[GRAPHIC OMITTED] [GRAPHIC OMITTED]
Warburg Pincus Funds Credit Suisse/Asset Management
INTERNATIONAL GROWTH FUND
EMERGING MARKETS II FUND
EUROPEAN EQUITY FUND
U.S. CORE EQUITY FUND
GLOBAL TELECOMMUNICATIONS FUND
SELECT ECONOMIC VALUE EQUITY FUND
LONG-SHORT MARKET NEUTRAL FUND
LONG-SHORT EQUITY FUND
U.S. CORE FIXED INCOME FUND
STRATEGIC GLOBAL FIXED INCOME FUND
HIGH YIELD FUND
MUNICIPAL BOND FUND
AUGUST 31, 1999 ANNUAL REPORT
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 800-222-8977 or by writing 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.
Credit Suisse Asset Management Securities,Inc., Distributor, 466 Lexington
Avenue,New York, NY 10017. Telephone: 800-888-6878. Warburg Pincus Funds is a
division of Credit Suisse Asset Management Securities, LLC.
<PAGE>
FROM TIME TO TIME, THE FUNDS' INVESTMENT ADVISER AND CO-ADMINISTRATORS MAY WAIVE
SOME FEES AND/OR REIMBURSE SOME EXPENSES, WITHOUT WHICH PERFORMANCE WOULD BE
LOWER. WAIVERS AND/OR REIMBURSEMENTS ARE SUBJECT TO CHANGE.
RETURNS ARE HISTORICAL AND INCLUDE CHANGE IN SHARE PRICE AND REINVESTMENT OF
DIVIDENDS AND CAPITAL GAINS. PAST PERFORMANCE CANNOT GUARANTEE FUTURE RESULTS.
RETURNS AND SHARE PRICE WILL FLUCTUATE, AND REDEMPTION VALUE MAY BE MORE OR LESS
THAN ORIGINAL COST.
THE VIEWS OF THE FUNDS' MANAGEMENT ARE AS OF THE DATE OF THE LETTERS AND
PORTFOLIO HOLDINGS DESCRIBED IN THIS DOCUMENT ARE AS OF AUGUST 31, 1999; THESE
VIEWS AND PORTFOLIO HOLDINGS MAY HAVE CHANGED SUBSEQUENT TO THESE DATES. NOTHING
IN THIS DOCUMENT IS A RECOMMENDATION TO PURCHASE OR SELL SECURITIES.
FUND SHARES ARE NOT DEPOSITS OR OTHER OBLIGATIONS OF CREDIT SUISSE ASSET
MANAGEMENT, LLC (CSAM) OR ANY AFFILIATE, ARE NOT FDIC INSURED AND ARE NOT
GUARANTEED BY CSAM OR ANY AFFILIATE. FUND INVESTMENTS ARE SUBJECT TO INVESTMENT
RISKS, INCLUDING LOSS OF YOUR INVESTMENT.
<PAGE>
WARBURG PINCUS INTERNATIONAL GROWTH FUND
PORTFOLIO MANAGERS' LETTER
September 15, 1999
Dear Shareholders:
We are writing to report on the results of the Warburg Pincus International
Growth Fund (the "Fund") for the fiscal year ended August 31, 1999.
At August 31, 1999, the net asset value ("NAV") of the Fund's institutional
shares was $23.47, compared to an NAV of $22.70 on August 31, 1998. As a result,
the institutional shares' total return was 13.9% (assuming the reinvestment of
dividends and distributions totaling $2.27 per share). By comparison, the MSCI
EAFE Index ("EAFE Index") returned 26.0% during the same period.
At August 31,1999, the NAV of the Fund's common shares was $23.25, compared to
an NAV of $22.56 on August 31, 1998. As a result, the common shares' total
return was 13.5% (assuming the reinvestment of dividends and distributions
totaling $2.26 per share). By comparison, EAFE Index returned 26.0% during the
same period.
The Fund underperformed its EAFE benchmark primarily due to the effects of our
exposure to Europe, Asia and Japan:
(BULLET) EUROPE. Our sectoral positioning in Europe proved unsuccessful. We
adopted a defensive orientation late in the third quarter of 1998, for
instance, at a time when market sentiment was intensely negative. This
included the elimination of most of our holdings in major European
banks. The Fund was thus heavily underweight in the latter sector
during the fourth quarter, when interest-rate-sensitive companies
worldwide sharply rallied as global rates fell. Our overall approach of
"growth at a reasonable price" detracted from performance in the first
half of 1999, furthermore, when investor preferences shifted toward
value-oriented cyclical sectors.
(BULLET) ASIA. We remained prudently cautious about the ability of most Asian
economies to bounce back from the severe macroeconomic downturn that
struck the region in 1997 and 1998. As a result, we were largely absent
from major Asian markets like Singapore and Hong Kong, both of which
generated extraordinary returns during the fiscal year.
(BULLET) JAPAN. In Japan, we emphasized large blue-chip exporters such as Sony,
Canon, TDK and Honda, 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 the yen
began to strengthen and investors favored the shares of the large
Japanese banks and other sectors that had previously lagged the
domestic market.
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 Equities Management Team
Steven D. Bleiberg, Managing Director
Richard W. Watt, Managing Director
Emily Alejos, Director
Robert B. Hrabchak, Director
Alan Zlatar, Vice President
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)
[GRAPHIC OMITTED]
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
Warburg Pincus
International Growth MSCI EAFE
Institutional Shares Index 1
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
5/31/96 $14,426 $16,041
8/31/96 $14,008 $15,706
11/30/96 $14,701 $16,606
2/28/97 $15,165 $16,090
5/31/97 $15,940 $17,303
8/31/97 $16,240 $17,179
11/30/97 $16,693 $16,588
2/28/98 $18,790 $18,633
5/31/98 $20,823 $19,278
8/31/98 $18,956 $17,201
11/30/98 $19,650 $19,370
2/28/99 $19,923 $19,610
5/31/99 $19,537 $20,175
8/31/99 $21,588 $21,678
INSTITUTIONAL SHARES
--------------------
AVERAGE ANNUAL
TOTAL RETURNS
FOR THE PERIODS ENDED AUGUST 31, 1999
One Year 13.88%
Three Years 15.51%
Five Years 8.64%
From Inception
(9/30/92) 11.76%
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)
[GRAPHIC OMITTED]
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
Warburg Pincus
International Growth MSCI EAFE
Common Shares Index 1
11/1/96 $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
2/28/99 $13,939 $12,244
5/31/99 $13,660 $12,597
8/31/99 $15,073 $13,535
COMMON SHARES
-------------
AVERAGE ANNUAL
TOTAL RETURNS
FOR THE PERIODS ENDED AUGUST 31, 1999
One Year 13.52%
From Inception
(11/1/96) 15.59%
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
AUGUST 31, 1999
NUMBER
OF SHARES VALUE
---------- ------------
COMMON STOCKS -- 97.7%
AUSTRALIA -- 1.8%
BANKING -- 0.4%
National Australia Bank, Ltd.# ................ 160,200 $ 2,418,110
------------
BROADCASTING & PUBLISHING -- 0.3%
Publishing & Broadcasting, Ltd. 331,538 1,947,658
------------
BUSINESS & PUBLIC SERVICES -- 0.0%
ecorp Limited** ............................... 66 83
------------
ENERGY SOURCES -- 0.6%
Broken Hill Proprietary Co., Ltd. ............. 396,073 4,252,298
------------
MULTI-INDUSTRY -- 0.3%
Southcorp Limited ............................. 474,903 1,784,066
------------
REAL ESTATE -- 0.2%
Lend Lease Corp., Ltd. ........................ 138,380 1,687,754
------------
TOTAL AUSTRALIA ............................... 12,089,969
------------
BRAZIL -- 0.3%
ENERGY SOURCES -- 0.3%
Petroleo Brasileiro S.A. ADR** ................ 160,200 2,142,162
------------
TOTAL BRAZIL .................................. 2,142,162
------------
CHILE -- 0.1%
TELECOMMUNICATIONS -- 0.1%
Compania de Telecomunicaciones
de Chile S.A. ADR#** ........................ 29,000 652,500
------------
TOTAL CHILE 652,500
................................................. ------------
CHINA -- 0.2%
METALS - STEEL -- 0.2%
China Steel Corp. ADR ......................... 71,400 1,292,340
------------
TOTAL CHINA ................................... 1,292,340
------------
FINLAND -- 2.6%
ELECTRICAL & ELECTRONICS -- 1.8%
Nokia Oyj ..................................... 145,262 12,120,893
------------
FOREST PRODUCTS & PAPER -- 0.8%
UPM-Kymmene Oyj# .............................. 167,249 5,785,359
------------
TOTAL FINLAND ................................. 17,906,252
------------
FRANCE -- 15.9%
AUTOMOBILES -- 0.9%
Renault S.A. .................................. 116,344 6,267,144
------------
BANKING -- 2.5%
Banque Nationale de Paris -
CVG** ....................................... 24,869 218,280
Banque Nationale de Paris# 133,538 10,211,721
Compagnie Financiere de
Paribas ..................................... 18 1,914
Credit Lyonnais S.A.** ........................ 219,812 6,732,943
------------
17,164,858
------------
NUMBER
OF SHARES VALUE
---------- ------------
FRANCE -- (CONTINUED)
BUSINESS & PUBLIC SERVICES -- 2.8%
Cap Gemini S.A.# .............................. 37,571 $ 6,448,543
Suez Lyonnaise des Eaux ....................... 25,064 4,180,113
Vivendi# ...................................... 112,167 8,660,401
-----------
19,289,057
-----------
ELECTRICAL & ELECTRONICS -- 1.2%
Alcatel ....................................... 52,789 8,084,757
-----------
ELECTRONIC COMP. & INSTRUMENTS -- 1.3%
STMicroelectronics N.V. ....................... 133,388 8,854,775
-----------
ENERGY SOURCES -- 1.2%
Total Fina S.A. Cl. B# ........................ 65,395 8,426,746
-----------
FOOD & HOUSEHOLD PRODUCTS -- 1.2%
Groupe Danone ................................. 32,993 8,161,391
-----------
HEALTH & PERSONAL CARE -- 0.6%
Rhone-Poulenc S.A. ............................ 83,431 4,046,549
-----------
INSURANCE -- 1.1%
AXA S.A. ...................................... 62,145 7,732,270
-----------
MERCHANDISING -- 1.6%
Carrefour S.A.# ............................... 66,166 10,762,449
-----------
RECREATION & OTHER CONSUMER GOODS -- 1.5%
Louis Vuitton Moet Hennessy# .................. 32,701 9,950,841
-----------
TOTAL FRANCE .................................. 108,740,837
-----------
GERMANY -- 7.7%
BANKING -- 1.2%
Deutsche Bank AG 116,772 7,949,085
------------
BUSINESS & PUBLIC SERVICES -- 0.9%
Systeme, Anwendungen, Produkte
in der Datenverarbeitung
AG Pfd. 5,913 2,344,228
Systeme, Anwendungen, Produkte
in der Datenverarbeitung AG 11,897 4,121,609
------------
6,465,837
------------
CHEMICALS -- 0.8%
BASF AG 116,983 5,226,592
------------
ELECTRICAL & ELECTRONICS -- 0.7%
Siemans AG# 62,172 5,194,298
------------
INSURANCE -- 0.9%
Allianz AG Registered Shares# 23,498 6,150,178
------------
MULTI-INDUSTRY -- 1.1%
Preussag AG# 128,944 7,327,215
------------
TELECOMMUNICATIONS -- 1.3%
Mannesmann AG 57,223 8,648,997
------------
UTILITIES - ELECTRICAL & GAS-- 0.8%
Veba AG 90,003 5,670,521
------------
TOTAL GERMANY 52,632,723
------------
See Accompanying Notes to Financial Statements.
3
<PAGE>
WARBURG PINCUS INTERNATIONAL GROWTH FUND (CONTINUED)
NUMBER
OF SHARES VALUE
---------- ------------
GREECE -- 0.5%
BANKING -- 0.2%
National Bank of Greece
S.A. GDR** .................................. 106,508 $ 1,560,342
------------
TELECOMMUNICATIONS -- 0.3%
Hellenic Telecommunications
Organization S.A. ADR#** .................... 205,320 2,117,362
------------
TOTAL GREECE .................................. 3,677,704
------------
Hong Kong -- 1.0%
BANKING -- 0.2%
Hang Seng Bank Limited ........................ 120,510 1,361,861
------------
MULTI-INDUSTRY -- 0.3%
Hutchison Whampoa, Ltd. ....................... 72,000 702,389
Swire Pacific, Ltd. ........................... 242,000 1,249,747
------------
1,952,136
------------
REAL ESTATE -- 0.3%
Cheung Kong Holdings, Ltd. .................... 156,000 1,356,097
Henderson Land Development Co.,
Ltd. ........................................ 160,900 851,648
------------
2,207,745
------------
TELECOMMUNICATIONS -- 0.2%
China Telecom (Hong Kong),
Ltd.** ...................................... 460,800 1,433,151
------------
TOTAL HONG KONG ............................... 6,954,893
------------
ISRAEL -- 0.1%
ELECTRICAL & ELECTRONICS -- 0.1%
ECI Telecommunications, Ltd.
ADR# ........................................ 28,670 813,511
------------
INVESTMENT COMPANY -- 0.0%
Geotek Communications, Inc.
Series M** .................................. 600 0
------------
TOTAL ISRAEL .................................. 813,511
------------
ITALY -- 3.1%
BANKING -- 0.8%
Istituto Bancario San Paolo di
Torino S.p.A.# .............................. 406,421 5,456,036
------------
ENERGY SOURCES -- 1.2%
ENI S.p.A ..................................... 1,351,474 8,122,234
------------
INSURANCE -- 1.1%
Assicurazioni Generali S.p.A. ................. 219,461 7,406,000
------------
TOTAL ITALY ................................... 20,984,270
------------
JAPAN -- 27.4%
APPLIANCES & HOUSEHOLD DURABLES -- 1.8%
Aiwa Co., Ltd. ................................ 48,900 1,409,356
Morgan Stanley "Sony Corp." -
(CPS) ....................................... 1,750 3,707,468
Sony Corp. .................................... 53,900 6,970,913
Sony Corp. ADR ................................ 1,100 140,044
------------
12,227,781
------------
NUMBER
OF SHARES VALUE
---------- ------------
JAPAN -- (CONTINUED)
AUTOMOBILES -- 2.6%
Fuji Heavy Industries, Ltd.# .................. 333,000 $ 2,648,411
Mabuchi Motor Co., Ltd.# ...................... 30,248 3,763,013
Merrill Lynch "Honda Motor
Corp." - (CPS) .............................. 3,200 3,043,840
Toyota Motor Corp. ............................ 286,600 8,443,127
------------
17,898,391
------------
BANKING -- 3.0%
Asahi Bank, Ltd. (The) ........................ 409,000 2,499,325
Bank of Tokyo - Mitsubishi, Ltd.
(The) ....................................... 310,000 4,622,789
Sanwa Bank, Ltd. (The)# ....................... 253,000 3,461,277
Sumitomo Bank, Ltd. (The) ..................... 285,000 3,899,068
Sakura Bank, Ltd. (The) ....................... 611,000 3,232,167
Tokai Bank, Ltd. (The) ........................ 397,000 2,520,138
------------
20,234,764
------------
BROADCASTING & PUBLISHING -- 0.3%
Kadokawa Shoten Publishing Co.,
Ltd. ........................................ 8,700 1,944,061
------------
Business & Public Services -- 2.1%
Bellsystem 24, Inc. ........................... 1,900 953,105
Fuji Soft ABC, Inc. ........................... 32,200 2,232,000
Fujitsu Support & Service, Inc. ............... 8,500 2,193,967
Konami Co., Ltd. .............................. 36,200 3,166,298
NTT Data Corp. ................................ 385 3,722,127
Toyo Information Systems Co.,
Ltd.# ....................................... 47,000 2,036,180
------------
14,303,677
------------
CHEMICALS -- 1.4%
Mitsui Chemicals Industries ................... 495,800 3,617,605
Sumitomo Chemical Co., Ltd. ................... 442,000 2,265,600
Takeda Chemical Industries .................... 73,000 3,661,931
------------
9,545,136
------------
CONSTRUCTION & HOUSING -- 0.6%
Daiwa House Industry Co., Ltd. ................ 210,000 2,106,865
Sekisui House, Ltd. ........................... 209,000 2,243,610
------------
4,350,475
------------
DATA PROCESSING & REPRODUCTION-- 1.0%
Canon, Inc. ................................... 62,000 1,809,532
Fujitsu Limited ............................... 108,000 3,161,939
Morgan Stanley "Canon Corp." -
(CPS) ....................................... 1,860 2,068,671
------------
7,040,142
------------
ELECTRICAL & ELECTRONICS -- 0.9%
Hikari Tsushin, Inc.# ......................... 6,500 3,426,619
NEC Corp.# .................................... 156,000 2,532,615
------------
5,959,234
------------
See Accompanying Notes to Financial Statements
4
<PAGE>
WARBURG PINCUS INTERNATIONAL GROWTH FUND (CONTINUED)
NUMBER
OF SHARES VALUE
---------- ------------
JAPAN -- (CONTINUED)
ELECTRONIC COMP. & INSTRUMENTS -- 2.7%
Fanuc, Ltd. ................................... 41,300 $ 2,486,100
Hoya Corp. .................................... 24,000 1,435,951
I-O Data Device, Inc. ......................... 12,300 445,369
Nemic-Lambda K.K. ............................. 11,300 608,072
NIDEC Corp.# .................................. 10,300 2,028,217
Rohm Co., Ltd. ................................ 27,700 5,507,581
TDK Corp. ..................................... 28,100 3,408,651
Tokyo Seimitsu Co., Ltd. ...................... 24,500 2,413,318
------------
18,333,259
------------
FINANCIAL SERVICES -- 2.4%
Acom Company, Ltd.# ........................... 37,700 3,820,147
Daiwa Securities Group, Inc.# ................. 174,000 1,572,706
Jafco Co., Ltd. ............................... 25,000 1,901,650
Nichiei Co., Ltd.# ............................ 32,468 2,990,898
Nomura Securities Co., Ltd. (The) ............. 298,000 4,362,304
Orix Corp.# ................................... 21,200 2,037,986
------------
16,685,691
------------
FOOD & HOUSEHOLD PRODUCTS -- 0.5%
Kao Corp. ..................................... 94,000 2,666,324
Yakult Honsha Co., Ltd. ....................... 69,000 1,000,624
------------
3,666,948
------------
INDUSTRIAL COMPONENTS -- 0.4%
Minebea Company# .............................. 151,000 1,817,923
Sumitomo Rubber Industries,
Ltd. ........................................ 140,000 962,773
------------
2,780,696
------------
MERCHANDISING -- 1.4%
Avex, Inc. .................................... 1,800 356,252
Don Quijote Co., Ltd.# ........................ 4,200 907,867
FamilyMart Co., Ltd. .......................... 56,400 2,890,947
Ito-Yokado Co., Ltd.# ......................... 42,000 3,087,514
Ryohin Keikaku Co., Ltd. - New ................ 3,900 768,322
Ryohin Keikaku Co., Ltd.# ..................... 3,900 782,550
Shimamura Co. ................................. 5,500 727,370
------------
9,520,822
------------
REAL ESTATE -- 0.5%
Sumitomo Realty & Development
Co., Ltd.# .................................. 793,000 3,175,136
------------
RECREATION & OTHER CONSUMER GOODS-- 1.9%
Aruze Corp. ................................... 17,000 1,612,527
Heiwa Corp. ................................... 41,700 1,262,696
Nintendo Co., Ltd. ............................ 42,900 7,434,222
Noritsu Koki Co., Ltd. ........................ 11,000 487,589
Sankyo Co., Ltd. .............................. 30,400 2,290,226
------------
13,087,260
------------
NUMBER
OF SHARES VALUE
---------- ------------
JAPAN -- (CONTINUED)
TELECOMMUNICATIONS -- 2.2%
Nippon Telegraph & Telephone .................. 967 $ 10,848,163
NTT Mobile Communication
Network, Inc.# .............................. 36 597,583
NTT Mobile Communication
Network, Inc. - New ......................... 200 3,301,667
------------
14,747,413
------------
TEXTILES & APPAREL -- 0.3%
WORLD Co., Ltd.# .............................. 14,900 1,732,691
------------
TRANSPORTATION - ROAD & RAIL -- 0.4%
Nippon Express Co., Ltd. ...................... 390,000 2,977,246
------------
TRANSPORTATION - SHIPPING -- 0.1%
Mitsui O.S.K. Lines Ltd. ...................... 418,000 800,609
------------
WHOLESALE & INTERNATIONAL TRADE -- 0.9%
Softbank Corp. ................................ 18,200 6,241,427
------------
TOTAL JAPAN ................................... 187,252,859
------------
MEXICO -- 1.1%
MERCHANDISING -- 0.3%
Cifra S.A. de C.V. Cl. V ADR#** ............... 94,020 1,567,877
------------
TELECOMMUNICATIONS -- 0.8%
Cemex S.A. de C.V., Cl. A ADR ................. 6,745 59,980
Cemex S.A. de C.V., Cl. B ADR ................. 175,600 1,559,644
Telefonos de Mexico S.A.,Cl. L
ADR ......................................... 53,900 4,008,813
------------
5,628,437
------------
TOTAL MEXICO .................................. 7,196,314
------------
NETHERLANDS -- 4.5%
APPLIANCES & HOUSEHOLD DURABLES -- 1.3%
Koninklijke Philips Electronics
N.V. ........................................ 84,521 8,708,581
------------
BROADCASTING & PUBLISHING -- 1.0%
VNU Verenigd Bezit ............................ 177,491 6,805,162
------------
CHEMICALS -- 1.0%
Akzo Nobel N.V. ............................... 147,159 6,846,810
------------
FINANCIAL SERVICES -- 0.6%
ING Groep N.V.# ............................... 71,496 3,919,265
------------
INSURANCE -- 0.6%
Fortis (NL) N.V. .............................. 123,457 4,179,259
------------
TOTAL NETHERLANDS ............................. 30,459,077
------------
PORTUGAL -- 1.2%
Telecommunications -- 1.2%
Portugal Telecom S.A. ......................... 190,205 7,953,585
------------
TOTAL PORTUGAL ................................ 7,953,585
------------
See Accompanying Notes to Financial Statements.
5
<PAGE>
WARBURG PINCUS INTERNATIONAL GROWTH FUND (CONTINUED)
NUMBER
OF SHARES VALUE
---------- ------------
SINGAPORE -- 0.7%
ELECTRONIC COMP. & INSTRUMENTS-- 0.2%
Natsteel Electronics, Ltd. .................... 231,100 $ 1,152,571
------------
REAL ESTATE -- 0.4%
City Developments, Ltd. ....................... 208,790 1,264,440
DBS Land, Ltd. ................................ 835,387 1,904,615
------------
3,169,055
------------
TRANSPORTATION - AIRLINES -- 0.1%
Singapore Airlines, Ltd. ...................... 85,300 800,192
------------
TOTAL SINGAPORE ............................... 5,121,818
------------
SOUTH AFRICA -- 0.6%
BEVERAGES & TOBACCO -- 0.2%
South African Breweries plc ................... 186,303 1,531,634
------------
INSURANCE -- 0.2%
Liberty Life Association of Africa,
Ltd. ........................................ 80,540 944,205
------------
MULTI-INDUSTRY -- 0.2%
Anglo American plc ............................ 23,431 1,289,856
------------
REAL ESTATE -- 0.0%
Liberty International plc ..................... 37,551 280,930
------------
TOTAL SOUTH AFRICA ............................ 4,046,625
------------
SOUTH KOREA -- 1.4%
APPLIANCES & HOUSEHOLD DURABLES -- 0.1%
Samsung Electronics Co.
GDR#** ...................................... 5,948 552,867
------------
METALS - STEEL -- 0.2%
Pohang Iron & Steel Company,
Ltd. ADR# ................................... 42,421 1,558,972
------------
TELECOMMUNICATIONS -- 0.5%
Korea Telecom Corp. ADR** ..................... 76,400 2,483,000
SK Telecom Co., Ltd. ADR** .................... 90,080 1,019,030
------------
3,502,030
------------
UTILITIES - ELECTRICAL & GAS -- 0.6%
Korea Electric Power Corp. ADR ................ 226,520 4,077,360
------------
TOTAL SOUTH KOREA ............................. 9,691,229
------------
SPAIN -- 2.5%
BANKING -- 0.8%
Banco Santander Central Hispano
SA .......................................... 560,730 5,632,352
------------
TELECOMMUNICATIONS -- 1.7%
Telefonica S.A. ............................... 718,267 11,455,614
------------
TOTAL SPAIN ................................... 17,087,966
------------
NUMBER
OF SHARES VALUE
---------- ------------
SWEDEN -- 1.9%
ELECTRICAL & ELECTRONICS -- 0.9%
Telefonaktiebolaget L.M. Ericsson
Cl. B ....................................... 190,997 $ 6,151,667
------------
INSURANCE -- 1.0%
Skandia Forsakrings AB# ....................... 332,048 6,754,524
------------
TOTAL SWEDEN .................................. 12,906,191
------------
SWITZERLAND -- 4.6%
BANKING -- 1.1%
United Bank of Switzerland S.A. ............... 26,871 7,582,161
------------
ELECTRICAL & ELECTRONICS -- 0.6%
ABB AG - Bearer#** ............................ 44,281 4,515,636
------------
HEALTH & PERSONAL CARE -- 1.9%
Novartis AG Registered Shares ................. 3,832 5,513,851
Roche Holding AG .............................. 632 7,308,432
------------
12,822,283
------------
INSURANCE -- 1.0%
Zurich Allied AG** ............................ 11,440 6,712,755
------------
TOTAL SWITZERLAND ............................. 31,632,835
------------
TAIWAN -- 0.8%
ELECTRICAL & ELECTRONICS -- 0.6%
Taiwan Semiconductor
Manufacturing Co., Ltd.
ADR#** ...................................... 143,442 4,150,870
------------
STRUCTURED INVESTMENT -- 0.2%
Morgan Stanley Taiwan Opals ................... 12,964 1,688,302
------------
TOTAL TAIWAN .................................. 5,839,172
------------
UNITED KINGDOM -- 17.7%
BANKING -- 2.9%
Abbey National plc ............................ 260,098 4,466,777
Bank of Scotland .............................. 563,767 7,030,197
LLoyds TSB Holdings Group plc ................. 592,792 8,202,368
------------
19,699,342
------------
BUSINESS & PUBLIC SERVICES -- 0.6%
Reuters Group plc ............................. 308,457 4,521,030
------------
ELECTRICAL & ELECTRONICS -- 1.3%
General Electric Co. plc ...................... 892,294 8,924,510
------------
ENERGY SOURCES -- 4.4%
BP Amoco plc .................................. 992,111 18,425,882
Shell Transport & Trading Co.
plc ......................................... 1,435,614 11,449,998
------------
29,875,880
------------
FINANCIAL SERVICES -- 0.3%
AMVESCAP plc .................................. 257,161 2,204,034
------------
See Accompanying Notes to Financial Statements.
6
<PAGE>
WARBURG PINCUS INTERNATIONAL GROWTH FUND (CONCLUDED)
NUMBER
OF SHARES VALUE
---------- ------------
UNITED KINGDOM -- (CONTINUED)
HEALTH & PERSONAL CARE -- 3.0%
Glaxo Wellcome ................................ 397,059 $ 10,445,383
SmithKline Beecham plc ........................ 762,243 9,934,191
------------
20,379,574
------------
TELECOMMUNICATIONS -- 4.4%
British Telecommunications plc ................ 639,459 9,799,223
Orange plc .................................... 370,125 6,243,239
Vodafone AirTouch plc ......................... 709,284 14,302,230
------------
30,344,692
------------
TRANSPORTATION - SHIPPING -- 0.8%
Peninsular & Oriental Steam
Navigation Company (The) .................... 322,344 5,289,549
------------
TOTAL UNITED KINGDOM .......................... 121,238,611
------------
TOTAL COMMON STOCKS
(Cost $595,998,532) ......................... $668,313,443
------------
PAR
(000)
-----------
SHORT-TERM INVESTMENT -- 2.6%
BBH Grand Cayman U.S. Dollar
Time Deposit
4.500% 09/01/99 $18,025 $ 18,025,000
(Cost $18,025,000) ------------
TOTAL INVESTMENTS -- 100.3%
(Cost $614,023,532*) $686,338,443
LIABILITIES IN EXCESS OF
OTHER ASSETS-- (0.3%) (2,444,873)
------------
TOTAL NET ASSETS-- 100.0% $683,893,570
============
* Cost for Federal income tax purposes at August 31, 1999 is $618,110,693. The
gross appreciation (depreciation) on a tax basis is as follows:
Gross Appreciation ...................................... $ 94,064,154
Gross Depreciation ...................................... (25,836,404)
------------
Net Appreciation ........................................ $ 68,227,750
============
** Non-income producing securities.
# Security or a portion thereof is out on loan.
INVESTMENT ABBREVIATIONS
ADR ................................................American Depository Receipts
CPS ...................................................Currency Protected Shares
GDR ..................................................Global Depository Receipts
See Accompanying Notes to Financial Statements.
7
<PAGE>
WARBURG PINCUS EMERGING MARKETS II FUND
PORTFOLIO MANAGERS' LETTER
September 14, 1999
Dear Shareholders:
We are writing to report on the results of the Warburg Pincus Emerging Markets
II Fund (the "Fund") for the fiscal year ended August 31, 1999.
At August 31,1999, the net asset value ("NAV") of the Fund was $14.88, compared
to an NAV of $10.44 on August 31, 1998. As a result, the Fund's total return was
45.1% (assuming the reinvestment of distributions totaling $0.21 per share). By
comparison, the MSCI Emerging Markets Free Index ("EMF Index") returned 72.3%
during the same period.
At August 31, 1999, the NAV of the Fund's common shares was $14.91, compared to
an NAV of $10.48 on August 31, 1998. The common shares' total return between
August 31, 1998 and August 31, 1999 was 44.7% (assuming the reinvestment of
distributions totaling $0.19 per share). By comparison, the EMF Index returned
72.3% during the same period.
Several factors were responsible for the Fund's underperformance of its EMF
benchmark:
(BULLET) SOUTH KOREA. Stock selection in South Korea was particularly
ineffective, as we chose to emphasize growth-oriented Korean companies
based on the impressive momentum of the nation's economic recovery.
Unfortunately for the Fund, we did so during a period in which the
shares of banks, brokers and other value-oriented sectors dramatically
outperformed.
(BULLET) BRAZIL. Returns were subpar in Brazil, particularly in February and
March. We adopted a cautious stance in Brazil following its mid-January
devaluation of the real. This was due both to the harsh "contagion"
effect of Asian devaluations on financial markets throughout the
emerging world and the historical tendency among Latin American nations
to raise interest rates in devaluationary times. This approach proved
unsuccessful, however, as the real's devaluation had little impact on
other markets and Brazil subsequently pursued a course of sharply
reducing interest rates.
(BULLET) CASH. Prudence and long experience with the volatile nature of emerging
equity markets prompted us to maintain a small -- yet meaningful --
level of the Fund's assets in cash reserves. The extraordinary
performance of emerging equities caused this to be a drag on the Fund's
overall return.
(BULLET) POLAND AND HUNGARY. Our choice of stocks in Poland and Hungary proved
unfavorable, notably our insufficient exposure to the strong Polish
banking sector.
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 Markets Equities Management Team
Richard W. Watt, Managing Director
Steven D. Bleiberg, Managing Director
Emily Alejos, Director
Robert B. Hrabchak, Director
Alan Zlatar, Vice President
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.
8
<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)
[GRAPHIC OMITTED]
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
Warburg Pincus MSCI Emerging
Emerging Markets II Markets Free
Institutional Shares Index 1
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
5/31/99 $10,522 $13,175
8/31/99 $11,667 $14,402
INSTITUTIONAL SHARES
--------------------
AVERAGE ANNUAL
TOTAL RETURNS
FOR THE PERIODS ENDED AUGUST 31, 1999
One Year 45.12%
Three Years (3.58)%
Five Years (6.88)%
From Inception
(1/29/93) 2.37%
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)
[GRAPHIC OMITTED]
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
Warburg Pincus MSCI Emerging
Emerging Markets II Markets Free
Common Shares Index 1
11/1/96 $10,000 $10,000
11/30/96 $10,171 $10,106
2/28/97 $11,394 $11,309
5/31/97 $11,134 $11,347
8/31/97 $10,841 $10,589
11/30/97 $ 9,652 $ 8,765
2/28/98 $ 9,818 $ 9,135
5/31/98 $ 8,867 $ 8,136
8/31/98 $ 6,195 $ 5,341
11/30/98 $ 7,016 $ 6,800
2/28/99 $ 6,900 $ 6,657
5/31/99 $ 8,078 $ 8,417
8/31/99 $ 8,962 $ 9,201
INSTITUTIONAL SHARES
--------------------
AVERAGE ANNUAL
TOTAL RETURNS
FOR THE PERIODS ENDED AUGUST 31, 1999
One Year 44.67%
From Inception
(11/1/96) (3.80)%
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.
9
<PAGE>
WARBURG PINCUS EMERGING MARKETS II FUND
SCHEDULE OF INVESTMENTS
AUGUST 31, 1999
NUMBER
OF SHARES VALUE
---------- ------------
COMMON STOCKS,
WARRANTS AND RIGHTS -- 94.7%
BRAZIL -- 3.5%
BEVERAGES & TOBACCO -- 0.5%
Companhia Cervejaria Brahma ................... 47,103 $ 24,976
Companhia Cervejaria Brahma
ADR ......................................... 1,160 12,252
------------
37,228
------------
ENERGY SOURCES -- 1.0%
Petroleo Brasileiro S.A. ADR .................. 2,360 31,557
Petroleo Brasileiro S.A. PN ................... 264,669 35,464
------------
67,021
------------
METALS - STEEL -- 0.5%
Companhia Vale do Rio Doce
ADR ......................................... 800 17,732
Companhia Vale do Rio Doce PN ................. 752 16,702
Companhia Vale do Rio Doce
PN Cl. B .................................... 39,000 0
------------
34,434
------------
MULTI-INDUSTRY -- 0.1%
Serrana S.A. ON ............................... 10,210 2,715
Serrana S.A. PN ............................... 12,175 3,174
------------
5,889
------------
TELECOMMUNICATIONS -- 1.2%
Telecomunicacoes Brasileiras
S.A. PN Block ............................... 500 37,094
Telecomunicacoes de Minas Gerais
Celular S.A. PN ............................. 71,636 586
Telecomunicacoes de Minas Gerais
S.A. PN ..................................... 71,636 1,662
Telecomunicacoes de Sao Paulo
S.A. PN ..................................... 505,034 44,497
Telecomunicacoes do Rio de
Janeiro S.A. PN ............................. 8,733 125
------------
83,964
------------
UTILITIES - ELECTRICAL & GAS -- 0.2%
Centrais Eletricas Brasileiras
S.A. ADR** .................................. 2,086 16,335
------------
TOTAL BRAZIL .................................. 244,871
------------
CHILE -- 2.6%
BEVERAGES & TOBACCO -- 0.3%
Embotelladora Andina S.A. ADR,
Series B .................................... 1,400 18,506
------------
Merchandising -- 0.3%
Distribucion Y Servicio D & S S.A.
ADR ......................................... 1,325 21,862
------------
NUMBER
OF SHARES VALUE
---------- ------------
CHILE -- (CONTINUED)
TELECOMMUNICATIONS -- 1.3%
Compania de Telecomunicaciones
de Chile S.A. ADR ........................... 3,802 $ 85,545
------------
UTILITIES - ELECTRICAL & GAS-- 0.7%
Chilectra S.A. ADR ............................ 2,167 42,525
Gener S.A. ADR ................................ 481 8,845
------------
51,370
------------
TOTAL CHILE ................................... 177,283
------------
CHINA -- 3.0%
METALS - STEEL -- 3.0%
China Steel Corp. ADR#** ...................... 11,300 204,530
------------
TOTAL CHINA ................................... 204,530
------------
COLUMBIA -- 0.0%
BUILDING MATERIALS & COMPONENTS-- 0.0%
Cementos Paz del Rio ADR ...................... 118 710
------------
TOTAL COLUMBIA ................................ 710
------------
GREECE -- 0.4%
ELECTRICAL & ELECTRONICS -- 0.4%
Intracom S.A. ................................. 286 24,797
------------
TOTAL GREECE .................................. 24,797
------------
HONG KONG -- 3.3%
APPLIANCES & HOUSEHOLD DURABLES -- 0.4%
Guangdong Kelon Electrical
Holdings Co., Ltd. .......................... 27,300 27,951
------------
CHEMICALS -- 0.4%
Yizheng Chemical Fibre Co., Ltd.
Cl. H ....................................... 96,000 28,436
------------
ELECTRONIC COMP. & INSTRUMENTS -- 0.5%
Legend Holdings, Ltd. ......................... 36,000 34,772
------------
MISC. MATERIALS & COMMODITIES -- 0.2%
Yanzhou Coal Mining Co., Ltd. ................. 36,000 15,879
------------
MULTI-INDUSTRY -- 0.5%
Beijing Enterprises Holdings,
Ltd. ........................................ 17,100 34,134
------------
TELECOMMUNICATIONS -- 0.7%
China Telecom (Hong Kong),
Ltd.** ...................................... 15,600 48,518
------------
UTILITIES - ELECTRICAL & GAS -- 0.6%
Shandong International Power
Development Co., Ltd.** ..................... 197,700 39,464
------------
TOTAL HONG KONG ............................... 229,154
------------
See Accompanying Notes to Financial Statements.
10
<PAGE>
WARBURG PINCUS EMERGING MARKETS II FUND
SCHEDULE OF INVESTMENTS
AUGUST 31, 1999
NUMBER
OF SHARES VALUE
---------- ------------
HUNGARY -- 2.9%
BANKING -- 0.7%
OTP Bank GDR .................................. 1,000 $ 45,698
------------
ENERGY SOURCES -- 1.2%
MOL Magyar Olaj - es Gazipari
GDR 144A .................................... 3,200 81,508
------------
TELECOMMUNICATIONS -- 1.0%
Magyar Tavkozlesi Rt. ADR ..................... 2,300 69,862
------------
TOTAL HUNGARY ................................. 197,068
------------
INDIA -- 10.7%
AUTOMOBILE -- 0.2%
Mahindra & Mahindra Ltd.
Participation Notes ......................... 1,750 16,588
------------
BANKING -- 1.3%
Infosys Technologies, Ltd. ADR ................ 900 89,269
------------
BEVERAGES & TOBACCO -- 1.5%
ITC Agro-Tech, Ltd. GDR ....................... 3,500 107,275
------------
CHEMICALS -- 0.9%
Reliance Industries Ltd.
144A GDR .................................... 5,304 59,272
------------
ELECTRICAL & ELECTRONICS -- 0.8%
Bharat Heavy Electricals Ltd.
Participation Notes ......................... 8,035 58,692
------------
ENERGY SOURCES -- 2.8%
Hindustan Petroleum Corporation
Ltd. Participation Notes .................... 32,400 191,383
------------
HEALTH & PERSONAL CARE -- 0.9%
Ranbaxy Laboratories, Ltd. 144A
GDR ......................................... 2,500 65,275
------------
INVESTMENT COMPANY -- 0.7%
Morgan Stanley India Investment
Fund, Inc. .................................. 4,200 52,237
------------
MACHINERY & ENGINEERING -- 0.3%
Larsen & Toubro Ltd. Participation
Notes ....................................... 2,093 18,852
------------
METALS - NON-FERROUS -- 0.9%
Hindalco Industries Ltd. GDR .................. 2,300 63,538
------------
TELECOMMUNCATIONS -- 0.4%
Mahanagar Telephone Nigam, Ltd.
144A GDR .................................... 2,700 29,363
------------
TOTAL INDIA ................................... 751,744
------------
NUMBER
OF SHARES VALUE
---------- ------------
INDONESIA -- 2.6%
BANKING -- 0.0%
P.T. Bank Dagang Nasional
Indonesia Warrants **/*** ................... 400 $ 0
P.T. Bank International
Indonesia *** ............................... 34 0
P.T. Bank International Indonesia
Options ..................................... 100 0
P.T. Bank International Indonesia
Warrants .................................... 4 0
------------
0
------------
BEVERAGES & TOBACCO -- 1.2%
P.T. Hanjaya Mandala Sampoerna
Tbk ......................................... 40,000 83,129
------------
FOOD & HOUSEHOLD PRODUCTS -- 0.7%
P.T. Indofood Sukses Makmur
Tbk ......................................... 48,000 51,285
------------
TELECOMMUNICATIONS -- 0.7%
P.T. Telekomunikasi Indonesia ................. 79,300 30,481
P.T. Telekomunikasi Indonesia
ADR ......................................... 2,400 18,450
------------
48,931
------------
TOTAL INDONESIA ............................... 183,346
------------
ISRAEL -- 2.3%
BANKING -- 1.0%
Bank Hapoalim Ltd. ............................ 30,408 70,111
------------
BUILDING MATERIALS & COMPONENTS -- 0.9%
Check Point Software Technologies,
Ltd.** ...................................... 800 61,700
------------
HEALTH & PERSONAL CARE -- 0.4%
Teva Pharmaceutical Industries Ltd.
ADR ......................................... 600 28,237
------------
TOTAL ISRAEL .................................. 160,048
------------
MEXICO -- 9.9%
BEVERAGES & TOBACCO -- 0.5%
Grupo Modelo S.A. de C.V.
Cl. C ....................................... 13,403 35,893
------------
BROADCASTING & PUBLISHING -- 1.6%
Grupo Televisa S.A. de C.V.
GDS ......................................... 3,001 109,161
------------
BUILDING MATERIALS & COMPONENTS -- 1.2%
Cementos Mexicanos S.A. de C.V.
Cl. B** ..................................... 18,349 81,603
------------
HEALTH & PERSONAL CARE -- 1.0%
Kimberly-Clark de Mexico S.A. de
C.V. Cl. A .................................. 22,437 71,240
------------
See Accompanying Notes to Financial Statements.
11
<PAGE>
WARBURG PINCUS EMERGING MARKETS II FUND (CONTINUED)
NUMBER
OF SHARES VALUE
---------- ------------
MEXICO -- (CONTINUED)
MERCHANDISING -- 1.8%
Cifra S.A. de C.V. Cl. V ADR** ................ 7,483 $ 124,786
------------
TELECOMMUNICATIONS -- 3.8%
Telefonos de Mexico S.A., Cl.
L ADR ....................................... 3,500 260,312
------------
TOTAL MEXICO .................................. 682,995
------------
PHILIPPINES -- 1.6%
REAL ESTATE -- 0.4%
SM Prime Holdings ............................. 118,500 21,804
------------
TELECOMMUNICATIONS -- 0.9%
Philippine Long Distance Telephone
Company ADR ................................. 2,701 63,980
------------
UTILITIES - ELECTRICAL & GAS-- 0.3%
Manila Electric Company ....................... 7,400 22,009
------------
TOTAL PHILIPPINES ............................. 107,793
------------
POLAND -- 2.0%
BANKING -- 0.7%
Bank Handlowy W. Warszawie
144A ADR .................................... 1,303 18,815
Bank Rozwoju Eksportu S.A. .................... 871 28,436
------------
47,251
------------
METALS - NON-FERROUS -- 0.4%
KGHM Polska Miedz S.A. ........................ 4,183 26,998
------------
MULTI-INDUSTRY -- 0.3%
Elektrim Spolka Akcyjna S.A. .................. 1,634 20,518
------------
TELECOMMUNICATIONS -- 0.6%
Telekomunikacja Polska GDR .................... 6,450 43,736
------------
TOTAL POLAND .................................. 138,503
------------
RUSSIA -- 0.8%
Energy Sources -- 0.8%
Lukoil Holding ADR ............................ 900 27,000
Surgutneftegaz ADR ............................ 3,800 30,020
------------
57,020
------------
TOTAL RUSSIA .................................. 57,020
------------
SINGAPORE -- 0.5%
BANKING -- 0.0%
Oversea-Chinese Banking Corp.
Ltd. *** .................................... 231 1,618
------------
BROADCASTING & PUBLISHING -- 0.0%
Singapore Press Holdings Ltd.*** .............. 39 648
------------
FOREST PRODUCTS & PAPER -- 0.5%
Asia Pulp & Paper Co. Ltd. ADR** .............. 4,200 32,025
Asia Pulp & Paper Warrants** .................. 1,060 1,458
------------
33,483
------------
TOTAL SINGAPORE ............................... 35,749
------------
NUMBER
OF SHARES VALUE
---------- ------------
SOUTH AFRICA -- 6.4%
BANKING -- 0.8%
Nedcor Limited ................................ 2,876 $ 57,219
Nedcor Rights ................................. 3,476 6
------------
57,225
------------
BEVERAGES & TOBACCO -- 1.0%
South African Breweries plc ................... 8,148 66,986
------------
BUSINESS & PUBLIC SERVICES -- 1.1%
Dimension Data Holdings Ltd. .................. 17,282 71,750
------------
INSURANCE -- 0.9%
Liberty Life Association of Africa,
Ltd. ........................................ 5,566 65,253
------------
MULTI-INDUSTRY -- 2.6%
Anglo American Corp. of South
Africa Ltd. ................................ 1,367 75,252
C.G. Smith Ltd. ............................... 26,713 71,155
Johnnies Industrial Corp. Ltd. ................ 4,960 33,845
------------
180,252
------------
REAL ESTATE -- 0.0%
Liberty International plc ..................... 1 7
------------
TOTAL SOUTH AFRICA ............................ 441,473
------------
SOUTH KOREA -- 17.6%
APPLIANCES & HOUSEHOLD DURABLES -- 3.6%
Samsung Electronics Co. ....................... 1,300 246,683
------------
BANKING -- 1.1%
Housing & Commercial Bank,
Korea ....................................... 3,400 79,494
------------
ELECTRICAL & ELECTRONICS -- 3.1%
L.G. Information & Communication
Ltd. ........................................ 2,400 214,492
------------
METALS - STEEL -- 2.7%
Pohang Iron & Steel Company, Ltd.
ADR ......................................... 5,000 183,750
------------
TELECOMMUNICATIONS -- 3.8%
Korea Telecom Corp. ........................... 1,200 75,225
Korea Telecom Corp. ADR ....................... 5,800 188,500
------------
263,725
------------
UTILITIES - ELECTRICAL & GAS-- 3.3%
Korea Electric Power Corp.** .................. 2,800 104,366
Korea Electric Power Corp.
ADR** ....................................... 7,100 127,800
------------
232,166
------------
TOTAL SOUTH KOREA ............................. 1,220,310
------------
See Accompanying Notes to Financial Statements.
12
<PAGE>
WARBURG PINCUS EMERGING MARKETS II FUND (CONCLUDED)
NUMBER
OF SHARES VALUE
---------- ------------
TAIWAN -- 16.0%
ELECTRIC COMP. & INSTRUMENTS -- 0.5%
Advanced Semiconductor
Engineering Inc. ............................ 2,080 $ 37,606
------------
ELECTRICAL & ELECTRONICS -- 5.4%
Taiwan Semiconductor
Manufacturing Co., Ltd. ADR ................. 7,872 227,796
Yageo Corp. - GDR (Reg. S)** .................. 29,600 148,000
------------
375,796
------------
INVESTMENT COMPANIES -- 2.6%
R.O.C. Taiwan Fund ............................ 11,900 93,713
Taiwan Fund ................................... 4,800 87,900
------------
181,613
------------
STRUCTURED INVESTMENT -- 6.0%
Morgan Stanley Taiwan Opals ................... 3,200 416,736
------------
TEXTILES & APPAREL -- 0.8%
Siliconware Precision Industries
GDR ......................................... 3,868 52,411
------------
TRANSPORTATION - SHIPPING -- 0.7%
Evergreen Marine Corp. ........................ 3,388 45,230
------------
TOTAL TAIWAN .................................. 1,109,392
------------
THAILAND -- 3.7%
BANKING -- 1.5%
Siam Commercial Bank Pfd.** ................... 63,800 72,360
Siam Commerical Bank -
Warrants .................................... 75,000 33,732
------------
106,092
------------
BROADCASTING & PUBLISHING -- 0.9%
BEC World Public Co., Ltd.*** ................. 9,800 58,258
------------
BUILDING MATERIALS & COMPONENTS -- 0.3%
Siam City Cement Public Co.
Ltd.**/*** .................................. 800 20,692
------------
TELECOMMUNICATIONS -- 1.0%
Advanced Information Services
Public Co. Ltd.*** .......................... 5,100 69,943
------------
TOTAL THAILAND ................................ 254,985
------------
TURKEY -- 4.2%
APPLIANCES & HOUSEHOLD DURABLES -- 1.1%
Arcelik A.S. .................................. 3,430,668 78,917
------------
BANKING -- 2.4%
Akbank T.A.S. ................................. 7,453,432 98,691
Yapi Ve Kredi Bankasi A.S. .................... 5,235,831 68,153
------------
166,844
------------
MERCHANDISING -- 0.7%
Migros Turk T.A.S. ............................ 114,400 45,571
------------
TOTAL TURKEY .................................. 291,332
------------
NUMBER
OF SHARES VALUE
---------- ------------
UNITED STATES -- 0.7%
ELECTRONIC COMP. & INSTRUMENTS -- 0.7%
Comverse Technology, Inc.** ................... 600 $ 46,800
------------
TOTAL UNITED STATES ........................... 46,800
------------
VENEZUELA -- 0.0%
UTILITIES - ELECTRICAL & GAS-- 0.0%
La Electricidad de Caracas .................... 2 1
------------
TOTAL VENEZUELA ............................... 1
------------
TOTAL COMMON STOCKS,
WARRANTS AND RIGHTS
(Cost $6,108,414) ........................... $ 6,559,904
------------
PAR
(000)
-----------
SHORT-TERM INVESTMENT -- 5.8%
BBH Grand Cayman U.S. Dollar
Time
4.500% 09/01/99 $ 402 $ 402,000
(Cost $402,000) ------------
TOTAL INVESTMENTS -- 100.5%
(Cost $6,510,414*) $ 6,961,904
LIABILITIES IN EXCESS OF
OTHER ASSETS-- (0.5%) (37,165)
------------
TOTAL NET ASSETS-- 100.0% $ 6,924,739
============
* Cost for Federal income tax purposes at August 31, 1999 is $6,658,596. The
gross appreciation (depreciation) on a tax basis is as follows:
Gross Appreciation ...................................... $ 814,276
Gross Depreciation ...................................... (510,968)
---------
Net Appreciation ........................................ $ 303,308
=========
** Non-incoming producing.
*** 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.
13
<PAGE>
WARBURG PINCUS EUROPEAN EQUITY FUND
PORTFOLIO MANAGERS' LETTER
September 15, 1999
Dear Shareholders:
We are writing to report on the results of the Warburg Pincus European Equity
Fund (the "Fund") from its inception of investment operations on January 28,
1999 to the end of its fiscal year on August 31, 1999.
European equity markets were fairly flat during the period, as reflected by the
0.3% return of the MSCI Europe Index1. A number of meaningful positive and
negative factors tended to offset each other. On the positive side, the European
Central Bank unexpectedly cut short-term interest rates in Euroland by half a
percentage point in April, and there was an ongoing stream of announcements of
high-profile mergers or acquisitions in a variety of industries.
The supportive effects of these and other developments, though, were ultimately
canceled out by concern about U.S. interest rates and inflation; nervousness
about persistent weakness in Continental economies, particularly that of
Germany; disappointing weakness in the euro versus the U.S. dollar for much of
the period; and the conflict in Kosovo.
The Fund's results were most favorable in France, where we owned six of the ten
strongest stocks during the period. Effective country allocations included our
complete absence from Belgium, overweight in Germany and underweight in Finland.
Conditions proved most challenging in the U.K.
At August 31, 1999, the net asset value ("NAV") of the Fund's institutional and
common shares was $9.80 and $9.79, respectively, compared to an NAV of $10.00
for both share classes on January 28, 1999 (Inception date).
Looking ahead, we are optimistic about the prospects for European equity
markets. Stocks on the Continent and in the U.K. should benefit from clearer
signs of economic recovery; the likelihood that Euroland interest rates will
remain stable; and vibrant corporate consolidation activity.
The fundamental elements of our strategy include an emphasis on companies poised
to benefit from an anticipated pick-up in economic activity, both regionally and
globally. Overweight positions have been established in capital goods
manufacturers, oil and oil service companies and information technology service
providers, which reflect our belief that earnings will surprise on the upside as
we move into the year 2000.
Geographically, we have moved to underweight the U.K., where the interest-rate
environment appears less favorable than on the Continent. However, we continue
to find individual U.K. companies that are poised to benefit from the trends
mentioned above.
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 European Equities Management Team
Harold W. Ehrlich, Managing Director
Nancy Nierman, Director
J. H. Cullum Clark, 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.
14
<PAGE>
WARBURG PINCUS EUROPEAN EQUITY FUND
SCHEDULE OF INVESTMENTS
AUGUST 31, 1999
NUMBER
OF SHARES VALUE
---------- ------------
COMMON STOCKS -- 93.6%
AUSTRIA -- 1.1%
ENERGY SOURCES -- 1.1%
OMV AG ........................................ 2,600 $ 260,750
------------
TOTAL AUSTRIA ................................. 260,750
------------
DENMARK -- 2.0%
BUSINESS & PUBLIC SERVICES -- 2.0%
ISS International Service System
A/S Cl. B ................................... 9,100 501,615
------------
TOTAL DENMARK ................................. 501,615
------------
FINLAND -- 4.5%
ELECTRICAL & ELECTRONICS -- 1.8%
Nokia Oyj ..................................... 5,242 437,401
------------
FOREST PRODUCTS & PAPER -- 2.7%
Metsa-Serla Oyj B Shares ...................... 23,300 220,505
UPM-Kymmene Oyj ............................... 12,679 438,583
------------
659,088
------------
TOTAL FINLAND ................................. 1,096,489
------------
FRANCE -- 20.9%
BANKING -- 1.4%
Banque Nationale de Paris ..................... 4,519 345,570
------------
BUILDING MATERIALS & COMPONENTS -- 1.2%
Compagnie de Saint-Gobain ..................... 1,505 290,900
------------
BUSINESS & PUBLIC SERVICES -- 1.5%
Cap Gemini S.A. ............................... 2,174 373,137
------------
ELECTRICAL & ELECTRONICS -- 2.0%
Alstom# ....................................... 14,700 494,984
------------
ELECTRONIC COMP. & INSTRUMENTS -- 2.1%
STMicroelectronics N.V. ....................... 7,770 515,801
------------
ENERGY EQUIPMENT & SERVICES -- 0.9%
Coflexip S.A. ADR** ........................... 4,900 221,725
------------
ENERGY SOURCES -- 2.1%
Total Fina S.A. Cl. B# ........................ 4,083 526,132
------------
INDUSTRIAL COMPONENTS -- 1.1%
Valeo S.A. .................................... 3,208 259,210
------------
INSURANCE -- 1.8%
AXA S.A. ...................................... 3,480 432,992
------------
METALS - NON-FERROUS -- 2.5%
Pechiney SA Cl. A ............................. 10,600 616,897
------------
MISC. MATERIALS & COMMODITIES-- 1.0%
Imetal SA ..................................... 1,600 254,845
------------
MULTI-INDUSTRY -- 1.7%
Lagardere SCA ................................. 10,166 412,322
------------
NUMBER
OF SHARES VALUE
---------- ------------
FRANCE -- (CONTINUED)
RECREATION AND OTHER CONSUMER GOODS -- 1.6%
Louis Vuitton Moet Hennessy ................... 1,303 $ 396,500
------------
TOTAL FRANCE .................................. 5,141,015
------------
GERMANY -- 10.3%
CHEMICALS -- 1.8%
BASF AG ....................................... 10,029 448,078
------------
ELECTRONICAL & ELECTRONICS -- 1.1%
Siemens AG .................................... 3,316 277,043
------------
ELECTRONIC COMP. & INSTRUMENTS -- 2.8%
Austria Technologie &
Systemtechnik AG** .......................... 21,900 674,277
------------
MULTI-INDUSTRY -- 3.4%
Metallgesellschaft AG# ........................ 24,000 545,011
Preussag AG ................................... 4,984 283,215
------------
828,226
------------
TELECOMMUNICATIONS -- 1.2%
Mannesmann AG ................................. 2,000 302,291
------------
TOTAL GERMANY ................................. 2,529,915
------------
HUNGARY -- 0.8%
BANKING -- 0.8%
OTP Bank Rt. GDR 144A ......................... 4,400 201,072
------------
TOTAL HUNGARY ................................. 201,072
------------
IRELAND -- 2.6%
BANKING -- 1.5%
Bank of Ireland ............................... 40,000 362,073
------------
TELECOMMUNICATIONS -- 1.1%
Bord Telecom Eireann plc** .................... 62,200 283,351
------------
TOTAL IRELAND ................................. 645,424
------------
ITALY -- 2.0%
INSURANCE -- 2.0%
Mediolanum S.p.A. ............................. 62,765 501,181
------------
TOTAL ITALY ................................... 501,181
------------
NETHERLANDS -- 7.7%
APPLIANCES & HOUSEHOLD DURABLES -- 1.6%
Koninklijke Philips Electronics
N.V. ........................................ 3,888 400,598
------------
BUSINESS & PUBLIC SERVICES -- 1.8%
Getronics N.V. ................................ 9,000 440,603
------------
CONSTRUCTION & HOUSING -- 1.3%
IHC Caland N.V. ............................... 6,600 310,561
------------
FOOD & HOUSEHOLD PRODUCTS -- 0.8%
Koninklijke Numico N.V.# ...................... 4,626 190,069
------------
See Accompanying Notes to Financial Statements.
15
<PAGE>
WARBURG PINCUS EUROPEAN EQUITY FUND (CONTINUED)
NUMBER
OF SHARES VALUE
---------- ------------
NETHERLANDS -- (CONTINUED)
INSURANCE -- 0.8%
AEGON N.V.# ................................... 2,321 $ 202,984
------------
TELECOMMUNICATIONS -- 1.4%
Versatel Telecom International
N.V.** ...................................... 26,200 $ 359,749
------------
TOTAL NETHERLANDS ............................. 1,904,564
------------
PORTUGAL -- 1.4%
TELECOMMUNICATIONS -- 1.4%
Portugal Telecom S.A. ......................... 8,400 351,253
------------
TOTAL PORTUGAL ................................ 351,253
------------
SPAIN -- 5.2%
BANKING -- 1.4%
Banco Santander Central Hispano
SA .......................................... 35,280 354,376
------------
BROADCASTING & PUBLISHING -- 2.8%
Sogecable S.A.** .............................. 25,000 680,736
------------
ENERGY SOURCES -- 1.0%
Repsol-YPF, SA ................................ 12,000 251,339
------------
TOTAL SPAIN ................................... 1,286,451
------------
SWEDEN -- 6.9%
APPLIANCES & HOUSEHOLD DURABLES -- 1.0%
Electrolux AB Series B ........................ 12,825 257,780
------------
ELECTRICAL & ELECTRONICS -- 1.6%
Telefonaktiebolaget L.M. Ericsson
Cl. B ....................................... 12,477 401,862
------------
INDUSTRIAL COMPONENTS -- 2.9%
SKF AB Cl. B# ................................. 31,000 705,674
------------
INSURANCE -- 1.4%
Skandia Forsakrings AB ........................ 17,066 347,157
------------
TOTAL SWEDEN .................................. 1,712,473
------------
SWITZERLAND -- 5.5%
BANKING -- 1.9%
United Bank of Switzerland S.A. ............... 1,635 461,346
------------
HEALTH & PERSONAL CARE -- 2.0%
Roche Holding AG .............................. 43 497,251
------------
INSURANCE -- 1.6%
Zurich Allied AG .............................. 662 388,448
------------
TOTAL SWITZERLAND ............................. 1,347,045
------------
NUMBER
OF SHARES VALUE
---------- ------------
UNITED KINGDOM -- 22.0%
AEROSPACE & MILITARY TECHNOLOGY -- 2.1%
British Aerospace plc ......................... 71,800 $ 524,452
------------
BANKING -- 2.0%
LLoyds TSB Holdings Group plc ................. 34,558 478,174
------------
BROADCASTING & PUBLISHING -- 1.4%
Reed International plc ........................ 50,200 333,986
------------
ENERGY SOURCES -- 3.4%
BP Amoco plc .................................. 22,056 409,633
Shell Transport & Trading Co.
plc ......................................... 54,644 435,823
------------
845,456
------------
HEALTH & PERSONAL CARE -- 3.4%
AstraZeneca Group plc ......................... 11,600 460,724
SmithKline Beecham plc ........................ 28,500 371,436
------------
832,160
------------
INSURANCE -- 2.0%
Prudential Corporation plc .................... 33,500 500,164
------------
MERCHANDISING -- 1.1%
Marks & Spencer plc ........................... 40,516 270,697
------------
TELECOMMUNICATIONS -- 5.4%
British Telecommunications plc ................ 28,673 439,392
Cable & Wireless Communications
plc** ....................................... 18,912 197,516
Orange plc** .................................. 22,463 378,904
Vodafone AirTouch plc ......................... 16,116 324,968
------------
1,340,780
------------
TRANSPORTATION - SHIPPING -- 1.2%
Peninsular & Oriental Steam
Navigation Company (The) .................... 18,222 299,016
------------
TOTAL UNITED KINGDOM .......................... 5,424,885
------------
UNITED STATES -- 0.7%
TELECOMMUNICATIONS -- 0.7%
Viatel, Inc.** ................................ 4,400 170,225
------------
TOTAL UNITED STATES ........................... 170,225
------------
TOTAL COMMON STOCKS
(Cost $22,125,067) .......................... $ 23,074,357
------------
See Accompanying Notes to Financial Statements.
16
<PAGE>
WARBURG PINCUS EUROPEAN EQUITY FUND (CONCLUDED)
PAR
(000) VALUE
---------- ------------
SHORT-TERM INVESTMENT -- 5.8%
BBH Grand Cayman U.S. Dollar
Time Deposit
4.500% 09/01/99 ............................. $1,430 $ 1,430,000
(Cost $1,430,000) -----------
TOTAL INVESTMENTS -- 99.4%
(Cost $23,555,067*) ......................... $24,504,357
OTHER ASSETS IN EXCESS
OF LIABILITIES-- 0.6% ....................... 152,087
-----------
TOTAL NET ASSETS-- 100.0% ..................... $24,656,444
===========
* The cost for Federal income tax purposes at August 31, 1999 is $23,662,430.
The gross appreciation (depreciation) on a tax basis is as follows:
Gross Appreciation ...................................... $1,706,230
Gross Depreciation ...................................... (864,303)
----------
Net Appreciation ........................................ $ 841,927
==========
** Non-income producing securities.
# Security or a portion thereof is out on loan.
INVESTMENT ABBREVIATIONS
ADR ................................................American Depository Receipts
GDR ..................................................Global Depository Receipts
See Accompanying Notes to Financial Statements.
17
<PAGE>
WARBURG PINCUS U.S. CORE EQUITY FUND
PORTFOLIO MANAGERS' LETTER
September 15, 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 year ended August 31, 1999.
At August 31, 1999, the net asset value ("NAV") of the Fund's institutional
shares was $19.58, compared to an NAV of $21.73 on August 31, 1998. The
institutional shares' total return was thus 38.1% (assuming the reinvestment of
dividends and distributions totaling $9.78 per share). By comparison, the
Standard & Poor's 500 Index (the "Index") returned 39.9% during the same period.
At August 31, 1999, the NAV of the Fund's common shares was $19.53, compared to
an NAV of $25.22 at their inception of investment operations on October 30,
1998. Including the effect of linkage to the institutional shares, the common
shares' total return between August 31, 1998 and August 31, 1999 thus was 37.7%
(assuming the reinvestment of dividends and distributions totaling $9.78 per
share). By comparison, the Index returned 39.9% during the same period.
We attribute the Fund's modest underperformance of its S&P 500 benchmark during
the fiscal year to a combination of broad-based and sector-specific factors that
prevailed in 1999 through the end of August.
Broad market volatility was unusually high, as investors often were preoccupied
with concerns about U.S. interest rates and inflation. As a result, two aspects
of market activity worked against our particular investment discipline, which
focuses on stock selection rather than macro-level or sector-related issues.
First, there was a general unwillingness to commit to relatively long-term
positions, which caused a choppier-than-usual trading environment. Second, there
was an emphasis on positioning portfolios to benefit from expectations about
interest rates by betting on industry sectors rather than individual stocks. In
the latter trend, stocks within many sectors performed similarly, which negated
the normal benefit we derive by highlighting companies with strong fundamentals.
These macro effects particularly applied to the technology and financial
sectors, which together constitute 40% of the S&P 500 index. Our stock selection
within technology and financials was thus disappointing. Even when a stock
selection discipline works well across most sectors -- as ours frequently did --
underperformance in such "super-sectors" can be sufficient to meaningfully
reduce aggregate results.
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 Equities Management Team
William W. Priest, Jr., Managing Director
Eric N. Remole, Managing Director
Marc E. Bothwell, Vice President
Michael A. Welhoelter, Vice President
18
<PAGE>
WARBURG PINCUS U.S. CORE EQUITY FUND
PORTFOLIO MANAGERS' LETTER (CONCLUDED)
[GRAPHIC OMITTED]
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
Warburg Pincus
U.S. Core Equity S&P 500
Institutional Shares Index 1
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
5/31/99 $27,408 $30,125
8/31/99 $27,748 $30,661
INSTITUTIONAL SHARES
--------------------
AVERAGE ANNUAL
TOTAL RETURNS
FOR THE PERIODS ENDED AUGUST 31, 1999
One Year 38.07%
Three Years 25.37%
Five Years 22.64%
From Inception
(9/1/94) 22.62%
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.
19
<PAGE>
WARBURG PINCUS U.S. CORE EQUITY FUND
SCHEDULE OF INVESTMENTS
AUGUST 31, 1999
NUMBER
OF SHARES VALUE
---------- ------------
COMMON STOCKS -- 99.0%
AEROSPACE -- 1.8%
United Technologies Corp. ..................... 18,600 $ 1,229,925
------------
AGRICULTURE -- 1.0%
Archer-Daniels-Midland ........................ 53,600 696,800
------------
AUTOMOTIVE -- 5.5%
Ford Motor .................................... 48,100 2,507,212
General Motors Corp. .......................... 20,900 1,382,012
------------
3,889,224
------------
CHEMICALS -- 2.1%
Dow Chemical Co. (The) ........................ 12,800 1,454,400
------------
COMPUTERS, SOFTWARE AND SERVICING-- 11.0%
Dell Computer Corp.** ......................... 19,900 971,369
Electronic Data Systems Corp. ................. 15,800 886,775
EMC Corp.** ................................... 20,400 1,224,000
Hewlett-Packard Co. ........................... 21,200 2,233,950
Microsoft Corporation** ....................... 25,800 2,388,112
------------
7,704,206
------------
CONGLOMERATES -- 4.9%
General Electric Co. .......................... 30,700 3,447,994
------------
CONSTRUCTION & BUILDING MATERIALS -- 1.0%
Sherwin Williams Co. .......................... 28,000 682,500
------------
ELECTRONICS -- 9.5%
Cisco Systems** ............................... 49,400 3,349,937
Intel Corp. ................................... 40,200 3,303,937
------------
6,653,874
------------
ENERGY & OIL EXPLORATION -- 8.1%
DTE Energy .................................... 41,600 1,640,600
Edison International .......................... 23,300 591,238
Enron Corp. ................................... 46,600 1,951,375
Exxon Corporation ............................. 5,700 449,588
Unocal Corp. .................................. 25,400 1,063,625
------------
5,696,426
------------
FINANCIAL SERVICES -- 14.4%
Allstate Corporation .......................... 18,700 613,594
Chase Manhattan Corp. (The) ................... 31,200 2,611,050
Dun & Bradstreet Corp. (The) .................. 45,700 1,196,769
J.P. Morgan & Co., Inc. ....................... 15,700 2,028,244
Lehman Brothers Holdings,
Inc. ........................................ 35,000 1,881,250
Merrill Lynch ................................. 23,800 1,776,075
------------
10,106,982
------------
FOOD & BEVERAGES -- 3.1%
Anheuser-Busch Companies,
Inc. ........................................ 28,500 2,194,500
------------
HEALTH CARE -- 3.0%
Aetna, Inc. ................................... 19,000 1,477,250
Allergan, Inc. ................................ 6,100 609,238
------------
2,086,488
------------
NUMBER
OF SHARES VALUE
---------- ------------
INDUSTRIAL GOODS & MATERIALS -- 3.2%
Illinois Tool Works, Inc. ..................... 28,900 $ 2,252,394
------------
PHARMACEUTICALS -- 10.9%
Bristol-Myers Squibb .......................... 39,200 2,758,700
Merck & Co. ................................... 40,700 2,734,531
Schering-Plough Corp. ......................... 28,400 1,492,775
Warner Lambert Co. ............................ 10,200 675,750
------------
7,661,756
------------
PUBLISHING & INFORMATION SERVICES -- 2.9%
Gannett Company, Inc. ......................... 30,000 2,038,125
------------
RETAIL -- 6.7%
Kroger Co. .................................... 66,600 1,540,125
Wal-Mart Stores# .............................. 72,100 3,194,931
------------
4,735,056
------------
TELECOMMUNICATIONS -- 9.9%
AT&T Corp. .................................... 7,600 342,000
BellSouth Corp. ............................... 52,600 2,380,150
Nortel Networks Corp. ......................... 57,900 2,377,519
Sprint Corp. (FON Group) ...................... 41,400 1,837,125
------------
6,936,794
------------
TOTAL COMMON STOCKS
(Cost $61,882,880) .......................... $ 69,467,444
------------
PAR
(000)
-------
SHORT-TERM INVESTMENT -- 1.4%
BBH Grand Cayman U.S. Dollar
Time Deposit
4.500% 09/01/99 $1,001 $ 1,001,000
(Cost $1,001,000) ------------
TOTAL INVESTMENTS -- 100.4%
(Cost $62,883,880*) $ 70,468,444
LIABILITIES IN EXCESS OF
OTHER ASSETS-- (0.4%) (253,515)
------------
TOTAL NET ASSETS -- 100.0% $ 70,214,929
============
* Cost for Federal income tax purposes at August 31, 1999 is $62,972,051. The
gross appreciation (depreciation) on a tax basis is as follows:
Gross Appreciation $ 9,408,712
Gross Depreciation (1,912,319)
-----------
Net Appreciation $ 7,496,393
===========
** Non-income producing securities.
# Security or a portion thereof is out on loan.
See Accompanying Notes to Financial Statements.
20
<PAGE>
WARBURG PINCUS GLOBAL TELECOMMUNICATIONS FUND
PORTFOLIO MANAGERS' LETTER
September 14, 1999
Dear Shareholders:
We are pleased to report on the results of the Warburg Pincus Global
Telecommunications Fund (the "Fund") for the fiscal year ended August 31, 1999.
At August 31, 1999, the net asset value ("NAV") of the Fund was $41.22, compared
to an NAV of $20.54 on August 31, 1998. As a result, the Fund's total return was
120.7% (assuming the reinvestment of distributions totaling $2.84 per share). By
comparison, the MSCI Telecommunications Index returned 36.6% during the same
period.
Several elements contributed to the Fund's outstanding performance:
(BULLET) We effectively managed the balance of the portfolio's exposure to
developed markets relative to emerging markets. During the first half
of the year, for example, we generally steered clear of emerging
markets, whose telecom stocks did not perform as well as those of most
other emerging sectors.
We gradually re-entered Latin America in the fourth quarter of 1998,
though, when major Latin telecoms like Brazil's Telebras and Telesp
were selling at bargain-basement valuations -- and in time for the
early-1999 Latin rally. We deployed assets more meaningfully elsewhere
in the emerging world starting in the second quarter of 1999.
(BULLET) Stock selection was notably successful in developed Europe, where we
fared especially well in the U.K. and Finland.
(BULLET) We raised the Fund's allocation to Japan, where there is historically
high positive correlation between the economy's strength and the
performance of telecom stocks like the giant Nippon Telephone &
Telegraph (NTT). Evidence of recovery in the Japanese economy now
appears indisputable, which thus augurs well for telecom shares there.
Another plus is that NTT, for instance, is undergoing a major corporate
restructuring. We believe this will have very favorable implications
for NTT's own shares as well as those of the broader Japanese telecom
sector, in which we have built widely diversified exposure.
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 Global Telecommunications Management Team
Steven D. Bleiberg, Managing Director
Richard W. Watt, Managing Director
Scott Lewis, Director
James A. Abate, 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.
21
<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)
[GRAPHIC OMITTED]
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
Warburg Pincus
Global Morgan Stanley
Telecommunications Composite Index
Fund Telecommunications 1
12/4/96 $10,000 $10,000
2/28/97 $10,787 $10,253
5/31/97 $11,460 $10,727
8/31/97 $11,533 $10,729
11/30/97 $12,859 $12,107
2/28/98 $15,178 $13,864
5/31/98 $16,664 $15,022
8/31/98 $14,461 $15,079
11/30/98 $19,460 $17,255
2/28/99 $24,138 $20,840
5/31/99 $28,188 $21,044
8/31/99 $31,920 $20,598
COMMON SHARES
------------------
AVERAGE ANNUAL
TOTAL RETURNS
FOR THE PERIODS ENDED AUGUST 31, 1999
One Year 120.73%
From Inception
(12/4/96) 52.69%
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.
22
<PAGE>
WARBURG PINCUS GLOBAL TELECOMMUNICATIONS FUND
SCHEDULE OF INVESTMENTS
AUGUST 31, 1999
NUMBER
OF SHARES VALUE
---------- ------------
COMMON STOCKS -- 92.7%
AUSTRIA -- 0.5%
ELECTRONIC COMP. & INSTRUMENTS -- 0.5%
Austria Technologie &
Systemtechnik AG** .......................... 9,750 $ 300,192
------------
TOTAL AUSTRIA ................................. 300,192
------------
BELGIUM -- 0.0%
TELECOMMUNICATIONS -- 0.0%
Telinfo NV-Strip VVPR** ....................... 61 1
------------
TOTAL BELGIUM ................................. 1
------------
CANADA -- 1.1%
TELECOMMUNICATIONS -- 1.1%
BCE, Inc. ..................................... 4,317 201,820
Research in Motion Ltd.#** .................... 18,000 535,500
------------
737,320
------------
TOTAL CANADA .................................. 737,320
------------
CHINA -- 1.4%
TELECOMMUNICATIONS -- 1.4%
China Telecom (Hong Kong), Ltd.
ADR#** ...................................... 14,300 889,281
------------
TOTAL CHINA ................................... 889,281
------------
FINLAND -- 2.5%
TELECOMMUNICATIONS -- 2.5%
Nokia Corp. ADR ............................... 10,700 892,112
Sonera Group Oyj .............................. 30,700 744,178
------------
TOTAL FINLAND ................................. 1,636,290
------------
GERMANY -- 2.1%
TELECOMMUNICATIONS -- 2.1%
Mannesmann AG ................................. 6,969 1,053,333
Telegate AG** ................................. 9,200 296,376
------------
1,349,709
------------
TOTAL GERMANY ................................. 1,349,709
------------
GREECE -- 1.2%
TELECOMMUNICATIONS -- 1.2%
Hellenic Telecommunications
Organization S.A. ADR#** .................... 73,760 760,650
------------
TOTAL GREECE .................................. 760,650
------------
INDIA -- 2.1%
TELECOMMUNICATIONS -- 2.1%
Mahanagar Telephone Nigam, Ltd.
144A GDR** .................................. 48,000 522,000
Videsh Sanchar Nigam, Ltd.
GDR# ........................................ 61,100 864,565
------------
1,386,565
------------
TOTAL INDIA ................................... 1,386,565
------------
NUMBER
OF SHARES VALUE
---------- ------------
ITALY -- 0.4%
TELECOMMUNICATIONS -- 0.4%
Telecom Italia S.p.A .......................... 27,024 $ 272,018
------------
TOTAL ITALY ................................... 272,018
------------
JAPAN -- 20.1%
BUSINESS & PUBLIC SERVICES -- 3.0%
Fuji Soft ABC, Inc. ........................... 24,470 1,696,181
Trans Cosmos, Inc. ............................ 2,700 274,576
------------
1,970,757
------------
ELECTRONIC COMP. & INSTRUMENTS -- 2.8%
Internet Intitiative Japan, Inc.
ADR** ....................................... 10,000 516,250
Megachips Corp. ............................... 3,000 413,164
Sony Corp. ADR ................................ 7,200 916,650
------------
1,846,064
------------
TELECOMMUNICATIONS -- 14.3%
Japan Telecom Co., Ltd. ....................... 35 692,712
KDD Corp. ..................................... 20,300 1,583,021
Nippon Telegraph & Telephone .................. 248 2,782,156
NTT Data Corp. ................................ 236 2,281,616
NTT Mobile Communication
Network, Inc.# .............................. 55 912,975
NTT Mobile Communication
Network, Inc. - New ......................... 64 1,056,533
------------
9,309,013
------------
TOTAL JAPAN ................................... 13,125,834
------------
NETHERLANDS -- 1.4%
ELECTRICAL & ELECTRONICS -- 0.5%
Equant N.V.** ................................. 3,484 308,190
------------
TELECOMMUNICATIONS -- 0.9%
Versatel Telecom International
N.V.** ...................................... 44,100 605,532
------------
TOTAL NETHERLANDS ............................. 913,722
------------
PORTUGAL -- 3.4%
TELECOMMUNICATIONS -- 3.4%
Portugal Telecom S.A. ......................... 6,815 284,975
Telecel-Comunicacoes Pessoais
S.A. ........................................ 14,751 1,903,918
------------
2,188,893
------------
TOTAL PORTUGAL ................................ 2,188,893
------------
SOUTH KOREA -- 0.7%
TELECOMMUNICATIONS -- 0.7%
SK Telecom Co., Ltd. ADR** .................... 38,310 433,382
------------
TOTAL SOUTH KOREA ............................. 433,382
------------
See Accompanying Notes to Financial Statements.
23
<PAGE>
WARBURG PINCUS GLOBAL TELECOMMUNICATIONS FUND (CONTINUED)
SCHEDULE OF INVESTMENTS
AUGUST 31, 1999
NUMBER
OF SHARES VALUE
---------- ------------
SPAIN -- 1.3%
BROADCASTING & PUBLISHING -- 0.7%
Sogecable S.A.** .............................. 17,000 $ 462,900
------------
TELECOMMUNICATIONS -- 0.6%
Telefonica S.A. ADR ........................... 8,100 390,319
------------
TOTAL SPAIN ................................... 853,219
------------
SWEDEN -- 1.0%
TELECOMMUNICATIONS -- 1.0%
Telefonaktiebolaget L.M.
Ericsson ADR ................................ 5,054 164,571
Telefonaktiebolaget L.M.
Ericsson Cl. B .............................. 14,550 468,629
------------
633,200
------------
TOTAL SWEDEN .................................. 633,200
------------
UNITED KINGDOM -- 8.0%
ELECTRONIC COMP. & INSTRUMENTS -- 0.8%
Arm Holdings plc** ............................ 35,744 505,217
------------
TELECOMMUNICATIONS -- 7.2%
British Telecommunications plc ................ 70,700 1,083,424
COLT Telecom Group plc ADR** .................. 15,963 1,398,758
Filtronic plc ................................. 26,000 346,170
Orange plc** .................................. 73,885 1,246,286
Vodafone AirTouch plc ......................... 18,026 363,492
Vodafone AirTouch plc ADR ..................... 1,467 294,225
------------
4,732,355
------------
TOTAL UNITED KINGDOM .......................... 5,237,572
------------
UNITED STATES -- 45.5%
AEROSPACE & MILITARY TECHNOLOGY -- 1.2%
General Motors Corp. Cl. H** .................. 4,543 233,964
Loral Space & Communications,
Ltd.** ...................................... 30,260 556,027
------------
789,991
------------
BROADCASTING & PUBLISHING -- 0.9%
TCI Satellite Entertainment,
Inc.** ...................................... 57,615 205,253
Time Warner, Inc. ............................. 6,197 367,560
------------
572,813
------------
BUSINESS & PUBLIC SERVICES -- 1.1%
Microsoft Corporation** ....................... 7,500 694,219
------------
DATA PROCESSING & REPRODUCTION -- 2.1%
Sun Microsystems, Inc.** ...................... 17,500 1,391,250
------------
NUMBER
OF SHARES VALUE
---------- ------------
UNITED STATES -- (CONTINUED)
ELECTRONIC COMP. & INSTRUMENTS -- 7.6%
America Online** .............................. 6,204 $ 566,503
Cisco Systems** ............................... 31,894 2,162,812
Go2Net, Inc.#** ............................... 11,700 760,500
JDS Uniphase Corp.** .......................... 8,380 888,804
Network Appliance, Inc.** ..................... 2,640 173,415
Yahoo, Inc.** ................................. 2,566 378,485
------------
4,930,519
------------
TELECOMMUNICATIONS -- 32.6%
Allegiance Telecom, Inc.** .................... 16,500 992,062
American Tower Corp., Cl. A** ................. 19,500 443,625
AT&T Corp. - Liberty Media Group
Cl. A** ..................................... 17,600 563,200
Bell Atlantic Corp. ........................... 16,500 1,010,625
BellSouth Corp. ............................... 18,800 850,700
Broadcom Corp. Cl. A** ........................ 13,712 1,765,420
Cincinnati Bell, Inc. ......................... 30,300 560,550
Comcast Corp. - Special Cl. A** ............... 20,804 678,730
Cox Communications, Inc.** .................... 15,400 572,688
CTC Communications Corp.** .................... 33,000 497,062
EchoStar Communications
Corp.** ..................................... 4,800 401,400
Global Crossing, Ltd.#** ...................... 11,327 293,086
Lucent Technologies ........................... 17,146 1,098,416
MCI WorldCom, Inc.** .......................... 21,495 1,628,246
MediaOne Group, Inc.** ........................ 2,372 155,959
Motorola, Inc. ................................ 7,300 673,425
Nextel Communications, Inc.
Cl. A** ..................................... 9,000 520,313
NEXTLINK Communications,
Inc.** ...................................... 10,000 503,750
Pacific Gateway Exchange,
Inc.#** ..................................... 30,400 619,400
PMC-Sierra, Inc.** ............................ 16,200 1,506,600
QUALCOMM, Inc.** .............................. 4,000 768,750
Qwest Communications
International, Inc.** ....................... 10,000 287,500
SBC Communications, Inc. ...................... 10,121 485,808
Sprint Corp. (FON Group) ...................... 21,000 931,875
Sprint Corp. (PCS Group)** .................... 10,708 639,803
Teligent, Inc. Cl. A** ........................ 10,792 680,571
Time Warner Telecom, Inc.
Cl. A** ..................................... 16,000 432,000
Viatel, Inc.** ................................ 21,600 835,650
WinStar Communications, Inc.** ................ 18,000 914,625
------------
21,311,839
------------
TOTAL UNITED STATES ........................... 29,690,631
------------
TOTAL COMMON STOCKS
(Cost $55,305,677) .......................... $ 60,408,479
------------
See Accompanying Notes to Financial Statements.
24
<PAGE>
WARBURG PINCUS GLOBAL TELECOMMUNICATIONS FUND (CONCLUDED)
SCHEDULE OF INVESTMENTS
AUGUST 31, 1999
PAR
(000) VALUE
---------- ------------
SHORT-TERM INVESTMENT -- 8.1%
BBH Grand Cayman U.S. Dollar
Time Deposit
4.500% 09/01/99 ............................. $5,250 $ 5,250,000
(Cost $5,250,000) -----------
TOTAL INVESTMENTS -- 100.8%
(Cost $60,555,677*) ......................... $65,658,479
LIABILITIES IN EXCESS OF
OTHER ASSETS-- (0.8%) ....................... (492,988)
-----------
TOTAL NET ASSETS-- 100.0% ..................... $65,165,491
===========
* Cost for Federal income tax purposes at August 31, 1999 is $60,556,454. The
gross appreciation (depreciation) on a tax basis is as follows:
Gross Appreciation $ 6,641,183
Gross Depreciation (1,539,158)
-----------
Net Appreciation $ 5,102,025
===========
** Non-income producing securities.
# Security or a portion thereof is out on loan.
INVESTMENT ABBREVIATIONS
ADR ................................................American Depository Receipts
GDR ..................................................Global Depository Receipts
See Accompanying Notes to Financial Statements.
25
<PAGE>
WARBURG PINCUS SELECT ECONOMIC VALUE EQUITY FUND
PORTFOLIO MANAGERS' LETTER
September 15, 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 year ended August 31, 1999.
At August 31, 1999, the net asset value ("NAV") of the Fund's institutional
shares was $20.15, compared to an NAV of $13.17 on August 31, 1998. As a result,
the institutional shares' total return was 53.2% (assuming the reinvestment of
dividends totaling $0.02 per share). By comparison, the Standard & Poor's 500
Index (the "Index") returned 39.9% during the same period.
At August 31, 1999, the NAV of the Fund's common shares was $20.11, compared to
an NAV of $15.95 at their inception of investment operations on October 30,
1998. Including the effect of linkage to the institutional shares, the common
shares' total return between August 31, 1998 and August 31, 1999 thus was 52.8%
(assuming the reinvestment of dividends totaling $0.02 per share). By
comparison, the Index returned 39.9% during the same period.
We attribute the fund's substantial outperformance of the S&P benchmark during
the fiscal year to a combination of sector weightings and stock selection whose
timing proved to be advantageous. This was notably true in technology, basic
materials and health care:
(BULLET) TECHNOLOGY. Early in the fiscal year, we built a large overweight
position in semiconductor manufacturers and equipment makers. Our
thesis was that many of these companies were selling at unusually
reduced valuations and would benefit from falling interest rates and
improved economic conditions (particularly technology spending). This
strategy paid off, as semiconductor stocks such as Motorola, Micron
Technology and Applied Materials enjoyed an extraordinary rally during
1998's fourth quarter and well into 1999. We were subsequently able to
re-enter selected technology positions at lower valuations and profited
from the sector again.
(BULLET) CYCLICALS. We chose to heavily overweight cyclical industries because
they were available at historically depressed valuations at a time when
prospects for global economic growth were improving. This succeeded, as
basic materials and energy were among 1999's best-performing sectors
through the end of August. In basic materials, we realized good gains
from metals companies like Inco and Newmont Mining, chemicals giant
DuPont and a variety of paper manufacturers. Energy exposure most
benefited from an exploration and production company, Union Pacific
Resources, and integrated oils like Exxon, Chevron and Marathon.
(BULLET) HEALTH CARE. The Fund's holdings in health care -- our largest single
sector exposure -- detracted from performance in the second half of the
fiscal year. Notably weak names included Health Management Associates,
Watson Pharmaceuticals and Mylan Labs. Nonetheless, health care was
sufficiently strong in late 1998 to be a net positive for the
portfolio's overall return.
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 Equities Management Team
William W. Priest, Jr., Managing Director
James A. Abate, Director
D. Susan Everly, Vice President
26
<PAGE>
WARBURG PINCUS SELECT ECONOMIC VALUE EQUITY FUND
PORTFOLIO MANAGERS' LETTER (CONCLUDED)
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN THE WARBURG PINCUS SELECT
ECONOMIC VALUE EQUITY INSTITUTIONAL SHARES AND THE S&P 500 INDEX 1 FROM
INCEPTION (7/31/98) AND AT EACH QUARTER END. (UNAUDITED)
[GRAPHIC OMITED]
EDGAR REPRESENTATION OF DATA POINTS USED IN THE PRINTED GRAPHIC
Warburg Pincus
Select Economic
Value Fund S&P 500
Institutional Shares Index 1
07/31/98 $10,000 $10,000
08/31/98 $ 8,780 $ 8,809
11/30/98 $11,447 $10,753
02/28/99 $11,770 $11,479
05/31/99 $12,744 $12,108
08/31/99 $13,452 $12,324
INSTITUTIONAL SHARES
--------------------
AVERAGE ANNUAL
TOTAL RETURNS
FOR THE PERIODS ENDED AUGUST 31, 1999
One Year 53.21%
From Inception
(7/31/98) 31.34%
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.
27
<PAGE>
WARBURG PINCUS SELECT ECONOMIC VALUE EQUITY FUND
SCHEDULE OF INVESTMENTS
AUGUST 31, 1999
NUMBER
OF SHARES VALUE
---------- ------------
COMMON STOCKS -- 99.5%
AGRICULTURE -- 7.4%
Archer-Daniels-Midland ........................ 102,375 $ 1,330,875
Monsanto Co. .................................. 31,800 1,305,787
------------
2,636,662
------------
COMPUTERS, SOFTWARE & SERVICING-- 6.6%
America Online** .............................. 3,000 273,937
I2 Technologies** ............................. 17,400 552,450
Metacreations Corp.** ......................... 8,740 54,625
Microsoft Corporation** ....................... 15,900 1,471,744
------------
2,352,756
------------
CONSUMER PRODUCTS & SERVICES -- 10.8%
Colgate-Palmolive Company ..................... 13,700 732,950
Fruit of The Loom, Inc.** ..................... 41,590 291,130
Procter & Gamble Co. (The) .................... 3,900 387,075
Unilever N.V. ADR ............................. 22,900 1,577,237
Wrigley (Wm.) Jr. Company ..................... 10,500 822,281
------------
3,810,673
------------
ELECTRONICS -- 11.4%
Advanced Micro Devices, Inc.** ................ 42,500 879,219
Atmel Corp.** ................................. 11,800 463,887
Cisco Systems** ............................... 10,200 691,687
LSI Logic Corp.** ............................. 7,100 402,925
Micron Technology, Inc.** ..................... 3,300 246,056
Motorola, Inc. ................................ 14,800 1,365,300
------------
4,049,074
------------
ENERGY & OIL EXPLORATION -- 11.8%
Chevron Corp. ................................. 18,400 1,697,400
Exxon Corporation ............................. 16,900 1,332,988
Noble Affiliates, Inc. ........................ 10,500 325,500
Union Pacific Resources Group,
Inc. ........................................ 25,900 464,581
USX-Marathon Group ............................ 12,000 373,500
------------
4,193,969
------------
FOOD & BEVERAGE -- 3.9%
Coca-Cola Co. ................................. 23,400 1,399,613
------------
HEALTH CARE -- 8.8%
Columbia/HCA Healthcare
Corp. ....................................... 37,900 933,288
Guidant Corp.** ............................... 15,200 892,050
Health Management Associates,
Inc.** ...................................... 40,300 322,400
Medtronic, Inc. ............................... 12,300 962,475
------------
3,110,213
------------
INVESTMENT TRUST -- 4.7%
Nasdaq-100 Shares# ............................ 14,000 1,671,250
------------
NUMBER
OF SHARES VALUE
---------- ------------
METALS & MINING -- 9.9%
Barrick Gold .................................. 36,590 $ 708,931
Cominco, Ltd. ................................. 22,900 397,888
Homestake Mining .............................. 50,000 425,000
Inco, Ltd. .................................... 21,800 446,900
Newmont Mining ................................ 47,900 978,956
Placer Dome, Inc. ............................. 54,000 560,250
------------
3,517,925
------------
PHARMACEUTICALS -- 16.0%
Coulter Pharmaceutical, Inc.#** ............... 3,540 70,579
Eli Lilly and Company ......................... 13,900 1,037,288
Merck & Co. ................................... 18,000 1,209,375
Mylan Laboratories, Inc. ...................... 30,100 596,356
Pfizer, Inc. .................................. 12,100 456,775
Schering-Plough Corp. ......................... 27,300 1,434,956
Watson Pharmaceuticals, Inc.** ................ 24,200 868,175
------------
5,673,504
------------
RETAIL -- 3.4%
Wal-Mart Stores ............................... 27,400 1,214,163
------------
TELECOMMUNICATIONS -- 1.9%
Nextel Communications, Inc.
Cl. A** ..................................... 7,400 427,813
Sprint Corp. (PCS Group)** .................... 3,800 227,050
------------
654,863
------------
TOBACCO -- 2.9%
Philip Morris Companies, Inc. ................. 27,300 1,022,044
------------
TOTAL COMMON STOCKS
(Cost $33,911,614) .......................... $ 35,306,709
------------
PAR
(000)
-------
SHORT-TERM INVESTMENT -- 0.3%
BBH Grand Cayman U.S. Dollar
Time Deposit
4.500% 09/01/99 ............................. $111 $ 111,304
(Cost $111,304) ------------
See Accompanying Notes to Financial Statements.
28
<PAGE>
WARBURG PINCUS SELECT ECONOMIC VALUE EQUITY FUND (CONCLUDED)
NUMBER
OF SHARES VALUE
---------- ------------
OPTIONS -- 0.1%
Call Option Bkx Index
Oct99 830 ................................... 18 $ 30,375
Call Option Bkx Index
Oct99 840 ................................... 17 22,100
-----------
TOTAL OPTIONS
(Cost $146,880) ............................. $ 52,475
-----------
TOTAL INVESTMENTS -- 99.9%
(Cost $34,169,798*) ......................... $35,470,488
OTHER ASSETS IN EXCESS
OF LIABILITIES-- 0.1% ....................... 18,798
-----------
TOTAL NET ASSETS -- 100.0% .................... $35,489,286
===========
* Cost for Federal income tax purposes at August 31, 1999 is $34,256,977. The
gross appreciation (depreciation) on a tax basis is as follows:
Gross Appreciation ....................... $ 3,367,837
Gross Depreciation ....................... (2,154,326)
-----------
Net Appreciation ......................... $ 1,213,511
===========
** Non-income producing securities.
INVESTMENT ABBREVIATIONS
ADR ................................................American Depository Receipts
See Accompanying Notes to Financial Statements.
29
<PAGE>
WARBURG PINCUS LONG-SHORT MARKET NEUTRAL FUND
PORTFOLIO MANAGERS' LETTER
September 15, 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 year ended August 31, 1999.
At August 31, 1999, the net asset value ("NAV") of the Fund's institutional
shares was $14.21, compared to an NAV of $15.27 on August 31, 1998. As a result,
the institutional shares' total return was down 5.7% (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 benchmark (the "Index")
returned 4.3% during the same period.
At August 31, 1999, the NAV of the Fund's common shares was $14.19, compared to
an NAV of $15.19 at their inception of investment operations on September 8,
1998. Including the effect of linkage to the institutional shares, the common
shares' total return between August 31, 1998 and August 31, 1999 thus was down
5.8% (assuming the reinvestment of dividends and distributions totaling $0.20
per share). By comparison, the Index returned 4.3% during the same period.
We attribute the Fund's underperformance of its benchmark during the fiscal year
to a combination of broad-based and sector-specific factors that prevailed in
1999 through the end of August.
Broad market volatility was unusually high, as investors often were preoccupied
with concerns about U.S. interest rates and inflation. As a result, two aspects
of market activity worked against our particular investment discipline, which
focuses on stock selection rather than macro-level or sector-related issues.
First, there was a general unwillingness to commit to relatively long-term
positions, which caused a choppier-than- usual trading environment. Second,
there was an emphasis on positioning portfolios to benefit from expectations
about interest rates by betting on industry sectors rather than individual
stocks. In the latter trend, stocks within many sectors performed similarly,
which negated the normal benefit we derive by highlighting companies with
especially strong or weak 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 Equities Management Team
William W. Priest, Jr., 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.
30
<PAGE>
WARBURG PINCUS LONG-SHORT MARKET NEUTRAL FUND
PORTFOLIO MANAGERS' LETTER (CONCLUDED)
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN THE WARBURG PINCUS
LONG-SHORT MARKET NEUTRAL INSTITUTIONAL SHARES AND THE 30-DAY U.S. TREASURY BILL
INDEX 1 FROM INCEPTION (7/31/98) AND AT EACH QUARTER END. (UNAUDITED)
Warburg Pincus
Long-Short 30-Day
Market Neutral U.S. Treasury Bill
Institutional Shares Index 1
07/31/98 $10,000 $10,000
08/31/98 $10,180 $10,040
11/30/98 $ 9,927 $10,133
02/28/99 $10,061 $10,241
05/31/99 $ 9,804 $10,353
08/31/99 $ 9,601 $10,465
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 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.
31
<PAGE>
WARBURG PINCUS LONG-SHORT MARKET NEUTRAL FUND
SCHEDULE OF INVESTMENTS
AUGUST 31, 1999
NUMBER
OF SHARES VALUE
---------- ------------
COMMON STOCKS -- 87.0%
AEROSPACE/DEFENSE -- 2.1%
Textron, Inc. ................................. 2,000 $ 161,500
------------
AIR TRANSPORT-FREIGHT -- 1.7%
Southwest Airlines Co. ........................ 7,800 130,162
------------
AUTOMOTIVE -- 13.5%
Delphi Automotive Systems
Corp. ....................................... 1,300 24,375
Ford Motor Co. ................................ 6,000 312,750
General Motors Corp. .......................... 1,900 125,638
Johnson Controls, Inc. ........................ 5,700 389,738
Navistar International Corp. .................. 4,100 199,363
------------
1,051,864
------------
BEVERAGES & TOBACCO -- 0.3%
Anheuser-Busch Cos., Inc. ..................... 300 23,100
------------
CABLE -- 2.9%
At Home Corp. Series A** ...................... 5,600 224,700
------------
CHEMICALS -- 3.1%
Air Products & Chemicals, Inc. ................ 4,200 142,800
Lyondell Petrochemical Co. .................... 6,700 97,569
------------
240,369
------------
COMMUNICATIONS & MEDIA -- 1.3%
A. H. Belo Corp. Cl. A ........................ 5,400 102,263
------------
COMPUTERS, SOFTWARE & SERVICING-- 0.9%
GTECH Holdings ................................ 1,200 30,300
RealNetworks, Inc.** .......................... 500 40,875
------------
71,175
------------
CONSTRUCTION & BUILDING MATERIALS-- 4.0%
Ingersoll-Rand Co. ............................ 2,500 159,063
Lafarge Corp. ................................. 2,500 68,750
Masco Corp. ................................... 3,000 84,938
------------
312,751
------------
CONSUMER PRODUCTS & SERVICES -- 1.8%
Avon Products ................................. 2,400 105,300
Nu Skin Enterprises, Inc.** ................... 3,200 34,200
------------
139,500
------------
ELECTRIC UTILITIES -- 1.6%
Niagara Mohawk Power .......................... 5,700 86,213
Pinnacle West Capital ......................... 1,100 41,800
------------
128,013
------------
ELECTRONICS -- 7.4%
Circuit City Stores ........................... 5,000 215,000
Cisco Systems, Inc.** ......................... 2,200 149,188
Halliburton Co. ............................... 400 18,550
Linear Technology Corp. ....................... 1,800 113,288
NUMBER
OF SHARES VALUE
---------- ------------
ELECTRONICS -- (CONTINUED)
Teradyne, Inc.** .............................. 500 $ 34,031
UtiliCorp United, Inc. ........................ 1,900 44,056
------------
574,113
------------
ENERGY & OIL EXPLORATION -- 0.8%
Tidewater Inc. ................................ 1,900 61,750
------------
FINANCIAL SERVICES -- 15.5%
20th Century Industries ....................... 1,700 31,875
Fannie Mae .................................... 300 18,638
Hartford Financial Services, Inc. ............. 6,200 281,713
J.P. Morgan & Co. Inc. ........................ 2,400 310,050
Jefferson-Pilot Corp. ......................... 1,500 100,125
Lehman Brothers Holdings Inc. ................. 3,700 198,875
Regions Financial Corp. ....................... 2,100 74,156
T. Rowe Price Associates, Inc. ................ 1,400 43,313
UnionBanCal Corp. ............................. 3,000 115,125
Merrill Lynch & Co., Inc. ..................... 400 29,850
------------
1,203,720
------------
FOOD & BEVERAGE -- 4.9%
Coors, (Adolph) Cl. B ......................... 1,900 108,419
Fleming Companies, Inc. ....................... 12,800 154,400
U.S. Foodservice** ............................ 5,800 120,713
------------
383,532
------------
FOREST PRODUCTS & PAPER -- 1.3%
Weyerhaeuser Co. .............................. 1,800 101,250
------------
GAS UTILITIES -- 0.6%
Boise Cascade Corp. ........................... 500 18,188
Peoples Energy ................................ 700 25,506
------------
43,694
------------
HEALTH CARE -- 2.7%
Aetna Inc. .................................... 700 54,425
Wellpoint Health Networks,
Inc.** ...................................... 2,100 153,038
------------
207,463
------------
METALS & MINING -- 1.7%
Bethlehem Steel Corp.** ....................... 3,200 24,600
Freeport-McMoran Copper &
Gold, Inc. Cl. B ............................ 4,300 69,069
Ryerson Tull, Inc. ............................ 2,200 41,663
------------
135,332
------------
OIL SERVICES -- 4.8%
Enron Corp. ................................... 7,000 293,125
Pennzoil-Quaker State Co. ..................... 5,700 79,088
------------
372,213
------------
PHARMACEUTICALS -- 0.2%
Bergen Brunswig Corp. ......................... 1,000 15,438
------------
See Accompanying Notes to Financial Statements.
32
<PAGE>
WARBURG PINCUS LONG-SHORT MARKET NEUTRAL FUND (CONTINUED)
NUMBER
OF SHARES VALUE
---------- ------------
PUBLISHING & INFORMATION SERVICES-- 0.4%
Donnelley (R.R.) & Sons Co. ................... 1,000 $ 31,375
------------
REAL ESTATE -- 0.7%
Host Marriott Corp. ........................... 1,700 15,725
Simon Debartolo Group ......................... 1,600 40,800
------------
56,525
------------
RENTALS -- 0.6%
Hertz Corp. ................................... 1,100 44,344
------------
RETAIL-SPECIALTY APPAREL STORES-- 2.5%
Dayton Hudson Corp. ........................... 1,000 58,000
Dollar Tree Stores** .......................... 1,500 49,500
Office Depot.** ............................... 5,900 61,581
Safeway, Inc.** ............................... 600 27,938
------------
197,019
------------
TELECOMMUNICATIONS -- 9.7%
AT&T Corp. .................................... 2,700 121,500
Galileo International, Inc. ................... 1,600 77,600
General Instrument Corp.** .................... 4,300 211,506
NEXTLINK Communications,
Inc.** ...................................... 2,400 120,900
SBC Communications, Inc. ...................... 800 38,400
Tellabs, Inc. ................................. 3,100 184,644
------------
754,550
------------
TOTAL COMMON STOCKS
(Cost $7,156,349) ........................... $ 6,767,715
------------
SECURITIES SOLD SHORT -- (91.0%)
AEROSPACE & DEFENSE -- (3.1%)
Lear Corp** ................................... (500) $ (20,094)
Lockheed Martin Corp. ......................... (6,000) (222,000)
------------
(242,094)
------------
AGRICULTURE -- (0.6%)
IMC Global, Inc. .............................. (3,000 (47,813)
------------
AUTOMOTIVE PARTS & EQUIPMENT-- (12.4%)
Autonation, Inc.** ............................ (12,800) (165,600)
General Motors Corp. Cl-H ..................... (6,900) (355,350)
Genuine Parts Co. ............................. (1,100) (31,763)
Goodyear Tire & Rubber Co. .................... (7,400) (415,325)
------------
(968,038)
------------
BUILDING & BUILDING MATERIALS -- (2.7%)
Armstrong World Industries .................... (3,400) (165,113)
Johns Manville Corp. .......................... (3,000) (43,125)
------------
(208,238)
------------
BUSINESS SERVICES -- (2.4%)
ACNielsen Corp.** ............................. (1,300) (32,500)
Catalina Marketing Corp.** .................... (1,700) (154,275)
------------
(186,775)
------------
NUMBER
OF SHARES VALUE
--------- ------------
COMMUNICATIONS & MEDIA -- (4.5%)
America Online ................................ (2,100) $ (191,756)
Chris-Craft Industries, Inc.** ................ (1,600) (81,000)
USA Networks, Inc. ............................ (1,700) (76,288)
------------
(349,044)
------------
COMPUTERS, SOFTWARE & SERVICING -- (1.2%)
Tandy Corp. ................................... (2,000) (94,500)
------------
CONGLOMERATES -- (0.3%)
General Electric Co. .......................... (200) (22,463)
------------
CONSUMER PRODUCTS & SERVICES -- (6.4%)
Colgate-Palmolive Co. ......................... (2,900) (155,150)
Fruit of The Loom, Inc. Cl. A ................ (2,400) (16,800)
Gillette Co. .................................. (3,300) (153,863)
Newell Rubbermaid, Inc. ....................... (2,200) (90,200)
Whitman Corp. ................................. (5,000) (83,438)
------------
(499,451)
------------
ELECTRIC UTILITIES -- (1.2%)
Unicom Corp. .................................. (2,500) (96,563)
------------
ELECTRONICS -- (6.6%)
Atmel Corp.** ................................. (11,700) (459,956)
Vishay Intertechnology** ...................... (2,450) (52,522)
------------
(512,478)
------------
ENERGY & OIL EXPLORATION -- (4.6%)
Baker Hughes, Inc. ............................ (2,500) (85,000)
USX - Marathon Group .......................... (2,000) (62,250)
Weatherford International, Inc.** ............. (6,000) (213,750)
------------
(361,000)
------------
ENVIRONMENTAL SERVICES -- (0.2%)
Waste Management, Inc. ........................ (600) (13,088)
------------
FINANCIAL SERVICES -- (15.6%)
American Financial Group ...................... (3,900) (115,050)
American International Group
Inc. ........................................ (750) (69,516)
Bank of America Corp. ......................... (5,100) (308,550)
CCB Financial Corp. ........................... (1,100) (51,975)
Charles Schwab Corp. .......................... (2,000) (79,000)
Cincinnati Financial Corp. .................... (1,100) (43,588)
MBIA, Inc. .................................... (3,200) (166,000)
MGIC Investment Corp. ......................... (2,400) (104,250)
People's Bank/Connecticut ..................... (2,100) (55,125)
PMI Group, Inc. ............................... (750) (31,875)
Union Planters Corporation .................... (2,300) (97,031)
Wachovia Corp. ................................ (1,200) (94,050)
------------
(1,216,010)
------------
FOOD & BEVERAGE -- (0.9%)
Coca-Cola Co. ................................. (1,100) (65,794)
------------
HEALTH CARE -- (1.1%)
PE Corp. - PE Biosystems Group ................ (1,200) (82,575)
------------
See Accompanying Notes to Financial Statements.
33
<PAGE>
WARBURG PINCUS LONG-SHORT MARKET NEUTRAL FUND (CONCLUDED)
PAR
(000) VALUE
---------- ------------
INDUSTRIAL GOODS & MATERIALS -- (0.7%)
Owens-Illinois, Inc.** ........................ (600) $ (14,850)
Southdown, Inc. ............................... (700) (35,350)
------------
(50,200)
------------
MEDICAL EQUIPMENT -- (2.3%)
Beckman Coulter, Inc. ......................... (3,800) (180,025)
------------
OFFICE EQUIPMENT & SUPPLIES -- (2.8%)
Harland ( John H. ) Co. ....................... (10,900) (216,638)
------------
OIL SERVICES -- (2.8%)
Amerada Hess Corp. ............................ (3,500) (217,219)
------------
PAPER & FORESTRY PRODUCTS -- (4.8%)
Bowater Inc. ................................. (7,000) (375,375)
------------
PHARMACEUTICALS -- (1.5%)
Dura Pharmaceuticals** ........................ (2,000) (26,625)
Forest Laboratories, Inc.** ................... (1,300) (62,969)
Monsanto Co. .................................. (600) (24,638)
------------
(114,232)
------------
REAL ESTATE -- (2.4%)
Archstone Communities Trust ................... (1,600) (34,200)
Starwood Hotels & Resorts
Worldwide, Inc. ............................. (700) (16,669)
Vornado Realty Trust .......................... (4,000) (136,500)
------------
(187,369)
------------
RETAIL-SPECIALTY APPAREL STORES-- (2.9%)
Gap, Inc. ..................................... (1,500) (58,688)
Ikon Office Solutions ......................... (7,300) (81,213)
Kohls Corp.** ................................. (1,200) (85,500)
------------
(225,401)
------------
TELECOMMUNICATIONS -- (6.5%)
AT&T Corp. - Liberty Media
Group Cl. A** ............................... (1,100) (35,200)
Cabletron Systems, Inc.** ..................... (4,700) (79,019)
Citizens Utilities Co. Cl. B .................. (2,700) (29,700)
McLeodUSA, Inc. Class A** ..................... (10,800) (360,450)
------------
(504,369)
------------
TRANSPORTATION -- (0.5%)
Wisconsin Central Transportation
Corp.** ..................................... (2,600) (41,438)
------------
TOTAL SECURITIES SOLD SHORT
(Cost $6,989,392) ........................... $ (7,078,190)
------------
PAR
(000) VALUE
---------- ------------
REPURCHASE AGREEMENT -- 3.4%
Bear Stearns (Agreement dated
08/31/99, to be repurchased at
$266,930, collateralized by
$235,000 U.S. Treasury Bond
9.375% due 02/15/06. Market
Value of collateral is $275,526.)
5.430% 09/01/99 ............................. $267 $ 266,889
(Cost $266,889) ------------
TOTAL INVESTMENTS -- (0.6%)
(Cost $433,846*) ............................ $ (43,586)
OTHER ASSETS IN EXCESS
OF LIABILITIES-- 100.6% ..................... 7,829,167
------------
TOTAL NET ASSETS-- 100.0% ..................... $ 7,785,581
============
* Cost for Federal income tax purposes at August 31, 1999 is $1,638,288. The
gross appreciation (depreciation) on a tax basis is as follows:
Gross Appreciation - Investments ............................ $ 133,371
Gross Depreciation - Investments ............................ (833,185)
Gross Appreciation - Short Sales ............................ 48,770
Gross Depreciation - Short Sales ............................ (1,030,830)
-----------
Net Depreciation ......................................... $(1,681,874)
===========
** Non-income producing securities.
See Accompanying Notes to Financial Statements.
34
<PAGE>
WARBURG PINCUS LONG-SHORT EQUITY FUND
PORTFOLIO MANAGERS' LETTER
September 15, 1999
DEAR SHAREHOLDERS:
We are writing to report on the results of the Warburg Pincus Long-Short Equity
Fund (the "Fund") for the fiscal year ended August 31, 1999.
At August 31, 1999, the net asset value ("NAV") of the Fund's institutional
shares was $16.57, 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 August 31, 1999 was 13.4% (assuming the
reinvestment of dividends and distributions totaling $0.45 per share). By
comparison, the Standard & Poor's 500 Index1 (the "Index") returned 36.5% during
the same period.
At August 31, 1999, the NAV of the Fund's common shares was $16.51, compared to
an NAV of $15.72 at their inception of investment operations on October 30,
1998. The common shares' total return thus was 7.8% between October 30, 1998 and
August 31, 1999 (assuming the reinvestment of dividends and distributions
totaling $0.45 per share). By comparison, the Index returned 21.6% during the
same period.
We attribute the Fund's modest underperformance of its S&P 500 benchmark during
the fiscal year to a combination of broad-based and sector-specific factors that
prevailed in 1999 through the end of August.
Broad market volatility was unusually high, as investors often were preoccupied
with concerns about U.S. interest rates and inflation. As a result, two aspects
of market activity worked against our particular investment discipline, which
focuses on stock selection rather than macro-level or sector-related issues.
First, there was a general unwillingness to commit to relatively long-term
positions, which caused a choppier-than- usual trading environment. Second,
there was an emphasis on positioning portfolios to benefit from expectations
about interest rates by betting on industry sectors rather than individual
stocks. In the latter trend, stocks within many sectors performed similarly,
which negated the normal benefit we derive by highlighting companies with
especially strong or weak fundamentals.
An additional contributor to underperformance was the simple fact that, as a
fairly new portfolio that was (and is) small and growing, the Fund periodically
experienced disproportionate volatility in response to relatively large cash
flows. 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.
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 Equities Management Team
William W. Priest, Jr., 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.
35
<PAGE>
WARBURG PINCUS LONG-SHORT EQUITY FUND
SCHEDULE OF INVESTMENTS
AUGUST 31, 1999
NUMBER
OF SHARES VALUE
---------- ------------
INVESTMENT COMPANY -- 90.1%
Warburg Pincus Long-Short
Market Neutral Fund,
Institutional Shares ........................ 75,910 $1,078,687
(Cost $1,128,538) ----------
TOTAL INVESTMENTS -- 90.1%
(Cost $1,128,538*) .......................... $1,078,687
OTHER ASSETS IN EXCESS
OF LIABILITIES-- 9.9% ....................... 118,837
----------
TOTAL NET ASSETS -- 100.0% .................... $1,197,524
==========
* Cost for Federal income tax purposes at August 31, 1999 is $1,155,006. The
gross appreciation (depreciation) on a tax basis is as follows:
Gross and Net Depreciation .............................. $(76,319)
========
See Accompanying Notes to Financial Statements.
36
<PAGE>
WARBURG PINCUS U.S. CORE FIXED INCOME FUND
PORTFOLIO MANAGERS' LETTER
September 17, 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 year ended August 31, 1999.
At August 31, 1999, the net asset value ("NAV") of the Fund's institutional
shares was $15.01, 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 $1.08 per share). By comparison, the Lehman
Brothers Aggregate Bond Index (the "Index") returned 0.8% during the same
period.
At August 31, 1999, the NAV of the Fund's common shares was $14.99, compared to
an NAV of $15.68 at their inception of investment operations on October 30,
1998. Including the effect of linkage to the institutional shares, the common
shares' total return between August 31, 1998 and August 31, 1999 was 2.1%
(assuming the reinvestment of dividends and distributions totaling $0.85 per
share). By comparison, the Index returned 0.8% during the same period.
We attribute the Fund's outperformance of the Index benchmark during the fiscal
year to our decisions regarding the portfolio's exposure to "spread product"
(i.e., debt securities whose market valuation is driven by the difference, known
as the "spread," between their yields and those of U.S. Treasury debt).
As the fiscal year began in September 1998, we continued to be overweighted in
spread product relative to the Index. This stance hurt the Fund's performance in
the middle of 1998, when an extraordinary confluence of events in global
financial markets -- including a sharp decline in the currencies, securities and
economies of many developing nations; rapidly deteriorating political and
macroeconomic conditions in Russia; and the collapse of a major hedge fund,
Long-Term Capital Management -- caused prices of non-Treasury debt to plummet
and their yield spreads to dramatically widen.
We increased our spread product positions into the new fiscal year because we
believed that they represented attractive fundamental value and would eventually
recover. Our patience was rewarded in the fourth quarter of 1998 and the first
quarter of 1999, as yield spreads contracted and spread-based sectors generated
healthy gains.
The outlook for spread product turned less favorable in the second quarter,
however, when we felt that prices had exhausted much of their near-term
potential and investors began to focus on the potential for an increase in
interest rates. We responded by taking some profits and raising the portfolio's
overall credit quality, notably in our exposure to below-investment-grade
sectors like high yield and emerging market debt. Our timing proved fortunate,
as both sectors subsequently outperformed spread products.
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
Gregg M. Diliberto, Managing Director
Mark K. Silverstein, Managing Director
Jo Ann Corkran, Director
Jose A. Rodriguez, Director
37
<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)
[GRAPHIC OMITTED]
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
Warburg Pincus
U.S. Core Lehman Brothers
Fixed Income Aggregate Bond
Institutional Shares Index 1
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
5/31/96 $11,464 $11,638
8/31/96 $11,658 $11,806
11/30/96 $12,328 $12,488
2/28/97 $12,420 $12,442
5/31/97 $12,567 $12,607
8/31/97 $13,001 $12,991
11/30/97 $13,327 $13,437
2/28/98 $13,670 $13,735
5/31/98 $13,898 $13,985
8/31/98 $14,011 $14,364
11/30/98 $14,381 $14,706
2/28/99 $14,352 $14,594
5/31/99 $14,489 $14,591
8/31/09 $14,343 $14,476
INSTITUTIONAL SHARES
--------------------
AVERAGE ANNUAL
TOTAL RETURNS
FOR THE PERIODS ENDED AUGUST 31, 1999
One Year 2.37%
Three Years 7.15%
Five Years 7.44%
From Inception
(3/31/94) 6.88%
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.
38
<PAGE>
WARBURG PINCUS U.S. CORE FIXED INCOME FUND
SCHEDULE OF INVESTMENTS
AUGUST 31, 1999
PAR
(000) VALUE
---------- ------------
CORPORATE BONDS -- 40.1%
AEROSPACE/DEFENSE EQUIPMENT -- 0.1%
Boeing Co. Debentures
7.500% 08/15/42 ............................. $ 150 $ 145,312
Sequa Corp.
Senior Notes
9.000% 08/01/09 ............................. 290 285,650
------------
430,962
------------
AUTOMOTIVE -- 0.3%
Delco Remy International, Inc.
Gtd. Sr. Sub Notes
10.625% 08/01/06 ............................ 210 219,712
Hayes Lemmerz International, Inc.
144A Sr. Sub. Notes
8.250% 12/15/08 ............................. 285 266,475
Hayes Wheels International, Inc.
Gtd. Notes
11.000% 07/15/06 ............................ 55 59,125
Lear Corp.
7.960% 05/15/05 ............................. 540 531,900
Oxford Automotive, Inc.
Sr. Sub. Notes
10.125% 06/15/07 ............................ 75 74,250
------------
1,151,462
------------
BANKING -- 7.1%
Bangko Sentral Pilipinas
Yankee Bonds
8.600% 06/15/27 ............................. 1,655 1,278,487
Bay View Capital Corp.
Sub. Notes
9.125% 08/15/07 ............................. 1,060 980,500
Chase Manhattan Bank Corp.
Sub. Notes
6.500% 08/01/05 ............................. 240 233,700
6.750% 09/15/06 ............................. 630 607,162
7.250% 06/01/07 ............................. 490 489,387
6.375% 04/01/08 ............................. 360 339,300
Citicorp Sub. Notes, Series F
6.375% 11/15/08 ............................. 1,550 1,447,312
Credit Lyonnais
Perpetual Sub. Variable Rate
Notes, Rule 144A
6.437%(DAGGER)/(DAGGER)(DAGGER)(DAGGER) ..... 2,830 2,596,525
Deutsche Bank Financial
144A Pfd.
7.872%(DAGGER)/(DAGGER)(DAGGER)(DAGGER) ..... 1,600 1,503,064
Dresdner Bank
8.151% 06/30/31 ............................. 640 587,200
First Republic Bank
Sub. Notes
7.750% 09/15/12 ............................. 2,080 1,908,400
ForeningsSparbanken AB
Perpetual Sr. Sub. FRN
5.926%(DAGGER)/(DAGGER)(DAGGER)(DAGGER) ..... 980 964,271
PAR
(000) VALUE
---------- ------------
BANKING -- (CONTINUED)
Fuji Finance (Cayman), Ltd.
Medium Term Notes
7.300%(DAGGER)/(DAGGER)(DAGGER)(DAGGER) .. $ 850 $ 739,500
Perpetual Sub. Notes
6.573%(DAGGER)/(DAGGER)(DAGGER)(DAGGER) .. 540 467,100
Fuji JGB Investment L.L.C.,
Noncumulative Preferred
Securities, Series A
9.870%(DAGGER)/(DAGGER)(DAGGER)(DAGGER) ..... 1,620 1,595,700
Okobank Perpetual Medium
Term FRN
5.598%(DAGGER)/(DAGGER)(DAGGER)(DAGGER) ..... 2,000 1,910,000
Santander Financial Issuances
Perpetual
6.087%(DAGGER)/(DAGGER)(DAGGER)(DAGGER) ..... 750 680,625
Sanwa Bank Ltd Global
Sub Notes
8.350% 07/15/09 ............................. 1,780 1,782,225
Skandinaviska Enskilda Banken
Perpetual Sub. FRN
6.625%(DAGGER)/(DAGGER)(DAGGER)(DAGGER) .. 2,280 2,234,400
144A Perpetual Sub. FRN
6.500%(DAGGER)(DAGGER)(DAGGER) ........... 1,200 1,119,769
Sumitomo Bank Int'l. Finance
8.500% 06/15/09 ............................. 1,500 1,518,750
------------
24,983,377
------------
BROADCASTING -- 1.1%
Chancellor Media Corp.
144A Sr. Sub. Notes
8.000% 11/01/08 ............................. 225 216,000
Fox/Liberty Networks L.L.C.,
Registered Sr. Notes
8.875% 08/15/07 ............................. 1,390 1,410,850
Granite Broadcasting Corp.
144A Sr. Sub. Notes
8.875% 05/15/08 ............................. 190 182,400
HMV Media Group plc
Senior Subordinated Yankee
Notes, Series B
10.250% 05/15/08 ............................ 115 112,700
TV Guide, Inc.
8.125% 03/01/09 ............................. 380 357,200
Turner Broadcasting Systems, Inc.
Sr. Notes
7.400% 02/01/04 ............................. 1,450 1,468,125
------------
3,747,275
------------
BUILDING MATERIALS -- 0.1%
Jackson Products, Inc. Notes
9.500% 04/15/05 ............................. 345 317,400
------------
See Accompanying Notes to Financial Statements.
39
<PAGE>
WARBURG PINCUS U.S. CORE FIXED INCOME FUND (CONTINUED)
PAR
(000) VALUE
---------- ------------
CABLE -- 1.5%
Belo (A.H.) Corp.
Sr. Notes
6.875% 06/15/02 ............................. $ 2,635 $ 2,615,237
Classic Cable
Sr. Sub. Notes
9.875% 08/01/08 ............................. 150 151,500
CSC Holdings Inc.
Sr. Notes
7.875% 12/15/07 ............................. 1,080 1,047,600
7.250% 07/15/08 ............................. 320 296,800
Diamond Cable Communications
plc, Yankee Sr. Discount Notes
10.750% 02/15/07(DAGGER)(DAGGER) ............ 815 623,475
James Cable Partners L.P.
Sr. Notes, Series B
10.750% 08/15/04 ............................ 245 248,062
Videotron Holdings plc
Yankee Sr. Discount Notes
11.000% 08/15/05(DAGGER)(DAGGER) ............ 95 94,219
------------
5,076,893
------------
CHEMICALS -- 0.1%
Lyondell Chemical, Inc.
Senior Secured Notes,
Series A
9.625% 05/01/07 ........................ 110 111,650
Series B
9.875% 05/01/07 ........................ 115 115,862
------------
227,512
------------
COMPUTERS, SOFTWARE & SERVICES -- 0.5%
PSINET, Inc.
144A Sr. Notes
11.500% 11/01/08 ............................ 220 223,300
Seagate Technology, Inc.
Sr. Debentures
7.450% 03/01/37 ............................. 1,710 1,541,137
------------
1,764,437
------------
CONSULTING SERVICES -- 1.4%
Comdisco Inc Mtn
7.250% 09/01/02 ............................. 3,050 3,030,937
Comdisco, Inc Ser H Mtn
7.230% 08/16/01 ............................. 1,850 1,850,000
------------
4,880,937
------------
ENERGY -- 2.3%
Crown Central Petroleum
Sr. Notes
10.875% 02/01/05 ............................ 150 132,000
Dresser Industries, Inc.
Debentures
7.600% 08/15/49 ............................. 1,820 1,794,975
PAR
(000) VALUE
---------- ------------
Energy -- (continued)
Korea Electric Power
Global Unsubordinated Notes
6.375% 12/01/03 .......................... $ 60 $ 56,100
Yankee Debentures
7.000% 02/01/27 .......................... 1,575 1,433,250
Yankee Notes
7.000% 10/01/02 .......................... 1,735 1,685,119
Valero Energy Corp.
144A Putable Asset Trusts
6.750% 12/15/02 ............................. 2,945 2,864,012
------------
7,965,456
------------
ENTERTAINMENT -- 1.6%
Regal Cinemas, Inc.
Sr. Sub. Notes
9.500% 06/01/08 ............................. 300 213,000
Time Warner, Inc.
Debentures
8.050% 01/15/16 ............................. 1,935 1,976,119
6.850% 01/15/26 ............................. 3,560 3,555,550
------------
5,744,669
------------
FINANCIAL SERVICES -- 6.4%
American General Institutional
Capital Trust Co.
144A Gtd. Notes,
Series B
8.125% 03/15/46 ............................. 2,605 2,634,306
AT&T Capital Corp.
Medium Term Note, Series 4
6.470% 12/03/99 ............................. 960 961,098
6.480% 12/03/99 ............................. 2,805 2,808,277
Ford Motor Credit Corp.
5.800% 01/12/09 ............................. 2,750 2,475,000
6.700% 07/16/04 ............................. 350 345,187
Industrial Credit & Investment Corp.
144A Yankee Medium Term
Notes
7.550% 08/15/07 ............................. 40 36,500
L'Auxiliare du Credit Foncier
de France
Gtd. Notes
5.000% 09/25/02(DAGGER) .................. 2,235 2,167,950
Gtd. Notes
5.000% 10/22/02(DAGGER) .................. 155 151,109
Lehman Brothers Holdings, Inc.
Global Notes
6.625% 04/01/04 .......................... 1,310 1,270,700
Notes
7.000% 05/15/03 .......................... 550 545,875
Long Island Savings Bank, Inc.
Notes
7.000% 06/13/02 ............................. 1,670 1,661,650
See Accompanying Notes to Financial Statements.
40
<PAGE>
WARBURG PINCUS U.S. CORE FIXED INCOME FUND (CONTINUED)
PAR
(000) VALUE
---------- ------------
FINANCIAL SERVICES -- (CONTINUED)
MBNA Master Credit Card Trust
Series 1997-I, Class A
6.550% 01/15/07 .......................... $ 2,200 $ 2,173,552
Series 1999-G, Class A
6.350% 12/15/06 .......................... 1,800 1,767,366
Merrill Lynch & Co.
Notes
6.875% 11/15/18 ............................. 1,220 1,116,300
Prudential Insurance Co. of
America
144A Capital Notes
6.875% 04/15/03 ........................ 1,600 1,590,000
144A Sr. Notes
6.375% 07/23/06 ........................ 800 755,000
------------
22,459,870
------------
FOOD & BEVERAGE -- 0.6%
AmeriServ Food Distribution, Inc.
Gtd. Sr. Notes
8.875% 10/15/06 ............................. 150 129,000
Archibald Candy Corp.
144A Gtd. Sr. Secured Notes
10.250% 07/01/04 ............................ 400 398,000
Kroger Co.
7.250% 06/01/09 ............................. 1,500 1,462,500
Pantry, Inc.
Sr. Sub. Notes
10.250% 10/15/07 ............................ 100 99,500
Premier Intl Foods
PLC
12.000% 09/01/09 ............................ 130 131,300
------------
2,220,300
------------
HEALTH CARE -- 0.2%
Columbia/HCA Healthcare Corp.
Debentures
8.360% 04/15/24 ............................. 840 751,800
------------
Industrial Goods & Materials -- 0.4%
Motors & Gears Inc.
Sr. Notes, Series D
10.750% 11/15/06 ............................ 335 330,812
Tyco Intl Group
6.125% 01/15/09 ............................. 1,250 1,139,063
------------
1,469,875
------------
PACKAGING/CONTAINERS -- 0.8%
Crown Cork & Seal
Sr Notes
7.125% 09/01/02 ............................. 2,950 2,931,562
Crown Packaging Enterprises, Ltd.
Yankee Sr. Secured Discount
Notes
14.000% 08/01/06(DAGGER)(DAGGER) ............ 550 8,250
------------
2,939,812
------------
PAR
(000) VALUE
---------- ------------
PAPER & FOREST PRODUCTS -- 0.3%
Fort James Corp.
Notes
6.234% 03/15/01 ............................. $ 350 $ 348,688
P.T. Indah Kiat Pulp & Paper Corp.
Sr. Secured Notes
8.875% 11/01/00 ............................. 290 255,809
10.000% 07/01/07 ............................ 425 263,500
Repap New Brunswick
Sr. Yankee Notes
10.625% 04/15/05 ............................ 35 30,450
------------
898,447
------------
REAL ESTATE -- 0.4%
EOP Operating L.P.
Mandatory Par Put Remarketed
Securities
6.376% 02/15/02 ............................. 1,295 1,267,481
HMH Properties, Inc.
Sr. Notes
8.450% 12/01/08 ............................. 255 239,063
------------
1,506,544
------------
RESTAURANTS, HOTELS & CASINOS -- 0.1%
Circus Circus Enterprise
Sr. Sub. Notes
9.250% 12/01/05 ............................. 210 211,575
Hollywood Park Operating
Sr. Sub. Notes
9.500% 08/01/07 ............................. 50 49,375
Horseshoe Gaming Holdings
144A Sr. Sub. Notes
8.625% 05/15/09 ............................. 235 227,363
------------
488,313
------------
RETAIL TRADE -- 1.7%
K Mart Corp.
Notes
7.950% 02/01/23 .......................... 430 399,363
Pass Through Certificates,
Series 1995 Class K3
8.540% 01/02/15 .......................... 1,656 1,713,658
Pathmark Stores
Sr. Sub Notes
9.625% 05/01/03 ............................. 150 152,813
Wal Mart Notes
6.875% 08/10/09 ............................. 3,600 3,582,000
------------
5,847,834
------------
STEEL -- 0.2%
AK Steel Corp.
144A Sr. Notes
7.875% 02/15/09 ............................. 300 288,000
Gulf States Steel, Inc.
First Mortgage Notes
13.500% 04/15/03 ............................ 145 26,100
See Accompanying Notes to Financial Statements.
41
<PAGE>
WARBURG PINCUS U.S. CORE FIXED INCOME FUND (CONTINUED)
PAR
(000) VALUE
---------- ------------
STEEL -- (CONTINUED)
Wheeling-Pittsburgh Corp.
144A Sr. Notes
9.250% 11/15/07 ............................. $ 215 $ 205,325
------------
519,425
------------
TELECOMMUNICATIONS -- 7.0%
Adelphia Communications Corp.
Sr. Notes, Series B
9.250% 10/01/02 ............................. 310 313,100
8.375% 02/01/08 ............................. 150 140,250
BellSouth Telecommunications, Inc.
Debentures
5.850% 11/15/45 ............................. 995 993,756
7.000% 12/01/45 ............................. 255 229,500
CenCall Communications Corp.
Sr. Discount Notes
10.125% 01/15/04 ............................ 435 443,700
Charter Communications Holding
LLC, Sr. Disc. Notes 144A
8.625% 04/01/09 ............................. 220 209,000
9.920% 04/01/11(DAGGER)(DAGGER) ............. 145 87,000
Echostar DBS Corp.
Sr. Notes
9.250% 02/01/06 ............................. 400 398,000
GTE Corp.
Debentures
6.840% 04/15/18 ............................. 1,150 1,078,125
6.940% 04/15/28 ............................. 1,160 1,080,250
GTE North, Inc.
Debentures, Series D
6.900% 11/01/08 ............................. 395 389,075
Intermedia Communication, Inc.
Sr. Notes, Series B
8.500% 01/15/08 ............................. 235 207,975
ITC Deltacom, Inc.
144A Sr. Notes
11.000% 06/01/07 ............................ 180 192,375
LCI International, Inc.
Senior Notes
7.250% 06/15/07 ............................. 1,350 1,296,000
Level 3 Communications, Inc.
144A Sr. Notes
9.125% 05/01/08 ............................. 410 382,325
MCI Communications Corp.
Sr. Discount Notes
6.125% 04/15/02 ............................. 1,615 1,588,756
MCI Communications Corp.
Sr. Notes
6.500% 04/15/10 ............................. 20 18,850
McLeodUSA, Inc.
144A Sr. Sub. Notes
8.125% 02/15/09 ............................. 280 258,300
Metromedia Fiber Network, Inc.
Sr. Notes, Series B
10.000% 11/15/08 ............................ 190 188,100
PAR
(000) VALUE
---------- ------------
TELECOMMUNICATIONS -- (CONTINUED)
Nextel Communications, Inc.
Sr. Discount Notes
9.750% 08/15/04 .......................... $ 2,250 $ 2,250,000
9.750% 10/31/07(DAGGER)(DAGGER) .......... 225 158,625
144A Sr. Redeemable Discount
Notes
10.650% 09/15/07(DAGGER)(DAGGER) ......... 5 3,663
144A Sr. Discount Notes
9.950% 02/15/08(DAGGER)(DAGGER) .......... 640 443,200
Nextlink Communications, Inc.
Sr. Notes
9.625% 10/01/07 .......................... 115 112,988
144A Sr. Notes
10.750% 11/15/08 ......................... 300 304,500
Paging Network, Inc.
Sr. Sub. Notes
8.875% 02/01/06 ............................. 550 302,500
10.000% 10/15/08 ............................ 720 405,000
10.125% 08/01/07 ............................ 270 151,875
Qwest Communications
International, Inc.
144A Sr. Notes
7.250% 11/01/08 ............................. 310 302,250
TCI Communications, Inc.
Notes
6.340% 02/01/02 ............................. 1,615 1,602,888
Telefonica de Argentina
144A Medium Term Notes
9.125% 05/07/08 ............................. 850 735,250
Teleport Communications
Group, Inc.
Sr. Discount Notes
9.650% 03/31/27 ............................. 1,545 1,755,506
US West Cap Funding
144A Notes
6.875% 08/15/01 ............................. 3,850 3,840,375
Worldcom Inc.
Sr. Notes
7.750% 01/01/07 ............................. 2,665 2,751,613
------------
24,614,670
------------
TRANSPORTATION -- 3.4%
Continental Airlines, Inc.
Sr. Notes
9.500% 12/15/01 ............................. 1,835 1,912,988
Grupo Transportacion Ferroviaria
Mexicana, S.A. de CV
144A Gtd. Sr. Discount Notes
11.750% 06/15/09(DAGGER)(DAGGER) ............ 2,495 1,303,638
Norfolk Southern Corp.
Notes
7.050% 05/01/04 ............................. 2,300 2,302,875
7.400% 09/15/06 ............................. 550 554,813
7.350% 05/15/07 ............................. 15 15,094
7.700% 05/15/17 ............................. 1,000 1,012,500
See Accompanying Notes to Financial Statements.
42
<PAGE>
WARBURG PINCUS U.S. CORE FIXED INCOME FUND (CONTINUED)
PAR
(000) VALUE
---------- ------------
TRANSPORTATION -- (CONTINUED)
Northwest Airlines, Inc.
Gtd. Notes
7.625% 03/15/05 ............................. $ 3,085 $ 2,811,206
7.875% 03/15/08 ............................. 340 300,050
US Airways, Inc.,
Gtd. Sr. Notes
9.625% 02/01/01 ............................. 1,745 1,762,171
------------
11,975,335
------------
UTILITIES -- 2.4%
Beaver Valley Funding Corp.
Secured Lease Obligation Bonds
9.000% 06/01/17 ............................. 2,400 2,541,000
Connecticut Light and Power Co.
First Mortgage Bonds,
Series C
7.750% 06/01/02 .......................... 770 778,663
First Mortgage Bonds,
Series D
7.875% 10/01/24 .......................... 730 740,950
Niagara Mohawk Power Corp.
First Mortgage Bonds
8.750% 04/01/22 ............................. 1,130 1,154,013
North Atlantic Energy Corp.
Secured First Mortgage Notes,
Series A
9.050% 06/01/02 ............................. 1,690 1,692,113
Texas Utilities Electric Capital Trust
Preferred V
8.175% 01/30/37 ............................. 1,540 1,470,700
------------
8,377,439
------------
WASTE MANAGEMENT -- 0.1%
Allied Waste North America
Series B
7.625% 01/01/06 ............................. 105 96,338
7.875% 01/01/09 ............................. 255 232,050
USA Waste Services, Inc.
Sr. Notes
7.125% 10/01/07 ............................. 25 22,781
------------
351,169
------------
TOTAL CORPORATE BONDS
(Cost $146,502,256) ......................... $140,711,213
------------
MUNICIPAL BONDS -- 0.2%
Illinois State GO
4.750% 06/01/23 ............................. $ 850 $ 724,625
Tampa, FL Health Systems
Revenue Bond
4.750% 11/15/28 ............................. 45 37,913
------------
TOTAL MUNICIPAL BONDS
(Cost $848,106) ............................. $ 762,538
------------
PAR
(000) VALUE
---------- ------------
FOREIGN GOVERNMENT BONDS -- 3.2%
Empresa Nacional de Electricidad
8.125%(DAGGER)(DAGGER)(DAGGER) .............. $ 800 $ 654,000
Republic of Colombia
Yankee Notes
12.471% 08/13/05(DAGGER) .................... 1,210 1,058,750
Republic of Ecuador
Past Due Interest Notes
3.750% 02/26/00(DAGGER) ..................... 437 102,335
Republic of Philippines
Global Bonds
9.875% 01/15/19 ............................. 1,025 969,906
Republic of Poland
Past Due Interest Bonds
5.000% 10/27/14(DAGGER)(DAGGER) ............. 1,070 934,913
5.000% 10/27/14(DAGGER)(DAGGER) ............. 3,800 3,320,250
United Mexican States
Global Bonds
11.500% 05/15/26 ......................... 20 21,725
Par Bonds, Series W-A
6.250% 12/31/19 .......................... 4,150 2,977,625
Par Bonds, Series W-B
6.250% 12/31/19 .......................... 1,350 968,625
------------
TOTAL FOREIGN
GOVERNMENT BONDS
(Cost $11,693,811) .......................... $ 11,008,129
------------
AGENCY OBLIGATIONS -- 54.5%
FEDERAL HOME LOAN MORTGAGE CORPORATION -- 3.0%
Various Pools:
7.000% 12/01/09 ............................. $ 151 $ 149,586
Series MACR 1860 Principle Only
8.5865% 02/15/24 ............................ 2,444 1,395,584
Discount Notes:
5.060% 11/30/99 ............................. 8,930 8,815,780
------------
TOTAL FEDERAL HOME
LOAN MORTGAGE
CORPORATION ................................. $ 10,360,950
------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION -- 46.2%
Various Pools:
10.000% 02/01/05 ............................. 159 168,728
10.000% 01/01/10 ............................. 721 777,962
6.500% 06/01/29 .............................. 6,081 5,757,706
6.500% 06/01/29 .............................. 2,744 2,597,753
6.500% 07/01/29 .............................. 7,023 6,649,873
6.500% 07/01/29 .............................. 3,711 3,513,639
6.500% 07/01/29 .............................. 5,895 5,585,632
6.500% 08/01/29 .............................. 1,887 1,786,159
6.500% 08/01/29 .............................. 11,373 10,768,515
6.500% 08/01/29 .............................. 30 28,400
6.000% 12/01/28 .............................. 145 133,427
6.000% 07/01/29 .............................. 16,188 14,888,255
6.000% 07/01/29 .............................. 18,520 17,032,787
6.000% 07/01/29 .............................. 601 552,479
See Accompanying Notes to Financial Statements.
43
<PAGE>
WARBURG PINCUS U.S. CORE FIXED INCOME FUND (CONTINUED)
PAR
(000) VALUE
---------- ------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION -- (CONTINUED)
Various Pools: (continued)
6.000% 01/01/29 ............................. $ 3,867 $ 3,556,399
6.000% 01/01/29 ............................. 5,477 5,037,353
Global Notes
6.864% 06/01/17 ............................. 12,250 3,699,853
REMIC - PAC 1991-165 Class M
8.250% 12/25/21 ............................. 10 10,101
Series 1996-5 Class PX PO
7.959% 11/25/23 ............................. 224 130,602
Series 1997-16 Class M PO
9.160% 02/25/23 ............................. 170 97,298
15 Year TBA:
6.000% 01/15/11 ............................. 7,550 7,184,297
6.500% 05/01/13 ............................. 4,080 3,962,700
30 Year TBA:
8.000% 03/15/25 ............................. 32,350 32,774,594
6.000% 04/15/25 ............................. 5,300 4,871,031
6.500% 09/01/27 ............................. 3,100 2,935,313
7.000% 09/01/27 ............................. 19,460 18,900,525
Discount Notes:
4.930% 09/10/99 ............................. 8,975 8,963,760
------------
TOTAL FEDERAL NATIONAL
MORTGAGE ASSOCIATION ........................ $162,365,141
------------
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION -- 5.0%
Various Pools:
6.500% 09/15/03 ............................. 5 5,035
8.250% 08/15/04 ............................. 1 277
9.000% 11/15/04 ............................. 1 623
9.000% 12/15/04 ............................. 1 677
8.250% 04/15/06 ............................. 1 936
13.500% 07/15/14 ............................ 1 900
9.000% 12/15/16 ............................. 24 25,570
8.000% 04/15/17 ............................. 74 75,035
9.000% 08/15/21 ............................. 340 357,023
30 Year TBA:
7.500% 08/01/28 ............................. 17,350 17,192,766
------------
TOTAL GOVERNMENT
NATIONAL MORTGAGE
ASSOCIATION ................................. $ 17,658,842
------------
MISCELLANEOUS -- 0.3%
Government Trust Certificates
Collateral Trust
Series 1C
9.250% 11/15/01 ............................. 305 309,516
National Archives Facility Trust
COP
8.500% 09/01/19 ............................. 670 750,001
Tennessee Valley Authority
Debentures, Series B
6.235% 07/15/45 ............................. 60 60,450
------------
1,119,967
------------
TOTAL AGENCY OBLIGATIONS
(Cost $191,900,098) ......................... $191,504,900
------------
PAR
(000) VALUE
---------- ------------
ASSET BACKED SECURITIES -- 3.1%
Green Tree Recreational
Equipment and Consumer Trust
Series 1997-C, Class A1
6.490% 02/15/18 ............................. $ 443 $ 428,510
Green Tree Securitized Net Interest
Margin Trust, REMIC,
Series 1994-A, Class A
6.900% 02/15/04 ............................. 504 501,059
Merrill Lynch Mortgage Investors,
Inc., Manufactured Housing
Retail Installment Sales
Contracts, Series 1991-C,
Class A
9.000% 07/15/11 ............................. 20 20,028
Morgan Stanley Inc.
Capital I, Series 1998-Xl1,
Class A3
6.480% 06/03/30 ............................. 5,100 4,814,273
National Westminster Bank
Debentures Guaranteed Cap.
Notes
9.375% 11/15/03 ............................. 680 739,500
PECO Energy Transition Trust
6.050% 03/01/09 ............................. 1,345 1,268,960
6.130% 03/01/09 ............................. 2,265 2,102,792
Prudential Securities Secured
Financing Series 1999-C2,
Class A2
7.193% 04/15/09 ............................. 850 834,815
Vanderbilt Mortgage Finance,
Manufactured Housing Retail
Installment Sales Contracts,
Series 1995-B, Class A3
6.675% 05/07/06 ............................. 202 201,004
------------
TOTAL ASSET BACKED
SECURITIES
(Cost $11,513,375) .......................... $ 10,910,941
------------
COLLATERALIZED MORTGAGED BACKED
SECURITIES -- 4.7%
Nomura Asset Securitization Corp.,
Series 1998-D6, Class A1B
6.590% 03/15/28 ............................. $ 4,350 $ 4,126,867
Asset Securitization Corp.,
Series 1996-MD6, Class A6
7.587% 09/13/99 ............................. 760 703,831
Carousel Center Finance Inc.,
Series 1, Class C, Rule 144A
7.527% 11/15/07 ............................. 313 310,992
Cityscape Home Equity Loan Trust,
Home Equity Loan Certificates,
Series 1996-2, Class A2
7.200% 04/25/11 ............................. 119 120,412
See Accompanying Notes to Financial Statements.
44
<PAGE>
WARBURG PINCUS U.S. CORE FIXED INCOME FUND (CONTINUED)
PAR
(000) VALUE
---------- ------------
COLLATERALIZED MORTGAGED BACKED
SECURITIES -- (CONTINUED)
Collateralized Mortgage Obligation
Trust, REMIC Series 54,
Class C
9.250% 11/01/13 ............................. $ 1 $ 908
Commercial Mortgage Asset Trust,
Series 1999-C1, Class A3
6.640% 09/17/10 ............................. 4,315 4,056,898
Contimortgage Home Equity Loan
Trust, Series 1996-4, Class A8
7.220% 01/15/28 ............................. 880 865,153
G3 Mortgage Reinsurance Corp.,
Class A
6.163% 09/27/99 ............................. 950 864,500
GMAC Commercial Mortgage
Securities, Inc., Series 1997-C1
Class A2
6.853% 09/15/06 ............................. 540 536,331
Heller Financial Commercial
Mortgage Asset Corp.
Series 1999-PH1, Class A2
6.847% 05/15/31 ............................. 1,550 1,499,710
Option One Mortgage Loan Trust,
Series 1999-2, Class A
9.660% 06/25/29 ............................. 1,979 1,961,579
Salomon Brothers Mortgage
Securities VII, Series 1997-NC4,
Class A
5.635% 09/27/99 ............................. 25 25,083
UCFC Home Equity Loan Trust,
Series 1996-B1, Class A7
8.200% 09/15/27 ............................. 760 760,817
UCFC Home Equity Loan Trust,
Series 1998-A1, Class A7
6.870% 07/15/29 ............................. 690 665,488
------------
TOTAL COLLATERALIZED
MORTGAGED BACKED
SECURITIES
(Cost $17,438,999) .......................... $ 16,498,569
------------
NUMBER
OF SHARES
---------
COMMON STOCK -- 0.0%
Packaging/Containers -- 0.0%
Crown Packaging Enterprises,
Ltd. ........................................ 45,544 $ 455
------------
TOTAL COMMON STOCK
(Cost $0) ................................... $ 455
------------
NUMBER
OF SHARES VALUE
---------- ------------
PREFERRED STOCKS -- 2.7%
BANKING -- 2.5%
California Federal Capital Corp.,
Series A 9.125% ............................. 97,170 $ 2,417,104
Centaur Funding Corp. 9.08% ................... 1,360 1,433,950
Citigroup, Inc. 6.213% ........................ 37,800 1,856,925
Lehman Brothers Holdings
5.94% ....................................... 18,320 806,080
Lehman Brothers Holdings
5.67% ....................................... 24,860 1,056,550
NationsBank Captial Corp. 8.35% ............... 48,000 1,200,000
------------
8,770,609
------------
REAL ESTATE -- 0.2%
American Real Estate Corp.
8.50% Cumulative, Series A .................. 30,800 783,475
------------
TOTAL PREFERRED STOCKS
(Cost $10,056,876) $ 9,554,084
------------
PAR
(000)
--------
U.S. TREASURY OBLIGATIONS -- 3.5%
U.S. TREASURY BILLS -- 0.2%
4.370% 09/16/99 ............................. $ 470 $ 467,741
4.520% 09/16/99 ............................. 100 99,614
------------
567,355
------------
U.S. TREASURY BONDS -- 1.3%
8.000% 11/15/21 ............................. 3,770 4,439,128
------------
U.S. TREASURY INFLATION PROTECTED NOTES -- 1.6%
3.875% 04/15/29 ............................. 5,750 5,660,596
------------
U.S. TREASURY NOTES -- 0.1%
6.625% 06/30/01 ............................. 115 116,671
7.500% 02/15/05 ............................. 5 5,320
6.250% 02/15/07 ............................. 270 270,945
------------
392,936
------------
U.S. TREASURY STRIP BONDS -- 0.3%
6.589% 11/15/16 ............................. 3,430 1,124,240
------------
TOTAL U.S. TREASURY
OBLIGATIONS
(Cost $12,511,065) .......................... $ 12,184,255
------------
See Accompanying Notes to Financial Statements.
45
<PAGE>
WARBURG PINCUS U.S. CORE FIXED INCOME FUND (CONCLUDED)
NUMBER
OF SHARES VALUE
---------- ------------
RIGHTS/WARRANTS -- 0.0%
Capital Pacific Holdings Group,
Inc. strike $3.4 expires
May 2002 .................................... 2,528 $ 1,264
Checkers Drive-In Restaurants
strike $1.375 expires
Dec. 2000 ................................... 2,642 248
Mexican Value Recovery Rights
strike $1.188 expires
June 2003 ................................... 1 0
Uniroyal Technology Corp.
strike $4.375 expires
06/01/03 .................................... 10,800 91,800
------------
TOTAL RIGHTS/WARRANTS
(Cost $14,178) .............................. $ 93,312
------------
PAR
(000)
---------
SHORT TERM INVESTMENT -- 12.3%
BBH Grand Cayman U.S. Dollar
Time Deposit
4.500% 09/01/99 ............................. $43,044 $ 43,044,000
------------
TOTAL SHORT TERM
INVESTMENT
(Cost $43,044,000) .......................... $ 43,044,000
------------
PAR
(000) VALUE
---------- ------------
SECURITIES SOLD SHORT -- (1.1%)
Federal National Mortgage
Association 30 Year TBA
6.500% 09/01/29 ............................. $ (3,900) $ (3,692,813)
(Cost ($3,757,406)) ------------
TOTAL INVESTMENTS -- 123.2%
(Cost $441,765,791*) ........................ $432,579,583
LIABILITIES IN EXCESS OF
OTHER ASSETS-- (23.2%) ...................... (81,631,972)
------------
TOTAL NET ASSETS -- 100.0% .................... $350,947,611
============
* Cost for Federal income tax purposes at August 31, 1999 is $441,854,938. The
gross appreciation (depreciation) on a tax basis is as follows:
Gross Appreciation ...................................... $ 2,095,221
Gross Depreciation ...................................... (11,370,576)
------------
Net Depreciation ........................................ $ (9,275,355)
============
(DAGGER) Variable rate obligations -- The interest shown is the rate as of
August 31, 1999.
(DAGGER)(DAGGER) Step Bond-- The interest rate as of August 31, 1999 is 0% and
will reset to interest rate shown at a future date.
(DAGGER)(DAGGER)(DAGGER) Securities have no stated maturity date.
INVESTMENT ABBREVIATIONS
FRN ..........................................................Floating Rate Note
MACR .....................Modified and Combinable Real Estate Investment Conduit
PAC ..................................................Planned Amortization Class
PO ...............................................................Principle Only
REMIC ....................................RealEstate Mortgage Investment Conduit
TBA .............................................................To Be Announced
See Accompanying Notes to Financial Statements.
46
<PAGE>
WARBURG PINCUS STRATEGIC GLOBAL FIXED INCOME FUND
PORTFOLIO MANAGERS' LETTER
September 16, 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 year ended August 31, 1999.
At August 31, 1999, the net asset value ("NAV") of the Fund's institutional
shares was $14.97, compared to an NAV of $15.10 on August 31, 1998. As a result,
the institutional shares' total return was 2.8% (assuming the reinvestment of
dividends and distributions totaling $0.57 per share). By comparison, the
unhedged J.P. Morgan Global Government Bond Index ("GBI") returned 3.0% during
the same period.
At August 31, 1999, the NAV of the Fund's common shares was $14.91, compared to
an NAV of $16.10 at their inception of investment operations on October 30,
1998. Including the effect of linkage to the institutional shares, the common
shares' total return between August 31, 1998 and August 31, 1999 was 2.3%
(assuming the reinvestment of dividends and distributions totaling $0.56 per
share). By comparison, the GBI returned 3.0% during the same period.
The Fund's performance during the fiscal year was essentially a story of
offsetting returns in the first and second halves of the year.
In the first half, the Fund outperformed GBI as a result of our positions in
"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 -- and our positions in Japan.
Prices of spread product had plummeted in the third quarter of 1998, as spreads
dramatically widened in response to anxiety about Russia and severe problems at
Long-Term Capital Management, a major hedge fund with significant debt exposure.
These same prices strongly rebounded in the final months of 1998 and into early
1999, however, helping the Fund to outperform the GBI during this time period.
This resurgence was particularly true in U.S. and emerging market securities, in
which spreads sharply contracted.
Our longstanding underweighting in Japan paid off especially well in December,
when Japanese bond yields nearly tripled. We also chose to remain neutral in our
exposure to the yen, which prevented the Fund from losing ground relative to GBI
when the yen strengthened.
Unfavorable conditions in the fiscal year's second half served to offset the
gains we had accumulated in the first half, including:
(BULLET) Widening spreads in much of 1999's spring and summer in anticipation of
higher U.S. interest rates, which hurt our spread product holdings;
(BULLET) Our underweighted positions in Japan which negated a number of
successful steps we took with regard to regional allocations and
duration; and one of the strongest developed-nation bond markets of the
period in local-currency terms;
(BULLET) OUR OVERWEIGHTING OF THE EURO VERSUS THE U.S. DOLLAR AT A TIME WHEN THE
DOLLAR STRENGTHENED VERSUS THE EURO; AS WELL AS OUR MODEST
UNDERWEIGHTING OF THE YEN, WHICH EXPERIENCED A VIGOROUS RALLY ALONG
WITH JAPANESE BONDS.
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 Global Fixed Income Management Team
Gregg M. Diliberto, Managing Director
Dilip K. Rasgotra, Managing Director
Mark K. Silverstein, Managing 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.
47
<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 JPMORGAN 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)1
06/28/94 $10,000 $10,000
07/31/94 $10,027 $10,115
08/31/94 $10,001 $10,089
11/30/94 $10,044 $10,161
02/28/95 $10,272 $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
5/31/96 $11,832 $11,907
8/31/96 $12,140 $12,283
11/30/96 $12,816 $12,776
2/28/97 $12,531 $12,284
5/31/97 $12,672 $12,408
8/31/97 $12,684 $12,487
11/30/97 $13,006 $12,878
2/28/98 $13,171 $13,089
5/31/98 $13,232 $13,247
8/31/98 $13,215 $13,689
11/30/98 $14,090 $14,560
2/28/99 $13,803 $14,220
5/31/99 $13,645 $14,001
8/31/99 $13,582 $14,105
INSTITUTIONAL SHARES
--------------------
AVERAGE ANNUAL
TOTAL RETURNS
FOR THE PERIODS ENDED AUGUST 31, 1999
One Year 2.78%
Three Years 2.81%
Five Years 6.31%
From Inception
(6/27/94) 6.08%
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.
48
<PAGE>
WARBURG PINCUS STRATEGIC GLOBAL FIXED INCOME FUND
SCHEDULE OF INVESTMENTS
AUGUST 31, 1999
PAR
(000) VALUE
--------- ------------
INTERNATIONAL BONDS -- 51.6%
ARGENTINA -- 0.1%
Argentina Bocon,
Series Pro1
2.880% 04/01/07(DAGGER) ..................... $ 50 $ 33,546
------------
ARUBA -- 0.4%
Sanwa Bank Ltd.
Global Sub. Notes
8.350% 07/15/09 ............................. 100 100,125
------------
CANADA -- 3.8%
Government of Canada
Debenture
7.000% 12/01/06 .......................CND 250 179,605
6.000% 06/01/08 .......................... 1,250 851,199
------------
1,030,804
------------
CHILE -- 0.2%
Empresa Nacional de Electricidad
8.125%(DAGGER)(DAGGER)(DAGGER) .............. $ 55 44,962
------------
COLOMBIA -- 0.2%
Republic of Colombia,
Yankee Notes
12.471% 08/13/05(DAGGER) .................... 55 48,125
------------
DENMARK -- 2.6%
Kingdom of Denmark Government
Bonds
6.000% 11/15/09 ..........................DKK 4,800 713,978
------------
ECUADOR -- 0.0%
Republic of Ecuador
Past Due Interest Notes
3.750% 02/29/00(DAGGER) ..................... $ 12 2,729
3.750% 02/27/15(DAGGER) ..................... 17 4,093
------------
6,822
------------
FINLAND -- 0.2%
Okobank Perpetual
Medium Term FRN
5.598%(DAGGER)/(DAGGER)(DAGGER)(DAGGER) ..... 60 57,300
------------
FRANCE -- 8.8%
L'Auxiliare du Credit Foncier de
France Gtd. Notes
5.000% 09/25/02(DAGGER) ..................... 125 121,250
Republic of France Treasury Bonds
7.500% 04/25/05 ..........................EUR 549 667,434
5.250% 04/25/08 ............................. 1,500 1,618,397
------------
2,407,081
------------
PAR
(000) VALUE
---------- ------------
GERMANY -- 11.7%
Deutsche Bank Financial
144A Pfd.
6.000% 07/04/07 ..........................EUR 2,776 $ 3,143,704
Federal Republic of Germany
Eurobonds
7.872% 12/29/49 ............................. 55 51,668
------------
3,195,372
------------
JAPAN -- 0.4%
Fuji Finance (Cayman), Ltd.
Medium Term Notes
7.300%(DAGGER)/(DAGGER)(DAGGER)(DAGGER) .. $ 50 43,500
Perpetual Sub. FRN
6.573%(DAGGER)/(DAGGER)(DAGGER)(DAGGER) .. 80 69,200
------------
112,700
------------
MAURITIUS -- 0.1%
P.T. Indah Kiat Pulp & Paper Corp.
Sr. Secured Notes
10.000% 07/01/07 ............................ 45 27,900
------------
MEXICO -- 0.6%
Grupo Transportacion Ferroviaria
Mexicana, S.A. de CV
144A Gtd. Sr. Discount Notes
11.750% 06/15/09# ........................... 70 36,575
United Mexican States Global
Bonds
11.500% 05/15/26 ............................ 120 130,350
------------
166,925
------------
NETHERLANDS -- 4.2%
Kingdom of Netherlands
Government Bonds
5.750% 01/15/04 ..........................EUR 1,021 1,137,183
------------
PHILIPPINES -- 0.6%
Bangko Sentral Pilipinas
Yankee Bonds
8.600% 06/15/27 ............................. $ 55 42,487
Republic of Philippines
Global Bonds
9.875% 01/15/19 ............................. 125 118,281
------------
160,768
------------
POLAND -- 1.0%
Republic of Poland,
Past Due Interest Bonds
5.000% 10/27/14(DAGGER)(DAGGER) ............. 20 17,475
5.000% 10/27/14(DAGGER)(DAGGER) ............. 305 266,494
------------
283,969
------------
See Accompanying Notes to Financial Statements.
49
<PAGE>
WARBURG PINCUS STRATEGIC GLOBAL FIXED INCOME FUND (CONTINUED)
PAR
(000) VALUE
--------- ------------
SOUTH KOREA -- 0.4%
Korea Electric Power,
Yankee Debentures
7.000% 02/01/27 ............................. $ 55 $ 50,050
Korea Electric Power,
Global Unsubordinated Notes
6.375% 12/01/03 ............................. 20 18,700
Korea Electric Power,
Yankee Notes
7.000% 10/01/02 ............................. 45 43,706
-----------
112,456
-----------
SUPRANATIONAL -- 8.3%
European Investment Bank
Eurobonds
5.000% 04/15/08 ..........................EUR 516 539,297
International Bank for
Reconstruction & Development
Japanese Yen Global Bonds
5.250% 03/20/02 ..........................JPY 170,000 1,739,281
-----------
2,278,578
-----------
SWEDEN -- 0.8%
Skandinaviska Enskilda Banken
AB Perpetual Sub. FRN
7.500%(DAGGER)/(DAGGER)(DAGGER)(DAGGER) ..... 250 230,000
-----------
UNITED KINGDOM -- 7.2%
U.K. Treasury Gilt Bonds
7.500% 12/07/06 ..........................GBP 1,100 1,964,960
-----------
TOTAL INTERNATIONAL BONDS
(Cost $14,816,671) .......................... $14,113,554
-----------
U.S. BONDS -- 44.9%
CORPORATE BONDS -- 17.4%
AEROSPACE/DEFENSE EQUIPMENT -- 0.1%
Sequa Corp. Senior Notes
9.000% 08/01/09 ............................. 20 19,700
-----------
AUTOMOTIVE -- 0.2%
Delco Remy International, Inc.
Gtd. Sr. Sub Notes
10.625% 08/01/06 ............................ 10 10,462
Hayes Lemmerz International, Inc.
Sr. Sub Notes
9.125% 07/15/07 .......................... 5 4,962
Sr. Sub Notes
8.250% 12/15/08 .......................... 15 14,025
Lear Corp. 144A
Sr. Notes
7.960% 05/15/05 ............................. 15 14,775
Oxford Automotive, Inc.
Gtd. Sr. Sub. Notes
10.125% 06/15/07 ............................ 10 10,000
-----------
54,224
-----------
PAR
(000) VALUE
--------- ------------
BANKING -- 1.1%
Bay View Capital Corp.
Sub. Notes
9.125% 08/15/07 ............................. $ 65 $ 60,125
Chase Manhattan Bank Corp.
Sub. Notes
6.500% 08/01/05 ............................. 10 9,737
6.750% 09/15/06 ............................. 20 19,275
7.250% 06/01/07 ............................. 20 19,975
Citicorp Sub. Notes, Series F
6.375% 11/15/08 ............................. 65 60,694
Credit Lyonnais
Perpetual Sub. Variable Rate
Notes, Rule 144A
6.438%(DAGGER)/(DAGGER)(DAGGER)(DAGGER) ..... 90 82,575
First Republic Bank
Sub. Notes
7.750% 09/15/12 ............................. 60 55,050
------------
307,431
------------
BROADCASTING -- 0.5%
Chancellor Media Corp.
144A Sr. Sub. Notes
8.000% 11/01/08 ............................. 10 9,600
Fox/Liberty Networks L.L.C.,
Registered Sr. Notes
8.875% 08/15/07 ............................. 90 91,350
Granite Broadcasting Corp.
144A Sr. Sub. Notes
8.875% 05/15/08 ............................. 10 9,600
HMV Media Group plc,
Senior Subordinated Yankee
Notes, Series B
10.250% 05/15/08 ............................ 10 9,800
Turner Broadcast Sr. Notes
7.400% 02/01/04 ............................. 10 10,125
------------
130,475
------------
BUILDING MATERIALS -- 0.1%
Jackson Products, Inc.
Notes
9.500% 04/15/05 ............................. 20 18,400
------------
CABLE -- 0.9%
Belo (A.H.) Corp.
Sr. Notes
6.875% 06/01/02 ............................. 35 34,737
7.125% 06/01/07 ............................. 50 48,437
Classic Cable
Sr. Sub. Notes
9.875% 08/01/08 ............................. 10 10,100
CSC Holdings Inc.
Sr. Notes
7.875% 12/15/07 ............................. 75 72,750
7.250% 07/15/08 ............................. 30 27,825
See Accompanying Notes to Financial Statements.
50
<PAGE>
WARBURG PINCUS STRATEGIC GLOBAL FIXED INCOME FUND (CONTINUED)
PAR
(000) VALUE
--------- ------------
CABLE -- (CONTINUED)
Diamond Cable Communications
plc, Yankee Sr. Discount Notes
10.750% 02/15/07(DAGGER)(DAGGER) ............ $ 40 $ 30,600
James Cable Partners L.P.
Sr. Notes, Series B
10.750% 08/15/04 ............................ 20 20,250
------------
244,699
------------
CHEMICALS -- 0.2%
Huntsman ICI
144A Sr. Sub. Notes
10.125% 07/01/09 ............................ 35 34,912
Lyondell Chemical, Inc.
Senior Secured Notes,
Series A
9.625% 05/01/07 .......................... 10 10,150
Senior Secured Notes,
Series B
9.875% 05/01/07 .......................... 5 5,038
------------
50,100
------------
Computers, Software & Services -- 0.2%
PSINET, Inc.
144A Sr. Notes
11.500% 11/01/08 ............................ 10 10,150
Seagate Technology, Inc.
Sr. Debentures
7.450% 03/01/37 ............................. 60 54,075
------------
64,225
------------
CONSULTING SERVICES -- 0.6%
Comdisco Inc.
MTN Series H
7.230% 08/16/01 .......................... 55 55,000
Senior Notes
7.250% 09/01/02 .......................... 100 99,375
------------
154,375
------------
ENERGY -- 0.7%
Bellwether Exploration Co.
Gtd. Sr. Sub. Notes
10.875% 04/01/07 ............................ 25 22,750
Crown Central Petroleum
Sr. Notes
10.875% 02/01/05 ............................ 10 8,800
Dresser Industries, Inc.
Debentures
7.600% 08/15/45 ............................. 60 59,175
Valero Energy Corp.
144A Putable Asset Trusts
6.750% 12/15/02 ............................. 100 97,250
------------
187,975
------------
PAR
(000) VALUE
--------- ------------
ENTERTAINMENT -- 0.8%
Regal Cinemas, Inc.
Sr. Sub. Notes
9.500% 06/01/08 ............................. $ 20 $ 14,200
Time Warner, Inc.
Debentures
8.050% 01/15/16 ............................. 65 66,381
6.850% 01/15/26 ............................. 145 144,819
------------
225,400
------------
FINANCIAL SERVICES -- 1.9%
American General Institutional
Capital Trust Co.
144A Gtd. Notes, Series B
8.125% 03/15/46 ............................. 80 80,900
EOP Operating LP
Notes
6.500% 01/15/04 ............................. 30 28,800
Ford Motor Credit Corp.
6.700% 07/16/04 ............................. 10 9,862
5.800% 01/12/09 ............................. 85 76,500
Lehman Brothers Holdings, Inc.
Global Notes
6.625% 04/01/04 .......................... 40 38,800
Notes
7.000% 05/15/03 .......................... 20 19,850
MBNA Master Credit Card Trust
Series 1997-I, Class A
6.550% 01/15/07 .......................... 70 69,158
Series 1999-G, Class A
6.350% 12/15/06 .......................... 60 58,912
Merrill Lynch & Co. Notes
6.875% 11/15/18 ............................. 35 32,025
Prudential Insurance Co. of
America
144A Sr. Notes
6.375% 07/23/06 ............................. 100 94,375
------------
509,182
------------
FOOD & BEVERAGE -- 0.3%
AmeriServ Food Distribution, Inc.
Gtd. Sr. Notes
8.875% 10/15/06 ............................. 10 8,600
Archibald Candy Corp.
144A Gtd. Sr. Secured Notes
10.250% 07/01/04 ............................ 20 19,900
Kroger Co.
144A Notes
7.250% 06/01/09 ............................. 45 43,875
Pantry, Inc.
Sr. Sub. Notes
10.250% 10/15/07 ............................ 10 9,950
Premier Intl. Foods plc
Sr. Notes
12.000% 09/01/09 ............................ 5 5,050
------------
87,375
------------
See Accompanying Notes to Financial Statements.
51
<PAGE>
WARBURG PINCUS STRATEGIC GLOBAL FIXED INCOME FUND (CONTINUED)
PAR
(000) VALUE
--------- ------------
HEALTH CARE -- 0.1%
Columbia/HCA Healthcare Corp.,
Debentures
8.360% 04/15/24 ............................. $ 30 $ 26,850
------------
INDUSTRIAL GOODS & MATERIALS -- 0.1%
Motors & Gears Inc.,
Sr. Notes, Series D
10.750% 11/15/06 ............................ 30 29,625
------------
MANUFACTURING -- 0.5%
Crown Cork & Seal
Sr. Notes
7.125% 09/01/02 ............................. 90 89,438
Tyco Intl. Group SA
Sr. Notes
6.125% 01/15/09 ............................. 40 36,450
------------
125,888
------------
REAL ESTATE -- 0.0%
HMH Properties, Inc.
Sr. Notes
8.450% 12/01/08 ............................. 15 14,062
------------
RESTAURANTS, HOTELS & CASINOS -- 0.2%
Circus Circus Enterprise
Sr. Sub. Notes
9.250% 12/01/05 ............................. 20 20,150
Hollywood Park Operating
Sr. Sub. Notes
9.500% 08/01/07 ............................. 10 9,875
Horseshoe Gaming Holdings
144A Sr. Sub. Notes
8.625% 05/15/09 ............................. 20 19,350
------------
49,375
------------
RETAIL TRADE -- 1.5%
K Mart Corp.
Medium Term Notes
Series C
7.820% 01/02/02 .......................... 100 101,125
7.840% 01/02/02 .......................... 100 101,125
Medium Term Notes
Series D
7.770% 07/02/02 .......................... 100 101,125
Pathmark Stores
Sr. Sub Notes
9.625% 05/01/03 ............................. 10 10,188
Wal Mart Stores
Sr. Global Bonds
6.875% 08/10/09 ............................. 110 109,450
------------
423,013
------------
STEEL -- 0.1%
AK Steel Corp.
144A Sr. Notes
7.875% 02/15/09 ............................. 20 19,200
PAR
(000) VALUE
--------- ------------
STEEL -- (CONTINUED)
Wheeling-Pittsburgh Corp.
144A Sr. Notes
9.250% 11/15/07 ............................. $ 15 $ 14,325
------------
33,525
------------
TELECOMMUNICATIONS -- 3.8%
Adelphia Communications Corp.
Sr. Notes, Series B
9.250% 10/01/02 ............................. 15 15,150
8.375% 02/01/08 ............................. 10 9,350
AT&T Capital Corp. Co.
Guaranteed Notes, Series F
6.875% 01/16/01 ............................. 95 94,763
CenCall Communications Corp.
Sr. Discount Notes
10.125% 01/15/04 ............................ 15 15,300
Echostar DBS Corp.
Sr. Notes
9.250% 02/01/06 ............................. 20 19,900
GTE Corp.
Debentures
6.840% 04/15/18 ............................. 80 75,000
GTE North, Inc.
Debentures, Series D
6.900% 11/01/08 ............................. 10 9,850
Intermedia Communication, Inc.
Sr. Notes, Series B
8.500% 01/15/08 ............................. 10 8,850
ITC Deltacom, Inc.
144A Sr. Notes
11.000% 06/01/07 ............................ 10 10,688
LCI International
Senior Notes
7.250% 06/15/07 ............................. 60 57,600
Level 3 Communications, Inc.
144A Sr. Notes
9.125% 05/01/08 ............................. 30 27,975
MCI Communications Corp.
Sr. Discount Notes
6.125% 04/15/02(DAGGER) ..................... 45 44,269
McLeodUSA, Inc.
144A Sr. Sub. Notes
8.125% 02/15/09 ............................. 20 18,450
Metromedia Fiber Network, Inc.
Sr. Notes, Series B
10.000% 11/15/08 ............................ 20 19,800
Nextel Communications, Inc.
144A Sr. Discount Notes
9.950% 02/15/08(DAGGER)(DAGGER) .......... 10 6,925
144A Sr. Redeemable Discount
Notes
10.650% 09/15/07(DAGGER)(DAGGER) ......... 90 65,925
Sr. Discount Notes
9.750% 08/15/04 .......................... 120 120,000
See Accompanying Notes to Financial Statements.
52
<PAGE>
WARBURG PINCUS STRATEGIC GLOBAL FIXED INCOME FUND (CONTINUED)
PAR
(000) VALUE
--------- ------------
TELECOMMUNICATIONS -- (CONTINUED)
Nextlink Communications, Inc.
Sr. Notes
9.625% 10/01/07 .......................... $ 10 $ 9,825
144A Sr. Notes
10.750% 11/15/08 ......................... 15 15,225
Paging Network, Inc.,
Sr. Sub. Notes
8.875% 02/01/06 ............................. 20 11,000
10.125% 08/01/07 ............................ 15 8,438
10.000% 10/15/08 ............................ 70 39,375
Qwest Communications
International, Inc.
144A Sr. Notes
7.250% 11/01/08 ............................. 15 14,625
TCI Communications, Inc.
Notes
6.340% 02/01/02 ............................. 55 54,587
Teleport Communications
Group, Inc.
Sr. Discount Notes
9.650% 03/31/27 ............................. 50 56,812
US West Cap Funding
144A Notes
6.875% 08/15/01 ............................. 115 114,713
Worldcom Inc.,
Sr. Notes
7.750% 01/01/07 ............................. 85 87,763
------------
1,032,158
------------
TRANSPORTATION -- 2.0%
Continental Airlines, Inc.
Sr. Notes
9.500% 12/15/01 ............................. 120 125,100
Norfolk Southern Corp.
Notes
7.700% 05/15/17 ............................. 35 35,437
7.050% 05/01/37 ............................. 70 70,087
7.400% 09/15/06 ............................. 20 20,175
Northwest Airlines, Inc.,
Gtd. Notes
7.625% 03/15/05 ............................. 230 209,588
US Airways, Inc.,
Gtd. Sr. Notes
9.625% 02/01/01 ............................. 95 95,935
------------
556,322
------------
UTILITIES -- 1.4%
Beaver Valley Funding Corp.
Secured Lease Obligation
Bonds
9.000% 06/01/17 ............................. 150 158,813
PAR
(000) VALUE
--------- ------------
UTILITIES -- (CONTINUED)
Connecticut Light and Power Co.
First Mortgage Bonds,
Series C
7.750% 06/01/02 .......................... $ 10 $ 10,113
First Mortgage Bonds,
Series D
7.875% 10/01/24 .......................... 40 40,600
Niagara Mohawk Power Corp.
First Mortgage Bonds
8.750% 04/01/22 ............................. 30 30,638
North Atlantic Energy Corp.
Secured First Mortgage Notes,
Series A
9.050% 06/01/02 ............................. 107 107,134
Texas Utilities Electric Capital
Trust Preferred V
8.175% 02/01/37 ............................. 50 47,750
------------
395,048
------------
WASTE MANAGEMENT -- 0.1%
Allied Waste North America,
Series B
7.625% 01/01/06 ............................. 10 9,175
7.875% 01/01/09 ............................. 25 22,750
------------
31,925
------------
TOTAL CORPORATE BONDS
(Cost $4,972,213) ........................... $ 4,771,352
------------
MUNICIPAL BOND -- 0.0%
Illinois State GO
4.750% 06/01/23 ............................. 15 12,788
(Cost $14,242) ------------
AGENCY OBLIGATIONS -- 17.0%
FEDERAL HOME LOAN MORTGAGE
CORPORATION -- 1.7%
7.000% 12/01/09 ............................ 287 284,214
6.500% 07/01/29 ............................ 180 170,409
------------
454,623
------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION -- 13.7%
Various Pools:
6.000% 01/01/29 ............................. 122 112,544
6.000% 01/01/29 ............................. 362 333,277
6.000% 07/01/29 ............................. 400 367,839
6.000% 07/01/29 ............................. 348 319,626
6.500% 06/01/29 ............................. 52 48,855
6.500% 06/01/29 ............................. 113 107,216
6.500% 07/01/29 ............................. 220 208,076
6.500% 07/01/29 ............................. 240 227,228
6.500% 08/01/29 ............................. 145 136,968
6.500% 08/01/29 ............................. 35 33,130
See Accompanying Notes to Financial Statements.
53
<PAGE>
WARBURG PINCUS STRATEGIC GLOBAL FIXED INCOME FUND (CONTINUED)
PAR
(000) VALUE
--------- ------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION -- (CONTINUED)
15-Year TBA:
6.000% 08/01/14 ............................. $ 270 $ 256,922
6.500% 08/01/14 ............................. 100 97,125
30-Year TBA:
6.000% 10/15/17 ............................. 25 22,977
6.500% 06/01/29 ............................. 25 23,672
7.000% 12/31/25 ............................. 480 465,900
8.000% 06/01/28 ............................. 820 830,762
Global Notes
6.860% 06/01/17 ............................. 390 117,791
Series 1997-16 Class M PO
9.160% 02/25/23 ............................. 80 45,787
------------
3,755,695
------------
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION -- 1.6%
TBA
7.500% 08/01/28 ............................. 430 426,103
------------
TOTAL AGENCY OBLIGATIONS
(Cost $4,671,902) ........................... $ 4,636,421
------------
ASSET BACKED SECURITIES -- 1.6%
Green Tree Recreational,
Equipment and Consumer Trust
Series 1997-C, Class A1
6.490% 02/15/18 ............................. 131 126,966
Morgan Stanley Inc., Capital I,
Series 1998-Xl1, Class A3
6.480% 06/03/30 ............................. 165 155,756
National Westminster Bank
Debentures Guaranteed Cap
Notes
9.375% 11/15/03 ............................. 15 16,312
PECO Energy Transition Trust
6.050% 03/01/09 ............................. 40 37,739
6.130% 03/01/09 ............................. 75 69,629
Prudential Securities Secured
Financing Series 1999-C2,
Class A2
7.193% 04/15/09 ............................. 30 29,464
------------
TOTAL ASSET BACKED
SECURITIES .................................. $ 435,866
(Cost $458,451) ------------
COLLATERALIZED MORTGAGE
BACKED SECURITIES -- 2.0%
Commercial Mortgage Asset Trust,
Series 1999-C1, Class A3
6.640% 04/17/10 ............................. 145 136,327
Contimortgage Home Equity Loan
Trust, Series 1996-4, Class A8
7.220% 01/15/28 ............................. 10 9,831
Donaldson Lufkin Jenrette
Commercial Mortgage Corp.,
Series 1998-CG1, Class A1-B
6.410% 05/10/08 ............................. 100 93,590
PAR
(000) VALUE
--------- ------------
COLLATERALIZED MORTGAGE
BACKED SECURITIES -- (CONTINUED)
GMAC Commercial Mortgage
Securities, Inc., Series 1997-C1
Class A2
6.853% 09/15/06 ............................. $ 20 $ 19,864
Heller Financial Commercial
Mortgage Asset Corp.
Series 1999-PH1, Class A2
6.847% 05/15/31 ............................. 50 48,378
Nomura Asset Securitization Corp.,
Series 1998-D6, Class A1B
6.590% 03/17/28 ............................. 140 132,819
Option One Mortgage Loan Trust,
Series 1999-2, Class A
9.660% 06/25/29 ............................. 64 63,751
UCFC Home Equity Loan Trust,
Series 1996-B1, Class A7
8.200% 09/15/27 .......................... 25 25,027
Series 1998-A1, Class A7
6.870% 07/15/29 .......................... 25 24,112
------------
TOTAL COLLATERALIZED
MORTGAGE BACKED
SECURITIES .................................. $ 553,699
(Cost $586,201) ------------
U.S. TREASURY OBLIGATIONS -- 6.9%
U.S. Treasury Bills -- 0.1%
4.315% 09/16/99 ............................. $ 10 $ 9,982
4.369% 09/16/99 ............................. 20 19,964
------------
29,946
------------
U.S. TREASURY BONDS -- 1.7%
8.000% 11/15/21 ............................. 385 453,333
------------
U.S. TREASURY INFLATION PROTECTED NOTES -- 0.7%
3.875% 04/15/29 ............................. 190 187,046
------------
U.S. TREASURY NOTES -- 4.4%
7.250% 05/15/04 ............................. 1,055 1,107,781
6.250% 02/15/07 ............................. 95 95,332
------------
1,203,113
------------
TOTAL U.S. TREASURY
OBLIGATIONS
(Cost $1,908,149) ........................... $ 1,873,438
------------
TOTAL U.S. BONDS
(Cost $12,611,158) .......................... $ 12,283,564
------------
See Accompanying Notes to Financial Statements.
54
<PAGE>
WARBURG PINCUS STRATEGIC GLOBAL FIXED INCOME FUND (CONCLUDED)
NUMBER
OF SHARES VALUE
---------- ------------
PREFERRED STOCKS -- 1.1%
California Federal Capital Corp.,
Series A 9.125% ............................. 6,100 $ 151,738
Centaur Funding Corp. 9.08% ................... 40 42,175
Citigroup, Inc. 6.213% ........................ 1,200 58,950
Lehman Brothers Holdings, Inc.
Pfd. Series C 5.94% ......................... 600 26,400
Pfd. Series D 5.67% ......................... 800 34,000
------------
TOTAL PREFERRED STOCKS
(Cost $327,171) ............................. $ 313,263
------------
PAR
(000)
--------
SHORT-TERM INVESTMENT -- 6.9%
BBH Grand Cayman U. S. Dollar
Time Deposit
4.500% 09/01/99 ............................. $ 1,892 $ 1,892,000
(Cost $1,892,000) ------------
SECURITIES SOLD SHORT -- (0.3%)
Federal National Mortgage
Association TBA
6.500% 06/01/29 ............................. 90 $ (85,219)
(Cost ($86,709)) ------------
TOTAL INVESTMENTS -- 104.2%
(Cost $29,560,291*) ......................... $ 28,517,162
LIABILITIES IN EXCESS OF
OTHER ASSETS-- (4.2%) ....................... (1,157,444)
------------
TOTAL NET ASSETS -- 100.0% .................... $ 27,359,718
============
* Cost for Federal income tax purposes at August 31, 1999 is $29,575,906. The
gross appreciation (depreciation) on a tax basis is as follows:
Gross and Net Depreciation .............................. $ (1,058,744)
============
(DAGGER) Variable rate obligations -- The interest shown is the rate as of
August 31, 1999.
(DAGGER)(DAGGER) Step Bond-- The interest rate as of August 31, 1999 is 0% and
will reset to interest rate shown at a future date.
(DAGGER)(DAGGER)(DAGGER) Securities have no stated maturity date.
CURRENCY ABBREVIATIONS
CND ............................................................Canadian Dollars
DKK ................................................................Danish Krone
EUR ......................................................European Economic Unit
GBP .......................................................United Kingdom Pounds
JPY ................................................................Japanese Yen
INVESTMENT ABBREVIATIONS
FRB ..........................................................Floating Rate Bond
FRN ..........................................................Floating Rate Note
GO ..........................................................General Obligations
See Accompanying Notes to Financial Statements.
55
<PAGE>
WARBURG PINCUS HIGH YIELD FUND
PORTFOLIO MANAGERS' LETTER
September 17, 1999
Dear Shareholders:
We are writing to report on the results of the Warburg Pincus High Yield Fund
(the "Fund") for the fiscal year ended August 31, 1999.
At August 31, 1999, the net asset value ("NAV") of the Fund's institutional
shares was $15.32, compared to an NAV of $16.60 on August 31, 1998. As a result,
the institutional shares' total return was 0.7% (assuming the reinvestment of
dividends totaling $1.37 per share). By comparison, the Credit Suisse First
Boston Global High Yield Index (the "Index") returned 4.7% during the same
period.
At August 31, 1999, the NAV of the Fund's common shares was $15.38, compared to
an NAV of $16.62 on August 31, 1998. As a result, the common shares' total
return was 0.4% (assuming the reinvestment of dividends totaling $1.29 per
share). By comparison, the Index returned 4.7% during the same period.
The Fund performed fairly well during most of the fiscal year, however, returns
in the months of September, October and November 1998 were low. An extraordinary
confluence of events during this time period in global financial markets --
including a relatively sharp decline in the currencies, securities and economies
of many developing nations; rapidly deteriorating political and macroeconomic
conditions in Russia; and the collapse of a major hedge fund, Long-Term Capital
Management -- caused great instability in fixed income sectors generally.
The Fund's relative returns in these months were sufficiently low to cause it to
underperform the Index. We attribute this underperformance to the following
factors:
(BULLET) Our substantial overweighting in telecommunications left the portfolio
more highly exposed than the benchmark to deferred-interest instruments
such as zero-coupon bonds whose returns generally were lower than those
of traditional cash-pay instruments. These lower returns reflected
investors' preference at the time for higher-quality issues within the
overall high yield universe.
(BULLET) We underweighted utilities, which performed well during the period.
(BULLET) A majority of our holdings in the transportation sector were with
shipping companies, which were hurt by a combination of falling oil
prices and declining Asian demand for oil.
Bright spots for the Fund included our overweightings in cable/media and gaming,
both of which performed much better than the benchmark;and underweightings 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 anytime.
Sincerely yours,
Credit Suisse Asset Management High Yield Management Team
Richard J. Lindquist, Managing Director
Misia K. Dudley, Director
Marianne Rossi, Director
John M. Tobin, Director
Mary Ann Thomas, 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.
56
<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)
[GRAPHIC OMITTED]
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
Warburg Pincus
High Yield Fund CS First Boston
Institutional Shares High Yield Index 1
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
5/31/96 $13,997 $13,662
8/31/96 $13,991 $13,965
11/30/96 $14,579 $14,547
2/28/97 $15,199 $15,219
5/31/97 $15,359 $15,488
8/31/97 $16,114 $16,119
11/30/97 $16,662 $16,553
2/28/98 $17,523 $17,120
5/31/98 $17,854 $17,387
8/31/98 $16,997 $16,354
11/30/98 $16,672 $16,840
2/28/99 $16,867 $16,924
5/31/99 $17,289 $17,268
8/31/99 $17,110 $17,131
INSTITUTIONAL SHARES
--------------------
AVERAGE ANNUAL
TOTAL RETURNS
FOR THE PERIODS ENDED AUGUST 31, 1999
One Year 0.67%
Three Years 6.94%
Five Years 8.18%
From Inception
(3/1/93) 8.59%
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)
[GRAPHIC OMITTED]
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
Warburg Pincus
High Yield Fund CS First Boston
Common Shares High Yield Index 1
11/1/96 $10,000 $10,000
11/30/96 $10,105 $10,156
2/28/97 $10,528 $10,625
5/31/97 $10,632 $10,813
8/31/97 $11,149 $11,253
11/30/97 $11,508 $11,556
2/28/98 $12,098 $11,952
5/31/98 $12,317 $12,138
8/31/98 $11,737 $11,417
11/30/98 $11,507 $11,756
2/28/99 $11,637 $11,815
5/31/99 $11,919 $12,055
8/31/99 $11,782 $11,960
COMMON SHARES
--------------------
AVERAGE ANNUAL
TOTAL RETURNS
FOR THE PERIODS ENDED AUGUST 31, 1999
One Year 0.39%
From Inception
(11/1/96) 5.96%
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.
57
<PAGE>
WARBURG PINCUS HIGH YIELD FUND
SCHEDULE OF INVESTMENTS
AUGUST 31, 1999
PAR
(000) VALUE
------ ------------
CORPORATE BONDS -- 90.1%
AEROSPACE/DEFENSE -- 0.2%
K&F Industries, Inc.
Sr. Sub. Notes
9.250% 10/15/07 ............................. $ 250 $ 256,562
------------
AUTOMOTIVE -- 3.2%
Aetna Industries, Inc.
Sr. Notes
11.875% 10/01/06 ............................ 500 558,750
Breed Technologies, Inc.
144A Sr. Sub. Notes
9.250% 04/15/08(DAGGER)(DAGGER) ............. 500 40,000
Cambridge Industries, Inc.
Gtd. Sr. Sub. Notes,
Series B
10.250% 07/15/07 ............................ 400 302,000
Collins & Aikman Products Corp.
Gtd. Sr. Sub. Notes
11.500% 04/15/06 ............................ 350 353,500
Delco Remy International, Inc.
Gtd. Sr. Sub. Notes
10.625% 08/01/06 ............................ 500 523,125
Hayes Lemmerz International, Inc.
144A Sr. Sub. Notes
8.250% 12/15/08 ............................. 400 374,000
Hayes Wheels International, Inc.
Sr. Sub. Notes, Series B
9.125% 07/15/07 ............................. 350 347,375
LDM Technologies, Inc.
144A Sr. Sub. Notes,
Series B
10.750% 01/05/07 ............................ 400 393,000
Oxford Automotive, Inc.
Sr. Sub. Notes
10.125% 06/15/07 ............................ 500 495,000
Safelite Glass Corp.
Sr. Sub. Notes
9.875% 12/15/06 ............................. 350 315,000
Titan Wheel International, Inc.
Sr. Sub. Notes
8.750% 04/01/07 ............................. 250 249,375
United Rentals, Inc.
144A Sr. Sub. Notes
9.250% 01/15/09 ............................. 250 245,000
------------
4,196,125
------------
BROADCASTING -- 4.1%
Allbritton Communications
Company Sr. Sub. Notes,
Series B
9.750% 11/30/07 ............................. 250 250,625
8.875% 02/01/08 ............................. 250 240,625
American Radio Systems Corp. ..................
Gtd. Sr. Sub. Notes
9.000% 02/01/06 ............................. 250 263,750
PAR
(000) VALUE
------ ------------
BROADCASTING -- (CONTINUED)
Australis Holdings Pty. Ltd.
144A Yankee Sr. Secured
Discount Notes
15.000% 11/01/02(DAGGER)/(DAGGER)(DAGGER) ... $ 294 $ 2,940
Australis Media Ltd.
Yankee Gtd. Sr. Sub. Discount
Notes
15.750% 05/15/03(DAGGER)/(DAGGER)(DAGGER) ... 8 1
15.750% 05/15/03(DAGGER)(DAGGER) ............ 900 90
Big City Radio, Inc.,
144A Sr. Bonds
11.250% 03/15/05(DAGGER) .................... 750 535,312
Capstar Broadcasting, Inc.
Sr. Sub. Discount Notes
12.750% 02/01/09(DAGGER) .................... 500 428,750
Chancellor Media Corp.
144A Sr. Sub. Notes
8.000% 11/01/08 .......................... 300 288,000
Sr. Sub. Notes
9.375% 10/01/04 .......................... 250 252,500
Citadel Broadcasting Co.
144A Sr. Sub. Notes
9.250% 11/15/08 ............................. 250 248,750
Emmis Communications
Corporation Sr. Sub.Notes,
Series B
8.125% 03/15/09 ............................. 250 236,250
Granite Broadcasting Corp.
144A Sr. Sub Notes
8.875% 05/15/08 .......................... 250 240,000
Sr. Sub. Notes
9.375% 12/01/05 .......................... 450 447,750
HMV Media Group plc,
Senior Subordinated Yankee
Notes, Series B
10.250% 05/15/08 ............................ 350 343,000
Jacor Communications Co.
Sr. Sub. Notes
9.750% 12/15/06 ............................. 250 266,250
Sinclair Broadcast Group
Sr. Sub. Notes
10.000% 09/30/05 ............................ 400 410,000
Spanish Broadcasting System, Inc.
144A Sr. Notes
11.000% 03/15/04 ............................ 300 330,000
United International Holdings,
144A Sr. Discount Notes
10.750% 02/15/08(DAGGER) .................... 500 290,000
Young Broadcasting, Inc.
Gtd. Sr. Sub. Notes,
Series B
9.000% 01/15/06 ............................. 250 245,625
------------
5,320,218
------------
See Accompanying Notes to Financial Statements.
58
<PAGE>
WARBURG PINCUS HIGH YIELD FUND (CONTINUED)
PAR
(000) VALUE
------ ------------
BUILDING MATERIALS -- 0.7%
Building One Services, Inc.
144A Sr. Sub. Notes
10.500% 05/01/09 ............................ $ 250 $ 233,750
It Group, Inc.
144A Sr. Sub. Notes
11.250% 04/01/09 ............................ 250 240,625
Jackson Products, Inc. Notes
9.500% 04/15/05 ............................. 400 368,000
------------
842,375
------------
BUSINESS SERVICES -- 0.6%
Iron Mountain, Inc.
144A Sr. Notes
8.750% 09/30/09 ............................. 500 478,750
U.S. Office Products Co.
144A Sr. Sub. Notes
9.750% 06/15/08 ............................. 400 232,000
------------
710,750
------------
CABLE -- 10.6%
Adelphia Communications Corp.
Sr. Notes, Series B
10.500% 07/15/04 ............................ 400 420,000
Avalon Cable Holdings
Sr. Discount Notes
11.875% 12/01/08 ............................ 500 330,000
Avalon Cable of Michigan, Inc.
Sr. Sub. Notes
9.375% 12/01/08 ............................. 400 403,000
Century Communications,
Sr. Discount Notes,
Series B
10.785% 01/15/08 ............................ 500 207,500
Classic Cable Sr. Sub. Notes
9.875% 08/01/08 ............................. 500 505,000
Classic Communications, Inc.
144A Sr. Discount Notes
9.875% 08/01/09(DAGGER) ..................... 1,000 675,000
Coaxial Communications, Inc.
Phoenix Associates Co. Gtd
Notes
10.000% 08/15/06 ............................ 550 561,000
Coaxial L.L.C
144A Co. Gtd
12.875% 08/15/08(DAGGER) .................... 400 269,000
Comcast U.K. Cable Partners Ltd.,
Yankee Sr. Debentures
11.200% 11/15/07(DAGGER) .................... 750 678,750
CSC Holdings,
Sr. Debentures
9.875% 02/15/13 ............................. 500 512,500
Diamond Cable Communications
plc Sr. Discount Notes
11.750% 12/15/05(DAGGER) .................... 500 447,500
PAR
(000) VALUE
------ ------------
CABLE -- (CONTINUED)
DIVA Systems Corp.
Sr. Disc. Notes Cl. B
12.625% 03/01/08(DAGGER) .................... $2,527 $ 707,560
Echostar DBS Corp.
144A Sr. Notes
9.375% 02/01/09 ............................. 500 500,000
Falcon Holding Group L.P./Falcon
Funding Corp.
144A Debentures
9.285% 04/15/10(DAGGER) ..................... 500 355,000
8.375% 04/15/10 ............................. 400 397,000
Frontiervision Holdings L.P.
Sr. Discount Notes
11.875% 09/15/07(DAGGER) .................... 500 428,750
Galaxy Telecom L.P.
Sr. Sub. Notes
12.375% 10/01/05 ............................ 400 439,000
Golden Sky Systems, Inc.
144A Sr. Discount Notes
13.500% 03/01/07(DAGGER) .................... 750 448,125
Helicon Group L.P.
Sr. Secured Notes, Series B
11.000% 11/01/03 ............................ 500 521,250
International CableTel, Inc.
Sr. Deferred Coupon Notes,
Series A
12.750% 04/15/05(DAGGER) .................... 750 731,250
James Cable Partners L.P.
Sr. Notes, Series B
10.750% 08/15/04 ............................ 650 658,125
Jones Intercable, Inc.
Sr. Notes
7.625% 04/15/08 ............................. 500 505,000
Lenfest Communications, Inc.
Sr. Notes
8.375% 11/01/05 ............................. 300 310,875
Mediacom L.L.C. Capital
144A Sr. Notes
7.875% 02/15/11 ............................. 300 264,750
Northland Cable Television,
144A Sr. Sub. Notes
10.250% 11/15/07 ............................ 350 353,500
Rifkin Acquisition Partners L.P.
Sr. Sub. Notes
11.125% 01/15/06 ............................ 500 561,250
Rogers Communications, Inc.
Yankee Sr. Notes
9.125% 01/15/06 ............................. 550 565,125
Telewest Communications Group
plc Yankee Sr. Discount
Debentures
11.000% 10/01/07(DAGGER) .................... 700 617,750
Telewest Communications plc
Senior Discount Notes
9.250% 04/15/09(DAGGER) ..................... 500 305,000
------------
13,678,560
------------
See Accompanying Notes to Financial Statements.
59
<PAGE>
WARBURG PINCUS HIGH YIELD FUND (CONTINUED)
PAR
(000) VALUE
------ ------------
CELLULAR/WIRELESS COMMUNICATIONS -- 1.3%
Centennial Cellular Corp.
Sr. Sub. Notes
10.750% 12/15/08 ............................ $ 400 $ 417,000
Dobson Communications
144A Sr. Notes
11.750% 04/15/07 ............................ 250 263,750
Microcell Telecommunications, Inc.
Yankee Sr. Discount Notes,
Series B
14.000% 06/01/06(DAGGER) .................... 500 411,250
Sprint Spectrum L.P./Sprint
Spectrum Finance Corp.
Sr. Notes
11.000% 08/15/06 ............................ 500 561,875
------------
1,653,875
------------
CHEMICALS -- 1.7%
ClimaChem, Inc.
Notes,
Series B
10.750% 12/01/07 ............................ 250 246,562
Huntsman Corp.
144A Sr. Sub. Notes
9.500% 07/01/07 ............................. 250 237,500
Lyondell Chemical, Inc.
Senior Secured Notes, Series B
9.875% 05/01/07 ............................. 500 503,750
Philipp Brothers Chemicals, Inc.
Co. Gtd. Sr. Notes
9.875% 06/01/08 ............................. 350 316,750
Pioneer Americas Acquistics Corp.
Gtd. Sr. Secured Notes,
Series B
9.250% 06/15/07 ............................. 250 182,500
Radnor Holdings Corp.
Sr. Notes, Series B
10.000% 12/01/03 ............................ 500 505,000
Sterling Chemical Holdings, Inc.
Sr. Secured Discount Notes
13.500% 08/15/08(DAGGER) .................... 700 175,000
------------
2,167,062
------------
COMPUTERS, SOFTWARE & SERVICES -- 0.6%
PSINET, Inc.
144A Sr. Notes
11.500% 11/01/08 ............................ 250 253,750
Verio, Inc.
144A Units
13.500% 06/15/04 ......................... 350 391,125
Sr. Notes
10.375% 04/01/05 ......................... 200 200,000
------------
844,875
------------
PAR
(000) VALUE
------ ------------
CONSTRUCTION & BUILDING MATERIALS -- 1.8%
Collins & Aikman Floorcoverings,
Inc. Sr. Sub. Notes, Series B
10.000% 01/15/07 ............................ $ 500 $ 501,250
Koppers Industry, Inc.
Sr. Sub. Notes
9.875% 12/01/07 ............................. 250 247,500
Omega Cabinets, Ltd.
Sr. Sub. Notes
10.500% 06/15/07 ............................ 400 392,000
Southdown, Inc.
Sr. Sub. Notes, Series B
10.000% 03/01/06 ............................ 500 546,250
Uniforet, Inc.
Yankee Gtd. Sr. Notes
11.125% 10/15/06 ............................ 500 358,750
Waxman Industries, Inc.
Sr. Notes, Series B
12.750% 06/01/04 ............................ 600 306,000
------------
2,351,750
------------
CONSUMER PRODUCTS & SERVICES -- 2.5%
Coinstar, Inc.
Sr. Discount Notes
13.000% 10/01/06(DAGGER) .................... 525 551,250
Drypers Corp.
Sr. Notes, Series B
10.250% 06/15/07 ............................ 250 197,500
Group Maintenance America Corp.
144A Sr. Sub. Notes
9.750% 01/15/09 ............................. 250 246,562
Holmes Products Corp.
144A Sr. Sub. Notes
9.875% 11/15/07 ............................. 500 472,500
Hosiery Corp. of America, Inc.
Sr. Sub. Notes
13.750% 08/01/02 ............................ 400 424,000
Packaged Ice, Inc.
144A Gtd. Sr. Notes
9.750% 02/01/05 ............................. 400 381,000
The Scotts Co.
144A Sr. Sub. Notes
8.625% 01/15/09 ............................. 300 294,000
Werner Holdings Co., Inc.
Gtd. Sr. Sub. Notes, Series A
10.000% 11/15/07 ............................ 500 475,000
Worldtex, Inc.
144A Sr. Notes
9.625% 12/15/07 ............................. 250 220,000
------------
3,261,812
------------
ELECTRIC UTILITIES -- 0.2%
Integrated Electric Services, Inc.
144A Sr. Sub. Notes (B2, BB-)
9.375% 02/01/09 ............................. 250 247,500
------------
See Accompanying Notes to Financial Statements.
60
<PAGE>
WARBURG PINCUS HIGH YIELD FUND (CONTINUED)
PAR
(000) VALUE
------ ------------
ELECTRONICS -- 1.0%
Ampex Corp.
144A Sr. Notes
12.000% 03/15/03 ............................ $ 500 $ 518,750
Elgar Holdings Inc.,
144A Gtd. Sr. Notes
9.875% 02/01/08 ............................. 500 375,000
Unisys Corporation
Sr. Notes, Series B
12.000% 04/15/03 ............................ 400 434,000
------------
1,327,750
------------
ENERGY -- 3.2%
Abraxas Petroleum, Inc. and
Canadian Abraxas Petroleum
Limited, Gtd. Sr. Notes,
Series D
11.500% 11/01/04 ............................ 500 342,500
AEI Resources, Inc.
144A Sr. Sub. Notes
11.500% 12/15/06 ............................ 400 340,000
Bellwether Exploration Co.
Gtd. Sr. Sub. Notes
10.875% 04/01/07 ............................ 250 227,500
Cliffs Drilling Company
Gtd. Sr. Notes, Series D
10.250% 05/15/03 ............................ 350 347,375
CMS Energy Corp.
Sr. Notes
7.500% 01/15/09 ............................. 500 458,125
Dailey International, Inc.
Gtd. Sr. Notes, Series B
9.500% 02/15/08 ............................. 800 517,000
Eagle Geophysical, Inc. Co.
Gtd.
10.750% 07/15/08(DAGGER)(DAGGER) ............ 500 95,000
HS Resources, Inc.
Sr. Sub. Notes
9.250% 11/15/06 ............................. 400 396,000
Plains Resources, Inc.
Gtd. Sr. Sub. Notes,
Series B
10.250% 03/15/06 ............................ 250 251,250
Pogo Producing Co.
Sr. Sub. Notes, Cl. B
8.750% 05/15/07 ............................. 500 470,000
Pride Petroleum Services, Inc.
Sr. Notes
9.375% 05/01/07 ............................. 300 301,500
Southwest Royalties, Inc.
Gtd. Sr. Notes, Series B
10.500% 10/15/04 ............................ 300 144,000
Wiser Oil Co.
Gtd. Sr. Sub. Notes
9.500% 05/15/07 ............................. 250 206,250
------------
4,096,500
------------
PAR
(000) VALUE
------ ------------
ENERGY SOURCES -- 0.8%
Key Energy Services, Inc.
Units 144A
14.000% 01/15/09 ............................ $ 750 $ 795,000
Nuevo Energy Co.
144A Sr. Sub. Notes
9.500% 06/01/08 ............................. 250 250,000
------------
1,045,000
------------
ENTERTAINMENT -- 3.1%
Ackerley Group, Inc.
Sr. Sub. Notes (B2, B)
9.000% 01/15/09 ............................. 250 245,000
AMC Entertainment, Inc.
Sr. Sub. Notes
9.500% 03/15/09 ............................. 500 425,000
American Skiing Co.
Sr. Sub. Notes, Series B
12.000% 07/15/06 ............................ 400 362,000
AMF Bowling Worldwide, Inc.
Gtd. Sr. Discount Notes
12.250% 03/15/06 ......................... 350 280,000
Gtd. Sr. Discount Notes,
Series B
10.875% 03/15/06(DAGGER) ................. 459 281,711
Booth Creek Ski Holdings, Inc.
Gtd. Sr. Notes, Series B
12.500% 03/15/07 ............................ 400 336,000
Florida Panthers Holdings, Inc.
144A Sr. Sub. Notes
9.875% 04/15/09 ............................. 250 240,625
Imax Corp.
Sr. Notes
7.875% 12/01/05 ............................. 250 236,875
KSL Recreation Group, Inc.
Sr. Sub. Notes
10.250% 05/01/07 ............................ 500 511,250
Premier Parks Inc.
Gtd. Sr. Notes
9.750% 01/15/07 ............................. 250 256,875
Premier Parks Inc.
Sr. Notes
9.250% 04/01/06 ............................. 250 243,750
Regal Cinemas, Inc.
144A Sr. Sub. Notes
8.875% 12/15/10 ............................. 500 330,000
SFX Entertainment, Inc.
144A Sr. Sub. Notes
9.125% 12/01/08 ............................. 250 236,875
------------
3,985,961
------------
ENVIRONMENTAL SERVICES -- 0.3%
First Wave Marine
Sr. Notes
11.000% 02/01/08 ............................ 500 415,000
------------
See Accompanying Notes to Financial Statements.
61
<PAGE>
WARBURG PINCUS HIGH YIELD FUND (CONTINUED)
PAR
(000) VALUE
------ ------------
FINANCIAL SERVICES -- 0.4%
Oglebay Norton Co.
144A Sr. Sub. Notes
10.000% 02/01/09 ............................ $ 500 $ 490,000
------------
FOOD & BEVERAGE -- 3.5%
Agrilink Foods, Inc.
Sr. Sub. Notes
11.875% 11/01/08 ............................ 250 255,000
AmeriServ Food Distribution, Inc.
Gtd. Sr. Notes
8.875% 10/15/06 ............................. 250 215,000
Archibald Candy Corp.
144A Gtd. Sr. Secured Notes
10.250% 07/01/04 ............................ 300 298,500
Carrols Corp.
144A Sr. Sub. Notes
9.500% 12/01/08 ............................. 250 215,000
Delta Beverage Group, Inc.
Sr. Notes
9.750% 12/15/03 ............................. 250 253,750
Eagle Family Foods, Inc.
Sr. Sub. Notes
8.750% 01/15/08 ............................. 600 510,000
Fleming Companies, Inc.
Sr. Gtd. Sub. Notes, Series B
10.500% 12/01/04 ............................ 150 142,500
International Home Foods, Inc.
Gtd. Sr. Sub. Notes
10.375% 11/01/06 ............................ 250 269,375
Luigino's, Inc.
144A Sr. Sub. Notes
10.000% 02/01/06 ............................ 500 499,730
Mrs. Fields' Holding Co., Inc.
144A Units
14.000% 12/01/05(DAGGER) .................... 200 100,000
Mrs. Fields' Original Cookies Inc.
144A Gtd. Sr. Notes, Series A
10.125% 12/01/04 ......................... 250 229,375
Gtd. Sr. Notes, Series B
10.125% 12/01/04 ......................... 150 137,250
National Wine & Spirits Co.
Gtd.
10.125% 01/15/09 ............................ 250 255,000
New World Pasta Co.
144A Sr. Sub. Notes
9.250% 02/15/09 ............................. 500 499,375
Pantry, Inc.
Sr. Sub. Notes
10.250% 10/15/07 ............................ 250 248,750
Premium Standard Farm, Inc.
Sr. Secured Notes
11.000% 09/17/03 ............................ 475 427,275
------------
4,555,880
------------
PAR
(000) VALUE
------ ------------
HEALTH CARE -- 2.7%
Beverly Enterprises, Inc.
Gtd. Sr. Notes
9.000% 02/15/06 ............................. $ 400 $ 360,000
Fountain View, Inc. Co.
Gtd.
11.250% 04/15/08 ............................ 500 410,000
Genesis Health Ventures, Inc.
Sr. Sub. Notes
9.875% 01/15/09 ............................. 500 305,000
InSight Health Services, Inc. Co.
Gtd. Sr. Notes
9.625% 06/15/08 ............................. 400 379,000
Integrated Health Services, Inc.
Sr. Sub. Notes, Series A
9.500% 09/15/07 ............................. 250 90,000
Oxford Health Plans, Inc.
144A Sr. Notes
11.000% 05/15/05 ............................ 400 414,000
Paracelsus Healthcare Corp.
Sr. Sub. Notes
10.000% 08/15/06 ............................ 250 196,250
Quest Diagnostic, Inc.
Sr. Sub. Notes
10.750% 12/15/06 ............................ 500 549,375
Tenet Healthcare Corp.
Sr. Sub. Notes
8.625% 01/15/07 ............................. 250 240,000
Triad Hospitals, Inc.
144A Sr. Sub. Notes
11.000% 05/15/09 ............................ 500 505,000
------------
3,448,625
------------
INDUSTRIAL GOODS & MATERIALS -- 1.6%
Anchor Lamina, Inc./Anchor
Lamina America, Inc.
144A Sr. Sub. Notes
9.875% 02/01/08 ............................. 250 225,625
Golden Ocean Group Ltd.,
144A Gtd. Sr. Notes
10.000% 08/31/01 ............................ 657 88,695
Jordan Industries, Inc.
Sr. Notes
10.375% 08/01/07 ............................ 500 488,750
MMI Products, Inc.
144A Sr. Sub. Notes, Series B
11.250% 04/15/07 ............................ 500 507,500
Morris Materials Handling, Inc.
144A Sr. Notes
9.500% 04/01/08 ............................. 250 97,500
Motors & Gears, Inc.
Sr. Notes, Series D
10.750% 11/15/06 ............................ 500 493,750
Thermadyne Holdings Corp.
Sr. Discount Debentures
12.500% 06/01/08(DAGGER) .................... 250 121,250
------------
2,023,070
------------
See Accompanying Notes to Financial Statements.
62
<PAGE>
WARBURG PINCUS HIGH YIELD FUND (CONTINUED)
PAR
(000) VALUE
------ ------------
LEISURE & ENTERTAINMENT -- 0.4%
Hollywood Park, Inc.
144A Sr. Sub. Notes )
9.250% 02/15/07 ............................. $ 500 $ 490,000
------------
METALS & MINING -- 2.3%
Bayou Steel Corp. Co.
Gtd.
9.500% 05/15/08 ............................. 500 472,500
Golden Northwest Aluminum
First Mortgage Notes
12.000% 12/15/06 ............................ 400 412,000
Haynes International, Inc.
Sr. Notes
11.625% 09/01/04 ............................ 250 236,250
Ivaco, Inc.
Yankee Sr. Notes
11.500% 09/15/05 ............................ 250 252,500
Kaiser Aluminum and Chemical, Inc.
144A Sr. Notes
10.875% 10/15/06 ............................ 250 256,250
Metallurg, Inc.
Sr. Notes
11.000% 12/01/07 ............................ 500 488,125
Weirton Steel Corporation
Sr. Notes
11.375% 07/01/04 ............................ 350 350,000
WHX Corp.
Sr. Exchange Notes
10.500% 04/15/05 ............................ 500 476,250
------------
2,943,875
------------
OFFICE EQUIPMENT & SUPPLIES -- 0.3%
Knoll, Inc.
Sr. Sub. Notes
10.875% 03/15/06 ............................ 325 357,094
------------
PACKAGING/CONTAINERS -- 0.5%
BPC Holding Corporation
Sr. Secured Notes, Series B
12.500% 06/15/06 ............................ 400 393,000
Crown Packaging Enterprises, Ltd.
Yankee Sr. Secured Discount
Notes
14.000% 08/01/06(DAGGER) .................... 775 11,625
Stone Container Finance Co.
Yankee Gtd. Sr. Notes
11.500% 08/15/06 ............................ 250 261,250
------------
665,875
------------
PAPER & FOREST PRODUCTS -- 3.1%
Ainsworth Lumber Co. Ltd.
Yankee Sr. Secured PIK Notes
12.500% 07/15/07 ............................ 500 553,750
Bear Island Paper Company, L.L.C./
Bear Island Finance Company II
Sr. Secured Notes, Series B
10.000% 12/01/07 ............................ 400 392,000
PAR
(000) VALUE
------ ------------
PAPER & FOREST PRODUCTS -- (CONTINUED)
Crown Paper Co.
Sr. Sub. Notes
11.000% 09/01/05 ............................ $ 400 $ 306,000
Gaylord Container Corp.
Sr. Notes
9.375% 06/15/07 ............................. 600 546,000
MAXXAM Group Holdings, Inc.
144A Sr. Secured Notes,
Series B
12.000% 08/01/03 ............................ 400 408,000
Printpack, Inc.
Sr. Sub. Notes, Series B
10.625% 08/15/06 ............................ 450 428,062
Repap New Brunswick
Sr. Yankee Notes
10.625% 04/15/05 ............................ 450 391,500
S.D. Warren Co.
Sr. Sub. Notes
12.000% 12/15/04 ............................ 400 429,000
Specialty Paperboard, Inc.
144A Sr. Notes
9.375% 10/15/06 ............................. 250 253,750
Tembec Industries, Inc.
Sr. Co. Gtd.
8.625% 06/30/09 ............................. 250 245,000
------------
3,953,062
------------
PHARMACEUTICALS -- 0.4%
ICN Pharmaceutical, Inc.
144A Sr. Notes
8.750% 11/15/08 ............................. 500 490,000
------------
PUBLISHING & INFORMATION SERVICES -- 3.7%
American Media Operation
144A Sr. Sub Notes
10.250% 05/01/09 ............................ 500 486,250
Big Flower Press Holdings, Inc.
Sr. Sub. Notes
8.625% 12/01/08 ............................. 250 233,750
Gray Communications Systems
Gtd. Sr. Sub. Notes
10.625% 10/01/06 ............................ 200 209,500
Hollinger International Publishing
Inc. Sr. Sub. Notes
9.250% 03/15/07 ............................. 250 251,250
InterAct Systems, Inc.
144A Sr. Discount Notes
14.000% 08/01/03 ............................ 700 258,125
Liberty Group Publishing, Inc.
Sr. Discount Debentures
11.625% 02/01/09(DAGGER) .................... 300 170,625
Mail-Well, Inc.
144A Sr. Sub. Notes
8.750% 12/15/08 ............................. 400 387,000
See Accompanying Notes to Financial Statements.
63
<PAGE>
WARBURG PINCUS HIGH YIELD FUND (CONTINUED)
PAR
(000) VALUE
------ ------------
PUBLISHING & INFORMATION SERVICES -- (CONTINUED)
Mentus Media Corp.
144A Sr. Secured Notes
12.000% 02/01/03 ............................ $ 591 $ 576,225
Nebraska Book Co.,
144A Sr. Sub. Notes
8.750% 02/15/08 ............................. 500 410,000
Phoenix Color Corp.
144A Sr. Sub. Notes
10.375% 02/01/09 ............................ 500 482,500
Sun Media Corp.
Yankee Sr. Sub. Notes
9.500% 02/15/07 ............................. 194 200,790
9.500% 05/15/07 ............................. 65 67,275
Tri-State Outdoor Media Group, Inc.
144A Sr. Notes
11.000% 05/15/08 ............................ 500 501,250
World Color Press, Inc.
144A Sr. Sub. Notes
8.375% 11/15/08 ............................. 500 493,750
------------
4,728,290
------------
REAL ESTATE -- 0.7%
HMH Properties, Inc.
Sr. Notes
8.450% 12/01/08 ............................. 300 281,250
Host Marriot Hotel Properties
Sr. Notes (Ba2, BB)
7.875% 08/01/05 ............................. 400 371,000
Intrawest Corp.
Yankee Sr Notes
9.750% 08/15/08 ............................. 250 245,000
------------
897,250
------------
RESTAURANTS, HOTELS & GAMING -- 7.7%
AFC Enterprises
Sr. Sub. Notes
10.250% 05/15/07 ............................ 400 404,000
American Restaurant Group, Inc.
144A Sr. Notes
11.500% 02/15/03 ............................ 500 453,125
AmeriKing, Inc.
Gtd. Sr. Notes
10.750% 12/01/06 ............................ 400 410,000
Ameristar Casinos, Inc.
Gtd. Sr. Sub. Notes,
Series B
10.500% 08/01/04 ............................ 500 502,500
Arogosy Gaming Co.
144A Sr. Sub. Notes
10.750% 06/01/09 ............................ 500 515,000
CapStar Hotel Co.,
144A Sr. Sub. Notes
8.750% 08/15/07 ............................. 250 233,437
PAR
(000) VALUE
------ ------------
RESTAURANTS, HOTELS & GAMING -- (CONTINUED)
Casino Magic of Louisiana Corp.
Gtd. First Mortgage Notes,
Series B
13.000% 08/15/03 ............................ $ 600 $ 682,500
Circus Circus Enterprise
Sr. Sub. Notes
9.250% 12/01/05 ............................. 450 453,375
Coast Hotels & Casino, Inc.
144A Sr. Sub. Notes
9.500% 04/01/09 ............................. 250 240,000
Hard Rock Hotel, Inc.
144A Sr. Sub. Notes
9.250% 04/01/05 ............................. 350 316,750
Harrahs Operating Co. Inc. Co.
Gtd.
7.875% 12/15/05 ............................. 250 237,500
Harvey Casino Resorts
Sr. Sub. Notes
10.625% 06/01/06 ............................ 450 464,625
Horseshoe Gaming L.L.C.
Gtd. Sr. Sub. Notes,
Series B
9.375% 06/15/07 ............................. 400 407,500
Isle of Capri Casinos
144A Sr. Sub Notes
8.750% 04/15/09 ............................. 500 465,000
Louisiana Casino Cruises, Inc.
Secured 144A
11.000% 12/01/05 ............................ 500 501,250
Majestic Star Casino
144A Secured Notes
10.875% 07/01/06 ............................ 400 392,000
Mohegan Tribal Gaming Authority
Sr. Sub. Notes
8.750% 01/01/09 ............................. 400 394,000
Park Place Entertainment, Inc.
144A Sr. Sub. Notes
7.875% 12/15/05 ............................. 250 235,625
Peninsula Gaming L.L.C.
144A Sr. Notes
12.250% 07/01/06 ............................ 250 246,875
Players International, Inc.
Sr. Notes
10.875% 04/15/05 ............................ 250 265,000
Prime Hospitality Corp. Secured
First Mortgage Notes
9.250% 01/15/06 ............................. 250 251,562
Red Roof Inns, Inc.
Sr. Exchange Notes
9.625% 12/15/03 ............................. 250 256,250
Santa Fe Hotel, Inc.
First Mortgage Notes
11.000% 12/15/00 ............................ 500 498,750
See Accompanying Notes to Financial Statements.
64
<PAGE>
WARBURG PINCUS HIGH YIELD FUND (CONTINUED)
PAR
(000) VALUE
------ ------------
RESTAURANTS, HOTELS & GAMING -- (CONTINUED)
Station Casinos, Inc.
Sr. Sub. Notes
10.125% 03/15/06 ............................ $ 500 $ 515,000
Sun International Hotels Ltd.
Yankee Gtd. Sr. Sub. Notes
9.000% 03/15/07 ............................. 400 391,000
Waterford Gaming L.L.C./Waterford
Gaming Finance Corp.
144A Sr. Notes
9.500% 03/15/10 ............................. 250 249,375
------------
9,981,999
------------
RETAIL TRADE -- 2.1%
Advance Holding Corp
Sr. Discount Debentures,
Series B
12.875% 04/15/09(DAGGER) .................... 500 280,000
County Seat Stores, Inc.
144A Units
12.750% 11/01/04(DAGGER)(DAGGER) ............ 500 45,000
Finlay Enterprises, Inc.
Sr. Secured Debentures
9.000% 05/01/08 ............................. 250 237,500
Jitney-Jungle Stores of America, Inc.
Gtd. Sr. Notes
12.000% 03/01/06 ............................ 250 202,500
Jo-Ann Stores, Inc.
144A Sr. Sub Notes
10.375% 05/01/07 ............................ 250 246,250
K Mart Corp.
Debentures
7.750% 10/01/12 ............................. 500 476,875
Pathmark Stores,
Sr. Sub Notes
9.625% 05/01/03 ............................. 500 509,375
Pueblo Xtra International, Inc.
Sr. Notes
9.500% 08/01/03 ............................. 400 352,000
Randall's Food Markets, Inc.
Sr. Sub. Notes, Series B
9.375% 07/01/07 ............................. 350 382,812
------------
2,732,312
------------
STEEL -- 0.0%
Gulf States Steel, Inc.
First Mortgage Notes
13.500% 04/15/03(DAGGER)(DAGGER) ............ 200 36,000
------------
TELECOMMUNICATIONS -- 21.7%
AMSC Acquisition Company, Inc.
Senior Notes, Series B
12.250% 04/01/08 ............................ 500 380,000
Bresnan Communications Co.
144A Sr. Discount Notes
9.250% 02/01/09(DAGGER) .................. 1,000 657,500
144A Sr. Notes
8.000% 02/01/09 .......................... 250 247,500
PAR
(000) VALUE
------ ------------
TELECOMMUNICATIONS -- (CONTINUED)
Call-Net Enterprises, Inc.
Sr. Discount Notes
8.000% 05/15/09(DAGGER) .................. $ 450 $ 254,250
Yankee Sr. Notes
9.375% 05/15/09 .......................... 400 373,000
Caprock Communications Corp.
144A Sr. Notes
11.500% 05/01/09 ............................ 400 397,000
Carrier1 144A Units
13.250% 02/15/09 ............................ 500 507,500
Charter Communications Holding
LLC, Sr. Disc. Notes 144A
8.625% 04/01/09 ............................. 250 237,500
9.920% 04/01/11 ............................. 500 300,000
Clearnet Communications, Inc.
Sr. Discount Notes
14.750% 12/15/05(DAGGER) .................... 750 697,500
Completel Europe NV Unit
14.000% 02/15/09(DAGGER) .................... 1,000 510,000
Covad Communication Group, Inc.
Sr. Notes 144A
12.500% 02/15/09 ............................ 250 241,875
Dobson Sygnet Communications
Sr. Notes
12.250% 12/15/08 ............................ 500 527,500
Dolphin Telecom plc
144A Sr. Discount Notes
14.000% 05/15/09(DAGGER) .................... 500 206,250
DTI Holdings, Inc.
144A Sr. Discount Notes
12.250% 03/01/08(DAGGER) .................... 600 210,000
E Spire Communications
Sr. Discount Notes
13.000% 11/01/05(DAGGER) .................... 800 504,000
Focal Communications Corp.,
144A Sr. Discount Notes
12.125% 02/15/08(DAGGER) .................... 550 313,500
Global Crossing Holdings, Ltd.
9.625% 05/15/08 ............................. 250 253,750
Globalstar L.P./ Globalstar Capital
Corp. 144A Sr. Notes
10.750% 11/01/04 ............................ 100 66,000
Globix Corp.
Sr Regulated Notes
13.000% 05/01/05 ............................ 600 550,500
GST Equipment Funding
144A Sr. Secured Exchange
Notes
13.250% 05/01/07(DAGGER) .................... 250 273,125
GST USA, Inc. Gtd. Sr. Discount
Exchange Notes
12.875% 12/15/05 ............................ 500 418,750
Hermes Europe Railtel
BV Sr. Notes
10.375% 01/15/09 ............................ 250 250,000
See Accompanying Notes to Financial Statements.
65
<PAGE>
WARBURG PINCUS HIGH YIELD FUND (CONTINUED)
PAR
(000) VALUE
------ ------------
TELECOMMUNICATIONS -- (CONTINUED)
Hyperion Telecommunications, Inc.
Sr. Discount Notes, Series B
13.000% 04/15/03(DAGGER) ................. $ 500 $ 420,000
Sr. Notes, Series B
12.250% 09/01/04 ......................... 250 263,750
ICG Holdings, Inc.
Gtd. Senior Discount Notes
11.625% 03/15/07(DAGGER) .................... 300 216,000
ICG Services, Inc.
144A Sr. Discount Notes
10.000% 02/15/08(DAGGER) .................... 500 288,750
Intelcom Group (U.S.A.), Inc.
Gtd. Sr. Exchangeable Discount
Notes
12.500% 05/01/06(DAGGER) .................... 800 642,000
Intercel, Inc.
Sr. Discount Notes
12.000% 02/01/06(DAGGER) .................... 500 428,750
Intermedia Communications, Inc.
Sr. Discount Notes
11.250% 07/15/07(DAGGER) .................... 1,000 700,000
International Cabletel, Inc.
Sr. Notes
11.500% 02/01/06(DAGGER) .................... 415 358,975
ITC Deltacom, Inc.
144A Sr. Notes
11.000% 06/01/07 ............................ 163 174,206
IXC Communications, Inc.
Sr. Sub. Notes
9.000% 04/15/08 ............................. 350 345,625
Jordan Telecommunications
Products, Inc.
Sr. Discount Notes, Series B
11.750% 08/01/07(DAGGER) ................. 400 339,500
Sr. Notes
9.875% 08/01/07 .......................... 250 244,062
KMC Telecom Holdings, Inc.
Sr. Discount Notes
12.500% 02/15/08(DAGGER) .................... 500 267,500
Knology Hldgs., Inc.
Sr. Discount Notes
11.875% 10/15/07(DAGGER) .................... 550 313,500
Level 3 Communications, Inc.
Gtd. Sr. Sub. Notes
8.500% 05/15/08 .......................... 250 245,938
8.000% 08/01/08 .......................... 250 245,000
Sr. Discount Notes
10.500% 12/01/08(DAGGER) ................. 500 288,750
Logix Communications Enterprises
Sr. Notes
12.250% 06/15/08 ............................ 500 452,500
McCaw International Ltd.
144A Units
13.000% 04/15/07(DAGGER) .................... 500 287,500
PAR
(000) VALUE
------ ------------
TELECOMMUNICATIONS -- (CONTINUED)
McLeodUSA, Inc.
144A Sr. Sub. Notes
8.125% 02/15/09 ............................. $ 250 $ 230,625
McLeodUSA, Inc.
Sr. Discount Notes
10.500% 03/01/07(DAGGER) ................. 600 462,000
Sr. Notes
9.250% 07/15/07 .......................... 300 296,250
MDC Communications Corp.
Sr. Sub. Notes
10.500% 12/01/06 ............................ 400 407,000
Metromedia Fiber Network, Inc.
Sr. Notes, Series B
10.000% 11/15/08 ............................ 500 495,000
MetroNet Communications Corp.
Sr. Discount Notes
10.750% 11/01/07(DAGGER) ................. 400 319,500
Sr. Notes
12.000% 08/15/07 ......................... 400 464,000
MJD Communications, Inc.
Sr. Sub. Notes
9.500% 05/01/08 ............................. 250 249,063
Nextel Communications, Inc.
Sr. Discount Notes
9.750% 08/15/04 ............................. 500 500,000
Nextel Partners, Inc.
144A Sr. Discount Notes
14.000% 02/01/09(DAGGER) .................... 500 297,500
Nextlink Communications, Inc.
144A Sr. Notes
10.750% 11/15/08 ......................... 250 253,750
Sr. Discount Notes
9.450% 04/15/08(DAGGER) .................. 500 303,750
Nextlink Communications, L.L.C./
Nextlink Capital, Inc.
Sr. Notes
12.500% 04/15/06 ............................ 250 272,500
NTL, Inc.
144A Sr. Notes
10.000% 02/15/07 ............................ 250 253,125
Optel, Inc.
Sr. Notes
11.500% 07/01/08 ............................ 350 238,875
Orbital Imaging Corp.,
144A Units
11.625% 03/01/05 ............................ 500 392,500
Orion Network Systems, Inc.
Gtd. Sr. Notes
11.250% 01/15/07 ............................ 300 267,000
Pac-West Telecomm, Inc.
144A Sr. Notes
13.500% 02/01/09 ............................ 250 254,375
Pagemart Nationwide, Inc.
Sr. Discount Notes
15.000% 02/01/05(DAGGER) .................... 750 706,875
See Accompanying Notes to Financial Statements.
66
<PAGE>
WARBURG PINCUS HIGH YIELD FUND (CONTINUED)
PAR
(000) VALUE
------ ------------
TELECOMMUNICATIONS -- (CONTINUED)
Pegasus Communications Corp.
Sr. Notes, Series B
9.750% 12/01/06 ............................. $ 500 $ 493,750
PLD Telekom, Inc.
144A Sub. Notes
9.000% 06/01/06 .......................... 230 131,100
Yankee Co. Gtd. Notes
14.000% 06/01/04 ......................... 1,010 691,850
Price Comm Wireless, Inc.
144A Sr. Sub. Notes
11.750% 07/15/07 ............................ 250 274,375
Primus Telecommunications
Group, Inc.
144A Sr. Notes
11.250% 01/15/09 ............................ 500 490,000
Qwest Communications
International, Inc.
Sr. Discount Notes
9.470% 10/15/07(DAGGER) .................. 750 583,125
Sr. Notes, Series B
10.875% 04/01/07 ......................... 130 148,038
RCN Corp.
Sr. Discount Notes, Series B
10.000% 10/15/07(DAGGER) ................. 400 270,000
Sr. Discount Notes, Series B
9.800% 02/15/08(DAGGER) .................. 300 186,750
Sr. Notes, Series B
10.000% 10/15/07 ......................... 400 395,000
Rhythms Netconnections
Sr. Discount Notes
12.750% 05/15/08(DAGGER) .................... 600 303,000
RSL Communications plc
Yankee Co. Gtd
10.500% 11/15/08 ............................ 400 377,000
Startec Global Communications, Inc.
Sr. Notes
12.000% 05/15/08 ............................ 400 358,500
Telewest Communications plc
Debentures
9.625% 10/01/06 ............................. 250 253,125
Teligent Inc.
Sr. Notes
11.500% 12/01/07 ............................ 250 240,000
Time Warner Telecom L.L.C./
Time Warner Telecom Inc.,
Sr. Notes
9.750% 07/15/08 ............................. 500 507,500
Viatel, Inc.
Sr. Discount Notes
12.500% 04/15/08(DAGGER) .................... 600 372,000
WinStar Communications, Inc.
Sr. Discount Notes
14.000% 10/15/05(DAGGER) .................... 500 437,500
------------
28,075,607
------------
PAR
(000) VALUE
------ ------------
TEXTILES & APPAREL -- 1.2%
Advanced Glass Fiber Yarns
Sr. Sub. Notes 144A
9.875% 01/15/09 ............................. $ 250 $ 236,250
Bgf Industries, Inc.
Sr. Sub. Notes 144A
10.250% 01/15/09 ............................ 250 222,500
Maxim Group, Inc.
Gtd. Sr. Sub. Notes, Series B
9.250% 10/15/07 ............................. 500 426,250
Phillips Van-Heusen Corp.
Sr. Sub. Notes
9.500% 05/01/08 ............................. 250 243,125
William Carter Company
Sr. Sub. Notes, Series A
10.375% 12/01/06 ............................ 450 451,125
------------
1,579,250
------------
TRANSPORTATION -- 1.3%
AirTran Airlines, Inc.
Secured Notes
10.500% 04/15/01 ............................ 250 245,938
Atlantic Express Transportation
Corp.
Gtd. Sr. Secured Notes
10.750% 02/01/04 ............................ 250 245,000
Canadian Airlines Corp.
Yankee Sr. Notes
12.250% 08/01/06 ............................ 250 162,500
Kitty Hawk, Inc.
Sr. Notes
9.950% 11/15/04 ............................. 250 245,000
Pegasus Shipping (Hellas) Ltd.
144A Gtd. First Preferred
Mortgage Notes, Series A
11.875% 11/15/04 ............................ 500 200,000
Trans World Airlines
Sr. Notes
11.375% 03/01/06 ............................ 500 325,000
Transportation Manufacturing
Operations, Inc.,
144A Sr. Sub. Notes
11.250% 05/01/09 ............................ 250 243,750
------------
1,667,188
------------
WASTE MANAGEMENT -- 0.6%
Allied Waste North America,
Series B
7.875% 01/01/09 ............................. 500 455,000
Waste Systems International, Inc.
144A Conv. Sub. Notes
7.000% 05/13/05 ............................. 400 348,000
------------
803,000
------------
TOTAL CORPORATE BONDS
(Cost $124,587,886) $116,320,052
------------
See Accompanying Notes to Financial Statements.
67
<PAGE>
WARBURG PINCUS HIGH YIELD FUND (CONTINUED)
PAR
(000) VALUE
------ ------------
ASSET BACKED SECURITY -- 0.4%
Airplanes Pass Through Trust
Series 1, Class D
10.875% 03/15/19 ............................ $ 600 $ 572,922
(Cost $600,000) ------------
NUMBER
OF SHARES
---------
RIGHTS & WARRANTS -- 0.9%
BROADCASTING -- 0.0%
Australis Holdings Pty. Ltd.
Strike $0.01 expires 10/30/01 ............... 294 $ 3
------------
CABLE -- 0.5%
DIVA Systems Corp.(DAGGER)(DAGGER)(DAGGER)
Strike $0.01 expires May 2006 ............... 2,250 544,500
DIVA Systems Corp.(DAGGER)(DAGGER)(DAGGER)
Strike $0.01 expires May 2006 ............... 7,581 60,648
------------
605,148
------------
CHEMICALS -- 0.3%
Uniroyal Technology Corp.
Strike $4.375 expires 06/01/03 .............. 43,500 369,750
------------
CONSTRUCTION & BUILDING MATERIALS -- 0.0%
Capital Pacific Holdings Group,
Inc. ......................................... 12,640 6,320
------------
CONSUMER PRODUCTS & SERVICES -- 0.0%
Signature Brands USA, Inc.
Strike $6.25 expires 08/15/02 ............... 250 0
------------
ENERGY -- 0.0%
Key Energy Services Inc.
Strike $4.88 expires 01/15/09 ............... 750 11,344
------------
INDUSTRIAL GOODS & MATERIALS -- 0.0%
Golden Ocean Group, Ltd.
Strike $46.20 expires 08/31/01 .............. 438 9
------------
PUBLISHING & INFORMATION SERVICES -- 0.0%
InterAct Systems, Inc.
Strike $0.01 expires 08/01/03 ............... 700 0
Mentus Media Corp. 144A(DAGGER)(DAGGER)(DAGGER)
Strike $0.01 expires 02/01/08 ............... 1,391 14
Source Media Inc.
Strike $11.00 expires 06/23/00 .............. 5,587 25,144
------------
25,158
------------
TELECOMMUNICATIONS -- 0.1%
American Mobile Satellite
Corporation Strike $12.51
expires 04/01/08 ............................ 500 35,000
Ampex Corp. 144A
Strike $2.25 expires 03/15/03 ............... 17,000 14,960
DTI Holdings, Inc. 144A
Strike $0.01 expires 03/01/08 ............... 3,000 30
NUMBER
OF SHARES VALUE
--------- ------------
TELECOMMUNICATIONS -- (CONTINUED)
Globalstar, L.P.
Strike $17.39 expires 02/15/04 .............. 200 $ 26,000
KMC Telecom Holdings, Inc.
Strike $0.22 expires 04/15/08 ............... 500 12,500
McCaw International Ltd.
Strike $36.45 expires 04/15/07 .............. 500 1,250
Orbital Imaging Corp.
Strike $1.00 expires 03/01/05 ............... 500 10,000
PLD Telekom, Inc.
Strike $1.00 expires June 2004 .............. 1,010 5,050
Primestar Inc. General Motors Cl.
H Stock Appreciation Rts
Strike $47.00 expires May 2000 .............. 3,828 35,998
Startec Global Communications
Strike $24.20 expires 05/15/08 .............. 400 400
------------
141,188
------------
TOTAL RIGHTS & WARRANTS
(Cost $430,305) ............................. $ 1,158,920
------------
COMMON STOCKS -- 1.4%
COMPUTERS, SOFTWARE & SERVICES -- 0.3%
Globix Corp. .................................. 2,112 101,508
Verio, Inc. ................................... 9,858 366,594
------------
468,102
------------
CONSUMER PRODUCTS & SERVICES -- 0.1%
Coinstar Inc. ................................. 3,671 84,892
------------
PACKAGING/CONTAINERS -- 0.0%
Crown Packaging Enterprises,
Ltd. ........................................ 100,847 1,008
------------
TELECOMMUNICATIONS -- 1.0%
Advanced Radio Telecom Corp. .................. 10,117 110,655
AT&T Canada, Inc. ............................. 685 41,577
E Spire Communications, Inc. .................. 21,253 170,024
Intermedia Communications, Inc. ............... 2,421 62,946
Loral Space and Communications
Ltd. ........................................ 181 3,326
Microcell Telecommunications,
Inc. ........................................ 3,436 35,219
Price Communications Corp. .................... 40,269 830,561
------------
1,254,308
------------
TOTAL COMMON STOCKS
(Cost $605,604) ............................. $ 1,808,310
------------
See Accompanying Notes to Financial Statements.
68
<PAGE>
WARBURG PINCUS HIGH YIELD FUND (CONCLUDED)
NUMBER
OF SHARES VALUE
--------- ------------
PREFERRED STOCKS -- 2.9%
AEROSPACE/DEFENSE -- 0.7%
GPA Group plc Convertible
Cumulative Second Preference
Shares 7.00% ................................ 1,750,000 $ 910,000
------------
CABLE -- 0.0%
DIVA Systems Corporation,
Series C .................................... 11,890 35,670
------------
CELLULAR/WIRELESS COMMUNICATIONS -- 0.2%
Rural Cellular Corp. 144A PIK
11.375% ..................................... 2,859 283,781
------------
INDUSTRIAL -- 0.3%
International Utility Structures
Inc. 13.00% ................................. 707 66,682
International Utility Structures Inc.,
Units 13.00% ................................ 3,492 332,661
------------
399,343
------------
PUBLISHING & INFORMATION SERVICES -- 0.1%
Source Media Inc. 144A PIK
13.50% ...................................... 12,617 126,180
------------
RESTAURANTS, HOTELS & GAMING -- 0.1%
AmeriKing, Inc. 13.00% Cum.
Exchangeable ................................ 6,659 94,891
------------
TELECOMMUNICATIONS -- 1.5%
Classic Communications Inc .................... 3,000 50,010
E Spire Communications Inc.
Jr. PIK 12.75% .............................. 1,200 528,000
Hyperion Telecommunications, Inc.
12.875% Sr. Exch. Redeemable,
Series B .................................... 7 6,283
Intermedia Communications Inc.
144A 7.00% Jr. Convertible,
Series E .................................... 20,000 510,000
Nextel Communications, Inc.
13.00% Exchangeable,
Series D PIK ................................ 318 344,235
NEXTLINK Communications, Inc.
144A 14.00% Sr. Exchangeable
PIK ......................................... 8,463 425,277
------------
1,863,805
------------
TOTAL PREFERRED STOCKS
(Cost $3,903,185) ........................... $ 3,713,670
------------
PAR
(000) VALUE
------ ------------
SHORT-TERM INVESTMENT -- 1.3%
BBH grand Cayman U.S. Dollar
Time Deposit
4.500% 09/01/99 ............................. $1,620 $ 1,620,000
(Cost $1,620,000) ------------
TOTAL INVESTMENTS -- 97.0%
(Cost $131,746,980*) ........................ $125,193,874
OTHER ASSETS IN EXCESS
OF LIABILITIES-- 3.0% ....................... 3,959,035
------------
TOTAL NET ASSETS -- 100.0% .................... $129,152,909
============
* Also cost for Federal income tax purposes at August 31, 1999. The gross
appreciation (depreciation) on a tax basis is as follows:
Gross Appreciation ................................... $ 5,380,428
Gross Depreciation ................................... (11,933,534)
------------
Net Depreciation ..................................... $ 6,553,106
============
(DAGGER) Step Bond-- The interest rate as of August 31, 1999
is 0% and will reset to interest rate shown at a
future date.
(DAGGER)(DAGGER) Security in default.
(DAGGER)(DAGGER)(DAGGER) Illiquid Security.
INVESTMENT ABBREVIATIONS
PIK .................................................................Pay In Kind
See Accompanying Notes to Financial Statements.
69
<PAGE>
WARBURG PINCUS MUNICIPAL BOND FUND
PORTFOLIO MANAGERS' LETTER
September 17, 1999
Dear Shareholders:
We are writing to report on the results of the Warburg Pincus Municipal Bond
Fund (the "Fund") for the fiscal year ended August 31, 1999.
At August 31, 1999, the net asset value ("NAV") of the Fund's institutional
shares was $14.30, compared to an NAV of $15.12 on August 31, 1998. As a result,
the institutional shares' total return was 0.4% (assuming the reinvestment of
dividends and distributions totaling $0.89 per share). By comparison, the Lehman
Brothers Municipal Bond Index (the "Index") returned 0.5% in the same period.
At August 31, 1999, the NAV of the Fund's common shares was $14.29, compared to
an NAV of $15.14 at their inception of investment operations on October 30,
1998. Including the effect of linkage to the institutional shares, the common
shares' total return between August 31, 1998 and August 31, 1999 was 0.1%
(assuming the reinvestment of dividends and distributions totaling $0.73 per
share). By comparison, the Index returned 0.5% in the same period.
The Fund performed in line with its Index benchmark during the fiscal year. More
importantly, however, was the Fund substantially outperformed the average
general municipal fund which, as calculated by Lipper Inc., declined by 1.6%. We
believe that the following factors contributed the most to this outperformance:
(BULLET) We maintained a modest level of exposure to taxable instruments,
primarily corporate bonds and mortgage-backed securities. This
exposure helped the Fund's overall return because taxables in general
outperformed the broad market for investment-grade debt instruments,
and because of effective security selection within our taxable
exposure.
(BULLET) We continued to emphasize higher-quality municipal paper, which
remained especially popular among muni buyers and which generally
weathered market downturns better than lower-quality munis. Our
allocation to non-callable muni securities typically was double that
of the Index benchmark.
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
Gregg M. Diliberto, Managing Director
Mark K. Silverstein, Managing Director
Jo Ann Corkran, Director
Jose A. Rodriguez, Director
A PORTION OF INCOME MAY BE SUBJECT TO STATE AND CITY TAXES OF FEDERAL
ALTERNATIVE MINIMUM TAX.
70
<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)
[GRAPHIC OMITTED]
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
Warburg Pincus Lehman Brothers
Municipal Bond Municipal Bond
Institutional Shares Index 1
-------------------- ---------------
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
5/31/96 $10,937 $11,314
8/31/96 $11,134 $11,539
11/30/96 $11,643 $12,049
2/28/97 $11,731 $12,132
5/31/97 $11,835 $12,252
8/31/97 $12,218 $12,606
11/30/97 $12,508 $12,914
2/28/98 $12,812 $13,242
5/31/98 $12,971 $13,402
8/31/98 $13,149 $13,697
11/30/98 $13,370 $13,916
2/28/99 $13,446 $14,055
5/31/99 $13,483 $14,028
8/31/99 $13,195 $13,765
- ----------------------------------------------
INSTITUTIONAL SHARES
-----------------------------
AVERAGE ANNUAL
TOTAL RETURNS
FOR THE PERIODS ENDED AUGUST 31, 1999
One Year 0.36%
Three Years 5.83%
Five Years 5.62%
From Inception
(6/20/94) 5.47%
- ----------------------------------------------
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.
71
<PAGE>
WARBURG PINCUS MUNICIPAL BOND FUND
SCHEDULE OF INVESTMENTS
AUGUST 31, 1999
PAR
(000) VALUE
------ -----------
MUNICIPAL BONDS -- 76.0%
CALIFORNIA -- 11.4%
California State GO
6.300% 09/11/11 ............................. $ 670 $ 743,700
California State GO
5.125% 10/01/17 ............................. 825 793,031
Los Angeles CA, Department of
Water & Power Water RB
4.500% 05/15/23 ............................. 705 588,675
San Diego CA Convention Center
Expansion Financing Authority,
Series A
4.750% 04/01/28 ............................. 535 456,087
-----------
2,581,493
-----------
COLORADO -- 2.8%
Colorado Springs CO,
Utility RB
5.875% 11/15/17 ............................. 595 629,956
-----------
FLORIDA -- 5.9%
Jacksonville FL, Electric Authority
RB, 2nd Installment
6.000% 07/01/12 ............................. 610 639,737
Tallahassee FL, Electric RB,
First Lien
6.100% 10/01/06 ............................. 670 698,475
-----------
1,338,212
-----------
ILLINOIS -- 5.9%
Chicago Illinois GO,
Series 1993
5.250% 01/01/18 ............................. 705 665,344
Illinois State Sales Tax RB,
Series Q
5.750% 06/15/14 ............................. 650 658,937
-----------
1,324,281
-----------
INDIANA -- 0.1%
Indianapolis IN, Public
Improvement Board RB
6.000% 01/10/03 ............................. 25 25,781
-----------
LOUISIANA -- 3.1%
New Orleans LA, Home Mortgage
Authority SOB
6.250% 01/15/11 ............................. 635 693,737
-----------
MARYLAND -- 4.3%
Maryland State Transportation
Authority Project RB
6.800% 07/01/16 ............................. 850 962,625
-----------
PAR
(000) VALUE
------ -----------
MASSACHUSETTS -- 2.7%
Massachusetts State Water
Resources Authority RB,
Series B
5.000% 12/01/25 ............................. $ 660 $ 586,575
Massachusetts State Water
Resources Authority, General
RB, Series 92A
6.500% 07/15/19 ............................. 20 21,950
-----------
608,525
-----------
NEW YORK -- 26.3%
Metropolitan Transit Authority
Commuter Facilities RB,
Series A
5.000% 07/01/23 ............................. 600 543,000
New York State Dormitory
Authority RB (Elizabeth Church
Manor Nursing Home)
5.400% 08/01/23 ............................. 55 53,075
New York State Dormitory
Authority RB (Episcopal Health
Services)
7.550% 08/01/29 ............................. 435 448,041
New York State Dormitory
Authority RB (Judicial Facilities
Lease)
7.375% 07/01/16 ............................. 40 47,150
New York State Dormitory
Authority RB (Park Ridge
Housing Inc. Project)
7.850% 02/01/29 ............................. 530 539,158
New York State Local Government
Assistance Corp. RB,
Series B
4.875% 04/01/20 ............................. 580 516,925
New York State Power Authority
General Purpose RB,
Series R
7.000% 01/01/10 ............................. 360 413,550
New York State Throughway
Authority General RB,
Series B
5.000% 01/01/20 ............................. 30 27,450
New York, NY Municipal Water
Finance Authority Water &
Sewer System RB,
Series B
5.125% 06/15/30 ............................. 295 265,131
New York, NY Municipal Water
Finance Authority Water &
Sewer System RB,
Series D
4.875% 06/15/21 ............................. 400 353,500
See Accompanying Notes to Financial Statements.
72
<PAGE>
WARBURG PINCUS MUNICIPAL BOND FUND (CONTINUED)
PAR
(000) VALUE
------ -----------
NEW YORK -- (CONTINUED)
New York, NY Prerefunded GO,
Series D
8.000% 08/01/01 ............................. $ 605 $ 656,425
New York, NY Prerefunded GO,
Series D
6.000% 02/15/05 ............................. 5 5,369
New York, NY Prerefunded GO,
Series H
7.200% 02/01/02 ............................. 530 572,400
New York, NY Transitional
Finance Authority RB
(Future Tax Secured), Series B
4.750% 11/15/14 ............................. 35 32,244
New York, NY Unrefunded
Balance GO, Series D
8.000% 08/01/03 ............................. 45 48,487
6.000% 02/15/25 ............................. 10 10,112
New York, NY Unrefunded Balance
GO, Series H
7.200% 02/01/13 ............................. 70 74,550
Suffolk County NY Water Authority,
Waterworks RB, Series V
6.750% 06/01/12 ............................. 580 653,225
Triborough Bridge and Tunnel
Authority, NY General Purpose
RB, Series A
5.200% 01/01/20 ............................. 730 686,200
-----------
5,945,992
-----------
PUERTO RICO -- 3.3%
Commonwealth of Puerto Rico GO
5.400% 07/01/07 ............................. 730 755,550
-----------
SOUTH DAKOTA -- 0.1%
Heartland Consumers Power
District, SD Electric RB
6.375% 01/01/16 ............................. 25 26,719
-----------
TENNESSEE -- 0.1%
Metropolitan Government of
Nashville and Davidson County,
TN Water and Sewer RB
Series A
4.750% 01/01/22 ............................. 30 25,988
-----------
VIRGIN ISLANDS -- 3.1%
Virgin Islands Public Finance
Authority RB
7.700% 10/01/99 ............................. 690 706,008
-----------
VIRGINIA -- 3.3%
Fairfax County, VA
Redevelopment & Housing
Authority (Island Walk Proj.),
Mortgage RB
7.100% 04/01/19 ............................. 630 740,250
-----------
PAR
(000) VALUE
------ -----------
WASHINGTON -- 3.6%
King County, WA GO, Series A
6.200% 01/01/24 ............................. $ 40 $ 43,250
Seattle, WA Municipal Light &
Power RB
5.125% 07/01/22 ............................. 100 93,000
Seattle, WA Water System RB
5.250% 12/01/23 ............................. 735 686,306
-----------
822,556
-----------
TOTAL MUNICIPAL BONDS
(Cost $16,817,122) .......................... $17,187,673
-----------
CORPORATE BONDS -- 8.0%
BANKING -- 1.7%
Bangko Sentral Pilipinas,
Yankee Bonds
8.600% 06/15/27 ............................. 105 81,113
Bay View Capital Corp.
Sub. Notes
9.125% 08/15/07 ............................. 65 60,125
Export-Import Bank of Korea,
Global Bonds
6.500% 02/10/02 ............................. 25 24,250
Export-Import Bank of Korea,
Yankee Notes
6.500% 05/15/00 ............................. 50 49,625
First Republic Bank Sub. Notes
7.750% 09/15/12 ............................. 25 22,938
Fuji JGB Investment L.L.C.,
Noncumulative Preferred
Securities, Series A
9.870% 12/30/99 ............................. 45 44,325
Fuji Finance (Cayman), Ltd.
Perpetual Sub. Notes
6.573%(DAGGER)(DAGGER)(DAGGER) .............. 120 103,800
-----------
386,176
-----------
BROADCASTING -- 0.5%
Fox/Liberty Networks L.L.C.,
Registered Sr. Notes
8.875% 08/15/07 ............................. 105 106,575
-----------
CABLE -- 0.6%
CSC Holdings Inc.,
Sr. Notes
7.875% 12/15/07 ............................. 80 77,600
7.250% 07/15/08 ............................. 20 18,550
Diamond Cable Communications
plc, Yankee Sr. Discount Notes
10.750% 02/15/07(DAGGER) .................... 50 38,250
-----------
134,400
-----------
See Accompanying Notes to Financial Statements.
73
<PAGE>
WARBURG PINCUS MUNICIPAL BOND FUND (CONTINUED)
PAR
(000) VALUE
------ -----------
HEALTH CARE -- 0.2%
Columbia/HCA Healthcare Corp.,
Debentures
8.360% 04/15/24 ............................. $ 50 $ 44,750
-----------
PAPER & FOREST PRODUCTS -- 0.0%
P.T. Indah Kiat Pulp & Paper Corp.,
Sr. Secured Notes
8.875% 11/01/00 ............................. 15 13,232
-----------
RETAIL -- 0.6%
K Mart Corp. Notes
7.950% 02/01/23 ............................. 25 23,219
K Mart Corp. Pass Through
Certificates, Series 1995
Class K3
8.540% 01/02/15 ............................. 103 106,156
-----------
129,375
-----------
TELECOMMUNICATIONS -- 1.1%
CenCall Communications Corp.
Sr. Discount Notes
10.125% 01/15/04 ............................ 25 25,500
LCI International, Inc.
Senior Notes
7.250% 06/15/07 ............................. 40 38,400
Nextel Communications, Inc.
Sr. Discount Notes
9.750% 08/15/04 ............................. 130 130,000
Paging Network, Inc.,
Sr. Sub. Notes
8.875% 02/01/06 ............................. 10 5,500
10.125% 08/01/07 ............................ 50 28,125
10.000% 10/15/08 ............................ 35 19,688
-----------
247,213
-----------
TRANSPORTATION -- 1.9%
Continental Airlines, Inc.
Sr. Notes
9.500% 12/15/01 ............................. 105 109,463
Grupo Transportacion Ferroviaria
Mexicana, S.A. de CV
144A Gtd. Sr. Discount Notes
11.750% 06/15/09(DAGGER) .................... 110 57,475
Northwest Airlines, Inc.,
Gtd. Notes
7.625% 03/15/05 ............................. 200 182,250
US Airways, Inc.,
Gtd. Sr. Notes
9.625% 02/01/01 ............................. 95 95,935
-----------
445,123
-----------
PAR
(000) VALUE
------ -----------
UTILITIES -- 1.4%
Beaver Valley Funding Corp.
Secured Lease Obligation Bonds
9.000% 06/01/17 ............................. $ 140 $ 148,225
Connecticut Light and Power Co.
First Mortgage Bonds,
Series C
7.750% 06/01/02 ............................. 85 85,956
Series D
7.875% 10/01/24 ............................. 10 10,150
North Atlantic Energy Corp.,
Secured First Mortgage Notes,
Series A
9.050% 06/01/02 ............................. 69 69,086
-----------
313,417
-----------
TOTAL CORPORATE BONDS
(Cost $1,899,919) ........................... $ 1,820,261
-----------
FOREIGN BONDS -- 2.0%
Republic of Colombia,
Yankee Notes
9.705% 11/13/99 ............................. 75 65,625
Republic of Philippines Global
Bonds
9.875% 01/15/19 ............................. 60 56,775
Republic of Poland,
Past Due Interest Bonds
5.000% 10/27/14 ............................. 310 270,863
United Mexican States,
Global Bonds
11.500% 05/15/26 ............................ 50 54,313
-----------
TOTAL FOREIGN BONDS
(Cost $460,074) ............................. $ 447,576
-----------
U.S. TREASURY OBLIGATIONS -- 1.6%
U.S. Treasury Notes
7.250% 05/15/04 ............................. 140 147,004
6.250% 02/15/07 ............................. 135 135,472
U.S. Treasury Bonds
8.000% 11/15/21 ............................. 75 88,312
-----------
TOTAL U.S. TREASURY
OBLIGATIONS
(Cost $380,947) ............................. $ 370,788
-----------
See Accompanying Notes to Financial Statements.
74
<PAGE>
WARBURG PINCUS MUNICIPAL BOND FUND (CONCLUDED)
NUMBER
OF SHARES VALUE
--------- -----------
PREFERRED STOCKS -- 4.4%
Blackrock Insured Municipal,
Series M7
3.190%(DAGGER)(DAGGER) ...................... 10 $ 250,000
California Federal Capital Corp.,
Series A
9.125% ...................................... 5,725 142,409
Nuveen Insured Municipal
Opportunity, Series W Pfd.
3.200%(DAGGER)(DAGGER) ...................... 8 200,000
Nuveen Insured Premium
Income 2, Series W Pfd.
3.000%(DAGGER)(DAGGER) ...................... 8 200,000
Nuveen Maryland Premium
Income 2, Series W Pfd.
3.000%(DAGGER)(DAGGER) ...................... 8 200,000
-----------
TOTAL PREFERRED STOCKS
(Cost $996,417) $ 992,409
-----------
PAR
(000)
------
SHORT-TERM INVESTMENT -- 7.5%
BBH Grand Cayman U.S. Dollar
Time Deposit
4.500% 09/01/99 ............................. $1,702 $ 1,702,000
(Cost $1,702,000) -----------
TOTAL INVESTMENTS -- 99.5%
(Cost $22,256,479*) ......................... $22,520,707
OTHER ASSETS IN EXCESS
OF LIABILITIES -- 0.5% ...................... 113,493
-----------
TOTAL NET ASSETS -- 100.0% .................... $22,634,200
===========
* Cost for Federal income tax purposes at August 31, 1999 is $22,257,927. The
gross appreciation (depreciation) on a tax basis is as follows:
Gross Appreciation ................................... $ 725,662
Gross Depreciation ................................... (462,882)
---------
Net Appreciation ..................................... $ 262,780
=========
(DAGGER) Step Bond -- The interest rate as of August 31, 1999 is
0% and will reset to interest rate shown at a future
date.
(DAGGER)(DAGGER) Variable Rate Obligation -- The rate shown is the rate
as of August 31, 1999.
(DAGGER)(DAGGER)(DAGGER) 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 August 31, 1999 and are
unaudited.
INVESTMENT ABBREVIATIONS
GO ..........................................................General Obligations
RB .................................................................Revenue Bond
SOB ....................................................Special Obligations Bond
See Accompanying Notes to Financial Statements.
75
<PAGE>
THE WARBURG PINCUS FUNDS
STATEMENTS OF ASSETS AND LIABILITIES
AUGUST 31, 1999
<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 - $614,023,532, $6,510,414,
$23,555,067 and $62,883,880, respectively) .............. $686,338,443 $ 6,961,904 $24,504,357 $70,468,444
Collateral received for securities loaned ................. 91,414,446 171,200 2,260,671 2,914,000
Receivable for investments sold ........................... 3,649,284 -- 255,921 4,742,678
Receivable for Fund shares sold ........................... 62,694 -- 378,750 6,996
Receivable from investment advisor ........................ -- 53,845 33,778 --
Receivable for foreign tax reclaims ....................... 344,400 -- 22,197 --
Dividends and interest receivable ......................... 1,079,063 54,827 106,798 70,620
Prepaid expenses and other assets ......................... 96,863 40,314 45,669 14,174
------------ ----------- ----------- -----------
Total Assets ............................................ 782,985,193 7,282,090 27,608,141 78,216,912
------------ ----------- ----------- -----------
LIABILITIES
Payable on securities loaned .............................. 91,414,446 171,200 2,260,671 2,914,000
Payable for investments purchased ......................... 5,506,983 -- 619,771 4,976,897
Payable for Fund shares repurchased ....................... 790,421 2,170 11,748 3,000
Overdraft liability ....................................... -- 141,390 -- --
Advisory fee payable ...................................... 437,570 1,432 -- 29,267
Distribution fee payable (Common shares) .................. 13,302 913 -- 157
Accrued expenses payable .................................. 928,901 40,246 59,507 78,662
------------ ----------- ----------- -----------
Total Liabilities ....................................... 99,091,623 357,351 2,951,697 8,001,983
------------ ----------- ----------- -----------
NET ASSETS
Capital stock, $0.001 par value ........................... 29,144 61,706 2,520 3,585
Paid-in capital ........................................... 531,100,512 28,703,213 25,305,835 54,803,331
Undistributed net investment income ....................... 2,441,057 -- 135,265 131,333
Accumulated net realized gain/(loss) from investments,
securities sold short, futures and foreign currency
related transactions, if any ............................ 78,004,899 (22,282,438) (1,740,365) 7,692,116
Net unrealized appreciation on investments
and other, if any ....................................... 72,317,958 442,258 953,189 7,584,564
------------ ----------- ----------- -----------
Net Assets .............................................. $683,893,570 $ 6,924,739 $24,656,444 $70,214,929
============ =========== =========== ===========
INSTITUTIONAL SHARES
Net assets ................................................ $675,117,900 $ 5,972,215 $ 98,055 $70,081,197
------------ ----------- ----------- -----------
Shares outstanding ........................................ 28,766,447 401,418 10,003 3,578,351
------------ ----------- ----------- -----------
Net asset value, offering price and redemption price
per share ............................................... $ 23.47 $ 14.88 $ 9.80 $ 19.58
============ =========== =========== ===========
COMMON SHARES
Net assets ................................................ $ 8,775,670 $ 952,524 $24,558,389 $ 133,732
------------ ----------- ----------- -----------
Shares outstanding ........................................ 377,380 63,899 2,509,751 6,846
------------ ----------- ----------- -----------
Net asset value, offering price and redemption price
per share ............................................... $ 23.25 $ 14.91 $ 9.79 $ 19.53
============ =========== =========== ===========
</TABLE>
See Accompanying Notes to Financial Statements.
76
<PAGE>
THE WARBURG PINCUS FUNDS
STATEMENTS OF ASSETS AND LIABILITIES
AUGUST 31, 1999
<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 - $60,555,677, $34,169,798,
$7,423,238 and $1,128,538, respectively) ................ $ 65,658,479 $ 35,470,488 $ 7,034,604 $ 1,078,687
Deposits with brokers and custodian bank for securities
sold short or futures contracts ......................... -- -- 7,870,099 64
Cash ...................................................... -- -- -- 50,726
Collateral received for securities loaned ................. 4,614,130 1,676,400 -- --
Receivable for investments sold ........................... -- -- -- 55,415
Receivable for Fund shares sold ........................... 278,772 -- -- --
Receivable from investment adviser ........................ -- -- -- 65,537
Receivable on open futures contracts ...................... -- -- -- 6,570
Dividends and interest receivable ......................... 53,732 31,324 25,016 202
Receivable for foreign tax reclaims ....................... 15,964 -- -- --
Prepaid expenses and other assets ......................... -- 22,137 16,531 --
------------ ------------ ----------- -----------
Total Assets ............................................ 70,621,077 37,200,349 14,946,250 1,257,201
------------ ------------ ----------- -----------
LIABILITIES
Securities sold short (proceeds $6,989,392 for
Long-Short Market Neutral Fund) ......................... -- -- 7,078,190 --
Payable on securities loaned .............................. 4,614,130 1,676,400 -- --
Payable for investments purchased ......................... 491,198 10,517 -- --
Payable for Fund shares repurchased ....................... 127,588 -- 55,415 --
Overdraft liability ....................................... 71,594 -- -- --
Advisory fee payable ...................................... -- 1,709 6,982 --
Distribution fee payable (Common shares) .................. -- 46 6,341 513
Accrued expenses payable .................................. 151,076 22,391 13,741 59,164
------------ ------------ ----------- -----------
Total Liabilities ....................................... 5,455,586 1,711,063 7,160,669 59,677
------------ ------------ ----------- -----------
NET ASSETS
Capital stock, $0.001 par value ........................... 1,580 1,761 548 72
Paid-in capital ........................................... 58,048,744 26,065,806 9,323,000 1,877,605
Undistributed net investment income/(loss) ................ -- 125,352 385,836 --
Accumulated net realized gain/(loss) from investments,
securities sold short, futures and foreign currency
related transactions, if any ............................ 2,012,194 7,995,677 (1,446,371) (636,904)
Net unrealized appreciation/(depreciation) on
investments and other, if any ........................... 5,102,973 1,300,690 (477,432) (43,249)
------------ ------------ ----------- -----------
Net Assets .............................................. $ 65,165,491 $ 35,489,286 $ 7,785,581 $ 1,197,524
============ ============ =========== ===========
INSTITUTIONAL SHARES
Net assets ................................................ $ 35,394,151 $ 5,900,706 $ 109,237
------------ ----------- -----------
Shares outstanding ........................................ 1,756,467 415,181 6,592
------------ ----------- -----------
Net asset value, offering price and redemption price
per share ............................................... $ 20.15 $ 14.21 $ 16.57
============ =========== ===========
COMMON SHARES
Net assets ................................................ $ 65,165,491 $ 95,135 $ 1,884,875 $ 1,088,287
------------ ------------ ----------- -----------
Shares outstanding ........................................ 1,580,761 4,731 132,798 65,910
------------ ------------ ----------- -----------
Net asset value, offering price and redemption price
per share ............................................... $ 41.22 $ 20.11 $ 14.19 $ 16.51
============ ============ =========== ===========
</TABLE>
See Accompanying Notes to Financial Statements.
77
<PAGE>
THE WARBURG PINCUS FUNDS
STATEMENTS OF ASSETS AND LIABILITIES
AUGUST 31, 1999
<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 - $445,523,197, $29,647,000
$131,746,980 and $22,256,479, respectively) ............. $436,272,396 $28,602,381 $125,193,874 $22,520,707
Deposits with brokers and custodian bank for securities
sold short or futures contracts ......................... 2,258,275 1,116 -- --
Cash ...................................................... 21,520 298,851 670,871 --
Receivable for investments sold ........................... 20,445,008 162,203 979,780 --
Receivable for Fund shares sold ........................... -- -- 1,665 --
Receivable from investment advisor ........................ -- 46,214 -- --
Receivable on forward currency contracts .................. -- 164,028 -- --
Dividends and interest receivable ......................... 3,528,724 406,660 2,508,321 294,482
Prepaid expenses and other assets ......................... 20,436 81,117 72,602 15,366
------------ ----------- ------------ -----------
Total Assets ............................................ 462,546,359 29,762,570 129,427,113 22,830,555
------------ ----------- ------------ -----------
LIABILITIES
Securities sold short (proceeds $3,757,406 and $86,709 for
U.S. Core Fixed Income Fund and Strategic Global
Fixed Income Fund, respectively) ........................ 3,692,813 85,219 -- --
Payable for investments purchased ......................... 106,835,267 2,269,753 -- --
Payable for Fund shares repurchased ....................... 6,996 -- 157,628 157,000
Payable on open futures contracts ......................... 817,558 7,635 -- --
Overdraft liability ....................................... -- -- -- 9,920
Advisory fee payable ...................................... 59,252 2,637 31,187 --
Distribution fee payable (Common shares) .................. 60 25 14,568 --
Accrued expenses payable .................................. 186,802 37,583 70,821 29,435
------------ ----------- ------------ -----------
Total Liabilities ....................................... 111,598,748 2,402,852 274,204 196,355
------------ ----------- ------------ -----------
NET ASSETS
Capital stock, $0.001 par value ........................... 23,385 1,828 8,431 1,583
Paid-in capital ........................................... 360,820,427 28,228,271 150,516,422 22,172,327
Undistributed net investment income ....................... 4,903,858 630,190 2,804,423 113,529
Accumulated net realized gain/(loss) from investments,
securities sold short, futures and foreign currency
related transactions, if any ............................ (6,007,052) (622,214) (17,623,263) (1,448)
Net unrealized appreciation/(depreciation) on
investments and other, if any ........................... (8,793,007) (878,357) (6,553,104) 348,209
------------ ----------- ------------ -----------
Net Assets .............................................. $350,947,611 $27,359,718 $129,152,909 $22,634,200
============ =========== ============ ===========
INSTITUTIONAL SHARES
Net assets ................................................ $350,843,675 $27,341,368 $ 95,129,177 $22,423,211
------------ ----------- ------------ -----------
Shares outstanding ........................................ 23,378,237 1,826,677 6,208,727 1,568,517
------------ ----------- ------------ -----------
Net asset value, offering price and redemption price
per share ............................................... $ 15.01 $ 14.97 $ 15.32 $ 14.30
============ =========== ============ ===========
COMMON SHARES
Net assets ................................................ $ 103,936 $ 18,350 $ 34,023,732 $ 210,989
------------ ----------- ------------ -----------
Shares outstanding ........................................ 6,934 1,231 2,211,885 14,760
------------ ----------- ------------ -----------
Net asset value, offering price and redemption price
per share ............................................... $ 14.99 $ 14.91 $ 15.38 $ 14.29
============ =========== ============ ===========
</TABLE>
See Accompanying Notes to Financial Statements.
78
<PAGE>
THE WARBURG PINCUS FUNDS
STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED AUGUST 31, 1999
<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 ................................................. $11,323,865 $ 362,796 $ 402,172 $ 835,937
Interest .................................................. 1,466,580 68,974 48,985 58,257
Securities lending ........................................ 423,412 13,354 4,484 8,191
Foreign taxes withheld .................................... (754,665) (43,521) (20,970) (405)
----------- ----------- ----------- -----------
Total Investment Income ................................. 12,459,192 401,603 434,671 901,980
----------- ----------- ----------- -----------
EXPENSES
Investment advisory fees .................................. 5,508,687 188,384 152,482 517,425
Administration fees ....................................... 1,001,399 28,187 18,085 99,829
Custodian fees ............................................ 804,105 138,105 78,560 61,032
Audit fees ................................................ 59,220 1,659 10,196 13,201
Printing fees ............................................. 422,209 4,734 21,279 35,204
Registration fees ......................................... 46,928 19,604 27,345 35,790
Legal fees ................................................ 162,937 2,582 28,021 19,965
Transfer agent fees ....................................... 258,895 3,198 8,984 33,383
Insurance expense ......................................... 77,528 988 -- 5,414
Directors fees ............................................ 12,541 10,916 11,829 13,001
Organization expense ...................................... -- -- -- --
Distribution fees ......................................... 47,318 2,146 37,979 157
Miscellaneous fees ........................................ 25,541 3,866 5,803 9,589
----------- ----------- ----------- -----------
8,427,308 404,369 400,563 843,990
Less fees waived and reimbursed ........................... (70,067) (123,904) (179,633) (160,911)
----------- ----------- ----------- -----------
Total Expenses .......................................... 8,357,241 280,465 220,930 683,079
----------- ----------- ----------- -----------
Net Investment Income ........................................ 4,101,951 121,138 213,741 218,901
----------- ----------- ----------- -----------
REALIZED AND UNREALIZED GAIN/(LOSS)ON INVESTMENTS
AND FOREIGN CURRENCY TRANSACTIONS
Net realized gain/(loss) from:
Security transactions ................................... 92,124,562 (3,565,121) (1,734,841) 7,659,607
Foreign exchange transactions ........................... (4,942,605) (258,257) (84,000) --
----------- ----------- ----------- -----------
87,181,957 (3,823,378) (1,818,841) 7,659,607
----------- ----------- ----------- -----------
Net change in unrealized appreciation/(depreciation):
Investments ............................................. 1,243,617 11,209,302 949,290 13,330,712
Translation of assets and
liabilities in foreign currencies .................... (131,019) (6,645) 3,899 --
----------- ----------- ----------- -----------
1,112,598 11,202,657 953,189 13,330,712
----------- ----------- ----------- -----------
Net Gain/(Loss) On Investments And
Foreign Currency Transactions ........................... 88,294,555 7,379,279 (865,652) 20,990,319
----------- ----------- ----------- -----------
Net Increase/(Decrease) In Net Assets Resulting
From Operations ......................................... $92,396,506 $ 7,500,417 $ (651,911) $21,209,220
=========== =========== =========== ===========
<FN>
* Inception Date January 28, 1999.
</FN>
</TABLE>
See Accompanying Notes to Financial Statements.
79
<PAGE>
THE WARBURG PINCUS FUNDS
STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED AUGUST 31, 1999
<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 ................................................. $ 126,076 $ 500,957 $ 267,060 $ 178
Interest .................................................. 126,868 3,091 897,074 33,753
Securities lending ........................................ 11,271 1,456 -- --
Foreign taxes withheld .................................... (10,016) (18,353) (38) --
----------- ----------- ----------- -----------
Total Investment Income ................................. 254,199 487,151 1,164,096 33,931
----------- ----------- ----------- -----------
EXPENSES
Investment advisory fees .................................. 194,860 250,313 291,148 4,332
Administration fees ....................................... 34,101 47,067 31,235 7,383
Custodian fees ............................................ 63,707 50,349 66,711 8,742
Audit fees ................................................ 10,419 11,807 12,567 3,619
Printing fees ............................................. 16,060 21,965 2,629 38,520
Registration fees ......................................... 49,352 34,264 42,670 48,439
Legal fees ................................................ 14,318 31,034 20,857 31,651
Transfer agent fees ....................................... 39,476 7,825 11,042 19,289
Insurance expense ......................................... 1,011 1,092 10,287 1,822
Directors fees ............................................ 13,001 13,001 13,001 12,467
Dividend expense .......................................... -- -- 244,307 --
Interest expense .......................................... -- -- 2,475 --
Distribution fees ......................................... 48,715 46 25,941 9,838
Miscellaneous fees ........................................ 5,139 5,724 4,242 4,416
----------- ----------- ----------- -----------
490,159 474,487 779,112 190,518
Less fees waived and reimbursed ........................... (168,639) (144,106) (114,610) (70,941)
----------- ----------- ----------- -----------
Total Expenses .......................................... 321,520 330,381 664,502 119,577
----------- ----------- ----------- -----------
Net Investment Income/(Loss) ................................. (67,321) 156,770 499,594 (85,646)
----------- ----------- ----------- -----------
REALIZED AND UNREALIZED GAIN/(LOSS) ON INVESTMENTS,
FUTURES, SECURITIES SOLD SHORT AND FOREIGN
CURRENCY TRANSACTIONS
Net realized gain/(loss) from:
Security transactions ................................... 2,165,040 8,033,361 4,455,545 (973,466)
Futures tranactions ..................................... -- -- -- 360,202
Securities sold short ................................... -- -- (5,585,519) --
Foreign exchange transactions ........................... (85,679) -- -- --
----------- ----------- ----------- -----------
2,079,361 8,033,361 (1,129,974) (613,264)
----------- ----------- ----------- -----------
Net change in unrealized appreciation/(depreciation):
Investments ............................................... 5,118,086 4,435,432 (685,565) (49,851)
Futures ................................................... -- -- -- 6,602
Translation of assets and
liabilities in foreign currencies ....................... (426) -- -- --
----------- ----------- ----------- -----------
5,117,660 4,435,432 (685,565) (43,249)
----------- ----------- ----------- -----------
Net Gain/(Loss) On Investments, Futures, Securities
Sold Short and Foreign Currency Transactions ............ 7,197,021 12,468,793 (1,815,539) (656,513)
----------- ----------- ----------- -----------
Net Increase/(Decrease) In Net Assets
Resulting From Operations ............................... $ 7,129,700 $12,625,563 $(1,315,945) $ (742,159)
=========== =========== =========== ===========
<FN>
* Inception Date September 11, 1998
</FN>
</TABLE>
See Accompanying Notes to Financial Statements.
80
<PAGE>
THE WARBURG PINCUS FUNDS
STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED AUGUST 31, 1999
<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 ................................................. $ 635,766 $ 13,721 $ 272,197 $ 23,381
Interest .................................................. 23,646,957 1,630,954 12,370,315 1,234,498
----------- ---------- ----------- -----------
Total Investment Income ................................. 24,282,723 1,644,675 12,642,512 1,257,879
----------- ---------- ----------- -----------
EXPENSES
Investment advisory fees .................................. 1,436,025 144,265 903,069 160,667
Administration fees ....................................... 373,129 56,505 193,659 42,424
Custodian fees ............................................ 150,458 78,142 51,725 31,000
Audit fees ................................................ 26,051 6,604 9,283 2,354
Printing fees ............................................. 107,349 19,170 52,983 11,317
Registration fees ......................................... 46,463 7,650 31,779 31,055
Legal fees ................................................ 63,575 5,616 10,952 14,404
Transfer agent fees ....................................... 105,005 21,580 28,120 10,932
Insurance expense ......................................... 13,175 792 4,540 573
Directors fees ............................................ 14,954 13,001 13,001 13,001
Organization expense ...................................... 5,229 -- -- --
Interest expense .......................................... -- 1,445 29,319 --
Distribution fees ......................................... 111 25 63,586 247
Miscellaneous fees ........................................ 25,717 14,105 31,959 9,834
----------- ---------- ----------- -----------
2,367,241 368,900 1,423,975 327,808
Less fees waived and reimbursed ........................... (689,093) (153,930) (466,009) (100,339)
----------- ---------- ----------- -----------
Total Expenses .......................................... 1,678,148 214,970 957,966 227,469
----------- ---------- ----------- -----------
Net Investment Income ........................................ 22,604,575 1,429,705 11,684,546 1,030,410
----------- ---------- ----------- -----------
REALIZED AND UNREALIZED GAIN/(LOSS) ON INVESTMENTS, FUTURES
AND FOREIGN CURRENCY TRANSACTIONS
Net realized gain/(loss) from:
Security transactions ................................... (5,389,818) (484,360) (2,208,892) 161,557
Futures tranactions ..................................... 621,347 (19,279) -- --
Foreign exchange transactions ........................... 175,213 (66,954) -- --
----------- ---------- ----------- -----------
(4,593,258) (570,593) (2,208,892) 161,557
----------- ---------- ----------- -----------
Net change in unrealized appreciation/(depreciation):
Investments ............................................. (8,679,646) (386,311) (6,943,394) (1,105,750)
Futures ................................................. 828,152 29,980 -- --
Translation of assets and
liabilities in foreign currencies .................... (15,939) 356,164 -- --
----------- ---------- ----------- -----------
(7,867,433) (167) (6,943,394) (1,105,750)
----------- ---------- ----------- -----------
Net Gain/(Loss) On Investments, Futures and Foreign
Currency Transactions ................................... (12,460,691) (570,760) (9,152,286) (944,193)
----------- ---------- ----------- -----------
Net Increase In Net Assets Resulting
From Operations ......................................... $10,143,884 $ 858,945 $ 2,532,260 $ 86,217
=========== ========== =========== ===========
</TABLE>
See Accompanying Notes to Financial Statements.
81
<PAGE>
THE WARBURG PINCUS FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
EUROPEAN
INTERNATIONAL GROWTH FUND EMERGING MARKETS II FUND EQUITY FUND
-------------------------------- -------------------------------- ------------------
FOR THE YEAR FOR THE YEAR FOR THE YEAR FOR THE YEAR FOR THE PERIOD
ENDED ENDED ENDED ENDED JANUARY 28, 1999*
AUGUST 31, 1999 AUGUST 31, 1998 AUGUST 31, 1999 AUGUST 31, 1998 TO AUGUST 31, 1999
--------------- --------------- --------------- --------------- ------------------
<S> <C> <C> <C> <C> <C>
Increase/(decrease) in net assets:
Operations:
Net investment income .................. $ 4,101,951 $ 4,459,649 $ 121,138 $ 374,101 $ 213,741
Net gain/(loss) on investments and
foreign currency transactions ........ 88,294,555 78,134,835 7,379,279 (25,007,447) (865,652)
------------ ------------ ----------- ----------- -----------
Net increase/(decrease) in net assets
resulting from operations ............ 92,396,506 82,594,484 7,500,417 (24,633,346) (651,911)
------------ ------------ ----------- ----------- -----------
Dividends and Distributions to
shareholders:
From net investment income:
Institutional shares ................. (7,632,495) -- -- (732,736) --
Common shares ........................ (344,430) -- -- (83) --
From net realized capital gains:
Institutional shares ................. (54,241,925) (73,424,625) -- (649,941) --
Common shares ........................ (2,569,737) (167,102) -- (115) --
From capital:
Institutional shares ................. -- -- (312,194) (3,255,728) --
Common shares ........................ -- -- (12,381) (580) --
------------ ------------ ----------- ----------- -----------
Total distributions to shareholders ....... (64,788,587) (73,591,727) (324,575) (4,639,183) --
------------ ------------ ----------- ----------- -----------
Net capital share transactions ............ 31,183,186 47,441,934 (25,105,168) (28,889,378) 25,308,355
------------ ------------ ----------- ----------- -----------
Total increase/(decrease)
in net assets .......................... 58,791,105 56,444,691 (17,929,326) (58,161,907) 24,656,444
Net Assets:
Beginning of period .................... 625,102,465 568,657,774 24,854,065 83,015,972 --
------------ ------------ ----------- ----------- -----------
End of period .......................... $683,893,570 $625,102,465 $ 6,924,739 $24,854,065 $24,656,444
============ ============ =========== =========== ===========
<FN>
* Inception Date
</FN>
</TABLE>
See Accompanying Notes to Financial Statements.
82
<PAGE>
THE WARBURG PINCUS FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
U.S. CORE EQUITY FUND GLOBAL TELECOMMUNICATIONS FUND
-------------------------------- --------------------------------
FOR THE YEAR FOR THE YEAR FOR THE YEAR FOR THE YEAR
ENDED ENDED ENDED ENDED
AUGUST 31, 1999 AUGUST 31, 1998 AUGUST 31, 1999 AUGUST 31, 1998
--------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
Increase/(decrease) in net assets:
Operations:
Net investment income/(loss) ........... $ 218,901 $ 231,556 $ (67,321) $ (298)
Net gain on investments and foreign
currency transactions ................ 20,990,319 7,098,025 7,197,021 142,046
------------ ------------ ----------- --------
Net increase in net assets resulting
from operations ...................... 21,209,220 7,329,581 7,129,700 141,748
------------ ------------ ----------- --------
Dividends and Distributions to
shareholders:
From net investment income:
Institutional shares ................. (104,261) (472,680) -- --
Common shares ........................ (22) -- -- (138)
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 ............ 9,728,907 (16,844,975) 57,496,988 44,798
------------ ------------ ----------- --------
Total increase/(decrease)
in net assets .......................... 6,700,964 (22,667,776) 64,447,398 148,621
Net Assets:
Beginning of year ...................... 63,513,965 86,181,741 718,093 569,472
------------ ------------ ----------- --------
End of year ............................ $ 70,214,929 $ 63,513,965 $65,165,491 $718,093
============ ============ =========== ========
</TABLE>
See Accompanying Notes to Financial Statements.
83
<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 YEAR FOR THE PERIOD FOR THE YEAR FOR THE PERIOD FOR THE PERIOD
ENDED JULY 31, 1998* ENDED JULY 31, 1998* SEPTEMBER 11, 1998*
AUGUST 31, 1999 TO AUGUST 31, 1998 AUGUST 31, 1999 TO AUGUST 31, 1998 TO AUGUST 31, 1999
--------------- ------------------ --------------- ------------------ -------------------
<S> <C> <C> <C> <C> <C>
Increase/(decrease) in net assets:
Operations:
Net investment income/(loss) ... $ 156,770 $ 18,161 $ 499,594 $ 21,200 $ (85,646)
Net gain/(loss) on investments,
futures and securities
sold short ................... 12,468,793 (3,172,426) (1,815,539) 89,659 (656,513)
----------- ----------- ---------- ---------- ----------
Net increase/(decrease) in
net assets resulting from
operations ................... 12,625,563 (3,154,265) (1,315,945) 110,859 (742,159)
----------- ----------- ---------- ---------- ----------
Dividends and Distributions to
shareholders:
From net investment income:
Institutional shares ......... (49,578) -- (30,279) -- --
Common shares ................ (1) -- (90,662) -- --
From net realized capital gains:
Institutional shares ......... -- -- (52,082) -- (13,656)
Common shares ................ -- -- (159,858) -- (338)
From capital:
Institutional shares ......... -- -- -- -- (15,857)
Common shares ................ -- -- -- -- (388)
----------- ----------- ---------- ---------- ----------
Total distributions to
shareholders ................... (49,579) -- (332,881) -- (30,239)
----------- ----------- ---------- ---------- ----------
Net capital share transactions .... 253,862 25,813,705 3,132,125 6,191,423 1,969,922
----------- ----------- ---------- ---------- ----------
Total increase in net assets ...... 12,829,846 22,659,440 1,483,299 6,302,282 1,197,524
Net Assets:
Beginning of period ............ 22,659,440 -- 6,302,282 -- --
----------- ----------- ---------- ---------- ----------
End of period .................. $35,489,286 $22,659,440 $7,785,581 $6,302,282 $1,197,524
=========== =========== ========== ========== ==========
<FN>
* Inception Date.
</FN>
</TABLE>
See Accompanying Notes to Financial Statements.
84
<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 YEAR FOR THE YEAR FOR THE YEAR FOR THE YEAR
ENDED ENDED ENDED ENDED
AUGUST 31, 1999 AUGUST 31, 1998 AUGUST 31, 1999 AUGUST 31, 1998
--------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
Increase/(decrease) in net assets:
Operations:
Net investment income ........................... $ 22,604,575 $ 13,581,467 $ 1,429,705 $ 1,809,232
Net gain/(loss) on investments, futures and
foreign currency transactions ................. (12,460,691) 1,267,128 (570,760) (247,851)
------------ ------------ ----------- ------------
Net increase in net assets resulting
from operations ............................... 10,143,884 14,848,595 858,945 1,561,381
------------ ------------ ----------- ------------
Dividends and Distributions to
shareholders:
From net investment income:
Institutional shares .......................... (22,277,216) (11,454,482) (548,508) (1,133,693)
Common shares ................................. (2,149) -- (37) --
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 ................ (26,699,885) (14,236,759) (1,079,459) (2,295,953)
------------ ------------ ----------- ------------
Net capital share transactions ..................... (26,029,500) 215,702,694 (903,152) (15,067,445)
------------ ------------ ----------- ------------
Total increase/(decrease)
in net assets ................................... (42,585,501) 216,314,530 (1,123,666) (15,802,017)
Net Assets:
Beginning of year ............................... 393,533,112 177,218,582 28,483,384 44,285,401
------------ ------------ ----------- ------------
End of year ..................................... $350,947,611 $393,533,112 $27,359,718 $ 28,483,384
============ ============ =========== ============
</TABLE>
See Accompanying Notes to Financial Statements.
85
<PAGE>
THE WARBURG PINCUS FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
HIGH YIELD FUND MUNICIPAL BOND FUND
----------------------------------- ----------------------------------
FOR THE YEAR FOR THE YEAR FOR THE YEAR FOR THE YEAR
ENDED ENDED ENDED ENDED
AUGUST 31, 1999 AUGUST 31, 1998 AUGUST 31, 1999 AUGUST 31, 1998
--------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
Increase/(decrease) in net assets:
Operations:
Net investment income ........................... $ 11,684,546 $ 8,042,385 $ 1,030,410 $ 979,325
Net gain/(loss) on investments .................. (9,152,286) (3,054,518) (944,193) 541,320
------------ ----------- ----------- -----------
Net increase in net assets resulting
from operations ............................... 2,532,260 4,987,867 86,217 1,520,645
------------ ----------- ----------- -----------
Dividends and Distributions to
shareholders:
From net investment income:
Institutional shares .......................... (8,940,115) (7,732,581) (1,031,337) (976,336)
Common shares ................................. (1,873,396) (169,975) (4,114) --
From net realized capital gains:
Institutional shares .......................... -- -- (320,024) (154,615)
Common shares ................................. -- -- (14) --
------------ ----------- ----------- -----------
Total distributions to shareholders ................ (10,813,511) (7,902,556) (1,355,489) (1,130,951)
------------ ----------- ----------- -----------
Net capital share transactions ..................... 42,820,448 4,811,589 1,674,840 2,028,820
------------ ----------- ----------- -----------
Total increase in net assets ....................... 34,539,197 1,896,900 405,568 2,418,514
Net Assets:
Beginning of year ............................... 94,613,712 92,716,812 22,228,632 19,810,118
------------ ----------- ----------- -----------
End of year ..................................... $129,152,909 $94,613,712 $22,634,200 $22,228,632
============ =========== =========== ===========
</TABLE>
See Accompanying Notes to Financial Statements.
86
<PAGE>
THE WARBURG PINCUS FUNDS
INTERNATIONAL GROWTH FUND
FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
INSTITUTIONAL
---------------------------------------------------
FOR THE YEAR ENDED AUGUST 31,
---------------------------------------------------
1999 1998 1997 1996 1995
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period ............ $ 22.70 $ 22.22 $ 19.41 $ 18.24 $ 20.73
-------- -------- -------- -------- --------
Income from investment operations
Net investment income ....................... 0.14 0.15 0.18 0.19 0.06
Net gain/(loss) on investments and foreign
currency transactions (both realized and
unrealized) ............................... 2.90 3.26 2.89 1.05 (1.75)
-------- -------- -------- -------- --------
Total from investment operations ............ 3.04 3.41 3.07 1.24 (1.69)
-------- -------- -------- -------- --------
Less Distributions
Dividends from net investment income ........ (0.28) -- (0.26) (0.07) --
Distributions from capital gains ............ (1.99) (2.93) -- -- (0.80)
-------- -------- -------- -------- --------
Total distributions ......................... (2.27) (2.93) (0.26) (0.07) (0.80)
-------- -------- -------- -------- --------
Net asset value, end of period $ 23.47 $ 22.70 $ 22.22 $ 19.41 $ 18.24
======== ======== ======== ======== ========
Total return .................................... 13.88% 16.74% 15.93% 6.81%(d) (8.06)%(d)
Ratios/Supplemental Data:
Net assets, end of period (000s omitted) ...... $675,118 $623,482 $568,510 $682,271 $773,255
Ratio of expenses to average net assets ....... 1.21%(a) 1.14%(a) 1.16%(a) 1.19%(a) 1.25%(a)
Ratio of net investment income (loss) to
average net assets .......................... 0.60% 0.72% 0.71% 0.84% 0.35%
Fund turnover rate ............................ 182% 141% 126% 86% 78%
</TABLE>
<TABLE>
<CAPTION>
COMMON
------------------------------------------
FOR THE YEAR ENDED FOR THE PERIOD
AUGUST 31, NOVEMBER 1, 1996*
---------------------- to August 31,
1999 1998 1997
------- ------ -----------------
<S> <C> <C> <C>
Net asset value, beginning of period ............ $ 22.56 $22.17 $19.67
------- ------ ------
Income from investment operations
Net investment income ....................... 0.12(DAGGER) 0.03 0.36
Net gain/(loss) on investments and foreign
currency transactions (both realized and
unrealized) ............................... 2.83 3.29 2.40
------- ------ ------
Total from investment operations ............ 2.95 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 $ 23.25 $22.56 $22.17
======= ====== ======
Total return .................................... 13.52% 16.33% 14.14%(c)
Ratios/Supplemental Data:
Net assets, end of period (000s omitted) ...... $ 8,776 $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 .......................... 0.31% 0.58% 1.15%(b)
Fund turnover rate ............................ 182% 141% 126%(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 1.22%, 1.23%, 1.25%, 1.22% and 1.26% for the years ended
August 31, 1999, 1998, 1997, 1996 and 1995, 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 1.51%
and 1.48% for the years ended August 31, 1999 and 1998, respectively, and
1.53% annualized for the period ended August 31, 1997.
(b) Annualized.
(c) Not annualized.
(d) Redemption fees not reflected in total return.
* Inception Date.
(DAGGER) Per share information is calculated using the average share outstanding
method.
</FN>
</TABLE>
See Accompanying Notes to Financial Statements.
87
<PAGE>
THE WARBURG PINCUS FUNDS
EMERGING MARKETS II FUND
FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
INSTITUTIONAL
-------------------------------------------------------
FOR THE YEAR ENDED AUGUST 31,
-------------------------------------------------------
1999 1998 1997 1996 1995
-------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period ............ $ 10.44 $ 19.64 $ 18.20 $ 17.67 $ 24.58
------- ------- ------- ------- -------
Income from investment
operations
Net investment income ....................... 0.08(DAGGER) 0.12 0.21 0.10 0.02
Net gain/(loss) on investments and
foreign currency transactions (both
realized and unrealized) .................. 4.57 (8.08) 1.30 0.48 (5.94)
------- ------- ------- ------- --------
Total from investment operations ............ 4.65 (7.96) 1.51 0.58 (5.92)
------- ------- ------- ------- --------
Less Distributions
Dividends from net investment
income .................................... -- (0.20) (0.07) (0.05) (0.07)
Distributions from capital gains ............ -- (0.17) -- -- (0.92)
Return of Capital ........................... (0.21) (0.87) -- -- --
------- ------- ------- ------- --------
Total distributions ......................... (0.21) (1.24) (0.07) (0.05) (0.99)
------- ------- ------- ------- --------
Net asset value, end of period .................. $ 14.88 $ 10.44 $ 19.64 $ 18.20 $ 17.67
======= ======= ======= ======= ========
Total return .................................... 45.12% (42.96)% 8.31% 3.33%(d)(24.42)%(d)
Ratios/Supplemental Data:
Net assets, end of period (000s omitted) ...... $ 5,972 $24,217 $83,012 $114,691 $128,323
Ratio of expenses to average net assets ....... 1.48%(a) 1.50%(a) 1.49%(a) 1.49%(a) 1.50%(a)
Ratio of net investment income (loss) to
average net assets .......................... 0.66% 0.61% 0.99% 0.63% 0.02%
Fund turnover rate ............................ 230% 179% 147% 79% 79%
</TABLE>
<TABLE>
<CAPTION>
COMMON
------------------------------------------
FOR THE YEAR ENDED FOR THE PERIOD
AUGUST 31, NOVEMBER 1, 1996*
---------------------- to August 31,
1999 1998 1997
------ ------ -----------------
<S> <C> <C> <C>
Net asset value, beginning of period ............ $10.48 $19.60 $18.08
------ ------ ------
Income from investment
operations
Net investment income ....................... 0.04 0.03 0.18
Net gain/(loss) on investments and
foreign currency transactions (both
realized and unrealized) .................. 4.58 (7.99) 1.40
------ ------ ------
Total from investment operations ............ 4.62 (7.96) 1.58
------ ------ ------
Less Distributions
Dividends from net investment
income .................................... -- (0.12) (0.06)
Distributions from capital gains ............ -- (0.17) --
Return of Capital ........................... (0.19) (0.87) --
------ ------ ------
Total distributions ......................... (0.19) (1.16) (0.06)
------ ------ ------
Net asset value, end of period .................. $14.91 $10.48 $19.60
====== ====== ======
Total return .................................... 44.67% (42.86)% 8.76%(c)
Ratios/Supplemental Data:
Net assets, end of period (000s omitted) ...... $ 953 $ 636 $ 4
Ratio of expenses to average net assets ....... 1.75%(a) 1.75%(a) 1.75%(a)(b)
Ratio of net investment income (loss) to
average net assets .......................... 0.28% 1.08% 0.88%(b)
Fund turnover rate ............................ 230% 179% 147%(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 2.13%, 2.01%, 1.63%, 1.62%, and 1.61% for the three years
ended August 31, 1999, 1998, 1997, 1996 and 1995, 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
2.42% and 2.33% for the years ended August 31, 1999 and 1998,
respectively, and 1.88% annualized for the period ended August 31, 1997.
(b) Annualized.
(c) Not annualized.
(d) Redemption fees not reflected in total return.
* Inception date.
(DAGGER) Per share information is calculated using the average share outstanding
method.
</FN>
</TABLE>
See Accompanying Notes to Financial Statements.
88
<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 28, 1999* JANUARY 28, 1999*
TO AUGUST 31, 1999 TO AUGUST 31, 1999
------------------ ------------------
<S> <C> <C>
Net asset value, beginning of period ........................ $10.00 $ 10.00
------ -------
Income from investment operations
Net investment income ................................... 0.09 0.08
Net loss on investments and foreign currency transactions
(both realized and unrealized) ........................ (0.29) (0.29)
------ -------
Total from investment operations ........................ (0.20) (0.21)
------ -------
Less Distributions
Dividends from net investment income .................... -- --
Distributions from capital gains ........................ -- --
------ -------
Total distributions ..................................... -- --
------ -------
Net asset value, end of period .............................. $ 9.80 $ 9.79
====== =======
Total return .............................................. (2.00)%(c) (2.10)%(c)
Ratios/Supplemental Data:
Net assets, end of period (000s omitted) .................. $ 98 $24,588
Ratio of expenses to average net assets ................... 1.16%(a)(b) 1.46%(a)(b)
Ratio of net investment income (loss) to average net assets 1.67%(b) 1.41%(b)
Fund turnover rate ........................................ 161%(c) 161%(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 2.29% annualized for the period ended August 31, 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 2.64% annualized for the period ended August 31, 1999.
(b) Annualized.
(c) Not Annualized.
* Inception Date.
</FN>
</TABLE>
See Accompanying Notes to Financial Statements.
89
<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 YEAR
FOR THE YEAR ENDED AUGUST 31, AUGUST 31, 1994* FOR THE PERIOD
------------------------------------- TO AUGUST 31, OCTOBER 30, 1998*
1999 1998 1997 1996 1995 TO AUGUST 31, 1999
-------- ------- ------- ------- ---------------- ------------------
<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 ....................... 0.07 0.01 0.14 0.20 0.22 0.04
Net gain on investments
(both realized and unrealized) ............ 7.56 0.88 6.82 2.81 2.72 4.05
------- ------- ------- ------- ------- ------
Total from investment operations ............ 7.63 0.89 6.96 3.01 2.94 4.09
------- ------- ------- ------- ------- ------
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 .................. $ 19.58 $ 21.73 $ 24.40 $ 19.05 $ 17.86 $19.53
======= ======= ======= ======= ======= ======
Total return .................................... 38.07% 3.18% 38.32% 17.59% 19.75% 18.67%(c)
Ratios/Supplemental Data:
Net assets, end of period (000s omitted) ...... $70,081 $63,514 $86,182 $59,015 $31,644 $ 134
Ratio of expenses to average net assets ....... 0.99%(a) 1.00%(a) 1.00%(a) 1.00%(a) 1.00%(a) 1.26%(a)(b)
Ratio of net investment income (loss)
to average net assets ....................... 0.32% 0.23% 0.67% 1.25% 1.59% 0.02%(b)
Fund turnover rate ............................ 110% 164% 93% 127% 123% 110%(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 1.22%, 1.18%, 1.18%, 1.34% and 1.51% for the years ended August
31, 1999, 1998, 1997, 1996 and 1995 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 1.51% annualized for
the period ended August 31, 1999.
(b) Annualized.
(c) Not Annualized.
* Inception Date.
</FN>
</TABLE>
See Accompanying Notes to Financial Statements.
90
<PAGE>
THE WARBURG PINCUS FUNDS
GLOBAL TELECOMMUNICATIONS FUND
FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
COMMON
-------------------------------------------------
FOR THE YEAR ENDED FOR THE PERIOD
AUGUST 31, DECEMBER 4, 1996*
-------------------------- TO AUGUST 31,
1999 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) ........................................ (0.04) (0.01) 0.02
Net gain on investments and foreign currency transactions
(both realized and unrealized) .................................... 23.56 4.29 2.28
------- ------ ------
Total from investment operations .................................... 23.52 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 .......................................... $ 41.22 $20.54 $17.30
======= ====== ======
Total return ............................................................ 120.73% 25.38% 15.33%(c)
Ratios/Supplemental Data:
Net assets, end of period (000s omitted) .............................. $65,165 $ 718 $ 569
Ratio of expenses to average net assets ............................... 1.65%(a) 1.65%(a) 1.65%(a)(b)
Ratio of net investment income (loss) to average net assets ........... (0.35)% (0.03)% 0.16%(b)
Fund turnover rate .................................................... 203% 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 2.52% and 6.86% for the years ended August 31, 1999 and 1998 and 8.38%
annualized for the period ended August 31, 1997.
(b) Annualized.
(c) Not Annualized.
* Inception Date.
</FN>
</TABLE>
See Accompanying Notes to Financial Statements.
91
<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 YEAR FOR THE PERIOD
ENDED JULY 31, 1998* FOR THE PERIOD
AUGUST 31, TO AUGUST 31, OCTOBER 30, 1998*
1999 1998 TO AUGUST 31, 1999
------------ -------------- ------------------
<S> <C> <C> <C>
Net asset value, beginning of period ............................... $ 13.17 $ 15.00 $15.95
-------- ------- ------
Income from investment operations
Net investment income .......................................... 0.08 0.01 0.02
Net gain/(loss) on investments (both realized and unrealized) .. 6.92 (1.84) 4.16
-------- ------- ------
Total from investment operations ............................... 7.00 (1.83) 4.18
-------- ------- ------
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 ..................................... $ 20.15 $ 13.17 $20.11
======== ======= ======
Total return ....................................................... 53.21% (12.20)%(c) 26.19%(c)
Ratios/Supplemental Data:
Net assets, end of period (000s omitted) ......................... $ 35,394 $22,659 $95
Ratio of expenses to average net assets .......................... 0.99%(a) 1.00%(a)(b) 1.29%(a)(b)
Ratio of net investment income (loss) to average net assets ...... 0.47% 0.92%(b) 0.17%(b)
Fund turnover rate ............................................... 209% 52%(c) 209%(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 1.42% for the year ended August 31, 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 1.74% annualized for the period ended August 31, 1999.
(b) Annualized.
(c) Not Annualized.
* Inception Date.
</FN>
</TABLE>
See Accompanying Notes to Financial Statements.
92
<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 YEAR FOR THE PERIOD
ENDED JULY 31, 1998* FOR THE PERIOD
AUGUST 31, TO AUGUST 31, SEPTEMBER 8, 1998*
1999 1998 TO AUGUST 31, 1999
------------ -------------- ------------------
<S> <C> <C> <C>
Net asset value, beginning of period ...................................... $15.27 $15.00 $ 15.19
------ ------ -------
Income from investment operations
Net investment income ................................................. 0.39(DAGGER) 0.05 0.32(DAGGER)
Net gain/(loss) on investments and securities sold short
(both realized and unrealized) ...................................... (1.25) 0.22 (1.12)
------ ------ -------
Total from investment operations ...................................... (0.86) 0.27 (0.80)
------ ------ -------
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 ............................................ $14.21 $15.27 $ 14.19
====== ====== =======
Total return .............................................................. (5.68)% 1.80%(c) (5.33)%(c)
Ratios/Supplemental Data:
Net assets, end of period (000s omitted) ................................ $5,901 $6,302 $ 1,885
Ratio of expenses to average net assets (including dividend expense) .... 3.33%(a) 4.32%(a)(b) 3.40%(a)(b)
Ratio of expenses to average net assets (excluding dividend expense) .... 2.00%(a) 2.00%(a)(b) 2.24%(a)(b)
Ratio of net investment income (loss) to average net assets ............. 2.65% 1.96%(b) 2.46%(b)
Fund turnover rate ...................................................... 705% 130%(c) 705%
<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 2.56% (excluding dividend expense) and 3.93%
(including dividend expense) for the year ended August 31, 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 2.84% (excluding dividend expense) and 4.00% (including
dividend expense) annualized for the period ended August 31, 1999.
(b) Annualized.
(c) Not Annualized.
* Inception Date.
(DAGGER) Per share information is calculated using the average share outstanding
method.
</FN>
</TABLE>
See Accompanying Notes to Financial Statements.
93
<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 11, 1998* OCTOBER 30, 1998*
TO AUGUST 31, 1999 TO AUGUST 31, 1999
------------------- ------------------
<S> <C> <C>
Net asset value, beginning of period ......................................... $15.00 $15.72
------ ------
Income from investment operations
Net investment loss ...................................................... (0.09)(DAGGER) (0.07)(DAGGER)
Net gain on investments and futures (both realized and unrealized) ....... 2.11 1.31
------ ------
Total from investment operations ......................................... 2.02 1.24
------ ------
Less Distributions
Distributions from capital gains ......................................... (0.21) (0.21)
Return of capital ........................................................ (0.24) (0.24)
------ ------
Total distributions ...................................................... (0.45) (0.45)
------ ------
Net asset value, end of period ............................................... $16.57 $16.51
====== ======
Total return ................................................................. 13.42%(c) 7.82%(c)
Ratios/Supplemental Data:
Net assets, end of period (000s omitted) ................................... $109 $1,088
Ratio of expenses to average net assets .................................... 2.48%(a)(b) 2.79%(a)(b)
Ratio of net investment income (loss) to average net assets ................ 0.76%(b) (2.26)%(b)
Fund turnover rate ......................................................... 951%(c) 951%(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 4.12% annualized for the period ended August 31,
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 4.43% annualized for the period ended August 31, 1999.
(b) Annualized.
(c) Not Annualized. * Inception Date.
(DAGGER) Per share information is calculated using the average share outstanding
method.
</FN>
</TABLE>
See Accompanying Notes to Financial Statements.
94
<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 YEAR ENDED AUGUST 31, FOR THE PERIOD
--------------------------------------------------- OCTOBER 30, 1998*
1999 1998 1997 1996 1995 TO AUGUST 31, 1999
------- -------- -------- -------- ------- ------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period ............... $ 15.72 $ 15.65 $ 15.06 $ 15.42 $ 14.77 $15.68
------- -------- -------- -------- ------- ------
Income from investment operations
Net investment income .......................... 0.93 0.84 0.92 0.95 0.88 0.74
Net gain/(loss) on investments,
futures and foreign currency transactions
(both realized and unrealized) ............... (0.56) 0.33 0.76 (0.16) 0.61 (0.58)
------- -------- -------- -------- ------- ------
Total from investment operations ............... 0.37 1.17 1.68 0.79 1.49 0.16
------- -------- -------- -------- ------- ------
Less Distributions
Dividends from net investment income ........... (0.91) (0.87) (0.97) (0.93) (0.84) (0.68)
Distributions from capital gains ............... (0.17) (0.23) (0.12) (0.22) -- (0.17)
------- -------- -------- -------- ------- ------
Total distributions ............................ (1.08) (1.10) (1.09) (1.15) (0.84) (0.85)
------- -------- -------- -------- ------- ------
Net asset value, end of period ..................... $ 15.01 $ 15.72 $ 15.65 $ 15.06 $ 15.42 $14.99
======= ======== ======== ======== ======= ======
Total return ....................................... 2.37% 7.77% 11.53% 5.23% 10.60% 1.00%(c)
Ratios/Supplemental Data:
Net assets, end of period (000s omitted) ......... $350,844 $393,533 $177,219 $118,596 $99,250 $104
Ratio of expenses to average net assets .......... 0.44%(a) 0.47%(a) 0.50%(a) 0.50%(a) 0.50%(a) 0.70%(a)(b)
Ratio of net investment income (loss) to
average net assets ............................. 5.90% 5.87% 6.31% 6.43% 6.47% 5.82%(b)
Fund turnover rate ............................... 569% 372% 372% 201% 304% 569%(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%, .74%, .78%, .78% and .84% for the years ended August 31,
1999, 1998, 1997, 1996 and 1995, 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 .90% annualized for the period ended August 31, 1999.
(b) Annualized.
(c) Not Annualized.
* Inception Date.
</FN>
</TABLE>
See Accompanying Notes to Financial Statements.
95
<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 YEAR ENDED AUGUST 31, FOR THE PERIOD
--------------------------------------------------- OCTOBER 30, 1998*
1999 1998 1997 1996 1995 TO AUGUST 31, 1999
------- -------- -------- -------- ------- ------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period ...................... $ 15.10 $ 15.41 $ 15.75 $ 15.67 $ 15.00 $16.10
------- ------- ------- ------- ------- ------
Income from investment operations
Net investment income ................................. 0.79 0.87 0.85 0.87 1.06 0.63
Net gain/(loss) on investments, futures and foreign
currency transactions (both realized and
unrealized) ......................................... (0.35) (0.25) (0.16) 0.58 0.49 (1.26)
------- ------- ------- ------- ------- ------
Total from investment operations ...................... 0.44 0.62 0.69 1.45 1.55 (0.63)
------- ------- ------- ------- ------- ------
Less Distributions
Dividends from net investment income .................. (0.29) (0.45) (0.71) (1.22) (0.88) (0.28)
Distributions from capital gains ...................... (0.28) (0.48) (0.32) (0.15) -- (0.28)
------- ------- ------- ------- ------- ------
Total distributions ................................... (0.57) (0.93) (1.03) (1.37) (0.88) (0.56)
------- ------- ------- ------- ------- ------
Net asset value, end of period ............................ $ 14.97 $ 15.10 $ 15.41 $ 15.75 $ 15.67 $14.91
======= ======= ======= ======= ======= ======
Total return .............................................. 2.78% 4.19% 4.48% 9.65% 10.72% (4.09)%(c)
Ratios/Supplemental Data:
Net assets, end of period (000s omitted) ................ $ 27,342 $28,483 $44,285 $38,348 $19,565 $ 18
Ratio of expenses to average net assets ................. 0.74%(a) 0.75%(a) 0.75%(a) 0.75%(a) 0.75%(a) 1.00%(a)(b)
Ratio of net investment income (loss) to
average net assets .................................... 4.96% 5.30% 5.31% 7.37% 7.26% 4.80%(b)
Fund turnover rate ...................................... 305% 283% 98% 87% 91% 305%(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 1.27%, 1.17%, 0.98%, 1.07% and 1.29% for the years ended August
31, 1999, 1998, 1997, 1996 and 1995, 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 1.56% annualized for the period ended August 31, 1999.
(b) Annualized.
(c) Not Annualized.
* Inception Date.
</FN>
</TABLE>
See Accompanying Notes to Financial Statements.
96
<PAGE>
THE WARBURG PINCUS FUNDS
HIGH YIELD FUND
FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
INSTITUTIONAL COMMON
----------------------------------------------- ----------------------------------------
FOR THE YEAR ENDED FOR THE PERIOD
FOR THE YEAR ENDED AUGUST 31, AUGUST 31, NOVEMBER 1, 1996*
----------------------------------------------- --------------------- TO AUGUST 31,
1999 1998 1997 1996 1995 1999 1998 1997
------- ------- ------- ------- ------- ------- ------ ----------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period ..... $ 16.60 $ 17.08 $ 16.09 $ 15.72 $ 15.94 $ 16.62 $17.08 $16.21
------- ------- ------- ------- ------- ------- ------ ------
Income from investment operations
Net investment income ................ 1.42 1.43 1.37 1.47 1.42 1.39(DAGGER) 1.36 0.93
Net gain/(loss) on investments (both
realized and unrealized) ........... (1.33) (0.49) 0.96 0.40 (0.30) (1.34) (0.45) 0.87
------- ------- ------- ------- ------- ------- ------ ------
Total from investment
operations ......................... 0.09 0.94 2.33 1.87 1.12 0.05 0.91 1.80
------- ------- ------- ------- ------- ------- ------ ------
Less Distributions
Dividends from net investment
income ............................. (1.37) (1.42) (1.34) (1.50) (1.34) (1.29) (1.37) (0.93)
Distributions from capital gains ..... -- -- -- -- -- -- -- --
------- ------- ------- ------- ------- ------- ------ ------
Total distributions .................. (1.37) (1.42) (1.34) (1.50) (1.34) (1.29) (1.37) (0.93)
------- ------- ------- ------- ------- ------- ------ ------
Net asset value, end of period ....... $ 15.32 $ 16.60 $ 17.08 $ 16.09 $ 15.72 $ 15.38 $16.62 $17.08
======= ======= ======= ======= ======= ======= ====== ======
Total return ............................. 0.67% 5.48% 15.17% 12.42% 7.79%(d) 0.39% 5.27% 11.49%(c)
Ratios/Supplemental Data:
Net assets, end of period
(000s omitted) ....................... $95,129 $94,044 $92,630 $75,849 $153,621 $34,024 $ 570 $ 86
Ratio of expenses to average
net assets ........................... 0.69%(a) 0.70%(a) 0.70%(a) 0.88%(a) 1.00%(a) 0.95%(a) 0.95%(a) 0.96%(a)(b)
Ratio of net investment income
(loss) to average net assets ......... 9.10% 8.12% 8.44% 8.92% 9.37% 8.86% 7.96% 8.13%(b)
Fund turnover rate ..................... 40% 60% 84% 143% 70% 40% 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 1.04%, 1.14%, 1.13%, 1.11%, and 1.08% for the
years ended August 31, 1999, 1998, 1997, 1996, and 1995 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 1.34% and 1.39% for the years ended August 31, 1999 and 1998,
respectively, and 1.47% annualized for the period ended August 31,
1997.
(b) Annualized.
(c) Not annualized.
(d) Redemption fees not reflected in total return.
* Inception Date.
(DAGGER) Per share information is calculated using the average share outstanding
method.
</FN>
</TABLE>
See Accompanying Notes to Financial Statements.
97
<PAGE>
THE WARBURG PINCUS FUNDS
MUNICIPAL BOND FUND
FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
INSTITUTIONAL COMMON
------------------------------------------------ ------------------
FOR THE YEAR ENDED AUGUST 31, FOR THE PERIOD
------------------------------------------------ OCTOBER 30, 1998*
1999 1998 1997 1996 1995 TO AUGUST 31, 1999
------- ------- ------- ------- ------- ------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period .................... $ 15.12 $ 14.84 $ 14.65 $ 15.46 $ 15.06 $15.14
------- ------- ------- ------- ------- ------
Income from investment operations
Net investment income ............................... 0.67 0.70 0.72 0.73 0.71 0.54
Net gain/(loss) on investments (both realized
and unrealized) ................................... (0.60) 0.40 0.65 (0.37) 0.50 (0.66)
------- ------- ------- ------- ------- ------
Total from investment operations .................... 0.07 1.10 1.37 0.36 1.21 (0.12)
------- ------- ------- ------- ------- ------
Less Distributions
Dividends from net investment income ................ (0.68) (0.71) (0.72) (0.74) (0.76) (0.52)
Distributions from capital gains .................... (0.21) (0.11) (0.46) (0.43) (0.05) (0.21)
------- ------- ------- ------- ------- ------
Total distributions ................................. (0.89) (0.82) (1.18) (1.17) (0.81) (0.73)
------- ------- ------- ------- ------- ------
Net asset value, end of period .......................... $ 14.30 $ 15.12 $ 14.84 $ 14.65 $ 15.46 $14.29
======= ======= ======= ======= ======= ======
Total return ............................................ 0.36% 7.62% 9.74% 2.27% 8.42% (0.85)%(c)
Ratios/Supplemental Data:
Net assets, end of period (000s omitted) .............. $22,423 $22,229 $19,810 $19,581 $48,978 $ 211
Ratio of expenses to average net assets ............... 0.99%(a) 1.00%(a) 1.00%(a) 1.00%(a) 1.00%(a) 1.26%(a)(b)
Ratio of net investment income (loss) to
average net assets .................................. 4.49% 4.72% 4.88% 4.62% 4.76% 4.44%(b)
Fund turnover rate .................................... 26% 57% 43% 34% 25% 26%(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 1.43%, 1.39%, 1.37%, 1.42% and 1.19% for the years ended August
31, 1999, 1998, 1997, 1996 and 1995, 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 1.71% annualized for the period ended August 31, 1999.
(b) Annualized.
(c) Not Annualized.
* Inception Date.
</FN>
</TABLE>
See Accompanying Notes to Financial Statements.
98
<PAGE>
THE WARBURG PINCUS FUNDS
NOTES TO FINANCIAL STATEMENTS
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 Funds, Inc. ("European Equity"), Warburg, Pincus U.S. Core Equity Fund,
Inc. ("Core Equity"), Warburg, Pincus Global Telecommunications Funds, 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 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 (other than European Equity which
is 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 at an annual rate not to exceed .25% of
the average daily net asset value of the Fund's outstanding Common shares. In
addition, the Common shares bear a co-administrative fee.
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. (each an
"Acquired Fund" and collectively, the "Acquired Funds"). The acquisitions were
accomplished by a tax-free exchange of the following shares of each Fund (other
than European Equity), 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 reorganization.
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 Fixed -- 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 (other than European Equity) directly after the
reorganization were the same as the corresponding Acquired Fund as described in
the table below. Each Fund (other than European Equity) 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 Fixed 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 unrealized
appreciation/(depreciation) listed above.
99
<PAGE>
THE WARBURG PINCUS FUNDS
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
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 statements 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 Inc. 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 a remaining maturity 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
securities for the applicable period less applicable expense.
International, Emerging Markets, European Equity, Core Equity, Global
Telecommunications, Select Economic, Long-Short Neutral and Long-Short
Equity will distribute substantially all of its net realized capital gains
and all net investment income, if any, to its shareholders at least
annually. Core Fixed, Global Fixed and High Yield will distribute
substantially all if its net realized capital gains, if any, to its
shareholders at least annually and will distribute net investment income at
least quarterly. Municipal will distribute substantially all of its net
realized capital gains, if any, at least 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, paydowns on mortgage-backed
securities, passive foreign investment companies, and forward foreign
currency contracts. To the extent these differences are permanent in
nature, such amounts are reclassified within capital accounts based on
their U.S. federal tax-basis treatment. Temporary differences do not
require reclassification. At August 31, 1999, International, Emerging
Markets, European Equity, Global Telecommunications, Long-Short Neutral,
Long-Short Equity, Core Fixed, Global Fixed, High Yield and Municipal
reclassified $9,529,177, $(42,334), $(78,476), $67,581, $(2,533), $9,644,
$248,422, $274,840, $37,862 and $71,099, respectively, from accumulated net
realized gain/(loss) to undistributed net investment income. Emerging
Markets, Long-Short Equity and Municipal reclassified $(202,844), $(82,601)
and $373, respectively, from accumulated net investment income/(loss) to
capital contributions. Emerging Markets, Core Equity, Long-Short
100
<PAGE>
THE WARBURG PINCUS FUNDS
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Equity and Municipal reclassified $(5,371,360), $2,654,767, $(9,644) and
$(11,128), respectively, from accumulated net realized gain/(loss) to
capital contributions.
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.
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. Long-Short Neutral had an open
repurchase agreement at August 31, 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 fair value
caused by changes in prevailing market interest rates or securities prices,
or for other purposes. Certain Fund's 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 August 31, 1999, Long-Short Equity held the following futures
contracts:
<TABLE>
<CAPTION>
FUTURES EXPIRATION CONTRACT CONTRACT UNREALIZED
CONTRACTS DATE AMOUNT VALUE GAIN/LOSS
----------- ---------- ------------ ------------ ---------
<S> <C> <C> <C> <C>
S&P 500 Index Futures 09/16/99 $ 983,475 $ 989,850 $ 6,375
S&P 500 Mini Futures 09/17/99 197,775 197,970 195
</TABLE>
As of August 31, 1999, Core Fixed held the following futures contracts:
<TABLE>
<CAPTION>
FUTURES EXPIRATION CONTRACT CONTRACT UNREALIZED
CONTRACTS DATE AMOUNT VALUE GAIN/LOSS
----------- ---------- ------------ ------------ ---------
<S> <C> <C> <C> <C>
U.S. Treasury 5 Year Note Futures 12/20/99 $ 6,163,110 $ 6,152,438 $ (10,672)
U.S. Treasury 10 Year Note Futures 12/20/99 (27,947,922) (27,667,922) 280,000
U.S. Treasury Bond Futures 12/20/99 16,991,383 16,981,344 (10,039)
Japan 10 Year Bond Futures 09/08/99 (15,785,870) (15,483,813) 302,057
</TABLE>
101
<PAGE>
THE WARBURG PINCUS FUNDS
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
As of August 31, 1999, Global Fixed held the following futures contracts:
<TABLE>
<CAPTION>
FUTURES EXPIRATION CONTRACT CONTRACT UNREALIZED
CONTRACTS DATE AMOUNT VALUE GAIN/LOSS
----------- ---------- ------------ ------------ ---------
<S> <C> <C> <C> <C>
U.S. Treasury 2 year Note Futures 12/29/99 $ 9,137,563 $ 9,108,000 $(29,563)
U.S. Treasury 5 Year Note Futures 12/20/99 1,194,243 1,187,313 (6,930)
U.S. Treasury 10 Year Note Futures 12/20/99 (3,755,414) (3,718,219) 37,195
Euro 10 Year Bond Futures 09/10/99 806,555 797,543 (9,012)
</TABLE>
I) OPTION TRANSACTIONS -- When a Fund writes or purchases a call
or a put option, an amount equal to the premium received or paid by the
Fund is recorded as a liability or asset, the value of which is
marked-to-market daily to reflect the current market value of the option.
When the option expires, the Fund realizes a gain or loss equal to the
amount of the premium received or paid. When the Fund exercises an option
or enters into a closing transaction by purchasing or selling an offsetting
option, it realizes a gain or loss without regard to any unrealized gain or
loss to underlying security. The potential loss associated with purchasing
an option is limited to the premium paid, and the premium would partially
offset any gains achieved from its use.
J) 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. This 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.
K) SECURITIES LENDING -- Loans of 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. Cash collateral received by the Funds in
connection with securities lending activity is invested in the Boston
Global Investment Trust. 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 right to draw on letter of credit) at
August 31, 1999 is as follows:
MARKETS VALUE OF VALUE OF
FUND SECURITIES LOANED COLLATERAL RECORDED
------------------------- ----------------- -------------------
International $86,757,007 $91,414,446
Emerging Markets 165,305 171,200
European Equity 2,145,915 2,260,671
Core Equity 2,821,000 2,914,000
Global Telecommunications 4,436,746 4,614,130
Select Economic 1,635,975 1,676,400
L) 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 the 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 has sold
a security short, its potential loss is limited only by the maximum
attainable price of the security 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
102
<PAGE>
THE WARBURG PINCUS FUNDS
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
short sale if, after giving effect to such sale, the market value of all
securities sold short exceeds 100% of the value of its net assets.
M) OTHER -- Securities denominated in currencies other than U.S.
dollars 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 change 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.
NOTE 2. TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES
Effective July 6, 1999, the Funds' investment adviser, Credit Suisse Asset
Management became Credit Suisse Asset Management, LLC. In addition, in
connection with the closing of the acquisition of Warburg Pincus Asset
Management, Inc. by Credit Suisse Group, Warburg Pincus Asset Management, Inc.
was merged into Credit Suisse Asset Management, LLC. Credit Suisse Asset
Management had previously changed its name from BEA Associates effective January
1, 1999.
Pursuant to Investment Advisory Agreements, Credit Suisse Asset Management,
LLC ("CSAM") an indirect, wholly-owned subsidiary of Credit Suisse Group, serves
as investment advisor 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
(except Long-Short Neutral):
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 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
For Long-Short Neutral, CSAM is entitled to receive from the Fund a monthly
fee equal to an annual rate of 1.50% of the Fund's average daily net assets. In
addition, starting in the thirteenth month of operation, CSAM is entitled to a
monthly performance adjustment fee which may increase or decrease the total
advisory fee by up to 0.50% per year. The performance adjustment fee decreased
the total advisory fee by $3,395 or .50% of average daily net assets due to
lower performance in comparison to the Salomon Smith Barney U.S. 1-Month
Treasury Bill Index plus 5 percentage points for the twelve months ended August
31, 1999.
103
<PAGE>
THE WARBURG PINCUS FUNDS
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE 2. TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES (CONTINUED)
CSAM may, at its discretion, voluntarily waive all or any portion of its
advisory fee for any of the Funds. For the year ended August 31, 1999 advisory
fees and waivers for each of the twelve investment Funds were as follows:
GROSS NET
FUND ADVISORY FEE WAIVER ADVISORY FEE
-------------------------- ------------ -------- ------------
International $5,508,687 -- $5,508,687
Emerging Markets 188,384 (120,352) 68,032
European Equity 152,482 (152,482) --
Core Equity 517,425 (148,230) 369,195
Global Telecommunications 194,860 (101,660) 93,200
Select Economic 250,313 (139,116) 111,197
Long-Short Neutral 291,148 (97,341) 193,807
Long-Short Equity 4,332 (4,332) --
Core Fixed 1,436,025 (608,214) 827,811
Global Fixed 144,265 (144,265) --
High Yield 903,069 (405,408) 497,661
Municipal 160,667 (95,749) 64,918
CSAM reimbursed expenses of European Equity, Global Telecommunications,
Long-Short Equity, and Global Fixed in the amounts of $19,556, $33,124, $66,605
and $3,649 respectively, for the year ended August 31, 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 daily net assets of each of
Emerging Markets and Global Fixed and .50% of the average daily net assets of
European Equity. For the year ended, August 31, 1999, CSAM Limited was entitled
to receive $56,515, $86,559 and $76,241 from CSAM for sub-advisory services
provided to Emerging Markets, Global Fixed and European Equity, respectively,
all of which were waived.
State Street Bank and Trust Company ("State Street"), serves as each Fund's
transfer and dividend disbursement 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.
Counsellors Funds Service, Inc. ("CFSI"), a wholly-owned subsidiary of
Credit Suisse Asset Management, LLC, and PFPC, Inc. ("PFPC"), an indirect,
wholly-owned subsidiary of PNC Bank Corp., serve as each Fund's
co-administrator. For administration services, each Fund, except European
Equity, 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. For European
Equity, CFSI is entitled to recieve from the Fund a monthly fee equal to an
annual rate of .10% of average daily net asset of the Common shares. No
compensation is payable by the Funds to CFSI for co-administration services for
the Institutional shares. CFSI may, at its discretion, voluntarily waive all or
any portion of its co-administration fees for any of the Funds. For the period
October 24, 1998 to August 31, 1999, co-administration fees earned by CFSI on
the Common shares were as follows:
GROSS NET
FUND ADMINISTRATION FEE WAIVER ADMINISTRATION FEE
------------------------- ------------------ ------- ------------------
International $ 9,292 $ -- $9,292
Emerging Markets 377 (142) 235
European Equity 15,192 (7,596) 7,596
Core Equity 31 (25) 6
Global Telecommunications 9,709 (9,463) 246
Select Economic 9 (7) 2
Long-Short Neutral 5,180 (4,144) 1,036
Long-Short Equity 1,968 -- 1,968
Core Fixed 22 (18) 4
Global Fixed 5 (4) 1
High Yield 12,663 (9,930) 2,733
Municipal 49 (40) 9
104
<PAGE>
THE WARBURG PINCUS FUNDS
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE 2. TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES (CONTINUED)
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 each Fund's (except European Equity) corresponding portfolio of The RBB Fund.
The administrative agent may at its discretion voluntarily waive all or any
portion of its administrative fee for any of the Funds. For the period September
1, 1998 through 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 $(70,067) $61,307
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
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 its administration fee for
any of the Funds. For the year ended August 31, 1999, the co-administration fees
earned and waived by PFPC were as follows:
GROSS ADMINISTRATIVE NET ADMINISTRATIVE
FUND SERVICE FEE WAIVER SERVICE FEE
------------------------- -------------------- -------- ------------------
International $860,732 $ -- $860,732
Emerging Markets 23,548 -- 23,548
European Equity 2,894 -- 2,894
Core Equity 86,237 -- 86,237
Global Telecommunications 24,357 (24,357) --
Select Economic 41,719 -- 41,719
Long-Short Neutral 24,545 (11,902) 12,643
Long-Short Equity 5,412 -- 5,412
Core Fixed 286,470 -- 286,470
Global Fixed 50,059 -- 50,059
High Yield 161,262 (32,252) 129,010
Municipal 37,500 -- 37,500
105
<PAGE>
THE WARBURG PINCUS FUNDS
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE 2. TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES (CONTINUED)
Credit Suisse Asset Management Securities, Inc. ("CSI"), also a
wholly-owned subsidiary of Credit Suisse Asset Management, LLC, 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 .25% of
the average daily net assets of the Common shares of each Fund. For the year
ended August 31, 1999, distribution fees earned by CSI were as follows:
FUND DISTRIBUTION FEE
----------------------------- ----------------
International $47,318
Emerging Markets 2,146
European Equity 37,979
Core Equity 157
Global Telecommunications 48,715
Select Economic 46
Long-Short Neutral 25,941
Long-Short Equity 9,838
Core Fixed 111
Global Fixed 25
High Yield 63,586
Municipal 247
NOTE 3. PURCHASES AND SALES OF SECURITIES
For the period ended August 31, 1999, purchases and sales of investment
securities (other than short-term investments) were as follows:
<TABLE>
<CAPTION>
INVESTMENT SECURITIES SHORT SECURITIES
------------------------------- ----------------
FUND PURCHASES SALES SALES
----------------------------- -------------- --------------- -----------
<S> <C> <C> <C>
International $1,194,403,607 $ 1,190,202,178 $ --
Emerging Markets 38,225,168 60,244,926 --
European Equity 63,543,115 39,683,207 --
Core Equity 73,400,111 78,539,205 --
Global Telecommunications 89,335,347 36,815,339 --
Select Economic 68,474,077 67,634,656 --
Long-Short Neutral 121,662,548 59,668,602 60,494,767
Long-Short Equity 34,374,838 32,274,697 --
Core Fixed 2,321,888,522 2,373,949,386 3,757,406
Global Fixed Income 88,117,516 90,559,751 86,709
High Yield 87,338,937 49,422,453 --
Municipal 6,458,587 5,674,568 --
</TABLE>
106
<PAGE>
THE WARBURG PINCUS FUNDS
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE 4. CAPITAL SHARES
Transactions in capital shares for each period were as follows:
<TABLE>
<CAPTION>
INTERNATIONAL GROWTH FUND
------------------------------------------------------------------------------------------------------
INSTITUTIONAL COMMON
-------------------------------------------------- -------------------------------------------------
FOR THE YEAR ENDED FOR THE YEAR ENDED FOR THE YEAR ENDED FOR THE YEAR ENDED
AUGUST 31, 1999 AUGUST 31, 1998 AUGUST 31, 1999 AUGUST 31, 1998
------------------------ ------------------------ ----------------------- ----------------------
SHARES VALUE SHARES VALUE SHARES VALUE SHARES VALUE
---------- ------------- ---------- ------------ ---------- ----------- -------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Shares sold 11,591,187 $ 257,783,566 4,245,007 $102,490,297 3,185,532 $ 71,124,892 211,487 $ 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 (12,967,216) (293,781,727) (5,715,329) (125,473,547) (3,007,619) (66,621,836) (154,474) (3,642,448)
----------- ------------ ---------- ------------- ---------- ------------ -------- -----------
Net increase 1,295,377 $ 23,841,340 1,884,611 $ 45,927,067 305,557 $ 7,341,847 65,176 $ 1,514,868
=========== ============ ========== ============= ========== ============ ======== ===========
</TABLE>
<TABLE>
<CAPTION>
EMERGING MARKETS II FUND
------------------------------------------------------------------------------------------------------
INSTITUTIONAL COMMON
-------------------------------------------------- -------------------------------------------------
FOR THE YEAR ENDED FOR THE YEAR ENDED FOR THE YEAR ENDED FOR THE YEAR ENDED
AUGUST 31, 1999 AUGUST 31, 1998 AUGUST 31, 1999 AUGUST 31, 1998
------------------------ ------------------------ ---------------------- ----------------------
SHARES VALUE SHARES VALUE SHARES VALUE SHARES VALUE
---------- ------------ ---------- ------------ ---------- --------- -------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Shares sold 46,493 $ 584,900 102,528 $ 1,830,455 69,187 $ 952,603 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 (1,991,203) (25,992,240) (2,256,500) (35,760,759) (66,044) (959,369) (32,820) (571,277)
---------- ------------ ---------- ------------ -------- --------- -------- ----------
Net increase/
(decrease) (1,917,647) $(25,099,092) (1,908,171) $(29,776,270) 3,203 $ (6,076) 60,513 $ 886,892
========== ============ ========== ============ ======== ========= ======== ==========
</TABLE>
<TABLE>
<CAPTION>
EUROPEAN EQUITY FUND
---------------------------------------------------------------------
INSTITUTIONAL COMMON
-------------------------------- ---------------------------------
FOR THE PERIOD JANUARY 28, 1999* FOR THE PERIOD JANUARY 28, 1999*
THROUGH AUGUST 31, 1999 THROUGH AUGUST 31, 1999
-------------------------------- ---------------------------------
SHARES VALUE SHARES VALUE
------ -------- ---------- ------------
<S> <C> <C> <C> <C>
Shares sold 10,003 $100,030 4,115,201 $ 40,639,910
Shares issued in
reinvestment of
dividends -- -- -- --
Shares repurchased -- -- (1,605,450) (15,431,585)
------ -------- ---------- ------------
Net increase 10,003 $100,030 2,509,751 $ 25,208,325
====== ======== ========== ============
<FN>
*Inception Date.
</FN>
</TABLE>
107
<PAGE>
THE WARBURG PINCUS FUNDS
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE 4. CAPITAL SHARES (CONTINUED)
<TABLE>
<CAPTION>
U.S. CORE EQUITY FUND
---------------------------------------------------------------------------------------
INSTITUTIONAL COMMON
---------------------------------------------------- --------------------------------
FOR THE YEAR ENDED FOR THE YEAR ENDED FOR THE PERIOD OCTOBER 30, 1998*
AUGUST 31, 1999 AUGUST 31, 1998 THROUGH AUGUST 31, 1999
----------------------- ------------------------- --------------------------------
SHARES VALUE SHARES VALUE SHARES VALUE
--------- ------------ ---------- ------------ ------ --------
<S> <C> <C> <C> <C> <C> <C>
Shares sold 251,693 $ 5,039,021 682,212 $ 16,949,211 9,123 $193,824
Shares issued in
reinvestment of
dividends 1,230,678 22,619,857 568,713 12,778,985 156 2,861
Shares repurchased (827,554) (18,062,739) (1,859,405) (46,573,171) (2,433) (63,918)
---------- ------------ ---------- ------------ ------ --------
Net increase/(decrease) 654,817 $ 9,596,139 (608,480) $(16,844,975) 6,846 $132,767
========== ============ ========== ============ ====== ========
</TABLE>
GLOBAL TELECOMMUNICATIONS FUND
-----------------------------------------------
COMMON
-----------------------------------------------
FOR THE YEAR ENDED FOR THE YEAR ENDED
AUGUST 31, 1999 AUGUST 31, 1998
----------------------- ---------------------
SHARES VALUE SHARES VALUE
--------- ------------ ------- ---------
Shares sold 1,820,386 $ 68,055,242 18,229 $ 414,135
Shares issued in
reinvestment of
dividends 5,883 167,194 2,037 37,921
Shares repurchased (280,472) (10,725,448) (18,228) (407,258)
--------- ------------ ------- ---------
Net increase 1,545,797 $ 57,496,988 2,038 $ 44,798
========= ============ ======= =========
<TABLE>
<CAPTION>
SELECT ECONOMIC VALUE EQUITY FUND
----------------------------------------------------------------------------------------
INSTITUTIONAL COMMON
---------------------------------------------------- --------------------------------
FOR THE YEAR ENDED FOR THE PERIOD JULY 31, 1998* FOR THE PERIOD OCTOBER 30, 1998*
AUGUST 31, 1999 THROUGH AUGUST 31, 1998 THROUGH AUGUST 31, 1999
-------------------- ----------------------------- --------------------------------
SHARES VALUE SHARES VALUE SHARES VALUE
-------- ---------- --------- ----------- ------ --------
<S> <C> <C> <C> <C> <C> <C>
Shares sold 420,175 $ 7,478,114 1,721,030 $25,813,705 5,210 $102,064
Shares issued in
reinvestment of
dividends 2,776 49,578 -- -- -- --
Shares repurchased (387,514) (7,367,592) -- -- (479) (8,302)
-------- ----------- --------- ----------- ----- --------
Net increase 35,437 $ 160,100 1,721,030 $25,813,705 4,731 $ 93,762
======== =========== ========= =========== ===== ========
</TABLE>
<TABLE>
<CAPTION>
LONG-SHORT MARKET NEUTRAL FUND
---------------------------------------------------------------------------------------------
INSTITUTIONAL COMMON
-------------------------------------------------------- ---------------------------------
FOR THE YEAR ENDED FOR THE PERIOD JULY 31, 1998* FOR THE PERIOD SEPTEMBER 8, 1998*
AUGUST 31, 1999 THROUGH AUGUST 31, 1998 THROUGH AUGUST 31, 1999
------------------------- ----------------------------- ---------------------------------
SHARES VALUE SHARES VALUE SHARES VALUE
---------- ------------ --------- ---------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
Shares sold 2,702,645 $ 40,468,228 412,744 $6,191,423 3,454,318 $ 51,387,127
Shares issued in
reinvestment of
dividends 5,561 82,361 -- -- 16,915 250,336
Shares repurchased (2,705,769) (39,525,343) -- -- (3,338,435) (49,530,584)
---------- ------------ --------- ---------- ---------- ------------
Net increase 2,437 $ 1,025,246 412,744 $6,191,423 132,798 $ 2,106,879
========== ============ ========= ========== ========== ============
<FN>
*Inception Date.
</FN>
</TABLE>
108
<PAGE>
THE WARBURG PINCUS FUNDS
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE 4. CAPITAL SHARES (CONTINUED)
<TABLE>
<CAPTION>
LONG-SHORT EQUITY FUND
-----------------------------------------------------------------------
INSTITUTIONAL COMMON
---------------------------------- --------------------------------
FOR THE PERIOD SEPTEMBER 11, 1998* FOR THE PERIOD OCTOBER 30, 1998*
THROUGH AUGUST 31, 1999 THROUGH AUGUST 31, 1999
---------------------------------- --------------------------------
SHARES VALUE SHARES VALUE
------- ----------- ---------- ------------
<S> <C> <C> <C> <C>
Shares sold 65,686 $ 1,009,786 2,009,319 $ 35,443,765
Shares issued in
reinvestment of
dividends 1,757 29,512 43 720
Shares repurchased (60,851) (1,011,801) (1,943,452) (33,502,061)
------- ----------- ---------- ------------
Net increase 6,592 $ 27,497 65,910 $ 1,942,424
======= =========== ========== ============
</TABLE>
<TABLE>
<CAPTION>
U.S. CORE FIXED INCOME FUND
---------------------------------------------------------------------------------------
INSTITUTIONAL COMMON
---------------------------------------------------- --------------------------------
FOR THE YEAR ENDED FOR THE YEAR ENDED FOR THE PERIOD OCTOBER 30, 1998*
AUGUST 31, 1999 AUGUST 31, 1998 THROUGH AUGUST 31, 1999
-------------------------- ------------------------ --------------------------------
SHARES VALUE SHARES VALUE SHARES VALUE
----------- ------------- ---------- ------------ ------ --------
<S> <C> <C> <C> <C> <C> <C>
Shares sold 16,356,857 $ 252,861,810 15,080,236 $237,240,219 10,093 $155,782
Shares issued in
reinvestment of
dividends 1,697,821 26,132,715 906,263 14,074,352 135 2,031
Shares repurchased (19,716,018) (305,132,292) (2,268,321) (35,611,876) (3,294) (49,547)
----------- ------------- ---------- ------------ ------ --------
Net increase/(decrease) (1,661,340) $ (26,137,767) 13,718,178 $215,702,695 6,934 $108,266
=========== ============= ========== ============ ====== ========
</TABLE>
<TABLE>
<CAPTION>
STRATEGIC GLOBAL FIXED INCOME FUND
------------------------------------------------------------------------------------
INSTITUTIONAL COMMON
-------------------------------------------------- --------------------------------
FOR THE YEAR ENDED FOR THE YEAR ENDED FOR THE PERIOD OCTOBER 30, 1998*
AUGUST 31, 1999 AUGUST 31, 1998 THROUGH AUGUST 31, 1999
----------------------- ------------------------ --------------------------------
SHARES VALUE SHARES VALUE SHARES VALUE
-------- ----------- ---------- ------------ ------ --------
<S> <C> <C> <C> <C> <C> <C>
Shares sold 56,355 $ 891,603 227,215 $ 3,505,185 2,478 $ 38,282
Shares issued in
reinvestment of
dividends 68,272 1,075,528 147,509 2,200,318 4 55
Shares repurchased (184,373) (2,889,584) (1,361,892) (20,772,949) (1,251) (19,035)
-------- ----------- ---------- ------------ ------ --------
Net increase/(decrease) (59,746) $ (922,453) (987,168) $(15,067,446) 1,231 $ 19,302
======== =========== ========== ============ ====== ========
</TABLE>
<TABLE>
<CAPTION>
HIGH YIELD FUND
------------------------------------------------------------------------------------------------------
INSTITUTIONAL COMMON
-------------------------------------------------- -------------------------------------------------
FOR THE YEAR ENDED FOR THE YEAR ENDED FOR THE YEAR ENDED FOR THE YEAR ENDED
AUGUST 31, 1999 AUGUST 31, 1998 AUGUST 31, 1999 AUGUST 31, 1998
------------------------ ------------------------ ----------------------- ----------------------
SHARES VALUE SHARES VALUE SHARES VALUE SHARES VALUE
---------- ------------- ---------- ------------ ---------- ----------- -------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Shares sold 2,505,861 $ 39,359,915 2,248,712 $ 38,970,312 2,499,612 $39,264,516 266,018 $ 4,697,209
Shares issued in
reinvestment of
dividends 508,551 7,926,308 416,842 7,175,130 105,404 1,641,508 9,315 162,504
Shares repurchased (2,470,735) (38,614,790) (2,423,467) (41,922,050) (427,403) (6,757,008) (246,118) (4,271,516)
---------- ------------ ---------- ------------ --------- ----------- -------- -----------
Net increase 543,677 $ 8,671,433 242,087 $ 4,223,392 2,177,613 $34,149,016 29,215 $ 588,197
========== ============ ========== ============ ========= =========== ======== ===========
<FN>
*Inception Date.
</FN>
</TABLE>
109
<PAGE>
THE WARBURG PINCUS FUNDS
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE 4. CAPITAL SHARES (CONTINUED)
<TABLE>
<CAPTION>
MUNICIPAL BOND FUND
------------------------------------------------------------------------------------
INSTITUTIONAL COMMON
-------------------------------------------------- --------------------------------
FOR THE YEAR ENDED FOR THE YEAR ENDED FOR THE PERIOD OCTOBER 30, 1998*
AUGUST 31, 1999 AUGUST 31, 1998 THROUGH AUGUST 31, 1999
----------------------- ------------------------ --------------------------------
SHARES VALUE SHARES VALUE SHARES VALUE
-------- ----------- ---------- ----------- ------ --------
<S> <C> <C> <C> <C> <C> <C>
Shares sold 179,990 $ 2,675,315 217,663 $ 3,269,230 15,816 $236,022
Shares issued in
reinvestment of
dividends 86,580 1,287,465 70,888 1,064,203 279 4,072
Shares repurchased (168,278) (2,507,954) (153,265) (2,304,613) (1,335) (20,081)
-------- ----------- -------- ----------- ------ --------
Net increase 98,292 $ 1,454,826 135,286 $ 2,028,820 14,760 $220,013
======== =========== ======== =========== ====== ========
<FN>
*Inception Date.
</FN>
</TABLE>
On August 31, 1999, the number of shareholders that held 5% or more of the
outstanding shares are as follows:
<TABLE>
<CAPTION>
NUMBER OF APPROXIMATE PERCENTAGE
SHAREHOLDERS OF OUTSTANDING SHARES
------------ ----------------------
<S> <C> <C>
International Institutional shares 4 24.90%
International Common shares 3 89.83
Emerging Markets Institutional shares 4 89.49
Emerging Markets Common shares 3 89.74
European Equity Institutional shares 1 99.97
European Equity Common shares 1 81.40
Core Equity Institutional shares 5 78.17
Core Equity Common shares 5 49.42
Select Economic Value Institutional Shares 2 94.03
Select Economic Value Common Shares 5 84.94
Long-Short Market Neutral Institutional shares 7 81.02
Long-Short Market Neutral Common shares 4 94.94
Long-Short Equity Institutional shares 1 100.00
Long-Short Equity Common shares 1 91.44
Core Fixed Institutional shares 6 43.89
Core Fixed Common shares 1 94.19
Global Fixed Institutional shares 3 96.34
Global Fixed Common shares 2 97.30
High Yield Institutional shares 4 59.93
High Yield Common shares 3 87.84
Municipal Institutional shares 4 70.71
Municipal Common shares 2 99.52
</TABLE>
110
<PAGE>
THE WARBURG PINCUS FUNDS
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE 5. RESTRICTED SECURITIES
One of International's investments is restricted as to resale and is 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
August 31, 1999, percentage of net assets which the security comprises,
aggregate cost and unit value of the security.
<TABLE>
<CAPTION>
NUMBER OF ACQUISITION 08/31/99 PERCENTAGE OF SECURITY VALUE PER
SHARES DATE FAIR VALUE NET ASSETS COST UNIT
--------- ----------- ---------- ------------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C>
Geotek Communications, Inc.
Series M 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 or 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.
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, the
Fund could be exposed to risks if the counterparty to the contract is unable to
meet the terms of their contract. During the year ended August 31, 1999, Global
Fixed and Core Fixed entered into forward foreign currency contracts. Core Fixed
had no open forward foreign contracts at August 31, 1999.
The Global Fixed had open forward foreign currency contracts at August 31,
1999 as follows:
<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>
Danish Krona 09/28/99 $ 5,579,200 $ 783,926 $ 792,394 $ (8,468)
Euro 09/15/99 1,360,092 1,415,427 1,441,417 (25,990)
Great Britain Pound 09/15/99 600,000 932,913 965,808 (32,895)
---------- ---------- ---------
$3,132,266 $3,199,619 $ (67,353)
========== ========== =========
</TABLE>
111
<PAGE>
THE WARBURG PINCUS FUNDS
NOTES TO FINANCIAL STATEMENTS (CONCLUDED)
NOTE 6. FORWARD FOREIGN CURRENCY CONTRACTS (CONTINUED)
<TABLE>
<CAPTION>
FOREIGN UNREALIZED
FORWARD CURRENCY EXPIRATION CURRENCY CONTRACT CONTRACT FOREIGN EXCHANGE
CONTRACT DATE TO BE PURCHASED AMOUNT VALUE GAIN/(LOSS)
------------------- ---------- --------------- ----------- ----------- ----------------
<S> <C> <C> <C> <C> <C>
Canadian Dollar 09/10/99 533,255 $ 359,337 $ 356,516 $ (2,821)
Euro 09/10/99 3,794,314 3,954,813 4,019,485 64,672
Euro 09/15/99 3,444,338 3,602,912 3,650,287 47,375
Japanese Yen 11/10/99 212,948,837 1,876,201 1,970,713 94,512
Swedish Krona 09/10/99 4,939,859 573,070 600,713 27,643
----------- ----------- --------
$10,366,333 $10,597,714 $231,381
=========== =========== ========
</TABLE>
NOTE 7. LINE OF CREDIT
The Funds, together with other funds advised by CSAM, have established a
$250 million committed line of credit facility ("Credit Facility") with Deutche
Bank, AG as administrative agent, State Street Bank and Trust Company as
operations agent, Bank of Nova Scotia as syndication agent and certain other
lenders, for temporary or emergency purposes primarily relating to unanticipated
portfolio share redemptions. Under the terms of the Credit Facility, the funds
with access to the Credit Facility pay an aggregate commitment fee at a rate of
.075% per annum on the average daily balance of the Credit Facility that is
undisbursed and uncanceled during the preceding quarter allocated among the
participating funds in such manner as is determined by the governing Boards of
the various funds. In addition, the participating funds will pay interest on
borrowing at the Federal funds rate plus .50%. During the period ended August
31, 1999, the following fund had borrowings under the line of credit agreement:
<TABLE>
<CAPTION>
AVERAGE DAILY AVERAGE MAXIMUM DAILY LOAN OUTSTANDING
PORTFOLIO LOAN BALANCE INTEREST RATE % LOAN OUTSTANDING AT 8/31/99
---------- ------------- --------------- ---------------- ----------------
<S> <C> <C> <C> <C>
High Yield $516,986 5.67% $10,500,000 $0
</TABLE>
NOTE 8. CAPITAL LOSS CARRYOVER
At August 31, 1999, capital loss carryovers were available to offset future
realized gains as follows: $20,719,643 in Emerging Markets of which $88,398
expires in 2003, $9,829,561 expires in 2004, $68,462 expires in 2006 and
$10,733,222 expires in 2007; $183,151 in Global Fixed which expires in 2007; and
$15,551,561 in High Yield of which $6,869,153 expires in 2001, $4,986,021
expires in 2003, $3,354,749 expires in 2005 and $341,638 expires in 2007.
112
<PAGE>
THE WARBURG PINCUS FUNDS
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholders Of The Warburg Pincus Funds:
In our opinion, the accompanying statements of assets and liabilities, including
the schedules of investments of 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 and Warburg Pincus Municipal Bond Fund (all
funds collectively referred to as the "Funds"), as of August 31, 1999 and the
related statements of operations and of changes in net assets and the financial
highlights present fairly, in all material respects, the financial position of
the Funds at August 31, 1999, and the results of each of their operations for
the year (or period) then ended, the changes in each of their net assets for
each of the two years (or periods) in the period then ended and their financial
highlights for each of the years (or periods) presented, in conformity with
generally accepted accounting principles. These financial statements and
financial highlights (hereafter referred to as "financial statements") are the
responsibility of the Funds' management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these financial statements in accordance with generally accepted
auditing standards, which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits, which included confirmation of securities at August 31, 1999 by
correspondence with the custodians and brokers, provide a reasonable basis for
the opinion expressed above.
PricewaterhouseCoopers LLP
2400 Eleven Penn Center
Philadelphia, PA
October 7, 1999
113
<PAGE>
THE WARBURG PINCUS FUNDS
TAX INFORMATION LETTERS
IMPORTANT TAX INFORMATION FOR SHAREHOLDERS OF WARBURG PINCUS INTERNATIONAL
GROWTH FUND (UNAUDITED)
During the fiscal year ended August 31, 1999, the International Growth Fund
- - Institutional Class distributed $5,684,280 of foreign source income on which
the Fund paid foreign taxes of $606,655. This information is being furnished to
you pursuant to notice requirements of Section 853(a) and 855(d) of the Internal
Revenue Code 1986, as amended the "Code", and the Treasury Regulations
thereunder.
During the fiscal year ended August 31, 1999, the International Growth Fund
- - Common Class distributed $258,106 of foreign source income on which the Fund
paid foreign taxes of $28,741. This information is being furnished to you
pursuant to notice requirements of Section 853(a) and 855(d) of the Code and the
Treasury Regulations thereunder.
IMPORTANT TAX INFORMATION FOR SHAREHOLDERS OF WARBURG PINCUS EMERGING MARKET II
FUND (UNAUDITED)
During the fiscal year ended August 31, 1999, the Emerging Market II Fund -
Institutional Class distributed $371,643 of foreign source income on which the
Fund paid foreign taxes of $62,881. This information is being furnished to you
pursuant to notice requirements of Section 853(a) and 855(d) of the Code and the
Treasury Regulations thereunder.
During the fiscal year ended August 31, 1999, the Emerging Market II Fund -
Common Class distributed $14,918 of foreign source income on which the Fund paid
foreign taxes of $2,683. This information is being furnished to you pursuant to
notice requirements of Section 853(a) and 855(d) of the Code and the Treasury
Regulations thereunder.
IMPORTANT TAX INFORMATION FOR CORPORATE SHAREHOLDERS (UNAUDITED)
Corporate shareholders should note that for the fiscal year ended August
31, 1999, the percentage of Fund's investment income (i.e., net investment
income plus short-term capital gains) that qualifies for the intercorporate
dividends received deductions is as follows:
Percentage
----------
Warburg Pincus U.S. Core Equity Fund 11.32%
Warburg Pincus Select Economic Value Equity Fund 100.00%
Warburg Pincus Long-Short Market Neutral Fund 20.78%
IMPORTANT TAX INFORMATION FOR SHAREHOLDERS OF WARBURG PINCUS MUNICIPAL BOND FUND
(UNAUDITED)
In the twelve months ended August 31, 1999, (the end of the fiscal year),
75% of the dividends paid by the Fund were exempt-interest dividends for the
purpose of federal income taxes and free from such taxes. In addition, none of
such dividends were attributable to interest on private activity bonds which
must be included in federal alternative minimum taxable income for purposes of
determining liability for federal alternative minimum tax.
In January 2000, you will be furnished with a schedule the yearly
percentage breakdown by state or U.S. possession of the source of interest
earned by the Fund in 1999. It is suggested that you consult your tax advisor
concerning the applicability of State and local taxes to dividends paid by the
Fund during the year.
114
<PAGE>
THE WARBURG PINCUS FUNDS
TAX INFORMATION LETTERS (CONCLUDED)
IMPORTANT TAX INFORMATION FOR SHAREHOLDERS (UNAUDITED)
During the year ended August 31, 1999, the Funds declared the following
dividends from realized capital gains:
SHORT-TERM LONG-TERM
CAPITAL GAIN CAPITAL GAIN
PER SHARE PER SHARE
---------- ----------
Warburg Pincus International Growth Fund $0.4142 $1.5771
Warburg Pincus U.S Core Equity Fund 2.9842 6.7583
Warburg Pincus Global Telecommunication Fund -- 2.8396
Warburg Pincus Long Short Market Neutral Fund 0.1266 --
Warburg Pincus Long-Short Equity Fund 0.1433 0.2079
Warburg Pincus U.S. Core Fixed Income Fund 0.1537 0.0196
Warburg Pincus Strategic Global Fixed Income Fund 0.1563 0.1270
Warburg Pincus Municipal Bond Fund 0.0397 0.1690
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THE WARBURG PINCUS FUNDS
YEAR 2000 COMPLIANCE
NOT COVERED BY INDEPENDENT ACCOUNTANTS REPORT
Many services provided to the Fund's and their shareholders by CSAM and
certain of its affiliates ("CSAMService Providers") and the Fund's other service
providers rely on the functioning of their respective computer systems. Many
computer systems cannot distinguish the year 2000 from the year 1900, resulting
in potential difficulty in performing various calculations ("Year 2000 Issue").
The Year 2000 could potentially have an adverse impact on the handling of
security trades, the payment of interest and dividends, pricing, account
services and other Fund operations. It has been reported that foreign
institutions have made less progress in addressing the Year 2000 Issue than
major U.S. entities, which could adversely affect the portfolios' foreign
investments.
The CSAM Service Providers recognize the importance of the Year 2000 Issue
and are taking appropriate steps necessary in preparation for the year 2000. The
CSAM Service Providers anticipate that their systems and those of the Fund's
other service providers will be adapted in time for the Year 2000. The CSAM
Service Providers have completed mission critical systems testing and have
participated in industry-wide testing programs. In addition, the CSAM Service
Providers are formulating a contingency plan to address the Year 2000 Issue and
anticipate completion of the plan by the end of the third quarter of 1999. The
CSAM Service Providers have also completed investigations of material operations
of the Fund's other major service providers. The CSAM Service Providers continue
to monitor the Year 2000 Issue and its potential impact on the Funds. However,
there can be no assurance that these steps will be sufficient to avoid any
adverse impact on the Funds nor can there be any assurance that the Year 2000
Issue will not have an adverse effect on the Fund's investments or on global
markets or economics, generally.
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P.O. Box 8500, Boston, MA 02266-8500
800-222-8977
CREDIT SUISSE ASSET MANAGEMENT SECURITIES, INC., DISTRIBUTOR
