[GRAPHIC OMITTED]
[GRAPHIC OMITTED]
INTERNATIONAL GROWTH FUND
EUROPEAN EQUITY FUND
U.S. CORE EQUITY FUND
GLOBAL TELECOMMUNICATIONS FUND
FOCUS FUND
LONG-SHORT MARKET NEUTRAL FUND
U.S. CORE FIXED INCOME FUND
STRATEGIC GLOBAL FIXED INCOME FUND
HIGH YIELD FUND
MUNICIPAL BOND FUND
FEBRUARY 29, 2000 SEMI-ANNUAL REPORT
(Unaudited)
More complete information about the funds, including charges and expenses, is
provided in the PROSPECTUS, which must precede or accompany this document and
which should be read carefully before investing. Institutional shareholders may
obtain additional copies by calling 800-222-8977 or by writing to Warburg Pincus
Funds, P.O. Box 8500, Boston, MA 02266-8500. Common shareholders may obtain
additional copies by calling 800-927-2874 or by writing to Warburg Pincus Funds,
P.O. Box 9030, Boston, MA 02205-9030.
Provident Distributors, Inc., Distributor, located at Four Falls Corporate
Center, 6th Floor, West Conshohocken, PA 19428-2961 is not affiliated with
Credit Suisse Asset Management, LLC. Telephone: 800-927-2874.
<PAGE>
FROM TIME TO TIME, THE FUNDS' INVESTMENT ADVISER AND CO-ADMINISTRATORS MAY WAIVE
SOME FEES AND/OR REIMBURSE SOME EXPENSES, WITHOUT WHICH PERFORMANCE WOULD BE
LOWER. WAIVERS AND/OR REIMBURSEMENTS ARE SUBJECT TO CHANGE.
RETURNS ARE HISTORICAL AND INCLUDE CHANGE IN SHARE PRICE AND REINVESTMENT OF
DIVIDENDS AND CAPITAL GAINS. PAST PERFORMANCE CANNOT GUARANTEE FUTURE RESULTS.
RETURNS AND SHARE PRICE WILL FLUCTUATE, AND REDEMPTION VALUE MAY BE MORE OR LESS
THAN ORIGINAL COST.
THE VIEWS OF THE FUNDS' MANAGEMENT ARE AS OF THE DATE OF THE LETTERS AND
PORTFOLIO HOLDINGS DESCRIBED IN THIS DOCUMENT ARE AS OF FEBRUARY 29, 2000; THESE
VIEWS AND PORTFOLIO HOLDINGS MAY HAVE CHANGED SUBSEQUENT TO THESE DATES. NOTHING
IN THIS DOCUMENT IS A RECOMMENDATION TO PURCHASE OR SELL SECURITIES.
FUND SHARES ARE NOT DEPOSITS OR OTHER OBLIGATIONS OF CREDIT SUISSE ASSET
MANAGEMENT, LLC ("CSAM") OR ANY AFFILIATE, ARE NOT FDIC INSURED AND ARE NOT
GUARANTEED BY CSAM OR ANY AFFILIATE. FUND INVESTMENTS ARE SUBJECT TO INVESTMENT
RISKS, INCLUDING LOSS OF YOUR INVESTMENT.
<PAGE>
WARBURG PINCUS INTERNATIONAL GROWTH FUND
PORTFOLIO MANAGERS' LETTER
March 21, 2000
Dear Shareholders:
We are writing to report on the results of the Warburg Pincus International
Growth Fund (the "Fund") for the six months ended February 29, 2000.
At February 29, 2000, the net asset value ("NAV") of the Fund's institutional
shares was $24.84, compared to an NAV of $23.47 on August 31, 1999. As a result,
the institutional shares' total return was 23.9%, (assuming the reinvestment of
dividends and distributions totaling $4.1027 per share). By comparison, the MSCI
EAFE Index* (the "EAFE") returned 13.8% during the same period.
The Fund outperformed the EAFE via a combination of favorable country weightings
and stock selection. Our stock selection emphasized companies in so-called "New
Economy" (I.E., information-based) industries such as technology, media and
telecommunications (abbreviated as "TMT"), whose prospects we considered
especially bright. Even we, however, did not expect that New Economy names would
rise as dramatically as they did in 1999's fourth quarter.
Relative returns were positive in nearly all markets in which the portfolio
invested. Among developed nations, performance was strongest in Europe and
Japan. We also benefited from allocating a modest portion of assets to the
equities of selected emerging nations.
o EUROPE. The biggest contribution to overall performance from the Fund's
European holdings came from our underweighting in the U.K. We underweighted
the U.K. throughout the period due to its less constructive environment
compared to that of its Continental counterparts. Our caution proved correct,
as the U.K. generated one of the period's lowest returns among European
markets.
Continental exposure was most successful in Spain, the Netherlands and
Sweden, as stock selection was strong in each.
o JAPAN. Stock selection also drove relative outperformance in Japan. We
emphasized Japanese TMT companies, which we felt were best-positioned to
succeed as the Japanese economy revived. Not only did many of these names
thrive in the fourth-quarter global TMT rally, but they also outperformed
non-TMT names to a degree higher than that in most of the world's major
markets.
Japanese exposure additionally benefited from our inclusion of several strong
smaller companies in the portfolio.
o EMERGING MARKETS. Although our investment in emerging markets was fairly
small, it nonetheless positively contributed to overall performance. This was
particularly true of our allocations to Brazil, Taiwan, Mexico and China.
On the negative side, the Fund's aggregate return was somewhat reduced by
adverse results in a handful of markets, which included Italy, Hong Kong,
France, South Korea, Greece and South Africa.
As other developments occur in the international equity markets or at Credit
Suisse Asset Management, we will be sure to keep you informed. Meanwhile, if you
have questions, please feel free to call upon us at any time.
Sincerely yours,
Credit Suisse Asset Management International Equities Management Team
Steven D. Bleiberg, Managing Director
Richard W. Watt, Managing Director
Emily Alejos, Director
Robert B. Hrabchak, Director
Alan Zlatar, Vice President
INTERNATIONAL INVESTING ENTAILS SPECIAL RISK CONSIDERATIONS, INCLUDING CURRENCY
FLUCTUATIONS, LOWER LIQUIDITY, ECONOMIC AND POLITICAL RISKS, AND DIFFERENCES IN
ACCOUNTING METHODS.
1
<PAGE>
WARBURG PINCUS INTERNATIONAL GROWTH FUND
PORTFOLIO MANAGERS' LETTER (CONCLUDED)
PERFORMANCE
<TABLE>
<CAPTION>
SINCE
FIVE YEARS INCEPTION
SIX MONTHS ONE YEAR (3/1/95 - 2/29/00) 9/30/92
2/29/00 (3/1/99 - 2/29/00) (ANNUALIZED) (ANNUALIZED)
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Warburg Pincus International Growth Fund 23.9% 34.3% 17.9% 14.2%
MSCI EAFE Index * 13.8% 25.8% 13.2% 12.9%
- ---------------------------------------------------------------------------------------------------------------------------
<FN>
*THE MORGAN STANLEY CAPITAL INTERNATIONAL EUROPE, AUSTRALASIA AND FAR EAST INDEX
IS AN UNMANAGED INDEX (WITH NO DEFINED INVESTMENT OBJECTIVE) OF INTERNATIONAL
EQUITIES THAT INCLUDES REINVESTMENT OF DIVIDENDS, AND IS THE EXCLUSIVE PROPERTY
OF MORGAN STANLEY CAPITAL INTERNATIONAL & CO., INCORPORATED.
</FN>
</TABLE>
2
<PAGE>
WARBURG PINCUS INTERNATIONAL GROWTH FUND
SCHEDULE OF INVESTMENTS
FEBRUARY 29, 2000
(UNAUDITED)
NUMBER
OF SHARES VALUE
--------- ------------
COMMON STOCKS -- 98.4%
AUSTRALIA -- 1.1%
BANKING -- 0.2%
Westpac Banking Corp., Ltd. ................... 170,940 $ 1,091,839
------------
BROADCASTING & PUBLISHING -- 0.2%
News Corp., Ltd. (The) ........................ 50,792 740,368
------------
MULTI-INDUSTRY -- 0.3%
Broken Hill Proprietary Co., Ltd. ............. 123,075 1,216,358
Southcorp, Ltd. ............................... 183,924 499,278
------------
1,715,636
------------
REAL ESTATE -- 0.2%
Lend Lease Corp., Ltd. ........................ 97,231 1,277,909
------------
TELECOMMUNICATIONS -- 0.2%
Cable & Wireless Optus, Ltd.** ................ 315,000 1,249,754
------------
TOTAL AUSTRALIA ............................... 6,075,506
------------
BRAZIL -- 0.9%
ENERGY SOURCES -- 0.5%
Petroleo Brasileiro ADR#** 114,550 2,990,913
------------
TELECOMMUNICATIONS -- 0.4%
Telecomunicacoes Brasileiras S.A.
Pfd. Block ADR#** ........................... 13,000 1,914,250
------------
TOTAL BRAZIL .................................. 4,905,163
------------
CHINA -- 0.1%
METALS - STEEL -- 0.1%
China Steel Corp. ADR#** ...................... 44,450 727,869
------------
TOTAL CHINA ................................... 727,869
------------
FINLAND -- 3.8%
FOREST PRODUCTS & PAPER -- 0.5%
UPM-Kymmene Oyj ............................... 104,781 2,905,427
------------
TELECOMMUNICATIONS -- 3.3%
Nokia Oyj ..................................... 72,528 14,454,764
Sonera Oyj .................................... 54,655 4,214,998
------------
18,669,762
------------
TOTAL FINLAND ................................. 21,575,189
------------
FRANCE -- 12.7%
AUTOMOBILES -- 0.6%
Renault S.A.# ................................. 82,557 3,290,707
------------
BANKING -- 1.4%
Banque Nationale de Paris# .................... 96,414 7,611,827
Banque Nationale de Paris -
CVG** ....................................... 17,620 117,055
------------
7,728,882
------------
BUSINESS & PUBLIC SERVICES -- 1.5%
Vivendi ....................................... 70,027 8,225,462
------------
ELECTRICAL & ELECTRONICS -- 1.2%
Alcatel ....................................... 30,220 7,076,084
------------
NUMBER
OF SHARES VALUE
--------- ------------
FRANCE -- (CONTINUED)
ELECTRONIC COMP. & INSTRUMENTS -- 2.4%
STMicroelectronics N.V.# ...................... 67,351 $ 13,358,147
------------
ENERGY SOURCES -- 1.7%
Total Fina Cl. B .............................. 74,189 9,821,485
------------
FOOD & HOUSEHOLD PRODUCTS -- 0.7%
Groupe Danone ................................. 18,873 3,794,079
------------
HEALTH & PERSONAL CARE -- 0.0%
Aventis S.A. .................................. 170 8,675
------------
INSURANCE -- 1.2%
AXA S.A. ...................................... 56,479 7,096,308
------------
MERCHANDISING -- 1.4%
Carrefour S.A. ................................ 22,226 3,370,364
Pinault-Printemps-Redoute S.A. ................ 22,146 4,458,454
------------
7,828,818
------------
MULTI-INDUSTRY -- 0.6%
Suez Lyonnaise des Eaux S.A. .................. 21,864 3,599,653
------------
TOTAL FRANCE .................................. 71,828,300
------------
GERMANY -- 9.7%
BANKING -- 3.9%
HypoVereinsbank ............................... 58,315 3,177,837
Deutsche Bank AG .............................. 146,303 12,311,178
Dresdner Bank AG .............................. 132,584 6,357,047
------------
21,846,062
------------
BUSINESS & PUBLIC SERVICES -- 1.8%
Systeme, Anwendungen, Produkte
in der Datenverarbeitung AG ................. 7,164 4,483,363
Systeme, Anwendungen, Produkte
in der Datenverarbeitung
AG Pfd. ..................................... 6,787 5,668,685
------------
10,152,048
------------
ELECTRICAL & ELECTRONICS -- 1.2%
Siemens AG# ................................... 38,836 6,936,068
------------
INSURANCE -- 1.7%
Allianz AG Registered Shares .................. 10,531 3,672,426
Muenchener Rueckversicherung-
Gesellschaft AG ............................. 22,303 6,244,428
------------
9,916,854
------------
MULTI-INDUSTRY -- 0.6%
Preussag AG# .................................. 78,080 3,623,446
------------
UTILITIES - ELECTRICAL & GAS-- 0.5%
Veba AG ....................................... 59,915 2,676,631
------------
TOTAL GERMANY ................................. 55,151,109
------------
See Accompanying Notes to Financial Statements.
3
<PAGE>
WARBURG PINCUS INTERNATIONAL GROWTH FUND (CONTINUED)
NUMBER
OF SHARES VALUE
--------- ------------
GREECE -- 0.3%
BANKING -- 0.2%
Alpha Credit Bank S.A. ........................ 6,141 $ 441,547
National Bank of Greece
S.A. ADR#** ................................. 55,100 740,406
------------
1,181,953
------------
TELECOMMUNICATIONS -- 0.1%
Intracom S.A. ................................. 11,525 511,393
------------
TOTAL GREECE .................................. 1,693,346
------------
HONG KONG -- 2.4%
BANKING -- 0.2%
Dao Heng Bank Group, Ltd. ..................... 83,100 311,790
Hang Seng Bank, Ltd. .......................... 43,310 390,943
HSBC Holdings plc ............................. 35,600 408,260
------------
1,110,993
------------
BROADCASTING & PUBLISHING -- 0.1%
Television Broadcasts, Ltd. ................... 48,924 402,328
------------
ELECTRONIC COMP. & INSTRUMENTS -- 0.3%
Legend Holdings, Ltd. ......................... 308,000 1,424,728
------------
MULTI-INDUSTRY -- 0.4%
Hutchison Whampoa, Ltd. ....................... 114,000 1,787,077
Swire Pacific, Ltd. ........................... 88,000 421,765
------------
2,208,842
------------
REAL ESTATE -- 0.4%
Cheung Kong (Holdings), Ltd. .................. 97,000 1,290,003
Sun Hung Kai Properties, Ltd. ................. 132,000 1,191,513
------------
2,481,516
------------
TELECOMMUNICATIONS -- 1.0%
Cable & Wireless HKT, Ltd. .................... 367,200 1,224,387
China Telecom (Hong Kong),
Ltd.** ...................................... 102,000 937,098
China Telecom (Hong Kong),
Ltd. ADR** .................................. 8,300 1,542,762
China.com Corp. ADR#** ........................ 13,286 1,632,517
Pacific Century CyberWorks,
Ltd.** ...................................... 169,000 480,993
------------
5,817,757
------------
TOTAL HONG KONG ............................... 13,446,164
------------
HUNGARY -- 0.2%
TELECOMMUNICATIONS -- 0.2%
Magyar Tavkozlesi ADR# ........................ 28,400 1,304,625
------------
TOTAL HUNGARY ................................. 1,304,625
------------
INDIA -- 0.7%
BANKING -- 0.2%
State Bank of India GDR# ...................... 76,800 1,186,560
------------
MULTI-INDUSTRY -- 0.1%
Larsen & Toubro, Ltd. GDR ..................... 42,300 865,035
------------
NUMBER
OF SHARES VALUE
--------- ------------
INDIA -- (CONTINUED)
TELECOMMUNICATIONS -- 0.4%
Videsh Sanchar Nigam, Ltd. ....................
144A GDR .................................... 54,650 $ 2,008,387
------------
TOTAL INDIA ................................... 4,059,982
------------
ISRAEL -- 0.0%
INVESTMENT COMPANY -- 0.0%
Geotek Communications, Inc.
Series M** .................................. 600 0
------------
TOTAL ISRAEL ..................................... 0
------------
ITALY -- 3.6%
BANKING -- 0.9%
Istituto Bancario San Paolo di
Torino S.p.A.# .............................. 312,782 4,938,790
------------
INSURANCE -- 1.1%
Assicurazioni Generali S.p.A.# ................ 230,247 6,262,495
------------
MULTI-INDUSTRY -- 0.7%
Concessioni e Costruzioni
Autostrade S.p.A.# .......................... 439,737 3,869,672
------------
TELECOMMUNICATIONS -- 0.9%
Tecnost S.p.A.# ............................... 1,294,664 5,384,877
------------
TOTAL ITALY ................................... 20,455,834
------------
JAPAN -- 30.6%
AUTOMOBILES -- 1.9%
Bridgestone Corp. ............................. 94,000 2,100,745
Denso Corp. ................................... 118,000 2,207,434
Toyota Motor Corp. ............................ 157,394 6,289,942
------------
10,598,121
------------
BANKING -- 2.0%
Bank of Tokyo - Mitsubishi, Ltd.
(The) ....................................... 154,000 1,885,545
Fuji Bank, Ltd.# .............................. 243,000 1,893,538
Industrial Bank of Japan, Ltd.
(The) ....................................... 135,000 1,055,652
Sakura Bank, Ltd. (The) ....................... 266,000 1,518,249
Sanwa Bank, Ltd. (The)# ....................... 142,000 1,306,873
Sumitomo Bank, Ltd. (The) ..................... 151,000 1,782,834
Sumitomo Trust & Banking ...................... 339,000 1,916,396
------------
11,359,087
------------
BEVERAGES & TOBACCO -- 0.7%
Japan Tobacco, Inc. ........................... 164 1,171,946
Kirin Brewery Company, Ltd. ................... 231,000 2,756,821
------------
3,928,767
------------
BROADCASTING & PUBLISHING -- 1.7%
Dai Nippon Printing Co., Ltd. ................. 73,000 1,093,157
Fuji Television Network, Inc. ................. 159 3,531,676
Tokyo Broadcasting System, Inc. ............... 114,000 5,199,200
------------
9,824,033
------------
See Accompanying Notes to Financial Statements.
4
<PAGE>
WARBURG PINCUS INTERNATIONAL GROWTH FUND (CONTINUED)
NUMBER
OF SHARES VALUE
--------- ------------
JAPAN -- (CONTINUED)
BUILDING MATERIALS & COMPONENTS-- 0.8%
Daikin Industries, Ltd. ....................... 215,000 $ 3,215,659
Tostem Corporation ............................ 101,000 1,392,926
------------
4,608,585
------------
BUSINESS & PUBLIC SERVICES -- 0.9%
Fuji Soft ABC, Inc. ........................... 16,100 1,137,317
Mauri Co., Ltd. ............................... 99,000 1,297,752
SECOM Co., Ltd. ............................... 27,000 2,418,537
------------
4,853,606
------------
CHEMICALS -- 2.3%
Kaneka Corporation ............................ 167,000 1,819,720
Mitsui Chemicals Industries ................... 337,800 2,438,522
Shin-Etsu Chemical Co. ........................ 62,000 3,358,169
Sumitomo Chemical Co., Ltd. ................... 350,000 1,322,239
Takeda Chemical Industries .................... 68,000 3,837,908
------------
12,776,558
------------
DATA PROCESSING & REPRODUCTION-- 1.0%
Canon, Inc. ................................... 86,000 3,577,738
Fujitsu Limited ............................... 66,000 2,192,960
------------
5,770,698
------------
ELECTRICAL & ELECTRONICS -- 1.1%
Fuji Photo Film Co. ........................... 28,983 1,274,337
Hitachi, Ltd. ................................. 185,000 2,524,453
NEC Corp. ..................................... 118,000 2,637,105
------------
6,435,895
------------
ELECTRONIC COMP. & INSTRUMENTS-- 5.3%
Advantest Corp. ............................... 11,300 2,049,093
Fanuc, Ltd. ................................... 23,500 2,288,999
Kyocera Corp. ................................. 21,900 3,712,083
Matsushita Electric Industrial Co.,
Ltd. ........................................ 128,000 3,728,669
Mitsumi Electric Co., Ltd.# ................... 58,000 2,222,819
Murata Manufacturing Co., Ltd. ................ 7,000 1,333,072
NIDEC Corp.# .................................. 3,800 719,517
Olympus Optical Co., Ltd. ..................... 193,000 2,573,883
Rohm Co., Ltd. ................................ 8,600 2,790,949
Sony Corp. .................................... 7,587 2,244,643
TDK Corp. ..................................... 100 9,567
Tokyo Electron, Ltd. .......................... 19,000 2,897,092
Toshiba Corp. ................................. 413,000 3,372,379
------------
29,942,765
------------
FINANCIAL SERVICES -- 2.2%
Daiwa Securities Group, Inc. .................. 166,000 2,636,923
Hitachi Credit Corp.# ......................... 105,500 1,762,311
Nikko Securities Co., Ltd. (The) .............. 150,000 1,934,884
Orix Corp.# ................................... 35,200 6,088,218
------------
12,422,336
------------
NUMBER
OF SHARES VALUE
--------- ------------
JAPAN -- (CONTINUED)
FOOD & HOUSEHOLD PRODUCTS -- 2.0%
Ajinomoto Co., Inc. ........................... 229,000 $ 2,522,405
House Foods Corp. ............................. 109,000 1,587,598
Kao Corp. ..................................... 81,000 2,149,401
Nippon Meat Packers, Inc. ..................... 205,000 1,884,817
Nissin Food Products Co., Ltd. ................ 134,400 2,875,154
------------
11,019,375
------------
HEALTH & PERSONAL CARE -- 1.5%
Chugai Pharmaceutical Co.,
Ltd.# ....................................... 144,000 2,202,245
Fujisawa Pharmaceutical Co.,
Ltd. ........................................ 34,000 1,117,326
Taisho Pharmaceutical Co., Ltd. ............... 45,000 1,269,896
Yamanouchi Pharmaceutical Co.,
Ltd. ........................................ 79,000 3,775,551
------------
8,365,018
------------
INSURANCE -- 0.1%
Tokio Marine & Fire Insurance
Co. ......................................... 91,000 830,876
------------
MACHINERY & ENGINEERING -- 0.9%
Kubota Corporation ............................ 841,000 2,449,852
Mori Seiki Co., Ltd. .......................... 86,000 1,123,426
SMC Corporation ............................... 8,600 1,597,065
------------
5,170,343
------------
MERCHANDISING -- 0.4%
Ito-Yokado Co., Ltd. .......................... 12,000 699,126
Seven-Eleven Japan Co., Ltd. .................. 14,000 1,409,539
------------
2,108,665
------------
MULTI-INDUSTRY -- 0.3%
Mitsubishi Corp. .............................. 220,000 1,624,192
------------
RECREATION OTHER CONSUMER GOODS -- 0.4%
Nintendo Co., Ltd. ............................ 10,100 2,205,695
------------
TELECOMMUNICATIONS -- 4.2%
DDI Corp. ..................................... 352 3,268,412
Matsushita Communication
Industrial Co., Ltd. ........................ 8,000 1,354,556
Nippon Telegraph & Telephone .................. 718 9,934,865
NTT Data Corp.# ............................... 168 3,043,381
NTT Mobile Communication
Network, Inc. ............................... 148 5,968,420
------------
23,569,634
------------
TEXTILES -- 0.4%
Toray Industries Inc. ......................... 249,000 793,344
WORLD Co., Ltd.# .............................. 15,900 1,728,205
------------
2,521,549
------------
See Accompanying Notes to Financial Statements.
5
<PAGE>
WARBURG PINCUS INTERNATIONAL GROWTH FUND (CONTINUED)
NUMBER
OF SHARES VALUE
--------- ------------
JAPAN -- (CONTINUED)
TRANSPORTATION - ROAD & RAIL -- 0.5%
Fukuyama Transporting Co., Ltd. ............... 199,000 $ 1,418,433
Yamato Transport Co., Ltd. .................... 63,000 1,674,624
------------
3,093,057
------------
TOTAL JAPAN ................................... 173,028,855
------------
MEXICO -- 1.4%
BROADCASTING & PUBLISHING -- 0.3%
Grupo Televisa S.A. GDR** ..................... 19,800 1,520,888
------------
MERCHANDISING -- 0.2%
Wal-Mart de Mexico S.A. de C.V.
Cl. V ADR** ................................. 51,900 1,163,463
------------
TELECOMMUNICATIONS -- 0.9%
Telefonos de Mexico S.A.
Cl. L ADR ................................... 77,000 5,062,750
------------
TOTAL MEXICO .................................. 7,747,101
------------
NETHERLANDS -- 5.7%
APPLIANCES & HOUSEHOLD DURABLES -- 1.8%
Koninklijke Philips Electronics
N.V. ........................................ 56,213 10,404,904
------------
BROADCASTING & PUBLISHING -- 0.6%
VNU Verenigd Bezit ............................ 51,859 3,577,464
------------
CHEMICALS -- 0.4%
Akzo Nobel N.V. ............................... 59,830 2,304,743
------------
ELECTRICAL & ELECTRONICS -- 0.9%
Equant N.V.** ................................. 46,281 5,231,254
------------
FINANCIAL SERVICES -- 1.0%
ING Groep N.V. ................................ 116,409 5,886,352
------------
FOOD & HOUSEHOLD PRODUCTS -- 0.5%
Unilever N.V. - CVA ........................... 57,697 2,624,762
------------
INSURANCE -- 0.5%
Fortis (NL) N.V. .............................. 101,607 2,551,327
------------
TOTAL NETHERLANDS ............................. 32,580,806
------------
PORTUGAL -- 0.6%
MULTI-INDUSTRY -- 0.0%
PT Multimedia - Servicos de
Telecomunicacoes e Multimedia
SGPS S.A.** ................................. 15 1,908
------------
TELECOMMUNICATIONS -- 0.6%
Portugal Telecom S.A. ......................... 258,760 3,679,702
------------
TOTAL PORTUGAL ................................ 3,681,610
------------
NUMBER
OF SHARES VALUE
--------- ------------
SINGAPORE -- 0.6%
BANKING -- 0.1%
DBS Group Holdings, Ltd. ...................... 26,000 $ 321,286
Overseas Union Bank, Ltd. ..................... 69,200 307,118
------------
628,404
------------
BROADCASTING & PUBLISHING -- 0.1%
Singapore Press Holdings, Ltd. ................ 25,000 478,622
------------
ELECTRONIC COMP. & INSTRUMENTS -- 0.2%
NatSteel Electronics, Ltd. .................... 71,000 428,381
Venture Manufacturing (Singapore),
Ltd. ........................................ 44,145 663,315
------------
1,091,696
------------
REAL ESTATE -- 0.1%
City Developments, Ltd. ....................... 76,631 311,201
------------
TELECOMMUNICATIONS -- 0.1%
Singapore Telecommunications,
Ltd. ........................................ 218,800 355,421
------------
TRANSPORTATION - AIRLINES -- 0.0%
Singapore Airlines, Ltd. ...................... 18,000 167,082
------------
TRANSPORTATION - SHIPPING -- 0.0%
Neptune Orient Lines, Ltd.** .................. 342,824 280,433
------------
TOTAL SINGAPORE ............................... 3,312,859
------------
SOUTH AFRICA -- 0.5%
BANKING -- 0.2%
Standard Bank Investment Corp.,
Ltd. ........................................ 240,300 935,518
------------
BEVERAGES & TOBACCO -- 0.2%
South African Breweries plc ................... 125,430 968,721
------------
INSURANCE -- 0.1%
Liberty Life Association of Africa,
Ltd. ........................................ 79,751 774,316
------------
TOTAL SOUTH AFRICA ............................ 2,678,555
------------
SOUTH KOREA -- 0.6%
ELECTRONIC COMP. & INSTRUMENTS -- 0.1%
Samsung Electronics Co.
GDR#** ...................................... 3,741 489,603
------------
METALS - STEEL -- 0.1%
Pohang Iron & Steel Company,
Ltd. ADR .................................... 15,900 399,488
------------
TELECOMMUNICATIONS -- 0.2%
Korea Telecom Corp. ADR** ..................... 30,250 1,315,875
------------
UTILITIES - ELECTRICAL & GAS -- 0.2%
Korea Electric Power Corp. ADR ................ 81,000 1,113,750
------------
TOTAL SOUTH KOREA ............................. 3,318,716
------------
See Accompanying Notes to Financial Statements.
6
<PAGE>
WARBURG PINCUS INTERNATIONAL GROWTH FUND (CONTINUED)
NUMBER
OF SHARES VALUE
--------- ------------
SPAIN -- 3.4%
BANKING -- 0.8%
Banco Santander Central Hispano
S.A. ........................................ 441,961 $ 4,638,157
------------
TELECOMMUNICATIONS -- 2.6%
Telefonica S.A.#** ............................ 500,132 14,373,546
------------
TOTAL SPAIN ................................... 19,011,703
------------
SWEDEN -- 2.4%
ELECTRICAL & ELECTRONICS -- 1.8%
Telefonaktiebolaget L.M. Ericsson
Cl. B ....................................... 107,445 10,282,733
------------
INSURANCE -- 0.6%
Skandia Forsakrings AB ........................ 78,411 3,210,937
------------
TOTAL SWEDEN .................................. 13,493,670
------------
SWITZERLAND -- 3.9%
BANKING -- 0.9%
United Bank of Switzerland S.A. ............... 20,768 5,047,817
------------
ELECTRICAL & ELECTRONICS -- 0.5%
ABB AG - Bearer** ............................. 29,443 3,132,553
------------
HEALTH & PERSONAL CARE -- 1.5%
Novartis AG Registered Shares ................. 2,960 3,768,463
Roche Holding AG .............................. 454 4,892,869
------------
8,661,332
------------
INSURANCE -- 0.7%
Zurich Allied AG# ............................. 8,929 3,783,905
------------
TELECOMMUNICATIONS -- 0.3%
Carrier 1 International S.A.#** ............... 9,542 1,488,296
------------
TOTAL SWITZERLAND ............................. 22,113,903
------------
TAIWAN -- 1.1%
ELECTRICAL & ELECTRONICS -- 0.9%
Taiwan Semiconductor
Manufacturing Co., Ltd.
ADR#** ...................................... 85,000 5,084,063
------------
STRUCTURED INVESTMENT -- 0.2%
Morgan Stanley Taiwan Opals ................... 8,900 1,442,067
------------
TOTAL TAIWAN .................................. 6,526,130
------------
TURKEY -- 0.3%
BANKING -- 0.1%
Yapi ve Kredi Bankasi A.S. .................... 30,696,400 907,890
------------
BROADCASTING & PUBLISHING -- 0.2%
Dogan Yayin Holding A.S.** .................... 38,535,000 988,882
------------
TOTAL TURKEY .................................. 1,896,772
------------
NUMBER
OF SHARES VALUE
--------- ------------
UNITED KINGDOM -- 11.8%
BANKING -- 0.6%
LLoyds TSB Holdings Group plc ................. 340,539 $ 3,134,280
------------
BUSINESS & PUBLIC SERVICES -- 1.2%
Reuters Group plc ............................. 154,254 3,333,821
WPP Group plc ................................. 184,632 3,560,433
------------
6,894,254
------------
ENERGY SOURCES -- 1.5%
BP Amoco plc .................................. 482,735 3,715,231
Shell Transport & Trading Co.
plc ......................................... 708,351 4,870,113
------------
8,585,344
------------
HEALTH & PERSONAL CARE -- 1.7%
Glaxo Wellcome ................................ 196,030 4,697,823
SmithKline Beecham plc ........................ 423,899 4,748,076
------------
9,445,899
------------
INSURANCE -- 0.3%
Legal & General Group plc ..................... 675,036 1,646,485
------------
MERCHANDISING -- 0.3%
J Sainsbury plc ............................... 436,936 1,796,917
------------
TELECOMMUNICATIONS -- 5.9%
British Telecommunications plc ................ 330,376 5,768,553
Marconi plc ................................... 411,096 5,123,866
Vodafone AirTouch plc ......................... 3,972,138 22,277,214
------------
33,169,633
------------
TRANSPORTATION - SHIPPING -- 0.3%
Peninsular & Oriental Steam
Navigation Company (The) .................... 167,503 1,886,770
------------
TOTAL UNITED KINGDOM .......................... 66,559,582
------------
TOTAL COMMON STOCKS
(Cost $489,620,741) ......................... $577,173,349
PAR
(000)
---------
INTERNATIONAL BOND -- 0.0%
UNITED KINGDOM -- 0.0%
AEROSPACE & MILITARY TECHNOLOGY -- 0.0%
British Aerospace plc (CALS)
7.450% 11/30/03 ............................. $ 65 $ 102,857
------------
TOTAL INTERNATIONAL BOND
(Cost $51,528) .............................. $ 102,857
------------
See Accompanying Notes to Financial Statements.
7
<PAGE>
WARBURG PINCUS INTERNATIONAL GROWTH FUND (CONCLUDED)
PAR
(000) VALUE
--------- -------
SHORT-TERM INVESTMENT -- 1.0%
BBH Grand Cayman U.S. Dollar
Time Deposit
4.950% 03/01/00 ............................. $ 5,709 $ 5,709,000
Cost $5,709,000) ------------
TOTAL INVESTMENTS -- 99.4%
(Cost $495,381,269*) ........................ $562,985,206
OTHER ASSETS IN EXCESS
OF LIABILITIES-- 0.6% ....................... $ 3,216,853
------------
TOTAL NET ASSETS-- 100.0% ..................... $566,202,059
============
* Cost for Federal income tax purposes at February 29, 2000 is $499,891,037. The
gross appreciation (depreciation) on a tax basis is as follows:
Gross Appreciation .................................... $108,385,245
Gross Depreciation .................................... (45,291,076)
------------
Net Appreciation ...................................... $ 63,094,169
============
** Non-income producing securities.
# Security or a portion thereof is out on loan.
INVESTMENT ABBREVIATIONS
ADR ...............................................American Depositary Receipts
CALS .............................................Capital Amortizing Loan Stock
GDR .................................................Global Depositary Receipts
See Accompanying Notes to Financial Statements.
8
<PAGE>
WARBURG PINCUS EUROPEAN EQUITY FUND
PORTFOLIO MANAGERS' LETTER
April 3, 2000
Dear Shareholders:
We are writing to report on the results of the Warburg Pincus European Equity
Fund (the "Fund") for the six months ended February 29, 2000.
On February 29, 2000, the net asset value ("NAV") of the Fund's common shares
was $12.88, vs. a NAV of $9.79 on August 31, 1999. The common shares' total
return was 32.12% (assuming the reinvestment of dividends and distributions at
$0.0499 a share). By comparison, the Morgan Stanley Capital International Europe
Index* (the "MSCI Europe") had a return of 13.98% for the period. The Fund's
common shares' one-year return through February 29, 2000 was 35.30%. The Fund's
common shares' since-inception (on January 28, 1999) average annual total return
through February 29, 2000 was 26.62%.
The Fund's institutional shares had a NAV of $12.90 on February 29, 2000, vs. a
NAV of $9.80 on August 31, 1999. The institutional shares' total return was
32.38% for the six months (assuming the reinvestment of dividends and
distributions at $0.0667 a share). The MSCI Europe had a return of 13.98% for
the six months. The Fund's institutional shares' one-year return through
February 29, 2000 was 35.71%. The Fund's institutional shares' since-inception
(on January 28, 1999) average annual total return through February 29, 2000 was
26.67%.
The period was a positive one for almost all European stock markets, buoyed by
optimism over the region's economic prospects and an improving outlook for
earnings in general. Market leadership, however, was limited to a handful of
sectors, largely those relating to telecommunications, media and technology.
Against this backdrop, the Fund had a solid gain in absolute terms, and handily
outpaced its benchmark for the six months. The Fund's results reflected a strong
showing from its substantial position in stocks in the above-mentioned areas.
We made few noteworthy changes during the period in terms of country emphasis.
We maintained a primary focus on the Continent's "core" economies (most
specifically, France and Germany), where we generally saw the most compelling
value. We also saw attractively priced stocks in smaller European markets within
the EMU block, including Finland, Europe's strongest-performing market for the
six months. We established a modest position in Turkey, where significant
macroeconomic changes occurred during the period. We maintained our underweight
stance in the U.K., reflecting our near-term concerns over the country's
interest-rate policies. The relatively low allocation to the U.K. proved
beneficial, as the country's stock market was a laggard for the six months.
Looking ahead, our outlook for Europe's equity markets remains positive based on
our expectation that GDP growth in the region is set to accelerate. Furthermore,
we believe that continued growth is possible without a material pickup in
inflation as unemployment rates (though falling) remain relatively high and
price transparency resulting from a single currency and the Internet act as
deflationary forces within the region. We feel that merger & acquisition
activity is likely to remain high, particularly in segments of the market
related to the "new economy." All these factors stand to provide a strong
backdrop for equity investors going forward. The Fund, we believe, is currently
well positioned to benefit from the positive impact of economic recovery on
traditional industries as well as the emergence of new trends and technologies.
Our favorable long-term outlook aside, Europe's stock markets will likely remain
volatile, necessitating careful stock selection as well as country allocation.
As ever, we will continue to strive to identify markets and companies we deem to
have the brightest long-term prospects.
Sincerely yours,
Credit Suisse Asset Management European Equities Management Team
Harold W. Erlich, Managing Director
Nancy Nierman, 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.
*The Morgan Stanley 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.
9
<PAGE>
WARBURG PINCUS EUROPEAN EQUITY FUND
SCHEDULE OF INVESTMENTS
FEBRUARY 29, 2000
(UNAUDITED)
NUMBER
OF SHARES VALUE
--------- -----------
COMMON STOCKS -- 83.1%
AUSTRIA -- 2.0%
ELECTRICAL COMP. & INSTRUMENTS -- 0.8%
Austria Technologie &
Systemtechnik AG** .......................... 4,304 $ 327,367
-----------
ENERGY SOURCES -- 1.2%
OMV AG ........................................ 5,855 458,359
-----------
TOTAL AUSTRIA ................................. 785,726
-----------
DENMARK -- 1.3%
BUSINESS & PUBLIC SERVICES -- 1.3%
ISS International Service System
A/S Cl. B ................................... 7,675 512,442
-----------
TOTAL DENMARK ................................. 512,442
-----------
FINLAND -- 7.2%
ELECTRICAL & ELECTRONICS -- 2.6%
Nokia Oyj ..................................... 5,022 1,000,880
-----------
MACHINERY & ENGINEERING -- 2.1%
Metso Oyj ..................................... 62,760 821,782
-----------
TELEPHONE - INTEGRATED -- 2.5%
Helsingin Puhelin Oyj (Helsinki
Telephone Corp.)# ........................... 9,060 968,247
-----------
TOTAL FINLAND ................................. 2,790,909
-----------
FRANCE -- 14.0%
BANKING -- 1.6%
Banque Nationale de Paris ..................... 7,924 625,595
-----------
BROADCASTING & PUBLISHING -- 2.5%
Hachette Filipacchi Medias .................... 7,560 618,694
Thomson Multimedia** .......................... 2,670 351,668
-----------
970,362
-----------
DIVERSIFIED OPERATIONS/
COMMERCIAL SERVICES -- 1.4%
Vivendi ....................................... 4,644 545,490
-----------
ELECTRONIC COMP. & INSTRUMENTS -- 1.7%
STMicroelectronics N.V.# ...................... 3,375 669,385
-----------
ENERGY EQUIPMENT & SERVICES -- 1.2%
Coflexip S.A. ADR#** .......................... 10,175 455,967
-----------
ENERGY SOURCES -- 2.0%
Total Fina S.A. Cl. B ......................... 5,853 774,847
-----------
INSURANCE -- 1.5%
AXA S.A.** .................................... 4,610 579,224
-----------
METALS - NON-FERROUS -- 0.8%
Pechiney S.A. Cl. A ........................... 5,041 294,120
-----------
MULTI-INDUSTRY -- 1.3%
Lagardere S.C.A. .............................. 5,351 503,344
-----------
TOTAL FRANCE .................................. 5,418,334
-----------
NUMBER
OF SHARES VALUE
--------- -----------
GERMANY -- 12.6%
BANKING -- 3.4%
Deutsche Bank AG .............................. 5,950 $ 500,684
Dresdner Bank AG .............................. 16,500 791,131
-----------
1,291,815
-----------
ELECTRICAL & ELECTRONICS -- 1.9%
Siemens AG .................................... 4,166 744,043
-----------
FINANCIAL SERVICES -- 2.1%
Marschollek, Lautenschlaeger und
Partner AG .................................. 1,611 822,065
-----------
INTERNET SOFTWARE -- 1.0%
Intershop Communications AG** ................. 760 387,815
-----------
REINSURANCE -- 1.9%
Hannover Rueckversicherungs
AG .......................................... 12,515 747,063
-----------
UTILITIES - ELECTRICAL & GAS-- 2.3%
Viag AG ....................................... 49,350 876,634
-----------
TOTAL GERMANY ................................. 4,869,435
-----------
HUNGARY -- 1.7%
BANKING -- 1.7%
OTP Bank Rt. GDR 144A ......................... 11,150 636,601
-----------
TOTAL HUNGARY ................................. 636,601
-----------
IRELAND -- 3.2%
BANKING -- 0.9%
Bank of Ireland ............................... 59,850 349,198
-----------
TELECOMMUNICATIONS -- 2.3%
eircom plc** .................................. 200,000 881,345
-----------
TOTAL IRELAND ................................. 1,230,543
-----------
ITALY -- 4.7%
TELEPHONE - INTEGRATED -- 2.7%
Tecnost S.p.A.# ............................... 248,600 1,033,998
-----------
TRANSPORT - SERVICES -- 2.0%
Concessioni e Costruzioni
Autostrade S.p.A.# .......................... 89,351 786,286
-----------
TOTAL ITALY ................................... 1,820,284
-----------
NETHERLANDS -- 5.2%
APPLIANCES & HOUSEHOLD DURABLES -- 1.6%
Koninklijke Philips Electronics
N.V. ........................................ 3,366 623,039
-----------
BROADCASTING & PUBLISHING -- 0.8%
VNU N.V. ...................................... 4,400 303,532
-----------
CONSTRUCTION & HOUSING -- 0.9%
IHC Caland N.V. ............................... 10,450 352,143
-----------
ELECTRICAL & ELECTRONICS -- 1.9%
Equant** ...................................... 6,628 749,179
-----------
TOTAL NETHERLANDS ............................. 2,027,893
-----------
See Accompanying Notes to Financial Statements.
10
<PAGE>
WARBURG PINCUS EUROPEAN EQUITY FUND (CONCLUDED)
NUMBER
OF SHARES VALUE
--------- -----------
PORTUGAL -- 3.5%
MULTI-INDUSTRY -- 1.0%
PT MULTIMEDIA - Servicos
de Telecomunicacoes e
Multimedia SGPS S.A.** ...................... 3,150 $ 400,634
-----------
TELECOMMUNICATIONS -- 2.5%
Portugal Telecom S.A. ......................... 66,760 949,362
-----------
TOTAL PORTUGAL ................................ 1,349,996
-----------
SPAIN -- 3.3%
BANKING -- 1.8%
Banco Bilbao Vizcaya S.A.** ................... 49,003 712,417
-----------
RETAIL - HYPERMARKETS -- 1.5%
Centros Comerciales Continente,
S.A. ........................................ 16,750 283,026
Centros Comerciales Pryca, S.A.# .............. 21,700 286,648
-----------
569,674
-----------
TOTAL SPAIN ................................... 1,282,091
-----------
SWEDEN -- 5.2%
BANKING -- 2.0%
Nordbanken Holding AB ......................... 143,600 753,482
-----------
ELECTRICAL & ELECTRONICS -- 3.2%
Telefonaktiebolaget L.M. Ericsson
Cl. B ....................................... 13,069 1,250,733
-----------
TOTAL SWEDEN .................................. 2,004,215
-----------
SWITZERLAND -- 0.8%
TELECOMMUNICATIONS -- 0.8%
Carrier 1 International S.A.** ................ 1,900 296,349
Carrier 1 International S.A. -
ADR** ....................................... 400 12,975
-----------
309,324
-----------
TOTAL SWITZERLAND ............................. 309,324
-----------
TURKEY -- 1.3%
COMMERCIAL BANKS-EUROPE -- 0.7%
Yapi ve Kredi Bankasi A.S. .................... 8,930,000 264,118
-----------
DIVERSIFIED OPERATIONS -- 0.6%
Haci Omer Sabanci Holding A.S. ................ 4,851,000 223,653
-----------
TOTAL TURKEY .................................. 487,771
-----------
UNITED KINGDOM -- 17.1%
AEROSPACE & MILITARY TECHNOLOGY -- 1.7%
British Aerospace plc ......................... 131,185 649,268
-----------
BANKING -- 3.4%
Bank of Scotland .............................. 64,000 570,862
LLoyds TSB Holdings Group plc ................. 79,194 728,892
-----------
1,299,754
-----------
NUMBER
OF SHARES VALUE
--------- -----------
UNITED KINGDOM -- (CONTINUED)
BROADCASTING & PUBLISHING -- 1.3%
Reed International plc ........................ 67,300 $ 493,784
-----------
HEALTH & PERSONAL CARE -- 2.3%
AstraZeneca Group plc ......................... 9,731 316,312
SmithKline Beecham plc ........................ 52,850 591,970
-----------
908,282
-----------
INSURANCE -- 1.7%
Prudential Corporation plc .................... 45,956 677,628
-----------
TELECOMMUNICATIONS -- 6.7%
British Telecommunications plc ................ 53,373 931,921
Cable & Wireless Communications
plc** ....................................... 18,912 320,958
Viatel, Inc.** ................................ 8,850 498,366
Vodafone AirTouch plc ......................... 147,724 828,491
-----------
2,579,736
-----------
TOTAL UNITED KINGDOM .......................... 6,608,452
-----------
TOTAL COMMON STOCKS
(Cost $28,798,417) .......................... $32,134,016
-----------
PAR
(000)
---------
SHORT-TERM INVESTMENT -- 5.5%
BBH Grand Cayman U.S. Dollar
Time Deposit
4.850% 03/01/00 ............................. $2,110 $ 2,110,000
(Cost $2,110,000) -----------
TOTAL INVESTMENTS -- 88.6%
(Cost $30,908,417*) ......................... $34,244,016
OTHER ASSETS IN EXCESS
OF LIABILITIES-- 11.4% ...................... $ 4,409,145
-----------
TOTAL NET ASSETS-- 100.0% ..................... $38,653,161
===========
* The cost for Federal income tax purposes at February 29, 2000 is $31,020,267.
The gross appreciation (depreciation) on a tax basis is as follows:
Gross Appreciation .................................... $ 5,164,873
Gross Depreciation .................................... (1,941,124)
-----------
Net Appreciation ...................................... $ 3,223,749
===========
** Non-income producing securities.
# Security or a portion thereof is out on loan.
INVESTMENT ABBREVIATIONS
ADR ...............................................American Depositary Receipts
GDR .................................................Global Depositary Receipts
See Accompanying Notes to Financial Statements.
11
<PAGE>
WARBURG PINCUS U.S. CORE EQUITY FUND
PORTFOLIO MANAGERS' LETTER
March 24, 2000
Dear Shareholders:
We are writing to report on the results of the Warburg Pincus U.S. Core Equity
Fund (the "Fund") for the six months ended February 29, 2000.
At February 29, 2000, the net asset value ("NAV") of the Fund's institutional
shares was $18.72, compared to an NAV of $19.58 on August 31, 1999. The
institutional shares' total return was thus 11.7%, (assuming the reinvestment of
dividends and distributions totaling $3.0564 per share). By comparison, the
Standard & Poor's 500 Index* (the "Index") returned 4.1% during the same period.
The Fund outperformed the Index during the fiscal half-year due to a positive
combination of market conditions and our stock selection emphasis using certain
fundamental factors that our research concluded would be most effective.
Unlike earlier periods, the market's high level of overall volatility was
helpful to performance. This served to create a number of opportunities of which
we could take advantage. Share-price momentum and relative valuation worked
notably well during the period in this regard.
The factors that we correctly emphasized were earnings revisions, which were
plentiful in a buoyant macroeconomic environment; operating performance, as
reflected more in companies' income statements than in their balance sheets; and
long-term relative strength.
Although our investment discipline does not significantly overweight or
underweight industry sectors relative to the benchmark, results during the
period were particularly strong in certain sectors. The strongest was technology
which, in line with the benchmark, was also the portfolio's most heavily
weighted sector. Some of the Fund's largest individual holdings were technology
names that performed especially well, such as Nortel Networks, Cisco Systems and
Intel.
In addition to technology, stock selection was best in telecommunications and
commercial services.
Results were weaker in the so-called "Old Economy" (I.E.,
manufacturing-oriented) sectors. These suffered as investors overwhelmingly
preferred "New Economy" companies (I.E., those based on information and
technology). Exposure to Old Economy sectors like noncyclicals, industrials and
utilities particularly hurt performance, with utilities experiencing further
neglect based on rising energy prices and concerns about higher interest rates.
The Fund's poorer performers in these sectors included Anheuser-Busch, United
Technologies and PG&E.
As developments occur that we believe would be of interest to you, we will keep
you informed. Meanwhile, if you have any questions about your portfolio or the
capital markets generally, please feel free to call upon us at any time.
Sincerely yours,
Credit Suisse Asset Management Structured Equities Management Team
William W. Priest, Jr., Managing Director
Eric N. Remole, Managing Director
Marc E. Bothwell, Vice President
Michael A. Welhoelter, Vice President
PERFORMANCE
<TABLE>
<CAPTION>
SINCE
FIVE YEARS INCEPTION
SIX MONTHS ONE YEAR (3/1/95 - 2/29/00) 8/31/94
2/29/00 (3/1/99 - 2/29/00) (ANNUALIZED) (ANNUALIZED)
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Warburg Pincus U.S. Core Equity Fund 11.7% 18.5% 24.8% 22.8%
Standard & Poor's 500 Index* 4.1% 11.7% 25.1% 23.5%
- ---------------------------------------------------------------------------------------------------------------------------
<FN>
*THE S&P 500 INDEX IS AN UNMANAGED INDEX (WITH NO DEFINED INVESTMENT OBJECTIVE)
OF COMMON STOCKS, INCLUDES REINVESTMENT OF DIVIDENDS, AND IS A REGISTERED
TRADEMARK OF MCGRAW-HILL CO., INC.
</FN>
</TABLE>
12
<PAGE>
WARBURG PINCUS U.S. CORE EQUITY FUND
SCHEDULE OF INVESTMENTS
FEBRUARY 29, 2000
(UNAUDITED)
NUMBER
OF SHARES VALUE
--------- -----------
COMMON STOCKS -- 98.1%
BANKS -- 7.3%
Bank of America Corp. ......................... 18,900 $ 870,581
Chase Manhattan Corp. ......................... 31,000 2,468,375
J.P. Morgan & Co., Inc. ....................... 16,500 1,831,500
-----------
5,170,456
-----------
BROADCASTING -- 1.4%
Clear Channel Communications,
Inc.** ...................................... 15,400 1,026,025
-----------
CELLULAR COMMUNICATIONS -- 4.3%
Nextel Communications, Inc.** ................. 22,100 3,012,506
-----------
CHEMICALS -- 2.1%
Dow Chemical Co. .............................. 9,300 1,009,050
Sherwin Williams Co. .......................... 25,000 478,125
-----------
1,487,175
-----------
COMPUTER HARDWARE & BUSINESS MACHINES -- 7.5%
Cisco Systems** ............................... 33,500 4,428,281
Dell Computer Corp.** ......................... 21,800 889,712
-----------
5,317,993
-----------
COMPUTER SOFTWARE -- 4.1%
Microsoft Corp.** ............................. 32,600 2,913,625
-----------
COMPUTERS, SOFTWARE AND SERVICING -- 2.2%
Oracle Corp.** ................................ 21,300 1,581,525
-----------
CONGLOMERATES -- 0.6%
Philip Morris Cos., Inc. ...................... 21,400 429,337
-----------
ELECTRIC UTILITIES -- 1.0%
PG & E Corp. .................................. 33,700 695,062
-----------
ELECTRICAL EQUIPMENT -- 4.7%
Nortel Networks Corp.# ........................ 29,600 3,300,400
-----------
ENERGY RESERVES & PRODUCTION -- 4.0%
Royal Dutch Petroleum Co. ..................... 42,600 2,236,500
Unocal Corp. .................................. 22,700 607,225
-----------
2,843,725
-----------
FINANCIAL SERVICES -- 2.2%
General Electric Co. .......................... 11,800 1,559,812
-----------
FOOD & BEVERAGE -- 3.0%
Anheuser-Busch Companies,
Inc. ........................................ 25,400 1,628,775
Archer-Daniels-Midland Co. .................... 47,800 480,987
-----------
2,109,762
-----------
HEALTH CARE -- 3.6%
American Home Products Corp. .................. 58,900 2,562,150
-----------
NUMBER
OF SHARES VALUE
--------- -----------
INDUSTRIAL PARTS -- 1.2%
United Technologies Corp. ..................... 16,600 $ 845,563
-----------
INFORMATION SERVICES -- 3.1%
Electronic Data Systems Corp. ................. 33,900 2,195,025
-----------
INSURANCE - PROPERTY/ CASUALTY-- 0.5%
Allstate Corp. ................................ 16,700 325,650
-----------
LIFE & HEALTH INSURANCE -- 3.7%
Aetna, Inc. ................................... 16,900 695,013
Cigna Corp. ................................... 26,300 1,941,269
-----------
2,636,282
-----------
MEDICAL PROVIDERS & SERVICES -- 2.0%
United Healthcare Corp. ....................... 27,400 1,400,825
-----------
MOTOR VEHICLES & PARTS -- 5.7%
Ford Motor Co. ................................ 39,900 1,660,838
General Motors Corp. .......................... 31,000 2,357,938
-----------
4,018,776
-----------
OIL COMP-INTEGRATED -- 0.9%
Conoco, Inc. Class B .......................... 31,400 618,188
-----------
OIL REFINERY -- 4.0%
Enron Corp. ................................... 41,500 2,863,500
-----------
PHARMACEUTICALS -- 4.9%
Bristol-Myers Squibb Co. ...................... 34,700 1,971,394
Merck & Co. ................................... 24,000 1,477,500
-----------
3,448,894
-----------
PUBLISHING -- 1.6%
Gannett Company, Inc. ......................... 17,900 1,166,856
-----------
RETAIL - DEPARTMENT STORES -- 3.7%
Wal-Mart Stores, Inc. ......................... 53,900 2,624,256
-----------
RETAIL - GROCERY STORES -- 0.9%
Kroger Co.** .................................. 44,500 661,938
-----------
SECURITY & ASSET MANAGEMENT -- 2.8%
Merrill Lynch & Co., Inc. ..................... 19,500 1,998,750
-----------
SEMICONDUCTORS -- 6.3%
Intel Corp. ................................... 39,700 4,486,100
-----------
TELECOMMUNICATIONS -- 8.8%
BellSouth Corp. ............................... 47,000 1,915,250
MCI WorldCom, Inc.** .......................... 53,700 2,396,363
Qualcomm, Inc.** .............................. 13,500 1,922,906
-----------
6,234,519
-----------
TOTAL COMMON STOCKS
(Cost $62,150,360) .......................... $69,534,675
-----------
See Accompanying Notes to Financial Statements.
13
<PAGE>
WARBURG PINCUS U.S. CORE EQUITY FUND (CONCLUDED)
PAR
(000) VALUE
--------- -----------
SHORT TERM INVESTMENT -- 1.7%
BBH Grand Cayman U.S. Dollar
Time Deposit
4.950% 03/01/00 ............................. $ 1,190 $ 1,190,000
(Cost $1,190,000) -----------
TOTAL INVESTMENTS -- 99.8%
(Cost $63,340,360*) ......................... $70,724,675
OTHER ASSETS IN EXCESS
OF LIABILITIES -- 0.2% ...................... $ 119,432
-----------
TOTAL NET ASSETS -- 100.0% .................... $70,844,107
===========
* Cost for Federal income tax purposes at February 29, 2000 is $63,410,382. The
gross appreciation (depreciation) on a tax basis is as follows:
Gross Appreciation ....................................... $13,111,200
Gross Depreciation ....................................... (5,796,907)
-----------
Net Appreciation ......................................... $ 7,314,293
===========
** Non-income producing securities
# Security or a portion thereof is out on loan.
See Accompanying Notes to Financial Statements.
14
<PAGE>
WARBURG PINCUS GLOBAL TELECOMMUNICATIONS FUND
PORTFOLIO MANAGERS' LETTER
March 22, 2000
Dear Shareholders:
We are pleased to report on the results of the Warburg Pincus Global
Telecommunications Fund (the "Fund") for the six months ended February 29, 2000.
At February 29, 2000, the net asset value ("NAV") of the Fund was $82.65,
compared to an NAV of $41.22 on August 31, 1999. As a result, the Fund's total
return was 104.5%, (assuming the reinvestment of dividends and distributions
totaling $1.23 per share). By comparison, the MSCI Global Telecommunications
Index* returned 36.6% during the same period.
The Fund outperformed as a result of effective stock selection across all
geographies in which we invested. In order of their positive contributions to
overall performance during the fiscal half-year, these were the U.S., Japan,
Europe, Asia/Pacific, other emerging markets and Latin America.
o THE U.S. We emphasized two telecommunications subsectors in the Fund's U.S.
exposure. The first was non-traditional service carriers, best exemplified by
companies known as CLECs (I.E., competitive local-exchange carriers). Our
analysis concluded that CLECs, which are fairly young companies that provide
advanced data and Internet services in addition to traditional telephony,
offered unusually strong growth potential. The portfolio thus benefited as
CLEC names enjoyed significant appreciation.
The other subsector we highlighted in the U.S. was wireless. Wireless
companies, which sold at valuations that were quite reasonable compared to
their bright growth prospects, also outperformed.
o JAPAN. Japanese stock selection favored competitive entrants and wireless
companies. Among the latter was NTT Mobile Communications, one of the world's
top wireless providers and the Fund's largest individual holding, whose
shares more than doubled during the half-year.
o EUROPE. Results in Europe were strong in several nations, especially the U.K.
Our biggest U.K. position (and one of the Fund's biggest as well) was
Vodafone Airtouch, the global wireless giant whose shares surged in the wake
of its bid to acquire Germany's Mannesmann. The Vodafone bid for Mannesmann,
incidentally, was announced in November and proved to be a catalytic event in
terms of its upward impact on telecom stocks worldwide.
Elsewhere in Europe, relative returns were best in Finland, the Netherlands
and Italy.
o ASIA/PACIFIC. Asian performance was highest in China, India and South Korea,
each of which benefited from one of the portfolio's major positions.
Respectively by market, these were China Telecom, VSNL and SK Telecom.
o OTHER EMERGING MARKETS. Among other emerging markets, we fared particularly
well in Russia and Israel.
o LATIN AMERICA. Our decision to focus on the key markets of Mexico and Brazil
drove outperformance in Latin America. In Mexico, we invested in a
combination of incumbent providers and newer competitive entrants. Brazilian
exposure focused on incumbents, wireless providers and data-focused companies
spun off from Telebras, the privatized telecom holding company.
Thank you for your support, and please feel free to call upon us at any time if
you have questions.
Sincerely yours,
Credit Suisse Asset Management Global Telecommunications Management Team
Scott T. Lewis, Director
Vincent J. McBride, 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.
15
<PAGE>
WARBURG PINCUS GLOBAL TELECOMMUNICATIONS FUND
PORTFOLIO MANAGERS' LETTER (CONCLUDED)
PERFORMANCE
<TABLE>
<CAPTION>
SINCE
INCEPTION
SIX MONTHS ONE YEAR 12/4/96
2/29/00 (3/1/99 - 2/29/00) (ANNUALIZED)
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Warburg Pincus Global Telecommunications Fund 104.5% 170.4% 78.4%
Morgan Stanley Global Telecommunications Index* 36.6% 35.1% 37.7%
- ---------------------------------------------------------------------------------------------------------------------------
<FN>
*THE MORGAN STANLEY GLOBAL TELECOMMUNICATIONS INDEX IS AN UNMANAGED INDEX (WITH
NO DEFINED INVESTMENT OBJECTIVE) OF TELECOMMUNICATIONS EQUITIES THAT INCLUDES
REINVESTMENT OF DIVIDENDS AND IS COMPILED BY MORGAN STANLEY & CO., INCORPORATED.
</FN>
</TABLE>
16
<PAGE>
WARBURG PINCUS GLOBAL TELECOMMUNICATIONS FUND
SCHEDULE OF INVESTMENTS
FEBRUARY 29, 2000
(UNAUDITED)
NUMBER
OF SHARES VALUE
--------- ------------
COMMON STOCKS -- 88.7%
ARGENTINA -- 0.4%
TELECOMMUNICATIONS -- 0.4%
Telecom Argentina S.A. ADR#** ................ 40,000 $ 1,667,500
------------
TOTAL ARGENTINA ............................... 1,667,500
------------
BELGIUM -- 0.0%
TELECOMMUNICATIONS -- 0.0%
Telinfo NV-Strip VVPR** ....................... 61 1
------------
TOTAL BELGIUM ................................. 1
------------
BERMUDA -- 0.9%
MULTI-INDUSTRY -- 0.6%
Tyco International Ltd. ADR ................... 123,300 4,677,694
------------
TELECOMMUNICATIONS -- 0.3%
FLAG Telecom Holdings, Ltd.** ................. 95,000 2,719,375
------------
TOTAL BERMUDA ................................. 7,397,069
------------
BRAZIL -- 2.1%
TELECOMMUNICATIONS -- 2.1%
Celular crt Participacoes S.A.
Pfd. A** .................................... 3,172,000 1,045,971
Embratel Participacoes S.A.
ADR** ....................................... 118,300 2,839,200
Tele Centro Oeste Celular
Participacoes S.A. ADR** .................... 317,000 2,853,000
Telecomunicacoes Brasileiras
S.A. Pfd. Block ADR#** ...................... 27,100 3,990,475
------------
10,728,646
------------
TOTAL BRAZIL .................................. 10,728,646
------------
CANADA -- 2.8%
TELECOMMUNICATIONS -- 2.8%
Clearnet Communications, Inc.,
Cl. A** ..................................... 47,000 1,976,937
Descartes Systems Group, Inc.
(The)** ..................................... 71,800 3,949,000
OCI Communications, Inc. Cl. B ................ 11,800 143,535
Research in Motion, Ltd.** .................... 35,500 4,801,375
Telesystem International Wireless,
Inc.** ...................................... 80,000 3,220,000
------------
14,090,847
------------
TOTAL CANADA .................................. 14,090,847
------------
CHILE -- 0.5%
TELECOMMUNICATIONS -- 0.5%
Cia. de Telecomunicaciones de
Chile S.A. ADR** ............................ 111,300 2,226,000
------------
TOTAL CHILE ................................... 2,226,000
------------
NUMBER
OF SHARES VALUE
--------- ------------
FINLAND -- 3.0%
TELECOMMUNICATIONS -- 3.0%
Comptel Oyj ................................... 22,000 $ 2,670,993
Nokia Corp. ADR ............................... 29,800 5,909,712
Sonera Oyj .................................... 82,980 6,399,424
------------
14,980,129
------------
TOTAL FINLAND ................................. 14,980,129
------------
FRANCE -- 0.9%
BUILDING MATERIALS & COMPONENTS -- 0.6%
Bouygues S.A. ................................. 3,614 3,009,811
------------
ELECTRICAL & ELECTRONICS -- 0.3%
Alcatel ....................................... 6,676 1,563,201
------------
TOTAL FRANCE .................................. 4,573,012
------------
GERMANY -- 0.3%
TELECOMMUNICATIONS -- 0.3%
Telegate AG** ................................. 9,200 1,381,807
------------
TOTAL GERMANY ................................. 1,381,807
------------
GREECE -- 1.8%
TELECOMMUNICATIONS -- 1.8%
Hellenic Telecommunications
Organization S.A. ADR#** .................... 486,135 7,292,025
STET Hellas Telecommunications
S.A. ADR** .................................. 60,900 1,823,194
------------
9,115,219
------------
TOTAL GREECE .................................. 9,115,219
------------
HONG KONG -- 2.2%
MULTI-INDUSTRY -- 0.6%
Hutchison Whampoa, Ltd. ....................... 173,000 2,711,968
------------
TELECOMMUNICATIONS -- 1.6%
China Telecom (Hong Kong), Ltd.
ADR** ....................................... 44,300 8,234,262
------------
TOTAL HONG KONG ............................... 10,946,230
------------
HUNGARY -- 0.7%
TELECOMMUNICATIONS -- 0.7%
Magyar Tavkozlesi ADR ......................... 74,200 3,408,562
------------
TOTAL HUNGARY ................................. 3,408,562
------------
INDIA -- 2.1%
TELECOMMUNICATIONS -- 2.1%
Mahanagar Telephone Nigam, Ltd.
144A GDR** .................................. 119,000 2,305,625
Videsh Sanchar Nigam, Ltd.
144A GDR .................................... 226,600 8,327,550
------------
10,633,175
------------
TOTAL INDIA ................................... 10,633,175
------------
See Accompanying Notes to Financial Statements.
17
<PAGE>
WARBURG PINCUS GLOBAL TELECOMMUNICATIONS FUND (CONTINUED)
NUMBER
OF SHARES VALUE
--------- ------------
IRELAND -- 1.0%
TELECOMMUNICATIONS -- 1.0%
eircom plc** .................................. 1,127,210 $ 4,967,304
------------
TOTAL IRELAND ................................. 4,967,304
------------
ISRAEL -- 0.4%
TELECOMMUNICATIONS -- 0.4%
Gilat Satellite Networks, Ltd.
ADR#** ...................................... 12,100 1,814,244
------------
TOTAL ISRAEL .................................. 1,814,244
------------
ITALY -- 1.3%
TELECOMMUNICATIONS -- 1.3%
Telecom Italia S.p.A.# ........................ 381,279 6,684,790
------------
TOTAL ITALY ................................... 6,684,790
------------
JAPAN -- 7.5%
BUSINESS & PUBLIC SERVICES -- 0.7%
Trans Cosmos, Inc. ............................ 7,900 3,682,061
------------
ELECTRONIC COMP. & INSTRUMENTS -- 1.1%
Internet Intitiative Japan, Inc.
ADR** ....................................... 10,000 1,060,000
Sony Corp. .................................... 7,200 2,130,148
Sony Corp. ADR ................................ 7,200 2,256,300
------------
5,446,448
----------
MULTI-INDUSTRY -- 1.1%
Furukawa Electric Co., Ltd. ..................... 389,000 5,945,580
----------
TELECOMMUNICATIONS -- 4.6%
DDI Corp.# .................................... 411 3,816,242
KDD Corp. ..................................... 30,200 2,817,895
NTT Mobile Communication
Network, Inc. ............................... 303 12,219,130
Softbank Corp. ................................ 3,100 4,515,186
------------
23,368,453
------------
TOTAL JAPAN ................................... 38,442,542
------------
MALAYSIA -- 0.7%
TELECOMMUNICATIONS -- 0.7%
Telekom Malaysia Berhad ....................... 847,300 3,589,971
------------
TOTAL MALAYSIA ................................ 3,589,971
------------
MEXICO -- 2.8%
BROADCASTING & PUBLISHING -- 0.8%
Grupo Televisa S.A. GDR** ..................... 56,300 4,324,544
------------
TELECOMMUNICATIONS -- 2.0%
Neuvo Grupo Iusacell S.A. de
C.V. ADR** .................................. 74,832 1,590,180
Telefonos de Mexico S.A.
Cl. L ADR ................................... 130,200 8,560,650
------------
10,150,830
------------
TOTAL MEXICO .................................. 14,475,374
------------
NUMBER
OF SHARES VALUE
--------- ------------
NETHERLANDS -- 2.1%
ELECTRICAL & ELECTRONICS -- 0.4%
Equant N.V.** ................................. 18,984 $ 2,145,808
------------
TELECOMMUNICATIONS -- 1.7%
United Pan-Europe
Communications N.V.** ....................... 29,658 5,843,709
Versatel Telecom International
N.V.#** ..................................... 44,100 2,670,694
------------
8,514,403
------------
TOTAL NETHERLANDS ............................. 10,660,211
------------
PERU -- 0.2%
TELECOMMUNICATIONS -- 0.2%
Telefonica del Peru S.A.A.
ADR** ....................................... 42,100 826,212
------------
TOTAL PERU .................................... 826,212
------------
PHILIPPINES -- 0.4%
TELECOMMUNICATIONS -- 0.4%
Philippine Long Distance
Telephone Co. ............................... 44,000 955,618
Philippine Long Distance
Telephone Co. ADR# .......................... 38,200 830,850
------------
1,786,468
------------
TOTAL PHILIPPINES ............................. 1,786,468
------------
PORTUGAL -- 1.5%
MULTI-INDUSTRY -- 0.2%
PT Multimedia - Servicos de
Telecomunicacoes e Multimedia
SGPS S.A.** ................................. 7,500 953,892
------------
TELECOMMUNICATIONS -- 1.3%
Portugal Telecom S.A. ......................... 458,720 6,523,237
------------
TOTAL PORTUGAL ................................ 7,477,129
------------
RUSSIA -- 0.6%
TELECOMMUNICATIONS -- 0.6%
Golden Telecom, Inc. ADR#** ................... 70,000 2,940,000
------------
TOTAL RUSSIA .................................. 2,940,000
------------
SOUTH KOREA -- 3.0%
ELECTONIC COMP. & INSTRUMENTS -- 0.8%
Samsung Electronics Co. ....................... 17,400 3,938,220
------------
TELECOMMUNICATIONS -- 2.2%
Korea Telecom Corp. ADR** ..................... 58,100 2,527,350
SK Telecom Co., Ltd. ADR** .................... 201,110 9,037,381
------------
11,564,731
------------
TOTAL SOUTH KOREA ............................. 15,502,951
------------
SPAIN -- 0.7%
BROADCASTING & PUBLISHING -- 0.2%
Sogecable S.A.** .............................. 17,000 1,095,808
------------
See Accompanying Notes to Financial Statements.
18
<PAGE>
WARBURG PINCUS GLOBAL TELECOMMUNICATIONS FUND (CONTINUED)
NUMBER
OF SHARES VALUE
--------- ------------
SPAIN -- (CONTINUED)
TELECOMMUNICATIONS -- 0.5%
Telefonica S.A.** ............................. 53,000 $ 1,523,194
Telefonica S.A. ADR#** ........................ 11,934 1,034,529
------------
2,557,723
------------
TOTAL SPAIN ................................... 3,653,531
------------
SWEDEN -- 1.7%
ELECTRICAL & ELECTRONICS -- 1.7%
Telefonaktiebolaget L.M. Ericsson
ADR ......................................... 25,000 2,400,000
Telefonaktiebolaget L.M. Ericsson
Cl. B ....................................... 65,550 6,273,285
------------
8,673,285
------------
TOTAL SWEDEN .................................. 8,673,285
------------
TAIWAN -- 0.0%
ELECTRONIC COMP. & INSTRUMENTS-- 0.0%
Yageo Corp. 144A GDR# ......................... 400 3,026
------------
TOTAL TAIWAN .................................. 3,026
------------
THAILAND -- 0.3%
TELECOMMUNICATIONS -- 0.3%
TelecomAsia Corp. Public Co.,
Ltd.** ...................................... 891,600 1,239,833
------------
TOTAL THAILAND ................................ 1,239,833
------------
UNITED KINGDOM -- 4.9%
ELECTRONIC COMP. & INSTRUMENTS -- 0.3%
Arm Holdings plc** ............................ 17,744 1,337,603
------------
TELECOMMUNICATIONS -- 4.6%
British Telecommunications plc ................ 239,012 4,173,282
British Telecommunications plc
ADR ......................................... 3,800 677,350
COLT Telecom Group plc ADR** .................. 15,963 3,719,130
Filtronic plc ................................. 36,600 1,289,956
NDS Group plc ADR#** .......................... 28,700 2,134,562
Vodafone AirTouch plc ......................... 1,441,979 8,087,150
Vodafone AirTouch plc ADR# .................... 63,500 3,663,156
------------
23,744,586
------------
TOTAL UNITED KINGDOM .......................... 25,082,189
------------
UNITED STATES -- 41.9%
AEROSPACE & MILITARY TECHNOLOGY -- 1.6%
General Motors Corp. Cl. H#** ................. 24,143 2,909,231
Loral Space & Communications,
Ltd.** ...................................... 198,260 2,986,291
Titan Corporation (The)** ..................... 55,000 2,062,500
------------
7,958,022
------------
NUMBER
OF SHARES VALUE
--------- ------------
UNITED STATES -- (CONTINUED)
BROADCASTING & PUBLISHING -- 4.0%
CBS Corp.** ................................... 51,000 $ 3,037,687
Emmis Communications Corp.** .................. 80,000 2,920,000
Fox Entertainment Group, Inc.** ............... 195,600 5,146,725
Infinity Broadcasting Corp.** ................. 65,000 2,075,937
TCI Satellite Entertainment, Inc.** ........... 57,615 727,389
Time Warner, Inc.** ........................... 43,597 3,727,543
TV Guide, Inc. Cl. A** ........................ 60,000 2,827,500
------------
20,462,781
------------
BUSINESS & PUBLIC SERVICES -- 1.2%
Microsoft Corporation** ....................... 50,000 4,468,750
Walt Disney Co. (The) ......................... 55,000 1,842,500
------------
6,311,250
------------
DATA PROCESSING & REPRODUCTION -- 1.1%
Sun Microsystems, Inc.** ...................... 59,000 5,619,750
------------
ELECTRONIC COMP. & INSTRUMENTS-- 7.3%
America Online** .............................. 60,108 3,546,372
Applied Materials, Inc.** ..................... 9,000 1,646,437
Cabletron Systems, Inc.** ..................... 155,000 7,595,000
Cisco Systems** ............................... 15,894 2,100,988
Gemstar International Group
Ltd.** ...................................... 32,500 2,465,938
i2 Technologies, Inc.** ....................... 10,000 1,635,000
JDS Uniphase Corp.** .......................... 22,960 6,055,700
Sanmina Corp.** ............................... 35,000 4,097,188
Texas Instruments, Inc. ....................... 44,000 7,326,000
Yahoo, Inc.** ................................. 6,732 1,075,016
------------
37,543,639
------------
ENERGY SOURCES -- 0.3%
Montana Power Co. (The) ....................... 40,000 1,575,000
------------
TELECOMMUNICATIONS -- 26.4%
Adelphia Communications Corp.
Cl. A#** .................................... 28,000 1,538,250
Allegiance Telecom, Inc.** .................... 21,900 2,165,363
ALLTEL Corp. .................................. 75,000 4,350,000
AT&T Corp. .................................... 41,000 2,026,938
AT&T Corp. - Liberty Media Group
Cl. A** ..................................... 40,500 2,116,125
Bell Atlantic Corp. ........................... 16,500 807,469
BellSouth Corp. ............................... 70,300 2,864,725
Broadcom Corp. Cl. A** ........................ 20,424 4,031,187
Broadwing, Inc.** ............................. 89,600 2,660,000
CenturyTel, Inc. .............................. 75,000 2,521,875
Crown Castle International
Corp.** ..................................... 87,500 2,821,875
Global Crossing, Ltd.** ....................... 22,827 1,064,309
Go2Net, Inc.** ................................ 57,300 4,985,100
GTE Corp. ..................................... 40,600 2,395,400
Harris Corp. .................................. 135,000 4,303,125
Inktomi Corp.** ............................... 25,000 3,428,125
Internet Capital Group, Inc.#** ............... 24,200 2,559,150
See Accompanying Notes to Financial Statements.
19
<PAGE>
WARBURG PINCUS GLOBAL TELECOMMUNICATIONS FUND (CONCLUDED)
NUMBER
OF SHARES VALUE
--------- ------------
UNITED STATES -- (CONTINUED)
Leap Wireless International,
Inc.** ..................................... 48,500 $ 4,252,844
MCI WorldCom, Inc.** .......................... 95,292 4,252,406
McLeodUSA, Inc. Cl.A#** ....................... 81,400 7,163,200
Motorola, Inc. ................................ 17,300 2,949,650
Network Solutions, Inc.** ..................... 6,000 1,934,625
Next Level Communication,
Inc.** ...................................... 21,000 2,824,500
Nextel Communications, Inc.
Cl. A** ..................................... 22,000 2,998,875
NEXTLINK Communications,
Inc.#** ..................................... 75,600 8,330,175
NTL, Inc.#** .................................. 27,375 2,504,813
PanAmSat Corp.** .............................. 110,000 5,369,375
PMC-Sierra, Inc.** ............................ 34,400 6,641,350
PNV.net, Inc.** ............................... 161,200 664,950
QUALCOMM, Inc.** .............................. 26,200 3,731,863
Qwest Communications
International, Inc.#** ...................... 108,000 5,008,500
Rhythms NetConnections,
Inc.#** ..................................... 55,000 1,962,812
SBA Communications Corp.** .................... 75,000 3,037,500
SBC Communications, Inc. ...................... 123,321 4,686,198
Tellabs, Inc.** ............................... 75,000 3,600,000
Time Warner Telecom, Inc.
Cl. A** ..................................... 68,100 5,243,700
Western Wireless Corp.** ...................... 102,200 4,956,700
Williams Communications Group,
Inc.#** ..................................... 67,000 2,981,500
WinStar Communications,
Inc.#** ..................................... 40,000 3,095,000
------------
134,829,552
------------
TOTAL UNITED STATES ........................... 214,299,994
------------
TOTAL COMMON STOCKS
(Cost $332,328,378) ......................... $453,267,251
------------
PAR
(000) VALUE
--------- ------------
SHORT-TERM INVESTMENT -- 10.3%
BBH Grand Cayman U.S. Dollar
Time Deposit
4.950% 03/01/00 ............................. $ 52,930 $ 52,930,000
(Cost $52,930,000) ------------
TOTAL INVESTMENTS -- 99.0%
(Cost $385,258,378*) .......................... $506,197,251
OTHER ASSETS IN EXCESS
OF LIABILITIES -- 1.0% ....................... $ 5,069,910
------------
TOTAL NET ASSETS -- 100.0% ..................... $511,267,161
============
* Also cost for Federal income tax purposes at February 29, 2000. The gross
appreciation (depreciation) on a tax basis is as follows:
Gross Appreciation ......................................... $131,766,079
Gross Depreciation ......................................... (10,827,206)
------------
Net Appreciation ........................................... $120,938,873
============
** Non-income producing securities.
# Security or a portion thereof is out on loan.
INVESTMENT ABBREVIATIONS
ADR ...............................................American Depositary Receipts
GDR .................................................Global Depositary Receipts
See Accompanying Notes to Financial Statements.
20
<PAGE>
WARBURG PINCUS FOCUS FUND
PORTFOLIO MANAGERS' LETTER
MARCH 27, 2000
Dear Shareholders:
We are writing to report on the results of the Warburg Pincus Focus Fund 1 (the
"Fund") for the six months ended February 29, 2000.
At February 29, 2000, the net asset value ("NAV") of the Fund's institutional
shares was $16.34, compared to an NAV of $20.15 on August 31, 1999. As a result,
the institutional shares' total return was 13.6%, (assuming the reinvestment of
distributions totaling $5.77 per share). By comparison, the Standard & Poor's
500 Index 2 (the "Index") returned 4.1% during the same period.
At February 29, 2000, NAV of the Fund's common shares was $16.26, compared to an
NAV of $20.11 on August 31, 1999. As a result, the common shares' total return
was 13.4%, (assuming the reinvestment of distributions totaling $5.77 per
share). By comparison, the Index returned 4.1% during the same period.
Effective stock selection in two industry sectors drove the Fund's
outperformance of its Index benchmark in the fiscal half-year. These were
technology and health care:
o TECHNOLOGY. In technology, we focused on semiconductor and software companies
with proprietary products and clear market leadership. Prospects for
semiconductor makers brightened in late 1999 as chip prices rose. Our
selection both of companies that produce the chips themselves and those that
make chip-manufacturing equipment proved especially timely. By the end of the
year, the stocks' rising valuations persuaded us to realize much of our gains
and trim the Fund's technology exposure.
As for software, we invested selectively in names that ended up faring
especially well during the period. Results in technology were additionally
notable because the sector's high valuation levels caused us to underweight
it relative to the Index.
o HEALTH CARE. Health care, which remained the Fund's largest sector exposure,
contributed positively to overall performance after detracting from it
through the summer of 1999. We emphasized names within medical technology,
hospital management and pharmaceuticals. These included Guidant Corp., a
major manufacturer of medical devices whose shares began to rebound from what
we considered a bout of overly pessimistic investor sentiment. The fact that
Guidant was the portfolio's biggest individual holding magnified its
favorable effect on performance.
On the negative side of the ledger, we took advantage of the significant value
available in the stocks of large U.S.-based consumer companies that generate
substantial portions of their revenues and earnings elsewhere in the world.
Unfortunately, most such companies were distinctly out of favor, as the market
overwhelmingly preferred so-called "New Economy" sectors like technology, media
and telecommunications.
Several consumer companies were among the Fund's biggest positions, including
Coca-Cola, Philip Morris, Nabisco and Archer-Daniels-Midland. All lost ground
during the fiscal half-year.
As developments occur that we believe would be of interest to you, we will keep
you informed. Meanwhile, if you have any questions about your portfolio or the
capital markets generally, please feel free to call upon us at any time.
Sincerely yours,
Credit Suisse Asset Management Select Equity Management Team
James A. Abate, Managing Director
D. Susan Everly, Director
21
<PAGE>
WARBURG PINCUS FOCUS FUND
PORTFOLIO MANAGERS' LETTER (CONCLUDED)
PERFORMANCE
<TABLE>
<CAPTION>
SINCE
SIX MONTHS ONE YEAR INCEPTION
2/29/00 (3/1/99 - 2/29/00) (ANNUALIZED)
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Warburg Pincus Focus Fund (Institutional)3 13.6% 29.9% 30.7%
Warburg Pincus Focus Fund (Common)4 13.4% 29.4% 30.7%
Standard & Poor's 500 Index2 4.1% 11.7% 24.6%5
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
1 NAME CHANGED FROM WARBURG PINCUS SELECT ECONOMIC VALUE EQUITY FUND EFFECTIVE
JANUARY 1, 2000
2 THE STANDARD & POOR'S 500 INDEX IS AN UNMANAGED INDEX (WITH NO DEFINED
INVESTMENT OBJECTIVE) OF COMMON STOCKS, INCLUDES REINVESTMENT OF DIVIDENDS,
AND IS A REGISTERED TRADEMARK OF MCGRAW-HILL CO., INC.
3 INCEPTION DATE: 7/31/98
4 INCEPTION DATE: 10/30/98
5 SINCE INCEPTION OF INSTITUTIONAL SHARES
FROM CREDIT SUISSE ASSET MANAGEMENT:
The Fund's Board of Directors voted during the fourth quarter of 1999 to change
the Fund's name to Warburg Pincus Focus Fund from Warburg Pincus Select Economic
Value Fund. This was done in order to better reflect the Fund's investment
strategy.
22
<PAGE>
WARBURG PINCUS FOCUS FUND
SCHEDULE OF INVESTMENTS
FEBRUARY 29, 2000
(UNAUDITED)
NUMBER
OF SHARES VALUE
--------- ------------
COMMON STOCKS -- 97.8%
AGRICULTURE -- 7.4%
Archer-Daniels-Midland ........................ 27,900 $ 280,744
Monsanto Co. .................................. 7,900 306,619
----------
587,363
----------
AIR TRANSPORT -- 3.8%
Lockheed Martin Corp. ......................... 17,300 301,669
----------
CHEMICALS -- 6.4%
E. I. du Pont de Nemours and
Co. ......................................... 5,700 287,850
IMC Global, Inc. .............................. 10,600 143,100
Nova Chemicals Corp. .......................... 4,700 75,200
----------
506,150
----------
COMPUTERS, SOFTWARE & SERVICES-- 19.7%
America Online** .............................. 2,000 118,000
BMC Software, Inc.** .......................... 2,600 119,600
Citrix Systems, Inc.** ........................ 1,600 168,700
Dell Computer Corp.** ......................... 1,800 73,463
i2 Technologies** ............................. 1,600 261,600
Inktomi Corp.** ............................... 800 109,700
Metacreations Corp.** ......................... 1,800 39,600
Microsoft Corporation** ....................... 3,700 330,687
RealNetworks, Inc.** .......................... 400 28,125
Siebel Systems, Inc.** ........................ 800 110,950
VERITAS Software Corp.** ...................... 800 158,300
Yahoo! Inc.** ................................. 200 31,938
----------
1,550,663
----------
CONSUMER PRODUCTS & SERVICES -- 6.3%
Unilever N.V. ADR ............................. 6,800 309,400
Wrigley (Wm.) Jr. Company ..................... 2,800 189,350
----------
498,750
----------
ELECTRONICS -- 13.0%
Advanced Micro Devices,
Inc.** ...................................... 4,000 156,500
Atmel Corp.** ................................. 4,400 217,800
Cisco Systems** ............................... 1,700 224,719
Lucent Technologies ........................... 5,300 315,350
Micron Technology, Inc.** ..................... 1,100 107,869
----------
1,022,238
----------
FOOD & BEVERAGE -- 6.6%
Coca-Cola Co. ................................. 6,900 334,219
Nabisco Group Holdings Corp. .................. 22,000 189,750
----------
523,969
----------
HEALTH CARE -- 12.1%
Boston Scientific Corp.** ..................... 12,000 219,000
Cardinal Health, Inc. ......................... 3,600 148,500
Gilead Sciences, Inc.** ....................... 1,500 114,750
Guidant Corp.** ............................... 5,900 397,512
Medtronic, Inc. ............................... 1,500 72,656
----------
952,418
----------
NUMBER
OF SHARES VALUE
--------- ------------
METALS & MINING -- 0.1%
Cominco, Ltd. ................................. 500 $ 7,250
----------
PHARMACEUTICALS -- 10.7%
Eli Lilly and Company ......................... 3,000 178,312
Merck & Co. ................................... 1,000 61,562
Mylan Laboratories, Inc. ...................... 8,500 195,500
Pfizer, Inc. .................................. 6,100 195,962
Schering-Plough Corp. ......................... 2,200 76,725
Watson Pharmaceuticals,
Inc.** ...................................... 3,400 136,000
----------
844,061
----------
TELECOMMUNICATIONS -- 7.8%
MCI WorldCom, Inc.** .......................... 6,650 296,756
SBC Communications, Inc. ...................... 8,400 319,200
----------
615,956
----------
TOBACCO -- 3.9%
Philip Morris Companies, Inc. ................. 15,500 310,969
----------
TOTAL COMMON STOCKS
(Cost $7,468,553) ........................... $7,721,456
----------
PAR
(000)
---------
SHORT-TERM INVESTMENT -- 2.1%
BBH Grand Cayman U.S. Dollar
Time Deposit
4.950% 03/01/00 ............................. $163 $ 163,048
(Cost $163,048) ----------
TOTAL INVESTMENTS -- 99.9%
(Cost $7,631,601*) .......................... $7,884,504
OTHER ASSETS IN EXCESS
OF LIABILITIES -- 0.1% ....................... $ 6,355
----------
TOTAL NET ASSETS -- 100.0% .................... $7,890,859
==========
* Cost for Federal income tax purposes at February 29, 2000 is $8,089,421. The
gross appreciation (depreciation) on a tax basis is as follows:
Gross Appreciation ......................................... $ 657,621
Gross Depreciation ......................................... (862,538)
----------
Net Depreciation ........................................... $ (204,917)
==========
** Non-income producing securities.
INVESTMENT ABBREVIATIONS
ADR ...............................................American Depositary Receipts
See Accompanying Notes to Financial Statements.
23
<PAGE>
WARBURG PINCUS LONG-SHORT MARKET NEUTRAL FUND
PORTFOLIO MANAGERS' LETTER
March 24, 2000
Dear Shareholders:
We are writing to report on the results of the Warburg Pincus Long-Short Market
Neutral Fund (the "Fund") for the six months ended February 29, 2000.
At February 29, 2000, the net asset value ("NAV") of the Fund's institutional
shares was $15.50, compared to an NAV of $14.21 on August 31, 1999. As a result,
the institutional shares' total return was 17.8%, (assuming the reinvestment of
dividends and distributions totaling $1.1220 per share). By comparison, the
Salomon Smith Barney U.S. 1-Month Treasury Bill Index 1 benchmark (the "Index")
returned 2.3% during the same period.
At February 29, 2000, NAV of the Fund's common shares was $15.67, compared to an
NAV of $14.19 on August 31, 1999. As a result, the common shares' total return
was 17.6%, (assuming the reinvestment of dividends and distributions totaling
$.9290 per share). By comparison, the Index returned 2.3% during the same
period.
The Fund significantly outperformed the Index during the fiscal half-year due to
a positive combination of market conditions and our weighting of fundamental
stock selection factors that our research concluded would most effectively
discriminate between attractive and unattractive stocks.
The factors that we correctly emphasized were earnings revisions, which were
plentiful in a buoyant macroeconomic environment; operating performance, as
reflected by companies' income statements rather than their balance sheets; and
long-term relative strength.
Unlike earlier periods, the market's high level of overall volatility helped
performance. This served to create a number of opportunities of which we took
advantage. Share-price momentum and relative valuation worked notably well
during the period in this regard.
Although our investment discipline is based on stock selection and does not
significantly overweight or underweight industry sectors relative to the
benchmark, results during the period were particularly strong in two sectors,
technology and consumer cyclicals.
Within technology, the Fund's long holdings were positioned to benefit from
strong global demand for computer and Internet-related equipment, while short
holdings were more oriented toward mainframe computers and older technology.
Within consumer cyclicals, we profited from shorting companies that were more
sensitive to a potential increase in commodity prices and owning the shares of
companies that were more end-product-oriented.
Perhaps the weakest spot in the portfolio was the media sector. Our media stocks
experienced disappointing relative performance, as several long positions did
not benefit from improving earnings expectations and shorts were not penalized
for their deficiencies as much as we had expected.
As developments occur that we believe would be of interest to you, we will keep
you informed. Meanwhile, if you have any questions about your portfolio or the
capital markets generally, please feel free to call upon us at any time.
Sincerely yours,
Credit Suisse Asset Management Structured Equities Management Team
William W. Priest, Jr., Managing Director
Eric N. Remole, Managing Director
Marc E. Bothwell, Vice President
Michael A. Welhoelter, Vice President
INVESTING IN SHARES OF THE FUND CAN BE MORE VOLATILE AND RISKY THAN SOME OTHER
FORMS OF INVESTMENTS. IN ADDITION, IF THE ADVISER TAKES LONG POSITIONS IN STOCKS
THAT DECLINE OR SHORT POSITIONS IN STOCKS THAT INCREASE IN VALUE, THEN LOSSES OF
THE FUND MAY EXCEED THOSE OF OTHER STOCK MUTUAL FUNDS THAT HOLD LONG POSITIONS
ONLY.
24
<PAGE>
WARBURG PINCUS LONG-SHORT MARKET NEUTRAL FUND
PORTFOLIO MANAGERS' LETTER (CONCLUDED)
PERFORMANCE
<TABLE>
<CAPTION>
SINCE
SIX MONTHS ONE YEAR INCEPTION
2/29/00 (3/1/99 - 2/29/00) (ANNUALIZED)
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Warburg Pincus Long-Short Market
Neutral Fund (Institutional)2 17.8% 12.4% 8.1%
Warburg Pincus Long-Short Market
Neutral Fund (Common)3 17.6% 12.2% 7.5%
Salomon Smith Barney U.S. One-Month Treasury Index 1 2.3% 4.6% 7.1%4
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
1 MONTHLY RETURN EQUIVALENTS OF YIELD AVERAGES WHICH ARE NOT MARKED TO MARKET.
THE SALOMON SMITH BARNEY ONE-MONTH TREASURY INDEX CONSISTS OF THE LAST
ONE-MONTH TREASURY BILL ISSUES.
2 INCEPTION: 7/31/98
3 INCEPTION: 9/8/98
4 SINCE INCEPTION OF INSTITUTIONAL SHARES
25
<PAGE>
WARBURG PINCUS LONG-SHORT MARKET NEUTRAL FUND
SCHEDULE OF INVESTMENTS
FEBRUARY 29, 2000
(UNAUDITED)
NUMBER
OF SHARES VALUE
--------- ----------
COMMON STOCKS -- 82.0%
AEROSPACE/DEFENSE -- 1.3%
Textron, Inc. ................................. 1,600 $ 97,600
-----------
AIR TRANSPORT-FREIGHT -- 1.5%
Southwest Airlines Co. ........................ 6,000 110,625
-----------
AUTOMOTIVE -- 7.8%
Ford Motor Co. ................................ 4,200 174,825
General Motors Corp. .......................... 1,700 129,306
Johnson Controls, Inc. ........................ 3,800 202,825
PACCAR Inc. ................................... 1,300 55,981
-----------
562,937
-----------
BEVERAGES & TOBACCO -- 1.7%
Anheuser-Busch Cos., Inc. ..................... 400 25,650
Philip Morris Cos., Inc. ...................... 1,300 26,081
Tootsie Roll Industries ....................... 2,300 68,281
-----------
120,012
-----------
BROADCASTING & PUBLISHING -- 0.8%
AMFM, Inc.** .................................. 1,000 61,375
-----------
CABLE -- 3.2%
At Home Corp. Series A** ...................... 3,400 116,663
Cablevision Systems Corp.** ................... 1,800 115,538
-----------
232,201
-----------
CHEMICALS -- 1.7%
Air Products & Chemicals, Inc. ................ 3,200 82,400
Occidental Petroleum Corp. .................... 2,700 43,369
-----------
125,769
-----------
COMPUTERS, SOFTWARE & SERVICES-- 4.4%
Earthlink, Inc.** ............................. 1,876 46,666
RealNetworks, Inc.** .......................... 800 56,250
VERITAS Software Corp.** ...................... 1,100 217,663
-----------
320,579
-----------
CONSTRUCTION & BUILDING MATERIALS -- 1.0%
Ingersoll-Rand Co. ............................ 1,800 68,963
-----------
CONSUMER PRODUCTS & SERVICES -- 0.9%
Avon Products ................................. 1,800 48,713
Nu Skin Enterprises, Inc.** ................... 1,700 15,194
-----------
63,907
-----------
ELECTRIC UTILITIES -- 1.4%
FirstEnergy Corp. ............................. 1,100 20,556
Niagara Mohawk Power .......................... 2,900 34,075
Pinnacle West Capital ......................... 1,600 44,200
-----------
98,831
-----------
ELECTRONICS -- 8.7%
Circuit City Stores ........................... 2,100 84,788
JDS Uniphase Corp.** .......................... 200 52,750
Linear Technology Corp. ....................... 1,300 136,419
NUMBER
OF SHARES VALUE
--------- ----------
ELECTRONICS -- (CONTINUED)
Motorola, Inc. ................................ 1,767 $ 301,274
Teradyne, Inc.** .............................. 600 52,200
-----------
627,431
-----------
ENERGY & OIL EXPLORATION -- 1.9%
Apache Corp. .................................. 1,200 43,800
Burlington Resources, Inc. .................... 1,800 49,725
Tidewater, Inc. ............................... 1,500 42,469
-----------
135,994
-----------
FINANCIAL SERVICES -- 10.7%
Hartford Financial Services,
Inc. ........................................ 5,400 168,750
J.P. Morgan & Co., Inc. ....................... 1,600 177,600
Jefferson-Pilot Corp. ......................... 3,000 156,188
Legg Mason, Inc. .............................. 2,000 78,500
Merrill Lynch & Co., Inc. ..................... 300 30,750
Regions Financial Corp. ....................... 1,700 34,425
UnionBanCal Corp. ............................. 3,300 106,013
USX - Marathon Group .......................... 1,000 21,625
-----------
773,851
-----------
FOOD & BEVERAGE -- 3.8%
Coors, (Adolph) Class B ....................... 1,500 65,813
Darden Restaurants, Inc. ...................... 2,700 35,606
Fleming Companies, Inc. ....................... 6,000 92,625
U.S. Foodservice .............................. 4,400 77,825
-----------
271,869
-----------
GAS UTILITIES -- 0.2%
Peoples Energy ................................ 500 14,469
-----------
HEALTH CARE -- 4.0%
Abbott Laboratories ........................... 1,300 42,575
Aetna, Inc. ................................... 400 16,450
Boston Scientific Corp. ....................... 700 12,775
Cigna Corp. ................................... 1,400 103,338
Wellpoint Health Networks,
Inc.** ...................................... 1,700 114,750
-----------
289,888
-----------
INTERNET CONTENT -- 3.0%
Extreme Networks, Inc.** ...................... 500 55,625
InfoSpace.com, Inc. ........................... 300 65,100
Priceline.Com, Inc.** ......................... 1,700 95,094
-----------
215,819
-----------
METALS & MINING -- 1.7%
Barrick Gold Corp. ............................ 2,300 37,519
Bethlehem Steel Corp. ......................... 2,500 14,219
Freeport-McMoran Copper &
Gold, Inc. Class B** ........................ 3,300 45,375
Ryerson Tull, Inc. ............................ 1,800 23,850
-----------
120,963
-----------
See Accompanying Notes to Financial Statements.
26
<PAGE>
WARBURG PINCUS LONG-SHORT MARKET NEUTRAL FUND (CONTINUED)
NUMBER
OF SHARES VALUE
--------- ----------
OIL SERVICES -- 3.8%
Enron Corp. ................................... 3,400 $ 34,600
Pennzoil-Quaker State Co. ..................... 4,400 38,500
-----------
273,100
-----------
PAPER & FOREST PRODUCTS -- 1.3%
Weyerhaeuser Co. .............................. 1,800 92,363
-----------
PHARMACEUTICALS -- 2.6%
Chiron Corp.** ................................ 600 30,000
ICOS Corp.** .................................. 3,000 157,125
-----------
187,125
-----------
REAL ESTATE -- 4.3%
Apartment Investment &
Management Company,
Class A ..................................... 3,200 118,400
Equity Residential Properties
Trust ....................................... 1,100 43,931
General Growth Properties,
Inc. ........................................ 3,400 98,388
Host Marriott Corp. ........................... 1,800 15,975
Simon Debartolo Group ......................... 1,600 37,600
-----------
314,294
-----------
RENTALS -- 0.3%
Hertz Corp. ................................... 700 25,069
-----------
RETAIL - SPECIALTY APPAREL STORES -- 3.2%
Intimate Brands, Inc. Class A ................. 2,900 94,794
Safeway, Inc.** ............................... 500 19,281
Target Corp. .................................. 700 41,300
Ticketmaster Online-CitySearch,
Inc.** ...................................... 2,100 73,270
-----------
228,645
-----------
SEMICONDUCTOR -- 2.1%
Broadcom Corp.** .............................. 400 78,950
National Semiconductor
Corp.** ..................................... 1,000 75,125
-----------
154,075
-----------
TELECOMMUNICATIONS -- 4.9%
A. H. Belo Corp. Class A ...................... 4,200 54,075
American Tower Corporation,
Class A** ................................... 700 34,475
AT&T Corp. .................................... 2,000 98,875
Galileo International, Inc. ................... 1,300 22,100
MCI WorldCom, Inc.** .......................... 1,000 44,625
Nextel Communications, Inc.** ................. 500 68,156
NEXTLINK Communications,
Inc.** ...................................... 300 33,056
-----------
355,362
-----------
TOTAL COMMON STOCKS
(Cost $6,102,083) ........................... $ 5,943,117
-----------
NUMBER
OF SHARES VALUE
--------- ----------
EPURCHASE AGREEMENT -- 14.0%
Bear Stearns (Agreement dated
02/29/00, to be repurchased at
$1,014,141, collateralized by
$1,065,000 U.S. Treasury
Inflation Index Note 3.875%
due 01/15/09. Market value of
collateral is $1,036,206.)
5.760% 03/01/00 ............................. $1,014 $ 1,013,979
(Cost $1,013,979) -----------
NUMBER
OF SHARES
---------
SECURITIES SOLD SHORT -- (81.9%)
ACCIDENT & HEALTH INSURANCE -- (1.1%)
UAL Corp.** ................................... (1,600) $ (78,000)
-----------
AEROSPACE/DEFENSE -- (5.0%)
AMR Corp.** ................................... (1,400) (74,025)
Lear Corp.** .................................. (1,800) (38,025)
Lockheed Martin Corp. ......................... (3,500) (61,031)
T.R.W., Inc. .................................. (4,000) (192,000)
-----------
(365,081)
-----------
ARRANGEMENT OF TRANSPORTATION OF
FREIGHT & CARGO -- (3.0%)
Avnet, Inc. ................................... (3,200) (214,000)
-----------
AUTOMOBILE PARTS & EQUIPMENT -- (3.6%)
Autonation, Inc.** ............................ (9,300) (70,331)
Dana Corp. .................................... (3,100) (66,069)
Genuine Parts Co. ............................. (900) (20,306)
Goodyear Tire & Rubber Co. .................... (4,600) (104,363)
-----------
(261,069)
-----------
BUILDING & BUILDING MATERIALS -- (1.0%)
Armstrong World Industries .................... (2,600) (49,400)
Johns Manville Corp. .......................... (2,400) (19,500)
-----------
(68,900)
-----------
BUSINESS SERVICES -- (2.5%)
ACNielsen Corp. ............................... (1,000) (16,938)
Catalina Marketing Corp.** .................... (1,400) (119,175)
Keane, Inc.** ................................. (2,000) (48,000)
-----------
(184,113)
-----------
CABLE -- (1.3%)
Cox Communications, Inc.** .................... (2,100) (95,419)
-----------
CAPITAL IMPROVEMENT -- (1.3%)
American Standard
Companies** ................................. (2,800) (97,650)
-----------
COMMUNICATIONS & MEDIA -- (2.1%)
Chris-Craft Industries, Inc.** ................ (1,300) (85,556)
Telephone and Data Systems,
Inc. ........................................ (600) (63,300)
-----------
(148,856)
-----------
See Accompanying Notes to Financial Statements.
27
<PAGE>
WARBURG PINCUS LONG-SHORT MARKET NEUTRAL FUND (CONTINUED)
NUMBER
OF SHARES VALUE
--------- ----------
COMPUTERS, SOFTWARE & SERVICES-- (4.5%)
BMC Software, Inc.** .......................... (3,100) $ (142,600)
Citrix Systems, Inc.** ........................ (600) (63,263)
Storage Technology Corp.** .................... (1,000) (12,750)
Tandy Corp. ................................... (2,900) (110,381)
-----------
(328,994)
-----------
CONGLOMERATE -- (1.1%)
General Electric Co. .......................... (600) (79,313)
-----------
CONSUMER PRODUCTS & SERVICES -- (3.2%)
Colgate-Palmolive Co. ......................... (1,500) (78,281)
Gillette Co. .................................. (2,600) (91,650)
Newell Rubbermaid, Inc. ....................... (700) (16,188)
Whitman Corp. ................................. (3,800) (47,500)
-----------
(233,619)
-----------
ELECTRIC UTILITIES -- (1.0%)
Unicom Corp. .................................. (1,900) (71,844)
-----------
ELECTRONICS -- (5.0%)
Arrow Electronics, Inc.** ..................... (3,500) (105,875)
Atmel Corp.** ................................. (2,900) (143,550)
Texas Instruments, Inc. ....................... (700) (116,550)
-----------
(365,975)
-----------
ENVIRONMENTAL SERVICES -- (0.2%)
Waste Management, Inc. ........................ (1,000) (15,000)
-----------
FINANCIAL SERVICES -- (10.1%)
American Express Co. .......................... (400) (53,675)
American Financial Group ...................... (3,100) (65,100)
CCB Financial Corp. ........................... (900) (33,413)
Charles Schwab Corp. .......................... (1,500) (62,719)
Cincinnati Financial Corp. .................... (900) (26,888)
Franklin Resources ............................ (5,200) (141,375)
MBIA, Inc. .................................... (2,600) (99,775)
MGIC Investment Corp. ......................... (2,000) (74,750)
People's Bank ................................. (1,600) (31,925)
PMI Group, Inc. ............................... (700) (25,419)
Starwood Financial, Inc. ...................... (900) (15,188)
Union Planters Corporation .................... (1,800) (49,275)
Wachovia Corp. ................................ (900) (51,469)
-----------
(730,971)
-----------
FOOD & BEVERAGE -- (2.8%)
Coca-Cola Co. ................................. (3,500) (169,531)
Tricon Global Restaurants,
Inc.** ...................................... (1,200) (31,950)
-----------
(201,481)
-----------
NUMBER
OF SHARES VALUE
--------- ----------
HEALTH CARE -- (6.7%)
Beckman Coulter, Inc. ........................ (3,000) $ (144,375)
PE Corp. - PE Biosystems
Group ....................................... (1,800) (189,900)
Stryker Corp. ................................. (900) (52,650)
United Healthcare ............................. (2,000) (102,250)
-----------
(489,175)
-----------
INDUSTRIAL GOODS & MATERIALS -- (2.6%)
Southdown, Inc. ............................... (500) (24,813)
Spx Corp.** ................................... (1,900) (165,419)
-----------
(190,232)
-----------
LEISURE -- (0.6%)
International Game Technology ................. (2,600) (46,313)
-----------
OIL SERVICES -- (5.8%)
Amerada Hess Corp. ............................ (1,500) (75,844)
National Fuel Gas Co. ......................... (1,500) (61,406)
R & B Falcon Corp.** .......................... (4,600) (71,013)
Texaco, Inc. .................................. (2,000) (94,875)
Weatherford International,
Inc.** ...................................... (2,600) (117,000)
-----------
(420,138)
-----------
PAPER & FOREST PRODUCTS -- (3.7%)
Bowater, Inc. ................................. (3,400) (167,238)
Georgia-Pacific Group ......................... (3,000) (104,063)
-----------
(271,301)
-----------
PHARMACEUTICALS -- (3.3%)
FMC Corp.** ................................... (1,700) (82,131)
Forest Laboratories, Inc.** ................... (400) (27,325)
IMC Global, Inc. .............................. (2,400) (32,400)
Monsanto Co. .................................. (1,500) (58,219)
Watson Pharmaceuticals,
Inc.** ...................................... (1,000) (40,000)
-----------
(240,075)
-----------
PUBLISHING -- (1.6%)
Harland ( John H. ) Co. ....................... (1,100) (16,981)
Investment Technology Group,
Inc. ........................................ (2,600) (100,750)
-----------
(117,731)
-----------
RETAIL - SPECIALTY APPAREL STORES -- (4.4%)
Cintas Corp. .................................. (700) (27,956)
Dillard's, Inc. Class A ....................... (4,100) (71,238)
Gap, Inc. ..................................... (1,200) (57,975)
Ikon Office Solutions ......................... (5,700) (39,900)
Payless ShoeSource, Inc.** .................... (900) (35,550)
Penney, J.C. Co. .............................. (5,700) (89,775)
-----------
(322,394)
-----------
See Accompanying Notes to Financial Statements.
28
<PAGE>
WARBURG PINCUS LONG-SHORT MARKET NEUTRAL FUND (CONCLUDED)
NUMBER
OF SHARES VALUE
--------- ----------
TELECOMMUNICATIONS -- (3.8%)
Alltel Corp. .................................. (1,700) $ (98,600)
AT&T Corp. - Liberty Media
Group Class A** ............................. (1,600) (83,600)
Citizens Utilities Co.
Class B** ................................... (2,000) (30,500)
Lucent Technologies ........................... (1,000) (59,500)
-----------
(272,200)
-----------
TRANSPORTATION -- (0.3%)
Wisconsin Central Transportation
Corp.** ..................................... (2,000) (24,750)
-----------
TOTAL SECURITIES SOLD SHORT
(Cost $6,678,039) ........................... $(5,934,595)
-----------
TOTAL INVESTMENTS -- 14.1%
(Cost $438,023*) ............................ $ 1,022,501
OTHER ASSETS IN EXCESS
OF LIABILITIES -- 85.9% ..................... $ 6,224,875
-----------
TOTAL NET ASSETS -- 100.0% .................... $ 7,247,376
===========
* Cost for Federal income tax purposes at February 29, 2000 is $469,914. The
gross appreciation (depreciation) on a tax basis is as follows:
Gross Appreciation - Investments .............. $ 845,425
Gross Depreciation - Investments .............. (1,017,947)
Gross Appreciation - Short Sales .............. 1,259,158
Gross Depreciation - Short Sales .............. (534,049)
-----------
Net Appreciation ........................... $ 552,587
===========
** Non-income producing securities.
See Accompanying Notes to Financial Statements.
29
<PAGE>
WARBURG PINCUS U.S. CORE FIXED INCOME FUND
PORTFOLIO MANAGERS' LETTER
March 20, 2000
Dear Shareholders:
We are writing to report on the results of the Warburg Pincus U.S. Core Fixed
Income Fund (the "Fund") for the six months ended February 29, 2000.
On February 29, 2000, the net asset value ("NAV") of the Fund's institutional
shares was $14.86, compared to a NAV of $15.01 on August 31, 1999. As a result,
the institutional shares' total return was 2.9%, (assuming the reinvestment of
dividends and distributions totaling $0.5731 per share). By comparison, the
Lehman Brothers Aggregate Bond Index* (the "Index") returned 1.9% during the
same period.
The Fund's returns exceeded those of the Index during the fiscal half-year. We
attribute this performance to our relative positioning, among various sectors of
the fixed income market, during sharply different market conditions throughout
the period.
In the second half of 1999, spread product (I.E., securities trading at a spread
over Treasuries) became very cheap, as investors were widely concerned about
potential Y2K problems. Initially, we overweighted high-grade corporate bonds
and mortgage-backed securities. When these sectors rallied much quicker than
expected, we rotated into lower-quality securities, where our price targets were
also soon met. Given the rate of appreciation in spread product, we initiated
risk reduction at the end of the quarter and began to take profits. This
approach helped our results as unfavorable conditions in the first two months of
2000 trimmed some of the gains in these market segments.
In early February, the Federal Reserve raised interest rates and the Treasury
announced plans to buy back some of its long-term bonds in the open market
(which would reduce total outstanding debt). As a result, spreads on all
securities in the 10- to 30-year range widened. Nevertheless, by owning
mortgage-backed securities and emerging market debt -- two areas that performed
especially well -- we were able to offset the relative underperformance of
investment grade bonds. The Fund's overall return was considerably better than
that of the Index for the fiscal half-year.
As developments occur in the fixed income markets or here at Credit Suisse Asset
Management that we believe would be of interest to you, we will be sure to keep
you informed. Meanwhile, if you have questions, please feel free to call upon us
at any time.
Sincerely yours,
Credit Suisse Asset Management Fixed Income Management Team
Gregg M. Diliberto, Managing Director
Jo Ann Corkran, Managing Director
Mark K. Silverstein, Managing Director
Jose A. Rodriguez, Director
PERFORMANCE
<TABLE>
<CAPTION>
SINCE
FIVE YEARS INCEPTION
SIX MONTHS ONE YEAR (3/1/95 - 2/29/00) 4/1/94
2/29/00 (3/1/99 - 2/29/00) (ANNUALIZED) (ANNUALIZED)
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Warburg Pincus U.S. Core Fixed Income Fund 2.9% 2.8% 7.7% 6.8%
Lehman Bros. Aggregate Bond Index* 1.9% 1.1% 7.0% 6.6%
- ---------------------------------------------------------------------------------------------------------------------------
<FN>
*THE LEHMAN BROTHERS AGGREGATE BOND INDEX IS COMPOSED OF THE LEHMAN
GOVERNMENT/CORPORATE INDEX AND THE MORTGAGE-BACKED SECURITIES INDEX AND
INCLUDES U.S. TREASURY AND AGENCY ISSUES, CORPORATE BOND ISSUES AND
MORTGAGE-BACKED SECURITIES RATED INVESTMENT-GRADE OR HIGHER BY MOODY'S
INVESTORS SERVICE, STANDARD AND POOR'S CORPORATION OR FITCH INVESTORS' SERVICE.
TOTAL RETURN COMPRISES PRICE APPRECIATION/DEPRECIATION AND INCOME AS A
PERCENTAGE OF THE ORIGINAL INVESTMENT. INDICES ARE REBALANCED MONTHLY BY MARKET
CAPITALIZATION.
</FN>
</TABLE>
30
<PAGE>
WARBURG PINCUS U.S. CORE FIXED INCOME FUND
SCHEDULE OF INVESTMENTS
FEBRUARY 29, 2000
(UNAUDITED)
PAR
(000) VALUE
--------- ----------
CORPORATE BONDS -- 37.3%
AEROSPACE/DEFENSE EQUIPMENT -- 1.9%
Boeing Co. Debentures
7.250% 06/15/25 ............................. $ 10 $ 9,362
7.500% 08/15/42 ............................. 150 141,000
Lockheed Martin Corp.
7.950% 12/01/05 ............................. 1,680 1,652,700
8.200% 12/01/09 ............................. 2,170 2,153,725
8.500% 12/01/29 ............................. 3,110 3,075,012
Raytheon Co.
6.450% 08/15/02 ............................. 15 14,531
Sequa Corp. Sr. Notes
9.000% 08/01/09 ............................. 270 253,800
United Technology Corp.
6.625% 11/15/04 ............................. 10 9,712
-------------
7,309,842
-------------
AUTOMOTIVE -- 0.8%
DaimlerChrysler N.A. Holdings
Gtd. Global Bonds
7.200% 09/01/09 ............................. 10 9,725
Delco Remy International, Inc.
Gtd. Sr. Sub. Notes
10.625% 08/01/06 ............................ 115 114,137
Delphi Auto Systems Corp.
Debentures
7.125% 05/01/29 ............................. 10 8,900
Federal-Mogul Corp.
7.500% 01/15/09 ............................. 2,060 1,797,350
Ford Motor Co. Global Notes
7.450% 07/16/31 ............................. 10 9,475
Hayes Lemmerz International,
Inc. 144A Sr. Sub. Notes
8.250% 12/15/08 ............................. 205 179,887
Lear Corp.
7.960% 05/15/05 ............................. 770 736,312
Meritor Automotive, Inc.
6.800% 02/15/09 ............................. 10 9,062
-------------
2,864,848
-------------
BANKING -- 8.2%
Barclays Bank plc Sub. Notes
7.400% 12/15/09 ............................. 10 9,913
Bay View Capital Corp.
Sub. Notes
9.125% 08/15/07 ............................. 1,205 994,125
Chase Manhattan Bank Corp.
Sub. Notes
6.500% 08/01/05 ............................. 275 262,625
Citicorp Sub. Notes, Series F
6.375% 11/15/08 ............................. 10 9,187
Credit Lyonnais Perpetual Sub.
Variable Rate Notes, Rule 144A
7.437%+/+++ ................................. 3,220 3,087,336
PAR
(000) VALUE
--------- ----------
BANKING -- (CONTINUED)
Deutsche Bank Financial
144A Pfd.
7.872%+/+++ ................................. $ 1,600 $ 1,498,656
First Republic Bank Sub. Notes
7.750% 09/15/12 ............................. 2,215 1,866,137
ForeningsSparbanken AB
Perpetual Sr. Sub. FRN
6.890%+/+++ ................................. 980 975,982
Fuji Finance (Cayman), Ltd.
Medium Term Notes
7.300%+/+++ ................................. 850 809,625
Guaranteed Perpetual FRN
6.842%+/+++ ................................. 90 86,625
Perpetual Sub. Notes
7.113%+/+++ ................................. 540 518,400
Fuji JGB Investment L.L.C.,
Noncumulative Preferred
Securities, Series A
9.870%+/+++ ................................. 2,345 2,356,725
KBC Bank Fund Trust III 144A
9.860%+/+++ ................................. 2,100 2,228,625
National Westminster Bank
Sub. Notes
7.375% 10/01/09 ............................. 10 9,737
Nordbanken
8.950%+/+++ ................................. 1,460 1,450,215
Okobank Perpetual Medium
Term FRN
6.620%+/+++ ................................. 2,140 2,102,550
Royal Bank of Scotland plc
Global Bonds
8.817%+++ ................................... 2,300 2,300,000
Santander Financial Issuances
Perpetual
7.087%+/+++ ................................. 1,000 924,250
Sanwa Bank, Ltd. Global
Sub. Notes
8.350% 07/15/09 ............................. 2,015 2,032,631
Skandinaviska Enskilda Banken
144A Perpetual Sub. FRN
6.500%+/+++ .............................. 1,700 1,596,281
Perpetual Sub. FRN
6.625%+/+++ .............................. 2,280 2,243,224
Sovereign Bancorp, Inc.
10.500% 11/15/06 ............................ 1,580 1,591,850
Sumitomo Bank Int'l. Finance
8.500% 06/15/09 ............................. 1,735 1,771,869
-------------
30,726,568
-------------
See Accompanying Notes to Financial Statements.
31
<PAGE>
WARBURG PINCUS U.S. CORE FIXED INCOME FUND (CONTINUED)
PAR
(000) VALUE
--------- ----------
BROADCASTING -- 0.5%
Belo (A.H.) Corp. Sr. Debentures
7.250% 09/15/27 ............................. $ 10 $ 8,813
Chancellor Media Corp.
144A Sr. Sub. Notes
8.000% 11/01/08 ............................. 180 180,000
Fox/Liberty Networks L.L.C.,
Registered Sr. Notes
8.875% 08/15/07 ............................. 1,590 1,613,850
Granite Broadcasting Corp.
144A Sr. Sub. Notes
8.875% 05/15/08 ............................. 130 120,900
-------------
1,923,563
-------------
BUILDING MATERIALS -- 0.1%
Jackson Products, Inc. Notes
9.500% 04/15/05 ............................. 345 312,225
-------------
CABLE -- 0.6%
CSC Holdings Inc., Sr. Notes
7.875% 12/15/07 ............................. 1,180 1,153,450
7.250% 07/15/08 ............................. 410 385,400
Diamond Cable Communications
plc, Yankee Sr. Discount Notes
10.750% 02/15/07++ .......................... 470 378,350
James Cable Partners L.P.
Sr. Notes, Series B
10.750% 08/15/04 ............................ 160 160,000
Videotron Holdings plc Yankee
Sr. Discount Notes
11.000% 08/15/05++ .......................... 95 97,121
-------------
2,174,321
-------------
CHEMICALS -- 0.5%
Lyondell Chemical, Inc.
Sr. Secured Notes,
Series A
9.625% 05/01/07 ........................ 90 87,075
Series B
9.875% 05/01/07 ........................ 105 100,800
Rohm & Haas Co.
7.850% 07/15/29 ............................. 1,575 1,582,875
-------------
1,770,750
-------------
COMPUTERS, SOFTWARE & SERVICES -- 0.4%
Seagate Technology, Inc.
Sr. Debentures
7.450% 03/01/37 ............................. 1,540 1,339,800
-------------
CONSULTING SERVICES -- 0.2%
Comdisco, Inc. Mtn
7.250% 09/01/02 ............................. 480 473,400
Comdisco, Inc. Ser. H Mtn
7.230% 08/16/01 ............................. 410 407,437
-------------
880,837
-------------
PAR
(000) VALUE
--------- ----------
ENERGY -- 1.5%
Conoco, Inc. Sr. Notes
6.950% 04/15/29 ............................. $ 10 $ 9,100
Crown Central Petroleum
Sr. Notes
10.875% 02/01/05 ............................ 170 120,700
Dresser Industries, Inc. Debentures
7.600% 08/15/49 ............................. 2,100 1,987,125
Edison International, Inc.
6.875% 09/15/04 ............................. 10 9,750
Hydro-Quebec, Yankee Notes
9.400% 02/01/21 ............................. 10 11,575
Keyspan Gas East
Unsubordinated Notes
7.875% 02/01/10 ............................. 10 10,100
KN Energy, Inc. Reset Put Notes
6.300% 03/01/01 ............................. 10 9,888
Korea Electric Power
Global Unsubordinated Notes
6.375% 12/01/03 .......................... 120 112,950
Yankee Debentures
7.000% 02/01/27 .......................... 1,780 1,617,575
Yankee Notes
7.000% 10/01/02 .......................... 1,965 1,915,875
-------------
5,804,638
-------------
ENTERTAINMENT -- 1.2%
Regal Cinemas, Inc. Sr. Sub. Notes
9.500% 06/01/08 ............................. 90 59,850
Time Warner, Inc.
6.625% 05/15/29 ............................. 2,700 2,288,250
Time Warner, Inc. Debentures
8.050% 01/15/16 ............................. 2,248 2,278,910
-------------
4,627,010
-------------
FINANCIAL SERVICES -- 7.2%
Abbey National Capital Trust I
FLIRB
8.963%+/+++ ................................. 650 651,074
American General Institutional
Capital Trust Co. 144A Gtd.
Notes, Series B
8.125% 03/15/46 ............................. 2,935 2,927,663
Associates Corp. of North
America Debentures
6.950% 11/01/18 ............................. 30 27,225
AT&T Capital Corp.
7.110% 09/13/01 ............................. 405 408,038
Bear Stearns Co., Inc.
Global Notes
7.625% 02/01/05 ............................. 2,810 2,778,388
7.625% 12/07/09 ............................. 15 14,588
Conseco, Inc.
7.875% 12/15/00 ............................. 10 10,022
6.400% 02/10/03 ............................. 10 9,450
9.000% 10/15/06 ............................. 5,845 5,932,675
See Accompanying Notes to Financial Statements.
32
<PAGE>
WARBURG PINCUS U.S. CORE FIXED INCOME FUND (CONTINUED)
PAR
(000) VALUE
--------- ----------
FINANCIAL SERVICES -- (CONTINUED)
Conseco Finance Trust III
8.796% 04/01/27 ............................. $ 1,540 $ 1,414,875
Enterprise Rent a Car Finance
Co. 144A Notes
7.950% 12/15/09 ............................. 760 749,550
Finova Capital Corp.
7.125% 05/01/02 ............................. 245 242,856
7.250% 11/08/04 ............................. 2,030 1,997,013
Ford Motor Credit Corp.
7.375% 10/28/09 ............................. 3,245 3,151,706
GATX Capital Corp.
7.750% 12/01/06 ............................. 10 9,775
Goldman Sachs Group, Inc.
Global Bonds
7.350% 10/01/09 ............................. 1,220 1,178,825
Industrial Credit & Investment
Corp. 144A Yankee Medium
Term Notes
7.550% 08/15/07 ............................. 40 36,798
Lehman Brothers Holdings, Inc.
Global Notes
6.625% 04/01/04 ............................. 2,055 1,970,231
Long Island Savings Bank, Inc.
Notes
7.000% 06/13/02 ............................. 250 245,313
Merrill Lynch & Co. Notes
6.875% 11/15/18 ............................. 1,415 1,278,806
Potomac Capital Investment
7.550% 11/19/01 ............................. 330 326,288
Prudential Insurance Co. of
America 144A Capital Notes
6.875% 04/15/03 ............................. 1,600 1,570,000
Wells Fargo Co. Mtn, Series G
6.875% 08/08/06 ............................. 10 9,588
-------------
26,940,747
-------------
FOOD & BEVERAGE -- 0.6%
Archibald Candy Corp. 144A Gtd.
Sr. Secured Notes
10.250% 07/01/04 ............................ 400 384,000
Kroger Co.
7.250% 06/01/09 ............................. 1,720 1,634,000
Pantry, Inc. Sr. Sub. Notes
10.250% 10/15/07 ............................ 90 85,500
Premier Int'l. Foods plc
12.000% 09/01/09 ............................ 90 87,750
-------------
2,191,250
-------------
INDUSTRIAL GOODS & MATERIALS -- 0.2%
Motors & Gears Inc., Sr. Notes,
Series D
10.750% 11/15/06 ............................ 400 397,000
Sbarro, Inc. 144A Sr. Notes
11.000% 09/15/09 ............................ 250 256,250
-------------
653,250
-------------
PAR
(000) VALUE
--------- ----------
PACKAGING/CONTAINERS -- 0.9%
Crown Cork & Seal Sr. Notes
7.125% 09/01/02 ............................. $ 3,390 $ 3,330,675
Crown Packaging Enterprises, Ltd.
Yankee Sr. Secured Discount
Notes
14.000% 08/01/06++ .......................... 550 5,500
-------------
3,336,175
-------------
PAPER & FOREST PRODUCTS -- 0.4%
Fort James Corp. Notes
6.234% 03/15/01 ............................. 350 346,500
Georgia Pacific Corp.
7.750% 11/15/29 ............................. 1,335 1,273,256
Repap New Brunswick
Sr. Yankee Notes
10.625% 04/15/05 ............................ 35 32,550
-------------
1,652,306
-------------
REAL ESTATE -- 0.4%
EOP Operating L.P. Mandatory
Par Put Remarketed Securities
6.376% 02/15/02 ............................. 1,495 1,455,756
HMH Properties, Inc. Sr. Notes
8.450% 12/01/08 ............................. 215 193,500
-------------
1,649,256
-------------
RESTAURANTS, HOTELS & CASINOS -- 0.1%
Circus Circus Enterprise
Sr. Sub. Notes
9.250% 12/01/05 ............................. 225 218,813
Hollywood Park Operating
Sr. Sub. Notes
9.500% 08/01/07 ............................. 80 77,900
Horseshoe Gaming Holdings
8.625% 05/15/09 ............................. 160 147,600
-------------
444,313
-------------
RETAIL TRADE -- 1.8%
Dayton Hudson Corp. Debentures
6.750% 01/01/28 ............................. 10 8,813
Federated Department Stores, Inc.
Debentures
7.000% 02/15/28 ............................. 15 13,331
K Mart Corp.
Notes
8.375% 12/01/04 .......................... 755 735,181
7.950% 02/01/23 .......................... 480 402,600
Medium Term Notes,
Series MTNC
7.840% 01/02/02 .......................... 15 14,775
Pass Through Certificates,
Series K-2
9.780% 01/05/20 ........................ 50 49,534
Series 95K-3
8.540% 01/02/15 ........................ 1,870 1,806,730
See Accompanying Notes to Financial Statements.
33
<PAGE>
WARBURG PINCUS U.S. CORE FIXED INCOME FUND (CONTINUED)
PAR
(000) VALUE
--------- ----------
RETAIL TRADE -- (CONTINUED)
Saks, Inc.
7.000% 07/15/04 ............................. $ 1,500 $ 1,387,500
8.250% 11/15/08 ............................. 2,725 2,541,063
-------------
6,959,527
-------------
STEEL -- 0.1%
Ak Steel Corp.
7.875% 02/15/09 ............................. 300 271,500
Wheeling-Pittsburgh Corp.
144A Sr. Notes
9.250% 11/15/07 ............................. 90 84,600
-------------
356,100
-------------
TELECOMMUNICATIONS -- 6.1%
Adelphia Communications Corp.
Sr. Notes, Series B
9.250% 10/01/02 ............................. 305 305,000
BellSouth Telecommunications,
Inc. Debentures
7.000% 12/01/45 ............................. 255 221,850
Charter Communications
Holdings L.L.C.
8.625% 04/01/09 ............................. 215 197,263
9.920% 04/01/11++ ........................... 105 60,900
Echostar DBS Corp. Sr. Notes
9.250% 02/01/06 ............................. 185 181,763
Global Crossing Holdings, Ltd.
9.500% 11/15/09 ............................. 1,890 1,833,300
GTE Corp. Debentures
6.840% 04/15/18 ............................. 1,505 1,390,244
6.940% 04/15/28 ............................. 1,320 1,202,850
Intermedia Communications, Inc.
Sr. Notes, Series B
8.500% 01/15/08 ............................. 225 207,000
ITC Deltacom, Inc.
144A Sr. Notes
11.000% 06/01/07 ............................ 210 217,350
Level 3 Communications, Inc.
Sr. Notes
11.000% 03/15/08 ......................... 800 804,000
144A Sr. Notes
9.125% 05/01/08 .......................... 365 330,325
MCI Communications Corp.
Sr. Discount Notes
6.125% 04/15/02 .......................... 1,840 1,796,300
Sr. Notes
6.500% 04/15/10 .......................... 20 18,375
McLeodUSA, Inc.
144A Sr. Sub. Notes
8.125% 02/15/09 ............................. 340 305,150
Metromedia Fiber Network, Inc.
Sr. Notes, Series B
10.000% 11/15/08 ............................ 215 213,388
PAR
(000) VALUE
--------- ----------
TELECOMMUNICATIONS -- (CONTINUED)
Nextel Communications, Inc.
144A Sr. Discount Notes
9.950% 02/15/08++ ........................ $ 1,235 $ 876,850
144A Sr. Redeemable
Discount Notes
10.650% 09/15/07++ ....................... 5 3,819
Sr. Discount Notes
9.750% 10/31/07++ ........................ 435 314,288
Nextlink Communications, Inc.
144A Sr. Notes
10.750% 11/15/08 ......................... 290 291,450
144A Sr. Notes
10.500% 12/01/09 ......................... 845 845,000
144A Sr. Discount Notes
12.125% 12/01/09++ ....................... 1,670 943,550
Sr. Notes
9.625% 10/01/07 .......................... 80 77,200
Orange plc
9.000% 06/01/09 ............................. 1,500 1,556,250
Paging Network, Inc.
Sr. Sub. Notes
8.875% 02/01/06 ............................. 155 113,150
10.125% 08/01/07 ............................ 345 251,850
10.000% 10/15/08 ............................ 555 405,150
Qwest Communications
International, Inc.
144A Sr. Notes
7.250% 11/01/08 ............................. 350 333,282
Sprint Capital Corp. Gtd.
Medium Term Notes
6.500% 11/15/01 ............................. 10 9,888
Teleport Communications Group,
Inc. Sr. Discount Notes
9.650% 03/31/27 ............................. 1,735 1,945,369
US West Capital Funding
144A Notes
6.875% 08/15/01 ............................. 550 545,875
US West Communications 144A
7.200% 11/01/04 ............................. 1,740 1,720,425
Voicestream Wireless
144A Sr. Discount Notes
11.875% 11/15/09++ ....................... 1,415 891,450
144A Sr. Notes
10.375% 11/15/09 ......................... 885 918,188
Worldcom Inc., Sr. Notes
7.750% 01/01/07 ............................. 1,560 1,569,750
-------------
22,897,842
-------------
See Accompanying Notes to Financial Statements.
34
<PAGE>
WARBURG PINCUS U.S. CORE FIXED INCOME FUND (CONTINUED)
PAR
(000) VALUE
--------- ----------
TRANSPORTATION -- 1.5%
Grupo Transportacion Ferroviaria
Mexicana, S.A. de C.V.
144A Gtd. Sr. Discount Notes
11.750% 06/15/09++ .......................... $ 935 $ 673,200
Northwest Airlines, Inc.,
Gtd. Notes
7.625% 03/15/05 ............................. 3,335 2,968,150
7.875% 03/15/08 ............................. 465 401,644
US Airways, Inc., Gtd. Sr. Notes
9.625% 02/01/01 ............................. 1,500 1,490,565
-------------
5,533,559
-------------
UTILITIES -- 2.1%
Beaver Valley Funding Corp.
Secured Lease Obligation
Bonds
9.000% 06/01/17 ............................. 1,925 1,915,375
Connecticut Light and Power Co.
First Mortgage Bonds,
Series C
7.750% 06/01/02 ........................ 240 238,800
Series D
7.875% 10/01/24 ........................ 730 730,000
Niagara Mohawk Power Corp.
First Mortgage Bonds
8.750% 04/01/22 ............................. 1,285 1,297,850
North Atlantic Energy Corp.
Secured First Mortgage Notes,
Series A
9.050% 06/01/02 ............................. 1,939 1,936,576
Texas Utilities Electric Capital
Trust Preferred V
8.175% 01/30/37 ............................. 1,680 1,619,100
-------------
7,737,701
-------------
WASTE MANAGEMENT -- 0.0%
Allied Waste North America,
Series B
7.875% 01/01/09 ............................. 265 223,925
-------------
TOTAL CORPORATE BONDS
(Cost $144,596,876) ......................... $ 140,310,353
-------------
FOREIGN GOVERNMENT BONDS -- 2.5%
Empresa Nacional de Electricidad
8.125% 02/01/49 ............................. $ 925 $ 745,781
Israel Electric Corp., Ltd. 144A
8.250% 10/15/09 ............................. 1,500 1,496,250
Polska Telefonica Cyfrowa
International Finance II S.A.
11.250% 12/01/09 ............................ 515 502,769
Republic of Argentina Bank
Guaranteed, Series B
8.286% 04/15/01 ............................. 2,025 1,847,813
PAR
(000) VALUE
--------- ----------
FOREIGN GOVERNMENT BONDS -- (CONTINUED)
Republic of Argentina FRB
6.813% 03/31/05+ ............................ $ 902 $ 835,478
Republic of Brazil EI FRB
6.937% 04/15/06+ ............................ 611 543,790
Republic of Brazil EI Bond
6.937% 04/15/06+ ............................ 80 71,111
Republic of Bulgaria, FLIRB,
Series A
2.750% 07/28/12+ ............................ 1,445 1,083,750
Republic of Turkey
11.875% 11/05/04 ............................ 900 930,375
United Mexican States
Global Bonds
11.500% 05/15/26 ......................... 20 24,850
Par Bonds, Series W-A
6.250% 12/31/19 .......................... 1,000 815,000
Par Bonds, Series W-B
6.250% 12/31/19 .......................... 600 489,000
-------------
TOTAL FOREIGN
GOVERNMENT BONDS
(Cost $9,365,256) ........................... $ 9,385,967
-------------
AGENCY OBLIGATIONS -- 40.0%
FEDERAL HOME LOAN MORTGAGE CORPORATION -- 0.4%
Various Pools:
7.000% 12/01/09 ............................. $ 137 $ 134,356
Series MACR 1860 Principle Only
4.840% 02/15/24 ............................. 2,352 1,370,404
-------------
1,504,760
-------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION -- 37.3%
Various Pools:
10.000% 02/01/05 ............................ 120 126,670
10.000% 01/01/10 ............................ 611 653,057
7.000% 03/01/15 ............................. 8,600 8,449,500
6.500% 06/01/29 ............................. 1,953 1,825,135
6.500% 07/01/29 ............................. 786 735,459
6.500% 07/01/29 ............................. 6,923 6,470,509
6.500% 07/01/29 ............................. 490 457,862
6.500% 08/01/29 ............................. 1,862 1,738,571
6.500% 08/01/29 ............................. 805 752,307
6.500% 08/01/29 ............................. 30 27,845
6.000% 02/01/29 ............................. 57 52,129
6.000% 03/01/29 ............................. 291 263,529
6.000% 09/01/29 ............................. 267 242,066
6.000% 01/01/30 ............................. 648 587,845
REMIC - PAC 1991-165 Class M
8.250% 12/25/21 ............................. 8 8,323
Series 1996-5 Class PX PO
4.100% 11/25/23 ............................. 227 142,999
Series 1997-16 Class M PO
4.330% 02/25/23 ............................. 195 121,972
See Accompanying Notes to Financial Statements.
35
<PAGE>
WARBURG PINCUS U.S. CORE FIXED INCOME FUND (CONTINUED)
PAR
(000) VALUE
--------- ----------
FEDERAL NATIONAL MORTGAGE ASSOCIATION -- (CONTINUED)
TBA
7.500% 11/15/02 ............................. $ 26,465 $ 25,943,970
6.000% 01/15/11 ............................. 7,625 7,146,055
6.500% 01/01/13 ............................. 4,205 4,038,114
8.000% 03/15/25 ............................. 37,795 37,842,244
6.500% 09/01/27 ............................. 3,105 2,902,205
7.000% 09/01/27 ............................. 32,150 30,833,853
Discount Notes
5.830% 05/25/00 ............................. 8,930 8,805,630
-------------
140,167,849
-------------
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION -- 2.1%
Various Pools:
6.500% 09/15/03 ............................. 4 4,087
8.250% 08/15/04 ............................. 0 248
9.000% 11/15/04 ............................. 1 520
9.000% 12/15/04 ............................. 1 589
8.250% 04/15/06 ............................. 1 773
13.500% 07/15/14 ............................ 1 859
9.000% 12/15/16 ............................. 24 25,020
8.000% 04/15/17 ............................. 68 68,651
9.000% 08/15/21 ............................. 324 336,677
7.500% 08/01/28 ............................. 7,600 7,457,500
-------------
7,894,924
-------------
MISCELLANEOUS -- 0.2%
Government Trust Certificates
Collateral Trust,
Series 1C
9.250% 11/15/01 ............................. 245 249,796
National Archives Facility Trust
COP
8.500% 09/01/19 ............................. 673 724,566
-------------
974,362
-------------
TOTAL AGENCY OBLIGATIONS
(Cost $150,056,418) ......................... $ 150,541,895
-------------
ASSET BACKED SECURITIES -- 1.6%
Green Tree Recreational,
Equipment and Consumer Trust
Series 1997-C, Class A1
6.490% 02/15/18 ............................. $ 359 $ 352,311
Green Tree Securitized Net Interest
Margin Trust, REMIC,
Series 1994-A, Class A
6.900% 02/15/04 ............................. 193 192,809
MBNA Master Credit Card Trust
Series 1997-I, Class A
6.550% 08/15/04 ............................. 10 9,704
PECO Energy Transition Trust
6.050% 03/01/09 ............................. 1,525 1,411,700
6.130% 03/01/09 ............................. 2,670 2,446,534
PAR
(000) VALUE
--------- ----------
ASSET BACKED SECURITIES -- (CONTINUED)
Prudential Securities Secured
Financing, Series 1999-C2,
Class A2
7.193% 04/15/09 ............................. $ 1,000 $ 972,070
Citibank CCMT 1,
Series 1994-2, Class A
7.250% 04/07/06 ............................. 570 566,553
Vanderbilt Mortgage Finance,
Manufactured Housing Retail
Installment Sales Contracts,
Series 1995-B, Class A3
6.675% 05/07/06 ............................. 84 82,206
-------------
TOTAL ASSET BACKED
SECURITIES
(Cost $6,309,213) ........................... $ 6,033,887
-------------
COLLATERALIZED MORTGAGED BACKED SECURITIES -- 6.1%
American Express Master Trust,
Series 1994-3, Class A
7.850% 09/15/04 ............................. $ 10 $ 10,181
Carousel Center Finance Inc.,
Series 1, Class C, Rule 144A
7.527% 11/15/07 ............................. 4,530 4,445,831
Chase Credit Card Master Trust
Series 1998-3, Class A
6.000% 04/15/03 .......................... 10 9,624
Series, 1999-3, Class A
6.660% 09/15/04 .......................... 15 14,590
Collateralized Mortgage
Obligation Trust, REMIC
Series 54, Class C
9.250% 11/01/13 ............................. 1 746
Commercial Mortgage Asset Trust,
Series 1999-C1, Class A3
6.640% 09/17/10 ............................. 5,030 4,661,718
Contimortgage Home Equity
Loan Trust, Series 1996-4,
Class A8
7.220% 01/15/28 ............................. 880 843,515
DLJ Commercial Mortgage Corp.,
Series 1998-CG1, Class A1B
6.410% 05/10/08 ............................. 760 704,851
G3 Mortgage Reinsurance Corp.,
Class A
6.814% 03/27/00+ ............................ 950 907,250
Gulf States Steel, Inc. First
Mortgage Notes
13.500% 04/15/03** .......................... 165 24,750
GMAC Commercial Mortgage
Securities, Inc.,
Series 1997-C,1 Class A2
6.853% 09/15/06 ........................ 575 556,361
Series 1999-C2, Class A2
6.945% 09/15/33 ........................ 620 582,878
See Accompanying Notes to Financial Statements.
36
<PAGE>
WARBURG PINCUS U.S. CORE FIXED INCOME FUND (CONTINUED)
PAR
(000) VALUE
--------- ----------
COLLATERALIZED MORTGAGED BACKED SECURITIES -- (CONTINUED)
Merrill Lynch 1999-C1, Class A2
7.560% 09/15/09 ............................. $ 2,760 $ 2,734,556
Merrill Lynch Mortgage Investors,
Inc., Manufactured Housing
Retail Installment Sales
Contracts, Series 1991-C,
Class A
9.000% 07/15/11 ............................. 6 6,007
Nomura Asset Securitization Corp.,
Series 1998-D6, Class A1B
6.590% 03/15/28 ............................. 2,255 2,094,878
Option One Mortgage Loan Trust
Series 2000-1, Class CTFS
9.850% 05/26/30 .......................... 1,708 1,700,639
Series 1999-2, Class A
9.660% 06/25/29 .......................... 2,026 1,987,812
Salomon Brothers Mortgage
Securities VII,
Series 1997-NC4, Class A
6.135% 03/27/00+ ............................ 6 5,771
UCFC Home Equity Loan Trust
Series 1996-B1, Class A7
8.200% 09/15/27 .......................... 760 739,773
Series 1998-A1, Class A7
6.870% 07/15/29 .......................... 795 745,158
-------------
TOTAL COLLATERALIZED
MORTGAGED BACKED
SECURITIES
(Cost $23,672,771) .......................... $ 22,776,889
-------------
U.S. TREASURY OBLIGATIONS -- 7.5%
U.S. TREASURY BILLS -- 0.2%
4.900% 03/16/00 ............................. $ 570 $ 566,528
6.260% 03/16/00 ............................. 95 94,752
-------------
661,280
-------------
U.S. TREASURY BONDS -- 3.3%
10.375% 11/15/12 ............................ 7,850 9,510,211
8.000% 11/15/21 ............................. 2,610 3,085,544
-------------
12,595,755
-------------
U.S. TREASURY NOTES -- 3.7%
5.375% 02/15/01 ............................. 350 346,894
6.250% 06/30/02 ............................. 2,910 2,891,072
7.250% 05/15/04 ............................. 6,500 6,642,520
7.500% 02/15/05 ............................. 5 5,175
6.250% 02/15/07 ............................. 900 879,680
6.000% 08/15/09 ............................. 1,500 1,443,475
6.500% 05/15/05 ............................. 220 218,634
6.500% 02/15/10 ............................. 1,440 1,449,377
-------------
13,876,827
-------------
PAR
(000) VALUE
--------- ----------
U.S. TREASURY STRIP BONDS -- 0.3%
6.459% 11/15/16 ............................. $ 3,430 $ 1,185,794
-------------
TOTAL U.S. TREASURY
OBLIGATIONS
(Cost $28,386,012) .......................... $ 28,319,656
-------------
NUMBER
OF SHARES
---------
COMMON STOCK -- 0.0%
PACKAGING/CONTAINERS -- 0.0%
Crown Packaging Enterprises,
Ltd. ........................................ 45,544 $ 455
-------------
TOTAL COMMON STOCK
(Cost $0) ................................... $ 455
-------------
PREFERRED STOCKS -- 3.0%
BANKING -- 2.8%
California Federal Capital Corp.,
Series A 9.125% ............................. 109,870 $ 2,417,140
Centaur Funding Corp. 9.08% ................... 1,535 1,576,734
Citigroup, Inc. 6.213% ........................ 42,850 1,997,881
Citigroup, Inc. Series F Pfd.
6.365% ...................................... 26,550 1,261,125
Lehman Brothers Holdings
5.67% ....................................... 43,300 1,634,575
Lehman Brothers Holdings
5.94% ....................................... 18,365 766,739
Lehman Brothers Holdings
6.625% ...................................... 85 1,955
NationsBank Captial Corp.
8.35% ....................................... 48,400 1,085,975
-------------
10,742,124
-------------
REAL ESTATE -- 0.2%
American Real Estate Corp.
8.50% Cumulative, Series A .................. 30,900 728,081
-------------
TOTAL PREFERRED STOCKS
(Cost $12,713,730) .......................... $ 11,470,205
-------------
RIGHTS / WARRANTS -- 0.2%
Capital Pacific Holdings Group,
Inc. strike $3.4
expires May 2002 ............................ 2,528 $ 25
Checkers Drive-In Restaurants
strike $1.375 expires
Dec. 2000 ................................... 2,642 248
Mexican Value Recovery Rights
strike $1.188 expires
June 2003 ................................... 1,000 0
Uniroyal Technology Corp.
strike $4.375 expires
June 2003 ................................... 10,800 599,400
-------------
TOTAL RIGHTS/WARRANTS
(Cost $14,178) ................................. $ 599,673
-------------
See Accompanying Notes to Financial Statements.
37
<PAGE>
WARBURG PINCUS U.S. CORE FIXED INCOME FUND (CONCLUDED)
PAR
(000) VALUE
--------- ----------
SHORT TERM INVESTMENT -- 30.9%
BBH Grand Cayman U.S. Dollar
Time Deposit
4.950% 03/01/00 ............................. $ 116,262 $ 116,262,000
(Cost $116,262,000) -------------
TOTAL INVESTMENTS -- 129.1%
(Cost $491,376,454*) .......................... $ 485,700,980
LIABILITIES IN EXCESS OF
OTHER ASSETS -- (29.1%) ....................... $(109,592,707)
-------------
TOTAL NET ASSETS -- 100.0% .................... $ 376,108,273
=============
* Cost for Federal income tax purposes at February 29, 2000 is $491,581,989.
The gross appreciation (depreciation) on a tax basis is as follows:
Gross Appreciation ...................................... $ 2,649,663
Gross Depreciation ...................................... (8,530,672)
.............................................................. -------------
Net Depreciation ........................................ $ (5,881,009)
.............................................................. =============
** Security in default
+ Variable rate obligations -- The interest shown is the rate as of February
29, 2000.
++ Step Bond -- The interest rate as of February 29, 2000 is 0% and will reset
to interest rate shown at a future date.
+++ Securities have no stated maturity date.
INVESTMENT ABBREVIATIONS
FRN ..........................................................Floating Rate Note
MACR .....................Modified and Combinable Real Estate Investment Conduit
PAC ..................................................Planned Amortization Class
PO ...............................................................Principle Only
REMIC ....................................RealEstate Mortgage Investment Conduit
TBA .............................................................To Be Announced
See Accompanying Notes to Financial Statements.
38
<PAGE>
WARBURG PINCUS STRATEGIC GLOBAL FIXED INCOME FUND
PORTFOLIO MANAGERS' LETTER
March 20, 2000
Dear Shareholders:
We are writing to report on the results of the Warburg Pincus Strategic Global
Fixed Income Fund (the "Fund") for the six months ended February 29, 2000.
On February 29, 2000, the net asset value ("NAV") of the Fund's institutional
shares was $13.72, compared to an NAV of $14.97 on August 31, 1999. As a result,
the institutional shares' total return was down 3.7%, (assuming the reinvestment
of dividends totaling $0.7271 per share). By comparison, the unhedged J.P.
Morgan Global Government Bond Index* (the "Index") was down 2.6% during the same
period.
Although the Fund modestly underperformed the Index during the fiscal half-year,
we note that relative returns increased in the latter portion of the period.
Results benefited from improving trends in our geographic asset allocation,
currency decisions and U.S. security selection.
GEOGRAPHICAL ASSET ALLOCATION. Our underweight of Japanese government bonds
(JGBs) contributed most negatively to the Fund's overall performance. Contrary
to their weak underlying fundamentals, JGBs continued to outperform (in
local-currency terms) through much of the period. In the first two months of
2000, however, they began to perform more consistently with fundamentals and
underperformed all other major developed markets. Our underweight of Japan thus
helped to improve relative performance toward the end of the half-year.
CURRENCY DECISIONS. Our underweight of the yen detracted from performance at the
beginning of the period, as the currency surged in response to foreigners'
strong interest in Japanese stocks. In line with our belief that the yen would
decline, however, we raised our underweight in the yen versus the U.S. dollar
and the euro (to a lesser extent) in late 1999. By the end of February, our
currency strategy modestly contributed to the Fund's performance, as the yen and
euro weakened against the dollar.
U.S.SECURITY SELECTION. U.S. spread product, (I.E., debt securities whose market
valuation is driven by the difference between their yields and those of U.S.
Treasuries) contributed positively to overall performance. At the end of 1999,
we believed that U.S. bond yields appeared close to peaking, as widespread
concern over possible Y2K-related computer problems and the potential resulting
squeeze in market liquidity had dissipated. Additionally, the U.S. Treasury
indicated it would buy back some of its own long-term bonds in the open market,
which would reduce total outstanding debt. Based on these factors, we expected
longer-term bonds to appreciate and lengthened duration accordingly. Although
corporate bonds in particular did not respond as expected, our positioning in
U.S. spread product proved additive.
As developments occur in the global fixed income markets or at Credit Suisse
Asset Management that we believe would be of interest to you, we will be sure to
keep you informed. Meanwhile, if you have questions, please feel free to call
upon us at any time.
Sincerely yours,
Credit Suisse Asset Management Global Fixed Income Management Team
Gregg M. Diliberto, Managing Director
Dilip K. Rasgotra, Managing Director
Jo Ann Corkran, Managing Director
Mark K. Silverstein, Managing Director
Jose A. Rodriguez, Director
INTERNATIONAL INVESTING ENTAILS SPECIAL RISK CONSIDERATIONS, INCLUDING CURRENCY
FLUCTUATIONS, LOWER LIQUIDITY, ECONOMIC AND POLITICAL RISKS, AND DIFFERENCES IN
ACCOUNTING METHODS.
39
<PAGE>
WARBURG PINCUS STRATEGIC GLOBAL FIXED INCOME FUND
PORTFOLIO MANAGERS' LETTER (CONCLUDED)
PERFORMANCE
<TABLE>
<CAPTION>
SINCE
FIVE YEARS INCEPTION
SIX MONTHS ONE YEAR (3/1/95 - 2/29/00) 3/1/93
2/29/00 (3/1/99 - 2/29/00) (ANNUALIZED) (ANNUALIZED)
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Warburg Pincus Strategic Global Fixed
Income Fund (Institutional) (3.7%) (5.2%) 5.0% 4.9%
J.P. Morgan Global Govt. Bond Index (unhedged)* (2.6%) (3.4%) 5.2% 5.7%
- ---------------------------------------------------------------------------------------------------------------------------
<FN>
*THE J.P. MORGAN GLOBAL GOVERNMENT BOND INDEX (UNHEDGED) (I.E., INCLUDING US$)
IS A MARKET-CAPITALIZATION INDEX CONSISTING OF THE GOVERNMENT BOND MARKETS OF
THE FOLLOWING COUNTRIES: AUSTRALIA, BELGIUM, CANADA, DENMARK, FRANCE, GERMANY,
ITALY, JAPAN, THE NETHERLANDS, SPAIN, SWEDEN, THE U.K. AND THE U.S. ALL ISSUES
HAVE A REMAINING MATURITY OF AT LEAST ONE YEAR AND THE INDEX IS REBALANCED
MONTHLY.
</FN>
</TABLE>
40
<PAGE>
WARBURG PINCUS STRATEGIC GLOBAL FIXED INCOME FUND
SCHEDULE OF INVESTMENTS
FEBRUARY 29, 2000
(UNAUDITED)
PAR
(000) VALUE
------- ------------
INTERNATIONAL BONDS -- 47.7%
ARGENTINA -- 0.6%
Argentina Bocon,
Series Pro1
2.866% 04/01/07+ ............................ $ 20 $ 14,297
Republic of Argentina Bank
Guaranteed, Series B
8.286% 04/15/01 ............................. 45 41,062
Republic of Argentina FRB
Non-US Tranche
6.812% 03/31/05+ ............................ 26 24,453
-----------
79,812
-----------
BRAZIL -- 0.1%
Federal Republic of Brazil
EI Bonds, Series EI-L
6.937% 04/15/06+ ............................ 19 16,732
-----------
BULGARIA -- 0.3%
National Republic of Bulgaria FRN
2.750% 07/28/12+ ............................ 50 37,500
-----------
CHILE -- 0.1%
Empresa Nacional de Electricidad
8.125%+++ 15 12,094
-----------
FINLAND -- 0.2%
Okobank Perpetual
Medium Term FRN
6.620%+/+++ ................................. 20 19,650
-----------
FRANCE -- 4.4%
French Treasury Note
4.500% 07/12/03 ........................ EUR 350 333,036
Republic of France Treasury Bonds
7.500% 04/25/05 ........................ EUP 199 211,327
-----------
544,363
-----------
GERMANY -- 12.2%
Bundesrepublic Deutschland
5.625% 01/04/28 ....................... EUP 570 526,020
Deutsche Bank Financial
144A Pfd.
6.000% 07/04/07 ........................ EUR 986 981,483
Federal Republic of Germany
Eurobonds
7.872% 12/29/49 ........................ 15 14,050
-----------
1,521,553
-----------
JAPAN -- 6.1%
Fannie Mae Global
Senior Notes, Series Emtn
1.750% 03/26/08 ....................... JPY 50,000 459,347
PAR
(000) VALUE
------- ------------
JAPAN -- (CONTINUED)
Fuji Finance (Cayman), Ltd.
Medium Term Notes
7.300%+/+++ .............................. $ 20 $ 19,050
Perpetual Sub. FRN
7.113%+/+++ .............................. 30 28,800
Inter-American Development Bank
1.900% 07/08/09 ....................... JPY 28,000 257,336
-----------
764,533
-----------
LUXEMBOURG -- 0.1%
Polska Telefonica Cyfrowa
International Finance II SA
11.250% 12/01/09 ............................ 15 14,644
-----------
MEXICO -- 0.4%
Grupo Transportacion Ferroviaria
Mexicana, S.A. de CV
144A Gtd. Sr. Discount Notes
11.750% 06/15/09++ .......................... 30 21,600
United Mexican States Global
Bonds
11.500% 05/15/26 ............................ 25 31,062
-----------
52,662
-----------
NETHERLANDS -- 2.9%
Kingdom of Netherlands
Government Bonds
5.750% 01/15/04 ........................ EUR 361 356,091
-----------
SOUTH KOREA -- 0.3%
Korea Electric Power,
Global Unsubordinated Notes
6.375% 12/01/03 .......................... 10 9,412
Yankee Debentures
7.000% 02/01/27 .......................... 15 13,631
Yankee Notes
7.000% 10/01/02 .......................... 15 14,625
-----------
37,668
-----------
SPAIN -- 6.6%
Spanish Government Bonds
4.500% 07/30/04 ........................ EUR 700 656,233
6.000% 01/31/29 ........................ EUR 180 171,865
-----------
828,098
-----------
SUPRANATIONAL -- 6.3%
European Investment Bank
Eurobonds
5.000% 04/15/08 ........................ EUR 186 171,533
International Bank for
Reconstruction & Development
Japanese Yen Global Bonds
5.250% 03/20/02 ........................ JPY 61,000 612,213
-----------
783,746
-----------
See Accompanying Notes to Financial Statements.
41
<PAGE>
WARBURG PINCUS STRATEGIC GLOBAL FIXED INCOME FUND (CONTINUED)
PAR
(000) VALUE
------- ------------
TURKEY -- 0.2%
Republic of Turkey
11.875% 11/05/04 ............................ $ 30 $ 31,012
-----------
UNITED KINGDOM -- 6.9%
Orange plc Yankee Discount Notes
9.000% 06/01/09 ............................. 50 51,875
Royal Bank of Scotland plc
Perp NC 5
8.817% 03/31/49 ............................. 35 35,000
U.K. Treasury Gilt Bonds
7.500% 12/07/06 ........................ GBP 450 771,942
-----------
858,817
-----------
TOTAL INTERNATIONAL BONDS
(Cost $6,534,474) ........................... $ 5,958,975
-----------
UNITED STATES BONDS -- 32.2%
CORPORATE BONDS -- 15.2%
AEROSPACE -- 0.4%
Lockheed Martin Corp. Notes
7.950% 12/01/05 ............................. $ 20 $ 19,675
8.200% 12/01/09 ............................. 20 19,850
Sequa Corp. Senior Notes
9.000% 08/01/09 ............................. 10 9,400
-----------
48,925
-----------
AUTOMOTIVE -- 0.2%
Hayes Lemmerz International, Inc.
Sr. Sub Notes
9.125% 07/15/07 ............................. 5 4,650
Lear Corp.
7.960% 05/15/05 ............................. 15 14,344
-----------
18,994
-----------
BANKING -- 1.2%
Bay View Capital Corp.
Sub. Notes
9.125% 08/15/07 ............................. 25 20,625
Chase Manhattan Corp.
Sub. Notes
7.000% 11/15/09 ............................. 10 9,475
Citicorp Sub. Notes, Series F
6.375% 11/15/08 ............................. 25 22,969
Credit Lyonnais
Perpetual Sub. Variable Rate
Notes, Rule 144A
7.437%+/+++ ................................. 30 28,764
First Republic Bank
Sub. Notes
7.750% 09/15/12 ............................. 20 16,850
KBC Bank Fund Trust III
9.860% 05/02/00 ............................. 20 21,225
Sovereign Bancorp, Inc.
10.500% 11/15/06 ............................ 35 35,262
-----------
155,170
-----------
PAR
(000) VALUE
------- ------------
BROADCASTING -- 0.2%
Fox/Liberty Networks L.L.C.,
Registered Sr. Notes
8.875% 08/15/07 ............................. $ 30 $ 30,450
-----------
BUILDING MATERIALS -- 0.1%
Jackson Products, Inc.
Notes
9.500% 04/15/05 ............................. 10 9,050
-----------
CABLE -- 0.7%
Charter Communications
Holdings L.L.C.
144A Sr. Discount Notes
8.625% 04/01/09 ............................. 10 9,175
9.920% 04/01/11++ ........................... 10 5,800
CSC Holdings, Inc.
Sr. Notes
7.875% 12/15/07 ............................. 25 24,437
7.250% 07/15/08 ............................. 35 32,900
Diamond Cable Communications
plc, Yankee Sr. Discount Notes
10.750% 02/15/07++ .......................... 10 8,050
James Cable Partners L.P.
Sr. Notes, Series B
10.750% 08/15/04 ............................ 10 10,000
-----------
90,362
-----------
CHEMICALS -- 0.1%
Huntsman ICI
144A Sr. Sub. Notes
10.125% 07/01/09 ............................ 10 10,050
-----------
COMPUTERS, SOFTWARE & SERVICES -- 0.1%
Seagate Technology, Inc.
Sr. Debentures
7.450% 03/01/37 ............................. 20 17,400
-----------
CONSULTING SERVICES -- 0.4%
Comdisco, Inc.
MTN Series H
7.230% 08/16/01 .......................... 15 14,906
Senior Notes
7.250% 09/01/02 .......................... 40 39,450
-----------
54,356
-----------
ENERGY -- 0.2%
Bellwether Exploration Co.
Gtd. Sr. Sub. Notes
10.875% 04/01/07 ............................ 5 4,394
Dresser Industries, Inc.
Debentures
7.600% 08/15/45 ............................. 20 18,925
-----------
23,319
-----------
See Accompanying Notes to Financial Statements.
42
<PAGE>
WARBURG PINCUS STRATEGIC GLOBAL FIXED INCOME FUND (CONTINUED)
PAR
(000) VALUE
------- ------------
ENTERTAINMENT -- 0.6%
Regal Cinemas, Inc.
Sr. Sub. Notes
9.500% 06/01/08 ............................. $ 10 $ 6,650
Time Warner, Inc.
Company Guaranteed Unsecured
Notes
6.625% 05/15/29 .......................... 55 46,612
Debentures
8.050% 01/15/16 .......................... 25 25,344
-----------
78,606
-----------
FINANCIAL SERVICES -- 2.9%
American General Institutional
Capital Trust Co.
144A Gtd. Notes, Series B
8.125% 03/15/46 ............................. 30 29,925
AT&T Capital Corp.
7.110% 03/13/00+ ............................ 5 5,037
Bear Stearns Co., Inc.
7.625% 02/01/05 ............................. 45 44,494
Conseco Finance Trust III
8.796% 04/01/27 ............................. 70 64,312
Enterprise Rent a Car Finance Co.
144A Notes
7.950% 12/15/09 ............................. 10 9,862
EOP Operating LP Notes
6.500% 01/15/04 ............................. 10 9,538
Finova Capital Corp.
7.125% 05/01/02 ............................. 15 14,869
7.250% 11/08/04 ............................. 20 19,675
Ford Motor Credit Co.
7.375% 10/28/09 ............................. 30 29,138
Goldman Sachs Global Bonds
7.350% 10/01/09 ............................. 40 38,650
Lehman Brothers Holdings, Inc.,
Global Notes
6.625% 04/01/04 ............................. 20 19,175
Merrill Lynch & Co. Notes
6.875% 11/15/18 ............................. 15 13,556
Potomac Capital Investment
144A, Series D
7.550% 11/19/01 ............................. 70 69,213
-----------
367,444
-----------
FOOD & BEVERAGE -- 0.2%
Archibald Candy Corp.
144A Gtd. Sr. Secured Notes
10.250% 07/01/04 ............................ 10 9,600
Kroger Co.
7.250% 06/01/09 ............................. 15 14,250
-----------
23,850
-----------
PAR
(000) VALUE
------- ------------
HEALTH CARE -- 0.5%
Conseco, Inc.
Unsecured Notes
9.000% 10/15/06 ............................. $ 55 $ 55,825
-----------
INDUSTRIAL GOODS & MATERIALS -- 0.1%
Motors & Gears, Inc.
Sr. Notes, Series D
10.750% 11/15/06 ............................ 10 9,925
-----------
MANUFACTURING -- 0.4%
Crown Cork & Seal
Sr. Notes
7.125% 09/01/02 ............................. 30 29,475
Georgia Pacific Corp.
7.750% 11/15/29 ............................. 25 23,844
-----------
53,319
-----------
RESTAURANTS, HOTELS & CASINOS -- 0.2%
Circus Circus Enterprise
Sr. Sub. Notes
9.250% 12/01/05 ............................. 10 9,725
Horseshoe Gaming Holdings
144A Senior Sub. Notes
8.625% 05/15/09 ............................. 10 9,225
Sbarro, Inc.
Senior Notes Series 144A
11.000% 09/15/09 ............................ 10 10,250
-----------
29,200
-----------
RETAIL TRADE -- 1.5%
K Mart Corp.
Medium Term Notes, Series C
7.820% 01/02/02 .......................... 35 34,475
Senior Notes
8.375% 12/01/04 .......................... 65 63,294
Saks, Inc.
Company Guaranteed
7.000% 07/15/04 ............................. 30 27,750
8.250% 11/15/08 ............................. 60 55,950
-----------
181,469
-----------
STEEL -- 0.1%
AK Steel Corp.
Company Guaranteed
7.875% 02/15/09 ............................. 10 9,050
-----------
TELECOMMUNICATIONS -- 3.6%
Echostar DBS Corp.
Sr. Notes
9.250% 02/01/06 ............................. 10 9,825
Global Crossing Holdings, Ltd.
144A Senior Notes
9.500% 11/15/09 ............................. 60 58,200
GTE Corp.
Debentures
6.840% 04/15/18 ............................. 30 27,713
See Accompanying Notes to Financial Statements.
43
<PAGE>
WARBURG PINCUS STRATEGIC GLOBAL FIXED INCOME FUND (CONTINUED)
PAR
(000) VALUE
------- ------------
TELECOMMUNICATIONS -- (CONTINUED)
Level 3 Communications
11.000% 03/15/08 ............................ $ 25 $ 25,125
Level 3 Communications, Inc.,
144A Sr. Notes
9.125% 05/01/08 ............................. 10 9,050
MCI Communications Corp.
Sr. Discount Notes
6.125% 04/15/02+ ............................ 45 43,931
McLeodUSA, Inc.
144A Sr. Sub. Notes
8.125% 02/15/09 ............................. 10 8,975
Metromedia Fiber Network, Inc.
Sr. Notes, Series B
10.000% 11/15/08 ............................ 10 9,925
Nextel Communications, Inc.
144A Sr. Discount Notes
9.950% 02/15/08++ ........................ 20 14,200
144A Sr. Redeemable Discount
Notes
10.650% 09/15/07 ......................... 30 22,913
Nextlink Communications, Inc.
144A Sr. Discount Notes
12.125% 12/01/09++ ....................... 95 53,675
144A Sr. Notes
10.500% 12/01/09++ ....................... 30 30,000
Paging Network, Inc.
Sr. Sub. Notes
8.875% 02/01/06 ............................. 10 7,300
10.125% 08/01/07 ............................ 5 3,650
10.000% 10/15/08 ............................ 20 14,600
Qwest Communications
International, Inc.
144A Sr. Notes
7.250% 11/01/08 ............................. 5 4,761
Teleport Communications
Group, Inc.
Sr. Discount Notes
9.650% 03/31/27 ............................. 20 22,425
US West Communications
7.200% 11/01/04 ............................. 20 19,775
Voicestream Wireless
144A Sr. Discount Notes
11.875% 11/15/09++ .......................... 45 28,350
Voicestream Wireless Holding
144A Sr. Notes
10.375% 11/15/09 ............................ 25 25,938
Worldcom, Inc.
Sr. Notes
7.750% 01/01/07 ............................. 10 10,063
-----------
450,394
-----------
PAR
(000) VALUE
------- ------------
TRANSPORTATION -- 0.9%
Northwest Airlines, Inc.
Gtd. Notes
7.625% 03/15/05 ............................. $ 80 $ 71,200
US Airways, Inc.
Gtd. Sr. Notes
9.625% 02/01/01 ............................. 35 34,780
-----------
105,980
-----------
UTILITIES -- 0.6%
Connecticut Light and Power Co.
First Mortgage Bonds, Series D
7.875% 10/01/24 ............................. 10 10,000
Niagara Mohawk Power Corp.
First Mortgage Bonds
8.750% 04/01/22 ............................. 10 10,100
North Atlantic Energy Corp.
Secured First Mortgage Notes,
Series A
9.050% 06/01/02 ............................. 37 36,954
Texas Utilities Electric Capital Trust
Preferred V
8.175% 02/01/37 ............................. 20 19,275
-----------
76,329
-----------
TOTAL CORPORATE BONDS
(Cost $1,967,756) ........................... $ 1,899,467
-----------
AGENCY OBLIGATIONS -- 12.9%
FEDERAL NATIONAL MORTGAGE ASSOCIATION -- 12.5%
Various Pools:
7.500% 11/15/02 ............................. $ 325 $ 318,602
7.000% 06/01/13 ............................. 100 98,250
6.000% 08/01/14 ............................. 95 89,033
6.500% 08/01/14 ............................. 40 38,412
7.000% 12/31/25 ............................. 390 373,791
8.000% 11/01/28 ............................. 370 370,462
6.000% 01/01/29 ............................. 62 56,051
6.500% 06/01/29 ............................. 21 19,997
6.500% 06/01/29 ............................. 43 40,128
6.500% 07/01/29 ............................. 28 26,357
6.500% 07/01/29 ............................. 39 36,060
6.500% 08/01/29 ............................. 54 50,398
6.000% 01/01/30 ............................. 25 22,674
Series 1997-16 Class M PO
4.330% 02/25/23 ............................. 30 18,765
-----------
1,558,980
-----------
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION -- 0.4%
TBA
7.500% 08/01/28 ............................. 60 58,875
-----------
TOTAL AGENCY OBLIGATIONS
(Cost $1,618,297) ........................... $ 1,617,855
-----------
See Accompanying Notes to Financial Statements.
44
<PAGE>
WARBURG PINCUS STRATEGIC GLOBAL FIXED INCOME FUND (CONCLUDED)
PAR
(000) VALUE
------- ------------
ASSET BACKED SECURITIES -- 0.9%
Green Tree Recreational,
Equipment and Consumer Trust
Series 1997-C, Class A1
6.490% 02/15/18 ............................. $ 76 $ 74,563
PECO Energy Transition Trust
6.050% 03/01/09 ............................. 10 9,257
6.130% 03/01/09 ............................. 25 22,908
-----------
TOTAL ASSET BACKED
SECURITIES
(Cost $109,942) ............................. $ 106,728
-----------
COLLATERIZED MORTGAGED
BACKED SECURITIES -- 1.7%
Commercial Mortgage Asset Trust,
Series 1999-C1, Class A3
6.640% 04/17/10 ............................. $ 55 $ 50,973
Donaldson Lufkin Jenrette
Commercial Mortgage Corp.,
Series 1998-CG1, Class A1-B
6.410% 05/10/08 ............................. 40 37,097
GMAC Commercial Mortgage
Securities, Inc.
Series 1997-C1 Class A2
6.853% 09/15/06 ............................. 10 9,676
Merrill Lynch Mortgage
Investors, Inc.
Series 1999-C1, Class A2
7.560% 09/15/09 ............................. 15 14,862
Nomura Asset Securitization Corp.
Series 1998-D6, Class A1B
6.590% 03/17/28 ............................. 35 32,515
Option One Mortgage Loan Trust
Series 1999-2, Class A
9.660% 06/25/29 .......................... 59 57,826
Series 2000-1, Class C
9.850% 05/26/30 .......................... 10 9,959
-----------
TOTAL COLLATERIZED
MORTGAGED BACKED
SECURITIES
(Cost $225,687) ............................. $ 212,908
-----------
U.S. TREASURY OBLIGATIONS -- 1.5%
U.S. TREASURY BILLS -- 0.4%
4.900% 03/16/00 ............................. $ 30 $ 29,939
5.150% 03/16/00 ............................. 20 19,957
-----------
49,896
-----------
U.S. TREASURY BONDS -- 0.6%
10.375% 11/15/12 ............................ 40 48,460
8.000% 11/15/21 ............................. 25 29,555
-----------
78,015
-----------
PAR
(000) VALUE
------------
U.S. TREASURY NOTES -- 0.5%
6.250% 06/30/02 ............................. $ 15 $ 14,903
7.250% 05/15/04 ............................. 10 10,219
6.500% 02/15/10 ............................. 30 30,195
-----------
55,317
-----------
TOTAL U.S. TREASURY
OBLIGATIONS
(Cost $183,204) ............................. $ 183,228
-----------
TOTAL UNITED STATES BONDS
(Cost $4,104,886) ........................... $ 4,020,186
-----------
NUMBER
OF SHARES
---------
PREFERRED STOCK -- 0.4%
California Federal Capital Corp.
Series A 9.125% ............................. 2,100 $ 46,200
(Cost $55,191) -----------
PAR
(000) VALUE
-----------
SHORT-TERM INVESTMENT -- 25.7%
BBH Grand Cayman U.S. Dollar
Time Deposit
4.950% 03/01/00 ............................. $ 3,218 $ 3,218,000
(Cost $3,218,000) -----------
TOTAL INVESTMENTS -- 106.0%
(Cost $13,912,551*) ......................... $13,243,361
LIABILITIES IN EXCESS OF
OTHER ASSETS -- (6.0%) ...................... $ (745,466)
-----------
TOTAL NET ASSETS -- 100.0% .................... $12,497,895
===========
* Also cost for Federal income tax purposes at February 29, 2000. The gross
appreciation (depreciation) on a tax basis is as follows:
Gross and Net Depreciation ................. $ (669,190)
==========
+ Variable rate obligations -- The interest shown is the rate as of February
29, 2000.
++ Step Bond -- The interest rate as of February 29, 2000 is 0% and will reset
to interest rate shown at a future date.
+++ Securities have no stated maturity date.
CURRENCY ABBREVIATIONS
EUR ....................................................European Economic Unit
GBP .....................................................United Kingdom Pounds
JPY ................................................... ...........Japanese Yen
INVESTMENT ABBREVIATIONS
FRB ........................................................Floating Rate Bond
FRN ..........................................................Floating Rate Note
GO ..........................................................General Obligations
PO ...............................................................Principle Only
See Accompanying Notes to Financial Statements.
45
<PAGE>
WARBURG PINCUS HIGH YIELD FUND
PORTFOLIO MANAGERS' LETTER
March 20, 2000
Dear Shareholders:
We are writing to report on the results of the Warburg Pincus High Yield Fund
(the "Fund") for the six months ended February 29, 2000.
On February 29, 2000, the net asset value ("NAV") of the Fund's institutional
shares was $15.46, compared to an NAV of $15.32 on August 31, 1999. The
institutional shares' total return was 6.4%, (assuming the reinvestment of
dividends totaling $0.7867 per share). By comparison, the Credit Suisse First
Boston Domestic + High Yield Index* (the "Index") returned 0.5% during the same
period.
At February 29, 2000, NAV of the Fund's common shares was $15.53, compared to an
NAV of $15.38 on August 31, 1999. The common shares' total return was 6.2%,
(assuming the reinvestment of dividends $0.7610 per share). By comparison, the
Index returned 0.5% during the same period.
The Fund meaningfully outperformed the Index based primarily on effective sector
allocation:
o We maintained our longstanding overweight (relative to the Index) in the
telecommunications industry which rebounded sharply in the period and was one
of the better-performing groups in the high yield universe.
The Fund's telecom holdings further helped because they provided us with
relatively high exposure to deferred-interest securities such as zero-coupon
bonds, which outperformed traditional cash-pay issues.
o We also overweighted cable and media companies, whose solid returns
additionally benefited the Fund's overall performance.
o We selectively increased exposure in the last few months of 1999 to
economically sensitive industries such as paper and energy, which performed
moderately well.
o We underweighted poorly performing sectors such as health care, consumer
products, and retail food and drug.
On a negative note, our overweight in the textile/apparel/shoe-manufacturing
sector, which fell sharply, detracted from performance.
As developments occur that we believe would be of interest to you, we will be
sure to keep you informed. Meanwhile, if you have questions, please feel free to
call upon us at any time.
Sincerely yours,
Credit Suisse Asset Management High Yield Management Team
Richard J. Lindquist, CFA, Managing Director
Misia K. Dudley, Director
Mary Ann Thomas, CFA, Director
John M. Tobin, CFA, Director
HIGH YIELD BONDS ARE LOWER-QUALITY BONDS THAT ARE ALSO KNOWN AS "JUNK" BONDS.
SUCH BONDS ENTAIL GREATER RISKS THAN THOSE FOUND IN HIGHER-RATED SECURITIES.
INTERNATIONAL INVESTING ENTAILS SPECIAL RISK CONSIDERATIONS, INCLUDING CURRENCY
FLUCTUATIONS, LOWER LIQUIDITY, ECONOMIC AND POLITICAL RISKS, AND DIFFERENCES IN
ACCOUNTING METHODS.
46
<PAGE>
WARBURG PINCUS HIGH YIELD FUND
PORTFOLIO MANAGERS' LETTER (CONCLUDED)
PERFORMANCE
<TABLE>
<CAPTION>
SINCE
FIVE YEARS INCEPTION
SIX MONTHS ONE YEAR (3/1/95 - 2/29/00) 3/1/93
2/29/00 (3/1/99 - 2/29/00) (ANNUALIZED) (ANNUALIZED)
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Warburg Pincus High Yield Fund (Institutional) 6.4% 7.9% 10.7% 8.9%
Warburg Pincus High Yield Fund (Common) 6.2% 7.5% 10.5% 8.8%
CSFB Domestic + High Yield Index* 0.5% 1.1% 8.0%** 8.0%**
- ---------------------------------------------------------------------------------------------------------------------------
<FN>
* THE CREDIT SUISSE FIRST BOSTON DOMESTIC + HIGH YIELD INDEX IS AN UNMANAGED
INDEX (WITH NO DEFINED INVESTMENT OBJECTIVE) OF DOMESTIC HIGH YIELD BONDS AND
IS COMPILED BY CREDIT SUISSE FIRST BOSTON, AN AFFILIATE OF THE FUND'S
ADVISER.
** INCLUDES RETURNS FOR CREDIT SUISSE FIRST BOSTON GLOBAL HIGH YIELD INDEX FOR
ALL PERIODS BEFORE 1/1/99 AND RETURNS FOR CREDIT SUISSE FIRST BOSTON DOMESTIC
+ HIGH YIELD INDEX FOR ALL PERIODS AFTER 1/1/99.
</FN>
</TABLE>
47
<PAGE>
WARBURG PINCUS HIGH YIELD FUND
SCHEDULE OF INVESTMENTS
FEBRUARY 29, 2000
(UNAUDITED)
PAR
(000) VALUE
------- ------------
CORPORATE BONDS -- 80.6%
AEROSPACE/DEFENSE -- 0.2%
K&F Industries, Inc.
Sr. Sub. Notes
9.250% 10/15/07 ............................. $ 250 $ 236,250
------------
APPAREL -- 0.2%
Transportation Manufacturing
Operations
144A Sr. Sub. Notes
11.250% 05/01/09 ............................ 250 245,000
------------
AUTOMOTIVE -- 2.3%
Aetna Industries, Inc.
Sr. Notes
11.875% 10/01/06 ............................ 500 491,875
Breed Technologies, Inc.
144A Sr. Sub. Notes
9.250% 04/15/08++ ........................... 500 11,250
Cambridge Industries, Inc.
Gtd. Sr. Sub. Notes,
Series B
10.250% 07/15/07 ............................ 400 76,000
Collins & Aikman Products Corp.
Gtd. Sr. Sub. Notes
11.500% 04/15/06 ............................ 350 343,875
Delco Remy International, Inc.
Gtd. Sr. Sub. Notes
10.625% 08/01/06 ............................ 250 248,125
Hayes Lemmerz International, Inc.
144A Sr. Sub. Notes
8.250% 12/15/08 ............................. 150 131,625
Hayes Wheels International, Inc.
Sr. Sub. Notes, Series B
9.125% 07/15/07 ............................. 350 325,500
LDM Technologies, Inc.
144A Sr. Sub. Notes, Series B
10.750% 01/05/07 ............................ 400 336,000
Oxford Automotive, Inc.
Sr. Sub. Notes
10.125% 06/15/07 ............................ 500 468,750
Safelite Glass Corp.
Sr. Sub. Notes
9.875% 12/15/06 ............................. 350 21,000
Titan Wheel International, Inc.
Sr. Sub. Notes
8.750% 04/01/07 ............................. 250 200,000
United Rentals, Inc.
144A Sr. Sub. Notes
9.250% 01/15/09 ............................. 250 231,875
------------
2,885,875
------------
BROADCASTING -- 3.2%
Allbritton Communications
Company Sr. Sub. Notes,
Series B
9.750% 11/30/07 ............................. 250 245,625
8.875% 02/01/08 ............................. 250 235,625
PAR
(000) VALUE
------- ------------
BROADCASTING -- (CONTINUED)
American Radio Systems Corp.
Gtd. Sr. Sub. Notes
9.000% 02/01/06 ............................. $ 250 $ 262,187
Australis Holdings Pty. Ltd.
144A Yankee Sr. Secured
Discount Notes++
15.000% 11/01/02+ ........................... 294 2,940
Australis Media Ltd.
Yankee Gtd. Sr. Sub. Discount
Notes++
15.750% 05/15/03+ ........................... 15 2
15.750% 05/15/03 ............................ 900 90
Big City Radio, Inc.
144A Sr. Bonds
11.250% 03/15/05+ ........................... 500 320,000
Capstar Broadcasting, Inc.
Sr. Sub. Discount Notes
12.750% 02/01/09+ ........................... 500 450,000
Chancellor Media Corp.
144A Sr. Sub. Notes
8.000% 11/01/08 ............................. 300 300,000
Citadel Broadcasting Co.
144A Sr. Sub. Notes
9.250% 11/15/08 ............................. 250 240,937
Emmis Communications
Corporation Sr. Sub. Notes,
Series B
8.125% 03/15/09 ............................. 250 234,375
Granite Broadcasting Corp.
144A Sr. Sub Notes
8.875% 05/15/08 .......................... 250 232,500
Sr. Sub. Notes
9.375% 12/01/05 .......................... 450 448,875
HMV Media Group plc,
Senior Subordinated Yankee
Notes, Series B
10.250% 05/15/08 ............................ 250 191,250
Sinclair Broadcast Group
Sr. Sub. Notes
10.000% 09/30/05 ............................ 400 391,000
United International Holdings,
144A Sr. Discount Notes
10.750% 02/15/08+ ........................... 500 353,750
------------
3,909,156
------------
BUILDING MATERIALS -- 0.5%
Building One Services, Inc.
144A Sr. Sub. Notes
10.500% 05/01/09 ............................ 250 232,500
Jackson Products, Inc., Notes
9.500% 04/15/05 ............................. 400 362,000
------------
594,500
------------
See Accompanying Notes to Financial Statements.
48
<PAGE>
WARBURG PINCUS HIGH YIELD FUND (CONTINUED)
PAR
(000) VALUE
------- ------------
BUSINESS SERVICES -- 0.7%
Iron Mountain, Inc.
144A Sr. Notes
8.750% 09/30/09 ............................. $ 250 $ 225,000
Sovereign Bancorp, Inc.
10.500% 11/15/06 ............................ 500 503,750
U.S. Office Products Co.
144A Sr. Sub. Notes
9.750% 06/15/08 ............................. 400 200,000
------------
928,750
------------
CABLE -- 7.7%
Adelphia Communications Corp.
Sr. Notes, Series B
10.500% 07/15/04 ............................ 400 406,000
Century Communications,
Sr. Discount Notes, Series B
7.226% 01/15/08 ............................. 500 211,250
Coaxial Communications, Inc.
Phoenix Associates Co. Gtd.
Notes
10.000% 08/15/06 ............................ 300 288,000
Coaxial L.L.C.
144A Co. Gtd.
12.875% 08/15/08+ ........................... 400 252,000
Comcast U.K. Cable Partners Ltd.,
Yankee Sr. Debentures
11.200% 11/15/07+ ........................... 750 720,937
CSC Holdings, Sr. Debentures
9.875% 02/15/13 ............................. 500 521,250
Diamond Cable Communications
plc Sr. Discount Notes
11.750% 12/15/05+ ........................... 500 476,875
DIVA Systems Corp.
Sr. Disc. Notes Cl. B
12.625% 03/01/08+ ........................... 2,527 1,339,310
Frontiervision Holdings L.P.
Sr. Discount Notes
11.875% 09/15/07+ ........................... 500 443,750
Galaxy Telecom L.P.
Sr. Sub. Notes
12.375% 10/01/05 ............................ 400 422,000
Golden Sky Systems, Inc.
144A Sr. Dicsount Notes
13.500% 03/01/07+ ........................... 750 498,750
International CableTel, Inc.
Sr. Deferred Coupon Notes,
Series A
11.500% 04/15/05+ ........................... 750 761,250
James Cable Partners L.P./James
Cable Finance Corp.
Sr. Notes, Series B
10.750% 08/15/04 ............................ 400 400,000
Jones Intercable, Inc.
Sr. Notes
7.625% 04/15/08 ............................. 500 493,125
PAR
(000) VALUE
------- ------------
CABLE -- (CONTINUED)
Lenfest Communications, Inc.
Sr. Notes
8.375% 11/01/05 ............................. $ 300 $ 306,375
------------
Mediacom L.L.C. Capital
144A Sr. Notes
7.875% 02/15/11 ............................. 300 258,000
Northland Cable Television,
144A Sr. Sub. Notes
10.250% 11/15/07 ............................ 250 245,000
Rogers Communications, Inc.
Yankee Sr. Notes
9.125% 01/15/06 ............................. 550 552,750
Telewest Communications Group
plc Yankee Sr. Discount
Debentures
11.000% 10/01/07+ ........................... 700 664,125
Telewest Communications plc
Senior Discount Notes
9.250% 04/15/09+ ............................ 500 300,000
------------
9,560,747
------------
CAPITAL GOODS - TECHNOLOGY -- 0.2%
It Group, Inc.
Sr. Sub. Notes Series 144A
11.250% 04/01/09 ............................ 250 241,250
------------
CELLULAR/WIRELESS COMMUNICATIONS -- 1.1%
Centennial Cellular Corp.
Sr. Sub. Notes
10.750% 12/15/08 ............................ 400 409,000
Microcell Telecommunications, Inc.
Yankee Sr. Discount Notes,
Series B (B3, B)
14.000% 06/01/06+ ........................... 500 450,000
Sprint Spectrum L.P./Sprint
Spectrum Finance Corp.
Sr. Notes
11.000% 08/15/06 ............................ 500 560,000
------------
1,419,000
------------
CHEMICALS -- 1.4%
ClimaChem, Inc.
Notes, Series B
10.750% 12/01/07 ............................ 250 65,000
Huntsman Corp.
144A Sr. Sub. Notes
9.500% 07/01/07 ............................. 250 236,250
Lyondell Chemical, Inc.
Senior Secured Notes, Series B
9.875% 05/01/07 ............................. 500 480,000
Philipp Brothers Chemicals, Inc.
Co. Gtd. Sr. Notes
9.875% 06/01/08 ............................. 350 315,000
See Accompanying Notes to Financial Statements.
49
<PAGE>
WARBURG PINCUS HIGH YIELD FUND (CONTINUED)
PAR
(000) VALUE
------- ------------
CHEMICALS -- (CONTINUED)
Pioneer Americas Acquistics Corp.
Gtd. Sr. Secured Notes,
Series B
9.250% 06/15/07 ............................. $ 250 $ 212,500
Radnor Holdings Corp.
Sr. Notes, Series B
10.000% 12/01/03 ............................ 250 233,750
Sterling Chemical Holdings, Inc.
Sr. Secured Discount Notes
13.500% 08/15/08+ ........................... 700 231,000
------------
1,773,500
------------
COMPUTERS, SOFTWARE & SERVICES -- 0.7%
PSINET, Inc.
144A Sr. Notes
11.500% 11/01/08 ............................ 250 253,750
Verio, Inc.
144A Units
13.500% 06/15/04 ......................... 350 384,125
Sr. Notes
10.375% 04/01/05 ......................... 200 200,750
------------
838,625
------------
CONSTRUCTION -- 0.1%
Laroche Industries, Inc.
144A Sr. Sub. Notes
9.500% 09/15/07 ............................. 500 158,750
------------
CONSTRUCTION & BUILDING MATERIALS -- 1.0%
Collins & Aikman Floorcoverings,
Inc., Sr. Sub. Notes, Series B
10.000% 01/15/07 ............................ 250 244,375
Koppers Industry, Inc.
Sr. Sub. Notes
9.875% 12/01/07 ............................. 250 231,250
Omega Cabinets, Ltd.
Sr. Sub. Notes
10.500% 06/15/07 ............................ 400 400,000
Uniforet, Inc.
Yankee Gtd. Sr. Notes
11.125% 10/15/06 ............................ 250 90,000
Waxman Industries, Inc.
Sr. Notes, Series B
12.750% 06/01/04 ............................ 600 288,000
------------
1,253,625
------------
CONSUMER PRODUCTS & SERVICES -- 2.2%
Coinstar, Inc.
Sr. Discount Notes
13.000% 10/01/06+ ........................... 525 535,500
Drypers Corp.
Sr. Notes, Series B
10.250% 06/15/07 ............................ 400 324,000
Holmes Products Corp.
Sr. Sub. Notes, Series D
9.875% 11/15/07 ............................. 500 366,250
PAR
(000) VALUE
------- ------------
CONSUMER PRODUCTS & SERVICES -- (CONTINUED)
Hosiery Corp. of America, Inc.
Sr. Sub. Notes
13.750% 08/01/02 ............................ $ 400 $ 418,000
Packaged Ice, Inc.
144A Gtd. Sr. Notes
9.750% 02/01/05 ............................. 400 348,000
The Scotts Co.
144A Sr. Sub. Notes
8.625% 01/15/09 ............................. 250 235,625
Werner Holdings Co., Inc.
Gtd. Sr. Sub. Notes, Series A
10.000% 11/15/07 ............................ 250 243,125
Worldtex, Inc.
144A Sr. Notes
9.625% 12/15/07 ............................. 250 199,375
------------
2,669,875
------------
ELECTRIC UTILITIES -- 0.2%
Integrated Electric Services, Inc.
144A Sr. Sub. Notes
9.375% 02/01/09 ............................. 250 215,000
------------
ELECTRONICS -- 1.0%
Aavid Thermal Technologies, Inc.
12.750% 02/01/07 ............................ 250 248,750
Ampex Corp. 144A Sr. Notes
12.000% 03/15/03 ............................ 250 246,250
Elgar Holdings, Inc.
144A Gtd. Sr. Notes
9.875% 02/01/08 ............................. 500 310,000
Unisys Corporation
Sr. Notes, Series B
12.000% 04/15/03 ............................ 400 426,000
------------
1,231,000
------------
ENERGY -- 3.4%
Abraxas Petroleum Corp.
11.500% 11/01/04 ............................ 350 311,500
Bellwether Exploration Co.
Gtd. Sr. Sub. Notes
10.875% 04/01/07 ............................ 250 219,687
Cliffs Drilling Company
Gtd. Sr. Notes, Series D
10.250% 05/15/03 ............................ 350 357,875
CMS Energy Corp.
Sr. Notes
7.500% 01/15/09 ............................. 250 228,437
Frontier Oil Corp.
Sr. Notes
10.750% 07/15/08 ............................ 500 55,000
11.750% 11/15/09 ............................ 500 445,000
HS Resources, Inc.
Sr. Sub. Notes
9.250% 11/15/06 ............................. 400 386,000
Nuevo Energy Co.
9.500% 06/01/08 ............................. 250 242,500
See Accompanying Notes to Financial Statements.
50
<PAGE>
WARBURG PINCUS HIGH YIELD FUND (CONTINUED)
PAR
(000) VALUE
------- ------------
ENERGY -- (CONTINUED)
Plains Resources, Inc.
144A Sr. Sub. Notes
10.250% 03/15/06 ......................... $ 250 $ 245,000
Gtd. Sr. Sub. Notes, Series B
10.250% 03/15/06 ......................... 250 245,000
Pogo Producing Co.
Sr. Sub. Notes, Cl. B
8.750% 05/15/07 ............................. 500 475,000
Pride Petroleum Services, Inc.
Sr. Notes
9.375% 05/01/07 ............................. 300 291,000
Southwest Royalties, Inc.
Gtd. Sr. Notes, Series B
10.500% 10/15/04 ............................ 300 171,000
The AES Corporation
Senior Notes
11.500% 12/15/06 ............................ 400 96,000
9.500% 06/01/09 ............................. 250 246,875
Wiser Oil Co.
Gtd. Sr. Sub. Notes
9.500% 05/15/07 ............................. 250 200,000
------------
4,215,874
------------
ENERGY SOURCES -- 0.4%
Key Energy Services, Inc.
Units 144A
14.000% 01/15/09 ............................ 500 548,750
------------
ENGINES -- 0.2%
Interact Operating Co.
14.000% 08/01/03 ............................ 375 205,975
------------
ENTERTAINMENT -- 2.3%
Ackerley Group, Inc.
Sr. Sub. Notes
9.000% 01/15/09 ............................. 250 237,500
AMC Entertainment, Inc.
Sr. Sub. Notes
9.500% 03/15/09 ............................. 250 195,000
American Skiing Co.
Sr. Sub. Notes, Series B
12.000% 07/15/06 ............................ 400 344,000
AMF Bowling Worldwide, Inc.
Gtd. Sr. Discount Notes
10.875% 03/15/06 ......................... 350 162,750
Gtd. Sr. Discount Notes,
Series B
12.250% 03/15/06+ ........................ 459 156,060
Booth Creek Ski Holdings, Inc.
Gtd. Sr. Notes, Series B
12.500% 03/15/07 ............................ 400 280,000
Florida Panthers Holdings, Inc.
144A Sr. Sub. Notes
9.875% 04/15/09 ............................. 250 236,250
PAR
(000) VALUE
------- ------------
ENTERTAINMENT -- (CONTINUED)
Imax Corp.
Sr. Notes
7.875% 12/01/05 ............................. $ 250 $ 233,125
KSL Recreation Group, Inc.
Sr. Sub. Notes
10.250% 05/01/07 ............................ 250 246,250
Premier Parks Inc.
Gtd. Sr. Notes
9.750% 01/15/07 .......................... 250 250,000
Sr. Notes
9.250% 04/01/06 .......................... 250 235,312
Regal Cinemas, Inc.
144A Sr. Sub. Notes
8.875% 12/15/10 ............................. 500 310,000
------------
2,886,247
------------
ENVIRONMENTAL SERVICES -- 0.1%
First Wave Marine
Sr. Notes
11.000% 02/01/08 ............................ 150 107,250
------------
FINANCIAL -- 0.4%
Arcadia Financial, Ltd.
Sr. Notes
11.500% 03/15/07 ............................ 200 210,000
Polska Telefonica Cyfrowa
International Finance II SA
144A Co. Gtd.
11.250% 12/01/09 ............................ 250 244,062
------------
454,062
------------
FINANCIAL SERVICES -- 0.6%
Ameriserve Finance/Capital
144A Secured
12.000% 09/15/06 ............................ 250 125,000
Insight Midwest/Insight Capital
144A Sr. Sub. Notes
9.750% 10/01/09 ............................. 350 353,500
Oglebay Norton Co.
144A Sr. Sub. Notes
10.000% 02/01/09 ............................ 250 235,000
------------
713,500
------------
FOOD & BEVERAGE -- 3.0%
Agrilink Foods, Inc.
Sr. Sub. Notes
11.875% 11/01/08 ............................ 250 246,875
Archibald Candy Corp.
144A Gtd. Sr. Secured Notes
10.250% 07/01/04 ............................ 300 288,000
Carrols Corp.
144A Sr. Sub. Notes
9.500% 12/01/08 ............................. 250 218,750
Delta Beverage Group, Inc.
Sr. Notes
9.750% 12/15/03 ............................. 250 247,500
See Accompanying Notes to Financial Statements.
51
<PAGE>
WARBURG PINCUS HIGH YIELD FUND (CONTINUED)
PAR
(000) VALUE
------- ------------
FOOD & BEVERAGE -- (CONTINUED)
Eagle Family Foods, Inc.
Sr. Sub. Notes
8.750% 01/15/08 ............................. $ 350 $ 269,500
Fleming Companies, Inc.
Sr. Gtd. Sub. Notes, Series B
10.500% 12/01/04 ............................ 150 140,250
International Home Foods, Inc.
Gtd. Sr. Sub. Notes
10.375% 11/01/06 ............................ 250 253,750
Luigino's, Inc.
144A Sr. Sub. Notes
10.000% 02/01/06 ............................ 500 430,000
Mrs. Fields' Holding Co. Inc.
144A Units
14.000% 12/01/05+ ........................... 200 112,000
Mrs. Fields' Original Cookies Inc.
144A Gtd. Sr. Notes, Series A
10.125% 12/01/04 ......................... 250 202,500
Gtd. Sr. Notes, Series B
10.125% 12/01/04 ......................... 150 121,500
National Wine & Spirits Co.
Gtd.
10.125% 01/15/09 ............................ 280 278,600
New World Pasta Co.
144A Sr. Sub. Notes
9.250% 02/15/09 ............................. 250 229,687
Pantry, Inc.
Sr. Sub. Notes
10.250% 10/15/07 ............................ 250 237,500
Premium Standard Farm, Inc.
Sr. Secured Notes
11.000% 09/17/03 ............................ 501 460,792
------------
3,737,204
------------
HEALTH -- 0.7%
Triad Hospital Holdings, Inc.
Sr. Sub. Notes
11.000% 05/15/09 ............................ 500 515,000
Unilab Finance Corp.
144A Sr. Sub. Notes
12.750% 10/01/09 ............................ 400 408,000
------------
923,000
------------
HEALTH CARE -- 1.6%
Beverly Enterprises, Inc.
Gtd. Sr. Notes
9.000% 02/15/06 ............................. 400 366,000
Fountain View, Inc.
Co. Gtd.
11.250% 04/15/08 ............................ 250 191,250
Genesis Health Ventures, Inc.
Sr. Sub. Notes
9.875% 01/15/09 ............................. 500 97,500
InSight Health Services, Inc.
Co. Gtd. Sr. Notes
9.625% 06/15/08 ............................. 400 370,000
PAR
(000) VALUE
------- ------------
HEALTH CARE -- (CONTINUED)
Oxford Health Plans, Inc.
144A Sr. Notes
11.000% 05/15/05 ............................ $ 400 $ 387,500
Paracelsus Healthcare Corp.
Sr. Sub. Notes
10.000% 08/15/06++ .......................... 250 125,000
Quest Diagnostic, Inc.
Sr. Sub. Notes
10.750% 12/15/06 ............................ 250 262,500
Tenet Healthcare Corp.
Sr. Sub. Notes
8.625% 01/15/07 ............................. 250 240,313
------------
2,040,063
------------
INDUSTRIAL GOODS & MATERIALS -- 2.1%
Anchor Lamina, Inc./Anchor
Lamina America, Inc.
144A Sr. Sub. Notes
9.875% 02/01/08 ............................. 250 187,500
Carrier1
144A Sr. Notes, Series B
13.250% 02/15/09 ............................ 250 266,250
Equinix, Inc.
8.750% 03/15/04 ............................. 500 435,000
13.000% 12/01/07 ............................ 450 464,625
Golden Ocean Group Ltd.
144A Gtd. Sr. Notes
10.000% 08/31/01++ .......................... 457 27,420
Jordan Industries, Inc.
Sr. Notes
10.375% 08/01/07 ............................ 250 246,250
MMI Products, Inc.
144A Sr. Sub. Notes, Series B
11.250% 04/15/07 ............................ 250 258,125
Morris Materials Handling, Inc.
144A Sr. Notes
9.500% 04/01/08 ............................. 250 50,000
Motors & Gears, Inc.
Sr. Notes, Series D
10.750% 11/15/06 ............................ 500 496,250
Thermadyne Holdings Corp.
Sr. Discount Debentures
12.500% 06/01/08+ ........................... 250 115,000
------------
2,546,420
------------
LEISURE & ENTERTAINMENT -- 0.4%
Hollywood Park, Inc.
144A Sr. Sub. Notes
9.250% 02/15/07 ............................. 500 483,750
------------
MANUFACTURING -- 0.2%
Holley Performance Products
144A Sr. Notes
12.250% 09/15/07 ............................ 250 243,750
------------
See Accompanying Notes to Financial Statements.
52
<PAGE>
WARBURG PINCUS HIGH YIELD FUND (CONTINUED)
PAR
(000) VALUE
------- ------------
METALS -- 0.2%
Algoma Steel Inc.
1st Mortgage Yankee Notes
12.375% 07/15/05 ............................ $ 250 $ 248,125
------------
METALS & MINING -- 1.9%
Bayou Steel Corp.
Co. Gtd.
9.500% 05/15/08 ............................. 250 230,625
Golden Northwest Aluminum
First Mortgage Notes
12.000% 12/15/06 ............................ 400 419,000
Haynes International, Inc.
Sr. Notes
11.625% 09/01/04 ............................ 250 137,500
Ivaco, Inc.
Yankee Sr. Notes
11.500% 09/15/05 ............................ 250 270,000
Kaiser Aluminum and Chemical, Inc.
144A Sr. Notes
10.875% 10/15/06 ............................ 250 247,500
Metallurg, Inc.
Sr. Notes
11.000% 12/01/07 ............................ 500 448,750
Weirton Steel Corporation
Sr. Notes
11.375% 07/01/04 ............................ 350 358,750
WHX Corp.
Sr. Exchange Notes
10.500% 04/15/05 ............................ 250 237,500
------------
2,349,625
------------
OFFICE EQUIPMENT & SUPPLIES -- 0.3%
Knoll, Inc.
Sr. Sub. Notes
10.875% 03/15/06 ............................ 325 331,500
------------
PACKAGING & CONTAINERS -- 0.5%
BPC Holding Corporation
Sr. Secured Notes, Series B
12.500% 06/15/06 ............................ 426 400,440
Crown Packaging Enterprises, Ltd.
Yankee Sr. Secured Discount
Notes
14.000% 08/01/06+ ........................... 775 7,750
Stone Container Finance Co.
Yankee Gtd. Sr. Notes
11.500% 08/15/06 ............................ 250 265,000
------------
673,190
------------
PAPER & ALLIED PRODUCTS -- 0.3%
Charter Communications Holdings
10.250% 01/15/10 ............................ 350 348,250
------------
PAR
(000) VALUE
------- ------------
PAPER & FOREST PRODUCTS -- 2.8%
Ainsworth Lumber Co. Ltd.
Yankee Sr. Secured PIK Notes
12.500% 07/15/07 ............................ $ 500 $ 546,250
Bear Island Paper Company, L.L.C./
Bear Island Finance Company II
Sr. Secured Notes, Series B
10.000% 12/01/07 ............................ 200 191,000
Crown Paper Co.
Sr. Sub. Notes
11.000% 09/01/05 ............................ 500 230,000
Gaylord Container Corp.
Sr. Notes
9.375% 06/15/07 ............................. 350 314,125
MAXXAM Group Holdings, Inc.
144A Sr. Secured Notes, Series B
12.000% 08/01/03 ............................ 400 370,000
Printpack, Inc.
Sr. Sub. Notes, Series B
10.625% 08/15/06 ............................ 450 435,375
Repap New Brunswick
Sr. Yankee Notes
10.625% 04/15/05 ............................ 500 465,000
S.D. Warren Co.
Sr. Sub. Notes
12.000% 12/15/04 ............................ 400 419,500
Specialty Paperboard, Inc.
144A Sr. Notes
9.375% 10/15/06 ............................. 250 242,500
Tembec Industries, Inc.
Sr. Co. Gtd.
8.625% 06/30/09 ............................. 250 241,250
------------
3,455,000
------------
PHARMACEUTICALS -- 0.4%
ICN Pharmaceutical, Inc.
144A Sr. Notes
8.750% 11/15/08 ............................. 500 467,500
------------
PUBLISHING & INFORMATION SERVICES -- 2.3%
American Media Operation
144A Sr. Sub Notes
10.250% 05/01/09 ............................ 250 248,750
Gray Communications Systems
Gtd. Sr. Sub. Notes
10.625% 10/01/06 ............................ 200 204,500
Hollinger International Publishing
Inc., Sr. Sub. Notes
9.250% 03/15/07 ............................. 250 236,875
Liberty Group Publishing, Inc.
Sr. Discount Debentures
11.625% 02/01/09+ ........................... 300 159,000
Mail-Well, Inc.
144A Sr. Sub. Notes
8.750% 12/15/08 ............................. 400 362,000
See Accompanying Notes to Financial Statements.
53
<PAGE>
WARBURG PINCUS HIGH YIELD FUND (CONTINUED)
PAR
(000) VALUE
------- ------------
PUBLISHING & INFORMATION SERVICES -- (CONTINUED)
Mentus Media Corp.
144A Sr. Secured Notes
12.000% 02/01/03 ............................ $ 626 $ 212,840
Nebraska Book Co.
144A Sr. Sub. Notes
8.750% 02/15/08 ............................. 250 207,500
Phoenix Color Corp.
144A Sr. Sub. Notes
10.375% 02/01/09 ............................ 250 240,625
Sun Media Corp.
Yankee Sr. Sub. Notes
9.500% 02/15/07 ............................. 194 187,695
9.500% 05/15/07 ............................. 65 62,888
Tri-State Outdoor Media Group, Inc.
144A Sr. Notes
11.000% 05/15/08 ............................ 500 487,500
World Color Press, Inc.
144A Sr. Sub. Notes
8.375% 11/15/08 ............................. 250 240,000
------------
2,850,173
------------
REAL ESTATE -- 0.7%
HMH Properties, Inc.
Sr. Notes
8.450% 12/01/08 ............................. 300 270,000
Host Marriot Hotel Properties
Sr. Notes
7.875% 08/01/05 ............................. 400 362,000
Intrawest Corp.
Yankee Sr Notes
9.750% 08/15/08 ............................. 250 240,000
------------
872,000
------------
RESTAURANTS, HOTELS & GAMING -- 7.0%
AFC Enterprises
Sr. Sub. Notes
10.250% 05/15/07 ............................ 400 398,000
American Restaurant Group, Inc.
144A Sr. Notes
11.500% 02/15/03 ............................ 300 237,000
AmeriKing, Inc.
Gtd. Sr. Notes
10.750% 12/01/06 ............................ 400 356,000
Ameristar Casinos, Inc.
Gtd. Sr. Sub. Notes, Series B
10.500% 08/01/04 ............................ 350 346,500
Arogosy Gaming Co.
144A Co. Gtd.
10.750% 06/01/09 ............................ 250 258,750
CapStar Hotel Co.
144A Sr. Sub. Notes
8.750% 08/15/07 ............................. 250 223,750
Casino Magic of Louisiana Corp.
Gtd. First Mortgage Notes,
Series B
13.000% 08/15/03 ............................ 350 385,000
PAR
(000) VALUE
------- ------------
RESTAURANTS, HOTELS & GAMING -- (CONTINUED)
Circus Circus Enterprise
Sr. Sub. Notes
9.250% 12/01/05 ............................. $ 450 $ 437,625
Coast Hotels & Casino, Inc.
144A Sr. Sub. Notes
9.500% 04/01/09 ............................. 250 235,000
Hard Rock Hotel, Inc.
144A Sr. Sub. Notes
9.250% 04/01/05 ............................. 500 411,250
Harrahs Operating Co. Inc.
Co. Gtd.
7.875% 12/15/05 ............................. 250 235,000
Harvey Casino Resorts
Sr. Sub. Notes
10.625% 06/01/06 ............................ 450 462,375
Horseshoe Gaming L.L.C.
Gtd. Sr. Sub. Notes, Series B
9.375% 06/15/07 ............................. 400 390,000
Isle of Capri Casinos
144A Sr. Sub. Notes
8.750% 04/15/09 ............................. 250 222,188
Jazz Casino Co., L.L.C.
Sr. Sub. Notes
5.927% 05/15/00 ............................. 512 189,386
Louisiana Casino Cruises, Inc.
Secured 144A
11.000% 12/01/05 ............................ 500 515,000
Majestic Star Casino Co.
Gtd., Series B
10.875% 07/01/06 ............................ 400 388,000
Mohegan Tribal Gaming Authority
Sr. Sub. Notes
8.750% 01/01/09 ............................. 400 385,000
Park Place Entertainment, Inc.
144A Sr. Sub. Notes
7.875% 12/15/05 ............................. 250 233,750
Peninsula Gaming L.L.C.
144A Sr. Notes
12.250% 07/01/06 ............................ 250 245,625
Players International, Inc.
Sr. Notes
10.875% 04/15/05 ............................ 250 260,625
Prime Hospitality Corp.
Secured First Mortgage Notes
9.250% 01/15/06 ............................. 250 245,000
Santa Fe Hotel, Inc.
First Mortgage Notes
11.000% 12/15/00 ............................ 250 243,750
Sbarro Inc.
144A Sr. Notes
11.000% 09/15/09 ............................ 250 256,250
Station Casinos, Inc.
Sr. Sub. Notes
10.125% 03/15/06 ............................ 500 507,500
See Accompanying Notes to Financial Statements.
54
<PAGE>
WARBURG PINCUS HIGH YIELD FUND (CONTINUED)
PAR
(000) VALUE
------- ------------
RESTAURANTS, HOTELS & GAMING -- (CONTINUED)
Sun International Hotels Ltd.
Yankee Gtd. Sr. Sub. Notes
9.000% 03/15/07 ............................. $ 400 $ 377,000
Waterford Gaming L.L.C./Waterford
Gaming Finance Corp.
144A Sr. Notes
9.500% 03/15/10 ............................. 239 234,220
------------
8,679,544
------------
RETAIL TRADE -- 1.1%
Advance Holding Corp
Sr. Discount Debentures, Series B
12.875% 04/15/09+ ........................... 500 260,000
County Seat Stores, Inc.
144A Units
12.750% 11/01/04++ .......................... 500 7,500
Finlay Enterprises, Inc.
Sr. Secured Debentures
9.000% 05/01/08 ............................. 250 226,250
Jo-Ann Stores, Inc.
144A Sr. Sub. Notes
10.375% 05/01/07 ............................ 250 213,750
K Mart Corp.
Debentures
7.750% 10/01/12 ............................. 250 229,848
Pathmark Stores
Sr. Sub Notes
9.625% 05/01/03 ............................. 350 248,500
Pueblo Xtra International, Inc.
Sr. Notes
9.500% 08/01/03 ............................. 400 180,000
------------
1,365,848
------------
STEEL -- 0.0%
Gulf States Steel, Inc.
First Mortgage Notes
13.500% 04/15/03++ .......................... 200 30,000
------------
TELECOMMUNICATIONS -- 19.0%
Airgate PCS Inc.
Sr. Sub. Notes
13.500% 10/01/09+ ........................... 500 392,500
AMSC Acquisition Company, Inc.
Senior Notes, Series B
12.250% 04/01/08 ............................ 250 221,250
Bresnan Communications Co.
144A Sr. Discount Notes
9.250% 02/01/09+ ......................... 500 356,250
144A Sr. Notes
8.000% 02/01/09 .......................... 250 251,250
Call-Net Enterprises, Inc.
Sr. Discount Notes
10.800% 05/15/09+ ........................ 450 216,000
Yankee Sr. Notes
9.375% 05/15/09 .......................... 400 324,000
PAR
(000) VALUE
------- ------------
TELECOMMUNICATIONS -- (CONTINUED)
Caprock Communications Corp.
144A Sr. Notes
11.500% 05/01/09 ............................ $ 400 $ 408,000
Charter Communications Holdings
L.L.C. 144A Sr. Discount Notes
8.625% 04/01/09 ............................. 250 229,375
9.920% 04/01/11+ ............................ 500 290,000
Clearnet Communications, Inc.
Sr. Discount Notes
14.750% 12/15/05+ ........................... 500 498,750
Covad Communication Group, Inc.
Sr. Notes 144A
12.500% 02/15/09 ............................ 250 260,000
Dobson Sygnet Communications
Sr. Notes
12.250% 12/15/08 ............................ 500 540,000
DTI Holdings, Inc.
144A Sr. Discount Notes
12.500% 03/01/08+ ........................... 600 294,000
E Spire Communications
Sr. Discount Notes
13.000% 11/01/05+ ........................... 550 387,750
Echostar DBS Corp.
Sr. Notes
9.375% 02/01/09 ............................. 250 246,250
Focal Communications Corp.
144A Sr. Discount Notes
12.125% 02/15/08 ............................ 550 371,250
Global Crossing Holdings, Ltd.
9.625% 05/15/08 ............................. 350 341,250
Globalstar L.P./Globalstar Capital
Corp. 144A Sr. Notes
10.750% 11/01/04 ............................ 100 57,500
Globix Corp.
Sr Regulated Notes
13.000% 05/01/05 ............................ 350 373,188
GST Equipment Funding
144A Sr. Secured Exchange
Notes
13.250% 05/01/07+ ........................... 250 251,250
GST USA, Inc.
Gtd. Sr. Discount Exchange Notes
13.875% 12/15/05 ............................ 500 340,000
Hermes Europe Railtel
BV Sr. Notes
10.375% 01/15/09 ............................ 250 233,750
Hyperion Telecommunications, Inc.
Sr. Discount Notes, Series B
13.000% 04/15/03+ ........................ 500 460,000
Sr. Notes, Series B
12.250% 09/01/04 ......................... 250 266,875
ICG Holdings, Inc.
Gtd. Senior Discount Notes
11.625% 03/15/07+ ........................... 300 202,500
See Accompanying Notes to Financial Statements.
55
<PAGE>
WARBURG PINCUS HIGH YIELD FUND (CONTINUED)
PAR
(000) VALUE
------- ------------
TELECOMMUNICATIONS -- (CONTINUED)
ICG Services, Inc.
144A Sr. Discount Notes
10.000% 02/15/08+ ........................... $ 500 $ 291,250
Intelcom Group (U.S.A.), Inc.
Gtd. Sr. Exchangeable Discount
Notes
12.500% 05/01/06+ ........................... 550 451,000
Intercel, Inc.
Sr. Discount Notes
12.000% 02/01/06+ ........................... 500 454,375
Intermedia Communications, Inc.
Sr. Discount Notes
11.250% 07/15/07+ ........................... 1,000 795,000
International Cabletel, Inc.
Sr. Notes
11.500% 02/01/06+ ........................... 415 389,063
ITC Deltacom, Inc.
144A Sr. Notes
11.000% 06/01/07 ............................ 163 168,705
KMC Telecom Holdings, Inc.
Sr. Discount Notes
12.500% 02/15/08+ ........................... 250 145,000
Knology Hldgs., Inc.
Sr. Discount Notes
11.875% 10/15/07+ ........................... 550 360,250
Level 3 Communications, Inc.
Gtd. Sr. Sub. Notes
8.500% 05/15/08 .......................... 250 227,500
Sr. Discount Notes
10.500% 12/01/08+ ........................ 250 148,125
Logix Communications Enterprises
Sr. Notes
12.250% 06/15/08 ............................ 500 366,875
McLeodUSA, Inc.
144A Sr. Sub. Notes
8.125% 02/15/09 .......................... 250 224,375
Sr. Discount Notes
10.500% 03/01/07+ ........................ 350 281,750
Sr. Notes
9.250% 07/15/07 .......................... 300 292,500
MDC Communications Corp.
Sr. Sub. Notes
10.500% 12/01/06 ............................ 400 395,000
Metromedia Fiber Network, Inc.
Sr. Notes, Series B
10.000% 11/15/08 ............................ 500 496,250
MetroNet Communications Corp.
Sr. Discount Notes
10.750% 11/01/07+ ........................ 400 331,000
Sr. Notes
12.000% 08/15/07 ......................... 400 460,000
MJD Communications, Inc.
Sr. Sub. Notes
9.500% 05/01/08 ............................. 250 238,750
PAR
(000) VALUE
------- ------------
TELECOMMUNICATIONS -- (CONTINUED)
Nextel Partners, Inc.
144A Sr. Discount Notes
14.000% 02/01/09+ ........................... $ 500 $ 337,500
Nextlink Communications, Inc.
144A Sr. Notes
10.750% 11/15/08 ......................... 250 251,250
Sr. Discount Notes
9.450% 04/15/08+ ......................... 500 310,000
Nextlink Communications, L.L.C./
Nextlink Capital, Inc.
Sr. Notes
12.500% 04/15/06 ............................ 250 266,250
NTL, Inc.
144A Sr. Notes
10.000% 02/15/07 ............................ 250 250,625
Orbital Imaging Corp.
144A Units
11.625% 03/01/05 ............................ 500 340,000
Orion Network Systems, Inc.
Gtd. Sr. Notes
11.250% 01/15/07 ............................ 300 237,000
Pac-West Telecom, Inc.
144A Sr. Notes
13.500% 02/01/09 ............................ 250 265,625
Pagemart Nationwide, Inc.
Sr. Discount Notes
15.000% 04/01/00+ ........................... 250 245,000
Pegasus Communications Corp.
Sr. Notes, Series B
9.750% 12/01/06 ............................. 250 243,750
Price Comm Wireless, Inc.
144A Sr. Sub. Notes
11.750% 07/15/07 ............................ 250 273,125
Primus Telecommunications
Group, Inc.
144A Sr. Notes
11.250% 01/15/09 ............................ 350 330,750
Qwest Communications
International, Inc.
Sr. Discount Notes
9.470% 10/15/07+ ......................... 750 608,438
Sr. Discount Notes, Series B
8.290% 02/01/08+ ......................... 250 192,500
Sr. Notes, Series B
10.875% 04/01/07 ......................... 130 143,975
RCN Corp.
Sr. Discount Notes, Series B
9.800% 02/15/08+ ......................... 300 186,750
Sr. Notes, Series B
10.000% 10/15/07+ ........................ 400 373,000
Rhythms Netconnections
Sr. Discount Notes
13.500% 05/15/08+ ........................... 600 324,000
See Accompanying Notes to Financial Statements.
56
<PAGE>
WARBURG PINCUS HIGH YIELD FUND (CONTINUED)
PAR
(000) VALUE
------- ------------
TELECOMMUNICATIONS -- (CONTINUED)
RSL Communications plc
Yankee Co. Gtd.
10.500% 11/15/08 ............................ $ 400 $ 358,000
Salem Communications Corp.
144A Co. Gtd., Series B
9.500% 10/01/07 ............................. 400 388,000
Startec Global Communications, Inc.,
Sr. Notes
12.000% 05/15/08 ............................ 400 339,500
Telewest Communications plc
Debentures
9.625% 10/01/06 ............................. 250 246,250
Teligent Inc.
Sr. Notes
11.500% 12/01/07 ............................ 250 241,875
Time Warner Telecom L.L.C./Time
Warner Telecom Inc.
Sr. Notes
9.750% 07/15/08 ............................. 500 503,125
United Pan - Europe Comm
Industries 144A Sr. Notes
10.875% 11/01/07 ............................ 350 353,500
US Unwired Inc.
144A Sr. Discount Notes
13.375% 11/01/09+ ........................... 500 290,000
Viatel, Inc.
Sr. Discount Notes
12.500% 04/15/08+ ........................... 600 360,000
Williams Communications
Group, Inc.
Sr. Notes
10.700% 10/01/07 ............................ 500 515,000
WinStar Communications, Inc.
Sr. Discount Notes
14.000% 10/15/05+ ........................... 500 507,500
------------
23,611,994
------------
TELEPHONE -- 0.3%
Flooring America, Inc.
9.250% 10/15/07 ............................. 500 397,500
------------
TEXTILES & APPAREL -- 0.9%
Advanced Glass Fiber Yarns
Sr. Sub. Notes 144A
9.875% 01/15/09 ............................. 250 230,625
Bgf Industries, Inc.
Sr. Sub. Notes 144A
10.250% 01/15/09 ............................ 250 231,250
Phillips Van-Heusen Corp.
Sr. Sub. Notes
9.500% 05/01/08 ............................. 250 231,250
William Carter Company
Sr. Sub. Notes, Series A
10.375% 12/01/06 ............................ 450 397,125
------------
1,090,250
------------
PAR
(000) VALUE
------- ------------
TRANSPORT -- 3.3%
Complete Europe NV Unit
14.000% 02/15/09+ ........................... $ 1,000 $ 650,000
Dolphin Telecom PLC
144A Sr. Discount Notes
14.000% 05/15/09+ ........................... 500 203,750
Exodus Communications, Inc.
144A Senior Notes
10.750% 12/15/09 ............................ 450 457,875
Gt Group Telecommunications
13.250% 02/01/10+ ........................... 500 296,875
Metricom Financial
13.000% 02/15/10 ............................ 300 254,250
Metromedia International 144A
10.500% 09/30/07 ............................ 1,761 827,526
Norampac, Inc.
9.500% 02/01/08 ............................. 250 248,750
PageMart Wireless, Inc.
Senior Subordinated Discount
Exchange Notes
15.000% 02/01/08+ ........................... 250 131,250
Triton PCS, Inc.
Senior Subordinated Discount
Notes, Company Guaranteed
11.000% 05/01/08+ ........................... 500 361,250
Viatel, Inc.
11.500% 03/15/09 ............................ 172 162,925
Voicestream Wireless Holding
10.375% 11/15/09 ............................ 500 518,750
------------
4,113,201
------------
TRANSPORTATION -- 1.0%
AirTran Airlines, Inc.
Secured Notes
10.500% 04/15/01 ............................ 250 243,750
Atlantic Express Transportation Corp.
Gtd. Sr. Secured Notes
10.750% 02/01/04 ............................ 250 242,500
Canadian Airlines Corp.
Yankee Sr. Notes
12.250% 08/01/06++ .......................... 250 125,000
Kitty Hawk, Inc.
Sr. Notes
9.950% 11/15/04 ............................. 250 246,875
Pegasus Shipping (Hellas) Ltd.
144A Gtd. First Preferred
Mortgage Notes, Series A
11.875% 11/15/04++ .......................... 500 195,000
Trans World Airlines
Sr. Notes
11.375% 03/01/06 ............................ 500 185,000
------------
1,238,125
------------
See Accompanying Notes to Financial Statements.
57
<PAGE>
WARBURG PINCUS HIGH YIELD FUND (CONTINUED)
PAR
(000) VALUE
------- ------------
WASTE MANAGEMENT -- 0.5%
Allied Waste North America,
Series B (Ba2, BB)
7.875% 01/01/09 ............................. $ 250 $ 211,250
Waste Systems International, Inc.
144A Conv. Sub. Notes
7.000% 05/13/05 ............................. 400 350,000
------------
561,250
------------
TOTAL CORPORATE BONDS
(Cost $112,176,932) ......................... $ 99,949,823
------------
ASSET BACKED SECURITY -- 0.4%
Airplanes Pass Through Trust
Series 1, Class D
10.875% 03/15/19 ............................ $ 594 $ 540,667
(Cost $594,120) ------------
NUMBER
OF SHARES
---------
RIGHTS & WARRANTS -- 2.7%
BROADCASTING -- 0.0%
Australis Holdings Pty. Ltd. strike
$0.01 expires Oct. 2001 ..................... 294 $ 3
------------
CABLE -- 0.7%
DIVA Systems Corp.+++ strike
$0.01 expires May 2006 ...................... 2,250 818,100
DIVA Systems Corp.+++ strike
$0.01 expires March 2008 .................... 7,581 90,972
------------
909,072
------------
CHEMICALS -- 1.1%
Uniroyal Technology Corp.
strike $4.375 expires June 2003 ............. 23,500 1,304,250
------------
CONSTRUCTION & BUILDING MATERIALS -- 0.0%
Capital Pacific Holdings Group,
Inc. ........................................ 12,640 126
------------
ELECTRONICS -- 0.0%
Interact Electronic Marketing, Inc.
strike $0.01 expires Dec. 2009 .............. 700 7
------------
ENERGY -- 0.1%
Abraxas Petroleum Corp.
expires Nov. 2004 ........................... 29,809 298
Key Energy Services, Inc. strike
$4.88 expires Jan. 2009 ..................... 750 45,000
Metricom, Inc. strike $87.00
expires Feb. 2010 ........................... 300 42,000
------------
87,298
------------
INDUSTRIAL GOODS & MATERIALS -- 0.0%
Golden Ocean Group, Ltd.
strike $46.20 expires Aug. 2001 ............. 438 0
------------
NUMBER
OF SHARES VALUE
--------- ------------
PUBLISHING & INFORMATION SERVICES -- 0.0%
InterAct Systems, Inc.+++
strike $0.01 expires Aug. 700 $ 17,500
Mentus Media Corp. 144A
strike $0.01 expires Feb. 1,391 14
Source Media, Inc. strike $0.01
expires Nov. 2007 ........................... 5,587 44,700
------------
62,214
------------
TELECOMMUNICATIONS -- 0.8%
Airgate Pcs, Inc. strike $0.01
expires Oct. 2009 ........................... 500 10,000
American Mobile Satellite
Corporation strike $12.28
expires April 2008 .......................... 500 40,000
Ampex Corp. 144A strike $2.25
expires March 2003 .......................... 17,000 27,625
Carrier1 International strike $2.00
expires Feb. 2009 ........................... 500 400,000
Completel Holdings Class B 144A ............... 10,000 200,000
DTI Holdings, Inc. 144A strike
$0.01 expires March 2008 .................... 3,000 30
KMC Telecom Holdings, Inc.
strike $0.22 expires April 2008 ............. 500 12,500
McCaw International Ltd. strike
$36.45 expires April 2007 ................... 500 1,250
Orbital Imaging Corp. strike
$1.00 expires March 2005 .................... 500 15,000
PLD Telekom, Inc. strike
$1.00 expires June 2004 ..................... 1,010 4,040
PLD Telekom, Inc. strike
$10.86 expires March 2003 ................... 230 1,038
PLD Telekom, Inc. strike $10.86
expires March 2003 .......................... 1,010 8,476
Primestar, Inc. General Motors Cl.
H Stock Appreciation Rts strike
$47.00 expires May 2000 ..................... 3,828 286,281
Startec Global Communications
strike $24.20 expires May 2008 .............. 400 720
------------
1,006,960
------------
TOTAL RIGHTS & WARRANTS
(Cost $438,305) ............................. $ 3,369,930
------------
COMMON STOCKS -- 4.0%
COMPUTERS, SOFTWARE & SERVICES -- 1.0%
Globix Corp. .................................. 8,448 $ 442,992
Verio, Inc. ................................... 9,858 739,966
------------
1,182,958
------------
CONSUMER PRODUCTS -- 0.0%
Coinstar, Inc. ................................ 3,671 51,394
------------
See Accompanying Notes to Financial Statements.
58
<PAGE>
WARBURG PINCUS HIGH YIELD FUND (CONCLUDED)
NUMBER
OF SHARES VALUE
--------- ------------
ENERGY -- 1.3%
Abraxas Petroleum Corp. ....................... 29,809 $ 40,987
Weatherford International, Inc. ............... 15,162 682,290
Metretek Technologies, Inc. ................... 150 871,200
------------
1,594,477
------------
PACKAGING & CONTAINERS -- 0.0%
Crown Packaging Enterprises, Ltd. ............. 100,847 1,008
------------
TELECOMMUNICATIONS -- 1.7%
Advanced Radio Telecom Corp. .................. 10,117 386,975
AT&T Canada, Inc. ............................. 1,370 79,506
E Spire Communications, Inc. .................. 21,253 265,663
Globalstar Telecommunications,
Ltd. ........................................ 1,651 47,071
Intermedia Communications, Inc. ............... 3,097 196,093
Loral Space and Communications
Ltd. ........................................ 181 2,726
Microcell Telecommunications,
Inc. ........................................ 3,436 158,056
Price Communications Corp. .................... 40,268 961,399
------------
2,097,489
------------
TOTAL COMMON STOCKS
(Cost $1,640,920) ........................... $ 4,927,326
------------
PREFERRED STOCKS -- 3.8%
AEROSPACE/DEFENSE -- 0.7%
GPA Group plc Convertible
Cumulative Second Preference
Shares 7.00% ................................ 1,750,000 $ 840,000
------------
CABLE -- 0.1%
DIVA Systems Corporation,
Series C .................................... 11,890 95,120
------------
CELLULAR/WIRELESS COMMUNICATIONS -- 0.3%
Rural Cellular Corp. 144A PIK
11.375% ..................................... 3,013 297,563
------------
ELECTRONICS -- 0.2%
Interact Electronic Marketing,
Inc. 14.00% ................................. 700 178,500
------------
INDUSTRIAL -- 0.3%
International Utility Structures,
Inc. 13.00% ................................. 960 79,920
International Utility Structures, Inc.,
Units 13.00% ................................ 3,500 312,813
------------
392,733
------------
MISCELLANEOUS -- 0.0%
Peninsula Gaming LLC .......................... 1,760 10,563
------------
PUBLISHING & INFORMATION SERVICES -- 0.2%
Source Media, Inc., 144A PIK
13.50% ...................................... 13,484 296,653
------------
NUMBER
OF SHARES VALUE
--------- ------------
RESTAURANTS, HOTELS & GAMING -- 0.1%
AmeriKing, Inc., 13.00% Cum.
Exchangeable ................................ 7,329 $ 146,583
------------
TELECOMMUNICATIONS -- 1.9%
Adelphia Business Solutions, Inc.
12.875% Pfd., Series B ...................... 8 7,761
Classic Communications, Inc. .................. 3,000 50,010
E.Spire Communications, Inc.
Jr. PIK 12.75% .............................. 1,277 453,501
Intermedia Communications, Inc.
144A 7.00% Jr. Convertible,
Series E .................................... 20,000 1,045,000
Nextel Communications, Inc.
13.00% Exchangeable,
Series D PIK ................................ 338 362,505
NEXTLINK Communications, Inc.
144A 14.00% Sr. Exchangeable
PIK ......................................... 9,065 478,179
------------
2,396,956
------------
TOTAL PREFERRED STOCKS
(Cost $4,042,955) ........................... $ 4,654,671
------------
SHORT-TERM INVESTMENT -- 0.6%
BBH Grand Cayman U.S. Dollar
Time Deposit
4.950% 03/01/00 ............................. $ 812 $ 812,000
(Cost $812,000) ------------
TOTAL INVESTMENTS -- 92.1%
(Cost $119,705,232*) ........................ $114,254,417
------------
OTHER ASSETS IN EXCESS
OF LIABILITIES -- 7.9% ...................... $ 9,829,394
------------
TOTAL NET ASSETS -- 100.0% .................... $124,083,811
============
* Also cost for Federal income tax purposes at February 29, 2000. The gross
appreciation (depreciation) on a tax basis is as follows:
Gross Appreciation .................................... $ 10,548,946
Gross Depreciation .................................... (15,999,761)
------------
Net Depreciation ...................................... $ (5,450,815)
============
+ Step Bond -- The interest rate as of February 29, 2000 is 0% and will reset
to interest rate shown at a future date.
++ Security in default.
+++ Illiquid Security.
INVESTMENT ABBREVIATIONS
PIK ................................................................Pay In Kind
See Accompanying Notes to Financial Statements.
59
<PAGE>
WARBURG PINCUS MUNICIPAL BOND FUND
PORTFOLIO MANAGERS' LETTER
March 20, 2000
Dear Shareholders:
We are writing to report on the results of the Warburg Pincus Municipal Bond
Fund (the "Fund") for the six months ended February 29, 2000.
On February 29, 2000, the net asset value ("NAV") of the Fund's institutional
shares was $13.89, compared to an NAV of $14.30 on August 31, 1999. As a result,
the institutional shares' total return was down 0.1%, (assuming the reinvestment
of dividends and distributions totaling $0.40 per share). By comparison, the
Lehman Brothers Municipal Bond Index* (the "Index") returned 0.0% over the same
period.
At February 29, 2000, NAV of the Fund's common shares was $13.90 compared to an
NAV of $14.29 on August 31, 1999. As a result, the common shares' total return
was down 0.1%, (assuming the reinvestment of dividends and distributions
totaling $0.37 per share). By comparison, the Index returned 0.0% during the
same period.
The Fund slightly underperformed the Index in the fiscal half-year. As the
period progressed, performance continued to improve, despite unstable conditions
in fixed income markets.
As the period opened in September 1999, the Fund was lagging the Index due to
its continued exposure to taxable securities. Valuations of taxables like
investment-grade and high yield bonds had declined during the third quarter
compared to those of tax-exempt instruments. The Fund's exposure to these
sectors thus negated gains from our municipal strategy of avoiding insured debt
and overweighting noncallable issues.
We became increasingly cautious as the end of the year approached, given the
widespread concern over possible Y2K-related computer problems and the possible
resulting squeeze on market liquidity. We moved to lessen the impact on the
portfolio from any such disruption by emphasizing bonds for which demand would
likely remain strong. These included high-quality municipal securities in
general, bonds from states with especially high income-tax rates, as well as
noncallable and prerefunded issues (for their stable cash flow and valuation
characteristics). We maintained exposure to deeply discounted tax-exempt paper
and taxable securities -- notably high yield bonds -- in an effort to benefit
from the upturN that we anticipated in these segments.
As it turned out, aggregate fixed income markets fell sharply in the last three
months of 1999. Municipals, moreover, turned in the worst performance among the
entire U.S. fixed income universe as institutional buying fell and retail
selling rose. Investors' excessive selling of both low-coupon municipals and
lower-quality taxable bonds in particular hampered the Fund's returns compared
to those of the Index.
In the first two months of 2000, bond markets still had not stabilized due to
the Federal Reserve's interest rate increase and the Treasury's announced
buyback of some of its own long-term bonds in the open market. Nevertheless, the
Fund's performance began to improve, as investors recognized how cheap
deep-discount paper and high yield bonds had become. The rebound in prices that
began in January and February in these two sectors helped to improve overall
returns.
As developments occur in the fixed income markets or at Credit Suisse Asset
Management that we believe would be of interest to you, we will be sure to keep
you informed. Meanwhile, if you have questions, please feel free to call upon us
at any time.
Sincerely yours,
Credit Suisse Asset Management Fixed Income Management Team
Gregg M. Diliberto, Managing Director
Jo Ann Corkran, Managing Director
Mark K. Silverstein, Managing Director
Jose A. Rodriguez, Director
60
<PAGE>
WARBURG PINCUS MUNICIPAL BOND FUND
PORTFOLIO MANAGERS' LETTER (CONCLUDED)
PERFORMANCE
<TABLE>
<CAPTION>
SINCE
FIVE YEARS INCEPTION
SIX MONTHS ONE YEAR (3/1/95 - 2/29/00) 6/17/94
2/29/00 (3/1/99 - 2/29/00) (ANNUALIZED) (ANNUALIZED)
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Warburg Pincus Municipal Bond Fund (Institutional) (0.1%) (1.9%) 5.0% 5.0%
Warburg Pincus Municipal Bond Fund (Common) (0.1%) (2.1%) 4.9% 4.9%
Lehman Brothers Municipal Bond Index* 0.0% (2.1%) 5.9% 5.8%
- ---------------------------------------------------------------------------------------------------------------------------
<FN>
*THE LEHMAN BROTHERS MUNICIPAL BOND INDEX IS A BROAD MARKET PERFORMANCE
BENCHMARK FOR THE TAX-EXEMPT BOND MARKET. IT IS COMPUTED WEEKLY AND MONTHLY
FROM PRICES SUPPLIED BY MULLER DATA CORPORATION ON APPROXIMATELY 48,059
INVESTMENT GRADE MUNICIPAL BONDS WITH MATURITIES OF 1-22+ YEARS AND IS
CALCULATED BY LEHMAN BROTHERS, INC. THE INDEX IS COMPOSED OF STATE, LOCAL,
REVENUE, PREREFUNDED, AND INSURED DEBT, AND CONTAINS ISSUES SUBJECT TO THE
ALTERNATIVE MINIMUM TAX.
</FN>
</TABLE>
61
<PAGE>
WARBURG PINCUS MUNICIPAL BOND FUND
SCHEDULE OF INVESTMENTS
FEBRUARY 29, 2000
(UNAUDITED)
PAR
(000) VALUE
------ -----------
MUNICIPAL BONDS -- 91.1%
CALIFORNIA -- 15.3%
California State GO
6.300% 09/11/11 ............................. $670 $ 733,650
5.125% 10/01/17 ............................. 825 760,031
Los Angeles CA, Department of
Water & Power Water RB
4.500% 05/15/23 ............................. 705 568,406
San Diego CA Convention Center
Expansion Financing Authority,
Series A
4.750% 04/01/28 ............................. 535 436,025
-----------
2,498,112
-----------
COLORADO -- 3.8%
Colorado Springs CO,
Utility RB
5.875% 11/15/17 ............................. 595 612,850
-----------
FLORIDA -- 3.8%
Tallahassee FL, Electric RB,
First Lien
6.100% 10/01/06 ............................. 600 621,000
-----------
ILLINOIS -- 5.1%
Chicago Illinois GO,
Series 1993
5.250% 01/01/18 ............................. 200 182,000
Illinois State Sales Tax RB,
Series Q
5.750% 06/15/14 ............................. 650 650,812
-----------
832,812
-----------
INDIANA -- 0.2%
Indianapolis IN, Public
Improvement Board RB
6.000% 01/10/03 ............................. 25 25,125
-----------
LOUISIANA -- 4.2%
New Orleans LA, Home Mortgage
Authority SOB
6.250% 01/15/11 ............................. 635 678,656
-----------
MARYLAND -- 5.8%
Maryland State Transportation
Authority Project RB
6.800% 07/01/16 ............................. 850 944,562
-----------
MASSACHUSETTS -- 3.6%
Massachusetts State Water
Resources Authority RB,
Series B
5.000% 12/01/25 ............................. 660 564,300
Massachusetts State Water
Resources Authority, General
RB, Series 92A
6.500% 07/15/19 ............................. 20 21,400
-----------
585,700
-----------
PAR
(000) VALUE
------ -----------
NEW YORK -- 35.3%
Metropolitan Transit Authority
Commuter Facilities RB,
Series A
5.000% 07/01/23 ............................. $600 $ 510,750
New York State Dormitory
Authority RB (Elizabeth Church
Manor Nursing Home)
5.400% 08/01/23 ............................. 50 45,500
New York State Dormitory
Authority RB (Episcopal Health
Services)
7.550% 08/01/29 ............................. 435 444,244
New York State Dormitory
Authority RB (Judicial Facilities
Lease)
7.375% 07/01/16 ............................. 40 45,900
New York State Dormitory
Authority RB (Park Ridge
Housing Inc. Project)
7.850% 02/01/29 ............................. 530 537,277
New York State Local Government
Assistance Corp. RB,
Series B
4.875% 04/01/20 ............................. 580 491,550
New York State Power Authority
General Purpose RB,
Series R
7.000% 01/01/10 ............................. 360 407,700
New York State Throughway
Authority General RB,
Series B
5.000% 01/01/20 ............................. 30 26,175
New York, NY Municipal Water
Finance Authority Water &
Sewer System RB,
Series B
5.125% 06/15/30 ............................. 295 252,225
New York, NY Municipal Water
Finance Authority Water &
Sewer System RB,
Series D
4.875% 06/15/21 ............................. 400 339,000
New York, NY Prerefunded GO,
Series D
8.000% 08/01/01 ............................. 605 642,056
6.000% 02/15/05 ............................. 5 5,256
New York, NY Prerefunded GO,
Series H
7.200% 02/01/02 ............................. 530 561,137
New York, NY Transitional
Finance Authority RB
(Future Tax Secured), Series B
4.750% 11/15/14 ............................. 35 31,106
See Accompanying Notes to Financial Statements.
62
<PAGE>
WARBURG PINCUS MUNICIPAL BOND FUND (CONTINUED)
PAR
(000) VALUE
------ -----------
NEW YORK -- (CONTINUED)
New York, NY Unrefunded Balance
GO, Series D
8.000% 08/01/03 ............................. $ 45 $ 47,644
6.000% 02/15/25 ............................. 10 9,800
New York, NY Unrefunded Balance
GO, Series H
7.200% 02/01/13 ............................. 70 73,587
Suffolk County NY Water Authority,
Waterworks RB, Series V
6.750% 06/01/12 ............................. 580 640,175
Triborough Bridge and Tunnel
Authority, NY General Purpose
RB, Series A
5.200% 01/01/20 ............................. 730 652,438
-----------
5,763,520
-----------
PUERTO RICO -- 4.5%
Commonwealth of Puerto Rico GO
5.400% 07/01/07 ............................. 730 742,775
-----------
SOUTH DAKOTA -- 0.1%
Heartland Consumers Power
District, SD Electric RB
6.375% 01/01/16 ............................. 20 21,175
-----------
TENNESSEE -- 0.1%
Metropolitan Government of
Nashville and Davidson County,
TN Water and Sewer RB
Series A
4.750% 01/01/22 ............................. 30 24,863
-----------
VIRGINIA -- 4.4%
Fairfax County, VA Redevelopment
& Housing Authority (Island
Walk Proj.), Mortgage RB
7.100% 04/01/19 ............................. 630 715,050
-----------
WASHINGTON -- 4.9%
King County, WA GO, Series A
6.200% 01/01/24 ............................. 40 42,400
Seattle, WA Municipal Light &
Power RB
5.125% 07/01/22 ............................. 100 87,250
Seattle, WA Water System RB
5.250% 12/01/23 ............................. 735 663,338
-----------
792,988
-----------
TOTAL MUNICIPAL BONDS
(Cost $14,921,226) .......................... $14,859,188
-----------
PAR
(000) VALUE
------ -----------
CORPORATE BONDS -- 6.2%
BANKING -- 1.9%
Bay View Capital Corp.
Sub. Notes
9.125% 08/15/07 ............................. $ 65 $ 53,625
Export-Import Bank of Korea,
Global Bonds
6.500% 02/10/02 ............................. 25 24,375
Export-Import Bank of Korea,
Yankee Notes
6.500% 05/15/00 ............................. 50 49,938
First Republic Bank Sub. Notes
7.750% 09/15/12 ............................. 25 21,063
Fuji Finance (Cayman), Ltd.
Perpetual Sub. Notes
7.113% 08/08/00++/+++ ....................... 120 115,200
Fuji JGB Investment L.L.C.,
Noncumulative Preferred
Securities, Series A
9.870% 06/30/00++ ........................... 45 45,225
-----------
309,426
-----------
BROADCASTING -- 0.7%
Fox/Liberty Networks L.L.C.,
Registered Sr. Notes
8.875% 08/15/07 ............................. 105 106,575
-----------
CABLE -- 0.1%
CSC Holdings Inc.,
Sr. Notes
7.250% 07/15/08 ............................. 20 18,800
-----------
RETAIL -- 0.7%
K Mart Corp. Notes
7.950% 02/01/23 ............................. 25 20,969
K Mart Corp. Pass Through
Certificates, Series 1995
Class K3
8.540% 01/02/15 ............................. 103 99,064
-----------
120,033
-----------
TELECOMMUNICATIONS -- 0.7%
Nextlink Communications
144A Senior Notes
10.500% 12/01/09 ............................ 40 40,000
Voicestream Wireless Holding,
Series 144A
10.375% 11/15/09+ ........................... 60 37,800
10.375% 11/15/09 ............................ 40 41,500
-----------
119,300
-----------
TRANSPORTATION -- 1.1%
Northwest Airlines, Inc.,
Gtd. Notes
7.625% 03/15/05 ............................. 200 178,000
-----------
See Accompanying Notes to Financial Statements.
63
<PAGE>
WARBURG PINCUS MUNICIPAL BOND FUND (CONCLUDED)
PAR
(000) VALUE
------ -----------
UTILITIES -- 1.0%
Connecticut Light and Power Co.
First Mortgage Bonds,
Series C
7.750% 06/01/02 .......................... $ 85 $ 84,575
Series D
7.875% 10/01/24 .......................... 10 10,000
North Atlantic Energy Corp.,
Secured First Mortgage Notes,
Series A
9.050% 06/01/02 ............................. 69 68,914
-----------
163,489
-----------
TOTAL CORPORATE BONDS
(Cost $1,039,196) ........................... $ 1,015,623
-----------
U.S. TREASURY OBLIGATIONS -- 0.7%
U.S. Treasury Bonds
8.000% 11/15/21 ............................. $ 65 $ 76,843
U.S. Treasury Notes
6.500% 02/15/10 ............................. 30 30,195
-----------
TOTAL U.S. TREASURY
OBLIGATIONS
(Cost $103,276) ............................. $ 107,038
-----------
SHORT TERM INVESTMENT -- 0.6%
BBH Grand Cayman U.S. Dollar
Time Deposit
4.950% 03/01/00 ............................. $106 $ 106,000
(Cost $106,000) -----------
TOTAL INVESTMENTS -- 98.6%
(Cost $16,169,698*) ......................... $16,087,849
OTHER ASSETS IN EXCESS
OF LIABILITIES-- 1.4% ....................... $ 224,582
-----------
TOTAL NET ASSETS -- 100.0% .................... $16,312,431
===========
*Also cost for Federal income tax purposes at February 29, 2000. The gross
appreciation (depreciation) on a tax basis is as follows:
Gross Appreciation .................................... $ 500,503
Gross Depreciation .................................... (582,352)
-----------
Net Depreciation ...................................... $ (81,849)
===========
+Step Bond -- The interest rate as of February 29, 2000 is 0% and will
reset to interest rate shown at a future date.
++Variable Rate Obligation -- The rate shown is the rate as of February 29,
2000.
+++Securities have no stated maturity date.
INVESTMENT ABBREVIATIONS
GO .........................................................General Obligations
RB ................................................................Revenue Bond
SOB ...................................................Special Obligations Bond
See Accompanying Notes to Financial Statements.
64
<PAGE>
THE WARBURG PINCUS FUNDS
STATEMENTS OF ASSETS AND LIABILITIES
FEBRUARY 29, 2000
(UNAUDITED)
<TABLE>
<CAPTION>
GLOBAL
INTERNATIONAL EUROPEAN U.S. CORE TELECOMMUNICATIONS
GROWTH FUND EQUITY FUND EQUITY FUND FUND
--------------- ----------- ----------- -------------------
<S> <C> <C> <C> <C>
ASSETS
Investments, at value (cost - $495,381,269, $30,908,417,
$63,340,360 and $385,258,378, respectively) .......... $562,985,206 $34,244,016 $70,724,675 $506,197,251
Cash ................................................... 1,085,688 1,333,119 387 --
Collateral received for securities loaned .............. 81,943,025 3,001,500 3,306,000 56,298,740
Receivable for investments sold ........................ 8,924,624 744,075 -- 5,926,094
Receivable for Fund shares sold ........................ -- 2,980,482 132,888 12,649,767
Receivable from investment adviser ..................... -- 7,186 -- --
Receivable from foreign tax reclaims ................... 337,322 26,727 -- --
Dividends and interest receivable ...................... 379,415 29,721 86,113 164,622
Prepaid expenses and other assets ...................... 69,679 44,104 11,150 111,396
------------ ----------- ----------- ------------
Total Assets ......................................... 655,724,959 42,410,930 74,261,213 581,347,870
------------ ----------- ----------- ------------
LIABILITIES
Payable upon return of securities loaned ............... 81,943,025 3,001,500 3,306,000 56,298,740
Payable for investments purchased ...................... 6,355,272 426,419 -- 12,135,788
Payable for Fund shares repurchased .................... 6,161 322,598 -- 1,001,287
Advisory fee payable ................................... 388,678 -- 36,854 363,318
Distribution fee payable (Common shares) ............... -- 7,252 -- 86,845
Accrued expenses payable ............................... 829,764 -- 74,252 194,731
------------ ----------- ----------- ------------
Total Liabilities .................................... 89,522,900 3,757,769 3,417,106 70,080,709
------------ ----------- ----------- ------------
NET ASSETS
Capital stock, $0.001 par value ........................ 22,796 3,001 3,785 6,186
Paid-in capital ........................................ 374,142,729 30,169,083 57,539,963 363,413,546
Undistributed net investment income/(loss) ............. (3,410,607) (312,273) 1,646 (1,046,579)
Accumulated net realized gain from investments,
securities sold short, futures and foreign currency
related transactions, if any ......................... 127,886,207 5,459,438 5,914,398 27,955,424
Net unrealized appreciation on investments and other,
if any ............................................... 67,560,934 3,333,912 7,384,315 120,938,584
------------ ----------- ----------- ------------
Net Assets ........................................... $566,202,059 $38,653,161 $70,844,107 $511,267,161
============ =========== =========== ============
INSTITUTIONAL SHARES
Net assets ............................................. $566,202,059 $ 129,657 $70,844,107
------------ ----------- -----------
Shares outstanding ..................................... 22,795,782 10,051 3,784,947
------------ ----------- -----------
Net asset value, offering price and redemption price
per share ............................................ $ 24.84 $ 12.90 $ 18.72
============ =========== ===========
COMMON SHARES
Net assets ............................................. $38,523,504 $511,267,161
----------- ------------
Shares outstanding ..................................... 2,991,321 6,185,960
----------- ------------
Net asset value, offering price and redemption price
per share ............................................ $ 12.88 $ 82.65
=========== ============
</TABLE>
See Accompanying Notes to Financial Statements.
65
<PAGE>
THE WARBURG PINCUS FUNDS
STATEMENTS OF ASSETS AND LIABILITIES
FEBRUARY 29, 2000
(UNAUDITED)
<TABLE>
<CAPTION>
LONG-SHORT
FOCUS MARKET NEUTRAL U.S. CORE FIXED
FUND FUND INCOME FUND
----------- ---------------- ---------------
<S> <C> <C> <C>
ASSETS
Investments, at value (cost - $7,631,601, $7,116,062 and
$491,376,454, respectively) .......................................... $7,884,504 $ 6,957,096 $485,700,980
Deposits with brokers and custodian bank for
securities sold short or futures contract ............................ -- 6,132,722 1,051,350
Cash ................................................................... -- 73,621 --
Receivable for investments sold ........................................ 422,883 -- 15,751,405
Receivable for Fund shares sold ........................................ 74,500 4,955 --
Receivable from investment adviser ..................................... 11,085 3,239 --
Receivable on open futures contracts ................................... -- -- 146,133
Dividends and interest receivable ...................................... 2,877 19,816 4,133,601
Prepaid expenses and other assets ...................................... 15,739 10,480 29,585
---------- ----------- ------------
Total Assets ......................................................... 8,411,588 13,201,929 506,813,054
---------- ----------- ------------
LIABILITIES
Securities sold short (proceeds $6,678,039 for the
Long-Short Market Neutral Fund) ...................................... -- 5,934,595 --
Payable for investments purchased ...................................... 493,073 -- 130,238,782
Payable for Fund shares repurchased .................................... -- -- 157,146
Overdraft liability .................................................... 2,716 -- --
Payable on open futures contracts ...................................... -- -- 71,866
Advisory fee payable ................................................... -- -- 73,160
Distribution fee payable (Common shares) ............................... 173 610 --
Accrued expenses payable ............................................... 24,767 19,348 163,827
---------- ----------- ------------
Total Liabilities .................................................... 520,729 5,954,553 130,704,781
---------- ----------- ------------
NET ASSETS
Capital stock, $0.001 par value ........................................ 483 465 31,158
Paid-in capital ........................................................ 7,508,051 8,158,428 388,548,336
Undistributed net investment income/(loss) ............................. (10,220) 27,299 3,278,945
Accumulated net realized gain/(loss) from investments,
securities sold short, futures and foreign currency
related transactions, if any ......................................... 139,641 (1,523,294) (10,179,598)
Net unrealized appreciation/(depreciation) on
investments and other, if any ........................................ 252,904 584,478 (5,570,568)
---------- ----------- ------------
Net Assets ........................................................... $7,890,859 $ 7,247,376 $376,108,273
========== =========== ============
INSTITUTIONAL SHARES
Net assets ............................................................. $6,945,113 $ 3,750,252 $376,108,273
---------- ----------- ------------
Shares outstanding ..................................................... 424,971 241,912 25,312,428
---------- ----------- ------------
Net asset value, offering price and redemption price
per share ............................................................ $ 16.34 $ 15.50 $ 14.86
========== =========== ============
COMMON SHARES
Net assets ............................................................. $ 945,746 $ 3,497,124
---------- -----------
Shares outstanding ..................................................... 58,153 223,134
---------- -----------
Net asset value, offering price and redemption price
per share ............................................................ $ 16.26 $ 15.67
========== ===========
</TABLE>
See Accompanying Notes to Financial Statements.
66
<PAGE>
THE WARBURG PINCUS FUNDS
STATEMENTS OF ASSETS AND LIABILITIES
FEBRUARY 29, 2000
(UNAUDITED)
<TABLE>
<CAPTION>
STRATEGIC
GLOBAL FIXED HIGH YIELD MUNICIPAL
INCOME FUND FUND BOND FUND
------------ ------------ ------------
<S> <C> <C> <C>
ASSETS
Investments, at value (cost - $13,912,551, $119,705,232 and
$16,169,698, respectively) ........................................... $13,243,361 $114,254,417 $16,087,849
Cash ................................................................... 340,620 34,507 270
Receivable for investments sold ........................................ 110,826 2,783,357 --
Receivable for Fund shares sold ........................................ -- 4,721,555 --
Receivable from investment adviser ..................................... 20,532 -- 3,623
Receivable on open futures contracts ................................... 8,781 -- --
Dividends and interest receivable ...................................... 177,956 2,340,076 232,470
Prepaid expenses and other assets ...................................... 55,997 52,482 13,040
----------- ------------ -----------
Total Assets ......................................................... 13,958,073 124,186,394 16,337,252
----------- ------------ -----------
LIABILITIES
Payable for investments purchased ...................................... 1,374,560 -- --
Payable on forward currency contracts .................................. 51,540 -- --
Advisory fee payable ................................................... -- 26,461 --
Distribution fee payable (Common shares) ............................... -- 5,319 43
Accrued expenses payable ............................................... 34,078 70,803 24,778
----------- ------------ -----------
Total Liabilities .................................................... 1,460,178 102,583 24,821
----------- ------------ -----------
NET ASSETS
Capital stock, $0.001 par value ........................................ 911 8,016 1,173
Paid-in capital ........................................................ 14,862,545 145,021,756 16,380,665
Undistributed net investment income .................................... 495,285 1,870,259 72,919
Accumulated net realized loss from investments,
securities sold short, futures and foreign currency
related transactions, if any ......................................... (2,134,455) (17,365,405) (153,639)
Net unrealized appreciation/(depreciation) on
investments and other, if any ........................................ (726,391) (5,450,815) 11,313
----------- ------------ -----------
Net Assets ........................................................... $12,497,895 $124,083,811 $16,312,431
=========== ============ ===========
INSTITUTIONAL SHARES
Net assets ............................................................. $12,497,895 $ 90,944,631 $16,095,264
----------- ------------ -----------
Shares outstanding ..................................................... 911,116 5,882,641 1,158,400
----------- ------------ -----------
Net asset value, offering price and redemption price
per share ............................................................ $ 13.72 $ 15.46 $ 13.89
=========== ============ ===========
COMMON SHARES
Net assets ............................................................. $ 33,139,180 $ 217,167
------------ -----------
Shares outstanding ..................................................... 2,133,772 15,627
------------ -----------
Net asset value, offering price and redemption price
per share ............................................................ $ 15.53 $ 13.90
=========== ===========
</TABLE>
See Accompanying Notes to Financial Statements.
67
<PAGE>
THE WARBURG PINCUS FUNDS
STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED FEBRUARY 29, 2000
(UNAUDITED)
<TABLE>
<CAPTION>
GLOBAL
INTERNATIONAL EUROPEAN U.S. CORE TELECOMMUNICATIONS
GROWTH FUND EQUITY FUND EQUITY FUND FUND
-------------- ----------- ------------ -------------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME
Dividends ............................................... $ 1,574,772 $ 89,260 $ 450,278 $ 271,448
Interest ................................................ 212,665 46,751 20,493 549,803
Securities lending ...................................... 125,892 2,134 5,287 69,453
Foreign taxes withheld .................................. (141,569) (5,994) -- (7,779)
------------ ---------- ---------- ------------
Total Investment Income ............................... 1,771,760 132,151 476,058 882,925
------------ ---------- ---------- ------------
EXPENSES
Investment advisory fees ................................ 2,584,420 150,121 267,189 1,044,183
Administration fees ..................................... 405,433 33,773 44,558 182,732
Custodian fees .......................................... 350,667 40,663 27,506 53,611
Transfer agent fees ..................................... 119,002 4,249 15,882 73,439
Registration fees ....................................... 54,230 32,897 22,210 88,915
Printing fees ........................................... 35,667 68,198 11,517 19,968
Interest expense ........................................ 31,875 13,846 4,387 --
Audit fees .............................................. 29,772 6,259 5,344 4,524
Insurance expense ....................................... 7,652 88 (712) 289
Directors fees .......................................... 5,165 6,080 5,284 5,377
Legal fees .............................................. 4,968 28,061 4,115 8,357
Distribution fees ....................................... 3,819 37,391 57 261,135
Miscellaneous fees ...................................... 12,815 6,129 1,479 5,095
------------ ---------- ---------- ------------
3,645,485 427,755 408,816 1,747,625
Less fees waived and reimbursed ......................... -- (197,975) (49,284) (24,723)
------------ ---------- ---------- ------------
Total Expenses ........................................ 3,645,485 229,780 359,532 1,722,902
------------ ---------- ---------- ------------
Net Investment Income/(Loss) ............................... (1,873,725) (97,629) 116,526 (839,977)
------------ ---------- ---------- ------------
REALIZED AND UNREALIZED GAIN/(LOSS) ON INVESTMENTS
AND FOREIGN CURRENCY TRANSACTIONS
Net realized gain/(loss) from:
Security transactions ................................. 149,924,983 7,199,803 8,154,281 29,697,789
Foreign exchange transactions ......................... (1,479,020) (214,538) -- (206,602)
------------ ---------- ---------- ------------
148,445,963 6,985,265 8,154,281 29,491,187
------------ ---------- ---------- ------------
Net change in unrealized appreciation/(depreciation):
Investments ........................................... (4,710,973) 2,386,309 (200,249) 115,836,071
Translation of assets and
liabilities in foreign currencies ..................... (46,051) (5,585) -- (460)
------------ ---------- ---------- ------------
(4,757,024) 2,380,724 (200,249) 115,835,611
------------ ---------- ---------- ------------
Net Gain On Investments And
Foreign Currency Transactions ......................... 143,688,939 9,365,989 7,954,032 145,326,798
------------ ---------- ---------- ------------
Net Increase In Net Assets Resulting
From Operations ....................................... $141,815,214 $9,268,360 $8,070,558 $144,486,821
============ ========== ========== ============
</TABLE>
See Accompanying Notes to Financial Statements.
68
<PAGE>
THE WARBURG PINCUS FUNDS
STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED FEBRUARY 29, 2000
(UNAUDITED)
<TABLE>
<CAPTION>
LONG-SHORT
FOCUS MARKET NEUTRAL U.S. CORE FIXED
FUND FUND INCOME FUND
----------- -------------- ---------------
<S> <C> <C> <C>
INVESTMENT INCOME
Dividends .............................................................. $ 58,459 $ 46,301 $ 469,401
Interest ............................................................... 6,870 176,605 11,213,699
Securities lending ..................................................... 1,586 -- --
Foreign taxes withheld ................................................. (234) -- --
----------- ---------- -----------
Total Investment Income .............................................. 66,681 222,906 11,683,100
----------- ---------- -----------
EXPENSES
Investment advisory fees ............................................... 57,633 38,351 623,114
Administration fees .................................................... 9,735 4,816 130,342
Custodian fees ......................................................... 26,341 1,080 30,589
Registration fees ...................................................... 22,504 19,721 28,475
Printing fees .......................................................... 19,172 33,701 53,612
Transfer agent fees .................................................... 11,434 6,283 48,837
Audit fees ............................................................. 7,618 7,559 21,468
Directors fees ......................................................... 5,246 5,300 4,151
Legal fees ............................................................. 3,349 3,631 22,409
Distribution fees ...................................................... 652 2,794 52
Insurance expense ...................................................... 164 (3,731) 1,392
Dividend expense ....................................................... -- 37,434 --
Miscellaneous fees ..................................................... 1,295 3,079 19,470
----------- ---------- -----------
165,143 160,018 983,911
Less fees waived and reimbursed ........................................ (88,195) (51,692) (241,908)
----------- ---------- -----------
Total Expenses ....................................................... 76,948 108,326 742,003
----------- ---------- -----------
Net Investment Income/(Loss) .............................................. (10,267) 114,580 10,941,097
----------- ---------- -----------
REALIZED AND UNREALIZED GAIN/(LOSS) ON INVESTMENTS
AND FOREIGN CURRENCY TRANSACTIONS
Net realized gain/(loss) from:
Security transactions ................................................ 1,242,602 311,942 (4,021,537)
Futures transactions ................................................. -- -- 218,437
Securities sold short ................................................ -- (388,865) --
Foreign exchange transactions ........................................ -- -- (271,672)
----------- ---------- -----------
1,242,602 (76,923) (4,074,772)
----------- ---------- -----------
Net change in unrealized appreciation/(depreciation):
Investments .......................................................... (1,047,786) 1,061,910 3,511,093
Futures .............................................................. -- -- (330,362)
Translation of assets and
liabilities in foreign currencies ................................. -- -- 41,708
----------- ---------- -----------
(1,047,786) 1,061,910 3,222,439
----------- ---------- -----------
Net Gain/(Loss) On Investments And Foreign
Currency Transactions ................................................ 194,816 984,987 (852,333)
----------- ---------- -----------
Net Increase In Net Assets
Resulting From Operations ............................................ $ 184,549 $1,099,567 $10,088,764
=========== ========== ===========
</TABLE>
See Accompanying Notes to Financial Statements.
69
<PAGE>
THE WARBURG PINCUS FUNDS
STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED FEBRUARY 29, 2000
(UNAUDITED)
<TABLE>
<CAPTION>
STRATEGIC
GLOBAL FIXED HIGH YIELD MUNICIPAL
INCOME FUND FUND BOND FUND
----------- ---------- ----------
<S> <C> <C> <C>
INVESTMENT INCOME
Dividends .............................................................. $ 9,476 $ 140,784 $ 5,663
Interest ............................................................... 561,969 6,266,891 529,766
----------- ---------- ----------
Total Investment Income .............................................. 571,445 6,407,675 535,429
----------- ---------- ----------
EXPENSES
Investment advisory fees ............................................... 49,650 439,704 63,916
Administration fees .................................................... 24,866 85,185 18,703
Registration fees ...................................................... 42,188 49,361 18,002
Custodian fees ......................................................... 32,681 22,216 13,792
Transfer agent fees .................................................... 8,883 25,772 8,867
Printing fees .......................................................... 8,541 29,646 10,227
Audit fees ............................................................. 6,570 12,440 6,597
Directors fees ......................................................... 5,755 5,246 5,276
Legal fees ............................................................. 2,992 16,197 2,989
Insurance expense ...................................................... 180 402 117
Interest expense ....................................................... 155 990 679
Distribution fees ...................................................... 8 33,331 273
Miscellaneous fees ..................................................... 11,441 20,132 5,387
----------- ---------- ----------
193,910 740,622 154,825
Less fees waived and reimbursed ........................................ (119,728) (268,176) (62,898)
----------- ---------- ----------
Total Expenses ....................................................... 74,182 472,446 91,927
----------- ---------- ----------
Net Investment Income ..................................................... 497,263 5,935,229 443,502
----------- ---------- ----------
REALIZED AND UNREALIZED GAIN/(LOSS) ON INVESTMENTS
AND FOREIGN CURRENCY TRANSACTIONS
Net realized gain/(loss) from:
Security transactions ................................................ (1,526,661) 257,858 $ (124,385)
Futures transactions ................................................. 14,420 -- --
Foreign exchange transactions ........................................ 224,584 -- --
----------- ---------- ----------
(1,287,657) 257,858 (124,385)
----------- ---------- ----------
Net change in unrealized appreciation/(depreciation):
Investments ............................................................ 366,612 1,102,289 (336,896)
Futures ................................................................ 9,756 -- --
Translation of assets and
liabilities in foreign currencies .................................... (224,402) -- --
----------- ---------- ----------
151,966 1,102,289 (336,896)
----------- ---------- ----------
Net Gain/(Loss) On Investments And Foreign
Currency Transactions ................................................ (1,135,691) 1,360,147 (461,281)
----------- ---------- ----------
Net Increase/(Decrease) In Net Assets
Resulting From Operations ............................................ $ (638,428) $7,295,376 $ (17,779)
=========== ========== ==========
</TABLE>
See Accompanying Notes to Financial Statements.
70
<PAGE>
THE WARBURG PINCUS FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
EUROPEAN
INTERNATIONAL GROWTH FUND EQUITY FUND
----------------------------------- --------------------------------------
FOR THE SIX MONTHS FOR THE YEAR FOR THE SIX MONTHS FOR THE PERIOD
ENDED ENDED ENDED JANUARY 28, 1999*
FEBRUARY 29, 2000 AUGUST 31, 1999 FEBRUARY 29, 2000 TO AUGUST 31, 1999
----------------- --------------- ----------------- ------------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
Increase/(decrease) in net assets:
Operations:
Net investment income/(loss) .......................... $ (1,873,725) $ 4,101,951 $ (97,629) $ 213,741
Net gain/(loss) on investments and foreign
currency transactions ............................... 143,688,939 88,294,555 9,365,989 (865,652)
------------- ------------ ----------- -----------
Net increase/(decrease) in net assets resulting
from operations ..................................... 141,815,214 92,396,506 9,268,360 (651,911)
------------- ------------ ----------- -----------
Dividends and Distributions to
shareholders:
From net investment income:
Institutional shares ................................ (2,498,919) (7,632,495) (667) --
Common shares ....................................... -- (344,430) (134,704) --
From net realized capital gains:
Institutional shares ................................ (98,708,550) (54,241,925) -- --
Common shares ....................................... (1,335,125) (2,569,737) -- --
------------- ------------ ----------- -----------
Total distributions to shareholders ...................... (102,542,594) (64,788,587) (135,371) --
------------- ------------ ----------- -----------
Net capital share transactions ........................... (156,964,131) 31,183,186 4,863,728 25,308,355
------------- ------------ ----------- -----------
Total increase/(decrease) in net assets .................. (117,691,511) 58,791,105 13,996,717 24,656,444
Net Assets:
Beginning of period ................................... 683,893,570 625,102,465 24,656,444 --
------------- ------------ ----------- -----------
End of period ......................................... $ 566,202,059 $683,893,570 $38,653,161 $24,656,444
============= ============ =========== ===========
Undistributed net investment income/(loss) ............... $ (3,410,607) $ 2,441,057 $ (312,273) $ 135,265
============= ============ =========== ===========
<FN>
* Inception Date
</FN>
</TABLE>
See Accompanying Notes to Financial Statements.
71
<PAGE>
THE WARBURG PINCUS FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
U.S. CORE EQUITY FUND GLOBAL TELECOMMUNICATIONS FUND
------------------------------------ --------------------------------------
FOR THE SIX MONTHS FOR THE YEAR FOR THE SIX MONTHS FOR THE YEAR
ENDED ENDED ENDED ENDED
FEBRUARY 29, 2000 AUGUST 31, 1999 FEBRUARY 29, 2000 AUGUST 31, 1999
----------------- --------------- ------------------- ---------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
Increase/(decrease) in net assets:
Operations:
Net investment income/(loss) ........................ $ 116,526 $ 218,901 $ (839,977) $ (67,321)
Net gain on investments and foreign
currency transactions ............................. 7,954,032 20,990,319 145,326,798 7,197,021
------------ ------------ ------------ -----------
Net increase in net assets resulting
from operations ................................... 8,070,558 21,209,220 144,486,821 7,129,700
------------ ------------ ------------ -----------
Dividends and Distributions to
shareholders:
From net investment income:
Institutional shares .............................. (245,904) (104,261) -- --
Common shares ..................................... (309) (22) -- --
From net realized capital gains:
Institutional shares .............................. (9,910,582) (24,127,328) -- --
Common shares ..................................... (21,417) (5,552) (3,754,559) (179,290)
------------ ------------ ------------ -----------
Total distributions to shareholders .................... (10,178,212) (24,237,163) (3,754,559) (179,290)
------------ ------------ ------------ -----------
Net capital share transactions ......................... 2,736,832 9,728,907 305,369,408 57,496,988
------------ ------------ ------------ -----------
Total increase in net assets ........................... 629,178 6,700,964 446,101,670 64,447,398
Net Assets:
Beginning of period ................................. 70,214,929 63,513,965 65,165,491 718,093
------------ ------------ ------------ -----------
End of period ....................................... $ 70,844,107 $ 70,214,929 $511,267,161 $65,165,491
============ ============ ============ ===========
Undistributed net investment income/(loss) ............. $ 1,646 $ 131,333 $ (1,046,579) $ --
============ ============ ============ ===========
</TABLE>
See Accompanying Notes to Financial Statements.
72
<PAGE>
THE WARBURG PINCUS FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOCUS FUND LONG-SHORT MARKET NEUTRAL FUND
------------------------------------- -----------------------------------
FOR THE SIX MONTHS FOR THE YEAR FOR THE SIX MONTHS FOR THE YEAR
ENDED ENDED ENDED ENDED
FEBRUARY 29, 2000 AUGUST 31, 1999 FEBRUARY 29, 2000 AUGUST 31, 1999
----------------- --------------- ----------------- ---------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
Increase/(decrease) in net assets:
Operations:
Net investment income/(loss) ............................ $ (10,267) $ 156,770 $ 114,580 $ 499,594
Net gain/(loss) on investments and foreign
currency transactions ................................. 194,816 12,468,793 984,987 (1,815,539)
------------ ------------ ------------ ------------
Net increase/(decrease) in net assets resulting
from operations ....................................... 184,549 12,625,563 1,099,567 (1,315,945)
------------ ------------ ------------ ------------
Dividends and Distributions to
shareholders:
From net investment income:
Institutional shares .................................. (124,682) (49,578) (345,792) (30,279)
Common shares ......................................... (623) (1) (127,325) (90,662)
From net realized capital gains:
Institutional shares .................................. (9,020,862) -- -- (52,082)
Common shares ......................................... (77,776) -- -- (159,858)
------------ ------------ ------------ ------------
Total distributions to shareholders ........................ (9,223,943) (49,579) (473,117) (332,881)
------------ ------------ ------------ ------------
Net capital share transactions ............................. $(18,559,033) 253,862 (1,164,655) 3,132,125
------------ ------------ ------------ ------------
Total increase/(decrease) in net assets .................... (27,598,427) 12,829,846 (538,205) 1,483,299
Net Assets:
Beginning of period ..................................... 35,489,286 22,659,440 7,785,581 6,302,282
------------ ------------ ------------ ------------
End of period ........................................... $ 7,890,859 $ 35,489,286 $ 7,247,376 $ 7,785,581
============ ============ ============ ============
Undistributed net investment income/(loss) ................. $ (10,220) $ 125,352 $ 27,299 $ 385,836
============ ============ ============ ============
</TABLE>
See Accompanying Notes to Financial Statements.
73
<PAGE>
THE WARBURG PINCUS FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
U.S. CORE FIXED INCOME FUND STRATEGIC GLOBAL FIXED INCOME FUND
------------------------------------- ------------------ ---------------
FOR THE SIX MONTHS FOR THE YEAR FOR THE SIX MONTHS FOR THE YEAR
ENDED ENDED ENDED ENDED
FEBRUARY 29, 2000 AUGUST 31, 1999 FEBRUARY 29, 2000 AUGUST 31, 1999
----------------- --------------- ----------------- ---------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
Increase/(decrease) in net assets:
Operations:
Net investment income ......................... $ 10,941,097 $ 22,604,575 $ 497,263 $ 1,429,705
Net loss on investments and foreign
currency transactions ....................... (852,333) (12,460,691) (1,135,691) (570,760)
------------ ------------ ----------- -----------
Net increase/(decrease) in net assets resulting
from operations ............................. 10,088,764 10,143,884 (638,428) 858,945
------------ ------------ ----------- -----------
Dividends and Distributions to
shareholders:
From net investment income:
Institutional shares ........................ (12,290,586) (22,277,216) (855,865) (548,508)
Common shares ............................... (3,752) (2,149) (887) (37)
From net realized capital gains:
Institutional shares ........................ (369,326) (4,420,509) -- (530,896)
Common shares ............................... (120) (11) -- (18)
------------ ------------ ----------- -----------
Total distributions to shareholders .............. (12,663,784) (26,699,885) (856,752) (1,079,459)
------------ ------------ ----------- -----------
Net capital share transactions ................... 27,735,682 (26,029,500) (13,366,643) (903,152)
------------ ------------ ----------- -----------
Total increase/(decrease) in net assets .......... 25,160,662 (42,585,501) (14,861,823) (1,123,666)
Net Assets:
Beginning of period ........................... 350,947,611 393,533,112 27,359,718 28,483,384
------------ ------------ ----------- -----------
End of period ................................. $376,108,273 $350,947,611 $ 12,497,895 $27,359,718
============ ============ ============ ===========
Undistributed net investment income .............. $ 3,278,945 $ 4,903,858 $ 495,285 $ 630,190
============ ============ ============ ===========
</TABLE>
See Accompanying Notes to Financial Statements.
74
<PAGE>
THE WARBURG PINCUS FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
HIGH YIELD FUND MUNICIPAL BOND FUND
------------------------------------- -----------------------------------
FOR THE SIX MONTHS FOR THE YEAR FOR THE SIX MONTHS FOR THE YEAR
ENDED ENDED ENDED ENDED
FEBRUARY 29, 2000 AUGUST 31, 1999 FEBRUARY 29, 2000 AUGUST 31, 1999
----------------- --------------- ----------------- ---------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
Increase/(decrease) in net assets:
Operations:
Net investment income ......................... $ 5,935,229 $ 11,684,546 $ 443,502 $ 1,030,410
Net gain/(loss) on investments and foreign
currency transactions ....................... 1,360,147 (9,152,286) (461,281) (944,193)
------------ ------------ ----------- -----------
Net increase/(decrease) in net assets resulting
from operations ............................. 7,295,376 2,532,260 (17,779) 86,217
------------ ------------ ----------- -----------
Dividends and Distributions to
shareholders:
From net investment income:
Institutional shares ........................ (5,522,389) (8,940,115) (478,614) (1,031,337)
Common shares ............................... (1,347,004) (1,873,396) (5,498) (4,114)
From net realized capital gains:
Institutional shares ........................ -- -- (27,430) (320,024)
Common shares ............................... -- -- (376) (14)
------------ ------------ ----------- -----------
Total distributions to shareholders .............. (6,869,393) (10,813,511) (511,918) (1,355,489)
------------ ------------ ----------- -----------
Net capital share transactions ................... (5,495,081) 42,820,448 (5,792,072) 1,674,840
------------ ------------ ----------- -----------
Total increase/(decrease) in net assets .......... (5,069,098) 34,539,197 (6,321,769) 405,568
Net Assets:
Beginning of period ........................... 129,152,909 94,613,712 22,634,200 22,228,632
------------ ------------ ----------- -----------
End of period ................................. $124,083,811 $129,152,909 $16,312,431 $22,634,200
============ ============ =========== ===========
Undistributed net investment income .............. $ 1,870,259 $ 2,804,423 $ 72,919 $ 113,529
============ ============ =========== ===========
</TABLE>
See Accompanying Notes to Financial Statements.
75
<PAGE>
THE WARBURG PINCUS FUNDS
INTERNATIONAL GROWTH FUND
FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
INSTITUTIONAL
----------------------------------------------------------------------------------
FOR THE SIX
MONTHS ENDED FOR THE YEAR ENDED AUGUST 31,
FEBRUARY 29, 2000 ----------------------------------------------------------------
(UNAUDITED) 1999 1998 1997 1996 1995
----------------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period ..... $ 23.47 $ 22.70 $ 22.22 $ 19.41 $ 18.24 $ 20.73
Income from investment
operations
Net investment
income/(loss) ....... (0.05) 0.14 0.15 0.18 0.19 0.06
Net gain/(loss) on
investments and
foreign currency
transactions (both
realized and
unrealized) ......... 5.52 2.90 3.26 2.89 1.05 (1.75)
-------- -------- -------- -------- -------- --------
Total from investment
operations .......... 5.47 3.04 3.41 3.07 1.24 (1.69)
-------- -------- -------- -------- -------- --------
Less Distributions
Dividends from
net investment
income .............. (0.10) (0.28) -- (0.26) (0.07) --
Distributions from
capital gains ....... (4.00) (1.99) (2.93) -- -- (0.80)
-------- -------- -------- -------- -------- --------
Total distributions ... (4.10) (2.27) (2.93) (0.26) (0.07) (0.80)
-------- -------- -------- -------- -------- --------
Net asset value,
end of period ........... $ 24.84 $ 23.47 $ 22.70 $ 22.22 $ 19.41 $ 18.24
======== ======== ======== ======== ======== ========
Total return .............. 23.94%(c) 13.88% 16.74% 15.93% 6.81%(d) (8.06)%(d)
Ratios/Supplemental Data:
Net assets, end of period
(000s omitted) ........ $566,202 $675,118 $623,482 $568,510 $682,271 $773,255
Ratio of expenses to
average net assets .... 1.13%(b) 1.21%(a) 1.14%(a) 1.16%(a) 1.19%(a) 1.25%(a)
Ratio of net investment
income/(loss) to
average net assets .... (0.58)%(b) 0.60% 0.72% 0.71% 0.84% 0.35%
Fund turnover rate ...... 71%(c) 182% 141% 126% 86% 78%
COMMON
---------------------------------------------------------------
FOR THE PERIOD FOR THE YEAR ENDED FOR THE PERIOD
SEPTEMBER 1, 1999 AUGUST 31, NOVEMBER 1, 1996*
JANUARY 7, 2000** ----------------------- TO AUGUST 31,
(UNAUDITED) 1999 1998 1997
----------------- ------- ------ ------
<S> <C> <C> <C> <C>
Net asset value,
beginning of period ..... $ 23.25 $ 22.56 $22.17 $19.67
Income from investment
operations
Net investment
income/(loss) ....... (0.04) 0.12+ 0.03 0.36
Net gain/(loss) on
investments and
foreign currency
transactions (both
realized and
unrealized) ......... 4.80 2.83 3.29 2.40
------- ------- ------ ------
Total from investment
operations .......... 4.76 2.95 3.32 2.76
------- ------- ------ ------
Less Distributions
Dividends from
net investment
income .............. -- (0.27) -- (0.26)
Distributions from
capital gains ....... (4.00) (1.99) (2.93) --
------- ------- ------ ------
Total distributions ... (4.00) (2.26) (2.93) (0.26)
------- ------- ------ ------
Net asset value,
end of period ........... $ 24.01 $ 23.25 $22.56 $22.17
======= ======= ====== ======
Total return .............. 20.62%(c) 13.52% 16.33% 14.14%(c)
Ratios/Supplemental Data:
Net assets, end of period
(000s omitted) ........ $ -- $8,776 $1,620 $147
Ratio of expenses to
average net assets .... 1.28%(b) 1.50%(a) 1.40%(a) 1.43%(a)(b)
Ratio of net investment
income/(loss) to
average net assets .... (0.73)%(b) 0.31% 0.58% 1.15%(b)
Fund turnover rate ...... 71%(c) 182% 141% 126%(c)
<FN>
(a) Without the voluntary waiver of advisory fees and administration fees, the
ratios of expenses to average net assets for the Institutional Class would
have been 1.22%, 1.23% ,1.25%, 1.22% and 1.26% for the years ended August
31, 1999, 1998, 1997, 1996 and 1995, respectively. Without the voluntary
waiver of advisory fees and administration fees, the ratios of expenses to
average net assets for the Common Class would have been 1.51% and 1.48 % for
the years ended August 31, 1999 and 1998, respectively, and 1.53% annualized
for the period ended August 31, 1997.
(b) Annualized.
(c) Not annualized.
(d) Redemption fees not reflected in total return.
* Commencement of operations.
** Last day of operations.
+ Per Share information is calculated using the average share outstanding
method.
</FN>
</TABLE>
See Accompanying Notes to Financial Statements.
76
<PAGE>
THE WARBURG PINCUS FUNDS
EUROPEAN EQUITY FUND
FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
INSTITUTIONAL COMMON
-------------------------------------- ---------------------------------------
FOR THE SIX FOR THE SIX
MONTHS ENDED FOR THE PERIOD MONTHS ENDED FOR THE PERIOD
FEBRUARY 29, 2000 JANUARY 28, 1999* FEBRUARY 29, 2000 JANUARY 28, 1999*
(UNAUDITED) TO AUGUST 31, 1999 (UNAUDITED) TO AUGUST 31, 1999
----------------- -------------------- ----------------- ------------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period ........ $ 9.80 $10.00 $ 9.79 $ 10.00
------ ------ ------- -------
Income from investment operations
Net investment income ................... (0.01) 0.09 (0.04) 0.08
Net gain/(loss) on investments and
foreign currency transactions
(both realized and unrealized) ........ 3.18 (0.29) 3.18 (0.29)
------ ------ ------- -------
Total from investment operations ........ 3.17 (0.20) 3.14 (0.21)
------ ------ ------- -------
Less Distributions
Dividends from net investment income .... (0.07) -- (0.05) --
Distributions from capital gains ........ -- -- -- --
------ ------ ------- -------
Total distributions ..................... (0.07) -- (0.05) --
------ ------ ------- -------
Net asset value, end of period .............. $12.90 $ 9.80 $ 12.88 $ 9.79
====== ====== ======= =======
Total return .............................. 32.38%(c) (2.00)%(c) 32.12%(c) (2.10)%(c)
Ratios/Supplemental Data:
Net assets, end of period (000s omitted) .. $ 130 $ 98 $38,524 $24,588
Ratio of expenses to average net assets ... 1.23%(a)(b) 1.16%(a)(b) 1.53%(a)(b) 1.46%(a)(b)
Ratio of net investment income/(loss) to
average net assets (0.37)%(b) 1.67%(b) (0.65)%(b) 1.41%(b)
Fund turnover rate ........................ 112%(c) 161%(c) 112%(c) 161%(c)
<FN>
(a) Without the voluntary waiver of advisory fees and administration fees, the
ratios of expenses to average net assets for the Institutional Class would
have been 2.39% annualized for the six months ended February 29, 2000 and
2.29% annualized for the period ended August 31, 1999. Without the volunary
waiver of advisory fees and administration fees, the ratios of expenses to
average net assets for the Common Class would have been 2.72% annualized for
the six months ended February 29, 2000 and 2.64% annualized for the period
ended August 31, 1999.
(b) Annualized.
(c) Not Annualized.
* Inception Date.
</FN>
</TABLE>
See Accompanying Notes to Financial Statements.
77
<PAGE>
THE WARBURG PINCUS FUNDS
U.S. CORE EQUITY FUND
FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
INSTITUTIONAL
--------------------------------------------------------------------------------------
FOR THE SIX FOR THE PERIOD
MONTHS ENDED FOR THE YEAR ENDED AUGUST 31, AUGUST 31, 1994*
FEBRUARY 29, 2000 -------------------------------------------- TO AUGUST 31,
(UNAUDITED) 1999 1998 1997 1996 1995
---------------- ------- ------- ------- ------- --------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period ... $ 19.58 $ 21.73 $ 24.40 $ 19.05 $ 17.86 $ 15.00
------- ------- ------- ------- ------- -------
Income from investment operations
Net investment income .............. 0.04 0.07 0.01 0.14 0.20 0.22
Net gain on investments
(both realized and unrealized) ... 2.15 7.56 0.88 6.82 2.81 2.72
------- ------- ------- ------- ------- -------
Total from investment operations ... 2.19 7.63 0.89 6.96 3.01 2.94
------- ------- ------- ------- ------- -------
Less Distributions
Dividends from net investment
income ........................... (0.07) (0.04) (0.13) (0.20) (0.21) (0.08)
Distributions from capital gains ... (2.98) (9.74) (3.43) (1.41) (1.61) --
------- ------- ------- ------- ------- -------
Total distributions ................ (3.05) (9.78) (3.56) (1.61) (1.82) (0.08)
------- ------- ------- ------- ------- -------
Net asset value, end of period ......... $ 18.72 $ 19.58 $ 21.73 $ 24.40 $ 19.05 $ 17.86
======= ======= ======= ======= ======= =======
Total return ........................... 11.73%(c) 38.07% 3.18% 38.32% 17.59% 19.75%
Ratios/Supplemental Data:
Net assets, end of period
(000s omitted) ..................... $70,844 $70,081 $63,514 $86,182 $59,015 $31,644
Ratio of expenses to average
net assets ......................... 1.01%(a)(b) 0.99%(a) 1.00%(a) 1.00%(a) 1.00%(a) 1.00%(a)
Ratio of net investment income
to average net assets .............. 0.33%(b) 0.32% 0.23% 0.67% 1.25% 1.59%
Fund turnover rate ................... 45%(c) 110% 164% 93% 127% 123%
COMMON
---------------------------------------------
FOR THE PERIOD
SEPTEMBER 1, 1999 TO FOR THE PERIOD
JANUARY 7, 2000** OCTOBER 30, 1998*
(UNAUDITED) TO AUGUST 31, 1999
-------------------- ------------------
<S> <C> <C>
Net asset value, beginning of period ... $19.53 $25.22
------ ------
Income from investment operations
Net investment income .............. 0.02 0.04
Net gain on investments
(both realized and unrealized) ... 2.68 4.05
------ ------
Total from investment operations ... 2.70 4.09
------ ------
Less Distributions
Dividends from net investment
income ........................... (0.04) (0.04)
Distributions from capital gains ... (2.98) (9.74)
------ ------
Total distributions ................ (3.02) (9.78)
------ ------
Net asset value, end of period ......... $19.21 $19.53
====== ======
Total return ........................... 14.82%(c) 18.67%(c)
Ratios/Supplemental Data:
Net assets, end of period
(000s omitted) ..................... $ -- $ 134
Ratio of expenses to average
net assets ......................... 1.11%(a)(b) 1.26%(a)(b)
Ratio of net investment income
to average net assets .............. 0.29%(b) 0.02%(b)
Fund turnover rate ................... 45%(c) 110%(c)
<FN>
(a) Without the voluntary waiver of advisory fees and administration fees, the
ratios of expenses to average net assets for the Institutional Class would
have been 1.15% annualized for six months ended February 29, 2000 and 1.22%,
1.18%, 1.18% and 1.34% for the years ended August 31, 1999, 1998, 1997 and
1996, respectively, and 1.51% annualized for the period ended August 31,
1995. Without the voluntary waiver of advisory fees and administration fees,
the ratios of expenses to average net assets for the Common Class would have
been 1.29% annualized for period ended January 7, 2000 and 1.51% annualized
for the period ended August 31, 1999.
(b) Annualized.
(c) Not Annualized.
* Commencement of operations.
** Last day of operations.
</FN>
</TABLE>
See Accompanying Notes to Financial Statements.
78
<PAGE>
THE WARBURG PINCUS FUNDS
GLOBAL TELECOMMUNICATIONS FUND
FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
COMMON
--------------------------------------------------------------------
FOR THE SIX FOR THE YEAR ENDED FOR THE PERIOD
MONTHS ENDED AUGUST 31, DECEMBER 4, 1996*
FEBRUARY 29, 2000 ------------------------ TO AUGUST 31,
(UNAUDITED) 1999 1998 1997
----------------- ------- ------ -----------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period ..................... $ 41.22 $ 20.54 $17.30 $15.00
------- ------- ------ ------
Income from investment operations
Net investment income/(loss) ......................... (0.10) (0.04) (0.01) 0.02
Net gain on investments and foreign currency
transactions (both realized and unrealized) ........ 42.76 23.56 4.29 2.28
------- ------- ------ ------
Total from investment operations ..................... 42.66 23.52 4.28 2.30
------- ------- ------ ------
Less Distributions
Dividends from net investment income ................. -- -- -- --
Distributions from capital gains ..................... (1.23) (2.84) (1.04) --
------- ------- ------ ------
Total distributions ................................. (1.23) (2.84) (1.04) --
------- ------- ------ ------
Net asset value, end of period ........................... $ 82.65 $ 41.22 $20.54 $17.30
======= ======= ====== ======
Total return ............................................. 104.49%(c) 120.73% 25.38% 15.33%(c)
Ratios/Supplemental Data:
Net assets, end of period (000s omitted) ............... $511,267 $65,165 $ 718 $ 569
Ratio of expenses to average net assets 1.65%(a)(b) 1.65%(a) 1.65%(a) 1.65%(a)(b)
Ratio of net investment income/(loss) to
average net assets .................................... (0.80)%(b) (0.35)% (0.03)% 0.16%(b)
Fund turnover rate ..................................... 50%(c) 203% 169% 43%(c)
</TABLE>
(a) Without the voluntary waiver of advisory fees and administration fees, the
ratios of expenses to average net assets for the Common Class would have
been 1.67% annualized for the six months ended February 29, 2000 and 2.52%
and 6.86% for the years ended August 31, 1999 and 1998, respectively, and
8.38% annualized for the period ended August 31, 1997.
(b) Annualized.
(c) Not Annualized.
* Inception Date.
See Accompanying Notes to Financial Statements.
79
<PAGE>
THE WARBURG PINCUS FUNDS
FOCUS FUND
FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
INSTITUTIONAL COMMON
------------------------------------------------- --------------------------------------
FOR THE SIX FOR THE YEAR FOR THE PERIOD FOR THE SIX
MONTHS ENDED ENDED JULY 31, 1998* MONTHS ENDED FOR THE PERIOD
FEBRUARY 29, 2000 AUGUST 31, TO AUGUST 31, FEBRUARY 29, 2000 OCTOBER 30, 1998*
(UNAUDITED) 1999 1998 (UNAUDITED) TO AUGUST 31, 1999
----------------- ---------- ------------- ----------------- ------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period ..... $ 20.15 $ 13.17 $ 15.00 $20.11 $15.95
------- ------- ------- ------ ------
Income from investment operations
Net investment income/(loss) ......... (0.01)+ 0.08 0.01 (0.02)+ 0.02
Net gain/(loss) on investments
(both realized and unrealized ...... 1.97 6.92 (1.84) 1.94 4.16
------- ------- ------- ------ ------
Total from investment operations ..... 1.96 7.00 (1.83) 1.92 4.18
------- ------- ------- ------ ------
Less Distributions
Dividends from net investment income . (0.07) (0.02) -- (0.07) (0.02)
Distributions from capital gains ..... (5.70) -- -- (5.70) --
------- ------- ------- ------ ------
Total distributions .................. (5.77) (0.02) -- (5.77) (0.02)
------- ------- ------- ------ ------
Net asset value, end of period ........... $ 16.34 $ 20.15 $ 13.17 $16.26 $20.11
======= ======= ======= ====== ======
Total return ............................. 13.64%(c) 53.21% (12.20)%(c) 13.40%(c) 26.19%(c)
Ratios/Supplemental Data:
Net assets, end of period (000s omitted) $ 6,945 $35,394 $22,659 $ 946 $ 95
Ratio of expenses to average net assets 1.00%(a)(b) 0.99%(a) 1.00%(a)(b) 1.25%(a)(b) 1.29%(a)(b)
Ratio of net investment income/(loss)
to average net assets ................ (0.13)%(b) 0.47% 0.92%(b) (0.27)%(b) 0.17%(b)
Fund turnover rate ..................... 123%(c) 209% 52%(c) 123%(c) 209%(c)
<FN>
(a) Without the voluntary waiver of advisory fees and administration fees, the
ratios of expenses to average net assets for the Institutional Class would
have been 2.07% annualized for the six months ended February 29, 2000, 1.42%
for the year ended August 31, 1999 and 1.30% annualized for the period ended
August 31, 1998. Without the voluntary waiver of advisory fees and
administration fees, the ratios of expenses to average net assets for the
Common Class would have been 4.33% annualized for the six months ended
February 29, 2000 and 1.74% annualized for the period ended August 31, 1999.
(b) Annualized.
(c) Not Annualized.
* Inception Date.
+ Per share information is calculated using the average share outstanding
method.
</FN>
</TABLE>
See Accompanying Notes to Financial Statements.
80
<PAGE>
THE WARBURG PINCUS FUNDS
LONG-SHORT MARKET NEUTRAL FUND
FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
INSTITUTIONAL
-------------------------------------------------------------------
FOR THE SIX FOR THE YEAR FOR THE PERIOD
MONTHS ENDED ENDED JULY 31, 1998*
FEBRUARY 29, 2000 AUGUST 31, TO AUGUST 31,
(UNAUDITED) 1999 1998
----------- ------ ------
<S> <C> <C> <C>
Net asset value, beginning of period ................. $14.21 $15.27 $15.00
------ ------ ------
Income from investment operations
Net investment income ............................ 0.25+ 0.39+ 0.05
Net gain/(loss) on investments and securities sold
short (both realized and unrealized) ........... 2.16 (1.25) 0.22
------ ------ ------
Total from investment operations ................. 2.41 (0.86) 0.27
------ ------ ------
Less Distributions
Dividends from net investment income ............. (1.12) (0.07) --
Distributions from capital gains ................. -- (0.13) --
------ ------ ------
Total distributions .............................. (1.12) (0.20) --
------ ------ ------
Net asset value, end of period ....................... $15.50 $14.21 $15.27
====== ====== ======
Total return ......................................... 17.76%(c) (5.68)% 1.80%(c)
Ratios/Supplemental Data:
Net assets, end of period (000s omitted) ........... $3,750 $5,901 $6,302
Ratio of expenses to average net assets
(including dividend expense) ..................... 3.09%(a)(b) 3.33%(a) 4.32%(a)(b)
Ratio of expenses to average net assets
(excluding dividend expense) ..................... 2.00%(a)(b) 2.00%(a) 2.00%(a)(b)
Ratio of net investment income to average net assets 3.43%(b) 2.65% 1.96%(b)
Fund turnover rate ................................. 147%(c) 705% 130%(c)
COMMON
---------------------------------------------
FOR THE SIX
MONTHS ENDED FOR THE PERIOD
FEBRUARY 29, 2000 SEPTEMBER 8, 1998*
(UNAUDITED) TO AUGUST 31, 1999
----------- ------------------
<S> <C> <C>
Net asset value, beginning of period ................. $ 14.19 $ 15.19
------- -------
Income from investment operations
Net investment income ............................ 0.24+ 0.32+
Net gain/(loss) on investments and securities sold
short (both realized and unrealized) ........... 2.17 (1.12)
------- -------
Total from investment operations ................. 2.41 (0.80)
------- -------
Less Distributions
Dividends from net investment income ............. (0.93) (0.07)
Distributions from capital gains ................. -- (0.13)
------- -------
Total distributions .............................. (0.93) (0.20)
------- -------
Net asset value, end of period ....................... $ 15.67 $ 14.19
======= =======
Total return ......................................... 17.63%(c) (5.33)%(c)
Ratios/Supplemental Data:
Net assets, end of period (000s omitted) ........... $ 3,497 $ 1,885
Ratio of expenses to average net assets
(including dividend expense) ..................... 3.37%(a)(b) 3.40%(a)(b)
Ratio of expenses to average net assets
(excluding dividend expense) ..................... 2.26%(a)(b) 2.24%(a)(b)
Ratio of net investment income to average net assets 3.23%(b) 2.46%(b)
Fund turnover rate ................................. 147%(c) 705%
</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 3.46% (excluding dividend expense) and 4.55% (including dividend
expense) annualized for the six months ended February 29, 2000, 2.56%
(excluding dividend expense) and 3.93% (including dividend expense) for the
year ended August 31, 1999 and 5.12% (excluding dividend expense) and 7.44%
(including dividend expense) annualized for the period ended August 31,
1998. Without the voluntary waiver of advisory fees and administration fees,
the ratios of expenses to average net assets for the Common Class would have
been 3.90% (excluding dividend expense) and 5.18% (including dividend
expense) annualized for the six months ended February 29, 2000 and 2.84%
(excluding dividend expense) and 4.00% (including dividend expense)
annualized for the period ended August 31, 1999.
(b) Annualized.
(c) Not Annualized.
* Inception Date.
+ Per share information is calculated using the average share outstanding
method.
See Accompanying Notes to Financial Statements.
81
<PAGE>
THE WARBURG PINCUS FUNDS
U.S. CORE FIXED INCOME FUND
FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
INSTITUTIONAL
-------------------------------------------------------------------------------------
FOR THE SIX
MONTHS ENDED FOR THE YEAR ENDED AUGUST 31,
FEBRUARY 29, 2000 ----------------------------------------------------------------
(UNAUDITED) 1999 1998 1997 1996 1995
----------------- -------- -------- -------- -------- -------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period ...... $ 15.01 $ 15.72 $ 15.65 $ 15.06 $ 15.42 $ 14.77
-------- -------- -------- -------- -------- -------
Income from investment operations
Net investment income ................. 0.49 0.93 0.84 0.92 0.95 0.88
Net gain/(loss) on investments, futures
and foreign currency transactions
(both realized and unrealized) ...... (0.06) (0.56) 0.33 0.76 (0.16) 0.61
-------- -------- -------- -------- -------- -------
Total from investment operations ...... 0.43 0.37 1.17 1.68 0.79 1.49
-------- -------- -------- -------- -------- -------
Less Distributions
Dividends from net investment
income .............................. (0.56) (0.91) (0.87) (0.97) (0.93) (0.84)
Distributions from capital gains ...... (0.02) (0.17) (0.23) (0.12) (0.22) --
-------- -------- -------- -------- -------- -------
Total distributions ................... (0.58) (1.08) (1.10) (1.09) (1.15) (0.84)
-------- -------- -------- -------- -------- -------
Net asset value, end of period ............ $ 14.86 $ 15.01 $ 15.72 $ 15.65 $ 15.06 $ 5.42
======== ======== ======== ======== ======== =======
Total return .............................. 2.87%(c) 2.37% 7.77% 11.53% 5.23% 10.60%
Ratios/Supplemental Data:
Net assets, end of period (000s omitted) $376,108 $350,844 $393,533 $177,219 $118,596 $99,250
Ratio of expenses to average net assets . 0.45%(a)(b) 0.44%(a) 0.47%(a) 0.50%(a) 0.50%(a) 0.50%(a)
Ratio of net investment income to
average net assets .................... 6.58%(b) 5.90% 5.87% 6.31% 6.43% 6.47%
Fund turnover rate ...................... 224%(c) 569% 372% 372% 201% 304%
COMMON
-------------------- ------------------
FOR THE PERIOD
SEPTEMBER 1, 1999 TO FOR THE PERIOD
JANUARY 7, 2000** OCTOBER 30, 1998*
(UNAUDITED) TO AUGUST 31, 1999
------ ------
<S> <C> <C>
Net asset value, beginning of period ...... $14.99 $15.68
------ ------
Income from investment operations
Net investment income ................. 0.47 0.74
Net gain/(loss) on investments, futures
and foreign currency transactions
(both realized and unrealized) ...... (0.21) (0.58)
------ ------
Total from investment operations ...... 0.26 0.16
------ ------
Less Distributions
Dividends from net investment
income .............................. (0.54) (0.68)
Distributions from capital gains ...... (0.02) (0.17)
------ ------
Total distributions ................... (0.56) (0.85)
------ ------
Net asset value, end of period ............ $14.69 $14.99
====== ======
Total return .............................. 1.70%(c) 1.00%(c)
Ratios/Supplemental Data:
Net assets, end of period (000s omitted) $ -- $ 104
Ratio of expenses to average net assets . 0.57%(a)(b) 0.70%(a)(b)
Ratio of net investment income to
average net assets .................... 6.39%(b) 5.82%(b)
Fund turnover rate ...................... 224%(c) 569%(c)
<FN>
(a) Without the voluntary waiver of advisory fees and administration fees, the
ratios of expenses to average net assets for the Institutional Class would
have been .59% annualized for the six months ended February 29, 2000 and
.62%, .74%, .78%, .78% and .84% for the years ended August 31, 1999, 1998,
1997, 1996 and 1995, respectively. Without the voluntary waiver of advisory
fees and administration fees, the ratios of expenses to average net assets
for the Common Class would have been .78% annualized for the period ended
January 7, 2000 and .90% annualized for the period ended August 31, 1999.
(b) Annualized.
(c) Not Annualized.
* Inception Date.
** Last day of operations.
</FN>
</TABLE>
See Accompanying Notes to Financial Statements.
82
<PAGE>
THE WARBURG PINCUS FUNDS
STRATEGIC GLOBAL FIXED INCOME FUND
FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
INSTITUTIONAL
-----------------------------------------------------------------------------------
FOR THE SIX
MONTHS ENDED FOR THE YEAR ENDED AUGUST 31,
FEBRUARY 29, 2000 --------------------------------------------------------------
(UNAUDITED) 1999 1998 1997 1996 1995
-------------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period ...... $ 14.97 $ 15.10 $ 15.41 $ 15.75 $ 15.67 $ 15.00
------- ------- ------- ------- ------- -------
Income from investment operations
Net investment income ................. 1.38 0.79 0.87 0.85 0.87 1.06
Net gain/(loss) on investments, futures
and foreign currency transactions
(both realized and unrealized) ...... (1.90) (0.35) (0.25) (0.16) 0.58 0.49
------- ------- ------- ------- ------- -------
Total from investment operations ...... (0.52) 0.44 0.62 0.69 1.45 1.55
------- ------- ------- ------- ------- -------
Less Distributions
Dividends from net investment
income .............................. (0.73) (0.29) (0.45) (0.71) (1.22) (0.88)
Distributions from capital gains ...... -- (0.28) (0.48) (0.32) (0.15) --
------- ------- ------- ------- ------- -------
Total distributions ................... (0.73) (0.57) (0.93) (1.03) (1.37) (0.88)
------- ------- ------- ------- ------- -------
Net asset value, end of period ............ $13.72 $ 14.97 $ 15.10 $ 15.41 $15.75 $15.67
======= ======= ======= ======= ======= =======
Total return .............................. (3.65)%(c) 2.78% 4.19% 4.48% 9.65% 10.72%
Ratios/Supplemental Data:
Net assets, end of period
(000s omitted) ........................ $ 12,498 $ 27,342 $28,483 $44,285 $38,348 $19,565
Ratio of expenses to average net assets . 0.75%(a)(b) 0.74%(a) 0.75%(a) 0.75%(a) 0.75%(a) 0.75%(a)
Ratio of net investment income
to average net assets ................. 5.01%(b) 4.96% 5.30% 5.31% 7.37% 7.26%
Fund turnover rate ...................... 104%(c) 305% 283% 98% 87% 91%
COMMON
---------------------------------------
FOR THE PERIOD
SEPTEMBER 1, 1999 TO FOR THE PERIOD
JANUARY 7, 2000** OCTOBER 30, 1998*
(UNAUDITED) TO AUGUST 31, 1999
-------------------- ------------------
<S> <C> <C>
Net asset value, beginning of period ...... $14.91 $16.10
------ ------
Income from investment operations
Net investment income ................. 0.36 0.63
Net gain/(loss) on investments, futures
and foreign currency transactions
(both realized and unrealized) ...... (0.52) (1.26)
------ ------
Total from investment operations ...... (0.16) (0.63)
------ ------
Less Distributions
Dividends from net investment
income .............................. (0.71) (0.28)
Distributions from capital gains ...... -- (0.28)
------ ------
Total distributions ................... (0.71) (0.56)
------ ------
Net asset value, end of period ............ $14.04 $14.91
====== ======
Total return .............................. (1.08)%(c) (4.09)%(c)
Ratios/Supplemental Data:
Net assets, end of period
(000s omitted) ........................ $ -- $ 18
Ratio of expenses to average net assets . 0.86%(a)(b) 1.00%(a)(b)
Ratio of net investment income
to average net assets ................. 4.87%(b) 4.80%(b)
Fund turnover rate ...................... 104%(c) 305%(c)
<FN>
(a) Without the voluntary waiver of advisory fees and administration fees, the
ratios of expenses to average net assets for the Institutional Class would
have been 1.95% annualized for six months ended February 29, 2000 and 1.27%,
1.17%, 0.98%, 1.07% and 1.29% for the years ended August 31, 1999, 1998,
1997, 1996 and 1995, respectively. Without the voluntary waiver of advisory
fees and administration fees, the ratios of expenses to average net assets
for the Common Class would have been 2.01% annualized for period ended
January 7, 2000 and 1.56% annualized for the period ended August 31, 1999.
(b) Annualized.
(c) Not Annualized.
* Inception Date.
** Last day of operations.
</FN>
</TABLE>
See Accompanying Notes to Financial Statements.
83
<PAGE>
THE WARBURG PINCUS FUNDS
HIGH YIELD FUND
FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
INSTITUTIONAL
--------------------------------------------------------------------------
FOR THE SIX
MONTHS ENDED FOR THE YEAR ENDED AUGUST 31,
FEBRUARY 29, 2000 --------------------------------------------------------
(UNAUDITED) 1999 1998 1997 1996 1995
---------------- ------- ------- ------- ------- --------
<S> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period ... $ 15.32 $ 16.60 $ 17.08 $ 16.09 $ 15.72 $ 15.94
------- ------- ------- ------- ------- --------
Income from investment
operations
Net investment income 0.71+ 1.42 1.43 1.37 1.47 1.42
Net gain/(loss) on
investments (both
realized and
unrealized) ....... 0.22 (1.33) (0.49) 0.96 0.40 (0.30)
------- ------- ------- ------- ------- --------
Total from investment
operations ........ 0.93 0.09 0.94 2.33 1.87 1.12
------- ------- ------- ------- ------- --------
Less Distributions
Dividends from net
investment income ... (0.79) (1.37) (1.42) (1.34) (1.50) (1.34)
Distributions from
capital gains ....... -- -- -- -- -- --
------- ------- ------- ------- ------- --------
Total distributions ... (0.79) (1.37) (1.42) (1.34) (1.50) (1.34)
------- ------- ------- ------- ------- --------
Net asset value,
end of period ..... $ 15.46 $ 15.32 $ 16.60 $ 17.08 $ 16.09 $ 15.72
======= ======= ======= ======= ======= ========
Total return ............ 6.37%(c) 0.67% 5.48% 15.17% 12.42% 7.79%(d)
Ratios/Supplemental Data:
Net assets, end of
period
(000s omitted) ...... $90,945 $95,129 $94,044 $92,630 $75,849 $153,621
Ratio of expenses to
average net assets .. 0.70%(a)(b) (0.69%(a) 0.70%(a) 0.70%(a) 0.88%(a) 1.00%(a)
Ratio of net investment
income to average
net assets .......... 9.50%(b) 9.10% 8.12% 8.44% 8.92% 9.37%
Fund turnover rate .... 15%(c) 40% 60% 84% 143% 70%
COMMON
----------------------------------------------------------
FOR THE SIX FOR THE YEAR ENDED FOR THE PERIOD
MONTHS ENDED AUGUST 31, NOVEMBER 1, 1996*
FEBRUARY 29, 2000 ------------------ TO AUGUST 31,
(UNAUDITED) 1999 1998 1997
----------------- ------- ------ ------------------
<S> <C> <C> <C> <C>
Net asset value,
beginning of period ... $ 15.38 $ 16.62 $17.08 $ 16.21
------- ------- ------ --------
Income from investment
operations
Net investment income 0.69+ 1.39+ 1.36 0.93
Net gain/(loss) on
investments (both
realized and
unrealized) ....... 0.22 (1.34) (0.45) 0.87
------ ------- ------ ------
Total from investment
operations ........ 0.91 0.05 0.91 1.80
------ ------- ------ ------
Less Distributions
Dividends from net
investment income ... (0.76) (1.29) (1.37) (0.93)
Distributions from
capital gains ....... -- -- -- --
------ ------- ------ ------
Total distributions ... (0.76) (1.29) (1.37) (0.93)
------ ------- ------ ------
Net asset value,
end of period ..... $15.53 $ 15.38 $16.62 $17.08
====== ======= ====== ======
Total return ............ 6.23%(c) 0.39% 5.27% 11.49%(c)
Ratios/Supplemental Data:
Net assets, end of
period (000s omitted) $33,139 $34,024 $ 570 $ 86
Ratio of expenses to
average net assets .. 0.96%(a)(b) 0.95%(a) 0.95%(a) 0.96%(a)(b)
Ratio of net investment
income to average
net assets .......... 9.27%(b) 8.86% 7.96% 8.13%(b)
Fund turnover rate .... 15%(c) 40% 60% 84%(c)
<FN>
(a) Without the voluntary waiver of advisory fees and administration fees, the
ratios of expenses to average net assets for the Institutional Class would
have been 1.11% annualized for six months ended February 29, 2000 and 1.04%,
1.14%, 1.13%, 1.11% and 1.08% for the years ended August 31, 1999, 1998,
1997, 1996 and 1995, respectively. Without the voluntary waiver of advisory
fees and administration fees, the ratios of expenses to average net assets
for the Common Class would have been 1.42% annualized for six months ended
February 29, 2000 and 1.34% and 1.39 % for the years ended August 31, 1999
and 1998, respectively, and 1.47% annualized for the period ended August 31,
1997.
(b) Annualized.
(c) Not annualized.
(d) Redemption fees not reflected in total return.
* Inception Date.
+ Per share information is calculated using the average share outstanding
method.
</FN>
</TABLE>
See Accompanying Notes to Financial Statements.
84
<PAGE>
THE WARBURG PINCUS FUNDS
MUNICIPAL BOND FUND
FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
INSTITUTIONAL
--------------------------------------------------------------------------------------
FOR THE SIX
MONTHS ENDED FOR THE YEAR ENDED AUGUST 31,
FEBRUARY 29, 2000 -------------------------------------------------------------
(UNAUDITED) 1999 1998 1997 1996 1995
----------------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period .... $ 14.30 $ 15.12 $ 14.84 $ 14.65 $ 15.46 $ 15.06
------- ------- ------- ------- ------- -------
Income from investment operations
Net investment income ............... 0.34 0.67 0.70 0.72 0.73 0.71
Net gain/(loss) on investments
(both realized and unrealized) .... (0.35) (0.60) 0.40 0.65 (0.37) 0.50
------- ------- ------- ------- ------- -------
Total from investment operations .... (0.01) 0.07 1.10 1.37 0.36 1.21
------- ------- ------- ------- ------- -------
Less Distributions
Dividends from net investment
income ............................ (0.38) (0.68) (0.71) (0.72) (0.74) (0.76)
Distributions from capital gains .... (0.02) (0.21) (0.11) (0.46) (0.43) (0.05)
------- ------- ------- ------- ------- -------
Total distributions ................. (0.40) (0.89) (0.82) (1.18) (1.17) (0.81)
------- ------- ------- ------- ------- -------
Net asset value, end of period .......... $13.89 $14.30 $15.12 $ 14.84 $ 14.65 $15.46
======= ======= ======= ======= ======= =======
Total return ............................ (0.07)%(c) 0.36% 7.62% 9.74% 2.27% 8.42%
Ratios/Supplemental Data:
Net assets, end of period
(000s omitted) ...................... $16,095 $22,423 $22,229 $19,810 $19,581 $48,978
Ratio of expenses to average net assets 1.00%(a)(b) 0.99%(a) 1.00%(a) 1.00%(a) 1.00%(a) 1.00%(a)
Ratio of net investment income
average net assets .................. 4.86%(b) 4.49% 4.72% 4.88% 4.62% 4.76%
Fund turnover rate .................... 3%(c) 26% 57% 43% 34% 25%
COMMON
--------------------------------------
FOR THE SIX
MONTHS ENDED FOR THE PERIOD
FEBRUARY 29, 2000O OCTOBER 30, 1998*
(UNAUDITED) TO AUGUST 31, 1999
------------------ ------------------
<S> <C> <C>
Net asset value, beginning of period .... $14.29 $15.14
------ ------
Income from investment operations
Net investment income ............... 0.33 0.54
Net gain/(loss) on investments
(both realized and unrealized) .... (0.35) (0.66)
------ ------
Total from investment operations .... (0.02) (0.12)
------ ------
Less Distributions
Dividends from net investment
income ............................ (0.35) (0.52)
Distributions from capital gains .... (0.02) (0.21)
------ ------
Total distributions ................. (0.37) (0.73)
------ ------
Net asset value, end of period .......... $13.90 $14.29
====== ======
Total return ............................ (0.07)%(c) (0.85)%(c)
Ratios/Supplemental Data:
Net assets, end of period
(000s omitted) ...................... $ 217 $ 211
Ratio of expenses to average net assets 1.26%(a)(b) 1.26%(a)(b)
Ratio of net investment income
average net assets .................. 4.64%(b) 4.44%(b)
Fund turnover rate .................... 3%(c) 26%(c)
<FN>
(a) Without the voluntary waiver of advisory fees and administration fees, the
ratios of expenses to average net assets for the Institutional Class would
have been 1.68% annualized for the six months ended February 29, 2000 and
1.43%, 1.39%, 1.37%, 1.42% and 1.19% for the years ended August 31, 1999,
1998, 1997, 1996 and 1995, respectively. Without the voluntary waiver of
advisory fees and administration fees, the ratios of expenses to average net
assets for the Common Class would have been 2.00% annualized for the six
months ended February 29, 2000 and 1.71% annualized for the period ended
August 31, 1999.
(b) Annualized.
(c) Not Annualized.
* Inception Date.
</FN>
</TABLE>
See Accompanying Notes to Financial Statements.
85
<PAGE>
THE WARBURG PINCUS FUNDS
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Warburg Pincus Funds covered in this report are comprised of Warburg,
Pincus International Growth Fund, Inc. ("International"), Warburg, Pincus
European Equity Fund, Inc. ("European Equity"), Warburg, Pincus U.S. Core Equity
Fund, Inc. ("Core Equity"), Warburg, Pincus Global Telecommunication Fund, Inc.
("Global Telecommunications"), Warburg, Pincus Focus Fund, Inc. (formerly,
Warburg, Pincus Select Economic Value Equity Fund, Inc) ("Focus"), Warburg,
Pincus Long-Short Market Neutral Fund, Inc. ("Long-Short Neutral"), Warburg,
Pincus U.S. Core Fixed Income Fund, Inc. ("Core Fixed"), Warburg, Pincus
Strategic Global Fixed Fund, Inc. ("Global Fixed"), Warburg, Pincus High Yield
Fund, Inc. ("High Yield") and Warburg, Pincus Municipal Bond Fund, Inc.
("Municipal") (each, a "Fund" and collectively, the "Funds"), which are
registered under the Investment Company Act of 1940 , as amended (the "1940
Act"), as non-diversified (other than European Equity which is diversified),
open-end management investment companies. Each Fund is authorized to offer three
classes of shares: Common, Advisor and Institutional, although only Common
shares and Institutional shares of each Fund are currently offered. The Common
shares for International, Core Equity, Core Fixed and Global Fixed were
exchanged for Institutional shares of the same Fund and ceased operations on
January 10, 2000. Common shares for each Fund bear expenses paid pursuant to a
shareholder servicing and distribution agreement at an annual rate not to exceed
.25% of the average daily net asset value of the Fund's outstanding Common
shares. In addition, the Common shares bear a co-administration fee.
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 of each Fund is determined
daily as of the close of regular trading on The New York Stock Exchange
Inc. Each Fund's securities for which market quotations are readily
available are valued at market value, which is currently determined using
the last reported sales price. If no sales are reported, as in the case of
some securities traded over-the-counter, the securities are valued at the
mean between the last reported bid and asked prices. All other securities
and assets are valued as determined in good faith by the Fund's Board of
Directors. Short-term obligations with maturities of 60 days or less are
valued at amortized cost, which approximates market value.
B) FOREIGN CURRENCY TRANSACTIONS -- Transactions denominated in
foreign currencies are recorded in each Fund's records at the current
prevailing exchange rates. Asset and liability accounts that are
denominated in a foreign currency are adjusted daily to reflect current
exchange rates. Transaction gains or losses resulting from changes in
exchange rates during the reporting period or upon settlement of the
foreign currency transaction are reported in operations for the current
period. It is not practical to isolate that portion of both realized and
unrealized gains and losses on investments in the statement of operations
that result from fluctuations in foreign currency exchange rates. Each Fund
reports certain foreign currency related transactions as components of
realized gains for financial reporting purposes, whereas such components
are treated as ordinary income (loss) for Federal income tax purposes.
C) SECURITY TRANSACTIONS AND INVESTMENT INCOME -- Security
transactions are accounted for on the trade date. The cost of investments
sold is determined by use of the specific identification method for both
financial reporting and income tax purposes. Interest income is recorded on
the accrual basis. Dividends are recorded on the ex-dividend date. Certain
expenses are class specific expenses and vary by class. Expenses not
directly attributable to a specific Fund or class are allocated based on
relative net assets of each Fund and class, respectively.
D) DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS -- Each Fund
calculates its dividends from net investment income. Net investment income
includes interest accrued and dividends earned on the Fund's portfolio
securities for the applicable period less applicable expense.
International, European Equity, Core Equity, Global Telecommunications,
Focus and Long-Short Neutral will distribute substantially all of its net
realized capital gains and all net investment income, if any, to its
shareholders at least annually. Core Fixed, Global Fixed and High Yield
will distribute substantially all of its net realized capital gains, if
any, to its shareholders at least annually and will distribute net
investment income at least quarterly. The Municipal Fund will distribute
substantially all of its net realized capital gains, if any, at least
annually and all net investment income monthly.
86
<PAGE>
THE WARBURG PINCUS FUNDS
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
The character of distributions made during the year for net
investment income or net realized gains may differ from their ultimate
characterization for federal income tax purposes due to generally accepted
accounting principles (GAAP) and tax differences in the character of income
and expense recognition. These differences are primarily due to differing
treatments for net operating losses, paydowns on mortgage-backed
securities, passive foreign investment companies, and forward foreign
currency contracts. To the extent these differences are permanent in
nature, such amounts are reclassified within capital accounts based on U.S.
tax-basis treatment. Temporary differences do not require reclassification
E) FEDERAL INCOME TAXES -- No provision is made for Federal taxes
as it is each Fund's intention to qualify for and elect the tax treatment
applicable to regulated investment companies under the Internal Revenue
Code of 1986, as amended and make the requisite distributions to its
shareholders which will be sufficient to relieve it from Federal income and
excise taxes.
F) USE OF ESTIMATES -- The preparation of financial statements in
conformity with GAAP requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
G) REPURCHASE AGREEMENTS -- Money market instruments may be
purchased from banks and non-bank dealers subject to the seller's agreement
to repurchase them at an agreed upon date and price. Collateral for
repurchase agreements may have longer maturities than the maximum
permissible remaining maturity of portfolio investments. The seller will be
required on a daily basis to maintain the value of the securities subject
to the agreement at not less than the repurchase price. The agreements are
conditional upon the collateral being deposited under the Federal Reserve
book-entry system or held in a separate account by each Fund's custodian or
an authorized securities depository. Long-Short Neutral had an open
repurchase agreement at February 29, 2000.
H) FUTURES TRANSACTIONS -- A Fund invests in futures contracts for
the purpose of hedging its existing portfolio securities, or securities
that the Fund intends to purchase, against fluctuations in fair value
caused by changes in prevailing market interest rates or securities prices,
or for other purposes. Certain Fund's may enter into futures contracts
subject to certain limitations. Upon entering into a futures contract, each
Fund is required to deposit cash or liquid securities 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
a perfect price correlation between the futures contracts and the
underlying securities. Second, it is possible that a lack of liquidity for
futures contracts could exist in the secondary market, resulting in an
inability to close a futures position prior to its maturity date. Third,
the purchase of a futures contract involves the risk that a Fund could lose
more than the original margin deposit required to initiate a futures
transaction.
As of February 29, 2000, Core Fixed held the following futures contracts:
<TABLE>
<CAPTION>
FUTURES EXPIRATION CONTRACT CONTRACT UNREALIZED
CONTRACTS DATE AMOUNT VALUE GAIN/LOSS
--------- ---------- -------- -------- ----------
<S> <C> <C> <C> <C>
U.S. Treasury 2 Year Note Futures 06/28/00 $ 1,185,750 $ 1,184,531 $ (1,219)
U.S. Treasury 5 Year Note Futures 06/21/00 32,465,977 32,623,500 157,523
U.S. Treasury 10 Year Note Futures 03/22/00 6,656,079 6,703,594 47,515
U.S. Treasury 10 Year Note Futures 06/21/00 (30,628,476) (30,524,999) 103,477
U.S. Treasury Bond Futures 06/21/00 20,721,133 20,641,875 (79,258)
</TABLE>
87
<PAGE>
THE WARBURG PINCUS FUNDS
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
As of February 29, 2000, Global Fixed held the following futures contracts:
<TABLE>
<CAPTION>
FUTURES EXPIRATION CONTRACT CONTRACT UNREALIZED
CONTRACTS DATE AMOUNT VALUE GAIN/LOSS
--------- ---------- ----------- ---------- ----------
<S> <C> <C> <C> <C>
U.S. Treasury 2 year Note Futures 06/28/00 $ 592,875 $ 592,266 $ (609)
U.S. Treasury 5 Year Note Futures 03/22/00 (984,266) (975,313) 8,953
U.S. Treasury 10 Year Note Futures 03/22/00 (94,969) (95,766) (797)
U.S. Treasury 10 Year Note Futures 06/21/00 570,328 572,344 2,016
U.S. Treasury Bond Futures 06/21/00 1,425,610 1,420,313 (5,297)
</TABLE>
I) OPTION TRANSACTIONS -- When a Fund writes or purchases a call
or a put option, an amount equal to the premium received or paid by the
Fund is recorded as a liability or asset, the value of which is
marked-to-market daily to reflect the current market value of the option.
When the option expires, the Fund realizes a gain or loss equal to the
amount of the premium received or paid. When the Fund exercises an option
or enters into a closing transaction by purchasing or selling an offsetting
option, it realizes a gain or loss without regard to any unrealized gain or
loss to underlying security. The potential loss associated with purchasing
an option is limited to the premium paid, and the premium would partially
offset any gains achieved from its use.
J) TBA PURCHASE COMMITMENTS -- The Funds may enter into "TBA" (to
be announced) purchases commitments to purchase securities for a fixed
price at a future date, typically not exceeding 45 days. TBA purchase
commitments may be considered securities in themselves, and involve a risk
of loss if the value of the security to be purchased declines prior to
settlement date. This risk is in addition to the risk of decline in each
Fund's other assets. Unsettled TBA purchase commitments are valued at the
current market value of the underlying securities, according to the
procedures described under "Security Valuation" above.
K) SECURITIES LENDING -- Loans of 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. Cash collateral received by the Fund in
connection with securities lending activity is invested in the Boston
Global Investment Trust. However, in the event of default or bankruptcy by
the other party to the agreement, realization and/or retention of the
collateral may be subject to legal proceedings. The market value of
securities on loan to brokers and the value of collateral held by each Fund
with respect to such loans (including right to draw on letter of credit) at
February 29, 2000 is as follows:
MARKETS VALUE OF VALUE OF
FUND SECURITIES LOANED COLLATERAL RECORDED
---- ----------------- -------------------
International $ 79,347,017 $ 81,943,025
European Equity 2,880,312 3,001,500
Core Equity 3,299,764 3,306,000
Global Telecommunications 55,116,669 56,298,740
L) SHORT SALES -- When a Fund's investment adviser believes that a
security is overvalued, it may sell the security short by borrowing the
same security from a broker or other institution and selling the security.
A Fund will incur a loss as a result of the short sale if the price of the
borrowed security increases between the date of the short sale and the date
on which the Fund replaces such security. A Fund will realize a gain if
there is a decline in price of the security between those dates, and the
decline exceeds the cost of the borrowing the security and other
transaction costs. There can be no assurance that a Fund will be able to
close out a short position at any particular time or at an acceptable
price. Although a Fund's gain is limited to the amount at which it is sold
a security short, its potential loss is limited only by the maximum
attainable price of the security less the price at which the security was
sold. Until a Fund replaces a borrowed security, it will maintain at all
times cash or other liquid securities in an amount which, when added to any
amount deposited with a broker as collateral will at least equal the
current market value of the security sold short. Depending on arrangements
made with brokers, a Fund may not receive any payments (including interest)
on collateral deposited with them. Long-Short Neutral will not make a short
sale if, after giving effect to such sale, the market value of all
securities sold short exceeds 100% of its net asset.
88
<PAGE>
THE WARBURG PINCUS FUNDS
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
M) OTHER -- Securities denominated in currencies other than U.S.
dollars are subject to changes in value due to fluctuations in exchange
rates.
Some countries in which the Funds invest require governmental
approval for the repatriation of investment income, capital or the proceeds
of sales of securities by foreign investors. In addition, if there is a
deterioration in a country's balance of payments or for other reasons, a
country may impose temporary restrictions on foreign capital remittances
abroad.
The securities exchanges of certain foreign markets are
substantially smaller, less liquid and more volatile than the major
securities markets in the United States. Consequently, acquisition and
disposition of securities by each Fund may be inhibited. In addition, a
significant proportion of the aggregate market value of equity securities
listed on the major securities exchanges in emerging markets are held by a
smaller number of investors. This may limit the number of shares available
for acquisition or disposition by a Fund.
Lower-rated debt securities (commonly known as "junk bonds")
possess speculative characteristics and are subject to greater market
fluctuations and risk of lost income and principal than higher-rated debt
securities for a variety of reasons. Also, during an economic downturn or
substantial period of rising interest rates, highly leveraged issuers may
experience financial stress which would adversely affect their ability to
service their principal and interest payment obligations, to meet projected
business goals and to obtain additional financing.
In addition, periods of economic uncertainty and 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,
LLC ("CSAM") an indirect, wholly-owned subsidiary of Credit Suisse Group, serves
as investment advisor for each of ten Funds described herein.
For its advisory services, CSAM is entitled to receive the following fees,
computed daily and payable monthly on each Fund's average daily net assets
(except Long-Short Market Neutral):
FUND ANNUAL RATE
---- -----------
International 0.80% of average daily net assets
European Equity 1.00% of average daily net assets
Global Telecommunications 1.00% of average daily net assets
Focus 0.75% of average daily net assets
Core Equity 0.75% of average daily net assets
Core Fixed 0.375% of average daily net assets
Global Fixed 0.50% of average daily net assets
High Yield 0.70% of average daily net assets
Municipal 0.70% of average daily net assets
For Long-Short Neutral, CSAM is entitled to receive from the Fund a monthly
fee equal to an annual rate of 1.50% of the Fund's average daily net assets. In
addition, CSAM is entitled to a monthly performance adjustment fee, which may
increase or decreased the total advisory fee by up to 0.50% per year. The
performance adjustment fee decreased the total advisory fee by $12,724 or .37%
(annualized) of average daily net assets due to lower performance in comparison
to the Salomon Smith Barney U.S. 1-Month Treasury Bill Index plus 5 percentage
points for the twelve months ended February 29, 2000.
89
<PAGE>
THE WARBURG PINCUS FUNDS
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
NOTE 2. TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES (CONTINUED)
CSAM may, at its discretion, voluntarily waive all or any portion of its
advisory fee for any of the Funds. For the six months ended February 29, 2000
advisory fees and waivers for each of the ten investment Funds were as follows:
GROSS NET
FUND ADVISORY FEE WAIVER ADVISORY FEE
---- ------------ ------ ------------
International $2,584,420 $ -- $2,584,420
European Equity 150,121 (150,121) --
Core Equity 267,189 (49,264) 217,925
Global Telecommunications 1,044,183 (11,032) 1,033,151
Focus 57,633 (38,917) 18,716
Long-Short Neutral 38,351 (37,753) 598
Core Fixed 623,114 (241,892) 381,222
Global Fixed 49,650 (49,650) --
High Yield 439,704 (247,140) 192,564
Municipal 63,916 (56,534) 7,382
CSAM reimbursed expenses of European Equity, Focus, Long-Short Neutral,
Global Fixed and Municipal in the amount of $21,558, $49,173, $11,458, $70,075
and $6,320, respectively, for the six months ended February 29, 2000.
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 Global
Fixed and .50% of the average daily net assets of European Equity. For the six
months ended February 29, 2000, CSAM Limited was entitled to receive $23,625 and
$75,061 from CSAM for sub-advisory services provided to Global Fixed and
European Equity, respectively, all of which were waived.
State Street Bank and Trust Company ("State Street") , serves as each
Fund's transfer and dividend disbursement agent. State Street has delegated most
of its Fund service obligations to Boston Financial Data Services, Inc. (BFDS),
a 50% owned subsidiary of State Street.
Counsellors Fund Services, Inc. ("CFSI"), a wholly-owned subsidiary of
Credit Suisse Asset Management, LLC. served as co-administrator of each Fund
until November 1, 1999. On November 1, 1999, Credit Suisse Asset Management
Securities, Inc. ("CSAMSI") replaced CFSI as co-administrator to each portfolio.
PFPC Inc. ("PFPC"), an indirect subsidiary of PNC Financial Services Group, also
serves as each Fund's co-administrator. For administration services, each Fund,
except European Equity, pays CSAMSI a fee calculated at an annual rate .05% of
the Fund's first $125 million in average daily nets assets of the Common shares
and .10% of average daily net assets of the Common shares over $125 million. For
European Equity, CSAMSI is entitled to receive from the Fund a monthly fee equal
to annual rate of.10% of average daily net assets of the Common shares. No
compensation is payable by the Funds to CSAMSI for co-administration services
for the Institutional shares.
CSFI, at its discretion, voluntarily waived a portion of its
co-administration fees for the Funds. For the period September 1, 1999 to
October 31, 1999, co-administration fees earned and waived by CFSI on the Common
shares were as follows:
<TABLE>
<CAPTION>
GROSS NET
FUND CO-ADMINISTRATION FEE WAIVER CO-ADMINISTRATION FEE
---- --------------------- ------ ---------------------
<S> <C> <C> <C>
International $ 764 $ -- $ 764
European Equity 3,989 (1,995) 1,994
Core Equity 11 (9) 2
Global Telecommunications 6,554 (6,554) --
Focus 10 (8) 2
Long-Short Neutral 163 (131) 32
Core Fixed 10 (8) 2
Global Fixed 2 (1) 1
High Yield 2,188 (1,750) 438
Municipal 18 (15) 3
</TABLE>
90
<PAGE>
THE WARBURG PINCUS FUNDS
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
NOTE 2. TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES (CONTINUED)
CSAMSI may, at its discretion, voluntarily waive all or any portion of its
administrative fee for any of the Funds. For the period November 1, 1999 to
February 29, 2000, co-administrative service fees earned and waived by CSAMSI on
the Common shares were as following:
<TABLE>
<CAPTION>
GROSS CO-ADMINISTRATIVE NET CO-ADMINISTRATIVE
FUND FEE WAIVER FEE
---- ----------------------- ------ ---------------------
<S> <C> <C> <C>
International $ 853 $ -- $ 853
European Equity 10,967 (5,483) 5,484
Core Equity 15 (12) 3
Global Telecommunications 45,655 -- 45,655
Focus 120 (96) 24
Long-Short Neutral 396 (316) 80
Core Fixed 10 (8) 2
Global Fixed 1 (1) --
High Yield 4,478 (3,583) 895
Municipal 37 (29) 8
</TABLE>
For administration services, PFPC currently receives a fee calculated at
annual rate of .125% on each Fund's average daily net asset, except European
Equity, subject to a minimum annual fee and exclusive of out-of-pocket expenses.
For European Equity, PFPC is entitled to receive a fee calculated at an annual
rate of .12% of the funds first $250 million in average daily net assets, .10%
of the next $250 million in average daily net assets, .08% of the next $250
million in average daily net assets and .05% of average daily net assets over
$750 million, subject to minimum annual fee and exclusive of out-of-pocket
expense. PFPC may, at its discretion, voluntarily waive all or any portion of
its administration fee for any of the Funds. For the six months ended February
29, 2000, the co-administration fee earned and waived by PFPC were as follows:
<TABLE>
<CAPTION>
GROSS CO-ADMINISTRATIVE NET CO-ADMINISTRATIVE
FUND FEE WAIVER FEE
---- ----------------------- ----------- ---------------------
<S> <C> <C> <C>
International $403,816 $ -- $403,816
European Equity 18,817 (18,817) --
Core Equity 44,532 -- 44,532
Global Telecommunications 130,523 (7,137) 123,386
Focus 9,605 ------ 9,605
Long-Short Neutral 4,257 (2,034) 2,223
Core Fixed 130,322 -- 130,322
Global Fixed 24,863 -- 24,863
High Yield 78,519 (15,704) 62,815
Municipal 18,648 -- 18,648
</TABLE>
In addition to serving as each Funds co-administrator, CSAMSI served as
distributor of each Fund's shares until January 1, 2000. On January 1, 2000,
Provident Distributors, Inc. ("PDI") replaced CSAMSI as distributor to each
Fund. No compensation is payable by any of the Funds to PDI for distribution
services, but CSAMSI receives compensation from each Fund's Common shares under
the co-administration agreement for shareholder servicing and distribution. For
the Shareholder Servicing and Distribution Plan on the Common shares, CSAMSI
receives a fee calculated at an annual rate .25% of the average daily net assets
of the Common shares of each Fund. For the six months ended February 29, 2000,
shareholder servicing and distribution fees, earned by CSAMSI were as follows:
FUND DISTRIBUTION FEE
---- ----------------
International $ 3,819
European Equity 37,391
Core Equity 57
Global Telecommunications 261,135
Focus 652
Long-Short Neutral 2,794
Core Fixed 52
Global Fixed 8
High Yield 33,331
Municipal 273
91
<PAGE>
THE WARBURG PINCUS FUNDS
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
NOTE 3. PURCHASES AND SALES OF SECURITIES
For the six months ended February 29, 2000, purchases and sales of
investment securities (other than short-term investments) were as follows:
<TABLE>
<CAPTION>
INVESTMENT SECURITIES SHORT SECURITIES
------------------------------ ----------------
FUND PURCHASES SALES SALES
---- -------------- -------------- -------
<S> <C> <C> <C>
International $443,307,621 $699,559,809 $ --
European Equity 30,808,407 31,334,860 --
Core Equity 31,631,807 39,657,829 --
Global Telecommunications 347,512,067 100,187,155 --
Focus 16,964,238 44,795,089 --
Long-Short Neutral 9,062,357 4,997,065 4,749,860
Core Fixed 776,569,160 785,286,669 --
Global Fixed Income 18,518,836 34,666,925 --
High Yield 18,489,083 31,522,220 --
Municipal 507,438 4,159,271 --
</TABLE>
NOTE 4. CAPITAL SHARES
Transactions in capital shares for each period were as follows:
<TABLE>
<CAPTION>
INTERNATIONAL GROWTH FUND
--------------------------------------------------------------
INSTITUTIONAL
--------------------------------------------------------------
FOR THE SIX MONTHS ENDED
FEBRUARY 29, 2000 FOR THE YEAR ENDED
(UNAUDITED) AUGUST 31, 1999
------------------------------- ----------------------------
SHARES VALUE SHARES VALUE
----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Shares sold ............................. 2,583,196 $ 63,186,130 11,591,187 $ 257,783,566
Shares issued in
reinvestment of
dividends ............................ 4,107,321 98,493,562 2,671,406 59,839,501
Shares exchanged ........................ 384,859 9,309,745 -- --
Shares repurchased ...................... (13,046,042) (318,781,114) (12,967,216) (293,781,727
----------- ------------- ----------- -------------
Net increase/(decrease) (5,970,666) $(147,791,677) 1,295,377 $ 23,841,340
=========== ============= =========== =============
INTERNATIONAL GROWTH FUND
--------------------------------------------------------------
COMMON
--------------------------------------------------------------
FOR THE PERIOD ENDED
JANUARY 10, 2000** FOR THE YEAR ENDED
(UNAUDITED) AUGUST 31, 1999
---------------------------- ---------------------------
SHARES VALUE SHARES VALUE
-------- ----------- ---------- -----------
<S> <C> <C> <C> <C>
Shares sold ............................. 164,721 $ 3,922,608 3,185,532 $71,124,892
Shares issued in
reinvestment of
dividends ............................ 55,594 1,323,700 127,644 2,838,791
Shares exchanged ........................ (387,744) (9,309,745) -- --
Shares repurchased ...................... (209,951) (5,109,017) (3,007,619) (66,621,836)
-------- ----------- ---------- -----------
Net increase/(decrease) (377,380) $(9,172,454) 305,557 $ 7,341,847
======== =========== ========== ===========
</TABLE>
<TABLE>
<CAPTION>
EUROPEAN EQUITY FUND
----------------------------------------------------------
INSTITUTIONAL
----------------------------------------------------------
FOR THE SIX MONTHS ENDED FOR THE PERIOD
FEBRUARY 29, 2000 JANUARY 28, 1999*
(UNAUDITED) THROUGH AUGUST 31, 1999
------------------------ -----------------------
SHARES VALUE SHARES VALUE
------ ----- ------ --------
<S> <C> <C> <C> <C>
Shares sold -- $ -- 10,003 $100,030
Shares issued in
reinvestment of
dividends 48 566 -- --
Shares repurchased -- -- -- --
-- ---- ------ --------
Net increase 48 $566 10,003 $100,030
== ==== ====== ========
EUROPEAN EQUITY FUND
---------------------------------------------------------------------------
COMMON
---------------------------------------------------------------------------
FOR THE SIX MONTHS ENDED FOR THE PERIOD
FEBRUARY 29, 2000 JANUARY 28, 1999*
(UNAUDITED) THROUGH AUGUST 31, 1999
------------------------------- -------------------------------
SHARES VALUE SHARES VALUE
---------- ------------ ---------- ------------
<S> <C> <C> <C> <C>
Shares sold 6,223,639 $ 73,924,345 4,115,201 $ 40,639,910
Shares issued in
reinvestment of
dividends 11,320 132,331 -- --
Shares repurchased (5,753,389) (69,193,513) (1,605,450) (15,431,585)
---------- ------------ ---------- ------------
Net increase 481,570 $ 4,863,163 2,509,751 $ 25,208,325
========== ============ ========== ============
</TABLE>
* Inception Date.
**Ceased Operations.
92
<PAGE>
THE WARBURG PINCUS FUNDS
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
NOTE 4. CAPITAL SHARES (CONTINUED)
<TABLE>
<CAPTION>
U.S. CORE EQUITY FUND
-------------------------------------------------------------------
INSTITUTIONAL
---------------------------------------------------------------
FOR THE SIX MONTHS ENDED
FEBRUARY 29, 2000 FOR THE YEAR ENDED
(UNAUDITED) AUGUST 31, 1999
--------------------------- ----------------------------
SHARES VALUE SHARES VALUE
-------- ------------ --------- ------------
<S> <C> <C> <C> <C>
Shares sold 367,648 $ 6,999,701 251,693 $ 5,039,021
Shares issued in
reinvestment of
dividends 554,388 10,045,511 1,230,678 22,619,857
Shares exchanged 7,943 152,900 -- --
Shares repurchased (723,383) (14,328,324) (827,554) (18,062,739)
-------- ------------ --------- ------------
Net increase/(decrease) 206,596 $ 2,869,788 654,817 $ 9,596,139
======== ============ ========= ============
U.S. CORE EQUITY FUND
-----------------------------------------------------
COMMON
-----------------------------------------------------
FOR THE PERIOD ENDED FOR THE PERIOD
JANUARY 10, 2000** OCTOBER 30, 1998*
(UNAUDITED) THROUGH AUGUST 31, 1999
---------------------- -----------------------
SHARES VALUE SHARES VALUE
------ --------- ------ ---------
<S> <C> <C> <C> <C>
Shares sold 615 $ 11,900 9,123 $ 193,824
Shares issued in
reinvestment of
dividends 1,202 21,723 156 2,861
Shares exchanged (7,959) (152,900) -- --
Shares repurchased (704) (13,679) (2,433) (63,918)
------ --------- ------ ---------
Net increase/(decrease) (6,846) $(132,956) 6,846 $ 132,767
====== ========= ====== =========
</TABLE>
<TABLE>
<CAPTION>
GLOBAL TELECOMMUNICATIONS FUND
----------------------------------------------------------------------
COMMON
----------------------------------------------------------------------
FOR THE SIX MONTHS ENDED
FEBRUARY 29, 2000 FOR THE YEAR ENDED
(UNAUDITED) AUGUST 31, 1999
-------------------------------- -----------------------------
SHARES VALUE SHARES VALUE
---------- ------------- --------- ------------
<S> <C> <C> <C> <C>
Shares sold 6,740,206 $ 450,096,204 1,820,386 $ 68,055,242
Shares issued in
reinvestment of
dividends 57,720 3,567,095 5,883 167,194
Shares repurchased (2,192,727) (148,293,891) (280,472) (10,725,448)
---------- ------------- --------- ------------
Net increase 4,605,199 $ 305,369,408 1,545,797 $ 57,496,988
========== ============= ========= ============
</TABLE>
<TABLE>
<CAPTION>
FOCUS FUND
---------------------------------------------------------------------
INSTITUTIONAL
-----------------------------------------------------------------
FOR THE SIX MONTHS ENDED
FEBRUARY 29, 2000 FOR THE YEAR ENDED
(UNAUDITED) AUGUST 31, 1999
----------------------------- ---------------------------
SHARES VALUE SHARES VALUE
---------- ------------ -------- -----------
<S> <C> <C> <C> <C>
Shares sold 130,973 $ 2,259,970 420,175 $ 7,478,114
Shares issued in
reinvestment of
dividends 86,540 1,293,067 2,776 49,578
Shares repurchased (1,549,010) (23,013,298) (387,514) (7,367,592)
---------- ------------ -------- -----------
Net increase/(decrease (1,331,497) $(19,460,261) 35,437 $ 160,100
========== ============ ======== ===========
FOCUS FUND
------------------------------------------------------
COMMON
-----------------------------------------------------
FOR THE SIX MONTHS ENDED FOR THE PERIOD
FEBRUARY 29, 2000 OCTOBER 30, 1998*
(UNAUDITED) THROUGH AUGUST 31, 1999
----------------------- -----------------------
SHARES VALUE SHARES VALUE
------- ---------- ------ --------
<S> <C> <C> <C> <C>
Shares sold 60,517 $1,045,848 5,210 $102,064
Shares issued in
reinvestment of
dividends 4,960 75,842 -- --
Shares repurchased (12,054) (220,462) (479) (8,302)
------- ---------- ------ --------
Net increase/(decrease 53,423 $ 901,228 4,731 $ 93,762
======= ========== ====== ========
</TABLE>
<TABLE>
<CAPTION>
LONG-SHORT MARKET NEUTRAL FUND
---------------------------------------------------------------
INSTITUTIONAL
---------------------------------------------------------------
FOR THE SIX MONTHS ENDED
FEBRUARY 29, 2000 FOR THE YEAR ENDED
(UNAUDITED) AUGUST 31, 1999
--------------------------- -----------------------------
SHARES VALUE SHARES VALUE
-------- ----------- ---------- ------------
<S> <C> <C> <C> <C>
Shares sold 46,893 $ 630,344 2,702,645 $ 40,468,228
Shares issued in
reinvestment of
dividends 21,825 307,514 5,561 82,361
Shares repurchased (241,987) (3,479,365) (2,705,769) (39,525,343)
-------- ----------- ---------- ------------
Net increase/(decrease) (173,269) $(2,541,507) 2,437 $ 1,025,246
======== =========== ========== ============
LONG-SHORT MARKET NEUTRAL FUND
----------------------------------------------------
COMMON
----------------------------------------------------
FOR THE SIX MONTHS ENDED FOR THE PERIOD
FEBRUARY 29, 2000 SEPTEMBER 8, 1998*
(UNAUDITED) THROUGH AUGUST 31, 1999
----------------------- --------------------------
SHARES VALUE SHARES VALUE
------- ----------- ---------- -----------
<S> <C> <C> <C> <C>
Shares sold 111,084 $ 1,689,509 3,454,318 $51,387,127
Shares issued in
reinvestment of
dividends 8,769 124,965 16,915 250,336
Shares repurchased (29,517) (437,622) (3,338,435) 49,530,584)
------- ----------- ---------- -----------
Net increase/(decrease) 90,336 $ 1,376,852 132,798 $ 2,106,879
======= =========== ========== ===========
</TABLE>
* Inception Date.
**Ceased Operations.
93
<PAGE>
THE WARBURG PINCUS FUNDS
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
NOTE 4. CAPITAL SHARES (CONTINUED)
<TABLE>
<CAPTION>
U.S. CORE FIXED INCOME FUND
---------------------------------------------------------------------
INSTITUTIONAL
-----------------------------------------------------------------
FOR THE SIX MONTHS ENDED
FEBRUARY 29, 2000 FOR THE YEAR ENDED
(UNAUDITED) AUGUST 31, 1999
----------------------------- ------------------------------
SHARES VALUE SHARES VALUE
---------- ------------ ----------- -------------
<S> <C> <C> <C> <C>
Shares sold 6,843,944 $101,328,873 16,356,857 $ 252,861,810
Shares issued in
reinvestment of
dividends 813,314 12,048,938 1,697,821 26,132,715
Shares exchanged 7,098 104,334 -- --
Shares repurchased (5,730,165) (85,644,043) (19,716,018) (305,132,292)
---------- ------------ ----------- -------------
Net increase/(decrease 1,934,191 $ 27,838,102 (1,661,340) $ (26,137,767)
========== ============ =========== =============
U.S. CORE FIXED INCOME FUND
------------------------------------------------------
COMMON
-----------------------------------------------------
FOR THE PERIOD ENDED FOR THE PERIOD
JANUARY 10, 2000** OCTOBER 30, 1998*
(UNAUDITED) THROUGH AUGUST 31, 1999
----------------------- ----------------------
SHARES VALUE SHARES VALUE
------- ---------- ------ --------
<S> <C> <C> <C> <C>
Shares sold 20,559 $ 306,983 10,093 $155,782
Shares issued in
reinvestment of
dividends 249 3,694 135 2,031
Shares exchanged (7,102) (104,334) -- --
Shares repurchased (20,640) (308,763) (3,294) (49,547)
------- --------- ------ --------
Net increase/(decrease (6,934) $(102,420) 6,934 $108,266
======= ========= ====== ========
</TABLE>
<TABLE>
<CAPTION>
STRATEGIC GLOBAL FIXED INCOME FUND
---------------------------------------------------------------------
INSTITUTIONAL
-----------------------------------------------------------------
FOR THE SIX MONTHS ENDED
FEBRUARY 29, 2000 FOR THE YEAR ENDED
(UNAUDITED) AUGUST 31, 1999
----------------------------- ---------------------------
SHARES VALUE SHARES VALUE
---------- ------------ -------- ------------
<S> <C> <C> <C> <C>
Shares sold 87,592 $1,236,103 56,355 $ 891,603
Shares issued in
reinvestment of
dividends 58,582 846,116 68,272 1,075,528
Shares exchanged 1,289 18,150 -- --
Shares repurchased (1,063,024) (15,449,747) (184,373) (2,889,584)
---------- ------------ -------- ------------
Net increase/(decrease) (915,561) $(13,349,378) (59,746) $ (922,453)
========== ============ ======== ============
STRATEGIC GLOBAL FIXED INCOME FUND
-----------------------------------------------------
COMMON
----------------------------------------------------
FOR THE PERIOD ENDED FOR THE PERIOD
JANUARY 10, 2000** OCTOBER 30, 1998*
(UNAUDITED) THROUGH AUGUST 31, 1999
---------------------- -----------------------
SHARES VALUE SHARES VALUE
------ --------- ------ ---------
<S> <C> <C> <C> <C>
Shares sold -- $ -- 2,478 $38,282
Shares issued in
reinvestment of
dividends 62 887 4 55
Shares exchanged (1,293) (18,150) -- --
Shares repurchased -- (2) (1,251) (19,035)
------ --------- ----- ---------
Net increase/(decrease) (1,231) $ (17,265) 1,231 $ 19,302
====== ========= ===== =========
</TABLE>
<TABLE>
<CAPTION>
HIGH YIELD FUND
-------------------------------------------------------------------
INSTITUTIONAL
-----------------------------------------------------------------
FOR THE SIX MONTHS ENDED
FEBRUARY 29, 2000 FOR THE YEAR ENDED
(UNAUDITED) AUGUST 31, 1999
----------------------------- ---------------------------
SHARES VALUE SHARES VALUE
---------- ------------ -------- ------------
<S> <C> <C> <C> <C>
Shares sold 1,033,057 $ 15,717,759 2,505,861 $ 39,359,915
Shares issued in
reinvestment of
dividends 332,277 4,900,053 508,551 7,926,308
Shares repurchased (1,691,420) $(24,958,869) (2,470,735) (38,614,790)
---------- ------------ ---------- ------------
Net increase/(decrease) (326,086) $ (4,341,057) 543,677 $ 8,671,433
========== ============ ========== ============
HIGH YIELD FUND
---------------------------------------------------------
COMMON
---------------------------------------------------------
FOR THE SIX MONTHS ENDED
FEBRUARY 29, 2000 FOR THE YEAR ENDED
(UNAUDITED) AUGUST 31, 1999
------------------------ -----------------------
SHARES VALUE SHARES VALUE
------ --------- ------ ---------
<S> <C> <C> <C> <C>
Shares sold 880,515 $13,481,335 2,499,612 $39,264,516
Shares issued in
reinvestment of
dividends 81,579 1,208,563 105,404 1,641,508
Shares repurchased (1,040,206) (15,843,922) (427,403) (6,757,008)
---------- ----------- ---------- -----------
Net increase/(decrease) (78,112) $(1,154,024) 2,177,613 $34,149,016
========== =========== ========== ===========
</TABLE>
* Inception Date
** Ceased Operations.
94
<PAGE>
THE WARBURG PINCUS FUNDS
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
NOTE 4. CAPITAL SHARES (CONTINUED)
<TABLE>
<CAPTION>
MUNICIPAL BOND FUND
---------------------------------------------------------------
INSTITUTIONAL
---------------------------------------------------------------
FOR THE SIX MONTHS ENDED
FEBRUARY 29, 2000 FOR THE YEAR ENDED
(UNAUDITED) AUGUST 31, 1999
--------------------------- ---------------------------
SHARES VALUE SHARES VALUE
-------- ----------- -------- ------------
<S> <C> <C> <C> <C>
Shares sold 13,424 $ 80,042 179,990 $ 2,675,315
Shares issued in
reinvestment of
dividends 25,239 474,085 86,580 1,287,465
Shares repurchased (448,780) (6,358,533) (168,278) (2,507,954)
-------- ----------- -------- -----------
Net increase/(decrease) (410,117) $(5,804,406) 98,292 $ 1,454,826
======== =========== ======== ===========
MUNICIPAL BOND FUND
------------------------------------------------------
COMMON
-----------------------------------------------------
FOR THE SIX MONTHS ENDED FOR THE PERIOD
FEBRUARY 29, 2000 OCTOBER 30, 1998*
(UNAUDITED) THROUGH AUGUST 31, 1999
------------------------ -----------------------
SHARES VALUE SHARES VALUE
------ -------- ------ --------
<S> <C> <C> <C> <C>
Shares sold 5,541 $ 78,517 15,816 $236,022
Shares issued in
reinvestment of
dividends 415 5,801 279 4,072
Shares repurchased (5,089) (71,984) (1,335) (20,081)
------ -------- ------ --------
Net increase/(decrease) 867 $ 12,334 14,760 $220,013
====== ======== ====== ========
<FN>
*Inception Date
</FN>
</TABLE>
On February 29, 2000, the number of shareholders that held 5% or more of
the outstanding shares are as follows:
<TABLE>
<CAPTION>
NUMBER OF APPROXIMATE PERCENTAGE
SHAREHOLDERS OF OUTSTANDING SHARES
------------- ----------------------
<S> <C> <C>
International Institutional shares 7 45.81%
European Equity Institutional shares 1 99.97
European Equity Common shares 2 71.52
Core Equity Institutional shares 4 75.75
Long-Short Market Neutral
Institutional shares 6 90.07
Core Fixed Institutional shares 6 52.39
Global Fixed Institutional shares 2 92.60
High Yield Institutional shares 3 60.01
High Yield Common shares 3 78.15
Municipal Institutional shares 3 67.87
Municipal Common shares 2 98.38
Focus Fund Institutional shares 4 85.88
Focus Fund Common shares 6 73.75
</TABLE>
NOTE 5. RESTRICTED SECURITIES
One of International's investments is 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 29, 2000, percentage of net assets which the
securities comprise, aggregate cost and unit value of the securities.
<TABLE>
<CAPTION>
NUMBER OF ACQUISITION 02/29/00 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>
95
<PAGE>
THE WARBURG PINCUS FUNDS
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
NOTE 6. FORWARD FOREIGN CURRENCY CONTRACTS
The Funds will generally enter into forward foreign currency exchange
contracts as a way of managing foreign exchange rate risk or to enhance total
return. Each Fund may enter into these contracts to fix the U.S. dollar value of
a security that it has agreed to buy or sell for the period between the date the
trade was entered into and the date the security is delivered and paid for. Each
Fund may also use these contracts to hedge the U.S. dollar value of securities
denominated in foreign currencies that it already owns. The Fund may enter into
these contracts for the purchase or sale of a specific foreign currency at a
fixed price on a future date as a hedge or cross-hedge against either
transactions or portfolio positions.
Forward foreign currency contracts are valued at the forward rate, and are
marked-to-market daily. The change in market value is recorded by each Fund as
an unrealized gain or loss. When the contract is closed, each Fund records a
realized gain or loss equal to the difference between the value of the contract
at the time it was opened and the value at the time it was closed. Each Fund's
policy is to include this portion of realized and unrealized gains and losses on
investments that result from foreign currency changes with other foreign
currency gains and losses on the Statement of Operations.
The use of forward foreign currency contracts does not eliminate
fluctuations in the underlying prices of each Fund's portfolio securities, but
it does establish a rate of exchange that can be achieved in the future.
Although forward foreign currency contracts limit the risk of loss due to a
decline in the value of the hedged currency, they also limit any potential gain
that might result should the value of the currency increase. In addition, the
Fund could be exposed to risks if the counterparty to the contract is unable to
meet the terms of their contract. During the six months ended February 29, 2000,
Global Fixed and Core Fixed entered into forward foreign currency contracts.
Core Fixed had no open forward foreign contracts at February 29, 2000.
The Global Fixed had open forward currency contracts at February 29, 2000
as follows:
<TABLE>
<CAPTION>
FOREIGN UNREALIZED
FORWARD CURRENCY EXPIRATION CURRENCY CONTRACT CONTRACT FOREIGN EXCHANGE
TRACT DATE TO BE SOLD AMOUNT VALUE GAIN/(LOSS)
-------------------- ---------- ------------ ---------- ---------- ----------------
<S> <C> <C> <C> <C> <C>
Canadian Dollar 03/10/00 $ 555,552 $ 376,390 $ 383,639 $ (7,249)
Euro 04/20/00 1,475,194 1,462,670 1,427,888 34,782
Japanese Yen 04/20/00 123,148,238 1,186,213 1,130,256 55,957
Japanese Yen 05/11/00 26,682,500 250,000 245,749 4,251
United Kingdom Pound 04/20/00 117,422 191,761 185,362 6,399
---------- ---------- --------
$3,467,034 $3,372,894 $ 94,140
========== ========== ========
</TABLE>
<TABLE>
<CAPTION>
FOREIGN UNREALIZED
FORWARD CURRENCY EXPIRATION CURRENCY CONTRACT CONTRACT FOREIGN EXCHANGE
TRACT DATE TO BE PURCHASED AMOUNT VALUE GAIN/(LOSS)
-------------------- ---------- --------------- ---------- ---------- ----------------
<S> <C> <C> <C> <C> <C>
Canadian Dollar 03/10/00 $ 1,501,575 $1,026,385 $1,037,611 $ 11,226
Euro 04/20/00 2,410,351 2,436,429 2,333,057 (103,372)
Euro 05/11/00 247,760 250,000 240,157 (9,843)
Japanese Yen 04/20/00 136,484,437 1,273,176 1,252,656 (20,520)
Japanese Yen 05/11/00 26,670,000 250,000 245,634 (4,366)
Swedish Krona 03/10/00 2,268,250 267,703 259,422 (8,281)
United Kingdom Pound 04/20/00 170,000 278,885 268,362 (10,523)
---------- ---------- ---------
$5,782,578 $5,636,899 $(145,679)
========== ========== =========
</TABLE>
96
<PAGE>
THE WARBURG PINCUS FUNDS
NOTES TO FINANCIAL STATEMENTS (CONCLUDED)
(UNAUDITED)
NOTE 7. LINE OF CREDIT
The Funds, together with other funds advised by CSAM, have established a
$250 million committed line of credit facility ("Credit Facility") with Deutche
Bank, AG as administrative agent, State Street Bank and Trust Company as
operations agents, Bank of Nova Scotia as syndication agent and certain other
lender, for temporary or emergency purposes primarily relating to unanticipated
portfolio share redemption. Under the terms of the Credit Facility, the funds
with access to the Credit Facility pay an aggregate commitment fee at a rate of
.075% per annum on the average daily balance of the Credit Facility that is
undisbursed and uncanceled during the preceding quarter allocated among the
participation funds in such manner as is determined by the governing Boards of
the various funds. In addition the participating funds will pay interest on
borrowing at the Federal funds rate plus .50%. During the six months ending
February 29, 2000, the following funds had borrowings under line of credit
agreement.
<TABLE>
<CAPTION>
AVERAGE DAILY AVERAGE MAXIMUM DAILY LOAN OUTSTANDING
PORTFOLIO LOAN BALANCE INTEREST RATE % LOAN OUTSTANDING AT 02/29/00
--------- ------------- --------------- ---------------- ----------------
<S> <C> <C> <C> <C>
International $ 28,022 6.00% $1,7000,000 $ 0
European Equity 448,599 6.09% 5,858,000 0
High Yield 24,176 6.00% 4,400,000 0
</TABLE>
97
<PAGE>
THE WARBURG PINCUS FUNDS
SPECIAL SHAREHOLDER MEETING RESULTS
FEBRUARY 29, 2000 (UNAUDITED)
Warburg Pincus Emerging Markets II Fund
Warburg Pincus European Equity Fund
Warburg Pincus Global Telecommunications Fund
Warburg Pincus International Growth Fund
Warburg Pincus Long-Short Equity Fund
Warburg Pincus Long-Short Market Neutral Fund
Warburg Pincus Select Economic Value Equity Fund
Warburg Pincus U.S. Core Equity Fund
Warburg Pincus Central & Eastern Europe Fund
Warburg Pincus High Yield Fund
Warburg Pincus Municipal Bond Fund
Warburg Pincus Strategic Global Fixed Income Fund
Warburg Pincus U.S. Core Fixed Income Fund
A special meeting of shareholders of each Fund was held on May 21, 1999. At the
special meeting, the following persons were elected as directors of each Fund,
constituting the entire Board of Directors: Richard H. Francis, Jack W. Fritz,
Jeffrey E. Garten, James S. Pasman, Jr., William W. Priest, Steven N. Rappaport,
Arnold M. Reichman and Alexander B. Trowbridge.
In addition, shareholders of each Fund voted on the following matters:
Proposal 2: Ratification of the selection of PricewaterhouseCoopers LLP
as the independent accountants for each of the Funds for the
fiscal year ending August 31, 1999.
The voting results for each Fund were as follows:
Election of Directors:
- --------------------------------------------------------------------------------
EMERGING MARKETS II For Withheld
- --------------------------------------------------------------------------------
Richard H. Francis 1,580,378.3210 428.0680
- --------------------------------------------------------------------------------
Jack W. Fritz 1,580,378.3210 428.0680
- --------------------------------------------------------------------------------
Jeffrey E. Garten 1,580,378.3210 428.0680
- --------------------------------------------------------------------------------
James S. Pasman, Jr. 1,580,378.3210 428.0680
- --------------------------------------------------------------------------------
William W. Priest 1,580,378.3210 428.0680
- --------------------------------------------------------------------------------
Steven N. Rappaport 1,580,378.3210 428.0680
- --------------------------------------------------------------------------------
Arnold M. Reichman 1,580,378.3210 428.0680
- --------------------------------------------------------------------------------
Alexander B. Trowbridge 1,580,378.3210 428.0680
- --------------------------------------------------------------------------------
Proposal 2:
- --------------------------------------------------------------------------------
% of Shares to
% of Shares to Total Total Shares
Shares Outstanding Shares Vote
- --------------------------------------------------------------------------------
For 1,090,753.7830 56.8722% 100.0000%
- --------------------------------------------------------------------------------
Against 0.0000 0.0000% 0.0000%
- --------------------------------------------------------------------------------
Abstain 0.0000 0.0000% 0.0000%
- --------------------------------------------------------------------------------
98
<PAGE>
THE WARBURG PINCUS FUNDS
SPECIAL SHAREHOLDER MEETING RESULTS (CONTINUED)
FEBRUARY 29, 2000 (UNAUDITED)
- --------------------------------------------------------------------------------
EUROPEAN EQUITY For Withheld
- --------------------------------------------------------------------------------
Richard H. Francis 1,563,817.1831 46,857.0038
- --------------------------------------------------------------------------------
Jack W. Fritz 1,568,007.1941 42,666.9928
- --------------------------------------------------------------------------------
Jeffrey E. Garten 1,565,720.2961 44,953.8908
- --------------------------------------------------------------------------------
James S. Pasman, Jr. 1,565,842.6191 44,831.5678
- --------------------------------------------------------------------------------
William W. Priest 1,568,007.8711 42,666.3158
- --------------------------------------------------------------------------------
Steven N. Rappaport 1,567,490.5061 43,183.6808
- --------------------------------------------------------------------------------
Arnold M. Reichman 1,568,607.8711 43,066.3158
- --------------------------------------------------------------------------------
Alexander B. Trowbridge 1,565,051.0831 45,623.1038
- --------------------------------------------------------------------------------
Proposal 2:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------
% of Shares to Total % of Shares to Total Shares
Shares Outstanding Shares Vote
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
For 1,585,178.7222 56.4308% 98.4171%
- --------------------------------------------------------------------------------------------------
Against 12,845.8637 0.4573% 0.7975%
- --------------------------------------------------------------------------------------------------
Abstain 12,649.6010 0.4503% 0.7854%
- --------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
GLOBAL TELECOMMUNICATIONS For Withheld
- --------------------------------------------------------------------------------
Richard H. Francis 129,882.0290 1,716.8970
- --------------------------------------------------------------------------------
Jack W. Fritz 129,217.0550 2,381.8710
- --------------------------------------------------------------------------------
Jeffrey E. Garten 129,404.0120 2,194.9140
- --------------------------------------------------------------------------------
James S. Pasman, Jr. 129,882.0290 1,716.8970
- --------------------------------------------------------------------------------
William W. Priest 129,930.6370 1,668.2890
- --------------------------------------------------------------------------------
Steven N. Rappaport 130,019.5860 1,579.3400
- --------------------------------------------------------------------------------
Arnold M. Reichman 129,930.6370 1,668.2890
- --------------------------------------------------------------------------------
Alexander B. Trowbridge 129,266.4550 2,332.4710
- --------------------------------------------------------------------------------
Proposal 2:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------
% of Shares to Total % of Shares to Total Shares
Shares Outstanding Shares Vote
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
For 129,971.3690 40.8565% 98.7632%
- --------------------------------------------------------------------------------------------------
Against 712.5570 0.2240% 0.5415%
- --------------------------------------------------------------------------------------------------
Abstain 915.0000 0.2876% 0.6953%
- --------------------------------------------------------------------------------------------------
</TABLE>
99
<PAGE>
THE WARBURG PINCUS FUNDS
SPECIAL SHAREHOLDER MEETING RESULTS (CONTINUED)
FEBRUARY 29, 2000 (UNAUDITED)
- --------------------------------------------------------------------------------
INTERNATIONAL GROWTH For Withheld
- --------------------------------------------------------------------------------
Richard H. Francis 13,552,240.0712 11,342.7678
- --------------------------------------------------------------------------------
Jack W. Fritz 13,552,240.0712 11,342.7678
- --------------------------------------------------------------------------------
Jeffrey E. Garten 13,552,240.0712 11,342.7678
- --------------------------------------------------------------------------------
James S. Pasman, Jr. 13,552,240.0712 11,342.7678
- --------------------------------------------------------------------------------
William W. Priest 13,552,240.0712 11,342.7678
- --------------------------------------------------------------------------------
Steven N. Rappaport 13,552,240.0712 11,342.7678
- --------------------------------------------------------------------------------
Arnold M. Reichman 13,552,240.0712 11,342.7678
- --------------------------------------------------------------------------------
Alexander B. Trowbridge 13,552,240.0712 11,342.7678
- --------------------------------------------------------------------------------
Proposal 2:
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------
% of Shares to Total % of Shares to Total Shares
Shares Outstanding Shares Vote
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
For 13,561,773.0858 41.7350% 99.9867%
- ---------------------------------------------------------------------------------------------------
Against 1,045.2327 0.0032% 0.0077%
- ---------------------------------------------------------------------------------------------------
Abstain 764.5205 0.0024% 0.0056%
- ---------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
LONG-SHORT EQUITY For Withheld
- --------------------------------------------------------------------------------
Richard H. Francis 565,682.1940 0.0000
- --------------------------------------------------------------------------------
Jack W. Fritz 565,682.1940 0.0000
- --------------------------------------------------------------------------------
Jeffrey E. Garten 565,682.1940 0.0000
- --------------------------------------------------------------------------------
James S. Pasman, Jr. 565,682.1940 0.0000
- --------------------------------------------------------------------------------
William W. Priest 565,682.1940 0.0000
- --------------------------------------------------------------------------------
Steven N. Rappaport 565,682.1940 0.0000
- --------------------------------------------------------------------------------
Arnold M. Reichman 565,682.1940 0.0000
- --------------------------------------------------------------------------------
Alexander B. Trowbridge 565,682.1940 0.0000
- --------------------------------------------------------------------------------
Proposal 2:
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------
% of Shares to Total % of Shares to Total Shares
Shares Outstanding Shares Vote
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
For 565,682.1940 99.6712% 100.0000%
- ----------------------------------------------------------------------------------------------------
Against 0.0000 0.0000% 0.0000%
- ----------------------------------------------------------------------------------------------------
Abstain 0.0000 0.0000% 0.0000%
- ----------------------------------------------------------------------------------------------------
</TABLE>
100
<PAGE>
THE WARBURG PINCUS FUNDS
SPECIAL SHAREHOLDER MEETING RESULTS (CONTINUED)
FEBRUARY 29, 2000 (UNAUDITED)
- --------------------------------------------------------------------------------
LONG-SHORT MARKET NEUTRAL For Withheld
- --------------------------------------------------------------------------------
Richard H. Francis 1,006,652.5040 0.0000
- --------------------------------------------------------------------------------
Jack W. Fritz 1,006,652.5040 0.0000
- --------------------------------------------------------------------------------
Jeffrey E. Garten 1,006,652.5040 0.0000
- --------------------------------------------------------------------------------
James S. Pasman, Jr. 1,006,652.5040 0.0000
- --------------------------------------------------------------------------------
William W. Priest 1,006,652.5040 0.0000
- --------------------------------------------------------------------------------
Steven N. Rappaport 1,006,652.5040 0.0000
- --------------------------------------------------------------------------------
Arnold M. Reichman 1,006,652.5040 0.0000
- --------------------------------------------------------------------------------
Alexander B. Trowbridge 1,006,652.5040 0.0000
- --------------------------------------------------------------------------------
Proposal 2:
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------
% of Shares to Total % of Shares to Total Shares
Shares Outstanding Shares Vote
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
For 1,006,652.5040 58.3092% 100.0000%
- ---------------------------------------------------------------------------------------------------------------
Against 0.0000 0.0000% 0.0000%
- ---------------------------------------------------------------------------------------------------------------
Abstain 0.0000 0.0000% 0.0000%
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
SELECT ECONOMIC VALUE EQUITY For Withheld
- --------------------------------------------------------------------------------
Richard H. Francis 1,648,986.3950 3,023.7183
- --------------------------------------------------------------------------------
Jack W. Fritz 1,648,986.3950 3,023.7183
- --------------------------------------------------------------------------------
Jeffrey E. Garten 1,648,986.3950 3,023.7183
- --------------------------------------------------------------------------------
James S. Pasman, Jr. 1,648,986.3950 3,023.7183
- --------------------------------------------------------------------------------
William W. Priest 1,648,986.3950 3,023.7183
- --------------------------------------------------------------------------------
Steven N. Rappaport 1,648,986.3950 3,023.7183
- --------------------------------------------------------------------------------
Arnold M. Reichman 1,648,986.3950 3,023.7183
- --------------------------------------------------------------------------------
Alexander B. Trowbridge 1,648,986.3950 3,023.7183
- --------------------------------------------------------------------------------
Proposal 2:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------
% of Shares to Total % of Shares to Total Shares
Shares Outstanding Shares Vote
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
For 1,652,010.1140 70.7373% 100.0000%
- --------------------------------------------------------------------------------------------------------
Against 0.0000 0.0000% 0.0000%
- --------------------------------------------------------------------------------------------------------
Abstain 0.0000 0.0000% 0.0000%
- --------------------------------------------------------------------------------------------------------
</TABLE>
101
<PAGE>
THE WARBURG PINCUS FUNDS
SPECIAL SHAREHOLDER MEETING RESULTS (CONTINUED)
FEBRUARY 29, 2000 (UNAUDITED)
- --------------------------------------------------------------------------------
U.S. CORE EQUITY For Withheld
- --------------------------------------------------------------------------------
Richard H. Francis 2,532,609.5330 350.5320
- --------------------------------------------------------------------------------
Jack W. Fritz 2,532,608.3240 351.7410
- --------------------------------------------------------------------------------
Jeffrey E. Garten 2,532,634.8070 325.5800
- --------------------------------------------------------------------------------
James S. Pasman, Jr. 2,532,609.5330 350.5320
- --------------------------------------------------------------------------------
William W. Priest 2,532,609.5330 350.5320
- --------------------------------------------------------------------------------
Steven N. Rappaport 2,532,609.5330 350.5320
- --------------------------------------------------------------------------------
Arnold M. Reichman 2,532,609.5330 350.5320
- --------------------------------------------------------------------------------
Alexander B. Trowbridge 2,532,636.0160 324.0490
- --------------------------------------------------------------------------------
Proposal 2:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------
% of Shares to Total % of Shares to Total Shares
Shares Outstanding Shares Vote
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
For 2,532,682.8510 68.0243% 99.9891%
- --------------------------------------------------------------------------------------------------------------
Against 0.0000 0.0000% 0.0000%
- --------------------------------------------------------------------------------------------------------------
Abstain 277.2140 0.0074% 0.0109%
- --------------------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
CENTRAL & EASTERN EUROPE For Withheld
- --------------------------------------------------------------------------------
Richard H. Francis 10,000.0000 0.0000
- --------------------------------------------------------------------------------
Jack W. Fritz 10,000.0000 0.0000
- --------------------------------------------------------------------------------
Jeffrey E. Garten 10,000.0000 0.0000
- --------------------------------------------------------------------------------
James S. Pasman, Jr. 10,000.0000 0.0000
- --------------------------------------------------------------------------------
William W. Priest 10,000.0000 0.0000
- --------------------------------------------------------------------------------
Steven N. Rappaport 10,000.0000 0.0000
- --------------------------------------------------------------------------------
Arnold M. Reichman 10,000.0000 0.0000
- --------------------------------------------------------------------------------
Alexander B. Trowbridge 10,000.0000 0.0000
- --------------------------------------------------------------------------------
Proposal 2:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------
% of Shares to Total % of Shares to Total Shares
Shares Outstanding Shares Vote
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
For 10,000.0000 99.9900% 100.0000%
- -----------------------------------------------------------------------------------------------------------------
Against 0.0000 0.0000% 0.0000%
- -----------------------------------------------------------------------------------------------------------------
Abstain 0.0000 0.0000% 0.0000%
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
102
<PAGE>
THE WARBURG PINCUS FUNDS
SPECIAL SHAREHOLDER MEETING RESULTS (CONTINUED)
FEBRUARY 29, 2000 (UNAUDITED)
- --------------------------------------------------------------------------------
HIGH YIELD For Withheld
- --------------------------------------------------------------------------------
Richard H. Francis 5,464,641.0590 2,279.8760
- --------------------------------------------------------------------------------
Jack W. Fritz 5,460,763.4240 6,157.5110
- --------------------------------------------------------------------------------
Jeffrey E. Garten 5,464,641.0590 2,279.8760
- --------------------------------------------------------------------------------
James S. Pasman, Jr. 5,460,763.4240 6,157.5110
- --------------------------------------------------------------------------------
William W. Priest 5,464,641.0590 2,279.8760
- --------------------------------------------------------------------------------
Steven N. Rappaport 5,464,641.0590 2,279.8760
- --------------------------------------------------------------------------------
Arnold M. Reichman 5,464,641.0590 2,279.8760
- --------------------------------------------------------------------------------
Alexander B. Trowbridge 5,464,641.0590 2,279.8760
- --------------------------------------------------------------------------------
Proposal 2:
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------
% of Shares to Total % of Shares to Total Shares
Shares Outstanding Shares Vote
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
For 5,463,212.1834 59.8353% 99.9322%
- ---------------------------------------------------------------------------------------------------------------
Against 459.4244 0.0050% 0.0084%
- ---------------------------------------------------------------------------------------------------------------
Abstain 3,249.3272 0.0356% 0.0594%
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
MUNICIPAL BOND For Withheld
- --------------------------------------------------------------------------------
Richard H. Francis 1,177,497.9240 0.0000
- --------------------------------------------------------------------------------
Jack W. Fritz 1,177,497.9240 0.0000
- --------------------------------------------------------------------------------
Jeffrey E. Garten 1,177,497.9240 0.0000
- --------------------------------------------------------------------------------
James S. Pasman, Jr. 1,177,497.9240 0.0000
- --------------------------------------------------------------------------------
William W. Priest 1,177,497.9240 0.0000
- --------------------------------------------------------------------------------
Steven N. Rappaport 1,177,497.9240 0.0000
- --------------------------------------------------------------------------------
Arnold M. Reichman 1,177,497.9240 0.0000
- --------------------------------------------------------------------------------
Alexander B. Trowbridge 1,177,497.9240 0.0000
- --------------------------------------------------------------------------------
Proposal 2:
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------
% of Shares to Total % of Shares to Total Shares
Shares Outstanding Shares Vote
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
For 1,177,497.9240 72.7497% 100.0000%
- ---------------------------------------------------------------------------------------------------------------
Against 0.0000 0.0000% 0.0000%
- ---------------------------------------------------------------------------------------------------------------
Abstain 0.0000 0.0000% 0.0000%
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
103
<PAGE>
THE WARBURG PINCUS FUNDS
SPECIAL SHAREHOLDER MEETING RESULTS (CONTINUED)
FEBRUARY 29, 2000 (UNAUDITED)
- --------------------------------------------------------------------------------
STRATEGIC GLOBAL FIXED INCOME For Withheld
- --------------------------------------------------------------------------------
Richard H. Francis 1,032,483.3210 0.0000
- --------------------------------------------------------------------------------
Jack W. Fritz 1,032,483.3210 0.0000
- --------------------------------------------------------------------------------
Jeffrey E. Garten 1,032,483.3210 0.0000
- --------------------------------------------------------------------------------
James S. Pasman, Jr. 1,032,483.3210 0.0000
- --------------------------------------------------------------------------------
William W. Priest 1,032,483.3210 0.0000
- --------------------------------------------------------------------------------
Steven N. Rappaport 1,032,483.3210 0.0000
- --------------------------------------------------------------------------------
Arnold M. Reichman 1,032,483.3210 0.0000
- --------------------------------------------------------------------------------
Alexander B. Trowbridge 1,032,483.3210 0.0000
- --------------------------------------------------------------------------------
Proposal 2:
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
% of Shares to Total % of Shares to Total Shares
Shares Outstanding Shares Vote
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
For 1,032,483.3210 55.6040% 100.0000%
- ----------------------------------------------------------------------------------------------------------------
Against 0.0000 0.0000% 0.0000%
- ----------------------------------------------------------------------------------------------------------------
Abstain 0.0000 0.0000% 0.0000%
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
- -------------------------------------------------------------------------------
U.S. CORE FIXED INCOME For Withheld
- -------------------------------------------------------------------------------
Richard H. Francis 8,874,495.2327 361.5353
- -------------------------------------------------------------------------------
Jack W. Fritz 8,874,495.2327 361.5353
- -------------------------------------------------------------------------------
Jeffrey E. Garten 8,874,495.2327 361.5353
- -------------------------------------------------------------------------------
James S. Pasman, Jr. 8,874,495.2327 361.5353
- -------------------------------------------------------------------------------
William W. Priest 8,874,495.2327 361.5353
- -------------------------------------------------------------------------------
Steven N. Rappaport 8,874,495.2327 361.5353
- -------------------------------------------------------------------------------
Arnold M. Reichman 8,870,667.8457 4,188.9223
- -------------------------------------------------------------------------------
Alexander B. Trowbridge 8,870.667.8457 4,188.9223
- -------------------------------------------------------------------------------
Proposal 2:
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------
% of Shares to Total % of Shares to Total Shares
Shares Outstanding Shares Vote
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
For 8,867,054.0638 36.7772% 99.9121%
- ---------------------------------------------------------------------------------------------------------------
Against 272.1831 0.0011% 0.0031%
- ---------------------------------------------------------------------------------------------------------------
Abstain 7,530.5211 0.0312% 0.0849%
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
104
<PAGE>
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800-222-8977
PROVIDENT DISTRIBUTORS, INC., DISTRIBUTOR CSISB-3-0200
