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SIGNATURE MARY JANE MALONEY
TITLE MANAGER
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EXHIBIT INDEX
Exhibit A:
Attachment to item 77B: Accountant's report on internal
control.
- -----------------------------------------------------------
Exhibit A:
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholders
of Warburg, Pincus Capital Appreciation Fund, Inc.:
In planning and performing our audit of the financial statements
and financial highlights of Warburg, Pincus Capital Appreciation
Fund, Inc. (the "Fund") for the year ended October 31, 1998, we
considered its internal control, including control activities for
safeguarding securities, in order to determine our auditing
procedures for the purpose of expressing our opinion on the
financial statements and financial highlights and to comply with
the requirements of Form N-SAR, not to provide assurance on
internal control.
The management of the Fund is responsible for establishing and
maintaining internal control. In fulfilling this responsibility,
estimates and judgements by management are required to assess the
expected benefits and related costs of controls. Generally,
controls that are relevant to an audit pertain to the entity's
objective of preparing financial statements and financial
highlights for external purposes that are fairly presented in
conformity with generally accepted accounting principles. Those
controls include the safeguarding of assets against unauthorised
acquisition, use or disposition.
Because of inherent limitations in internal controls, errors or
fraud may occur and not be detected. Also, projection of any
evaluation of internal control to future periods is subject to
the risk that it may become inadequate because of changes in
conditions or that the effectiveness of the design and operation
may deteriorate.
Our consideration of internal control would not necessarily
disclose all matters in internal control that might be material
weaknesses under standards established by the American Institute
of Certified Public Accountants. A material weakness is a
condition in which the design or operation of one or more of the
internal control components does not reduce to a relatively low
level the risk that misstatements caused by errors or fraud in
amounts that would be material in relation to the financial
statements and financial highlights being audited may occur and
not be detected within a timely period by employees in the normal
course of performing their assigned functions. However, we noted
no matters involving internal control and its operation,
including controls over safeguarding securities, that we consider
to be material weaknesses as defined above as of October 31,
1998.
This report is intended solely for the information and use of
management, the Board of Directors of the Fund, and the
Securities and Exchange Commission.
PricewaterhouseCoopers LLP
December 11, 1998
