<PAGE>
WARBURG PINCUS LONG-SHORT MARKET NEUTRAL FUND
WARBURG PINCUS LONG-SHORT EQUITY FUND
Supplement to Combined Prospectus/Proxy Statement dated September 11, 1998
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Both the Warburg Pincus Long-Short Market Neutral Fund and the
corresponding BEA Long-Short Market Neutral Fund (the "Market Neutral Funds")
seek to achieve their respective investment objectives by, among other things,
taking short positions in stocks that the Funds' investment adviser has
identified as overvalued. Until a security sold short by the Market Neutral
Funds is replaced, the Funds are required to repay the lender of the security
any dividends or interest that accrue during the period of the loan ("short-sale
dividends"). As such, short-sale dividends of each Market Neutral Fund are
treated, for accounting purposes, as an expense of the Fund. Moreover, because
the Warburg Pincus Long-Short Equity Fund and the BEA Long-Short Equity Fund
(the "Long-Short Funds") each invest in shares of the corresponding Market
Neutral Fund, short-sale dividends of each Market Neutral Fund are treated as an
indirect expense of the corresponding Long-Short Fund.
The impact of short-sale dividends on the expense ratios of the Market
Neutral Funds and the Long-Short Funds (collectively, the "Funds") was not
reflected in the "Fee Table" information contained in the Combined
Prospectus/Proxy Statement (the "Prospectus"). Although it is not possible to
predict the amount of short-sale dividends that would be incurred during the
first fiscal year of the Funds' operations, such amounts, when incurred, could
materially adversely affect the investment returns of the Funds.
The following modifies the "Fee Table" information contained in the
Prospectus to reflect that short-sale dividends have not been included in the
Funds' annual operating expenses, expense limitations and expense examples.
Capitalized terms used below, unless otherwise defined, have the same meaning
assigned to them in the Prospectus.
<TABLE>
<CAPTION>
MARKET NEUTRAL FUND Institutional Shares* Common Shares**
BEA
BEA Fund Warburg (Advisor) Warburg
Fund Fund Fund
<S> <C> <C> <C> <C>
Annual Operating Expenses
(after fee waivers and
expense reimbursements)
Management fees............ 1.40% 1.40% 1.40% 1.40%
12b-1 fees................. None None .25% .25%
Other expenses+............ .60% .60% .60% .60%
Total Operating Expenses
(after waivers and
reimbursements)+.............. 2.00% 2.00% 2.25% 2.25%
</TABLE>
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<TABLE>
<CAPTION>
LONG-SHORT FUND Institutional Shares* Common Shares**
BEA
Warburg (Advisor) Warburg
BEA Fund Fund Fund Fund
<S> <C> <C> <C> <C>
Annual Operating Expenses
(after fee waivers and
expense reimbursements)
Management fees........... 0% 0% 0% 0%
12b-1 fees................ None None .25% .25%
Other expenses+........... 2.50% 2.50% 2.50% 2.50%
Total Operating Expenses
(after waivers and
reimbursements)+............. 2.50% 2.50% 2.75% 2.75%
</TABLE>
+ "Other expenses" and "Total Operating Expenses" do not include short-sale
dividends (estimated at 1.50% and 1.35% for the first fiscal years of the Market
Neutral Funds and the Long-Short Funds, respectively), which are included in and
reduce the investment return of the Funds.
* BEA has agreed to waive fees and reimburse expenses of the Institutional
Shares of each Warburg Fund for a one-year period following the closing of the
Reorganization so that the expense ratio of such shares (exclusive of short-sale
dividends) will be no higher than that of the Institutional class of the
corresponding BEA Fund (exclusive of short-sale dividends) for the thirty days
ending on the Closing Date of the Reorganization, plus the performance
adjustment fee applicable to the Long-Short Neutral Fund.
** BEA and CFSI have agreed to waive fees and reimburse expenses of the Common
Shares of each Warburg Fund for a one-year period following the closing of the
Reorganization so that the expense ratio of such shares (exclusive of short-sale
dividends) will be no higher than that of the Advisor class of the corresponding
BEA Fund (exclusive of short-sale dividends) for the thirty days ending on the
Closing Date of the Reorganization, plus the performance adjustment fee
applicable to the Long-Short Neutral Fund.
The above tables reflect a voluntary assumption of some of the additional
expenses of the Funds by BEA and, with respect to the Common Shares of the
Warburg Funds, CFSI in order to limit the operating expenses of each class of
the Funds (exclusive of short-sale dividends) to the percentage of the Funds'
average daily net assets noted under "Total Operating Expenses," plus the
performance adjustment fee applicable to the Long-Short Neutral Fund. Absent
such expense reimbursements, under current expense levels, the resulting fees
and expenses for the Funds (exclusive of short-sale dividends) would be as
follows:
<TABLE>
<CAPTION>
RULE
MANAGEMENT 12b-1 OTHER TOTAL
FUND FEES FEES EXPENSES EXPENSES
<S> <C> <C> <C> <C>
Market Neutral
Fund/Institutional Shares
BEA Fund............. 1.50% 0 .60% 2.10%
Warburg Fund......... 1.50% 0 .60% 2.10%
Market Neutral Fund/Common
Shares
BEA (Advisor) Fund... 1.50% .25% .60% 2.35%
Warburg Fund......... 1.50% .25% .60% 2.35%
Long-Short
Fund/Institutional Shares
BEA Fund............. .10% 0 2.50% 2.60%
Warburg Fund......... .10% 0 2.50% 2.60%
Long-Short Fund/Common
Shares
BEA (Advisor) Fund... .10% .25% 2.50% 2.85%
Warburg Fund......... .10% .25% 2.50% 2.85%
</TABLE>
The expense examples for the Funds provided in the Prospectus exclude short-sale
dividends and assume payment of operating expenses at the levels set forth in
the "Annual Operating Expenses" tables above.
Dated: October 21, 1998
