[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
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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
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- -----
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
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- --
Redemption fees NONE NONE NONE
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- --
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.
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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.
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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
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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