FEBRUARY 28, 1999 SEMI-ANNUAL REPORT
WARBURG PINCUS INTERNATIONAL GROWTH FUND
WARBURG PINCUS EMERGING MARKETS II FUND
WARBURG PINCUS EUROPEAN EQUITY FUND
WARBURG PINCUS U.S. CORE EQUITY FUND
WARBURG PINCUS GLOBAL TELECOMMUNICATIONS FUND
WARBURG PINCUS SELECT ECONOMIC VALUE EQUITY FUND
WARBURG PINCUS LONG-SHORT MARKET NEUTRAL FUND
WARBURG PINCUS LONG-SHORT EQUITY FUND
WARBURG PINCUS U.S. CORE FIXED INCOME FUND
WARBURG PINCUS STRATEGIC GLOBAL FIXED INCOME FUND
WARBURG PINCUS HIGH YIELD FUND
WARBURG PINCUS MUNICIPAL BOND FUND
[GRAPHIC OMITTED]
ADVISED BY CREDIT SUISSE ASSET MANAGEMENT
More complete information about the funds, including charges and expenses, is
provided in the Prospectus, which must precede or accompany this document and
which should be read carefully before investing. Institutional shareholders may
obtain additional copies by calling 800-275-4232 or by writiing to Warburg
Pincus Funds, P.O. Box 8500, Boston, MA 02266-8500. Common shareholders may
obtain additional copies by calling 800-927-2874 or by writing to Warburg Pincus
Funds, P.O. Box 9030, Boston, MA 02205-9030.
<PAGE>
WARBURG PINCUS INTERNATIONAL GROWTH FUND
PORTFOLIO MANAGERS' LETTER
April 20, 1999
Dear Shareholders:
We are writing to report on the results of the Warburg Pincus International
Growth Fund (the "Fund") for the fiscal half-year ended February 28, 1999.
At February 28, 1999, the net asset value ("NAV") of the Fund's Institutional
shares was $21.66, compared to an NAV of $22.70 on August 31, 1998. As a result,
the Institutional shares' total return was 5.1% (assuming the reinvestment of
dividends and distributions totaling $2.27 per share). By comparison, the MSCI
EAFE Index (the "EAFE") returned 14.0% during the same period.
At February 28, 1999, the NAV of the Fund's Common shares was $21.50, compared
to an NAV of $22.56 on August 31, 1998. As a result, the Common shares' total
return was 5.0% (assuming the reinvestment of dividends and distributions
totaling $2.26 per share). By comparison, the EAFE returned 14.0% during the
same period.
The Fund underperformed its EAFE benchmark mainly because of two sector
allocation decisions: we underweighted global financials and cyclical stocks at
times when these sectors rallied (in October 1998 and February 1999,
respectively).
[BULLET] In Europe, we repositioned our holdings in favor of defensive
industries (e.g., pharmaceuticals, food, utilities) and companies
whose core businesses are concentrated in Europe late in the third
quarter of 1998. This negatively affected performance in October, when
oversold global financial companies sharply rallied after the Federal
Reserve lowered U.S. interest rates; and in February, when cyclicals
gained in response to increasing fears about global inflation.
[BULLET] Our Japan allocation concentrated on large blue-chip exporters such as
Sony Corp., Canon, Inc., TDK Corp. and Honda Motor Corp., which we
believed would benefit from a weakening yen and a relatively low
exposure to the depressed domestic economy. This positioning hurt
performance particularly in the fourth quarter of 1998, when many of
these stocks experienced profit-taking as investors favored the shares
of the large Japanese banks and other sectors that had previously
lagged the domestic market.
[BULLET] We remained significantly underweight in Asian markets -- which are
disproportionately weighted in banks and other financial companies --
relative to EAFE throughout the period. The Fund's overall return thus
suffered while Asia enjoyed a vigorous rally in the fourth quarter and
into 1999.
As other developments occur in the international equity markets or at Credit
Suisse Asset Management, we will be sure to keep you informed. Meanwhile, if you
have questions, please feel free to call upon us at any time.
Sincerely yours,
Credit Suisse Asset Management International Equity Management Team
William P. Sterling, Head of Global Equity and Managing Director
Steven D. Bleiberg, Managing Director
Richard W. Watt, Head of Emerging Markets and Managing Director
Emily Alejos, Director
Robert B. Hrabchak, Director
INTERNATIONAL INVESTING ENTAILS SPECIAL RISK CONSIDERATIONS, INCLUDING CURRENCY
FLUCTUATIONS, LOWER LIQUIDITY, ECONOMIC AND POLITICAL RISKS, AND DIFFERENCES IN
ACCOUNTING METHODS.
1
<PAGE>
WARBURG PINCUS INTERNATIONAL GROWTH FUND
PORTFOLIO MANAGERS' LETTER (CONCLUDED)
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN THE WARBURG PINCUS
INTERNATIONAL GROWTH INSTITUTIONAL SHARES AND THE MSCI EAFE INDEX 1 FROM
INCEPTION (9/30/92) AND AT EACH QUARTER END. (UNAUDITED)
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
WARBURG PINCUS
INTERNATIONAL GROWTH MSCI EAFE
INSTITUTIONAL SHARES INDEX
10/01/92 $10,000 $10,000
11/30/92 9,947 9,571
02/28/93 10,173 9,918
05/31/93 11,520 12,062
08/31/93 12,487 12,962
11/30/93 12,447 11,928
02/28/94 14,154 13,841
05/31/94 13,349 13,735
08/31/94 14,264 14,405
11/30/94 13,432 13,732
02/28/95 11,741 13,258
05/31/95 12,834 14,451
08/31/95 13,115 14,517
11/30/95 12,849 14,815
02/29/96 13,849 15,539
05/31/96 14,426 16,041
08/31/96 14,008 15,706
11/30/96 14,701 16,606
02/28/97 15,165 16,090
05/31/97 15,940 17,303
08/31/97 16,240 17,179
11/30/97 16,693 16,588
02/28/98 18,790 18,633
05/31/98 20,823 19,278
08/31/98 18,956 17,201
11/30/98 19,650 19,370
02/28/99 19,923 19,610
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN THE WARBURG PINCUS
INTERNATIONAL GROWTH COMMON SHARES AND THE MSCI EAFE INDEX 1 FROM INCEPTION
(11/1/96) AND AT EACH QUARTER END. (UNAUDITED)
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
WARBURG PINCUS
INTERNATIONAL GROWTH MSCI EAFE
COMMON SHARES INDEX
11/01/96 $10,000 $10,000
11/30/96 10,356 10,369
02/28/97 10,673 10,046
05/31/97 11,208 10,803
08/31/97 11,414 10,726
11/30/97 11,728 10,357
02/28/98 13,189 11,634
05/31/98 14,596 12,037
08/31/98 13,278 10,740
11/30/98 13,754 12,094
02/28/99 13,939 12,244
Note:Past performance is not predictive of future performance. Investment return
and principle value of an investment will fluctuate so that an investor's shares
upon redemption may be worth more or less than their original cost.
1 The Morgan Stanley Europe, Australia and Far East Index is an unmanaged index
(with no defined investment objective) of equities that includes
reinvestments of dividends, and is the exclusive property of Morgan Stanley
Capital Co., Incorporated.
2
<PAGE>
WARBURG PINCUS INTERNATIONAL GROWTH FUND
SCHEDULE OF INVESTMENTS
FEBRUARY 28, 1999
(UNAUDITED)
NUMBER
OF SHARES VALUE
--------- -----------
COMMON STOCKS,
WARRANTS AND RIGHTS -- 98.1%
DENMARK -- 1.4%
Tele Danmark A/S Cl. B# ..................... 77,293 $ 9,289,955
------------
FINLAND -- 2.1%
Nokia Oyj Cl. A ............................. 105,386 14,414,094
------------
FRANCE -- 17.6%
Accor S.A. .................................. 14,351 3,339,677
Alcatel ..................................... 63,683 6,850,716
AXA S.A.# ................................... 90,277 11,772,805
Canal Plus .................................. 29,307 9,155,723
Cap Gemini S.A.# ............................ 54,302 9,388,210
Carrefour S.A. .............................. 14,320 10,201,737
Compagnie de Saint-Gobain ................... 48,737 7,575,450
Etablissements Economiques du
Casino Guichard-Perrachon
S.A.# ..................................... 25,350 2,329,109
Groupe Danone ............................... 29,523 7,353,285
Sanofi S.A. ................................. 26,177 4,606,168
STMicroelectronics N.V.** ................... 101,083 9,004,364
Suez Lyonnaise des Eaux ..................... 94,210 18,831,865
Total S.A. Cl. B# ........................... 72,698 7,581,104
Valeo S.A. .................................. 38,963 3,256,932
Vivendi ..................................... 35,845 9,344,985
------------
120,592,130
------------
GERMANY -- 4.3%
Allianz AG Holding Registered
Shares# ................................... 20,289 6,035,543
Mannesmann AG# .............................. 142,355 19,251,733
Metro AG# ................................... 62,816 4,413,028
------------
29,700,304
------------
IRELAND -- 2.0%
Allied Irish Banks plc ...................... 782,587 13,602,692
------------
ITALY -- 13.4%
Assicurazioni Generali S.p.A. ............... 320,540 12,385,436
Credito Italiano# ........................... 2,171,732 11,419,002
Olivetti S.p.A.**# .......................... 2,547,337 7,829,442
Istituto Bancario San Paolo di
Torino S.p.A. ............................. 590,845 10,312,337
Seat S.p.A.# ................................ 17,124,849 22,463,687
Telecom Italia S.p.A.# ...................... 1,148,460 12,089,849
Telecom Italia Savings Shares
S.p.A. .................................... 2,224,251 15,015,690
------------
91,515,443
------------
JAPAN -- 10.5%
Acom Company, Ltd. .......................... 38,800 2,292,354
Ajinomoto Co., Inc. ......................... 105,000 1,147,787
Asahi Breweries Ltd.# ....................... 73,000 967,180
Bridgestone Corp.# .......................... 71,000 1,588,748
NUMBER
OF SHARES VALUE
--------- -----------
JAPAN -- (CONTINUED)
Canon, Inc. ................................. 58,000 $ 1,241,634
Casio Computer Company,
Ltd.# ..................................... 250,000 1,666,666
Citizen Watch Co. ........................... 318,000 2,152,161
Daiichi Pharmaceutical Co.,
Ltd ....................................... 198,000 3,013,804
East Japan Railway Co. ...................... 190 1,143,362
FamilyMart Co., Ltd. ........................ 68,400 3,015,017
Fuji Photo Film Co. ......................... 64,000 2,351,790
Ito-Yokado Co., Ltd. ........................ 51,000 2,974,461
Kirin Brewery Co., Ltd. ..................... 151,000 1,788,073
Merrill Lynch "Honda Motor
Corp." - (CPS) ............................ 3,200 3,182,720
Minebea Company# ............................ 143,000 1,422,165
Mitsubishi Heavy Industries,
Ltd. ...................................... 356,000 1,323,185
Mitsui Chemicals Industries# ................ 529,700 2,075,941
Morgan Stanley
"Canon Corp." - (CPS) ..................... 1,860 1,642,007
Morgan Stanley
"Sony Corp." - (CPS) ...................... 1,750 2,347,888
Nintendo Co., Ltd.# ......................... 26,200 2,208,174
Nippon Express Co., Ltd. .................... 398,000 1,992,515
Nippon Telegraph &
Telephone ................................. 529 4,360,402
Promise Co., Ltd. ........................... 43,600 1,984,323
Rohm Co., Ltd. .............................. 36,300 3,548,924
Sankyo Co., Ltd. ............................ 156,000 3,352,716
Sekisui House, Ltd. ......................... 256,000 2,621,490
Sony Corp. .................................. 9,200 696,300
Sony Corp. ADR .............................. 1,100 82,156
TDK Corp. ................................... 36,100 2,589,219
Terumo Corp. ................................ 117,000 2,386,345
Tokyo Electric Power ........................ 150,000 3,027,811
Toppan Printing Company,
Ltd. ....................................... 181,000 2,118,912
Toyota Motor Corp.# ......................... 148,000 3,866,833
------------
72,173,063
------------
NETHERLANDS -- 8.0%
AEGON N.V. ................................... 58,996 6,158,706
ASM Lithography Holding
N.V. ....................................... 123,456 5,075,168
Equant N.V.** ................................ 181,705 13,104,445
Heineken N.V. ................................ 53,543 2,797,667
Koninklijke Numico N.V.# ..................... 109,800 5,122,449
Koninklijke Philips Electronics
N.V.# ...................................... 52,590 3,665,754
STMicroelectronics N.V. -
ADR** ...................................... 21,300 1,861,087
TNT Post Group N.V. .......................... 164,275 5,617,149
VNU Verenigd Bezit ........................... 103,803 4,267,250
Wolters Kluwer N.V. .......................... 37,318 7,189,222
------------
54,858,897
------------
See Accompanying Notes to Financial Statements.
3
<PAGE>
WARBURG PINCUS INTERNATIONAL GROWTH FUND (CONCLUDED)
NUMBER
OF SHARES VALUE
--------- -----------
SPAIN -- 2.0%
Argentaria, Caja Postal y
Banco Hipotecario de
Espana, S.A.# ............................. 578,983 $ 13,855,069
Telefonica S.A.# ............................ 2,214 101,101
------------
13,956,170
------------
SWEDEN -- 1.9%
Skandia Forsakrings AB ...................... 388,676 7,123,211
Telefonaktiebolaget LM
Ericsson Cl. B# ........................... 210,660 5,566,643
------------
12,689,854
------------
SWITZERLAND -- 10.7%
Nestle S.A. ................................ 2,120 4,001,353
Novartis AG Registered
Shares# ................................... 7,589 13,312,933
Roche Holding AG ............................ 1,412 17,880,695
Swiss Reinsurance Group
Registered Shares ......................... 1,787 4,001,777
Swisscom AG**# .............................. 27,713 10,958,517
United Bank of Switzerland
S.A. ..................................... 38,949 12,122,341
Zurich Allied AG ............................ 16,630 11,040,302
------------
73,317,918
------------
UNITED KINGDOM -- 24.2%
Allied Zurich plc** ......................... 262,475 3,874,769
Bank of Scotland ............................ 683,956 9,883,192
BP Amoco plc ................................ 562,915 8,016,912
British Telecommunications
plc ....................................... 366,467 6,346,336
Cable & Wireless
Communications plc** ...................... 525,900 6,234,439
COLT Telecom Group plc** .................... 207,360 3,845,108
Compass Group plc ........................... 1,190,433 14,713,073
Dixons Group plc ............................ 629,557 11,865,594
Energis plc** ............................... 114,100 2,741,823
Glaxo Wellcome .............................. 531,024 16,937,446
LLoyds TSB Holdings Group
plc ....................................... 614,980 8,812,596
National Grid Group plc ..................... 1,311,713 9,477,153
Orange plc** ................................ 536,278 7,762,125
Railtrack Group plc ......................... 392,131 9,749,569
SmithKline Beecham plc ...................... 1,107,694 15,598,094
Synstar plc** ............................... 517,710 1,314,554
Unilever plc ................................ 388,446 3,733,743
Vodafone Group plc .......................... 1,027,735 18,851,655
WPP Group plc ............................... 750,075 5,936,004
------------
165,694,185
------------
TOTAL COMMON STOCKS,
WARRANTS AND RIGHTS
(Cost $592,463,004) ....................... $671,804,705
------------
NUMBER
OF SHARES VALUE
--------- -------------
PREFERRED STOCK -- 0.0%
ISRAEL -- 0.0%
Geotek Communications,
Inc.** .................................... 600 $ --
------------
(Cost $6,000,000)
PAR
(000)
-------
SHORT-TERM INVESTMENT -- 5.1%
BBH Grand Cayman U.S.
Dollar Time Deposit
4.250% 03/01/99 ........................... $ 34,627 $ 34,627,000
------------
(Cost $34,627,000)
TOTAL INVESTMENTS -- 103.2%
(Cost $633,090,004*) ...................... $706,431,705
LIABILITIES IN EXCESS OF
OTHER ASSETS-- (3.2%) ..................... (21,661,704)
------------
TOTAL NET ASSETS -- 100.0% .................. $684,770,001
============
* Cost for Federal income tax purposes at February 28, 1999 is $634,138,530.
The gross appreciation (depreciation) on a tax basis is as follows:
Gross Appreciation ....................................... $ 93,261,567
Gross Depreciation ....................................... (20,968,392)
------------
Net Appreciation ......................................... $ 72,293,175
============
** Non-income producing securities.
# Security or a portion thereof is out on loan.
INVESTMENT ABBREVIATIONS
ADR ...............................................American Depository Receipts
CPS ..................................................Currency Protected Shares
See Accompanying Notes to Financial Statements.
4
<PAGE>
WARBURG PINCUS EMERGING MARKETS II FUND
PORTFOLIO MANAGERS' LETTER
April 20, 1999
Dear Shareholders:
We are writing to report on the results of the Warburg Pincus Emerging Markets
II Fund (the "Fund") for the fiscal half-year ended February 28, 1999.
At February 28, 1999, the net asset value ("NAV") of the Fund's Institutional
shares was $11.44, compared to an NAV of $10.44 on August 31, 1998. As a result,
the Institutional shares' total return was 11.6% (assuming the reinvestment of
dividends and distributions totaling $0.21 per share). By comparison, the MSCI
Emerging Markets Free Index (the"EMF") returned 24.7% during the same period.
At February 28, 1999, the NAV of the Fund's Common shares was $11.48, compared
to an NAV of $10.48 on August 31, 1998. As a result the Common shares' total
return was 11.4% (assuming the reinvestment of dividends and distributions
totaling $0.19 per share). By comparison, the EMF returned 24.7% during the same
period.
The Fund underperformed its EMF benchmark primarily due to a combination of two
factors. These were our underweighting (i.e., relative to EMF) of those Asian
markets that vigorously rallied in the final months of 1998; and our decision to
maintain a level of cash reserves that was, in retrospect, too high.
[BULLET] ASIA. We significantly underweighted Asian markets due to our belief
that a macroeconomic recovery in the region was not yet sustainable.
This was best illustrated by the period's rally in South Korea: we
were caught off-guard by the speed and extent to which investor
optimism returned to the Korean market, despite the nation's
relatively limited improvement in macroeconomic fundamentals.
[BULLET] CASH. Our caution about Asia prompted us to hold a high level of cash
in reserve. Given the better environment for Asian equities, this
served to hurt the Fund's overall results.
In closing, we would like to point out that the Fund's performance relative to
EMF has markedly improved since the start of 1999. In part, this is because of
weakness in several of the markets that we had previously underweighted.
Thank you for your support, and please feel free to call upon us at any time if
you have questions.
Sincerely yours,
Credit Suisse Asset Management Emerging Market Equity Management Team
William P. Sterling, Head of Global Equity and Managing Director
Richard W. Watt, Head of Emerging Markets and Managing Director
Steven D. Bleiberg, Managing Director
Emily Alejos, Director
Robert Hrabchak, Director
INTERNATIONAL INVESTING ENTAILS SPECIAL RISK CONSIDERATIONS, INCLUDING CURRENCY
FLUCTUATIONS, LOWER LIQUIDITY, ECONOMIC AND POLITICAL RISKS, AND DIFFERENCES IN
ACCOUNTING METHODS; THESE RISKS ARE GENERALLY HEIGHTENED FOR EMERGING MARKETS
INVESTMENTS.
5
<PAGE>
WARBURG PINCUS EMERGING MARKETS II FUND
PORTFOLIO MANAGERS' LETTER (CONCLUDED)
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN THE WARBURG PINCUS
EMERGING MARKETS II INSTITUTIONAL SHARES AND THE MSCI EMERGING MARKETS FREE
INDEX 1 FROM INCEPTION (1/29/93) AND AT EACH QUARTER END. (UNAUDITED)
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
WARBURG PINCUS MSCI EMERGING
EMERGING MARKETS II MARKETS FREE
INSTITUTIONAL SHARES INDEX
02/01/93 $10,000 $10,000
02/28/93 9,967 10,159
05/31/93 10,707 10,923
08/31/93 12,253 12,443
11/30/93 14,507 14,648
02/28/94 16,908 17,058
05/31/94 14,691 15,724
08/31/94 16,664 18,257
11/30/94 15,722 17,189
02/28/95 11,347 13,765
05/31/95 12,552 15,243
08/31/95 12,594 15,263
11/30/95 11,718 14,349
02/29/96 12,863 15,795
5/31/96 13,743 16,481
8/31/96 13,013 15,846
11/30/96 13,164 15,817
2/28/97 14,790 17,699
5/31/97 14,460 17,759
8/31/97 14,094 16,573
11/30/97 12,559 13,717
2/28/98 12,767 14,298
5/31/98 11,520 12,734
8/31/98 8,039 8,360
11/30/98 9,110 10,644
2/28/99 8,970 10,420
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN THE WARBURG PINCUS
EMERGING MARKETS II COMMON SHARES AND THE MSCI EMERGING MARKETS FREE INDEX 1
FROM INCEPTION (11/1/96) AND AT EACH QUARTER END. (UNAUDITED)
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
WARBURG PINCUS MSCI EMERGING
EMERGING MARKETS II MARKETS FREE
COMMON SHARES INDEX
11/01/96 $10,000 $10,000
11/30/96 10,171 10,106
02/28/97 11,394 11,309
05/31/97 11,134 11,347
08/31/97 10,841 10,589
11/30/97 9,652 8,765
02/28/98 9,818 9,135
05/31/98 8,867 8,136
08/31/98 6,195 5,341
11/30/98 7,016 6,800
02/28/99 6,900 6,657
Note:Past performance is not predictive of future performance. Investment return
and principle value of an investment will fluctuate so that an investor's shares
upon redemption may be worth more or less than their original cost.
1 The Morgan Stanley Emerging Markets Free Index is an unmanaged index (with no
defined investment objective) of equities that include reinvestment of
dividends and is compiled by Morgan Stanley Capital International.
6
<PAGE>
WARBURG PINCUS EMERGING MARKETS II FUND
SCHEDULE OF INVESTMENTS
FEBRUARY 28, 1999
(UNAUDITED)
NUMBER
OF SHARES VALUE
--------- ------------
COMMON STOCKS,
WARRANTS AND RIGHTS -- 88.2%
ARGENTINA -- 5.1%
Perez Companc S.A.** ........................ 32,577 $ 132,637
Telefonica de Argentina S.A.
ADR ....................................... 11,109 324,938
YPF S.A. ADR ................................ 15,700 455,300
------------
912,875
------------
BRAZIL -- 6.7%
Companhia Cervejaria Brahma ................. 568,673 215,174
Companhia Cervejaria Brahma
ADR ....................................... 6,300 48,037
Companhia Vale do Rio Doce
PN ........................................ 17,597 225,259
Companhia Vale do Rio Doce
PN Cl. B .................................. 39,000 --
Seara Alimentos ............................. 45,623,768 --
Serrana S.A. ON ............................. 10,210 2,458
Serrana S.A. PN ............................. 12,175 2,692
Telecomunicacoes Brasileiras
S.A. PN Block# ............................ 7,284 470,273
Telecomunicacoes de Sao
Paulo, S.A. PN ............................ 2,538,047 237,055
Telecomunicacoes do Rio de
Janeiro S.A. PN ........................... 8,733 144
------------
1,201,092
------------
CHILE -- 3.2%
Chilectra S.A. ADR .......................... 5,317 104,853
Compania de Telecomunicaciones
de Chile S.A. ADR ......................... 12,002 265,544
Distribucion Y Servicio D & S
S.A. ADR** ................................ 6,387 71,455
Embotelladora Andina S.A.
ADR, Series B ............................. 4,400 51,150
Empresa Nacional de
Electricidad S.A. ADR .................... 5,858 73,957
Enersis S.A. ADR ............................ 400 9,750
------------
576,709
------------
COLOMBIA -- 0.0%
Cementos Paz del Rio ADR** ................. 118 797
------------
CROATIA -- 0.9%
Pliva D.D. GDR 144A ......................... 9,900 162,155
------------
CHINA -- 0.7%
China Steel Corp. GDR ....................... 10,500 118,125
------------
CZECH REPUBLIC -- 0.6%
SPT Telecom A.S. ............................ 9,823 111,030
NUMBER
OF SHARES VALUE
--------- -------------
EGYPT -- 1.8%
Al-Ahram Beverages Co.,
S.A.E. 144A GDR** ........................ 3,450 $ 115,455
Ameriyah Cement Co. ......................... 2,050 37,621
Eastern Co. for Tobacco &
Cigarettes ................................ 1,380 40,660
Madinet Nasr For Housing &
Development Co. ........................... 25 898
Misr International Bank S.A.E.
GDR** ..................................... 9,151 124,466
------------
319,100
------------
GREECE -- 9.2%
Alpha Credit Bank ........................... 3,112 357,280
Hellenic Telecommunications
Organization ADR ......................... 13,639 182,435
Intracom S.A. ............................... 4,122 297,442
National Bank of Greece S.A. ................ 8,172 597,774
Panafon Hellenic Telecom
S.A.** .................................... 6,882 219,538
------------
1,654,469
------------
HUNGARY -- 2.1%
Matav RT ADR** .............................. 6,661 181,512
MOL Magyar Olaj - es Gazipari
Rt. GDR 144A** ............................ 5,300 130,458
OTP Bank RT GDR ............................. 1,750 69,562
------------
381,532
------------
INDIA -- 5.5%
Bharat Heavy Electricals Ltd.
Participation Notes** ..................... 25,135 140,768
Hindustan Petroleum Corporation
Ltd. Participation Notes .................. 32,400 157,160
ITC Agro-Tech, Ltd. GDR** ................... 7,300 132,572
Larsen & Toubro Ltd.
Participation Notes ....................... 2,093 8,970
Mahanagar Telephone Nigam
Ltd. 144A GDR** ........................... 8,500 63,299
Mahindra & Mahindra Ltd.
Participation Notes ....................... 1,750 9,739
Morgan Stanley India Investment
Fund, Inc.** .............................. 46,076 374,368
Reliance Industries Ltd. 144A
GDR** ..................................... 16,594 108,409
------------
995,285
------------
INDONESIA -- 0.0%
P.T. Bank International
Indonesia** ............................... 2 --
PT Bank Dagang Nasional
Indonesia Warrants**,*** .................. 400 --
------------
--
------------
See Accompanying Notes to Financial Statements.
7
<PAGE>
WARBURG PINCUS EMERGING MARKETS II FUND (CONTINUED)
NUMBER
OF SHARES VALUE
--------- -----------
ISRAEL -- 5.2%
Bank Hapoalim Ltd. .......................... 99,635 $ 193,067
Bezeq Israeli Telecommunication
Corporation Ltd. .......................... 44,120 154,193
ECI Telecommunications Ltd. ................. 1,310 48,143
Formula Systems Ltd.** ...................... 1,700 44,034
Gilat Satellite Networks Ltd.
ADR** ..................................... 1,529 90,593
Koor Industries Ltd., ADR .................. 9,600 181,800
Makhteshim-Agan Industries
Ltd.** .................................... 48,173 101,920
Supersol Ltd. ............................... 29,849 75,693
Teva Pharmaceutical Industries
Ltd., ADR ................................. 1,000 40,438
------------
929,881
------------
MEXICO -- 10.0%
Cementos Mexicanos S.A. de
C.V. ...................................... 3,425 9,882
Cementos Mexicanos S.A. de
C.V. Cl. B ................................ 60,049 186,003
Cifra S.A. de C.V. Class V
ADR**# .................................... 24,569 311,955
Corporacion Industrial SanLuis
S.A. de C.V. CPO .......................... 287 325
Fomento Economico Mexicano,
S.A. de C.V. ADR** ........................ 9,018 237,302
Grupo Modelo S.A. de
C.V. Cl. C** .............................. 78,682 175,732
Grupo Televisa S.A. de
C.V. GDS .................................. 7,371 207,309
Kimberly-Clark de Mexico
S.A. de C.V. Cl. A** ...................... 74,228 230,673
Telefonos de Mexico S.A.
ADR ....................................... 7,661 438,113
------------
1,797,294
------------
PERU -- 0.4%
Telefonica del Peru
S.A. ADR** ................................ 6,800 80,325
------------
PHILIPPINES -- 1.3%
Ayala Land, Inc. ............................ 260,016 76,770
Philippine Long Distance
Telephone Company ADR ..................... 6,771 160,811
------------
237,581
------------
POLAND -- 2.4%
Bank Rozwoju Eksportu S.A. .................. 2,498 42,425
Elektrim Spolka Akcyjna S.A. ................ 18,692 192,368
Prokom Software GDR ......................... 4,000 63,372
Telekomunikacja Polska
GDR** ..................................... 26,650 140,512
------------
438,677
------------
NUMBER
OF SHARES VALUE
--------- -----------
SINGAPORE -- 4.4%
Natsteel Electronics Ltd. ................... 43,000 $ 119,859
Oversea-Chinese Banking Corp.
Ltd.*** ................................... 34,400 229,729
Singapore Airlines Ltd.*** .................. 13,341 98,390
Singapore Press Holdings Ltd. ............... 9,239 105,158
Singapore Telecommunications
Ltd. ...................................... 111,000 157,924
Venture Manufacturing ....................... 20,200 85,045
------------
796,105
------------
SOUTH AFRICA -- 8.1%
BOE Corporation Ltd. ........................ 223,636 171,472
C.G. Smith Ltd. ............................. 106,162 252,766
Gold Fields Ltd. ............................ 23,406 125,436
Liberty Life Association of
Africa Limited ............................ 13,766 189,546
Nedcor Limited .............................. 8,287 167,746
Sanlam Limited** ............................ 173,474 123,770
South African Breweries
Limited ................................... 30,062 436,735
------------
1,467,471
------------
SOUTH KOREA -- 7.7%
Korea Electric Power Corp. .................. 8,560 202,194
L.G. Electronics ............................ 12,490 126,074
Pohang Iron & Steel Company,
Ltd. ADR .................................. 12,130 189,531
Samsung Electronics Co. ..................... 7,100 500,221
Samsung Fire and Marine
Insurance ................................. 710 226,318
SK Telecom Co. Ltd. ADR**# .................. 14,685 148,690
------------
1,393,028
------------
TAIWAN -- 7.6%
Morgan Stanley Taiwan Opals ................. 10,815 1,045,378
Taiwan Semiconductor
Manufacturing Co., Ltd.
ADR# ...................................... 9,050 175,909
Winbond Electronics Corp. ................... 12,142 155,262
------------
1,376,549
------------
THAILAND -- 1.7%
Advanced Information Services
Public Co., Ltd.*** ....................... 11,173 77,840
Bangkok Expressway Public
Co., Ltd.*** .............................. 72,195 53,682
Electricity Generating Public
Co., Ltd.*** .............................. 24,079 52,261
PTT Exploration & Production
Public Co., Ltd.*** ....................... 8,400 54,920
Siam City Cement Public Co.,
Ltd.*** ................................... 3,342 69,132
------------
307,835
------------
See Accompanying Notes to Financial Statements.
8
<PAGE>
WARBURG PINCUS EMERGING MARKETS II FUND (CONCLUDED)
NUMBER
OF SHARES VALUE
--------- -----------
TURKEY -- 3.6%
Akbank T.A.S. ............................... 3,523,200 $ 95,379
Dogan Sirketler Grubu Holding
A.S. ...................................... 7,653,600 73,382
Haci Omer Sabanci Holdings
144A** .................................... 22,369 130,890
Migros Turk T.A.S. .......................... 121,282 157,325
Tupras-Turikye Petrol
Rafinerileri A.S. ......................... 1,750,939 112,330
Yapi Ve Kredi Bankasi A.S. .................. 5,087,470 88,948
------------
658,254
------------
TOTAL COMMON STOCKS,
WARRANTS AND RIGHTS
(Cost $16,683,911) ........................ $ 15,916,169
------------
PAR
(000)
-------
SHORT-TERM INVESTMENT -- 9.5%
BBH Grand Cayman U.S. Dollar
Time Deposit
4.250% 03/01/99 ........................... $ 1,716 $ 1,716,000
------------
(Cost $1,716,000)
TOTAL INVESTMENTS -- 97.7%
(Cost $18,399,911*) ....................... $ 17,632,169
OTHER ASSETS IN EXCESS
OF LIABILITIES-- 2.3% ..................... 413,265
------------
TOTAL NET ASSETS -- 100.0% .................. $ 18,045,434
============
* Cost for Federal income tax purposes at February 28, 1999 is $19,268,307.
The gross appreciation (depreciation) on a tax basis is as follows:
Gross Appreciation ....................................... $ 947,710
Gross Depreciation ....................................... (2,583,848)
------------
Net Depreciation ......................................... $ (1,636,138)
============
** Non-income producing securities.
*** Denotes foreign shares.
# Security or a portion thereof is out on loan.
INVESTMENT ABBREVIATIONS
ADR ................................................American Depository Receipts
ADS ..................................................American Depository Shares
GDR ..................................................Global Depository Receipts
See Accompanying Notes to Financial Statements.
9
<PAGE>
WARBURG PINCUS EUROPEAN EQUITY FUND
PORTFOLIO MANAGERS' LETTER
April 20, 1999
Dear Shareholders:
We are writing to report on the results of the Warburg Pincus European Equity
Fund (the "Fund") for the fiscal half-year ended February 28, 1999.
At February 28, 1999, the net asset value ("NAV") of the Fund's Institutional
and Common shares each was $9.56, compared to an NAV of $10.00 at their
inception of investment operations on January 28, 1999. As a result, the total
return of the Fund's Institutional and Common shares were both down 4.40%. By
comparison, the MSCI Europe Index 1 (the "Index") declined 2.4% during the same
period.
Essentially, the Fund underperformed the Index benchmark because we took an
overly defensive approach in structuring the portfolio. We did so out of concern
that economic growth and corporate earnings in Europe would slow down in 1999,
as well as our expectation that investors would take profits after European
markets enjoyed robust gains in 1998. We thus overweighted the portfolio
relative to the Index in defensive industry sectors such as utilities, food,
pharmaceuticals and telecommunications.
Returns in three countries contributed most negatively to the Fund's overall
performance. We underweighted the United Kingdom, which was one of the
best-performing European markets during the period, and emphasized defensive
sectors there at a time when growth-oriented companies were most popular.
Similarly defensive stock selection also hurt results in France and Switzerland.
Since February 28, we have revised our country and sector allocations to become
less defensive and better-positioned to capture the potential appreciation that
we see in many European markets.
As other developments occur in the European equity markets or at Credit Suisse
Asset Management, we will be sure to keep you informed. Meanwhile, if you have
questions, please feel free to call upon us at any time.
Sincerely yours,
Credit Suisse Asset Management International Equity Management Team
William P. Sterling, Head of Global Equities and Managing Director
Steven D. Bleiberg, Managing Director
Richard W. Watt, Head of Emerging Markets and Managing Director
Emily Alejus, Director
Robert B. Hrabchack, Director
INTERNATIONAL INVESTING ENTAILS SPECIAL RISK CONSIDERATIONS, INCLUDING CURRENCY
FLUCTUATIONS, LOWER LIQUIDITY, ECONOMIC AND POLITICAL RISKS, AND DIFFERENCES IN
ACCOUNTING METHODS. SINCE THE FUND FOCUSES ITS INVESTMENTS ON COMPANIES IN
EUROPE, AN INVESTMENT IN THE FUND MAY INVOLVE A GREATER DEGREE OF RISK THAN AN
INVESTMENT IN A MORE GEOGRAPHICALLY DIVERSIFIED EQUITY FUND.
1 The Morgan Stanley Capital International Europe Index is a market
capitalization-weighted index of 15 European countries. The index is
calculated on a total return basis with net dividends reinvested.
10
<PAGE>
WARBURG PINCUS EUROPEAN EQUITY FUND
SCHEDULE OF INVESTMENTS
FEBRUARY 28, 1999
(UNAUDITED)
NUMBER
OF SHARES VALUE
--------- -----------
COMMON STOCKS -- 96.8%
DENMARK -- 1.4%
Tele Danmark A/S Cl. B# ..................... 3,167 $ 380,646
------------
FINLAND -- 2.9%
Nokia Oyj Cl. A ............................. 5,749 786,315
------------
FRANCE -- 18.5%
Accor S.A. .................................. 652 151,729
Alcatel ..................................... 3,113 334,882
AXA S.A. .................................... 3,620 472,075
Canal Plus .................................. 1,096 342,398
Cap Gemini S.A. ............................. 2,148 371,365
Carrefour S.A. .............................. 594 423,173
Compagnie de Saint-Gobain ................... 2,640 410,349
Etablissements Economiques du
Casino Guichard-Perrachon
S.A. ...................................... 1,094 100,515
Groupe Danone ............................... 1,129 281,200
Sanofi S.A. ................................. 1,242 218,545
STMicroelectronics N.V.** ................... 4,622 411,723
Suez Lyonnaise des Eaux ..................... 3,668 733,205
Total S.A. Cl. B ............................ 2,944 307,007
Valeo S.A. .................................. 1,815 151,717
Vivendi ..................................... 1,410 367,595
------------
5,077,478
------------
GERMANY -- 4.4%
Allianz AG Holding Registered
Shares .................................... 813 241,850
Mannesmann AG ............................... 5,823 787,488
Metro AG .................................... 2,601 182,729
------------
1,212,067
------------
IRELAND -- 2.1%
Allied Irish Banks plc ...................... 32,436 563,793
------------
ITALY -- 13.9%
Assicurazioni Generali S.p.A. ............... 13,058 504,552
Credito Italiano# ........................... 87,140 458,183
Istituto Bancario San Paolo di
Torino S.p.A. ............................. 24,814 433,092
Olivetti S.p.A.**# .......................... 101,588 312,239
Seat S.p.A. ................................. 713,617 936,094
Telecom Italia S.p.A. ....................... 35,250 371,077
Telecom Italia Savings Shares
S.p.A. .................................... 118,075 797,112
------------
3,812,349
------------
NETHERLANDS -- 8.5%
AEGON N.V. .................................. 2,414 252,002
ASM Lithography Holding
N.V.** .................................... 4,848 199,297
Equant N.V.** ............................... 8,233 593,759
Heineken N.V. ............................... 2,209 115,422
Koninklijke Numico N.V. ..................... 5,975 278,749
Koninklijke Philips Electronics
N.V. ...................................... 2,241 156,208
NUMBER
OF SHARES VALUE
--------- -----------
NETHERLANDS -- (CONTINUED)
TNT Post Group N.V. ......................... 6,886 $ 235,457
VNU Verenigd Bezit .......................... 4,339 178,372
Wolters Kluwer N.V. ......................... 1,659 319,602
------------
2,328,868
------------
SPAIN -- 2.3%
Argentaria Caja Postal y Banco
Hipotecario de Espana S.A. ................ 25,950 620,984
Telefonica S.A. ............................. 31 1,416
------------
622,400
------------
SWEDEN -- 1.9%
Skandia Forsakrings AB ...................... 17,754 325,375
Telefonaktiebolaget L M.
Ericsson Cl. B ............................ 7,674 202,784
------------
528,159
------------
SWITZERLAND -- 12.1%
Nestle S.A. ................................. 91 171,756
Novartis AG Registered Shares ............... 333 584,162
Roche Holding AG ............................ 75 949,754
Swiss Reinsurance Group
Registered Shares ......................... 76 170,193
Swisscom AG ................................. 1,148 453,952
United Bank of Switzerland
S.A. ...................................... 1,701 529,413
Zurich Allied AG ............................ 689 457,412
------------
3,316,642
------------
UNITED KINGDOM -- 28.8%
Allied Zurich plc** ......................... 10,790 159,287
Bank of Scotland ............................ 31,138 449,945
BG plc ...................................... 43,972 258,879
BP Amoco plc ................................ 19,809 282,115
British Telecommunications
plc ....................................... 15,574 269,705
Cable & Wireless
Communications plc** ...................... 19,677 233,267
COLT Telecom Group plc** .................... 8,417 156,078
Compass Group plc ........................... 50,150 619,825
Dixons Group plc ............................ 27,625 520,663
Energis plc** ............................... 4,513 108,447
Glaxo Wellcome .............................. 41,772 1,332,352
LLoyds TSB Holdings Group
plc ....................................... 26,537 380,272
National Grid Group plc ..................... 55,002 397,391
Orange plc** ................................ 23,365 338,187
Railtrack Group plc ......................... 16,697 415,138
SmithKline Beecham plc ...................... 46,913 660,609
Synstar plc** ............................... 20,420 51,850
Unilever plc ................................ 14,881 143,036
Vodafone Group plc .......................... 46,072 845,094
WPP Group plc ............................... 34,338 271,747
------------
7,893,887
------------
TOTAL COMMON STOCKS
(Cost $27,657,073) ........................ $ 26,522,604
------------
See Accompanying Notes to Financial Statements.
11
<PAGE>
WARBURG PINCUS EUROPEAN EQUITY FUND (CONCLUDED)
PAR
(000) VALUE
------- -----------
SHORT-TERM INVESTMENT -- 8.7%
BBH Grand Cayman U.S. Dollar
Time Deposit
4.250% 03/01/99 ........................... $ 2,394 $ 2,394,000
------------
(Cost $2,394,000)
TOTAL INVESTMENTS -- 105.5%
(Cost $30,051,073*) ....................... $ 28,916,604
LIABILITIES IN EXCESS OF
OTHER ASSETS-- (5.5%) ..................... (1,518,899)
------------
TOTAL NET ASSETS -- 100.0% .................. $ 27,397,705
============
* Also cost for Federal income tax purposes at February 28, 1999. The gross
appreciation (depreciation) on a tax basis is as follows:
Gross Appreciation ....................................... $ 327,807
Gross Depreciation ....................................... (1,462,276)
------------
Net Depreciation ......................................... $ (1,134,469)
============
** Non-income producing securities.
# Security or a portion thereof is out on loan.
See Accompanying Notes to Financial Statements.
12
<PAGE>
WARBURG PINCUS U.S. CORE EQUITY FUND
PORTFOLIO MANAGERS' LETTER
April 20, 1999
Dear Shareholders:
We are writing to report on the results of the Warburg Pincus U.S. Core Equity
Fund (the "Fund") for the fiscal half-year ended February 28, 1999.
At February 28, 1999, the net asset value ("NAV") of the Fund's Institutional
shares was $18.46, compared to an NAV of $21.73 on August 31, 1998. As a result,
the Institutional shares' total return was thus 30.2% (assuming the reinvestment
of dividends and distributions totaling $9.78 per share). By comparison, the
Standard & Poor's 500 Index (the "Index") returned 30.3% during the same period.
At February 28, 1999, the NAV of the Fund's Common shares was $18.44, compared
to an NAV of $25.22 at their inception of investment operations on October 30,
1998. The Common shares' total return between October 30, 1998 and February 28,
1999 thus was 12.1% (assuming the reinvestment of dividends and distributions
totaling $9.78 per share). By comparison, the Index returned 13.2% during the
same period.
Overall, the Fund performed in line with the Index benchmark. In the first half
of the fiscal half-year, the Fund outperformed, as investors returned to a more
rational, value-based approach after months of aggressive buying and the harsh
sell-off of August and September 1998. Our emphasis on valuation and earnings
strength proved particularly effective.
In the second half, however, the Fund underperformed, as the market became
heavily momentum-oriented and the technology sector -- notably gravity-defying
Internet companies -- led stocks to new highs. In this type of environment,
stocks noT favored by momentum buyers tended to generate returns lower than the
market. Our ongoing bias toward companies offering attractive valuations and
earnings strength performed accordingly.
Among the Fund's top-performing holdings during the period were Microsoft
Corporation, which was reasonably valued compared to its technology peers and
produced better-than-expected earnings; Kroger Co., a major supermarket operator
whose above-average earnings growth reflected its focus on controlling costs;
and Ford Motor, which carried a reasonable valuation and benefited from
operating efficiencies and strong truck sales.
As developments occur that we believe would be of interest to you, we will keep
you informed. Meanwhile, if you have any questions about your portfolio or the
capital markets generally, please feel free to call upon us at any time.
Sincerely yours,
Credit Suisse Asset Management Structured Equity Management Team
William W. Priest, Jr., CEO and Managing Director
Eric N. Remole, Managing Director
Marc E. Bothwell, Vice President
Michael A. Welhoelter, Vice President
13
<PAGE>
WARBURG PINCUS U.S. CORE EQUITY FUND
PORTFOLIO MANAGERS' LETTER (CONCLUDED)
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN THE WARBURG PINCUS U.S.
CORE EQUITY INSTITUTIONAL SHARES AND THE S&P 500 INDEX 1 FROM INCEPTION (9/1/94)
AND AT EACH QUARTER END. (UNAUDITED)
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
WARBURG PINCUS
U.S. CORE EQUITY S&P 500
INSTITUTIONAL SHARES INDEX
09/01/94 $10,000 $10,000
11/30/94 9,553 9,615
02/28/95 10,251 10,398
05/31/95 11,103 11,455
08/31/95 11,975 12,149
11/30/95 12,746 13,168
02/29/96 13,940 14,007
5/31/96 14,383 14,720
8/31/96 14,080 14,421
11/30/96 16,150 16,837
2/28/97 16,786 17,672
5/31/97 17,943 19,049
8/31/97 19,476 20,275
11/30/97 20,466 21,625
2/28/98 22,899 23,838
5/31/98 23,112 24,880
8/31/98 20,097 21,917
11/30/98 24,804 26,754
2/28/99 26,161 28,560
Note:Past performance is not predictive of future performance. Investment return
and principle value of an investment will fluctuate so that an investor's shares
upon redemption may be worth more or less than their original cost.
1 The S&P 500 Index is an unmanaged index (with no defined investment
objective) of common stocks, includes reinvestment of dividends, and is a
registered trademark of Standard & Poor's Corporation.
14
<PAGE>
WARBURG PINCUS U.S. CORE EQUITY FUND
SCHEDULE OF INVESTMENTS
FEBRUARY 28, 1999
(UNAUDITED)
NUMBER
OF SHARES VALUE
--------- -----------
COMMON STOCKS -- 98.7%
AGRICULTURE -- 1.2%
Archer-Daniels-Midland ...................... 53,300 $ 806,162
------------
AUTOMOTIVE -- 3.8%
Ford Motor .................................. 43,400 2,574,162
------------
COMPUTERS, SOFTWARE & SERVICING-- 12.3%
BMC Software, Inc.** ........................ 46,300 1,892,512
Cisco Systems, Inc.** ....................... 12,800 1,252,000
Dell Computer Corp.** ....................... 10,400 833,300
EMC Corp.** ................................. 11,800 1,208,025
Microsoft Corporation** ..................... 21,200 3,182,650
------------
8,368,487
------------
CONGLOMERATES -- 5.1%
General Electric Co. ........................ 34,400 3,450,750
------------
CONSTRUCTION & BUILDING MATERIALS-- 3.5%
Fluor Corp.# ................................ 27,300 960,619
Sherwin Williams Co. ........................ 59,900 1,441,344
------------
2,401,963
------------
CONSUMER PRODUCTS & SERVICES -- 3.4%
Clorox Company .............................. 9,600 1,135,800
Newell Co. .................................. 27,000 1,147,500
------------
2,283,300
------------
ELECTRONICS -- 4.7%
Intel Corp. ................................. 26,500 3,178,344
------------
ENERGY & OIL EXPLORATION -- 8.1%
Apache Corp. ................................ 69,700 1,389,644
DTE Energy .................................. 43,400 1,714,300
Edison International ........................ 24,300 619,650
Exxon Corporation ........................... 13,200 878,625
Unocal Corp. ................................ 31,500 887,906
------------
5,490,125
------------
FINANCIAL SERVICES -- 17.3%
Allstate Corporation ........................ 19,500 731,250
Chase Manhattan Corp. (The) ................. 11,000 875,875
Lehman Brothers Holdings
Inc. ...................................... 41,100 2,178,300
Merrill Lynch ............................... 22,100 1,696,175
National City Corp. ......................... 29,500 2,061,312
SLM Holding Corp. ........................... 37,300 1,599,238
Transamerica Corp. .......................... 36,400 2,641,275
------------
11,783,425
------------
FOOD & BEVERAGE -- 1.5%
McDonald's Corp. ............................ 11,900 1,011,500
------------
HEALTH CARE -- 2.8%
Medtronic, Inc. ............................. 27,400 1,935,125
------------
INDUSTRIAL GOODS & MATERIALS -- 5.2%
Dover Corporation ........................... 42,500 1,445,000
Illinois Tool Works, Inc. ................... 30,100 2,069,375
------------
3,514,375
------------
NUMBER
OF SHARES VALUE
--------- -----------
METALS & MINING -- 1.8%
Aluminum Company of
America# .................................. 31,000 $ 1,255,500
------------
PHARMACEUTICALS -- 9.6%
Bristol-Myers Squibb ........................ 14,800 1,863,875
Merck & Co. ................................. 28,500 2,329,875
Schering-Plough ............................. 28,000 1,566,250
Warner Lambert Co. .......................... 10,700 738,969
------------
6,498,969
------------
PUBLISHING & INFORMATION SERVICES -- 2.9%
Gannett Company, Inc. ....................... 31,200 1,981,200
------------
RETAIL -- 8.3%
Kroger Co. .................................. 34,700 2,244,656
Wal-Mart Stores# ............................ 39,200 3,385,900
------------
5,630,556
------------
TELECOMMUNICATIONS -- 7.2%
Ameritech Corp. ............................. 40,700 2,660,763
BellSouth Corp. ............................. 18,000 832,500
Sprint Corp. ................................ 16,300 1,398,744
------------
4,892,007
------------
TOTAL COMMON STOCKS
(Cost $59,266,950) ........................ $ 67,055,950
------------
PAR
(000)
-------
SHORT-TERM INVESTMENT -- 1.4%
BBH Grand Cayman U.S.
Dollar Time Deposit
4.250% 03/01/99 ........................... $ 969 $ 969,000
------------
(Cost $969,000)
TOTAL INVESTMENTS -- 100.1%
(Cost $60,235,950*) ....................... $ 68,024,950
LIABILITIES IN EXCESS OF
OTHER ASSETS-- (0.1%) ..................... (66,643)
------------
TOTAL NET ASSETS -- 100.0% .................. $ 67,958,307
============
* Cost for Federal income tax purposes at February 28, 1999 is $60,242,867.
The gross appreciation (depreciation) on a tax basis is as follows:
Gross Appreciation ....................................... $ 9,813,128
Gross Depreciation ....................................... (2,031,045)
------------
Net Appreciation ......................................... $ 7,782,083
============
** Non-income producing securities.
# Security or a portion thereof is out on loan.
See Accompanying Notes to Financial Statements.
15
<PAGE>
WARBURG PINCUS GLOBAL TELECOMMUNICATIONS FUND
PORTFOLIO MANAGERS' LETTER
April 20, 1999
Dear Shareholders:
We are pleased to report on the results of the Warburg Pincus Global
Telecommunications Fund (the "Fund") for the fiscal half-year ended February 28,
1999.
At February 28, 1999, the net asset value ("NAV") of the Fund was $31.17,
compared to an NAV of $20.54 on August 31, 1998. As a result, the Fund's total
return was 66.9% (assuming the reinvestment of dividends and distributions
totaling $2.84 per share). By comparison, the MSCI Telecommunications Index
returned 38.2% during the same period.
We attribute the Fund's outstanding performance to a combination of two factors.
The first was our decision to substantially overweight the portfolio's exposure
to developed markets relative to emerging markets. Although most of the latter
enjoyed vigorous rallies in the fiscal half-year, their telecom stocks did not
generally perform as well as those in the developed world. We diversified the
portfolio's developed holdings across North America and Europe, and largely
avoided Japan and the other major Asian markets.
The second positive contributor to performance was stock selection. Within North
America and Europe, we emphasized the shares of companies in the wireless,
electronic commerce, Internet and data networking sectors. Notably strong
performers included America Online, Yahoo, Inc. and Lucent Technologies in the
U.S.; JDS Fitel Inc. in Canada; Nokia Corp. in Finland; Mannesmann AG in
Germany; Olivetti S.p.A. in Italy; and COLT Telecom Group and Vodafone in the
United Kingdom.
There were several bright spots in the Fund's emerging markets allocation as
well. Our holdings in OTE, Greece's largest telecom provider, disproportionately
benefited from the period's enthusiastic buying in the Greek market. In Mexico,
we focused on Telefonos de Mexico, which participated in the overall buoyancy of
Mexican stocks. We also fared well with our ongoing position in Global
TeleSystems Group Inc., a young company that provides a broad range of telecom
services throughout Western and Central Europe.
As developments occur in the telecommunications industry or at Credit Suisse
Asset Management that we believe would be of interest to you, we will be sure to
keep you informed. Meanwhile, if you have questions, please feel free to call
upon us at any time.
Sincerely yours,
Credit Suisse Asset Management Global Telecommunications Management Team
William P. Sterling, Managing Director
Steven D. Bleiberg, Managing Director
Richard W. Watt, Managing Director
James A. Abate, Director
Stephen R. Waite, Director
Emily Alejos, Director
Robert B. Hrabchak, Director
INTERNATIONAL INVESTING ENTAILS SPECIAL RISK CONSIDERATIONS, INCLUDING CURRENCY
FLUCTUATIONS, LOWER LIQUIDITY, ECONOMIC AND POLITICAL RISKS, AND DIFFERENCES IN
ACCOUNTING METHODS. SINCE THE FUND FOCUSES ITS INVESTMENTS ON COMPANIES INVOLVED
IN TELECOMMUNICATIONS, AN INVESTMENT IN THE FUND MAY INVOLVE A GREATER DEGREE OF
RISK THAN AN INVESTMENT IN OTHER MUTUAL FUNDS THAT SEEK CAPITAL APPRECIATION BY
INVESTING IN A BROADER MIX OF ISSUES. MORE INFORMATION ABOUT THE FUND, INCLUDING
CHARGES AND EXPENSES AND THE SPECIAL RISK CONSIDERATIONS ASSOCIATED WITH A
SINGLE-INDUSTRY FUND, IS PROVIDED IN THE PROSPECTUS.
16
<PAGE>
WARBURG PINCUS GLOBAL TELECOMMUNICATIONS FUND
PORTFOLIO MANAGERS' LETTER (CONCLUDED)
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN THE WARBURG PINCUS GLOBAL
TELECOMMUNICATIONS COMMON SHARES AND THE MSCI TELECOMMUNICATIONS INDEX 1 FROM
INCEPTION (12/4/96) AND AT EACH QUARTER END. (UNAUDITED)
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
WARBURG PINCUS
GLOBAL MORGAN STANLEY
TELECOMMUNICATIONS COMPOSITE INDEX
FUND TELECOMMUNICATIONS
12/04/96 $10,000 $10,000
02/28/97 10,787 10,253
05/31/97 11,460 10,727
08/31/97 11,533 10,729
11/30/97 12,859 12,107
02/28/98 15,178 13,864
05/31/98 16,664 15,022
08/31/98 14,461 15,079
11/30/98 19,460 17,255
02/28/99 24,138 20,840
Note:Past performance is not predictive of future performance. Investment return
and principle value of an investment will fluctuate so that an investor's shares
upon redemption may be worth more or less than their original cost.
1 The Morgan Stanley Telecommunications Index is an unmanaged index (with no
defined investment objective) of telecommunciations equities that include
reinvestment of dividends and is compiled by Morgan Stanley Capital
International.
17
<PAGE>
WARBURG PINCUS GLOBAL TELECOMMUNICATIONS FUND
SCHEDULE OF INVESTMENTS
FEBRUARY 28, 1999
(UNAUDITED)
NUMBER
OF SHARES VALUE
--------- -----------
COMMON STOCKS -- 80.9%
BELGIUM -- 1.3%
Telinfo NV .................................. 550 $ 87,180
------------
BRAZIL -- 11.5%
Telecomunicacoes Brasileiras
S.A. ADR** .................................. 12,300 794,119
------------
CANADA -- 4.9%
BCE, Inc. ................................... 1,017 41,125
JDS Fitel Inc.** ............................ 4,400 188,003
Teleglobe, Inc. ............................. 1,469 45,932
Teleglobe, Inc. ADR ......................... 2,119 66,484
------------
341,544
------------
FINLAND -- 1.1%
Nokia Corp. ADR ............................. 550 74,594
------------
GERMANY -- 1.2%
Mannesmann AG ............................... 619 83,712
------------
GREECE -- 1.6%
Panafon Hellenic Telecom
SA** ...................................... 3,520 112,289
------------
ITALY -- 4.5%
Olivetti S.p.A.** ........................... 16,879 51,879
Telecom Italia S.p.A. ....................... 12,624 132,893
Telecom Italia Savings Shares
S.p.A. .................................... 18,660 125,972
------------
310,744
------------
JAPAN -- 4.2%
Nippon Telegraph & Telephone
Corp. ..................................... 35 288,495
------------
NETHERLANDS -- 3.6%
Equant N.V.** ............................... 3,484 251,264
------------
SWEDEN -- 0.8%
Telefonaktiebolaget L.M.
Ericsson ADR ............................... 2,054 53,404
------------
UNITED KINGDOM -- 8.8%
ARM Holdings plc** .......................... 4,311 165,231
COLT Telecom Group plc
ADR** ..................................... 4,063 302,693
Energis plc** ............................... 3,666 88,094
Orange plc** ................................ 3,885 56,232
------------
612,250
------------
UNITED STATES -- 37.4%
Airtouch Communications,
Inc.** .................................... 1,016 92,519
America Online** ............................ 2,304 204,912
At Home Corp. Series A**# ................... 1,174 124,591
AT&T Corp. .................................. 1,572 129,100
Broadcom Corp. Cl. A** ...................... 1,312 78,966
Century Communications Corp.
Cl. A** ................................... 3,681 127,685
NUMBER
OF SHARES VALUE
--------- -----------
UNITED STATES -- (CONTINUED)
Cisco Systems** ............................. 1,497 $ 146,425
Comcast Corp. - Special Cl. A ............... 1,152 81,720
Global Crossing Ltd.** ...................... 1,421 83,839
Global Telesystems Group,
Inc.**# ................................... 1,500 83,250
Lucent Technologies ......................... 1,493 151,633
MCI WorldCom, Inc.** ........................ 3,895 321,337
MediaOne Group, Inc.** ...................... 1,042 56,789
Motorola, Inc. .............................. 800 56,200
Network Appliance, Inc.** ................... 2,640 110,880
Newbridge Networks Corp.** .................. 1,600 39,000
SBC Communications Inc. ..................... 2,421 128,010
Sprint Corp. (FON Group) .................... 521 44,708
Sprint Corp. (PCS Group)** .................. 2,008 64,256
Tele-Communications Liberty
Media, Inc. Cl. A ......................... 1,000 53,875
Tele-Communications, Inc.
Cl. A** ................................... 845 53,077
Teligent, Inc. Cl. A** ...................... 2,392 94,036
Time Warner Inc. ............................ 1,897 122,357
Uniphase Corp.** ............................ 1,152 101,520
Yahoo, Inc.** ............................... 266 40,831
------------
2,591,516
------------
TOTAL COMMON STOCKS
(Cost $5,172,464) ......................... $ 5,601,111
------------
PAR
(000)
-------
SHORT-TERM INVESTMENT -- 16.7%
BBH Grand Cayman U.S Dollar
Time Deposit
4.250% 03/01/99 ........................... $ 1,159 $ 1,159,000
------------
(Cost $1,159,000)
TOTAL INVESTMENTS -- 97.6%
(Cost $6,331,464*) ........................ $ 6,760,111
OTHER ASSETS IN EXCESS
OF LIABILITIES-- 2.4% ..................... 169,442
------------
TOTAL NET ASSETS -- 100.0% .................. $ 6,929,553
============
* Cost for Federal income tax purposes at February 28, 1999 is $6,334,133.
The gross appreciation (depreciation) on a tax basis is as follows:
Gross Appreciation ....................................... $ 539,243
Gross Depreciation ....................................... (113,265)
------------
Net Appreciation ......................................... $ 425,978
============
** Non-income producing securities.
# Security or a portion thereof is out on loan.
See Accompanying Notes to Financial Statements.
18
<PAGE>
WARBURG PINCUS SELECT ECONOMIC VALUE EQUITY FUND
PORTFOLIO MANAGERS' LETTER
April 20, 1999
Dear Shareholders:
We are writing to report on the results of the Warburg Pincus Select Economic
Value Equity Fund (the "Fund") for the fiscal half-year ended February 28, 1999.
At February 28, 1999, the net asset value ("NAV") of the Fund's Institutional
shares was $17.63, compared to an NAV of $13.17 on August 31, 1998. As a result,
the Institutional shares' total return was 34.1% (assuming the reinvestment of
dividends and distributions totaling $0.02 per share). By comparison, the
Standard & Poor's 500 Index 1 (the "Index") returned 30.3% during the same
period.
At February 28, 1999, the NAV of the Fund's Common shares was $17.62, compared
to an NAV of $15.95 at their inception of investment operations on October 30,
1998. The Common shares' total return between October 30, 1998 and February 28,
1999 thus was 10.6% (assuming the reinvestment of dividends and distributions
totaling $0.02 per share). By comparison, the Index returned 13.2% during the
same period.
The Fund outperformed the Index benchmark due to effective stock selection,
notably in technology, basic materials and health care:
[BULLET] TECHNOLOGY. We built a large overweight position in semiconductor
manufacturers and equipment makers that were selling at overly
depressed valuations and would benefit from falling interest rates and
improved economic conditions (particularly technology spending). This
strategy paid off, as semiconductor stocks enjoyed an extraordinary
rally during 1998's fourth quarter and well into 1999.
[BULLET] BASIC MATERIALS. We heavily overweighted cyclical companies such as
producers of metals and paper, based on such companies' historically
low relative valuations; our belief that their prices already
reflected considerable negative expectations; and their tremendous
earnings leverage if commodity prices go up. Fortunately, we were
right, and our favorable stock selection enhanced the positive effect
of the overweighting.
[BULLET] HEALTH CARE. We maintained the Fund's largest single sector exposure
during the period in health care, primarily makers of pharmaceuticals
and medical equipment. Many of these stable-growth companies performed
especially well in late 1998.
As developments occur that we believe would be of interest to you, we
will keep you informed. Meanwhile, if you have any questions about your
portfolio or the capital markets generally, please feel free to call upon us at
any time.
Sincerely yours,
Credit Suisse Asset Management Select Economic Value Equity Management Team
William W. Priest, Jr., CEO and Managing Director
John B. Hurford, Managing Director
James A. Abate, Director and Portfolio Manager
D. Susan Everly, Vice President
James J. Mecca, Vice President
1 The S&P 500 Index is an unmanaged index (with no defined investment
objective) of common stocks, includes reinvestments of dividends, and is a
registered trademark of Standard & Poor's Corporation.
19
<PAGE>
WARBURG PINCUS SELECT ECONOMIC VALUE EQUITY FUND
SCHEDULE OF INVESTMENTS
FEBRUARY 28, 1999
(UNAUDITED)
NUMBER
OF SHARES VALUE
--------- -----------
COMMON STOCKS -- 99.6%
AGRICULTURE -- 5.5%
Archer-Daniels-Midland ...................... 67,475 $ 1,020,559
Monsanto Co. ................................ 18,300 833,794
------------
1,854,353
------------
CHEMICALS -- 2.1%
E. I. du Pont de Nemours and
Co. ....................................... 14,100 723,506
------------
COMPUTERS, SOFTWARE & SERVICING -- 1.8%
I2 Technologies** ........................... 22,680 565,582
Metacreations Corp.** ....................... 8,740 56,264
------------
621,846
------------
CONSUMER PRODUCTS & SERVICES -- 3.4%
Fruit of the Loom, Inc.** ................... 23,990 304,373
Gillette Co. (The) .......................... 15,900 852,637
------------
1,157,010
------------
ELECTRONICS -- 6.1%
Atmel Corp.** ............................... 17,300 297,344
Motorola, Inc. .............................. 20,400 1,433,100
National Semiconductor
Corp.** ................................... 30,850 323,925
------------
2,054,369
------------
ENERGY & OIL EXPLORATION -- 13.9%
Anadarko Petroleum .......................... 6,200 170,500
Apache Corp. ................................ 15,200 303,050
Chevron Corp. ............................... 13,580 1,043,962
Exxon Corporation ........................... 18,340 1,220,756
Noble Affiliates, Inc. ...................... 11,400 257,925
Talisman Energy** ........................... 9,985 156,640
Texaco, Inc. ................................ 9,320 433,962
Union Pacific Resources Group,
Inc. ...................................... 42,420 379,129
Unocal Corp. ................................ 8,180 230,574
USX-Marathon Group .......................... 25,300 523,394
------------
4,719,892
------------
FINANCIAL SERVICES -- 7.7%
American International Group,
Inc. ...................................... 9,000 1,025,437
Bank of Montreal ............................ 7,600 314,450
BankAmerica Corporation ..................... 5,600 365,750
Royal Bank of Canada ........................ 11,100 538,350
Toronto Dominion Bank (The) ................. 8,700 358,875
------------
2,602,862
------------
NUMBER
OF SHARES VALUE
----------- -----------
FOOD & BEVERAGE -- 2.6%
Coca-Cola Co. (The) ......................... 13,900 $ 888,731
------------
HEALTH CARE -- 14.0%
Boston Scientific Corp.** ................... 27,980 741,470
Centocor, Inc.** ............................ 4,600 191,187
Columbia/HCA Healthcare
Corp. ..................................... 43,500 777,562
Guidant Corp. ............................... 7,400 421,800
Health Management Associates,
Inc.** .................................... 43,800 566,663
Medtronic, Inc. ............................. 12,300 868,688
Merck & Co., Inc. ........................... 14,460 1,182,105
------------
4,749,475
------------
METALS & MINING -- 8.1%
Aluminum Company of
America ................................... 11,940 483,570
Barrick Gold ................................ 33,090 585,279
Cominco Ltd. ................................ 12,600 170,888
Homestake Mining ............................ 34,500 316,969
Inco, Ltd. .................................. 29,850 376,856
Newmont Mining .............................. 46,480 801,780
------------
2,735,342
------------
PAPER & FOREST PRODUCTS -- 1.1%
Champion International ...................... 3,980 147,260
Georgia Pacific Corporation ................. 2,900 212,425
------------
359,685
------------
PHARMACEUTICALS -- 14.1%
American Home Products
Corp. ..................................... 5,800 345,100
Bristol-Meyers Squibb ....................... 4,000 503,750
Coulter Pharmaceutical, Inc.** .............. 3,540 72,128
Eli Lilly and Company ....................... 6,700 634,406
Mylan Laboratories Inc. ..................... 25,000 682,813
Pfizer Inc. ................................. 8,270 1,091,123
Schering-Plough Corp. ....................... 13,760 769,700
Watson Pharmaceuticals, Inc.** .............. 14,130 682,656
------------
4,781,676
------------
See Accompanying Notes to Financial Statements.
20
<PAGE>
WARBURG PINCUS SELECT ECONOMIC VALUE EQUITY FUND (CONCLUDED)
NUMBER
OF SHARES VALUE
--------- -----------
RETAIL -- 10.0%
Home Depot, Inc. ............................ 13,800 $ 823,688
J.C. Penney Company, Inc. ................... 15,980 577,278
Sears, Roebuck & Co. ........................ 19,000 771,875
Wal-Mart Stores ............................. 14,110 1,218,751
------------
3,391,592
------------
TELECOMMUNICATIONS -- 9.2%
AT&T Corp. .................................. 9,800 804,825
Bell Atlantic Corp. ......................... 11,900 683,506
BellSouth Corp. ............................. 7,600 351,500
MCI WorldCom, Inc.** ........................ 9,300 767,250
SBC Communications, Inc. .................... 10,000 528,750
------------
3,135,831
------------
TOTAL COMMON STOCKS
(Cost $33,126,722) ........................ $ 33,776,170
------------
TOTAL INVESTMENTS -- 99.6%
(Cost $33,126,722*) ....................... $ 33,776,170
OTHER ASSETS IN EXCESS
OF LIABILITIES-- 0.4% ..................... 125,006
------------
TOTAL NET ASSETS -- 100.0% .................. $ 33,901,176
============
* Cost for Federal income tax purposes at February 28, 1999 is $33,140,769.
The gross appreciation (depreciation) on a tax basis is as follows:
Gross Appreciation ....................................... $ 2,594,577
Gross Depreciation ....................................... (1,959,176
------------
Net Appreciation ......................................... $ 635,401)
============
** Non-income producing securities.
See Accompanying Notes to Financial Statements.
21
<PAGE>
WARBURG PINCUS LONG-SHORT MARKET NEUTRAL FUND
PORTFOLIO MANAGERS' LETTER
April 20, 1999
Dear Shareholders:
We are writing to report on the results of the Warburg Pincus Long-Short Market
Neutral Fund (the "Fund") for the fiscal half-year ended February 28, 1999.
At February 28, 1999, the net asset value ("NAV") of the Fund's Institutional
shares was $14.89, compared to an NAV of $15.27 on August 31, 1998. As a result,
the Institutional shares' total return was down 1.2% (assuming the reinvestment
of dividends and distributions totaling $0.20 per share). By comparison, the
Salomon Smith Barney U.S. One-Month Treasury Bill Index 1 (the "Index") returned
2.0% during the same period.
At February 28, 1999, the NAV of the Fund's Common shares was $14.88, compared
to an NAV of $15.19 at their inception of investment operations on September 8,
1998. The Common shares' total return between September 8, 1998 and February 28,
1999 thus was down 0.7% (assuming the reinvestment of dividends and
distributions totaling $0.20 per share). By comparison, the Index returned 1.9%
during the same period.
The Fund's underperformance of its Index benchmark was primarily due to our
emphasis on two of the five "drivers" that we believe contribute most to
appreciation in stock prices. The first of these was good valuation, which was
attractively low for many companies following the global sell-off in equities in
the summer of 1998. The second was improvement both in earnings strength and
earnings expectations. Unfortunately for the Fund, we chose to highlight these
drivers during a period when investors appeared to be much more concerned with
choosing an investment theme for the market than with selecting stocks on the
basis of company fundamentals.
Among individual holdings, returns were particularly strong for two long
positions: Broadcom, a manufacturer of bandwidth-enhancing semiconductor chips
that started the period with a relatively reasonable valuation and whose
earnings growth was accelerating; and Southwest Airlines Co., whose emphasis on
cost-efficiency helped its earnings to grow faster than those of its peers. A
short position that proved particularly unsuccessful was Netscape
Communications. We sold this stock short based on its extraordinarily high
valuation and rapidly declining fundamentals, but it rose significantly on the
news that America Online intended to acquire it.
As developments occur that we believe would be of interest to you, we will keep
you informed. Meanwhile, if you have any questions about your portfolio or the
capital markets generally, please feel free to call upon us at any time.
Sincerely yours,
Credit Suisse Asset Management Structured Equity Management Team
William W. Priest, Jr., CEO and Managing Director
Eric N. Remole, Managing Director
Marc E. Bothwell, Vice President
Michael A. Welhoelter, Vice President
INVESTING IN SHARES OF THE FUND CAN BE MORE VOLATILE AND RISKY THAN SOME OTHER
FORMS OF INVESTMENTS. IN ADDITION, IF THE ADVISER TAKES LONG POSITIONS IN STOCKS
THAT DECLINE OR SHORT POSITIONS IN STOCKS THAT INCREASE IN VALUE, THEN LOSSES OF
THE FUND MAY EXCEED THOSE OF OTHER STOCK MUTUAL FUNDS THAT HOLD LONG POSITIONS
ONLY.
1 Monthly return equivalents of yield averages which are not marked to market.
The 1 month T-Bill index consists of the last 1 month T-Bill issues.
22
<PAGE>
WARBURG PINCUS LONG-SHORT MARKET NEUTRAL FUND
SCHEDULE OF INVESTMENTS
FEBRUARY 28, 1999
(UNAUDITED)
NUMBER
OF SHARES VALUE
--------- -----------
COMMON STOCKS -- 86.7%
AIR TRANSPORT -- 3.5%
Continental Airlines, Inc.
Cl. B** ................................... 10,400 $ 360,100
Southwest Airlines Co. ...................... 18,900 569,362
------------
929,462
------------
AUTOMOTIVE -- 10.0%
Ford Motor Co. .............................. 5,900 349,944
General Motors Corp. ........................ 6,600 544,913
Johnson Controls, Inc. ...................... 18,900 1,162,350
Navistar International Corp. ................ 14,400 619,200
------------
2,676,407
------------
BUSINESS SERVICES -- 0.2%
Robert Half International, Inc. ............. 1,800 64,800
------------
CHEMICALS -- 2.7%
Air Products & Chemicals,
Inc. ...................................... 12,200 391,925
Lyondell Petrochemical Co. .................. 24,800 331,700
------------
723,625
------------
COMMUNICATIONS & MEDIA -- 1.7%
A. H. Belo Corp. Cl. A ...................... 18,900 342,562
CBS Corp. ................................... 2,700 99,562
Comsat Corp. ................................ 600 17,550
------------
459,674
------------
COMPUTERS, SOFTWARE & SERVICING-- 1.8%
Cadence Design Systems** .................... 5,000 120,312
GTECH Holdings** ............................ 4,100 92,762
Microsoft Corp. ............................. 1,800 270,225
------------
483,299
------------
CONSTRUCTION & BUILDING MATERIALS-- 3.8%
Caterpillar, Inc. ........................... 2,300 104,794
Ingersoll-Rand Co. .......................... 8,600 408,500
Lafarge Corp. ............................... 8,600 274,125
Masco Corp. ................................. 8,600 225,750
------------
1,013,169
------------
CONSUMER PRODUCTS -- 2.0%
Avon Products ............................... 7,200 299,700
Nu Skin Enterprises, Inc.** ................. 11,300 235,888
------------
535,588
------------
ELECTRIC UTILITIES -- 2.8%
Niagara Mohawk Power ........................ 19,800 289,575
Pinnacle West Capital ....................... 12,600 455,175
------------
744,750
------------
NUMBER
OF SHARES VALUE
--------- -----------
ELECTRONICS -- 5.3%
Broadcom Corp.** ............................ 3,600 $ 216,675
Linear Technology Corp. ..................... 22,600 990,163
Teradyne, Inc. .............................. 1,400 66,675
UtiliCorp United Inc. ....................... 4,000 137,500
------------
1,411,013
------------
ENTERTAINMENT -- 1.3%
Clear Channel
Communications ............................ 5,900 354,000
------------
FINANCIAL SERVICES -- 15.8%
AmSouth Bancorporation ...................... 6,800 319,600
Chubb Corp. (The) ........................... 900 53,775
Equitable Companies ......................... 1,800 121,613
Fannie Mae .................................. 800 56,000
First Union Corp. ........................... 1,800 95,963
Hartford Financial Services,
Inc. ...................................... 1,800 97,313
J.P. Morgan & Co. Inc. ...................... 3,600 401,175
Jefferson-Pilot Corp. ....................... 5,900 400,094
Lehman Brothers Holdings
Inc. ...................................... 10,800 572,400
Old Republic International .................. 2,600 48,913
Regions Financial Corp. ..................... 7,200 273,600
SLM Holding ................................. 8,600 368,725
T. Rowe Price Associates, Inc. .............. 5,400 166,388
Transamerica Corp. .......................... 10,800 783,675
20th Century Industries ..................... 5,900 112,838
UnionBanCal Corp. ........................... 10,800 339,525
------------
4,211,597
------------
FOOD & BEVERAGE -- 5.1%
Coors, (Adolph) Cl. B ....................... 6,800 405,025
Fleming Companies, Inc. ..................... 47,300 348,838
SUPERVALU Inc. .............................. 2,000 48,125
Tootsie Roll Industries ..................... 1,800 82,800
U.S. Foodservice** .......................... 10,000 464,375
------------
1,349,163
------------
GAS UTILITIES -- 0.3%
Peoples Energy .............................. 2,300 78,056
------------
HEALTH CARE -- 3.0%
Aetna Inc. .................................. 2,600 192,563
Shared Medical Systems
Corp. ..................................... 1,400 71,400
Stryker Corp. ............................... 2,300 108,675
Wellpoint Health Networks,
Inc.** .................................... 5,400 425,925
------------
798,563
------------
See Accompanying Notes to Financial Statements.
23
<PAGE>
WARBURG PINCUS LONG-SHORT MARKET NEUTRAL FUND (CONTINUED)
NUMBER
OF SHARES VALUE
--------- -----------
MANUFACTURING -- 2.9%
Aeroquip-Vickers, Inc. ..................... 4,100 $ 232,163
Honeywell Inc. .............................. 4,500 314,719
Tyco International Ltd. ..................... 3,000 223,313
------------
770,195
------------
METALS & MINING -- 2.1%
Bethlehem Steel Corp. ....................... 11,300 99,581
Freeport-McMoran Copper &
Gold, Inc. Cl. B .......................... 17,600 166,100
Phelps Dodge Corp. .......................... 2,700 130,950
Ryerson Tull, Inc. .......................... 8,600 156,950
------------
553,581
------------
OIL & GAS EXPLORATION -- 2.9%
Cooper Cameron Corp.** ...................... 6,800 157,250
Helmerich & Payne ........................... 23,000 375,188
Smith International, Inc. ................... 5,000 121,563
Tidewater Inc. .............................. 6,300 118,519
------------
772,520
------------
OIL SERVICES -- 1.8%
PennzEnergy Co. ............................. 21,600 202,500
Pennzoil-Quaker State Co. ................... 21,600 268,650
------------
471,150
------------
PHARMACEUTICALS -- 0.2%
Bergen Brunswig Corp. ....................... 1,900 46,431
------------
PUBLISHING & INFORMATION SERVICES -- 0.4%
Donnelley (R.R.) & Sons Co. ................. 2,800 95,900
------------
REAL ESTATE -- 1.5%
Host Marriott Corp. ......................... 5,869 63,459
Kimco Realty ................................ 5,200 197,275
Simon Debartolo Group ....................... 5,900 150,081
------------
410,815
------------
RENTALS -- 0.3%
Hertz Corp. ................................. 1,800 71,663
------------
RETAIL -- 6.6%
Dayton Hudson Corp. ......................... 2,700 168,919
Dollar Tree Stores** ........................ 2,300 92,000
Federated Department Stores,
Inc.** .................................... 2,300 87,544
Office Depot.** ............................. 15,300 546,019
Sears Roebuck & Co. ......................... 2,300 93,438
TJX Companies ............................... 26,600 759,763
------------
1,747,683
------------
NUMBER
OF SHARES VALUE
--------- -----------
TELECOMMUNICATIONS -- 7.9%
AirTouch Communications** ................... 1,400 $ 127,488
AT&T Corp. .................................. 9,500 780,188
General Instrument Corp.** .................. 11,300 330,525
Northern Telecom Ltd. ....................... 2,700 156,769
Tellabs, Inc.** ............................. 7,200 576,450
Vitesse Semiconductor
Corp.** .................................. 3,200 147,000
------------
2,118,420
------------
WASTE MANAGEMENT -- 0.8%
Browning-Ferris Industries .................. 7,200 226,800
----------
TOTAL COMMON STOCKS
(Cost $22,115,475) ........................ $ 23,118,324
------------
SECURITIES SOLD SHORT -- (85.8%)
AEROSPACE & DEFENSE -- (2.9%)
Lockheed Martin Corp. ....................... (20,600) $ (776,363)
------------
AGRICULTURE -- (2.4%)
IMC Global, Inc. ............................ (10,300) (205,356)
Pioneer Hi-Bred International ............... (18,900) (442,969)
------------
(648,325)
------------
AIR TRANSPORT -- (1.2%)
Delta Air Lines, Inc. ....................... (4,500) (273,656)
US Airways Group, Inc. ...................... (1,100) (52,113)
------------
(325,769)
------------
AUTOMOTIVE -- (0.6%)
Autoliv, Inc. ............................... (1,300) (49,400)
Genuine Parts Co. ........................... (3,600) (107,775)
------------
(157,175)
------------
BUILDING & BUILDING MATERIALS-- (3.2%)
Armstrong World Industries .................. (8,500) (418,094)
Home Depot, Inc. (The) ...................... (2,700) (161,156)
Johns Manville Corp. ........................ (10,300) (180,894)
Lennar Corp. ................................ (3,600) (83,475)
------------
(843,619)
------------
BUSINESS SERVICES -- (1.4%)
ACNielsen Corp. ............................. (4,500) (117,000)
Electronic Data Systems
Corp. ..................................... (5,400) (251,100)
------------
(368,100)
------------
CHEMICALS -- (0.2%)
Cabot Corp. ................................. (2,200) (55,413)
------------
See Accompanying Notes to Financial Statements.
24
<PAGE>
WARBURG PINCUS LONG-SHORT MARKET NEUTRAL FUND (CONTINUED)
NUMBER
OF SHARES VALUE
--------- -----------
COMMUNICATIONS & MEDIA -- (2.3%)
Time Warner, Inc. ........................... (4,500) $ (290,250)
Univision Communications,
Inc. - Cl. A .............................. (2,200) (89,650)
USA Networks, Inc. .......................... (5,800) (230,550)
------------
(610,450)
------------
COMPUTERS, SOFTWARE & SERVICING -- (0.3%)
Hewlett-Packard Co. ......................... (1,200) (79,725)
------------
CONGLOMERATES -- (1.0%)
General Electric Co. ........................ (2,700) (270,844)
------------
CONSUMER PRODUCTS -- (3.1%)
Fruit of the Loom, Inc., Cl. A ............. (7,600) (96,425)
Gillette Co. ................................ (7,600) (407,550)
Whitman Corp. ............................... (17,100) (324,900)
------------
(828,875)
------------
ELECTRIC UTILITIES -- (2.8%)
Unicom Corp. ................................ (8,600) (305,838)
Wisconsin Energy Corp. ...................... (17,100) (437,119)
------------
(742,957)
------------
ELECTRONICS -- (7.9%)
Atmel Corp. ................................. (40,000) (687,500)
General Motors Corp. Cl-H ................... (28,000) (1,321,250)
Vishay Intertechnology ...................... (6,700) (86,681)
------------
(2,095,431)
------------
FINANCIAL SERVICES -- (17.5%)
American Financial Group .................... (13,900) (513,431)
Bank America Corp. .......................... (21,500) (1,404,219)
Capital One Financial
Corporation ............................... (1,300) (165,913)
CCB Financial Corp. ......................... (3,600) (186,975)
Morgan Stanley Dean Witter
Discover & Co. ............................ (10,800) (977,400)
People's Bank/Connecticut ................... (7,200) (201,600)
Providian Financial Corp. ................... (5,400) (551,475)
Union Planters Corporation .................. (7,600) (343,425)
Wachovia Corp. .............................. (4,000) (340,250)
Wesco Financial Corp. ....................... (200) (69,288)
------------
(4,753,976)
------------
HEALTH CARE -- (0.4%)
Humana, Inc. ................................ (3,600) (63,000)
United Healthcare ........................... (1,100) (54,244)
------------
(117,244)
------------
INDUSTRIAL GOODS & MATERIALS -- (0.4%)
Owens-Illinois, Inc. ........................ (2,200) (52,663)
UNIFI Inc. ................................. (4,500) (54,281)
------------
(106,944)
------------
NUMBER
OF SHARES VALUE
--------- -----------
MEDICAL EQUIPMENT -- (7.3%)
Beckman Coulter, Inc. ....................... (13,000) $ (628,063)
Perkin Elmer ................................ (11,900) (1,127,525)
Raychem Corp. ............................... (8,100) (184,781)
------------
(1,940,369)
------------
METALS & MINING -- (0.7%)
Battle Mountain Gold ........................ (53,000) (178,875)
------------
OFFICE EQUIPMENT & SUPPLIES -- (1.9%)
Harland (John H.) Co. ....................... (36,900) (495,844)
------------
OIL & GAS EXPLORATION -- (1.5%)
Baker Hughes, Inc. .......................... (13,500) (243,000)
USX - Marathon Group ........................ (7,600) (157,225)
------------
(400,225)
------------
OIL SERVICES -- (2.6%)
Amerada Hess Corp. .......................... (13,900) (630,713)
Dynegy Inc. ................................ (4,500) (54,000)
------------
(684,713)
------------
PAPER & FOREST PRODUCTS -- (4.4%)
Georgia Pacific ............................. (14,400) (1,054,800)
Kimberly-Clark Corp. ........................ (2,200) (103,950)
------------
(1,158,750)
------------
PHARMACEUTICALS -- (1.6%)
Dura Pharmaceuticals ........................ (6,700) (94,219)
Forest Laboratories, Inc. ................... (4,500) (222,469)
Monsanto Co. ................................ (2,200) (100,238)
------------
(416,926)
------------
REAL ESTATE -- (2.2%)
Archstone Communities Trust ................. (5,400) (105,638)
Vornado Realty Trust ........................ (13,700) (470,938)
------------
(576,576)
------------
RECREATION -- (1.8%)
Brunswick Corp. ............................. (22,000) (468,875)
------------
RETAIL -- (5.2%)
Bausch & Lomb, Inc. ......................... (2,700) (162,844)
Black & Decker Corp. ........................ (1,000) (48,750)
Circuit City Stores ......................... (3,500) (189,875)
Gap, Inc. ................................... (4,000) (258,750)
General Nutrition ........................... (19,300) (258,138)
Ikon Office Solutions ....................... (24,700) (348,888)
Tele-Communications Liberty
Media, Inc. Cl-A .......................... (2,200) (118,525)
------------
(1,385,770)
------------
See Accompanying Notes to Financial Statements.
25
<PAGE>
WARBURG PINCUS LONG-SHORT MARKET NEUTRAL FUND (CONCLUDED)
NUMBER
OF SHARES VALUE
--------- -----------
TELECOMMUNICATIONS -- (5.8%)
Andrew Corp. ................................ (3,600) $ (54,450)
Cabletron Systems, Inc. ..................... (16,200) (131,625)
Citizens Utilities Co. Cl. B ................ (9,100) (69,388)
Frontier Corp. .............................. (12,600) (452,813)
MCI WorldCom, Inc. .......................... (800) (66,000)
McLeodUSA, Inc. Class A ..................... (18,400) (708,400)
Qwest Communications
International, Inc. ....................... (900) (55,294)
------------
(1,537,970)
------------
TOBACCO -- (0.4%)
UST, Inc. ................................... (3,600) (106,425)
------------
TRANSPORTATION -- (0.8%)
FDX Corp. ................................... (900) (85,950)
Wisconsin Central
Transportation Corp. ...................... (9,000) (123,750)
------------
(209,700)
------------
WASTE MANAGEMENT -- (2.0%)
Republic Industries, Inc. ................... (43,600) (534,100)
------------
TOTAL SECURITIES SOLD SHORT
(Proceeds $21,993,870) .................... $(22,876,328)
------------
TOTAL INVESTMENTS -- 0.9%
(Cost $121,605*) $ 241,996
OTHER ASSETS IN EXCESS
OF LIABILITIES-- 99.1% .................... 26,423,257
------------
TOTAL NET ASSETS-- 100.0% ................... $ 26,665,253
============
* Cost for Federal income tax purposes at February 28, 1999 is $381,079. The
gross appreciation (depreciation) on a tax basis is as follows:
Gross Appreciation - Investments ......................... $ 2,078,157
Gross Depreciation - Investments ......................... (1,282,845)
Gross Appreciation - Short Sales ......................... 1,152,435
Gross Depreciation - Short Sales ......................... (2,086,830)
------------
Net Depreciation ....................................... $ (139,083)
============
** Non-income producing securities.
See Accompanying Notes to Financial Statements.
26
<PAGE>
WARBURG PINCUS LONG-SHORT EQUITY FUND
PORTFOLIO MANAGERS' LETTER
April 20, 1999
Dear Shareholders:
We are writing to report on the results of the Warburg Pincus Long-Short Equity
Fund (the "Fund") for the fiscal half-year ended February 28, 1999.
At February 28, 1999, the NAV of the Fund's Institutional shares was $16.76,
compared to an NAV of $15.00 at their inception of investment operations on
September 11, 1998. As a result, the Institutional shares' total return between
September 11, 1998 and February 28, 1999 was 14.7% (assuming the reinvestment of
dividends and distributions totaling $0.45 per share). By comparison, the
Standard & Poor's 500 Index 1 (the "Index") returned 27.2% during the same
period.
At February 28, 1999, the NAV of the Fund's Common shares was $16.74, compared
to an NAV of $15.72 at their inception of investment operations on October 30,
1998. The Common shares' total return between October 30, 1998 and February 28,
1999 thus was 9.3% (assuming the reinvestment of dividends and distributions
totaling $0.45 per share). By comparison, the Index returned 13.2% during the
same period.
The Fund underperformed its Index benchmark due to two factors:
[BULLET] As a young portfolio that was (and is) small and growing, the Fund
experienced disproportionate volatility as it absorbed comparatively
substantial new investments. We fully expect that the Fund's relative
performance will more closely track that of the Warburg Pincus
Long-Short Market Neutral Fund, whose shares form its primary asset,
as the Fund continues to grow larger.
[BULLET] We emphasized two of the five "drivers" that we believe contribute
most to appreciation in stock prices. The first of these was
valuation, which was attractively low for many companies following the
global sell-off in equities in the summer of 1998. The second was
improvement both in earnings strength and earnings expectations.
Unfortunately for the Fund, we chose to highlight these drivers during
a period when investors appeared to be much more concerned with
choosing an investment theme for the market than with selecting stocks
on the basis of company fundamentals.
As developments occur that we believe would be of interest to you, we will keep
you informed. Meanwhile, if you have any questions about your portfolio or the
capital markets generally, please feel free to call upon us at any time.
Sincerely yours,
Credit Suisse Asset Management Structured Equity Management Team
William W. Priest, Jr., CEO and Managing Director
Eric N. Remole, Managing Director
Marc E. Bothwell, Vice President
Michael A. Welhoelter, Vice President
INVESTING IN SHARES OF THE FUND CAN BE MORE VOLATILE AND RISKY THAN SOME OTHER
FORMS OF INVESTMENTS. IN ADDITION, IF THE ADVISER TAKES LONG POSITIONS IN STOCKS
THAT DECLINE OR SHORT POSITIONS IN STOCKS THAT INCREASE IN VALUE, THEN THE
LOSSES OF THE FUND MAY EXCEED THOSE OF OTHER STOCK MUTUAL FUNDS THAT HOLD LONG
POSITIONS ONLY.
1 The S&P Index is an unmanaged index (with no defined investment objective) of
common stocks, includes reinvestments of dividends, and is a registered
trademark of Standard & Poor's Corporation.
27
<PAGE>
WARBURG PINCUS LONG-SHORT EQUITY FUND
SCHEDULE OF INVESTMENTS
FEBRUARY 28, 1999
(UNAUDITED)
NUMBER
OF SHARES VALUE
--------- -----------
COMMON STOCK -- 2.1%
MISCELLANEOUS -- 2.1%
Standard & Poor's Depositary
Receipts (Spiders) ........................ 200 $ 24,737
------------
(Cost $21,537)
INVESTMENT COMPANY -- 69.4%
Warburg Pincus Long-Short
Market Neutral Fund,
Institutional Shares ...................... 54,871 817,034
------------
(Cost $834,014)
TOTAL INVESTMENTS -- 71.5%
(Cost $855,551*) .......................... $ 841,771
OTHER ASSETS IN EXCESS OF
LIABILITIES-- 28.5% ....................... 335,430
------------
TOTAL NET ASSETS -- 100.0% .................. $ 1,177,201
============
* Cost for Federal income tax purposes at February 28, 1999 is $856,961. The
gross appreciation (depreciation) on a tax basis is as follows:
Gross Appreciation ....................................... $ 3,201
Gross Depreciation ....................................... (18,391)
------------
Net Depreciation ......................................... $ (15,190)
=============
See Accompanying Notes to Financial Statements.
28
<PAGE>
WARBURG PINCUS U.S. CORE FIXED INCOME FUND
PORTFOLIO MANAGERS' LETTER
April 20, 1999
Dear Shareholders:
We are writing to report on the results of the Warburg Pincus U.S. Core Fixed
Income Fund (the "Fund") for the fiscal half-year ended February 28, 1999.
At February 28, 1999, the net asset value ("NAV") of the Fund's Institutional
shares was $15.43, compared to an NAV of $15.72 on August 31, 1998. As a result,
the Institutional shares' total return was 2.4% (assuming the reinvestment of
dividends and distributions totaling $0.67 per share). By comparison, the Lehman
Brothers Aggregate Bond Index (the "Index") returned 1.6% during the same
period.
At February 28, 1999, the NAV of the Fund's Common shares was $15.42, compared
to an NAV of $15.68 at their inception of investment operations on October 30,
1998. The Common shares' total return between October 30, 1998 and February 28,
1999 thus was 1.2% (assuming the reinvestment of dividends and distributions
totaling $0.45 per share). By comparison, the Index was down 0.2% during the
same period.
The Fund outperformed the Index benchmark during the fiscal half-year due to our
overweighting in "spread product" -- debt securities whose market valuation is
driven by the difference, known as the "spread," between their yields and those
of U.S. Treasury debt. This was in marked contrast to the previous six months,
when the same commitment to spread product resulted in relative
underperformance.
We maintained our spread product positions through the earlier period because we
believed that they represented attractive fundamental value and would eventually
recover. Our patience was rewarded in the fourth quarter of 1998, as yield
spreads contracted and spread-based sectors, therefore, generated healthy gains.
[BULLET] MORTGAGE-BACKED SECURITIES. Our decisions to slightly underweight
mortgage-backed securities early in the fourth quarter and then
heavily overweight them later, after prices fell, proved especially
effective.
[BULLET] MUNICIPAL BONDS. For some time, we have maintained exposure to
municipal bonds, whose valuations relative to comparable Treasuries
have been at historically low levels. Valuations of our municipal
holdings finally recovered somewhat in late 1998 and early 1999.
[BULLET] CORPORATE BONDS. Two aspects of our approach to corporates enhanced
the Fund's return. We overweighted credit duration, for example, which
helped as investment-grade issues strengthened. Security selection was
also a positive, as our positions in Fuji Finance, Ltd., Worldcom,
Inc. and Chase Manhattan Bank Corp. all did especially well.
[BULLET] BELOW INVESTMENT-GRADE. We added to our position in domestic high
yield early in the fourth quarter, when global fixed income markets
were at their most volatile. The sector rebounded toward year-end
along with global financial markets more generally. Emerging market
debt rebounded in October and November, helped by easier U.S. monetary
policy and positive news from Brazil.
[BULLET] NON-US$ HOLDINGS. Toward the end of 1998, we purchased a put option on
Japanese government bonds, based on our belief that deteriorating
conditions in Japan would cause bond prices to fall. The Fund
benefited accordingly, as yields on 10-year JGBs dramatically rose
(and nearly tripled at one point).
As developments occur in the fixed income markets or here at Credit Suisse Asset
Management that we believe would be of interest to you, we will be sure to keep
you informed. Meanwhile, if you have questions, please feel free to call upon us
at any time.
Sincerely yours,
Credit Suisse Asset Management Fixed Income Management Team
Robert J. Moore, Managing Director
William P. Sterling, Managing Director
Gregg M. Diliberto, Managing Director
Robert W. Justich, Managing Director
Mark K. Silverstein, Managing Director
Ira Edelblum, Director
Jo Ann Corkran, Director
29
<PAGE>
WARBURG PINCUS U.S. CORE FIXED INCOME FUND
PORTFOLIO MANAGERS' LETTER (CONCLUDED)
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN THE WARBURG PINCUS U.S.
CORE FIXED INCOME INSTITUTIONAL SHARES AND THE LEHMAN BROTHERS AGGREGATE BOND
INDEX 1 FROM INCEPTION (3/31/94) AND AT EACH QUARTER END. (UNAUDITED)
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
WARBURG PINCUS
U.S. CORE LEHMAN BROTHERS
FIXED INCOME AGGREGATE BOND
INSTITUTIONAL SHARES INDEX
04/01/94 $10,000 $10,000
05/31/94 9,913 9,999
08/31/94 10,017 10,188
11/30/94 9,812 10,007
02/28/95 10,204 10,520
05/31/95 10,864 11,148
08/31/95 11,078 11,342
11/30/95 11,475 11,775
02/29/96 11,590 11,809
05/31/96 11,464 11,638
08/31/96 11,658 11,806
11/30/96 12,328 12,488
02/28/97 12,420 12,442
05/31/97 12,567 12,607
08/31/97 13,001 12,991
11/30/97 13,327 13,437
02/28/98 13,670 13,735
05/31/98 13,898 13,985
08/31/98 14,011 14,364
11/30/98 14,372 14,706
02/28/99 14,335 14,594
Note:Past performance is not predictive of future performance. Investment return
and principle value of an investment will fluctuate so that an investor's shares
upon redemption may be worth more or less than their original cost.
1 The Lehman Brothers Aggregate Bond Index is composed of the Lehman
Government/Corporate Index and the Mortgage-Backed Securities Index and
includes treasury issues, agency issues, corporate bond issues, and
mortgage-backed securities. Total return comprises price
appreciation/depreciation and income as a percentage of the original
investment. Indexes are rebalanced monthly by market capitalization.
30
<PAGE>
WARBURG PINCUS U.S. CORE FIXED INCOME FUND
SCHEDULE OF INVESTMENTS
FEBRUARY 28, 1999
(UNAUDITED)
PAR
(000) VALUE
------- -----------
CORPORATE BONDS -- 34.9%
AEROSPACE/DEFENSE -- 0.0%
Boeing Co. Debentures
7.500% 08/15/42 ........................... $ 150 $ 161,438
------------
AUTOMOTIVE -- 0.1%
Hayes Lemmerz International,
Inc. 144A Sr. Sub. Notes
8.250% 12/15/08 ........................... 430 435,375
Hayes Wheels International, Inc.
Gtd. Notes
11.000% 07/15/06 .......................... 75 83,625
------------
519,000
------------
BANKING -- 6.5%
Bangko Sentral Pilipinas,
Yankee Bonds
8.600% 06/15/27 ........................... 1,300 1,124,500
BankBoston N.A. Notes
6.375% 04/15/08 ........................... 610 593,225
Bay View Capital Corp.
Sub. Notes
9.125% 08/15/07 ........................... 990 959,062
Chase Manhattan Bank Corp.
Sub. Notes
6.750% 09/15/06 ........................... 630 639,450
6.375% 04/01/08 ........................... 600 599,250
7.250% 06/01/07 ........................... 490 513,275
Cie. Financiered Paribas
Sub. Notes
6.950% 07/22/13 ........................... 680 671,500
Citicorp Sub. Notes, Series F
6.375% 11/15/08 ........................... 2,140 2,121,275
Credit Lyonnais
Perpetual Sub. Variable Rate
Notes, Rule 144A
6.563%+/+++ ............................... 2,780 2,425,550
First Republic Bank
Sub. Notes
7.750% 09/15/12 ........................... 2,070 1,974,262
ForeningsSparbanken AB
Perpetual Sr. Sub. FRN
5.976%+/+++ ............................... 980 958,538
Fuji Finance (Cayman), Ltd.
Medium Term Notes
7.300%+/+++ ............................ 730 416,100
Perpetual Sub. Notes
5.801%+/+++ ............................ 820 467,400
Fuji JGB Investment LLC,
Noncumulative Preferred
Securities, Series A
9.870% 06/30/99+ .......................... 2,350 1,835,820
Okobank Perpetual Medium
Term FRN
5.739%+/+++ ............................... 1,970 1,891,200
PAR
(000) VALUE
--------- -----------
BANKING -- (CONTINUED)
Santander Financial Issuances
Perpetual Sub. FRN
6.213%+/+++ ............................... $ 750 $ 682,537
Skandinaviska Enskilda Banken,
Sub. Notes
6.625%+/+++ ............................. 2,280 2,233,169
Perpetual Sub. FRN
7.500%+/+++ ............................. 1,905 1,802,759
144A Perpetual Sub. FRN
6.500% 12/29/49 ......................... 2,200 2,083,400
Sovereign Bancorp Sr. Notes
6.750% 07/01/00 ........................... 185 186,156
------------
24,178,428
------------
BROADCASTING -- 1.1%
Chancellor Media Corp.
144A Sr. Sub. Notes
8.000% 11/01/08 ........................... 225 238,500
Fox/Liberty Network LLC.,
Sr. Discount Notes
8.875% 08/15/07 ........................... 1,360 1,419,500
Granite Broadcasting Corp.
144A Sr. Sub. Notes
8.875% 05/15/08 ........................... 145 143,912
Turner Broadcasting Systems, Inc.
Sr. Notes
7.400% 02/01/04 ........................... 2,120 2,231,300
------------
4,033,212
------------
BUILDING MATERIALS -- 0.1%
Jackson Products, Inc. Notes
9.500% 04/15/05 ........................... 345 344,137
------------
CABLE -- 0.8%
Classic Cable
Sr. Sub. Notes
9.875% 08/01/08 ........................... 150 157,875
CSC Holdings Inc.,
Sr. Notes
7.875% 12/15/07 ........................... 1,405 1,485,787
7.250% 07/15/08 ........................... 310 315,425
Diamond Cable
Communications plc
Yankee Sr. Discount Notes
10.750% 02/15/07++ ........................ 800 616,000
James Cable Partners L.P.,
Sr. Notes, Series B
10.750% 08/15/04 .......................... 325 344,094
Videotron Holdings Plc
Yankee Sr. Discount Notes
11.000% 08/15/05 .......................... 95 85,144
------------
3,004,325
------------
See Accompanying Notes to Financial Statements.
31
<PAGE>
WARBURG PINCUS U.S. CORE FIXED INCOME FUND (CONTINUED)
PAR
(000) VALUE
------- -----------
ENERGY -- 2.0%
CMS Energy Corp.
Medium Term Notes
6.750% 01/15/04 ........................... $ 230 $ 224,250
Crown Central Petroleum
Sr. Notes
10.875% 02/01/05 .......................... 150 136,687
Forcenergy, Inc.
Sr. Sub. Notes
8.500% 02/15/07 ........................... 115 42,262
Korea Electric Power,
Yankee Notes
7.000% 10/01/02 ........................ 1,700 1,634,125
Global Unsubordinated Notes
6.375% 12/01/03 ........................ 50 46,375
Yankee Debentures
7.000% 02/01/27 ........................ 1,575 1,458,844
LASMO (USA), Inc.
Gtd. Debentures
7.300% 11/15/27 ........................... 25 22,187
Petroleum Geo-Services ASA
Yankee Sr. Notes
7.125% 03/30/28 ........................... 805 719,469
Sibneft, Loan Participation
Notes
9.000% 08/15/00+ .......................... 455 118,300
Valero Energy Corp.
144A Putable Asset Trusts
6.750% 12/15/02 ........................... 1,820 1,822,275
YPF S.A.
Sr. Notes
7.250% 03/15/03 ........................ 175 166,469
Notes
8.000% 02/15/04 ........................ 1,250 1,209,375
------------
7,600,618
------------
ENTERTAINMENT -- 2.3%
Regal Cinemas, Inc.
Sr. Sub. Notes
9.500% 06/01/08 ........................... 300 300,000
TV Guide, Inc.
Sr. Sub. Notes
8.125% 03/01/09 ........................... 400 397,500
Time Warner, Inc.
Debentures
8.050% 01/15/16 ........................ 1,875 2,090,625
6.850% 01/15/26 ........................ 3,970 4,173,462
Notes
9.125% 01/15/13 ........................ 1,220 1,499,075
------------
8,460,662
------------
PAR
(000) VALUE
------- -----------
FINANCIAL SERVICES -- 4.9%
American General Institutional
Capital Trust Co.
144A Gtd. Notes, Series B
8.125%+++ ................................. $ 2,160 $ 2,430,000
Associates Corp. of North
America Sr. Debentures
5.960% 05/15/37 ........................... 195 195,487
AT&T Capital Corp.
Medium Term Note, Series 4
6.920% 04/29/99 ........................... 815 815,731
6.410% 08/13/99 ........................... 155 155,133
6.470% 12/03/99 ........................... 950 951,459
6.480% 12/03/99 ........................... 2,730 2,734,389
BellSouth Capital Funding Corp.
Debentures
6.040% 11/15/26 ........................... 2,975 3,027,062
Ford Motor Credit Corp.
5.800% 01/12/09 ........................... 2,615 2,530,012
Industrial Credit & Investment
Corp.
144A Yankee Medium
Term Notes
7.550% 08/15/07 ........................... 40 34,500
L'Auxiliare du Credit Foncier
de France
Gtd. Notes
5.281% 03/25/99+ .......................... 2,200 2,143,570
5.000% 04/20/99+ .......................... 155 149,381
Long Island Savings Bank, Inc.
Notes
7.000% 06/13/02 ........................... 1,040 1,055,600
Prudential Insurance Co. of
America
144A Capital Notes
6.875% 04/15/03 ........................ 1,600 1,632,000
144A Sr. Notes
6.375% 07/23/06 ........................ 350 341,687
------------
18,196,011
------------
FOOD & BEVERAGE -- 0.2%
Archibald Candy Corp.
144A Gtd. Sr. Secured Notes
10.250% 07/01/04 .......................... 400 408,000
Arisco Productos Alimenticios
S.A. Gtd. Notes
10.750% 05/22/05 .......................... 340 197,200
Pantry, Inc.
Sr. Sub. Notes
10.250% 10/15/07 .......................... 215 224,406
------------
829,606
------------
See Accompanying Notes to Financial Statements.
32
<PAGE>
WARBURG PINCUS U.S. CORE FIXED INCOME FUND (CONTINUED)
PAR
(000) VALUE
------- -----------
HEALTH CARE -- 2.3%
Columbia/HCA Healthcare
Corp., Debentures
8.360% 04/15/24 ........................... $ 1,485 $ 1,372,882
Merck & Co., Inc.
Medium Term Notes Series B
5.760% 05/03/37 ........................... 7,130 7,031,963
------------
8,404,845
------------
INDUSTRIAL GOODS & MATERIALS -- 1.3%
Dresser Industries, Inc.
Debentures
7.600% 08/15/49 ........................... 1,785 1,936,725
Motors & Gears, Inc.,
Sr. Notes, Series D
10.750% 11/15/06 .......................... 270 277,088
PSINet, Inc.
Sr. Notes
11.500% 11/01/08 .......................... 220 246,400
Seagate Technology, Inc.
Sr. Debentures
7.450% 03/01/37 ........................... 2,230 2,079,475
Wheeling-Pittsburgh Corp.
144A Sr. Notes
9.250% 11/15/07 ........................... 215 210,969
------------
4,750,657
------------
PACKAGING/CONTAINERS -- 0.0%
Crown Packaging Enterprises Ltd.
Yankee Sr. Secured
Discount Notes
14.000% 08/01/06 .......................... 550 6,188
------------
PAPER & FOREST PRODUCTS -- 0.1%
Fort James Corp. Notes
6.234% 03/15/01 ........................... 330 326,700
P.T. Indah Kiat Pulp & Paper Corp.
Sr. Secured Notes
8.875% 11/01/00 ........................... 280 201,250
Repap New Brunswick
Sr. Secured Debentures
10.625% 04/15/05 .......................... 35 26,425
------------
554,375
------------
PUBLISHING & INFORMATION SERVICES -- 0.7%
Belo (A.H.) Corp.
Sr. Notes
6.875% 06/15/02 ........................... 2,635 2,690,994
------------
REAL ESTATE -- 0.3%
EOP Operating L.P.
Mandatory Par Put
Remarketed Securities
6.376% 02/15/02 ........................... 1,295 1,265,863
------------
PAR
(000) VALUE
------- -----------
RESTAURANTS, HOTELS & CASINOS -- 0.2%
Circus Circus Enterprise
Sr. Sub. Notes
9.250% 12/01/05 ........................... $ 210 $ 213,938
HMH Properties, Inc.
Sr. Notes
8.450% 12/01/08 ........................... 250 248,125
Hyatt Equities LLC
144A Medium Term Notes
6.800% 05/15/00 ........................... 230 232,013
------------
694,076
------------
RETAIL TRADE -- 0.6%
K Mart Corp.
Notes
7.950% 02/01/23 ........................ 420 416,850
Pass Through Certificates,
Series 1995 Class K3
8.540% 01/02/15 ........................ 1,626 1,573,355
Pathmark Stores
Sr. Sub Notes
9.625% 05/01/03 ........................... 160 161,400
Phillips Van-Heusen Corp.
Sr. Sub. Notes
9.500% 05/01/08 ........................... 145 146,269
------------
2,297,874
------------
TELECOMMUNICATIONS -- 6.2%
Adelphia Communications Corp.
144A Sr. Notes
8.375% 02/01/08 ........................ 180 187,650
Sr. Notes, Series B
9.250% 10/01/02 ........................ 310 329,375
BellSouth Telecommunications, Inc.
Debentures
5.850% 11/15/45 ........................... 950 954,750
7.000% 12/01/45 ........................... 255 264,881
CenCall Communications Corp.
Sr. Discount Notes
10.125% 01/15/04 .......................... 425 431,375
CS Wireless Systems, Inc.
Sr. Discount Notes, Series B
11.375% 03/01/06++ ........................ 1,040 208,000
Echostar DBS Corp.
Sr. Notes
9.250% 02/01/06 ........................... 420 424,200
Global Communicacoes e
Participacoes S.A.
144A Par Bonds
10.625% 12/05/08 .......................... 670 371,850
GTE Corp. Debentures
6.840% 04/15/18 ........................... 1,120 1,141,000
6.940% 04/15/28 ........................... 1,160 1,193,350
GTE North, Inc.
Debentures, Series D
6.900% 11/01/08 ........................... 395 418,206
See Accompanying Notes to Financial Statements.
33
<PAGE>
WARBURG PINCUS U.S. CORE FIXED INCOME FUND (CONTINUED)
PAR
(000) VALUE
------- -----------
TELECOMMUNICATIONS -- (CONTINUED)
Intermedia Communication Inc.
Sr. Notes, Series B
8.500% 01/15/08 ........................... $ 220 $ 206,800
ITC Deltacom, Inc.
144A Sr. Notes
11.000% 06/01/07 .......................... 225 246,375
Level 3 Communications, Inc.,
144A Sr. Notes
9.125% 05/01/08 ........................... 440 429,000
MCI Communications Corp.
Sr. Discount Notes
6.125% 04/15/10+ .......................... 1,615 1,619,038
McleodUSA, Inc.
144A Sr. Notes
8.125% 02/15/09 ........................... 130 129,025
Metromedia Fiber Network
144A Sr. Notes
10.000% 11/15/08 .......................... 190 199,500
Nextel Communications, Inc.
Sr. Redeemable Discount
Notes
9.950% 02/15/08++ ..................... 785 502,400
10.650% 09/15/07++ ..................... 1,380 938,400
Sr. Discount Notes
9.750% 08/15/04++ ...................... 2,850 2,899,875
9.750% 10/31/07++ ...................... 225 146,813
NEXTLINK Communications, Inc.
Sr. Notes
9.625% 10/01/07 ........................ 220 218,350
144A Sr. Notes
10.750% 11/15/08 ....................... 310 321,625
Paging Network, Inc.,
Sr. Sub. Notes
8.875% 02/01/06 ....................... 70 59,500
10.000% 10/15/08 ....................... 570 495,900
Notes Callable
10.125% 08/01/07 ....................... 800 696,000
Qwest Communications
144A Sr. Notes Callable
7.250% 11/01/08 ........................... 310 321,625
TCI Communications Inc.
Notes
6.340% 02/01/02 ........................... 1,585 1,602,831
Telefonica de Argentina
144A Medium Term Notes
9.125% 05/07/08 ........................... 850 782,000
Teleport Communications
Group, Inc.
Sr. Discount Notes
9.650% 03/31/27 ........................... 1,445 1,721,356
Wireless One, Inc.
Sr. Discount
Notes
13.500% 08/01/06++ ........................ 635 57,150
PAR
(000) VALUE
------- -----------
TELECOMMUNICATIONS -- (CONTINUED)
Worldcom, Inc.
Sr. Notes
8.875% 01/15/06 ........................... $ 2,120 $ 2,281,650
6.950% 08/15/28 ........................... 1,225 1,254,094
------------
23,053,944
------------
TRANSPORTATION -- 2.8%
Continental Airlines, Inc.
Sr. Notes
9.500% 12/15/01 ........................... 1,755 1,844,944
Delco Remy International, Inc.
Gtd. Sr. Sub Notes
10.625% 08/01/06 .......................... 220 235,400
Grupo Transportacion Ferroviaria
Mexicana, S.A. de C V.
Yankee Gtd. Sr. Notes
11.750% 06/15/09 .......................... 2,465 1,318,775
Norfolk Southern Corp.
Notes
7.875% 02/15/04 ........................... 5 5,350
7.050% 05/01/04 ........................... 2,250 2,382,188
Northwest Airlines, Inc.,
Gtd. Notes
7.875% 03/15/08 ........................... 290 260,638
7.625% 03/15/05 ........................... 3,065 2,819,800
US Airways, Inc.,
Gtd. Sr. Notes
9.625% 02/01/01 ........................... 1,710 1,752,647
------------
10,619,742
------------
UTILITIES -- 2.3%
Beaver Valley Funding Corp.
Secured Lease Obligation Bonds
9.000% 06/01/17 ........................... 2,370 2,577,375
Connecticut Light and Power Co.
First Mortgage Bonds, Series C
7.750% 06/01/02 ........................ 1,060 1,090,475
First Mortgage Bonds, Series D
7.875% 10/01/24 ........................ 720 747,900
Niagara Mohawk Power Corp.
First Mortgage Bonds
8.750% 04/01/22 ........................... 1,110 1,155,788
North Atlantic Energy Corp.
Secured First Mortgage Notes,
Series A
9.050% 06/01/02 ........................... 1,556 1,569,615
TU Electric Capital V,
Capital Securities
8.175% 01/30/37 ........................... 1,410 1,484,025
------------
8,625,178
------------
See Accompanying Notes to Financial Statements.
34
<PAGE>
WARBURG PINCUS U.S. CORE FIXED INCOME FUND (CONTINUED)
PAR
(000) VALUE
------- -----------
WASTE MANAGEMENT -- 0.1%
Allied Waste North America,
Sr. Notes
7.875% 01/01/09 ........................ $ 185 $ 187,313
Allied Waste North America,
Gtd. Notes
7.375% 01/01/04 ........................ 30 30,450
------------
217,763
------------
TOTAL CORPORATE BONDS
(Cost $133,536,480) ....................... $130,508,936
------------
MUNICIPAL BONDS -- 2.1%
Florida State Board of Education,
Capital Outlay GO, Series B
4.750% 06/01/23 ........................... $ 705 $ 675,919
Illinois State GO
4.750% 06/01/23 ........................... 850 796,875
Massachusetts State Water
Resources Authority, General
Revenue Bonds, Series A
4.750% 08/01/27 ........................... 960 900,000
Massachussetts Bay
Transportation Authority,
General Transportation
Systems Revenue Bonds,
Series A
4.750% 03/01/21 ........................... 765 727,706
Metropolitan Transit Authority,
NY Dedicated Tax Fund,
Series A
4.750% 04/01/28 ........................... 260 246,025
Nevada State General Obligation
(Municipal Bond Bank Project
Numbers 65 & R-6)
4.750% 05/15/26 ........................... 1,000 940,000
New Jersey Economic
Development Authority, State
Pension Funding Revenue Bonds
0.000% 02/15/09 ........................ 155 83,119
Series B
0.000% 02/15/01 ........................ 320 286,000
0.000% 02/15/02 ........................ 165 138,600
0.000% 02/15/03 ........................ 1,085 858,506
New York City Municipal Water
Finance Authority, Water and
Sewer Systems Revenue Bond,
Series D
4.750% 06/15/25 ......................... 395 375,250
4.750% 06/15/25 ......................... 735 698,250
PAR
(000) VALUE
--------- -----------
MUNICIPAL BONDS -- (CONTINUED)
Ohio State Turnpike Commission,
Series B
4.750% 02/15/28 ........................... $ 530 $ 503,500
Tampa, FL Health Systems
Revenue Bond
4.750% 11/15/28 ........................... 45 42,356
Triborough Bridge & Tunnel
Authority NY, Series A
4.750% 01/01/24 ........................... 500 476,875
------------
TOTAL MUNICIPAL BONDS
(Cost $7,759,207) ......................... $7,748,981
------------
FOREIGN GOVERNMENT BONDS -- 4.3%
Federal Republic of Brazil,
Discount Bond, Series Z- L
6.125% 04/15/24 ........................... $ 560 $ 312,200
Republic of Argentina, Sr. Notes
12.163% 04/10/05+ ......................... 2,180 1,940,200
Republic of Colombia,
Yankee Notes
10.986% 08/13/05 .......................... 2,575 2,317,500
Republic of Philippines,
Global Bonds
9.875% 01/15/19 ........................... 1,025 1,018,594
Republic of Poland,
Past Due Interest Bonds
5.000% 10/27/14++ ......................... 1,050 954,844
5.000% 10/27/14++ ......................... 8,420 7,656,938
United Mexican States Par Bonds,
Series W-A
6.250% 12/31/19 ........................... 2,650 1,985,844
------------
TOTAL FOREIGN
GOVERNMENT BONDS
(Cost $16,034,861) ........................ $ 16,186,120
------------
AGENCY OBLIGATIONS -- 47.3%
FEDERAL HOME LOAN MORTGAGE CORPORATION -- 0.5%
Various Pools:
6.500% 07/01/99 ........................... $ 51 $ 51,730
7.000% 12/01/09 ........................... 667 681,138
Series MACR 1860 Principle Only
0.000% 02/15/24 ........................... 1,505 1,055,744
------------
TOTAL FEDERAL HOME
LOAN MORTGAGE
CORPORATION ............................... $ 1,788,612
------------
See Accompanying Notes to Financial Statements.
35
<PAGE>
WARBURG PINCUS U.S. CORE FIXED INCOME FUND (CONTINUED)
PAR
(000) VALUE
------- -----------
FEDERAL NATIONAL MORTGAGE ASSOCIATION -- 40.9%
Various Pools:
10.000% 02/01/05 .......................... $ 183 $ 194,053
10.000% 01/01/10 .......................... 838 907,352
6.000% 10/01/28 ........................... 12,572 12,195,253
6.000% 01/01/29 ........................... 4,137 4,012,611
6.000% 01/01/29 ........................... 11,200 10,864,001
REMIC - PAC 1991-165 Class M
8.250% 12/25/21 ........................... 12 12,656
Series 1996-5 Class PX PO
0.000% 11/25/23 ........................... 198 139,399
Series 1997-16 Class M PO
0.000% 02/25/23 ........................... 170 117,513
TBA
6.000% 01/15/11 ........................... 14,980 14,834,881
6.500% 05/01/13 ........................... 7,665 7,715,302
8.000% 03/15/25 ........................... 34,330 35,713,928
6.000% 04/15/25 ........................... 53,060 51,435,038
6.500% 09/01/27 ........................... 14,960 14,866,500
------------
TOTAL FEDERAL NATIONAL
MORTGAGE ASSOCIATION ...................... $153,008,487
------------
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION -- 5.0%
Various Pools:
6.500% 09/15/03 ........................... $ 6 $ 6,008
8.250% 08/15/04 ........................... 1 524
9.000% 11/15/04 ........................... 1 876
9.000% 12/15/04 ........................... 1 759
8.250% 04/15/06 ........................... 1 1,243
13.500% 07/15/14 .......................... 1 913
9.000% 12/15/16 ........................... 25 26,316
8.000% 04/15/17 ........................... 99 103,677
9.000% 08/15/21 ........................... 394 421,237
TBA
6.500% 09/01/25 ........................... 18,460 18,356,163
------------
TOTAL GOVERNMENT
NATIONAL MORTGAGE
ASSOCIATION ............................... $ 18,917,716
------------
MISCELLANEOUS -- 0.9%
Government Trust Certificates
Collateral Trust Series 1C
(Aaa, AAA)
9.250% 11/15/01 ........................... $ 365 $ 375,177
National Archives Facility Trust
COP (Aaa, AAA)
8.500% 09/01/19 ........................... 676 807,713
Tennessee Valley Authority
Debentures, Series B (Aaa, NR)
6.235% 07/15/45 ........................ 60 61,650
Power Bonds Series A (NR, AAA)
5.880% 04/01/36 ........................ 1,980 1,947,825
------------
3,192,365
------------
TOTAL AGENCY OBLIGATIONS
(Cost $178,380,528) ....................... $176,907,180
------------
PAR
(000) VALUE
------- -----------
ASSET BACKED SECURITIES -- 1.3%
Capital Equipment Receivables
Trust Series 1996-1, Class A3
6.110% 07/15/99 ........................... $ 192 $ 191,821
Goldome Credit Corp. Home
Equity Trust Series 1990-1,
Class A
10.000% 07/15/05 .......................... 34 34,570
Green Tree Financial Corp.
Manufactured Housing Retail
Installment Sales Contracts,
Series 1995-6, Class A-3
6.650% 09/15/26 ........................ 1,052 1,060,577
Series 1998-C, Class A-2
6.250% 09/15/26 ........................ 35 34,717
Green Tree Recreational,
Equipment & Consumer Trust
Series 1997-C, Class A1
6.490% 02/15/18 ........................ 566 565,045
Series 1998-B, Class A-3
6.050% 10/15/10 ........................ 1,065 1,068,328
Green Tree Securitized Net
Interest Margin Trust, REMIC,
Series 1994-A, Class A
6.900% 02/15/04 ........................... 582 583,424
Health & Retirement Properties
5.658% 04/09/99+ .......................... 100 99,125
Merrill Lynch Mortgage Investors,
Inc., Manufactured Housing
Retail Installment Sales
Contracts Series 1991-C,
Class A
9.000% 07/15/11 ........................... 38 37,952
National Westminster Bank
Debentures Guaranteed Cap
Notes
9.375% 11/15/03 ........................... 670 743,700
New York City Tax Lien
144A Collateralized Bonds,
Series 1996-1, Class C
7.110% 05/25/05 ........................... 46 45,767
Vanderbilt Mortgage Finance,
Manufactured Housing Retail
Installment Sales Contracts,
Series 1995-B, Class A3
6.675% 05/07/06 ........................... 325 327,152
------------
TOTAL ASSET BACKED
SECURITIES
(Cost $4,813,799) ......................... $ 4,792,178
------------
See Accompanying Notes to Financial Statements.
36
<PAGE>
WARBURG PINCUS U.S. CORE FIXED INCOME FUND (CONTINUED)
PAR
(000) VALUE
------- -----------
COLLATERALIZED MORTGAGED
BACKED SECURITIES -- 3.9%
AESOP Funding II Series 1997-1,
Class A1
6.220% 10/20/01 ........................... $ 720 $ 724,313
Asset Securitization Corp.
Series 1996-MD6, Class A6
7.484% 03/13/99 ........................... 760 727,819
Carousel Center Finance Inc.
Series 1, Class C, Rule 144A
7.527% 11/15/07 ........................... 340 344,554
Cityscape Home Equity Loan
Trust, Home Equity Loan
Certificates Series 1996-2,
Class A2
7.200% 11/15/06 ........................... 291 294,616
Collateralized Mortgage
Obligation Trust, REMIC
Series 54, Class C
9.250% 11/01/13 ........................... 1 1,168
Contimortgage Home Equity
Loan Trust
Series 1996-4, Class A8
7.220% 01/15/28 ........................ 820 824,378
Series 1998-1, Class A5
6.430% 04/15/16 ........................ 1,980 1,987,413
G3 Mortgage Reinsurance Corp.
Class A
6.042% 03/25/99 ........................... 950 886,469
General Motors Acceptance
Corp. Commercial Mortgage
Securities, Inc. Series 1997-C1,
Class A2
6.853% 09/15/06 ........................... 530 554,181
Kidder Peabody Acceptance Corp.
Series 1993-M1, Class A1
7.150% 04/25/25 ........................ 201 200,105
Series 1994-C1, Class A
6.650% 02/01/06 ........................ 390 392,342
Series 1994-C1, Class B
6.850% 02/01/06 ........................ 1,305 1,332,527
New Century Home Equity Loan
Trust Series 1997-NC6,
Class A4
6.730% 07/25/22 ........................... 675 673,192
PaineWebber Mortgage Acceptance
Corp. IV Multifamily Mortgage
Pass-Throughs Series 1995-M1,
Class A 144A
6.700% 01/15/07 ........................... 1,430 1,451,450
PAR
(000) VALUE
------- -----------
COLLATERALIZED MORTGAGED
BACKED SECURITIES -- (CONTINUED)
Residential Reinsurance Ltd.
Series 1998-A2
9.435% 03/01/99 ........................... $ 600 $ 607,200
Salomon Brothers Mortgage
Securities VII, Series 1997-NC4,
Class A
5.198% 03/25/99 ........................... 44 44,387
Southern Pacific Secured Asset
Corp. Home Equity,
Series 1998-1, Class A2
6.270% 03/25/28 ........................... 2,455 2,454,616
Structured Asset Securitization
Corp. Series 1996-CFL,
Class A1C
5.944% 02/25/28 ........................... 362 362,020
UCFC Home Equity Loan
Series 1996-B1, Class A7
8.200% 09/15/27 ........................... 745 765,703
------------
TOTAL COLLATERALIZED
MORTGAGED BACKED
SECURITIES
(Cost $14,747,980) ........................ $ 14,628,453
------------
NUMBER
OF SHARES
---------
COMMON STOCK -- 0.0%
PACKAGING/CONTAINERS -- 0.0%
Crown Packaging Enterprises,
Ltd. ...................................... 45,544 $ 455
------------
TOTAL COMMON STOCK
(Cost $0) ................................. $ 455
------------
PREFERRED STOCKS -- 2.2%
BANKING -- 2.0%
California Federal Capital Corp.
Series A .................................. 94,200 $ 2,490,413
Centaur Funding Corp. ....................... 1,360 1,501,100
Citigroup, Inc. ............................. 37,300 1,902,300
Lehman Brothers Holdings .................... 10,800 461,700
NationsBank Captial Corp. ................... 46,600 1,234,900
------------
7,590,413
------------
REAL ESTATE -- 0.2%
American Real Estate Corp.
8.50% Cumulative, Series A .................. 29,600 771,450
------------
TOTAL PREFERRED STOCKS
(Cost $8,446,853) ......................... $ 8,361,863
------------
See Accompanying Notes to Financial Statements.
37
<PAGE>
WARBURG PINCUS U.S. CORE FIXED INCOME FUND (CONCLUDED)
PAR
(000) VALUE
------- -----------
U.S. TREASURY OBLIGATIONS -- 13.6%
U.S. TREASURY BILLS -- 0.1%
4.365% 04/08/99 ............................. $ 330 $ 327,732
4.280% 04/08/99 ............................. 40 39,751
4.320% 04/08/99 ............................. 100 99,380
------------
466,863
------------
U.S. TREASURY BONDS -- 2.7%
8.000% 11/15/21 ............................. 8,015 10,176,145
------------
U.S. TREASURY INFLATION PROTECTED NOTES -- 1.9%
3.625% 01/15/08 ............................. 7,300 7,258,305
------------
U.S. TREASURY NOTES -- 7.6%
8.500% 02/15/00 ............................. 220 227,090
5.375% 02/15/01 ............................. 12,550 12,606,378
6.625% 06/30/01 ............................. 185 190,872
6.250% 06/30/02 ............................. 6,265 6,453,804
7.500% 02/15/05 ............................. 5 5,537
6.250% 02/15/07 ............................. 8,280 8,719,394
------------
28,203,075
------------
U.S. TREASURY STRIP BONDS -- 1.3%
0.000% 11/15/16 ............................. 3,430 1,197,932
0.000% 05/15/17 ............................. 10,950 3,732,112
------------
4,930,044
------------
TOTAL U.S. TREASURY
OBLIGATIONS
(Cost $51,383,909) ........................ $ 51,034,432
------------
NUMBER
OF SHARES
---------
RIGHTS / WARRANTS -- 0.0%
Capital Pacific Holdings
Group, Inc. ............................... 2,528 $ 1,390
Checkers Drive-In Restaurants ............... 2,642 330
Mexican Value Recovery
Rights .................................... 1,000
Uniroyal Technology Corp. ................... 10,800 69,525
------------
TOTAL RIGHTS / WARRANTS
(Cost $14,178) ............................ $ 71,245
------------
PAR
(000) VALUE
------- -----------
SHORT-TERM INVESTMENTS -- 27.9%
BBH Grand Cayman U.S. Dollar
Time Deposit
4.250% 03/01/99 ........................... $ 46,426 $ 46,426,000
Federal Home Loan Bank
Discount Notes
4.900% 03/18/99 ........................... 9,900 9,876,717
Federal Home Loan Mortgage
Corp. Discount Notes
4.930% 03/17/99 ........................... 48,100 47,992,851
------------
TOTAL SHORT-TERM
INVESTMENTS
(Cost $104,297,700) ....................... $104,295,568
------------
TOTAL INVESTMENTS -- 137.5%
(Cost $519,415,495*) ...................... $514,535,411
LIABILITIES IN EXCESS OF
OTHER ASSETS -- (37.5%) ................... (140,315,168)
------------
TOTAL NET ASSETS -- 100.0% .................. $374,220,243
============
* Cost for Federal income tax purposes at February 28, 1999 is $519,436,781.
The gross appreciation (depreciation) on a tax basis is as follows:
Gross Appreciation ....................................... $ 2,563,176
Gross Depreciation ....................................... (7,464,546)
------------
Net Depreciation ......................................... $ (4,901,370)
============
+ Variable rate obligations -- The interest shown is the rate as of February
28, 1999.
++ Step Bond -- The interest rate as of February 28, 1999 is 0% and will reset
to interest rate shown at a future date.
+++ Securities have no stated maturity date.
INVESTMENT ABBREVIATIONS
FRN ..........................................................Floating Rate Note
MACR .....................Modified and Combinable Real Estate Investment Conduit
PAC ..................................................Planned Amortization Class
REMIC ...................................Real Estate Mortgage Investment Conduit
TBA .............................................................To Be Announced
See Accompanying Notes to Financial Statements.
38
<PAGE>
WARBURG PINCUS STRATEGIC GLOBAL FIXED INCOME FUND
PORTFOLIO MANAGERS' LETTER
April 20, 1999
Dear Shareholders:
We are writing to report on the results of the Warburg Pincus Strategic Global
Fixed Income Fund (the "Fund") for the fiscal half-year ended February 28, 1999.
At February 28, 1999, the net asset value ("NAV") of the Fund's Institutional
shares was $15.26, compared to an NAV of $15.10 on August 31, 1998. As a result,
the Institutional shares' total return was 4.5% (assuming the reinvestment of
dividends and distributions totaling $0.53 per share). By comparison, the
unhedged J.P. Morgan Global Government Bond Index ("GBI") returned 3.9% during
the same period.
At February 28, 1999, the NAV of the Fund's Common shares was $15.25, compared
to an NAV of $16.10 at their inception of investment operations on October 30,
1998. The Common shares' total return between October 30, 1998 and February 28,
1999 thus was down 2.2% (assuming the reinvestment of dividends and
distributions totaling $0.52 per share). By comparison, the GBI was down 3.4%
during the same period.
We attribute the Fund's outperformance of the GBI benchmark during the fiscal
half-year to our positioning of the portfolio in two areas:
SPREAD PRODUCT. Our allocations to "spread product" -- debt securities
whose market valuation is greatly driven by the difference, known as the
"spread," between their yields and those of U.S. Treasury debt -- experienced
strong gains after hurting performance in the second and third quarters of 1998.
This was particularly true in U.S. and emerging market securities.
We maintained our U.S. spread product positions through the earlier periods
because we believed that they represented attractive fundamental value and would
eventually recover. Our patience was rewarded in the final months of 1998 and
early 1999, as yield spreads contracted and prices in spread-based sectors,
therefore, rose. Emerging market debt also revived. Although our allocation to
emerging markets remained modest, the sector's strength was sufficient for it to
meaningfully add to the Fund's return.
JAPAN. Our longstanding underweight in Japan relative to GBI paid off especially
well in December, as Japanese bond yields nearly tripled. We also chose to
remain essentially neutral in our yen currency holdings, which prevented the
Fund from losing ground relative to GBI when the yen strengthened.
As developments occur in the global fixed income markets or at Credit Suisse
Asset Management that we believe would be of interest to you, we will be sure to
keep you informed. Meanwhile, if you have questions, please feel free to call
upon us at any time.
Sincerely yours,
Credit Suisse Asset Management Fixed Income Management Team
Robert J. Moore, Managing Director
William P. Sterling, Managing Director
Gregg M. Diliberto, Managing Director
Robert W. Justich, Managing Director
Mark K. Silverstein, Managing Director
Ira Edelblum, Director
Jo Ann Corkran, Director
INTERNATIONAL INVESTING ENTAILS SPECIAL RISK CONSIDERATIONS, INCLUDING CURRENCY
FLUCTUATIONS, LOWER LIQUIDITY, ECONOMIC AND POLITICAL RISKS, AND DIFFERENCES IN
ACCOUNTING METHODS.
39
<PAGE>
WARBURG PINCUS STRATEGIC GLOBAL FIXED INCOME FUND
PORTFOLIO MANAGERS' LETTER (CONCLUDED)
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN THE WARBURG PINCUS
STRATEGIC GLOBAL FIXED INCOME INSTITUTIONAL SHARES AND THE JP MORGAN GLOBAL
GOVERNMENT BOND INDEX (UNHEDGED)1 FROM INCEPTION (6/27/94), PERIOD ENDED
(7/31/94), AND AT EACH QUARTER END. (UNAUDITED)
WARBURG PINCUS
STRATEGIC GLOBAL JP MORGAN GLOBAL
FIXED INCOME GOVT. BOND INDEX
INSTITUTIONAL SHARES (UNHEDGED)
06/28/94 $10,000 $10,000
07/31/94 10,027 10,115
08/31/94 10,001 10,089
11/30/94 10,045 10,161
02/28/95 10,274 10,659
05/31/95 11,156 11,696
08/31/95 11,072 11,496
11/30/95 11,574 12,003
02/29/96 11,668 11,957
05/31/96 11,831 11,907
08/31/96 12,140 12,283
11/30/96 12,815 12,776
02/28/97 12,531 12,284
05/31/97 12,673 12,408
08/31/97 12,684 12,487
11/30/97 13,006 12,878
02/28/98 13,170 13,089
05/31/98 13,232 13,247
08/31/98 13,215 13,689
11/30/98 14,090 14,560
02/28/99 13,804 14,220
Note:Past performance is not predictive of future performance. Investment return
and principle value of an investment will fluctuate so that an investor's shares
upon redemption may be worth more or less than their original cost.
1 The JP Morgan Global Government Bond Index Unhedged (including U.S. $) is
market-capitalization index consisting of the government bond markets of the
following countries: Australia, Belgium, Canada, Denmark, France, Germany,
Italy, Japan, Netherlands, Spain, Sweden, the U.K. and the U.S. All issues
have a remaining maturity of at least one year and the index is rebalanced
monthly.
40
<PAGE>
WARBURG PINCUS STRATEGIC GLOBAL FIXED INCOME FUND
SCHEDULE OF INVESTMENTS
FEBRUARY 28, 1999
(UNAUDITED)
PAR
(000) VALUE
------- -----------
INTERNATIONAL BONDS -- 55.0%
ARGENTINA -- 1.1%
Argentina Bocon, Series Pro1
2.687% 04/01/07+ .................. $ 50 $ 35,950
Republic of Argentina
Discount Bond, Series L
6.063% 03/31/23+ ............... 65 46,231
Euro Notes
11.750% 02/12/07 ............... 30 24,637
FRB Non-US Tranche
6.188% 03/31/05+ ............... 52 42,491
Global Bonds
9.750% 09/19/27 ................ 20 16,125
Par Bonds
5.750% 03/31/23++ .............. 70 46,944
Unsubordinated Series Bgl4
11.000% 10/09/06 ............... 20 18,200
Yankee Notes
12.163% 04/10/05+ .............. 65 57,850
YPF S.A. Yankee Notes
8.000% 02/15/04 ................... 35 33,862
------------
322,290
------------
BRAZIL -- 0.7%
Cia. Petroleo Ipiranga S.A.
Sr. Notes
10.625% 02/25/02 .................. 65 50,375
Federal Republic of Brazil
Capitalization Bonds,
Series 20Yr
8.000% 04/15/99+ ............... 101 57,790
EI Bonds, Series EI-L
6.125% 04/15/06+ ............... 34 21,168
Discount, Series ZL
6.125% 04/15/24+ ............... 61 34,007
EI FRB Debenture Euro
Registered, Series RG
6.125% 04/15/06+ ............... 48 30,240
------------
193,580
------------
BULGARIA -- 0.2%
Government of Bulgaria Discount
FRN, Series A
5.875% 07/28/24+ .................. 40 28,125
National Republic of Bulgaria FRN
4.166% 07/28/12+ .................. 50 30,125
------------
58,250
------------
CANADA -- 1.2%
Government of Canada Debenture
5.500% 02/01/00 .....................CND 250 166,026
7.000% 12/01/06 ..................... 250 182,256
------------
348,282
------------
PAR
(000) VALUE
------- -----------
COLUMBIA -- 0.4%
Republic of Colombia
Yankee Notes
10.986% 08/13/05+ ................ $ 110 $ 99,000
Global Bonds
8.625% 04/01/08 .................. 10 8,537
------------
107,537
------------
CROATIA -- 0.1%
Government of Croatia
Series A Pro-Rata Redemption
Bonds
5.813% 07/31/10 ................ 20 15,800
Series B Pro-Rata Redemption
Bonds
5.813% 07/31/06+ ............... 27 19,610
------------
35,410
------------
FINLAND -- 0.2%
Okobank Perpetual Medium Term
FRN
5.739% 03/09/99+/+++ ................ 60 57,600
------------
FRANCE -- 3.1%
Ivory Coast Past Due Interest
Bonds
1.900% 03/29/18+ ..................FRF 370 18,591
L'Auxiliare du Credit Foncier
de France Gtd. Notes
5.281% 09/25/02+ ..................$ 125 121,794
Republic of France
Treasury Bonds
7.500% 04/25/05 ...................EUR 549 727,925
------------
868,310
------------
GERMANY -- 23.0%
Federal Republic of Germany
Eurobonds
6.000% 02/16/06 ...................EUR 2,000 2,475,987
6.000% 07/04/07 ................... 3,206 4,005,126
------------
6,481,113
------------
JAPAN -- 0.3%
Fuji Finance (Cayman) Ltd.
Perpetual Sub. FRN
5.801%+/+++ ....................... $ 90 51,300
Fuji Finance (Cayman)
Perpetual Gtd. Medium Term
Notes
7.300%+/+++ ....................... 50 28,500
------------
79,800
------------
See Accompanying Notes to Financial Statements.
41
<PAGE>
WARBURG PINCUS STRATEGIC GLOBAL FIXED INCOME FUND (CONTINUED)
PAR
(000) VALUE
------- -----------
MEXICO -- 1.2%
Grupo Transportacion Ferroviaria
Mexicana, S.A. de CV
144A Gtd. Sr. Discount Notes
11.750% 06/15/09++ ................ $ 55 $ 29,425
Mexican Cetes Zero Coupon
Bonds
0.000% 01/13/00 ................... 251 20,402
United Mexican States
Global Bonds
11.500% 05/15/26 ............... 80 83,600
Government National Discount
Bond, Series W-A
6.116% 12/31/19+(a) ............... 260 209,625
------------
343,052
------------
NETHERLANDS -- 4.3%
Kingdom of Netherlands
Government Bonds
5.750% 01/15/04 ...................EUR 1,021 1,227,797
------------
PANAMA -- 0.1%
Republic of Panama Euro Bonds
8.875% 09/30/27 ..................... $ 20 17,900
------------
PERU -- 0.1%
Government of Peru Front Loaded
Interest Reduction Bond
3.250% 03/07/17 ................... 20 10,737
Peru Past Due Interest FRB
Series 20 Year Bonds
4.000% 03/07/17+ .................. 20 11,862
------------
22,599
------------
PHILIPPINES -- 0.4%
Bangko Sentral Pilipinas
Yankee Bonds
8.600% 06/15/27 ................... 40 34,600
Republic of Philippines
Global Bonds
9.875% 01/15/19 ................... 75 74,531
------------
109,131
------------
POLAND -- 1.5%
Republic of Poland
Non-U.S. Global Past Due
Interest Bonds
5.000% 10/27/14++ ............... 20 18,187
Par Bond
3.000% 10/27/24++ ............... 35 22,794
Past Due Interest Bonds
5.000% 10/27/14++ ............... 415 377,391
------------
418,372
------------
PAR
(000) VALUE
------- -----------
RUSSIA -- 0.1%
AO Sibneft
Loan Participation Notes
9.000% 08/15/00+ .................. $ 50 $ 13,000
Ministry Finance Russia Bonds
12.750% 06/24/28 .................. 60 16,800
------------
29,800
------------
SOUTH AFRICA -- 0.0%
Republic of South Africa
Senior Notes
12.000% 02/28/05 ..................ZAR 80 11,743
------------
SOUTH KOREA -- 0.4%
Korea Electric Power
Yankee Notes
7.000% 10/01/02 .................. $ 45 43,256
Debentures
6.750% 08/01/27 .................. 10 9,400
Unsecured Unsubordinated
Global Notes
6.375% 12/01/03 .................. 20 18,550
Debentures
7.000% 02/01/27 .................. 55 50,944
------------
122,150
------------
SUPRANATIONAL -- 7.9%
European Investment Bank
Eurobonds
5.000% 04/15/08 ...................ITL 1,000,000 597,390
International Bank for
Reconstruction & Development
Japanese Yen Global Bonds
5.250% 03/20/02 ...................JPY 170,000 1,635,166
------------
2,232,556
------------
SWEDEN -- 1.2%
Skandinaviska Enskilda Banken
AB Perpetual Sub. FRN
7.500% 03/12/99+/+++ .............. $ 350 331,215
------------
TURKEY -- 0.0%
Republic of Turkey Treasury Bills
0.000% 08/18/99 ...................TRL 5,569,100 10,740
------------
UNITED KINGDOM -- 7.4%
U.K. Treasury Gilt Bonds
7.500% 12/07/06 ...................GBP 1,100 2,077,810
------------
VENEZUELA -- 0.1%
Republic of Venezuela
Global Bonds
9.250% 09/15/27 ................... $ 40 22,800
------------
TOTAL INTERNATIONAL BONDS
(Cost $15,586,109) $ 15,529,837
------------
See Accompanying Notes to Financial Statements.
42
<PAGE>
WARBURG PINCUS STRATEGIC GLOBAL FIXED INCOME FUND (CONTINUED)
PAR
(000) VALUE
------- -----------
DOMESTIC BONDS -- 49.8%
CORPORATE BONDS -- 16.9%
AUTOMOTIVE -- 0.2%
Delco Remy International, Inc.
Gtd. Sr. Sub Notes
10.625% 08/01/06 .................. $ 15 $ 16,050
Hayes Lemmerz International, Inc.
Sr. Sub Notes
8.250% 12/15/08 ................... 25 25,312
------------
41,362
------------
BANKING -- 1.5%
BankBoston N.A. Notes
6.375% 04/15/08 ................... 15 14,588
Bay View Capital Corp.
Sub. Notes
9.125% 08/15/07 ................... 45 43,594
Chase Manhattan Bank Corp.
Sub. Notes
6.750% 09/15/06 ................... 20 20,300
7.250% 06/01/07 ................... 10 10,475
6.375% 04/01/08 ................... 20 19,975
Citicorp Sub. Notes, Series F
6.375% 11/15/08 ................... 65 64,431
Credit Lyonnais Perpetual Sub.
Variable Rate Notes, Rule 144A
6.563% 09/19/49+/+++ .............. 90 78,525
First Republic Bank Sub. Notes
7.750% 09/15/12 ................... 60 57,225
National Westminster Bank
Debentures Guaranteed Cap
Notes
9.375% 11/15/03 ................... 15 16,650
Sovereign Bancorp Sr. Notes
6.750% 07/01/00 ................... 115 115,719
------------
441,482
------------
COMPUTER SOFTWARE -- 0.1%
PSINet, Inc. 144A Sr. Notes
11.500% 11/01/08 .................... 10 11,200
------------
ELECTRIC -- 1.6%
Beaver Valley Funding Corp.
Secured Lease Obligation Bonds
9.000% 06/01/17 ................... 150 163,125
Connecticut Light and Power Co.
First Mortgage Bonds, Series C
7.750% 06/01/02 ................ 75 77,156
First Mortgage Bonds, Series D
7.875% 10/01/24 ................ 40 41,550
Crown Central Petroleum Sr. Notes
10.875% 02/01/05 .................. 10 9,113
Forcenergy, Inc. Sr. Sub. Notes
8.500% 02/15/07 ................... 10 3,675
Niagara Mohawk Power Corp.
First Mortgage Bonds
8.750% 04/01/22 ................... 30 31,238
PAR
(000) VALUE
------- -----------
ELECTRIC -- (CONTINUED)
North Atlantic Energy Corp.
Secured First Mortgage Notes,
Series A
9.050% 06/01/02 ................... $ 130 $ 131,138
------------
456,995
------------
ELECTRONICS -- 0.2%
Seagate Technology, Inc.
Sr. Debentures
7.450% 03/01/37 ................... 70 65,275
------------
ENERGY -- 0.7% CMS Energy Corp.
Medium Term Notes
6.750% 01/15/04 ................... 15 14,625
Dresser Industries, Inc.
Debentures
7.600% 08/15/45 ................... 60 65,100
Petroleum Geo-Services
Yankee Sr. Notes
7.125% 03/30/28 ................... 25 22,344
Valero Energy Corp.
144A Putable Asset Trusts
6.750% 12/15/02 ................... 100 100,125
------------
202,194
------------
ENTERTAINMENT -- 1.5%
Circus Circus Enterprise
Sr. Sub. Notes
9.250% 12/01/05 ................... 15 15,281
Regal Cinemas, Inc.
Sr. Sub. Notes
9.500% 06/01/08 ................... 20 20,000
Time Warner, Inc
Debentures
9.125% 01/15/13 ................ 45 55,294
8.050% 01/15/16 ................ 140 156,100
6.850% 01/15/26 ................ 165 173,456
------------
420,131
------------
FINANCIAL SERVICES -- 2.0%
American General Institutional
Capital Trust Co.
144A Gtd. Notes, Series B
8.125% 03/15/46 ................... 40 45,000
AT&T Capital Corp.
Medium Term Notes, Series 4
6.920% 04/29/99 ................... 135 135,121
Ford Motor Credit Corp.
5.800% 01/12/09 ................... 80 77,400
HRPT Properties Trust Notes
5.658% 04/09/99 ................... 310 307,288
------------
564,809
------------
See Accompanying Notes to Financial Statements.
43
<PAGE>
WARBURG PINCUS STRATEGIC GLOBAL FIXED INCOME FUND (CONTINUED)
PAR
(000) VALUE
------- -----------
HEALTH CARE -- 0.8%
Columbia/HCA Healthcare Corp.
Debentures
8.360% 04/15/24 ................... $ 55 $ 50,848
Merck & Company, Inc.
Medium Term Notes, Series B
5.760% 05/03/37 ................... 185 182,456
------------
233,304
------------
INDUSTRIAL GOODS & MATERIALS -- 0.1%
Motors & Gears Inc.,
Sr. Notes, Series D
10.750% 11/15/06 .................... 15 15,394
------------
MEDIA CABLE -- 1.0%
Adelphia Communications Corp.
144A Sr. Notes
8.375% 02/01/08 ................ 10 10,425
Sr. Notes, Series B
9.250% 10/01/02 ................ 15 15,938
Classic Cable Sr. Sub. Notes
9.875% 08/01/08 ................... 10 10,525
CS Wireless Systems, Inc.
144A Sr. Discount Notes
11.375% 03/01/06++ ................ 70 14,000
CSC Holdings, Inc. Sr. Notes
7.875% 12/15/07 ................... 90 95,175
7.250% 07/15/08 ................... 20 20,350
Diamond Cable Communications plc
144A Yankee Sr. Discount
Notes
10.750% 02/15/07++ ................ 40 30,800
James Cable Partners L.P.
Sr. Notes, Series B
10.750% 08/15/04 .................. 20 21,175
TCI Communications Inc. Notes
6.340% 02/01/02 ................... 55 55,619
Wireless One, Inc.
Sr. Discount Notes
13.500% 08/01/06++ ................ 45 4,050
------------
278,057
------------
MEDIA NON CABLE -- 0.4%
Chancellor Media Corp.
144A Sr. Notes
8.000% 11/01/08 ................... 10 10,600
Echostar DBS Corp.
144A Sr. Notes
9.250% 02/01/06 ................... 20 20,200
Fox/Liberty Networks L.L.C.,
Registered Sr. Notes
08/15/07++ ........................ 80 83,500
Granite Broadcasting Corp.
Sr. Sub. Notes
8.875% 05/15/08 ................... 10 9,925
------------
124,225
------------
PAR
(000) VALUE
------- -----------
REAL ESTATE -- 0.1%
HMH Properties, Inc. Sr. Notes
8.450% 12/01/08 ................... $ 15 $ 14,888
------------
RETAIL -- 1.3%
Archibald Candy Corp.
144A Gtd. Sr. Secured Notes
10.250% 07/01/04 .................. 20 20,400
Jackson Products, Inc. Notes
9.500% 04/15/05 ................... 20 19,950
K Mart Corp.
Medium Term Notes, Series C
7.820% 01/02/02 ................ 100 98,625
7.840% 01/02/02 ................ 100 98,625
Medium Term Notes, Series D
7.770% 07/02/02 ................ 100 98,250
Pantry, Inc. Sr. Sub. Notes
10.250% 10/15/07 .................. 15 15,656
Pathmark Stores, Sr. Sub Notes
9.625% 05/01/03 ................... 10 10,088
Phillips Van-Heusen Corp.,
Sr. Sub. Notes
9.500% 05/01/08 ................... 10 10,088
------------
371,682
------------
STEEL -- 0.1%
Wheeling-Pittsburgh Corp.
144A Sr. Notes
9.250% 11/15/07 ................... 15 14,719
------------
TELECOMMUNICATIONS -- 3.6%
BellSouth Capital Funding Corp.
Debentures
6.040% 11/15/26 ................... 165 167,888
Cencall Communications Corp.
Sr. Discount Notes
10.125% 01/15/04 .................. 15 15,225
Global Communicacoes e
Participacoes S.A.
144A Par Bonds
10.625% 12/05/08 .................. 20 11,100
GTE Corp., Debentures
6.840% 04/15/18 ................... 215 219,031
GTE North, Inc.
Debentures, Series D
6.900% 11/01/08 ................... 10 10,588
ITC Deltacom, Inc.
144A Sr. Notes
11.000% 06/01/07 .................. 10 10,950
Level 3 Communications, Inc.
144A Sr. Notes
9.125% 05/01/08 ................... 25 24,375
MCI Communications Corp.
Sr. Discount Notes
6.125% 04/15/02+ .................. 45 45,113
McleodUSA, Inc. 144A Sr. Notes
8.125% 02/15/09 ................... 10 9,925
See Accompanying Notes to Financial Statements.
44
<PAGE>
WARBURG PINCUS STRATEGIC GLOBAL FIXED INCOME FUND (CONTINUED)
PAR
(000) VALUE
------- -----------
TELECOMMUNICATIONS -- (CONTINUED)
Metromedia Fiber Network
144A Sr. Notes
10.000% 11/15/08 .................. $ 10 $ 10,500
Nextel Communications, Inc.
144A Sr. Discount Notes
9.950% 02/15/08++ .............. 10 6,400
144A Sr. Redeemable Discount
Notes
10.650% 09/15/07++ ............. 180 122,400
Sr. Discount Notes
9.750% 08/15/04 ................ 150 152,625
NEXTLINK Communications, Inc.
144A Sr. Notes
10.750% 11/15/08 ............... 15 15,563
Sr. Notes
9.625% 10/01/07 ................ 10 9,925
Paging Network, Inc.,
Sr. Sub. Notes
8.875% 02/01/06 .................. 10 8,500
10.125% 08/01/07 .................. 20 17,400
10.000% 10/15/08 .................. 45 39,150
Qwest Communications
144A Sr. Notes
7.250% 11/01/08 ................... 15 15,563
Worldcom Inc., Sr. Notes
8.875% 01/15/06 ................... 65 69,956
6.950% 08/15/28 ................... 40 40,950
------------
1,023,127
------------
TELEPHONE -- 0.0%
Intermedia Communication
Sr. Notes, Series B
8.500% 01/15/08 ................... 10 9,400
------------
TRANSPORTATION -- 1.7%
Continental Airlines, Inc.
Sr. Notes
9.500% 12/15/01 ................... 120 126,150
Norfolk Southern Corp. Notes
7.050% 05/01/37 ................... 60 63,525
Northwest Airlines, Inc.
Gtd. Notes
7.625% 03/15/05 ................... 230 211,600
US Airways, Inc. Gtd. Sr. Notes
9.625% 02/01/01 ................... 85 87,120
------------
488,395
------------
WASTE MANAGEMENT -- 0.0%
Allied Waste North America
Sr. Notes
7.875% 01/01/09 ................... 10 10,125
------------
TOTAL CORPORATE BONDS
(Cost $4,874,411) $ 4,786,764
-------------
PAR
(000) VALUE
------- -----------
MUNICIPAL BONDS -- 0.9%
Florida State Board of Education,
Capital Outlay GO, Series B
4.750% 06/01/23 ................... $ 20 $ 19,175
Illinois State GO
4.750% 06/01/23 ................... 15 14,063
Massachusetts State Water
Resources Authority General
Revenue Bond, Series A
4.750% 08/01/27 ................... 25 23,438
Massachussetts Bay
Transportation Authority,
General Transportation
System Revenue Bonds,
Series A
4.750% 03/01/21 ................... 35 33,294
New York City Municipal Water
Finance Authority Water and
Sewer Systems Revenue Bonds,
Series D
4.750% 06/15/25 ................... 10 9,500
North Texas Thruway Authority,
Dallas North Thruway System
Revenue Bonds
4.750% 01/01/29 ................... 125 116,875
Tennessee Valley Authority Bonds
5.880% 04/01/36 ................... 40 39,350
------------
TOTAL MUNICIPAL BONDS
(Cost $259,419) ................... $ 255,695
------------
AGENCY OBLIGATIONS -- 21.1%
FEDERAL HOME LOAN MORTGAGE CORPORATION -- 2.0%
Various Pools:
7.000% 12/01/09 ..................... $ 334 $ 340,569
------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION -- 16.9%
Various Pools:
6.500% 01/01/13+++ ................ 255 256,673
6.000% 05/01/13+++ ................ 490 485,253
6.000% 10/15/17+++ ................ 1,760 1,706,100
6.500% 09/01/27+++ ................ 490 486,937
8.000% 06/01/28+++ ................ 1,120 1,165,150
6.000% 10/01/28 ................... 373 362,047
6.000% 01/01/29 ................... 125 120,862
6.000% 01/01/29 ................... 370 358,900
FNMA Series 1997-16 Class M
Principle Only
0.000% 02/25/23 ................... 80 55,300
------------
4,997,222
------------
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION -- 2.2%
6.500% 12/01/28+++ .................. 610 606,569
------------
TOTAL AGENCY OBLIGATIONS ...........
(Cost $5,984,456) ................. $ 5,944,360
------------
See Accompanying Notes to Financial Statements.
45
<PAGE>
WARBURG PINCUS STRATEGIC GLOBAL FIXED INCOME FUND (CONTINUED)
PAR
(000) VALUE
------- -----------
ASSET BACKED SECURITIES -- 1.4%
Contimortgage Home Equity
Loan Trust,
Series 1996-4, Class A8
7.220% 01/15/28 ................ $ 10 $ 10,053
Series 1998-1, Class A5
6.430% 04/15/16 ................ 70 70,262
Green Tree Recreational,
Equipment & Consumer Trust
Series 1998-B, Class A-3
6.050% 10/15/10 ................ 15 15,047
Series 1997-C, Class A1
6.490% 02/15/18 ................ 168 167,424
New Century Home Equity Loan
Trust Series 1997-NC6,
Class A4
6.730% 07/25/22 ................... 20 19,946
Southern Pacific Secured Asset
Corp. Home Equity
Series 1998-1, Class A2
6.270% 03/25/28 ................... 80 79,987
UCFC Home Equity Loan Trust,
Series 1996-B1, Class A7
8.200% 09/15/27 ................... 25 25,695
------------
TOTAL ASSET BACKED
SECURITIES
(Cost $389,934) ................... $ 388,414
------------
COLLATERALIZED MORTGAGE
BACKED SECURITIES -- 0.4%
Donaldson Lufkin Jenrette
Commercial Mortgage Corp.,
Series 1998-CG1, Class A1-B
6.410% 05/10/08 ................... $ 85 $ 85,993
GMAC Commercial Mortgage
Securities, Inc., Series 1997-C1
Class A2
6.853% 09/15/06 ................... 20 20,912
------------
TOTAL COLLATERALIZED
MORTGAGE BACKED
SECURITIES
(Cost $106,467) ................... $ 106,905
------------
PAR
(000) VALUE
------- -------------
U.S. TREASURY OBLIGATIONS -- 9.1%
U.S. TREASURY BILLS -- 0.1%
4.365% 04/08/99 ..................... $ 20 $ 19,908
------------
U.S. TREASURY BONDS -- 6.3%
8.000% 11/15/21 ..................... 1,395 1,771,143
------------
U.S. TREASURY INFLATION PROTECTED NOTES -- 0.8%
3.625% 01/15/08 ..................... 225 223,715
------------
U.S. TREASURY NOTES -- 1.5%
6.250% 06/30/02 ..................... 245 252,383
6.250% 02/15/07 ..................... 170 179,021
------------
431,404
------------
U.S. TREASURY STRIPPED BONDS -- 0.4%
0.000% 05/15/17 ..................... 335 114,179
------------
TOTAL U.S. TREASURY
OBLIGATIONS
(Cost $2,613,317) ................. $ 2,560,349
------------
TOTAL DOMESTIC BONDS
(Cost $14,228,004) ................ $ 14,042,487
------------
NUMBER
OF SHARES
---------
STOCKS, RIGHTS & WARRANTS -- 0.8%
California Federal Capital Corp.,
Series A .......................... 5,050 $ 133,509
Centaur Funding Corp. ............... 40 44,150
Citigroup, Inc. ..................... 1,100 56,100
------------
TOTAL STOCKS,
RIGHTS & WARRANTS
(Cost $231,837) ................... $ 233,759
------------
See Accompanying Notes to Financial Statements.
46
<PAGE>
WARBURG PINCUS STRATEGIC GLOBAL FIXED INCOME FUND (CONCLUDED)
PAR
(000) VALUE
------- -----------
SHORT-TERM INVESTMENT -- 13.1%
BBH U.S. Grand Cayman Time
Deposit
4.250% 03/01/99 ................... $ 3,685 $ 3,685,000
------------
(Cost $3,685,000)
TOTAL INVESTMENTS -- 118.7%
(Cost $33,730,950*) ............... $ 33,491,083
LIABILITIES IN EXCESS OF
OTHER ASSETS -- (18.7%) ........... (5,265,739)
------------
TOTAL NET ASSETS -- 100.0% .......... $ 28,225,344
============
* Cost for Federal income tax purposes at February 28, 1999 is $33,767,671.
The gross appreciation (depreciation) on a tax basis is as follows:
Gross Appreciation ........................................$ 482,736
Gross Depreciation ........................................ (759,324)
------------
Net Depreciation ..........................................$ (276,588)
============
+ Variable rate obligations -- The interest shown is the rate as of February
28, 1999.
++ Step Bond -- The interest rate as of February 28, 1999 is 0% and will reset
to interest rate shown at a future date.
+++ Securities have no stated maturity date.
(a) With additional 399,000 rights attached, expiring 06/03/2006, with no
market value.
CURRENCY ABBREVIATIONS
CND ............................................................Canadian Dollars
EUR ......................................................European Economic Unit
FF ................................................................French Francs
GBP .......................................................United Kingdom Pounds
ITL ................................................................Italian Lira
JPY ................................................................Japanese Yen
TRL ................................................................Turkish Lira
ZAR ..........................................................South African Rand
INVESTMENT ABBREVIATIONS
FRB ..........................................................Floating Rate Bond
FRN ..........................................................Floating Rate Note
GO ..........................................................General Obligations
See Accompanying Notes to Financial Statements.
47
<PAGE>
WARBURG PINCUS HIGH YIELD FUND
PORTFOLIO MANAGERS' LETTER
April 20, 1999
Dear Shareholders:
We are writing to report on the results of the Warburg Pincus High Yield Fund
(the "Fund") for the fiscal half-year ended February 28, 1999.
At February 28, 1999, the net asset value ("NAV") of the Fund's Institutional
shares was $15.74, compared to an NAV of $16.60 on August 31, 1998. As a result,
the Institutional shares' total return was down 0.8% (assuming the reinvestment
of dividends and distributions totaling $0.72 per share). By comparison, the
Credit Suisse First Boston High Yield Index (the "Index") returned 3.5% during
the same period.
At February 28, 1999, NAV of the Fund's Common shares was $15.81, compared to an
NAV of $16.62 on August 31, 1998. As a result, the Common shares' total return
was down 0.9% (assuming the reinvestment of dividends and distributions totaling
$0.66 per share). By comparison, the Index returned 3.5% during the same period.
Sector allocations were most responsible for the Fund's underperformance of the
Index:
[BULLET] Our substantial overweighting in telecommunications hurt returns, as
it left the portfolio more highly exposed than the benchmark to
deferred-interest instruments such as zero-coupon bonds. Zeros'
returns generally were lower than those of traditional cash-pay
instruments, reflecting investors' ongoing preference for
higher-quality issues within the overall high yield universe.
[BULLET] We underweighted utilities, which performed well.
[BULLET] Our holdings in the transportation sector were mostly shipping
companies, which were hurt by a combination of falling oil prices and
declining Asian demand for oil.
Bright spots included our overweights in cable/media and gaming, both of which
performed much better than the overall benchmark; and underweights in finance
and energy, which were among the worst-performing sectors in the entire high
yield market.
As developments occur that we believe would be of interest to you, we will be
sure to keep you informed. Meanwhile, if you have questions, please feel free to
call upon us at any time.
Sincerely yours,
Credit Suisse Asset Management High Yield Management Team
Richard J. Lindquist, CFA, Managing Director
Misia K. Dudley, Director
Marianne Rossi, CFA, Director
John M. Tobin, CFA, Director
Mary Ann Thomas, CFA, Director
HIGH YIELD BONDS ARE LOWER-QUALITY BONDS THAT ARE ALSO KNOWN AS "JUNK" BONDS.
SUCH BONDS ENTAIL GREATER RISKS THAN THOSE FOUND IN HIGHER-RATED SECURITIES.
INTERNATIONAL INVESTING ENTAILS SPECIAL RISK CONSIDERATIONS, INCLUDING CURRENCY
FLUCTUATIONS, LOWER LIQUIDITY, ECONOMIC AND POLITICAL RISKS AND DIFFERENCES IN
ACCOUNTING METHODS.
48
<PAGE>
WARBURG PINCUS HIGH YIELD FUND
PORTFOLIO MANAGERS' LETTER (CONCLUDED)
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN THE WARBURG PINCUS HIGH
YIELD INSTITUTIONAL SHARES AND THE CS FIRST BOSTON HIGH YIELD INDEX 1 FROM
INCEPTION (3/1/93) AND AT EACH QUARTER END. (UNAUDITED)
WARBURG PINCUS
HIGH YIELD FUND CS FIRST BOSTON
INSTITUTIONAL SHARES HIGH YIELD INDEX
03/01/93 $10,000 $10,000
05/31/93 10,613 10,419
08/31/93 11,293 10,809
11/30/93 11,880 11,209
02/28/94 12,137 11,570
05/31/94 11,491 11,143
08/31/94 11,547 11,201
11/30/94 11,456 11,123
02/28/95 10,968 11,638
05/31/95 12,018 12,370
08/31/95 12,446 12,680
11/30/95 12,758 13,029
02/29/96 13,672 13,516
05/31/96 13,997 13,662
08/31/96 13,852 13,965
11/30/96 14,433 14,547
02/28/97 15,047 15,219
05/31/97 15,205 15,488
08/31/97 15,953 16,119
11/30/97 16,496 16,553
02/28/98 17,349 17,120
05/31/98 17,676 17,387
08/31/98 16,828 16,354
11/30/98 16,506 16,840
02/28/99 16,699 16,924
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN THE WARBURG PINCUS HIGH
YIELD COMMON SHARES AND THE CS FIRST BOSTON HIGH YIELD INDEX 1 FROM INCEPTION
(11/1/96) AND AT EACH QUARTER END. (UNAUDITED)
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
WARBURG PINCUS CS FIRST BOSTON
HIGH YIELD FUND HIGH YIELD
COMMON SHARES INDEX
11/01/96 $10,000 $10,000
11/30/96 10,105 10,156
02/28/97 10,528 10,625
05/31/97 10,632 10,813
08/31/97 11,149 11,253
11/30/97 11,508 11,556
02/28/98 12,098 11,952
05/31/98 12,317 12,138
08/31/98 11,737 11,417
11/30/98 11,507 11,756
02/28/99 11,637 11,815
Note:Past performance is not predictive of future performance. Investment return
and principle value of an investment will fluctuate so that an investor's shares
upon redemption may be worth more or less than their original cost.
1 The Credit Suisse First Boston High Yield Index is an unmanaged index (with
no defined investment objective) of high yield bonds and is compiled by
Credit Suisse First Boston, an affiliate of the fund's adviser.
49
<PAGE>
WARBURG PINCUS HIGH YIELD FUND
SCHEDULE OF INVESTMENTS
FEBRUARY 28, 1999
(UNAUDITED)
PAR
(000) VALUE
------- -----------
CORPORATE BONDS -- 94.7%
AEROSPACE/DEFENSE -- 0.4%
K&F Industries, Inc.
Sr. Sub. Notes
9.250% 10/15/07 ........................... $ 500 $ 512,500
------------
AUTOMOTIVE -- 3.7%
Aetna Industries, Inc.
Sr. Notes
11.875% 10/01/06 .......................... 500 518,125
Breed Technologies, Inc.
144A Sr. Sub. Notes
9.250% 04/15/08 ........................... 650 325,000
Cambridge Industries, Inc.
Gtd. Sr. Sub. Notes, Series B
10.250% 07/15/07 .......................... 400 334,000
Collins & Aikman Products Corp.
Gtd. Sr. Sub. Notes
11.500% 04/15/06 .......................... 600 634,500
Consorcio G Grupo Dina S.A./MCII
Holdings (U.S.A.), Inc.
144A Sr. Secured Notes
12.000% 11/15/02 .......................... 500 431,875
Delco Remy International, Inc.
Gtd. Sr. Sub Notes
10.625% 08/01/06 .......................... 500 535,000
Hayes Lemmerz International, Inc.
144A Sr. Sub. Notes
8.250% 12/15/08 ........................... 400 405,000
Hayes Wheels International, Inc.
Sr. Sub. Notes, Series B
9.125% 07/15/07 ........................... 350 370,125
LDM Technologies, Inc.
144A Sr. Sub. Notes, Series B
10.750% 01/05/07 .......................... 400 401,000
Oxford Automotive, Inc.
Gtd. Sr. Sub. Notes
10.125% 06/15/07 .......................... 500 517,500
Oxford Automotive, Inc.
Sr. Sub. Notes
10.125% 06/15/07 .......................... 300 310,500
Safelite Glass Corp.
Sr. Sub. Notes
9.875% 12/15/06 ........................... 350 329,000
Titan Wheel International, Inc.
Sr. Sub. Notes
8.750% 04/01/07 ........................... 250 234,375
------------
5,346,000
------------
BROADCASTING -- 4.9%
Allbritton Communications Company
Sr. Sub. Notes, Series B
8.875% 02/01/08 ........................... 250 256,250
9.750% 11/30/07 ........................... 250 268,750
American Radio Systems Corp.
Gtd. Sr. Sub. Notes
9.000% 02/01/06 ........................... 250 272,500
PAR
(000) VALUE
------- -----------
BROADCASTING -- (CONTINUED)
Australis Holdings Pty. Ltd.
144A Yankee Sr. Secured
Discount Notes
15.000% 11/01/02 .......................... $ 294 $ 2,940
Australis Media Ltd.
Yankee Gtd. Sr. Sub.
Discount Notes
15.750% 05/15/03+ ......................... 8 60
15.750% 05/15/03 .......................... 900 6,750
Big City Radio, Inc.,
144A Sr. Bonds
11.250% 03/15/05+ ......................... 750 528,750
Capstar Broadcasting, Inc.
Sr. Sub. Discount Notes
12.750% 02/01/09+ ......................... 500 423,125
Chancellor Media Corp.
Sr. Sub. Notes
9.375% 10/01/04 ........................... 250 264,375
144A Sr. Notes
8.000% 11/01/08 ........................... 350 371,000
Citadel Broadcasting Co.
144A Sr. Sub. Notes
9.250% 11/15/08 ........................... 750 801,562
Emmis Communications Corp.,
144A Sr. Sub. Notes
8.125% 03/15/09 ........................... 500 501,250
Granite Broadcasting Corp.
144A Sr. Sub Notes
8.875% 05/15/08 ........................... 250 248,125
Sr. Sub. Notes
9.375% 12/01/05 ........................... 450 460,125
Jacor Communications Co.
Sr. Sub. Notes
9.750% 12/15/06 ........................... 250 278,125
Pegasus Communications Corp.
Sr. Notes, Series B
9.625% 10/15/05 ........................... 250 258,750
Sinclair Broadcast Group
Sr. Sub. Notes
10.000% 09/30/05 .......................... 400 423,000
Spanish Broadcasting System, Inc.
144A Sr. Notes
11.000% 03/15/04 .......................... 300 322,875
TCI Satellite
144A Sr. Discount Notes
12.250% 02/15/07+ ......................... 200 106,500
144A Sr. Sub. Notes
10.875% 02/15/07 .......................... 350 259,000
United International Holdings,
144A Sr. Discount Notes
10.750% 02/15/08+ ......................... 1,000 652,500
Young Broadcasting, Inc.
Gtd. Sr. Sub. Notes, Series B
9.000% 01/15/06 ........................... 250 257,812
------------
6,964,124
------------
See Accompanying Notes to Financial Statements.
50
<PAGE>
WARBURG PINCUS HIGH YIELD FUND (CONTINUED)
PAR
(000) VALUE
------- -----------
BUSINESS SERVICES -- 0.9%
Big Flower Press Holdings, Inc.
Sr. Sub. Notes $
8.625% 12/01/08 ........................... $ 500 $ 510,625
Iron Mountain, Inc.
144A Sr. Notes
8.750% 09/30/09 ........................... 500 516,875
U.S. Office Products Co.
144A Sr. Sub. Notes
9.750% 06/15/08 ........................... 400 287,500
------------
1,315,000
------------
CABLE -- 11.1%
Adelphia Communications Corp.
Sr. Notes, Series B
10.500% 07/15/04 .......................... 400 446,000
Avalon Cable Holdings
Sr. Discount Notes
11.875% 12/01/08 .......................... 500 310,000
Avalon Cable of Michigan, Inc.
Sr. Sub. Notes
9.375% 12/01/08 ........................... 650 687,375
Century Communications,
Sr. Discount Notes, Series B
0.000% 01/15/08 ........................... 1,000 533,750
Charter Communications
Southeast,L.P
Sr. Notes, Series B
11.250% 03/15/06 .......................... 900 1,037,250
Classic Cable
Sr. Sub. Notes
9.875% 08/01/08 ........................... 500 526,250
Coaxial Communications, Inc.
Phoenix Associates Co.
Gtd. Notes
10.000% 08/15/06 .......................... 450 474,750
Coaxial L.L.C.
144A Co. Gtd.
12.875% 08/15/08+ ......................... 400 246,000
Comcast U.K. Cable Partners Ltd.,
Yankee Sr. Debentures
11.200% 11/15/07+ ......................... 750 661,875
CSC Holdings,
Sr. Debentures
9.875% 02/15/13 ........................... 500 556,250
Diamond Cable Communications plc
Sr. Discount Notes
11.750% 12/15/05+ ......................... 500 435,000
DIVA Systems Corp.
12.625% 03/01/08 .......................... 2,527 767,576
Echostar DBS Corp.
144A Sr. Notes
9.375% 02/01/09 ........................... 500 503,750
PAR
(000) VALUE
------- -----------
CABLE -- (CONTINUED)
Falcon Holding Group L.P./Falcon
Funding Corp.
144A Debentures
9.285% 04/15/10+ .......................... $ 500 $ 351,250
8.375% 04/15/10 ........................... 400 412,000
Frontiervision Holdings L.P.
Sr. Discount Notes
11.875% 09/15/07+ ......................... 500 435,000
Galaxy Telecom L.P.
Sr. Sub. Notes
12.375% 10/01/05 .......................... 400 448,500
Golden Sky Systems, Inc.
144A Sr. Discount Notes
13.500% 03/01/07+ ......................... 750 405,000
Helicon Group L.P.
Sr. Secured
Notes, Series B
11.000% 11/01/03 .......................... 500 523,125
International CableTel, Inc.
Sr. Deferred Coupon Notes,
Series A
12.750% 04/15/05+ ......................... 750 712,500
James Cable Partners L.P./ James
Cable Finance Corp.
Sr. Notes, Series B
10.750% 08/15/04 .......................... 650 688,187
Jones Intercable, Inc.
Sr. Notes
7.625% 04/15/08 ........................... 500 536,250
Lenfest Communications, Inc.
Sr. Notes
8.375% 11/01/05 ........................... 300 329,250
Marcus Cable L.P.
Sr. Discount Notes
14.250% 12/15/05+ ......................... 650 640,250
Mediacom L.L.C. Capital
144A Sr. Notes
7.875% 02/15/11 ........................... 300 295,500
Metromedia Fiber Network
144A Sr. Notes
10.000% 11/15/08 .......................... 500 525,000
Northland Cable Television,
144A Sr. Sub. Notes
10.250% 11/15/07 .......................... 600 637,500
Rifkin Acquisition Partners L.P.
Sr. Sub. Notes
11.125% 01/15/06 .......................... 500 569,375
Rogers Communications, Inc.
Yankee Sr. Notes
9.125% 01/15/06 ........................... 550 576,125
Telewest Communications
Group plc
Yankee Sr. Discount Debentures
11.000% 10/01/07+ ......................... 700 610,750
------------
15,881,388
------------
See Accompanying Notes to Financial Statements.
51
<PAGE>
WARBURG PINCUS HIGH YIELD FUND (CONTINUED)
PAR
(000) VALUE
------- -----------
CELLULAR/WIRELESS COMMUNICATIONS -- 2.0%
Centennial Cellular Corp.
144A Sr. Sub. Notes
10.750% 12/15/08 .......................... $ 500 $ 537,500
Comcast Cellular Holding, Inc.
Sr. Notes, Series B
9.500% 05/01/07 ........................... 500 570,625
Dobson Communications
144A Sr. Notes
11.750% 04/15/07 .......................... 250 267,812
Microcell Telecommunications, Inc.
Yankee Sr. Discount Notes,
Series B
14.000% 06/01/06+ ......................... 500 398,125
Nextel Communications, Inc.
Sr. Discount Notes
9.750% 08/15/04 ........................... 500 508,750
Sprint Spectrum L.P./Sprint
Spectrum Finance Corp.
Sr. Notes
11.000% 08/15/06 .......................... 500 578,750
------------
2,861,562
------------
CHEMICALS -- 1.8%
ClimaChem, Inc.
Notes, Series B
10.750% 12/01/07 .......................... 500 508,125
Huntsman Corp.
144A Sr. Sub. Notes
9.500% 07/01/07 ........................... 600 608,250
Philipp Brothers Chemicals, Inc.
Co. Gtd. Sr. Notes
9.875% 06/01/08 ........................... 450 437,062
Pioneer Americas Acquistics Corp.
Gtd. Sr. Secured Notes, Series B
9.250% 06/15/07 ........................... 250 173,437
Radnor Holdings Corp.
Sr. Notes, Series B
10.000% 12/01/03 .......................... 500 515,625
Sterling Chemical Holdings, Inc.
Sr. Secured Discount Notes
13.500% 08/15/08+ ......................... 700 280,000
------------
2,522,499
------------
COMPUTERS, SOFTWARE & SERVICES -- 0.4%
Verio, Inc. 144A Units
13.500% 06/15/04 ............................ 350 382,812
Sr. Notes
10.375% 04/01/05 ............................ 200 206,750
------------
589,562
------------
PAR
(000) VALUE
------- -----------
CONSTRUCTION & BUILDING MATERIALS -- 2.0%
Collins & Aikman
Floorcoverings, Inc.
Sr. Sub. Notes, Series B
10.000% 01/15/07 .......................... $ 500 $ 526,875
D.R. Horton, Inc.
Sr. Notes
8.000% 02/01/09 ........................... 500 498,125
Koppers Industry, Inc.
Sr. Sub. Notes
9.875% 12/01/07 ........................... 250 250,937
Omega Cabinets, Ltd.
Sr. Sub. Notes
10.500% 06/15/07 .......................... 400 385,000
Southdown, Inc.
Sr. Sub. Notes, Series B
10.000% 03/01/06 .......................... 500 551,250
Uniforet, Inc.
Yankee Gtd. Sr. Notes
11.125% 10/15/06 .......................... 500 355,000
Waxman Industries, Inc.
Sr. Notes,
Series B
12.750% 06/01/04+ ......................... 600 312,000
------------
2,879,187
------------
CONSUMER PRODUCTS & SERVICES -- 3.1%
Coinstar, Inc.
Sr. Discount Notes
13.000% 10/01/06+ ......................... 525 460,687
Drypers Corp.
Sr. Notes, Series B
10.250% 06/15/07 .......................... 250 235,000
Group Maintenance America Corp.
144ASr. Sub. Notes
9.750% 01/15/09 ........................... 500 513,750
Holmes Products Corp.
144A Sr. Sub. Notes
9.875% 11/15/07 ........................... 500 481,875
Hosiery Corp. of America, Inc.
Sr. Sub. Notes
13.750% 08/01/02 .......................... 400 431,500
Packaged Ice, Inc.
144A Gtd. Sr. Notes
9.750% 02/01/05 ........................... 500 511,875
Signature Brands USA, Inc.
Sr. Sub. Notes
13.000% 08/15/02 .......................... 250 276,875
The Scotts Co.
144A Sr. Sub. Notes
8.625% 01/15/09 ........................... 300 309,000
See Accompanying Notes to Financial Statements.
52
<PAGE>
WARBURG PINCUS HIGH YIELD FUND (CONTINUED)
PAR
(000) VALUE
------- -----------
CONSUMER PRODUCTS & SERVICES -- (CONTINUED)
United Rentals, Inc.
144A Sr. Sub. Notes
9.250% 01/15/09 ........................... $ 500 $ 519,375
Werner Holdings Co., Inc.
Gtd. Sr. Sub. Notes, Series A
10.000% 11/15/07 .......................... 500 503,750
Worldtex, Inc.
144A Sr. Notes
9.625% 12/15/07 ........................... 250 216,875
------------
4,460,562
------------
UTILITIES -- 0.4%
Integrated Electric Services, Inc.
144A Sr. Sub. Notes
9.375% 02/01/09 ........................... 500 508,750
------------
ELECTRONICS -- 1.0%
Ampex Corp.
144A Sr. Notes
12.000% 03/15/03 .......................... 500 520,000
Elgar Holdings Inc.,
144A Gtd. Sr. Notes
9.875% 02/01/08 ........................... 500 422,500
Unisys Corporation
Sr. Notes, Series B
12.000% 04/15/03 .......................... 400 446,000
------------
1,388,500
------------
ENERGY -- 4.3%
Abraxas Petroleum, Inc. and
Canadian Abraxas Petroleum
Limited,
Gtd. Sr. Notes, Series D
11.500% 11/01/04 .......................... 500 260,000
AEI Resources, Inc.
144A Sr. Sub. Notes
11.500% 12/15/06 .......................... 400 394,500
Bellwether Exploration Co.
Gtd. Sr. Sub. Notes
10.875% 04/01/07 .......................... 250 242,812
Cliffs Drilling Company
Gtd. Sr. Notes, Series D
10.250% 05/15/03 .......................... 350 356,562
CMS Energy Corp.
Medium Term Notes
6.750% 01/15/04 ......................... 650 633,750
Sr. Notes
7.500% 01/15/09 ......................... 500 500,000
Dailey International, Inc.
Gtd. Sr. Notes, Series B
9.500% 02/15/08 ........................... 400 200,500
Eagle Geophysical, Inc. Co.
Gtd.
10.750% 07/15/08 .......................... 500 289,375
PAR
(000) VALUE
------- -----------
ENERGY -- (CONTINUED)
Forcenergy, Inc.
Sr. Sub. Notes
9.500% 11/01/06 ........................... $ 250 $ 90,000
8.500% 02/15/07 ........................... 250 91,875
HS Resources, Inc.
Sr. Sub. Notes
9.250% 11/15/06 ........................ 400 379,500
Gtd. Sr. Sub. Notes
9.250% 11/15/06 ........................ 100 94,875
KCS Energy Inc.
Gtd. Sr. Sub. Notes
8.875% 01/15/08 ........................... 250 87,500
Kelley Oil & Gas Corp.
Gtd. Sr. Sub. Notes
10.375% 10/15/06 .......................... 500 320,000
Key Energy Services, Inc.
144A Units
14.000% 01/15/09 .......................... 750 751,875
Nuevo Energy Company
Gtd.Sr. Sub. Notes
9.500% 04/15/06 ........................... 250 232,187
Plains Resources, Inc.
Gtd. Sr. Sub. Notes, Series B
10.250% 03/15/06 .......................... 250 253,125
Pogo Producing Co.
Sr. Sub. Notes, Cl. B
8.750% 05/15/07 ........................... 500 451,250
Pride Petroleum Services, Inc.
Sr. Notes
9.375% 05/01/07 ........................... 300 281,625
Southwest Royalties, Inc.
Grd. Sr. Notes, Series B
10.500% 10/15/04 .......................... 300 132,750
Wiser Oil Co.
Gtd. Sr. Sub. Notes
9.500% 05/15/07 ........................... 250 150,000
------------
6,194,061
------------
ENTERTAINMENT -- 3.6%
Ackerley Group, Inc.
Sr. Sub. Notes
9.000% 01/15/09 ........................... 500 520,000
AMC Entertainment, Inc.
Sr. Sub. Notes
9.500% 03/15/09 ........................... 500 491,250
American Skiing Co.
Sr. Sub. Notes, Series B
12.000% 07/15/06 .......................... 400 397,000
AMF Bowling Worldwide, Inc.
Gtd. Sr. Discount Notes
12.250% 03/15/06+ ......................... 350 282,625
Sr. Discount Notes, Series B
10.875% 03/15/06 .......................... 459 263,925
Booth Creek Ski Holdings, Inc.
Gtd. Sr. Notes, Series B
12.500% 03/15/07 .......................... 400 389,500
See Accompanying Notes to Financial Statements.
53
<PAGE>
WARBURG PINCUS HIGH YIELD FUND (CONTINUED)
PAR
(000) VALUE
------- -----------
ENTERTAINMENT -- (CONTINUED)
Imax Corp. Sr. Notes
7.875% 12/01/05 ........................... $ 500 $ 491,875
KSL Recreation Group, Inc.
Sr. Sub. Notes
10.250% 05/01/07 .......................... 500 501,250
Premier Parks Inc.
Sr. Notes
9.250% 04/01/06 ........................... 250 262,187
Premier Parks, Inc.
Gtd. Sr. Notes
9.750% 01/15/07 ........................... 250 271,250
Regal Cinemas, Inc.
144A Sr. Sub. Notes
8.875% 12/15/10 ........................... 750 725,625
SFX Entertainment, Inc.
Sr. Sub. Notes
9.125% 12/01/08 ........................... 500 506,250
------------
5,102,737
------------
ENVIRONMENTAL SERVICES -- 0.3%
First Wave Marine
Sr. Notes
11.000% 02/01/08 .......................... 500 471,250
------------
FINANCIAL SERVICES -- 0.7%
DVI, Inc.
Sr. Notes
9.875% 02/01/04 ........................... 500 489,375
Oglebay Norton Co.
144A Sr. Sub. Notes
10.000% 02/01/09 .......................... 500 486,875
------------
976,250
------------
FOOD & BEVERAGE -- 4.1%
Agrilink Foods, Inc.
Sr. Sub. Notes
11.875% 11/01/08 .......................... 500 536,250
AmeriServ Food Distribution, Inc.
Gtd. Sr. Notes
8.875% 10/15/06 ........................... 500 466,250
Archibald Candy Corp.
Gtd. Sr. Secured Notes
10.250% 07/01/04 .......................... 300 306,000
10.250% 07/01/04 .......................... 250 255,000
BGF Industries, Inc.
144A Sr. Sub. Notes
10.250% 01/15/09 .......................... 500 506,250
Delta Beverage Group, Inc.
Sr. Notes
9.750% 12/15/03 ........................... 250 265,312
Eagle Family Foods, Inc.
Sr. Sub. Notes
8.750% 01/15/08 ........................... 600 576,750
Fleming Companies, Inc.
Sr. Gtd. Sub. Notes, Series B
10.500% 12/01/04 .......................... 150 142,312
PAR
(000) VALUE
------- -----------
FOOD & BEVERAGE -- (CONTINUED)
International Home Foods, Inc.
Gtd. Sr. Sub. Notes
10.375% 11/01/06 .......................... $ 250 $ 269,062
Luigino's, Inc.
144A Sr. Sub. Notes
10.000% 02/01/06 .......................... 500 500,625
Mrs. Fields' Holding Co., Inc.
144A Units
14.000% 12/01/05+ ......................... 200 111,500
Mrs. Fields' Original Cookies Inc.
Gtd. Sr. Notes, Series B
10.125% 12/01/04 ....................... 150 144,375
144A Gtd. Sr. Notes, Series A
10.125% 12/01/04 ....................... 350 336,875
National Wine & Spirits
Holding Corp.
144A Sr. Notes
10.125% 01/15/09 .......................... 500 513,750
New World Pasta Co.
144A Sr. Sub. Notes
9.250% 02/15/09 ........................... 500 507,500
Premium Standard Farm, Inc.
Sr. Secured Notes
11.000% 09/17/03 .......................... 450 461,250
------------
5,899,061
------------
HEALTH CARE -- 2.3%
Beverly Enterprises, Inc.
Gtd. Sr. Notes
9.000% 02/15/06 ........................... 400 403,500
Fountain View, Inc. Co.
Gtd.
11.250% 04/15/08 .......................... 500 438,750
Genesis Health Ventures
144A Sr. Sub. Notes
9.875% 01/15/09 ........................... 500 417,500
InSight Health Services, Inc. Co.
Gtd. Sr. Notes
9.625% 06/15/08 ........................... 400 391,000
Integrated Health Services, Inc.
Sr. Sub. Notes, Series A
9.500% 09/15/07 ........................... 250 190,000
Oxford Health Plans, Inc.
144A Sr. Notes
11.000% 05/15/05 .......................... 400 407,000
Paracelsus Healthcare Corp.
Sr. Sub. Notes
10.000% 08/15/06 .......................... 250 213,437
Quest Diagnostic, Inc.
Sr. Sub. Notes
10.750% 12/15/06 .......................... 500 554,375
Tenet Healthcare Corp.
Sr. Sub. Notes
8.625% 01/15/07 ........................... 250 256,250
------------
3,271,812
------------
See Accompanying Notes to Financial Statements.
54
<PAGE>
WARBURG PINCUS HIGH YIELD FUND (CONTINUED)
PAR
(000) VALUE
------- -----------
INDUSTRIAL GOODS & MATERIALS -- 3.0%
Advanced Glass Fiber Yarns
144A Sr. Sub. Notes
9.875% 01/15/09 ........................... $ 500 $ 506,250
Anchor Lamina, Inc./ Anchor
Lamina America, Inc.
144A Sr. Sub. Notes
9.875% 02/01/08 ........................... 500 475,000
Golden Ocean Group Ltd.,
144A Gtd. Sr. Notes
10.000% 08/31/01 .......................... 657 170,820
International Utility Structures, Inc.
144A Sr. Sub. Notes
13.000% 02/01/08 .......................... 395 370,313
Jordan Industries, Inc.
Sr. Notes
10.375% 08/01/07 .......................... 500 509,375
MMI Products, Inc.
144A Sr. Sub. Notes, Series B
11.250% 04/15/07 .......................... 500 538,750
Morris Materials Handling, Inc.
144A Sr. Notes
9.500% 04/01/08 ........................... 250 148,125
Motors & Gears, Inc.
Sr. Notes, Series D
10.750% 11/15/06 .......................... 500 513,125
Russell Stanley Holdings, Inc.
Sr. Sub. Notes
10.875% 02/15/09 .......................... 500 495,000
Thermadyne Holdings Corp.
Sr. Discount Debentures
12.500% 06/01/08+ ......................... 250 121,250
World Color Press, Inc.
Sr. Sub. Notes
8.375% 11/15/08 ........................... 500 511,875
------------
4,359,883
------------
LEISURE & ENTERTAINMENT -- 0.4%
Hollywood Park, Inc.
144A Sr. Sub. Notes
9.250% 02/15/07 ........................... 500 499,375
------------
METALS & MINING -- 2.4%
Bayou Steel Corp. Co.
Gtd.
9.500% 05/15/08 ........................... 500 483,750
Golden Northwest Aluminum
First Mortgage Notes
12.000% 12/15/06 .......................... 400 407,500
Gulf States Steel, Inc.
First Mortgage Notes
13.500% 04/15/03 .......................... 200 48,500
Haynes International, Inc.
Sr. Notes
11.625% 09/01/04 .......................... 500 424,375
PAR
(000) VALUE
------- -----------
METALS & MINING -- (CONTINUED)
Ivaco, Inc. Yankee
Sr. Notes
11.500% 09/15/05 .......................... $ 250 $ 260,625
Kaiser Aluminum and
Chemical, Inc.
144A Sr. Notes
10.875% 10/15/06 .......................... 250 254,375
Metallurg, Inc.
Sr. Notes
11.000% 12/01/07 .......................... 500 457,500
NS Group, Inc.
Gtd. Sr. Secured Notes
13.500% 07/15/03 .......................... 240 258,600
Weirton Steel Corporation
Sr. Notes
11.375% 07/01/04 .......................... 350 329,000
WHX Corp.
Sr. Exchange Notes
10.500% 04/15/05 .......................... 500 476,250
------------
3,400,475
------------
OFFICE EQUIPMENT & SUPPLIES -- 0.2%
Knoll, Inc.
Sr. Sub. Notes
10.875% 03/15/06 ............................ 325 358,719
------------
PACKAGING & CONTAINERS -- 0.9%
BPC Holding Corporation
Sr. Secured Notes, Series B
12.500% 06/15/06 .......................... 500 527,500
Crown Packaging Enterprises Ltd.
Yankee Sr. Secured Discount Notes
14.000% 08/01/06+ ......................... 775 8,719
Four M Corp.
Gtd. Sr. Secured Notes,
Series B
12.000% 06/01/06 .......................... 250 191,250
Plastic Containers, Inc.
Sr. Secured Notes, Series B
10.000% 12/15/06 .......................... 250 262,813
Stone Container Finance Co.
Yankee Gtd. Sr. Notes
11.500% 08/15/06 .......................... 250 251,875
------------
1,242,157
------------
PAPER & FOREST PRODUCTS -- 2.7%
Ainsworth Lumber Co. Ltd.
Yankee Sr. Secured PIK Notes
12.500% 07/15/07 .......................... 400 399,000
Bear Island Paper Company, L.L.C./
Bear Island Finance Company II
Sr. Secured Notes, Series B
10.000% 12/01/07 .......................... 400 398,500
Crown Paper Co.
Sr. Sub. Notes
11.000% 09/01/05 .......................... 400 314,000
See Accompanying Notes to Financial Statements.
55
<PAGE>
PAR
(000) VALUE
------- -----------
PAPER & FOREST PRODUCTS -- (CONTINUED)
Gaylord Container Corp.
Sr. Notes
9.375% 06/15/07 ........................... $ 600 $ 559,500
MAXXAM Group Holdings, Inc.
144A Sr. Secured Notes,
Series B
12.000% 08/01/03 .......................... 400 405,500
Printpack, Inc.
Sr. Sub. Notes, Series B
10.625% 08/15/06 .......................... 450 433,125
Repap New Brunswick
Sr. Yankee Notes
10.625% 04/15/05 .......................... 700 528,500
S.D. Warren Co.
Sr. Sub. Notes
12.000% 12/15/04 .......................... 500 543,125
Specialty Paperboard, Inc.
144A Sr. Notes
9.375% 10/15/06 ........................... 250 255,000
------------
3,836,250
------------
PHARMACEUTICALS -- 0.3%
ICN Pharmaceutical, Inc.
144A Sr. Notes
8.750% 11/15/08 ........................... 500 502,500
------------
PUBLISHING & INFORMATION SERVICES -- 2.7%
Gray Communications Systems
Gtd. Sr. Sub. Notes
10.625% 10/01/06 .......................... 200 215,500
Hollinger International
Publishing Inc.
Sr. Sub. Notes
9.250% 03/15/07 ........................... 250 268,125
InterAct Systems, Inc.
144A Sr. Discount Notes
14.000% 08/01/03+ ......................... 700 280,000
Liberty Group Publishing, Inc.
Sr. Discount Debentures
11.625% 02/01/09+ ......................... 300 161,250
Mailwell Corp.
144A Sr. Sub. Notes
8.750% 12/15/08 ........................... 400 410,000
Mentus Media Corp.
144A Sr. Secured Notes
12.000% 02/01/03 .......................... 558 544,050
Nebraska Book Co.,
144A Sr. Sub. Notes
8.750% 02/15/08 ........................... 500 479,375
Phoenix Color Corp.
144A Sr. Sub. Notes
10.375% 02/01/09 .......................... 4500 506,250
Sun Media Corp.
Yankee Sr. Sub. Notes
9.500% 02/15/07 ........................... 194 214,855
9.500% 05/15/07 ........................... 65 71,988
PAR
(000) VALUE
------- -----------
PUBLISHING & INFORMATION SERVICES -- (CONTINUED)
Tri-State Outdoor Media
Group, Inc.
144ASr. Notes
11.000% 05/15/08 .......................... $ 500 $ 514,375
TV Guide, Inc.
144A Sr. Sub. Notes
8.125% 03/01/09 ........................... 275 273,281
------------
3,939,049
------------
REAL ESTATE -- 0.8%
HMH Properties, Inc.
Gtd. Sr. Notes
8.450% 12/01/08 ........................... 300 297,750
Host Marriot Hotel Properties
Sr. Notes
7.875% 08/01/05 ........................... 400 388,000
Intrawest Corp.
Yankee Sr Notes
9.750% 08/15/08 ........................... 500 509,375
------------
1,195,125
------------
RESTAURANTS, HOTELS & GAMING -- 8.9%
AFC Enterprises
Sr. Sub. Notes
10.250% 05/15/07 .......................... 400 423,000
American Restaurant Group, Inc.
144A Sr. Notes
11.500% 02/15/03 .......................... 500 451,875
AmeriKing, Inc.
Gtd. Sr. Notes
10.750% 12/01/06 .......................... 400 422,000
Ameristar Casinos, Inc.
Gtd. Sr. Sub. Notes, Series B
10.500% 08/01/04 .......................... 500 473,750
Argosy Gaming Co.
Sub. Notes
12.000% 06/01/01 .......................... 524 524,655
CapStar Hotel Co.,
144A Sr. Sub. Notes
8.750% 08/15/07 ........................... 250 243,125
Carrols Corp.
144A Sr. Sub. Notes
9.500% 12/01/08 ........................... 500 510,000
Casino America, Inc.
Gtd. Sr. Notes
12.500% 08/01/03 .......................... 500 561,875
Casino Magic of Louisiana Corp.
Gtd. First Mortgage Notes,
Series B
13.000% 08/15/03 .......................... 600 674,250
Circus Circus Enterprise
Sr. Sub. Notes
9.250% 12/01/05 ........................... 700 713,125
Coast Hotels and Casinos, Inc.
Gtd. First Mortgage Notes,
Series B
13.000% 12/15/02 .......................... 350 411,688
See Accompanying Notes to Financial Statements.
56
<PAGE>
WARBURG PINCUS HIGH YIELD FUND (CONTINUED)
PAR
(000) VALUE
------- -----------
RESTAURANTS, HOTELS & GAMING -- (CONTINUED)
Hard Rock Hotel, Inc.
144A Sr. Sub. Notes
9.250% 04/01/05 ........................... $ 600 $ 600,750
Harrahs Operating Co. Inc. Co.
Gtd.
7.875% 12/15/05 ........................... 500 500,000
Harvey Casino Resorts
Sr. Sub. Notes
10.625% 06/01/06 .......................... 500 530,000
Horseshoe Gaming L.L.C.
Gtd. Sr. Sub. Notes, Series B
9.375% 06/15/07 ........................... 500 510,000
Louisiana Casino Cruises, Inc.
144A Secured Notes
11.000% 12/01/05 .......................... 500 504,375
Mohegan Tribal Gaming Authority
Sr. Secured Notes, Series B
13.500% 11/15/02 .......................... 400 480,000
144A Sr. Sub. Notes
8.750% 01/01/09 ........................... 400 408,500
Park Place Entertainment
144A Sr. Sub. Notes
7.875% 12/15/05 ........................... 250 245,625
Players International, Inc.
Sr. Notes
10.875% 04/15/05 .......................... 250 268,750
Prime Hospitality Corp.
Secured First Mortgage Notes
9.250% 01/15/06 ........................... 250 259,063
Red Roof Inns, Inc.
Sr. Exchange Notes
9.625% 12/15/03 ........................... 250 249,688
Rio Hotel & Casino, Inc.
Sr. Sub. Notes
10.625% 07/15/05 .......................... 300 325,125
Showboat Marina Casino
Partnership/Showboat Marine
First Mortgage Notes, Series B
13.500% 03/15/03 .......................... 450 521,438
Station Casinos, Inc.
Sr. Sub. Notes
10.125% 03/15/06 .......................... 500 527,500
Sun International Hotels Ltd.
Yankee Gtd. Sr. Sub. Notes
9.000% 03/15/07 ........................... 400 419,500
The Majestic Star Casino L.L.C
Sr. Secured Notes
12.750% 05/15/03 .......................... 500 535,000
Waterford Gaming L.L.C./
Waterford Gaming Finance Corp.
144A Sr. Notes
12.750% 11/15/03 .......................... 473 532,125
------------
12,826,782
------------
PAR
(000) VALUE
------- -----------
RETAIL TRADE -- 3.1%
Advance Holding Corp
Sr. Discount
Debentures, Series B
12.875% 04/15/09+ ......................... $ 500 $ 306,250
County Seat Stores, Inc.
144A Units
12.750% 11/01/04 .......................... 500 255,000
Finlay Enterprises, Inc.
Sr. Secured
Debentures
9.000% 05/01/08 ........................... 250 231,875
HMV Media Group plc,
Sr. Sub. Notes
10.250% 05/15/08 .......................... 500 508,750
Jackson Products, Inc. Co.
Gtd. Notes
9.500% 04/15/05 ........................... 500 498,750
Jitney-Jungle Stores of
America, Inc.
Gtd. Sr. Notes
12.000% 03/01/06 .......................... 250 277,500
K Mart Corp. Debentures
7.750% 10/01/12 ........................... 600 596,250
Pantry, Inc.
Sr. Sub. Notes
10.250% 10/15/07 .......................... 250 260,938
Pathmark Stores,
Sr. Sub Notes
9.625% 05/01/03 ........................... 500 504,375
Pueblo Xtra International, Inc.
Sr. Notes
9.500% 08/01/03 ........................... 400 382,500
Randall's Food Markets, Inc.
Sr. Sub. Notes, Series B
9.375% 07/01/07 ........................... 600 649,500
------------
4,471,688
------------
TELECOMMUNICATIONS -- 18.8%
Bresnan Communications Co.
144A Sr. Discount Notes
9.250% 02/01/09+ .......................... 1,000 662,500
144A Sr. Notes
8.000% 02/01/09 ........................... 250 253,125
Carrier1
144A Units
13.250% 02/15/09 .......................... 500 500,000
Classic Communications Units
13.250% 08/01/09+ ......................... 1,000 660,000
Clearnet Communications, Inc.
Sr. Discount Notes
14.750% 12/15/05+ ......................... 1,000 891,250
Completel Europe NV Unit
14.000% 02/15/09+ ......................... 1,000 508,540
See Accompanying Notes to Financial Statements.
57
<PAGE>
WARBURG PINCUS HIGH YIELD FUND (CONTINUED)
PAR
(000) VALUE
------- -----------
TELECOMMUNICATIONS -- (CONTINUED)
Dobson Sygnet Communications
Sr. Notes
12.250% 12/15/08 .......................... $ 500 $ 538,125
DTI Holdings, Inc.
144A Sr. Discount Notes
12.500% 03/01/08+ ......................... 600 148,500
E Spire Communications
Sr. Discount Notes
13.000% 11/01/05+ ......................... 700 527,625
Focal Communications Corp.,
144A Sr. Discount Notes
12.125% 02/15/08 .......................... 550 275,000
Global Crossing Holdings, Ltd.
9.625% 05/15/08 ........................... 150 157,500
Globalstar L.P./ Globalstar Capital
Corp. 144A Sr. Notes
10.750% 11/01/04 .......................... 100 64,250
Globix Corp. Sr Regulated Notes
13.000% 05/01/05 .......................... 600 557,250
GST Equipment Funding
144A Sr. Secured Exchange Notes
13.250% 05/01/07 .......................... 250 252,500
GST USA, Inc.
Gtd. Sr. Discount Exchange Notes
13.875% 12/15/05+ ......................... 500 356,875
Hyperion Telecommunications, Inc.
Sr. Discount Notes, Series B
13.000% 04/15/03+ ......................... 500 390,000
Hyperion Telecommunications, Inc.
Sr. Notes, Series B
12.250% 09/01/04 .......................... 250 267,500
ICG Services, Inc.
144A Sr. Discount Notes
10.000% 02/15/08+ ......................... 500 268,750
Intelcom Group (U.S.A.), Inc.
Gtd. Sr. Exchangeable
Discount Notes
12.500% 05/01/06 .......................... 800 609,000
Intermedia Communications, Inc.
Sr. Discount Notes
11.250% 07/15/07+ ......................... 1,000 696,250
International Cabletel, Inc.
Sr. Notes
11.500% 02/01/06+ ......................... 415 357,938
Iridium L.L.C. Capital Corp.
144A Sr. Notes
11.250% 07/15/05 .......................... 350 266,875
ITC DeltaCom, Inc.
Sr. Notes
11.000% 06/01/07 .......................... 163 178,485
IXC Communications, Inc.
Sr. Sub. Notes
9.000% 04/15/08 ........................... 600 636,000
PAR
(000) VALUE
------- -----------
TELECOMMUNICATIONS -- (CONTINUED)
Jordan Telecommunications
Products, Inc.
Sr. Discount Notes, Series B
11.750% 08/01/07+ ...................... $ 400 $ 324,000
Sr. Notes
9.875% 08/01/07 ........................ 250 251,563
KMC Telecom Holdings, Inc.
Sr. Discount Notes
12.500% 02/15/08+ ......................... 500 267,500
Level 3 Communications, Inc.
Gtd. Sr. Sub. Notes
8.500% 05/15/08 ........................ 250 260,938
8.000% 08/01/08 ........................ 250 255,625
Sr. Discount Notes
10.500% 12/01/08+ ...................... 1,000 575,000
Logix Communications Enterprises
Sr. Notes
12.250% 06/15/08 .......................... 400 365,000
McCaw International Ltd.
144A Units
13.000% 04/15/07+ ......................... 500 275,000
McleodUSA, Inc.
144A Sr. Notes
8.125% 02/15/09 ........................ 500 496,250
Sr. Notes
9.250% 07/15/07 ........................ 300 318,000
Sr. Discount Notes
10.500% 03/01/07+ ...................... 600 471,000
MDC Communications Corp.
Sr. Sub. Notes
10.500% 12/01/06 .......................... 500 505,000
MetroNet Communications Corp.
Sr. Discount Notes
10.750% 11/01/07+ ...................... 400 288,000
Sr. Notes
12.000% 08/15/07 ....................... 400 452,000
MJD Communications, Inc.
Sr. Sub. Notes
9.500% 05/01/08 ........................... 250 253,438
Nextel Partners, Inc.
144A Sr. Discount Notes
14.000% 02/01/09+ ......................... 1,000 520,000
NEXTLINK Communications, Inc.
144A Sr. Notes
10.750% 11/15/08 ....................... 250 259,375
Sr. Discount Notes
9.450% 04/15/08+ ....................... 500 296,250
NEXTLINK Communications,
L.L.C. /NEXTLINK Capital, Inc.
Sr. Notes
12.500% 04/15/06 .......................... 250 273,125
See Accompanying Notes to Financial Statements.
58
<PAGE>
WARBURG PINCUS HIGH YIELD FUND (CONTINUED)
PAR
(000) VALUE
------- -----------
TELECOMMUNICATIONS -- (CONTINUED)
NTL, Inc.
144A Sr. Notes
10.000% 02/15/07 .......................... $ 250 $ 266,875
Optel, Inc.
Sr. Notes
11.500% 07/01/08 .......................... 350 342,125
Orbital Imaging Corp.,
144A Units
11.625% 03/01/05 .......................... 500 501,875
Orion Network Systems, Inc.
Gtd. Sr. Notes
11.250% 01/15/07 .......................... 300 291,000
Pac-West Telecomm, Inc.
144A Sr. Notes
13.500% 02/01/09 .......................... 250 250,625
Pagemart Nationwide, Inc.
Sr. Discount Notes
15.000% 02/01/05+ ......................... 750 636,563
Pegasus Communications, Inc.
Sr. Notes
9.750% 12/01/06 ........................... 500 523,750
PLD Telekom, Inc.
144ASub. Notes
9.000% 06/01/06 ........................... 230 117,300
PLD Telekom, Inc.
Yankee Co. Gtd. Notes
14.000% 06/01/04 .......................... 1,010 606,000
Price Comm Wireless, Inc.
144A Sr. Sub. Notes
11.750% 07/15/07 .......................... 250 277,500
Price Communications Cellular
Holdings Sr. PIK Notes
11.250% 08/15/08 .......................... 250 238,125
Primus Telecommunications
Group, Inc.
144A Sr. Notes
11.250% 01/15/09 .......................... 800 810,000
PSINET, Inc.
144A Sr. Notes
11.500% 11/01/08 .......................... 500 560,000
Qwest Communications
International, Inc.
Sr. Discount Notes
9.470% 10/15/07+ ....................... 750 599,063
Sr. Notes, Series B
10.875% 04/01/07 ....................... 130 150,963
RCN Corp.
Sr. Notes, Series B
10.000% 10/15/07 ....................... 400 385,000
Sr. Discount Notes, Series B
11.125% 10/15/07+ ...................... 250 146,875
9.800% 02/15/08+ ...................... 300 162,000
Rhythms Netconnections
Sr. Discount Notes
13.500% 05/15/08+ ......................... 850 425,000
PAR
(000) VALUE
------- -----------
TELECOMMUNICATIONS -- (CONTINUED)
Rsl Communications plc
10.500% 11/15/08 .......................... $ 400 $ 411,000
Salem Communications Corp.
144A Co. Gtd., Series B
9.500% 10/01/07 ........................... 250 266,875
Startec Global Communications,
Inc. Sr. Notes
12.000% 05/15/08 .......................... 400 350,000
Supercanal Holdings S.A.,
144A Bonds
11.500% 05/15/05 .......................... 250 118,125
Telewest Communications plc
Debentures
9.625% 10/01/06 ........................... 250 267,500
Teligent Inc.
Sr. Notes
11.500% 12/01/07 .......................... 250 237,500
Time Warner Telecom L.L.C
and Time Warner Telecom Inc.,
Sr. Notes
9.750% 07/15/08 ........................... 500 540,000
Viatel, Inc.
Sr. Disc. Notes
12.500% 04/15/08+ ......................... 600 363,000
WinStar Communications, Inc.
Sr. Discount Notes
14.000% 10/15/05+ ......................... 500 366,250
------------
26,941,791
------------
TEXTILES & APPAREL -- 1.0%
Maxim Group, Inc.
Gtd. Sr. Sub. Notes, Series B
9.250% 10/15/07 ........................... 500 498,750
Phillips Van-Heusen Corp.
Sr. Sub. Notes
9.500% 05/01/08 ........................... 500 504,375
William Carter Company
Sr. Sub. Notes, Series A
10.375% 12/01/06 .......................... 450 484,875
------------
1,488,000
------------
TRANSPORTATION -- 1.7%
AirTran Airlines, Inc.
Secured Notes
10.500% 04/15/01 .......................... 250 212,500
Atlantic Express Transportation
Corp.
Gtd. Sr. Secured Notes
10.750% 02/01/04 .......................... 250 256,875
Canadian Airlines Corp.
Yankee Sr. Notes
12.250% 08/01/06 .......................... 250 152,500
Hermes Europe Railtel
144A Sr. Notes
10.375% 01/15/09 .......................... 500 528,750
See Accompanying Notes to Financial Statements.
59
<PAGE>
WARBURG PINCUS HIGH YIELD FUND (CONTINUED)
PAR
(000) VALUE
------- -----------
TRANSPORTATION -- (CONTINUED)
Hermes Europe Railtel BV
Sr. Notes
11.500% 08/15/07 .......................... $ 250 $ 271,250
Kitty Hawk, Inc.
Sr. Notes
9.950% 11/15/04 ........................... 250 250,313
Pegasus Shipping ( Hellas) Ltd.
144A Gtd. First Preferred
Mortgage Notes, Series A
11.875% 11/15/04 .......................... 500 411,875
Trans World Airlines
Sr. Notes
11.375% 03/01/06 .......................... 500 299,375
------------
2,383,438
------------
WASTE MANAGEMENT -- 0.8%
Allied Waste North America,
144A Gtd. Sr. Notes
7.875% 01/01/09 ........................... 700 708,750
Waste Systems International, Inc.
144A Conv. Sub. Notes
7.000% 05/13/05 ........................... 500 467,500
------------
1,176,250
------------
TOTAL CORPORATE BONDS
(Cost $139,356,294) ....................... $135,766,287
------------
ASSET BACKED SECURITY -- 0.4%
Airplanes Pass Through Trust
Series 1, Class D
10.875% 03/15/19 .......................... $ 600 $ 607,503
------------
(Cost $600,000)
NUMBER
OF SHARES
---------
RIGHTS & WARRANTS -- 1.1%
BROADCASTING -- 0.0%
Australis Holdings Pty. Ltd. ................ 294 $ 3
------------
CABLE -- 0.4%
DIVA Systems Corp. .......................... 7,581 76
DIVA Systems Corp. .......................... 2,250 495,000
------------
495,076
------------
CHEMICALS -- 0.2%
Uniroyal Technology Corp. ................... 43,500 280,031
------------
COMPUTERS, SOFTWARE & SERVICES-- 0.1%
Verio, Inc. ................................. 2,800 61,600
------------
CONSTRUCTION & BUILDING MATERIALS -- 0.0%
Capital Pacific Holdings Group,
Inc. ........................................ 12,640 6,952
------------
NUMBER
OF SHARES VALUE
--------- -----------
CONSUMER PRODUCTS & SERVICES -- 0.0%
Coinstar Inc. ............................... 3,671 $ 57,818
Signature Brands USA, Inc. .................. 250 --
------------
57,818
------------
INDUSTRIAL GOODS & MATERIALS -- 0.0%
Golden Ocean Group, Ltd. .................... 438 876
------------
PUBLISHING & INFORMATION SERVICES-- 0.0%
InterAct Systems, Inc. ...................... 700
Mentus Media Corp. 144A ..................... 1,391 14
Source Media Inc. ........................... 5,587 49,589
------------
49,603
------------
TELECOMMUNICATIONS -- 0.4%
Advanced Radio
Telecommunications Corp. .................. 7,500 48,000
Ampex Corp. 144A ............................ 17,000 51,000
Bell Technology 144A ........................ 600 12,658
DTI Holdings, Inc. 144A ..................... 3,000 150
E Spire Communications Inc.
144A ...................................... 1,500 165,000
Globalstar, L.P. ............................ 200 10,900
KMC Telecom Holdings, Inc. .................. 500 7,500
McCaw International Ltd. .................... 500 1,250
MetroNet Communications
Corp. ..................................... 400 1,400
Microcell Telecommunications,
Inc. ...................................... 1,600 17,600
Orbital Imaging Corp. ....................... 500 20,000
Orion Network Systems, Inc. ................. 300 3,300
PLD Telekom, Inc. ........................... 1,010 10
Price Communications Corp. .................. 2,752 159,616
Rhythms Netconnections ...................... 3,000 60,000
Startec Global Communications ............... 400 400
------------
558,784
------------
TOTAL RIGHTS & WARRANTS
(Cost $542,432) ........................... $ 1,510,743
------------
COMMON STOCKS -- 0.0%
PACKAGING/CONTAINERS -- 0.0%
Crown Packaging Enterprises,
Ltd. ...................................... 100,847 $ 1,008
------------
TELECOMMUNICATIONS -- 0.0%
Intermedia Communications,
Inc. ...................................... 1,671 30,287
------------
TOTAL COMMON STOCKS
(Cost $34,471) ............................ $ 31,295
------------
See Accompanying Notes to Financial Statements.
60
<PAGE>
WARBURG PINCUS HIGH YIELD FUND (CONCLUDED)
NUMBER
OF SHARES VALUE
--------- -----------
PREFERRED STOCKS -- 2.2%
AEROSPACE/DEFENSE -- 0.6%
GPA Group plc Convertible
Cumulative Second
Preference Shares ......................... 1,750,000 $ 910,000
------------
CABLE -- 0.1%
DIVA Systems Corporation,
Series C .................................. 5,945 67,773
------------
CELLULAR/WIRELESS COMMUNICATIONS -- 0.2%
Rural Cellular Corp.
144A PIK .................................. 2,710 266,258
------------
PUBLISHING & INFORMATION SERVICES -- 0.2%
Source Media Inc.
144A PIK .................................. 11,807 230,237
------------
RESTAURANTS, HOTELS & GAMING -- 0.1%
AmeriKing, Inc.
13.00% Cum. Exchangeable .................. 6,250 160,938
------------
TELECOMMUNICATIONS -- 1.0%
E Spire Communications Inc.
Jr. PIK ................................... 934 354,920
Hyperion Telecommunications, Inc.
12.875% Sr. Exch
Redeemable, Series B ...................... 7 5,180
Intermedia Communications Inc.
144A 7.00% Jr. Convertible,
Series E .................................. 20,000 397,500
Nextel Communications, Inc.
13.00% Exchangeable,
Series D PIK .............................. 299 299,425
NEXTLINK Communications, Inc.
144A14% Sr. Exchangeable
PIK ....................................... 7,901 414,803
------------
1,471,828
------------
TOTAL PREFERRED STOCKS
($3,251,687) .............................. $ 3,107,034
------------
VALUE
-----------
TOTAL INVESTMENTS -- 98.4%
(Cost $143,784,884*) ......................... $141,022,862
OTHER ASSETS IN EXCESS
OF LIABILITIES-- 1.6% ..................... 2,291,974
------------
TOTAL NET ASSETS -- 100.0% .................. $143,314,836
============
* Also cost for Federal income tax purposes at February 28, 1999. The gross
appreciation (depreciation) on a tax basis is as follows:
Gross Appreciation ....................................... $ 6,232,110
Gross Depreciation ....................................... (8,994,132)
------------
Net Depreciation ......................................... $ (2,762,022)
============
+ Step Bond-- The interest rate as of February 28, 1999 is 0% and will reset
to interest rate shown at a future date.
INVESTMENT ABBREVIATIONS
PIK .................................................................Pay In Kind
See Accompanying Notes to Financial Statements.
61
<PAGE>
WARBURG PINCUS MUNICIPAL BOND FUND
PORTFOLIO MANAGERS' LETTER
April 20, 1999
Dear Shareholders:
We are writing to report on the results of the Warburg Pincus Municipal Bond
Fund (the "Fund") for the fiscal half-year ended February 28, 1999.
At February 28, 1999, the net asset value ("NAV") of the Fund's Institutional
shares was $14.92, compared to an NAV of $15.12 on August 31, 1998. As a result,
the Institutional shares' total return was 2.3% (assuming the reinvestment of
dividends and distributions totaling $0.48 per share). By comparison, the Lehman
Brothers Municipal Bond Index (the "Index") returned 2.6% during the same
period.
At February 28, 1999, NAV of the Fund's Common shares was $14.92, compared to an
NAV of $15.14 at their inception of investment operations on October 30, 1998.
The Common shares' total return between October 30, 1998 and February 28, 1999
thus was 1.2% (assuming the reinvestment of dividends and distributions totaling
$0.40 per share). By comparison, the Index returned 1.4% during the same period.
The Fund slightly underperformed the Index in the fiscal half-year due to its
modest exposure to taxable corporate bonds. Although corporates enjoyed a
healthy rebound after the broad fixed-income sell-off in the summer of 1998,
they did not do so to the same extent as the municipal market. The Fund's return
relative to the Index was affected accordingly.
Within the broad municipal market, performance benefited from our ongoing
emphasis on higher-quality paper, which remained especially popular among muni
buyers. This was reflected by our substantial positions in non-callable
securities.
As developments occur in the fixed income markets or at Credit Suisse Asset
Management that we believe would be of interest to you, we will be sure to keep
you informed. Meanwhile, if you have questions, please feel free to call upon us
at any time.
Sincerely yours,
Credit Suisse Asset Management Fixed Income Management Team
Robert J. Moore, Managing Director
William P. Sterling, Managing Director
Gregg M. Diliberto, Managing Director
Robert W. Justich, Managing Director
Mark K. Silverstein, Managing Director
Ira Edelblum, Director
Jo Ann Corkran, Director
A PORTION OF INCOME MAY BE SUBJECT TO STATE AND CITY TAXES OF FEDERAL
ALTERNATIVE MINIMUM TAX.
62
<PAGE>
WARBURG PINCUS MUNICIPAL BOND FUND
PORTFOLIO MANAGERS' LETTER (CONCLUDED)
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN THE WARBURG PINCUS
MUNICIPAL BOND INSTITUTIONAL SHARES AND THE LEHMAN BROTHERS MUNICIPAL BOND
INDEX 1 FROM INCEPTION (6/20/94), PERIOD ENDED (7/31/94) AND AT EACH QUARTER
END. (UNAUDITED)
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
WARBURG PINCUS LEHMAN BROTHER
MUNICIPAL BOND MUNICIPAL BOND
INSTITUTIONAL SHARES INDEX
06/20/94 $10,000 10,000
07/31/94 10,040 10,038
08/31/94 10,040 10,073
11/30/94 9,647 9,571
02/28/95 10,350 10,354
05/31/95 10,846 10,820
08/31/95 10,886 10,965
11/30/95 11,193 11,079
02/29/96 11,216 11,498
05/31/96 10,937 11,314
08/31/96 11,134 11,539
11/30/96 11,643 12,049
02/28/97 11,731 12,132
05/31/97 11,835 12,252
08/31/97 12,218 12,606
11/30/97 12,508 12,914
02/28/98 12,812 13,242
05/31/98 12,971 13,402
08/31/98 13,149 13,697
11/30/98 13,370 13,916
02/28/99 13,446 14,055
Note: Past performance is not predictive of future performance. Investment
return and principle value of an investment will fluctuate so that an investor's
shares upon redemption may be worth more or less than their original cost.
1 The Lehman Brothers Municipal Bond 10 Year Index is computed twice a month
from prices on approximately 1,100 bonds. The index is composed of
approximately 60% revenue bonds and 40% state government obligations. The
issues in the index have a maturity of 8-12 years and the prices are supplied
by Kenny Information Systems, Inc.
63
<PAGE>
WARBURG PINCUS MUNICIPAL BOND FUND
SCHEDULE OF INVESTMENTS
FEBRUARY 28, 1999
(UNAUDITED)
PAR
(000) VALUE
--------- ---------
MUNICIPAL BONDS -- 76.6%
CALIFORNIA -- 11.6%
California State GO
6.300% 09/11/11 ......................... $ 670 $ 793,112
5.125% 10/01/17 ......................... 825 836,344
Los Angeles CA, Department of
Water & Power Water RB
4.500% 05/15/23 ......................... 705 650,362
San Diego CA Convention Center
Expansion Financing Authority,
Series A
4.750% 04/01/28 ......................... 535 512,262
---------
2,792,080
---------
COLORADO -- 2.8%
Colorado Springs CO, Utility RB
5.875% 11/15/17 ........................... 595 667,144
---------
FLORIDA -- 5.9%
Jacksonville FL, Electric Authority
RB, 2nd Installment
6.000% 07/01/12 ......................... 610 677,862
Tallahassee FL, Electric RB, First Lien
6.100% 10/01/06 ......................... 670 727,787
---------
1,405,649
---------
ILLINOIS -- 5.8%
Chicago Illinois GO, Series 1993
5.250% 01/01/18 ......................... 705 707,644
Illinois State Sales Tax RB, Series Q
5.750% 06/15/14 ......................... 650 684,125
---------
1,391,769
---------
INDIANA -- 0.1%
Indianapolis IN, Public
Improvement Board RB
6.000% 01/10/03 ......................... 25 27,125
---------
LOUISIANA -- 3.1%
New Orleans LA, Home Mortgage
Authority SOB
6.250% 01/15/11 ......................... 635 731,837
---------
MARYLAND -- 4.2%
Maryland State Transportation
Authority Project RB
6.800% 07/01/16 ......................... 850 1,014,687
---------
MASSACHUSETTS -- 2.8%
Massachusetts State Water
Resources Authority, General RB,
Series 92A
6.500% 07/15/19 ......................... 20 23,550
Massachusetts State Water Resources
Authority RB, Series B
5.000% 12/01/25 ......................... 660 642,675
---------
666,225
---------
PAR
(000) VALUE
--------- --------
NEW YORK -- 26.2%
Metropolitan Transit Authority
Commuter Facilities RB, Series A
5.000% 07/01/23 ......................... $ 600 $ 593,250
New York, NY Municipal Water
Finance Authority Water &
Sewer System RB, Series D
4.875% 06/15/21 ......................... 400 390,000
New York State Dormitory Authority
RB (Elizabeth Church Manor
Nursing Home)
5.400% 08/01/23 ......................... 60 61,125
New York State Dormitory
Authority RB (Episcopal
Health Services)
7.550% 08/01/29 ......................... 435 455,645
New York State Dormitory Authority
RB (Judicial Facilities Lease)
7.375% 07/01/16 ......................... 40 50,000
New York State Dormitory
Authority RB (Park Ridge
Housing Inc. Project)
7.850% 02/01/29 ......................... 530 547,776
New York State Local Government
Assistance Corp. RB, Series B
4.875% 04/01/20 ......................... 580 566,950
New York State Power Authority
General Purpose RB, Series R
7.000% 01/01/10 ......................... 360 432,000
New York State Throughway
Authority General RB, Series B
5.000% 01/01/20 ......................... 30 29,775
New York, NY Prerefunded GO,
Series D
8.000% 08/01/01 ......................... 605 676,844
6.000% 02/15/05 ......................... 10 11,162
New York, NY Unrefunded Balance
GO, Series D
8.000% 08/01/03 ......................... 45 49,894
6.000% 02/15/25 ......................... 5 5,362
New York, NY Prerefunded GO,
Series H
7.200% 02/01/02 ......................... 530 588,962
New York, NY Unrefunded
Balance GO, Series H
7.200% 02/01/13 ......................... 70 76,650
New York, NY Municipal Water
Finance Authority Water &
Sewer System RB, Series B
5.125% 06/15/30 ......................... 295 295,369
New York, NY Transitional Finance
Authority RB (Future Tax Secured),
Series B
4.750% 11/15/14 ......................... 35 34,781
Suffolk County NY Water Authority,
Waterworks RB, Series V
6.750% 06/01/12 ......................... 580 676,425
See Accompanying Notes to Financial Statements.
64
<PAGE>
WARBURG PINCUS MUNICIPAL BOND FUND (CONTINUED)
PAR
(000) VALUE
--------- ----------
NEW YORK -- (CONTINUED)
Triborough Bridge and Tunnel
Authority, NY General Purpose
RB, Series A
5.200% 01/01/20 ......................... $ 730 $ 736,387
-----------
6,278,357
-----------
PUERTO RICO -- 3.9%
Commonwealth of Puerto Rico GO
5.400% 07/01/07 ......................... 730 790,225
Puerto Rico Electric Power
Authority RB, Series N
7.125% 07/01/14 ......................... 135 138,842
-----------
929,067
-----------
SOUTH DAKOTA -- 0.1%
Heartland Consumers Power District,
SD Electric RB
6.375% 01/01/16 .......................... 25 28,312
-----------
TENNESSEE -- 0.1%
Metropolitan Government of
Nashville and Davidson County,
TN Water and Sewer RB Series A
4.750% 01/01/22 .......................... 30 28,538
-----------
VIRGIN ISLANDS -- 3.0%
Virgin Islands Public Finance
Authority RB
7.700% 10/01/99 .......................... 690 722,803
-----------
VIRGINIA -- 3.3%
Fairfax County, VA Redevelopment
& Housing Authority (Island Walk
Proj.), Mortgage RB
7.100% 04/01/19 .......................... 630 789,075
-----------
WASHINGTON -- 3.7%
King County, WA GO, Series A
6.200% 01/01/24 ......................... 40 44,750
Seattle, WA Municipal Light &
Power RB
5.125% 07/01/22 ......................... 100 100,375
Seattle, WA Water System RB
5.250% 12/01/23 ......................... 735 735,919
-----------
881,044
-----------
TOTAL MUNICIPAL BONDS
($16,989,386) ........................... $18,353,712
-----------
CORPORATE BONDS -- 9.2%
BANKING -- 1.4%
Bangko Sentral Pilipinas,
Yankee Bonds
8.600% 06/15/27 ......................... $ 75 $ 64,875
Export-Import Bank of Korea,
Global Bonds
6.500% 02/10/02 ......................... 25 23,969
PAR
(000) VALUE
--------- --------
BANKING -- (CONTINUED)
Export-Import Bank of Korea,
Yankee Notes
6.500% 05/15/00 ........................ $ 50 $ 49,063
First Republic Bank Corp.
Sub. Notes
7.750% 09/15/12 ......................... 25 23,844
Fuji JGB Investment LLC,
Noncumulative Preferred
Securities, Series A
9.870% 06/30/99 ......................... 145 113,274
Fuji Finance (Cayman) Ltd.
Perpetual Sub. Notes
5.801%+++ ............................... 100 57,000
---------
332,025
---------
BROADCASTING -- 0.5%
Fox/Liberty Networks L.L.C.,
Registered Sr. Discount Notes
8.875% 08/15/07 ......................... 105 109,594
---------
CABLE -- 0.6%
CSC Holdings Inc., Sr. Notes
7.875% 12/15/07 ......................... 80 84,600
7.250% 07/15/08 ......................... 20 20,350
Diamond Cable Communications plc,
Yankee Sr. Discount Notes
10.750% 02/15/07 ........................ 50 38,500
---------
143,450
---------
ENERGY -- 0.6%
YPF S.A., Yankee Sr. Notes
7.250% 03/15/03 ......................... 75 71,344
YPF S.A., Yankee Notes
8.000% 02/15/04 ......................... 75 72,563
---------
143,907
---------
FINANCIAL SERVICES -- 0.2%
Bay View Capital Corp.,
Sub. Notes
9.125% 08/15/07 ......................... 55 53,281
---------
FOOD & BEVERAGE -- 0.1%
Arisco Productos Alimenticios
S.A., Gtd. Notes
10.750% 05/22/05 ........................ 20 11,600
---------
HEALTH CARE -- 0.3%
Columbia/HCA Healthcare Corp.,
Debentures
8.360% 04/15/24 ......................... 85 78,583
---------
PAPER AND FOREST PRODUCTS -- 0.0%
P.T. Indah Kiat Pulp & Paper Corp.,
Sr. Secured Notes
8.875% 11/01/00 ......................... 15 10,781
---------
See Accompanying Notes to Financial Statements.
65
<PAGE>
WARBURG PINCUS MUNICIPAL BOND FUND (CONTINUED)
PAR
(000) VALUE
--------- --------
RETAIL -- 0.4%
K Mart Corp. Notes
7.950% 02/01/23 ......................... $ 25 $ 24,813
K Mart Corp., Pass-Through
Certificates, Series 1995 Class K3
8.540% 01/02/15 ......................... 78 75,597
---------
100,410
---------
TELECOMMUNICATIONS -- 1.4%
Cencall Communications Corp.,
Sr. Discount Notes
10.125% 01/15/04 ........................ 25 25,375
CS Wireless Systems, Inc.,
Sr. Discount Notes, Series B
11.375% 03/01/06 ........................ 30 6,000
Global Communicacoes e
Participacoes S.A., Sr. Notes
10.625% 12/05/08 ........................ 30 16,650
Nextel Communications, Inc.,
Sr. Discount Notes
9.950% 02/15/08 ......................... 5 3,200
Nextel Communications, Inc.,
Sr. Serial Redeemable
Discount Notes
10.650% 09/15/07 ........................ 90 61,200
Nextel Communications, Inc.,
Sr. Discount Notes
9.750% 08/15/04 ......................... 145 147,538
Paging Network, Inc.,
Sr. Sub. Notes
8.875% 02/01/06 ......................... 10 8,500
10.125% 08/01/07 ......................... 35 30,450
10.000% 10/15/08 ......................... 35 30,450
Wireless One, Inc.,
Sr. Discount Notes
13.500% 08/01/06 ........................ 35 3,150
---------
332,513
---------
TRANSPORTATION -- 1.7%
Continental Airlines, Inc.,
Sr. Notes
9.500% 12/15/01 ......................... 90 94,613
Grupo Transportacion Ferroviaria
Mexicana, S. A. de CV, Gtd.
Sr. Discount Notes
11.750% 06/15/09 ........................ 80 42,800
Northwest Airlines, Inc., Gtd. Notes
7.625% 03/15/05 ......................... 200 184,000
US Airways, Inc., Gtd. Sr. Notes
9.625% 02/01/01 ......................... 95 97,369
---------
418,782
---------
PAR
(000) VALUE
--------- --------
UTILITIES -- 2.0%
Beaver Valley Funding Corp.
Secured Lease Obligation Bonds
9.000% 06/01/17 ......................... $ 140 $ 152,250
Connecticut Light and Power Co.
First and Ref. Mortgage Bonds,
Series C
7.750% 06/01/02 ......................... 85 87,444
Series D
7.875% 10/01/24 ......................... 10 10,388
Korea Electric Power,
Yankee Notes
7.000% 10/01/02 ......................... 35 33,644
Korea Electric Power,
Yankee Debentures
7.000% 02/01/27 ......................... 115 106,519
North Atlantic Energy Corp.,
Secured First Mortgage Notes,
Series A
9.050% 06/01/02 ......................... 93 93,814
----------
484,059
----------
TOTAL CORPORATE BONDS
($2,300,202) ............................ $2,218,985
----------
FOREIGN BONDS -- 3.7%
Republic of Argentina,
Sr. Notes
12.163% 04/10/05 ........................ $ 130 $ 115,700
Republic of Colombia,
Yankee Notes
10.986% 05/13/99 ........................ 140 126,000
Republic of Phillippines,
Global Bonds
9.875% 01/15/19 ......................... 60 59,625
Republic of Poland, Past Due
Interest Bonds
5.000% 10/27/14 ......................... 510 463,781
Republic of Venezuela,
Global Bonds
9.250% 09/15/27 ......................... 105 59,850
United Mexican States,
Global Bonds
11.500% 05/15/26 ........................ 50 52,250
---------
TOTAL FOREIGN BONDS
($877,998) .............................. $ 877,206
---------
See Accompanying Notes to Financial Statements.
66
<PAGE>
WARBURG PINCUS MUNICIPAL BOND FUND (CONCLUDED)
NUMBER
OF SHARES VALUE
--------- ----------
PREFERRED STOCKS -- 5.2%
California Federal
Capital Corp., Series A ................. 5,450 $ 144,084
Blackrock Insured Municipal,
Series M7 ............................... 20 500,000
Nuveen Insured Municipal
Opportunity, Series W Pfd. .............. 8 200,000
Nuveen Insured Premium
Income 2, Series W Pfd. ................. 8 200,000
Nuveen Maryland Premium
Income 2, Series W Pfd. ................. 8 200,000
-----------
TOTAL PREFERRED STOCKS
(Cost $1,238,975) ....................... $ 1,244,084
-----------
PAR
(000)
-------
SHORT-TERM INVESTMENT -- 4.3%
BBH Grand Cayman U.S.
Dollar Time Deposit
4.250% 03/01/99 ......................... 1,024 $ 1,024,000
-----------
(Cost $1,024,000)
TOTAL INVESTMENTS -- 99.0%
(Cost $22,430,561*) $23,717,987
OTHER ASSETS IN EXCESS
OF LIABILITIES-- 1.0% 249,566
-----------
TOTAL NET ASSETS -- 100.0% $23,967,553
===========
* Cost for Federal income tax purposes at February 28, 1999 is $22,519,438.
The gross appreciation (depreciation) on a tax basis is as follows:
Gross Appreciation ................... $ 1,397,035
Gross Depreciation ................... (198,486)
-----------
Net Appreciation ..................... $ 1,198,549
===========
+++ Securities have no stated maturity date.
The Moody's Investors Service, Inc. and Standard & Poor's Ratings Group
ratings indicated are the most recent rating available at Februrary 28, 1999
and are unaudited.
INVESTMENT ABBREVIATIONS
GO .........................................................General Obligations
RB ................................................................Revenue Bond
SOB ...................................................Special Obligations Bond
See Accompanying Notes to Financial Statements.
67
<PAGE>
THE WARBURG PINCUS FUNDS
STATEMENTS OF ASSETS AND LIABILITIES
FEBRUARY 28, 1999
(UNAUDITED)
<TABLE>
<CAPTION>
INTERNATIONAL EMERGING EUROPEAN U.S. CORE
GROWTH FUND MARKETS II FUND EQUITY FUND EQUITY FUND
------------- --------------- ----------- -----------
<S> <C> <C> <C> <C>
ASSETS
Investments, at value (cost - $633,090,004, $18,399,911,
$30,051,073 and $60,235,950, respectively) .............. $ 706,431,705 $ 17,632,169 $28,916,604 $68,024,950
Collateral received for securities loaned ................. 121,024,220 1,104,232 1,122,400 4,835,500
Receivable for investments sold ........................... 31,632,640 251,499 2,103,241 --
Receivable for Fund shares sold ........................... 19,598 -- 67,122 --
Dividends and interest receivable ......................... 1,116,940 63,385 19,464 60,784
Prepaid expenses and other assets ......................... 90,593 186,852 2,346 546
------------- --------------- ----------- -----------
Total Assets ............................................ 860,315,696 19,238,137 32,231,177 72,921,780
------------- --------------- ----------- -----------
LIABILITIES
Payable upon return of securities loaned .................. 121,024,220 1,104,232 1,122,400 4,835,500
Payable for investments purchased ......................... 53,327,906 27,818 3,660,198 --
Payable for Fund shares repurchased ....................... 98,006 -- 18,161 80,000
Advisory fee payable ...................................... 403,367 9,985 6,941 29,021
Distribution fee payable (Common shares) .................. 27,944 1,248 5,768 --
Accrued expenses payable .................................. 664,252 49,420 20,004 18,952
------------- --------------- ----------- -----------
Total Liabilities ....................................... 175,545,695 1,192,703 4,833,472 4,963,473
------------- --------------- ----------- -----------
NET ASSETS
Capital stock, $0.001 par value. .......................... 31,619 62,819 2,913 3,682
Paid-in capital. .......................................... 590,214,129 51,111,341 28,641,951 56,804,066
Undistributed net investment income/(loss) ................ (12,995,357) (612,444) 33,482 17,400
Accumulated net realized gain/(loss) from investments,
securities sold short, futures and foreign currency
related transactions, if any ............................ 34,119,237 (31,730,242) (252,370) 3,344,159
Net unrealized appreciation/(depreciation) on
investments and other, if any. .......................... 73,400,373 (786,040) (1,028,271) 7,789,000
------------- --------------- ----------- -----------
Net Assets .............................................. $ 684,770,001 $ 18,045,434 $27,397,705 $67,958,307
============= =============== =========== ===========
INSTITUTIONAL SHARES
Net assets ................................................ $ 658,289,264 $ 17,278,548 $ 95,630 $67,873,191
------------- --------------- ----------- -----------
Shares outstanding ........................................ 30,386,239 1,510,755 10,003 3,677,407
------------- --------------- ----------- -----------
Net asset value, offering price and redemption
price per share ......................................... $ 21.66 $ 11.44 $ 9.56 $ 18.46
============= =============== =========== ===========
COMMON SHARES
Net assets ................................................ $ 26,480,737 $ 766,886 $27,302,075 $ 85,116
------------- --------------- ----------- -----------
Shares outstanding ........................................ 1,231,688 66,818 2,856,863 4,616
------------- --------------- ----------- -----------
Net asset value, offering price and redemption
price per share ......................................... $ 21.50 $ 11.48 $ 9.56 $ 18.44
============= =============== =========== ===========
</TABLE>
See Accompanying Notes to Financial Statements.
68
<PAGE>
THE WARBURG PINCUS FUNDS
STATEMENTS OF ASSETS AND LIABILITIES
FEBRUARY 28, 1999
(UNAUDITED)
<TABLE>
<CAPTION>
GLOBAL SELECT LONG-SHORT
TELECOMMUNICATIONS ECONOMIC VALUE MARKET NEUTRAL LONG-SHORT
FUND EQUITY FUND FUND EQUITY FUND
------------------ -------------- -------------- -----------
<S> <C> <C> <C> <C>
ASSETS
Investments, at value (cost - $6,331,464, $33,126,722,
$22,115,475 and $855,551, respectively) ................. $6,760,111 $33,776,170 $23,118,324 $ 841,771
Deposits with brokers and custodian bank for
securities sold short or futures contracts .............. -- -- 26,518,975 327,025
Collateral received for securities loaned ................. 115,700 -- -- --
Receivable for investments sold ........................... 117,155 700,755 -- --
Receivable for Fund shares sold ........................... 112,436 -- 13,616 --
Receivable from investment adviser ........................ 42,214 -- -- 8,312
Dividends and interest receivable ......................... 931 48,691 72,355 1,596
Prepaid expenses and other assets ......................... 18,454 76,244 -- 19,393
---------- ----------- ----------- ----------
Total Assets ............................................ 7,167,001 34,601,860 49,723,270 1,198,097
---------- ----------- ----------- ----------
LIABILITIES
Securities sold short (proceeds $21,993,870 for
Long-Short Market Neutral Fund) ......................... -- -- 22,876,328 --
Payable upon return of securities loaned .................. 115,700 -- -- --
Payable for investments purchased ......................... 86,875 375,732 -- --
Payable for Fund shares repurchased ....................... 24,706 -- 109,839 --
Overdraft liability ....................................... -- 294,749 -- --
Payable on open futures contracts ......................... -- -- -- 4,455
Advisory fee payable ...................................... -- 11,197 43,288 --
Distrubution fee payable (Common shares) .................. 5,699 3 10,250 149
Accrued expenses payable .................................. 4,468 19,003 18,312 16,292
---------- ----------- ----------- ----------
Total Liabilities ....................................... 237,448 700,684 23,058,017 20,896
---------- ----------- ----------- ----------
NET ASSETS
Capital stock, $0.001 par value. .......................... 247 1,923 1,798 70
Paid-in capital. .......................................... 6,323,104 29,188,862 27,072,963 1,085,840
Undistributed net investment income/(loss) ................ 1,601 23,874 93,821 (3,583)
Accumulated net realized gain/(loss) from investments,
securities sold short, futures and foreign currency
related transactions, if any ............................ 176,420 4,037,069 (623,720) 78,280
Net unrealized appreciation/(depreciation) on
investments and other, if any. .......................... 428,181 649,448 120,391 16,594
---------- ----------- ----------- ----------
Net Assets .............................................. $6,929,553 $33,901,176 $26,665,253 $1,177,201
========== =========== =========== ==========
INSTITUTIONAL SHARES
Net assets ................................................ $33,893,809 $ 6,637,660 $ 122,539
----------- ----------- ----------
Shares outstanding ........................................ 1,922,241 445,644 7,310
----------- ----------- ----------
Net asset value, offering price and redemption
price per share ......................................... $ 17.63 $ 14.89 $ 16.76
=========== =========== ==========
COMMON SHARES
Net assets ................................................ $6,929,553 $ 7,367 $20,027,593 $1,054,662
---------- ----------- ----------- ----------
Shares outstanding ........................................ 222,327 418 1,345,598 63,013
---------- ----------- ----------- ----------
Net asset value, offering price and redemption
price per share ......................................... $ 31.17 $ 17.62 $ 14.88 $ 16.74
========== =========== =========== ==========
</TABLE>
See Accompanying Notes to Financial Statements.
69
<PAGE>
THE WARBURG PINCUS FUNDS
STATEMENTS OF ASSETS AND LIABILITIES
FEBRUARY 28, 1999
(UNAUDITED)
<TABLE>
<CAPTION>
STRATEGIC
U.S. CORE FIXED GLOBAL FIXED HIGH YIELD MUNICIPAL
INCOME FUND INCOME FUND FUND BOND FUND
--------------- ------------ ------------ -----------
<S> <C> <C> <C> <C>
ASSETS
Investments, at value (cost - $519,415,495, $33,730,950,
$143,784,884 and $22,430,561, respectively) ............. $514,535,411 $33,491,083 $141,022,862 $23,717,987
Deposits with brokers and custodian bank for
securities sold short or futures contracts .............. 1,017,923 -- -- --
Receivable for investments sold ........................... 17,558,846 1,054,188 2,517,975 --
Receivable on open futures contracts ...................... 23,069 719 -- --
Dividends and interest receivable ......................... 3,478,116 457,526 2,788,648 308,882
Prepaid expenses and other assets ......................... 601,633 253,990 133,885 412
------------ ----------- ------------ -----------
Total Assets ............................................ 537,214,998 35,257,506 146,463,370 24,027,281
------------ ----------- ------------ -----------
LIABILITIES
Payable for investments purchased ......................... 162,615,438 5,793,979 675,000 37,077
Payable for Fund shares repurchased ....................... 214,000 -- 276 --
Overdraft liability ....................................... -- 1,052,111 2,269,364 --
Payable on forward currency contracts ..................... -- 172,276 -- --
Advisory fee payable ...................................... 68,305 -- 134,419 7,919
Distrubution fee payable (Common shares) .................. 5 -- 21,304 5
Accrued expenses payable .................................. 97,007 13,796 48,171 14,727
------------ ----------- ------------ -----------
Total Liabilities ....................................... 162,994,755 7,032,162 3,148,534 59,728
------------ ----------- ------------ -----------
NET ASSETS
Capital stock, $0.001 par value. .......................... 24,274 1,849 9,095 1,606
Paid-in capital. .......................................... 374,640,918 28,563,599 160,955,621 22,543,641
Undistributed net investment income/(loss) ................ 3,164,535 110,395 2,071,940 37,988
Accumulated net realized gain/(loss) from investments,
securities sold short, futures and foreign currency
related transactions, if any ............................ 580,310 (44,438) (16,959,798) 22,218
Net unrealized appreciation/(depreciation) on
investments and other, if any. .......................... (4,189,794) (406,061) (2,762,022) 1,362,100
------------ ----------- ------------ -----------
Net Assets .............................................. $374,220,243 $28,225,344 $143,314,836 $23,967,553
INSTITUTIONAL SHARES
Net assets ................................................ $374,204,317 $28,216,638 $111,561,938 $23,961,540
------------ ----------- ------------ -----------
Shares outstanding ........................................ 24,258,730 1,848,975 7,085,929 1,606,026
------------ ----------- ------------ -----------
Net asset value, offering price and redemption
price per share ......................................... $ 15.43 $ 15.26 $ 15.74 $ 14.92
============ =========== ============ ===========
COMMON SHARES
Net assets ................................................ $ 15,926 $ 8,706 $ 31,752,898 $ 6,013
------------ ----------- ------------ -----------
Shares outstanding ........................................ 1,033 571 2,008,991 403
------------ ----------- ------------ -----------
Net asset value, offering price and redemption
price per share ......................................... $ 15.42 $ 15.25 $ 15.81 $ 14.92
============ =========== ============ ===========
</TABLE>
See Accompanying Notes to Financial Statements.
70
<PAGE>
THE WARBURG PINCUS FUNDS
STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED FEBRUARY 28, 1999
(UNAUDITED)
<TABLE>
<CAPTION>
INTERNATIONAL EMERGING EUROPEAN U.S. CORE
GROWTH FUND MARKETS II FUND EQUITY FUND* EQUITY FUND
-------------- --------------- ------------ -----------
<S> <C> <C> <C> <C>
INVESTMENT INCOME
Dividends ................................................. $ 2,325,570 $ 201,503 $ 22,014 $ 383,662
Interest .................................................. 827,992 50,695 37,814 38,924
Securities lending ........................................ 98,610 5,844 -- 6,075
Foreign taxes withheld .................................... (145,420) (26,793) (768) --
------------ ----------- ----------- -----------
Total Investment Income ................................. 3,106,752 231,249 59,060 428,661
------------ ----------- ----------- -----------
EXPENSES
Investment advisory fees .................................. 2,621,576 92,442 6,946 245,268
Administration fees ....................................... 545,661 15,942 5,201 54,443
Custodian fees ............................................ 445,564 15,805 4,274 28,179
Audit fees ................................................ 27,709 3,386 1,388 3,472
Miscellaneous fees ........................................ 10,277 5,651 1,275 6,231
Printing fees ............................................. 120,454 8,741 2,470 17,457
Registration fees ......................................... 9,913 10,178 2,814 8,985
Legal fees ................................................ 158,600 6,605 2,163 8,406
Transfer agent fees ....................................... 89,897 5,206 1,531 14,640
Insurance expense ......................................... 15,307 988 225 1,167
Directors fees ............................................ 6,219 1,855 654 6,447
Organization expense ...................................... -- -- -- (5,373)
Distribution fees ......................................... 24,187 887 5,768 23
------------ ----------- ----------- -----------
4,075,364 167,686 34,709 389,345
Less fees waived and reimbursed ........................... (102,388) (29,666) (1,159) (65,652)
------------ ----------- ----------- -----------
Total Expenses .......................................... 3,972,976 138,020 33,550 323,693
------------ ----------- ----------- -----------
Net Investment Income/(Loss) ................................. (866,224) 93,229 25,510 104,968
------------ ----------- ----------- -----------
Realized and Unrealized Gain/(Loss) on Investments
and Foreign Currency Transactions
Net realized gain/(loss) from:
Security transactions ................................... 33,767,118 (7,857,488) (252,370) 3,311,650
Foreign exchange transactions ........................... (939,062) (99,450) 7,972 --
------------ ----------- ----------- -----------
32,828,056 (7,956,938) (244,398) 3,311,650
------------ ----------- ----------- -----------
Net change in unrealized appreciation/(depreciation):
Investments ............................................. 2,270,409 9,985,826 (1,134,469) 13,535,148
Translation of assets and
liabilities in foreign currencies .................... (75,396) (11,467) 106,198 --
------------ ----------- ----------- -----------
2,195,013 9,974,359 (1,028,271) 13,535,148
------------ ----------- ----------- -----------
Net Gain/(Loss) On Investments And
Foreign Currency Transactions ........................... 35,023,069 2,017,421 (1,272,669) 16,846,798
------------ ----------- ----------- -----------
Net Increase/(Decrease) In Net Assets
Resulting From Operations ............................... $ 34,156,845 $ 2,110,650 $(1,247,159) $16,951,766
============ =========== =========== ==========
*Commenced operations on January 29, 1999.
</TABLE>
See Accompanying Notes to Financial Statements.
71
<PAGE>
THE WARBURG PINCUS FUNDS
STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED FEBRUARY 28, 1999
(UNAUDITED)
<TABLE>
<CAPTION>
GLOBAL SELECT LONG-SHORT
TELECOMMUNICATIONS ECONOMIC VALUE MARKET NEUTRAL LONG-SHORT
FUND EQUITY FUND FUND EQUITY FUND*
------------------ -------------- -------------- ------------
<S> <C> <C> <C> <C>
Investment Income
Dividends .......................................... $ 1,354 $ 200,994 $ 111,171 $ 114
Interest ........................................... 11,797 3,956 332,609 12,738
Securities lending ................................. 594 772 -- --
Foreign taxes withheld ............................. (63) -- -- --
-------- ---------- --------- --------
Total Investment Income .......................... 13,682 205,722 443,780 12,852
-------- ---------- --------- --------
EXPENSES
Investment advisory fees ........................... 10,476 114,020 108,831 392
Administration fees ................................ 1,833 24,343 12,621 519
Custodian fees ..................................... 20,435 14,598 28,418 7,120
Audit fees ......................................... 43 1,372 279 --
Miscellaneous fees ................................. 2,478 2,628 1,946 170
Printing fees ...................................... 4,094 4,033 1,237 2
Registration fees .................................. 5,951 7,439 5,951 5,491
Legal fees ......................................... 51 4,996 391 1
Transfer agent fees ................................ 2,608 3,225 719 2
Insurance expense .................................. 501 322 103 2
Directors fees ..................................... 6,447 6,447 6,447 5,949
Dividend expense ................................... -- -- 83,710 --
Distribution fees .................................. 2,619 3 10,250 148
-------- ---------- --------- --------
57,536 183,426 260,903 19,796
Less fees waived and reimbursed .................... (40,251) (32,996) (22,169) (9,960)
-------- ---------- --------- --------
Total Expenses ................................... 17,285 150,430 238,734 9,836
-------- ---------- --------- --------
Net Investment Income/(Loss) .......................... (3,603) 55,292 205,046 3,016
-------- ---------- --------- --------
Realized and Unrealized Gain/(Loss) on Investments
and Foreign Currency Transactions
Net realized gain/(loss) from:
Security transactions ............................ 176,006 4,074,753 (714,707) (1,550)
Futures tranactions .............................. -- -- -- 103,507
Securities sold short ............................ -- -- 409,917 --
Foreign exchange transactions .................... 5,464 -- -- --
-------- ---------- --------- --------
181,470 4,074,753 (304,790) 101,957
-------- ---------- --------- --------
Net change in unrealized appreciation/(depreciation):
Investments ........................................ 443,932 3,784,191 (87,742) (13,780)
Futures ............................................ -- -- -- 30,337
Translation of assets and
liabilities in foreign currencies ................ (1,064) -- -- --
-------- ---------- --------- --------
442,868 3,784,191 (87,742) 16,557
-------- ---------- --------- --------
Net Gain/(Loss) On Investments And
Foreign Currency Transactions .................... 624,338 7,858,944 (392,532) 118,514
-------- ---------- --------- --------
Net Increase/(Decrease) In Net Assets
Resulting From Operations ........................ $620,735 $7,914,236 $(187,486) $121,530
======== ========== ========= ========
</TABLE>
* Commenced operations on September 14, 1998.
See Accompanying Notes to Financial Statements.
72
<PAGE>
THE WARBURG PINCUS FUNDS
STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED FEBRUARY 28, 1999
(UNAUDITED)
<TABLE>
<CAPTION>
STRATEGIC
U.S. CORE FIXED GLOBAL FIXED HIGH YIELD MUNICIPAL
INCOME FUND INCOME FUND FUND BOND FUND
--------------- ------------ ----------- ---------
<S> <C> <C> <C> <C>
INVESTMENT INCOME
Dividends ............................................ $ 235,905 $ 854 $ 115,427 $ 2,716
Interest ............................................. 12,083,338 831,010 5,395,919 603,314
----------- ---------- ----------- --------
Total Investment Income ............................ 12,319,243 831,864 5,511,346 606,030
----------- ---------- ----------- --------
EXPENSES
Investment advisory fees ............................. 743,539 74,467 397,580 80,355
Administration fees .................................. 232,886 31,294 95,055 23,471
Custodian fees ....................................... 81,258 31,675 14,555 15,372
Audit fees ........................................... 10,704 2,256 4,745 1,168
Miscellaneous fees ................................... 6,742 5,951 15,372 6,853
Printing fees ........................................ 45,932 2,876 26,274 4,878
Registration fees .................................... 14,269 -- 4,378 7,687
Legal fees ........................................... 37,950 1,488 6,415 13,465
Transfer agent fees .................................. 32,789 6,146 13,944 3,521
Insurance expense .................................... 4,177 390 1,285 284
Directors fees ....................................... 8,400 6,447 6,447 6,447
Organization expense ................................. 1,694 (4,574) -- (6,127)
Distribution fees .................................... 5 3 22,042 5
----------- ---------- ----------- --------
1,220,345 158,419 608,092 157,379
Less fees waived and reimbursed ...................... (354,825) (48,218) (192,180) (43,745)
----------- ---------- ----------- --------
Total Expenses ..................................... 865,520 110,201 415,912 113,634
----------- ---------- ----------- --------
Net Investment Income ................................... 11,453,723 721,663 5,095,434 492,396
----------- ---------- ----------- --------
Realized and Unrealized Gain/(Loss) on Investments
and Foreign Currency Transactions
Net realized gain/(loss) from:
Security transactions .............................. 2,326,390 (138,155) (1,583,289) 115,625
Futures tranactions ................................ (507,499) (90,365) -- --
Foreign exchange transactions ...................... (84,284) 338,665 -- --
----------- ---------- ----------- --------
1,734,607 110,145 (1,583,289) 115,625
----------- ---------- ----------- --------
Net change in unrealized appreciation/(depreciation):
Investments ........................................ (4,396,297) 413,674 (3,152,312) (91,859)
Futures ............................................ 1,076,308 60,328 -- --
Translation of assets and
liabilities in foreign currencies ............... 55,769 (1,873) -- --
----------- ---------- ----------- --------
(3,264,220) 472,129 (3,152,312) (91,859)
----------- ---------- ----------- --------
Net Gain/(Loss) On Investments And Foreign
Currency Transactions .............................. (1,529,613) 582,274 (4,735,601) 23,766
----------- ---------- ----------- --------
Net Increase In Net Assets
Resulting From Operations .......................... $ 9,924,110 $1,303,937 $ 359,833 $516,162
=========== ========== =========== ========
</TABLE>
See Accompanying Notes to Financial Statements.
73
<PAGE>
THE WARBURG PINCUS FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
EUROPEAN
INTERNATIONAL EQUITY FUND EMERGING MARKETS II FUND EQUITY FUND
-------------------------------------- ----------------------------------- --------------------
FOR THE SIX MONTHS FOR THE YEAR FOR THE SIX MONTHS FOR THE YEAR FOR THE PERIOD
ENDED ENDED ENDED ENDED JANUARY 29, 1999*
FEBRUARY 28, 1999 AUGUST 31, 1998 FEBRUARY 28, 1999 AUGUST 31, 1998 TO FEBRUARY 28, 1999
--------------------- ---------------- ------------------ ---------------- --------------------
(UNAUDITED) (UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
Increase/(decrease) in net assets:
Operations:
Net investment income/(loss) ..... $ (866,224) $ 4,459,649 $ 93,229 $ 374,101 $ 25,510
Net gain/(loss) on investments and
foreign currency transactions .. 35,023,069 78,134,835 2,017,421 (25,007,447) (1,272,669)
------------ ------------ ----------- ------------ -----------
Net increase/(decrease) in net
assets resulting from operations 34,156,845 82,594,484 2,110,650 (24,633,346) (1,247,159)
------------ ------------ ----------- ------------ -----------
Dividends and Distributions to
shareholders:
Dividends to shareholders from
net investment income:
Institutional shares ........... (7,632,495) -- (312,194) (732,736) --
Common shares .................. (344,430) -- (12,381) (83) --
Distributions to shareholders from
net realized capital gains:
Institutional shares ........... (54,241,925) (73,424,625) -- (649,941) --
Common shares .................. (2,569,737) (167,102) -- (115) --
Distributions to shareholders from
capital:
Institutional shares ........... -- -- -- (3,255,728) --
Common shares .................. -- -- -- (580) --
------------ ------------ ----------- ------------ -----------
Total distributions to shareholders . (64,788,587) (73,591,727) (324,575) (4,639,183) --
------------ ------------ ----------- ------------ -----------
Net capital share transactions ...... 90,299,278 47,441,934 (8,594,706) (28,889,378) 28,644,864
------------ ------------ ----------- ------------ -----------
Total increase/(decrease)
in net assets .................... 59,667,536 56,444,691 (6,808,631) (58,161,907) $27,397,705
Net Assets:
Beginning of period .............. 625,102,465 568,657,774 24,854,065 83,015,972 --
------------ ------------ ----------- ------------ -----------
End of period .................... $684,770,001 $625,102,465 $18,045,434 $ 24,854,065 $27,397,705
============ ============ =========== ============ ===========
* Commencement of Operations.
</TABLE>
See Accompanying Notes to Financial Statements.
74
<PAGE>
THE WARBURG PINCUS FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
U.S. CORE EQUITY FUND GLOBAL TELECOMMUNICATIONS FUND
----------------------------------- -----------------------------------
FOR THE SIX MONTHS FOR THE YEAR FOR THE SIX MONTHS FOR THE YEAR
ENDED ENDED ENDED ENDED
FEBRUARY 28, 1999 AUGUST 31, 1998 FEBRUARY 28, 1999 AUGUST 31, 1998
------------------ --------------- ------------------ ---------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
Increase/(decrease) in net assets:
Operations:
Net investment income/(loss) ............. $ 104,968 $ 231,556 $ (3,603) $ (298)
Net gain on investments and foreign
currency transactions .................. 16,846,798 7,098,025 624,338 142,046
----------- ----------- ---------- --------
Net increase in net assets resulting
from operations. ....................... 16,951,766 7,329,581 620,735 141,748
----------- ----------- ---------- --------
Dividends and Distributions to
shareholders:
Dividends to shareholders from
net investment income:
Institutional shares ................... (104,261) (472,680) -- --
Common shares .......................... (22) -- -- (138)
Distributions to shareholders from
net realized capital gains:
Institutional shares ................... (24,127,328) (12,679,702) -- --
Common shares .......................... (5,552) -- (179,290) (37,787)
----------- ----------- ---------- --------
Total distributions to shareholders ......... (24,237,163) (13,152,382) (179,290) (37,925)
----------- ----------- ---------- --------
Net capital share transactions .............. 11,729,739 (16,844,975) 5,770,015 44,798
----------- ----------- ---------- --------
Total increase/(decrease)
in net assets ............................ 4,444,342 (22,667,776) 6,211,460 148,621
Net Assets:
Beginning of period ...................... 63,513,965 86,181,741 718,093 569,472
----------- ----------- ---------- --------
End of period ............................ $67,958,307 $63,513,965 $6,929,553 $718,093
=========== =========== ========== ========
</TABLE>
See Accompanying Notes to Financial Statements.
75
<PAGE>
THE WARBURG PINCUS FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
LONG-SHORT
SELECT ECONOMIC VALUE EQUITY FUND LONG-SHORT MARKET NEUTRAL FUND EQUITY FUND
------------------------------------- --------------------------------- --------------------
FOR THE SIX MONTHS FOR THE PERIOD FOR THE SIX MONTHS FOR THE PERIOD FOR THE PERIOD
ENDED AUGUST 3, 1998* ENDED AUGUST 3, 1998* SEPTEMBER 14, 1998*
FEBRUARY 28, 1999 TO AUGUST 31, 1998 FEBRUARY 28, 1999 TO AUGUST 31, 1998 TO FEBRUARY 28, 1999
------------------ ------------------ ------------------ ------------------ --------------------
(UNAUDITED) (UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
Increase/(decrease) in net assets:
Operations:
Net investment income ........... $ 55,292 $ 18,161 $ 205,046 $ 21,200 $ 3,016
Net gain/(loss) on
investments ................... 7,858,944 (3,172,426) (392,532) 89,659 118,514
----------- ----------- ----------- ---------- ----------
Net increase/(decrease) in
net assets resulting from
operations. ................... 7,914,236 (3,154,265) (187,486) 110,859 121,530
----------- ----------- ----------- ---------- ----------
Dividends and Distributions to
shareholders:
Dividends to shareholders from
net investment income:
Institutional shares .......... (49,578) -- (30,279) -- (6,444)
Common shares ................. (1) -- (90,662) -- (155)
Distributions to shareholders
from net realized capital gains:
Institutional shares .......... -- -- (52,082) -- (23,069)
Common shares ................. -- -- (159,858) -- (571)
----------- ----------- ----------- ---------- ----------
Total distributions to
shareholders .................... (49,579) -- (332,881) -- (30,239)
----------- ----------- ----------- ---------- ----------
Net capital share transactions ..... 3,377,079 25,813,705 20,883,338 6,191,423 1,085,910
----------- ----------- ----------- ---------- ----------
Total increase in net assets ....... 11,241,736 22,659,440 20,362,971 6,302,282 1,177,201
Net Assets:
Beginning of period ............. 22,659,440 -- 6,302,282 -- --
----------- ----------- ----------- ---------- ----------
End of period ................... $33,901,176 $22,659,440 $26,665,253 $6,302,282 $1,177,201
=========== =========== =========== ========== ==========
<FN>
* Commencement of Operations.
</FN>
</TABLE>
See Accompanying Notes to Financial Statements.
76
<PAGE>
THE WARBURG PINCUS FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
U.S. CORE FIXED INCOME FUND STRATEGIC GLOBAL FIXED INCOME FUND
---------------------------------- ------------------------------------
FOR THE SIX MONTHS FOR THE YEAR FOR THE SIX MONTHS FOR THE YEAR
ENDED ENDED ENDED ENDED
FEBRUARY 28, 1999 AUGUST 31, 1998 FEBRUARY 28, 1999 AUGUST 31, 1998
------------------ --------------- ------------------ ---------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
Increase/(decrease) in net assets:
Operations:
Net investment income ................... $ 11,453,723 $ 13,581,467 $ 721,663 $ 1,809,232
Net gain/(loss) on investments and
foreign currency transactions ......... (1,529,613) 1,267,128 582,274 (247,851)
------------ ------------ ----------- -----------
Net increase in net assets resulting
from operations. ...................... 9,924,110 14,848,595 1,303,937 1,561,381
------------ ------------ ----------- -----------
Dividends and Distributions to
shareholders:
Dividends to shareholders
from net investment income:
Institutional shares .................. (12,608,321) (11,454,482) (463,245) (1,133,693)
Common shares ......................... (18) -- (15) --
Distributions to shareholders
from net realized capital gains:
Institutional shares .................. (4,420,509) (2,782,277) (530,896) (1,162,260)
Common shares ......................... (11) -- (18) --
------------ ------------ ----------- -----------
Total distributions to shareholders ........ (17,028,859) (14,236,759) (994,174) (2,295,953)
------------ ------------ ----------- -----------
Net capital share transactions ............. (12,208,120) 215,702,694 (567,803) (15,067,445)
------------ ------------ ----------- -----------
Total increase/(decrease)
in net assets ........................... (19,312,869) 216,314,530 (258,040) (15,802,017)
Net Assets:
Beginning of period ..................... 393,533,112 177,218,582 28,483,384 44,285,401
------------ ------------ ----------- -----------
End of period ........................... $374,220,243 $393,533,112 $28,225,344 $28,483,384
============ ============ =========== ===========
</TABLE>
See Accompanying Notes to Financial Statements.
77
<PAGE>
THE WARBURG PINCUS FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
HIGH YIELD FUND MUNICIPAL BOND FUND
---------------------------------- ------------------------------------
FOR THE SIX MONTHS FOR THE YEAR FOR THE SIX MONTHS FOR THE YEAR
ENDED ENDED ENDED ENDED
FEBRUARY 28, 1999 AUGUST 31, 1998 FEBRUARY 28, 1999 AUGUST 31, 1998
------------------ --------------- ------------------ ---------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
Increase/(decrease) in net assets:
Operations:
Net investment income ................... $ 5,095,434 $ 8,042,385 $ 492,396 $ 979,325
Net gain/(loss) on investments .......... (4,735,601) (3,054,518) 23,766 541,320
------------ ----------- ----------- -----------
Net increase in net assets resulting
from operations. ...................... 359,833 4,987,867 516,162 1,520,645
------------ ----------- ----------- -----------
Dividends and Distributions to
shareholders:
Dividends to shareholders from
net investment income:
Institutional shares .................. (4,311,038) (7,732,581) (502,165) (976,336)
Common shares ......................... (607,982) (169,975) (87) --
Distributions to shareholders from
net realized capital gains:
Institutional shares .................. -- -- (320,024) (154,615)
Common shares ......................... -- -- (14) --
------------ ----------- ----------- -----------
Total distributions to shareholders ........ (4,919,020) (7,902,556) (822,290) (1,130,951)
------------ ----------- ----------- -----------
Net capital share transactions ............. 53,260,311 4,811,589 2,045,049 2,028,820
------------ ----------- ----------- -----------
Total increase in net assets ............... 48,701,124 1,896,900 1,738,921 2,418,514
Net Assets:
Beginning of period ..................... 94,613,712 92,716,812 22,228,632 19,810,118
------------ ----------- ----------- -----------
End of period ........................... $143,314,836 $94,613,712 $23,967,553 $22,228,632
============ =========== =========== ===========
</TABLE>
See Accompanying Notes to Financial Statements.
78
<PAGE>
THE WARBURG PINCUS FUNDS
INTERNATIONAL GROWTH FUND
FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
INSTITUTIONAL
--------------------------------------------------------------------
FOR THE SIX
MONTHS ENDED FOR THE YEAR ENDED AUGUST 31,
FEBRUARY 28, 1999 ------------------------------------------------
(UNAUDITED) 1998 1997 1996 1995 1994
----------------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period ..... $ 22.70 $ 22.22 $ 19.41 $ 18.24 $ 20.73 $ 18.73
-------- -------- -------- -------- -------- --------
Income from investment
operations
Net investment
income (loss) ....... (0.02) 0.15 0.18 0.19 0.06 0.05
Net gain (loss) on
investments and
foreign currency
transactions (both
realized and
unrealized) ......... 1.25 3.26 2.89 1.05 (1.75) 2.60
-------- -------- -------- -------- -------- --------
Total from investment
operations .......... 1.23 3.41 3.07 1.24 (1.69) 2.65
-------- -------- -------- -------- -------- --------
Less Distributions
Dividends from net
investment income ... (0.28) -- (0.26) (0.07) -- (0.05)
Distributions from
capital gains ....... (1.99) (2.93) -- -- (0.80) (0.60)
-------- -------- -------- -------- -------- --------
Total distributions ... (2.27) (2.93) (0.26) (0.07) (0.80) (0.65)
-------- -------- -------- -------- -------- --------
Net asset value,
end of period ........... $ 21.66 $ 22.70 $ 22.22 $ 19.41 $ 18.24 $ 20.73
======== ======== ======== ======== ======== ========
Total return .............. 5.09%(c) 16.74% 15.93% 6.81%(d) 8.06)%(d) 14.23%(d)
Ratios/Supplemental Data:
Net assets, end of period
(000s omitted) ........ $658,289 $623,482 $568,510 $682,271 $773,255 $767,190
Ratio of expenses to
average net assets .... 1.20%(a)(b) 1.14%(a) 1.16%(a) 1.19%(a) 1.25%(a) 1.25%(a)
Ratio of net investment
income (loss) to
average net assets .... (0.25)%(b) 0.72% 0.71% 0.84% 0.35% 0.33%
Fund turnover rate ...... 82%(c) 141% 126% 86% 78% 104%
</TABLE>
COMMON
--------------------------------------------------
FOR THE SIX FOR THE YEAR FOR THE PERIOD
MONTHS ENDED ENDED NOVEMBER 1, 1996*
FEBRUARY 28, 1999 AUGUST 31, TO AUGUST 31,
(UNAUDITED) 1998 1997
----------------- ------------ -----------------
Net asset value,
beginning of period ..... $ 22.56 $22.17 $19.67
------- ------ ------
Income from investment
operations
Net investment
income (loss) ....... (0.08) 0.03 0.36
Net gain (loss) on
investments and
foreign currency
transactions (both
realized and
unrealized) ......... 1.28 3.29 2.40
------- ------ ------
Total from investment
operations .......... 1.20 3.32 2.76
------- ------ ------
Less Distributions
Dividends from net
investment income ... (0.27) -- (0.26)
Distributions from
capital gains ....... (1.99) (2.93) --
------- ------ ------
Total distributions ... (2.26) (2.93) (0.26)
------- ------ ------
Net asset value,
end of period ........... $ 21.50 $22.56 $22.17
======= ====== ======
Total return .............. 4.98%(c) 16.33% 14.14%(c)
Ratios/Supplemental Data:
Net assets, end of period
(000s omitted) ........ $26,481 $1,620 $ 147
Ratio of expenses to
average net assets .... 1.50%(a) 1.40%(a) 1.43%(a)(b)
Ratio of net investment
income (loss) to
average net assets .... (0.63)%(b) 0.58% 1.15%(b)
Fund turnover rate ...... 82%(c) 141% 126%(c)
(a) Without the voluntary waiver of advisory fees and administration fees, the
ratios of expenses to average net assets for the Institutional Class would
have been 1.23% annualized for the six months ended February 28, 1999 and
1.23%, 1.25%, 1.22%, 1.26% and 1.30% for the years ended August 31, 1998,
1997, 1996, 1995 and 1994, respectively. Without the voluntary waiver of
advisory fees and administration fees, the ratios of expenses to average net
assets for the Common Class would have been 1.54% annualized for the six
months ended February 28, 1999, 1.48% for the year ended August 31, 1998 and
1.53% annualized for the period ended August 31, 1997.
(b) Annualized.
(c) Not annualized.
(d) Redemption fees not reflected in total return.
* Commencement of operations.
See Accompanying Notes to Financial Statements.
79
<PAGE>
THE WARBURG PINCUS FUNDS
EMERGING MARKETS II FUND
FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
INSTITUTIONAL
--------------------------------------------------------------------
FOR THE SIX
MONTHS ENDED FOR THE YEAR ENDED AUGUST 31,
FEBRUARY 28, 1999 ------------------------------------------------
(UNAUDITED) 1998 1997 1996 1995 1994
----------------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period ..... $ 10.44 $ 19.64 $ 18.20 $ 17.67 $ 24.58 $ 18.38
-------- -------- -------- -------- -------- --------
Income from investment
operations
Net investment
income (loss) ....... 0.07 0.12 0.21 0.10 0.02 (0.03)
Net gain (loss) on
investments and
foreign currency
transactions (both
realized and
unrealized) ......... 1.14 (8.08) 1.30 0.48 (5.94) 6.64
-------- -------- -------- -------- -------- --------
Total from investment
operations .......... 1.21 (7.96) 1.51 0.58 (5.92) 6.61
-------- -------- -------- -------- -------- --------
Less Distributions
Dividends from
net investment
income .............. (0.21) (0.20) (0.07) (0.05) (0.07) (0.09)
Distributions from
capital gains ....... -- (0.17) -- -- (0.92) (0.32)
Return of Capital ..... -- (0.87) -- -- -- --
-------- -------- -------- -------- -------- --------
Total distributions ... (0.21) (1.24) (0.07) (0.05) (0.99) (0.41)
-------- -------- -------- -------- -------- --------
Net asset value,
end of period ........... $ 11.44 $ 10.44 $ 19.64 $ 18.20 $ 17.67 $ 24.58
======== ======== ======== ======== ======== ========
Total return .............. 11.57%(c) (42.96)% 8.31% 3.33%(d)(24.42)%(d)35.99%(d)
Ratios/Supplemental Data:
Net assets, end of period
(000s omitted) ........ $17,279 $24,217 $83,012 $114,691 $128,323 $140,675
Ratio of expenses to
average net assets .... 1.48%(a)(b) 1.50%(a) 1.49%(a) 1.49%(a) 1.50%(a) 1.50%(a)
Ratio of net investment
income (loss) to
average net assets .... 1.02%(b) 0.61% 0.99% 0.63% 0.02% (0.02)%
Fund turnover rate ...... 122%(c) 179% 147% 79% 79% 54%
</TABLE>
COMMON
--------------------------------------------------
FOR THE SIX FOR THE YEAR FOR THE PERIOD
MONTHS ENDED ENDED NOVEMBER 1, 1996*
FEBRUARY 28, 1999 AUGUST 31, TO AUGUST 31,
(UNAUDITED) 1998 1997
----------------- ------------ -----------------
Net asset value,
beginning of period ..... $ 10.48 $ 19.60 $ 18.08
-------- ------- -------
Income from investment
operations
Net investment
income (loss) ....... 0.04 0.03 0.18
Net gain (loss) on
investments and
foreign currency
transactions (both
realized and
unrealized) ......... 1.15 (7.99) 1.40
-------- ------- -------
Total from investment
operations .......... 1.19 (7.96) 1.58
-------- ------- -------
Less Distributions
Dividends from
net investment
income .............. (0.19) (0.12) (0.06)
Distributions from
capital gains ....... -- (0.17) --
Return of Capital ..... -- (0.87) --
-------- ------- -------
Total distributions ... (0.19) (1.16) (0.06)
-------- ------- -------
Net asset value,
end of period ........... $ 11.48 $ 10.48 $ 19.60
======== ======= =======
Total return .............. 11.39%(c) (42.86)% 8.76%(c)
Ratios/Supplemental Data:
Net assets, end of period
(000s omitted) ........ $ 767 $636 $ 4
Ratio of expenses to
average net assets .... 1.76%(a) 1.75%(a) 1.75%(a)(b)
Ratio of net investment
income (loss) to
average net assets .... 0.72%(b) 1.08% 0.88%(b)
Fund turnover rate ...... 122%(c) 179% 147%(c)
(a) Without the voluntary waiver of advisory fees and administration fees, the
ratios of expenses to average net assets for the Institutional Class would
have been 1.80% annualized for the six months ended February 28, 1999 and
2.01% ,1.63%, 1.62%, 1.61% and 2.01% for the years ended August 31, 1998,
1997, 1996, 1995 and 1994, respectively. Without the voluntary waiver of
advisory fees and administration fees, the ratios of expenses to average net
assets for the Common Class would have been 2.11% annualized for the six
months ended February 28, 1999, 2.33% for the year ended August 31, 1998 and
1.88% annualized for the period ended August 31, 1997.
(b) Annualized.
(c) Not annualized.
(d) Redemption fees not reflected in total return.
* Commencement of operations.
See Accompanying Notes to Financial Statements.
80
<PAGE>
THE WARBURG PINCUS FUNDS
EUROPEAN EQUITY FUND
FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
INSTITUTIONAL COMMON
-------------------- --------------------
FOR THE PERIOD FOR THE PERIOD
JANUARY 29, 1999* JANUARY 29, 1999*
TO FEBRUARY 28, 1999 TO FEBRUARY 28, 1999
(UNAUDITED) (UNAUDITED)
-------------------- --------------------
<S> <C> <C>
Net asset value, beginning of period ........ $10.00 $10.00
------ ------
Income from investment operations
Net investment income (loss) ............ 0.01 0.01
Net gain (loss) on investments
and foreign currency transactions
(both realized and unrealized) ........ (0.45) (0.45)
------ ------
Total from investment operations ........ (0.44) (0.44)
------ ------
Less Distributions
Dividends from net investment income .... -- --
Distributions from capital gains ........ -- --
------ ------
Total distributions ..................... -- --
------ ------
Net asset value, end of period .............. $ 9.56 $ 9.56
====== ======
Total return ................................ (4.40)%(c) (4.40)%(c)
Ratios/Supplemental Data:
Net assets, end of period
(000s omitted) .......................... $ 123 $1,055
Ratio of expenses to average
net assets .............................. 1.15%(a)(b) 1.45%(a)(b)
Ratio of net investment income
(loss) to average net assets ............ 1.41%(b) 1.10%(b)
Fund turnover rate ........................ 18%(c) 18%(c)
<FN>
(a) Without the voluntary waiver of advisory fees and administration fees, the
ratios of expenses to average net assets for the Institutional Class would
have been 1.15% annualized for the period ended February 28, 1999. Without
the voluntary waiver of advisory fees and administration fees, the ratios of
expenses to average net assets for the Common Class would have been 1.50%
annualized for the period ended February 28, 1999.
(b) Annualized.
(c) Not Annualized.
* Commencement of operations.
</FN>
</TABLE>
See Accompanying Notes to Financial Statements.
81
<PAGE>
THE WARBURG PINCUS FUNDS
U.S. CORE EQUITY FUND
FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
INSTITUTIONAL COMMON
------------------------------------------------------------------ ----------------------
FOR THE SIX FOR THE PERIOD FOR THE PERIOD
MONTHS ENDED FOR THE YEAR ENDED AUGUST 31, SEPTEMBER 1, 1994* NOVEMBER 2, 1998*
FEBRUARY 28, 1999 ----------------------------- TO AUGUST 31, TO FEBRUARY 28, 1999
(UNAUDITED) 1998 1997 1996 1995 (UNAUDITED)
----------------- -------- -------- -------- ---------------- ----------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period ....... $ 21.73 $ 24.40 $ 19.05 $ 17.86 $ 15.00 $25.22
------- ------- ------- ------- ------- ------
Income from investment operations
Net investment income (loss) ........... 0.04 0.01 0.14 0.20 0.22 0.03
Net gain (loss) on investments
and foreign currency
transactions (both realized
and unrealized) ...................... 6.47 0.88 6.82 2.81 2.72 2.97
------- ------- ------- ------- ------- ------
Total from investment operations ....... 6.51 0.89 6.96 3.01 2.94 3.00
------- ------- ------- ------- ------- ------
Less Distributions
Dividends from net investment income ... (0.04) (0.13) (0.20) (0.21) (0.08) (0.04)
Distributions from capital gains ....... (9.74) (3.43) (1.41) (1.61) -- (9.74)
------- ------- ------- ------- ------- ------
Total distributions .................... (9.78) (3.56) (1.61) (1.82) (0.08) (9.78)
------- ------- ------- ------- ------- ------
Net asset value, end of period ............. $ 18.46 $ 21.73 $ 24.40 $ 19.05 $ 17.86 $18.44
======= ======= ======= ======= ======= ======
Total return ............................... 30.18%(c) 3.18% 38.32% 17.59% 19.75% 12.05%(c)
Ratios/Supplemental Data:
Net assets, end of period (000s omitted) . $67,873 $63,514 $86,182 $59,015 $31,644 $ 85
Ratio of expenses to average net asset ...0.99%(a)(b) 1.00%(a) 1.00%(a) 1.00%(a) 1.00%(a) 1.25%(a)(b)
Ratio of net investment income (loss)
to average net assets .................. 0.32%(b) 0.23% 0.67% 1.25% 1.59% 0.02%(b)
Fund turnover rate ....................... 63%(c) 164% 93% 127% 123% 63%(c)
<FN>
(a) Without the voluntary waiver of advisory fees and administration fees, the
ratios of expenses to average net assets for the Institutional Class would
have been 1.19% annualized for the six months ended February 28, 1999 and
1.18%, 1.18% and 1.34% for the years ended August 31, 1998, 1997 and 1996,
respectively and 1.51% annualized for the period ended August 31, 1995.
Without the voluntary waiver of advisory fees and administration fees, the
ratios of expenses to average net assets for the Common Class would have
been 1.38% annualized for the period ended February 28, 1999.
(b) Annualized.
(c) Not Annualized.
* Commencement of operations.
</FN>
</TABLE>
See Accompanying Notes to Financial Statements.
82
<PAGE>
THE WARBURG PINCUS FUNDS
GLOBAL TELECOMMUNICATIONS FUND
FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
COMMON
---------------------------------------------------
FOR THE SIX FOR THE YEAR FOR THE PERIOD
MONTHS ENDED ENDED DECEMBER 4, 1996*
FEBRUARY 28, 1999 AUGUST 31, TO AUGUST 31,
(UNAUDITED) 1998 1997
----------------- ---------- -----------------
<S> <C> <C> <C>
Net asset value, beginning of period ....... $20.54 $17.30 $15.00
------ ------ ------
Income from investment operations
Net investment income (loss) ........... (0.02) (0.01) 0.02
Net gain (loss) on investments and
foreign currency transactions
(both realized and unrealized) ....... 13.49 4.29 2.28
------ ------ ------
Total from investment operations ....... 13.47 4.28 2.30
------ ------ ------
Less Distributions
Dividends from net investment income ... -- -- --
Distributions from capital gains ....... (2.84) (1.04) --
------ ------ ------
Total distributions .................... (2.84) (1.04) --
------ ------ ------
Net asset value, end of period ............. $31.17 $20.54 $17.30
====== ====== ======
Total return ............................... 66.92%(c) 25.38% 15.33%(c)
Ratios/Supplemental Data:
Net assets, end of period
(000s omitted) ......................... $6,930 $ 718 $ 569
Ratio of expenses to average
net assets ............................. 1.65%(a)(b) 1.65%(a) 1.65%(a)(b)
Ratio of net investment income
(loss) to average net assets ........... (0.34)%(b) (0.03)% 0.16%(b)
Fund turnover rate ....................... 121%(c) 169% 43%(c)
<FN>
(a) Without the voluntary waiver of advisory fees and administration fees, the
ratios of expenses to average net assets for the Common Class would have
been 5.49% annualized for the six months ended February 28, 1999 and 6.86%
for the year ended August 31, 1998 and 8.38% annualized for the period ended
August 31, 1997.
(b) Annualized.
(c) Not Annualized.
* Commencement of operations.
</FN>
</TABLE>
See Accompanying Notes to Financial Statements.
83
<PAGE>
THE WARBURG PINCUS FUNDS
SELECT ECONOMIC VALUE EQUITY FUND
FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
INSTITUTIONAL COMMON
---------------------------------- -------------------
FOR THE SIX FOR THE PERIOD FOR THE PERIOD
MONTHS ENDED AUGUST 3, 1998* NOVEMBER 2, 1998*
FEBRUARY 28, 1999 TO AUGUST 31, TO FEBRUARY 28, 1999
(UNAUDITED) 1998 (UNAUDITED)
----------------- --------------- --------------------
<S> <C> <C> <C>
Net asset value, beginning of period ....... $ 13.17 $ 15.00 $15.95
------- ------- ------
Income from investment operations
Net investment income (loss) ........... 0.03 0.01 0.02
Net gain (loss) on investments
and foreign currency transactions
(both realized and unrealized) ....... 4.45 (1.84) 1.67
------- ------- ------
Total from investment operations ....... 4.48 (1.83) 1.69
------- ------- ------
Less Distributions
Dividends from net investment income ... (0.02) -- (0.02)
Distributions from capital gains ....... -- -- --
------- ------- ------
Total distributions .................... (0.02) -- (0.02)
------- ------- ------
Net asset value, end of period ............. $ 17.63 $ 13.17 $17.62
======= ======= ======
Total return ............................... 34.05%(c) (12.20)%(c) 10.56%(c)
Ratios/Supplemental Data:
Net assets, end of period
(000s omitted) ......................... $33,894 $22,659 $ 7
Ratio of expenses to average
net assets ............................. 0.99%(a)(b) 1.00%(a)(b) 1.25%(a)(b)
Ratio of net investment income
(loss) to average net assets ........... 0.36%(b) 0.92%(b) 0.38%(b)
Fund turnover rate ...................... 131%(c) 52%(c) 131%(c)
<FN>
(a) Without the voluntary waiver of advisory fees and administration fees, the
ratios of expenses to average net assets for the Institutional Class would
have been 1.21% annualized for the six months ended February 28, 1999 and
1.30% annualized for the period ended August 31, 1998. Without the voluntary
waiver of advisory fees and administration fees, the ratios of expenses to
average net assets for the Common Class would have been 1.52% annualized for
the period ended February 28, 1999.
(b) Annualized.
(c) Not Annualized.
* Commencement of operations.
</FN>
</TABLE>
See Accompanying Notes to Financial Statements.
84
<PAGE>
THE WARBURG PINCUS FUNDS
LONG-SHORT MARKET NEUTRAL FUND
FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
INSTITUTIONAL COMMON
--------------------------------- -------------------
FOR THE SIX FOR THE PERIOD FOR THE PERIOD
MONTHS ENDED AUGUST 3, 1998* SEPTEMBER 9, 1998*
FEBRUARY 28, 1999 TO AUGUST 31, TO FEBRUARY 28, 1999
(UNAUDITED) 1998 (UNAUDITED)
----------------- --------------- --------------------
<S> <C> <C> <C>
Net asset value, beginning of period ....... $15.27 $15.00 $ 15.19
------ ------ -------
Income from investment operations
Net investment income (loss) ........... 0.19 0.05 0.08
Net gain (loss) on investments
and foreign currency transactions
(both realized and unrealized) ....... (0.37) 0.22 (0.19)
------ ------ -------
Total from investment operations ....... (0.18) 0.27 (0.11)
------ ------ -------
Less Distributions
Dividends from net investment income ... (0.07) -- (0.07)
Distributions from capital gains ....... (0.13) -- (0.13)
------ ------ -------
Total distributions .................... (0.20) -- (0.20)
------ ------ -------
Net asset value, end of period ............. $14.89 $15.27 $ 14.88
====== ====== =======
Total return ............................... (1.17)%(c) 1.80%(c) (0.73)%(c)
Ratios/Supplemental Data:
Net assets, end of period
(000s omitted) ......................... $6,638 $6,302 $20,029
Ratio of expenses to average net
assets (including dividend expense) .... 3.20%(a)(b) 4.32%(a)(b) 3.36%(a)(b)
Ratio of expenses to average net
assets (excluding dividend expense) .... 1.99%(a)(b) 2.00%(a)(b) 2.25%(a)(b)
Ratio of net investment income
(loss) to average net assets ........... 3.05%(b) 1.96%(b) 2.66%(b)
Fund turnover rate ....................... 252%(c) 130%(c) 252%(c)
<FN>
(a) Without the voluntary waiver of advisory fees and administration fees, the
ratios of expenses to average net assets for the Institutional Class would
have been 2.22% (excluding dividend expense) and 3.45% (including dividend
expense) annualized for the six months ended February 28, 1999 and 5.12%
(excluding dividend expense) and 7.44% (including dividend expense)
annualized for the period ended August 31, 1998. Without the voluntary
waiver of advisory fees and administration fees, the ratios of expenses to
average net assets for the Common Class would have been 2.62% (excluding
dividend expense) and 3.72% (including dividend expense) annualized for the
period ended February 28, 1999.
(b) Annualized.
(c) Not Annualized.
* Commencement of operations.
</FN>
</TABLE>
See Accompanying Notes to Financial Statements.
85
<PAGE>
THE WARBURG PINCUS FUNDS
LONG-SHORT EQUITY FUND
FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
INSTITUTIONAL COMMON
-------------------- --------------------
FOR THE PERIOD FOR THE PERIOD
SEPTEMBER 14, 1998* NOVEMBER 2, 1998*
TO FEBRUARY 28, 1999 TO FEBRUARY 28, 1999
(UNAUDITED) (UNAUDITED)
-------------------- --------------------
<S> <C> <C>
Net asset value, beginning of period ....... $15.00 $ 15.72
------ -------
Income from investment operations
Net investment income (loss) ........... 0.05 0.05
Net gain (loss) on investments
and foreign currency transactions
(both realized and unrealized) ....... 2.16 1.42
------ -------
Total from investment operations ....... 2.21 1.47
------ -------
Less Distributions
Dividends from net investment income ... (0.10) (0.10)
Distributions from capital gains ....... (0.35) (0.35)
------ -------
Total distributions .................... (0.45) (0.45)
------ -------
Net asset value, end of period ............. $16.76 $ 16.74
====== =======
Total return ............................... 14.72%(c) 9.32%(c)
Ratios/Supplemental Data:
Net assets, end of period
(000s omitted) ......................... $6,638 $20,028
Ratio of expenses to average
net assets ............................. 2.46%(a)(b) 2.72%(a)(b)
Ratio of net investment income
(loss) to average net assets ........... 1.19%(b) (1.52)%(b)
Fund turnover rate ....................... 22%(c) 22%(c)
<FN>
(a) Without the voluntary waiver of advisory fees and administration fees, the
ratios of expenses to average net assets for the Institutional Class would
have been 5.14% annualized for the period ended February 28, 1999. Without
the voluntary waiver of advisory fees and administration fees, the ratios of
expenses to average net assets for the Common Class would have been 4.76%
annualized for the period ended February 28, 1999.
(b) Annualized.
(c) Not Annualized.
* Commencement of operations.
</FN>
</TABLE>
See Accompanying Notes to Financial Statements.
86
<PAGE>
THE WARBURG PINCUS FUNDS
U.S. CORE FIXED INCOME FUND
FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
INSTITUTIONAL COMMON
------------------------------------------------------------------------- --------------------
FOR THE SIX FOR THE PERIOD FOR THE PERIOD
MONTHS ENDED FOR THE YEAR ENDED AUGUST 31, APRIL 1, 1994* NOVEMBER 2, 1998*
FEBRUARY 28, 1999 -------------------------------------- TO AUGUST 31, TO FEBRUARY 28, 1999
(UNAUDITED) 1998 1997 1996 1995 1994 (UNAUDITED)
--------------- -------- -------- -------- -------- -------------- --------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period .. $ 15.72 $ 15.65 $ 15.06 $ 15.42 $ 14.77 $ 15.00 $15.68
-------- -------- -------- -------- ------- ------- ------
Income from investment operations
Net investment income(loss) ....... 0.46 0.84 0.92 0.95 0.88 0.42 0.36
Net gain (loss) on
investments and foreign
currency transactions
(both realized and unrealized) .. (0.08) 0.33 0.76 (0.16) 0.61 (0.40) (0.17)
-------- -------- -------- -------- ------- ------- ------
Total from investment operations .. 0.38 1.17 1.68 0.79 1.49 0.02 0.19
-------- -------- -------- -------- ------- ------- ------
Less Distributions
Dividends from net investment
income .......................... (0.50) (0.87) (0.97) (0.93) (0.84) (0.25) (0.28)
Distributions from capital gains .. (0.17) (0.23) (0.12) (0.22) -- -- (0.17)
-------- -------- -------- -------- ------- ------- ------
Total distributions ............... (0.67) (1.10) (1.09) (1.15) (0.84) (0.25) (0.45)
-------- -------- -------- -------- ------- ------- ------
Net asset value, end of period ........ $ 15.43 $ 15.72 $ 15.65 $ 15.06 $ 15.42 $ 14.77 $15.42
======== ======== ======== ======== ======= ======= ======
Total return .......................... 2.43%(c) 7.70% 11.53% 5.23% 10.60% 0.17%(c) 1.21%(c)
Ratios/Supplemental Data:
Net assets, end of period
(000s omitted) .................... $374,204 $393,533 $177,219 $118,596 $99,250 $30,016 $ 16
Ratio of expenses to average
net assets ........................0.44%(a)(b) 0.47%(a) 0.50%(a) 0.50%(a) 0.50%(a) 0.50%(a)(b) 0.70%(a)(b)
Ratio of net investment income
(loss) to average net assets ..... 5.77%(b) 5.87% 6.31% 6.43% 6.47% 6.04%(b) 5.37%(b)
Fund turnover rate .................. 276%(c) 372% 372% 201% 304% 186%(c) 276%(c)
<FN>
(a) Without the voluntary waiver of advisory fees and administration fees, the
ratios of expenses to average net assets for the Institutional Class would
have been .62% annualized for the six months ended February 28, 1999 and
.74%, .78%, .78% and .84% for the years ended August 31, 1998, 1997, 1996
and 1995, respectively, and .99% annualized for the period ended August 31,
1994. Without the voluntary waiver of advisory fees and administration fees,
the ratios of expenses to average net assets for the Common Class would have
been .90% annualized for the period ended February 28, 1999.
(b) Annualized.
(c) Not Annualized.
* Commencement of operations.
</FN>
</TABLE>
See Accompanying Notes to Financial Statements.
87
<PAGE>
THE WARBURG PINCUS FUNDS
STRATEGIC GLOBAL FIXED INCOME FUND
FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
INSTITUTIONAL COMMON
------------------------------------------------------------------------- --------------------
FOR THE SIX FOR THE PERIOD FOR THE PERIOD
MONTHS ENDED FOR THE YEAR ENDED AUGUST 31, JUNE 28, 1994* NOVEMBER 2, 1998*
FEBRUARY 28, 1999 -------------------------------------- TO AUGUST 31, TO FEBRUARY 28, 1999
(UNAUDITED) 1998 1997 1996 1995 1994 (UNAUDITED)
--------------- -------- -------- -------- -------- -------------- --------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period . $ 15.10 $ 15.41 $ 15.75 $ 15.67 $ 15.00 $15.00 $16.10
------- ------- ------- ------- ------- ------ ------
Income from investment operations
Net investment income (loss) ..... 0.38 0.87 0.85 0.87 1.06 0.15 0.32
Net gain (loss) on investments
and foreign currency transactions
(both realized and unrealized) . 0.31 (0.25) (0.16) 0.58 0.49 (0.15) (0.65)
------- ------- ------- ------- ------- ------ ------
Total from investment operations . 0.69 0.62 0.69 1.45 1.55 0.00 (0.33)
------- ------- ------- ------- ------- ------ ------
Less Distributions
Dividends from net investment
income ......................... (0.25) (0.45) (0.71) (1.22) (0.88) -- (0.24)
Distributions from capital gains . (0.28) (0.48) (0.32) (0.15) -- -- (0.28)
------- ------- ------- ------- ------- ------ ------
Total distributions .............. (0.53) (0.93) (1.03) (1.37) (0.88) -- (0.52)
------- ------- ------- ------- ------- ------ ------
Net asset value, end of period ....... $ 15.26 $ 15.10 $ 15.41 $ 15.75 $ 15.67 $15.00 $15.25
======= ======= ======= ======= ======= ====== ======
Total return ......................... 4.46%(c) 4.19% 4.48% 9.65% 10.72% 0.00%(c) (2.15)%(c)
Ratios/Supplemental Data:
Net assets, end of period
(000s omitted) ................... $28,217 $28,483 $44,285 $38,348 $19,565 $6,300 $ 9
Ratio of expenses to average
net assets ....................... 0.74%(a)(b) 0.75%(a) 0.75%(a) 0.75%(a) 0.75%(a) 0.75%(a)(b) 1.00%(a)(b)
Ratio of net investment income
(loss) to average net assets ..... 4.85%(b) 5.30% 5.31% 7.37% 7.26% 5.64%(b) 4.82%(b)
Fund turnover rate ................. 134%(c) 283% 98% 87% 91% 0%(c) 134%(c)
<FN>
(a) Without the voluntary waiver of advisory fees and administration fees, the
ratios of expenses to average net assets for the Institutional Class would
have been 1.06% annualized for the six months ended February 28, 1999 and
1.17%, 0.98%, 1.07% and 1.29% for the years ended August 31, 1998, 1997,
1996 and 1995, respectively and 1.92% annualized for the period ended August
31, 1994. Without the voluntary waiver of advisory fees and administration
fees, the ratios of expenses to average net assets for the Common Class
would have been 1.26% annualized for the period ended February 28, 1999.
(b) Annualized.
(c) Not Annualized.
* Commencement of operations.
</FN>
</TABLE>
See Accompanying Notes to Financial Statements.
88
<PAGE>
THE WARBURG PINCUS FUNDS
HIGH YIELD FUND
FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
INSTITUTIONAL
-------------------------------------------------------------------
FOR THE SIX
MONTHS ENDED FOR THE YEAR ENDED AUGUST 31,
FEBRUARY 28, 1999 ------------------------------------------------
(UNAUDITED) 1998 1997 1996 1995 1994
----------------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period ........ $ 16.60 $ 17.08 $ 16.09 $ 15.72 $ 15.94 $ 16.94
-------- ------- ------- ------- -------- --------
Income from investment
operations
Net investment
income (loss) .......... 0.65 1.43 1.37 1.47 1.42 1.20
Net gain (loss) on
investments and
foreign currency
transactions (both
realized and
unrealized) ............ (0.79) (0.49) 0.96 0.40 (0.30) (0.77)
-------- ------- ------- ------- -------- --------
Total from investment
operations ............. (0.14) 0.94 2.33 1.87 1.12 0.43
-------- ------- ------- ------- -------- --------
Less Distributions
Dividends from
net investment
income ................. (0.72) (1.42) (1.34) (1.50) (1.34) (1.43)
Distributions from
capital gains .......... -- -- -- -- -- --
-------- ------- ------- ------- -------- --------
Total distributions ...... (0.72) (1.42) (1.34) (1.50) (1.34) (1.43)
-------- ------- ------- ------- -------- --------
Net asset value,
end of period .............. $ 15.74 $ 16.60 $ 17.08 $ 16.09 $ 15.72 $ 15.94
======== ======= ======= ======= ======== ========
Total return ................. (0.76)%(c) 5.48% 15.17% 12.42% 7.79%(d) 2.24%(d)
Ratios/Supplemental Data:
Net assets, end of period
(000s omitted) ........... $111,562 $94,044 $92,630 $75,849 $153,621 $143,517
Ratio of expenses to
average net assets .......0.69%(a)(b) 0.70%(a) 0.70%(a) 0.88%(a) 1.00%(a) 1.00%(a)
Ratio of net investment
income (loss) to
average net assets ....... 9.02%(b) 8.12% 8.44% 8.92% 9.37% 7.73%
Fund turnover rate ......... 12%(c) 60% 84% 143% 70% 121%
</TABLE>
<TABLE>
<CAPTION>
COMMON
-------------------------------------------------------
FOR THE SIX FOR THE YEAR FOR THE PERIOD
MONTHS ENDED ENDED NOVEMBER 1, 1996*
FEBRUARY 28, 1999 AUGUST 31, TO AUGUST 31,
(UNAUDITED) 1998 1997
----------------- ------------ -----------------
<S> <C> <C> <C>
Net asset value,
beginning of period ........ $ 16.62 $17.08 $16.21
------- ------ ------
Income from investment .....
operations
Net investment
income (loss) .......... 0.62 1.36 0.93
Net gain (loss) on
investments and
foreign currency
transactions (both
realized and
unrealized) ............ (0.77) (0.45) 0.87
------- ------ ------
Total from investment
operations ............. (0.15) 0.91 1.80
------- ------ ------
Less Distributions
Dividends from
net investment
income ................. (0.66) (1.37) (0.93)
Distributions from
capital gains .......... -- -- --
------- ------ ------
Total distributions ...... (0.66) (1.37) (0.93)
------- ------ ------
Net asset value,
end of period .............. $ 15.81 $16.62 $17.08
======= ====== ======
Total return ................. (0.85)%(c) 5.27% 11.49%(c)
Ratios/Supplemental Data:
Net assets, end of period
(000s omitted) ........... $31,753 $ 570 $ 86
Ratio of expenses to
average net assets ....... 0.95%(a) 0.95%(a) 0.96%(a)(b)
Ratio of net investment
income (loss) to
average net assets ....... 8.73%(b) 7.96% 8.13%(b)
Fund turnover rate ......... 12%(c) 60% 84%(c)
<FN>
(a) Without the voluntary waiver of advisory fees and administration fees, the
ratios of expenses to average net assets for the Institutional Class would
have been 1.02% annualized for the six months ended February 28, 1999 and
1.14%, 1.13%, 1.11%, 1.08% and 1.13% for the years ended August 31, 1998,
1997, 1996, 1995 and 1994, respectively. Without the voluntary waiver of
advisory fees and administration fees, the ratios of expenses to average net
assets for the Common Class would have been 1.32% annualized for the six
months ended February 28, 1999, 1.39% for the year ended August 31, 1998 and
1.47% annualized for the period ended August 31, 1997.
(b) Annualized.
(c) Not annualized.
(d) Redemption fees not reflected in total return.
* Commencement of operations.
</FN>
</TABLE>
See Accompanying Notes to Financial Statements.
89
<PAGE>
THE WARBURG PINCUS FUNDS
MUNICIPAL BOND FUND
FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
INSTITUTIONAL COMMON
------------------------------------------------------------------------ --------------------
FOR THE SIX FOR THE PERIOD FOR THE PERIOD
MONTHS ENDED FOR THE YEAR ENDED AUGUST 31, JUNE 20, 1994* NOVEMBER 2, 1998*
FEBRUARY 28, 1999 -------------------------------------- TO AUGUST 31, TO FEBRUARY 28, 1999
(UNAUDITED) 1998 1997 1996 1995 1994 (UNAUDITED)
----------------- -------- -------- -------- -------- -------------- --------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period ... $ 15.12 $ 14.84 $ 14.65 $ 15.46 $ 15.06 $ 15.00 $15.14
------- ------- ------- ------- ------- ------- ------
Income from investment operations
Net investment income (loss) ....... 0.32 0.70 0.72 0.73 0.71 0.09 0.19
Net gain (loss) on investments
and foreign currency
transactions (both realized
and unrealized) .................. 0.02 0.40 0.65 (0.37) 0.50 (0.03) --
------- ------- ------- ------- ------- ------- ------
Total from investment operations ... 0.34 1.10 1.37 0.36 1.21 0.06 0.19
------- ------- ------- ------- ------- ------- ------
Less Distributions
Dividends from net investment
income ........................... (0.33) (0.71) (0.72) (0.74) (0.76) -- (0.20)
Distributions from capital gains ... (0.21) (0.11) (0.46) (0.43) (0.05) -- (0.21)
------- ------- ------- ------- ------- ------- ------
Total distributions ................ (0.54) (0.82) (1.18) (1.17) (0.81) -- (0.41)
------- ------- ------- ------- ------- ------- ------
Net asset value, end of period ......... $ 14.92 $ 15.12 $ 14.84 $ 14.65 $ 15.46 $ 15.06 $14.92
======= ======= ======= ======= ======= ======= ======
Total return ........................... 2.26%(c) 7.62% 9.74% 2.27% 8.42% 0.40%(c) 1.23%(c)
Ratios/Supplemental Data:
Net assets, end of period
(000s omitted) ..................... $23,962 $22,229 $19,810 $19,581 $48,978 $42,310 $ 6
Ratio of expenses to average
net assets .........................0.99%(a)(b) 1.00%(a) 1.00%(a) 1.00%(a) 1.00%(a) 1.00%(a)(b) 1.25%(a)(b)
Ratio of net investment income
(loss) to average net assets ....... 4.29%(b) 4.72% 4.88% 4.62% 4.76% 3.27%(b) 4.45%(b)
Fund turnover rate ................... 17%(c) 57% 43% 34% 25% 9%(c) 17%(c)
<FN>
(a) Without the voluntary waiver of advisory fees and administration fees, the
ratios of expenses to average net assets for the Institutional Class would
have been 1.37% annualized for the six months ended February 28, 1999 and
1.39%, 1.37%, 1.42% and 1.19% for the years ended August 31, 1998, 1997,
1996 and 1995, respectively and 1.34% annualized for the period ended August
31, 1994. Without the voluntary waiver of advisory fees and administration
fees, the ratios of expenses to average net assets for the Common Class
would have been 1.43% annualized for the period ended February 28, 1999.
(b) Annualized.
(c) Not Annualized.
* Commencement of operations.
</FN>
</TABLE>
See Accompanying Notes to Financial Statements.
90
<PAGE>
THE WARBURG PINCUS FUNDS
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Warburg Pincus Funds covered in this report are comprised of Warburg
Pincus International Growth Fund,Inc. ("International"), Warburg Pincus Emerging
Markets II Fund Inc. ("Emerging Markets"), Warburg Pincus European Equity Fund,
Inc. ("European Equity"), Warburg Pincus U.S. Core Equity Fund,Inc. ("Core
Equity"), Warburg Pincus Global Telecommunications Fund, Inc. ("Global
Telecommunications"), Warburg Pincus Select Economic Value Equity Fund,Inc.
("Select Economic"), Warburg Pincus Long-Short Market Neutral Fund, Inc.
("Long-Short Neutral"), Warburg Pincus Long-Short Equity Fund, Inc. ("Long-Short
Equity"), Warburg Pincus U.S. Core Fixed Income Fund, Inc. ("Core Fixed"),
Warburg Pincus Strategic Global Fixed Income Fund, Inc. ("Global Fixed"),
Warburg Pincus High Yield Fund, Inc. ("High Yield") and Warburg Pincus Municipal
Bond Fund, Inc. ("Municipal") (each, a "Fund" and collectively, the "Funds"),
which are registered under the Investment Company Act of 1940, as amended (the
"1940 Act"), as non-diversified, open-end management investment companies. Each
Fund is authorized to offer three classes of shares: Common, Advisor and
Institutional, although only Common shares and Institutional shares of each Fund
are currently offered. Common shares for each Fund bear expenses paid pursuant
to a shareholder servicing and distribution plan at an annual rate not to exceed
.25% of the average daily net asset value of the Fund's outstanding Common
shares.
On October 23, 1998, pursuant to an Agreement and Plan of Reorganization,
each Fund (other than European Equity) acquired all of the assets and
liabilities of a corresponding investment series of The RBB Fund, Inc.
(collectively, the "Acquired Funds"). The acquisitions were accomplished by a
tax-free exchange of the following shares of each Fund, in each case for the
same amount of shares of the corresponding class of the applicable Acquired
Fund. Shares were reissued to shareholders at the time of the reorganizations.
FUND COMMON SHARES INSTITUTIONAL SHARES
------------------------- ------------- --------------------
International 145,719 27,622,659
Emerging Markets 62,181 1,508,675
Core Equity -- 2,578,272
Global Telecommunications 40,351 --
Select Economic -- 1,755,874
Long-Short Neutral -- 310,521
Long-Short Equity -- 7,168
Core Income -- 25,307,129
Global Fixed -- 1,875,514
High Yield 34,314 5,655,408
Municipal -- 1,483,582
The net assets of each Fund directly after the reorganization were the same
as the corresponding Acquired Fund as described in the table below. Each Fund
assumed the prior operating history of the corresponding Acquired Fund.
UNREALIZED
FUND NET ASSETS APPRECIATION/(DEPRECIATION)*
-------------------------- ------------ ----------------------------
International $615,300,445 $ 46,755,858
Emerging Markets 17,766,403 (4,401,793)
Core Equity 62,977,054 1,772,191
Global Telecommunications 943,831 112,975
Select Economic 27,207,148 994,655
Long-Short Neutral 4,693,517 26,972
Long-Short Equity 109,073 (2,142)
Core Income 395,200,568 (3,009,982)
Global Fixed 30,261,883 526,957
High Yield 87,873,344 (5,030,237)
Municipal 22,404,233 1,280,536
*The amount of each Fund's net assets includes the amount of unrealize
appreciation/(depreciation) listed above.
91
<PAGE>
THE WARBURG PINCUS FUNDS
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Certain of the Funds are permitted to engage in the investment strategies
described in the Notes to Financial Statements. 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.
Please refer to each Fund's prospectus(es) and statement of additional
information for a description of its investment strategies.
A) SECURITY VALUATION -- The net asset value of each Fund is
determined daily as of the close of regular trading on the New York Stock
Exchange. Each Fund's securities for which market quotations are readily
available are valued at market value, which is currently determined using
the last reported sales price. If no sales are reported, as in the case of
some securities traded over-the-counter, the securities are valued at the
mean between the last reported bid and asked prices. All other securities
and assets are valued as determined in good faith by the Fund's Board of
Directors. Short-term obligations with maturities of 60 days or less are
valued at amortized cost which approximates market value.
B) FOREIGN CURRENCY TRANSACTIONS -- Transactions denominated in
foreign currencies are recorded in each Fund's records at the current
prevailing exchange rates. Asset and liability accounts that are
denominated in a foreign currency are adjusted daily to reflect current
exchange rates. Transaction gains or losses resulting from changes in
exchange rates during the reporting period or upon settlement of the
foreign currency transaction are reported in operations for the current
period. It is not practical to isolate that portion of both realized and
unrealized gains and losses on investments in the statement of operations
that result from fluctuations in foreign currency exchange rates. Each Fund
reports certain foreign currency related transactions as components of
realized gains for financial reporting purposes, whereas such components
are treated as ordinary income (loss) for Federal income tax purposes.
C) SECURITY TRANSACTIONS AND INVESTMENT INCOME -- Security
transactions are accounted for on the trade date. The cost of investments
sold is determined by use of the specific identification method for both
financial reporting and income tax purposes. Interest income is recorded on
the accrual basis. Dividends are recorded on the ex-dividend date. Certain
expenses are class specific expenses and vary by class. Expenses not
directly attributable to a specific Fund or class are allocated based on
relative net assets of each Fund and class, respectively.
D) DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS -- Each Fund calculates
its dividends from net investment income. Net investment income includes
interest accrued and dividends earned on the Fund's portfolio securites for
the applicable period less applicable expenses. Each of the Emerging
Markets, International, Select Economic, Core Equity, European Equity,
Global Telecommunications, Long-Short Neutral Fund and Long-Short Equity
Funds will distribute substantially all of its net realized capital gains
and all net investment income, if any, to its shareholders annually. Each
of the High Yield, Global Fixed and Core Fixed Funds will distribute
substantially all of its net realized capital gains, if any, to its
shareholders annually and will distribute net investment income at least
quarterly. The Municipal Fund will distribute substantially all of its net
realized capital gains, if any, annually and all net investment income
monthly. The character of distributions made during the year for net
investment income or net realized gains may differ from their ultimate
characterization for federal income tax purposes due to generally accepted
accounting principles (GAAP) and tax differences in the character of income
and expense recognition. These differences are primarily due to differing
treatments for net operating losses, mortgage-backed securities, passive
foreign investment companies, and forward foreign currency contracts.
E) FEDERAL INCOME TAXES -- No provision is made for Federal taxes as
it is each Fund's intention 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.
F) USE OF ESTIMATES -- The preparation of financial statements in
conformity with GAAP requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
92
<PAGE>
THE WARBURG PINCUS FUNDS
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
G) REPURCHASE AGREEMENTS -- Money market instruments may be purchased
from banks and non-bank dealers subject to the seller's agreement to
repurchase them at an agreed upon date and price. Collateral for repurchase
agreements may have longer maturities than the maximum permissible
remaining maturity of portfolio investments. The seller will be required on
a daily basis to maintain the value of the securities subject to the
agreement at not less than the repurchase price. The agreements are
conditional upon the collateral being deposited under the Federal Reserve
book-entry system or held in a separate account by each Fund's custodian or
an authorized securities depository. None of the Funds had open repurchase
agreements at February 28, 1999.
H) FUTURES TRANSACTIONS -- A Fund invests in futures contracts for the
purpose of hedging its existing portfolio securities, or securities that
the Fund intends to purchase, against fluctuations in value caused by
changes in prevailing market interest rates or securities prices, or for
other purposes. Certain Funds' may enter into futures contracts subject to
certain limitations. Upon entering into a futures contract, each Fund is
required to deposit cash or pledge U.S. Government securities of an initial
margin. Subsequent payments, which are dependent on the daily fluctuations
in the value of the underlying instrument, are made or received by the Fund
each day (daily variations margin) and are recorded as unrealized gains or
losses until the contracts are closed. When the contracts are closed, the
Fund records a realized gain or loss equal to the difference between the
proceeds from (or cost of) the closing transaction and the Fund's basis in
the contracts. RISKS OF ENTERING INTO FUTURES CONTRACTS INCLUDE THE
POSSIBILITY THAT THERE WILL BE AN IMPERFECT PRICE CORRELATION BETWEEN THE
FUTURES CONTRACTS AND THE UNDERLYING SECURITIES. Second, it is possible
that a lack of liquidity for futures contracts could exist in the secondary
market, resulting in an inability to close a futures position prior to its
maturity date. Third, the purchase of a futures contract involves the risk
that a Fund could lose more than the original margin deposit required to
initiate a futures transaction.
As of February 28, 1999, Long-Short Equity held the following futures
contracts:
FUTURES EXPIRATION CONTRACT CONTRACT UNREALIZED
CONTRACTS DATE AMOUNT VALUE GAIN/LOSS
--------- ---------- -------- -------- ----------
S&P 500 Futures 03/18/99 896,288 $926,625 $30,337
As of February 28, 1999, Core Fixed held the following futures contracts:
FUTURES EXPIRATION CONTRACT CONTRACT UNREALIZED
CONTRACTS DATE AMOUNT VALUE GAIN/LOSS
--------- ---------- -------- -------- ----------
Japan 10 Year
Bond Futures 03/11/99 $(15,734,091) $(15,457,219) $ 276,872
U.S. Treasury
Notes Futures 06/21/99 22,893,875 22,526,656 (367,219)
U.S. Treasury
Notes Futures 06/21/99 (65,207,672) (63,680,543) 1,527,129
U.S. Treasury
Bond Futures 06/21/99 23,975,726 23,346,969 (628,757)
As of February 28, 1999, Global Fixed held the following futures contracts:
FUTURES EXPIRATION CONTRACT CONTRACT UNREALIZED
CONTRACTS DATE AMOUNT VALUE GAIN/LOSS
--------- ---------- -------- -------- ----------
U.S. Treasury
Notes Futures 06/21/99 $ 676,930 $ 665,813 $(11,117)
U.S. Treasury
Notes Futures 06/21/99 843,000 836,812 (6,188)
U.S. Treasury
Notes Futures 06/21/99 (3,172,984) (3,098,250) 74,734
U.S. Treasury
Bond Futures 06/21/99 1,242,266 1,209,688 (32,578)
I) TBA PURCHASE COMMITMENTS -- The Funds may enter into "TBA" (to be
announced) purchases commitments to purchase securities for a fixed price
at a future date, typically not exceeding 45 days. TBA purchase commitments
may be considered securities in themselves, and involve a risk of loss if
the value of the security to be purchased declines prior to settlement
date, which risk is in addition to the risk of decline in each Fund's other
assets. Unsettled TBA purchase commitments are valued at the current market
value of the underlying securities, according to the procedures described
under "Security Valuation" above.
93
<PAGE>
THE WARBURG PINCUS FUNDS
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
J) SECURITIES LENDING -- Loans of the securities are required at all
times to be secured by collateral at least equal to 102% of the market
value of domestic securities on loan including any accrued interest thereon
and 105% of the market value of foreign securities on loan including any
accrued interest thereon. However, in the event of default or bankruptcy by
the other party to the agreement, realization and/or retention of the
collateral may be subject to legal proceedings. The market value of
securities on loan to brokers and the value of collateral held by each Fund
with respect to such loans (including the right to draw on a letter of
credit) at February 28, 1999 is as follows:
MARKETS VALUE OF VALUE OF
FUND SECURITIES LOANED COLLATERAL RECORDED
------------------------- ----------------- -------------------
International $113,870,012 $121,024,220
Emerging Markets 1,045,741 1,104,232
European Equity 1,048,990 1,122,400
Core Equity 4,700,578 4,835,500
Global Telecommunications 112,275 115,700
K) SHORT SALES -- When a Fund's investment adviser believes that a
security is overvalued, it may sell the security short by borrowing the
same security from a broker or other institution and selling the security.
A Fund will incur a loss as a result of the short sale if the price of the
borrowed security increases between the date of the short sale and the date
on which the Fund replaces such security. A Fund will realize a gain if
there is a decline in price of the security between those dates, which
decline exceeds the cost of borrowing the security and other transaction
costs. There can be no assurance that a Fund will be able to close out a
short position at any particular time or at an acceptable price. Although a
Fund's gain is limited to the amount at which it sold a security short, its
potential loss is limited only by the maximum attainable price of the
security (which at least theoretically is unlimited) less the price at
which the security was sold. Until a Fund replaces a borrowed security, it
will maintain at all times cash, or liquid securities in an amount which,
when added to any amount deposited with a broker as collateral will at
least equal the current market value of the security sold short. Depending
on arrangements made with brokers, a Fund may not receive any payments
(including interest) on collateral deposited with them. Long-Short Neutral
and Long-Short Equity will not make a short sale if, after giving effect to
such sale, the market value of all securities sold short exceeds 100% of
the value of a Fund's net assets.
L) OTHER -- Securities denominated in currencies other than the U.S.
dollar are subject to changes in value due to fluctuations in exchange
rates.
Some countries in which the Funds invest require governmental approval
for the repatriation of investment income, capital or the proceeds of sales
of securities by foreign investors. In addition, if there is a
deterioration in a country's balance of payments or for other reasons, a
country may impose temporary restrictions on foreign capital remittances
abroad.
The securities exchanges of certain foreign markets are substantially
smaller, less liquid and more volatile than the major securities markets in
the United States. Consequently, acquisition and disposition of securities
by each Fund may be inhibited. In addition, a significant proportion of the
aggregate market value of equity securities listed on the major securities
exchanges in emerging markets are held by a smaller number of investors.
This may limit the number of shares available for acquisition or
disposition by a Fund.
Lower-rated debt securities (commonly known as "junk bonds") possess
speculative characteristics and are subject to greater market fluctuations
and risk of lost income and principal than higher-rated debt securities for
a variety of reasons. Also, during an economic downturn or substantial
period of rising interest rates, highly leveraged issuers may experience
financial stress which would adversely affect their ability to service
their principal and interest payment obligations, to meet projected
business goals and to obtain additional financing.
In addition, periods of economic uncertainty and changes can be
expected to result in increased volatility of market prices of lower-rated
debt securities and (to the extent a Fund invests in junk bonds) the Fund's
net asset value.
94
<PAGE>
THE WARBURG PINCUS FUNDS
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
NOTE 2. TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES
Pursuant to Investment Advisory Agreements, Credit Suisse Asset Management
("CSAM") an indirect, wholly-owned subsidiary of Credit Suisse Group, serves as
investment adviser for each of the twelve Funds described herein.
For its advisory services, CSAM is entitled to receive the following fees,
computed daily and payable monthly on each Fund's average daily net assets:
FUND ANNUAL RATE
-------------------------- ----------------------------------
International 0.80% of average daily net assets
Emerging Markets 1.00% of average daily net assets
European Equity 1.00% of average daily net assets
Global Telecommunications 1.00% of average daily net assets
Select Economic 0.75% of average daily net assets
Long-Short Neutral 1.50% of average daily net assets
Long-Short Equity 0.10% of average daily net assets
Core Equity 0.75% of average daily net assets
Core Fixed 0.375% of average daily net assets
Global Fixed 0.50% of average daily net assets
High Yield 0.70% of average daily net assets
Municipal 0.70% of average daily net assets
CSAM may, at its discretion, voluntarily waive all or any portion of its
advisory fee for any of the Funds. For the six months ended February 28, 1999,
advisory fees and waivers for each of the twelve investment Funds were as
follows:
GROSS NET
FUND ADVISORY FEE WAIVER ADVISORY FEE
-------------------------- ------------ --------- ------------
International $2,621,576 $ (32,322) $2,589,254
Emerging Markets 92,442 (26,215) 66,227
European Equity 6,946 (6) 6,940
Core Equity 245,268 (52,992) 192,276
Global Telecommunications 10,476 (10,476) --
Select Economic 114,020 (28,012) 86,008
Long-Short Neutral 108,831 (10,243) 98,588
Long-Short Equity 392 (392) --
Core Fixed 743,539 (273,963) 469,576
Global Fixed 74,467 (42,206) 32,261
High Yield 397,580 (156,312) 241,268
Municipal 80,355 (39,196) 41,159
CSAM reimbursed Global Telecommunications and Long-Short Equity $28,188 and
$9,565, respectively, for the six months ended February 28, 1999.
For its sub-advisory services, Credit Suisse Asset Management Limited
("CSAM Limited"), an indirect, wholly-owned subsidiary of Credit Suisse Group,
is entitled to receive from CSAM .30% of the average daily net assets of each of
Emerging Markets and Global Fixed and .50% of the average daily net assets of
European Equity. For the six-months ended February 28, 1999, CSAM Limited was
entitled to receive $27,733, $22,340 and $3,473 from CSAM for sub-advisory
services provided to Emerging Markets, Global Fixed and European Equity,
respectively, all of which fees were waived.
State Street Bank and Trust Company ("State Street"), serves as each Fund's
transfer and dividend disbursing agent. State Street has delegated most of its
Fund service obligations to Boston Financial Data Services, Inc. (BFDS), a 50%
owned subsidiary of State Street.
95
<PAGE>
THE WARBURG PINCUS FUNDS
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
NOTE 2. TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES (CONTINUED)
Counsellors Funds Service, Inc. ("CFSI"), a wholly-owned subsidiary of
Warburg Pincus Asset Management, Inc., and PFPC Inc. ("PFPC"), an indirect,
wholly-owned subsidiary of PNC Bank Corp., serve as each Fund's
co-administrators. For administration services, each Fund pays CFSI a fee
calculated at an annual rate .05% of the Fund's first $125 million in average
daily nets assets of the Common shares and .10% of average daily net assets of
the Common shares over $125 million. No compensation is payable by the Funds to
CFSI for co-administration services for the Institutional shares. CSFI may, at
its discretion, voluntarily waive all or any portion of its co-administration
fees for any of the Funds. For the period October 23, 1998 to February 28, 1999,
co-administration fees earned and waived by CFSI were as follows:
GROSS NET
FUND ADMINISTRATION FEE WAIVER ADMINISTRATION FEE
------------------------- ------------------ ------ ------------------
International $4,666 $ -- $4,666
Emerging Markets 125 (42) 83
European Equity 2,307 (1,153) 1,154
Core Equity 5 (4) 1
Global Telecommunications 490 (244) 246
Select Economic 1 -- 1
Long-Short Neutral 2,042 (1,633) 409
Long-Short Equity 29 -- 29
Core Fixed 1 (1) --
Global Fixed -- -- --
High Yield 4,325 (3,251) 1,074
Municipal 1 (1) --
Prior to October 23, 1998, Provident Distributors, Inc. ("PDI") served as
administrative service agent. An administrative service fee was computed daily
and payable quarterly at an annual rate of .15% of the average daily net assets
of the corresponding portfolios of the RBB Fund (except for European Equity).
The administrative service agent may at its discretion voluntarily waive
all or any portion of its administrative fee for any of the Funds. For the
period ended October 23, 1998, administrative service fees earned and waived by
PDI were as follows:
GROSS ADMINISTRATIVE NET ADMINISTRATIVE
FUND SERVICE FEE WAIVER SERVICE FEE
------------------------- -------------------- -------- ------------------
International $131,374 $(70,066) $61,308
Emerging Markets 4,262 (3,409) 853
Core Equity 13,560 (12,656) 904
Global Telecommunications 34 (34) --
Select Economic 5,339 (4,984) 355
Long-Short Neutral 1,510 (1,224) 286
Long-Short Equity 3 (3) --
Core Fixed 86,637 (80,861) 5,776
Global Fixed 6,441 (6,012) 429
High Yield 19,734 (18,418) 1,316
Municipal 4,874 (4,548) 326
96
<PAGE>
THE WARBURG PINCUS FUNDS
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
NOTE 2. TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES (CONTINUED)
For administration services, PFPC currently receives a fee calculated at
annual rate of .125% on each Fund's average daily net assets, subject to a
minimum annual fee and exclusive of out-of-pocket expenses. PFPC may, at its
discretion, voluntarily waive all or any portion of it administration fee for
any of the Funds. For the six months ended February 28, 1999, co-administration
fees earned and waived by PFPC were as follows:
GROSS ADMINISTRATIVE NET ADMINISTRATIVE
FUND FEE WAIVER FEE
------------------------- -------------------- -------- ------------------
International $409,621 $-- $409,621
Emerging Markets 11,555 -- 11,555
European Equity 2,894 -- 2,894
Core Equity 40,878 -- 40,878
Global Telecommunications 1,309 (1,309) --
Select Economic 19,003 -- 19,003
Long-Short Neutral 9,069 (9,069) --
Long-Short Equity 487 -- 487
Core Fixed 146,248 -- 146,248
Global Fixed 24,853 -- 24,853
High Yield 70,996 (14,199) 56,797
Municipal 18,596 -- 18,596
Counsellors Securities Inc. ("CSI"), also a wholly-owned subsidiary of
Warburg Pincus Asset Management, Inc., serves as each Fund's distributor. No
compensation is payable by any Fund to CSI for its distribution services for
Institutional shares. For its distribution services for the Common shares, CSI
receives a fee calculated at an annual rate of .25% of the average daily net
assets of the Common shares of each Fund. For the six months ended February 28,
1999, distribution fees earned by CSI were as follows:
FUND DISTRIBUTION FEE
----------------------------- ----------------
International $ 24,187
Emerging Markets 887
European Equity 5,768
Core Equity 23
Global Telecommunications 2,619
Select Economic 3
Long-Short Neutral 10,250
Long-Short Equity 148
Core Fixed 5
Global Fixed 3
High Yield 22,042
Municipal 5
NOTE 3. PURCHASES AND SALES OF SECURITIES
For the six months ended February 28, 1999, purchases and sales of
investment securities (other than short-term investments) were as follows:
INVESTMENT SECURITIES SHORT SECURITIES
------------------------------- ----------------
FUND PURCHASES SALES SALES
------------------------- -------------- -------------- ----------------
International $ 579,302,852 $ 514,279,509 $--
Emerging Markets 20,937,566 28,089,459 --
European Equity 32,596,118 4,686,675 --
Core Equity 40,018,407 43,042,918 --
Global Telecommunications 6,636,228 2,260,399 --
Select Economic 43,351,827 39,338,689 --
Long-Short Neutral 34,139,490 7,284,002 25,852,087
Long-Short Equity 1,010,865 155,626 --
Core Fixed 1,160,469,026 1,126,621,296 --
Global Fixed Income 60,275,775 40,023,956 --
High Yield 65,418,677 13,390,024 --
Municipal 5,539,964 3,592,132 --
97
<PAGE>
THE WARBURG PINCUS FUNDS
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
NOTE 4. CAPITAL SHARES
Transactions in capital shares for each period were as follows:
<TABLE>
<CAPTION>
INTERNATIONAL GROWTH FUND
--------------------------------------------------------------------------------------------------------
INSTITUTIONAL COMMON
---------------------------------------------------- ------------------------------------------------
FOR THE SIX MONTHS ENDED FOR THE SIX MONTHS ENDED
FEBRUARY 28, 1999 FOR THE YEAR ENDED FEBRUARY 28, 1999 FOR THE YEAR ENDED
(UNAUDITED) AUGUST 31, 1998 (UNAUDITED) AUGUST 31, 1998
------------------------ ------------------------ ------------------------ ----------------------
SHARES VALUE SHARES VALUE SHARES VALUE SHARES VALUE
---------- ----------- ---------- ------------ ----------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Shares sold 3,961,053 $88,860,179 4,245,007 $102,490,297 1,726,765 $38,794,175 211,487 $4,990,229
Shares issued in
reinvestment of
dividends 2,671,406 59,839,501 3,354,933 68,910,317 127,644 2,838,791 8,163 167,087
Shares repurchased (3,717,290) (84,010,625) (5,715,329) (125,473,547) (694,544) (16,022,743) (154,474) (3,642,448)
---------- ----------- --------- ------------ --------- ----------- ------- ----------
Net increase 2,915,169 $64,689,055 1,884,611 $ 45,927,067 1,159,865 $25,610,223 65,176 $1,514,868
========== =========== ========= ============ ========= =========== ======= ==========
EMERGING MARKETS II FUND
--------------------------------------------------------------------------------------------------------
INSTITUTIONAL COMMON
---------------------------------------------------- ------------------------------------------------
FOR THE SIX MONTHS ENDED FOR THE SIX MONTHS ENDED
FEBRUARY 28, 1999 FOR THE YEAR ENDED FEBRUARY 28, 1999 FOR THE YEAR ENDED
(UNAUDITED) AUGUST 31, 1998 (UNAUDITED) AUGUST 31, 1998
------------------------ ------------------------ ------------------------ ----------------------
SHARES VALUE SHARES VALUE SHARES VALUE SHARES VALUE
---------- ----------- ---------- ------------ --------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Shares sold 18,125 $ 201,804 102,528 $ 1,830,455 7,122 $ 81,508 93,287 $1,457,394
Shares issued in
reinvestment of
dividends 27,063 308,248 245,801 4,154,034 60 690 46 775
Shares repurchased (853,498) (9,175,786) (2,256,500) (35,760,759) (1,060) (11,170) 32,820) (571,277)
---------- ----------- ---------- ----------- --------- ----------- ------- ----------
Net increase/(decrease) (808,310) $(8,665,734) (1,908,171) $(29,776,270) 6,122 $ 71,028 60,513 $ 886,892
========== =========== ========== ============ ========= =========== ======= ==========
EUROPEAN EQUITY FUND
---------------------------------------------------------------------
INSTITUTIONAL COMMON
-------------------------------- ---------------------------------
FOR THE PERIOD JANUARY 29, 1999* FOR THE PERIOD JANUARY 29, 1999*
THROUGH FEBRUARY 28, 1999 THROUGH FEBRUARY 28, 1999
(UNAUDITED) (UNAUDITED)
-------------------------------- ---------------------------------
SHARES VALUE SHARES VALUE
---------- ----------- ------------ --------------
<S> <C> <C> <C> <C>
Shares sold 10,003 $100,030 2,901,541 $28,977,961
Shares issued in
reinvestment of
dividends -- -- -- --
Shares repurchased -- -- (44,678) (433,127)
------ -------- --------- -----------
Net increase 10,003 $100,030 2,856,863 $28,544,834
====== ======== ========= ===========
<FN>
*Commencement of operations.
</FN>
</TABLE>
98
<PAGE>
THE WARBURG PINCUS FUNDS
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
NOTE 4. CAPITAL SHARES (CONTINUED)
<TABLE>
<CAPTION>
U.S. CORE EQUITY FUND
----------------------------------------------------------------------------------------
INSTITUTIONAL COMMON
------------------------------------------------------ --------------------------------
FOR THE SIX MONTHS ENDED FOR THE PERIOD NOVEMBER 2, 1998*
FEBRUARY 28, 1999 FOR THE YEAR ENDED THROUGH FEBRUARY 28, 1999
(UNAUDITED) AUGUST 31, 1998 (UNAUDITED)
--------------------------- ------------------------- --------------------------------
SHARES VALUE SHARES VALUE SHARES VALUE
------------- ------------ ---------- ------------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Shares sold 82,118 $ 1,771,766 682,212 $ 16,949,211 4,942 $95,732
Shares issued in
reinvestment of
dividends 1,230,677 22,619,858 568,713 12,778,985 155 2,861
Shares repurchased (558,922) (12,751,646) (1,859,405) (46,573,171) (481) (8,832)
--------- ----------- ---------- ------------ ----- -------
Net increase/(decrease) 753,873 11,639,978 (608,480) $(16,844,975) 4,616 $89,761
========= =========== ========= ============ ===== =======
GLOBAL TELECOMMUNICATIONS FUND
------------------------------------------------------
COMMON
------------------------------------------------------
FOR THE SIX MONTHS ENDED FOR THE YEAR ENDED
FEBRUARY 28, 1999 AUGUST 31, 1998
(UNAUDITED) (UNAUDITED)
--------------------------- -------------------------
SHARES VALUE SHARES VALUE
------------- ------------ ---------- -------------
<S> <C> <C> <C> <C>
Shares sold 214,771 $6,599,871 18,229 $ 414,135
Shares issued in
reinvestment of
dividends 5,883 167,194 2,037 37,921
Shares repurchased (33,291) (997,050) (18,228) (407,258)
------- ---------- ------- ---------
Net increase 187,363 $5,770,015 2,038 $ 44,798
======= ========== ======= =========
SELECT ECONOMIC VALUE EQUITY FUND
-------------------------------------------------------------------------------------------
INSTITUTIONAL COMMON
-------------------------------------------------------- --------------------------------
FOR THE SIX MONTHS ENDED FOR THE PERIOD FOR THE PERIOD NOVEMBER 2, 1998*
FEBRUARY 28, 1999 AUGUST 3, 1998* THROUGH FEBRUARY 28, 1999
(UNAUDITED) THROUGH AUGUST 31, 1998 (UNAUDITED)
--------------------------- --------------------------- --------------------------------
SHARES VALUE SHARES VALUE SHARES VALUE
-------------- ------------ ---------- ------------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Shares sold 330,916 $ 5,679,987 1,721,030 $25,813,705 868 $14,991
Shares issued in
reinvestment of
dividends 2,776 49,578 -- -- -- --
Shares repurchased (132,481) (2,359,699) -- -- (450) (7,778)
-------- ----------- --------- ----------- ---- -------
Net increase 201,211 $ 3,369,866 1,721,030 $25,813,705 418 $ 7,213
======== =========== ========= =========== ==== =======
<FN>
*Commencement of operations.
</FN>
</TABLE>
99
<PAGE>
THE WARBURG PINCUS FUNDS
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
NOTE 4. CAPITAL SHARES (CONTINUED)
<TABLE>
<CAPTION>
LONG-SHORT MARKET NEUTRAL FUND
--------------------------------------------------------------------------------------------------
INSTITUTIONAL COMMON
------------------------------------------------------------- ---------------------------------
FOR THE SIX MONTHS ENDED FOR THE PERIOD SEPTEMBER 9, 1998*
FEBRUARY 28, 1999 FOR THE PERIOD AUGUST 3, 1998* THROUGH FEBRUARY 28, 1999
(UNAUDITED) THROUGH AUGUST 31, 1998 (UNAUDITED)
--------------------------- ------------------------------ ---------------------------------
SHARES VALUE SHARES VALUE SHARES VALUE
------------- ------------ ---------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Shares sold 295,597 $ 4,466,851 412,744 $6,191,423 1,467,167 $22,198,712
Shares issued in
reinvestment of
dividends 5,561 82,361 -- -- 16,915 250,336
Shares repurchased (268,258) (4,033,548) -- -- (138,484) (2,081,374)
-------- ---------- ------- ---------- --------- -----------
Net increase 32,900 $ 515,664 412,744 $6,191,423 1,345,598 $20,367,674
======== ========== ======= ========== ========= ===========
LONG-SHORT EQUITY FUND
------------------------------------------------------------------------
INSTITUTIONAL COMMON
---------------------------------- --------------------------------
FOR THE PERIOD SEPTEMBER 14, 1998* FOR THE PERIOD NOVEMBER 2, 1998*
THROUGH FEBRUARY 28, 1999 THROUGH FEBRUARY 28, 1999
(UNAUDITED) (UNAUDITED)
---------------------------------- --------------------------------
SHARES VALUE SHARES VALUE
------------- ------------- ------------ ------------
<S> <C> <C> <C> <C>
Shares sold 65,685 $ 1,010,030 64,503 $1,071,231
Shares issued in
reinvestment of
dividends 1,757 29,513 43 720
Shares repurchased (60,132) (1,000,000) (1,533) (25,584)
------- ----------- ------ ----------
Net increase 7,310 $ 39,543 63,013 $1,046,367
======= =========== ====== ==========
U.S. CORE FIXED INCOME FUND
----------------------------------------------------------------------------------------
INSTITUTIONAL COMMON
---------------------------------------------------- --------------------------------
FOR THE SIX MONTHS ENDED FOR THE PERIOD NOVEMBER 2, 1998*
FEBRUARY 28, 1999 FOR THE YEAR ENDED THROUGH FEBRUARY 28, 1999
(UNAUDITED) AUGUST 31, 1998 (UNAUDITED)
------------------------- ------------------------ --------------------------------
SHARES VALUE SHARES VALUE SHARES VALUE
---------- ------------ ---------- ------------ ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Shares sold 6,845,188 $107,157,220 15,080,236 $237,240,219 1,031 $16,022
Shares issued in
reinvestment of
dividends 1,079,605 16,758,880 906,263 14,074,352 2 29
Shares repurchased (8,705,640) (136,140,271) (2,268,321) (35,611,876) -- --
---------- ------------ ---------- ------------ ----- -------
Net increase/(decrease) (780,847) $(12,224,171) 13,718,178 $215,702,695 1,033 $16,051
========== ============ ========== ============ ===== =======
<FN>
*Commencement of operations.
</FN>
</TABLE>
100
<PAGE>
THE WARBURG PINCUS FUNDS
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
NOTE 4. CAPITAL SHARES (CONTINUED)
<TABLE>
<CAPTION>
STRATEGIC GLOBAL FIXED INCOME FUND
--------------------------------------------------------------------------------------
INSTITUTIONAL COMMON
-------------------------------------------------- ---------------------------------
FOR THE SIX MONTHS ENDED FOR THE PERIOD NOVEMBER 2, 1998*
FEBRUARY 28, 1999 FOR THE YEAR ENDED THROUGH FEBRUARY 28, 1999
(UNAUDITED) AUGUST 31, 1998 (UNAUDITED)
------------------------ ----------------------- ---------------------------------
SHARES VALUE SHARES VALUE SHARES VALUE
--------- ----------- --------- ------------- ---------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Shares sold 49,311 $ 784,925 227,215 $ 3,505,185 569 $9,022
Shares issued in
reinvestment of
dividends 62,754 990,884 147,509 2,200,318 2 32
Shares repurchased (149,513) (2,352,666) (1,361,892) (20,772,949) -- --
------- ---------- --------- ------------ --- ------
Net increase/(decrease) (37,448) $ (576,857) (987,168) $(15,067,446) 571 $9,054
======= ========== ========= ============ === ======
</TABLE>
<TABLE>
HIGH YIELD FUND
--------------------------------------------------------------------------------------------------------
INSTITUTIONAL COMMON
--------------------------------------------------- ----------------------------------------------------
FOR THE SIX MONTHS ENDED FOR THE SIX MONTHS ENDED
FEBRUARY 28, 1999 FOR THE YEAR ENDED FEBRUARY 28, 1999 FOR THE YEAR ENDED
(UNAUDITED) AUGUST 31, 1998 (UNAUDITED) AUGUST 31, 1998
------------------------ ----------------------- ---------------------- ------------------------
SHARES VALUE SHARES VALUE SHARES VALUE SHARES VALUE
---------- ------------ --------- ------------ --------- ----------- --------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Shares sold 2,004,825 $ 31,561,695 2,248,712 $ 38,970,312 2,098,268 $32,879,970 266,018 $ 4,697,209
Shares issued in
reinvestment of
dividends 238,675 3,749,600 416,842 7,175,130 33,436 523,091 9,315 162,504
Shares repurchased (822,621) (12,958,425) (2,423,467) (41,922,050) (156,985) (2,495,620) (246,118) (4,271,516)
--------- ------------ --------- ------------ --------- ----------- ------- -----------
Net increase 1,420,879 $ 22,352,870 242,087 $ 4,223,392 1,974,719 $30,907,441 29,215 $ 588,197
========= ============ ========= ============ ========= =========== ======= ===========
</TABLE>
<TABLE>
MUNICIPAL BOND FUND
-------------------------------------------------------------------------------
INSTITUTIONAL COMMON
---------------------------------------------- --------------------------------
FOR THE SIX MONTHS ENDED FOR THE PERIOD NOVEMBER 2, 1998*
FEBRUARY 28, 1999 FOR THE YEAR ENDED THROUGH FEBRUARY 28, 1999
(UNAUDITED) AUGUST 31, 1998 (UNAUDITED)
---------------------- -------------------- ----------------------
SHARES VALUE SHARES VALUE SHARES VALUE
-------- ---------- ------- ---------- ------ --------
<S> <C> <C> <C> <C> <C> <C>
Shares sold 106,078 $1,594,893 217,663 $3,269,230 1,395 $ 21,022
Shares issued in
reinvestment of
dividends 52,580 789,139 70,888 1,064,203 3 46
Shares repurchased (22,857) (344,926) (153,265) (2,304,613) (995) (15,125)
------- ---------- ------- ---------- ----- --------
Net increase 135,801 $2,039,106 135,286 $2,028,820 403 $ 5,943
======= ========== ======= ========== ===== ========
<FN>
*Commencement of operations.
</FN>
</TABLE>
101
<PAGE>
THE WARBURG PINCUS FUNDS
NOTES TO FINANCIAL STATEMENTS (CONCLUDED)
(UNAUDITED)
NOTE 4. CAPITAL SHARES (CONTINUED)
On February 28, 1999, two shareholders held approximately 12% of the
outstanding shares of the International Institutional shares, three shareholders
held approximately 95% of the International Common shares, four shareholders
held approximately 94% of the outstanding shares of the Emerging Markets
Institutional shares, one shareholder held approximately 89% of the Emerging
Markets Common shares, one shareholder held approximately 100% of the European
Equity Institutional shares, one shareholder held approximately 83% of the
European Equity Common shares, six shareholders held approximately 83% of the
outstanding shares of the Core Equity Institutional shares, seven shareholders
held approximately 81% of the Core Equity Common shares, three shareholders held
approximately 47% of the outstanding shares of the Global Telecommunications
Common shares, four shareholders held approximately 91% of the Long-Short
Neutral Institutional shares, one shareholder held approximately 95% of the
outstanding shares of the Long-Short Neutral Common shares, two shareholders
held approximately 100% of the Long-Short Equity Institutional shares, one
shareholder held approximately 96% of the outstanding shares of the Long-Short
Equity Common shares, six shareholders held approximately 43% of the outstanding
shares of the Core Fixed Institutional shares, three shareholders held
approximately 100% of the outstanding shares of the Core Fixed Common shares,
three shareholders held approximately 96% of the outstanding shares of the
Global Fixed Institutional shares, three shareholders held approximately 100% of
the outstanding shares of the Global Fixed Common shares, four shareholders held
approximately 55% of the outstanding shares of the High Yield Institutional
shares, three shareholders held approximately 90% of the outstanding shares of
the High Yield Common shares, three shareholders held approximately 59% of the
outstanding shares of the Municipal Institutional shares and two shareholders
held approximately 100% of the outstanding shares of the Municipal Common
shares.
NOTE 5. RESTRICTED SECURITIES
One of International Fund's investments are restricted as to resale and are
valued at the direction of the Fund's Board of Directors in good faith, at fair
value, after taking into consideration appropriate indications of value
available. The table below shows the number of shares held, the acquisition
date, value as of February 28, 1999, percentage of Fund net assets which the
securities comprise, aggregate cost and unit value of the securities.
<TABLE>
NUMBER OF ACQUISITION 02/28/99 PERCENTAGE OF SECURITY VALUE PER
SHARES DATE FAIR VALUE NET ASSETS COST UNIT
--------- ----------- ---------- ------------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
Geotek Communications, Inc. 600 5/26/95 0.00 0.0% $ 6,000,000 0.000
---- -----------
0.00 $ 6,000.000
==== ===========
</TABLE>
NOTE 6. FORWARD FOREIGN CURRENCY CONTRACTS
The Funds will generally enter into forward foreign currency exchange
contracts as a way of managing foreign exchange rate risk and to enhance total
return. Each Fund may enter into these contracts to fix the U.S. dollar value of
a security that it has agreed to buy or sell for the period between the date the
trade was entered into and the date the security is delivered and paid for. Each
Fund may also use these contracts to hedge the U.S. dollar value of securities
denominated in foreign currencies that it already owns. The Fund may enter into
these contracts for the purchase or sale of a specific foreign currency at a
fixed price on a future date as a hedge or cross-hedge against either
transactions or portfolio positions.
Forward foreign currency contracts are valued at the forward rate, and are
marked-to-market daily. The change in market value is recorded by each Fund as
an unrealized gain or loss. When the contract is closed, each Fund records a
realized gain or loss equal to the difference between the value of the contract
at the time it was opened and the value at the time it was closed. Each Fund's
policy is to include this portion of realized and unrealized gains and losses on
investments that result from foreign currency changes with other foreign
currency gains and losses on the Statement of Operations.
102
<PAGE>
THE WARBURG PINCUS FUNDS
NOTES TO FINANCIAL STATEMENTS (CONCLUDED)
(UNAUDITED)
NOTE 6. FORWARD FOREIGN CURRENCY CONTRACTS (CONTINUED)
The use of forward foreign currency contracts does not eliminate
fluctuations in the underlying prices of each Fund's portfolio securities, but
it does establish a rate of exchange that can be achieved in the future.
Although forward foreign currency contracts limit the risk of loss due to a
decline in the value of the hedged currency, they also limit any potential gain
that might result should the value of the currency increase. In addition, a Fund
could be exposed to risks if the counterparty to the contract is unable to meet
the terms of the contract. During the six months ended February 28, 1999, the
Global Fixed and the Core Fixed entered into forward foreign currency contracts.
Core Fixed had no open forward foreign contracts at February 28, 1999.
The Global Fixed had the following open Forward Foreign Currency Contracts
at February 28, 1999:
<TABLE>
<CAPTION>
FOREIGN UNREALIZED
FORWARD CURRENCY EXPIRATION CURRENCY CONTRACT CONTRACT FOREIGN EXCHANGE
CONTRACT DATE TO BE SOLD AMOUNT VALUE GAIN/(LOSS)
--------------------- ---------- ---------- ---------- ---------- ----------------
<S> <C> <C> <C> <C> <C>
Australian Dollar 03/11/99 826,404 $ 519,064 $ 512,676 $ 6,388
Euro 03/11/99 716,894 835,038 789,140 45,898
French Frank 05/18/99 18,032 20,306 19,925 381
Great Britain Pound 03/11/99 193,910 319,583 311,094 8,489
Italian Lira 03/11/99 517,993 609,248 570,194 39,054
New Zealand Dollar 03/04/99 1,769,799 934,029 929,782 4,247
South African Rand 08/18/99 71,527 10,945 11,080 (135)
---------- ---------- --------
$3,248,213 $3,143,891 $104,322
========== ========== ========
</TABLE>
<TABLE>
<CAPTION>
FOREIGN UNREALIZED
FORWARD CURRENCY EXPIRATION CURRENCY CONTRACT CONTRACT FOREIGN EXCHANGE
CONTRACT DATE TO BE SOLD AMOUNT VALUE GAIN/(LOSS)
--------------------- ---------- ---------- ---------- ---------- ----------------
<S> <C> <C> <C> <C> <C>
Australian Dollars 03/11/99 826,404 $ 510,552 $ 512,676 $ 2,124
Canadian Dollars 03/11/99 1,077,389 699,376 713,947 14,571
German Deutschemarks 03/11/99 2,197,806 2,583,253 2,419,291 (163,962)
Great Britain Pounds 03/11/99 485,259 802,763 778,511 (24,252)
Japanese Yen 05/10/99 169,750,637 1,529,285 1,440,350 (88,935)
Swedish Krona 03/11/99 4,939,859 610,160 604,064 (6,096)
---------- ---------- --------
$6,735,389 $6,468,839 $(266,550)
========== ========== ========
</TABLE>
103
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK.]
104
<PAGE>
P.O. Box 8500, Boston, MA 02266-8500
800-275-4232
COUNSELLORS SECURITIES INC., DISTRIBUTOR
