WARBURG PINCUS LARGE CO GROWTH FUND INC, N-1A, 1999-11-01

WARBURG PINCUS LARGE CO GROWTH FUND INC
N-1A, 1999-11-01

Previous: PACIFIC BASIN EQUITY PORTFLOLIO, N-1A, 1999-11-01

Next: WARBURG PINCUS LARGE CO GROWTH FUND INC, N-8A, 1999-11-01

<PAGE>

As filed with the U.S. Securities and Exchange Commission
on November 1, 1999

Securities Act File No. 33-
Investment Company Act File No. 811-

U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 \x\

Pre-Effective Amendment No. ___ \ \

Post-Effective Amendment No. ___ \ \

and/or

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT
OF 1940 \x\

Amendment No. ___ \ \
(Check appropriate box or boxes)

Warburg, Pincus Large Company Growth Fund, Inc.
.......................................
(Exact Name of Registrant as Specified in Charter)

466 Lexington Avenue
New York, New York 10017-3147
...............................................................
(Address of Principal Executive Offices) (Zip Code)

Registrant's Telephone Number, including Area Code: (212) 878-0600

Hal Liebes, Esq.
Warburg, Pincus Large Company Growth Fund, Inc.
466 Lexington Avenue
New York, New York 10017-3147
......................................
(Name and Address of Agent for Service)

Copy to:
Rose F. DiMartino, Esq.
Willkie Farr & Gallagher
787 Seventh Avenue
New York, New York 10019-6099

<PAGE>

Approximate Date of Proposed Public Offering: As soon as practicable after the
effective date of this Registration Statement.

Title of Securities Being Registered: Common Stock, $.001 par value per share.

The Registrant hereby amends this Registration Statement on such date
or dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933, as amended (the "1933 Act"), or until the
Registration Statement shall become effective on such date as the Commission,
acting pursuant to said Section 8(a), may determine.

<PAGE>

- --------------------------------------------------------------------------------

THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY
NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER
TO SELL THESE SECURITIES AND IS NOT SOLICITING AN OFFER TO BUY THESE SECURITIES
IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.

SUBJECT TO COMPLETION, DATED NOVEMBER 1, 1999

PROSPECTUS

COMMON CLASS

___________, 2000

WARBURG PINCUS
LARGE 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.

[LOGO]

Warburg Pincus Funds are advised by Credit Suisse Asset Management, LLC.

- --------------------------------------------------------------------------------

<PAGE>

CONTENTS
<TABLE>
<CAPTION>
<S> <C>
KEY POINTS.............................................................. 4
Goal and Principal Strategies........................................ 4
Investor Profile..................................................... 4
A Word About Risk.................................................... 5

INVESTOR EXPENSES....................................................... 7
Fees and Fund Expenses............................................... 7
Example.............................................................. 7

THE FUND IN DETAIL...................................................... 8
The Management Firm.................................................. 8
Multi-Class Structure................................................ 9
Fund Information Key................................................. 9
Goal and Strategies.................................................. 10
Portfolio Investments................................................ 10
Risk Factors......................................................... 10
Portfolio Management................................................. 11
Investor Expenses.................................................... 11

MORE ABOUT RISK......................................................... 12
Introduction......................................................... 12
Types of Investment Risk............................................. 12
Certain Investment Practices......................................... 14

MEET THE MANAGERS....................................................... 17

ABOUT YOUR ACCOUNT...................................................... 18
Share Valuation...................................................... 18
Buying and Selling Shares............................................ 18
Account Statements................................................... 19
Distributions........................................................ 19
Taxes................................................................ 19

OTHER INFORMATION....................................................... 21
Distribution......................................................... 21

FOR MORE INFORMATION............................................ back cover
</TABLE>

<PAGE>

KEY POINTS

GOAL AND PRINCIPAL STRATEGIES

<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
FUND/RISK FACTORS GOAL STRATEGIES
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
LARGE COMPANY Long-term growth - Invests primarily in U.S. equity securities
GROWTH FUND of capital
Risk Factors: - Focuses on large companies
MARKET RISK
- Uses a growth investment style and looks for companies
whose earnings growth rates significantly exceed market averages
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>

INVESTOR PROFILE
- ----------------

THIS FUND IS DESIGNED FOR INVESTORS WHO:

- - are investing for long-term goals

- - are willing to assume the risk of losing money in exchange for attractive
potential long-term returns

- - are looking for capital growth

- - want to diversify their portfolios into common stocks

IT 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.

<PAGE>

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.

The principal risk factor for the fund is 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.

<PAGE>

This page intentionally left blank

<PAGE>

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 expected amounts for the fiscal period ending
October 31, 2000.

<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
SHAREHOLDER FEES
(paid directly from your investment)
- --------------------------------------------------------------------------------
<S> <C>
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 .80%
Distribution and service (12b-1) fee .25%
Other expenses(1)
TOTAL ANNUAL FUND OPERATING EXPENSES(2)
- --------------------------------------------------------------------------------
</TABLE>

(1) Other expenses are based on estimated amounts to be charged in the current
fiscal period.

(2) Fund service providers have voluntarily agreed to waive some of their fees
and reimburse some expenses. These waivers and reimbursements are expected
to lower the fund's expenses as follows:

EXPENSES AFTER WAIVERS AND REIMBURSEMENTS
<TABLE>
<CAPTION>
<S> <C>
Management fee

Distribution and service (12b-1) fee .25%

Other expenses
-----
TOTAL ANNUAL FUND OPERATING EXPENSES 1.40%
</TABLE>

EXAMPLE

This example may help you compare the cost of investing in the 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:

<TABLE>
<CAPTION>
- ------------------------------------------------------------
ONE YEAR THREE YEARS
- ------------------------------------------------------------
<S> <C>
$ $
</TABLE>

<PAGE>

THE FUND IN DETAIL

THE MANAGEMENT FIRM
- -------------------

CREDIT SUISSE ASSET MANAGEMENT, LLC
One Citicorp Center
153 East 53rd Street
New York, NY 10022

- - 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 (CSAM), the institutional asset
management and mutual fund arm of Credit Suisse Group, one of the world's
leading banks

- - CSAM companies manage more than $57 billion in the U.S. and $175 billion
globally

- - CSAM 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

<PAGE>

FUND INFORMATION KEY
- --------------------

A concise description of the fund begins on the next page. The 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

Expected expenses for the 2000 fiscal period. Actual 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 registration fees and miscellaneous
expenses. Expressed as a percentage of average net assets after waivers,
credits and reimbursements.

<PAGE>

LARGE COMPANY GROWTH FUND

GOAL AND STRATEGIES
- -------------------

The fund seeks long-term growth of capital. To pursue this goal, it invests
primarily in equity securities of large U.S. companies.

In seeking to identify growth companies, the fund's portfolio manager looks
for companies whose earnings growth rates significantly exceed market averages.

Under normal market conditions, the fund invests at least 65% of assets in
equity securities of large U.S. companies. The fund considers a "large" company
to be one whose market capitalization exceeds $5 billion. Some companies may
fail to meet the definition of large company after the fund has purchased their
securities. These companies continue to be considered large for purposes of the
fund's minimum 65% allocation to large-company equities.

PORTFOLIO INVESTMENTS
- ---------------------

Equity holdings may consist of:

- - common and preferred stocks

- - securities convertible into or exchangeable for common stocks

- - securities such as rights and warrants, whose values are based on common
stocks

The fund may invest up to 20% of assets in foreign securities. To a limited
extent, it may also engage in other investment practices.

RISK FACTORS
- ------------

This fund's principal risk factor is:

- - market risk

The value of your investment 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 value stocks).

"More About Risk" details certain other investment practices the fund may
use. Please read that section carefully before you invest.

<PAGE>

PORTFOLIO MANAGEMENT
- --------------------

[_____________] manage[s] the fund's investment portfolio. You can find out
more about [them] in "Meet the Manager[s]."

INVESTOR EXPENSES
- -----------------

Expected expenses for the 2000 fiscal period:

<TABLE>
<CAPTION>
<S> <C>
Management fee .xx%
Distribution and service
(12b-1) fee .25%
All other expenses .xx%
-----
Total expenses 1.40%
</TABLE>

<PAGE>

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 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

<PAGE>

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.

Bonds and other fixed-income securities generally involve less market risk
than stocks. However, the risk of bonds can vary significantly depending upon
factors such as issuer and maturity. The bonds of some companies may be riskier
than the stocks of others.

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.

<PAGE>

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

<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------
INVESTMENT PRACTICE LIMIT
- -------------------------------------------------------------------------------------
<S> <C>
BORROWING The borrowing of money from banks to meet redemptions or
for other temporary or emergency purposes. SPECULATIVE EXPOSURE RISK. 33 1/3%
- -------------------------------------------------------------------------------------
FOREIGN SECURITIES Securities of foreign issuers. May include depositary
receipts. CURRENCY, INFORMATION, LIQUIDITY, MARKET,
POLITICAL, VALUATION RISKS. 20%
- -------------------------------------------------------------------------------------
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, securities or stock indexes. Futures obligate
the fund (or give it the right, in the case of options) to receive
or make payment at a specific future time based on those future
changes.(1) CORRELATION, CURRENCY, HEDGED EXPOSURE, INTEREST-RATE,
MARKET, SPECULATIVE EXPOSURE RISKS.(2) / /
- -------------------------------------------------------------------------------------
INVESTMENT-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. / /
- -------------------------------------------------------------------------------------
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. / /
- -------------------------------------------------------------------------------------
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%
- -------------------------------------------------------------------------------------
REAL-ESTATE INVESTMENT TRUSTS (REITS) Pooled investment vehicles that invest primarily in
income-producing real estate or real-estate-related loans or interests.
CREDIT, INTEREST-RATE, MARKET RISKS. / /
- -------------------------------------------------------------------------------------
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------
INVESTMENT PRACTICE LIMIT
- -------------------------------------------------------------------------------------
<S> <C>
RESTRICTED AND OTHER ILIQUID SECURITIES Securities with
restrictions on trading, or those not actively traded. May include
private placements. LIQUIDITY, MARKET, VALUATION RISKS. 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,
OPERATIONAL RISKS. 33 1/3%
- -------------------------------------------------------------------------------------
SHORT-TERM TRADING Selling a security shortly after purchase.
A fund engaging in short-term trading will have higher turnover
and transaction expenses. Increased short-term capital gains
distributions could raise shareholders' income tax liability. /X/
- -------------------------------------------------------------------------------------
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. / /
- -------------------------------------------------------------------------------------
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. / /
- -------------------------------------------------------------------------------------
</TABLE>

<PAGE>

(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.

<PAGE>

MEET THE MANAGERS

<PAGE>

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) (currently 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.

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.

BUYING AND SELLING SHARES
- -------------------------

The accompanying SHAREHOLDER GUIDE explains how to invest directly with the
fund. You will find information about purchases, redemptions, exchanges and
services.

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 also 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.

Some of the firms through which the funds are available include:

- - Charles Schwab & Co., Inc. Mutual Fund OneSource-Registered Trademark-
service

- - Fidelity Brokerage Services, Inc. FundsNetwork-TM- Program

- - Waterhouse Securities, Inc.

<PAGE>

ACCOUNT STATEMENTS
- ------------------

In general, you will receive account statements 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 receive annual and semiannual financial reports.

DISTRIBUTIONS
- -------------

As a fund investor, you will receive distributions.

The fund earns 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 distributes dividends annually. The fund typically distributes
capital gains annually in December.

Most investors have their distributions reinvested in additional shares of
the 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.

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 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, the fund 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 are generally taxed as
ordinary income. The fund will mostly make capital-gain distributions, which
could be short-term or long-term.

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.

<PAGE>

The Form 1099 that is mailed to you every January details your distributions
and their federal tax category, including the portion taxable as long-term
capital gains.

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.

<PAGE>

OTHER INFORMATION

DISTRIBUTION
- ------------

As part of its business strategy, the fund has adopted a Rule 12b-1
shareholder-servicing and distribution plan. Under the plan, the fund pays 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.

<PAGE>

- --------------------------------------------------------------------------------

FOR MORE INFORMATION

More information about the fund 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 REPORTS 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
800-SEC-0330) or by sending your request and a duplicating fee to the SEC's
Public Reference Section, Washington, DC 20549-6009.

Please contact Warburg Pincus Funds to obtain, without charge, the SAI and
ANNUAL and SEMIANNUAL REPORTS and to make shareholder inquiries:

BY TELEPHONE:
800-WARBURG
(800-927-2874)

BY MAIL:
Warburg Pincus Funds
P.O. Box 9030
Boston, MA 02205-9030

BY OVERNIGHT OR COURIER SERVICE:
Boston Financial
Attn: Warburg Pincus Funds
66 Brooks Drive
Braintree, MA 02184

ON THE INTERNET:
www.warburg.com

SEC FILE NUMBERS:
Warburg Pincus Large Company
Growth Fund 811-

[LOGO]

P.O. BOX 9030, BOSTON, MA 02205-9030
800-WARBURG (800-927-2874) www.warburg.com

CREDIT SUISSE ASSET MANAGEMENT SECURITIES, INC., DISTRIBUTOR WPxxx-1-0100

- --------------------------------------------------------------------------------

<PAGE>

WARBURG PINCUS FUNDS

SHAREHOLDER

GUIDE

Common Class
September 16, 1999

This SHAREHOLDER GUIDE is incorporated into and legally part of each
Warburg Pincus (Common Class) prospectus.

[Warburg Pincus Funds Logo]

<PAGE>

Warburg Pincus Funds is a division of Credit Suisse Asset Management, LLC

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 Shareholder Service Center to receive
one by mail or fax. Or you can download it from our Internet Web site:
www.warburg.com.

You can make your initial investment by check or wire. The "By Wire" method
in the table enables you to buy shares on a particular day at that day's closing
NAV.

ADDING TO AN ACCOUNT

You can add to your account in a variety of ways, as shown in the table. If
you want to use ACH transfer, be sure to complete the "ACH on Demand" section of
the account application.

INVESTMENT CHECKS

Please use either a personal or bank check payable in U.S. dollars to Warburg
Pincus Funds. Unfortunately, we cannot accept "starter" checks that do not have
your name preprinted on them. We also cannot accept checks payable to you or to
another party and endorsed to the order of Warburg Pincus Funds. These types of
checks may be returned to you and your purchase order may not be processed.
Limited exceptions include properly endorsed government checks.

MINIMUM INITIAL INVESTMENT

<TABLE>
<S> <C>
Cash Reserve Fund: $ 1,000
New York Tax Exempt Fund: $ 1,000
Balanced Fund: $ 1,000
Growth & Income Fund: $ 1,000
WorldPerks-Registered Trademark- Funds: $ 5,000
Long-Short Funds: $ 25,000
All other funds: $ 2,500
IRAs: $ 500*
Transfers/Gifts to Minors: $ 500*
</TABLE>

* $25,000 minimum for Long-Short Funds.

WIRE INSTRUCTIONS

State Street Bank and Trust Company
ABA# 0110 000 28
Attn: Mutual Funds/Custody Dept.
[WARBURG PINCUS FUND NAME]
DDA# 9904-649-2
F/F/C: [ACCOUNT NUMBER AND REGISTRATION]

HOW TO REACH US

SHAREHOLDER SERVICE CENTER
Toll free: 800-WARBURG
(800 -927-2874)
Fax: 212-370-9833

MAIL
Warburg Pincus Funds
P.O. Box 9030
Boston, MA 02205-9030

OVERNIGHT/COURIER SERVICE
Boston Financial
Attn: Warburg Pincus Funds
66 Brooks Drive
Braintree, MA 02184

INTERNET WEB SITE
www.warburg.com

2
<PAGE>

<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------
OPENING AN ACCOUNT ADDING TO AN ACCOUNT
- --------------------------------------------------------------------------------------------
BY CHECK
- --------------------------------------------------------------------------------------------
<S> <C>
- - Complete the NEW ACCOUNT APPLICATION. - Make your check payable to Warburg
For IRAs use the UNIVERSAL IRA Pincus Funds.
APPLICATION.
- Write the account number and the fund
- - Make your check payable to Warburg name on your check.
Pincus Funds.
- Mail to Warburg Pincus Funds.
- - Mail to Warburg Pincus Funds.
- Minimum amount is $100.

- --------------------------------------------------------------------------------------------
BY EXCHANGE
- --------------------------------------------------------------------------------------------

- - Call our Shareholder Service Center to - Call our Shareholder Service Center to
request an exchange. Be sure to read request an exchange.
the current prospectus for the new
fund. Also please observe the minimum - Minimum amount is $250.
initial investment.
If you do not have telephone privileges,
If you do not have telephone mail or fax a signed letter of
privileges, mail or fax a signed letter instruction.
of instruction.

- --------------------------------------------------------------------------------------------
BY WIRE
- --------------------------------------------------------------------------------------------

- - Complete and sign the NEW ACCOUNT - Call our Shareholder Service Center by
APPLICATION. 4 p.m. ET to inform us of the incoming
wire. Please be sure to specify your
- - Call our Shareholder Service Center and name, the account number and the fund
fax the signed NEW ACCOUNT APPLICATION name on your wire advice.
by 4 p.m. ET.
- Wire the money for receipt that day.
- - Shareholder Services will telephone you
with your account number. Please be - Minimum amount is $500.
sure to specify your name, the 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 Funds.

This method is not available for IRAs.

- --------------------------------------------------------------------------------------------
BY AUTOMATED CLEARING HOUSE (ACH) TRANSFER
- --------------------------------------------------------------------------------------------

- - Cannot be used to open an account. - Call our Shareholder Service Center to
request an ACH transfer from your bank.

- Your purchase will be effective at the
next NAV calculated after we receive your
order in proper form.

- Minimum amount is $50.

Requires ACH on Demand
privileges.

- --------------------------------------------------------------------------------------------
</TABLE>

800-WARBURG (800-927-2874)
MONDAY-FRIDAY, 8 A.M.-8 P.M. ET SATURDAY, 8 A.M.-4 P.M. ET

3
<PAGE>

SELLING SHARES*

<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------
SELLING SOME OR ALL OF YOUR SHARES CAN BE USED FOR
- --------------------------------------------------------------------------------------------
BY MAIL
- --------------------------------------------------------------------------------------------
<S> <C>
Write us a letter of instruction that - Accounts of any type.
includes:
- Sales of any amount.
- - your name(s) and signature(s)
For IRAs please use the IRA DISTRIBUTION
- - the fund name and account number REQUEST FORM.

- - 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
Funds.

If only a letter of instruction is
required, you can fax it to the
Shareholder Service Center.

- - Call our Shareholder Service Center to - Accounts with telephone privileges.
request an exchange. Be sure to read the
current prospectus for the new fund. Also If you do not have telephone privileges,
please observe the minimum initial mail or fax a letter of instruction to
investment. exchange shares.

- --------------------------------------------------------------------------------------------
BY PHONE
- --------------------------------------------------------------------------------------------

Call our Shareholder Service Center to - Non-IRA accounts with telephone
request a redemption. You can receive the privileges.
proceeds as:

- - a check mailed to the address of record

- - an ACH transfer to your bank ($50
minimum)

- - a wire to your bank ($500 minimum)

See "By Wire or ACH Transfer" for
details.

- --------------------------------------------------------------------------------------------
BY WIRE OR ACH TRANSFER
- --------------------------------------------------------------------------------------------

- - Complete the "Wire Instructions" or - Non-IRA accounts with wire-redemption
"ACH on Demand" section of your NEW or ACH on Demand privileges.
ACCOUNT APPLICATION.
- Requests by phone or mail.
- - For federal-funds wires, proceeds will
be wired on the next business day. For
ACH transfers, proceeds will be
delivered within two business days.

- --------------------------------------------------------------------------------------------
</TABLE>

* For the Japan Small Company Fund only: The fund imposes a 1.00% redemption
fee (short-term trading fee) on fund shares redeemed or exchanged less than six
months from purchase. This fee is calculated based on the shares' net asset
value at redemption and deducted from the redemption proceeds. The fee is paid
to the fund to offset costs associated with short-term shareholder trading. It
does not apply to shares acquired through reinvestment of distributions. For
purposes of computing the redemption fee, any shares bought through reinvestment
of distributions will be redeemed first without charging the fee, followed by
the shares held longest. The redemption fee applies to fund shares purchased on
or after November 17, 1999.

4
<PAGE>

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

- redemption in certain large amounts (other than by exchange)

- requests to send the proceeds to a different payee or address

- shares represented by certificates, which must be returned with your sell
order

A signature guarantee helps protect against fraud. You can obtain one from
most banks or securities dealers, but not from a notary public.

RECENTLY PURCHASED SHARES

If the fund has not yet collected payment for the shares you are selling, it
will delay sending you the proceeds until your purchase payment clears. This may
take up to 10 calendar days after the purchase. To avoid the collection period,
consider buying shares by bank wire, bank check, certified check or money order.

LOW-BALANCE ACCOUNTS

If your account balance falls below the minimum required to keep it open due
to redemptions or exchanges, the fund may ask you to increase your balance. If
it is still below the minimum after 60 days, the fund may close your account and
mail you the proceeds.

MINIMUM TO KEEP AN ACCOUNT OPEN

<TABLE>
<S> <C>
Cash Reserve Fund: $ 750
New York Tax Exempt Fund: $ 750
Balanced Fund: $ 500
Growth & Income Fund: $ 500
WorldPerks Funds: $ 750
All other funds: $2,000
IRAs: $ 250
Transfers/Gifts to Minors: $ 250
</TABLE>

800-WARBURG (800-927-2874)
MONDAY-FRIDAY, 8 A.M.-8 P.M. ET SATURDAY, 8 A.M.-4 P.M. ET

5
<PAGE>

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 Shareholder Service Center.

AUTOMATIC MONTHLY INVESTMENT PLAN

For making automatic investments ($50 minimum) from a designated bank
account.

AUTOMATIC WITHDRAWAL PLAN

For making automatic monthly, quarterly, semiannual or annual withdrawals of
$250 or more.

DISTRIBUTION SWEEP

For automatically reinvesting your dividend and capital-gain distributions
into another identically registered Warburg Pincus fund. Not available for IRAs.

RETIREMENT PLANS

Warburg Pincus offers a range of tax-advantaged retirement accounts,
including:

- Traditional IRAs

- Roth IRAs

- Roth Conversion IRAs

- Spousal IRAs

- Rollover IRAs

- SEP IRAs

To transfer your IRA to Warburg Pincus, use the IRA TRANSFER/DIRECT ROLLOVER
FORM. If you are opening a new IRA, you will also need to complete the UNIVERSAL
IRA APPLICATION. Please consult your tax professional concerning your IRA
eligibility and tax situation.

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 Shareholder Service Center to update your account records whenever
you change your address. Shareholder Services can also help you change your
account information or privileges.

6
<PAGE>

OTHER POLICIES

TRANSACTION DETAILS

You are entitled to capital-gain and earned dividend distributions as soon as
your purchase order is executed. For the Intermediate Maturity Government, New
York Intermediate Municipal and Fixed Income Funds and the Money Market Funds,
you begin to earn dividend distributions the business day after your purchase
order is executed. However, if we receive your purchase order and payment to
purchase shares of a Money Market Fund before 12 p.m. (noon), you begin to earn
dividend distributions on that day.

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 Shareholder Services 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

A 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

- change its 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)

- modify or waive its minimum investment requirements for investments through
certain financial-services firms and for employees and clients of its
adviser, sub-adviser, distributor and their affiliates and, for the
Long-Short Funds, investments through certain financial-services firms
($10,000 minimum) and through retirement plan programs (no minimum)

- stop offering its shares for a period of time (such as when management
believes that a substantial increase in assets could adversely affect it)

800-WARBURG (800-927-2874)
MONDAY-FRIDAY, 8 A.M.-8 P.M. ET SATURDAY, 8 A.M.-4 P.M. ET

7
<PAGE>

[WARBURG PINCUS FUNDS LOGO]

P.O. BOX 9030, BOSTON, MA 02205-9030

800-WARBURG (800-927-2874) B www.warburg.com

CREDIT SUISSE ASSET MANAGEMENT SECURITIES, INC., DISTRIBUTOR.
WPCOM-31-0999

<PAGE>
[side note]

The information in this Statement of Additional Information is not complete and
may be changed. We may not sell these securities until the registration
statement filed with the Securities and Exchange Commission is effective. This
Statement of Additional Information is not an offer to sell these securities and
is not soliciting an offer to buy these securities in any State where the offer
or sale is not permitted.

SUBJECT TO COMPLETION, DATED NOVEMBER 1, 1999

STATEMENT OF ADDITIONAL INFORMATION

____________ , 2000

WARBURG PINCUS LARGE COMPANY GROWTH FUND

This STATEMENT OF ADDITIONAL INFORMATION provides information about the
Warburg Pincus Large Company Growth Fund (the "Fund") that supplements
information contained in the PROSPECTUS of the Fund dated _________, 2000, as
amended or supplemented from time to time (the "PROSPECTUS") and is
incorporated by reference in its entirety in the PROSPECTUS.

This STATEMENT OF ADDITIONAL INFORMATION is not a prospectus and no
investment in shares of the Fund should be made solely upon the information
contained herein. Copies of the PROSPECTUS and information regarding the
Fund's current performance and the status of shareholder accounts can be
obtained by writing or telephoning: Warburg Pincus Funds, P.O. Box
9030, Boston, Massachusetts 02205-9030, 800-WARBURG.

<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS

Page
----
<S> <C>
INVESTMENT OBJECTIVE AND POLICIES.............................................................................1
Strategic and Other Transactions.........................................................................1
Options, Futures and Currency Exchange Transactions.............................................1
Securities Options..............................................................................1
Securities Index Options........................................................................4
OTC Options.....................................................................................4
Futures Activities..............................................................................5
Currency Exchange Transactions..................................................................7
Hedging Generally...............................................................................9
Asset Coverage for Forward Contracts, Options, Futures and Options
on Futures..................................................................................10
Additional Information on Other Investment Practices....................................................11
U.S. Government Securities.....................................................................11
Other U.S. Government Securities...............................................................11
Money Market Obligations.......................................................................11
Convertible Securities.........................................................................12
Structured Securities..........................................................................12
Debt Securities................................................................................16
Below Investment Grade Securities..............................................................16
Zero Coupon Securities.........................................................................18
Securities of Other Investment Companies.......................................................18
Lending of Portfolio Securities................................................................18
Foreign Investments............................................................................19
Short Sales "Against the Box"..................................................................22
Short Sales (excluding Short Sales "Against the Box")..........................................22
Warrants.......................................................................................22
Non-Publicly Traded and Illiquid Securities....................................................23
Borrowing......................................................................................24
Reverse Repurchase Agreements..................................................................24
When-Issued Securities and Delayed-Delivery Transactions.......................................25
REITs..........................................................................................25
Small Capitalization and Emerging Growth Companies; Unseasoned
Issuers.....................................................................................26
Special Situation Companies....................................................................26
Dollar Rolls...................................................................................27
INVESTMENT RESTRICTIONS......................................................................................27
PORTFOLIO VALUATION..........................................................................................29
PORTFOLIO TRANSACTIONS.......................................................................................30
PORTFOLIO TURNOVER...........................................................................................32
MANAGEMENT OF THE FUND.......................................................................................32
Officers and Board of Directors.........................................................................32
Directors' Total Compensation...........................................................................35
Portfolio Managers of the Fund..........................................................................36

<PAGE>
<CAPTION>
<S> <C>
Control Persons and Principal Holders of Securities.....................................................36
Investment Adviser and Co-Administrators................................................................36
Custodians and Transfer Agent...........................................................................37
Organization of the Fund................................................................................38
Distribution and Shareholder Servicing..................................................................38
Distributor.................................................................................38
Common Shares...............................................................................38
Advisor Shares..............................................................................40
General.....................................................................................41
ADDITIONAL PURCHASE AND REDEMPTION INFORMATION...............................................................41
Automatic Cash Withdrawal Plan..........................................................................41
EXCHANGE PRIVILEGE...........................................................................................42
ADDITIONAL INFORMATION CONCERNING TAXES......................................................................42
The Fund and Its Investments............................................................................42
Passive Foreign Investment Companies....................................................................45
Dividends and Distributions.............................................................................46
Sales of Shares.........................................................................................46
Foreign Taxes...........................................................................................47
Backup Withholding......................................................................................47
Notices.................................................................................................47
Special Tax Matters Relating to Zero Coupon Securities..................................................48
Other Taxation..........................................................................................48
DETERMINATION OF PERFORMANCE.................................................................................48
INDEPENDENT ACCOUNTANTS AND COUNSEL..........................................................................50
MISCELLANEOUS................................................................................................50
FINANCIAL STATEMENTS.........................................................................................51
APPENDIX - DESCRIPTION OF RATINGS...........................................................................A-1
</TABLE>

(ii)
<PAGE>

INVESTMENT OBJECTIVE AND POLICIES

The following information supplements the discussion of the Fund's
investment objective and policies in the Prospectus. There are no assurances
that the Fund will achieve its investment objective.

The investment objective of the Large Company Growth Fund is long-term
growth of capital.

The Fund is permitted, but not obligated, to engage in the
following investment strategies, subject to any percentage limitations set
forth below. The Fund is not obligated to pursue any of the following
strategies and does not represent that these techniques are available now or
will be available at any time in the future.

STRATEGIC AND OTHER TRANSACTIONS

OPTIONS, FUTURES AND CURRENCY EXCHANGE TRANSACTIONS. The Fund may
purchase and write (sell) options on securities, securities indices and
currencies for both hedging purposes and to increase total return. The Fund
may enter into futures contracts and options on futures contracts on
securities, securities indices and currencies and may engage in currency
exchange transactions for these same purposes, which may involve speculation.

Up to 25% of the Fund's assets may be at risk in connection with
these strategies. The amount of assets considered to be "at risk" in these
transactions is, in the case of purchasing options, the amount of the premium
paid, and, in the case of writing options, the value of the underlying
obligation. Options may be traded on an exchange or over-the-counter ("OTC")

SECURITIES OPTIONS. The Fund may write covered put and call options
on stock and debt securities and may purchase such options that are traded on
U.S. and foreign exchanges, as well as OTC options. The Fund realizes fees
(referred to as "premiums") for granting the rights evidenced by the options
it has written. A put option embodies the right of its purchaser to compel
the writer of the option to purchase from the option holder an underlying
security at a specified price for a specified time period or at a specified
time. In contrast, a call option embodies the right of its purchaser to
compel the writer of the option to sell to the option holder an underlying
security at a specified price for a specified time period or at a specified
time.

The potential loss associated with purchasing an option is limited to
the premium paid, and the premium would partially offset any gains achieved from
its use. However, for an option writer the exposure to adverse price movements
in the underlying security or index is potentially unlimited during the exercise
period. Writing securities options may result in substantial losses to the Fund,
force the sale or purchase of portfolio securities at inopportune times or at
less advantageous prices, limit the amount of appreciation the Fund could
realize on its investments or require the Fund to hold securities it would
otherwise sell.

The principal reason for writing covered options on a security is to
attempt to realize, through the receipt of premiums, a greater return than would
be realized on the securities alone. In return for a premium, the Fund as the
writer of a covered call option forfeits the right to any appreciation in the
value of the underlying security above the strike price for the life of the
option (or until a closing purchase transaction can be effected). A fund that
writes call options retains the risk of an increase in the price of the
underlying security. The size of the premiums that the Fund may receive may be
adversely affected as new or existing

<PAGE>

institutions, including other investment companies, engage in or increase their
option-writing activities.

If security prices rise, a put writer would generally expect to
profit, although its gain would be limited to the amount of the premium it
received. If security prices remain the same over time, it is likely that the
writer will also profit, because it should be able to close out the option at a
lower price. If security prices decline, the put writer would expect to suffer a
loss. This loss may be less than the loss from purchasing the underlying
instrument directly to the extent that the premium received offsets the effects
of the decline.

In the case of options written by the Fund that are deemed covered
by virtue of the Fund's holding convertible or exchangeable preferred stock
or debt securities, the time required to convert or exchange and obtain
physical delivery of the underlying common stock with respect to which the
Fund has written options may exceed the time within which the Fund must make
delivery in accordance with an exercise notice. In these instances, the Fund
may purchase or temporarily borrow the underlying securities for purposes of
physical delivery. By so doing, the Fund will not bear any market risk, since
the Fund will have the absolute right to receive from the issuer of the
underlying security an equal number of shares to replace the borrowed
securities, but the Fund may incur additional transaction costs or interest
expenses in connection with any such purchase or borrowing.

Additional risks exist with respect to certain of the securities for
which the Fund may write covered call options. For example, if the Fund writes
covered call options on mortgage-backed securities, the mortgage-backed
securities that it holds as cover may, because of scheduled amortization or
unscheduled prepayments, cease to be sufficient cover. If this occurs, the Fund
will compensate for the decline in the value of the cover by purchasing an
appropriate additional amount of mortgage-backed securities.

Options written by the Fund will normally have expiration dates
between one and nine months from the date written. The exercise price of the
options may be below, equal to or above the market values of the underlying
securities at the times the options are written. In the case of call options,
these exercise prices are referred to as "in-the-money," "at-the-money" and
"out-of-the-money," respectively. The Fund may write (i) in-the-money call
options when Credit Suisse Asset Management, LLC, the Fund's investment adviser
("CSAM"), expects that the price of the underlying security will remain flat or
decline moderately during the option period, (ii) at-the-money call options when
CSAM expects that the price of the underlying security will remain flat or
advance moderately during the option period and (iii) out-of-the-money call
options when CSAM expects that the premiums received from writing the call
option plus the appreciation in market price of the underlying security up to
the exercise price will be greater than the appreciation in the price of the
underlying security alone. In any of the preceding situations, if the market
price of the underlying security declines and the security is sold at this lower
price, the amount of any realized loss will be offset wholly or in part by the
premium received. Out-of-the-money, at-the-money and in-the-money put options
(the reverse of call options as to the relation of exercise price to market
price) may be used in the same market environments that such call options are
used in equivalent transactions. To secure its obligation to deliver the
underlying security when it

2
<PAGE>

writes a call option, the Fund will be required to deposit in escrow the
underlying security or other assets in accordance with the rules of the Options
Clearing Corporation (the "Clearing Corporation") and of the securities exchange
on which the option is written.

Prior to their expirations, put and call options may be sold in
closing sale or purchase transactions (sales or purchases by the Fund prior to
the exercise of options that it has purchased or written, respectively, of
options of the same series) in which the Fund may realize a profit or loss from
the sale. An option position may be closed out only where there exists a
secondary market for an option of the same series on a recognized securities
exchange or in the OTC market. When the Fund has purchased an option and engages
in a closing sale transaction, whether the Fund realizes a profit or loss will
depend upon whether the amount received in the closing sale transaction is more
or less than the premium the Fund initially paid for the original option plus
the related transaction costs. Similarly, in cases where the Fund has written an
option, it will realize a profit if the cost of the closing purchase transaction
is less than the premium received upon writing the original option and will
incur a loss if the cost of the closing purchase transaction exceeds the premium
received upon writing the original option. The Fund may engage in a closing
purchase transaction to realize a profit, to prevent an underlying security with
respect to which it has written an option from being called or put or, in the
case of a call option, to unfreeze an underlying security (thereby permitting
its sale or the writing of a new option on the security prior to the outstanding
option's expiration). The obligation of the Fund under an option it has written
would be terminated by a closing purchase transaction (the Fund would not be
deemed to own an option as a result of the transaction). So long as the
obligation of the Fund as the writer of an option continues, the Fund may be
assigned an exercise notice by the broker-dealer through which the option was
sold, requiring the Fund to deliver the underlying security against payment of
the exercise price. This obligation terminates when the option expires or the
Fund effects a closing purchase transaction. The Fund cannot effect a closing
purchase transaction with respect to an option once it has been assigned an
exercise notice.

There is no assurance that sufficient trading interest will exist to
create a liquid secondary market on a securities exchange for any particular
option or at any particular time, and for some options no such secondary market
may exist. A liquid secondary market in an option may cease to exist for a
variety of reasons. In the past, for example, higher than anticipated trading
activity or order flow or other unforeseen events have at times rendered certain
of the facilities of the Clearing Corporation and various securities exchanges
inadequate and resulted in the institution of special procedures, such as
trading rotations, restrictions on certain types of orders or trading halts or
suspensions in one or more options. There can be no assurance that similar
events, or events that may otherwise interfere with the timely execution of
customers' orders, will not recur. In such event, it might not be possible to
effect closing transactions in particular options. Moreover, the Fund's ability
to terminate options positions established in the OTC market may be more limited
than for exchange-traded options and may also involve the risk that securities
dealers participating in OTC transactions would fail to meet their obligations
to the Fund. The Fund, however, intends to purchase OTC options only from
dealers whose debt securities, as determined by CSAM, are considered to be
investment grade. If, as a covered call option writer, the Fund is unable to
effect a closing purchase transaction

3
<PAGE>

in a secondary market, it will not be able to sell the underlying security
and would continue to be at market risk on the security.

Securities exchanges generally have established limitations governing
the maximum number of calls and puts of the class which may be held or written,
or exercised within certain time periods by an investor or group of investors
acting in concert (regardless of whether the options are written on the same or
different securities exchanges or are held, written or exercised in one or more
accounts or through one or more brokers). It is possible that the Fund and other
clients of CSAM and certain of its affiliates may be considered to be such a
group. A securities exchange may order the liquidation of positions found to be
in violation of these limits and it may impose certain other sanctions. These
limits may restrict the number of options the Fund will be able to purchase on a
particular security.

SECURITIES INDEX OPTIONS. The Fund may purchase and write
exchange-listed and OTC put and call options on securities indexes. A securities
index measures the movement of a certain group of securities by assigning
relative values to the securities included in the index, fluctuating with
changes in the market values of the securities included in the index. Some
securities index options are based on a broad market index, such as the NYSE
Composite Index, or a narrower market index such as the Standard & Poor's 100.
Indexes may also be based on a particular industry or market segment.

Options on securities indexes are similar to options on securities
except that (i) the expiration cycles of securities index options are monthly,
while those of securities options are currently quarterly, and (ii) the delivery
requirements are different. Instead of giving the right to take or make delivery
of securities at a specified price, an option on a securities index gives the
holder the right to receive a cash "exercise settlement amount" equal to (a) the
amount, if any, by which the fixed exercise price of the option exceeds (in the
case of a put) or is less than (in the case of a call) the closing value of the
underlying index on the date of exercise, multiplied by (b) a fixed "index
multiplier." Receipt of this cash amount will depend upon the closing level of
the securities index upon which the option is based being greater than, in the
case of a call, or less than, in the case of a put, the exercise price of the
index and the exercise price of the option times a specified multiple. The
writer of the option is obligated, in return for the premium received, to make
delivery of this amount. Securities index options may be offset by entering into
closing transactions as described above for securities options.

OTC OPTIONS. The Fund may purchase and write OTC or dealer options.
Unlike exchange-listed options where an intermediary or clearing corporation,
such as the Clearing Corporation, assures that all transactions in such options
are properly executed, the responsibility for performing all transactions with
respect to OTC options rests solely with the writer and the holder of those
options. A listed call option writer, for example, is obligated to deliver the
underlying securities to the clearing organization if the option is exercised,
and the clearing organization is then obligated to pay the writer the exercise
price of the option. If the Fund were to purchase a dealer option, however, it
would rely on the dealer from whom it purchased the option to perform if the
option were exercised. If the dealer fails to honor the

4
<PAGE>

exercise of the option by the Fund, the Fund would lose the premium it paid for
the option and the expected benefit of the transaction.

Exchange-traded options generally have a continuous liquid market
while OTC or dealer options do not. Consequently, the Fund will generally be
able to realize the value of a dealer option it has purchased only by exercising
it or reselling it to the dealer who issued it. Similarly, when the Fund writes
a dealer option, it generally will be able to close out the option prior to its
expiration only by entering into a closing purchase transaction with the dealer
to which the Fund originally wrote the option. Although the Fund will seek to
enter into dealer options only with dealers who will agree to and that are
expected to be capable of entering into closing transactions with the Fund,
there can be no assurance that the Fund will be able to liquidate a dealer
option at a favorable price at any time prior to expiration. The inability to
enter into a closing transaction may result in material losses to the Fund.
Until the Fund, as a covered OTC call option writer, is able to effect a closing
purchase transaction, it will not be able to liquidate securities (or other
assets) used to cover the written option until the option expires or is
exercised. This requirement may impair the Fund's ability to sell portfolio
securities or, with respect to currency options, currencies at a time when such
sale might be advantageous.

FUTURES ACTIVITIES. The Fund may enter into futures contracts and
options on futures contracts on securities, securities indices and currencies
for bona fide hedging and speculative purposes. These futures contracts are
standardized contracts for the future delivery of a non-U.S. currency, an
interest rate sensitive security or, in the case of index futures contracts or
certain other futures contracts, a cash settlement with reference to a specified
multiplier times the change in the index. An option on a futures contract gives
the purchaser the right, in return for the premium paid, to assume a position in
a futures contract.

These transactions may be entered into for "bona fide hedging"
purposes as defined in CFTC regulations and other permissible purposes including
hedging against changes in the value of portfolio securities due to anticipated
changes in currency values, interest rates and/or market conditions and
increasing return. Aggregate initial margin and premiums (discussed below)
required to establish positions other than those considered to be "bona fide
hedging" by the CFTC will not exceed 5% of the Fund's net asset value after
taking into account unrealized profits and unrealized losses on any such
contracts it has entered into. Although the Fund is limited in the amount of
assets that may be invested in futures transactions, there is no overall limit
on the percentage of Fund assets that may be at risk with respect to futures
activities.

The Fund reserves the right to engage in transactions involving
futures contracts and options on futures contracts to the extent allowed by CFTC
regulations in effect from time to time and in accordance with the Fund's
policies. There is no overall limit on the percentage of Fund assets that may be
at risk with respect to futures activities.

FUTURES CONTRACTS. A foreign currency futures contract provides for
the future sale by one party and the purchase by the other party of a certain
amount of a specified non-U.S. currency at a specified price, date, time and
place. An interest rate futures contract

5
<PAGE>

provides for the future sale by one party and the purchase by the other party of
a certain amount of a specific interest rate sensitive financial instrument
(debt security) at a specified price, date, time and place. Securities indexes
are capitalization weighted indexes which reflect the market value of the
securities represented in the indexes. A securities index futures contract is an
agreement to be settled by delivery of an amount of cash equal to a specified
multiplier times the difference between the value of the index at the close of
the last trading day on the contract and the price at which the agreement is
made.

No consideration is paid or received by the Fund upon entering into a
futures contract. Instead, the Fund is required to deposit in a segregated
account with its custodian an amount of cash or liquid securities acceptable to
the broker, equal to approximately 1% to 10% of the contract amount (this amount
is subject to change by the exchange on which the contract is traded, and
brokers may charge a higher amount). This amount is known as "initial margin"
and is in the nature of a performance bond or good faith deposit on the contract
which is returned to the Fund upon termination of the futures contract, assuming
all contractual obligations have been satisfied. The broker will have access to
amounts in the margin account if the Fund fails to meet its contractual
obligations. Subsequent payments, known as "variation margin," to and from the
broker, will be made daily as the currency, financial instrument or securities
index underlying the futures contract fluctuates, making the long and short
positions in the futures contract more or less valuable, a process known as
"marking-to-market." The Fund will also incur brokerage costs in connection with
entering into futures transactions.

At any time prior to the expiration of a futures contract, the Fund
may elect to close the position by taking an opposite position, which will
operate to terminate the Fund's existing position in the contract. Positions in
futures contracts and options on futures contracts (described below) may be
closed out only on the exchange on which they were entered into (or through a
linked exchange). No secondary market for such contracts exists. Although the
Fund may enter into futures contracts only if there is an active market for such
contracts, there is no assurance that an active market will exist at any
particular time. Most futures exchanges limit the amount of fluctuation
permitted in futures contract prices during a single trading day. Once the daily
limit has been reached in a particular contract, no trades may be made that day
at a price beyond that limit or trading may be suspended for specified periods
during the day. It is possible that futures contract prices could move to the
daily limit for several consecutive trading days with little or no trading,
thereby preventing prompt liquidation of futures positions at an advantageous
price and subjecting the Fund to substantial losses. In such event, and in the
event of adverse price movements, the Fund would be required to make daily cash
payments of variation margin. In such situations, if the Fund had insufficient
cash, it might have to sell securities to meet daily variation margin
requirements at a time when it would be disadvantageous to do so. In addition,
if the transaction is entered into for hedging purposes, in such circumstances
the Fund may realize a loss on a futures contract or option that is not offset
by an increase in the value of the hedged position. Losses incurred in futures
transactions and the costs of these transactions will affect the Fund's
performance.

OPTIONS ON FUTURES CONTRACTS. The Fund may purchase and write put and
call options on futures contracts and may enter into closing transactions with
respect to such

6
<PAGE>

options to terminate existing positions. There is no guarantee that such closing
transactions can be effected; the ability to establish and close out positions
on such options will be subject to the existence of a liquid market.

An option on a currency, interest rate or securities index futures
contract, as contrasted with the direct investment in such a contract, gives the
purchaser the right, in return for the premium paid, to assume a position in a
futures contract at a specified exercise price at any time prior to the
expiration date of the option. The writer of the option is required upon
exercise to assume an offsetting futures position (a short position if the
option is a call and a long position if the option is a put). Upon exercise of
an option, the delivery of the futures position by the writer of the option to
the holder of the option will be accompanied by delivery of the accumulated
balance in the writer's futures margin account, which represents the amount by
which the market price of the futures contract exceeds, in the case of a call,
or is less than, in the case of a put, the exercise price of the option on the
futures contract. The potential loss related to the purchase of an option on a
futures contract is limited to the premium paid for the option (plus transaction
costs). Because the value of the option is fixed at the point of sale, there are
no daily cash payments by the purchaser to reflect changes in the value of the
underlying contract; however, the value of the option does change daily and that
change would be reflected in the net asset value of the Fund.

CURRENCY EXCHANGE TRANSACTIONS. The value in U.S. dollars of the
assets of the Fund that are invested in foreign securities may be affected
favorably or unfavorably by a variety of factors not applicable to investment in
U.S. securities, and the Fund may incur costs in connection with conversion
between various currencies. Currency exchange transactions may be from any
non-U.S. currency into U.S. dollars or into other appropriate currencies. The
Fund will conduct its currency exchange transactions (i) on a spot (I.E., cash)
basis at the rate prevailing in the currency exchange market, (ii) through
entering into futures contracts or options on such contracts (as described
above), (iii) through entering into forward contracts to purchase or sell
currency or (iv) by purchasing exchange-traded currency options. Risks
associated with currency forward contracts and purchasing currency options are
similar to those described herein for futures contracts and securities and stock
index options. In addition, the use of currency transactions could result in
losses from the imposition of foreign exchange controls, suspension of
settlement or other governmental actions or unexpected events. The Fund may
engage in currency exchange transactions for hedging purposes or for other
purposes, including generating current income to offset expenses or to increase
return.

FORWARD CURRENCY CONTRACTS. A forward currency contract involves an
obligation to purchase or sell a specific currency at a future date, which may
be any fixed number of days from the date of the contract as agreed upon by the
parties, at a price set at the time of the contract. These contracts are entered
into in the interbank market conducted directly between currency traders
(usually large commercial banks and brokers) and their customers. Forward
currency contracts are similar to currency futures contracts, except that
futures contracts are traded on commodities exchanges and are standardized as to
contract size and delivery date.

7
<PAGE>

At or before the maturity of a forward contract, the Fund may either
sell a portfolio security and make delivery of the currency, or retain the
security and fully or partially offset its contractual obligation to deliver the
currency by negotiating with its trading partner to enter into an offsetting
transaction. If the Fund retains the portfolio security and engages in an
offsetting transaction, the Fund, at the time of execution of the offsetting
transaction, will incur a gain or a loss to the extent that movement has
occurred in forward contract prices.

CURRENCY OPTIONS. The Fund may purchase exchange-traded put and call
options on foreign currencies. Put options convey the right to sell the
underlying currency at a price which is anticipated to be higher than the spot
price of the currency at the time the option is exercised. Call options convey
the right to buy the underlying currency at a price which is expected to be
lower than the spot price of the currency at the time the option is exercised.

CURRENCY HEDGING. The Fund's currency hedging will be limited to
hedging involving either specific transactions or portfolio positions.
Transaction hedging is the purchase or sale of forward currency with respect to
specific receivables or payables of the Fund generally accruing in connection
with the purchase or sale of its portfolio securities. Position hedging is the
sale of forward currency with respect to portfolio security positions. The Fund
may not position hedge to an extent greater than the aggregate market value (at
the time of entering into the hedge) of the hedged securities.

A decline in the U.S. dollar value of a foreign currency in which the
Fund's securities are denominated will reduce the U.S. dollar value of the
securities, even if their value in the foreign currency remains constant. The
use of currency hedges does not eliminate fluctuations in the underlying prices
of the securities, but it does establish a rate of exchange that can be achieved
in the future. For example, in order to protect against diminutions in the U.S.
dollar value of non-dollar denominated securities it holds, the Fund may
purchase foreign currency put options. If the value of the foreign currency does
decline, the Fund will have the right to sell the currency for a fixed amount in
dollars and will thereby offset, in whole or in part, the adverse effect on the
U.S. dollar value of its securities that otherwise would have resulted.
Conversely, if a rise in the U.S. dollar value of a currency in which securities
to be acquired are denominated is projected, thereby potentially increasing the
cost of the securities, the Fund may purchase call options on the particular
currency. The purchase of these options could offset, at least partially, the
effects of the adverse movements in exchange rates. The benefit to the Fund
derived from purchases of currency options, like the benefit derived from other
types of options, will be reduced by premiums and other transaction costs.
Because transactions in currency exchange are generally conducted on a principal
basis, no fees or commissions are generally involved. Currency hedging involves
some of the same risks and considerations as other transactions with similar
instruments. Although currency hedges limit the risk of loss due to a decline in
the value of a hedged currency, at the same time, they also limit any potential
gain that might result should the value of the currency increase. If a
devaluation is generally anticipated, the Fund may not be able to contract to
sell a currency at a price above the devaluation level it anticipates.

8
<PAGE>

While the values of currency futures and options on futures, forward
currency contracts and currency options may be expected to correlate with
exchange rates, they will not reflect other factors that may affect the value of
the Fund's investments and a currency hedge may not be entirely successful in
mitigating changes in the value of the Fund's investments denominated in that
currency. A currency hedge, for example, should protect a Yen-denominated bond
against a decline in the Yen, but will not protect the Fund against a price
decline if the issuer's creditworthiness deteriorates.

HEDGING GENERALLY. In addition to entering into options, futures and
currency exchange transactions for other purposes, including generating current
income to offset expenses or increase return, the Fund may enter into these
transactions as hedges to reduce investment risk, generally by making an
investment expected to move in the opposite direction of a portfolio position. A
hedge is designed to offset a loss in a portfolio position with a gain in the
hedged position; at the same time, however, a properly correlated hedge will
result in a gain in the portfolio position being offset by a loss in the hedged
position. As a result, the use of options, futures contracts and currency
exchange transactions for hedging purposes could limit any potential gain from
an increase in the value of the position hedged. In addition, the movement in
the portfolio position hedged may not be of the same magnitude as movement in
the hedge. With respect to futures contracts, since the value of portfolio
securities will far exceed the value of the futures contracts sold by the Fund,
an increase in the value of the futures contracts could only mitigate, but not
totally offset, the decline in the value of the Fund's assets.

In hedging transactions based on an index, whether the Fund will
realize a gain or loss depends upon movements in the level of securities prices
in the stock market generally or, in the case of certain indexes, in an industry
or market segment, rather than movements in the price of a particular security.
The risk of imperfect correlation increases as the composition of the Fund's
portfolio varies from the composition of the index. In an effort to compensate
for imperfect correlation of relative movements in the hedged position and the
hedge, the Fund's hedge positions may be in a greater or lesser dollar amount
than the dollar amount of the hedged position. Such "over hedging" or "under
hedging" may adversely affect the Fund's net investment results if market
movements are not as anticipated when the hedge is established. Securities index
futures transactions may be subject to additional correlation risks. First, all
participants in the futures market are subject to margin deposit and maintenance
requirements. Rather than meeting additional margin deposit requirements,
investors may close futures contracts through offsetting transactions which
would distort the normal relationship between the securities index and futures
markets. Secondly, from the point of view of speculators, the deposit
requirements in the futures market are less onerous than margin requirements in
the securities market. Therefore, increased participation by speculators in the
futures market also may cause temporary price distortions. Because of the
possibility of price distortions in the futures market and the imperfect
correlation between movements in the securities index and movements in the price
of securities index futures, a correct forecast of general market trends by CSAM
still may not result in a successful hedging transaction.

9
<PAGE>

The Fund will engage in hedging transactions only when deemed
advisable by CSAM, and successful use by the Fund of hedging transactions will
be subject to CSAM's ability to predict trends in currency, interest rate or
securities markets, as the case may be, and to predict correctly movements in
the directions of the hedge and the hedged position and the correlation between
them, which predictions could prove to be inaccurate. This requires different
skills and techniques than predicting changes in the price of individual
securities, and there can be no assurance that the use of these strategies will
be successful. Even a well-conceived hedge may be unsuccessful to some degree
because of unexpected market behavior or trends. Losses incurred in hedging
transactions and the costs of these transactions will affect the Fund's
performance.

To the extent that the Fund engages in the strategies described above,
the Fund may experience losses greater than if these strategies had not been
utilized. In addition to the risks described above, these instruments may be
illiquid and/or subject to trading limits, and the Fund may be unable to close
out a position without incurring substantial losses, if at all. The Fund is also
subject to the risk of a default by a counterparty to an off-exchange
transaction.

ASSET COVERAGE FOR FORWARD CONTRACTS, OPTIONS, FUTURES AND OPTIONS ON
FUTURES. The Fund will comply with guidelines established by the Securities and
Exchange Commission (the "SEC") and other applicable regulatory bodies with
respect to coverage of forward currency contracts, options written by the Fund
on securities and indexes; and currency, interest rate and security index
futures contracts and options on these futures contracts. These guidelines may,
in certain instances, require segregation by the Fund of cash or liquid
securities with its custodian or a designated sub-custodian to the extent the
Fund's obligations with respect to these strategies are not otherwise "covered"
through ownership of the underlying security or financial instrument or by other
portfolio positions or by other means consistent with applicable regulatory
policies. Segregated assets cannot be sold or transferred unless equivalent
assets are substituted in their place or it is no longer necessary to segregate
them. As a result, there is a possibility that segregation of a large percentage
of the Fund's assets could impede portfolio management or the Fund's ability to
meet redemption requests or other current obligations.

For example, a call option written by the Fund on securities may
require the Fund to hold the securities subject to the call (or securities
convertible into the securities without additional consideration) or to
segregate assets (as described above) sufficient to purchase and deliver the
securities if the call is exercised. A call option written by the Fund on an
index may require the Fund to own portfolio securities that correlate with the
index or to segregate assets (as described above) equal to the excess of the
index value over the exercise price on a current basis. A put option written by
the Fund may require the Fund to segregate assets (as described above) equal to
the exercise price. The Fund could purchase a put option if the strike price of
that option is the same or higher than the strike price of a put option sold by
the Fund. If the Fund holds a futures or forward contract, the Fund could
purchase a put option on the same futures or forward contract with a strike
price as high or higher than the price of the contract held. The Fund may enter
into fully or partially offsetting transactions so that its net position,
coupled with any segregated assets (equal to any remaining obligation),

10
<PAGE>

equals its net obligation. Asset coverage may be achieved by other means when
consistent with applicable regulatory policies.

ADDITIONAL INFORMATION ON OTHER INVESTMENT PRACTICES

U.S. GOVERNMENT SECURITIES. The obligations issued or guaranteed by
the U.S. government in which the Fund may invest include direct obligations of
the U.S. Treasury and obligations issued by U.S. government agencies and
instrumentalities ("U.S. Government Securities"). Included among direct
obligations of the United States are Treasury Bills, Treasury Notes and Treasury
Bonds, which differ in terms of their interest rates, maturities and dates of
issuance. Treasury Bills have maturities of less than one year, Treasury Notes
have maturities of one to 10 years and Treasury Bonds generally have maturities
of greater than 10 years at the date of issuance. Included among the obligations
issued by agencies and instrumentalities of the United States are instruments
that are supported by the full faith and credit of the United States (such as
certificates issued by the Government National Mortgage Association ("GNMA"));
instruments that are supported by the right of the issuer to borrow from the
U.S. Treasury (such as securities of Federal Home Loan Banks); and instruments
that are supported by the credit of the instrumentality (such as Federal
National Mortgage Association ("FNMA") and Federal Home Loan Mortgage
Corporation ("FHLMC") bonds).

OTHER U.S. GOVERNMENT SECURITIES. The Fund may invest in include
securities issued or guaranteed by the Federal Housing Administration, Farmers
Home Loan Administration, Export-Import Bank of the United States, Small
Business Administration, General Services Administration, Central Bank for
Cooperatives, Federal Farm Credit Banks, Federal Intermediate Credit Banks,
Federal Land Banks, Maritime Administration, Tennessee Valley Authority,
District of Columbia Armory Board and Student Loan Marketing Association.
Because the U.S. government is not obligated by law to provide support to an
instrumentality it sponsors, the Fund will invest in obligations issued by such
an instrumentality only if CSAM determines that the credit risk with respect to
the instrumentality does not make its securities unsuitable for investment by
the Fund.

MONEY MARKET OBLIGATIONS. The Fund is authorized to invest, under
normal market conditions, up to 20% of its total assets in domestic and foreign
short-term (one year or less remaining to maturity) and medium-term (five year
or less remaining to maturity) money market obligations and for temporary
defensive purposes may invest in these securities without limit. These
instruments consist of obligations issued or guaranteed by the U.S. government
or a foreign government, their agencies or instrumentalities; bank obligations
(including certificates of deposit, time deposits and bankers' acceptances of
domestic or foreign banks, domestic savings and loans and similar institutions)
that are high quality investments; commercial paper rated no lower than A-2 by
Standard & Poor's Ratings Services ("S&P") or Prime-2 by Moody's Investors
Service, Inc. ("Moody's") or the equivalent from another major rating service
or, if unrated, of an issuer having an outstanding, unsecured debt issue then
rated within the three highest rating categories; and repurchase agreements with
respect to the foregoing.

11
<PAGE>

MONEY MARKET MUTUAL FUNDS. Where CSAM believes that it would be
beneficial to the Fund and appropriate considering the factors of return and
liquidity, the Fund may invest up to 5% of its assets in securities of money
market mutual funds that are unaffiliated with the Fund or CSAM. As a
shareholder in any mutual fund, the Fund will bear its ratable share of the
mutual fund's expenses, including management fees, and will remain subject to
payment of the Fund's management fees and other expenses with respect to assets
so invested.

REPURCHASE AGREEMENTS. The Fund may invest in repurchase agreement
transactions with member banks of the Federal Reserve System and certain
non-bank dealers. Repurchase agreements are contracts under which the buyer of a
security simultaneously commits to resell the security to the seller at an
agreed-upon price and date. Under the terms of a typical repurchase agreement,
the Fund would acquire any underlying security for a relatively short period
(usually not more than one week) subject to an obligation of the seller to
repurchase, and the Fund to resell, the obligation at an agreed-upon price and
time, thereby determining the yield during the Fund's holding period. This
arrangement results in a fixed rate of return that is not subject to market
fluctuations during the Fund's holding period. The value of the underlying
securities will at all times be at least equal to the total amount of the
purchase obligation, including interest. The Fund bears a risk of loss in the
event that the other party to a repurchase agreement defaults on its obligations
or becomes bankrupt and the Fund is delayed or prevented from exercising its
right to dispose of the collateral securities, including the risk of a possible
decline in the value of the underlying securities during the period in which the
Fund seeks to assert this right. CSAM, acting under the supervision of the
Fund's Board of Directors (the "Board"), monitors the creditworthiness of those
bank and non-bank dealers with which the Fund enters into repurchase agreements
to evaluate this risk. A repurchase agreement is considered to be a loan under
the Investment Company Act of 1940, as amended (the "1940 Act").

CONVERTIBLE SECURITIES. Convertible securities in which the Fund may
invest, including both convertible debt and convertible preferred stock, may be
converted at either a stated price or stated rate into underlying shares of
common stock. Because of this feature, convertible securities enable an investor
to benefit from increases in the market price of the underlying common stock.
Convertible securities provide higher yields than the underlying equity
securities, but generally offer lower yields than non-convertible securities of
similar quality. The value of convertible securities fluctuates in relation to
changes in interest rates like bonds and, in addition, fluctuates in relation to
the underlying common stock. Subsequent to purchase by the Fund, convertible
securities may cease to be rated or a rating may be reduced below the minimum
required for purchase by the Fund. Neither event will require sale of such
securities, although CSAM will consider such event in its determination of
whether the Fund should continue to hold the securities.

STRUCTURED SECURITIES. The Fund may purchase any type of publicly
traded or privately negotiated fixed income security, including mortgage-backed
securities; structured notes, bonds or debentures; and assignments of and
participations in loans.

12
<PAGE>

MORTGAGE-BACKED SECURITIES. The Fund may invest in mortgage-backed
securities, such as those issued by GNMA, FNMA, FHLMC or certain foreign
issuers. Mortgage-backed securities represent direct or indirect
participations in, or are secured by and payable from, mortgage loans secured
by real property. The mortgages backing these securities include, among other
mortgage instruments, conventional 30-year fixed-rate mortgages, 15-year
fixed-rate mortgages, graduated payment mortgages and adjustable rate
mortgages. The government or the issuing agency typically guarantees the
payment of interest and principal of these securities. However, the
guarantees do not extend to the securities' yield or value, which are likely
to vary inversely with fluctuations in interest rates, nor do the guarantees
extend to the yield or value of the Fund's shares. These securities generally
are "pass-through" instruments, through which the holders receive a share of
all interest and principal payments from the mortgages underlying the
securities, net of certain fees.

Yields on pass-through securities are typically quoted by investment
dealers and vendors based on the maturity of the underlying instruments and the
associated average life assumption. The average life of pass-through pools
varies with the maturities of the underlying mortgage loans. A pool's term may
be shortened by unscheduled or early payments of principal on the underlying
mortgages. The occurrence of mortgage prepayments is affected by various
factors, including the level of interest rates, general economic conditions, the
location, scheduled maturity and age of the mortgage and other social and
demographic conditions. Because prepayment rates of individual pools vary
widely, it is not possible to predict accurately the average life of a
particular pool. For pools of fixed-rate 30-year mortgages in a stable interest
rate environment, a common industry practice in the U.S. has been to assume that
prepayments will result in a 12-year average life, although it may vary
depending on numerous factors. At present, pools, particularly those with loans
with other maturities or different characteristics, are priced on an assumption
of average life determined for the pool. In periods of falling interest rates,
the rate of prepayment tends to increase, thereby shortening the actual average
life of a pool of mortgage-related securities. Conversely, in periods of rising
rates the rate of prepayment tends to decrease, thereby lengthening the actual
average life of the pool. However, these effects may not be present, or may
differ in degree, if the mortgage loans in the pools have adjustable interest
rates or other special payment terms, such as a prepayment charge. Actual
prepayment experience may cause the yield of mortgage-backed securities to
differ from the assumed average life yield. Reinvestment of prepayments may
occur at higher or lower interest rates than the original investment, thus
affecting the Fund's yield.

The rate of interest on mortgage-backed securities is lower than the
interest rates paid on the mortgages included in the underlying pool due to the
annual fees paid to the servicer of the mortgage pool for passing through
monthly payments to certificate holders and to any guarantor, such as GNMA, and
due to any yield retained by the issuer. Actual yield to the holder may vary
from the coupon rate, even if adjustable, if the mortgage-backed securities are
purchased or traded in the secondary market at a premium or discount. In
addition, there is normally some delay between the time the issuer receives
mortgage payments from the

13
<PAGE>

servicer and the time the issuer makes the payments on the mortgage-backed
securities, and this delay reduces the effective yield to the holder of such
securities.

ASSET-BACKED SECURITIES. The Fund may invest in asset-backed
securities, which represent participations in, or are secured by and payable
from, assets such as motor vehicle installment sales, installment loan
contracts, leases of various types of real and personal property and receivables
from revolving credit (credit card) agreements. Such assets are securitized
through the use of trusts and special purpose corporations. Payments or
distributions of principal and interest may be guaranteed up to certain amounts
and for a certain time period by a letter of credit or a pool insurance policy
issued by a financial institution unaffiliated with the trust or corporation.

Asset-backed securities present certain risks that are not presented
by other securities in which the Fund may invest. Automobile receivables
generally are secured by automobiles. Most issuers of automobile receivables
permit the loan servicers to retain possession of the underlying obligations. If
the servicer were to sell these obligations to another party, there is a risk
that the purchaser would acquire an interest superior to that of the holders of
the asset-backed securities. In addition, because of the large number of
vehicles involved in a typical issuance and technical requirements under state
laws, the trustee for the holders of the automobile receivables may not have a
proper security interest in the underlying automobiles. Therefore, there is the
possibility that recoveries on repossessed collateral may not, in some cases, be
available to support payments on these securities. Credit card receivables are
generally unsecured, and the debtors are entitled to the protection of a number
of state and federal consumer credit laws, many of which give such debtors the
right to set off certain amounts owed on the credit cards, thereby reducing the
balance due. In addition, there is no assurance that the security interest in
the collateral can be realized.

STRUCTURED NOTES, BONDS OR DEBENTURES. Typically, the value of the
principal and/or interest on these instruments is determined by reference to
changes in the value of specific currencies, interest rates, commodities,
indexes or other financial indicators (the "Reference") or the relevant change
in two or more References. The interest rate or the principal amount payable
upon maturity or redemption may be increased or decreased depending upon changes
in the applicable Reference. The terms of the structured securities may provide
that in certain circumstances no principal is due at maturity and, therefore,
may result in the loss of the Fund's entire investment. The value of structured
securities may move in the same or the opposite direction as the value of the
Reference, so that appreciation of the Reference may produce an increase or
decrease in the interest rate or value of the security at maturity. In addition,
the change in interest rate or the value of the security at maturity may be a
multiple of the change in the value of the Reference so that the security may be
more or less volatile than the Reference, depending on the multiple.
Consequently, structured securities may entail a greater degree of market risk
and volatility than other types of debt obligations.

ASSIGNMENTS AND PARTICIPATIONS. The Fund may invest in assignments of
and participations in loans issued by banks and other financial institutions.

14
<PAGE>

When the Fund purchases assignments from lending financial
institutions, the Fund will acquire direct rights against the borrower on the
loan. However, since assignments are generally arranged through private
negotiations between potential assignees and potential assignors, the rights and
obligations acquired by the Fund as the purchaser of an assignment may differ
from, and be more limited than, those held by the assigning lender.

Participations in loans will typically result in the Fund having a
contractual relationship with the lending financial institution, not the
borrower. The Fund would have the right to receive payments of principal,
interest and any fees to which it is entitled only from the lender of the
payments from the borrower. In connection with purchasing a participation, the
Fund generally will have no right to enforce compliance by the borrower with the
terms of the loan agreement relating to the loan, nor any rights of set-off
against the borrower, and the Fund may not benefit directly from any collateral
supporting the loan in which it has purchased a participation. As a result, a
fund purchasing a participation will assume the credit risk of both the borrower
and the lender selling the participation. In the event of the insolvency of the
lender selling the participation, the Fund may be treated as a general creditor
of the lender and may not benefit from any set-off between the lender and the
borrower.

The Fund may have difficulty disposing of assignments and
participations because there is no liquid market for such securities. The lack
of a liquid secondary market will have an adverse impact on the value of such
securities and on the Fund's ability to dispose of particular assignments or
participations when necessary to meet the Fund's liquidity needs or in response
to a specific economic event, such as a deterioration in the creditworthiness of
the borrower. The lack of a liquid market for assignments and participations
also may make it more difficult for the Fund to assign a value to these
securities for purposes of valuing the Fund's portfolio and calculating its net
asset value.

The Fund may invest in fixed and floating rate loans ("Loans")
arranged through private negotiations between a foreign government (a
"Borrower") and one or more financial institutions ("Lenders"). The majority of
the Fund's investments in Loans are expected to be in the form of participations
in Loans ("Participations") and assignments of portions of Loans from third
parties ("Assignments"). Participations typically will result in the Fund having
a contractual relationship only with the Lender, not with the Borrower. The Fund
will have the right to receive payments of principal, interest and any fees to
which it is entitled only from the Lender selling the Participation and only
upon receipt by the Lender of the payments from the Borrower. In connection with
purchasing Participations, the Fund generally will have no right to enforce
compliance by the Borrower with the terms of the loan agreement relating to the
Loan, nor any rights of set-off against the Borrower, and the Fund may not
directly benefit from any collateral supporting the Loan in which it has
purchased the Participation. As a result, the Fund will assume the credit risk
of both the Borrower and the Lender that is selling the Participation. In the
event of the insolvency of the Lender selling a Participation, the Fund may be
treated as a general creditor of the Lender and may not benefit from any set-off
between the Lender and the Borrower. The Fund will acquire Participations only
if the Lender interpositioned between the Fund and the Borrower is determined by
CSAM to be creditworthy.

15
<PAGE>

When the Fund purchases Assignments from Lenders, the Fund will
acquire direct rights against the Borrower on the Loan. However, since
Assignments are generally arranged through private negotiations between
potential assignees and potential assignors, the rights and obligations acquired
by the Fund as the purchaser of an Assignment may differ from, and be more
limited than, those held by the assigning Lender.

There are risks involved in investing in Participations and
Assignments. The Fund may have difficulty disposing of them because there is no
liquid market for such securities. The lack of a liquid secondary market will
have an adverse impact on the value of such securities and on the Fund's ability
to dispose of particular Participations or Assignments when necessary to meet
the Fund's liquidity needs or in response to a specific economic event, such as
a deterioration in the creditworthiness of the Borrower. The lack of a liquid
market for Participations and Assignments also may make it more difficult for
the Fund to assign a value to these securities for purposes of valuing the
Fund's portfolio and calculating its net asset value.

DEBT SECURITIES. The Fund may invest in debt securities with respect
to up to 20% of the Fund's total assets. Debt obligations of corporations in
which the Fund may invest include corporate bonds, debentures and notes. Debt
securities convertible into common stock and certain preferred stocks may have
risks similar to those described below. The interest income to be derived may be
considered as one factor in selecting debt securities for investment by CSAM.
The market value of debt obligations may be expected to vary depending upon,
among other factors, interest rates, the ability of the issuer to repay
principal and interest, any change in investment rating and general economic
conditions. Because the market value of debt obligations can be expected to vary
inversely to changes in prevailing interest rates, investing in debt obligations
may provide an opportunity for capital appreciation when interest rates are
expected to decline. The success of such a strategy is dependent upon CSAM's
ability to accurately forecast changes in interest rates. Subsequent to its
purchase by the Fund, an issue of securities may cease to be rated or its rating
may be reduced below the minimum required for purchase by the Fund. Neither
event will require sale of such securities, although CSAM will consider such
event in its determination of whether the Fund should continue to hold the
securities. Any percentage limitation on the Fund's ability to invest in debt
securities will not be applicable during periods when the Fund pursues a
temporary defensive strategy as discussed below.

When CSAM believes that a defensive posture is warranted, the Fund may
invest temporarily without limit in investment grade debt obligations and in
domestic and foreign money market obligations, including repurchase agreements.

BELOW INVESTMENT GRADE SECURITIES. The Fund may invest up to 20% of
its total assets in securities rated below investment grade, including
convertible debt securities. A security will be deemed to be investment grade
if it is rated within the four highest grades by Moody's or S&P or, if
unrated, is determined to be a comparable quality by CSAM. Bonds rated in the
fourth highest grade may have speculative characteristics and changes in
economic conditions or other circumstances are more likely to lead to a
weakened capacity to make principal and interest payments than is the case
with higher grade bonds. The Fund's holdings

16
<PAGE>

of debt securities rated below investment grade (commonly referred to as "junk
bonds") may be rated as low as C by Moody's or D by S&P at the time of purchase,
or may be unrated securities considered to be of equivalent quality. Securities
that are rated C by Moody's comprise the lowest rated class and can be regarded
as having extremely poor prospects of ever attaining any real investment
standing. Debt rated D by S&P is in default or is expected to default upon
maturity or payment date.

While the market values of medium- and lower-rated securities and
unrated securities of comparable quality tend to react less to fluctuations in
interest rate levels than do those of higher-rated securities, the market values
of certain of these securities also tend to be more sensitive to individual
corporate developments and changes in economic conditions than higher-quality
securities. In addition, medium- and lower-rated securities and comparable
unrated securities generally present a higher degree of credit risk. Issuers of
medium- and lower-rated securities and unrated securities are often highly
leveraged and may not have more traditional methods of financing available to
them so that their ability to service their obligations during an economic
downturn or during sustained periods of rising interest rates may be impaired.
The risk of loss due to default by such issuers is significantly greater because
medium-and lower-rated securities and unrated securities generally are unsecured
and frequently are subordinated to the prior payment of senior indebtedness.

An economic recession could disrupt severely the market for such
securities and may adversely affect the value of such securities and the ability
of the issuers of such securities to repay principal and pay interest thereon.
The Fund may have difficulty disposing of certain of these securities because
there may be a thin trading market. Because there is no established retail
secondary market for many of these securities, the Fund anticipates that these
securities could be sold only to a limited number of dealers or institutional
investors. To the extent a secondary trading market for these securities does
exist, it generally is not as liquid as the secondary market for higher-rated
securities. The lack of a liquid secondary market, as well as adverse publicity
and investor perception with respect to these securities, may have an adverse
impact on market price and the Fund's ability to dispose of particular issues
when necessary to meet the Fund's liquidity needs or in response to a specific
economic event such as a deterioration in the creditworthiness of the issuer.
The lack of a liquid secondary market for certain securities also may make it
more difficult for the Fund to obtain accurate market quotations for purposes of
valuing the Fund and calculating its net asset value.

The market value of securities in medium- and lower-rated categories
is also more volatile than that of higher quality securities. Factors adversely
impacting the market value of these securities will adversely impact the Fund's
net asset value. The Fund will rely on the judgment, analysis and experience of
CSAM in evaluating the creditworthiness of an issuer. In this evaluation, in
addition to relying on ratings assigned by Moody's or S&P, CSAM will take into
consideration, among other things, the issuer's financial resources, its
sensitivity to economic conditions and trends, its operating history, the
quality of the issuer's management and regulatory matters. Interest rate trends
and specific developments which may affect individual issuers will also be
analyzed. Subsequent to its purchase by the Fund, an issue of securities may
cease to be rated or its rating may be reduced. Neither event will require sale
of such securities, although CSAM will consider such event in its determination
of

17
<PAGE>

whether the Fund should continue to hold the securities. Normally, medium- and
lower-rated and comparable unrated securities are not intended for short-term
investment. The Fund may incur additional expenses to the extent it is required
to seek recovery upon a default in the payment of principal or interest on its
portfolio holdings of such securities. At times, adverse publicity regarding
lower-rated securities has depressed the prices for such securities to some
extent.

ZERO COUPON SECURITIES. The Fund may invest in "zero coupon" U.S.
Treasury, foreign government and U.S. and foreign corporate convertible and
nonconvertible debt securities, which are bills, notes and bonds that have been
stripped of their unmatured interest coupons and custodial receipts or
certificates of participation representing interests in such stripped debt
obligations and coupons. A zero coupon security pays no interest to its holder
prior to maturity. Accordingly, such securities usually trade at a deep discount
from their face or par value and will be subject to greater fluctuations of
market value in response to changing interest rates than debt obligations of
comparable maturities that make current distributions of interest. The Fund
anticipates that it will not normally hold zero coupon securities to maturity.
Redemption of shares of the Fund that require it to sell zero coupon securities
prior to maturity may result in capital gains or losses that may be substantial.
Federal tax law requires that a holder of a zero coupon security accrue a
portion of the discount at which the security was purchased as income the year,
even though the holder receives no interest payment on the security during the
year. Such accrued discount will be includible in determining the amount of
dividends the Fund must pay the year and, in order to generate cash necessary to
pay such dividends, the Fund may liquidate portfolio securities at a time when
it would not otherwise have done so.

SECURITIES OF OTHER INVESTMENT COMPANIES. The Fund may invest in
securities of other investment companies to the extent permitted under the 1940
Act. Presently, under the 1940 Act, the Fund may hold securities of another
investment company in amounts which (i) do not exceed 3% of the total
outstanding voting stock of such company, (ii) do not exceed 5% of the value of
the Fund's total assets and (iii) when added to all other investment company
securities held by the Fund, do not exceed 10% of the value of the Fund's total
assets.

LENDING OF PORTFOLIO SECURITIES. The Fund may lend portfolio
securities to brokers, dealers and other financial organizations that meet
capital and other credit requirements or other criteria established by the
Fund's Board. These loans, if and when made, may not exceed 33 1/3% of the
Fund's total assets taken at value (including the loan collateral). The Fund
will not lend portfolio securities to its investment adviser, any
sub-investment adviser or its affiliates unless it has applied for and
received specific authority to do so from the SEC. Loans of portfolio
securities will be collateralized by cash, letters of credit or U.S.
Government Securities, which are maintained at all times in an amount equal
to at least 102% of the current market value of the loaned U.S. securities
and at least 105% of the current market value of loaned non-U.S. securities.
Any gain or loss in the market price of the securities loaned that might
occur during the term of the loan would be for the account of the Fund. From
time to time, the Fund may return a part of the interest earned from the
investment of collateral received for securities loaned to the borrower
and/or a third party that is unaffiliated with the Fund and that is acting as
a "finder."

18
<PAGE>

By lending its securities, the Fund can increase its income by
continuing to receive interest and any dividends on the loaned securities as
well as by either investing the collateral received for securities loaned in
short-term instruments or obtaining yield in the form of interest paid by the
borrower when U.S. Government Securities are used as collateral. The Fund
will adhere to the following conditions whenever its portfolio securities are
loaned: (i) the Fund must receive cash collateral or equivalent securities of
the type discussed in the preceding paragraph from the borrower; (ii) the
borrower must increase such collateral whenever the market value of the
securities rises above the level of such collateral; (iii) the Fund must be
able to terminate the loan at any time; (iv) the Fund must receive reasonable
interest on the loan, as well as any dividends, interest or other
distributions on the loaned securities and any increase in market value; (v)
the Fund may pay only reasonable custodian fees in connection with the loan;
and (vi) voting rights on the loaned securities may pass to the borrower,
provided, however, that if a material event adversely affecting the
investment occurs, the Board must terminate the loan and regain the right to
vote the securities. Loan agreements involve certain risks in the event of
default or insolvency of the other party including possible delays or
restrictions upon the Fund's ability to recover the loaned securities or
dispose of the collateral for the loan.

FOREIGN INVESTMENTS. The Fund may invest up to 20% of total assets in
the securities of foreign issuers. Investors should recognize that investing in
foreign companies involves certain risks, including those discussed below, which
are in addition to those associated with investing in U.S. issuers. Individual
foreign economies may differ favorably or unfavorably from the U.S. economy in
such respects as growth of gross national product, rate of inflation, capital
reinvestment, resource self-sufficiency, and balance of payments positions. The
Fund may invest in securities of foreign governments (or agencies or
instrumentalities thereof), and many, if not all, of the foregoing
considerations apply to such investments as well.

DEPOSITARY RECEIPTS. The assets of the Fund may be invested in the
securities of foreign issuers in the form of American Depositary Receipts
("ADRs"), European Depositary Receipts ("EDRs") and International Depositary
Receipts ("IDRs"). These securities may not necessarily be denominated in the
same currency as the securities into which they may be converted. ADRs are
receipts typically issued by a U.S. bank or trust company which evidence
ownership of underlying securities issued by a foreign corporation. EDRs, which
are sometimes referred to as Continental Depositary Receipts ("CDRs"), are
receipts issued in Europe, and IDRs, which are sometimes referred to as Global
Depositary Receipts ("GDRs"), are issued outside the United States. EDRs (CDRs)
and IDRs (GDRs) are typically issued by non-U.S. banks and trust companies and
evidence ownership of either foreign or domestic securities. Generally, ADRs in
registered form are designed for use in U.S. securities markets, and EDRs (CDRs)
and IDRs (GDRs) in bearer form are designed for use in European and non-U.S.
securities markets, respectively.

FOREIGN CURRENCY EXCHANGE. Since the Fund may be investing in
securities denominated in currencies of non-U.S. countries, and since the Fund
may temporarily hold funds in bank deposits or other money market investments
denominated in foreign currencies, the Fund may be affected favorably or
unfavorably by exchange control regulations or changes

19
<PAGE>

in the exchange rate between such currencies and the dollar. A change in the
value of a foreign currency relative to the U.S. dollar will result in a
corresponding change in the dollar value of the Fund assets denominated in that
foreign currency. Changes in foreign currency exchange rates may also affect the
value of dividends and interest earned, gains and losses realized on the sale of
securities and net investment income and gains, if any, to be distributed to
shareholders by the Fund. Unless otherwise contracted, the rate of exchange
between the U.S. dollar and other currencies is determined by the forces of
supply and demand in the foreign exchange markets. Changes in the exchange rate
may result over time from the interaction of many factors directly or indirectly
affecting economic and political conditions in the United States and a
particular foreign country, including economic and political developments in
other countries. Governmental intervention may also play a significant role.
National governments rarely voluntarily allow their currencies to float freely
in response to economic forces. Sovereign governments use a variety of
techniques, such as intervention by a country's central bank or imposition of
regulatory controls or taxes, to affect the exchange rates of their currencies.
The Fund may use hedging techniques with the objective of protecting against
loss through the fluctuation of the value of foreign currencies against the U.S.
dollar, particularly the forward market in foreign exchange, currency options
and currency futures.

EURO CONVERSION. The introduction of a single European currency, the
euro, on January 1, 1999 for participating European nations in the Economic and
Monetary Union presents unique risks and uncertainties for investors in those
countries, including (i) the functioning of the payment and operational systems
of banks and other financial institutions; (ii) the creation of suitable
clearing and settlement payment schemes for the euro; (iii) the fluctuation of
the euro relative to non-euro currencies during the transition period from
January 1, 1999 to December 31, 2000 and beyond; and (iv) whether the interest
rate, tax and labor regimes of the European countries participating in the euro
will converge over time. Further, the conversion of the currencies of other
Economic Monetary Union countries, such as the United Kingdom, and the admission
of other countries, including Central and Eastern European countries, to the
Economic Monetary Union could adversely affect the euro. These or other factors
may cause market disruptions and could adversely affect the value of foreign
securities and currencies held by the Fund.

INFORMATION. Many of the foreign securities held by the Fund will not
be registered with, nor will the issuers thereof be subject to reporting
requirements of, the SEC. Accordingly, there may be less publicly available
information about the securities and about the foreign company or government
issuing them than is available about a domestic company or government entity.
Foreign companies are generally subject to financial reporting standards,
practices and requirements that are either not uniform or less rigorous than
those applicable to U.S. companies.

POLITICAL INSTABILITY. With respect to some foreign countries, there
is the possibility of expropriation or confiscatory taxation, limitations on the
removal of funds or other assets of the Fund, political or social instability,
or domestic developments which could affect U.S. investments in those and
neighboring countries.

20
<PAGE>

FOREIGN MARKETS. Securities of some foreign companies are less liquid
and their prices are more volatile than securities of comparable U.S. companies.
Certain foreign countries are known to experience long delays between the trade
and settlement dates of securities purchased or sold which may result in
increased exposure to market and foreign exchange fluctuations and increased
illiquidity.

INCREASED EXPENSES. The operating expenses of the Fund, to the extent
it invests in foreign securities, may be higher than that of an investment
company investing exclusively in U.S. securities, since the expenses of the
Fund, such as the cost of converting foreign currency into U.S. dollars, the
payment of fixed brokerage commissions on foreign exchanges, custodial costs,
valuation costs and communication costs, may be higher than those costs incurred
by other investment companies not investing in foreign securities. In addition,
foreign securities may be subject to foreign government taxes that would reduce
the net yield on such securities.

FOREIGN DEBT SECURITIES. The returns on foreign debt securities
reflect interest rates and other market conditions prevailing in those
countries. The relative performance of various countries' fixed income markets
historically has reflected wide variations relating to the unique
characteristics of the country's economy. Year-to-year fluctuations in certain
markets have been significant, and negative returns have been experienced in
various markets from time to time.

The foreign government securities in which the Fund may invest
generally consist of obligations issued or backed by national, state or
provincial governments or similar political subdivisions or central banks in
foreign countries. Foreign government securities also include debt obligations
of supranational entities, which include international organizations designated
or backed by governmental entities to promote economic reconstruction or
development, international banking institutions and related government agencies.
Examples include the International Bank for Reconstruction and Development (the
"World Bank"), the European Coal and Steel Community, the Asian Development Bank
and the InterAmerican Development Bank.

PRIVATIZATIONS. The Fund may invest in privatizations (i.e. foreign
government programs of selling interests in government-owned or controlled
enterprises). The ability of U.S. entities, such as the Fund, to participate in
privatizations may be limited by local law, or the terms for participation may
be less advantageous than for local investors. There can be no assurance that
privatization programs will be available or successful.

BRADY BONDS. The Fund may invest in so-called "Brady Bonds," which
have been issued by Costa Rica, Mexico, Uruguay and Venezuela and which may be
issued by other Latin American countries. Brady Bonds are issued as part of a
debt restructuring in which the bonds are issued in exchange for cash and
certain of the country's outstanding commercial bank loans. Investors should
recognize that Brady Bonds do not have a long payment history. Brady Bonds may
be collateralized or uncollateralized, are issued in various currencies
(primarily the U.S. dollar) and are actively traded in the over-the-counter
("OTC") secondary market for debt of

21
<PAGE>

Latin American issuers. In light of the history of commercial bank loan defaults
by Latin American public and private entities, investments in Brady Bonds may be
viewed as speculative.

SHORT SALES "AGAINST THE BOX." In a short sale, the Fund sells a
borrowed security and has a corresponding obligation to the lender to return the
identical security. The seller does not immediately deliver the securities sold
and is said to have a short position in those securities until delivery occurs.
The Fund may engage in a short sale if at the time of the short sale the Fund
owns or has the right to obtain without additional cost an equal amount of the
security being sold short. This investment technique is known as a short sale
"against the box." It may be entered into by the Fund to, for example, lock in a
sale price for a security the Fund does not wish to sell immediately. If the
Fund engages in a short sale, the collateral for the short position will be
segregated in an account with the Fund's custodian or qualified sub-custodian

The Fund may make a short sale as a hedge, when it believes that the
price of a security may decline, causing a decline in the value of a security
owned by the Fund (or a security convertible or exchangeable for such security).
In such case, any future losses in the Fund's long position should be offset by
a gain in the short position and, conversely, any gain in the long position
should be reduced by a loss in the short position. The extent to which such
gains or losses are reduced will depend upon the amount of the security sold
short relative to the amount the Fund owns. There will be certain additional
transaction costs associated with short sales against the box, but the Fund will
endeavor to offset these costs with the income from the investment of the cash
proceeds of short sales.

If the Fund effects a short sale of securities at a time when it has
an unrealized gain on the securities, it may be required to recognize that gain
as if it had actually sold the securities (as a "constructive sale") on the date
it effects the short sale. However, such constructive sale treatment may not
apply if the Fund closes out the short sale with securities other than the
appreciated securities held at the time of the short sale and if certain other
conditions are satisfied. Uncertainty regarding the tax consequences of
effecting short sales may limit the extent to which the Fund may effect short
sales.

SHORT SALES. The Fund may from time to time sell securities short. A
short sale is a transaction in which the Fund sells securities it does not own
in anticipation of a decline in the market price of the securities. The current
market value of the securities sold short (excluding short sales "against the
box") will not exceed 10% of the Fund's assets.

To deliver the securities to the buyer, the Fund must arrange through
a broker to borrow the securities and, in so doing, the Fund becomes obligated
to replace the securities borrowed at their market price at the time of
replacement, whatever that price may be. The Fund will make a profit or incur a
loss as a result of a short sale depending on whether the price of the
securities decreases or increases between the date of the short sale and the
date on which the Fund purchases the security to replace the borrowed securities
that have been sold. The amount of any loss would be increased (and any gain
decreased) by any premium or interest the Fund is required to pay in connection
with a short sale.

The Fund's obligation to replace the securities borrowed in
connection with a short sale will be secured by cash or liquid securities
deposited as collateral with the broker. In addition, the Fund will place in
a segregated account with its custodian or a qualified subcustodian an amount
of cash or liquid securities equal to the difference, if any, between (i) the
market value of the securities sold at the time they were sold short and (ii)
any cash or liquid securities deposited as collateral with the broker in
connection with the short sale (not including the proceeds of the short
sale). Until it replaces the borrowed securities, the Fund will maintain the
segregated account daily at a level so that (a) the amount deposited in the
account plus the amount deposited with the broker (not including the proceeds
from the short sale) will equal the current market value of the securities
sold short and (b) the amount deposited in the account plus the amount
deposited with the broker (not including the proceeds from the short sale)
will not be less than the market value of the securities at the time they
were sold short.

WARRANTS. The Fund may invest up to 15% of its net assets in
warrants. The Fund may purchase warrants issued by domestic and foreign
companies to purchase newly created equity securities consisting of common and
preferred stock. Warrants are securities that give the holder the right, but not
the obligation to purchase equity issues of the company issuing the warrants, or
a related company, at a fixed price either on a date certain or during a set
period. The equity security underlying a warrant is authorized at the time the
warrant is issued or is issued together with the warrant.

Investing in warrants can provide a greater potential for profit or
loss than an equivalent investment in the underlying security, and, thus, can be
a speculative investment. At the time of issue, the cost of a warrant is
substantially less than the cost of the underlying security itself, and price
movements in the underlying security are generally magnified in the price
movements of the warrant. This leveraging effect enables the investor to gain
exposure to the underlying security with a relatively low capital investment.
This leveraging increases

22
<PAGE>

an investor's risk, however, in the event of a decline in the value of the
underlying security and can result in a complete loss of the amount invested in
the warrant. In addition, the price of a warrant tends to be more volatile than,
and may not correlate exactly to, the price of the underlying security. If the
market price of the underlying security is below the exercise price of the
warrant on its expiration date, the warrant will generally expire without value.
The value of a warrant may decline because of a decline in the value of the
underlying security, the passage of time, changes in interest rates or in the
dividend or other policies of the company whose equity underlies the warrant or
a change in the perception as to the future price of the underlying security, or
any combination thereof. Warrants generally pay no dividends and confer no
voting or other rights other than to purchase the underlying security.

NON-PUBLICLY TRADED AND ILLIQUID SECURITIES. The Fund may invest up to
15% of its total assets in non-publicly traded and illiquid securities,
including securities that are illiquid by virtue of the absence of a readily
available market, time deposits maturing in more than seven days, certain Rule
144A Securities (as defined below) and repurchase agreements which have a
maturity of longer than seven days. Securities that have legal or contractual
restrictions on resale but have a readily available market are not considered
illiquid for purposes of this limitation. Repurchase agreements subject to
demand are deemed to have a maturity equal to the notice period.

Historically, illiquid securities have included securities subject to
contractual or legal restrictions on resale because they have not been
registered under the Securities Act of 1933, as amended (the "Securities Act"),
securities which are otherwise not readily marketable and repurchase agreements
having a maturity of longer than seven days. Securities which have not been
registered under the Securities Act are referred to as private placements or
restricted securities and are purchased directly from the issuer or in the
secondary market. Companies whose securities are not publicly traded may not be
subject to the disclosure and other investor protection requirements applicable
to companies whose securities are publicly traded. Limitations on resale may
have an adverse effect on the marketability of portfolio securities and a mutual
fund might be unable to dispose of restricted or other illiquid securities
promptly or at reasonable prices and might thereby experience difficulty
satisfying redemptions within seven days without borrowing. A mutual fund might
also have to register such restricted securities in order to dispose of them
resulting in additional expense and delay. Adverse market conditions could
impede such a public offering of securities.

In recent years, however, a large institutional market has developed
for certain securities that are not registered under the Securities Act
including repurchase agreements, commercial paper, foreign securities, municipal
securities and corporate bonds and notes. Institutional investors depend on an
efficient institutional market in which the unregistered security can be readily
resold or on an issuer's ability to honor a demand for repayment. The fact that
there are contractual or legal restrictions on resale to the general public or
to certain institutions may not be indicative of the liquidity of such
investments.

RULE 144A SECURITIES. Rule 144A under the Securities Act adopted by
the SEC allows for a broader institutional trading market for securities
otherwise subject to restriction on resale to the general public. Rule 144A
establishes a "safe harbor" from the registration

23
<PAGE>

requirements of the Securities Act for resales of certain securities to
qualified institutional buyers. CSAM anticipates that the market for certain
restricted securities such as institutional commercial paper will expand further
as a result of this regulation and use of automated systems for the trading,
clearance and settlement of unregistered securities of domestic and foreign
issuers, such as the PORTAL System sponsored by the National Association of
Securities Dealers, Inc.

An investment in Rule 144A Securities will be considered illiquid and
therefore subject to the Fund's limit on the purchase of illiquid securities
unless the Board or its delegates determines that the Rule 144A Securities are
liquid. In reaching liquidity decisions, the Board and its delegates may
consider, INTER ALIA, the following factors: (i) the unregistered nature of the
security; (ii) the frequency of trades and quotes for the security; (iii) the
number of dealers wishing to purchase or sell the security and the number of
other potential purchasers; (iv) dealer undertakings to make a market in the
security and (v) the nature of the security and the nature of the marketplace
trades (E.G., the time needed to dispose of the security, the method of
soliciting offers and the mechanics of the transfer).

Investing in Rule 144A securities could have the effect of increasing
the level of illiquidity in the Fund to the extent that qualified institutional
buyers are unavailable or uninterested in purchasing such securities from the
Fund. The Board may adopt guidelines and delegate to CSAM the daily function of
determining and monitoring the liquidity of Rule 144A Securities, although the
Board will retain ultimate responsibility for liquidity determinations.

BORROWING. The Fund may borrow up to 33 1/3% of its total assets for
temporary or emergency purposes, including to meet portfolio redemption requests
so as to permit the orderly disposition of portfolio securities or to facilitate
settlement transactions on portfolio securities, so long as there is asset
coverage of at least 300% for all borrowings of the Fund. Additional investments
(including roll-overs) will not be made when borrowings exceed 5% of the Fund's
total assets. Although the principal of such borrowings will be fixed, the
Fund's assets may change in value during the time the borrowing is outstanding.
The Fund expects that some of its borrowings may be made on a secured basis. In
such situations, either the custodian will segregate the pledged assets for the
benefit of the lender or arrangements will be made with a suitable subcustodian,
which may include the lender.

REVERSE REPURCHASE AGREEMENTS. The Fund may enter into reverse
repurchase agreements with member banks of the Federal Reserve System and
certain non-bank dealers. Reverse repurchase agreements involve the sale of
securities held by the Fund pursuant to its agreement to repurchase them at a
mutually agreed upon date, price and rate of interest. At the time the Fund
enters into a reverse repurchase agreement, it will segregate with an approved
custodian cash or liquid high-grade debt securities having a value not less than
the repurchase price (including accrued interest). The segregated assets will be
marked-to-market daily and additional assets will be segregated on any day in
which the assets fall below the repurchase price (plus accrued interest). The
Fund's liquidity and ability to manage its assets might be affected when it sets
aside cash or portfolio securities to cover such commitments. Reverse repurchase
agreements involve the risk that the market value of the securities retained in
lieu of sale may decline below the price of the securities the Fund has sold but
is obligated

24
<PAGE>

to repurchase. In the event the buyer of securities under a reverse repurchase
agreement files for bankruptcy or becomes insolvent, such buyer or its trustee
or receiver may receive an extension of time to determine whether to enforce the
Fund's obligation to repurchase the securities, and the Fund's use of the
proceeds of the reverse repurchase agreement may effectively be restricted
pending such decision. Reverse repurchase agreements that are accounted for as
financings are considered to be borrowings under the 1940 Act.

WHEN-ISSUED SECURITIES AND DELAYED-DELIVERY TRANSACTIONS. The Fund may
utilize up to 20% of its total assets to purchase securities on a "when-issued"
basis or purchase or sell securities for delayed delivery (I.E., payment or
delivery occur beyond the normal settlement date at a stated price and yield).
In these transactions, payment for and delivery of the securities occur beyond
the regular settlement dates, normally within 30-45 days after the transaction.
The Fund will enter into a when-issued transaction for the purpose of acquiring
portfolio securities and not for the purpose of leverage, but may sell the
securities before the settlement date if CSAM deems it advantageous to do so.
The payment obligation and the interest rate that will be received on
when-issued and delayed-delivery securities are fixed at the time the buyer
enters into the commitment. Due to fluctuations in the value of securities
purchased or sold on a when-issued or delayed-delivery basis, the yields
obtained on such securities may be higher or lower than the yields available in
the market on the dates when the investments are actually delivered to the
buyers. When-issued securities may include securities purchased on a "when, as
and if issued" basis, under which the issuance of the security depends on the
occurrence of a subsequent event, such as approval of a merger, corporate
reorganization or debt restructuring.

When the Fund agrees to purchase when-issued or delayed-delivery
securities, its custodian will set aside cash or liquid securities equal to the
amount of the commitment in a segregated account. Normally, the custodian will
set aside portfolio securities to satisfy a purchase commitment, and in such a
case, the Fund may be required subsequently to place additional assets in the
segregated account in order to ensure that the value of the account remains
equal to the amount of the Fund's commitment. It may be expected that the Fund's
net assets will fluctuate to a greater degree when it sets aside portfolio
securities to cover such purchase commitments than when it sets aside cash. When
the Fund engages in when-issued or delayed-delivery transactions, it relies on
the other party to consummate the trade. Failure of the seller to do so may
result in the Fund incurring a loss or missing an opportunity to obtain a price
considered to be advantageous.

REITS. The Fund may invest in real estate investment trusts ("REITs"),
which are pooled investment vehicles that invest primarily in income-producing
real estate or real estate related loans or interests. Like regulated investment
companies such as the Fund, REITs are not taxed on income distributed to
shareholders provided they comply with several requirements of the Internal
Revenue Code of 1986, as amended (the "Code"). By investing in a REIT, the Fund
will indirectly bear its proportionate share of any expenses paid by the REIT in
addition to the expenses of the Fund.

Investing in REITs involves certain risks. A REIT may be affected by
changes in the value of the underlying property owned by such REIT or by the
quality of any credit

25
<PAGE>

extended by the REIT. REITs are dependent on management skills, are not
diversified (except to the extent the Code requires), and are subject to the
risks of financing projects. REITs are subject to heavy cash flow dependency,
default by borrowers, self-liquidation, the possibilities of failing to qualify
for the exemptions from the 1940 Act. REITs are also subject to interest rate
risks.

SMALL CAPITALIZATION AND EMERGING GROWTH COMPANIES; UNSEASONED
ISSUERS. Investments in small- and medium- sized and emerging growth companies,
as well as companies with continuous operations of less than three years
("unseasoned issuers") involve considerations that are not applicable to
investing in securities of established, larger-capitalization issuers, including
reduced and less reliable information about issuers and markets, less stringent
financial disclosure requirements, illiquidity of securities and markets, higher
brokerage commissions and fees and greater market risk in general. In addition,
securities of small- and medium-sized and emerging growth companies and
unseasoned issuers may involve greater risks since these securities may have
limited marketability and, thus, may be more volatile.

"SPECIAL SITUATION" COMPANIES. "Special situation companies" are
involved in an actual or prospective acquisition or consolidation;
reorganization; recapitalization; merger, liquidation or distribution of cash,
securities or other assets; a tender or exchange offer; a breakup or workout of
a holding company; or litigation which, if resolved favorably, would improve the
value of the company's stock. If the actual or prospective situation does not
materialize as anticipated, the market price of the securities of a "special
situation company" may decline significantly. CSAM believes, however, that if it
analyzes "special situation companies" carefully and invests in the securities
of these companies at the appropriate time, the Fund may achieve maximum capital
appreciation. There can be no assurance, however, that a special situation that
exists at the time of an investment will be consummated under the terms and
within the time period contemplated.

26
<PAGE>

DOLLAR ROLLS. The Fund also may enter into "dollar rolls," in which
the Fund sells fixed-income securities for delivery in the current month and
simultaneously contracts to repurchase similar but not identical (same type,
coupon and maturity) securities on a specified future date. During the roll
period, the Fund would forego principal and interest paid on such securities.
The Fund would be compensated by the difference between the current sale price
and the forward price for the future purchase, as well as by the interest earned
on the cash proceeds of the initial sale. At the time the Fund enters into a
dollar roll transaction, it will segregate with an approved custodian cash or
liquid securities having a value not less than the repurchase price (including
accrued interest) and will subsequently monitor the segregated assets to ensure
that its value is maintained.

INVESTMENT RESTRICTIONS

Certain investment limitations of the Fund may not be changed without
the affirmative vote of the holders of a majority of the Fund's outstanding
shares ("Fundamental Restrictions"). Such majority is defined as the lesser of
(i) 67% or more of the shares present at the meeting, if the holders of more
than 50% of the outstanding shares of the Fund are present or represented by
proxy, or (ii) more than 50% of the outstanding shares.

If a percentage restriction (other than the percentage limitation
set forth in No. 1 of the Fund) is adhered to at the time of an investment, a
later increase or decrease in the percentage of assets resulting from a
change in the values of portfolio securities or in the amount of the Fund's
assets will not constitute a violation of such restriction.

The investment limitations numbered 1 through 9 are Fundamental
Restrictions. Investment limitations 10 through 13 may be changed by a vote of
the Board at any time.

The Fund may not:

1. Borrow money except that the Fund may (a) borrow from banks
for temporary or emergency purposes and (b) enter into reverse repurchase
agreements; provided that reverse repurchase agreements, dollar roll
transactions that are accounted for as financings and any other transactions
constituting borrowing by the Fund may not exceed 33 1/3% of the value of the
Fund's total assets at the time of such borrowing. For purposes of this
restriction, short sales, the entry into currency transactions, options,
futures contracts, options on futures contracts, forward commitment
transactions and dollar roll transactions that are not accounted

27
<PAGE>

for as financings (and the segregation of assets in connection with any of the
foregoing) shall not constitute borrowing.

2. Purchase any securities which would cause 25% or more of the
value of the Fund's total assets at the time of purchase to be invested in the
securities of issuers conducting their principal business activities in the same
industry; provided that there shall be no limit on the purchase of U.S.
Government Securities.

3. Purchase the securities of any issuer if as a result more than
5% of the value of the Fund's total assets would be invested in the securities
of such issuer, except that this 5% limitation does not apply to U.S. Government
Securities and except that up to 25% of the value of the Fund's total assets may
be invested without regard to this 5% limitation.

4. Make loans, except that the Fund may purchase or hold
fixed-income securities, including loan participations, assignments and
structured securities, lend portfolio securities and enter into repurchase
agreements.

5. Underwrite any securities issued by others except to the extent
that the investment in restricted securities and the sale of securities in
accordance with the Fund's investment objective, policies and limitations may be
deemed to be underwriting.

6. Purchase or sell real estate or invest in oil, gas or mineral
exploration or development programs, except that the Fund may invest in (a)
securities secured by real estate, mortgages or interests therein and (b)
securities of companies that invest in or sponsor oil, gas or mineral
exploration or development programs.

7. Purchase securities on margin, except that the Fund may obtain
any short-term credits necessary for the clearance of purchases and sales of
securities. For purposes of this restriction, the deposit or payment of initial
or variation margin in connection with transactions in currencies, options,
futures contracts or related options will not be deemed to be a purchase of
securities on margin.

8. Invest in commodities, except that the Fund may purchase and
sell futures contracts, including those relating to securities, currencies and
indexes, and options on futures contracts, securities, currencies or indexes,
purchase and sell currencies on a forward commitment or delayed-delivery basis
and enter into stand-by commitments.

9. Issue any senior security except as permitted in the Fund's
investment limitations.

10. Purchase securities of other investment companies except in
connection with a merger, consolidation, acquisition, reorganization or offer of
exchange, or as otherwise permitted under the 1940 Act.

11. Pledge, mortgage or hypothecate its assets, except to the
extent necessary to secure permitted borrowings and to the extent related to the
deposit of assets in escrow in connection with the purchase of securities on a
forward commitment or delayed-

28
<PAGE>

delivery basis and collateral and initial or variation margin arrangements with
respect to currency transactions, options, futures contracts, and options on
futures contracts.

12. Invest more than 15% of the Fund's net asses in securities
which may be illiquid because of legal or contractual restrictions on resale or
securities for which there are no readily available market quotations. For
purposes of this limitation, repurchase agreements with maturities greater than
seven days shall be considered illiquid securities.

13. Make additional investments (including roll-overs) if the
Fund's borrowings exceed 5% of its net assets.

PORTFOLIO VALUATION

The following is a description of the procedures used by the Fund in
valuing their assets.

Securities listed on a U.S. securities exchange (including securities
traded through the Nasdaq National Market System) or foreign securities exchange
or traded in an over-the-counter market will be valued at the most recent sale
as of the time the valuation is made or, in the absence of sales, at the mean
between the highest bid and the lowest asked quotations. If there are no such
quotations, the value of the securities will be taken to be the most recent bid
quotation on the exchange or market. Options contracts will be valued similarly.
Futures contracts will be valued at the most recent settlement price at the time
of valuation. A security which is listed or traded on more than one exchange is
valued at the quotation on the exchange determined to be the primary market for
such security. In determining the market value of portfolio investments, the
Fund may employ outside organizations (each, a "Pricing Service") which may use
a matrix, formula or other objective method that takes into consideration market
indexes, matrices, yield curves and other specific adjustments. The procedures
of Pricing Services are reviewed periodically by the officers of the Fund under
the general supervision and responsibility of the Board, which may replace a
Pricing Service at any time. Short-term obligations with maturities of 60 days
or less are valued at amortized cost, which constitutes fair value as determined
by the Board. Amortized cost involves valuing a portfolio instrument at its
initial cost and thereafter assuming a constant amortization to maturity of any
discount or premium, regardless of the impact of fluctuating interest rates on
the market value of the instrument. The amortized cost method of valuation may
also be used with respect to other debt obligations with 60 days or less
remaining to maturity. Securities, options, futures contracts and other assets
for which market quotations are not available and certain other assets of the
Fund will be valued at their fair value as determined in good faith pursuant to
consistently applied procedures established by the Board. In addition, the Board
or its delegates may value a security at fair value if it determines that such
security's value determined by the methodology set forth above does not reflect
its fair value.

Trading in securities in certain foreign countries is completed at
various times prior to the close of business on each business day in New York
(I.E., a day on which the New York Stock Exchange, Inc. (the "NYSE") is open for
trading). In addition, securities trading

29
<PAGE>

in a particular country or countries may not take place on all business days in
New York. Furthermore, trading takes place in various foreign markets on days
which are not business days in New York and days on which the Fund's net asset
value is not calculated. As a result, calculation of the Fund's net asset value
may not take place contemporaneously with the determination of the prices of
certain foreign portfolio securities used in such calculation. All assets and
liabilities initially expressed in foreign currency values will be converted
into U.S. dollar values at the prevailing rate as quoted by a Pricing Service as
of 12:00 noon (Eastern time). If such quotations are not available, the rate of
exchange will be determined in good faith pursuant to consistently applied
procedures established by the Board.

PORTFOLIO TRANSACTIONS

CSAM is responsible for establishing, reviewing and, where necessary,
modifying the Fund's investment program to achieve its investment objective.
Purchases and sales of newly issued portfolio securities are usually principal
transactions without brokerage commissions effected directly with the issuer or
with an underwriter acting as principal. Other purchases and sales may be
effected on a securities exchange or over-the-counter, depending on where it
appears that the best price or execution will be obtained. The purchase price
paid by the Fund to underwriters of newly issued securities usually includes a
concession paid by the issuer to the underwriter, and purchases of securities
from dealers, acting as either principals or agents in the after market, are
normally executed at a price between the bid and asked price, which includes a
dealer's mark-up or mark-down. Transactions on U.S. stock exchanges and some
foreign stock exchanges involve the payment of negotiated brokerage commissions.
On exchanges on which commissions are negotiated, the cost of transactions may
vary among different brokers. On most foreign exchanges, commissions are
generally fixed. There is generally no stated commission in the case of
securities traded in domestic or foreign over-the-counter markets, but the price
of securities traded in over-the-counter markets includes an undisclosed
commission or mark-up. U.S. Government Securities are generally purchased from
underwriters or dealers, although certain newly issued U.S. Government
Securities may be purchased directly from the U.S. Treasury or from the issuing
agency or instrumentality. No brokerage commissions are typically paid on
purchases and sales of U.S. Government Securities.

CSAM will select specific portfolio investments and effect
transactions for the Fund and in doing so seeks to obtain the overall best
execution of portfolio transactions. In evaluating prices and executions, CSAM
will consider the factors it deems relevant, which may include the breadth of
the market in the security, the price of the security, the financial condition
and execution capability of a broker or dealer and the reasonableness of the
commission, if any, for the specific transaction and on a continuing basis.

CSAM may, in its discretion, effect transactions in portfolio
securities with brokers and dealers who provide brokerage and research services
(as those terms are defined in Section 28(e) of the Securities Exchange Act of
1934, as amended) to the Fund and/or other accounts over which CSAM exercises
investment discretion. CSAM may place portfolio transactions with a broker or
dealer with whom it has negotiated a commission that is in excess of the
commission another broker or dealer would have charged for effecting the
transaction if

30
<PAGE>

CSAM determines in good faith that such amount of commission was reasonable in
relation to the value of such brokerage and research services provided by such
broker or dealer viewed in terms of either that particular transaction or of the
overall responsibilities of CSAM. Research and other services received may be
useful to CSAM in serving both the Fund and its other clients and, conversely,
research or other services obtained by the placement of business of other
clients may be useful to CSAM in carrying out its obligations to the Fund.
Research may include furnishing advice, either directly or through publications
or writings, as to the value of securities, the advisability of purchasing or
selling specific securities and the availability of securities or purchasers or
sellers of securities; furnishing seminars, information, analyses and reports
concerning issuers, industries, securities, trading markets and methods,
legislative developments, changes in accounting practices, economic factors and
trends and portfolio strategy; access to research analysts, corporate management
personnel, industry experts, economists and government officials; comparative
performance evaluation and technical measurement services and quotation
services; and products and other services (such as third party publications,
reports and analyses, and computer and electronic access, equipment, software,
information and accessories that deliver, process or otherwise utilize
information, including the research described above) that assist CSAM in
carrying out its responsibilities. Research received from brokers or dealers is
supplemental to CSAM's own research program. The fees to CSAM under its advisory
agreement with the Fund are not reduced by reason of its receiving any brokerage
and research services.

Investment decisions for the Fund concerning specific portfolio
securities are made independently from those for other clients advised by CSAM.
Such other investment clients may invest in the same securities as the Fund.
When purchases or sales of the same security are made at substantially the same
time on behalf of such other clients, transactions are averaged as to price and
available investments allocated as to amount, in a manner which CSAM believes to
be equitable to each client, including the Fund. In some instances, this
investment procedure may adversely affect the price paid or received by the Fund
or the size of the position obtained or sold for the Fund. To the extent
permitted by law, securities may be aggregated with those to be sold or
purchased for the Fund with those to be sold or purchased for such other
investment clients in order to obtain best execution.

In no instance will portfolio securities be purchased from or sold
to CSAM, Credit Suisse Asset Management Securities, Inc. ("CSAMSI") or Credit
Suisse First Boston ("CS First Boston") or any affiliated person of the
foregoing entities except as permitted by SEC exemptive order or by
applicable law. In addition, the Fund will not give preference to any
institutions with whom the Fund enters into distribution or shareholder
servicing agreements concerning the provision of distribution services or
support services.

Transactions for the Fund may be effected on foreign securities
exchanges. In transactions for securities not actively traded on a foreign
securities exchange, the Fund will deal directly with the dealers who make a
market in the securities involved, except in those circumstances where better
prices and execution are available elsewhere. Such dealers usually are acting as
principal for their own account. On occasion, securities may be purchased
directly from the issuer. Such portfolio securities are generally traded on a
net basis and do not normally involve brokerage commissions. Securities firms
may receive brokerage

31
<PAGE>

commissions on certain portfolio transactions, including options, futures and
options on futures transactions and the purchase and sale of underlying
securities upon exercise of options.

The Fund may participate, if and when practicable, in bidding for the
purchase of securities for the Fund's portfolio directly from an issuer in order
to take advantage of the lower purchase price available to members of such a
group. The Fund will engage in this practice, however, only when CSAM, in its
sole discretion, believes such practice to be otherwise in the Fund's interest.

PORTFOLIO TURNOVER

The Fund does not intend to seek profits through short-term trading,
but the rate of turnover will not be a limiting factor when the Fund deems it
desirable to sell or purchase securities. The Fund's portfolio turnover rate is
calculated by dividing the lesser of purchases or sales of its portfolio
securities for the year by the monthly average value of the portfolio
securities. Securities with remaining maturities of one year or less at the date
of acquisition are excluded from the calculation.

Certain practices that may be employed by the Fund could result in
high portfolio turnover. For example, options on securities may be sold in
anticipation of a decline in the price of the underlying security (market
decline) or purchased in anticipation of a rise in the price of the underlying
security (market rise) and later sold. To the extent that its portfolio is
traded for the short-term, the Fund will be engaged essentially in trading
activities based on short-term considerations affecting the value of an issuer's
stock instead of long-term investments based on fundamental valuation of
securities. Because of this policy, portfolio securities may be sold without
regard to the length of time for which they have been held. Consequently, the
annual portfolio turnover rate of the Fund may be higher than mutual funds
having similar objectives that do not utilize these strategies.

It is not possible to predict the Fund's portfolio turnover rate. High
portfolio turnover rates (100% or more) may result in higher brokerage
commissions, dealer mark-ups or underwriting commissions as well as other
transaction costs. In addition, gains realized from portfolio turnover may be
taxable to shareholders.

MANAGEMENT OF THE FUND

OFFICERS AND BOARD OF DIRECTORS

The business and affairs of the Fund is managed by the Board of
Directors in accordance with the laws of the State of Maryland. The Board elects
officers who are responsible for the day-to-day operations of the Fund and who
execute policies authorized by the Board. Under the Fund's Charter, the Board
may classify or reclassify any unissued shares of the Fund into one or more
additional classes by setting or changing in any one or more respects their
relative rights, voting powers, restrictions, limitations as to dividends,
qualifications and terms and conditions of redemption. The Board may similarly
classify or

32
<PAGE>

reclassify any class of its shares into one or more series and,
without shareholder approval, may increase the number of authorized shares of
the Fund.

The names (and ages) of the Fund's Directors and officers, their
addresses, present positions and principal occupations during the past five
years and other affiliations are set forth below.

<TABLE>
<CAPTION>
<S> <C>
Richard H. Francis (67) DIRECTOR
40 Grosvenor Road Currently retired; Executive Vice President and
Short Hills, New Jersey 07078 Chief Financial Officer of Pan Am Corporation
and Pan American World Airways, Inc.
from 1988 to 1991; Director of
The Infinity Mutual Funds,
BISYS Group Incorporated;
Director/Trustee of other Warburg
Pincus Funds and other
CSAM-advised investment companies.

Jack W. Fritz (72) DIRECTOR
2425 North Fish Creek Road Private investor; Consultant and Director of
P.O. Box 483 Fritz Broadcasting, Inc. and Fritz Communications
Wilson, Wyoming 83014 (developers and operators of radio stations);
Director of Advo, Inc. (direct mail advertising);
Director/Trustee of other Warburg Pincus Funds.

Jeffrey E. Garten (53) DIRECTOR
Box 208200 Dean of Yale School of Management and William S.
New Haven, Connecticut 06520-8200 Beinecke Professor in the Practice of
International Trade and Finance;
Undersecretary of Commerce for
International Trade from
November 1993 to October 1995;
Professor at Columbia
University from September 1992 to
November 1993; Director/Trustee
of other Warburg Pincus Funds.

James S. Pasman, Jr. (68) DIRECTOR
29 The Trillium Currently retired; President and Chief Operating
Pittsburgh, Pennsylvania 15238 Officer of National InterGroup, Inc. from April 1989
to March 1991; Chairman of Permian Oil Co. from
April 1989 to March 1991; Director of Education
Management Corp., Tyco International Ltd., Trustee,
BT Insurance Funds Trust; Director/Trustee of other
Warburg Pincus Funds and other CSAM-advised
investment companies.
</TABLE>

33
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
William W. Priest* (58) CHAIRMAN OF THE BOARD
153 East 53rd Street Chairman-Management Committee, Chief Executive
New York, New York 10022 Officer and Managing Director of CSAM (U.S.)
since 1990; Director of TIG Holdings, Inc.;
Director/Trustee of other Warburg
Pincus Funds and other CSAM-advised investment
companies.

Steven N. Rappaport (51) DIRECTOR
153 East 53rd Street, President of Loanet, Inc. since 1997; Executive
Suite 5500 Vice President of Loanet, Inc. from 1994 to 1997;
New York, New York 10022 Director, President, North American Operations,
and former Executive Vice President from 1992 to 1993
of Worldwide Operations of Metallurg Inc.; Executive
Vice President, Telerate, Inc. from 1987 to 1992;
Partner in the law firm of Hartman & Craven until 1987;
Director/Trustee of other Warburg Pincus Funds
and other CSAM-advised investment companies.

Alexander B. Trowbridge (69) DIRECTOR
1317 F Street, N.W., 5th Floor Currently retired; President of Trowbridge Partners, Inc.
Washington, DC 20004 (business consulting) from January 1990 to November 1996;
Director or Trustee of New England Mutual Life Insurance Co.,
ICOS Corporation (biopharmaceuticals), IRI International
(energy services), The Rouse Company (real estate
development), Harris Corp. (electronics and
communications equipment), The Gillette Co.
(personal care products) and Sunoco, Inc. (petroleum
refining and marketing); Director/Trustee of other Warburg
refining and marketing);

Eugene L. Podsiadlo (42) PRESIDENT
466 Lexington Avenue Managing Director of CSAM; Associated with CSAM since CSAM
New York, New York 10017-3147 acquired the Funds' predecessor adviser in July 1999;
with the predecessor adviser since 1991; Vice President
of Citibank, N.A. from 1987 to 1991; Officer of CSAMSI
and of other Warburg Pincus Funds.
</TABLE>

- -------------------------
* Indicates a Director/Trustee who is an "interested person" of the Fund as
defined in the 1940 Act.

34
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Hal Liebes, Esq. (35) VICE PRESIDENT AND SECRETARY
153 East 53rd Street Director and General Counsel of CSAM;
New York, New York 10022 Associated with CSAM since 1995; Associated
with CS First Boston Investment Management from
1994 to 1995; Associated with Division of
Enforcement, U.S. Securities and
Exchange Commission from 1991 to 1994; Officer
of CSAMSI, other Warburg Pincus Funds and
other CSAM-advised investment companies.

Michael A. Pignataro (39) TREASURER AND CHIEF FINANCIAL OFFICER
153 East 53rd Street Vice President and Director of Fund Administration
New York, New York 10022 of CSAM; Associated with CSAM since 1984; Officer
of other Warburg Pincus Funds and other CSAM-advised
investment companies.

Stuart J. Cohen, Esq. (30) ASSISTANT SECRETARY
466 Lexington Avenue Vice President and Legal Counsel of CSAM;
New York, New York 10017-3147 Associated with CSAM since CSAM acquired
the Funds' predecessor adviser in July 1999;
with the predecessor adviser since 1997;
Associated with the law firm of Gordon Altman
Butowsky Weitzen Shalov & Wein from 1995 to 1997;
Officer of other Warburg Pincus Funds.

Rocco A. DelGuercio (36) ASSISTANT TREASURER
153 East 53rd Street Assistant Vice President and Administrative
New York, New York 10022 Officer of CSAM; Associated with CSAM since
June 1996; Assistant Treasurer, Bankers
Trust Corp. -- Fund Administration from
March 1994 to June 1996; Mutual Fund Accounting
Supervisor, Dreyfus Corporation from April 1987 to
March 1994; Officer of other Warburg Pincus Funds
and other CSAM-advised investment companies.
</TABLE>

The Fund pays Directors who are not "affiliated persons" (as defined
in the 1940 Act) of CSAM, CSAMSI, PFPC Inc., the Fund's co-administrator
("PFPC"), or any of their affiliates an annual fee of $750 and $250 for each
meeting of the Board attended by him for his services as a Director, and is
reimbursed for expenses incurred in connection with his attendance at Board
meetings. Each member of the Audit Committee receives an annual fee of $250, and
the Chairman of the Audit Committee receives an annual fee of $325.

DIRECTORS' TOTAL COMPENSATION
(estimated for fiscal period ending October 31, 2000):

35
<PAGE>
<TABLE>
------------------------------------------------------------------------------------------
ALL INVESTMENT
COMPANIES IN WARBURG
NAME OF DIRECTOR THE FUND PINCUS FUND COMPLEX*
------------------------------------------------------------------------------------------
<S> <C> <C>
William W. Priest** None None
------------------------------------------------------------------------------------------
Richard H. Francis $ 2,000 $ 102,000
------------------------------------------------------------------------------------------
Jack W. Fritz $ 2,000 $ 102,000
------------------------------------------------------------------------------------------
Jeffrey E. Garten $ 2,000 $ 102,000
------------------------------------------------------------------------------------------
James S. Pasman, Jr. $ 2,000 $ 102,000
------------------------------------------------------------------------------------------
Steven N. Rappaport $ 2,000 $ 102,000
------------------------------------------------------------------------------------------
Alexander B. Trowbridge $ 2,125 $ 108,375
------------------------------------------------------------------------------------------
</TABLE>

* Each Director serves as a Director or Trustee of 51 investment
companies or portfolios in the Warburg Pincus family of funds.

** Mr. Priest receives compensation as an affiliate of CSAM, and,
accordingly, receives no compensation from any Fund or any other
investment company advised by CSAM.

PORTFOLIO MANAGERS OF THE FUND

[TO COME]

CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES

Credit Suisse Asset Management International, an affiliate of CSAM,
will hold all of the shares of the Fund on the date the Fund's Registration
Statement becomes effective.

INVESTMENT ADVISER AND CO-ADMINISTRATORS

CSAM, located at 153 East 53rd Street, New York, New York 10022,
serves as investment adviser to the Fund pursuant to a written agreement (the
"Advisory Agreement"). CSAM, formerly known as BEA Associates, together with its
predecessor firms, has been engaged in the investment advisory business for over
60 years. CSAM is an indirect wholly-owned U.S. subsidiary of Credit Suisse
("Credit Suisse"). Credit Suisse is a global financial services company,
providing a comprehensive range of banking and insurance products. Active on
every continent and in all major financial centers, Credit Suisse comprises five
business units -- Credit Suisse Asset Management (asset management); Credit
Suisse First Boston (investment banking); Credit Suisse Private Banking (private
banking); Credit Suisse (retail banking); and Winterthur (insurance). Credit
Suisse has approximately $680 billion of global assets under management and
employs approximately 62,000 people worldwide. The principal business address of
Credit Suisse is Paradeplatz 8, CH 8070, Zurich, Switzerland.

36
<PAGE>

CSAMSI and PFPC both serve as co-administrators to the Fund
pursuant to separate written agreements (the "CSAMSI Co-Administration
Agreement" and the "PFPC Co-Administration Agreement," respectively). For
the services provided by CSAM under the Advisory Agreement, the Fund pays
CSAM a fee calculated at an annual rate of 0.80% of the Fund's average
daily net assets. For the services provided by CSAMSI under the CSAMSI
Co-Administration Agreement, the Fund pays CSAMSI a fee calculated at an
annual rate of .10% of the Fund's average daily net assets. For the
services provided by PFPC under the PFPC Co-Administration Agreement, the
Fund pays PFPC a fee calculated at an annual rate of .10% of the Fund's
first $500 million in average daily net assets, .075% of the next $1
billion in average daily net assets and .05% of average daily net
assets exceeding $1.5 billion, exclusive of out-of-pocket expenses.
Each class of shares of the Fund bears its proportionate share of fees
payable to CSAM, CSAMSI and PFPC in the proportion that its assets bear to
the aggregate assets of the Fund at the time of calculation. These fees
are calculated at an annual rate based on a percentage of the Fund's
average daily net assets.

CUSTODIANS AND TRANSFER AGENT

Brown Brothers Harriman & Co. ("BBH") acts as global custodian for
the Fund pursuant to a written Custodian Agreement (the "Custodian Agreement").
BBH will (i) maintain a separate account or accounts in the name of the Fund,
(ii) hold and transfer portfolio securities on account of the Fund, (iii) accept
receipts and disbursements of money on behalf of the Fund, (iv) collect and
receive all income and other payments and distributions for the account of the
Fund's portfolio securities and (v) make periodic reports to the Board
concerning the Fund's custodial arrangements. BBH is authorized to select one
or more foreign banking institutions and foreign securities depositories to
serve as sub-custodian on behalf of the Fund, provided that BBH remains
responsible for the performance of all its duties under the Custodian Agreement
and holds the Fund harmless from the negligent acts and omissions of any
sub-custodian. For its services to the Fund under the Custodian Agreement, BBH
receives a fee which is calculated based upon the Fund's average daily gross
assets, exclusive of transaction charges and out-of-pocket expenses, which are
also charged to the Fund. BBH's principal business address is 40 Water Street,
Boston, Massachusetts 02109.

State Street Bank and Trust Company ("State Street") serves as the
shareholder servicing, transfer and dividend disbursing agent of the Fund
pursuant to a Transfer Agency and Service Agreement, under which State Street
(i) issues and redeems shares of the Fund, (ii) addresses and mails all
communications by the Fund to record owners of Fund shares, including reports to
shareholders, dividend and distribution notices and proxy material for its
meetings of shareholders, (iii) maintains shareholder accounts and, if
requested, sub-accounts and (iv) makes periodic reports to the Board concerning
the transfer agent's operations with respect to the Fund. State Street has
delegated to Boston Financial Data Services, Inc., an affiliate of State Street
("BFDS"), responsibility for most shareholder servicing functions. BFDS's
principal business address is 2 Heritage Drive, North Quincy, Massachusetts
02171.

37
<PAGE>

ORGANIZATION OF THE FUND

The Fund is a diversified open-end management investment company
within the meaning of the 1940 Act. The Fund was organized as a corporation
under the laws of the State of Maryland on October 21, 1999.

The Fund's Charter authorizes the Board to issue three billion full
and fractional shares of capital stock, $.001 par value per share, of which one
billion shares are designated Common Shares, one billion shares are designated
Institutional Shares and one billion are designated Advisor Shares. The Fund
currently offers Common Shares.

Investors in the Fund are entitled to one vote for each full share
held and fractional votes for fractional shares held. Shareholders of the Fund
will vote in the aggregate except where otherwise required by law and except
that each class will vote separately on certain matters pertaining to its
distribution and shareholder servicing arrangements. There will normally be no
meetings of investors for the purpose of electing members of the governing Board
unless and until such time as less than a majority of the members holding office
have been elected by investors. Any Director of the Fund may be removed from
office upon the vote of shareholders holding at least a majority of the Fund's
outstanding shares, at a meeting called for that purpose. A meeting will be
called for the purpose of voting on the removal of a Board member at the written
request of holders of 10% of the outstanding shares of the Fund.

Shareholders of the Fund, upon liquidation, will participate
ratably in the Fund's net assets. Shares do not have cumulative voting
rights, which means that holders of more than 50% of the shares voting for
the election of Directors can elect all Directors. Shares are transferable,
but have no preemptive, conversion or subscription rights.

DISTRIBUTION AND SHAREHOLDER SERVICING

DISTRIBUTOR. In addition to serving as the Fund's co-administrator,
CSAMSI serves as distributor of the Fund's shares. CSAMSI offers the Fund's
shares on a continuous basis. No compensation is payable by the Fund to
CSAMSI for distribution services under the Distribution Agreement, but CSAMSI
receives compensation from the Fund under the CSAMSI Co-Administration
Agreement as described herein. CSAMSI's principal business address is 466
Lexington Avenue, New York, New York 10017.

COMMON SHARES. The Fund has adopted a Shareholder Servicing and
Distribution Plan (the "Common Shares 12b-1 Plan"), pursuant to Rule 12b-1
under the 1940 Act, pursuant to which the Fund pays CSAMSI under the CSAMSI
Co-Administration Agreement a fee calculated at an annual rate of .25% of the
average daily net assets of the Common Shares of the Fund. The fee is
intended to compensate CSAMSI, or to enable CSAMSI to compensate other
persons ("Service Providers"), for providing Services (as defined below) to
the Fund. Services performed by CSAMSI under the CSAMSI Co-Administration
Agreement or Service Providers include (i) services that are primarily
intended to result in, or that are primarily attributable to, the sale of the
Common Shares, as set forth in the Common Shares 12b-1 Plan ("Selling
Services") and (ii) ongoing servicing and/or maintenance of the accounts of
Common Shareholders of the Fund, as set forth in the Common Shares 12b-1 Plan
("Shareholder Services", together with Selling Services, "Services").
Shareholder Services

38
<PAGE>

may include, without limitation, responding to Fund shareholder inquiries and
providing services to shareholders not otherwise provided by the Funds'
distributor or transfer agent. Selling Services may include, without limitation,
(a) the printing and distribution to prospective investors in Common Shares of
prospectuses and statements of additional information describing the Fund; (b)
the preparation, including printing, and distribution of sales literature,
advertisements and other informational materials relating to the Common Shares;
(c) providing telephone services relating to the Fund, including responding to
inquiries of prospective Fund investors; (d) formulating and implementing
marketing and promotional activities, including, but not limited to, direct mail
promotions and television, radio, newspaper, magazine and other mass media
advertising and obtaining whatever information, analyses and reports with
respect to marketing and promotional activities that the Fund may, from time to
time, deem advisable. In providing compensation for Services in accordance with
this Plan, CSAMSI is expressly authorized (i) to make, or cause to be made,
payments to Service Providers reflecting an allocation of overhead and other
office expenses related to providing Services and (ii) to make, or cause to be
made, payments to compensate selected dealers or other authorized persons for
providing any Services.

Payments under the Common Shares 12b-1 Plan are not tied
exclusively to the distribution expenses actually incurred by CSAMSI under
the CSAMSI Co-Administration Agreement and the payments may exceed
distribution expenses actually incurred.

Pursuant to the Common Shares 12b-1 Plan, CSAMSI provides the Board
with periodic reports of amounts expended under the Common Shares 12b-1 Plan and
the purpose for which the expenditures were made. The Common Shares 12b-1 Plan
was adopted on October 26, 1999.

The Fund has authorized certain broker-dealers, financial
institutions, recordkeeping organizations and other financial intermediaries
(collectively, "Service Organizations") or, if applicable, their designees to
enter confirmed purchase and redemption orders on behalf of their clients and
customers, with payment to follow no later than the Fund's pricing on the
following business day. If payment is not received by such time, the Service
Organization could be held liable for resulting fees or losses. The Fund may be
deemed to have received a purchase or redemption order when a Service
Organization, or, if applicable, its authorized designee, accepts the order.
Such orders received by the Fund in proper form will be priced at the Fund's net
asset value next computed after they are accepted by the Service Organization or
its authorized designee. Service Organizations may impose transaction or
administrative charges or other direct fees, which charges or fees would not be
imposed if Fund shares are purchased directly from the Fund.

For administration, subaccounting, transfer agency and/or other
services, CSAM or its affiliates may pay Service Organizations a fee of up to
.40% of the average annual value of accounts with the Fund maintained by such
Service Organizations. Service Organizations may also be reimbursed for
marketing costs. The Service Fee payable to any one Service Organization is
determined based upon a number of factors, including the nature and quality of
services provided, the operations processing requirements of the relationship
and the standardized fee schedule of the Service Organization or recordkeeper.
The Fund may

39
<PAGE>

reimburse part of the Service Fee at rates they would normally pay to the
transfer agent for providing the services.

ADVISOR SHARES. The Fund (which currently does not offer Advisor
Shares) may enter into agreements ("Agreements") with institutional
shareholders of record, broker-dealers, financial institutions, depository
institutions, retirement plans and financial intermediaries ("Institutions")
to provide certain distribution, shareholder servicing, administrative and/or
accounting services for their clients or customers (or participants in the
case of retirement plans) ("Customers") who are beneficial owners of Advisor
Shares. Agreements will be governed by a distribution plan (the "Advisor
Share 12b-1 Plan") pursuant to Rule 12b-1 under the 1940 Act, pursuant to
which the Fund pays in consideration for services, a fee calculated at an
annual rate of .50% of the average daily net assets of the Advisor Shares of
the Fund. Such payments may be paid to Institutions directly by the Fund or
by CSAMSI under the CSAMSI Co-Administration Agreement on behalf of the Fund.
The Advisor Share 12b-1 Plan requires the Board, at least quarterly, to
receive and review written reports of amounts expended under the Advisor
Share 12b-1 Plan and the purposes for which such expenditures were made. The
Advisor Shares 12b-1 Plan was adopted on October 26, 1999.

Certain Institutions may receive additional fees from CSAMSI, CSAM or
their affiliates for providing supplemental services in connection with
investments in the Fund. Institutions may also be reimbursed for marketing and
other costs. Additional fees may be up to 0.10% per year of the value of Fund
accounts maintained by the firm. Fees payable to any particular Institution are
determined based upon a number of factors, including the nature and quality of
the services provided, the operations processing requirements of the
relationship and the standardized fee schedule of the Institution. To the extent
that CSAMSI, CSAM or their affiliates provide additional compensation or
reimbursements for marketing expenses, such payments would not represent an
additional expense to the Fund or its shareholders.

An Institution with which the Fund has entered into an Agreement with
respect to its Advisor Shares may charge a Customer one or more of the following
types of fees, as agreed upon by the Institution and the Customer, with respect
to the cash management or other services provided by the Institution: (i)
account fees (a fixed amount per month or per year); (ii) transaction fees (a
fixed amount per transaction processed); (iii) compensation balance requirements
(a minimum dollar amount a Customer must maintain in order to obtain the
services offered); or (iv) account maintenance fees (a periodic charge based
upon the percentage of assets in the account or of the dividend paid on those
assets). Services provided by an Institution to Customers are in addition to,
and not duplicative of, the services to be provided under the Fund's
co-administration and distribution and shareholder servicing arrangements. A
Customer of an Institution should read the Prospectus and this Statement of
Additional Information in conjunction with the Agreement and other literature
describing the services and related fees that would be provided by the
Institution to its Customers prior to any purchase of Fund shares. A Prospectus
is available from the Fund's distributor upon request. No preference will be
shown in the selection of Fund portfolio investments for the instruments of
Institutions.

40
<PAGE>

GENERAL. The Advisor Share 12b-1 Plan and the Common Shares 12b-1 Plan
will continue in effect for so long as their continuance is specifically
approved at least annually by the Fund's Board, including a majority of the
Directors who are not interested persons of the Fund and who have no direct or
indirect financial interest in the operation of the Advisor Shares 12b-1 Plan or
the Common Shares 12b-1 Plan, as the case may be ("Independent Directors"). Any
material amendment of the Advisor Shares 12b-1 Plan or the Common Shares 12b-1
Plan would require the approval of the Board in the same manner. Neither the
Advisor Shares 12b-1 Plan nor the Common Shares 12b-1 Plan may be amended to
increase materially the amount to be spent thereunder without shareholder
approval of the relevant class of shares. The Advisor Share 12b-1 Plan and the
Common Shares 12b-1 Plan may be terminated at any time, without penalty, by vote
of a majority of the Independent Directors or by a vote of a majority of the
outstanding voting securities of the relevant class of shares.

ADDITIONAL PURCHASE AND REDEMPTION INFORMATION

The offering price of the Fund's shares is equal to the per share net
asset value of the relevant class of shares of the Fund.

Under the 1940 Act, the Fund may suspend the right of redemption or
postpone the date of payment upon redemption for any period during which the
NYSE is closed, other than customary weekend and holiday closings, or during
which trading on the NYSE is restricted, or during which (as determined by the
SEC) an emergency exists as a result of which disposal or fair valuation of
portfolio securities is not reasonably practicable, or for such other periods as
the SEC may permit. (The Fund may also suspend or postpone the recordation of an
exchange of its shares upon the occurrence of any of the foregoing conditions.)

If conditions exist which make payment of redemption proceeds wholly
in cash unwise or undesirable, the Fund may make payment wholly or partly in
securities or other investment instruments which may not constitute securities
as such term is defined in the applicable securities laws. If a redemption is
paid wholly or partly in securities or other property, a shareholder would incur
transaction costs in disposing of the redemption proceeds. The Fund will comply
with Rule 18f-1 promulgated under the 1940 Act with respect to redemptions in
kind.

AUTOMATIC CASH WITHDRAWAL PLAN. An automatic cash withdrawal plan (the
"Plan") is available to shareholders who wish to receive specific amounts of
cash periodically. Withdrawals may be made under the Plan by redeeming as many
shares of the Fund as may be necessary to cover the stipulated withdrawal
payment. To the extent that withdrawals exceed dividends, distributions and
appreciation of a shareholder's investment in the Fund, there will be a
reduction in the value of the shareholder's investment and continued withdrawal
payments may reduce the shareholder's investment and ultimately exhaust it.
Withdrawal payments should not be considered as income from investment in the
Fund.

41
<PAGE>

EXCHANGE PRIVILEGE

An exchange privilege with certain other funds advised by CSAM is
available to investors in the Fund. A Common Shareholder may exchange Common
Shares of the Fund for Common Shares of another Fund or for Common Shares of
another Warburg Pincus Fund at their respective net asset values. An Advisor
Shareholder may exchange Advisor Shares of the Fund for Advisor Shares of
another Warburg Pincus Fund at their respective net asset values.

If an exchange request is received by Warburg Pincus Funds or their
agent prior to the close of regular trading on the NYSE, the exchange will be
made at the Fund's net asset value determined at the end of that business
day. Exchanges will be effected without a sales charge but must satisfy the
minimum dollar amount necessary for new purchases. The Fund may refuse
exchange purchases at any time without prior notice.

The exchange privilege is available to shareholders residing in any
state in which the shares being acquired may legally be sold. When an investor
effects an exchange of shares, the exchange is treated for federal income tax
purposes as a redemption. Therefore, the investor may realize a taxable gain or
loss in connection with the exchange. Investors wishing to exchange shares of
the Fund for shares in another Warburg Pincus Fund should review the prospectus
of the other fund prior to making an exchange. For further information regarding
the exchange privilege or to obtain a current prospectus for another Warburg
Pincus Fund, an investor should contact Warburg Pincus Funds at (800) 927-2874.

The Fund reserves the right to refuse exchange purchases by any person
or group if, in CSAM's judgment, the Fund would be unable to invest the money
effectively in accordance with its investment objective and policies, or would
otherwise potentially be adversely affected. Examples of when an exchange
purchase could be refused are when the Fund receives or anticipates receiving
large exchange orders at or about the same time and/or when a pattern of
exchanges within a short period of time (often associated with a "market timing"
strategy) is discerned. The Fund reserves the right to terminate or modify the
exchange privilege at any time upon 30 days' notice to shareholders.

ADDITIONAL INFORMATION CONCERNING TAXES

The following is a summary of the material United States federal
income tax considerations regarding the purchase, ownership and disposition of
shares in the Fund. The prospective shareholder is urged to consult his own tax
adviser with respect to the specific federal, state, local and foreign tax
consequences of investing in the Fund. The summary is based on the laws in
effect on the date of this Statement of Additional Information, which are
subject to change.

THE FUND AND ITS INVESTMENTS

The Fund intends to continue to qualify to be treated as a regulated
investment company the taxable year under the Code. To so qualify, the Fund
must, among other things: (a) derive at least 90% of its gross income in the
taxable year from dividends, interest, payments with respect to securities loans
and gains from the sale or other disposition of stock

42
<PAGE>

or securities or foreign currencies, or other income (including, but not limited
to, gains from options, futures or forward contracts) derived with respect to
its business of investing in such stock, securities or currencies; and (b)
diversify its holdings so that, at the end of the quarter of the Fund's taxable
year, (i) at least 50% of the market value of the Fund's assets is represented
by cash, securities of other regulated investment companies, United States
Government Securities and other securities, with such other securities limited,
in respect of any one issuer, to an amount not greater than 5% of the Fund's
assets and not greater than 10% of the outstanding voting securities of such
issuer and (ii) not more than 25% of the value of its assets is invested in the
securities (other than U.S. Government Securities or securities of other
regulated investment companies) of any one issuer or any two or more issuers
that the Fund controls and are determined to be engaged in the same or similar
trades or businesses or related trades or businesses.

As a regulated investment company, the Fund will not be subject to
United States federal income tax on its net investment income (I.E., income
other than its net realized long- and short-term capital gains) and its net
realized long- and short-term capital gains, if any, that it distributes to its
shareholders, provided that an amount equal to at least 90% of the sum of its
investment company taxable income (I.E., 90% of its taxable income minus the
excess, if any, of its net realized long-term capital gains over its net
realized short-term capital losses (including any capital loss carryovers), plus
or minus certain other adjustments as specified in the Code) and its net
tax-exempt income for the taxable year is distributed, but will be subject to
tax at regular corporate rates on any taxable income or gains that it does not
distribute. Any dividend declared by the Fund in October, November or December
of any calendar year and payable to shareholders of record on a specified date
in such a month shall be deemed to have been received by the shareholder on
December 31 of such calendar year and to have been paid by the Fund not later
than such December 31, provided that such dividend is actually paid by the Fund
during January of the following calendar year.

If for any taxable year the Fund does not qualify for the special
federal income tax treatment afforded regulated investment companies, all of its
taxable income will be subject to federal income tax at regular corporate rates
(without any deduction for distributions to its shareholders). In such event,
dividend distributions, including amounts derived from interest on tax-exempt
obligations, would be taxable to shareholders to the extent of current and
accumulated earnings and profits, and would be eligible for the dividends
received deduction for corporations in the case of corporate shareholders.

The Fund intends to distribute annually to its shareholders
substantially all of its investment company taxable income. The Board of the
Fund will determine annually whether to distribute any net realized long-term
capital gains in excess of net realized short-term capital losses (including any
capital loss carryovers). The Fund currently expects to distribute any excess
annually to its shareholders. However, if the Fund retains for investment an
amount equal to all or a portion of its net long-term capital gains in excess of
its net short-term capital losses and capital loss carryovers, it will be
subject to a corporate tax (currently at a rate of 35%) on the amount retained.
In that event, the Fund will designate such retained amounts as undistributed
capital gains in a notice to its shareholders who (a) will be required to
include in income for United Stares federal income tax purposes, as long-term
capital gains, their

43
<PAGE>

proportionate shares of the undistributed amount, (b) will be entitled to credit
their proportionate shares of the 35% tax paid by the Fund on the undistributed
amount against their United States federal income tax liabilities, if any, and
to claim refunds to the extent their credits exceed their liabilities, if any,
and (c) will be entitled to increase their tax basis, for United States federal
income tax purposes, in their shares by an amount equal to 65% of the amount of
undistributed capital gains included in the shareholder's income. Organizations
or persons not subject to federal income tax on such capital gains will be
entitled to a refund of their pro rata share of such taxes paid by the Fund upon
filing appropriate returns or claims for refund with the Internal Revenue
Service (the "IRS"). Even if the Fund makes such an election, it is possible
that it may incur an excise tax as a result of not having distributed net
capital gains.

The Code imposes a 4% nondeductible excise tax on the Fund to the
extent the Fund does not distribute by the end of any calendar year at least 98%
of its net investment income for that year and 98% of the net amount of its
capital gains (both long-and short-term) for the one-year period ending, as a
general rule, on October 31 of that year. For this purpose, however, any income
or gain retained by the Fund that is subject to corporate income tax will be
considered to have been distributed by year-end. In addition, the minimum
amounts that must be distributed in any year to avoid the excise tax will be
increased or decreased to reflect any underdistribution or overdistribution, as
the case may be, from the previous year. The Fund anticipates that it will pay
such dividends and will make such distributions as are necessary in order to
avoid the application of this tax.

With regard to the Fund's investments in foreign securities, exchange
control regulations may restrict repatriations of investment income and capital
or the proceeds of securities sales by foreign investors such as the Fund and
may limit the Fund's ability to pay sufficient dividends and to make sufficient
distributions to satisfy the 90% and excise tax distribution requirements.

If, in any taxable year, the Fund fails to qualify as a regulated
investment company under the Code or fails to meet the distribution requirement,
it would be taxed in the same manner as an ordinary corporation and
distributions to its shareholders would not be deductible by the Fund in
computing its taxable income. In addition, in the event of a failure to qualify,
the Fund's distributions, to the extent derived from the Fund's current or
accumulated earnings and profits, would constitute dividends (eligible for the
corporate dividends-received deduction) which are taxable to shareholders as
ordinary income, even though those distributions might otherwise (at least in
part) have been treated in the shareholders' hands as long-term capital gains.
If the Fund fails to qualify as a regulated investment company in any year, it
must pay out its earnings and profits accumulated in that year in order to
qualify again as a regulated investment company. In addition, if the Fund failed
to qualify as a regulated investment company for a period greater than one
taxable year, the Fund may be required to recognize any net built-in gains (the
excess of the aggregate gains, including items of income, over aggregate losses
that would have been realized if it had been liquidated) in order to qualify as
a regulated investment company in a subsequent year.

44
<PAGE>

The Fund's short sales against the box, if any, and transactions in
foreign currencies, forward contracts, options and futures contracts (including
options and futures contracts on foreign currencies) will be subject to special
provisions of the Code that, among other things, may affect the character of
gains and losses realized by the Fund (i.e., may affect whether gains or losses
are ordinary or capital), accelerate recognition of income to the Fund and defer
Fund losses. These rules could therefore affect the character, amount and timing
of distributions to shareholders. These provisions also (a) will require the
Fund to mark-to-market certain types of the positions in its portfolio (i.e.,
treat them as if they were closed out) and (b) may cause the Fund to recognize
income without receiving cash with which to pay dividends or make distributions
in amounts necessary to satisfy the distribution requirements for avoiding
income and excise taxes. The Fund will monitor its transactions, will make the
appropriate tax elections and will make the appropriate entries in its books and
records when it engages in short sales against the box or acquires any foreign
currency, forward contract, option, futures contract or hedged investment in
order to mitigate the effect of these rules and prevent disqualification of the
Fund as a regulated investment company.

PASSIVE FOREIGN INVESTMENT COMPANIES

If the Fund purchases shares in certain foreign investment entities,
called "passive foreign investment companies" (a "PFIC"), it may be subject to
United States federal income tax on a portion of any "excess distribution" or
gain from the disposition of such shares even if such income is distributed as a
taxable dividend by the Fund to its shareholders. Additional charges in the
nature of interest may be imposed on the Fund in respect of deferred taxes
arising from such distributions or gains. If the Fund were to invest in a PFIC
and elected to treat the PFIC as a "qualified electing fund" under the Code, in
lieu of the foregoing requirements, the Fund might be required to include in
income the year a portion of the ordinary earnings and net capital gains of the
qualified electing fund, even if not distributed to the Fund, and such amounts
would be subject to the 90% and excise tax distribution requirements described
above. In order to make this election, the Fund would be required to obtain
certain annual information from the passive foreign investment companies in
which it invests, which may be difficult or not possible to obtain.

Alternatively, the Fund may make a mark-to-market election that will
result in the Fund being treated as if it had sold and repurchased all of the
PFIC stock at the end of the year. In this case, the Fund would report gains as
ordinary income and would deduct losses as ordinary losses to the extent of
previously recognized gains. The election, once made, would be effective for all
subsequent taxable years of the Fund, unless revoked with the consent of the
IRS. By making the election, the Fund could potentially ameliorate the adverse
tax consequences with respect to its ownership of shares in a PFIC, but in any
particular year may be required to recognize income in excess of the
distributions it receives from PFICs and its proceeds from dispositions of PFIC
company stock. The Fund may have to distribute this "phantom" income and gain to
satisfy its distribution requirement and to avoid imposition of the 4% excise
tax. The Fund will make the appropriate tax elections if possible, and take any
additional steps that are necessary to mitigate the effect of these rules.

45
<PAGE>

DIVIDENDS AND DISTRIBUTIONS

Dividends of net investment income and distributions of net realized
short-term capital gains are taxable to a United States shareholder as ordinary
income, whether paid in cash or in shares. Distributions of net-long-term
capital gains, if any, that the Fund designates as capital gains dividends are
taxable as long-term capital gains, whether paid in cash or in shares and
regardless of how long a shareholder has held shares of the Fund. Dividends and
distributions paid by the Fund (except for the portion thereof, if any,
attributable to dividends on stock of U.S. corporations received by the Fund)
will not qualify for the deduction for dividends received by corporations.
Distributions in excess of the Fund's current and accumulated earnings and
profits will, as to the shareholder, be treated as a tax-free return of capital,
to the extent of a shareholder's basis in his shares of the Fund, and as a
capital gain thereafter (if the shareholder holds his shares of the Fund as
capital assets).

Shareholders receiving dividends or distributions in the form of
additional shares should be treated for United States federal income tax
purposes as receiving a distribution in the amount equal to the amount of money
that the shareholders receiving cash dividends or distributions will receive,
and should have a cost basis in the shares received equal to such amount.

Investors considering buying shares just prior to a dividend or
capital gain distribution should be aware that, although the price of shares
just purchased at that time may reflect the amount of the forthcoming
distribution, such dividend or distribution may nevertheless be taxable to them.

If the Fund is the holder of record of any stock on the record date
for any dividends payable with respect to such stock, such dividends are
included in the Fund's gross income not as of the date received but as of the
later of (a) the date such stock became ex-dividend with respect to such
dividends (I.E., the date on which a buyer of the stock would not be entitled to
receive the declared, but unpaid, dividends) or (b) the date the Fund acquired
such stock. Accordingly, in order to satisfy its income distribution
requirements, the Fund may be required to pay dividends based on anticipated
earnings, and shareholders may receive dividends in an earlier year than would
otherwise be the case.

SALES OF SHARES

Upon the sale or exchange of his shares, a shareholder will realize a
taxable gain or loss equal to the difference between the amount realized and his
basis in his shares. Such gain or loss will be treated as capital gain or loss,
if the shares are capital assets in the shareholder's hands, and will be
long-term capital gain or loss if the shares are held for more than one year and
short-term capital gain or loss if the shares are held for one year or less. Any
loss realized on a sale or exchange will be disallowed to the extent the shares
disposed of are replaced, including replacement through the reinvesting of
dividends and capital gains distributions in the Fund, within a 61-day period
beginning 30 days before and ending 30 days after the disposition of the shares.
In such a case, the basis of the shares acquired will be increased to reflect
the disallowed loss. Any loss realized by a shareholder on the sale of the

46
<PAGE>

Fund share held by the shareholder for six months or less will be treated for
United States federal income tax purposes as a long-term capital loss to the
extent of any distributions or deemed distributions of long-term capital gains
received by the shareholder with respect to such share.

FOREIGN TAXES

Income received by the Fund from non-U.S. sources may be subject to
withholding and other taxes imposed by other countries. Because it is not
expected that more than 50 percent of the value of the Fund's total assets at
the close of its taxable year will consist of stock and securities of non-U.S.
corporations, it is not expected that the Fund will be eligible to elect to
"pass through" to the Fund's shareholders the amount of foreign income and
similar taxes paid by the Fund. In the absence of such an election, the foreign
taxes paid by the Fund will reduce its investment company taxable income, and
distributions of investment company taxable income received by the Fund from
non-US sources will be treated as United States source income.

BACKUP WITHHOLDING

The Fund may be required to withhold, for United States federal income
tax purposes, 31% of the dividends and distributions payable to shareholders who
fail to provide the Fund with their correct taxpayer identification number or to
make required certifications, or who have been notified by the IRS that they are
subject to backup withholding. Certain shareholders are exempt from backup
withholding. Backup withholding is not an additional tax and any amount withheld
may be credited against a shareholder's United States federal income tax
liabilities.

NOTICES

Shareholders will be notified annually by the Fund as to the United
States federal income tax status of the dividends, distributions and deemed
distributions attributable to undistributed capital gains (discussed above in
"The Fund and Its Investments") made by the Fund to its shareholders.
Furthermore, shareholders will also receive, if appropriate, various written
notices after the close of the Fund's taxable year regarding the United States
federal income tax status of certain dividends, distributions and deemed
distributions that were paid (or that are treated as having been paid) by the
Fund to its shareholders during the preceding taxable year.

47
<PAGE>

SPECIAL TAX MATTERS RELATING TO ZERO COUPON SECURITIES

Investment by the Fund in zero coupon securities may create special
tax consequences. Zero coupon securities do not make interest payments; however,
a portion of the difference between a zero coupon security's maturity value and
its purchase price is imputed as income to the Fund the year even though the
Fund receives no cash distribution until maturity. Under the U.S. federal tax
laws applicable to mutual funds, the Fund will not be subject to tax on this
income if it pays dividends to its shareholders substantially equal to all the
income received from, or imputed with respect to, its investments during the
year, including its zero coupon securities. These dividends will ordinarily
constitute taxable income to shareholders of the Fund.

OTHER TAXATION

Distributions also may be subject to additional state, local and
foreign taxes depending on the shareholder's particular situation.

THE FOREGOING IS ONLY A SUMMARY OF CERTAIN MATERIAL TAX CONSEQUENCES AFFECTING
THE FUND AND ITS SHAREHOLDERS. SHAREHOLDERS ARE ADVISED TO CONSULT THEIR OWN TAX
ADVISERS WITH RESPECT TO THE PARTICULAR TAX CONSEQUENCES TO THEM OF AN
INVESTMENT IN THE FUND.

DETERMINATION OF PERFORMANCE

From time to time, the Fund may quote the total return of its Common
Shares, Advisor Shares and/or Institutional Shares in advertisements or in
reports and other communications to shareholders. These figures are calculated
by finding the average annual compounded rates of return for the one-, five- and
ten- (or such shorter period as the relevant class of shares has been offered)
year periods that would equate the initial amount invested to the ending
redeemable value according to the following formula: P (1 + T)n = ERV. For
purposes of this formula, "P" is a hypothetical investment of $1,000; "T" is
average annual total return; "n" is number of years; and "ERV" is the ending
redeemable value of a hypothetical $1,000 payment made at the beginning of the
one-, five- or ten-year periods (or fractional portion thereof). Total return or
"T" is computed by finding the average annual change in the value of an initial
$1,000 investment over the period and assumes that all dividends and
distributions are reinvested during the period. The net asset value of Common
Shares is listed in THE WALL STREET JOURNAL each business day under the heading
"Warburg Pincus Funds." Current total return figures may be obtained by calling
Warburg-Pincus Funds at (800) 927-2874.

When considering average total return figures for periods longer than
one year, it is important to note that the annual total return for one year in
the period might have been greater or less than the average for the entire
period. When considering total return figures for periods shorter than one year,
investors should bear in mind that the Fund seeks long-term appreciation and
that such return may not be representative of nay Fund's return over a longer

48
<PAGE>

market cycle. The Fund may also advertise aggregate total return figures for
various periods, representing the cumulative change in value of an investment in
the relevant Fund for the specific period (again reflecting changes in share
prices and assuming reinvestment of dividends and distributions). Aggregate and
average total returns may be shown by means of schedules, charts or graphs and
may indicate various components of total return (i.e., change in value of
initial investment, income dividends and capital gains distributions).

The Fund may advertise, from time to time, comparisons of the
performance of its Common Shares, Advisor Shares and/or Institutional Shares
with that of one or more other mutual funds with similar investment objectives.
The Fund may advertise average annual calendar year-to-date and calendar quarter
returns, which are calculated according to the formula set forth in the
preceding paragraphs, except that the relevant measuring period would be the
number of months that have elapsed in the current calendar year or most recent
three months, as the case may be. Investors should note that this performance
may not be representative of the Fund's total return in longer market cycles.

The performance of a class of Fund shares will vary from time to time
depending upon market conditions, the composition of the Fund's portfolio and
operating expenses allocable to it. As described above, total return is based on
historical earnings and is not intended to indicate future performance.
Consequently, any given performance quotation should not be considered as
representative of performance for any specified period in the future.
Performance information may be useful as a basis for comparison with other
investment alternatives. However, the Fund's performance will fluctuate, unlike
certain bank deposits or other investments which pay a fixed yield for a stated
period of time. Any fees charged by Institutions or other institutional
investors directly to their customers in connection with investments in Fund
shares are not reflected in the Fund's total return, and such fees, if charged,
will reduce the actual return received by customers on their investments.

In addition, reference may be made in advertising a class of Fund
shares to opinions of Wall Street economists and analysts regarding economic
cycles and their effects historically on the performance of small companies,
both as a class and relative to other investments. The Fund may also discuss its
beta, or volatility relative to the market, and make reference to its relative
performance in various market cycles in the United States.

49
<PAGE>

The Fund may compare its performance with (i) that of other mutual
funds as listed in the rankings prepared by Lipper Analytical Services, Inc.
or similar investment services that monitor the performance of mutual funds
or as set forth in the publications listed below; (ii) the S&P 500 Index or
other appropriate indexes; or (iii) other appropriate indexes of investment
securities or with data developed by CSAM derived from such indexes. The Fund
may include evaluations of the Fund published by nationally recognized
ranking services and by financial publications that are nationally
recognized, such as BARRON'S, BUSINESS WEEK, FINANCIAL TIMES, FORBES,
FORTUNE, INC., INSTITUTIONAL INVESTOR, INVESTOR'S BUSINESS DAILY, MONEY,
MORNINGSTAR, MUTUAL FUND MAGAZINE, SMARTMONEY, THE WALL STREET JOURNAL and
WORTH. Morningstar, Inc. rates funds in broad categories based on risk/reward
analyses over various time periods. In addition, the Fund may from time to
time compare the expense ratio of its Common Shares to that of any investment
company with similar objectives and policies, based on data generated by
Lipper Analytical Services, Inc. or similar investment services that monitor
mutual funds.

In its reports, investor communications or advertisements, the Fund
may also include: (i) its total return performance; (ii) its performance
compared with various indexes or other mutual funds; (iii) published
evaluations by nationally recognized ranking services and financial
publications; (iv) descriptions and updates concerning its strategies and
portfolio investments; (v) its goals, risk factors and expenses compared with
other mutual funds; (vi) analysis of its investments by industry, country,
credit quality and other characteristics; (vii) a discussion of the
risk/return continuum relating to different investments; (viii) the general
biography or work experience of the portfolio managers of the Fund; (ix)
portfolio manager commentary or market updates; (x) research methodology
underlying stock selection or the Fund's investment objective; and (xi) other
information of interest to investors.

INDEPENDENT ACCOUNTANTS AND COUNSEL

PricewaterhouseCoopers LLP ("PwC"), with principal offices at 2400
Eleven Penn Center, Philadelphia, Pennsylvania 19103, serves as independent
accountants for the Fund. The financial statements that are incorporated by
reference into this Statement of Additional Information have been audited by PwC
and have been incorporated by reference herein in reliance upon the report of
such firm of independent accountants given upon their authority as experts in
accounting and auditing.

Willkie Farr & Gallagher serves as counsel for the Fund and provides
legal services from time to time for CSAM and CSAMI.

MISCELLANEOUS

The Fund is not sponsored, endorsed, sold or promoted by Warburg,
Pincus & Co. Warburg, Pincus & Co. makes no representation or warranty, express
or implied, to the owners of the Fund or any member of the public regarding the
advisability of investing in securities generally or in the Fund particularly.
Warburg, Pincus & Co. licenses certain trademarks and trade names of Warburg,
Pincus & Co., and is not responsible for and has not

50
<PAGE>

participated in the calculation of the Fund's net asset value, nor is Warburg,
Pincus & Co. a distributor of the Fund. Warburg, Pincus & Co. has no obligation
or liability in connection with the administration, marketing or trading of the
Fund.

FINANCIAL STATEMENTS

The Fund's financial statement follows the Report of Independent
Accountants.

51
<PAGE>

APPENDIX

DESCRIPTION OF RATINGS

COMMERCIAL PAPER RATINGS

Commercial paper rated A-1 by Standard and Poor's Ratings Services
("S&P") indicates that the degree of safety regarding timely payment is strong.
Those issues determined to possess extremely strong safety characteristics are
denoted with a plus sign designation. Capacity for timely payment on commercial
paper rated A-2 is satisfactory, but the relative degree of safety is not as
high as for issues designated A-1.

The rating Prime-1 is the highest commercial paper rating assigned by
Moody's Investors Service, Inc. ("Moody's"). Issuers rated Prime-1 (or related
supporting institutions) are considered to have a superior capacity for
repayment of short-term promissory obligations. Issuers rated Prime-2 (or
related supporting institutions) are considered to have a strong capacity for
repayment of short-term promissory obligations. This will normally be evidenced
by many of the characteristics of issuers rated Prime-1 but to a lesser degree.
Earnings trends and coverage ratios, while sound, will be more subject to
variation. Capitalization characteristics, while still appropriate, may be more
affected by external conditions. Ample alternative liquidity is maintained.

SHORT-TERM NOTE RATINGS

The following summarizes the two highest ratings used by S&P for
short-term notes:

SP-1 - Loans bearing this designation evidence a very strong or strong
capacity to pay principal and interest. Those issues determined to possess
overwhelming safety characteristics will be given a plus sign designation.

SP-2 - Loans bearing this designation evidence a satisfactory capacity
to pay principal and interest..

The following summarizes the two highest ratings used by Moody's for
short-term notes and variable rate demand obligations:

MIG-1/VMIG-1 - Obligations bearing these designations are of the best
quality, enjoying strong protection from established cash flows of funds for
their servicing or from established and broad-based access to the market for
refinancing, or both.

MIG-2/VMIG-2 - Obligations bearing these designations are of high
quality with margins of protection ample although not so large as in the
preceding group.

A-1
<PAGE>

CORPORATE BOND AND MUNICIPAL OBLIGATIONS RATINGS

The following summarizes the ratings used by S&P for corporate bonds
and Municipal Obligations:

AAA - This is the highest rating assigned by S&P to a debt obligation
and indicates an extremely strong capacity to pay interest and repay principal.

AA - Debt rated AA has a very strong capacity to pay interest and
repay principal and differs from AAA issues only in small degree.

A - Debt rated A has a strong capacity to pay interest and repay
principal although it is somewhat more susceptible to the adverse effects of
changes in circumstances and economic conditions than debt in higher-rated
categories.

BBB - This is the lowest investment grade. Debt rated BBB is regarded
as having an adequate capacity to pay interest and repay principal. Although it
normally exhibits adequate protection parameters, adverse economic conditions or
changing circumstances are more likely to lead to a weakened capacity to pay
interest and repay principal for bonds in this category than for bonds in higher
rated categories.

BB, B and CCC - Debt rated BB and B are regarded, on balance, as
predominately speculative with respect to capacity to pay interest and repay
principal in accordance with the terms of the obligation. BB represents a lower
degree of speculation than B, and CCC the highest degree of speculation. While
such bonds will likely have some quality and protective characteristics, these
are outweighed by large uncertainties or major risk exposures to adverse
conditions.

BB - Debt rated BB has less near-term vulnerability to default than
other speculative issues. However, it faces major ongoing uncertainties or
exposure to adverse business, financial, or economic conditions, which could
lead to inadequate capacity to meet timely interest and principal payments. The
BB rating category is also used for debt subordinated to senior debt that is
assigned an actual or implied BBB rating.

B - Debt rated B has a greater vulnerability to default but currently
has the capacity to meet interest payments and principal repayments. Adverse
business, financial, or economic conditions will likely impair capacity or
willingness to pay interest and repay principal. The B rating category is also
used for debt subordinated to senior debt that is assigned an actual or implied
BB or BB- rating.

CCC - Debt rated CCC has a currently identifiable vulnerability to
default and is dependent upon favorable business, financial and economic
conditions to meet timely payment of interest and repayment of principal. In the
event of adverse business, financial or economic conditions, it is not likely to
have the capacity to pay interest and repay principal. The CCC rating category
is also used for debt subordinated to senior debt that is assigned an actual or
implied B or B- rating.

A-2
<PAGE>

CC - This rating is typically applied to debt subordinated to senior
debt that is assigned an actual or implied CCC rating.

C - This rating is typically applied to debt subordinated to senior
debt which is assigned an actual or implied CCC- debt rating. The C rating may
be used to cover a situation where a bankruptcy petition has been filed, but
debt service payments are continued.

Additionally, the rating CI is reserved for income bonds on which no
interest is being paid. Such debt is rated between debt rated C and debt rated
D.

To provide more detailed indications of credit quality, the ratings
may be modified by the addition of a plus or minus sign to show relative
standing within this major rating category.

D - Debt rated D is in payment default. The D rating category is used
when interest payments or principal payments are not made on the date due even
if the applicable grace period has not expired, unless S&P believes that such
payments will be made during such grace period. The D rating also will be used
upon the filing of a bankruptcy petition if debt service payments are
jeopardized.

The following summarizes the ratings used by Moody's for corporate
bonds and Municipal Obligations:

Aaa - Bonds that are rated Aaa are judged to be of the best quality.
They carry the smallest degree of investment risk and are generally referred to
as "gilt edged." Interest payments are protected by a large or exceptionally
stable margin and principal is secure. While the various protective elements are
likely to change, such changes as can be visualized are most unlikely to impair
the fundamentally strong position of such issues.

Aa - Bonds that are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally known as
high grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities or fluctuation of protective
elements may be of greater amplitude or there may be other elements present
which make the long-term risks appear somewhat larger than in Aaa securities.

A - Bonds which are rated A possess many favorable investment
attributes and are to be considered as upper-medium-grade obligations. Factors
giving security to principal and interest are considered adequate, but elements
may be present which suggest a susceptibility to impairment sometime in the
future.

Baa - Bonds which are rated Baa are considered as medium-grade
obligations, I.E., they are neither highly protected nor poorly secured.
Interest payments and principal security appear adequate for the present but
certain protective elements may be lacking or may be characteristically
unreliable over any great length of time. Such bonds lack outstanding investment
characteristics and in fact have speculative characteristics as well.

A-3
<PAGE>

Ba - Bonds which are rated Ba are judged to have speculative elements;
their future cannot be considered as well assured. Often the protection of
interest and principal payments may be very moderate and thereby not well
safeguarded during both good and bad times over the future. Uncertainty of
position characterizes bonds in this class.

B - Bonds which are rated B generally lack characteristics of
desirable investments. Assurance of interest and principal payments or of
maintenance of other terms of the contract over any long period of time may be
small.

Moody's applies numerical modifiers (1, 2 and 3) with respect to the
bonds rated "Aa" through "B." The modifier 1 indicates that the bond being rated
ranks in the higher end of its generic rating category; the modifier 2 indicates
a mid-range ranking; and the modifier 3 indicates that the bond ranks in the
lower end of its generic rating category.

Caa - Bonds that are rated Caa are of poor standing. These issues may
be in default or present elements of danger may exist with respect to principal
or interest.

Ca - Bonds which are rated Ca represent obligations which are
speculative in a high degree. Such issues are often in default or have other
marked shortcomings.

C - Bonds which are rated C comprise the lowest rated class of bonds,
and issues so rated can be regarded as having extremely poor prospects of ever
attaining any real investment standing.

A-4

<PAGE>

PART C
OTHER INFORMATION

Item 23. EXHIBITS
EXHIBIT NO. DESCRIPTION OF EXHIBIT

a Articles of Incorporation.

b By-Laws.

c Registrant's Form of Stock Certificates. (1)

d Form of Investment Advisory Agreement. (1)

e Form of Distribution Agreement. (1)

f Not applicable.

g Custodian Agreement with Brown Brothers Harriman &
Co. (1)

h(1) Transfer Agency and Service Agreement.(1)

(2) Form of Co-Administration Agreement with Credit
Suisse Asset Management Securities, Inc. (1)

(3) Form of Co-Administration Agreement with PFPC Inc.
(1)

i(1) Opinion and Consent of Willkie Farr & Gallagher,
counsel to the Fund. (1)

(2) Opinion and Consent of Venable, Baetjer and
Howard, LLP, Maryland counsel to the Fund. (1)

j(1) Consent of PricewaterhouseCoopers LLP, Independent
Accountants. (1)

(2) Powers of Attorney.

k Not Applicable.

l Form of Purchase Agreement. (1)

m(1) Form of Shareholder Servicing and Distribution
Plan. (1)

(2) Form of Distribution Plan. (1)
- ------------------------------
(1) To be filed by amendment.

<PAGE>

n Not applicable.

o Form of 18f-3 Plan. (1)

Item 24. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL
WITH REGISTRANT

From time to time, Credit Suisse Asset Management, LLC ("CSAM, LLC")
may be deemed to control the Fund and other registered investment companies it
advises through its beneficial ownership of more than 25% of the relevant fund's
shares on behalf of discretionary advisory clients. CSAM, LLC has three
wholly-owned subsidiaries: Warburg, Pincus Asset Management International, Inc.
a Delaware corporation; Warburg, Pincus Asset Management (Japan), Inc., a
Japanese corporation; and Warburg Pincus Asset Management (Dublin) Limited, an
Irish corporation.

Item 25. INDEMNIFICATION

Registrant, officers and directors of CSAM, LLC, of Credit Suisse
Asset Management Securities Inc. ("CSAM Securities") and of Registrant are
covered by insurance policies indemnifying them for liability incurred in
connection with the operation of Registrant. These policies provide insurance
for any "Wrongful Act" of an officer, director or trustee. Wrongful Act is
defined as breach of duty, neglect, error, misstatement, misleading statement,
omission or other act done or wrongfully attempted by an officer, director or
trustee in connection with the operation of Registrant. Insurance coverage does
not extend to (a) conflicts of interest or gain in fact any profit or advantage
to which one is not legally entitled, (b) intentional non-compliance with any
statute or regulation or (c) commission of dishonest, fraudulent acts or
omissions. Insofar as it related to Registrant, the coverage is limited in
amount and, in certain circumstances, is subject to a deductible.

Under Article VIII of the Articles of Incorporation (the "Articles"),
the Directors and officers of Registrant shall not have any liability to
Registrant or its stockholders for money damages, to the fullest extent
permitted by Maryland law. This limitation on liability applies to events
occurring at the time a person serves as a Director or officer of Registrant
whether or not such person is a Director or officer at the time of any
proceeding in which liability is asserted. No provision of Article VIII shall
protect or purport to protect any Director or officer of Registrant against any
liability to Registrant or its stockholders to which he would otherwise be
subject by reason of willful misfeasance, bad faith, gross negligence or
reckless disregard of the duties involved in the conduct of his office.
Registrant shall indemnify and advance expenses to its currently acting and its
former Director to the fullest extent that indemnification of Directors and
advancement of expenses to Directors is permitted by the Maryland General
Corporation Law.

<PAGE>

Registrant shall indemnify and advance expenses to its officers to the
same extent as its Directors and to such further extent as is consistent with
such law. The Board of Directors may, through a by-law, resolution or agreement,
make further provisions for indemnification of directors, officers, employees
and agents to the fullest extent permitted by the Maryland General Corporation
Law.

Article V of the By-Laws further limits the liability of the Directors
by providing that any person who was or is a party or is threatened to be made a
party in any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative, by reason of the fact
that such person is a current or former director or officer of Registrant, or is
or was serving while a director or officer of Registrant at the request of
Registrant as a director, officer, partner, trustee, employee, agent or
fiduciary of another corporation, partnership, joint venture, trust, enterprise
or employee benefit plan, shall be indemnified by Registrant against judgments,
penalties, fines, excise taxes, settlements and reasonable expenses (including
attorneys' fees) actually incurred by such person in connection with such
action, suit or proceeding to the full extent permissible under the Maryland
General Corporation Law, the 1993 Act and the 1940 Act, as such statutes are now
or hereafter in force, except that such indemnity shall not protect any such
person against any liability to Registrant or any stockholder thereof to which
such person would otherwise be subject by reason of willful misfeasance, bad
faith, gross negligence or reckless disregard of the duties involved in the
conduct of this office.

Item 26. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER

CSAM, LLC acts as investment adviser to the Registrant. CSAM, LLC
renders investment advice to a wide variety of individual and institutional
clients. The list required by this Item 26 of officers and directors of CSAM,
LLC, together with information as to their other business, profession, vocation
or employment of a substantial nature during the past two years, is incorporated
by reference to Schedules A and D of Form ADV filed by CSAM, LLC (SEC File No.
801-37170).

Item 27. PRINCIPAL UNDERWRITER

(a) CSAM Securities will act as distributor for Registrant, as well
as for Warburg Pincus Balanced Fund; Warburg Pincus Capital Appreciation Fund;
Warburg Pincus Cash Reserve Fund; Warburg Pincus Central & Eastern Europe Fund;
Warburg Pincus Emerging Growth Fund; Warburg Pincus Emerging Markets Fund;
Warburg Pincus Emerging Markets II Fund; Warburg Pincus European Equity Fund;
Warburg Pincus Fixed Income Fund; Warburg Pincus Global Fixed Income Fund;
Warburg Pincus Global Post-Venture Capital Fund; Warburg Pincus Growth & Income
Fund;

<PAGE>

Warburg Pincus Health Sciences Fund; Warburg Pincus High Yield Fund; Warburg
Pincus Institutional Fund; Warburg Pincus Intermediate Maturity Government Fund;
Warburg Pincus International Equity Fund; Warburg Pincus International Growth
Fund; Warburg Pincus International Small Company Fund; Warburg Pincus Japan
Growth Fund; Warburg Pincus Japan Small Company Fund; Warburg Pincus Long-Short
Equity Fund; Warburg Pincus Long-Short Market Neutral Fund; Warburg Pincus Major
Foreign Markets Fund; Warburg Pincus Municipal Bond Fund; Warburg Pincus New
York Intermediate Municipal Fund; Warburg Pincus New York Tax Exempt Fund;
Warburg Pincus Post-Venture Capital Fund; Warburg Pincus Select Economic Value
Equity Fund; Warburg Pincus Small Company Growth Fund; Warburg Pincus Small
Company Value Fund; Warburg Pincus Strategic Global Fixed Income Fund; Warburg
Pincus Trust; Warburg Pincus Trust II; Warburg Pincus U.S. Core Equity Fund;
Warburg Pincus U.S. Core Fixed Income Fund; Warburg Pincus WorldPerks Money
Market Fund; and Warburg Pincus WorldPerks Tax Free Money Market Fund.

(b) For information relating to each director, officer or partner of
CSAM Securities, reference is made to Form BD (SEC File No. 8-32482) filed by
CSAM Securities, under the Securities Exchange Act of 1934.

Item 28. LOCATION OF ACCOUNTS AND RECORDS

(1) Warburg, Pincus Large Company Growth Fund, Inc.
466 Lexington Avenue
New York, New York 10017-3147
(Fund's Articles of Incorporation, By-Laws and
minute books)

(2) Credit Suisse Asset Management, LLC
One Citicorp Center
153 East 53rd Street
New York, New York 10022
(records relating to its functions as
investment adviser)

(3) PFPC Inc.
400 Bellevue Parkway
Wilmington, Delaware 19809
(records relating to its functions as
co-administrator)

(4) Credit Suisse Asset Management Securities, Inc.
466 Lexington Avenue
New York, New York 10017-3147
(records relating to its functions as
co-administrator and distributor)

(5) State Street Bank and Trust Company

<PAGE>

225 Franklin Street
Boston, Massachusetts 02110
(records relating to its functions as transfer
agent and dividend disbursing agent)

(6) Boston Financial Data Services, Inc.
2 Heritage Drive
North Quincy, Massachusetts 02171
(records relating to its functions as transfer
agent and dividend disbursing agent)

(7) Brown Brothers Harriman & Co.
40 Water Street
Boston, Massachusetts 02109
(records relating to its functions as custodian)

Item 29. MANAGEMENT SERVICES

Not applicable.

Item 30. UNDERTAKINGS.

Not applicable.

<PAGE>

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, as amended, and
the Investment Company Act of 1940, as amended, the Registrant has duly caused
this Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of New York and the State of New York, on
the 1st day of November 1999.

WARBURG, PINCUS LARGE COMPANY GROWTH
FUND, INC.

By:/s/Eugene L. Podsiadlo
----------------------
Eugene L. Podsiadlo
President

Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed below by the following persons in
the capacities and on the date indicated:

<TABLE>
<CAPTION>
Signature Title Date
- --------- ----- ----
<S> <C> <C>
/s/William W. Priest Chairman of the November 1, 1999
- -------------------- Board of Directors
William W. Priest

/s/Eugene L. Podsiadlo President November 1, 1999
- ----------------------
Eugene L. Podsiadlo

/s/Michael A. Pignataro Treasurer and Chief November 1, 1999
- ----------------------- Financial Officer
Michael A. Pignataro

/s/Richard H. Francis Director November 1, 1999
- ---------------------
Richard H. Francis

/s/Jack W. Fritz Director November 1, 1999
- ----------------
Jack W. Fritz

/s/Jeffrey E. Garten Director November 1, 1999
- --------------------
Jeffrey E. Garten

/s/James S. Pasman, Jr. Director November 1, 1999
- -----------------------
James S. Pasman, Jr.

/s/Steven N. Rappaport Director November 1, 1999
- ----------------------
Steven N. Rappaport

/s/Alexander B. Trowbridge Director November 1, 1999
- --------------------------
Alexander B. Trowbridge
</TABLE>

<PAGE>

INDEX TO EXHIBITS

EXHIBIT NO. DESCRIPTION OF EXHIBIT

a Articles of Incorporation
b By-Laws
j(2) Powers of Attorney

<PAGE>

ARTICLES OF INCORPORATION

WARBURG, PINCUS LARGE COMPANY GROWTH FUND, INC.

ARTICLE I

INCORPORATOR

The undersigned, Yvette M. Garcia, whose post office address is c/o
Willkie Farr & Gallagher, 787 Seventh Avenue, New York, New York 10019-6099,
being at least 18 years of age, does hereby act as an incorporator and forms a
corporation under the Maryland General Corporation Law.

ARTICLE II

NAME

The name of the corporation is Warburg, Pincus Large Company Growth
Fund, Inc. (the "Corporation").

ARTICLE III

PURPOSES AND POWERS

To conduct and carry on the business of an investment company.

(1) To hold, invest and reinvest its assets in securities and other investments
or to hold part or all of its assets in cash.

(2) To issue and sell shares of its capital stock in such amounts, on such
terms and conditions, for such purposes and for such amount or kind of
consideration as may now or hereafter be permitted by law.

(3) To redeem, purchase or acquire in any other manner, hold, dispose of,
resell, transfer, reissue or cancel (all without the vote or consent of the
stockholders of the Corporation) shares of its capital stock, in any manner
and to the extent now or hereafter permitted by law and by this Charter.

(4) To do any and all additional acts and to exercise any and all additional
powers or rights as may be necessary, incidental, appropriate or desirable
for the accomplishment of all or any of the foregoing purposes.

(5) The Corporation shall be authorized to exercise and enjoy all of the
powers, rights and privileges granted to, or conferred upon, corporations
by the Maryland General Corporation Law now or hereafter in force, and the

<PAGE>

enumeration of the foregoing shall not be deemed to exclude any powers,
rights or privileges so granted or conferred.

ARTICLE IV

PRINCIPAL OFFICE AND RESIDENT AGENT

The post office address of the principal office of the Corporation in
the State of Maryland is c/o The Corporation Trust Company Incorporated, 300
East Lombard Street, Baltimore, Maryland 21202. The name and address of the
resident agent of the Corporation in the State of Maryland is The Corporation
Trust Company Incorporated, a Maryland corporation, 300 East Lombard Street,
Baltimore, Maryland 21202.

ARTICLE V

CAPITAL STOCK

(1)

(A) The total number of shares of capital stock that the Corporation shall
have authority to issue is three billion (3,000,000,000) shares, of
the par value of one tenth of one cent ($.001) per share and of the
aggregate par value of three million dollars ($3,000,000), all of
which three billion (3,000,000,000) shares are designated Common
Stock.

(B)

(i) One billion (1,000,000,000) shares of Common Stock have been
divided into and classified initially as a series of Common Stock,
designated "Common Shares."

(ii) One billion (1,000,000,000) shares of Common Stock have been
divided into and classified initially as a series of Common Stock,
designated "Advisor Shares."

(iii) One billion (1,000,000,000) shares of Common Stock have been
divided into and classified initially as a series of Common Stock,
designated "Institutional Shares."

(C) Each Common Share will have the same preferences, conversion and other
rights, voting powers, restrictions, limitations as to dividends,
qualifications and terms and conditions of redemption as every other
share of Common Stock, except that, subject to the provisions of any
governing order, rule or regulation issued pursuant to the Investment
Company Act of 1940, as amended (the "1940 Act"):

<PAGE>

(i) Common Shares will share equally with Common Stock other than
Common Shares ("Non-Common Shares") in the income, earnings and
profits derived from investment and reinvestment of the assets
belonging to the Corporation and will be charged equally with
Non-Common Shares with the liabilities and expenses of the
Corporation, except that Common Shares will bear the expense of
payments made pursuant to any agreements entered into by the
Corporation pursuant to any shareholder services plan and/or
distribution plan adopted by the Corporation with respect to
Common Shares;

(ii) On any matter submitted to a vote of shareholders of the
Corporation that pertains to the agreements or expenses
described in clause (C)(i) above (or to any plan adopted by the
Corporation relating to said agreements or expenses), only
Common Shares will be entitled to vote, except that if said
matter affects Non-Common Shares, Non-Common Shares will also
be entitled to vote, and in such case Common Shares will be
voted in the aggregate together with such Non-Common Shares and
not by series except where otherwise required by law. Common
Shares will not be entitled to vote on any matter that does not
affect Common Shares (except where otherwise required by law)
even though the matter is submitted to a vote of the holders of
Non-Common Shares; and

(iii) The Board of Directors of the Corporation in its sole
discretion may determine whether a matter affects a particular
class or series of Corporation shares.

(D) Each Institutional Share will have the same preferences, conversion
and other rights, voting powers, restrictions, limitations as to
dividends, qualifications and terms and conditions of redemption as
every other share of Common Stock, except that, subject to the
provisions of any governing order, rule or regulation issued pursuant
to the 1940 Act:

(i) Institutional Shares will share equally with Common Stock other
than Institutional Shares ("Non-Institutional Shares") in the
income, earnings and profits derived from investment and
reinvestment of the assets belonging to the Corporation and
will be charged equally with Non-Institutional Shares with the

<PAGE>

liabilities and expenses of the Corporation, except that
Institutional Shares will bear the expense of payments made
pursuant to any agreements entered into by the Corporation
pursuant to any shareholder services plan and/or distribution
plan adopted by the Corporation with respect to Institutional
Shares;

(ii) On any matter submitted to a vote of shareholders of the
Corporation that pertains to the agreements or expenses
described in clause (D)(i) above (or to any plan adopted by the
Corporation relating to said agreements or expenses), only
Institutional Shares will be entitled to vote, except that if
said matter affects Non-Institutional Shares, Non-Institutional
Shares will also be entitled to vote, and in such case
Institutional Shares will be voted in the aggregate together
with such Non-Institutional Shares and not by series except
where otherwise required by law. Institutional Shares will not
be entitled to vote on any matter that does not affect
Institutional Shares (except where otherwise required by law)
even though the matter is submitted to a vote of the holders of
Non- Institutional Shares; and

(iii) The Board of Directors of the Corporation in its sole
discretion may determine whether a matter affects a particular
class or series of Corporation shares.

(E) Each Advisor Share will have the same preferences, conversion and
other rights, voting powers, restrictions, limitations as to
dividends, qualifications and terms and conditions of redemption as
every other share of Common Stock, except that, subject to the
provisions of any governing order, rule or regulation issued pursuant
to the 1940 Act:

(i) Advisor Shares will share equally with Common Stock other than
Advisor Shares ("Non-Advisor Shares") in the income, earnings
and profits derived from investment and reinvestment of the
assets belonging to the Corporation and will be charged equally
with Non-Advisor Shares with the liabilities and expenses of
the Corporation, except that Advisor Shares will bear the
expense of payments made pursuant to any agreements entered
into by the Corporation pursuant to any shareholder

<PAGE>

services plan and/or distribution plan adopted by the
Corporation with respect to Advisor Shares;

(ii) On any matter submitted to a vote of shareholders of the
Corporation that pertains to the agreements or expenses
described in clause (E)(i) above (or to any plan adopted by the
Corporation relating to said agreements or expenses), only
Advisor Shares will be entitled to vote, except that if said
matter affects Non-Advisor Shares, Non-Advisor Shares will also
be entitled to vote, and in such case Advisor Shares will be
voted in the aggregate together with such Non-Advisor Shares
and not by series except where otherwise required by law.
Advisor Shares will not be entitled to vote on any matter that
does not affect Advisor Shares (except where otherwise required
by law) even though the matter is submitted to a vote of the
holders of Non-Advisor Shares; and

(iii) The Board of Directors of the Corporation in its sole
discretion may determine whether a matter affects a particular
class or series of Corporation shares.

(2) Any fractional share shall carry proportionately the rights of a whole
share including, without limitation, the right to vote and the right to
receive dividends. A fractional share shall not, however, have the right to
receive a certificate evidencing it.

(3) All persons who shall acquire stock in the Corporation shall acquire the
same subject to the provisions of this Charter and the By-Laws of the
Corporation.

(4) No holder of stock of the Corporation by virtue of being such a holder
shall have any preemptive or other right to purchase or subscribe for any
shares of the Corporation's capital stock or any other security that the
Corporation may issue or sell (whether out of the number of shares
authorized by this Charter or out of any shares of the Corporation's
capital stock that the Corporation may acquire) other than a right that the
Board of Directors in its discretion may determine to grant.

(5) The Board of Directors shall have authority by resolution to classify or to
reclassify, as the case may be, any authorized but unissued shares of
capital stock from time to time by setting or changing in any one or more
respects the preferences, conversion or other rights, voting powers,

<PAGE>

restrictions, limitations as to dividends, qualifications or terms or
conditions of redemption of the capital stock.

(6) Notwithstanding any provision of law requiring any action to be taken or
authorized by the affirmative vote of a greater proportion of the votes of
all classes or of any class of stock of the Corporation, such action shall
be effective and valid if taken or authorized by the affirmative vote of a
majority of the total number of votes entitled to be cast thereon, except
as otherwise provided in this Charter.

(7) The presence in person or by proxy of the holders of one-third of the
shares of stock of the Corporation entitled to vote (without regard to
class) shall constitute a quorum at any meeting of the stockholders, except
with respect to any matter which, under applicable statutes or regulatory
requirements, requires approval by a separate vote of one or more classes
of stock, in which case the presence in person or by proxy of the holders
of one-third of the shares of stock of each class required to vote as a
class on the matter shall constitute a quorum.

ARTICLE VI

REDEMPTION

Each holder of shares of the Corporation's capital stock shall be
entitled to require the Corporation to redeem all or any part of the shares of
capital stock of the Corporation standing in the name of the holder on the books
of the Corporation, and all shares of capital stock issued by the Corporation
shall be subject to redemption by the Corporation, at the redemption price of
the shares as in effect from time to time as may be determined by or pursuant to
the direction of the Board of Directors of the Corporation in accordance with
the provisions of Article VII, subject to the right of the Board of Directors of
the Corporation to suspend the right of redemption or postpone the date of
payment of the redemption price in accordance with provisions of applicable law.
Without limiting the generality of the foregoing, the Corporation shall, to the
extent permitted by applicable law, have the right at any time to redeem the
shares owned by any holder of capital stock of the Corporation (i) if the
redemption is, in the opinion of the Board of Directors of the Corporation,
desirable in order to prevent the Corporation from being deemed a "personal
holding company" within the meaning of the Internal Revenue Code of 1986, as
amended, or (ii) if the value of the shares in the account maintained by the
Corporation or its transfer agent for any class of stock for the stockholder is
below an amount determined from time to time by the Board of Directors of the
Corporation (the "Minimum Account Balance") and the stockholder has been given
notice of the redemption and has failed to make additional purchases of shares
in an amount sufficient to bring the value in his account to at least the
Minimum Account Balance before the redemption is effected by the

<PAGE>

Corporation. Payment of the redemption price shall be made in cash by the
Corporation at the time and in the manner as may be determined from time to time
by the Board of Directors of the Corporation unless, in the opinion of the Board
of Directors, which shall be conclusive, conditions exist that make payment
wholly in cash unwise or undesirable; in such event the Corporation may make
payment wholly or partly by securities or other property included in the assets
belonging or allocable to the class of the shares for which redemption is being
sought, the value of which shall be determined as provided herein. The Board of
Directors may establish procedures for redemption of shares.

ARTICLE VII

BOARD OF DIRECTORS

(1) The number of directors constituting the Board of Directors shall be one or
such other number as may be set forth in the By-Laws or determined by the
Board of Directors pursuant to the By-Laws. The number of Directors shall
at no time be less than the minimum number required under the Maryland
General Corporation Law. Hal Liebes has been appointed director of the
Corporation to hold office until the first annual meeting of stockholders
or until his successor is elected and qualified.

(2) In furtherance, and not in limitation, of the powers conferred by the
Maryland General Corporation Law, the Board of Directors is expressly
authorized:

(i) To make, alter or repeal the By-Laws of the Corporation, except
where such power is reserved by the By-Laws to the
stockholders, and except as otherwise required by the 1940 Act.

(ii) From time to time to determine whether and to what extent and
at what times and places and under what conditions and
regulations the books and accounts of the Corporation, or any
of them other than the stock ledger, shall be open to the
inspection of the stockholders. No stockholder shall have any
right to inspect any account or book or document of the
Corporation, except as conferred by law or authorized by
resolution of the Board of Directors or of the stockholders.

(iii) Without the assent or vote of the stockholders, to authorize
the issuance from time to time of shares of the stock of any
class of the Corporation, whether now or hereafter authorized,
and securities convertible into shares of stock of the

<PAGE>

Corporation of any class or classes, whether now or hereafter
authorized, for such consideration as the Board of Directors
may deem advisable.

(iv) Without the assent or vote of the stockholders, to authorize
and issue obligations of the Corporation, secured and
unsecured, as the Board of Directors may determine, and to
authorize and cause to be executed mortgages and liens upon the
real or personal property of the Corporation.

(v) Notwithstanding anything in this Charter to the contrary, to
establish in its absolute discretion the basis or method for
determining the value of the assets belonging to any class, the
value of the liabilities belonging to any class and the net
asset value of each share of any class of the Corporation's
stock.

(vi) To determine in accordance with generally accepted accounting
principles and practices what constitutes net profits,
earnings, surplus or net assets in excess of capital, and to
determine what accounting periods shall be used by the
Corporation for any purpose; to set apart out of any funds of
the Corporation reserves for such purposes as it shall
determine and to abolish the same; to declare and pay any
dividends and distributions in cash, securities or other
property from surplus or any other funds legally available
therefor, at such intervals as it shall determine; to declare
dividends or distributions by means of a formula or other
method of determination, at meetings held less frequently than
the frequency of the effectiveness of such declarations; and to
establish payment dates for dividends or any other
distributions on any basis, including dates occurring less
frequently than the effectiveness of declarations thereof.

(vii) In addition to the powers and authorities granted herein and by
statute expressly conferred upon it, the Board of Directors is
authorized to exercise all powers and do all acts that may be
exercised or done by the Corporation pursuant to the provisions
of the laws of the State of Maryland, this Charter and the
By-Laws of the Corporation.

<PAGE>

(3) Any determination made in good faith, and in accordance with applicable law
and generally accepted accounting principles and practices, if applicable,
by or pursuant to the direction of the Board of Directors, with respect to
the amount of assets, obligations or liabilities of the Corporation, as to
the amount of net income of the Corporation from dividends and interest for
any period or amounts at any time legally available for the payment of
dividends, as to the amount of any reserves or charges set up and the
propriety thereof, as to the time of or purpose for creating reserves or as
to the use, alteration or cancellation of any reserves or charges (whether
or not any obligation or liability for which the reserves or charges have
been created has been paid or discharged or is then or thereafter required
to be paid or discharged), as to the value of any security owned by the
Corporation, the determination of the net asset value of shares of any
class of the Corporation's capital stock, or as to any other matters
relating to the issuance, sale or other acquisition or disposition of
securities or shares of capital stock of the Corporation, and any
reasonable determination made in good faith by the Board of Directors
regarding whether any transaction constitutes a purchase of securities on
"margin," a sale of securities "short," or an underwriting of the sale of,
or a participation in any underwriting or selling group in connection with
the public distribution of, any securities, shall be final and conclusive,
and shall be binding upon the Corporation and all holders of its capital
stock, past, present and future, and shares of the capital stock of the
Corporation are issued and sold on the condition and understanding,
evidenced by the purchase of shares of capital stock or acceptance of share
certificates, that any and all such determinations shall be binding as
aforesaid. No provision of this Charter shall be effective to (i) require a
waiver of compliance with any provision of the Securities Act of 1933, as
amended, or the 1940 Act, or of any valid rule, regulation or order of the
Securities and Exchange Commission under those Acts or (ii) protect or
purport to protect any director or officer of the Corporation against any
liability to the Corporation or its security holders to which he would
otherwise be subject by reason of willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct of
his office.

ARTICLE VIII

INDEMNIFICATION AND LIMITATION OF LIABILITY

(1) To the fullest extent that limitations on the liability of directors and
officers are permitted by the Maryland General Corporation Law, no director
or officer of the Corporation shall have any liability to the Corporation
or its stockholders for money damages. This limitation on

<PAGE>

liability applies to events occurring at the time a person serves as a
director or officer of the Corporation whether or not such person is a
director or officer at the time of any proceeding in which liability is
asserted.

(2) The Corporation shall indemnify and advance expenses to its currently
acting and its former directors to the fullest extent that indemnification
of directors and advancement of expenses to directors is permitted by the
Maryland General Corporation Law. The Corporation shall indemnify and
advance expenses to its officers to the same extent as its directors and to
such further extent as is consistent with such law. The Board of Directors
may, through a by-law, resolution or agreement, make further provisions for
indemnification of directors, officers, employees and agents to the fullest
extent permitted by the Maryland General Corporation Law.

(3) No provision of this Article VIII shall be effective to protect or purport
to protect any director or officer of the Corporation against any liability
to the Corporation or its stockholders to which he would otherwise be
subject by reason of willful misfeasance, bad faith, gross negligence or
reckless disregard of the duties involved in the conduct of his office.

(4) References to the Maryland General Corporation Law in this Article VIII are
to the law as from time to time amended. No amendment to this Charter shall
affect any right of any person under this Article VIII based on any event,
omission or proceeding prior to such amendment. The term "Charter" as used
herein shall have the meaning set forth in the Maryland General Corporation
Law and includes these Articles of Incorporation and all amendments
thereto.

ARTICLE IX

AMENDMENTS

The Corporation reserves the right from time to time to make any
amendment to its Charter, now or hereafter authorized by law, including any
amendment that alters the contract rights, as expressly set forth in this
Charter, of any outstanding stock, and all rights at any time conferred upon the
stockholders of the Corporation by its Charter are granted subject to the
provisions of this Article and the reservation of the right to amend the Charter
herein contained.

<PAGE>

IN WITNESS WHEREOF, I have adopted and signed these Articles of
Incorporation and do hereby acknowledge that the adoption and signing are my
act.

/s/Yvette M. Garcia
----------------------------------------
Yvette M. Garcia
Incorporator

Dated the 21st day of October, 1999

<PAGE>

BY-LAWS

WARBURG, PINCUS LARGE COMPANY GROWTH FUND, INC.

A Maryland Corporation

ARTICLE I

STOCKHOLDERS

SECTION 1. ANNUAL MEETINGS. No annual meeting of the stockholders of
the Warburg, Pincus Large Company Growth Company Fund, Inc. (the "Corporation")
shall be held in any year in which the election of directors is not required to
be acted upon under the Investment Company Act of 1940, as amended (the "1940
Act"), unless otherwise determined by the Board of Directors. An annual meeting
may be held at any place within the United States as may be determined by the
Board of Directors and as shall be designated in the notice of the meeting, at
the time specified by the Board of Directors. Any business of the Corporation
may be transacted at an annual meeting without being specifically designated in
the notice unless otherwise provided by statute, the Corporation's Charter or
these By-Laws.

SECTION 2. SPECIAL MEETINGS. Special meetings of the stockholders for
any purpose or purposes, unless otherwise prescribed by statute or by the
Corporation's Charter, may be held at any place within the United States, and
may be called at any time by the Board of Directors or by the President, and
shall be called by the President or Secretary at the request in writing of a
majority of the Board of Directors or at the request in writing of stockholders
entitled to cast at least 10% (ten percent) of the votes entitled to be cast at
the meeting upon payment by such stockholders to the Corporation of the
reasonably estimated cost of preparing and mailing a notice of the meeting
(which estimated cost shall be provided to such stockholders by the Secretary of
the Corporation). Notwithstanding the foregoing, unless requested by
stockholders entitled to cast a majority of the votes entitled to be cast at the
meeting, a special meeting of the stockholders need not be called at the request
of stockholders to consider any matter which is substantially the same as a
matter voted on at any special meeting of the stockholders held during the
preceding 12 (twelve) months. A written request shall state the purpose or
purposes of the proposed meeting.

SECTION 3. NOTICE OF MEETINGS. Written or printed notice of the
purpose or purposes and of the time and place of every meeting of the
stockholders shall be given by the Secretary of the Corporation to each
stockholder of record entitled to vote at the meeting, by placing the notice in
the mail at least 10 (ten) days, but not more than 90 (ninety) days, prior to
the date

<PAGE>

designated for the meeting addressed to each stockholder at his address
appearing on the books of the Corporation or supplied by the stockholder to the
Corporation for the purpose of notice. The notice of any meeting of stockholders
may be accompanied by a form of proxy approved by the Board of Directors in
favor of the actions or the election of persons as the Board of Directors may
select. Notice of any meeting of stockholders shall be deemed waived by any
stockholder who attends the meeting in person or by proxy, or who before or
after the meeting submits a signed waiver of notice that is filed with the
records of the meeting.

SECTION 4. QUORUM. Except as otherwise provided by statute or by the
Corporation's Charter, the presence in person or by proxy of stockholders of the
Corporation entitled to cast at least one-third of the votes to be cast shall
constitute a quorum at each meeting of the stockholders and all questions shall
be decided by majority of the votes cast (except with respect to the election of
directors, which shall be by a plurality of votes cast). In the absence of a
quorum, the stockholders present in person or by proxy, by majority vote and
without notice other than by announcement, may adjourn the meeting from time to
time as provided in Section 5 of this Article I until a quorum shall attend. The
stockholders present at any duly organized meeting may continue to do business
until adjournment, notwithstanding the withdrawal of enough stockholders to
leave less than a quorum. The absence from any meeting in person or by proxy of
holders of the number of shares of stock of the Corporation in excess of a
majority that may be required by Maryland law, the 1940 Act, or any other
applicable statute, the Corporation's Charter or these By-Laws, for action upon
any given matter shall not prevent action at the meeting on any other matter or
matters that may properly come before the meeting, so long as there are present,
in person or by proxy, holders of the number of shares of stock of the
Corporation required for action upon such other matter or matters.

SECTION 5. ADJOURNMENT. Any meeting of the stockholders may be
adjourned from time to time, without notice other than by announcement at the
meeting at which the adjournment is taken. At any adjourned meeting at which a
quorum shall be present, any action may be taken that could have been taken at
the meeting originally called. A meeting of the stockholders may not be
adjourned without further notice to a date more than 120 (one hundred twenty)
days after the original record date determined pursuant to Section 9 of this
Article I.

SECTION 6. ORGANIZATION. At every meeting of the stockholders, the
Chairman of the Board, or in his absence or inability to act (or if there is
none), the President, or in his absence or inability to act, a Vice President,
or in the absence or inability to act of the Chairman of the Board, the
President and all the Vice Presidents, a chairman chosen by the stockholders
shall act as chairman of the meeting. The Secretary, or in his absence or
inability to act, a person

<PAGE>

appointed by the chairman of the meeting, shall act as secretary of the meeting
and keep the minutes of the meeting.

SECTION 7. ORDER OF BUSINESS. The order of business at all meetings of
the stockholders shall be as determined by the chairman of the meeting.

SECTION 8. VOTING. Except as otherwise provided by statute or the
Corporation's Charter, each holder of record of shares of stock of the
Corporation having voting power shall be entitled at each meeting of the
stockholders to one vote for every share of stock standing in his name on the
records of the Corporation as of the record date determined pursuant to Section
9 of this Article I.

Each stockholder entitled to vote at any meeting of stockholders may
authorize another person to act as proxy for the stockholder by, (a) signing a
writing authorizing another person to act as proxy, or (b) any other means
permitted by law. Signing may be accomplished by the stockholder or the
stockholder's authorized agent signing the writing or causing the stockholder's
signature to be affixed to the writing by any reasonable means, including
facsimile signature.

If a vote shall be taken on any question other than the election of
directors, which shall be by written ballot, then unless required by statute or
these By-Laws, or determined by the chairman of the meeting to be advisable, any
such vote need not be by ballot. On a vote by ballot, each ballot shall be
signed by the stockholder voting, or by his proxy, and shall state the number of
shares voted.

SECTION 9. FIXING OF RECORD DATE. The Board of Directors may set a
record date for the purpose of determining stockholders entitled to vote at any
meeting of the stockholders. The record date for a particular meeting shall be
not more than 90 (ninety) nor fewer than 10 (ten) days before the date of the
meeting. All persons who were holders of record of shares as of the record date
of a meeting, and no others, shall be entitled to vote at such meeting and any
adjournment thereof.

SECTION 10. INSPECTORS. The Board of Directors may, in advance of any
meeting of stockholders, appoint one or more inspectors to act at the meeting or
at any adjournment of the meeting. If the inspectors shall not be so appointed
or if any of them shall fail to appear or act, the chairman of the meeting may,
and on the request of any stockholder entitled to vote at the meeting shall,
appoint inspectors. Each inspector, before entering upon the discharge of his
duties, shall take and sign an oath to execute faithfully the duties of
inspector at the meeting with strict impartiality and according to the best of
his ability. The inspectors shall determine the number of shares outstanding and
the voting power of each share, the number of shares represented at the meeting,
the existence of a quorum and

<PAGE>

the validity and effect of proxies, and shall receive votes, ballots or
consents, hear and determine all challenges and questions arising in connection
with the right to vote, count and tabulate all votes, ballots or consents,
determine the result, and do those acts as are proper to conduct the election or
vote with fairness to all stockholders. On request of the chairman of the
meeting or any stockholder entitled to vote at the meeting, the inspectors shall
make a report in writing of any challenge, request or matter determined by them
and shall execute a certificate of any fact found by them. No director or
candidate for the office of director shall act as inspector of an election of
directors. Inspectors need not be stockholders of the Corporation.

SECTION 11. CONSENT OF STOCKHOLDERS IN LIEU OF MEETING. Except as
otherwise provided by statute or the Corporation's Charter, any action required
to be taken at any meeting of stockholders, or any action that may be taken at
any meeting of the stockholders, may be taken without a meeting, without prior
notice and without a vote, if the following are filed with the records of
stockholders' meetings: (a) a unanimous written consent that sets forth the
action and is signed by each stockholder entitled to vote on the matter; and (b)
a written waiver of notice and any right to dissent signed by each stockholder
entitled to notice of the meeting but not entitled to vote at the meeting.

SECTION 12. NOTICE OF STOCKHOLDER BUSINESS.

(a) At any annual or special meeting of the stockholders, only such
business shall be conducted as shall have been properly brought before the
meeting. To be properly brought before an annual or special meeting business
must be, (i), (A) specified in the notice of meeting (or any supplement thereto)
given by or at the direction of the Board of Directors, (B) otherwise properly
brought before the meeting by or at the direction of the Board of Directors, or
(C) subject to the provisions of Section 13 of this Article I, otherwise
properly brought before the meeting by a stockholder, and (ii) a proper subject
under applicable law for stockholder action.

(b) For business to be properly brought before an annual or special
meeting by a stockholder, the stockholder must have given timely notice thereof
in writing to the Secretary of the Corporation. To be timely, any such notice
must be delivered to or mailed and received at the principal executive offices
of the Corporation not later than 60 (sixty) days prior to the date of the
meeting; provided, however, that if less than 70 (seventy) days' notice or prior
public disclosure of the date of the meeting is given or made to stockholders,
any such notice by a stockholder to be timely must be so received not later than
the close of business on the tenth day following the day on which notice of the
date of the annual or special meeting was given or such public disclosure was
made.

<PAGE>

(c) Any such notice by a stockholder shall set forth as to each matter
the stockholder proposes to bring before the annual or special meeting, (i) a
brief description of the business desired to be brought before the annual or
special meeting and the reasons for conducting such business at the annual or
special meeting, (ii) the name and address, as they appear on the Corporation's
books, of the stockholder proposing such business, (iii) the class and number of
shares of the capital stock of the Corporation which are beneficially owned by
the stockholder, and (iv) any material interest of the stockholder in such
business.

(d) Notwithstanding anything in the By-Laws to the contrary, no
business shall be conducted at any annual or special meeting except in
accordance with the procedures set forth in this Section 12. The chairman of the
annual or special meeting shall, if the facts warrant, determine and declare to
the meeting that business was not properly brought before the meeting and in
accordance with the provisions of this Section 12, and if he should so
determine, he shall so declare to the meeting and any such business not properly
brought before the meeting shall not be considered or transacted.

SECTION 13. STOCKHOLDER BUSINESS NOT ELIGIBLE FOR CONSIDERATION.

(a) Notwithstanding anything in these By-Laws to the contrary, any
proposal that is otherwise properly brought before an annual or special meeting
by a stockholder will not be eligible for consideration by the stockholders at
such annual or special meeting if such proposal is substantially the same as a
matter properly brought before such annual or special meeting by or at the
direction of the Board of Directors of the Corporation. The chairman of such
annual or special meeting shall, if the facts warrant, determine and declare
that a stockholder proposal is substantially the same as a matter properly
brought before the meeting by or at the direction of the Board of Directors,
and, if he should so determine, he shall so declare to the meeting and any such
stockholder proposal shall not be considered at the meeting.

(b) This Section 13 shall not be construed or applied to make
ineligible for consideration by the stockholders at any annual or special
meeting any stockholder proposal required to be included in the Corporation's
proxy statement relating to such meeting pursuant to Rule 14a-8 under the
Securities Exchange Act of 1934 (the "Exchange Act"), or any successor rule
thereto.

<PAGE>

ARTICLE II

BOARD OF DIRECTORS

SECTION 1. GENERAL POWERS. Except as otherwise provided in the
Corporation's Charter, the business and affairs of the Corporation shall be
managed under the direction of its Board of Directors. All powers of the
Corporation may be exercised by or under authority of the Board of Directors
except as conferred on or reserved to the stockholders by law, by the
Corporation's Charter or by these By-Laws.

SECTION 2. NUMBER OF DIRECTORS. The number of directors shall be fixed
from time to time by resolution of the Board of Directors adopted by a majority
of the entire Board of Directors; provided, however, that the number of
directors shall in no event be fewer than one nor more than fifteen. Any vacancy
created by an increase in directors may be filled in accordance with Section 7
of this Article II. No reduction in the number of directors shall have the
effect of removing any director from office prior to the expiration of his term
unless the director is specifically removed pursuant to Section 6 of this
Article II at the time of the decrease. A director need not be a stockholder of
the Corporation, a citizen of the United States or a resident of the State of
Maryland.

SECTION 3. ELECTION AND TERM OF DIRECTORS. The term of office of each
director shall be from the time of his election and qualification until his
successor shall have been elected and shall have qualified, or until his death,
or until his resignation or removal as provided in these By-Laws, or as
otherwise provided by statute or the Corporation's Charter.

SECTION 4. DIRECTOR NOMINATIONS.

(a) Only persons who are nominated in accordance with the procedures
set forth in this Section 4 shall be eligible for election or re-election as
directors. Nominations of persons for election or re-election to the Board of
Directors of the Corporation may be made at a meeting of stockholders by or at
the direction of the Board of Directors or by any stockholder of the Corporation
who is entitled to vote for the election of such nominee at the meeting and who
complies with the notice procedures set forth in this Section 4.

(b) Such nominations, other than those made by or at the direction of
the Board of Directors, shall be made pursuant to timely notice delivered in
writing to the Secretary of the Corporation. To be timely, any such notice by a
stockholder must be delivered to or mailed and received at the principal
executive offices of the Corporation not later than 60 (sixty) days prior to the
meeting; provided, however, that if less than 70 (seventy) days' notice or prior
public disclosure of the date of the meeting is given or made to stockholders,
any such notice by a

<PAGE>

stockholder to be timely must be so received not later than the close of
business on the tenth day following the day on which notice of the date of the
meeting was given or such public disclosure was made.

(c) Any such notice by a stockholder shall set forth, (i) as to each
person whom the stockholder proposes to nominate for election or re-election as
a director, (A) the name, age, business address and residence address of such
person, (B) the principal occupation or employment of such person, (C) the class
and number of shares of the capital stock of the Corporation which are
beneficially owned by such person, and (D) any other information relating to
such person that is required to be disclosed in solicitations of proxies for the
election of directors pursuant to Regulation 14A under the Exchange Act or any
successor regulation thereto (including without limitation such person's written
consent to being named in the proxy statement as a nominee and to serving as a
director if elected and whether any person intends to seek reimbursement from
the Corporation of the expenses of any solicitation of proxies should such
person be elected a director of the Corporation); and (ii) as to the stockholder
giving the notice, (A) the name and address, as they appear on the Corporation's
books, of such stockholder, and (B) the class and number of shares of the
capital stock of the Corporation which are beneficially owned by such
stockholder. At the request of the Board of Directors, any person nominated by
the Board of Directors for election as a director shall furnish to the Secretary
of the Corporation that information required to be set forth in a stockholder's
notice of nomination which pertains to the nominee.

(d) If a notice by a stockholder is required to be given pursuant to
this Section 4, no person shall be entitled to receive reimbursement from the
Corporation of the expenses of a solicitation of proxies for the election as a
director of a person named in such notice unless such notice states that such
reimbursement will be sought from the Corporation. No person shall be eligible
for election as a director of the Corporation unless nominated in accordance
with the procedures set forth in this Section 4. The chairman of the meeting
shall, if the facts warrant, determine and declare to the meeting that a
nomination was not made in accordance with the procedures prescribed by the
By-Laws, and if he should so determine, he shall so declare to the meeting and
the defective nomination shall be disregarded for all purposes.

SECTION 5. RESIGNATION. A director of the Corporation may resign at
any time by giving written notice of his resignation to the Board of Directors
or the Chairman of the Board or to the President or the Secretary of the
Corporation. Any resignation shall take effect at the time specified in it or,
should the time when it is to become effective not be specified in it,
immediately upon its receipt. Acceptance of a resignation

<PAGE>

shall not be necessary to make it effective unless the resignation states
otherwise.

SECTION 6. REMOVAL OF DIRECTORS. Any director of the Corporation may
be removed by the stockholders with or without cause at any time by a vote of a
majority of the votes entitled to be cast for the election of directors.

SECTION 7. VACANCIES. Subject to the provisions of the 1940 Act, any
vacancies in the Board of Directors, whether arising from death, resignation,
removal or any other cause except an increase in the number of directors, shall
be filled by a vote of the majority of the Board of Directors then in office
even though that majority is less than a quorum, provided that no vacancy or
vacancies shall be filled by action of the remaining directors if, after the
filling of the vacancy or vacancies, fewer than two-thirds of the directors then
holding office shall have been elected by the stockholders of the Corporation. A
majority of the entire Board as calculated prior to Board expansion may fill a
vacancy which results from an increase in the number of directors. In the event
that at any time a vacancy exists in any office of a director that may not be
filled by the remaining directors, a special meeting of the stockholders shall
be held as promptly as possible and in any event within 60 (sixty) days, for the
purpose of filling the vacancy or vacancies. Any director elected or appointed
to fill a vacancy shall hold office until a successor has been chosen and
qualifies or until his earlier death, resignation or removal.

SECTION 8. PLACE OF MEETINGS. Meetings of the Board may be held at any
place that the Board of Directors may from time to time determine or that is
specified in the notice of the meeting.

SECTION 9. REGULAR MEETINGS. Regular meetings of the Board of
Directors may be held without notice at the time and place determined by the
Board of Directors.

SECTION 10. SPECIAL MEETINGS. Special meetings of the Board of
Directors may be called by two or more directors of the Corporation or by the
Chairman of the Board or the President.

SECTION 11. NOTICE OF SPECIAL MEETINGS. Notice of each special meeting
of the Board of Directors shall be given by the Secretary as hereinafter
provided. Each notice shall state the time and place of the meeting and shall be
delivered to each director, either personally or by telephone, facsimile
transmission or other standard form of telecommunication, at least 24
(twenty-four) hours before the time at which the meeting is to be held, or by
first-class mail, postage prepaid, addressed to the director at his residence or
usual place of business, and mailed at least 3 (three) days before the day on
which the meeting is to be held.

<PAGE>

SECTION 12. WAIVER OF NOTICE OF MEETINGS. Notice of any special
meeting need not be given to any director who shall, either before or after the
meeting, sign a written waiver of notice that is filed with the records of the
meeting or who shall attend the meeting.

SECTION 13. QUORUM AND VOTING. One-third (but not fewer than two
unless there be only one director) of the members of the entire Board of
Directors shall be present in person at any meeting of the Board in order to
constitute a quorum for the transaction of business at the meeting, and except
as otherwise expressly required by statute, the Corporation's Charter, these
By-Laws, the 1940 Act, or any other applicable statute, the act of a majority of
the directors present at any meeting at which a quorum is present shall be the
act of the Board. In the absence of a quorum at any meeting of the Board, a
majority of the directors present may adjourn the meeting to another time and
place until a quorum shall be present. Notice of the time and place of any
adjourned meeting shall be given to the directors who were not present at the
time of the adjournment and, unless the time and place were announced at the
meeting at which the adjournment was taken, to the other directors. At any
adjourned meeting at which a quorum is present, any business may be transacted
that might have been transacted at the meeting as originally called.

SECTION 14. ORGANIZATION. The Board of Directors may, by resolution
adopted by a majority of the entire Board, designate a Chairman of the Board,
who shall preside at each meeting of the Board. In the absence or inability of
the Chairman of the Board to act or if there is none, the President, or, in his
absence or inability to act, another director chosen by a majority of the
directors present, shall act as chairman of the meeting and preside at the
meeting. The Secretary, or, in his absence or inability to act, any person
appointed by the chairman, shall act as secretary of the meeting and keep the
minutes thereof.

SECTION 15. COMMITTEES. The Board of Directors may designate one or
more committees of the Board of Directors, each consisting of 2 (two) or more
directors. To the extent provided in the resolution, and permitted by law, the
committee or committees shall have and may exercise the powers of the Board of
Directors in the management of the business and affairs of the Corporation and
may authorize the seal of the Corporation to be affixed to all papers that may
require it. Any committee or committees shall have the name or names determined
from time to time by resolution adopted by the Board of Directors. Each
committee shall keep regular minutes of its meetings and report the same to the
Board of Directors when required. The members of a committee present at any
meeting, whether or not they constitute a quorum, may appoint a director to act
in the place of an absent member.

<PAGE>

SECTION 16. WRITTEN CONSENT OF DIRECTORS IN LIEU OF A MEETING. Subject
to the provisions of the 1940 Act, any action required or permitted to be taken
at any meeting of the Board of Directors or of any committee of the Board may be
taken without a meeting if all members of the Board or committee, as the case
may be, consent thereto in writing, and the writing or writings are filed with
the records of the Board's or such committee's meetings.

SECTION 17. TELEPHONE CONFERENCE. Members of the Board of Directors or
any committee of the Board may participate in any Board or committee meeting by
means of a conference telephone or similar communications equipment by means of
which all persons participating in the meeting can hear each other at the same
time. Participation by such means shall constitute presence in person at the
meeting.

SECTION 18. COMPENSATION. Each director shall be entitled to receive
compensation, if any, as may from time to time be fixed by the Board of
Directors, including a fee for each meeting of the Board or any committee
thereof, regular or special, he attends. Directors may also be reimbursed by the
Corporation for all reasonable expenses incurred in traveling to and from the
place of a Board or committee meeting.

ARTICLE III

OFFICERS, AGENTS AND EMPLOYEES

SECTION 1. NUMBER AND QUALIFICATIONS. The officers of the Corporation
shall be a President, a Secretary and a Treasurer, each of whom shall be elected
by the Board of Directors. The Board of Directors may elect or appoint one or
more Vice Presidents and may also appoint any other officers, agents and
employees it deems necessary or proper. Any two or more offices may be held by
the same person, except the offices of President and Vice President, but no
officer shall execute, acknowledge or verify any instrument in more than one
capacity. Officers shall be elected by the Board of Directors, each to hold
office until his successor shall have been duly elected and shall have
qualified, or until his death, or until his resignation or removal as provided
in these By-Laws. The Board of Directors may from time to time elect, or
designate to the President the power to appoint, such officers (including one or
more Assistant Vice Presidents, one or more Assistant Treasurers and one or more
Assistant Secretaries) and such agents as may be necessary or desirable for the
business of the Corporation. Such other officers and agents shall have such
duties and shall hold their offices for such terms as may be prescribed by the
Board or by the appointing authority.

SECTION 2. RESIGNATIONS. Any officer of the Corporation may resign at
any time by giving written notice of his resignation to the Board of Directors,
the Chairman of the

<PAGE>

Board, the President or the Secretary. Any resignation shall take effect at the
time specified therein or, if the time when it shall become effective is not
specified therein, immediately upon its receipt. Acceptance of a resignation
shall not be necessary to make it effective unless the resignation states
otherwise.

SECTION 3. REMOVAL OF OFFICER, AGENT OR EMPLOYEE. Any officer, agent
or employee of the Corporation may be removed by the Board of Directors with or
without cause at any time, and the Board may delegate the power of removal as to
agents and employees not elected or appointed by the Board of Directors. Removal
shall be without prejudice to the person's contract rights, if any, but the
appointment of any person as an officer, agent or employee of the Corporation
shall not of itself create contract rights.

SECTION 4. VACANCIES. A vacancy in any office whether arising from
death, resignation, removal or any other cause, may be filled for the unexpired
portion of the term of the office that shall be vacant, in the manner prescribed
in these By-Laws for the regular election or appointment to the office.

SECTION 5. COMPENSATION. The compensation of the officers of the
Corporation shall be fixed by the Board of Directors, but this power may be
delegated to any officer with respect to other officers under his control.

SECTION 6. BONDS OR OTHER SECURITY. If required by the Board, any
officer, agent or employee of the Corporation shall give a bond or other
security for the faithful performance of his duties, in an amount and with any
surety or sureties as the Board may require.

SECTION 7. PRESIDENT. The President shall be the chief executive
officer of the Corporation. In the absence or inability of the Chairman of the
Board to act (or if there is none), the President shall preside at all meetings
of the stockholders and of the Board of Directors. The President shall have,
subject to the control of the Board of Directors, general charge of the business
and affairs of the Corporation, and may employ and discharge employees and
agents of the Corporation, except those elected or appointed by the Board, and
he may delegate these powers.

SECTION 8. VICE PRESIDENT. Each Vice President shall have the powers
and perform the duties that the Board of Directors or the President may from
time to time prescribe.

SECTION 9. TREASURER. Subject to the provisions of any contract that
may be entered into with any custodian pursuant to authority granted by the
Board of Directors, the Treasurer shall have charge of all receipts and
disbursements of the Corporation and shall have or provide for the custody of
the Corporation's funds and securities; he shall have full

<PAGE>

authority to receive and give receipts for all money due and payable to the
Corporation, and to endorse checks, drafts and warrants, in its name and on its
behalf and to give full discharge for the same; he shall deposit all funds of
the Corporation, except those that may be required for current use, in such
banks or other places of deposit as the Board of Directors may from time to time
designate; and, in general, he shall perform all duties incident to the office
of Treasurer and such other duties as may from time to time be assigned to him
by the Board of Directors or the President.

SECTION 10. SECRETARY. The Secretary shall:

(a) keep or cause to be kept in one or more books provided for the
purpose, the minutes of all meetings of the Board of Directors, the committees
of the Board and the stockholders;

(b) see that all notices are duly given in accordance with the
provisions of these By-Laws and as required by law;

(c) be custodian of the records and the seal of the Corporation and
affix and attest the seal to all stock certificates of the Corporation (unless
the seal of the Corporation on such certificates shall be a facsimile, as
hereinafter provided) and affix and attest the seal to all other documents to be
executed on behalf of the Corporation under its seal;

(d) see that the books, reports, statements, certificates and other
documents and records required by law to be kept and filed are properly kept and
filed; and

(e) in general, perform all the duties incident to the office of
Secretary and such other duties as from time to time may be assigned to him by
the Board of Directors or the President.

SECTION 11. DELEGATION OF DUTIES. In case of the absence of any
officer of the Corporation, or for any other reason that the Board of Directors
may deem sufficient, the Board may confer for the time being the powers or
duties, or any of them, of such officer upon any other officer or upon any
director.

ARTICLE IV

STOCK

SECTION 1. STOCK CERTIFICATES. Each holder of stock of the Corporation
shall be entitled upon specific written request to such person as may be
designated by the Corporation to have a certificate or certificates, in a form
approved by the Board, representing the number of shares of stock of the

<PAGE>

Corporation owned by him; provided, however, that certificates for fractional
shares will not be delivered in any case. The certificates representing shares
of stock shall be signed by or in the name of the Corporation by the Chairman of
the Board, President or a Vice President and by the Secretary or an Assistant
Secretary or the Treasurer or an Assistant Treasurer and sealed with the seal of
the Corporation. Any or all of the signatures or the seal on the certificate may
be facsimiles. In case any officer, transfer agent or registrar who has signed
or whose facsimile signature has been placed upon a certificate shall have
ceased to be such officer, transfer agent or registrar before such certificate
shall be issued, it may be issued by the Corporation with the same effect as if
such officer, transfer agent or registrar were still in office at the date of
issue.

SECTION 2. BOOKS OF ACCOUNT AND RECORD OF STOCKHOLDERS. There shall be
kept at the principal executive office of the Corporation correct and complete
books and records of account of all the business and transactions of the
Corporation. There shall be made available upon request of any stockholder, in
accordance with Maryland law, a record containing the number of shares of stock
issued during a specified period not to exceed 12 (twelve) months and the
consideration received by the Corporation for each such share.

SECTION 3. TRANSFERS OF SHARES. Transfers of shares of stock of the
Corporation shall be made on the stock records of the Corporation only by the
registered holder thereof, or by his attorney thereunto authorized by power of
attorney duly executed and filed with the Secretary or with a transfer agent or
transfer clerk, and on surrender of the certificate or certificates, if issued,
for the shares properly endorsed or accompanied by a duly executed stock
transfer power and the payment of all taxes thereon. Except as otherwise
provided by law, the Corporation shall be entitled to recognize the exclusive
right of a person in whose name any share or shares stand on the record of
stockholders as the owner of the share or shares for all purposes, including,
without limitation, the rights to receive dividends or other distributions and
to vote as the owner, and the Corporation shall not be bound to recognize any
equitable or legal claim to or interest in any such share or shares on the part
of any other person.

SECTION 4. REGULATIONS. The Board of Directors may make any additional
rules and regulations, not inconsistent with these By-Laws, as it may deem
expedient concerning the issue, transfer and registration of certificates for
shares of stock of the Corporation. It may appoint, or authorize any officer or
officers to appoint, one or more transfer agents or one or more transfer clerks
and one or more registrars and may require all certificates for shares of stock
to bear the signature or signatures of any of them.

<PAGE>

SECTION 5. STOLEN, LOST, DESTROYED OR MUTILATED CERTIFICATES. The
holder of any certificate representing shares of stock of the Corporation shall
immediately notify the Corporation of its theft, loss, destruction or mutilation
and the Corporation may issue a new certificate of stock in the place of any
certificate issued by it that has been alleged to have been stolen, lost or
destroyed or that shall have been mutilated. The Board may, in its discretion,
require the owner (or his legal representative) of a stolen, lost, destroyed or
mutilated certificate to give to the Corporation a bond in a sum, limited or
unlimited, and in a form and with any surety or sureties, as the Board in its
absolute discretion shall determine or to indemnify the Corporation against any
claim that may be made against it on account of the alleged theft, loss,
destruction or the mutilation of any such certificate, or issuance of a new
certificate. Anything herein to the contrary notwithstanding, the Board of
Directors, in its absolute discretion, may refuse to issue any such new
certificate, except pursuant to legal proceedings under the Maryland General
Corporation Law.

SECTION 6. FIXING OF RECORD DATE FOR DIVIDENDS, DISTRIBUTIONS, ETC.
The Board may fix, in advance, a date not more than 90 (ninety) days preceding
the date fixed for the payment of any dividend or the making of any distribution
or the allotment of rights to subscribe for securities of the Corporation, or
for the delivery of evidences of rights or evidences of interests arising out of
any change, conversion or exchange of common stock or other securities, as the
record date for the determination of the stockholders entitled to receive any
such dividend, distribution, allotment, rights or interests, and in such case
only the stockholders of record at the time so fixed shall be entitled to
receive such dividend, distribution, allotment, rights or interests.

SECTION 7. INFORMATION TO STOCKHOLDERS AND OTHERS. Any stockholder of
the Corporation or his agent may inspect and copy during the Corporation's usual
business hours the Corporation's By-Laws, minutes of the proceedings of its
stockholders, annual statements of its affairs and voting trust agreements on
file at its principal office.

ARTICLE V

INDEMNIFICATION AND INSURANCE

SECTION 1. INDEMNIFICATION OF DIRECTORS AND OFFICERS. Any person who
was or is a party or is threatened to be made a party in any threatened, pending
or completed action, suit or proceeding, whether civil, criminal, administrative
or investigative, by reason of the fact that such person is a current or former
director or officer of the Corporation, or is or was serving while a director or
officer of the Corporation at the request of the Corporation as a director,
officer, partner, trustee, employee, agent or fiduciary of another corporation,

<PAGE>

partnership, joint venture, trust, enterprise or employee benefit plan, shall be
indemnified by the Corporation against judgments, penalties, fines, excise
taxes, settlements and reasonable expenses (including attorneys' fees) actually
incurred by such person in connection with such action, suit or proceeding to
the full extent permissible under the Maryland General Corporation Law, the
Securities Act of 1933, as amended (the "Securities Act"), and the 1940 Act, as
such statutes are now or hereafter in force, except that such indemnity shall
not protect any such person against any liability to the Corporation or any
stockholder thereof to which such person would otherwise be subject by reason of
willful misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of his office ("disabling conduct").

SECTION 2. ADVANCES. Any current or former director or officer of the
Corporation claiming indemnification within the scope of this Article V shall be
entitled to advances from the Corporation for payment of the reasonable expenses
incurred by him in connection with proceedings to which he is a party in the
manner and to the full extent permissible under the Maryland General Corporation
Law, the Securities Act and the 1940 Act, as such statutes are now or hereafter
in force; provided however, that the person seeking indemnification shall
provide to the Corporation a written affirmation of his good faith belief that
the standard of conduct necessary for indemnification by the Corporation has
been met and a written undertaking to repay any such advance unless it is
ultimately determined that he is entitled to indemnification, and provided
further that at least one of the following additional conditions is met: (a) the
person seeking indemnification shall provide a security in form and amount
acceptable to the Corporation for his undertaking; (b) the Corporation is
insured against losses arising by reason of the advance; or (c) a majority of a
quorum of directors of the Corporation who are neither "interested persons" as
defined in Section 2(a)(19) of the 1940 Act, nor parties to the proceeding
("disinterested non-party directors"), or independent legal counsel, in a
written opinion, shall determine, based on a review of facts readily available
to the Corporation at the time the advance is proposed to be made, that there is
reason to believe that the person seeking indemnification will ultimately be
found to be entitled to indemnification.

SECTION 3. PROCEDURE. At the request of any current or former director
or officer, or any employee or agent whom the Corporation proposes to indemnify,
the Board of Directors shall determine, or cause to be determined, in a manner
consistent with the Maryland General Corporation Law, the Securities Act and the
1940 Act, as such statutes are now or hereafter in force, whether the standards
required by this Article V have been met; provided, however, that
indemnification shall be made only following: (a) a final decision on the merits
by a court or other body before whom the proceeding was brought that the person
to be indemnified was not liable by reason of disabling conduct; or (b) in the
absence

<PAGE>

of such a decision, a reasonable determination, based upon a review of the
facts, that the person to be indemnified was not liable by reason of disabling
conduct by, (i) the vote of a majority of a quorum of disinterested non-party
directors, or (ii) an independent legal counsel in a written opinion.

SECTION 4. INDEMNIFICATION OF EMPLOYEES AND AGENTS. Employees and
agents who are not officers or directors of the Corporation may be indemnified,
and reasonable expenses may be advanced to such employees or agents, in
accordance with the procedures set forth in this Article V to the extent
permissible under the 1940 Act, the Securities Act and Maryland General
Corporation Law, as such statutes are now or hereafter in force, to the extent,
consistent with the foregoing, as may be provided by action of the Board of
Directors or by contract.

SECTION 5. OTHER RIGHTS. The indemnification provided by this Article
V shall not be deemed exclusive of any other right, in respect of
indemnification or otherwise, to which those seeking such indemnification may be
entitled under any insurance or other agreement, vote of stockholders or
disinterested directors or otherwise, both as to action by a director or officer
of the Corporation in his official capacity and as to action by such person in
another capacity while holding such office or position, and shall continue as to
a person who has ceased to be a director or officer and shall inure to the
benefit of the heirs, executors and administrators of such a person.

SECTION 6. INSURANCE. The Corporation shall have the power to purchase
and maintain insurance on behalf of any person who is or was a director,
officer, employee or agent of the Corporation, or who, while a director,
officer, employee or agent of the Corporation, is or was serving at the request
of the Corporation as a director, officer, partner, trustee, employee, agent or
fiduciary of another corporation, partnership, joint venture, trust, enterprise
or employee benefit plan, against any liability asserted against and incurred by
him in any such capacity, or arising out of his status as such, provided that no
insurance may be obtained by the Corporation for liabilities against which it
would not have the power to indemnify him under this Article V or applicable
law.

SECTION 7. CONSTITUENT, RESULTING OR SURVIVING CORPORATIONS. For the
purposes of this Article V, references to the "Corporation" shall include all
constituent corporations absorbed in a consolidation or merger as well the
resulting or surviving corporation so that any person who is or was a director,
officer, employee or agent of a constituent corporation or is or was serving at
the request of a constituent corporation as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise shall stand in the same position under this Article V with respect to
the resulting or surviving corporation as he would if he had served the
resulting or surviving corporation in the same capacity.

<PAGE>

ARTICLE VI

SEAL

The seal of the Corporation shall be circular in form and shall bear
the name of the Corporation, the year of its incorporation, the words "Corporate
Seal" and "Maryland" and any emblem or device approved by the Board of
Directors. The seal may be used by causing it or a facsimile to be impressed or
affixed or in any other manner reproduced, or by placing the word "(seal)"
adjacent to the signature of the authorized officer of the Corporation.

ARTICLE VII

FISCAL YEAR

The Corporation's fiscal year shall be fixed by the Board of
Directors.

ARTICLE VIII

AMENDMENTS

These By-Laws may be amended or repealed by the affirmative vote of a
majority of the Board of Directors at any regular or special meeting of the
Board of Directors, subject to the requirements of the 1940 Act.

As adopted, October 26, 1999

<PAGE>
POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that I, William W. Priest, hereby make,
constitute and appoint each of Eugene L. Podsiadlo and Michael A. Pignataro,
with full power to act without the other, as my agent and attorney-in-fact for
the purpose of executing in my name, in my capacity as a Director/Trustee of one
or more Warburg Pincus Funds, all registration statements on Form N-1A
(including amendments thereto) to be filed with the United States Securities and
Exchange Commission pursuant to the Securities Act of 1933, as amended, and the
Investment Company Act of 1940, as amended, and the rules and regulations
promulgated thereunder.

All past acts of an attorney-in-fact in furtherance of the foregoing are hereby
ratified and confirmed.

This power of attorney shall be valid from the date hereof until revoked by me.