SEMIANNUAL
REPORT
February 28, 1999
WARBURG PINCUS
INTERNATIONAL GROWTH FUND
o
WARBURG PINCUS
EUROPEAN EQUITY FUND
o
WARBURG PINCUS
EMERGING MARKETS II FUND
o
WARBURG PINCUS
GLOBAL TELECOMMUNICATIONS FUND
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. You may obtain additional
copies by calling 800-WARBURG (800-927-2874) or by writing to Warburg Pincus
Funds, P.O. Box 9030, Boston, MA 02205-9030.
[WARBURG PINCUS FUNDS LOGO]
<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.
International investing entails special risk considerations, including
currency fluctuations, lower liquidity, economic and political risks, and
differences in accounting methods.
The views of the funds' management are as of the date of the letters and
portfolio holdings described in this document are as of February 28, 1999; these
views and portfolio holdings may have changed subsequent to these days. Nothing
in this document is a recommendation to purchase or sell securities.
<PAGE>
Warburg Pincus International Growth Fund
Portfolio Managers' Letter -- February 28, 1999
- -------------------------------------------------------------------------------
April 20, 1999
Dear Shareholders:
We are writing to report on the results of the Warburg Pincus International
Growth Fund (the "Fund") for the fiscal half-year ended February 28, 1999.
At February 28, 1999, the net asset value ("NAV") of the Fund's Institutional
shares was $21.66, compared to an NAV of $22.70 on August 31, 1998. As a result,
the Institutional shares' total return was 5.1% (assuming the reinvestment of
dividends and distributions totaling $2.27 per share). By comparison, the MSCI
EAFE Index (the "EAFE") returned 14.0% during the same period.
At February 28, 1999, the NAV of the Fund's Common shares was $21.50,
compared to an NAV of $22.56 on August 31, 1998. As a result, the Common shares'
total return was 5.0% (assuming the reinvestment of dividends and distributions
totaling $2.26 per share). By comparison, the EAFE returned 14.0% during the
same period.
The Fund underperformed its EAFE benchmark mainly because of two sector
allocation decisions: we underweighted global financials and cyclical stocks at
times when these sectors rallied (in October 1998 and February 1999,
respectively).
o In Europe, we repositioned our holdings in favor of defensive
industries (e.g., pharmaceuticals, food, utilities) and companies
whose core businesses are concentrated in Europe late in the third
quarter of 1998. This negatively affected performance in October, when
oversold global financial companies sharply rallied after the Federal
Reserve lowered U.S. interest rates; and in February, when cyclicals
gained in response to increasing fears about global inflation.
o Our Japan allocation concentrated on large blue-chip exporters such as
Sony Corp., Canon, Inc., TDK Corp. and Honda Motor Corp., which we
believed would benefit from a weakening yen and a relatively low
exposure to the depressed domestic economy. This positioning hurt
performance particularly in the fourth quarter of 1998, when many of
these stocks experienced profit-taking as investors favored the shares
of the large Japanese banks and other sectors that had previously
lagged the domestic market.
o We remained significantly underweight in Asian markets -- which are
disproportionately weighted in banks and other financial companies --
relative to EAFE throughout the period. The Fund's overall return thus
suffered while Asia enjoyed a vigorous rally in the fourth quarter and
into 1999.
1
<PAGE>
Warburg Pincus International Growth Fund
Portfolio Managers' Letter -- February 28, 1999 (cont'd)
- -------------------------------------------------------------------------------
As other developments occur in the international equity markets or at Credit
Suisse Asset Management, we will be sure to keep you informed. Meanwhile, if you
have questions, please feel free to call upon us at any time.
Sincerely yours,
Credit Suisse Asset Management International Equity Management Team
William P. Sterling, Head of Global Equity and Managing Director
Steven D. Bleiberg, Managing Director
Richard W. Watt, Head of Emerging Markets and Managing Director
Emily Alejos, Director
Robert B. Hrabchak, Director
International investing entails special risk considerations, including currency
fluctuations, lower liquidity, economic and political risks, and differences in
accounting methods.
2
<PAGE>
Warburg Pincus International Growth Fund
Portfolio Managers' Letter -- February 28, 1999 (cont'd)
- -------------------------------------------------------------------------------
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]
In the printed version of the document, a line graph
appears which depicts the following plot points:
Warburg MSCI
10/01/92 10000 10000
11/30/92 9947 9571
02/28/93 10173 9918
05/31/93 11520 12062
08/31/93 12487 12962 Average Annual
11/30/93 12447 11928 Total Returns
02/28/94 14154 13841 for the period ending
05/31/94 13349 13735 2/28/99
08/31/94 14264 14405 (Institutional Shares)
11/30/94 13432 13732 (Unaudited)
02/28/95 11741 13258
05/31/95 12834 14451 1 year
08/31/95 13115 14517 6.03%
11/30/95 12849 14815
02/29/96 13849 15539 3 years
5/31/96 14426 16041 12.89%
8/31/96 14008 15706
11/30/96 14701 16606 5 years
2/28/97 15165 16090 7.08%
5/31/97 15940 17303
8/31/97 16240 17179 Since Inception
11/30/97 16693 16588 (9/30/92)
2/28/98 18790 18633 11.34%
5/31/98 20823 19278
8/31/98 18956 17201
11/30/98 19650 19370
2/28/99 19923 19610
Comparison of Change in Value of $10,000 Investment in the Warburg Pincus
International Growth Common Shares and the MSCI EAFE Index(1)
from Inception (11/1/96) and at each Quarter End. (Unaudited)
[GRAPHIC]
In the printed version of the document, a line graph
appears which depicts the following plot points:
Warburg MSCI Average Annual
Total Returns
11/01/96 10000 10000 for the period ending
11/30/96 10356 10369 2/28/99
02/28/97 10673 10046 (Common Shares)
05/31/97 11208 10803 (Unaudited)
08/31/97 11414 10726
11/30/97 11728 10357 1 year
02/28/98 13189 11634 5.68%
05/31/98 14596 12037
08/31/98 13278 10740 Since Inception
11/30/98 13754 12094 (11/1/96)
02/28/99 13939 12244 15.33%
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.
3
<PAGE>
Warburg Pincus European Equity Fund
Portfolio Managers' Letter -- February 28, 1999
- --------------------------------------------------------------------------------
April 20, 1999
Dear Shareholders:
We are writing to report on the results of the Warburg Pincus European Equity
Fund (the "Fund") for the fiscal half-year ended February 28, 1999.
At February 28, 1999, the net asset value ("NAV") of the Fund's Institutional
and Common shares each was $9.56, compared to an NAV of $10.00 at their
inception of investment operations on January 28, 1999. As a result, the total
return of the Fund's Institutional and Common shares were both down 4.40%. By
comparison, the MSCI Europe Index(1) (the "Index") declined 2.4% during the same
period.
Essentially, the Fund underperformed the Index benchmark because we took an
overly defensive approach in structuring the portfolio. We did so out of concern
that economic growth and corporate earnings in Europe would slow down in 1999,
as well as our expectation that investors would take profits after European
markets enjoyed robust gains in 1998. We thus overweighted the portfolio
relative to the Index in defensive industry sectors such as utilities, food,
pharmaceuticals and telecommunications.
Returns in three countries contributed most negatively to the Fund's overall
performance. We underweighted the United Kingdom, which was one of the
best-performing European markets during the period, and emphasized defensive
sectors there at a time when growth-oriented companies were most popular.
Similarly defensive stock selection also hurt results in France and Switzerland.
Since February 28, we have revised our country and sector allocations to
become less defensive and better-positioned to capture the potential
appreciation that we see in many European markets.
4
<PAGE>
Warburg Pincus European Equity Fund
Portfolio Managers' Letter -- February 28, 1999 (cont'd)
- --------------------------------------------------------------------------------
As other developments occur in the European equity markets or at Credit
Suisse Asset Management, we will be sure to keep you informed. Meanwhile, if you
have questions, please feel free to call upon us at any time.
Sincerely yours,
Credit Suisse Asset Management International Equity Management Team
William P. Sterling, Head of Global Equities and Managing Director
Steven D. Bleiberg, Managing Director
Richard W. Watt, Head of Emerging Markets and Managing Director
Emily Alejus, Director
Robert B. Hrabchack, Director
International investing entails special risk considerations, including currency
fluctuations, lower liquidity, economic and political risks, and differences in
accounting methods. Since the fund focuses its investments on companies in
Europe, an investment in the fund may involve a greater degree of risk than an
investment in a more geographically diversified equity Fund.
(1) The Morgan Stanley Capital International Europe Index is a market
capitalization-weighted index of 15 European countries. The index is
calculated on a total return basis with net dividends reinvested.
5
<PAGE>
Warburg Pincus Emerging Markets II Fund
Portfolio Managers' Letter -- February 28, 1999
- --------------------------------------------------------------------------------
April 20, 1999
Dear Shareholders:
We are writing to report on the results of the Warburg Pincus Emerging
Markets II Fund (the "Fund") for the fiscal half-year ended February 28, 1999.
At February 28, 1999, the net asset value ("NAV") of the Fund's Institutional
shares was $11.44, compared to an NAV of $10.44 on August 31, 1998. As a result,
the Institutional shares' total return was 11.6% (assuming the reinvestment of
dividends and distributions totaling $0.21 per share). By comparison, the MSCI
Emerging Markets Free Index (the"EMF") returned 24.7% during the same period.
At February 28, 1999, the NAV of the Fund's Common shares was $11.48,
compared to an NAV of $10.48 on August 31, 1998. As a result the Common shares'
total return was 11.4% (assuming the reinvestment of dividends and distributions
totaling $0.19 per share). By comparison, the EMF returned 24.7% during the same
period.
The Fund underperformed its EMF benchmark primarily due to a combination of
two factors. These were our underweighting (i.e., relative to EMF) of those
Asian markets that vigorously rallied in the final months of 1998; and our
decision to maintain a level of cash reserves that was, in retrospect, too high.
o Asia. We significantly underweighted Asian markets due to our belief that
a macroeconomic recovery in the region was not yet sustainable. This was
best illustrated by the period's rally in South Korea: we were caught
off-guard by the speed and extent to which investor optimism returned to
the Korean market, despite the nation's relatively limited improvement in
macroeconomic fundamentals.
o Cash. Our caution about Asia prompted us to hold a high level of cash in
reserve. Given the better environment for Asian equities, this served to
hurt the Fund's overall results.
In closing, we would like to point out that the Fund's performance relative
to EMF has markedly improved since the start of 1999. In part, this is because
of weakness in several of the markets that we had previously underweighted.
6
<PAGE>
Warburg Pincus Emerging Markets II Fund
Portfolio Managers' Letter -- February 28, 1999 (cont'd)
- --------------------------------------------------------------------------------
Thank you for your support, and please feel free to call upon us at any time
if you have questions.
Sincerely yours,
Credit Suisse Asset Management Emerging Market
Equity Management Team
William P. Sterling, Head of Global Equity and Managing Director
Richard W. Watt, Head of Emerging Markets and Managing Director
Steven D. Bleiberg, Managing Director
Emily Alejos, Director
Robert Hrabchak, Director
International investing entails special risk considerations, including currency
fluctuations, lower liquidity, economic and political risks, and differences in
accounting methods; these risks are generally heightened for emerging markets
investments.
7
<PAGE>
Warburg Pincus Emerging Markets II Fund
Portfolio Managers' Letter -- February 28, 1999 (cont'd)
- --------------------------------------------------------------------------------
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]
In the printed version of the document, a line graph
appears which depicts the following plot points:
Warburg MSCI
02/01/93 10000 10000
02/28/93 9967 10159 Average Annual
05/31/93 10707 10923 Total Returns
08/31/93 12253 12443 for the period ending
11/30/93 14507 14648 2/28/99
02/28/94 16908 17058 (Institutional Shares)
05/31/94 14691 15724 (Unaudited)
08/31/94 16664 18257
11/30/94 15722 17189 1 year
02/28/95 11347 13765 (29.75)%
05/31/95 12552 15243
08/31/95 12594 15263 3 years
11/30/95 11718 14349 (11.32)%
02/29/96 12863 15795
05/31/96 13743 16481 5 years
08/31/96 13013 15846 (11.91)%
11/30/96 13164 15817
02/28/97 14790 17699 Since Inception
05/31/97 14460 17759 (1/29/93)
08/31/97 14094 16573 (1.77)%
11/30/97 12559 13717
02/28/98 12767 14298
05/31/98 11520 12734
08/31/98 8039 8360
11/30/98 9110 10644
2/28/99 8970 10420
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]
In the printed version of the document, a line graph
appears which depicts the following plot points:
Warburg MSCI Average Annual
Total Returns
11/01/96 10000 10000 for the period ending
11/30/96 10171 10106 2/28/99
02/28/97 11394 11309 (Common Shares)
05/31/97 11134 11347 (Unaudited)
08/31/97 10841 10589
11/30/97 9652 8765 1 year
02/28/98 9818 9135 (29.72)%
05/31/98 8867 8136
08/31/98 6195 5341 Since Inception
11/30/98 7016 6800 (11/1/96)
02/28/99 6900 6657 (14.73)%
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.
8
<PAGE>
Warburg Pincus Global Telecommunications Fund
Portfolio Managers' Letter -- February 28, 1999
- --------------------------------------------------------------------------------
April 20, 1999
Dear Shareholders:
We are pleased to report on the results of the Warburg Pincus Global
Telecommunications Fund (the "Fund") for the fiscal half-year ended February 28,
1999.
At February 28, 1999, the net asset value ("NAV") of the Fund was $31.17,
compared to an NAV of $20.54 on August 31, 1998. As a result, the Fund's total
return was 66.9% (assuming the reinvestment of dividends and distributions
totaling $2.84 per share). By comparison, the MSCI Telecommunications Index
returned 38.2% during the same period.
We attribute the Fund's outstanding performance to a combination of two
factors. The first was our decision to substantially overweight the portfolio's
exposure to developed markets relative to emerging markets. Although most of the
latter enjoyed vigorous rallies in the fiscal half-year, their telecom stocks
did not generally perform as well as those in the developed world. We
diversified the portfolio's developed holdings across North America and Europe,
and largely avoided Japan and the other major Asian markets.
The second positive contributor to performance was stock selection. Within
North America and Europe, we emphasized the shares of companies in the wireless,
electronic commerce, Internet and data networking sectors. Notably strong
performers included America Online, Yahoo, Inc. and Lucent Technologies in the
U.S.; JDS Fitel Inc. in Canada; Nokia Corp. in Finland; Mannesmann AG in
Germany; Olivetti S.p.A. in Italy; and COLT Telecom Group and Vodafone in the
United Kingdom.
There were several bright spots in the Fund's emerging markets allocation as
well. Our holdings in OTE, Greece's largest telecom provider, disproportionately
benefited from the period's enthusiastic buying in the Greek market. In Mexico,
we focused on Telefonos de Mexico, which participated in the overall buoyancy of
Mexican stocks. We also fared well with our ongoing position in Global
TeleSystems Group Inc., a young company that provides a broad range of telecom
services throughout Western and Central Europe.
9
<PAGE>
Warburg Pincus Global Telecommunications Fund
Portfolio Managers' Letter -- February 28, 1999 (cont'd)
- --------------------------------------------------------------------------------
As developments occur in the telecommunications industry or at Credit Suisse
Asset Management that we believe would be of interest to you, we will be sure to
keep you informed. Meanwhile, if you have questions, please feel free to call
upon us at any time.
Sincerely yours,
Credit Suisse Asset Management Global Telecommunications
Management Team
William P. Sterling, Managing Director
Steven D. Bleiberg, Managing Director
Richard W. Watt, Managing Director
James A. Abate, Director
Stephen R. Waite, Director
Emily Alejos, Director
Robert B. Hrabchak, Director
International investing entails special risk considerations, including currency
fluctuations, lower liquidity, economic and political risks, and differences in
accounting methods. Since the Fund focuses its investments on companies involved
in telecommunications, an investment in the Fund may involve a greater degree of
risk than an investment in other mutual funds that seek capital appreciation by
investing in a broader mix of issues. More information about the Fund, including
charges and expenses and the special risk considerations associated with a
single-industry fund, is provided in the Prospectus.
10
<PAGE>
Warburg Pincus Global Telecommunications Fund
Portfolio Managers' Letter -- February 28, 1999 (cont'd)
- --------------------------------------------------------------------------------
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]
In the printed version of the document, a line graph
appears which depicts the following plot points:
Warburg MSCI Average Annual
Total Returns
12/04/96 10000 10000 for the period ending
02/28/97 10787 10253 2/28/99
05/31/97 11460 10727 (Common Shares)
08/31/97 11533 10729 (Unaudited)
11/30/97 12859 12107
02/28/98 15178 13864 1 year
05/31/98 16664 15022 59.02%
08/31/98 14461 15079
11/30/98 19460 17255 Since Inception
02/28/99 24138 20840 (12/4/96)
48.24%
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.
11
<PAGE>
Warburg Pincus International Growth Fund
Schedule of Investments
February 28, 1999 (Unaudited)
- --------------------------------------------------------------------------------
Number
of
Shares Value
-------- ------
COMMON STOCKS, WARRANTS AND RIGHTS (98.1%)
Denmark (1.4%)
Tele Danmark A/S Cl. B# 77,293 $ 9,289,955
------------
Finland (2.1%)
Nokia Oyj Cl. A 105,386 14,414,094
------------
France (17.6%)
Accor S.A. 14,351 3,339,677
Alcatel 63,683 6,850,716
AXA S.A.# 90,277 11,772,805
Canal Plus 29,307 9,155,723
Cap Gemini S.A.# 54,302 9,388,210
Carrefour S.A. 14,320 10,201,737
Compagnie de Saint-Gobain 48,737 7,575,450
Etablissements Economiques du Casino
Guichard-Perrachon S.A.# 25,350 2,329,109
Groupe Danone 29,523 7,353,285
Sanofi S.A. 26,177 4,606,168
STMicroelectronics N.V.** 101,083 9,004,364
Suez Lyonnaise des Eaux 94,210 18,831,865
Total S.A. Cl. B# 72,698 7,581,104
Valeo S.A. 38,963 3,256,932
Vivendi 35,845 9,344,985
------------
120,592,130
------------
Germany (4.3%)
Allianz AG Holding Registered Shares# 20,289 6,035,543
Mannesmann AG# 142,355 19,251,733
Metro AG# 62,816 4,413,028
-------------
29,700,304
-------------
Ireland (2.0%)
Allied Irish Banks plc 782,587 13,602,692
------------
Italy (13.4%)
Assicurazioni Generali S.p.A. 320,540 12,385,436
Credito Italiano# 2,171,732 11,419,002
Olivetti S.p.A.**# 2,547,337 7,829,442
Istituto Bancario San Paolo di Torino S.p.A. 590,845 10,312,337
Seat S.p.A.# 17,124,849 22,463,687
Telecom Italia S.p.A.# 1,148,460 12,089,849
Telecom Italia Savings Shares S.p.A. 2,224,251 15,015,690
------------
91,515,443
------------
See Accompanying Notes to Financial Statements.
12
<PAGE>
Warburg Pincus International Growth Fund
Schedule of Investments (cont'd)
February 28, 1999 (Unaudited)
- --------------------------------------------------------------------------------
Number
of
Shares Value
-------- ------
COMMON STOCKS, WARRANTS AND RIGHTS (cont'd)
Japan (10.5%)
Acom Company, Ltd. 38,800 $ 2,292,354
Ajinomoto Co., Inc. 105,000 1,147,787
Asahi Breweries Ltd.# 73,000 967,180
Bridgestone Corp.# 71,000 1,588,748
Canon, Inc. 58,000 1,241,634
Casio Computer Company, Ltd.# 250,000 1,666,666
Citizen Watch Co. 318,000 2,152,161
Daiichi Pharmaceutical Co., Ltd. 198,000 3,013,804
East Japan Railway Co. 190 1,143,362
FamilyMart Co., Ltd. 68,400 3,015,017
Fuji Photo Film Co. 64,000 2,351,790
Ito-Yokado Co., Ltd. 51,000 2,974,461
Kirin Brewery Co., Ltd. 151,000 1,788,073
Merrill Lynch "Honda Motor Corp." - (CPS) 3,200 3,182,720
Minebea Company# 143,000 1,422,165
Mitsubishi Heavy Industries, Ltd. 356,000 1,323,185
Mitsui Chemicals Industries# 529,700 2,075,941
Morgan Stanley
"Canon Corp." - (CPS) 1,860 1,642,007
Morgan Stanley
"Sony Corp." - (CPS) 1,750 2,347,888
Nintendo Co., Ltd.# 26,200 2,208,174
Nippon Express Co., Ltd. 398,000 1,992,515
Nippon Telegraph & Telephone 529 4,360,402
Promise Co., Ltd. 43,600 1,984,323
Rohm Co., Ltd. 36,300 3,548,924
Sankyo Co., Ltd. 156,000 3,352,716
Sekisui House, Ltd. 256,000 2,621,490
Sony Corp. 9,200 696,300
Sony Corp. ADR 1,100 82,156
TDK Corp. 36,100 2,589,219
Terumo Corp. 117,000 2,386,345
Tokyo Electric Power 150,000 3,027,811
Toppan Printing Company, Ltd. 181,000 2,118,912
Toyota Motor Corp.# 148,000 3,866,833
------------
72,173,063
------------
See Accompanying Notes to Financial Statements.
13
<PAGE>
Warburg Pincus International Growth Fund
Schedule of Investments (cont'd)
February 28, 1999 (Unaudited)
- --------------------------------------------------------------------------------
Number
of
Shares Value
-------- ------
COMMON STOCKS, WARRANTS AND RIGHTS (cont'd)
Netherlands (8.0%)
AEGON N.V. 58,996 $ 6,158,706
ASM Lithography Holding N.V. 123,456 5,075,168
Equant N.V.** 181,705 13,104,445
Heineken N.V. 53,543 2,797,667
Koninklijke Numico N.V.# 109,800 5,122,449
Koninklijke Philips Electronics N.V.# 52,590 3,665,754
STMicroelectronics N.V. - ADR** 21,300 1,861,087
TNT Post Group N.V. 164,275 5,617,149
VNU Verenigd Bezit 103,803 4,267,250
Wolters Kluwer N.V. 37,318 7,189,222
------------
54,858,897
------------
Spain (2.0%)
Argentaria, Caja Postal y Banco Hipotecario
de Espana, S.A.# 578,983 13,855,069
Telefonica S.A.# 2,214 101,101
------------
13,956,170
------------
Sweden (1.9%)
Skandia Forsakrings AB 388,676 7,123,211
Telefonaktiebolaget LM Ericsson Cl. B# 210,660 5,566,643
------------
12,689,854
------------
Switzerland (10.7%)
Nestle S.A. 2,120 4,001,353
Novartis AG Registered Shares# 7,589 13,312,933
Roche Holding AG 1,412 17,880,695
Swiss Reinsurance Group Registered Shares 1,787 4,001,777
Swisscom AG**# 27,713 10,958,517
United Bank of Switzerland S.A. 38,949 12,122,341
Zurich Allied AG 16,630 11,040,302
------------
73,317,918
------------
United Kingdom (24.2%)
Allied Zurich plc** 262,475 3,874,769
Bank of Scotland 683,956 9,883,192
BP Amoco plc 562,915 8,016,912
British Telecommunications plc 366,467 6,346,336
Cable & Wireless Communications plc** 525,900 6,234,439
COLT Telecom Group plc** 207,360 3,845,108
Compass Group plc 1,190,433 14,713,073
Dixons Group plc 629,557 11,865,594
Energis plc** 114,100 2,741,823
Glaxo Wellcome 531,024 16,937,446
See Accompanying Notes to Financial Statements.
14
<PAGE>
Warburg Pincus International Growth Fund
Schedule of Investments (cont'd)
February 28, 1999 (Unaudited)
- --------------------------------------------------------------------------------
Number
of
Shares Value
-------- ------
COMMON STOCKS, WARRANTS AND RIGHTS (cont'd)
United Kingdom (cont'd)
LLoyds TSB Holdings Group plc 614,980 $ 8,812,596
National Grid Group plc 1,311,713 9,477,153
Orange plc** 536,278 7,762,125
Railtrack Group plc 392,131 9,749,569
SmithKline Beecham plc 1,107,694 15,598,094
Synstar plc** 517,710 1,314,554
Unilever plc 388,446 3,733,743
Vodafone Group plc 1,027,735 18,851,655
WPP Group plc 750,075 5,936,004
------------
165,694,185
------------
TOTAL COMMON STOCKS, WARRANTS AND RIGHTS (Cost $592,463,004) $671,804,705
------------
PREFERRED STOCK (0.0%)
Israel (0.0%)
Geotek Communications, Inc.** 600 $ --
(Cost $6,000,000) ------------
Par
(000)
-----
SHORT-TERM INVESTMENT (5.1%)
BBH Grand Cayman U.S.
Dollar Time Deposit
4.250% 03/01/99 $34,627 $ 34,627,000
------------
(Cost $34,627,000)
TOTAL INVESTMENTS (103.2%) (Cost $633,090,004*) $706,431,705
LIABILITIES IN EXCESS OF OTHER ASSETS (3.2%) (21,661,704)
------------
TOTAL NET ASSETS (100.0%) $684,770,001
============
* Cost for Federal income tax purposes at February 28, 1999 is $634,138,530.
The gross appreciation (depreciation) on a tax basis is as follows:
Gross Appreciation $ 93,261,567
Gross Depreciation (20,968,392)
------------
Net Appreciation $ 72,293,175
============
** Non-income producing securities.
# Security or a portion thereof is out on loan.
INVESTMENT ABBREVIATIONS
ADR = American Depository Receipts
CPS = Currency Protected Shares
See Accompanying Notes to Financial Statements.
15
<PAGE>
Warburg Pincus European Equity Fund
Schedule of Investments
February 28, 1999 (Unaudited)
- --------------------------------------------------------------------------------
Number
of
Shares Value
-------- ------
COMMON STOCKS (96.8%)
Denmark (1.4%)
Tele Danmark A/S Cl. B# 3,167 $ 380,646
-----------
Finland (2.9%)
Nokia Oyj Cl. A 5,749 786,315
-----------
France (18.5%)
Accor S.A. 652 151,729
Alcatel 3,113 334,882
AXA S.A. 3,620 472,075
Canal Plus 1,096 342,398
Cap Gemini S.A. 2,148 371,365
Carrefour S.A. 594 423,173
Compagnie de Saint-Gobain 2,640 410,349
Etablissements Economiques du
Casino Guichard-Perrachon S.A. 1,094 100,515
Groupe Danone 1,129 281,200
Sanofi S.A. 1,242 218,545
STMicroelectronics N.V.** 4,622 411,723
Suez Lyonnaise des Eaux 3,668 733,205
Total S.A. Cl. B 2,944 307,007
Valeo S.A. 1,815 151,717
Vivendi 1,410 367,595
-----------
5,077,478
-----------
Germany (4.4%)
Allianz AG Holding Registered Shares 813 241,850
Mannesmann AG 5,823 787,488
Metro AG 2,601 182,729
-----------
1,212,067
-----------
Ireland (2.1%)
Allied Irish Banks plc 32,436 563,793
-----------
Italy (13.9%)
Assicurazioni Generali S.p.A. 13,058 504,552
Credito Italiano# 87,140 458,183
Istituto Bancario San Paolo di Torino S.p.A. 24,814 433,092
Olivetti S.p.A.**# 101,588 312,239
Seat S.p.A 713,617 936,094
Telecom Italia S.p.A. 35,250 371,077
Telecom Italia Savings Shares S.p.A. 118,075 797,112
-----------
3,812,349
-----------
See Accompanying Notes to Financial Statements.
16
<PAGE>
Warburg Pincus European Equity Fund
Schedule of Investments (cont'd)
February 28, 1999 (Unaudited)
- --------------------------------------------------------------------------------
Number
of
Shares Value
-------- ------
COMMON STOCKS (cont'd)
Netherlands (8.5%)
AEGON N.V. 2,414 $ 252,002
ASM Lithography Holding N.V.** 4,848 199,297
Equant N.V.** 8,233 593,759
Heineken N.V. 2,209 115,422
Koninklijke Numico N.V. 5,975 278,749
Koninklijke Philips Electronics N.V. 2,241 156,208
TNT Post Group N.V. 6,886 235,457
VNU Verenigd Bezit 4,339 178,372
Wolters Kluwer N.V. 1,659 319,602
-----------
2,328,868
-----------
Spain (2.3%)
Argentaria Caja Postal y Banco Hipotecario
de Espana S.A. 25,950 620,984
Telefonica S.A. 31 1,416
-----------
622,400
-----------
Sweden (1.9%)
Skandia Forsakrings AB 17,754 325,375
Telefonaktiebolaget L.M. Ericsson Cl. B 7,674 202,784
-----------
528,159
-----------
Switzerland (12.1%)
Nestle S.A. 91 171,756
Novartis AG Registered Shares 333 584,162
Roche Holding AG 75 949,754
Swiss Reinsurance Group Registered Shares 76 170,193
Swisscom AG 1,148 453,952
United Bank of Switzerland S.A. 1,701 529,413
Zurich Allied AG 689 457,412
-----------
3,316,642
-----------
United Kingdom (28.8%)
Allied Zurich plc** 10,790 159,287
Bank of Scotland 31,138 449,945
BG plc 43,972 258,879
BP Amoco plc 19,809 282,115
British Telecommunications plc 15,574 269,705
Cable & Wireless Communications plc** 19,677 233,267
COLT Telecom Group plc** 8,417 156,078
Compass Group plc 50,150 619,825
Dixons Group plc 27,625 520,663
Energis plc** 4,513 108,447
Glaxo Wellcome 41,772 1,332,352
LLoyds TSB Holdings Group plc 26,537 380,272
See Accompanying Notes to Financial Statements.
17
<PAGE>
Warburg Pincus European Equity Fund
Schedule of Investments (cont'd)
February 28, 1999 (Unaudited)
- --------------------------------------------------------------------------------
Number
of
Shares Value
-------- ------
COMMON STOCKS (cont'd)
United Kingdom (cont'd)
National Grid Group plc 55,002 $ 397,391
Orange plc** 23,365 338,187
Railtrack Group plc 16,697 415,138
SmithKline Beecham plc 46,913 660,609
Synstar plc** 20,420 51,850
Unilever plc 14,881 143,036
Vodafone Group plc 46,072 845,094
WPP Group plc 34,338 271,747
-----------
7,893,887
-----------
TOTAL COMMON STOCKS (Cost $27,657,073) $26,522,604
-----------
Par
(000)
------
SHORT-TERM INVESTMENT (8.7%)
BBH Grand Cayman U.S. Dollar Time Deposit
4.250% 03/01/99 $2,394 $ 2,394,000
(Cost $2,394,000) -----------
TOTAL INVESTMENTS (105.5%) (Cost $30,051,073*) $28,916,604
LIABILITIES IN EXCESS OF OTHER ASSETS (5.5%) (1,518,899)
-----------
TOTAL NET ASSETS (100.0%) $27,397,705
===========
* Also cost for Federal income tax purposes at February 28, 1999. The gross
appreciation (depreciation) on a tax basis is as follows:
Gross Appreciation $ 327,807
Gross Depreciation (1,462,276)
-----------
Net Depreciation $(1,134,469)
===========
** Non-income producing securities.
# Security or a portion thereof is out on loan.
See Accompanying Notes to Financial Statements.
18
<PAGE>
Warburg Pincus Emerging Markets II Fund
Schedule of Investments
February 28, 1999 (Unaudited)
- --------------------------------------------------------------------------------
Number
of
Shares Value
-------- ------
COMMON STOCKS, WARRANTS AND RIGHTS (88.2%)
Argentina (5.1%)
Perez Companc S.A.** 32,577 $ 132,637
Telefonica de Argentina S.A. ADR 11,109 324,938
YPF S.A. ADR 15,700 455,300
-----------
912,875
-----------
Brazil (6.7%)
Companhia Cervejaria Brahma 568,673 215,174
Companhia Cervejaria Brahma ADR 6,300 48,037
Companhia Vale do Rio Doce PN 17,597 225,259
Companhia Vale do Rio Doce PN Cl. B 39,000 --
Seara Alimentos 45,623,768 --
Serrana S.A. ON 10,210 2,458
Serrana S.A. PN 12,175 2,692
Telecomunicacoes Brasileiras S.A. PN Block# 7,284 470,273
Telecomunicacoes de Sao Paulo, S.A. PN 2,538,047 237,055
Telecomunicacoes do Rio de Janeiro S.A. PN 8,733 144
-----------
1,201,092
-----------
Chile (3.2%)
Chilectra S.A. ADR 5,317 104,853
Compania de Telecomunicaciones de Chile S.A. ADR 12,002 265,544
Distribucion Y Servicio D & S S.A. ADR** 6,387 71,455
Embotelladora Andina S.A. ADR, Series B 4,400 51,150
Empresa Nacional de Electricidad S.A. ADR 5,858 73,957
Enersis S.A. ADR 400 9,750
-----------
576,709
-----------
Colombia (0.0%)
Cementos Paz del Rio ADR** 118 797
-----------
Croatia (0.9%)
Pliva D.D. GDR 144A 9,900 162,155
-----------
China (0.7%)
China Steel Corp. GDR 10,500 118,125
-----------
Czech Republic (0.6%)
SPT Telecom A.S. 9,823 111,030
-----------
Egypt (1.8%)
Al-Ahram Beverages Co.,
S.A.E. 144A GDR** 3,450 115,455
Ameriyah Cement Co. 2,050 37,621
Eastern Co. for Tobacco & Cigarettes 1,380 40,660
See Accompanying Notes to Financial Statements.
19
<PAGE>
Warburg Pincus Emerging Markets II Fund
Schedule of Investments (cont'd)
February 28, 1999 (Unaudited)
- --------------------------------------------------------------------------------
Number
of
Shares Value
-------- ------
COMMON STOCKS, WARRANTS AND RIGHTS (cont'd)
Egypt (cont'd)
Madinet Nasr For Housing &
Development Co. 25 $ 898
Misr International Bank S.A.E. GDR** 9,151 124,466
-----------
319,100
-----------
Greece (9.2%)
Alpha Credit Bank 3,112 357,280
Hellenic Telecommunications Organization ADR 13,639 182,435
Intracom S.A. 4,122 297,442
National Bank of Greece S.A. 8,172 597,774
Panafon Hellenic Telecom S.A.** 6,882 219,538
-----------
1,654,469
-----------
Hungary (2.1%)
Matav RT ADR** 6,661 181,512
MOL Magyar Olaj - es Gazipari Rt. GDR 144A** 5,300 130,458
OTP Bank RT GDR 1,750 69,562
-----------
381,532
-----------
India (5.5%)
Bharat Heavy Electricals Ltd.
Participation Notes** 25,135 140,768
Hindustan Petroleum Corporation Ltd.
Participation Notes 32,400 157,160
ITC Agro-Tech, Ltd. GDR** 7,300 132,572
Larsen & Toubro Ltd.
Participation Notes 2,093 8,970
Mahanagar Telephone Nigam Ltd.
144A GDR** 8,500 63,299
Mahindra & Mahindra Ltd.
Participation Notes 1,750 9,739
Morgan Stanley India Investment Fund, Inc.** 46,076 374,368
Reliance Industries Ltd. 144A GDR** 16,594 108,409
-----------
995,285
-----------
Indonesia (0.0%)
P.T. Bank International Indonesia** 2 --
PT Bank Dagang Nasional Indonesia Warrants**,*** 400 --
-----------
--
-----------
See Accompanying Notes to Financial Statements.
20
<PAGE>
Warburg Pincus Emerging Markets II Fund
Schedule of Investments (cont'd)
February 28, 1999 (Unaudited)
- --------------------------------------------------------------------------------
Number
of
Shares Value
-------- ------
COMMON STOCKS, WARRANTS AND RIGHTS (cont'd)
Israel (5.2%)
Bank Hapoalim Ltd. 99,635 $ 193,067
Bezeq Israeli Telecommunication Corporation Ltd. 44,120 154,193
ECI Telecommunications Ltd. 1,310 48,143
Formula Systems Ltd.** 1,700 44,034
Gilat Satellite Networks Ltd. ADR** 1,529 90,593
Koor Industries Ltd., ADR 9,600 181,800
Makhteshim-Agan Industries Ltd.** 48,173 101,920
Supersol Ltd. 29,849 75,693
Teva Pharmaceutical Industries Ltd., ADR 1,000 40,438
-----------
929,881
-----------
Mexico (10.0%)
Cementos Mexicanos S.A. de C.V. 3,425 9,882
Cementos Mexicanos S.A. de C.V. Cl. B 60,049 186,003
Cifra S.A. de C.V. Class V ADR**# 24,569 311,955
Corporacion Industrial SanLuis S.A. de C.V. CPO 287 325
Fomento Economico Mexicano, S.A. de C.V. ADR** 9,018 237,302
Grupo Modelo S.A. de C.V. Cl. C** 78,682 175,732
Grupo Televisa S.A. de C.V. GDS 7,371 207,309
Kimberly-Clark de Mexico S.A. de C.V. Cl. A** 74,228 230,673
Telefonos de Mexico S.A. ADR 7,661 438,113
-----------
1,797,294
-----------
Peru (0.4%)
Telefonica del Peru S.A. ADR** 6,800 80,325
-----------
Philippines (1.3%)
Ayala Land, Inc. 260,016 76,770
Philippine Long Distance Telephone Company ADR 6,771 160,811
-----------
237,581
-----------
Poland (2.4%)
Bank Rozwoju Eksportu S.A. 2,498 42,425
Elektrim Spolka Akcyjna S.A. 18,692 192,368
Prokom Software GDR 4,000 63,372
Telekomunikacja Polska GDR** 26,650 140,512
-----------
438,677
-----------
See Accompanying Notes to Financial Statements.
21
<PAGE>
Warburg Pincus Emerging Markets II Fund
Schedule of Investments (cont'd)
February 28, 1999 (Unaudited)
- --------------------------------------------------------------------------------
Number
of
Shares Value
-------- ------
COMMON STOCKS, WARRANTS AND RIGHTS (cont'd)
Singapore (4.4%)
Natsteel Electronics Ltd. 43,000 $ 119,859
Oversea-Chinese Banking Corp. Ltd.*** 34,400 229,729
Singapore Airlines Ltd.*** 13,341 98,390
Singapore Press Holdings Ltd. 9,239 105,158
Singapore Telecommunications Ltd. 111,000 157,924
Venture Manufacturing 20,200 85,045
-----------
796,105
-----------
South Africa (8.1%)
BOE Corporation Ltd. 223,636 171,472
C.G. Smith Ltd. 106,162 252,766
Gold Fields Ltd. 23,406 125,436
Liberty Life Association of Africa Limited 13,766 189,546
Nedcor Limited 8,287 167,746
Sanlam Limited** 173,474 123,770
South African Breweries Limited 30,062 436,735
-----------
1,467,471
-----------
South Korea (7.7%)
Korea Electric Power Corp. 8,560 202,194
L.G. Electronics 12,490 126,074
Pohang Iron & Steel Company, Ltd. ADR 12,130 189,531
Samsung Electronics Co. 7,100 500,221
Samsung Fire and Marine Insurance 710 226,318
SK Telecom Co. Ltd. ADR**# 14,685 148,690
-----------
1,393,028
-----------
Taiwan (7.6%)
Morgan Stanley Taiwan Opals 10,815 1,045,378
Taiwan Semiconductor Manufacturing Co., Ltd. ADR# 9,050 175,909
Winbond Electronics Corp. 12,142 155,262
-----------
1,376,549
-----------
Thailand (1.7%)
Advanced Information Services Public Co., Ltd.*** 11,173 77,840
Bangkok Expressway Public Co., Ltd.*** 72,195 53,682
Electricity Generating Public Co., Ltd.*** 24,079 52,261
PTT Exploration & Production Public Co., Ltd.*** 8,400 54,920
Siam City Cement Public Co., Ltd.*** 3,342 69,132
-----------
307,835
-----------
See Accompanying Notes to Financial Statements.
22
<PAGE>
Warburg Pincus Emerging Markets II Fund
Schedule of Investments (cont'd)
February 28, 1999 (Unaudited)
- --------------------------------------------------------------------------------
Number
of
Shares Value
-------- ------
COMMON STOCKS, WARRANTS AND RIGHTS (cont'd)
Turkey (3.6%)
Akbank T.A.S. 3,523,200 $ 95,379
Dogan Sirketler Grubu Holding A.S. 7,653,600 73,382
Haci Omer Sabanci Holdings
144A** 22,369 130,890
Migros Turk T.A.S. 121,282 157,325
Tupras-Turikye Petrol Rafinerileri A.S. 1,750,939 112,330
Yapi Ve Kredi Bankasi A.S. 5,087,470 88,948
-----------
658,254
-----------
TOTAL COMMON STOCKS, WARRANTS AND RIGHTS (Cost $16,683,911) $15,916,169
-----------
Par
(000)
----
SHORT-TERM INVESTMENT (9.5%)
BBH Grand Cayman U.S. Dollar Time Deposit
4.250% 03/01/99 $1,716 $ 1,716,000
(Cost $1,716,000) -----------
TOTAL INVESTMENTS (97.7%) (Cost $18,399,911*) $17,632,169
OTHER ASSETS IN EXCESS OF LIABILITIES (2.3%) 413,265
-----------
TOTAL NET ASSETS (100.0%) $18,045,434
===========
* Cost for Federal income tax purposes at February 28, 1999 is $19,268,307.
The gross appreciation (depreciation) on a tax basis is as follows:
Gross Appreciation $ 947,710
Gross Depreciation (2,583,848)
-----------
Net Depreciation $(1,636,138)
===========
** Non-income producing securities.
*** Denotes foreign shares.
# Security or a portion thereof is out on loan.
INVESTMENT ABBREVIATIONS
ADR = American Depository Receipts
ADS = American Depository Shares
GDR = Global Depository Receipts
See Accompanying Notes to Financial Statements.
23
<PAGE>
Warburg Pincus Global Telecommunications Fund
Schedule of Investments
February 28, 1999 (Unaudited)
- --------------------------------------------------------------------------------
Number
of
Shares Value
-------- ------
COMMON STOCKS (80.9%)
Belgium (1.3%)
Telinfo NV 550 $ 87,180
-----------
Brazil (11.5%)
Telecomunicacoes Brasileiras S.A. ADR** 12,300 794,119
-----------
Canada (4.9%)
BCE, Inc. 1,017 41,125
JDS Fitel Inc.** 4,400 188,003
Teleglobe, Inc. 1,469 45,932
Teleglobe, Inc. ADR 2,119 66,484
-----------
341,544
-----------
Finland (1.1%)
Nokia Corp. ADR 550 74,594
-----------
Germany (1.2%)
Mannesmann AG 619 83,712
-----------
Greece (1.6%)
Panafon Hellenic Telecom SA** 3,520 112,289
-----------
Italy (4.5%)
Olivetti S.p.A.** 16,879 51,879
Telecom Italia S.p.A. 12,624 132,893
Telecom Italia Savings Shares S.p.A. 18,660 125,972
-----------
310,744
-----------
Japan (4.2%)
Nippon Telegraph & Telephone Corp. 35 288,495
-----------
Netherlands (3.6%)
Equant N.V.** 3,484 251,264
-----------
Sweden (0.8%)
Telefonaktiebolaget L.M. Ericsson ADR 2,054 53,404
-----------
United Kingdom (8.8%)
ARM Holdings plc** 4,311 165,231
COLT Telecom Group plc ADR** 4,063 302,693
Energis plc** 3,666 88,094
Orange plc** 3,885 56,232
-----------
612,250
-----------
See Accompanying Notes to Financial Statements.
24
<PAGE>
Warburg Pincus Global Telecommunications Fund
Schedule of Investments (cont'd)
February 28, 1999 (Unaudited)
- --------------------------------------------------------------------------------
Number
of
Shares Value
-------- ------
COMMON STOCKS (cont'd)
United States (37.4%)
Airtouch Communications, Inc.** 1,016 $ 92,519
America Online** 2,304 204,912
At Home Corp. Series A**# 1,174 124,591
AT&T Corp. 1,572 129,100
Broadcom Corp. Cl. A** 1,312 78,966
Century Communications Corp.
Cl. A** 3,681 127,685
Cisco Systems** 1,497 146,425
Comcast Corp. - Special Cl. A 1,152 81,720
Global Crossing Ltd.** 1,421 83,839
Global Telesystems Group, Inc.**# 1,500 83,250
Lucent Technologies 1,493 151,633
MCI WorldCom, Inc.** 3,895 321,337
MediaOne Group, Inc.** 1,042 56,789
Motorola, Inc. 800 56,200
Network Appliance, Inc.** 2,640 110,880
Newbridge Networks Corp.** 1,600 39,000
SBC Communications Inc. 2,421 128,010
Sprint Corp. (FON Group) 521 44,708
Sprint Corp. (PCS Group)** 2,008 64,256
Tele-Communications Liberty
Media, Inc. Cl. A 1,000 53,875
Tele-Communications, Inc.
Cl. A** 845 53,077
Teligent, Inc. Cl. A** 2,392 94,036
Time Warner Inc. 1,897 122,357
Uniphase Corp.** 1,152 101,520
Yahoo, Inc.** 266 40,831
-----------
2,591,516
-----------
TOTAL COMMON STOCKS (Cost $5,172,464) $ 5,601,111
-----------
See Accompanying Notes to Financial Statements.
25
<PAGE>
Warburg Pincus Global Telecommunications Fund
Schedule of Investments (cont'd)
February 28, 1999 (Unaudited)
- --------------------------------------------------------------------------------
Par
(000) Value
------ ------
SHORT-TERM INVESTMENT (16.7%)
BBH Grand Cayman U.S Dollar Time Deposit
4.250% 03/01/99 $1,159 $ 1,159,000
-----------
(Cost $1,159,000)
TOTAL INVESTMENTS (97.6%) (Cost $6,331,464*) $ 6,760,111
OTHER ASSETS IN EXCESS OF LIABILITIES (2.4%) 169,442
-----------
TOTAL NET ASSETS (100.0%) $ 6,929,553
===========
* Cost for Federal income tax purposes at February 28, 1999 is $6,334,133.
The gross appreciation (depreciation) on a tax basis is as follows:
Gross Appreciation $ 539,243
Gross Depreciation (113,265)
-----------
Net Appreciation $ 425,978
===========
** Non-income producing securities.
# Security or a portion thereof is out on loan.
See Accompanying Notes to Financial Statements.
26
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
27
<PAGE>
Warburg Pincus Fund
Statements of Assets and Liabilities
February 28, 1999 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Global
International European Emerging Telecommunications
Growth Fund Equity Fund Markets II Fund Fund
------------- ------------ --------------- ------------------
<S> <C> <C> <C> <C>
Assets
Investments, at value (cost - $633,090,004,
$30,051,073, $18,399,911 and
$6,331,464, respectively) $ 706,431,705 $ 28,916,604 $ 17,632,169 $6,760,111
Collateral received for securities loaned 121,024,220 1,122,400 1,104,232 115,700
Receivable for investments sold 31,632,640 2,103,241 251,499 117,155
Receivable for Fund shares sold 19,598 67,122 -- 112,436
Receivable from investment adviser -- -- -- 42,214
Dividends and interest receivable 1,116,940 19,464 63,385 931
Prepaid expenses and other assets 90,593 2,346 186,852 18,454
------------- ------------ ------------ ----------
Total Assets 860,315,696 32,231,177 19,238,137 7,167,001
------------- ------------ ------------ ----------
Liabilities
Payable upon return of securities loaned 121,024,220 1,122,400 1,104,232 115,700
Payable for investments purchased 53,327,906 3,660,198 27,818 86,875
Payable for Fund shares repurchased 98,006 18,161 -- 24,706
Advisory fee payable 403,367 6,941 9,985 --
Distrubution fee payable (Common shares) 27,944 5,768 1,248 5,699
Accrued expenses payable 664,252 20,004 49,420 4,468
------------- ------------ ------------ ----------
Total Liabilities 175,545,695 4,833,472 1,192,703 237,448
------------- ------------ ------------ ----------
Net Assets
Capital stock, $0.001 par value 31,619 2,913 62,819 247
Paid-in capital 590,214,129 28,641,951 51,111,341 6,323,104
Undistributed net investment income/(loss) (12,995,357) 33,482 (612,444) 1,601
Accumulated net realized gain/(loss)
from investments, securities sold short,
futures and foreign currency related
transactions, if any 34,119,237 (252,370) (31,730,242) 176,420
Net unrealized appreciation/(depreciation)
on investments and other, if any 73,400,373 (1,028,271) (786,040) 428,181
------------- ------------ ------------ ----------
Net Assets $ 684,770,001 $ 27,397,705 $ 18,045,434 $6,929,553
============= ============ ============ ==========
Institutional Shares
Net assets $ 658,289,264 $ 95,630 $ 17,278,548
------------- ------------ ------------
Shares outstanding 30,386,239 10,003 1,510,755
------------- ------------ ------------
Net asset value, offering price and
redemption price per share $ 21.66 $ 9.56 $ 11.44
============= ============ ============
Common Shares
Net assets $ 26,480,737 $ 27,302,075 $ 766,886 $6,929,553
------------- ------------ ------------ ----------
Shares outstanding 1,231,688 2,856,863 66,818 222,327
------------- ------------ ------------ ----------
Net asset value, offering price and
redemption price per share $ 21.50 $ 9.56 $ 11.48 $ 31.17
============= ============ ============ ==========
</TABLE>
See Accompanying Notes to Financial Statements.
28
<PAGE>
Warburg Pincus Funds
Statements of Operations
For the six months ended February 28, 1999 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Global
International European Emerging Telecommunications
Growth Fund Equity Fund Markets II Fund Fund
------------- ----------- --------------- ------------------
<S> <C> <C> <C> <C>
Investment Income
Dividends $ 2,325,570 $ 22,014 $ 201,503 $ 1,354
Interest 827,992 37,814 50,695 11,797
Securities lending 98,610 -- 5,844 594
Foreign taxes withheld (145,420) (768) (26,793) (63)
------------ ----------- ----------- ---------
Total Investment Income 3,106,752 59,060 231,249 13,682
------------ ----------- ----------- ---------
Expenses
Investment advisory fees 2,621,576 6,946 92,442 10,476
Administration fees 545,661 5,201 15,942 1,833
Custodian fees 445,564 4,274 15,805 20,435
Audit fees 27,709 1,388 3,386 43
Miscellaneous fees 10,277 1,275 5,651 2,478
Printing fees 120,454 2,470 8,741 4,094
Registration fees 9,913 2,814 10,178 5,951
Legal fees 158,600 2,163 6,605 51
Transfer agent fees 89,897 1,531 5,206 2,608
Insurance expense 15,307 225 988 501
Directors fees 6,219 654 1,855 6,447
Distribution fees 24,187 5,768 887 2,619
------------ ----------- ----------- ---------
4,075,364 34,709 167,686 57,536
Less fees waived and reimbursed (102,388) (1,159) (29,666) (40,251)
------------ ----------- ----------- ---------
Total Expenses 3,972,976 33,550 138,020 17,285
------------ ----------- ----------- ---------
Net Investment Income/(Loss) (866,224) 25,510 93,229 (3,603)
------------ ----------- ----------- ---------
Realized and Unrealized Gain/(Loss)
on Investments and
Foreign Currency Transactions
Net realized gain/(loss) from:
Security transactions 33,767,118 (252,370) (7,857,488) 176,006
Foreign exchange transactions (939,062) 7,972 (99,450) 5,464
------------ ----------- ----------- ---------
32,828,056 (244,398) (7,956,938) 181,470
------------ ----------- ----------- ---------
Net change in unrealized
appreciation/(depreciation):
Investments 2,270,409 (1,134,469) 9,985,826 443,932
Translation of assets and
liabilities in foreign currencies (75,396) 106,198 (11,467) (1,064)
------------ ----------- ----------- ---------
2,195,013 (1,028,271) 9,974,359 442,868
------------ ----------- ----------- ---------
Net Gain/(Loss) On Investments And
Foreign Currency Transactions 35,023,069 (1,272,669) 2,017,421 624,338
------------ ----------- ----------- ---------
Net Increase/(Decrease) In Net Assets
Resulting From Operations $ 34,156,845 $(1,247,159) $ 2,110,650 $ 620,735
------------ ----------- ----------- ---------
</TABLE>
- ----------
*Commenced operations on January 29, 1999.
See Accompanying Notes to Financial Statements.
29
<PAGE>
Warburg Pincus Funds
Statement of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
European
International Equity Fund Equity Fund
------------------------------------- -----------------
For the Six Months For the Year For the Period
Ended Ended January 29, 1999*
February 28, 1999 August 31, 1998 to February, 1999
------------------ --------------- -----------------
(Unaudited) (Unaudited)
<S> <C> <C> <C>
Increase/(decrease) in net assets:
Operations:
Net investment income/(loss) $ (866,224) $ 4,459,649 $ 25,510
Net gain on investments
and foreign currency
transactions 35,023,069 78,134,835 (1,272,669)
------------- ------------- ------------
Net increase in net assets resulting
from operations 34,156,845 82,594,484 (1,247,159)
------------- ------------- ------------
Dividends and Distributions to
shareholders:
Dividends to shareholders from
net investment income:
Institutional shares (7,632,495) -- --
Common shares (344,430) -- --
Distributions to shareholders
from net realized capital gains:
Institutional shares (54,241,925) (73,424,625) --
Common shares (2,569,737) (167,102) --
Distributions to shareholders
from capital:
Institutional shares -- -- --
Common shares -- -- --
------------- ------------- ------------
Total distributions to shareholders (64,788,587) (73,591,727) --
------------- ------------- ------------
Net capital share transactions 90,299,278 47,441,934 28,664,864
------------- ------------- ------------
Total increase/(decrease)
in net assets 59,667,536 56,444,691 27,397,705
Net Assets:
Beginning of period 625,102,465 568,657,774 --
------------- ------------- ------------
End of period $ 684,770,001 $ 625,102,465 $ 27,397,705
============= ============= ============
</TABLE>
- ----------
*Commencement of operations.
30
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Emerging Markets II Fund Global Telecommunications Fund
------------------------------------ -------------------------------------
For the Six Months For the Year For the Six Months For the Year
Ended Ended Ended Ended
February 28, 1999 August 31, 1998 February 28, 1999 August 31, 1998
------------------ --------------- ------------------ ---------------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Increase/(decrease) in net assets:
Operations:
Net investment income/(loss) $ 93,229 $ 374,101 $ (3,603) $ (298)
Net gain on investments
and foreign currency
transactions 2,017,421 (25,007,447) 624,338 (142,748)
------------ ------------ ----------- ---------
Net increase in net assets resulting
from operations 2,110,650 (24,633,346) 620,735 (141,748)
------------ ------------ ----------- ---------
Dividends and Distributions to
shareholders:
Dividends to shareholders from
net investment income:
Institutional shares (312,194) (732,736) -- --
Common shares (12,381) (83) -- (138)
Distributions to shareholders
from net realized capital gains:
Institutional shares -- (649,941) -- --
Common shares -- (115) (179,290) (37,787)
Distributions to shareholders
from capital:
Institutional shares -- (3,255,728) -- --
Common shares -- (580) -- --
------------ ------------ ----------- ---------
Total distributions to shareholders (324,575) (4,639,183) (179,290) (37,925)
------------ ------------ ----------- ---------
Net capital share transactions (8,594,706) (28,889,378) 5,770,015 44,798
------------ ------------ ----------- ---------
Total increase/(decrease)
in net assets (6,808,631) (58,161,907) 6,211,460 148,621
Net Assets:
Beginning of period 24,854,065 83,015,972 718,093 569,472
------------ ------------ ----------- ---------
End of period $ 18,045,434 $ 24,854,065 $ 6,929,553 $ 718,093
============ ============ =========== =========
</TABLE>
See Accompanying Notes to Financial Statements.
31
<PAGE>
Warburg Pincus Funds
International Growth Fund Financial Highlights
(For a Share Outstanding Throughout each Period)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Institutional
---------------------------------------------------------------------
For the Six
Months Ended
February 28, For the Year Ended August 31,
1999 -------------------------------------------------------
(Unaudited) 1998 1997 1996 1995 1994
------------ ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $ 22.70 $ 22.22 $ 19.41 $ 18.24 $ 20.73 $ 18.73
------- ------- ------- ------- ------- -------
Income from investment
operations
Net investment
income (loss) (0.02) 0.15 0.18 0.19 0.06 0.05
Net gain (loss) on
investments and
foreign currency
transactions (both
realized and
unrealized) 1.25 3.26 2.89 1.05 (1.75) 2.60
------- ------- ------- ------- ------- -------
Total from investment
operations 1.23 3.41 3.07 1.24 (1.69) 2.65
------- ------- ------- ------- ------- -------
Less Distributions
Dividends from net
investment income (0.28) -- (0.26) (0.07) -- (0.05)
Distributions from
capital gains (1.99) (2.93) -- -- (0.80) (0.60)
------- ------- ------- ------- ------- -------
Total distributions (2.27) (2.93) (0.26) (0.07) (0.80) (0.65)
------- ------- ------- ------- ------- -------
Net asset value,
end of period $ 21.66 $ 22.70 $ 22.22 $ 19.41 $ 18.24 $ 20.73
======= ======= ======= ======= ======= =======
Total return 5.09%(c) 16.74% 15.93% 6.81%(d) (8.06)%(d) 14.23%(d)
Ratios/Supplemental Data:
Net assets, end of period
(000s omitted) $658,289 $623,482 $568,510 $682,271 $773,255 $767,190
Ratio of expenses to
average net assets 1.20%(a)(b) 1.14%(a) 1.16%(a) 1.19%(a) 1.25%(a) 1.25%(a)
Ratio of net investment
income (loss) to
average net assets (0.25)%(b) 0.72% 0.71% 0.84% 0.35% 0.33%
Fund turnover rate 82%(c) 141% 126% 86% 78% 104%
</TABLE>
- ---------------------
(a) Without the voluntary waiver of advisory fees and administration fees, the
ratios of expenses to average net assets for the Institutional Class would
have been 1.23% annualized for the six months ended February 28, 1999 and
1.23%, 1.25%, 1.22%, 1.26% and 1.30% for the years ended August 31, 1998,
1997, 1996, 1995 and 1994, respectively. Without the voluntary waiver of
advisory fees and administration fees, the ratios of expenses to average
net assets for the Common Class would have been 1.54% annualized for the
six months ended February 28, 1999, 1.48% for the year ended August 31,
1998 and 1.53% annualized for the period ended August 31, 1997.
(b) Annualized.
(c) Not annualized.
(d) Redemption fees not reflected in total return.
* Commencement of operations.
32
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Common
---------------------------------------------
For the Six For the Period
Months Ended For the Year November 1,
February 28, Ended 1996*
1999 August 31, to August 31,
(Unaudited) 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 (loss) (0.08) 0.03 0.36
Net gain (loss) on
investments and
foreign currency
transactions (both
realized and
unrealized) 1.28 3.29 2.40
------- ------- -------
Total from investment
operations 1.20 3.32 2.76
------- ------- -------
Less Distributions
Dividends from net
investment income (0.27) -- (0.26)
Distributions from
capital gains (1.99) (2.93) --
------- ------- -------
Total distributions (2.26) (2.93) (0.26)
------- ------- -------
Net asset value,
end of period $ 21.50 $ 22.56 $ 22.17
======= ======= =======
Total return 4.98%(c) 16.33% 14.14%(c)
Ratios/Supplemental Data:
Net assets, end of period
(000s omitted) $26,481 $1,620 $147
Ratio of expenses to
average net assets 1.50%(a) 1.40%(a) 1.43%(a)(b)
Ratio of net investment
income (loss) to
average net assets (0.63)%(b) 0.58% 1.15%(b)
Fund turnover rate 82%(c) 141% 126%(c)
</TABLE>
See Accompanying Notes to Financial Statements.
33
<PAGE>
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
September 14, 1998* November 2, 1998*
to February 28, 1999 to February 28, 1999
(Unaudited) (Unaudited)
-------------------- --------------------
<S> <C> <C>
Net asset value, beginning of period $ 10.00 $ 10.00
------- -------
Income from investment operations
Net investment income (loss) 0.01 0.01
Net gain (loss) on investments and
foreign currency transactions
(both realized and unrealized) (0.45) (0.45)
------- -------
Total from investment operations (0.44) (0.44)
------- -------
Net asset value, end of period $ 9.56 $ 9.56
======= =======
Total return (4.40)%(c) (4.40)%(c)
Ratios/Supplemental Data:
Net assets, end of period (000s omitted) $ 123 $ 1,055
Ratio of expenses to average net assets 1.15%(a)(b) 1.45%(a)(b)
Ratio of net investment income (loss) to average net assets 1.41%(b) 1.10%(b)
Fund turnover rate 18%(c) 18%(c)
</TABLE>
- ----------
(a) Without the voluntary waiver of advisory fees and administration fees, the
ratios of expenses to average net assets for the Institutional Class would
have been 1.15% annualized for the period ended February 28, 1999. Without
the voluntary waiver of advisory fees and administration fees, the ratios
of expenses to average net assets for the Common Class would have been
1.50% annualized for the period ended February 28, 1999.
(b) Annualized.
(c) Not Annualized.
* Commencement of operations.
See Accompanying Notes to Financial Statements.
34
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
35
<PAGE>
Warburg Pincus Funds
Emerging Markets II Fund Financial Highlights
(For a Share Outstanding Throughout each Period)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Institutional
------------------------------------------------------------------------
For the Six
Months Ended
February 28, For the Year Ended August 31,
1999 ------------------------------------------------------
(Unaudited) 1998 1997 1996 1995 1994
------------ ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $ 10.44 $ 19.64 $ 18.20 $ 17.67 $ 24.58 $ 18.38
------- ------- ------- ------- ------- -------
Income from investment
operations
Net investment
income (loss) 0.07 0.12 0.21 0.10 0.02 (0.03)
Net gain (loss) on
investments and
foreign currency
transactions (both
realized and
unrealized) 1.14 (8.08) 1.30 0.48 (5.94) 6.64
------- ------- ------- ------- ------- -------
Total from investment
operations 1.21 (7.96) 1.51 0.58 (5.92) 6.61
------- ------- ------- ------- ------- -------
Less Distributions
Dividends from net
investment income (0.21) (0.20) (0.07) (0.05) (0.07) (0.09)
Distributions from
capital gains -- (0.17) -- -- (0.92) (0.32)
Return of Capital -- (0.87) -- -- -- --
------- ------- ------- ------- ------- -------
Total distributions (0.21) (1.24) (0.07) (0.05) (0.99) (0.41)
------- ------- ------- ------- ------- -------
Net asset value,
end of period $ 11.44 $ 10.44 $ 19.64 $ 18.20 $ 17.67 $ 24.58
======= ======= ======= ======= ======= =======
Total return 11.57%(c) (42.96)% 8.31% 3.33%(d) (24.42)%(d) 35.99%(d)
Ratios/Supplemental Data:
Net assets, end of period
(000s omitted) $17,279 $24,217 $83,012 $114,691 $128,323 $140,675
Ratio of expenses to
average net assets 1.48%(a)(b) 1.50%(a) 1.49%(a) 1.49%(a) 1.50%(a) 1.50%(a)
Ratio of net investment
income (loss) to
average net assets 1.02%(b) 0.61% 0.99% 0.63% 0.02% (0.02)%
Fund turnover rate 122%(c) 179% 147% 79% 79% 54%
</TABLE>
- ----------
(a) Without the voluntary waiver of advisory fees and administration fees, the
ratios of expenses to average net assets for the Institutional Class would
have been 1.80% annualized for the six months ended February 28, 1999 and
2.01% ,1.63%, 1.62%, 1.61% and 2.01% for the years ended August 31, 1998,
1997, 1996, 1995 and 1994, respectively. Without the voluntary waiver of
advisory fees and administration fees, the ratios of expenses to average
net assets for the Common Class would have been 2.11% annualized for the
six months ended February 28, 1999, 2.33% for the year ended August 31,
1998 and 1.88% annualized for the period ended August 31, 1997.
(b) Annualized.
(c) Not annualized.
(d) Redemption fees not reflected in total return.
* Commencement of operations.
36
<PAGE>
- --------------------------------------------------------------------------------
Common
----------------------------------------------
For the Six For the Period
Months Ended For the Year November 1,
February 28, Ended 1996* to
1999 August 31, August 31,
(Unaudited) 1998 1997
------------ ------------ --------------
Net asset value,
beginning of period $ 10.48 $ 19.60 $ 18.08
------- ------- -------
Income from investment
operations
Net investment
income (loss) 0.04 0.03 0.18
Net gain (loss) on
investments and
foreign currency
transactions (both
realized and
unrealized) 1.15 (7.99) 1.40
------- ------- -------
Total from investment
operations 1.19 (7.96) 1.58
------- ------- -------
Less Distributions
Dividends from net
investment income (0.19) (0.12) (0.06)
Distributions from
capital gains -- (0.17) --
Return of Capital -- (0.87) --
------- ------- -------
Total distributions (0.19) (1.16) (0.06)
------- ------- -------
Net asset value,
end of period $ 11.48 $10.48 $19.60
======= ====== ======
Total return 11.39%(c) (42.86)% 8.76%(c)
Ratios/Supplemental Data:
Net assets, end of period
(000s omitted) $ 767 $ 636 $ 4
Ratio of expenses to
average net assets 1.76%(a) 1.75%(a) 1.75%(a)(b)
Ratio of net investment
income (loss) to
average net assets 0.72%(b) 1.08% 0.88%(b)
Fund turnover rate 122%(c) 179% 147%(c)
See Accompanying Notes to Financial Statements.
37
<PAGE>
Warburg Pincus Funds
Global Communications Fund Financial Highlights
(For a Share Outstanding Throughout each Period)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Common
---------------------------------------------------------
For the Six For the Year For the Period
Months Ended Ended December 4, 1996*
February 28, 1999 August 31, to August 31,
(Unaudited) 1998* 1997
----------------- ------------ -----------------
<S> <C> <C> <C>
Net asset value, beginning of period $20.54 $17.30 $15.00
------ ------ ------
Income from investment operations
Net investment income (loss) (0.02) (0.01) 0.02
Net gain (loss) on investments and
foreign currency transactions
(both realized and unrealized) 13.49 4.29 2.28
------ ------ ------
Total from investment operations 13.47 4.28 2.30
------ ------ ------
Less Distributions
Distributions from capital gains 2.84 (1.04) --
------ ------ ------
Total distributions (2.84) (1.04) --
------ ------ ------
Net asset value, end of period $31.17 $20.54 $17.30
====== ====== ======
Total return 66.92%(c) 25.38%(c) 15.33%(c)
Ratios/Supplemental Data:
Net assets, end of period (000s omitted) $6,930 $ 718 $ 569
Ratio of expenses to average net assets
(including dividend expense) 1.65%(a)(b) 1.65%(a) 1.65%(a)(b)
Ratio of expenses to average net assets
Ratio of net investment income (loss) to average net assets (0.34)%(b) (0.03)% 0.16%(b)
Fund turnover rate 121%(c) 169%(c) 43%(c)
</TABLE>
- ----------
(a) Without the voluntary waiver of advisory fees and administration fees, the
ratios of expenses to average net assets for the Institutional Class would
have been 2.22% (excluding dividend expense and 3.45% (including dividend
expense) annualized for the six months ended February 28, 1999 and 5.12%
(excluding dividend expense and 7.44% (including dividend expense)
annualixed for the period ended August 31, 1998. Without the voluntary
waiver of advisory fees and administration fees, the ratios of expenses to
average net assets for the Common Class would have been 2.62% (excluding
dividend expense) and 3.72% (including dividend expense) annualized for the
period ended February 28, 1999.
(b) Annualized.
(c) Not Annualized.
* Commencement of operations.
See Accompanying Notes to Financial Statements.
38
<PAGE>
Warburg Pincus Funds
Notes to Financial Statements
February 28, 1999 (Unaudited)
- --------------------------------------------------------------------------------
Note 1. Summary of Significant Accounting Policies
The Warburg Pincus Funds covered in this report are comprised of Warburg
Pincus International Growth Fund ("International"), Warburg Pincus Emerging
Markets II Fund ("Emerging Markets"), Warburg Pincus European Equity Fund
("European Equity") and Warburg Pincus Global Telecommunications Fund ("Global
Telecommunications") (each, a "Fund" and collectively, the "Funds"), which are
registered under the Investment Company Act of 1940, as amended (the "1940
Act"), as non-diversified, open-end management investment companies. Each Fund
is authorized to offer three classes of shares: Common, Advisor and
Institutional, although only Common shares and Institutional shares of each Fund
are currently offered (Common shares only in the case of the Global
Telecommunications Fund). Common shares for each Fund bear expenses paid
pursuant to a shareholder servicing and distribution plan at an annual rate of
.25% of the average daily net asset value of the Fund's outstanding Common
shares.
On October 23, 1998, pursuant to an Agreement and Plan of Reorganization,
each Fund (other than European Equity) acquired all of the assets and
liabilities of a corresponding investment series of The RBB Fund, Inc.
(collectively, the "Acquired Funds"). The acquisitions were accomplished by a
tax-free exchange of the following shares of each Fund, in each case for the
same amount of shares of the corresponding class of the applicable Acquired
Fund. Shares were reissued to shareholders at the time of the reorganizations.
Fund Common Shares Institutional Shares
---- ------------- --------------------
International 145,719 27,622,659
Emerging Markets 62,181 1,508,675
Global Telecommunications 40,351 --
The net assets of each Fund directly after the reorganization were the same
as the corresponding Acquired Fund as described in the table below. Each Fund
assumed the prior operating history of the corresponding Acquired Fund.
Unrealized
Fund Net Assets Appreciation/(Depreciation)*
---- ------------ ----------------------------
International $615,300,445 $46,755,858
Emerging Markets 17,766,403 (4,401,793)
Global Telecommunications 943,831 112,975
- ----------
*The amount of each Fund's net assets includes the amount of unrealized
appreciation\(depreciation) listed above.
39
<PAGE>
Warburg Pincus Funds
Notes to Financial Statements (cont'd)
February 28, 1999 (Unaudited)
- --------------------------------------------------------------------------------
Note 1. Summary of Significant Accounting Policies -- (cont'd)
Certain of the Funds are permitted to engage in the investment strategies
described in the Notes to Financial Statements. The Funds are not obligated to
pursue any of the following strategies and do not represent that these
techniques are available now or will be available at any time in the future.
Please refer to each Fund's prospectus(es) and statement of additional
information for a description of its investment strategies.
A) SECURITY VALUATION -- The net asset value of each Fund is
determined daily as of the close of regular trading on the New York
Stock Exchange. Each Fund's securities for which market quotations are
readily available are valued at market value, which is currently
determined using the last reported sales price. If no sales are
reported, as in the case of some securities traded over-the-counter,
the securities are valued at the mean between the last reported bid
and asked prices. All other securities and assets are valued as
determined in good faith by the Fund's Board of Directors. Short-term
obligations with maturities of 60 days or less are valued at amortized
cost which approximates market value.
B) FOREIGN CURRENCY TRANSACTIONS -- Transactions denominated in
foreign currencies are recorded in each Fund's records at the current
prevailing exchange rates. Asset and liability accounts that are
denominated in a foreign currency are adjusted daily to reflect
current exchange rates. Transaction gains or losses resulting from
changes in exchange rates during the reporting period or upon
settlement of the foreign currency transaction are reported in
operations for the current period. It is not practical to isolate that
portion of both realized and unrealized gains and losses on
investments in the statement of operations that result from
fluctuations in foreign currency exchange rates. Each Fund reports
certain foreign currency related transactions as components of
realized gains for financial reporting purposes, whereas such
components are treated as ordinary income (loss) for Federal income
tax purposes.
C) SECURITY TRANSACTIONS AND INVESTMENT INCOME -- Security
transactions are accounted for on the trade date. The cost of
investments sold is determined by use of the specific identification
method for both financial reporting and income tax purposes. Interest
income is recorded on the accrual basis. Dividends are recorded on the
ex-dividend date. Certain expenses are class specific expenses and
vary by class. Expenses not directly attributable to a specific Fund
or class
40
<PAGE>
Warburg Pincus Funds
Notes to Financial Statements (cont'd)
February 28, 1999 (Unaudited)
- --------------------------------------------------------------------------------
Note 1. Summary of Significant Accounting Policies -- (cont'd)
are allocated based on relative net assets of each Fund and class,
respectively.
D) DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS -- Each Fund calculates
its dividends from net investment income. Net investment income includes
interest accrued and dividends earned on the Fund's portfolio securites for
the applicable period less applicable expenses. Each of the Emerging
Markets, International, European Equity and Global Telecommunications will
distribute substantially all of its net realized capital gains and all net
investment income, if any, to its shareholders annually. The character of
distributions made during the year for net investment income or net
realized gains may differ from their ultimate characterization for federal
income tax purposes due to generally accepted accounting principles (GAAP)
and tax differences in the character of income and expense recognition.
These differences are primarily due to differing treatments for net
operating losses, mortgage-backed securities, passive foreign investment
companies, and forward foreign currency contracts.
E) FEDERAL INCOME TAXES -- No provision is made for Federal taxes as
it is each Fund's intention to qualify for and elect the tax treatment
applicable to regulated investment companies under the Internal Revenue
Code of 1986, as amended and make the requisite distributions to its
shareholders which will be sufficient to relieve it from Federal income and
excise taxes.
F) USE OF ESTIMATES -- The preparation of financial statements in
conformity with GAAP requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
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
41
<PAGE>
Warburg Pincus Funds
Notes to Financial Statements (cont'd)
February 28, 1999 (Unaudited)
- --------------------------------------------------------------------------------
Note 1. Summary of Significant Accounting Policies -- (cont'd)
separate account by each Fund's custodian or an authorized securities
depository. None of the Funds had open repurchase agreements at February
28, 1999.
H) FUTURES TRANSACTIONS -- A Fund invests in futures contracts for the
purpose of hedging its existing portfolio securities, or securities that
the Fund intends to purchase, against fluctuations in value caused by
changes in prevailing market interest rates or securities prices, or for
other purposes. Certain Funds' may enter into futures contracts subject to
certain limitations. Upon entering into a futures contract, each Fund is
required to deposit cash or pledge U.S. Government securities of an initial
margin. Subsequent payments, which are dependent on the daily fluctuations
in the value of the underlying instrument, are made or received by the Fund
each day (daily variations margin) and are recorded as unrealized gains or
losses until the contracts are closed. When the contracts are closed, the
Fund records a realized gain or loss equal to the difference between the
proceeds from (or cost of) the closing transaction and the Fund's basis in
the contracts. Risks of entering into futures contracts include the
possibility that there will be an imperfect price correlation between the
futures contracts and the underlying securities. Second, it is possible
that a lack of liquidity for futures contracts could exist in the secondary
market, resulting in an inability to close a futures position prior to its
maturity date. Third, the purchase of a futures contract involves the risk
that a Fund could lose more than the original margin deposit required to
initiate a futures transaction. None of the Funds had open futures
transactions at February 28, 1999.
I) TBA PURCHASE COMMITMENTS -- The Funds may enter into "TBA" (to be
announced) purchases commitments to purchase securities for a fixed price
at a future date, typically not exceeding 45 days. TBA purchase commitments
may be considered securities in themselves, and involve a risk of loss if
the value of the security to be purchased declines prior to settlement
date, which risk is in addition to the risk of decline in each Fund's other
assets. Unsettled TBA purchase commitments are valued at the current market
value of the underlying securities, according to the procedures described
under "Security Valuation" above.
42
<PAGE>
Warburg Pincus Funds
Notes to Financial Statements (cont'd)
February 28, 1999 (Unaudited)
- --------------------------------------------------------------------------------
Note 1. Summary of Significant Accounting Policies -- (cont'd)
J) SECURITIES LENDING -- Loans of the securities are required at all
times to be secured by collateral at least equal to 102% of the market
value of domestic securities on loan including any accrued interest thereon
and 105% of the market value of foreign securities on loan including any
accrued interest thereon. However, in the event of default or bankruptcy by
the other party to the agreement, realization and/or retention of the
collateral may be subject to legal proceedings. The market value of
securities on loan to brokers and the value of collateral held by each Fund
with respect to such loans (including the right to draw on a letter of
credit) at February 28, 1999 is as follows:
Markets Value of Value of
Fund Securities Loaned Collateral Recorded
---- ----------------- -------------------
International $113,870,012 $121,024,220
Emerging Markets 1,045,741 1,104,232
European Equity 1,048,990 1,122,400
Global Telecommunications 112,275 115,700
K) SHORT SALES -- When a Fund's investment adviser believes that a
security is overvalued, it may sell the security short by borrowing the
same security from a broker or other institution and selling the security.
A Fund will incur a loss as a result of the short sale if the price of the
borrowed security increases between the date of the short sale and the date
on which the Fund replaces such security. A Fund will realize a gain if
there is a decline in price of the security between those dates, which
decline exceeds the cost of borrowing the security and other transaction
costs. There can be no assurance that a Fund will be able to close out a
short position at any particular time or at an acceptable price. Although a
Fund's gain is limited to the amount at which it sold a security short, its
potential loss is limited only by the maximum attainable price of the
security (which at least theoretically is unlimited) less the price at
which the security was sold. Until a Fund replaces a borrowed security, it
will maintain at all times cash, or liquid securities in an amount which,
when added to any amount deposited with a broker as collateral will at
least equal the current market value of the security sold short. Depending
on arrangements made with brokers, a Fund may not receive any payments
(including interest) on collateral deposited with them.
43
<PAGE>
Warburg Pincus Funds
Notes to Financial Statements (cont'd)
February 28, 1999 (Unaudited)
- --------------------------------------------------------------------------------
Note 1. Summary of Significant Accounting Policies -- (cont'd)
L) OTHER -- Securities denominated in currencies other than the U.S.
dollar are subject to changes in value due to fluctuations in exchange
rates.
Some countries in which the Funds invest require governmental approval
for the repatriation of investment income, capital or the proceeds of sales
of securities by foreign investors. In addition, if there is a
deterioration in a country's balance of payments or for other reasons, a
country may impose temporary restrictions on foreign capital remittances
abroad.
The securities exchanges of certain foreign markets are substantially
smaller, less liquid and more volatile than the major securities markets in
the United States. Consequently, acquisition and disposition of securities
by each Fund may be inhibited. In addition, a significant proportion of the
aggregate market value of equity securities listed on the major securities
exchanges in emerging markets are held by a smaller number of investors.
This may limit the number of shares available for acquisition or
disposition by a Fund.
Lower-rated debt securities (commonly known as "junk bonds") possess
speculative characteristics and are subject to greater market fluctuations
and risk of lost income and principal than higher-rated debt securities for
a variety of reasons. Also, during an economic downturn or substantial
period of rising interest rates, highly leveraged issuers may experience
financial stress which would adversely affect their ability to service
their principal and interest payment obligations, to meet projected
business goals and to obtain additional financing.
In addition, periods of economic uncertainty and changes can be
expected to result in increased volatility of market prices of lower-rated
debt securities and (to the extent a Fund invests in junk bonds) the Fund's
net asset value.
Note 2. Transactions with Affiliates and Related Parties
Pursuant to Investment Advisory Agreements, Credit Suisse Asset Management
("CSAM") an indirect, wholly-owned subsidiary of Credit Suisse Group, serves as
investment adviser for each of the four Funds described herein.
44
<PAGE>
Warburg Pincus Funds
Notes to Financial Statements (cont'd)
February 28, 1999 (Unaudited)
- --------------------------------------------------------------------------------
Note 2. Transactions with Affiliates and Related Parties -- (cont'd)
For its advisory services, CSAM is entitled to receive the following fees,
computed daily and payable monthly on each Fund's average daily net assets:
Fund Annual Rate
---- ---------------------------------
International 0.80% of average daily net assets
Emerging Markets 1.00% of average daily net assets
European Equity 1.00% of average daily net assets
Global Telecommunications 1.00% of average daily net assets
CSAM may, at its discretion, voluntarily waive all or any portion of its
advisory fee for any of the Funds. For the six months ended February 28, 1999,
advisory fees and waivers for each of the twelve investment Funds were as
follows:
Gross Net
Fund Advisory Fee Waiver Advisory Fee
---- ------------ --------- ------------
International $2,621,576 $(32,322) $2,589,254
Emerging Markets 92,442 (26,215) 66,227
European Equity 6,946 (6) 6,940
Global Telecommunications 10,476 (10,476) --
CSAM reimbursed Global Telecommunications $28,188 for the six months ended
February 28, 1999.
For its sub-advisory services, Credit Suisse Asset Management Limited
("CSAM Limited"), an indirect, wholly-owned subsidiary of Credit Suisse Group,
is entitled to receive from CSAM .30% of the average daily net assets of
Emerging Markets and .50% of the average daily net assets of European Equity.
For the six-months ended February 28, 1999, CSAM Limited was entitled to receive
$27,733 and $3,473 from CSAM for sub-advisory services provided to Emerging
Markets and European Equity, respectively, all of which fees were waived.
State Street Bank and Trust Company ("State Street"), serves as each Fund's
transfer and dividend disbursing agent. State Street has delegated most of its
Fund service obligations to Boston Financial Data Services, Inc. (BFDS), a 50%
owned subsidiary of State Street.
Counsellors Funds Service, Inc. ("CFSI"), a wholly-owned subsidiary of
Warburg Pincus Asset Management, Inc., and PFPC Inc. ("PFPC"), an indirect,
wholly-owned subsidiary of PNC Bank Corp., serve as each Fund's
co-administrators. For administration services, each Fund pays CFSI a fee
calculated at an annual rate of .05% of the Fund's first $125 million in average
daily net assets of the Common shares and .10% of average daily
45
<PAGE>
Warburg Pincus Funds
Notes to Financial Statements (cont'd)
February 28, 1999 (Unaudited)
- --------------------------------------------------------------------------------
Note 2. Transactions with Affiliates and Related Parties -- (cont'd)
net assets of the Common shares over $125 million. No compensation is payable by
the Funds to CFSI for co-administration services for the Institutional shares.
CSFI may, at its discretion, voluntarily waive all or any portion of its
co-administration fees for any of the Funds. For the period October 23, 1998 to
February 28, 1999, co-administration fees earned and waived by CFSI were as
follows:
Gross Net
Fund Administration Fee Waiver Administration Fee
---- ------------------ -------- ------------------
International $4,666 $ -- $4,666
Emerging Markets 125 (42) 83
European Equity 2,307 (1,153) 1,154
Global Telecommunications 490 (244) 246
Prior to October 23, 1998, Provident Distributors, Inc. ("PDI") served as
administrative service agent. An administrative service fee was computed daily
and payable quarterly at an annual rate of .15% of the average daily net assets
of the corresponding portfolios of the RBB Fund (except for European Equity).
The administrative service agent may at its discretion voluntarily waive
all or any portion of its administrative fee for any of the Funds. For the
period ended October 23, 1998, administrative service fees earned and waived by
PDI were as follows:
Gross
Administrative Net
Fund Service Fee Waiver Administrative Fee
---- -------------- --------- ------------------
International $131,374 $(70,066) $61,308
Emerging Markets 4,262 (3,409) 853
Global Telecommunications 34 (34) --
For administration services, PFPC currently receives a fee calculated at
annual rate of .125% on each Fund's average daily net assets, subject to a
minimum annual fee and exclusive of out-of-pocket expenses. PFPC may, at its
discretion, voluntarily waive all or any portion of it administration fee for
any of the Funds. For the six months ended February 28, 1999, co-administration
fees earned and waived by PFPC were as follows:
Gross
Administrative Net
Fund Fee Waiver Administrative Fee
---- -------------- ------ ------------------
International $409,621 $ -- $409,621
Emerging Markets 11,555 -- 11,555
European Equity 2,894 -- 2,894
Global Telecommunications 1,309 (1,309) --
46
<PAGE>
Warburg Pincus Funds
Notes to Financial Statements (cont'd)
February 28, 1999 (Unaudited)
- --------------------------------------------------------------------------------
Note 2. Transactions with Affiliates and Related Parties -- (cont'd)
Counsellors Securities Inc. ("CSI"), also a wholly-owned subsidiary of
Warburg Pincus Asset Management, Inc., serves as each Fund's distributor. No
compensation is payable by any Fund to CSI for its distribution services for
Institutional shares. For its distribution services for the Common shares, CSI
receives a fee calculated at an annual rate of .25% of the average daily net
assets of the Common shares of each Fund. For the six months ended February 28,
1999, distribution fees earned by CSI were as follows:
Fund Distribution Fee
------ ----------------
International $ 24,187
Emerging Markets 887
European Equity 5,768
Global Telecommunications 2,619
Note 3. Purchases and Sales of Securities
For the six months ended February 28, 1999, purchases and sales of
investment securities (other than short-term investments) were as follows:
Investment Securities Short Securities
---------------------------- ----------------
Fund Purchases Sales Sales
---- ------------ ------------ ----------------
International $579,302,852 $514,279,509 $ --
Emerging Markets 20,937,566 28,089,459 --
European Equity 32,596,118 4,686,675 --
Global Telecommunications 6,636,228 2,260,399 --
Note 4. Capital Shares
Transactions in capital shares for each period were as follows:
International Growth Fund
----------------------------------------------------------
Institutional
----------------------------------------------------------
For the Six Months Ended
February 28, 1999 For the Year Ended
(Unaudited) August 31, 1998
------------------------- -------------------------
Shares Value Shares Value
----------- ----------- --------- ------------
Shares sold 3,961,053 $88,860,179 4,245,007 $102,490,297
Shares issued in
reinvestment
of dividends 2,671,406 59,839,501 3,354,933 68,910,317
Shares
repurchased (3,717,290) (84,010,625) (5,715,329) (125,473,547)
---------- ----------- ---------- ------------
Net increase 2,915,169 $64,689,055 1,884,611 $ 45,927,067
========== =========== ========== ============
International Growth Fund
-------------------------------------------------------
Common
-------------------------------------------------------
For the Six Months Ended
February 28, 1999 For the Year Ended
(Unaudited) August 31, 1998
------------------------ ----------------------
Shares Value Shares Value
--------- ----------- -------- -----------
Shares sold 1,726,765 $38,794,175 211,487 $ 4,990,229
Shares issued in
reinvestment
of dividends 127,644 2,838,791 8,163 167,087
Shares repurchased (694,544) (16,022,743) (154,474) (3,642,448)
--------- ----------- -------- -----------
Net increase 1,159,865 $25,610,223 65,176 $ 1,514,868
========= =========== ======== ===========
47
<PAGE>
Warburg Pincus Funds
Notes to Financial Statements (cont'd)
February 28, 1999 (Unaudited)
- --------------------------------------------------------------------------------
Note 4. Capital Shares (cont'd)
<TABLE>
<CAPTION>
Emerging Markets II Fund
------------------------------------------------------------------------------------------------------------
Institutional Common
------------------------------------------------------ ---------------------------------------------------
For the Six Months Ended For the Six Months Ended
February 28, 1999 For the Year Ended February 28, 1999 For the Year Ended
(Unaudited) August 31, 1998 (Unaudited) August 31, 1998
------------------------ -------------------------- ------------------------ ----------------------
Shares Value Shares Value Shares Value Shares Value
--------- ----------- ---------- ------------ ------ -------- -------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Shares sold 18,125 $ 201,804 102,528 $ 1,830,455 7,122 $ 81,508 93,287 $1,457,394
Shares issued in
reinvestment
of dividends 27,063 308,248 245,801 4,154,034 60 690 46 775
Shares
repurchased (853,498) (9,175,786) (2,256,500) (35,760,759) (1,060) (11,170) (32,820) (571,277)
-------- ----------- ---------- ------------ ------ -------- ------- ----------
Net increase/
(decrease) (808,310) $(8,665,734) (1,908,171) $(29,776,270) 6,122 $ 71,028 60,513 $ 886,892
======== =========== ========== ============ ===== ======== ====== ==========
</TABLE>
<TABLE>
<CAPTION>
European Equity Fund
-------------------------------------------------------------------
Institutional Common
-------------------------------- -------------------------------
For the Period January 29, 1999* For the Period January 29, 1999*
Through February 28, 1999 Through February 28, 1999
(Unaudited) (Unaudited)
-------------------------------- -------------------------------
Shares Value Shares Value
----------- ------------ ---------- -----------
<S> <C> <C> <C> <C>
Shares sold 10,003 $100,030 2,901,541 $28,977,961
Shares issued in
reinvestment of
dividends -- -- -- --
Shares repurchased -- -- (44,678) (433,127)
------ -------- --------- -----------
Net increase 10,003 $100,030 2,856,863 $28,544,834
====== ======== ========= ===========
</TABLE>
- ---------------
*Commencement of operations.
Global Telecommunications Fund
----------------------------------------------------------
Common
----------------------------------------------------------
For the Six Months Ended For the Year Ended
February 28, 1999 August 31, 1998
(Unaudited) (Unaudited)
---------------------------- -----------------------
Shares Value Shares Value
-------- ---------- ------- --------
Shares sold 214,771 $6,599,871 18,229 $414,135
Shares issued in
reinvestment of
dividends 5,883 167,194 2,037 37,921
Shares repurchased (33,291) (997,050) (18,228) (407,258)
------- ----------- ------- --------
Net increase 187,363 $5,770,015 2,038 $ 44,798
======= =========== ======= ========
48
<PAGE>
Warburg Pincus Funds
Notes to Financial Statements (cont'd)
February 28, 1999 (Unaudited)
- --------------------------------------------------------------------------------
Note 4. Capital Shares (cont'd)
On February 28, 1999, three shareholders held approximately 95% of the
International Common shares, one shareholder held approximately 89% of the
Emerging Markets Common shares, one shareholder held approximately 83% of the
European Equity Common shares and three shareholders held approximately 47% of
the outstanding shares of the Global Telecommunications Common shares.
Note 5. Restricted Securities
One of International Fund's investments are restricted as to resale and are
valued at the direction of the Fund's Board of Directors in good faith, at fair
value, after taking into consideration appropriate indications of value
available. The table below shows the number of shares held, the acquisition
date, value as of February 28, 1999, percentage of Fund net assets which the
securities comprise, aggregate cost and unit value of the securities.
<TABLE>
<CAPTION>
Number of Acquisition 02/28/99 Percentage of Security Value Per
Shares Date Fair Value Net Assets Cost Unit
--------- ----------- ---------- ------------- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
Geotek Communications, Inc. 600 5/26/95 0.00 0.0% $6,000,000 0.000
---- ----------
0.00 $6,000,000
==== ==========
</TABLE>
Note 6. Forward Foreign Currency Contracts
The Funds will generally enter into forward foreign currency exchange
contracts as a way of managing foreign exchange rate risk and to enhance total
return. Each Fund may enter into these contracts to fix the U.S. dollar value of
a security that it has agreed to buy or sell for the period between the date the
trade was entered into and the date the security is delivered and paid for. Each
Fund may also use these contracts to hedge the U.S. dollar value of securities
denominated in foreign currencies that it already owns. The Fund may enter into
these contracts for the purchase or sale of a specific foreign currency at a
fixed price on a future date as a hedge or cross-hedge against either
transactions or portfolio positions.
Forward foreign currency contracts are valued at the forward rate, and are
marked-to-market daily. The change in market value is recorded by each Fund as
an unrealized gain or loss. When the contract is closed, each Fund records a
realized gain or loss equal to the difference between the value of the contract
at the time it was opened and the value at the time it was closed. Each Fund's
policy is to include this portion of realized and unrealized gains and losses on
investments that result from foreign currency changes with other foreign
currency gains and losses on the Statement of Operations.
49
<PAGE>
Warburg Pincus Funds
Notes to Financial Statements (cont'd)
February 28, 1999 (Unaudited)
- --------------------------------------------------------------------------------
Note 6. Forward Foreign Currency Contracts (cont'd)
The use of forward foreign currency contracts does not eliminate
fluctuations in the underlying prices of each Fund's portfolio securities, but
it does establish a rate of exchange that can be achieved in the future.
Although forward foreign currency contracts limit the risk of loss due to a
decline in the value of the hedged currency, they also limit any potential gain
that might result should the value of the currency increase. In addition, a Fund
could be exposed to risks if the counterparty to the contract is unable to meet
the terms of the contract. During the six months ended February 28, 1999, none
of the Funds entered into forward foreign currency contracts.
50
<PAGE>
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