-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, LFmLLxfiJT7DE0sgHFIICCNzIYa6VH2jkgPxgXuZLCeG/NGYM2eQUReh0KifPZUp GOS9mn+t1vZKxvrBFMp0DA== 0000891804-01-000459.txt : 20010312 0000891804-01-000459.hdr.sgml : 20010312 ACCESSION NUMBER: 0000891804-01-000459 CONFORMED SUBMISSION TYPE: N-14 PUBLIC DOCUMENT COUNT: 9 FILED AS OF DATE: 20010309 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CREDIT SUISSE WARBURG PINCUS CAPITAL FUNDS CENTRAL INDEX KEY: 0000790184 STANDARD INDUSTRIAL CLASSIFICATION: [] IRS NUMBER: 133666126 STATE OF INCORPORATION: MA FISCAL YEAR END: 1031 FILING VALUES: FORM TYPE: N-14 SEC ACT: SEC FILE NUMBER: 333-56836 FILM NUMBER: 1565602 BUSINESS ADDRESS: STREET 1: 277 PARK AVE 24TH FLOOR CITY: NEW YORK STATE: NY ZIP: 10005 BUSINESS PHONE: 8002258011 MAIL ADDRESS: STREET 1: 277 PARK AVE STREET 2: 42ND FLOOR CITY: NEW YORK STATE: NY ZIP: 10005 FORMER COMPANY: FORMER CONFORMED NAME: DLJ FOCUS FUNDS DATE OF NAME CHANGE: 20000801 FORMER COMPANY: FORMER CONFORMED NAME: DLJ WINTHROP FOCUS FUNDS DATE OF NAME CHANGE: 19990304 FORMER COMPANY: FORMER CONFORMED NAME: WINTHROP FOCUS FUNDS DATE OF NAME CHANGE: 19920703 N-14 1 0001.txt CREDIT SUISSE WARBURG PINCUS CAPITAL FUNDS As filed with the Securities and Exchange Commission on March 9, 2001 - -------------------------------------------------------------------------------- Registration No. 333-_______ - -------------------------------------------------------------------------------- UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM N-14 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 |_| Pre-Effective Amendment No. __ |_| Post-Effective Amendment No. __ CREDIT SUISSE WARBURG PINCUS CAPITAL FUNDS (formerly, DLJ Focus Funds) (Exact Name of Registrant as Specified in Charter) Area Code and Telephone Number: (212) 875-3000 466 Lexington Avenue New York, New York 10017 (Address of Principal Executive Offices) (Zip code) Hal Liebes, Esq. Credit Suisse Warburg Pincus Capital Funds 466 Lexington Avenue New York, New York 10017 (Name and address of Agent for Service) With copies to: Rose F. DiMartino, Esq. Earl D. Weiner, Esq. Willkie Farr & Gallagher Sullivan & Cromwell 787 Seventh Avenue 125 Broad Street New York, NY 10019-6099 New York, NY 10004 Approximate date of public offering: As soon as practicable after the Registration Statement becomes effective under the Securities Act of 1933. Title of Securities Being Registered: Shares of beneficial interest, $.01 par value per share. REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDEMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a), MAY DETERMINE. Registrant has registered an indefinite amount of securities pursuant to Rule 24f-2 under the Investment Company Act of 1940, as amended; accordingly, no fee is payable herewith in reliance upon Section 24(f). CONTENTS OF REGISTRATION STATEMENT This Registration Statement contains the following pages and documents: Front Cover Contents Page Letter to Shareholders Notice of Special Meeting Part A - Prospectus/Proxy Statement Part B - Statement of Additional Information Part C - Other Information Signature Page Exhibits WARBURG PINCUS SMALL COMPANY VALUE II FUND YOUR VOTE IS IMPORTANT Dear Shareholder: We are pleased to invite you to attend a special meeting (the "Meeting") of the shareholders of Warburg, Pincus Small Company Value II Fund, Inc. (the "Acquired Fund"). The Board of Directors of the Acquired Fund has recently reviewed and unanimously endorsed a proposal for the Acquired Fund to be acquired by Credit Suisse Warburg Pincus Small Company Value Fund (formerly the DLJ Small Company Value Fund) (the "Acquiring Fund"), a series of Credit Suisse Warburg Pincus Capital Funds (formerly the DLJ Focus Funds) (the "Acquiring Trust"). The Acquiring Fund is a similar fund managed by your Fund's investment adviser, Credit Suisse Asset Management, LLC ("CSAM"). Under the terms of the proposal, the Acquiring Fund would acquire all of the assets and liabilities of the Acquired Fund. You are being asked to approve an Agreement and Plan of Reorganization (the "Plan") pursuant to which the acquisition of the Acquired Fund by the Acquiring Fund (the "Acquisition") would be effected. The Acquired Fund's Board of Directors and CSAM believe that the Acquisition is in the best interests of the Acquired Fund and its shareholders. As disclosed in the attached prospectus/proxy statement, the Acquisition is not expected to result in any material changes to the investment philosophy or operations of the Acquired Fund since the Acquired Fund and the Acquiring Fund have similar investment objectives and investment policies, although the Acquiring Fund has certain different investment limitations as compared to the Acquired Fund. Although the Acquiring Fund also has a different custodian, transfer agent and independent accountant, the quality and level of service provided currently to the Acquired Fund by CSAM are expected to continue as CSAM is the successor to DLJ Asset Management Group, Inc., the Acquiring Trust's previous investment adviser. Also, CSAM has agreed to reimburse expenses, for the two-year period beginning on the date of the closing of the Acquisition, to the extent necessary to maintain the net average annualized expense ratio of the Common Class of the Acquiring Fund at the lower of that of the net average annualized expense ratio of the Common Class of the Acquiring Fund at the closing of the Acquisition or the class of the Acquired Fund that such holder will surrender at such closing measured over the 60-day period ending on the closing of the Acquisition (the "Closing Date"). The Closing Date is expected to be on or about June 8, 2001. If shareholders of the Acquired Fund approve the Plan, the Acquired Fund will be liquidated upon consummation of the Acquisition and subsequently dissolved. Upon consummation of the Acquisition, you will become a shareholder of the Acquiring Fund, having received shares of the Acquiring Fund's Common Class shares with an aggregate net asset value equal to the aggregate net asset value of your investment in the Acquired Fund immediately prior to the Acquisition. No sales or other charges will be imposed in connection with the Acquisition. The Acquisition will, in the opinion of counsel, be free from federal income taxes to you, the Acquired Fund and the Acquiring Fund. CSAM or its affiliates will bear all expenses incurred in connection with the Acquisition. The Meeting will be held on May 25, 2001 to consider the Acquisition and the other matters being presented. We strongly invite your participation by asking you to review, complete and return your proxy promptly. Detailed information about the proposal is described in the attached prospectus/proxy statement. THE BOARD OF DIRECTORS OF THE ACQUIRED FUND UNANIMOUSLY RECOMMENDS THAT YOU VOTE IN FAVOR OF THE PROPOSAL. On behalf of the Board of Directors, I thank you for your participation as a shareholder and urge you to please exercise your right to vote by completing, dating and signing the enclosed proxy card(s). A self-addressed, postage-paid envelope has been enclosed for your convenience; if you prefer, you can fax the proxy card to D.F. King & Co, Inc., the Acquired Fund's proxy solicitor, Attn.: Dominic F. Maurillo, at (212) 269-2796. We also encourage you to vote by telephone or through the Internet. Proxies may be voted by telephone by calling 1-800-290-6424 between the hours of 9:00 a.m. and 10:00 p.m. (Eastern time) or through the Internet using the Internet address located on your proxy card. Voting by fax, telephone or through the Internet will reduce the time and costs associated with the proxy solicitation. When the Acquired Fund records proxies by telephone or through the Internet, it will use procedures designed to (i) authenticate shareholders' identities, (ii) allow shareholders to authorize the voting of their shares in accordance with their instructions and (iii) confirm that their instructions have been properly recorded. Shareholders voting via the Internet should understand that there may be costs associated with electronic access, such as usage charges from Internet access providers and telephone companies, that must be borne by the shareholder. We have been advised that the Internet voting procedures that have been made available to you are consistent with the requirements of applicable law. Whichever voting method you choose, please read the full text of the prospectus/proxy statement before you vote. If you have any questions regarding the proposed Acquisition, please feel free to call D.F. King & Co., Inc. at 1-800-290-6424 who will be pleased to assist you. IT IS VERY IMPORTANT THAT YOUR VOTING INSTRUCTIONS BE RECEIVED PROMPTLY. Sincerely, /s/Hal Liebes Hal Liebes Secretary __________, 2001 ________, 2001 WARBURG PINCUS SMALL COMPANY VALUE II FUND Important News For Fund Shareholders While we encourage you to read the full text of the enclosed Prospectus/Proxy Statement, here is a brief overview of the proposal you are being asked to vote on. Q & A: QUESTIONS AND ANSWERS Q: WHAT IS HAPPENING? A: Credit Suisse Group ("Credit Suisse") has acquired Donaldson, Lufkin & Jenrette, Inc. ("DLJ"), including its subsidiary, DLJ Asset Management Group, Inc. ("DLJAM"), the prior investment adviser of the Acquiring Fund, and has combined the investment advisory business of DLJAM with its existing U.S. asset management business, which is managed by your fund's investment adviser, Credit Suisse Asset Management, LLC ("CSAM"). CSAM is part of Credit Suisse Asset Management, which is the institutional asset management and mutual fund arm of Credit Suisse, with global assets under management of approximately $298 billion. Credit Suisse is a global financial services company, providing a comprehensive range of banking and insurance products. To reduce confusion in the marketplace by eliminating multiple, similar funds advised by the same investment adviser, CSAM is proposing to combine the assets of Warburg, Pincus Small Company Value II Fund, Inc. (the "Acquired Fund") with Credit Suisse Warburg Pincus Small Company Value Fund (the "Acquiring Fund"), a series of Credit Suisse Warburg Pincus Capital Funds, with the Acquiring Fund surviving the acquisition. You are being asked to vote on an Agreement and Plan of Reorganization (the "Plan") for the assets and liabilities of the Acquired Fund to be acquired by the Acquiring Fund in a tax-free exchange of shares (the "Acquisition"). If the Plan is approved and the Acquisition consummated, you would no longer be a shareholder of the Acquired Fund, but would become a shareholder of the Acquiring Fund. Q: WHAT ARE THE DIFFERENCES BETWEEN THE ACQUIRED FUND AND THE ACQUIRING FUND? A: The Acquisition is not expected to result in any material changes to the investment philosophy or operations of the Acquired Fund since the Acquired Fund and the Acquiring Fund have similar investment objectives and investment policies, although the Acquiring Fund has certain different investment limitations as compared to the Acquired Fund. The Acquiring Fund has the same investment adviser, co-administrators and distributor as the Acquired Fund. The custodian, transfer agent and independent accountant will change in connection with the Acquisition. Q: WHAT WILL HAPPEN TO FUND EXPENSES? A: CSAM, each Fund's investment adviser, has agreed to reimburse expenses, for the two-year period beginning on the date of the closing of the Acquisition, to the extent necessary to maintain the net average annualized expense ratio of the Common Class of the Acquiring Fund at the lower of that of (a) the net average annualized expense ratio of the Common Class of the Acquiring Fund at the closing of the Acquisition or (b) the net average annualized expense ratio of the class of the Acquired Fund that such holder will surrender at such closing, in each case measured over the 60-day period ending on the closing of the Acquisition. In other words, we will compute the net average annualized expense ratio over the 60-day period before the closing for your class and the class that you will receive and your expenses as a shareholder of the Acquiring Fund will not exceed the lower of the two for two years. The expense ratio of a class of a Fund during the 60-day computation period could be higher than as presented in this Prospectus/Proxy Statement due to redemptions of Fund shares prior to the Acquisition or for other reasons. The closing of the proposed Acquisition is expected to be on or about June 8, 2001. Q: WHAT ARE THE BENEFITS OF THE TRANSACTION? A: The Board members of the Acquired Fund believe that you may benefit from the proposed Acquisition, in part, because it will result in a single larger fund with a potentially lower expense ratio and will eliminate confusion in the marketplace associated with there being two small company value-oriented funds managed by the same investment adviser. The proposed Acquisition may result in efficiencies due to a larger asset base. The following pages give you additional information on the proposed Acquisition on which you are being asked to vote. Q: WILL I INCUR TAXES AS A RESULT OF THE TRANSACTION? A: The Acquisition is expected to be a tax-free event. Generally, shareholders of the Acquired Fund will not incur capital gains or losses on the conversion from the Acquired Fund to the Acquiring Fund. Shareholders will incur capital gains or losses if they sell their shares in the Acquired Fund before the Acquisition becomes effective or sell (or exchange) their Acquiring Fund shares after the Acquisition becomes effective. Shareholders will also be responsible for tax obligations associated with periodic dividend and capital gains distributions that occur prior to and after the Acquisition. The Acquired Fund will pay a dividend of any undistributed net investment income and capital gains, which may be substantial, immediately prior to the closing date. Please note that retirement accounts are exempt from such tax consequences. Q: WHAT HAPPENS IF THE PLAN IS NOT APPROVED? A: In the event the Plan is not approved, you will continue to be a shareholder of the Acquired Fund and the Board will consider other possible courses of action available to it, including resubmitting the Acquisition proposal to shareholders. Q: HOW DO THE BOARD MEMBERS OF MY FUND RECOMMEND THAT I VOTE? A: AFTER CAREFUL CONSIDERATION, THE BOARD OF DIRECTORS OF THE ACQUIRED FUND, INCLUDING THOSE DIRECTORS WHO ARE NOT AFFILIATED WITH THE ACQUIRED FUND OR CSAM, RECOMMEND THAT YOU VOTE FOR THE PROPOSAL. Q: WHOM DO I CALL FOR MORE INFORMATION? A: Please call D.F. King & Co., Inc., the Acquired Fund's proxy solicitor, at 1-800-290-6424. Q: HOW CAN I VOTE MY SHARES? A: Please choose one of the following options to vote your shares: o By mail, with the enclosed proxy card; o By telephone, with a toll-free call to the telephone number that appears on your proxy card or, if no toll-free telephone number appears on your proxy card, to D.F. King & Co., Inc., the Acquired Fund's proxy solicitor, at 1-800-290-6424; o By faxing the enclosed proxy card to D.F. King & Co., Inc., Attn: Dominic F. Maurillo, at 212-269-2796; o Through the Internet, by using the Internet address located on your proxy card and following the instructions on the site; or o In person at the special meeting. Q: WILL THE ACQUIRED FUND PAY FOR THIS PROXY SOLICITATION? A: No. CSAM or its affiliates will bear these costs. WARBURG, PINCUS SMALL COMPANY VALUE II FUND, INC. 466 LEXINGTON AVENUE NEW YORK, NEW YORK 10017 NOTICE OF SPECIAL MEETING OF SHAREHOLDERS To Be Held on May 25, 2001 Notice is hereby given that a Special Meeting of Shareholders (the "Meeting") of Warburg, Pincus Small Company Value II Fund, Inc. (the "Acquired Fund") will be held at the offices of the Acquired Fund, 466 Lexington Avenue, 16th Floor, New York, New York 10017 on May 25, 2001, commencing at 3:00 p.m. for the following purposes: 1. To approve an Agreement and Plan of Reorganization (the "Plan") providing that (i) the Acquired Fund would transfer to Credit Suisse Warburg Pincus Small Company Value Fund (the "Acquiring Fund"), a series of Credit Suisse Warburg Pincus Capital Funds, all of the Acquired Fund's assets in exchange for shares of the Common Class of the Acquiring Fund and the assumption by the Acquiring Fund of the Acquired Fund's liabilities, (ii) such shares of the Acquiring Fund would be distributed to shareholders of the Acquired Fund in liquidation of the Acquired Fund, and (iii) the Acquired Fund would subsequently be dissolved; 2. To transact such other business as may properly come before the Meeting or any adjournment or adjournments thereof. THE BOARD OF DIRECTORS OF THE ACQUIRED FUND UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE TO APPROVE THE PROPOSAL. The Board of Directors of the Acquired Fund has fixed the close of business on March 15, 2001, as the record date for the determination of shareholders of the Acquired Fund entitled to notice of and to vote at the Meeting and any adjournment or adjournments thereof. As a convenience to shareholders, you can now vote in any one of five ways: o By mail, with the enclosed proxy card(s); o By telephone, with a toll-free call to the telephone number that appears on your proxy card or, if no toll-free telephone number appears on your proxy card, to D.F. King & Co., Inc., the Acquired Fund's proxy solicitor, at 1-800-290-6424; o By faxing the enclosed proxy card to D.F. King & Co., Inc., Attn: Dominic F. Maurillo, at 212-269-2796; o Through the Internet, by using the Internet address located on your proxy card and following the instructions on the site; or o In person at the Meeting. If you have any questions regarding the proposals, please feel free to call D.F. King & Co., Inc. at 1-800-290-6424. IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. By Order of the Board of Directors, /s/Hal Liebes Hal Liebes Secretary __________, 2001 YOUR PROMPT ATTENTION TO THE ENCLOSED PROXY WILL HELP TO AVOID THE EXPENSE OF FURTHER SOLICITATION. INSTRUCTIONS FOR SIGNING PROXY CARDS The following general rules for signing proxy cards may be of assistance to you and avoid the time and expense involved in validating your vote if you fail to sign your proxy card properly. 1. Individual Accounts: Sign your name exactly as it appears in the registration on the proxy card. 2. Joint Accounts: Either party may sign, but the name of the party signing should conform exactly to the name shown in the registration on the proxy card. 3. All Other Accounts: The capacity of the individual signing the proxy card should be indicated unless it is reflected in the form of registration. For example: Registration Valid Signatures Corporate Accounts (1) ABC Corp. ABC Corp. (2) ABC Corp. John Doe, Treasurer (3) ABC Corp. c/o John Doe, Treasurer John Doe (4) ABC Corp. Profit Sharing Plan John Doe, Trustee Trust Accounts (1) ABC Trust Jane B. Doe, Trustee (2) Jane B. Doe, Trustee u/t/d 12/28/78 Jane B. Doe Custodial or Estate Accounts (1) John B. Smith, Cust. f/b/o John B. Smith, Jr. UGMA John B. Smith (2) John B. Smith John B. Smith, Jr., Executor SUBJECT TO COMPLETION, DATED MARCH 9, 2001 PRELIMINARY PROSPECTUS/PROXY STATEMENT __________, 2001 PROXY STATEMENT WARBURG, PINCUS SMALL COMPANY VALUE II FUND, INC. 466 LEXINGTON AVENUE NEW YORK, NEW YORK 10017 800-WARBURG PROSPECTUS CREDIT SUISSE WARBURG PINCUS SMALL COMPANY VALUE FUND, A SERIES OF CREDIT SUISSE WARBURG PINCUS CAPITAL FUNDS 466 LEXINGTON AVENUE NEW YORK, NEW YORK 10017 800-225-8011 This Prospectus/Proxy Statement is being furnished to shareholders of Warburg, Pincus Small Company Value II Fund, Inc. (the "Acquired Fund"), an open-end, diversified management investment company organized as a Maryland corporation, in connection with the solicitation of proxies by its Board of Directors for use at a Special Meeting of Shareholders to be held on May 25, 2001 at 3:00 p.m. (the "Meeting"), at the offices of the Acquired Fund located at 466 Lexington Avenue, 16th Floor, New York, New York 10017, or any adjournment(s) thereof. The only proposals to be considered are set forth below: 1. to approve an Agreement and Plan of Reorganization (the "Plan"); 2. to transact such other business as may properly come before the Meeting and any adjournment(s) thereof. Pursuant to the Plan, the Acquired Fund would transfer to Credit Suisse Warburg Pincus Small Company Value Fund (formerly the DLJ Small Company Value Fund) (the "Acquiring Fund" and, together with the Acquired Fund, the "Funds"), a series of Credit Suisse Warburg Pincus Capital Funds (formerly the DLJ Focus Funds) (the "Acquiring Trust"), an open-end, diversified management investment company organized as a Massachusetts business trust, all of the Acquired Fund's assets in exchange for shares of the Common Class of the ================================================================================ THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS/PROXY STATEMENT AND IN THE MATERIALS EXPRESSLY INCORPORATED HEREIN BY REFERENCE AND, IF GIVEN OR MADE, SUCH OTHER INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE FUNDS. ================================================================================ Acquiring Fund and the assumption by the Acquiring Fund of the Acquired Fund's liabilities; such shares of the Acquiring Fund would be distributed to shareholders of the Acquired Fund in liquidation of the Acquired Fund; and the Acquired Fund would subsequently be dissolved (hereinafter collectively referred to as the "Acquisition"). As disclosed herein, the proposed Acquisition is not expected to result in any material changes to the investment philosophy or operations of the Acquired Fund since the Acquired Fund and the Acquiring Fund have similar investment objectives and investment policies, although the Acquiring Fund has certain different investment limitations as compared to the Acquired Fund. The investment objective of the Acquired Fund is long-term capital appreciation and, similarly, the investment objective of the Acquiring Fund is a high level of growth of capital. The Acquired Fund pursues its objective by investing in equity securities of "small" U.S. value companies. Current income is a secondary consideration in selecting portfolio investments. The Acquiring Fund pursues its objective by investing in common stock and other equity securities of small capitalization companies employing a value-oriented investment approach. The Acquiring and Acquired Funds define a "small" company slightly differently: the Acquiring Fund considers a company to be small if it has a market capitalization of $2 billion or less at the time of purchase, whereas the Acquired Fund considers a company to be small if its capitalization, at the time of purchase, is within the range of capitalization of companies in the Russell 2000 Index (between $4 million and $6.1 billion as of December 31, 2000). Neither Fund is required to dispose of investments that outgrow the definition of small company after purchase. Consequently, the investment objective and policies of the Acquiring Fund are similar to those of the Acquired Fund, except as described herein and under "Comparison of Investment Objectives and Policies" in this Prospectus/Proxy Statement. Credit Suisse Asset Management, LLC, the investment adviser for the Acquiring Fund ("CSAM"), and Credit Suisse Asset Management Securities, Inc. ("CSAMSI") and PFPC, Inc. ("PFPC"), co-administrators of the Acquiring Fund, serve in the same capacities for the Acquired Fund, although the custodian, transfer agent and independent accountant will change in connection with the Acquisition. As a result of the proposed Acquisition, each Common Class and Advisor Class shareholder of the Acquired Fund will receive that number of shares of the Common Class of the Acquiring Fund having an aggregate net asset value equal to the aggregate net asset value of such shareholder's shares of the Acquired Fund immediately prior to the Acquisition. All expenses of the Acquisition and of this solicitation will be borne by CSAM or its affiliates. No sales or other charges will be imposed on the shares of the Acquiring Fund received by the shareholders of the Acquired Fund in connection with the Acquisition. This transaction is structured to be tax-free for federal income tax purposes to shareholders of the Acquired Fund and to each of the Acquired Fund and the Acquiring Fund. This Prospectus/Proxy Statement, which should be retained for future reference, sets forth concisely the information about the Acquiring Fund that a prospective investor should know before voting. This Prospectus/Proxy Statement is expected to first be sent to shareholders on or about April 1, 2001. A Statement of Additional Information, dated _________, 2001, relating to this Prospectus/Proxy Statement and the Acquisition, has been filed with the Securities and Exchange Commission (the "SEC") and is incorporated by reference into this Prospectus/Proxy Statement. A copy of such Statement of Additional Information is available upon oral or written request and without charge by writing to the Acquiring Fund at the address listed on the cover page of this Prospectus/Proxy Statement or by calling 1-800-225-8011. The following documents, which have been filed with the SEC, are incorporated herein in their entirety by reference. o The current Prospectus of the Acquiring Fund, dated February 28, 2001. The Acquiring Fund's Prospectus accompanies this Prospectus/Proxy Statement. o The current Common Class Prospectus and Advisor Class Prospectus of the Acquired Fund, each dated February 28, 2001, and the Shareholder Guide, which accompanies the Common Class Prospectus. Copies may be obtained without charge by writing to the Acquiring Fund at the address on the cover page of this Prospectus/Proxy Statement or by calling 1-800-225-8011. o The Annual Report of each of the Acquired Fund and of the Acquiring Fund for the fiscal year ended October 31, 2000. The Annual Report of the Acquiring Fund accompanies this Prospectus/Proxy Statement. The Acquired Fund's most recent Annual Report to shareholders is available upon request without charge by writing to the address listed on the cover page of this Prospectus/Proxy Statement or by calling 1-800-WARBURG. Accompanying this Prospectus/Proxy Statement as Exhibit A is a copy of the form of the Plan for the proposed Acquisition. TABLE OF CONTENTS PROPOSAL - APPROVAL OF THE PLAN ........................................... 1 Summary ................................................................ 1 Risk Factors ........................................................... 5 Reasons for the Acquisition ............................................ 6 Fee Table .............................................................. 7 Information About the Acquisition ...................................... 9 Total Returns .......................................................... 13 Share Ownership of the Funds ........................................... 14 Comparison of Investment Objectives and Policies ....................... 15 Determination of Net Asset Value of Shares of the Acquiring Fund ....... 19 Management of Each Fund ................................................ 19 Interest of CSAM in the Acquisition .................................... 21 Information on Shareholders' Rights .................................... 21 Conclusion ............................................................. 23 Required Vote .......................................................... 24 ADDITIONAL INFORMATION .................................................... 24 VOTING INFORMATION ........................................................ 24 OTHER BUSINESS ............................................................ 26 FINANCIAL STATEMENTS AND EXPERTS .......................................... 26 ADDITIONAL MATERIALS ...................................................... 26 VALIDITYOFSHARES .......................................................... 26 EXHIBIT A: AGREEMENT AND PLAN OF REORGANIZATION .......................... A-1 PROPOSAL - APPROVAL OF THE PLAN SUMMARY THIS SUMMARY IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE ADDITIONAL INFORMATION CONTAINED ELSEWHERE IN THIS PROSPECTUS/PROXY STATEMENT, THE PLAN (A COPY OF THE FORM OF WHICH IS ATTACHED TO THIS PROSPECTUS/PROXY STATEMENT AS EXHIBIT A), THE PROSPECTUSES OF THE ACQUIRED FUND, THE STATEMENT OF ADDITIONAL INFORMATION OF THE ACQUIRED FUND, THE PROSPECTUS OF THE ACQUIRING FUND AND THE STATEMENT OF ADDITIONAL INFORMATION OF THE ACQUIRING FUND. PROPOSED ACQUISITION. The Plan provides for the acquisition of all of the assets and liabilities of the Acquired Fund by the Acquiring Fund in exchange for shares of the Acquiring Fund. The Plan also calls for the distribution of Common Class shares of the Acquiring Fund to the Acquired Fund's Common Class and Advisor Class shareholders in liquidation of the Acquired Fund. As a result of the Acquisition, each holder of Common Class and Advisor Class shares of the Acquired Fund will become the owner of that number of full and fractional Common Class shares of the Acquiring Fund having an aggregate net asset value equal to the aggregate net asset value of the shareholder's shares of the Acquired Fund as of the close of business on the date that the Acquired Fund's assets and liabilities are exchanged for shares of the Acquiring Fund. See "Information About the Acquisition -- Agreement and Plan of Reorganization." Because the Acquiring Fund is a series of the Acquiring Trust, it does not have a Board of Trustees separate from the other series of the Acquiring Trust. Accordingly, when we refer to the "Trustees of the Acquiring Fund" or the "Board of Trustees of the Acquiring Fund" elsewhere in this prospectus/proxy statement, we mean the Trustees and the Board of Trustees of the Acquiring Trust. For the reasons set forth below under "Reasons for the Acquisition," the Board of Directors of the Acquired Fund, including the Directors of the Acquired Fund who are not "interested persons" (the "Independent Directors"), as that term is defined in the Investment Company Act of 1940, as amended (the "1940 Act"), has unanimously concluded that the Acquisition would be in the best interests of the shareholders of the Acquired Fund and that the interests of the Acquired Fund's existing shareholders will not be diluted as a result of the transaction contemplated by the Acquisition. The Board therefore has submitted the Plan for approval by the Acquired Fund's shareholders. The Board of Trustees of the Acquiring Fund has also reached similar conclusions and approved the Acquisition with respect to the Acquiring Fund. Approval of the Acquisition of the Acquired Fund will require the affirmative vote of a majority of the Acquired Fund's outstanding shares, in the aggregate without regard to class, present in person or represented by proxy. See "Voting Information." In the event that the Plan is not approved by shareholders of the Acquired Fund, the Board will consider other possible courses of action available to it, including resubmitting the Acquisition proposal to shareholders. TAX CONSEQUENCES. Prior to completion of the Acquisition, the Acquired Fund and the Acquiring Fund will have received an opinion of counsel that, upon the closing of the Acquisition and the transfer of the assets of the Acquired Fund, no gain or loss will be recognized by the Acquired Fund or its shareholders for federal income tax purposes. The holding period and aggregate tax basis of the Acquiring Fund shares received by an Acquired Fund shareholder will be the same as the holding period and aggregate tax basis of the shares of the Acquired Fund previously held by such shareholder. In addition, the holding period and aggregate tax basis of the assets of the Acquired Fund in the hands of the Acquiring Fund as a result of the Acquisition will be the same as in the hands of the Acquired Fund immediately prior to the Acquisition. INVESTMENT OBJECTIVES AND POLICIES. The proposed Acquisition is not expected to result in any material changes to the investment philosophy or operations of the Acquired Fund since the Acquired Fund and the Acquiring Fund have similar investment objectives and investment policies, although the Acquiring Fund has certain different investment limitations as compared to the Acquired Fund. The investment objective of the Acquired Fund is long-term capital appreciation and, similarly, the investment objective of the Acquiring Fund is a high level of growth of capital. The Acquired Fund pursues its objective by investing in equity securities of "small" U.S. value companies. Current income is a secondary consideration in selecting portfolio investments. The Acquiring Fund pursues its objective by investing in common stock and other equity securities of small capitalization companies employing a value-oriented investment approach. The Acquiring Fund is not intended for investors whose principal objective is assured income or preservation of capital. The Acquiring and Acquired Funds define a "small" company slightly differently: the Acquiring Fund considers a company to be small if it has a market capitalization of $2 billion or less at the time of purchase, whereas the Acquired Fund considers a company to be small if its capitalization, at the time of purchase, is within the range of capitalization of companies in the Russell 2000 Index (between $4 million and $6.1 billion as of December 31, 2000). Neither Fund is required to dispose of investments that outgrow the definition of small company after purchase. Consequently, the investment objective and policies of the Acquiring Fund are similar to those of the Acquired Fund, except as otherwise described herein. The investment objective of each Fund is a fundamental policy which means that it can not be changed without shareholder approval. The other investment policies and fundamental and non-fundamental investment limitations of the Acquiring Fund are similar to those of the Acquired Fund except for differences noted below under "Comparison of Investment Objectives and Policies." PURCHASE AND REDEMPTION PROCEDURES. Except as otherwise indicated in this section, the Funds have similar policies with respect to purchases, redemptions and exchanges of shares. Common Class shares of the Acquiring 2 Fund are available for purchase by Common Class and Advisor Class shareholders of the Acquired Fund and generally by other individuals. Advisor Class shares of the Acquired Fund are offered through the Fund's distributor and various financial intermediaries. Each Fund's Common Class shares may be purchased directly from the Fund, through the Fund's distributor and through various financial intermediaries. Shares of the Common Class of the Acquired Fund require a minimum initial investment of $2,500, and a minimum additional investment of $100 if made by check, although this amount varies based on the method of payment. As of the Closing Date, Common Class shares of the Acquiring Fund require a minimum additional investment of $100 and offer the same privileges currently available to Common Class shareholders of the Acquired Fund, such as an automatic monthly investment plan, a dividend direction option or a systematic withdrawal plan. Both Funds require that requests for redemptions of large amounts be made in writing and be accompanied by a signature guarantee. Both Funds also reserve the right to take actions designed to discourage frequent or excessive trading associated with market timing. You should also note that certain financial institutions who make shares of the Acquired Fund available to their customers may not distribute shares of the Acquiring Fund. Please see the Prospectuses and Shareholder Guide, as applicable, of each of the Acquiring Fund and the Acquired Fund for more detailed information on purchasing and redeeming shares of the relevant Fund. SALES CHARGES. Common Class shares of the Acquiring Fund and Common Class shares of the Acquired Fund are sold at net asset value per share and without an initial or contingent deferred sales charge, but are subject to the same 12b-1 fee of 0.25% per annum of average daily net assets. Advisor Class shares of the Acquired Fund are subject to a 12b-1 fee of up to 0.75% per annum, although the current 12b-1 fee is 0.50% per annum. Each Fund has compensation type 12b-1 plans in which the distributor receives the distribution fee regardless of the cost of the distribution activities performed. See "Fee Table" below. EXCHANGE PRIVILEGES. The exchange privileges available to shareholders of the Acquiring Fund are similar to those available to shareholders of the Acquired Fund. Shareholders of each Fund may exchange at net asset value all or a portion of their shares for shares of the same class of other mutual funds in their respective family of funds at their respective net asset values, provided that such Fund offers the relevant class of shares. For former Acquired Fund shareholders, the family of funds available for exchange immediately after the Acquisition will consist of the Credit Suisse Warburg Pincus family of funds (previously called the DLJ Mutual Funds) offering Common Class shares. Exchanges from the Credit Suisse Warburg Pincus Funds into a fund in the Warburg Pincus family of funds (and vice versa) would not be permitted. It is anticipated that, at such time as the transfer agent of both fund families is changed to be the same, exchanges between funds in the two families will be permitted. This change is expected to occur on or before July 1, 2001. Between the Closing Date and this date, if a former Acquired Fund shareholder wishes to exchange shares in the Acquiring Fund for shares of a 3 fund in the Warburg Pincus family of funds, that shareholder would be required to place both a sale order with the Acquiring Fund and a purchase order with the relevant fund in the Warburg Pincus family of funds. Although the tax consequences of that sale/purchase would be the same as those of any exchange, the sale and purchase transactions would be effected on successive business days, unlike an exchange which is effected on a single day. Exchanges may be effected by mail or by telephone. Exchanges must satisfy the minimum dollar amount necessary for new purchases in the fund in which shares are being purchased. Each of the Acquired Fund and the Acquiring Fund may refuse exchange purchases at any time without prior notice. The exchange privilege may be modified or terminated at any time upon 30-days' notice to shareholders. The exchange privilege is available to shareholders residing in any state in which the relevant fund's shares being acquired may legally be sold. When an investor effects an exchange of shares, the exchange is treated for federal income tax purposes as a redemption. Therefore, the investor may realize a taxable gain or loss in connection with the exchange. Please see the Prospectuses and Shareholder Guide, as applicable, of each of the Acquiring Fund and the Acquired Fund for more detailed information on exchanging shares of the relevant Fund. DIVIDENDS. The Acquiring Fund and the Acquired Fund each distribute substantially all of their respective net investment income and net realized capital gains, if any, to their respective shareholders. All distributions are reinvested in the form of additional full and fractional shares of the relevant Fund unless a shareholder elects otherwise. Each Fund declares and pays dividends, if any, from net investment income annually. Net realized capital gains (including net short-term capital gains), if any, of each Fund will be distributed once a year. It is expected that the Acquired Fund will pay a dividend of any undistributed net investment income and capital gains, which may be substantial, immediately prior to the Closing Date. If paid as of February 28, 2001, the amount of this dividend would have been $.99 per Common Class share of the Acquired Fund, consisting of $.01 per share of net investment income and $.98 per share of net realized capital gains. The amount of such dividend with respect to the Advisor Class of the Acquired Fund would have been slightly lower due to its higher expenses. The amount of any dividend actually paid prior to the Closing Date may be higher or lower than this amount (perhaps materially so), depending on a number of factors, such as changes in the value of Acquired Fund holdings and net redemptions of Acquired Fund shares. See "Distributions" in the Prospectus of the Acquired Fund. SHAREHOLDER VOTING RIGHTS. The Acquiring Trust and the Acquired Fund are each registered with the SEC as open-end, diversified management investment companies. The Acquiring Fund is a series of a Massachusetts business trust, having a Board of Trustees. The Acquired Fund is a Maryland corporation with a Board of Directors. Shareholders of each Fund have similar voting rights. Neither 4 Fund holds a meeting of shareholders annually, except as required by the 1940 Act or other applicable law. The Acquired Fund's By-Laws provide that a special meeting of shareholders will be called at the written request of shareholders entitled to cast at least 10% of the votes entitled to be cast at the meeting. Payment by such shareholders of the reasonably estimated cost of preparing and mailing a notice of the meeting is required in advance of the meeting, provided, however, that the matter to be considered at such special meeting of shareholders is not substantially the same as a matter voted on at a special meeting of shareholders held during the preceding 12 months. The Acquiring Fund's Amended and Restated Agreement and Declaration of Trust (the "Agreement and Declaration of Trust") provides that a special meeting of shareholders will be called at the written request of shareholders holding at least 10% of the outstanding shares of the Fund. To the extent required by law, each Fund will assist in shareholder communications in such matters. The presence of one-third of the votes to be cast at a shareholder meeting of the Acquired Fund will constitute a quorum whereas the presence of a majority of shares of the Acquiring Fund at a meeting will constitute a quorum. Under the laws of the Commonwealth of Massachusetts, shareholders of the Acquiring Fund do not have appraisal rights in connection with a combination or acquisition of the assets of the Acquiring Fund. In addition, under the laws of the State of Maryland, shareholders of the Acquired Fund do not have appraisal rights in connection with a combination or acquisition of the assets of the Acquired Fund by another entity. Shareholders of the Acquired Fund may, however, redeem their shares at net asset value prior to the date of the Acquisition (subject only to certain restrictions set forth in the 1940 Act). See "Information on Shareholders' Rights -- Voting Rights." RISK FACTORS The investment objectives of the Acquiring Fund (i.e., high level of growth of capital) and the Acquired Fund (i.e., long-term capital appreciation) are similar, and the investment policies of the Acquiring Fund and the Acquired Fund (and the risks related thereto) along with each Fund's "small company value" orientation are, except as noted herein, similar. The principal risk factors affecting both the Acquiring Fund and the Acquired Fund are (i) market risk and (ii) the risk of investing in start-up and other small companies. The Acquiring Fund is not intended for investors whose principal objective is assured income or preservation of capital. The Acquiring Fund may not invest in restricted securities, although securities freely saleable among certain institutional investors pursuant to Rule 144A under the Securities Act are not considered "restricted securities" for purposes of this limitation. The Acquired Fund can invest up to 10% of its net assets in restricted securities. The Acquiring Fund can have greater exposure to the risks associated with investing in non-U.S. securities as the Acquiring Fund may invest up to 20% of its total assets in non-U.S. securities, while the Acquired Fund may invest up to 10% of its total assets. The Acquiring Fund may also invest in "special situation" companies. These companies have a value that may be affected by particular developments unrelated to business conditions generally such as a development particularly or uniquely applicable to that company. If the 5 development does not occur, the value of the investment may decline. See the accompanying Prospectus of the Acquiring Fund for a complete discussion of the risks of investing in that Fund. REASONS FOR THE ACQUISITION The Board of Directors of the Acquired Fund has unanimously determined that it is in the best interest of the Acquired Fund to effect the Acquisition. In reaching this conclusion, the Board considered a number of factors, including the following: 1. the Acquisition will result in a single larger fund, thereby eliminating confusion in the marketplace associated with there being two "small company value" oriented funds managed by CSAM; 2. the Acquisition may increase efficiencies, eliminating one of the two sets of prospectuses, annual reports and other documents required for two funds, although there is no guarantee that the combined fund will realize such efficiencies; 3. a larger asset base could provide portfolio management benefits, such as greater diversification to mitigate the risks of investing in a limited number of equity securities and the ability to command more attention from brokers and underwriters of portfolio securities; 4. the performance record of the Acquiring Fund; 5. the terms and conditions of the Acquisition; 6. the similar investment objectives, investment philosophies, investment policies and restrictions of the Acquiring Fund in relation to those of the Acquired Fund; 7. that the investment adviser for the Acquiring Fund is the same as that of the Acquired Fund; 8. the federal tax consequences of the Acquisition to the Acquired Fund, the Acquiring Fund and the shareholders of each Fund, and that a legal opinion will be rendered that no recognition of gain or loss for federal income tax purposes will occur as a result of the Acquisition to any of them; 9. the possibility of alternative transactions, including the possibility of a transaction with a fund that is not managed by CSAM; 10. that the interests of shareholders of the Acquired Fund will not be diluted as a result of the Acquisition; 6 11. CSAM has agreed to reimburse expenses, for the two-year period beginning on the date of the closing of the Acquisition, to the extent necessary to maintain the average annualized expense ratio of the Common Class of the Acquiring Fund (after waivers) at the lower of that of (i) the net average annualized expense ratio of the Common Class of the Acquiring Fund at the closing of the Acquisition or (ii) the net average annualized expense ratio of the class of the Acquired Fund that such holder will surrender at such closing, in each case measured over the 60-day period ending on the Closing Date; 12. that the expenses of the Acquisition will be borne by CSAM or its affiliates; and 13. that no sales or other charges will be imposed in connection with the Acquisition. In light of the foregoing, the Board of Directors of the Acquired Fund, including the Independent Directors, has determined that it is in the best interests of the Acquired Fund and its shareholders to effect the Acquisition. The Board of Directors of the Acquired Fund has also determined that the Acquisition would not result in a dilution of the interests of the Acquired Fund's shareholders. In making these determinations, the Board did not give equal weight to each factor. The Board of Trustees of the Acquiring Fund has also determined that it is advantageous to the Acquiring Fund to effect the Acquisition. The Acquiring Fund's Board of Trustees considered, among other things, (1) the terms and conditions of the Acquisition, (2) CSAM's representation that, to its knowledge, there are no claims, or circumstances that are reasonably likely to give rise to claims, against the Acquired Fund that would materially adversely affect the Acquired Fund or its assets or business, (3) CSAM's covenant that the Acquiring Fund will succeed to all rights that the Acquired Fund has, or would have but for the Acquisition, against CSAM or its affiliates by reason of any failure to act by CSAM or its affiliates prior to the Closing Date and (4) representations that the Acquisition would be effected as a tax-free reorganization. Accordingly, the Board of Trustees of the Acquiring Fund, including a majority of the Independent Trustees, has determined that the Acquisition is in the best interests of the Acquiring Fund's shareholders and that the interests of the Acquiring Fund's shareholders would not be diluted as a result of the Acquisition. FEE TABLE Following is a table showing current fees and expenses of the Common Class shares and Advisor Class shares of the Acquired Fund, holders of which will receive the Common Class shares of the Acquiring Fund upon closing of the Acquisition and the costs and expenses of Common Class shares of the Acquiring Fund before and after giving effect to the Acquisition. The table does not reflect charges that institutions and financial intermediaries may impose on their customers. 7 TOTAL ANNUAL FUND OPERATING EXPENSES (EXPENSES THAT ARE DEDUCTED FROM FUND ASSETS -- REFLECTING CURRENT FEES)
- ------------------------------------------------------------------------------------------------- CREDIT SUISSE WARBURG PINCUS SMALL COMPANY VALUE FUND ACQUIRING FUND ACQUIRED FUND PRO FORMA - ------------------------------------------------------------------------------------------------- (COMMON BEFORE FEE WAIVERS AND COMMON ADVISOR CLASS AFTER REIMBURSEMENTS COMMON CLASS CLASS* CLASS* ACQUISITION) - ------------------------------------------------------------------------------------------------- Transaction Expenses: Maximum sales charge imposed on purchases (as a percentage of offering price) None None None None - ------------------------------------------------------------------------------------------------- Maximum deferred sales charge (as a percentage of original purchase price, or redemption proceeds, as applicable) None None None None - -------------------------------------------------------------------------------------------------- Annual Fund Operating Expenses (expenses that are deducted from fund assets) Management fees .81% 1.00% 1.00% .79% 12b-1 fees .25% 25% .50% .25% Other expenses .42% .74% .74% .42% - ------------------------------------------------------------------------------------------------- Total Annual Fund Operating Expenses 1.48% 1.99% 2.24% 1.46%** - ------------------------------------------------------------------------------------------------- * Fee waivers and expense reimbursements or credits reduced expenses for the Acquired Fund during its most recent fiscal years but it may be discontinued at any time. - ------------------------------------------------------------------------------------------------- CREDIT SUISSE WARBURG PINCUS SMALL COMPANY VALUE FUND ACQUIRING FUND ACQUIRED FUND PRO FORMA - ------------------------------------------------------------------------------------------------- (COMMON AFTER FEE WAIVERS AND COMMON ADVISOR CLASS AFTER REIMBURSEMENTS COMMON CLASS CLASS CLASS ACQUISITION) - -------------------------------------------------------------------------------------------------- Annual Fund Operating Expenses (expenses that are deducted from fund assets) Management fees .81% .84% .84% .68% 12b-1 fees .25% .25% .50% .25% Other expenses .29% .65% .65% .42% - ------------------------------------------------------------------------------------------------- Total Annual Fund Operating Expenses 1.35%*** 1.74% 1.99% 1.35%** - -------------------------------------------------------------------------------------------------
* Fee waivers and expense reimbursements or credits reduced expenses for the Acquired Fund during its most recent fiscal years but it may be discontinued at any time. ** CSAM has agreed to reimburse expenses, for the two year period beginning on the date of the closing of the Acquisition, to the extent necessary to maintain the net average annualized expense ratio of the Common Class of the Acquiring Fund at the lower of that of (i) the net average annualized expense ratio of the Common Class of the Acquiring Fund at the closing of the Acquisition or (ii) the net average annualized expense ratio of the class of the Acquired Fund that such holder will surrender at such closing, in each case measured over the 60-day period ending on the closing of the Acquisition. The expense ratio of a Fund during the 60-day computation period could be higher than that shown above, due to redemptions of Fund shares prior to the Acquisition or for other reasons. If this occurred, the level at which Acquiring Fund expenses would be waived and/or reimbursed could be higher than that shown above. In addition, there can be no assurance that Acquiring Fund expenses will not increase following the two-year period. *** Effective February 1, 2001, CSAMSI and PFPC began providing administrative services to the Acquiring Fund. Administrative services previously were provided by DLJAM and CSAM without charge. Although these services are now provided for a total rate not to exceed .175% of average daily net assets, CSAM will limit average annual expenses of the Acquiring Fund from the date of the acquisition of DLJ, November 3, 2000, until November 3, 2002 to the annualized levels previously paid by the Acquiring Fund, measured over the 60-day period ended on November 3, 2000. As a result, it is not anticipated that the Acquiring Fund's average annualized operating expense ratio will increase through November 3, 2002 as a result of the retention of new co-administrators. This limit is not reflected in the first fee table above. 8 EXAMPLES The following examples are intended to assist an investor in understanding the various costs that an investor in each Fund will bear directly or indirectly. The examples assume payment of operating expenses at the levels set forth in the first table above (i.e., before fee waivers and expense reimbursements), except (i) for the Acquiring Fund example, the waiver of fees described above for the period until November 3, 2002 has been taken into account and (ii) for the pro forma example, the waiver of fees described above for the two-year period beginning on the Closing Date has been taken into account. The examples also assume that all dividends and distributions are reinvested. Assume you invest $10,000, each Fund returns 5% annually and you close your account at the end of each of the time periods shown. Based on these assumptions, your cost would be:
- ------------------------------------------------------------------------------------------------- CREDIT SUISSE WARBURG PINCUS SMALL COMPANY VALUE FUND ACQUIRING FUND ACQUIRED FUND PRO FORMA - ------------------------------------------------------------------------------------------------- COMMON CLASS COMMON CLASS ADVISOR CLASS COMMON CLASS - ------------------------------------------------------------------------------------------------- 1 Year $137 $202 $227 $137 3 Year 448 624 700 440 5 Year 789 1,073 1,200 776 10 Year 1,751 2,317 2,575 1,727 - -------------------------------------------------------------------------------------------------
The examples provide a means for an investor to compare expense levels of funds with different fee structures over varying investment periods. To facilitate such comparison, all funds are required to utilize a 5.00% annual return assumption. However, each Fund's actual return will vary and may be greater or less than 5.00%. These examples should not be considered representations of past or future expenses and actual expenses may be greater or less than those shown. INFORMATION ABOUT THE ACQUISITION Agreement and Plan of Reorganization. The following summary of the Plan is qualified in its entirety by reference to the form of Plan (Exhibit A hereto). The Plan provides that the Acquiring Fund will acquire all of the assets of the Acquired Fund in exchange for shares of the Acquiring Fund and the assumption by the Acquiring Fund of the liabilities of the Acquired Fund on the Closing Date. The Closing Date is expected to be on or about June 8, 2001. Prior to the Closing Date, the Acquired Fund will endeavor to discharge all of its known liabilities and obligations, other than those liabilities and obligations which would otherwise be discharged at a later date in the ordinary course of business. The Acquiring Fund will assume all liabilities, expenses, costs, charges and reserves, including those liabilities reflected on an unaudited statement of assets and liabilities of the Acquired Fund, as of the close of regular trading on the New York Stock Exchange, Inc. ("NYSE"), currently 4:00 p.m. New York City time, on the Closing Date, in accordance with generally accepted 9 accounting principles consistently applied from the prior audited period. The net asset value per share of each class of each Fund will be calculated by determining the total assets attributable to such class, subtracting the relevant class' pro rata share of the actual and accrued liabilities of a Fund and the liabilities specifically allocated to that class of shares, and dividing the result by the total number of outstanding shares of the relevant class. Each Fund will utilize the procedures set forth in its respective current Prospectus or Statement of Additional Information to determine the value of their respective portfolio securities and to determine the aggregate value of each Fund's portfolio. On or as soon after the Closing Date as conveniently practicable, the Acquired Fund will liquidate and distribute pro rata to shareholders of record as of the close of business on the Closing Date the shares of the Common Class of the Acquiring Fund received by the Acquired Fund. Such liquidation and distribution will be accomplished by the establishment of accounts in the names of the Acquired Fund's shareholders on the share records of the Acquiring Fund's transfer agent. Each account will represent the number of shares of the Common Class of shares of the Acquiring Fund due to each of the Acquired Fund's shareholders calculated in accordance with the Plan. After such distribution and the winding up of its affairs, the Acquired Fund will terminate as a management investment company and dissolve as a Maryland corporation. The consummation of the Acquisition is subject to the conditions set forth in the Plan, including approval of the Plan by the shareholders of the Acquired Fund. Notwithstanding approval by the shareholders of the Acquired Fund, the Plan may be terminated at any time at or prior to the Closing Date: (i) by mutual agreement of the Acquired Fund and the Acquiring Fund; (ii) by the Acquired Fund, in the event the Acquiring Fund shall, or by the Acquiring Fund, in the event the Acquired Fund shall, materially breach any representation, warranty or agreement contained in the Plan to be performed at or prior to the Closing Date; or (iii) if a condition to the Plan expressed to be precedent to the obligations of the terminating party has not been met and it reasonably appears that it will not or cannot be met within a reasonable time. Pursuant to the Plan, the Acquiring Fund has agreed to indemnify and advance expenses to each Director or officer of the Acquired Fund against money damages incurred in connection with any claim arising out of such person's services as a Director or officer with respect to matters specifically relating to the Acquisition. Approval of the Plan with respect to the Acquired Fund will require the affirmative vote of a majority of the Fund's outstanding shares in the aggregate without regard to class, in person or by proxy, if a quorum is present. Shareholders of the Acquired Fund are entitled to one vote for each share. If the Acquisition is not approved by shareholders of the Acquired Fund, the Board of Directors of the Acquired Fund will consider other possible courses of action available to it, including resubmitting the Acquisition proposal to shareholders. 10 DESCRIPTION OF THE ACQUIRING FUND SHARES. Shares of the Acquiring Fund will be issued to the Acquired Fund in accordance with the procedures detailed in the Plan and as described in the Acquiring Fund's Prospectus and Statement of Additional Information. The Acquiring Fund, like the Acquired Fund, will not issue share certificates to its shareholders. See "Information on Shareholders' Rights" and the Prospectus of the Acquiring Fund for additional information with respect to the shares of the Acquiring Fund. The Acquiring Fund has authorized five classes of common stock, called Class A shares, Class B shares, Class C shares, Class D shares and Common Class shares. Common Class shares of the Acquiring Fund will be issued to holders of Common Class shares and Advisor Class shares of the Acquired Fund. The Acquiring Fund intends to continuously offer Common Class shares after consummation of the Acquisition. Shares of each class of the Acquiring Fund represent equal pro rata interests in the Acquiring Fund and accrue dividends and calculate net asset value and performance quotations in the same manner. FEDERAL INCOME TAX CONSEQUENCES. The exchange of assets of the Acquired Fund for shares of the Acquiring Fund, followed by the distribution of these shares, is intended to qualify for federal income tax purposes as a tax-free reorganization under Section 368(a) of the Internal Revenue Code of 1986, as amended (the "Code"). As a condition to the closing of the Acquisition, the Acquiring Fund and the Acquired Fund will receive an opinion from Willkie Farr & Gallagher, counsel to the Acquired Fund, to the effect that, on the basis of the existing provisions of the Code, U.S. Treasury regulations issued thereunder, current administrative rules, pronouncements and court decisions, for federal income tax purposes, upon consummation of the Acquisition: (1) the transfer of all of the Acquired Fund's assets in exchange for the Acquiring Fund shares and the assumption by the Acquiring Fund of the liabilities of the Acquired Fund, and the distribution of the Acquiring Fund shares to the shareholders of the Acquired Fund in exchange for their shares of the Acquired Fund, will constitute a "reorganization" within the meaning of Section 368(a) of the Code, and the Acquiring Fund and the Acquired Fund will each be a "party to a reorganization" within the meaning of Section 368(b) of the Code; (2) no gain or loss will be recognized by the Acquiring Fund upon the receipt of the assets of the Acquired Fund solely in exchange for the Acquiring Fund shares and the assumption by the Acquiring Fund of the liabilities of the Acquired Fund; (3) no gain or loss will be recognized by the Acquired Fund upon the transfer of the Acquired Fund's assets to the Acquiring Fund in exchange for the Acquiring Fund shares and the assumption by the Acquiring Fund of the liabilities of the Acquired Fund or upon the distribution of the Acquiring Fund shares to the Acquired Fund's shareholders; 11 (4) no gain or loss will be recognized by shareholders of the Acquired Fund upon the exchange of their shares for Acquiring Fund shares or upon the assumption by the Acquiring Fund of the liabilities of the Acquired Fund; (5) the aggregate tax basis of the Acquiring Fund shares received by each shareholder of the Acquired Fund pursuant to the Acquisition will be the same as the aggregate tax basis of shares of the Acquired Fund held by such shareholder immediately prior to the Acquisition, and the holding period of Acquiring Fund shares to be received by each shareholder of the Acquired Fund will include the period during which the shares of the Acquired Fund exchanged therefor were held by such shareholder (provided that such shares of the Acquired Fund were held as capital assets on the date of the Acquisition); and (6) the tax basis of the Acquired Fund's assets acquired by the Acquiring Fund will be the same as the tax basis of such assets to the Acquired Fund immediately prior to the Acquisition, and the holding period of the assets of the Acquired Fund in the hands of the Acquiring Fund will include the period during which those assets were held by the Acquired Fund. You should recognize that an opinion of counsel is not binding on the Internal Revenue Service ("IRS") or any court. Neither the Acquired Fund nor the Acquiring Fund will seek to obtain a ruling from the IRS regarding the tax consequences of the Acquisition. Accordingly, if the IRS sought to challenge the tax treatment of the Acquisition and was successful, neither of which is anticipated, the Acquisition could be treated, in whole or in part, as a taxable sale of assets of the Acquired Fund, followed by the taxable liquidation thereof. Shareholders of the Acquired Fund should consult their tax advisors regarding the effect, if any, of the proposed Acquisition in light of their individual circumstances. Since the foregoing discussion only relates to the federal income tax consequences of the Acquisition, shareholders of the Acquired Fund should also consult their tax advisors as to state and local tax consequences, if any, of the Acquisition. 12 CAPITALIZATION. The following table shows the capitalization of each Fund as of October 31, 2000 and the capitalization of the Acquiring Fund on a pro forma basis as of such date, after giving effect to the Acquisition.(1)
CREDIT SUISSE WARBURG PINCUS SMALL COMPANY ACQUIRED PRO FORMA VALUE FUND FUND ACQUIRING FUND ADJUSTMENTS PRO FORMA - ------------------------------------------------------------------------------------- Net Assets - Fund Level $26,432,873 $206,081,654 -- $232,514,527 Common 26,403,491 -- ($26,403,491) -- Advisor 29,382 -- (29,382) -- Class A -- 188,501,273 -- 188,501,273 Class B -- 17,255,162 -- 17,255,162 Class C -- 219,866 -- 219,866 Class D(2) -- -- -- -- Common Class(3) -- 105,353 26,432,873 26,538,226 Net Asset Value Common $13.57 -- ($13.57) -- Advisor 13.45 -- (13.45) -- Class A -- $22.54 -- $22.54 Class B -- 21.95 -- 21.95 Class C -- 21.94 -- 21.94 Class D(2) -- -- -- -- Common Class(3) -- 22.62 -- 22.62 Shares Outstanding Common 1,945,293 -- (1,945,293) -- Advisor 2,185 -- (2,185) -- Class A -- 8,362,136 -- 8,362,136 Class B -- 786,118 -- 786,118 Class C -- 10,020 -- 10,020 Class D(2) -- -- -- -- Common Class(3) -- 4,658 1,168,562 1,173,220 - -------------------------------------------------------------------------------------
(1)Assumes the Acquisition had been consummated on October 31, 2000 and is for information purposes only. No assurance can be given as to how many Acquiring Fund shares will be received by shareholders of the Acquired Fund on the date the Acquisition takes place, and the foregoing should not be relied upon to reflect the number of Acquiring Fund shares that actually will be received on or after such date. (2)Class D of the Acquiring Fund had not commenced operations as of October 31, 2000. (3)Class R shares have been redesignated Common Class shares of the Acquiring Fund. TOTAL RETURNS Total return is a measure of the change in value of an investment in a fund over the period covered, which assumes that any dividends or capital gains distributions are automatically reinvested in shares of the fund rather than paid to the investor in cash. The formula for total return used by a fund is prescribed by the SEC and includes three steps: (1) adding to the total number of shares of the fund that would be purchased by a hypothetical $1,000 investment in the fund all additional shares that would have been purchased if all dividends and distributions paid or distributed during the period had been automatically reinvested; (2) calculating the redeemable value of the hypothetical initial investment as of the end of the 13 period by multiplying the total number of shares owned at the end of the period by the net asset value per share on the last trading day of the period; and (3) dividing this account value for the hypothetical investor by the amount of the initial investment, and annualizing the result for periods of less than one year. Total return may be stated with or without giving effect to any expense limitations in effect for a fund. The following table reflects the average annual total return (excluding sales charges) for the 1-year, 5-year, 10-year and since inception periods ended October 31, 2000 for each Fund:
ACQUIRING FUND(2) ACQUIRED FUND(3) - --------------------------------------------------------------------------------- CLASS A CLASS B CLASS C COMMON CLASS COMMON ADVISOR - --------------------------------------------------------------------------------- Average Annual Total Return(1) 1-year 21.69% 20.80% n/a n/a 22.56% 22.04% 5-year 11.43% n/a n/a n/a n/a n/a 10-year 16.44% n/a n/a n/a n/a n/a Since Inception --% 9.72% 22.16% 5.95% 12.76% 12.46% n/a = Not disclosed as the classes were not in existence during all of the period indicated. - --------------------------------------------------------------------------------
(1)If CSAM or its predecessor had not temporarily waived fees and reimbursed expenses, the total returns shown above would have been lower for the Acquired Fund. (2)Inception Date February 8, 1967 for Class A, February 28, 1996 for Class B, February 28, 2000 for Class C and August 1, 2000 for Common Class. Class D of the Acquiring Fund had not commenced operations as of October 31, 2000. (3)Inception Date December 29, 1995 for Common Class and Advisor Class. SHARE OWNERSHIP OF THE FUNDS As of March 15, 2001 (the "Record Date"), the officers, Trustees or Directors of the Acquiring Fund and the Acquired Fund beneficially owned as a group less than 1% of the outstanding securities of the relevant Fund. To the best knowledge of a Fund, as of the Record Date, no shareholder or "group" (as that term is used in Section 13(d) of the Securities Exchange Act of 1934 (the "1934 Act")), except as set forth below, owned beneficially or of record more than 5% of the outstanding shares of a class of the Funds.
NAME PERCENT OWNED AS OF RECORD DATE - ------------------------------------------------------------------------------------- ACQUIRED FUND COMMON ADVISOR - ------------------------------------------------------------------------------------- Charles Schwab & Co.* [34.32%] National Financial Services Corp.* [9.81%] [19.15%] Fidelity Investments Institutional Operations CNT* [9.22%] Merrill Lynch Pierce Fenner & Smith [5.30%] Donaldson Lufkin Jenrette Securities Corp.* [34.25%] State Street Bank & Trust Cust. for the IRA of Peggy D. Polonky [15.92%] James Reis Montagne IRA E-Trade Custodian [11.35%] Advanced Clearing FBO* [7.44%] TRUSTLYNX & Co.* [7.04%]
14
NAME PERCENT OWNED AS OF RECORD DATE - ---------------------------------------------------------------------------------------------- COMMON ACQUIRING FUND CLASS A CLASS B CLASS C CLASS D CLASS - ---------------------------------------------------------------------------------------------- Donald Macdonald [15.55%] Karen Smith IRA [15.34%] Robert W. Ahola [14.91%] Norman Hormozl [11.21%] Olive Jacobson [6.53%] Frank Navarro Money Purchase Plan [5.63%] G.M. Cochran Cust Elizabeth P Cochran [22.44%] Bryan & Sara Foulk [20.03%] G.M. Cochran Cust Lee Cochran II [14.97%] Weiman Shi & Xianjun Kong [8.84%] Wendy Martin IRA [7.96%] Robert & Jane Oliver [5.76%] Jay Hufford IRA [38.88%] Alice M. Liey Trust [36.63%] Pamela T. Vand [17.06%] Henry Gibbans-Neff Jr. [7.27%] DLJ Asset Management Group* [6.82%] - ----------------------------------------------------------------------------------------------
* Each Fund believes these entities are not the beneficial owners of shares held of record by them. COMPARISON OF INVESTMENT OBJECTIVES AND POLICIES The following discussion is based upon and qualified in its entirety by the disclosures in the respective Prospectuses and Statements of Additional Information of the Acquiring Fund and the Acquired Fund. INVESTMENT OBJECTIVES. The investment objective of the Acquired Fund is long-term capital appreciation. The investment objective of the Acquiring Fund is a high level of growth of capital. The Acquiring Fund is not intended for investors whose principal objective is assured income or preservation of capital. Each Fund's investment objective is a fundamental policy that can not be changed without the approval of the respective shareholders. There can be no assurance that either Fund will achieve its investment objective. PRIMARY INVESTMENTS. To pursue its investment objective, the Acquired Fund invests in equity securities of small U.S. value companies (at least 65% of assets, under normal market conditions). Current income is a secondary consideration in selecting portfolio investments. The Acquired Fund's adviser defines value companies as companies whose earnings power or asset value does not appear to be reflected in the current stock price. As a result, value companies look underpriced according to financial measurements of their intrinsic worth or business prospects. The Acquired Fund's adviser determines value based upon research and analysis, taking all relevant factors into account. The Acquired Fund considers a company to be small if its capitalization, at the time of purchase, is within the range of capitalization of companies in the Russell 2000 Index 15 (between $4 million and $6.1 billion as of December 31, 2000). The Acquired Fund expects to invest primarily in the following types of equity securities: common stocks and preferred stock; securities convertible into common stocks; and securities such as rights and warrants, whose values are based on common stock. To pursue its investment objective, the Acquiring Fund invests primarily in equity securities of small market capitalization companies (at least 65% of assets, under normal market conditions), including common stock, securities convertible into common stock, preferred stock, other equity securities, bonds or certain other debt securities. The Acquiring Fund considers small companies to be companies with market capitalizations of $2 billion or less at the time of purchase. The adviser seeks securities that appear to be underpriced. The adviser looks for stocks issued by companies with proven management, consistent earnings, sound finances and strong potential for market growth. The Acquiring Fund focuses on the fundamentals of each small-cap company instead of trying to anticipate what changes might occur in the stock market, the economy, or the political environment. The Acquiring Fund may invest up to 35% of its assets in investment grade debt securities and may invest up to 20% of its assets in foreign securities, whereas the Acquired Fund is subject to a corresponding 20% and 10%, respectively, of total assets limitation. The Acquiring Fund invests in both listed and unlisted securities, although the Acquiring Fund may not invest in restricted securities (as compared to a limitation of up to 10% of net assets for the Acquired Fund) but may invest in securities freely saleable among certain institutional investors pursuant to Rule 144A under the Securities Act. Like the Acquired Fund, the Acquiring Fund may enter into derivative transactions, but the Acquiring Fund is generally subject to more stringent limitations as to the types of derivative transactions which may be entered into as well the purposes for which they are intended. INVESTMENT LIMITATIONS. The Acquired Fund and the Acquiring Fund have adopted certain fundamental and non-fundamental investment limitations. Fundamental investment limitations may not be changed without the affirmative vote of the holders of a majority of the relevant Fund's outstanding shares. Each Fund has substantially similar fundamental investment limitations with respect to issuer concentration; industry concentration; making loans; underwriting securities; purchasing securities on margin; purchasing or selling real estate; and issuing senior securities. Each Fund has a different fundamental investment limitation with respect to borrowing as the Acquiring Fund is limited to 15% of its total assets, while the Acquired Fund is limited to 30% of its total assets. While the Acquired Fund has fundamental investment limitations which prohibit investing in short sales and oil, gas or mineral exploration or development programs, the Acquiring Fund has no stated limitations in this context. While the Acquired Fund has a fundamental limitation which prohibits investing in commodities, except it may purchase and sell futures contracts, the Acquiring Fund may invest in commodities for hedging purposes. While the Acquiring Fund has a fundamental investment limitation which prohibits investing in restricted securities, the 16 Acquired Fund is subject to a non-fundamental limitation of up to 10% of its net assets in securities which may be illiquid because of legal or contractual restrictions on resale or securities for which there are no readily available market quotations. Although each Fund has substantially similar limitations with respect to pledging, mortgaging or hypothecating its assets and making additional investments if borrowing exceeds 5% of assets, the Acquiring Fund's limitations are fundamental while the Acquired Fund's limitations are non-fundamental. While the Acquiring Fund has a fundamental investment limitation which prohibits investing in companies for the purpose of exercising control or management, the Acquired Fund has no stated limitation in this context. Each Fund has substantially similar non-fundamental limitations with respect to investing in other investment companies. Each Fund has a different non-fundamental investment limitation with respect to investing in warrants, options, futures and options thereon, securities lending, and when-issued securities and forward commitments (see table below). CERTAIN INVESTMENT PRACTICES. For each of the following practices, this table shows the applicable investment limitation. Risks are indicated for each practice. The specific risks associated with each of the investment practices described below are defined for the Acquiring Fund in the Acquiring Fund's Prospectus, which accompanies this Prospectus/Proxy Statement, and for the Acquired Fund in the Acquired Fund's Prospectuses. KEY TO TABLE: /x/ Permitted without limitation; does not indicate actual use 20% Italic type (e.g., 20%) represents an investment limitation as a percentage of net fund assets; does not indicate actual use 20% Roman type (e.g. 20%) represents an investment limitation as a percentage of total fund assets; does not indicate actual use / / Permitted, but not expected to be used to a significant extent -- Not permitted
INVESTMENT PRACTICE LIMIT - --------------------------------------------------------------------------------------------------- Acquiring Acquired Fund Fund - --------------------------------------------------------------------------------------------------- BORROWING. The borrowing of money from banks to meet 15% 30% redemptions or for other temporary or emergency purposes. only 5% permitted for Speculative exposure risk. purposes other than meeting redemptions CONVERTIBLE SECURITIES. Bond or preferred stock convertible to /x/ /x/ common stock of an issuer. Correlation, credit, hedged exposure, liquidity, market, speculative exposure risks. HEDGING TRANSACTIONS. Instruments, such as options, futures or /x/ /x/ forwards, intended to manage fund exposure to currency risk. Options, futures or forwards involve the right or obligation to buy or sell a given amount of foreign currency at a specified price and future date.(1) Correlation, credit, currency, hedged exposure, liquidity, political, valuation risks. 17 INVESTMENT PRACTICE LIMIT - --------------------------------------------------------------------------------------------------- Acquiring Acquired Fund Fund - --------------------------------------------------------------------------------------------------- FOREIGN SECURITIES. Securities of foreign issuers. May include 20% 10% depositary receipts. Currency, Information, market, political, valuation risks. FUTURES AND OPTIONS ON FUTURES. Exchange-traded contracts that enable 5% / / a fund to hedge against or speculate on future changes in currency values, interest rates or stock indexes. Futures obligate the fund (or give it the right, in the case of options) to receive or make payment at a specific future time based on those future changes. (1) Correlation, currency, hedged exposure, interest-rate, market, speculative exposure risks.(2) INVESTMENT COMPANIES. Investments in other investment companies. To the extent To the extent Market, liquidity, operational risks. permitted by the permitted by the 1940 Act 1940 Act INVESTMENT-GRADE DEBT SECURITIES. Debt securities rated within the four 35% 20% highest grades (AAA/Aaa through BBB/Baa) by Standard & Poor's or Moody's rating service, and unrated securities of comparable quality. Credit, interest-rate, market risks. MORTGAGE-BACKED AND ASSET-BACKED SECURITIES. Debt securities backed / / / / by pools of mortgages, including passthrough certificates and other senior classes of collateralized mortgage obligations (CMOs), or other receivables. Credit, extension, interest-rate, liquidity, prepayment risks. NON-INVESTMENT-GRADE DEBT SECURITIES. Debt securities and convertible -- 10% securities rated below the fourth-highest grade (BBB/Baa) by Standard & Poor's or Moody's rating service, and unrated securities of comparable quality. Commonly referred to as junk bonds. Credit, information, interest-rate, liquidity, market, valuation risks. OPTIONS. Instruments that provide a right to buy (call) or sell (put) a 10% 25% particular security or an index of securities at a fixed price within a certain time period. A fund may purchase and write both put and call options for hedging or speculative purposes.(1) Correlation, credit, hedged exposure, liquidity, market, speculative exposure risks. RESTRICTED AND OTHER ILLIQUID SECURITIES. Securities with restrictions -- 10% on trading, or those not actively traded. May include private May invest 10% in placements. Liquidity, market, valuation risks. instruments having no ready market SECURITIES LENDING. Lending portfolio securities to financial institutions; 25% 33 1/3% a fund receives cash, U.S. government securities or bank letters of credit as collateral. Credit, liquidity, market, operational risks. SHORT SALES. Selling borrowed securities with the intention of -- -- repurchasing them for a profit on the expectation that the market Shorts sales Shorts sales pricewill drop. If a fund were to take short positions in stocks that "against the box" "against the box" increase in value, then it would be likely to underperform are permitted up are permitted up similar mutual funds that do not take short positions. to 10% of net to 10% of net Liquidity, market, speculative exposure risks. assets assets SINGLE INDUSTRY. Companies within a single industry. Correlation, 25% 25% market, operational risks. except US except US government government instruments instruments SPECIAL-SITUATION COMPANIES. Companies experiencing unusual /x/ /x/ developments affecting their market values. Special situations may include acquisition, consolidation, reorganization, recapitalization, merger, liquidation, special distribution, tender or exchange offer, or potentially favorable litigation. Securities of a special-situation company could decline in value and hurt a fund's performance if the anticipated benefits of the special situation do not materialize. Information, market risks. 18 INVESTMENT PRACTICE LIMIT - --------------------------------------------------------------------------------------------------- Acquiring Acquired Fund Fund - --------------------------------------------------------------------------------------------------- START-UP AND OTHER SMALL COMPANIES. Companies with small relative /x/ /x/ market capitalizations, including those with continuous Limited to 10% for operations of less than three years. Information, liquidity, start-up companies market, valuation risks. TEMPORARY DEFENSIVE TACTICS. Placing some or all of a fund's assets / / / / in investments such as money-market obligations and investment-grade debt securities for defensive purposes. Although intended to avoid losses in adverse market, economic, political or other conditions, defensive tactics might be inconsistent with a fund's principal investment strategies and might prevent a fund from achieving its goal. WARRANTS. Options issued by a company granting the holder the right 5% 10% to buy certain securities, generally common stock, at a specified price and usually for a limited time. Liquidity, market, speculative exposure risks. WHEN-ISSUED SECURITIES AND FORWARD COMMITMENTS. The purchase / / 20% or sale of securities for delivery at a future date; market value may change before delivery. Liquidity, market, speculative exposure risks. - -----------------------------------------------------------------------------------------------------
(1)The Funds are not obligated to pursue any hedging strategy and do not represent that these techniques are available now or will be available at any time in the future. (2)Each Fund is limited to 5% of net assets for initial margin and premium amounts on futures positions considered to be speculative by the Commodity Futures Trading Commission. DETERMINATION OF NET ASSET VALUE OF SHARES OF THE ACQUIRING FUND The net asset value ("NAV") of shares of the Acquiring Fund is determined at the close of regular trading on the NYSE (usually 4 p.m. Eastern Time) each day the NYSE is open for business. It is calculated by dividing a Class' total assets less its liabilities, by the number of shares of such Class outstanding. The Acquiring Fund values its securities based on market quotations when it calculates its NAV. If market quotations are not readily available, securities and other assets are valued by another method the Board of Trustees believes accurately reflects fair value. Debt obligations that will mature in 60 days or less are valued on the basis of amortized cost, unless the Board determines that using this method would not reflect an investment's value. Some securities of the Acquiring Fund may be listed on foreign exchanges that are open on days (such as U.S. holidays) when the Acquiring Fund does not compute its price. This could cause the value of the Acquiring Fund's portfolio investments to be affected by trading on days when you cannot buy or sell shares. MANAGEMENT OF EACH FUND CSAM, located at 466 Lexington Avenue, 16th Floor, New York, New York 10017-3174, provides investment advisory services to both Funds under separate advisory agreements. The same persons at CSAM are responsible for the day-to-day management of each of the Acquiring Fund and the Acquired Fund. 19 In addition, PFPC and CSAMSI provide accounting and co-administrative services as applicable to each Fund. PFPC and CSAMSI provide certain financial administration, accounting, administrative, personnel and other services necessary to operate the Acquired Fund. CSAMSI has served as distributor of the Acquired Fund prior to January 3, 2000 and since August 1, 2000 and has provided distribution services to the Acquiring Fund since December 18, 2000. Provident Distributors, Inc. served as distributor of the Acquired Fund from January 3 to August 1, 2000. Boston Financial Data Services, Inc. ("BFDS") is the shareholder servicing agent, transfer agent and dividend disbursing agent for the Acquired Fund; Brown Brothers Harriman & Co. is the custodian of the Acquired Fund; and PricewaterhouseCoopers LLP serves as auditor for the Acquired Fund. PFPC serves as the transfer agent for the Acquiring Fund and Ernst & Young LLP serves as auditor for the Acquiring Fund. The Board of Trustees of the Acquiring Fund has, however, approved BFDS to serve as the transfer agent of such Fund. The Acquired Fund pays a management fee to CSAM of 1.00% of average daily net assets and the Acquiring Fund pays a management fee to CSAM of 0.75% of the first $75 million in average daily net assets and 0.50% of the balance of average daily net assets above $75 million. In addition to the management fee, the Acquired Fund pays a co-administration fee to CSAMSI of .10% of average daily net assets of its shares. On February 1, 2001, the Board of Trustees of the Acquiring Fund approved the same fee for the Acquiring Fund. CSAM and CSAMSI have, however, agreed to waive their respective fees as described below. On February 1 and February 5, 2001, the Board of Trustees of the Acquiring Fund and the Board of Directors of the Acquired Fund, respectively, approved the payment to PFPC of a fee calculated at an annual rate of .075% of its first $500 million, .065% of the next $1 billion and .055% over $1.5 billion of the average daily net assets (exclusive of out-of-pocket expenses). These new co-administration fees payable by the Acquiring Fund are reflected in the expense tables above, however, CSAM will limit average annual expenses of the Acquiring Fund from the date of the acquisition of DLJ, November 3, 2000, until November 3, 2002 to the annualized levels previously paid by the Acquiring Fund, measured over the 60-day period ended on November 3, 2000. As a result, it is not anticipated that the Acquiring Fund's average annualized operating expense ratio will increase through November 3, 2002 as a result of the retention of new co-administrators. In addition, CSAM and CSAMSI, as applicable, have agreed to waive fees, and CSAM has agreed to reimburse expenses, for the two-year period beginning on the Closing Date, to the extent necessary to maintain the net average annualized expense ratio of the Common Class of the Acquiring Fund at the lower of that of (a) the net average annualized expense ratio of the Common Class of the Acquiring Fund at the closing of the Acquisition or (b) the net average annualized expense ratio of the class of the Acquired Fund that such holder will surrender at such closing, in each case measured over the 60-day period ending on the Closing Date. 20 INTEREST OF CSAM IN THE ACQUISITION CSAM may be deemed to have an interest in the Plan and the Acquisition because it provides investment advisory services to each Fund. CSAM receives compensation from each Fund for services it provides pursuant to separate advisory agreements. The terms and provisions of the current arrangements with CSAM are described in each Fund's Prospectus and Statement of Additional Information. Future growth of assets of the Acquiring Fund, if any, can be expected to increase the total amount of fees payable to CSAM and its affiliates and to reduce the amount of fees and expenses required to be waived to maintain total fees and expenses of the Acquiring Fund at agreed upon levels. CSAM may also be deemed to have an interest in the Plan and the Acquisition because, as of the Record Date, it or one or more of its affiliates possessed or shared voting power or investment power as a beneficial owner or as a fiduciary on behalf of its customers or employees in the Acquired Fund (see "Information About the Acquisition -- Share Ownership of the Funds" above). CSAM and its affiliates have advised the Acquired Fund that they intend to vote the shares over which they have voting power at the Meeting in the manner instructed by the customers for which such shares are held. As of March 15, 2001, CSAM had discretionary power to vote or dispose of securities over accounts which held in the aggregate ____ shares or ____ % of the Acquired Fund's outstanding shares. See "Voting Information." CSAM may also be deemed to have an interest in the Plan and the Acquisition because CSAMSI serves as the co-administrator and distributor for each Fund. As such, CSAMSI receives compensation for its services. INFORMATION ON SHAREHOLDERS' RIGHTS GENERAL. The Funds are both open-end management investment companies registered under the 1940 Act. Both Funds continuously offer to sell shares at their current net asset values. The Acquiring Fund is a series of a Massachusetts business trust, governed by its Agreement and Declaration of Trust, dated February 22, 1996, as amended, By-Laws and Board of Trustees. The Acquired Fund is a Maryland corporation organized on October 23, 1995 and is governed by its Articles of Incorporation, By-Laws and Board of Directors. Each Fund is also governed by applicable state and federal law. The Acquiring Fund has an unlimited number of transferable shares of beneficial interest with par value of $.01 per share. The Acquired Fund has an authorized capital of three billion shares of common stock with a par value of $.001 per share, of which one billion are designated Common Class and two billion are designated Advisor Class. In each Fund, shares represent interests in the assets of the relevant Fund and have identical voting, dividend, liquidation and other rights (other than as set forth below) on the same terms and conditions except that expenses related to the distribution of each class of shares of the relevant Fund are borne solely by such class and each class of shares has exclusive voting rights with respect to provisions of such Fund's Rule 12b-1 distribution plan, if any, pertaining to that particular class. 21 MULTI-CLASS STRUCTURE. Each Fund is authorized to offer multiple classes. The Acquiring Fund offers Class A, B, C, D and Common Class shares. The Acquired Fund offers Common Class and Advisor Class shares. The Acquiring Fund expects to continue to offer shares of its Class A, B, C, D and Common Class shares following the Acquisition. TRUSTEES/DIRECTORS. The Agreement and Declaration of Trust of the Acquiring Fund and the By-Laws of the Acquired Fund provide that the term of office of each Trustee or Director, respectively, shall be from the time of his or her election and qualification until his or her successor shall have been elected and shall have qualified. In the case of the Acquiring Fund, the Trustees have the power to set and alter their terms of office, and at any time to lengthen or shorten their own terms or make their terms of unlimited duration. Trustees of the Acquiring Fund may be removed by at least two-thirds of the shares entitled to vote. Directors of the Acquired Fund may be removed by a majority of the shares entitled to vote. Vacancies on the Boards of either Fund may be filled by the Trustees/Directors remaining in office, provided that no vacancy or vacancies may be filled by action of the remaining Trustee/Directors if, after the filling of the vacancy or vacancies, fewer than two-thirds of the Trustees/Directors then holding office shall have been elected by the shareholders of the relevant Fund. A meeting of shareholders will be required for the purpose of electing Trustees/Directors whenever (a) fewer than a majority of the Trustees/Directors then in office were elected by shareholders of the relevant Fund or (b) a vacancy exists that may not be filled by the remaining Trustees/Directors and must be filled. VOTING RIGHTS. Neither Fund holds a meeting of shareholders annually, and there normally is no meeting of shareholders for the purpose of electing Trustees/Directors unless and until such time as less than a majority of the Trustees/Directors of the relevant Fund holding office have been elected by shareholders or a vacancy exists that may not be filled by the remaining Trustees/Directors. At such times, the Trustees or Directors then in office will call a shareholders' meeting for the election of Trustees/Directors. LIQUIDATION OR TERMINATION. In the event of the liquidation or termination of either Fund, the shareholders of the relevant Fund are entitled to receive, when and as declared by the Trustees or Directors, the excess of the assets over the liabilities belonging to such Fund. In either case, the assets so distributed to shareholders will be distributed among the shareholders in proportion to the number of shares held by them and recorded on the books of such Fund. LIABILITY OF TRUSTEES OR DIRECTORS. The constituent documents of each Fund provide that its Trustees/Directors and officers shall not be liable in such capacity for monetary damages for breach of fiduciary duty as a Trustee/Director or officer, except for willful misfeasance, bad faith, gross negligence or reckless disregard of duties in the conduct of his office or the discharge of his functions on the part of such Trustee, Director or officer. The constituent instruments of each Fund provide that the relevant Fund shall indemnify each Trustee/Director and officer and permit advances for the payment of expenses relating to the matter for 22 which indemnification is sought, in the case of the Acquired Fund, to the fullest extent permitted by applicable law and, in the case of both Funds, except for bad faith, willful misfeasance, gross negligence or reckless disregard of duties in the conduct of his office or the discharge of his functions on the part of such Trustee/ Director or officer. RIGHTS OF INSPECTION. Maryland law permits any shareholder of the Acquired Fund or any agent of such shareholder to inspect and copy, during usual business hours, the By-Laws, minutes of shareholder proceedings, annual statements of the affairs and voting trust agreements of the relevant Fund on file at its principal offices. Massachusetts business trust law does not have such provisions. However, the Acquiring Fund's Agreement and Declaration of Trust provides that the records of the Acquiring Fund shall be open to inspection by shareholders to the same extent as is permitted to stockholders of a corporation under the Massachusetts business corporation statute. SHAREHOLDER LIABILITY. Under Maryland law, shareholders of the Acquired Fund do not have personal liability for corporate acts and obligations. Massachusetts law provides that shareholders of the Acquiring Fund could, under certain circumstances, be held personally liable for the obligation of the Acquiring Fund. However, the Agreement and Declaration of Trust of the Acquiring Fund disclaims shareholder liability for acts or obligations of the Acquiring Fund and requires that notice of such disclaimer be given in each agreement, obligation or instrument entered into or executed by such Fund or a Trustee. The Plan contains such a disclaimer. The Agreement and Declaration of Trust of the Acquiring Fund provides for indemnification from the Acquiring Fund's property for all losses and expenses arising from such liability. Thus, the risk of shareholder liability is limited to circumstances in which the Acquiring Fund would be unable to meet its obligations. Upon payment of any liability incurred by the Acquiring Fund, the shareholder paying the liability will be entitled to reimbursement from the general assets of the Acquiring Fund. The foregoing is only a summary of certain characteristics of the operations of each Fund. The foregoing is not a complete description of the documents cited. Shareholders should refer to the provisions of the constituent documents and state laws governing each Fund for a more thorough description. CONCLUSION The Plan was approved by the Board of Trustees of the Acquiring Fund on February 1, 2001 and by the Board of Directors of the Acquired Fund on February 5, 2001. The Board of each Fund has determined that the Acquisition is in the best interests of shareholders of their respective Fund and that the interests of existing shareholders of the Acquired Fund and the Acquiring Fund would not be diluted as a result of the Acquisition. If the shareholders of the Acquired Fund do not approve the Plan or if the Acquisition is not completed, the Acquired Fund will continue to engage in business as a registered investment company and the Board of the Acquired Fund will consider other possible courses of action available to it, including resubmitting the Acquisition proposal to shareholders. 23 REQUIRED VOTE Approval of the Plan requires the affirmative vote of a majority of the Acquired Fund's outstanding shares in the aggregate without regard to class, in person or by proxy, if a quorum is present. THE BOARD OF DIRECTORS OF THE ACQUIRED FUND, INCLUDING THE INDEPENDENT DIRECTORS, RECOMMENDS THAT YOU VOTE FOR THIS PROPOSAL. ADDITIONAL INFORMATION The Acquiring Fund and the Acquired Fund are each subject to the informational requirements of the 1934 Act and the 1940 Act and in accordance therewith file reports and other information including proxy material, reports and charter documents, with the SEC. These materials can be inspected and copies obtained at the Public Reference Facilities maintained by the SEC at 450 Fifth Street, N.W., Washington, D.C. 20549 and at the New York Regional Office of the SEC at 7 World Trade Center, Suite 1300, New York, New York 10048. Copies of such material can also be obtained from the Public Reference Branch, Office of Consumer Affairs and Information Services, SEC, Washington, D.C. 20549 at prescribed rates. The Prospectus and the Statement of Additional Information for the Acquiring Fund, along with related information, may be found on the SEC website as well (http://www.sec.gov). VOTING INFORMATION This Prospectus/Proxy Statement is furnished in connection with a solicitation of proxies by the Board of Directors of the Acquired Fund to be used at the Special Meeting of Shareholders of the Acquired Fund to be held at 3:00 p.m. on May 25, 2001, at the offices of the Acquired Fund, 466 Lexington Avenue, New York, New York 10017-3147 and at any adjournment(s) thereof. This Prospectus/Proxy Statement, along with a Notice of the Meeting and proxy card(s), is first being mailed to shareholders of the Acquired Fund on or about April 1, 2001. Only shareholders of record as of the close of business on March 15, 2001 (the "Record Date") will be entitled to notice of, and to vote at, the Meeting or any adjournment(s) thereof. As of the Record Date, the Acquired Fund had the following shares outstanding and entitled to vote: ___________. The holders of one-third of the shares of the Acquired Fund outstanding at the close of business on the Record Date present in person or represented by proxy will constitute a quorum for the Meeting of the Fund. For purposes of determining a quorum for transacting business at the Meeting, abstentions and broker "non-votes" (that is, proxies from brokers or nominees indicating that such persons have not received instructions from the beneficial owner or other persons entitled to vote shares on a particular matter with respect to which the brokers or nominees do not have discretionary power) will be treated as shares that are present but which have not been voted. For this reason, abstentions and broker non-votes will have the effect of a vote against the Plan for purposes of obtaining the requisite approval of the 24 Plan. If the enclosed proxy is properly executed and returned in time to be voted at the Meeting, the proxies named therein will vote the shares represented by the proxy in accordance with the instructions marked thereon. Executed, but unmarked proxies (i.e., executed proxies in which there is no indication of the shareholder's voting instructions) will be voted FOR approval of the Plan and FOR approval of any other matters deemed appropriate. A proxy may be revoked at any time on or before the Meeting by the subsequent execution and submission of a revised proxy, by written notice to Hal Liebes, Secretary of the Acquired Fund, 466 Lexington Avenue, New York, New York 10017-3147 or by voting in person at the Meeting. CSAM has retained D.F. King & Co. to solicit proxies. Proxy solicitations will be made primarily by mail, but proxy solicitations also may be made by telephone, facsimile or personal interviews conducted by officers and employees of CSAM and its affiliates. All expenses of the Acquisition, which are currently estimated to be $[_________], including the costs of the proxy solicitation and the preparation of enclosures to the Prospectus/Proxy Statement, reimbursement of expenses of forwarding solicitation material to beneficial owners of shares of the Acquired Fund and expenses incurred in connection with the preparation of this Prospectus/Proxy Statement, will be borne by CSAM or its affiliates (excluding extraordinary expenses not normally associated with transactions of this type). It is anticipated that banks, brokerage houses and other institutions, nominees and fiduciaries will be requested to forward proxy materials to beneficial owners and to obtain authorization for the execution of proxies. CSAM or its affiliates, may, upon request, reimburse banks, brokerage houses and other institutions, nominees and fiduciaries for their expenses in forwarding proxy materials to beneficial owners. In the event that a quorum necessary for any proposal at the Meeting is not present or sufficient votes to approve any proposal are not received prior to 3:00 p.m. on May 25, 2001, the persons named as proxies may propose one or more adjournments of the Meeting to permit further solicitation of proxies with respect to any proposal which did not receive the vote necessary for its passage or to obtain a quorum. With respect to any proposal for which there is represented a sufficient number of votes in favor, an act taken at the Meeting will be effective irrespective of any adjournments with respect to any other proposal. In determining whether to adjourn the Meeting, the following factors may be considered: the percentage of votes actually cast, the percentage of negative votes actually cast, the nature of any further solicitation and the information to be provided to shareholders with respect to the reasons for the solicitation. Any such adjournment will require an affirmative vote by the holders of a majority of the shares of the Acquired Fund present in person or by proxy and entitled to vote at the Meeting. The persons named as proxies will vote upon a decision to adjourn the Meeting after consideration of the best interests of all shareholders of the Acquired Fund. As of March 15, 2001, CSAM (or its affiliates) possessed or shared voting power or investment power as a fiduciary on behalf of its customers, with respect to the Acquired Fund as set forth above under "Proposal - Information 25 About the Acquisition -- Interest of CSAM in the Acquisition." CSAM and its affiliates have advised the Acquired Fund that they intend to vote the shares over which they have voting power at the Meeting, including shares that are held directly or on behalf of employees, in the manner instructed by the customers or employees for which such shares are held. OTHER BUSINESS The Board of Directors knows of no other business to be brought before the Meeting. However, if any other matters come before the Meeting, proxies that do not contain specific restrictions to the contrary will be voted on such matters in accordance with the judgment of the persons named in the enclosed Proxy Card(s). The approval of shareholders of the Acquiring Fund is not required in order to affect the Acquisition and, accordingly, the votes of the shareholders of the Acquiring Fund are not being solicited by this Prospectus/Proxy Statement. FINANCIAL STATEMENTS AND EXPERTS The audited Statement of Assets and Liabilities of each Fund as of October 31, 2000, including their respective schedules of portfolio investments, and the related statements of operations for the year and/or period then ended, the statement of changes in net assets for each of the two years in the period then ended and the financial highlights for each of the five years (or such shorter period as the relevant Fund's share class has been in existence) in the period then ended, have been incorporated by reference into this Prospectus/Proxy Statement in reliance upon the reports of Ernst & Young LLP, in the case of the Acquiring Fund, and PricewaterhouseCoopers LLP, in the case of the Acquired Fund, independent accountants, given on the authority of such firms as experts in accounting and auditing. ADDITIONAL MATERIALS The following additional materials, which have been incorporated by reference into the Statement of Additional Information, dated __________, 2001, relating to this Prospectus/Proxy Statement and the Acquisition, will be sent to all shareholders of the Acquired Fund requesting a copy of such Statement of Additional Information. 1. The current Statement of Additional Information for the Acquiring Fund, dated February 28, 2001 and any supplements thereto. 2. The current Statement of Additional Information for the Acquired Fund, dated February 28, 2001 and any supplements thereto. VALIDITY OF SHARES The validity of the shares of the Acquiring Fund will be passed upon by Hale & Dorr, 60 State Street, Boston, Massachusetts 02109, special counsel to the Acquiring Fund. 26 EXHIBIT A AGREEMENT AND PLAN OF REORGANIZATION THIS AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") is made as of this ___ day of [INSERT], 2001, between and among Credit Suisse Warburg Pincus Capital Funds (formerly the DLJ Focus Funds), a Massachusetts business trust (the "Acquiring Trust"), for and on behalf of its series, Credit Suisse Warburg Pincus Small Company Value Fund (formerly the DLJ Small Company Value Fund) (the "Acquiring Fund"), Warburg, Pincus Small Company Value II Fund, Inc., a Maryland corporation (the "Acquired Fund"), and, solely for purposes of Sections 4.3, 5.11 and 9.2 hereof, Credit Suisse Asset Management, LLC, a limited liability company organized under the laws of the State of Delaware ("CSAM"). This Agreement is intended to be and is adopted as a plan of reorganization within the meaning of Section 368(a) of the United States Internal Revenue Code of 1986, as amended (the "Code"). The reorganization of the Acquired Fund (collectively, the "Reorganization") will consist of the transfer of all of the assets of the Acquired Fund in exchange solely for shares of the Common Class shares of beneficial interest (the "Shares") of the Acquiring Fund, and the assumption by the Acquiring Fund of liabilities of the Acquired Fund, and the distribution, on or after the Closing Date hereinafter referred to, of Shares of the Acquiring Fund ("Acquiring Fund Shares") to the shareholders of the Acquired Fund in liquidation of the Acquired Fund as provided herein, all upon the terms and conditions hereinafter set forth in this Agreement. As the Acquiring Fund is a series of the Acquiring Trust, all parties to this Agreement acknowledge and accept that the Acquiring Fund does not have a Board of Trustees or officers separate from the other series of the Acquiring Trust. Accordingly, all representations, warranties, covenants and/or other obligations of any kind made by the Acquiring Fund in this Agreement are expressly understood by all parties to this Agreement as being made by the Trustees or officers of the Acquiring Trust, as applicable, in their respective capacities as Trustees or officers (and not in their individual capacities) for, and on behalf of, the Acquiring Fund. WHEREAS, the Board of Directors of the Acquired Fund has determined that the exchange of all of the assets of the Acquired Fund for Acquiring Fund Shares and the assumption of the liabilities of the Acquired Fund by the Acquiring Fund is in the best interests of the Acquired Fund and that the interests of the existing shareholders of the Acquired Fund would not be diluted as a result of this transaction; and WHEREAS, the Board of Trustees of the Acquiring Trust has determined that the exchange of all of the assets of the Acquired Fund for Acquiring Fund Shares is in the best interests of the Acquiring Fund's shareholders and that the interests of the existing shareholders of the Acquiring Fund would not be diluted as a result of this transaction. A-1 NOW, THEREFORE, in consideration of the premises and of the covenants and agreements hereinafter set forth, the parties hereto covenant and agree as follows: 1. Transfer of Assets of the Acquired Fund in Exchange for Acquiring Fund Shares and Assumption of the Acquired Fund's Liabilities and Liquidation of the Acquired Fund 1.1. Subject to the terms and conditions herein set forth and on the basis of the representations and warranties contained herein, the Acquired Fund agrees to transfer its assets as set forth in paragraph 1.2 to the Acquiring Fund, and the Acquiring Fund agrees in exchange therefor: (i) to deliver to the Acquired Fund the number of Acquiring Fund Shares, including fractional Acquiring Fund Shares, of each class of the Acquired Fund determined by dividing the value of the Acquired Fund's net assets attributable to each such class of shares, computed in the manner and as of the time and date set forth in paragraph 2.1, by the net asset value of one Acquiring Fund Share of the applicable class; and (ii) to assume the liabilities of the Acquired Fund, as set forth in paragraph 1.3. Such transactions shall take place at the closing provided for in paragraph 3.1 (the "Closing"). 1.2. (a) The assets of the Acquired Fund to be acquired by the Acquiring Fund shall consist of all property including, without limitation, all cash, securities and dividend or interest receivables that are owned by or owed to the Acquired Fund and any deferred or prepaid expenses shown as an asset on the books of the Acquired Fund on the Closing date provided in paragraph 3.1 (the "Closing Date"). (b) The Acquired Fund has provided the Acquiring Fund with a list of all of the Acquired Fund's assets as of the date of execution of this Agreement. The Acquired Fund reserves the right to sell any of these securities but will not, without the prior approval of the Acquiring Fund, acquire any additional securities other than securities of the type in which the Acquiring Fund is permitted to invest. The Acquired Fund will, within a reasonable time prior to the Closing Date, furnish the Acquiring Fund with a list of the securities, if any, on the Acquired Fund's list referred to in the first sentence of this paragraph which do not conform to the Acquiring Fund's investment objective, policies and restrictions. In the event that the Acquired Fund holds any investments which the Acquiring Fund may not hold, the Acquired Fund will dispose of such securities prior to the Closing Date. In addition, if it is determined that the portfolios of the Acquired Fund and the Acquiring Fund, when aggregated, would contain investments exceeding certain percentage limitations imposed upon the Acquiring Fund with respect to such investments, the Acquired Fund, if requested by the Acquiring Fund, will dispose of and/or reinvest a sufficient amount of such investments as may be necessary to avoid violating such limitations as of the Closing Date. 1.3. The Acquired Fund will endeavor to discharge all of the known liabilities and obligations of the Acquired Fund prior to the Closing Date, other than those liabilities and obligations which would otherwise be discharged at a later date in the ordinary course of business. The Acquiring Fund shall assume all A-2 liabilities, expenses, costs, charges and reserves, including those liabilities reflected on unaudited statements of assets and liabilities of the Acquired Fund and the Acquiring Fund prepared by PFPC, Inc. ("PFPC"), the accounting agent of each Fund, as of the Valuation Date (as defined in paragraph 2.1), in accordance with generally accepted accounting principles consistently applied from the prior audited period. The Acquiring Fund shall also assume any liabilities, expenses, costs or charges incurred by or on behalf of the Acquired Fund specifically arising from or relating to the operations and/or transactions of the Acquired Fund prior to and including the Closing Date but which are not reflected on the above-mentioned statement of assets and liabilities, including any liabilities, expenses, costs or charges arising under paragraph 5.10 hereof. 1.4. As soon on or after the Closing Date as is conveniently practicable (the "Liquidation Date"), the Acquired Fund will liquidate and distribute pro rata to the Acquired Fund's shareholders of record determined as of the close of business on the Closing Date (the "Fund Shareholders") the Acquiring Fund Shares it receives pursuant to paragraph 1.1. Such liquidation and distribution will be accomplished by the transfer of the Acquiring Fund Shares then credited to the account of the Acquired Fund on the books of the Acquiring Fund to open accounts on the share records of the Acquiring Fund in the name of the Acquired Fund's shareholders representing the respective pro rata number of the Acquiring Fund Shares due such shareholders. All issued and outstanding shares of the Acquired Fund will simultaneously be canceled on the books of the Acquired Fund, although share certificates representing interests in the Acquired Fund will represent a number of Acquiring Fund Shares after the Closing Date as determined in accordance with Section 2.2. The Acquiring Fund shall not issue certificates representing the Acquiring Fund Shares in connection with such exchange. 1.5. Ownership of Acquiring Fund Shares will be shown on the books of the Acquiring Fund's transfer agent. Shares of the Acquiring Fund will be issued in the manner described in the Acquiring Fund's current prospectuses and statement of additional information. 1.6. Any transfer taxes payable upon issuance of the Acquiring Fund Shares in a name other than the registered holder of the Acquired Fund Shares on the books of the Acquired Fund as of that time shall, as a condition of such issuance and transfer, be paid by the person to whom such Acquiring Fund Shares are to be issued and transferred. 1.7. Any reporting responsibility of the Acquired Fund is and shall remain the responsibility of the Acquired Fund up to and including the applicable Closing Date and such later date on which the Acquired Fund is terminated. 2. Valuation 2.1. The value of the Acquired Fund's assets to be acquired hereunder shall be the value of such assets computed as of the close of regular trading on the New York Stock Exchange, Inc. (the "NYSE") on the Closing Date (such time and date A-3 being hereinafter called the "Valuation Date"), using the valuation procedures set forth in the Acquired Fund's then current prospectus or statement of additional information. 2.2. The number of Common Class of the Acquiring Fund to be issued (including fractional shares, if any) in exchange for Common Class and Advisor Class shares of the Acquired Fund shall be determined by dividing the value of the net assets of the Acquired Fund attributable to its respective Common Class or Advisor Class shares determined using the same valuation procedures referred to in paragraph 2.1 by the net asset value per Share of the Common Class shares of the Acquiring Fund computed as of the close of regular trading on the NYSE on the Closing Date, using the valuation procedures set forth in the Acquiring Fund's then current prospectus or statement of additional information. 2.3. All computations of value with respect to the Acquiring Fund and the Acquired Fund shall be made by PFPC in accordance with its regular practice as pricing agent for the Acquiring Fund. 3. Closing and Closing Date 3.1. The Closing Date for the Reorganization shall be June 8, 2001, or such other date as the parties to such Reorganization may agree to in writing. All acts taking place at the Closing shall be deemed to take place simultaneously as of the close of trading on the NYSE on the Closing Date unless otherwise provided. The Closing shall be held as of [10:00 a.m.], at the offices of Willkie Farr & Gallagher or at such other time and/or place as the parties may agree. 3.2. Citibank, N.A., the custodian for the Acquiring Fund (the "Custodian"), shall deliver at the Closing a certificate of an authorized officer stating that: (a) the Acquired Fund's portfolio securities, cash and any other assets have been delivered in proper form to the Acquiring Fund on the Closing Date and (b) all necessary taxes, including all applicable federal and state stock transfer stamps, if any, have been paid, or provision for payment has been made, in conjunction with the delivery of portfolio securities. 3.3. In the event that on the Valuation Date (a) the NYSE or another primary trading market for portfolio securities of the Acquiring Fund or the Acquired Fund shall be closed to trading or trading thereon shall be restricted or (b) trading or the reporting of trading on the NYSE or elsewhere shall be disrupted so that accurate appraisal of the value of the net assets of the Acquiring Fund or the Acquired Fund is impracticable, the applicable Closing Date shall be postponed until the first business day after the day when trading shall have been fully resumed and reporting shall have been restored. 3.4. The Acquired Fund shall deliver at the Closing a list of the names and addresses of the Acquired Fund's shareholders and the number and class of outstanding Shares owned by each such shareholder immediately prior to the Closing or provide evidence that such information has been provided to the Acquiring Fund's transfer agent. The Acquiring Fund shall issue and deliver a A-4 confirmation evidencing the Acquiring Fund Shares to be credited to the Acquired Fund's account on the Closing Date to the Secretary of the Acquired Fund or provide evidence satisfactory to the Acquired Fund that such Acquiring Fund Shares have been credited to the Acquired Fund's account on the books of the Acquiring Fund. At the Closing, each party shall deliver to the relevant other parties such bills of sale, checks, assignments, share certificates, if any, receipts or other documents as such other party or its counsel may reasonably request. 4. Representations and Warranties 4.1. The Acquired Fund represents and warrants to the Acquiring Fund as follows: (a) The Acquired Fund is a duly organized, validly existing corporation in good standing under the laws of the State of Maryland; (b) The Acquired Fund is a registered investment company classified as a management company of the open-end type and its registration with the Securities and Exchange Commission (the "Commission") as an investment company under the Investment Company Act of 1940, as amended (the "1940 Act"), is in full force and effect; (c) The Acquired Fund is not, and the execution, delivery and performance of this Agreement by the Acquired Fund will not result, in a violation of its Articles of Incorporation or By-Laws or any material agreement, indenture, instrument, contract, lease or other undertaking to which the Acquired Fund is a party or by which the Acquired Fund or its property is bound or affected; (d) There are no contracts or other commitments (other than this Agreement) of the Acquired Fund which will be terminated with liability to the Acquired Fund prior to the Closing Date; (e) Except as previously disclosed in writing to and accepted by the Acquiring Fund, no litigation or administrative proceeding or investigation of or before any court or governmental body is presently pending or to its knowledge threatened against the Acquired Fund or any of its properties or assets which, if adversely determined, would materially and adversely affect its financial condition or the conduct of its business. The Acquired Fund knows of no facts which might form the basis for the institution of such proceedings and is not party to or subject to the provisions of any order, decree or judgment of any court or governmental body which materially and adversely affects its business or the business of the Acquired Fund or its ability to consummate the transactions herein contemplated; (f) The Statements of Assets and Liabilities, including the Investment Portfolio, Operations, and Changes in Net Assets, and the Financial Highlights of the Acquired Fund at October 31, 2000 and for each fiscal period from December 29, 1995 (commencement of operations) to October 31, 2000 have been audited by PricewaterhouseCoopers LLP, independent accountants, and are in accordance with generally accepted accounting principles consistently applied, and such statements A-5 (copies of which have been furnished to the Acquiring Fund) fairly reflect the financial condition of the Acquired Fund as of such dates, and there are no known contingent liabilities of the Acquired Fund as of such dates not disclosed therein; (g) Since October 31, 2000, there has not been any material adverse change in the Acquired Fund's financial condition, assets, liabilities or business other than changes occurring in the ordinary course of business, or any incurrence by the Acquired Fund of indebtedness maturing more than one year from the date such indebtedness was incurred except as otherwise disclosed to and accepted in writing by the Acquiring Fund. For purposes of this subsection (g), a decline in net asset value per share of the Acquired Fund due to declines in market values of securities in the Acquired Fund's portfolio, the discharge of Fund liabilities, or the redemption of the Acquired Fund shares by Fund shareholders shall not constitute a material adverse change; (h) At the date hereof and the Closing Date, all federal and other tax returns and reports, including extensions, of the Acquired Fund required by law to have been filed by such dates shall have been filed, and all federal and other taxes shall have been paid so far as due, or provision shall have been made for the payment thereof and, to the best of the Acquired Fund's knowledge, no such return is currently under audit and no assessment has been asserted with respect to such returns; (i) For each taxable year of its operation (including the taxable year ending on the Closing Date), the Acquired Fund has met the requirements of Subchapter M of the Code for qualification and treatment as a regulated investment company; all of the Acquired Fund's issued and outstanding shares have been offered and sold in compliance in all material respects with applicable federal and state securities laws; (j) All issued and outstanding shares of each class of the Acquired Fund are, and at the Closing Date will be, duly and validly issued and outstanding, fully paid and, except as set forth in the Fund's Articles of Incorporation, non-assessable, by the Acquired Fund. All of the issued and outstanding shares of the Acquired Fund will, at the time of Closing, be held by the persons and in the amounts set forth in the records of the transfer agent as provided in paragraph 3.4. The Acquired Fund does not have outstanding any options, warrants or other rights to subscribe for or purchase any of the Acquired Fund's shares, nor is there outstanding any security convertible into any of the Acquired Fund's shares; (k) At the Closing Date, the Acquired Fund will have good and marketable title to the Acquired Fund's assets to be transferred to the Acquiring Fund pursuant to paragraph 1.2 and full right, power and authority to sell, assign, transfer and deliver such assets hereunder and, upon delivery and payment for such assets, the Acquiring Fund will acquire good and marketable title thereto, subject to no restrictions on the full transfer thereof, except such restrictions as might arise under the Securities Act of 1933, as amended (the "1933 Act"), and the 1940 Act with respect to privately placed or otherwise restricted securities that the Acquired Fund may have acquired in A-6 the ordinary course of business and of which the Acquiring Fund has received notice and necessary documentation at or prior to the Closing; (l) The execution, delivery and performance of this Agreement has been duly authorized by all necessary actions on the part of the Acquired Fund's Board of Directors, and subject to the approval of the Acquired Fund's shareholders, this Agreement will constitute a valid and binding obligation of the Acquired Fund enforceable in accordance with its terms, subject to the effect of bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other laws relating to or affecting creditors' rights and to general equity principles; (m) The information to be furnished by Acquired Fund for use in applications for orders, registration statements or proxy materials or for use in any other document filed or to be filed with any federal, state or local regulatory authority (including the National Association of Securities Dealers, Inc.), which may be necessary in connection with the transactions contemplated hereby, shall be accurate and complete in all material respects and shall comply in all material respects with federal securities and other laws and regulations applicable thereto; (n) The current prospectuses and statement of additional information of the Acquired Fund conform in all material respects to the applicable requirements of the 1933 Act and the 1940 Act and the rules and regulations of the Commission thereunder and do not include any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not materially misleading; and (o) Insofar as the following relate to the Acquired Fund, the registration statement filed by the Acquiring Fund on Form N-14 relating to Acquiring Fund Shares that will be registered with the Commission pursuant to this Agreement, which, without limitation, shall include a proxy statement of the Acquired Fund that is responsive to the proxy statement requirements of a registration statement on Form N-14 (the "Proxy Statement") and the prospectus of the Acquiring Fund with respect to the transactions contemplated by this Agreement, and any supplement or amendment thereto, and the documents contained or incorporated therein by reference (the "N-14 Registration Statement"), on the effective date of the N-14 Registration Statement, at the time of any shareholders' meeting referred to herein, on the Valuation Date and on the Closing Date: (i) shall comply in all material respects with the provisions of the 1933 Act, the Securities Exchange Act of 1934 (the "1934 Act") and the 1940 Act and the rules and regulations under those Acts, and (ii) shall not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading; provided, however, that the representations and warranties in this section shall not apply to statements in or omissions from the Proxy Statement and the N-14 Registration Statement made in reliance upon and in conformity with information that was furnished or should have been furnished by the Acquiring Fund for use therein. A-7 4.2. The Acquiring Fund represents and warrants to the Acquired Fund as follows: (a) The Acquiring Fund is a duly established series of the Acquiring Trust; the Acquiring Trust is a Massachusetts business trust duly organized, validly existing and in good standing under the laws of The Commonwealth of Massachusetts; (b) The Acquiring Trust is a registered investment company classified as a management company of the open-end type and its registration with the Commission as an investment company under the 1940 Act is in full force and effect; (c) The current prospectus and statement of additional information filed as part of the Acquiring Fund registration statement on Form N-1A (the "Acquiring Fund Registration Statement") conform in all material respects to the applicable requirements of the 1933 Act and the 1940 Act and the rules and regulations of the Commission under those Acts and do not include any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not materially misleading; (d) At the Closing Date, the Acquiring Fund will have good and marketable title to its assets; (e) The Acquiring Fund is not, and the execution, delivery and performance of this Agreement will not result, in a violation of the Acquiring Trust's Amended and Restated Agreement and Declaration of Trust (the "Agreement and Declaration of Trust") or By-Laws or any material agreement, indenture, instrument, contract, lease or other undertaking to which the Acquiring Fund is a party or by which the Acquiring Fund or its property is bound; (f) Except as previously disclosed in writing to and accepted by the Acquired Fund, no litigation or administrative proceeding or investigation of or before any court or governmental body is presently pending or to its knowledge threatened against the Acquiring Fund or any of its properties or assets which, if adversely determined, would materially and adversely affect its financial condition or the conduct of its business. The Acquiring Fund knows of no facts which might form the basis for the institution of such proceedings and is not a party to or subject to the provisions of any order, decree or judgment of any court or governmental body which materially and adversely affects its business or its ability to consummate the transactions contemplated herein; (g) Since October 31, 2000, there has not been any material adverse change in the Acquiring Fund's financial condition, assets, liabilities or business other than changes occurring in the ordinary course of business, or any incurrence by the Acquiring Fund of indebtedness maturing more than one year from the date such indebtedness was incurred except as otherwise disclosed to and accepted in writing by the Acquired Fund. For purposes of this subsection (g), a decline in net asset value per share of the Acquiring Fund due to declines in market values of securities in the Acquiring Fund's portfolio, the discharge of Acquiring Fund A-8 liabilities, or the redemption of Acquiring Fund Shares by Acquiring Fund Shareholders shall not constitute a material adverse change; (h) At the Closing Date, all federal and other tax returns and reports, including extensions, of the Acquiring Fund required by law then to be filed shall have been filed, and all federal and other taxes shown as due on said returns and reports shall have been paid or provision shall have been made for the payment thereof; (i) For each taxable year of its operation (including the taxable year ending on the Closing Date), the Acquiring Fund has met the requirements of Subchapter M of the Code for qualification as a regulated investment company and has elected to be treated as such, has been eligible to and has computed its federal income tax under Section 852 of the Code; (j) At the date hereof, all issued and outstanding Acquiring Fund Shares are, and at the Closing Date will be, duly and validly issued and outstanding, fully paid and non-assessable, except as set forth in the Acquiring Trust's Agreement and Declaration of Trust. The Acquiring Fund does not have outstanding any options, warrants or other rights to subscribe for or purchase any Acquiring Fund Shares (except for the conversion feature with respect to Class B shares of the Acquiring Fund), nor is there outstanding any security convertible into any Acquiring Fund Shares; (k) The execution, delivery and performance of this Agreement has been duly authorized by all necessary actions on the part of the Acquiring Fund's Board of Trustees, and this Agreement will constitute a valid and binding obligation of the Acquiring Fund enforceable in accordance with its terms, subject to the effect of bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other laws relating to or affecting creditors' rights and to general equity principles; (l) The Acquiring Fund Shares to be issued and delivered to the Acquired Fund, for the account of the Acquired Fund's shareholders, pursuant to the terms of this Agreement, will at the Closing Date have been duly authorized and when so issued and delivered, will be duly and validly issued Acquiring Fund Shares, and will be fully paid and non-assessable, except as set forth in the Acquiring Trust's Agreement and Declaration of Trust; (m) Insofar as the following relate to the Acquiring Fund, the N-14 Registration Statement, on the effective date of the N-14 Registration Statement, at the time of any shareholders' meeting referred to herein, on the Valuation Date and on the Closing Date: (i) shall comply in all material respects with the provisions of the 1933 Act, the 1934 Act and the 1940 Act and the rules and regulations under those Acts, and (ii) shall not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading; provided, however, that the representations and warranties in this section shall not apply to statements in or omissions from the Proxy Statement and the N-14 Registration Statement made in reliance upon and A-9 in conformity with information that was furnished by the Acquired Fund for use therein; and (n) The Acquiring Fund agrees to use all reasonable efforts to obtain the approvals and authorizations required by the 1933 Act, the 1940 Act and such of the state Blue Sky or securities laws as it may deem appropriate in order to continue its operations after the Closing Date. 4.3. CSAM represents and warrants to the Acquiring Trust as follows: To the knowledge of CSAM (i) there are no claims, actions, suits or proceedings pending against the Acquired Fund, and (ii) there are no claims, actions, suits or proceedings threatened, or circumstances that have been identified by the Management Committee of CSAM and the Secretary thereof as reasonably likely to give rise to any claims, actions, suits or proceedings, against the Acquired Fund that would materially adversely affect the Acquired Fund or its assets or business. 5. Covenants of the Acquired Fund, the Acquiring Fund and CSAM 5.1. The Acquiring Fund and the Acquired Fund will operate their respective businesses in the ordinary course between the date hereof and the Closing Date. It is understood that such ordinary course of business will include the declaration and payment of customary dividends and distributions. 5.2. The Acquired Fund will call a meeting of the shareholders of the Acquired Fund to consider and act upon this Agreement and to take all other actions necessary to obtain approval of the transactions contemplated herein. 5.3. The Acquired Fund covenants that the Acquiring Fund Shares to be issued hereunder are not being acquired for the purpose of making any distribution thereof other than in accordance with the terms of this Agreement. 5.4. The Acquired Fund will assist the Acquiring Fund in obtaining such information as the Acquiring Fund reasonably requests concerning the beneficial ownership of the Acquired Fund's Shares. 5.5. Subject to the provisions of this Agreement, the Acquiring Fund and the Acquired Fund will each take, or cause to be taken, all action, and do or cause to be done, all things reasonably necessary, proper or advisable to consummate and make effective the transactions contemplated by this Agreement. 5.6. The Acquired Fund will provide the Acquiring Fund with information reasonably necessary for the preparation of a prospectus (the "Prospectus") which will include the Proxy Statement referred to in paragraph 4.1(o), all to be included in the N-14 Registration Statement, in compliance with the 1933 Act, the 1934 Act and the 1940 Act in connection with the meeting of the Acquired Fund's shareholders to consider approval of this Agreement and the transactions contemplated herein. 5.7. The Acquired Fund will provide the Acquiring Fund with information reasonably necessary for the preparation of the Acquiring Fund Registration Statement. A-10 5.8. As promptly as practicable, but in any case within thirty days of the Closing Date, the Acquired Fund shall furnish the Acquiring Fund with a statement containing information required for purposes of complying with Rule 24f-2 under the 1940 Act. 5.9. The Acquiring Fund agrees to indemnify and advance expenses to each person who at the time of the execution of this Agreement serves as a Director or Officer ("Indemnified Person") of the Acquired Fund, against money damages actually and reasonably incurred by such Indemnified Person in connection with any claim that is asserted against such Indemnified Person arising out of such person's service as a Director or officer of the Acquired Fund with respect to matters specifically relating to the Reorganization, provided that such indemnification and advancement of expenses shall be permitted to the fullest extent that is available under applicable law. This paragraph 5.9 shall not protect any such Indemnified Person against any liability to the Acquired Fund, the Acquiring Fund or their shareholders to which he would otherwise be subject by reason of willful misfeasance, bad faith, gross negligence or from reckless disregard of the duties involved in the conduct of his office. An Indemnified Person seeking indemnification shall be entitled to advances from the Acquiring Fund for payment of the reasonable expenses incurred by him in connection with the matter as to which he is seeking indemnification in the manner and to the fullest extent permissible under applicable law. Such Indemnified Person shall provide to the Acquiring Fund a written affirmation of his good faith belief that the standard of conduct necessary for indemnification by the Acquiring Fund has been met and a written undertaking to repay any advance if it should ultimately be determined that the standard of conduct has not been met. In addition, at least one of the following additional conditions shall be met: (a) the Indemnified Person shall provide security in form and amount acceptable to the Acquiring Fund for its undertaking; (b) the Acquiring Fund is insured against losses arising by reason of the advance; or (c) either a majority of a quorum of disinterested non-party trustees of the Acquiring Fund (collectively, the "Disinterested Trustees"), or independent legal counsel experienced in mutual fund matters, selected by the Indemnified Person, in a written opinion, shall have determined, based on a review of facts readily available to the Acquiring Fund at the time the advance is proposed to be made, that there is reason to believe that the Indemnified Person will ultimately be found to be entitled to indemnification. 5.10. The Acquiring Fund agrees to take no action that would adversely affect the qualification of the Reorganization as a reorganization under Section 368(a) of the Code. In this regard, the Acquiring Fund covenants that, following the Reorganization, it (a) will (i) continue the historic business of the Acquired Fund or (ii) use a significant portion of the Acquired Fund's historic business assets in a business, and (b) will not sell or otherwise dispose of any of the assets of the Acquired Fund, except for dispositions in the ordinary course of business or transfers to a corporation (or other entity classified for federal income tax purposes as an association taxable as a corporation) that is "controlled" by the Acquiring Fund within the meaning of Section 368(c) of the Code. A-11 5.11. CSAM agrees that the Acquiring Trust will succeed to all rights that the Acquired Fund has, or would have but for the Reorganization, against CSAM or its affiliates by reason of any act or failure to act by CSAM or any of its affiliates prior to the Closing Date. 6. Conditions Precedent to Obligations of the Acquired Fund The obligations of the Acquired Fund to consummate the transactions provided for herein shall be subject, at its election, to the performance by the Acquiring Fund of all of the obligations to be performed by it hereunder on or before the Closing Date and, in addition thereto, the following further conditions: 6.1. All representations and warranties of the Acquiring Fund contained in this Agreement shall be true and correct in all material respects as of the date hereof and, except as they may be affected by the actions contemplated by this Agreement, as of the Closing Date with the same force and effect as if made on and as of the Closing Date; 6.2. The Acquiring Fund shall have delivered to the Acquired Fund a certificate executed in its name by its President, Vice President, Secretary, Treasurer or Assistant Treasurer, in a form reasonably satisfactory to the Acquired Fund and dated as of the Closing Date, to the effect that the representations and warranties of the Acquiring Fund made in this Agreement are true and correct at and as of the Closing Date, except as they may be affected by the transactions contemplated by this Agreement and as to such other matters as the Acquired Fund shall reasonably request; 6.3. The Acquired Fund shall have received a written agreement from CSAM to reimburse expenses to the Acquiring Fund to the extent necessary to maintain the average annualized expense ratio of the Common Class shares of the Acquiring Fund (after waivers) for the two-year period beginning on the Closing Date at the lower of the average annualized expense ratio of Common Class Shares or Advisor Class shares, respectively, of the Acquired Fund (after waivers) or the Common Class shares of the Acquiring Fund (after waivers) measured over the 60-day period ending on the Closing Date; and 6.4. The Acquired Fund shall have received on the Closing Date a favorable opinion from Sullivan & Cromwell, counsel to the Acquiring Trust, dated as of the Closing Date, in a form reasonably satisfactory to the Acquired Fund, covering the following points: That (a) the Acquiring Trust is a validly existing business trust in good standing under the laws of The Commonwealth of Massachusetts, has the statutory power to own all of its properties and assets and to carry on its business as a registered investment company and the Acquiring Fund is a duly established series of the Acquiring Trust; (b) the Agreement has been duly authorized, executed and delivered by the Acquiring Trust and, assuming due authorization, execution and delivery of the Agreement by the other parties thereto, is a valid and binding obligation of the Acquiring Fund enforceable against the Acquiring Fund in A-12 accordance with its terms, subject to the effect of bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other laws relating to or affecting creditors' rights generally and to general equity principles; (c) the Acquiring Fund Shares to be issued to the Acquired Fund's shareholders as provided by this Agreement are duly authorized and upon such delivery will be validly issued, fully paid and nonassessable (except as set forth in the Acquiring Trust's Agreement and Declaration of Trust) and no shareholder of the Acquiring Fund has any preemptive rights to subscription or purchase in respect thereof; (d) the execution and delivery of this Agreement did not, and the consummation of the transactions contemplated hereby will not, result in (i) a violation of the Acquiring Trust's Agreement and Declaration of Trust or By-Laws; or (ii) a default or breach of (A) the Interim Investment Advisory Agreement, dated as of November 3, 2000, between the Acquiring Trust and CSAM; (B) the Custodian Contract, dated as of July 15, 1999, between the Acquiring Trust and Citibank, N.A.; (C) the Distribution Agreement, dated as of December 18, 2000, between the Acquiring Trust and CSAMSI; or (D) the agreements set forth in Annex A to this Agreement; (e) to the knowledge of such counsel, no consent, approval, authorization or order of any court or governmental authority of the United States or The Commonwealth of Massachusetts is required for the consummation by the Acquiring Fund of the actions contemplated herein, except such as have been obtained under the 1933 Act, the 1934 Act and the 1940 Act, and such as may be required under state securities laws; (f) to the knowledge of such counsel, there is no legal, administrative or governmental proceeding, investigation, order, decree or judgment of any court or governmental body, only insofar as they relate to the Acquiring Fund or its assets or properties, pending, threatened or otherwise existing on or before the effective date of the N-14 Registration Statement or the Closing Date, which are required to be described in the N-14 Registration Statement or to be filed as exhibits to the N-14 Registration Statement which are not described and filed as required; (g) the Acquiring Trust is registered as an investment company under the 1940 Act and to the knowledge of such counsel, its registration with the Commission as an investment company under the 1940 Act is in full force and effect; (h) the Prospectus, as of its date, and the Acquiring Fund Registration Statement (except as to financial and statistical data contained therein, as to which no opinion need be given), as of the date of the effectiveness of the Registration Statement, appeared on their face to be appropriately responsive in all material respects to the requirements of the 1933 Act, the 1934 Act and the 1940 Act and the rules and regulations thereunder; provided, however, that such counsel shall be entitled to state that it does not assume any responsibility for the accuracy, completeness or fairness of the Prospectus and the Acquiring Fund Registration Statement; and (i) to the knowledge of such counsel the Acquiring Fund Registration Statement is effective under the 1933 Act and the 1940 Act and no stop-order suspending its effectiveness or order pursuant to section 8(e) of the 1940 Act has been issued. With respect to all matters of Massachusetts law, such counsel shall be entitled to state that, with the approval of the Acquired Fund, they have relied upon the opinion of Hale & Dorr, and that their opinion is subject to the same A-13 assumptions, qualifications and limitations with respect to such matters as are contained in the opinion of Hale & Dorr. Such opinion also shall include such other matters incident to the transaction contemplated hereby as the Acquired Fund may reasonably request. In this paragraph 6.4, references to the Proxy Statement include and relate only to the text of such Proxy Statement and not, except as specifically stated above, to any exhibits or attachments thereto or to any documents incorporated by reference therein. 7. Conditions Precedent to Obligations of the Acquiring Fund The obligations of the Acquiring Fund to complete the transactions provided for herein shall be subject, at its election, to the performance by the Acquired Fund of all the obligations to be performed by it hereunder on or before the Closing Date and, in addition thereto, the following conditions: 7.1. All representations and warranties by or on behalf of the Acquired Fund contained in this Agreement shall be true and correct in all material respects as of the date hereof and, except as they may be affected by the transactions contemplated by this Agreement, as of the Closing Date with the same force and effect as if made on and as of the Closing Date; 7.2. The Acquired Fund shall have delivered to the Acquiring Fund a statement of the Acquired Fund's assets and liabilities as of the Closing Date, certified by the Treasurer or Assistant Treasurer of the Acquired Fund; 7.3. The Acquired Fund shall have delivered to the Acquiring Fund on the Closing Date a certificate executed in its name by its President, Vice President, Secretary, Treasurer or Assistant Treasurer, in form and substance satisfactory to the Acquiring Trust and dated as of the Closing Date, to the effect that the representations and warranties of the Acquired Fund made in this Agreement are true and correct at and as of the Closing Date, except as they may be affected by the transactions contemplated by this Agreement, and as to such other matters as the Acquiring Fund shall reasonably request; and 7.4. The Acquiring Fund shall have received on the Closing Date a favorable opinion of Willkie Farr & Gallagher, counsel to the Acquired Fund, in a form satisfactory to the Secretary of the Acquiring Fund, covering the following points: That (a) the Acquired Fund is a validly existing corporation and in good standing under the laws of the State of Maryland and has the corporate power to own all of its properties and assets and to carry on its business as a registered investment company; (b) the Agreement has been duly authorized, executed and delivered by the Acquired Fund and, assuming due authorization, execution and delivery of the Agreement by the other parties hereto, is a valid and binding obligation of the Acquired Fund enforceable against the Acquired Fund in accordance with its terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability relating to or A-14 affecting creditors' rights and to general equity principles; (c) the execution and delivery of the Agreement did not, and the consummation of the transactions contemplated hereby will not, conflict with the Acquired Fund's Articles of Incorporation or By-Laws or in a material violation of any provision of any material agreement (known to such counsel) to which the Acquired Fund is a party or by which it or its property is bound or, to the knowledge of such counsel, result in the acceleration of any obligation or the imposition of any penalty, under any material agreement, judgment, or decree to which the Acquired Fund is a party or by which it or its property is bound; (d) to the knowledge of such counsel, no consent, approval, authorization or order of any court or governmental authority of the United States or the state of Maryland is required for the consummation by the Acquired Fund of the transactions contemplated herein, except such as have been obtained under the 1933 Act, the 1934 Act and the 1940 Act, and such as may be required under state securities laws; (e) the Proxy Statement (except as to financial and statistical data contained therein, as to which no opinion need be given), as of its date, appeared on its face to be appropriately responsive in all material respects to the 1934 Act and the 1940 Act and the rules and regulations thereunder; provided, however, that such counsel shall be entitled to state that it does not assume any responsibility for the accuracy, completeness or fairness of the Proxy Statement; (f) to the knowledge of such counsel, there is no legal, administrative or governmental proceeding, investigation, order, decree or judgment of any court or governmental body, only insofar as they relate to the Acquired Fund or its assets or properties, pending, threatened or otherwise existing on or before the effective date of the N-14 Registration Statement or the Closing Date, which is required to be described in the N-14 Registration Statement or to be filed as an exhibit to the N-14 Registration Statement which is not described or filed as required or which materially and adversely affect the Acquired Fund's business; and (g) the Acquired Fund is registered as an investment company under the 1940 Act, and, to our knowledge, its registration with the Commission as an investment company under the 1940 Act is in full force and effect. With respect to all matters of Maryland law, such counsel shall be entitled to state that, with the approval of the Acquiring Fund, they have relied upon the opinion of Venable, Baetjer and Howard and that their opinion is subject to the same assumptions, qualifications and limitations with respect to such matters as are contained in the opinion of Venable, Baetjer and Howard. Such opinion also shall include such other matters incident to the transaction contemplated hereby as the Acquiring Fund may reasonably request. In this paragraph 7.4, references to the Proxy Statement include and relate only to the text of such Proxy Statement and not to any exhibits or attachments thereto or to any documents incorporated by reference therein. 7.5. The Acquiring Fund shall have received from PricewaterhouseCoopers LLP a letter addressed to the Acquiring Fund dated as of the effective date of the N-14 Registration Statement in form and substance satisfactory to the Acquiring Fund, to the effect that: A-15 (a) they are independent public accountants with respect to the Acquired Fund within the meaning of the 1933 Act and the applicable regulations thereunder; and (b) in their opinion, the financial statements and financial highlights of the Acquired Fund included or incorporated by reference in the N-14 Registration Statement and reported on by them comply as to form in all material aspects with the applicable accounting requirements of the 1933 Act and the rules and regulations thereunder. 7.6. The Acquiring Fund shall have received from Ernst & Young LLP a letter addressed to the Acquiring Fund dated as of the effective date of the N-14 Registration Statement in form and substance satisfactory to the Acquiring Fund, to the effect that: (a) they are independent public accountants with respect to the Acquiring Fund within the meaning of the 1933 Act and the applicable regulations thereunder; (b) in their opinion, the financial statements and financial highlights of the Acquiring Fund included or incorporated by reference in the N-14 Registration Statement and reported on by them comply as to form in all material aspects with the applicable accounting requirements of the 1933 Act and the rules and regulations thereunder; and (c) on the basis of limited procedures agreed upon by the Acquiring Fund and the Acquired Fund and described in such letter (but not an examination in accordance with generally accepted auditing standards), specified information relating to each Fund appearing in the N-14 Registration Statement and the Proxy Statement has been obtained from the accounting records of each Fund or from schedules prepared by officers of each Fund having responsibility for financial and reporting matters and such information is in agreement with such records, schedules or computations made therefrom. 7.7. The Acquired Fund shall have delivered to the Acquiring Fund, pursuant to paragraph 4.1(f), copies of financial statements of the Acquired Fund as of and for the fiscal year ended October 31, 2000. 7.8. The Acquiring Fund shall have received from Ernst & Young LLP a letter addressed to the Acquiring Fund and dated as of the Closing Date stating that, as of a date no more than three (3) business days prior to the Closing Date, Ernst & Young LLP performed limited procedures and that on the basis of those procedures it confirmed the matters set forth in paragraph 7.6. 7.9. The Board of Directors of the Acquired Fund, including a majority of the directors who are not "interested persons" of the Acquired Fund (as defined by the 1940 Act), shall have determined that this Agreement and the transactions contemplated hereby are in the best interests of the Acquired Fund and that the interests of the shareholders in the Acquired Fund would not be diluted as a result A-16 of such transactions, and the Acquired Fund shall have delivered to the Acquiring Fund at the Closing, a certificate, executed by an officer, to the effect that the condition described in this subparagraph has been satisfied. 8. Further Conditions Precedent to Obligations of the Acquiring Fund and the Acquired Fund If any of the conditions set forth below do not exist on or before the Closing Date with respect to the Acquiring Fund, the Acquired Fund shall, and if any of such conditions do not exist on or before the Closing Date with respect to the Acquired Fund, the Acquiring Fund shall, at their respective option, not be required to consummate the transactions contemplated by this Agreement. 8.1. The Agreement and the transactions contemplated herein shall have been approved by the requisite vote of the holders of the outstanding shares of the Acquired Fund in accordance with the provisions of the Acquired Fund's Articles of Incorporation and applicable law and certified copies of the votes evidencing such approval shall have been delivered to the Acquiring Fund. 8.2. On the Closing Date no action, suit or other proceeding shall be pending before any court or governmental agency in which it is sought to restrain or prohibit, or obtain damages or other relief in connection with, this Agreement or the transactions contemplated herein. 8.3. All consents of other parties and all other consents, orders and permits of federal, state and local regulatory authorities (including those of the Commission and of state blue sky and securities authorities, including "no-action" positions of and exemptive orders from such federal and state authorities) deemed necessary by the Acquiring Fund or the Acquired Fund to permit consummation, in all material respects, of the transactions contemplated hereby shall have been obtained, except where failure to obtain any such consent, order or permit would not involve a risk of a material adverse effect on the assets or properties of the Acquiring Fund or the Acquired Fund, provided that either party hereto may for itself waive any of such conditions. 8.4. The N-14 Registration Statement and the Acquiring Fund Registration Statement shall each have become or be effective under the 1933 Act and no stop orders suspending the effectiveness thereof shall have been issued and, to the best knowledge of the parties hereto, no investigation or proceeding for that purpose shall have been instituted or be pending, threatened or contemplated under the 1933 Act. 8.5. The parties shall have received a favorable opinion of Willkie Farr & Gallagher, addressed to, and in form and substance satisfactory to, the Acquired Fund and the Acquiring Fund, substantially to the effect that for federal income tax purposes: (a) The transfer of all of the Acquired Fund's assets in exchange for the Acquiring Fund Shares and the assumption by the Acquiring Fund of the liabilities of A-17 the Acquired Fund, and the distribution of such Acquiring Fund Shares to shareholders of the Acquired Fund in exchange for their shares of the Acquired Fund, will constitute a "reorganization" within the meaning of Section 368(a) of the Code, and the Acquiring Fund and the Acquired Fund will each be a "party to a reorganization" within the meaning of Section 368(b) of the Code; (b) no gain or loss will be recognized by the Acquiring Fund on the receipt of the assets of the Acquired Fund solely in exchange for the Acquiring Fund Shares and the assumption by the Acquiring Fund of the liabilities of the Acquired Fund; (c) no gain or loss will be recognized by the Acquired Fund upon the transfer of the Acquired Fund's assets to the Acquiring Fund in exchange for the Acquiring Fund Shares and the assumption by the Acquiring Fund of the liabilities of the Acquired Fund or upon the distribution of the Acquiring Fund Shares to the Acquired Fund's shareholders in exchange for their shares of the Acquired Fund; (d) no gain or loss will be recognized by shareholders of the Acquired Fund upon the exchange of their Acquired Fund shares for the Acquiring Fund Shares or upon the assumption by the Acquiring Fund of the liabilities of the Acquired Fund; (e) the aggregate tax basis for the Acquiring Fund Shares received by each of the Acquired Fund's shareholders pursuant to the Reorganization will be the same as the aggregate tax basis of the Acquired Fund Shares held by such shareholder immediately prior to the Reorganization, and the holding period of the Acquiring Fund Shares to be received by each Acquired Fund shareholder will include the period during which the Acquired Fund Shares exchanged therefor were held by such shareholder (provided that such Acquired Fund Shares were held as capital assets on the date of the Reorganization); and (f) the tax basis of the Acquired Fund's assets acquired by the Acquiring Fund will be the same as the tax basis of such assets to the Acquired Fund immediately prior to the Reorganization, and the holding period of the assets of the Acquired Fund in the hands of the Acquiring Fund will include the period during which those assets were held by the Acquired Fund. Notwithstanding anything herein to the contrary, neither the Acquiring Fund nor the Acquired Fund may waive the conditions set forth in this paragraph 8.5. 9. Brokerage Fees and Expenses; Other Agreements 9.1. The Acquiring Fund represents and warrants to the Acquired Fund, and the Acquired Fund represents and warrants to the Acquiring Fund, that there are no brokers or finders or other entities to receive any payments in connection with the transactions provided for herein. 9.2. CSAM or its affiliates agrees to bear the reasonable expenses incurred in connection with the transactions contemplated by this Agreement, whether or not consummated (excluding extraordinary expenses such as litigation expenses, damages and other expenses not normally associated with transactions of the type contemplated by this Agreement). These expenses consist of: (i) expenses associated with preparing this Agreement, the N-14 Registration Statement and expenses of the shareholder meetings; (ii) preparing and filing the N-14 Registration Statement covering the Acquiring Fund Shares to be issued in the Reorganization; (iii) registration or qualification fees and expenses of A-18 preparing and filing such forms, if any, necessary under applicable state securities laws to qualify the Acquiring Fund Shares to be issued in connection with the Reorganization; (iv) postage; printing; accounting fees; and legal fees incurred by the Acquiring Fund and by the Acquired Fund in connection with the transactions contemplated by this Agreement; (v) solicitation costs incurred in connection with the shareholders meeting referred to in clause (i) above and paragraph 5.2 hereof and (vi) any other reasonable Reorganization expenses. 9.3. Any other provision of this Agreement to the contrary notwithstanding, any liability of either Fund under this Agreement, or in connection with the transactions contemplated herein with respect to such Fund, shall be discharged only out of the assets of such Fund. 10. Entire Agreement; Survival of Warranties 10.1. The Acquiring Fund and the Acquired Fund agree that neither party has made any representation, warranty or covenant not set forth herein and that this Agreement constitutes the entire agreement among the parties. 10.2. The representations, warranties and covenants contained in this Agreement or in any document delivered pursuant hereto or in connection herewith shall survive the consummation of the transactions contemplated hereunder. 11. Termination 11.1. This Agreement may be terminated at any time at or prior to the Closing Date by: (1) mutual agreement of the Acquired Fund and the Acquiring Fund; (2) the Acquired Fund in the event the Acquiring Fund shall, or the Acquiring Fund, in the event the Acquired Fund shall, materially breach any representation, warranty or agreement contained herein to be performed at or prior to the Closing Date; or (3) the Acquired Fund or the Acquiring Fund in the event a condition herein expressed to be precedent to the obligations of the terminating party or parties has not been met and it reasonably appears that it will not or cannot be met within a reasonable time. 11.2. In the event of any such termination, there shall be no liability for damages on the part of either the Acquiring Fund, the Acquiring Trust or the Acquired Fund, or their respective Trustees, Directors or officers, to the other party or parties. 12. Amendments This Agreement may be amended, modified or supplemented in writing in such manner as may be mutually agreed upon by the authorized officers of the Acquired Fund and the Acquiring Fund; provided, however, that following the meeting of the Acquired Fund's shareholders called by the Acquired Fund pursuant to paragraph 5.2 of this Agreement no such amendment may have the effect of changing the provisions for determining the number of the Acquiring Fund Shares to be issued to the Acquired Fund's Shareholders under this Agreement to the detriment of such shareholders without their further approval. A-19 13. Notices 13.1. Any notice, report, statement or demand required or permitted by any provisions of this Agreement shall be in writing and shall be given by prepaid telegraph, telecopy or certified mail addressed to the Acquiring Trust at: 466 Lexington Avenue New York, NY 10017 Attention: Martin Jaffe with a copy to: Earl D. Weiner, Esq. Sullivan & Cromwell 125 Broad St. New York, NY 10004 or to the Acquired Fund at: 466 Lexington Avenue New York, NY 10017 Attention: Hal Liebes, Esq. with a copy to: Rose F. DiMartino, Esq. Willkie Farr & Gallagher 787 Seventh Avenue New York, NY 10019-6099 14. Headings; Counterparts; Governing Law; Assignment; Limitation of Liability 14.1. The article and paragraph headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. 14.2. This Agreement may be executed in any number of counterparts, each of which shall be deemed an original. 14.3. This Agreement shall be governed by and construed in accordance with the laws of the State of New York. 14.4. This Agreement shall bind and inure to the benefit of the parties hereto and their respective successors and assigns, but no assignment or transfer hereof or of any rights or obligations hereunder shall be made by any party without the written consent of the other party. Nothing herein expressed or implied is intended or shall be construed to confer upon or give any person, firm or corporation, other than the parties hereto and their respective successors and assigns, any rights or remedies under or by reason of this Agreement. A-20 14.5. Notice is hereby given that this Agreement is entered into on behalf of the Acquiring Fund by an officer of the Acquiring Trust in such officer's capacity as an officer and not individually. It is understood and expressly stipulated that none of the Trustees, officers or shareholders of the Acquiring Trust are personally liable hereunder. All persons dealing with the Acquiring Trust shall look solely to the property of the Acquiring Trust for the enforcement of any claims against the Acquiring Trust. IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to be executed by its Chairman of the Board, President or Vice President and attested to by its Secretary or Assistant Secretary. CREDIT SUISSE WARBURG PINCUS CAPITAL FUNDS, For and on Behalf of CREDIT SUISSE WARBURG PINCUS SMALL COMPANY VALUE FUND By:_____________________________________________________________________________ Name: Title: Attestation By:_________________________________________________________________ Name: Title: WARBURG, PINCUS SMALL COMPANY VALUE II FUND, INC. By:_____________________________________________________________________________ Name: Hal Liebes Title: Vice President and Secretary Attestation By:_________________________________________________________________ Name: Gregory Bressler Title: Assistant Secretary Solely with respect to paragraphs 4.3, 5.11 and 9.2 hereof: CREDIT SUISSE ASSET MANAGEMENT, LLC By:_____________________________________________________________________________ Name: Hal Liebes Title: Managing Director Attestation By:_________________________________________________________________ Name: Gregory Bressler Title: Vice President A-21 ANNEX A TO AGREEMENT AND PLAN OF REORGANIZATION LIST OF ADDITIONAL EXAMINED AGREEMENTS TO WHICH CREDIT SUISSE WARBURG PINCUS CAPITAL FUNDS IS A PARTY o Co-Administration Agreement with CSAMSI. o Co-Administration Agreement with PFPC. o Transfer Agency Agreement. PROXY [X] PLEASE MARK VOTES AS IN THIS EXAMPLE WARBURG, PINCUS SMALL COMPANY VALUE II FUND, INC. VOTE THIS CARD TODAY BY MAIL, BY FAX AT 1-212-_________, BY PHONE AT 1-800-_________ OR ON-LINE AT _________ CONTROL NUMBER: Please be sure to sign and date this Proxy. Date_______________ Shareholder sign here____________________Co-owner sign here __________________
1. To approve the Agreement and Plan of Reorganization For Against Abstain (the "Plan") providing that (i) Warburg, Pincus Small [ ] [ ] [ ] Company Value II Fund, Inc. (the "Acquired Fund") would transfer to Credit Suisse Warburg Pincus Small Company Value Fund (the "Acquiring Fund"), a series of Credit Suisse Warburg Pincus Capital Funds, all of its assets in exchange for shares of the Acquiring Fund and the assumption by the Acquiring Fund of the Acquired Fund's liabilities, (ii) such shares of the Acquiring Fund would be distributed to shareholders of the Acquired Fund in liquidation of the Acquired Fund, and (iii) the Acquired Fund would subsequently be dissolved.
The proxies are authorized to vote upon such other business as may properly come before the Meeting or any adjournment or adjournments thereof. Mark box at right if an address change or comment has been noted on the reverse side of this card. RECORD DATE SHARES: WARBURG, PINCUS SMALL COMPANY VALUE II FUND, INC. THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS SPECIAL MEETING OF SHAREHOLDERS - MAY 25, 2001 The undersigned hereby appoints [Hal Liebes, Michael Pignataro and Gregory Bressler], each with the power of substitution, as proxies for the undersigned to vote all shares of the Warburg, Pincus Small Company Value II Fund, Inc. which the undersigned is entitled to vote at the Special Meeting of Shareholders of the Fund to be held at the offices of the Fund, 466 Lexington Avenue, New York, New York 10017, on May 25, 2001 at [10:00] a.m., Eastern time, and at any adjournments thereof. UNLESS OTHERWISE SPECIFIED IN THE BOXES PROVIDED, THE UNDERSIGNED'S VOTE WILL BE CAST FOR EACH ITEM LISTED ON THE REVERSE SIDE. A PROPERLY EXECUTED PROXY IN WHICH NO SPECIFICATION IS MADE WILL BE VOTED IN FAVOR OF THE PROPOSAL. PLEASE VOTE, DATE AND SIGN ON REVERSE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. NOTE: Please sign exactly as name(s) appear(s) hereon. Joint owners should each sign. When signing as attorney, executor, administrator, trustee or guardian, please give full title as such. HAS YOUR ADDRESS CHANGED? DO YOU HAVE ANY COMMENTS? _____________________________ _______________________________ _____________________________ _______________________________ _____________________________ _______________________________ PART B STATEMENT OF ADDITIONAL INFORMATION DATED ____________ , 2001 Acquisition of the Assets of WARBURG, PINCUS SMALL COMPANY VALUE II FUND, INC. 466 Lexington Avenue New York, New York 10017 800-WARBURG By and in Exchange for Shares of CREDIT SUISSE WARBURG PINCUS SMALL COMPANY VALUE FUND, a series of Credit Suisse Warburg Pincus Capital Funds, 466 Lexington Avenue New York, New York 10017 (800) 225-8011 This Statement of Additional Information, relating specifically to the proposed transfer of all of the assets of the Warburg, Pincus Small Company Value II Fund, Inc. (the "Acquired Fund") to Credit Suisse Warburg Pincus Small Company Value Fund (the "Acquiring Fund"), a series of Credit Suisse Warburg Pincus Capital Funds (the "Acquiring Trust"), in exchange for shares of the Acquiring Fund and the assumption by the Acquiring Fund of liabilities of the Acquired Fund (the "Acquisition"), consists of this cover page and the following described documents, each of which accompanies this Statement of Additional Information and is incorporated herein by reference. 1. Statement of Additional Information for the Acquiring Fund, dated February 28, 2001. 2. Annual Reports of the Acquiring Fund and the Acquired Fund for the fiscal year ended October 31, 2000. This Statement of Additional Information is not a prospectus. Extra copies of the Prospectus/Proxy Statement, dated _________, 2001, relating to the above-referenced matter may be obtained without charge by calling or writing the Acquiring Fund at the telephone number or address set forth above. This Statement of Additional Information should be read in conjunction with the Prospectus/Proxy Statement. FINANCIAL STATEMENTS The Annual Reports of the Acquiring Fund and the Acquired Fund, for the fiscal year ended October 31, 2000, and each including audited financial statements, notes to the financial statements and report of the independent auditors, are incorporated by reference herein. To obtain a copy of the Annual Reports without charge, please call (800) WARBURG. PRO FORMA FINANCIAL STATEMENTS (UNAUDITED) The following tables set forth the unaudited pro forma condensed Statement of Assets and Liabilities and Schedule of Investments as of October 31, 2000 and the unaudited pro forma condensed Statement of Operations for the fiscal year ended October 31, 2000 for each of the Acquiring Fund and the Acquired Fund, as adjusted, giving effect to the Acquisition. Warburg Pincus Small Company Value II Fund into Credit Suisse Warburg Pincus Small Company Value Fund Combined Statement of Operations For the 12 months ended October 31, 2000 (unaudited)
Credit Suisse Warburg Credit Suisse Warburg Pincus Pincus Small Warburg Pincus Small Co Value Co Value Small Co Value Adjustments Pro-Forma ------------ -------------- ----------- --------- Investment Income Dividends ............................. 399,806 3,216,557 -- 3,616,363 Interest .............................. 86,841 123,339 -- 210,180 --------- ---------- --------- ---------- Total Investment Income ............. 486,647 3,339,896 -- 3,826,543 --------- ---------- --------- ---------- Expenses Investment advisory services .......... 265,466 1,622,703 (99,549)(a) 1,788,620 Distribution fees - Class A ........... -- 524,059 -- 524,059 Distribution fees - Class B ........... -- 176,261 -- 176,261 Distribution fees - Class C ........... -- 363 -- 363 Distribution fees - Common Class (former Class R) ...................... -- 19 66,187 (b,c) 66,206 Distribution fees - Common Class ...... 66,098 -- (66,098)(b) -- Distribution fees - Adviser Class ..... 179 (179)(b) Transfer agent ........................ 13,455 264,000 20,407 (d) 297,862 Custodian ............................. 33,033 101,000 (111,326)(e) 22,707 Administrative and accounting fees .... 30,282 -- 150,038 (f) 180,320 Administrative services fees .......... 26,547 -- 200,051 (g) 226,598 Registration Fees ..................... 25,196 58,000 (25,196)(h) 58,000 Legal ................................. 15,894 37,000 (15,894)(h) 37,000 Directors'/Trustees' fees ............. 10,624 27,000 (10,624)(h) 27,000 Audit ................................. 12,000 16,000 (12,000)(h) 16,000 Printing .............................. 14,419 31,000 (14,419)(h) 31,000 Insurance expense ..................... 1,524 -- (1,524)(h) -- Miscellaneous ......................... -- 52,146 -- (h) 52,146 Offering Costs ........................ 14,944 -- (14,944)(h) -- --------- ---------- --------- ---------- 529,661 2,909,551 64,930 3,504,142 Less: Expenses waived and reimbursed by CSAM/DLJ .............. (43,515) -- (205,786)(i) (249,301) Less: Expenses offset by Transfer Agent (5,175) -- 5,175 (i) -- Less: Expenses waived by PFPC ......... (17,786) -- 17,786 (i) -- --------- ---------- --------- ---------- Net Expenses .......................... 463,185 2,909,551 (117,895) 3,254,841 --------- ---------- --------- ---------- Net Investment Income ................... 23,462 430,345 117,895 571,702 --------- ---------- --------- ---------- Net Realized and Unrealized Gain/(Loss) from Investments: Net realized gain/(loss) from investments .......................... 3,733,200 29,349,170 -- 33,082,370 Net change in unrealized appreciation/(depreciation) from investments ..................... 1,967,554 9,049,299 -- 11,016,853 --------- ---------- --------- ---------- Net realized and unrealized gain from investments ................ 5,700,754 38,398,469 -- 44,099,223 --------- ---------- --------- ---------- Net increase in net assets resulting from operations ............ 5,724,216 38,828,814 117,895 44,670,925 ========= ========== ========= ==========
See notes to pro forma financial statements. Warburg Pincus Small Company Value II Fund into Credit Suisse Warburg Pincus Small Company Value Fund Combined Statement of Assets and Liabilities (unaudited) As of October 31, 2000
Credit Suisse Warburg Credit Suisse Warburg Pincus Small Co Value WP Small Co. Value II Pincus Small Co Value Pro Forma ------------------------- ------------------------ ------------------------ Cost Value Cost Value Adjustments Cost Value ----------- ----------- ----------- ----------- ------------ ----------- ----------- ASSETS Investments at value 22,182,943 26,296,812 147,859,222 208,948,194 170,042,165 235,245,006 Cash -- -- -- -- -- -- Receivable for investments sold unsettled -- -- -- 1,414,374 -- 1,414,374 Receivable for Fund shares sold -- 1,084,648 -- 23,095 1,107,743 Dividends and interest receivable -- 80,054 -- 151,118 -- 231,172 Prepaid expenses and other assets -- 190,043 -- -- -- 190,043 ----------- ----------- ----------- Total Assets 27,651,557 210,536,781 238,188,338 ----------- ----------- ----------- LIABILITIES Payable for investments purchased unsettled -- 1,162,562 -- 3,742,368 -- 4,904,930 Due to Custodian -- -- -- 3,107 -- 3,107 Advisory fee payable -- 10,792 -- 135,173 -- 145,965 Administration fee payable -- 2,113 -- -- -- 2,113 Directors fee payable -- 2,725 -- -- -- 2,725 Distribution fee payable -- -- -- 52,879 -- 52,879 Payable for Fund shares redeemed -- 4,861 -- 157,799 -- 162,660 Accrued expenses payable -- 35,631 -- 363,801 -- 399,432 ----------- ----------- ----------- Total Liabilities 1,218,684 4,455,127 5,673,811 ----------- ----------- ----------- NET ASSETS 26,432,873 206,081,654 232,514,527 =========== =========== =========== Common Class Net Assets 26,403,491 -- (26,403,491) -- Shares outstanding 1,945,293 -- (1,945,293) -- Net asset value, offering 13.57 -- (13.57) -- price and redemption price per share Adviser Class Net Assets 29,382 -- (29,382) -- Shares outstanding 2,185 -- (2,185) -- Net asset value, offering price and redemption price per share 13.45 -- (13.45) -- Class A Shares Net Assets -- 188,501,273 -- 188,501,273 Shares outstanding -- 8,362,136 -- 8,362,136 Net asset value, offering -- 22.54 -- 22.54 price and redemption price per share Maximum offering price per share -- 23.92 -- 23.92 (net asset value plus maximum sales charge) Class B Shares Net Assets -- 17,255,162 -- 17,255,162 Shares outstanding -- 786,118 -- 786,118 Net asset value, offering -- 21.95 -- 21.95 price and redemption price per share Class C Shares Net Assets -- 219,866 -- 219,866 Shares outstanding -- 10,020 -- 10,020 Net asset value, offering -- 21.94 -- 21.94 price and redemption price per share Common Class Shares Net Assets -- 105,353 26,432,873 26,538,226 Shares outstanding -- 4,658 1,168,562 1,173,220 Net asset value, offering -- 22.62 22.62 price and redemption price per share
See notes to pro forma financial statements. Warburg Pincus Small Company Value II Fund and Credit Suisse Warburg Pincus Small Company Value Fund Combined Statement of Investments (unaudited) As of October 31, 2000 - -------------------------------------------------------------------------------- Credit Suisse Warburg Pincus Small Company Value - -------------------------------------------------------------------------------- Market Security Name Shares Value - ------------- ------- ----------- AMETEK, INC 185,000 4,023,750 AMSOUTH BANCORPORATION 127,022 1,770,369 APTARGROUP, INC 146,600 3,032,787 ARROW INTERNATIONAL, INC 116,000 4,676,250 ASSOCIATED BANC-CORP 24,300 584,719 BANKNORTH GROUP, INC 198,000 3,588,750 BANTA CORP 200,250 4,618,266 BECKMAN COULTER, INC 56,600 3,965,537 BENCHMARK ELECTRONICS, INC.* 45,500 1,831,375 BISYS GROUP, INC.* 106,000 4,995,250 BRADY (W.H.) CL. A 102,700 3,183,700 BROWN & BROWN, INC 153,800 4,998,500 C&D TECHNOLOGIES, INC.* 48,000 2,838,000 CAMBREX CORP 104,800 4,185,450 CARLISLE COMPANIES, INC 108,200 4,503,825 CENTURA BANKS, INC 33,000 1,268,437 CFW COMMUNICATIONS CO 8,500 168,937 CHROMCRAFT REVINGTON, INC.* 156,600 1,291,950 CULLEN/FROST BANKERS, INC 128,000 4,264,000 DALLAS SEMICONDUCTOR CORP 87,800 3,479,075 Warburg Pincus Small Company Value II Fund - -------------------------------------------------------------------------------- Market Security Name Shares Value - ------------- ------- ----------- AFTERMARKET TECH * 45,800 243,313 AMERICREDIT CORP. * 22,100 593,938 AVANT! CORP * 21,200 356,425 AVID TECHNOLOGY INC 7,200 99,900 BERGEN BRUNSWIG CORP 13,700 124,156 BORGWARNER, INC 7,000 264,250 BRE PROPERTIES, INC 17,100 540,788 CARAUSTAR IND 30 302 CENTERPOINT PROPERTIES CORP 11,800 524,363 CENTURY BANCORP, INC. CL. A 30,300 416,625 CROSS TIMBERS OIL CO 8,850 166,491 CUTTER & BUCK INC 12,600 129,150 DELPHI FINL GRP * 10,000 370,000 Credit Suisse Warburg Pincus Small Co Value Pro-Forma - -------------------------------------------------------------------------------- Market Security Name Shares Value - ------------- ------- ----------- AFTERMARKET TECH * 45,800 243,313 AMERICREDIT CORP. * 22,100 593,938 AMETEK, INC 185,000 4,023,750 AMSOUTH BANCORPORATION 127,022 1,770,369 APTARGROUP, INC 146,600 3,032,787 ARROW INTERNATIONAL, INC 116,000 4,676,250 ASSOCIATED BANC-CORP 24,300 584,719 AVANT! CORP * 21,200 356,425 AVID TECHNOLOGY INC 7,200 99,900 BANKNORTH GROUP, INC 198,000 3,588,750 BANTA CORP 200,250 4,618,266 BECKMAN COULTER, INC 56,600 3,965,537 BENCHMARK ELECTRONICS, INC.* 45,500 1,831,375 BERGEN BRUNSWIG CORP 13,700 124,156 BISYS GROUP, INC.* 106,000 4,995,250 BORGWARNER, INC 7,000 264,250 BRADY (W.H.) CL. A 102,700 3,183,700 BRE PROPERTIES, INC 17,100 540,788 BROWN & BROWN, INC 153,800 4,998,500 C&D TECHNOLOGIES, INC.* 48,000 2,838,000 CAMBREX CORP 104,800 4,185,450 CARAUSTAR IND 30 302 CARLISLE COMPANIES, INC 108,200 4,503,825 CENTERPOINT PROPERTIES CORP 11,800 524,363 CENTURA BANKS, INC 33,000 1,268,437 CENTURY BANCORP, INC. CL. A 30,300 416,625 CFW COMMUNICATIONS CO 8,500 168,937 CHROMCRAFT REVINGTON, INC.* 156,600 1,291,950 CROSS TIMBERS OIL CO 8,850 166,491 CULLEN/FROST BANKERS, INC 128,000 4,264,000 CUTTER & BUCK INC 12,600 129,150 DALLAS SEMICONDUCTOR CORP 87,800 3,479,075 DELPHI FINL GRP * 10,000 370,000 Warburg Pincus Small Company Value II Fund and Credit Suisse Warburg Pincus Small Company Value Fund Combined Statement of Investments (unaudited) As of October 31, 2000 - -------------------------------------------------------------------------------- Credit Suisse Warburg Pincus Small Company Value - -------------------------------------------------------------------------------- Market Security Name Shares Value - ------------- ------- ----------- DENTSPLY INTERNATIONAL, INC 50,000 1,734,375 ELECTRO SCIENTIFIC 52,700 1,841,206 INDUSTRIES, INC.* EQUITABLE RESOURCES, INC 84,000 4,872,000 ESCO ELECTRONICS CORP.* 148,000 2,691,750 FIRSTMERIT CORP 180,000 4,106,250 H.B. FULLER CO 59,610 2,015,563 HARTE HANKS, INC 100,000 2,212,500 HON INDUSTRIES, INC 77,000 1,852,813 HORACE MANN EDUCATORS CORP 52,400 880,975 HSB GROUP, INC 96,950 3,835,584 INVACARE CORP 166,700 4,750,950 KING PHARMACEUTICALS, INC 64,312 2,881,981 LIBERTY PROPERTY TRUST 49,000 1,295,437 LONGVIEW FIBRE CO 205,000 2,793,125 Warburg Pincus Small Company Value II Fund - -------------------------------------------------------------------------------- Market Security Name Shares Value - ------------- ------- ----------- DIME BANCORP 18,500 452,094 DTE ENERGY CO 9,200 332,350 EA INDUSTRIES, INC 1 -- ENERGY EAST CORP 17,700 357,319 ESSEX PROPERTY TRUST INC 9,800 509,600 EVERGREEN RESOURCES INC.* 13,100 360,250 FREMONT GENERAL CORP 159,200 577,100 GATX CORP 13,900 584,669 HARMAN INTERNATIONAL INDUS 13,400 643,200 HCC INSURANCE HOLDINGS 12,000 228,750 HEALTH MANAGEMENT ASSOC 12,900 255,581 HOME PROP OF NY, INC 7,800 212,063 HS RESOURCES INC 5,400 168,075 ICU MEDICAL, INC. * 9,100 227,500 INST MONEY MARKET TRUST 2,721,795 2,721,795 INTEGRATED DEVICE * 1,300 73,206 IVEX PACKAGING CORP. * 68,900 676,081 JDA SOFTWARE GROUP INC.* 4,820 72,601 LANDSTAR SYSTEMS, INC. * 7,700 363,825 LEAR CORP 10,000 272,500 LIFEPOINT HOSPITALS INC. * 5,200 201,500 LOJACK CORP. * 51,400 411,200 Credit Suisse Warburg Pincus Small Co Value Pro-Forma - -------------------------------------------------------------------------------- Market Security Name Shares Value - ------------- ------- ----------- DENTSPLY INTERNATIONAL, INC 50,000 1,734,375 DIME BANCORP 18,500 452,094 DTE ENERGY CO 9,200 332,350 EA INDUSTRIES, INC 1 -- ELECTRO SCIENTIFIC INDUSTRIES, 52,700 1,841,206 INC.* ENERGY EAST CORP 17,700 357,319 EQUITABLE RESOURCES, INC 84,000 4,872,000 ESCO ELECTRONICS CORP.* 148,000 2,691,750 ESSEX PROPERTY TRUST INC 9,800 509,600 EVERGREEN RESOURCES INC.* 13,100 360,250 FIRSTMERIT CORP 180,000 4,106,250 FREMONT GENERAL CORP 159,200 577,100 GATX CORP 13,900 584,669 H.B. FULLER CO 59,610 2,015,563 HARMAN INTERNATIONAL INDUS 13,400 643,200 HARTE HANKS, INC 100,000 2,212,500 HCC INSURANCE HOLDINGS 12,000 228,750 HEALTH MANAGEMENT ASSOC 12,900 255,581 HOME PROP OF NY, INC 7,800 212,063 HON INDUSTRIES, INC 77,000 1,852,813 HORACE MANN EDUCATORS CORP 52,400 880,975 HS RESOURCES INC 5,400 168,075 HSB GROUP, INC 96,950 3,835,584 ICU MEDICAL, INC. * 9,100 227,500 INVACARE CORP 166,700 4,750,950 INST MONEY MARKET TRUST 2,721,795 2,721,795 INTEGRATED DEVICE * 1,300 73,206 IVEX PACKAGING CORP. * 68,900 676,081 JDA SOFTWARE GROUP INC.* 4,820 72,601 KING PHARMACEUTICALS, INC 64,312 2,881,981 LANDSTAR SYSTEMS, INC. * 7,700 363,825 LEAR CORP 10,000 272,500 LIBERTY PROPERTY TRUST 49,000 1,295,437 LIFEPOINT HOSPITALS INC. * 5,200 201,500 LOJACK CORP. * 51,400 411,200 LONGVIEW FIBRE CO 205,000 2,793,125 Warburg Pincus Small Company Value II Fund and Credit Suisse Warburg Pincus Small Company Value Fund Combined Statement of Investments (unaudited) As of October 31, 2000 - -------------------------------------------------------------------------------- Credit Suisse Warburg Pincus Small Company Value - -------------------------------------------------------------------------------- Market Security Name Shares/Principal Value - ------------- ------- ----------- LYDALL, INC.* 184,500 1,948,781 MANITOWOC, INC.* 85,000 2,310,938 MARCUS CORP 149,975 2,127,770 MENTOR GRAPHICS CORP.* 81,100 1,900,781 MERCURY COMPUTER SYSTEMS, INC 112,000 3,472,000 MEREDITH CORP 72,000 2,286,000 METHODE ELECTRONICS, INC 62,150 2,338,394 MICHAEL'S STORES, INC.* 39,000 948,188 MODINE MANUFACTURING CO 131,400 3,465,675 MYERS INDUSTRIES, INC 192,969 2,556,839 NATIONAL AUSTRALIA FUNDING 6,282,000 6,282,000 6.581%, 11/01/00** NATIONAL COMMERCE 156,800 3,332,000 BANCORPORATION NATIONAL FUEL GAS CO 89,600 4,804,800 NEIMAN MARCUS GROUP, INC.* 90,000 3,116,250 OCEANEERING INTERNATIONAL, 112,000 1,575,000 INC.* PATTERSON DENTAL CO 15,000 469,688 PEOPLES' BANK, INC 105,000 2,126,250 Warburg Pincus Small Company Value II Fund - -------------------------------------------------------------------------------- Market Security Name Shares Value - ------------- ------- ----------- LSI INDUSTRIES INC 12,300 230,625 MANUFACTURED HOME COMMUNITIES 13,200 328,350 MCN CORP 14,300 352,138 MDC HOLDINGS INC 9,332 255,464 MISSION WEST PROPERTIES INC 49,386 663,624 MORRISON MANAGEMENT SPECIALIST 8,450 283,075 NATIONAL DATA CORP 3,400 129,625 NATL WESTRN LIFE INS CO CL. A * 2,500 221,250 NEWFIELD EXPLORATION CO 4,700 177,425 NEWPARK RESOURCES, INC. * 23,200 208,800 NSTAR 10,900 421,694 OCEAN ENERGY INC 13,400 185,925 OMNICARE, INC 28,500 498,750 PACKAGING CORP OF AMERICA 22,500 330,469 PATHMARK STORES INC 38,700 607,106 Credit Suisse Warburg Pincus Small Co Value Pro-Forma - -------------------------------------------------------------------------------- Market Security Name Shares/Principal Value - ------------- ------- ----------- LSI INDUSTRIES INC 12,300 230,625 LYDALL, INC.* 184,500 1,948,781 MANITOWOC, INC.* 85,000 2,310,938 MANUFACTURED HOME COMMUNITIES 13,200 328,350 MARCUS CORP 149,975 2,127,770 MCN CORP 14,300 352,138 MDC HOLDINGS INC 9,332 255,464 MENTOR GRAPHICS CORP.* 81,100 1,900,781 MERCURY COMPUTER SYSTEMS, INC 112,000 3,472,000 MEREDITH CORP 72,000 2,286,000 METHODE ELECTRONICS, INC 62,150 2,338,394 MICHAEL'S STORES, INC.* 39,000 948,188 MISSION WEST PROPERTIES INC 49,386 663,624 MODINE MANUFACTURING CO 131,400 3,465,675 MORRISON MANAGEMENT SPECIALIST 8,450 283,075 MYERS INDUSTRIES, INC 192,969 2,556,839 NATIONAL AUSTRALIA FUNDING 6,282,000 6,282,000 6.581%, 11/01/00** NATIONAL COMMERCE BANCORPORATION 156,800 3,332,000 NATIONAL DATA CORP 3,400 129,625 NATIONAL FUEL GAS CO 89,600 4,804,800 NATL WESTRN LIFE INS CO. CL A * 2,500 221,250 NEIMAN MARCUS GROUP, INC.* 90,000 3,116,250 NEWFIELD EXPLORATION CO 4,700 177,425 NEWPARK RESOURCES, INC. * 23,200 208,800 NSTAR 10,900 421,694 OCEANEERING INTERNATIONAL, INC.* 112,000 1,575,000 OCEAN ENERGY INC 13,400 185,925 OMNICARE, INC 28,500 498,750 PACKAGING CORP OF AMERICA 22,500 330,469 PATHMARK STORES INC 38,700 607,106 PATTERSON DENTAL CO 15,000 469,688 PEOPLES' BANK, INC 105,000 2,126,250 Warburg Pincus Small Company Value II Fund and Credit Suisse Warburg Pincus Small Company Value Fund Combined Statement of Investments (unaudited) As of October 31, 2000 - -------------------------------------------------------------------------------- Credit Suisse Warburg Pincus Small Company Value - -------------------------------------------------------------------------------- Market Security Name Shares Value - ------------- ------- ----------- PERFORMANCE FOOD GROUP, 127,000 5,143,500 INC.* PHARMACEUTICAL PRODUCT 155,000 4,853,438 DEVELOPMENT, INC.* PIONEER STANDARD 239,450 3,322,369 ELECTRONICS, INC POLYONE CORP 11,800 92,925 PROGRESS SOFTWARE CORP.* 196,800 3,111,900 PROTECTIVE LIFE CORP 120,200 2,779,625 ROGERS CORP.* 96,600 3,453,450 ROPER INDUSTRIES, INC 69,700 2,439,500 RPM, INC. OHIO 85,187 761,359 RUDDICK CORP 227,700 2,988,563 STEWART & STEVENSON 50,000 1,200,000 SERVICES, INC SUSQUEHANNA BANCSHARES, 75,000 1,059,375 INC TECHNITROL, INC 31,600 3,503,650 TELEFLEX, INC 99,900 3,452,794 TETRA TECH, INC 105,175 3,654,831 TIDEWATER, INC 54,100 2,498,744 UNIVERSAL FOODS CORP 196,800 3,886,800 Warburg Pincus Small Company Value II Fund - -------------------------------------------------------------------------------- Market Security Name Shares Value - ------------- ------- ----------- PHILIPS-VAN HEUSEN CORP 46,900 556,938 PRIDE INTERNATIONAL, INC.* 10,200 258,188 PROSPERITY BANCSHARES, INC 38,000 717,250 PUBLIC SERVICE CO NEW MEXICO 23,300 642,206 RADIAN GROUP, INC 3,905 276,767 RBB SWEEP 1,205,652 1,205,652 SCP POOL CORP. * 11,319 292,879 SENSORMATIC ELECTR * 6,000 108,000 SIERRA PACIFIC RESOURCES 23,100 397,031 SILICON GRAPHICS INC 18,700 84,150 STANCORP FINANCIAL GROUP 14,900 607,175 STANLEY WORKS 10,200 271,575 STORAGE TECHNOLOGY CORP 7,700 75,075 SUNRISE ASSISTED LIVING INC 13,200 308,550 TESORO PETROLEUM CORP 17,900 185,713 TRANSACTION SYSTEMS ARCHIT 4,700 63,450 UNISOURCE ENERGY 16,200 241,988 Credit Suisse Warburg Pincus Small Company Value Pro-Forma - -------------------------------------------------------------------------------- Market Security Name Shares Value - ------------- ------- ----------- PERFORMANCE FOOD GROUP, INC.* 127,000 5,143,500 PHARMACEUTICAL PRODUCT 155,000 4,853,438 DEVELOPMENT, INC.* PHILIPS-VAN HEUSEN CORP 46,900 556,938 PIONEER STANDARD ELECTRONICS, 239,450 3,322,369 INC PRIDE INTERNATIONAL, INC.* 10,200 258,188 POLYONE CORP 11,800 92,925 PROGRESS SOFTWARE CORP.* 196,800 3,111,900 PROSPERITY BANCSHARES, INC 38,000 717,250 PROTECTIVE LIFE CORP 120,200 2,779,625 PUBLIC SERVICE CO NEW MEXICO 23,300 642,206 RADIAN GROUP, INC 3,905 276,767 RBB SWEEP 1,205,652 1,205,652 ROGERS CORP.* 96,600 3,453,450 ROPER INDUSTRIES, INC 69,700 2,439,500 RPM, INC. OHIO 85,187 761,359 RUDDICK CORP 227,700 2,988,563 SCP POOL CORP. * 11,319 292,879 SENSORMATIC ELECTR * 6,000 108,000 SIERRA PACIFIC RESOURCES 23,100 397,031 SILICON GRAPHICS INC 18,700 84,150 STANCORP FINANCIAL GROUP 14,900 607,175 STANLEY WORKS 10,200 271,575 STEWART & STEVENSON SERVICES, 50,000 1,200,000 INC STORAGE TECHNOLOGY CORP 7,700 75,075 SUNRISE ASSISTED LIVING INC 13,200 308,550 SUSQUEHANNA BANCSHARES, INC 75,000 1,059,375 TECHNITROL, INC 31,600 3,503,650 TELEFLEX, INC 99,900 3,452,794 TESORO PETROLEUM CORP 17,900 185,713 TETRA TECH, INC 105,175 3,654,831 TIDEWATER, INC 54,100 2,498,744 TRANSACTION SYSTEMS ARCHIT 4,700 63,450 UNISOURCE ENERGY 16,200 241,988 UNIVERSAL FOODS CORP 196,800 3,886,800 Warburg Pincus Small Company Value II Fund and Credit Suisse Warburg Pincus Small Company Value Fund Combined Statement of Investments (unaudited) As of October 31, 2000 - -------------------------------------------------------------------------------- Credit Suisse Warburg Pincus Small Company Value - -------------------------------------------------------------------------------- Market Security Name Shares Value - ------------- ------- ----------- VARCO INTERNATIONAL, INC.* 159,767 2,755,981 WASHINGTON GAS LIGHT CO 134,500 3,429,750 WEBSTER FINANCIAL CORP 50,000 1,218,750 WERNER ENTERPRISES, INC 206,750 2,894,500 WOODHEAD INDUSTRIES, INC 197,800 4,351,600 ----------- 208,948,194 =========== Warburg Pincus Small Company Value II Fund - -------------------------------------------------------------------------------- Market Security Name Shares Value - ------------- ------- ----------- UNIVERSAL HEALTH * 3,700 310,338 URBAN SHOPPING CENTERS INC 10,900 522,519 WALTER INDUSTRIES, INC. * 50,500 375,594 WEBSTER FINANCIAL CORP 15,200 370,500 ----------- 26,296,812 =========== Credit Suisse Warburg Pincus Small Company Value Pro-Forma - -------------------------------------------------------------------------------- Market Security Name Shares Value - ------------- ------- ----------- UNIVERSAL HEALTH * 3,700 310,338 URBAN SHOPPING CENTERS INC 10,900 522,519 VARCO INTERNATIONAL, INC.* 159,767 2,755,981 WALTER INDUSTRIES, INC. * 50,500 375,594 WASHINGTON GAS LIGHT CO 134,500 3,429,750 WEBSTER FINANCIAL CORP 65,200 1,589,250 WERNER ENTERPRISES, INC 206,750 2,894,500 WOODHEAD INDUSTRIES, INC 197,800 4,351,600 ----------- 235,245,006 =========== * NON-INCOME PRODUCING SECURITIES ** COMMERCIAL PAPER IS TRADED ON A DISCOUNT BASIS: THE INTEREST RATE SHOWN REFLECTS THE DISCOUNT RATE PAID AT THE TIME OF PURCHASE BY THE FUND. *** CREDIT SUISSE WARBURG PINCUS SMALL COMPANY VALUE FUND DOES NOT ANTICIPATE HAVING TO SELL ANY SECURITIES AS A RESULT OF THIS ACQUISITION. See notes to pro forma financial statements. Credit Suisse Warburg Pincus Small Company Value Fund Warburg Pincus Small Company Value II Fund Notes to Pro Forma Financial Statements (unaudited) October 31, 2000 1. Basis of Combination The unaudited Pro Forma Combined Portfolio of Investments, Pro Forma Combined Statement of Assets and Liabilities and Pro Forma Combined Statement of Operations give effect to the proposed merger of the Warburg Pincus Small Company Value II Fund ("WP Small Company") into the Credit Suisse Warburg Pincus Small Company Value Fund ("Credit Suisse Small Company"). The proposed acquisition will be accounted for by the method of accounting for tax-free mergers of investment companies. The acquisition provides for the transfer of all of the assets of WP Small Company to Credit Suisse Small Company in exchange for Credit Suisse Small Company Common Shares, the distribution of such Credit Suisse Small Company Common Shares to Common Class and Advisor Class shareholders of WP Small Company and the subsequent liquidation of WP Small Company. The accounting survivor in the proposed acquisition will be Credit Suisse Small Company. This is because although WP Small Company has the same investment objective as Credit Suisse Small Company, the surviving fund will invest in a style that is similar to the way in which Credit Suisse Small Company is currently operated (including hedging and investment in debt securities). Additionally, Credit Suisse Small Company has a significantly larger asset base than WP Small Company. The pro forma combined statements should be read in conjunction with the historical financial statements of the constituent fund and the notes thereto incorporated by reference in the Registration Statement filed on Form N-14. WP Small Company and Credit Suisse Small Company are both open-end, management investment companies registered under the Investment Company Act of 1940, as amended. Pro Forma Adjustments: The Pro Forma adjustments below reflect the impact of the acquisition of WP Small Company by Credit Suisse Small Company. (a) To decrease Investment Advisory Services Fees to reflect the revised fee schedule. (b) To re-classify Distribution fees from WP Small Company Common Class Shares and Advisor Class Shares to Credit Suisse Small Company Common Shares. (c) To decrease Distribution fees in WP Small Company Advisor Shares from 0.50% to 0.25%. (d) Adjustment based on the contractual agreement with the transfer agent for the combined fund. (e) Adjustment based on the contractual agreements with the custodian for the combined fund. (f) Adjustment based on the addition of PFPC as administrator based on fee schedule. (g) Adjustment based on the addition of CSAMSI as co-administrator. (h) Assumes elimination of duplicate charges in combination, and reflects management's estimates of combined pro-forma operations. (i) Adjustment to eliminate fee waiver for PFPC and Transfer Agent offset. Increase CSAM waiver and reduce total expense ratio. 2. Summary of Significant Accounting Policies Following is a summary of significant accounting policies, which are consistently followed by WP Small Company and Credit Suisse Small Company in the preparation of their financial statements. The policies are in conformity with generally accepted accounting principles. Preparation of the financial statements includes the use of management estimates. Actual results could differ from those estimates. Security Valuation - Securities traded on a U.S. or foreign stock exchange, or the Nasdaq Stock Market Inc. ("Nasdaq") system, are valued at the last quoted sale price reported as of the close of regular trading on the exchange the security is traded most extensively. If there is no such sale, the security is valued at the calculated mean between the last bid and asked price on the exchange. Securities not traded on an exchange or Nasdaq, but traded in another over-the-counter market are valued at the average between the current bid and asked price in such markets. Short-term obligations and commercial paper are valued at amortized cost, which approximates market. Debt securities (other than short-term obligations and commercial paper) are valued on the basis of valuations furnished by a pricing service authorized by the Board of Trustees (the "Board"), which determines valuations based upon market transactions for normal, institutional-size trading units of such securities. All other securities are valued at their fair value as determined in good faith by the Valuation Committee of the Board. Security Transactions and Investment Income - Security transactions are accounted for on the trade date. Dividend income is recorded on the ex-dividend date, and interest income is accrued on a daily basis. Corporate actions, including dividends, on foreign securities are recorded on the ex-dividend date. If such information is not available on the ex-dividend date, corporate actions are recorded as soon as reliable information is available from the Fund's sources. Realized gains and losses from security transactions are calculated on an identified cost basis. Federal Income Taxes - WP Small Company and Credit Suisse Small Company intend to qualify for tax treatment applicable to regulated investment companies under the Internal Revenue Code of 1986 (the "Code"), as amended, and distribute all of their taxable income to their shareholders. Therefore, no provision has been recorded for Federal income or excise taxes. Distributions to Shareholders - Distributions from net investment income and net realized capital gains, if any, are declared annually. PART C OTHER INFORMATION Item 15. Indemnification. The response to this item is incorporated by reference to "Plan of Reorganization" under the caption Proposal Number 1 - Information About the Reorganization" and to "Liability of Directors" under the caption "Proposal - Information on Shareholders' Rights" in Part A of this Registration Statement. Item 16. Exhibits (1)(a) Registrant's Amended and Restated Declaration of Trust is incorporated by reference to Post-Effective Amendment No. 14 to Registrant's Registration Statement on Form N-1A (File No. 33-3706) filed on December 29, 1995. (1)(b) Registrant's Amendment to Amended and Restated Declaration of Trust is incorporated by reference to Post-Effective Amendment No. 16 to Registrant's Registration Statement on Form N1-A (File No. 33-3706) filed on February 20, 1997. (1)(c) Registrant's Amendment No. 2 to Amended and Restated Declaration of Trust is incorporated by reference to Post-Effective Amendment No. 23 to Registrant's Registration Statement on Form N1-A (File No. 33-3706) filed on February 28, 2000. (1)(d) Registrant's Amendment No. 3 to Amended and Restated Declaration of Trust is incorporated by reference to Post-Effective Amendment No. 27 to Registrant's Registration Statement on Form N1-A (File No. 33-3706) filed on January 24, 2001. (1)(e) Registrant's Amendment No. 4 to Amended and Restated Declaration of Trust is incorporated by reference to Post-Effective Amendment No. 28 to Registrant's Registration Statement on Form N1-A (File No. 33-3706) filed on February 28, 2001. (2)(a) By-Laws of the Registrant are incorporated by reference to Registrant's Registration Statement on Form N1-A (File No. 33-3706) filed on March 4, 1986. (2)(b) Amendments to the By-Laws are incorporated by reference to Post-Effective Amendment No. 28 to Registrant's Registration Statement on Form N1-A (File No. 33-3706) filed on February 28, 2001. (3) Not Applicable. (4) Plan of Reorganization (included as Exhibit A to Registrant's Prospectus/Proxy Statement contained in Part A of this Registration Statement). (5) Specimen Stock Certificate is incorporated by reference to Post-Effective Amendment No. 8 to Registrant's Registration Statement on Form N1-A (File No. 33-3706) filed on February 24, 1992. (6)(a) Investment Advisory Agreement is incorporated by reference to Post-Effective Amendment No. 8 to Registrant's Registration Statement on Form N1-A (File No. 33-3706) filed on February 24, 1992. (6)(b) Interim Investment Advisory Contract with Credit Suisse Asset Management, LLC dated November 3, 2000 is incorporated by reference to Post-Effective Amendment No. 26 to Registrant's Registration Statement on Form N1-A (File No. 33-3706) filed on December 29, 2000. (7) Not Applicable. (8) Not Applicable. (9) Custodial Services Agreement is incorporated by reference to Post-Effective Amendment No. 9 to Registrant's Registration Statement on Form N1-A (File No. 33-3706) filed on December 31, 1992. (10)(a) Form of Distribution Plan pursuant to Rule 12b-1 under the 1940 Act is incorporated by reference; material provisions, other than the fee rate, as set forth under "Summary - Sales Charges" in Part A of this Registration Statement are substantially similar to those of the corresponding exhibit in Post-Effective Amendment No. 25 to Registrant's Registration Statement on Form N1-A (File No. 33-3706) filed on August 1, 2000. (10)(b) Distribution Agreement dated as of December 18, 2000 is incorporated by reference to Post-Effective Amendment No. 26 to Registrant's Registration Statement on Form N1-A (File No. 33-3706) filed on December 29, 2000. (10)(c) Registrant's Plan for Multiple Classes of Shares pursuant to Rule 18f-3 is incorporated by reference to Post-Effective Amendment No. 28 to Registrant's Registration Statement on Form N1-A (File No. 33-3706) filed on February 28, 2001. (11) Opinion and Consent of Hale & Dorr, counsel to Registrant, with respect to validity of shares, to be filed by amendment. (12) Opinion of Willkie Farr & Gallagher with respect to tax matters.* (13)(a) Form of Transfer Agency Agreement is incorporated by reference to Post-Effective Amendment No. 28 to Registrant's Registration Statement on Form N1-A (File No. 33-3706) filed on February 28, 2001. - ---------- * See Item 17 (undertakings). (13)(b) Form of Co-Administration Agreement with Credit Suisse Asset Management Securities, Inc. is incorporated by reference to Post-Effective Amendment No. 28 to Registrant's Registration Statement on Form N1-A (File No. 33-3706) filed on February 28, 2001. (13)(c) Form of Co-Administration Agreement with PFPC, Inc. is incorporated by reference to Post-Effective Amendment No. 28 to Registrant's Registration Statement on Form N1-A (File No. 33-3706) filed on February 28, 2001. (14)(a) Consent of Ernst & Young LLP. (14)(b) Consent of PricewaterhouseCoopers LLP. (15) Not Applicable. (16) Powers of Attorney. (17)(a) Form of Proxy Card (included as an exhibit to Registrant's Prospectus/Proxy Statement contained in Part A of this Registration Statement). (17)(b) Registrant's declaration pursuant to Rule 24f-2 is incorporated by reference to the Registration Statements. (17)(c) Prospectus of the Registrant. (17)(d) Prospectuses of the Acquired Fund. (17)(e) Statement of Additional Information for the Registrant. (17)(f) Annual Report of the Registrant. (17)(g) Annual Report of the Acquired Fund. Item 17. Undertakings (1) The undersigned Registrant agrees that prior to any public reoffering of the securities registered through the use of a prospectus which is a part of this Registration Statement by any person or party who is deemed to be an underwriter within the meaning of Rule 145(c) of the Securities Act [17 CFR 230.145c], the reoffering prospectus will contain the information called for by the applicable registration form for reofferings by persons who may be deemed underwriters, in addition to the information called for by the other items of the applicable form. (2) The undersigned Registrant agrees to file the tax opinion required by Item 16(12) in a post-effective amendment to this Registration Statement after the Closing of the Reorganization. (3) The undersigned Registrant agrees that every prospectus that is filed under paragraph (1) above will be filed as a part of an amendment to the Registration Statement and will not be used until the amendment is effective, and that, in determining any liability under the Securities Act of 1933, as amended, each post-effective amendment shall be deemed to be a new registration statement for the securities offered therein, and the offering of the securities at that time shall be deemed to be the initial bona fide offering of them. SIGNATURES As required by the Securities Act of 1933, as amended, this Registration Statement has been signed on behalf of the registrant, in the City of New York and State of New York, on the 9th day of March, 2001. Credit Suisse Warburg Pincus Capital Funds on behalf of Credit Suisse Warburg Pincus Small Company Value Fund By: /s/ G. Moffett Cochran* --------------------------------------- Name: G. Moffett Cochran Title: President As required by the Securities Act of 1933, as amended, this Registration Statement has been signed by the following persons in the capacities and on the dates indicated. Signature Title Date --------- ----- ---- /s/ G. Moffett Cochran* President and Chairman March 9, 2001 - -------------------------- of the Board G. Moffett Cochran /s/ Martin Jaffe Trustee and Treasurer March 9, 2001 - -------------------------- Martin Jaffe /s/ Stig Host* Trustee March 9, 2001 - -------------------------- Stig Host /s/ Peter F. Krogh* Trustee March 9, 2001 - -------------------------- Peter F. Krogh /s/ Robert E. Fischer* Trustee March 9, 2001 - -------------------------- Robert Fisher /s/ Wilmot H. Kidd, III* Trustee March 9, 2001 - -------------------------- Wilmot H. Kidd, III /s/ John J. Sheehan* Trustee March 9, 2001 - -------------------------- John J. Sheehan * By: /s/ Martin Jaffe - -------------------------- Martin Jaffe (Attorney-in-fact) Pursuant to Power of Attorney EXHIBIT INDEX Exhibit Number Description Page - -------------- ----------- ---- 14(a) Consent of Ernst & Young LLP ________ 14(b) Consent of PricewaterhouseCoopers LLP ________ 16 Powers of Attorney ________ 17(c) Prospectus of the Acquiring Fund. ________ 17(d) Prospectuses of the Acquired Fund. ________ 17(e) Statement of Additional Information for the Acquiring Fund. ________ 17(f) Annual Report of the Acquiring Fund ________ 17(g) Annual Report of the Acquired Fund ________ EX-99.14(A) 2 0002.txt CONSENT OF ERNST & YOUNG LLP CONSENT OF INDEPENDENT AUDITORS We consent to the reference to our firm under the captions "Management of Each Fund" and "Financial Statements and Experts" and to the use of our report dated December 20, 2000 with respect to Credit Suisse Warburg Pincus Small Company Value Fund (formerly, DLJ Small Company Value Fund) (one of the funds comprising Credit Suisse Warburg Pincus Capital Funds, formerly DLJ Focus Funds), which is incorporated by reference, in this Registration Statement on Form N-14 of Credit Suisse Warburg Pincus Capital Funds. ERNST & YOUNG LLP New York, New York March 9, 2001 EX-99.14(B) 3 0003.txt CONSENT OF PRICEWATERHOUSECOOPEERS LLP CONSENT OF INDEPENDENT ACCOUNTANTS We hereby consent to the incorporation by reference in this Registration Statement on Form N-14 of our report dated December 15, 2000, relating to the financial statements and financial highlights which appears in the October 31, 2000 Annual Report to Shareholders of Warburg, Pincus Small Company Value II Fund, Inc. (formerly the Warburg, Pincus Small Company Value Fund, Inc.), which is also incorporated by reference into the Registration Statement. We also consent to the references to us under the headings "Management of Each Fund" and "Financial Statements and Experts" in the Proxy/Prospectus. PricewaterhouseCoopers LLP Philadelphia, Pennsylvania March 9, 2001 EX-99.16 4 0004.txt POWERS OF ATTORNEY POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that each of the undersigned has constituted and appointed, and by these presents does constitute and appoint, G. Moffett Cochran and Martin Jaffe, or either of them, the true and lawful agents and attorneys-in-fact of each of the undersigned with respect to all matters arising in connection with the filing with the Securities and Exchange Commission of the Registration Statement for Credit Suisse Warburg Pincus Capital Funds under the Securities Act of 1933 and under the Investment Company Act of 1940 on Form N-14 and any subsequent amendments to the Registration Statement with full power and authority to execute and deliver for and on behalf of each of the undersigned all such consents and documents in connection therewith as said agents and attorneys-in-fact may deem advisable. Each of the undersigned hereby gives to said agents and attorneys-in-fact full power and authority to act in the premises, including, but not limited to, the power and authority to execute and file with the Securities and Exchange Commission this Registration Statement on Form N-14 and any amendments thereto, and/or other documents in connection therewith, and to appoint a substitute or substitutes to act hereunder with the same power and authority as said agents and attorneys-in-fact would have if personally acting. Each of the undersigned hereby ratifies and confirms all that said agents and attorneys-in-fact, or any substitute or substitutes, may do by virtue hereof. This Power of Attorney may be signed in more than one counterpart, each of which shall be deemed an original, but all of which together shall constitute one and the same document. /s/ G. Moffett Cochran /s/ Wilmot H. Kidd III - -------------------------- -------------------------- G. Moffett Cochran Wilmot H. Kidd, III /s/ Stig Host /s/ Peter F. Krogh - -------------------------- --------------------------- Stig Host Peter F. Krogh /s/ John J. Sheehan /s/ Robert E. Fischer - -------------------------- --------------------------- John J. Sheehan Robert E. Fischer /s/ Martin Jaffe - ------------------------- Martin Jaffe Dated as of February 1, 2001 EX-99.17(C) 5 0005.txt PROSPECTUS OF THE ACQUIRING FUND CREDIT SUISSE WARBURG PINCUS FUNDS (FORMERLY DLJ MUTUAL FUNDS) CREDIT SUISSE WARBURG PINCUS BLUE CHIP FUND CREDIT SUISSE WARBURG PINCUS VALUE FUND CREDIT SUISSE WARBURG PINCUS SMALL COMPANY VALUE FUND CREDIT SUISSE WARBURG PINCUS STRATEGIC GROWTH FUND CREDIT SUISSE WARBURG PINCUS TECHNOLOGY FUND CREDIT SUISSE WARBURG PINCUS DEVELOPING MARKETS FUND CREDIT SUISSE WARBURG PINCUS INTERNATIONAL EQUITY II FUND CREDIT SUISSE WARBURG PINCUS FIXED INCOME II FUND CREDIT SUISSE WARBURG PINCUS MUNICIPAL TRUST FUND CREDIT SUISSE WARBURG PINCUS HIGH INCOME FUND CREDIT SUISSE WARBURG PINCUS MUNICIPAL MONEY FUND CREDIT SUISSE WARBURG PINCUS U.S. GOVERNMENT MONEY FUND FEBRUARY 28, 2001 PROSPECTUS As with all mutual funds, the Securities and Exchange Commission has not approved these funds, nor has it passed upon the adequacy or accuracy of this PROSPECTUS. It is a criminal offense to state otherwise. An investment in any of the Funds is not a deposit of any bank and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. WARBURG PINCUS FUNDS PART OF CREDIT SUISSE ASSET MANAGEMENT CONTENTS CREDIT SUISSE WARBURG PINCUS FUNDS' RISK/RETURN SUMMARY ............ 4 SUMMARY OF CREDIT SUISSE WARBURG PINCUS FUND EXPENSES .............. 16 ANNUAL FUND OPERATING EXPENSES ..................................... 17 RECENT DEVELOPMENTS ................................................ 22 PURCHASE INFORMATION ............................................... 24 CREDIT SUISSE WARBURG PINCUS FUNDS' INVESTMENT OBJECTIVES AND POLICIES ........................................................... 26 ADDITIONAL INFORMATION ON INVESTMENT POLICIES AND RISKS ............ 39 FUND MANAGEMENT .................................................... 42 HOW TO BUY AND SELL SHARES ......................................... 44 OTHER SHAREHOLDER INFORMATION ...................................... 51 ADDITIONAL SHAREHOLDER SERVICES .................................... 56 DISTRIBUTION CHARGES ............................................... 57 DIVIDEND AND DISTRIBUTION INFORMATION .............................. 58 TAXES .............................................................. 58 FINANCIAL HIGHLIGHTS ............................................... 59 FOR MORE INFORMATION ............................................... back cover THIS PART OF THE PROSPECTUS SUMMARIZES EACH FUND'S INVESTMENT OBJECTIVE, PRINCIPAL INVESTMENT STRATEGIES AND PRINCIPAL RISKS. THIS SECTION ALSO CONTAINS LIMITED PERFORMANCE DATA. MORE INFORMATION ABOUT THE CREDIT SUISSE WARBURG PINCUS FUNDS IS CONTAINED IN "CREDIT SUISSE WARBURG PINCUS FUNDS' INVESTMENT OBJECTIVES AND POLICIES," AND "ADDITIONAL INFORMATION ON INVESTMENT POLICIES AND RISKS." PLEASE READ THE ENTIRE PROSPECTUS CAREFULLY BEFORE INVESTING AND SAVE IT FOR FUTURE REFERENCE. 3 CREDIT SUISSE WARBURG PINCUS FUNDS' RISK/RETURN SUMMARY CREDIT SUISSE WARBURG PINCUS DOMESTIC EQUITY FUNDS THE CREDIT SUISSE WARBURG PINCUS BLUE CHIP FUND The Credit Suisse Warburg Pincus Blue Chip Fund's investment objective is long-term capital appreciation. The Fund seeks to achieve its objective by investing in companies that offer long-term capital appreciation. The Fund invests in common stock, securities convertible into common stock and other equity securities of well-known and established companies. The Fund takes a long-term view of each stock it buys, holding each company until its long-term growth potential no longer meets the Fund's requirements. Generally, the Fund attempts to identify companies with growth rates that will exceed that of the S&P 500 Index. The Credit Suisse Warburg Pincus Blue Chip Fund is "sector neutral." This means that its investments are allocated to industries in proportion to the sector allocation of the S&P 500 Index, with the exception of the electric and the gas utilities sectors. In the opinion of the Adviser, this strategy enables the Fund to properly diversify its portfolio within the most important and central realm of the U.S. equity universe. The Fund may also make an investment to earn income when its Adviser believes that it will not compromise the investment objective. To achieve this objective, the Fund may invest up to 35% of the value of its assets in investment-grade fixed income securities, including bonds, debentures, notes, asset and mortgage-backed securities and money market instruments such as commercial paper and bankers' acceptances and other financial instruments. The Fund may also invest in non-U.S. securities. Like any investment, an investment in the Credit Suisse Warburg Pincus Blue Chip Fund is subject to risk and you could lose money. While investments are selected that Credit Suisse Asset Management, LLC ("CSAM" or the "Adviser") believes will experience long-term appreciation, their value could decline. The Fund is subject to risks that affect equity securities markets in general, such as general economic conditions and adverse changes (generally increases) in interest rates. These and other factors could adversely affect your investment. The following chart and table illustrate the risk and the variability of the Fund's returns by showing the rate of return from year to year and how annual returns for 1, 5 and 10 years compare to those of the S&P 500 Composite Index, which is a broad measure of market performance. The Fund's past performance is not necessarily an indication of how it will perform in the future. CALENDAR YEAR TOTAL RETURNS [BAR CHART] 1991 28.00% 1992 2.00% 1993 14.00% 1994 -4.00% 1995 24.00% 1996 20.00% 1997 28.00% 1998 28.00% 1999 28.00% 2000 -4.00%
The annual returns referenced in the bar chart are for the calendar years ended December 31 and do not include sales charges. If sales charges were included, the annual returns would be lower than those shown. During the 10-year period shown in the bar chart for Class A shares, the highest return for a quarter was 21.16% (quarter ending 12/31/98) and the lowest return for a quarter was -9.22% (quarter ending 9/30/98). 4 AVERAGE ANNUAL TOTAL RETURNS
- ----------------------------------------------------------------------------------------------------- (FOR THE PERIODS ENDING DECEMBER 31, 2000) PAST YEAR PAST 5 YEARS PAST 10 YEARS - ----------------------------------------------------------------------------------------------------- BLUE CHIP FUND CLASS A (9.78)% 17.96% 14.91% - ----------------------------------------------------------------------------------------------------- BLUE CHIP FUND CLASS B* (8.59)% N/A N/A - ----------------------------------------------------------------------------------------------------- BLUE CHIP FUND CLASS D** (4.04)% N/A N/A - ----------------------------------------------------------------------------------------------------- S&P 500*** (9.11)% 18.33% 17.46% - -----------------------------------------------------------------------------------------------------
The Average Annual Total Returns for the Fund reflect the maximum applicable sales charges currently in effect. The Fund commenced offering Class C and Common Class shares on February 28, 2000 and August 1, 2000, respectively. Therefore, the Fund does not yet have a full calendar year of performance information for these classes. * The since inception (February 28, 1996) average annual total return for Class B shares for the period ending December 31, 2000 was 17.54%. ** The since inception (May 13, 1999) average annual total return for Class D shares for the period ending December 31, 2000 was 6.42%. *** The S&P 500 -Registered Trademark- is the Standard & Poor's Composite Index of 500 Stocks, a widely recognized, unmanaged index of common stock prices. The returns for the S&P 500 do not include any sales charges, fees or other expenses. THE CREDIT SUISSE WARBURG PINCUS VALUE FUND The Credit Suisse Warburg Pincus Value Fund's investment objective is long-term capital appreciation and continuity of income. The Fund seeks to achieve its objective by investing in dividend paying common stock and by diversifying its investments among different industries and different companies. Securities are selected on the basis of their investment merit and their potential for appreciation in value and/or income, with a focus on stability. The Adviser identifies companies that it believes are undervalued and waits for the market to discover that value. A portion of the Fund may be invested in debt securities that are of investment-grade quality, U.S. Government securities and money market instruments. The Fund may also invest in securities of non-U.S. based issuers or issuers that do business principally outside of the U.S., which we refer to as non-U.S. securities. There is no fixed percentage of the Fund's assets that must be invested in any particular type of security. Like any investment, an investment in the Credit Suisse Warburg Pincus Value Fund is subject to risk and you could lose money. While the Fund seeks investments that will appreciate in value and/or provide income, the Adviser could select securities that will decline in value and provide no income. The Fund is also subject to risks that affect equity securities markets in general, such as general economic conditions and adverse changes (generally increases) in interest rates. These and other factors could adversely affect your investment. The following chart and table illustrate the risk and the variability of the Fund's returns by showing the rate of return from year to year and how annual returns for 1, 5 and 10 years compare to those of the S&P 500 Composite Index, which is a broad measure of market performance. The Fund's past performance is not necessarily an indication of how it will perform in the future. CALENDAR YEAR TOTAL RETURNS [BAR CHART] 1991 24.00% 1992 6.00% 1993 16.00% 1994 -2.00% 1995 30.00% 1996 22.00% 1997 33.00% 1998 19.00% 1999 10.00% 2000 8.00%
The annual returns referenced in the bar chart are for the calendar years ended December 31 and do not include sales charges. If sales charges were included, the annual returns would be lower than those shown. During the 10-year period shown in the bar chart for Class A shares, the highest return for a quarter was 16.00% (quarter ending 12/31/98) and the lowest return for a quarter was -9.35% (quarter ending 9/30/98). 5 AVERAGE ANNUAL TOTAL RETURNS
- ----------------------------------------------------------------------------------------------------- (FOR THE PERIODS ENDING DECEMBER 31, 2000) PAST YEAR PAST 5 YEARS PAST 10 YEARS - ----------------------------------------------------------------------------------------------------- VALUE FUND CLASS A 2.11% 16.68% 15.33% - ----------------------------------------------------------------------------------------------------- VALUE FUND CLASS B* 3.62% N/A N/A - ----------------------------------------------------------------------------------------------------- VALUE FUND CLASS D** 8.64% N/A N/A - ----------------------------------------------------------------------------------------------------- S&P 500*** (9.11)% 18.33% 17.46% - -----------------------------------------------------------------------------------------------------
The Average Annual Total Returns for the Fund reflect the maximum applicable sales charges currently in effect. The Fund commenced offering Class C and Common Class shares on February 28, 2000 and August 1, 2000, respectively. Prior to the date of this prospectus, the Fund had not yet offered Advisor Class shares. Therefore, the Fund does not yet have a full calendar year of performance information for these classes. * The since inception (February 28, 1996) average annual total return for Class B shares for the period ending December 31, 2000 was 16.51%. ** The since inception (April 30, 1999) average annual total return for Class D shares for the period ending December 31, 2000 was 7.17%. *** The S&P 500 -Registered Trademark- is the Standard & Poor's Composite Index of 500 Stocks, a widely recognized, unmanaged index of common stock prices. The returns for the S&P 500 do not include any sales charges, fees or other expenses. THE CREDIT SUISSE WARBURG PINCUS SMALL COMPANY VALUE FUND The Credit Suisse Warburg Pincus Small Company Value Fund's investment objective is a high level of growth of capital. The Fund seeks to achieve its objective by investing in common stock and other equity securities of "small-cap" companies that appear to be undervalued. Companies with market capitalizations of $2 billion or less at the time of purchase are considered to be small-cap companies. This Fund's investment objective causes it to be riskier than other funds and you could lose money. While the Fund seeks investments that provide a high level of growth of capital, they may decline in value. You should not invest in this Fund if your principal objective is assured income or capital preservation. Investments in small-cap companies often involve greater risks than investments in larger, more established companies. Small-cap companies may have less management experience, fewer financial resources, and limited product diversification, all of which may increase risks. The frequency and trading volume for securities of small-cap companies are substantially less than for larger companies. This can result in greater and more abrupt price fluctuations and can cause small-cap stocks to be less liquid than securities of larger companies. The Fund is also subject to risks that affect equity securities markets in general, such as general economic conditions and adverse changes (generally increases) in interest rates. These and other factors could adversely affect your investment. The following chart and table illustrate the risk and the variability of the Fund's returns by showing the rate of return from year to year and how annual returns for 1, 5 and 10 years compare to those of the Russell 2000 Index, which is a broad measure of market performance. The Fund's past performance is not necessarily an indication of how it will perform in the future. CALENDAR YEAR TOTAL RETURNS [BAR CHART] 1991 51.00% 1992 18.00% 1993 22.00% 1994 -1.00% 1995 20.00% 1996 15.00% 1997 26.00% 1998 -5.00% 1999 1.00% 2000 27.00%
The annual returns referenced in the bar chart are for the calendar years ended December 31 and do not include sales charges. If sales charges were included, the annual returns would be lower than those shown. During the 10-year period shown in the bar chart for Class A shares, the highest return for a quarter was 17.81% (quarter ending 3/31/91) and the lowest return for a quarter was -18.15% (quarter ending 9/30/98). 6 AVERAGE ANNUAL TOTAL RETURNS
- ----------------------------------------------------------------------------------------------------- (FOR THE PERIODS ENDING DECEMBER 31, 2000) PAST YEAR PAST 5 YEARS PAST 10 YEARS - ----------------------------------------------------------------------------------------------------- SMALL COMPANY VALUE FUND CLASS A 19.75% 10.87% 15.80% - ----------------------------------------------------------------------------------------------------- SMALL COMPANY VALUE FUND CLASS B* 22.10% N/A N/A - ----------------------------------------------------------------------------------------------------- RUSSELL 2000** (3.02)% 10.31% 15.53% - -----------------------------------------------------------------------------------------------------
The Average Annual Total Returns for the Fund reflect the maximum applicable sales charges currently in effect. The Fund commenced offering Class C and Common Class shares on February 28, 2000 and August 1, 2000, respectively. Prior to the date of this prospectus, the Fund had not yet offered Class D shares. Therefore, the Fund does not yet have a full calendar year of performance information for these classes. * The since inception (February 28, 1996) average annual total return for Class B shares for the period ending December 31, 2000 was 11.36%. ** The Russell 2000 Index is an unmanaged index of common stock prices and is composed of the 2,000 smallest companies in the Russell 3000 Index. The Russell 3000 Index is composed of 3,000 of the largest U.S. companies by market capitalization. The returns for the Russell 2000 Index do not include any sales charges, fees or other expenses. THE CREDIT SUISSE WARBURG PINCUS STRATEGIC GROWTH FUND THE BOARD OF TRUSTEES OF THE FUND HAS APPROVED, SUBJECT TO SHAREHOLDER APPROVAL, AT A MEETING SCHEDULED FOR MARCH 23, 2001, THE TRANSFER OF ALL OF THE ASSETS AND LIABILITIES OF THE FUND IN EXCHANGE FOR SHARES OF THE WARBURG, PINCUS FOCUS FUND, INC., A SIMILAR FUND IN THE WARBURG PINCUS FAMILY OF FUNDS. SEE "RECENT DEVELOPMENTS" FOR ADDITIONAL INFORMATION. The Credit Suisse Warburg Pincus Strategic Growth Fund's investment objective is long-term growth of capital. The Fund seeks to achieve this objective by investing in equity securities of a limited number of large, carefully selected companies that the Adviser believes will achieve superior growth. The Fund intends to hold securities of approximately 50-60 companies, which may fluctuate depending on the Adviser's view of market conditions. The Fund seeks to achieve superior performance as compared to other U.S. domestic growth funds. Like any investment, an investment in the Credit Suisse Warburg Pincus Strategic Growth Fund is subject to risk, and you could lose money. While the Adviser believes that the investments it selects will experience long-term appreciation, their value could decline. Growth companies are typically characterized by higher price-to-earnings and price-to-book ratios, lower dividend yields, greater volatility, and higher historical and predicted earnings. The Fund is also subject to risks that affect equity securities markets in general, such as general economic conditions and adverse changes (generally increases) in interest rates. Because the Fund normally invests in a smaller number of securities than many other equity funds, an investment in this Fund has the risk that changes in the value of a single security may have a more significant effect, either negative or positive, on the Fund's net asset value. These and other factors could adversely affect your investment. The following chart and table illustrate the risk and the variability of the Fund's returns by showing the highest and lowest quarterly returns for the Fund's first full calendar year and how the annual returns for 1 year and from inception compare to those of the S&P 500 Barra Index, which is a broad measure of market performance. The Fund's past performance is not necessarily an indication of how it will perform in the future. CALENDAR YEAR TOTAL RETURNS [BAR CHART] 2000 -16.00%
The annual return referenced in the bar chart is for the calendar year ended December 31 and does not include sales charges. If sales charges were included, the annual return would be lower than shown. During the 1-year period shown in the bar chart for Common Class shares, the highest return for a quarter was 8.79% (quarter ending 3/31/00) and the lowest return for a quarter was -18.18% (quarter ending 12/31/00). 2000 was the first full calendar year of operations. 7 AVERAGE ANNUAL TOTAL RETURNS
- -------------------------------------------------------------------------------------------------- (FOR THE PERIODS ENDING DECEMBER 31, 2000) PAST YEAR FROM INCEPTION ON 11/18/99 - -------------------------------------------------------------------------------------------------- STRATEGIC GROWTH FUND COMMON CLASS (15.93)% (7.33)% - -------------------------------------------------------------------------------------------------- S&P 500 BARRA INDEX* (22.08)% (15.35)% - --------------------------------------------------------------------------------------------------
Common Class shares are not subject to a sales charge. Therefore, the Average Annual Total Returns for the Fund do not reflect the maximum applicable sales charges currently in effect. If sales charges were included, the annual total returns would be lower than those shown. The Fund commenced offering Class A shares, Class B shares and Class C shares on August 1, 2000. Therefore, the Fund does not have a full calendar year of performance for these shares. * The S&P 500 Barra Index is comprised of those companies within the S&P 500 Index with higher ratios of market price to book value than other companies within the S&P 500 Index. The returns for the S&P 500 Barra Index do not include any sales charges, fees or other expenses. THE CREDIT SUISSE WARBURG PINCUS TECHNOLOGY FUND The Credit Suisse Warburg Pincus Technology Fund's investment objective is growth of capital. The Fund seeks to achieve this objective by investing in a broad number of industries that comprise the U.S. domestic technology sector. Under normal market conditions, the Fund invests at least 65% of its assets in technology companies. The Fund seeks to create a blend of stocks in companies that include, but are not limited to, the computer hardware, computer software, electronics, semiconductor, semiconductor capital equipment, telecommunication equipment, telecommunication services, and internet industries. Like any investment, an investment in the Credit Suisse Warburg Pincus Technology Fund is subject to risk and you could lose money. While the Fund seeks investments that will appreciate in value, the Adviser could select securities that will decline in value and provide no income. Technology stocks, especially those of smaller, less-seasoned companies tend to be more volatile than the overall stock market. When stock prices fall, you should expect the value of your investment to fall as well, possibly to a greater extent than the decline in equity markets generally. The fact that the Fund concentrates in a single sector increases risk and volatility as compared to more diverse funds. This is because factors that affect that sector are likely to directly affect the Fund's performance, both negatively and positively. Even if the overall direction of equity prices is upward, if technology stocks are headed lower, Fund performance could be adversely affected. For example, technology companies could be hurt by such factors as market saturation, price competition, and the advent of competing technologies. The Fund is also subject to risks that affect equity securities markets in general, such as general economic conditions and adverse changes (generally increases) in interest rates. These and other factors could adversely affect your investment. The following chart and table illustrate the risk and the variability of the Fund's returns by showing the highest and lowest quarterly returns for the Fund's first full calendar year and how the annual returns for 1 year and from inception compare to those of the Chase H & Q Technology Index, which is a broad measure of market performance. The Fund's past performance is not necessarily an indication of how it will perform in the future. CALENDAR YEAR TOTAL RETURNS [BAR CHART] 2000 -29.00%
The annual returns referenced in the bar chart are for the calendar year ended December 31 and do not include sales charges. If sales charges were included, the annual returns would be lower than those shown. During the 1-year period shown in the bar chart for Common Class shares, the highest return for a quarter was 26.49% (quarter ending 3/31/00) and the lowest return for a quarter was -37.75% (quarter ending 12/31/00). 2000 was the first full calendar year of operations. 8 AVERAGE ANNUAL TOTAL RETURNS
- -------------------------------------------------------------------------------------------------- (FOR THE PERIODS ENDING DECEMBER 31, 2000) PAST YEAR FROM INCEPTION ON 11/18/99 - -------------------------------------------------------------------------------------------------- TECHNOLOGY FUND COMMON CLASS (29.00%) (10.85%) - -------------------------------------------------------------------------------------------------- CHASE HAMBRECHT & QUIST TECHNOLOGY INDEX* (35.35%) (18.07%) - --------------------------------------------------------------------------------------------------
Common Class shares are not subject to a sales charge. Therefore, the Average Annual Total Returns for the Fund do not reflect the maximum applicable sales charges currently in effect. If sales charges were included, the annual returns would be lower than those shown. The Fund commenced offering Class A shares, Class B shares, and Class C shares on August 1, 2000 and Class D shares on September 1, 2000. Therefore, the Fund does not have a full calendar year of performance for these shares. * The Chase H & Q Technology Index is comprised of a cross-section of computer hardware, computer software, communications, semiconductor, information services and internet services companies. The returns for the Chase H & Q Technology Index do not include any sales charges, fees or other expenses. CREDIT SUISSE WARBURG PINCUS INTERNATIONAL FUNDS THE CREDIT SUISSE WARBURG PINCUS DEVELOPING MARKETS FUND THE BOARD OF TRUSTEES OF THE FUND HAS APPROVED, SUBJECT TO SHAREHOLDER APPROVAL, AT A MEETING SCHEDULED FOR MARCH 23, 2001, THE TRANSFER OF ALL OF THE ASSETS AND LIABILITIES OF THE FUND IN EXCHANGE FOR SHARES OF THE WARBURG, PINCUS EMERGING MARKETS FUND, INC., A SIMILAR FUND IN THE WARBURG PINCUS FAMILY OF FUNDS. SEE "RECENT DEVELOPMENTS" FOR ADDITIONAL INFORMATION. The Credit Suisse Warburg Pincus Developing Markets Fund's investment objective is to provide long-term growth of capital by primarily investing in common stocks and other equity securities of companies from developing countries. The Fund seeks to achieve its objective by investing in securities of issuers in countries included in the Morgan Stanley Capital Index ("MSCI") Emerging Markets Free Index. The Fund's investment approach is to seek to minimize country and sector risk by maintaining country and sector neutrality, with weightings close to those of the MSCI Emerging Markets Free Index. This Fund's investment objective causes it to be riskier than other mutual funds and you could lose money. While the Fund seeks investments that provide a high level of growth of capital, they may decline in value. The Fund invests primarily in non-U.S. securities (securities of non-U.S. based issuers or issuers that do business principally outside the United States) of issuers in developing markets. Investments in non-U.S. securities present additional risks including greater price volatility and a lack of liquidity. Investments in developing markets present further risks because they tend to be smaller, less mature and less stable than investments in developed markets. The Fund is also subject to risks that affect equity securities markets in general, such as general economic conditions and adverse changes in interest and foreign exchange rates. These and other factors could adversely affect your investment. The following chart and table illustrate the risk and the variability of the Fund's returns by showing the rate of return from year to year and how annual returns for 1 and 5 years and from inception compare to those of the MSCI Emerging Markets Free Index, which is a broad measure of market performance. The Fund's past performance is not necessarily an indication of how it will perform in the future. CALENDAR YEAR TOTAL RETURNS [BAR CHART] 1996 4.00% 1997 -6.00% 1998 -22.00% 1999 69.00% 2000 -38.00%
The annual returns referenced in the bar chart are for the calendar years ended December 31 and do not include sales charges. If sales charges were included, the annual returns would be lower than those shown. During the 5-year period shown in the bar chart for Class A shares, the highest return for a quarter was 27.74% (quarter ending 12/31/99) and the lowest return for a quarter was -21.96% (quarter ending 6/30/98). 1996 was the first full calendar year of operations. 9 AVERAGE ANNUAL TOTAL RETURNS
- -------------------------------------------------------------------------------------------------------------- (FOR THE PERIODS ENDING DECEMBER 31, 2000) PAST YEAR PAST 5 YEARS FROM INCEPTION ON 9/8/95 - -------------------------------------------------------------------------------------------------------------- DEVELOPING MARKETS FUND CLASS A (41.60)% (5.47)% (5.56)% - -------------------------------------------------------------------------------------------------------------- DEVELOPING MARKETS FUND CLASS B (41.01)% (5.09)% (5.26)% - -------------------------------------------------------------------------------------------------------------- MSCI EMERGING MARKETS FREE INDEX* (30.61)% (4.17)% (4.46)% - --------------------------------------------------------------------------------------------------------------
The Average Annual Total Returns for the Fund reflect the maximum applicable sales charges currently in effect. The Fund commenced offering Class C shares and Common Class shares on February 28, 2000 and August 1, 2000, respectively. Therefore, the Fund does not yet have a full calendar year of performance information for these classes. * The MSCI Emerging Markets Free Index is an unmanaged index composed of a sample of companies representative of the market structure of developing countries worldwide. The index is the property of Morgan Stanley & Co. Incorporated. The returns for the Index do not include any sales charges, fees or other expenses. THE CREDIT SUISSE WARBURG PINCUS INTERNATIONAL EQUITY II FUND The Credit Suisse Warburg Pincus International Equity II Fund's investment objective is long-term growth of capital by investing in equity securities from established non-U.S. markets. The Fund seeks to achieve this objective by focusing on investment selection based primarily on the recommendations of CSFB International Research. The Fund invests in securities of issuers in the developed countries of Europe, Australia and the Far East ("EAFE"), using disciplined, quantitative methods in its attempt to minimize country, industry and financial risks. The Fund is country and sector neutral and will seek to maintain its weightings close to those of the MSCI EAFE Index. Like any investment, an investment in the Fund is subject to risk and you could lose money. While the Fund selects investments that the Adviser believes will appreciate in value, those securities could decline in value and provide no income. The Fund invests primarily in non-U.S. securities (securities of non-U.S. based issuers or issuers that do business principally outside the United States). Investments in non-U.S. securities present additional risks including greater price volatility and a lack of liquidity. The Fund is also subject to risks that affect equity securities markets in general, such as general economic conditions and adverse changes in interest (generally increases) and foreign exchange rates. These and other factors could adversely affect your investment. The following chart and table illustrate the risk and the variability of the Fund's returns by showing the rate of return from year to year and how annual returns for 1 year and 5 years and from inception compare to those of the MSCI-EAFE -Registered Trademark- Index, which is a broad measure of market performance. The Fund's past performance is not necessarily an indication of how it will perform in the future. CALENDAR YEAR TOTAL RETURNS [BAR CHART] 1996 6.00% 1997 7.00% 1998 18.00% 1999 28.00% 2000 -15.00%
The annual returns, referenced in the bar chart are for the calendar years ended December 31 and do not include sales charges. If sales charges were included, the annual returns would be lower than those shown. During the 5-year period shown in the bar chart for Class A shares, the highest return for a quarter was 19.76% (quarter ending 12/31/99) and the lowest return for a quarter was -15.46% (quarter ending 9/30/98). 1996 was the first full calendar year of operations. 10 AVERAGE ANNUAL TOTAL RETURNS
- ------------------------------------------------------------------------------------------------------- (FOR THE PERIODS ENDING DECEMBER 31, 2000) PAST YEAR PAST 5 YEARS SINCE INCEPTION* - ------------------------------------------------------------------------------------------------------- INTERNATIONAL EQUITY II FUND CLASS A (19.94)% 6.51% 6.38% - ------------------------------------------------------------------------------------------------------- INTERNATIONAL EQUITY II FUND CLASS B (19.00)% 6.94% 6.74% - ------------------------------------------------------------------------------------------------------- INTERNATIONAL EQUITY II FUND CLASS D** (14.84)% N/A N/A - ------------------------------------------------------------------------------------------------------- MSCI-EAFE*** (13.96)% 7.43% 8.09% - -------------------------------------------------------------------------------------------------------
The Average Annual Returns for the Fund reflect the maximum applicable sales charges. The Fund commenced offering Class C and Common Class shares on February 28, 2000 and August 1, 2000, respectively. Therefore, the Fund does not yet have a full calendar year of performance information for these classes. * Inception date of Class A and Class B shares was September 8, 1995 and Class D shares was May 13, 1999. ** The since inception (May 13, 1999) average annual total return for Class D shares for the period ending December 31, 2000 was 3.26%. *** The MSCI-EAFE -Registered Trademark- is an unmanaged index composed of a sample of companies representative of the market structure of European and Pacific Basin Countries. The index is the property of Morgan Stanley & Co. Incorporated. The returns for the Index do not include any sales charges, fees or other expenses. CREDIT SUISSE WARBURG PINCUS FIXED INCOME FUNDS THE CREDIT SUISSE WARBURG PINCUS FIXED INCOME II FUND THE BOARD OF TRUSTEES OF THE FUND HAS APPROVED, SUBJECT TO SHAREHOLDER APPROVAL, AT A MEETING SCHEDULED FOR MARCH 23, 2001, THE TRANSFER OF ALL OF THE ASSETS AND LIABILITIES OF THE FUND IN EXCHANGE FOR SHARES OF THE WARBURG PINCUS CREDIT SUISSE WARBURG PINCUS FIXED INCOME FUND, A SIMILAR FUND IN THE WARBURG PINCUS FAMILY OF FUNDS. SEE "RECENT DEVELOPMENTS" FOR ADDITIONAL INFORMATION. The Credit Suisse Warburg Pincus Fixed Income II Fund's investment objective is to 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 Fund seeks to achieve its objective by investing primarily in a diversified portfolio of high-grade intermediate-term corporate bonds and U.S. Government securities, as well as in commercial paper and obligations issued or guaranteed by national or state banks. In addition, the Adviser actively manages the maturities of the securities in the portfolio in response to the Adviser's anticipation of the movement of interest rates and relative yields. The Fund seeks to limit risk by selecting investment-grade debt securities. While the Fund seeks investments that will satisfy its investment objective, the investments could decline in value and you could lose money. Concerns about an issuer's ability to repay its borrowings or to pay interest will adversely affect the value of its securities. The Fund is subject to risks that affect the bond markets in general, such as general economic conditions and adverse changes (generally increases) in interest rates. As interest rates rise, absent other factors, bond prices and the value of your investments will fall. The Fund is also subject to the risk that, in seeking to enhance total return, the Adviser will incorrectly forecast changes in interest rates or improperly assess the value of debt securities. These and other factors could adversely affect your investment. 11 The following chart and table illustrate the risk and the variability of the Fund's returns by showing the rate of return from year to year and how annual returns for 1, 5 and 10 years compare to those of the Lehman Brothers Government/Corporate Intermediate Bond Index, which is a broad measure of market performance. The Fund's past performance is not necessarily an indication of how it will perform in the future. CALENDAR YEAR TOTAL RETURNS [BAR CHART] 1991 14.00% 1992 7.00% 1993 10.00% 1994 -4.00% 1995 15.00% 1996 3.00% 1997 8.00% 1998 8.00% 1999 -1.00% 2000 9.00%
The annual returns referenced in the bar chart are for the calendar years ended December 31 and do not include sales charges. If sales charges were included, the annual returns would be lower than those shown. During the 10-year period shown in the bar chart for Class A shares, the highest return for a quarter was 5.09% (quarter ending 12/31/91) and the lowest return for a quarter was -2.88% (quarter ending 3/31/94). AVERAGE ANNUAL TOTAL RETURNS
- ----------------------------------------------------------------------------------------------------- (FOR THE PERIODS ENDING DECEMBER 31, 2000) PAST YEAR PAST 5 YEARS PAST 10 YEARS - ----------------------------------------------------------------------------------------------------- FIXED INCOME II FUND CLASS A 3.70% 4.08% 6.18% - ----------------------------------------------------------------------------------------------------- FIXED INCOME II FUND CLASS B* 4.14% N/A N/A - ----------------------------------------------------------------------------------------------------- FIXED INCOME II FUND CLASS D** 9.22% N/A N/A - ----------------------------------------------------------------------------------------------------- LEHMAN INDEX*** 10.12% 6.11% 7.36% - -----------------------------------------------------------------------------------------------------
The Average Annual Total Returns for the Fund reflect the maximum applicable sales charges currently in effect. The Fund commenced offering Class C and Common Class shares on February 28, 2000 and August 1, 2000, respectively. Therefore, the Fund does not yet have a full calendar year of performance information for these classes. * The since inception (February 28, 1996) average annual total return for Class B shares for the period ending December 31, 2000 was 4.67%. ** The since inception (April 30, 1999) average annual total return for Class D shares for the period ending December 31, 2000 was 5.37%. *** The Lehman Brothers Government/Corporate Intermediate Bond Index is comprised of securities in the Lehman Brothers Government/Corporate Bond Index that have maturities of 5-10 years. The Lehman Brothers Government/Corporate Bond Index includes the Lehman Brothers Government Bond Index and the Lehman Brothers Corporate Bond Index and does not include sales charges, fees or expenses in its calculation. THE CREDIT SUISSE WARBURG PINCUS MUNICIPAL TRUST FUND THE BOARD OF TRUSTEES OF THE FUND HAS APPROVED, SUBJECT TO SHAREHOLDER APPROVAL, AT A MEETING SCHEDULED FOR MARCH 23, 2001, THE TRANSFER OF ALL OF THE ASSETS AND LIABILITIES OF THE FUND IN EXCHANGE FOR SHARES OF THE WARBURG, PINCUS MUNICIPAL BOND FUND, INC., A SIMILAR FUND IN THE WARBURG PINCUS FAMILY OF FUNDS. SEE "RECENT DEVELOPMENTS" FOR ADDITIONAL INFORMATION. The Credit Suisse Warburg Pincus Municipal Trust Fund's investment objective is to provide as high a level of total return as is consistent with capital preservation by investing principally in high-grade tax-exempt municipal securities. By high-grade tax-exempt municipal securities, we mean securities rated Aaa, Aa, A or MIG-1 by Moody's or AAA, AA, A or SP-1 by S&P. It is important to note that unlike most other municipal bond funds, the Fund's objective is not to provide current income that is exempt from federal and/or state income tax. The Fund seeks to achieve its objective by investing primarily in a diversified portfolio of high-grade, intermediate-term municipal securities. In addition, the Adviser actively manages the maturities of the securities in the portfolio in response to the Adviser's anticipation of the movement of interest rates and relative yields. Certain investments are selected that the Adviser believes are undervalued. The Fund attempts to limit risk by selecting investment-grade debt securities and by maintaining an average maturity of between five and ten years. 12 While the Fund seeks investments that will satisfy its investment objective, these investments could decline in value and you could lose money. Concerns about an issuer's ability to repay its borrowings or to pay interest will adversely affect the value of its securities. The Fund is also subject to the risk that, in seeking to enhance total return, the Adviser will incorrectly forecast changes in interest rates or improperly assess the value of municipal securities. Like all bond funds, this Fund is subject to risks that affect the bond markets in general, such as general economic conditions and adverse changes (generally increases) in interest rates. As interest rates rise, absent other factors, bond prices and the value of your investment will fall. The Fund is also subject to risks of investing in municipal securities. These risks include uncertainties regarding the securities' tax status, political and legislative changes and the rights of their holders. These and other factors could adversely affect your investment. The following chart and table illustrate the risk and the variability of the Fund's returns by showing the rate of return from year to year and how annual returns for 1 and 5 years and from inception compare to those of The Lehman Brothers Seven Year Municipal Bond Index, which is a broad measure of market performance. The Fund's past performance is not necessarily an indication of how it will perform in the future. CALENDAR YEAR TOTAL RETURNS [BAR CHART] 1994 -3.00% 1995 12.00% 1996 4.00% 1997 8.00% 1998 5.00% 1999 -1.00% 2000 7.00%
The annual returns referenced in the bar chart are for the calendar years ended December 31 and do not include sales charges. If sales charges were included, the annual returns would be lower than those shown. During the 7-year period shown in the bar chart for Class A shares, the highest return for a quarter was 4.52% (quarter ending 3/31/95) and the lowest return for a quarter was -4.18% (quarter ending 3/31/94). 1994 was the first full calendar year of operations. AVERAGE ANNUAL TOTAL RETURNS
- --------------------------------------------------------------------------------------------------------------- (FOR THE PERIODS ENDING DECEMBER 31, 2000) PAST YEAR PAST 5 YEARS FROM INCEPTION ON 7/28/93 - --------------------------------------------------------------------------------------------------------------- MUNICIPAL TRUST FUND CLASS A 2.23% 3.45% 3.77% - --------------------------------------------------------------------------------------------------------------- MUNICIPAL TRUST FUND CLASS B* 2.50% N/A N/A - --------------------------------------------------------------------------------------------------------------- LBSYMBI** 9.07% 5.40% 5.65%*** - ---------------------------------------------------------------------------------------------------------------
The Average Annual Total Returns for the Fund reflect the maximum applicable sales charges currently in effect. The Fund commenced offering Class C and Common Class shares on February 28, 2000 and August 1, 2000, respectively. Therefore, the Fund does not yet have a full calendar year of performance information for these classes. * The since inception (February 28, 1996) average annual total return for Class B shares for the period ending December 31, 2000 was 3.76%. ** The Lehman Brothers Seven Year Municipal Bond Index ("LBSYMBI") is comprised of municipal securities having an average approximate maturity of seven years and does not include sales charges, fees or expenses in its calculation. *** For comparative purposes the value of the index on 7/31/93 is used for the beginning value on 7/28/93. THE CREDIT SUISSE WARBURG PINCUS HIGH INCOME FUND The Credit Suisse Warburg Pincus High Income Fund's primary investment objective is to provide a high level of current income and a secondary objective is capital appreciation. The Fund seeks to achieve its objective by investing in fixed income securities of U.S. issuers that are rated below investment-grade quality or unrated fixed income securities deemed to be of comparable quality. Lower grade fixed income securities are commonly known as "junk bonds." This investment objective causes it to be riskier than other mutual funds and you could lose money. Investments in lower grade securities are subject to special risks, including greater price volatility and a greater risk of loss of principal and non-payment of interest. The market value of longer maturity debt securities, like those held 13 by the Fund, is more sensitive to interest rate changes than the market value of shorter maturity debt securities. The Fund is not recommended for investors whose principal objectives are assured income or capital preservation. This Fund is designed for investors willing to assume additional risk in return primarily for the potential for high current income and secondarily capital appreciation. The following chart and table illustrate the risk and the variability of the Fund's returns by showing the highest and lowest quarterly returns for the Fund's first full calendar year and how the annual returns for 1 year and from inception compare to those of Lipper Open-End High Yield Bond Fund Index, which is a broad measure of market performance. The Fund's past performance is not necessarily an indication of how it will perform in the future. CALENDAR YEAR TOTAL RETURNS [BAR CHART] 2000 -5.00%
The annual returns referenced in the bar chart are for the calendar year ended December 31 and do not include sales charges. If sales charges were included, the annual returns would be lower than those shown. During the 1-year period shown in the bar chart for Class A shares, the highest return for a quarter was 2.89% (quarter ending 12/31/99) and the lowest return for a quarter was -4.17% (quarter ending 12/31/00). 2000 was the first full calendar year of operations. AVERAGE ANNUAL TOTAL RETURNS
- ------------------------------------------------------------------------------------------- (FOR THE PERIODS ENDING DECEMBER 31, 2000) PAST YEAR SINCE INCEPTION* - ------------------------------------------------------------------------------------------- HIGH INCOME FUND CLASS A (9.20)% (2.48)% - ------------------------------------------------------------------------------------------- HIGH INCOME FUND CLASS B (8.90)% (2.03)% - ------------------------------------------------------------------------------------------- HIGH INCOME FUND CLASS D** (4.40)% (2.04)% - ------------------------------------------------------------------------------------------- LIPPER OPEN-END HIGH YIELD BOND FUND INDEX*** (9.71)% (3.91)% - -------------------------------------------------------------------------------------------
The Average Annual Total Returns for the Fund reflect the maximum applicable sales charges currently in effect. The Fund commenced offering Class C and Common Class shares on February 28, 2000 and August 1, 2000, respectively. Therefore, the Fund does not yet have a full calendar year of performance for these classes. * Inception for Class A and Class B shares on March 8, 1999 and Class D shares on May 13, 1999. ** The since inception (May 13, 1999) average annual total return for Class D shares for the period ending December 31, 2000 was -2.04%. *** The Lipper Open-End High Yield Bond Fund Index is comprised of open-end mutual funds that invest primarily in high yield debt securities. The Index does not include sales charges, fees or expenses in its calculation. THE CREDIT SUISSE WARBURG PINCUS MUNICIPAL MONEY FUND The Credit Suisse Warburg Pincus Municipal Money Fund's investment objective is maximum current income, consistent with liquidity and safety of principal, that is exempt from Federal income taxation to the extent described herein. The Fund seeks to achieve this objective by investing in municipal securities. The Fund earns income at current money market rates, and its yield generally reflects short-term interest rates which vary from day to day. Such municipal securities will have varying lengths of maturities but will generally have remaining maturities of one year or less. In general, securities with longer maturities are more vulnerable to price changes, although they may provide higher yields. Like any money market fund investment, this investment is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. The Fund seeks to preserve the value of your investment at $1.00 per share, however, it is possible to lose money by investing in the Fund. Because this Fund began operations in February, 1997, the first full calendar year of performance was 1998. The Fund's past performance is not necessarily an indication of how it will perform in the future. 14 CALENDAR YEAR TOTAL RETURNS [BAR CHART] 1998 3.00% 1999 2.00% 2000 3.00%
During the 3-year period shown in the bar chart, the highest return for a quarter was 0.90% (quarter ending 12/31/00) and the lowest return for a quarter was 0.52% (quarter ending 3/31/99). The annual returns are for the calendar years ended December 31. AVERAGE ANNUAL TOTAL RETURNS
- ------------------------------------------------------------------------------------------------- (FOR THE PERIODS ENDING DECEMBER 31, 2000) PAST YEAR FROM INCEPTION ON 2/24/97 - ------------------------------------------------------------------------------------------------- MUNICIPAL MONEY FUND 3.35% 2.84% - -------------------------------------------------------------------------------------------------
Seven Day Yield as of December 31, 2000 was 3.81%. THE CREDIT SUISSE WARBURG PINCUS U.S. GOVERNMENT MONEY FUND The Credit Suisse Warburg Pincus U.S. Government Money Fund's investment objective is maximum current income, consistent with liquidity and safety of principal. The Fund seeks to achieve its objective by investing in a portfolio of U.S. Government securities, including issues of the U.S. Treasury and other government agencies, which generally have remaining maturities of one year or less and collateralized repurchase agreements. Like any money market fund investment, this investment is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. The Fund seeks to preserve the value of your investment at $1.00 per share, however, it is possible to lose money by investing in the Fund. The Fund earns income at current market rates, and its yield generally reflects short-term interest rates, which vary from day to day. Because this Fund began operations in February 1997, the first full calendar year of performance was 1998. The Fund's past performance is not necessarily an indication of how it will perform in the future. CALENDAR YEAR TOTAL RETURNS [BAR CHART] 1998 5.00% 1999 4.00% 2000 6.00%
During the 3 year period shown in the bar chart, the highest return for a quarter was 1.44% (quarter ending 9/30/00) and the lowest return for a quarter was 1.00% (quarter ending 3/31/99). The annual returns are for the calendar years ended December 31. AVERAGE ANNUAL TOTAL RETURNS
- ------------------------------------------------------------------------------------------------- (FOR THE PERIODS ENDING DECEMBER 31, 2000) PAST YEAR FROM INCEPTION ON 2/24/97 - ------------------------------------------------------------------------------------------------- U.S. GOVERNMENT MONEY FUND 5.55% 4.85% - -------------------------------------------------------------------------------------------------
Seven Day Yield as of December 31, 2000 was 5.54%. 15 SUMMARY OF CREDIT SUISSE WARBURG PINCUS FUND EXPENSES SHAREHOLDER TRANSACTION EXPENSES This table describes the fees and expenses that you may pay if you buy and hold shares of the Credit Suisse Warburg Pincus Funds.
- -------------------------------------------------------------------------------------------------------------------------- EQUITY FUNDS* - -------------------------------------------------------------------------------------------------------------------------- SHAREHOLDER FEES: COMMON ADVISOR (THESE FEES ARE PAID DIRECTLY FROM YOUR INVESTMENT.) CLASS A(1) CLASS B(2) CLASS C CLASS D CLASS CLASS - -------------------------------------------------------------------------------------------------------------------------- Maximum sales charge (load) imposed on purchases (as a percentage of offering price) 5.75% NONE NONE NONE NONE NONE - -------------------------------------------------------------------------------------------------------------------------- Maximum sales charge (load) imposed on reinvested dividends (as a percentage of offering price) NONE NONE NONE NONE NONE NONE - -------------------------------------------------------------------------------------------------------------------------- Maximum deferred sales charge (load) (as a percentage of original purchase price or redemption proceeds, as applicable) NONE 4%(3) 1%(4) NONE NONE NONE - -------------------------------------------------------------------------------------------------------------------------- Redemption Fees NONE NONE NONE NONE NONE NONE - -------------------------------------------------------------------------------------------------------------------------- Exchange Fee NONE NONE NONE NONE NONE NONE - --------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------- MONEY FIXED INCOME FUNDS** FUNDS*** - -------------------------------------------------------------------------------------------------------------------------- SHAREHOLDER FEES: COMMON (THESE FEES ARE PAID DIRECTLY FROM YOUR INVESTMENT.) CLASS A(1) CLASS B(2) CLASS C CLASS D CLASS - -------------------------------------------------------------------------------------------------------------------------- Maximum sales charge (load) imposed on purchases (as a percentage of offering price) 4.75% NONE NONE NONE NONE NONE - -------------------------------------------------------------------------------------------------------------------------- Maximum sales charge (load) imposed on reinvested dividends (as a percentage of offering price) NONE NONE NONE NONE NONE NONE - -------------------------------------------------------------------------------------------------------------------------- Maximum deferred sales charge (load) (as a percentage of original purchase price or redemption proceeds, as applicable) NONE 4%(3) 1%(4) NONE NONE NONE - -------------------------------------------------------------------------------------------------------------------------- Redemption Fees NONE NONE NONE NONE NONE NONE - -------------------------------------------------------------------------------------------------------------------------- Exchange Fee NONE NONE NONE NONE NONE NONE - --------------------------------------------------------------------------------------------------------------------------
* Includes the Credit Suisse Warburg Pincus Blue Chip Fund, the Credit Suisse Warburg Pincus Value Fund, the Credit Suisse Warburg Pincus Small Company Value Fund, the Credit Suisse Warburg Pincus Strategic Growth Fund, the Credit Suisse Warburg Pincus Technology Fund, the Credit Suisse Warburg Pincus Developing Markets Fund and the Credit Suisse Warburg Pincus International Equity II Fund. ** Includes the Credit Suisse Warburg Pincus Fixed Income II Fund, the Credit Suisse Warburg Pincus Municipal Trust Fund and the Credit Suisse Warburg Pincus High Income Fund. *** Includes the Credit Suisse Warburg Pincus Municipal Money Fund and the Credit Suisse Warburg Pincus U.S. Government Money Fund. (1) The maximum sales charge imposed is reduced for larger purchases. Purchases of $1,000,000 or more are not subject to an initial sales charge but may be subject to a 1% CDSC (Contingent Deferred Sales Charge) on redemptions made within one year of purchase. See "Other Shareholder Information." (2) Class B shares of each Fund automatically convert to Class A shares after eight years. The effect of the automatic conversion feature is reflected in the Examples that follow. See "Other Shareholder Information." (3) 4% during the first year decreasing 1% annually to 0% after the fourth year. (4) 1% during the first year. 16 ANNUAL FUND OPERATING EXPENSES These examples help you compare the cost of investing in the Funds with the cost of investing in other mutual funds. They assume that you invest $10,000 in the applicable Fund for the periods indicated and then sell all of your shares at the end of those periods. The examples also assume that your investment has a 5% return each year and that the Fund's operating expenses remain the same. For each Fund that has Waived Fees, as explained in the footnotes below, the After 1 Year Examples and the first year in each of the other Examples reflect the Waived Fees. For the Credit Suisse Warburg Pincus Strategic Growth Fund and the Credit Suisse Warburg Pincus Technology Fund, the Waived Fees are also reflected in the 3, 5 and 10 Year Examples through the period ended October 31, 2002. Although your actual costs may be higher or lower, based on these assumptions your costs would be: ANNUAL FUND OPERATING EXPENSES (EXPENSES THAT ARE DEDUCTED FROM FUND ASSETS -- REFLECTING CURRENT FEES)*
- --------------------------------------------------------------------------------------------------------------------------- CREDIT SUISSE WARBURG PINCUS COMMON BLUE CHIP FUND CLASS A CLASS B CLASS C CLASS D CLASS - --------------------------------------------------------------------------------------------------------------------------- Management Fee .61% .61% .61% .61% .61% Distribution (12b-1) and Service Fees(a) .25% 1.00% 1.00% .00% .25% Other Expenses .37% .37% .37% .37% .37% - --------------------------------------------------------------------------------------------------------------------------- TOTAL ANNUAL FUND OPERATING EXPENSES 1.23% 1.98% 1.98% .98% 1.23% - --------------------------------------------------------------------------------------------------------------------------- CREDIT SUISSE WARBURG PINCUS COMMON ADVISOR VALUE FUND CLASS A CLASS B CLASS C CLASS D CLASS CLASS - --------------------------------------------------------------------------------------------------------------------------- Management Fee .58% .58% .58% .58% .58% .58% Distribution (12b-1) and Service Fees(a) .25% 1.00% 1.00% .00% .25% .50%(b) Other Expenses .35% .35% .35% .35% .35% .35% - --------------------------------------------------------------------------------------------------------------------------- TOTAL ANNUAL FUND OPERATING EXPENSES 1.18% 1.93% 1.93% .93% 1.18% 1.43% - --------------------------------------------------------------------------------------------------------------------------- CREDIT SUISSE WARBURG PINCUS COMMON SMALL COMPANY VALUE FUND CLASS A CLASS B CLASS C CLASS D CLASS - --------------------------------------------------------------------------------------------------------------------------- Management Fee .81% .81% .81% .81% .81% Distribution (12b-1) and Service Fees(a) .25% 1.00% 1.00% .00% .25% Other Expenses .42% .42% .42% .42% .42% - --------------------------------------------------------------------------------------------------------------------------- TOTAL ANNUAL FUND OPERATING EXPENSES 1.48% 2.23% 2.23% 1.23% 1.48% - --------------------------------------------------------------------------------------------------------------------------- CREDIT SUISSE WARBURG PINCUS COMMON STRATEGIC GROWTH FUND CLASS A CLASS B CLASS C CLASS - --------------------------------------------------------------------------------------------------------------------------- Management Fee .75% .75% .75% .75% Distribution (12b-1) and Service Fees(a) .25% 1.00% 1.00% .25% Other Expenses 1.42% 1.42% 1.42% 1.42% - --------------------------------------------------------------------------------------------------------------------------- TOTAL ANNUAL FUND OPERATING EXPENSES 2.42% 3.17% 3.17% 2.42% - --------------------------------------------------------------------------------------------------------------------------- Waived Fees(c) (1.23)% (1.23)% (1.23)% (1.23)% - --------------------------------------------------------------------------------------------------------------------------- TOTAL EXPENSES LESS WAIVED FEES 1.19% 1.94% 1.94% 1.19% - --------------------------------------------------------------------------------------------------------------------------- CREDIT SUISSE WARBURG PINCUS COMMON TECHNOLOGY FUND CLASS A CLASS B CLASS C CLASS D CLASS - --------------------------------------------------------------------------------------------------------------------------- Management Fee .88% .88% .88% .88% .88% Distribution (12b-1) and Service Fees(a) .25% 1.00% 1.00% .00% .25% Other Expenses 1.03% 1.03% 1.03% 1.03% 1.03% TOTAL ANNUAL FUND OPERATING EXPENSES 2.16% 2.91% 2.91% 1.91% 2.16% Waived Fees(d) (.77)% (.77)% (.77)% (.77)% (.77)% - --------------------------------------------------------------------------------------------------------------------------- TOTAL EXPENSES LESS WAIVED FEES 1.39% 2.14% 2.14% 1.14% 1.39% - ---------------------------------------------------------------------------------------------------------------------------
17
- --------------------------------------------------------------------------------------------------------------------------- CREDIT SUISSE WARBURG PINCUS COMMON DEVELOPING MARKETS FUND(e) CLASS A CLASS B CLASS C CLASS - --------------------------------------------------------------------------------------------------------------------------- Management Fee 1.25% 1.25% 1.25% 1.25% Distribution (12b-1) and Service Fees(a) .25% 1.00% 1.00% .25% Other Expenses 1.31% 1.31% 1.31% 1.31% - --------------------------------------------------------------------------------------------------------------------------- TOTAL ANNUAL FUND OPERATING EXPENSES 2.81% 3.56% 3.56% 2.81% - --------------------------------------------------------------------------------------------------------------------------- Waived Fees(f) (.66)% (.66)% (.66)% (.66)% - --------------------------------------------------------------------------------------------------------------------------- TOTAL EXPENSES LESS WAIVED FEES 2.15% 2.90% 2.90% 2.15% - --------------------------------------------------------------------------------------------------------------------------- CREDIT SUISSE WARBURG PINCUS COMMON INTERNATIONAL EQUITY II FUND(e) CLASS A CLASS B CLASS C CLASS D CLASS - --------------------------------------------------------------------------------------------------------------------------- Management Fee 1.00% 1.00% 1.00% 1.00% 1.00% Distribution (12b-1) and Service Fees(a) .25% 1.00% 1.00% .00% .25% Other Expenses .61% .61% .61% .61% .61% - --------------------------------------------------------------------------------------------------------------------------- TOTAL ANNUAL FUND OPERATING EXPENSES 1.86% 2.61% 2.61% 1.61% 1.86% - --------------------------------------------------------------------------------------------------------------------------- CREDIT SUISSE WARBURG PINCUS COMMON FIXED INCOME II FUND CLASS A CLASS B CLASS C CLASS D CLASS - --------------------------------------------------------------------------------------------------------------------------- Management Fee .59% .59% .59% .59% .59% Distribution (12b-1) and Service Fees(a) .25% 1.00% 1.00% .00% .25% Other Expenses .36% .36% .36% .36% .36% - --------------------------------------------------------------------------------------------------------------------------- TOTAL ANNUAL FUND OPERATING EXPENSES 1.20% 1.95% 1.95% .95% 1.20% - --------------------------------------------------------------------------------------------------------------------------- Waived Fees(g) (.25)% (.25)% (.25)% (.25)% (.25)% - --------------------------------------------------------------------------------------------------------------------------- TOTAL EXPENSES LESS WAIVED FEES .95% 1.70% 1.70% .70% .95% - --------------------------------------------------------------------------------------------------------------------------- CREDIT SUISSE WARBURG PINCUS COMMON MUNICIPAL TRUST FUND CLASS A CLASS B CLASS C CLASS - --------------------------------------------------------------------------------------------------------------------------- Management Fee .63% .63% .63% .63% - --------------------------------------------------------------------------------------------------------------------------- Distribution (12b-1) and Service Fees(a) .25% 1.00% 1.00% .25% Other Expenses .59% .59% .59% .59% TOTAL ANNUAL FUND OPERATING EXPENSES 1.47% 2.22% 2.22% 1.47% Waived Fees(h) (.52)% (.52)% (.52)% (.52)% - --------------------------------------------------------------------------------------------------------------------------- TOTAL EXPENSES LESS WAIVED FEES .95% 1.70% 1.70% .95% - --------------------------------------------------------------------------------------------------------------------------- CREDIT SUISSE WARBURG PINCUS COMMON HIGH INCOME FUND CLASS A CLASS B CLASS C CLASS D CLASS - --------------------------------------------------------------------------------------------------------------------------- Management Fee .70% .70% .70% .70% .70% - --------------------------------------------------------------------------------------------------------------------------- Distribution (12b-1) and Service Fees(a) .25% 1.00% 1.00% .00% .25% Other Expenses 1.53% 1.53% 1.53% 1.53% 1.53% TOTAL ANNUAL FUND OPERATING EXPENSES 2.48% 3.23% 3.23% 2.23% 2.48% Waived Fees(i) (1.38)% (1.38)% (1.38)% (1.38)% (1.38)% - --------------------------------------------------------------------------------------------------------------------------- TOTAL EXPENSES LESS WAIVED FEES 1.10% 1.85% 1.85% .85% 1.10% - --------------------------------------------------------------------------------------------------------------------------- - --------------------------------------------------------------------------------------------------------------------------- CREDIT SUISSE WARBURG PINCUS CREDIT SUISSE WARBURG PINCUS MUNICIPAL MONEY FUND U.S. GOVERNMENT MONEY FUND - --------------------------------------------------------------------------------------------------------------------------- Management Fee .40% Management Fee .40% Distribution (12b-1) and Service Fees(a,j) .25% Distribution (12b-1) and Service Fees(a,j) .25% Other Expenses .46% Other Expenses .46% TOTAL ANNUAL FUND OPERATING EXPENSES 1.11% TOTAL ANNUAL FUND OPERATING EXPENSES 1.11% Waived Fees(k) (.21)% Waived Fees(l) (.21)% TOTAL EXPENSES LESS WAIVED FEES .90% TOTAL EXPENSES LESS WAIVED FEES .90%
18 EXAMPLES+
- ------------------------------------------------------------------------------------------------------------------------------------ CREDIT SUISSE WARBURG PINCUS COMMON COMMON BLUE CHIP FUND CLASS A CLASS B** CLASS B*** CLASS C** CLASS C*** CLASS D CLASS - ------------------------------------------------------------------------------------------------------------------------------------ 1 Year $ 693 $ 601 $ 201 $ 301 $ 201 $ 100 $ 125 3 Years 943 821 621 621 621 312 390 5 Years 1,212 1,068 1,068 1,068 1,068 542 676 10 Years 1,978 2,113 2,113 2,306 2,306 1,201 1,489 - ------------------------------------------------------------------------------------------------------------------------------------ CREDIT SUISSE WARBURG PINCUS COMMON ADVISOR VALUE FUND CLASS A CLASS B** CLASS B*** CLASS C** CLASS C*** CLASS D CLASS CLASS - ------------------------------------------------------------------------------------------------------------------------------------ 1 Year 688 596 196 296 196 95 120 146 3 Years 928 806 606 606 606 296 375 452 5 Years 1,187 1,042 1,042 1,042 1,042 515 649 782 10 Years 1,924 2,059 2,059 2,254 2,254 1,143 1,432 1,713 - ------------------------------------------------------------------------------------------------------------------------------------ CREDIT SUISSE WARBURG PINCUS COMMON SMALL COMPANY VALUE FUND CLASS A CLASS B** CLASS B*** CLASS C** CLASS C*** CLASS D CLASS - ------------------------------------------------------------------------------------------------------------------------------------ 1 Year 717 626 226 326 226 125 151 3 Years 1,016 897 697 697 697 390 468 5 Years 1,336 1,195 1,195 1,195 1,195 676 808 10 Years 2,242 2,376 2,376 2,565 2,565 1,489 1,768 - ------------------------------------------------------------------------------------------------------------------------------------ CREDIT SUISSE WARBURG PINCUS COMMON STRATEGIC GROWTH FUND CLASS A CLASS B** CLASS B*** CLASS C** CLASS C*** CLASS - ------------------------------------------------------------------------------------------------------------------------------------ 1 Year 689 597 197 297 197 121 3 Years 1,057 940 740 740 740 511 5 Years 1,574 1,438 1,438 1,438 1,438 1,060 10 Years 2,989 3,122 3,122 3,299 3,299 2,561 - ------------------------------------------------------------------------------------------------------------------------------------ CREDIT SUISSE WARBURG PINCUS COMMON TECHNOLOGY FUND CLASS A CLASS B** CLASS B*** CLASS C** CLASS C*** CLASS D CLASS - ------------------------------------------------------------------------------------------------------------------------------------ 1 Year 708 617 217 317 217 116 142 3 Years 1,068 951 751 751 751 446 523 5 Years 1,531 1,393 1,393 1,393 1,393 884 1,014 10 Years 2,806 2,939 2,939 3,119 3,119 2,103 2,367 - ------------------------------------------------------------------------------------------------------------------------------------ CREDIT SUISSE WARBURG PINCUS COMMON DEVELOPING MARKETS FUND CLASS A CLASS B** CLASS B*** CLASS C** CLASS C*** CLASS - ------------------------------------------------------------------------------------------------------------------------------------ 1 Year 781 693 293 393 293 218 3 Years 1,337 1,231 1,031 1,031 1,031 809 5 Years 1,919 1,789 1,789 1,789 1,789 1,426 10 Years 3,487 3,617 3,617 3,784 3,784 3,090 - ------------------------------------------------------------------------------------------------------------------------------------ CREDIT SUISSE WARBURG PINCUS COMMON INTERNATIONAL EQUITY II FUND CLASS A CLASS B** CLASS B*** CLASS C** CLASS C*** CLASS D CLASS - ------------------------------------------------------------------------------------------------------------------------------------ 1 Year 753 664 264 364 264 164 189 3 Years 1,126 1,011 811 811 811 508 585 5 Years 1,523 1,385 1,385 1,385 1,385 876 1,006 10 Years 2,629 2,762 2,762 2,944 2,944 1,911 2,180 - ------------------------------------------------------------------------------------------------------------------------------------ CREDIT SUISSE WARBURG PINCUS COMMON FIXED INCOME II FUND CLASS A CLASS B** CLASS B*** CLASS C** CLASS C*** CLASS D CLASS - ------------------------------------------------------------------------------------------------------------------------------------ 1 Year 567 573 173 273 173 72 97 3 Years 814 788 588 588 588 278 356 5 Years 1,080 1,029 1,029 1,029 1,029 501 636 10 Years 1,839 2,060 2,060 2,255 2,255 1,144 1,432 - ---------------------------------------------------------------------------------------------------------------------------
19
- --------------------------------------------------------------------------------------------------------------------------- CREDIT SUISSE WARBURG PINCUS COMMON MUNICIPAL TRUST FUND CLASS A CLASS B** CLASS B*** CLASS C** CLASS C*** CLASS - --------------------------------------------------------------------------------------------------------------------------- 1 Year 567 573 173 273 173 97 3 Years 869 844 644 644 644 414 5 Years 1,193 1,142 1,142 1,142 1,142 753 10 Years 2,106 2,324 2,324 2,514 2,514 1,713 - --------------------------------------------------------------------------------------------------------------------------- CREDIT SUISSE WARBURG PINCUS COMMON HIGH INCOME FUND CLASS A CLASS B** CLASS B*** CLASS C** CLASS C*** CLASS D CLASS - --------------------------------------------------------------------------------------------------------------------------- 1 Year 582 588 188 288 188 87 112 3 Years 1,085 1,066 866 866 866 564 641 5 Years 1,614 1,569 1,569 1,569 1,569 1,069 1,196 10 Years 3,058 3,263 3,263 3,436 3,436 2,457 2,712 - --------------------------------------------------------------------------------------------------------------------------- CREDIT SUISSE WARBURG PINCUS CREDIT SUISSE WARBURG PINCUS MUNICIPAL MONEY FUND++ U.S. GOVERNMENT MONEY FUND++ - --------------------------------------------------------------------------------------------------------------------------- 1 Year 92 1 Year 92 3 Years 332 3 Years 332 5 Years 591 5 Years 591 10 Years 1,333 10 Years 1,333
* Effective February 1, 2001, Credit Suisse Asset Management Securities, Inc. ("CSAMSI") and PFPC, Inc. ("PFPC") began providing administrative services. Administrative services previously were provided by DLJAM and CSAM without charge to the Funds (although DLJAM, and then CSAM, were entitled to reimbursement from the Credit Suisse Warburg Pincus Opportunity Funds and the Credit Suisse Warburg Pincus Select Funds). Although these services are now provided for a total rate not to exceed .18% of average daily net assets, if the new investment advisory agreement is approved, CSAM will limit average annual expenses from the date of the acquisition of DLJ, November 3, 2000, until November 3, 2002 to the annualized levels previously paid by each Fund measured over the 60-day period ended on November 3, 2000. As a result, it is not anticipated that there will be any increase in the average annualized operating expense ratio of any of the Funds through November 3, 2002 due to the retention of new co-administrators. This limit is not reflected in the fee tables and examples above. PFPC continues to provide accounting services, but no longer pursuant to a separate agreement. ** Assumes reinvestment of all dividends and redemption at end of period. *** Assumes reinvestment of all dividends and no redemption at end of period. + Ten year figures assume conversion of Class B shares to Class A shares at the end of the eighth year following the date of purchase. ++ Shares purchased directly into a Money Fund will not be subject to a CDSC and therefore expenses paid will remain unaffected by redemption. (a) The Fund has adopted a Rule 12b-1 plan for the indicated classes of shares that allows the Fund to pay distribution fees for the sale and distribution of those classes of shares out of the assets applicable to those classes. Because these fees are paid out over time, they will increase the cost of your investment and may cost you more than paying other types of sales charges. A portion of the 12b-1 fee represents an asset-based sales charge. (b) The maximum amount payable for distributing these shares is .75 of 1% of the average daily net assets attributable to this Class. The Board of Trustees is currently limiting the amount payable to .50 of 1% of the average daily net assets attributable to the Class. (c) The Adviser has undertaken, in writing, to limit Total Expenses of the Credit Suisse Warburg Pincus Strategic Growth Fund to 1.19% for the Fund's Class A and Common Class shares and 1.94% for the Fund's Class B and Class C shares. This arrangement will remain in place at least until October 31, 2002. (d) The Adviser has undertaken, in writing, to limit Total Expenses of the Credit Suisse Warburg Pincus Technology Fund to 1.14% per year for the Fund's Class D shares, 1.39% per year for the Fund's Class A and Common Class shares, and 2.14% for the Fund's Class B and Class C shares. This arrangement will remain in place at least until October 31, 2002. 20 (e) The expense ratios for each class of shares of the Credit Suisse Warburg Pincus Developing Markets Fund and the Credit Suisse Warburg Pincus International Equity II Fund are higher than those paid by most other investment companies, but Credit Suisse Asset Management, LLC (as Adviser) believes that the fees are comparable to those paid by investment companies of similar investment orientation. On November 1, 2000, following the termination of the sub-adviser to the International Equity II Fund, the investment advisory fee was reduced to 1% of the average annual net assets of the Fund. (f) The Adviser has undertaken, in writing, to limit Total Expenses of the Credit Suisse Warburg Pincus Developing Markets Fund to 2.15% per year for the Fund's Class A and Common Class shares and 2.90% for the Fund's Class B and Class C shares. This arrangement will remain in place at least until October 31, 2001. (g) The Adviser has undertaken, in writing, to limit Total Expenses of the Credit Suisse Warburg Pincus Fixed Income II Fund to .70% for the Fund's Class D shares, to .95% for the Fund's Class A and Common Class shares and to 1.70% for the Fund's Class B and Class C shares. This arrangement will remain in place at least until October 31, 2001. (h) The Adviser has undertaken, in writing, to limit Total Expenses of the Credit Suisse Warburg Pincus Municipal Trust Fund to .95% per year for the Fund's Class A and Common Class shares and to 1.70% for the Fund's Class B and Class C shares. This arrangement will remain in place at least until October 31, 2001. (i) The Adviser has undertaken, in writing, to limit Total Expenses of the Credit Suisse Warburg Pincus High Income Fund to .85% per year for the Fund's Class D shares and 1.10% for the Fund's Class A shares and Common Class shares, and 1.85% for the Fund's Class B and Class C shares. This arrangement will remain in place at least until October 31, 2001. (j) The maximum allowable amount payable for distributing these shares is .40 of 1% of the average daily net assets of each Money Fund. The Board of Trustees has currently limited the amount payable to .25 of 1% of the average daily net assets of each Money Fund. (k) The Adviser has undertaken, in writing, to limit Total Expenses of the Credit Suisse Warburg Pincus Municipal Money Fund to .90% per year. This arrangement will remain in place at least until October 31, 2001. (l) The Adviser has undertaken, in writing, to limit Total Expenses of the Credit Suisse Warburg Pincus U.S. Government Money Fund to .90% per year. This arrangement will remain in place at least until October 31, 2001. 21 RECENT DEVELOPMENTS The names of the DLJ Focus Funds, the DLJ Opportunity Funds and the DLJ Select Funds have changed to the Credit Suisse Warburg Pincus Capital Funds, the Credit Suisse Warburg Pincus Opportunity Funds and the Credit Suisse Warburg Pincus Select Funds, respectively. The names of each Fund have also changed, as indicated on the front page of this Prospectus. The consummation of the previously announced acquisition of Donaldson, Lufkin & Jenrette, Inc. ("DLJ") by Credit Suisse Group ("Credit Suisse") occurred on November 3, 2000, following which the assets and business of DLJ Asset Management Group, Inc. ("DLJAM") were transferred to CSAM. As a result, and pursuant to approval by the Board of Trustees of each of the Credit Suisse Warburg Pincus Capital Funds, the Credit Suisse Warburg Pincus Opportunity Funds and the Credit Suisse Warburg Pincus Select Funds (each a "Fund" and collectively the "Funds"), CSAM has succeeded DLJAM as investment adviser to the Funds pursuant to interim advisory agreements (the "Interim Advisory Agreements"). The Interim Investment Advisory Agreements terminate at the earlier of April 2, 2001 and the approval by shareholders of the Funds of new investment advisory agreements with CSAM. To rationalize the management of the Funds and the Warburg Pincus family of funds managed by CSAM ("Warburg Pincus Funds"), CSAM has proposed, and the Board of Trustees of the relevant Funds have approved for submission to shareholders at meetings scheduled for March 23, 2001: (i) new investment advisory agreements with CSAM on the same economic terms as the Interim Advisory Agreements; (ii) the replacement of all the current Trustees of the Funds, other than Peter F. Krogh, with trustees of the Warburg Pincus Funds; and (iii) as more fully explained below, the combinations of certain series of the Funds (the "Acquired Funds") into similar funds within the Warburg Pincus Funds (the "Acquiring Funds"). On December 18, 2000, Credit Suisse Asset Management Securities, Inc. ("CSAMSI") became the distributor of the Funds. Effective February 1, 2001, the Funds retained CSAMSI and PFPC, Inc. ("PFPC") as co-administrators to each of the Funds for a total rate not to exceed .18% of each Funds' average daily net assets. DLJAM and then CSAM provided administrative services to the Funds without charge prior to February 1, 2001 (although DLJAM, and later CSAM, were entitled to reimbursement from the Funds of the Credit Suisse Warburg Pincus Select Funds and the Credit Suisse Warburg Pincus Opportunity Funds). However, CSAM has agreed to assume DLJAM's undertaking to limit total annual operating expenses until October 31, 2001, or October 31, 2002, as the case may be, and to limit average annual expenses from the date of the acquisition of DLJ, November 3, 2000, until November 3, 2002 to the annualized levels previously paid by each of the Funds measured over the 60-day period ended on the date of the acquisition of DLJ. Consequently, it is not anticipated that there will be any increase in the average annualized operating expense ratio of a Fund until November 3, 2002 as a result of the retention of new co-administrators. Further, accounting services previously provided by PFPC pursuant to a separate agreement will be provided by PFPC under its new co-administration agreement. Effective February 6, 2001, State Street Bank and Trust Company ("State Street") became the transfer agent for the Fund's Common Class (former Class R) shares. The Board has approved the retention of State Street as transfer agent for the Fund's other classes of shares. MERGERS. The Board of Trustees for each of the Acquired Funds listed below has approved, subject to shareholder approval, the transfer to the Acquiring Fund listed below of all of the assets and liabilities of the Acquired Fund in exchange for shares of the Acquiring Fund.
ACQUIRED FUND ACQUIRING FUND ------------- -------------- Credit Suisse Warburg Pincus Fixed Income II Fund Warburg Pincus Fixed Income Fund Credit Suisse Warburg Pincus Municipal Trust Fund Warburg, Pincus Municipal Bond Fund, Inc. Credit Suisse Warburg Pincus Developing Markets Fund Warburg, Pincus Emerging Markets Fund, Inc. Credit Suisse Warburg Pincus Strategic Growth Fund Warburg, Pincus Focus Fund, Inc.
Each of the Acquiring Funds has an investment objective and strategies substantially similar to the investment objective and strategies of the corresponding Acquired Fund. Shareholders of each Acquired Fund would receive on a tax-free basis shares of the relevant Acquiring Fund with the same net asset value as their shares of the Acquired Fund. The investment advisory fees of the Acquiring Funds would in each case be the same as the relevant Acquired Funds, and CSAM has agreed to reimburse expenses of each Acquiring Fund as necessary so that for the two-year period following the consummation of each acquisition the annualized expense ratio of each Acquired 22 Fund would not increase above its expense ratio for the 60-day period prior to consummation of the acquisitions. Each acquisition would be consummated promptly after receipt of shareholder approval. If an acquisition of an Acquired Fund is not approved, such Fund will continue to engage in business as a series of the Fund and the Board of the Acquired Fund will consider other possible courses of action available to it, including resubmitting the proposal to shareholders. The Board of Trustees of the Credit Suisse Warburg Pincus Capital Funds has approved the transfer of all of the assets and liabilities of the Warburg, Pincus Small Company Value II Fund, Inc. and the Warburg, Pincus Value II Fund, Inc. in exchange for shares of the Credit Suisse Warburg Pincus Small Company Value Fund and the Credit Suisse Warburg Pincus Value Fund, respectively. These acquisitions are subject to the approval of shareholders of the relevant Warburg, Pincus Fund and, if approved, are expected to be consummated in early June, 2001. 23 PURCHASE INFORMATION Shares of the Credit Suisse Warburg Pincus Municipal Money Fund and the Credit Suisse Warburg Pincus U.S. Government Money Fund (the "Money Funds") or Class A, Class B or Class C shares of the other Funds may be purchased directly by using the Share Purchase Application found in this Prospectus, or through CSAMSI, the Funds' distributor, or by contacting your securities dealer. Common Class shares of the Funds may be purchased directly by using the application available at the Shareholder Service Center or downloaded from WWW.WARBURG.COM. See "How to Buy and Sell Shares -- 2. For Common Class Shares." Common Class shares may also be purchased through a variety of financial services firms such as banks, brokers and financial advisors. Advisor Class Shares of the Credit Suisse Warburg Pincus Value Fund are available for purchase through certain eligible institutions and financial services firms and not by individual investors directly. The minimum initial investment in each Fund is $1,000 ($2,000 for Common Class shares). The minimum for additional investments is $25 ($50 for Common Class shares). These minimums are waived for certain types of accounts. Share certificates will not be issued for full or fractional shares of the Funds. Further information can be obtained from Credit Suisse Warburg Pincus Funds at the address and telephone number shown on the back cover of this Prospectus. See "How to Buy and Sell Shares" and "Other Shareholder Services." The Funds, except the Money Funds, offer Class A, Class B, Class C and Common Class shares. The Credit Suisse Warburg Pincus Blue Chip Fund, Credit Suisse Warburg Pincus Value Fund, Credit Suisse Warburg Pincus Small Company Value Fund, Credit Suisse Warburg Pincus Technology Fund, Credit Suisse Warburg Pincus International Equity II Fund, Credit Suisse Warburg Pincus Fixed Income II Fund and Credit Suisse Warburg Pincus High Income Fund also offer Class D shares. The Credit Suisse Warburg Pincus Value Fund also offers Advisor Class shares. Class A shares may be purchased at the net asset value per share of the Fund plus an initial sales charge imposed at the time of purchase and may be subject to a contingent deferred sales charge ("CDSC") in cases where the initial sales charge was not applied because of the size of the purchase. Class B shares may be purchased at the net asset value per share, but are subject to a CDSC upon redemption. The CDSC applicable to Class B shares declines from 4% for redemptions made during the first year of purchase to zero after four years. Class C shares may be purchased at the net asset value per share, but are subject to a 1% CDSC if redeemed within the first year of purchase. Common Class shares may be purchased at the net asset value per share without any initial sales charge or CDSC. Advisor Class shares may be purchased without any initial sales charge or CDSC. Class D shares are offered without any initial sales charge or CDSC to employees of Credit Suisse First Boston ("CSFB") and its subsidiaries that are eligible to participate in the Employee Savings and Retirement Plan of Credit Suisse First Boston, certain investment advisory or brokerage clients of CSAM or its affiliates, and certain employee benefit plans for employees of CSAM or its affiliates. CSFB employees should contact the CSFB Hotline at 1-800-588-6200 concerning how to purchase Class D shares. See "How to Buy and Sell Shares." Shares of the Money Funds may be purchased at a price equal to the net asset value per share of each Money Fund, which is expected to be $1.00 per share. See "Net Asset Value" in the side-bar included on this page. The Credit Suisse Warburg Pincus Blue Chip Fund, the Credit Suisse Warburg Pincus Value Fund, the Credit Suisse Warburg Pincus Small Company Value Fund, the Credit Suisse Warburg Pincus Fixed Income II Fund and the Credit Suisse Warburg Pincus Municipal Trust Fund are each a series of the Credit Suisse Warburg Pincus Capital Funds. The Credit Suisse Warburg Pincus International Equity II Fund, the Credit Suisse Warburg Pincus Developing Markets Fund, the Credit Suisse Warburg Pincus High Income Fund, the Credit Suisse Warburg Pincus Municipal Money Fund and the Credit Suisse Warburg Pincus U.S. Government Money Fund are each a series of the Credit Suisse Warburg Pincus Opportunity Funds. The Credit Suisse Warburg Pincus Strategic Growth Fund and the Credit Suisse Warburg Pincus Technology Fund are each a series of the Credit Suisse Warburg Pincus Select Funds. The Credit Suisse Warburg Pincus Opportunity Funds, Credit Suisse Warburg Pincus Capital Funds, and Credit Suisse Warburg Pincus Select Funds are different legal entities and are separately offering their Funds through this Prospectus. Based on the advice of counsel, the Funds believe that the potential liability of each Fund with respect to the disclosure in this Prospectus extends only to the disclosure relating to that Fund. 24 NET ASSET VALUE: Net asset value per share (or "NAV") is determined separately for each class by taking the total assets of each class of a Fund and subtracting its total liabilities and then dividing the difference by the total number of shares outstanding in each class. The NAV is determined at the close of the New York Stock Exchange each day that the New York Stock Exchange is open for trading. The price at which a purchase or redemption is effected is based on the next calculation of NAV after the order is placed. For the Money Funds, the NAV is expected to be maintained at a constant $1.00 per share, although this price is not guaranteed. For purposes of computing NAV, the securities in each Money Fund's portfolio are valued at amortized cost, which minimizes the effect of changes in a security's market value and helps maintain a stable $1.00 per share price. However, there is a risk that we will sell a security for a price that is higher or lower than amortized cost. Such an event could have an effect on our ability to maintain an NAV of $1.00 per share. In calculating the NAV of the Credit Suisse Warburg Pincus Funds, except the Money Funds, each Fund's investments are valued at their current market value determined on the basis of market quotations or, if such quotations are not readily available, such other method as the Trustees of the applicable Fund believe in good faith would accurately reflect their fair value. The investment objectives and policies of each Fund are set forth below. There can be, of course, no assurance that any Fund will achieve its investment objective. The Funds' investment objectives are fundamental policies that cannot be changed without the approval of the shareholders of the applicable Fund. The Board of Trustees of a Fund may change non-fundamental policies without shareholder approval. 25 CREDIT SUISSE WARBURG PINCUS FUNDS' INVESTMENT OBJECTIVES AND POLICIES CREDIT SUISSE WARBURG PINCUS BLUE CHIP FUND GOAL: The investment objective of the Credit Suisse Warburg Pincus Blue Chip Fund is long-term capital appreciation. Investments are made based on their potential for long-term capital appreciation. The Credit Suisse Warburg Pincus Blue Chip Fund may make an investment to earn income when, in the opinion of the Adviser, such an investment will not compromise the Credit Suisse Warburg Pincus Blue Chip Fund's investment objective. STRATEGY: The Credit Suisse Warburg Pincus Blue Chip Fund invests in common stock, securities convertible into common stock and other equity securities (e.g., preferred stock and interests in master limited partnerships). It invests primarily in well-known and established companies (generally, companies in operation for more than three years). The Fund may occasionally invest in new and unseasoned companies which, in the opinion of the Adviser, have the potential for long-term capital appreciation. The Adviser applies extensive research that has been conducted primarily by research analysts employed by Credit Suisse First Boston on the growth prospects of stocks that are considered for the Fund's portfolio. Target companies normally have market capitalizations of at least $1 billion at the time of purchase. Generally, the Adviser attempts to identify companies with growth rates that will exceed that of the S&P 500 Index. The Credit Suisse Warburg Pincus Blue Chip Fund is "sector neutral." This means that its investments are allocated to industries in proportion to the sector allocation of the S&P 500 Index, with the exception of the electric and the gas utilities sectors. Other factors considered in the selection of securities include the economic and political outlook, the value of a particular security relative to another security, trends in the determinants of corporate profits, and management capability and practices. See "Risks for the Credit Suisse Warburg Pincus Blue Chip Fund and the Credit Suisse Warburg Pincus Value Fund." INVESTMENTS: Under normal circumstances, the Credit Suisse Warburg Pincus Blue Chip Fund invests at least 65% of its total assets in equity securities of companies that the Adviser believes have above-average long-term capital appreciation potential. For temporary defensive purposes, the Credit Suisse Warburg Pincus Blue Chip Fund may invest in investment-grade short-term fixed-income securities, enter into repurchase agreements and hold cash. A temporary defensive position could affect the Fund's ability to achieve its investment objective. In addition, the Fund may invest in equity securities selected on a basis other than the potential for long-term capital appreciation. The Fund may invest up to 35% of the value of its assets in investment-grade fixed-income securities, including bonds, debentures, notes, asset and mortgage-backed securities and money market instruments such as commercial paper and bankers'-acceptances and other financial instruments. The Fund may invest in both listed and unlisted securities and may also: - invest up to 10% of the value of its total assets in non-U.S. securities; - invest no more than 10% of its net assets in restricted securities or other instruments with no ready market; - invest up to 5% of its total assets in warrants; and - attempt to minimize the effect of a market decline on the value of its securities, subject to market conditions, by writing covered call options on securities or stock indices. See "Additional Information on Investment Policies and Risks." CREDIT SUISSE WARBURG PINCUS VALUE FUND GOAL: The investment objective of the Credit Suisse Warburg Pincus Value Fund is long-term capital appreciation and continuity of income. STRATEGY: The Credit Suisse Warburg Pincus Value Fund pursues its investment objective by investing principally in dividend-paying common stock and by diversifying its investments among different industries and companies. Securities are selected based on the Adviser's evaluation of their investment merit and their potential for appreciation in value and/or income. The selection of securities on the basis of their capital appreciation or income potential does not ensure against possible loss in value. INVESTMENTS: The Credit Suisse Warburg Pincus Value Fund invests in common stock, preferred stock and securities convertible into common stock. The Credit Suisse Warburg Pincus Value Fund may invest in debt securities that are of investment-grade quality at the time of purchase (including bonds, debentures, notes and asset 26 and mortgage-backed securities), U.S. government securities, municipal securities (including general and special obligation securities and industrial revenue bonds) and money market instruments. See "Additional Information on Investment Policies and Risks -- Mortgage and Asset-Backed Securities and Investment-Grade Debt Securities." There is no fixed proportion of the Credit Suisse Warburg Pincus Value Fund's assets that must be invested in particular types of securities. The percentage of assets invested in various types of securities may be changed from time to time by the Adviser. The Credit Suisse Warburg Pincus Value Fund invests in both listed and unlisted securities. The Credit Suisse Warburg Pincus Value Fund may invest in non-U.S. securities and restricted securities. To minimize the effect of a market decline in the value of its securities, the Fund may, depending on market conditions, write covered call options on securities or stock indices. The Fund may invest up to 10% of its assets in non-U.S. securities and up to 10% of its assets in restricted securities. For additional information on the use, risks and costs of the above referenced policies and practices, see "Additional Information on Investment Policies and Risks." RISKS FOR THE CREDIT SUISSE WARBURG PINCUS BLUE CHIP FUND AND THE CREDIT SUISSE WARBURG PINCUS VALUE FUND: Like any investment, an investment in the Credit Suisse Warburg Pincus Blue Chip Fund or Credit Suisse Warburg Pincus Value Fund is subject to risk and you could lose money. While the Funds seek investments that will appreciate in value and/or provide income, the value of the securities could decline and provide no income. The Funds are subject to risks that affect equity securities markets in general, such as general economic conditions and adverse changes in interest rates (generally increases). If the value of equity markets in general declines, you can expect the value of your investment in the Funds to decline, possibly to a greater extent than the decline in equity markets generally. The Credit Suisse Warburg Pincus Blue Chip Fund may invest in new and unseasoned companies. Stocks of these companies tend to be more volatile than stocks of larger and more established companies. In addition, because stocks are selected on the basis of their appreciation potential, they tend to be more risky than many investments that provide current income. The Credit Suisse Warburg Pincus Value Fund may invest in debt securities. Debt securities are subject to risks that the issuer will not repay its borrowings or pay interest. They are also subject to the risk of declines in value because of increases in interest rates and decreases in the credit quality of the issuer. The Credit Suisse Warburg Pincus Blue Chip Fund and the Credit Suisse Warburg Pincus Value Fund may each invest in unlisted securities. Investments in unlisted securities may be less liquid and more volatile than investments in listed securities and could result in losses to the Funds if they had to be sold quickly. The Credit Suisse Warburg Pincus Blue Chip Fund and the Credit Suisse Warburg Pincus Value Fund may each invest in non-U.S. securities. Non-U.S. securities carry the same risks as securities of U.S. companies and the added risks of being traded in less liquid markets than U.S. securities. Non-U.S. securities are also issued by companies that are not subject to U.S. reporting requirements and involve political systems, economies and markets that may not be as developed as in the U.S. See "Additional Information on Investment Policies and Risks." CREDIT SUISSE WARBURG PINCUS SMALL COMPANY VALUE FUND GOAL: The investment objective of the Credit Suisse Warburg Pincus Small Company Value Fund is a high level of growth of capital. The Credit Suisse Warburg Pincus Small Company Value Fund is not intended for investors whose principal objective is assured income or preservation of capital. STRATEGY: The Credit Suisse Warburg Pincus Small Company Value Fund invests primarily in common stock and may also invest in securities convertible into common stock, preferred stock, other equity securities, bonds or other debt securities as described below. Under normal market conditions, at least 65% of the Fund's assets are invested in equity securities of small market capitalization companies. "Small-cap" companies, for purposes of this Fund, are considered to be companies with market capitalizations of $2 billion or less at the time of purchase. If the market capitalization of a small-cap company in which the Fund has invested increases to a level above $2 billion, the investment adviser will continue to hold the securities of that company until the investment adviser determines that the company no longer has growth potential. 27 INVESTMENTS: The Credit Suisse Warburg Pincus Small Company Value Fund pursues its investment objective by employing a value-oriented investment approach. This means that the Adviser seeks securities that appear to be underpriced. The Adviser looks for stocks issued by companies with proven management, consistent earnings, sound finances and strong potential for market growth. By investing in such companies, the Credit Suisse Warburg Pincus Small Company Value Fund tries to enhance its potential for appreciation and limit the risk of decline in the value of its portfolio. The Credit Suisse Warburg Pincus Small Company Value Fund focuses on the fundamentals of each small-cap company instead of trying to anticipate what changes might occur in the stock market, the economy, or the political environment. This approach differs from that used by many other funds investing in small-cap company stocks. Those other funds often buy stocks of companies they believe will have above-average earnings growth, based on anticipated future developments. In contrast, the Credit Suisse Warburg Pincus Small Company Value Fund's securities are generally selected with the belief that they are currently undervalued based on existing conditions and that their earning power or franchise value does not appear to be reflected in their current stock price. To further reduce risk, the Credit Suisse Warburg Pincus Small Company Value Fund diversifies its holdings among many companies and industries. The Adviser also considers whether a company has an established presence in its industry, a product or market niche and whether management owns a significant stake in the company. The Credit Suisse Warburg Pincus Small Company Value Fund may also invest in special situation companies. A special situation company is a company whose value may increase within a reasonable period of time solely by reason of a development particularly or uniquely applicable to that company. The securities of these companies may be affected by particular developments unrelated to business conditions generally. These investments may fluctuate without relation to general market trends. In general, the principal risk associated with investing in special situation companies is the potential decline in the value of these securities likely to occur if the anticipated development fails to take place. Examples of special situation companies are companies that are being reorganized or merged, have unusual new products, enjoy particular tax advantages, or acquire new management. The Credit Suisse Warburg Pincus Small Company Value Fund invests primarily in common stock. It may also invest in securities convertible into common stock, preferred stock, investment-grade debt securities (including bonds, debentures, notes, asset and mortgage-backed securities), U.S. Government Securities, municipal securities (including general and special obligation securities and industrial revenue bonds), money market instruments (such as commercial paper and bankers' acceptances) and other financial instruments. The Credit Suisse Warburg Pincus Small Company Value Fund may also invest in unlisted securities and securities traded in the over-the-counter markets. The Credit Suisse Warburg Pincus Small Company Value Fund may allocate a larger percentage of its assets to unlisted securities than would a typical large company mutual fund. The Credit Suisse Warburg Pincus Small Company Value Fund may also: - purchase or sell options on securities and on indices to seek to enhance return or hedge its portfolio; - purchase or sell financial futures contracts and options thereon for hedging and risk management purposes; - invest up to 20% of total assets in non-U.S. securities; - invest up to 5% of total assets in rights or warrants; and - invest not more than 10% of net assets in instruments having no ready market. However, the Fund does not invest in restricted securities. RISKS FOR THE CREDIT SUISSE WARBURG PINCUS SMALL COMPANY VALUE FUND: The investment objective for the Credit Suisse Warburg Pincus Small Company Value Fund causes it to be riskier than other funds and you could lose money. While it seeks investments that will provide a high level of growth of capital, they may decline in value. You should not invest in the Credit Suisse Warburg Pincus Small Company Value Fund if your principal objective is assured income or capital preservation. While smaller companies generally have the potential for rapid growth, they often involve greater risks than investments in larger, more established companies. Small companies may have less management experience, fewer financial resources, and limited product diversification. In addition, in many instances the frequency and trading volume for securities of smaller companies are substantially less than those of larger companies, causing such securities to be subject to greater and more abrupt price fluctuations and to be less liquid than securities of larger companies. When making large sales of portfolio securities, it may be necessary for the Credit Suisse Warburg Pincus Small Company Value Fund to sell such 28 securities at discounts from quoted prices or to execute a series of small sales over an extended period of time. These factors cause an investment in the Credit Suisse Warburg Pincus Small Company Value Fund to be riskier than an investment in a typical "large company" mutual fund. The Credit Suisse Warburg Pincus Small Company Value Fund also is subject to risks that affect equity securities markets in general, such as general economic conditions and adverse changes in interest rates. These factors also could adversely affect an investment in the Fund. If the value of equity markets in general declines, the value of your investment in the Credit Suisse Warburg Pincus Small Company Value Fund could also decline, possibly to a greater extent than the decline in equity markets generally. The Credit Suisse Warburg Pincus Small Company Value Fund may invest in various types of debt securities. Debt securities are subject to the risk that the issuer will not repay its borrowings or pay interest. They are also subject to the risk of declines in value because of increases in interest rates and decreases in the perceived credit quality of the issuer. The Fund may also invest in unlisted securities. Investments in unlisted securities may be less liquid and more volatile than investments in listed securities and could result in losses if they had to be sold quickly. The Fund may also invest in non-U.S. securities. Not only do non-U.S. securities carry the same risks as securities of U.S. companies, they also have the added risks of generally being traded in less liquid markets than U.S. securities, involve political systems, economies and markets that may not be as developed as in the U.S. and may be issued by companies that are not subject to reporting requirements that are as rigorous as those imposed on U.S. issuers. The Fund also may invest in options, warrants and financial futures contracts. Selecting options, warrants and financial futures contracts involves determinations as to how a particular security, index, interest rate, or currency will change. If the Adviser is wrong in its prediction, the Fund could lose money. In addition, such instruments may not be available, or if available, may be too expensive to utilize. See "Additional Information on Investment Policies and Risks." CREDIT SUISSE WARBURG PINCUS STRATEGIC GROWTH FUND GOAL: The investment objective of the Credit Suisse Warburg Pincus Strategic Growth Fund is long-term growth of capital. Investments are made based on their potential for superior growth. STRATEGY: The Fund seeks to achieve this objective by investing in equity securities of a limited number of large, carefully selected companies that the Adviser believes will achieve superior growth. Unlike most equity funds, the Fund focuses on a relatively small number of intensely researched companies. The Fund seeks to achieve superior performance as compared to other U.S. domestic growth funds. The Adviser applies extensive research that has been conducted primarily by research analysts employed by Credit Suisse First Boston on the growth prospects of stocks that are considered for the Fund's portfolio. Unlike many equity funds, the Credit Suisse Warburg Pincus Strategic Growth Fund seeks to limit the number of Fund holdings to companies that offer the highest potential for capital appreciation. The Fund intends to hold securities of approximately 50-60 companies, which may fluctuate depending on the Adviser's view of market conditions. Growth companies tend to be concentrated in the technology, health care, consumer, financial, telecommunications and commercial services sectors. By emphasizing Credit Suisse First Boston research in the portfolio stock selection, this Fund will try to deliver superior performance as compared to the U.S. domestic growth fund peer universe. Other factors considered in the selection of securities include the economic and political outlook, the value of a particular security relative to another security, trends in the determinants of corporate profits, and management capability and practices. See "Additional Information on Investment Policies and Risks." INVESTMENTS: Under normal circumstances, the Credit Suisse Warburg Pincus Strategic Growth Fund invests at least 85% of its total assets in equity securities in U.S. companies that the Adviser believes have above-average long-term capital appreciation potential. The Adviser expects the average market capitalization of companies in the portfolio to be in the range of companies that are included in the Standard & Poor's 500 Index. The Fund may invest in both listed and unlisted securities and may also: - invest up to 10% of the value of its total assets in non-U.S. securities; - invest no more than 15% of its net assets in illiquid securities; 29 - invest up to 5% of its total assets in warrants; - attempt to minimize the effect of a market decline on the value of its securities, subject to market conditions, by writing covered call options on securities or stock indices. See "Additional Information on Investment Policies and Risks"; and - invest in investment-grade fixed income securities, including bonds, debentures, notes and money market instruments such as commercial paper and bankers acceptances and other financial instruments. For additional information on the use, risks and costs of the above referenced policies and practices, see "Additional Information on Investment Policies and Risks." CREDIT SUISSE WARBURG PINCUS TECHNOLOGY FUND GOAL: The Credit Suisse Warburg Pincus Technology Fund's investment objective is growth of capital. STRATEGY: The Credit Suisse Warburg Pincus Technology Fund seeks to achieve this objective by investing in a broad number of industries that comprise the U.S. domestic technology sector. Under normal market conditions, the Fund invests at least 65% of its assets in technology companies. The Fund seeks to create a blend of stocks in companies that include the computer hardware, computer software, electronics, semiconductor, semiconductor capital equipment, telecommunication equipment, telecommunication services and internet industries. Stock selection reflects a growth approach and is based on fundamental research that assesses a company's prospects for above-average earnings. The research applied by the Adviser is conducted primarily by research analysts employed by Credit Suisse First Boston. In addition, the Adviser also obtains research from other investment firms. INVESTMENTS: The Credit Suisse Warburg Pincus Technology Fund invests in common stock, preferred stock and securities convertible into common stock. The Fund will normally invest 80% of its assets in securities of companies principally engaged in offering, developing products, processes or services that will provide technological advances and improvements. The types of companies include computer hardware, computer software, electronics, semiconductor, telecommunication equipment, telecommunication services and internet industries. The Fund may invest in listed and unlisted securities, well-known and established companies and in new and unseasoned companies. The Fund will not invest more than 25% of its total assets in any one industry. The Fund may also: - attempt to minimize the effect of a market decline on the value of its securities, subject to market conditions, by writing covered call options on securities or stock indices; - invest up to 10% of its assets in non-U.S. securities; - invest up to 15% of its net assets in illiquid securities; and - invest in investment-grade fixed income securities, including bonds, debentures, notes and money market instruments such as commercial paper and bankers-acceptances and other financial instruments. RISKS FOR THE CREDIT SUISSE WARBURG PINCUS TECHNOLOGY FUND AND THE CREDIT SUISSE WARBURG PINCUS STRATEGIC GROWTH FUND: Like any investment, an investment in the Credit Suisse Warburg Pincus Technology Fund or Credit Suisse Warburg Pincus Strategic Growth Fund is subject to risk and you could lose money. While the Funds seek investments that will appreciate in value, the value of the securities could decline and provide no income. The Funds are subject to market risks that affect equity securities markets in general, such as general economic conditions and adverse changes in interest rates (generally increases). If the value of equity markets in general declines, you can expect the value of your investment in the Funds to decline, possibly to a greater extent than the decline in equity markets generally. The Funds are also subject to investment risk, which is the possibility that the returns from a specific type of stock will perform worse than the overall stock market or other market sectors. Other general risks include the following: The Credit Suisse Warburg Pincus Technology Fund invests in technology companies. The fact that the Fund concentrates in a single sector increases risk and volatility as compared to a fund with a more diversified portfolio. This is because factors that affect that sector are likely to directly affect the Fund's performance, both negatively and positively. Even if the overall direction of equity prices is upward, if technology stocks are headed lower, Fund performance could be adversely affected. Certain factors or market conditions that affect technology companies could have an impact on the Fund's net asset value and performance. For example, companies in the rapidly 30 changing technology sector often face unusually high price volatility, both in terms of gains and losses. Products or services that at first appear promising may not prove commercially successful or may become obsolete quickly. Earnings disappointments could also result in sharp price declines. In addition, stocks of small, less seasoned companies, tend to be more volatile than the overall market. The Credit Suisse Warburg Pincus Strategic Growth Fund will limit the number of companies in its portfolio. As a result, changes in the value of one security are more likely to have a greater effect on the Fund's net asset value than other U.S. domestic growth funds with more diversified portfolios. In addition, each Fund may from time to time take temporary defensive positions that are inconsistent with a Fund's investment strategies in attempting to respond to adverse market conditions. If a Fund takes a temporary defensive position, the Fund may not achieve its investment objective. THE CREDIT SUISSE WARBURG PINCUS INTERNATIONAL FUNDS CREDIT SUISSE WARBURG PINCUS DEVELOPING MARKETS FUND GOAL: The investment objective of the Credit Suisse Warburg Pincus Developing Markets Fund is long-term growth of capital by investing primarily in common stocks and other equity securities of companies from developing countries. Under normal market conditions, the Fund invests at least 65% of its assets in equity securities of developing countries. STRATEGY: The Credit Suisse Warburg Pincus Developing Markets Fund seeks to achieve this objective by investing in securities of issuers in countries included in the Morgan Stanley Capital Index ("MSCI") Emerging Markets Free Index. The Fund's investment approach is to seek to minimize country and sector risk by maintaining country and sector neutrality, with weightings close to those of the MSCI Emerging Markets Free Index. INVESTMENTS: Equity securities include common and preferred stock, warrants, rights or options that are convertible into common stock, debt securities that are convertible into common stock, depositary receipts for those securities and other classes of stock that may exist. The Fund may purchase non-U.S. securities in the form of sponsored or unsponsored depositary receipts or other securities representing underlying shares of non-U.S. issuers. The Fund may purchase a limited amount of restricted or otherwise illiquid securities. The Fund may enter into forward foreign currency exchange contracts to attempt to protect the value of its assets against future changes in the level of currency exchange rates. The Fund may purchase and sell financial futures contracts and options thereon which are traded on a commodities exchange or board of trade for certain hedging, return enhancement and risk management purposes. The Fund may purchase and sell financial futures contracts and related options, without limitation, for bona fide hedging purposes. Subject to the foregoing, the value of all financial futures contracts sold will not exceed the total market value of the Fund's portfolio. These futures contracts and related options will be on financial indices and foreign currencies or groups of foreign currencies. As used in this Prospectus, a company in a developing country is an entity for which either the principal securities trading market is in a developing country, it is organized under the laws in a developing country or it has its principal office in a developing country. The Fund invests primarily in countries represented within the MSCI Emerging Markets Free Index. Those countries currently include Argentina, Brazil, Chile, China, Colombia, Czech Republic, Greece, Hungary, India, Indonesia, Israel, Jordan, Korea, Malaysia, Mexico, Pakistan, Peru, Philippines, Poland, Russia, South Africa, Sri Lanka, Taiwan, Thailand, Turkey and Venezuela. The Fund generally does not invest more than 25% of its total assets in developing countries not represented within the MSCI Emerging Markets Free Index. RISKS FOR THE CREDIT SUISSE WARBURG PINCUS DEVELOPING MARKETS FUND: Like any investment, an investment in the Credit Suisse Warburg Pincus Developing Markets Fund is subject to risk and you could lose money. While the Fund selects investments that the Fund believes will experience long-term appreciation, their value could decline. The Fund is also subject to risks that affect equity securities markets in general, such as general economic conditions and adverse changes (generally increases) in interest rates. There are certain risks involved in investing in non-U.S. securities, in addition to the risks inherent in U.S. investments. These risks may include currency fluctuations, currency revaluations, adverse political and economic developments, currency exchange blockages, foreign governmental laws or restrictions, reduced public information concerning issuers, and the lack of uniform accounting, auditing and financial reporting standards and other regulatory practices and requirements comparable for domestic companies. 31 Furthermore, non-U.S. securities may be less liquid and more volatile than comparable U.S. securities. There is also a possibility of expropriation, nationalization, confiscatory taxation, and limitations on use or removal of funds or assets. Investments in non-U.S. securities may result in higher expenses due to currency conversions, brokerage commissions which generally are higher than U.S. commissions and the expense of maintaining securities with non-U.S. custodians. In addition to the general risks of investing in non-U.S. securities, characteristics of developing countries may affect certain investments, such as national policies that restrict foreign investment and the absence of developed legal structures governing private property and private and foreign investments. The typically small size of securities markets and the possibility of a low or nonexistent volume of trading in developing countries may also result in a lack of liquidity and substantial price volatility. You should be aware that investing in developing countries generally involves exposure to economic structures that are generally less diverse and mature, and to political systems with less stability than those of developed countries. For additional information on the use, risks and costs of the above referenced policies and practices, see "Additional Information on Investment Policies and Risks." CREDIT SUISSE WARBURG PINCUS INTERNATIONAL EQUITY II FUND GOAL: The investment objective of the Credit Suisse Warburg Pincus International Equity II Fund is long-term growth of capital by investing primarily in equity securities from established non-U.S. markets. During normal market conditions, the Fund invests most of its assets in securities of issuers from at least three different countries outside the United States. The Fund may invest in securities of companies incorporated in the United States but having their principal activities and interests outside of the United States. STRATEGY: The Fund seeks to achieve this objective by focusing on stock selection based primarily on the recommendations of CSFB International Research. The Fund invests in the developed countries of Europe, Australia and the Far East ("EAFE"), using disciplined, quantitative methods in its attempt to minimize country, industry and financial risks. The Fund is country and sector neutral and seeks to maintain its weightings close to those of the MSCI-EAFE Index. Those countries currently include Australia, Austria, Belgium, Denmark, Finland, France, Germany, Hong Kong, Ireland, Italy, Japan, the Netherlands, New Zealand, Portugal, Singapore, Spain, Sweden, Switzerland, and the United Kingdom. INVESTMENTS: Equity securities include common and preferred stock, warrants, rights or options that are convertible into common stock, debt securities that are convertible into common stock, depositary receipts for those securities and other classes of stock that may exist. The Fund may purchase non-U.S. securities in the form of sponsored or unsponsored depositary receipts or other securities representing underlying shares of non-U.S. issuers. The Adviser anticipates that, subject to market conditions, depositary receipts may represent a substantial portion of the Fund's investments. This Fund may invest a limited amount of its assets in restricted or otherwise illiquid securities. The Fund may enter into forward foreign currency exchange contracts to protect the value of its assets against future changes in the level of currency exchange rates. The Fund may purchase and sell financial futures contracts and options thereon which are traded on a commodities exchange or board of trade for certain hedging, return enhancement and risk management purposes. The Fund may purchase and sell financial futures contracts and related options, without limitation, for bona fide hedging purposes. Subject to the foregoing, the value of all financial futures contracts sold will not exceed the total market value of the Fund's portfolio. These futures contracts and related options will be on financial indices and foreign currencies or groups of foreign currencies. ADRS: ADRs are depositary receipts typically issued by a U.S. bank or trust company which evidence ownership of underlying securities issued by a non-U.S. corporation. EDRs and GDRs are depositary receipts typically issued by non-U.S. banks or trust companies, although they also may be issued by U.S. banks or trust companies, and evidence ownership of underlying securities issued by either a non-U.S. or a U.S. corporation. 32 RISKS FOR THE CREDIT SUISSE WARBURG PINCUS INTERNATIONAL EQUITY II FUND: Like any investment, an investment in the Credit Suisse Warburg Pincus International Equity II Fund is subject to risk and you could lose money. While the Fund selects investments the Fund believes will experience long-term appreciation, their value could decline. The Fund is also subject to risks that affect equity securities markets in general, such as general economic conditions and adverse changes (generally increases) in interest rates. There are certain risks involved in investing in non-U.S. securities, in addition to the risks inherent in U.S. investments. These risks may include currency fluctuations, currency revaluations, adverse political and economic developments, currency exchange blockages, foreign governmental laws or restrictions, reduced public information concerning issuers, and the lack of uniform accounting, auditing and financial reporting standards and other regulatory practices and requirements comparable for domestic companies. Furthermore, non-U.S. securities may be less liquid and more volatile than comparable U.S. securities. There is also a possibility of expropriation, nationalization, confiscatory taxation, and limitations on use or removal of funds or assets. Investments in non-U.S. securities may result in higher expenses due to currency conversions, brokerage commissions which generally are higher than U.S. commissions and the expense of maintaining securities with non-U.S. custodians. For additional information on the use, risks and costs of the above referenced policies and practices, see "Additional Information on Investment Policies and Risks." THE CREDIT SUISSE WARBURG PINCUS FIXED INCOME FUNDS CREDIT SUISSE WARBURG PINCUS FIXED INCOME II FUND GOAL: The investment objective of the Credit Suisse Warburg Pincus Fixed Income II Fund is to 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 nonconvertible debt securities of domestic and foreign companies, including both well-known and established and new and lesser-known companies. Total return means the sum of net investment income (if any) and realized and unrealized gains less losses. Capital preservation means minimizing the risk of capital loss in a period of falling prices (rising interest rates) for debt securities. STRATEGY: The Fund invests in and holds debt securities that the Adviser believes will maximize total return at a level consistent with capital preservation. The average maturity of the Fund's portfolio is adjusted based on the Adviser's assessment of relative yields on debt securities and expectations of future interest rate patterns. A change in the price of a debt security generally is inversely related to market interest rates. This means that the value of the Fund's investments will tend to decrease during periods of rising interest rates and to increase during periods of falling rates. In general, as the average maturity of the portfolio increases, so does the potential volatility in share price. As a matter of fundamental policy, the Fund will invest at least 80% of the value of its total assets in debt securities. In normal circumstances, the Credit Suisse Warburg Pincus Fixed Income II Fund invests at least 65% of the value of its total assets in fixed income securities. However, the Fund may hold cash and short-term fixed income securities and may enter into repurchase agreements for temporary defensive purposes as determined by the Adviser without regard to the above limits. A temporary defensive position could affect the Fund's ability to achieve its investment objective. INVESTMENTS: The Credit Suisse Warburg Pincus Fixed Income II Fund may invest in bonds, including municipal bonds (taxable and tax-exempt) and other debt securities rated Aaa, Aa, A or MIG-1 by Moody's Investors Service, Inc. ("Moody's"), or AAA, AA, A or SP-1 by Standard & Poor's Ratings Group ("S&P"), U.S. Government Securities, obligations issued or guaranteed by national or state bank holding companies, and commercial paper rated Prime-1 by Moody's or A-1+ or A-1 by S&P. The Credit Suisse Warburg Pincus Fixed Income II Fund may also invest not more than 25% of its total assets in lower-rated debt securities that are not rated below BBB or SP-2 by S&P or Baa or MIG-2 by Moody's to the extent the Adviser views such investments as consistent with this Fund's investment objective. See "Additional Information on Investment Policies and Risks" for a description of securities rated BBB by S&P and Baa by Moody's. The Credit Suisse Warburg Pincus Fixed Income II Fund may enter into repurchase agreements, terminable within seven days or less, involving U.S. Treasury securities, with member banks of the Federal Reserve 33 System or primary dealers in U.S. Government Securities. The Credit Suisse Warburg Pincus Fixed Income II Fund may invest up to 10% of its assets in restricted securities and in instruments having no ready market value. CREDIT SUISSE WARBURG PINCUS MUNICIPAL TRUST FUND GOAL: The investment objective of the Credit Suisse Warburg Pincus Municipal Trust Fund is to provide as high a level of total return as is consistent with capital preservation by investing principally in high-grade tax-exempt municipal securities. This investment objective, unlike that of most other municipal bond funds, is NOT to provide current income exempt from federal and/or state income tax. Total return means the sum of net investment income and capital gains less capital losses. The Fund intends to distribute annually its net capital gains. Such distributions, if any, will be taxable to a shareholder as capital gain. See "Dividend and Distribution Information" and "Taxes." STRATEGY: The Credit Suisse Warburg Pincus Municipal Trust Fund attempts to maximize total return by actively managing the maturities of the bonds in its portfolio to reflect the Adviser's assessment of anticipated interest rate movements and relative yields. The Credit Suisse Warburg Pincus Municipal Trust Fund currently maintains an average maturity of between 5 and 10 years in order to help reduce the interest rate risk associated with investing in long-term bonds. However, the Fund may adjust this average maturity as the Adviser's views on interest rate movements change, shortening maturities in periods of rising interest rates and lengthening maturities in periods of falling interest rates. The Fund attempts to supplement total return by identifying and purchasing undervalued municipal securities. As with any fixed income investment, the success of these strategies depends upon the Adviser's ability to accurately forecast changes in interest rates and to assess the value of municipal securities. You should be aware that there are no assurances that the Fund's investment strategies will be successful. See "Risks for the Credit Suisse Warburg Pincus Fixed Income II Fund and the Credit Suisse Warburg Pincus Municipal Trust Fund." INVESTMENTS: The Credit Suisse Warburg Pincus Municipal Trust Fund seeks to achieve its objective by investing primarily in a diversified portfolio of high-grade, intermediate-term municipal securities. Municipal securities fall into two principal classes: bonds and notes, both of which may have fixed, variable or floating rates of interest. The Fund invests in tax-exempt municipal bonds and notes which are rated Aaa, Aa, A or MIG-1 by Moody's or AAA, AA, A or SP-1 by S&P. The Fund may also invest up to 25% of its total assets in lower-rated municipal securities to the extent the Adviser views such investments as consistent with this Fund's investment objective. See "Additional Information on Investment Policies and Risks -- Investment-Grade Debt Securities" for a description of securities rated BBB by S&P and Baa by Moody's. The Fund may also invest in unrated municipal securities when the Adviser believes they are of comparable quality to that of rated securities and are consistent with the Fund's objective and policies. Because a change in the market value of a debt security generally is inversely related to market interest rates, the market value of the Credit Suisse Warburg Pincus Municipal Trust Fund's investments will tend to decrease during periods of rising interest rates and to increase during periods of falling rates. In general, as the average maturity of the portfolio increases, so does the potential volatility in share price. Fluctuations in market value of the Credit Suisse Warburg Pincus Municipal Trust Fund's portfolio resulting from fluctuations in interest rates will generally be greater at times when the average maturity of the Credit Suisse Warburg Pincus Municipal Trust Fund's portfolio is longer. The Credit Suisse Warburg Pincus Municipal Trust Fund may enter into repurchase agreements terminable within seven days or less. The Fund may also invest in restricted securities, in instruments having no ready market value and municipal bonds that are subject to the alternative minimum tax. The Credit Suisse Warburg Pincus Municipal Trust Fund reserves the right to hold cash and short-term fixed income securities and to enter into repurchase agreements as necessary for temporary defensive or emergency purposes as determined by the Adviser, without regard for the above limitation. A temporary defensive position could affect the Fund's ability to achieve its investment objective. Dividends of the Credit Suisse Warburg Pincus Municipal Trust Fund will consist of income exempt from federal income tax, income subject to the federal alternative minimum tax ("AMT"), and taxable ordinary income and capital gains. See "Dividend and Distribution Information" and "Taxes." 34 RISKS FOR THE CREDIT SUISSE WARBURG PINCUS FIXED INCOME II FUND AND CREDIT SUISSE WARBURG PINCUS MUNICIPAL TRUST FUND: While these Funds seek investments that will satisfy their investment objectives, the Funds' investments could decline in value and you could lose money. Concerns about an issuer's ability to repay its borrowings or to pay interest will adversely affect the value of its securities. The Funds' Adviser seeks to limit this risk generally by selecting higher-quality debt securities. In addition, the Funds are subject to risks that affect the bond markets in general, such as general economic conditions and adverse changes (generally increases) in interest rates. Each Fund may invest in unlisted securities. Unlisted securities may be less liquid and more volatile than listed securities and could result in losses if they had to be sold quickly. The Credit Suisse Warburg Pincus Municipal Trust Fund is also subject to risks of investing in municipal securities. These risks include uncertainties regarding the tax status of a particular security, political and legislative changes and the rights of their holders. These factors could adversely affect your investment. HIGH QUALITY RATINGS: High Quality Ratings are Aaa, Aa, A or MIG-1 by Moody's, or AAA, AA, A or SP-1 by S&P. CREDIT SUISSE WARBURG PINCUS HIGH INCOME FUND GOAL: The Credit Suisse Warburg Pincus High Income Fund's primary investment objective is to provide a high level of current income and a secondary objective is capital appreciation. This Fund is not recommended for investors whose principal objective is assured income or capital preservation. STRATEGY: This Fund seeks to achieve its investment objectives by investing in fixed-income securities, including corporate bonds and notes, convertible securities and preferred stocks, that are rated in the lower rating categories of the established rating services (Baa or lower by Moody's and BBB or lower by S&P), or, if unrated, are of comparable quality. Securities rated Baa or lower by Moody's and BBB or lower by S&P are commonly known as "junk bonds." These bonds are considered by those rating agencies to have speculative characteristics. These bonds can be expected to provide higher yields. However these securities may be subject to greater market fluctuations and risk of loss of income and principal than lower yielding, higher-rated fixed-income securities. Investment in such high-yield securities entails relatively greater risk of loss of income and principal. INVESTMENTS: This Fund seeks to achieve its objective by investing primarily in a diversified portfolio of lower-rated fixed-income securities including convertible and non-convertible debt securities and preferred stock. The Fund may also hold assets in cash or cash equivalents. This Fund generally does not invest in common stocks, rights or other equity securities. From time to time, the Fund may acquire or hold such securities (if consistent with its objectives) when they are acquired in unit offerings with fixed-income securities or in connection with an actual or proposed conversion, exchange or restructuring of fixed-income securities. Selection and supervision by the Adviser of the Fund of investments in lower-rated fixed-income securities involves continuous analysis of individual issuers, general business conditions and other factors. The furnishing of these services does not, of course, guarantee successful results. The Adviser's analysis of issuers includes, among other things, historic and current financial conditions, current and anticipated cash flow and borrowing requirements, value of assets in relation to historical cost, strength of management, responsiveness to business conditions, credit standing, and current and anticipated results of operations. Analysis of general business conditions and other factors may include anticipated changes in economic activity and interest rates, the availability of new investment opportunities, and the economic outlook for specific industries. While the Adviser considers as one factor in its credit analysis the ratings assigned by the rating services, the Adviser performs its own independent credit analysis of issuers and consequently, the Credit Suisse Warburg Pincus High Income Fund may invest, without limit, in unrated securities. The Fund's ability to achieve its investment objective may depend on the Adviser's own credit analysis to a greater extent than the funds that invest in higher-rated securities. Although the Credit Suisse Warburg Pincus High Income Fund primarily invests in lower-rated securities, it will generally not invest in securities rated at the time of investment in the lowest rating categories (Ca or below for Moody's and CC or below for S&P). Securities which are subsequently downgraded may continue to be held and will be sold only if, in the judgment of the Adviser, it is advantageous to do so. 35 RISKS FOR THE CREDIT SUISSE WARBURG PINCUS HIGH INCOME FUND: While the Credit Suisse Warburg Pincus High Income Fund seeks investments that will satisfy its investment objective, the Fund's investments could decline in value and you could lose money. Concerns about an issuer's ability to repay its borrowings or to pay interest will adversely affect the value of its securities. The Fund is also subject to risks that affect the bond markets in general, such as general economic conditions and adverse changes (generally increases) in interest rates. The market value of longer maturity debt securities, like those held by the Fund, is more sensitive to interest rate changes than the market value of shorter maturity debt securities. In addition, the Fund's investments in lower grade securities will subject investors to greater risk than normally experienced in other fixed income securities. Lower grade securities are regarded as being predominantly speculative as to the issuer's ability to pay the principal and interest. Issuers of lower grade securities are more likely to experience financial stress in periods of economic downturn or rising interest rates. The issuer's ability to service its debt may be adversely affected by poor management, inability to meet business forecasts or unavailability of additional financing. There is a higher default rate with lower grade securities because they may be unsecured or subordinate to other securities of the issuer. There are fewer dealers in lower grade securities which may make the market for these securities less liquid and cause larger differences in prices quoted than that of higher-rated fixed income securities. In addition, the Fund may incur additional expense when it is required to seek recovery upon a default or restructuring. THE CREDIT SUISSE WARBURG PINCUS MONEY FUNDS CREDIT SUISSE WARBURG PINCUS MUNICIPAL MONEY FUND GOAL: The Credit Suisse Warburg Pincus Municipal Money Fund seeks maximum current income, consistent with liquidity and safety of principal, that is exempt from Federal income taxation to the extent described herein. STRATEGY: The Fund pursues its objectives by investing at least 80% of its total assets in municipal securities. One hundred percent of the securities the Fund invests in are high quality having remaining maturities of one year or less, although their maturities may extend to 397 days. The Fund reserves the right to lower the percentage of investments in municipal securities if economic or political conditions warrant. To increase the Fund's ability to reach its investment objectives, the dollar-weighted average maturity of its portfolio securities is always 90 days or less. In general, securities with longer maturities are more vulnerable to price changes, although they may provide higher yields. It is possible that a major change in interest rates or a default on the Credit Suisse Warburg Pincus Municipal Money Fund's investments could cause its net asset value per share to deviate from $1.00. INVESTMENTS: Normally, substantially all the Credit Suisse Warburg Pincus Municipal Money Fund's income will be exempt from Federal income taxation. Such income may be subject to state or local and/or Federal AMT income taxes. The Fund invests in municipal notes and short-term municipal bonds, which may have fixed, variable or floating rates of interest. Municipal securities with variable rates may include participation interests in industrial development bonds which may be backed by letters of credit from banking or other financial institutions. The letters of credit of any single institution in respect of all variable rate obligations will not cover more than the allowable percentage of the Credit Suisse Warburg Pincus Municipal Money Fund's total assets in accordance with Rule 2a-7 under the Investment Company Act of 1940, as amended ("1940 Act"). For a more complete discussion of Municipal Securities, see "Additional Information on Investment Policies and Risks -- Municipal Securities." All of the Fund's municipal securities at the time of purchase are rated within the two highest quality ratings of Moody's or S&P's, or judged by the Adviser to be of comparable quality. The Credit Suisse Warburg Pincus Municipal Money Fund may also invest without limitation in tax-exempt municipal securities subject to the AMT. See "Dividend and Distribution Information" and "Taxes." The Credit Suisse Warburg Pincus Municipal Money Fund may invest to a limited extent in stand-by commitments, delayed-delivery, when-issued securities and other illiquid securities. This Fund may also invest a small percentage of its net assets in municipal leases, which are leases or installment purchases used by state and local governments as a means to acquire property, equipment or facilities without involving debt issuance limitations. The Fund may from time to time invest in taxable securities including obligations of the U.S. Government and its agencies, high quality certificates of deposit and bankers' acceptances, prime commercial paper, and repurchase agreements. 36 CASH EQUIVALENTS: The International Funds may from time to time take a defensive position by holding all or a portion of the Fund in other types of securities, including commercial paper, bankers' acceptances, short-term debt securities (corporate and government) or government and high quality money market securities of U.S. and non-U.S. issuers, repurchase agreements, time deposits or cash (foreign currencies or U.S. dollars). The International Funds may also temporarily hold cash and invest in high quality foreign or domestic money market instruments with up to 35% of their assets, pending investment of proceeds from new sales of International Funds' shares or to meet ordinary daily cash needs. RISKS FOR THE CREDIT SUISSE WARBURG PINCUS MUNICIPAL MONEY FUND: Like any money market fund investment, this investment is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. This fund seeks to preserve the value of your investment at $1.00 per share; however, it is possible to lose money by investing in this Fund. To seek to reduce investment risk, the Credit Suisse Warburg Pincus Municipal Money Fund may not invest in the securities of any one issuer, (except the U.S. Government), in excess of the percentage of the Credit Suisse Warburg Pincus Municipal Money Fund's total assets allowed under Rule 2a-7 of the 1940 Act. The Credit Suisse Warburg Pincus Municipal Money Fund earns income at current money market rates and its yield varies from day to day and generally reflects current short-term interest rates and other market conditions. It is important to note that neither the Credit Suisse Warburg Pincus Municipal Money Fund nor its yield are insured or guaranteed by the U.S. Government. For additional information on the use, risks and costs of the above referenced policies and practices, see "Additional Information on Investment Policies and Risks." CREDIT SUISSE WARBURG PINCUS U.S. GOVERNMENT MONEY FUND GOAL: The Credit Suisse Warburg Pincus U.S. Government Money Fund seeks maximum current income, consistent with liquidity and safety of principal. STRATEGY: This Fund pursues its objectives by maintaining a portfolio of high quality money market securities, including the types described in the succeeding paragraph, which at the time of investment generally have remaining maturities of one year or less. Some maturities may extend to 397 days. The dollar weighted average maturity of the Credit Suisse Warburg Pincus U.S. Government Money Fund's portfolio securities will vary, but will always be 90 days or less. In general, securities with longer maturities are more vulnerable to price changes, although they may provide higher yields. It is possible that a major change in interest rates or a default on the Credit Suisse Warburg Pincus U.S. Government Money Fund's investments could cause its net asset value per share to deviate from $1.00. INVESTMENTS: The Fund invests in U.S. Government Securities, including issues of the U.S. Treasury, such as bills, certificates of indebtedness, notes and bonds, and issues of agencies and instrumentalities established under the authority of an act of Congress, including variable rate obligations such as floating rate notes. The Fund also invests in repurchase agreements that are collateralized in full each day by eligible mortgage related securities or the types of securities listed above. These agreements are entered into with "primary dealers" (as designated by the Federal Reserve Bank of New York) in U.S. Government Securities. This type of investment could create a loss to the Fund if, in the event of a dealer default, the proceeds from the sale of the collateral were less than the repurchase price. In addition, if the seller of repurchase agreements becomes insolvent, the Fund's right to dispose of the securities might be restricted. In addition to the investments listed, the Money Funds may take temporary defensive measures by holding other types of securities which are permitted by Rule 2a-7 of the 1940 Act. RISKS FOR THE CREDIT SUISSE WARBURG PINCUS U.S. GOVERNMENT MONEY FUND: Like any money market fund investment, this investment is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. This Fund seeks to preserve the value of your investment at $1.00 per share, however, it is possible to lose money by investing in this Fund. 37 The Credit Suisse Warburg Pincus U.S. Government Money Fund earns income at current money market rates and its yield will vary from day to day and generally reflects current short-term interest rates and other market conditions. It is important to note that neither the Credit Suisse Warburg Pincus U.S. Government Money Fund nor its yield is insured or guaranteed by the U.S. Government. TO MAINTAIN PORTFOLIO DIVERSIFICATION AND REDUCE INVESTMENT RISK, THE MONEY FUNDS DO NOT: (1) borrow money, except from banks on a temporary basis or through entering into reverse repurchase agreements to be used exclusively to facilitate the orderly maturation and sale of portfolio securities during any periods of abnormally heavy redemption requests (the borrowings are not used to purchase investments); or (2) pledge, hypothecate or in any manner transfer, as security for indebtedness, its assets, except to secure permitted borrowings. For additional information on the use, risks and costs of the above referenced policies and practices, see "Additional Information on Investment Policies and Risks." 38 ADDITIONAL INFORMATION ON INVESTMENT POLICIES AND RISKS The following general investment policies and risks supplement those set forth above for each Fund. EQUITY SECURITIES. "Equity securities" include common stock, preferred stock (including convertible preferred stock), bonds convertible into common or preferred stock, rights and warrants, equity interests in trusts and depositary receipts for equity securities. CONVERTIBLE SECURITIES. A "convertible security" is a bond or preferred stock which may be converted at a stated price within a specified period of time into a certain quantity of the common or preferred stock of the same or a different issuer. Convertible securities have characteristics of both bonds and equity securities. Like a bond, a convertible security tends to increase in market value when interest rates decline and tends to decrease in market value when interest rates rise. However, the price of a convertible security is also influenced by the market value of the underlying stock. The price of a convertible security tends to increase as the market value of the underlying stock rises, whereas it tends to decrease as the market value of the underlying stock declines. WARRANTS. A "warrant" gives the holder thereof the right to buy equity securities at a specific price during a specified period of time. Warrants tend to be more volatile than the underlying security, and if at a warrant's expiration date the security is trading at a price below the price set in the warrant, the warrant will expire worthless. Conversely, if at the expiration date the underlying security is trading at a price higher than the price set in the warrant, the holder of the warrant can acquire the security at a price below its market value. MORTGAGE-BACKED SECURITIES. Except for the Credit Suisse Warburg Pincus Municipal Trust Fund, the Credit Suisse Warburg Pincus Funds may invest in mortgage-backed securities. "Mortgage-backed securities" are securities that directly or indirectly represent a participation in, or are secured by and payable from mortgage loans on real property, including pass-through securities such as Ginnie Mae, Fannie Mae and Freddie Mac Certificates. The yield and credit characteristics of mortgage-backed securities differ in a number of ways from traditional fixed income securities. The major differences typically include more frequent interest and principal payments, usually monthly, and the possibility that prepayment of principal may be made at any time. Prepayment rates are influenced by changes in current interest rates and a variety of other factors. In general, changes in the rate of prepayment on a security will change the yield to maturity of that security. Under certain interest rate or prepayment rate scenarios, a Fund may fail to recoup fully its investment in such securities notwithstanding the credit quality of the issuers of such securities. Based on historic prepayment patterns, amounts available for reinvestment are likely to be greater during a period of declining interest rates and, thus, are likely to be reinvested at lower interest rates, than during a period of rising interest rates. Mortgage-backed securities may decrease in value as a result of increases in interest rates and may benefit less than other fixed income securities from declining interest rates because of the risk of prepayment. ASSET-BACKED SECURITIES. Except for the Credit Suisse Warburg Pincus Municipal Trust Fund, the Credit Suisse Warburg Pincus Funds may invest in asset-backed securities. "Asset-backed securities" have similar structural characteristics to mortgage-backed securities, but the underlying assets include assets such as motor vehicle installment sales or installment loan contracts, leases of various types of real and personal property and receivables from revolving credit agreements, rather than mortgage loans or interests in mortgage loans. Asset-backed securities present certain risks that are not present in mortgage-backed securities; primarily, these securities do not have the benefit of the same security interest in the related collateral. There is the possibility that recoveries of repossessed collateral may not, in some cases, be available to support payments on these securities. For example, in the event that the collateral underlying an asset-backed security must be disposed of, it may be difficult to convert that collateral into a stream of payments to be paid to the holders of the security. MUNICIPAL SECURITIES. "Municipal securities" are either bonds or notes. Municipal bonds, which are longer-term debt obligations meeting long-term capital needs, are either "general obligation" bonds or "revenue" bonds. Payment of principal and interest on general obligation bonds is secured by the issuing municipality's pledge of its full faith and credit and taxing power. Payment on revenue bonds is met from the revenues obtained from a certain facility, class of facilities, special excise or other tax, but not from general tax revenues. Variations on these two classifications exist, such as revenue bonds backed by a municipality's general taxing power, or general obligation bonds backed by limited taxing power. Municipal notes are short-term debt obligations generally maturing in one year or less meeting short-term capital needs and are also either "general obligation" or "revenue" debt securities. They include tax anticipation notes, revenue anticipation notes, bond anticipation notes, construction loan notes and tax-exempt commercial paper. 39 Municipal securities may have fixed, variable or floating rates of interest. Variable and floating rate securities pay interest at rates that are adjusted periodically, according to a specified formula, in order to minimize fluctuation in the value of the principal of the securities. A "variable" interest rate adjusts at predetermined intervals (e.g., daily, weekly, or monthly), while a "floating" interest rate adjusts whenever a specified benchmark rate (such as the bank prime lending rate) changes. The Credit Suisse Warburg Pincus Municipal Money Fund and Credit Suisse Warburg Pincus Municipal Trust Fund may invest in variable rate obligations. Such adjustments minimize changes in the market value of the obligation, and in the case of the Credit Suisse Warburg Pincus Municipal Money Fund enhances the ability of such Fund to maintain a stable $1.00 net asset value. See "Net Asset Value." INVESTMENT-GRADE DEBT SECURITIES. All of the Credit Suisse Warburg Pincus Funds may invest in debt securities of investment-grade quality. "Investment-grade debt securities" are debt securities rated in one of the four highest rating categories by a nationally recognized statistical rating organization, such as S&P or Moody's. Investment-grade debt securities may also include debt securities believed by the Adviser (on the basis of criteria believed by the Adviser to be comparable to that applied by such rating agencies) to be of comparable quality to debt securities so rated by the rating agencies. Debt securities rated Baa or higher by Moody's or BBB or higher by S&P are investment-grade securities. Securities rated BBB are regarded by S&P as having an adequate capacity to pay interest and repay principal; while such securities normally exhibit adequate protection parameters, adverse economic conditions or changing circumstances are more likely, in the opinion of S&P, to lead to a weakened capacity to pay interest and repay principal for debt in this category than in higher rated categories. Securities rated Baa by Moody's are considered to be medium-grade obligations. These securities are neither highly protected nor poorly secured. The rating organization determines that interest payments and principal security appear to be adequate for the present but certain protective elements may be lacking or may be characteristically unreliable over any great length of time. For a more complete description of Moody's and S&P's ratings, see the Appendix to the Statement of Additional Information of each of the Credit Suisse Warburg Pincus Funds. The investment-grade limitations referenced for each Fund are applicable at the time of initial investment and a Fund may determine to retain securities of issuers which have had their credit characteristics downgraded. REPURCHASE AGREEMENTS. The Credit Suisse Warburg Pincus Funds may enter into a repurchase agreement with member banks of the Federal Reserve System or "primary dealers" (as designated by the Federal Reserve Bank of New York) in such securities. Repurchase agreements permit a Fund to keep all of its assets at work while retaining "overnight" flexibility in pursuit of investments of a longer-term nature. The Adviser requires continual maintenance of collateral with a Fund's custodian in an amount equal to, or in excess of, the market value of the securities that are the subject of a repurchase agreement. In the event a counterparty defaults on its repurchase obligation, a Fund might suffer a loss to the extent that the proceeds from the sale of the collateral are less than the repurchase price. If the counterparty becomes the subject of bankruptcy proceedings, the Fund might be delayed in selling the collateral. NON-U.S. SECURITIES. All of the Credit Suisse Warburg Pincus Funds, except the Money Funds and the Credit Suisse Warburg Pincus Municipal Trust Fund, may invest in securities of issuers outside of the United States, which we refer to as "non-U.S. securities." There are additional risks involved in investing in non-U.S. securities. These risks include those resulting from fluctuations in currency exchange rates, revaluation of currencies, and the possible imposition of currency exchange blockages. In addition, there are risks associated with future adverse political and economic developments and a limited availability of public information concerning issuers. Non-U.S. issuers typically are subject to different accounting, auditing and financial reporting standards. Securities of many non-U.S. companies may be less liquid and their prices more volatile than those of domestic companies. There is the possibility of expropriation, nationalization, confiscatory taxation and limitations on the use or removal of Funds or other assets of a non-U.S. issuer, including the withholding of dividends. Non-U.S. securities may be subject to taxes imposed by foreign governments that would reduce the net yield on such securities. Investment in non-U.S. securities may result in higher expenses due to the cost of converting foreign currency into U.S. dollars, the payment of fixed brokerage commissions on foreign exchanges (which generally are higher than commissions on U.S. exchanges) and the expense of maintaining securities with non-U.S. custodians. 40 Investments in non-U.S. securities include securities issued by European issuers. On January 1, 1999, the countries participating in the European Monetary Union ("EMU") implemented a new currency unit, the Euro, which is reshaping financial markets, banking systems and monetary policies in Europe and other parts of the world. Although it is not possible to predict the eventual impact of the Euro implementation plan on the Funds, the transition to the Euro may change the economic environment and behavior of investors, particularly in European markets. Certain European investments may be subject to additional risks as a result of this conversion. These risks include adverse tax and accounting consequences, as well as difficulty in processing transactions. The Funds are aware of such potential problems and are coordinating ways to prevent or alleviate their adverse impact on the Funds. INVESTMENT COMPANIES. Certain Funds may invest a limited amount of their assets in shares of other investment companies. Investments in other mutual funds may involve the payment of substantial premiums above the value of such investment companies' portfolio securities. In addition, such investments are subject to limitations under the 1940 Act and market availability. Currently, the International Funds, the Credit Suisse Warburg Pincus Strategic Growth Fund, the Credit Suisse Warburg Pincus Technology Fund and the Credit Suisse Warburg Pincus Municipal Money Fund may invest in such investment companies if, in the judgment of the Adviser, the potential benefits of such investments justify the payment of any applicable premium or sales charge. As a shareholder in an investment company, these Funds would bear its ratable share of that investment company's expenses, including its advisory and administrative fees. At the same time shareholders of these Funds would continue to pay their own management fees and other expenses. OPTIONS. A call option is a contract that gives the holder the right to buy from the seller the security underlying the call option at a pre-determined price while a put option is a contract that gives the buyer the right to require the seller to purchase the security underlying the put option at a pre-determined price. The Credit Suisse Warburg Pincus Blue Chip Fund and the Credit Suisse Warburg Pincus Value Fund may write covered call options on individual securities or stock indices. For these Funds, this practice will only be used to minimize the effect of a market decline in the value of securities in their respective portfolios. We cannot guarantee that, should a Fund seek to enter into such transactions, it could do so at all or on terms that are acceptable. The Credit Suisse Warburg Pincus Small Company Value Fund may purchase or sell put and call options on individual securities or stock indices as a means of achieving additional return or of hedging the value of its portfolio. The International Funds may purchase and sell put and call options on securities, currencies and financial indices that are traded on U.S. or non-U.S. securities exchanges or in the over-the-counter market. Options traded in the over-the-counter market are considered illiquid investments. The International Funds may purchase and sell financial futures contracts and options thereon which are traded on a commodities exchange or board of trade for certain hedging, return enhancement and risk management purposes in accordance with regulations of the CFTC. These futures contracts and related options will be on financial indices and foreign currencies or groups of foreign currencies. Each of the Credit Suisse Warburg Pincus Strategic Growth Fund's, Credit Suisse Warburg Pincus Technology Fund's and International Fund's successful use of options and financial futures depends on the ability of the Adviser to predict the direction of the market and is subject to various additional risks. The investment techniques and skills required to use options and futures successfully are different from those required to select international securities for investment. The ability of each of these Funds to close out an option or futures position depends on a liquid secondary market. There is no assurance that liquid secondary markets will exist for any particular option or futures contract at any particular time. The inability to close options and futures positions also could have an adverse impact on each Fund's ability to effectively hedge its portfolio. There is also the risk of loss by the Funds of margin deposits or collateral in the event of bankruptcy of a broker with whom the Funds have an open position in an option, a futures contract or related option. LOWER-GRADE SECURITIES. The Credit Suisse Warburg Pincus High Income Fund purchases lower-grade securities. "Lower-grade securities" are regarded as being predominantly speculative as to the issuer's ability to make payments of principal and interest. Investment in these securities involves substantial risk. Lower-grade securities are commonly referred to as "junk bonds." Issuers of lower-grade securities may be highly leveraged and may not have traditional methods of financing. The risks associated with acquiring the securities of these issuers generally are greater than is the case with higher-rated securities. For example, during an economic downturn or a sustained period of rising interest rates, issuers of lower-grade securities may be more likely to experience financial stress, especially if such issuers are highly leveraged. The risk of loss due to default is significantly greater for the holders of lower-grade securities because such securities may be unsecured and may be subordinate to other securities of the issuer. 41 FUND MANAGEMENT As discussed under "Recent Developments," on November 3, 2000, DLJ, the indirect parent of DLJAM was acquired by Credit Suisse. Following the acquisition, CSAM succeeded DLJAM as Adviser of the Credit Suisse Warburg Pincus Funds pursuant to Interim Advisory Agreements. CSAM, located at 466 Lexington Avenue, New York, New York 10017-3147, is a member of Credit Suisse Asset Management, the institutional asset management arm of Credit Suisse Group, one of the world's leading banks. As of December 31, 2000, Credit Suisse Asset Management companies managed approximately $93 billion in the U.S. and $298 billion globally. Except as set forth below, the investment personnel involved in the management of the Funds has not changed. Effective November 1, 2000, the Subadvisory Agreement with AXA Investor Managers GS Ltd. ("AXA") pursuant to which AXA acted as subadviser of the Credit Suisse Warburg Pincus Developing Markets Fund and Credit Suisse Warburg Pincus International Equity II Fund (the "International Funds") was terminated by mutual agreement of the parties. At that time, the Adviser became solely responsible for investment management of the International Funds. THE FEES PAID FOR THE FISCAL YEAR ENDED OCTOBER 31, 2000 WERE AS FOLLOWS:
- ----------------------------------------------------------------------------------------------------------------- FUND* % OF AVERAGE NET ASSETS FEES PAID - ----------------------------------------------------------------------------------------------------------------- Credit Suisse Warburg Pincus Blue Chip Fund .61% $1,338,293 - ----------------------------------------------------------------------------------------------------------------- Credit Suisse Warburg Pincus Value Fund .58% $1,442,618 - ----------------------------------------------------------------------------------------------------------------- Credit Suisse Warburg Pincus Small Company Value Fund .81% $1,622,703 - ----------------------------------------------------------------------------------------------------------------- Credit Suisse Warburg Pincus Strategic Growth Fund .75% $ 47,380 - ----------------------------------------------------------------------------------------------------------------- Credit Suisse Warburg Pincus Technology Fund .88% $ 208,699 - ----------------------------------------------------------------------------------------------------------------- Credit Suisse Warburg Pincus Developing Markets Fund 1.25% $ 262,585 - ----------------------------------------------------------------------------------------------------------------- Credit Suisse Warburg Pincus International Equity II Fund 1.25% $ 809,279 - ----------------------------------------------------------------------------------------------------------------- Credit Suisse Warburg Pincus Fixed Income II Fund .59% $ 837,673 - ----------------------------------------------------------------------------------------------------------------- Credit Suisse Warburg Pincus Municipal Trust Fund .625% $ 163,791 - ----------------------------------------------------------------------------------------------------------------- Credit Suisse Warburg Pincus High Income Fund .70% $ 98,962 - ----------------------------------------------------------------------------------------------------------------- Credit Suisse Warburg Pincus Municipal Money Fund .40% $ 223,580 - ----------------------------------------------------------------------------------------------------------------- Credit Suisse Warburg Pincus U.S. Government Money Fund .40% $ 256,602 - -----------------------------------------------------------------------------------------------------------------
* The Credit Suisse Warburg Pincus Strategic Growth Fund and the Credit Suisse Warburg Pincus Technology Fund commenced operations on November 18, 1999. Accordingly, the percentages shown represent the annual fees payable pursuant to the advisory agreements. THE FOLLOWING INDIVIDUALS ARE RESPONSIBLE FOR MANAGEMENT OF THE CREDIT SUISSE WARBURG PINCUS FUNDS. Cathy A. Jameson is the portfolio manager of the Credit Suisse Warburg Pincus Fixed Income II Fund, a position she has held since the Fund was started in 1986. Ms. Jameson is a Vice President of the Credit Suisse Warburg Pincus Capital Funds. She is also a Managing Director of CSAM, which she joined as a result of Credit Suisse's acquisition of DLJ. Roger W. Vogel serves as the primary portfolio manager of the Credit Suisse Warburg Pincus Small Company Value Fund and as of February, 2000, the Credit Suisse Warburg Pincus Value Fund. He has acted as the portfolio co-manager of the Credit Suisse Warburg Pincus Blue Chip Fund, the Credit Suisse Warburg Pincus Value Fund, and the Credit Suisse Warburg Pincus Small Company Value Fund since July 1993. Mr. Vogel is a Vice President of the Credit Suisse Warburg Pincus Capital Funds, and a Managing Director of CSAM, which he joined as a result of Credit Suisse's acquisition of DLJ. Prior to becoming associated with the Funds, Mr. Vogel was a Vice President and portfolio manager with Chemical Banking Corp. Marybeth B. Leithead is the portfolio manager of the Credit Suisse Warburg Pincus Municipal Trust Fund, a position she has held since the commencement of its operations on July 28, 1993. Ms. Leithead is also a Vice President of the Credit Suisse Warburg Pincus Capital Funds and a Director of CSAM, which she joined as a result of Credit Suisse's acquisition of DLJ. 42 Hugh M. Neuburger is the primary portfolio manager of the Credit Suisse Warburg Pincus Blue Chip Fund, Credit Suisse Warburg Pincus Strategic Growth Fund and Credit Suisse Warburg Pincus Technology Fund. He has also served as the co-portfolio manager of the Credit Suisse Warburg Pincus Blue Chip Fund, the Credit Suisse Warburg Pincus Value Fund and the Credit Suisse Warburg Pincus Small Company Value Fund since August 1995, and the Credit Suisse Warburg Pincus Developing Markets Fund and the Credit Suisse Warburg Pincus International Equity II Fund since November 2000. Mr. Neuburger is a Managing Director of CSAM, which he joined as a result of Credit Suisse's acquisition of DLJ. William D. Butler, a Vice President of CSAM, which he joined as a result of Credit Suisse's acquisition of DLJ, serves as co-portfolio manager of the Credit Suisse Warburg Pincus Technology Fund. Mr. Butler joined DLJAM as an Equity Analyst in 1998 after spending three years as a Senior Consultant at BARRA Inc., advising institutional money managers on equity risk management, performance attribution and portfolio construction. Luisa Michel is the co-portfolio manager of the Credit Suisse Warburg Pincus Developing Markets Fund and the Credit Suisse Warburg Pincus International Equity II Fund and Vice President of CSAM, with which she has been associated since 1998. Ms. Michel joined CSAM as a result of Credit Suisse's acquisition of DLJ. From 1993 to 1998, Ms. Michel was a Senior International Credit Analyst at Merrill, Lynch, Pierce, Fenner and Smith Inc. focusing on Latin America. From 1989 to 1991, she acted as a lending officer for Manufacturers Hanover Trust Company. Effective December 8, 2000, Richard Lindquist assumed the role of portfolio manager for the Credit Suisse Warburg Pincus High Income Fund. Mr. Lindquist is a Managing Director of CSAM and heads CSAM's high yield management team. Mr. Lindquist joined CSAM in 1995 as a result of CSAM's acquisition of CS First Boston Investment Corp., which he joined in 1989. Previously, he managed high yield portfolios at Prudential Insurance Company of America and a high yield mutual fund at T. Rowe Price Associates. Mr. Lindquist also assumed the role of portfolio manager for the DLJ High Yield Bond Fund. Mr. Lindquist is a Chartered Financial Analyst. 43 HOW TO BUY AND SELL SHARES 1. BUYING SHARES OF THE MONEY FUNDS OR CLASS A, CLASS B OR CLASS C SHARES OF THE OTHER CREDIT SUISSE WARBURG PINCUS FUNDS OPENING AN ACCOUNT: Decide whether your first payment will be delivered by check or wire. Initial payment must be at least $1,000. BY CHECK USING U.S. MAIL: Complete an application and send it along with a check made payable to the Credit Suisse Warburg Pincus Funds to: Credit Suisse Warburg Pincus Funds PFPC, Inc. P.O. Box 61503 King of Prussia, PA 19406-3101 BY CHECK USING U.S. OVERNIGHT DELIVERY: Complete an application and send it along with a check made payable to the Credit Suisse Warburg Pincus Funds to: Credit Suisse Warburg Pincus Funds PFPC, Inc. 211 S. Gulph Road King of Prussia, PA 19406-3101 BY WIRE: Call Credit Suisse Warburg Pincus Funds at 1-800-225-8011 (option #2) to obtain an account number. A representative will instruct you to send a completed, signed application to the Transfer Agent, PFPC, Inc. ("Transfer Agent"). Your account cannot be opened without a completed, signed application and a Fund account number. CONTACT YOUR BANK TO ARRANGE A WIRE TRANSFER TO: Boston Safe Deposit & Trust ABA #: 011001234 Credit: (Insert Name of Your Fund) ACCT#: 006068 FBO (Shareholder name and account number) Your wire instructions must also include: the name of the Fund, your account number and the name(s) of the account holders. An account at the Fund will be established once the application and check are received in good order. If you purchase shares of the Money Funds through a wire transfer, you will be eligible to receive the daily dividend declared on the date of purchase, as long as the Transfer Agent is notified of such purchase by 12:00 noon. The funds must be received by the Transfer Agent by 4:00 p.m. Investors may also purchase shares of the Credit Suisse Warburg Pincus Funds through their securities dealer. For shares purchased through a securities dealer or by clients of an eligible institution: call your broker or service representative for instructions in opening an account. Investors may be charged separate fees if they effect transactions through a securities dealer or eligible institution. In addition, securities dealers may offer an automatic sweep for the shares of the Money Funds in the operation of cash accounts for their customers. Shares of the Money Funds purchased through an automatic sweep by 1:00 p.m. are eligible to receive that day's daily dividend. For more information, contact your securities dealer. Other information regarding purchasing shares is contained in each Fund's Statement of Additional Information. Shareholder accounts established on behalf of the following types of plans will be exempt from the Fund's minimum and additional investment amounts: 401(k) Plans, 403(b) Plans, 457 Plans, SEP Plans, and SIMPLE Plans. An account established for the Funds' Class D shares will also be exempt from the Funds' minimum and subsequent purchase requirements. In addition, the Funds reserve the right to waive their minimum purchase requirements. 44 Additional investments may be made at any time by sending a check payable to the Funds along with an investment stub found at the bottom of the Funds' Shareholder Statement form. If the stub is not available, you may send a check payable to the "Credit Suisse Warburg Pincus Funds" directly to the Transfer Agent at the address listed above. Please reference the account number to be credited on the check, as well as the Fund you have selected to purchase. SELLING SHARES OF THE MONEY FUNDS OR CLASS A, CLASS B OR CLASS C SHARES OF THE OTHER CREDIT SUISSE WARBURG PINCUS FUNDS Will you be requesting a redemption of your holdings in the Credit Suisse Warburg Pincus Funds through the Funds' Telephone Redemption Privilege? YES. Call 1-800-225-8011 to sell your shares. Requests for redemptions of more than $50,000 must be made in writing and be accompanied by a signature guarantee. (A "signature guarantee" is a signature guaranteed by an eligible bank, broker, dealer, credit union, national securities exchange, registered securities association, clearing agency or savings association.) Remember, the Money Funds require a minimum account size of $750 and the other Credit Suisse Warburg Pincus Funds require a minimum account size of $250 for Class A, Class B or Class C shares. NO. FOR SHARES HELD AT THE FUND, WRITE TO THE FUND AT: Credit Suisse Warburg Pincus Funds PFPC, Inc. P.O. Box 61503 (211 S. Gulph Road)* King of Prussia, PA 19406-3101 Remember, any Class A, Class B or Class C account that has less than $250 (or $750 in the case of the Money Funds), the Fund may redeem. *FOR OVERNIGHT DELIVERY. For shares purchased through a broker-dealer: call your broker or securities dealer representative. Your redemption will be processed at the net asset value per share, next computed following the receipt of your request in proper form. If you own Class B or Class C shares or purchased Class A shares without paying an initial sales charge, any applicable CDSC will be applied to the net asset value and deducted from your redemption. The value of your shares may be more or less than your investment depending on the net asset value of your Fund on the day you redeem. The Credit Suisse Warburg Pincus Funds have a minimum account size of $250 for Class A, Class B and Class C shares and $750 for shares of the Money Funds. You may be requested to increase your balance if it falls below these levels. The Funds reserve the right to close such account and send the proceeds to you. A Fund will not redeem involuntarily any shareholder account with an aggregate balance of less than these levels based solely on the market movement of such Fund's shares. For information concerning circumstances in which redemptions may be effected through the delivery of in-kind portfolio securities, see your Statement of Additional Information. PURCHASING ADDITIONAL SHARES Decide if you are making additional purchases by mail, wire, or automatic investment. If using mail or wire, please check to make sure funds meet the $25.00 minimum. BY MAIL: Complete the investment stub found at the bottom of the Funds' shareholder statement form, or if an investment stub is not available, reference on the check the account number to be credited and the Fund you have selected to purchase and mail to: Credit Suisse Warburg Pincus Funds PFPC, Inc. P.O. Box 61503 King of Prussia, PA 19406-3101 45 BY WIRE: Please call the Transfer Agent at 800-225-8011 (option #2) to notify them of the impending wire. PROVIDE YOUR BANK WITH FUNDS AND WITH THE FOLLOWING INFORMATION: Boston Safe Deposit & Trust ABA #: 011001234 Credit: (Insert Name of Your Fund) ACCT#: 006068 FBO (Shareholder name and account number) PURCHASE SHOULD REFERENCE YOUR NAME, ACCOUNT NUMBER, AND NAME OF FUND. AUTOMATIC INVESTMENT PROGRAM: The automatic investment program requires purchases of at least $25.00. Fill out the application, designating the automatic investment option and provide your bank information. The Fund automatically deducts payment from your account on a regular basis. PROVIDE YOUR BANK WITH FUNDS AND WITH THE FOLLOWING INFORMATION: Boston Safe Deposit & Trust ABA #: 011001234 Credit: (Insert Name of Your Fund) ACCT#: 006068 FBO (Shareholder name and account number) Shares of the Money Funds or Class A, Class B or Class C shares of the other Credit Suisse Warburg Pincus Funds may be purchased directly by using the Share Purchase Application found in the prospectus, or through CSAMSI, or by contacting your securities dealer. Shareholders should read the prospectus carefully before investing in the Funds. The minimum initial investment in each Fund is $1,000 ($2,000 for Common Class shares). The minimum for additional investments is $25 ($50 for Common Class shares). The minimum initial and minimum additional investment may be waived for retirement accounts. There is a maximum purchase limitation in the Funds' Class B shares of $250,000 and $1,000,000 in the Funds' Class C shares. Each of the Funds, except the Money Funds, offers Class A, Class B and Class C shares. Class A shares may be purchased at a price equal to net asset value of the Fund plus an initial sales charge imposed at the time of purchase. On a purchase of $1,000,000 or more, there is no initial sales charge, but there could be a CDSC if the shares are redeemed within one year of purchase. Class B shares may be purchased for net asset value, but may be subject to a CDSC upon redemption. The CDSC declines from 4% during the first year of purchase to zero after four years. Class B shares will convert to Class A shares approximately eight years from the time of purchase. Class C shares may be purchased for net asset value, but may be subject to a 1% CDSC if redeemed in the first year. Shares of the Money Funds may be purchased at a price equal to the net asset value per share which is expected to be $1.00. 2. BUYING COMMON CLASS SHARES OF THE CREDIT SUISSE WARBURG PINCUS FUNDS. A. PURCHASES OF COMMON CLASS THROUGH FINANCIAL-SERVICES FIRMS You can buy and sell Common Class shares through a variety of financial-services firms such as banks, brokers and financial advisors. The Credit Suisse Warburg Pincus Funds have authorized these firms (and other intermediaries that the firms may designate) to accept orders. When an authorized firm or its designee has received your order, it is considered received by the fund and will be priced at the next-computed NAV. Financial-services firms may charge transaction fees or other fees that you could avoid by investing directly with the fund. Please read their program materials of the particular firm for any special provisions or additional service features that may apply to your investment. Certain features of the Common Class shares, such as the minimum initial or subsequent investment amounts, may be modified. 46 B. PURCHASING COMMON CLASS SHARES DIRECTLY OPENING AN ACCOUNT Your account application provides us with key information we need to set up your account correctly. It also lets you authorize services that you may find convenient in the future. If you need an application, call our Shareholder Service Center to receive one by mail or fax. Or you can download it from our Internet Web site: www.warburg.com. You can make your initial investment by check or wire. The "By Wire" method in the "Buying Common Class Shares" table below enables you to buy shares on a particular day at that day's closing NAV. ADDING TO AN ACCOUNT You can add to your account in a variety of ways, as shown in the table. If you want to use Automated Clearing House (ACH) transfer, be sure to complete the "ACH on Demand" section of the Common Class shares account application. INVESTMENT CHECKS Checks should be made payable in U.S. dollars to Credit Suisse Warburg Pincus Funds. Unfortunately, we cannot accept "starter" checks that do not have your name preprinted on them. We also cannot accept checks payable to you or to another party and endorsed to the order of Credit Suisse Warburg Pincus Funds. These types of checks may be returned to you and your purchase order may not be processed. WIRE INSTRUCTIONS State Street Bank and Trust Company ABA# 0110 000 28 Attn: Mutual Funds/Custody Dept. [Credit Suisse Warburg Pincus Fund Name] DDA# 9904-649-2 F/F/C: [Account Number and Registration] HOW TO REACH US Shareholder Service Center Toll free: 800-WARBURG (800-927-2874) Fax: 646-354-5026 MAIL: Credit Suisse Warburg Pincus Funds P.O. Box 9030 Boston, MA 02205-9030 Overnight/Courier Service Boston Financial Data Services, Inc. Attn: Credit Suisse Warburg Pincus Funds 66 Brooks Drive Braintree, MA 02184 INTERNET WEB SITE www.warburg.com 47 BUYING COMMON CLASS SHARES OPENING AN ACCOUNT ADDING TO AN ACCOUNT BY CHECK - Complete the NEW - Make your check ACCOUNT APPLICATION. payable to Credit For IRAs use the Suisse Warburg UNIVERSAL IRA Pincus Funds. APPLICATION. - Make your check - Write the account payable to Credit number and the fund Suisse Warburg name on your check. Pincus Funds. - Mail to Credit - Mail to Credit Suisse Warburg Suisse Warburg Pincus Funds. Pincus Funds. - Minimum amount is $100. BY EXCHANGE - Call our Shareholder - Call our Shareholder Service Center to Service Center to request an exchange. request an exchange. Be sure to read the current prospectus - Minimum amount is for the new fund. $250. Also please observe the minimum initial - If you do not have investment. telephone privileges, mail or - If you do not have fax a letter of telephone instruction signed privileges, mail or by all shareholders. fax a letter of instruction signed by all shareholders. BY WIRE - Complete and sign - Call our Shareholder the NEW ACCOUNT Service Center by 4 APPLICATION. For p.m. ET to inform us IRAs use the of the incoming UNIVERSAL IRA wire. Please be sure APPLICATION. to specify your name, the account - Call our Shareholder number and the fund Service Center and name on your wire fax the signed NEW advice. ACCOUNT APPLICATION by 4 p.m. ET. - Wire the money for receipt that day. - Shareholder Services will telephone you - Your purchase will with your account be effective at the number. Please be next NAV calculated sure to specify your after we receive name, the account your order in proper number and the fund form. name on your wire advice. - Minimum amount is $500 - Wire your initial investment for receipt that day. - Mail the original, signed application to Credit Suisse Warburg Pincus Funds. BY AUTOMATED CLEARING HOUSE (ACH) TRANSFER - Cannot be used to - Call our Shareholder open a new account. Service Center to request an ACH transfer from your bank. - Your purchase will be effective at the next NAV calculated after we receive your order in proper form. - Minimum amount is $50, subject to other minimum investment requirements. - Requires ACH on Demand privileges. 48 SELLING COMMON CLASS SHARES SELLING SOME OR ALL OF YOUR SHARES CAN BE USED FOR BY MAIL Write us a letter of - Accounts of any instruction that includes: type. - your name(s) and - Sales of any amount. signature(s) For IRAs please use the - the fund name and IRA DISTRIBUTION REQUEST account number FORM. - the dollar or share amount you want to sell - how to send the proceeds Obtain a signature guarantee or other documentation, if required (see "Selling Shares in Writing"). Mail the materials to Credit Suisse Warburg Pincus Funds. If only a letter of instruction is required, you can fax it to the Shareholder Service Center. BY EXCHANGE - Call our Shareholder - Accounts with Service Center to telephone request an exchange. privileges. Be sure to read the current prospectus If you do not have for the new fund. telephone privileges, Also please observe mail or fax a letter of the minimum initial instruction signed by all investment. shareholders to exchange shares. BY PHONE Call our Shareholder - Non-IRA accounts Service Center to request with telephone a redemption. You can privileges. receive the proceeds as: - a check mailed to the address of record ($100 minimum) - an ACH transfer to your bank ($50 minimum) - a wire to your bank ($500 minimum) See "By Wire or ACH Transfer" for details. BY WIRE OR ACH TRANSFER - Complete the "Wire - Non-IRA accounts Instructions" or with wire-redemption "ACH on Demand" or ACH on Demand section of your NEW privileges. ACCOUNT APPLICATION. - Requests by phone or - For federal-funds mail. wires, proceeds will be wired on the next business day. For ACH transfers, proceeds will be delivered within two business days. 49 SELLING COMMON CLASS SHARES IN WRITING Some circumstances require a written sell order, along with a signature guarantee. These include: - - accounts whose address of record has been changed within the past 30 days - - redemptions in certain large amounts (other than by exchange) - - requests to send the proceeds to a different payee or address - - shares represented by certificates, which must be returned with your sell order A signature guarantee helps protect against fraud. You can obtain one from most banks or securities dealers, but not from a notary public. RECENTLY PURCHASED COMMON CLASS SHARES For fund shares purchased other than by bank wire, bank check, U.S. Treasury check, certified check or money order, the funds will delay payment of your cash redemption proceeds until the check or other purchase payment clears, which generally takes up to 10 calendar days from the day of purchase. At any time during this period, you may exchange into another fund. LOW-BALANCE ACCOUNTS OF COMMON CLASS SHARES If your account balance falls below the minimum required to keep it open due to redemptions or exchanges, the fund may ask you to increase your balance. If it is still below the minimum after 60 days, the fund may close your account and mail you the proceeds. - - Minimum to Keep an Account Open: $2,000 3. ADVISOR CLASS AND CLASS D SHARES. Advisor Class shares may be purchased through certain eligible institutions and financial services firms. Class D shares are offered exclusively to employees of CSFB and its subsidiaries that are eligible to participate in the Employee Savings and Retirement Plan of Credit Suisse First Boston, certain investment advisory or brokerage clients of CSAM or its affiliates, and certain employee benefit plans for employees of CSAM or its affiliates. CSFB employees should contact the CSFB Hotline at 1-800-588-6200 to learn how to purchase Class D shares. 50 OTHER SHAREHOLDER INFORMATION CLASSES OF SHARES AND SALES CHARGES The Credit Suisse Warburg Pincus Funds, except the Money Funds, offer Class A shares, Class B shares, Class C shares and Common Class shares to the general public. The Advisor Class shares of the Credit Suisse Warburg Pincus Value Fund are available for purchase through certain eligible institutions and financial services firms. Class D shares are offered exclusively to employees of CSFB and its subsidiaries who are eligible to participate in the Employee Savings and Retirement Plan of Credit Suisse First Boston, certain investment advisory or brokerage clients of CSAM or its affiliates, and certain employee benefit plans for employees of CSAM or its affiliates. Class D shares are only offered by the Credit Suisse Warburg Pincus Blue Chip Fund, the Credit Suisse Warburg Pincus Value Fund, the Credit Suisse Warburg Pincus Small Company Value Fund, the Credit Suisse Warburg Pincus Technology Fund, the Credit Suisse Warburg Pincus Fixed Income II Fund, the Credit Suisse Warburg Pincus High Income Fund and the Credit Suisse Warburg Pincus International Equity II Fund. Shares held in each Fund are normally entitled to one vote (with proportional voting for fractional shares) for all purposes. Each class is identical in all respects except that each class bears different distribution service fees (except for Class D shares, which are not subject to any distribution service fees and are offered only to a limited group of investors). Each class has different exchange privileges and only Class B shares have a conversion feature. Class A, Class B, Class C, Common Class and Advisor Class shareholders have exclusive voting rights relating to their respective class's 12b-1 Plan. CLASS A SHARES OFFERING PRICE: The offering price for Class A shares (with a sales charge) is NAV plus the applicable sales charge (unless you are entitled to a waiver). The offering price for Class A shares of the Funds is the net asset value plus the applicable sales charge from the schedule below: INITIAL SALES CHARGE -- CLASS A CREDIT SUISSE WARBURG PINCUS FIXED INCOME FUNDS (1)
- ----------------------------------------------------------------------------------------------------------------- AMOUNT PURCHASED AS A % OF AMOUNT AS A % OF OFFERING COMMISSION TO INVESTED PRICE DEALER/AGENT AS A % OF OFFERING PRICE - ----------------------------------------------------------------------------------------------------------------- Less than $50,000 4.99% 4.75% 4.25% - ----------------------------------------------------------------------------------------------------------------- $50,000 to less than 4.71% 4.50% 4.00% $100,000 - ----------------------------------------------------------------------------------------------------------------- $100,000 to less than 3.63% 3.50% 3.25% $250,000 - ----------------------------------------------------------------------------------------------------------------- $250,000 to less than 2.56% 2.50% 2.25% $500,000 - ----------------------------------------------------------------------------------------------------------------- $500,000 to less than 2.04% 2.00% 1.75% $1,000,000 - ----------------------------------------------------------------------------------------------------------------- $1,000,000 or more 0 0 1.00%* - -----------------------------------------------------------------------------------------------------------------
51 CREDIT SUISSE WARBURG PINCUS EQUITY FUNDS (2)
- ----------------------------------------------------------------------------------------------------------------- AMOUNT PURCHASED AS A % OF AMOUNT AS A % OF OFFERING COMMISSION TO INVESTED PRICE DEALER/AGENT AS A % OF OFFERING PRICE - ----------------------------------------------------------------------------------------------------------------- Less than $50,000 6.10% 5.75% 5.00% - ---------------------------------------------------------------------------------------------------------------- $50,000 to less than 4.99% 4.75% 4.00% $100,000 - ---------------------------------------------------------------------------------------------------------------- $100,000 to less than 3.90% 3.75% 3.00% $250,000 - ---------------------------------------------------------------------------------------------------------------- $250,000 to less than 2.56% 2.50% 2.00% $500,000 - ---------------------------------------------------------------------------------------------------------------- $500,000 to less than 2.04% 2.00% 1.75% $1,000,000 - ---------------------------------------------------------------------------------------------------------------- $1,000,000 or more 0 0 1.00%* - ----------------------------------------------------------------------------------------------------------------
(1) The Credit Suisse Warburg Pincus Fixed Income Funds include the Credit Suisse Warburg Pincus Fixed Income II Fund, the Credit Suisse Warburg Pincus Municipal Trust Fund and the Credit Suisse Warburg Pincus High Income Fund. (2) The Credit Suisse Warburg Pincus Equity Funds include the Credit Suisse Warburg Pincus Blue Chip Fund, the Credit Suisse Warburg Pincus Value Fund, the Credit Suisse Warburg Pincus Small Company Value Fund, the Credit Suisse Warburg Pincus Strategic Growth Fund, the Credit Suisse Warburg Pincus Technology Fund, the Credit Suisse Warburg Pincus Developing Markets Fund and the Credit Suisse Warburg Pincus International Equity II Fund. * On purchases of $1,000,000 or more, there is no initial sales charge although there could be a Limited CDSC (as described below). The Distributor may pay the dealer a fee of up to 1% as follows: 1% on purchases up to and including $3 million, .50% on the next $47 million, .25% on purchase amounts over $50 million. In addition, Class A shares issued upon conversion of Class B shares of the Funds are not subject to an initial sales charge. From time to time, the Distributor may re-allow the full amount of the sales charge to brokers as a commission for sales of such shares. In addition, investors may be charged a fee by a securities dealer if they effect transactions through a broker or agent. THE INITIAL SALES CHARGE IS WAIVED FOR THE FOLLOWING SHAREHOLDERS OR TRANSACTIONS: (1) investment advisory clients of the Adviser; (2) officers, Trustees and retired Trustees of the Funds, directors or trustees of other investment companies managed by the Adviser, officers, directors and full-time employees of the Adviser and of its wholly-owned subsidiaries or parent entities ("Related Entities"); or the spouse, siblings, children, parents or grandparents of any such person or any such person's spouse (collectively, "relatives"), or any trust or individual retirement account or self-employed retirement plan for the benefit of any such person or relative; or the estate of any such person or relative, if such sales are made for investment purposes (such shares may not be resold except to the Funds); (3) certain employee benefit plans for employees of the Advisers and Related Entities; (4) full-time employees of the Funds' Transfer Agent or an entity that provides distribution to the Funds, an agent or broker of a dealer that has a sales agreement with the Distributor, for their own account or an account of a relative of any such person, or any trust or individual retirement account or self-employed retirement plan for the benefit of any such person or relative; or the estate of any such person or relative, if such sales are made for investment purposes (such shares may not be resold except to the Funds); (5) shares purchased by registered investment advisers on behalf of fee-based accounts or by broker-dealers that have sales agreements with the Funds and for which shares have been purchased on behalf of wrap fee client accounts and for which such registered investment advisers or broker-dealers perform advisory, custodial, record keeping or other services; 52 (6) shareholders who received shares in the Credit Suisse Warburg Pincus Funds as a result of the merger of Neuwirth Fund, Inc., Pine Street Fund, Inc. or deVegh Mutual Fund, Inc., and who have maintained their investment in such shares; (7) shares purchased for 401(k) Plans, 403(b) Plans and 457 Plans; and employee benefit plans sponsored by an employer; non-U.S. nationalized pension plans; and (8) Class B shares which are automatically converted to Class A shares. REDUCED SALES CHARGES ARE AVAILABLE TO PARTICIPANTS IN THE FOLLOWING PROGRAMS: LETTER OF INTENT. By initially investing at least $1,000 and submitting a Letter of Intent to the Funds' Distributor or Transfer Agent, you may purchase shares of a Credit Suisse Warburg Pincus Fund over a 13-month period at the reduced sales charge, which applies, to the aggregate amount of the intended purchases stated in the Letter. The Letter only applies to purchases made up to 90 days before the date of the Letter. RIGHT OF ACCUMULATION. For investors who already have an account with the Funds, reduced sales charges based upon the Funds' sales charge schedules are applicable to subsequent purchases. The sales charge on each additional purchase is determined by adding the current net asset value of the shares the investor currently owns to the amount being invested. The Right of Accumulation is illustrated by the following example: If a previous purchase currently valued in the amount of $50,000 had been made subject to a sales charge and the shares are still held, a current purchase of $50,000 will qualify for a reduced sales charge (i.e., the sales charge on a $100,000 purchase). The reduced sales charge is applicable only to current purchases. It is the investor's responsibility to notify the Transfer Agent at the time of subsequent purchases that the account is eligible for the Right of Accumulation. CONCURRENT PURCHASES. To qualify for a reduced sales charge, you may combine concurrent purchases of shares purchased in any Credit Suisse Warburg Pincus Fund. For example, if the investor concurrently invests $25,000 in one Fund and $25,000 in another, the sales charge would be reduced to reflect a $50,000 purchase. In order to exercise the Concurrent Purchases privilege, the investor must notify the Distributor or Transfer Agent prior to his or her purchase. COMBINED PURCHASE PRIVILEGE. By combining the investor's holdings of shares in any Credit Suisse Warburg Pincus Fund, the investor can reduce the initial sales charges on any additional purchases of Class A shares. The investor may also use these combinations under a Letter of Intent. This allows the investor to make purchases over a 13-month period and qualify the entire purchase for a reduction in initial sales charges on Class A shares. A combined purchase of $1,000,000 or more may trigger the payment of a dealer's commission and the applicability of a Limited CDSC. See "Other Shareholder Information -- Class A Limited CDSC." REINSTATEMENT PRIVILEGE. The Reinstatement Privilege permits shareholders to reinvest the proceeds provided by a redemption of a Fund's Class A shares within 120 days from the date of redemption without an initial sales charge. It is the investor's responsibility to notify the Transfer Agent prior to his or her purchase in order to exercise the Reinstatement Privilege. In addition, a CDSC paid to the Distributor will be eligible for reimbursement at the current net asset value of the applicable Fund if a shareholder reinstates his Fund account holdings within 120 days from the date of redemption. CLASS B SHARES You may choose to purchase Class B shares at the Fund's net asset value although such shares may be subject to a CDSC when you redeem your investment. The CDSC does not apply to investments held for more than four years or shares received pursuant to dividend reinvestment. 53 Where the CDSC is imposed, the amount of the CDSC will depend on the number of years that you have held the shares according to the table on this page. The CDSC will be assessed on an amount equal to the lesser of the then current net asset value or the original purchase price of the shares identified for redemption.
- -------------------------------------------------------------------------------- YEAR AFTER PURCHASE CDSC PERCENTAGE - -------------------------------------------------------------------------------- 1st 4% ---------------------------------------------------- 2nd 3% ---------------------------------------------------- 3rd 2% ---------------------------------------------------- 4th 1% ---------------------------------------------------- After 4th year None ----------------------------------------------------
THE CDSC ON CLASS B SHARES WILL BE WAIVED FOR THE FOLLOWING SHAREHOLDERS OR TRANSACTIONS: (1) shares received pursuant to the exchange privilege which are currently exempt from a CDSC; (2) redemptions as a result of shareholder death or disability (as defined in the Internal Revenue Code of 1986, as amended); (3) redemptions made pursuant to a Credit Suisse Warburg Pincus Fund's systematic withdrawal plan pursuant to which up to 1% monthly or 3% quarterly of an account (excluding dividend reinvestments) may be withdrawn, provided that no more than 12% of the total market value of an account may be withdrawn over any 12 month period. Shareholders who elect systematic withdrawals on a semi-annual or annual basis are not eligible for the waiver; and (4) liquidations, distributions or loans from the following types of retirement plan accounts: -Section 401(k) retirement Plans; -Section 403(b) Plans; or -Section 457 Plans; and (5) A redemption related to minimum distributions from retirement plans or accounts at age 70 1/2, which are required without penalty pursuant to the Internal Revenue Code. Redemptions effected by the Funds pursuant to their right to liquidate a shareholder's account with a current net asset value of less than $250 will not be subject to the CDSC. In addition, Class B shares held for eight years after purchase will be automatically converted in Class A shares and accordingly will no longer be subject to the CSDC. CLASS A LIMITED CDSC. A Limited Contingent Deferred Sales Charge ("Limited CDSC") will be imposed by the Funds upon certain redemptions of Class A shares (or shares into which such Class A shares are exchanged) made within 12 months of purchase, if such purchases were made at net asset value and triggered the payment by the Distributor of the dealer's commission described above (i.e., purchases of $1,000,000 or more). The Limited CDSC will be paid to the Distributor and will be equal to the lesser of 1% of: - - the net asset value at the time of purchase of the Class A shares being redeemed; or - - the net asset value of such Class A shares at the time of redemption. For purposes of this formula, the "net asset value at the time of purchase" will be the net asset value at the time of purchase of such Class A shares even if those shares are later exchanged, and in the event of an exchange of such Class A shares, the "net asset value of such shares at the time of redemption" will be the net asset value of the shares into which the Class A shares have been exchanged. The Limited CDSC on Class A shares will be waived on redemptions made pursuant to a Credit Suisse Warburg Pincus Fund's systematic withdrawal plan under the same circumstances as outlined in item (3) above related to the waiver of the CDSC on Class B shares. CLASS C SHARES You may choose to purchase Class C shares at the Fund's net asset value, although such shares will be subject to a 1% CDSC if you redeem your shares within 1 year. If you exchange your shares for Class C shares of another Credit Suisse Warburg Pincus Fund, the 1% CDSC also will apply to those Class C shares. The 1-year period for the CDSC begins with the date of your original purchase, not the date of the exchange for the other Class C shares. The 54 1% CDSC on Class C shares will be waived under the circumstances that would result in a waiver of the CDSC on Class B shares. Class C shares are subject to a distribution fee of 1.00% of average daily net assets. CLASS D SHARES Class D shares are offered only to employees of CSFB and its subsidiaries who are eligible to participate in the Employee Savings and Retirement Plan of Credit Suisse First Boston, certain investment advisory or brokerage clients of CSAM or its affiliates, and certain employee benefit plans for employees of CSAM or its affiliates. Class D shares are not subject to any sales charges or distribution fees. CSFB employees should contact the CSFB 401(k) Hotline at 1-800-588-6200 to learn how to purchase Class D shares. COMMON CLASS SHARES You may choose to purchase Common Class shares at the Fund's net asset value. Common Class shares are not subject to any initial or contingent deferred sales charge, but there is a distribution fee of .25% of average daily net assets. The Distributor, the Adviser or their affiliates may make additional payments out of their own resources to institutions for providing distribution, administrative, accounting and/or other services with respect to Common Class shares. Under certain circumstances, the Funds, on behalf of the Series, may reimburse a portion of these payments. ADVISOR CLASS SHARES Advisor Class shares of the Credit Suisse Warburg Pincus Value Fund are available for purchase through certain institutions and financial services firms and are not available to individual investors directly. These shares will be offered without a front end sales load or a contingent deferred sales charge but will be charged a shareholder service fee payable at an annual rate of up to .25%, and a distribution and/or administrative services fee payable at an annual rate of up to .50% of the average daily net assets of such class. The aggregate distribution and/or shareholder services fee payable by the Advisor Class may not exceed .75% of the average daily net assets relating to that class. The Board of Trustees is currently limiting the amount payable to .50 of 1% of the average daily net assets relating to that class. Payments may be made to an institution directly out of assets of the Fund attributable to the class or by the Distributor on the Fund's behalf. The Distributor, the Adviser or their affiliates may make additional payments out of their own resources to institutions for providing distribution, administrative, accounting and/or other services with respect to Advisor Class shares. Under certain circumstances, the Fund, on behalf of the Series, may reimburse a portion of these payments. 55 ADDITIONAL SHAREHOLDER SERVICES EXCHANGE PRIVILEGE. You may exchange shares of a Fund for shares offered under the same class of another Credit Suisse Warburg Pincus Fund or for shares of the Money Funds. Class A shares may also be exchanged for Common Class shares of another Credit Suisse Warburg Pincus Fund. After about July 1, 2001, Common Class shares of Credit Suisse Warburg Pincus Funds may be exchanged for Common Class shares of funds in the Warburg, Pincus family of funds (and VICE VERSA). Shareholders whose initial investment was directly into a Money Fund may exchange such shares for either Class A, Class B, Class C, or Common Class of another Credit Suisse Warburg Pincus Fund. Shares of each Money Fund purchased pursuant to the Credit Suisse Warburg Pincus Funds' exchange privilege will be eligible for exchange into another Credit Suisse Warburg Pincus Fund provided that the exchange is directed into the same class of shares upon which the initial investment was made. Shareholders whose initial investment was invested directly into a Money Fund will, upon an exchange request, automatically be exchanged into Class A shares of the requested Fund (unless otherwise indicated on the purchase application or by written notice). You should be aware that for federal income tax purposes an exchange is treated as a sale and a purchase of shares which may result in recognition of a gain or loss. THE FOLLOWING PRIVILEGES ARE PROVIDED BY THE TRANSFER AGENT AND DO NOT APPLY TO CLASS D OR ADVISOR CLASS SHARES: AUTOMATIC MONTHLY INVESTMENT PLAN. You may elect on the Application to make additional investments in a Fund automatically by authorizing Credit Suisse Warburg Pincus to withdraw funds from your bank or other cash account and purchase additional shares with those funds. You select the date (either the 10th, 15th or 20th of each month) and amount (subject to a minimum of $25 for Class A, Class B or Class C shares or $50 for Common Class shares). The plan may be terminated at any time without penalty by you or the Fund. AUTOMATIC EXCHANGE PLAN. You may authorize the Credit Suisse Warburg Pincus Funds in advance to exchange a set dollar amount of shares in one Fund for shares of the same class of another Fund or for shares of the Money Funds on a monthly, quarterly, semi-annual or annual basis under an Automatic Exchange Plan. The minimum exchange amount under the Automatic Exchange Plan is $50. These exchanges are subject to the terms of the Exchange Privilege described above. This service is not available for Common Class shares. DIVIDEND DIRECTION OPTION. Any Class A, Class B or Class C shareholder may elect on the Application to have his or her dividends paid to another individual. All shareholders may elect to have his or her dividends directed for reinvestment within the same class of another Fund provided that an existing account in such other Fund is maintained by the shareholder. SYSTEMATIC WITHDRAWAL PLAN. Any Class A, Class B or Class C shareholder who owns or purchases shares of a Fund having a current net asset value of at least $10,000 may establish a Systematic Withdrawal Plan under which the shareholder or a third party will receive payment by check in a stated amount of not less than $50 on a monthly, quarterly, semi-annual or annual basis. A CDSC which may otherwise be imposed on a redemption will be waived in connection with redemptions made pursuant to Credit Suisse Warburg Pincus Funds' Systematic Withdrawal Plan up to 1% monthly or 3% quarterly of an account (excluding dividend reinvestment) not to exceed 12% over any 12 month rolling period. Systematic withdrawals elected on a semi-annual or annual basis are not eligible for the waiver. Common Class shareholders have available the Automatic Withdrawal Plan for making automatic monthly, quarterly, semiannual or annual withdrawals of $250 or more. CHECKWRITING PRIVILEGES. Shareholders of the Money Funds may redeem shares by writing checks of at least $100 against their account balance. Investments in the Money Funds will continue to earn dividends until a shareholder's check is presented to the Money Funds for payment. Checks will be returned by the Transfer Agent if there are insufficient shares to meet the withdrawal amount. You should not attempt to close an account by check because the exact balance at the time the check clears will not be known when the check is written. There is currently no charge to shareholders for checkwriting, but the Money Funds reserve the right to impose a charge in the future. The Money Funds may modify, suspend or terminate checkwriting privileges at any time upon notice to shareholders and will terminate checkwriting privileges without notice for accounts whose assets are exchanged completely out of the Money Funds. In addition, Boston Safe Deposit & Trust., as agent for the Transfer Agent in processing redemptions via the checkwriting privilege, reserves the right to terminate checkwriting privileges at any time without notice to you. Checkwriting privileges are not available for accounts subject to a CDSC. 56 SAVEMYMONEY PROGRAM. Available to Common Class shareholders of certain Funds, SaveMyMoney-SM- is a low minimum, automatic investing program that makes it easy to build a mutual fund portfolio. For an initial investment of $250 along with a minimum $50 monthly investment, you can invest in Common Class shares. The SaveMyMoney Program will automatically transfer the monthly investment amount you designate from your bank account. RETIREMENT PLANS. Credit Suisse Warburg Pincus Funds offer a range of qualified retirement plans including Traditional, Educational and Roth IRAs, SEPs, SIMPLE plans and other pension and profit sharing plans. Semper Trust Company serves as custodian under these prototype retirement plans and charges an annual account maintenance fee of $15 per participant, regardless of the number of Funds selected. To transfer your IRA to Credit Suisse Warburg Pincus, use the IRA TRANSFER/DIRECT ROLLOVER FORM. If you are opening a new IRA, you will also need to complete the UNIVERSAL IRA APPLICATION. Please consult your tax professional concerning your IRA eligibility and tax situation. For more information you should write or telephone the Transfer Agent at 1-800-225-8011. For a more detailed explanation of the retirement plans offered by the Funds, see each Fund's Statement of Additional Information. TRANSFERS/GIFTS TO MINORS. Depending on state laws, you can set up a custodial account under the Uniform Transfers-to-Minors Act (UTMA) or the Uniform Gifts-to-Minors Act (UGMA). Please consult your tax professional about these types of accounts. Additional information concerning shareholder services is available by contacting the Funds at the address or telephone number listed on the last page of this Prospectus. THE FUNDS DO NOT PERMIT MARKET-TIMING. DO NOT INVEST IN THESE FUNDS IF YOU ARE A MARKET-TIMER. THE FUNDS RESERVE THE RIGHT TO IMPOSE SHORT-TERM REDEMPTION FEES TO DISCOURAGE MARKET-TIMING IN THE FUNDS. DISTRIBUTION CHARGES Each Fund has adopted 12b-1 Plans pursuant to the rules of the 1940 Act. These plans allow each Fund to collect distribution and service fees for the sale and servicing of the individual classes of each Fund's shares. Since these fees are paid out of each Fund's assets on an on-going basis, over time these fees will increase the cost of your investment. These fees may cost you more than paying other types of sales charges. Effective as of August 1, 2000, the limitation on annual distribution and service fees for Class A shares of the Credit Suisse Warburg Pincus Blue Chip Fund, Credit Suisse Warburg Pincus Value Fund, Credit Suisse Warburg Pincus Small Company Value Fund, Credit Suisse Warburg Pincus Fixed Income II Fund and Credit Suisse Warburg Pincus Municipal Trust Fund was reduced from 0.30% to 0.25%. Effective as of the date of this Prospectus, the limitation on annual distribution and service fees for the Advisor Class of the Credit Suisse Warburg Pincus Value Fund has been reduced from 0.75% to 0.50%. The Funds do not pay any of the expenses for distributing Class D shares. DISTRIBUTION AND SERVICE FEES: Distribution and service fees are used to pay the Distributor to promote the sale of shares and the servicing of accounts of each Fund. The expenses incurred by the Distributor under the 12b-1 Plans include the preparation, printing and distribution of prospectuses, sales brochures and other promotional materials sent to prospective shareholders. They also include purchasing radio, television, newspaper and other advertising and compensating the Distributor's employees or employees of the Distributor's affiliates for their distribution assistance. Distribution fees also allow the Distributor to compensate broker/dealers or other persons or entities for providing distribution assistance, as well as financial intermediaries for providing administrative and accounting services for their account holders. In addition to commissions and maintenance fees paid to broker/dealers the Distributor may from time to time pay additional compensation to broker/dealers in connection with the sale of shares. Such additional amounts may be utilized to provide additional compensation to registered representatives of such broker/dealers who sell shares of the Fund. On some occasions, such compensation will be conditioned on the sale of a specified minimum dollar amount of the shares of the Funds during a specific period of time. Such incentives may take the form of payment for meals, entertainment, or attendance at educational seminars and associated expenses such as travel and lodging. Such broker/dealers may elect to receive cash incentives of equivalent amounts in lieu of such payments. 57 DIVIDEND AND DISTRIBUTION INFORMATION Dividends are declared daily and paid monthly to shareholders of the Money Funds, the Credit Suisse Warburg Pincus Fixed Income II Fund, the Credit Suisse Warburg Pincus Municipal Trust Fund and the Credit Suisse Warburg Pincus High Income Fund from net investment income. Dividends are paid to shareholders of the Credit Suisse Warburg Pincus Value Fund quarterly, if net investment income has been earned, and to shareholders of the Credit Suisse Warburg Pincus Blue Chip Fund, the Credit Suisse Warburg Pincus Small Company Value Fund, the Credit Suisse Warburg Pincus Strategic Growth Fund, the Credit Suisse Warburg Pincus Technology Fund and the International Funds once a year. Capital gains earned in any of the Funds are normally distributed to shareholders once a year, shortly after the Funds' fiscal year end. For purposes of this calculation, net investment income consists of all accrued interest and dividend income on Fund assets less the Fund expenses applicable to that dividend period. For your convenience, dividends and capital gains are automatically reinvested in your Fund. If you ask us to pay the distributions in cash, the Fund will send you a check instead of purchasing more shares of your Fund. You will receive a confirmation that shows the payment amount and a summary of all transactions. Checks are normally mailed within five business days of the payment date. TAXES As with any investment, you should consider how your investment in the Funds will be taxed. If your account is not a tax-deferred retirement account, you should be aware of these tax consequences. For federal income tax purposes, a Fund's income and short-term capital gain distributions are taxed as ordinary income. Long-term capital gain distributions are taxed as long-term capital gains. Your distributions may also be subject to state and local income taxes. The distributions are taxable when they are paid, whether you receive them in cash or participate in the dividend reinvestment program. Each January, your Fund will mail you a form indicating the federal tax status of your dividend and capital gain distributions. For individuals, long-term capital gains are generally subject to a maximum tax rate of 20%. If you hold shares in a tax-deferred retirement account, your distributions will be taxed when you receive a distribution from your tax-deferred account. Distributions to shareholders of tax-exempt interest income earned by the Credit Suisse Warburg Pincus Municipal Trust Fund and the Credit Suisse Warburg Pincus Municipal Money Fund are not subject to federal income tax if, at the close of each quarter of each Fund's taxable year, at least 50% of the value of each Fund's total assets consists of tax-exempt obligations. Both Funds intend to meet this requirement. Because the Credit Suisse Warburg Pincus Municipal Trust Fund and Credit Suisse Warburg Pincus Municipal Money Fund can invest in taxable municipal bonds and other taxable securities as well as tax-exempt municipal bonds, the portion of their dividends exempt from or subject to regular federal income taxes cannot be predicted. In addition, these distributions may also be subject to state and local taxes. If you are subject to the AMT, you should be aware that a portion of the distributions out of tax-exempt interest earned by the Credit Suisse Warburg Pincus Municipal Trust Fund and the Credit Suisse Warburg Pincus Municipal Money Fund may be taxable. When you redeem your shares, the tax treatment of any gains or losses may be affected by the length of time for which you hold your shares. As a shareholder, you must provide your Fund with a correct taxpayer identification number (generally your Social Security number) and certify that you are not subject to backup withholding. If you fail to do so, the IRS can require your Fund to withhold 31% of your taxable distributions and redemptions. Federal law also requires your Fund to withhold 30% or the applicable tax treaty rate from dividends paid to certain non-resident alien, non-U.S. partnership and non-U.S. corporation shareholder accounts. Please see the Statement of Additional Information for your Fund for more information on the tax consequences of your investment. You should also consult your own tax adviser for further information. THE TAXPAYER RELIEF ACT OF 1997: The Taxpayer Relief Act of 1997 made certain changes to capital gains tax rates. Under this law, certain taxpayers will pay a lower tax rate when it comes to capital gains. The Fund will provide information relating to the portion of any Fund distribution that is eligible for the reduced capital gains tax rate. 58 FINANCIAL HIGHLIGHTS The financial highlights table is intended to help you understand your Fund's financial performance for the past 5 years (or, if shorter, the period of the Fund's operations.) Certain information reflects financial results for a single Fund share. The total returns in the table represent the rate that an investor would have earned (or lost) on an investment in the indicated Fund (assuming reinvestment of all dividends and distributions). This information has been audited by Ernst & Young LLP, the Funds' independent auditors, whose unqualified reports, along with the Funds' financial statements, are included in the Statements of Additional Information, which are available upon request. Additional information about the performance of the Funds is contained in each Fund's annual report to shareholders, which may be obtained without charge. Prior to February 28, 1996, the Credit Suisse Warburg Pincus Capital Funds offered only a single class of shares. Accordingly, the data presented below with respect to Class A shares of the Credit Suisse Warburg Pincus Capital Funds for periods prior to such date have been obtained from the financial statements for the Credit Suisse Warburg Pincus Capital Funds' sole class of shares outstanding during such prior fiscal years. Also, Class R shares of the Fund are now designated Common Class. 59
NET ASSET NET NET REALIZED TOTAL DIVIDENDS VALUE INVESTMENT AND UNREALIZED FROM FROM NET BEGINNING INCOME/ GAINS/(LOSSES) INVESTMENT INVESTMENT OF PERIOD (LOSS) ON SECURITIES OPERATIONS INCOME - --------------------------------------------------------------------------------------------------------------------- CREDIT SUISSE WARBURG PINCUS BLUE CHIP FUND CLASS A Year Ended October 31, 2000 ...................... $21.27 $(0.04)* $2.92 $2.88 $ -- Year Ended October 31, 1999 ...................... 16.52 (0.03)* 5.04 5.01 -- Year Ended October 31, 1998 ...................... 14.56 (0.00)*+ 2.88 2.88 (0.02) Year Ended October 31, 1997 ...................... 12.69 0.03 3.07 3.10 (0.05) Year Ended October 31, 1996 ...................... 11.35 0.05 2.11 2.16 (0.04) CLASS B Year Ended October 31, 2000 ...................... 20.75 (0.20)* 2.85 2.65 -- Year Ended October 31, 1999 ...................... 16.25 (0.17)* 4.93 4.76 -- Year Ended October 31, 1998 ...................... 14.41 (0.12)* 2.86 2.74 -- Year Ended October 31, 1997 ...................... 12.63 (0.03) 3.02 2.99 (0.03) Year Ended October 31, 1996+ ..................... 11.88 (0.01) 0.76 0.75 -- CLASS C Year Ended October 31, 2000++++ .................. 20.01 (0.17)* 1.95 1.78 -- CLASS D Year Ended October 31, 2000 ...................... 21.27 0.02* 2.92 2.94 -- Year Ended October 31, 1999++ .................... 20.29 0.01* 0.97 0.98 -- COMMON CLASS Year Ended October 31, 2000++++++ ................ 22.55 (0.02)* 0.02 -- -- - ----------------------------------------------------------------------------------------------------------------------- CREDIT SUISSE WARBURG PINCUS VALUE FUND CLASS A Year Ended October 31, 2000 ...................... $23.49 $0.16* $0.16 $0.32 $(0.12) Year Ended October 31, 1999 ...................... 22.60 0.12* 2.87 2.99 (0.09) Year Ended October 31, 1998 ...................... 20.09 0.20* 3.51 3.71 (0.17) Year Ended October 31, 1997 ...................... 17.18 0.21 4.59 4.80 (0.21) Year Ended October 31, 1996 ...................... 14.57 0.27 2.93 3.20 (0.24) CLASS B Year Ended October 31, 2000 ...................... 23.37 --*+ 0.38 0.38 -- Year Ended October 31, 1999 ...................... 22.55 (0.04)* 2.88 2.84 (0.01) Year Ended October 31, 1998 ...................... 20.06 0.04* 3.50 3.54 (0.02) Year Ended October 31, 1997 ...................... 17.15 0.08 4.58 4.66 (0.07) Year Ended October 31, 1996+ ..................... 16.05 0.14 1.11 1.25 (0.15) CLASS C Year Ended October 31, 2000++++ .................. 20.87 (0.01)* 3.50 3.49 (0.03) CLASS D Year Ended October 31, 2000 ...................... 23.50 0.23* 0.04 0.27 (0.18) Year Ended October 31, 1999+++ ................... 23.73 0.10* (0.26) (0.16) (0.07) COMMON CLASS Year Ended October 31, 2000+++++ ................. 22.44 0.02* 2.13 2.15 (0.04) 60 DISTRIBUTIONS FROM NET ASSET CAPITAL TOTAL VALUE TOTAL GAINS DISTRIBUTIONS END OF PERIOD RETURN** - ------------------------------------------------------------------------------------------------------------------ CREDIT SUISSE WARBURG PINCUS BLUE CHIP FUND CLASS A Year Ended October 31, 2000 ...................... $(1.61) $(1.61) $22.54 14.39% Year Ended October 31, 1999 ...................... (0.26) (0.26) 21.27 30.77 Year Ended October 31, 1998 ...................... (0.90) (0.92) 16.52 21.00 Year Ended October 31, 1997 ...................... (1.18) (1.23) 14.56 26.48 Year Ended October 31, 1996 ...................... (0.78) (0.82) 12.69 20.32 CLASS B Year Ended October 31, 2000 ...................... (1.61) (1.61) 21.79 13.58 Year Ended October 31, 1999 ...................... (0.26) (0.26) 20.75 29.73 Year Ended October 31, 1998 ...................... (0.90) (0.90) 16.25 20.20 Year Ended October 31, 1997 ...................... (1.18) (1.21) 14.41 25.66 Year Ended October 31, 1996+ ..................... -- -- 12.63 6.40 CLASS C Year Ended October 31, 2000++++ .................. -- -- 21.79 8.90 CLASS D Year Ended October 31, 2000 ...................... (1.61) (1.61) 22.60 14.69 Year Ended October 31, 1999++ .................... -- -- 21.27 4.83 COMMON CLASS Year Ended October 31, 2000++++++ ................ -- -- 22.55 0.00 - ------------------------------------------------------------------------------------------------------------------ CREDIT SUISSE WARBURG PINCUS VALUE FUND CLASS A Year Ended October 31, 2000 ...................... $(0.69) $(0.81) $24.62 8.44% Year Ended October 31, 1999 ...................... (2.01) (2.10) 23.49 14.37 Year Ended October 31, 1998 ...................... (1.03) (1.20) 22.60 19.14 Year Ended October 31, 1997 ...................... (1.68) (1.89) 20.09 30.53 Year Ended October 31, 1996 ...................... (0.35) (0.59) 17.18 22.60 CLASS B Year Ended October 31, 2000 ...................... (0.69) (0.69) 24.44 7.66 Year Ended October 31, 1999 ...................... (2.01) (2.02) 23.37 13.66 Year Ended October 31, 1998 (1.03) (1.05) 22.55 18.29 Year Ended October 31, 1997 ...................... (1.68) (1.75) 20.06 29.59 Year Ended October 31, 1996+ ..................... -- (0.15) 17.15 7.67 CLASS C Year Ended October 31, 2000++++ .................. -- (0.03) 24.39 17.02 CLASS D Year Ended October 31, 2000 ...................... (0.69) (0.87) 24.64 8.75 Year Ended October 31, 1999+++ ................... -- (0.07) 23.50 (0.67) COMMON CLASS Year Ended October 31, 2000+++++ ................. -- (0.04) 24.63 9.96 NET ASSETS RATIO OF RATIO OF NET END OF EXPENSES INVESTMENT INCOME PORTFOLIO PERIOD TO AVERAGE (LOSS) TO AVERAGE TURNOVER (000 OMITTED) NET ASSETS(2) NET ASSETS(2) RATE - ----------------------------------------------------------------------------------------------------------------- CREDIT SUISSE WARBURG PINCUS BLUE CHIP FUND CLASS A Year Ended October 31, 2000 ...................... $159,945 1.14% (0.19)% 26.0% Year Ended October 31, 1999 ...................... 135,677 1.23 (0.16) 34.7 Year Ended October 31, 1998 ...................... 97,078 1.29 (0.02) 21.0 Year Ended October 31, 1997 ...................... 82,926 1.36 0.21 41.1 Year Ended October 31, 1996 ...................... 68,096 1.48 0.47 60.6 CLASS B Year Ended October 31, 2000 ...................... 50,233 1.85 (0.91) 26.0 Year Ended October 31, 1999 ...................... 32,783 1.93 (0.86) 34.7 Year Ended October 31, 1998 ...................... 17,438 1.99 (0.72) 21.0 Year Ended October 31, 1997 ...................... 10,378 2.06 (0.51) 41.1 Year Ended October 31, 1996+ ..................... 3,177 2.17(1) (0.34)(1) 60.6 CLASS C Year Ended October 31, 2000++++ .................. 4,412 1.32 (0.91) 26.0 CLASS D Year Ended October 31, 2000 ...................... 23,029 0.85 0.07 26.0 Year Ended October 31, 1999++ .................... 4,839 1.17(1) 0.07(1) 34.7 COMMON CLASS Year Ended October 31, 2000++++++ ................ 1,002 0.27 (0.11) 26.0 - ------------------------------------------------------------------------------------------------------------------ CREDIT SUISSE WARBURG PINCUS VALUE FUND CLASS A Year Ended October 31, 2000 ...................... $162,871 1.08% 0.71% 55.4% Year Ended October 31, 1999 ...................... 174,213 1.11 0.52 24.5 Year Ended October 31, 1998 ...................... 163,936 1.13 0.92 32.7 Year Ended October 31, 1997 ...................... 145,586 1.22 1.15 19.8 Year Ended October 31, 1996 ...................... 113,803 1.36 1.68 44.0 CLASS B Year Ended October 31, 2000 ...................... 41,194 1.80 (0.01) 55.4 Year Ended October 31, 1999 ...................... 41,144 1.81 (0.18) 24.5 Year Ended October 31, 1998 ...................... 33,325 1.83 0.22 32.7 Year Ended October 31, 1997 ...................... 19,664 1.92 0.39 19.8 Year Ended October 31, 1996+ ..................... 6,545 1.99(1) 1.06(1) 44.0 CLASS C Year Ended October 31, 2000++++ .................. 496 1.28 (0.03) 55.4 CLASS D Year Ended October 31, 2000 ...................... 46,708 0.80 1.00 55.4 Year Ended October 31, 1999+++ ................... 48,152 0.97(1) 0.99(1) 24.5 COMMON CLASS Year Ended October 31, 2000+++++ ................. 96 0.43 0.07 55.4
61
NET ASSET NET NET REALIZED TOTAL DIVIDENDS VALUE INVESTMENT AND UNREALIZED FROM FROM NET BEGINNING INCOME/ GAINS/(LOSSES) INVESTMENT INVESTMENT OF PERIOD (LOSS) ON SECURITIES OPERATIONS INCOME - ------------------------------------------------------------------------------------------------------------------------------ CREDIT SUISSE WARBURG PINCUS SMALL COMPANY VALUE FUND CLASS A Year Ended October 31, 2000 ...................... $20.52 $ 0.06* $4.05 $4.11 $(0.04) Year Ended October 31, 1999 ...................... 19.54 0.06* 1.01 1.07 (0.07) Year Ended October 31, 1998 ...................... 23.34 0.07* (2.55) (2.48) (0.06) Year Ended October 31, 1997 ...................... 18.41 0.07 5.66 5.73 (0.08) Year Ended October 31, 1996 ...................... 16.61 0.09 2.16 2.25 (0.04) CLASS B Year Ended October 31, 2000 ...................... 20.13 (0.09)* 3.96 3.87 -- Year Ended October 31, 1999 ...................... 19.23 (0.14)* 1.06 0.92 -- Year Ended October 31, 1998 ...................... 23.12 (0.09)* (2.55) (2.64) -- Year Ended October 31, 1997 ...................... 18.34 (0.02) 5.57 5.55 (0.05) Year Ended October 31, 1996+ ..................... 17.41 (0.02) 0.95 0.93 -- CLASS C Year Ended October 31, 2000++++ .................. 17.96 (0.07)* 4.05 3.98 -- COMMON CLASS Year Ended October 31, 2000+++++ ................. 21.35 0.02* 1.25 1.27 -- - ------------------------------------------------------------------------------------------------------------------------------ CREDIT SUISSE WARBURG PINCUS STRATEGIC GROWTH FUND COMMON CLASS Year Ended October 31, 2000++++++ ................ $10.00 $(0.05)* $0.99 $0.94 $ -- CLASS A Year Ended October 31, 2000+++++++ ............... 11.07 (0.02)* (0.12) (0.14) -- CLASS B Year Ended October 31, 2000+++++++ ............... 11.07 (0.04)* (0.10) (0.14) -- CLASS C Year Ended October 31, 2000+++++++ ............... 11.07 (0.04)* (0.10) (0.14) -- - ------------------------------------------------------------------------------------------------------------------------------ CREDIT SUISSE WARBURG PINCUS TECHNOLOGY FUND COMMON CLASS Year Ended October 31, 2000++++++ ................ $10.00 $(0.14)* $2.93 $2.79 $ -- CLASS A Year Ended October 31, 2000+++++++ ............... 13.30 (0.04)* (0.47) (0.51) -- CLASS B Year Ended October 31, 2000+++++++ ............... 13.30 (0.07)* (0.46) (0.53) -- CLASS C Year Ended October 31, 2000+++++++ ............... 13.30 (0.06)* (0.47) (0.53) -- CLASS D Year Ended October 31, 2000++++++++ .............. 15.79 (0.02)* (2.98) (3.00) -- 62 DISTRIBUTIONS FROM NET ASSET CAPITAL TOTAL VALUE TOTAL GAINS DISTRIBUTIONS END OF PERIOD RETURN** - -------------------------------------------------------------------------------------------------------------- CREDIT SUISSE WARBURG PINCUS SMALL COMPANY VALUE FUND CLASS A Year Ended October 31, 2000 ...................... ($2.05) ($2.09) $22.54 21.69% Year Ended October 31, 1999 ...................... (0.02) (0.09) 20.52 5.47 Year Ended October 31, 1998 ...................... (1.26) (1.32) 19.54 (11.20) Year Ended October 31, 1997 ...................... (0.72) (0.80) 23.34 32.48 Year Ended October 31, 1996 ...................... (0.41) (0.45) 18.41 13.80 CLASS B Year Ended October 31, 2000 ...................... (2.05) (2.05) 21.95 20.80 Year Ended October 31, 1999 ...................... (0.02) (0.02) 20.13 4.75 Year Ended October 31, 1998 ...................... (1.25) (1.25) 19.23 (11.98) Year Ended October 31, 1997 ...................... (0.72) (0.77) 23.12 31.55 Year Ended October 31, 1996+ ..................... -- -- 18.34 5.28 CLASS C Year Ended October 31, 2000++++ .................. -- -- 21.94 22.16 COMMON CLASS Year Ended October 31, 2000+++++ ................. -- -- 22.62 5.95 - -------------------------------------------------------------------------------------------------------------- CREDIT SUISSE WARBURG PINCUS STRATEGIC GROWTH FUND COMMON CLASS Year Ended October 31, 2000++++++ ................ $ -- $ -- $10.94 9.40% CLASS A Year Ended October 31, 2000+++++++ ............... -- -- 10.93 (1.26) CLASS B Year Ended October 31, 2000+++++++ ............... -- -- 10.93 (1.26) CLASS C Year Ended October 31, 2000+++++++ ............... -- -- 10.93 (1.26) - -------------------------------------------------------------------------------------------------------------- CREDIT SUISSE WARBURG PINCUS TECHNOLOGY FUND COMMON CLASS Year Ended October 31, 2000++++++ ................ $ -- $ -- $12.79 27.90% CLASS A Year Ended October 31, 2000+++++++ ............... -- -- 12.79 (3.83) CLASS B Year Ended October 31, 2000+++++++ ............... -- -- 12.77 (3.98) CLASS C Year Ended October 31, 2000+++++++ ............... -- -- 12.77 (3.98) CLASS D Year Ended October 31, 2000++++++++ .............. -- -- 12.79 (19.00) NET ASSETS RATIO OF RATIO OF NET END OF EXPENSES INVESTMENT INCOME PORTFOLIO PERIOD TO AVERAGE (LOSS) TO AVERAGE TURNOVER (000 OMITTED) NET ASSETS(2) NET ASSETS(2) RATE - --------------------------------------------------------------------------------------------------------------- CREDIT SUISSE WARBURG PINCUS SMALL COMPANY VALUE FUND CLASS A Year Ended October 31, 2000 ...................... $188,501 1.39% 0.28% 41.6% Year Ended October 31, 1999 ...................... 188,192 1.37 0.33 29.6 Year Ended October 31, 1998 ...................... 237,873 1.29 0.30 41.5 Year Ended October 31, 1997 ...................... 283,001 1.35 0.37 21.1 Year Ended October 31, 1996 ...................... 227,716 1.47 0.48 35.1 CLASS B Year Ended October 31, 2000 ...................... 17,255 2.10 (0.43) 41.6 Year Ended October 31, 1999 ...................... 19,257 2.07 (0.71) 29.6 Year Ended October 31, 1998 ...................... 22,284 1.99 (0.40) 41.5 Year Ended October 31, 1997 ...................... 18,395 2.05 (0.32) 21.1 Year Ended October 31, 1996+ ..................... 6,305 2.15(1) (0.34)(1) 35.1 CLASS C Year Ended October 31, 2000++++ .................. 220 1.42 (0.33) 41.6 COMMON CLASS Year Ended October 31, 2000+++++ ................. 105 0.34 0.09 41.6 - ---------------------------------------------------------------------------------------------------------------- CREDIT SUISSE WARBURG PINCUS STRATEGIC GROWTH FUND COMMON CLASS Year Ended October 31, 2000++++++ ................ $8,263 1.13% (0.43)% 21.4% CLASS A Year Ended October 31, 2000+++++++ ............... 100 0.30 (0.17) 21.4 CLASS B Year Ended October 31, 2000+++++++ ............... 359 0.48 (0.34) 21.4 CLASS C Year Ended October 31, 2000+++++++ ............... 38 0.48 (0.35) 21.4 - ---------------------------------------------------------------------------------------------------------------- CREDIT SUISSE WARBURG PINCUS TECHNOLOGY FUND COMMON CLASS Year Ended October 31, 2000++++++ ................ $28,726 1.31% (1.03)% 14.2% CLASS A Year Ended October 31, 2000+++++++ ............... 2,913 0.35 (0.29) 14.2 CLASS B Year Ended October 31, 2000+++++++ ............... 1,277 0.53 (0.47) 14.2 CLASS C Year Ended October 31, 2000+++++++ ............... 479 0.54 (0.48) 14.2 CLASS D Year Ended October 31, 2000++++++++ .............. 3,292 0.18 (0.15) 14.2
63
NET ASSET NET NET REALIZED TOTAL DIVIDENDS VALUE INVESTMENT AND UNREALIZED FROM FROM NET BEGINNING INCOME/ GAINS/(LOSSES) INVESTMENT INVESTMENT OF PERIOD (LOSS) ON SECURITIES OPERATIONS INCOME - -------------------------------------------------------------------------------------------------------------------- CREDIT SUISSE WARBURG PINCUS FIXED INCOME II FUND CLASS A Year Ended October 31, 2000 ..................... $ 9.83 $ 0.52 $ (0.02) $ 0.50 $ (0.52) Year Ended October 31, 1999 ..................... 10.46 0.50 (0.53) (0.03) (0.50) Year Ended October 31, 1998 ..................... 10.16 0.53 0.30 0.83 (0.53) Year Ended October 31, 1997 ..................... 10.07 0.58 0.09 0.67 (0.58) Year Ended October 31. 1996 ..................... 10.22 0.58 (0.15) 0.43 (0.58) CLASS B Year Ended October 31, 2000 ..................... 9.83 0.45 (0.02) 0.43 (0.45) Year Ended October 31, 1999 ..................... 10.46 0.43 (0.53) (0.10) (0.43) Year Ended October 31, 1998 ..................... 10.16 0.46 0.30 0.76 (0.46) Year Ended October 31, 1997 ..................... 10.07 0.50 0.09 0.59 (0.50) Year Ended October 31, 1996+ .................... 10.22 0.34 (0.15) 0.19 (0.34) CLASS C Year Ended October 31, 2000++++ ................. 9.69 0.25 0.12 0.37 (0.25) CLASS D Year Ended October 31, 2000 ..................... 9.83 0.55 (0.02) 0.53 (0.55) Year Ended October 31, 1999+++ .................. 10.09 0.26 (0.26) -- (0.26) COMMON CLASS Year Ended October 31, 2000+++++ ................ 9.71 0.14 0.10 0.24 (0.14) + For the period February 28, 1996 (commencement of offering of Class B shares) to October 31, 1996. ++ For the period May 13, 1999 (commencement of offering of Class D shares) to October 31, 1999. +++ For the period April 30, 1999 (commencement of offering of Class D shares) to October 31, 1999. ++++ For the period February 28, 2000 (commencement of offering of Class C shares) to October 31, 2000. +++++ For the period August 1, 2000 (commencement of offering of Common Class shares by all Funds except Credit Suisse Warburg Pincus Strategic Growth Fund and Credit Suisse Warburg Pincus Technology Fund) to October 31, 2000. ++++++ For the period November 18, 1999 (commencement of operations) to October 31, 2000. +++++++ For the period August 1, 2000 (the commencement of offering of Class A, Class B and Class C shares by the Credit Suisse Warburg Pincus Strategic Growth Fund and Credit Suisse Warburg Pincus Technology Fund) to October 31, 2000. ++++++++ For the period September 1, 2000 (the commencement of offering of Class D shares) to October 31, 2000. * Based on average shares outstanding. ** Total return is calculated assuming an initial investment made at the net asset value at the beginning of the period, reinvestments of all dividends and distributions at net asset value during the period, and redemption on the last day of the period. An initial sales charge or contingent deferred sales charge is not reflected in the calculation of total return. 64 DISTRIBUTIONS FROM NET ASSET CAPITAL TOTAL VALUE TOTAL GAINS DISTRIBUTIONS END OF PERIOD RETURN** - -------------------------------------------------------------------------------------------------------------------- CREDIT SUISSE WARBURG PINCUS FIXED INCOME II FUND CLASS A Year Ended October 31, 2000 ..................... $ -- $ (0.52) $ 9.81 5.31% Year Ended October 31, 1999 ..................... (0.10) (0.60) 9.83 (0.26) Year Ended October 31, 1998 ..................... -- (0.53) 10.46 8.46 Year Ended October 31, 1997 ..................... -- (0.58) 10.16 6.84 Year Ended October 31. 1996 ..................... -- (0.58) 10.07 4.34 CLASS B Year Ended October 31, 2000 ..................... -- (0.45) 9.81 4.57 Year Ended October 31, 1999 ..................... (0.10) (0.53) 9.83 (0.97) Year Ended October 31, 1998 ..................... -- (0.46) 10.46 7.71 Year Ended October 31, 1997 ..................... -- (0.50) 10.16 6.10 Year Ended October 31, 1996+ .................... -- (0.34) 10.07 2.23 CLASS C Year Ended October 31, 2000++++ ................. -- (0.25) 9.81 3.86 CLASS D Year Ended October 31, 2000 ..................... -- (0.55) 9.81 5.62 Year Ended October 31, 1999+++ .................. -- (0.26) 9.83 0.04 COMMON CLASS Year Ended October 31, 2000+++++ ................ -- (0.14) 9.81 2.44 NET ASSETS RATIO OF RATIO OF NET END OF EXPENSES INVESTMENT INCOME PORTFOLIO PERIOD TO AVERAGE (LOSS) TO AVERAGE TURNOVER (000 OMITTED) NET ASSETS(2) NET ASSETS(2) RATE - --------------------------------------------------------------------------------------------------------------- CREDIT SUISSE WARBURG PINCUS FIXED INCOME II FUND CLASS A Year Ended October 31, 2000 ..................... $ 34,951 0.99% 5.38% 84.2% Year Ended October 31, 1999 ..................... 43,060 1.00 4.91 84.3 Year Ended October 31, 1998 ..................... 47,834 1.00 5.24 114.0 Year Ended October 31, 1997 ..................... 54,755 1.00 5.74 119.3 Year Ended October 31. 1996 ..................... 56,388 1.00 5.72 90.2 CLASS B Year Ended October 31, 2000 ..................... 3,256 1.70 4.67 84.2 Year Ended October 31, 1999 ..................... 4,471 1.70 4.21 84.3 Year Ended October 31, 1998 ..................... 5,849 1.70 4.50 114.0 Year Ended October 31, 1997 ..................... 3,375 1.70 4.99 119.3 Year Ended October 31, 1996+ .................... 1,629 1.70(1) 5.03(1) 90.2 CLASS C Year Ended October 31, 2000++++ ................. 0(3) 1.70(1) 4.08(1) 84.2 CLASS D Year Ended October 31, 2000 ..................... 95,471 0.70 5.67 84.2 Year Ended October 31, 1999+++ .................. 116,424 0.70(1) 6.30(1) 84.3 COMMON CLASS Year Ended October 31, 2000+++++ ................ 22 0.99(1) 6.51(1) 84.2
+ Rounds to less than $0.01. (1) Annualized (2) See footnote (3) on page 70. (3) Amount rounds to less than $1,000. 65
NET REALIZED NET ASSET NET AND TOTAL DIVIDENDS VALUE INVESTMENT UNREALIZED CONTRIBUTION FROM FROM NET BEGINNING INCOME/ GAINS/(LOSSES) FROM INVESTMENT INVESTMENT OF PERIOD (LOSS) ON SECURITIES SUB-ADVISER OPERATIONS INCOME - ----------------------------------------------------------------------------------------------------------------------------------- CREDIT SUISSE WARBURG PINCUS MUNICIPAL TRUST FUND CLASS A Year Ended October 31, 2000 ................ $10.05 $0.39 $0.12 $-- $0.51 $(0.39) Year Ended October 31, 1999 ................ 10.53 0.38 (0.48) -- (0.10) (0.38) Year Ended October 31, 1998 ................ 10.29 0.38 0.24 -- 0.62 (0.38) Year Ended October 31, 1997 ................ 10.01 0.45 0.28 -- 0.73 (0.45) Year Ended October 31, 1996 ................ 10.06 0.43 (0.05) -- 0.38 (0.43) CLASS B Year Ended October 31, 2000 ................ 10.05 0.32 0.12 -- 0.44 (0.32) Year Ended October 31, 1999 ................ 10.53 0.31 (0.48) -- (0.17) (0.31) Year Ended October 31, 1998 ................ 10.29 0.32 0.24 -- 0.56 (0.32) Year Ended October 31, 1997 ................ 10.01 0.37 0.28 -- 0.65 (0.37) Year Ended October 31, 1996+ ............... 10.12 0.25 (0.11) -- 0.14 (0.25) CLASS C Year Ended October 31, 2000++++ ............ 9.88 0.19 0.17 -- 0.36 (0.19) COMMON CLASS Year Ended October 31, 2000+++++ ........... 10.04 0.10 0.05 -- 0.15 (0.10) - ----------------------------------------------------------------------------------------------------------------------------------- CREDIT SUISSE WARBURG PINCUS INTERNATIONAL EQUITY II FUND CLASS A Year Ended October 31, 2000 ................ $14.00 $(0.06)* $(0.11) $-- $(0.17) $ -- Year Ended October 31, 1999 ................ 12.20 (0.06)* 2.56 -- 2.50 -- Year Ended October 31, 1998 ................ 11.42 (0.06)* 0.99 -- 0.93 (0.06) Year Ended October 31, 1997 ................ 10.38 (0.07)* 1.11 -- 1.04 -- Year Ended October 31, 1996 ................ 9.58 (0.04)* 0.84 -- 0.80 -- CLASS B Year Ended October 31, 2000 ................ 13.63 (0.16)* (0.12) -- (0.28) -- Year Ended October 31, 1999 ................ 11.98 (0.15)* 2.50 -- 2.35 -- Year Ended October 31, 1998 ................ 11.24 (0.15)* 0.98 -- 0.83 -- Year Ended October 31, 1997 ................ 10.29 (0.15)* 1.10 -- 0.95 -- Year Ended October 31, 1996 ................ 9.57 (0.13)* 0.85 -- 0.72 -- CLASS C Year Ended October 31, 2000++++ ............ 13.35 (0.24)* (1.52) -- (1.76) -- CLASS D Year Ended October 31, 2000 ................ 14.02 0.02* (0.17) -- (0.15) -- Year Ended October 31, 1999+++ ............. 12.69 (0.14)* 1.47 -- 1.33 -- COMMON CLASS Year Ended October 31, 2000+++++ ........... 13.05 (0.11)* (0.89) -- (1.00) -- 66 DISTRIBUTIONS TAX NET ASSET FROM RETURN VALUE CAPITAL OF TOTAL END OF TOTAL GAINS CAPITAL DISTRIBUTIONS PERIOD RETURN(2) - ----------------------------------------------------------------------------------------------------------------------------------- CREDIT SUISSE WARBURG PINCUS MUNICIPAL TRUST FUND CLASS A Year Ended October 31, 2000 ............ $ (0.08) $ -- $ (0.47) $ 10.09 5.20% Year Ended October 31, 1999 ............ -- -- (0.38) 10.05 (1.02) Year Ended October 31, 1998 ............ -- -- (0.38) 10.53 6.28 Year Ended October 31, 1997 ............ -- -- (0.45) 10.29 7.37 Year Ended October 31, 1996 ............ -- -- (0.43) 10.01 3.83 CLASS B Year Ended October 31, 2000 ............ (0.08) -- (0.40) 10.09 4.45 Year Ended October 31, 1999 ............ -- -- (0.31) 10.05 (1.71) Year Ended October 31, 1998 ............ -- -- (0.32) 10.53 5.54 Year Ended October 31, 1997 ............ -- -- (0.37) 10.29 6.62 Year Ended October 31, 1996+ ........... -- -- (0.25) 10.01 1.42 CLASS C Year Ended October 31, 2000++++ ........ -- -- (0.19) 10.05 3.65 COMMON CLASS Year Ended October 31, 2000+++++ ....... -- -- (0.10) 10.09 1.46 - ----------------------------------------------------------------------------------------------------------------------------------- CREDIT SUISSE WARBURG PINCUS INTERNATIONAL EQUITY II FUND CLASS A Year Ended October 31, 2000 ............ $ (1.78) $ -- $ (1.78) $ 12.05 (1.87)% Year Ended October 31, 1999 ............ (0.70) -- (0.70) 14.00 21.76 Year Ended October 31, 1998 ............ (0.09) -- (0.15) 12.20 8.20 Year Ended October 31, 1997 ............ -- -- -- 11.42 10.02 Year Ended October 31, 1996 ............ -- -- -- 10.38 8.35 CLASS B Year Ended October 31, 2000 ............ (1.78) -- (1.78) 11.57 (2.84) Year Ended October 31, 1999 ............ (0.70) -- (0.70) 13.63 20.86 Year Ended October 31, 1998 ............ (0.09) -- (0.09) 11.98 7.43 Year Ended October 31, 1997 ............ -- -- -- 11.24 9.23 Year Ended October 31, 1996 ............ -- -- -- 10.29 7.52 CLASS C Year Ended October 31, 2000++++ ........ -- -- -- 11.59 (13.18) CLASS D Year Ended October 31, 2000 ............ (1.78) -- (1.78) 12.09 (1.70) Year Ended October 31, 1999+++ ......... -- -- -- 14.02 10.48 COMMON CLASS Year Ended October 31, 2000+++++ ....... -- -- -- 12.05 (7.66) RATIO OF RATIO OF NET ASSETS EXPENSES TO NET INVESTMENT END OF AVERAGE INCOME (LOSS) PORTFOLIO PERIOD NET TO AVERAGE TURNOVER (000 OMITTED) ASSETS(3) NET ASSETS(3) RATE - ----------------------------------------------------------------------------------------------------------------------------------- CREDIT SUISSE WARBURG PINCUS MUNICIPAL TRUST FUND CLASS A Year Ended October 31, 2000 ................ $22,565 0.99% 3.92% 17.7% Year Ended October 31, 1999 ................ 29,912 1.00 3.65 76.5 Year Ended October 31, 1998 ................ 44,306 1.00 3.78 51.5 Year Ended October 31, 1997 ................ 35,878 0.70 4.38 84.3 Year Ended October 31, 1996 ................ 38,794 0.80 4.26 79.3 CLASS B Year Ended October 31, 2000 ................ 1,082 1.70 3.21 17.7 Year Ended October 31, 1999 ................ 1,044 1.70 2.94 76.5 Year Ended October 31, 1998 ................ 1,430 1.70 3.04 51.5 Year Ended October 31, 1997 ................ 546 1.40 3.66 84.3 Year Ended October 31, 1996+ ............... 489 1.23(1) 3.81(1) 79.3 CLASS C Year Ended October 31, 2000++++ ............ 0(4) 1.70(1) 2.91(1) 17.7 COMMON CLASS Year Ended October 31, 2000+++++ ........... 26 0.99(1) 4.01(1) 17.7 - ----------------------------------------------------------------------------------------------------------------------------------- CREDIT SUISSE WARBURG PINCUS INTERNATIONAL EQUITY II FUND CLASS A Year Ended October 31, 2000 ................ $52,966 2.03% (0.45)% 45.2% Year Ended October 31, 1999 ................ 48,181 2.15 (0.44) 82.0 Year Ended October 31, 1998 ................ 44,286 2.15 (0.49) 69.7 Year Ended October 31, 1997 ................ 44,316 2.15 (0.59) 73.9 Year Ended October 31, 1996 ................ 42,170 2.15 (0.39) 94.1 CLASS B Year Ended October 31, 2000 ................ 5,089 2.78 (1.22) 45.2 Year Ended October 31, 1999 ................ 5,527 2.90 (1.18) 82.0 Year Ended October 31, 1998 ................ 6,133 2.90 (1.24) 69.7 Year Ended October 31, 1997 ................ 6,821 2.90 (1.32) 73.9 Year Ended October 31, 1996 ................ 4,955 2.90 (1.25) 94.1 CLASS C Year Ended October 31, 2000++++ ............ 141 2.59 (1.81) 45.2 CLASS D Year Ended October 31, 2000 ................ 4,738 1.50 0.18 45.2 Year Ended October 31, 1999+++ ............. 1,586 1.90(1) (1.14)(1) 82.0 COMMON CLASS Year Ended October 31, 2000+++++ ........... 138 1.63 (0.87) 45.2
67
NET REALIZED NET ASSET NET AND TOTAL DIVIDENDS VALUE INVESTMENT UNREALIZED CONTRIBUTION FROM FROM NET BEGINNING INCOME/ GAINS/(LOSSES) FROM INVESTMENT INVESTMENT OF PERIOD (LOSS) ON SECURITIES SUB-ADVISER OPERATIONS INCOME - ----------------------------------------------------------------------------------------------------------------------------------- CREDIT SUISSE WARBURG PINCUS DEVELOPING MARKETS FUND CLASS A Year Ended October 31, 2000 .................. $9.95 $ (0.08)* $(1.28) $ -- $(1.36) $ -- Year Ended October 31, 1999 .................. 7.14 0.03* 2.58 0.23 2.84 (0.01) Year Ended October 31, 1998 .................. 9.52 0.02* (2.40) -- (2.38) -- Year Ended October 31, 1997 .................. 9.96 (0.02)* (0.40) -- (0.42) -- Year Ended October 31, 1996 .................. 9.53 (0.01)* 0.44 -- 0.43 -- CLASS B Year Ended October 31, 2000 .................. 9.66 (0.16)* (1.22) -- (1.38) -- Year Ended October 31, 1999 .................. 6.96 (0.03)* 2.50 0.23 2.70 -- Year Ended October 31, 1998 .................. 9.36 (0.04)* (2.36) -- (2.40) -- Year Ended October 31, 1997 .................. 9.86 (0.19)* (0.29) -- (0.48) -- Year Ended October 31, 1996 .................. 9.52 (0.08)* 0.42 -- 0.34 -- CLASS C Year Ended October 31, 2000++++ .............. 12.35 (0.28)* (3.81) -- (4.09) -- COMMON CLASS Year Ended October 31, 2000+++++ ............. 10.54 (0.19)* (1.76) -- (1.95) -- - ----------------------------------------------------------------------------------------------------------------------------------- CREDIT SUISSE WARBURG PINCUS MUNICIPAL MONEY FUND Year Ended October 31, 2000 ................. . $1.00 $0.032 $ -- $ -- $0.032 $(0.032) Year Ended October 31, 1999 .................. 1.00 0.023 -- -- 0.023 (0.023) Year Ended October 31, 1998 .................. 1.00 0.027 -- -- 0.027 (0.027) Year Ended October 31, 1997** ................ 1.00 0.020 -- -- 0.020 (0.020) - ----------------------------------------------------------------------------------------------------------------------------------- CREDIT SUISSE WARBURG PINCUS U.S. GOVERNMENT MONEY FUND Year Ended October 31, 2000 .................. $1.00 $0.053 $ -- $ -- $0.053 $(0.053) Year Ended October 31, 1999 .................. 1.00 0.042 -- -- 0.042 (0.042) Year Ended October 31, 1998 .................. 1.00 0.047 -- -- 0.047 (0.047) Year Ended October 31, 1997** ................ 1.00 0.032 -- -- 0.032 (0.032) 68 DISTRIBUTIONS TAX NET ASSET FROM RETURN VALUE CAPITAL OF TOTAL END OF TOTAL GAINS CAPITAL DISTRIBUTIONS PERIOD RETURN(2) - ------------------------------------------------------------------------------------------------------------------------------------ CREDIT SUISSE WARBURG PINCUS DEVELOPING MARKETS FUND CLASS A Year Ended October 31, 2000 .................. $ -- $ -- $ -- $8.59 (13.67)% Year Ended October 31, 1999 .................. -- (0.02) (0.03) 9.95 39.82 Year Ended October 31, 1998 .................. -- -- -- 7.14 (25.00) Year Ended October 31, 1997 .................. (0.02) -- (0.02) 9.52 (4.18) Year Ended October 31, 1996 .................. -- -- -- 9.96 4.51 CLASS B Year Ended October 31, 2000 .................. -- -- -- 8.28 (14.29) Year Ended October 31, 1999 .................. -- -- -- 9.66 38.79 Year Ended October 31, 1998 .................. -- -- -- 6.96 (25.64) Year Ended October 31, 1997 .................. (0.02) -- (0.02) 9.36 (4.83) Year Ended October 31, 1996 .................. -- -- -- 9.86 3.57 CLASS C Year Ended October 31, 2000++++ .............. -- -- -- 8.26 (33.12) COMMON CLASS Year Ended October 31, 2000+++++ ............. -- -- -- 8.59 (18.50) - ----------------------------------------------------------------------------------------------------------------------------------- CREDIT SUISSE WARBURG PINCUS MUNICIPAL MONEY FUND Year Ended October 31, 2000 .................. $ -- $ -- $(0.032) $1.00 3.23% Year Ended October 31, 1999 .................. -- -- (0.023) 1.00 2.37 Year Ended October 31, 1998 .................. -- -- (0.027) 1.00 2.72 Year Ended October 31, 1997** ................ -- -- (0.020) 1.00 2.90(1) - ----------------------------------------------------------------------------------------------------------------------------------- CREDIT SUISSE WARBURG PINCUS U.S. GOVERNMENT MONEY FUND Year Ended October 31, 2000 .................. $ -- $ -- $(0.053) $1.00 5.39% Year Ended October 31, 1999 .................. -- -- (0.042) 1.00 4.26 Year Ended October 31, 1998 .................. -- -- (0.047) 1.00 4.79 Year Ended October 31, 1997** ................ -- -- (0.032) 1.00 4.68(1) RATIO OF RATIO OF NET ASSETS EXPENSES TO NET INVESTMENT END OF AVERAGE INCOME (LOSS) PORTFOLIO PERIOD NET TO AVERAGE TURNOVER (000 OMITTED) ASSETS(3) NET ASSETS(3) RATE - -------------------------------------------------------------------------------------------------------------------- CREDIT SUISSE WARBURG PINCUS DEVELOPING MARKETS FUND CLASS A Year Ended October 31, 2000 .................. $13,294 2.15% (0.70)% 115.4% Year Ended October 31, 1999 .................. 16,023 2.15 0.32 36.9 Year Ended October 31, 1998 .................. 16,355 2.15 0.22 43.6 Year Ended October 31, 1997 .................. 29,402 2.15 (0.17) 52.8 Year Ended October 31, 1996 .................. 36,918 2.15 (0.14) 26.8 CLASS B Year Ended October 31, 2000 .................. 2,214 2.90 (1.43) 115.4 Year Ended October 31, 1999 .................. 2,685 2.90 (0.36) 36.9 Year Ended October 31, 1998 .................. 2,509 2.90 (0.50) 43.6 Year Ended October 31, 1997 .................. 4,941 2.90 (1.74) 52.8 Year Ended October 31, 1996 .................. 3,641 2.90 (0.83) 26.8 CLASS C Year Ended October 31, 2000++++ .............. 12 1.97 (1.97) 115.4 COMMON CLASS Year Ended October 31, 2000+++++ ............. 18 0.54 (0.54) 115.4 - -------------------------------------------------------------------------------------------------------------------- CREDIT SUISSE WARBURG PINCUS MUNICIPAL MONEY FUND Year Ended October 31, 2000 .................. $56,488 0.90% 3.17% N/A Year Ended October 31, 1999 .................. 44,347 0.90 2.33 N/A Year Ended October 31, 1998 .................. 57,778 0.90 2.68 N/A Year Ended October 31, 1997** ................ 38,681 0.90(1) 2.87 N/A - -------------------------------------------------------------------------------------------------------------------- CREDIT SUISSE WARBURG PINCUS U.S. GOVERNMENT MONEY FUND Year Ended October 31, 2000 .................. $59,926 0.90% 5.26% N/A Year Ended October 31, 1999 .................. 59,877 0.90 4.19 N/A Year Ended October 31, 1998 .................. 56,697 0.90 4.68 N/A Year Ended October 31, 1997** ................ 35,174 0.90(1) 4.65(1) N/A
69
NET REALIZED NET ASSET NET AND TOTAL DIVIDENDS VALUE INVESTMENT UNREALIZED CONTRIBUTION FROM FROM NET BEGINNING INCOME/ GAINS/(LOSSES) FROM INVESTMENT INVESTMENT OF PERIOD (LOSS) ON SECURITIES SUB-ADVISER OPERATIONS INCOME - ------------------------------------------------------------------------------------------------------------------------------------ CREDIT SUISSE WARBURG PINCUS HIGH INCOME FUND CLASS A Year Ended October 31, 2000 ............ $9.66 $0.88 $(0.86) $-- $0.02 $(0.88) Year Ended October 31, 1999++ .......... 10.00 0.56 (0.34) -- 0.22 (0.56) CLASS B Year Ended October 31, 2000 ............ 9.66 0.81 (0.86) -- (0.05) (0.81) Year Ended October 31, 1999++ .......... 10.00 0.50 (0.34) -- 0.16 (0.50) CLASS C Year Ended October 31, 2000++++ ........ 9.57 0.53 (0.84) -- (0.31) (0.53) CLASS D Year Ended October 31, 2000 ............ 9.65 0.90 (0.85) -- 0.05 (0.90) Year Ended October 31, 1999+++ ......... 10.23 0.41 (0.58) -- (0.17) (0.41) COMMON CLASS Year Ended October 31, 2000+++++ ....... 9.21 0.21 (0.48) -- (0.27) (0.21)
* Based on average shares outstanding. ** Commencement of operations for the Credit Suisse Warburg Pincus Municipal Money Fund and the Credit Suisse Warburg Pincus U.S. Government Money Fund was February 24, 1997. + For the period February 28, 1996 (commencement of offering of Class B shares) to October 31, 1996. ++ Commencement of operations for the Credit Suisse Warburg Pincus High Income Fund was March 8, 1999. +++ For the period May 13, 1999 (commencement of offering of Class D shares) to October 31, 1999. ++++ For the period February 28, 2000 (commencement of offering of Class C shares) to October 31, 2000. +++++ For the period August 1, 2000 (commencement of offering of Common Class shares by all Funds except Credit Suisse Warburg Pincus Strategic Growth Fund and Credit Suisse Warburg Pincus Technology Fund) to October 31, 2000. (1) Annualized (2) Total return is calculated assuming an initial investment made at the net asset value at the beginning of the period, reinvestment of all dividends and distributions at net asset value during the period, and redemption on the last day of the period. An initial sales charge or contingent deferred sales charge is not reflected in the calculation of total return. Total return calculated for a period of less than one year is not annualized except for the Money Funds. Total return for the year end October 31, 1999 excluding the effect of the contribution from the former sub-adviser for realized and unrealized securities losses was 36.59% and 35.49% for the Credit Suisse Warburg Pincus Developing Markets Fund Class A and B shares, respectively. (3) Net of voluntary assumption by the investment adviser of expenses, expressed as a percentage of average net assets, as follows: Credit Suisse Warburg Pincus Strategic Growth Fund Common Class shares, 1.87% (annualized) for the period 11/19/99 through 10/31/00, Credit Suisse Warburg Pincus Strategic Growth Fund Class A, B and C shares, 1.87%, 1.87% and 1.87% (annualized), respectively for the period 8/1/00 through 10/31/00; Credit Suisse Warburg Pincus Technology Fund Common Class shares, .83% (annualized) for the period 11/19/99 through 10/31/00, Credit Suisse Warburg Pincus Technology Fund Class A, B and C shares, .83%, .83% and .83% (annualized), respectively for the period 8/1/00 through 10/31/00, Credit Suisse Warburg Pincus Technology Fund Class D shares, .83% (annualized) for the period 9/1/00 through 10/31/00; Credit Suisse Warburg Pincus Fixed Income II Fund Class A shares, .13%, .14%, .30%, .30%, and .34%, for the years ended 10/31/00, 99, 98, 97, and 96 respectively; Credit Suisse Warburg Pincus Fixed Income II 70
DISTRIBUTIONS TAX NET ASSET FROM RETURN VALUE CAPITAL OF TOTAL END OF TOTAL GAINS CAPITAL DISTRIBUTIONS PERIOD RETURN(2) - ------------------------------------------------------------------------------------------------------------------------------------ CREDIT SUISSE WARBURG PINCUS HIGH INCOME FUND CLASS A Year Ended October 31, 2000 ............ $(0.07) $-- $(0.95) $8.73 (0.06)% Year Ended October 31, 1999++ .......... -- -- (0.56) 9.66 2.19 CLASS B Year Ended October 31, 2000 ............ (0.07) -- (0.88) 8.73 (0.81) Year Ended October 31, 1999++ .......... -- -- (0.50) 9.66 1.60 CLASS C Year Ended October 31, 2000++++ ........ -- -- (0.53) 8.73 (3.31) CLASS D Year Ended October 31, 2000 ............ (0.07) -- (0.97) 8.73 0.29 Year Ended October 31, 1999+++ ......... -- -- (0.41) 9.65 (1.63) COMMON CLASS Year Ended October 31, 2000+++++ ....... -- -- (0.21) 8.73 (2.98) RATIO OF RATIO OF NET ASSETS EXPENSES TO NET INVESTMENT END OF AVERAGE INCOME (LOSS) PORTFOLIO PERIOD NET TO AVERAGE TURNOVER (000 OMITTED) ASSETS(3) NET ASSETS(3) RATE - ---------------------------------------------------------------------------------------------------------------------- CREDIT SUISSE WARBURG PINCUS HIGH INCOME FUND CLASS A Year Ended October 31, 2000 ............ $10,709 1.10% 9.35% 43.9% Year Ended October 31, 1999++ .......... 10,488 1.10(1) 8.61(1) 188.4 CLASS B Year Ended October 31, 2000 ............ 1,313 1.85 8.60 43.9 Year Ended October 31, 1999++ .......... 1,447 1.85(1) 7.83(1) 188.4 CLASS C Year Ended October 31, 2000++++ ........ 78 1.85(1) 7.57(1) 43.9 CLASS D Year Ended October 31, 2000 ............ 1,504 0.85 9.62 43.9 Year Ended October 31, 1999+++ ......... 926 0.85(1) 9.36(1) 188.4 COMMON CLASS Year Ended October 31, 2000+++++ ....... 141 1.10(1) 9.14(1) 43.9
Fund Class B shares, .13%, .14%, .30%, and .30% for the years ended 10/31/00, 99, 98 and 97, and .34% (annualized) for the period 2/28/96 through 10/31/96; Fixed Income Class C shares, .13% (annualized) for the period 2/28/00 through 10/31/00; Fixed Income Class D shares, .13% for the year ended 10/31/00, and .14% (annualized) for the period 4/30/99 through 10/31/99; Fixed Income Common Class shares, .13% (annualized) for the period 8/1/00 through 10/31/00; Credit Suisse Warburg Pincus Municipal Trust Fund Class A shares, .53%, .42%, .41%, .74%, and .64% for the years ended 10/31/00, 99, 98, 97, and 96, respectively; Credit Suisse Warburg Pincus Municipal Trust Fund Class B shares, .53%, .42%, .41% and .74% for the years ended 10/31/00, 99, 98 and 97, and .64% (annualized) for the period 2/28/96 through 10/31/96; Credit Suisse Warburg Pincus Municipal Trust Fund Class C shares, .53% (annualized) for the period 2/28/00 through 10/31/00; Credit Suisse Warburg Pincus Municipal Trust Fund Common Class shares, .53% (annualized) for the period 8/1/00 through 10/31/00; Credit Suisse Warburg Pincus Developing Markets Fund Class A and Class B shares, .72%, .76%, .61%, .34%, and .54% for the years ended 10/31/00, 99, 98, 97, and 96, respectively; Credit Suisse Warburg Pincus Developing Markets Fund Class C shares, .72% (annualized) for the period 2/28/00 through 10/31/00; Credit Suisse Warburg Pincus Developing Markets Fund Common Class shares, .72% (annualized) for the period 8/1/00 through 10/31/00; Credit Suisse Warburg Pincus International Equity II Fund Class A and Class B shares, .04%, .10%, .18%, and .27% for the years ended 10/31/99, 98, 97, and 96, respectively; Credit Suisse Warburg Pincus International Equity II Fund Class D shares, 04% (annualized) for the period 5/13/99 through 10/31/99; Credit Suisse Warburg Pincus Municipal Money Fund, .09%, .14%, .15% and .40% (annualized) for the years ended 10/31/00, 99, 98 and 97, respectively; Credit Suisse Warburg Pincus U.S. Government Money Fund, .09% .19%, .25% and .45% (annualized) for the years ended 10/31/00, 99, 98, and 97, respectively; Credit Suisse Warburg Pincus High Income Fund Class A and Class B shares, 1.53%, for the year ended 10/31/00 and 1.43% (annualized) for the period 3/8/99 through 10/31/99; Credit Suisse Warburg Pincus High Income Fund Class C shares, 1.53% (annualized) for the period 2/28/00 through 10/31/00; Credit Suisse Warburg Pincus High Income Fund Class D shares, 1.53% for the year ended 10/31/00 and 1.43% (annualized) for the period 5/13/99 through 10/31/99; and Credit Suisse Warburg Pincus High Income Fund Common Class shares, 1.53% (annualized) for the period 8/1/00 through 10/31/00. (4) Amount rounds to less than $1,000. 71 FOR MORE INFORMATION More information about these Funds is available free upon request, including the following: ANNUAL/SEMIANNUAL REPORTS TO SHAREHOLDERS Includes financial statements, portfolio investments and detailed performance information. The ANNUAL REPORT also contains a letter from the Funds' President discussing market conditions and investment strategies that significantly affected fund performance during the past fiscal year. OTHER INFORMATION A current STATEMENT OF ADDITIONAL INFORMATION (SAI) which provides more details about the Funds is on file with the Securities and Exchange Commission (SEC) and is incorporated by reference. You may visit the SEC's Internet website (www.sec.gov) to view the SAI, material incorporated by reference and other information. You can also obtain copies by visiting the SEC's Public Reference Room in Washington, DC (phone 202-942-8090) or by sending your request and a duplicating fee to the SEC's Public Reference Section, Washington, DC 20549-6009 or electronically at publicinfo@sec.gov. Shareholders may obtain any of these documents free of charge and may obtain other information about the Funds by visiting the Funds' website (www.warburg.com). Further information about the Funds may be obtained by calling 800-225-8011 or by writing: Credit Suisse Warburg Pincus Funds PFPC, Inc. P.O. Box 61503 King of Prussia, PA 19406-0903 SEC FILE NUMBERS: Credit Suisse Warburg Pincus Capital Funds 811-04604 Credit Suisse Warburg Pincus Blue Chip Fund Credit Suisse Warburg Pincus Value Fund Credit Suisse Warburg Pincus Small Company Value Fund Credit Suisse Warburg Pincus Fixed Income II Fund Credit Suisse Warburg Pincus Municipal Trust Fund Credit Suisse Warburg Pincus Opportunity Funds 811-9054 Credit Suisse Warburg Pincus Developing Markets Fund Credit Suisse Warburg Pincus International Equity II Fund Credit Suisse Warburg Pincus High Income Fund Credit Suisse Warburg Pincus Municipal Money Fund Credit Suisse Warburg Pincus U.S. Government Money Fund Credit Suisse Warburg Pincus Select Funds 811-09531 Credit Suisse Warburg Pincus Strategic Growth Fund Credit Suisse Warburg Pincus Technology Fund WARBURG PINCUS FUNDS PART OF CREDIT SUISSE ASSET MANAGEMENT P.O. BOX 9030, BOSTON, MA 02205-9030 800-WARBURG (800-927-2874) - www.warburg.com CREDIT SUISSE ASSET MANAGEMENT SECURITIES, INC., DISTRIBUTOR. CSWPF-1-0201 EX-99.17(D) 6 0006.txt PROSPECTUSES OF THE ACQUIRED FUND [WARBURG PINCUS LOGO] PROSPECTUS Common Class February 28, 2001 WARBURG PINCUS EMERGING GROWTH FUND - WARBURG PINCUS SMALL COMPANY VALUE II FUND - WARBURG PINCUS SMALL COMPANY GROWTH FUND As with all mutual funds, the Securities and Exchange Commission has not approved these funds, nor has it passed upon the adequacy or accuracy of this Prospectus. It is a criminal offense to state otherwise. Warburg Pincus Funds are advised by Credit Suisse Asset Management, LLC. SUPPLEMENT TO THE PROSPECTUSES AND STATEMENTS OF ADDITIONAL INFORMATION WARBURG PINCUS VALUE II FUND WARBURG PINCUS SMALL COMPANY VALUE II FUND The following information supersedes certain information in the funds' Prospectuses and Statements of Additional Information. FUND MERGERS The consummation of the previously announced acquisition of Donaldson, Lufkin & Jenrette, Inc. ("DLJ") by Credit Suisse Group ("Credit Suisse") occurred on November 3, 2000, following which the assets and business of DLJ Asset Management Group, Inc. were transferred to Credit Suisse Asset Management, LLC ("CSAM"). To rationalize the management of the funds and the former DLJ family of funds managed by CSAM (now called the Credit Suisse Warburg Pincus Funds), CSAM has proposed, and the Board of Directors of each fund has approved for submission to shareholders at meetings scheduled for late May 2001 as more fully explained below, the combinations of the funds (each, an "Acquired Fund") into similar funds within the Credit Suisse Warburg Pincus Funds (each, an "Acquiring Fund"). The Board of Directors of each Acquired Fund has approved a proposed reorganization (each, an "Acquisition") where the assets of an Acquired Fund would be acquired by the relevant Acquiring Fund. The Acquisition will involve an exchange of shares of an Acquiring Fund for all of the assets of the relevant Acquired Fund. The Acquired Funds would then be liquidated and shares of the relevant Acquiring Fund would be distributed to the Acquired Fund's shareholders. The Acquisition will not result in any material changes to the goal or investment operations of the Acquired Funds since each of the Acquiring Funds has an investment objective and strategies similar to the investment objective and strategies of the corresponding Acquired Fund.
- ------------------------------------------------------------------------------ ACQUIRED FUND ACQUIRING FUND - ------------------------------------------------------------------------------ Warburg Pincus Value Fund Credit Suisse Warburg Pincus Value Fund - ------------------------------------------------------------------------------ Warburg Pincus Small Company Credit Suisse Warburg Pincus Small Value Fund Company Value Fund - ------------------------------------------------------------------------------
If the Acquisition is completed, each shareholder of an Acquired Fund would become a shareholder of the respective Acquiring Fund and receive shares of the appropriate class of that Acquiring Fund with a value equal to the value of the shareholder's investment in the relevant Acquired Fund. Each Acquisition is not expected to result in any gain or loss for federal income tax purposes to an Acquired Fund's shareholders. The investment advisory fees of the Acquiring Funds would be lower in each case than the corresponding Acquired Funds, and CSAM has agreed to reimburse expenses of each Acquiring Fund as necessary so that for the two-year period following the consummation of each Acquisition the total annual expense ratio of each Acquiring Fund would not be greater than the expense ratio of either the Acquiring Fund or the Acquired Fund for the 60-day period prior to consummation of the Acquisition. The Acquisition is subject to the completion of certain conditions, including the approval of shareholders of the respective Acquired Fund. Proxy materials describing the proposed Acquisitions will be mailed to shareholders of the Acquired Funds in anticipation of a special meeting of shareholders to be held on or about May 25, 2001. If approved by shareholders, the Acquisitions will occur shortly after the meeting. Dated: February 28, 2001 16-0201 for WPUSS ADUSS WPUSL ADUSL This page intentionally left blank CONTENTS KEY POINTS.................... .................... 4 Goals and Principal Strategies.................. 4 Investor Profile................................ 4 A Word About Risk............................... 5 PERFORMANCE SUMMARY............... ................ 6 Year-by-Year Total Returns...................... 6 Average Annual Total Returns.................... 7 INVESTOR EXPENSES................ ................. 8 Fees and Fund Expenses.......................... 8 Example......................................... 9 THE FUNDS IN DETAIL............... ................ 10 The Management Firm............................. 10 Multi-Class Structure........................... 10 Fund Information Key............................ 11 EMERGING GROWTH FUND............... ............... 12 SMALL COMPANY VALUE II FUND........... ............ 14 SMALL COMPANY GROWTH FUND............ ............. 16 MORE ABOUT RISK................. .................. 18 Introduction.................................... 18 Types of Investment Risk........................ 18 Certain Investment Practices.................... 20 MEET THE MANAGERS................ ................. 24 ABOUT YOUR ACCOUNT................ ................ 26 Share Valuation................................. 26 Buying and Selling Shares....................... 26 Account Statements.............................. 27 Distributions................................... 27 Taxes........................................... 27 OTHER INFORMATION................ ................. 29 About the Distributor........................... 29 FOR MORE INFORMATION............... ............... back cover
KEY POINTS GOALS AND PRINCIPAL STRATEGIES
- -------------------------------------------------------------------------------- - ----- FUND/RISK FACTORS GOAL STRATEGIES EMERGING GROWTH FUND Maximum capital - Invests in U.S. equity Risk factors: appreciation securities Market risk - Focuses on emerging-growth Non-diversified companies status - Looks for growth characteristics Special-situation such as positive earnings and companies potential for accelerated growth Start-up and other small companies - -------------------------------------------------------------------------------- - ----- SMALL COMPANY VALUE II Long-term capital - Invests in equity securities of FUND appreciation small U.S. companies Risk factors: - Analyzes factors such as Market risk price-to-earnings, price- to-book Special-situation and price-to-cash flow ratios, companies using a value investment style Start-up and other small companies - -------------------------------------------------------------------------------- - ----- SMALL COMPANY GROWTH Capital growth - Invests in equity securities of FUND small U.S. companies Risk factors: - Using a growth investment style, Market risk may look for either developing or Special-situation older companies in a growth companies stage or companies providing Start-up and other products or services with a high small companies unit-volume growth rate - -------------------------------------------------------------------------------- - -----
INVESTOR PROFILE THESE FUNDS ARE DESIGNED FOR INVESTORS WHO: - are investing for long-term goals that may include college or retirement - are willing to assume the risk of losing money in exchange for attractive potential long-term returns - are investing for capital appreciation - want to diversify their portfolios with more aggressive stock funds THEY MAY NOT BE APPROPRIATE IF YOU: - are investing for a shorter time horizon - are uncomfortable with an investment that will fluctuate in value - are looking for income You should base your selection of a fund on your own goals, risk preferences and time horizon. A WORD ABOUT RISK All investments involve some level of risk. Simply defined, risk is the possibility that you will lose money or not make money. Principal risk factors for the funds are discussed below. Before you invest, please make sure you understand the risks that apply to your fund. As with any mutual fund, you could lose money over any period of time. Investments in the funds are not bank deposits and are not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. MARKET RISK All funds The market value of a security may move up and down, sometimes rapidly and unpredictably. These fluctuations, which are often referred to as "volatility," may cause a security to be worth less than it was worth at an earlier time. Market risk may affect a single issuer, industry, sector of the economy, or the market as a whole. Market risk is common to most investments--including stocks and bonds, and the mutual funds that invest in them. START-UP AND OTHER SMALL COMPANIES All funds Start-up and other small companies may have less-experienced management, limited product lines, unproven track records or inadequate capital reserves. Their securities may carry increased market, liquidity and other risks. Key information about the company may be inaccurate or unavailable. SPECIAL-SITUATION COMPANIES All funds "Special situations" are unusual developments that affect a company's market value. Examples include mergers, acquisitions and reorganizations. Securities of special-situation companies may decline in value if the anticipated benefits of the special situation do not materialize. NON-DIVERSIFIED STATUS Emerging Growth Fund The fund is considered a non-diversified investment company under the Investment Company Act of 1940 and is permitted to invest a greater proportion of its assets in the securities of a smaller number of issuers. As a result, the fund may be subject to greater volatility with respect to its portfolio securities than a fund that is more broadly diversified. PERFORMANCE SUMMARY The bar chart below and the table on the next page provide an indication of the risks of investing in these funds. The bar chart shows you how each fund's performance has varied from year to year for up to 10 years. The table compares each fund's performance over time to that of a broadly based securities market index and other indexes, if applicable. As with all mutual funds, past performance is not a prediction of the future. YEAR-BY-YEAR TOTAL RETURNS [EMERGING GROWTH FUND BAR CHART]
EMERGING GROWTH FUND ------- - ------------- 1991 56.13 1992 12.14 1993 18.11 1994 - -1.43 1995 46.22 1996 9.87 1997 21.26 1998 5.82 1999 41.81 2000 - -12.03
[SMALL COMPANY VALUE II FUND BAR CHART]
SMALL COMPANY VALUE II FUND -------- - -------------- 1996 56.20 1997 19.16 1998 - -14.88 1999 7.55 2000 12.74
[SMALL COMPANY GROWTH FUND BAR CHART]
SMALL COMPANY GROWTH FUND ------- - ------------- 1997 22.29 1998 - -1.40 1999 99.23 2000 - -9.11
AVERAGE ANNUAL TOTAL RETURNS
- -------------------------------------------------------------------------------- - -------- ONE YEAR FIVE YEARS TEN YEARS LIFE OF INCEPTION PERIOD ENDED 12/31/00: 2000 1996-2000 1991-2000 FUND DATE EMERGING GROWTH FUND -12.03% 11.96% 18.02% 15.85% 1/21/88 RUSSELL 2000 GROWTH INDEX(1) -22.43% 7.15% 12.80% 7.15%(2) RUSSELL 2500 GROWTH INDEX(3) -16.09% 12.18% 15.72% 14.02%(2) SMALL COMPANY VALUE II FUND 12.74% 13.95% NA 13.91% 12/29/95 RUSSELL 2000 INDEX(4) -3.02% 10.32% NA 8.82% SMALL COMPANY GROWTH FUND -9.11% NA NA 21.52% 12/31/96 RUSSELL 2000 GROWTH INDEX(1) -22.43% NA NA 8.86%
(1) The Russell 2000 Growth Index is an unmanaged index (with no defined investment objective) of those securities in the Russell 2000 Index with a greater-than-average growth orientation. The Russell 2000 Growth Index includes reinvestment of dividends, and is compiled by Frank Russell Company. (2) Performance since January 31, 1988. (3) The Russell 2500 Growth Index measures the performance of those companies in the Russell 2500 Index with higher price-to-book values and higher forecasted growth rates. The Russell 2500 Index is composed of the 2,500 smallest companies in the Russell 3000 Index, which measures the performance of the 3000 largest U.S. companies based on total market capitalization. The Russell 2500 Index represents approximately 22% of the total market capitalization of the Russell 3000 Index. (4) The Russell 2000 Index is an unmanaged index (with no defined investment objective) of approximately 2,000 small-cap stocks, includes reinvestment of dividends, and is compiled by Frank Russell Company. UNDERSTANDING PERFORMANCE - TOTAL RETURN tells you how much an investment in a fund has changed in value over a given time period. It assumes that all dividends and capital gains (if any) were reinvested in additional shares. The change in value can be stated either as a cumulative return or as an average annual rate of return. - A CUMULATIVE TOTAL RETURN is the actual return of an investment for a specified period. The year-by-year total returns in the bar chart are examples of one-year cumulative total returns. - An AVERAGE ANNUAL TOTAL RETURN applies to periods longer than one year. It smoothes out the variations in year-by-year performance to tell you what constant annual return would have produced the investment's actual cumulative return. This gives you an idea of an investment's annual contribution to your portfolio, assuming you held it for the entire period. - Because of compounding, the average annual total returns in the table cannot be computed by averaging the returns in the bar chart. INVESTOR EXPENSES FEES AND FUND EXPENSES This table describes the fees and expenses you may bear as a shareholder. Annual fund operating expense figures are for the fiscal year ended October 31, 2000.
SMALL SMALL EMERGING COMPANY COMPANY GROWTH FUND VALUE II FUND GROWTH FUND SHAREHOLDER FEES (paid directly from your investment) - -------------------------------------------------------------------------------- - -- Sales charge "load" on purchases NONE NONE NONE - -------------------------------------------------------------------------------- - -- Deferred sales charge "load" NONE NONE NONE - -------------------------------------------------------------------------------- - -- Sales charge "load" on reinvested distributions NONE NONE NONE - -------------------------------------------------------------------------------- - -- Redemption fees NONE NONE NONE - -------------------------------------------------------------------------------- - -- Exchange fees NONE NONE NONE - -------------------------------------------------------------------------------- - -- ANNUAL FUND OPERATING EXPENSES (deducted from fund assets) - -------------------------------------------------------------------------------- - -- Management fee .90% 1.00% 1.00% - -------------------------------------------------------------------------------- - -- Distribution and service (12b-1) fee NONE .25% .25% - -------------------------------------------------------------------------------- - -- Other expenses .29% .74% .73% - -------------------------------------------------------------------------------- - -- TOTAL ANNUAL FUND OPERATING EXPENSES* 1.19% 1.99% 1.98% - -------------------------------------------------------------------------------- - --
* Actual fees and expenses for the fiscal year ended October 31, 2000 are shown below. Fee waivers and expense reimbursements or credits reduced expenses for some funds during 2000, but may be discontinued at any time:
SMALL SMALL EXPENSES AFTER WAIVERS EMERGING COMPANY COMPANY AND REIMBURSEMENTS GROWTH FUND VALUE II FUND GROWTH FUND Management fee .90% .84% .51% Distribution and service (12b-1) fee NONE .25% .25% Other expenses .27% .65% .64% ----- ----- ----- TOTAL ANNUAL FUND OPERATING EXPENSES 1.17% 1.74% 1.40%
EXAMPLE This example may help you compare the cost of investing in these funds with the cost of investing in other mutual funds. Because it uses hypothetical conditions, your actual costs may be higher or lower. Assume you invest $10,000, each fund returns 5% annually, expense ratios remain as listed in the first table on the opposite page (before fee waivers and expense reimbursements or credits) and you close your account at the end of each of the time periods shown. Based on these assumptions, your cost would be:
- -------------------------------------------------------------------------------- - ------ ONE YEAR THREE YEARS FIVE YEARS TEN YEARS EMERGING GROWTH FUND $121 $378 $654 $1,443 SMALL COMPANY VALUE II FUND $202 $624 $1,073 $2,317 SMALL COMPANY GROWTH FUND $201 $621 $1,068 $2,306
THE FUNDS IN DETAIL THE MANAGEMENT FIRM CREDIT SUISSE ASSET MANAGEMENT, LLC 466 Lexington Avenue New York, NY 10017 - Investment adviser for the funds - Responsible for managing each fund's assets according to its goal and strategies - A member of Credit Suisse Asset Management, the institutional asset management and mutual fund arm of Credit Suisse Group (Credit Suisse), one of the world's leading banks - Credit Suisse Asset Management companies manage approximately $94 billion in the U.S. and $298 billion globally - Credit Suisse Asset Management has offices in 14 countries, including SEC-registered offices in New York and London; other offices (such as those in Budapest, Frankfurt, Milan, Moscow, Paris, Prague, Sydney, Tokyo, Warsaw and Zurich) are not registered with the U.S. Securities and Exchange Commission For easier reading, Credit Suisse Asset Management, LLC will be referred to as "CSAM" or "we" throughout this Prospectus. MULTI-CLASS STRUCTURE This Prospectus offers Common Class shares of the funds. Common Class shares are no-load. Each of the funds except the Small Company Growth Fund offers Advisor Class shares described in separate prospectuses. Advisor Class shares are available through financial-services firms. FUND INFORMATION KEY Concise fund-by-fund descriptions begin on the next page. Each description provides the following information: GOAL AND STRATEGIES The fund's particular investment goal and the strategies it intends to use in pursuing that goal. Percentages of fund assets are based on total assets unless indicated otherwise. PORTFOLIO INVESTMENTS The primary types of securities in which the fund invests. Secondary investments are described in "More About Risk." RISK FACTORS The major risk factors associated with the fund. Additional risk factors are included in "More About Risk." PORTFOLIO MANAGEMENT The individuals designated by the investment adviser to handle the fund's day-to-day management. INVESTOR EXPENSES Actual fund expenses for the 2000 fiscal year. Future expenses may be higher or lower. - MANAGEMENT FEE The fee paid to the investment adviser and sub-investment adviser for providing investment advice to the fund. Expressed as a percentage of average net assets after waivers. - DISTRIBUTION AND SERVICE (12b-1) FEES Fees paid by the fund to the distributor for making shares of the fund available to you. Expressed as a percentage of average net assets. - OTHER EXPENSES Fees paid by the fund for items such as administration, transfer agency, custody, auditing, legal and registration fees and miscellaneous expenses. Expressed as a percentage of average net assets after waivers, credits and reimbursements. FINANCIAL HIGHLIGHTS A table showing the fund's audited financial performance for up to five years. - TOTAL RETURN How much you would have earned on an investment in the fund, assuming you had reinvested all dividend and capital-gain distributions. - PORTFOLIO TURNOVER An indication of trading frequency. The funds may sell securities without regard to the length of time they have been held. A high turnover rate may increase the fund's transaction costs and negatively affect its performance. Portfolio turnover may also result in capital-gain distributions that could raise your income-tax liability. The Annual Report includes the auditor's report, along with the fund's financial statements. It is available free upon request. EMERGING GROWTH FUND GOAL AND STRATEGIES The Emerging Growth Fund seeks maximum capital appreciation. To pursue this goal, it invests in equity securities of emerging-growth companies. Emerging-growth companies are small or medium-size companies that: - have passed their start-up phase - show positive earnings - offer the potential for accelerated earnings growth Emerging-growth companies generally stand to benefit from new products or services, technological developments, management changes or other factors. They include "special-situation companies"--companies experiencing unusual developments affecting their market value. Under normal market conditions, the fund will invest at least 65% of assets in equity securities of emerging-growth companies that represent attractive capital-appreciation opportunities. Its non-diversified status allows the fund to invest a greater share of its assets in the securities of fewer companies. PORTFOLIO INVESTMENTS This fund invests in a portfolio of U.S. equity securities consisting of: - common and preferred stocks - securities convertible into common stocks - rights and warrants The fund may invest up to 10% of assets in foreign securities. To a limited extent, it may also engage in other investment practices. RISK FACTORS This fund's principal risk factors are: - market risk - start-up and other small companies - special-situation companies - non-diversified status The value of your investment generally will fluctuate in response to stock-market movements. Fund performance will largely depend upon the performance of growth stocks, which may be more volatile than the overall stock market. Different types of stocks (such as "growth" vs. "value" stocks) tend to shift in and out of favor depending on market and economic conditions. Accordingly, the fund's performance may sometimes be lower or higher than that of other types of funds (such as those emphasizing value stocks). Investing in start-up and other small companies may expose the fund to increased market, liquidity and information risks. These risks are defined in "More About Risk." Securities of companies in special situations may decline in value and hurt the fund's performance if the anticipated benefits of the special situation do not materialize. Non-diversification might cause the fund to be more volatile than a diversified fund. "More About Risk" details certain other investment practices the fund may use. Please read that section carefully before you invest. PORTFOLIO MANAGEMENT Elizabeth B. Dater and Stephen J. Lurito manage the fund's investment portfolio. You can find out more about them in "Meet the Managers." INVESTOR EXPENSES Management fee .90% All other expenses .27% ----- Total expenses 1.17%
FINANCIAL HIGHLIGHTS The figures below have been audited by the fund's independent auditors, PricewaterhouseCoopers LLP.
PERIOD ENDED: 10/00 10/99 10/98 10/97 10/96 PER-SHARE DATA - -------------------------------------------------------------------------------- - -------------------------- Net asset value, beginning of period $43.73 $33.69 $39.66 $32.80 $29.97 - -------------------------------------------------------------------------------- - -------------------------- Investment activities: Net investment loss (0.33) (0.33) (0.12) (0.19) (0.02) Net gains or losses on investments (both realized and unrealized) 13.07 10.37 (3.46) 7.12 4.60 - -------------------------------------------------------------------------------- - -------------------------- Total from investment activities 12.74 10.04 (3.58) 6.93 4.58 - -------------------------------------------------------------------------------- - -------------------------- Distributions: From realized capital gains (6.23) 0.00 (2.39) (0.07) (1.75) - -------------------------------------------------------------------------------- - -------------------------- Total distributions (0.00) 0.00 (2.39) (0.07) (1.75) - -------------------------------------------------------------------------------- - -------------------------- Net asset value, end of period $50.24 $43.73 $33.69 $39.66 $32.80 - -------------------------------------------------------------------------------- - -------------------------- Total return 30.60% 29.80% (9.40%) 21.18% 16.14% - -------------------------------------------------------------------------------- - -------------------------- RATIOS AND SUPPLEMENTAL DATA - -------------------------------------------------------------------------------- - -------------------------- Net assets, end of period (000s omitted) $2,114,737 $1,592,595 $1,532,521 $1,515,395 $1,104,684 Ratio of expenses to average net assets 1.19% 1.23%(1) 1.22%(1) 1.22%(1) 1.28%(1) Ratio of net loss to average net assets (.65%) (.75%) (.48%) (.59%) (.63%) Portfolio turnover rate 190.82% 154.08% 91.60% 87.03% 65.77%
- -------------------------------------------------------------------------------- (1) Interest earned on uninvested cash balances is used to offset portions of the transfer agent expense. These arrangements resulted in a reduction to the Common Class shares' expenses by .02% annualized for the year ended October 31, 2000, and by .01%, .00%, 0.1% and .01% for the years ending 1999, 1998, 1997 and 1996, respectively. The Common Class shares' operating expense ratio after reflecting these arrangements were 1.17% for the year ended October 31, 2000, and 1.22%, 1.22%, 1.21% and 1.27% for the years ending 1999, 1998, 1997 and 1996, respectively. SMALL COMPANY VALUE II FUND GOAL AND STRATEGIES The Small Company Value II Fund seeks long-term capital appreciation. To pursue this goal, it invests in equity securities of small U.S. value companies. Current income is a secondary consideration in selecting portfolio investments. Value companies are companies whose earnings power or asset value does not appear to be reflected in the current stock price. As a result, value companies look underpriced according to financial measurements of their intrinsic worth or business prospects. These measurements include price-to-earnings, price-to-book, price-to-cash flow and debt-to-equity ratios. The portfolio managers determine value based upon research and analysis, taking all relevant factors into account. Under normal market conditions, the fund will invest at least 65% of assets in equity securities of small U.S. companies. The fund considers a "small" company to be one whose market capitalization is within the range of capitalizations of companies in the Russell 2000 Index. As of December 31, 2000, market capitalizations of Russell 2000 companies ranged from approximately $4 million to $6.1 billion. Some companies may outgrow the definition of a small company after the fund has purchased their securities. These companies continue to be considered small for purposes of the fund's 65% minimum allocation to small-company equities. In addition, the fund may invest in companies of any size once the 65% policy is met. As a result, the fund's average market capitalization may sometimes exceed that of the largest company in the Russell 2000 Index. PORTFOLIO INVESTMENTS This fund invests primarily in equity securities of small-capitalization value companies. Equity holdings may consist of: - common and preferred stocks - securities convertible into common stocks - rights and warrants The fund may invest up to 10% of assets in foreign securities. To a limited extent, it may also engage in other investment practices. RISK FACTORS This fund's principal risk factors are: - market risk - start-up and other small companies - special-situation companies The value of your investment generally will fluctuate in response to stock-market movements. Different types of stocks (such as "growth" vs. "value" stocks) tend to shift in and out of favor depending on market and economic conditions. Accordingly, the fund's performance may sometimes be lower or higher than that of other types of funds (such as those emphasizing growth stocks). Investing in start-up and other small companies may expose the fund to increased market, liquidity and information risks. These risks are defined in "More About Risk." Small companies are often involved in "special situations." Securities of special-situation companies may decline in value and hurt the fund's performance if the anticipated benefits of the special situation do not materialize. "More About Risk" details certain other investment practices the fund may use. Please read that section carefully before you invest. PORTFOLIO MANAGEMENT Roger W. Vogel and Richard Hanlon manage the fund's investment portfolio. You can find out more about them in "Meet the Managers." INVESTOR EXPENSES Management fee .84% Distribution and service (12b-1) fee .25% All other expenses .65% ----- Total expenses 1.74%
FINANCIAL HIGHLIGHTS The figures below have been audited by the fund's independent auditors, PricewaterhouseCoopers LLP.
PERIOD ENDED: 10/00 10/99 10/98 10/97 10/96(1) PER-SHARE DATA - -------------------------------------------------------------------------------- - ------ Net asset value, beginning of period $12.47 $13.39 $18.77 $14.38 $10.00 - -------------------------------------------------------------------------------- - ------ Investment activities: Net investment loss 0.01 (0.15) (0.12) (0.08) (0.02) Net gains or losses on investments (both realized and unrealized) 2.65 (0.34) (3.33) 4.64 4.40 - -------------------------------------------------------------------------------- - ------ Total from investment activities 2.66 (0.49) (3.45) 4.56 4.38 - -------------------------------------------------------------------------------- - ------ Less Distributions: From net realized capital gains (1.56) (0.43) (1.93) (0.17) 0.00 - -------------------------------------------------------------------------------- - ------ Total distributions (1.56) (0.43) (1.93) (0.17) 0.00 - -------------------------------------------------------------------------------- - ------ Net asset value, end of period $13.57 $12.47 $13.39 $18.77 $14.38 - -------------------------------------------------------------------------------- - ------ Total return 22.56% (3.91%) (19.97%) 32.05% 43.80%(2) - -------------------------------------------------------------------------------- - ------ RATIOS AND SUPPLEMENTAL DATA - -------------------------------------------------------------------------------- - ------ Net assets, end of period (000s omitted) $26,403 $29,201 $80,318 $223,675 $84,045 Ratio of expenses to average net assets 1.76%(1) 1.76%(1) 1.70%(1) 1.70%(1) 1.75%(1,3) Ratio of net gain to average net assets .09% (.76%) (.46%) (.63%) (.43%)(3) Decrease reflected in above operating expense ratio due to waivers/reimbursements .23% .38% .01% .03% .44%(3) Portfolio turnover rate 155.35% 168.57% 77.92% 105.87% 43.14%(2)
(1) Interest earned on uninvested cash balances is used to offset portions of the transfer agent expense. These arrangements resulted in a reduction to the Common Class shares' expenses by .02% annualized for the year ended October 31, 2000, and by .01%, .00%, .01% and .00% for the year or period ending 1999, 1998, 1997 and 1996, respectively. The Common Class shares' operating expense ratio after reflecting these arrangements were 1.74% for the year ended October 31, 2000, and 1.75%, 1.70%, 1.69% and 1.75% for the year or period ending 1999, 1998, 1997 and 1996, respectively. (2) Non-annualized. (3) Annualized. (4) For the period December 29, 1995 (commencement of operations) through October 31, 1996. SMALL COMPANY GROWTH FUND GOAL AND STRATEGIES The Small Company Growth Fund seeks capital growth. To pursue this goal, it invests in equity securities of small U.S. growth companies. In seeking to identify growth companies--companies with attractive capital-growth potential--the fund's portfolio managers often look for: - companies still in the developmental stage - older companies that appear to be entering a new stage of growth - companies providing products or services with a high unit-volume growth rate The fund may also invest in emerging-growth companies--small or medium-size companies that have passed their start-up phase, show positive earnings, and offer the potential for accelerated earnings growth. Emerging-growth companies generally stand to benefit from new products or services, technological developments, changes in management or other factors. Under normal market conditions, the fund will invest at least 65% of assets in equity securities of small U.S. companies. The fund considers a "small" company to be one whose market capitalization is within the range of capitalizations of companies in the Russell 2000 Index. As of December 31, 2000, market capitalizations of Russell 2000 companies ranged from $4 million to $6.1 billion. Some companies may outgrow the definition of a small company after the fund has purchased their securities. These companies continue to be considered small for purposes of the fund's minimum 65% allocation to small-company equities. In addition, the fund may invest in companies of any size once the 65% policy is met. As a result, the fund's average market capitalization may sometimes exceed that of the largest company in the Russell 2000 Index. PORTFOLIO INVESTMENTS This fund intends to invest at least 80% of assets in equity securities of small-capitalization growth companies. Equity holdings may consist of: - common and preferred stocks - securities convertible into common stocks - rights and warrants The fund may invest up to 10% of assets in foreign securities. To a limited extent, it may also engage in other investment practices. RISK FACTORS This fund's principal risk factors are: - market risk - start-up and other small companies - special-situation companies The value of your investment generally will fluctuate in response to stock-market movements. Fund performance will largely depend upon the performance of growth stocks, which may be more volatile than the overall stock market. Different types of stocks (such as "growth" vs. "value" stocks) tend to shift in and out of favor depending on market and economic conditions. Accordingly, the fund's performance may sometimes be lower or higher than that of other types of funds (such as those emphasizing value stocks). Investing in start-up and other small companies may expose the fund to increased market, liquidity and information risks. These risks are defined in "More About Risk." Small companies and emerging-growth companies are often involved in "special situations." Securities of special-situation companies may decline in value and hurt the fund's performance if the anticipated benefits of the special situation do not materialize. "More About Risk" details certain other investment practices the fund may use. Please read that section carefully before you invest. PORTFOLIO MANAGEMENT Stephen J. Lurito and Sammy Oh manage the fund's investment portfolio. You can find out more about them in "Meet the Managers." INVESTOR EXPENSES Management fee .51% Distribution and service (12b-1) fee .25% All other expenses .64% ----- Total expenses 1.40%
FINANCIAL HIGHLIGHTS The figures below have been audited by the fund's independent auditors, PricewaterhouseCoopers LLP.
PERIOD ENDED: 10/00 10/99 10/98(4) 10/97(4) PER-SHARE DATA - -------------------------------------------------------------------------------- - --------------------------------------- Net asset value, beginning of period $16.60 $10.11 $12.25 $10.00 - -------------------------------------------------------------------------------- - --------------------------------------- Investment activities: Net investment loss (0.13) (0.13) (0.34) (0.04) Net gains or losses on investments (both realized and unrealized) 7.28 6.62 (1.74) 2.29 - -------------------------------------------------------------------------------- - --------------------------------------- Total from investment activities 7.15 6.49 (2.08) 2.25 - -------------------------------------------------------------------------------- - --------------------------------------- Less Distributions: From net investment income 0.00 0.00 (0.06) 0.00 From net realized capital gains (0.64) 0.00 0.00 0.00 - -------------------------------------------------------------------------------- - --------------------------------------- Total distributions (0.64) 0.00 (0.06) 0.00 - -------------------------------------------------------------------------------- - --------------------------------------- Net asset value, end of period $23.11 $16.60 $10.11 $12.25 - -------------------------------------------------------------------------------- - --------------------------------------- Total return 43.65% 64.19% (17.00%) 22.50%(2) - -------------------------------------------------------------------------------- - --------------------------------------- RATIOS AND SUPPLEMENTAL DATA - -------------------------------------------------------------------------------- - --------------------------------------- Net assets, end of period (000s omitted) $47,900 $9,020 $4,544 $11,977 Ratio of expenses to average net assets 1.42%(1) 1.41%(1) 1.40%(1) 1.41%(1,3) Ratio of net loss to average net assets (.80%) (1.06%) (.95%) (.53%)(3) Decrease reflected in above operating expense ratio due to waivers/reimbursements .56% 2.13% 1.10% 3.66%(3) Portfolio turnover rate 93.65% 191.65% 114.97% 123.24%(2)
(1) Interest earned on uninvested cash balances is used to offset portions of transfer agent expense. These arrangements resulted in a reduction to the Common Class shares' expenses by .02% annualized for the year ended October 31, 2000, by .01%, .00%, and .01%, for the year or period ended October 31, 1999, 1998 and 1997, respectively. The Common Class shares' operating expense ratio after reflecting these arrangements were 1.40% for the year ended October 31, 2000, 1.40%, 1.40% and 1.40% for the year or period ended October 31, 1999, 1998 and 1997, respectively. (2) Non-annualized. (3) Annualized. (4) For the period December 31, 1996 (commencement of operations) through October 31, 1997. MORE ABOUT RISK INTRODUCTION A fund's goal and principal strategies largely determine its risk profile. You will find a concise description of each fund's risk profile in "Key Points." The fund-by-fund discussions contain more detailed information. This section discusses other risks that may affect the funds. The funds may use certain investment practices that have higher risks associated with them. However, each fund has limitations and policies designed to reduce many of the risks. The "Certain Investment Practices" table describes these practices and the limitations on their use. TYPES OF INVESTMENT RISK The following risks are referred to throughout this Prospectus. CORRELATION RISK The risk that changes in the value of a hedging instrument will not match those of the investment being hedged. CREDIT RISK The issuer of a security or the counterparty to a contract may default or otherwise become unable to honor a financial obligation. CURRENCY RISK Fluctuations in exchange rates between the U.S. dollar and foreign currencies may negatively affect an investment. Adverse changes in exchange rates may erode or reverse any gains produced by foreign-currency- denominated investments and may widen any losses. EXPOSURE RISK The risk associated with investments (such as derivatives) or practices (such as short selling) that increase the amount of money a fund could gain or lose on an investment. - HEDGED Exposure risk could multiply losses generated by a derivative or practice used for hedging purposes. Such losses should be substantially offset by gains on the hedged investment. However, while hedging can reduce or eliminate losses, it can also reduce or eliminate gains. - SPECULATIVE To the extent that a derivative or practice is not used as a hedge, the fund is directly exposed to its risks. Gains or losses from speculative positions in a derivative may be much greater than the derivative's original cost. For example, potential losses from writing uncovered call options and from speculative short sales are unlimited. INFORMATION RISK Key information about an issuer, security or market may be inaccurate or unavailable. INTEREST-RATE RISK Changes in interest rates may cause a decline in the market value of an investment. With bonds and other fixed-income securities, a rise in interest rates typically causes a fall in values, while a fall in interest rates typically causes a rise in values. LIQUIDITY RISK Certain fund securities may be difficult or impossible to sell at the time and the price that the fund would like. A fund may have to lower the price, sell other securities instead or forego an investment opportunity. Any of these could have a negative effect on fund management or performance. MARKET RISK The market value of a security may move up and down, sometimes rapidly and unpredictably. These fluctuations, which are often referred to as "volatility," may cause a security to be worth less than it was worth at an earlier time. Market risk may affect a single issuer, industry, sector of the economy, or the market as a whole. Market risk is common to most investments--including stocks and bonds, and the mutual funds that invest in them. OPERATIONAL RISK Some countries have less-developed securities markets (and related transaction, registration and custody practices) that could subject a fund to losses from fraud, negligence, delay or other actions. POLITICAL RISK Foreign governments may expropriate assets, impose capital or currency controls, impose punitive taxes, or nationalize a company or industry. Any of these actions could have a severe effect on security prices and impair a fund's ability to bring its capital or income back to the U.S. Other political risks include economic policy changes, social and political instability, military action and war. VALUATION RISK The lack of an active trading market may make it difficult to obtain an accurate price for a fund security. CERTAIN INVESTMENT PRACTICES For each of the following practices, this table shows the applicable investment limitation. Risks are indicated for each practice. KEY TO TABLE: [-] 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
SMALL SMALL EMERGING COMPANY COMPANY GROWTH VALUE GROWTH FUND FUND FUND INVESTMENT PRACTICE LIMIT BORROWING The borrowing of money from banks to meet redemptions or for other temporary or emergency purposes. Speculative exposure risk. 10% 30% 30% - -------------------------------------------------------------------------------- - ---- 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 include depositary receipts. Currency, euro conversion, information, liquidity, market, operational, political, valuation risks. 10% 10% 10% - -------------------------------------------------------------------------------- - ---- INVESTMENT-GRADE DEBT SECURITIES Debt securities rated within the four highest grades (AAA/Aaa through BBB/Baa) by Standard & Poor's or Moody's rating service, and unrated securities of comparable quality. Credit, interest-rate, market risks. 20% 20% 20% - -------------------------------------------------------------------------------- - ---- NON-INVESTMENT-GRADE DEBT SECURITIES Debt 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. 5% 10% 5% - -------------------------------------------------------------------------------- - ---- OPTIONS Instruments that provide a right to buy (call) or sell (put) a particular security, currency or index of securities at a fixed price within a certain time period. A fund may purchase or sell (write) both put and call options for hedging or speculative purposes.(1) Correlation, credit, hedged exposure, liquidity, market, speculative exposure risks. 25% 25% 25% - -------------------------------------------------------------------------------- - ----
SMALL SMALL EMERGING COMPANY COMPANY GROWTH VALUE GROWTH FUND FUND FUND INVESTMENT PRACTICE LIMIT RESTRICTED AND OTHER ILLIQUID SECURITIES Certain securities with restrictions on trading, or those not actively traded. May include private placements. Liquidity, market, valuation risks. 10% 10% 15% - -------------------------------------------------------------------------------- - ---- SECURITIES LENDING Lending portfolio securities to financial institutions; a fund receives cash, U.S. government securities or bank letters of credit as collateral. Credit, liquidity, market risks. 33 1/3% 33 1/3% 33 1/3% - -------------------------------------------------------------------------------- - ---- SHORT SALES Selling borrowed securities with the intention of repurchasing them for a profit on the expectation that the market price will drop. Liquidity, market, speculative exposure risks. -- -- 10% - -------------------------------------------------------------------------------- - ---- SPECIAL-SITUATION COMPANIES Companies experiencing unusual developments affecting their market values. Special situations may include acquisition, consolidation, reorganization, recapitalization, merger, liquidation, special distribution, tender or exchange offer, or potentially favorable litigation. Securities of a special-situation company could decline in value and hurt a fund's performance if the anticipated benefits of the special situation do not materialize. Information, market risks. [-] [-] [-] - -------------------------------------------------------------------------------- - ----
SMALL SMALL EMERGING COMPANY COMPANY GROWTH VALUE GROWTH FUND FUND FUND INVESTMENT PRACTICE LIMIT START-UP AND OTHER SMALL COMPANIES Companies with small relative market capitalizations, including those with continuous operations of less than three years. Information, liquidity, market, valuation risks. [-] [-] [-] - -------------------------------------------------------------------------------- - ---- TEMPORARY DEFENSIVE TACTICS Placing some or all of a fund's assets in investments such as money-market obligations and investment-grade debt securities for defensive purposes. Although intended to avoid losses in adverse market, economic, political or other conditions, defensive tactics might be inconsistent with a fund's principal investment strategies and might prevent a fund from achieving its goal. [ ] [ ] [ ] - -------------------------------------------------------------------------------- - ---- WARRANTS Options issued by a company granting the holder the right to buy certain securities, generally common stock, at a specified price and usually for a limited time. Liquidity, market, speculative exposure risks. 10% 10% 15% - -------------------------------------------------------------------------------- - ---- WHEN-ISSUED SECURITIES AND FORWARD COMMITMENTS The purchase or sale of securities for delivery at a future date; market value may change before delivery. Liquidity, market, speculative exposure risks. 20% 20% 20% - -------------------------------------------------------------------------------- - ----
(1) The funds are not obligated to pursue any hedging strategy. In addition, hedging practices may not be available, may be too costly to be used effectively or may be unable to be used for other reasons. (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. This page intentionally left blank MEET THE MANAGERS [ELIZABETH B. DATER PHOTO] ELIZABETH B. DATER Managing Director - Co-Portfolio Manager, Emerging Growth Fund since fund inception - With CSAM since 1999 as a result of Credit Suisse's acquisition of Warburg Pincus Asset Management, Inc. (Warburg Pincus) - With Warburg Pincus since 1978 [STEPHEN J. LURITO PHOTO] STEPHEN J. LURITO Managing Director - Co-Portfolio Manager, Small Company Growth Fund since fund inception - Co-Portfolio Manager, Emerging Growth Fund since 1990 - With CSAM since 1999 as a result of Credit Suisse's acquisition of Warburg Pincus - With Warburg Pincus since 1987 [SAMMY OH PHOTO] SAMMY OH Director - Co-Portfolio Manager, Small Company Growth Fund since March 1999 - With CSAM since 1999 as a result of Credit Suisse's acquisition of Warburg Pincus - With Warburg Pincus since 1997 - Vice president with Bessemer Trust, 1995 to 1997 - Vice president with Forstmann-Leff, 1993 to 1995 [ROGER VOGEL PHOTO] ROGER W. VOGEL Managing Director - Co-Portfolio Manager, Small Company Value II Fund since January 2001 - With CSAM since 2000 as a result of Credit Suisse's acquisition of Donaldson, Lufkin & Jenrette, Inc. and the transfer of the business of DLJ Asset Management Group, Inc. ("DLJAM") to CSAM - With DLJAM since 1993 Job titles indicate position with the investment adviser. [RICHARD HANLON PHOTO] RICHARD HANLON Director - Co-Portfolio Manager, Small Company Value II Fund since January 2001 - With CSAM since 2000 as a result of Credit Suisse's acquisition of Donaldson, Lufkin & Jenrette, Inc. and the transfer of the business of DLJAM to CSAM - With DLJAM since 1994 Job titles indicate position with the investment adviser. ABOUT YOUR ACCOUNT SHARE VALUATION The price of your shares is also referred to as their net asset value (NAV). The NAV 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 the Common Class's total assets, less its liabilities, by the number of Common Class shares outstanding. Each 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 that the Board of Directors 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 of Directors determines that using this method would not reflect an investment's value. Some fund securities may be listed on foreign exchanges that are open on days (such as U.S. holidays) when the funds do not compute their prices. This could cause the value of a fund's portfolio investments to be affected by trading on days when you cannot buy or sell shares. BUYING AND SELLING SHARES The accompanying Shareholder Guide explains how to invest directly with the funds. You will find information about purchases, redemptions, exchanges and services. Each fund is open on those days when the NYSE is open, typically Monday through Friday. If we receive your request in proper form by the close of the NYSE (usually 4 p.m. ET), your transaction will be priced at that day's NAV. If we receive it after that time, it will be priced at the next business day's NAV. FINANCIAL-SERVICES FIRMS You can also buy and sell fund shares through a variety of financial-services firms such as banks, brokers and financial advisors. The funds have authorized these firms (and other intermediaries that the firms may designate) to accept orders. When an authorized firm or its designee has received your order, it is considered received by the fund and will be priced at the next-computed NAV. Financial-services firms may charge transaction fees or other fees that you could avoid by investing directly with the funds. Please read their program materials for any special provisions or additional service features that may apply to your investment. Certain features of the funds, such as the minimum initial or subsequent investment amounts, may be modified. Some of the firms through which the funds are available include: - Charles Schwab & Co., Inc. Mutual Fund OneSource(R) service - Fidelity Brokerage Services, Inc. FundsNetwork(TM) Funds - TD Waterhouse Securities, Inc. ACCOUNT STATEMENTS In general, you will receive account statements or notices as follows: - after every transaction that affects your account balance (except for distribution reinvestments and automatic transactions) - after any changes of name or address of the registered owner(s) - otherwise, every quarter You will also receive annual and semiannual financial reports. DISTRIBUTIONS As a fund investor, you will receive distributions. Each fund may earn dividends from stocks and interest from bond, money- market and other investments. These are passed along as dividend distributions. A fund realizes capital gains whenever it sells securities for a higher price than it paid for them. These are passed along as capital-gain distributions. The funds typically distribute dividends and capital gains annually, usually in December. Most investors have their distributions reinvested in additional shares of the same fund. Distributions will be reinvested unless you choose on your account application to have a check for your distributions mailed to you or sent by electronic transfer. Estimated year-end distribution information, including record and payment dates, will be available late in the year at www.warburg.com or by calling 800-WARBURG (800-927-2874). Investors are encouraged to consider the potential tax consequences of distributions prior to buying or selling shares of the funds. TAXES As with any investment, you should consider how your investment in a fund will be taxed. If your account is not a tax-advantaged retirement account, you should be especially aware of the following potential tax implications. Please consult your tax professional concerning your own tax situation. TAXES ON DISTRIBUTIONS As long as a fund continues to meet the requirements for being a tax-qualified regulated investment company, it pays no federal income tax on the earnings it distributes to shareholders. Distributions you receive from a fund, whether reinvested or taken in cash, are generally considered taxable. Distributions from a fund's long-term capital gains are taxed as long-term capital gains regardless of how long you have held fund shares. Distributions from other sources (including the fund's short-term capital gains) are generally taxed as ordinary income. The funds will mostly make capital-gain distributions, which will be largely derived from the fund's short-term or long-term capital gains. If you buy shares shortly before or on the "record date"--the date that establishes you as the person to receive the upcoming distribution--you may receive a portion of the money you just invested in the form of a taxable distribution. The Form 1099-DIV that is mailed to you every January details your distributions and their federal-tax category, including the portion taxable as long-term capital gain. TAXES ON TRANSACTIONS Any time you sell or exchange shares, it is considered a taxable event for you. Depending on the purchase price and the sale price of the shares you sell or exchange, you may have a gain or loss on the transaction. You are responsible for any tax liabilities generated by your transactions. OTHER INFORMATION ABOUT THE DISTRIBUTOR Credit Suisse Asset Management Securities, Inc. (CSAMSI), an affiliate of CSAM, is responsible for: - making the funds available to you - account servicing and maintenance - other administrative services related to sale of the Common Class As part of their business strategies, the Small Company Value II Fund and the Small Company Growth Fund have each adopted a Rule 12b-1 shareholder-servicing and distribution plan to compensate CSAMSI for providing certain shareholder and other services related to the sale of the Common Class. Under the plan, CSAMSI receives fees at an annual rate of 0.25% of average daily net assets of the fund's Common Class. Because the fees are paid out of the fund's assets on an ongoing basis, over time they will increase the cost of your investment and may cost you more than paying other types of sales charges. With respect to each of the funds, CSAMSI, CSAM or their affiliates may make additional payments out of their own resources to firms offering Common Class shares for providing administration, subaccounting, transfer agency and/or other services. Under certain circumstances, the funds may reimburse a portion of these payments. This page intentionally left blank This page intentionally left blank This page intentionally left blank FOR MORE INFORMATION More information about these funds is available free upon request, including the following: SHAREHOLDER GUIDE Explains how to buy and sell shares. The Shareholder Guide is incorporated by reference into (is legally part of) this Prospectus. ANNUAL/SEMIANNUAL REPORT TO SHAREHOLDERS Includes financial statements, portfolio investments and detailed performance information. The Annual Report also contains a letter from the funds' managers discussing market conditions and investment strategies that significantly affected fund performance during its past fiscal year. OTHER INFORMATION A current Statement of Additional Information (SAI), which provides more details about the funds, is on file with the Securities and Exchange Commission (SEC) and is incorporated by reference. You may visit the SEC's Internet Web site (www.sec.gov) to view the SAI, material incorporated by reference, and other information. You can also obtain copies by visiting the SEC's Public Reference Room in Washington, DC (phone 202-942-8090) or by sending your request and a duplicating fee to the SEC's Public Reference Section, Washington, DC 20549-6009 or electronically at publicinfo@sec.gov. Please contact Warburg Pincus Funds to obtain information, without charge, the SAI, Annual and Semiannual Reports and portfolio holdings and other information, and to make shareholder inquiries: BY TELEPHONE: 800-WARBURG (800-927-2874) BY FACSIMILE: 646-354-5026 BY MAIL: Warburg Pincus Funds P.O. Box 9030 Boston, MA 02205-9030 BY OVERNIGHT OR COURIER SERVICE: Boston Financial Data Services, Inc. Attn: Warburg Pincus Funds 66 Brooks Drive Braintree, MA 02184 ON THE INTERNET: www.warburg.com SEC FILE NUMBERS: Warburg Pincus Emerging Growth Fund 811-05396 Warburg Pincus Small Company Value II Fund 811-07375 Warburg Pincus Small Company Growth Fund 811-07909 [WARBURG PINCUS FUNDS LOGO] P.O. BOX 9030, BOSTON, MA 02205-9030 800-WARBURG (800-927-2874) - www.warburg.com CREDIT SUISSE ASSET MANAGEMENT SECURITIES, INC., DISTRIBUTOR. WPUSS-1-0201 VIA EDGAR March 7, 2001 Securities and Exchange Commission 450 Fifth Street, N.W. Washington, DC 20549 Re: Warburg Pincus Funds Listed on Schedule A Ladies and Gentlemen: On behalf of the Warburg, Pincus Funds listed on Schedule A (each a "Registrant"), I hereby transmit for filing pursuant to Rule 497(c) under the Securities Act of 1933, as amended, each Registrant's Prospectuses, Shareholder Guide and Statement of Additional Information. The Registration Statements, of which these Prospectuses, Shareholder Guide and Statement of Additional Information are a part, were declared effective by the Securities and Exchange Commission on February 28, 2001. Very truly yours, /s/ Niral P. Kalaria - -------------------- Niral P. Kalaria Enclosures cc: Hal Liebes Rose F. DiMartino SCHEDULE A Warburg Pincus Balanced Fund, Inc. Securities Act File No. 33-00533 Investment Company Act File No. 811-07517 Warburg Pincus Value II Fund, Inc. Securities Act File No. 33-00527 Investment Company Act File No. 811-07515 Warburg Pincus Capital Appreciation Fund Securities Act File No. 33-12344 Investment Company Act File No. 811-05041 Warburg Pincus Emerging Growth Fund, Inc. Securities Act File No. 33-18632 Investment Company Act File No. 811-05396 Warburg Pincus Small Company Value II Fund, Inc. Securities Act File No. 33-63653 Investment Company Act File No. 811-07375 Warburg Pincus Small Company Growth Fund, Inc. Securities Act File No. 33-15453 Investment Company Act File No. 811-07909 [WARBURG PINCUS FUNDS LOGO] PART OF [CREDIT SUISSE/ASSET MANAGEMENT LOGO] PROSPECTUS Advisor Class February 28, 2001 WARBURG PINCUS SMALL COMPANY VALUE II FUND As with all mutual funds, the Securities and Exchange Commission has not approved this fund, nor has it passed upon the adequacy or accuracy of this Prospectus. It is a criminal offense to state otherwise. Warburg Pincus Advisor Funds are advised by Credit Suisse Asset Management, LLC. CONTENTS KEY POINTS.................... .................... 4 Goal and Principal Strategies................... 4 Investor Profile................................ 4 A Word About Risk............................... 5 PERFORMANCE SUMMARY............... ................ 6 Year-by-Year Total Returns...................... 6 Average Annual Total Returns.................... 7 INVESTOR EXPENSES................ ................. 8 Fees and Fund Expenses.......................... 8 Example......................................... 9 THE FUND IN DETAIL................ ................ 10 The Management Firm............................. 10 Multi-Class Structure........................... 10 Fund Information Key............................ 11 Goal and Strategies............................. 12 Portfolio Investments........................... 12 Risk Factors.................................... 12 Portfolio Management............................ 13 Investor Expenses............................... 13 MORE ABOUT RISK................. .................. 14 Introduction.................................... 14 Types of Investment Risk........................ 14 Certain Investment Practices.................... 16 MEET THE MANAGERS................ ................. 18 ABOUT YOUR ACCOUNT................ ................ 19 Share Valuation................................. 19 Account Statements.............................. 19 Distributions................................... 19 Taxes........................................... 20 OTHER INFORMATION................ ................. 21 About the Distributor........................... 21 BUYING SHARES.................. ................... 22 SELLING SHARES.................. .................. 24 SHAREHOLDER SERVICES............... ............... 26 OTHER POLICIES.................. .................. 27 FOR MORE INFORMATION............... ............... back cover
KEY POINTS GOAL AND PRINCIPAL STRATEGIES
FUND/RISK FACTORS GOAL STRATEGIES SMALL COMPANY VALUE II Long-term capital - Invests in equity securities of FUND appreciation small U.S. companies Risk factors: - Analyzes factors such as Market risk price-to-earnings, price-to-book Special-situation and price-to-cash flow ratios, companies using a value investment style Start-up and other small companies
INVESTOR PROFILE THIS FUND IS DESIGNED FOR INVESTORS WHO: - are investing for long-term goals that may include college or retirement - are willing to assume the risk of losing money in exchange for attractive potential long-term returns - are investing for capital appreciation - want to diversify their portfolios with a more aggressive stock fund THEY MAY NOT BE APPROPRIATE IF YOU: - are investing for a shorter time horizon - are uncomfortable with an investment that will fluctuate in value - are looking for income You should base your investment decision on your own goals, risk preferences and time horizon. A WORD ABOUT RISK All investments involve some level of risk. Simply defined, risk is the possibility that you will lose money or not make money. Principal risk factors for the fund are discussed below. Before you invest, please make sure you understand the risks that apply to the fund. As with any mutual fund, you could lose money over any period of time. Investments in the fund are not bank deposits and are not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. MARKET RISK The market value of a security may move up and down, sometimes rapidly and unpredictably. These fluctuations, which are often referred to as "volatility," may cause a security to be worth less than it was worth at an earlier time. Market risk may affect a single issuer, industry, sector of the economy, or the market as a whole. Market risk is common to most investments--including stocks and bonds, and the mutual funds that invest in them. START-UP AND OTHER SMALL COMPANIES Start-up and other small companies may have less-experienced management, limited product lines, unproven track records or inadequate capital reserves. Their securities may carry increased market, liquidity and other risks. Key information about the company may be inaccurate or unavailable. SPECIAL-SITUATION COMPANIES "Special situations" are unusual developments that affect a company's market value. Examples include mergers, acquisitions and reorganizations. Securities of special-situation companies may decline in value if the anticipated benefits of the special situation do not materialize. PERFORMANCE SUMMARY The bar chart and the table below provide an indication of the risks of investing in the fund. The bar chart shows you how the fund's performance has varied from year to year for up to 10 years. The table compares the fund's performance over time to that of a broadly based securities market index. As with all mutual funds, past performance is not a prediction of the future. YEAR-BY-YEAR TOTAL RETURNS
YEAR ENDED 12/31: 1996 1997 1998 1999 2000 SMALL COMPANY VALUE II FUND................................. 57.00% 17.77% - 7.22% 12.09% 14.80%
Best quarter: 15.97% (Q3 97) Worst quarter: -21.21% (Q3 98) Inception date: 12/29/95
SMALL COMPANY VALUE II FUND ---------------------- 1996 57.00 1997 17.77 1998 -14.80 1999 7.22 2000 12.09
AVERAGE ANNUAL TOTAL RETURNS
ONE YEAR FIVE YEARS TEN YEARS LIFE OF INCEPTION PERIOD ENDED 12/31/00: 2000 1996-2000 1991-2000 FUND DATE SMALL COMPANY VALUE II FUND 12.09% 13.63% NA 13.59% 12/29/95 RUSSELL 2000 INDEX* -3.02% 10.32% NA 10.32%
* The Russell 2000 Index is an unmanaged index (with no defined investment objective) of approximately 2,000 small-cap stocks, includes reinvestment of dividends, and is compiled by Frank Russell Company. UNDERSTANDING PERFORMANCE BTOTAL RETURN tells you how much an investment in the fund has changed in value over a given time period. It assumes that all dividends and capital gains (if any) were reinvested in additional shares. The change in value can be stated either as a cumulative return or as an average annual rate of return. BA CUMULATIVE TOTAL RETURN is the actual return of an investment for a specified period. The year-by-year total returns in the bar chart are examples of one-year cumulative total returns. BAn AVERAGE ANNUAL TOTAL RETURN applies to periods longer than one year. It smoothes out the variations in year-by-year performance to tell you what constant annual return would have produced the investment's actual cumulative return. This gives you an idea of an investment's annual contribution to your portfolio, assuming you held it for the entire period. BBecause of compounding, the average annual total returns in the table cannot be computed by averaging the returns in the bar chart. INVESTOR EXPENSES FEES AND FUND EXPENSES This table describes the fees and expenses you may bear as a shareholder. Annual fund operating expense figures are for the fiscal year ended October 31, 2000.
SHAREHOLDER FEES (paid directly from your investment) Sales charge "load" on purchases NONE Deferred sales charge "load" NONE Sales charge "load" on reinvested distributions NONE Redemption fees NONE Exchange fees NONE ANNUAL FUND OPERATING EXPENSES (deducted from fund assets) Management fee 1.00% Distribution and service (12b-1) fee .50% Other expenses .74% TOTAL ANNUAL FUND OPERATING EXPENSES* 2.24%
*Actual fees and expenses for the fiscal year ended October 31, 2000 are shown below. Fee waivers and expense reimbursements or credits reduced expenses during 2000, but may be discontinued at any time.
EXPENSES AFTER WAIVERS AND REIMBURSEMENTS Management fee .84% Distribution and service (12b-1) fee .50% Other expenses .65% ----- TOTAL ANNUAL FUND OPERATING EXPENSES 1.99%
EXAMPLE This example may help you compare the cost of investing in this fund with the cost of investing in other mutual funds. Because it uses hypothetical conditions, your actual costs may be higher or lower. Assume you invest $10,000, the fund returns 5% annually, expense ratios remain as listed in the first table on the opposite page (before fee waivers and expense reimbursements or credits) and you close your account at the end of each of the time periods shown. Based on these assumptions, your cost would be:
ONE YEAR THREE YEARS FIVE YEARS TEN YEARS $227 $700 $1,200 $2,575
THE FUND IN DETAIL THE MANAGEMENT FIRM CREDIT SUISSE ASSET MANAGEMENT, LLC 466 Lexington Ave. New York, NY 10017 - Investment adviser for the fund - Responsible for managing the fund's assets according to its goal and strategies. - A member of Credit Suisse Asset Management, the institutional asset management and mutual fund arm of Credit Suisse Group (Credit Suisse), one of the world's leading banks - Credit Suisse Asset Management companies manage approximately $94 billion in the U.S. and $298 billion globally - Credit Suisse Asset Management has offices in 14 countries, including SEC-registered offices in New York and London; other offices (such as those in Budapest, Frankfurt, Milan, Moscow, Paris, Prague, Sydney, Tokyo, Warsaw and Zurich) are not registered with the U.S. Securities and Exchange Commission For easier reading, Credit Suisse Asset Management, LLC will be referred to as "CSAM" or "we" throughout this Prospectus. MULTI-CLASS STRUCTURE The fund offers two classes of shares, Common and Advisor. This Prospectus offers the Advisor Class of shares, which are sold through financial-services firms. The Common Class of the fund is described in a separate prospectus. FUND INFORMATION KEY A concise description of the fund begins on the next page. The description provides the following information about the fund: GOAL AND STRATEGIES The fund's particular investment goal and the strategies it intends to use in pursuing that goal. Percentages of fund assets are based on total assets unless indicated otherwise. PORTFOLIO INVESTMENTS The primary types of securities in which the fund invests. Secondary investments are described in "More About Risk." RISK FACTORS The major risk factors associated with the fund. Additional risk factors are included in "More About Risk." PORTFOLIO MANAGEMENT The individuals designated by the investment adviser to handle the fund's day-to-day management. INVESTOR EXPENSES Actual fund expenses for the 2000 fiscal year. Future expenses may be higher or lower. - MANAGEMENT FEE The fee paid to the investment adviser for providing investment advice to the fund. Expressed as a percentage of average net assets after waivers. - DISTRIBUTION AND SERVICE (12B-1) FEES Fees paid by the fund to the distributor for making shares of the fund available to you. Expressed as a percentage of average net assets. - OTHER EXPENSES Fees paid by the fund for items such as administration, transfer agency, custody, auditing, legal and registration fees and miscellaneous expenses. Expressed as a percentage of average net assets after waivers, credits and reimbursements. FINANCIAL HIGHLIGHTS A table showing the fund's audited financial performance for up to five years. - TOTAL RETURN How much you would have earned on an investment in the fund, assuming you had reinvested all dividend and capital-gain distributions. - PORTFOLIO TURNOVER An indication of trading frequency. The funds may sell securities without regard to the length of time they have been held. A high turnover rate may increase the fund's transaction costs and negatively affect its performance. Portfolio turnover may also result in capital-gain distributions that could raise your income-tax liability. The Annual Report includes the auditor's report, along with the fund's financial statements. It is available free upon request. GOAL AND STRATEGIES The Small Company Value II Fund seeks long-term capital appreciation. To pursue this goal, it invests in equity securities of small U.S. value companies. Current income is a secondary consideration in selecting portfolio investments. Value companies are companies whose earnings power or asset value does not appear to be reflected in the current stock price. As a result, value companies look underpriced according to financial measurements of their intrinsic worth or business prospects. These measurements include price-to-earnings, price-to-book, price-to-cash flow and debt-to-equity ratios. The portfolio managers determine value based upon research and analysis, taking all relevant factors into account. Under normal market conditions, the fund will invest at least 65% of assets in equity securities of small U.S. companies. The fund considers a "small" company to be one whose market capitalization is within the range of capitalizations of companies in the Russell 2000 Index. As of December 31, 2000, market capitalizations of Russell 2000 companies ranged from approximately $4 million to $6.1 billion. Some companies may outgrow the definition of a small company after the fund has purchased their securities. These companies continue to be considered small for purposes of the fund's 65% minimum allocation to small-company equities. In addition, the fund may invest in companies of any size once the 65% policy is met. As a result, the fund's average market capitalization may sometimes exceed that of the largest company in the Russell 2000 Index. PORTFOLIO INVESTMENTS The fund invests primarily in equity securities of small-capitalization value companies. Equity holdings may consist of: - common and preferred stocks - securities convertible into common stocks - rights and warrants The fund may invest up to 10% of assets in foreign securities. To a limited extent, it may also engage in other investment practices. RISK FACTORS The fund's principal risk factors are: - market risk - start-up and other small companies - special-situation companies The value of your investment generally will fluctuate in response to stock-market movements. Different types of stocks (such as "growth" vs. "value" stocks) tend to shift in and out of favor depending on market and economic conditions. Accordingly, the fund's performance may sometimes be lower or higher than that of other types of funds (such as those emphasizing growth stocks). Investing in start-up and other small companies may expose the fund to increased market, liquidity and information risks. These risks are defined in "More About Risk." Small companies are often involved in "special situations." Securities of special-situation companies may decline in value and hurt the fund's performance if the anticipated benefits of the special situation do not materialize. "More About Risk" details certain other investment practices the fund may use. Please read that section carefully before you invest. PORTFOLIO MANAGEMENT Roger W. Vogel and Richard Hanlon co-manage the fund's investment portfolio. You can find out more about them in "Meet the Managers." INVESTOR EXPENSES Management fee .84% Distribution and service (12b-1) fee .50% All other expenses .65% Total expenses 1.99% FINANCIAL HIGHLIGHTS The figures below have been audited by the fund's independent auditors, PricewaterhouseCoopers LLP.
PERIOD ENDED: 2000 1999 1998 1997 1996(1 PER-SHARE DATA Net asset value, beginning of period $12.35 $13.30 $18.65 $14.46 $10.00 Investment activities: Net investment loss (0.01) (0.18) (0.40) (0.08) (0.02) Net gains or losses on investments (both realized and unrealized) 2.59 (0.34) (3.02) 4.44 4.48 Total from investment activities 2.58 (0.52) (3.42) 4.36 4.46 Less Distributions: From net realized capital gains (1.48) (0.43) (1.93) (0.17) 0.00 Total distributions (1.48) (0.43) (1.93) (0.17) 0.00 Net asset value, end of period $13.45 $12.35 $13.30 $18.65 $14.46 Total return 22.04% (4.17%) (19.93%) 30.47% 44.60%(2) RATIOS AND SUPPLEMENTAL DATA Net assets, end of period (000s omitted) $29 $30 $53 $255 $5 Ratio of expenses to average net assets 2.01%(1) 2.01%(1) 1.97%(1) 1.89%(1) 1.97%(1,3) Ratio of net loss to average net assets (.07%) (1.02%) (.92%) (.78%) (.52%)(3) Decrease reflected in above operating expense ratio due to waivers/reimbursements .23% .39% .27% .65% 1.46%(3) Portfolio turnover rate 155% 169% 78% 106% 43%(2)
(1)Interest earned on uninvested cash balances is used to offset portions of transfer agent expense. These arrangements resulted in a reduction to the net expense ratio by .02% for the year ended October 31, 2000 and by .01%, .00%, .01% and .00% for the year or period ended October 31, 1999, 1998, 1997 and 1996, respectively. The operating expense ratios after reflecting these arrangements were 1.99% for the year ended October 31, 2000 and 2.00%, 1.97%, 1.88% and 1.97% for the year or period ended October 31, 2000, 1999, 1998, 1997 and 1996, respectively. (2) Non-annualized. (3) Annualized. MORE ABOUT RISK INTRODUCTION The fund's goal and principal strategies largely determine its risk profile. You will find a concise description of the fund's risk profile in "Key Points." The discussion of the fund contains more detailed information. This section discusses other risks that may affect the fund. The fund may use certain investment practices that have higher risks associated with them. However, the fund has limitations and policies designed to reduce many of the risks. The "Certain Investment Practices" table describes these practices and the limitations on their use. TYPES OF INVESTMENT RISK The following risks are referred to throughout this Prospectus. CORRELATION RISK The risk that changes in the value of a hedging instrument will not match those of the investment being hedged. CREDIT RISK The issuer of a security or the counterparty to a contract may default or otherwise become unable to honor a financial obligation. CURRENCY RISK Fluctuations in exchange rates between the U.S. dollar and foreign currencies may negatively affect an investment. Adverse changes in exchange rates may erode or reverse any gains produced by foreign-currency- denominated investments and may widen any losses. EXPOSURE RISK The risk associated with investments (such as derivatives) or practices (such as short selling) that increase the amount of money the fund could gain or lose on an investment. - HEDGED Exposure risk could multiply losses generated by a derivative or practice used for hedging purposes. Such losses should be substantially offset by gains on the hedged investment. However, while hedging can reduce or eliminate losses, it can also reduce or eliminate gains. - SPECULATIVE To the extent that a derivative or practice is not used as a hedge, the fund is directly exposed to its risks. Gains or losses from speculative positions in a derivative may be much greater than the derivative's original cost. For example, potential losses from writing uncovered call options and from speculative short sales are unlimited. INFORMATION RISK Key information about an issuer, security or market may be inaccurate or unavailable. INTEREST-RATE RISK Changes in interest rates may cause a decline in the market value of an investment. With bonds and other fixed-income securities, a rise in interest rates typically causes a fall in values, while a fall in interest rates typically causes a rise in values. LIQUIDITY RISK Certain fund securities may be difficult or impossible to sell at the time and the price that the fund would like. The fund may have to lower the price, sell other securities instead or forego an investment opportunity. Any of these could have a negative effect on fund management or performance. MARKET RISK The market value of a security may move up and down, sometimes rapidly and unpredictably. These fluctuations, which are often referred to as "volatility," may cause a security to be worth less than it was worth at an earlier time. Market risk may affect a single issuer, industry, sector of the economy, or the market as a whole. Market risk is common to most investments--including stocks and bonds, and the mutual funds that invest in them. OPERATIONAL RISK Some countries have less-developed securities markets (and related transaction, registration and custody practices) that could subject the fund to losses from fraud, negligence, delay or other actions. POLITICAL RISK Foreign governments may expropriate assets, impose capital or currency controls, impose punitive taxes, or nationalize a company or industry. Any of these actions could have a severe effect on security prices and impair the fund's ability to bring its capital or income back to the U.S. Other political risks include economic policy changes, social and political instability, military action and war. VALUATION RISK The lack of an active trading market may make it difficult to obtain an accurate price for a fund security. CERTAIN INVESTMENT PRACTICES For each of the following practices, this table shows the applicable investment limitation. Risks are indicated for each practice. 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 - -------------------------------------------------------------------- BORROWING The borrowing of money from banks to meet redemptions or for other temporary or emergency purposes. Speculative exposure risk. 30% - -------------------------------------------------------------------- FUTURES AND OPTIONS ON FUTURES Exchange-traded contracts that enable the 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 include depositary receipts. Currency, euro conversion, information, liquidity, market, operational, political, valuation risks. 10% - -------------------------------------------------------------------- INVESTMENT-GRADE DEBT SECURITIES Debt securities rated within the four highest grades (AAA/Aaa through BBB/Baa) by Standard & Poor's or Moody's rating service, and unrated securities of comparable quality. Credit, interest-rate, market risks. 20% - -------------------------------------------------------------------- NON-INVESTMENT-GRADE DEBT SECURITIES Debt 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. 10% - -------------------------------------------------------------------- OPTIONS Instruments that provide a right to buy (call) or sell (put) a particular security, currency or index of securities at a fixed price within a certain time period. The fund may purchase or sell (write) both put and call options for hedging or speculative purposes.(1) Correlation, credit, hedged exposure, liquidity, market, speculative exposure risks. 25% - -------------------------------------------------------------------- RESTRICTED AND OTHER ILLIQUID SECURITIES Certain securities with restrictions on trading, or those not actively traded. May include private placements. Liquidity, market, valuation risks. 10% - -------------------------------------------------------------------- SECURITIES LENDING Lending portfolio securities to financial institutions; the fund receives cash, U.S. government securities or bank letters of credit as collateral. Credit, liquidity, market risks. 33 1/3% - -------------------------------------------------------------------- SPECIAL-SITUATION COMPANIES Companies experiencing unusual developments affecting their market values. Special situations may include acquisition, consolidation, reorganization, recapitalization, merger, liquidation, special distribution, tender or exchange offer, or potentially favorable litigation. Securities of a special-situation company could decline in value and hurt the fund's performance if the anticipated benefits of the special situation do not materialize. Information, market risks. /x/ - -------------------------------------------------------------------- START-UP AND OTHER SMALL COMPANIES Companies with small relative market capitalizations, including those with continuous operations of less than three years. Information, liquidity, market, valuation risks. /x/ - -------------------------------------------------------------------- TEMPORARY DEFENSIVE TACTICS Placing some or all of the 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 the fund's principal investment strategies and might prevent the fund from achieving its goal. / / - -------------------------------------------------------------------- WARRANTS Options issued by a company granting the holder the right to buy certain securities, generally common stock, at a specified price and usually for a limited time. Liquidity, market, speculative exposure risks. 10% - -------------------------------------------------------------------- WHEN-ISSUED SECURITIES AND FORWARD COMMITMENTS The purchase or sale of securities for delivery at a future date; market value may change before delivery. Liquidity, market, speculative exposure risks. 20% - --------------------------------------------------------------------
(1) The fund is not obligated to pursue any hedging strategy. In addition, hedging practices may not be available, may be too costly to be used effectively or may be unable to be used for other reasons. (2) The 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. MEET THE MANAGERS [Richard W. Vogel PHOTO] RICHARD W. VOGEL Managing Director Co-Portfolio Manager, Small Company Value II Fund since January 2001 With CSAM since 2000 as a result of Credit Suisse's acquisition of Donaldson, Lufkin & Jenrette, Inc. and the transfer of the business of DLJ Asset Management Group, Inc. ("DLJAM") to CSAM With DLJAM since 1993 [Richard Hanlon PHOTO] RICHARD HANLON Director Co-Portfolio Manager, Small Company Value II Fund since January 2001 With CSAM since 2000 as a result of Credit Suisse's acquisition of Donaldson, Lufkin & Jenrette, Inc. and the transfer of the business of DLJAM to CSAM With DLJAM since 1994 Job title indicates position with the investment adviser. ABOUT YOUR ACCOUNT SHARE VALUATION The price of your shares is also referred to as their net asset value (NAV). The NAV 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 the Advisor Class's total assets, less its liabilities, by the number of Advisor Class shares outstanding. The 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 that the Board of Directors 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 of Directors determines that using this method would not reflect an investment's value. Some fund securities may be listed on foreign exchanges that are open on days (such as U.S. holidays) when the fund does not compute its prices. This could cause the value of the fund's portfolio investments to be affected by trading on days when you cannot buy or sell shares. ACCOUNT STATEMENTS In general, you will receive account statements or notices as follows: - after every transaction that affects your account balance (except for distribution reinvestments and automatic transactions) - after any changes of name or address of the registered owner(s) - otherwise, every calendar quarter You will also receive annual and semiannual financial reports. DISTRIBUTIONS As a fund investor, you will receive distributions. The fund may earn dividends from stocks and interest from bond, money-market and other investments. These are passed along as dividend distributions. The fund realizes capital gains whenever it sells securities for a higher price than it paid for them. These are passed along as capital-gain distributions. The fund typically distributes dividends and capital gains annually, usually in December. Most investors have their distributions reinvested in additional shares of the same fund. Distributions will be reinvested unless you choose on your account application to have a check for your distributions mailed to you or sent by electronic transfer. Estimated year-end distribution information, including record and payment dates, will be available late in the year at www.warburg.com or by calling 800-222-8977. Investors are encouraged to consider the potential tax consequences of distributions prior to buying or selling shares of the fund. TAXES As with any investment, you should consider how your investment in the fund will be taxed. If your account is not a tax-advantaged retirement account, you should be especially aware of the following potential tax implications. Please consult your tax professional concerning your own tax situation. TAXES ON DISTRIBUTIONS As long as the fund continues to meet the requirements for being a tax-qualified regulated investment company, it pays no federal income tax on the earnings it distributes to shareholders. Distributions you receive from the fund, whether reinvested or taken in cash, are generally considered taxable. Distributions from the fund's long-term capital gains are taxed as long-term capital gains regardless of how long you have held fund shares. Distributions from other sources (including the fund's short-term capital gains) are generally taxed as ordinary income. The fund will mostly make capital-gain distributions, which will be largely derived from the fund's short-term or long-term capital gains. If you buy shares shortly before or on the "record date"--the date that establishes you as the person to receive the upcoming distribution--you may receive a portion of the money you just invested in the form of a taxable distribution. The Form 1099-DIV that is mailed to you every January details your distributions and their federal-tax category, including the portion taxable as long-term capital gain. TAXES ON TRANSACTIONS Any time you sell or exchange shares, it is considered a taxable event for you. Depending on the purchase price and the sale price of the shares you sell or exchange, you may have a gain or loss on the transaction. You are responsible for any tax liabilities generated by your transactions. OTHER INFORMATION ABOUT THE DISTRIBUTOR Credit Suisse Asset Management Securities, Inc. (CSAMSI), a wholly owned subsidiary of CSAM, is responsible for: - making the fund available to you - account servicing and maintenance - other administrative services related to sale of the Advisor Class Certain institutions and financial-services firms may offer Advisor Class shares to their clients and customers (or participants in the case of retirement plans). These firms provide distribution, administrative and shareholder services for fund shareholders. The fund has adopted a Rule 12b-1 shareholder- servicing and distribution plan to compensate these firms for their services. The current 12b-1 fee is .50% per annum of the fund's average daily net assets, although under the 12b-1 plan the fund is authorized to pay up to .75%. CSAMSI, CSAM or their affiliates may make additional payments out of their own resources to firms offering Advisor Class shares for providing administration, subaccounting, transfer agency and/or other services. Under certain circumstances, the fund may reimburse a portion of these payments. BUYING SHARES OPENING AN ACCOUNT Your account application provides us with key information we need to set up your account correctly. It also lets you authorize services that you may find convenient in the future. If you need an application, call our Institutional Services Center to receive one by mail or fax. You can make your initial investment by check or wire. The "By Wire" method in the table enables you to buy shares on a particular day at that day's closing NAV. BUYING AND SELLING SHARES The fund is open on those days when the NYSE is open, typically Monday through Friday. If we receive your request in proper form by the close of the NYSE (usually 4 p.m. ET), your transaction will be priced at that day's NAV. If we receive it after that time, it will be priced at the next business day's NAV. FINANCIAL-SERVICES FIRMS You can buy and sell fund shares through a variety of financial-services firms such as banks, brokers and financial advisors. The fund has authorized these firms (and other intermediaries that the firms may designate) to accept orders. When an authorized firm or its designee has received your order, it is considered received by the fund and will be priced at the next-computed NAV. Financial-services firms may charge transaction fees or other fees that you could avoid by investing directly with the fund. Please read their program materials for any special provisions or additional service features that may apply to your investment. Certain features of the fund, such as the minimum initial or subsequent investment amounts, may be modified. ADDING TO AN ACCOUNT You can add to your account in a variety of ways, as shown in the table. If you want to use Automated Clearing House (ACH) transfer, be sure to complete the "ACH on Demand" section of the Advisor Class account application. INVESTMENT CHECKS Checks should be made payable in U.S. dollars to Warburg Pincus Advisor Funds. Unfortunately, we cannot accept "starter" checks that do not have your name pre-printed on them. We also cannot accept checks payable to you or to another party and endorsed to the order of Warburg Pincus Advisor Funds. These types of checks may be returned to you and your purchase order may not be processed.
OPENING AN ACCOUNT ADDING TO AN ACCOUNT BY CHECK - - Complete the Warburg Pincus Advisor - Make your check payable to Warburg Funds New Account Application. Pincus Advisor Funds. - - Make your check payable to Warburg - Write the account number and the fund Pincus Advisor Funds. name on your check. - - Write the fund name on the check. - Mail to Warburg Pincus Advisor Funds. - - Mail to Warburg Pincus Advisor Funds. BY EXCHANGE - - Call our Institutional Services Center - Call our Institutional Services Center to request an exchange from another to request an exchange from another Warburg Pincus Advisor Fund or Warburg Pincus Advisor Fund or portfolio. Be sure to read the current portfolio. Prospectus for the new fund or - If you do not have telephone portfolio. privileges, mail or fax a letter of - - If you do not have telephone instruction signed by all shareholders. privileges, mail or fax a letter of instruction signed by all shareholders. BY WIRE - Complete and sign the New Account - Call our Institutional Services Center Application. by 4 p.m. ET to inform us of the incoming - - Call our Institutional Services Center wire. Please be sure to specify the and fax the signed New Account account registration, account number Application by 4 p.m. ET. and the fund name on your wire advice. - - The Institutional Services Center will - Wire the money for receipt that day. telephone you with your account number. Please be sure to specify the account registration, account number and the fund name on your wire advice. - - Wire your initial investment for receipt that day. - - Mail the original, signed application to Warburg Pincus Advisor Funds. BY ACH TRANSFER - - Cannot be used to open an account. - Call our Institutional Services Center to request an ACH transfer from your bank. - Your purchase will be effective at the next NAV calculated after we receive your order in proper form. - Requires ACH on Demand privileges.
INSTITUTIONAL SERVICES CENTER 800-222-8977 MONDAY - FRIDAY, 8 A.M. - 5 P.M. ET 23 SELLING SHARES
SELLING SOME OR ALL OF YOUR SHARES CAN BE USED FOR BY MAIL Write us a letter of instruction that - Sales of any amount. includes: - - your name(s) and signature(s) or, if redeeming on an investor's behalf, the name(s) of the registered owner(s) and the signature(s) of their legal representative(s) - - the fund name and account number - - the dollar amount you want to sell - - how to send the proceeds Obtain a signature guarantee or other documentation, if required (see "Selling Shares in Writing"). Mail the materials to Warburg Pincus Advisor Funds. If only a letter of instruction is required, you can fax it to the Institutional Services Center (unless a signature guarantee is required). BY EXCHANGE - - Call our Institutional Services Center - Accounts with telephone privileges. to request an exchange into another If you do not have telephone privileges, Warburg Pincus Advisor Fund or portfolio. mail or fax a letter of instruction to Be sure to read the current Prospectus exchange shares. for the new fund or portfolio. BY PHONE Call our Institutional Services Center to - Accounts with telephone privileges. request a redemption. You can receive the proceeds as: - - a check mailed to the address of record - - an ACH transfer to your bank - - a wire to your bank See "By Wire or ACH Transfer" for details. BY WIRE OR ACH TRANSFER - - Complete the "Wire Instructions" or - Requests by phone or mail. "ACH on Demand" section of your New Account Application. - - For federal-funds wires, proceeds will be wired on the next business day. For ACH transfers, proceeds will be delivered within two business days.
HOW TO REACH US INSTITUTIONAL SERVICES CENTER Toll free: 800-222-8977 Fax: 646-354-5026 MAIL Warburg Pincus Advisor Funds P.O. Box 9030 Boston, MA 02205-9030 OVERNIGHT/COURIER SERVICE Boston Financial Data Services, Inc. Attn: Warburg Pincus Advisor Funds 66 Brooks Drive Braintree, MA 02184 INTERNET WEB SITE www.warburg.com WIRE INSTRUCTIONS State Street Bank and Trust Company ABA# 0110 000 28 Attn: Mutual Funds/Custody Dept. [Warburg Pincus Advisor Fund Name] DDA# 9904-649-2 F/F/C: [Account Number and Account registration] SELLING SHARES IN WRITING Some circumstances require a written sell order, along with a signature guarantee. These include: - accounts whose address of record has been changed within the past 30 days - redemptions in certain large accounts (other than by exchange) - requests to send the proceeds to a different payee or address than on record - shares represented by certificates, which must be returned with your sell order A signature guarantee helps protect against fraud. You can obtain one from most banks or securities dealers, but not from a notary public. RECENTLY PURCHASED SHARES For fund shares purchased other than by bank wire, bank check, U.S. Treasury check, certified check or money order, the fund will delay payment of your cash redemption proceeds until check or other purchase payment clears, which generally takes up to 10 calendar days from the day of purchase. At any time during this period, you may exchange into another fund. INSTITUTIONAL SERVICES CENTER 800-222-8977 MONDAY - FRIDAY, 8 A.M. - 5 P.M. ET SHAREHOLDER SERVICES AUTOMATIC SERVICES Buying or selling shares automatically is easy with the services described below. You can set up most of these services with your account application or by calling our Institutional Services Center. AUTOMATIC MONTHLY INVESTMENT PLAN For making automatic investments from a designated bank account. AUTOMATIC WITHDRAWAL PLAN For making automatic monthly, quarterly, semiannual or annual withdrawals. STATEMENTS AND REPORTS The fund produces financial reports, which include among other things a list of the fund's portfolio holdings, semiannually and updates its prospectus annually. The fund generally does not hold shareholder meetings. To reduce expenses by eliminating duplicate mailings to the same address, the fund may choose to mail only one report, prospectus, proxy statement or information statement, as applicable, to your household, even if more than one person in the household has an account with the fund. Please call 800-222-8977 if you would like to receive additional reports, prospectuses or proxy statements. TRANSFERS/GIFTS TO MINORS Depending on state laws, you can set up a custodial account under the Uniform Transfers-to-Minors Act (UTMA) or the Uniform Gifts-to-Minors Act (UGMA). Please consult your tax professional about these types of accounts. ACCOUNT CHANGES Call our Institutional Services Center to update your account records whenever you change your address. The Institutional Services Center can also help you change your account information or privileges. OTHER POLICIES TRANSACTION DETAILS You are entitled to capital-gain and earned-dividend distributions as soon as your purchase order is executed. Your purchase order will be canceled and you may be liable for losses or fees incurred by the fund if: - your investment check or ACH transfer does not clear - you place a telephone order by 4 p.m. ET and we do not receive your wire that day If you wire money without first calling our Institutional Services Center to place an order, and your wire arrives after the close of regular trading on the NYSE, then your order will not be executed until the end of the next business day. In the meantime, your payment will be held uninvested. Your bank or other financial-services firm may charge a fee to send or receive wire transfers. While we monitor telephone-servicing resources carefully, during periods of significant economic or market change it may be difficult to place orders by telephone. Uncashed redemption or distribution checks do not earn interest. SPECIAL SITUATIONS The fund reserves the right to: - refuse any purchase or exchange request, including those from any person or group who, in the fund's view, is likely to engage in excessive trading - change or discontinue its exchange privilege after 30 days' notice to current investors, or temporarily suspend this privilege during unusual market conditions - impose minimum investment amounts after 15 days' notice to current investors of any increases - charge a wire-redemption fee - make a "redemption in kind"--payment in portfolio securities rather than cash--for certain large redemption amounts that could hurt fund operations - suspend redemptions or postpone payment dates as permitted by the Investment Company Act of 1940 (such as during periods other than weekends or holidays when the NYSE is closed or trading on the NYSE is restricted, or any other time that the SEC permits) - stop offering its shares for a period of time (such as when management believes that a substantial increase in assets could adversely affect it). INSTITUTIONAL SERVICES CENTER 800-222-8977 MONDAY - FRIDAY, 8 A.M. - 5 P.M. ET This page intentionally left blank This page intentionally left blank This page intentionally left blank For More Information More information about the fund is available free upon request, including the following: ANNUAL/SEMIANNUAL REPORT TO SHAREHOLDERS Includes financial statements, portfolio investments and detailed performance information. The Annual Report also contains a letter from the fund's manager discussing market conditions and investment strategies that significantly affected fund performance during its past fiscal year. OTHER INFORMATION A current Statement of Additional Information (SAI), which provides more details about the fund, is on file with the Securities and Exchange Commission (SEC) and is incorporated by reference. You may visit the SEC's Internet Web site (www.sec.gov) to view the SAI, material incorporated by reference, and other information. You can also obtain copies by visiting the SEC's Public Reference Room in Washington, DC (phone 202-942-8090) or by sending your request and a duplicating fee to the SEC's Public Reference Section, Washington, DC 20549-6009 or electronically at publicinfo@sec.gov. Please contact Warburg Pincus Advisor Funds to obtain information, without charge, the SAI, Annual and Semiannual Reports and portfolio holdings and other information, and to make shareholder inquiries: BY TELEPHONE: 800-222-8977 BY FACSIMILE: 646-354-5026 BY MAIL: Warburg Pincus Advisor Funds P.O. Box 9030 Boston, MA 02205-9030 BY OVERNIGHT OR COURIER SERVICE: Boston Financial Data Services, Inc. Attn: Warburg Pincus Advisor Funds 66 Brooks Drive Braintree, MA 02184 ON THE INTERNET: www.warburg.com SEC FILE NUMBER: Warburg Pincus Small Company Value II Fund 811-07375 [WARBURG PINCUS FUNDS LOGO] PART OF [CREDIT SUISSE/ASSET MANAGEMENT LOGO] P.O. BOX 9030, BOSTON, MA 02205-9030 800-222-8977 - www.warburg.com CREDIT SUISSE ASSET MANAGEMENT SECURITIES, INC., DISTRIBUTOR. ADSCV-1-0201 EX-99.17(E) 7 0007.txt S.A.I. FOR THE ACQUIRING FUND Credit Suisse Warburg Pincus Capital Funds - -------------------------------------------------------------------------------- 466 LEXINGTON AVENUE, NEW YORK, NEW YORK 10017 Toll Free (800) 225-8011 - -------------------------------------------------------------------------------- STATEMENT OF ADDITIONAL INFORMATION dated February 28, 2001 The Credit Suisse Warburg Pincus Capital Funds is a "series fund" comprised of the following diversified, open-end investment management companies, commonly known as "mutual funds": Credit Suisse Warburg Pincus Blue Chip Fund, Credit Suisse Warburg Pincus Value Fund, Credit Suisse Warburg Pincus Small Company Value Fund, Credit Suisse Warburg Pincus Fixed Income II Fund and Credit Suisse Warburg Pincus Municipal Trust Fund (individually, a "Fund" and collectively, the "Capital Funds" or the "Funds"). The Credit Suisse Warburg Pincus Capital Funds is empowered to expand the series by establishing additional Funds with investment objectives and policies that differ from those of the current Funds. The Credit Suisse Warburg Pincus Capital Funds also may offer additional classes of shares. This Statement of Additional Information (the "SAI") is not a prospectus and should be read in conjunction with the Credit Suisse Warburg Pincus Capital Funds' current Prospectus dated February 28, 2001 (the "Prospectus"), as supplemented from time to time, which is incorporated herein by reference. A copy of the Prospectus may be obtained by contacting the Credit Suisse Warburg Pincus Capital Funds at the address or telephone number listed above. TABLE OF CONTENTS PAGE Fund History..................................................................4 Description Of The Funds And Their Investments And Risks......................6 Management Of The Funds......................................................49 Investment Advisory And Other Services.......................................56 Brokerage Allocation And Other Practices.....................................69 Capital Stock And Organization...............................................75 Purchases, Redemptions, Exchanges And Pricing Of Fund Shares.................79 Shareholder Investment Account...............................................94 Net Asset Value..............................................................97 Taxes, Dividends, And Distributions.........................................100 Performance Information.....................................................108 General Information.........................................................112 Financial Statements........................................................113 Appendix I - Description Of Security Ratings................................A-1 -3- - -------------------------------------------------------------------------------- FUND HISTORY - -------------------------------------------------------------------------------- The Credit Suisse Warburg Pincus Capital Funds (formerly the DLJ Focus Funds) were organized under the laws of the Commonwealth of Massachusetts on November 26, 1985 as a "business trust" under the name "Winthrop Focus Funds." On January 19, 1999, the name was changed from "Winthrop Focus Funds" to "DLJ Winthrop Focus Funds"; on July 31, 2000 to "DLJ Focus Funds" and subsequently to "Credit Suisse Warburg Pincus Capital Funds" on January 18, 2001. In addition, on the latest date the names of Growth Fund, Growth and Income Fund, Small Company Value Fund, Fixed Income Fund and Municipal Trust Fund Series were changed to Credit Suisse Warburg Pincus Blue Chip Fund, Credit Suisse Warburg Pincus Value Fund, Credit Suisse Warburg Pincus Small Company Value Fund, Credit Suisse Warburg Pincus Fixed Income II Fund and Credit Suisse Warburg Pincus Municipal Trust Fund, respectively. The Board of Trustees of the Credit Suisse Warburg Pincus Capital Funds has approved, subject to shareholder approval at special meetings of shareholders scheduled for March 23, 2001, the transfer to the Acquiring Fund listed below of all of the assets and liabilities of the Acquired Fund in exchange for shares of the Acquiring Fund. -4- Acquired Fund Acquiring Fund ------------- -------------- Credit Suisse Warburg Pincus Fixed Income II Fund Warburg Pincus Fixed Income Fund Credit Suisse Warburg Pincus Municipal Trust Fund Warburg, Pincus Municipal Bond Fund, Inc. Each of the Acquiring Funds has an investment objective and strategies substantially similar to the investment objective and strategies of the Acquired Fund to be acquired by it. Shareholders of each Acquired Fund would receive on a tax-free basis shares of the relevant Acquiring Fund with the same net asset value as their shares of the Acquired Fund. The investment advisory fees of the Acquiring Funds would in each case be the same as the relevant Acquired Funds, and Credit Suisse Asset Management, LLC ("CSAM" or the "Adviser") has agreed to reimburse expenses of each Acquiring Fund as necessary so that for the two-year period following the consummation of each acquisition the annualized expense ratio of each Acquired Fund would not increase above its expense ratio for the 60-day period prior to consummation of the acquisitions. Each acquisition would be consummated promptly after receipt of shareholder approval. The Board of Trustees of the Credit Suisse Warburg Pincus Capital Funds has approved the transfer of all of the assets and liabilities of the Warburg, Pincus Small Company Value II Fund, Inc. and the Warburg, Pincus Value II Fund, Inc. in exchange for shares of the Credit Suisse Warburg Pincus Small Company Value Fund and the Credit Suisse Warburg Pincus Value Fund, respectively. These acquisitions are subject to the approval of shareholders of the relevant Warburg, Pincus Fund and, if approved, would be consummated in early June, 2001. -5- - -------------------------------------------------------------------------------- DESCRIPTION OF THE FUNDS AND THEIR INVESTMENTS AND RISKS - -------------------------------------------------------------------------------- (a) Classification Each of the Funds is a diversified open-end management investment company. (b) Investment Strategies and Risks The following investment policies and restrictions supplement, and should be read in conjunction with, the information set forth under the heading "Credit Suisse Warburg Pincus Funds' Investment Objectives and Policies" in the Prospectus. Except as noted in the Prospectus and in this SAI, the Funds' investment policies are not fundamental and may be changed by the Trustees of the Credit Suisse Warburg Pincus Capital Funds without shareholder approval; however, shareholders will be notified prior to a significant change in such policies. A Fund's fundamental investment restrictions may not be changed without shareholder approval as defined in "Investment Restrictions" in this SAI. Credit Suisse Warburg Pincus Capital Funds' investment adviser is CSAM. I. Credit Suisse Warburg Pincus Blue Chip Fund, Credit Suisse Warburg Pincus Small Company Value Fund and Credit Suisse Warburg Pincus Value Fund The investment objective of the Credit Suisse Warburg Pincus Blue Chip Fund is long-term capital appreciation. It seeks to achieve this objective by investing principally in common stock, securities convertible into common stock and other equity -6- securities (i.e., preferred stock, interests in master limited partnerships) of well-known and established companies (generally, companies in operation for more than three years) which, in the opinion of the Adviser, have the potential for long-term capital appreciation. There can be no assurance that the Credit Suisse Warburg Pincus Blue Chip Fund's investment objective will be achieved. The investment objective of the Credit Suisse Warburg Pincus Value Fund is long-term capital appreciation and continuity of income. It seeks to achieve this objective by investing principally in dividend-paying common stock and diversifying its investments among different industries and different companies. Accordingly, the Value Fund invests in securities on the basis of the Adviser's evaluation of their investment merit and their potential for appreciation in value and/or income. The selection of securities on the basis of their capital appreciation or income potential cannot ensure against possible loss in value. There can be no assurance that the Credit Suisse Warburg Pincus Value Fund's investment objective will be achieved. The investment objective of the Credit Suisse Warburg Pincus Small Company Value Fund is a high level of growth of capital. It seeks to achieve this objective by investing principally in common stock and securities convertible into common stock, but it may, when deemed appropriate by the Adviser, invest part of its assets in preferred stock, other equity securities, bonds or other debt securities as described below. There can be no assurance that the Credit Suisse Warburg Pincus Small Company Value Fund's investment objective will be achieved. The Credit Suisse Warburg Pincus Small Company Value Fund will pursue its investment objective by employing a value-oriented investment approach. The -7- Adviser's research efforts may also play a greater role in selecting securities for the Credit Suisse Warburg Pincus Small Company Value Fund than in a fund that invests in larger, more established companies. The Credit Suisse Warburg Pincus Small Company Value Fund seeks securities that appear to be underpriced and are issued by companies with proven management, consistent earnings, sound finances and strong potential for market growth. By investing in such companies, the Small Company Value Fund tries to enhance the potential for appreciation and limit the risk of decline in the value of its portfolio. The Credit Suisse Warburg Pincus Small Company Value Fund focuses on the fundamentals of each small-cap company instead of trying to anticipate what changes might occur in the stock market, the economy, or the political environment. This approach differs from that used by many other funds investing in small-cap company stocks. Those funds often buy stocks of companies they believe will have above-average earnings growth, based on anticipated future developments. In contrast, the Credit Suisse Warburg Pincus Small Company Value Fund's securities are generally selected with the belief that they are currently undervalued based on existing conditions, and that their earning power or franchise value does not appear to be reflected in their current stock price. In addition, to further reduce risk, the Credit Suisse Warburg Pincus Small Company Value Fund diversifies its holdings among many companies and industries. Other factors considered in the selection of securities include whether a company has an established presence in its industry, a product or market niche or whether management owns a significant stake in the company's operation. -8- For a further description of the Funds' investment objectives and policies, see "Credit Suisse Warburg Pincus Funds' Investment Objective and Policies" in the Prospectus. Warrants The Credit Suisse Warburg Pincus Blue Chip Fund and the Credit Suisse Warburg Pincus Small Company Value Fund each may invest up to 5% of their respective total assets in warrants. Warrants may be considered more speculative than certain other types of investments in that they do not entitle a holder to dividends or voting rights with respect to the securities which may be purchased, nor do they represent any rights in the assets of the issuing company. Also, the value of a warrant does not necessarily change in proportion to the value of the underlying securities and a warrant ceases to have value if it is not exercised prior to the expiration date. Foreign Securities The Credit Suisse Warburg Pincus Blue Chip Fund and the Credit Suisse Warburg Pincus Value Fund may invest up to 10% of the value of their respective total assets in securities of issuers doing business primarily outside the U.S. or domiciled outside the U.S. ("foreign securities") and the Credit Suisse Warburg Pincus Small Company Value Fund may invest up to 20% of the value of its total assets in foreign securities. Investment in foreign securities involves certain risks not ordinarily associated with investments in securities of domestic issuers. These risks include fluctuations in foreign exchange rates, future political and economic developments, and the possible imposition of exchange controls or other foreign governmental laws or restrictions. In addition, with respect to certain countries, there is the possibility of expropriation of -9- assets, confiscatory taxation, political or social instability or diplomatic developments which could adversely affect investments in those countries. There may be less publicly available information about a foreign company than about a U.S. company, and foreign companies may not be subject to accounting, auditing and financial reporting standards and requirements comparable to or as uniform as those to which U.S. companies are subject. Non-U.S. securities markets, while experiencing increases in the volume of securities traded, generally have substantially less volume than U.S. markets, and securities of many foreign companies are less liquid and their prices more volatile than securities of comparable U.S. companies. Transaction costs associated with investing in non-U.S. securities markets generally are higher than in the U.S. There is generally less government supervision and regulation of exchanges, brokers and issuers than in the U.S. The Funds might have greater difficulty taking appropriate legal action in non-U.S. courts. Non-U.S. markets also have different clearance and settlement procedures, which in some markets have at times failed to keep pace with the volume of transactions, thereby creating substantial delays and settlement failures that could adversely affect a Fund's performance. Dividend and interest income from non-U.S. securities will generally be subject to withholding taxes by the country in which the issuer is located and may not be recoverable by the Funds or investors. Investment-Grade Securities The Credit Suisse Warburg Pincus Blue Chip Fund and Credit Suisse Warburg Pincus Small Company Value Fund may invest up to 35% of the value of their respective total assets in investment-grade fixed-income -10- securities, while the Credit Suisse Warburg Pincus Value Fund may invest in investment-grade fixed-income securities without limitation. Investment-grade obligations are those obligations rated BBB or better by Standard and Poor's Ratings Group ("S&P") or Baa or better by Moody's Investors Service, Inc. ("Moody's") in the case of long-term obligations and equivalently rated obligations in the case of short-term obligations, or unrated instruments believed by the Adviser to be of comparable quality to such rated instruments. Issuers with securities rated BBB by S&P are regarded by S&P as having an adequate capacity to pay interest and repay principal. While such securities normally exhibit adequate protection parameters, adverse economic conditions or changing circumstances are more likely, in the opinion of S&P, to lead to a weakened capacity to pay interest and repay principal for debt in this category than in higher rated categories. Securities rated Baa by Moody's are considered by Moody's to be medium-grade obligations; they are neither highly protected nor poorly secured; interest payments and principal security appear to be adequate for the present but certain protective elements may be lacking or may be characteristically unreliable over any great length of time; in the opinion of Moody's, they lack outstanding investment characteristics and in fact have speculative characteristics as well. Fixed-income securities in which the Funds may invest include asset and mortgage backed securities. Prepayments of principal may be made at any time on the obligations underlying asset and mortgage backed securities and are passed on to the holders of the asset and mortgage backed securities. As a result, if a Fund purchases such a security at a premium, faster than expected prepayments will reduce, and slower than expected prepayments will increase, yield to maturity. Conversely, if a Fund purchases these securities at a discount, faster than expected -11- prepayments will increase, while slower than expected prepayments will reduce, yield to maturity. Options The Credit Suisse Warburg Pincus Blue Chip Fund and the Credit Suisse Warburg Pincus Value Fund may write covered calls on securities or securities indices for purposes of hedging against a decline in the value of the respective portfolio securities. The Credit Suisse Warburg Pincus Small Company Value Fund may write covered calls, purchase calls and write covered put options on securities and securities indices both for hedging and return enhancement purposes. A call option on a security gives the purchaser of the option, upon payment of a premium to the writer of the option, the right to purchase from the writer of the option a specified number of shares of a specified security on or before a fixed date, at a predetermined price. A call option on a securities index represents the holder's right to obtain from the writer in cash a fixed multiple of the amount by which the exercise price is less than the value of the underlying securities index on the exercise date. So long as a Fund remains obligated as a writer of a covered call option, it will forego the opportunity to profit from increases in the market price of the underlying security or index above the exercise price of the option. A Fund will not write a call option on a security unless at all times during the option period the Fund owns either (i) the optioned securities, or securities convertible into or carrying rights to acquire the optioned securities at no additional cost, or (ii) an offsetting call option on the same securities at the same or a lower strike price. When a Fund writes a call option on a securities index, it will establish a segregated account with its custodian into which it will deposit cash or -12- other liquid unencumbered assets, marked-to-market daily, or a combination of both, with a value equal to or greater than the market value of the option and will maintain the account while the option is open. If either the Credit Suisse Warburg Pincus Blue Chip Fund, the Credit Suisse Warburg Pincus Value Fund or the Credit Suisse Warburg Pincus Small Company Value Fund desires to sell a particular security from its portfolio on which it has written an option, such Fund will seek to effect a closing purchase transaction with respect to such option prior to or concurrently with the sale of the portfolio security. A Fund may also enter into a closing purchase transaction in order to terminate its obligation under an option it has written. A closing purchase transaction is a transaction in which an investor who is obligated as the writer of an option terminates his obligation by purchasing an option on the same security and same terms as the previously written option. There can be no assurances that a closing purchase transaction can be effected. If a closing purchase transaction cannot be effected, a Fund will not be able to sell the underlying security until the option expires or it delivers the underlying security upon exercise. A Fund will realize a profit from a closing purchase transaction for an option it has written if the cost of such transaction is less than the premium received from the writing of the option and will realize a loss if the cost of such transaction is more than the premium received. The Credit Suisse Warburg Pincus Blue Chip Fund and Credit Suisse Warburg Pincus Value Fund will only purchase call options in closing purchase transactions. As indicated above, the Credit Suisse Warburg Pincus Small Company Value Fund may write or purchase a put option on securities or securities indices. A put option is a contract that gives the holder of the option the right, in return for a premium, to sell to the -13- writer of the option the underlying security at a specified price. The seller of the put, on the other hand, has the obligation to buy the underlying security at the exercise price. The Credit Suisse Warburg Pincus Small Company Value Fund will only write "covered" put options (i.e., so long as the Fund is obligated under the put, it will have on deposit cash or other liquid unencumbered assets, marked-to-market daily, or a combination of both, with a value equal to or greater than the exercise price of the underlying securities or index). It is possible that, as a result of writing a put, the Fund may have to purchase the underlying securities at an amount greater than their market price at the time of writing the put. If the Credit Suisse Warburg Pincus Small Company Value Fund purchases an option, it runs the risk that the option will expire "out of the money", resulting in a loss equal to the amount of the premium paid plus any transaction costs. Thus, in some periods the Credit Suisse Warburg Pincus Small Company Value Fund may receive a lower total return in connection with its options transactions than it would have received from the underlying securities had options not been purchased. Neither the Credit Suisse Warburg Pincus Blue Chip Fund nor the Credit Suisse Warburg Pincus Value Fund may write a covered call option if, as a result thereof, the aggregate value of such Fund's portfolio securities subject to outstanding call options (valued at the lower of the option price or the market value of the underlying securities) or the amount deposited in a segregated account would exceed 5% of such Fund's total assets. The Credit Suisse Warburg Pincus Small Company Value Fund may not purchase options if, as a result, the aggregate cost of all outstanding options exceeds 10% of its total assets. -14- Because exercises of index options are settled in cash, a call writer such as the Credit Suisse Warburg Pincus Blue Chip Fund, the Credit Suisse Warburg Pincus Value Fund or the Credit Suisse Warburg Pincus Small Company Value Fund cannot determine the amount of its settlement obligation in advance and, unlike call writing on specific stocks, cannot provide in advance for, or cover, its potential obligations by acquiring and holding a particular security. Price movements in a Fund's portfolio probably will not correlate precisely with movements in the level of an index underlying an option and, therefore, a Fund bears the risk that the price of the securities held by such Fund may not increase as much as the index on which a Fund has written a covered call option. In such event, a Fund would bear a loss on the covered call option that it has written that is not completely offset by movements in the price of such Fund's portfolio. It is also possible that the index underlying a covered call may rise when the Fund's portfolio does not rise. If this occurred, a Fund would incur a loss on the call that would not be offset by an increase in the value of its portfolio and might also experience a loss in its portfolio. However, because the value of a diversified portfolio will, over time, generally tend to move in the same direction as the market, movements in the value of a Fund in the opposite direction as the market would be likely to occur for only a short period or to a small degree. Unless a Fund that has written a call option has other liquid assets which are sufficient to satisfy the exercise of a call on an index, such Fund would be required to liquidate portfolio securities in order to satisfy the exercise. -15- When a Fund has written a call on an index, there is also a risk that the market may decline between the time such Fund has a call exercised against it, at a price which is fixed as of the closing level of the index on the date of exercise, and the time such Fund is able to sell stocks in its portfolio. As with stock options, the Fund will not learn that an index option has been exercised until the day following the exercise date but, unlike a call on stock where a Fund would be able to deliver the underlying securities in settlement, such Fund may have to sell part of its investment portfolio in order to make settlement in cash, and the price of such investments might decline before they can be sold. This timing risk makes certain strategies involving more than one option substantially riskier with index options than with stock options. For example, even if an index call which a Fund has written is "covered" by an index call held by such Fund with the same strike price, such Fund will bear the risk that the level of the index may decline between the close of trading on the date the exercise notice is filed with the clearing corporation and the close of trading on the date such Fund exercises the call it holds or the time such Fund sells the call which, in either case, would occur no earlier than the day following the day the exercise notice was filed. If a Fund holds an index option and exercises it before final determination of the closing index value for that day, it runs the risk that the level of the underlying index may change before closing. If such a change causes the exercised option to fall out-of-the-money, the Fund will be required to pay the difference between the closing index value and the exercise price of the option (times the applicable multiplier) to the assigned writer. Although a Fund may be able to minimize this risk by withholding exercise instructions until just before the daily cutoff time or by selling rather than -16- exercising an option when the index level is close to the exercise price, it may not be possible to eliminate this risk entirely because the cutoff times for index options may be earlier than those fixed for other types of options and may occur before definitive closing index values are announced. Financial Futures and Options Thereon The Credit Suisse Warburg Pincus Small Company Value Fund may also seek to increase its return or to hedge all or a portion of its portfolio investments through the use of financial instruments currently or hereafter available, such as financial futures contracts and options thereon. On the futures markets, the Adviser may, with respect to the Credit Suisse Warburg Pincus Small Company Value Fund, adopt an overall strategy in response to expected market movements. Such a strategy would involve the purchase or sale of securities index futures contracts and related options traded on regulated exchanges, to the extent permitted by the Commodity Futures Trading Commission ("CFTC"), for bona fide hedging purposes or for other appropriate risk management purposes permitted under regulations promulgated by the CFTC. A securities index futures contract is an agreement to take or make delivery of an amount of cash equal to the difference between the value of the index at the beginning and at the end of the contract period. The Credit Suisse Warburg Pincus Small Company Value Fund may enter into securities index futures contracts in anticipation of or during a market decline to attempt to offset the decrease in the market value of securities in its portfolio that might otherwise result. An option on a futures contract gives the purchaser the right, but not the obligation, to assume a position in a futures contract (a long position if the option is a call -17- and a short position if the option is a put) at a specified exercise price at any time during the option exercise period. The writer of the option is required upon exercise to assume an offsetting futures position (a short position if the option is a call and a long position if the option is a put). Upon exercise of the option, the assumption of offsetting futures positions by the holder and writer of the option will be accompanied by delivery of the accumulated cash balance in the writer's futures margin account which represents the amount by which the market price of the futures contract, at exercise, exceeds, in the case of a call, or is less than, in the case of a put, the exercise price of the option on the futures contract. With respect to stock indices, options are traded on futures contracts for various U.S. and foreign stock indices, including the S&P 500 Stock Index and the NYSE Composite Index. The holder or writer of an option may terminate its position by selling or purchasing an option of the same series. There is no guarantee that such closing transactions can be effected. The Credit Suisse Warburg Pincus Small Company Value Fund may only invest in futures contracts and related options to the extent that the Fund would not be required to register with the CFTC. The Credit Suisse Warburg Pincus Small Company Value Fund will not engage in financial futures or related options transactions for speculative purposes but only in an effort to hedge portfolio risks as described above. In accordance with the foregoing, under current regulations the Credit Suisse Warburg Pincus Small Company Value Fund may not purchase or sell futures contracts if, immediately thereafter, the sum of the amount of initial margin deposits on the Fund's open futures positions and premiums on open positions thereon would exceed 5% of the market value of the Credit Suisse Warburg Pincus Small Company Value Fund's total -18- assets. Certain provisions of the federal tax laws may limit the extent to which the Credit Suisse Warburg Pincus Small Company Value Fund may engage in options and financial futures transactions. Such transactions may also affect the amount, character and timing of income, gain or loss recognized by the Fund for federal tax purposes. The Credit Suisse Warburg Pincus Small Company Value Fund's successful use of options and financial futures depends on the ability of the Adviser to predict the direction of the market and is subject to various additional risks. The investment techniques and skills required to develop and implement a successful options and futures strategy are different from those required to select equity and debt securities for investment. The correlation between movements in the price of an option or future and the price of securities index futures and options may decline if the composition of the Fund's portfolio diverges from the composition of the index underlying such index futures and options. In addition, the ability of the Fund to close out an option or futures position depends on the existence of a liquid secondary market for those contracts. There is no assurance that liquid secondary markets will exist for any particular option or futures contract at any particular time. A Fund's losses on futures transactions could be unlimited. New and innovative financial instruments continue to be developed and the Credit Suisse Warburg Pincus Small Company Value Fund may invest in any such instrument as may be developed to the extent that the utilization of such instrument is consistent with its investment objective and policies and the regulatory requirements applicable to the Fund. -19- Risks of Options, Currency Exchange Contracts and Financial Futures Strategies Participation in the options or futures markets and in currency exchange transactions involves investment risks and transaction costs to which a Fund would not be subject absent the use of these strategies. If the Adviser's predictions of movements in the direction of the securities, foreign currency and interest rate markets are inaccurate, the adverse consequences to a Fund may leave the Fund in a worse position than if such strategies were not used. The loss from entering into futures contracts is potentially unlimited. Risks inherent in the use of options, foreign currency and futures contracts and options on futures contracts include (1) dependence on the investment manager's ability to predict correctly movements in the direction of interest rates, securities prices and currency markets; (2) imperfect correlation between the price of options and futures contracts and options thereon and movements in the prices of securities or currencies being hedged; (3) skills needed to use these strategies which are different from those needed to select portfolio securities; (4) the possible absence of a liquid secondary market for any particular instrument at any time; (5) the possible need to defer closing out certain hedged positions to avoid adverse tax consequences; and (6) the possible inability of a Fund to purchase or sell a portfolio security at a time that otherwise would be favorable for it to do so, or the possible need for a Fund to sell a portfolio security at a disadvantageous time, due to the need for such Fund to maintain "cover" or to segregate securities in connection with hedging transactions. Small Company Stocks At least 65% of the Credit Suisse Warburg Pincus Small Company Value Fund's total assets normally will be invested in equity securities of small market -20- capitalization companies, which for the purposes of this Fund, are those companies with a market capitalization of $2 billion or less at the time of the Fund's investment. While small-cap company stocks generally pay low or no dividends, they are considered to offer greater potential for appreciation than securities of companies with larger market capitalizations. Small-cap company stocks generally also have higher risk and volatility, because most are not as broadly traded as stocks of companies with larger capitalizations and their prices thus may fluctuate more widely and abruptly. Small-cap company securities generally are also less researched. Special Situation Companies The Credit Suisse Warburg Pincus Small Company Value Fund may also invest in securities of companies in special situations, that is, in securities the values of which may be affected by particular developments unrelated to business conditions generally, and which may fluctuate without relation to general market trends. In general, a special situation company is a company whose securities could reasonably be expected to be accorded market recognition within a foreseeable period of time at an appreciated value solely by reason of a development particularly or uniquely applicable to that company. The principal risk associated with an investment in special situation companies is that if the anticipated development does not occur, the investment is likely not to appreciate or may decline. Examples of special situation companies are companies being reorganized or merged, having unusual new products, enjoying particular tax advantages, or acquiring new management. The Credit Suisse Warburg Pincus Small Company Value Fund will not, however, invest more than 10% of its assets (at the time -21- of purchase) in equity securities of companies (including predecessors) that have less than three years of operations. Short-Term Portfolio Transactions The Credit Suisse Warburg Pincus Small Company Value Fund may engage in short-term portfolio transactions in an attempt to generate capital gains when deemed appropriate by the Adviser under the circumstances, taking into consideration the market analysis factors of any particular security and the technical conditions of the securities markets in general. In accordance with the investment policy of engaging in short-term portfolio transactions, the Credit Suisse Warburg Pincus Small Company Value Fund has no restrictions with respect to portfolio turnover and the rate of portfolio turnover is not considered a prohibitive factor by the Adviser when considering short-term portfolio transactions. As a result of this policy, it is possible that the Credit Suisse Warburg Pincus Small Company Value Fund's annual portfolio turnover rate may exceed 100%, although the Adviser anticipates that such rate will not exceed 100%. Because it is difficult to predict accurately portfolio turnover rates, actual turnover may be higher or lower. The portfolio turnover rate is computed by dividing the lesser of the amount of the securities purchased or the securities sold by the average monthly value of securities owned during the year, excluding securities whose maturities at the time of acquisition were one year or less. A high degree of portfolio turnover results in increased transaction costs. IOs and POs Although the Credit Suisse Warburg Pincus Small Company Value Fund has no present intention to so invest, the Credit Suisse Warburg Pincus Small Company -22- Value Fund may invest in securities representing interests in a pool of mortgages or other assets the cash flow of which has been separated into its interest and principal components, commonly known as "IOs" (interest only) and "POs" (principal only). IOs and POs issued by parties other than agencies or instrumentalities of the U.S. Government are considered, under current guidelines of the staff of the Securities and Exchange Commission, to be illiquid securities. Additional Investment Policies of the Credit Suisse Warburg Pincus Blue Chip Fund and Credit Suisse Warburg Pincus Value Fund The following additional policies have been adopted by the Credit Suisse Warburg Pincus Blue Chip Fund and the Credit Suisse Warburg Pincus Value Fund and may be changed by the Trustees without shareholder approval: 1. The Funds will not make or maintain a short position (other than short sales against the box) or write, purchase or sell puts, calls, straddles, spreads or combinations thereof, provided, however, that the Funds may write covered call options and purchase call options in closing purchase transactions. 2. The Funds will not invest in oil, gas or other mineral exploration or development programs, but this shall not prohibit the Funds from investing in securities of companies engaged in oil, gas or mineral activities or investigations. II. Credit Suisse Warburg Pincus Fixed Income II Fund The investment objective of the Credit Suisse Warburg Pincus Fixed Income II Fund is to 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 nonconvertible debt securities of foreign and domestic companies, -23- including both well-known and established and new and lesser-known companies. Total return means the sum of net investment income (if any) and realized and unrealized gains less losses. Capital preservation means minimizing the risk of capital loss in a period of falling prices (rising interest rates) for debt securities. Specifically, the investment policies of the Credit Suisse Warburg Pincus Fixed Income II Fund permit it to invest, without restriction, in the following types of securities: (1) Bonds, including municipal bonds (taxable and tax-exempt, including, among others, special and general obligation bonds and industrial development bonds) and other debt securities, which are rated Aaa, Aa, A or MIG-1 by Moody's or AAA, AA, A or SP-1 by S&P; (2) U.S. Government Securities; (3) Obligations issued or guaranteed by national or state bank holding companies, which obligations are not rated as a matter of policy by either Moody's or S&P, but which, in the opinion of the Adviser (on the basis of criteria believed by the Adviser to be comparable to that used by nationally recognized statistical rating organizations for assigning ratings), meet the Credit Suisse Warburg Pincus Fixed Income II Fund's investment objective; and (4) Commercial paper rated Prime-1 by Moody's or A-1+ or A-1 by S&P. The Credit Suisse Warburg Pincus Fixed Income II Fund may also invest not more than 25% (in the aggregate) of its total assets at the time of investment in (i) debt securities rated Baa or MIG-2 by Moody's or BBB or SP-2 by S&P, to the extent -24- that such investments would, in the opinion of the Adviser, be consistent with the Credit Suisse Warburg Pincus Fixed Income II Fund's investment objective. See "Additional Information on Investment Policies and Risks" in the Prospectus for a description of securities rated BBB by S&P and Baa by Moody's and of asset and mortgage-backed securities. As a matter of fundamental policy, which cannot be changed without approval by the vote of a majority of the Credit Suisse Warburg Pincus Fixed Income II Fund's outstanding voting securities (as defined in this SAI), the Credit Suisse Warburg Pincus Fixed Income II Fund will invest at least 80% of the value of its total assets at the time of investment in debt securities. In normal circumstances, the Credit Suisse Warburg Pincus Fixed Income II Fund will invest at least 65% of the value of its total assets at the time of investment in fixed-income securities. However, the Credit Suisse Warburg Pincus Fixed Income II Fund reserves the right to hold cash and short-term fixed-income securities and to enter into repurchase agreements as necessary for temporary defensive or emergency purposes as determined by the Adviser without regard for the above limitations. The Credit Suisse Warburg Pincus Fixed Income II Fund may also invest in restricted securities and in instruments having no ready market if such purchases at the time thereof would not cause more than 10% of the value of its net assets to be invested in not readily marketable assets. The Credit Suisse Warburg Pincus Fixed Income II Fund generally does not intend to acquire common stocks or equity securities exchangeable for common stock or rights or warrants to subscribe for or purchase common stock, except that, with respect -25- to convertible debt securities, the Fund may acquire common stock through the exercise of conversion rights in situations where it believes such exercise is in the best interest of the Credit Suisse Warburg Pincus Fixed Income II Fund and its shareholders. In such event, the Credit Suisse Warburg Pincus Fixed Income II Fund will sell the common stock resulting from such conversion as soon as practicable. The Credit Suisse Warburg Pincus Fixed Income II Fund may acquire debt securities, including convertible and non-convertible debt securities which may have voting rights, but in no case will the Credit Suisse Warburg Pincus Fixed Income II Fund acquire more than 10% of the voting securities of any one issuer. The relative size of the Credit Suisse Warburg Pincus Fixed Income II Fund's investments in any grade or type of security will vary from time to time. Critical factors which are considered in the selection of securities or other investment alternatives include trends in the determinates of interest rates, corporate profits and management capabilities and practices. The Credit Suisse Warburg Pincus Fixed Income II Fund may use a variety of techniques in seeking to attain its investment objective. In making investment decisions, for example, the Credit Suisse Warburg Pincus Fixed Income II Fund seeks to balance favorable factors, such as high yields to maturity and high current rates of income, against unfavorable factors, such as increased risk which accompanies longer maturities. The Credit Suisse Warburg Pincus Fixed Income II Fund may use trading to attain its investment objectives and policies. Trading may be used in anticipation of market developments or to take advantage of yield disparities between major sectors of the investment-grade market. For example, the Credit Suisse Warburg Pincus Fixed -26- Income II Fund may employ trading in order to (i) shorten the average maturity of the portfolio in anticipation of higher interest rates, (ii) lengthen the average maturity of the portfolio in anticipation of lower interest rates, (iii) change the average coupon of the portfolio when yield disparities occur between debt securities selling at differing levels of premium or discount, (iv) sell one type of debt security (e.g., industrial bonds) and buy another type of debt security (e.g., Federal agency bonds or notes) when disparities arise in the relative value of each, and (v) sell one class of fixed-income securities (e.g., preferred stocks) and buy another class (e.g., publicly offered utility bonds) when disparities arise in the relative values of each. Debt securities acquired for the Credit Suisse Warburg Pincus Fixed Income II Fund's portfolio may be subject to call by the issuer prior to maturity, in which case the Credit Suisse Warburg Pincus Fixed Income II Fund may be forced to sell such securities at prices below market value. The Credit Suisse Warburg Pincus Fixed Income II Fund may seek protection against calls at prices below market value. Such protection may be sought by (i) purchasing securities with high call prices relative to their market prices, (ii) purchasing securities with sinking fund features which are selling at a premium where the period before inception of the sinking fund payments is relatively long, (iii) selling a security whose market price has risen above its call price and purchasing another security of comparable quality whose market price is below its call price and (iv) substituting for a security with a refunding date a comparable security with a more distant refunding date. Depending on market conditions, debt securities may be purchased at a discount or premium from face value, producing a yield of more or less than the coupon rate. The market value of the Credit Suisse Warburg Pincus Fixed -27- Income II Fund's assets will reflect yields generally available on debt securities of similar quality. When such yields (i.e., interest rates) decline, the market value of the Credit Suisse Warburg Pincus Fixed Income II Fund's assets already invested can be expected to rise. Similarly, when such yields increase, the market value of the Fund's assets already invested can be expected to decline. III. Credit Suisse Warburg Pincus Municipal Trust Fund The investment objective of the Credit Suisse Warburg Pincus Municipal Trust Fund is to provide as high a level of total return as is consistent with capital preservation by investing principally in high grade tax-exempt municipal securities. This investment objective, unlike that of most other municipal bond funds, is not to provide current income which is exempt from federal and/or state income tax. Total return means the sum of net investment income (if any) and realized and unrealized gains less losses. The Credit Suisse Warburg Pincus Municipal Trust Fund intends to distribute annually its net capital gains. Any such distributions will be taxable to a shareholder as capital gain. See "Taxes, Dividends, and Distributions." The Credit Suisse Warburg Pincus Municipal Trust Fund attempts to provide high total return by actively managing the maturities of the bonds in the portfolio in response to the Adviser's anticipation of the movement of interest rates and its assessment of the relative yields. The Fund will shorten the portfolio's maturities when the Adviser believes that interest rates will rise and lengthen maturities when the Adviser believes that rates will fall. To a lesser extent, the Credit Suisse Warburg Pincus Municipal Trust Fund will also attempt to enhance total return by selecting municipal -28- securities which the Adviser believes are undervalued. The success of these strategies depends upon the Adviser's ability to accurately forecast changes in interest rates and to properly assess the value of municipal securities. The investor should be aware that there can be no assurances that the Credit Suisse Warburg Pincus Municipal Trust Fund's investment strategies will be successful. Under normal circumstances, it is the Credit Suisse Warburg Pincus Municipal Trust Fund's policy to invest at least 80% of the value of its net assets at the time of investment in tax-exempt municipal securities. However, the Credit Suisse Warburg Pincus Municipal Trust Fund reserves the right to hold cash and short-term fixed-income securities and to enter into repurchase agreements as necessary for temporary defensive or emergency purposes as determined by the Adviser without regard for the above limitation. The Credit Suisse Warburg Pincus Municipal Trust Fund seeks to achieve its objective by investing primarily in a diversified portfolio of high grade, intermediate term municipal securities. Municipal securities fall into two principal classes: bonds and notes, both of which may have fixed, variable or floating rates of interest. The investment policies of the Municipal Trust Fund permit it to invest, without restriction, in tax-exempt municipal bonds and notes which are rated Aaa, Aa, A or MIG-1 by Moody's or AAA, AA, A or SP-1 by S&P. The Municipal Trust Fund may also invest not more than 25% (in the aggregate) of its total assets at the time of investment in (i) municipal securities rated Baa or MIG-2 by Moody's or BBB or SP-2 by S&P and (ii) commercial paper rated Prime-2 by Moody's or A-2 by S&P, to the extent that such investments -29- would, in the opinion of the Adviser, be consistent with the Municipal Trust Fund's investment objective. Non-rated municipal securities will also be considered for investment by the Credit Suisse Warburg Pincus Municipal Trust Fund when the Adviser believes that the financial condition of the issuers of such obligations and the protection afforded by the terms of the obligations themselves limit the risk to the Credit Suisse Warburg Pincus Municipal Trust Fund to a degree comparable to that of rated securities which are consistent with the Credit Suisse Warburg Pincus Municipal Trust Fund's objective and policies. Municipal securities include municipal bonds as well as short-term (i.e., maturing in under one year to as much as three years) municipal notes, demand notes and tax-exempt commercial paper. In the event the Credit Suisse Warburg Pincus Municipal Trust Fund invests in demand notes, the Adviser will continually monitor the ability of the obligor under such notes to meet its obligations. Typically, municipal bonds are issued to obtain funds used to construct a wide range of public facilities, such as schools, hospitals, housing, mass transportation systems, airports, highways and bridges. The funds may also be used for general operating expenses, refunding of outstanding obligations and loans to other public institutions and facilities. Municipal bonds fall into two general classes: general obligation bonds and revenue or special obligation bonds. Payment of principal of and interest on general obligation bonds is secured by the issuer's pledge of its faith, credit and taxing power. Payment on revenue or special obligation bonds is met only from the revenues obtained from a particular facility or class of facilities or, in some cases, from the proceeds of a -30- special excise tax or other specific revenue source but not from general tax and other unrestricted revenues of the issuer. The term "issuer" means the agency, authority, instrumentality or other political subdivision whose assets and revenues are available for the payment of principal of and interest on the bonds. Certain types of private activity bonds are also considered municipal bonds if the interest thereon is exempt from federal income tax. Private activity bonds are issued by or on behalf of public authorities to obtain funds for various privately-operated manufacturing facilities, airports, housing projects, resource recovery programs, solid waste disposal facilities, student loan programs and water and sewage disposal facilities. Private activity bonds are in most cases revenue bonds and do not generally constitute the pledge of the credit or taxing power of the issuer of such bonds. The payment of the principal and interest on such industrial revenue bonds depends solely on the ability of the user of the facilities financed by the bonds to meet its financial obligations and the pledge, if any, of real and personal property so financed as security for such payment. Municipal notes in which the Credit Suisse Warburg Pincus Municipal Trust Fund may invest include demand notes, which are tax-exempt obligations that have stated maturities in excess of one year, but permit the holder to sell back the security (at par) to the issuer within 1 to 7 days' notice. The payment of principal and interest by the issuer of these obligations will ordinarily be guaranteed by letters of credit offered by banks. The interest rate on a demand note may be based upon a known lending rate, such as a bank's prime rate, and may be adjusted when such rate changes, or the interest rate on a demand note may be a market rate that is adjusted at specified intervals. -31- Other short-term obligations constituting municipal notes include tax anticipation notes, revenue anticipation notes and bond anticipation notes, and tax-exempt commercial paper. Tax anticipation notes are issued to finance working capital needs of municipalities. Generally, they are issued in anticipation of various seasonal tax revenues, such as income, sales, use and business taxes. Revenue anticipation notes are issued in expectation of receipt of other types of revenues, such as federal revenues available under the Federal Revenue Sharing Programs. Bond anticipation notes are issued to provide interim financing until long-term financing can be arranged. In most such cases, the long-term bonds provide the money for the repayment of the notes. Tax-exempt commercial paper is a short-term obligation with a stated maturity of 365 days or less (however, issuers typically do not issue such obligations with maturities longer than seven days). Such obligations are issued by state and local municipalities to finance seasonal working capital needs or as short-term financing in anticipation of longer-term financing. There are, of course, variations in the terms of, and the security underlying, municipal securities, both within a particular rating classification and between such classifications, depending on many factors. The ratings of Moody's and S&P represent their respective opinions of the quality of the municipal securities rated by them. It should be emphasized that such ratings are general and are not absolute standards of quality. Consequently, municipal securities with the same maturity, coupon and rating may have different yields, while the municipal securities of the same maturity -32- and coupon, but with different ratings may have the same yield. The Adviser appraises independently the fundamental quality of the securities included in the Fund's portfolio. Yields on municipal securities are dependent on a variety of factors, including the general conditions of the municipal securities market, the size of a particular offering, the maturity of the obligation and the rating of the issue. Municipal securities with longer maturities tend to produce higher yields and are generally subject to greater price movements than obligations with shorter maturities. An increase in interest rates generally will reduce the market value of portfolio investments, and a decline in interest rates generally will increase the value of portfolio investments. The achievement of the Fund's investment objectives depends in part on the continuing ability of the issuers of municipal securities in which the Fund invests to meet their obligations for the payment of principal and interest when due. Municipal securities historically have not been subject to registration with the Securities and Exchange Commission, although from time to time there have been proposals which would require registration in the future. After purchase by the Credit Suisse Warburg Pincus Municipal Trust Fund, a municipal security may cease to be rated or its rating may be reduced below the minimum required for purchase by the Credit Suisse Warburg Pincus Municipal Trust Fund. Neither event requires the sale of such security by the Credit Suisse Warburg Pincus Municipal Trust Fund, but the Adviser will consider such event in its determination of whether the Credit Suisse Warburg Pincus Municipal Trust Fund should continue to hold the security. To the extent that the ratings given by Moody's or S&P may change as a result of changes in such organizations or their rating systems, the -33- Adviser will attempt to use such changed ratings in a manner consistent with the Fund's quality criteria as described in the Prospectus. Obligations of issuers of municipal securities are subject to the provisions of bankruptcy, insolvency, and other laws affecting the rights and remedies of creditors, such as the Federal Bankruptcy Code. In addition, the obligations of such issuers may become subject to laws enacted in the future by Congress, state legislatures, or referenda extending the time for payment of principal and/or interest, or imposing other constraints upon enforcement of such obligations or upon the ability of municipalities to levy taxes. There is also the possibility that, as a result of litigation or other conditions, the ability of any issuer to pay, when due, the principal or the interest on its municipal bonds may be materially affected. From time to time, proposals have been introduced before Congress for the purpose of restricting or eliminating the federal income tax exemption for interest on municipal securities. It can be expected that similar proposals may be introduced in the future. If such a proposal were enacted, the availability of municipal securities for investment by the Fund and the value of the Fund's portfolio would be affected. Additionally, the Fund would reevaluate its investment objectives and policies. IV. Additional General Investment Policies The following general investment policies supplement those set forth above for each Fund. Short Sales ("Against the Box") Except for the Credit Suisse Warburg Pincus Municipal Trust Fund, a Fund may effect short sales "against the box." While a short sale is a sale of a security -34- the Fund does not own, it is "against the box" if at all times during which a short position is open, the Fund owns an equal amount of the securities, or, by virtue of the ownership of securities, has the right, without further consideration, to obtain an equal amount of the securities sold short. No more than 10% of each Fund's net assets (taken at the then current market value) will be held as collateral for its short sales at any time. Neither the Credit Suisse Warburg Pincus Blue Chip Fund, the Credit Suisse Warburg Pincus Fixed Income II Fund nor the Credit Suisse Warburg Pincus Value Fund have an intention of entering into short sales against the box in the foreseeable future. Repurchase Agreements A Fund may enter into repurchase agreements with respect to marketable obligations of, or guaranteed by, the U.S. Government, its agencies or instrumentalities ("U.S. Government Securities"). While the maturities of the underlying securities may exceed one year, the term of the repurchase agreement must always be less than one year. Repurchase agreements often are for short periods such as one day or one week, but may be longer. In the event that a vendor defaults on its repurchase obligation, a Fund might suffer a loss to the extent that the proceeds from the sale of the collateral were less than the repurchase price. If the vendor becomes the subject of bankruptcy proceedings, a Fund might be delayed in selling the collateral. Reverse Repurchase Agreements The Credit Suisse Warburg Pincus Blue Chip Fund, Credit Suisse Warburg Pincus Small Company Value Fund, Credit Suisse Warburg Pincus Fixed Income II Fund and Credit Suisse Warburg Pincus Municipal Trust Fund each may enter into reverse repurchase agreements. Under a reverse repurchase agreement, a Fund -35- would sell securities and agree to repurchase them at a mutually agreed upon date and price. At the time a Fund enters into a reverse repurchase agreement, it would establish and maintain with an approved custodian a segregated account containing liquid high-grade debt securities having a value not less than the repurchase price. Reverse repurchase agreements involve the risk that the market value of the securities subject to such agreement could decline below the repurchase price to be paid by a Fund for such securities. In the event the buyer of securities under a reverse repurchase agreement filed for bankruptcy or became insolvent, such buyer (or receiver for such buyer) would receive an extension of time to determine whether to enforce the Fund's obligations to repurchase the securities and the Fund's use of the proceeds of the reverse repurchase could effectively be restricted pending such decision. Reverse repurchase agreements create leverage, a speculative factor, but are not considered senior securities by the Funds or the Securities and Exchange Commission to the extent liquid, unencumbered assets, marked to market daily, are segregated in an amount at least equal to the amount of the liability. Securities Lending The Credit Suisse Warburg Pincus Blue Chip Fund, Credit Suisse Warburg Pincus Small Company Value Fund, Credit Suisse Warburg Pincus Fixed Income II Fund and Credit Suisse Warburg Pincus Municipal Trust Fund each may seek to receive or increase income by lending their respective portfolio securities. Under present regulatory policies, such loans may be made to member firms of the New York Stock Exchange and are required to be secured continuously by collateral held by Citibank, N.A. (the "Custodian") consisting of cash, cash equivalents or U.S. -36- Government Securities maintained in an amount at least equal to the market value of the securities loaned. The Funds have the right to call such a loan and obtain the securities loaned at any time on five days' notice. As is the case with any extension of credit, loans of portfolio securities involve special risks in the event that the borrower is unable to repay the loan, including delays or inability to recover the loaned securities or foreclose against the collateral. The aggregate value of securities loaned by a Fund may not exceed 25% of the value of its total assets at the time such loan is made. Restricted Securities The Credit Suisse Warburg Pincus Blue Chip Fund, the Credit Suisse Warburg Pincus Value Fund, the Credit Suisse Warburg Pincus Fixed Income II Fund and the Credit Suisse Warburg Pincus Municipal Trust Fund may invest in restricted securities and all of the Funds may invest in other assets having no ready market if such purchases at the time thereof would not cause more than 10% (or 15% in the case of the Credit Suisse Warburg Pincus Municipal Trust Fund) of the value of a Fund's net assets to be invested in assets which are not readily marketable. Restricted securities may be sold only in privately negotiated transactions, in a public offering with respect to which a registration statement is in effect under the Securities Act of 1933 or pursuant to Rule 144 promulgated under such Act. Where registration is available or required, the Fund may be obligated to pay all or part of the registration expense, and a considerable period of time may elapse between the time of the decision to sell and the time that the Fund may be permitted to sell a security under an effective registration statement. If during such a period adverse market conditions were to develop, the Fund might obtain a less favorable price than that which prevailed when it decided to sell. Securities salable -37- without restriction among qualified institutional investors pursuant to rules promulgated under the Securities Act of 1933 (e.g., Rule 144A) are not considered to be subject to legal restrictions on transfer and may be considered liquid if they satisfy liquidity standards established by the Board of Trustees. The continued liquidity of such securities is less certain than that of publicly traded securities, and accordingly the Board of Trustees will monitor their liquidity. Restricted securities will be valued in such manner as the Trustees of Credit Suisse Warburg Pincus Capital Funds in good faith deem appropriate to reflect their fair value. The staff of the SEC has taken the position that purchased over the counter ("OTC") options and the assets used as cover for written OTC options are illiquid securities. However, a Fund may treat the securities it uses as cover for written OTC options on U.S. Government Securities as liquid, provided the Fund satisfies the following condition: A Fund may sell OTC options on U.S. Government Securities only to qualified dealers who agree that the Fund may repurchase options it writes for a maximum price to be calculated by a predetermined formula. In such cases, OTC options would be considered liquid only to the extent that the maximum repurchase price exceeds the intrinsic value of the option. When Issued, Delayed Delivery Securities and Forward Commitments The Funds may, to the extent consistent with their other investment policies and restrictions, enter into forward commitments for the purchase or sale of securities, including on a "when issued" or "delayed delivery" basis in excess of customary settlement periods for the type of security involved. In some cases, a forward commitment may be conditioned upon the occurrence of a subsequent event, such as -38- approval and consummation of a merger, corporate reorganization or debt restructuring, i.e., a when, as and if issued security. When such transactions are negotiated, the price is fixed at the time of the commitment, with payment and delivery taking place in the future, generally a month or more after the date of the commitment. While the Funds will only enter into a forward commitment with the intention of actually acquiring the security, the Funds may sell the security before the settlement date if it is deemed advisable. Securities purchased under a forward commitment are subject to market fluctuations, and no interest (or dividends) accrues to a Fund prior to the settlement date. The Funds will segregate with the Custodian cash or other liquid, unencumbered assets, in an aggregate amount at least equal to the amount of their respective outstanding forward commitments. Stand-By Commitments The Credit Suisse Warburg Pincus Municipal Trust Fund may invest in stand-by commitments which may involve certain additional expenses. The Custodian will maintain a segregated account containing liquid securities having value equal to, or greater than, such securities. The price of such securities, which is generally expressed in yield terms, is fixed at the time the commitment to purchase is made, but delivery and payment for such securities takes place at a later time. Normally the settlement date occurs within ten days to one month after the purchase of the issue. The value of such securities may fluctuate prior to their settlement, thereby creating an unrealized gain or loss to the Fund. Such securities are examples of what the SEC considers "illiquid securities" because the settlement date occurs more than seven days after the purchase. -39- State Undertakings The Funds also have entered into agreements with certain States which (a) limit investment in warrants to not more than 5% of the value of each Fund's net assets (only 2% of the value of each Fund's net assets may be invested in warrants not listed on the New York or American Stock Exchange), (b) generally prohibit any investment in oil, gas and other mineral leases, and (c) prohibit purchases or sales of real property (including limited partnership interests, but excluding readily marketable interests in real estate investment trusts or readily marketable securities of companies which invest in real estate). The Credit Suisse Warburg Pincus Small Company Value Fund has entered into additional agreements with certain States which (a) limit to not more than 5% of its total assets investments in not readily marketable securities, (b) prohibit investment in commodities and commodity futures contracts, and (c) limit investment in options, financial futures and stock index futures to 5% of the value of its net assets. The Credit Suisse Warburg Pincus Municipal Trust Fund has entered into additional agreements with certain States which (a) prohibit the purchase of securities of companies which have been in operation for less than three years, (b) limit to no more than 10% of its total assets its investments in equity securities and to no more than 5% of its total assets its investment in equity securities which are not readily marketable, and (c) limit to no more than 5% of its total assets its aggregate investment in puts, calls, straddles, spreads, and any combinations thereof. -40- The Funds intend to withdraw such undertakings at the earliest practicable date. Such withdrawals are not expected to have a material effect on the portfolio of the affected Fund. (c) Investment Restrictions The following restrictions are fundamental policies. Fundamental policies are those which cannot be changed without the approval of the holders of a majority of the Fund's outstanding voting securities. A "majority of the Fund's outstanding voting securities," when used in this SAI, means the lesser of (i) 67% of the voting shares represented at a meeting at which more than 50% of the outstanding voting shares are present in person or represented by proxy or (ii) more than 50% of the outstanding voting shares. The following fundamental investment restrictions are in addition to those set forth elsewhere in this SAI. A Fund may not: 1. Purchase the securities of any one issuer other than the United States Government or any of its agencies or instrumentalities, if immediately after such purchase more than 5% of the value of the Fund's assets would be invested in such issuer or the Fund would own more than 10% of the outstanding voting securities of such issuer, except that up to 25% of the value of the Fund's total assets may be invested without regard to such 5% and 10% limitations; -41- 2. Invest more than 25% of its total assets in the securities of issuers conducting their principal business activities in any one industry, provided that, for purposes of this policy, consumer finance companies, industrial finance companies and gas, electric, water and telephone utility companies are each considered to be separate industries, and provided further, that there is no limitation for the Credit Suisse Warburg Pincus Fixed Income II Fund, the Credit Suisse Warburg Pincus Municipal Trust Fund, the Credit Suisse Warburg Pincus Small Company Value Fund or the Credit Suisse Warburg Pincus Value Fund in respect of investments in U.S. Government Securities or, for the Credit Suisse Warburg Pincus Fixed Income II Fund, the Credit Suisse Warburg Pincus Municipal Trust Fund and the Credit Suisse Warburg Pincus Small Company Value Fund, in municipal bonds (including industrial development bonds). A Fund may be deemed to be concentrated to the extent that it invests more than 25% of its total assets in taxable municipal securities issued by a single issuer; 3. Purchase securities on margin, but a Fund may obtain such short-term credits from banks as may be necessary for the clearance of purchases and sales of securities; 4. Make loans of its assets to any person, except for (i) the purchase of publicly distributed debt securities, (ii) the purchase of non-publicly distributed securities subject to paragraph 7, (iii) the lending of portfolio securities, and (iv) the entering of repurchase agreements; -42- 5. Borrow money except for (i) the short-term credits from banks referred to in paragraph 3 above and (ii) borrowings from banks for temporary or emergency purposes, including the meeting of redemption requests which might require the disposition of securities. Borrowing in the aggregate may not exceed 15%, and borrowing for purposes other than meeting redemptions may not exceed 5% of the value of the Fund's total assets (including all amounts borrowed) less liabilities (not including all amounts borrowed) at the time the borrowing is made. Outstanding borrowings in excess of 5% of the value of the Fund's total assets will be repaid before any subsequent investments are made. This restriction and asset limitation on borrowing shall not prohibit the Funds from entering into reverse repurchase agreements; 6. Mortgage, pledge or hypothecate any of its assets, except as may be necessary in connection with permissible borrowings mentioned in paragraph 5 and except, with respect to the Credit Suisse Warburg Pincus Small Company Value Fund and the Credit Suisse Warburg Pincus Value Fund, in connection with hedging transactions, short sales (against the box), when issued and forward commitment transactions and similar investment strategies; 7. Act as an underwriter of securities of other issuers, except that a Fund may acquire restricted or not readily marketable securities under circumstances where, if such securities were sold, the Funds or the Advisor might be -43- deemed to be an underwriter for purposes of the Securities Act of 1933 and except, with respect to the Credit Suisse Warburg Pincus Small Company Value Fund, to the extent that in connection with the disposition of portfolio securities such Fund may be deemed to be an underwriter; 8. Invest more than 10%, or 15% in the case of the Credit Suisse Warburg Pincus Municipal Trust Fund, of the value of its net assets in the aggregate in restricted securities or other instruments not having a ready market, including repurchase agreements not terminable within seven days; provided that the Credit Suisse Warburg Pincus Small Company Value Fund will not invest in restricted securities. Securities freely saleable among qualified institutional investors under special rules adopted by the Securities and Exchange Commission ("Rule 144A Securities") are not considered to be subject to legal restrictions on transfer and may be considered liquid if they satisfy liquidity standards established by the Board of Trustees. The continued liquidity of such securities is not as well assured as that of publicly traded securities, and accordingly, the Board of Trustees will monitor their liquidity. Restricted securities will be valued in such manner as the Trustees of Credit Suisse Warburg Pincus Capital Funds in good faith deem appropriate to reflect their value; 9. With respect to the Credit Suisse Warburg Pincus Blue Chip Fund, the Credit Suisse Warburg Pincus Fixed Income II Fund, the Credit Suisse Warburg Pincus Municipal Trust Fund and the Credit Suisse Warburg -44- Pincus Value Fund, invest in the securities of any issuer which has a record of less than three years of continuous operation (including the operation of any predecessor) if such purchase at the time thereof would cause more than 10% of the value of the total assets of the Fund to be invested in the securities of such issuer or issuers; 10. With respect to the Credit Suisse Warburg Pincus Blue Chip Fund, the Credit Suisse Warburg Pincus Fixed Income II Fund, the Credit Suisse Warburg Pincus Municipal Trust Fund and the Credit Suisse Warburg Pincus Value Fund, purchase or retain the securities of any issuer if, to the knowledge of Credit Suisse Warburg Pincus Capital Fund's management, those officers and Trustees of the Credit Suisse Warburg Pincus Capital Fund and its Adviser who each own beneficially more than one-half of 1% of the outstanding securities of such issuer together own more than 5% of the securities of such issuer; 11. With respect to the Credit Suisse Warburg Pincus Blue Chip Fund, the Credit Suisse Warburg Pincus Fixed Income II Fund, the Credit Suisse Warburg Pincus Municipal Trust Fund and the Credit Suisse Warburg Pincus Value Fund, invest more than 5% of the value of its total assets at the time an investment is made in the non-convertible preferred stock of issuers whose non-convertible preferred stock is not readily marketable, subject to the limitation in paragraph 8; -45- 12. With respect to the Credit Suisse Warburg Pincus Blue Chip Fund, the Credit Suisse Warburg Pincus Fixed Income II Fund, the Credit Suisse Warburg Pincus Municipal Trust Fund and the Credit Suisse Warburg Pincus Value Fund, participate on a joint or joint and several basis in any securities trading account; 13. Issue any senior security within the meaning of the Investment Company Act of 1940 (except to the extent that when-issued securities transactions, forward commitments, stand-by commitments or reverse repurchase agreements may be considered senior securities and except, with respect to the Credit Suisse Warburg Pincus Small Company Value Fund and the Credit Suisse Warburg Pincus Value Fund, that the hedging transactions in which such Funds may engage and similar investment strategies are not treated as senior securities); 14. Invest in real estate (other than money market securities secured by real estate or interests therein or money market securities issued by companies which invest in real estate or interests therein and, with respect to the Credit Suisse Warburg Pincus Small Company Value Fund and the Credit Suisse Warburg Pincus Value Fund, other than mortgage-backed securities and similar instruments), or commodities or commodity contracts except, with respect to the Credit Suisse Warburg Pincus Small Company Value Fund, for hedging purposes; -46- 15. With respect to the Credit Suisse Warburg Pincus Blue Chip Fund, the Credit Suisse Warburg Pincus Fixed Income II Fund, the Credit Suisse Warburg Pincus Municipal Trust Fund and the Credit Suisse Warburg Pincus Value Fund, invest in the securities of other investment companies or investment trusts except by purchase in the open market where no commission or profit to a sponsor or dealer results from such purchase other than the customary broker's commission, or except when such purchase, though not in the open market, is part of a plan of merger, acquisition or transfer of assets, or consolidation and except, with respect to the Credit Suisse Warburg Pincus Value Fund, for purchases of securities of money market funds; 16. Invest in companies for the purpose of exercising control or management; or 17. With respect to the Credit Suisse Warburg Pincus Municipal Trust Fund, make short sales of securities. The Funds do not consider the segregation of assets in connection with any of their investment practices to be a mortgage, pledge or hypothecation of such assets. The following fundamental investment restrictions are applicable only to the Credit Suisse Warburg Pincus Fixed Income II Fund and may not be changed with respect to the Credit Suisse Warburg Pincus Fixed Income II Fund without the approval -47- of the shareholders of the Credit Suisse Warburg Pincus Fixed Income II Fund (as described above). The Credit Suisse Warburg Pincus Fixed Income II Fund may not: 1. Write, purchase or sell puts, calls, straddles or spreads, or combinations thereof; or 2. Invest in oil, gas or other mineral exploration or development programs. (d) Temporary Defensive Position The Credit Suisse Warburg Pincus Blue Chip Fund reserves the right, when the Adviser determines it appropriate, to invest in investment-grade short-term fixed-income securities and other investment-grade debt securities, enter into repurchase agreements and hold cash for temporary defensive purposes. The Credit Suisse Warburg Pincus Fixed Income II Fund may enter into repurchase agreements, terminable within 7 days or less, with respect to issues of the U.S. Treasury, with member banks of the Federal Reserve System or primary dealers in U.S. Government Securities, without limit for temporary defensive purposes. The Credit Suisse Warburg Pincus Municipal Trust Fund reserves the right to hold cash and short-term fixed-income securities and to enter into repurchase agreements as necessary for temporary defensive or emergency purposes, without limit, as determined by the Adviser. -48- - -------------------------------------------------------------------------------- MANAGEMENT OF THE FUNDS - -------------------------------------------------------------------------------- (a) Trustees The Credit Suisse Warburg Pincus Capital Funds has Trustees who, in addition to overseeing the actions of the Funds' Adviser and Distributor, decide upon matters of general policy. The Trustees also review the actions of the officers of the Credit Suisse Warburg Pincus Capital Funds who conduct and supervise the daily business operations of the Funds. The Trustees and principal officers of the Credit Suisse Warburg Pincus Capital Funds, their ages and their primary occupations during the past five years are set forth below. Position(s) Held with Credit Suisse Warburg Pincus Principal Occupation(s) Name, Address and Age (1) Capital Funds During Past 5 Years - ------------------------- ------------------ ----------------------- *G. MOFFETT COCHRAN (49) Chairman of the President, Managing Board of Trustees Director and Member of the and President Management Committee of CSAM; former Chairman of DLJAM, with which he had been associated since prior to 1993; formerly Senior Vice President with Bessemer Trust Companies. Trustee of Credit Suisse Warburg Pincus Opportunity Funds, Credit Suisse Warburg Pincus Select Funds and DLJ High Yield Bond Fund. RICHARD J. HANLON (34) Vice President Director of CSAM, which he joined as a result of Credit Suisse's acquisition of DLJ; previously Senior Vice President of DLJAM, with which he had been associated since 1994. Prior to his becoming associated with Credit Suisse Warburg Pincus Funds and the Adviser, Mr. Hanlon was a portfolio manager at Manufacturers Hanover/Chemical Bank. -49- Position(s) Held with Credit Suisse Warburg Pincus Principal Occupation(s) Name, Address and Age (1) Capital Funds During Past 5 Years - ------------------------- ------------------ ----------------------- STIG HOST (74) Trustee Oil company executive; Member of the Boards-International Energy Corp., International Marine Sales, Inc., Kriti Exploration Inc., Alliance International Fund, Alliance New Europe Fund, Alliance All Asia Investment Fund, Alexander Host Foundation, American Scandinavian Foundation, Trustee of Credit Suisse Warburg Pincus Opportunity Funds, Credit Suisse Warburg Pincus Select Funds and DLJ High Yield Bond Fund. His address is 103 Oneida Drive, Greenwich, CT 06830. MARTIN JAFFE (54)* Trustee, Vice Chief Financial Officer, President, Managing Director and Treasurer and Member of the Management Secretary Committee of CSAM; former Chief Operating Officer of DLJAM, with which he had been associated since prior to 1993. Trustee of Credit Suisse Warburg Pincus Opportunity Funds, Credit Suisse Warburg Pincus Select Funds and DLJ High Yield Bond Fund. CATHY A. JAMESON (46) Vice President Managing Director of CSAM, which she joined as a result of Credit Suisse's acquisition of DLJ; previously Managing Director of DLJAM, with which she had been associated since prior to 1993. BRIAN A. KAMMERER (43) Vice President Director of CSAM, which he joined as a result of Credit Suisse's acquisition of DLJ; previously Senior Vice President of DLJAM with which he had been associated since prior to 1993. PETER F. KROGH (63) Trustee Dean Emeritus and Distinguished Professor of International Affairs at the Edmund A. Walsh School of Foreign Service, Georgetown University; Moderator of PBS foreign affairs television series; Member of Board of The Carlisle Companies Inc. Member of Selection Committee for Truman Scholars and Henry Luce Scholars. Senior Associate of Center for Strategic and International Studies; Trustee of numerous world affairs organizations. Trustee/Director of Credit Suisse Warburg Pincus Opportunity Funds, Credit Suisse Warburg Pincus Select Funds, DLJ High Yield Bond Fund and other CSAM-advised investment companies. His address is 3417 N. Street NW, Washington, DC 20007. -50- Position(s) Held with Credit Suisse Warburg Pincus Principal Occupation(s) Name, Address and Age (1) Capital Funds During Past 5 Years - ------------------------- ------------------ ----------------------- MARYBETH B. LEITHEAD (37) Vice President Director of CSAM, which she joined as a result of Credit Suisse's acquisition of DLJ; previously Senior Vice President of DLJAM, with which she had been associated since 1993. HUGH M. NEUBURGER (56) Vice President Managing Director of CSAM, which he joined as a result of Credit Suisse's acquisition of DLJ; previously Managing Director of DLJAM, with which he had been associated since March 1995. Prior to his association with Credit Suisse Warburg Pincus Capital Funds and the Adviser, Mr. Neuburger was the President of Hugh M. Neuburger, Inc., a consulting firm. JOHN J. SHEEHAN (69) Trustee Owns own consulting firm; Former President and CEO of National Computer Analysts, Inc., Principal Negotiator for NCA, Director of National Accounts for Large Financial Institutions Group. Trustee of Credit Suisse Warburg Pincus Opportunity Funds, Credit Suisse Warburg Pincus Select Funds and DLJ High Yield Bond Fund. His address is 4 Bennington Place, Newton, PA18940. ROGER W. VOGEL (43) Vice President Managing Director of CSAM, which he joined as a result of Credit Suisse's acquisition of DLJ; previously Managing Director of DLJAM, a position he held since July 1993. ROBERT E. FISCHER (69) Trustee Trustee of the Credit Suisse Warburg Pincus Opportunity Funds, Credit Suisse Warburg Pincus Select Funds and DLJ High Yield Bond Fund. Has been Partner at the law firm of Wolf, Block, Schorr and Solis-Cohen LLP (or its predecessor firm), since prior to 1993. WILMOT H. KIDD, III (59) Trustee Trustee of the Credit Suisse Warburg Pincus Opportunity Funds, Credit Suisse Warburg Pincus Select Funds, has been President of Central Securities Corporation, since prior to 1993. - ---------- (1) Unless otherwise specified, the address of each of such persons is 466 Lexington Avenue, New York, New York 10017. -51- * Those Trustees whose names are preceded by an asterisk are "interested persons" of Credit Suisse Warburg Pincus Capital Funds as defined by the Investment Company Act of 1940. Messrs. Host, Fischer, Kidd, Krogh and Sheehan are members of the Audit Committee, whose function is to oversee and monitor the integrity of the Funds' financial reporting processes. Messrs. Cochran and Jaffe are members of the Executive Committee a function of which is to declare dividends on behalf of the Trustees. Messrs. Host and Sheehan are members of the Valuation Committee whose function is to value the securities of each Fund in emergency situations. To rationalize the management of the Funds and the Warburg Pincus family of funds managed by CSAM ("Warburg Pincus Funds"), CSAM has proposed, and the Board of Trustees has approved for submission to shareholders at a meeting scheduled for March 23, 2001 the replacement of all the current Trustees of the Funds, other than Peter F. Krogh, with trustees of the Warburg Pincus Funds. Additionally, the Board of Trustees has appointed James P. McCaughan as Chairman of the Trust, effective March 23, 2001. The following table sets forth the aggregate compensation paid by the Credit Suisse Warburg Pincus Capital Funds to the Trustees who are not affiliated with the Adviser for the fiscal year ended October 31, 2000 and the aggregate compensation paid to such Trustees for service on the Funds' Boards and that of all other investment companies that are part of the same fund complex. Below are listed the Trustees who have served the Credit Suisse Warburg Pincus Capital Funds during its most recent fiscal year. -52- Compensation Table
Pension or Total Compensation Retirement Benefits from Credit Suisse Aggregate Accrued As Part of Warburg Pincus Compensation From Credit Suisse Capital Funds and Credit Suisse Warburg Pincus Estimated Annual Fund Complex Paid to Warburg Pincus Capital Funds Benefits Upon Trustees in Current Name and Position Capital Funds (1) Expenses Retirement Fiscal Year(2) - --------------------- ---------------------- --------------------- ------------------ ----------------------- Robert L. Bast* $ 4,000 None None $ 4,000 (Trustee) Stig Host 11,250 None None 22,000 (Trustee) Peter F. Krogh 11,250 None None 22,000 (Trustee) Dennis G. Little* 4,000 None None 4,000 (Trustee) William H. Mathers* 4,500 None None 4,500 (Trustee) John J. Sheehan 10,250 None None 19,500 (Trustee) William C. Simpson** 2,000 None None 2,000 (Trustee) Robert E. Fischer 6,250 None None 30,500 (Trustee) Wilmot H. Kidd III 6,250 None None 30,500 (Trustee)
* Retired, April 27, 2000. ** Deceased, April, 2000. (1) The Capital Funds anticipate paying each independent Trustee approximately $11,000 in each calendar year. (2) 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, which were subsequently renamed the Credit Suisse Warburg Pincus Capital Funds, the Credit Suisse Warburg Pincus Opportunity Funds and the Credit Suisse Warburg Pincus Select Funds, respectively) with a total of 12 series and one closed-end investment company (DLJ High Yield Bond Fund). The Trustees of Credit Suisse Warburg Pincus Capital Funds who are officers or employees of the Adviser or any of its affiliates receive no remuneration from Credit Suisse Warburg Pincus Capital Funds. Effective May 16, 2000, each of the Trustees who is not affiliated with the Adviser will be paid a $2,500 fee for each board meeting attended, a $250 fee for each Audit Committee meeting attended, a $500 fee for each special meeting attended and an annual retainer of $500. For the year ended October 31, 2000, such remuneration totaled $59,750. -53- (b) Control Persons None. (c) Principal Holders To the best of the Fund's knowledge as of January 31, 2001, no shareholder owned 5% or more of the outstanding Class A, Class B, Class C, Class D or Common Class shares of the Credit Suisse Warburg Pincus Blue Chip Fund, the Credit Suisse Warburg Pincus Small Company Value Fund, the Credit Suisse Warburg Pincus Value Fund, the Credit Suisse Warburg Pincus Municipal Trust Fund or the Credit Suisse Warburg Pincus Fixed Income II Fund. The Adviser manages accounts over which it has discretionary power to vote or dispose of securities held in such accounts and which accounts hold in the aggregate, as of January 31, 2001, 263,579 shares (2.3%) of the Credit Suisse Warburg Pincus Blue Chip Fund, 233,704 shares (2.1%) of the Credit Suisse Warburg Pincus Value Fund, 1,626,676 shares (15.3%) of the Credit Suisse Warburg Pincus Small Company Value Fund, 476,924 shares (3.5%) of the Credit Suisse Warburg Pincus Fixed Income II Fund, and 572,009 shares (25.9%) of the Credit Suisse Warburg Pincus Municipal Trust Fund. Set forth below is certain information as to persons who owned 5% or more of a Fund's outstanding shares as of January 31, 2001: Name and Address % of Class Nature of Ownership Bankers Trust Company 11.67% Beneficial Estate of Robert Winthrop P.O. Box 9005 Church Street Station New York, NY 10008 -54- - ----------------- (d) Management Ownership As of January 31, 2001, the Trustees and officers of Credit Suisse Warburg Pincus Capital Funds as a group owned beneficially less than 1.0% of any class of any Fund. -55- - -------------------------------------------------------------------------------- INVESTMENT ADVISORY AND OTHER SERVICES - -------------------------------------------------------------------------------- (a) Investment Adviser CSAM, with principal offices at 466 Lexington Avenue, New York, New York 10017 has been retained under an interim investment advisory agreement ("Interim Investment Advisory Agreement") as Credit Suisse Warburg Pincus Capital Funds' investment adviser (see "Fund Management" in the Prospectus) effective November 3, 2000. Credit Suisse Group ("Credit Suisse") acquired Donaldson, Lufkin & Jenrette, Inc. ("DLJ"), including its subsidiary, DLJAM, the previous investment adviser of the Credit Suisse Warburg Pincus Capital Funds, and has combined the investment advisory business of DLJAM with its existing U.S. asset management business, CSAM (the "Acquisition"). CSAM is part of Credit Suisse Asset Management, which is the institutional asset management and mutual fund arm of Credit Suisse. Credit Suisse is a global financial services company, providing a comprehensive range of banking and insurance products. Prior to the Acquisition, DLJAM was a wholly-owned subsidiary of Donaldson, Lufkin & Jenrette Securities Corporation ("DLJ Securities"), the former distributor of the Funds' shares, a wholly-owned subsidiary of DLJ, which was, in turn an independently operated, indirect subsidiary of AXA Financial, Inc., a holding company controlled by AXA, a French insurance holding company. Following the Acquisition, DLJAM was merged with Credit Suisse Investment Corporation ("CSIC"), the parent -56- 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. 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 $93 billion in the U.S. and $298 billion globally as of December 31, 2000. CSAM's sole member is CSAM Americas Holding Corp. located at 466 Lexington Avenue, New York, New York 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, New York 10010, which is indirectly wholly-owned by Credit Suisse Group. The Interim Investment Advisory Agreement became effective on November 3, 2000. The Interim Investment Advisory Agreement replaced an earlier, substantially identical agreement (the "Previous Investment Advisory Agreement") with DLJAM that terminated pursuant to the terms of the existing agreement. The provisions -57- of the Interim Investment Advisory Agreement and the Previous Investment Advisory Agreement are the same, except for the identity of the parties, the commencement and termination dates and the payment of fees. On October 26, 2000, the Trustees approved the Interim Investment Advisory Agreement with DLJAM, which was assigned to CSAM as part of the Acquisition. 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, voting separately by series, of a new investment advisory agreement. CSAM has proposed, and the Board of Trustees of the Credit Suisse Warburg Pincus Capital Funds have approved for submission to shareholders at meetings scheduled for March 23, 2001, a new investment advisory agreement with CSAM on the same economic terms as the Interim Investment Advisory Agreement. The Interim Investment Advisory Agreement provides for termination at any time without penalty on ten days' prior written notice, 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. For the fiscal years ending October 31, 2000, 1999 and 1998 the Credit Suisse Warburg Pincus Blue Chip Fund paid the Adviser fees of $1,338,293, $984,475 and $791,152 respectively; the Credit Suisse Warburg Pincus Small Company Value Fund paid the Adviser fees of $1,622,703, $1,826,662 and $2,257,326 respectively; the Credit Suisse Warburg Pincus Fixed Income II Fund paid the Adviser fees of $837,673, $641,978 and $347,059 respectively; the Credit Suisse Warburg Pincus Value Fund paid -58- the Adviser fees of $1,442,618, $1,377,123 and $1,138,550 respectively; and the Credit Suisse Warburg Pincus Municipal Trust Fund paid the Adviser fees of $163,791, $247,109 and $252,180 respectively. During the fiscal years ended October 31, 2000, 1999 and 1998, the Adviser reimbursed the Credit Suisse Warburg Pincus Fixed Income II Fund $188,370, $157,981 and $164,206 respectively, and the Credit Suisse Warburg Pincus Municipal Trust Fund $138,175, $163,442 and $165,742 respectively, for operating expenses. As required by Rule 15a-4(b)(2)(vi) of the 1940 Act, the Interim Investment Advisory Agreement provides that fees earned by CSAM with respect to each series of the Credit Suisse Warburg Pincus Capital Funds will be deposited into an interest-bearing escrow account with Citibank, N.A., and will only be paid to CSAM if a majority of the shareholders of such series approves a new investment advisory agreement for that series. If shareholders of a series do not approve a new investment advisory agreement, CSAM will receive as compensation or reimbursement in respect of such series 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). Pursuant to the terms of the Interim Investment Advisory Agreement, the Adviser may retain, at its own expense, a sub-adviser to assist in the performance of its services to Credit Suisse Warburg Pincus Capital Funds, although such an arrangement is not currently contemplated. Certain other clients of the Adviser may have investment objectives and policies similar to those of the Credit Suisse Warburg Pincus Capital Funds. The Adviser -59- may, from time to time, make recommendations which result in the purchase or sale of a particular security by its other clients simultaneously with the Credit Suisse Warburg Pincus Capital Funds. If transactions on behalf of more than one client during the same period increase the demand for securities being purchased or the supply of the securities being sold, there may be an adverse effect on price. It is the policy of the Adviser to allocate advisory recommendations and the placing of orders in a manner which is deemed equitable by the Adviser to the accounts involved, including the Credit Suisse Warburg Pincus Capital Funds. When two or more of the clients of the Adviser (including the Credit Suisse Warburg Pincus Capital Funds) are purchasing the same security on a given day from the same broker-dealer, such transactions may be averaged as to price. The Fund intends to enter into arrangements with certain broker-dealers (including affiliates of the Distributor) whose customers are Credit Suisse Warburg Pincus Capital Funds shareholders pursuant to which the broker-dealers may perform shareholder servicing functions, such as opening new shareholder accounts, processing purchase and redemption transactions, and responding to certain inquiries regarding a Fund's performance and the status of shareholder accounts. A Fund may pay for the electronic communications equipment maintained at the broker-dealers' offices that permits access to the Fund's computer files and, in addition, may reimburse the broker-dealers at cost for personnel expenses involved in providing the services. Effective February 1, 2001, the Funds retained Credit Suisse Asset Management Securities, Inc. ("CSAMSI") and PFPC, Inc. ("PFPC") as co-administrators to each of the Funds for a total rate not to exceed .18% of each Funds' average -60- daily net assets. DLJAM, and then CSAM, provided administrative services to the Funds without charge. However, CSAM has agreed to assume DLJAM's undertaking to limit total annual operating expenses until October 31, 2001, and to limit average annual expenses from the date of the acquisition of DLJ, November 3, 2000, until November 3, 2002 to the annualized levels previously paid by each of the Funds measured over the 60-day period ended on the date of the acquisition of DLJ. Consequently, it is not anticipated that there will be any increase in the average annualized expense ratio of each Fund until November 3, 2002 as a result of the retention of new co-administrators. Further, accounting services previously provided by PFPC pursuant to a separate agreement will be provided by PFPC under its new co-administration agreement. Effective February 6, 2001, State Street Bank and Trust Company ("State Street") became the transfer agent for the Funds' Common Class (former Class R) shares. The Board has approved the retention of State Street as transfer agent for the Funds' other classes of shares. (b) Principal Underwriter, Distributor and Rule 12b-1 Plans CSAMSI, located at 466 Lexington Avenue, New York, New York 10017 (the "Distributor") became the distributor of the Credit Suisse Warburg Pincus Capital Funds on December 18, 2000. The principal underwriter of the Credit Suisse Warburg Pincus Capital Funds is also CSAMSI. Pursuant to Rule 12b-1 adopted by the Securities and Exchange Commission under the Investment Company Act of 1940, Credit Suisse Warburg Pincus -61- Capital Funds has adopted a Distribution Agreement (the "Distribution Agreement") and 12b-1 Plans for Class A shares, Class B shares, Class C shares and Common Class shares of each Fund, and for Advisor Class shares of the Credit Suisse Warburg Pincus Value Fund, to permit Credit Suisse Warburg Pincus Capital Funds to compensate the Distributor for activities associated with the distribution of shares. Pursuant to the Distribution Agreement and the 12b-1 Plans, the officers, Adviser or Distributor of Credit Suisse Warburg Pincus Capital Funds report the amounts expended under the Distribution Agreement and the purposes for which such expenditures were made to the Trustees of Credit Suisse Warburg Pincus Capital Funds on a quarterly basis. Also, the 12b-1 Plans provide that the selection and nomination of disinterested Trustees (as defined in the Investment Company Act of 1940) are committed to the discretion of the disinterested Trustees then in office. The Distribution Agreement and 12b-1 Plans may be continued annually if approved by a majority vote of the Trustees, including a majority of the Trustees who neither are interested persons of Credit Suisse Warburg Pincus Capital Funds nor have any direct or indirect financial interest in the Distribution Agreement, the 12b-1 Plans or in any other agreement related to the 12b-1 Plans, cast in person at a meeting called for the purpose of voting on such approval. The Distribution Agreement and 12b-1 Plans for the Class A shares and Class B shares were initially approved by the Trustees, including a majority of the disinterested Trustees, on October 19, 1995. The Class A 12b-1 Plans were approved by shareholders at a special meeting on February 7, 1996. The Class B 12b-1 Plans were approved by the sole Class B shareholder of each Fund on February 27, 1996. The 12b-1 -62- Plans were last approved by the Board of Trustees on August 3, 2000. Prior to February 28, 1996, the Funds operated under 12b-1 Plans pursuant to which each Fund reimbursed the Distributor up to .50 of 1% of the average daily net assets of such Fund. The Distribution Agreement and 12b-1 Plans for the Class C shares were initially approved by the Trustees, including a majority of the disinterested Trustees, on January 27, 2000. The Class C 12b-1 Plans were approved by the sole Class C shareholder of each Fund on February 25, 2000. The Common Class 12b-1 Plans were initially approved by the Trustees, including a majority of the disinterested Trustees, on May 16, 2000. The Common Class 12b-1 Plans were approved by the sole Common Class shareholder of each Fund on July 31, 2000. The Advisor Class 12b-1 Plans were initially approved by the Trustees, including a majority of the disinterested Trustees, on December 18, 2000. As approved, the Class A Plans currently provide that a service fee of .25 of 1% per year of the average daily net assets of the Class A shares of the Fund may be paid as compensation to the Distributor for its services. The Class B Plans currently provide that: (i) an asset based sales charge of .75 of 1% per year and (ii) a service fee of .25 of 1% per year, in each case, of the average daily net assets of the Class B shares of the Fund may be paid as compensation to the Distributor for its services. The Class C Plans currently provide that: (i) an asset based sales charge of .75 of 1% per year and (ii) a service fee of .25 of 1% per year, in each case, of the average daily net assets of the Class C shares of the Fund may be paid as compensation to the Distributor for its services. The Common Class Plans provide that a service fee of .25 of 1% per year of the average daily net assets of the Common Class shares of the Fund may be paid as compensation to the Distributor for its services. Advisor Class shares will be offered -63- without a front end sales load or a contingent deferred sales charge but will be charged a shareholder service fee payable at an annual rate of up to .25%, and a distribution and/or services fee payable at an annual rate of up to .50% of the average daily net assets of such class. The aggregate distribution and/or shareholder services fee payable by the Advisor Class may not exceed .75% of the average daily net assets relating to that class. The Board of Trustees is currently limiting the amount payable to .50 of 1% of the average daily net assets relating to that class. Payments may be made to an institution directly out of assets of the Fund attributable to the class or by the Distributor on the Fund's behalf. The Distributor, the Adviser or their affiliates may make additional payments to institutions for providing distribution, administrative, accounting and/or other services with respect to Advisor Class shares. Under certain circumstances, the Fund, on behalf of the Series, may reimburse a portion of these payments. All material amendments to the 12b-1 Plans must be approved by a vote of the Trustees, including a majority of the Trustees who neither are interested persons of Credit Suisse Warburg Pincus Capital Funds nor have any direct or indirect financial interest in the 12b-1 Plans or any related agreement, cast in person at a meeting called for the purpose of voting on such approval. In addition to such Trustee approval, the 12b-1 Plans may not be amended in order to increase materially the costs which the Funds may bear pursuant to the 12b-1 Plans without the approval of a majority of the outstanding shares of each class of shares of each Fund, voting separately. The 12b-1 Plans may be terminated without penalty at any time by a majority vote of the disinterested Trustees, by a majority vote of the outstanding shares of each class of shares of each Fund, voting separately, or by the Adviser. Any agreement related to the 12b-1 Plans may be -64- terminated at any time, without payment of any penalty, by a majority vote of the independent Trustees or by majority vote of the outstanding shares of each class of shares of each Fund, voting separately, and will terminate automatically in the event of assignment. The 12b-1 Plans require that the Board of Trustees shall review at least quarterly a written report of the payments made pursuant to each Plan and the purpose for which such payments were made. For the year ended October 31, 2000, distribution fees paid or payable with respect to Class A shares, Class B shares, Class C shares and Common Class shares for each fund were as follows: Class A Class B Class C Common Class Fund Shares Shares Shares Shares - -------------------------------------------------------------------------------- Credit Suisse Warburg Pincus $444,797 $428,149 $12,245 $225 Blue Chip Fund Credit Suisse Warburg Pincus $109,539 $35,617 $2 $7 Fixed Income II Fund Credit Suisse Warburg Pincus $524,059 $176,261 $363 $19 Small Company Value Fund Credit Suisse Warburg Pincus $475,998 $408,174 $1,130 $36 Value Fund Credit Suisse Warburg Pincus $72,659 $9,984 $2 $11 Municipal Trust Fund During the year ended October 31, 2000, the Distributor received from each Fund the following amounts as initial sales charges, which are paid in respect of Class A shares, and contingent deferred sales charges ("CDSC"), which are paid in respect of Class B shares and Class C shares: -65- Fund Initial Sales CDSC Charges - -------------------------------------------------------------------------------- Credit Suisse Warburg Pincus Blue $48,092 $85,629 Chip Fund Credit Suisse Warburg Pincus Fixed $971 $24,343 Income II Fund Credit Suisse Warburg Pincus Small $10,639 $58,650 Company Value Fund Credit Suisse Warburg Pincus Value $31,290 $85,470 Fund Credit Suisse Warburg Pincus $65 $1,296 Municipal Trust Fund During the year ended October 31, 2000, the Distributor expended $1,977,691 in respect of the Credit Suisse Warburg Pincus Blue Chip Fund in distributing such Fund's shares. Of such amount, it is estimated that $178,767 was spent on advertising; $9,266 was spent on printing and mailing of prospectuses to other than current shareholders; $0 was spent on compensation to underwriters; $1,204,090 was spent on compensation to broker-dealers; $549,873 was spent on compensation to sales personnel; and $35,695 was spent on other distributing and consulting costs. During the year ended October 31, 2000, the Distributor expended $344,299 in respect of the Credit Suisse Warburg Pincus Fixed Income II Fund in distributing such Fund's shares. Of such amount, it is estimated that $41,639 was spent on advertising; $507 was spent on printing and mailing of prospectuses to other than current shareholders; $0 was spent on compensation to underwriters; $166,998 was spent on compensation to broker-dealers; $127,184 was spent on compensation to sales personnel; and $7,971 was spent on other distributing and consulting costs. During the year ended October 31, 2000, the Distributor expended $1,391,526 in respect of the Credit Suisse Warburg Pincus Small Company Value Fund in distributing such Fund's shares. Of such amount, it is estimated that $198,344 was spent on advertising; $3,024 was spent on printing and mailing of prospectuses to other -66- than current shareholders; $0 was spent on compensation to underwriters; $570,381 was spent on compensation to broker-dealers; $596,256 was spent on compensation to sales personnel; and $23,521 was spent on other distributing and consulting costs. During the year ended October 31, 2000, the Distributor expended $1,718,969 in respect of the Credit Suisse Warburg Pincus Value Fund in distributing such Fund's shares. Of such amount, it is estimated that $134,379 was spent on advertising; $6,992 was spent on printing and mailing of prospectuses to other than current shareholders; $0 was spent on compensation to underwriters; $851,641 was spent on compensation to broker-dealers; $686,229 was spent on compensation to sales personnel; and $39,728 was spent on other distributing and consulting costs. During the year ended October 31, 2000, the Distributor expended $180,389 in respect of the Credit Suisse Warburg Pincus Municipal Trust Fund in distributing such Fund's shares. Of such amount, it is estimated that $17,835 was spent on advertising; $299 was spent on printing and mailing of prospectuses to other than current shareholders; $0 was spent on compensation to underwriters; $68,248 was spent on compensation to broker-dealers; $88,757 was spent on compensation to sales personnel; and $5,250 was spent on other distributing and consulting costs. The Distribution Agreement also provides that the Distributor will serve as distributor for the Class D shares without compensation from the Funds. The Distributor anticipates commencing distribution of Advisor Class shares as of February 28, 2001. -67- (c) Other Service Providers Citibank, N.A. serves as Custodian for the Funds' portfolio securities and cash and in that capacity maintains certain records pursuant to an agreement with the Credit Suisse Warburg Pincus Capital Funds. PFPC, Inc., 211 S. Gulph Road, King of Prussia, PA 19406-3101, serves as Transfer Agent to the Class A, B, C and D shares of the Credit Suisse Warburg Pincus Capital Funds and provides customary transfer agency services to the Funds, including the handling of shareholder communications, the processing of shareholder transactions, the maintenance of shareholder account records, the payment of dividends and distributions and related functions. Boston Financial Data Services, Inc., 66 Brooks Drive, Braintree, MA 02184, serves as Transfer Agent to the Common Class and Advisor Class shares of the Credit Suisse Warburg Pincus Capital Funds. Ernst & Young LLP, 787 Seventh Avenue, New York, NY 10019, serves as the independent auditor of the Credit Suisse Warburg Pincus Capital Funds. -68- - -------------------------------------------------------------------------------- BROKERAGE ALLOCATION AND OTHER PRACTICES - -------------------------------------------------------------------------------- CSAM is responsible for establishing, reviewing and, where necessary, modifying each 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 and execution will be obtained. The purchase price paid by a 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 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 a 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 a 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 a Fund. In some instances, this investment procedure may adversely affect the price paid or received by a Fund or the size of the position obtained or sold for a Fund. To the extent permitted by law, securities may be aggregated with those to be sold or purchased for a 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 Credit Suisse First Boston ("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 CSFB or any affiliated person of the foregoing entities except as permitted by SEC exemptive order or by applicable law. In addition, the Funds will not give preference to any institutions with whom a Fund enters into distribution or shareholder servicing agreements concerning the provision of distribution services or support services. If permitted for a Fund, transactions for such Fund may be effected on foreign securities exchanges. In transactions for securities not actively traded on a foreign securities exchange, such 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. A Fund may participate, if and when practicable, in bidding for the purchase of securities for a Fund's portfolio directly from an issuer in order to take advantage of the lower purchase price available to members of such a group. A Fund will engage in this practice, however, only when the Adviser, in its sole discretion, believes such practice to be otherwise in a Fund's interest. -69- During the fiscal year ended October 31, 2000, commissions of $126,881, $460,009 and $299,222 related to transactions of $108,890,562, $257,745,654 and $125,702,605 were paid to brokers that provided research or other services to the Credit Suisse Warburg Pincus Blue Chip Fund, the Credit Suisse Warburg Pincus Value Fund and the Credit Suisse Warburg Pincus Small Company Value Fund, respectively. -70- -71- The tables below show certain information regarding the payment of commissions by the Credit Suisse Warburg Pincus Blue Chip Fund, the Credit Suisse Warburg Pincus Small Company Value Fund and the Credit Suisse Warburg Pincus Value Fund for the three years ending October 31, 2000. -72-
Fiscal Years ended October 31, --------------------------------- 2000 1999 1998 -------- -------- -------- Total brokerage commissions incurred by the Credit Suisse Warburg Pincus Blue Chip Fund ....................................... $126,881 $150,653 $63,125 Total dollar amount paid to Autranet, Inc. .......................... $7,099 $24,637 $0 Percentage of total brokerage commissions paid to Autranet, Inc. .... 5.6% 16.4% 0% Percentage of aggregate dollar amount of transactions involving the payment of commissions to Autranet, Inc. ........................ 1.3% Total dollar amount paid to Donaldson, Lufkin & Jenrette Securities Corporation .............................................. $0 $19,912 $11,200 Percentage of total brokerage commissions paid to Donaldson, Lufkin & Jenrette Securities Corporation ............................ 0% 13.2% 17.7% Percentage of aggregate dollar amount of transactions involving the payment of commissions to Donaldson, Lufkin & Jenrette Securities Corporation .............................................. 0% 10.6% 11.9% Fiscal Years ended October 31, --------------------------------- 2000 1999 1998 -------- -------- -------- Total brokerage commissions incurred by the Credit Suisse Warburg Pincus Small Company Value Fund ............................. $299,222 $338,342 $468,261 Total dollar amount paid to Autranet, Inc. .......................... $4,108 $24,070 $59,082 Percentage of total brokerage commissions paid to Autranet, Inc. .... 1.4% 7.1% 12.6% Percentage of aggregate dollar amount of transactions involving the payment of commissions to Autranet, Inc. ........................ 0.3%
-73-
Fiscal Years ended October 31, --------------------------------- 2000 1999 1998 -------- -------- -------- Total brokerage commissions incurred by the Credit Suisse Warburg Pincus Value Fund ........................................... $460,009 $120,954 $141,358 Total dollar amount paid to Autranet, Inc. .......................... $46,757 $25,758 $29,410 Percentage of total brokerage commissions paid to Autranet, Inc. .... 10.2% 21.3% 20.8% Percentage of aggregate dollar amount of transactions involving the payment of commissions to Autranet, Inc. ........................ 6.0% Total dollar amount paid to Donaldson, Lufkin & Jenrette Securities Corporation .............................................. $600 $1,050 0 Percentage of total broker commissions paid to Donaldson, Lufkin & Jenrette Securities Corporation ............................ 0.1% 0.6% 0 Percentage of aggregate dollar amount of transactions involving the payment of commissions to Donaldson, Lufkin & Jenrette Securities Corporation .............................................. 0.1% 0.9% 0
-74- - -------------------------------------------------------------------------------- CAPITAL STOCK AND ORGANIZATION - -------------------------------------------------------------------------------- Each Fund of the Credit Suisse Warburg Pincus Capital Funds is authorized to issue an unlimited number of shares of beneficial interest per share divided into four classes, designated Class A, Class B, Class C and Common Class. In addition, Credit Suisse Warburg Pincus Blue Chip Fund, Credit Suisse Warburg Pincus Value Fund, Credit Suisse Warburg Pincus Small Company Value Fund and Credit Suisse Warburg Pincus Fixed Income II Fund are also authorized to issue an unlimited number of shares of beneficial interest per share, designated Class D and the Credit Suisse Warburg Pincus Value Fund is also authorized to issue an unlimited number of shares of beneficial interest per share, designated Advisor Class. Each class of shares represents an interest in the same assets of a Fund and is identical in all respects except that (i) each class is subject to different sales charges and distribution and/or service fees (except for Class D shares, which are not subject to any sales charges and distribution and/or service fees), which may affect performance, (ii) each class has exclusive voting rights on any matter submitted to shareholders that relates solely to its arrangement and has separate voting rights on any matter submitted to shareholders in which the interests of one class differ from the interests of any other class, (iii) each class has a different exchange privilege, (iv) only Class B shares have a conversion feature, (v) Class D shares are solely available for purchase by employees of Credit Suisse First Boston ("CSFB") and its subsidiaries that are eligible to participate in the Employee Savings and Retirement Plan of Credit Suisse First Boston, certain investment advisory or brokerage clients of -75- CSAM or its affiliates, and certain employee benefit plans for employees of CSAM or its affiliates (CSFB employees should contact the CSFB Hotline at 1-800-588-6200 concerning how to purchase Class D shares), (vi) Common Class shares have slightly different procedures for buying and selling shares and available services, as described in the Prospectus under "How to Buy and Sell Shares" and "Additional Shareholder Services," and (vii) Advisor Class shares are available for purchase through certain institutions and financial services firms and are not available to individual investors directly. In accordance with the Credit Suisse Warburg Pincus Capital Funds' Amended and Restated Agreement and Declaration of Trust, the Trustees may authorize the creation of additional series and classes within such series, with such preferences, privileges, limitations and voting and dividend rights as the Trustees may determine. Currently, each Fund is offering four classes of shares, designated Class A, Class B, Class C and Common Class for each of the Credit Suisse Warburg Pincus Capital Funds and, in addition, Class D shares for the Credit Suisse Warburg Pincus Blue Chip Fund, Credit Suisse Warburg Pincus Value Fund, Credit Suisse Warburg Pincus Small Company Value Fund and Credit Suisse Warburg Pincus Fixed Income II Fund, and Advisor Class shares for the Credit Suisse Warburg Pincus Value Fund. The Trust was formed on November 26, 1985 as a "business trust" under the laws of The Commonwealth of Massachusetts. Under Massachusetts law, shareholders of a business trust, unlike shareholders of a corporation, could be held personally liable as partners for the obligations of the trust under certain circumstances. The Amended and Restated Agreement and Declaration of Trust, however, provides that shareholders of Credit Suisse Warburg Pincus Capital Funds shall not be subject to any -76- personal liability for the acts or obligations of Credit Suisse Warburg Pincus Capital Funds and that every written obligation, contract, instrument or undertaking made by Credit Suisse Warburg Pincus Capital Funds shall contain a provision to that effect. Upon payment of any liability, the shareholder will be entitled to reimbursement from the general assets of the appropriate Fund. The Trustees intend to conduct the operation of Credit Suisse Warburg Pincus Capital Funds, with the advice of counsel, in such a way as to avoid, to the extent possible, ultimate liability of the shareholders for liabilities of Credit Suisse Warburg Pincus Capital Funds. The Amended and Restated Agreement and Declaration of Trust further provide that no Trustee, officer, employee or agent of Credit Suisse Warburg Pincus Capital Funds is liable to Credit Suisse Warburg Pincus Capital Funds or to a shareholder, nor is any Trustee, officer, employee or agent liable to any third persons in connection with the affairs of Credit Suisse Warburg Pincus Capital Funds, except such liability as may arise from his or its own bad faith, willful misfeasance, gross negligence or reckless disregard of his or its duties. It also provides that all third parties shall look solely to the property of Credit Suisse Warburg Pincus Capital Funds or the property of the appropriate Fund for satisfaction of claims arising in connection with the affairs of Credit Suisse Warburg Pincus Capital Funds or of the particular Fund, respectively. With the exceptions stated, the Amended and Restated Agreement and Declaration of Trust permits the Trustees to provide for the indemnification of Trustees, officers, employees or agents of Credit Suisse Warburg Pincus Capital Funds against all liability in connection with the affairs of Credit Suisse Warburg Pincus Capital Funds. -77- All shares of Credit Suisse Warburg Pincus Capital Funds when duly issued will be fully paid and non-assessable. The Trustees are authorized to re-classify and issue any unissued shares to any number of additional series or classes without shareholder approval. Accordingly, the Trustees in the future, for reasons such as the desire to establish one or more additional Funds with different investment objectives, policies or restrictions, may create additional series or classes of shares. Any issuance of shares of such additional series or classes would be governed by the Investment Company Act of 1940 and the laws of the Commonwealth of Massachusetts. -78- - -------------------------------------------------------------------------------- PURCHASES, REDEMPTIONS, EXCHANGES AND PRICING OF FUND SHARES - -------------------------------------------------------------------------------- The following information supplements that set forth in the Prospectus under the heading "How to Buy and Sell Shares" and "Other Shareholder Information." (a) Purchases Shares of the Funds are offered at the respective net asset value per share ("NAV") next determined following receipt of a purchase order in proper form by Credit Suisse Warburg Pincus Capital Funds or by the Distributor plus, in the case of Class A shares of each Fund, an initial sales charge imposed at the time of purchase or, in the case of Class B shares or Class C shares of each Fund, subject to a contingent deferred sales charge or "CDSC" upon redemption. Common Class shares of each Fund and Advisor Class shares of the Credit Suisse Warburg Pincus Value Fund are offered without any sales charge (but are subject to a distribution and/or servicing fee). Class D shares of the Credit Suisse Warburg Pincus Blue Chip Fund, the Credit Suisse Warburg Pincus Value Fund, the Credit Suisse Warburg Pincus Small Company Value Fund and the Credit Suisse Warburg Pincus Fixed Income II Fund are offered to employees of CSFB and its subsidiaries that are eligible to participate in the Employee Savings and Retirement Plan of Credit Suisse First Boston, certain investment advisory or brokerage clients of CSAM or its affiliates, and certain employee benefit plans for employees of CSAM or its affiliates at NAV without any sales charge. The Funds calculate NAV as of the close of -79- the regular session of the New York Stock Exchange, which is generally 4:00 p.m. New York City time on each day that trading is conducted on the New York Stock Exchange. Each class of shares of a Fund represents an interest in the same assets of such Fund and is identical in all respects except that (i) each class is subject to different sales charges and distribution and/or service fees (except for Class D shares, which are not subject to any sales charges and distribution and/or service fees), which may affect performance, (ii) each class has exclusive voting rights on any matter submitted to shareholders that relates solely to its arrangement and has separate voting rights on any matter submitted to shareholders in which the interests of one class differ from the interests of any other class, (iii) each class has a different exchange privilege, (iv) only Class B shares have a conversion feature, (v) Class D shares are solely available for purchase by employees of CSFB and its subsidiaries that are eligible to participate in the Employee Savings and Retirement Plan of Credit Suisse First Boston, certain investment advisory or brokerage clients of CSAM or its affiliates, and certain employee benefit plans for employees of CSAM or its affiliates (CSFB employees should contact the CSFB Hotline at 1-800-588-6200 concerning how to purchase Class D shares), (vi) Common Class shares have slightly different procedures for buying and selling shares and available services, as described in the Prospectus under "How to Buy and Sell Shares" and "Additional Shareholder Services," and (vii) Advisor Class shares are available for purchase through certain institutions and financial services firms and are not available to individual investors directly. In accordance with the Credit Suisse Warburg Pincus Capital Funds' Amended and Restated Agreement and Declaration of Trust, the Trustees may authorize the creation of additional series and classes within such series, -80- with such preferences, privileges, limitations and voting and dividend rights as the Trustees may determine. To open a new account by wire for Class A, Class B or Class C shares, first call Credit Suisse Warburg Pincus Funds at 1-800-225-8011 (option #2) to obtain an account number. A representative will instruct you to send a completed, signed application to the Transfer Agent. Accounts cannot be opened without a completed, signed application and a fund account number. Contact your bank to arrange a wire transfer to: Boston Safe Deposit & Trust ABA #011001234 For: PFPC, Inc. A/C #006068 Attn: Credit Suisse Warburg Pincus Funds Your wire instructions must also include: --the name of the Fund in which the money is to be invested, --your account number at the Fund, and --the name(s) of the account holder(s) For Common Class shares, call the Shareholder Service Center at 1-800-WARBURG (800 927-2874) to obtain an application by mail or fax. Applications can also be downloaded from the Internet Web site at: www.warburg.com. Contact your bank to arrange a wire transfer to: State Street Bank and Trust Company ABA# 0110 000 28 Attn: Mutual Funds/Custody Dept. [Credit Suisse Warburg Pincus Fund Name] DDA# 9904-649-2 F/F/C: [Account Number and Registrations Orders for the purchase of shares of a Fund become effective at the next transaction time after Federal funds or bank wire monies become available to Citibank, -81- N.A. ("Citibank") for a shareholder's investment. Federal funds are a bank's deposits in a Federal Reserve Bank. These funds can be transferred by Federal Reserve wire from the account of one member bank to that of another member bank on the same day and are considered to be immediately available funds; similar immediate availability is accorded monies received at Citibank by bank wire. Investors should note that their banks may impose a charge for this service. Money transmitted by a check drawn on a member of the Federal Reserve System is converted to Federal Funds in one business day following receipt. Checks drawn on banks which are not members of the Federal Reserve System may take longer. All payments (including checks from individual investors) must be in United States dollars. All shares purchased are confirmed to each shareholder and are credited to such shareholder's account at NAV and with respect to Class A shares, less any applicable sales charge. To avoid unnecessary expense to the Funds and to facilitate the immediate redemption of shares, share certificates are not issued except upon the written request of a shareholder and payment of a fee in the amount of $50 for such share issuance. The Funds retain the right to waive such fee in their sole discretion. Shareholders maintaining Fund accounts through brokerage firms and other institutions should be aware that such institutions may necessarily set deadlines for receipt of transaction orders from their clients that are earlier than the transaction times of the Fund itself so that the institutions may properly process such orders prior to their transmittal to the Fund or the Distributor. Should an investor place a transaction order with such an institution after its deadline, the institution may not effect the order with the Fund until the next business day. Accordingly, an investor should familiarize himself or -82- herself with the deadlines set by his or her institution. (For example, a brokerage firm may accept purchase orders from its customers up to 2:15 p.m. for issuance at the 4:00 p.m. transaction time and price.) A brokerage firm acting on behalf of a customer in connection with transactions in Fund shares is subject to the same legal obligations imposed on it generally in connection with transactions in securities for a customer, including the obligation to act promptly and accurately. A Fund may also issue its shares in return for securities or other assets, subject to approval of the Board of Trustees. (b) Contingent Deferred Sales Charges Redemptions of Class B shares will be subject to a contingent deferred sales charge or CDSC declining from 4% to zero over a four-year period. Redemptions of Class C shares will be subject to a CDSC of 1% if such redemptions occur within one year of purchase of the shares redeemed. The CDSC for Class B shares and Class C shares will be waived for the following shareholders or transactions: (1) shares received pursuant to the exchange privilege which are currently exempt from a CDSC; (2) liquidations, distributions or loans from the following types of retirement plans: (i) retirement plans qualified under section 401(k) of the Code; (ii) plans described in section 403(b) of the Code; and (iii) deferred compensation plans described in section 457 of the Code; (3) redemptions as a result of shareholder death or disability (as defined in the Code); -83- (4) redemptions made pursuant to the Credit Suisse Warburg Pincus Capital Funds' systematic withdrawal plan up to 1% monthly or 3% quarterly of the account's total purchase payments (excluding dividend reinvestment) not to exceed 12% of total purchase payments over any 12 month rolling period (systematic withdrawals elected on a semi-annual or annual basis are not eligible for the waiver); and (5) a redemption related to minimum distributions from retirement plans or accounts at age 70 1/2, which are required without penalty pursuant to the Internal Revenue Code. Redemptions effected by Credit Suisse Warburg Pincus Capital Funds pursuant to its right to liquidate a shareholder's account with a current net asset value of less than $250 will not be subject to the CDSC. The CDSC will be deducted from the redemption proceeds and reduce the amount paid to you. In the case of Class B shares and Class C shares, a CDSC will be applied on the lesser of the original purchase price or the current value of the shares being identified for redemption. Increases in the value of your shares identified for redemption or shares acquired through reinvestment of dividends or distributions are not subject to a CDSC. The amount of any CDSC will be paid to and retained by the Distributor. The amount of the CDSC, if any, will vary depending on the number of years from the time of payment for the purchase of shares until the time of redemption of such shares. Solely for purposes of determining the number of years from the time of any payment for the purchase of shares, all payments during a month will be aggregated and deemed to have been made on the last day of the month. The CDSC will be calculated -84- from the first day of the month after the initial purchase, excluding the time shares were held in a money market fund, if the initial purchase was made in such money market fund. -85- The following table sets forth the rates of the CDSC applicable to redemptions of Class B shares: Contingent Deferred Sales Charge as a Percentage of the Lesser of Dollars Year Since Purchase Invested or Redemption Payment Made Proceeds ---------------------- ---------------------- First................. 4.0% Second................ 3.0% Third................. 2.0% Fourth................ 1.0% Fifth................. 0.0% Sixth................. 0.0% Seventh............... 0.0% For federal income tax purposes, the amount of the CDSC will reduce the gain or increase the loss, as the case may be, on the amount recognized on the redemption of shares. (c) Redemptions Payment of the redemption price may be made either in cash or in portfolio securities (selected at the discretion of the Trustees and taken at their value used in determining the redemption price), or partly in cash and partly in portfolio securities. However, payments will be made wholly in cash unless the Trustees believe that economic conditions exist which would make such a practice detrimental to the best interest of Credit Suisse Warburg Pincus Capital Funds. Credit Suisse Warburg Pincus Capital Funds has filed a formal election with the Securities and Exchange Commission pursuant to which Credit Suisse Warburg Pincus Capital Funds will only effect a redemption in portfolio securities where the particular shareholder of record is redeeming -86- more than $250,000 or 1% of a Fund's total net assets, whichever is less, during any 90 day period. In the opinion of Credit Suisse Warburg Pincus Capital Funds' management, however, the amount of a redemption request would have to be significantly greater than $250,000 or 1% of total net assets of a Fund before a redemption wholly or partly in portfolio securities would be made. If payment for shares redeemed is made wholly or partly in portfolio securities, brokerage costs may be incurred by the investor in converting the securities to cash. See the Prospectus for a description of the CDSC which may be applicable to certain redemptions. To redeem shares represented by share certificates, investors should forward the appropriate share certificates, endorsed in blank or with blank stock powers attached, to Credit Suisse Warburg Pincus Capital Funds with the request that the shares represented thereby or a specified portfolio thereof be redeemed at the next determined net asset value per share. The share assignment form on the reverse side of each share certificate surrendered to Credit Suisse Warburg Pincus Capital Funds for redemption must be signed by the registered owner or owners exactly as the registered name appears on the face of the certificate or, in the alternative, a stock power signed in the same manner may be attached to the share certificate or certificates, or, where tender is made by mail, separately mailed to Credit Suisse Warburg Pincus Capital Funds. The signature or signatures on the assignment form must be guaranteed in the manner described below. If the total value of the shares being redeemed exceeds $50,000 (before deducting any applicable CDSC) or a redemption request directs proceeds to a party other than the registered account owner(s), the signature or signatures on the letter or the endorsement must be guaranteed by an "eligible guarantor institution" as defined in Rule -87- 17Ad-15 under the Securities Exchange Act of 1934. Eligible guarantor institutions include banks, brokers, dealers, credit unions, national securities exchanges, registered securities associations, clearing agencies and savings associations. A broker-dealer guaranteeing signatures must be a member of a clearing corporation or maintain net capital of at least $100,000. Credit unions must be authorized to issue signature guarantees. Signature guarantees will be accepted from any eligible guarantor institution which participates in a signature guarantee program. Additional documents may be required for redemption of corporate, partnership or fiduciary accounts. The requirement for a guaranteed signature is for the protection of the shareholder in that it is intended to prevent an unauthorized person from redeeming his shares and obtaining the redemption proceeds. (d) Exchanges Class A, Class B, Class C or Common Class shares of a Fund may be exchanged by mail or telephone for shares of the same class of another Fund or for shares of the Credit Suisse Warburg Pincus Opportunity Funds or Credit Suisse Warburg Pincus Select Funds, each investment companies managed by the Adviser and an affiliate of the Adviser. The Credit Suisse Warburg Pincus Opportunity Funds are currently comprised of five portfolios: the Credit Suisse Warburg Pincus Developing Markets Fund, and the Credit Suisse Warburg Pincus International Equity II Fund (the "Opportunity International Funds") and together with the Credit Suisse Warburg Pincus High Income Fund (the "Credit Suisse Warburg Pincus Opportunity Long-term Funds"), and Credit Suisse Warburg Pincus Municipal Money Fund and Credit Suisse Warburg Pincus U.S. -88- Government Money Fund (the "Credit Suisse Warburg Pincus Opportunity Money Funds"). The Credit Suisse Warburg Pincus Select Funds are currently comprised of two portfolios: The Credit Suisse Warburg Pincus Strategic Growth Fund and Credit Suisse Warburg Pincus Technology Fund. Shares exchanged from a Fund must be exchanged for the same class of shares of the Credit Suisse Warburg Pincus Opportunity Long-term Funds or Credit Suisse Warburg Pincus Select Funds. Class A, Class B and Class C shares may also be exchanged for shares of the Credit Suisse Warburg Pincus Opportunity Money Funds. In addition, Class A shares may be exchanged for Common Class shares of other Credit Suisse Warburg Pincus Capital Funds, Credit Suisse Warburg Pincus Opportunity Long-term Funds, or Credit Suisse Warburg Pincus Select Funds. After about July 1, 2001, Common Class shares of Credit Suisse Warburg Pincus Funds may be exchanged for Common Class shares of funds in the Warburg, Pincus family of funds (and vice versa). Each Credit Suisse Warburg Pincus Opportunity Long-term Fund and Credit Suisse Warburg Pincus Select Fund portfolio offers four classes of shares: Class A shares, Class B shares, Class C shares and Common Class shares. Class A shares are sold with a front-end sales charge of up to 5.75% for the Opportunity International Funds and Credit Suisse Warburg Pincus Select Funds and up to 4.75% for the Credit Suisse Warburg Pincus High Income Fund. In addition, Class A shares of the Credit Suisse Warburg Pincus Opportunity Long-term Funds and Credit Suisse Warburg Pincus Select Funds are sold with a 12b-1 fee of .25% annually. Class B shares are sold with a CDSC which declines from 4% to zero, depending on the period of time the shares are held, and a 12b-1 fee of 1% annually. Class C shares are sold subject to a CDSC of 1% if such -89- shares are redeemed within one year of purchase, and a 12b-1 fee of 1% annually. Common Class shares are subject to a 12b-1 fee of .25% annually. In addition, the Credit Suisse Warburg Pincus High Income Fund, Credit Suisse Warburg Pincus International Equity II Fund and Credit Suisse Warburg Pincus Technology Fund offer Class D shares which are sold without an initial sales charge or CDSC at net asset value to employees of CSFB and its subsidiaries that are eligible to participate in the Employee Savings and Retirement Plan of Credit Suisse First Boston, certain investment advisory or brokerage clients of CSAM or its affiliates, and certain employee benefit plans for employees of CSAM or its affiliates. Class D shareholders of the Credit Suisse Warburg Pincus Value Fund who received Class D shares in exchange for their shares of the Warburg, Pincus Value Fund II, Inc., but who are not otherwise eligible Class D shareholders, may exchange such Class D shares for Common Class shares of other Credit Suisse Warburg Pincus Funds. Such shareholders may exchange their (i) Class D shares of the Credit Suisse Warburg Pincus Value Fund for Common Class shares of other Credit Suisse Warburg Pincus Funds, and (ii) Common Class shares of other Credit Suisse Warburg Pincus Funds for Class D shares of the Credit Suisse Warburg Pincus Value Fund as long as such shareholders maintain a balance in the Credit Suisse Warburg Pincus Value Fund. Each Credit Suisse Warburg Pincus Opportunity Money Fund Portfolio currently offers only one class of shares, and is subject to a 12 b-1 fee of .25% annually. Class A shares subject to a CDSC as described in the Prospectus and Class B shares and Class C shares which are exchanged for shares of the Credit Suisse Warburg Pincus Opportunity Funds and Credit Suisse Warburg Pincus Select Funds will continue to be subject to the same CDSC at the same rate and for the same period of time as they were prior to exchange. The telephone exchange privilege will be offered automatically -90- unless a shareholder declines such option on the Share Purchase Application found in the Funds' Prospectus, or by writing to the Funds' Transfer Agent, PFPC, Inc., 211 S. Gulph Road, King of Prussia, PA 19406-3101, Attn: Credit Suisse Warburg Pincus Funds. Participants within the Employee Savings and Retirement Plan of Credit Suisse First Boston should contact the CSFB Hotline at 1-800-588-6200 for information regarding the exchange of Class D shares. In the case of each of the Credit Suisse Warburg Pincus Opportunity Funds and Credit Suisse Warburg Pincus Select Funds, the exchange privilege is available only in those jurisdictions where shares of the relevant Fund may be legally sold. Prospectuses for the Credit Suisse Warburg Pincus Opportunity Funds may be obtained at the address or telephone number listed on the cover page of the Prospectus. An exchange is effected on the basis of each Fund's relative NAV next computed following receipt of an order for such exchange from the shareholder. In addition, the exchange privilege is available only when payment for the shares to be redeemed has been made and the shares exchanged are held by the Transfer Agent or Distributor. Only those shareholders who have had shares in a Fund for at least seven days may exchange all or part of those shares for shares of another Fund or one of the Credit Suisse Warburg Pincus Opportunity Funds or Credit Suisse Warburg Pincus Select Funds and no partial exchange may be made if, as a result, the shareholders' interest in a Fund would be reduced to less than $250. The minimum initial exchange into another Fund is $1,000. All exchanges into the Credit Suisse Warburg Pincus Opportunity Funds or Credit Suisse Warburg Pincus Select Funds are subject to the minimum investment requirements and any other applicable terms set forth in the Prospectus for the relevant -91- Fund whose shares are being acquired. If for these or other reasons the exchange cannot be effected, the shareholder will be so notified. A shareholder of Credit Suisse Warburg Pincus Capital Funds who has exchanged shares for shares of the Credit Suisse Warburg Pincus Opportunity Funds or Credit Suisse Warburg Pincus Select Funds will have all of the rights and privileges of a shareholder of the relevant Credit Suisse Warburg Pincus Opportunity Fund or Credit Suisse Warburg Pincus Select Funds. The exchange privilege is intended to provide shareholders with a convenient way to switch their investments when their objectives or perceived market conditions suggest a change. The exchange privilege is not meant to afford shareholders an investment vehicle to play short-term swings in the stock market by engaging in frequent transactions in and out of the Funds. Shareholders who engage in such frequent transactions may be prohibited or restricted from placing future exchange orders. (e) Systematic Withdrawal Plan Shares of a Fund owned by a participant in Credit Suisse Warburg Pincus Capital Funds' systematic withdrawal plan will be redeemed as necessary to meet withdrawal payments. A CDSC which would otherwise be imposed will be waived in connection with redemptions made pursuant to Credit Suisse Warburg Pincus Capital Funds' systematic withdrawal plan of up to 1% monthly or 3% quarterly of an account (excluding dividend reinvestments) not to exceed 12% over any 12 month rolling period; however, the CDSC will not be waived for systematic withdrawals elected on a semi-annual or annual basis. See "How to Buy and Sell Shares" in the Prospectus for a -92- description of the CDSC. A shareholder's systematic withdrawal plan may be terminated at any time by the shareholder or Credit Suisse Warburg Pincus Capital Funds. Redemption of shares for withdrawal purposes may reduce or even liquidate an account. While an occasional lump sum investment may be made by a shareholder who is maintaining a systematic withdrawal plan, such investment should normally be an amount equivalent to three times the annual withdrawal or $5,000 whichever is less. -93- - -------------------------------------------------------------------------------- SHAREHOLDER INVESTMENT ACCOUNT - -------------------------------------------------------------------------------- Each Fund may be a suitable investment vehicle for part or all of the assets held in various tax-sheltered retirement plans, such as those listed below. Semper Trust Company serves as custodian under these prototype retirement plans and charges an annual account maintenance of $15 per participant, regardless of the number of Funds selected. Persons desiring information concerning these plans should write or telephone the Capital Funds' Transfer Agent. While the Credit Suisse Warburg Pincus Capital Funds reserves the right to suspend sales of its shares in response to conditions in the securities markets or for other reasons, it is anticipated that any such suspension of sales would not apply to sales to the types of plans listed below. (a) Individual Retirement Accounts ("IRA") The Adviser has available a prototype form of a traditional IRA for investment in shares of any one or more Funds. Under the Code, individuals may currently make tax-deferred IRA contributions of up to $2,000 annually. Married individuals filing jointly may make tax-deferred contributions of up to $2,000 for each spouse if the combined compensation of both spouses is at least equal to the contributed amount. Contributions to a traditional IRA may be wholly or partly tax-deductible, depending upon the contributor's income level and participation in an employer-sponsored retirement plan. The income earned on shares held in a traditional IRA is not subject to federal income tax until withdrawn in accordance with the Code. Investors -94- may be subject to penalties or additional taxes on contributions to or withdrawals from traditional IRAs under certain circumstances. The Adviser has available a prototype form of the new Roth IRA. Unlike traditional IRAs, contributions to a Roth IRA are not currently deductible. However, amounts within a Roth IRA account will accumulate tax-free, and qualified distributions from a Fund held within such an account will not be included in a shareholder's taxable income. An individual may contribute a maximum of $2,000 annually to a Roth IRA ($4,000 for joint returns). However, such limit is calculated in the aggregate with contributions to traditional IRAs. Roth IRAs are not available to individuals above certain income levels. The Adviser also has available a prototype form of the new Education IRA for investment in shares of any one or more Credit Suisse Warburg Pincus Capital Funds. Like the Roth IRA, contributions are not currently deductible. However, the investment earnings accumulate tax-free, and qualifying distributions used for higher education expenses are not taxable. An individual may contribute a maximum of $500 per account annually. In addition, Educational IRA's are not available to individuals above certain income levels. (b) Simplified Employee Pension Plan ("SEP/IRA") A SEP/IRA is available for investment and may be established on a group basis by an employer who wishes to sponsor a tax-sheltered retirement program by making IRA contributions on behalf of all eligible employees. -95- (c) Savings Incentive Match Plan for Employees ("SIMPLE") -- SIMPLE IRA and SIMPLE 401(k) SIMPLE plans offer employers with 100 or fewer eligible employees who earned at least $5,000 from the employer in the preceding calendar year the ability to establish a retirement plan that permits employee contributions. An employer may also elect to make additional contributions to these Plans. Please telephone Credit Suisse Warburg Pincus Capital Funds' shareholder servicing representatives at (800) 225-8011 for more information. (d) Employer-Sponsored Retirement Plans The Adviser has a prototype retirement plan available which provides for investment of plan assets in shares of any one or more of the Capital Funds. The prototype retirement plan may be used by sole proprietors and partnerships as well as corporations to establish a tax qualified profit sharing plan or money purchase pension plan (or both) of their own. Under the prototype retirement plan, an employer may make annual tax-deductible contributions for allocation to the accounts of the plan participants to the maximum extent permitted by the federal tax law for the type of plan implemented. The Adviser has received favorable opinion letters from the IRS stating that the prototype retirement plan is acceptable by qualified employers. (e) Self-Directed Retirement Plans Shares of the Credit Suisse Warburg Pincus Capital Funds may be suitable for self-directed IRA accounts and prototype retirement plans. -96- - -------------------------------------------------------------------------------- NET ASSET VALUE - -------------------------------------------------------------------------------- Net asset value per share is computed each Fund Business Day in accordance with the Credit Suisse Warburg Pincus Capital Funds' Amended and Restated Agreement and Declaration of Trust and By-Laws. For this purpose, a Fund Business Day is any day on which the New York Stock Exchange is open for business, typically, Monday through Friday exclusive of New Year's Day, Martin Luther King Jr. Day, Presidents Day, Memorial Day, Independence Day, Labor Day, Thanksgiving Day, Christmas Day and Good Friday. The Funds calculate net asset value on each Fund Business Day, as of the close of the regular session of the New York Stock Exchange, generally 4:00 p.m. New York City time. The NAV is calculated by taking the sum of the value of a Fund's investments and any cash or other assets, subtracting liabilities, and dividing by the total number of shares outstanding. All expenses, including the fees payable to the Adviser, are accrued daily. The net asset value is calculated separately for each class of shares. Although the legal rights of each class of shares are substantially identical, the different expenses attributable to each class will result in different net asset values and dividends. The net asset value of Class B and Class C shares will generally be lower than the net asset value of Class A shares as a result of the larger distribution and service fees imposed on Class B and Class C shares. The net asset value of Class A shares, Common Class shares and Advisor Class shares will generally be lower than the net asset value of Class D shares because Class D shares are not subject to any distribution or service fees. -97- It is expected that the net asset value of Class A shares, Class B shares, Class C shares, Class D shares, Common Class shares and Advisor Class shares will tend to converge immediately after the recording of dividends, if any, which will differ in amount by approximately the differential of the accrual of distribution fees. For purposes of the computation of net asset value, each of the Funds value securities held in their respective portfolios as follows: readily marketable portfolio securities listed on the New York Stock Exchange are valued, except as indicated below, at the last sale price at the close of the New York Stock Exchange on the business day as of which such value is being determined. If there has been no sale on such day, the securities are valued at the mean of the closing bid and asked prices on such day, unless it is determined that such mean does not reasonably reflect true market value, in which case such value shall be taken at such amount as shall be deemed reasonable by Trustees of Credit Suisse Warburg Pincus Capital Funds, but not less than said bid price nor more than said asked price. If no bid or asked prices are quoted on such day, then the security is valued by such method as the Trustees of Credit Suisse Warburg Pincus Capital Funds shall determine in good faith to reflect its fair value. Readily marketable securities, including certain options, not listed on the New York Stock Exchange but listed on other national securities exchanges or admitted to trading on the Nasdaq National Market are valued in a like manner. Portfolio securities traded on more than one national securities exchange are valued at the last sale price on the business day as of which such value is being determined at the close of the exchange representing the principal market for such securities. -98- Readily marketable securities, including certain options traded only in the over-the-counter market, and listed securities whose primary market is believed by the Adviser to be over-the-counter (excluding those admitted to trading on The Nasdaq National Market) are valued at the mean of the current bid and asked prices as reported by The Nasdaq National Market, or in the case of securities not quoted on The Nasdaq National Market, the National Quotation Bureau, Inc. or such other comparable source that the Trustees of the Fund deem appropriate to reflect their fair market value. However, fixed-income securities (except short-term securities) may be valued on the basis of prices provided by a pricing service when such prices are believed by the Adviser to reflect the fair market value of such securities. The prices provided by a pricing service are determined without regard to bid or last sale prices but take into account institutional size trading in similar groups of securities and any developments related to specific securities. The money market securities in which each Fund invests are traded primarily in the over-the-counter market and are valued at the mean between most recent bid and asked prices as obtained from dealers that make markets in such securities, except for securities having 60 days or less remaining until maturity which are stated at amortized cost. Portfolio securities underlying listed call options will be valued at their market prices and reflected in net assets accordingly. Premiums received on call options written by the Fund will be included in the liability section of the Statement of Assets and Liabilities as a deferred credit and subsequently adjusted (marked-to-market) to the current market value of the option written. Investments for which market quotations are not readily available are valued at fair value as determined in good faith by the Trustees of Credit Suisse Warburg Pincus Capital Funds. -99- - -------------------------------------------------------------------------------- TAXES, DIVIDENDS, AND DISTRIBUTIONS - -------------------------------------------------------------------------------- Each of the Funds has elected to qualify and intends to remain qualified as a regulated investment company under Subchapter M of the Internal Revenue Code of 1986, as amended (the "Code"). As a regulated investment company, a Fund will not be subject to federal income taxes if at least 90% of its net investment income and net short-term capital gains less any available capital loss carryforwards are distributed to shareholders within allowable time limits. However, a Fund will be subject to tax on its income and gains to the extent that it does not distribute to its shareholders an amount equal to such income and gains. In addition, a Fund will be subject to a nondeductible 4% excise tax to the extent that it does not make distributions to its shareholders on a basis such that the distributions are taxed to shareholders in the same year in which the related income or gain was realized by such Fund. To the extent possible, each Fund intends to make such distributions as may be necessary to avoid this excise tax. Each Fund normally will distribute substantially all of its net investment income and net capital gain, if any, to shareholders in the form of dividends to be paid from time to time. Any dividends or distributions paid shortly after the purchase of shares by an investor may have the effect of reducing the per share value of the shares owned by the investor by the per share amount of the dividends or distributions. Furthermore, such dividends and distributions, although in effect a return of capital, are subject to income taxes. -100- In the event that total distributions (including distributed or designated net capital gain) of a Fund for a taxable year exceed its investment company taxable income and net capital gain, a portion of each distribution generally will be treated as a tax return of capital. Distributions treated as a return of capital reduce a shareholder's basis in its shares and could result in a tax on capital gain either when a distribution is in excess of basis or, more likely, when a shareholder redeems shares. Upon a redemption or other disposition of shares of a Fund, a shareholder will generally recognize gain or loss in an amount equal to the difference between the amount realized and the shareholder's tax basis in such shares. Generally, such gain or loss will be capital gain or loss and will be long-term capital gain or loss if the shareholder's holding period for such shares exceeds one year. Long-term capital gain of a non-corporate shareholder is generally subject to a maximum tax rate of 20% in respect of property held for more than one year. Dividends distributed by a Fund will be eligible for the dividends-received deduction available to corporate shareholders only to the extent of the portion of the Fund's gross income which consists of dividends received on equity securities issued by domestic corporations with respect to which such Fund meets the same holding period, risk of loss, and borrowing limitations applicable to the Fund's shareholders. Section 246 of the Code generally permits the dividends-received deduction to corporate shareholders only if the shares with respect to which the dividends were paid have been held for more than 45 days. If the holding period is not satisfied, the dividends-received deduction is disallowed, regardless of whether the shares with respect to which the dividends were paid have been sold or otherwise disposed of. The holding period requirements are -101- separately applicable to each block of shares acquired, including each block of shares received in payment of the Fund's dividends. The Internal Revenue Service ("IRS") has specific regulations governing the identification of shares to be redeemed by a shareholder that wishes to redeem some, but not all, of its shares. For purposes of determining whether this holding period requirement has been met, the day of acquisition and any day after the first 45 days after the date on which such shares become ex-dividend must be disregarded. In addition, the holding period is suspended during periods in which the stock is subject to diminished risk of loss including, for example, because the holder has acquired a put option or sold a call option (other than certain covered call options where the exercise price is not substantially below the selling price) or otherwise hedged his position. A corporate shareholder would not be entitled to a dividends-received deduction for dividends paid or accrued after September 5, 1997 unless the 45 day holding period were satisfied over a period immediately before or immediately after the shareholder became entitled to receive the dividend. A transition rule provides that the provision will not apply to dividends received within two years of the date of enactment if (1) the dividend is paid with respect to stock held on June 8, 1997, and all times thereafter until the dividend is received; (2) the stock is continuously subject to a diminished risk of loss (as described above) on June 8, 1997, and all times thereafter until the dividend is received; and (3) such stock and related position was identified by the taxpayer by September 30, 1997. The dividends-received deduction will also be reduced for shareholders who incur indebtedness that is directly attributable to the purchase of shares by the -102- percentage of the cost of such shares. Such reduction depends on the particular facts and circumstances of each situation and accordingly shareholders are urged to consult their tax advisers. Under section 1059 of the Code, a corporation which receives an "extraordinary dividend" and disposes of the stock with respect to which such dividend was paid is required to reduce its basis in such stock (but not below zero) by the amount of the dividend which was not taxed because of the dividends-received deduction, with such basis reduction generally being treated as having occurred immediately before the sale or disposition of such stock unless such stock has not been held for at least two years prior to the date of declaration, announcement or agreement about the extraordinary dividend. To the extent such untaxed amount exceeds the shareholder's basis, such excess will be taxed as gain upon sale or disposition of such stock. An extraordinary dividend generally is any dividend that equals or exceeds 10% of the shareholder's basis in the stock (5% in the case of preferred stock). For this purpose, generally, all dividends having ex-dividend dates within any 85-day period and, if such dividends total more than 20% of the shareholder's basis in its stock, all dividends having ex-dividend dates within one year, must be aggregated. The shareholder may elect to determine the status of extraordinary dividends by reference to the fair market value of the stock as of the date before the ex-dividend date, rather than by reference to the adjusted basis of such stock (provided the shareholder establishes the fair market value to the satisfaction of the Commissioner of the IRS). In determining whether the above mentioned two-year holding period has been met, the same rules apply as are applicable to the 45-day holding period requirement for the dividends-received deduction. -103- Each Fund intends to declare and pay dividends and capital gains distributions so as to avoid imposition of the 4% federal excise tax referred to above. Accordingly, each Fund expects to distribute during the calendar year an amount at least equal to the sum of (i) 98% of its calendar year net investment income, (ii) 98% of its net capital gain income (the excess of short and long-term capital gain over short and long-term capital loss) for each one-year period ending October 31, and (iii) 100% of any undistributed net investment income or capital gain from the prior year which has not been distributed by such Fund. Dividends declared in October, November, or December and made payable to shareholders of record in such month would be deemed paid by a Fund and taxable to its shareholders on December 31 of such year provided that such dividends are actually paid during or before January of the following year. A Fund may make a deemed distribution with respect to its net capital gain by paying the tax with respect to the net capital gain and then designating, but not distributing, all or a portion of such gain as a capital gain dividend. Such Fund's shareholders will treat such designated amounts as net capital gain on their income tax returns, but will receive a credit or refund equal to federal income taxes paid by such Fund with respect to such capital gains. In addition, shareholders will increase their basis in the Fund's shares by the difference between the amount of such includible gains and the tax deemed paid by such shareholders in respect of such gains. If a capital gain dividend is paid with respect to any shares of a Fund which are sold at a loss after being held for less than six months, any loss realized upon the sale of such shares will be treated as long-term capital loss to the extent of such capital gain dividend. Any loss realized on the sale of shares will be disallowed to the extent the shares disposed of are replaced within a period of 61 days -104- beginning 30 days before the disposition of such shares. In such case, the basis of shares acquired will be adjusted to reflect the disallowed loss. Some of the investment practices of the Credit Suisse Warburg Pincus Blue Chip Fund, Credit Suisse Warburg Pincus Small Company Value Fund and the Credit Suisse Warburg Pincus Value Fund are subject to special provisions that, among other things, may defer the use of certain losses of such Funds and affect the holding periods of the securities held by the Funds and the character of the gains or losses realized. These provisions may also require the Credit Suisse Warburg Pincus Blue Chip Fund, the Credit Suisse Warburg Pincus Small Company Value Fund and the Credit Suisse Warburg Pincus Value Fund to mark-to-market some of the positions in their portfolio (i.e., treat them as if they were closed out), which may cause such Funds to recognize income without receiving cash with which to make distributions in amounts necessary to satisfy the distribution requirements for qualification as a regulated investment company and for avoiding income and excise taxes. Each Fund will monitor its transactions and may make certain tax elections in order to mitigate the effect of these rules and prevent disqualification of the Fund as a regulated investment company. Dividend and interest income from non-U.S. equity and debt securities may be subject to a withholding tax imposed by the country in which the issuer is located. Each Fund expects to claim a deduction or foreign tax credit with respect to any such withholding tax, to the extent allowable under the Code, regulations thereunder, or an applicable treaty. Since a Fund's investment policies would preclude it from investing more than 50% of the value of the total assets of such Fund in non-U.S. equity and debt -105- securities, shareholders are not expected to be eligible for a pass-through of the credit for foreign taxes paid. For shareholders' federal income tax purposes, distributions to shareholders out of tax-exempt interest income (less expenses applicable thereto) earned by the Credit Suisse Warburg Pincus Municipal Trust Fund are not subject to federal income tax if, at the close of each quarter of the Credit Suisse Warburg Pincus Municipal Trust Fund's taxable year, at least 50% of the value of the Credit Suisse Warburg Pincus Municipal Trust Fund's total assets consist of tax-exempt obligations. The Fund intends to meet this requirement. However, under current tax law, some individuals and corporations may be subject to an alternative minimum tax (the "AMT") with respect to their receipt of certain distributions of tax-exempt interest income from the Credit Suisse Warburg Pincus Municipal Trust Fund. Distributions of taxable interest income, other investment income, and short-term capital gains are taxable to shareholders as ordinary income. Since the Credit Suisse Warburg Pincus Municipal Trust Fund's investment income is derived from interest rather than dividends, no portion of such distributions is eligible for the dividends-received deduction available to corporations. Long-term capital gains, if any, distributed by the Credit Suisse Warburg Pincus Municipal Trust Fund to a shareholder are taxable to the shareholder as long-term capital gain, regardless of the length of time the shareholder may have held the Credit Suisse Warburg Pincus Municipal Trust Fund shares. Each Fund is required to withhold and remit to the U.S. Treasury 31% of the dividends or proceeds of any redemptions or exchanges of shares with respect to any shareholder who fails to furnish his or her Fund with a correct taxpayer identification -106- number, who has been notified by the U.S. Treasury that he or she has under-reported dividend or interest income or who fails to certify to his or her Fund that he or she is not subject to such withholding. An individual's tax identification number is generally his or her social security number. Shareholders will be notified annually by the Funds as to the Federal tax status of dividends and distributions paid during the calendar year. Dividends and distributions may also be subject to state and local taxes. State and local tax treatment may vary according to applicable laws. The foregoing discussion is a general summary of certain current federal income tax laws regarding the Funds and relates solely to the application of that law to (i) citizens or residents of the United States, (ii) domestic corporations or partnerships, or (iii) entities otherwise subject to U.S. taxation on a net income basis. The discussion does not purport to deal with all of the federal income tax consequences applicable to the Funds, or to all categories of investors, some of whom may be subject to special rules. Each prospective and current shareholder should consult with his or her own professional tax adviser regarding federal, state and local tax consequences of ownership of shares of the Funds. -107- - -------------------------------------------------------------------------------- PERFORMANCE INFORMATION - -------------------------------------------------------------------------------- Presented below is certain performance information with respect to an investment in Class A, Class B and Class D shares of beneficial interest of the Funds. Prior to February 28, 1996, Class A shares were not offered. Accordingly, the information presented below with respect to Class A shares has been obtained from the financial statements for the Funds' prior fiscal years. Because Common Class shares were issued on August 1, 2000, Class C shares were issued as of February 28, 2000, and Advisor Class shares have not been issued as of the date of this SAI, no performance information is included for these classes of shares. Total returns shown reflect the impact of expense waivers and/or reimbursements by the investment advisor. Absent such waivers/reimbursements, total returns would be lower. (a) Average Annual Total Return The average annual total return of Class A shares for the one, five and ten year periods ended October 31, 2000 was 7.80%, 21.03% and 16.76% for the Credit Suisse Warburg Pincus Blue Chip Fund and 0.31%, 3.88% and 6.20% for the Credit Suisse Warburg Pincus Fixed Income II Fund, respectively. The average annual total return of Class A shares for the one, five and ten year periods ended October 31, 2000 for the Credit Suisse Warburg Pincus Small Company Value Fund (which was previously named the Winthrop Aggressive Growth Fund and which includes its predecessor, the Neuwirth Fund, Inc.) and the Credit Suisse Warburg Pincus Value Fund (which includes its predecessor, the Pine Street Fund, Inc.) was 14.70%, 10.13% and 15.75% for the Credit Suisse Warburg Pincus Small Company Value Fund and 2.22%, 17.38% -108- and 15.71% for the Credit Suisse Warburg Pincus Value Fund, respectively. The average annual total return of Class A shares for the one and five year periods ended October 31, 2000 for the Credit Suisse Warburg Pincus Municipal Trust Fund was 0.21% and 3.28% respectively and 3.54% for the period July 28, 1993 (commencement of operations) through October 31, 2000. The average annual total return for Class B shares for the one year period ended October 31, 2000 was 9.58%, 0.57%, 16.80%, 3.66% and 0.45% and for the period February 28, 1996 (commencement of offering of Class B shares) through October 31, 2000 was 20.25%, 4.15%, 9.72%, 16.23% and 3.45%, for the Credit Suisse Warburg Pincus Blue Chip Fund, the Credit Suisse Warburg Pincus Fixed Income II Fund, the Credit Suisse Warburg Pincus Small Company Value Fund, the Credit Suisse Warburg Pincus Value Fund and the Credit Suisse Warburg Pincus Municipal Trust Fund, respectively. The average annual total return for Class D shares for the one year period ended October 31, 2000 was 8.75%, 5.62%, and 14.69% for the Credit Suisse Warburg Pincus Value Fund, the Credit Suisse Warburg Pincus Fixed Income II Fund, and the Credit Suisse Warburg Pincus Blue Chip Fund, respectively, and for the period April 30, 1999 (commencement of offering Class D shares for Credit Suisse Warburg Pincus Value Funds and Credit Suisse Warburg Pincus Fixed Income II Fund) or May 13, 1999 (commencement of offering of Class D shares for Credit Suisse Warburg Pincus Blue Chip Fund), as the case may be, through October 31, 2000 the total return for Class D shares for the Credit Suisse Warburg Pincus Value Fund, the Credit Suisse Warburg -109- Pincus Fixed Income II Fund and the Credit Suisse Warburg Pincus Blue Chip Fund was 5.25%, 3.72% and 13.01%, respectively. The Fund commenced offering Class C shares on February 28, 2000 and Common Class shares on August 1, 2000. Therefore, the Fund does not yet have a full calendar year of performance indicated for these classes. These amounts were computed by assuming a hypothetical initial investment of $1,000. It was then assumed that all of the dividends and distributions by each of the Funds over the relevant time periods were reinvested. It was then assumed that with respect to the Class A shares of the Credit Suisse Warburg Pincus Blue Chip Fund, the Credit Suisse Warburg Pincus Small Company Value Fund and the Credit Suisse Warburg Pincus Value Fund, the maximum initial sales charge of 5.75% was deducted at the time of investment and, with respect to the Class A shares of the Credit Suisse Warburg Pincus Fixed Income II Fund and the Credit Suisse Warburg Pincus Municipal Trust Fund, the maximum initial sales charge of 4.75% was deducted at the time of investment. With respect to the Class B shares of each of the Credit Suisse Warburg Pincus Capital Funds, it was assumed that at the end of these periods the entire amount was redeemed and the appropriate sales load, if any, was deducted. The average annual total return was then calculated by using the annual rate required for the initial payment to grow to the amount which would have been received upon redemption (i.e., the average annual compounded rate of return). The results shown should not be considered an indication of future performance from an investment in any Fund today. -110- (b) Computation of the Credit Suisse Warburg Pincus Fixed Income II Fund's and Credit Suisse Warburg Pincus Municipal Trust Fund's 30-Day Yield Quotation The 30-day yield for each of the Credit Suisse Warburg Pincus Fixed Income II Fund and the Credit Suisse Warburg Pincus Municipal Trust Fund for the period ended October 31, 2000 was with respect to Class A shares, 5.49% and 3.66%, respectively; with respect to Class B shares, 5.01% and 3.11%, respectively; with respect to Class C shares, 4.86% and 2.61%, respectively; with respect to Common Class shares, 5.77% and 3.89%, respectively; and with respect to Class D shares, 6.02% for the Credit Suisse Warburg Pincus Fixed Income II Fund. The Fund's yield is based on a 30-day period and is computed by dividing the net investment income per share earned during the period by the maximum offering price per share on the last day of the period, according to the following formula: YIELD = 2[(a-b/cd+1)^6-1] Where: a = dividends and interest earned during the period. b = expenses accrued for the period (net of reimbursements). c = the average daily number of shares outstanding during the period that were entitled to receive dividends. d = the maximum offering price per share on the last day of the period. -111- - -------------------------------------------------------------------------------- GENERAL INFORMATION - -------------------------------------------------------------------------------- (a) Counsel and Auditors Sullivan & Cromwell, 125 Broad Street, New York, New York 10004, serves as legal counsel for the Credit Suisse Warburg Pincus Capital Funds. Ernst & Young LLP, 787 Seventh Avenue, New York, New York 10019, has been appointed as independent auditors for the Credit Suisse Warburg Pincus Capital Funds. (b) Additional Information This Statement of Additional Information does not contain all the information set forth in the Registration Statement filed by Credit Suisse Warburg Pincus Capital Funds with the Securities and Exchange Commission under the Securities Act of 1933. Copies of the Registration Statement may be obtained at a reasonable charge from the Commission or may be examined, without charge, at the offices of the Commission in Washington, D.C. -112- - -------------------------------------------------------------------------------- FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- The audited financial statements of the Funds for the fiscal year ended October 31, 2000 and the report of the Funds' independent auditors in connection therewith are included in the October 31, 2000 Annual Report to Shareholders. The audited financial statements included in the Annual Report are incorporated by reference into this Statement of Additional Information. You can obtain a copy of the Fund's Annual Report by writing the address or calling the telephone numbers set forth on the cover of this Statement of Additional Information. -113- - -------------------------------------------------------------------------------- Appendix I - Description of Security Ratings - -------------------------------------------------------------------------------- Bond Ratings Municipal and Corporate Bonds. The four highest ratings of Moody's Investors Service, Inc. ("Moody's") for municipal corporate bonds are Aaa, Aa, A and Baa. Bonds rated Aaa are judged to be of high quality by all standards. Together with the Aa group, they comprise what are generally known as high-grade bonds. Moody's states that Aa bonds are rated lower than the best bonds because margins of protection may not be as large as in Aaa securities or fluctuation of protective elements may be of greater amplitude or there may be other elements present which make the long-term risks appear somewhat larger than in Aaa securities. Bonds which are rated A are judged by Moody's to possess many favorable investment attributes and are considered "upper medium grade obligations." Factors giving security to principal and interest of A-rated bonds are considered adequate, but elements may be present which suggest a susceptibility to impairment sometime in the future. Bonds rated Baa are considered as medium-grade obligations, i.e., they are neither highly protected nor poorly secured. Interest payments and principal appear adequate for the present but certain protective elements may be lacking or may be characteristically unreliable over any great length of time. Such bonds lack outstanding investment characteristics and in fact have speculative characteristics as well. The generic ratings Aa through Baa may be modified by the addition of the numerals 1, 2 or 3. The modifier 1 indicates that the security ranks in the A-1 higher end of the rating category; the modifier 2 indicates a mid-range rating; and the modifier 3 indicates that the issue ranks in the lower end of such rating category. Moody's highest ratings for short-term municipal loans is MIG-1. Moody's states that short-term municipal securities rated MIG-1 are of the best quality, enjoying strong protection from established cash flows of funds for their servicing and broad-based access to the market for refinancing, or both. Loans bearing the MIG-2 designation are judged to be of high quality, with margins of protection ample although not so large as in the MIG-1 group. The four highest ratings of Standard & Poor's Ratings Group ("S&P") for municipal and corporate bonds are AAA, AA, A and BBB. Bonds rated AAA have the highest rating assigned by S&P to a debt obligation and indicate an extremely strong capacity to pay interest and repay principal. Bonds rated AA also qualify as high-quality debt obligations and have a very strong capacity to pay interest and repay principal and in the majority of instances differ from AAA issues only in a small degree. Bonds rated A have a strong capacity to pay interest and repay principal although they are somewhat more susceptible to the adverse effects of changes in circumstances and economic conditions than bonds in higher rated categories. The BBB rating, which is the lowest "investment-grade" security rating of S&P, indicates an adequate capacity to pay principal and interest. Whereas they normally exhibit adequate protection parameters, adverse economic conditions or changing circumstances are more likely to lead to a weakened capacity to pay principal and interest for bonds in this category than for bonds in the A category. The ratings AA through BBB may be modified by the addition of a plus (+) or minus (-) sign to show relative standing within such rating categories. A-2 Notes rated SP-1 have a very strong capacity to pay principal and interest. Those issues determined by S&P to possess overwhelming safety characteristics are given an SP-1+ rating. Notes rated SP-2 have a satisfactory capacity to pay principal and interest. Notes rated SP-3 have a speculative capacity to pay principal and interest. The rating scale for notes is closely related to long-term bond ratings; notes rated SP-1+ compare with bonds rated AAA, AA+, AA and AA-; notes rated SP-1 compare with bonds rated A+, A and A-; and notes rated SP-2 compare with bonds rated BBB+, BBB and BBB-. Other Municipal Securities and Commercial Paper "Prime-1" is the highest rating assigned by Moody's for other short-term municipal securities and commercial paper, and "A-1+" and "A-1" are the two highest ratings for commercial paper assigned by S&P (S&P does not rate short-term tax-free obligations). Moody's uses the numbers 1, 2 and 3 to denote relative strength within its highest classification of "Prime", while S&P uses the numbers 1+, 1, 2 and 3 to denote relative strength within the highest classification of "A". Issuers rated "Prime" by Moody's have the following characteristics: their short-term debt obligations carry the smallest degree of investment risk, margins or support for current indebtedness are large or stable with cash flow and asset protection well assured, current liquidity provides ample coverage of near-term liabilities and unused alternative financing arrangements are generally available. While protective elements may change over the intermediate or longer term, such changes are most likely to impair the fundamentally strong position of short-term obligations. Commercial paper issuers rated "A" by S&P have the following characteristics: liquidity ratios are better than industry average, long-term debt rating is A-3 A or better, the issuer has access to at least two additional channels of borrowing, the basic earnings and cash flow are in an upward trend. Typically, the issuer is a strong company, is in a well-established industry and has superior management. A-4 EX-99.17(F) 8 0008.txt ANNUAL REPORT OF THE ACQUIRING FUND [DLJ LOGO] ANNUAL REPORT Leadership through Experience - ----------------------------- DLJ Core Equity Fund DLJ Growth and Income Fund DLJ Small Company Value Fund DLJ Technology Fund DLJ Strategic Growth Fund DLJ International Equity Fund DLJ Developing Markets Fund DLJ Fixed Income Fund DLJ Municipal Trust Fund DLJ High Income Fund October 31, 2000 DEAR SHAREHOLDERS: Without a doubt, the most newsworthy development in the capital markets since our April report has been the demise of the NASDAQ market, led by the collapse of the 'new economy dot-coms'. While painful to watch, we think this return to old economy concepts like earnings and valuation, is healthier for the markets in the long term. We are pleased to note that all of our domestic equity funds are ahead of their respective benchmarks for the calendar year to date, rewarding patience and our sticking to our investment disciplines. While the equity markets, particularly the international arena, have generally been difficult, the fixed income markets have provided positive returns as interest rates decline in anticipation of an economic slowdown and the Federal Reserve's adoption of an easing bias. The notable exception has been the high yield area, where weakness in the telecom area has impacted the entire market, driving yield spreads significantly higher. We believe our portfolios are relatively well positioned. The return to more traditional valuation metrics can only help us. If the economy experiences only a modest slowdown, even the high yield area may become attractive, while our core fixed income portfolios should continue to do well. DLJ CORE EQUITY FUND For the twelve months ended October 31, 2000 the DLJ Core Equity Fund Class A shares returned 14.39% versus a 6.09% return for the S&P 500. Investments in the technology, pharmaceuticals, and financial sectors were among the Fund's best performers. Among the Fund's more successful technology holdings were Ciena, EMC Corp and Scientific Atlanta. In the pharmaceuticals/medical supplies group, Amgen, Baxter International, and Medtronic performed especially well. Some of our telecom and retail holdings were our poorer performers. DLJ GROWTH AND INCOME FUND For the year ended October 31, 2000 the DLJ Growth and Income Fund Class A shares returned 8.44% versus a 6.09% return for the S&P 500. The recent rotation back to more 'value' oriented issues has helped the fund considerably. Consumer staples, led by healthcare issues, and energy have been our strongest performing sectors. Technology, where we have only modest exposure, has been our weakest sector. We continue to reduce the number of names in the portfolio. At the end of October, we held 62 issues, down from 73 as of October 1999. In an attempt to make the portfolio more defensive, we have been trying to reduce the overall price/earnings ratio of the portfolio. We have reduced or eliminated exposure to some richly valued issues including: Walgreen's, Automatic Data Processing, American International Group, and Enron. On the buy side, we have modestly raised the yield of the portfolio through the purchase of some high quality companies available at reasonable valuations, including: Avery Dennison, CP&L Energy, Emerson Electric, Kimberly Clark, and 3M. Our worst purchases were in the technology sector, with Computer Associates and Unisys among our biggest losers. DLJ SMALL COMPANY VALUE FUND For the fiscal year ended October 31, 2000 the DLJ Small Company Value Fund Class A shares returned 21.69% versus 17.41% for the Russell 2000 Index. The collapse of the NASDAQ market that began in the Spring of 2000 has helped the Fund's performance dramatically relative to the Russell 2000 Index. We have had no exposure to the 'new economy dot coms' that have imploded over the past six months. Generally, our consumer staple holdings, particularly those that are health care related, have been strong performers. Some of our technology stocks have performed poorly. Due in part to the volatility experienced by our technology holdings, we did make a larger than usual capital gains distribution for the fiscal year just ended. While we were fortunate in eliminating or reducing many of our technology issues at much higher than current prices, many of these issues were relatively short-lived holdings. We have tried to reduce the gain without sacrificing the longer-term potential of the Fund. While the Fund has enjoyed strong absolute and relative performance thus far in 2000, we believe our holdings remain significantly undervalued. To a large degree, we feel this year has just been the start of a 'catch-up' period following two very difficult years for the small cap value style. As investor enthusiasm for all things technology wanes, we believe the Fund is well situated for several years of potentially strong performance. DLJ TECHNOLOGY FUND From the inception of the Fund through the fiscal year ended October 31, 2000 the DLJ Technology Fund Class R shares returned 27.90% versus 11.81% for the Hambrecht and Quist Technology Index. Investments in the Storage Networks and Systems, Telecommunications Equipment, Software, and Semiconductor industries were among the Fund's best performers. Investments in the Internet, Wireless Telecommunication, and Information Services industries under-performed over the period. DLJ STRATEGIC GROWTH FUND From the inception of the Fund through the fiscal year ended October 31, 2000 the DLJ Strategic Growth Fund Class R shares returned 9.40% versus - 3.01% for the S&P BARRA Growth Index. Investments in the Software, Hardware, Electronics, Semiconductor, and Securities and Asset Management industries were among the Fund's best performers. Investments in the Department Stores, Telecommunications, and Specialty Retail industries under-performed over the period. DLJ INTERNATIONAL EQUITY FUND The DLJ International Equity Fund Class A returned - 1.87% versus - 2.66% for the Fund's benchmark, the MSCI EAFE Free Index, for the year ended October 31, 2000. International developed markets have had a disappointing year, with most markets falling since the end of the first quarter. In Europe, despite some anecdotal evidence of improving export competitiveness due to the weak Euro and productivity gains, the automobile and machinery sectors underperformed, but the real culprit was the telecommunications sector. Following frenzied expectations for 3G spectrum auctions earlier in the year, mature reflection concluded that there are some very large bills to be paid. A general sense of pessimism in global markets, in general, was worsened by profit warnings from some US technology companies. The Fund maintained an overweighted position in Asia, underweighted in Japan, and it was slightly underweighted in Europe. DLJ DEVELOPING MARKETS FUND The total return of the Class A shares of the DLJ Developing Markets Fund for the year ended October 31, 2000 was - 13.67% versus - 8.81% for the Fund's benchmark, the MSCI Emerging Markets Free Index. Following a spectacular 1999, developing markets were down during most of 2000. Markets sold off sharply, especially during the third and fourth quarter, primarily due to growing concerns over the impact of a slowing US economy, rising oil prices, profit warnings, and currency volatility. Asian markets have been the most impacted on a relative basis. At these levels, Global Emerging Markets are poised to recover, are oversold, and valuations look very cheap. Over the next 12 months, we continue to expect that the best returns are likely to come from Brazil, China and South Korea. The Fund had higher weightings in Latin America and Asia relative to its index. DLJ FIXED INCOME FUND The DLJ Fixed Income Fund Class A shares returned 5.31% for the fiscal year ended October 31, 2000 versus 6.46% for the Lehman Brothers Government Corporate Intermediate Bond Index. The Federal Reserve maintained a bias toward higher short-term interest rates throughout this time period, in an effort to slow domestic growth. This effort to slow growth, coupled with the U.S. Treasury's decision to implement a series of Treasury debt buybacks, increased the overall demand for long maturity debt with no perceived credit risk. The Fund increased it's exposure to Treasury debt throughout the year, in an effort to capture the appreciation potential afforded this sector. DLJ MUNICIPAL TRUST FUND The DLJ Municipal Trust Fund Class A shares returned 5.20% for the fiscal year ended October 31, 2000. Returns in the municipal bond markets were aided this year by a significant decrease in interest rates as the marketplace responded to decreases in economic activity, anticipating a more accomodative Federal Reserve monetary policy. Additionally, municipal bond performance was aided from a technical standpoint by reduced primary market municipal supply coupled with strong demand by the investing public. The Fund was shorter in average maturity than its peer group this year in order to accomodate liquidations made throughout the year and consequently lagged the Lipper Intermediate Muni Index return of 6.44% for the fiscal year ended October 31, 2000. DLJ HIGH INCOME FUND The DLJ High Income Fund outperformed the Lipper High Yield Bond Fund Index (the Lipper Index) for the fiscal year ended October 31, 2000. The Fund's average annual total return for the fiscal year periods noted above was - 0.06% on its Class A shares versus - 3.20% for the Lipper Index for the same time period. The Fund also outperformed the CSFB/DLJ High-Yield Bond Index during that period. That index compiled a total return of - 0.99% for the fiscal year period. The high-yield bond market has been under heavy downward pressure for much of the year 2000 and so our emphasis on higher quality, more defensive credits enabled us to outperform the overall market. The pressure stems from widespread concern over whether the economy will go into recession or just enter a slower growth mode in 2001 and what that means for earnings and cash flow generation, credit availability, and bond default and recovery rates. This has led to a flight out of risk-assets (like equities and high yield bonds) and into U.S. Treasuries in recent months. Given the sea-change in the economic and financial environments in the past 6 months, investors' concerns are certainly understandable. Investors are worried that they don't know where the market 'bottom' is at this point. We expect that over the next several months that question will be answered. However, for the time being we will continue our relatively defensive posture in the Fund. The portfolio is market-weighted by sector with an emphasis on larger issuers and more liquid bonds. The Officers and Trustees wish you a happy and prosperous New Year. Sincerely, [SIGNATURE] G. Moffett Cochran President December, 2000 FUND HIGHLIGHTS (unaudited) DLJ CORE EQUITY FUND PORTFOLIO CHANGES For the Year Ended October 31, 2000 MAJOR PURCHASES MAJOR SALES American Home Products Corp.(1) Amgen, Inc. Chevron Corp.(1) Ciena Corp. Citigroup, Inc.(1) Coca Cola Company(2) Computer Associates International, Inc. Freddie Mac(2) EMC Corp.(1) MediaOne Group, Inc.(2) Fleet Boston Corp.(1) Oracle Corp. Johnson & Johnson(1) Pharmacia & Upjohn, Inc.(2) Merck & Co., Inc. Phillips Petroleum Co.(2) Qwest Communications International, Inc.(1) Sprint Corp. (PCS Group) Sun Microsystems, Inc.(1) U.S. Bancorp.(2) (1) New Holdings (2) Deletions
TEN LARGEST HOLDINGS October 31, 2000
PERCENT VALUE OF FUND ----------- ------- General Electric Co......................................... $10,249,937 4.3% Merck & Co., Inc............................................ 7,590,725 3.2 Cisco Systems, Inc.......................................... 7,574,825 3.2 EMC Corp.................................................... 7,356,563 3.1 Microsoft Corp.............................................. 7,080,350 3.0 Exxon Mobil Corp............................................ 6,118,262 2.6 Intel Corp.................................................. 5,985,000 2.5 Ciena Corp.................................................. 5,151,125 2.1 American Express Co......................................... 4,828,860 2.0 Lehman Brothers Holdings, Inc............................... 4,811,700 2.0 ----------- ---- $66,747,347 28.0% ----------- ---- ----------- ----
INVESTMENT RESULTS For the Periods Ended October 31, 2000 [CHART] DLJ Core Equity Fund Class A
Without Load With Load S&P 500 ------------ --------- ------- 10/90 $10,000 $ 9,425 $10,000 10/91 12,970 12,225 13,352 10/92 13,575 12,795 14,680 10/93 15,524 14,632 16,873 10/94 16,169 15,239 17,524 10/95 18,143 17,099 22,155 10/96 21,829 20,574 27,496 10/97 27,610 26,022 36,327 10/98 33,408 31,487 44,318 10/99 43,688 41,176 55,690 10/00 49,974 47,101 59,082
AVERAGE ANNUAL TOTAL RETURNS ------------------------------ 1 YEAR 5 YEARS 10 YEARS ------- -------- --------- DLJ CORE EQUITY FUND Class A With Load.......................... 7.80% 21.03% 16.76% Without Load....................... 14.39% 22.46% 17.46% Class B With Load.......................... 9.58% N/A N/A Without Load....................... 13.58% N/A N/A Class D.............................. 14.69% N/A N/A S&P 500.............................. 6.09% 21.67% 19.44%
INCEPTION AVG. ANNUAL AGGREGATE DATE TOTAL RETURN TOTAL RETURN S&P 500 --------- ------------ ------------ ------- Class B With Load............ 02/28/96 20.25% N/A 20.43% Without Load......... 02/28/96 20.25% N/A 20.43% Class C With Load............ 02/28/00 N/A 7.90% 5.38% Without Load......... 02/28/00 N/A 8.90% 5.38% Class D................ 05/13/99 13.01% N/A 4.31% Class R................ 08/01/00 N/A 0.00% 0.18%
The performance data quoted represents past performance, which is no indication of future performance. Investment return and principal value will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost. No adjustment has been made for any income taxes payable by shareholders on dividends or capital gains, but the returns calculated above have been computed after deduction of all fund expenses including advisory fees. Class A returns shown above are computed with and without the imposition of the maximum 5.75% front-end sales load. Effective February 28, 1996, the Fund began offering Class B shares which, instead of a front-end sales load, are subject to a contingent deferred sales charge (CDSC) ranging from 4% during the first year to 0% after 4 years. The Fund also commenced offering Class C shares on February 28, 2000, subject to a 1.00% CDSC during the first year, and Class R shares on August 1, 2000. Class R shares are offered to eligible institutions who purchase shares on behalf of their clients. Class D shares are currently offered only to employees of Credit Suisse and its subsidiaries who are eligible to participate in the Credit Suisse First Boston Employees' Savings and Profit Sharing Plan. Class D and Class R shares are not subject to any sales charges. The performance data for Class A, B and C shares are referenced in the table above with and without the imposition of their applicable sales charge. The S&P 500 Composite Stock Price Index is a widely accepted, unmanaged index of overall stock market performance, which does not take into account charges, fees and other expenses. Further information relating to Fund performance, including expense reimbursements, is contained in the Financial Highlights section of the Prospectus and elsewhere in this report. FUND HIGHLIGHTS (unaudited) DLJ GROWTH AND INCOME FUND PORTFOLIO CHANGES For the Year Ended October 31, 2000 MAJOR PURCHASES MAJOR SALES Bell Atlantic Corp.(1) Abbot Laboratories Co.(2) Burlington Resources, Inc.(1) BP Amoco PLC Costco Wholesale Corp.(1) Cisco Systems, Inc.(2) Emerson Electric Co.(1) Freddie Mac General Mills, Inc.(1) Intel Corp.(2) Minnesota Mining & Manufacturing Co.(1) NTL, Inc.(2) Rohm & Haas Co.(1) Oracle Corp.(2) Safeway, Inc.(1) Republic NY Corp.(2) Unisys Corp. Texas Instruments, Inc.(2) Viacom Inc.(1) Walgreen Co.(2) (1) New Holdings (2) Deletions
TEN LARGEST HOLDINGS October 31, 2000
PERCENT VALUE OF FUND ----------- ------- Merck & Co., Inc............................................ $ 9,587,338 3.8% American International Group, Inc........................... 9,354,296 3.7 United Technologies Corp.................................... 8,475,238 3.4 Tyco International Ltd...................................... 8,446,438 3.4 Automatic Data Processing, Inc.............................. 7,589,312 3.0 Enron Corp.................................................. 7,484,100 3.0 Cardinal Health, Inc........................................ 7,106,250 2.8 SYSCO Corp.................................................. 6,993,125 2.8 General Dynamics Corp....................................... 6,562,281 2.6 Avon Products, Inc.......................................... 6,523,250 2.6 ----------- ---- $78,121,628 31.1% ----------- ---- ----------- ----
INVESTMENT RESULTS For the Periods Ended October 31, 2000 [CHART] DLJ Growth and Income Fund Class A
S&P 500 Without Load With Load ------- ------------ --------- 10/90 $10,000 $10,000 $ 9,425 10/91 13,352 12,685 11,955 10/92 14,680 13,591 12,809 10/93 16,873 15,892 14,978 10/94 17,524 16,621 15,665 10/95 22,155 19,297 18,188 10/96 27,496 23,657 22,297 10/97 36,327 30,880 29,104 10/98 44,318 36,790 34,675 10/99 55,690 42,079 39,659 10/00 59,082 45,629 43,005
Comparison of Change in Value of $10,000 Investment
AVERAGE ANNUAL TOTAL RETURNS ------------------------------ 1 YEAR 5 YEARS 10 YEARS ------- -------- --------- DLJ GROWTH AND INCOME FUND Class A With Load.......................... 2.22% 17.38% 15.71% Without Load....................... 8.44% 18.78% 16.39% Class B With Load.......................... 3.66% N/A N/A Without Load....................... 7.66% N/A N/A Class D.............................. 8.75% N/A N/A S&P 500.............................. 6.09% 21.67% 19.44%
INCEPTION AVG. ANNUAL AGGREGATE DATE TOTAL RETURN TOTAL RETURN S&P 500 --------- ------------ ------------ ------- Class B With Load............ 02/28/96 16.23% N/A 20.43% Without Load......... 02/28/96 16.23% N/A 20.43% Class C With Load............ 02/28/00 N/A 16.02% 5.38% Without Load......... 02/28/00 N/A 17.02% 5.38% Class D................ 04/30/99 5.25% N/A 5.88% Class R................ 08/01/00 N/A 9.96% 0.18%
The performance data quoted represents past performance, which is no indication of future performance. Investment return and principal value will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost. No adjustment has been made for any income taxes payable by shareholders on dividends or capital gains, but the returns calculated above have been computed after deduction of all fund expenses including advisory fees. Class A returns shown above are computed with and without the imposition of the maximum 5.75% front-end sales load. Effective February 28, 1996, the Fund began offering Class B shares which, instead of a front-end sales load, are subject to a contingent deferred sales charge (CDSC) ranging from 4% during the first year to 0% after 4 years. The Fund also commenced offering Class C shares on February 28, 2000, subject to a 1.00% CDSC during the first year, and Class R shares on August 1, 2000. Class R shares are offered to eligible institutions who purchase shares on behalf of their clients. Class D shares are currently offered only to employees of Credit Suisse and its subsidiaries who are eligible to participate in the Credit Suisse First Boston Employees' Savings and Profit Sharing Plan. Class D and Class R shares are not subject to any sales charges. The performance data for Class A, B and C shares are referenced in the table above with and without the imposition of their applicable sales charge. The S&P 500 Composite Stock Price Index is a widely accepted, unmanaged index of overall stock market performance, which does not take into account charges, fees and other expenses. Further information relating to Fund performance, including expense reimbursements, is contained in the Financial Highlights section of the Prospectus and elsewhere in this report. FUND HIGHLIGHTS (unaudited) DLJ SMALL COMPANY VALUE FUND PORTFOLIO CHANGES For the Year Ended October 31, 2000 MAJOR PURCHASES MAJOR SALES BISYS Group, Inc.(1) Applied Power, Inc.(2) CCB Financial Corp. Dallas Semiconductor Corp. CFW Communications Co.(1) DII Group, Inc.(2) Equitable Resources, Inc.(1) Electro Scientific Industries, Inc. Mercury Computer Systems, Inc.(1) Helmerich & Payne, Inc.(2) Modine Manufacturing Co. IGATE Capital Corp. Oceaneering International, Inc.(1) Methode Electronics, Inc. Performance Food Group, Inc.(1) Pericom Semiconductor, Inc. Pharmaceutical Product Development, Inc.(1) Technitrol, Inc. Rogers Corp.(1) WICOR, Inc.(2) (1) New Holdings (2) Deletions
TEN LARGEST HOLDINGS October 31, 2000
PERCENT VALUE OF FUND ----------- ------- Performance Food Group, Inc................................. $ 5,143,500 2.5% Brown & Brown, Inc.......................................... 4,998,500 2.4 BISYS Group, Inc............................................ 4,995,250 2.4 Equitable Resources, Inc.................................... 4,872,000 2.4 Pharmaceutical Product Development, Inc..................... 4,853,438 2.4 National Fuel Gas Co........................................ 4,804,800 2.3 Invacare Corp............................................... 4,750,950 2.3 Arrow International, Inc.................................... 4,676,250 2.3 Banta Corp.................................................. 4,618,266 2.2 Carlisle Companies, Inc..................................... 4,503,825 2.2 ----------- ---- $48,216,779 23.4% ----------- ---- ----------- ----
INVESTMENT RESULTS For the Periods Ended October 31, 2000 [CHART] DLJ SMALL COMPANY VALUE FUND Class A
RUSSELL WITHOUT LOAD WITH LOAD 2000 ------------ --------- ------- 10/90 10,000 9,425 10,000 10/91 15,156 14,285 15,858 10/92 18,287 17,235 17,364 10/93 22,920 21,602 22,989 10/94 23,991 22,612 22,917 10/95 26,655 25,122 27,119 10/96 30,334 28,590 31,625 10/97 40,187 37,876 40,900 10/98 35,686 33,634 36,057 10/99 37,636 35,472 41,418 10/00 45,799 43,165 48,629
Comparison of Change in Value of $10,000 Investment
AVERAGE ANNUAL TOTAL RETURNS ------------------------------ 1 YEAR 5 YEARS 10 YEARS ------- -------- --------- DLJ SMALL COMPANY VALUE FUND Class A With Load.......................... 14.70% 10.13% 15.75% Without Load....................... 21.69% 11.43% 16.44% Class B With Load.......................... 16.80% N/A N/A Without Load....................... 20.80% N/A N/A RUSSELL 2000......................... 17.41% 12.39% 17.14%
INCEPTION AVG. ANNUAL AGGREGATE RUSSELL DATE TOTAL RETURN TOTAL RETURN 2000 --------- ------------ ------------ ------- Class B With Load............. 02/28/96 9.72% N/A 10.96% Without Load.......... 02/28/96 9.72% N/A 10.96% Class C With Load............. 02/28/00 N/A 21.16% -13.19% Without Load.......... 02/28/00 N/A 22.16% -13.19% Class R................. 08/01/00 N/A 5.95% -0.20%
The performance data quoted represents past performance, which is no indication of future performance. Investment return and principal value will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost. No adjustment has been made for any income taxes payable by shareholders on dividends or capital gains, but the returns calculated above have been computed after deduction of all fund expenses including advisory fees. Class A returns shown above are computed with and without the imposition of the maximum 5.75% front-end sales load. Effective February 28, 1996, the Fund began offering Class B shares which, instead of a front-end sales load, are subject to a contingent deferred sales charge (CDSC) ranging from 4% during the first year to 0% after 4 years. The Fund also commenced offering Class C shares on February 28, 2000, subject to a 1.00% CDSC during the first year, and Class R shares on August 1, 2000. Class R shares are offered to eligible institutions who purchase shares on behalf of their clients. Class R shares are not subject to any sales charges. The performance data for Class A, B and C shares are referenced in the table above with and without the imposition of their applicable sales charge. The Russell 2000 Index is an unmanaged index and is composed of the 2,000 smallest companies in the Russell 3000 Index. The Russell 3000 Index is composed of 3,000 of the largest U.S. companies by market capitalization. The Index does not take into account charges, fees and other expenses. Further information relating to Fund performance, including expense reimbursements, is contained in the Financial Highlights section of the Prospectus and elsewhere in this report. FUND HIGHLIGHTS (unaudited) DLJ TECHNOLOGY FUND PORTFOLIO ALLOCATION October 31, 2000* [CHART] Business & I.T. Services 1.2% Internet Business to B&C 2.1% Software Products 19.4% Telecommunications Equipment 10.1% Electronic Manufacturing Services 8.5% Computer Systems Manufacturers 8.5% Communications Services 7.9% Semicondutor Manufacturers-Large 7.3% Internet Business-to-Business 6.8% Storage Networks & Systems 5.8% Semiconductor Capital Equipment 5.1% Semiconductor Manufacturers-Fabless 4.5% Personal Computer Manufacturers 3.6% Computer Networking 3.4% Internet Business-to-Consumer 3.3% Cash & Other Assets/Liabilities 2.5%
*Technology Industries defined by Chase Hambrecht & Quist. TEN LARGEST HOLDINGS October 31, 2000
PERCENT VALUE OF FUND ----------- ---------- Network Appliance, Inc...................................... $ 1,645,175 4.5% Sun Microsystems, Inc....................................... 1,485,725 4.0 CIENA Corp.................................................. 1,329,831 3.6 Veritas Software Corp....................................... 1,329,072 3.6 EMC Corp.................................................... 1,242,422 3.4 Cognos, Inc................................................. 1,232,550 3.4 Sanmina Corp................................................ 1,140,267 3.1 Oracle Corp................................................. 1,072,500 2.9 Siebel Systems, Inc......................................... 1,015,270 2.8 Palm, Inc................................................... 995,406 2.7 ----------- ---- $12,488,218 34.0% ----------- ---- ----------- ----
INVESTMENT RESULTS For the Period Ended October 31, 2000
HAMBRECHT & INCEPTION AGGREGATE QUIST DATE TOTAL RETURN NASDAQ TECHNOLOGY INDEX --------- ------------ ------- ---------------- DLJ TECHNOLOGY FUND Class A With Load....................... 08/01/00 -9.36% -10.52% -4.67% Without Load.................... 08/01/00 -3.83% -10.52% -4.67% Class B With Load....................... 08/01/00 -7.83% -10.52% -4.67% Without Load.................... 08/01/00 -3.98% -10.52% -4.67% Class C With Load....................... 08/01/00 -4.95% -10.52% -4.67% Without Load.................... 08/01/00 -3.98% -10.52% -4.67% Class D............................ 09/01/00 -19.00% -19.87% -18.95% Class R............................ 11/18/99 27.90% 0.83% 11.81%
The performance data quoted represents past performance, which is no indication of future performance. Investment return and principal value will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost. No adjustment has been made for any income taxes payable by shareholders on dividends or capital gains. The Fund commenced offering Class A, B and C shares on August 1, 2000. Class A returns shown above are computed with and without the imposition of the maximum 5.75% front-end sales load. Class B shares which, instead of a front-end sales load, are subject to a contingent deferred sales charge (CDSC) ranging from 4% during the first year to 0% after 4 years. Class C shares are subject to a 1.00% CDSC during the first year. Class D shares are currently offered only to employees of Credit Suisse and its subsidiaries who are eligible to participate in the Credit Suisse First Boston Employees' Savings and Profit Sharing Plan. Class D and Class R shares are not subject to any sales charges. The Fund commenced offering Class R shares on November 18, 1999 to eligible institutions who purchase shares on behalf of their clients. The performance data for Class A, B and C shares are referenced in the table above with and without the imposition of their applicable sales charge. NASDAQ is a widely accepted value-weighted index of stock market performance, which does not take into account charges, fees and other expenses. The Hambracht & Quist Technology Index is comprised of the publicly traded stocks of 250 technology companies. It is market-capitalization weighted and is representative of the overall industry at any point in time. Further information relating to Fund performance, including expense reimbursements, is contained in the Financial Highlights section of the Prospectus and elsewhere in this report. FUND HIGHLIGHTS (unaudited) DLJ STRATEGIC GROWTH FUND PORTFOLIO ALLOCATION October 31, 2000* [CHART] Information Services 2.2% Cash & Other Assets/Liabilities 1.7% Technology 49.5% Consumer Staples 25.7% Consumer Cyclical 9.1% Capital Goods 8.1% Financial 3.7%
*Industry sectors defined by Barra, Inc. TEN LARGEST HOLDINGS October 31, 2000
PERCENT VALUE OF FUND ---------- ---------- General Electric Co......................................... $ 416,575 4.7% Merck & Co., Inc............................................ 332,769 3.8 Microsoft Corp.............................................. 321,991 3.7 Cisco Systems, Inc.......................................... 320,556 3.7 EMC Corp.................................................... 307,266 3.5 Sun Microsystems, Inc....................................... 282,731 3.2 Intel Corp.................................................. 270,000 3.1 Oracle Corp................................................. 247,500 2.8 Veritas Software Corp....................................... 243,252 2.8 Johnson & Johnson........................................... 221,100 2.5 ---------- ---- $2,963,740 33.8% ---------- ---- ---------- ----
INVESTMENT RESULTS For the Period Ended October 31, 2000
INCEPTION AGGREGATE S&P 500/BARRA DATE TOTAL RETURN GROWTH INDEX --------- ------------ ------------- DLJ STRATEGIC GROWTH FUND Class A With Load.................................... 08/01/00 -6.94% -7.01% Without Load................................. 08/01/00 -1.26% -7.01% Class B With Load.................................... 08/01/00 -5.21% -7.01% Without Load................................. 08/01/00 -1.26% -7.01% Class C With Load.................................... 08/01/00 -2.25% -7.01% Without Load................................. 08/01/00 -1.26% -7.01% Class R......................................... 11/18/99 9.40% -3.01%
The performance data quoted represents past performance, which is no indication of future performance. Investment return and principal value will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost. No adjustment has been made for any income taxes payable by shareholders on dividends or capital gains. The Fund commended offering Class A, B and C shares on August 1, 2000. Class A returns shown above are computed with and without the imposition of the maximum 5.75% front-end sales load. Class B shares which, instead of a front-end sales load, are subject to a contingent deferred sales charge (CDSC) ranging from 4% during the first year to 0% after 4 years. Class C shares are subject to a 1.00% CDSC during the first year. The Fund commenced offering Class R shares on November 18, 1999 to eligible institutions who purchase shares on behalf of their clients. Class R shares are not subject to any sales charges. The performance data for Class A, B and C shares are referenced in the table above with and without the imposition of their applicable shares charge. The S&P500/Barra Growth Index is a widely accepted, unmanaged index that is a subset of the S&P 500 Composite Stock Price Index. It includes companies with higher than average price to book ratios and does not take into account charges, fees and other expenses. Further information relating to Fund performance, including expense reimbursements, is contained in the Financial Highlights section of the Prospectus and elsewhere in this report. FUND HIGHLIGHTS (unaudited) DLJ INTERNATIONAL EQUITY FUND ASSET ALLOCATION BY COUNTRY October 31, 2000 TEN LARGEST HOLDINGS October 31, 2000 [CHART] Denmark 0.3% Ireland 0.4% Singapore 0.5% Australia 0.7% Portugal 0.8% Belgium 1.8% Finland 2.0% Sweden 2.0% Spain 2.7% Netherlands 4.5% Germany 4.9% Cash & Other Assets/Liabilities 5.9% Switzerland 6.2% Italy 7.0% Hong Kong 7.1% France 13.5% Japan 18.2% United Kingdom 21.5%
PERCENT COUNTRY US $ VALUE OF FUND -------------- ----------- ------- Vodafone Group Plc.............................. United Kingdom $ 1,851,499 2.9% San Paolo -- IMI SPA............................ Italy 1,624,630 2.6 Total Fina SA................................... France 1,485,072 2.3 Shell Transport & Trading Co. Plc............... United Kingdom 1,409,491 2.2 Oy Nokia (Ab) Ser `A'........................... Finland 1,249,444 2.0 ING Groep NV.................................... Netherlands 1,112,357 1.8 China Telecom (Hong Kong) Ltd................... Hong Kong 1,108,205 1.8 Takeda Chemical Industries Ltd.................. Japan 1,053,576 1.7 Royal Bank of Scotland Group Plc................ United Kingdom 1,016,505 1.6 Nestle SA....................................... Switzerland 959,165 1.5 ----------- ---- $12,869,944 20.4% ----------- ---- ----------- ----
INVESTMENT RESULTS For the Periods Ended October 31, 2000 [CHART] DLJ International Equity Fund Class A
Without Load With Load EAFE ------------ --------- ---- 9/95 10,000 9,425 10,000 10/95 9,580 9,029 9,852 10/96 10,380 9,783 10,916 10/97 11,420 10,763 11,454 10/98 12,357 11,646 12,594 10/99 15,045 14,180 15,537 10/00 14,764 13,915 15,124
Comparison of Change in Value of $10,000 Investment
AVERAGE ANNUAL TOTAL RETURNS ------------------------------- 1 YEAR 5 YEARS -------------- -------------- DLJ INTERNATIONAL EQUITY FUND Class A With Load......... -7.49% 7.76% Without Load...... -1.87% 9.03% Class B With Load......... -6.24% 8.18% Without Load...... -2.84% 8.18% Class D............. -1.70% N/A MSCI EAFE INDEX..... -2.66% 8.95%
INCEPTION AVG. ANNUAL AGGREGATE MSCI EAFE DATE TOTAL RETURN TOTAL RETURN INDEX --------- ------------ ------------ --------- Class A With Load................ 09/08/95 6.65% N/A 8.42% Without Load............. 09/08/95 7.89% N/A 8.42% Class B With Load................ 09/08/95 7.04% N/A 8.42% Without Load............. 09/08/95 7.04% N/A 8.42% Class C With Load................ 02/28/00 N/A -14.05% -10.31% Without Load............. 02/28/00 N/A -13.18% -10.31% Class D.................... 05/13/99 5.80% N/A 5.73% Class R.................... 08/01/00 N/A -7.66% -6.25%
The performance data quoted represents past performance, which is no indication of future performance. Investment return and principal value will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost. No adjustment has been made for any income taxes payable by shareholders on dividends or capital gains. Class A returns shown above are computed with and without the imposition of the maximum 5.75% front-end sales load. Class B shares which, instead of a front-end sales load, are subject to a contingent deferred sales charge (CDSC) ranging from 4% during the first year to 0% after 4 years. The Fund commenced offering Class C shares on February 28, 2000, subject to a 1.00% CDSC during the first year, and Class R shares on August 1, 2000. Class R shares are offered to eligible institutions who purchase shares on behalf of their clients. Class D shares are currently offered only to employees of Credit Suisse and its subsidiaries who are eligible to participate in the Credit Suisse First Boston Employees' Savings and Profit Sharing Plan. Class D and Class R shares are not subject to any sales charges. The performance data for Class A, B and C shares are referenced in the table above with and without the imposition of their applicable sales charge. The MSCI EAFE Index is an unmanaged index composed of a sample of companies representative of the market structure of European and Pacific Basin countries. The index is the property of Morgan Stanley & Co. Incorporated. The index does not take into account charges, fees and other expenses. Further information relating to Fund performance, including expense reimbursements, if applicable, is contained in the Financial Highlights section of the Prospectus and elsewhere in this report. Further information relating to Fund performance, including expense reimbursements, is contained in the Financial Highlights section of the Prospectus and elsewhere in this report. FUND HIGHLIGHTS (unaudited) DLJ DEVELOPING MARKETS FUND ASSET ALLOCATION BY COUNTRY October 31, 2000 [CHART] Argentina 0.7% Philippines 0.7% Czech Republic 0.6% Venezuela 0.4% Morocco 0.3% Cash & Other Assets/Liabilities (0.2)% Brazil 13.3% Taiwan 12.2% South Korea 11.3% Mexico 11.3% China 8.7% South Africa 5.6% Malaysia 5.5% India 4.8% Israel 4.7% Turkey 4.0% Greece 4.0% Russia 3.1% Chile 2.4% Hungary 1.9% Thailand 1.8% United Kingdom 1.6% Poland 1.3%
TEN LARGEST HOLDINGS October 31, 2000
PERCENT OF COUNTRY US $ VALUE FUND ----------- ----------- ---------- Taiwan Semiconductor Manufacturing Co. Ltd........ Taiwan $ 635,250 4.1% China Telecom (Hong Kong) Ltd..................... China 599,204 3.9 Samsung Electronics GDR........................... South Korea 590,000 3.8 Petroleo Brasileiro SA Prf........................ Brazil 450,810 2.9 Check Point Software Technologies Ltd............. Israel 413,359 2.7 Cifra SA de CV Ser.`V'............................ Mexico 390,168 2.5 United Microelectronics Corp...................... Taiwan 366,367 2.4 Korea Electrical Power ADR........................ South Korea 365,625 2.3 Fomento Economico Mexicano SA de CV............... Mexico 362,311 2.3 Compania Vale do Rio Doce SA Prf.................. Brazil 345,821 2.2 ---------- ---- $4,518,915 29.1% ---------- ---- ---------- ----
INVESTMENT RESULTS For the Periods Ended October 31, 2000 [CHART] DLJ Developing Markets Fund Class A
Without Load EAFE With Load ------------ --------- --------- 9/95 $10,000 $9,425 $10,000 10/95 9,530 8,982 9,462 10/96 9,960 9,387 10,075 10/97 9,544 8,995 9,220 10/98 7,158 6,746 6,363 10/99 10,006 9,433 9,203 10/00 8,638 8,144 8,392
Comparison of Change in Value of $10,000 Investment
AVERAGE ANNUAL TOTAL RETURNS ------------------------------ 1 YEAR 5 YEARS -------------- ------------- DLJ DEVELOPING MARKETS FUND Class A With Load................................................. -18.66% -3.09% Without Load.............................................. -13.67% -1.94% Class B With Load................................................. -17.71% -2.70% Without Load.............................................. -14.29% -2.70% MSCI EMERGING MARKETS FREE INDEX............................ -8.81% -2.37%
INCEPTION AVG. ANNUAL AGGREGATE MSCI EMERGING DATE TOTAL RETURN TOTAL RETURN MARKETS FREE INDEX --------- ------------ ------------ ------------------ Class A With Load............... 09/08/95 -3.92% N/A -3.34% Without Load............ 09/08/95 -2.81% N/A -3.34% Class B With Load............... 09/08/95 -3.56% N/A -3.34% Without Load............ 09/08/95 -3.56% N/A -3.34% Class C With Load............... 02/28/00 N/A -33.79% -27.16% Without Load............ 02/28/00 N/A -33.12% -27.16% Class R................... 08/01/00 N/A -18.50% -14.93%
The performance data quoted represents past performance, which is no indication of future performance. Investment return and principal value will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost. No adjustment has been made for any income taxes payable by shareholders on dividends or capital gains. Class A returns shown above are computed with and without the imposition of the maximum 5.75% front-end sales load. Class B shares which, instead of a front-end sales load, are subject to a contingent deferred sales charge (CDSC) ranging from 4% during the first year to 0% after 4 years. The Fund commenced offering Class C shares on February 28, 2000, subject to a 1.00% CDSC during the first year, and Class R shares on August 1, 2000. Class R shares are offered to eligible institutions who purchase shares on behalf of their clients. Class R shares are not subject to any sales charge. The performance data for Class A, B and C shares are referenced in the table above with and without the imposition of their applicable sales charge. The MSCI Emerging Markets Free Index is an unmanaged index composed of a sample of companies representative of the market structure of developing countries worldwide. The index is the property of Morgan Stanley & Co. Incorporated. The index does not take into account charges, fees and other expenses. Further information relating to Fund performance, including expense reimbursements, is contained in the Financial Highlights section of the Prospectus and elsewhere in this report. FUND HIGHLIGHTS (unaudited) DLJ FIXED INCOME FUND TEN LARGEST HOLDINGS October 31, 2000
PERCENT PERCENT VALUE OF FUND VALUE OF FUND ---------- ------- ---------- ------- U.S. Treasury Notes MBNA Master Credit Card Trust 7.000%, 07/15/06............. $7,486,737 5.6% 6.450%, 02/15/08.............. $4,938,250 3.7% Federal Home Loan Bank MCI Communications Corp. 7.360%, 07/01/04............. 6,166,020 4.6 6.125%, 04/15/02.............. 4,937,500 3.7 U.S. Treasury Bond Ford Motor Credit Corp. 7.500%, 11/15/16............. 6,048,420 4.5 7.375%, 10/28/09.............. 4,887,500 3.7 U.S. Treasury Note U.S. Treasury Bill 6.125%, 12/31/01............. 5,343,901 4.0 6.375%, 03/31/01.............. 4,650,651 3.5 U.S. Treasury Note AT&T Corp. 6.250%, 08/31/02............. 5,023,650 3.8 6.000%, 03/15/09.............. 4,393,750 3.3
PORTFOLIO CHARACTERISTICS October 31, 2000 30 DAY YIELD, CLASS A: 5.49% AVERAGE RATING: AA* 30 DAY YIELD, CLASS B: 5.01% AVERAGE YEARS TO MATURITY: 6.9 years* 30 DAY YIELD, CLASS C: 4.86% AVERAGE COUPON: 6.35%'D'* 30 DAY YIELD, CLASS D: 6.02% AVERAGE DURATION: 3.4 years* 30 DAY YIELD, CLASS R: 5.77% * Weighted Averages 'D' Exclusive of Commercial Paper
INVESTMENT RESULTS For the Periods Ended October 31, 2000 [CHART] DLJ Fixed Income Fund Class A
Lehman Brothers Without Load With Load Gov't Corp. 10/90 10,000 9,425 10,000 10/91 11,392 10,851 11,379 10/92 12,574 11,977 12,517 10/93 14,056 13,388 13,760 10/94 13,440 12,802 13,495 10/95 15,084 14,368 15,185 10/96 15,739 14,991 16,069 10/97 16,816 16,017 17,272 10/98 18,238 17,372 18,844 10/99 18,190 17,376 19,030 10/00 19,157 18,247 20,259
AVERAGE ANNUAL TOTAL RETURNS ------------------------------ 1 YEAR 5 YEARS 10 YEARS ------- -------- --------- DLJ FIXED INCOME FUND Class A With Load................................................. 0.31% 3.88% 6.20% Without Load.............................................. 5.31% 4.90% 6.72% Class B With Load................................................. 0.57% N/A N/A Without Load.............................................. 4.57% N/A N/A Class D..................................................... 5.62% N/A N/A LEHMAN BROS. GOV'T. CORPORATE INTERMEDIATE BOND INDEX....... 6.46% 5.94% 7.32%
LEHMAN BROS. GOV'T. CORP. INCEPTION AVG. ANNUAL AGGREGATE INTERMEDIATE DATE TOTAL RETURN TOTAL RETURN BOND INDEX --------- ------------ ------------ ------------ Class B With Load............................... 02/28/96 4.15% N/A 5.90% Without Load............................ 02/28/96 4.15% N/A 5.90% Class C With Load............................... 02/28/00 N/A 2.86% 6.19% Without Load............................ 02/28/00 N/A 3.86% 6.19% Class D................................... 04/30/99 3.72% N/A 4.57% Class R................................... 08/01/00 N/A 2.44% 2.57%
The performance data quoted represents past performance, which is no indication of future performance. Investment return and principal value will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost. No adjustment has been made for any income taxes payable by shareholders on dividends or capital gains. Class A returns shown above are computed with and without the imposition of the maximum 4.75% front-end sales load. Effective February 28, 1996, the Fund began offering Class B shares which, instead of a front-end sales load, are subject to a contingent deferred sales charge (CDSC) ranging from 4% during the first year to 0% after 4 years. The Fund also commenced offering Class C shares on February 28, 2000, subject to a 1.00% CDSC during the first year, and Class R shares on August 1, 2000. Class R shares are offered to eligible institutions who purchase shares on behalf of their clients. Class D shares are currently offered only to employees of Credit Suisse and its subsidiaries who are eligible to participate in the Credit Suisse Employees' Savings and Profit Sharing Plan. Class D and Class R shares are not subject to any sales charges. The performance data for Class A, B and C shares are referenced in the table above with and without the imposition of their applicable sales charge. The Lehman Brothers Government/Corporate Intermediate Bond Index is comprised of securities in the Lehman Brothers Government/Corporate Bond Index that have maturities of 5-10 years. The Lehman Brothers Government/Corporate Bond Index includes the Lehman Brothers Government Bond Index and the Lehman Brothers Corporate Bond Index, which do not take into account charges, fees and other expenses. Further information relating to Fund performance, including expense reimbursements, is contained in the Financial Highlights section of the Prospectus and elsewhere in this report. FUND HIGHLIGHTS (unaudited) DLJ MUNICIPAL TRUST FUND TEN LARGEST HOLDINGS October 31, 2000
PERCENT VALUE OF FUND ---------- ------- Plano, Texas Independent School District 6.000%, 02/15/05............ $2,107,500 8.9% Houston, Texas Revenue 5.000%, 03/01/05............ 2,032,500 8.6 Grand River Dam Authority, Oklahoma 6.250%, 06/01/11............ 1,678,125 7.1 Denver, Colorado City & County Airport 6.750%, 11/15/22............ 1,629,375 6.9 Port Authority of Houston, Texas 5.375%, 10/01/05............ 1,321,219 5.6
PERCENT VALUE OF FUND ---------- ------- Chicago, Illinois Metropolitan Water Reclamation District 7.000%, 01/01/11........... $1,157,500 4.9% Texas State Refunding Ser. A 6.000%, 10/01/08........... 1,086,250 4.6 New York State Dormitory Authority Revenue 6.500%, 05/15/06........... 1,086,250 4.6 Indiana University Revenue Student Fee Ser. K 6.500%, 08/01/05........... 1,082,500 4.6 New York City, NY Ser. G 5.750%, 02/01/08........... 1,056,250 4.5
PORTFOLIO CHARACTERISTICS October 31, 2000 30 DAY YIELD, CLASS A: 3.66% AVERAGE RATING: AA* 30 DAY YIELD, CLASS B: 3.11% AVERAGE YEARS TO MATURITY: 5.2 years* 30 DAY YIELD, CLASS C: 2.61% AVERAGE COUPON: 5.75%* 30 DAY YIELD, CLASS R: 3.89% AVERAGE DURATION: 4.3 years* * Weighted Averages
INVESTMENT RESULTS For the Periods Ended October 31, 2000 [CHART] DLJ Municipal Trust Fund Class A
Without Load With Load Lipper ------------ --------- ------ 07/93 10,000 9,525 10,000 10/93 10,183 9,699 10,309 10/94 9,952 9,479 10,060 10/95 10,953 10,433 11,160 10/96 11,373 10,832 11,639 10/97 12,211 11,631 12,403 10/98 12,982 12,365 13,248 10/99 12,849 12,239 13,127 10/00 13,517 12,875 13,972
AVERAGE ANNUAL TOTAL RETURNS ------------------------------ 1 YEAR 5 YEARS -------------- ------------- DLJ MUNICIPAL TRUST FUND Class A With Load................................................. 0.21% 3.28% Without Load.............................................. 5.20% 4.29% Class B With Load................................................. 0.45% N/A Without Load.............................................. 4.45% N/A LIPPER INTERMEDIATE MUNICIPAL FUND INDEX.................... 6.44% 4.64%
LIPPER INTERMEDIATE INCEPTION AVG. ANNUAL AGGREGATE MUNICIPAL DATE TOTAL RETURN TOTAL RETURN FUND INDEX --------- ------------ ------------ ------------ Class A With Load.................. 07/28/93 3.54% N/A 4.71% Without Load............... 07/28/93 4.24% N/A 4.71% Class B With Load.................. 02/28/96 3.45% N/A 4.39% Without Load............... 02/28/96 3.45% N/A 4.39% Class C With Load.................. 02/28/00 N/A 2.65% 5.68% Without Load............... 02/28/00 N/A 3.65% 5.68% Class R...................... 08/01/00 N/A 1.46% 1.78%
The performance data quoted represents past performance, which is no indication of future performance. Investment return and principal value will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost. No adjustment has been made for any income taxes payable by shareholders on dividends or capital gains. Class A returns shown above are computed with and without the imposition of the maximum 4.75% front-end sales load. Effective February 28, 1996, the Fund began offering Class B shares, which, instead of a front-end sales load, are subject to a contingent deferred sales charge (CDSC) ranging from 4% during the first year to 0% after 4 years. The Fund also commenced offering Class C shares on February 28, 2000, subject to a 1.00% CDSC during the first year, and Class R shares on August 1, 2000. Class R shares are offered to eligible institutions who purchase shares on behalf of their clients. Class R shares are not subject to any sales charges. The performance data for Class A, B and C shares are referenced in the table above with and without the imposition of their applicable sales charge. The Lipper Intermediate Municipal Fund Index is an equally weighted performance index of the 30 largest funds in the Lipper grouping of intermediate municipal debt funds, adjusted for capital gains and income dividends. Further information relating to Fund performance, including expense reimbursements, is contained in the Financial Highlights section of the Prospectus and elsewhere in this report. FUND HIGHLIGHTS (unaudited) DLJ HIGH INCOME FUND TEN LARGEST HOLDINGS October 31, 2000 Esat Telecom Group PLC Ser. B 11.875%, 12/01/08........... $296,250 2.2% Triarc Consumer Group, Inc. 10.250%, 02/15/09........... 281,250 2.1 R&B Falcon Corp. 9.500%, 12/15/08............ 268,125 2.0 Dobson/Sygnet Communications, Inc. 13.000%, 05/01/09........... 265,875 1.9 King Pharmaceutical, Inc. 10.750%, 02/15/09........... 265,000 1.9
PERCENT PERCENT VALUE OF FUND VALUE OF FUND -------- ------- -------- ------- Argosy Gaming Co. 10.750%, 06/01/09........... $262,500 1.9 % Packaging Corp. of America 9.625%, 04/01/09............ 256,250 1.9 Express Scripts, Inc. 9.625%, 06/15/09............ 253,125 1.8 Station Casinos, Inc. 10.125%, 03/15/06........... 252,500 1.8 Canadaigua Brands, Inc. 8.500%, 03/01/09............ 252,200 1.8
PORTFOLIO AND FUND INFORMATION October 31, 2000 30 Day Yield, Class A: 11.12% Average Rating: B* 30 Day Yield, Class B: 10.87% Average Years to Maturity: 6.4 years* 30 Day Yield, Class C: 10.87% Average Coupon: 8.70%'D'* 30 Day Yield, Class D: 11.94% 30 Day Yield, Class R: 11.68% * Weighted Average 'D' Exclusive of Commercial Paper
INVESTMENT RESULTS For the Periods Ended October 31, 2000 [CHART] DLJ High Income Fund Class A
WITHOUT LOAD WITH LOAD LIPPER ------------ --------- ------ 3/99 10,000 9,525 10,000 10/99 10,219 9,734 10,011 10/00 10,213 9,728 9,806
Comparison of Change in Value of $10,000 Investment
AVG. ANNUAL TOTAL RETURN 1 YEAR ------------ DLJ HIGH INCOME FUND Class A With Load................................................. -4.79% Without Load.............................................. -0.06% Class B With Load................................................. -4.42% Without Load.............................................. -0.81% Class D..................................................... 0.29% LIPPER HIGH YIELD BOND FUND INDEX........................... -3.20%
LIPPER INCEPTION AVG. ANNUAL AGGREGATE HIGH YIELD DATE TOTAL RETURN TOTAL RETURN BOND FUND INDEX --------- ------------ ------------ --------------- Class A With Load................ 03/08/99 -1.67% N/A -1.91% Without Load............. 03/08/99 1.29% N/A -1.91% Class B With Load................ 03/08/99 -1.84% N/A -1.91% Without Load............. 03/08/99 0.48% N/A -1.91% Class C With Load................ 02/28/00 N/A -4.28% -6.20% Without Load............. 02/28/00 N/A -3.31% -6.20% Class D.................... 05/13/99 -0.92% N/A -4.49% Class R.................... 08/01/00 N/A -2.98% -4.34%
The performance data quoted represents past performance, which is no indication of future performance. Investment return and principal value will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost. No adjustment has been made for any income taxes payable by shareholders on dividends or capital gains. Class A returns shown above are computed with and without the imposition of the maximum 4.75% front-end sales load. Effective March 8, 1999, the Fund began offering Class B shares which, instead of a front-end sales load, are subject to a contingent deferred sales charge (CDSC) ranging from 4% during the first year to 0% after 4 years. The Fund also commenced offering Class C shares on February 28, 2000, subject to a 1.00% CDSC during the first year, and Class R shares on August 1, 2000. Class R shares are offered to eligible institutions who purchase shares on behalf of their clients. Class D shares are currently offered only to employees of Credit Suisse and its subsidiaries who are eligible to participate in the Credit Suisse First Boston Employees' Savings and Profit Sharing Plan. Class D and Class R shares are not subject to any sales charges. The performance data for Class A, B and C shares are referenced in the table above with and without the imposition of their applicable sales charge. The Lipper High Yield Bond Fund Index is an equally weighted performance index of the 30 largest funds within the investment objective of high yield bonds, as defined by Lipper. The index is adjusted for the reinvestment of capital gains and income dividends. DLJ MUTUAL FUNDS -- STATEMENT OF INVESTMENTS October 31, 2000 - -------------------------------------------------------------------------------- DLJ CORE EQUITY FUND COMMON STOCKS -- 99.0%
SHARES VALUE BASIC MATERIALS -- 1.5% ----------- ------------ CHEMICALS-0.5% Air Products and Chemicals, Inc. ... 31,000 $ 1,156,687 ------------ METALS & MINING-1.0% Alcoa, Inc. ........................ 83,300 2,389,669 ------------ 3,546,356 ------------ CAPITAL GOODS -- 9.0% AEROSPACE & DEFENSE-1.4% General Dynamics Corp. ............. 47,100 3,370,594 ------------ CONGLOMORATES-6.1% General Electric Co. ............... 187,000 10,249,937 Tyco International Ltd. ............ 76,500 4,336,594 ------------ 14,586,531 ------------ ELECTRICAL EQUIPMENT-1.5% Emerson Electric Co. ............... 49,100 3,605,781 ------------ 21,562,906 ------------ CONSUMER CYCLICAL -- 10.3% BROADCASTING & CABLE TV-1.1% Cablevision Systems Corp.*.......... 20,000 1,490,000 Comcast Corp.*...................... 30,000 1,222,500 ------------ 2,712,500 ------------ LEISURE RELATED-1.4% Disney (Walt) Co. .................. 94,500 3,384,281 ------------ PERSONAL & HOUSEHOLD PRODUCTS-0.8% Estee Lauder Companies, Inc. Cl. A.................................. 38,300 1,778,556 ------------ PRINTING & PUBLISHING-1.1% Time Warner, Inc. .................. 34,700 2,634,077 ------------ RETAIL-GENERAL-5.9% CVS Corp. .......................... 71,500 3,785,031 Home Depot, Inc. ................... 60,700 2,610,100 Target Corp. ....................... 117,300 3,240,413 Wal-Mart Stores, Inc. .............. 99,200 4,501,200 ------------ 14,136,744 ------------ 24,646,158 ------------ CONSUMER STAPLES -- 19.2% BEVERAGE & TOBACCO-0.6% Pepsico, Inc. ...................... 29,000 1,404,688 ------------ DRUGS-10.9% American Home Products Corp. ....... 72,000 4,572,000 Amgen, Inc.*........................ 67,500 3,910,781 Johnson & Johnson................... 39,000 3,592,875 Merck & Co., Inc. .................. 84,400 7,590,725 Pharmacia Corp. .................... 55,700 3,063,500 Shering-Plough Corp. ............... 61,200 3,163,275 ------------ 25,893,156 ------------ HOSPITAL SUPPLIES & SERVICES-0.6% Medtronic, Inc. .................... 24,700 1,341,519 ------------ FOOD & FOOD RETAILERS-3.0% General Mills, Inc.................. 60,300 2,517,525 SYSCO Corp.......................... 88,000 4,592,500 ------------ 7,110,025 ------------ MEDICAL EQUIPMENT & SUPPLIES-1.1% Baxter International, Inc........... 33,000 2,712,187 ------------ SOAPS & TOILETRIES - 3.0% Colgate-Palmolive Co................ 61,200 3,596,112 Procter & Gamble Co................. 51,500 3,679,031 ------------ 7,275,143 ------------ 45,736,718 ------------ SHARES VALUE ENERGY -- 7.5% ----------- ------------ OIL-INTERNATIONAL-6.7% Chevron Corp........................ 53,200 $ 4,369,050 Exxon Mobil Corp.................... 68,600 6,118,262 Royal Dutch Petroleum Co............ 43,100 2,559,063 Texaco, Inc......................... 49,500 2,923,594 ------------ 15,969,969 ------------ OIL-SERVICES-0.8% Schlumberger Ltd.................... 23,500 1,788,938 ------------ 17,758,907 ------------ FINANCIAL -- 16.3% BANKING-6.9% Chase Manhattan Corp................ 69,400 3,157,700 Citigroup, Inc...................... 86,500 4,552,062 Fleet Boston Financial Corp......... 65,000 2,470,000 Northern Trust Corp................. 36,000 3,073,500 Wells Fargo & Co.................... 70,000 3,241,875 ------------ 16,495,137 ------------ FINANCIAL SERVICES-4.8% American Express Co................. 80,481 4,828,860 Lehman Brothers Holdings, Inc....... 74,600 4,811,700 Providian Financial Corp............ 16,200 1,684,800 ------------ 11,325,360 ------------ INSURANCE-4.6% American General Corp............... 30,500 2,455,250 American International Group, Inc................................ 42,900 4,204,200 Hartford Financial Services, Inc.... 58,400 4,347,150 ------------ 11,006,600 ------------ 38,827,097 ------------ TECHNOLOGY -- 33.4% COMMUNICATIONS EQUIPMENT-4.1% Ciena Corp.*........................ 49,000 5,151,125 Nortel Networks Corp................ 101,600 4,622,800 ------------ 9,773,925 ------------ COMPUTERS-16.2% Cisco Systems, Inc.*................ 140,600 7,574,825 EMC Corp.*.......................... 82,600 7,356,563 International Business Machines Corp............................... 31,500 3,102,750 Microsoft Corp.*.................... 102,800 7,080,350 Oracle Corp.*....................... 131,600 4,342,800 Qwest Communications International, Inc.*.............................. 72,000 3,501,000 Sun Microsystems, Inc.*............. 31,000 3,437,125 Veritas Software Corp.*............. 16,300 2,298,555 ------------ 38,693,968 ------------ ELECTRONICS-8.7% Intel Corp.......................... 133,000 5,985,000 Linear Technology Corp.............. 28,000 1,807,750 Sanmina Corp.*...................... 11,700 1,337,456 Scientific-Atlanta, Inc............. 60,000 4,106,250 Solectron Corp.*.................... 73,800 3,247,200 Texas Instruments, Inc.............. 88,500 4,342,031 ------------ 20,825,687 ------------ OFFICE SUPPLIES-0.7% Avery Dennison Corp................. 30,400 1,535,200 ------------
See notes to financial statements. DLJ MUTUAL FUNDS -- STATEMENT OF INVESTMENTS October 31, 2000 (continued) - -------------------------------------------------------------------------------- DLJ CORE EQUITY FUND
SHARES VALUE ----------- ------------ TELECOMMUNICATIONS-3.7% MCI WorldCom, Inc.*................. 127,000 $ 3,016,250 Nextel Communications, Inc.*........ 49,200 1,891,125 Sprint Corp. (PCS Group)*........... 34,800 1,326,750 Voicestream Wireless Corp........... 20,000 2,630,000 ------------ 8,864,125 ------------ 79,692,905 ------------ TRANSPORT & SERVICE -- 1.8% ADVERTISING-1.8% Omnicom Group, Inc.................. 47,200 4,354,200 ------------ TOTAL COMMON STOCKS (cost $150,839,250)................ 236,125,247 ------------ PRINCIPAL AMOUNT VALUE COMMERCIAL PAPER -- 1.1% ----------- ------------ (amortized cost $2,644,000) National Australia Funding 6.581%, 11/01/00**................. $ 2,644,000 $ 2,644,000 ------------ TOTAL INVESTMENTS -- 100.1% (cost $153,483,249)................ 238,769,247 ------------ LIABILITIES NET OF CASH AND OTHER ASSETS -- (0.1)%............. (147,241) ------------ NET ASSETS -- 100.0%................ $238,622,006 ------------ ------------
* Non-income producing ** Commercial paper is traded on a discount basis; the interest rate shown reflects the discount rate paid at the time of purchase by the Fund. - -------------------------------------------------------------------------------- DLJ GROWTH AND INCOME FUND COMMON STOCKS -- 97.0%
SHARES VALUE BASIC MATERIALS -- 11.2% ----------- ------------ CHEMICALS-0.4% Rohm & Haas Co...................... 37,000 $ 1,112,313 ------------ ELECTRICAL EQUIPMENT-2.0% Emerson Electric Co................. 70,000 5,140,625 ------------ OIL & GAS-7.0% BP Amoco PLC........................ 28,566 1,455,081 Burlington Resources, Inc........... 110,000 3,960,000 Exxon Mobil Corp.................... 41,000 3,656,687 Schlumberger Ltd.................... 62,500 4,757,813 Texaco, Inc......................... 64,000 3,780,000 ------------ 17,609,581 ------------ PAPER & PAPER PRODUCTS-1.5% Kimberly Clark Corp................. 56,000 3,696,000 ------------ PLASTIC & RUBBER-0.3% Polyone Corp........................ 88,100 693,788 ------------ 28,252,307 ------------ CAPITAL GOODS/ CONSTRUCTION -- 6.0% AEROSPACE & DEFENSE-6.0% General Dynamics Corp............... 91,700 6,562,281 United Technologies Corp............ 121,400 8,475,238 ------------ 15,037,519 ------------ CONSUMER PRODUCTS & SERVICES -- 32.4% AUTO & TRUCK PARTS-1.8% Modine Manufacturing Co............. 169,000 4,457,375 ------------ BEVERAGES & TOBACCO-1.3% Philip Morris Cos., Inc............. 89,000 3,259,625 ------------ DRUGS-5.4% Merck & Co., Inc.................... 106,600 9,587,338 Pharmacia Corp...................... 72,352 3,979,360 ------------ 13,566,698 ------------ FOODS-5.4% General Mills, Inc.................. 154,200 6,437,850 SYSCO Corp.......................... 134,000 6,993,125 ------------ 13,430,975 ------------ HOSPITAL SUPPLIES & SERVICES-2.8% Cardinal Health, Inc................ 75,000 7,106,250 ------------ HOUSEHOLD FURNITURE-0.6% Leggett & Platt, Inc................ 87,600 1,434,450 ------------ SHARES VALUE ----------- ------------ LEISURE-0.8% Cedar Fair LP....................... 111,400 $ 1,984,312 ------------ MEDICAL & ENTERTAINMENT-1.9% Viacom, Inc......................... 85,000 4,834,375 ------------ PRINTING & PUBLISHING-2.7% New York Times Co. Cl. A............ 50,000 1,837,500 Tribune Co.......................... 134,200 4,973,788 ------------ 6,811,288 ------------ RETAIL-FOOD & DRUGS-2.5% Safeway, Inc........................ 111,500 6,097,656 ------------ RETAIL-GENERAL-0.7% Federated Department Stores, Inc.... 54,000 1,758,375 ------------ RETAIL-SPECIALTY-2.1% Costco Wholesale Corp.*............. 145,000 5,310,625 ------------ SOAPS & TOILETRIES-4.4% Avon Products, Inc.................. 134,500 6,523,250 Johnson and Johnson................. 50,000 4,606,250 ------------ 11,129,500 ------------ 81,181,504 ------------ ENERGY -- 7.2% OIL-DOMESTIC-1.9% National Fuel Gas Co................ 90,000 4,826,250 ------------ OIL-SUPPLIES & CONSTRUCTION-5.3% Enron Corp.......................... 91,200 7,484,100 Halliburton Co...................... 75,600 2,801,925 New Jersey Resources Corp........... 28,000 1,118,250 San Juan Basin Royalty Trust........ 180,000 1,845,000 ------------ 13,249,275 ------------ 18,075,525 ------------ FINANCIAL SERVICES -- 15.1% BANKING-8.4% Bank of America Corp................ 49,337 2,371,260 Citigroup, Inc...................... 73,333 3,859,149 Federal Home Loan Mortgage Corp..... 62,400 3,744,000 Firstar Corp........................ 73,000 1,437,187 Household International, Inc........ 55,000 2,767,188 U.S. Bancorp........................ 146,196 3,536,116 Washington Mutual, Inc.............. 77,200 3,396,800 ------------ 21,111,700 ------------
See notes to financial statements. DLJ MUTUAL FUNDS -- STATEMENT OF INVESTMENTS October 31, 2000 (continued) - -------------------------------------------------------------------------------- DLJ GROWTH AND INCOME FUND
SHARES VALUE ----------- ------------ INSURANCE-6.7% American International Group, Inc................................ 95,452 $ 9,354,296 Hartford Financial Services Group... 15,000 1,116,562 HSB Group, Inc...................... 114,000 4,510,125 Progressive Corp.................... 20,000 1,965,000 ------------ 16,945,983 ------------ 38,057,683 ------------ PUBLIC UTILITIES -- 3.5% ELECTRIC-2.0% Ameren Corp......................... 30,000 1,192,500 Carolina Power & Light Co........... 95,000 3,829,687 ------------ 5,022,187 ------------ OIL & GAS-1.5% Washington Gas Light Co............. 150,000 3,825,000 ------------ 8,847,187 ------------ SCIENCE & TECHNOLOGY -- 13.4% COMPUTERS-7.4% Automatic Data Processing, Inc...... 116,200 7,589,312 Computer Associates International, Inc................................ 79,700 2,540,437 Gateway 2000, Inc.*................. 71,000 3,664,310 Hewlett-Packard Co.................. 100,400 4,662,325 ------------ 18,456,384 ------------ OFFICE SUPPLIES-1.0% Avery Dennison Corp................. 50,000 2,525,000 ------------ SEMICONDUCTORS-1.6% Dallas Semiconductor Corp........... 99,000 3,922,875 ------------ TELECOMMUNICATIONS-3.4% Alltel Corp......................... 6,800 438,175 Comcast Corp.-Special Cl. A......... 111,600 4,547,700 Verizon Communication, Inc.......... 61,300 3,543,906 ------------ 8,529,781 ------------ 33,434,040 ------------ TRANSPORT & SERVICE -- 0.7% SHARES VALUE ----------- ------------ RAILROADS-0.7% Burlington Northern Santa Fe........ 70,100 $ 1,862,031 ------------ MISCELLANEOUS -- 7.5% DIVERSIFIED-6.7% Berkshire Hathaway, Inc............. 50 3,185,000 Minnesota Minning and Manufacturing Co................................. 53,200 5,140,450 Tyco International Ltd.............. 149,000 8,446,438 ------------ 16,771,888 ------------ LIMITED PARTNERSHIP-TIMBER-0.5% Plum Creek Timber Co. LP............ 50,000 1,296,875 ------------ REAL ESTATE INVESTMENT TRUST-0.3% General Growth Properties, Inc...... 30,000 885,000 ------------ 18,953,763 ------------ TOTAL COMMON STOCKS (cost $163,448,918)................ 243,701,559 ------------ PRINCIPAL AMOUNT COMMERCIAL PAPER -- 2.9% ----------- (amortized cost $7,264,000) National Australia Funding 6.581%, 11/01/00**................. $ 7,264,000 7,264,000 ------------ TOTAL INVESTMENTS -- 99.9% (cost $170,712,918)................ 250,965,559 ------------ CASH AND OTHER ASSETS NET OF LIABILITIES -- 0.1%......... 399,111 ------------ NET ASSETS -- 100.0%................ $251,364,670 ------------ ------------
* Non-income producing ** Commercial paper is traded on a discount basis; the interest rate shown reflects the discount rate paid at the time of purchase by the Fund. - -------------------------------------------------------------------------------- DLJ SMALL COMPANY VALUE FUND COMMON STOCKS -- 98.3%
SHARES VALUE BASIC MATERIALS -- 6.9% ----------- ------------ CHEMICALS-3.7% Cambrex Corp........................ 104,800 $ 4,185,450 Rogers Corp.*....................... 96,600 3,453,450 ------------ 7,638,900 ------------ PACKAGING-1.5% AptarGroup, Inc..................... 146,600 3,032,787 ------------ PAPER-1.3% Longview Fibre Co................... 205,000 2,793,125 ------------ PLASTIC & RUBBER-0.4% Polyone Corp........................ 11,800 92,925 ------------ 13,557,737 ------------ CAPITAL GOODS/ CONSTRUCTION -- 13.5% AEROSPACE-3.0% Esco Electronics Corp.*............. 148,000 2,691,750 Teleflex, Inc....................... 99,900 3,452,794 ------------ 6,144,544 ------------ SHARES VALUE ----------- ------------ BUILDING & CONSTRUCTION-6.4% Carlisle Companies, Inc............. 108,200 $ 4,503,825 Lydall, Inc.*....................... 184,500 1,948,781 Manitowoc, Inc.*.................... 85,000 2,310,938 Roper Industries, Inc............... 69,700 2,439,500 RPM, Inc. Ohio...................... 85,187 761,359 Stewart & Stevenson Services, Inc................................ 50,000 1,200,000 ------------ 13,164,403 ------------ ELECTRICAL EQUIPMENT-4.1% AMETEK, Inc......................... 185,000 4,023,750 Woodhead Industries, Inc............ 197,800 4,351,600 ------------ 8,375,350 ------------ 27,684,297 ------------ CONSUMER CYCLICAL -- 17.6% AUTO RELATED-2.9% Modine Manufacturing Co............. 131,400 3,465,675 Myers Industries, Inc............... 192,969 2,556,839 ------------ 6,022,514 ------------ FOOD SERVICE/LODGING-5.4% Marcus Corp......................... 149,975 2,127,770 Performance Food Group, Inc.*....... 127,000 5,143,500 Universal Foods Corp................ 196,800 3,886,800 ------------ 11,158,070 ------------
See notes to financial statements. DLJ MUTUAL FUNDS -- STATEMENT OF INVESTMENTS October 31, 2000 (continued) - -------------------------------------------------------------------------------- DLJ SMALL COMPANY VALUE FUND
SHARES VALUE ----------- ------------ HOUSEHOLD FURNITURE/APPLIANCES-1.5% Chromcraft Revington, Inc.*......... 156,600 $ 1,291,950 HON Industries, Inc................. 77,000 1,852,813 ------------ 3,144,763 ------------ PRINTING & PUBLISHING-4.4% Banta Corp.......................... 200,250 4,618,266 Harte Hanks, Inc.................... 100,000 2,212,500 Meredith Corp....................... 72,000 2,286,000 ------------ 9,116,766 ------------ RETAIL-GENERAL-3.4% Michael's Stores, Inc.*............. 39,000 948,188 Neiman Marcus Group, Inc.*.......... 90,000 3,116,250 Ruddick Corp........................ 227,700 2,988,563 ------------ 7,053,001 ------------ 36,495,114 ------------ CONSUMER STAPLES -- 12.2% DRUGS-3.7% King Pharmaceuticals, Inc........... 64,312 2,881,981 Pharmaceutical Product Development, Inc.*.............................. 155,000 4,853,438 ------------ 7,735,419 ------------ HOSPITAL SUPPLIES & SERVICES-8.5% Arrow International, Inc............ 116,000 4,676,250 Beckman Coulter, Inc................ 56,600 3,965,537 Dentsply International, Inc......... 50,000 1,734,375 H.B. Fuller Co...................... 59,610 2,015,563 Invacare Corp....................... 166,700 4,750,950 Patterson Dental Co................. 15,000 469,688 ------------ 17,612,363 ------------ 25,347,782 ------------ ENERGY -- 3.3% OIL-SUPPLIES & CONSTRUCTION-3.3% Oceaneering International, Inc.*.... 112,000 1,575,000 Tidewater, Inc...................... 54,100 2,498,744 Varco International, Inc.*.......... 159,767 2,755,981 ------------ 6,829,725 ------------ FINANCIAL -- 17.3% BANKS-11.3% AmSouth Bancorporation.............. 127,022 1,770,369 Associated Banc-Corp................ 24,300 584,719 Banknorth Group, Inc................ 198,000 3,588,750 Centura Banks, Inc.................. 33,000 1,268,437 Cullen/Frost Bankers, Inc........... 128,000 4,264,000 FirstMerit Corp..................... 180,000 4,106,250 National Commerce Bancorporation.... 156,800 3,332,000 Peoples' Bank, Inc.................. 105,000 2,126,250 Susquehanna Bancshares, Inc......... 75,000 1,059,375 Webster Financial Corp.............. 50,000 1,218,750 ------------ 23,318,900 ------------ INSURANCE-6.0% Brown & Brown, Inc.................. 153,800 4,998,500 Horace Mann Educators Corp.......... 52,400 880,975 HSB Group, Inc...................... 96,950 3,835,584 Protective Life Corp................ 120,200 2,779,625 ------------ 12,494,684 ------------ 35,813,584 ------------ PUBLIC UTILITIES -- 6.3% ELECTRIC-2.3% Equitable Resources, Inc............ 84,000 4,872,000 ------------ SHARES VALUE ----------- ------------ GAS-4.0% National Fuel Gas Co................ 89,600 $ 4,804,800 Washington Gas Light Co............. 134,500 3,429,750 ------------ 8,234,550 ------------ 13,106,550 ------------ TECHNOLOGY -- 15.9% COMPUTER HARDWARE-1.7% Mercury Computer Systems, Inc....... 112,000 3,472,000 ------------ COMPUTER SERVICES-2.4% BISYS Group, Inc.*.................. 106,000 4,995,250 ------------ ELECTRONICS-9.3% Benchmark Electronics, Inc.*........ 45,500 1,831,375 C&D Technologies, Inc.*............. 48,000 2,838,000 Dallas Semiconductor Corp........... 87,800 3,479,075 Electro Scientific Industries, Inc.*.............................. 52,700 1,841,206 Methode Electronics, Inc............ 62,150 2,338,394 Pioneer Standard Electronics, Inc................................ 239,450 3,322,369 Technitrol, Inc..................... 31,600 3,503,650 ------------ 19,154,069 ------------ SOFTWARE & PROGRAMMING-2.4% Mentor Graphics Corp.*.............. 81,100 1,900,781 Progress Software Corp.*............ 196,800 3,111,900 ------------ 5,012,681 ------------ TELECOMMUNICATIONS-0.1% CFW Communications Co............... 8,500 168,937 ------------ 32,802,937 ------------ TRANSPORT & SERVICE -- 3.2% PROFESSIONAL SERVICES-1.8% Tetra Tech, Inc..................... 105,175 3,654,831 ------------ TRUCKING & SHIPPING-1.4% Werner Enterprises, Inc............. 206,750 2,894,500 ------------ 6,549,331 ------------ MISCELLANEOUS -- 2.1% DIVERSIFIED-1.5% Brady (W.H.) Cl. A.................. 102,700 3,183,700 ------------ REAL ESTATE INVESTMENT TRUST-0.6% Liberty Property Trust.............. 49,000 1,295,437 ------------ 4,479,137 ------------ TOTAL COMMON STOCKS (cost $141,577,222)................ 202,666,194 ------------ PRINCIPAL AMOUNT COMMERCIAL PAPER -- 3.0% ----------- (amortized cost $6,282,000) National Australia Funding 6.581%, 11/01/00**................. $ 6,282,000 6,282,000 ------------ TOTAL INVESTMENTS -- 101.3% (cost $147,859,222)................ 208,948,194 ------------ LIABILITIES NET OF CASH AND OTHER ASSETS -- (1.3%)............. (2,866,540) ------------ NET ASSETS -- 100.0%................ $206,081,654 ------------ ------------
* Non-income producing ** Commercial paper is traded on a discount basis; the interest rate shown reflects the discount rate paid at the time of purchase by the Fund. See notes to financial statements. DLJ MUTUAL FUNDS -- STATEMENT OF INVESTMENTS October 31, 2000 - -------------------------------------------------------------------------------- DLJ TECHNOLOGY FUND
SHARES VALUE COMMON STOCKS -- 97.5% ----------- ------------ BUSINESS & INFORMATION TECHNOLOGY SERVICES-1.2% Electronic Data Systems Corp.*...... 9,800 $ 459,988 ------------ COMMUNICATIONS SERVICES-7.9% Amdocs Ltd*......................... 7,475 484,473 Nextel Communications, Inc.*........ 9,300 357,469 Openwave Systems, Inc.*............. 5,725 529,920 Pegasus Communication Corp.*........ 7,850 279,166 Portal Software, Inc.*.............. 10,800 380,025 Qwest Communications International, Inc.*.............................. 7,400 359,825 XO Communications, Inc.*............ 15,001 506,049 ------------ 2,896,927 ------------ COMPUTER NETWORKING-3.4% 3Com Corp.*......................... 14,975 265,806 Cisco Systems, Inc.*................ 17,950 967,056 ------------ 1,232,862 ------------ COMPUTER SYSTEMS MANUFACTURERS-8.5% Network Appliance, Inc.*............ 13,825 1,645,175 Sun Microsystems, Inc. *............ 13,400 1,485,725 ------------ 3,130,900 ------------ ELECTRONIC MANUFACTURING SERVICES-8.5% Flextronics International Ltd*...... 20,350 773,300 Sanmina Corp.*...................... 9,975 1,140,267 SCI Systems, Inc.*.................. 13,275 570,825 Solectron Corp.*.................... 14,500 638,000 ------------ 3,122,392 ------------ INTERNET BUSINESS-TO-BUSINESS & CONSUMER-2.1% RealNetworks, Inc.*................. 12,825 264,315 Yahoo! Inc.*........................ 8,500 498,313 ------------ 762,628 ------------ INTERNET BUSINESS-TO-BUSINESS-6.8% Agile Software Corp.*............... 8,200 618,075 DoubleClick, Inc.*.................. 10,500 170,625 Exodus Communications, Inc.*........ 21,200 711,525 Globix Corp.*....................... 20,000 202,500 I2 Technologies, Inc.*.............. 3,625 616,250 Vitria Technology, Inc.*............ 6,000 161,250 ------------ 2,480,225 ------------ INTERNET BUSINESS-TO-CONSUMER-3.3% America OnLine, Inc.*............... 12,825 646,765 eBay, Inc.*......................... 10,975 565,213 ------------ 1,211,978 ------------ PERSONAL COMPUTER MANUFACTURERS-3.6% Gateway, Inc.*...................... 6,350 327,723 Palm, Inc.*......................... 18,584 995,406 ------------ 1,323,129 ------------ SEMICONDUCTOR MANUFACTURERS-LARGE-7.3% Analog Devices, Inc.*............... 12,050 783,250 Linear Technology Corp.............. 15,375 992,648 Texas Instruments, Inc.............. 18,000 883,125 ------------ 2,659,023 ------------ SHARES VALUE ----------- ------------ SEMICONDUCTOR MANUFACTURERS-FABLESS-4.5% Lattice Semiconductor Corp.*........ 27,300 $ 796,819 Xilinx, Inc*........................ 12,075 874,683 ------------ 1,671,502 ------------ SEMICONDUCTOR CAPITAL EQUIPMENT-5.1% Applied Materials, Inc.*............ 13,675 726,484 Kla-Tencor Corp.*................... 15,300 517,331 SDL, Inc.*.......................... 2,450 635,163 ------------ 1,878,978 ------------ SOFTWARE PRODUCTS-19.4% BEA Systems, Inc.*.................. 10,975 787,456 BMC Software, Inc.*................. 9,650 196,016 Cognos, Inc.*....................... 29,700 1,232,550 Microsoft Corp.*.................... 9,825 676,697 Oracle Corp.*....................... 32,500 1,072,500 Peregrine Systems, Inc.*............ 18,800 451,200 Quest Software, Inc.*............... 8,300 362,606 Siebel Systems, Inc.*............... 9,675 1,015,270 Veritas Software Corp.*............. 9,425 1,329,072 ------------ 7,123,367 ------------ STORAGE NETWORKS & SYSTEMS-5.8% EMC Corp.*.......................... 13,950 1,242,422 QLogic Corp.*....................... 9,300 899,775 ------------ 2,142,197 ------------ TELECOMMUNICATIONS EQUIPMENT-10.1% ANTEC Corp.*........................ 10,350 126,141 CIENA Corp.*........................ 12,650 1,329,831 Corning, Inc........................ 5,800 443,700 Scientific-Atlanta, Inc.*........... 12,100 828,094 Sycamore Networks, Inc.*............ 5,000 316,250 Tellabs, Inc.*...................... 12,975 647,939 ------------ 3,691,955 ------------ TOTAL COMMON STOCKS (cost $36,599,789)................. 35,788,051 ------------ PRINCIPAL AMOUNT COMMERCIAL PAPER -- 2.4% ----------- (amortized cost $868,000) National Australia Funding 6.581%, 11/01/00**................. $ 868,000 868,000 ------------ TOTAL INVESTMENTS -- 99.9% (cost $37,467,789)................. 36,656,051 ------------ CASH AND OTHER ASSETS NET OF LIABILITIES -- 0.1%......... 31,605 ------------ NET ASSETS -- 100.0%................ $ 36,687,656 ------------ ------------
* Non-income producing ** Commercial paper is traded on a discount basis; the interest rate shown reflects the discount rate paid at the time of purchase by the Fund. See notes to financial statements. DLJ MUTUAL FUNDS -- STATEMENT OF INVESTMENTS October 31, 2000 - -------------------------------------------------------------------------------- DLJ STRATEGIC GROWTH FUND COMMON STOCKS -- 98.3%
SHARES VALUE CAPITAL GOODS -- 8.1% ---------- ------------ CONGLOMERATES-6.9% General Electric Co.................. 7,600 $ 416,575 Tyco International Ltd............... 3,350 189,903 ------------ 606,478 ------------ SEMICONDUCTOR CAPITAL EQUIPMENT-1.2% Applied Materials, Inc.*............. 1,933 102,691 ------------ 709,169 ------------ CONSUMER CYCLICAL -- 9.1% BROADCASTING & CABLE TV-2.0% Time Warner, Inc..................... 2,275 172,695 ------------ 172,695 ------------ INTERNET-2.4% America Online, Inc.*................ 3,150 158,854 Exodus Communications, Inc.*......... 1,600 53,700 ------------ 212,554 ------------ RETAIL-GENERAL-4.7% Costco Wholesale Corp.*.............. 1,975 72,334 Home Depot, Inc...................... 3,275 140,825 Wal-Mart Stores, Inc................. 4,325 196,247 ------------ 409,406 ------------ 794,655 ------------ CONSUMER STAPLES -- 25.7% DRUGS-16.9% American Home Products Corp.......... 3,300 209,550 Amgen, Inc.*......................... 3,075 178,158 Merck & Co., Inc..................... 3,700 332,769 Millennium Pharmaceuticals, Inc.*.... 2,300 166,894 Pfizer, Inc.......................... 5,100 220,256 Pharmacia Corp....................... 3,167 174,185 Schering-Plough Corp................. 3,900 201,581 ------------ 1,483,393 ------------ FOOD & BEVERAGE-1.2% General Mills, Inc................... 2,575 107,506 ------------ HOME PRODUCTS-3.1% Colgate-Palmolive Co................. 2,200 129,272 Procter & Gamble Co.................. 2,025 144,661 ------------ 273,933 ------------ MEDICAL PRODUCTS & SUPPLIES-4.5% Johnson & Johnson.................... 2,400 221,100 Medtronic, Inc....................... 3,125 169,726 ------------ 390,826 ------------ 2,255,658 ------------ FINANCIAL -- 3.7% BANKING-1.0% Citigroup, Inc....................... 1,766 92,936 ------------ FINANCIAL SERVICES-2.7% Lehman Brothers Holdings, Inc........ 2,000 129,000 Providian Financial Corp............. 1,000 104,000 ------------ 233,000 ------------ 325,936 ------------ INFORMATION SERVICES -- 2.2% Omnicom Group, Inc................... 2,075 191,419 ------------ SHARES VALUE TECHNOLOGY -- 49.5% ---------- ------------ COMPUTERS-25.5% BMC Software, Inc.*.................. 1,525 $ 30,977 Cisco Systems, Inc.*................. 5,950 320,556 Computer Associates International, Inc................................. 1,800 57,375 EMC Corp.*........................... 3,450 307,266 Microsoft Corp.*..................... 4,675 321,991 Network Appliance, Inc.*............. 1,750 208,250 Oracle Corp.*........................ 7,500 247,500 Siebel Systems, Inc.*................ 2,000 209,875 Sun Microsystems, Inc.*.............. 2,550 282,731 Veritas Software Corp.*.............. 1,725 243,252 ------------ 2,229,773 ------------ ELECTRONICS-11.7% Ciena Corp.*......................... 1,480 155,585 Corning, Inc.*....................... 2,100 160,650 Flextronics International Ltd*....... 2,350 89,300 Nortel Networks Corp................. 3,550 161,525 SCI Systems, Inc.*................... 1,775 76,325 Scientific-Atlanta, Inc.*............ 2,825 193,336 Solectron Corp.*..................... 2,650 116,600 Tellabs, Inc.*....................... 1,425 71,161 ------------ 1,024,482 ------------ SEMICONDUCTORS-7.8% Analog Devices, Inc.*................ 1,700 110,500 Intel Corp........................... 6,000 270,000 Linear Technology Corp............... 1,700 109,756 Texas Instruments, Inc............... 3,900 191,344 ------------ 681,600 ------------ TELECOMMUNICATIONS-4.5% MCI WorldCom, Inc.*.................. 3,000 71,250 Nextel Communications, Inc.*......... 1,800 69,187 Sprint Corp. (FON Group)............. 1,775 45,263 XO Communications, Inc.*............. 6,200 209,153 ------------ 394,853 ------------ 4,330,708 ------------ TOTAL COMMON STOCKS (cost $8,292,866)................... 8,607,545 ------------ PRINCIPAL AMOUNT COMMERCIAL PAPER -- 1.9% ---------- (amortized cost $167,000) National Australia Funding 6.581%, 11/01/00**.................. $ 167,000 167,000 ------------ TOTAL INVESTMENTS -- 100.2% (cost $8,459,866)................... 8,774,545 ------------ LIABILITIES NET OF CASH AND OTHER ASSETS -- (0.2)%.......... (15,059) ------------ NET ASSETS -- 100.0%................. $ 8,759,486 ------------ ------------
* Non-income producing ** Commercial paper is traded on a discount basis; the interest rate shown reflects the discount rate paid at the time of purchase by the Fund. See notes to financial statements. DLJ MUTUAL FUNDS -- STATEMENT OF INVESTMENTS October 31, 2000 - -------------------------------------------------------------------------------- DLJ INTERNATIONAL EQUITY FUND
SHARES U.S. $ VALUE COMMON STOCKS -- 94.1% ------------ ------------ AUSTRALIA-0.7% National Australia Bank Ltd........ 4,410 $ 61,239 Normandy Mining Ltd................ 46,400 22,359 Qantas Airways Ltd................. 42,100 84,639 Telstra Corporation Ltd............ 36,150 117,931 The News Corporation Ltd........... 9,810 102,576 Woodside Petroleum Ltd............. 8,100 59,178 ----------- 447,922 ----------- BELGIUM-1.8% Fortis Cl.`B'...................... 10,970 335,664 Dexia NPV.......................... 5,129 780,347 ----------- 1,116,011 ----------- DENMARK-0.3% Tele Danmark AS.................... 4,510 213,146 ----------- FINLAND-2.0% Oy Nokia (Ab) Ser `A'.............. 30,400 1,249,444 ----------- FRANCE-13.5% Accor SA........................... 8,000 323,444 Air Liquide SA..................... 2,350 277,466 Alcatel Alsthom.................... 14,354 874,768 Aventis SA......................... 12,579 906,267 CAP Gemini SA...................... 2,100 334,632 Carrefour SA....................... 3,646 244,447 Danone Groupe...................... 2,620 365,973 Lafarge SA......................... 11,459 845,000 Lagardere S.C.A.................... 2,937 166,541 LVMH (Moet-Hennessy Louis Vuitton).......................... 4,300 313,442 Pinault-Printemps-Redoute SA....... 1,500 267,375 Publicis Groupe SA................. 3,250 106,194 Rhodia SA.......................... 10,365 129,496 STMicroelectronics NV.............. 11,250 566,885 Suez Lyonnaise des Eaux SA......... 2,350 358,136 Television Francaise............... 6,180 336,814 Total Fina SA...................... 10,392 1,485,072 Vivendi............................ 8,140 584,386 ----------- 8,486,338 ----------- GERMANY-4.9% Allianz AG......................... 2,681 910,102 Bayerische Vereinsbank AG.......... 5,450 298,876 BASF AG............................ 6,089 239,472 Deutsche Lufthansa AG.............. 14,959 295,427 Deutsche Telecom AG................ 13,220 493,592 SAP AG Vorzug...................... 4,140 836,912 ----------- 3,074,381 ----------- HONG KONG-7.1% Cheung Kong (Holdings) Ltd......... 60,000 663,538 China Resources Enterprises Ltd.... 110,000 124,117 China Telecom (Hong Kong) Ltd*..... 172,000 1,108,205 Citic Pacific Ltd.................. 170,000 682,258 Hong Kong & China Gas Company Ltd............................... 309,100 390,383 Hong Kong Electric Holdings........ 55,000 181,591 Hutchison Whampoa Ltd.............. 49,500 614,061 I-Cable Communications Ltd*........ 235 86 New World China Land Ltd........... 190 61 New World Development Company Ltd............................... 125,000 148,254 Shanghai Industrial Holdings Ltd............................... 156,000 294,034 SmarTone Telecommunications Holdings Ltd...................... 61,000 90,337 Wharf (Holdings) Ltd............... 94,000 191,638 ----------- 4,488,563 ----------- SHARES U.S. $ VALUE ------------ ------------ ITALY-7.0% Autogrill SPA...................... 29,412 $ 324,334 Banca Nazionale del Lavoro SPA..... 80,000 259,027 ENI SPA............................ 100,658 544,327 Italcementi SPA.................... 28,342 224,852 Saipem SPA......................... 141,700 737,444 San Paolo-IMI SPA.................. 100,353 1,624,630 Seat Pagine Gialle SPA............. 210,000 404,941 Telecom Italia SPA................. 25,752 297,944 ----------- 4,417,499 ----------- IRELAND-0.4% Bank of Ireland Plc................ 35,720...... 271,948 ----------- JAPAN-18.2% Bank of Tokyo - Mitsubishi Ltd..... 36,000 431,578 Canon, Inc......................... 12,000 475,868 Daiwa Securities Group, Inc........ 15,000 166,087 Fujitsu Ltd........................ 10,000 178,038 Fujitsu Support and Service, Inc............................... 2,000 242,879 Hitachi Ltd........................ 40,000 428,611 Ito EN Ltd......................... 8,000 575,144 Ito-Yokado Co. Ltd................. 10,000 451,507 Japan Airlines Co. Ltd............. 50,000 200,110 Japan Tobacco Inc.................. 39 267,882 Minebea Co. Ltd.................... 24,000 239,582 Mitsubishi Chemical Corp. Ltd...... 130,000 410,752 Mitsui Fudosan Co. Ltd............. 34,000 411,649 NEC Corp. Ltd...................... 15,000 285,740 Nintendo Co. Ltd................... 3,000 499,222 Nippon Express Co. Ltd............. 55,000 329,929 Nippon Telegraph & Telephone Corp. Ltd............................... 83 754,822 NTT Mobile Communication Network, Inc............................... 20 492,719 Sekisui House Ltd.................. 41,000 433,318 Shiseido Co. Ltd................... 21,000 271,179 Sony Corp. Ltd..................... 9,000 718,747 Sumitomo Bakelite Co. Ltd.......... 40,000 447,294 Sumitomo Bank Ltd.................. 30,000 364,044 Takeda Chemical Industries Ltd..... 16,000 1,053,576 TDK Corp. Ltd...................... 4,000 402,967 The Asahi Bank Ltd................. 100,000 393,809 Toyota Motor Corp. Ltd............. 12,000 479,165 World Co. Ltd...................... 3,000 110,450 ----------- 11,516,668 ----------- NETHERLANDS-4.5% Heineken NV........................ 9,236 501,020 ING Groep NV....................... 16,218 1,112,357 Koninklijke (Royal) Philips Electronics NV.................... 18,167 713,097 VNU NV............................. 10,524 495,068 ----------- 2,821,542 ----------- PORTUGAL-0.8% Banco Portugues SA................. 55,236 275,758 Portugal Telecom SA................ 26,695 237,580 ----------- 513,338 ----------- SINGAPORE-0.5% Fraser & Neave Ltd................. 15,100 52,469 Singapore Airlines Ltd............. 10,900 108,659 Total Access Communication Public Company Ltd....................... 44,000 139,920 ----------- 301,048 -----------
See notes to financial statements. DLJ MUTUAL FUNDS -- STATEMENT OF INVESTMENTS October 31, 2000 (continued) - -------------------------------------------------------------------------------- DLJ INTERNATIONAL EQUITY FUND
SHARES U.S. $ VALUE ------------ ------------ SPAIN-2.7% Banco Santander SA................. 50,000 $ 483,980 Endesa SA.......................... 19,820 322,549 Grupo Dragados SA.................. 31,813 308,746 Telefonica SA...................... 31,387 597,783 ----------- 1,713,058 ----------- SWEDEN-2.0% Nordbanken Holding AB.............. 44,650 334,207 Telefonaktiebolaget LM Ericsson AB................................ 68,236 905,727 Tele1 Europe Holding AB*........... 4,080 31,353 ----------- 1,271,287 ----------- SWITZERLAND-6.2% Nestle SA.......................... 463 959,165 Novartis AG -- Reg. Shares......... 612 928,160 Roche Holding AG................... 40 365,274 Schindler Holding AG............... 200 291,975 UBS -- Union Bank of Switzerland Ltd............................... 5,698 789,056 Zurich Allied AG................... 1,156 559,324 ----------- 3,892,954 ----------- UNITED KINGDOM-21.5% AstraZeneca Group Plc.............. 6,500 304,669 Bank of Scotland Plc............... 50,909 475,321 Barclays Plc....................... 26,532 759,728 BG Group Plc....................... 100,000 400,766 BP Amoco Plc....................... 97,011 823,354 British Aerospace Plc.............. 58,642 333,366 British Telecommunications Plc..... 55,184 647,449 SHARES U.S. $ VALUE ------------ ------------ Cable & Wireless Plc............... 27,498 $ 389,302 Carlton Communications Plc......... 10 81 CGU Plc............................ 15,000 200,818 Dimension Data Holdings Plc........ 64,000 561,304 EMAP Plc........................... 12,000 141,139 Energis Plc*....................... 52,620 450,418 Glaxo Wellcome Plc................. 27,808 801,111 Invensys Plc....................... 230,970 551,700 Kingfisher Plc..................... 44,266 264,819 Lattice Group Plc.................. 100,000 213,451 Prudential Corporation Plc......... 49,835 670,804 Reed International Plc............. 67,700 626,195 Royal Bank of Scotland Group Plc... 45,252 1,016,505 Sema Group Plc..................... 16,070 203,011 Shell Transport & Trading Co. Plc............................... 175,057 1,409,491 Smithkline Beecham Plc............. 18,788 242,802 Tesco Plc.......................... 61,860 236,011 Vodafone Group Plc................. 444,671 1,851,499 ----------- 13,575,114 ----------- TOTAL INVESTMENTS -- 94.1% (cost $54,282,569).............. 59,370,261 ----------- CASH AND OTHER ASSETS NET OF LIABILITIES -- 5.9%........ 3,701,316 ----------- NET ASSETS -- 100.0%............... $63,071,577 ----------- -----------
* Non-income producing - -------------------------------------------------------------------------------- DLJ DEVELOPING MARKETS FUND
SHARES U.S. $ VALUE COMMON STOCKS -- 86.9% ------------ ------------ ARGENTINA-0.7% Perez Companc...................... 36,000 $ 51,850 Telefonica de Argentina SA ADR..... 3,000 51,563 ----------- 103,413 ----------- CHILE-2.4% Banco de A. Edwards SA ADR*........ 7,000 84,000 Cia Cervecerias Unidas SA ADR...... 5,000 96,563 Cia de Telecomunicaciones de Chile SA ADR............................ 6,000 91,500 Empresa Nacional Electricida SA ADR............................... 10,000 105,000 Quimica Minera Chile SA ADR........ 169 3,127 ----------- 380,190 ----------- CHINA-8.7% China Everbright International Ltd*.............................. 1,516,000 58,314 China Petroleum and Chemical Corporation Ltd*.................. 550,000 107,897 China Resources Enterprise Ltd..... 124,000 139,914 China Telecom (Hong Kong) Ltd...... 93,000 599,204 China Unicom Ltd*.................. 50,000 100,332 Citic Pacific Ltd.................. 50,000 200,664 PetroChina Company Ltd............. 678,000 142,570 ----------- 1,348,895 ----------- CZECH REPUBLIC-0.6% Ceske Energeticke Zavody AS*....... 40,000 97,380 ----------- GREECE-4.0% Alpha Bank SA...................... 6,000 221,285 Hellenic Telecommunications Organization SA................... 9,000 156,868 Panafon Hellenic Telecom SA........ 12,000 99,563 SHARES U.S. $ VALUE ------------ ------------ Titan Cement Company SA............ 4,000 $ 143,681 ----------- 621,397 ----------- HUNGARY-1.9% Gedeon Richter Rt.................. 2,020 97,718 Graphisoft NV...................... 7,500 94,163 Magyar Tavkozlesi Rt.*............. 3,900 91,650 Mol Magyar Olaj GDR................ 1,000 15,350 ----------- 298,881 ----------- INDIA-4.8% Grasim Industries Ltd. GDR......... 18,000 94,500 ICICI Bank Ltd.*................... 19,000 90,250 Infosys Technologies SP ADR........ 2,000 275,000 Mahindra & Mahindra Ltd. GDR*...... 29,000 82,650 Ranbaxy Laboratories GDR........... 7,000 121,625 Videsh Sanchar ADR*................ 11,000 82,139 ----------- 746,164 ----------- ISRAEL-4.7% Check Point Software Technologies Ltd.*............................. 2,610 413,359 ECI Telecom Ltd.................... 3,000 70,875 Nice-Systems Ltd. ADR.............. 1,000 46,750 Orbotech Ltd....................... 1,500 79,406 Teva Pharmaceutical Industries Ltd............................... 2,000 118,250 ----------- 728,640 ----------- MALAYSIA-5.5% Malayan Banking Bhd................ 59,000 236,000 Resorts World Bhd.................. 76,000 133,000 Telecom Malaysia Bhd............... 41,000 126,237 Tenaga Nasional Bhd................ 62,400 201,979
See notes to financial statements. DLJ MUTUAL FUNDS -- STATEMENT OF INVESTMENTS October 31, 2000 (continued) - -------------------------------------------------------------------------------- DLJ DEVELOPING MARKETS FUND
SHARES U.S. $ VALUE ------------ ------------ Unisem (M) Bhd..................... 23,000 $ 81,105 United Engineers Bhd............... 50,000 71,053 YTL Corporation Bhd Warrants....... 3,650 860 ----------- 850,234 ----------- MEXICO-11.3% Cifra SA de CV Ser.`V'............. 162,000 390,168 Fomento Economico Mexicano SA de CV................................ 95,000 362,311 Grupo Carso SA de CV Ser.`A1'*..... 18,000 40,343 Grupo Financiero Banamex Accival SA de CV............................. 123,000 191,495 Grupo Iusacell SA de CV ADR*....... 13,000 169,000 Grupo Televisa SA GDR*............. 5,000 270,624 Telefonos de Mexico SA Cl.`L' ADR............................... 6,200 334,413 ----------- 1,758,354 ----------- MOROCCO-0.3% Managem............................ 775 41,409 ----------- PHILIPPINES-0.7% SM Prime Holdings Inc.............. 1,469,000 114,878 ----------- POLAND-1.3% Bank Slaski SA..................... 2,000 79,845 Polski Koncern Naftowy Orlen SA.... 8,000 62,000 Telekomukacja Polska SA............ 12,000 59,141 ----------- 200,986 ----------- RUSSIA-3.1% OAO Lukoil Holding ADR............. 4,000 249,000 Surgutneftegaz ADR................. 10,000 128,750 Unified Energy Systems ADR......... 8,000 100,500 ----------- 478,250 ----------- SOUTH AFRICA-5.6% De Beers Centenary AG.............. 5,000 137,590 Impala Platinum Holdings LTD....... 3,000 128,594 M-Cell Ltd......................... 54,000 200,034 Nedcor Ltd......................... 9,000 169,077 Sappi Ltd.......................... 12,000 82,236 Sasol Ltd.......................... 20,000 153,201 ----------- 870,732 ----------- SOUTH KOREA-11.3% Hyundai Motor Co. Ltd.............. 22,000 251,429 Korea Electrical Power ADR......... 30,000 365,625 Samsung Electronics GDR............ 8,000 590,000 Samsung Electro-Mechanics Co. Ltd............................... 4,000 128,000 Shinhan Bank Ltd................... 24,000 240,527 SK Telecom Co. Ltd ADR............. 7,500 187,969 ----------- 1,763,550 ----------- TAIWAN-12.2% Acer, Inc.*........................ 33,250 137,988 Asustek Computer Inc............... 19,000 94,527 Cathay Construction Corp........... 50 12 Cathay Life Insurance Co. Ltd...... 108,804 195,007 Chinatrust Commercial Bank......... 181,680 115,090 Evergreen Marine Corp.............. 987 616 Far Eastern Textile Ltd............ 35 29 Formosa Chemicals & Fibre Corp..... 191 148 Formosa Plastic Corp............... 89,000 141,637 Hon Hai Precision Industry*........ 24,613 128,537 Hua Nan Commercial Bank............ 346 284 International Commercial Bank of China............................. 771 569 Microtek International, Inc.*...... 980 164 Pacific Electrical Wire & Cable Corp.*............................ 898 373 SHARES U.S. $ VALUE ------------ ------------ Taiwan Semiconductor Manufacturing Co. Ltd*.......................... 28,000 $ 635,250 U-Ming Marine Transport Corp....... 211 48 United Microelectronics Corp....... 208,000 366,367 Winbond Electronics Corp........... 84,000 81,246 Yang Ming Marine Transport......... 849 308 ----------- 1,898,200 ----------- THAILAND-1.8% Advanced Info Service Co. Ltd.*.... 11,000 78,527 Hana Microelectronics Co. Ltd...... 18,000 43,788 Siam City Cement Public Co. Ltd.... 33,000 79,527 Thai Farmers Bank Public Co. Ltd............................... 152,000 78,618 ----------- 280,460 ----------- TURKEY-4.0% Aygaz AS........................... 894,000 39,276 Efes Sinai Holding AS*............. 10,462,000 114,910 Haci Omer Sabanci Holding AS....... 11,199,000 113,164 Turkcell Iletisim Hizmetleri AS*... 2,000,000 87,869 Vestel Elektronik Sanayi ve Ticaret AS*............................... 333,000 68,274 Yapi ve Kredi Bankasi AS........... 22,703,020 196,164 ----------- 619,657 ----------- UNITED KINGDOM-1.6% Dimension Data Holdings Plc........ 15,000 128,990 Old Mutual Plc..................... 52,000 114,204 ----------- 243,194 ----------- VENEZUELA-0.4% Compania Anonima Nacional Telefonos de Venezuela...................... 3,000 57,000 ----------- TOTAL COMMON STOCKS (cost $15,708,686)................ 13,501,864 ----------- PREFERRED STOCKS -- 13.3% BRAZIL-13.3% Banco Bradesco SA Prf.............. 18,186,000 112,442 Companhia de Bebidas das Americas SA Prf*........................... 1,440,000 321,433 Centrais Electricas Brasileiras SA Prf Cl.`B'........................ 10,722,000 190,451 Companhia Energetica de Minas Gerais SA Prf..................... 5,757,000 87,418 Companhia Vale do Rio Doce SA Prf............................... 15,000 345,821 Embratel Participacoes SA Prf...... 10,722,000 172,080 Empresa Brasileira de Aeronautica SA ADR*........................... 4,200 121,538 Petroleo Brasileiro SA Prf......... 17,000 450,810 Tele Celular Sul Participacoes SA Prf............................... 5,950,000 70,396 Tele Norte Leste Participacoes SA Prf*.............................. 5,477,000 119,613 Unibanco-Uniao de Bancos Brasileiros SA.................... 2,654,730 68,145 ----------- TOTAL PREFERRED STOCKS (cost $1,950,725)................. 2,060,147 ----------- TOTAL INVESTMENTS -- 100.2% (cost $17,659,411)................ 15,562,011 ----------- LIABILITIES NET OF CASH AND OTHER ASSETS -- (0.2)%............ (23,904) ----------- NET ASSETS -- 100.0%............... $15,538,107 ----------- -----------
* Non-income producing See notes to financial statements. DLJ MUTUAL FUNDS -- STATEMENT OF INVESTMENTS October 31, 2000 - -------------------------------------------------------------------------------- DLJ FIXED INCOME FUND
PRINCIPAL U.S. GOVERNMENT AMOUNT VALUE OBLIGATIONS -- 33.4% ----------- ------------ United States Treasury Bills 6.375%, 03/31/01................... $ 4,650,000 $ 4,650,651 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 6.500%, 03/31/02................... 4,000,000 4,020,000 6.250%, 08/31/02................... 5,000,000 5,023,650 6.250%, 02/15/03................... 1,250,000 1,258,625 6.500%, 08/15/05................... 2,300,000 2,364,446 7.000%, 07/15/06................... 7,100,000 7,486,737 6.000%, 08/15/09................... 3,000,000 3,032,070 6.500%, 02/15/10................... 2,250,000 2,355,997 ------------ TOTAL U.S. GOVERNMENT OBLIGATIONS (cost $45,551,151)................. 45,737,734 ------------ U.S. GOVERNMENT AGENCIES -- 20.1% Federal Home Loan Bank 7.360%, 07/01/04................... 6,000,000 6,166,020 Federal Home Loan Mortgage Corp. Pool #220016 8.750%, 10/01/01...... 1,793 1,814 6.000%, 07/19/04................... 2,000,000 1,951,700 6.875%, 11/22/06................... 500,000 492,040 7.625%, 09/09/09................... 3,000,000 2,991,300 Pool #260499 10.000%, 04/01/16..... 13,863 14,803 Pool #292065 8.500%, 04/01/17...... 1,519,982 1,571,753 Pool #606523 7.008%, 10/01/19...... 787,253 801,503 Federal National Mortgage Association Pool #312088 7.000%, 06/01/02...... 443,543 442,572 Pool #76368 9.250%, 09/01/03....... 25,738 26,993 Pool #76378 9.250%, 09/01/03....... 39,329 41,246 5.625%, 05/14/04................... 3,625,000 3,527,705 5.750%, 06/15/05................... 3,000,000 2,910,210 6.950%, 11/13/06................... 1,000,000 986,010 Pool #125136 8.000%, 07/01/07...... 588,647 599,496 Pool # 035574 8.750%, 10/01/08..... 85,310 87,576 Pool #004542 12.000%, 12/01/08..... 198,806 223,345 Pool #243876 9.000%, 01/01/09...... 142,548 147,002 6.375%, 06/15/09................... 2,404,000 2,355,559 Pool #270674 9.000%, 09/01/17...... 375,492 387,226 Pool #224635 9.000%, 09/01/20...... 77,358 79,776 Pool #124211 7.410%, 12/01/21...... 1,103,948 1,118,642 Pool #124790 9.000%, 02/01/23...... 407,388 420,119 Government National Mortgage Association Pool #93401 9.500%, 01/15/10....... 111,954 115,837 Pool #058985 11.000%, 07/15/13..... 11,449 12,547 Pool #068764 12.000%, 09/15/13..... 17,163 19,324 Pool #296254 9.500%, 09/15/20...... 4,539 4,721 ------------ TOTAL U.S. GOVERNMENT AGENCIES (cost $27,845,545)................. 27,496,839 ------------ CORPORATE BONDS -- 40.5% CONSUMER PRODUCTS & SERVICES-6.5% Anheuser Busch Cos. 7.000%, 09/01/05................... 1,500,000 1,498,125 Coca-Cola Enterprises 6.700%, 10/15/36................... 4,100,000 4,059,000 Tyco International Group, Inc. 6.375%, 06/15/05................... 3,500,000 3,390,625 ------------ 8,947,750 ------------ PRINCIPAL AMOUNT VALUE ----------- ------------ COMPUTERS-2.4% Hewlett-Packard Co. 7.150%, 06/15/05................... $ 3,250,000 $ 3,258,125 ------------ FINANCIAL-19.8% Barclays Bank PLC 7.400%, 12/15/09................... 2,500,000 2,487,500 Ford Motor Credit Co. 7.375%, 10/28/09................... 5,000,000 4,887,500 J.P. Morgan & Co. 5.750%, 02/25/04................... 3,000,000 2,883,750 Household Finance Co. 6.000%, 05/01/04................... 4,550,000 4,379,375 MBNA Master Credit Card Trust 6.450%, 02/15/08................... 5,000,000 4,938,250 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 ------------ 23,814,070 ------------ PUBLIC UTILITIES-5.0% Consolidated Natural Gas Co. 6.875%, 10/15/26................... 2,000,000 1,952,500 National Rural Utilities Cooperative Finance Corp. 6.125%, 05/15/05................... 1,000,000 968,750 Oklahoma Gas & Electric Co. 6.500%, 07/15/17................... 4,000,000 3,925,000 ------------ 6,846,250 ------------ TELECOMMUNICATIONS-6.8% AT&T Corp. 6.000%, 03/15/09................... 5,000,000 4,393,750 MCI Communications Corp. 6.125%, 04/15/02................... 5,000,000 4,937,500 ------------ 9,331,250 ------------ TOTAL CORPORATE BONDS (cost $54,031,267)................. 52,197,445 ------------ COMMERCIAL PAPER -- 5.0% (amortized cost $6,900,418) DaimlerChrysler AG 6.448%, 11/01/00*.................. 1,500,000 1,500,000 Merrill Lynch & Co., Inc. 6.553%, 11/02/00*.................. 3,200,000 3,199,418 National Australia Funding 6.581%, 11/01/00*.................. 2,201,000 2,201,000 ------------ 6,900,418 ------------ TOTAL INVESTMENTS -- 99.0% (cost $134,328,381)................ 132,332,436 ------------ CASH AND OTHER ASSETS NET OF LIABILITIES -- 1.0%......... 1,368,234 ------------ NET ASSETS -- 100.0%................ $133,700,670 ------------ ------------
* Commercial paper is traded on a discount basis; the interest rate shown reflects the discount rate paid at the time of purchase by the Fund. See notes to financial statements. DLJ MUTUAL FUNDS -- STATEMENT OF INVESTMENTS October 31, 2000 - -------------------------------------------------------------------------------- DLJ MUNICIPAL TRUST FUND
PRINCIPAL AMOUNT VALUE MUNICIPAL BONDS -- 98.2% ----------- ------------ COLORADO-6.9% Denver, Colorado City & County Airport 6.750%, 11/15/22................... $ 1,580,000 $ 1,629,375 ------------ ILLINOIS-11.3% Chicago, Illinois General Obligation 5.250%, 01/01/10................... 500,000 513,750 Chicago, Illinois Metropolitan Water Reclamation District 5.750%, 12/01/01................... 1,000,000 1,013,600 Chicago, Illinois Metropolitan Water Reclamation District 7.000%, 01/01/11................... 1,000,000 1,157,500 ------------ 2,684,850 ------------ INDIANA-4.6% Indiana University Revenue Student Fee Ser. K 6.500%, 08/01/05................... 1,000,000 1,082,500 ------------ IOWA-4.4% Iowa Student Loan Liquidation Corp. 6.800%, 03/01/05................... 1,000,000 1,038,750 ------------ NEW YORK-9.1% New York City, New York Ser. G 5.750%, 02/01/08................... 1,000,000 1,056,250 New York State Dormitory Authority Revenue 6.500%, 05/15/06................... 1,000,000 1,086,250 ------------ 2,142,500 ------------ OKLAHOMA-7.1% Grand River Dam Authority, Oklahoma 6.250%, 06/01/11................... 1,500,000 1,678,125 ------------ PUERTO RICO-5.8% Puerto Rico Commonwealth Refunding 5.100%, 07/01/02................... 1,000,000 1,012,500 Puerto Rico Electric Power Authority 6.000%, 07/01/11................... 330,000 367,125 ------------ 1,379,625 ------------ TENNESSEE-4.4% Memphis, Tennessee Electric System 6.000%, 01/01/05................... 1,000,000 1,055,000 ------------ PRINCIPAL AMOUNT VALUE ----------- ------------ TEXAS-36.0% Dallas, Texas Improvement 4.000%, 02/15/04................... $ 1,000,000 $ 977,500 Houston, Texas Revenue 5.000%, 03/01/05................... 2,000,000 2,032,500 Plano, Texas Independent School District 6.000%, 02/15/05................... 2,000,000 2,107,500 Port Authority of Houston, Texas 5.375%, 10/01/05................... 1,275,000 1,321,219 San Antonio, Texas Electric & Gas 5.000%, 02/01/12................... 1,000,000 1,000,000 Texas State Refunding Ser. A 6.000%, 10/01/08................... 1,000,000 1,086,250 ------------ 8,524,969 ------------ WASHINGTON-4.3% Washington State General Obligation 5.000%, 01/01/05................... 1,000,000 1,016,250 ------------ WISCONSIN-4.3% Wisconsin State Clean Water Revenue 5.000%, 06/01/03................... 1,000,000 1,013,750 ------------ TOTAL MUNICIPAL BONDS (cost $22,906,131)................. 23,245,694 ------------ COMMERCIAL PAPER -- 0.7% (amortized cost $157,000) National Australia Funding 6.581%, 11/01/00*.................. 157,000 157,000 ------------ TOTAL INVESTMENTS -- 98.9% (cost $23,063,131)................. 23,402,694 ------------ CASH AND OTHER ASSETS NET OF LIABILITIES -- 1.1%......... 270,974 ------------ NET ASSETS -- 100.0%................ $ 23,673,668 ------------ ------------
* Commercial paper is traded on a discount basis; the interest rate shown reflects the discount rate paid at the time of purchase by the Fund. See notes to financial statements. DLJ MUTUAL FUNDS -- STATEMENT OF INVESTMENTS October 31, 2000 - -------------------------------------------------------------------------------- DLJ HIGH INCOME FUND
PRINCIPAL AMOUNT VALUE BONDS -- 84.6% ----------- ----------- AEROSPACE-1.7% BE Aerospace, Inc. Ser. B 8.000%, 03/01/08**.................. $250,000 $ 232,500 ----------- CHEMICALS-5.2% Avecia Group, Inc. 11.000%, 07/01/09**................. 250,000 241,250 Huntsman ICI Chemicals LLC 10.125%, 07/01/09**................. 250,000 238,750 Lyondell Chemical Co. 10.875%, 05/01/09**................. 250,000 240,625 ----------- 720,625 ----------- CAPITAL GOODS-1.8% Actuant Corp. 13.000%, 05/01/09*,**............... 250,000 246,250 ----------- CONSUMER NON-DURABLE-1.6% Consolidated Container Co. LLC 10.125%, 07/15/09**................. 250,000 226,250 ----------- ENERGY-2.0% R&B Falcon Corp. 9.500%, 12/15/08**.................. 250,000 268,125 ----------- FINANCIAL SERVICES-3.5% AmeriCredit Corp. 9.875%, 04/15/06**.................. 250,000 245,625 Metris Companies, Inc. 10.125%, 07/15/06**................. 250,000 237,500 ----------- 483,125 ----------- FOOD & TOBACCO-6.5% Advantica Restaurant Group, Inc. 11.250%, 01/15/08**................. 250,000 121,250 Canandaigua Brands, Inc. 8.500%, 03/01/09**.................. 250,000 252,200 National Wine & Spirits Holdings Corp. 10.125%, 01/15/09**................. 250,000 233,750 Triarc Consumer Group, Inc. 10.250%, 02/15/09**................. 250,000 281,250 ----------- 888,450 ----------- FOREST PRODUCTS/CONTAINERS-2.9% Packaging Corp. of America 9.625%, 04/01/09**.................. 250,000 256,250 Phoenix Color Corp. 10.375%, 02/01/09**................. 180,000 147,600 ----------- 403,850 ----------- GAMING/LEISURE-5.5% Argosy Gaming Co. 10.750%, 06/01/09**................. 250,000 262,500 Mohegan Tribal Gaming 8.750%, 01/01/09**.................. 250,000 245,000 Station Casinos, Inc. 10.125%, 03/15/06**................. 250,000 252,500 ----------- 760,000 ----------- SERVICE-1.6% Allied Waste North America, Inc. 10.000%, 08/01/09**................. 250,000 215,000 ----------- TELECOMMUNICATIONS-15.0% Covad Communications Group, Inc. 12.000%, 02/15/10**................. 250,000 116,250 Crown Castle International Corp. 9.000%, 05/15/11**.................. 250,000 237,500 Esat Telecom Group PLC Ser. B 11.875%, 12/01/08**................. 250,000 296,250 PRINCIPAL AMOUNT VALUE ----------- ----------- Hermes Europe Railtel BV 11.500%, 08/15/07**................. $ 250,000 $ 113,750 Nextlink Communications, Inc. 10.750%, 06/01/09**................. 250,000 220,625 NTL, Inc. Ser. B 12.375%, 10/01/08**,***............. 250,000 147,500 Pegasus Communications Corp. 9.750%, 12/01/06**.................. 250,000 245,000 Primus Telecommunications Group, Inc. 11.750%, 08/01/04**................. 250,000 123,750 PSI Net, Inc. Ser. B 10.000%, 02/15/05**................. 250,000 120,625 Time Warner Telecom, Inc. 9.750%, 07/15/08**.................. 250,000 222,500 Williams Communications Group, Inc. 10.875%, 10/01/09**................. 250,000 211,875 ----------- 2,055,625 ----------- HEALTHCARE-5.6% Express Scripts, Inc. 9.625%, 06/15/09**.................. 250,000 253,125 ICN Pharmaceutical, Inc. 8.750%, 11/15/08*................... 250,000 249,375 King Pharmaceutical, Inc. 10.750%, 02/15/09**................. 250,000 265,000 ----------- 767,500 ----------- HOUSING-1.7% HMH Properties 7.875%, 08/01/08**.................. 250,000 231,250 ----------- INFORMATION TECHNOLOGY-1.8% Fairchild Semiconductor Corp. 10.375%, 10/01/07**................. 250,000 246,250 ----------- MANUFACTURING -- MISC.-5.2% BGF Industries, Inc. 10.250%, 01/15/09**................. 250,000 235,000 Gentek, Inc. 11.000%, 08/01/09**................. 250,000 248,750 Riverwood International Corp. 10.875%, 04/01/08**................. 250,000 226,875 ----------- 710,625 ----------- MEDIA/ENTERTAINMENT-9.4% Adelphia Communications Corp. 7.875%, 05/01/09.................... 250,000 197,500 Charter Communications Holdings LLC 8.625%, 04/01/09**.................. 250,000 226,250 Echostar DBS Corp. 9.375%, 02/01/09**.................. 250,000 246,875 Liberty Group, Inc. 9.375%, 02/01/08**.................. 250,000 203,750 Premier Parks, Inc. 9.250%, 04/01/06**.................. 250,000 231,250 United Pan-Europe Communications NV 10.875%, 08/01/09**................. 250,000 186,250 ----------- 1,291,875 ----------- METAL & MINERALS-2.2% Kaiser Aluminum & Chemical Corp. 12.750%, 02/01/03**................. 250,000 188,750 LTV Corp. 8.200%, 09/15/07**.................. 250,000 118,750 ----------- 307,500 ----------- RETAIL-5.2% MusicLand Group, Inc. 9.000%, 06/15/03**.................. 250,000 228,750 Rent-A-Center, Inc. 11.000%, 08/15/08**................. 250,000 246,250
See notes to financial statements. DLJ MUTUAL FUNDS -- STATEMENT OF INVESTMENTS October 31, 2000 (continued) - -------------------------------------------------------------------------------- DLJ HIGH INCOME FUND
PRINCIPAL AMOUNT VALUE ----------- ----------- Simmons Co. Ser. B 10.250%, 03/15/09**................. $ 250,000 $ 233,750 ----------- 708,750 ----------- TRANSPORTATION -- AUTOMOTIVE-6.2% American Axle & Manufacturing Holdings, Inc. 9.750%, 03/01/09**.................. 250,000 224,375 Atlas Air, Inc. 9.375%, 11/15/06**.................. 250,000 246,250 Roller Bearing Company of America Ser. B 9.625%, 06/15/07**........... 250,000 223,750 Venture Holdings Trust 11.000%, 06/01/07**................. 250,000 156,563 ----------- 850,938 ----------- TOTAL BONDS (cost $13,107,117).................. 11,614,488 ----------- PREFERRED STOCKS -- 1.9% SHARES ----------- (cost $291,950) TELECOMMUNICATIONS-1.9% Dobson Communications, Inc........... 291 265,875 ----------- PRINCIPAL COMMERCIAL PAPER -- 11.9% AMOUNT VALUE ----------- ----------- (amortized cost $1,640,000) National Australia Funding 6.581%, 11/01/00'D'................. $ 1,640,000 $ 1,640,000 ----------- TOTAL INVESTMENTS -- 98.4% (cost $15,039,067).................. 13,520,363 ----------- CASH AND OTHER ASSETS NET OF LIABILITIES -- 1.6%.......... 224,226 ----------- NET ASSETS -- 100.0%................. $13,744,589 ----------- -----------
* Security exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from the registration, normally to qualified institutional buyers. As of October 31, 2000, the value of these securities amounted to $495,625 or 3.6% of net assets. ** Security has an effective maturity date less than the stated maturity date due to a call feature. *** Zero coupon until a specified date at which time the stated coupon rate becomes effective until maturity. 'D' Commercial paper is traded on a discount basis; the interest rate shown reflects the discount rate paid at the time of purchase by the Fund. See notes to financial statements. DLJ MUTUAL FUNDS -- STATEMENT OF ASSETS AND LIABILITIES October 31, 2000 - --------------------------------------------------------------------------------
SMALL CORE EQUITY GROWTH AND COMPANY TECHNOLOGY STRATEGIC FUND INCOME FUND VALUE FUND FUND GROWTH FUND ---- ----------- ---------- ---- ----------- ASSETS: Investments in securities, at value (cost $153,483,249, $170,712,918, $147,859,222, $37,467,789, and $8,459,866, respectively)............... $238,769,247 $250,965,559 $208,948,194 $36,656,051 $8,774,545 Cash -- domestic.......................... 73,315 -- -- 17,977 679 Receivable for investment securities sold.................................... -- 675,245 1,414,374 -- -- Receivable for capital stock sold......... 168,440 8,713 23,095 132,611 -- Dividends and interest receivable......... 77,419 285,132 151,118 899 2,492 Reimbursement due from advisor............ -- -- -- -- 7,768 ------------ ------------ ------------ ----------- ---------- Total assets.......................... 239,088,421 251,934,649 210,536,781 36,807,538 8,785,484 ------------ ------------ ------------ ----------- ---------- LIABILITIES: Payable to advisor........................ 119,465 107,948 135,173 4,283 -- Payable to distributor.................... 77,856 67,183 52,879 8,001 2,059 Payable for investment securities purchased............................... -- -- 3,742,368 -- -- Payable for capital stock redeemed........ 64,535 109,445 157,799 -- -- Cash overdraft due to custodian........... -- 50,773 3,107 -- -- Accrued expenses and other liabilities.... 204,559 234,630 363,801 107,598 23,939 ------------ ------------ ------------ ----------- ---------- Total liabilities..................... 466,415 569,979 4,455,127 119,882 25,998 ------------ ------------ ------------ ----------- ---------- NET ASSETS................................... $238,622,006 $251,364,670 $206,081,654 $36,687,656 $8,759,486 ------------ ------------ ------------ ----------- ---------- ------------ ------------ ------------ ----------- ---------- NET ASSETS CONSIST OF: Capital paid-in........................... $143,260,405 $148,739,486 $115,294,512 $39,466,325 $8,649,718 Undistributed net investment income....... -- 1,212,938 375,783 -- -- Accumulated net realized gain (loss) on investments............................. 10,075,603 21,159,605 29,322,387 (1,966,931) (204,911) Net unrealized appreciation (depreciation) on investments.......................... 85,285,998 80,252,641 61,088,972 (811,738) 314,679 ------------ ------------ ------------ ----------- ---------- $238,622,006 $251,364,670 $206,081,654 $36,687,656 $8,759,486 ------------ ------------ ------------ ----------- ---------- ------------ ------------ ------------ ----------- ---------- CLASS A SHARES: Net assets................................ $159,945,469 $162,870,688 $188,501,273 $ 2,913,155 $ 478 ------------ ------------ ------------ ----------- ---------- ------------ ------------ ------------ ----------- ---------- Shares outstanding........................ 7,096,595 6,614,170 8,362,136 227,763 9,097 ------------ ------------ ------------ ----------- ---------- ------------ ------------ ------------ ----------- ---------- Net asset value and redemption value per share................................... $22.54 $24.62 $22.54 $12.79 $10.93 ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ Maximum offering price per share (net asset value plus maximum sales charge)................................. $23.92 $26.12 $23.92 $13.57 $11.60 ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ CLASS B SHARES: Net assets................................ $ 50,233,410 $ 41,194,462 $ 17,255,162 $ 1,272,555 $ 359,117 ------------ ------------ ------------ ----------- ---------- ------------ ------------ ------------ ----------- ---------- Shares outstanding........................ 2,305,013 1,685,549 786,118 99,643 32,864 ------------ ------------ ------------ ----------- ---------- ------------ ------------ ------------ ----------- ---------- Net asset value and offering price per share................................... $21.79 $24.44 $21.95 $12.77 $10.93 ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ CLASS C SHARES: Net assets................................ $ 4,412,358 $ 495,899 $ 219,866 $ 479,235 $ 38,306 ------------ ------------ ------------ ----------- ---------- ------------ ------------ ------------ ----------- ---------- Shares outstanding........................ 202,480 20,331 10,020 37,523 3,504 ------------ ------------ ------------ ----------- ---------- ------------ ------------ ------------ ----------- ---------- Net asset value and offering price per share................................... $21.79 $24.39 $21.94 $12.77 $10.93 ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ CLASS D SHARES: Net assets................................ $ 23,028,747 $ 46,707,695 $ 3,293,904 ------------ ------------ ----------- ------------ ------------ ----------- Shares outstanding........................ 1,018,823 1,895,615 257,587 ------------ ------------ ----------- ------------ ------------ ----------- Net asset value and offering price per share................................... $22.60 $24.64 $12.79 ------ ------ ------ ------ ------ ------ CLASS R SHARES: Net assets................................ $ 1,002,022 $ 95,926 $ 105,353 $28,728,807 $8,262,585 ------------ ------------ ------------ ----------- ---------- ------------ ------------ ------------ ----------- ---------- Shares outstanding........................ 44,432 3,894 4,658 2,246,647 755,256 ------------ ------------ ------------ ----------- ---------- ------------ ------------ ------------ ----------- ---------- Net asset value and offering price per share................................... $22.55 $24.63 $22.62 $12.79 $10.94 ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
See notes to financial statements. DLJ MUTUAL FUNDS -- STATEMENT OF ASSETS AND LIABILITIES October 31, 2000 (continued) - --------------------------------------------------------------------------------
FIXED INTERNATIONAL DEVELOPING INCOME MUNICIPAL HIGH INCOME EQUITY FUND MARKETS FUND FUND TRUST FUND FUND ----------- ------------ ---- ---------- ---- ASSETS: Investments in securities, at value (cost $54,282,569, $17,659,411, $134,328,381, $23,063,131, and $15,039,067, respectively)............................ $59,370,261 $15,562,011 $132,332,436 $23,402,694 $13,520,363 Cash -- foreign, at value (cost $788,817 and $152,271, respectively).............. 776,970 146,061 -- -- -- Cash -- domestic........................... 3,194,853 -- -- -- -- Receivable for capital stock sold.......... 18,395 2,000 50,000 -- -- Dividends and interest receivable.......... 140,742 13,159 2,039,139 370,303 369,780 Reimbursement due from advisor............. -- 71,457 -- -- -- Other assets............................... 89,408 -- 9,440 1,651 -- ----------- ----------- ------------ ----------- ----------- Total assets........................... 63,590,629 15,794,688 134,431,015 23,774,648 13,890,143 ----------- ----------- ------------ ----------- ----------- LIABILITIES: Payable to advisor......................... 64,590 -- 52,301 1,007 8,002 Payable to distributor..................... 15,235 4,754 10,091 5,691 3,664 Payable for capital stock redeemed......... 240,380 2,022 12,000 -- -- Cash overdraft due to custodian............ -- 76,181 655,953 94,151 38,465 Dividend payable........................... -- -- -- 131 -- Accrued expenses and other liabilities..... 198,847 173,624 -- -- 95,423 ----------- ----------- ------------ ----------- ----------- Total liabilities...................... 519,052 256,581 730,345 100,980 145,554 ----------- ----------- ------------ ----------- ----------- NET ASSETS.................................... $63,071,577 $15,538,107 $133,700,670 $23,673,668 $13,744,589 ----------- ----------- ------------ ----------- ----------- ----------- ----------- ------------ ----------- ----------- NET ASSETS CONSIST OF: Capital paid-in............................ $54,242,175 $21,608,032 $138,421,483 $23,462,813 $15,667,540 Accumulated distributions in excess of net investment income........................ -- -- -- (2,492) -- Accumulated net realized gain (loss) on investments.............................. 3,763,140 (3,967,852) (2,724,868) (126,216) (404,247) Net unrealized appreciation/(depreciation) on investments........................... 5,066,262 (2,102,073) (1,995,945) 339,563 (1,518,704) ----------- ----------- ------------ ----------- ----------- $63,071,577 $15,538,107 $133,700,670 $23,673,668 $13,744,589 ----------- ----------- ------------ ----------- ----------- ----------- ----------- ------------ ----------- ----------- CLASS A SHARES: Net assets................................. $52,965,713 $13,294,038 $ 34,950,921 $22,564,727 $10,708,907 ----------- ----------- ------------ ----------- ----------- ----------- ----------- ------------ ----------- ----------- Shares outstanding......................... 4,396,677 1,547,554 3,564,039 2,235,412 1,226,214 ----------- ----------- ------------ ----------- ----------- ----------- ----------- ------------ ----------- ----------- Net asset value and redemption value per share.................................... $12.05 $8.59 $9.81 $10.09 $8.73 ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ Maximum offering price per share (net asset value plus maximum sales charge)......... $12.79 $9.11 $10.30 $10.59 $9.17 ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ CLASS B SHARES: Net assets................................. $ 5,088,876 $ 2,214,010 $ 3,256,257 $ 1,082,464 $ 1,312,937 ----------- ----------- ------------ ----------- ----------- ----------- ----------- ------------ ----------- ----------- Shares outstanding......................... 439,780 267,373 332,052 107,283 150,397 ----------- ----------- ------------ ----------- ----------- ----------- ----------- ------------ ----------- ----------- Net asset value and offering price per share.................................... $11.57 $8.28 $9.81 $10.09 $8.73 ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ CLASS C SHARES: Net assets................................. $ 140,966 $ 11,954 $ 261 $ 260 $ 78,468 ----------- ----------- ------------ ----------- ----------- ----------- ----------- ------------ ----------- ----------- Shares outstanding......................... 12,162 1,447 26 26 8,983 ----------- ----------- ------------ ----------- ----------- ----------- ----------- ------------ ----------- ----------- Net asset value and offering price per share.................................... $11.59 $8.26 $9.81 $10.05 $8.73 ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ CLASS D SHARES: Net assets................................. $ 4,738,190 $ 95,471,436 $ 1,503,575 ----------- ------------ ----------- ----------- ------------ ----------- Shares outstanding......................... 391,789 9,734,448 172,207 ----------- ------------ ----------- ----------- ------------ ----------- Net asset value and offering price per share.................................... $12.09 $9.81 $8.73 ------ ------ ------ ------ ------ ------ CLASS R SHARES: Net assets................................. $ 137,832 $ 18,105 $ 21,795 $ 26,217 $ 140,702 ----------- ----------- ------------ ----------- ----------- ----------- ----------- ------------ ----------- ----------- Shares outstanding......................... 11,436 2,108 2,222 2,597 16,116 ----------- ----------- ------------ ----------- ----------- ----------- ----------- ------------ ----------- ----------- Net asset value and offering price per share.................................... $12.05 $8.59 $9.81 $10.09 $8.73 ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
See notes to financial statements. DLJ MUTUAL FUNDS -- STATEMENT OF OPERATIONS for the year ended October 31, 2000 - --------------------------------------------------------------------------------
SMALL CORE EQUITY GROWTH AND COMPANY TECHNOLOGY STRATEGIC FUND INCOME FUND VALUE FUND FUND* GROWTH FUND* ----------- ----------- ----------- ----------- ------------ INVESTMENT INCOME: Dividends........................ $ 1,720,853 $4,238,489 $ 3,216,557 $ 5,674 $ 28,639 Interest......................... 344,909 251,620 123,339 64,894 17,849 ----------- ----------- ----------- ----------- -------- 2,065,762 4,490,109 3,339,896 70,568 46,488 Less withholding tax on foreign source dividends............... (1,848) -- -- -- -- ----------- ----------- ----------- ----------- -------- Total investment income........ 2,063,914 4,490,109 3,339,896 70,568 46,488 ----------- ----------- ----------- ----------- -------- EXPENSES: Investment advisory fees (Note B)............................. 1,338,293 1,442,618 1,622,703 208,699 47,380 Distribution fees -- Class A (Note B)....................... 444,797 475,998 524,059 1,209 24 Distribution fees -- Class B (Note B)....................... 428,149 408,174 176,261 2,158 550 Distribution fees -- Class C (Note B)....................... 12,245 1,130 363 501 57 Distribution fees -- Class R (Note B)....................... 225 36 19 56,922 15,618 Shareholder servicing fees (Note B)............................. -- -- -- 32,907 8,850 Transfer agent fees.............. 209,000 219,000 264,000 26,800 18,000 Custodian fees................... 106,000 123,000 101,000 67,100 44,000 Registration fees................ 45,000 52,000 58,000 58,000 35,000 Printing fees.................... 23,000 21,000 31,000 14,000 6,000 Legal fees....................... 38,000 40,000 37,000 12,000 5,500 Auditing fees.................... 32,000 23,000 16,000 28,000 9,000 Trustees' fees (Note B).......... 19,000 31,000 27,000 11,000 2,000 Miscellaneous.................... 51,615 43,040 52,146 9,773 2,136 ----------- ----------- ----------- ----------- -------- Total expenses................. 2,747,324 2,879,996 2,909,551 529,069 194,115 Less expenses reimbursed by advisor (Note B)............. -- -- -- (196,374) (118,483) ----------- ----------- ----------- ----------- -------- Net expenses................... 2,747,324 2,879,996 2,909,551 332,695 75,632 ----------- ----------- ----------- ----------- -------- NET INVESTMENT INCOME (LOSS)........ (683,410) 1,610,113 430,345 (262,127) (29,144) ----------- ----------- ----------- ----------- -------- REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS -- NOTE C: Net realized gain (loss) on investments.................... 10,093,654 21,677,713 29,349,170 (1,966,931) (204,911) Net change in unrealized appreciation (depreciation) on investments.................... 16,397,007 (3,306,323) 9,049,299 (811,738) 314,679 ----------- ----------- ----------- ----------- -------- Net realized and unrealized gain (loss) on investments.......... 26,490,661 18,371,390 38,398,469 (2,778,669) 109,768 ----------- ----------- ----------- ----------- -------- INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS.................... $25,807,251 $19,981,503 $38,828,814 $(3,040,796) $ 80,624 ----------- ----------- ----------- ----------- -------- ----------- ----------- ----------- ----------- --------
* The Technology Fund and the Strategic Growth Fund commenced operations on November 18, 1999. See notes to financial statements. DLJ MUTUAL FUNDS -- STATEMENT OF OPERATIONS for the year ended October 31, 2000 (continued) - --------------------------------------------------------------------------------
FIXED INTERNATIONAL DEVELOPING INCOME MUNICIPAL HIGH INCOME EQUITY FUND MARKETS FUND FUND TRUST FUND FUND ------------- ------------ ---------- ---------- ----------- INVESTMENT INCOME: Dividends........................... $ 1,032,613 $ 308,555 $ -- $ -- $ -- Interest............................ 91,880 21,903 9,072,869 1,288,196 1,470,540 ----------- ----------- ---------- ---------- ----------- 1,124,493 330,458 9,072,869 1,288,196 1,470,540 Less withholding tax on foreign source dividends.................. (99,143) (25,433) -- -- -- ----------- ----------- ---------- ---------- ----------- Total investment income........... 1,025,350 305,025 9,072,869 1,288,196 1,470,540 ----------- ----------- ---------- ---------- ----------- EXPENSES: Investment advisory fees (Note B)... 809,279 262,585 837,673 163,791 98,962 Distribution fees -- Class A (Note B)................................ 136,766 44,887 109,539 72,659 27,736 Distribution fees -- Class B (Note B)................................ 57,612 30,488 35,617 9,984 15,943 Distribution fees -- Class C (Note B)................................ 217 18 2 2 95 Distribution fees -- Class R (Note B)................................ 44 4 7 11 227 Transfer agent fees................. 60,000 66,000 57,000 54,000 57,500 Custodian fees...................... 91,000 96,000 93,000 51,000 52,000 Registration fees................... 51,000 37,000 62,000 28,000 46,500 Printing fees....................... 29,500 11,000 18,000 7,000 15,000 Legal fees.......................... 36,000 21,000 30,000 8,000 34,000 Auditing fees....................... 25,000 13,000 23,000 3,000 17,000 Trustees' fees (Note B)............. 11,000 11,000 15,000 5,000 10,000 Amortization of organization costs (Note A).......................... 13,819 13,819 -- -- -- Miscellaneous....................... 25,390 19,902 50,346 2,824 13,415 ----------- ----------- ---------- ---------- ----------- Total expenses.................... 1,346,627 626,703 1,331,184 405,271 388,378 Less expenses reimbursed by advisor and/or subadvisor (Note B).............................. -- (152,177) (188,370) (138,175) (224,209) ----------- ----------- ---------- ---------- ----------- Net expenses...................... 1,346,627 474,526 1,142,814 267,096 164,169 ----------- ----------- ---------- ---------- ----------- NET INVESTMENT INCOME (LOSS)........... (321,277) (169,501) 7,930,055 1,021,100 1,306,371 ----------- ----------- ---------- ---------- ----------- REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS -- NOTE C: Net realized gain (loss) on investments....................... 4,262,030 575,610 (2,206,386) (126,217) (404,247) Net realized loss on foreign currency transactions............. (101,544) (42,582) -- -- -- Net change in unrealized appreciation (depreciation) on investments....................... (5,167,193) (2,832,139) 1,474,288 417,728 (959,036) Net change in unrealized appreciation (depreciation) on translation of foreign currency denominated assets and liabilities....................... (37,551) (28,008) -- -- -- ----------- ----------- ---------- ---------- ----------- Net realized and unrealized gain (loss) on investments and foreign currency transactions............. (1,044,258) (2,327,119) (732,098) 291,511 (1,363,283) ----------- ----------- ---------- ---------- ----------- INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS............................ $(1,365,535) $(2,496,620) $7,197,957 $1,312,611 $ (56,912) ----------- ----------- ---------- ---------- ----------- ----------- ----------- ---------- ---------- -----------
See notes to financial statements. DLJ MUTUAL FUNDS -- STATEMENT OF CHANGES IN NET ASSETS - --------------------------------------------------------------------------------
CORE EQUITY FUND GROWTH AND INCOME FUND --------------------------- --------------------------- YEAR ENDED YEAR ENDED 10/31/00 10/31/99 10/31/00 10/31/99 ------------ ------------ ------------ ------------ OPERATIONS: Net investment income (loss)................ $ (683,410) $ (407,517) $ 1,610,113 $ 1,038,244 Net realized gain on investments............ 10,093,654 13,398,533 21,677,713 7,532,501 Net change in unrealized appreciation on investments............................... 16,397,007 23,871,282 (3,306,323) 18,898,886 ------------ ------------ ------------ ------------ Increase in net assets from operations...... 25,807,251 36,862,298 19,981,503 27,469,631 ------------ ------------ ------------ ------------ DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM: Investment income: Class A................................... -- -- (855,863) (694,625) Class B................................... -- -- -- (16,859) Class C................................... -- -- (436) -- Class D................................... -- -- (343,579) (141,754) Class R................................... -- -- (118) -- Realized gains on investments: Class A................................... (10,289,314) (1,523,410) (5,060,415) (14,556,598) Class B................................... (2,597,317) (279,678) (1,204,657) (3,003,060) Class D................................... (475,552) -- (1,367,048) -- ------------ ------------ ------------ ------------ Total dividends and distributions to shareholders.............................. (13,362,183) (1,803,088) (8,832,116) (18,412,896) ------------ ------------ ------------ ------------ CAPITAL STOCK TRANSACTIONS -- (NET) Note D..... 52,877,730 23,723,233 (23,292,901) 57,190,869 ------------ ------------ ------------ ------------ Total increase (decrease) in net assets..... 65,322,798 58,782,443 (12,143,514) 66,247,604 NET ASSETS: Beginning of year........................... 173,299,208 114,516,765 263,508,184 197,260,580 ------------ ------------ ------------ ------------ End of year (including undistributed net investment income of $1,212,938 and $802,821 for the Growth and Income Fund at 10/31/00 and 10/31/99, respectively)...... $238,622,006 $173,299,208 $251,364,670 $263,508,184 ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ TECHNOLOGY SMALL COMPANY VALUE FUND FUND --------------------------- ------------ YEAR ENDED YEAR ENDED 10/31/00 10/31/99 10/31/00* ------------ ------------ ------------ OPERATIONS: Net investment income (loss)................ $ 430,345 $ 543,857 $ (262,127) Net realized gain (loss) on investments..... 29,349,170 20,499,594 (1,966,931) Net change in unrealized appreciation (depreciation) on investments............. 9,049,299 (9,202,368) (811,738) ------------ ------------ ------------ Increase (decrease) in net assets from operations................................ 38,828,814 11,841,083 (3,040,796) ------------ ------------ ------------ DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM: Investment income: Class A................................... (404,478) (852,298) -- Realized gains on investments: Class A................................... (18,572,467) (168,838) -- Class B................................... (1,941,783) (16,223) -- ------------ ------------ ------------ Total dividends and distributions to shareholders.............................. (20,918,728) (1,037,359) -- ------------ ------------ ------------ CAPITAL STOCK TRANSACTIONS -- (NET) Note D..... (19,277,621) (63,511,227) 39,678,452 ------------ ------------ ------------ Total increase (decrease) in net assets..... (1,367,535) (52,707,503) 36,637,656 NET ASSETS: Beginning of year........................... 207,449,189 260,156,692 50,000 ------------ ------------ ------------ End of year (including undistributed net investment income of $375,783 and $349,206 for the Small Company Value Fund at 10/31/00 and 10/31/99, respectively)...... $206,081,654 $207,449,189 $ 36,687,656 ------------ ------------ ------------ ------------ ------------ ------------
* The Technology Fund commenced operations on November 18, 1999. See notes to financial statements. DLJ MUTUAL FUNDS -- STATEMENT OF CHANGES IN NET ASSETS (continued) - --------------------------------------------------------------------------------
STRATEGIC GROWTH FUND INTERNATIONAL EQUITY FUND ----------- -------------------------- YEAR ENDED YEAR ENDED 10/31/00* 10/31/00 10/31/99 ----------- ----------- ------------ OPERATIONS: Net investment loss.......................... $ (29,144) $ (321,277) $ (267,097) Net realized gain (loss) on investments and foreign currency transactions.............. (204,911) 4,160,486 7,275,061 Net change in unrealized appreciation (depreciation) on investments and foreign currency denominated assets and liabilities................................ 314,679 (5,204,744) 3,065,685 ----------- ----------- ------------ Increase (decrease) in net assets from operations................................. 80,624 (1,365,535) 10,073,649 ----------- ----------- ------------ DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM: Realized gains on investments: Class A.................................... -- (6,041,311) (2,412,264) Class B.................................... -- (724,739) (358,183) Class D.................................... -- (266,755) -- ----------- ----------- ------------ Total dividends and distributions to shareholders............................... -- (7,032,805) (2,770,447) ----------- ----------- ------------ CAPITAL STOCK TRANSACTIONS -- (NET) Note D...... 8,628,862 16,175,904 (2,428,179) ----------- ----------- ------------ Total increase in net assets................. 8,709,486 7,777,564 4,875,023 NET ASSETS: Beginning of year............................ 50,000 55,294,013 50,418,990 ----------- ----------- ------------ End of year.................................. $8,759,486 $63,071,577 $ 55,294,013 ----------- ----------- ------------ ----------- ----------- ------------ DEVELOPING MARKETS FUND FIXED INCOME FUND ------------------------- --------------------------- YEAR ENDED YEAR ENDED 10/31/00 10/31/99 10/31/00 10/31/99 ----------- ----------- ------------ ------------ OPERATIONS: Net investment income (loss)................. $ (169,501) $ 37,837 $ 7,930,055 $ 5,607,375 Net realized gain (loss) on investments and foreign currency transactions.............. 533,028 (470,533) (2,206,386) (554,334) Net change in unrealized appreciation (depreciation) on investments and foreign currency denominated assets and liabilities................................ (2,860,147) 5,298,723 1,474,288 (5,249,092) Contribution from subadvisor................. -- 460,289 -- -- ----------- ----------- ------------ ------------ Increase (decrease) in net assets from operations................................. (2,496,620) 5,326,316 7,197,957 (196,051) ----------- ----------- ------------ ------------ DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM: Investment income: Class A.................................... -- (7,744) (2,046,705) (2,198,867) Class B.................................... -- -- (166,263) (228,041) Class C.................................... -- -- (7) -- Class D.................................... -- -- (5,716,910) (3,180,467) Class R.................................... -- -- (170) -- Realized gains on investments: Class A.................................... -- -- -- (477,719) Class B.................................... -- -- -- (58,661) Tax return of capital: Class A.................................... -- (34,031) -- -- ----------- ----------- ------------ ------------ Total dividends and distributions to shareholders............................... -- (41,775) (7,930,055) (6,143,755) ----------- ----------- ------------ ------------ CAPITAL STOCK TRANSACTIONS -- (NET) Note D...... (672,912) (5,440,079) (29,521,688) 116,610,870 ----------- ----------- ------------ ------------ Total increase (decrease) in net assets...... (3,169,532) (155,538) (30,253,786) 110,271,064 NET ASSETS: Beginning of year............................ 18,707,639 18,863,177 163,954,456 53,683,392 ----------- ----------- ------------ ------------ End of year.................................. $15,538,107 $18,707,639 $133,700,670 $163,954,456 ----------- ----------- ------------ ------------ ----------- ----------- ------------ ------------
* The Strategic Growth Fund commenced operations on November 18, 1999. See notes to financial statements. DLJ MUTUAL FUNDS -- STATEMENT OF CHANGES IN NET ASSETS (continued) - --------------------------------------------------------------------------------
MUNICIPAL TRUST FUND HIGH INCOME FUND -------------------------- ------------------------- YEAR ENDED YEAR ENDED 10/31/00 10/31/99 10/31/00 10/31/99* ----------- ------------ ----------- ----------- OPERATIONS: Net investment income.................................... $ 1,021,100 $ 1,429,752 $ 1,306,371 $ 547,160 Net realized gain (loss) on investments.................. (126,217) 216,865 (404,247) 88,352 Net change in unrealized appreciation (depreciation) on investments............................................ 417,728 (1,926,952) (959,036) (559,668) ----------- ------------ ----------- ----------- Increase (decrease) in net assets from operations........ 1,312,611 (280,335) (56,912) 75,844 ----------- ------------ ----------- ----------- DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM: Investment income: Class A................................................ (988,865) (1,389,791) (1,038,792) (481,082) Class B................................................ (32,042) (39,961) (137,149) (40,859) Class C................................................ (5) -- (728) -- Class D................................................ -- -- (130,131) (25,219) Class R................................................ (187) -- (7,647) -- Realized gains on investments: Class A................................................ (218,980) -- (73,884) -- Class B................................................ (7,797) -- (11,116) -- Class D................................................ -- -- (6,589) -- ----------- ------------ ----------- ----------- Total dividends and distributions to shareholders........ (1,247,876) (1,429,752) (1,406,036) (547,160) ----------- ------------ ----------- ----------- CAPITAL STOCK TRANSACTIONS -- (NET) Note D.................. (7,346,894) (13,070,060) 2,346,807 13,332,046 ----------- ------------ ----------- ----------- Total increase (decrease) in net assets.................. (7,282,159) (14,780,147) 883,859 12,860,730 NET ASSETS: Beginning of year........................................ 30,955,827 45,735,974 12,860,730 -- ----------- ------------ ----------- ----------- End of year.............................................. $23,673,668 $ 30,955,827 $13,744,589 $12,860,730 ----------- ------------ ----------- ----------- ----------- ------------ ----------- -----------
* The High Income Fund commenced operations on March 8, 1999. See notes to financial statements. NOTES TO FINANCIAL STATEMENTS October 31, 2000 - -------------------------------------------------------------------------------- NOTE (A) SIGNIFICANT ACCOUNTING POLICIES. DLJ Mutual Funds (the 'DLJ Funds' or 'Funds') consists of three trusts, DLJ Focus Funds (the 'Focus Funds'), organized as a Massachusetts business trust on November 26, 1985, DLJ Opportunity Funds (the 'Opportunity Funds') and DLJ Select Funds (the 'Select Funds'), each a Delaware business trust organized under the laws of Delaware on May 31, 1995 and August 3, 1999, respectively. Each Trust consists of separate portfolios (the 'Portfolios') and constitute a diversified, open-end investment company registered under the Investment Company Act of 1940, as amended ('Act'). On July 28, 2000, the Funds' Board of Trustees approved, effective August 1, 2000, a change of the Funds' name from 'DLJ Winthrop' to 'DLJ.' The Focus Funds consist of DLJ Core Equity Fund, DLJ Growth and Income Fund, DLJ Small Company Value Fund, DLJ Fixed Income Fund, and DLJ Municipal Trust Fund. The Opportunity Funds consist of DLJ International Equity Fund, DLJ Developing Markets Fund, DLJ Municipal Money Fund, DLJ U.S. Government Money Fund and DLJ High Income Fund. The Municipal Money Fund and the U.S. Government Money Fund are included in a separate report. The Select Funds consist of DLJ Technology Fund and DLJ Strategic Growth Fund. Prior to the commencement of operations on November 18, 1999, the Select Funds had no operations other than the sale and issuance to each of DLJ Asset Management Group and DLJdirect Inc. of 2,500 shares of beneficial interest at $10.00 per share of each of the Technology Fund and the Strategic Growth Fund. Effective August 1, 2000, the then existing shares of the Select Funds were redesignated as Class R shares and the Select Funds commenced offering additional classes of shares. The investment objective of the Core Equity Fund and the Growth and Income Fund is long-term capital appreciation. The Growth and Income Fund also seeks continuity of income. The Strategic Growth Fund seeks long-term growth of capital by investing in equity securities of a limited number of large, carefully selected companies that the Advisor believes will achieve superior growth. The investment objective of the Technology Fund is growth of capital which the Fund seeks to achieve by investing in a broad number of industries that comprise the U.S. domestic technology sector. The investment objective of the Small Company Value Fund is a high level of growth of capital. The Fixed Income Fund aims to 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 nonconvertible debt securities of foreign and domestic companies, including both well-known and established and new and lesser-known companies. The Municipal Trust Fund's investment objective is to provide as high a level of total return as is consistent with capital preservation by investing principally in high-grade tax-exempt municipal securities. The investment objective of the International Equity Fund is to seek long-term growth of capital by investing primarily in common stocks and other equity securities from established markets outside the United States. The Developing Markets Fund seeks DLJ MUTUAL FUNDS -- NOTES TO FINANCIAL STATEMENTS October 31, 2000 (continued) - -------------------------------------------------------------------------------- long-term growth of capital by investing primarily in common stocks and other equity securities from developing countries. The High Income Fund's primary investment objective is to provide a high level of current income and its secondary objective is capital appreciation. Each portfolio offers Class A, Class B, Class C and Class R shares. In addition, Core Equity Fund, Growth and Income Fund, Fixed Income Fund, International Equity Fund, High Income Fund and Technology Fund offer Class D shares exclusively to employees of Credit Suisse First Boston and its subsidiaries who are eligible to participate in the Credit Suisse First Boston Employee's Savings and Profit Sharing Plan. Class A shares of Core Equity Fund, Growth and Income Fund, Small Company Value Fund, International Equity Fund, Developing Markets Fund, Technology Fund and Strategic Growth Fund are sold with a front-end sales charge of up to 5.75%. Class A shares of Fixed Income Fund, Municipal Trust Fund and High Income Fund are sold with a front-end sales charge of up to 4.75%. Class B shares are sold with a contingent deferred sales charge which declines from 4% to zero depending on the period of time the shares are held. Class C shares are sold with a contingent deferred sales charge of 1% if redeemed within the first year of purchase. Class R shares are available for purchase at net asset value by eligible institutions on behalf of their clients. Each class is identical in all respects except that Class A and Class R shares bear similar distribution service fees which are different than Class B and Class C shares; and Class D shares are not subject to any distribution service fees. Class A, Class B, Class C and Class R shares have exclusive voting rights with respect to each class's distribution plan. Each class has different exchange privileges and only Class B shares have a conversion feature. The Funds account separately for the assets, liabilities and operations of each Portfolio. Expenses directly attributable to each Portfolio are charged to that Portfolio's operations; expenses which are applicable to all Portfolios are allocated among them on a pro rata basis. The Funds' financial statements are prepared in accordance with accounting principles generally accepted in the United States which may require the use of management estimates and assumptions. Actual results could differ from those estimates. The following is a summary of significant accounting policies consistently followed by the DLJ Funds. (1) SECURITY VALUATION: Securities and options traded on national exchanges and over-the-counter securities listed in the NASDAQ National Market System are valued at the last reported sales price at the close of the New York Stock Exchange. Securities for which there have been no sales on such day are valued at the mean of the current bid and asked prices. Over-the-counter securities not listed on the NASDAQ National Market System are valued at the mean of the current bid and asked prices. Fixed-income securities, except short-term securities, may be valued on the basis of prices provided by a pricing service when such prices are believed by the Advisor to reflect the fair market value of such securities. The prices provided by a pricing service are determined without regard to bid or last sale prices but take into account institutional size, trading in similar groups of securities and any developments related to the specific securities. Short-term investments, those with a remaining maturity of 60 days or less, are valued at amortized cost, which approximates market value. (2) REPURCHASE AGREEMENTS: The Funds may enter into repurchase agreements with financial institutions, deemed to be creditworthy by the Funds' Advisor, subject to the seller's agreement to repurchase and the Funds' agreement to resell such securities at a mutually agreed-upon price. Securities purchased subject to repurchase agreements are deposited with the Funds' custodian and, pursuant to the terms of the repurchase agreement, must have an aggregate market value greater than or equal to the repurchase price plus accrued interest at all times. If the value of the underlying securities falls below the value of the repurchase price plus accrued interest, the Funds will require the seller to deposit additional collateral by the next business day. If the request for additional collateral is not met, or the seller defaults on its repurchase obligation, the Funds maintain the right to sell the underlying securities at market value and may claim any resulting loss against the seller. (3) FOREIGN CURRENCY TRANSACTIONS: Investment securities and other assets and liabilities denominated in foreign currencies are translated into U.S. dollars at the bid prices of such currencies against the U.S. dollar as of the date of valuation. Purchases and sales of portfolio securities, commitments under forward foreign currency contracts, income receipts and expense accruals are translated at the prevailing exchange rate on the date of each transaction. The Funds do not isolate that portion of the results of operations resulting from changes in foreign exchange rates on investments from the fluctuations arising from changes in market prices of securities held. Such fluctuations are included with the net realized and unrealized gain or loss from investments. Reported net realized gain (loss) on foreign currency transactions arises from sales and maturities of short-term securities, sales of foreign currencies, currency gains or losses realized between the trade and settlement dates on securities transactions, and the difference between the amounts of dividends, interest, and foreign withholding taxes recorded on the fund's books and the U.S. dollar equivalent of the amounts actually received or paid. Net change in unrealized appreciation on translation of foreign currency denominated assets and liabilities arises from changes in the value of assets and liabilities other than investments in securities at fiscal year end, resulting from changes in exchange rates. (4) FEDERAL INCOME TAXES: The Funds intend to be treated as 'regulated investment companies' under Sub-chapter M of the Internal Revenue Code and to distribute substantially all of their net taxable income. Accordingly, no provisions for Federal income taxes have been made in the accompanying financial statements. DLJ MUTUAL FUNDS -- NOTES TO FINANCIAL STATEMENTS October 31, 2000 (continued) - -------------------------------------------------------------------------------- The Fixed Income Fund, Municipal Trust Fund, Developing Markets Fund, Strategic Growth Fund and Technology Fund each have unused capital loss carryovers available for Federal income tax purposes to be applied against future net securities profits, if any, realized subsequent to October 31, 2000. The approximate amounts and the fiscal year upon which the carryovers will be terminated are as follows:
FIXED MUNICIPAL HIGH TECHNOLOGY STRATEGIC DEVELOPING INCOME FUND TRUST FUND INCOME FUND FUND GROWTH FUND MARKETS FUND ----------- ---------- ----------- ---- ----------- ------------ Capital Loss Carryovers Total:........................ $2,636,000 $126,000 $404,000 $1,948,000 $188,000 $3,942,000 ---------- -------- -------- ---------- -------- ---------- ---------- -------- -------- ---------- -------- ---------- Expires in: Fiscal 2008....... $2,094,000 $126,000 $404,000 $1,948,000 $188,000 $ -- Fiscal 2007........... 542,000 -- -- -- -- 771,000 Fiscal 2006........... -- -- -- -- -- 587,000 Fiscal 2005........... -- -- -- -- -- 2,584,000
(5) INVESTMENT INCOME AND SECURITIES TRANSACTIONS: Dividend income is recorded on the ex-dividend date or as soon as the Fund is informed of the dividend. Interest income is accrued daily. Security transactions are accounted for on the date securities are purchased or sold. Security gains and losses are determined on the identified cost basis. Discounts and premiums on securities purchased are amortized in accordance with income tax regulations which approximate generally accepted accounting principles. In November 2000, the American Institute of Certified Public Accountants (AICPA) issued a revised version of the AICPA Audit and Accounting Guide for Investment Companies (the 'Guide'). The revised version of the Guide is effective for annual financial statements beginning after December 15, 2000 and will require investment companies to amortize premiums and discounts on fixed income securities. Currently, the Municipal Trust Fund does not amortize discounts and the High Income Fund does not amortize premiums. Upon adoption, the Funds will be required to record a cumulative effect adjustment to reflect the amortization. The adjustment will result in a reclassification between net investment income and unrealized appreciation/(depreciation) and, therefore, will not impact total net assets. At this time, the Funds have not completed their analysis of the impact of this accounting change. (6) DIVIDENDS AND DISTRIBUTIONS: Dividends and distributions to shareholders are recorded on the ex-dividend date. (7) DEFERRED ORGANIZATION COSTS: Costs incurred in connection with the International Equity Fund's and the Developing Markets Fund's organization are being amortized on a straight-line basis over five years commencing with the Fund's operation. (8) CONCENTRATION OF RISK: At October 31, 2000, the Municipal Trust Fund had approximately 36% of its net assets invested in municipal obligations of Texas. Economic changes affecting the state and certain of its public bodies and municipalities may affect the ability of issuers within the state to pay interest on, or repay principal of, municipal obligations of the Fund. The High Income Fund invests in fixed income securities rated below investment-grade quality or unrated fixed income securities deemed to be of comparable quality. Lower grade fixed income securities are commonly known as 'junk bonds' and are subject to special risks, including greater price volatility and a greater risk of loss of principal and non-payment of interest. The Technology Fund concentrates its investments in companies that rely significantly on technological events or advances in their product development, production or operations. Market or economic factors impacting these companies could have a major effect on the value of the Fund's investments. The value of stocks of these companies is particularly vulnerable to rapid changes in technological product cycles, government regulation and competition. The International Equity Fund and Developing Markets Fund each invest substantially all of their net assets in foreign securities. Foreign securities are generally more volatile and less liquid than U.S. securities, in part because of greater political and economic risks, less public information available about foreign companies and differing degrees of regulation and differing reporting, accounting and auditing standards. In addition, the Developing Markets Fund is subject to the risks of investing in developing or emerging markets. (9) RECLASSIFICATION OF COMPONENTS OF NET ASSETS: At October 31, 2000, the following reclassifications were recorded to reflect permanent book to tax differences. These reclassifications had no effect on net assets or net asset value per share. DLJ MUTUAL FUNDS -- NOTES TO FINANCIAL STATEMENTS October 31, 2000 (continued) - --------------------------------------------------------------------------------
UNDISTRIBUTED ACCUMULATED NET NET REALIZED GAIN CAPITAL INVESTMENT (LOSS) ON FUND PAID-IN INCOME INVESTMENTS - ---- ------- ------ ----------- Core Equity Fund................................... (683,410) 683,410 -- Growth and Income Fund............................. 20,275 -- (20,275) Small Company Value Fund........................... -- 710 710 Strategic Growth Fund.............................. (29,144) 29,144 -- Technology Fund.................................... (262,127) 262,127 -- International Equity Fund.......................... -- 321,277 (321,277) Developing Markets Fund............................ (211,471) 168,889 42,582 Fixed Income Fund.................................. (72,067) 48,592 23,475 Municipal Trust Fund............................... -- (2,492) 2,492 High Income Fund................................... (11,313) 8,076 3,237
NOTE (B) ADVISORY AND DISTRIBUTION SERVICES AGREEMENT: Donaldson, Lufkin & Jenrette, Inc. ('DLJ') was acquired by Credit Suisse Group ('Credit Suisse') on November 3, 2000 (the 'Acquisition'). Prior to the Acquisition, DLJ Asset Management Group ('DLJAM'), a wholly-owned subsidiary of Donaldson, Lufkin & Jenrette Securities Corporation ('DLJSC'), a wholly-owned subsidiary of DLJ, served as advisor to the Funds. Credit Suisse combined the investment advisory business of DLJAM with its existing U.S. asset management business, Credit Suisse Asset Management, LLC ('CSAM'). Accordingly, CSAM presently acts as the investment advisor to the Funds (the 'Advisor'). In anticipation of the Acquisition, at a meeting held on October 26, 2000, the Board of Trustees of the Funds approved an interim investment advisory agreement (the 'Interim Advisory Agreement') with CSAM on behalf of the Funds. The Interim Advisory Agreement will terminate, 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. Under the Interim Advisory Agreement with the Funds, the Advisor will provide investment advisory services and order placement facilities for the DLJ Funds and pay all compensation of Trustees of the DLJ Funds who are affiliated persons of the Advisor. The Advisor or its affiliates will also furnish the DLJ Funds, without charge, management supervision and assistance and office facilities. As required by rule 15a-4(vi) of the 1940 Act, the Interim Advisory Agreement provides that fees earned by the Advisor with respect to each Fund will be deposited into an interest-bearing escrow account with Citibank, N.A., the Funds' Custodian, and will only be paid to CSAM if a majority of the shareholders of such Fund approves a New Investment Advisory Agreement for that Fund. If shareholders of a DLJ Fund do not approve a New Investment Advisory Agreement, CSAM will receive as compensation or reimbursement in respect of such Fund the lesser of: (i) the fee under such Interim Advisory Agreement (the 'Advisory Fee'); or (ii) the costs of providing services during the term of such Interim Advisory Agreement (plus, in each case, interest earned on that amount while in escrow). The advisory fees paid by the Funds for the fiscal year ended October 31, 2000 were based on the following annual percentage rates of the average daily net assets of each Fund: Core Equity Fund, .750 of 1% of the first $100,000,000, .500 of 1% of the balance; Growth and Income Fund, .750 of 1% of the first $75,000,000, .500 of 1% of the balance; Small Company Value Fund, .875 of 1% of the first $100,000,000, .750 of 1% of the next $100,000,000 and .625 of 1% of net assets in excess of $200,000,000; Fixed Income Fund, .625 of 1% of the first $100,000,000, .500 of 1% of the balance; Municipal Trust Fund, .625 of 1% of the first $100,000,000, .500 of 1% of the balance; Technology Fund, .875 of 1% of the first $500,000,000, .750 of 1% of the next $500,000,000 and .625 of 1% of the balance; Strategic Growth Fund, .750 of 1% of the first $500,000,000 and .625 of 1% of the balance; International Equity Fund and Developing Markets Fund, 1.25% of the first $100,000,000, 1.15% of the next $100,000,000 and 1% of the balance; and High Income Fund, .70 of 1% of the first $500,000,000 and .625 of 1% of the balance. Such fees are accrued daily. Effective November 1, 2000, the Advisory Fee for the International Equity Fund was reduced to 1.00% of the average daily net assets. Through October 31, 2000, the Advisor had retained AXA Investment Managers GM Ltd. ('AXA') as subadvisor to the International Equity Fund and the Developing Markets Fund. The Advisor paid AXA for its services, out of the Advisor's own resources, at the following annual percentage rates of the average daily net assets of each of the International Equity Fund and Developing Markets Fund: .625 of 1% of each Portfolio's first $100,000,000, .575 of 1% of the next $100,000,000 and .50 of 1% of the balance. Effective November 1, 2000, upon the termination of AXA as subadviser of the Developing Markets Fund and International Equity Fund (the 'International Funds'), the Adviser became solely responsible for investment management of the International Funds. The investment objective of each Fund has remained unchanged. Through October 31, 2001, the Advisor has agreed to contractual expense limitations to reduce its management fees and reimburse operating expenses by the amount that total fund operating expenses exceed the percentage of the average daily net assets of each share class of each Fund referenced below:
TECHNOLOGY STRATEGIC INTERNATIONAL DEVELOPING FIXED INCOME MUNICIPAL HIGH INCOME FUND GROWTH FUND EQUITY FUND MARKETS FUND FUND TRUST FUND FUND ---- ----------- ----------- ------------ ---- ---------- ---- Class A................... 1.39% 1.19% 2.15% 2.15% 0.95% 0.95% 1.10% Class B................... 2.14 1.94 2.90 2.90 1.70 1.70 1.85 Class C................... 2.14 1.94 2.90 2.90 1.70 1.70 1.85 Class D................... 1.14 N/A 1.90 N/A 0.70 N/A 0.85 Class R................... 1.39 1.19 2.15 2.15 0.95 0.95 1.10
DLJ MUTUAL FUNDS -- NOTES TO FINANCIAL STATEMENTS October 31, 2000 (continued) - -------------------------------------------------------------------------------- After October 31, 2001, the Advisor may, in its sole discretion, determine to discontinue this practice with respect to all or any of such Funds. As a result of the assumption of expenses, the Advisor reimbursed the Technology Fund, Strategic Growth Fund, Fixed Income Fund, Municipal Trust Fund and High Income Fund $196,374, $118,483, $188,370, $138,175, and $224,209, respectively, during the year ended October 31, 2000. The Advisor and AXA waived fees amounting to $152,177 for the Developing Markets Fund during the year ended October 31, 2000. Pursuant to Rule 12b-1 under the Act, the DLJ Funds have entered into a Distribution Services Agreement (the 'Agreement') with Donaldson, Lufkin & Jenrette Securities Corporation, the Funds' Distributor. Effective as of August 1, 2000, the annual distribution service fee for Class A shares of each Focus Fund portfolio was reduced from .30 of 1.00% to .25 of 1.00%. Accordingly, under the Agreement, each Fund portfolio will pay a distribution services fee to the Distributor at an annual rate of .25 of 1% of the average daily net assets attributable to Class A and Class R shares and 1% of the average daily net assets attributable to Class B and Class C shares. Under the Agreement, each Focus Fund and Select Fund portfolio is obligated to pay distribution and/or service fees to the Distributor as compensation for its distribution and service activities ('Compensation Agreement') not as reimbursement for specific expenses incurred. If the Distributor's expenses exceed its distribution and service fees, such Funds will not be obligated to pay additional expenses. If the Distributor's expenses are less than such distribution and service fees, it will retain its full fees and realize a profit. Under the Agreement with the Opportunity Fund portfolios, amounts paid are used in their entirety to reimburse the Distributor for actual expenses incurred for distribution assistance and promotional activities ('Reimbursement Agreement'). In addition, the Agreement provides that the Advisor may use its own resources including fees from investment companies (including the DLJ Funds) to finance the distribution of DLJ Funds' shares. Prior to August 1, 2000, the Select Funds had a Shareholder Servicing Plan that permitted each Fund to pay banks, broker-dealers or other financial institutions for shareholder support services they provide at a rate of up to .25 of 1% of the average daily net assets of each Fund. This fee was discontinued at the time the Funds adopted a multiclass structure. Effective May 16, 2000, each Focus Fund Trustee who is not an affiliated person as defined in the Act will be paid a fee of $2,500 for each board meeting attended, a $500 fee for each special meeting attended, a $250 fee for each audit committee meeting and an annual retainer of $500. Each Opportunity Fund Trustee who is not an affiliated person as defined in the Act will be paid a fee of $1,500 for each board meeting attended, a $500 fee for each special meeting attended, a $250 fee for each audit committee meeting and an annual retainer of $500. Each Select Fund Trustee who is not an affiliated person as defined in the Act will be paid a $500 fee for each board meeting attended, a $500 fee for each special meeting attended, a $250 fee for each audit committee meeting and an annual retainer fee of $500. Prior to May 16, 2000, each Focus Fund Trustee who is not an affiliated person as defined in the Act received an attendance fee of $2,000 per meeting and $500 per audit committee meeting and an annual retainer of $2,000. Each Opportunity Fund Trustee who is not an affiliated person as defined in the Act received attendance fees of $2,000 per meeting and $1,000 per audit committee meeting. Each Select Fund Trustee who is not an affiliated person as defined in the Act received attendance fees of $1,000 per meeting and $500 per audit committee meeting. Trustees' fees are charged to all series of the appropriate Trust and are allocated on a pro rata basis. During the year ended October 31, 1999, the Subadvisor reimbursed the Developing Markets Fund $460,289 for realized and unrealized losses on certain security transactions. NOTE (C) INVESTMENT TRANSACTIONS: For federal income tax purposes, the cost of securities owned at October 31, 2000 was substantially the same as the cost of securities for financial statement purposes. At October 31, 2000, the components of the net unrealized appreciation (depreciation) on investments were as follows:
GROWTH AND SMALL STRATEGIC DEVELOPING CORE EQUITY INCOME COMPANY TECHNOLOGY GROWTH INTERNATIONAL MARKETS FUND FUND VALUE FUND FUND FUND EQUITY FUND FUND ---- ---- ---------- ---- ---- ----------- ---- Gross appreciation (investments having an excess of value over cost).......... $87,651,487 $81,116,921 $62,350,828 $ 5,504,219 $1,137,352 $ 5,086,151 $ 1,812,792 Gross depreciation (investments having an excess of cost over value)......... (2,365,489) (864,280) (1,261,856) (6,315,957) (822,673) (10,173,843) (3,910,192) ----------- ----------- ----------- ----------- ---------- ------------ ----------- Net unrealized appreciation (depreciation) of investments......... $85,285,998 $80,252,641 $61,088,972 $ (811,738) $ 314,679 $ (5,087,692) $(2,097,400) ----------- ----------- ----------- ----------- ---------- ------------ ----------- ----------- ----------- ----------- ----------- ---------- ------------ ----------- FIXED MUNICIPAL HIGH INCOME TRUST INCOME FUND FUND FUND ---- ---- ---- Gross appreciation (investments having an excess of value over cost).......... $ 269,412 $411,784 $ 156,136 Gross depreciation (investments having an excess of cost over value)......... (2,265,357) (72,221) (1,674,840) ----------- -------- ----------- Net unrealized appreciation (depreciation) of investments......... $(1,995,945) $339,563 $(1,518,704) ----------- -------- ----------- ----------- -------- -----------
For the year ended October 31, 2000, total aggregate purchases and sales of portfolio securities, excluding short-term securities, were as follows:
SMALL STRATEGIC DEVELOPING CORE EQUITY GROWTH AND COMPANY TECHNOLOGY GROWTH INTERNATIONAL MARKETS FUND INCOME FUND VALUE FUND FUND FUND EQUITY FUND FUND ---- ----------- ---------- ---- ---- ----------- ---- Purchases............ $97,857,211 $138,472,742 $ 83,168,818 $42,083,114 $9,883,322 $34,417,375 $23,309,285 Sales................ 55,136,716 169,484,105 119,922,879 3,516,394 1,385,545 28,018,238 23,550,084 HIGH FIXED INCOME MUNICIPAL INCOME FUND TRUST FUND FUND ---- ---------- ---- Purchases............ $115,012,501 $ 4,613,355 $6,910,875 Sales................ 151,481,210 11,971,729 5,647,900
DLJ MUTUAL FUNDS -- NOTES TO FINANCIAL STATEMENTS October 31, 2000 (continued) - -------------------------------------------------------------------------------- NOTE (D) SHARES OF BENEFICIAL INTEREST: There is an unlimited number of shares ($0.01 par value for the Focus Funds; $0.001 for the Opportunity Funds and Select Funds) authorized. Transactions in shares of beneficial interest were as follows:
CLASS A* CLASS B* CLASS C*'D' -------- -------- ---------- SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT ------ ------ ------ ------ ------ ------ CORE EQUITY FUND YEAR ENDED OCTOBER 31, 2000 Shares sold.................... 1,110,169 $ 24,346,169 835,369 $17,925,689 203,183 $4,500,995 Shares issued through reinvestment of dividends and distributions................. 444,968 9,019,526 126,449 2,494,838 -- -- ----------- ------------ ---------- ----------- ------- ---------- 1,555,137 33,365,695 961,818 20,420,527 203,183 4,500,995 ----------- ------------ ---------- ----------- ------- ---------- Shares redeemed................ (838,237) (18,427,363) (236,791) (5,072,241) (703) (15,544) ----------- ------------ ---------- ----------- ------- ---------- Net increase................... 716,900 $ 14,938,332 725,027 $15,348,286 202,480 $4,485,451 ----------- ------------ ---------- ----------- ------- ---------- ----------- ------------ ---------- ----------- ------- ---------- YEAR ENDED OCTOBER 31, 1999 Shares sold.................... 1,065,641 $ 20,539,658 667,503 $12,806,960 Shares issued through reinvestment of dividends and distributions................. 79,584 1,318,711 16,719 272,358 ----------- ------------ ---------- ----------- 1,145,225 21,858,369 684,222 13,079,318 ----------- ------------ ---------- ----------- Shares redeemed................ (640,696) (12,397,268) (177,148) (3,396,569) ----------- ------------ ---------- ----------- Net increase................... 504,529 $ 9,461,101 507,074 $ 9,682,749 ----------- ------------ ---------- ----------- ----------- ------------ ---------- ----------- GROWTH AND INCOME FUND YEAR ENDED OCTOBER 31, 2000 Shares sold.................... 586,384 $ 13,390,153 309,030 $ 5,937,239 20,313 $ 471,254 Shares issued through reinvestment of dividends and distributions................. 213,248 4,986,997 50,221 1,168,147 18 436 ----------- ------------ ---------- ----------- ------- ---------- 799,632 18,377,150 359,251 7,105,386 20,331 471,690 ----------- ------------ ---------- ----------- ------- ---------- Shares redeemed................ (1,601,084) (36,923,636) (434,467) (8,818,730) -- -- ----------- ------------ ---------- ----------- ------- ---------- Net increase (decrease)........ (801,452) $(18,546,486) (75,216) $(1,713,344) 20,331 $ 471,690 ----------- ------------ ---------- ----------- ------- ---------- ----------- ------------ ---------- ----------- ------- ---------- YEAR ENDED OCTOBER 31, 1999 Shares sold.................... 678,846 $ 15,276,701 397,678 $ 9,035,772 Shares issued through reinvestment of dividends and distributions................. 614,712 12,914,181 139,759 2,921,650 ----------- ------------ ---------- ----------- 1,293,558 28,190,882 537,437 11,957,422 ----------- ------------ ---------- ----------- Shares redeemed................ (1,133,237) (25,802,845) (254,577) (5,820,349) ----------- ------------ ---------- ----------- Net increase................... 160,321 $ 2,388,037 282,860 $ 6,137,073 ----------- ------------ ---------- ----------- ----------- ------------ ---------- ----------- CLASS D'D'D' CLASS R'D'D'D' ------------ -------------- SHARES AMOUNT SHARES AMOUNT ------ ------ ------ ------ CORE EQUITY FUND YEAR ENDED OCTOBER 31, 2000 Shares sold.................... 1,002,764 $21,958,459 45,018 $1,025,450 Shares issued through reinvestment of dividends and distributions................. 23,461 475,552 -- -- ----------- ----------- ------- ---------- 1,026,225 22,434,011 45,018 1,025,450 ----------- ----------- ------- ---------- Shares redeemed................ (234,930) (5,341,036) (586) (12,764) ----------- ----------- ------- ---------- Net increase................... 791,295 $17,092,975 44,432 $1,012,686 ----------- ----------- ------- ---------- ----------- ----------- ------- ---------- YEAR ENDED OCTOBER 31, 1999 Shares sold.................... 231,750 $ 4,666,053 Shares issued through reinvestment of dividends and distributions................. -- -- ----------- ----------- 231,750 4,666,053 ----------- ----------- Shares redeemed................ (4,222) (86,670) ----------- ----------- Net increase................... 227,528 $ 4,579,383 ----------- ----------- ----------- ----------- GROWTH AND INCOME FUND YEAR ENDED OCTOBER 31, 2000 Shares sold.................... 190,523 $ 4,416,217 5,481 $ 129,310 Shares issued through reinvestment of dividends and distributions................. 73,095 1,710,627 -- -- ----------- ----------- ------- ---------- 263,618 6,126,844 5,481 129,310 ----------- ----------- ------- ---------- Shares redeemed................ (417,169) (9,723,691) (1,587) (37,224) ----------- ----------- ------- ---------- Net increase (decrease)........ (153,551) $(3,596,847) 3,894 $ 92,086 ----------- ----------- ------- ---------- ----------- ----------- ------- ---------- YEAR ENDED OCTOBER 31, 1999 Shares sold.................... 2,283,021 $54,169,244 Shares issued through reinvestment of dividends and distributions................. 6,193 141,754 ----------- ----------- 2,289,214 54,310,998 ----------- ----------- Shares redeemed................ (240,048) (5,645,239) ----------- ----------- Net increase................... 2,049,166 $48,665,759 ----------- ----------- ----------- -----------
- ----------------------- * The Technology Fund and the Strategic Growth Fund commenced offering Class A, Class B and Class C shares on August 1, 2000. 'D' The Core Equity Fund, the Growth and Income Fund and the Small Company Value Fund commenced offering Class C shares on February 28, 2000. 'D'D' The Core Equity Fund commenced offering Class D shares on May 13, 1999. The Growth and Income Fund commenced offering Class D shares on April 30, 1999. The Technology Fund commenced offering Class D shares on September 1, 2000. 'D'D'D' The Core Equity Fund, the Growth and Income Fund and the Small Company Value Fund commenced offering Class R shares on August 1, 2000. The Technology Fund and the Strategic Growth Fund commenced offering Class R shares on November 18, 1999. DLJ MUTUAL FUNDS -- NOTES TO FINANCIAL STATEMENTS October 31, 2000 (continued) - --------------------------------------------------------------------------------
CLASS A* CLASS B* CLASS C*'D' -------- -------- ----------- SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT ------ ------ ------ ------ ------ ------ SMALL COMPANY VALUE FUND YEAR ENDED OCTOBER 31, 2000 Shares sold........................... 220,007 $ 4,504,981 57,246 $ 1,113,353 10,020 $214,880 Shares issued through reinvestment of dividends and distributions.......... 911,259 17,657,103 99,388 1,884,400 -- -- ---------- ------------ -------- ----------- ------ -------- 1,131,266 22,162,084 156,634 2,997,753 10,020 214,880 ---------- ------------ -------- ----------- ------ -------- Shares redeemed....................... (1,939,527) (38,421,201) (327,158) (6,333,402) -- -- ---------- ------------ -------- ----------- ------ -------- Net increase (decrease)............... (808,261) $(16,259,117) (170,524) $(3,335,649) 10,020 $214,880 ---------- ------------ -------- ----------- ------ -------- ---------- ------------ -------- ----------- ------ -------- YEAR ENDED OCTOBER 31, 1999 Shares sold........................... 531,219 $ 10,797,131 164,059 $ 3,282,346 Shares issued through reinvestment of dividends and distributions.......... 46,275 936,650 790 15,587 ---------- ------------ -------- ----------- 577,494 11,733,781 164,849 3,297,933 ---------- ------------ -------- ----------- Shares redeemed....................... (3,582,104) (71,324,894) (366,848) (7,218,047) ---------- ------------ -------- ----------- Net decrease.......................... (3,004,610) $(59,591,113) (201,999) $(3,920,114) ---------- ------------ -------- ----------- ---------- ------------ -------- ----------- TECHNOLOGY FUND YEAR ENDED OCTOBER 31, 2000 Shares sold........................... 229,719 $ 3,336,439 99,751 $ 1,408,302 37,523 $526,634 Shares redeemed....................... (1,956) (24,958) (108) (1,500) -- -- ---------- ------------ -------- ----------- ------ -------- Net increase.......................... 227,763 $ 3,311,481 99,643 $ 1,406,802 37,523 $526,634 ---------- ------------ -------- ----------- ------ -------- ---------- ------------ -------- ----------- ------ -------- STRATEGIC GROWTH FUND YEAR ENDED OCTOBER 31, 2000 Shares sold........................... 9,097 $ 100,773 33,000 $ 374,735 3,504 $ 41,785 Shares redeemed....................... -- -- (136) (1,535) -- -- ---------- ------------ -------- ----------- ------ -------- Net increase.......................... 9,097 $ 100,773 32,864 $ 373,200 3,504 $ 41,785 ---------- ------------ -------- ----------- ------ -------- ---------- ------------ -------- ----------- ------ -------- INTERNATIONAL EQUITY FUND YEAR ENDED OCTOBER 31, 2000 Shares sold........................... 6,796,992 $ 88,597,638 101,412 $ 1,330,439 12,162 $151,084 Shares issued through reinvestment of dividends and distributions.......... 472,799 5,990,357 57,330 704,010 -- -- ---------- ------------ -------- ----------- ------ -------- 7,269,791 94,587,995 158,742 2,034,449 12,162 151,084 ---------- ------------ -------- ----------- ------ -------- Shares redeemed....................... (6,314,145) (82,923,347) (124,475) (1,616,495) -- -- ---------- ------------ -------- ----------- ------ -------- Net increase.......................... 955,646 $ 11,664,648 34,267 $ 417,954 12,162 $151,084 ---------- ------------ -------- ----------- ------ -------- ---------- ------------ -------- ----------- ------ -------- YEAR ENDED OCTOBER 31, 1999 Shares sold........................... 860,513 $ 11,381,549 68,854 $ 881,626 Shares issued through reinvestment of dividends and distributions.......... 208,666 2,393,398 31,390 352,824 ---------- ------------ -------- ----------- 1,069,179 13,774,947 100,244 1,234,450 ---------- ------------ -------- ----------- Shares redeemed....................... (1,256,969) (16,356,572) (206,542) (2,568,893) ---------- ------------ -------- ----------- Net increase (decrease)............... (187,790) $ (2,581,625) (106,298) $(1,334,443) ---------- ------------ -------- ----------- ---------- ------------ -------- ----------- CLASS D'D'D' CLASS R'D'D'D' ------------ -------------- SHARES AMOUNT SHARES AMOUNT ------ ------ ------ ------ SMALL COMPANY VALUE FUND YEAR ENDED OCTOBER 31, 2000 Shares sold........................... 5,709 $ 124,927 Shares issued through reinvestment of dividends and distributions.......... -- -- ---------- ------------ 5,709 124,927 ---------- ------------ Shares redeemed....................... (1,051) (22,662) ---------- ------------ Net increase (decrease)............... 4,658 $ 102,265 ---------- ------------ ---------- ------------ YEAR ENDED OCTOBER 31, 1999 Shares sold........................... Shares issued through reinvestment of dividends and distributions.......... Shares redeemed....................... Net decrease.......................... TECHNOLOGY FUND YEAR ENDED OCTOBER 31, 2000 Shares sold........................... 301,181 $4,272,189 3,245,020 $ 44,571,558 Shares redeemed....................... (43,594) (573,272) (1,003,373) (13,836,940) -------- ---------- ---------- ------------ Net increase.......................... 257,587 $3,698,917 2,241,647 $ 30,734,618 -------- ---------- ---------- ------------ -------- ---------- ---------- ------------ STRATEGIC GROWTH FUND YEAR ENDED OCTOBER 31, 2000 Shares sold........................... 1,032,690 $ 11,279,363 Shares redeemed....................... (282,434) (3,166,259) ---------- ------------ Net increase.......................... 750,256 $ 8,113,104 ---------- ------------ ---------- ------------ INTERNATIONAL EQUITY FUND YEAR ENDED OCTOBER 31, 2000 Shares sold........................... 447,723 $6,062,902 13,473 $ 169,837 Shares issued through reinvestment of dividends and distributions.......... 21,021 266,755 -- -- -------- ---------- ---------- ------------ 468,744 6,329,657 13,473 169,837 -------- ---------- ---------- ------------ Shares redeemed....................... (190,108) (2,533,295) (2,037) (23,981) -------- ---------- ---------- ------------ Net increase.......................... 278,636 $3,796,362 11,436 $ 145,856 -------- ---------- ---------- ------------ -------- ---------- ---------- ------------ YEAR ENDED OCTOBER 31, 1999 Shares sold........................... 122,267 $1,606,921 Shares issued through reinvestment of dividends and distributions.......... -- -- -------- ---------- 122,267 1,606,921 -------- ---------- Shares redeemed....................... (9,114) (119,032) -------- ---------- Net increase (decrease)............... 113,153 $1,487,889 -------- ---------- -------- ----------
- ----------------------- * The Technology Fund and the Strategic Growth Fund commenced offering Class A, Class B and Class C shares on August 1, 2000. 'D' The Small Company Value Fund and the International Equity Fund commenced offering Class C shares on February 28, 2000. 'D'D' The International Equity Fund commenced offering Class D shares on May 13, 1999. The Technology Fund commenced offering Class D shares on September 1, 2000. 'D'D'D' The Technology Fund and the Strategic Growth Fund commenced offering Class R shares on November 18, 1999. The Small Company Value Fund and the International Equity Fund commenced offering Class R shares on August 1, 2000. DLJ MUTUAL FUNDS -- NOTES TO FINANCIAL STATEMENTS October 31, 2000 (continued) - --------------------------------------------------------------------------------
CLASS A CLASS B CLASS C'D' ------- ------- ---------- SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT ------ ------ ------ ------ ------ ------ DEVELOPING MARKETS FUND YEAR ENDED OCTOBER 31, 2000 Shares sold............................. 186,207 $ 2,274,649 55,944 $ 625,955 1,447 $14,240 Shares redeemed......................... (249,683) (2,912,298) (66,506) (694,884) -- -- ---------- ------------ -------- ----------- ----- ------- Net increase (decrease)................. (63,476) $ (637,649) (10,562) $ (68,929) 1,447 $14,240 ---------- ------------ -------- ----------- ----- ------- ---------- ------------ -------- ----------- ----- ------- YEAR ENDED OCTOBER 31, 1999 Shares sold............................. 295,113 $ 2,812,440 25,395 $ 232,158 Shares issued through reinvestment of dividends and distributions............ 5,473 40,773 -- -- ---------- ------------ -------- ----------- 300,586 2,853,213 25,395 232,158 ---------- ------------ -------- ----------- Shares redeemed......................... (980,986) (7,682,356) (108,041) (843,094) ---------- ------------ -------- ----------- Net decrease............................ (680,400) $ (4,829,143) (82,646) $ (610,936) ---------- ------------ -------- ----------- ---------- ------------ -------- ----------- FIXED INCOME FUND YEAR ENDED OCTOBER 31, 2000 Shares sold............................. 336,527 $ 3,256,988 32,723 $ 319,589 25 $ 250 Shares issued through reinvestment of dividends and distributions............ 157,180 1,526,182 14,273 138,551 1 6 ---------- ------------ -------- ----------- ----- ------- 493,707 4,783,170 46,996 458,140 26 256 ---------- ------------ -------- ----------- ----- ------- Shares redeemed......................... (1,308,905) (12,689,386) (169,646) (1,649,910) -- -- ---------- ------------ -------- ----------- ----- ------- Net increase (decrease)................. (815,198) $ (7,906,216) (122,650) $(1,191,770) 26 $ 256 ---------- ------------ -------- ----------- ----- ------- ---------- ------------ -------- ----------- ----- ------- YEAR ENDED OCTOBER 31, 1999 Shares sold............................. 441,735 $ 4,439,974 96,962 $ 984,089 Shares issued through reinvestment of dividends and distributions............ 207,086 2,087,393 26,021 262,583 ---------- ------------ -------- ----------- 648,821 6,527,367 122,983 1,246,672 ---------- ------------ -------- ----------- Shares redeemed......................... (841,917) (8,495,678) (227,336) (2,280,058) ---------- ------------ -------- ----------- Net increase (decrease)................. (193,096) $ (1,968,311) (104,353) $(1,033,386) ---------- ------------ -------- ----------- ---------- ------------ -------- ----------- MUNICIPAL TRUST FUND YEAR ENDED OCTOBER 31, 2000 Shares sold............................. 506,447 $ 4,666,724 12,796 $ 128,248 25 $ 250 Shares issued through reinvestment of dividends and distributions............ 87,675 875,336 1,576 15,731 1 5 ---------- ------------ -------- ----------- ----- ------- 594,122 5,542,060 14,372 143,979 26 255 ---------- ------------ -------- ----------- ----- ------- Shares redeemed......................... (1,334,680) (12,950,312) (11,036) (109,160) -- -- ---------- ------------ -------- ----------- ----- ------- Net increase (decrease)................. (740,558) $ (7,408,252) 3,336 $ 34,819 26 $ 255 ---------- ------------ -------- ----------- ----- ------- ---------- ------------ -------- ----------- ----- ------- YEAR ENDED OCTOBER 31, 1999 Shares sold............................. 1,193,944 $ 12,204,296 19,981 $ 208,455 Shares issued through reinvestment of dividends and distributions............ 110,367 1,144,940 1,941 20,128 ---------- ------------ -------- ----------- 1,304,311 13,349,236 21,922 228,583 ---------- ------------ -------- ----------- Shares redeemed......................... (2,534,110) (26,096,460) (53,743) (551,419) ---------- ------------ -------- ----------- Net decrease............................ (1,229,799) $(12,747,224) (31,821) $ (322,836) ---------- ------------ -------- ----------- ---------- ------------ -------- ----------- CLASS D'D'D' CLASS R'D'D'D' ------------ -------------- SHARES AMOUNT SHARES AMOUNT ------ ------ ------ ------ DEVELOPING MARKETS FUND YEAR ENDED OCTOBER 31, 2000 Shares sold............................. 2,296 $21,100 Shares redeemed......................... (188) (1,674) ----- ------- Net increase (decrease)................. 2,108 $19,426 ----- ------- ----- ------- YEAR ENDED OCTOBER 31, 1999 Shares sold............................. Shares issued through reinvestment of dividends and distributions............ Shares redeemed......................... Net decrease............................ FIXED INCOME FUND YEAR ENDED OCTOBER 31, 2000 Shares sold............................. 386,500 $ 3,757,752 2,737 $26,766 Shares issued through reinvestment of dividends and distributions............ 589,143 5,721,468 1 2 ---------- ------------ ----- ------- 975,643 9,479,220 2,738 26,768 ---------- ------------ ----- ------- Shares redeemed......................... (3,081,629) (29,924,903) (516) (5,043) ---------- ------------ ----- ------- Net increase (decrease)................. (2,105,986) $(20,445,683) 2,222 $21,725 ---------- ------------ ----- ------- ---------- ------------ ----- ------- YEAR ENDED OCTOBER 31, 1999 Shares sold............................. 12,857,121 $129,704,316 Shares issued through reinvestment of dividends and distributions............ 321,819 3,176,577 ---------- ------------ 13,178,940 132,880,893 ---------- ------------ Shares redeemed......................... (1,338,506) (13,268,326) ---------- ------------ Net increase (decrease)................. 11,840,434 $119,612,567 ---------- ------------ ---------- ------------ MUNICIPAL TRUST FUND YEAR ENDED OCTOBER 31, 2000 Shares sold............................. 2,597 $26,283 Shares issued through reinvestment of dividends and distributions............ -- 1 ----- ------- 2,597 26,284 ----- ------- Shares redeemed......................... -- -- ----- ------- Net increase (decrease)................. 2,597 $26,284 ----- ------- ----- ------- YEAR ENDED OCTOBER 31, 1999 Shares sold............................. Shares issued through reinvestment of dividends and distributions............ Shares redeemed......................... Net decrease............................
- ----------------------- 'D' The Funds commenced offering Class C shares on February 28, 2000. 'D'D' The International Equity Fund commenced offering Class D shares on May 13, 1999. The Fixed Income Fund commenced offering Class D shares on April 30, 1999. 'D'D'D' The Funds commenced offering Class R shares on August 1, 2000. DLJ MUTUAL FUNDS -- NOTES TO FINANCIAL STATEMENTS October 31, 2000 (continued) - --------------------------------------------------------------------------------
CLASS A CLASS B CLASS C'D' ----------------------- ---------------------- ---------------- SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT --------- ----------- -------- ----------- ------ ------- HIGH INCOME FUND YEAR ENDED OCTOBER 31, 2000 Shares sold................................ 223,661 $ 2,151,376 96,854 $ 930,638 8,900 $81,668 Shares issued through reinvestment of dividends and distributions............... 69,212 649,902 10,360 97,280 83 729 --------- ----------- -------- ----------- ----- ------- 292,873 2,801,278 107,214 1,027,918 8,983 82,397 --------- ----------- -------- ----------- ----- ------- Shares redeemed............................ (152,603) (1,455,897) (106,669) (1,012,257) -- -- --------- ----------- -------- ----------- ----- ------- Net increase............................... 140,270 $ 1,345,381 545 $ 15,661 8,983 $82,397 --------- ----------- -------- ----------- ----- ------- --------- ----------- -------- ----------- ----- ------- YEAR ENDED OCTOBER 31, 1999* Shares sold................................ 1,147,988 $11,482,944 146,586 $ 1,472,897 Shares issued through reinvestment of dividends and distributions............... 29,206 289,072 3,485 34,378 --------- ----------- -------- ----------- 1,177,194 11,772,016 150,071 1,507,275 --------- ----------- -------- ----------- Shares redeemed............................ (91,250) (901,341) (219) (2,146) --------- ----------- -------- ----------- Net increase............................... 1,085,944 $10,870,675 149,852 $ 1,505,129 --------- ----------- -------- ----------- --------- ----------- -------- ----------- CLASS D'D'D' CLASS R'D'D'D' -------------------- ---------------------- SHARES AMOUNT SHARES AMOUNT ------- ---------- -------- ----------- HIGH INCOME FUND YEAR ENDED OCTOBER 31, 2000 Shares sold................................ 128,646 $1,221,941 173,806 $ 1,579,027 Shares issued through reinvestment of dividends and distributions............... 14,720 136,886 1 2 ------- ---------- -------- ----------- 143,366 1,358,827 173,807 1,579,029 ------- ---------- -------- ----------- Shares redeemed............................ (67,043) (635,769) (157,691) (1,398,719) ------- ---------- -------- ----------- Net increase............................... 76,323 $ 723,058 16,116 $ 180,310 ------- ---------- -------- ----------- ------- ---------- -------- ----------- YEAR ENDED OCTOBER 31, 1999* Shares sold................................ 95,325 $ 951,003 Shares issued through reinvestment of dividends and distributions............... 2,578 25,219 ------- ---------- 97,903 976,222 ------- ---------- Shares redeemed............................ (2,019) (19,980) ------- ---------- Net increase............................... 95,884 $ 956,242 ------- ---------- ------- ----------
- ----------------------- 'D' The High Income Fund commenced offering Class C shares on February 28, 2000. 'D'D' The High Income Fund commenced offering Class D shares on May 13, 1999. 'D'D'D' The High Income Fund commenced offering Class R shares on August 1, 2000. * The High Income Fund commenced operations on March 8, 1999. NOTE (E) SUBSEQUENT EVENTS: On December 18, 2000 the Board of Trustees of each of the DLJ Funds listed below ('Acquired Funds') approved an Agreement and Plan of Reorganization providing for a proposed acquisition (each such transition, an 'Acquisition') of all of the assets and liabilities of each Acquired Fund by certain CSAM advised Warburg Pincus Funds (the 'Acquiring Funds'). The Acquisition would be considered a tax free exchange of shares of beneficial interest of the Acquired Fund at net asset value and the assumption of stated liabilities. The Agreement and Plan of Reorganization is subject to the approval of the shareholders of each of the Acquired Funds.
ACQUIRED FUNDS ACQUIRING FUNDS -------------- --------------- DLJ Strategic Growth Fund Warburg Pincus Focus Fund DLJ Developing Markets Fund Warburg Pincus Emerging Markets Fund DLJ Fixed Income Fund Warburg Pincus Fixed Income Fund DLJ Municipal Trust Fund Warburg Pincus Municipal Bond Fund
In addition, on December 18, 2000, upon the approval of new distribution agreements ('New Distribution Agreements') by each Board of Trustees of the DLJ Funds, Credit Suisse Asset Management Securities, Inc. ('CSAMI') assumed the role as the Funds' Distributor. The New Distribution Agreements with CSAMI are in the same form as the prior agreements with DLJSC, except for the identity of the parties, the commencement date and certain other minor changes. Importantly, there are no changes to fees, services, standards of care, identification or termination provisions. FINANCIAL HIGHLIGHTS - -------------------------------------------------------------------------------- The table below sets forth financial data for a share of beneficial interest outstanding throughout the periods presented. This information has been derived from information provided in the financial statements.
CORE EQUITY FUND ------------------------------------------------------------------------------------------------------ CLASS A CLASS B ---------------------------------------------------- ----------------------------------------------- YEAR ENDED OCTOBER 31, YEAR ENDED OCTOBER 31, ---------------------------------------------------- ----------------------------------------------- 2000 1999 1998 1997 1996 2000 1999 1998 1997 1996(1) -------- -------- -------- -------- -------- ------- ------- ------- ------- ------- Net asset value, beginning of period............ $ 21.27 $ 16.52 $ 14.56 $ 12.69 $ 11.35 $ 20.75 $ 16.25 $ 14.41 $ 12.63 $11.88 Net investment income (loss)............ (0.04)* (0.03)* --*(6) 0.03 0.05 (0.20)* (0.17)* (0.12)* (0.03) (0.01) Net realized and unrealized gain (loss) on investments....... 2.92 5.04 2.88 3.07 2.11 2.85 4.93 2.86 3.02 0.76 -------- -------- -------- -------- -------- ------- ------- ------- ------- ------ Net increase in net asset value from operations........ 2.88 5.01 2.88 3.10 2.16 2.65 4.76 2.74 2.99 0.75 -------- -------- -------- -------- -------- ------- ------- ------- ------- ------ Dividends from net investment income. -- -- (0.02) (0.05) (0.04) -- -- -- (0.03) -- Distributions from capital gains..... (1.61) (0.26) (0.90) (1.18) (0.78) (1.61) (0.26) (0.90) (1.18) -- -------- -------- -------- -------- -------- ------- ------- ------- ------- ------ Total distributions. (1.61) (0.26) (0.92) (1.23) (0.82) (1.61) (0.26) (0.90) (1.21) -- -------- -------- -------- -------- -------- ------- ------- ------- ------- ------ Net asset value, end of period......... $ 22.54 $ 21.27 $ 16.52 $ 14.56 $ 12.69 $ 21.79 20.75 $ 16.25 $ 14.41 $12.63 -------- -------- -------- -------- -------- ------- ------- ------- ------- ------ -------- -------- -------- -------- -------- ------- ------- ------- ------- ------ Total return'D'D'.. 14.39% 30.77% 21.00% 26.48% 20.32% 13.58% 29.73% 20.20% 25.66% 6.40% Ratio of expenses to average net assets............ 1.14% 1.23% 1.29% 1.36% 1.48% 1.85% 1.93% 1.99% 2.06% 2.17%'D' Ratio of net investment income (loss) to average net assets........ (0.19)% (0.16)% (0.02)% 0.21% 0.47% (0.91)% (0.86)% (0.72)% (0.51)% (0.34)%'D' Portfolio turnover rate.............. 26.0% 34.7% 21.0% 41.1% 60.6% 26.0% 34.7% 21.0% 41.1% 60.6% Net assets, end of period (000 omitted).......... $159,945 $135,677 $ 97,078 $ 82,926 $ 68,096 $50,233 $32,783 $17,438 $10,378 $3,177 CORE EQUITY FUND -------------------------------------------------------- CLASS C CLASS D CLASS R ------------ -------------------------- ------------ PERIOD ENDED YEAR ENDED PERIOD ENDED PERIOD ENDED OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31, 2000(2) 2000 1999(3) 2000(5) ------------ ----------- ------------ ------------ Net asset value, beginning of period.............. $20.01 $ 21.27 $ 20.29 $22.55 Net investment income (loss).............. (0.17)* 0.02* 0.01* (0.02)* Net realized and unrealized gain (loss) on investments......... 1.95 2.92 0.97 0.02 ------ ------- ------- ------ Net increase in net asset value from operations.......... 1.78 2.94 0.98 -- ------ ------- ------- ------ Dividends from net investment income... -- -- -- -- Distributions from capital gains....... -- (1.61) -- -- ------ ------- ------- ------ Total distributions.. -- (1.61) -- -- ------ ------- ------- ------ Net asset value, end of period........... $21.79 $ 22.60 $ 21.27 $22.55 ------ ------- ------- ------ ------ ------- ------- ------ Total return'D'D'.... 8.90% 14.69% 4.83% (0.00)% Ratio of expenses to average net assets.............. 1.32% 0.85% 1.17%'D' 0.27% Ratio of net investment income (loss) to average net assets.......... (0.91)% 0.07% 0.07%'D' (0.11)% Portfolio turnover rate................ 26.0% 26.0% 34.7% 26.0% Net assets, end of period (000 omitted)............ $4,412 $23,029 $ 4,839 $1,002
GROWTH AND INCOME FUND ------------------------------------------------------------------------------------------------------ CLASS A CLASS B ---------------------------------------------------- ----------------------------------------------- YEAR ENDED OCTOBER 31, YEAR ENDED OCTOBER 31, ---------------------------------------------------- ----------------------------------------------- 2000 1999 1998 1997 1996 2000 1999 1998 1997 1996(1) -------- -------- -------- -------- -------- ------- ------- ------- ------- ------- Net asset value, beginning of period............ $ 23.49 $ 22.60 $ 20.09 $ 17.18 $ 14.57 $ 23.37 $ 22.55 $ 20.06 $ 17.15 $16.05 Net investment income (loss)............. 0.16* 0.12* 0.20* 0.21 0.27 --(6) (0.04)* 0.04* 0.08 0.14 Net realized and unrealized gain (loss) on investments........ 0.16 2.87 3.51 4.59 2.93 0.38 2.88 3.50 4.58 1.11 -------- -------- -------- -------- -------- ------- ------- ------- ------- ------ Net increase (decrease) in net asset value from operations......... 0.32 2.99 3.71 4.80 3.20 0.38 2.84 3.54 4.66 1.25 -------- -------- -------- -------- -------- ------- ------- ------- ------- ------ Dividends from net investment income.. (0.12) (0.09) (0.17) (0.21) (0.24) -- (0.01) (0.02) (0.07) (0.15) Distributions from capital gains...... (0.69) (2.01) (1.03) (1.68) (0.35) (0.69) (2.01) (1.03) (1.68) -- -------- -------- -------- -------- -------- ------- ------- ------- ------- ------ Total distributions. (0.81) (2.10) (1.20) (1.89) (0.59) (0.69) (2.02) (1.05) (1.75) (0.15) -------- -------- -------- -------- -------- ------- ------- ------- ------- ------ Net asset value, end of period......... $ 24.62 $ 23.49 $ 22.60 $ 20.09 $ 17.18 $ 24.44 $ 23.37 $ 22.55 $ 20.06 $17.15 -------- -------- -------- -------- -------- ------- ------- ------- ------- ------ -------- -------- -------- -------- -------- ------- ------- ------- ------- ------ Total return'D'D'... 8.44% 14.37% 19.14% 30.53% 22.60% 7.66% 13.66% 18.29% 29.59% 7.67% Ratio of expenses to average net assets............. 1.08% 1.11% 1.13% 1.22% 1.36% 1.80% 1.81% 1.83% 1.92% 1.99%'D' Ratio of net investment income (loss) to average net assets......... 0.71% 0.52% 0.92% 1.15% 1.68% (0.01)% (0.18)% 0.22% 0.39% 1.06%'D' Portfolio turnover rate............... 55.4% 24.5% 32.7% 19.8% 44.0% 55.4% 24.5% 32.7% 19.8% 44.0% Net assets, end of period (000 omitted).......... $162,871 $174,213 $163,936 $145,586 $113,803 $41,194 $41,144 $33,325 $19,664 $6,545 GROWTH AND INCOME FUND -------------------------------------------------------- CLASS C CLASS D CLASS R ------------ -------------------------- ------------ PERIOD ENDED YEAR ENDED PERIOD ENDED PERIOD ENDED OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31, 2000(2) 2000 1999(4) 2000(5) ------------ ----------- ------------ ------------ Net asset value, beginning of period............. $20.87 $ 23.50 $ 23.73 $22.44 Net investment income (loss)............. (0.01)* 0.23* 0.10* 0.02* Net realized and unrealized gain (loss) on investments........ 3.50 0.04 (0.26) 2.13 ------ ------- ------- ------ Net increase (decrease) in net asset value from operations......... 3.49 0.27 (0.16) 2.15 ------ ------- ------- ------ Dividends from net investment income.. (0.03) (0.18) (0.07) (0.04) Distributions from capital gains...... -- (0.69) -- -- ------ ------- ------- ------ Total distributions. (0.03) (0.87) (0.07) (0.04) ------ ------- ------- ------ Net asset value, end of period.......... $24.39 $ 24.64 $ 23.50 $24.63 ------ ------- ------- ------ ------ ------- ------- ------ Total return'D'D'... 17.02% 8.75% (0.67)% 9.96% Ratio of expenses to average net assets............. 1.28% 0.80% 0.97%'D' 0.43% Ratio of net investment income (loss) to average net assets......... (0.03)% 1.00% 0.99%'D' 0.07% Portfolio turnover rate............... 55.4% 55.4% 24.5% 55.4% Net assets, end of period (000 omitted)........... $ 496 $46,708 $48,152 $ 96
- ------------------------ 'D' Annualized. 'D'D' Total return is calculated assuming an initial investment made at the net asset value at the beginning of the period, reinvestment of all dividends and distributions at net asset value during the period, and redemption on the last day of the period. Initial sales charge or contingent deferred sales charge is not reflected in the calculation of total return. Total return calculated for a period of less than one year is not annualized. * Based on average shares outstanding. (1) The Funds commenced offering Class B shares on February 28, 1996. (2) The Funds commenced offering Class C shares on February 28, 2000. (3) The Growth Fund commenced offering Class D shares on May 13, 1999. (4) The Growth and Income Fund commenced offering Class D shares on April 30, 1999. (5) The Funds commenced offering Class R shares on August 1, 2000. (6) Amount rounds to less than $0.01. FINANCIAL HIGHLIGHTS (continued) - -------------------------------------------------------------------------------- The table below sets forth financial data for a share of beneficial interest outstanding throughout the periods presented. This information has been derived from information provided in the financial statements.
SMALL COMPANY VALUE FUND ---------------------------------------------------- CLASS A ---------------------------------------------------- YEAR ENDED OCTOBER 31, ---------------------------------------------------- 2000 1999 1998 1997 1996 -------- -------- -------- -------- -------- Net asset value, beginning of period...... $ 20.52 $ 19.54 $ 23.34 $ 18.41 $ 16.61 Net investment income (loss).............. 0.06* 0.06* 0.07* 0.07 0.09 Net realized and unrealized gain (loss) on investments.............................. 4.05 1.01 (2.55) 5.66 2.16 -------- -------- -------- -------- -------- Net increase (decrease) in net asset value from operations.......................... 4.11 1.07 (2.48) 5.73 2.25 -------- -------- -------- -------- -------- Dividends from net investment income...... (0.04) (0.07) (0.06) (0.08) (0.04) Distributions from capital gains.......... (2.05) (0.02) (1.26) (0.72) (0.41) -------- -------- -------- -------- -------- Total distributions....................... (2.09) (0.09) (1.32) (0.80) (0.45) -------- -------- -------- -------- -------- Net asset value, end of period............ $ 22.54 $ 20.52 $ 19.54 $ 23.34 $ 18.41 -------- -------- -------- -------- -------- -------- -------- -------- -------- -------- Total return'D''D'........................ 21.69% 5.47% (11.20)% 32.48% 13.80% Ratio of expenses to average net assets... 1.39% 1.37% 1.29% 1.35% 1.47% Ratio of net investment income (loss) to average net assets....................... 0.28% 0.33% 0.30% 0.37% 0.48% Portfolio turnover rate................... 41.6% 29.6% 41.5% 21.1% 35.1% Net assets, end of period (000 omitted)... $188,501 $188,192 $237,873 $283,001 $227,716 SMALL COMPANY VALUE FUND ----------------------------------------------------------------------------- CLASS B CLASS C CLASS R ----------------------------------------------- ------------ ------------ YEAR ENDED OCTOBER 31, PERIOD ENDED PERIOD ENDED ----------------------------------------------- OCTOBER 31, OCTOBER 31, 2000 1999 1998 1997 1996(1) 2000(3) 2000(4) ------- ------- ------- ------- ------- ------------ ------------ Net asset value, beginning of period...... $ 20.13 $ 19.23 $ 23.12 $ 18.34 $17.41 $17.96 $21.35 Net investment income (loss).............. (0.09)* (0.14)* (0.09)* (0.02) (0.02) (0.07)* 0.02* Net realized and unrealized gain (loss) on investments.............................. 3.96 1.06 (2.55) 5.57 0.95 4.05 1.25 ------- ------- ------- ------- ------ ------ ------ Net increase (decrease) in net asset value from operations.......................... 3.87 0.92 (2.64) 5.55 0.93 3.98 1.27 ------- ------- ------- ------- ------ ------ ------ Dividends from net investment income...... -- -- -- (0.05) -- -- -- Distributions from capital gains.......... (2.05) (0.02) (1.25) (0.72) -- -- -- ------- ------- ------- ------- ------ ------ ------ Total distributions....................... (2.05) (0.02) (1.25) (0.77) -- -- -- ------- ------- ------- ------- ------ ------ ------ Net asset value, end of period............ $ 21.95 $ 20.13 $ 19.23 $ 23.12 $18.34 $21.94 $22.62 ------- ------- ------- ------- ------ ------ ------ ------- ------- ------- ------- ------ ------ ------ Total return'D''D'........................ 20.80% 4.75% (11.98)% 31.55% 5.28% 22.16% 5.95% Ratio of expenses to average net assets... 2.10% 2.07% 1.99% 2.05% 2.15%'D' 1.42% 0.34% Ratio of net investment income (loss) to average net assets....................... (0.43)% (0.71)% (0.40)% (0.32)% (0.34)%'D' (0.33)% 0.09% Portfolio turnover rate................... 41.6% 29.6% 41.5% 21.1% 35.1% 41.6% 41.6% Net assets, end of period (000 omitted)... $17,255 $19,257 $22,284 $18,395 $6,305 $ 220 $ 105 TECHNOLOGY FUND ------------------------------------------------------------------------ CLASS A CLASS B CLASS C CLASS D CLASS R ------------ ------------ ------------ ------------ ------------ PERIOD ENDED PERIOD ENDED PERIOD ENDED PERIOD ENDED PERIOD ENDED OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31, 2000(5) 2000(5) 2000(5) 2000(6) 2000(2) ------------ ------------ ------------ ------------ ------------ Net asset value, beginning of period...... $13.30 $13.30 $13.30 $15.79 $ 10.00 Net investment loss....................... (0.04)* (0.07)* (0.06)* (0.02)* (0.14)* Net realized and unrealized loss on investments.............................. (0.47) (0.46) (0.47) (2.98) 2.93 ------ ------ ------ ------ ------- Net decrease in net asset value from operations............................... (0.51) (0.53) (0.53) (3.00) 2.79 ------ ------ ------ ------ ------- Net asset value, end of period............ $12.79 $12.77 $12.77 $12.79 $ 12.79 ------ ------ ------ ------ ------- ------ ------ ------ ------ ------- Total return'D''D'........................ (3.83)% (3.98)% (3.98)% (19.00)% 27.90% Ratio of expenses to average net assets(7)................................ 0.35% 0.53% 0.54% 0.18% 1.31% Ratio of net investment loss to average net assets(7)............................ (0.29)% (0.47)% (0.48)% (0.15)% (1.03)% Portfolio turnover rate................... 14.2% 14.2% 14.2% 14.2% 14.2% Net assets, end of period (000 omitted)... $2,913 $1,277 $ 479 $3,292 $28,726
- ------------------------ 'D' Annualized. 'D''D' Total return is calculated assuming an initial investment made at the net asset value at the beginning of the period, reinvestment of all dividends and distributions at net asset value during the period, and redemption on the last day of the period. Initial sales charge or contingent deferred sales charge is not reflected in the calculation of total return. Total return calculated for a period of less than one year is not annualized. * Based on average shares outstanding. (1) The Small Company Value Fund commenced offering Class B shares on February 28, 1996. (2) The Technology Fund commenced operations on November 18, 1999. (3) The Small Company Value Fund commenced offering Class C shares on February 28, 2000. (4) The Small Company Value Fund commenced offering Class R shares on August 1, 2000. (5) The Technology Fund commenced offering Class A, Class B and Class C shares on August 1, 2000. (6) The Technology Fund commenced offering Class D shares on September 1, 2000. (7) Net of voluntary assumption by Advisor of expenses, expressed as a percentage of average net assets, as follows: Technology Fund, 0.83% (annualized) for the period ended 10/31/00. FINANCIAL HIGHLIGHTS (continued) - -------------------------------------------------------------------------------- The table below sets forth financial data for a share of beneficial interest outstanding throughout the periods presented. This information has been derived from information provided in the financial statements.
STRATEGIC GROWTH FUND --------------------------------------------------------- CLASS A CLASS B CLASS C CLASS R ------------ ------------ ------------ ------------ PERIOD ENDED PERIOD ENDED PERIOD ENDED PERIOD ENDED OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31, 2000(4) 2000(4) 2000(4) 2000(1) ------------ ------------ ------------ ------------ Net asset value, beginning of period........................... $11.07 $11.07 $11.07 $10.00 Net investment loss............... (0.02)* (0.04)* (0.04)* (0.05)* Net realized and unrealized gain (loss) on investments............ (0.12) (0.10) (0.10) 0.99 ------ ------ ------ ------ Net increase (decrease) in net asset value from operations...... (0.14) (0.14) (0.14) 0.94 ------ ------ ------ ------ Net asset value, end of period.... $10.93 $10.93 $10.93 $10.94 ------ ------ ------ ------ ------ ------ ------ ------ Total return'D'D'................. (1.26)% (1.26)% (1.26)% 9.40% Ratio of expenses to average net assets(6)........................ 0.30% 0.48% 0.48% 1.13% Ratio of net investment loss to average net assets(6)............ (0.17)% (0.34)% (0.35)% (0.43)% Portfolio turnover rate........... 21.4% 21.4% 21.4% 21.4% Net assets, end of period (000 omitted)......................... $ 100 $ 359 $ 38 $8,263
INTERNATIONAL EQUITY FUND ----------------------------------------------- CLASS A ----------------------------------------------- YEAR ENDED OCTOBER 31, ----------------------------------------------- 2000 1999 1998 1997 1996 ------- ------- ------- ------- ------- Net asset value, beginning of period.............. $ 14.00 $ 12.20 $ 11.42 $ 10.38 $ 9.58 Net investment income (loss).............. (0.06)* (0.06)* (0.06)* (0.07)* (0.04)* Net realized and unrealized gain (loss) on investments and foreign currency transactions........ (0.11) 2.56 0.99 1.11 0.84 ------- ------- ------- ------- ------- Net increase in net asset value from operations.......... (0.17) 2.50 0.93 1.04 0.80 ------- ------- ------- ------- ------- Dividends from net investment income... -- -- (0.06) -- -- Distributions from capital gains....... (1.78) (0.70) (0.09) -- -- ------- ------- ------- ------- ------- Total distributions.. (1.78) (0.70) (0.15) -- -- ------- ------- ------- ------- ------- Net asset value, end of period........... $ 12.05 $ 14.00 $ 12.20 $ 11.42 $ 10.38 ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- Total return'D'D'.... (1.87)% 21.76% 8.20% 10.02% 8.35% Ratio of expenses to average net assets(6)........... 2.03% 2.15% 2.15% 2.15% 2.15% Ratio of net investment income (loss) to average net assets(6)....... (0.45)% (0.44)% (0.49)% (0.59)% (0.39)% Portfolio turnover rate................ 45.2% 82.0% 69.7% 73.9% 94.1% Net assets, end of period (000 omitted)............ $52,966 $48,181 $44,286 $44,316 $42,170 INTERNATIONAL EQUITY FUND ------------------------------------------------------------------------------------------------------- CLASS B CLASS C CLASS D CLASS R -------------------------------------------- ------------ -------------------------- ------------ YEAR ENDED OCTOBER 31, PERIOD ENDED YEAR ENDED PERIOD ENDED PERIOD ENDED -------------------------------------------- OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31, 2000 1999 1998 1997 1996 2000(2) 2000 1999(3) 2000(5) -------- ------ ------ ------ ------ ------- ---- ------- ------- Net asset value, beginning of period.............. $ 13.63 $11.98 $11.24 $10.29 $ 9.57 $13.35 $14.02 $12.69 $13.05 Net investment income (loss).............. (0.16)* (0.15)* (0.15)* (0.15)* (0.13)* (0.24)* 0.02* (0.14)* (0.11)* Net realized and unrealized gain (loss) on investments and foreign currency transactions........ (0.12) 2.50 0.98 1.10 0.85 (1.52) (0.17) 1.47 (0.89) -------- ------ ------ ------ ------ ------ ------ ------ ------ Net increase in net asset value from operations.......... (0.28) 2.35 0.83 0.95 0.72 (1.76) (0.15) 1.33 (1.00) -------- ------ ------ ------ ------ ------ ------ ------ ------ Dividends from net investment income... -- -- -- -- -- -- -- -- -- Distributions from capital gains....... (1.78) (0.70) (0.09) -- -- -- (1.78) -- -- -------- ------ ------ ------ ------ ------ ------ ------ ------ Total distributions.. (1.78) (0.70) (0.09) -- -- -- (1.78) -- -- -------- ------ ------ ------ ------ ------ ------ ------ ------ Net asset value, end of period........... $ 11.57 $13.63 $11.98 $11.24 $10.29 $11.59 $12.09 $14.02 $12.05 -------- ------ ------ ------ ------ ------ ------ ------ ------ -------- ------ ------ ------ ------ ------ ------ ------ ------ Total return'D'D'.... (2.84)% 20.86% 7.43% 9.23% 7.52% (13.18)% (1.70)% 10.48% (7.66)% Ratio of expenses to average net assets(6)........... 2.78% 2.90% 2.90% 2.90% 2.90% 2.59% 1.50% 1.90%'D' 1.63% Ratio of net investment income (loss) to average net assets(6)....... (1.22)% (1.18)% (1.24)% (1.32)% (1.25)%'D' (1.81)% 0.18% (1.14)%'D' (0.87)% Portfolio turnover rate................ 45.2% 82.0% 69.7% 73.9% 94.1% 45.2% 45.2% 82.0% 45.2% Net assets, end of period (000 omitted)............ $ 5,089 $5,527 $6,133 $6,821 $4,955 $ 141 $4,738 $1,586 $ 138
- ------------------------ 'D' Annualized. 'D'D' Total return is calculated assuming an initial investment made at the net asset value at the beginning of the period, reinvestment of all dividends and distributions at net asset value during the period, and redemption on the last day of the period. Initial sales charge or contingent deferred sales charge is not reflected in the calculation of total return. Total return calculated for a period of less than one year is not annualized. * Based on average shares outstanding. (1) The Strategic Growth Fund commenced operations on November 18, 1999. (2) The International Equity Fund commenced offering Class C shares on February 28, 2000. (3) The International Equity Fund commenced offering Class D shares on May 13, 1999. (4) The Strategic Growth Fund commenced offering Class A, Class B and Class C shares on August 1, 2000. (5) The International Equity Fund commenced offering Class R shares on August 1, 2000. (6) Net of voluntary assumption by Advisor and Subadvisor of expenses, expressed as a percentage of average net assets, as follows: Strategic Growth Fund, 1.87% (annualized) for the period ended 10/31/00; International Equity Fund Class A and Class B shares, .04%, .10%, .18% and .27% for the years ended 10/31/99, 98, 97 and 96, respectively; and International Equity Fund Class D shares, .04% (annualized) for the period 05/13/99 through 10/31/99. FINANCIAL HIGHLIGHTS (continued) - -------------------------------------------------------------------------------- The table below sets forth financial data for a share of beneficial interest outstanding throughout the periods presented. This information has been derived from information provided in the financial statements.
DEVELOPING MARKETS FUND ----------------------------------------------------------------------------------- CLASS A CLASS B ----------------------------------------------------------- ------------------ YEAR ENDED OCTOBER 31, YEAR ENDED OCTOBER 31, ----------------------------------------------------------- ------------------ 2000 1999 1998 1997 1996 2000 1999 ------- ------- ------- ------- ------- ------ ------ Net asset value, beginning of period......... $ 9.95 $ 7.14 $ 9.52 $ 9.96 $ 9.53 $ 9.66 $ 6.96 Net investment income (loss)................. (0.08)* 0.03* 0.02* (0.02)* (0.01)* (0.16)* (0.03)* Net realized and unrealized gain (loss) on investments and foreign currency transactions................................ (1.28) 2.58 (2.40) (0.40) 0.44 (1.22) 2.50 Contribution from subadvisor................. -- 0.23 -- -- -- -- 0.23 ------- ------- ------- ------- ------- ------ ------ Net increase (decrease) in net asset value from operations............................. (1.36) 2.84 (2.38) (0.42) 0.43 (1.38) 2.70 ------- ------- ------- ------- ------- ------ ------ Dividends from net investment income......... -- (0.01) -- -- -- -- -- Distributions from capital gains............. -- -- -- (0.02) -- -- -- Tax return of capital........................ -- (0.02) -- -- -- -- -- ------- ------- ------- ------- ------- ------ ------ Total distributions.......................... -- (0.03) -- (0.02) -- -- -- ------- ------- ------- ------- ------- ------ ------ Net asset value, end of period............... $ 8.59 $ 9.95 $ 7.14 $ 9.52 $ 9.96 $ 8.28 $ 9.66 ------- ------- ------- ------- ------- ------ ------ ------- ------- ------- ------- ------- ------ ------ Total return'D''D'........................... (13.67)% 39.82% (25.00)% (4.18)% 4.51% (14.29)% 38.79% Ratio of expenses to average net assets(5)... 2.15% 2.15% 2.15% 2.15% 2.15% 2.90% 2.90% Ratio of net investment income (loss) to average net assets(5)....................... (0.70)% 0.32% 0.22% (0.17)% (0.14)% (1.43)% (0.36)% Portfolio turnover rate...................... 115.4% 36.9% 43.6% 52.8% 26.8% 115.4% 36.9% Net assets, end of period (000 omitted)...... $13,294 $16,023 $16,355 $29,402 $36,918 $2,214 $2,685 DEVELOPING MARKETS FUND ------------------------------------------------------------- CLASS B CLASS C CLASS R ------------------------------- ------------ ------------ YEAR ENDED OCTOBER 31, ------------------------------- OCTOBER 31, OCTOBER 31, 1998 1997 1996 2000(3) 2000(4) ------- ------ ------ ------------ ------------ Net asset value, beginning of period......... $ 9.36 $ 9.86 $ 9.52 $12.35 $10.54 Net investment income (loss)................. (0.04)* (0.19)* (0.08)* (0.28)* (0.19)* Net realized and unrealized gain (loss) on investments and foreign currency transactions................................ (2.36) (0.29) 0.42 (3.81) (1.76) Contribution from subadvisor................. -- -- -- -- -- ------- ------ ------ ------ ------ Net increase (decrease) in net asset value from operations............................. (2.40) (0.48) 0.34 (4.09) (1.95) ------- ------ ------ ------ ------ Dividends from net investment income......... -- -- -- -- -- Distributions from capital gains............. -- (0.02) -- -- -- Tax return of capital........................ -- -- -- -- -- ------- ------ ------ ------ ------ Total distributions.......................... -- (0.02) -- -- -- ------- ------ ------ ------ ------ Net asset value, end of period............... $ 6.96 $ 9.36 $ 9.86 $ 8.26 $ 8.59 ------- ------ ------ ------ ------ ------- ------ ------ ------ ------ Total return'D''D'........................... (25.64)% (4.83)% 3.57% (33.12)% (18.50)% Ratio of expenses to average net assets(5)... 2.90% 2.90% 2.90% 1.97% 0.54% Ratio of net investment income (loss) to average net assets(5)....................... (0.50)% (1.74)% (0.83)% (1.97)% (0.54)% Portfolio turnover rate...................... 43.6% 52.8% 26.8% 115.4% 115.4% Net assets, end of period (000 omitted)...... $ 2,509 $4,941 $3,641 $ 12 $ 18
FIXED INCOME FUND -------------------------------------------------------------------------- CLASS A CLASS B ----------------------------------------------- ------------------------ YEAR ENDED OCTOBER 31, YEAR ENDED OCTOBER 31, ----------------------------------------------- ------------------------ 2000 1999 1998 1997 1996 2000 1999 1998 ------- ------- ------- ------- ------- ------ ------ ------ Net asset value, beginning of period......... $ 9.83 $ 10.46 $ 10.16 $ 10.07 $ 10.22 $ 9.83 $10.46 $10.16 Net investment income........................ 0.52 0.50 0.53 0.58 0.58 0.45 0.43 0.46 Net realized and unrealized gain (loss) on investments................................. (0.02) (0.53) 0.30 0.09 (0.15) (0.02) (0.53) 0.30 ------- ------- ------- ------- ------- ------ ------ ------ Net increase (decrease) in net asset value from operations............................. 0.50 (0.03) 0.83 0.67 0.43 0.43 (0.10) 0.76 ------- ------- ------- ------- ------- ------ ------ ------ Dividends from net investment income......... (0.52) (0.50) (0.53) (0.58) (0.58) (0.45) (0.43) (0.46) Distributions from capital gains............. -- (0.10) -- -- -- -- (0.10) -- ------- ------- ------- ------- ------- ------ ------ ------ Total distributions.......................... (0.52) (0.60) (0.53) (0.58) (0.58) (0.45) (0.53) (0.46) ------- ------- ------- ------- ------- ------ ------ ------ Net asset value, end of period............... $ 9.81 $ 9.83 $ 10.46 $ 10.16 $ 10.07 $ 9.81 $ 9.83 $10.46 ------- ------- ------- ------- ------- ------ ------ ------ ------- ------- ------- ------- ------- ------ ------ ------ Total return'D''D'........................... 5.31% (0.26)% 8.46% 6.84% 4.34% 4.57% (0.97)% 7.71% Ratio of expenses to average net assets(5)... 0.99% 1.00% 1.00% 1.00% 1.00% 1.70% 1.70% 1.70% Ratio of net investment income to average net assets(5)................................... 5.38% 4.91% 5.24% 5.74% 5.72% 4.67% 4.21% 4.50% Portfolio turnover rate...................... 84.2% 84.3% 114.0% 119.3% 90.2% 84.2% 84.3% 114.0% Net assets, end of period (000 omitted)...... $34,951 $43,060 $47,834 $54,755 $56,388 $3,256 $4,471 $5,849 FIXED INCOME FUND ------------------------------------------------------------------------------- CLASS B CLASS C CLASS D CLASS R ------------------- ------------ --------------------------- ------------ YEAR ENDED OCTOBER 31, ERIOD ENDED YEAR ENDED PERIOD ENDED PERIOD ENDED ------------------- OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31, 1997 1996(1) 2000(3) 2000 1999(2) 2000(4) ------ ------- ------------ ------------ ------------ ------------ Net asset value, beginning of period......... $10.07 $10.22 $ 9.69 $ 9.83 $ 10.09 $ 9.71 Net investment income........................ 0.50 0.34 0.25 0.55 0.26 0.14 Net realized and unrealized gain (loss) on investments................................. 0.09 (0.15) 0.12 (0.02) (0.26) 0.10 ------ ------ ------ ------- -------- ------ Net increase (decrease) in net asset value from operations............................. 0.59 0.19 0.37 0.53 -- 0.24 ------ ------ ------ ------- -------- ------ Dividends from net investment income......... (0.50) (0.34) (0.25) (0.55) (0.26) (0.14) Distributions from capital gains............. -- -- -- -- -- -- ------ ------ ------ ------- -------- ------ Total distributions.......................... (0.50) (0.34) (0.25) (0.55) (0.26) (0.14) ------ ------ ------ ------- -------- ------ Net asset value, end of period............... $10.16 $10.07 $ 9.81 $ 9.81 $ 9.83 $ 9.81 ------ ------ ------ ------- -------- ------ ------ ------ ------ ------- -------- ------ Total return'D''D'........................... 6.10% 2.23% 3.86% 5.62% 0.04% 2.44% Ratio of expenses to average net assets(5)... 1.70% 1.70%'D' 1.70%'D' 0.70% 0.70%'D' 0.99%'D' Ratio of net investment income to average net assets(5)................................... 4.99% 5.03%'D' 4.08%'D' 5.67% 6.30%'D' 6.51%'D' Portfolio turnover rate...................... 119.3% 90.2% 84.2% 84.2% 84.3% 84.2% Net assets, end of period (000 omitted)...... $3,375 $1,629 $ --(6) $95,471 $116,424 $ 22
- ------------------------ 'D' Annualized. 'D''D' Total return is calculated assuming an initial investment made at the net asset value at the beginning of the period, reinvestment of all dividends and distributions at net asset value during the period, and redemption on the last day of the period. Initial sales charge or contingent deferred sales charge is not reflected in the calculation of total return. Total return calculated for a period of less than one year is not annualized. Total return for the year ended October 31, 1999 excluding the effect of the contribution from the Subadvisor for realized and unrealized securities losses was 36.59% and 35.49% for the Developing Markets Fund Class A and B shares, respectively. * Based on average shares outstanding. (1) The Fixed Income Fund commenced offering Class B shares on February 28, 1996. (2) The Fixed Income Fund commenced offering Class D shares on April 30, 1999. (3) The Funds commenced offering Class C shares on February 28, 2000. (4) The Funds commenced offering Class R shares on August 1, 2000. (5) Net of voluntary assumption by Advisor and Subadvisor of expenses, expressed as a percentage of average net assets, as follows: Developing Markets Fund Class A and Class B shares, .72%, .76%, .61%, .34% and .54% for the years ended 10/31/00, 99, 98, 97 and 96, respectively; Developing Markets Fund Class C shares, .72% (annualized) for the period 02/28/00 through 10/31/00; Developing Markets Fund Class R shares, .72% (annualized) for the period 08/01/00 through 10/31/00; Fixed Income Fund Class A shares, .13%, .14%, .30%, .30% and .34% for the years ended 10/31/00, 99, 98, 97 and 96, respectively; Fixed Income Fund Class B shares, .13%, .14%, .30%, and .30% for the years ended 10/31/00, 99, 98 and 97, respectively, and .34% (annualized) for the period 02/28/96 through 10/31/96; Fixed Income Fund Class C shares, .13% (annualized) for the period 02/28/00 through 10/31/00; Fixed Income Fund Class D shares, .13% for the year ended 10/31/00 and .14% (annualized) for the period 04/30/99 through 10/31/99; and Fixed Income Fund Class R shares, .13% (annualized) for the period 08/01/00 through 10/31/00. (6) Amount rounds to less than $1,000. FINANCIAL HIGHLIGHTS (continued) - -------------------------------------------------------------------------------- The table below sets forth financial data for a share of beneficial interest outstanding throughout the periods presented. This information has been derived from information provided in the financial statements.
MUNICIPAL TRUST FUND ----------------------------------------------- CLASS A ----------------------------------------------- YEAR ENDED OCTOBER 31, ----------------------------------------------- 2000 1999 1998 1997 1996 ------- ------- ------- ------- ------- Net asset value, beginning of period...... $ 10.05 $ 10.53 $ 10.29 $ 10.01 $ 10.06 Net investment income..................... 0.39 0.38 0.38 0.45 0.43 Net realized and unrealized gain (loss) on investments.............................. 0.12 (0.48) 0.24 0.28 (0.05) ------- ------- ------- ------- ------- Net increase (decrease) in net asset value from operations.......................... 0.51 (0.10) 0.62 0.73 0.38 ------- ------- ------- ------- ------- Dividends from net investment income...... (0.39) (0.38) (0.38) (0.45) (0.43) Distributions from capital gains.......... (0.08) -- -- -- -- ------- ------- ------- ------- ------- Total distributions....................... (0.47) (0.38) (0.38) (0.45) (0.43) ------- ------- ------- ------- ------- Net asset value, end of period............ $ 10.09 $ 10.05 $ 10.53 $ 10.29 $ 10.01 ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- Total return'D'D'......................... 5.20% (1.02)% 6.28% 7.37% 3.83% Ratio of expenses to average net assets(6)................................ 0.99% 1.00% 1.00% 0.70% 0.80% Ratio of net investment income to average net assets(6)............................ 3.92% 3.65% 3.78% 4.38% 4.26% Portfolio turnover rate................... 17.7% 76.5% 51.5% 84.3% 79.3% Net assets, end of period (000 omitted)... $22,565 $29,912 $44,306 $35,878 $38,794 MUNICIPAL TRUST FUND ------------------------------------------------------------------------- CLASS B CLASS C CLASS R ------------------------------------------- ------------ ------------ YEAR ENDED OCTOBER 31, PERIOD ENDED PERIOD ENDED ------------------------------------------- OCTOBER 31, OCTOBER 31, 2000 1999 1998 1997 1996(1) 2000(3) 2000(5) ------ ------ ------ ------ ------- ------------ ------------ Net asset value, beginning of period...... $10.05 $10.53 $10.29 $10.01 $10.12 $ 9.88 $10.04 Net investment income..................... 0.32 0.31 0.32 0.37 0.25 0.19 0.10 Net realized and unrealized gain (loss) on investments.............................. 0.12 (0.48) 0.24 0.28 (0.11) 0.17 0.05 ------ ------ ------ ------ ------ ------ ------ Net increase (decrease) in net asset value from operations.......................... 0.44 (0.17) 0.56 0.65 0.14 0.36 0.15 ------ ------ ------ ------ ------ ------ ------ Dividends from net investment income...... (0.32) (0.31) (0.32) (0.37) (0.25) (0.19) (0.10) Distributions from capital gains.......... (0.08) -- -- -- -- -- -- ------ ------ ------ ------ ------ ------ ------ Total distributions....................... (0.40) (0.31) (0.32) (0.37) (0.25) (0.19) (0.10) ------ ------ ------ ------ ------ ------ ------ Net asset value, end of period............ $10.09 $10.05 $10.53 $10.29 $10.01 $10.05 $10.09 ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ Total return'D'D'......................... 4.45% (1.71)% 5.54% 6.62% 1.42% 3.65% 1.46% Ratio of expenses to average net assets(6)................................ 1.70% 1.70% 1.70% 1.40% 1.23%'D' 1.70%'D' 0.99%'D' Ratio of net investment income to average net assets(6)............................ 3.21% 2.94% 3.04% 3.66% 3.81%'D' 2.91%'D' 4.01%'D' Portfolio turnover rate................... 17.7% 76.5% 51.5% 84.3% 79.3% 17.7% 17.7% Net assets, end of period (000 omitted)... $1,082 $1,044 $1,430 $ 546 $ 489 $ --(7) $ 26
HIGH INCOME FUND --------------------------------------------------------- CLASS A CLASS B --------------------------- --------------------------- YEAR ENDED PERIOD ENDED YEAR ENDED PERIOD ENDED OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31, 2000 1999(2) 2000 1999(2) ------------ ------------ ------------ ------------ Net asset value, beginning of period...... $ 9.66 $ 10.00 $ 9.66 $10.00 Net investment income..................... 0.88 0.56 0.81 0.50 Net realized and unrealized gain (loss) on investments.............................. (0.86) (0.34) (0.86) (0.34) ------- ------- ------ ------ Net increase (decrease) in net asset value from operations.......................... 0.02 0.22 (0.05) 0.16 ------- ------- ------ ------ Dividends from net investment income...... (0.88) (0.56) (0.81) (0.50) Distributions from capital gains.......... (0.07) -- (0.07) -- ------- ------- ------ ------ Total distributions....................... (0.95) (0.56) (0.88) (0.50) ------- ------- ------ ------ Net asset value, end of period............ $ 8.73 $ 9.66 $ 8.73 $ 9.66 ------- ------- ------ ------ ------- ------- ------ ------ Total return'D'D'......................... (0.06)% 2.19% (0.81)% 1.60% Ratio of expenses to average net assets(6)................................ 1.10% 1.10%'D' 1.85% 1.85%'D' Ratio of net investment income to average net assets(6)............................ 9.35% 8.61%'D' 8.60% 7.83%'D' Portfolio turnover rate................... 43.9% 188.4% 43.9% 188.4% Net assets, end of period (000 omitted)... $10,709 $10,488 $1,313 $1,447 HIGH INCOME FUND --------------------------------------------------------- CLASS C CLASS D CLASS R ------------ --------------------------- ------------ PERIOD ENDED YEAR ENDED PERIOD ENDED PERIOD ENDED OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31, 2000(3) 2000 1999(4) 2000(5) ------------ ------------ ------------ ------------ Net asset value, beginning of period...... $ 9.57 $ 9.65 $10.23 $ 9.21 Net investment income..................... 0.53 0.90 0.41 0.21 Net realized and unrealized gain (loss) on investments.............................. (0.84) (0.85) (0.58) (0.48) ------ ------ ------ ------ Net increase (decrease) in net asset value from operations.......................... (0.31) 0.05 (0.17) (0.27) ------ ------ ------ ------ Dividends from net investment income...... (0.53) (0.90) (0.41) (0.21) Distributions from capital gains.......... -- (0.07) -- -- ------ ------ ------ ------ Total distributions....................... (0.53) (0.97) (0.41) (0.21) ------ ------ ------ ------ Net asset value, end of period............ $ 8.73 $ 8.73 $ 9.65 $ 8.73 ------ ------ ------ ------ ------ ------ ------ ------ Total return'D'D'......................... (3.31)% 0.29% (1.63)% (2.98) Ratio of expenses to average net assets(6)................................ 1.85%'D' 0.85% 0.85%'D' 1.10%'D' Ratio of net investment income to average net assets(6)............................ 7.57%'D' 9.62% 9.36%'D' 9.14%'D' Portfolio turnover rate................... 43.9% 43.9% 188.4% 43.9% Net assets, end of period (000 omitted)... $ 78 $1,504 $ 926 $ 141
- ------------------------ 'D' Annualized. 'D'D' Total return is calculated assuming an initial investment made at the net asset value at the beginning of the period, reinvestment of all dividends and distributions at net asset value during the period, and redemption on the last day of the period. Initial sales charge or contingent deferred sales charge is not reflected in the calculation of total return. Total return calculated for a period of less than one year is not annualized. * Based on average shares outstanding. (1) The Municipal Trust Fund commenced offering Class B shares on February 28, 1996. (2) The High Income Fund commenced operations on March 8, 1999. (3) The Funds commenced offering Class C shares on February 28, 2000. (4) The High Income Fund commenced offering Class D shares on May 13, 1999. (5) The Funds commenced offering Class R shares on August 1, 2000. (6) Net of voluntary assumption by Advisor of expenses, expressed as a percentage of average net assets, as follows: Municipal Trust Fund Class A, .53%, .42%, .41%, .74% and .64% for the years ended 10/31/00, 99, 98, 97 and 96, respectively; Municipal Trust Fund Class B, .53%, .42%, .41% and .74% for the years ended 10/31/00, 99, 98 and 97, respectively, and .64% (annualized) for the period 02/28/96 through 10/31/96; Municipal Trust Fund Class C shares, .53% (annualized) for the period 02/28/00 through 10/31/00; Municipal Trust Fund Class R shares, .53% (annualized) for the period 08/01/00 through 10/31/00; High Income Fund Class A shares, 1.58% for the year ended 10/31/00 and 1.43% (annualized) for the period 03/08/99 through 10/31/99; High Income Fund Class B shares, 1.58% for the year ended 10/31/00 and 1.43% (annualized) for the period 03/08/99 through 10/31/99; High Income Fund Class C shares, 1.58% (annualized) for the period 02/28/00 through 10/31/00; High Income Fund Class D shares, 1.58% for the year ended 10/31/00 and 1.43% (annualized) for the period 05/13/99 through 10/31/99; and High Income Fund Class R shares, 1.58% (annualized) for the period 08/01/00 through 10/31/00. (7) Amount rounds to less than $1,000. REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS - -------------------------------------------------------------------------------- Shareholders and Board of Trustees DLJ Focus Funds DLJ Opportunity Funds and DLJ Select Funds We have audited the accompanying statements of assets and liabilities, including the statements of investments, of DLJ Focus Funds (comprising, respectively, DLJ Core Equity Fund, DLJ Fixed Income Fund, DLJ Growth and Income Fund, DLJ Municipal Trust Fund and DLJ Small Company Value Fund), DLJ Select Funds (comprising, respectively, DLJ Strategic Growth Fund and DLJ Technology Fund) and DLJ High Income Fund, DLJ International Equity Fund and DLJ Developing Markets Fund (three of the funds comprising DLJ Opportunity Funds) as of October 31, 2000, and the related statements of operations and changes in net assets and financial highlights for each of the periods indicated therein. These financial statements and financial highlights are the responsibility of the Funds' management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements and financial highlights. Our procedures included confirmation of securities owned as of October 31, 2000 by correspondence with the custodian and brokers. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of each of the respective Funds at October 31, 2000, and the results of their operations, the changes in their net assets and the financial highlights for each of the indicated periods, in conformity with accounting principles generally accepted in the United States. ERNEST & YOUNG LLP New York, New York December 20, 2000 DLJ MUTUAL FUNDS -- TAX INFORMATION (unaudited) - -------------------------------------------------------------------------------- We are required by Subchapter M of the Internal Revenue Code of 1986 to advise you as to the federal tax status of distributions received by shareholders during the Funds' fiscal year ended October 31, 2000. Accordingly, we are advising you that the following distributions paid during the fiscal year by the Funds were derived from the following sources:
ORDINARY INCOME DISTRIBUTIONS PER SHARE ----------------------- TAX ALTERNATIVE FROM FROM FROM EXEMPT MINIMUM TAX INVESTMENT SHORT-TERM LONG-TERM FUND INCOME* INCOME INCOME CAPITAL GAINS CAPITAL GAINS - ---- ------- ------ ------ ------------- ------------- DLJ Core Equity Fund -- Class A.............. $-- $-- $-- $-- $1.610 DLJ Core Equity Fund -- Class B.............. -- -- -- -- 1.610 DLJ Core Equity Fund -- Class D.............. -- -- -- -- 1.610 DLJ Growth and Income Fund -- Class A........ -- -- 0.121 -- 0.685 DLJ Growth and Income Fund -- Class B........ -- -- -- -- 0.685 DLJ Growth and Income Fund -- Class C........ -- -- 0.031 -- -- DLJ Growth and Income Fund -- Class D........ -- -- 0.179 -- 0.685 DLJ Growth and Income Fund -- Class R........ -- -- 0.044 -- -- DLJ Small Company Value Fund -- Class A...... -- -- 0.040 0.595 1.450 DLJ Small Company Value Fund -- Class B...... -- -- -- 0.595 1.450 DLJ International Equity Fund -- Class A..... -- -- -- 0.185 1.590 DLJ International Equity Fund -- Class B..... -- -- -- 0.185 1.590 DLJ International Equity Fund -- Class D..... -- -- -- 0.185 1.590 DLJ Fixed Income Fund -- Class A............. -- -- 0.524 -- -- DLJ Fixed Income Fund -- Class B............. -- -- 0.454 -- -- DLJ Fixed Income Fund -- Class C............. -- -- 0.249 -- -- DLJ Fixed Income Fund -- Class D............. -- -- 0.553 -- -- DLJ Fixed Income Fund -- Class R............. -- -- 0.136 -- -- DLJ Municipal Trust Fund -- Class A.......... 0.335 0.053 0.004 -- 0.080 DLJ Municipal Trust Fund -- Class B.......... 0.274 0.044 0.003 -- 0.080 DLJ Municipal Trust Fund -- Class C.......... 0.160 0.025 0.002 -- -- DLJ Municipal Trust Fund -- Class R.......... 0.082 0.013 0.001 -- -- DLJ High Income Fund -- Class A.............. -- -- 0.879 0.070 -- DLJ High Income Fund -- Class B.............. -- -- 0.808 0.070 -- DLJ High Income Fund -- Class C.............. -- -- 0.533 -- -- DLJ High Income Fund -- Class D.............. -- -- 0.902 0.070 -- DLJ High Income Fund -- Class R.............. -- -- 0.210 -- --
* Federally exempt interest dividends. Because each Fund's fiscal year is not the calendar year, calendar year taxpayers should use the dollar amounts and the nature of those amounts referenced on Form 1099-Div which will be mailed to you in late January, 2001. Included with your 1099-Div will be a notice identifying the percentage of ordinary dividends paid in 2000 which were derived from Federal obligations. In addition, for use by our DLJ Municipal Trust shareholders, a schedule referencing the source of federal tax exempt income identified by state will be provided. Shareholders are advised to consult their own tax advisors with respect to the tax consequences of their investments in each Fund. TRUSTEES G. Moffett Cochran Robert E. Fischer Stig Host Martin Jaffe Wilmot H. Kidd, III Peter F. Krogh John J. Sheehan OFFICERS G. Moffett Cochran, Chairman and President Martin Jaffe, Vice President, Treasurer and Secretary William Butler, Vice President Richard J. Hanlon, Vice President Cathy A. Jameson, Vice President Brian A. Kammerer, Vice President Marybeth B. Leithead, Vice President Luisa Michel, Vice President Hugh M. Neuburger, Vice President Roger W. Vogel, Vice President INVESTMENT ADVISOR Credit Suisse Asset Management, LLC An Investment Management Subsidiary of Credit Suisse Group 277 Park Avenue, New York, NY 10172 CUSTODIAN Citibank, N.A. 111 Wall Street, New York, NY 10043 TRANSFER AGENT PFPC, Inc. P.O. Box 61787 (211 South Gulph Road) King of Prussia, PA 19406-0903 DISTRIBUTOR Credit Suisse Asset Management Securities, Inc. 277 Park Avenue, New York, NY 10172 INDEPENDENT AUDITORS Ernst & Young LLP 787 Seventh Avenue, New York, NY 10019 LEGAL COUNSEL Sullivan & Cromwell 125 Broad Street, New York, NY 10004 This report is submitted for the general information of the shareholders of the Fund. It is not authorized for distribution to prospective investors in the Fund unless preceded or accompanied by an effective prospectus, which should be read carefully before investing. [DLJ LOGO] ANNUAL combined 10/00 277 Park Avenue, New York, NY 10172 STATEMENT OF DIFFERENCES ------------------------ The dagger symbol shall be expressed as .................................. 'D' EX-99.17(G) 9 0009.txt ANNUAL REPORT OF THE ACQUIRED FUND (LOGO) WARBURG PINCUS FUNDS PART OF CREDIT | ASSET SUISSE | MANAGEMENT [GRAPHIC OMITTED] ANNUAL REPORT OCTOBER 31, 2000 WARBURG PINCUS EMERGING GROWTH FUND (BULLET) WARBURG PINCUS SMALL COMPANY VALUE FUND (BULLET) WARBURG PINCUS SMALL COMPANY GROWTH FUND More complete information about the Funds, including charges and expenses, is provided in the PROSPECTUS, which must precede or accompany this document and which should be read carefully before investing. You may obtain additional copies by calling 800-WARBURG (800-927-2874) or by writing to Warburg Pincus Funds, P.O. Box 9030, Boston, MA 02205-9030. Credit Suisse Asset Management Securities, Inc., Distributor, located at 466 Lexington Avenue, New York, NY 10017-3147. Telephone: 800-927-2874. Warburg Pincus Funds are advised by Credit Suisse Asset Management, LLC. FROM TIME TO TIME, THE FUNDS' INVESTMENT ADVISER AND CO-ADMINISTRATORS MAY WAIVE SOME FEES AND/OR REIMBURSE SOME EXPENSES, WITHOUT WHICH PERFORMANCE WOULD BE LOWER. WAIVERS AND/OR REIMBURSEMENTS ARE SUBJECT TO CHANGE. RETURNS ARE HISTORICAL AND INCLUDE CHANGE IN SHARE PRICE AND REINVESTMENT OF DIVIDENDS AND CAPITAL GAINS. PAST PERFORMANCE CANNOT GUARANTEE FUTURE RESULTS. RETURNS AND SHARE PRICE WILL FLUCTUATE, AND REDEMPTION VALUE MAY BE MORE OR LESS THAN ORIGINAL COST. THE VIEWS OF THE FUNDS' MANAGEMENT ARE AS OF THE DATE OF THE LETTERS AND PORTFOLIO HOLDINGS DESCRIBED IN THIS DOCUMENT ARE AS OF OCTOBER 31, 2000; THESE VIEWS AND PORTFOLIO HOLDINGS MAY HAVE CHANGED SUBSEQUENT TO THESE DATES. NOTHING IN THIS DOCUMENT IS A RECOMMENDATION TO PURCHASE OR SELL SECURITIES. FUND SHARES ARE NOT DEPOSITS OR OTHER OBLIGATIONS OF CREDIT SUISSE ASSET MANAGEMENT, LLC ("CSAM") OR ANY AFFILIATE, ARE NOT FDIC INSURED AND ARE NOT GUARANTEED BY CSAM OR ANY AFFILIATE. FUND INVESTMENTS ARE SUBJECT TO INVESTMENT RISKS, INCLUDING LOSS OF YOUR INVESTMENT. WARBURG PINCUS EMERGING GROWTH FUND ANNUAL INVESTMENT ADVISER'S REPORT -- OCTOBER 31, 2000 - -------------------------------------------------------------------------------- December 6, 2000 Dear Shareholder: For the 12 months ended October 31, 2000, the Common Class shares of Warburg Pincus Emerging Growth Fund had a gain of 30.60%, vs. gains of 16.16% and 29.71%, respectively, for the Russell 2000 Growth Index and the Russell 2500 Growth Index. The period was a positive yet volatile one for growth-oriented small- and mid-cap stocks. The group initially surged, benefiting from investors' strong appetite for risk as Y2K fears evaporated and as a healthy U.S. economy buoyed profits. However, as in the large-cap market, these shares came under pressure as the economy's strength began to fuel inflation and interest-rate worries. Technology and telecommunications stocks, which had risen to generally lofty valuations, were especially volatile, falling sharply in April and May. Stocks were generally lackluster over the remainder of the period, with the economic and profit outlook becoming more clouded. However, certain market sectors performed well over the May-through-October span, with investors favoring defensive areas such as health care. Within this environment, the Fund had a good showing, both in absolute terms and compared to its benchmark. A number of the Fund's holdings contributed positively to its return, the late-period turmoil notwithstanding. Good performers for the Fund included its computer, oil-services, health-care and financial-services holdings. Stocks that hampered the Fund included certain of its telecommunications & equipment names. With regard to sector allocation, one notable change we made during the period was to raise the Fund's health-care position. Our heightened emphasis here was based on company-specific factors as well as on our belief that health-care fundamentals are improving. Companies that we added included a biotechnology/emerging pharmaceutical company whose technologies are used to develop products with enhanced therapeutic value. Other health-care companies we purchased included a medical-devices supplier. We also raised the Fund's weighting in the financial-services sector, where we generally focused on mid-cap companies with strong brand names. We added several companies we deemed attractive, given their valuations and their potential to benefit from what we believe will be a more-supportive interest-rate backdrop heading into 2001. 1 WARBURG PINCUS EMERGING GROWTH FUND ANNUAL INVESTMENT ADVISER'S REPORT -- OCTOBER 31, 2000 (CONT'D) - -------------------------------------------------------------------------------- We lowered the Fund's technology exposure over the course of the period, eliminating positions that we judged to have deteriorating prospects. Most of our selling activity was in the telecommunications area, where certain stocks in our view had become less attractive from a risk/reward perspective. That said, technology will continue to be a major theme in the Fund. The group in our view will remain a fount of opportunity, given such factors as a global emphasis on productivity enhancements and the rapid acceleration of Internet usage. Elsewhere of note, we ended the period with a roughly 10% weighting in the energy area, where we remained biased in favor of oil-services companies. We continue to have a positive view on the longer-term prospects for our energy holdings, and believe they can achieve good earnings growth even if energy prices began to decline going forward. Looking ahead, while the outlook for small- and mid-cap stocks over the next few months is certainly clouded, we remain of the view that a "soft landing" environment will prevail. Historically, a combination of subdued inflation and modest economic growth has tended to encourage investment in smaller companies, especially within the growth-oriented sectors targeted by the Fund. Of course, we will continue to monitor the flow of macroeconomic data and make adjustments to the portfolio as we deem appropriate from a risk/reward perspective. Elizabeth B. Dater Stephen J. Lurito Co-Portfolio Manager Co-Portfolio Manager INVESTING IN EMERGING-GROWTH COMPANIES ENTAILS SPECIAL RISK CONSIDERATIONS. THESE ARE DETAILED IN THE PROSPECTUS, WHICH SHOULD BE READ CAREFULLY BEFORE INVESTING. 2 WARBURG PINCUS EMERGING GROWTH FUND ANNUAL INVESTMENT ADVISER'S REPORT -- OCTOBER 31, 2000 (CONT'D) - -------------------------------------------------------------------------------- GROWTH OF $10,000 INVESTED IN COMMON CLASS SHARES OF WARBURG PINCUS EMERGING GROWTH FUND SINCE INCEPTION AS OF OCTOBER 31, 2000 The graph below illustrates a hypothetical investment of $10,000 in Common Class shares of Warburg Pincus Emerging Growth Fund (the "Fund") from January 21, 1988 (inception) to October 31, 2000, compared to the Russell 2000 Growth Index ("R2000G")* and the Russell 2500 Growth Index ("R2500G")** for the same time period. [GRAPHIC OMITTED] EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC Fund R2000G R2500G 1/21/88 $10,000.00 $10,000.00 $10,000.00 Feb-88 $10,480.00 $10,901.40 $10,926.20 Mar-88 $10,760.00 $11,411.20 $11,279.20 Apr-88 $10,860.00 $11,670.60 $11,393.90 May-88 $10,690.00 $11,357.00 $11,104.20 Jun-88 $11,696.60 $12,166.90 $11,925.10 Jul-88 $11,546.10 $12,051.50 $11,617.50 Aug-88 $11,104.80 $11,744.40 $11,192.20 Sep-88 $11,506.00 $12,055.80 $11,578.50 Oct-88 $11,245.20 $11,922.30 $11,444.00 Nov-88 $11,084.70 $11,527.30 $11,088.50 Dec-88 $11,696.20 $11,979.80 $11,557.80 Jan-89 $12,546.30 $12,514.90 $12,151.60 Feb-89 $12,720.40 $12,606.10 $12,194.30 Mar-89 $12,853.50 $12,903.50 $12,440.20 Apr-89 $13,601.20 $13,466.60 $13,116.30 May-89 $14,246.40 $14,046.60 $13,787.90 Jun-89 $14,183.10 $13,725.50 $13,442.60 Jul-89 $14,882.50 $14,255.80 $14,214.40 Aug-89 $15,067.60 $14,603.40 $14,632.30 Sep-89 $14,892.80 $14,649.80 $14,724.80 Oct-89 $13,967.10 $13,782.80 $14,074.40 Nov-89 $14,070.00 $13,875.30 $14,242.20 Dec-89 $14,238.40 $13,928.20 $14,390.30 Jan-90 $13,108.70 $12,711.40 $12,953.10 Feb-90 $13,503.00 $13,106.10 $13,342.90 Mar-90 $13,854.70 $13,615.80 $13,976.40 Apr-90 $13,396.40 $13,171.40 $13,620.70 May-90 $14,728.60 $14,103.70 $14,905.10 Jun-90 $14,821.50 $14,132.70 $15,016.00 Jul-90 $14,371.40 $13,510.80 $14,507.90 Aug-90 $12,903.20 $11,711.50 $12,514.20 Sep-90 $11,981.50 $10,675.30 $11,399.30 Oct-90 $11,606.50 $10,023.70 $10,887.50 Nov-90 $12,313.80 $10,788.00 $11,967.10 Dec-90 $12,834.80 $11,216.00 $12,635.10 Jan-91 $14,008.50 $12,230.30 $13,810.70 Feb-91 $15,149.80 $13,594.10 $15,303.60 Mar-91 $16,226.60 $14,551.00 $16,282.60 Apr-91 $15,645.10 $14,514.50 $15,917.20 May-91 $16,485.00 $15,206.40 $16,728.50 Jun-91 $15,249.50 $14,320.30 $15,810.60 Jul-91 $15,993.20 $14,822.80 $16,700.90 Aug-91 $16,920.00 $15,371.40 $17,423.40 Sep-91 $17,114.00 $15,491.80 $17,623.20 Oct-91 $18,288.70 $15,901.50 $18,219.90 Nov-91 $17,555.80 $15,166.20 $17,452.10 Dec-91 $20,039.30 $16,380.60 $19,587.40 Jan-92 $21,193.50 $17,707.90 $20,416.00 Feb-92 $21,215.50 $18,224.40 $20,617.30 Mar-92 $20,193.20 $17,607.70 $19,441.90 Apr-92 $18,808.10 $16,991.10 $18,428.60 May-92 $19,028.00 $17,217.10 $18,461.00 Jun-92 $18,401.40 $16,403.10 $17,457.10 Jul-92 $18,907.10 $16,973.90 $18,135.60 Aug-92 $18,709.20 $16,495.10 $17,600.60 Sep-92 $19,346.80 $16,875.40 $17,869.60 Oct-92 $20,094.30 $17,411.90 $18,629.00 Nov-92 $22,160.80 $18,744.20 $20,128.70 Dec-92 $22,472.20 $19,397.30 $20,721.90 Jan-93 $22,920.00 $20,053.90 $20,866.70 Feb-93 $21,755.60 $19,590.90 $19,819.00 Mar-93 $22,808.10 $20,226.60 $20,461.30 Apr-93 $22,427.40 $19,671.60 $19,698.10 May-93 $23,547.10 $20,542.00 $20,911.10 Jun-93 $23,871.80 $20,670.20 $20,961.70 Jul-93 $24,442.80 $20,955.70 $20,978.90 Aug-93 $25,909.60 $21,860.90 $22,084.50 Sep-93 $26,984.50 $22,477.90 $22,651.60 Oct-93 $26,581.40 $23,056.40 $23,097.20 Nov-93 $25,472.90 $22,297.90 $22,259.90 Dec-93 $26,541.10 $23,060.30 $23,238.70 Jan-94 $27,326.30 $23,783.20 $23,908.70 Feb-94 $26,874.20 $23,697.30 $23,949.30 Mar-94 $25,173.00 $22,446.40 $22,556.20 Apr-94 $24,744.70 $22,579.70 $22,530.70 May-94 $24,173.70 $22,326.30 $22,078.70 Jun-94 $23,804.90 $21,558.30 $21,098.70 Jul-94 $24,126.10 $21,922.70 $21,557.10 Aug-94 $25,553.70 $23,144.20 $23,142.00 Sep-94 $26,005.80 $23,066.90 $23,130.90 Oct-94 $26,624.40 $22,976.00 $23,528.50 Nov-94 $25,327.70 $22,048.20 $22,486.40 Dec-94 $26,160.40 $22,640.70 $22,942.70 Jan-95 $25,767.80 $22,355.20 $22,718.50 Feb-95 $27,088.40 $23,285.10 $23,954.00 Mar-95 $27,825.90 $23,686.10 $24,883.20 Apr-95 $28,611.10 $24,212.90 $25,164.80 May-95 $28,944.20 $24,629.10 $25,550.80 Jun-95 $31,430.60 $25,906.60 $27,101.80 Jul-95 $33,750.40 $27,399.10 $29,238.20 Aug-95 $34,975.70 $27,965.40 $29,481.80 Sep-95 $36,807.80 $28,465.20 $30,113.30 Oct-95 $35,653.80 $27,192.50 $29,049.40 Nov-95 $36,569.90 $28,334.90 $30,238.10 Dec-95 $38,251.40 $29,082.60 $30,639.30 Jan-96 $37,721.20 $29,051.80 $30,734.00 Feb-96 $39,160.40 $29,957.00 $32,086.30 Mar-96 $39,829.40 $30,566.70 $32,783.20 Apr-96 $43,163.20 $32,201.10 $35,027.60 May-96 $43,732.90 $33,470.10 $36,277.00 Jun-96 $42,106.10 $32,096.20 $34,458.80 Jul-96 $37,560.90 $29,292.90 $31,034.60 Aug-96 $39,770.40 $30,993.90 $33,171.70 Sep-96 $42,005.10 $32,205.20 $34,932.10 Oct-96 $41,412.80 $31,709.20 $33,845.40 Nov-96 $41,677.90 $33,015.60 $35,086.10 Dec-96 $42,032.20 $33,881.00 $35,258.00 Jan-97 $43,563.10 $34,558.20 $36,312.60 Feb-97 $41,627.30 $33,720.60 $34,721.80 Mar-97 $39,223.30 $32,129.60 $32,437.40 Apr-97 $39,311.90 $32,219.30 $32,583.40 May-97 $43,752.90 $35,803.60 $36,488.80 Jun-97 $45,574.90 $37,338.20 $37,709.40 Jul-97 $48,232.00 $39,075.50 $40,102.80 Aug-97 $49,244.20 $39,969.60 $41,081.30 Sep-97 $52,927.70 $42,895.00 $43,982.90 Oct-97 $50,180.70 $41,011.00 $41,238.80 Nov-97 $49,874.60 $40,744.40 $40,606.60 Dec-97 $50,966.90 $41,457.50 $40,462.40 Jan-98 $49,682.50 $40,803.70 $39,934.00 Feb-98 $54,645.80 $43,821.10 $43,362.30 Mar-98 $57,236.00 $45,628.30 $44,972.40 Apr-98 $57,762.60 $45,881.10 $45,381.20 May-98 $54,267.90 $43,409.90 $42,468.10 Jun-98 $56,536.30 $43,501.50 $42,779.40 Jul-98 $52,166.10 $39,980.10 $39,594.10 Aug-98 $41,925.90 $32,216.80 $30,596.70 Sep-98 $43,519.10 $34,738.00 $33,279.40 Oct-98 $45,464.40 $36,155.00 $35,526.50 Nov-98 $48,255.90 $38,049.10 $38,053.50 Dec-98 $53,935.60 $40,403.60 $41,717.30 Jan-99 $54,760.80 $40,940.60 $42,924.60 Feb-99 $49,306.60 $37,624.40 $39,441.70 Mar-99 $51,910.00 $38,211.70 $41,278.10 Apr-99 $51,910.00 $41,635.90 $44,571.20 May-99 $52,771.70 $42,244.20 $45,031.60 Jun-99 $56,872.10 $44,154.50 $48,214.50 Jul-99 $56,087.20 $42,944.60 $47,231.90 Aug-99 $54,830.90 $41,355.70 $46,211.20 Sep-99 $54,885.70 $41,364.80 $46,542.10 Oct-99 $59,002.20 $41,532.30 $48,808.70 Nov-99 $65,439.30 $44,012.20 $54,571.00 Dec-99 $76,478.90 $48,994.40 $64,863.10 Jan-00 $73,993.30 $48,205.60 $64,499.90 Feb-00 $89,028.80 $56,164.30 $81,044.10 Mar-00 $86,081.90 $52,463.10 $74,685.40 Apr-00 $77,077.80 $49,304.80 $67,408.80 May-00 $71,481.90 $46,431.30 $61,406.70 Jun-00 $79,473.60 $50,478.70 $69,525.30 Jul-00 $76,700.00 $48,854.80 $63,827.70 Aug-00 $85,888.60 $52,582.50 $72,147.00 Sep-00 $85,227.30 $51,037.10 $67,481.20 Oct-00 $77,062.50 $48,758.80 $63,308.20 Average Annual Total Returns for periods ended 10/31/00 (Common Shares) ------------------ 1 YEAR 30.60% ------------------ 3 YEAR 15.38% ------------------ 5 YEAR 16.67% ------------------ 10 YEAR 20.84% ------------------ FUND ------ 1 Year Total Return (9/30/99 to 9/30/00) ............................ 55.26% 3 Year Average Annual Total Return (9/30/97 to 9/30/00) ............. 17.21% 5 Year Average Annual Total Return (9/30/95 to 9/30/00 .............. 18.28% 10 Year Average Annual Total Return (9/30/90 to 9/30/00) ............ 21.68% Average Annual Total Return Since Inception (1/21/88 to 9/30/00) ............................................. 18.37% - ----------------- * The Russell 2000 Growth Index is an unmanaged index (with no defined investment objective) that measures the performance of those Russell 2000 companies with higher price-to-book ratios and higher forecasted growth values.It includes reinvestment of dividends, and is compiled by Frank Russell Company. ** The Russell 2500 Growth Index measures the performance of those companies in the Russell 2500 Index with higher price-to-book values and higher forecasted growth rates. The Russell 2500 Index is composed of the 2500 smallest companies in the Russell 3000 Index, which measures the performance of the 3000 largest US companies based on total market capitalization. The Russell 2500 Index represents approximately 17% of the total market capitalization of the Russell 3000 Index. 3 WARBURG PINCUS SMALL COMPANY VALUE FUND ANNUAL INVESTMENT ADVISER'S REPORT -- OCTOBER 31, 2000 - -------------------------------------------------------------------------------- December 6, 2000 Dear Shareholder: For the 12 months ended October 31, 2000, the Common Class shares of Warburg Pincus Small Company Value Fund (the "Fund") had a gain of 22.56%. For the six months ended October 31, 2000, the Fund had a gain of 8.15%, vs. a same-period gain of 8.41% for the Russell 2000 Value Index, the Fund's new benchmark effective May 2, 2000 (replacing the Russell 2000 Index). For the six months ended April 30, 2000, the Fund had a return of 13.07%, vs. a return of 18.72% for the Russell 2000 Index. The period was a positive one for small-capitalization stocks, though the group was volatile, as were stocks broadly. While the group's growth and value components posted roughly equal gains for the 12 months (with a slight edge to the value stocks), they hardly performed in tandem. Growth stocks dominated early in the period, when investors' tolerance for risk was high, buoyed by a strong economy and a rally in the technology sector. However, they tumbled over the March-through-May period on inflation and interest-rate uncertainties, and remained volatile. Value stocks outperformed their growth counterparts late in the period (within the small-cap arena and elsewhere), as investors took a more defensive stance due to worries over a slowing economy. Against this backdrop, the Fund had a competitive showing, with the Fund outpacing both Russell indexes cited above for the 12 months. Stocks that aided the Fund's return included its financial-services, health-care and utilities holdings. The Fund was also helped by its overweighting in the technology sector early in the period, when these stocks rallied (we subsequently reduced this position). On the negative side, stocks that hindered the Fund included certain of its materials & processing and consumer-related names. Our general strategy throughout the period was to focus on stocks that had good potential, in our estimation, to benefit from visible catalysts, such as positive earnings surprises or new product launches. This reflected our concerns that, amid general uncertainty and high market volatility, companies with visible improvements were the most likely to garner favorable investor attention (as opposed to companies merely trading at discounts to their underlying worth, for example). We made several noteworthy sector-weighting changes during the period. We raised our exposure to the financial segment, where we deemed a number of stocks to be attractive based on their valuations and on the prospects for a more-favorable interest-rate environment. These included insurance companies as well as real-estate investment trusts (we view REITs 4 WARBURG PINCUS SMALL COMPANY VALUE FUND ANNUAL INVESTMENT ADVISER'S REPORT -- OCTOBER 31, 2000 (CONT'D) - -------------------------------------------------------------------------------- as financial stocks due to their interest-rate sensitivity), with our position in REITs rising considerable late in the period. We also increased our weighting in the health-care sector, were our focus remained on services providers such as hospitals and acute-care companies. The major catalyst in this area is the restoration of "reimbursement" rates. These rates were reduced by the Balance Budget Act of 1997, sparking a slump in care-provider stocks, but Congress has recently been increasing the funding, and could continue to do so. Our health-care holdings also included laboratory-testing companies. We believe that these companies' profit margins will widen due to rising demand for testing related to new-drug development. Another increased area of emphasis for the Fund in the period was energy. We added companies that stood to benefit from an improving supply/demand backdrop for energy, including a number of electric-utility stocks we believed to represent good value. One sector weighting we reduced was technology. We had a significant position early in the period, based on the large amount of promising company-specific catalysts we were seeing here. We sold most of our technology holdings based on valuation factors as the period progressed; fortunately for the Fund, our exposure was minimal when the technology group declined sharply in April and May. Going forward, we will continue our efforts to identify companies with compelling valuations and good potential to benefit from industry trends and from company-specific catalysts. While the overall backdrop for equities could remain difficult for a spell, we believe that good opportunities will continue to exist within a range of sectors. As ever, we will attempt to ferret out hidden values that will receive wider market recognition over time. Kyle F. Frey Portfolio Manager INVESTING IN SMALL COMPANIES ENTAILS SPECIAL RISK CONSIDERATIONS. THESE ARE DETAILED IN THE PROSPECTUS, WHICH SHOULD BE READ CAREFULLY BEFORE INVESTING. 5 WARBURG PINCUS SMALL COMPANY VALUE FUND ANNUAL INVESTMENT ADVISER'S REPORT -- OCTOBER 31, 2000 (CONT'D) - -------------------------------------------------------------------------------- GROWTH OF $10,000 INVESTED IN COMMON CLASS SHARES OF WARBURG PINCUS SMALL COMPANY VALUE FUND SINCE INCEPTION AS OF OCTOBER 31, 2000 The graph below illustrates a hypothetical investment of $10,000 in Common Class shares of Warburg Pincus Small Company Fund (the "Fund") from December 29, 1995 (inception) to October 31, 2000, compared to the Russell 2000 Index ("R2000")* and the Russell 2000 Value Index ("R2000 Value")** for the same time period. [GRAPHIC OMITTED] EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC FUND R2000 R2000 VALUE 12/29/95 $10,000.00 $10,000.00 $10,000.00 Jan-96 $10,000.00 $9,989.40 $10,066.40 Feb-96 $10,650.00 $10,300.70 $10,224.10 Mar-96 $11,550.00 $10,510.30 $10,438.80 Apr-96 $12,619.50 $11,072.30 $10,723.60 May-96 $13,449.90 $11,508.60 $10,995.10 Jun-96 $13,339.60 $11,036.20 $10,865.40 Jul-96 $12,849.60 $10,072.30 $10,287.80 Aug-96 $13,539.60 $10,657.20 $10,734.20 Sep-96 $14,109.60 $11,073.70 $11,027.20 Oct-96 $14,379.10 $10,903.20 $11,155.10 Nov-96 $14,989.00 $11,352.40 $11,755.40 Dec-96 $15,618.60 $11,649.90 $12,137.00 Jan-97 $15,881.60 $11,882.80 $12,323.50 Feb-97 $15,598.30 $11,594.80 $12,440.50 Mar-97 $15,052.10 $11,047.70 $12,106.90 Apr-97 $15,112.80 $11,078.50 $12,284.90 May-97 $16,053.60 $12,311.00 $13,262.90 Jun-97 $17,156.20 $12,838.70 $13,934.00 Jul-97 $18,056.40 $13,436.00 $14,518.80 Aug-97 $18,663.20 $13,743.50 $14,749.20 Sep-97 $20,100.20 $14,749.40 $15,730.10 Oct-97 $18,986.70 $14,101.60 $15,302.50 Nov-97 $18,531.00 $14,009.90 $15,470.20 Dec-97 $18,608.80 $14,255.10 $15,994.70 Jan-98 $18,087.80 $14,030.30 $15,705.50 Feb-98 $19,154.90 $15,067.80 $16,654.90 Mar-98 $19,972.80 $15,689.20 $17,330.40 Apr-98 $20,098.70 $15,776.10 $17,416.00 May-98 $19,572.10 $14,926.40 $16,801.20 Jun-98 $19,742.40 $14,957.90 $16,706.50 Jul-98 $18,301.20 $13,747.10 $15,397.90 Aug-98 $15,396.80 $11,077.70 $12,986.40 Sep-98 $15,544.60 $11,944.60 $13,719.80 Oct-98 $15,193.30 $12,431.80 $14,127.10 Nov-98 $15,567.00 $13,083.10 $14,509.50 Dec-98 $15,839.50 $13,892.70 $14,964.40 Jan-99 $15,464.10 $14,077.30 $14,624.70 Feb-99 $14,270.20 $12,937.10 $13,626.30 Mar-99 $14,070.50 $13,139.00 $13,513.80 Apr-99 $15,065.20 $14,316.40 $14,747.50 May-99 $15,136.00 $14,525.60 $15,200.90 Jun-99 $15,862.60 $15,182.40 $15,751.30 Jul-99 $15,499.30 $14,766.40 $15,377.50 Aug-99 $14,504.30 $14,220.10 $14,815.50 Sep-99 $14,375.20 $14,223.20 $14,519.30 Oct-99 $14,598.00 $14,280.80 $14,228.80 Nov-99 $16,143.90 $15,133.50 $14,302.50 Dec-99 $17,035.10 $16,846.60 $14,742.00 Jan-00 $15,794.90 $16,575.40 $14,356.50 Feb-00 $15,610.10 $19,312.00 $15,234.00 Mar-00 $16,651.30 $18,039.30 $15,305.40 Apr-00 $16,506.40 $16,953.40 $15,396.00 May-00 $15,927.10 $15,965.30 $15,161.10 Jun-00 $16,376.20 $17,357.00 $15,604.10 Jul-00 $16,548.20 $16,798.60 $16,124.00 Aug-00 $17,642.00 $18,080.40 $16,844.90 Sep-00 $18,116.60 $17,549.00 $16,749.40 Oct-00 $17,891.90 $16,765.60 $16,689.90 Average Annual Total Returns for periods ended 10/31/00 (Common Shares) ------------------ 1 YEAR 22.56% ------------------ 3 YEAR -1.96% ------------------ SINCE INCEPTION (12/29/95) 12.76% ------------------ FUND ------ 1 Year Total Return (9/30/99 to 9/30/00) .............................. 26.01% 3 Year Average Annual Total Return (9/30/97 to 9/30/00) ............... -3.40% Average Annual Total Return Since Inception (12/29/95 to 9/30/00) . ............................................ 13.30% - ---------------- * The Russell 2000 Index is an unmanaged index (with no defined investment objective) of approximately 2,000 small-cap stocks, includes reinvestment of dividends, and is compiled by Frank Russell Company. ** The Russell 2000 Value Index is an unmanaged index (with no defined investment objective) that measures the performance of those Russell 2000 companies with lower price-to-book ratios and lower forecasted growth values. It includes reinvestment of dividends, and is compiled by Frank Russell Company. 6 WARBURG PINCUS SMALL COMPANY GROWTH FUND ANNUAL INVESTMENT ADVISER'S REPORT -- OCTOBER 31, 2000 - -------------------------------------------------------------------------------- December 6, 2000 Dear Shareholder: For the 12 months ended October 31, 2000, the Common Class shares of Warburg Pincus Small Company Growth Fund had a gain of 43.65%, vs. a gain of 16.16% for the Russell 2000 Growth Index. The period was an ultimately positive but very volatile one for small-capitalization stocks. The group had a strong start, but turned sharply down in April and May due to interest-rate worries and general concerns over valuations on technology companies. Small-cap stocks remained volatile, and ended the period on a difficult note due to some highly visible profit disappointments that tarnished stocks broadly. All told, most small-cap stocks gave up some but by no means all of their initial gains over the April-through-October span. Against this backdrop, the Fund had a strong showing, both in absolute terms and compared to that of its benchmark. The Fund's return was aided by good stock selection in general, especially within the computer, electronics and health-care sectors. Stocks that hindered the Fund, at least in relative terms, included specific consumer-related and communications holdings. We made no major changes to the Fund during the period with regard to overall strategy, remaining focused on rapidly growing companies with innovative, viable products and services. We continued to see a large number of such companies within the technology area, defined to include software, electronics and telecommunications companies. Notwithstanding the group's typically volatile nature, our longer-term outlook on these stocks remains positive based on accelerating Internet usage, the worldwide embrace of wireless technologies and a global push for better productivity. One noteworthy sector-weighting increase we made during the period was health care. We added several services providers as well as pharmaceutical companies and more-aggressive biotechnology stocks. On the services side, we deemed certain managed-care and hospital names to be attractive in the latter half of the period, based on what we viewed as improving fundamentals within the health-care industry. In addition, while the group's earnings-growth prospects remain relatively modest, these companies have good potential to meet expectations over the near-to-intermediate term. We believe that investors will continue to reward companies that can deliver such consistency. In the pharmaceutical/biotech area, we added several companies that stand to benefit over the longer term from breakthroughs in gene research and the launch of new products. 7 WARBURG PINCUS SMALL COMPANY GROWTH FUND ANNUAL INVESTMENT ADVISER'S REPORT -- OCTOBER 31, 2000 (CONT'D) - -------------------------------------------------------------------------------- We ended the period with a modest overweighting in the energy area, where we continued to emphasize oil-services providers. We believe these companies will continue to benefit from demand for their services, even if oil prices begin to decline. In our view, oil prices would have to fall dramatically to throttle activity in the oil-services industry. Despite the recent volatility in small caps, and the potential for choppy waters over the near term, we have a positive longer-term outlook on the group. We remain of the view that these stocks--and the group's growth-oriented names in particular--will benefit in due course from a historically supportive combination of benign inflation, relatively stable interest rates and modest economic growth. In addition, small caps currently trade at compelling valuations vs. those on larger-cap stocks, which should only add to their appeal from a risk-reward perspective as the economic picture becomes clearer. Our focus, as always, will remain on companies we deem to have the brightest long-term growth prospects. Stephen J. Lurito Sammy Oh Co-Portfolio Manager Co-Portfolio Manager INVESTING IN SMALL COMPANIES ENTAILS SPECIAL RISK CONSIDERATIONS. THESE ARE DETAILED IN THE PROSPECTUS, WHICH SHOULD BE READ CAREFULLY BEFORE INVESTING. 8 WARBURG PINCUS SMALL COMPANY GROWTH FUND ANNUAL INVESTMENT ADVISER'S REPORT -- OCTOBER 31, 2000 (CONT'D) - -------------------------------------------------------------------------------- GROWTH OF $10,000 INVESTED IN COMMON CLASS SHARES OF WARBURG PINCUS SMALL COMPANY GROWTH FUND SINCE INCEPTION AS OF OCTOBER 31, 2000 The graph below illustrates a hypothetical investment of $10,000 in Common Class shares of Warburg Pincus Small Company Growth Fund (the "Fund") from December 31, 1996 (inception) to October 31, 2000, compared to the Russell 2000 Growth Index ("R2000G")* for the same time period. [GRAPHIC OMITTED] EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC FUND R2000G 12/31/96 $10,000.00 $10,000.00 Jan-97 $10,350.00 $10,249.80 Feb-97 $10,020.00 $9,630.92 Mar-97 $9,250.00 $8,951.36 Apr-97 $8,940.00 $8,847.88 May-97 $10,280.00 $10,177.80 Jun-97 $10,840.00 $10,522.90 Jul-97 $11,370.00 $11,062.10 Aug-97 $11,650.00 $11,394.10 Sep-97 $12,930.00 $12,303.40 Oct-97 $12,250.00 $11,564.40 Nov-97 $12,069.90 $11,289.20 Dec-97 $12,229.20 $11,296.00 Jan-98 $11,927.20 $11,145.40 Feb-98 $12,802.60 $12,129.30 Mar-98 $13,637.40 $12,638.10 Apr-98 $13,496.90 $12,715.60 May-98 $12,360.50 $11,791.80 Jun-98 $12,591.60 $11,912.40 Jul-98 $11,414.30 $10,917.60 Aug-98 $8,949.95 $8,397.40 Sep-98 $9,844.94 $9,248.81 Oct-98 $10,166.90 $9,731.23 Nov-98 $11,092.10 $10,486.10 Dec-98 $12,057.10 $11,435.10 Jan-99 $12,620.10 $11,949.40 Feb-99 $11,644.60 $10,856.30 Mar-99 $12,499.30 $11,243.00 Apr-99 $12,991.80 $12,235.90 May-99 $13,061.90 $12,255.20 Jun-99 $14,570.60 $12,900.80 Jul-99 $14,400.10 $12,501.90 Aug-99 $14,390.00 $12,034.30 Sep-99 $15,154.20 $12,266.50 Oct-99 $16,692.30 $12,580.60 Nov-99 $19,136.00 $13,910.90 Dec-99 $24,021.50 $16,362.00 Jan-00 $23,824.50 $16,209.80 Feb-00 $32,634.80 $19,981.80 Mar-00 $28,921.00 $17,881.60 Apr-00 $24,530.80 $16,076.10 May-00 $22,195.40 $14,668.40 Jun-00 $26,625.60 $16,563.30 Jul-00 $23,710.10 $15,143.80 Aug-00 $27,425.50 $16,736.80 Sep-00 $25,609.90 $15,905.30 Oct-00 $23,981.20 $14,614.30 Average Annual Total Returns for periods ended 10/31/00 (Common Shares) ------------------ 1 YEAR 43.65% ------------------ 3 YEAR 25.10% ------------------ SINCE INCEPTION (12/31/96 25.59% ------------------ FUND ----- 1 Year Total Return (9/30/99 to 9/30/00) ............................. 68.99% 3 Year Average Annual Total Return (9/30/97 to 9/30/00) .............................................. 25.56% Average Annual Total Return Since Inception (12/31/96 to 9/30/00) ............................................. 28.47% - ------------------ * The Russell 2000 Index is an unmanaged index (with no defined investment objective) of approximately 2,000 small-cap stocks, includes reinvestment of dividends, and is compiled by Frank Russell Company. 9 WARBURG PINCUS EMERGING GROWTH FUND SCHEDULE OF INVESTMENTS--OCTOBER 31, 2000 - -------------------------------------------------------------------------------- NUMBER OF SHARES VALUE --------- -------------- COMMON STOCKS (90.6%) BUILDING & BUILDING MATERIALS (1.2%) Lennar Corp. 927,600 $ 29,799,150 -------------- BUSINESS SERVICES (6.2%) Cacheflow, Inc. 1 80,800 8,726,400 Commerce One, Inc. 1 512,500 32,896,094 New York Restaurant Group, Inc. 1,2 336,786 3,249,985 On Assignment, Inc. 1 1,472,520 37,089,097 Paychex, Inc. 509,550 28,885,116 TMP Worldwide, Inc. 1 374,550 26,072,191 West Teleservices Corp.1 430,500 10,977,750 -------------- 147,896,633 -------------- COMMUNICATIONS & MEDIA (2.6%) Ariba, Inc. 1 319,000 40,313,625 Finisar Corp. 1 687,000 19,794,187 Youthstream Media Networks, Inc. 1 995,344 1,928,479 -------------- 62,036,291 -------------- COMPUTERS (11.2%) Agile Software Corp. 1 25,200 1,899,450 BEA Systems, Inc. 1 670,000 48,072,500 Brocade Communications Systems, Inc. 173,000 39,335,875 Mercury Interactive Corp. 1 261,475 29,023,725 National Instruments Corp. 1 611,765 28,561,778 Network Appliance, Inc. 1 230,500 27,429,500 NVIDIA Corp. 1 390,200 24,247,272 Palm, Inc. 1 480,000 25,710,000 Phone.com, Inc. 1 190,000 17,586,875 Tech Data Corp. 1 641,000 26,681,625 -------------- 268,548,600 -------------- CONSUMER SERVICES (2.0%) DeVRY, Inc. 1 1,007,321 37,207,919 ITT Educational Services, Inc. 1 679,050 10,695,037 -------------- 47,902,956 -------------- ELECTRONICS (14.9%) Applied Micro Circuits Corp. 1 210,000 16,038,750 Bookham Technology PLC - ADR 1 662,500 22,317,969 Celestica, Inc. ADR 1 325,400 23,388,125 Emulex Corp. 1 172,000 25,262,500 Maxim Integrated Products, Inc. 1 1,132,390 75,091,612 Molex, Inc. 582,300 31,444,200 PMC-Sierra, Inc. 1 210,825 35,734,837 QLogic Corp. 1 240,000 23,220,000 Texas Instruments, Inc. 716,524 35,154,459 TranSwitch Corp. 1 575,000 33,206,250 See Accompanying Notes to Financial Statements. 10 WARBURG PINCUS EMERGING GROWTH FUND SCHEDULE OF INVESTMENTS (CONT'D)--OCTOBER 31, 2000 - -------------------------------------------------------------------------------- NUMBER OF SHARES VALUE --------- -------------- COMMON STOCKS (CONT'D) ELECTRONICS (cont'd) Vishay Intertechnology, Inc. 1 570,057 $ 17,101,710 Vitesse Semiconductor Corp. 1 264,000 18,463,500 -------------- 356,423,912 -------------- ENERGY (3.7%) Apache Corp. 562,500 31,113,281 Chaparral Resources, Inc. 1 13,889 90,278 Devon Energy Corp. 509,000 25,653,600 Noble Affiliates, Inc. 646,500 23,718,469 Southern Energy, Inc. 1 276,500 7,534,625 -------------- 88,110,253 -------------- FINANCIAL SERVICES (9.7%) Capital One Financial Corp. 205,000 12,940,625 Enhance Financial Services Group, Inc. 295,050 5,732,144 Franklin Resources, Inc. 560,100 23,994,684 Indymac Mortgage Holdings, Inc. 1 1,848,900 38,595,787 John Hancock Financial Services, Inc. 1 400,000 12,650,000 Lehman Brothers Holdings, Inc. 400,000 25,800,000 MBIA, Inc. 445,000 32,345,937 Reinsurance Group of America, Inc. 1,139,095 42,573,676 Sun Life Financial Services 550,000 11,275,000 XL Capital, Ltd., Class A 350,000 26,906,250 -------------- 232,814,103 -------------- FOOD, BEVERAGES & TOBACCO (0.1%) Foodtrader.Com, Inc. 1,2 966,183 2,000,000 -------------- HEALTHCARE (13.9%) ALZA Corp. 1 461,400 37,344,562 Coherent, Inc. 1 366,400 12,755,300 Community Health Systems, Inc. 1 557,600 15,717,350 Focal, Inc. 1 1 2 HCA-The Healthcare Co. 755,000 30,152,812 Health Management Associates, Inc., Class A 1 1,444,500 28,619,156 Inhale Therapeutic Systems, Inc. 1 275,000 13,681,250 Ivax Corp. 1,222,950 53,198,325 PE Corp - PE Biosystems Group 375,800 43,968,600 Stryker Corp. 282,000 13,289,250 Tenet Healthcare Corp. 964,000 37,897,250 Wellpoint Health Networks, Inc. 1 374,300 43,769,706 Softcom, Inc. 1,2 454,545 999,999 -------------- 331,393,562 -------------- LODGING & RESTAURANTS (0.7%) Park Place Entertainment Corp. 1 1,386,100 17,672,775 -------------- See Accompanying Notes to Financial Statements. 11 WARBURG PINCUS EMERGING GROWTH FUND SCHEDULE OF INVESTMENTS (CONT'D)--OCTOBER 31, 2000 - -------------------------------------------------------------------------------- NUMBER OF SHARES VALUE --------- -------------- COMMON STOCKS (CONT'D) OIL SERVICES (5.3%) Cooper Cameron Corp. 1 367,790 $ 20,044,555 Nabors Industries, Inc. 1 982,675 50,018,157 Noble Drilling Corp. 1 538,490 22,380,991 Pogo Producing Co. 424,000 10,600,000 Pride International, Inc. 1 913,100 23,112,844 -------------- 126,156,547 -------------- PHARMACEUTICALS (8.6%) Abgenix, Inc. 1 162,500 12,817,187 Barr Laboratories, Inc. 1 299,800 18,924,875 Biovail Corp. 1 1,055,100 44,380,144 Celgene Corp. 1 405,700 26,116,938 Elan Corp. PLC ADR 1 543,000 28,202,063 Gemini Genomics PLC ADR1 99,400 1,130,675 Human Genome Sciences, Inc. 1 155,000 13,700,547 Icos Corp.1 145,400 7,469,925 IDEC Pharmaceuticals Corp. 1 50,000 9,806,250 ImClone Systems, Inc. 1 65,000 3,554,688 Medarex, Inc. 1 230,300 14,077,088 Millennium Pharmaceuticals, Inc. 1 340,000 24,671,250 Protein Design Labs, Inc. 1 5,000 675,391 -------------- 205,527,021 -------------- REAL ESTATE (1.2%) Apartment Investment & Management Co, Class A 300,000 13,706,250 Boston Properties, Inc. 300,000 12,150,000 Prologis Trust 146,100 3,068,100 -------------- 28,924,350 -------------- TELECOMMUNICATIONS & EQUIPMENT (9.3%) ANTEC Corp. 1 250,000 3,046,875 Audiocodes, Ltd. 1 1,017,480 40,254,053 Avanex Corp. 1 220,600 22,404,688 McLeodUSA, Inc. 1 1,190,875 22,924,344 MRV Communications, Inc. 1 437,900 17,297,050 Polycom, Inc. 1 1,023,650 66,537,250 Redback Networks, Inc. 1 279,000 29,696,063 Scientific Atlanta, Inc. 313,400 21,448,313 -------------- 223,608,636 -------------- TOTAL COMMON STOCKS (Cost $1,509,482,200) 2,168,814,788 -------------- See Accompanying Notes to Financial Statements. 12 WARBURG PINCUS EMERGING GROWTH FUND SCHEDULE OF INVESTMENTS (CONT'D)--OCTOBER 31, 2000 - -------------------------------------------------------------------------------- NUMBER OF SHARES VALUE --------- -------------- WARRANTS (0.0%) Women First Healthcare, Inc. 1,2 (Cost $0) 5,516 $ 0 -------------- SHORT TERM INVESTMENTS (8.5%) Institutional Money Market Trust 90,491,206 90,491,206 RBB Money Market Portfolio 111,546,591 111,546,591 -------------- TOTAL SHORT TERM INVESTMENTS (Cost $202,037,797) 202,037,797 -------------- PREFERRED RATES (1.5%) BreezeCom, Ltd., Series B 1,2 1,509,955 28,028,540 Celltra, Ltd. 2 1,102,524 7,000,002 Opal Concepts, Inc., Series B 2 792,603 199,998 -------------- TOTAL PREFERRED (Cost $15,223,300) 35,228,540 -------------- PAR ----- BONDS (0.3%) Orckit Communications, Inc. (NR) 5.750% 04/01/05 $15,000,000 8,043,750 TimesSquareMedia.com, Inc. (NR)3,4 6.000% 11/22/02 2 2,900,000 0 -------------- TOTAL BONDS (Cost $17,900,000) 8,043,750 -------------- TOTAL INVESTMENTS AT VALUE (100.9%) (Cost $1,744,643,297 5) 2,414,124,875 LIABILITIES IN EXCESS OF OTHER ASSETS (0.9%) (21,585,381) -------------- NET ASSETS (100.0%) $2,392,539,494 ============== INVESTMENT ABBREVIATIONS ADR = American Depository Receipt NR = Not Rated - -------------------------------------------------------------------------------- 1 Non-income producing security. 2 Restricted security. 3 Bond is currently in deafult. 4 Illiquid security. 5 Cost for federal income tax purposes is $1,753,820,121. See Accompanying Notes to Financial Statements. 13 WARBURG PINCUS SMALL COMPANY VALUE FUND SCHEDULE OF INVESTMENTS--OCTOBER 31, 2000 - -------------------------------------------------------------------------------- NUMBER OF SHARES VALUE -------- ----------- COMMON STOCKS (84.6%) BANKS & SAVINGS & LOANS (5.9%) Century Bancorp, Inc. Class A 30,300 $ 416,625 Dime Bancorp, Inc. 18,500 452,094 Prosperity Bancshares, Inc. 38,000 717,250 ----------- 1,585,969 ----------- BUILDING & BUILDING MATERIALS (3.3%) LSI Industries, Inc. 12,300 230,625 The Stanley Works 10,200 271,575 Walter Industries, Inc. 50,500 375,594 ----------- 877,794 ----------- BUSINESS SERVICES (0.9%) National Data Corp. 3,400 129,625 Sensormatic Electronics Corp. 1 6,000 108,000 ----------- 237,625 ----------- COMPUTERS (1.5%) Avid Technology, Inc. 1 7,200 99,900 JDA Software Group, Inc. 1 4,820 72,601 Silicon Graphics, Inc. 1 18,700 84,150 Storage Technology Corp. 1 7,700 75,075 Transactions Systems Architects, Inc. Class A 1 4,700 63,450 ----------- 395,176 ----------- CONSUMER DURABLES (4.4%) Aftermarket Technology Corp. 1 45,800 243,312 Harman International Industries, Inc. 13,400 643,200 Lear Corp. 1 10,000 272,500 ----------- 1,159,012 ----------- CONSUMER NON-DURABLES (3.6%) Borg-Warner Automotive, Inc. 7,000 264,250 Cutter & Buck, Inc. 1 12,600 129,150 Phillips-Van Heusen Corp. 46,900 556,937 ----------- 950,337 ----------- CONSUMER SERVICES (1.6%) Lo-Jack Corp. 1 51,400 411,200 ----------- ELECTRONICS (2.6%) Avant Corp. 1 21,200 356,425 Integrated Device Technology, Inc. 1 1,300 73,206 M.D.C. Holdings, Inc. 9,332 255,464 ----------- 685,095 ----------- ELECTRIC - UTILITIES (9.1%) Energy East Corp. 17,000 357,319 Sierra Pacific Resources 23,100 397,031 DTE Energy Co. 9,200 332,350 See Accompanying Notes to Financial Statements. 14 WARBURG PINCUS SMALL COMPANY VALUE FUND SCHEDULE OF INVESTMENTS (CONT'D)--OCTOBER 31, 2000 - -------------------------------------------------------------------------------- NUMBER OF SHARES VALUE -------- ----------- COMMON STOCKS (CONT'D) ELECTRIC UTILITIES (cont'd) NSTAR 10,900 $ 421,694 UniSource Energy Corp. 16,200 241,988 Public Service Company of New Mexico 23,300 642,206 ----------- 2,392,588 ----------- ENERGY (3.3%) Cross Timbers Oil Co. 8,850 166,491 HS Resources, Inc. 1 5,400 168,075 Ocean Energy, Inc. 1 13,400 185,925 Newfield Exploration Co. 1 4,700 177,425 Tesoro Petroleum Corp. 1 17,900 185,712 ----------- 883,628 ----------- FINANCIAL SERVICES (14.5%) AmeriCredit Corp. 1 22,100 593,937 Delphi Financial Group, Inc. Class A 1 10,000 370,000 Fremont General Corp. 159,200 577,100 GATX Corp. 13,900 584,669 HCC Insurance Holdings, Inc. 12,000 228,750 National Western Life Insurance Co. Class A 1 2,500 221,250 Radian Group, Inc. 3,905 276,767 StanCorp Financial Group, Inc. 14,900 607,175 Webster Financial Corp. 15,200 370,500 ----------- 3,830,148 ----------- GAS UTILITIES (1.3%) MCN Energy Group, Inc. 14,300 352,138 ----------- HEALTHCARE (8.4%) Bergen Brunswig Corp. Class A 13,700 124,156 Health Management Associates, Inc. Class A 1 12,900 255,581 ICU Medical, Inc. 1 9,100 227,500 LifePoint Hospitals, Inc. 1 5,200 201,500 Morrison Management Specialists, Inc. 8,450 283,075 Omnicare, Inc. 28,500 498,750 Sunrise Assisted Living, Inc. 1 13,200 308,550 Universal Health Services, Inc. 3,700 310,337 ----------- 2,209,449 ----------- LEISURE & ENTERTAINMENT (1.1%) SCP Pool Corp. 1 11,319 292,879 ----------- OIL SERVICES (3.1%) Evergreen Resources, Inc. 1 13,100 360,250 Newpark Resources, Inc. 1 23,200 208,800 Pride International, Inc. 1 10,200 258,187 ----------- 827,237 ----------- See Accompanying Notes to Financial Statements. 15 WARBURG PINCUS SMALL COMPANY VALUE FUND SCHEDULE OF INVESTMENTS (CONT'D)--OCTOBER 31, 2000 - -------------------------------------------------------------------------------- NUMBER OF SHARES VALUE -------- ----------- COMMON STOCKS (CONT'D) PAPER & FORESTRY PRODUCTS (3.8%) Caraustar Industries, Inc. 30 $ 302 Ivex Packaging Corp. 1 68,900 676,081 Packaging Corporation of America 1 22,500 330,469 ----------- 1,006,852 ----------- REAL ESTATE (12.5%) BRE Properties, Inc. Class A 17,100 540,788 CenterPoint Properties Corp. 11,800 524,363 Essex Property Trust, Inc. 9,800 509,600 Home Properties of New York, Inc. 7,800 212,063 Manufactured Home Communities, Inc. 13,200 328,350 Mission West Properties, Inc. 49,386 663,624 Urban Shopping Centers, Inc. 10,900 522,519 ----------- 3,301,307 ----------- RETAIL (2.3%) Pathmark Stores, Inc. 1 38,700 607,106 ----------- TRANSPORTATION (1.4%) Landstar Systems, Inc. 1 7,700 363,825 ----------- TOTAL COMMON STOCKS (Cost $18,145,058) 22,369,365 ----------- SHORT TERM INVESTMENTS (14.9%) Institutional Money Market Trust 2,721,794 2,721,795 RBB Money Market Portfolio 1,205,652 1,205,652 ----------- TOTAL SHORT TERM INVESTMENTS (Cost $3,927,447) 3,927,447 ----------- RIGHTS & WARRANTS (0.0%) EA Industries, Inc. 2,3 (Cost $110,438) 1 0 ----------- TOTAL INVESTMENTS AT VALUE (99.5%) (Cost $22,182,943 4) 26,296,812 OTHER ASSETS IN EXCESS OF LIABILITIES (0.5%) 136,061 ----------- NET ASSETS (100.0%) $26,432,873 =========== INVESTMENT ABBREVIATIONS ADR = American Depository Receipt - -------------------------------------------------------------------------------- 1 Non-income producing security. 2 Restricted security. 3 Illiquid security. 4 Cost for federal income tax purposes is $22,230,177. See Accompanying Notes to Financial Statements. 16 WARBURG PINCUS SMALL COMPANY GROWTH FUND SCHEDULE OF INVESTMENTS--OCTOBER 31, 2000 - -------------------------------------------------------------------------------- NUMBER OF SHARES VALUE -------- ----------- COMMON STOCKS (92.6%) BUSINESS SERVICES (2.7%) Acxiom Corp. 1 17,800 $ 716,450 Getty Images, Inc. 1 11,200 355,600 QRS Corp. 1 5,650 47,672 Radvision Ltd. 1 2,700 59,737 Titan Corp. 1 8,200 109,675 ----------- 1,289,134 ----------- COMMUNICATIONS & MEDIA (2.8%) About.com, Inc. 2,200 52,800 IntraNet Solutions, Inc. 9,500 441,750 Pegasus Communications Corp. 1,004 35,705 Puma Technology, Inc. 3,500 47,469 Seachange International, Inc. 12,400 272,800 ValueVision International, Inc. 23,700 479,925 ----------- 1,330,449 ----------- COMPUTERS (12.3%) BackWeb Technologies, Ltd. 21,700 193,944 Concurrent Computer Corp. 1 31,700 558,712 Documentum, Inc. 1 8,700 739,500 Great Plains Software, Inc. 1 4,800 186,900 Informatica Corp. 1,500 141,750 Iona Technologies PLC ADR 1 7,500 493,125 Manugistics Group, Inc. 7,000 797,562 Marimba, Inc. 8,700 51,656 NetIQ Corp. 1 5,500 473,687 Peregrine Systems, Inc. 27,600 662,400 Planetweb, Inc. 1,2 27,600 150,144 Radiant Systems, Inc. 1 23,300 429,594 Remedy Corp. 1 8,900 152,412 RSA Security, Inc. 7,700 446,600 Unify Corp. 1 3,700 1,850 Zoran Corp. 1 7,900 395,987 ----------- 5,875,823 ----------- CONSUMER SERVICES (1.5%) Advantage Learning Systems, Inc. 13,800 409,687 Praecis Pharmaceuticals, Inc. 1 11,400 289,275 ----------- 698,962 ----------- ELECTRONICS (16.2%) Alpha Industries, Inc. 19,500 777,562 ANADIGICS, Inc. 1 15,750 352,406 Anaren Microwave, Inc. 1 5,350 556,400 Apw, Ltd. 1 18,200 840,612 Asyst Technologies, Inc. 1 11,500 172,500 Avant! Corp. 1 4,899 82,364 C-Cube Microsystems, Inc. 1 25,000 487,500 See Accompanying Notes to Financial Statements. 17 WARBURG PINCUS SMALL COMPANY GROWTH FUND SCHEDULE OF INVESTMENTS (CONT'D)--OCTOBER 31, 2000 - -------------------------------------------------------------------------------- NUMBER OF SHARES VALUE -------- ----------- COMMON STOCKS (CONT'D) ELECTRONICS (cont'd) Caliper Technologies Corp. 1 3,800 $ 214,225 Cymer, Inc. 9,700 242,500 DSP Group, Inc. 1 17,600 499,400 EMCORE Corp. 1 16,400 672,400 Exar Corp. 1 10,500 469,219 Interlink Electronics, Inc. 9,000 201,375 Mips Technologies, Inc. Class A 1 11,600 465,450 Photronics, Inc. 1 16,700 376,794 Plexus Corp. 1 1,467 92,513 PRI Automation, Inc. 9,200 208,150 Sipex Corp. 1 13,100 515,812 Telcom Semiconductor, Inc. 1 1,500 21,094 Varian Semiconductor Equipment Associates, Inc. 1 7,800 179,400 Veeco Instruments, Inc. 1 2,900 191,989 Zygo Corp. 1 2,205 109,147 ----------- 7,728,812 ----------- ENERGY (1.2%) Stone Energy Corp. 1 11,000 563,200 ----------- FINANCIAL SERVICES (3.9%) AmeriCredit Corp. 1 17,500 470,312 Compucredit Corp. 1 4,500 138,937 Enhance Financial Services Group, Inc. 4,200 48,825 Fidelity National Financial, Inc. 22,700 557,569 Mutual Risk Management, Ltd. 13,000 235,625 Reinsurance Group, Inc. 10,731 401,071 ----------- 1,852,339 ----------- FOOD, BEVERAGES & TOBACCO (0.7%) Hain Celestial Group, Inc. 1 8,300 329,406 ----------- HEALTHCARE (17.4%) Advance Paradigm, Inc. 1 21,800 1,065,475 AmeriSource Health Corp. Class A 1 18,100 786,219 Bindley Western Industries, Inc. 19,000 682,813 Coherent, Inc. 1 8,700 302,869 Community Health Care 1 29,600 834,350 Foundation Health Systems, Inc. Class A 1 42,700 862,006 Inhale Therapeutic Systems, Inc. 1 6,900 343,275 LifePoint Hospitals, Inc. 1 11,300 437,875 Mid Atlantic Medical Services, Inc. 1 29,100 494,700 MiniMed, Inc. 1 5,800 423,038 Oxford Health Plans, Inc. 1 28,000 945,000 Renal Care Group, Inc. 1 17,500 411,250 Universal Health Services, Inc. Class B 8,400 704,550 ----------- 8,293,420 ----------- See Accompanying Notes to Financial Statements. 18 WARBURG PINCUS SMALL COMPANY GROWTH FUND SCHEDULE OF INVESTMENTS (CONT'D)--OCTOBER 31, 2000 - -------------------------------------------------------------------------------- NUMBER OF SHARES VALUE -------- ----------- COMMON STOCKS (CONT'D) LEISURE & ENTERTAINMENT (3.1%) American Classic Voyages Co. 1 17,900 $ 247,244 Championship Auto Racing 1 16,600 412,925 Mandalay Resort Group 1 17,200 357,975 THQ, Inc. 1 21,600 442,800 ----------- 1,460,944 ----------- OIL SERVICES (5.8%) BJ Services Co. 1 8,000 419,500 Cooper Cameron Corp. 1 7,600 414,200 National-Oilwell, Inc. 1 14,100 412,425 Petroleum Geo - Services ADR 1 19,300 264,169 Precision Drilling Corp. 1 14,100 403,613 Rowan Companies, Inc. 1 16,000 403,000 Smith International, Inc. 1 6,300 444,150 ----------- 2,761,057 ----------- PHARMACEUTICALS (11.4%) Aclara Biosciences, Inc. 1 12,400 221,650 Alkermes, Inc. 1 21,000 778,313 Caremark Rx, Inc. 1 51,700 646,250 Cell Therapeutics, Inc. 1 9,000 602,016 Genencor International, Inc. 1 13,700 376,750 Intermune Pharmaceuticals, Inc. 2,900 145,000 K-V Pharmaceutical Co. 8,000 311,500 Lynx Therapeutics, Inc. 1 8,400 147,000 Maxim Pharmaceuticals, Inc. 4,800 213,000 Maxygen, Inc. 1 7,700 309,925 Medarex, Inc. 1 9,600 586,800 Medicis Pharmaceutical Corp. Class A 1 9,800 721,525 Titan Pharmaceuticals, Inc. 1 2,700 113,616 United Therapeutics Corp. 1 4,300 230,050 ----------- 5,403,395 ----------- TELECOMMUNICATIONS & EQUIPMENT (13.6%) Adaptive Broadband Corp. 1 1,900 30,519 Advanced Fibre Communications, Inc. 1 17,200 560,075 Aeroflex, Inc. 8,400 499,800 Antec Corp. 1 13,200 160,875 Audiocodes, Ltd. 1 11,900 470,794 Clarent Corp. 1 8,400 260,925 CTC Communications Corp. 1 8,850 85,458 Integrated Telecom Express, Inc. 1 22,700 320,638 MRV Communications, Inc. 1 10,800 426,600 Natural Microsystems Corp. 1 7,000 316,313 PECO II, Inc. 1 16,900 665,438 See Accompanying Notes to Financial Statements. 19 WARBURG PINCUS SMALL COMPANY GROWTH FUND SCHEDULE OF INVESTMENTS (CONT'D)--OCTOBER 31, 2000 - -------------------------------------------------------------------------------- NUMBER OF SHARES VALUE -------- ----------- COMMON STOCKS (CONT'D) TELECOMMUNICATIONS & EQUIPMENT (cont'd) Polycom, Inc. 9,800 $ 637,000 Powerwave Technologies, Inc. 1 14,700 707,438 Proxim, Inc. 10,400 630,500 Tekelec1 17,900 658,944 Viatel, Inc. 1 9,400 90,475 ----------- 6,521,792 ----------- TOTAL COMMON STOCKS (Cost $43,250,587) 44,108,733 ----------- SHORT TERM INVESTMENTS (6.6%) Institutional Money Market Trust 959,143 959,143 RBB Money Market Fund 2,208,176 2,208,176 ----------- TOTAL SHORT TERM INVESTMENTS (Cost $3,167,319) 3,167,319 ----------- TOTAL INVESTMENTS AT VALUE (98.9%) (COST $46,417,906 3) 47,276,052 OTHER ASSETS IN EXCESS OF LIABILITIES (1.1%) 623,460 ----------- NET ASSETS (100.0%) $47,899,512 =========== INVESTMENT ABBREVIATIONS ADR = American Depository Receipt - -------------------------------------------------------------------------------- 1 Non-income producing security. 2 Restricted security. 3 Cost for federal income tax purposes is $46,615,044. See Accompanying Notes to Financial Statements. 20 WARBURG PINCUS DOMESTIC EQUITY FUNDS STATEMENTS OF ASSETS AND LIABILITIES October 31, 2000 - --------------------------------------------------------------------------------
WARBURG PINCUS WARBURG PINCUS WARBURG PINCUS EMERGING GROWTH SMALL COMPANY SMALL COMPANY FUND VALUE FUND GROWTH FUND --------------- -------------- -------------- ASSETS Investments at value (cost - $1,744,643,297, $22,182,943 and $46,417,906, respectively) $2,414,124,875 $26,296,812 $47,276,052 Dividends and interest receivable 653,633 80,054 9,777 Receivable for fund shares sold 5,629,081 1,084,648 388,152 Receivable for investment sold unsettled 7,256,473 0 1,067,141 Cash 0 0 200 Prepaid expenses and other assets 86,657 190,043 35,801 -------------- ----------- ----------- 2,427,750,719 27,651,557 48,777,123 -------------- ----------- ----------- LIABILITIES Advisory fee payable 1,856,259 10,792 0 Administration services fee payable 206,251 2,113 3,942 Directors fee payable 3,000 2,725 3,869 Payable for investments purchased 25,894,563 1,162,562 792,321 Payable for fund shares redeemed 6,166,647 0 23,164 Payable for as of fund share 0 4,861 0 Accrued expenses payable 1,084,505 35,631 54,315 -------------- ----------- ----------- 35,211,225 1,218,684 877,611 -------------- ----------- ----------- NET ASSETS Capital stock, $0.001 par value 47,876 6,947 2,073 Paid-in capital 1,334,006,077 18,771,524 48,704,964 Undistributed net investment income 0 26,001 0 Accumulated net realized gain (loss) from security transactions 389,003,962 3,514,532 (1,665,672) Net unrealized appreciation from investments 669,481,579 4,113,869 858,146 -------------- ----------- ----------- Net Assets $2,392,539,494 $26,432,873 $47,899,512 ============== =========== =========== COMMON SHARES Net assets $2,114,737,396 $26,403,491 $47,899,512 -------------- ----------- ----------- Shares outstanding 42,096,024 1,945,293 2,072,823 -------------- ----------- ----------- Net asset value, offering price and redemption price per share $50.24 $13.57 $23.11 ====== ====== ====== ADVISOR SHARES Net assets $ 277,802,098 $ 29,382 -------------- ----------- Shares outstanding 5,784,998 2,185 -------------- ----------- Net asset value, offering price and redemption price per share $48.02 $13.45 ====== ======
See Accompanying Notes to Financial Statements. 21 WARBURG PINCUS DOMESTIC EQUITY FUNDS STATEMENTS OF OPERATIONS For the Year Ended October 31, 2000 - --------------------------------------------------------------------------------
WARBURG PINCUS WARBURG PINCUS WARBURG PINCUS EMERGING GROWTH SMALL COMPANY SMALL COMPANY FUND VALUE FUND GROWTH FUND --------------- -------------- -------------- INVESTMENT INCOME: Dividends $ 3,109,706 $ 399,806 $ 9,675 Interest 9,542,601 86,841 194,327 Foreign taxes withheld (4,575) 0 0 ------------ ---------- ----------- Total investment income 12,647,732 486,647 204,002 ------------ ---------- ----------- EXPENSES: Investment advisory fees 21,973,038 265,466 338,862 Administrative services fees 4,205,534 56,829 72,008 Shareholder servicing/Distribution fees 1,538,827 66,277 84,716 Transfer agent fees 1,783,382 13,455 28,499 Custodian/Sub-custodian fees 411,399 33,033 38,405 Printing fees 302,962 14,419 10,545 Legal fees 108,685 15,894 12,040 Audit fees 60,395 12,000 13,400 Registration fees 48,362 25,196 53,089 Insurance expense 15,175 1,524 1,453 Directors fees 12,825 10,624 13,517 Interest expense 12,425 0 1,631 Offering/Organizational costs 0 14,944 0 Miscellaneous expense 86,156 0 1,293 ------------ ---------- ----------- 30,559,165 529,661 669,458 ------------ ---------- ----------- Less: fees waived, expenses reimbursed and transfer agent offsets (477,369) (66,476) (195,051) ------------ ---------- ----------- Total expenses 30,081,796 463,185 474,407 ------------ ---------- ----------- Net investment income (loss) (17,434,064) 23,462 (270,405) ------------ ---------- ----------- NET REALIZED AND UNREALIZED GAIN (LOSS) FROM INVESTMENTS: Net realized loss from investments 419,040,087 3,733,200 (1,581,984) Net change in unrealized appreciation (depreciation) from investments 132,236,335 1,967,554 (1,139,253) ------------ ---------- ----------- Net realized and unrealized gain (loss) from investments 551,276,422 5,700,754 (2,721,237) ------------ ---------- ----------- Net increase (decrease) in net assets resulting from operations $533,842,358 $5,724,216 $(2,991,642) ============ ========== ===========
See Accompanying Notes to Financial Statements. 22 This page intentionally left blank WARBURG PINCUS EMERGING GROWTH FUND STATEMENTS OF CHANGES IN NET ASSETS - --------------------------------------------------------------------------------
WARBURG PINCUS WARBURG PINCUS EMERGING GROWTH SMALL COMPANY VALUE FUND FUND -------------------------------- -------------------------- FOR THE FOR THE FOR THE FOR THE YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31, --------------- --------------- ------------ ----------- 2000 1999 2000 1999 --------------- --------------- ------------ ----------- FROM OPERATIONS: Net investment income (loss) $ (17,434,064) $ (15,518,919) $ 23,462 $ (354,167) Net realized gain (loss) from investments 419,040,087 300,644,500 3,733,200 3,792,545 Net change in unrealized appreciation (depreciation) from investments 132,236,335 205,391,594 1,967,554 (4,750,334) --------------- --------------- ------------ ----------- Net increase (decrease) in net assets resulting from operations 533,842,358 490,517,175 5,724,216 (1,311,956) --------------- --------------- ------------ ----------- FROM DISTRIBUTIONS: Distributions from realized gains (losses): Common Class Shares (225,635,097) 0 (3,505,579) (2,280,474) Advisor Class Shares (31,683,347) 0 (2,470) (1,680) --------------- --------------- ------------ ----------- Net decrease in net assets from distributions (257,318,444) 0 (3,508,049) (2,282,154) --------------- --------------- ------------ ----------- FROM CAPITAL SHARE TRANSACTIONS: Proceeds from sale of shares 1,307,801,851 724,682,855 18,117,399 30,617,506 Reinvested distributions 248,328,679 225 3,045,568 2,155,694 Net asset value of shares redeemed (1,260,954,165) (1,237,905,127) (26,177,249) (80,318,997) --------------- --------------- ------------ ----------- Net increase (decrease) in net assets from capital share transactions 295,176,365* (513,222,047) (5,014,282) (47,545,797) --------------- --------------- ------------ ----------- Net increase (decrease) in net assets 571,700,279 (22,704,872) (2,798,115) (51,139,907) NET ASSETS: Beginning of year 1,820,839,215 1,843,544,087 29,230,988 80,370,895 --------------- --------------- ------------ ----------- End of year $ 2,392,539,494 $ 1,820,839,215 $ 26,432,873 $29,230,988 =============== =============== ============ =========== UNDISTRIBUTED NET INVESTMENT INCOME: $ 0 $ 0 $ 26,001 $ 0 =============== =============== ============ ===========
WARBURG PINCUS SMALL COMPANY GROWTH FUND ----------------------------- FOR THE FOR THE YEAR ENDED YEAR ENDED OCTOBER 31, OCTOBER 31, ------------ ------------ 2000 1999 ------------ ------------ FROM OPERATIONS: Net investment income (loss) $ (270,405) $ (69,300) Net realized gain (loss) from investments (1,581,984) 1,359,344 Net change in unrealized appreciation (depreciation) from investments (1,139,253) 1,785,904 ------------ ------------ Net increase (decrease) in net assets resulting from operations (2,991,642) 3,075,948 ------------ ------------ FROM DISTRIBUTIONS: Distributions from realized gains (losses): Common Class Shares (393,861) 0 Advisor Class Shares 0 0 ------------ ------------ Net decrease in net assets from distributions (393,861) 0 ------------ ------------ FROM CAPITAL SHARE TRANSACTIONS: Proceeds from sale of shares 97,628,775 11,768,644 Reinvested distributions 350,461 0 Net asset value of shares redeemed (55,714,596) (10,367,900) ------------ ------------ Net increase (decrease) in net assets from capital share transactions 42,264,640 1,400,744 ------------ ------------ Net increase (decrease) in net assets 38,879,137 4,476,692 NET ASSETS: Beginning of year 9,020,375 4,543,683 ------------ ------------ End of year $ 47,899,512 $ 9,020,375 ============ ============ UNDISTRIBUTED NET INVESTMENT INCOME: $ 0 $ 0 ============ ============ *Includes redemption of 7,924,407 as a result of redemption in-kind on March 31, 2000.
See Accompanying Notes to Financial Statements. 24 & 25 WARBURG PINCUS EMERGING GROWTH FUND FINANCIAL HIGHLIGHTS (For a Common Class share of the Fund Outstanding Throughout Each Year) - --------------------------------------------------------------------------------
FOR THE YEAR ENDED OCTOBER 31, ------------------------------------------------------------------------------- 2000 1999 1998 1997 1996 ---------- ---------- --------- ---------- ---------- PER-SHARE DATA Net asset value, beginning of year $ 43.73 $ 33.69 $ 39.66 $ 32.80 $ 29.97 ---------- ---------- --------- ---------- ---------- INVESTMENT ACTIVITIES: Net investment loss (0.33) (0.33) (0.12) (0.19) (0.02) Net gains (losses) on investments (both realized and unrealized) 13.07 10.37 (3.46) 7.12 4.60 ---------- ---------- --------- ---------- ---------- Total from investment activities 12.74 10.04 (3.58) 6.93 4.58 ---------- ---------- --------- ---------- ---------- LESS DISTRIBUTIONS: Distributions from realized capital gains (6.23) 0.00 (2.39) (0.07) (1.75) ---------- ---------- --------- ---------- ---------- Total distributions 0.00 0.00 (2.39) (0.07) (1.75) ---------- ---------- --------- ---------- ---------- NET ASSET VALUE, END OF YEAR $ 50.24 $ 43.73 $ 33.69 $ 39.66 $ 32.80 ========== ========== ========= ========== ========== Total return 30.60% 29.80% (9.40)% 21.18% 16.14% RATIOS/SUPPLEMENTAL DATA: Net assets, end of year (000s omitted) $2,114,737 $1,592,595 $1,532,521 $1,515,385 $1,104,684 Ratio of expenses to average net assets 1.19%1 1.23%1 1.22%1 1.22%1 1.28% Ratio of net loss to average net assets (.65)% (.75)% (.48)% (.59)% (.63)% Portfolio turnover rate 190.82% 154.08% 91.60% 87.03% 65.77% - -------------------------------------------------------------------------------- 1 Interest earned on uninvested cash balances is used to offset portions of the transfer agent expense. These arrangements resulted in a reduction to the Common Class shares' expenses by .02% annualized for the year ended October 31, 2000, and by .01%, .00%, .01% and .01% for the years ending 1999, 1998, 1997 and 1996, respectively. The Common Class shares' operating expense ratio after reflecting these arrangements were 1.17% for the year ended October 31, 2000, and 1.22%, 1.22%, 1.21% and 1.27% for the years ending 1999, 1998, 1997 and 1996, respectively.
See Accompanying Notes to Financial Statements. 26 WARBURG PINCUS SMALL COMPANY VALUE FUND FINANCIAL HIGHLIGHTS (For a Common Class share of the Fund Outstanding Throughout Each Period) - --------------------------------------------------------------------------------
FOR THE YEAR ENDED OCTOBER 31, ---------------------------------------------------------------------------- 2000 1999 1998 1997 1996 4 ------- ------- ------- -------- ------- PER-SHARE DATA Net asset value, beginning of period $ 12.47 $ 13.39 $ 18.77 $ 14.38 $ 10.00 ------- ------- ------- -------- ------- INVESTMENT ACTIVITIES: Net investment income/(loss) 0.01 (0.15) (0.12) (0.08) (0.02) Net gains (losses) on investments (both realized and unrealized) 2.65 (0.34) (3.33) 4.64 4.40 ------- ------- ------- -------- ------- Total from investment activities 2.66 (0.49) (3.45) 4.56 4.38 ------- ------- ------- -------- ------- LESS DISTRIBUTIONS: Distributions from realized capital gains (1.56) (0.43) (1.93) (0.17) 0.00 ------- ------- ------- -------- ------- Total distributions (1.56) (0.43) (1.93) (0.17) 0.00 ------- ------- ------- -------- ------- NET ASSET VALUE, END OF PERIOD $ 13.57 $ 12.47 $ 13.39 $ 18.77 $ 14.38 ======= ======= ======= ======== ======= Total return 22.56% (3.91)% (19.97)% 32.05% 43.80%2 RATIOS/SUPPLEMENTAL DATA: Net assets, end of period (000s omitted) $26,403 $29,201 $80,318 $223,675 $84,045 Ratio of expenses to average net assets 1.76%1 1.76%1 1.70%1 1.70%1 1.75%1,3 Ratio of net gain to average net assets .09% (.76)% (.46)% (.63)% (.43)%3 Decrease reflected in above operating expense ratios due to waivers/ reimbursements .23% .38% .01% .03% .44%3 Portfolio turnover rate 155.35% 168.57% 77.92% 105.87% 43.14%2 - -------------------------------------------------------------------------------- 1 Interest earned on uninvested cash balances is used to offset portions of the transfer agent expense. These arrangements resulted in a reduction to the Common Class shares' expenses by .02% annualized for the year ended October 31, 2000, and by .01%, .00%, .01% and .00% for the year or period ending 1999, 1998, 1997 and 1996, respectively. The Common Class shares' operating expense ratio after reflecting these arrangements were 1.74% for the year ended October 31, 2000, and 1.75%, 1.70%, 1.69% and 1.75% for the year or period ending 1999, 1998, 1997 and 1996, respectively. 2 Non-annualized. 3 Annualized. 4 For the period December 29, 1995 (commencement of operations) through October 31, 1996.
See Accompanying Notes to Financial Statements. 27 WARBURG PINCUS SMALL COMPANY GROWTH FUND FINANCIAL HIGHLIGHTS (For a Common Class share of the Fund Outstanding Throughout Each Period) - --------------------------------------------------------------------------------
FOR THE YEAR ENDED OCTOBER 31, ------------------------------------------- 2000 1999 1998 4 1997 4 ------- ------- ------- ------- PER-SHARE DATA Net asset value, beginning of period $ 16.60 $ 10.11 $ 12.25 $ 10.00 ------- ------- ------- ------- INVESTMENT ACTIVITIES: Net investment loss (0.13) (0.13) (0.34) (0.04) Net gains (losses) on investments and foreign currency related items (both realized and unrealized) 7.28 6.62 (1.74) 2.29 ------- ------- ------- ------- Total from investment activities 7.15 6.49 (2.08) 2.25 ------- ------- ------- ------- LESS DIVIDENDS AND DISTRIBUTIONS: Dividends from net investment income (loss) 0.00 0.00 (0.06) 0.00 Distributions from net realized gains (0.64) 0.00 0.00 0.00 ------- ------- ------- ------- Total dividends and distributions (0.64) 0.00 (0.06) 0.00 ------- ------- ------- ------- NET ASSET VALUE, END OF PERIOD $ 23.11 $ 16.60 $ 10.11 $ 12.25 ======= ======= ======= ======= Total return 43.65% 64.19% (17)% 22.50%2 RATIOS/SUPPLEMENTAL DATA: Net assets, end of period (000s omitted) $47,900 $ 9,020 $ 4,544 $11,977 Ratio of expenses to average net assets 1.42%1 1.41%1 1.40%1 1.41%1,3 Ratio of net loss to average net assets (.80)% (1.06)% (.95)% (.53)%3 Decrease reflected in above operating expense ratios due to waivers/reimbursements .56% 2.13% 1.10% 3.66%3 Portfolio turnover rate 93.65% 191.65% 114.97% 123.24%2 - -------------------------------------------------------------------------------- 1 Interest earned on uninvested cash balances is used to offset portions of the transfer agent expense. These arrangements resulted in a reduction to the Common Class shares' expenses by .02% annualized for the year ended October 31, 2000, by .01%, .00%, .01%, for the year or period ended October 31, 1999, 1998 and 1997, respectively. The Common Class shares' operating expense ratio after reflecting these arrangements were 1.40% for the year ended October 31, 2000, 1.40%, 1.40% and 1.40% for the year or period ended October 31, 1999, 1998 and 1997, respectively. 2 Non-annualized. 3 Annualized. 4 For the period December 31, 1996 (commencement of operations) through October 31, 1997.
See Accompanying Notes to Financial Statements. 28 WARBURG PINCUS DOMESTIC EQUITY FUNDS NOTES TO FINANCIAL STATEMENTS October 31, 2000 - -------------------------------------------------------------------------------- 1. SIGNIFICANT ACCOUNTING POLICIES The Warburg Pincus Emerging Growth Fund (the "Emerging Growth Fund"), Warburg Pincus Small Company Value (the "Small Company Value Fund"), and Warburg Pincus Small Company Growth Fund (the "Small Company Growth Fund") (each a "Fund" and collectively the "Funds") each a Maryland Corporation, are registered under the Investment Company Act of 1940, as amended (the "1940 Act") as diversified open-end management investment companies (except the Emerging Growth Fund), which is not diversified. Investment objectives for each Fund are as follows: the Emerging Growth Fund seeks maximum capital appreciation; the Small Company Value Fund seeks long-term capital appreciation; the Small Company Growth Fund seeks capital growth. Each Fund except the Small Company Growth Fund may invest up to 10% of its total assets in non-publicly traded securities (the Small Company Growth Fund may invest up to 15% of its net assets in such securities). Non-publicly traded securities may be less liquid than publicly traded securities, and they may be difficult or impossible to sell at the time and the price the Fund would like. In addition, the lack of an active market may make it difficult to obtain an accurate price for a Fund security. Each Fund (except the Small Company Growth Fund) offers two classes of shares, one class being referred to as the Common Class shares and one class being referred to as the Advisor Class shares. The Small Company Growth Fund offers only Common Class shares. Common Class and Advisor Class shares in each Fund represent an equal pro rata interest in such Fund, except that they bear different expenses which reflect the difference in the range of services provided to them. Common Class shares for the Small Company Value Fund and the Small Company Growth Fund each bear expenses paid pursuant to a shareholder servicing and distribution plan at an annual rate of .25% of the average daily net asset value of each Fund's Common Class shares. Advisor Class shares bear expenses paid pursuant to a distribution plan at an annual rate not to exceed .75% of the average daily net asset value of the applicable Fund's Advisor Class shares. Advisor Class shares are currently bearing expenses of .50% of average daily net assets. At October 31, 2000, there were no outstanding Advisor Class shares for the Small Company Growth Fund. 29 WARBURG PINCUS DOMESTIC EQUITY FUNDS NOTES TO FINANCIAL STATEMENTS (CONT'D) October 31, 2000 - -------------------------------------------------------------------------------- 1. SIGNIFICANT ACCOUNTING POLICIES -- (CONT'D) The net asset value of each Fund is determined daily as of the close of regular trading on the New York Stock Exchange. Each Fund's investments are valued at market value, which is generally determined using market quotations. If no sales are reported, investments are generally valued at the most recent bid price and if there is no bid price available, at the most recent ask price. If market quotations are not readily available, securities and other assets are valued by another method that the Board of Directors believes accurately reflects fair value. Debt that will mature in 60 days or less is valued on the basis of amortized cost, which approximates market value, unless the Board determines that using this method would not accurately reflect an investment's value. The books and records of the Funds are maintained in U.S. dollars. Transactions denominated in foreign currencies are recorded at the current prevailing exchange rates. All assets and liabilities denominated in foreign currencies are translated into U.S. dollar amounts at the current exchange rate at the end of the period. Translation gains or losses resulting from changes in the exchange rate during the reporting period and realized gains and losses on the settlement of foreign currency transactions are reported in the results of operations for the current period. The Funds do not isolate that portion of realized gains and losses on investments in equity securities which are due to changes in the foreign exchange rate from that which is due to changes in market prices of equity securities. The Funds isolate that portion of realized gains and losses on investments in debt securities which are due to changes in the foreign exchange rate from that which are due to changes in market prices of debt securities. Security transactions are accounted for on a trade date basis. Interest income is recorded on the accrual basis. Dividends are recorded on the ex-dividend date. Income, expenses (excluding class-specific expenses, principally distribution and shareholder servicing fees) and realized/unrealized gains/losses are allocated proportionately to each class of shares based upon the relative net asset value of outstanding shares of that class. The cost of investments sold is determined by use of the specific identification method for both financial reporting and income tax purposes. Dividends from net investment income and net realized capital gains, if any, are declared and paid at least annually. However, to the extent that a net realized capital gain can be reduced by a capital loss carryover, such gain will not be distributed. Income and capital gain distributions are determined in accordance with federal income tax regulations which may differ from generally accepted accounting principles. 30 WARBURG PINCUS DOMESTIC EQUITY FUNDS NOTES TO FINANCIAL STATEMENTS (CONT'D) October 31, 2000 - -------------------------------------------------------------------------------- 1. SIGNIFICANT ACCOUNTING POLICIES -- (CONT'D) No provision is made for federal taxes, as it is each Fund's intention to continue to qualify for and elect the tax treatment applicable to regulated investment companies under the Internal Revenue Code of 1986, as amended, (the "Code") and make the requisite distributions to its shareholders, which will be sufficient to relieve it from federal income and excise taxes. Costs incurred in connection with organization of each Fund other than Emerging Growth Fund have been deferred and are being amortized over a period of five years from the date each Fund commenced its operations. Pursuant to an exemptive order issued by the Securities and Exchange Commission, each Fund, along with other Funds advised by Credit Suisse Asset Management, LLC ("CSAM"), can transfer uninvested cash balances to a pooled cash account, which can invest in repurchase agreements secured by U.S. government securities. Securities, pledged as collateral for repurchase agreements, are held by the Funds' custodian bank until the agreements mature. Each agreement requires that the market value of the collateral be sufficient to cover payments of interest and principal; however, in the event of default or bankruptcy by the counterpart to the agreement, retention of the collateral may be subject to legal proceedings. As of October 31, 2000, the Funds had no investments in repurchase agreements. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates. The Funds have an arrangement with their transfer agent whereby interest earned on uninvested cash balances was used to offset a portion of their transfer agent expense. For the year ended October 31, 2000, the Funds received credits or reimbursements under this arrangement as follows: FUND AMOUNT ---- -------- Emerging Growth Fund $477,369 Small Company Value Fund 5,175 Small Company Growth Fund 6,058 31 WARBURG PINCUS DOMESTIC EQUITY FUNDS NOTES TO FINANCIAL STATEMENTS (CONT'D) October 31, 2000 - -------------------------------------------------------------------------------- 2. INVESTMENT ADVISER, CO-ADMINISTRATORS AND DISTRIBUTOR Pursuant to Investment Advisory Agreement, CSAM, an indirect, wholly-owned subsidiary of Credit Suisse Group, serves as investment advisor for each of the Funds described herein. For its investment advisory services, CSAM receives the following fees based on each Fund's average daily net assets: FUND ANNUAL RATE ------ --------------------------------- Emerging Growth Fund .90% of average daily net assets Small Company Value Fund 1.00% of average daily net assets Small Company Growth Fund 1.00% of average daily net assets For the year ended October 31, 2000, investment advisory fees and voluntary waivers were as follows: GROSS NET FUND ADVISORY FEE WAIVER ADVISORY FEE ---- ------------ --------- ------------ Emerging Growth Fund $21,973,038 $ 0 $21,973,038 Small Company Value Fund 265,467 (43,515) 221,952 Small Company Growth Fund 338,862 (166,999) 171,913 Credit Suisse Asset Management Securities, Inc. ("CSAMSI"), an affiliate of CSAM, serves as each Fund's co-administrator. PFPC Inc. ("PFPC") an indirect, wholly-owned subsidiary of PNC Bank Corp. ("PNC"), also serves as each Fund's co-administrator. For administrative services, CSAMSI currently receives a fee calculated at the rate of .10% of each Fund's daily net assets. For the year ended October 31, 2000, administrative services fees were as follows: FUND CO-ADMINISTRATION FEE ---- --------------------- Emerging Growth Fund $2,441,449 Small Company Value Fund 26,547 Small Company Growth Fund 33,886 For its administrative services through July 31, 2000, PFPC received a fee, exclusive of out-of-pocket expenses, based on the following fee structure: AVERAGE DAILY NET ASSETS ANNUAL RATE ------------------ -------------------------------- First $500 million .10% of average daily net assets Next $1 billion .075% of average daily net assets Over $1.5 billion .05% of average daily net assets Effective August 1, 2000, for its administrative services, PFPC receives a fee, exclusive of out-of-pocket expenses, based on the following fee structure: AVERAGE DAILY NET ASSETS ANNUAL RATE ------------------ -------------------------------- First $500 million .10% of average daily net assets Next $1 billion .08% of average daily net assets Over $1.5 billion .06% of average daily net assets 32 WARBURG PINCUS DOMESTIC EQUITY FUNDS NOTES TO FINANCIAL STATEMENTS (CONT'D) October 31, 2000 - -------------------------------------------------------------------------------- 2. INVESTMENT ADVISER, CO-ADMINISTRATORS AND DISTRIBUTOR -- (CONT'D) For the year ended October 31, 2000, administrative services fees earned and voluntarily waived by PFPC (including out-of-pocket expenses) were as follows:
NET FUND CO-ADMINISTRATION FEE WAIVER CO-ADMINISTRATION FEE ---- --------------------- -------- --------------------- Emerging Growth Fund $1,764,085 $ 0 $1,764,085 Small Company Value Fund 30,282 (17,786) 12,496 Small Company Growth Fund 38,122 (22,044) 16,078
In addition to serving as each Fund's co-administrator, CSAMSI served as distributor of each Fund's shares until January 1, 2000. On January 1, 2000, Provident Distributors, Inc. ("PDI") replaced CSAMSI as distributor for each Fund. On August 1, 2000 CSAMSI replaced PDI as distributor to each Fund. No compensation was paid by any of the Funds to PDI for distribution services. Pursuant to a distribution plan adopted by each Fund pursuant to Rule 12B-1 under the 1940 Act, CSAMSI receives a fee for its selling services. This fee is calculated at an annual rate of .25% of the average daily net assets of the Common Class shares of the Small Company Value and Small Company Growth and at .50% of the average daily net assets of each Funds' Advisor Class shares. CSAMSI may use this fee to compensate service organizations for shareholder servicing and distribution services. For the year ended October 31, 2000, shareholder servicing and distribution fees were as follows: SHAREHOLDER SERVICING/ FUND DISTRIBUTION FEE ---- ---------------------- Emerging Growth Fund Advisor Class shares $1,538,827 ========== Small Company Value Fund Common Class shares $ 66,098 Advisor Class shares 179 ---------- $ 66,277 ========== Small Company Growth Fund Common Class shares $ 84,716 ========== 33 WARBURG PINCUS DOMESTIC EQUITY FUNDS NOTES TO FINANCIAL STATEMENTS (CONT'D) October 31, 2000 - -------------------------------------------------------------------------------- 3. LINE OF CREDIT The Funds, together with other funds advised by CSAM, have established a $350 million committed and a $75 million uncommitted, unsecured, line of credit facility ("Credit Facility") with Deutsche Bank, AG as administrative agent, State Street Bank and Trust Company as operations agents, Bank of Nova Scotia as syndication agent and certain other lenders, for temporary or emergency purposes primarily relating to unanticipated Fund share redemption. Under the terms of the Credit Facility, the Funds with access to the Credit Facility pay an aggregate commitment fee at a rate of .075% per annum on the entire amount of the Credit Facility which is allocated among the participating Funds in such manner as is determined by the governing Boards of the various funds. In addition, the participating Funds will pay interest on borrowing at the Federal funds rate plus .50%. During the year ending October 31, 2000, the following fund had borrowings under the line of credit agreement:
MAXIMUM LOAN AVERAGE DAILY AVERAGE DAILY LOAN OUTSTANDING FUND LOAN BALANCE INTEREST RATE % OUTSTANDING 10/31/00 ---- ------------- --------------- ----------- ----------- Small Company Growth Fund $7,967 6.02 $671,000 $0
4. INVESTMENTS IN SECURITIES At October 31, 2000, purchases and sales of investment securities (excluding short-term investments) were as follows: FUND PURCHASES SALES ---- -------------- ----------- Emerging Growth Fund $4,281,122,199 $ 4,347,801 Small Company Value Fund 39,040,498 49,333,769 Small Company Growth Fund 68,172,491 31,291,489 At October 31, 2000, the net unrealized appreciation from investments for those securities having an excess of value over cost and net unrealized depreciation from investments for those securities having an excess of cost over value (based on cost for federal income tax purposes) was as follows:
UNREALIZED UNREALIZED NET UNREALIZED FUND APPRECIATION DEPRECIATION APPRECIATION ---- ------------ ------------ -------------- Emerging Growth Fund $756,233,330 $(95,928,576) $660,304,754 Small Company Value Fund 4,804,848 (738,213) 4,066,635 Small Company Growth Fund 8,558,541 (7,897,533) 661,008
34 WARBURG PINCUS DOMESTIC EQUITY FUNDS NOTES TO FINANCIAL STATEMENTS (CONT'D) October 31, 2000 - -------------------------------------------------------------------------------- 5. RESTRICTED SECURITIES Certain Funds' investments are restricted as to resale, are not readily marketable and are valued as determined by or under the direction of each Fund's Board in good faith, at fair value. The table below shows the number of shares held, the acquisition dates, aggregate cost, fair value as of October 31, 2000, and share value of the securities and percent of net assets, which the securities comprise.
PERCENTAGE SECURITY ACQUISITION MARKET OF NET FUND SECURITY DESCRIPTION TYPE DATE(S) COST VALUE ASSETS - ---- -------------------- -------- ----------- ----------- ---------- ---------- Emerging Growth Fund Foodtrader.com, Inc. Preferred 09/12/00 $ 2,000,000 $ 2,000,000 0.08% SoftCom, Inc. Preferred 12/21/99 999,999 999,999 0.04 Breeze Com, Ltd Series B Preferred 11/04/99 6,223,300 28,028,540 1.17 Celletra Limited Series C Preferred 04/05/00 7,000,000 7,000,002 0.29 TimesSquareMedia.com Bond 11/23/99 2,900,000 0 0.00 Chaparral Resources, Inc. Common 07/28/98 1,250,000 90,278 0.00 New York Restaurant Group, Inc. Common 10/30/97 3,249,985 3,249,985 0.14 Opal Concepts, Inc. Series B Preferred 08/31/95 2,000,000 199,998 0.01 Women First Healthcare, Inc. Warrants 03/18/99 0 0 0.00 ----------- ----------- ---- $25,623,284 $41,568,802 1.73% =========== =========== ===== Small Company Value Fund EA Industries, Inc. Warrants 03/31/98 $ 110,438 $ 0 0.00% Small Company Growth Fund Planetweb, Inc. Common 09/08/00 $ 150,144 $ 150,144 0.31%
6. FORWARD FOREIGN CURRENCY CONTRACTS Each Fund may enter into forward currency contracts for the purchase or sale of a specific foreign currency at a fixed price on a future date. Risks may arise upon entering into these contracts from the potential inability of counterparties to meet the terms of their contracts and from unanticipated movements in the value of a foreign currency relative to the U.S. dollar. Each Fund will enter into forward contracts primarily for hedging purposes. Forward currency contracts are adjusted by the daily exchange rate of the underlying currency and any gains or losses are recorded for financial statement purposes as unrealized until the contract settlement date or an offsetting position is entered into. At October 31, 2000, there were no open forward foreign currency contracts. 35 WARBURG PINCUS DOMESTIC EQUITY FUNDS NOTES TO FINANCIAL STATEMENTS (CONT'D) October 31, 2000 - -------------------------------------------------------------------------------- 7. CAPITAL SHARE TRANSACTIONS Each Fund is authorized to issue three billion full and fractional shares of capital stock, $.001 par value per share, of which one billion shares (two billion in the case of the Emerging Growth Fund) of each Fund are classified as the Advisor Class. Transactions in classes of each Fund were as follows:
EMERGING GROWTH FUND ------------------------------------------------------------------- COMMON CLASS SHARES ------------------------------------------------------------------- FOR THE YEAR ENDED FOR THE YEAR ENDED OCTOBER 31, 2000 OCTOBER 31,1999 ------------------------------- ------------------------------- SHARES VALUE SHARES VALUE ------------ --------------- ------------ --------------- Shares sold 23,543,013 $ 1,217,208,366 17,598,528 $ 690,945,900 Shares issued in reinvestment of dividends 4,767,193 217,193,291 6 225 Shares repurchased (22,635,213) (1,156,532,309) (26,668,182) (1,047,436,237) ----------- --------------- ----------- --------------- Net increase/ (decrease) 5,674,993 $ 277,869,348 (9,069,648) $ (356,490,110) =========== =============== =========== ===============
EMERGING GROWTH FUND ------------------------------------------------------------------- ADVISOR CLASS SHARES ------------------------------------------------------------------- FOR THE YEAR ENDED FOR THE YEAR ENDED OCTOBER 31, 2000 OCTOBER 31,1999 ------------------------------- ------------------------------- SHARES VALUE SHARES VALUE ------------ --------------- ------------ --------------- Shares sold 1,760,652 $ 90,593,485 882,074 $ 33,736,955 Shares issued in reinvestment of dividends 711,82 31,135,388 0 0 Shares repurchased (2,123,029) (104,421,856) (5,013,511) (190,468,890) ---------- ------------- ---------- ------------- Net increase/ (decrease) 349,452 $ 17,307,017 (4,131,437) $(156,731,935) ========== ============= ========== =============
SMALL COMPANY VALUE FUND ------------------------------------------------------------------- COMMON CLASS SHARES ------------------------------------------------------------------- FOR THE YEAR ENDED FOR THE YEAR ENDED OCTOBER 31, 2000 OCTOBER 31,1999 ------------------------------- ------------------------------- SHARES VALUE SHARES VALUE ------------ --------------- ------------ --------------- Shares sold 1,390,341 $ 17,797,30 2,370,859 $ 30,585,137 Shares issued in reinvestment of dividends 246,303 3,044,299 161,133 2,154,348 Shares repurchased (2,033,476) (25,851,039) (6,189,358) (80,265,308) ---------- ------------ ---------- ------------ Net (decrease) (396,832) $ (5,009,431) (3,657,366) $(47,525,823) ========== ============ ========== ============
SMALL COMPANY VALUE FUND ------------------------------------------------------------------- ADVISOR CLASS SHARES ------------------------------------------------------------------- FOR THE YEAR ENDED FOR THE YEAR ENDED OCTOBER 31, 2000 OCTOBER 31,1999 ------------------------------- ------------------------------- SHARES VALUE SHARES VALUE ------------ --------------- ------------ --------------- Shares sold 25,991 $ 320,090 2,662 $ 32,369 Shares issued in reinvestment of dividends 103 1,269 101 1,346 Shares repurchased (26,361) (326,210) (4,265) (53,689) ------- --------- ------ -------- Net (decrease) (267) $ (4,851) (1,502) $(19,974) ======= ========= ====== ========
36 WARBURG PINCUS DOMESTIC EQUITY FUNDS NOTES TO FINANCIAL STATEMENTS (CONT'D) October 31, 2000 - -------------------------------------------------------------------------------- 7. CAPITAL SHARE TRANSACTIONS -- (CONT'D) SMALL COMPANY GROWTH FUND ---------------------------------------------------------- COMMON CLASS SHARES ---------------------------------------------------------- FOR THE YEAR ENDED FOR THE YEAR ENDED OCTOBER 31, 2000 OCTOBER 31,1999 -------------------------- --------------------------- SHARES VALUE SHARES VALUE ---------- ------------ -------- ------------ Shares sold 3,680,086 $ 97,628,775 859,778 $ 11,768,644 Shares issued in reinvestment of dividends 17,427 350,461 0 0 Shares repurchased (2,168,206) (55,714,596) (765,739) (10,367,900) ---------- ------------ -------- ------------ Net increase 1,529,307 $ 42,264,639 94,039 $ 1,400,744 ========== ============ ======== ============ 37 WARBURG PINCUS DOMESTIC EQUITY FUNDS NOTES TO FINANCIAL STATEMENTS (CONT'D) October 31, 2000 - -------------------------------------------------------------------------------- 8. OTHER FINANCIAL HIGHLIGHTS Each fund (other than the Small Company Growth Fund) currently offers one other class of shares, Advisor Class shares, representing equal pro rata interests in each of the respective Funds. The financial highlights for an Advisor Class share of each Fund are as follows:
WARBURG PINCUS EMERGING GROWTH FUND ----------------------------------------------------------- ADVISOR CLASS SHARES ----------------------------------------------------------- YEAR ENDED: 2000 1999 1998 1997 1996 -------- -------- -------- -------- -------- PER-SHARE DATA Net asset value, beginning of period $ 41.99 $ 32.51 $ 38.50 $ 31.99 $ 29.38 -------- -------- -------- -------- -------- INVESTMENT ACTIVITIES: Net investment loss (0.61) (0.65) (0.49) (0.33) (0.09) Net gains or losses on investments and foreign currency related items (both realized and unrealized) 12.61 10.13 (3.11) 6.91 4.45 -------- -------- -------- -------- -------- Total from investment activities 12.00 9.48 (3.60) 6.58 4.36 -------- -------- -------- -------- -------- LESS DISTRIBUTIONS: Distributions from net realized capital gains (5.97) 0.00 (2.39) (0.07) (1.75) -------- -------- -------- -------- -------- Total distributions (5.97) 0.00 (2.39) (0.07) (1.75) -------- -------- -------- -------- -------- NET ASSET VALUE, END OF PERIOD $ 48.02 $ 41.99 $ 32.51 $ 38.50 $ 31.99 ======== ======== ======== ======== ======== Total return 29.96% 29.16% (9.75)% 20.62% 15.69% RATIOS/SUPPLEMENTAL DATA: Net assets, end of period (000s omitted) $277,802 $228,244 $311,023 $457,432 $362,696 Ratio of expenses to average net assets 1.69%1 1.72%1 1.62%1 1.63%1 1.70%1 Ratio of net loss to average net assets (1.15)% (1.25)% (.87)% (1.01)% (1.05)% Portfolio turnover rate 190.82% 154.08% 91.60% 87.03% 65.77% - -------------------------------------------------------------------------------- 1 Interest earned on uninvested cash balances is used to offset portions of transfer agent expense. These arrangements resulted in a reduction to the net expense ratio by .02% annualized for the year ended October 31, 2000 and by .01%, .00%, .00% and .01% for the year ended October 31, 2000, 1999, 1998, 1997 and 1996, respectively. The operating expense ratios after reflecting these arrangements were 1.67% for the year ended October 31, 2000, 1.71%, 1.62%, 1.63% and 1.69% for the year ended October 31, 2000, 1999, 1998, 1997 and 1996, respectively.
38 WARBURG PINCUS DOMESTIC EQUITY FUNDS NOTES TO FINANCIAL STATEMENTS (CONT'D) October 31, 2000 - -------------------------------------------------------------------------------- 8. OTHER FINANCIAL HIGHLIGHTS -- (CONT'D)
WARBURG PINCUS SMALL COMPANY VALUE FUND --------------------------------------------------------------- ADVISOR CLASS SHARES ------------------------------------------------------------- DECEMBER 29, 1995 FOR THE YEAR ENDED OCTOBER 31, (COMMENCEMENT OF -------------------------------------- OPERATIONS) THROUGH PERIOD ENDED: 2000 1999 1998 1997 OCTOBER 31, 1996 ------ ------ ------ ------ ------------------- PER-SHARE DATA Net asset value, beginning of period $12.35 $13.30 $18.65 $14.46 $10.00 ------ ------ ------ ------ ------ INVESTMENT ACTIVITIES: Net investment loss (0.01) (0.18) (0.40) (0.08) (0.02) Net gains (losses) on investments and foreign currency related items (both realized and unrealized) 2.59 (0.34) (3.02) 4.44 4.48 ------ ------ ------ ------ ------ Total from investment activities 2.58 (0.52) (3.42) 4.36 4.46 ------ ------ ------ ------ ------ LESS DISTRIBUTIONS: Distributions from net realized capital gains (1.48) (0.43) (1.93) (0.17) 0.00 ------ ------ ------ ------ ------ Total distributions (1.48) (0.43) (1.93) (0.17) 0.00 ------ ------ ------ ------ ------ NET ASSET VALUE, END OF PERIOD $13.45 $12.35 $13.30 $18.65 $14.46 ====== ====== ====== ====== ====== Total return 22.04% (4.17)% (19.93)% 30.47% 44.60%2 RATIOS/SUPPLEMENTAL DATA: Net assets, end of period (000s omitted) $ 29 $ 30 $ 53 $ 255 $ 5 Ratio of expenses to average net assets 2.01%1 2.01%1 1.97%1 1.89%1 1.97%1, 3 Ratio of net loss to average net assets (.07)% (1.02)% (.92)% (0.78)% (.52)%3 Decrease reflected in above operating expense ratios due to waivers/reimbursements .23% .39% .27% .65% 1.46%3 Portfolio turnover rate 155.35% 168.57% 77.92% 105.87% 43.14%2 - -------------------------------------------------------------------------------- 1 Interest earned on uninvested cash balances is used to offset portions of transfer agent expense. These arrangements resulted in a reduction to the net expense ratio by .02% for the year ended October 31, 2000 and by .01%, .00%, .01% and .00% for the year or period ended October 31, 1999, 1998, 1997 and 1996, respectively. The operating expense ratios after reflecting these arrangements were 1.99% for the year ended October 31, 2000 and 2.00%, 1.97%, 1.88% and 1.97% for the year or period ended October 31, 2000, 1999, 1998, 1997 and 1996, respectively. 2 Non-annualized. 3 Annualized.
39 WARBURG PINCUS FUNDS REPORT OF INDEPENDENT ACCOUNTANTS - -------------------------------------------------------------------------------- To the Board of Directors and Shareholders of WARBURG, PINCUS EMERGING GROWTH FUND, INC.; WARBURG, PINCUS SMALL COMPANY VALUE FUND, INC.; WARBURG, PINCUS SMALL COMPANY GROWTH FUND, INC.: In our opinion, the accompanying statements of assets and liabilities, including the schedules of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects the financial position of the Warburg, Pincus Emerging Growth Fund, Inc., Warburg, Pincus Small Company Value Fund, Inc. and Warburg, Pincus Small Company Growth Fund, Inc., (all funds collectively referred to as the "Funds") at October 31, 2000, the results of each of their operations for the year then ended, the changes in each of their net assets for each of the two years in the period then ended and their financial highlights for each of the years (or periods) presented, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as "financial statements") are the responsibility of the Funds' management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with auditing standards generally accepted in the United States of America, which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at October 31, 2000 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion. PRICEWATERHOUSECOOPERS LLP Two Commerce Square 2001 Market Street Philadelphia, Pennsylvania December 15, 2000 40 WARBURG PINCUS FUNDS SHAREHOLDER TAX INFORMATION (UNAUDITED) - -------------------------------------------------------------------------------- Each Fund is required by Subchapter M of the Code to advise its shareholders within 60 days of Fund's fiscal year end as to the U.S. federal tax status of distributions received by the Fund's shareholders in respect of such fiscal year. During the fiscal year ended October 31, 2000, the following dividends and distributions per share were paid by each of the Funds: ORDINARY LONG-TERM % OF ORDINARY INCOME INCOME CAPITAL GAINS DIVIDEND QUALIFYING FOR FUND PER SHARE PER SHARE DIVIDENDS RECEIVED DEDUCTION* - ---- --------- ------------- ----------------------------- 1999 PAYMENT DATE 12/07/99 12/07/99 ------------ -------- -------- Emerging Growth 0.00 Common shares $0.0000 $6.2321 Advisor shares 0.0000 5.9659 Small Company Value 0.00 Common shares $0.0000 $1.5602 Advisor shares 0.0000 1.4833 Small Company Growth 0.33 Common shares 0.2074 0.4331 Advisor shares 0.0000 0.0237 The Emerging Growth Fund and the Small Company Growth Fund did not pay any ordinary income dividends or capital gain distributions during the current fiscal year. Further, the above information was provided to calendar year taxpayers via Form 1099-DIV mailed in January of 2000. Because the fiscal year of the Funds is not a calendar year, another notification will be sent with respect to calendar year 2000. The second notification, which will reflect the amount to be used by calendar year taxpayers on their U.S. federal income tax returns, will be made in conjunction with Form 1099-DIV and will be mailed in January 20001. - ------------- * Available to Corporate Shareholders only. 41 This page intentionally left blank This page intentionally left blank This page intentionally left blank (LOGO) WARBURG PINCUS FUNDS PART OF CREDIT | ASSET SUISSE | MANAGEMENT [GRAPHIC OMITTED] P.O. BOX 9030, BOSTON, MA 02205-9030 800-WARBURG (800-927-2874) o WWW.WARBURG.COM CREDIT SUISSE ASSET MANAGEMENT SECURITIES, INC., DISTRIBUTOR. WPUSS-2-1000 -----END PRIVACY-ENHANCED MESSAGE-----