SEMIANNUAL
REPORT
JUNE 30, 1999
WARBURG PINCUS TRUST II
(BOX) FIXED INCOME PORTFOLIO
(BOX) GLOBAL FIXED INCOME PORTFOLIO
Warburg Pincus Trust II Shares are not available directly to individual
investors, but may be offered only through certain insurance products and
pension and retirement plans.
More complete information about the Trust, including charges and expenses, is
provided in the PROSPECTUS, which must precede or accompany this document and
which should be read carefully before investing. You may obtain additional
copies by calling 800-222-8977 or by writing to Warburg Pincus, P.O. Box 9030,
Boston, MA 02205-9030.
Warburg Pincus is a division of Credit Suisse Asset Management, LLC.
[GRAPHIC OMITTED]
<PAGE>
FROM TIME TO TIME, THE PORTFOLIOS' INVESTMENT ADVISER AND CO-ADMINISTRATORS MAY
WAIVE SOME FEES AND/OR REIMBURSE SOME EXPENSES, WITHOUT WHICH PERFORMANCE WOULD
BE LOWER. WAIVERS AND/OR REIMBURSEMENTS ARE SUBJECT TO CHANGE.
RETURNS ARE HISTORICAL AND INCLUDE CHANGE IN SHARE PRICE AND REINVESTMENT OF
DIVIDENDS AND CAPITAL GAINS. PAST PERFORMANCE CANNOT GUARANTEE FUTURE RESULTS.
RETURNS AND SHARE PRICE WILL FLUCTUATE, AND REDEMPTION VALUE MAY BE MORE OR LESS
THAN ORIGINAL COST.
THE VIEWS OF THE PORTFOLIOS' MANAGEMENT ARE AS OF THE DATE OF THE LETTERS, AND
PORTFOLIO HOLDINGS DESCRIBED IN THIS DOCUMENT ARE AS OF JUNE 30, 1999; THESE
VIEWS AND PORTFOLIO HOLDINGS MAY HAVE CHANGED SUBSEQUENT TO THESE DATES. NOTHING
IN THIS DOCUMENT IS A RECOMMENDATION TO PURCHASE OR SELL SECURITIES.
<PAGE>
WARBURG PINCUS TRUST II--FIXED INCOME PORTFOLIO
SEMIANNUAL INVESTMENT ADVISER'S REPORT--JUNE 30, 1999
- --------------------------------------------------------------------------------
August 12, 1999
Dear Shareholder:
For the six months ended June 30, 1999, Warburg Pincus Trust II--Fixed Income
Portfolio had a loss of 0.58%, vs. a loss of 0.59% for the Lehman Brothers
Intermediate Government/Corporate Bond Index.* The portfolio's one-year total
return through June 30, 1999 was 4.01%. Its since-inception (on March 31, 1997)
average annual total return through June 30, 1999 was 7.25%.
The period was a mostly difficult one for the domestic bond market,
reflecting surprising strength in the U.S. economy. The economy's health created
fears that the Federal Reserve would raise interest rates in order to contain
potential inflation. These concerns weighed on bonds in general and on
high-quality bonds in particular. (Most below-investment-grade bonds had gains
for the period. The improving economy and optimism over credit upgrades for
these bonds outweighed the negative impact of fears of rising interest rates.)
Bonds ended the period on a positive note, however. The Federal Reserve did
indeed raise rates--on June 30, by 25 basis points--but quickly announced its
reversion to a "neutral" stance on rates.
Against this backdrop, the portfolio had a modest loss in terms of total
return (i.e., bond-price changes plus coupon income), performing in line with
its benchmark. The portfolio's performance reflected the difficult environment
for bonds generally.
We made few noteworthy changes to the portfolio during the period in terms of
sector allocation. We remained well-diversified, maintaining significant
exposure to Treasury bonds (which accounted for roughly a third of the portfolio
at the end of the period), as well as to corporate, mortgage-backed and
asset-backed bonds. In general, yield differentials (or "spreads") between
non-Treasury and Treasury bonds remained attractive, in our view, hence our
relatively high weighting (compared to that of our benchmark) in non-Treasuries.
With respect to interest-rate exposure, we kept the portfolio's duration
fairly close to that of its benchmark during much of the period. While we
continued to have a positive longer-term outlook on inflation and interest
rates, we saw little incentive to take a more aggressive duration stance, given
persistent strength in the economy.
1
<PAGE>
WARBURG PINCUS TRUST II--FIXED INCOME PORTFOLIO
SEMIANNUAL INVESTMENT ADVISER'S REPORT--JUNE 30, 1999 (CONT'D)
- --------------------------------------------------------------------------------
Going forward, we plan to maintain a diversified mix of Treasury and
non-Treasury issues, adjusting our sector exposure as we deem appropriate on a
risk-vs.-reward basis. Overall, our focus will remain on high-quality,
intermediate-term bonds that have what we deem to be attractive risk-adjusted
yields and potential for longer-term appreciation.
M. Anthony E. van Daalen
Portfolio Manager
- ----------------
* The Lehman Brothers Intermediate Government/Corporate Bond Index is an
unmanaged index (with no defined investment objective) of intermediate-term
government and corporate bonds, and is calculated by Lehman Brothers Inc.
2
<PAGE>
WARBURG PINCUS TRUST II--GLOBAL FIXED INCOME PORTFOLIO
SEMIANNUAL INVESTMENT ADVISER'S REPORT--JUNE 30, 1999
- --------------------------------------------------------------------------------
August 12, 1999
Dear Shareholder:
For the six months ended June 30, 1999, Warburg Pincus Trust II--Global Fixed
Income Portfolio had a loss of 1.01%, vs. a loss of 1.37% for the Lehman
Brothers Aggregate Bond Index* and gains of 0.11% of 0.10%, respectively, for
the Salomon Brothers World Government Bond Index (Currency-Hedged)** and a
Composite Benchmark.*** The portfolio's one-year return through June 30, 1999
was 7.00%. Its since-inception (on March 31, 1997) average annual total return
through June 30, 1999 was 6.12%.
Global bond markets had mixed results for the period. European markets
struggled in local-currency terms, reflecting a somewhat uncertain monetary and
fiscal backdrop for European Monetary Union economies. Performance here was
uniformly--and significantly--lower in dollar terms, as the euro and other
regional currencies declined vs. the dollar during the period. The U.S. market
also struggled (though U.S. high-yield bonds advanced). A surprisingly healthy
U.S. economy created fears that the Federal Reserve would aggressively raise
interest rates to contain potential inflation. (These fears subsided somewhat at
the end of the period, however. The Federal Reserve raised rates by 25 basis
points on June 30, and then quickly announced its return to a "neutral" stance
on rates.) Winners for the period included most emerging bond markets, which
benefited from optimism over credit upgrades. Japan's market also rallied,
despite an increase in bond issuance in Japan during the period.
Against this backdrop, the portfolio had a loss, hampered by weakness in the
high-quality bonds that continued to comprise the bulk of its assets. On the
positive side, in terms of return, factors that aided the portfolio included our
currency strategies. We continued to hedge the bulk of the portfolio's exposure
to foreign currencies, which proved beneficial, since most currencies weakened
vs. the U.S. dollar during the period.
We made a few noteworthy adjustments to the portfolio during the period with
respect to the main sources of return of global fixed-income investing:
duration, credit quality and currency exposure. With regard to the first, we
modestly extended the portfolio's overall duration during the six months,
reflecting our generally more-positive view of the longer-term backdrop for
interest rates.
With respect to credit quality, we increased our weighting in high-yield
bonds during the period (as of June 30, high-yield securities accounted for
about 15% of the portfolio's assets). Yield spreads between these issues and
3
<PAGE>
WARBURG PINCUS TRUST II--GLOBAL FIXED INCOME PORTFOLIO
SEMIANNUAL INVESTMENT ADVISER'S REPORT--JUNE 30, 1999 (CONT'D)
- --------------------------------------------------------------------------------
higher-quality debt widened significantly during last summer's financial-asset
selloff. Since we considered this widening excessive, given these markets'
underlying fundamentals, we added several emerging-market bonds (most
specifically, from Latin America and South Africa) as well as some high-yield
U.S. corporate issues we deemed to represent good value.
As noted, we maintained a bias toward the U.S. dollar (as of June 30, 100% of
the portfolio was either hedged into or denominated in U.S. dollars). We will,
however, continue to seek opportunities to invest in foreign currencies that we
deem to have improving supply/demand fundamentals.
Charles C. Van Vleet
Portfolio Manager
INTERNATIONAL INVESTING ENTAILS SPECIAL RISK CONSIDERATIONS, INCLUDING
CURRENCY FLUCTUATIONS, LOWER LIQUIDITY, ECONOMIC AND POLITICAL RISKS, AND
DIFFERENCES IN ACCOUNTING METHODS.
- ----------------
* The Lehman Brothers Aggregate Bond Index is composed of the Lehman Brothers
Government/Corporate Bond Index and the Lehman Brothers Mortgage-Backed
Securities Index. The Aggregate Index includes U.S. Treasury and agency
issues, corporate bond issues and mortgage-backed securities rated
investment-grade or higher by Moody's Investors Service, Standard & Poor's
Corporation or Fitch Investors' Service.
** The Salomon Brothers World Government Bond Index (Currency-Hedged) is a
market-capitalization-weighted index designed to track major government debt
markets and is currency-hedged into U.S. dollars.
*** The Composite Benchmark measures the weighted performance of three component
indexes. The weights of the component indexes -- 50% Lehman Brothers
Aggregate Index, 35% Salomon Brothers World Government Bond Index excluding
the U.S. (Currency-Hedged), and 15% Merrill Lynch High Yield Master II Index
-- correspond to the investment strategy of the fund's manager. The Merrill
Lynch High Yield Master II Index provides a broad-based measure of the
performance of the non-investment-grade U.S. domestic bond market.
4
<PAGE>
WARBURG PINCUS TRUST II--FIXED INCOME PORTFOLIO
STATEMENT OF NET ASSETS--JUNE 30, 1999 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
RATINGS
PAR (MOODY'S/S&P) MATURITY RATE% VALUE
---- -------------- -------- ------- -------
<S> <C> <C> <C> <C> <C>
CORPORATE BONDS (24.9%)
$ 15,000 ABN-AMRO Bank N.V. New York Branch,
Subordinate Deposit Notes
(Callable 08/01/04 @ $100.00) (Aa3, NR) 08/01/09 8.250 $ 15,787
10,000 Aetna Services, Inc. (A3, A) 08/15/06 7.125 9,912
50,000 AT&T Capital Corp. (Baa3, BBB) 11/15/00 7.500 50,939
20,000 Charter Communications Holdings. LLC. (B2, B+) 04/01/09 8.625 19,250
30,000 Conagra, Inc. Senior Notes
(Putable 08/01/09 @ $100.00) (Baa1, BBB+) 08/01/09 6.700 30,000
40,000 Countrywide Home Loan Co. (A3, A) 04/15/09 6.250 37,250
50,000 Delphi Auto Systems Corp. (Baa2, BBB) 05/01/04 6.125 48,937
20,000 EchoStar DBS Corporation, Senior Notes (B2, B) 02/01/09 9.375 20,450
50,000 Federal-Mogul Corp. (Callable @ Greater of
Par or Make Whole +50BP) (Ba2, BB+) 01/15/06 7.375 47,125
20,000 Golden State Escrow Corp. (Callable @ Make
Whole +50BP) (Ba1, BB+) 08/01/03 7.000 19,550
50,000 The Goldman Sachs Group, Inc. (A1, A+) 05/15/09 6.650 48,437
20,000 HMH Properties, Inc. (Ba2, BB-) 05/15/05 9.500 21,350
50,000 Household Finance Corp. (A2, A) 11/15/08 6.500 47,812
40,000 Ingersoll-Rand Co. Medium Term Note
(Putable 11/19/03 @ $100.00) (A3, A-) 11/19/03 6.230 39,800
30,000 Lowes Companies Medium Term Note
(Putable 05/15/07 @ $100.00) (A2, A) 05/15/07 7.110 30,975
10,000 Nationwide Health Properties, Inc.
(Putable 07/07/03 @ $100.00) (Baa2, BBB) 07/07/03 6.590 9,487
50,000 Niagara Mohawk Power Corp. Series D
(Callable 4/01/99 to 12/31/00 @ Make
Whole +50BP) (Baa3, BBB-) 10/01/02 7.250 50,187
40,000 Noble Drilling Corp. (Baa2, A-) 03/15/09 6.950 39,900
20,000 NTL Communications Corp. Class B (B3, B-) 10/01/08 11.500 21,600
30,000 Occidental Petroleum Corp. (Baa3, BBB) 02/15/06 7.650 30,338
10,000 Philip Morris Cos., Inc. (Putable 06/01/01
@ $100.00) (A2, A) 06/01/01 6.950 10,113
5,000 Potomac Electric Power Co.
(Callable 05/15/02 @ $103.21) (A1, A) 05/15/27 8.500 5,225
45,000 Qwest Communications Intl., Inc. Class B (Ba1, BB+) 11/01/08 7.500 44,775
5,000 Riggs Capital Trust II Series C
(Callable 03/15/07 @ $104.44) (baa3, BB) 03/15/27 8.875 4,925
65,000 Sears Roebuck Acceptance Corp. (A2, A-) 05/01/09 6.250 61,181
--------
TOTAL CORPORATE BONDS (Cost $786,740) 765,305
--------
</TABLE>
See Accompanying Notes to Financial Statements.
5
<PAGE>
WARBURG PINCUS TRUST II--FIXED INCOME PORTFOLIO
STATEMENT OF NET ASSETS (CONT'D)--JUNE 30, 1999 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
RATINGS
PAR (MOODY'S/S&P) MATURITY RATE% VALUE
---- -------------- -------- ------- ----------
<S> <C> <C> <C> <C> <C>
MORTGAGE BACKED SECURITIES (32.7%)
$ 25,000 Asset Securitization Corp. (Nomura Asset
Securities Corp.) Series 1996-D2, Class A2 (NR, AA) 02/14/29 7.206# $ 25,286
100,000 California Infrastructure PG & E Series 97-1,
Class A7 (Aaa, AAA) 09/25/08 6.420 99,449
70,000 Commonwealth Edison Transitional Funding
Trust Series 1998-1 Class-A6 (Aaa, AAA) 06/25/09 5.630 66,249
59,635 Fannie Mae (Aaa, AAA) 12/01/08 5.690# 55,293
89,546 Fannie Mae (Aaa, AAA) 04/01/29 6.500 86,506
90,000 Fannie Mae (Aaa, AAA) 02/18/21 5.750 86,822
100,000 Fannie Mae, Series 1993-50 (Aaa, AAA) 09/25/20 5.000 94,527
20,000 Fannie Mae, Series 1997-51, Class KB
Guaranteed REMIC Trust (Aaa, AAA) 03/20/08 7.000 20,156
25,000 Fannie Mae, Series 1998-M4, Class B, (Aaa, AAA) 12/25/23 6.424 24,810
110,000 Freddie Mac Series 2072, Class PK (Aaa, AAA) 07/15/24 6.000 106,918
88,509 Ginnie Mae (Aaa, AAA) 10/15/28 6.500 85,282
90,000 MBNA Master Credit Card Trust,
Series 1998-J, Class A (Aaa, AAA) 02/15/06 5.250 86,420
30,000 Mortgage Capital Funding, Inc.
Series 1998-MC1, Class E, (NR, BBB+) 01/18/08 7.060# 29,277
13,867 Nomura Asset Securities Corp.
Series 1994-4B, Class 4A (Aaa, AAA) 09/25/24 8.300 14,125
120,000 Standard Credit Card Master Trust,
Series 1995-9, Class A (Aaa, AAA) 10/07/07 6.550 120,988
----------
TOTAL MORTGAE BACKED SECURITIES
(Cost $1,039,614) 1,002,108
----------
U.S. TREASURY OBLIGATIONS (34.7%)
U.S TREASURY BONDS (2.4%)
55,000 U.S. Treasury Bond (Aaa, AAA) 02/15/16 9.250 71,631
----------
U.S. TREASURY NOTES (29.9%)
220,000 U.S. Treasury Notes (Aaa, AAA) 05/15/01 8.000 229,637
300,000 U.S. Treasury Notes (Aaa, AAA) 08/15/02 6.375 305,525
25,000 U.S. Treasury Notes (Aaa, AAA) 02/15/05 7.500 26,864
75,000 U.S. Treasury Notes (Aaa, AAA) 05/15/09 5.500 73,431
275,000 U.S. Treasury Notes Inflation Index (Aaa, AAA) 07/15/02 3.625 282,636
----------
918,093
----------
U.S. TREASURY PRINCIPAL STRIPS (2.4%)
75,000 U.S. Treasury Principal Strip (Aaa, AAA) 08/15/99 4.640## 74,563
----------
TOTAL U.S. TREASURY OBLIGATIONS
(Cost $1,069,138) 1,064,287
----------
</TABLE>
See Accompanying Notes to Financial Statements.
6
<PAGE>
WARBURG PINCUS TRUST II--FIXED INCOME PORTFOLIO
STATEMENT OF NET ASSETS (CONT'D)--JUNE 30, 1999 (UNAUDITED)
- --------------------------------------------------------------------------------
NUMBER OF
SHARES RATE% VALUE
- --------- ------- ----------
PREFERRED STOCK (1.7%)
200 Equity Residential Properties Trust Series D
(Callable 07/15/07 @ $25.00) REIT 8.600 $ 5,063
500 Natexis AMBS Co. Series A
(Callable 06/30/08 @ $100.00) 8.440 47,719
----------
TOTAL PREFERRED STOCK (Cost $54,749) 52,782
----------
SHORT TERM INVESTMENTS (4.6%)
140,336 RBB Money Market Fund (Cost $140,336) 140,336
----------
TOTAL INVESTMENTS AT VALUE (98.6%) (Cost $3,090,577*) 3,024,818
OTHER ASSETS IN EXCESS OF LIABILITIES (1.4%) 42,045
----------
NET ASSETS (100.0%) (applicable to 298,973 shares outstanding) $3,066,863
==========
NET ASSET VALUE, offering and redemption price per share
($3,066,863 (DIVIDE) 298,973) $10.26
======
INVESTMENT ABBREVIATIONS
NR = NOT RATED
REMIC = Real Estate Mortgage Investment Conduit
REIT = Real Estate Investment Trust
- --------------------------------------------------------------------------------
# On instruments with variable rates, the rate shown reflects the current rate
as of June 30, 1999.
## Rate shown reflects the yield to maturity on date of purchase.
* Also cost for federal income tax purposes.
See Accompanying Notes to Financial Statements.
7
<PAGE>
WARBURG PINCUS TRUST II--GLOBAL FIXED INCOME PORTFOLIO
STATEMENT OF NET ASSETS--JUNE 30, 1999 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
RATINGS
PAR+ (MOODY'S/S&P) MATURITY RATE% VALUE
---- ------------- -------- ------- ---------
<S> <C> <C> <C> <C> <C>
BONDS (95.4%)
ARGENTINA (0.9%)
$ 20,000(A) Telecom Argentina (Ba3, BBB-) 07/12/01 9.750 $ 20,037
---------
CANADA (3.4%)
20,000(A) Newcourt Credit Group (Baa3, BBB) 12/17/03 7.125 20,225
83,000 Province of British Colombia (NR, NR) 12/01/06 5.250 53,889
---------
74,114
---------
CHILE (0.8%)
19,000(A) Republic of Chile (Baa1, A-) 04/28/09 6.875 18,240
---------
COLOMBIA (1.4%)
36,000(A) Republic of Colombia (Baa3, BBB-) 04/23/09 9.750 29,700
---------
DENMARK (4.0%)
555,000 Kingdom of Denmark (Aaa, AAA) 11/15/07 7.000 88,894
---------
GERMANY (11.1%)
60,000(B) Deutsche Bank AG (A1, AA-) 12/29/49 7.872 57,870
70,000(B) Republic of Germany (Aaa, NR) 10/14/05 6.500 80,800
90,000(B) Republic of Germany (Aaa, NR) 01/04/09 3.750 87,533
18,000(B) Republic of Germany (Aaa,NR) 07/04/09 4.000 17,815
---------
244,018
---------
GREECE (2.2%)
13,500,000 Hellenic Republic (A2, NR) 03/21/04 8.900 47,306
---------
MEXICO (1.5%)
30,000(A) United Mexican States (Ba2, BB) 05/15/26 11.500 32,700
---------
NETHERLANDS (1.7%)
37,000(B) KPNQwest BV, Series Regs
(Callable 06/01/04 @ 103.56) (Ba1, BB) 06/01/09 7.125 38,109
---------
NORWAY (3.0%)
510,000 Norwegian Government (Aaa, AAA) 11/30/04 5.750 65,303
---------
PANAMA (0.7%)
17,000(A) Republic of Panama
(Putable 04/01/06 @ $100) (Ba1, BB+) 04/01/06 9.375 16,065
---------
PHILIPPINES (1.2%)
27,000(A) Republic of Philippines (Ba1, BB+) 01/15/19 9.875 26,561
---------
SOUTH AFRICA (2.7%)
390,000 Republic of South Africa (Baa1, BBB+) 02/28/05 12.000 58,361
---------
SWEDEN (5.4%)
500,000 Swedish Government (Aa1, AAA) 01/15/04 5.000 59,955
500,000 Swedish Government (Aa1, AAA) 01/28/09 5.000 58,424
---------
118,379
---------
</TABLE>
See Accompanying Notes to Financial Statements.
8
<PAGE>
WARBURG PINCUS TRUST II--GLOBAL FIXED INCOME PORTFOLIO
STATEMENT OF NET ASSETS (CONT'D)--JUNE 30, 1999 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
RATINGS
PAR+ (MOODY'S/S&P) MATURITY RATE% VALUE
---- ------------- -------- ------- ----------
<S> <C> <C> <C> <C> <C>
BONDS (CONT'D)
UNITED KINGDOM (2.2%)
$ 30,000 Orange PLC (Callable 6/01/04 @ 104.438) (NR, NR) 06/01/09 8.875 $ 47,747
----------
UNITED STATES (53.2%)
42,000(B) Amercian Standard, Inc. (NR, NR) 06/01/06 7.125 43,259
50,000 California Infrastructure San Diego Gas & Electric
Rate Reduction Series 1997-1 Class A7 (Aaa, AAA) 12/26/09 6.370 48,488
20,000 Charter Communications Holdings LLC, (B2, B+) 04/01/09 8.625 19,250
20,000 Echostar Corp. (Callable 02/01/04 @ $104.688) (B2, B) 02/01/09 9.375 20,450
25,000 Federal Mogul (Ba2, BB+) 01/15/06 7.375 23,562
99,000 Ginnie Mae Pool 506601 (Aaa,AAA) 03/15/29 6.500 95,683
20,000 Golden State Escrow Corp. (Ba1, BB+) 08/01/03 7.000 19,550
25,000(B) Hunstman ICI Chemicals, Series 144A (Callable
07/01/04 @ 105.063) (B2, B+) 07/01/09 10.125 26,040
35,000 Illinois Power Transitional Funding Trust (Aaa,AAA) 06/25/09 5.540 32,822
65,000 Nomura Asset Securities Co. (NR, A) 03/16/13 6.690 62,071
20,000 NTL Communications Corp. Cl-B (B3, B-) 10/01/08 11.500 21,600
70,000 PECO Energy Co., Series 99, Class A6 Rate
Reduction Bond (Aaa, AAA) 03/01/09 6.050 67,074
25,000 Qwest Communications International, Inc. Cl-B (Ba1, BB+) 11/01/08 7.500 24,875
258,000 U.S Treasury Bond (Aaa, AAA) 11/15/08 4.750 236,855
443,000 U.S. Treasury Note (Aaa, AAA) 02/15/04 4.750 424,726
----------
1,166,305
----------
TOTAL BONDS (Cost $2,162,695) 2,091,839
----------
NUMBER OF
SHARES
- ---------
PREFERRED STOCK (1.3%)
UNITED STATES
300 Natexis AMBS Co. Series A 8.44% (Callable
06/30/08 At $100.00) (Cost $29,875) 8.440 28,631
----------
WARRANTS (0.0%)
ARGENTINA
30(A) Republic of Argentina, Expires 12/03/99, (Cost $0) 293
---------
SHORT TERM INVESTMENTS (1.2%)
27,084 RBB Money Market Fund (Cost $27,084) 27,084
----------
TOTAL INVESTMENTS AT VALUE (97.9%) (Cost $2,219,654*) 2,147,847
OTHER ASSETS IN EXCESS OF LIABILITIES (2.1%) 46,154
----------
NET ASSETS (100.0%) (applicable to 224,244 shares outstanding) $2,194,001
==========
NET ASSET VALUE, offering and redemption price per share
($2,194,001 (DIVIDE) 224,244) $9.78
=====
</TABLE>
INVESTMENT ABBREVIATIONS
NR=Not Rated
- --------------------------------------------------------------------------------
+ Unless otherwise indicated below, all securities are denominated in the
issuers' country of origin.
(A) Denominated in U.S. Dollars.
(B) Denominated in Euro.
* Also cost for federal income tax purposes.
See Accompanying Notes to Financial Statements.
9
<PAGE>
WARBURG PINCUS TRUST II PORTFOLIOS
STATEMENTS OF OPERATIONS
For the Six Months Ended June 30, 1999 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FIXED INCOME GLOBAL FIXED INCOME
PORTFOLIO PORTFOLIO
-------------- -------------------
<S> <C> <C>
INVESTMENT INCOME:
Dividends $ 1,426 $ 821
Interest 82,001 55,608
-------- --------
Total investment income 83,427 56,429
-------- --------
EXPENSES:
Investment advisory 7,065 9,534
Administrative services 4,486 2,147
Professional fees 7,729 9,265
Custodian/Sub-custodian 6,915 1,024
Trustees 2,332 2,887
Insurance 123 164
Interest 16 49
Organizational costs 816 921
Printing 5,616 5,351
Registration 116 248
Transfer agent 202 99
Miscelleneous 460 1,060
-------- --------
35,876 32,749
Less: fees waived, expenses reimbursed
and transfer agent fee offsets (21,888) (23,310)
-------- --------
Total expenses 13,988 9,439
-------- --------
Net investment income 69,439 46,990
-------- --------
NET REALIZED AND UNREALIZED GAIN (LOSS) FROM
INVESTMENTS AND FOREIGN CURRENCY RELATED ITEMS:
Net realized loss from security transactions (12,844) (4,140)
Net realized gain from foreign currency related items 0 39,023
Net change in unrealized appreciation (depreciation) from
investments and foriegn currency related items (76,726) (109,282)
-------- --------
Net realized and unrealized gain (loss) from investments
and foreign currency related items (89,570) (74,399)
-------- --------
Net decrease in net assets resulting from operations $(20,131) $(27,409)
======== ========
</TABLE>
See Accompanying Notes to Financial Statements.
10
`
<PAGE>
WARBURG PINCUS TRUST IIPORTFOLIOS
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FIXED INCOME PORTFOLIO GLOBAL FIXED INCOME PORTFOLIO
-------------------------------- --------------------------------
FOR THE SIX FOR THE SIX
MONTHS ENDED FOR THE MONTHS ENDED FOR THE
JUNE 30, 1999 YEAR ENDED JUNE 30, 1999 YEAR ENDED
(UNAUDITED) DECEMBER 31, 1998 (UNAUDITED) DECEMBER 31, 1998
------------- ----------------- ------------- -----------------
<S> <C> <C> <C> <C>
FROM OPERATIONS:
Net investment income $ 69,439 $ 62,035 $ 46,990 $ 81,184
Net realized gain (loss) from
security transactions (12,844) 46,770 (4,140) (5,603)
Net realized gain from foreign
currency related items 0 0 39,023 34,315
Net change in unrealized appreciation
(depreciation) from investments
and foreign currency related items (76,726) (4,228) (109,282) 84,140
----------- ----------- ---------- -----------
Net increase (decrease) in net
assets resulting from
operations (20,131) 104,577 (27,409) 194,036
----------- ----------- ---------- -----------
FROM DISTRIBUTIONS:
Dividends from net investment
income 0 (62,035) 0 (81,184)
Distributions in excess of net
investment income 0 (9,850) 0 (10,205)
Distributions from realized gains 0 (46,781) 0 (1,413)
Distributions in excess of
realized gains 0 0 0 (31,073)
----------- ----------- ---------- -----------
Net decrease in net assets from
distributions 0 (118,666) 0 (123,875)
----------- ----------- ---------- -----------
FROM CAPITAL SHARE TRANSACTIONS:
Proceeds from sale of shares 4,282,241 3,910,106 431,210 0
Reinvested dividends 0 118,666 0 0
Net asset value of shares redeemed (4,022,443) (1,786,826) (242) 123,873
----------- ----------- ---------- -----------
Net increase in net
assets from capital share
transactions 259,798 2,241,946 430,968 123,873
----------- ----------- ---------- -----------
Net increase in net assets 299,653 2,227,857 403,559 194,034
NET ASSETS:
Beginning of period 2,827,196 599,339 1,790,442 1,596,408
----------- ----------- ---------- -----------
End of Period $ 3,066,863 $ 2,827,196 $2,194,001 $ 1,790,442
----------- ----------- ---------- -----------
Undistributed (or distributions in
excess of) net investment income $ 69,862 $ 423 $ 15,917 $ (31,073)
=========== =========== ========== ===========
</TABLE>
See Accompanying Notes to Financial Statements.
11
<PAGE>
WARBURG PINCUS TRUST II--FIXED INCOME PORTFOLIO
FINANCIAL HIGHLIGHTS
(For a Share of the Portfolio Outstanding Throughout Each Period)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE SIX
MONTHS ENDED
JUNE 30, 1999
PERIOD ENDED: (UNAUDITED) 1998 1997 1
------------- -------- --------
<S> <C> <C> <C>
PER-SHARE DATA
Net asset value, beginning of period $10.32 $ 9.97 $10.00
------ ------ ------
INVESTMENT ACTIVITIES:
Net investment income 0.23 0.24 0.44
Net gain or losses on investments and foreign currency
related items (both realized and unrealized) (0.29) 0.57 0.45
------ ------ -----
Total from investment activities (0.06) 0.81 0.89
------ ------ ------
DISTRIBUTIONS:
From net investment income 0.00 (0.24) (0.41)
In excess of net investment income 0.00 (0.04) (0.31)
From realized capital gains 0.00 (0.18) (0.20)
------ ------ ------
Total distributions 0.00 (0.46) (0.92)
------ ------ ------
NET ASSET VALUE, END OF PERIOD $10.26 $10.32 $ 9.97
====== ====== ======
Total return (0.58)%2 8.08% 8.96%2
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000s omitted) $3,067 $2,827 $ 599
Ratio of expenses to average net assets .99%3,4 .99%3 .99%3,4
Ratio of net income to average net assets 4.91%4 4.69% 5.29%4
Decrease reflected in above operating expense ratios
due to waivers/reimbursements 1.54%4 4.33% 12.05%4
Portfolio turnover rate 125.47%2 318.95% 138.28%2
- ---------------------------------------------------------------------------------------------
<FN>
1 For the period March 31, 1997 (commencement of operations) through December
31, 1997.
2 Non-annualized.
3 Interest earned on uninvested cash balances is used to offset portions of the
transfer agent expense. These arrangements had no effect on the portfolio's
expense ratio.
4 Annualized.
</FN>
</TABLE>
See Accompanying Notes to Financial Statements.
12
<PAGE>
WARBURG PINCUS TRUST II--GLOBAL FIXED INCOME PORTFOLIO
FINANCIAL HIGHLIGHTS
(For a Share of the Portfolio Outstanding Throughout Each Period)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE SIX
MONTHS ENDED
JUNE 30, 1999
PERIOD ENDED: (UNAUDITED) 1998 1997 1
------------ -------- --------
<S> <C> <C> <C>
PER-SHARE DATA
Net asset value, beginning of period $ 9.88 $ 9.47 $10.00
------ ------ ------
INVESTMENT ACTIVITIES:
Net investment income 0.28 0.48 0.45
Net gain or losses on investments and foreign currency
related items (both realized and unrealized) (0.38) 0.66 (0.15)
------ ------ ------
Total from investment activities (0.10) 1.14 0.30
------ ------ ------
DISTRIBUTIONS:
From net investment income 0.00 (0.48) (0.44)
In excess of net investment income 0.00 (0.06) (0.11)
From realized capital gains 0.00 (0.01) (0.07)
In excess of realized capital gains 0.00 (0.18) (0.21)
------ ------ ------
Total distributions 0.00 (0.73) (0.83)
------ ------ ------
NET ASSET VALUE, END OF PERIOD $ 9.78 $ 9.88 $ 9.47
====== ====== ======
Total return (1.01)%2 12.09% 2.62%2
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000s omitted) $2,194 $1,790 $1,596
Ratio of expenses to average net assets .99%3,4 .99%3 .99%3,4
Ratio of net income to average net assets 4.93%4 4.84% 5.67%4
Decrease reflected in above operating expense ratios
due to waivers/reimbursements 2.44%4 3.00% 4.59%4
Portfolio turnover rate 195.75%2 232.58% 139.81%2
- --------------------------------------------------------------------------------
<FN>
1 For the period March 31, 1997 (commencement of operations) through December
31, 1997.
2 Non-annualized.
3 Interest earned on uninvested cash balances is used to offset portions of the
transfer agent expense. These arrangements had no effect on the portfolio's
expense ratio.
4 Annualized.
</FN>
</TABLE>
See Accompanying Notes to Financial Statements.
13
<PAGE>
WARBURG PINCUS TRUST II
NOTES TO FINANCIAL STATEMENTS
June 30, 1999 (Unaudited)
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES
Warburg Pincus Trust II is an open-end management investment company
registered under the Investment Company Act of 1940, as amended (1940 Act), and
currently offers two investment portfolios classified as non-diversified.
The Fixed Income Portfolio seeks total return consistent with prudent
investment management, and the Global Fixed Income Portfolio seeks total return
consistent with prudent investment management, consisting of a combination of
interest income, currency gains and capital appreciation. Shares of a portfolio
are not available directly to individual investors but may be offered only
through (a) variable-annuity contracts and variable life insurance contracts and
(b) tax-qualified pension and retirement plans. Certain portfolios may not be
available in connection with a particular contract or plan.
The net asset value of each portfolio is determined daily as of the close of
regular trading on the New York Stock Exchange. Each Portfolio's investments are
valued at market value, which is currently determined using the last reported
sales price. If no sales are reported, investments are generally valued at the
mean between the bid and asked prices. In the absence of market quotations,
investments are generally valued at fair value as determined by or under the
direction of the Trust's Board of Trustees. Debt that matures in 60 days or less
is valued on the basis of amortized cost, which approximates market value,
unless the Board determines that using this method would not reflect an
investment value.
The books and records of the portfolios are maintained in U.S. dollars.
Transactions denominated in foreign currencies are recorded at the current
prevailing exchange rates. All assets and liabilities denominated in foreign
currencies are translated into U.S. dollar amounts at the current exchange rate
at the end of the period. Translation gains or losses resulting from changes in
the exchange rate during the reporting period and realized gains and losses on
the settlement of foreign currency transactions are reported in the results of
operations for the current period. The Global Fixed Income Portfolio isolates
that portion of gains and losses on investments in debt securities which are due
to changes in the foreign exchange rate from that which are due to changes in
market prices of debt securities.
14
<PAGE>
WARBURG PINCUS TRUST II
NOTES TO FINANCIAL STATEMENTS (CONT'D)
June 30, 1999 (Unaudited)
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES -- (CONT'D)
The Portfolios may invest in securities of foreign countries and governments
which involve certain risks in addition to those inherent in domestic
investments. Such risks generally include, among others, fluctuations in
currency exchange rates, revaluation of currencies, future adverse political and
economic developments and the imposition of foreign laws and restrictions.
Securities of foreign issuers are often subject to less rigorous regulatory
practices and requirements than those applied in the United States and may also
be less liquid (and their prices more volatile) than securities of comparable
U.S companies. Moreover, individual foreign economies may differ favorably or
unfavorably from the U.S economy in many respects.
Security transactions are accounted for on a trade date basis. Interest
income is recorded on the accrual basis. Dividends are recorded on the
ex-dividend date. The cost of investments sold is determined by use of the
specific identification method for both financial reporting and income tax
purposes.
Dividends from net investment income and distributions of net realized
capital gains, if any, are declared and paid annually. However, to the extent
that a net realized capital gain can be reduced by a capital loss carryover,
such gain will not be distributed. Income and capital gain distributions are
determined in accordance with federal income tax regulations which may differ
from generally accepted accounting principles.
No provision is made for federal income taxes as it is the Trust's intention
to have each Portfolio continue to qualify for and elect the tax treatment
applicable to regulated investment companies under the Internal Revenue Code of
1986, as amended, and make the requisite distributions to its shareholders which
will be sufficient to relieve it from federal income and excise taxes.
Costs incurred by the Trust in connection with its organization have been
deferred and are being amortized over a period of five years from the date the
Trust commenced its operations.
15
<PAGE>
WARBURG PINCUS TRUST II
NOTES TO FINANCIAL STATEMENTS (CONT'D)
June 30, 1999 (Unaudited)
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES -- (CONT'D)
Pursuant to an exemptive order issued by the Securities and Exchange
Commission, each Portfolio, along with other Warburg Pincus Funds, transfers
uninvested cash balances to a pooled cash account, which is invested in
repurchase agreements secured by U.S. government securities. Securities pledged
as collateral for repurchase agreements are held by the portfolios' custodian
bank until the agreements mature. Each agreement requires that the market value
of the collateral be sufficient to cover payments of interest and principal;
however, in the event of default or bankruptcy by the counterparty to the
agreement, retention of the collateral may be subject to legal proceedings.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities at the date of the
financial statement and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from these estimates.
The portfolios have an arrangement with their transfer agent whereby interest
earned on uninvested cash balances is used to offset a portion of their transfer
agent expense. For the six months ended June 30, 1999, the Fixed Income
Portfolio and the Global Fixed Income Portfolio received credits or
reimbursements of $64 and $46, respectively, under this arrangement.
2. INVESTMENT ADVISER, CO-ADMINISTRATORS AND DISTRIBUTOR
On July 6, 1999, Credit Suisse Asset Management, LLC (CSAM) became each
portfolio's investment adviser as a result of the completion of the previously
announced acquisition of Warburg Pincus Asset Management, Inc. (WPAM) by Credit
Suisse Group (Credit Suisse) and the combination of WPAM with Credit Suisse's
existing U.S. asset management business. CSAM is an indirect wholly-owned U.S.
subsidiary of Credit Suisse. For its investment advisory services, CSAM receives
a fee from the Fixed Income Portfolio and the Global Fixed Income Portfolio
calculated at an annual rate of .50% and 1.00%, respectively, of the relevant
Portfolio's average daily net assets. For the six months ended June 30, 1999,
investment advisory fees, voluntarily waivers and reimbursements were as
follows:
16
<PAGE>
WARBURG PINCUS TRUST II
NOTES TO FINANCIAL STATEMENTS (CONT'D)
June 30, 1999 (Unaudited)
- --------------------------------------------------------------------------------
2. INVESTMENT ADVISER, CO-ADMINISTRATORS AND DISTRIBUTOR (CONT'D)
GROSS NET EXPENSE
PORTFOLIO ADVISORY FEE WAIVER ADVISORY FEE REIMBURSEMENTS
-------- -------------- -------- ------------ --------------
Fixed Income $7,065 $(7,065) $0 $(14,052)
Global Fixed Income 9,534 (9,534) 0 (13,253)
Counsellors Fund Services, Inc. (CFSI), an indirect wholly-owned subsidiary
of Credit Suisse, and PFPC, Inc. (PFPC), an indirect, wholly owned subsidiary of
PNC Bank Corp. (PNC), serve as each Portfolio's co-administrators. For its
administrative services, CFSI currently receives a fee calculated at an annual
rate of .10% of each Portfolio's average daily net assets. For the six months
ended June 30, 1999, administrative services fees earned by CFSI were as
follows:
Portfolio Co-Administration Fee
-------- ---------------------
Fixed Income $1,413
Global Fixed Income 953
For its administrative services, PFPC currently receives a fee from the Fixed
Income Portfolio and the Global Fixed Income Portfolio calculated at an annual
rate of .05% of the Portfolio's average daily net assets. For the six months
ended June 30, 1999, administrative services fees earned and waived by PFPC were
as follows:
NET
PORTFOLIO CO-ADMINISTRATION FEE WAIVER CO-ADMINISTRATION FEE
-------- --------------------- ------ ---------------------
Fixed Income $3,073 $(707) $2,366
Global Fixed Income 1,194 (477) 717
It is currently contemplated that, on or before January 6, 2000, CFSI will be
replaced as co-administrator of each Portfolio by Credit Suisse Asset Management
Securities, Inc. (CSAMSI), an indirect wholly-owned subsidiary of Credit Suisse
that was formerly known as Counsellors Securities Inc. CSAMSI serves as each
Portfolio's distributor. No compensation is paid by the Portfolios to CSAMSI for
its distribution services. On June 20, 1999, the Trust's Board of Trustees
approved Provident Distributors, Inc. (PDI) as each Portfolio's distributor,
effective on or before January 6, 2000. PDI, a Delaware corporation, is a
registered broker-dealer and serves as distributor to other mutual funds.
3. LINE OF CREDIT
The portfolios, together with other funds advised by CSAM, have established a
$250 million committed line of credit facility (Credit Facility) with Deutsche
Bank, AG as administrative agent, State Street Bank and Trust Company as
operations agent, Bank of Nova Scotia as syndication agent
17
<PAGE>
WARBURG PINCUS TRUST II
NOTES TO FINANCIAL STATEMENTS (CONT'D)
June 30, 1999 (Unaudited)
- --------------------------------------------------------------------------------
3. LINE OF CREDIT (CONT'D)
and certain other lenders, for temporary or emergency purposes primarily
relating to unanticipated portfolio share redemptions. Under the terms of the
Credit Facility, the funds with access to the Credit Facility pay an aggregate
commitment fee at a rate of .075% per annum on the average daily balance of the
Credit Facility that is undisbursed and uncanceled during the preceding quarter
allocated among the participating funds in such manner as is determined by the
governing Boards of the various funds. In addition, the participating funds will
pay interest on borrowings at the Federal Funds rate plus .50%
4. INVESTMENTS IN SECURITIES
For the six months ended June 30, 1999, purchases and sales of investment
securities (excluding short-term investments) were as follows:
U.S. GOVERNMENT AND
INVESTMENT SECURITIES AGENCY OBLIGATIONS
---------------------- ------------------------
PORTFOLIO PURCHASES SALES PURCHASES SALES
-------- ---------- ---------- ------------ ----------
Fixed Income $3,964,511 $3,092,719 $3,235,117 $2,484,631
Global Fixed Income 2,542,401 1,560,860 1,461,122 1,909,498
At June 30, 1999, the net unrealized appreciation from investments for those
securities having an excess of value over cost and net unrealized depreciation
from investments for those securities having an excess of cost over value (based
on cost for federal income tax purposes) were as follows:
NET UNREALIZED
UNREALIZED UNREALIZED APPRECIATION
PORTFOLIO APPRECIATION DEPRECIATION (DEPRECIATION)
-------- ------------ ------------ --------------
Fixed Income $641 $(66,400) $(65,759)
Global Fixed Income 0 (71,807) (71,807)
5. FORWARD CURRENCY CONTRACTS
The Portfolios may enter into forward currency contracts for the purchase or
sale of a specific foreign currency at a fixed price on a future date. Risks may
arise from movements in the value of a foreign currency relative to the U.S.
dollar and from the potential default of counterparties to the contract. Each
portfolio will enter into forward contracts primarily for hedging purposes. The
portfolios may also enter into forward contracts for speculative purposes, which
may increase the portfolios' investment risk. Forward currency contracts are
adjusted by the daily exchange rate of the underlying currency and any gains or
losses are recorded for financial statement purposes as unrealized until the
contract settlement date.
18
<PAGE>
WARBURG PINCUS TRUST II
NOTES TO FINANCIAL STATEMENTS (CONT'D)
June 30, 1999 (Unaudited)
- --------------------------------------------------------------------------------
5. FORWARD CURRENCY CONTRACTS (CONT'D)
At June 30, 1999, the Global Fixed Income Portfolio had the following open
forward currency contracts:
<TABLE>
<CAPTION>
FOREIGN UNREALIZED
EXPIRATION CURRENCY CONTRACT CONTRACT FOREIGN EXCHANGE
FORWARD CURRENCY CONTRACTS DATE TO BE SOLD AMOUNT VALUE GAIN/(LOSS)
- -------------------------- ---------- ---------- -------- --------- ----------------
<S> <C> <C> <C> <C> <C>
Canadian Dollars 07/28/99 88,156 $ 60,325 $ 59,585 $ 740
Euro 07/28/99 616,388 651,748 637,037 14,711
British Pounds 07/28/99 30,000 48,120 47,301 819
South African Rand 07/28/99 367,500 58,454 60,534 (2,080)
</TABLE>
6. CAPITAL SHARE TRANSACTIONS
Each portfolio is authorized to issue an unlimited number of full and
fractional shares of beneficial interest, par value of $.001 per share.
Transactions in shares of each Portfolio were as follows:
<TABLE>
<CAPTION>
FIXED INCOME PORTFOLIO GLOBAL FIXED INCOME PORTFOLIO
-------------------------------- ------------------------------
FOR THE SIX FOR THE SIX
MONTHS ENDED FOR THE MONTHS ENDED FOR THE
JUNE 30, 1999 YEAR ENDED JUNE 30, 1999 YEAR ENDED
(UNAUDITED) DECEMBER 31, 1998 (UNAUDITED) DECEMBER 31, 1998
------------- ----------------- ------------- -----------------
<S> <C> <C> <C> <C>
Shares sold 416,180 370,058 43,102 0
Shares issued to shareholders on
reinvestment of dividends 0 11,498 0 12,538
Shares Redeemed 391,083 (167,794) (25) 0
------- -------- ------ ------
Net increase in shares outstanding 25,097 213,762 43,077 12,538
======= ======== ====== ======
</TABLE>
7. LIABILITIES
At June 30, 1999, the Global Fixed Income Portfolio had an investment related
liability of $19,975 payable toward investment securities purchased.
8. NET ASSETS
Net assets at June 30, 1999, consisted of the following:
<TABLE>
<CAPTION>
FIXED INCOME GLOBAL FIXED INCOME
PORTFOLIO PORTFOLIO
------------ -------------------
<S> <C> <C>
Capital contributed, net $3,075,615 $2,206,859
Undistributed Net Investment Income 69,862 15,917
Accumulated (or Distributions in excess of) net realized
gain (loss) from security transactions (12,855) 29,280
Net unrealized appreciation (depreciation) from
investments and foreign currency related items (65,759) (58,055)
---------- ----------
Net assets $3,066,863 $2,194,001
========== ==========
</TABLE>
19
<PAGE>
WARBURG PINCUS TRUST II
NOTES TO FINANCIAL STATEMENTS (CONT'D)
June 30, 1999 (Unaudited)
- --------------------------------------------------------------------------------
9. RESULTS OF SPECIAL MEETING OF SHAREHOLDERS
At a special meeting of shareholders held on May 21, 1999, the following
proposals were submitted for the vote of shareholders of the Trust. The
proposals and voting results were:
1. To approve a new investment advisory agreement between each portfolio and
CSAM.
TRUST II FIXED % OF SHARES TO TOTAL % OF SHARES TO TOTAL
INCOME PORTFOLIO SHARES OUTSTANDING SHARES SHARES VOTED
- ---------------- ------ -------------------- --------------------
For 278,252.4320 99.9973% 100.0000%
Against 0.0000 0.0000% 0.0000%
Abstain 0.0000 0.0000% 0.0000%
TRUST II GLOBAL % OF SHARES TO TOTAL % OF SHARES TO TOTAL
FIXED INCOME PORTFOLIO SHARES OUTSTANDING SHARES SHARES VOTED
- ---------------------- ------ -------------------- --------------------
For 181,158.5880 99.9956% 100.0000%
Against 0.0000 0.0000% 0.0000%
Abstain 0.0000 0.0000% 0.0000%
2. To elect Trustees of the Trust.
TRUST II FIXED
INCOME PORTFOLIO FOR WITHHELD
---------------- ------------ --------
R.H. Francis 278,252.4320 0.0000
J.W. Fritz 278,252.4320 0.0000
J.E. Garten 278,252.4320 0.0000
J.S. Pasman 278,252.4320 0.0000
W.W. Priest 278,252.4320 0.0000
S.N. Rappaport 278,252.4320 0.0000
A.M. Reichman 278,252.4320 0.0000
A.B. Trowbridge 278,252.4320 0.0000
TRUST II GLOBAL FIXED
INCOME PORTFOLIO FOR WITHHELD
---------------- ------------ --------
R.H. Francis 181,158.5880 0.0000
J.W. Fritz 181,158.5880 0.0000
J.E. Garten 181,158.5880 0.0000
J.S. Pasman 181,158.5880 0.0000
W.W. Priest 181,158.5880 0.0000
S.N. Rappaport 181,158.5880 0.0000
A.M. Reichman 181,158.5880 0.0000
A.B. Trowbridge 181,158.5880 0.0000
20
<PAGE>
WARBURG PINCUS DOMESTIC EQUITY FUNDS
NOTES TO FINANCIAL STATEMENTS
June 30, 1999 (Unaudited)
- --------------------------------------------------------------------------------
9. RESULTS OF SPECIAL MEETING OF SHAREHOLDERS (CONT'D)
3. To ratify the selection of PricewaterhouseCoopers LLP as the independent
accountants for the Trust.
TRUST II FIXED % OF SHARES TO TOTAL % OF SHARES TO TOTAL
INCOME PORTFOLIO SHARES OUTSTANDING SHARES SHARES VOTED
- ---------------- ------ -------------------- --------------------
For 278,252.4320 99.9973% 100.0000%
Against 0.0000 0.0000% 0.0000%
Abstain 0.0000 0.0000% 0.0000%
TRUST II GLOBAL FIXED % OF SHARES TO TOTAL % OF SHARES TO TOTAL
INCOME PORTFOLIO SHARES OUTSTANDING SHARES SHARES VOTED
- --------------------- ------ -------------------- --------------------
For 181,158.5880 99.9956% 100.0000%
Against 0.0000 0.0000% 0.0000%
Abstain 0.0000 0.0000% 0.0000%
10. YEAR 2000 COMPLIANCE
Many services provided to the portfolios and their shareholders by CSAM and
certain of its affiliates (CSAM Service Providers) and the portfolios' other
service providers rely on the functioning of their respective computer systems.
Many computer systems cannot distinguish the year 2000 from the year 1900,
resulting in potential difficulty in performing various calculations (Year 2000
Issue). The Year 2000 could potentially have an adverse impact on the handling
of security trades, the payment of interest and dividends, pricing, account
services and other portfolio operations. It has been reported that foreign
institutions have made less progress in addressing the Year 2000 Issue than
major U.S. entities, which could adversely affect the portfolios' foreign
investments.
The CSAM Service Providers recognize the importance of the Year 2000 Issue
and are taking appropriate steps necessary in preparation for the year 2000. The
CSAM Service Providers anticipate that their systems and those of the
portfolios' other service providers will be adapted in time for the Year 2000.
The CSAM Service Providers have completed mission critical systems testing and
have participated in industry-wide testing programs. In addition, the CSAM
Service Providers are formulating a contingency plan to address the Year 2000
Issue and anticipate completion of the plan by the end off the third quarter of
1999. The CSAMService Providers have also completed investigations of material
operations of the portfolios' other major service providers. The CSAMService
Providers continue to monitor the Year 2000 Issue and its potential impact on
the portfolios. However, there can be no assurance that these steps will be
sufficient to avoid any adverse impact on the portfolios nor can there be any
assurance that the Year 2000 Issue will not have an adverse effect on the
portfolios' investments or on global markets or economies, generally.
21
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CREDIT SUISSE ASSET MANAGEMENT SECURITIES, Inc., Distributor. TRBDF-3-0699
