WARBURG PINCUS JAPAN SMALL CO FUND INC, 485BPOS, 2000-02-24

WARBURG PINCUS JAPAN SMALL CO FUND INC
485BPOS, 2000-02-24

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<PAGE> 1

As filed with the U.S. Securities and Exchange Commission
on February 24, 2000

Securities Act File No. 33-82362
Investment Company Act File No. 811-8686

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. 12 [x]

and/or

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [x]

Amendment No. 13 [x]

(Check appropriate box or boxes)

Warburg, Pincus Japan Small Company Fund, Inc.
(formerly known as Warburg, Pincus Japan OTC 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 Japan Small Company 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> 2

Approximate Date of Proposed Public Offering: February 29, 2000

It is proposed that this filing will become effective (check appropriate box):

[ ] immediately upon filing pursuant to paragraph (b)

[x] on February 29, 2000 pursuant to paragraph (b)

[ ] 60 days after filing pursuant to paragraph (a)(1)

[ ] on (date) pursuant to paragraph (a)(1)

[ ] 75 days after filing pursuant to paragraph (a)(2)

[ ] on (date) pursuant to paragraph (a)(2) of Rule 485.

If appropriate, check the following box:

[ ] This post-effective amendment designates a new effective date for a
previously filed post-effective amendment.

<PAGE> 3

[Warburg Pincus Logo] [Credit Suisse Logo]
[Credit Suisse Logo]
PROSPECTUS
Common Class

February 29, 2000

WARBURG PINCUS
JAPAN GROWTH FUND
-

WARBURG PINCUS
JAPAN SMALL COMPANY FUND

As with all mutual funds, the Securities and Exchange
Commission has not approved these funds, nor has it passed
upon the adequacy or accuracy of this Prospectus. It is a
criminal offense to state otherwise.

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

<PAGE> 4

CONTENTS

<TABLE>
<S> <C>
KEY POINTS.................... .................... 4
Goals and Principal Strategies.................. 4
Investor Profile................................ 4
A Word About Risk............................... 5
PERFORMANCE SUMMARY............... ................ 8
Year-by-Year Total Returns...................... 8
Average Annual Total Returns.................... 9
INVESTOR EXPENSES................ ................. 10
Fees and Fund Expenses.......................... 10
Example......................................... 11
THE FUNDS IN DETAIL............... ................ 12
The Management Firm............................. 12
Multi-Class Structure........................... 12
Fund Information Key............................ 13
JAPAN GROWTH FUND................ ................. 14
JAPAN SMALL COMPANY FUND............. ............. 16
MORE ABOUT RISK................. .................. 18
Introduction.................................... 18
Types of Investment Risk........................ 18
Certain Investment Practices.................... 20
MEET THE MANAGERS................ ................. 22
ABOUT YOUR ACCOUNT................ ................ 23
Share Valuation................................. 23
Buying and Selling Shares....................... 23
Account Statements.............................. 24
Distributions................................... 24
Taxes........................................... 24
OTHER INFORMATION................ ................. 26
About the Distributor........................... 26
FOR MORE INFORMATION............... ............... back cover
</TABLE>

3
<PAGE> 5

KEY POINTS

GOALS AND PRINCIPAL STRATEGIES

<S> <C> <C>
FUND/RISK FACTORS GOAL STRATEGIES
<CAPTION>

<S> <C> <C>
JAPAN GROWTH FUND Long-term growth of - Invests in equity securities of
Risk factors: capital Japanese companies
Market risk - May invest in companies of any
Foreign securities size
Country focus - May look for companies with
Non-diversified attractive growth potential or
status companies whose equity
securities appear undervalued
- ----------------------
JAPAN SMALL COMPANY Long-term capital - Invests in equity securities of
FUND appreciation small Japanese companies
Risk factors: - Emphasizes equity securities
Market risk with attractive
Foreign securities capital-appreciation potential
Country focus
Non-diversified
status
Small companies
Special-situation
companies
</TABLE>

INVESTOR PROFILE

THESE FUNDS ARE DESIGNED FOR INVESTORS WHO:

- have longer time horizons

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

- are investing for growth or capital appreciation

- are seeking access to the Japanese market, which can be less accessible to
individual investors

THEY MAY NOT BE APPROPRIATE IF YOU:

- are investing for a shorter time horizon

- are uncomfortable with an investment that has a higher degree of volatility

- are looking for income

You should base your selection of a fund on your own goals, risk preferences
and time horizon.

4
<PAGE> 6

A WORD ABOUT RISK

All investments involve some level of risk. Simply defined, risk is the
possibility that you will lose money or not make money.

Principal risk factors for the funds are discussed below. Before you invest,
please make sure you understand the risks that apply to your fund. As with any
mutual fund, you could lose money over any period of time.

Investments in the funds are not bank deposits and are not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency.

MARKET RISK
Both funds

The market value of a security may move up and down, sometimes rapidly and
unpredictably. These fluctuations, which are often referred to as "volatility,"
may cause a security to be worth less than it was worth at an earlier time.
Market risk may affect a single issuer, industry, sector of the economy, or the
market as a whole. Market risk is common to most investments--including stocks
and bonds, and the mutual funds that invest in them.

FOREIGN SECURITIES
Both funds

A fund that invests outside the U.S. carries additional risks that include:

- 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. Each of the funds may, but
is not required to, seek to reduce currency risk by hedging part or all of its
exposure to the Japanese yen.

- INFORMATION RISK Key information about an issuer, security or market may be
inaccurate or unavailable.

- 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.

COUNTRY FOCUS
Both funds

Focusing on a single country involves increased currency, political,
regulatory and other risks. Market swings in the targeted country (Japan) likely
will have a greater effect on fund performance than they would in a more
geographically diversified equity fund.

NON-DIVERSIFIED STATUS
Both funds

The funds are considered non-diversified investment companies under the
Investment Company Act of 1940 and are permitted to invest a greater
5
<PAGE> 7

proportion of their assets in the securities
of a smaller number of issuers. As a result, the funds may be subject to greater
volatility with respect to their respective portfolio securities than a fund
that is more broadly diversified.

SMALL COMPANIES
Japan Small Company Fund

Small companies may have less-experienced management, limited product lines,
unproven track records or inadequate capital reserves. Their securities may
carry increased market, liquidity, information and other risks. Key information
about the company may be inaccurate or unavailable.

SPECIAL-SITUATION COMPANIES
Japan Small Company Fund

"Special situations" are unusual developments that affect a company's market
value. Examples include mergers, acquisitions and reorganizations. Securities of
special-situation companies may decline in value if the anticipated benefits of
the special situation do not materialize.

6
<PAGE> 8

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7
<PAGE> 9

PERFORMANCE SUMMARY

The bar chart below and the table on the next page provide an indication of the
risks of investing in these funds. The bar chart shows you how each fund's
performance has varied from year to year for up to 10 years. The table compares
each fund's performance over time to that of a broadly based securities market
index and other indexes, if applicable. As with all mutual funds, past
performance is not a prediction of the future.

YEAR-BY-YEAR TOTAL RETURNS

<TABLE>
<CAPTION>
JAPAN GROWTH FUND
-----------------
<S> <C>
1995 0.00
1996 -5.49
1997 1.52
1998 1.28
1999 266.10
</TABLE>

<TABLE>
<CAPTION>
JAPAN SMALL COMPANY FUND
------------------------
<S> <C>
1995 -1.09
1996 -13.09
1997 -25.51
1998 12.76
1999 328.66
</TABLE>

8
<PAGE> 10

AVERAGE ANNUAL TOTAL RETURNS

<TABLE>
<CAPTION>
ONE YEAR FIVE YEARS 10 YEARS LIFE OF INCEPTION
PERIOD ENDED 12/31/99: 1999 1995-1999 1990-1999 FUND DATE
<S> <C> <C> <C> <C> <C>
JAPAN GROWTH FUND 266.10% N/A N/A 37.22% 12/29/95
- ----------------------------
TOPIX(1) 78.54% N/A N/A 3.64%
- ----------------------------
JAPAN SMALL COMPANY FUND 328.66% 25.35% N/A 23.09% 9/30/94
- ----------------------------
JASDAQ INDEX ($) UNHEDGED(2) 279.64% 9.28% N/A 7.69%
- ----------------------------
JASDAQ INDEX (Y) HEDGED(2) 244.49% 9.83% N/A 8.38%
- ----------------------------
MSCI Japan Small Company
Index(3) 33.11% -12.58% N/A -12.66%
</TABLE>

(1) The TOPIX is an unmanaged capitalization-weighted index (with no defined
investment objective) designed to reflect the general movement of the
Japanese stock market. The index consists of all shares listed on the First
Section of the Tokyo Stock Exchange, which is generally reserved for Japan's
larger companies.

(2) The JASDAQ Over-the-Counter Composite Index is an unmanaged index (with no
defined investment objective) of stocks traded over the counter in Japan.

(3) The Morgan Stanley Capital International Japan Small Company Index is
composed of small-cap Japanese stocks.

UNDERSTANDING PERFORMANCE
- TOTAL RETURN tells you how much an investment in a fund has changed in
value over a given time period. It assumes that all dividends and capital
gains (if any) were reinvested in additional shares. The change in value
can be stated either as a cumulative return or as an average annual rate
of return.

- A CUMULATIVE TOTAL RETURN is the actual return of an investment for a
specified period. The year-by-year total returns in the bar chart are
examples of one-year cumulative total returns.

- An AVERAGE ANNUAL TOTAL RETURN applies to periods longer than one year.
It smoothes out the variations in year-by-year performance to tell you
what constant annual return would have produced the investment's actual
cumulative return. This gives you an idea of an investment's annual
contribution to your portfolio, assuming you held it for the entire
period.

- Because of compounding, the average annual total returns in the table
cannot be computed by averaging the returns in the bar chart.

9
<PAGE> 11

INVESTOR EXPENSES

FEES AND FUND EXPENSES

This table describes the fees and expenses you may bear as a shareholder. Annual
fund operating expense figures are for the fiscal year ended October 31, 1999.

<TABLE>
<CAPTION>
JAPAN
JAPAN GROWTH SMALL COMPANY
FUND FUND
<S> <C> <C>
SHAREHOLDER FEES
(paid directly from your investment)
- ---------------------------------------------------
Sales charge "load" on purchases NONE NONE
- ---------------------------------------------------
Deferred sales charge "load" NONE NONE
- ---------------------------------------------------
Sales charge "load" on reinvested distributions NONE NONE
- ---------------------------------------------------
Redemption fees NONE 1.00%(1)
- ---------------------------------------------------
Exchange fees NONE NONE
- ---------------------------------------------------
ANNUAL FUND OPERATING EXPENSES
(deducted from fund assets)
- ---------------------------------------------------
Management fee 1.25% 1.25%
- ---------------------------------------------------
Distribution and service (12b-1) fee .25% .25%
- ---------------------------------------------------
Other expenses .69% .68%
- ---------------------------------------------------
TOTAL ANNUAL FUND OPERATING EXPENSES(2) 2.19% 2.18%
</TABLE>

(1) The fund imposes a 1.00% redemption fee (short-term trading fee) on fund
shares purchased on or after November 17, 1999 and 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.

(2) Actual fees and expenses for the fiscal year ended October 31, 1999 are
shown below. Fee waivers and expense reimbursements or credits reduced some
expenses during 1999 but may be discontinued at any time:

<TABLE>
<CAPTION>
JAPAN
JAPAN GROWTH SMALL COMPANY
EXPENSES AFTER WAIVERS AND REIMBURSEMENTS FUND FUND
<S> <C> <C>
Management fee .82% .83%
Distribution and service (12b-1) fee .25% .25%
Other expenses .68% .67%
----- -----
TOTAL ANNUAL FUND OPERATING EXPENSES 1.75% 1.75%
</TABLE>

10
<PAGE> 12

EXAMPLE

This example may help you compare the cost of investing in these funds with the
cost of investing in other mutual funds. Because it uses hypothetical
conditions, your actual costs may be higher or lower.

Assume you invest $10,000, each fund returns 5% annually, expense ratios remain
as listed in the first table on the opposite page (before fee waivers and
expense reimbursements or credits), and you close your account at the end of
each of the time periods shown. Based on these assumptions, your cost would be:

<TABLE>
<CAPTION>
ONE YEAR THREE YEARS FIVE YEARS 10 YEARS
<S> <C> <C> <C> <C>
JAPAN GROWTH FUND $222 $685 $1,175 $2,524
- ---------------------------------------
JAPAN SMALL COMPANY FUND $221 $682 $1,169 $2,513
</TABLE>

11
<PAGE> 13

THE FUNDS 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 funds

- Responsible for managing each fund's assets according to its goal and
strategies

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

- Credit Suisse Asset Management companies manage approximately $72 billion in
the U.S. and $203 billion globally

- Credit Suisse Asset Management has offices in 14 countries, including
SEC-registered offices in New York and London; other offices (such as those in
Budapest, Frankfurt, Milan, Moscow, Paris, Prague, Sydney, Tokyo, Warsaw and
Zurich) are not registered with the U.S. Securities and Exchange Commission

For easier reading, Credit Suisse Asset Management, LLC will be referred to
as "CSAM" or "we" throughout this Prospectus.

MULTI-CLASS STRUCTURE

This Prospectus offers Common Class shares of the funds. Common Class shares
are no-load.

Each of the funds offers Advisor Class shares described in a separate
prospectus. Advisor Class shares are available through financial-services firms.

12
<PAGE> 14

FUND INFORMATION KEY

Concise fund-by-fund descriptions begin on the next page. Each description
provides the following information:

GOAL AND STRATEGIES
The fund's particular investment goal and the strategies it intends to use in
pursuing that goal. Percentages of fund
assets are based on total assets unless indicated otherwise.

PORTFOLIO INVESTMENTS
The primary types of securities in which the fund invests. Secondary
investments are described in "More About Risk."

RISK FACTORS
The major risk factors associated with the fund. Additional risk factors are
included in "More About Risk."

PORTFOLIO MANAGEMENT
The individuals designated by the investment adviser to handle the fund's
day-to-day management.

INVESTOR EXPENSES

Actual fund expenses for the 1999 fiscal year. Future expenses may be higher
or lower.

- MANAGEMENT FEE The fee paid to the investment adviser for providing
investment advice to the fund. Expressed as a percentage of average net assets
after waivers.

- DISTRIBUTION AND SERVICE (12B-1) FEES Fees paid by the fund to the
distributor for making shares of the fund available to you. Expressed as a
percentage of average net assets.

- OTHER EXPENSES Fees paid by the fund for items such as administration,
transfer agency, custody, auditing, legal and registration fees and
miscellaneous expenses. Expressed as a percentage of average net assets after
waivers, credits and reimbursements.

FINANCIAL HIGHLIGHTS
A table showing the fund's audited financial performance for up to five
years.

- TOTAL RETURN How much you would have earned on an investment in the fund,
assuming you had reinvested all dividend and capital-gain distributions.

- PORTFOLIO TURNOVER An indication of trading frequency. The funds may sell
securities without regard to the length of time they have been held. A high
turnover rate may increase the fund's transaction costs and negatively affect
its performance. Portfolio turnover may also result in capital-gain
distributions that could raise your income-tax liability.

The Annual Report includes the auditor's report, along with the fund's
financial statements. It is available free upon request.

13
<PAGE> 15

JAPAN GROWTH FUND

GOAL AND STRATEGIES

The Japan Growth Fund seeks long-term growth of capital. To pursue this goal,
it invests in equity securities of growth companies located in or conducting a
majority of their business in Japan.

CSAM believes that Japanese industry is in an important period of
deregulation and restructuring. By investing in growth companies positioned to
benefit from the dynamic structural changes taking place in the Japanese
industrial system, the fund intends to provide investors with an opportunity to
participate in these developments.

In choosing equity securities, the fund's portfolio managers seek to identify
Japanese companies with attractive growth potential. The managers also look for
companies whose equity securities appear undervalued based on factors such as
earnings or assets. The fund may invest in companies of any size, whether traded
on an exchange or over-the-counter.

Under normal market conditions, the fund will invest at least 65% of assets
in equity securities of Japanese issuers. The remaining portion may be invested
in securities of other Asian issuers. Except for temporary defensive purposes,
the fund does not intend to invest in securities of non-Asian issuers.

PORTFOLIO INVESTMENTS

This fund currently intends to invest at least 80% of assets in equity
securities of Japanese issuers. Equity holdings may consist of:

- common and preferred stocks

- rights and warrants

- securities convertible into or exchangeable for common stocks

- American Depositary Receipts ("ADRs")

To a limited extent, the fund may also engage in other investment practices.

RISK FACTORS

This fund's principal risk factors are:

- market risk

- foreign securities

- country focus

- non-diversified status

The value of your investment generally will fluctuate in response to the
Japanese stock market. Because the fund invests internationally, it carries
additional risks, including currency, information and political risks. These
risks are defined in "More About Risk."

Targeting a single country could hurt the fund's performance or may cause the
fund to be more volatile than a more geographically diversified equity fund.
Fund performance is closely tied to economic and political conditions within
Japan. In addition, non-diversification might cause the fund to be more volatile
than a diversified mutual fund.

To the extent that the fund invests in smaller companies or special-situation
companies, it takes on further risks that could hurt its performance. "More
About

14
<PAGE> 16

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

PORTFOLIO MANAGEMENT

P. Nicholas Edwards and Todd Jacobson manage the fund's investment portfolio.
You can find out more about them in "Meet the Managers."

INVESTOR EXPENSES

Management fee .82%

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

All other expenses .68%

-----

Total expenses 1.75%
FINANCIAL HIGHLIGHTS

The figures below have been audited by the fund's independent auditors,
PricewaterhouseCoopers LLP.

<TABLE>
<CAPTION>
PERIOD ENDED: 10/99 10/98 10/97 10/96(1)
<S> <C> <C> <C> <C>
PER-SHARE DATA
- ---------------------------------------------------------------------------------------------
Net asset value, beginning of period $8.59 $9.74 $9.85 $10.00
- ---------------------------------------------------------------------------------------------
Investment activities:
Net investment loss (0.10) (0.07)(2) (0.07) (0.06)
Net gains or losses on investments and foreign
currency related items (both realized and
unrealized) 15.77 (1.08) 0.21 (0.09)
- ---------------------------------------------------------------------------------------------
Total from investment activities 15.67 (1.15) 0.14 (0.15)
- ---------------------------------------------------------------------------------------------
Distributions:
From net investment income 0.00 0.00 (0.20) 0.00
In excess of realized capital gains 0.00 0.00 (0.05) 0.00
- ---------------------------------------------------------------------------------------------
Total distributions 0.00 0.00 (0.25) 0.00
- ---------------------------------------------------------------------------------------------
Net asset value, end of period $24.26 $8.59 $9.74 $9.85
- ---------------------------------------------------------------------------------------------
Total return 182.42% (11.81%) 1.47% (1.50%)(3)
- ---------------------------------------------------------------------------------------------
RATIOS AND SUPPLEMENTAL DATA
- ---------------------------------------------------------------------------------------------
Net assets, end of period (000s omitted) $525,489 $40,519 $24,954 $20,157
Ratio of expenses to average net assets 1.76%(5) 1.75%(5) 1.75%(5) 1.76%(4,5)
Ratio of net loss to average net assets (1.32%) (0.76%) (1.03%) (1.03%)(4)
Decrease reflected in above operating expense
ratios due
to waivers/reimbursements .45% 0.53% 0.81% 1.79%(4)
Portfolio turnover rate 171.12% 75.82% 93.84% 51.72%(3)
</TABLE>

(1) For the period December 29, 1995 (Commencement of Operations) through
October 31, 1996.

(2) Per share information is calculated using the average shares outstanding
method.

(3) Not annualized.

(4) Annualized.

(5) Interest earned on uninvested cash balances is used to offset portions of
the transfer agent expense. These arrangements resulted in a reduction to
the Common Class shares' expenses by .01%, .00%, .00% and .01% for the years
ending October 31, 1999, 1998, 1997 and for the period ending October 31,
1996, respectively. The Common Class shares' operating expense ratio after
reflecting these arrangements were 1.75%, 1.75%, 1.75% and 1.75% for the
years ended October 31, 1999, 1998, 1997 and for the period ending October
31, 1996, respectively.

15
<PAGE> 17

JAPAN SMALL COMPANY FUND

GOAL AND STRATEGIES

The Japan Small Company Fund seeks long-term capital appreciation. To pursue
this goal, it invests in equity securities of small companies located in or
conducting a majority of their business in Japan.

Under normal market conditions, the fund will invest at least 65% of assets
in equity securities of small Japanese companies. The fund considers a "small"
company to be one whose market capitalization does not exceed the largest
capitalization of companies in the:

- JASDAQ Index

- Second Section of the Tokyo Stock Exchange or

- smaller half of the First Section of the Tokyo Stock Exchange

Some companies may outgrow the definition of a small company after the fund
has purchased their securities. These companies continue to be considered small
for purposes of the fund's 65% minimum allocation to Japanese small-company
equities.

Once the 65% policy is met, the fund may invest in Japanese or other Asian
companies of any size. Except for temporary defensive purposes, the fund does
not intend to invest in securities of non-Asian issuers. The fund will not
invest more than 10% of assets in any one country except Japan.

In choosing equity securities, the fund's portfolio manager looks for
companies that offer attractive opportunities for capital appreciation.
PORTFOLIO INVESTMENTS

This fund invests primarily in equity securities of small Japanese companies.
Equity holdings may consist of:

- common stocks

- rights and warrants

- securities convertible into or exchangeable for common stocks

To a limited extent, the fund may also engage in other investment practices.
RISK FACTORS

This fund's principal risk factors are:

- market risk

- foreign securities

- country focus

- non-diversified status

- small companies

- special-situation companies

Investing in small companies may expose the fund to increased market,
liquidity and information risks. Sometimes, these companies are involved in
"special situations." Securities of a special-situation company may decline in
value and hurt the fund's performance if the anticipated benefits of the special
situation do not materialize. "More About Risk" details certain other investment
practices the fund may use. Please read that section carefully before you
invest.

16
<PAGE> 18

PORTFOLIO MANAGEMENT

P. Nicholas Edwards and Todd Jacobson manage the fund's investment portfolio.
You can find out more about them in "Meet the Managers."

INVESTOR EXPENSES

Management fee .83%

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

All other expenses .67%

-----
Total expenses 1.75%

FINANCIAL HIGHLIGHTS

The figures below have been audited by the fund's independent auditors,
PricewaterhouseCoopers LLP.

<TABLE>
<CAPTION>
PERIOD ENDED: 10/99 10/98 10/97 10/96 10/95
<S> <C> <C> <C> <C> <C>
PER-SHARE DATA
- -------------------------------------------------------------------------------------------------
Net asset value, beginning of period $5.57 $6.37 $8.47 $9.09 $9.85
- -------------------------------------------------------------------------------------------------
Investment activities:
Net investment loss (0.08) (0.01) (1.22) (0.23) 0.00
Net gains or losses on investments and
foreign currency related items
(both realized and unrealized) 13.12 (0.67) (0.79) (0.01) (0.76)
- -------------------------------------------------------------------------------------------------
Total from investment activities 13.04 (0.68) (2.01) (0.24) (0.76)
- -------------------------------------------------------------------------------------------------
Distributions:
From net investment income 0.00 0.00 0.00 (0.38) 0.00
From realized capital gains 0.00 (0.07) (0.09) 0.00 0.00
Return of capital 0.00 (0.05) 0.00 0.00 0.00
- -------------------------------------------------------------------------------------------------
Total distributions 0.00 (0.12) (0.09) (0.38) 0.00
- -------------------------------------------------------------------------------------------------
Net asset value, end of period $18.61 $5.57 $6.37 $8.47 $9.09
- -------------------------------------------------------------------------------------------------
Total return 234.11% (10.61%) (23.98%) (2.79%) (7.72%)
- -------------------------------------------------------------------------------------------------
RATIOS AND SUPPLEMENTAL DATA
- -------------------------------------------------------------------------------------------------
Net assets, end of period (000s
omitted) $855,282 $37,299 $41,627 $154,460 $178,568
Ratio of expenses to average net assets 1.76%* 1.75%* 1.76%* 1.76%* 1.41%
Ratio of net loss to average
net assets (1.25%) (0.84%) (1.10%) (1.22%) (0.15%)
Decrease reflected in above operating
expense ratios due to
waivers/reimbursements 0.43% 0.81% 0.51% 0.29% 1.35%
Portfolio turnover rate 249.79% 112.68% 100.60% 95.23% 82.98%
</TABLE>

(*) Interest earned on uninvested cash balances is used to offset portions of
the transfer agent expense. These arrangements resulted in a reduction to
the Common Class shares' expenses by .01%, .00%, .01% and .01% for the years
ending October 31, 1999, 1998, 1997 and 1996, respectively. The Common Class
shares' operating expense ratio after reflecting these arrangements were
1.75%, 1.75%, 1.75% and 1.75% for the years ended October 31, 1999, 1998,
1997 and 1996, respectively.

17
<PAGE> 19

MORE ABOUT RISK

INTRODUCTION

A fund's goal and principal strategies largely determine its risk profile.
You will find a concise description of each fund's risk profile in "Key Points."
The fund-by-fund discussions contain more detailed information. This section
discusses other risks that may affect the funds.

The funds may use certain investment practices that have higher risks
associated with them. However, each fund has limitations and policies designed
to reduce many of the risks. The "Certain Investment Practices" table describes
these practices and the limitations on their use.

TYPES OF INVESTMENT RISK

The following risks are referred to throughout this Prospectus.

CORRELATION RISK The risk that changes in the value of a hedging instrument
will not match those of the investment being hedged.

CREDIT RISK The issuer of a security or the counterparty to a contract may
default or otherwise become unable to honor a financial obligation.

CURRENCY RISK Fluctuations in exchange rates between the U.S. dollar and
foreign currencies may negatively affect an investment. Adverse changes in
exchange rates may erode or reverse any gains produced by foreign-currency-
denominated investments and may widen any losses.

EXPOSURE RISK The risk associated with investments (such as derivatives) or
practices (such as short selling) that increase the amount of money a fund could
gain or lose on an investment.

- HEDGED Exposure risk could multiply losses generated by a derivative or
practice used for hedging purposes. Such losses should be substantially
offset by gains on the hedged investment. However, while hedging can reduce
or eliminate losses, it can also reduce or eliminate gains.

- SPECULATIVE To the extent that a derivative or practice is not used as a
hedge, the fund is directly exposed to the risks of the derivative or
practice. 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

18
<PAGE> 20

like. A fund may have to lower the price,
sell other securities instead or forego an investment opportunity. Any of these
could have a negative effect on fund management or performance.

MARKET RISK The market value of a security may move up and down, sometimes
rapidly and unpredictably. These fluctuations, which are often referred to as
"volatility," may cause a security to be worth less than it was worth at an
earlier time. Market risk may affect a single issuer, industry, sector of the
economy, or the market as a whole. Market risk is common to most
investments--including stocks and bonds, and the mutual funds that invest in
them.

OPERATIONAL RISK Some countries have less-developed securities markets (and
related transaction, registration and custody practices) that could subject a
fund to losses from fraud, negligence, delay or other actions.

POLITICAL RISK Foreign governments may expropriate assets, impose capital or
currency controls, impose punitive taxes, or nationalize a company or industry.
Any of these actions could have a severe effect on security prices and impair a
fund's ability to bring its capital or income back to the U.S. Other political
risks include economic policy changes, social and political instability,
military action and war.

VALUATION RISK The lack of an active trading market may make it difficult to
obtain an accurate price for a fund security.

YEAR 2000 PROCESSING RISK The inability of a computer system to distinguish
the year 2000 from the year 1900 (the "Year 2000 Issue") could cause
difficulties for system users after December 31, 1999. Although this date has
passed, the impact of the failure by companies or foreign markets in which a
fund invests to address the Year 2000 Issue effectively could continue to be
felt into 2000 and may negatively impact the funds' performance.

19
<PAGE> 21

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:

<TABLE>
<S> <C>
[-] 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>

<TABLE>
<CAPTION>
JAPAN
JAPAN SMALL
GROWTH COMPANY
FUND FUND
<S> <C> <C>
INVESTMENT PRACTICE LIMIT
BORROWING The borrowing of money from banks to meet
redemptions or for other temporary or emergency purposes.
Speculative exposure risk. 30% 30%
- ----------------------------------------------------------------------------
COUNTRY/REGION FOCUS Investing a significant portion of fund
assets in a single country or region. Market swings in the
targeted country or region will be likely to have a greater
effect on fund performance than they would in a more
geographically diversified equity fund. Currency, market,
political risks. [- ] [- ]
- ----------------------------------------------------------------------------
CURRENCY TRANSACTIONS Instruments, such as options, futures,
forwards or swaps, intended to manage fund exposure to
currency risk or to enhance total return. Options, futures
or forwards involve the right or obligation to buy or sell a
given amount of foreign currency at a specified price and
future date. Swaps involve the right or obligation to
receive or make payments based on two different currency
rates. Correlation, credit, currency, hedged exposure,
liquidity, political, speculative exposure, valuation
risks.(1) [- ] [- ]
- ----------------------------------------------------------------------------
FUTURES AND OPTIONS ON FUTURES Exchange-traded contracts
that enable a fund to hedge against or speculate on future
changes in currency values, interest rates or stock indexes.
Futures obligate the fund (or give it the right, in the case
of options) to receive or make payment at a specific future
time based on those future changes.(1) Correlation,
currency, hedged exposure, interest-rate, market,
speculative exposure risks.(2) [ ] [ ]
- ----------------------------------------------------------------------------
OPTIONS Instruments that provide a right to buy (call) or
sell (put) a particular security, currency or index of
securities at a fixed price within a certain time period. A
fund may purchase or sell (write) both put and call options
for hedging or speculative purposes.(1) Correlation, credit,
hedged exposure, liquidity, market, speculative exposure
risks. 25% 25%
- ----------------------------------------------------------------------------
RESTRICTED AND OTHER ILLIQUID SECURITIES Certain securities
with restrictions on trading, or those not actively traded.
May include private placements. Liquidity, market, valuation
risks. 10% 15%
- ----------------------------------------------------------------------------
</TABLE>

20
<PAGE> 22

<TABLE>
<CAPTION>
JAPAN
JAPAN SMALL
GROWTH COMPANY
FUND FUND
<S> <C> <C>

INVESTMENT PRACTICE LIMIT
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% 33 1/3%
- -----------------------------------------------------------------------------
SMALL COMPANIES Companies with small relative market
capitalizations. Information, liquidity, market, valuation
risks. [- ] [- ]
- -----------------------------------------------------------------------------
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. [ ] [ ]
- -----------------------------------------------------------------------------
WARRANTS Options issued by a company granting the holder the
right to buy certain securities, generally common stock, at
a specified price and usually for a limited time. Liquidity,
market, speculative exposure risks. 10% 10%
- -----------------------------------------------------------------------------
WHEN-ISSUED SECURITIES AND FORWARD COMMITMENTS The purchase
or sale of securities for delivery at a future date; market
value may change before delivery. Liquidity, market,
speculative exposure risks. 20% 20%
- -----------------------------------------------------------------------------
</TABLE>

(1) The funds are not obligated to pursue any hedging strategy and do not
represent that these techniques are available now or will be available at
any time in the future.
(2) Each fund is limited to 5% of net assets for initial margin and premium
amounts on futures positions considered to be speculative by the Commodity
Futures Trading Commission.

21
<PAGE> 23

MEET THE MANAGERS

[P. Nicholas Edwards Photo]
P. NICHOLAS EDWARDS
Managing Director

- Co-Portfolio Manager, Japan Growth Fund since fund inception

- Co-Portfolio Manager, Japan Small Company Fund since May 1997

- With CSAM since 1999 as a result of Credit Suisse's acquisition of Warburg
Pincus Asset Management, Inc. (Warburg Pincus)

- With Warburg Pincus since 1995

- Director at Jardine Fleming Investment Advisers, Tokyo, 1984 to 1995

[JACOBSON PHOTO]

TODD JACOBSON
Director

- Co-Portfolio Manager, Japan Growth Fund and Japan Small Company Fund since
1999

- With CSAM since 1999 as a result of Credit Suisse's acquisition of Warburg
Pincus

- With Warburg Pincus since 1997

- Analyst with Brown Brothers Harriman, 1993 to 1997

Job title indicates position with the investment adviser.

22
<PAGE> 24

ABOUT YOUR ACCOUNT

SHARE VALUATION

The price of your shares is also referred to as their net asset value (NAV).

The NAV is determined at the close of regular trading on the New York Stock
Exchange (NYSE) (usually 4 p.m. Eastern Time) each day the NYSE is open for
business. It is calculated by dividing the Common Class's total assets, less its
liabilities, by the number of Common Class shares outstanding.

Each fund values its securities based on market quotations when it calculates
its NAV. If market quotations are not readily available, securities and other
assets are valued by another method that the Board of Directors believes
accurately reflects fair value. Debt obligations that will mature in 60 days or
less are valued on the basis of amortized cost, unless the Board of Directors
determines that using this method would not reflect an investment's value.

Some fund securities may be listed on foreign exchanges that are open on days
(such as U.S. holidays) when the funds do not compute their prices. This could
cause the value of a fund's portfolio investments to be affected by trading on
days when you cannot buy or sell shares.

BUYING AND
SELLING SHARES

The accompanying Shareholder Guide explains how to invest directly with the
funds. You will find information about purchases, redemptions, exchanges and
services.

Each fund is open on those days when the NYSE is open, typically Monday
through Friday. If we receive your request in proper form by the close of the
NYSE (usually 4 p.m. ET), your transaction will be priced at that day's NAV. If
we receive it after that time, it will be priced at the next business day's NAV.

FINANCIAL-SERVICES FIRMS
You can also buy and sell fund shares through a variety of financial-services
firms such as banks, brokers and financial advisors. The funds have authorized
these firms (and other intermediaries that the firms may designate) to accept
orders. When an authorized firm or its designee has received your order, it is
considered received by the fund and will be priced at the next-computed NAV.

Financial-services firms may charge transaction fees or other fees that you
could avoid by investing directly with the funds. Please read their program
materials for any special provisions or additional service features that may
apply to your investment. Certain features of the funds, such as the minimum
initial or subsequent investment amounts, may be modified.

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

- Charles Schwab & Co., Inc. Mutual Fund OneSource(R) service

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

- Waterhouse Securities, Inc.
23
<PAGE> 25

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 quarter

You will receive annual and semiannual financial reports.

DISTRIBUTIONS

As a fund investor, you will receive distributions.

Each fund may earn dividends from stocks and interest from bond, money-
market and other investments. These are passed along as dividend distributions.
A fund realizes capital gains whenever it sells securities for a higher price
than it paid for them. These are passed along as capital-gain distributions.

The funds typically distribute dividends and capital gains annually, usually
in December.

Most investors have their distributions reinvested in additional shares of
the same fund. Distributions will be reinvested unless you choose on your
account application to have a check for your distributions mailed to you or sent
by electronic transfer.

TAXES

As with any investment, you should consider how your investment in a fund
will be taxed. If your account is not a tax-advantaged account, you should be
especially aware of the following potential tax implications. Please consult
your tax professional concerning your own tax situation.

TAXES ON DISTRIBUTIONS
As long as a fund continues to meet the requirements for being a
tax-qualified regulated investment company, it pays no federal income tax on the
earnings it distributes to shareholders.

Distributions you receive from a fund, whether reinvested or taken in cash,
are generally considered taxable. Distributions from a fund's long-term capital
gains are taxed as long-term capital gains regardless of how long you have held
fund shares. Distributions from other sources (including the fund's short-term
capital gains) are generally taxed as ordinary income. The funds will mostly
make capital-gain distributions, which will be largely derived from the fund's
short-term or long-term capital gains.

If you buy shares shortly before or on the "record date"--the date that
establishes you as the person to receive the upcoming distribution--you may
receive a portion of the money you just invested in the form of a taxable
distribution.

24
<PAGE> 26

The Form 1099 that is mailed to you every January details your distributions
and their federal tax category.

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.

25
<PAGE> 27

OTHER INFORMATION

ABOUT THE DISTRIBUTOR

Provident Distributors, Inc. (PDI), located at Four Falls Corporate Center,
West Conshohocken, PA 19428-2961, is the funds' distributor and is responsible
for making the funds available to you. PDI is not affiliated with CSAM.

As part of their business strategies, the funds each have adopted a Rule
12b-1 shareholder-servicing and distribution plan to compensate Credit Suisse
Asset Management Securities, Inc. (CSAMSI) for providing certain shareholder and
other services related to the sale of the Common Class. Under the plan, CSAMSI
receives fees at an annual rate of 0.25% of average daily net assets of a fund's
Common Class. Because the fees are paid out of a 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.

26
<PAGE> 28

FOR MORE INFORMATION

More information about these funds is available free upon request, including
the following:

SHAREHOLDER GUIDE

Explains how to buy and sell shares. The Shareholder Guide is incorporated by
reference into (is legally part of ) this Prospectus.

ANNUAL/SEMIANNUAL REPORT TO SHAREHOLDERS

Includes financial statements, portfolio investments and detailed performance
information.

The Annual Report also contains a letter from the 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 funds, is on file with the Securities and Exchange Commission
(SEC) and is incorporated by reference.

You may visit the SEC's Internet Web site (www.sec.gov) to view the SAI,
material incorporated by reference, and other information. You can also obtain
copies by visiting the SEC's Public Reference Room in Washington, DC (phone
202-942-8090) or by sending your request and a duplicating fee to the SEC's
Public Reference Section, Washington, DC 20549-6009 or electronically at
[email protected].

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 Japan Growth Fund 811-07371

Warburg Pincus Japan
Small Company Fund 811-08686

[Warburg Pincus Funds Logo]

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

PROVIDENT DISTRIBUTORS, INC., DISTRIBUTOR WPJPN-1-0200

<PAGE> 29

[Warburg Pincus Funds Logo][Credit Suisse Asset Management Logo]

WARBURG PINCUS FUNDS
SHAREHOLDER
GUIDE

Common Class

February 29, 2000

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

Warburg Pincus Funds are advised by Credit Suisse Asset Management, LLC
<PAGE> 30

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
Value Fund: $ 1,000
WorldPerks(R) Funds: $ 5,000
Long-Short Fund: $ 25,000
All other funds: $ 2,500
IRAs: $ 500(*)
Transfers/Gifts to
Minors: $ 500(*)
</TABLE>

(*) $25,000 minimum for Long-Short Fund.

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> 31

<TABLE>
<CAPTION>
OPENING AN ACCOUNT ADDING TO AN ACCOUNT
<S> <C>
BY CHECK
- - 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 - Minimum amount is $250.
fund. Also please observe the minimum If you do not have telephone privileges,
initial investment. mail or fax a signed letter of
If you do not have telephone privileges, instruction.
mail or fax a signed letter 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
- - Call our Shareholder Service Center and wire. Please be sure to specify your
fax the signed New Account Application name, the account number and the fund
by 4 p.m. ET. name on your wire advice.
- - Shareholder Services will telephone you - Wire the money for receipt that day.
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> 32

SELLING SHARES(*)

<TABLE>
<CAPTION>
SELLING SOME OR ALL OF YOUR SHARES CAN BE USED FOR
<S> <C>
BY MAIL

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.
BY EXCHANGE
- - Call our Shareholder Service Center to - Accounts with telephone privileges.
request an exchange. Be sure to read If you do not have telephone privileges,
the current prospectus for the new fund. mail or fax a letter of instruction to
Also please observe the minimum initial exchange shares.
investment.
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> 33

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

For fund shares purchased other than by bank wire, bank check, U.S. Treasury
check, certified check or money order, the funds will delay payment of your cash
redemption proceeds for 10 calendar days from the day of purchase. At any time
during this period, you may exchange into another fund.

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
Value 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> 34

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.

SAVEMYMONEY PROGRAM

SaveMyMoney(SM) is a low minimum, automatic investing program that makes it
easy to build a mutual fund portfolio. For an initial investment of $250 along
with a minimum $50 monthly investment, you can invest in certain Warburg Pincus
funds. The SaveMyMoney Program will automatically transfer the monthly
investment amount you designate from your bank account.

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> 35

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 Fund,
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> 36

[Warburg Pincus Funds Logo]

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

PROVIDENT DISTRIBUTORS, INC., DISTRIBUTOR WPCOM-31-0200

<PAGE> 37

[Warburg Pincus Logo] [Credit Suisse Logo]
PROSPECTUS
Advisor Class

February 29, 2000

WARBURG PINCUS
JAPAN GROWTH FUND
--

WARBURG PINCUS
JAPAN SMALL COMPANY FUND

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

<PAGE> 38

CONTENTS

<TABLE>
<S> <C>
KEY POINTS.................... .................... 4
Goals and Principal Strategies.................. 4
Investor Profile................................ 4
A Word About Risk............................... 5
PERFORMANCE SUMMARY............... ................ 7
Year-by-Year Total Returns...................... 7
Average Annual Total Returns.................... 8
INVESTOR EXPENSES................ ................. 9
Fees and Fund Expenses.......................... 9
Example......................................... 10
THE FUNDS IN DETAIL............... ................ 11
The Management Firm............................. 11
Multi-Class Structure........................... 11
Fund Information Key............................ 12
JAPAN GROWTH FUND................ ................. 13
JAPAN SMALL COMPANY FUND............. ............. 15
MORE ABOUT RISK................. .................. 17
Introduction.................................... 17
Types of Investment Risk........................ 17
Certain Investment Practices.................... 19
MEET THE MANAGERS................ ................. 21
ABOUT YOUR ACCOUNT................ ................ 22
Share Valuation................................. 22
Account Statements.............................. 22
Distributions................................... 22
Taxes........................................... 22
OTHER INFORMATION................ ................. 24
About the Distributor........................... 24

BUYING SHARES.................. ................... 25

SELLING SHARES.................. .................. 27

SHAREHOLDER SERVICES............... ............... 29

OTHER POLICIES.................. .................. 30

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

3
<PAGE> 39

KEY POINTS
GOALS AND PRINCIPAL STRATEGIES

<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------
FUND/RISK FACTORS GOAL STRATEGIES
- --------------------------------------------------------------------------------------
<S> <C> <C>
JAPAN GROWTH FUND Long-term growth of - Invests in equity securities of
Risk factors: capital Japanese companies
Market risk - May invest in companies of any
Foreign securities size
Country focus - May look for companies with
Non-diversified status attractive growth potential or
companies whose equity
securities appear undervalued
- --------------------------------------------------------------------------------------
JAPAN SMALL COMPANY Long-term capital -Invests in equity securities of
FUND appreciation small Japanese companies
Risk factors: -Emphasizes equity securities with
Market risk attractive capital-appreciation
Foreign securities potential
Country focus
Non-diversified status
Small companies
Special-situation
companies
- --------------------------------------------------------------------------------------
</TABLE>

INVESTOR PROFILE

THESE FUNDS ARE DESIGNED FOR INVESTORS WHO:

- have longer time horizons

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

- are investing for growth or capital appreciation

- are seeking access to the Japanese market, which can be less accessible to
individual investors

THEY MAY NOT BE APPROPRIATE IF YOU:

- are investing for a shorter time horizon

- are uncomfortable with an investment that has a higher degree of volatility

- are looking for income

You should base your selection of a fund on your own goals, risk preferences
and time horizon.

4
<PAGE> 40

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.

Investments in the funds are not bank deposits and are not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency.

MARKET RISK

Both funds

FOREIGN SECURITIES

Both funds

A fund that invests outside the U.S. carries additional risks that include:

- INFORMATION RISK Key information about an issuer, security or market may be
inaccurate or unavailable.

COUNTRY FOCUS

Both funds

NON-DIVERSIFIED STATUS

Both funds

The funds are considered non-diversified investment companies under the
Investment Company Act of 1940 and are permitted to invest a greater proportion
of their assets in the securities

5
<PAGE> 41

of a smaller number of issuers. As a result, the funds may be subject to greater
volatility with respect to their portfolio securities than a fund that is more
broadly diversified.

SMALL COMPANIES

Japan Small Company Fund

SPECIAL-SITUATION COMPANIES

Japan Small Company Fund

6
<PAGE> 42

PERFORMANCE SUMMARY

YEAR-BY-YEAR TOTAL RETURNS

<TABLE>
<CAPTION>
JAPAN GROWTH FUND
-----------------
<S> <C>
1996 -5.8
1997 0.85
1998 0.95
1999 260.27
</TABLE>

<TABLE>
<CAPTION>
JAPAN SMALL COMPANY FUND
------------------------
<S> <C>
1995 -1.24
1996 -13.35
1997 -26.18
1998 12.76
1999 329.68
</TABLE>

7
<PAGE> 43

AVERAGE ANNUAL TOTAL RETURNS

<TABLE>
<CAPTION>
ONE YEAR FIVE YEARS 10 YEARS LIFE OF INCEPTION
PERIOD ENDED 12/31/99: 1999 1995-1999 1990-1999 FUND DATE
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
JAPAN GROWTH FUND 260.27% N/A N/A 36.22% 12/29/95
- -----------------------------------------------------------------------------------------
TOPIX(1) 78.54% N/A N/A 3.64%
- -----------------------------------------------------------------------------------------
JAPAN SMALL COMPANY FUND 329.68% 25.07% N/A 22.83% 9/30/94
- -----------------------------------------------------------------------------------------
JASDAQ INDEX ($) UNHEDGED(2) 279.64% 9.28% N/A 7.69%
- -----------------------------------------------------------------------------------------
JASDAQ INDEX (YEN) HEDGED(2) 244.49% 9.83% N/A 8.38%
- -----------------------------------------------------------------------------------------
MSCI Japan Small Company
Index(3) 33.11% 12.58% N/A -12.66%
- -----------------------------------------------------------------------------------------
</TABLE>

(2) The JASDAQ Over-the-Counter Composite Index is an unmanaged index (with no
defined investment objective) of stocks traded over the counter in Japan.

(3) The Morgan Stanley Capital International Japan Small Company Index is
composed of small-cap Japanese stocks.

- A CUMULATIVE TOTAL RETURN is the actual return of an investment for a
specified period. The year-by-year total returns in the bar chart are
examples of one-year cumulative total returns.

- Because of compounding, the average annual total returns in the table
cannot be computed by averaging the returns in the bar chart.

8
<PAGE> 44

INVESTOR EXPENSES

FEES AND FUND EXPENSES

This table describes the fees and expenses you may bear as a shareholder.
Annual fund operating expense figures are for the fiscal year ended
October 31, 1999.

<TABLE>
<CAPTION>
JAPAN
JAPAN GROWTH SMALL COMPANY
FUND FUND
<S> <C> <C>
SHAREHOLDER FEES
(paid directly from your investment)
- --------------------------------------------------------------------------------
Sales charge "load" on purchases NONE NONE
- --------------------------------------------------------------------------------
Deferred sales charge "load" NONE NONE
- --------------------------------------------------------------------------------
Sales charge "load" on reinvested distributions NONE NONE
- --------------------------------------------------------------------------------
Redemption fees NONE 1.00%(1)
- --------------------------------------------------------------------------------
Exchange fees NONE NONE
- --------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES
(deducted from fund assets)
- --------------------------------------------------------------------------------
Management fee 1.25% 1.25%
- --------------------------------------------------------------------------------
Distribution and service (12b-1) fee .50% .50%
- --------------------------------------------------------------------------------
Other expenses .79% .76%
- --------------------------------------------------------------------------------
TOTAL ANNUAL FUND OPERATING EXPENSES(2) 2.54% 2.51%
</TABLE>

<TABLE>
<CAPTION>
JAPAN
JAPAN GROWTH SMALL COMPANY
EXPENSES AFTER WAIVERS AND REIMBURSEMENTS FUND FUND
<S> <C> <C>
Management fee .82% .83%
Distribution and service (12b-1) fee .50% .50%
Other expenses .68% .67%
----- -----
TOTAL ANNUAL FUND OPERATING EXPENSES 2.00% 2.00%
</TABLE>

9
<PAGE> 45

EXAMPLE

Assume you invest $10,000, each fund returns 5% annually, expense ratios remain
as listed in the first table on the opposite page (before fee waivers and
expense reimbursements and 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 FIVE YEARS 10 YEARS
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
JAPAN GROWTH FUND $257 $791 $1,350 $2,875
- ---------------------------------------------------------------------------------------
JAPAN SMALL COMPANY FUND $254 $782 $1,336 $2,846
- ---------------------------------------------------------------------------------------
</TABLE>

10
<PAGE> 46

THE FUNDS 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 funds

- Responsible for managing each fund's assets according to its goal and
strategies

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

- Credit Suisse Asset Management companies manage approximately $72 billion in
the U.S. and $203 billion globally

For easier reading, Credit Suisse Asset Management, LLC will be referred to
as "CSAM" or "we" throughout this Prospectus.

MULTI-CLASS STRUCTURE

This Prospectus offers Advisor Class shares of the funds, which are sold
through financial services firms.

Each of the funds offers Common Class shares described in a separate
prospectus.

11
<PAGE> 47

FUND INFORMATION KEY

Concise fund-by-fund descriptions begin on the next page. Each description
provides the following information:

GOAL AND STRATEGIES
The fund's particular investment goal and the strategies it intends to use in
pursuing that goal. Percentages of fund
assets are based on total assets unless indicated otherwise.

PORTFOLIO INVESTMENTS
The primary types of securities in which the fund invests. Secondary
investments are described in "More About Risk."

RISK FACTORS
The major risk factors associated with the fund. Additional risk factors are
included in "More About Risk."

PORTFOLIO MANAGEMENT
The individuals designated by the investment adviser to handle the fund's
day-to-day management.

INVESTOR EXPENSES

Actual fund expenses for the 1999 fiscal year. Future expenses may be higher
or lower.

- MANAGEMENT FEE The fee paid to the investment adviser for providing
investment advice to the fund. Expressed as a percentage of average net assets
after waivers.

- DISTRIBUTION AND SERVICE (12b-1) FEES Fees paid by the fund to the
distributor for making shares of the fund available to you. Expressed as a
percentage of average net assets.

FINANCIAL HIGHLIGHTS
A table showing the fund's audited financial performance for up to five
years.

- TOTAL RETURN How much you would have earned on an investment in the fund,
assuming you had reinvested all dividend and capital-gain distributions.

- PORTFOLIO TURNOVER An indication of trading frequency. The fund may sell
securities without regard to the length of time they have been held. A high
turnover rate may increase the fund's transaction costs and negatively affect
its performance. Portfolio turnover may also result in capital-gain
distributions that could raise your income-tax liability.

The Annual Report includes the auditor's report, along with the fund's
financial statements. It is available free upon request.

12
<PAGE> 48

JAPAN GROWTH FUND

GOAL AND STRATEGIES

The Japan Growth Fund seeks long-term growth of capital. To pursue its goal,
it invests in equity securities of growth companies located in or conducting a
majority of their business in Japan.

PORTFOLIO INVESTMENTS

This fund currently intends to invest at least 80% of assets in equity
securities of Japanese issuers. Equity holdings may consist of:

- common and preferred stocks

- rights and warrants

- securities convertible into or exchangeable for common stocks

- American Depositary Receipts ("ADRs")

To a limited extent, the fund may also engage in other investment practices.

RISK FACTORS

This fund's principal risk factors are:

- market risk

- foreign securities

- country focus

- non-diversified status

To the extent that the fund invests in smaller companies or special-situation
companies, it takes on further risks that could hurt its performance. "More
About

13
<PAGE> 49
Risk" details these and certain other investment practices the fund may use.
Please read that section carefully before you invest.

PORTFOLIO MANAGEMENT

P. Nicholas Edwards and Todd Jacobson manage the fund's investment portfolio.
You can find out more about them in "Meet the Managers."

INVESTOR EXPENSES

Management fee .82%

Distribution and service
(12b-1) fee .50%

All other expenses .68%

------------
Total expenses 2.00%

FINANCIAL HIGHLIGHTS

The figures below have been audited by the fund's independent auditors,
PricewaterhouseCoopers LLP.

PERIOD ENDED: 10/99 10/98 10/97 10/96(1)
<S> <C> <C> <C> <C>
PER-SHARE DATA
Net asset value, beginning of period $8.71 $9.89 $9.83 $10.00
Investment activities:
Net investment income (Loss) (0.06) (0.11)(2) 0.05 (0.09)
Net gains or losses on investments and foreign
currency related items (both realized and
unrealized) 15.53 (1.07) 0.01 (0.08)
Total from investment activities 15.47 (1.18) 0.06 (0.17)
Net asset value, end of period $24.18 $8.71 $9.89 $9.83
Total return 177.61% (11.93%) 0.61% (1.70%)(3)
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000s omitted) $3,375 $22 $17 $1
Ratio of expenses to average net assets 2.01%(5) 2.00%(5) 2.00%(5) 2.00%(4,5)
Ratio of net income (loss) to average net assets (1.55%) (1.11%) (1.42%) (1.08%)(4)
Decrease reflected in above operating expense
ratios due to waivers/reimbursements 0.54% 0.58% 7.25% 3.43%(4)
Portfolio turnover rate 171.12% 75.82% 93.84% 51.72%(3)
</TABLE>

(1) For the period December 29, 1995 (Commencement of Operations) through
October 31, 1996.

(2) Per share information is calculated using the average shares outstanding
method.

(3) Not annualized.

(4) Annualized.

(5) Interest earned on uninvested cash balances is used to offset portions of
the transfer agent expense. These arrangements resulted in a reduction to
the Advisor Class shares' expenses ratio by .01%, .00%, .00% and .00% for
the years ending October 31, 1999, 1998, 1997 and for the period ending
October 31, 1996, respectively. The Advisor Class shares' operating expense
ratio after reflecting these arrangements were 2.00%, 2.00%, 2.00% and 2.00%
for the years ended October 31, 1999, 1998, 1997 and for the period ending
October 31, 1996, respectively.

14
<PAGE> 50

JAPAN SMALL COMPANY FUND

GOAL AND STRATEGIES

- JASDAQ Index

- Second Section of the Tokyo Stock Exchange or

- smaller half of the First Section of the Tokyo Stock Exchange

In choosing equity securities, the fund's portfolio managers look for
companies that offer attractive opportunities for capital appreciation.

PORTFOLIO INVESTMENTS

This fund invests primarily in equity securities of small Japanese companies.
Equity holdings may consist of:

- common stocks

- rights and warrants

- securities convertible into or exchangeable for common stocks

To a limited extent, the fund may also engage in other investment practices.

RISK FACTORS

This fund's principal risk factors are:

- market risk

- foreign securities

- country focus

- non-diversified status

- small companies

- special-situation companies

15
<PAGE> 51

PORTFOLIO MANAGEMENT

P. Nicholas Edwards and Todd Jacobson manage the fund's investment portfolio.
You can find out more about them in "Meet the Managers."

INVESTOR EXPENSES

Management fee .83%

Distribution and service

(12b-1) fee .50%

All other expenses .67%

-----

Total expenses 2.00%

FINANCIAL HIGHLIGHTS

The figures below have been audited by the fund's independent auditors,
PricewaterhouseCoopers LLP.

<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------
PERIOD ENDED: 10/99 10/98 10/97 10/96 10/95
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
PER-SHARE DATA

Net asset value, beginning of year $ 5.57 $ 6.37 $ 8.45 $ 9.08 $ 9.85
- ----------------------------------------------------------------------------------------------
Investment activities:
Net investment income (loss) (0.06) (0.62) 0.35 (0.13) (0.02)
Net gains or losses on investments and
foreign currency related items
(both realized and unrealized) 13.15 (0.06) (2.43) (0.14) (0.75)
- ----------------------------------------------------------------------------------------------
Total from investment activities 13.09 (0.68) (2.08) (0.27) (0.77)
- ----------------------------------------------------------------------------------------------
Less Dividends and Distributions:
Dividends from net investment income 0.00 0.00 0.00 (0.36) 0.00
Distributions from realized capital gains 0.00 (0.07) (0.00) 0.00 0.00
Return of capital 0.00 (0.05) 0.00 0.00 0.00
- ----------------------------------------------------------------------------------------------
Total dividends and distributions 0.00 (0.12) 0.00 (0.36) 0.00
- ----------------------------------------------------------------------------------------------
Net asset value, end of year $ 18.66 $ 5.57 $ 6.37 $ 8.45 $ 9.08
- ----------------------------------------------------------------------------------------------
Total return 235.01% (10.63%) (24.62%) (3.17%) (7.82%)
- ----------------------------------------------------------------------------------------------
RATIOS AND SUPPLEMENTAL DATA
- ----------------------------------------------------------------------------------------------
Net assets, end of year (000s omitted) $ 3,410 $ 1 $ 3 $ 1 $ 1
Ratio of expenses to average net assets 2.01%* 2.01%* 2.00%* 2.01%* 1.31%
Ratio of net income (loss) to average
net assets (1.53%) (1.18%) (1.10%) (1.57%) 0.19%
Decrease reflected in above operating
expense ratios due to
waivers/reimbursements .51% 22.81% 6.69% .28% 1.83%
Portfolio turnover rate 249.79% 112.68% 100.60% 95.23% 82.98%
</TABLE>

* Interest earned on uninvested cash balances is used to offset portions of the
transfer agent expense. These arrangements resulted in a reduction to the
Advisor Class shares expenses by .01%, .01%, .00% and .01% for the years
ending October 31, 1999, 1998, 1997 and 1996, respectively. The Advisor Class
shares operating expense ratio after reflecting these arrangements were 2.00%,
2.00%, 2.00%, and 2.00% for the years ended October 31, 1999, 1998, 1997 and
1996, respectively.

16
<PAGE> 52

MORE ABOUT RISK

INTRODUCTION

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.

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.

INFORMATION RISK Key information about an issuer, security or market may be
inaccurate or unavailable.

LIQUIDITY RISK Certain fund securities may be difficult or impossible to sell
at the time and the price that the fund would

17
<PAGE> 53

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.

VALUATION RISK The lack of an active trading market may make it difficult to
obtain an accurate price for a fund security.

18
<PAGE> 54

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:

<TABLE>
<CAPTION>
JAPAN
JAPAN SMALL
GROWTH COMPANY
FUND FUND
<S> <C> <C>
INVESTMENT PRACTICE LIMIT
BORROWING The borrowing of money from banks to meet
redemptions or for other temporary or emergency purposes.
Speculative exposure risk. 30% 30%
- -----------------------------------------------------------------------------
COUNTRY/REGION FOCUS Investing a significant portion of fund
assets in a single country or region. Market swings in the
targeted country or region will be likely to have a greater
effect on fund performance than they would in a more
geographically diversified equity fund. Currency, market,
political risks. [- ] [- ]
- -----------------------------------------------------------------------------
CURRENCY TRANSACTIONS Instruments, such as options, futures,
forwards or swaps, intended to manage fund exposure to
currency risk or to enhance total return. Options, futures
or forwards involve the right or obligation to buy or sell a
given amount of foreign currency at a specified price and
future date. Swaps involve the right or obligation to
receive or make payments based on two different currency
rates.(1) Correlation, credit, currency, hedged exposure,
liquidity, political, speculative exposure, valuation risks. [- ] [- ]
- -----------------------------------------------------------------------------
FUTURES AND OPTIONS ON FUTURES Exchange-traded contracts
that enable a fund to hedge against or speculate on future
changes in currency values, interest rates or stock indexes.
Futures obligate the fund (or give it the right, in the case
of options) to receive or make payment at a specific future
time based on those future changes.(1) Correlation,
currency, hedged exposure, interest-rate, market,
speculative exposure risks.(2) [ ] [ ]
- -----------------------------------------------------------------------------
OPTIONS Instruments that provide a right to buy (call) or
sell (put) a particular security, currency or index of
securities at a fixed price within a certain time period. A
fund may purchase or sell (write) both put and call options
for hedging or speculative purposes.(1) Correlation, credit,
hedged exposure, liquidity, market, speculative exposure
risks. 25% 25%
- -----------------------------------------------------------------------------
RESTRICTED AND OTHER ILLIQUID SECURITIES Certain securities
with restrictions on trading, or those not actively traded.
May include private placements. Liquidity, market, valuation
risks. 10% 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% 33 1/3%
- -----------------------------------------------------------------------------
SMALL COMPANIES Companies with small relative market
capitalizations. Information, liquidity, market, valuation
risks. [- ] [- ]
- -----------------------------------------------------------------------------
</TABLE>

19
<PAGE> 55

<TABLE>
<CAPTION>
JAPAN
JAPAN SMALL
GROWTH COMPANY
FUND FUND
<S> <C> <C>

INVESTMENT PRACTICE LIMIT
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. [ ] [ ]
- -----------------------------------------------------------------------------
WARRANTS Options issued by a company granting the holder the
right to buy certain securities, generally common stock, at
a specified price and usually for a limited time. Liquidity,
market, speculative exposure risks. 10% 10%
- -----------------------------------------------------------------------------
WHEN-ISSUED SECURITIES AND FORWARD COMMITMENTS The purchase
or sale of securities for delivery at a future date; market
value may change before delivery. Liquidity, market,
speculative exposure risks. 20% 20%
- -----------------------------------------------------------------------------
</TABLE>

20
<PAGE> 56

MEET THE MANAGERS

[P. Nicholas Edwards Photo]
P. NICHOLAS EDWARDS
Managing Director

- Co-Portfolio Manager, Japan Growth Fund since fund inception

- Co-Portfolio Manager, Japan Small Company Fund since May 1997

- With CSAM since 1999 as a result of Credit Suisse's acquisition of Warburg
Pincus Asset Management, Inc. (Warburg Pincus)

- With Warburg Pincus since 1995

- Director at Jardine Fleming Investment Advisers, Tokyo, 1984 to 1995

[Todd Jacobson Photo]

TODD JACOBSON
Director

- Co-Portfolio Manager, Japan Growth Fund and Japan Small Company Fund since
1999

- With CSAM since 1999 as a result of Credit Suisse's acquisition of Warburg
Pincus

- With Warburg Pincus since 1997

- Analyst with Brown Brothers Harriman, 1993 to 1997

Job titles indicate position with the investment adviser.

21
<PAGE> 57

ABOUT YOUR ACCOUNT

SHARE VALUATION

The price of your shares is also referred to as their net asset value (NAV).

The NAV is determined at the close of regular trading on the New York Stock
Exchange (NYSE) (usually 4 p.m. Eastern Time) each day the NYSE is open for
business. It is calculated by dividing the Advisor Class's total assets, less
its liabilities, by the number of Advisor Class shares outstanding.

Each fund values its securities based on market quotations when it calculates
its NAV. If market quotations are not readily available, securities and other
assets are valued by another method that the Board of Directors believes
accurately reflects fair value. Debt obligations that will mature in 60 days or
less are valued on the basis of amortized cost, unless the Board determines that
using this method would not reflect an investment's value.

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 quarter

You will receive annual and semiannual financial reports.

DISTRIBUTIONS

As a fund investor, you will receive distributions.

The funds typically distribute dividends and capital gains annually, usually
in December.

TAXES

As with any investment, you should consider how your investment in a fund
will be taxed. If your account is not an IRA or other tax-advantaged account,
you should be especially aware of the following potential tax implications.

22
<PAGE> 58

Please consult your tax professional
concerning your own tax situation.

TAXES ON DISTRIBUTIONS

As long as a fund continues to meet the requirements for being a
tax-qualified regulated investment company, it pays no federal income tax on the
earnings it distributes to shareholders.

The Form 1099 that is mailed to you every January details your distributions
and their federal tax category.

23
<PAGE> 59

OTHER INFORMATION

ABOUT THE DISTRIBUTOR

Certain institutions and financial services firms may offer Advisor Class
shares to their clients and customers (or participants in the case of retirement
plans). These firms provide distribution, administrative and shareholder
services for fund shareholders. Each fund has adopted a Rule 12b-1 shareholder-
servicing and distribution plan to compensate these firms for their services.
The current 12b-1 fee for each fund is .50% per annum of the fund's average
daily net assets, although under the 12b-1 plan the fund is authorized to pay up
to .75%.

24
<PAGE> 60

BUYING SHARES

OPENING AN ACCOUNT

Your account application provides us with key information we need to set up
your account correctly. It also lets you authorize services that you may find
convenient in the future.

If you need an application, call our Institutional Shareholder Service Center
to receive one by mail or fax.

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

FINANCIAL-SERVICES FIRMS

You can buy and sell fund shares through a variety of financial-services
firms such as banks, brokers and financial advisors. The funds have authorized
these firms (and other intermediaries that the firms may designate) to accept
orders. When an authorized firm or its designee has received your order, it is
considered received by the fund and will be priced at the next-computed NAV.

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

- Charles Schwab & Co., Inc. Mutual Fund OneSource(R) service

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

- Waterhouse Securities, Inc.

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 Advisor Funds. Unfortunately, we cannot accept "starter" checks that do
not have your name pre-printed on them. We also cannot accept checks payable to
you or to another party and endorsed to the order of Warburg Pincus Advisor
Funds. These types of checks may be returned to you and your purchase order may
not be processed. Limited exceptions include properly endorsed government
checks.

25
<PAGE> 61

<TABLE>
<CAPTION>
OPENING AN ACCOUNT ADDING TO AN ACCOUNT
<S> <C>
BY CHECK
- - Complete the Warburg Pincus Advisor Funds New - Make your check payable to Warburg Pincus
Account Application. Advisor Funds.
- - Make your check payable to Warburg Pincus - Write the account number and the fund name on
Advisor Funds. your check.
- - Write the fund name on the check. - Mail to Warburg Pincus Advisor Funds.
- - Mail to Warburg Pincus Advisor Funds.
BY EXCHANGE
- - Call our Institutional Shareholder Service - Call our Institutional Shareholder Service
Center to request an exchange from another Center to request an exchange from another
Warburg Pincus fund or portfolio. Be sure to Warburg Pincus fund or portfolio.
read the current Prospectus for the new fund If you do not have telephone privileges, mail
or portfolio. or fax a letter of instruction.
If you do not have telephone privileges, mail
or fax a letter of instruction.
BY WIRE
- - Complete and sign the New Account - Call our Institutional Shareholder Service
Application. Center by 4 p.m. ET to inform us of the
- - Call our Institutional Shareholder Service incoming wire. Please be sure to specify the
Center and fax the signed New Account account registration, account number and the
Application by 4 p.m. ET. fund name on your wire advice.
- - Institutional Shareholder Services will - Wire the money for receipt that day.
telephone you with your account number.
Please be sure to specify the account
registration, account number and the fund
name on your wire advice.
- - Wire your initial investment for receipt that
day.
- - Mail the original, signed application to
Warburg Pincus Advisor Funds.
BY ACH TRANSFER

- - Cannot be used to open an account. - Call our Institutional 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.
Requires ACH on Demand privileges.
</TABLE>

INSTITUTIONAL SHAREHOLDER SERVICE CENTER

800-222-8977
MONDAY - FRIDAY, 8 A.M. - 5 P.M. ET
26
<PAGE> 62

SELLING SHARES*

<TABLE>
<CAPTION>
SELLING SOME OR ALL OF YOUR SHARES CAN BE USED FOR
<S> <C>
BY MAIL
WRITE US A LETTER OF INSTRUCTION THAT - Sales of any amount.
INCLUDES:
- - your name(s) and signature(s) or, if
redeeming on an investor's behalf, the
name(s) of the registered owner(s) and
the signature(s) of their legal
representative(s)
- - the fund name and account number
- - the dollar amount you want to sell
- - how to send the proceeds
Obtain a signature guarantee or other
documentation, if required (see "Selling
Shares in Writing").
Mail the materials to Warburg Pincus
Advisor Funds.
If only a letter of instruction is
required, you can fax it to the
Institutional Shareholder Service Center
(unless a signature guarantee is
required).
BY EXCHANGE
- - Call our Institutional Shareholder - Accounts with telephone privileges.
Service Center to request an exchange If you do not have telephone privileges,
into another Warburg Pincus Fund or mail or fax a letter of instruction to
portfolio. Be sure to read the current exchange shares.
Prospectus for the new fund or portfolio.
BY PHONE
CALL OUR INSTITUTIONAL SHAREHOLDER - Accounts with telephone privileges.
SERVICE CENTER TO REQUEST A REDEMPTION.
YOU CAN RECEIVE THE PROCEEDS AS:
- - a check mailed to the address of record
- - an ACH transfer to your bank
- - a wire to your bank
See "By Wire or ACH Transfer" for
details.
BY WIRE OR ACH TRANSFER
- - Complete the "Wire Instructions" or - Requests by phone or mail.
"ACH on Demand" section of your New
Account Application.
- - For federal-funds wires, proceeds will
be wired on the next business day. For
ACH transfers, proceeds will be
delivered within two business days.
</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.

27
<PAGE> 63

HOW TO REACH US

INSTITUTIONAL SHAREHOLDER SERVICE CENTER
Toll free: 800 -222-8977
Fax: 212-370-9833

MAIL
Warburg Pincus Advisor Funds

P.O. Box 9030

Boston, MA 02205-9030

OVERNIGHT/COURIER SERVICE
Boston Financial
Attn: Warburg Pincus Advisor Funds

66 Brooks Drive

Braintree, MA 02184

INTERNET
www.warburg.com

WIRE INSTRUCTIONS

State Street Bank and Trust Company
ABA# 0110 000 28
Attn: Mutual Funds/Custody Dept.
[Warburg Pincus Advisor Fund Name]
DDA# 9904-649-2
F/F/C: [Account Number and Registration]
SELLING SHARES IN WRITING

Some circumstances require a written sell order, along with a signature
guarantee. These include:

- accounts whose address of record has been changed within the past 30 days

- redemptions in certain large accounts (other than by exchange)

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

- 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

INSTITUTIONAL SHAREHOLDER SERVICE CENTER
800-222-8977
MONDAY - FRIDAY, 8 A.M. - 5 P.M. ET
28
<PAGE> 64

SHAREHOLDER SERVICES

AUTOMATIC SERVICES

Buying or selling shares automatically is easy with the services described
below. You can set up most of these services with your account application or by
calling our Institutional Shareholder Service Center.

AUTOMATIC MONTHLY INVESTMENT PLAN

For making automatic investments from a designated bank account.

AUTOMATIC WITHDRAWAL PLAN

For making automatic monthly, quarterly, semiannual or annual withdrawals.

TRANSFERS/GIFTS TO MINORS

ACCOUNT CHANGES

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

29
<PAGE> 65

OTHER POLICIES

TRANSACTION DETAILS

You are entitled to capital-gain and earned-dividend distributions as soon as
your purchase order is executed.

Your purchase order will be canceled and you may be liable for losses or fees
incurred by the fund if:

- your investment check or ACH transfer does not clear

- you place a telephone order by 4 p.m. ET and we do not receive your wire that
day

If you wire money without first calling our Institutional Shareholder Service
Center to place an order, and your wire arrives after the close of regular
trading on the NYSE, then your order will not be executed until the end of the
next business day. In the meantime, your payment will be held uninvested. Your
bank or other financial-services firm may charge a fee to send or receive wire
transfers.

While we monitor telephone-servicing resources carefully, during periods of
significant economic or market change it may be difficult to place orders by
telephone.

Uncashed redemption or distribution checks do not earn interest.
SPECIAL SITUATIONS

Each fund reserves the right to:

- refuse any purchase or exchange request, including those from any person or
group who, in the fund's view, is likely to engage in excessive trading

- change or discontinue its exchange privilege after 30 days' notice to current
investors, or temporarily suspend this privilege during unusual market
conditions

- impose minimum investment amounts after 15 days' notice to current investors
of any increases

- charge a wire-redemption fee

- make a "redemption in kind"--payment in portfolio securities rather than
cash--for certain large redemption amounts that could hurt fund operations

- suspend redemptions or postpone payment dates as permitted by the Investment
Company Act of 1940 (such as during periods other than weekends or holidays
when the NYSE is closed or periods when trading on the NYSE is restricted, or
any other time that the SEC permits)

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

INSTITUTIONAL SHAREHOLDER SERVICE CENTER
800-222-8977
MONDAY - FRIDAY, 8 A.M. - 5 P.M. ET
30
<PAGE> 66

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31
<PAGE> 67

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32
<PAGE> 68

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33
<PAGE> 69

FOR MORE INFORMATION

More information about these funds is available free upon request, including
the following:

ANNUAL/SEMIANNUAL REPORT TO SHAREHOLDERS

Includes financial statements, portfolio investments and detailed performance
information.

The Annual Report also contains a letter from the fund's manager discussing
market conditions and investment strategies that significantly affected fund
performance during its past fiscal year.

OTHER INFORMATION

A current Statement of Additional Information (SAI), which provides more
detail about the funds, is on file with the Securities and Exchange Commission
(SEC) and is incorporated by reference.

Please contact Warburg Pincus Advisor Funds to obtain, without charge, the
SAI and Annual and Semiannual Reports and to make shareholder inquiries:

BY TELEPHONE:
800-222-8977

BY MAIL:
Warburg Pincus Advisor Funds

P.O. Box 9030

Boston, MA 02205-9030

BY OVERNIGHT OR COURIER SERVICE:
Boston Financial
Attn: Warburg Pincus Advisor Funds

66 Brooks Drive

Braintree, MA 02184

ON THE INTERNET:
www.warburg.com

SEC FILE NUMBERS:

Warburg Pincus Japan Growth Fund 811-07371

Warburg Pincus Japan
Small Company Fund 811-08686

[WARBURG PINCUS LOGO]

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

800-222-8977 - www.warburg.com

PROVIDENT DISTRIBUTORS, INC., DISTRIBUTOR ADJPN-1-0200

<PAGE> 70
STATEMENT OF ADDITIONAL INFORMATION

February 29, 2000

WARBURG PINCUS JAPAN GROWTH FUND

WARBURG PINCUS JAPAN SMALL COMPANY FUND

This combined Statement of Additional Information provides

information about Warburg Pincus Japan Growth Fund ("Japan Growth Fund") and
Warburg Pincus Japan Small Company Fund ("Japan Small Company Fund") (each a
"Fund" and collectively, the "Funds") that supplements information contained in
the combined Prospectus for the Common Shares of the Funds and the combined
Prospectus for the Advisor Shares of the Funds, each dated February 29, 2000 as
amended or supplemented from time to time (together the "Prospectuses"), and is
incorporated by reference in its entirety into those Prospectuses.

Each Fund's audited Annual Report dated October 31, 1999,
which either accompanies this Statement of Additional Information or has
previously been provided to the investor to whom this Statement of Additional
Information is being sent, is incorporated herein by reference.

This Statement of Additional Information is not itself a
prospectus and no investment in shares of the Funds should be made solely upon
the information contained herein. Copies of the Prospectuses, Annual Reports and
information regarding each Fund's current performance may be obtained by writing
or telephoning:

Common Shares Advisor Shares
Warburg Pincus Funds Warburg Pincus Advisor Funds
P.O. Box 9030 P.O. Box 9030
Boston, Massachusetts 02205-9030 Boston, Massachusetts 02205-9030
800-WARBURG Attn: Institutional Services
800-222-8977
<PAGE> 71
TABLE OF CONTENTS

<TABLE>
<CAPTION>
Page
----
<S> <C>
INVESTMENT OBJECTIVES AND POLICIES........................................ 1
Asian Securities.......................................................... 1
Strategic and Other Transactions.......................................... 1
Options on Securities and Securities Indices and Futures
and Currency Exchange Transactions............................... 1
Securities Options................................................. 2
Securities Index Options........................................... 5
OTC Options........................................................ 5
Futures Activities................................................. 6
Futures Contracts........................................... 6
Options on Futures Contracts................................ 7
Currency Exchange Transactions..................................... 8
Forward Currency Contracts.................................. 8
Currency Options............................................ 8
Currency Hedging............................................ 8
Hedging Generally.................................................. 9
Swaps.............................................................. 10
Asset Coverage for Forward Contracts, Options,
Futures Options on Futures and Swaps............................. 11
Additional Information on Other Investment Practices...................... 12
Foreign Investments................................................ 12
Foreign Debt Securities..................................... 12
Foreign Currency Exchange................................... 13
Information................................................. 13
Political Instability....................................... 14
Foreign Markets............................................. 14
Increased Expenses.......................................... 14
Dollar-Denominated Debt Securities of Foreign Issuers....... 14
Depositary Receipts......................................... 14
Privatizations.............................................. 14
Brady Bonds................................................. 15
Emerging Markets............................................ 15
Sovereign Debt.............................................. 15

U.S. Government Securities......................................... 16

Debt Securities.................................................... 17
Below Investment Grade Securities........................... 18
Mortgage-Backed Securities.................................. 19
Asset-Backed Securities..................................... 20
Loan Participations and Assignments......................... 21
Structured Notes, Bonds or Debentures....................... 21
REITs.............................................................. 22
Convertible Securities............................................. 22
Securities of Other Investment Companies........................... 22
</TABLE>

(i)
<PAGE> 72

<TABLE>
<S> <C>
Lending of Portfolio Securities.......................................... 23
Borrowing................................................................ 23
When-Issued Securities and Delayed-Delivery Transactions................. 24
Short Sales "Against the Box" ........................................... 24
Emerging Growth and Smaller Capitalization Companies;
Unseasoned Issuers..................................................... 25
Special Situation Companies.............................................. 25
Warrants................................................................. 26
Non-Publicly Traded and Illiquid Securities.............................. 26
Rule 144A Securities.............................................. 27
Money Market Obligations................................................. 27
Repurchase Agreements............................................. 28
Money Market Mutual Funds......................................... 28
Reverse Repurchase Agreements and Dollar Rolls........................... 28
Non-Diversified Status................................................... 29
Temporary Defensive Strategies.................................................. 29
Debt Securities.......................................................... 29
Money Market Obligations................................................. 30
INVESTMENT RESTRICTIONS......................................................... 30
All Funds....................................................................... 30
Japan Growth Fund............................................................... 30
Japan Small Company Fund........................................................ 32
PORTFOLIO VALUATION............................................................. 33
PORTFOLIO TRANSACTIONS.......................................................... 34
PORTFOLIO TURNOVER.............................................................. 36
SPECIAL CONSIDERATIONS REGARDING JAPAN.......................................... 37
MANAGEMENT OF THE FUNDS......................................................... 40
Officers and Board of Directors................................................. 40
Portfolio Managers.............................................................. 44
Investment Adviser and Co-Administrators........................................ 45
Custodian and Transfer Agent.................................................... 47
Organization of the Funds....................................................... 48
Distribution and Shareholder Servicing.......................................... 49
Common Shares............................................................ 49
Advisor Shares........................................................... 50
General.................................................................. 51
ADDITIONAL PURCHASE AND REDEMPTION INFORMATION.................................. 52
Automatic Cash Withdrawal Plan.................................................. 52
EXCHANGE PRIVILEGE.............................................................. 53
ADDITIONAL INFORMATION CONCERNING TAXES......................................... 53
The Funds and Their Investments................................................. 53
Foreign Taxes................................................................... 56
Passive Foreign Investment Companies............................................ 56
Dividends and Distributions..................................................... 57
Sales of Shares................................................................. 58
</TABLE>

(ii)
<PAGE> 73

<TABLE>
<S> <C>
Backup Withholding.............................................................. 58
Notices......................................................................... 58
Other Taxation.................................................................. 59
DETERMINATION OF PERFORMANCE.................................................... 59
INDEPENDENT ACCOUNTANTS AND COUNSEL............................................. 64
MISCELLANEOUS................................................................... 64
FINANCIAL STATEMENTS............................................................ 66

APPENDIX - DESCRIPTION OF RATINGS............................................... A-1
</TABLE>

(iii)
<PAGE> 74
INVESTMENT OBJECTIVES AND POLICIES

The following policies supplement the descriptions of each
Fund's investment objectives and policies in the Prospectuses. There are no
assurances that the Funds will achieve their investment objectives.

The investment objective of the Japan Small Company Fund is
long-term capital appreciation.

The investment objective of the Japan Growth Fund is long-term
growth of capital.
Unless otherwise indicated, all of the Funds are permitted,
but not obligated, to engage in the following investment strategies, subject to
any percentage limitations set forth below.

The Funds are not obligated to pursue any of the following
strategies and do not represent that these techniques are available now or will
be available at any time in the future.

Asian Securities

The Japan Growth and the Japan Small Company Funds will
invest, under normal market conditions, at least 65% of their total assets in
equity securities of companies located in or conducting a majority of their
business in Japan. In addition, the Japan Small Company Fund may invest up to
35% of its total assets in securities of other Asian issuers. These include
companies located in or conducting a majority of their business in Asia,
companies which have issued securities traded principally in an Asian country,
or governments, governmental entities or political subdivisions of Asian
countries. The Japan Small Company Fund considers Asia to be comprised of the
contiguous eastern Eurasian land mass and adjacent islands, including, without
limitation, the countries of Taiwan, Korea, Indonesia, China, Hong Kong, Turkey,
India, Pakistan, the Philippines, Sri Lanka, Singapore and Thailand. For
purposes of applying the foregoing limitations, if a company meets the
definition of an Asian issuer as a result of relationships with respect to more
than one Asian country, the Japan Small Company Fund may consider the company to
be associated with any of such countries. Determinations as to the eligibility
of issuers under the foregoing definitions will be made by Credit Suisse Asset
Management, LLC ("CSAM"), the Funds' investment adviser, based on publicly
available information and inquiries made to the companies. Due to the rapidly
evolving nature of Asian markets, the Japan Small Company Fund reserves the
ability to consider additional countries to be included in Asia if market
conditions should develop so as to warrant such a change in investment policy,
and to modify its 10% limitation on investments relating to any one Asian
country (other than Japan).

Strategic and Other Transactions

Options on Securities and Securities Indices and Futures and
Currency Transactions. Each Fund may purchase and write covered or
collateralized options on

<PAGE> 75

securities, securities indices and currencies for both hedging purposes and to
increase total return. Up to 25% of the Fund's total assets may be at risk in
connection with investing in options on securities, securities indices and, if
applicable, currencies. The amount of assets considered to be "at risk" 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.

Securities Options. Each Fund may write covered put and call
options on stock and debt securities and each Fund may purchase such options
that are traded on foreign and U.S. exchanges, as well as OTC options. A 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 a 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 its 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, a 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 Funds may receive may be
adversely affected as new or existing 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 a 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

-2-
<PAGE> 76
must make delivery in accordance with an exercise notice. In these instances, a
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 a 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 a 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. Each Fund that can write put and call options
on securities may write (i) in-the-money call options when 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 writes a call option, each Fund will be required to deposit in escrow the
underlying security or other assets in accordance with the rules of 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 a Fund prior to
the exercise of options that it has purchased or written, respectively, of
options of the same series) in which a 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 a 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 a 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. A 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

-3-
<PAGE> 77
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
a 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 a 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. A 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 Options Clearing Corporation
(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, a 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 Funds,
however, intend 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, a Fund is unable to effect a closing purchase transaction 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 each 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
Funds 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 Funds will be
able to purchase on a particular security.

-4-
<PAGE> 78
Securities Index Options. 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. For example, the Japan Growth Fund or the
Japan Small Company Fund might utilize securities options on indexes such as the
Nikkei 225 Index, the Nikkei 300 Index, the OTC (JASDAQ) Index and the Topix
Index.

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. Each Fund may purchase OTC or dealer options or
sell covered OTC 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 a 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 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, a 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 a
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 each
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 Funds will be able to liquidate a
dealer option at a favorable price at any time prior to expiration. The
inability to

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enter into a closing transaction may result in material losses to the Funds.
Until a 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 Funds' ability to sell portfolio
securities or, with respect to currency options, currencies at a time when such
sale might be advantageous.

Futures Activities. Each Fund may enter into futures contracts
(and related options) on securities, securities indices, foreign currencies and
interest rates, and purchase and write (sell) related options traded on
exchanges designated by the Commodity Futures Trading Commission (the "CFTC") or
consistent with CFTC regulations, on foreign exchanges. 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. Each 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 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 a 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

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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." A Fund will also incur brokerage costs in connection
with entering into futures transactions.

At any time prior to the expiration of a futures contract, a
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 each
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 a 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 a Fund's
performance.

Options on Futures Contracts. Each Fund may purchase and write
put and call options on foreign currency, interest rate and stock index futures
contracts and may enter into closing transactions with respect to such 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

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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 each
Fund.

Currency Transactions. The value in U.S. dollars of the assets
of the Funds 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 Funds 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. Each 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.

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.

At or before the maturity of a forward contract, the Funds 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 a 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 Funds 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. Each 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 a Fund generally accruing in connection with
the purchase or sale of its portfolio securities. Position

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hedging is the sale of forward currency with respect to portfolio security
positions. No Fund may 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 a 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, a 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 a 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, a Fund may not be able to contract to sell
a currency at a price above the devaluation level it anticipates.

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 a 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, each 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

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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 a 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 a 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 a 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, a 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.

Each 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 a Fund's
performance.

Swaps. The Funds may each enter into swaps relating to
indexes, currencies, interest-rates and debt and equity interests of foreign
issuers without limit. A swap transaction is an agreement between a Fund and a
counterparty to act in accordance with the terms of the swap contract. Index
swaps involve the exchange by the Fund with another party of the respective
amounts payable with respect to a notional principal amount related to one or
more indexes. Currency swaps involve the exchange of cash flows on a notional
amount of two or more currencies based on their relative future values. Interest
rate swaps involve the exchange by the Funds with another party of their
respective commitments to pay or

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receive interest, such as an exchange of fixed rate payments for floating rate
payments. An equity or debt swap is an agreement to exchange streams of payments
computed by reference to a notional amount based on the performance of a
securities index, a basket of securities or a single security. A Fund may enter
into these transactions for hedging purposes, such as to preserve a return or
spread on a particular investment or portion of its assets, to protect against
currency fluctuations, as a duration management technique or to protect against
any increase in the price of securities the Fund anticipates purchasing at a
later date. The Funds may also use these transactions for speculative purposes
to increase total return, such as to obtain the price performance of a security
without actually purchasing the security in circumstances where, for example,
the subject security is illiquid, is unavailable for direct investment or
available only on less attractive terms. Swaps have risks associated with them,
including possible default by the counterparty to the transaction, illiquidity
and, where swaps are used as hedges, the risk that the use of a swap could
result in losses greater than if the swap had not been employed.

A Fund will usually enter into swaps on a net basis, i.e., the
two payment streams are netted out in a cash settlement on the payment date or
dates specified in the agreement, with the Fund receiving or paying, as the case
may be, only the net amount of the two payments. Swaps do not involve the
delivery of securities, other underlying assets or principal. Accordingly, the
risk of loss with respect to swaps is limited to the net amount of payments that
the Fund is contractually obligated to make. If the counterparty to a swap
defaults, the Fund's risk of loss consists of the net amount of payments that
the Fund is contractually entitled to receive. Where swaps are entered into for
good faith hedging purposes, CSAM believes such obligations do not constitute
senior securities under the Investment Company Act of 1940, as amended (the
"1940 Act"), and, accordingly, will not treat them as being subject to a Fund's
borrowing restrictions. Where swaps are entered into for other than hedging
purposes, a Fund will segregate an amount of cash or liquid securities having a
value equal to the accrued excess of its obligations over its entitlements with
respect to each swap on a daily basis.

Asset Coverage for Forward Contracts, Options, Futures,
Options on Futures and Swaps. Each Fund will comply with guidelines established
by the U.S. Securities and Exchange Commission (the "SEC") and other applicable
regulatory bodies with respect to coverage of forward currency contracts;
options written by a Fund on currencies, securities, if applicable, and indexes;
and currency, interest rate and 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 a Fund's assets could
impede portfolio management or the Fund's ability to meet redemption requests or
other current obligations.

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For example, a call option written by a 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 a 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 a Fund
may require the Fund to segregate assets (as described above) equal to the
exercise price. Each 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 a 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. Each Fund may enter into fully or
partially offsetting transactions so that its net position, coupled with any
segregated assets (equal to any remaining obligation), equals its net
obligation. Asset coverage may be achieved by other means when consistent with
applicable regulatory policies.

Additional Information on Other Investment Practices

Foreign Investments. Each Fund will ordinarily hold no less
than 65% of its total assets in foreign securities. 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 Funds 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. See "Japan and Its
Securities Markets" for a discussion of factors relating to Japanese investments
specifically.

Foreign Debt Securities. Each Fund may invest up to 35% of its
total assets in foreign debt securities. The returns on foreign debt securities
reflect interest rates and other market conditions prevailing in those countries
and the effect of gains and losses in the denominated currencies against the
U.S. dollar, which have had a substantial impact on investment in foreign
fixed-income securities. The relative performance of various countries'
fixed-income markets historically has reflected wide variations relating to the
unique characteristics of each 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 each of the Funds
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

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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.

Foreign government securities also include debt securities of
"quasi-governmental agencies" and debt securities denominated in multinational
currency units of an issuer (including supranational issuers). Debt securities
of quasi-governmental agencies are issued by entities owned by either a
national, state or equivalent government or are obligations of a political unit
that is not backed by the national government's full faith and credit and
general taxing powers. An example of a multinational currency unit is the
European Currency Unit ("ECU"). An ECU represents specified amounts of the
currencies of certain member states of the European Economic Community. The
specific amounts of currencies comprising the ECU may be adjusted by the Council
of Ministers of the European Community to reflect changes in relative values of
the underlying currencies.

Foreign Currency Exchange. Since the Funds will be investing
in securities denominated in currencies of non-U.S. countries, and since the
Funds may temporarily hold funds in bank deposits or other money market
investments denominated in foreign currencies, the Funds may be affected
favorably or unfavorably by exchange control regulations or changes 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 a 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.
See "Japan and Its Securities Markets -- Economic Background -- Currency
Fluctuation" below. The Funds may use hedging techniques with the objective of
protecting against loss through the fluctuation of the value of the yen against
the U.S. dollar, particularly the forward market in foreign exchange, currency
options and currency futures.

Information. The majority of the securities held by the Funds
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.

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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 Funds, political or social
instability, or domestic developments which could affect U.S. investments in
those and neighboring countries.

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 Funds can be
expected to be higher than that of an investment company investing exclusively
in U.S. securities, since the expenses of the Funds, such as 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,
as well as the rate of the investment advisory fees, though similar to such
expenses of some other international funds, are 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.

Dollar-Denominated Debt Securities of Foreign Issuers. 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 each 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.

Depositary Receipts. The assets of each 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.

Privatizations. Each 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 Funds, to
participate in privatizations may be limited by local law, or

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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. Each Fund may invest in so-called "Brady Bonds,"
which are securities created through the exchange of existing commercial bank
loans to public and private entities for new bonds in connection with debt
restructurings under a debt restructuring plan announced by former U.S.
Secretary of the Treasury Nicholas F. Brady. Brady Bonds may be collateralized
or uncollateralized, are issued in various currencies (primarily the U.S.
dollar) and are currently actively traded in the OTC secondary market for debt
instruments. Brady Bonds have been issued only recently and therefore do not
have a long payment history. 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.

Emerging Markets. Each Fund may invest in securities of
issuers located in "emerging markets" (less developed countries located outside
of the U.S.). Investing in emerging markets involves not only the risks
described above with respect to investing in foreign securities, but also other
risks, including exposure to economic structures that are generally less diverse
and mature than, and to political systems that can be expected to have less
stability than, those of developed countries. For example, many investments in
emerging markets experienced significant declines in value due to political and
currency volatility in emerging markets countries during the latter part of 1997
and the first half of 1998. Other characteristics of emerging markets that may
affect investment include certain national policies that may restrict investment
by foreigners in issuers or industries deemed sensitive to relevant national
interests and the absence of developed structures governing private and foreign
investments and private property. The typically small size of the markets of
securities of issuers located in emerging markets and the possibility of a low
or nonexistent volume of trading in those securities may also result in a lack
of liquidity and in price volatility of those securities.

Sovereign Debt. Investments in sovereign debt involve special
risks. The issuer of the debt or the governmental authorities that control the
repayment of the debt may be unable or unwilling to repay principal or interest
when due in accordance with the terms of such debt, and a Fund may have limited
legal recourse in the event of a default.

Sovereign debt differs from debt obligations issued by private
entities in that, generally, remedies for defaults must be pursued in the courts
of the defaulting party. Legal recourse is therefore somewhat limited. Political
conditions, especially a sovereign entity's willingness to meet the terms of its
debt obligations, are of considerable significance. Also, there can be no
assurance that the holders of commercial bank loans to the same sovereign entity
may not contest payments to the holders of sovereign debt in the event of
default under commercial bank loan agreements.

A sovereign debtor's willingness or ability to repay principal
and pay interest in a timely manner may be affected by, among other factors, its
cash flow situation, the extent of its foreign reserves, the availability of
sufficient foreign exchange on the date a payment is

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due, the relative size of the debt service burden to the economy as a whole, the
sovereign debtor's policy toward principal international lenders and the
political constraints to which a sovereign debtor may be subject. Increased
protectionism on the part of a country's trading partners, or political changes
in those countries, could also adversely affect its exports. Such events could
diminish a country's trade account surplus, if any, or the credit standing of a
particular local government or agency.

The occurrence of political, social or diplomatic changes in
one or more of the countries issuing sovereign debt could adversely affect a
Fund's investments. Political changes or a deterioration of a country's domestic
economy or balance of trade may affect the willingness of countries to service
their sovereign debt. While CSAM intends to manage the Funds in a manner that
will minimize the exposure to such risks, there can be no assurance that adverse
political changes will not cause a Fund to suffer a loss of interest or
principal on any of its holdings.

Investors should also be aware that certain sovereign debt
instruments in which a Fund may invest involve great risk. Sovereign debt issued
by issuers in many emerging markets generally is deemed to be the equivalent in
terms of quality to securities rated below investment grade by Moody's and S&P.
Such securities are regarded as predominantly speculative with respect to the
issuer's capacity to pay interest and repay principal in accordance with the
terms of the obligations and involve major risk exposure to adverse conditions.
Some of such sovereign debt, which may not be paying interest currently or may
be in payment default, may be comparable to securities rated "D" by S&P or "C"
by Moody's. A Fund may have difficulty disposing of certain sovereign debt
obligations because there may be a limited trading market for such securities.
Because there is no liquid secondary market for many of these securities, the
Funds anticipate that such securities could be sold only to a limited number of
dealers or institutional investors. The lack of a liquid secondary market may
have an adverse impact on the market price of such securities and a Fund's
ability to dispose of particular issues when necessary to meet a 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 a
Fund to obtain accurate market quotations for purposes of valuing a Fund's
portfolio and calculating its net asset value. When and if available, fixed
income securities may be purchased by a Fund at a discount from face value.
However, the Funds do not intend to hold such securities to maturity for the
purpose of achieving potential capital gains, unless current yields on these
securities remain attractive. From time to time, a Fund may purchase securities
not paying interest at the time acquired if, in the opinion of CSAM, such
securities have the potential for future income or capital appreciation.

U.S. Government Securities. The obligations issued or
guaranteed by the U.S. government in which a Fund may invest include direct
obligations of the U.S. Treasury and obligations issued by U.S. government
agencies and instrumentalities. 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

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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 Funds 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, a 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.

Debt Securities. The Japan Growth Fund and the Japan Small
Company Fund may each invest up to 35% of its total assets in investment grade
debt securities (other than money market obligations) and, in the case of the
Japan Small Company Fund, preferred stocks that are not convertible into common
stock for the purpose of seeking capital appreciation. Any percentage limitation
on a 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.
Each Fund may invest to a limited extent in zero coupon securities and
government zero coupon securities. See "Additional Information Concerning Taxes"
for a discussion of the tax consequences to shareholders of a Fund that invests
in zero coupon securities.

The interest income to be derived may be considered as one
factor in selecting debt securities for investment by CSAM. 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
forecast accurately changes in interest rates. The market value of debt
obligations may also be expected to vary depending upon, among other factors,
the ability of the issuer to repay principal and interest, any change in
investment rating and general economic conditions.

A security will be deemed to be investment grade if it is
rated within the four highest grades by Moody's Investors Service, Inc.
("Moody's") or Standard & Poor's Ratings Services ("S&P") or, if unrated, is
determined to be of comparable quality by CSAM. Securities 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

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make principal and interest payments than is the case with higher grade bonds.
Subsequent to its purchase by a 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.

Below Investment Grade Securities. The Japan Growth Fund may
invest or hold up to 5% of its net assets in securities rated below investment
grade, including convertible and non-convertible debt securities, downgraded
below investment grade subsequent to acquisition by the Fund. The Japan Small
Company Fund may invest or hold up to 5% of its net assets in securities
downgraded below investment grade, including convertible and non-convertible
debt securities, subsequent to acquisition by the Fund.

Below investment grade debt securities may be rated as low as
C by Moody's or D by S&P, or be deemed by CSAM to be of equivalent quality.
Securities that are rated C by Moody's are the lowest rated class and can be
regarded as having extremely poor prospects of ever attaining any real
investment standing. A security rated D by S&P is in default or is expected to
default upon maturity or payment date. Investors should be aware that ratings
are relative and subjective and are not absolute standards of quality.

Below investment grade securities (commonly referred to as
"junk bonds"), (i) will likely have some quality and protective characteristics
that, in the judgment of the rating organizations, are outweighed by large
uncertainties or major risk exposures to adverse conditions and (ii) are
predominantly speculative with respect to the issuer's capacity to pay interest
and repay principal in accordance with the terms of the obligation. The market
values of certain of these securities also tend to be more sensitive to
individual corporate developments and changes in economic conditions than
investment grade securities. In addition, these securities generally present a
higher degree of credit risk. The risk of loss due to default is significantly
greater because these securities generally are unsecured and frequently are
subordinated to the prior payment of senior indebtedness.

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.

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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. A 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 Funds anticipate 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 a 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 a 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 a
Fund's net asset value. A 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 a 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 whether a Fund should continue to hold the securities.
Normally, medium- and lower-rated and comparable unrated securities are not
intended for short-term investment. A 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.

Mortgage-Backed Securities. Mortgage-backed securities issued
or guaranteed by the U.S. government, its agencies or instrumentalities include
those issued by GNMA, FNMA and FHLMC. Non-government issued mortgage-backed
securities may offer higher yields than those issued by government entities, but
may be subject to greater price fluctuations. 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. Although there may be government or private
guarantees on the payment of interest and principal of these securities, 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

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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. Some mortgage-backed securities, such as
collateralized mortgage obligations ("CMOs"), make payments of both principal
and interest at a variety of intervals; others make semiannual interest payments
at a predetermined rate and repay principal at maturity (like a typical bond).

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. At present, pools, particularly those with loans with other
maturities or different characteristics, are priced on an assumption of average
life determined for each 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 Funds'
yield. In addition, mortgage-backed securities issued by certain non-government
entities and collateralized mortgage obligations may be less marketable than
other securities.

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 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. Asset-backed securities issued or
guaranteed by the U.S. government, its agencies or instrumentalities include
those issued by the Student Loan Marketing Association. Asset-backed securities
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

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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 these Funds 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. The remaining maturity of
any asset-backed security a Fund invests in will be 397 days or less. A Fund may
purchase asset-backed securities that are unrated.

Loan Participations and Assignments. Each 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 each 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.

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

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<PAGE> 95
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 a 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.

REITs. Each 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 Funds, REITs are not taxed on income
distributed to shareholders provided they comply with several requirements of
the Internal Revenue Code of 1986, amended (the "Code"). By investing in a REIT,
a 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 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 exemption from tax for distributed income under
the Code and failing to maintain their exemptions from the 1940 Act. REITs are
also subject to interest rate risks.

Convertible Securities. Convertible securities in which a 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 a 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 a Fund should continue to hold the securities.

Securities of Other Investment Companies. Each Fund may invest
in securities of other investment companies to the extent permitted under the
Investment Company Act of 1940, as amended (the "1940 Act"). Presently, under
the 1940 Act, each Fund may hold securities of another investment company in
amounts which (i) do not exceed 3% of the total

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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. Each 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 of Directors (the "Board"). These loans, if and when made, may not
exceed 331/3% of the Funds' total assets (including the loan collateral). The
Funds will not lend portfolio securities to its investment adviser, any
sub-investment adviser or their 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 100% of the
current market value of the loaned 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 Funds. From time to time, the Funds 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 Funds and that is acting as a "finder."

By lending its securities, each 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. Each Fund will
adhere to the following conditions whenever its portfolio securities are loaned:
(i) the Fund must receive at least 100% 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 a Fund's ability to
recover the loaned securities or dispose of the collateral for the loan.

Borrowing. Each Fund may borrow up to 30% 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. Additional
investments (including roll-overs) will not be made when borrowings exceed 5% of
a Fund's net assets. Although the principal of such borrowings will be fixed, a
Fund's assets may change in value during the time the borrowing is outstanding.
Each 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.

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<PAGE> 97

When-Issued Securities and Delayed-Delivery Transactions. Each
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 Funds will not enter into a when-issued or delayed-delivery
transaction for the purpose of leverage, but may sell the right to acquire a
when-issued security prior to its acquisition or dispose of its right to deliver
or receive securities in a delayed-delivery transaction 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
transactions 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 prices obtained on such securities may be higher or
lower than the prices available in the market on the dates when the investments
are actually delivered to the buyers. Each Fund will establish a segregated
account with its custodian consisting of cash or liquid securities in an amount
equal to its when-issued and delayed-delivery purchase commitments and will
segregate the securities underlying commitments to sell securities for delayed
delivery.

When a Fund agrees to purchase when-issued or delayed-delivery
securities, its custodian will set aside cash or liquid securities that are
acceptable as collateral to the appropriate regulatory authority 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 a 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 a 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
a 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 Funds' incurring a loss or missing an opportunity to obtain a price
considered to be advantageous.

Short Sales "Against the Box." The Japan Growth Fund may
engage in 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.
While a short sale is made by selling a security the Fund does not own, a short
sale is "against the box" to the extent that the Fund contemporaneously owns or
has the right to obtain, at no added cost, securities identical to those sold
short. It may be entered into by the Fund, for example, to lock in a sales 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 maintained by the
Fund's custodian or qualified sub-custodian. While the short sale is open, the
Fund will maintain in a segregated account an amount of securities equal in kind
and amount to the securities sold short or securities convertible into or
exchangeable for such equivalent securities. These securities constitute the
Fund's long position.

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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 transactions 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.

Emerging Growth and Smaller Capitalization Companies;
Unseasoned Issuers. The Funds may invest in securities of small- and
medium-sized, emerging growth companies and companies with continuous operations
of less than three years ("unseasoned issuers"), which may include JASDAQ and
Frontier Market securities. Such investments 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 these companies may involve greater
risks since these securities may have limited marketability and, thus, may be
more volatile.

Although investing in securities of small- and medium-sized
and emerging growth companies or unseasoned issuers offers potential for
above-average returns if the companies are successful, the risk exists that the
companies will not succeed and the prices of the companies' shares could
significantly decline in value. Therefore, an investment in a Fund may involve a
greater degree of risk than an investment in other mutual funds that seek growth
of capital or capital appreciation by investing in better-known, larger
companies.

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, may provide an
attractive investment opportunity. 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.

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<PAGE> 99
Warrants. Each Fund may invest up to 10% of net assets in
warrants 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. A Fund may invest in warrants to purchase equity securities consisting
of common and preferred stock. The equity security underlying a warrant is
outstanding 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 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 Japan Small
Company Fund may not invest more than 15% of its net assets and the Japan Growth
Fund may not invest more than 10% of its net assets in non-publicly traded and
illiquid securities, including certain securities that are illiquid by virtue of
the absence of a readily available market, repurchase agreements which have a
maturity of longer than seven days, certain Rule 144A Securities (as defined
below), and time deposits maturing in more 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

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<PAGE> 100
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 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 Funds' 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 or 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 Funds to the extent that qualified
institutional buyers are unavailable or uninterested in purchasing such
securities from the Funds. The Boards have adopted guidelines and delegated to
CSAM the daily function of determining and monitoring the liquidity of Rule 144A
Securities, although each Board will retain ultimate responsibility for
liquidity determinations.

Money Market Obligations. Each 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. These
instruments consist of obligations issued or guaranteed by the U.S. government
or a foreign government, its agencies or instrumentalities; bank obligations

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<PAGE> 101

(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 or, if unrated, deemed by CSAM to be high
quality investments; commercial paper rated no lower than A-2 by S&P or Prime-2
by 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.

Repurchase Agreements. The Funds 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, a 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 monitors the creditworthiness of those
bank and non-bank dealers with which each Fund enters into repurchase agreements
to evaluate this risk. A repurchase agreement is considered to be a loan under
the 1940 Act.

Money Market Mutual Funds. Where CSAM believes that it would
be beneficial to the Fund and appropriate considering the factors of return and
liquidity, each Fund may invest up to 5% of its net assets in securities of
money market mutual funds that are unaffiliated with the Fund or CSAM. A money
market mutual fund is an investment company that invests in short-term high
quality money market instruments. A money market mutual fund generally does not
purchase securities with a remaining maturity of more than one year. As a
shareholder in any mutual fund, a 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 administration fees and other expenses with respect to assets so
invested.

Reverse Repurchase Agreements and Dollar Rolls. Each of the
Funds 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 a Fund pursuant to its
agreement to repurchase them at a mutually agreed upon date, price and rate of
interest. At the time a Fund enters into a reverse repurchase agreement, it will
segregate with an approved custodian containing cash or liquid 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). A Fund's liquidity and ability to

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<PAGE> 102
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 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 a
Fund's obligation to repurchase the securities, and a Fund's use of the proceeds
of the reverse repurchase agreement may effectively be restricted pending such
decision.

Each of the Funds also may enter into "dollar rolls," in which
a 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. A
Fund would be compensated by the difference between the current sales 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 a 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. Reverse repurchase agreements and dollar rolls that are
accounted for as financings are considered to be borrowings under the 1940 Act.

Non-Diversified Status. The Japan Growth Fund and the Japan
Small Company Fund are classified as non-diversified within the meaning of the
1940 Act, which means that each of these Funds is not limited by such Act in the
proportion of its assets that it may invest in securities of a single issuer. As
a non-diversified fund, each Fund may invest a greater proportion of its assets
in the obligations of a smaller number of issuers and, as a result, may be
subject to greater risk with respect to portfolio securities. The investments of
these Funds will be limited, however, in order to qualify as a "regulated
investment company" for purposes of the Internal Revenue Code of 1986, as
amended (the "Code"). See "Additional Information Concerning Taxes." To qualify,
a Fund will comply with certain requirements, including limiting its investments
so that at the close of each quarter of the taxable year (i) not more than 25%
of the market value of its total assets will be invested in the securities of a
single issuer, and (ii) with respect to 50% of the market value of its total
assets, not more than 5% of the market value of its total assets will be
invested in the securities of a single issuer and the Fund will not own more
than 10% of the outstanding voting securities of a single issuer.

Temporary Defensive Strategies

Debt Securities. When CSAM believes that a defensive posture
is warranted, the Japan Growth Fund may invest temporarily without limit in U.S.
and foreign investment grade debt obligations, other securities of U.S.
companies and in domestic and foreign money market obligations, including
repurchase agreements. The Japan Small Company Fund may, for temporary defensive
purposes, invest without limit in U.S. debt securities.

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<PAGE> 103
Money Market Obligations. Each Fund, for temporary defensive
purposes, may invest in domestic and foreign short-term (one year or less
remaining to maturity) and medium-term (five years or less remaining to
maturity) money market obligations without limit.

INVESTMENT RESTRICTIONS

All Funds

Certain investment limitations of each Fund may not be changed
without the affirmative vote of the holders of a majority of a 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 each of the Funds) 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 Funds' assets will not constitute a violation of such restriction.

Japan Growth Fund

The investment limitations numbered 1 through 9 are
Fundamental Restrictions. Investment limitations 10 through 14 may be changed by
a vote of the Board at any time.

The Japan Growth 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 30% of the value of the Fund's
total assets at the time of such borrowing. For purposes of this restriction,
the entry into currency transactions, options, futures contracts, options on
futures contracts, forward commitment transactions and dollar roll transactions
that are not accounted 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. 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.

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<PAGE> 104
4. 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.

5. 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.

6. Make short sales of securities or maintain a short
position, except that the Fund may maintain short positions in forward currency
contracts, options, futures contracts and options on futures contracts and enter
into short sales "against the box."

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 indices, and options on futures contracts, securities, currencies or
indices, and purchase and sell currencies on a forward commitment or
delayed-delivery basis.

9. Issue any senior security except as permitted in these
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 and in connection with the writing of covered put
and call options and purchase of securities on a forward commitment or
delayed-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 10% of the Fund's net assets in
securities which may be illiquid because of legal or contractual restrictions on
resale or securities for which there are no readily available market quotations.
For purposes of this limitation, repurchase agreements with maturities greater
than seven days shall be considered illiquid securities.

13. Invest in warrants (other than warrants acquired by the
Fund as part of a unit or attached to securities at the time of purchase) if, as
a result, the investments (valued at the lower of cost or market) would exceed
10% of the value of the Fund's net assets.

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<PAGE> 105
14. Make additional investments (including roll-overs) if the
Fund's borrowings exceed 5% of its net assets.

Japan Small Company Fund

The investment limitations numbered 1 through 9 are
Fundamental Restrictions. Investment limitations 10 through 14 may be changed by
a vote of the Board at any time.

The Japan Small Company 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 30% 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 for as financings (and the segregation of
assets in connection with any of the foregoing) shall not constitute borrowing.

4. 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.

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<PAGE> 106
transactions in currencies, options, futures contracts or related options will
not be deemed to be a purchase of securities on margin.

9. Issue any senior security except as permitted in these
investment limitations.

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

14. 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
Funds in valuing its assets.

Securities listed on an exchange or traded in an
over-the-counter market will be valued at the closing price on the exchange or
market on which the security is primarily traded (the "Primary Market") at the
time of valuation (the "Valuation Time"). If the security did not trade on the
Primary Market, the security will be valued at the closing price on another
exchange or market where it trades at the Valuation Time. If there are no such
sales prices, the security will be valued at the most recent bid quotation

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<PAGE> 107

as of the Valuation Time or at the lowest asked quotation in the case of a short
sale of securities. If there are no such quotations, the value of the security
will be taken to be the most recent bid quotation on the exchange or market. In
determining the market value of portfolio investments, each 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 each Fund under the
general supervision and responsibility of the Board, which may replace a Pricing
Service at any time. If a Pricing Service is not able to supply closing prices
and bid/asked quotations, and there are two or more dealers, brokers or market
makers in the security, the security will be valued at the mean between the
highest bid and the lowest asked quotations from at least two dealers, brokers
or market makers or, if such dealers, brokers or market makers only provide bid
quotations, at the mean between the highest and the lowest bid quotations
provided. If a Pricing Service is not able to supply closing prices and
bid/asked quotations, and there is only one dealer, broker or market maker in
the security, the security will be valued at the mean between the bid and the
asked quotations provided, unless the dealer, broker or market maker can only
provide a bid quotation in which case the security will be valued at such bid
quotation. Options contracts will be valued similarly. Futures contracts will be
valued at the most recent settlement price at the time of valuation. 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 which cannot be valued pursuant to the
foregoing 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 Japan and 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 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 Funds' net asset value is
not calculated. As a result, calculation of the Funds' net asset value does not
take place contemporaneously with the determination of the prices of the
majority of the Funds' securities. All assets and liabilities initially
expressed in foreign currency values will be converted into U.S. dollar values
at the prevailing exchange rate as quoted by a Pricing Service as of 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 Boards.

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<PAGE> 108
PORTFOLIO TRANSACTIONS

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

In selecting broker-dealers, CSAM does business exclusively
with those broker-dealers that, in CSAM's judgment, can be expected to provide
the best service. The service has two main aspects: the execution of buy and
sell orders and the provision of research. In negotiating commissions with
broker-dealers, CSAM will pay no more for execution and research services that
it considers either, or both together, to be worth. The worth of execution
service depends on the ability of the broker-dealer to minimize costs of
securities purchased and to maximize prices obtained for securities sold. The
worth of research depends on its usefulness in optimizing portfolio composition
and its changes over time. Commissions for the combination of execution and
research services that meet CSAM's standards may be higher than for execution
services alone or for services that fall below CSAM's standards. CSAM believes
that these arrangements may benefit all clients and not necessarily only the
accounts in which the particular investment transactions occur that are so
executed. Further, CSAM will only receive brokerage or research service in
connection with securities transactions that are consistent with the "safe
harbor" provisions of Section 28(e) of the Securities Exchange Act of 1934 when
paying such higher commissions. For the fiscal year ended October 31, 1999,
$6,249 and $15,712 of total brokerage commissions was paid by the Japan Growth
Fund and the Japan Small Company Fund, respectively, to brokers and dealers who
provided such research and other services. Research received from brokers or
dealers is supplemental to CSAM's own research program.

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<PAGE> 109
The following table details amounts paid by each Fund in
commissions to broker-dealers for execution of portfolio transactions during the
indicated fiscal years or periods ended October 31.

<TABLE>
<CAPTION>
Fund 1997 1998 1999*
---- ---- ---- -----
<S> <C> <C> <C>
Japan Growth Fund $149,801 $197,011 $1,447,271
Japan Small Company Fund $849,667 $267,535 $3,242,062
</TABLE>

* For the fiscal year ended October 31, 1999, the increase in the amounts paid
by each Fund in commissions to broker-dealers was due to an increase in (i)
purchases and sales of portfolio securities in response to volatility in market
prices and (ii) large capital inflows and outflows due to purchases and
redemptions, including active trading, of the Fund's shares.

All orders for transactions in securities or options on behalf
of a Fund are placed by CSAM with broker-dealers that it selects, including
Credit Suisse Asset Management Securities, Inc. ("CSAMSI") and affiliates of
Credit Suisse Group ("Credit Suisse"). A Fund may utilize CSAMSI or affiliates
of Credit Suisse in connection with a purchase or sale of securities when CSAM
believes that the charge for the transaction does not exceed usual and customary
levels and when doing so is consistent with guidelines adopted by the Board.

Investment decisions for the Funds 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
Funds. 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 Funds. In some instances,
this investment procedure may adversely affect the price paid or received by the
Funds or the size of the position obtained or sold for the Funds. To the extent
permitted by law, Warburg may aggregate the securities to be sold or purchased
for each 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, CSAMSI or Credit Suisse First Boston ("CS First Boston") or any
affiliated person of such companies. In addition, the Funds will not give
preference to any institutions with whom the Funds enter into distribution or
shareholder servicing agreements concerning the provision of distribution
services or support services.

Transactions for each of the Funds may be effected on foreign
securities exchanges. In transactions for securities not actively traded on a
foreign securities exchange, the Funds 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

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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.

Each 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. A Fund will engage in this practice, however, only when CSAM, in
its sole discretion, believe such practice to be otherwise in the Fund's
interest.

PORTFOLIO TURNOVER

The Funds do not intend to seek profits through short-term
trading, but the rate of turnover will not be a limiting factor when a Fund
deems it desirable to sell or purchase securities. The Funds' 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 Funds 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, a 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.

It is not possible to predict the Funds' portfolio turnover
rates. High portfolio turnover rates (100% or more) may result in higher
brokerage commissions, dealer markups or underwriting commissions as well as
other transaction costs. In addition, gains realized from portfolio turnover may
be taxable to shareholders. For the fiscal year ended October 31, 1999, the
increase in each Fund's portfolio turnover rate was due to an increase in (i)
purchase and sales of portfolio securities in response to volatility in market
prices and (ii) large capital inflows and outflows due to purchases and
redemptions, including active trading, of the Fund's shares.

SPECIAL CONSIDERATIONS REGARDING JAPAN

The Japan Growth Fund and the Japan Small Company Fund, which
will invest a significant portion of their assets in Japanese securities, will
be subject to general economic and political conditions in Japan. The Funds may
be more volatile than a fund which is broadly diversified geographically.
Additional factors relating to Japan that an investor in either of these Funds
should consider include the following:

Economic Background

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<PAGE> 111

Generally. Since the end of World War II, Japan has
experienced significant economic development. Since the mid-1980's, Japan has
become a major creditor nation. With the exception of the periods associated
with the oil crises of the 1970's, Japan has generally experienced very low
levels of inflation. There is no guarantee, however, that these favorable
trends will continue.

The Japanese economy has languished for much of the 1990's.
Lack of effective government action in the areas of tax reform to reduce high
tax rates, banking regulation to address enormous amounts of bad debt, and
economic reforms to attempt to stimulate spending are among the factors cited as
possible causes to Japan's economic problems. Steps have been taken to
deregulate and liberalize protected areas of the economy, but the pace of change
has been slow.

Strains in the financial system have also been one of the
major causes of Japan's economic weakness. The non-performing loans of financial
institutions have hampered their ability to take on risk, thus obstructing the
flow of funds into capital outlays as well as equities. The large commercial
banks are having to bear a heavy burden of the bad-debt problem (e.g., in
accepting write-offs of loans they have extended to distressed smaller
institutions, in recapitalizing failed institutions and in stepping up
contributions to the Deposit Insurance Corporation, an organization jointly
established in 1971 by the government and private financial institutions to
protect depositors). While the banking system appears to be making some progress
in its attempt to deal with non-performing assets, it is extremely difficult to
gauge the true extent of the bad-debt problem which, if not adequately
addressed, could lead to a crisis in the banking system.

Japan's economy is a market economy in which industry and
commerce are predominantly privately owned and operated. However, the Japanese
government is involved in establishing and meeting objectives for developing the
economy and improving the standard of living of the Japanese people, so that
changes in government policies could have an adverse effect on the economy and
the companies in which the Funds invest. Changes in government policies cannot
be predicted.

Currency Fluctuation. Investments by a Fund in Japanese
securities will be denominated in yen and most income received by these Funds
from such investments will be in yen. However, each Fund's net asset value will
be reported, and distributions will be made, in U.S. dollars. Therefore, a
decline in the value of the yen relative to the U.S. dollar could have an
adverse effect on the value of a Fund's Japanese investments. The yen has had a
history of unpredictable and volatile movements against the dollar. The Funds
are not required to hedge against declines in the value of the yen.

Securities Markets

The common stocks of many Japanese companies trade at high
price-earnings ratios, and the Japanese stock markets have often been considered
significantly overvalued. Differences in accounting methods make it difficult to
compare the earnings

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<PAGE> 112

of Japanese companies with those of companies in other countries, especially the
United States.

The Japanese securities markets are less regulated than those
in the United States and, at times, have been very volatile. Evidence has
emerged from time to time of distortion of market prices to serve political or
other purposes. Shareholders' rights are also not always enforced to the same
extent as in the United States.

Foreign Trade

Much of Japan's economy is dependent upon international trade.
The country is a leading exporter of automobiles and industrial machinery as
well as industrial and consumer electronics. Consequently, Japan's economy and
export growth are largely dependent upon the economic development of its trading
partners, particularly the United States and the developing nations in Southeast
Asia.

Because of the large trade surpluses it has generated, Japan
at times has had difficult relations with its trading partners, particularly the
U.S. It is possible that trade sanctions or other protectionist measures could
impact Japan adversely in both the short- and long-term.

Natural Resource Dependency

An island nation with limited natural resources, Japan is also
heavily dependent upon imports of essential products such as oil, forest
products and industrial metals. Accordingly, Japan's industrial sector and
domestic economy are highly sensitive to fluctuations in international commodity
prices. In addition, many of these commodities are traded in U.S. dollars and
any strength in the exchange rate between the yen and the dollar can have either
a positive or a negative effect upon corporate profits.

Energy

Japan has historically depended on oil for most of its energy
requirements. Almost all of its oil is imported. In the past, oil prices have
had a major impact on the domestic economy, but more recently Japan has worked
to reduce its dependence on oil by encouraging energy conservation and use of
alternative fuels. In addition, a restructuring of industry, with emphasis
shifting from basic industries to processing and assembly-type industries, has
contributed to the reduction of oil consumption. However, there is no guarantee
this favorable trend will continue.

Natural Disasters

The islands of Japan lie in the western Pacific Ocean, off the
eastern coast of the continent of Asia. Japan has in the past experienced
earthquakes and tidal waves of varying degrees of severity, and the risks of
such phenomena, and the damage resulting therefrom, continue to exist. The
long-term economic effects of such geological

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<PAGE> 113

factors on the Japanese economy as a whole, and on the Funds' investments,
cannot be predicted.

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<PAGE> 114
MANAGEMENT OF THE FUNDS

Officers and Board of Directors

The business and affairs of each Fund are managed by the Board
of Directors in accordance with the laws of the State of Maryland. Each Board
elects officers who are responsible for the day-to-day operations of a Fund and
who execute policies authorized by the Board. Under each Fund's Charter, a Board
may classify or reclassify any unissued shares of the Funds 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. A Board may similarly
classify or reclassify any class of its shares into one or more series and,
without shareholder approval, may increase the number of authorized shares of
the Funds.

The names (and ages) of each 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>
<S> <C>
Richard H. Francis (67) Director
40 Grosvenor Road Currently retired; Executive Vice President and Chief
Short Hills, New Jersey 07078 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 Fritz
P.O. Box 483 Broadcasting, Inc. and Fritz Communications (developers and
Wilson, Wyoming 83014 operators of radio stations); Director/Trustee of other
Warburg Pincus Funds.
</TABLE>

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<PAGE> 115

<TABLE>
<S> <C>
James S. Pasman, Jr. (69) Director
29 The Trillium Currently retired; President and Chief Operating Officer of
Pittsburgh, Pennsylvania 15238 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.

William W. Priest* (58) Chairman of the Board
153 East 53rd Street Chairman--Management Committee, Chief Executive Officer and
New York, New York 10022 Managing Director of CSAM since 1990; Director/Trustee of
other Warburg Pincus Funds and other CSAM-advised investment
companies.

Steven N. Rappaport (51) Director
40 East 52nd Street, President of Loanet, Inc. (on-line accounting service) since
New York, New York 10022 1997; Executive Vice President of Loanet, Inc. from 1994 to
1997; 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.
</TABLE>

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

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<PAGE> 116

<TABLE>
<S> <C>
Alexander B. Trowbridge (70) Director
1317 F Street President of Trowbridge Partners, Inc. (business consulting)
5th Floor since January 1990; Director or Trustee of New England
Washington, DC 20004 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
Pincus Funds.

Eugene L. Podsiadlo (42) President
466 Lexington Avenue Managing Director of CSAM; Associated with CSAM since
New York, New York 10017-3147 Credit Suisse 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.

Hal Liebes, Esq. (35) Vice President and Secretary
153 East 53rd Street Managing Director and General Counsel of CSAM;
New York, New York 10022 Associated with Lehman Brothers, Inc. from 1996 to 1997;
Associated with CSAM from 1995 to 1996; 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 (40) Treasurer and Chief Financial Officer
153 East 53rd Street Vice president and Director of Fund Administration of CSAM;
New York, New York 10022 Associated with CSAM since 1984; Officer of other Warburg
Pincus Funds and other CSAM-advised investment companies.
</TABLE>

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<PAGE> 117

<TABLE>
<S> <C>
Stuart J. Cohen, Esq. (31) Assistant Secretary
466 Lexington Avenue Vice President and Legal Counsel of CSAM; Associated with
New York, New York 10017-3147 CSAM since Credit Suisse 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 Officer of CSAM;
New York, New York 10022 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>

No employee of CSAM, PFPC Inc., the Funds' co-administrator
("PFPC"), or any of their affiliates, receives any compensation from the Funds
for acting as an officer or director of a Fund. For each Fund in the Warburg
Pincus family of funds, each Director/Trustee who is not a director, trustee,
officer or employee of CSAM, PFPC or any of their affiliates receives an annual
fee of $750 per fund for Director services provided and $250 for each Board
meeting attended in addition to reimbursement for expenses incurred in
connection with attendance at Board meetings. Each member of the Audit Committee
receives an annual fee of $250, and the Chairman of the Audit Committee received
an annual fee of $325.

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<PAGE> 118

Directors' Total Compensation (for the fiscal year ended October 31, 1999):

<TABLE>
<CAPTION>
Name of Japan Small Company Japan Growth All Investment Companies in
Director Fund Fund Warburg Pincus Fund Complex(1)
-------- ------------------- ------------ ----------------------------
<S> <C> <C> <C>
William W. Priest(2) None None None
Arnold M. Reichman(3) None None None
Richard N. Cooper(4) $1,125 $1,125 $47,500
Richard H. Francis(5) $1,250 $1,000 $38,250
Jack W. Fritz $2,500 $2,250 $94,250
Jeffrey E. Garten(6) $2,500 $2,250 $94,250
Thomas A. Melfe(4) $1,375 $1,375 $40,750
James S. Pasman, Jr.(5) $1,250 $1,000 $38,250
Steven N. Rappaport(5) $1,250 $1,000 $38,250
Alexander B. Trowbridge $2,575 $2,325 $97,100
</TABLE>

1. Each Director serves as a Director or Trustee of 51 investment companies and
portfolios in the CSAM family of funds, except for Mr. Garten, who also
serves as a Director or Trustee of 33 investment companies in the Warburg
Pincus family of funds.

2. 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.

3. Mr. Reichman resigned as a Director of each Fund effective August 18, 1999.

4. Messrs. Cooper and Melfe resigned as a Director of each Fund effective July
6, 1999.

5. Messrs. Francis, Pasman and Rappaport became Directors of the Funds effective
July 6, 1999.

6. Mr. Garten resigned as a Director of each Fund effective February 3, 2000.

As of January 31, 2000, Directors and officers as a group,
owned of record less than 1% of each Fund's outstanding Common Shares. No
Director or officer owned any of the Funds' outstanding Advisor Shares.

Portfolio Managers

Mr. P. Nicholas Edwards is Co-Portfolio Manager of the Japan
Growth Fund and the Japan Small Company Fund. Mr. Edwards has been associated
with CSAM since Credit Suisse acquired the Funds' predecessor adviser in July
1999 and joined the predecessor adviser in August 1995. Prior to that, Mr.
Edwards was a director at Jardine Fleming Investment Advisers, Tokyo. He was a
vice president of Robert Fleming Inc. in

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<PAGE> 119
New York City from 1988 to 1991. Mr. Edwards earned M.A. degrees from Oxford
University and Hiroshima University in Japan.

Mr. Todd Jacobson is Co-Portfolio Manager of the Japan Growth
Fund and the Japan Small Company Fund. Mr. Jacobson has seven years of
investment experience. Mr. Jacobson has been associated with CSAM since Credit
Suisse acquired the Funds' predecessor adviser in July 1999. Prior to joining
the predecessor adviser in 1997, Mr. Jacobson was an analyst at Brown Brothers
Harriman from 1993 to 1997. He was an analyst with Value Line from 1989 to 1991.
Mr. Jacobson received his M.B.A. degree in Finance from the Wharton School and
his B.A. degree Phi Beta Kappa in Economics from the State University of New
York - Binghamton.

Investment Adviser and Co-Administrators

CSAM, located at 153 East 53rd Street, New York, New York
10022, serves as investment adviser to each Fund pursuant to a written agreement
(the "Advisory Agreement"). CSAM is an indirect wholly-owned U.S. subsidiary of
Credit Suisse. Credit Suisse is a global financial services company, providing a
comprehensive range of banking and insurance products. Active on every continent
and in all major financial centers, Credit Suisse comprises five business units
- -- Credit Suisse Asset Management (asset management); 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.

Prior to July 6, 1999, Warburg served as investment adviser to
each Fund. On that date, Credit Suisse acquired Warburg and combined Warburg
with Credit Suisse's existing U.S.-based asset management business ("Credit
Suisse Asset Management"). Consequently, the combined entity, CSAM, became the
Funds' investment adviser. Credit Suisse Asset Management, formerly known as BEA
Associates, together with its predecessor firms, has been engaged in the
investment advisory business for over 60 years.

CSAMSI and PFPC both serve as co-administrators to each Fund
pursuant to separate written agreements (the "CSAMSI Co-Administration
Agreement" and the "PFPC Co-Administration Agreement," respectively). CSAMSI
became co-administrator to each Fund on November 1, 1999. Prior to that,
Counsellors Funds Service, Inc. ("Counsellors Service") served as
co-administrator to the Funds.

CSAM, subject to the control of the Funds' officers and the
Board, manages the investment and reinvestment of the assets of the Funds in
accordance with each Fund's investment objective and stated investment policies.
CSAM makes investment decisions for each Fund and places orders to purchase or
sell securities on behalf of the Fund. CSAM also employs a support staff of
management personnel to provide services to the Funds and furnishes the Funds
with office space, furnishings and equipment. For its investment advisory

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<PAGE> 120

services, CSAM receives a fee calculated at an annual rate of 1.25% of each
Fund's average daily net assets.

As co-administrator, CSAMSI provides shareholder liaison
services to the Funds, including responding to shareholder inquiries and
providing information on shareholder investments. CSAMSI also performs a variety
of other services, including furnishing certain executive and administrative
services, acting as liaison between each Fund and its various service providers,
furnishing corporate secretarial services, which include preparing materials for
meetings of the Board, preparing proxy statements and annual and semiannual
reports, assisting in the preparation of tax returns and developing and
monitoring compliance procedures for the Funds. For its administrative services,
CSAMSI receives a fee calculated at an annual rate of .10% of each Fund's
average daily net assets.

As a co-administrator, PFPC calculates each Fund's net asset
value, provides all accounting services for the Funds and assists in related
aspects of the Funds' operations. For its administrative services, PFPC receives
a fee calculated at an annual rate of .12% on each Fund's first $250 million in
average daily net assets, .10% on the next $250 million in average daily net
assets, .08% on the next $250 million in average daily net assets and .05% of
the average daily net assets over $750 million, subject in each case to a
minimum annual fee and exclusive out-of-pocket expenses. PFPC has its principal
offices at 400 Bellevue Parkway, Wilmington, Delaware 19809.

CSAM and the Funds' co-administrators may voluntarily waive a
portion of their fees from time to time and temporarily limit the expenses to be
borne by the Funds.

Each class of shares of a 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 a Fund's average daily net
assets. The advisory fees earned by CSAM or CSAM's predecessor, Warburg, and the
co-administration fees earned by PFPC and Counsellors Service (the Funds'
predecessor co-administrator), respectively, for the last three fiscal years are
described below.

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<PAGE> 121

CSAM/Warburg Advisory Fees
(portions of fees waived, if any, noted in parenthesis)

<TABLE>
<CAPTION>
Fiscal year ended Fiscal year ended Fiscal year ended
Fund October 31, 1997 October 31, 1998 October 31, 1999
- ------------------- ---------------------------- ------------------------ ---------------------------
<S> <C> <C> <C> <C> <C> <C>
Japan Growth $260,741 ($143,819) $438,025 ($73,158) $2,057,582 ($716,702)
Japan Small Company $927,417* ($357,562) $526,522 ($288,783) $3,604,722 ($1,223,067)
</TABLE>

* Effective at the close of business on May 23, 1997, Warburg ceased to
engage SPARX Investment & Research, USA, Inc. ("SPARX") as sub-investment
adviser to the Japan Small Company Fund. Up until that time, Warburg paid
SPARX from its advisory fee at an annual rate of .625% of the average
daily net assets of the Fund.

PFPC Co-Administration Fees
(portions of fees waived, if any, noted in parenthesis)

<TABLE>
<CAPTION>
Fiscal year ended Fiscal year ended Fiscal year ended
Fund October 31, 1997 October 31, 1998 October 31, 1999
- ------------------- ---------------------------- ------------------------ ---------------------------
<S> <C> <C> <C> <C> <C> <C>
Japan Growth $25,031 ($25,031) $49,934 ($42,040) $197,949 ($20,875)
Japan Small Company $89,032 ($20,262) $58,033 ($50,546) $319,501 ($14,743)
</TABLE>

Counsellors Service Co-Administration Fees

<TABLE>
<CAPTION>
Fiscal year ended Fiscal year ended Fiscal year ended
Fund October 31, 1997 October 31, 1998 October 31, 1999
- ------------------- ---------------------------- ------------------------ ---------------------------
<S> <C> <C> <C>
Japan Growth $20,859 $35,042 $164,606
Japan Small Company $74,193 $42,122 $288,378
</TABLE>

Custodian and Transfer Agent

State Street Bank and Trust Company ("State Street") serves as
custodian of each of the Fund's non-U.S. assets, and PFPC Trust Company ("PFPC
Trust") serves as custodian of each of the Fund's U.S. assets. Pursuant to
separate custodian agreements (the "Custodian Agreements"), State Street and
PFPC Trust each (i) maintain a separate account or accounts in the name of the
Funds, (ii) hold and transfer portfolio securities on account of the Funds,
(iii) make receipts and disbursements of money on behalf of the Funds, (iv)
collect and receive all income and other payments and distributions for the
account of the Funds'

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<PAGE> 122

portfolio securities and (v) make periodic reports to the Boards concerning the
Funds' custodial arrangements. With approval of the Board, State Street is
authorized to select one or more foreign banking institutions and foreign
securities depositories to serve as sub-custodian on behalf of the Funds, and
PNC is authorized to select one or more domestic banks or trust companies to
serve as sub-custodian on behalf of the Funds. With approval of the Board, PFPC
Trust is authorized to select one or more domestic banks or trust companies to
serve as sub-custodian on behalf of the Funds. PFPC Trust has entered into a
sub-custodian agreement with PNC Bank, National Association ("PNC"), pursuant to
which PNC provides asset safekeeping and securities clearing services. PFPC
Trust and PNC are indirect, wholly owned subsidiaries of PNC Bank Corp. and
their principal business address is 8800 Tinicum Boulevard, Philadelphia,
Pennsylvania 19153. The principal business address of State Street is 225
Franklin Street, Boston, Massachusetts 02110.

State Street also serves as the shareholder servicing,
transfer and dividend disbursing agent of the Funds pursuant to a Transfer
Agency and Service Agreement, under which State Street (i) issues and redeems
shares of the Funds, (ii) addresses and mails all communications by the Funds to
record owners of Fund shares, including reports to shareholders, dividend and
distribution notices and proxy material for meetings of shareholders, (iii)
maintains shareholder accounts and, if requested, sub-accounts and (iv) makes
periodic reports to the Boards concerning the transfer agent's operations with
respect to the Funds. 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.

Organization of the Funds

The Funds are open-end management investment companies within
the meaning of the 1940 Act. The Japan Growth Fund was incorporated on October
10, 1995 under the laws of the State of Maryland under the name "Warburg, Pincus
Japan Growth Fund, Inc.," and the Japan Small Company Fund was incorporated on
July 26, 1994 under the laws of the State of Maryland under the name "Warburg,
Pincus Japan OTC Fund, Inc." On August 21, 1998, the Fund amended its charter to
change its name to "Warburg, Pincus Japan Small Company Fund, Inc." Each of the
Funds is a non-diversified management investment company. Each Fund offers two
classes of shares, Common Shares and Advisor Shares. Unless otherwise indicated,
references to a "Fund" apply to each class of shares of that Fund.

Each Fund's charter authorizes its 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 and two billion shares
are designated Advisor Shares. Under each Fund's charter documents, the Board
has the power to 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. A Board may similarly
classify or 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.

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<PAGE> 123
All shareholders of each Fund in each class, 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. Provident Distributors, Inc. ("PDI") serves as
distributor of the Funds' shares. PDI offers each Fund's shares on a continuous
basis. No compensation is payable by the Funds to PDI for distribution services,
however, pursuant to a separate agreement with CSAM, PDI is compensated for the
services provided to the Funds. PDI's principal business address is Four Falls
Corporate Center, West Conshohocken, Pennsylvania 19428-2961.

Common Shares. The Japan Growth Fund and the Japan Small
Company Fund have each 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 each Fund pays CSAMSI 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
Funds. Services performed by CSAMSI 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 Funds, as set forth in the Common Shares
12b-1 Plan ("Shareholder Services", together with Selling Services "Services").
Shareholder Services 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 Funds; (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 Funds, including responding to inquires 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 Funds 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.

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<PAGE> 124

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

Pursuant to the Common Shares 12b-1 Plan, CSAMSI provides the
Boards with periodic reports of amounts expended under the 12b-1 Plan and the
purpose for which the expenditures were made.

The Common Shares 12b-1 Plan was adopted on November 1, 1999.
Prior to that date, a substantially similar plan was in place with respect to
the Common Shares (the "Prior Common Shares 12b-1 Plan"). For the fiscal year
ended October 31, 1999, the Common Shares of the Japan Growth Fund and the Japan
Small Company Fund paid $410,245 and $719,267, respectively, pursuant to the
Prior Common Shares 12b-1 Plan, all of which was expended on advertising,
marketing communications and public relations.

Each 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 Funds.

For administration, subaccounting, transfer agency and/or
other services, CSAM or its affiliates may pay Service Organizations a fee up to
.40% of the average annual value of accounts with the Funds 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 Funds may reimburse part of the Service Fee at rates they would normally pay
to the transfer agent for providing the services.

Advisor Shares. Each Fund has entered into an agreement (the
"Agreement") 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

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<PAGE> 125

Shares 12b-1 Plan") pursuant to Rule 12b-1 under the 1940 Act. Advisor Shares of
the Fund bear expenses paid pursuant to the Advisor Shares 12b-1 Plan at an
annual rate not to exceed .75% of the average daily net asset value of the
Fund's outstanding Advisor Shares. Advisor Shares are currently bearing expenses
of .50% of average daily net assets. Such payments may be paid to Institutions
directly by a Fund or by CSAMSI on behalf of the Fund. The Advisor Shares 12b-1
Plan requires the Board, at least quarterly, to receive and review written
reports of amounts expended under the Advisor Shares 12b-1 Plan and the purpose
for which such expenditures were made. Advisor Shares 12b-1 Plan was adopted on
November 1, 1999. Prior to that date, a substantially similar plan was in place
with respect to the Advisor Shares (the "Prior Advisor Shares 12b-1 Plan"). For
the fiscal year ended October 31, 1999, the Advisor Shares of the Japan Growth
Fund and the Japan Small Company Fund paid $2,545 and $3,354, respectively,
pursuant to the Prior Advisor Shares 12b-1 Plan, all of which were paid to
Institutions.

Certain Institutions may receive service fees from the CSAMSI,
CSAM or their affiliates for providing recordkeeping or other services in
connection with investments in the funds. Institutions may also be reimbursed
for marketing and other costs. The service fee 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
Institutions. The funds may reimburse part of the service fee at rates they
would normally pay to the transfer agent for providing the services. To the
extent that CSAMSI, CSAM or their affiliates provide additional compensation or
reimbursements for market expenses, such payments would not represent an
additional expense to the Funds or their 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 relevant 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 the Fund's
shares. Prospectuses are 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.

General. The Common Shares 12b-1 Plans and the Advisor Shares
12b-1 Plans will continue in effect for so long as their continuance is
specifically approved at least annually

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by the Boards, including a majority of the Directors who are not interested
persons of the Funds and who have no direct or indirect financial interest in
the operation of the Distribution Plans or the 12b-1 Plans, as the case may be
("Independent Directors"). Any material amendment of a Common Shares 12b-1 Plan
or an Advisor Shares 12b-1 Plan would require the approval of the Boards in the
same manner. Neither the Common Shares 12b-1 Plans nor the Advisor Shares 12b-1
Plans may be amended to increase materially the amount to be spent thereunder
without shareholder approval of the relevant class of shares. Each Common Shares
12b-1 Plan or Advisor 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 of
each Fund.

ADDITIONAL PURCHASE AND REDEMPTION INFORMATION

The offering price of each 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, a 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. (A 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, each 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. Each Fund has elected, however, to be governed by Rule 18f-1 under the
1940 Act as a result of which a Fund is obligated to redeem shares, with respect
to any one shareholder during any 90 day period, solely in cash up to the lesser
of $250,000 or 1% of the net asset value of that Fund at the beginning of the
period.

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
relevant 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 a 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 a Fund.

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EXCHANGE PRIVILEGE

An exchange privilege with certain other funds advised by CSAM
is available to investors in each Fund. A Common Shareholder may exchange Common
Shares of a 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 a 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 each 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 a 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 1-800-222-8977.

The Funds reserve the right to refuse exchange purchases by
any person or group if, in CSAM's judgment, a 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 Funds reserve 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 Funds. Each 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 Funds. The summary is based on
the laws in effect on the date of this Statement of Additional Information and
existing judicial and administrative interpretations thereof, both of which are
subject to change.

The Funds and Their Investments

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Each Fund intends to continue to qualify as a regulated
investment company under the Code during each of its taxable years. To so
qualify, a Fund must, among other things: (a) derive at least 90% of its gross
income in each taxable year from dividends, interest, payments with respect to
securities, loans and gains from the sale or other disposition of stock,
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 each 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 United States government securities or securities of
other regulated investment companies) of any one issuer or any two or more
issuers that the Fund controls and which are determined to be engaged in the
same or similar trades or businesses or related trades or businesses.

As a regulated investment company, each 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-term and short-term capital gains) and
on its net realized long-term 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 to its
shareholders, 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 a
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 each 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.

Each Fund intends to distribute annually to its shareholders
substantially all of its investment company taxable income. The Board of
Directors 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). Each Fund currently expects to
distribute any such excess annually to its shareholders. However, if a 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 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

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<PAGE> 129

against their United States federal income tax liabilities, if any, and to claim
refunds to the extent their credits exceed their tax 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 their 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").

The Code imposes a 4% nondeductible excise tax on each Fund to
the extent the Fund does not distribute by the end of any calendar year at least
98% of its ordinary income for that year and at least 98% of its net capital
gains (both long-term and short-term) for the one-year period ending, as a
general rule, on October 31 of that year. For this purpose, however, any
ordinary income or net capital gains 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. Each Fund
anticipates that it will pay such dividends and will make such distributions as
are necessary in order to avoid the application of this excise tax.

If, in any taxable year, a 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, 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 a 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. Moreover, if a 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 the Fund had been liquidated) in order to qualify as a regulated investment
company in a subsequent year.

A 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

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for avoiding income and excise taxes. Each 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 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.

A Fund's investments in zero coupon securities, if any, may
create special tax consequences. Zero coupon securities do not make interest
payments, although a portion of the difference between a zero coupon security's
face value and its purchase price is imputed as income to the Fund each year
even though the Fund receives no cash distribution until maturity. Under the
U.S. federal tax laws, 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 ordinarily will constitute
taxable income to the shareholders of the Fund.

Foreign Taxes

In the opinion of Japanese counsel for the Funds, in the
absence of any activities in Japan by the Funds other than those contemplated
and disclosed in the Prospectuses and this Statement of Additional Information,
the operations of the Funds will not subject the Funds to any Japanese income,
capital gains or other taxes except for withholding taxes on interest and
dividends paid to the Funds by Japanese corporations. In the opinion of such
counsel, under the tax convention between the United States and Japan (the
"Convention") as currently in force, a Japanese withholding tax at a rate of 15%
is, within certain exceptions, imposed upon dividends paid by Japanese
corporations to the Funds. Pursuant to the present terms of the Convention,
interest received by the Funds from sources within Japan is subject to a
Japanese withholding tax at a rate of 10%.

Each Fund may elect for U.S. income tax purposes to treat
foreign income taxes paid by it as paid by its shareholders if: (i) the Fund
qualifies as a regulated investment company, (ii) certain asset and distribution
requirements are satisfied, and (iii) more than 50% of the Fund's total assets
at the close of its taxable year consists of stock or securities of foreign
corporations. Each Fund may qualify for and make this election in some, but not
necessarily all, of its taxable years. If a Fund were to make an election,
shareholders of the Fund would be required to take into account an amount equal
to their pro rata portions of such foreign taxes in computing their taxable
income and then treat an amount equal to those foreign taxes as a U.S. federal
income tax deduction or as a foreign tax credit against their U.S. federal
income taxes. Shortly after any year for which it makes such an election, a Fund
will report to its shareholders the amount per share of such foreign income
taxes that must be included in each shareholder's gross income and the amount
which will be available for the deduction or credit. No deduction for foreign
taxes may be claimed by a shareholder who does not itemize deductions. Certain
limitations will be imposed on the extent to which the credit (but not the
deduction) for foreign taxes may be claimed.

Passive Foreign Investment Companies

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If a Fund purchases shares in certain foreign investment
entities, called "passive foreign investment companies" ("PFICs"), 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 a 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 each 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 PFICs in which it
invests, which may be difficult or impossible to obtain.

Alternatively, a 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 each year. In such case, the Fund would report any
such gains as ordinary income and would deduct any such 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, a 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 stock. The Fund may have to distribute this "phantom"
income and gain to satisfy the 90% 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.

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-realized 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 each 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 an amount equal to the amount of money
that the shareholders receiving cash

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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 a 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 a 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 a 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 during such
six-month period.

Backup Withholding

A Fund may be required to withhold, for United States federal
income tax purposes, 31% of the dividends, distributions and redemption proceeds
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.

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Notices

Shareholders will be notified annually by the relevant 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 Funds and Their 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.

Other Taxation

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

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

DETERMINATION OF PERFORMANCE

From time to time, a Fund may quote the total return of its
Common Shares and/or Advisor Shares in advertisements or in reports and other
communications to shareholders. 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.

With respect to the Funds' Common and Advisor Shares, the
average annual total return for the periods ended October 31, 1999 were as
follows (performance figures calculated without waiver of fees by a Fund's
service provider(s), if any, are noted in parentheses):

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TOTAL RETURN

COMMON SHARES

<TABLE>
<CAPTION>
Fund (Inception Date) One-Year Five-Year Since Inception
------------------------ ----------------------- ------------------- --------------------
<S> <C> <C> <C> <C> <C> <C>
Japan Growth (12/29/95) 182.42% (181.96%) N/A N/A 26.78% (26.27%)
Japan Small Company 234.11% (233.57%) 15.29% (14.65%) 14.66% (14.02%)
(9/30/94)
</TABLE>

ADVISOR SHARES

<TABLE>
<CAPTION>
Fund (Inception Date) One-Year Five-Year Since Inception
------------------------ ----------------------- ------------------- --------------------
<S> <C> <C> <C> <C> <C> <C>
Japan Growth (12/29/95) 177.61% (177.38%) N/A N/A 25.82% (25.78%)
Japan Small Company 235.01% (234.83%) 15.04% (14.11%) 14.41% (13.42%)
(9/30/94)
</TABLE>

These total return figures show the average percentage change
in value of an investment in a Fund from the beginning of the measurement period
to the end of the measurement period. The figures reflect changes in the price
of the Fund's shares assuming that any income dividends and/or capital gain
distributions made by the Fund during the period were reinvested in shares of
the Fund. Total return will be shown for recent one-, five- and ten-year
periods, and may be shown for other periods as well (such as from commencement
of the Fund's operations or on a year-by-year, quarterly or current year-to-date
basis).

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. Investors should note that this performance may not be
representative of the Fund's total returns in longer market cycles.

These total return figures show the average percentage change
in value of an investment in the Common Shares from the beginning of the
measuring period to the end of the measuring period. The figures reflect changes
in the price of Common Shares assuming that any income dividends and/or capital
gain distributions made by the Fund during the period

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were reinvested in Common Shares of the Fund. Total return will be shown for
recent one-, five- and ten-year periods, and may be shown for other periods as
well (such as from commencement of the Fund's operations or on a year-by-year,
quarterly or current year-to-date basis).

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 each Fund seeks long-term
appreciation and that such return may not be representative of any Fund's return
over a longer market cycle. Each Fund may also advertise aggregate total return
figures of its Common Shares for various periods, representing the cumulative
change in value of an investment in the Common Shares of 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 gain
distributions).

A Fund may advertise, from time to time, comparisons of the
performance of its Common Shares and/or Advisor Shares with that of one or more
other mutual funds with similar investment objectives. A 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 paragraph, 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 a 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, a 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 a Fund's total return, and such fees, if charged,
will reduce the actual return received by customers on their investments.

A Fund may compare its performance with (i) that of other
mutual funds with similar investment objectives and policies, which may be based
on the rankings prepared by Lipper Analytical Services, Inc. or similar
investment services that monitor the performance of mutual funds; (ii) in the
case of the Japan Growth Fund, the Morgan Stanley Capital International Europe,
Australasia, Far East ("EAFE") Index, the Salomon Russell Global Equity Index,
the FT-Actuaries World Indices, the S&P 500 Index, the Nikkei over-the-

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<PAGE> 136
counter average, the JASDAQ Index, the Nikkei 225 and 300 Stock Indexes and the
Tokyo Stock Exchange Index, which are unmanaged indexes of common stock; and in
the case of the Japan Small Company Fund, the JASDAQ Index and the Morgan
Stanley Japan Small Company Index; or (iii) other appropriate indexes of
investment securities or with data developed by Warburg derived from such
indexes. A Fund may also include evaluations of the Fund published by nationally
recognized ranking services and by financial publications 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,
each Fund may from time to time compare its expense ratio to that of investment
companies with similar objectives and policies, based on data generated by
Lipper Analytical Services, Inc. or similar investment services that monitor
mutual funds.

Warburg believes that a diversified portfolio of international
equity securities, when combined with a similarly diversified portfolio of
domestic equity securities, tends to have a lower volatility than a portfolio
composed entirely of domestic securities. Furthermore, international equities
have been shown to reduce volatility in single asset portfolios regardless of
whether the investments are in all domestic equities or all domestic
fixed-income instruments, and research indicates that volatility can be
significantly decreased when international equities are added.

To illustrate this point, the performance of international
equity securities, as measured by the Morgan Stanley Capital International
(EAFE) Europe, Australasia, Far East Index (the "EAFE Index"), has equaled or
exceeded that of domestic equity securities, as measured by the Standard &
Poor's 500 Composite Stock Index (the "S&P 500 Index") in 15 of the last 28
years. The following table compares annual total returns of the EAFE Index and
the S&P 500 Index for the calendar years shown.

EAFE INDEX VS. S&P 500 INDEX
1972-1999
ANNUAL TOTAL RETURN+

<TABLE>
<CAPTION>
YEAR EAFE INDEX S&P 500 INDEX
---- ---------- -------------
<S> <C> <C>
1972* 33.28 15.63
1973* -16.82 -17.37
1974* -25.60 -29.72
1975 31.21 31.55
1976 -.36 19.15
1977* 14.61 -11.50
1978* 28.91 1.06
1979 1.82 12.31
1980 19.01 25.77
1981* -4.85 -9.73
1982 -4.63 14.76
</TABLE>

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<PAGE> 137

EAFE Index vs. S&P 500 Index
1972 - 1999
Annual Total Return +

<TABLE>
<CAPTION>
YEAR EAFE INDEX S&P 500 INDEX
---- ---------- -------------
<S> <C> <C>
1983* 20.91 17.27
1984* 5.02 1.40
1985* 52.97 26.33
1986* 66.80 14.62
1987* 23.18 2.03
1988* 26.66 12.40
1989 9.22 27.25
1990 -24.71 -6.56
1991 10.19 26.31
1992 -13.89 4.46
1993* 30.49 7.06
1994* 6.24 -1.54
1995 9.42 34.11
1996 4.40 20.26
1997 0.24 31.01
1998 18.29 26.23
1999* 26.97 21.02
----- ------- -----
</TABLE>

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

+ Without reinvestment of dividends.

* The EAFE Index has outperformed the S&P 500 Index 15 out of the last 28
years.

The quoted performance information shown above is not intended
to indicate the future performance of the Funds.

Advertising or supplemental sales literature relating to the
Japan Growth Fund and the Japan Small Company Fund may describe the percentage
decline from all-time high levels for certain foreign stock markets. It may also
describe how such Funds differ from the EAFE Index in composition. The Japan
Growth Fund and the Japan Small Company Fund may also discuss in advertising and
sales literature the history of Japanese stock markets, including the Tokyo
Stock Exchange and OTC market. Sales literature and advertising may also discuss
trends in the economy and corporate structure in Japan, including the contrast
between the sales growth, profit growth, price/earnings ratios, and return on
equity (ROE) of companies; it may discuss the cultural changes taking place
among consumers in Japan, including increasing cost-consciousness and
accumulation of purchasing power and wealth among Japanese consumers, and the
ability of new companies to take advantage of these trends. The sales literature
for these Funds may also discuss current statistics and projections of the
volume, market capitalization, sector weightings and number of issues traded on
Japanese exchanges and in Japanese OTC markets, and may include graphs of such
statistics in advertising and other sales literature.

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<PAGE> 138
In its reports, investor communications or advertisements,
each 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 Funds; (ix) portfolio manager
commentary or market updates; (x) research methodology underlying stock
selection or a 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 each Fund. The financial statements that are incorporated by
reference in this Statement of Additional Information have been audited by PwC,
and have been included 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 each Fund and
provides legal services from time to time for CSAM and CSAMSI.

MISCELLANEOUS

The Funds are 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 Funds or any member of the public
regarding the advisability of investing in securities generally or in the Funds
particularly. Warburg, Pincus & Co. licenses certain trademarks and trade names
of Warburg, Pincus & Co., and is not responsible for and has not participated in
the calculation of the Funds' net asset value, nor is Warburg, Pincus & Co. a
distributor of the Funds. Warburg, Pincus & Co. has no obligation or liability
in connection with the administration, marketing or trading of the Funds.

As of January 31, 2000, the name, address and percentage of
ownership of each person that owns of record 5% or more of a class of each
Fund's outstanding shares were as follows:

Japan Growth Fund

-65-
<PAGE> 139

<TABLE>
<S> <C> <C>
COMMON SHARES Charles Schwab & Co., Inc.* 32.13%
Special Custody Account for the
Exclusive Benefit of Customers
Attn: Mutual Funds
101 Montgomery Street
San Francisco, CA 94104-4122

National Financial Services Corporation* 27.17%
FBO Customers
P.O. Box 3908
Church Street Station
New York, NY 10008-3908

National Investor Services Corporation* 7.58%
For the Exclusive Benefit of our Customers
55 Water St., FL 32
New York, NY 10041-3299

ADVISOR SHARES National Financial Services Corporation* 26.42%
FBO Customers
P.O. Box 3908
Church Street Station
New York, NY 10008-3908

Sema and Co* 20.31%
95400141
12 E. 49th St., 41 FL
New York, NY 10017

National Investor Services Corporation* 12.26%
For the Exclusive Benefit of our Customers
55 Water St., FL 32
New York, NY 10041-3299

Japan Small Company Fund

COMMON SHARES Charles Schwab & Co., Inc.* 31.44%
Special Custody Account for the Exclusive Benefit of Customers
Attn: Mutual Funds
101 Montgomery Street
San Francisco, CA 94104-4122

National Investor Services Corporation* 7.73%
For the Exclusive Benefit of our Customers
55 Water St., FL 32
New York, NY 10041-3299
</TABLE>

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<PAGE> 140

<TABLE>
<S> <C> <C>
NFSC FEBO # X94-168289* 6.06%
Bramson Enterprises LP
401 N. Division St.
Carson City, NV 89703-4102
ADVISOR SHARES National Investor Services Corporation* 31.50%
For the Exclusive Benefit of our Customers 55
Water St., FL 32
New York, NY 10041-3299

Advanced Clearing FBO 1788789141* 5.36%
PO Box 2226
Omaha, NE 68103-2226
</TABLE>

- --------------------
* The Funds believe that these entities are not the beneficial owners of shares
held of record by it.

FINANCIAL STATEMENTS

Each Fund's audited financial report dated October 31, 1999,
which either accompanies this Statement of Additional Information or has
previously been provided to the investor to whom this Statement of Additional
Information is being sent, is incorporated herein by reference with respect to
all information regarding the relevant Fund included therein. Each Fund will
furnish without charge a copy of the annual reports upon request by calling
Warburg Pincus Funds at 800-927-2874.

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<PAGE> 141
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.

Corporate Bond Ratings

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

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

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<PAGE> 142
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.

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:

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

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<PAGE> 143
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.

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.

-3-
<PAGE> 144
PART C

OTHER INFORMATION

WARBURG, PINCUS JAPAN SMALL COMPANY FUND, INC.

Item 23. Exhibits

Exhibit No. Description of Exhibit

a(1) Articles of Incorporation.(1)

(2) Articles Supplementary.(1)

(3) Articles of Amendments.(2)

(4) Articles Supplementary.(2)

(5) Articles of Amendments.(3)

b(1) By-Laws.(1)

(2) Amendment to By-Laws.(1)

(3) Form of Amendment to By-Laws.(4)

(4) Amendment to By-Laws.(3)

c Form of Share Certificates.(5)

d Form of Investment Advisory Agreement.(6)

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

(1) Incorporated by reference to Post-Effective Amendment No. 2 to
Registrant's Registration Statement on Form N-1A, filed on September
22, 1995.

(2) Incorporated by reference to Post-Effective Amendment No. 5 to
Registrant's Registration Statement on Form N-1A, filed on February 25,
1997.

(3) Incorporated by reference to Post-Effective Amendment No. 8 to
Registrant's Registration Statement on Form N-1A, filed on August 20,
1998.

(4) Incorporated by reference; material provisions of this exhibit
substantially similar to those of the corresponding exhibit in
Post-Effective Amendment No. 8 to the Registration Statement on Form
N-1A of Warburg, Pincus Global Fixed Income Fund, Inc., filed on
February 17, 1998 (Securities Act File No. 33-36066).

(5) Incorporated by reference; material provisions of this exhibit
substantially similar to those of the corresponding exhibit in
Pre-Effective Amendment No. 2 to the Registration Statement on Form
N-1A of Warburg, Pincus Post-Venture Capital Fund, Inc., filed on
September 25, 1995 (Securities Act File No. 33-61225).

C-1
<PAGE> 145

e Distribution Agreement with Provident Distributors, Inc.
("PDI").(7)

f Not applicable.

g(1) Form of Custodian Agreement with State Street Bank and
Trust Company.(8)

(2) Form of Custodian Services Agreement with PFPC Trust
Company.(9)

(3) Form of Sub-Custodian Services Agreement with PFPC Trust
Company and PNC Bank, National Association. (9)

h(1) Form of Transfer Agency Agreement.(10)

(2) Co-Administration Agreement with Credit Suisse Asset
Management Securities, Inc.(11)

(3) Form of PFPC Co-Administration Agreement.(12)

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

(6) Incorporated by reference; material provisions of this exhibit
substantially similar to those of the corresponding exhibit in the
Registration Statement on Form N-14 of Warburg, Pincus Global Post-
Venture Capital Fund, Inc., filed November 4, 1999 (Securities Act File
No. 333-90341).

(7) Incorporated by reference to Post-Effective Amendment No. 9 to the
Registration Statement on Form N-1A of Warburg, Pincus Balanced Fund,
Inc., filed on February 24, 2000 (Securities Act File No. 333-00533)

(8) Incorporated by reference; material provisions of this exhibit
substantially similar to those of the corresponding exhibit in the
Registration Statement on Form N-14 of Warburg, Pincus Major Foreign
Markets Fund, Inc. (formerly known as Warburg, Pincus Managed EAFE(R)
Countries Fund, Inc.), filed on November 5, 1997 (Securities Act File
No. 333-39611).

(9) Incorporated by reference to Post-Effective Amendment No. 10 to the
Registration Statement on Form N-1A of Warburg, Pincus Trust, filed on
April 16, 1999 (Securities Act File No. 33-58125).

(10) Incorporated by reference; material provisions of this exhibit
substantially similar to those of the corresponding exhibit in
Pre-Effective Amendment No. 1 to the Registration Statement on Form
N-1A of Warburg, Pincus Trust, filed on June 14, 1995 (Securities Act
File No. 33-58125).

(11) Incorporated by reference to the Registration Statement on Form N-14 of
Warburg, Pincus Global Post-Venture Capital Fund, Inc., filed November
4 , 1999 (Securities Act File No. 333-90431).

C-2
<PAGE> 146
(4) Forms of Services Agreements.(2)

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

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

(2) Consent of Hamada & Matsumoto, Japanese counsel to the
Fund.

(3) Powers of Attorney.(11)

k Not applicable.

l Form of Purchase Agreement.(1)

m(1) Shareholder Servicing and Distribution Plan.(11)

(2) Distribution Plan.(11)

n Not applicable

o Form of Rule 18f-3 Plan.(11)

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, and officers and directors of CSAM, LLC, Credit
Suisse Asset Management Securities, Inc. ("CSAM Securities") and Registrant, are
covered by insurance policies indemnifying them for liability incurred in
connection with the

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

(12) Incorporated by reference; material provisions of this exhibit
substantially similar to those of the corresponding exhibit in
Post-Effective Amendment No. 10 to the Registration Statement on Form
N-1A of Warburg, Pincus International Equity Fund, Inc., filed on
September 22, 1995 (Securities Act File No. 33-27031).

C-3
<PAGE> 147
operation of Registrant. Discussion of this coverage is incorporated by
reference to Item 27 of Part C of the Registration Statement of Warburg, Pincus
Post-Venture Capital Fund, Inc., filed on July 21, 1995.

Item 26. Business and Other Connections of Investment Adviser

CSAM, LLC acts as investment adviser to 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) PDI acts 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 European Equity Fund; Warburg Pincus Fixed Income Fund; Warburg
Pincus Focus Fund; Warburg Pincus Global Fixed Income Fund; Warburg Pincus
Global Post-Venture Capital Fund; Warburg Pincus Global Telecommunications 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 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 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 Value Fund; Warburg
Pincus WorldPerks Money Market Fund and Warburg Pincus WorldPerks Tax Free Money
Market Fund.

PDI also acts as principal underwriter for the following
investment companies: International Dollar Reserve Fund I, Ltd.; Provident
Institutional Funds Trust; Pacific Innovations Trust; Columbia Common Stock
Fund, Inc.; Columbia Growth Fund, Inc.; Columbia International Stock Fund, Inc.;
Columbia Special Fund, Inc.; Columbia Small Cap Fund, Inc.; Columbia Real Estate
Equity Fund, Inc.; Columbia Balanced Fund, Inc.; Columbia Daily Income Company;
Columbia U.S. Government Securities Fund, Inc.; Columbia Fixed Income Securities
Fund, Inc.; Columbia Municipal Bond Fund, Inc.; Columbia High Yield Fund, Inc.;
Columbia National Municipal Bond Fund, Inc.; GAMNA Series Funds, Inc.; WT

C-4
<PAGE> 148

Investment Trust; Kalmar Pooled Investment Trust; The RBB Fund, Inc.; Robertson
Stephens Investment Trust; HT Insight Funds, Inc.; Harris Insight Funds Trust;
Hilliard-Lyons Government Fund, Inc.; Hilliard-Lyons Growth Fund, Inc.;
Hilliard-Lyons Research Trust; Senbanc Fund; ABN AMRO Funds; Alleghany Funds; BT
Insurance Funds Trust; First Choice Funds Trust; Forward Funds, Inc.; IAA Trust
Asset Allocation Fund, Inc.; IAA Trust Growth Fund, Inc.; IAA Trust Tax Exempt
Bond Fund, Inc.; IAA Trust Taxable Fixed Income Series Fund, Inc.; IBJ Funds
Trust; Light Index Funds, Inc.; LKCM Funds; Matthews International Funds; McM
Funds; Metropolitan West Funds; New Covenant Funds, Inc.; Panorama Trust; Smith
Breeden Series Funds; Smith Breeden Trust; Stratton Growth Funds, Inc.; Stratton
Monthly Dividend REIT Shares, Inc.; The Stratton Funds, Inc.; The Galaxy Fund;
The Galaxy VIP Fund; Galaxy Fund II; The Govett Funds, Inc.; Trainer, Wortham
First Mutual Funds; Undiscovered Managers Funds; Wilshire Target Funds, Inc.;
Weiss, Peck & Greer Funds Trust; Weiss, Peck & Greer International Fund; WPG
Growth and Income Fund; WPG Growth Fund; WPG Tudor Fund; RWB/WPG U.S. Large
Stock Fund; Tomorrow Funds Retirement Trust; The BlackRock Funds, Inc.
(distributed by BlackRock Distributors, Inc. a wholly owned subsidiary of PDI);
Northern Funds Trust and Northern Institutional Funds Trust (distributed by
Northern Funds Distributors, LLC a wholly owned subsidiary of PDI); The Offit
Investment Fund, Inc. (distributed by Offit Funds Distributor, Inc. a wholly
owned subsidiary of PDI) and The Offit Variable Insurance Fund, Inc.
(distributed by Offit Funds Distributor, Inc. a wholly owned subsidiary of PDI).

(b) For information relating to each director, officer or
partner of PDI, reference is made to Form BD (SEC File No. 8-46564) filed by PDI
under the Securities Exchange Act of 1934, as amended.

Item 28. Location of Accounts and Records

(1) Warburg, Pincus Japan Small Company 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 Securities, Inc.
466 Lexington Avenue
New York, New York 10017-3147
(records relating to its functions
as co-administrator)

C-5
<PAGE> 149
(3) PFPC Inc.
400 Bellevue Parkway
Wilmington, Delaware 19809
(records relating to its functions as
co-administrator)

(4) 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)

(5) State Street Bank and Trust Company
225 Franklin Street
Boston, Massachusetts 02110
(records relating to its functions
as custodian, shareholder servicing
agent, 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) PFTC Trust Company
8800 Tinicum Boulevard
Philadephia, Pennsylvania 19153
(records relating to its functions as custodian)

(8) Provident Distributors, Inc.
Four Falls Corporate Ctr., 6th Fl
West Conshohocken, PA 19428-2961
** 1 (records relating to its functions as
distributor)

Item 29. Management Services

Not applicable.

Item 30. Undertakings

Not applicable.

C-6
<PAGE> 150

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, as amended,
and the Investment Company Act of 1940, as amended, the Registrant certifies
that it meets all of the requirements for effectiveness of this Amendment to the
Registration Statement pursuant to Rule 485(b) under the Securities Act and has
duly caused this Amendment 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 24th day of February, 2000.

WARBURG, PINCUS JAPAN SMALL COMPANY FUND, INC.

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

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

<TABLE>
<S> <C> <C>
/s/ William W. Priest* Chairman of the Board February 24, 2000
- ----------------------- of Directors
William W. Priest

/s/ Eugene L. Podsiadlo President February 24, 2000
- -----------------------
Eugene L. Podsiadlo

/s/ Michael A. Pignataro Treasurer and Chief February 24, 2000
- ------------------------ Financial Officer
Michael A. Pignataro

/s/ Richard H. Francis* Director February 24, 2000
- -----------------------
Richard H. Francis

/s/ Jack W. Fritz* Director February 24, 2000
- ------------------
Jack W. Fritz
Director February 24, 2000
/s/ James S. Pasman, Jr.*
- -------------------------
James S. Pasman, Jr.

/s/ Steven N. Rappaport* Director February 24, 2000
- ------------------------
Steven N. Rappaport

/s/ Alexander B. Trowbridge* Director February 24, 2000
- ----------------------------
Alexander B. Trowbridge

*By: /s/Michael A. Pignataro
- ----------------------------
Michael A. Pignataro as
Attorney-in-Fact
</TABLE>

C-7
<PAGE> 151
INDEX TO EXHIBITS

Exhibit No. Description of Exhibit

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

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

(2) Consent of Hamada & Matsumoto, Japanese counsel to the Fund.

C-8

<PAGE> 1
EXHIBIT i(1)

February 24, 2000

Warburg, Pincus Japan Small Company Fund, Inc.
466 Lexington Avenue
New York, New York 10017-3147

Re: Post-Effective Amendment No. 12 to Registration Statement
(Securities Act File No. 33-82362; Investment Company Act
File No. 811-8686) (the "Registration Statement")

Ladies and Gentlemen:

You have requested us, as counsel to Warburg, Pincus Japan Small Company Fund,
Inc. (the "Fund"), a corporation organized under the laws of the State of
Maryland, to furnish you with this opinion in connection with the Fund's filing
of Post-Effective Amendment No. 12 (the "Amendment") to its Registration
Statement on Form N-1A (the "Registration Statement").

We have examined copies of the Fund's Articles of Incorporation, as amended or
supplemented to the date hereof (the "Articles"), the Fund's By-Laws, as amended
to the date hereof (the "By-Laws"), and the Amendment. We have also examined
such other records, documents, papers, statutes and authorities as we have
deemed necessary to form a basis for the opinion hereinafter expressed.

In our examination of material, we have assumed the genuineness of all
signatures, the authenticity of all documents submitted to us as originals and
the conformity to original documents of all copies submitted to us. As to
various questions of fact material to our opinion, we have relied upon
statements and certificates of officers and representatives of the Fund and
others.

Based upon the foregoing, we are of the opinion that the shares of common stock
of the Fund, par value $.001 per share (the "Shares"), when and if duly sold,
issued and paid for in accordance with the laws of applicable jurisdictions and
the terms of the Articles, the By-Laws and the Registration Statement, will be
valid, legally issued, fully paid and non-assessable, assuming (i) that at the
time of sale such Shares are sold at a sales price in each case in excess of the
par value of the Shares; (ii) that the issuance of the Shares does not cause the
number of outstanding Shares to exceed the number of authorized Shares provided
for in the Articles, as amended to the date of issuance; and (iii) that
resolutions of the Board of Directors authorizing the issuance of the Shares
that are in effect on the date hereof have not been modified or withdrawn and
are in full force and effect on the date of issuance.

<PAGE> 2

Warburg, Pincus Japan Small Company Fund, Inc.
February 24, 2000
Page 2

We hereby consent to the filing of this opinion as an exhibit to the Amendment,
to any reference to our name under the heading "Independent Accountants and
Counsel" in the Statement of Additional Information included as part of the
Amendment, and to the filing of this opinion as an exhibit to any application
made by or on behalf of the Fund or any distributor or dealer in connection with
the registration or qualification of the Fund or the Shares under the securities
laws of any state or other jurisdiction.

We are members of the Bar of the State of New York only and do not opine as to
the laws of any jurisdiction other than the laws of the State of New York and
the laws of the United States, and the opinions set forth above are,
accordingly, limited to the laws of those jurisdictions.

Very truly yours,

/s/WILLKIE FARR & GALLAGHER

<PAGE> 1
CONSENT OF INDEPENDENT ACCOUNTANTS

We hereby consent to the incorporation by reference in this Post-Effective
Amendment No. 12 to the Registration Statement under the Securities Act of 1933
and Post-Effective Amendment No. 13 to the Registration Statement under the
Investment Company Act of 1940 on Form N-1A (File Nos. 033-82362 and 811-8686,
respectively) of our report dated December 10, 1999 on our audit of the
financial statements and financial highlights of Warburg, Pincus Japan Small
Company Fund, Inc., which report is included in the Annual Report to
Shareholders for the year ended October 31, 1999. We also consent to the
reference of our firm under the reference of our firm under the headings
"Financial Highlights" in the Prospectus and under the headings "Independent
Accountants and Counsel" in the Statement of Additional Information.

Price WaterhouseCoopers L.L.P.
February 23, 2000

<PAGE> 1
EXHIBIT i(2)

THE LAW FIRM OF
HAMADA & MATSUMOTO

Kasumigaseki Building, 25th Floor Fax: 03-3581-4713 - 4715
2-5, Kasumigaseki 3-Chome 03-3592-0912, 0916
Chiyoda-Ku, Tokyo 100, Japan 03-5251-7985 (G4)
Tel: 03-3580-3377 TLX: J28844 HYLAW

February 24, 2000

Warburg, Pincus Japan Small Company Fund, Inc.
466 Lexington Avenue
New York, New York 10017-3147

Ladies and Gentlemen:

We have acted as counsel to Warburg, Pincus Japan Small Company Fund, Inc. (the
"Fund"), a corporation organized under the laws of the State of Maryland, as to
matters of Japanese law.

We hereby confirm that the information concerning Japanese law set forth under
the caption "Additional Information Concerning Taxes -- Foreign Taxes" in the
statement of additional information ("SAI") contained in the Fund's Registration
Statement on Form N-1A, as amended (the "Registration Statement"), has been
reviewed by us and in our opinion is correct. In addition, we hereby consent to
the reference to us in the SAI and to the filing of this opinion with the U.S.
Securities and Exchange Commission as an exhibit to the Registration Statement.

Very truly yours,

HAMADA & MATSUMOTO

By: /s/ Yogo Kimura
--------------------------------
Attorney-at-law
Yogo Kimura