S&C DRAFT OF 10/23/00
As filed with the Securities and Exchange Commission
on December __, 2000
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Registration No. 333-_______
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-14
REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933
| | Pre-Effective Amendment No. __ |_| Post-Effective Amendment No. __
WARBURG PINCUS FIXED INCOME FUND
(Exact Name of Registrant as Specified in Charter)
Area Code and Telephone Number: (212) 875-3500
466 Lexington Avenue
New York, New York 10017-3147
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(Address of Principal Executive Offices) (Zip code)
Hal Liebes, Esq.
Warburg Pincus Fixed Income Fund
466 Lexington Avenue
New York, New York 10017-3147
------------------------------------- -----------------------------------
Earl D. Weiner Rose F. DiMartino, Esq.
Sullivan & Cromwell Willkie Farr & Gallagher
125 Broad Street 787 Seventh Avenu
New York, NY 10004 New York, NY 10019-6099
------------------------------------- -----------------------------------
Approximate date of public offering: As soon as practicable following
effectiveness of the Registration Statement.
Title of Securities Being Registered Common Stock, $.001 par value per share.
Registrant has registered an indefinite amount of securities pursuant to Rule
24f-2 under the Investment Company Act of 1940, as amended; accordingly, no fee
is payable herewith in reliance upon Section 24(f).
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
DLJ FIXED INCOME FUND
Your Vote Is Important
Dear Shareholder:
We are pleased to invite you to attend a special meeting (the "Meeting")
of the shareholders of the DLJ Fixed Income Fund series of the DLJ Focus Funds
at which you will be asked to vote on three important matters.
The Board of Trustees of the DLJ Focus Funds has recently reviewed and
unanimously endorsed a proposal for the acquisition of its DLJ Fixed Income Fund
series (the "Fund") by another similar fund managed by your Fund's interim
investment adviser, Credit Suisse Asset Management, LLC ("CSAM"). Under the
terms of the proposal, Warburg Pincus Fixed Income Fund (the "Acquiring Fund")
would acquire all of the assets and liabilities of the Fund. In Proposal Number
1, you are being asked to approve an Agreement and Plan of Reorganization (the
"Plan") pursuant to which the acquisition of the Fund by the Acquiring Fund (the
"Acquisition") would be effected.
The Fund's Board of Trustees and CSAM believe that the Acquisition is in
the best interests of the Fund and its shareholders.
The Acquisition will not result in any material changes to the investment
philosophy or operations of the Fund, since the Acquiring Fund has a
substantially similar investment objective and strategy, and similar investment
policies as the Fund. The Acquiring Fund has a different transfer agent and
independent accountant from the Fund, but the quality and level of service
provided currently to the Fund and by CSAM's predecessor, DLJ Asset Management
Group, Inc. ("DLJAM"), are expected to continue. 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 average annual
expense ratio of each class of the Acquiring Fund at the lower of that of the
average annualized expense ratio of the class of the Acquiring Fund that a
holder of the Fund will receive at the closing of the Acquisition or the class
that such holder will surrender at such closing measured over the 60-day period
ended on the closing of the Acquisition (the "Closing Date"). The Closing Date
is expected to be on or about March 30, 2001.
If shareholders of the Fund approve the Plan, the Fund will be liquidated
upon consummation of the Acquisition. At that time, you will become a
shareholder of the Acquiring Fund, having received shares of the Common Class if
you hold Class D shares in the Fund and the Advisor Class if you hold Class A,
Class B or Class R shares in the Fund, in each case, with an aggregate net asset
value equal to the aggregate net asset value of your investment in the 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 Fund and the Acquiring
Fund. CSAM or its affiliates will bear all expenses incurred in connection with
the Acquisition.
In Proposal Number 2, you are being asked to approve a new investment
advisory agreement for the Fund with CSAM. This is important for two reasons.
First, assuming shareholders approve the Acquisition, it may take longer than
March 30, 2001 to close the Acquisition and the rules of the SEC that allow CSAM
to serve as interim investment adviser to the Fund will only let CSAM serve in
that capacity until April 2, 2001. Second, if shareholders do not approve the
Acquisition, CSAM would like to continue as adviser and would not be able to do
so without your approval.
Finally, in Proposal Number 3, you are being asked to elect Trustees to
the Board of Trustees for your Fund. Although we are asking you to approve the
Acquisition and that approval would result in your becoming a shareholder of
another fund with its own board of trustees, the Fund is a part of the DLJ
Focus Funds. The DLJ Focus Funds is having an election for Trustees and as
shareholders of the DLJ Focus Funds, you are entitled to participate in that
election and we strongly recommend that you do so. In the event that
shareholders do not approve the Acquisition, you would continue as a shareholder
of the Fund and the DLJ Focus Funds.
The Meeting will be held on March 23, 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 proposals is described in the attached
prospectus/proxy statement. THE BOARD OF TRUSTEES OF THE FUND UNANIMOUSLY
RECOMMENDS THAT YOU VOTE IN FAVOR OF THESE PROPOSALS. On behalf of the Board of
Trustees, 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 Fund's proxy solicitor, Attn.: Dominick 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 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
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 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/ Martin Jaffe
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Secretary
__________, 2001
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________, 2001
DLJ FIXED INCOME 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 proposals 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"), your Fund's prior investment adviser, and has
combined the investment advisory business of DLJAM with its existing U.S.
asset management business, which is managed by 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 $198 billion
as of September 30, 2000. 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 the DLJ Fixed Income Fund (the "Fund") with the Warburg
Pincus Fixed Income Fund (the "Acquiring Fund"), 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 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 Fund, but would become a shareholder of the
Acquiring Fund.
Q: WHAT ARE THE DIFFERENCES BETWEEN THE FUND AND THE ACQUIRING FUND?
A: The proposed Acquisition will not result in any material changes to the
investment philosophy of the Fund, since the Fund and the Acquiring Fund
have substantially similar investment objectives and strategies, and
similar investment policies. However, the Acquiring Fund has exposure to
the risks associated with investing in below-investment grade debt
securities, undertaking hedging strategies and purchasing options as it is
permitted to invest in such securities while the Fund is not. As a result,
the Acquiring Fund may be subject to greater volatility with respect to
its portfolio securities than the Fund. The Acquiring Fund has the same
investment adviser as the Fund. The administrator, transfer agent and
independent accountant will change as a result of the Acquisition.
Q: WILL THE FEES ASSESSED TO SHAREHOLDERS INCREASE?
A: No. CSAM, the 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 average annual
expense ratio of each class of the Acquiring Fund at the lower of that of
the average annualized expense ratio
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of the Acquiring Fund or the average annualized expense ratio of the class
that such holder will surrender at such closing, measured over the 60 day
period ending on the Closing Date. The closing of the proposed Acquisition
is expected to be on or about March 30, 2001. Even if the Plan is not
approved the total expense ratio of your Fund will not increase.
Q: WHAT ARE THE BENEFITS OF THE TRANSACTION?
A: The Board members of your 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 fixed income 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 Fund will not incur capital gains or losses on the
conversion from the Fund to the Acquiring Fund. Shareholders will incur
capital gains or losses if they sell their shares in the 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 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 Fund and the Board will consider other possible courses
of action available to it, including resubmitting the Acquisition proposal
to shareholders.
Q. WHY AM I BEING ASKED TO VOTE ON THE PROPOSED NEW INVESTMENT ADVISORY
AGREEMENT?
A. The Investment Company Act of 1940, which regulates investment companies
such as your Fund, requires a shareholder vote to approve a new investment
advisory agreement following certain types of business combinations.
Because the acquisition of DLJ on November 3, 2000 caused the then
existing investment advisory agreement between your Fund and DLJAM to
terminate both pursuant to its terms and the Investment Company Act of
1940, your Board approved an interim investment advisory agreement for the
Fund with DLJAM, which was assigned to CSAM, which took effect on November
3, 2000 when the Acquisition was completed. The interim investment
advisory agreement has the same fees as the prior agreement. The interim
investment advisory agreement will continue in effect until the earlier of
150 days from November 3, 2000, which is April 2, 2001, or until you
approve a new investment advisory agreement between your Fund and CSAM. It
is very important that you vote on this proposal regardless of your vote
for or against the Plan as CSAM's continuing as investment adviser of your
Fund requires shareholder approval of a new investment advisory agreement
with your Fund.
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Q. HOW WILL A NEW INVESTMENT ADVISORY AGREEMENT AFFECT ME AS A FUND
SHAREHOLDER?
A. If the Plan is not approved and the new investment advisory agreement with
CSAM is approved, you will still own the same shares in the same Fund and
CSAM will be the Fund's adviser. The terms of the new investment advisory
agreement are the same in all material respects as the current agreement,
except that CSAM will be the new investment adviser following your
approval and, as more fully explained below, it is anticipated that your
Fund will retain new administrators to provide administrative services
previously provided by DLJAM and CASM. If the Plan is not approved and
shareholders do not approve the new investment advisory agreement, the
interim investment advisory agreement will terminate and the Board of
Trustees of your Fund will take such action as it deems to be in the best
interests of your Fund and its shareholders.
Q. WILL THE INVESTMENT ADVISORY FEE REMAIN THE SAME UNDER THE NEW INVESTMENT
ADVISORY AGREEMENT IF THE PLAN IS NOT APPROVED?
A. Yes. However, it is proposed, subject to approval by the Board of Trustees
of the Fund, that the administrative services currently provided by CSAM
without additional fees pursuant to the interim advisory agreement to the
Fund will be provided by Credit Suisse Asset Management Securities, Inc.
and an outside administrator to the Fund for a total fee not to exceed
.20% of average daily net assets. In addition, if the Plan is not approved
and CSAM is approved as investment adviser to the Fund, CSAM has agreed to
impose limits on the average annual expense ratio of your Fund in two
ways. First, CSAM has agreed to assume DLJAM's undertaking to limit your
Fund's average annual operating expenses until October 31, 2001. Second,
CSAM has agreed in writing to limit average annual expenses from the date
of the acquisition of DLJ by Credit Suisse, November 3, 2000, until
November 3, 2002, to the annualized levels previously paid by your Fund,
measured over the 60-day period ending on November 3, 2000. Consequently,
it is not anticipated that there will be any increase in the average
annual operating expense ratio of your Fund through November 3, 2002 due
to the retention of CSAMSI and the outside administrator as
co-administrators. Consequently, your Fund will not bear any additional
cost through at least November 3, 2002 as a result of the appointment of
the co-administrators.
Q. WHAT ELSE AM I BEING ASKED TO VOTE ON?
A. You are being asked to vote to elect a new Board of Trustees.
Q: HOW DO THE BOARD MEMBERS OF MY FUND RECOMMEND THAT I VOTE?
A: AFTER CAREFUL CONSIDERATION, THE BOARD OF TRUSTEES OF YOUR FUND, INCLUDING
THOSE TRUSTEES WHO ARE NOT AFFILIATED WITH THE FUND OR CSAM, RECOMMEND
THAT YOU VOTE FOR THESE PROPOSALS.
Q: WHOM DO I CALL FOR MORE INFORMATION?
A: Please call D.F. King & Co., Inc., the 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:
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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 Fund's
proxy solicitor, at 1-800- 290-6424;
o By faxing the enclosed proxy card to D.F. King & Co., Inc. Attn:
Dominick 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.
Q: WILL THE FUND PAY FOR THIS PROXY SOLICITATION?
A: No. CSAM or its affiliates will bear these costs.
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DLJ FIXED INCOME FUND
277 Park Avenue
New York, New York 10172
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
To Be Held on March 23, 2001
Notice is hereby given that a Special Meeting of Shareholders (the
"Meeting") of DLJ Fixed Income Fund (the "Fund"), a series of DLJ Focus Funds,
will be held at the offices of the Fund, 277 Park Avenue, 24th Floor, New York,
New York 10172 on March 23, 2001, commencing at 10:00 a.m. for the following
purposes:
1. To approve the Agreement and Plan of Reorganization (the "Plan")
providing that (i) the Fund would transfer to Warburg Pincus Fixed
Income Fund (the "Acquiring Fund") all of its assets in exchange for
shares of the Acquiring Fund and the assumption by the Acquiring
Fund of the Fund's liabilities, (ii) such shares of the Acquiring
Fund would be distributed to shareholders of the Fund in liquidation
of the Fund, and (iii) the Fund would subsequently be terminated
(Proposal Number 1);
2. To approve a new investment advisory agreement as it relates to the
Fund permitting Credit Suisse Asset Management, LLC to continue as
investment adviser (Proposal Number 2);
3. To elect eight Trustees to the Board of Trustees of the DLJ Focus
Funds (Proposal Number 3); and
4. To transact such other business as may properly come before the
Meeting or any adjournment or adjournments thereof.
THE BOARD OF TRUSTEES OF THE FUND UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS
OF THE FUND VOTE TO APPROVE ALL OF THE PROPOSALS.
The Board of Trustees of the DLJ Focus Funds has fixed the close of
business on January 31, 2001, as the record date for the determination of
shareholders of the Fund entitled to notice of and to vote at the Meeting and
any adjournment or adjournments thereof. As a convenience to shareholders, you
can now vote in any one of 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 Fund's
proxy solicitor, at 1-800-290-6424;
o By faxing the enclosed proxy card to D.F. King & Co., Inc., Attn:
Dominick 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 Trustees
Martin Jaffe
Secretary
__________, 2001
Your Prompt Attention to the Enclosed Proxy Will Help to
Avoid the Expense of Further Solicitation.
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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:
4. Registration Valid Signatures
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Corporate Accounts
(1) ABC Corp. ABC Corp.
(2) ABC Corp. John Doe, Treasurer
(3) ABC Corp. John Doe
c/o John Doe, Treasurer
(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 December __, 2000
PRELIMINARY PROSPECTUS/PROXY STATEMENT
__________, 2001
PROXY STATEMENT
DLJ FIXED INCOME FUND
277 Park Avenue
New York, New York 10172
(800) 225-8011
prospectus
WARBURG PINCUS FIXED INCOME FUND
466 Lexington Avenue
New York, New York 10017
800-WARBURG
This Prospectus/Proxy Statement is being furnished to shareholders of DLJ
Fixed Income Fund (the "Fund"), a series of the DLJ Focus Funds, an open-end,
management investment company organized as a Massachusetts business trust, in
connection with the solicitation of proxies by the Board of Trustees of DLJ
Focus Funds for use at a Special Meeting of Shareholders to be held on March 23,
2001 at 10:00 a.m. (the "Meeting"), at the offices of the Fund located at 277
Park Avenue, New York, New York 10172, or any adjournment(s) thereof. A list of
the proposals to be considered is set forth below:
1. to approve an agreement and plan of reorganization (the "Plan");
2. to approve a new investment advisory agreement for the Fund;
3. to elect eight Trustees to the Board of Trustees of the DLJ Focus
Funds; and
4. to transact such other business as may properly come before the
meeting and any adjournment thereof.
Pursuant to the Plan, the Fund would transfer to Warburg Pincus Fixed
Income Fund, an open-end management investment company organized as a
Massachusetts business trust (the "Acquiring Fund" and, together with the Fund,
the "Funds"), all of its assets in exchange for shares of the Acquiring Fund and
the assumption by the Acquiring Fund of the Fund's liabilities; such shares of
the Acquiring Fund would be distributed to shareholders of the Fund in
liquidation of the Fund; and the Fund would subsequently be terminated
(hereinafter collectively referred to as the "Acquisition").
The Plan will not result in any material changes in the investment
philosophy of the Fund. The investment objective of the Fund (i.e., provide as
high a level of total return as is consistent with capital preservation by
investing principally in debt securities, including, without limitation,
convertible and non-convertible debt securities of foreign and domestic
companies, including both well-known and established and new and lesser known
companies) is substantially similar to the investment objective and strategy of
the Acquiring Fund (i.e., generate high current income consistent with
reasonable risk and, secondarily, capital appreciation by investing in
fixed-income securities denominated primarily in U.S. dollars). The investment
policies of the Acquiring Fund are similar to those of the Fund, other than
differences described under "Comparison of Investment Objectives and Policies"
in this Prospectus/Proxy Statement. The investment adviser for the Acquiring
Fund is the same as that of the Fund, although the administrator, transfer agent
and independent accountant will change as a result of the Acquisition.
As a result of the proposed Acquisition, each shareholder of a class of
shares of the Fund will receive that number of shares of the Common Class of the
Acquiring Fund, in the case of Class D shares of the Fund, and the Advisor
Class, in the case of Class A, Class B or Class R shares of the Fund, in each
case, having an aggregate net asset value equal to the aggregate net asset value
of such shareholder's shares of the 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 Fund in connection with
the Acquisition. This transaction is structured to be tax-free for federal
income tax purposes to shareholders of the Fund and to each of the Fund and the
Acquiring Fund.
This Prospectus/Proxy Statement, which should be retained for future
reference, sets forth concisely the information about the Acquiring Fund that a
prospective investor should know before voting. This Prospectus/Proxy Statement
is expected to first be sent to shareholders on or about February 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 (800)-WARBURG (800-927-2874).
The following documents, which have been filed with the SEC, are
incorporated herein in their entirety by reference.
o The current Prospectus of each of the Common Shares and the Advisor
Shares of the Acquiring Fund, each dated February 29, 2000,
supplements thereto dated May 2, 2000, August 1, 2000 and November
22, 2000 and the Shareholder Guide dated February 29, 2000 (as
revised March 27, 2000). The Acquiring Fund Prospectuses for the
Common Class or the Advisor Class, as applicable, accompany this
Prospectus/Proxy Statement.
o The current Prospectus of the Fund, dated August 1, 2000 and
supplements thereto dated October 31, 2000, December 1, 2000 and
December 15, 2000. Copies may be obtained without charge by writing
to the address on the cover page of this Prospectus/Proxy Statement
or by calling (800) 225-8011.
o The Annual Report of the Fund for the fiscal year ended October 31,
2000 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.
Accompanying this Prospectus/Proxy Statement as Exhibit A is a copy of the
form of the Plan for the proposed Acquisition.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
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
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REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE FUNDS.
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TABLE OF CONTENTS
PROPOSAL NUMBER 1 - APPROVAL OF THE PLAN....................................1
Summary......................................................................1
Risk Factors.................................................................5
Reasons for the Acquisition..................................................5
Fee Table....................................................................6
Information About The Acquisition............................................9
Comparison of Investment Objectives and Policies............................15
Determination of Net Asset Value of Shares of the Acquiring Fund............20
Management of Each Fund.....................................................20
Interest of CSAM in the Acquisition.........................................21
Information on Shareholders' Rights.........................................21
Conclusion..................................................................23
Required Vote...............................................................23
PROPOSAL NUMBER 2 - APPROVAL OF A NEW INVESTMENT ADVISORY AGREEMENT.........24
Information About DLJAM....................................................24
The Previous and Interim Investment Advisory Agreement......................24
Brokerage Commissions.......................................................26
Information About CSAM......................................................27
Section 15(f)...............................................................27
Evaluation by the Board.....................................................28
Required Vote...............................................................29
PROPOSAL NUMBER 3 - ELECTION OF EIGHT TRUSTEES TO THE BOARD OF TRUSTEES.....30
ADDITIONAL INFORMATION......................................................38
VOTING INFORMATION..........................................................38
OTHER BUSINESS..............................................................39
FINANCIAL STATEMENTS AND EXPERTS............................................39
ADDITIONAL MATERIALS........................................................40
LEGAL MATTERS...............................................................40
EXHIBIT A: AGREEMENT AND PLAN OF REORGANIZATION........................A-1
EXHIBIT B: FORM OF INVESTMENT ADVISORY AGREEMENT.......................B-1
EXHIBIT C: CERTAIN INFORMATION ABOUT CSAM AND CREDIT SUISSE GROUP......C-1
PROPOSAL NUMBER 1 -
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 PROSPECTUS OF THE FUND, THE STATEMENT OF ADDITIONAL INFORMATION
OF THE FUND, THE PROSPECTUSES OF THE ACQUIRING FUND AND THE STATEMENT OF
ADDITIONAL INFORMATION OF THE ACQUIRING FUND.
Proposed Acquisition. The Plan provides for the acquisition of all of the
assets and liabilities of the Fund by the Acquiring Fund in exchange for shares
of the Acquiring Fund. The Plan also calls for the distribution of shares of the
Acquiring Fund to the Fund's shareholders in liquidation of the Fund. As a
result of the Acquisition, each holder of Class D shares of the Fund will become
the owner of that number of full and fractional shares of the Common Class of
the Acquiring Fund and each holder of Class A shares of the Fund, each holder of
Class B shares of the Fund and each holder of Class R shares of the Fund will
become the owner of that number of full and fractional shares of the Advisor
Class of the Acquiring Fund, in each case, having an aggregate net asset value
equal to the aggregate net asset value of the shareholder's shares of the Fund
as of the close of business on the date that the 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 Fund is a series of the DLJ Focus Funds, it does not have a
Board of Trustees separate from the other series of the DLJ Focus Funds.
Accordingly, when we refer to the "Trustees of the Fund" or the "Board of
Trustees of the Fund" elsewhere in this prospectus/proxy statement, we mean the
Trustees and the Board of Trustees of the DLJ Focus Funds. For the reasons set
forth below under "Reasons for the Acquisition," the Board of Trustees of the
DLJ Focus Funds, including the Trustees of the DLJ Focus Funds who are not
"interested persons" (the "Independent Trustees"), as that term is defined in
the Investment Company Act of 1940, as amended (the "1940 Act"), has unanimously
concluded that the Acquisition would be in the best interests of the
shareholders of the Fund and that the interests of the Fund's existing
shareholders will not be diluted as a result of the transaction contemplated by
the Acquisition. The Board therefore has submitted the Plan for approval by the
Fund's shareholders. The Board of 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 Fund will require the affirmative vote
of a majority of the 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 Fund, the
Board will consider other possible courses of action available to it, including
resubmitting the Acquisition proposal to shareholders.
Tax Consequences. Prior to completion of the Acquisition, the Fund and the
Acquiring Fund will have received an opinion of counsel that, upon the closing
of the Acquisition and the transfer of the assets of the Fund, no gain or loss
will be recognized by the Fund or its shareholders for federal income tax
purposes. The holding period and aggregate tax basis of the Acquiring Fund
shares received by a Fund shareholder will be the same as the holding period and
aggregate tax basis of the shares of the Fund previously held by such
shareholder. In addition, the holding period and aggregate tax basis of the
assets
-1-
of the Fund in the hands of the Acquiring Fund as a result of the Acquisition
will be the same as in the hands of the Fund immediately prior to the
Acquisition.
Investment Objectives And Policies. The investment objective and strategy
of the Acquiring Fund (i.e., generate high current income consistent with
reasonable risk and, secondarily, capital appreciation by investing in
fixed-income securities denominated primarily in U.S. dollars) is substantially
similar to the investment objective of the Fund (i.e., provide as high a level
of total return as is consistent with capital preservation by investing
principally in debt securities, including, without limitation, convertible and
non-convertible debt securities of foreign and domestic companies, including
both well-known and established and new and lesser known companies). The
investment policies of the Acquiring Fund are similar to those of the Fund.
However, the Acquiring Fund may be subject to additional risks associated with
investing in below-investment grade debt securities, undertaking hedging
strategies and purchasing options as it is permitted to invest in such
securities while the Fund is not. The other investment policies of the Acquiring
Fund are similar to those of the Fund except for differences noted below under
"Comparison of Investment Objectives and Policies." Except as noted below under
"Comparison of Investment Objectives and Policies," each Fund has similar
fundamental and non-fundamental investment limitations.
Purchase And Redemption Procedures. Except as otherwise indicated in this
section, the Funds have substantially similar policies with respect to
purchases, redemptions and exchanges of shares. Class A or Class B shares of the
Fund may be purchased directly from the Fund, through the Fund's distributor or
through selected dealers. Class D shares are offered to employees of Donaldson,
Lufkin & Jenrette Inc. and its subsidiaries that are eligible to participate in
the DLJ 401(k) Retirement Savings Plan for Employees. Class R Shares of the Fund
are offered only to eligible institutions who purchase shares on behalf of their
clients and are not available to individual investors directly. The Acquiring
Fund's Common and Advisor Class Shares may be purchased from the Fund's
distributor and various financial intermediaries. Class D Shares of the Fund are
exempt from the Fund's minimum and subsequent purchase requirements. Common
Shares of the Acquiring Fund, however, 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. The Acquiring Fund requires
holders of Common Shares to maintain a minimum account size of $2,000. However,
CSAM has agreed to waive minimum account size requirements for shareholders of
the Fund who are currently below applicable minimum account size requirements.
Like holders of Class A shares and Class B shares of the Fund, holders of
the Common Class of the Acquiring Fund may redeem their shares by telephone for
accounts with such privileges. Both Funds require that requests for redemptions
of large amounts be made in writing and be accompanied by a signature guarantee.
In addition, both Funds offer automatic investment and withdrawal
programs. The Fund's automatic investment program requires a minimum purchase of
$25 on Class A or Class B Shares on a regular basis. The Acquiring Fund's Common
and Advisor Classes offer an automatic monthly investment plan, which requires a
$50 minimum on purchases of Common Shares. The Acquiring Fund also offers an
automatic withdrawal plan for making automatic periodic withdrawals of $250 or
more. The Fund's automatic withdrawal plan is available to holders of Class A or
Class B Shares with a current net asset value of at least $10,000. Such
shareholders may receive, or designate a third party to receive, periodic
payment by check in an amount not less than $50.
You should note that while holders of Class A shares or Class B shares of
the Fund have available the "Automatic Exchange Plan" and the "Dividend
Direction Option," the Acquiring Fund does not offer similar programs to holders
of its Common or Advisor Class of shares. Shareholders of the Fund who
-2-
currently participate in the Dividend Direction Option will have dividends
reinvested in the form of additional full and fractional shares of the relevant
Fund unless a shareholder elects otherwise. Any sales charges to a purchase or
redemption are discussed below under "Sales Charges".
You should also note that certain brokers who distribute shares of the
Fund may not distribute shares of the Acquiring Fund. The Prospectuses of the
Acquiring Fund provide additional information on purchasing shares of the
Acquiring Fund.
Sales Charges. Class A shares of the Fund are sold at net asset value per
share with an initial sales charge of 4.75% which declines for larger purchases
and is zero for purchases over $1 million and are subject to a 12b-1 fee of
0.25% per annum of average daily net assets. Class B shares of the Fund are sold
without an initial sales charge but may be subject to a contingent deferred
sales charge ("CDSC") of 4.00% for redemptions in the first year after purchase
and declines by 1.00% annually to zero for redemptions made after the fourth
year and are subject to a 12b-1 fee of 1.00% per annum of average daily net
assets. Class D shares are sold at net asset value per share without an initial
sales charge, CDSC or 12b-1 fee but are offered only to employees of Credit
Suisse First Boston ("CSFB") or its subsidiaries who are eligible to participate
in the Credit Suisse First Boston Employees' Savings and Profit Sharing Plan and
are not subject to any sales charge. Class R shares are sold at net asset value
per share without an initial sales charge or CDSC but are only sold to eligible
institutions who purchase shares on behalf of their clients and are not
available to individual investors directly and are subject to a 12b-1 fee of
0.25% of average daily net assets. Shares of the Acquiring Fund are sold at net
asset value per share and without an initial sales charge or CDSC. Shareholders
of the Fund who hold Class B shares of the Fund, however, who receive Advisor
class shares of the Acquiring Fund as part of the Acquisition will continue to
be subject to the CDSC that would otherwise be applicable to such Class B
shares. Common Shares of the Acquiring Fund are not subject to a 12b-1 fee.
Advisor Shares of the Acquiring Fund are assessed a 12b-1 fee of 0.25% per
annum. Importantly, the Fund has a reimbursement-type distribution plan while
the Acquiring Fund has a compensation-type plan. In a compensation plan, the
distributor receives the distribution fee regardless of the cost of the
distribution activities performed. In a reimbursement plan, the amounts payable
under the distribution plan are directly related to the expenses actually
incurred by the distributor for its distribution activities. See "Fee Table"
below.
Holders of Class B shares of the Fund should note that the shares of the
Advisor Class of the Acquiring Fund that they receive in connection with the
Acquisition will be subject to a contingent deferred sales charge to the same
extent as their Class B shares.
Exchange Privileges. The exchange privileges available to shareholders of
the Acquiring Fund are similar to those available to shareholders of the Fund.
Shareholders of each Fund, with the exception of Class D Shares of the 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. Exchanges may be effected by mail or by telephone.
In the case of the Fund, holders of Class A and Class B Shares may participate
in an "Automatic Exchange Plan." The Acquiring Fund does not offer such a plan.
Exchanges will be effected without a sales charge but must satisfy the minimum
dollar amount necessary for new purchases in the fund in which shares are being
purchased. Each of the 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. No initial sales charge is
imposed on the shares
-3-
being acquired in an exchange. See the Shareholder Guide which accompanies the
Prospectuses of the Acquiring Fund.
Dividends. The Acquiring Fund and the Fund each distribute substantially
all of their respective net investment income and net realized capital gains, if
any, to their respective shareholders. All distributions are reinvested in the
form of additional full and fractional shares of the relevant Fund unless a
shareholder elects otherwise. Each Fund declares dividends, if any, daily, and
pays them monthly, from net investment income. Net realized capital gains
(including net short-term capital gains), if any, of each Fund normally will be
distributed annually. It is expected that the Fund will pay a dividend of any
undistributed net investment income and capital gains, which may be substantial,
immediately prior to the Closing Date. In the case of the Fund, however, Class A
and Class B Shares may participate in a "Dividend Direction Option," which is
not available to Acquiring Fund shareholders. See "About Your Account --
Distributions" in the accompanying Prospectus(es) of the Acquiring Fund.
Shareholder Voting Rights. The Acquiring Fund and the Fund are each
registered with the SEC as open-end management investment companies. The
Acquiring Fund is a Massachusetts business trust, having a Board of Trustees.
The Fund is a series of a Massachusetts business trust with a Board of Trustees.
Shareholders of each Fund have similar voting rights. Neither Fund holds a
meeting of shareholders annually, except as required by the 1940 Act or other
applicable law. The Acquiring 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 Fund's 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 a majority of the outstanding
shares of a Fund at a shareholder meeting will constitute a quorum.
Under the laws of the Commonwealth of Massachusetts, shareholders of the
Funds will not have appraisal rights in connection with a combination or
acquisition of the assets of the Fund by another entity. Shareholders of the
Fund may, however, redeem their shares at net asset value prior to the date of
the Acquisition (subject only to certain restrictions set forth in the 1940
Act). See "Information on Shareholders' Rights -- Voting Rights."
-4-
Risk Factors
Due to the fact that the investment objective and strategy of the
Acquiring Fund (i.e., generate high current income consistent with reasonable
risk and, secondarily, capital appreciation by investing in fixed-income
securities denominated primarily in U.S. dollars) and the Fund (i.e., provide as
high a level of total return as is consistent with capital preservation by
investing principally in debt securities, including, without limitation,
convertible and non-convertible debt securities of foreign and domestic
companies, including both well-known and established and new and lesser known
companies) are substantially similar and the investment policies and
restrictions of the Acquiring Fund are, except as noted herein, similar to those
of the Fund, the investment risks are also similar. The principal risk factors
affecting both the Fund and the Acquiring Fund are market risk and the risks
associated with (i) interest-rate risk and (ii) credit risk. The Acquiring Fund
has exposure to the risks associated with: investing in below-investment grade
debt securities (as it is permitted to invest up to 35% of its total assets in
these securities); undertaking hedging strategies; and purchasing options. The
Fund, however, is not permitted to invest in such securities. Accordingly, the
Acquiring Fund may be subject to greater volatility with respect to its
portfolio securities than the Fund. See the accompanying Prospectus(es) of the
Acquiring Fund for a complete discussion of the risks of investing in that Fund.
Reasons for the Acquisition
The Board of Trustees of the Fund has unanimously determined that it is in
the best interest of the Fund to effect the Acquisition. In reaching this
conclusion, the Board considered a number of factors, including the following:
1. the Acquisition will result in a single fund, thereby eliminating
confusion in the marketplace associated with there being two fixed
income funds managed by CSAM;
2. the Acquisition may increase efficiencies, due to a somewhat larger
asset base and the elimination of one of the two sets of
prospectuses, annual reports and other documents required for two
funds;
3. the performance record of the Acquiring Fund;
4. a larger asset base could provide portfolio management benefits,
such as greater diversification to mitigate the risks of investing
in fixed income securities and the ability to command more attention
from brokers and underwriters of portfolio securities;
5. the terms and conditions of the Acquisition;
6. the substantially similar investment objective and strategy, and
similar investment policies and restrictions of the Acquiring Fund
in relation to those of the Fund;
7. that the investment adviser for the Acquiring Fund is the same as
that of the Fund;
8. the federal tax consequences of the Acquisition to the Fund, the
Acquiring Fund and the shareholders of each Fund, and that a legal
opinion will be rendered that no recognition of 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;
-5-
10. that the interests of shareholders of the Fund will not be diluted
as a result of the Acquisition;
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 annual expense ratio of
each class of the Acquiring Fund at the lower of that of (i) in the
case of the Common Class, the average annualized expense ratio of
Class D shares of the Fund and the average annualized expense ratio
of the Common Class and (ii) in the case of the Advisor Class, the
average annualized expense ratio of Class A shares, Class B shares
and Class R shares of the Fund and the average annualized expense
ratio of the Advisor Class, 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 Trustees of the Fund, including
the Independent Trustees, has determined that it is in the best interests of the
Fund and its shareholders to effect the Acquisition. The Board of Trustees of
the Fund has also determined that the Acquisition would not result in a dilution
of the interests of the Fund's shareholders.
The Board of 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, the terms and
conditions of the Acquisition and 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 Class D
shares of the Fund, holders of which will receive the Common Class of the
Acquiring Fund upon closing of the Acquisition, and Class A, Class B and Class R
shares of the Fund, holders of which will receive the Advisor Class of the
Acquiring Fund upon closing of the Acquisition, and the costs and expenses of
the Common Class and Advisor Class of the Acquiring Fund before and after giving
effect to the Acquisition. The table does not reflect charges that institutions
and financial intermediaries may impose on their customers.
Before Fee Waivers And Reimbursements
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
Acquiring
Fund Fund Pro Forma
---- ---- (Common
Class Common Class After
D* Class** Acquisition)
-- ------- ------------
Shareholder Transaction Expenses:
Maximum sales charge imposed
on purchases (as a percentage
of offering price) None None None
- ----------------------------------------------------------------------------
Maximum deferred sales charge
(as a percentage of original
purchase price, or redemption
proceeds, as applicable) None None None
- ----------------------------------------------------------------------------
Annual Fund Operating Expenses
(expenses that are deducted from
fund assets)
-6-
Management fees 0.59% 0.50% 0.50%
12b-1 fees 0.00% 0.00% 0.00%
Other expenses 0.24% 0.29% 0.29%
- ----------------------------------------------------------------------------
Total Annual Fund Operating 0.83% 0.79% 0.79%
Expenses**
- ----------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------
Fund Acquiring
Fund Pro Forma
------------------------------------ ---------- (Advisor
Advisor Class After
Class A Class B* Class C Class R* Class** Acquisition)
------- ------- ------- ------- ------- -------------
Shareholder Transaction Expenses:
Maximum sales charge imposed
on purchases (as a percentage
of offering price) 4.75% None None None None None
- -------------------------------------------------------------------------------------------------
Maximum deferred sales charge
(as a percentage of original
purchase price, or redemption
proceeds, as applicable) None 4%*** 1%**** None None None
- -------------------------------------------------------------------------------------------------
Annual Fund Operating Expenses
(expenses that are deducted from
fund assets)
Management fees 0.59% 0.59% 0.59% 0.59% 0.50% 0.50%
12b-1 fees 0.25% 1.00% 1.00% 0.25% 0.25% 0.25%
Other expenses 0.24% 0.24% 0.24% 0.24% 0.29% 0.29%
- -------------------------------------------------------------------------------------------------
Total Annual Fund Operating
Expenses***** 1.08% 1.83% 1.83% 1.08% 1.04% 1.04%
- -------------------------------------------------------------------------------------------------
After Fee Waivers And Reimbursements
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
Acquiring
Fund Fund Pro Forma
---- ----- (Common
Class Common Class After
D* Class** Acquisition)
---- ------- ------------
Shareholder Transaction Expenses:
Maximum sales charge imposed
on purchases (as a percentage
of offering price) None None None
- ----------------------------------------------------------------------------
Maximum deferred sales charge
(as a percentage of original
purchase price, or redemption
proceeds, as applicable) None None None
- ----------------------------------------------------------------------------
Annual Fund Operating Expenses
(expenses that are deducted from
fund assets)
Management fees 0.46% 0.48% 0.43%
12b-1 fees 0.00% 0.00% 0.00%
Other expenses 0.24% 0.27% 0.27%
Total Annual Fund Operating
Expenses** 0.70% 0.75% 0.70%
- ----------------------------------------------------------------------------
-7-
Acquiring
Fund Fund Pro Forma
------------------------------------------- ---------
Advisor (Advisor Class
Class A* Class B* Class C* Class R* Class** After Acquisition)
------- ------- ------- ------- -------- -------------------
Shareholder Transaction
Expenses: 4.75% None None None None None
Maximum sales charge
imposed on purchases (as
a percentage of offering
price)
- ------------------------------- ----------- ----------- ------------ --------- ----------- -------------------
Maximum deferred sales charge None 4%*** 1%**** None None None
(as a percentage of
original purchase price,
or redemption proceeds,
as applicable)
- ------------------------------- ----------- ----------- ------------ --------- ----------- -------------------
Annual Fund Operating
Expenses (expenses that are
deducted from fund assets)
Management fees 0.46% 0.46% 0.46% 0.46% 0.48% 0.43%
12b-1 fees 0.25% 1.00% 1.00% 0.25% 0.25% 0.25%
Other expenses 0.24% 0.24% 0.24% 0.24% 0.27% 0.27%
Total Annual Fund Operating
Expenses***** 0.95% 1.70% 1.70% 0.95% 1.00% 0.95%
- ------------------------------- ----------- ----------- ------------ --------- ----------- -------------------
* Actual fees and expenses for the year ended October 31, 2000 are shown
below. Fee waivers and expense reimbursements or credits reduced expenses
for the Funds during that period but may be discontinued at any time after
October 31, 2001.
** Actual fees and expenses for the year ended October 31, 2000.
*** 4% in the first year after purchase, declining annually by 1% to zero
after the fourth year. Following the Acquisition, shareholders of the Fund
holding Class B shares who receive Advisor Class shares will remain
subject to the CDSC that would have been applicable to their Class B
shares.
**** During the first year after purchase only.
***** CSAM and CSAMSI, as applicable, have agreed to waive fees, and CSAM has
agreed to reimburse expenses, for the two-year period beginning on the
date of the closing of the Acquisition to the extent necessary to maintain
the average annual expense ratio of each class of the Acquiring Fund at
the lower of that of (i) in the case of the Common Class, the average
annualized expense ratio of Class D shares of the Fund and the average
annualized expense ratio of the Common Class and (ii) in the case of the
Advisor Class, the average annualized expense ratio of Class A shares,
Class B shares and Class R shares of the Fund and the average annualized
expense ratio of the Advisor Class, in each case measured over the 60 day
period ended on the Closing Date
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
second table above (i.e., after fee waivers and expense reimbursements). The
examples also assume that all dividends and distributions are reinvested.
Fund
Class D Shares Acquiring Fund Pro Forma(4)
-------------- -------------- ------------
Common Shares
1 Year $72 $81 $72
3 Year 252 252 234
5 Year 448 439 421
10 Year 1013 978 961
Fund Acquiring
- --------------------------------------------------------------------------------
-8-
Class A Class R Fund Pro Forma(4)
------- ------- ---- ------------
Advisor Shares
- --------------
1 Year $567 $ 97 $106 $97
3 Year 790 331 331 313
5 Year 1030 583 574 556
10 Year 1718 1305 1271 1254
Fund Acquiring CDSC Fee Assumptions(4)
Class B(1)(2) Class C(3) Fund Pro Forma(4) Class B Class C
------------- ---------- ---- ------------ ------- -------
Advisor Shares
- --------------
1 Year $173 $173 $106 $97 $497 $197
3 Year 563 563 331 313 513 313
5 Year 978 978 574 556 556 556
10 Year 1940 2137 1271 1254 1254 1254
(1) Class B shares of the Fund automatically convert to Class A shares after
eight years. The effect of the automatic conversion feature is reflected
in the Examples set forth above.
(2) Assumes no redemptions at end of period. In the example above, if the
Class B shares were redeemed after 1 year, your costs would be $573 and
after 3 years, your costs would be $763. Costs for the other time periods
would remain the same.
(3) Assumes no redemptions at end of period. In the example above, if the
Class C shares were redeemed after 1 year, your costs would be $273. Costs
for the other time periods would remain the same.
(4) For the first 2 years assumes net expense ratio due to CSAM waiver. For
Class B and Class C shares assumes shareholder does not redeem. If
shareholder were to redeem, expense would be as set forth in table above.
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
Fund in exchange for shares of the Acquiring Fund and the assumption by the
Acquiring Fund of the liabilities of the Fund on the Closing Date. The Closing
Date is expected to be on or about March 30, 2001.
Prior to the Closing Date, the 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 Fund, as of the close of regular
trading on The New York Stock Exchange, Inc., currently 4:00 p.m. New York City
time, on the Closing Date, in accordance with generally accepted 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(es) 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.
-9-
On or as soon after the Closing Date as conveniently practicable, the Fund
will liquidate and distribute pro rata to shareholders of record as of the close
of business on the Closing Date the shares of the corresponding class of the
Acquiring Fund received by the Fund. Such liquidation and distribution will be
accomplished by the establishment of accounts in the names of the Fund's
shareholders on the share records of the Acquiring Fund's transfer agent. Each
account will represent the number of shares of the relevant class of shares of
the Acquiring Fund due to each of the Fund's shareholders calculated in
accordance with the Plan. After such distribution and the winding up of its
affairs, the Fund will terminate as a management investment company and dissolve
as a series of the DLJ Focus Funds.
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 Fund.
Notwithstanding approval by the shareholders of the Fund, the Plan may be
terminated at any time at or prior to the Closing Date: (i) by mutual agreement
of the Fund and the Acquiring Fund; (ii) by the Fund in the event the Acquiring
Fund shall, or by the Acquiring Fund, in the event the Fund shall, materially
breach any representation, warranty or agreement contained in the Plan to be
performed at or prior to the Closing Date; or (iii) if a condition to the Plan
expressed to be precedent to the obligations of the terminating party has not
been met and it reasonably appears that it will not or cannot be met within a
reasonable time.
Pursuant to the Plan, the Acquiring Fund has agreed to indemnify and
advance expenses to each Trustee or officer of the Fund against money damages
incurred in connection with any claim arising out of such person's services as a
Trustee or officer with respect to matters specifically relating to the
Acquisition.
Approval of the Plan with respect to the Fund will require the affirmative
vote of a majority of the Fund's outstanding shares in the aggregate without
regard to class, in person or by proxy, if a quorum is present. Shareholders of
the Fund are entitled to one vote for each share. If the Acquisition is not
approved by shareholders of the Fund, the Board of Trustees of the Fund will
consider other possible courses of action available to it, including
resubmitting the Acquisition proposal to shareholders.
Description of the Acquiring Fund Shares. Shares of the Acquiring Fund
will be issued to the Fund in accordance with the procedures detailed in the
Plan and as described in the Acquiring Fund's Prospectuses and Shareholder
Guide. The Acquiring Fund, like the Fund, will not issue share certificates to
its shareholders. See "Information on Shareholders' Rights" and the Prospectuses
of the Acquiring Fund for additional information with respect to the shares of
the Acquiring Fund.
The Acquiring Fund has authorized two classes of common stock, called
Common Shares and Advisor Shares. Common Class shares of the Acquiring Fund will
be issued to holders of Class D shares of the Fund and Advisor Class shares of
the Acquiring Fund will be issued to holders of Class A, Class B and Class R
shares of the Fund. The Acquiring Fund intends to continuously offer Common
Shares and Advisor Shares after consummation of the Acquisition. Individual
investors are only able to purchase Advisor Shares through financial-services
firms such as banks, brokers and financial advisors. Shares of each class of the
Acquiring Fund represent equal pro rata interests in the Acquiring Fund and
accrue dividends and calculate net asset value and performance quotations in the
same manner. Because of the higher 12b-1 fees to be paid by the Advisor Shares,
the total return on the Advisor Shares can be expected to be lower than the
total return on the Common Shares.
Federal Income Tax Consequences. The exchange of assets of the Fund for
shares of the Acquiring Fund, followed by the distribution of these shares, is
intended to qualify for federal income tax purposes as a tax-free reorganization
under Section 368(a) of the Internal Revenue Code of 1986, as amended (the
"Code"). As a condition to the closing of the Acquisition, the Acquiring Fund
and the Fund will receive an opinion from Willkie Farr & Gallagher, counsel to
the Acquiring Fund, to the effect that,
-10-
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 Fund's assets in exchange for the Acquiring
Fund shares and the assumption by the Acquiring Fund of the liabilities of the
Fund, and the distribution of the Acquiring Fund shares to the shareholders of
the Fund in exchange for their shares of the Fund, will constitute a
"reorganization" within the meaning of Section 368(a) of the Code, and the
Acquiring Fund and the Fund will each be a "party to a reorganization" within
the meaning of Section 368(b) of the Code;
(2) no gain or loss will be recognized by the Acquiring Fund upon the
receipt of the assets of the Fund solely in exchange for the Acquiring Fund
shares and the assumption by the Acquiring Fund of the liabilities of the Fund;
(3) no gain or loss will be recognized by the Fund upon the transfer of
the Fund's assets to the Acquiring Fund in exchange for the Acquiring Fund
shares and the assumption by the Acquiring Fund of the liabilities of the Fund
or upon the distribution of the Acquiring Fund shares to the Fund's
shareholders;
(4) no gain or loss will be recognized by shareholders of the Fund upon
the exchange of their shares for Acquiring Fund shares or upon the assumption by
the Acquiring Fund of the liabilities of the Fund;
(5) the aggregate tax basis of the Acquiring Fund shares received by each
shareholder of the Fund pursuant to the Acquisition will be the same as the
aggregate tax basis of the shares of the Fund held by such shareholder
immediately prior to the Acquisition, and the holding period of the Acquiring
Fund shares to be received by each shareholder of the Fund will include the
period during which the shares of the Fund exchanged therefor were held by such
shareholder (provided that such shares of the Fund were held as capital assets
on the date of the Acquisition); and
(6) the tax basis of the Fund's assets acquired by the Acquiring Fund will
be the same as the tax basis of such assets to the Fund immediately prior to the
Acquisition, and the holding period of the assets of the Fund in the hands of
the Acquiring Fund will include the period during which those assets were held
by the Fund.
You should recognize that an opinion of counsel is not binding on the
Internal Revenue Service ("IRS") or any court. Neither the 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 Fund, followed by the taxable liquidation thereof.
Shareholders of the Fund should consult their tax advisors regarding the
effect, if any, of the proposed Acquisition in light of their individual
circumstances. Since the foregoing discussion only relates to the federal income
tax consequences of the Acquisition, shareholders of the Fund should also
consult their tax advisors as to state and local tax consequences, if any, of
the Acquisition.
Capitalization. The following table shows the capitalization of each Fund
as of October 31, 2000 and the capitalization of the Acquiring Fund on a pro
forma basis as of the Closing Date, after giving effect to the Acquisition.(1)
-11-
Pro Forma
Fund Acquiring Fund Adjustment Pro Forma
------------------ -------------- ----------- -------------
Net Assets-- Fund Level $133,700,670 $308,991,579 -- $442,692,249
Common -- 302,187,709 $95,471,436 397,659,145
Advisor -- 6,803,870 38,229,234 45,033,104
Class A 34,950,921 -- (34,950,921) --
Class B 3,256,257 -- (3,256,257) --
Class C 261 -- (261) --
Class D 95,471,436 -- (95,471,436) --
Class R 21,795 -- (21,795) --
Net Asset Value
Common -- $9.78 -- $9.78
Advisor -- 9.78 -- 9.78
Class A $9.81 -- ($9.81) --
Class B 9.81 -- (9.81) --
Class C 9.81 -- (9.81) --
Class D 9.81 -- (9.81) --
Class R 9.81 -- (9.81) --
Shares Outstanding
Common -- 30,885,076 9,757,652 40,642,728
Advisor -- 695,665 3,908,767 4,604,432
Class A $3,564,039 -- (3,564,039) --
Class B 332,052 -- (332,052) --
Class C 26 -- (26) --
Class D 9,734,448 -- (9,734,448) --
Class R 2,222 -- (2,222) --
- ----------
(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 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.
Total Returns
Total return is a measure of the change in value of an investment in a
fund over the period covered, which assumes that any dividends or capital gains
distributions are automatically reinvested in shares of the fund rather than
paid to the investor in cash. The formula for total return used by a fund is
prescribed by the SEC and includes three steps: (1) adding to the total number
of shares of the fund that would be purchased by a hypothetical $1,000
investment in the fund all additional shares that would have been purchased if
all dividends and distributions paid or distributed during the period had been
automatically reinvested; (2) calculating the redeemable value of the
hypothetical initial investment as of the end of the period by multiplying the
total number of shares owned at the end of the period by the net asset value per
share on the last trading day of the period; and (3) dividing this account value
for the
-12-
hypothetical investor by the amount of the initial investment, and annualizing
the result for periods of less than one year. Total return may be stated with or
without giving effect to any expense limitations in effect for a fund.
The following table reflects the average annual total return for the 1-,
3-, 5- and 10-year and since inception periods ending October 31, 2000 for each
Fund:
Fund(2) Acquiring Fund(3)
Total ------- ------- ------- ------- ------- -----------------
Return(1) Class A Class B Class C Class D Class R Common Advisor
- ------- ------- ------- ------- ------- ------- ------ -------
1-Year 5.31% 4.55% n/a 5.62% n/a 5.59% 5.33%
3-Year 4.44 3.70 n/a n/a n/a 4.30% 4.04%
5-Year 4.90 n/a n/a n/a n/a 5.87% n/a
10-Year 6.72 n/a n/a n/a n/a 7.84% n/a
Since Inception 6.82 4.15 n/a 3.72 n/a 7.36% 5.90%
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 cumulative total return of each Fund for the one-year,
three-year, five-year and ten-year periods and since inception would have
been lower.
(2) Inception Date February 22, 1996 for Class A, February 28, 1996 for Class
B, February 28, 2000 for Class C, April 30, 1999 for Class D and August 1,
2000 for Class R.
(3) Inception Date August 17, 1987 for Common Class and July 3, 1996 for
Advisor Class.
-13-
Share Ownership of the Funds
As of January 31, 2001 (the "Record Date"), the officers or Trustees of
the Fund and the Acquiring 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 Fund.
Name Percent Owned as of Record Date
---- -------------------------------
Common Advisor
Acquiring Fund
Charles Schwab & Co.* 34.95% 0.00%
National Financial Services Corp* 7.45% 0.00%
Salomon Smith Barney* 7.14% 0.00%
Transco & Co. FBO Intrust Bank* n/a 46.87%
BSBC Bank US FBO Transco
Retirement* n/a 42.81%
BSBC Bank US FBO Alliance
Automation* n/a 10.90%
Class A Class B Class C Class D Class R
Fund Shares Shares Shares Shares Shares
------------------------------------------------------------------
Louise M. Welch Trust* 6.73%
Tasia Cavas [___]
DLJ Management Group* 100.00%
Tr. Of Mark Mays - Mark Mays
Trustee* 28.12%
Heikki P. Malinen & Minna
Kujala-Malien 23.75%
DLJSC IRA FBO James F. Golden* 13.87%
Victor A. Chieco & Maria L.
Chieco* 13.79%
Hans K. Vandelden 13.55%
* Each Fund believes these entities are not the beneficial owners of shares
held of record by them.
-14-
Comparison Of Investment Objectives And Policies
The following discussion is based upon and qualified in its entirety by
the disclosures in the respective Prospectuses and Statements of Additional
Information of the Acquiring Fund and the Fund.
Investment Objectives. As stated above each Fund has a substantially
similar investment objective and strategy. There can be no assurance that either
Fund will achieve its investment objective.
Primary Investments. Each Fund seeks to achieve its investment objective
by investing in both domestic and foreign fixed income or debt securities. The
Fund will invest at least 80% of the value of its total assets in debt
securities, with at least 65% of its total assets invested in fixed income
securities. The Fund seeks to limit risk by selecting investment-grade debt
securities, with investments in the lowest investment-grade debt categories
limited to 25%. In addition, CSAM actively manages the maturities of securities
in the portfolio in response to the Adviser's anticipation of the movement of
interest rates and relative yields. Similarly, under normal market conditions,
the Acquiring Fund will invest at least 65% of its assets in investment-grade
fixed income securities, and may invest up to 35% of its assets in non-dollar
denominated foreign securities and up to 35% of its assets in fixed-income
securities rated below investment-grade. Under normal market conditions, the
Acquiring Fund will maintain a weighted average maturity of 10 years or less.
Investment Limitations. The Fund and the Acquiring Fund have adopted
certain fundamental and non-fundamental investment limitations. Fundamental
investment limitations may not be changed without the affirmative vote of the
holders of a majority of the relevant Fund's outstanding shares. Each Fund has
substantially similar fundamental investment limitations with respect to: making
loans; investing in a single industry; purchasing securities of any one issuer;
purchasing or selling real estate; purchasing securities on margin; and
purchasing or selling natural resources. The Funds also have fundamental
investment limitations with respect to: issuing senior securities, with the
Acquiring Fund permitted to issue senior securities consistent with its
investment limitations, and the Fund permitted to issue senior securities as
permitted under the 1940 Act; underwriting securities, with neither Fund
permitted to underwrite securities of other issuers except, in the case of the
Acquiring Fund, to the extent that investment in restricted securities and the
sale of securities in accordance with its investment objective, policies and
limitations may be deemed to be underwriting, and in the case of the Fund, under
circumstances where, if such securities were sold, the Fund or the Adviser might
be deemed to be an underwriter for purposes of the 1933 Act; borrowing, with the
Acquiring Fund and the Fund limited to 30% of total assets and 15% of total
assets (5% if for purposes other than meeting redemption requests),
respectively; and investing in investment companies, where neither Fund can
invest in investment companies generally, except that the Fund can invest in the
open market where no commission, other than a customary brokerage fee, is paid.
The Fund has additional fundamental investment limitations with respect to
purchasing options; mortgaging, pledging or hypothecating its assets; investing
in illiquid or restricted securities; and investing in the securities of any
issuer which has a record of less than three years of continuous operation. The
Acquiring Fund has additional fundamental investment limitations with respect to
investing in commodities; and making short sales of securities. The Acquiring
Fund has non-fundamental investment limitations with respect to investing more
than 10% of its total assets in warrants; investing more than 35% of its total
assets in non-investment grade debt; investing more than 20% of its total assets
in when-issued securities and forward commitments; restricted or illiquid
securities; making additional investments if the Fund has borrowings in excess
of 5% of its net assets and pledging, mortgaging or hypothecating its assets.
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
-15-
Fund's Prospectus(es), which accompany this Prospectus/Proxy Statement, and for
the Fund in the Fund's Prospectus.
Key to Table:
/x/ Permitted without limitation; does not indicate actual use
20% Italic type (e.g., 20%) represents an investment limitation as a
percentage of net fund assets; does not indicate actual use
20% Roman type (e.g. 20%) represents an investment limitation as a
percentage of total fund assets; does not indicate actual use
/ / Permitted, but not expected to be used to a significant extent
-- Not permitted
- ---------------------------------------------------------------------------------------------
Investment Practice Limit
- ---------------------------------------------------------------------------------------------
Acquiring
Fund Fund
---------------- ----------------
Borrowing. The borrowing of money from banks to meet 30% 15%
redemptions or for other temporary or emergency purposes. Borrowing for
Speculative exposure risk. purposes other
than meeting
redemptions
limited to 5% of
total assets
less liabilities
(does not apply
to reverse
repurchase
agreements)
Company. Limits on purchasing securities of any one 5% total assets 5% total assets
issuer. Liquidity, market, operational risks. 10% of issuer's 10% of issuer(3)
voting securities(3)
Convertible securities. Bond or preferred stock /x/ /x/
convertible to common stock of an issuer. Correlation, Limited to 35%
credit, hedged exposure, liquidity, market, speculative below investment-
exposure risks. grade foreign
convertible
securities
Currency transactions. Instruments, such as options, /x/ --
futures or forwards, intended to manage fund exposure to
currency risk. Options, futures or forwards involve the
right or obligation to buy or sell a given amount of
foreign currency at a specified price and future date.(1)
Correlation, credit, currency, hedged
-16-
- ---------------------------------------------------------------------------------------------
Investment Practice Limit
- ---------------------------------------------------------------------------------------------
Acquiring
Fund Fund
---------------- ----------------
exposure, liquidity, political, speculative exposure,
valuation risks.
Emerging markets. Countries generally considered to be 35% --
relatively less developed or industrialized. Emerging
markets often face economic problems that could subject a
fund to increased volatility or substantial declines in
value. Deficiencies in regulatory oversight, market
infrastructure, shareholder protections and company laws
could expose a fund to risks beyond those generally
encountered in developed countries. Access, currency,
information, liquidity, market, operational, political,
valuation risks.
Futures and options on futures. Exchange-traded / / --
contracts that enable a fund to hedge against or
speculate on future changes in currency values, interest
rates or stock indexes. Futures obligate the fund (or
give it the right, in the case of options) to receive or
make payment at a specific future time based on those
future changes.(1) Correlation, currency, hedged
exposure, interest-rate, market, speculative exposure
risks.(2)
Foreign securities. Securities of foreign issuers. May /x/ /x/
include depositary receipts. Currency, information,
liquidity, market, political, valuation risks.
Investment companies. Investments in other investment 10% / /
companies. Market, liquidity, operational risks.
Limited to 5% in Only by purchase
any one company in open market
and 3% of where no
acquired commission or
investment profit to a
company except sponsor or
in conjunction dealer results
with merger, other than
acquisition or customary
consolidation broker's
commission or in
merger,
acquisition or
consolidation
Investment-grade debt securities. Debt securities rated /x/ /x/
within the four highest grades (AAA/Aaa through BBB/Baa)
by Standard & Poor's or Moody's rating service, and Investments in
unrated securities of comparable quality. Credit, BBB/Baa grade
interest-rate, market risks. debt limited to
25% of Fund's
total assets
-17-
- ---------------------------------------------------------------------------------------------
Investment Practice Limit
- ---------------------------------------------------------------------------------------------
Acquiring
Fund Fund
---------------- ----------------
Mortgage-backed and asset-backed securities. Debt /x/ --
securities backed by pools of mortgages, including
pass-through certificates and other senior classes of
collateralized mortgage obligations (CMOs), or other
receivables. Credit, extension, interest-rate, liquidity,
prepayment risks.
Municipal securities Debt obligations issued by or on /x/ /x/
behalf of states, territories and possessions of the U.S.
and the District of Columbia and their political
subdivisions, agencies and instrumentalities. Municipal
securities may be affected by uncertainties regarding
their tax status, legislative changes or rights of
municipal-securities holders. Credit, interest-rate,
market, regulatory risks.
Non-Convertible Preferred Stock. Credit, interest-rate, 15% 5%
readily liquidity, market, valuation risks
if not readily if not readily
marketable marketable
Non-investment-grade debt securities. Debt securities and 35% --
convertible securities rated below the fourth-highest
grade (BBB/Baa) by Standard & Poor's or Moody's
rating service, and unrated securities of comparable quality.
Commonly referred to as junk bonds. Credit, information,
interest-rate, liquidity, market, valuation risks.
Options. Instruments that provide a right to buy (call) 25% --
or sell (put) a particular security or an index of
securities at a fixed price within a certain time period.
A fund may purchase and write both put and call options
for hedging or speculative purposes.(1) Correlation, credit,
hedged exposure, liquidity, market, speculative exposure
risks.
Real Estate Investment Trusts (REITs). Pooled investment / / / /
vehicles that invest primarily in income-producing real
estate or real-estate-related loans or interests. Credit,
interest rate, market risks.
Restricted and other illiquid securities. Securities with 15% 10%
restrictions on trading, or those not actively traded.
May include private placements. Liquidity, market,
valuation risks.
Securities lending. Lending portfolio securities to 33 1/3% 25%
financial institutions; a fund receives cash, U.S.
government securities or bank letters of credit as
collateral. Credit, liquidity, market, operational risks.
Short sales "against the box". A short sale where the 10% 10%
fund owns enough shares of the security involved to cover
the borrowed securities, if necessary. Liquidity, market,
speculative
-18-
- ---------------------------------------------------------------------------------------------
Investment Practice Limit
- ---------------------------------------------------------------------------------------------
Acquiring
Fund Fund
---------------- ----------------
exposure risks.
Single industry. Companies within a single industry. 25% 25%
Correlation, market, operational risks.
Start-up and other small companies. Companies with small /x/ 10%
relative market capitalizations, including those with
continuous operations of less than three years.
Information, liquidity, market, valuation risks.
Structured instruments. Swaps, structured securities and / / --
other instruments that allow a fund to gain access to the
performance of a benchmark asset (such as an index or
selected stocks) that may be more attractive or
accessible than the fund's direct investment. Credit,
currency, information, interest-rate, liquidity, market,
political, speculative exposure, valuation risks.
Temporary defensive tactics. Placing some or all of a / / / /
fund's assets in investments such as money-market
obligations and investment-grade debt securities for
defensive purposes. Although intended to avoid losses in
adverse market, economic, political or other conditions,
defensive tactics might be inconsistent with a fund's
principal investment strategies and might prevent a fund
from achieving its goal.
Warrants. Options issued by a company granting the holder 10% 5% pursuant to
the right to buy certain securities, generally common undertaking with
stock, at a specified price and usually for a limited States (only 2%
time. Liquidity, market, speculative exposure risks. can be in
non-NYSE or ASE
warrants)
When-issued securities and forward commitments. The 20% /x/
purchase or sale of securities for delivery at a future
date; market value may change before delivery. Liquidity,
market, speculative exposure risks.
Zero-coupon bonds. Debt securities that pay no cash /x/ / /
income to holders until maturity and are issued at a
discount from maturity value. At maturity, the entire
return comes from the difference between purchase price
and maturity value. Interest rate, market 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.
-19-
(3) Up to 25% of the Fund's assets may be invested without regard to such
limitation.
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 New York Stock Exchange ("NYSE") (usually
4 p.m. Eastern Time) each day the NYSE is open for business. It is calculated by
dividing a Class's 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 specific persons at CSAM who are responsible for the
day-to-day management of the Acquiring Fund are described in the Prospectus(es)
of the Acquiring Fund, which accompany this Prospectus/Proxy Statement.)
In addition, PFPC Inc. ("PFPC") and CSAMSI provide accounting and
co-administrative services as applicable to the Acquiring Fund. PFPC and CSAMSI
provide certain financial administration, accounting, administrative, personnel
and other services necessary to operate the Acquiring Fund. CSAMSI has served as
distributor of the Acquiring Fund prior to January 3, 2000 and since August 1,
2000 and will continue to provide distribution services following the
Acquisition. Provident Distributors, Inc. served as distributor of the Acquiring
Fund from January 3 to August 1, 2000. State Street Bank and the Trust Company
("State Street") is the shareholder servicing agent, transfer agent and dividend
disbursing agent for the Acquiring Fund. Brown Brothers Harriman & Co. is the
custodian for the Acquiring Fund. PricewaterhouseCoopers LLP serves as auditor
for the Acquiring Fund. Citibank, N.A. is the custodian for the Fund. PFPC
serves as transfer agent to the Fund. The Fund's auditor is Ernst & Young LLP.
The Fund pays a management fee to CSAM of 0.50% of average daily net
assets. In addition to the management fee, the Acquiring Fund pays a
co-administration fee to CSAMSI of .10% of average daily net assets while the
Fund does not currently pay its administrator, CSAM, for administrative
services. CSAM and CSAMSI have, however, agreed to waive their respective fees
as described below. The Acquiring Fund pays PFPC a fee calculated at an annual
rate of .05% of its average daily net assets and exclusive of out-of-pocket
expenses. Importantly, the distribution fee for Class B shares of the Fund would
decrease following the Acquisition and would not change for Class A, Class D and
Class R shares of the Fund. 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 average
annual expense ratio of each class of the Acquiring Fund at the lower of (i) in
the case of the Common Class, the average annualized expense ratio of Class D
shares of the Fund and the average annualized expense ratio of the Common Class
and (ii) in the case of the Advisor Class, the average annualized expense ratio
of Class A shares, Class B shares and Class R shares of the Fund and
-20-
the average annualized expense ratio of the Advisor Class, in each case measured
over the 60 day period ended on the Closing Date.
Interest of CSAM in the Acquisition
CSAM may be deemed to have an interest in the Plan and the Acquisition
because it provides investment advisory services to each Fund. CSAM receives
compensation from each Fund for services it provides pursuant to separate
advisory agreements which, in the case of the Fund, is an interim agreement.
Whether or not shareholders of the Fund approve the Plan, shareholders of the
Fund are being asked to approve a new investment advisory agreement with CSAM.
See Proposal Number 2 for additional information regarding approval of a new
investment advisory agreement for the Fund. 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 Fund (see
"Information About the Acquisition -- Share Ownership of the Fund" above). CSAM
and its affiliates have advised the Fund that they intend to vote the shares
over which they have voting power at the Meeting, 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. See "Voting Information."
CSAM may also be deemed to have an interest in the Plan and Acquisition
because its affiliate, CSAMSI, serves as the co-administrator and distributor
for the Acquiring Fund and as distributor for the 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 Fund is a series of a Massachusetts business
trust, governed by its Agreement and Declaration of Trust, dated February 22,
1996, By-Laws and Board of Trustees. The Acquiring Fund is a Massachusetts
business trust organized on January 20, 1987, and is governed by its Agreement
and Declaration of Trust, By-Laws and Board of Trustees. Each Fund is also
governed by applicable state and federal law. The Acquiring Fund has an
unlimited number of transferable shares with a par value of $.001 per share. The
Fund has an unlimited number of transferable shares of beneficial interest with
par value of $.01 per share. 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.
Multi-Class Structure. Each Fund is authorized to offer multiple classes.
The Fund offers Class A, B, C, D and R shares, of which no Class C shares are
currently outstanding. The Acquiring Fund expects to continue to offer shares of
its Common Class and Advisor Class following the Acquisition.
Trustees/Directors. The Agreement and Declaration of Trust of each of the
Fund and the Acquiring Fund provide that the term of office of each Trustee,
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 Fund, the Trustees have the power to set and alter their terms
of office, and at any time
-21-
to lengthen or shorten their own terms or make their terms of unlimited
duration. Any Trustee of either Fund may be removed by vote of shareholders
holding not less than two-thirds of the outstanding shares or by a written
declaration signed by shareholders holding not less than two-thirds of the
outstanding shares and, in the case of the Acquiring Fund, filed with the
Trust's Custodian. Vacancies on the Boards of either Fund may be filled by the
Trustees remaining in office, provided that no vacancy or vacancies may be
filled by action of the remaining Trustees if, after the filling of the vacancy
or vacancies, fewer than two-thirds of the Trustees 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 whenever (a)
fewer than a majority of the Trustees 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 and must be filled such as, in the case where no
Trustees are in office and a vacancy needs to 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 unless and until such time as less than a majority of the Trustees of
the relevant Fund holding office have been elected by shareholders or a vacancy
exists that may not be filled by the remaining Trustees. At such times, the
Trustees then in office will call a shareholders' meeting for the election of
Trustees.
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, the excess of the assets over the
liabilities belonging to such Fund. In the case of the Fund, 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. In the case of the Acquiring Fund, the assets so distributable shall
be allocated among the Classes in proportion to the respective aggregate net
asset value of the outstanding Shares thereof, and shall be distributed to the
shareholders of each such Class in proportion to the number of Shares of that
class held by them and recorded on the books of the Trust.
Liability of Trustees. The Agreement and Declaration of Trust of the Fund
provides that its Trustees and officers shall not be liable for monetary damages
for breach of fiduciary duty as a Trustee or officer, except for willful
misfeasance, bad faith, gross negligence or reckless disregard of duties on the
part of such Trustee or officer. The Agreement and Declaration of Trust of the
Acquiring Fund provides that no Trustee, officer, employee or agent of the Trust
shall be subject to any personal liability whatsoever in tort, contract, or
otherwise, to any other person or persons in connection with the assets or
affairs of the Acquiring Fund, save only that arising from his own willful
misfeasance, bad faith, gross negligence or reckless disregard of the duties
involved in the conduct of his office or the discharge of his functions. The
constituent instruments of each Fund provide that the relevant Fund shall
indemnify each Trustee and officer and permit advances for the payment of
expenses relating to the matter for which indemnification is sought, except if
such Trustee or officer (i) did not act in good faith in the reasonable belief
that such Trustee's or officer's action was in or not opposed to the best
interests of the Fund or (ii) had acted with willful misfeasance, bad faith,
gross negligence or reckless disregard of the duties involved in the conduct of
such Trustee's or officer's office. Pursuant to the Plan, the Acquiring Fund
extends the protection it offers to its current Trustees and officers to the
Trustees and officers of the Fund for liability relating to the Acquisition. In
addition, CSAM has undertaken to obtain and pay the cost of a rider to the
Fund's Directors and Officers liability policy to extend the coverage under such
policy to three years after the Closing Date.
Rights of Inspection. 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. Massachusetts law provides that shareholders of the
Fund or the Acquiring Fund could, under certain circumstances, be held
personally liable for the obligation of such Fund. However, the Agreement and
Declaration of Trust of the Fund disclaims shareholder liability for
-22-
acts or obligations of such 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 Agreement and Declaration of Trust of the Acquiring
Fund provides that the Acquiring Fund shall assume the defense against the
charges and satisfy the judgment thereon, for any shareholder of the Acquiring
Fund, charged or held personally liable for any obligation or liability of the
Acquiring Fund solely by reason of being or having been a shareholder and not
because of such shareholder's acts or omissions or for some other reason. The
Agreements and Declarations of Trust of the Funds provide for indemnification
from such 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 Fund would be unable to meet its obligations. Upon payment of any
liability incurred by a Fund, the shareholder paying the liability will be
entitled to reimbursement from the general assets of such Fund.
The foregoing is only a summary of certain characteristics of the
operations of the Acquiring Fund and the Fund. The foregoing is not a complete
description of the documents cited. Shareholders should refer to the provisions
of the trust documents and state laws governing each Fund for a more
thorough description.
Conclusion
The Plan was approved by the Board of Trustees of the Fund on December 18,
2000 and by the Board of Trustees of the Acquiring Fund on December 21, 2000.
The Boards of each Fund determined that the Acquisition is in the best interests
of shareholders of their respective Fund and that the interests of existing
shareholders of the Fund and the Acquiring Fund would not be diluted as a result
of the Acquisition. If the shareholders of the Fund do not approve the Plan or
if the Acquisition is not completed, the Fund will continue to engage in
business as a series of a registered investment company and the Board of the
Fund will consider other possible courses of action available to it, including
resubmitting the Acquisition proposal to shareholders.
Required Vote
Approval of the Plan requires 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.
In the event that shareholder approval of the Plan is not obtained, the
Board of the Fund will consider other possible courses of action available to
it, including resubmitting the Acquisition proposal to shareholders.
THE BOARD OF TRUSTEES OF THE FUND, INCLUDING THE TRUSTEES WHO ARE
NOT "INTERESTED PERSONS" (AS THAT TERM IS DEFINED IN THE 1940
ACT) RECOMMENDS THAT YOU VOTE FOR PROPOSAL NUMBER 1.
-23-
PROPOSAL NUMBER 2 -
APPROVAL OF A NEW INVESTMENT ADVISORY AGREEMENT
As a result of the acquisition of Donaldson, Lufkin & Jenrette, Inc.
("DLJ") by Credit Suisse Group ("Credit Suisse"), shareholders of the Fund are
being asked to approve a new investment advisory agreement (the "New Investment
Advisory Agreement") with CSAM, a member of Credit Suisse Asset Management, the
institutional asset management and mutual fund arm of Credit Suisse and an
indirect wholly-owned U.S. subsidiary of Credit Suisse, in the event that the
Plan is not approved. The reason the Fund may require a new investment advisory
agreement is because on November 3, 2000, the date the acquisition of DLJ was
consummated, the then-existing investment advisory agreement for the Fund (the
"Previous Investment Advisory Agreement") terminated pursuant to the terms of
the Previous Investment Advisory Agreement.
In anticipation of the termination of the Previous Investment Advisory
Agreement, at a meeting held on October 26, 2000, the Board of Trustees,
including the Independent Trustees, unanimously approved an interim investment
advisory agreement for the Fund (the "Interim Investment Advisory Agreement")
containing substantially the same terms as the Previous Investment Advisory
Agreement between DLJ Asset Management Group, Inc. ("DLJAM" and, with CSAM, an
"Adviser") and the Fund. The Interim Investment Advisory Agreement terminates,
pursuant to its terms, upon the earlier of 150 days from November 3, 2000, which
is April 2, 2001 or the date of approval by the shareholders of a new investment
advisory agreement. See "The Previous and Interim Investment Advisory Agreement"
and "The New Investment Advisory Agreement."
The Board of Trustees, including a majority of the Independent Trustees,
recommend that shareholders approve the New Investment Advisory Agreement for
the Fund. A form of the New Investment Advisory Agreement is attached as Exhibit
B.
Information About DLJAM
Prior to the acquisition of DLJ, DLJAM was a wholly-owned subsidiary of
Donaldson, Lufkin & Jenrette Securities Corporation, the former distributor of
the Fund's shares, a wholly-owned subsidiary of DLJ, which was in turn an
independently operated, indirect subsidiary of AXA Financial, Inc. ("AXA
Financial"), a holding company controlled by AXA ("AXA"), a French insurance
holding company. DLJAM succeeded Wood, Struthers & Winthrop Management Corp.,
established in 1871 as a private concern to manage money for the Winthrop family
of Boston. Following the acquisition of DLJ, DLJAM was merged with Credit Suisse
Investment Corporation ("CSIC"), the parent company of CSAM. CSIC subsequently
changed its name to CSAM Americas Holding Corp. and CSIC contributed all of its
assets and liabilities, including its investment advisory agreements, to CSAM.
Prior to the acquisition of DLJ, CSAM managed $68 billion of the $198 billion in
total assets managed by Credit Suisse Asset Management globally. As a result of
the transfer of the assets and business of DLJAM to CSAM, CSAM manages more than
$100 billion in total assets in the U.S.
The Previous and Interim Investment Advisory Agreement
CSAM presently acts as the investment adviser to the Fund pursuant to the
Interim Investment Advisory Agreement. Prior to November 3, 2000, DLJAM served
as investment adviser to the Fund pursuant to the Previous Investment Advisory
Agreement, dated September 1, 1995, between the Fund and DLJAM. The Previous
Investment Advisory Agreement was last approved by the Fund's shareholders on
August 23, 1995. The Previous Investment Advisory Agreement was last approved
for continuance by the Board of Trustees at a meeting held on August 3, 2000.
The provisions of the Interim Investment Advisory Agreement and the Previous
Investment Advisory Agreement are substantially the
-24-
same, except for the identity of the parties, the commencement and termination
dates and the payment of fees. See "Service Provided" and "Fees" below.
Service Provided. Both the Previous Investment Advisory Agreement and the
Interim Investment Advisory Agreement provide that the Adviser is to manage the
investment and reinvestment of the Fund assets in accordance with the Fund's
investment objective and policies, make investment decisions for the Fund and
arrange for the purchase or sale of portfolio securities and other assets. In
addition, the Previous Investment Advisory Agreement and the Interim Investment
Advisory Agreement of the Fund specifies that the Adviser may provide and be
reimbursed for administrative services provided to the Fund, although the
Adviser has not sought such reimbursement from the Fund.
Under the Interim Investment Advisory Agreement, the Fund will pay
registration and filing fees to the Securities and Exchange Commission (the
"Commission") and state regulatory authorities. The Fund pays all other expenses
not assumed by CSAM, including the advisory fees, advertising and promotional
expenses pursuant to a 12b-1 plan, custody, transfer, and dividend disbursing
expenses, legal and auditing costs, fees and expenses of Trustees who are not
affiliated with CSAM, costs of printing prospectuses, statements of additional
information and shareholder reports to existing shareholders, costs of
maintenance of corporate existence, and interest charges, taxes, brokerage fees,
and commissions.
The Previous Investment Advisory Agreement and the Interim Investment
Advisory Agreement provide for termination at any time without penalty on sixty
days' prior written notice, or, in the case of the Interim Investment Advisory
Agreement, ten days, by a vote of the holders of a majority of the Fund's
outstanding voting securities or by a vote of a majority of the Board of
Trustees or by the Adviser on sixty days' prior written notice, and will
automatically terminate in the event of its assignment. The Previous Investment
Advisory Agreement and the Interim Investment Advisory Agreement provide that
the Adviser shall not be liable thereunder for any mistake of judgment or in any
event whatsoever. Notwithstanding any indemnification provision in the Previous
and the Interim Investment Advisory Agreements, the 1940 Act and the Investment
Advisers Act of 1940 limit the circumstances under which an investment adviser
may be indemnified.
The terms of the Previous Investment Advisory Agreement and the Interim
Investment Advisory Agreement permit the Adviser to serve as investment adviser
to other persons, firms or corporations, including other investment companies.
The Interim Investment Advisory Agreement was approved by the Board of
Trustees as a temporary measure to provide for continuity of management of the
Fund during and following the Acquisition. The Agreement will continue until the
earlier of April 2, 2001 or the approval of the New Investment Advisory
Agreement by the shareholders of the Fund, and thereupon will automatically
terminate for the Fund. See "The New Investment Advisory Agreement" below.
Fees. For the services provided and expenses borne by DLJAM under the
Previous Investment Advisory Agreement, DLJAM was paid a fee based on the
average daily and net assets of the Fund, as full compensation therefor, of
8.625 of 1% of the first $100,000,000 and 0.50 of 1% of the balance. The
aggregate amount paid for the fiscal year ended October 31, 2000 was $837,673.
For the same period DLJAM waived expenses of $188,370. For the period November
1, 2000 through October 31, 2001, DLJAM had undertaken in writing to reduce its
management fees and reimburse operating expenses in order to limit the total
operating expenses for the Fund to 0.95% for Class A shares, 1.70% for Class B
shares, 0.70% for Class D shares, and 0.95% for Class R shares through October
31, 2001, in each case, of the average daily net assets attributable to such
Class. CSAM has agreed to assume this undertaking for this period.
As required by Rule 15a-4(b)(2)(vi) of the 1940 Act, the Interim
Investment Advisory Agreement provides that advisory fees earned by CSAM with
respect to the Fund will be deposited into an interest-
-25-
bearing escrow account with Citibank, N.A., and will be paid to CSAM only if a
majority of the shareholders of the Fund approve a New Investment Advisory
Agreement for the Fund. If shareholders of the Fund do not approve a New
Investment Advisory Agreement, CSAM will receive as compensation or
reimbursement in respect of the Fund the lesser of: (i) the fee under such
Interim Investment Advisory Agreement; or (ii) the costs of providing services
during the term of such Interim Investment Advisory Agreement (plus, in each
case, interest earned on that amount while in escrow).
Brokerage Commissions
The Fund did not conduct any brokerage transactions through affiliated
broker-dealers of the Fund during the fiscal year ended October 31, 2000.
The New Investment Advisory Agreement
The following summary of the New Investment Advisory Agreement between the
Fund and CSAM is qualified in its entirety by reference to the form thereof
which is attached hereto as Exhibit B.
Service Provided. The terms of the New Investment Advisory Agreement are
substantially the same as the terms of the Previous and Interim Investment
Advisory Agreements in all material respects. The principal changes, which are
summarized below, largely reflect conforming changes that have been made to
promote consistency among the funds advised by CSAM and to permit ease of
administration. The principal changes are: (1) the identity of the parties and
(2) commencement and termination dates. The New Investment Advisory Agreement
also grants CSAM the authority to exercise voting rights with respect to
portfolio securities and to negotiate brokerage commissions on behalf of the
Fund. These rights were not expressly granted under the Previous and Interim
Investment Advisory Agreement.
It is proposed, subject to the approval of the Board of Trustees, that the
Fund retain Credit Suisse Asset Management Securities, Inc. ("CSAMSI") and an
outside administrator to be determined as co-administrators to the Fund at a
total rate not to exceed 0.20% of average daily net assets. Administrative
services have been provided by CSAM without charge. CSAM has undertaken to
continue to provide administrative services without additional fees should the
Board of Trustees not approve the co-administrator arrangement described above.
CSAM has agreed, in any event, to impose limits on the average annual expense
ratio of the Fund in two ways. First, CSAM has agreed to assume DLJAM's
undertaking to limit the Fund's average annual operating expenses until October
31, 2001. Second, CSAM has agreed in writing to limit average annual expenses
from the date of the acquisition of DLJ by Credit Suisse, November 3, 2000,
until November 3, 2002 to the annualized levels previously paid by the Fund
measured over the 60 day period ending on November 3, 2000. Consequently, it is
not anticipated that there will be any increase in the average annual operating
expense ratio of the Fund through November 3, 2002 due to the retention of
CSAMSI and the outside administrator as co-administrators. Consequently, the
Fund will not bear any additional cost through at least November 3, 2002 as a
result of the appointment of the co-administrators.
In addition, the New Investment Advisory Agreement would change the
provisions governing the use of the Adviser's name and expand such provisions to
permit certain uses of the name Credit Suisse. Pursuant to a License Agreement
among Warburg, Pincus & Co., Credit Suisse and other parties thereto, Credit
Suisse has been granted by Warburg, Pincus & Co. an exclusive license of the
rights to use and sublicense the names "Warburg Pincus" and derivations and
abbreviations thereof in the asset management sector of the financial services
industry (together, the "Warburg Marks"). Under the New Investment Advisory
Agreement, the Fund has the nonexclusive right to use one or more of the Warburg
Marks and the name "Credit Suisse" and derivations and abbreviations thereof
(together, the "CS Marks") as part of its name or the names of certain classes
of its shares, as applicable, and to use the Warburg
-26-
Marks and the CS Marks in the Fund's investment products and services. This
license continues only as long as the New Investment Advisory Agreement is in
place, and with respect to the Warburg Marks only as long as Credit Suisse
continues to be a licensee of the Warburg Marks as described above. As a
condition of the license, the Fund undertakes certain responsibilities and
agrees to certain restrictions, such as agreeing not to challenge the validity
of the Warburg Marks or the CS Marks or any ownership by Warburg, Pincus & Co.
of the Warburg Marks or Credit Suisse of the CS Marks, and the obligation to use
the names within commercially reasonable standards of quality. As part of the
acquisition of DLJ, CSAM has acquired all of DLJAM's rights to use the "DLJ"
name and any derivations and abbreviations thereof (the "DLJ Marks"). In the
event that the New Investment Advisory Agreement is terminated, the Fund must
not use a name likely to be confused with those associated with the Warburg
Marks, the CS Marks or the DLJ Marks.
If approved by the shareholders of the Fund, the New Investment Advisory
Agreement will continue in effect for the Fund for an initial two-year period,
and from year to year thereafter, subject to termination as hereinafter
provided, if such continuance is specifically approved at least annually (i) by
a vote of the holders of a majority of the outstanding voting securities of the
Fund (as defined in the 1940 Act) or by a vote of the Trustees, cast in person
at a meeting called for the purpose of voting on such approval, and (ii) by a
vote of a majority of Independent Trustees, cast in person at a meeting called
for the purpose of voting on such approval. The New Investment Advisory
Agreement, like the Previous Investment Advisory Agreement, will terminate
automatically upon their assignment and are terminable at any time without
penalty by a vote of the Trustees or by a vote of a majority of the outstanding
voting securities of the Fund (as defined in the 1940 Act) on 60 days' written
notice to CSAM and on 90 days' written notice to the Fund.
Fees. As compensation for services provided and the expenses borne by CSAM
under the New Investment Advisory Agreement, the Fund will pay CSAM the same
rate of fees as was paid to CSAM under the Interim Investment Advisory
Agreement. These fees, which are based upon a percentage of the Fund's average
daily net assets, are: 0.625 of 1% of the first $100,000,000 and 0.50 of 1% of
the balance. In addition, CSAM has agreed to assume DLJAM's obligation with
respect to the undertaking described above under "The Previous and Interim
Advisory Agreement - Fees".
The Board of Trustees has approved a change in the name of the Fund to
"Credit Suisse Warburg Pincus Fixed Income Fund." The change will become
effective upon the filing of appropriate documentation with the office of the
Secretary of State of the State of Massachusetts.
Information About CSAM
Information about CSAM, its managers and principal executive officers,
including those who are also officers of the Fund, its investment company
clients, its brokerage policies and the officers of CSAM, is presented in
Exhibit C.
Section 15(f)
Section 15(f) provides a non-exclusive safe harbor that permits an
investment adviser to an investment company or any affiliated persons to receive
any amount or benefit in connection with a "change in control" of the investment
adviser as long as two conditions are satisfied. First, an "unfair burden" must
not be imposed on investment company clients of the adviser as a result of the
transaction, or any express or implied terms, conditions or understandings
applicable to the transaction. The term "unfair burden" (as defined in the 1940
Act) includes any arrangement during the two-year period after the transaction
whereby the investment adviser (or predecessor or successor adviser), or any
"interested person" (as defined in the 1940 Act) of any such adviser, receives
or is entitled to receive any
-27-
compensation, directly or indirectly, from such an investment company or its
security holders (other than fees for bona fide investment advisory or other
services) or from any other person in connection with the purchase or sale of
securities or other property to, from or on behalf of such investment company.
The Board of the Fund has been advised that CSAM is aware of no circumstances
arising from the acquisition of DLJ that might result in an unfair burden being
imposed on the Fund.
The second condition of Section 15(f) is that during the three-year period
after the transaction, at least 75% of each such investment company's board of
trustees must not be "interested persons" (as defined in the 1940 Act) of the
investment adviser (or predecessor or successor adviser). Credit Suisse and each
of the other parties to the acquisition of DLJ have agreed to use their
reasonable best efforts to ensure compliance with Section 15(f) as it applies to
that acquisition during the applicable time periods.
Evaluation by the Board
The Trustees discussed the acquisition of DLJ and its implications for the
Fund at their meetings held on October 26, 2000 and December 18, 2000. The
Trustees received from representatives of CSAM (the "Representatives") such
information as the Trustees requested and as was reasonably necessary to
evaluate the terms of the Interim Investment Advisory Agreement and the proposed
New Investment Advisory Agreement.
During the October 26, 2000 meeting, the Trustees (including a majority of
the Independent Trustees), after evaluation and with the advice and assistance
of counsel, voted to approve the Interim Investment Advisory Agreement and, at
their meeting held on December 18, 2000, its New Investment Advisory Agreement
described above.
In determining whether it was appropriate to approve the New Investment
Advisory Agreement and to recommend approval to shareholders, the Board of the
Fund, including the Trustees who are not parties to the New Investment Advisory
Agreement or interested persons of such parties, considered various materials
and representations provided by CSAM, including information concerning
compensation arrangements to be implemented in connection with the acquisition
of DLJ, and considered a report provided by CSAM, and was advised by Fund
counsel with respect to these matters.
During their deliberations, the Trustees reviewed and discussed financial
and other information provided by the Representatives relating to CSAM. Among
other things, the Trustees considered the fact that CSAM is a significant and
sophisticated investment manager with substantial experience in providing
investment advisory and management services to investment companies, pension
funds and other institutional clients. The Trustees evaluated the management and
operations of CSAM and information provided by CSAM regarding the personnel
proposed to manage the Fund, the investment performance of CSAM, and the fact
that CSAM has stated that it has no current plan to change or to recommend that
the shareholders of the Fund change any of the Fund's policies or objectives in
any material respect. The Trustees also took into account the fact that CSAM has
stated its intention to continue to employ in the same capacity as employees of
CSAM, employees of DLJAM who were involved in the management of the Fund. CSAM
therefore expects to provide the Fund with a degree of continuity in portfolio
management; however, there can be no assurance that the investment professionals
previously employed by DLJAM and now employed by CSAM will continue to serve in
their current capacities. The Board of Trustees obtained assurances from the
Representatives that CSAM would provide satisfactory advisory and other services
to the Fund of a scope and quality at least equivalent, in the Trustees'
judgment, to the scope and quality of services previously provided to the Funds.
The Trustees also considered that CSAM would continue DLJAM's existing
undertaking to cap average annual expenses for the Fund for a two-year period
following the acquisition of DLJ by Credit Suisse. The Board believes that, like
the Previous Investment Advisory Agreement and the Interim Investment Advisory
Agreement, the New Investment
-28-
Advisory Agreement will enable the Fund to obtain appropriate services at a cost
that is reasonable and in the best interests of the Fund and its shareholders.
Accordingly, approval of the New Investment Advisory Agreement with CSAM should
have no immediate impact, other than as already noted above, on the management
of the Fund and the Fund should continue to receive the same quality of service.
The Board of Trustees further considered the nature and quality of the
administrative services currently provided by CSAM and also considered CSAM's
assurances that it and the external administrator would provide the same level
of administrative services to the Fund as it currently provides and that any
changes in the current arrangements with CSAM would be subject to Board
approval.
The Board of Trustees of the Fund, including the Independent Trustees,
recommend that the shareholders of the Fund approve the New Investment Advisory
Agreement.
Required Vote
In order to be approved by shareholders of the Fund, the New Investment
Advisory Agreement must be approved by the holders of a majority of the
outstanding voting securities of the Fund which is defined in the 1940 Act as
the lesser of (i) 67% of such shares present at the Meeting if the owners of
more than 50%, as the case may be, of the shares of the Fund then outstanding
are present in person or by proxy, or (ii) more than 50% of the outstanding
shares of the Fund, without regard to class.
In the event shareholder approval of the New Investment Advisory Agreement
is not obtained, the Trustees will take such action as they deem to be in the
best interests of the Fund and the Fund's shareholders.
THE BOARD OF TRUSTEES OF THE FUND, INCLUDING THE INDEPENDENT TRUSTEES,
RECOMMENDS THAT YOU VOTE FOR PROPOSAL NO. 2.
-29-
PROPOSAL NUMBER 3 -
ELECTION OF EIGHT TRUSTEES TO THE BOARD OF TRUSTEES
Shareholders will vote at the Meeting to elect eight Trustees for the
Board of Trustees of the DLJ Focus Funds. Each Trustee so elected will hold
office until the next meeting of shareholders and until his/her successor is
elected and qualifies, or until his/her term as Trustee is terminated as
provided in the Trust's Agreement and Declaration of Trust. If Proposal Number 1
is approved, there are not expected to be any future meetings of shareholders of
the Fund, as that approval would result in shareholders of the Fund becoming
shareholders of the Acquiring Fund, which has its own Board of Trustees. The
Fund's Agreement and Declaration of Trust provides that it will not be required
to hold meetings of shareholders if the election of Trustees is not required
under the 1940 Act. It is the present intention of the Board of Trustees of the
Fund not to hold annual meetings of shareholders unless such shareholder action
is required. Accordingly, Trustees elected at the Special Meeting will hold
office until the Fund is required by law to hold an election of Trustees and
successor Trustees are elected and qualify.
As nominees for election to the Board of Trustees of the Fund, the persons
named below have consented to be named in this Proxy Statement and to serve as
Trustees if elected. The Board of Trustees has no reason to believe that any
nominee will become unavailable for election as a Trustee, but if that should
occur before the Meeting, proxies will be voted for such other persons as the
Board of Trustees may recommend.
The Trustees and Officers of the Fund are listed below, together with
their respective positions, and a brief statement of their principal occupations
during the past five years and, in the case of Trustees, their positions with
certain international organizations and publicly held companies. As of December
__, 2000, the executive officers and Trustees of the Fund, as a group
beneficially owned 725,987.07 shares (0.55%) of the Fund.
The persons who have been nominated for election to serve as Trustee are:
Richard H. Francis, Jack W. Fritz, Jeffrey E. Garten, Peter F. Krogh, James S.
Pasman, William W. Priest, Steven N. Rappaport, and James P. McCaughan. Mr.
Krogh is a current member of the Board of Trustees.
These individuals were recommended by CSAM and, after consideration in
executive session, were nominated by those members of the present Board of
Trustees of the Fund who are not "interested persons" of the Fund, as defined in
the 1940 Act. The nominees for election, who are listed above, include six
persons who currently serve as trustees or directors of other funds advised by
CSAM. In order to achieve consistency among the Funds advised by CSAM, CSAM has
recommended that shareholder interests can more effectively be represented by a
single board with responsibility for overseeing substantially all of the CSAM
funds. CSAM also suggested that creation of a single, consolidated board should
also provide certain administrative efficiencies and potential future cost
savings for both the Fund and CSAM.
-30-
Name, Age, Position Principal Occupations Shares Beneficially Owned
with the Fund, and Address and Other Affiliations as of December ___, 2000*
-------------------------- ---------------------- -------------------------
G. Moffett Cochran** 49 President, Managing Director and Member 13,093
Chairman of the Board and of the Management Committee of CSAM;
President former Chairman of DLJAM, with which he
277 Park Avenue had been associated since
New York, NY 10172 prior to 1993; formerly Senior Vice
President with Bessemer Trust
Companies. Trustee of DLJ High Yield
Bond Fund. Trustee of DLJ Funds since
1994.
Robert E. Fischer ** 70 Partner at the law firm of Wolf, 4,182.68
Trustee Block, Schorr and Solis-Cohen LLP (or
250 Park Avenue, Suite 10000 its predecessor firm), since prior to
New York, NY 10107 1993. Trustee of DLJ High Yield Bond
Fund. Trustee of DLJ Funds since 1995.
Richard H. Francis 67 Currently retired; Executive Vice [ ]
Nominee for Trustee President and Chief Financial Officer
40 Grosvenor Road of Pan Am Corporation and Pan
Short Hills, NJ 07078 American World Airways, Inc. from
1988 to 1991; Director of the
Infinity Mutual Funds, BISYS Group
Incorporated; Director/Trustee of
other Warburg Pincus Funds and other
CSAM-advised investment companies.
Stig Host 73 Oil company executive; Member of the 52,729.26
Trustee Boards-International Energy Corp.,
The Corinthian, Suite 312 International Marine Sales, Inc.,
345 E. 37th Street Kriti Exploration Inc., Kriti
New York, NY 10016 Alliance International Fund, DLJ
Focus Funds, Alliance New Europe
Fund, Alliance All Asia Investment
Fund, Alexander Host Foundation,
American Scandinavian Foundation;
Trustee of DLJ High Yield Bond Fund.
Trustee of DLJ Funds since 1986.
Jack W. Fritz 72 Private investor; Consultant and [ ]
Nominee for Trustee Director of Fritz Broadcasting, Inc.
2425 North Fish Creek Road and Fritz Communications (developers
P.O. Box 483 and operators of radio stations);
Wilson, Wyoming 83014 Director of Advo, Inc. (direct mail
advertising); Director/Trustee of
other Warburg Pincus Funds.
-31-
Name, Age, Position Principal Occupations Shares Beneficially Owned
with the Fund, and Address and Other Affiliations as of December ___, 2000*
-------------------------- ---------------------- -------------------------
Jeffrey E. Garten 53 Dean of Yale School of Management and [ ]
Nominee for Trustee William S. Beinecke Professor in the
Box 208200 Practice of International Trade and
New Haven, CT 06520-8200 Finance; Undersecretary of Commerce
for International Trade from November
1993 to October 1995; Professor at
Columbia University from September
1992 to November 1993; Director of
Aetna, Inc.; Director/Trustee of
other Warburg Pincus Funds.
Martin Jaffe** 53 Chief Financial Officer, Managing 32,739.335
Trustee, Vice President, Director and Member of the Management
Secretary & Treasurer Committee of CSAM; former Chief
277 Park Avenue Operating Officer of DLJAM, with
New York, NY 10172 which he had been associated since
prior to 1993. Trustee of DLJ High
Yield Bond Fund. Trustee of DLJ
Funds since 1995.
Wilmot H. Kidd, III 58 President of Central Securities 1,134.342
Trustee Corporation, since prior to 1993.
375 Park Avenue Trustee of DLJ High Yield Bond Fund.
New York, NY 10112 Trustee of DLJ Funds since 1995.
Peter F. Krogh 63 Dean Emeritus and Distinguished 2,240.912
Trustee /Nominee for Trustee Professor of International Affairs at
301 ICC the Edmund A. Walsh School of Foreign
Georgetown University Service, Georgetown University;
Washington, DC 20057 Moderator of PBS foreign affairs
television series; Member of Board of
The Carlisle Companies Inc. Member
of Selection Committee for Harry
Truman Scholars and Henry Luce
Scholars. Senior Associate of Center
for Strategic and International
Studies; Trustee of numerous world
affairs organizations and DLJ High
Yield Bond Fund. Trustee of DLJ
Funds since 1986.
-32-
Name, Age, Position Principal Occupations Shares Beneficially Owned
with the Fund, and Address and Other Affiliations as of December ___, 2000*
-------------------------- ---------------------- -------------------------
James P. McCaughan __ Chief Executive Officer, Managing [ ]
Nominee for Trustee Director and Chairman of the
c/o CSAM Management Committee of CSAM;
466 Lexington Avenue President and Chief Operating Officer
New York, NY 10017 of Oppenheimer Capital from [_____];
President and Chief Executive Officer
of UBS Asset Management (New York)
from __ to ___; President, UBS
International Investment from __ to
__; Fellow, English Institute of
Actuaries.
James S. Pasman, Jr. 70 Currently retired; President and [ ]
Nominee for Trustee Chief Operating Officer of National
29 The Trillium InterGroup, Inc. from April 1989 to
Pittsburgh, PA 15238 March 1991; Chairman of Permian Oil
Co. from April 1989 to March 1991;
Director of Education Management
Corp., Tyco International Ltd.;
Trustee, BT Insurance Funds Trust;
Director/Trustee of other Warburg
Pincus Funds and other CSAM-advised
investment companies.
William W. Priest** 58 Chairman and Managing Director of [ ]
Nominee for Trustee CSAM since 2000; Chief Executive
c/o CSAM Officer and Managing Director of CSAM
466 Lexington Avenue from 1990 to 2000; Director/Trustee
New York, NY 10017 of other Warburg Pincus Funds and
other CSAM-advised investment
companies.
John J. Sheehan 69 Owns own consulting firm; Former 14,297.318
Trustee President and CEO of National
4 Bennington Place Computer Analysts, Inc., Principal
Newtown, PA 18940 Negotiator for NCA, Director of
National Accounts for large Financial
Institutions Group. Trustee of DLJ
High Yield Bond Fund. Trustee of DLJ
Funds since 1972.
-33-
Name, Age, Position Principal Occupations Shares Beneficially Owned
with the Fund, and Address and Other Affiliations as of December ___, 2000*
-------------------------- ---------------------- -------------------------
Steven N. Rappaport 51 President of Loanet, Inc. since 1997; [ ]
Nominee for Trustee Executive Vice President of Loanet,
Loanet, Inc. Inc. from 1994 to 1997; Director,
40 East 52nd Street President, North American Operations,
New York, NY 10022 and former Executive Vice President
from 1992 to 1993 of Worldwide
Operations of Metallurg Inc.;
Executive Vice President, Telerate,
Inc. from 1987 to 1992; Partner in
the law firm of Hartman & Craven
until 1987; Director/Trustee of other
Warburg Pincus Funds and other
CSAM-advised investment companies.
Richard J. Hanlon 34 Director of CSAM; previously Senior Vice 0
Vice President President of DLJAM, with which he had
277 Park Avenue been associated since 1994.
New York, NY 10172 Prior to his becoming associated with
DLJ Mutual Funds and the Adviser, Mr.
Hanlon was a portfolio manager at
Manufacturers Hanover/Chemical Bank.
Cathy A. Jameson 46 Managing Director of CSAM; previously 7,362.610
Vice President Managing Director of DLJAM with which
277 Park Avenue she had been associated since prior
New York, NY 10172 to 1993.
Brian A. Kammerer 43 Director of CSAM; previously Senior 1,754.735
Vice President Vice President of DLJAM with which he
277 Park Avenue had been associated since prior to
New York, NY 10172 1993.
Marybeth B. Leithead 37 Director of CSAM; previously Senior 1,375.533
Vice President Vice President of DLJAM, with which
277 Park Avenue she had been associated since 1993.
New York, NY 10172
Hugh M. Neuburger 56 Managing Director of CSAM; previously 1166.326
Vice President Managing Director of DLJAM, with
277 Park Avenue which he had been associated since
New York, NY 10172 March 1995. Prior to his association
with DLJ Winthrop Focus Funds and the
Adviser, Mr. Neuburger was the
President of Hugh M. Neuburger, Inc.,
a consulting firm.
-34-
Name, Age, Position Principal Occupations Shares Beneficially Owned
with the Fund, and Address and Other Affiliations as of December ___, 2000*
-------------------------- ---------------------- -------------------------
Roger W. Vogel 43 Managing Director of CSAM; previously 7,745.567
Vice President Managing Director of DLJAM, a
277 Park Avenue position he held since July 1993.
New York, NY 10172
- ----------
* This information has been furnished by each Trustee and Officer.
** "Interested" Trustee within the meaning of the 1940 Act. Mr. Cochran and
Mr. Jaffe are "interested" Trustees because of their affiliation with
CSAM, which acts as the Fund's investment adviser. If elected, Mr. Priest
and Mr. McCaughan each will be an "interested" Trustee because of his
affiliation with CSAM, which acts as the Fund's investment adviser.
There were four regular meetings and two special meetings of the Board of
Trustees of DLJ Focus Funds held during the fiscal year ended October 31, 2000.
Aggregate fees and expenses paid to the Board of Trustees for the fiscal year
ended October 31, 2000 were $32,500 for DLJ Opportunity Funds, $57,000 for the
DLJ Focus Funds, $16,500 for the DLJ Select Funds and $32,500 for the DLJ High
Yield Bond Fund.
The Board of Trustees has an Audit Committee. The Audit Committee makes
recommendations to its full Board of Trustees with respect to the engagement of
independent auditors and reviews with the independent auditors the plan and
results of the audit engagement and matters having a material effect on the
Fund's financial operations. The members of the Audit Committee are Messrs.
Fischer, Host, Kidd, Krogh and Sheehan. Each member of the Audit Committee is a
"non-interested" Trustee. The Audit Committee met two times during the fiscal
year ended October 31, 2000. The Board of Trustees has an Executive Committee
consisting of Messrs. Cochran and Jaffe. The Executive Committee is authorized
to act for the entire Board between meetings thereof, to the extent permitted
under the Agreement and Declaration of Trust and applicable law. The Executive
Committee did not meet during the fiscal year ended October 31, 2000.
The Board of Trustees does not have a Nominating Committee.
The following table sets forth certain information regarding the
compensation of the Fund's Trustees for the fiscal year ended October 31, 2000.
No persons (other than the Trustees who are not "interested" within the meaning
of the 1940 Act, as set forth below) currently receive compensation from the
Fund for acting as a Trustee or Officer. Trustees and executive officers of the
Fund do not receive pension or retirement benefits from the Fund. Trustees
receive reimbursement for travel and other out-of-pocket expenses incurred in
connection with board meetings.
-35-
COMPENSATION TABLE
for the
Fiscal Year Ended October 31, 2000
Aggregate Compensation Total Compensation from Fund
Name of Person and Position From the Fund and Fund Complex Paid to Trustees
--------------------------- ------------- ---------------------------------
G. Moffett Cochran*
Chairman of the Board
DLJ Focus Funds $0 $0
Robert E. Fischer, Trustee
DLJ Focus Funds $6,250 $32,500
Stig Host, Trustee
DLJ Focus Funds $11,250 $22,000
Martin Jaffe, Trustee*
DLJ Focus Funds $0 $0
Wilmot H. Kidd III, Trustee
DLJ Focus Funds $6,250 $32,500
Peter F. Krogh, Trustee
DLJ Focus Funds $11,250 $22,000
John J. Sheehan, Trustee
DLJ Focus Funds $10,250 $19,000
Robert Bast, Former Trustee
DLJ Focus Funds $4,000 $4,000
Dennis Little, Former Trustee
DLJ Focus Funds $4,000 $4,000
William H. Mathers, Former Trustee
DLJ Focus Funds $4,500 $4,500
William C. Simpson, Former Trustee
DLJ Focus Funds $2,000 $2,000
Stephen K. West, Former Trustee
DLJ Focus Funds $0 $0
Independent Trustees are not eligible for retirement benefits or other
payments upon their retirement from the Board of Trustees. A one-time benefit
payment of $50,000 is being made by CSAM to
- ----------
* "Intersted" Trustees.
-36-
each Trustee who has agreed to leave the Board prior to the time he would have
otherwise retired in order to facilitate the nomination of a consolidated Board
for all funds managed by CSAM.
As of October 31, 2000, the Fund Complex consisted of three open-end
investment companies (DLJ Focus Funds, DLJ Opportunity Funds and DLJ Select
Funds) with a total of 12 series and one closed-end investment company (DLJ High
Yield Bond Fund).
Required Vote
In the election of the Trustees of the DLJ Focus Funds, the candidates
receiving a plurality of the votes cast at the Meeting in person or by proxy
without regard to class or series, if a quorum is present, shall be elected.
THE BOARD OF TRUSTEES OF THE FUND RECOMMENDS THAT
YOU VOTE FOR PROPOSAL NO. 3.
-37-
ADDITIONAL INFORMATION
The Acquiring Fund and the Fund are each subject to the informational
requirements of the 1934 Act and the 1940 Act and in accordance therewith file
reports and other information including proxy material, reports and charter
documents, with the SEC. These materials can be inspected and copies obtained at
the Public Reference Facilities maintained by the SEC at 450 Fifth Street, N.W.,
Washington, D.C. 20549 and at the New York Regional Office of the SEC at 7 World
Trade Center, Suite 1300, New York, New York 10048. Copies of such material can
also be obtained from the Public Reference Branch, Office of Consumer Affairs
and Information Services, SEC, Washington, D.C. 20549 at prescribed rates. The
Prospectuses and the Statement of Additional Information for the Acquiring Fund,
along with related information, may be found on the SEC website as well
(http://www.sec.gov).
VOTING INFORMATION
This Prospectus/Proxy Statement is furnished in connection with a
solicitation of proxies by the Board of Trustees of the Fund to be used at the
Special Meeting of Shareholders of the Fund to be held at [10:00 a.m.] on March
23, 2001, at the offices of the Fund, 277 Park Avenue, New York, New York 10172
and at any adjournment(s) thereof. This Prospectus/Proxy Statement, along with a
Notice of the Meeting and proxy card(s), is first being mailed to shareholders
of the Fund on or about February 1, 2001. Only shareholders of record as of the
close of business on January 31, 2000 will be entitled to notice of, and to vote
at, the Special Meeting or any adjournment thereof. As of January 31, 2000, the
Fund had the following shares outstanding and entitled to vote: ___________. For
Proposal Number 1 and Number 2, the holders of a majority of the shares of the
Fund outstanding at the close of business on January 31, 2000 present in person
or represented by proxy will constitute a quorum for the Special Meeting of the
Fund. For Proposal Number 3, the holders of a majority of the shares of the DLJ
Focus Funds outstanding at the close of business on January 31, 2000 present in
person or represented by proxy will constitute a quorum for the Special Meeting
of the Fund. The total number of shares of the DLJ Focus Funds entitled to vote
on Proposal Number 3, including shares of the Fund is: ________. For purposes of
determining a quorum for transacting business at the Special Meeting,
abstentions and broker "non-votes" (that is, proxies from brokers or nominees
indicating that such persons have not received instructions from the beneficial
owner or other persons entitled to vote shares on a particular matter with
respect to which the brokers or nominees do not have discretionary power) will
be treated as shares that are present but which have not been voted. For this
reason, abstentions and broker non-votes will have the effect of a vote against
the Plan for purposes of obtaining the requisite approval of the Plan because
they are not affirmative votes. Abstentions and broker non-votes will have a
similar effect on the outcome of Proposal Number 2, but will not affect the
outcome of Proposal Number 3. If the enclosed proxy is properly executed and
returned in time to be voted at the Special Meeting, the proxies named therein
will vote the shares represented by the proxy in accordance with the
instructions marked thereon. Executed, but unmarked proxies (i.e., executed
proxies in which there is no indication of the shareholder's voting
instructions) will be voted FOR approval of the Plan, FOR approval of the New
Investment Advisory Agreement, FOR the election of Trustees and FOR approval of
any other matters deemed appropriate. A proxy may be revoked at any time on or
before the Special Meeting by the subsequent execution and submission of a
revised proxy, by written notice to Martin Jaffe, Secretary of the Fund, 277
Park Avenue, New York, New York 10172 or by voting in person at the Special
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 Fund and expenses
-38-
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 the Special Meeting
is not present or sufficient votes to approve any proposal are not received
prior to 10:00 a.m. on March 23, 2001, the persons named as proxies may propose
one or more adjournments of the Special 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
Special Meeting will be effective irrespective of any adjournments with respect
to any other proposal. In determining whether to adjourn the Special Meeting,
the following factors may be considered: the percentage of votes actually cast,
the percentage of negative votes actually cast, the nature of any further
solicitation and the information to be provided to shareholders with respect to
the reasons for the solicitation. Any such adjournment will require an
affirmative vote by the holders of a majority of the shares of the Fund present
in person or by proxy and entitled to vote at the Special Meeting. The persons
named as proxies will vote upon a decision to adjourn the Special Meeting after
consideration of the best interests of all shareholders of the Fund.
As of January 31, 2000, CSAM (or its affiliates) possessed or shared
voting power or investment power as a fiduciary on behalf of its customers, with
respect to the Fund as set forth above under "Proposal Number 1 - Information
About the Acquisition -- Share Ownership of the Fund." CSAM and its affiliates
have advised the 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 Trustees knows of no other business to be brought before the
Special Meeting. However, if any other matters come before the Special Meeting,
proxies that do not contain specific restrictions to the contrary will be voted
on such matters in accordance with the judgment of the persons named in the
enclosed Proxy Card(s).
The approval of shareholders of the Acquiring Fund is not required in
order to affect the Acquisition and, accordingly, the votes of the shareholders
of the Acquiring Fund are not being solicited by this Prospectus/Proxy
Statement.
FINANCIAL STATEMENTS AND EXPERTS
The audited statement of Assets and Liabilities of the Fund and the
Statement of Net Assets Acquiring Fund, including their respective schedules of
portfolio investments, as of October 31, 2000, 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, or share class, has been in existence) in the period then ended, have been
incorporated by reference into this Prospectus/Proxy Statement in reliance upon
the reports of Ernst & Young LLP, in the case of the Fund, and
PricewaterhouseCoopers LLP, in the case of the Acquiring Fund, independent
accountants, given on the authority of such firm as experts in accounting and
auditing.
-39-
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 Fund requesting a copy of such Statement of Additional
Information.
1. The current Statement of Additional Information for the Acquiring
Fund, dated February 29, 2000.
2. The current Statement of Additional Information for the Fund, dated
August 1, 2000.
LEGAL MATTERS
Certain legal matters concerning the issuance of shares of the Acquiring
Fund will be passed upon by Willkie Farr & Gallagher, 787 Seventh Avenue, New
York, New York 10019-6099, counsel to the Acquiring Fund. In rendering such
opinion, Willkie Farr & Gallagher may rely on an opinion of Sullivan & Worcester
as to certain matters under Massachusetts law.
-40-
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 Warburg Pincus Fixed Income
Fund, a Massachusetts business trust (the "Acquiring Fund"), and DLJ Focus
Funds, a Massachusetts business trust (the "Trust"), for and on behalf of its
DLJ Fixed Income Fund series (the "Fund"), and, solely for purposes of Section
9.2 hereof, Credit Suisse Asset Management, LLC, a limited liability company
organized under the laws of the State of Delaware ("CSAM").
This Agreement is intended to be and is adopted as a plan of
reorganization within the meaning of Section 368(a) of the United States
Internal Revenue Code of 1986, as amended (the "Code"). The reorganization of
the Fund (collectively, the "Reorganization") will consist of the transfer of
all of the assets of the Fund in exchange solely for shares of the applicable
class or classes of common stock (collectively, the "Shares") of the Acquiring
Fund, and the assumption by the Acquiring Fund of the liabilities of the Fund,
and the distribution, on or after the Closing Date hereinafter referred to, of
Shares of the Acquiring Fund ("Acquiring Fund Shares") to the shareholders of
the Fund in liquidation of the Fund as provided herein, all upon the terms and
conditions hereinafter set forth in this Agreement.
WHEREAS, the Board of Trustees of the Trust has determined that the
exchange of all of the assets of the Fund for Acquiring Fund Shares and the
assumption of the liabilities of the Fund by the Acquiring Fund is in the best
interests of the Fund and that the interests of the existing shareholders of the
Fund would not be diluted as a result of this transaction; and
WHEREAS, the Board of Trustees of the Acquiring Fund has determined that
the exchange of all of the assets of the Fund for Acquiring Fund Shares is in
the best interests of the Acquiring Fund's shareholders and that the interests
of the existing shareholders of the Acquiring Fund would not be diluted as a
result of this transaction.
NOW, THEREFORE, in consideration of the premises and of the covenants and
agreements hereinafter set forth, the parties hereto covenant and agree as
follows:
1. Transfer of Assets of the Fund in Exchange for Acquiring Fund Shares
and Assumption of the Fund's Liabilities and Liquidation of the Fund
1.1. Subject to the terms and conditions herein set forth and on the basis
of the representations and warranties contained herein, the Fund agrees to
transfer its assets as set forth in paragraph 1.2 to the Acquiring Fund, and the
Acquiring Fund agrees in exchange therefor: (i) to deliver to the Fund the
number of Acquiring Fund Shares, including fractional Acquiring Fund Shares, of
each class of the Fund determined by dividing the value of the Fund's net assets
attributable to each such class of shares, computed in the manner and as of the
time and date set forth in paragraph 2.1, by the net asset value of one
Acquiring Fund Share of the applicable class; and (ii) to assume the liabilities
of the 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 Fund to be acquired by the Acquiring Fund shall
consist of all property including, without limitation, all cash, securities and
dividend or interest receivables that are owned by or owed to the Fund and any
deferred or prepaid expenses shown as an asset on the books of the Fund on the
Closing date provided in paragraph 3.1 (the "Closing Date").
(b)The Trust has provided the Acquiring Fund with a list of all of the
Fund's assets as of the date of execution of this Agreement. The Trust 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
Trust will, within a reasonable time prior to the Closing Date, furnish
A-1
the Acquiring Fund with a list of the securities, if any, on the Fund's list
referred to in the first sentence of this paragraph which do not conform to the
Acquiring Fund's investment objective, policies and restrictions. In the event
that the Fund holds any investments which the Acquiring Fund may not hold, the
Fund will dispose of such securities prior to the Closing Date. In addition, if
it is determined that the portfolios of the Fund and the Acquiring Fund, when
aggregated, would contain investments exceeding certain percentage limitations
imposed upon the Acquiring Fund with respect to such investments, the Fund, if
requested by the Acquiring Fund, will dispose of and/or reinvest a sufficient
amount of such investments as may be necessary to avoid violating such
limitations as of the Closing Date.
1.3. The Trust will endeavor to discharge all of the known liabilities and
obligations of the 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 liabilities,
expenses, costs, charges and reserves, including those liabilities reflected on
unaudited statements of assets and liabilities of the 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 Fund specifically arising from or
relating to the operations and/or transactions of the Fund prior to and
including the Closing Date but which are not reflected on the above-mentioned
statement of assets and liabilities, including any liabilities, expenses, costs
or charges arising under paragraph 5.10 hereof.
1.4. As soon on or after the Closing Date as is conveniently practicable
(the "Liquidation Date"), the Fund will liquidate and distribute pro rata to the
Fund's shareholders of record determined as of the close of business on the
Closing Date (the "Fund Shareholders") the Acquiring Fund Shares it receives
pursuant to paragraph 1.1. Such liquidation and distribution will be
accomplished by the transfer of the Acquiring Fund Shares then credited to the
account of the Fund on the books of the Acquiring Fund to open accounts on the
share records of the Acquiring Fund in the name of the Fund's shareholders
representing the respective pro rata number of the Acquiring Fund Shares of the
particular class due such shareholders. All issued and outstanding shares of the
Fund will simultaneously be canceled on the books of the Fund, although share
certificates representing interests in the Fund will represent a number of
Acquiring Fund Shares after the Closing Date as determined in accordance with
Section 2.2. 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 Fund Shares on the books of
the Fund as of that time shall, as a condition of such issuance and transfer, be
paid by the person to whom such Acquiring Fund Shares are to be issued and
transferred.
1.7. Any reporting responsibility of the Fund is and shall remain the
responsibility of the Fund up to and including the applicable Closing Date and
such later date on which the Fund is terminated.
2. Valuation
2.1. The value of the Fund's assets to be acquired hereunder shall be the
value of such assets computed as of the close of regular trading on The New York
Stock Exchange, Inc. (the "NYSE") on the Closing Date (such time and date being
hereinafter called the "Valuation Date"), using the valuation procedures set
forth in the Fund's then current prospectus or statement of additional
information.
2.2. (a) The number of Shares of the Common Class of the Acquiring Fund to
be issued (including fractional shares, if any) in exchange for Class A shares
of the Fund shall be determined by dividing the value of the net assets of the
Fund attributable to its Class A shares determined using the same valuation
procedures referred
A-2
to in paragraph 2.1 by the net asset value per Share of the Advisor Class of the
Acquiring Fund computed as of the close of regular trading on the NYSE on the
Closing Date, using the valuation procedures set forth in the Acquiring Fund's
then current prospectuses or statement of additional information.
(b) The number of Shares of the Advisor Class of the Acquiring Fund to be
issued (including fractional shares, if any) in exchange for Class R shares of
the Fund shall be determined by dividing the value of the net assets of the Fund
attributable to its Class R shares determined using the same valuation
procedures referred to in paragraph 2.1 by the net asset value per Share of the
Advisor Class of the Acquiring Fund computed as of the close of regular trading
on the NYSE on the Closing Date, using the valuation procedures set forth in the
Acquiring Fund's then current prospectuses or statement of additional
information.
(c) The number of Shares of the Advisor Class of the Acquiring Fund to be
issued (including fractional shares, if any) in exchange for Class B shares of
the Fund shall be determined by dividing the value of the net assets of the Fund
attributable to its Class B shares determined using the same valuation
procedures referred to in paragraph 2.1 by the net asset value per Share of the
Advisor Class of the Acquiring Fund computed as of the close of regular trading
on the NYSE on the Closing Date, using the valuation procedures set forth in the
Acquiring Fund's then current prospectuses or statement of additional
information.
(d) The number of Shares of the Common Class of the Acquiring Fund to be
issued (including fractional shares, if any) in exchange for Class D shares of
the Fund shall be determined by dividing the value of the net assets of the Fund
attributable to its Class D shares determined using the same valuation
procedures referred to in paragraph 2.1 by the net asset value per Share of the
Common Class of the Acquiring Fund computed as of the close of regular trading
on the NYSE on the Closing Date, using the valuation procedures set forth in the
Acquiring Fund's then current prospectuses or statement of additional
information.
2.3. All computations of value with respect to the Acquiring 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 March 30, 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 [Sullivan & Cromwell] or at such other time and/or place as the parties may
agree.
3.2. The custodian for the Acquiring Fund (the "Custodian") shall deliver
at the Closing a certificate of an authorized officer stating that: (a) the
Fund's portfolio securities, cash and any other assets have been delivered in
proper form to the Acquiring Fund on the Closing Date and (b) all necessary
taxes, including all applicable federal and state stock transfer stamps, if any,
have been paid, or provision for payment has been made, in conjunction with the
delivery of portfolio securities.
3.3. In the event that on the Valuation Date (a) the NYSE or another
primary trading market for portfolio securities of the Acquiring Fund or the
Fund shall be closed to trading or trading thereon shall be restricted or (b)
trading or the reporting of trading on the NYSE or elsewhere shall be disrupted
so that accurate appraisal of the value of the net assets of the Acquiring Fund
or the Fund is impracticable, the applicable Closing Date shall be postponed
until the first business day after the day when trading shall have been fully
resumed and reporting shall have been restored.
3.4. The Trust, on behalf of the Fund, shall deliver at the Closing a list
of the names and addresses of the Fund's shareholders and the number and class
of outstanding Shares owned by each such shareholder immediately prior to the
Closing or provide evidence that such information has been provided to the
Acquiring Fund's transfer agent. The Acquiring Fund shall issue and deliver a
confirmation evidencing the Acquiring Fund Shares to be
A-3
credited to the Fund's account on the Closing Date to the Secretary of the Fund
or provide evidence satisfactory to the Fund that such Acquiring Fund Shares
have been credited to the Fund's account on the books of the Acquiring Fund. At
the Closing, each party shall deliver to the relevant other parties such bills
of sale, checks, assignments, share certificates, if any, receipts or other
documents as such other party or its counsel may reasonably request.
4. Representations and Warranties
4.1. The Trust, on behalf of the Fund, represents and warrants to the
Acquiring Fund as follows:
(a) The Fund is a duly established series of the Trust; the Trust is a
Massachusetts business trust duly organized, validly existing and in good
standing under the laws of the State of Massachusetts;
(b) The Trust 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 Trust is not, and the execution, delivery and performance of this
Agreement by the Trust on behalf of the Fund will not result, in a violation of
its Agreement and Declaration of Trust or By-Laws or any material agreement,
indenture, instrument, contract, lease or other undertaking to which the Trust,
with respect to the Fund, is a party or by which the Trust, with respect to the
Fund, or its property is bound or affected;
(d) There are no contracts or other commitments (other than this
Agreement) of the Trust which will be terminated with liability to the Fund
prior to the Closing Date;
(e) Except as previously disclosed in writing to and accepted by the
Acquiring Fund, no litigation or administrative proceeding or investigation of
or before any court or governmental body is presently pending or to its
knowledge threatened against the Fund or any of its properties or assets which,
if adversely determined, would materially and adversely affect its financial
condition or the conduct of its business. The Trust knows of no facts which
might form the basis for the institution of such proceedings and is not party to
or subject to the provisions of any order, decree or judgment of any court or
governmental body which materially and adversely affects its business or the
business of the Fund or its ability to consummate the transactions herein
contemplated;
(f) The Statements of Assets and Liabilities, including the Investment
Portfolio, Operations, and Changes in Net Assets, and the Financial Highlights
of the Fund at and for each of the fiscal years ended October 31 in the period
beginning with November 1, 1996 and ending October 31, 2000 have been audited by
Ernst & Young LLP, independent accountants, and are in accordance with generally
accepted accounting principles consistently applied, and such statements (copies
of which have been furnished to the Acquiring Fund) fairly reflect the financial
condition of the Fund as of such dates, and there are no known contingent
liabilities of the Fund as of such dates not disclosed therein;
(g) Since October 31, 2000, there has not been any material adverse change
in the Fund's financial condition, assets, liabilities or business other than
changes occurring in the ordinary course of business, or any incurrence by the
Fund of indebtedness maturing more than one year from the date 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 Fund due to declines in market values of securities in
the Fund's portfolio, the discharge of Fund liabilities, or the redemption of
the 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 Fund required by law to have
been filed by such dates shall have been filed, and all federal and other taxes
shall have been paid so far as due, or provision shall have been made for the
payment thereof and, to the best of the Fund's knowledge, no such return is
currently under audit and no assessment has been asserted with respect to such
returns;
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(i) For each taxable year of its operation (including the taxable year
ending on the Closing Date), the Fund has met the requirements of Subchapter M
of the Code for qualification and treatment as a regulated investment company;
all of the Fund's issued and outstanding shares have been offered and sold in
compliance in all material respects with applicable federal and state securities
laws;
(j) All issued and outstanding shares of each class of the Fund are, and
at the Closing Date will be, duly and validly issued and outstanding, fully paid
and, except as set forth in the Fund's Declaration of Trust, non-assessable, by
the Fund. All of the issued and outstanding shares of the Fund will, at the time
of Closing, be held by the persons and in the amounts set forth in the records
of the transfer agent as provided in paragraph 3.4. The Fund does not have
outstanding any options, warrants or other rights to subscribe for or purchase
any of the Fund's shares, nor is there outstanding any security convertible into
any of the Fund's shares, except for the conversion feature with respect to
Class B shares of the Fund;
(k) At the Closing Date, the Trust will have good and marketable title to
the 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 Fund may have acquired in 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 Trust's Board of
Trustees, and subject to the approval of the Fund's shareholders, this Agreement
will constitute a valid and binding obligation of the Trust, on behalf of the
Fund, enforceable in accordance with its terms, subject to the effect of
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and
other laws relating to or affecting creditors' rights and to general equity
principles;
(m) The information to be furnished by the Trust, on behalf of the Fund
for use in applications for orders, registration statements or proxy materials
or for use in any other document filed or to be filed with any federal, state or
local regulatory authority (including the National Association of Securities
Dealers, Inc.), which may be necessary in connection with the transactions
contemplated hereby, shall be accurate and complete in all material respects and
shall comply in all material respects with federal securities and other laws and
regulations applicable thereto;
(n) The current prospectus and statement of additional information of the
Fund conform in all material respects to the applicable requirements of the 1933
Act and the 1940 Act and the rules and regulations of the Commission thereunder
and do not include any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
materially misleading; and
(o) Insofar as the following relate to the Fund, the registration
statement filed by the Acquiring Fund on Form N-14 relating to Acquiring Fund
Shares that will be registered with the Commission pursuant to this Agreement,
which, without limitation, shall include a proxy statement of the Fund (the
"Proxy Statement") and the prospectuses of the Acquiring Fund with respect to
the transactions contemplated by this Agreement, and any supplement or amendment
thereto, and the documents contained or incorporated therein by reference (the
"N-14 Registration Statement"), on the effective date of the N-14 Registration
Statement, at the time of any shareholders' meeting referred to herein, on the
Valuation Date and on the Closing Date: (i) shall comply in all material
respects with the provisions of the 1933 Act, the Securities Exchange Act of
1934 (the "1934 Act") and the 1940 Act and the rules and regulations under those
Acts, and (ii) shall not contain any untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary to make the
statements therein not misleading; provided, however, that the representations
and warranties in this section shall not apply to statements in or omissions
from the Proxy Statement and the N-14 Registration Statement made in reliance
upon and in conformity with information that was furnished or should have been
furnished by the Acquiring Fund for use therein.
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4.2. The Acquiring Fund represents and warrants to the Fund as follows:
(a) The Acquiring Fund is a Massachusetts business trust, duly organized,
validly existing and in good standing under the laws of the State of
Massachusetts;
(b) The Acquiring Fund is a registered investment company classified as a
management company of the open-end type and its registration with the Commission
as an investment company under the 1940 Act is in full force and effect;
(c) The current prospectuses and statement of additional information filed
as part of the Acquiring Fund registration statement on Form N-1A (the
"Acquiring Fund Registration Statement") conform in all material respects to the
applicable requirements of the 1933 Act and the 1940 Act and the rules and
regulations of the Commission under those Acts and do not include any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not materially misleading;
(d) At the Closing Date, the Acquiring Fund will have good and marketable
title to its assets;
(e) The Acquiring Fund is not, and the execution, delivery and performance
of this Agreement will not result in, a violation of its 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 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 Fund. For purposes of this subsection (g), a
decline in net asset value per share of the Acquiring Fund due to declines in
market values of securities in the Acquiring Fund's portfolio, the discharge of
Acquiring Fund liabilities, or the redemption of Acquiring Fund Shares by
Acquiring Fund Shareholders shall not constitute a material adverse change;
(h) At the Closing Date, all federal and other tax returns and reports,
including extensions, of the Acquiring Fund required by law then to be filed
shall have been filed, and all federal and other taxes shown as due on said
returns and reports shall have been paid or provision shall have been made for
the payment thereof;
(i) For each taxable year of its operation (including the taxable year
ending on the Closing Date), the Acquiring Fund has met the requirements of
Subchapter M of the Code for qualification as a regulated investment company and
has elected to be treated as such, has been eligible to and has computed its
federal income tax under Section 852 of the Code;
(j) At the date hereof, all issued and outstanding Acquiring Fund Shares
are, and at the Closing Date will be, duly and validly issued and outstanding,
fully paid and non-assessable, with no personal liability attaching to the
ownership thereof. The Acquiring Fund does not have outstanding any options,
warrants or other rights to subscribe for or purchase any Acquiring Fund Shares,
nor is there outstanding any security convertible into any Acquiring Fund
Shares;
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(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 Fund, for
the account of the Fund's shareholders, pursuant to the terms of this Agreement,
will at the Closing Date have been duly authorized and when so issued and
delivered, will be duly and validly issued Acquiring Fund Shares, and will be
fully paid and non-assessable with no personal liability attaching to the
ownership thereof;
(m) Insofar as the following relate to the Acquiring Fund, the N-14
Registration Statement, on the effective date of the N-14 Registration
Statement, at the time of any shareholders' meeting referred to herein, on the
Valuation Date and on the Closing Date: (i) shall comply in all material
respects with the provisions of the 1933 Act, the 1934 Act and the 1940 Act and
the rules and regulations under those Acts, and (ii) shall not contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein not misleading;
provided, however, that the representations and warranties in this section shall
not apply to statements in or omissions from the Proxy Statement and the N-14
Registration Statement made in reliance upon and in conformity with information
that was furnished by the Fund for use therein; and
(n) The Acquiring Fund agrees to use all reasonable efforts to obtain the
approvals and authorizations required by the 1933 Act, the 1940 Act and such of
the state Blue Sky or securities laws as it may deem appropriate in order to
continue its operations after the Closing Date.
5. Covenants of the Trust, with respect to the Fund, and the Acquiring
Fund
5.1. The Acquiring Fund and the Trust, with respect to the 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 Trust, on behalf of the Fund, will call a meeting of the
shareholders of the 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 Trust, on behalf of the Fund, covenants that the Acquiring Fund
Shares to be issued hereunder are not being acquired for the purpose of making
any distribution thereof other than in accordance with the terms of this
Agreement.
5.4. The Trust, on behalf of the Fund, will assist the Acquiring Fund in
obtaining such information as the Acquiring Fund reasonably requests concerning
the beneficial ownership of the Fund's Shares.
5.5. Subject to the provisions of this Agreement, the Acquiring Fund and
the Trust, on behalf of the 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 Trust, on behalf of the Fund, will provide the Acquiring Fund
with information reasonably necessary for the preparation of a prospectus (the
"Prospectus") which will include the Proxy Statement referred to in paragraph
4.1(o), all to be included in the N-14 Registration Statement, in compliance
with the 1933 Act, the 1934 Act and the 1940 Act in connection with the meeting
of the Fund's shareholders to consider approval of this Agreement and the
transactions contemplated herein.
5.7. The Trust, on behalf of the 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 Trust, on behalf of the Fund, shall furnish the Acquiring Fund
with a statement containing information required for purposes of complying with
Rule 24f-2 under the 1940 Act. A notice pursuant to Rule 24f-2 will be filed by
the Acquiring Fund offsetting redemptions by the Fund during the fiscal year
ending on or after the applicable Closing Date against sales of Acquiring Fund
Shares and the Fund agrees that it will not net redemptions during such period
by the Fund against sales of its shares.
5.9. The Acquiring Fund agrees to indemnify and advance expenses to each
person who at the time of the execution of this Agreement serves as a Trustee or
Officer ("Indemnified Person") of the Fund, against money damages actually and
reasonably incurred by such Indemnified Person in connection with any claim that
is asserted against such Indemnified Person arising out of such person's service
as a Trustee or officer of the 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 the Massachusetts Business Trust law and other applicable law.
This paragraph 5.9 shall not protect any such Indemnified Person against any
liability to the Fund, the Acquiring Fund or their shareholders to which he
would otherwise be subject by reason of willful misfeasance, bad faith, gross
negligence or from reckless disregard of the duties involved in the conduct of
his office. An Indemnified Person seeking indemnification shall be entitled to
advances from the Acquiring Fund for payment of the reasonable expenses incurred
by him in connection with the matter as to which he is seeking indemnification
in the manner and to the fullest extent permissible under the Massachusetts
Business Trust law and other applicable law. Such Indemnified Person shall
provide to the Acquiring Fund a written affirmation of his good faith belief
that the standard of conduct necessary for indemnification by the Acquiring Fund
has been met and a written undertaking to repay any advance if it should
ultimately be determined that the standard of conduct has not been met. In
addition, at least one of the following additional conditions shall be met: (a)
the Indemnified Person shall provide security in form and amount acceptable to
the Acquiring Fund for its undertaking; (b) the Acquiring Fund is insured
against losses arising by reason of the advance; or (c) either a majority of a
quorum of disinterested non-party 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 Fund
or (ii) use a significant portion of the Fund's historic business assets in a
business, and (b) will not sell or otherwise dispose of any of the assets of the
Fund, except for dispositions in the ordinary course of business or transfers to
a corporation (or other entity classified for federal income tax purposes as an
association taxable as a corporation) that is "controlled" by the Acquiring Fund
within the meaning of Section 368(c) of the Code.
6. Conditions Precedent to Obligations of the Fund
The obligations of the Trust to consummate on behalf of the Fund, the
transactions provided for herein shall be subject, at its election, to the
performance by the Acquiring Fund of all of the obligations to be performed by
it hereunder on or before the Closing Date and, in addition thereto, the
following further conditions:
6.1. All representations and warranties of the Acquiring Fund contained in
this Agreement shall be true and correct in all material respects as of the date
hereof and, except as they may be affected by the actions contemplated by this
Agreement, as of the Closing Date with the same force and effect as if made on
and as of the Closing Date;
6.2. The Acquiring Fund shall have delivered to the Fund a certificate
executed in its name by its President or Vice President and its Secretary,
Treasurer or Assistant Treasurer, in a form reasonably satisfactory to the Fund
and dated as of the Closing Date, to the effect that the representations and
warranties of the Acquiring Fund made
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in this Agreement are true and correct at and as of the Closing Date, except as
they may be affected by the transactions contemplated by this Agreement and as
to such other matters as the Fund shall reasonably request;
6.3. The Fund shall have received a written agreement from CSAM to
reimburse expenses to the Acquiring Fund to the extent necessary to (a) maintain
the average annual expense ratio of the Common Class of the Acquiring Fund for
the two-year period beginning on the Closing Date at the lower of the average
annualized expense ratio of Class A or Class R shares of the Fund or the Common
Class measured over the 60 day period ended on such date and (b) maintain the
average annual expense ratio of the Advisor Class of the Acquiring Fund for the
two-year period beginning on the Closing Date at the lower of the average
annualized expense ratio of Class B or Class R shares of the Fund or the Advisor
Class measured over the 60 day period ended on such date; and
6.4. The Fund shall have received on the Closing Date a favorable opinion
from Willkie Farr & Gallagher, counsel to the Acquiring Fund, dated as of the
Closing Date, in a form reasonably satisfactory to the Fund, covering the
following points:
That (a) the Acquiring Fund is a validly existing business trust and in
good standing under the laws of the Commonwealth of Massachusetts, has the
corporate power to own all of its properties and assets and to carry on its
business as a registered investment company; (b) the Agreement has been duly
authorized, executed and delivered by the Acquiring Fund and, assuming due
authorization, execution and delivery of the Agreement by the other parties
thereto, is a valid and binding obligation of the Acquiring Fund enforceable
against the Acquiring Fund in accordance with its terms, subject to the effect
of bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and
other laws relating to or affecting creditors' rights generally and to general
equity principles; (c) the Acquiring Fund Shares to be issued to the Fund's
shareholders as provided by this Agreement are duly authorized and upon such
delivery will be validly issued and outstanding and are fully paid and
nonassessable with no personal liability attaching to ownership thereof, and no
shareholder of the Acquiring Fund has any preemptive rights to subscription or
purchase in respect thereof; (d) the execution and delivery of this Agreement
did not, and the consummation of the transactions contemplated hereby will not,
result in a violation of the Acquiring Fund's Agreement and Declaration of Trust
or By-Laws or in a material violation of any provision of any material agreement
(known to such counsel) to which the Acquiring Fund is a party or by which it or
its property is bound or, to the knowledge of such counsel, result in the
acceleration of any obligation or the imposition of any penalty, under any
material agreement, judgment, or decree to which the Acquiring Fund is a party
or by which it or its property is bound; (e) to the knowledge of such counsel,
no consent, approval, authorization or order of any court or governmental
authority of the United States or 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) only insofar
as they relate to the Acquiring Fund, the descriptions in the Proxy Statement of
statutes, legal and governmental proceedings, investigations, orders, decrees or
judgments of any court or governmental body in the United States and contracts
and other documents, if any, are accurate and fairly present the information
required to be shown; (g) such counsel does not know of any legal,
administrative or governmental proceedings, investigation, order, decree or
judgment of any court or governmental body, only insofar as they relate to the
Acquiring Fund or its assets or properties, pending, threatened or otherwise
existing on or before the effective date of the N-14 Registration Statement or
the Closing Date, which are required to be described in the N-14 Registration
Statement or to be filed as exhibits to the N-14 Registration Statement which
are not described and filed as required; (h) the Acquiring Fund is registered as
an investment company under the 1940 Act and its registration with the
Commission as an investment company under the 1940 Act is in full force and
effect; (i) the Proxy Statement, as of the date of effectiveness of the N-14
Registration Statement, and the Acquiring Fund Registration Statement as of its
effective date (in each case except as to financial and statistical data
contained therein, as to which no opinion need be given), 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 Proxy Statement and the Acquiring Fund Registration Statement; and (j)
the Acquiring Fund Registration Statement is effective under the 1933 Act and
the 1940 Act and no stop-order suspending its effectiveness or order pursuant to
section 8(e) of the 1940 Act has been issued.
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With respect to all matters of Massachusetts law, such counsel shall be
entitled to state that, with the approval of the Fund, they have relied upon the
opinion of Sullivan & Worcester, 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 Sullivan & Worcester. Such opinion also shall
include such other matters incident to the transaction contemplated hereby as
the Fund may reasonably request.
In this paragraph 6.4, references to the Proxy Statement include and
relate only to the text of such Proxy Statement and not, except as specifically
stated above, to any exhibits or attachments thereto or to any documents
incorporated by reference therein.
7. Conditions Precedent to Obligations of the Acquiring Fund
The obligations of the Acquiring Fund to complete the transactions
provided for herein shall be subject, at its election, to the performance by the
Fund of all the obligations to be performed by it hereunder on or before the
Closing Date and, in addition thereto, the following conditions:
7.1. All representations and warranties by or on behalf of the Fund
contained in this Agreement shall be true and correct in all material respects
as of the date hereof and, except as they may be affected by the transactions
contemplated by this Agreement, as of the Closing Date with the same force and
effect as if made on and as of the Closing Date;
7.2. The Trust shall have delivered to the Acquiring Fund a statement of
the Fund's assets and liabilities as of the Closing Date, certified by the
Treasurer or Assistant Treasurer of the Trust;
7.3. The Trust shall have delivered to the Acquiring Fund on the Closing
Date a certificate executed in its name by its President or Vice President and
its Treasurer or Assistant Treasurer, in form and substance satisfactory to the
Acquiring Fund and dated as of the Closing Date, to the effect that the
representations and warranties of the Trust 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 Sullivan & Cromwell, counsel to the Trust, in a form
satisfactory to the Secretary of the Acquiring Fund, covering the following
points:
That (a) the Trust is a validly existing business trust and in good
standing under the laws of the Commonwealth of Massachusetts and 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 Fund is a duly established
Series of the Trust; (b) the Agreement has been duly authorized, executed and
delivered by the Trust and, assuming due authorization, execution and delivery
of the Agreement by the other parties hereto, is a valid and binding obligation
of the Fund enforceable against the Fund in accordance with its terms, subject
to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and
similar laws of general applicability relating to or 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, (i) conflict with the Fund's Agreement and Declaration of Trust or
By-Laws or (ii) result in a default or breach of (A) the Interim Investment
Advisory Agreement, dated as of November 3, 2000, between the Trust and CSAM;
(B) the Custodian Contract, dated as of ____, between the Trust and Citibank,
N.A.; (C) the Distribution Agreement, dated as of December __, 2000, between the
Trust and CSAMSI; or (D) the agreements set forth in Annex A to this Agreement;
(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
Commonwealth of Massachusetts is required for the consummation by the Fund of
the transactions contemplated herein, except such as have been obtained under
the 1933 Act, the 1934 Act and the 1940 Act, and such as may be required under
state securities laws; (e) the Proxy Statement (except as to financial and
statistical data contained therein, as to which no opinion need be given), as of
the date of the effectiveness of the N-14 Registration Statement, appeared on
its face to be appropriately responsive
A-10
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 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 Fund's business; and (g) the 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 Massachusetts law, such counsel shall be
entitled to state that, with the approval of the Acquiring Fund, they have
relied upon the opinion of Hale & Dorr, 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 Hale & Dorr. 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 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 Fund
within the meaning of the 1933 Act and the applicable regulations thereunder;
(b) in their opinion, the financial statements and financial highlights of
the Fund included or incorporated by reference in the N-14 Registration
Statement and reported on by them comply as to form in all material aspects with
the applicable accounting requirements of the 1933 Act and the rules and
regulations thereunder; and
7.6. The Acquiring Fund shall have received from PricewaterhouseCoopers
LLP a letter addressed to the Acquiring Fund dated as of the effective date of
the N-14 Registration Statement in form and substance satisfactory to the
Acquiring Fund, to the effect that:
(a) they are independent public accountants with respect to the 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 Trust and described in such letter (but not an examination in accordance
with generally accepted auditing standards), specified information relating to
such Fund appearing in the N-14 Registration Statement and the Proxy Statement
has been obtained from the accounting records of such Fund or from schedules
prepared by officers of such 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 Trust, on behalf of the Fund, shall have delivered to the
Acquiring Fund, pursuant to paragraph 4.1(f), copies of financial statements of
the Fund as of and for the fiscal year ended October 31, 2000.
A-11
7.8. The Acquiring Fund shall have received from PricewaterhouseCoopers
LLP a letter addressed to the Acquiring Fund and dated as of the Closing Date
stating that, as of a date no more than three (3) business days prior to the
Closing Date, PricewaterhouseCoopers LLP performed limited procedures and that
on the basis of those procedures it confirmed the matters set forth in paragraph
7.6.
7.9. The Board of Trustees of the Trust, including a majority of the
trustees who are not "interested persons" of the Trust (as defined by the 1940
Act), shall have determined that this Agreement and the transactions
contemplated hereby are in the best interests of the Fund and that the interests
of the shareholders in the Fund would not be diluted as a result of such
transactions, and the Fund shall have delivered to the Acquiring Fund at the
Closing, a certificate, executed by an officer, to the effect that the condition
described in this subparagraph has been satisfied.
8. Further Conditions Precedent to Obligations of the Acquiring Fund and
the Fund
If any of the conditions set forth below do not exist on or before the
Closing Date with respect to the Acquiring Fund, the Trust, on behalf of the
Fund, shall, and if any of such conditions do not exist on or before the Closing
Date with respect to the Fund, the Acquiring Fund shall, at their respective
option, not be required to consummate the transactions contemplated by this
Agreement.
8.1. The Agreement and the transactions contemplated herein shall have
been approved by the requisite vote of the holders of the outstanding shares of
the Fund in accordance with the provisions of the Trust's Agreement and
Declaration of Trust and applicable law and certified copies of the votes
evidencing such approval shall have been delivered to the Acquiring Fund.
8.2. On the Closing Date no action, suit or other proceeding shall be
pending before any court or governmental agency in which it is sought to
restrain or prohibit, or obtain damages or other relief in connection with, this
Agreement or the transactions contemplated herein.
8.3. All consents of other parties and all other consents, orders and
permits of federal, state and local regulatory authorities (including those of
the Commission and of state blue sky and securities authorities, including
"no-action" positions of and exemptive orders from such federal and state
authorities) deemed necessary by the Acquiring Fund or the Fund to permit
consummation, in all material respects, of the transactions contemplated hereby
shall have been obtained, except where failure to obtain any such consent, order
or permit would not involve a risk of a material adverse effect on the assets or
properties of the Acquiring Fund or the Fund, provided that either party hereto
may for itself waive any of such conditions.
8.4. The N-14 Registration Statement and the Acquiring Fund Registration
Statement shall each have become or be effective under the 1933 Act and no stop
orders suspending the effectiveness thereof shall have been issued and, to the
best knowledge of the parties hereto, no investigation or proceeding for that
purpose shall have been instituted or be pending, threatened or contemplated
under the 1933 Act.
8.5. The parties shall have received a favorable opinion of Willkie Farr &
Gallagher, addressed to, and in form and substance satisfactory to, the Fund and
the Acquiring Fund, substantially to the effect that for federal income tax
purposes:
(a) The transfer of all of the 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 Fund, and the distribution of such Acquiring Fund
Shares to shareholders of the Fund in exchange for their shares of the Fund,
will constitute a "reorganization" within the meaning of Section 368(a) of the
Code, and the Acquiring Fund and the Fund will each be a "party to a
reorganization" within the meaning of Section 368(b) of the Code; (b) no gain or
loss will be recognized by the Acquiring Fund on the receipt of the assets of
the Fund solely in exchange for the Acquiring Fund Shares and the assumption by
the Acquiring Fund of the liabilities of the Fund; (c) no gain or loss will be
recognized by the Fund upon the transfer of the Fund's assets to the Acquiring
Fund in exchange for the Acquiring
A-12
Fund Shares and the assumption by the Acquiring Fund of the liabilities of the
Fund or upon the distribution of the Acquiring Fund Shares to the Fund's
shareholders in exchange for their shares of the Fund; (d) no gain or loss will
be recognized by shareholders of the Fund upon the exchange of their Fund shares
for the Acquiring Fund Shares or upon the assumption by the Acquiring Fund of
the liabilities of the Fund; (e) the aggregate tax basis for the Acquiring Fund
Shares received by each of the Fund's shareholders pursuant to the
Reorganization will be the same as the aggregate tax basis of the Fund Shares
held by such shareholder immediately prior to the Reorganization, and the
holding period of the Acquiring Fund Shares to be received by each Fund
shareholder will include the period during which the Fund Shares exchanged
therefor were held by such shareholder (provided that such Fund Shares were held
as capital assets on the date of the Reorganization); and (f) the tax basis of
the Fund's assets acquired by the Acquiring Fund will be the same as the tax
basis of such assets to the Fund immediately prior to the Reorganization, and
the holding period of the assets of the Fund in the hands of the Acquiring Fund
will include the period during which those assets were held by the Fund.
Notwithstanding anything herein to the contrary, neither the Acquiring
Fund nor the Trust 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 Trust, and the
Trust, on behalf of the Fund, represents and warrants to the Acquiring Fund,
that there are no brokers or finders or other entities to receive any payments
in connection with the transactions provided for herein.
9.2. CSAM or its affiliates agrees to bear the reasonable expenses
incurred in connection with the transactions contemplated by this Agreement,
whether or not consummated (excluding extraordinary expenses such as litigation
expenses, damages and other expenses not normally associated with transactions
of the type contemplated by this Agreement). These expenses consist of: (i)
expenses associated with preparing this Agreement, the N-14 Registration
Statement and expenses of the shareholder meetings; (ii) preparing and filing
the N-14 Registration Statement covering the Acquiring Fund Shares to be issued
in the Reorganization; (iii) registration or qualification fees and expenses of
preparing and filing such forms, if any, necessary under applicable state
securities laws to qualify the Acquiring Fund Shares to be issued in connection
with the Reorganization; (iv) postage; printing; accounting fees; and legal fees
incurred by the Acquiring Fund and by the Fund in connection with the
transactions contemplated by this Agreement; (v) solicitation costs incurred in
connection with the shareholders meeting referred to in clause (i) above and
paragraph 5.2 hereof and (vi) any other reasonable Reorganization expenses.
9.3. Any other provision of this Agreement to the contrary
notwithstanding, any liability of either Fund under this Agreement, or in
connection with the transactions contemplated herein with respect to such Fund,
shall be discharged only out of the assets of such Fund.
10. Entire Agreement; Survival of Warranties
10.1. The Acquiring Fund and the Trust 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 Trust and the Acquiring Fund; (2)
the Trust in the event the Acquiring Fund shall, or the Acquiring Fund, in the
event the Fund shall, materially breach any representation, warranty or
agreement contained herein
A-13
to be performed at or prior to the Closing Date; or (3) the Trust 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 Trust or the Fund, or
their respective Trustees 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 Trust
and the Acquiring Fund; provided, however, that following the meeting of the
Fund's shareholders called by the Trust pursuant to paragraph 5.2 of this
Agreement no such amendment may have the effect of changing the provisions for
determining the number of the Acquiring Fund Shares to be issued to the Fund's
Shareholders under this Agreement to the detriment of such shareholders without
their further approval.
13. Notices
13.1. Any notice, report, statement or demand required or permitted by any
provisions of this Agreement shall be in writing and shall be given by prepaid
telegraph, telecopy or certified mail addressed to the Trust at:
277 Park Avenue
New York, NY 10172
Attention: Martin Jaffe
with a copy to:
Earl D. Weiner, Esq.
Sullivan & Cromwell
125 Broad St.
New York, NY 10004
or to the Acquiring Fund at:
466 Lexington Avenue
New York, NY 10017
Attention: Hal Liebes, Esq.
with a copy to:
Rose F. DiMartino, Esq.
Willkie Farr & Gallagher
787 Seventh Avenue
New York, NY 10019-6099
14. Headings; Counterparts; Governing Law; Assignment; Limitation of
Liability
14.1. The article and paragraph headings contained in this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
14.2. This Agreement may be executed in any number of counterparts, each
of which shall be deemed an original.
A-14
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 business trust, other than the parties hereto and their respective
successors and assigns, any rights or remedies under or by reason of this
Agreement.
14.5. Notice is hereby given that this Agreement is entered into on behalf
of the DLJ Fixed Income Fund Series of the Trust by an officer of the Trust in
their capacity as an officer and not individually. It is understood and
expressly stipulated that none of the Trustees, officers or shareholders of the
Trust shall be personally liable hereunder. Neither the Trustees, officers,
agents or shareholders of the Trust assume any personal liability for
obligations entered into on behalf of the Trust. All persons dealing with the
Trust shall look solely to the property of the Trust for the enforcement of any
claims against the Trust.
A-15
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.
DLJ FOCUS FUNDS,
For and on Behalf of its DLJ Fixed Income Fund Series
By:
-------------------------------------------------
Name:
Title:
Attestation By:
-------------------------------------
Name:
Title:
WARBURG PINCUS FIXED INCOME FUND
By:
-------------------------------------------------
Name: Hal Liebes
Title: Secretary
Attestation By:
-------------------------------------
Name: Stuart Cohen
Title: Assistant Secretary
Solely with respect to paragraph 9.2:
CREDIT SUISSE ASSET MANAGEMENT, LLC
By:
-------------------------------------------------
Name:
Title:
Attestation By:
-------------------------------------
Name: Hal Liebes
Title: Secretary
A-16
ANNEX A
TO AGREEMENT AND PLAN OF REORGANIZATION
List of Additional Examined Agreements to which DLJ Focus Funds is a Party
o Interim Investment Advisory Contract, dated November 3, 2000.
o DLJ Core Equity Fund, DLJ Fixed Income Fund, DLJ Small Company Value
Fund and DLJ Growth and Income Fund
o DLJ Municipal Trust Fund
A-17
Exhibit B
FORM OF INVESTMENT ADVISORY AGREEMENT
____________, 2001
Credit Suisse Asset Management, LLC
466 Lexington Avenue
New York, New York 10017-3147
Dear Sirs:
The DLJ Focus Funds, a Massachusetts business trust (the "Fund"),
for and on behalf of each of its series listed on Annex I hereto, which may be
amended from time to time, (each, a "Series" and, collectively, the "Series"),
herewith confirms its agreement with Credit Suisse Asset Management, LLC (the
"Adviser") as follows:
1. Investment Description; Appointment
The Fund, on behalf of each of the Series, desires to employ the
capital of such Series by investing and reinvesting in investments of the kind
and in accordance with the limitations specified in its Agreement and
Declaration of Trust, as may be amended from time to time, and in the Fund's
Prospectus(es) and Statement(s) of Additional Information, if any, as from time
to time in effect (the "Prospectus" and "SAI," respectively), and in such manner
and to such extent as may from time to time be approved by the Board of Trustees
of the Fund. Copies of the Fund's Prospectuses and SAIs have been or will be
submitted to the Adviser. The Fund desires to employ and hereby appoints the
Adviser to act as investment adviser to each of the Series. The Adviser accepts
the appointment and agrees to furnish the services for the compensation set
forth below.
2. Services as Investment Adviser
Subject to the supervision and direction of the Board of Trustees of
the Fund, the Adviser will (a) act in strict conformity with the Fund's
Agreement and Declaration of Trust, the Investment Company Act of 1940 (the
"1940 Act") and the Investment Advisers Act of 1940, as the same may from time
to time be amended, (b) manage such Series' assets in accordance with such
Series' investment objective and policies as stated in the Fund's Prospectuses
and SAIs, (c) make investment decisions for such Series, (d) place purchase and
sale orders for securities on behalf of such Series, (e) exercise voting rights
in respect of portfolio securities and other investments for such Series, and
(f) monitor and evaluate the services provided by such Series' investment
sub-adviser(s), if any, under the terms of the applicable investment
sub-advisory agreement(s). In providing those services, the Adviser will provide
investment research and supervision of such Series' investments and conduct a
continual program of investment, evaluation and, if appropriate, sale and
reinvestment of such Series' assets. In addition, the Adviser will furnish each
Series with whatever statistical information such Series or Fund may reasonably
request with respect to the securities that such Series may hold or contemplate
purchasing.
Subject to the approval of the Board of Trustees of each of the Fund
and where required, the Fund's shareholders, the Adviser may engage an
investment sub-adviser or sub-advisers to provide advisory services in respect
of such Series and may delegate to such investment sub-adviser(s) the
responsibilities described in subparagraphs (b), (c), (d) and (e) above. In the
event that an investment sub-adviser's engagement has been terminated, the
Adviser shall be responsible for furnishing such Series with the services
required to be performed by such investment sub-adviser(s) under the applicable
investment sub-advisory agreements or arranging for a successor investment
sub-adviser(s) to provide such services on terms and conditions acceptable to
such Series and the Fund's Board of Trustees and subject to the requirements of
the 1940 Act.
B-1
3. Brokerage
In executing transactions for each Series, selecting brokers or
dealers and negotiating any brokerage commission rates, the Adviser will use its
best efforts to seek the best overall terms available. In assessing the best
overall terms available for any portfolio transaction, the Adviser will consider
all factors it deems relevant including, but not limited to, breadth of the
market in the security, the price of the security, the financial condition and
execution capability of the broker or dealer and the reasonableness of any
commission for the specific transaction and for transactions executed through
the broker or dealer in the aggregate. In selecting brokers or dealers to
execute a particular transaction and in evaluating the best overall terms
available, the Adviser may consider the brokerage and research services (as
those terms are defined in Section 28(e) of the Securities Exchange Act of 1934,
as the same may from time to time be amended) provided to each Series and/or
other accounts over which the Adviser or an affiliate exercises investment
discretion.
4. Information Provided to the Fund
The Adviser will keep each Series informed of developments
materially affecting such Series, and will, on its own initiative, furnish such
Series from time to time with whatever information the Adviser believes is
appropriate for this purpose.
5. Standard of Care
The Adviser shall exercise its best judgment in rendering the
services listed in paragraphs 2, 3 and 4 above. The Adviser shall not be liable
for any error of judgment or mistake of law or for any loss suffered by any
Series in connection with the matters to which this Agreement relates, provided
that nothing herein shall be deemed to protect or purport to protect the Adviser
against any liability to each Series or to shareholders of such Series to which
the Adviser would otherwise be subject by reason of willful misfeasance, bad
faith or gross negligence on its part in the performance of its duties or by
reason of the Adviser's reckless disregard of its obligations and duties under
this Agreement.
6. Compensation
In consideration of the services rendered pursuant to this
Agreement, each Series will pay the Adviser the annual fee applicable to such
Series calculated at an annual rate set forth on Annex I hereto of such Series'
average daily net assets.
The fee for the period from the date of this Agreement to the end of
the year shall be prorated according to the proportion that such period bears to
the full yearly period. Upon any termination of this Agreement before the end of
a year, the fee for such part of that year shall be prorated according to the
proportion that such period bears to the full yearly period and shall be payable
upon the date of termination of this Agreement. For the purpose of determining
fees payable to the Adviser, the value of each Series' net assets shall be
computed at the times and in the manner specified in such Fund's Prospectus(es)
or SAI(s).
The fee shall be calculated and payable monthly.
7. Expenses
The Adviser will bear all expenses in connection with the
performance of its services under this Agreement, including the fees payable to
any investment sub-adviser engaged pursuant to paragraph 2 of this Agreement.
Each Series will bear its proportionate share of certain other expenses to be
incurred in its operation, including: investment advisory and administration
fees; taxes, interest, brokerage fees and commissions, if any; fees of Trustees
of such Series who are not officers, trustees, or employees of the Adviser, any
sub-adviser or any of their affiliates; fees of any pricing service employed to
value shares of the Series; Securities and Exchange Commission fees and state
blue sky qualification fees; charges of custodians and transfer and dividend
disbursing
B-2
agents; such Series' proportionate share of insurance premiums; outside auditing
and legal expenses; costs of maintenance of such Series' or the Fund's
existence; costs attributable to investor services, including, without
limitation, telephone and personnel expenses; costs of preparing and printing
prospectuses and statements of additional information for regulatory purposes
and for distribution to existing shareholders; costs of shareholders' reports
and meetings of the shareholders of such Series and of the officers or Board of
Trustees of the Fund; and any extraordinary expenses.
Each Series will be responsible for nonrecurring expenses which may
arise, including costs of litigation to which such Series is a party and of
indemnifying officers and Trustees of the Fund with respect to such litigation
and other expenses as determined by the Trustees.
8. Services to Other Companies or Accounts
The Fund and Series understand that the Adviser now acts, will
continue to act and may act in the future as investment adviser to fiduciary and
other managed accounts and to one or more other investment companies or series
of investment companies, and such Series or Fund has no objection to the Adviser
so acting, provided that whenever such Series or Fund and one or more other
accounts or investment companies or portfolios advised by the Adviser have
available funds for investment, investments suitable and appropriate for each
will be allocated in accordance with a formula believed to be equitable to each
entity. Each Series and Fund recognizes that in some cases this procedure may
adversely affect the size of the position obtainable for such Series or Fund. In
addition, each Series and Fund understands that the persons employed by the
Adviser to assist in the performance of the Adviser's duties hereunder will not
devote their full time to such service and nothing contained herein shall be
deemed to limit or restrict the right of the Adviser or any affiliate of the
Adviser to engage in and devote time and attention to other businesses or to
render services of whatever kind or nature, provided that doing so does not
adversely affect the ability of the Adviser to perform its services under this
Agreement.
9. Term of Agreement
This Agreement shall continue for an initial two-year period
commencing on the date first written above, and thereafter shall continue
automatically for successive annual periods, provided such continuance is
specifically approved at least annually by (a) (i) in the case of a Series, the
Board of Trustees of the Fund of which such Series is a part or (ii) in the case
of the High Yield Bond Fund, the Board of Trustees of the Fund or (b) a vote of
a "majority" (as defined in the 1940 Act) of each Series' and Fund's outstanding
voting securities, provided that in either event the continuance is also
approved by a majority of the Board of Trustees of the applicable Fund, who are
not "interested persons" (as defined in said Act) of any party to this
Agreement, by vote cast in person at a meeting called for the purpose of voting
on such approval. This Agreement is terminable with respect to a Series or Fund,
without penalty, on 60 days' written notice, by the Board of Trustees of such
Series and Fund or by vote of holders of a majority of such Series' or Fund's
shares, or upon 90 days' written notice, by the Adviser. This Agreement will
also terminate automatically in the event of its assignment (as defined in said
Act).
10. Representation by the Fund
The Funds represent that copies of their Agreements and Declarations
of Trust, together with all amendments thereto, are on file in such state where
such Fund is registered.
11. Use of Names
The Funds recognize that directors, officers and employees of the
Adviser may from time to time serve as directors, trustees, officers and
employees of corporations and business trusts (including other investment
companies) and that such other corporations and trusts may include the name
"Warburg", "Warburg Pincus", "DLJ", "CS", "CSAM", "Credit Suisse" or "Credit
Suisse Warburg Pincus" as part of their names, and that the Adviser or its
affiliates may enter into advisory or other agreements with such other
corporations and trusts. If the Adviser ceases to act as the investment adviser
of a Series or Fund, such Series or Fund agrees that, at the Adviser's
B-3
request, such Series' or Fund's license to use the words "Warburg", "Warburg
Pincus", "DLJ", "CS", "CSAM", "Credit Suisse" or "Credit Suisse Warburg Pincus"
will terminate and that such Series or Fund will take all necessary action to
change the name of such Series or Fund to names not including the words
"Warburg", "Warburg Pincus", "DLJ", "CS", "CSAM", "Credit Suisse" or "Credit
Suisse Warburg Pincus".
12. Miscellaneous
Notice is hereby given that this Agreement is entered into on behalf
of a Fund by an officer of such Fund in his capacity as an officer and not
individually. It is understood and expressly stipulated that none of the
Trustees or shareholders of any Fund shall be personally liable hereunder.
Neither the Trustees, officers, agents nor shareholders of any Fund assume any
personal liability for obligations entered into on behalf of a Fund. All persons
dealing with a Fund must look solely to the property of such Fund for the
enforcement of any claims against such Fund.
Please confirm that the foregoing is in accordance with your
understanding by indicating your acceptance hereof at the place below indicated,
whereupon it shall become a binding agreement between us.
Very truly yours,
DLJ FOCUS FUNDS
By: _______________________
Name:
Title:
Accepted:
CREDIT SUISSE ASSET MANAGEMENT, LLC
By: _______________________
Name:
Title:
B-4
ANNEX I
TO INVESTMENT ADVISORY AGREEMENT
- --------------------------------------- ----------------------------------------
Annual Fee Rate
(as a percentage of average daily net
Series assets of such Series)
- --------------------------------------- ----------------------------------------
DLJ Core Equity Fund (a series of the .75 of 1% of the first $100,000,000;
DLJ Focus Funds) .50 of 1% of the balance
- --------------------------------------- ----------------------------------------
DLJ Growth and Income Fund (a series of .75 of 1% of the first $75,000,000;
the DLJ Focus Funds) .50 of 1% of the balance
- --------------------------------------- ----------------------------------------
DLJ Small Company Value Fund (a series .875 of 1% of the first $100,000,000;
of the DLJ Focus Funds) .75 of 1% of the next $100,000,000, and
.625 of 1% thereafter
- --------------------------------------- ----------------------------------------
DLJ Fixed Income Fund (a series of the .625 of 1% of the first $100,000,000;
DLJ Focus Funds) .50 of 1% of the balance
- --------------------------------------- ----------------------------------------
DLJ Municipal Trust Fund (a series of .625 of 1% of the first $100,000,000;
the DLJ Focus Funds) .50 of1% of the balance
- --------------------------------------- ----------------------------------------
B-5
Exhibit C
CERTAIN INFORMATION ABOUT CSAM AND CREDIT SUISSE GROUP
General
CSAM is an indirect wholly-owned U.S. subsidiary of Credit Suisse.
Credit Suisse is a global financial services company, providing a comprehensive
range of banking and insurance products. Active on every continent and in all
major financial centers, Credit Suisse comprises five business units -- Credit
Suisse Asset Management (asset management), of which CSAM is a member; Credit
Suisse First Boston (investment banking); Credit Suisse Private Banking (private
banking); Credit Suisse (retail banking); and Winterthur (insurance). Credit
Suisse has approximately $680 billion of global assets under management and
employs approximately 62,000 people worldwide. The principal business address of
Credit Suisse is Paradeplatz 8, CH 8070, Zurich, Switzerland. Credit Suisse
Asset Management companies managed approximately $68 billion in the U.S. and
$198 billion globally as of September 30, 2000.
CSAM's sole member is CSAM Americas Holding Corp. located at 466
Lexington Avenue, New York, New York New York, NY 10017, which is wholly-owned
by Credit Suisse Asset Management Holding Corp., of the same address, which in
turn is wholly-owned by Credit Suisse First Boston, Inc., located at 11 Madison
Avenue, New York, NY 10010, which is indirectly wholly-owned by Credit Suisse
Group.
Executive Officers of CSAM
The following chart sets forth information with respect to name,
address and principal occupations of the executive officer(s) and managing
member(s) of CSAM. (Unless otherwise noted, the person's position at CSAM
constitutes his/her principal occupation.) Each person's address is 466
Lexington Avenue, New York, New York 10017, except for Messrs. Cochran and
Jaffe, whose address is 277 Park Avenue, New York, New York 10172.
- ---------------------- ---------------------------------------------------------
Name Position with CSAM and Principal Occupation
- ---------------------- ---------------------------------------------------------
James P. McCaughan Chief Executive Officer, Managing Director and Chairman
of the Management Committee
- ---------------------- ---------------------------------------------------------
G. Moffett Cochran President, Managing Director and Member of the Management
Committee
- ---------------------- ---------------------------------------------------------
Martin Jaffe Chief Financial Officer, Managing Director and Member of
the Management Committee
- ---------------------- ---------------------------------------------------------
Laurence R. Smith Chief Investment Officer, Managing Director and Member of
the Management Committee
- ---------------------- ---------------------------------------------------------
Elizabeth B. Dater Head of Emerging Growth Group, Managing Director and
Member of the Management Committee
- ---------------------- ---------------------------------------------------------
Christopher F. Corapi Head of Equity Research, Managing Director and Member of
the Management Committee
- ---------------------- ---------------------------------------------------------
Sheila Scott Managing Director and Member of the Management Committee
- ---------------------- ---------------------------------------------------------
C-1
Similar Funds Managed by CSAM
The following chart sets forth information with respect to other
mutual funds advised by CSAM with an investment objective similar to the
investment objective of the Fund.
- --------------------------------------------------------------------------------
Similar Fund Net Assets as Contractual
Currently Managed by CSAM of 10/31/00 Advisory Fee% Fee Waiver
- --------------------------------------------------------------------------------
Open-End Funds
- --------------------------------------------------------------------------------
Credit Suisse Institutional 442,897,653.41 0.375 Yes
U.S. Core Fixed Income Fund
- --------------------------------------------------------------------------------
Warburg Pincus Fixed Income 308,991,579.00 0.500 Yes
Fund
- --------------------------------------------------------------------------------
Warburg Pincus Trust II Fixed 1,878,650.96 0.500 Yes
Income Portfolio
- --------------------------------------------------------------------------------
Brokerage Policies
CSAM is responsible for establishing, reviewing and, where
necessary, modifying the Fund's investment program to achieve its investment
objective. Purchases and sales of newly issued portfolio securities are usually
principal transactions without brokerage commissions effected directly with the
issuer or with an underwriter acting as principal. Other purchases and sales may
be effected on a securities exchange or over-the-counter, depending on where it
appears that the best price or execution will be obtained. The purchase price
paid by the Fund to underwriters of newly issued securities usually includes a
concession paid by the issuer to the underwriter, and purchases of securities
from dealers, acting as either principals or agents in the after market, are
normally executed at a price between the bid and asked price, which includes a
dealer's mark-up or mark-down. Transactions on U.S. stock exchanges and some
foreign stock exchanges involve the payment of negotiated brokerage commissions.
On exchanges on which commissions are negotiated, the cost of transactions may
vary among different brokers. On most foreign exchanges, commissions are
generally fixed. There is generally no stated commission in the case of
securities traded in domestic or foreign over-the-counter markets, but the price
of securities traded in over-the-counter markets includes an undisclosed
commission or mark-up. U.S. Government Securities are generally purchased from
underwriters or dealers, although certain newly issued U.S. Government
Securities may be purchased directly from the U.S. Treasury or from the issuing
agency or instrumentality. No brokerage commissions are typically paid on
purchases and sales of U.S. Government Securities.
In selecting broker-dealers, the Adviser does business exclusively
with those broker-dealers that, in the Adviser's judgment, can be expected to
provide the best service. The service has two main aspects: the execution of buy
and sell orders and the provision of research. In negotiating commissions with
broker-dealers, the Adviser will pay no more for execution and research services
than it considers either, or both together, to be worth. The worth of execution
service depends on the ability of the broker-dealer to minimize costs of
securities purchased and to maximize prices obtained for securities sold. The
worth of research depends on its usefulness in optimizing portfolio composition
and its changes over time. Commissions for the combination of execution and
research services that meet the Adviser's standards may be higher than for
execution services alone or for services that fall below the Adviser's
standards. The Adviser believes that these arrangements may benefit all clients
and not necessarily only the accounts in which the particular investment
transactions occur that are so executed. Further, the Adviser will only receive
brokerage or research service in connection with securities transactions that
are consistent with the "safe harbor" provisions of Section 28(e) of the
Securities Exchange Act of 1934 when paying such higher commissions. Research
services may include research on specific industries or
C-2
companies, macroeconomic analyses, analyses of national and international events
and trends, evaluations of thinly traded securities, computerized trading
screening techniques and securities ranking services, and general research
services.
Investment decisions for the Fund concerning specific portfolio
securities are made independently from those for other clients advised by the
Adviser. Such other investment clients may invest in the same securities as the
Fund. When purchases or sales of the same security are made at substantially the
same time on behalf of such other clients, transactions are averaged as to price
and available investments allocated as to amount, in a manner which the Adviser
believes to be equitable to each client, including the Fund. In some instances,
this investment procedure may adversely affect the price paid or received by the
Fund or the size of the position obtained or sold for the Fund. To the extent
permitted by law, securities may be aggregated with those to be sold or
purchased for the Fund with those to be sold or purchased for such other
investment clients in order to obtain best execution.
All orders for transactions in securities or options on behalf of a
Fund are placed by the Adviser with broker-dealers that it selects, including
CSFB, CSAMSI and affiliates of Credit Suisse. A Fund may utilize CSFB, CSAMSI or
affiliates of Credit Suisse in connection with a purchase or sale of securities
when the Adviser believes that the charge for the transaction does not exceed
usual and customary levels and when doing so is consistent with guidelines
adopted by the Board.
In no instance will portfolio securities be purchased from or sold
to CSAM, CSAMSI or Credit Suisse First Boston ("CS First Boston") or any
affiliated person of the foregoing entities except as permitted by SEC exemptive
order or by applicable law. In addition, the Fund will not give preference to
any institutions with whom the Fund enters into distribution or shareholder
servicing agreements concerning the provision of distribution services or
support services.
Transactions for the Fund may be effected on foreign securities
exchanges. In transactions for securities not actively traded on a foreign
securities exchange, the Fund will deal directly with the dealers who make a
market in the securities involved, except in those circumstances where better
prices and execution are available elsewhere. Such dealers usually are acting as
principal for their own account. On occasion, securities may be purchased
directly from the issuer. Such portfolio securities are generally traded on a
net basis and do not normally involve brokerage commissions. Securities firms
may receive brokerage commissions on certain portfolio transactions, including
options, futures and options on futures transactions and the purchase and sale
of underlying securities upon exercise of options.
The Fund may participate, if and when practicable, in bidding for
the purchase of securities for the Fund's portfolio directly from an issuer in
order to take advantage of the lower purchase price available to members of such
a group. The Fund will engage in this practice, however, only when the Adviser,
in its sole discretion, believes such practice to be otherwise in the Fund's
interest.
C-3
THIS PAGE INTENTIONALLY LEFT BLANK.
C-4
PROXY
[X] PLEASE MARK VOTES
AS IN THIS EXAMPLE
DLJ MUTUAL FUNDS
DLJ Fixed Income Fund
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 (the "Plan") providing
that (i) the Fund would transfer to Warburg Pincus Fixed Income Fund. (the
"Acquiring Fund") all of its assets in exchange for shares of the
Acquiring Fund and the assumption by the Acquiring Fund of the Fund's
liabilities, (ii) such shares of the Acquiring Fund would be distributed
to shareholders of the Fund in liquidation of the Fund, and (iii) the Fund
would subsequently be terminated.
For Against Abstain
[ ] [ ] [ ]
2. To approve a new investment advisory agreement for the Fund.
For Against Abstain
[ ] [ ] [ ]
3. To elect eight Trustees to the Board of Trustees of DLJ Focus Funds.
For All Withhold For All
Nominees Except
[ ] [ ] [ ]
(01) Richard H. Francis (05) James S. Pasman
(02) Jack W. Fritz (06) William W. Priest
(03) Jeffrey E. Garten (07) James P. McCaughan
(04) Peter F. Krogh (08) Steven N. Rappaport
Instruction: If you do not wish your shares voted "For" a particular nominee,
mark the "For All Except" box and strike a line through the name(s) of the
nominee(s). Your shares will be voted "For" the remaining nominee(s).
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:
DLJ FIXED INCOME FUND
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES
SPECIAL MEETING OF SHAREHOLDERS - March 23, 2001
The undersigned hereby appoints Brian Kammerer and Jill Kopin, each with
the power of substitution, as proxies for the undersigned to vote all shares of
the DLJ Fixed Income Fund which the undersigned is entitled to vote at the
Special Meeting of Shareholders of the Fund to be held at the offices of the
Fund, 277 Park Avenue, New York, New York 10172, on March 23, 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?
____________________________________ ________________________________
____________________________________ ________________________________
____________________________________ ________________________________
PROSPECTUSES OF THE ACQUIRING FUND ARE
INCORPORATED BY REFERENCE TO ITS
N-1A REGISTRATION STATEMENT
PART B
STATEMENT OF ADDITIONAL INFORMATION DATED __________, 2001
Acquisition of the Assets of
DLJ FIXED INCOME FUND
277 Park Avenue
New York, New York 10172
(800) 225-8011
By and in Exchange for Shares of
WARBURG PINCUS FIXED INCOME FUND
466 Lexington Avenue
New York, New York 10017
800-WARBURG
This Statement of Additional Information, relating specifically to the
proposed transfer of all of the assets of the DLJ Fixed Income Fund (the "Fund")
to Warburg Pincus Fixed Income Fund (the "Acquiring Fund") in exchange for
shares of the Acquiring Fund and the assumption by the Acquiring Fund of
liabilities of the 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 29, 2000.
2. Annual Reports of the Acquiring Fund and the 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 Report of the Fund and for the Acquiring Fund, each 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) 225-8011.
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 the Fund and the Acquiring Fund, as adjusted,
giving effect to the Acquisition.
PRO FORMA CONDENSED STATEMENT OF ASSETS AND LIABILITIES
AS OF OCTOBER 31, 2000 (UNAUDITED)
DLJ Fixed Income Warburg Pincus Fixed Income
---------------- ---------------------------
Cost Value Cost Value
---- ----- ---- -----
ASSETS
Investments at value $134,328,381 $132,332,436 $363,028,813 $356,405,320
Receivable for fund shares sold -- 50,000 -- 390,491
Cash -- -- -- 625
Receivable for investments sold unsettled -- -- -- 30,531,273
Dividends and interest receivable -- 2,039,139 -- 4,136,088
Prepaid expenses and other assets -- 9,440 -- 36,482
------------ ------------
Total Assets $134,431,015 $391,500,279
============ ============
LIABILITIES
Payable for investments purchased unsettled -- -- -- 81,787,953
Payable for fund shares repurchased -- 12,000 -- 271,907
Due to custodian -- 655,953 -- --
Advisory fee payable -- 52,301 -- 126,361
Distribution fee payable -- 10,091 -- --
Administration fee payable -- -- -- 48,878
Dividend payable -- -- -- 159,416
Accrued expenses payable -- -- -- 114,185
------------ ------------
Total Liabilities 730,345 82,508,700
------------ ------------
NET ASSETS $133,700,670 $308,991,579
============ ============
Common Class
Net Assets -- 302,187,709
Shares outstanding -- 30,885,076
Net asset value, offering price and redemption
price per share -- 9.78
Advisor Class
Net Assets -- 6,803,870
Shares outstanding -- 695,665
Net asset value, offering price and redemption
Price per share -- 9.78
Class A Shares
Net Assets 34,950,921 --
Shares outstanding 3,564,039 --
Net asset value, offering price and redemption
price per share 9.81 --
Maximum offering price per share (net asset value
plus maximum sales charge) 10.30 --
Class B Shares
Net Assets 3,256,257 --
Shares outstanding 332,052 --
Net asset value, offering price and redemption
price per share 9.81 --
Class C Shares
Net Assets 261 --
Shares outstanding 26 --
Net assets value, offering price and redemption
price per share 9.81 --
Class D Shares
Net Assets 95,471,436 --
Shares outstanding 9,734,448 --
Net asset value, offering price and redemption
price per share 9.81 --
Class R Shares
Net Assets 21,795 --
Shares outstanding 2,222 --
Net asset value, offering price and redemption
price per share 9.81 --
Adjustments Pro Forma
------------ -------------------------
Cost Value
----- ------
ASSETS
Investments at value $497,357,194 $488,737,756
Receivable for fund shares sold -- 440,491
Cash -- 625
Receivable for investment sold unsettled -- 30,531,273
Dividends and interest receivable -- 6,175,227
Prepaid expenses and other assets -- 45,922
------------
Total Assets $525,931,294
============
LIABILITIES
Payable for investments purchased unsettled -- 81,787,953
Payable for fund shares repurchased -- 283,907
Due to custodian -- 655,953
Advisory fee payable -- 178,662
Distribution fee payable -- 10,091
Administration fee payable -- 48,878
Dividend payable -- 159,416
Accrued expenses payable -- 114,185
------------
Total Liabilities 83,239,045
------------
NET ASSETS $442,692,249
============
Common Class
Net Assets 95,471,436 397,659,145
Shares outstanding 9,757,652 40,642,728
Net assets value, offering price and redemption
price per share 9.78
Advisor Class
Net Assets 38,229,234 45,033,104
Shares outstanding 3,908,767 4,604,432
Net assets value, offering price and redemption
Price per share 9.78
Class A Shares
Net Assets (34,950,921) --
Shares outstanding (3,564,039) --
Net assets value, offering price and redemption
price per share --
Maximum offering price per share (net asset value
plus maximum sales charge) --
Class B Shares
Net Assets (3,256,257) --
Shares outstanding (332,052) --
Net assets value, offering price and redemption
price per share --
Class C Shares
Net Assets (261) --
Shares outstanding (26) --
Net assets value, offering price and redemption
price per share --
Class D Shares
Net Assets (95,471,436) --
Shares outstanding (9,734,448) --
Net assets value, offering price and redemption
price per share --
Class R Shares
Net Assets (21,795) --
Shares outstanding (2,222) --
Net assets value, offering price and redemption
price per share --
See Notes to Pro Forma Financial Statements
Combined Schedule of Investments (unaudited)
As of October 31, 2000
DLJ Fixed Income (Acquired)
- --------------------------------------------------------------------------------
Shares/Par
Security Name Value Market Value
- ------------- ----- ------------
ANHEUSER BUSCH COS., 7.000%, 09/01/05 1,500,000 1,498,125
AT&T CORP., 6.000%, 03/15/09 5,000,000 4,393,750
BARCLAYS BANK PLC, 7.400%, 12/15/09 2,500,000 2,487,500
COCA-COLA COMPANY, 6.700%, 10/15/36 4,100,000 4,059,000
CONSOLIDATED NATURAL GAS CO.
6.875% 10/15/26 2,000,000 1,952,500
DAIMLERCHRYSLER AG, 6.448%, 11/01/00 1,500,000 1,500,000
FHLB 7.360%, 07/01/04 6,000,000 6,166,020
FHLMC, POOL #220016 8.750%, 10/01/01 1,793 1,814
FHLMC 7.625%, 09/09/09 3,000,000 2,991,300
FHLMC 6.000%, 07/19/04 2,000,000 1,951,700
FHLMC 6.875%, 11/22/06 500,000 492,040
FHLMC, POOL #260499 10.000%, 04/01/16 13,863 14,803
Warburg Pincus Fixed Income (Acquiring)
- --------------------------------------------------------------------------------
Shares/Par
Security Name Value Market Value
- ------------- ----- ------------
ABITIBI/CONSOLID ABY 8.30%, 8/1/2005 2,765,000.00 2,787,261.02
ABN-AMRO BANK 8.25%, 8/1/2009 2,000,000.00 2,060,148.00
ADELPHIA COMMUNICATIONS SRNT 9.375%, 11/15/2009 1,700,000.00 1,462,000.00
AFC ENTERPRISES 10.25%, 5/15/2007 40,000.00 38,400.00
ALLIED WASTE NA 10%, 8/1/2009 1,900,000.00 1,634,000.00
AMERADA HESS CORP. 7.875%, 10/1/2029 800,000.00 804,000.00
AMERICAN GENERAL CORP 7.50%, 8/11/2010 950,000.00 950,778.05
ANADARKO PETROLEUM 7.50%, 10/15/2026 1,500,000.00 1,428,342.00
REPUBLIC OF ARGENTINA FRBS 7.625%, 3/31/2005 1,605,600.00 1,406,907.00
REPUBLIC OF ARGENTINA PAR 6.00%, 3/31/2023 870,000.00 572,569.00
ARGOSY GAMING CO. 10.75%, 6/1/2009 415,000.00 435,750.00
ASSOCIATES CORP. 6.95%, 11/1/2018 500,000.00 462,748.00
AT&T CORP 6.50%, 3/15/2029 920,000.00 724,522.00
BANCO TOTTA SER A PFD, SERIES A CALLABLE
10/11/06 @ $ 25 36,800.0 837,200.0
BANK OF AMERICA CORP 7.80%, 2/15/2010 4,450,000.00 4,526,998.35
BRAND SCAFFOLD 10.25%, 2/15/2008 105,000.00 95,025.00
REPUBLIC OF BRAZIL C 8.00%, 4/15/2014 1,970,256.00 1,467,841.00
REPUBLIC OF BRAZIL DISC Z 7.375%, 4/15/2024 750,000.00 576,094.00
BRITISH SKY BROADCASTING 7.30%, 10/15/2006 700,000.00 634,603.00
GOVERNMENT OF BULGARIA DISC 7.75%, 7/28/2024 480,000.00 360,600.00
REPUBLIC OF BULGARIA FLIRB 2.75%, 7/28/2012 1,550,000.00 1,101,469.00
CALIFORNIA INFRA PG&E 6.42%, 9/25/2008 4,660,000.00 4,566,427.20
CENTURYTEL INC. 8.375%, 10/15/2010 750,000.00 751,093.00
CHASE MANHATTEN CORP 7.875%, 6/15/2010 900,000.00 917,694.00
CILCORP INC 9.375%, 10/15/2029 950,000.00 1,018,403.00
CITICORP 6.375%, 11/15/2008 1,050,000.00 987,825.30
CITIGROUP, INC. 7.25%, 10/1/2010 3,100,000.00 3,080,656.00
COMMONWEALTH EDISON 5.63%, 6/25/2009 5,650,000.00 5,316,791.25
COMMONWEALTH EDISON 8.625%, 2/1/2022 2,500,000.00 2,546,230.00
CONSECO INC 9.00%, 10/15/2006 4,580,000.00 2,885,400.00
COUNTRYWIDE BONDS 6.25%, 4/15/2009 1,750,000.00 1,575,950.25
COX COMMUN. 7.875%, 8/15/2009 550,000.00 554,982.45
CSC HOLDINGS 7.25%, 7/15/2008 585,000.00 543,750.48
CSC HOLDINGS INC. 8.125%, 7/15/2009 70,000.00 68,238.10
CSX CORP 7.95%, 5/1/2027 700,000.00 677,893.00
DAYTON SUPERIOR CORP. 13.00%, 6/15/2009 65,000.00 61,913.00
DAYTON SUPERIOR WTS 65.00 1,300.00
DIME BANCORP, INC. 7.00%, 7/25/2001 3,660,000.00 3,646,722.00
DLJ ACCEPTANCE TRUST 11.00%, 8/1/2019 171,127.20 185,523.43
DUKE ENERGY FIELD SERVICES 7.50%, 8/16/2005 1,550,000.00 1,565,522.00
ENRON CORP 7.875%, 6/15/2003 800,000.00 815,494.40
EQUITY RESIDENTIAL PROP PFD, 72,000.00 1,647,000.00
FHLMC POOL# 220014 8.75%, 10/8/1999 36,991.00 37,442.00
Pro-Forma Fund
- --------------------------------------------------------------------------------
Shares/Par
Security Name Value Market Value
- ------------- ----- ------------
ABITIBI/CONSOLID ABY 8.30%, 8/1/2005 2,765,000.00 2,787,261.02
ABN-AMRO BANK 8.25%, 8/1/2009 2,000,000.00 2,060,148.00
ADELPHIA COMMUNICATIONS SRNT 9.375%, 11/15/2009 1,700,000.00 1,462,000.00
AFC ENTERPRISES 10.25%, 5/15/2007 40,000.00 38,400.00
ALLIED WASTE NA 10%, 8/1/2009 1,900,000.00 1,634,000.00
AMERADA HESS CORP. 7.875%, 10/1/2029 800,000.00 804,000.00
AMERICAN GENERAL CORP 7.50%, 8/11/2010 950,000.00 950,778.05
ANADARKO PETROLEUM 7.50%, 10/15/2026 1,500,000.00 1,428,342.00
ANHEUSER BUSCH COS., 7.000%, 09/01/05 1,500,000 1,498,125
ARGENTINA FRBS 7.625%, 3/31/2005 1,605,600.00 1,406,907.00
ARGENTINA PAR 6.00%, 3/31/2023 870,000.00 572,569.00
ARGOSY GAMING CO. 10.75%, 6/1/2009 415,000.00 435,750.00
ASSOCIATES CORP. 6.95%, 11/1/2018 500,000.00 462,748.00
AT&T CORP., 6.000%, 03/15/09 5,000,000 4,393,750
AT&T CORP 6.50%, 3/15/2029 920,000.00 724,522.00
0 0
BANCO TOTTA SER A PFD CALLABLE 10/11/06 @ $ 25 36,800.0 837,200.0
BANK OF AMERICA CORP 7.80%, 2/15/2010 4,450,000.00 4,526,998.35
BARCLAYS BANK PLC, 7.400%, 12/15/09 2,500,000 2,487,500
BRAND SCAFFOLD 10.25%, 2/15/2008 105,000.00 95,025.00
BRAZIL C 8.00%, 4/15/2014 1,970,256.00 1,467,841.00
BRAZIL DISC Z 7.375%, 4/15/2024 750,000.00 576,094.00
BRITISH SKY BROADCASTING 7.30%, 10/15/2006 700,000.00 634,603.00
BULGARIA DISC 7.75%, 7/28/2024 480,000.00 360,600.00
REPUBLIC OF BULGARIA FLIRB 2.75%, 7/28/2012 1,550,000.00 1,101,469.00
CALIFORNIA INFRA PG&E 6.42%, 9/25/2008 4,660,000.00 4,566,427.20
CENTURYTEL INC. 8.375%, 10/15/2010 750,000.00 751,093.00
CHASE MANHATTEN CORP 7.875%, 6/15/2010 900,000.00 917,694.00
CILCORP INC 9.375%, 10/15/2029 950,000.00 1,018,403.00
CITICORP 6.375%, 11/15/2008 1,050,000.00 987,825.30
CITIGROUP, INC. 7.25%, 10/1/2010 3,100,000.00 3,080,656.00
COCA-COLA COMPANY, 6.700%, 10/15/36 4,100,000 4,059,000
COMMONWEALTH EDISON 5.63%, 6/25/2009 5,650,000.00 5,316,791.25
COMMONWEALTH EDISON 8.625%, 2/1/2022 2,500,000.00 2,546,230.00
CONSECO INC 9% 9.00%, 10/15/2006 4,580,000.00 2,885,400.00
CONSOLIDATED NATURAL GAS CO., 6.875%, 10/15/26 2,000,000 1,952,500
COUNTRYWIDE BONDS 6.25%, 4/15/2009 1,750,000.00 1,575,950.25
COX COMMUN. 7.875%, 8/15/2009 550,000.00 554,982.45
CSC HOLDINGS 7.25%, 7/15/2008 585,000.00 543,750.48
CSC HOLDINGS INC. 8.125%, 7/15/2009 70,000.00 68,238.10
CSX CORP 7.95%, 5/1/2027 700,000.00 677,893.00
DAIMLERCHRYSLER AG, 6.448%, 11/01/00 1,500,000 1,500,000
DAYTON SUPERIOR CORP. 13.00%, 6/15/2009 65,000.00 61,913.00
DAYTON SUPERIOR WTS 65.00 1,300.00
DIME BANCORP, INC. 7.00%, 7/25/2001 3,660,000.00 3,646,722.00
DLJ ACCEPTANCE TRUST 11.00%, 8/1/2019 171,127.20 185,523.43
DUKE ENERGY FIELD SERVICES 7.50%, 8/16/2005 1,550,000.00 1,565,522.00
ENRON CORP 7.875%, 6/15/2003 800,000.00 815,494.40
EQUITY RESIDENTIAL PROP PFD, 72,000.00 1,647,000.00
FHLB 7.360%, 07/01/04 6,000,000 6,166,020
FHLMC POOL# 220014 8.75%, 10/1/2001 36,991.00 37,442.00
FHLMC, POOL #220016 8.750%, 10/01/01 1,793 1,814
FHLMC 7.625%, 09/09/09 3,000,000 2,991,300
FHLMC 6.000%, 07/19/04 2,000,000 1,951,700
FHLMC 6.875%, 11/22/06 500,000 492,040
FHLMC, POOL #260499 10.000%, 04/01/16 13,863 14,803
DLJ Fixed Income (Acquired)
- --------------------------------------------------------------------------------
Shares/Par
Security Name Value Market Value
- ------------- ----- ------------
FHLMC, POOL #292065 8.500%, 04/01/17 1,519,982 1,571,753
FHLMC, POOL #606523 7.008%, 10/01/19 787,253 801,503
FNMA, POOL #312088 7.000%, 06/01/03 443,543 442,572
FNMA, POOL #76368 9.250%, 09/01/03 25,738 26,993
FNMA, POOL #76378 9.250%, 09/01/03 39,329 41,246
FNMA 5.625%, 05/14/04 3,625,000 3,527,705
FNMA 5.750%, 06/15/05 3,000,000 2,910,210
FNMA 6.950%, 11/13/06 1,000,000 986,010
FNMA, POOL #125136 8.000%, 07/01/07 588,647 599,496
FNMA, POOL # 035574 8.750%, 10/01/08 85,310 87,576
FNMA, POOL #004542 12.000%, 12/01/08 198,806 223,345
FNMA, POOL #243876 9.000%, 01/01/09 142,548 147,002
FNMA 6.375%, 06/15/09 2,404,000 2,355,559
FNMA, POOL #270674 9.000%, 09/01/17 375,492 387,226
FNMA, POOL #224635 9.000%, 09/01/20 77,358 79,776
FNMA, POOL #124211 7.410%, 12/01/21 1,103,948 1,118,642
FNMA, POOL #124790 9.000%, 02/01/23 407,388 420,119
Warburg Pincus Fixed Income (Acquiring)
- --------------------------------------------------------------------------------
Shares/Par
Security Name Value Market Value
- ------------- ----- ------------
FINOVA CAPITAL CORP. 7.625%, 9/21/2009 1,600,000.00 912,048.00
FNMA 7.00%, 3/20/2008 4,920,000.00 4,865,092.80
FNMA SERIES 1993-196 5.50%, 10/25/2008 30,380.00 2,895,472.23
FNMA 7.00%, 7/1/2015 9,800,000.00 9,751,000.00
FNMA 5.75%, 2/18/2021 12,248,000.00 11,737,258.40
FNMA 6.424%, 12/25/2023 4,700,000.00 4,578,351.78
FNMA 6.00%, 07/18/2026 11,000,000.00 10,030,350.00
FNMA 8.00%, 3/1/2028 4,733,952.07 4,794,605.83
FNMA 7.50%, 5/1/2029 835,504.36 834,721.07
FNMA 7.50%, 7/1/2029 60,867.28 60,810.22
FNMA 7.50%, 8/1/2029 24,308.09 24,285.30
FNMA 7.50%, 8/1/2029 32,461.22 32,430.79
FNMA 7.50%, 8/1/2029 570,026.62 569,492.22
FNMA 7.50%, 8/1/2029 648,928.54 648,320.17
FNMA 7.50%, 8/1/2029 75,791.79 75,720.74
FNMA 7.00%, 9/1/2029 316,774.59 310,736.07
FNMA 7.50%, 9/1/2029 35,805.38 35,771.81
FNMA 7.50%, 9/1/2029 25,907.43 25,883.14
FNMA 7.50%, 9/1/2029 107,484.03 107,383.26
FNMA 7.00%, 10/1/2029 653,231.28 640,779.06
FNMA 7.50%, 10/1/2029 514,742.07 514,259.50
FNMA 7.50%, 10/1/2029 542,182.08 541,673.78
FNMA 7.50%, 10/1/2029 36,943.74 36,909.11
FNMA 7.50%, 10/1/2029 39,001.53 38,964.97
FNMA 7.50%, 10/1/2029 24,410.20 24,387.32
FNMA 7.50%, 10/1/2029 40,989.57 40,951.14
FNMA 7.50%, 10/1/2029 79,945.64 79,870.69
FNMA 8.00%, 10/1/2029 199,479.79 202,035.62
FNMA 7.50%, 11/1/2029 335,987.59 335,672.60
FNMA 7.50%, 11/1/2029 40,313.61 40,275.82
FNMA 7.50%, 11/1/2029 656,982.85 656,366.93
FNMA 7.50%, 11/1/2029 98,564.57 98,472.17
FNMA 7.00%, 12/1/2029 144,546.18 141,790.77
FNMA 7.00%, 12/1/2029 1,082,021.87 1,061,395.83
FNMA 7.00%, 12/1/2029 560,232.65 549,553.22
FNMA 7.00%, 12/1/2029 54,689.50 53,646.98
FNMA 7.50%, 12/1/2029 571,458.47 570,922.73
FNMA 7.50%, 12/1/2029 190,654.08 190,475.34
FNMA 7.50%, 12/1/2029 382,022.62 381,664.47
FNMA 7.50%, 12/1/2029 45,737.58 45,694.70
FNMA 7.00%, 1/1/2030 40,224.72 39,457.94
FNMA 7.00%, 1/1/2030 51,688.78 50,703.46
FNMA 30 YR 7.50%, 1/1/2030 78,041.32 77,968.16
FNMA 7.50%, 1/1/2030 584,417.51 583,869.62
Pro-Forma Fund
- --------------------------------------------------------------------------------
Shares/Par
Security Name Value Market Value
- ------------- ----- ------------
FHLMC, POOL #292065 8.500%, 04/01/17 1,519,982 1,571,753
FHLMC, POOL #606523 7.008%, 10/01/19 787,253 801,503
FINOVA CAPITAL CORP. 7.625%, 9/21/2009 1,600,000.00 912,048.00
FNMA, POOL #312088 7.000%, 06/01/03 443,543 442,572
FNMA, POOL #76368 9.250%, 09/01/03 25,738 26,993
FNMA, POOL #76378 9.250%, 09/01/03 39,329 41,246
FNMA 5.625%, 05/14/04 3,625,000 3,527,705
FNMA 5.750%, 06/15/05 3,000,000 2,910,210
FNMA 6.950%, 11/13/06 1,000,000 986,010
FNMA, POOL #125136 8.000%, 07/01/07 588,647 599,496
FNMA 7.00%, 3/20/2008 4,920,000.00 4,865,092.80
FNMA, POOL # 035574 8.750%, 10/01/08 85,310 87,576
FNMA SERIES 1993-196 5.50%, 10/25/2008 3038000 2895472.23
FNMA, POOL #004542 12.000%, 12/01/08 198,806 223,345
FNMA, POOL #243876 9.000%, 01/01/09 142,548 147,002
FNMA 6.375%, 06/15/09 2,404,000 2,355,559
FNMA, POOL #270674 9.000%, 09/01/17 375,492 387,226
FNMA 7.00%, 7/1/2015 9,800,000.00 9,751,000.00
FNMA, POOL #224635 9.000%, 09/01/20 77,358 79,776
FNMA 5.75%, 2/18/2021 12,248,000.00 11,737,258.40
FNMA, POOL #124211 7.410%, 12/01/21 1,103,948 1,118,642
FNMA, POOL #124790 9.000%, 02/01/23 407,388 420,119
FNMA 6.4241% 12/25/23 6.424%, 12/25/2023 4,700,000.00 4,578,351.78
FNMA 6.00%, 07/18/2026 11,000,000.00 10,030,350.00
FNMA 8.00%, 3/1/2028 4,733,952.07 4,794,605.83
FNMA 7.50%, 5/1/2029 835,504.36 834,721.07
FNMA 7.50%, 7/1/2029 60,867.28 60,810.22
FNMA 7.50%, 8/1/2029 24,308.09 24,285.30
FNMA 7.50%, 8/1/2029 32,461.22 32,430.79
FNMA 7.50%, 8/1/2029 570,026.62 569,492.22
FNMA 7.50%, 8/1/2029 648,928.54 648,320.17
FNMA 7.50%, 8/1/2029 75,791.79 75,720.74
FNMA 7.00%, 9/1/2029 316,774.59 310,736.07
FNMA 7.50%, 9/1/2029 35,805.38 35,771.81
FNMA 7.50%, 9/1/2029 25,907.43 25,883.14
FNMA 7.50%, 9/1/2029 107,484.03 107,383.26
FNMA 7.00%, 10/1/2029 653,231.28 640,779.06
FNMA 7.50%, 10/1/2029 514,742.07 514,259.50
FNMA 7.50%, 10/1/2029 542,182.08 541,673.78
FNMA 7.50%, 10/1/2029 36,943.74 36,909.11
FNMA 7.50%, 10/1/2029 39,001.53 38,964.97
FNMA 7.50%, 10/1/2029 24,410.20 24,387.32
FNMA 7.50%, 10/1/2029 40,989.57 40,951.14
FNMA 7.50%, 10/1/2029 79,945.64 79,870.69
FNMA 8.00%, 10/1/2029 199,479.79 202,035.62
FNMA 7.50%, 11/1/2029 335,987.59 335,672.60
FNMA 7.50%, 11/1/2029 40,313.61 40,275.82
FNMA 7.50%, 11/1/2029 656,982.85 656,366.93
FNMA 7.50%, 11/1/2029 98,564.57 98,472.17
FNMA 7.00%, 12/1/2029 144,546.18 141,790.77
FNMA 7.00%, 12/1/2029 1,082,021.87 1,061,395.83
FNMA 7.00%, 12/1/2029 560,232.65 549,553.22
FNMA 7.00%, 12/1/2029 54,689.50 53,646.98
FNMA 7.50%, 12/1/2029 571,458.47 570,922.73
FNMA 7.50%, 12/1/2029 190,654.08 190,475.34
FNMA 7.50%, 12/1/2029 382,022.62 381,664.47
FNMA 7.50%, 12/1/2029 45,737.58 45,694.70
FNMA 7.00%, 1/1/2030 40,224.72 39,457.94
FNMA 7.00%, 1/1/2030 51,688.78 50,703.46
FNMA 30 YR 7.5% 7.50%, 1/1/2030 78,041.32 77,968.16
FNMA 7.50%, 1/1/2030 584,417.51 583,869.62
DLJ Fixed Income (Acquired)
- --------------------------------------------------------------------------------
Shares/Par
Security Name Value Market Value
- ------------- ----- ------------
FORD MOTOR CREDIT CO., 7.375%, 10/28/09 5,000,000 4,887,500
GNMA, POOL #058985 11.000%, 07/15/13 11,449 12,547
GNMA, POOL #068764 12.000%, 09/15/13 17,163 19,324
GNMA, POOL #296254 9.500%, 09/15/20 4,539 4,721
GNMA, POOL #93401 9.500%, 01/15/10 111,954.00 115,837
HEWLETT-PACKARD CO. 7.150%. 06/15/05 3,250,000 3,258,125
HOUSEHOLD FINANCE CO., 6.000%, 05/01/04 4,550,000 4,379,375
Warburg Pincus Fixed Income (Acquiring)
- --------------------------------------------------------------------------------
Shares/Par
Security Name Value Market Value
- ------------- ----- ------------
FNMA 7.125%, 1/15/2030 7,435,000.00 7,757,470.82
FNMA 7.00%, 2/1/2030 1,036,972.03 1,017,204.75
FNMA 7.00%, 2/1/2030 24,852.49 24,378.74
FNMA 7.00%, 2/1/2030 326,291.56 320,071.63
FNMA 7.00%, 2/1/2030 1,227,127.44 1,203,735.32
FNMA 7.50%, 2/1/2030 34,484.91 34,452.58
FNMA7.50%, 2/1/2030 47,147.23 47,103.03
FNMA 7.50%, 2/1/2030 99,836.20 99,742.60
FNMA 8.00%, 2/1/2030 215,362.82 218,122.16
FNMA 7.00%, 3/1/2030 417,464.97 409,507.04
FNMA 7.00%, 3/1/2030 634,563.37 622,467.01
FNMA 7.00%, 3/1/2030 919,336.15 901,811.30
FNMA 7.00%, 3/1/2030 446,690.73 438,175.69
FNMA 7.00%, 3/1/2030 340,293.39 333,806.55
FNMA 7.00%, 3/1/2030 723,120.98 709,336.49
FNMA 7.00%, 3/1/2030 271,120.30 265,952.07
FNMA 7.00%, 3/1/2030 490,327.55 480,980.68
FNMA 7.00%, 3/1/2030 1,472,134.13 1,444,071.57
FNMA 7.50%, 3/1/2030 825,744.11 824,969.97
FNMA 7.50%, 3/1/2030 916,395.34 915,536.22
FNMA 7.50%, 3/1/2030 993,898.76 992,966.98
FNMA 7.50%, 3/1/2030 63,214.71 63,155.45
FNMA 7.50%, 3/1/2030 172,081.68 171,920.35
FNMA 7.50%, 3/1/2030 686,194.63 685,551.32
FNMA 7.50%, 3/1/2030 777,387.59 776,658.79
FNMA 7.50%, 3/1/2030 76,769.49 76,697.52
FNMA 7.50%, 3/1/2030 665,872.72 665,248.46
FNMA 7.50%, 3/1/2030 163,912.60 163,758.93
FNMA 7.50%, 3/1/2030 69,158.09 69,093.25
FNMA 7.50%, 3/1/2030 685,753.49 685,110.60
FNMA 8.00%, 3/1/2030 915,751.06 927,484.12
FNMA 8.00%, 3/1/2030 565,083.41 572,323.54
FNMA 8.00%, 1/1/2030 649,996.57 658,324.65
FNMA 8.00%, 3/1/2030 1,294,645.75 1,311,233.40
FNMA 8.00%, 3/1/2030 843,284.73 854,089.32
FNMA 8.00%, 3/1/2030 563,176.66 570,392.36
FNMA 30YR TBA 7.00%, 6/1/2030 9,600,000.00 9,411,000.00
FNMA 30YR TBA 8.00%, 6/1/2030 28,800,000.00 29,151,000.00
FORD MOTOR CO. 7.45%, 7/16/2031 1,650,000.00 1,525,159.35
FORD MOTOR CREDIT 7.88%, 6/15/2010 2,260,000.00 2,282,803.40
GE GLOBAL INS. 7.50%, 6/15/10 7.50%, 6/15/2010 1,600,000.00 1,616,860.80
GENERAL MOTORS CORP. 6.75%, 5/1/2028 1,725,000.00 1,503,353.03
GLOBAL CROSSING 9.50%, 11/15/2009 1,675,000.00 1,608,000.00
GNMA TBA 7.50%, 7/1/2030 14,750,000.00 14,805,312.50
GOLDEN STATE ESCROW 7.00%, 8/1/2003 3,115,000.00 2,984,842.84
GOLDMAN SACHS 7.80%, 1/28/2010 300,000.00 303,403.50
GOTHIC PRODUCTION CORP. 11.125%, 5/1/2005 35,000.00 36,925.00
HCA-THE HEALTHCARE CO, 8.75%, 9/1/2010 110,000.00 111,170.07
HMH PROPERTIES INC 9.50%, 5/15/2005 2,980,000.00 2,920,400.00
HOLLINGER INTL PUBLISHING 8.625%, 3/15/2005 35,000.00 35,175.00
JOHN HANCOCK GLOB FDG 7.90%, 7/2/2010 2,940,000.00 3,014,864.16
INST. MONEY MARKET TRUST, 34,850,559.23 34,850,559.23
KMART CORP 8.375%, 12/1/2004 1,205,000.00 1,044,055.38
Pro-Forma Fund
- --------------------------------------------------------------------------------
Shares/Par
Security Name Value Market Value
- ------------- ----- ------------
FNMA 7.125%, 1/15/2030 7,435,000.00 7,757,470.82
FNMA 7.0% 7.00%, 2/1/2030 1,036,972.03 1,017,204.75
FNMA 7.0% 7.00%, 2/1/2030 24,852.49 24,378.74
FNMA 7.0% 7.00%, 2/1/2030 326,291.56 320,071.63
FNMA 7.0% 7.00%, 2/1/2030 1,227,127.44 1,203,735.32
FNMA 7.50%, 2/1/2030 34,484.91 34,452.58
FNMA7.50%, 2/1/2030 47,147.23 47,103.03
FNMA 7.5% 7.50%, 2/1/2030 99,836.20 99,742.60
FNMA 8% 8.00%, 2/1/2030 215,362.82 218,122.16
FNMA 7.0% 7.00%, 3/1/2030 417,464.97 409,507.04
FNMA 7.0% 7.00%, 3/1/2030 634,563.37 622,467.01
FNMA 7.0% 7.00%, 3/1/2030 919,336.15 901,811.30
FNMA 7.0% 7.00%, 3/1/2030 446,690.73 438,175.69
FNMA 7.0% 7.00%, 3/1/2030 340,293.39 333,806.55
FNMA 7.0% 7.00%, 3/1/2030 723,120.98 709,336.49
FNMA 7.0% 7.00%, 3/1/2030 271,120.30 265,952.07
FNMA 7.0% 7.00%, 3/1/2030 490,327.55 480,980.68
FNMA 7.0% 7.00%, 3/1/2030 1,472,134.13 1,444,071.57
FNMA7.50%, 3/1/2030 825,744.11 824,969.97
FNMA 7.50%, 3/1/2030 916,395.34 915,536.22
FNMA 7.50%, 3/1/2030 993,898.76 992,966.98
FNMA 7.50%, 3/1/2030 63,214.71 63,155.45
FNMA 7.50%, 3/1/2030 172,081.68 171,920.35
FNMA 7.50%, 3/1/2030 686,194.63 685,551.32
FNMA 7.50%, 3/1/2030 777,387.59 776,658.79
FNMA 7.50%, 3/1/2030 76,769.49 76,697.52
FNMA 7.50%, 3/1/2030 665,872.72 665,248.46
FNMA 7.50%, 3/1/2030 163,912.60 163,758.93
FNMA 7.50%, 3/1/2030 69,158.09 69,093.25
FNMA 7.50%, 3/1/2030 685,753.49 685,110.60
FNMA 8.00%, 3/1/2030 915,751.06 927,484.12
FNMA 8.00%, 3/1/2030 565,083.41 572,323.54
FNMA 8.00%, 1/1/2030 649,996.57 658,324.65
FNMA 8.00%, 3/1/2030 1,294,645.75 1,311,233.40
FNMA 8.00%, 3/1/2030 843,284.73 854,089.32
FNMA 8.00%, 3/1/2030 563,176.66 570,392.36
FNMA 30YR TBA 7.0% 7.00%, 6/1/2030 9,600,000.00 9,411,000.00
FNMA 30YR TBA 8.0% 8.00%, 6/1/2030 28,800,000.00 29,151,000.00
FORD MOTOR CREDIT CO., 7.375%, 10/28/09 5,000,000 4,887,500
FORD MOTOR CO. 7.45%, 7/16/2031 1,650,000.00 1,525,159.35
FORD MOTOR CREDIT 7.88%, 6/15/2010 2,260,000.00 2,282,803.40
GE GLOBAL INS. 7.50%, 6/15/10 7.50%, 6/15/2010 1,600,000.00 1,616,860.80
GENERAL MOTORS CORP. 6.75%, 5/1/2028 1,725,000.00 1,503,353.03
GLOBAL CROSSING 9.50%, 11/15/2009 1,675,000.00 1,608,000.00
GNMA, POOL #058985 11.000%, 07/15/13 11,449 12,547
GNMA, POOL #068764 12.000%, 09/15/13 17,163 19,324
GNMA, POOL #296254 9.500%, 09/15/20 4,539 4,721
GNMA, POOL #93401 9.500%, 01/15/10 111,954.00 115,837
GNMA TBA 7.50%, 7/1/2030 14,750,000.00 14,805,312.50
GOLDEN STATE ESCROW 7.00%, 8/1/2003 3,115,000.00 2,984,842.84
GOLDMAN SACHS 7.80%, 1/28/2010 300,000.00 303,403.50
GOTHIC PRODUCTION CORP. 11.125%, 5/1/2005 35,000.00 36,925.00
HCA-THE HEALTHCARE CO, 8.75%, 9/1/2010 110,000.00 111,170.07
HEWLETT-PACKARD CO. 7.150%. 06/15/05 3,250,000 3,258,125
HMH PROPERTIES INC 9.50%, 5/15/2005 2,980,000.00 2,920,400.00
HOLLINGER INTL PUBLISHING 8.625%, 3/15/2005 35,000.00 35,175.00
HOUSEHOLD FINANCE CO., 6.000%, 05/01/04 4,550,000 4,379,375
JOHN HANCOCK GLOB FDG 7.90%, 7/2/2010 2,940,000.00 3,014,864.16
INST. MONEY MARKET TRUST, 34,850,559.23 34,850,559.23
KMART CORP 8.375%, 12/1/2004 1,205,000.00 1,044,055.38
DLJ Fixed Income (Acquired)
- --------------------------------------------------------------------------------
Shares/Par
Security Name Value Market Value
- ------------- ----- ------------
MBNA MASTER CREDIT CARD TRUST, 6.450%,
02/15/08 5,000,000 4,938,25
MCI COMMUNICATIONS CORP., 6.125%, 04/15/02 5,000,000 4,937,50
MERILL LYNCH & CO., INC., 6.553%, 11/02/00 3,200,000 3,199,41
J.P. MORGAN & CO., 5.750%, 02/25/04 3,000,000 2,883,75
NATIONAL AUSTRALIA FUNDING,
6.581% 11/01/00 2,201,000 2,201,00
NATIONAL RURAL UTILITIES COOPERATIVE
FINANCE CORP., 6.125%, 05/15/05 1,000,000 968,75
OKLAHOMA GAS & ELECTRIC CO., 6.500%,
07/15/17 4,000,000 3,925,00
Warburg Pincus Fixed Income (Acquiring)
- --------------------------------------------------------------------------------
Shares/Par
Security Name Value Market Value
- ------------- ----- ------------
KONINKLIJKE KPN NV 8.375%, 10/1/2030 850,000.00 834,275.00
KOREA ASSET FUNDING 8.8913%, 2/10/2009 800,000.00 794,000.00
KROGER CO. 6.80%, 12/15/2018 1,500,000.00 1,292,080.50
LB COMMERCIAL CONDUIT 7.105%, 7/15/2008 1,653,214.00 1,666,612.14
LEHMAN BROTHERS HOLDINGS 8.25%, 6/15/2007 2,250,000.00 2,299,527.00
LEVEL 3 COMM 9.125%, 5/1/2008 3,000,000.00 2,437,500.00
LOCKHEED MARTIN 8.50%, 12/1/2029 2,300,000.00 2,467,998.90
LOCKHEED MARTIN 7.95%, 12/1/2005 2,230,000.00 2,293,806.99
LONG ISLAND SAVINGS BANK 7.00%, 6/13/2002 750,000.00 749,067.00
MAGNUM HUNTER 10.00%, 6/1/2007 1,370,000.00 1,349,450.00
MBNA CREDIT CARD 7.00%, 2/15/2012 1,000,000.00 1,004,350.00
MERRILL LYNCH MORTGAGE 7.56%, 9/15/2009 3,300,000.00 3,390,222.00
MGM GRAND INC 9.75%, 6/1/2007 780,000.00 813,150.00
MGM MIRAGE, INC. 8.50%, 9/15/2010 1,100,000.00 1,081,525.50
MORGAN STANLEY DEAN WITTER 7.75%, 6/15/2005 2,200,000.00 2,247,755.40
MORGAN STANLEY MORTGAGE TRUST 7.00%, 7/20/2021 2,664,335.36 2,634,299.77
NATEXIS BANK SER A PFD, 65,050.00 6,214,307.81
NEXTLINK 10.75%, 11/15/2008 40,000.00 35,200.00
NEXTLINK COMM 10.50%, 12/1/2009 1,000,000.00 870,000.00
NEXTLINK COMMUNICATIONS 10.75%, 6/1/2009 415,000.00 366,237.50
NEXTLINK COMMUNICATIONS 12.125%, 12/1/2009 1,610,000.00 784,875.00
NOMURA ASSET SECURITIES CORP. 6.68%, 12/15/2001 4,000,000.00 3,966,050.40
NOMURA ASSET SECURITIES CORP. 8.30%, 9/25/2024 788,853.55 795,759.96
NORFOLK SOUTHERN CORP 7.80%, 5/15/2027 700,000.00 681,953.30
NTL INC. 11.50%, 10/1/2008 1,400,000.00 1,288,000.00
NUEVO ENERGY CO. 9.375%, 10/1/2010 65,000.00 65,000.00
OWENS ILL 7.35%, 5/15/2008 80,000.00 54,800.00
PACIFIC GAS & ELECTRIC 7.375%, 11/1/2005 800,000.00 799,232.80
PARK PLACE 7.875%, 12/15/2005 1,015,000.00 979,475.00
PARKER DRILLING CO. 9.75%, 11/15/2006 25,000.00 24,625.00
PETROLEUM GEO-SERVICES 8.15%, 7/15/2029 550,000.00 535,876.00
PHILLIPS PET 8.50%, 5/25/2005 500,000.00 527,973.50
PHILLIPS PET 8.75%, 5/25/2010 700,000.00 765,923.90
POLAND PAR 3.50%, 10/27/2024 1,450,000.00 913,500.00
POLAND RSTA 4.00%, 10/27/2024 420,000.00 286,912.50
POTOMAC ELECTRIC POWER 8.50%, 5/15/2027 2,000,000.00 2,039,762.00
PROLOGIS TRUST SERIES C PFD, 27,250.00 1,181,118.55
PSINET INC. 10.00%, 2/15/2005 70,000.00 33,775.00
RAYTHEON CO 7.20%, 8/15/2027 800,000.00 734,954.40
RBB SWEEP, 14,967,214.00 14,967,214.00
REPUBLIC OF ARGENTINA 11.00, 12/4/2005 660,000.00 594,000.00
RESIDENTIAL FUNDING SEC 1 6.75%, 1/25/2011 632,479.55 628,526.55
RIGGS CAPITAL TRUST II 8.875%, 3/15/2027 3,400,000.00 2,505,983.60
RUSSIAN FEDERATION 2.50%, 3/31/2030 3,980,000.00 1,492,500.00
RYLAND GROUP 9.75%, 9/1/2010 45,000.00 43,425.00
Pro-Forma Fund
- --------------------------------------------------------------------------------
Shares/Par
Security Name Value Market Value
- ------------- ----- ------------
KONINKLIJKE KPN NV 8.375%, 10/1/2030 850,000.00 834,275.00
KOREA ASSET FUNDING 8.8913%, 2/10/2009 800,000.00 794,000.00
KROGER CO. 6.80%, 12/15/2018 1,500,000.00 1,292,080.50
LB COMMERCIAL CONDUIT 7.105%, 7/15/2008 1,653,214.00 1,666,612.14
LEHMAN BROTHERS HOLDINGS 8.25%, 6/15/2007 2,250,000.00 2,299,527.00
LEVEL 3 COMM 9.125%, 5/1/2008 3,000,000.00 2,437,500.00
LOCKHEED MARTIN 8.50%, 12/1/2029 2,300,000.00 2,467,998.90
LOCKHEED MARTIN 7.95%, 12/1/2005 2,230,000.00 2,293,806.99
LONG ISLAND SAVINGS BANK 7.00%, 6/13/2002 750,000.00 749,067.00
MAGNUM HUNTER 10.00%, 6/1/2007 1,370,000.00 1,349,450.00
MBNA MASTER CREDIT CARD TRUS, 6.450%, 02/15/08 5,000,000 4,938,250
MBNA CREDIT CARD 7.00%, 2/15/2012 1,000,000.00 1,004,350.00
MCI COMMUNICATIONS CORP., 6.125%, 04/15/02 5,000,000 4,937,500
MERILL LYNCH & CO., INC., 6.553%, 11/02/00 3,200,000 3,199,418
MERRILL LYNCH MORTGAGE 7.56%, 9/15/2009 3,300,000.00 3,390,222.00
MGM GRAND INC 9.75%, 6/1/2007 780,000.00 813,150.00
MGM MIRAGE, INC. 8.50%, 9/15/2010 1,100,000.00 1,081,525.50
J.P. MORGAN & CO., 5.750%, 02/25/04 3,000,000 2,883,750
MORGAN STANLEY DEAN WITTER 7.75%, 6/15/2005 2,200,000.00 2,247,755.40
MORGAN STANLEY MORTGAGE TRUST 7.00%, 7/20/2021 2,664,335.36 2,634,299.77
NATEXIS BANK SER A PFD, 65,050.00 6,214,307.81
NATIONAL AUSTRALIA FUNDING, 6.581%, 11/01/00 2,201,000 2,201,000
NATIONAL RURAL UTILITIES COOPERATIVE FINANCE CORP.
6.125%, 05/15/05 1,000,000 968,750
NEXTLINK 10.75%, 11/15/2008 40,000.00 35,200.00
NEXTLINK COMM 10.50%, 12/1/2009 1,000,000.00 870,000.00
NEXTLINK COMMUNICATIONS 10.75%, 6/1/2009 415,000.00 366,237.50
NEXTLINK COMMUNICATIONS 12.125%, 12/1/2009 1,610,000.00 784,875.00
NOMURA ASSET SECURITIES CORP. 6.68%, 12/15/2001 4,000,000.00 3,966,050.40
NOMURA ASSET SECURITIES CORP. 8.30%, 9/25/2024 788,853.55 795,759.96
NORFOLK SOUTHERN CORP 7.80%, 5/15/2027 700,000.00 681,953.30
NTL INC. 11.50%, 10/1/2008 1,400,000.00 1,288,000.00
NUEVO ENERGY CO. 9.375%, 10/1/2010 65,000.00 65,000.00
OKLAHOMA GAS & ELECTRIC CO., 6.500%, 07/15/17 4,000,000 3,925,000
OWENS ILL 7.35%, 5/15/2008 80,000.00 54,800.00
PARK PLACE 7.875%, 12/15/2005 800,000.00 799,232.80
PARK PLACE 7.875% 7.875%, 12/15/2005 1,015,000.00 979,475.00
PARKER DRILLING CO. 9.75%, 11/15/2006 25,000.00 24,625.00
PETROLEUM GEO-SERVICES 8.15%, 7/15/2029 550,000.00 535,876.00
PHILLIPS PET 8.50%, 5/25/2005 500,000.00 527,973.50
PHILLIPS PET 8.75%, 5/25/2010 700,000.00 765,923.90
POLAND PAR 3.50%, 10/27/2024 1,450,000.00 913,500.00
POLAND RSTA 4.00%, 10/27/2024 420,000.00 286,912.50
POTOMAC ELECTRIC POWER 8.50%, 5/15/2027 2,000,000.00 2,039,762.00
PROLOGIS TRUST SERIES C PFD, 27,250.00 1,181,118.55
PSINET INC. 10.00%, 2/15/2005 70,000.00 33,775.00
RAYTHEON CO 7.20%, 8/15/2027 800,000.00 734,954.40
RBB SWEEP, 14,967,214.00 14,967,214.00
REPUBLIC OF ARGENTINA 11.00, 12/4/2005 660,000.00 594,000.00
RESIDENTIAL FUNDING SEC 1 6.75%, 1/25/2011 632,479.55 628,526.55
RIGGS CAPITAL TRUST II 8.875%, 3/15/2027 3,400,000.00 2,505,983.60
RUSSIAN FEDERATION 2.50%, 3/31/2030 3,980,000.00 1,492,500.00
RYLAND GROUP 9.75%, 9/1/2010 45,000.00 43,425.00
DLJ Fixed Income (Acquired)
- --------------------------------------------------------------------------------
Shares/Par
Security Name Value Market Value
- ------------- ----- ------------
SEARS CREDIT ACCOUNT MASTER TRUST SERIES
1995-2, 8.100%, 06/15/04 187,500 187,815
STANDARD CREDIT CARD MASTER TRUST, 8.250%,
11/07/03 4,000,000 4,049,880
TYCO INTERNATIONAL GROUP, INC., 6.375%,
06/15/05 3,500,000 3,390,625
UNITED STATES TREASURY BILLS, 6.375%
03/31/01 4,650,000 4,650,651
UNITED STATES TREASURY BILLS, 6.375%
09/30/01 4,150,000 4,153,237
UNITED STATES TREASURY BONDS, 7.500%,
11/15/16 5,250,000 6,048,420
UNITED STATES TREASURY NOTES, 6.125%,
12/31/01 5,350,000 5,343,901
UNITED STATES TREASURY NOTES, 6.500%,
03/31/02 4,000,000 4,020,000
UNITED STATES TREASURY NOTES, 6.250%,
08/31/02 5,000,000 5,023,650
UNITED STATES TREASURY NOTES, 6.250%,
02/15/03 1,250,000 1,258,625
UNITED STATES TREASURY NOTES, 6.000%,
08/15/09 3,000,000 3,032,070
UNITED STATES TREASURY NOTES, 6.500%,
08/15/05 2,300,000 2,364,446
UNITED STATES TREASURY NOTES, 7.000%,
07/15/06 7,100,000 7,486,737
UNITED STATES TREASURY NOTES, 6.500%,
02/15/10 2,250,000 2,355,997
-----------
132,332,436
===========
Warburg Pincus Fixed Income (Acquiring)
- --------------------------------------------------------------------------------
Shares/Par
Security Name Value Market Value
- ------------- ----- ------------
SAFEWAY INC. 7.25%, 9/15/2004 2,365,000.00 2,355,837.99
SAKS INC 7.00%, 7/15/2004 2,775,000.00 1,873,125.00
SALEM COMMUNICATIONS 9.50%, 10/1/2007 30,000.00 28,800.00
SCOTTS COMPANY 8.625%, 1/15/2009 85,000.00 81,175.00
SHURGARD ABS PASS THRU 144A 8.24%, 11/15/2000 2,500,000.00 2,501,942.50
SMALL BUSINESS 8.20%, 4/1/2012 994,096.03 1,023,340.65
SPRINT CAP CORP 6.875%, 11/15/2028 1,750,000.00 1,444,581.25
TARGET CORP 7.50%, 8/15/2010 300,000.00 298,803.90
TELEFONICA EUROPE 7.35%, 9/15/2005 1,950,000.00 1,957,827.30
TELEFONICA EUROPE 8.25%, 9/15/2030 900,000.00 927,443.70
TELEFONICA EUROPE 7.75%, 9/15/2010 1,850,000.00 1,861,684.60
TIME WARNER,INC. 6.625%, 5/15/2029 3,195,000.00 2,757,294.59
TREASURY NOTE 6.75%, 5/15/2005 450,000.00 466,664.40
TYCO 6.875%, 1/15/2029 900,000.00 789,524.10
U.S. T-NOTES 6.0%, 9/30/2002 1,100,000.00 1,101,502.60
US TREASURY NOTE 4.25%, 11/15/2003 3,700,000.00 3,533,751.60
US WEST CAP NOTES 6.875%, 8/15/2001 1,650,000.00 1,649,049.60
VIACOM INC. 7.875%, 7/30/2030 700,000.0 707,524.30
VIACOM INC. 7.70%, 7/30/2010 550,000.0 561,255.20
VISTEON CORP. 8.25%, 8/1/2010 750,000.00 743,406.00
VOICESTREAM 10.375%, 11/15/2009 700,000.00 752,500.00
VOICESTREAM WIRELESS, 11/15/2009 1,250,000.00 909,375.00
WAL- MART STORES 7.55%, 2/15/2030 2,075,000.00 2,160,211.95
US T-NOTE 11/15/04 5.875%, 11/15/2004 100,000.00 100,067.80
WORLDCOM INC 8.00%, 5/15/2006 1,180,000.00 1,210,967.92
WORLDCOM INC. 6.95%, 8/15/2028 700,000.00 618,156.00
--------------
356,405,319.56
==============
Pro-Forma Fund
- --------------------------------------------------------------------------------
Shares/Par
Security Name Value Market Value
- ------------- ----- ------------
SAFEWAY INC. 7.25%, 9/15/2004 2,365,000.00 2,355,837.99
SAKS INC 7.00%, 7/15/2004 2,775,000.00 1,873,125.00
SALEM COMMUNICATIONS 9.50%, 10/1/2007 30,000.00 28,800.00
SCOTTS COMPANY 8.625%, 1/15/2009 85,000.00 81,175.00
SEARS CREDIT ACCOUNT MASTER TRUST SERIES 1995-2, 0
8.100%, 06/15/04 187,50 187,815
SHURGARD ABS PASS THRU 144A 8.24%, 6/15/2004 2,500,000.00 2,501,942.50
SMALL BUSINESS 8.20%, 4/1/2012 994,096.03 1,023,340.65
SPRINT CAP CORP 6.875%, 11/15/2028 1,750,000.00 1,444,581.25
STANDARD CREDIT CARD MASTER TRUST, 8.250%, 11/07/03 4,000,000 4,049,880
TARGET CORP 7.50%, 8/15/2010 300,000.00 298,803.90
TELEFONICA EUROPE 7.35%, 9/15/2005 1,950,000.00 1,957,827.30
TELEFONICA EUROPE 8.25%, 9/15/2030 900,000.00 927,443.70
TELEFONICA EUROPE 7.75%, 9/15/2010 1,850,000.00 1,861,684.60
TIME WARNER,INC. 6.625%, 5/15/2029 3,195,000.00 2,757,294.59
TREASURY NOTE 6.75%, 5/15/2005 450,000.00 466,664.40
TYCO INTERNATIONAL GROUP, INC., 6.375%, 06/15/05 3,500,000 3,390,625
TYCO 6.875%, 1/15/2029 900,000.00 789,524.10
UNITED STATES TREASURY BILLS, 6.375% 03/31/01 4,650,000 4,650,651
UNITED STATES TREASURY BILLS, 6.375% 09/30/01 4,150,000 4,153,237
UNITED STATES TREASURY BONDS, 7.500%, 11/15/16 5,250,000 6,048,420
UNITED STATES TREASURY NOTES, 6.125%, 12/31/01 5,350,000 5,343,901
U.S. T-NOTES 6.0%, 9/30/2002 1,100,000.00 1,101,502.60
UNITED STATES TREASURY NOTES, 6.500%, 03/31/02 4,000,000 4,020,000
UNITED STATES TREASURY NOTES, 6.250%, 08/31/02 5,000,000 5,023,650
UNITED STATES TREASURY NOTES, 6.250%, 02/15/03 1,250,000 1,258,625
UNITED STATES TREASURY NOTES, 6.000%, 08/15/09 3,000,000 3,032,070
US TREASURY NOTE 4.25%, 11/15/2003 3,700,000.00 3,533,751.60
US WEST CAP NOTES 6.875%, 8/15/2001 1,650,000.00 1,649,049.60
UNITED STATES TREASURY NOTES, 6.500%, 08/15/05 2,300,000 2,364,446
UNITED STATES TREASURY NOTES, 7.000%, 07/15/06 7,100,000 7,486,737
UNITED STATES TREASURY NOTES, 6.500%, 02/15/10 2,250,000 2,355,997
VIACOM INC. 7.875%, 7/30/2030 700,000.00 707,524.30
VIACOM INC. 7.70%, 7/30/2010 550,000.00 561,255.20
VISTEON CORP. 8.25%, 8/1/2010 750,000.00 743,406.00
VOICESTREAM 10.375%, 11/15/2009 700,000.00 752,500.00
VOICESTREAM WIRELESS, 11/15/2009 1,250,000.00 909,375.00
WAL- MART STORES 7.55%, 2/15/2030 2,075,000.00 2,160,211.95
WI T-NOTE 11/15/04 5.875%, 11/15/2004 100,000.00 100,067.80
WORLDCOM INC 8.00%, 5/15/2006 1,180,000.00 1,210,967.92
WORLDCOM INC. 6.95%, 8/15/2028 700,000.00 618,156.00
------------
488,737,756
============
See Notes to Pro Forma Financial Statements
Combined Statement of Operations
For the 12 months ended October 31, 2000
(unaudited)
Warburg Pincus Fixed
DLJ Fixed Income Fund Income Fund Adjustments Pro-Forma
Investment Income
Dividends - 862,030 - 862,030
Interest 9,072,869 23,628,791 - 32,701,660
------------- ------------ ------------ -------------
Total Investment Income 9,072,869 24,490,821 - 33,563,690
------------- ------------ ------------ -------------
Expenses
Investment advisory services 837,673 1,681,883 (127,781)(a) 2,391,775
Distribution fees - Class A 109,539 - (109,539)(b) -
Distribution fees - Class B 35,617 - (35,617)(c) -
Distribution fees - Class C 2 - (2)(c) -
Distribution fees - Class R 7 - (7)(b) -
Distribution fees - Advisor Class - 16,570 118,451 (b),(c) 135,021
Transfer agent 57,000 166,296 14,956 (d) 238,252
Custodian 93,000 66,541 (64,208)(e) 95,333
Administrative and accounting fees - 193,192 99,385 (f) 292,577
Administrative services fees - 336,377 141,978 (g) 478,355
Registration fees 62,000 33,999 (62,000)(h) 33,999
Interest - 1,165 - 1,165
Legal 30,000 26,225 (30,000)(h) 26,225
Directors'/Trustees' fees 15,000 10,820 (15,000)(h) 10,820
Audit 23,000 25,100 (23,000)(h) 25,100
Printing 18,000 113,202 (18,000)(h) 113,202
Insurance expense - 1,765 - 1,765
Miscellaneous 50,346 13,178 - 63,524
------------- ------------ ------------ -------------
1,331,184 2,686,313 (110,384) 3,907,113
Less: Expenses waived and reimbursed by
CSAM/DLJ (188,370) (81,285) (127,576)(i) (397,231)
Less: Expenses offset by Transfer Agent - (65,633) - (65,633)
------------- ------------ ------------ -------------
Total Expenses 1,142,814 2,539,395 (237,960) 3,444,249
------------- ------------ ------------ -------------
Net Investment Income/(Loss) 7,930,055 21,951,426 237,960 30,119,441
------------- ------------ ------------ -------------
Net Realized and Unrealized Gain/(Loss)
from Investments:
Net realized loss from investments (2,206,386) (9,807,340) - (12,013,726)
Net change in unrealized appreciation/
(depreciation) on investments 1,474,288 5,206,499 - 6,680,787
------------- ------------ ------------ -------------
Net realized and unrealized loss from
investments (732,098) (4,600,841) - (5,332,939)
------------- ------------ ------------ -------------
Net increase in net assets resulting
from operations 7,197,957 17,350,585 237,959 24,786,502
============= ============ ============ =============
See Notes to Pro Forma
Financial Statements
Notes to Pro Forma Financial Statements (unaudited)
1. Basis of Combination
The unaudited Pro Forma Combined Statement of Investments, Pro Forma
Combined Statement of Assets and Liabilities and Pro Forma Combined Statement of
Operations give effect to the proposed acquisition of the assets and liabilities
of the DLJ Fixed Income Fund ("DLJ Fixed") by the Warburg, Pincus Fixed Income
Fund, Inc. ("WP Fixed"). 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 DLJ Fixed to WP
Fixed in exchange for WP Fixed Common Class and Advisor Class shares, the
distribution of such WP Fixed Common Class shares to Class D Share shareholders
of DLJ Fixed, and such WP Fixed Advisor Class shares to Class A, B and R
shareholders of DLJ Fixed and the subsequent liquidation of DLJ Fixed. The
accounting survivor in the proposed acquisition will be WP Fixed. This is
because although the DLJ Fixed has the same investment objective as the WP Fixed
Income, the surviving fund will invest in a style that is similar to the way in
which WP Fixed is currently operated. Additionally, the WP Fixed has a
significantly larger asset base than DLJ Fixed. The costs of the proposed
acquisition will be paid by CSAM and its affiliates.
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 this Registration Statement filed on Form N-14.
WP Fixed and DLJ Fixed are both open-end, management investment companies
registered under the Investment Company Act of 1940, as amended.
Pro Forma Adjustments:
The Pro Forma adjustments below reflect the impact of the merger between
DLJ Fixed and WP Fixed.
(a) To decrease advisory fees in DLJ Fixed from 0.59% to 0.50%.
(b) To re-classify Distribution fees from DLJ Fixed Class A and R Shares to WP
Fixed Advisor Shares
(c) To decrease Distribution fees in DLJ Fixed Class B and C Shares from 1.00%
to 0.25% and to re-classify into the Advisor Class of WP Fixed.
(d) Adjustment based on the contractual agreement with the transfer agent for
the surviving fund.
(e) Adjustment based on the contractual agreements with the custodian for the
surviving fund.
(f) Adjustment based on the contractual agreements with the administrator for
the surviving fund.
(g) Adjustment based on the contractual agreements with the co-administrator
for the surviving fund.
(h) Assumes elimination of duplicate charges in combination, and reflects
management's estimates of combined pro-forma operations.
(i) To increase 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 both the DLJ Fixed and the WP Fixed 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 (those with less
than 60 days to maturity) 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 - Each of DLJ Fixed and the WP Fixed intends 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
its taxable income to its shareholders. Therefore, no provision has been
recorded for Federal income or excise taxes.
Distributions to Shareholders - Distributions from net investment income,
if any, are declared daily and paid monthly. Distributions from net realized
capital gains, if any, are typically distributed annually
(See Accompanying Notes to the Financial Statements)
THE ANNUAL REPORTS AND STATEMENT OF ADDITIONAL
INFORMATION OF THE ACQUIRING FUND ARE
INCORPORATED BY REFERENCE TO THE
MOST RECENT FILINGS BY THE FUND THEREOF
(INVESTMENT COMPANY ACT FILE NO. _________)
THE ANNUAL REPORTS, PROSPECTUSES AND STATEMENT
OF ADDITIONAL INFORMATION OF THE FUND ARE
INCORPORATED BY REFERENCE TO THE MOST
RECENT FILINGS BY THE FUND THEREOF
(INVESTMENT COMPANY ACT FILE NO. _________)
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 Number 1 - Information on
Shareholders' Rights" in Part A of this Registration Statement and to
Item 27 of Part C of Post-Effective Amendment No. 14 to Registrant's
Registration Statement on Form N-1A, filed on February 11, 1997.
Item 16. Exhibits
(1)(a) Agreement and Declaration of Trust is incorporated by reference to
Post-Effective Amendment No. 13 to Registrant's Registration
Statement on Form N-1A filed on January 16, 1996.
(1)(b) Articles of Amendment are incorporated by reference to
Post-Effective Amendment No. 14 to Registrant's Registration
Statement on Form N-1A, filed on February 11, 1997.
(2)(a) Second Amended and Restated By-Laws of the Registrant are
incorporated by reference to Post-Effective Amendment No. 13 to
Registrant's Registration Statement on Form N-1A, filed on January
16, 1996.
(2)(b) Amendment to the By-Laws is incorporated by reference to
Post-Effective Amendment No. 15 to Registrant's Registration
Statement on Form N1-A, filed on February 17, 1998 (Securities Act
File No. 33-36066).
(3) Not Applicable.
(4) Agreement and Plan of Reorganization (included as Exhibit A to
Registrant's Prospectus/Proxy Statement contained in Part A of this
Registration Statement).
(5) Form of stock certificates are incorporated by reference; material
provisions of this exhibit are substantially similar to those of
the corresponding exhibit in Pre-Effective Amendment No. 1 to the
Registration Statement on Form N-1A of Warburg, Pincus Trust filed
on June 14, 1995 (Securities Act File No. 333-58125).
(6) Form of Investment Advisory Agreement is incorporated by reference;
material provisions of this exhibit are substantially similar to
those of the corresponding exhibit in the Registration Statement on
Form N-14 of Warburg, Pincus Global Post-Venture Capital Fund,
Inc., filed on November 4, 1999 (Securities Act File No.
333-90341).
(7)(a) Distribution Agreement with Provident Distributors, Inc. ("PDI") is
incorporated by reference to Post-Effective Amendment No. 9 to the
Registration Statement on Form N-1A of Warburg, Pincus Balanced
Fund, Inc., filed on February 24, 2000 (Securities Act File No.
333-00533)
7(b) Form of Distribution Agreement with Credit Suisse Asset Management
Securities, Inc. is incorporated by reference; material provisions
of this exhibit are substantially similar to those of the
corresponding exhibit to Post-Effective Amendment No. 2 to the
Registration Statement on Form N-1A of Warburg, Pincus Long-Short
Market Neutral Fund, Inc., filed on November 2, 1999 (Securities
Act File No. 333-60687).
(8) Not Applicable.
(9)(a) Form of Custodian Services Agreement with PFPC Trust Company is
incorporated by reference to Post-Effective Amendment No. 10 to the
Registration Statement on Form N-1A of Warburg, Pincus Trust, filed
on April 16, 1999 (Securities Act File No. 33-58125)
(9)(b) Form of Custodian Agreement with State Street Bank & Trust Company
is incorporated by reference; material provisions of this exhibit
substantially similar to those of the corresponding exhibit to the
Registration Statement on Form N-14 of Warburg, Pincus Major
Foreign Markets Fund, Inc. (formerly known as Warburg, Pincus
Managed EAFE(R) Countries Fund, Inc.), filed on November 5, 1997
(Securities Act File No. 333-39611).
(9)(c) Form of Sub-Custodian Services Agreement with PFPC Trust Company
and PNC Bank National Association is incorporated by reference to
Post-Effective Amendment No. 10 to the Registration Statement on
Form N-1A of Warburg, Pincus Trust, filed on April 16, 1999
(Securities Act File No. 33-58125).
(9)(d) Custodian Agreement with Brown Brothers Harriman & Co. is
incorporated by reference; material provisions of this exhibit
substantially similar to those of the corresponding exhibit in
Pre-Effective Amendment No. 1 to the Registration Statement on
Form N-1A of Warburg, Pincus Emerging Markets II Fund, Inc.,
filed on August 14, 1998 (Securities Act File No. 333-60677).
(9)(e) Schedule I to Custodian Agreement, dated September 14, 2000.
(10)(a) Shareholder Servicing and Distribution Plan pursuant to Rule 12b-1
under the 1940 Act is incorporated by reference to the Registration
Statement on Form N-14 of the Warburg, Pincus Global Post-Venture
Capital Fund, Inc., filed on November 4, 1999 (Securities Act
File No. 333-90341).
(10)(b) Distribution Plan pursuant to Rule 12b-1 under the 1940 Act is
incorporated by reference to the Registration Statement on Form
N-14 of the Warburg, Pincus Global Post-Venture Capital Fund, Inc.,
filed on November 4, 1999 (Securities Act File No. 333-90341).
(10)(c) Form of 18f-3 Plan is incorporated by reference to the Registration
Statement on Form N-14 of Warburg, Pincus Global Post-Venture
Capital Fund, Inc., filed on November 4, 1999 (Securities Act File
No. 333-90341).
(11) Opinion and Consent of Willkie Farr & Gallagher, counsel to
Registrant, with respect to validity of shares.
(12) Opinion of Willkie Farr & Gallagher with respect to tax matters .
(13)(a) Form of Transfer Agency Agreement with State Street Bank & Trust
Company is incorporated by reference; material provisions of this
exhibit are substantially similar to those of the corresponding
exhibit in Pre-Effective Amendment No. 1 to the Registration
Statement on Form N-1A of Warburg, Pincus Trust filed on June 14,
1995 (Securities Act File No. 33-58125).
(13)(b) Co-Administration Agreement with Credit Suisse Asset Management
Securities, Inc. is incorporated by reference to the Registration
Statement on Form N-14 of Warburg, Pincus Global Post-Venture
Capital Fund, Inc., filed on November 4, 1999 (Securities Act File
No. 333-90341).
(13)(c) Form of Co-Administration Agreement with PFPC, Inc. is incorporated
by reference; material provisions of this exhibit are substantially
similar to those of the corresponding exhibit in Pre-Effective
Amendment No. 1 to the Registration Statement on Form N-1A of
Warburg, Pincus Trust, filed on June 14, 1995 (Securities Act File
No. 33-58125).
(14)(a) Consent of PricewaterhouseCoopers LLP.
(14)(b) Consent of Ernst & Young LLP.
(15) Not Applicable.
(16) Powers of Attorney (included as part of Signature Page to this
Registration Statement).
(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.
Item 17. Undertakings
(1) The undersigned Registrant agrees that prior to any public
reoffering of the securities registered through the use of a
prospectus which is a part of this Registration Statement by any
person or party who is deemed to be an underwriter within the
meaning of Rule 145(c) of the Securities Act [17 CFR 230.145c], the
reoffering prospectus will contain the information called for by
the applicable registration form for reofferings by persons who may
be deemed underwriters, in addition to the information called for
by the other items of the applicable form.
(2) The undersigned Registrant agrees that every prospectus that is
filed under paragraph (1) above will be filed as a part of an
amendment to the Registration Statement and will not be used until
the amendment is effective, and that, in determining any liability
under the Securities Act of 1933, as amended, each post-effective
amendment shall be deemed to be a new registration statement for
the securities offered therein, and the offering of the securities
at that time shall be deemed to be the
initial bona fide offering of them.
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 __th day of December, 2000.
Warburg Pincus Fixed Income Fund
By: /s/ Eugene L. Podsiadlo
-------------------
Name: Eugene L. Podsiadlo
Title: President
Each person whose signature appears below, hereby makes, constitutes
and appoints each of Hal Liebes and Michael A. Pignataro, with full power to act
without the other, as his agent and attorney-in-fact for the purpose of
executing in his name, in his capacity as a Trustee of the Warburg Pincus Fixed
Income Fund this registration statement on Form N-14 (including amendments
thereto) to be filed with the United States Securities and Exchange Commission
pursuant to the Securities Act of 1933, as amended, and the Investment Company
Act of 1940, as amended, and the rules and regulations promulgated thereunder.
Pursuant to the requirements of the Securities Act of 1933, as
amended, this Registration Statement has been signed below by the following
persons in the capacities and on the dates indicated.
Signature Title Date
--------- ----- ----
/s/ William W. Priest Chairman of the Board of
- ----------------------------- Directors December __, 2000
William W. Priest
/s/ Eugene L. Podsiadlo President December __, 2000
- ----------------------------
Eugene L. Podsiadlo
/s/ Michael A. Pignataro Treasurer and Chief December __, 2000
- ----------------------------- Financial Officer
Michael A. Pignataro
/s/ Richard H. Francis Trustee December __ 2000
- -----------------------------
Richard H. Francis
/s/ Jack W. Fritz Trustee December __, 2000
- -----------------------------
Jack W. Fritz
/s/ Jeffrey E. Garten Trustee December __, 2000
- -----------------------------
Jeffrey E. Garten
/s/ James S. Pasman, Jr. Trustee December __, 2000
- -----------------------------
James S. Pasman, Jr.
/s/ Steven N. Rappaport Trustee December __, 2000
- -----------------------------
Steven N. Rappaport
/s/ Alexander B. Trowbridge Trustee December __, 2000
- -----------------------------
Alexander B. Trowbridge
EXHIBIT INDEX
Exhibit Number Description Page
- -------------- ----------- ----
4 Agreement and Plan of Reorganization (included as
Exhibit A to Registrant's Prospectus/Proxy Statement
contained in Part A of this Registration Statement).
- ------------ ---------------------------------------------------------- ------
11 Opinion and Consent of Willkie Farr & Gallagher.
- ------------ ---------------------------------------------------------- ------
12 Opinion and Consent of Willkie Farr & Gallagher with
respect to tax matters.
- ------------ ---------------------------------------------------------- ------
14(a) Consent of PricewaterhouseCoopers LLP
- ------------ ---------------------------------------------------------- ------
14(b) Consent of Ernst & Young LLP
- ------------ ---------------------------------------------------------- ------
16 Powers of Attorney (included as part of
Signature Page to this Registration Statement.
- ------------ ---------------------------------------------------------- ------
17(a) Form of Proxy Card (included as an exhibit to
Registrant's Prospectus Prospectus/Proxy Statement
contained in Part A of this Registration Statement.
- ------------ ---------------------------------------------------------- ------