WARBURG PINCUS FUNDS (LOGO) CREDIT SUISSE ASSET MANAGEMENT (LOGO)
[GRAPHIC OMITTED] [GRAPHIC OMITTED]
ANNUAL
REPORT
AUGUST 31, 1999
WARBURG PINCUS
U.S. CORE FIXED INCOME FUND
(BULLET)
WARBURG PINCUS
HIGH YIELD FUND
(BULLET)
WARBURG PINCUS
MUNICIPAL BOND FUND
(BULLET)
WARBURG PINCUS
STRATEGIC GLOBAL FIXED INCOME FUND
More complete information about the funds, including charges and expenses, is
provided in the PROSPECTUS, which must precede or accompany this document and
which should be read carefully before investing. You may obtain additional
copies by calling 800-WARBURG (800-927-2874) or by writing to Warburg Pincus
Funds, P.O. Box 9030, Boston, MA 02205-9030.
Credit Suisse Asset Management Securities, Inc., Distributor, 466 Lexington
Avenue,New York, NY 10017. Telephone: 800-888-6878. Warburg Pincus Funds is a
division of Credit Suisse Asset Management Securities, LLC.
<PAGE>
FROM TIME TO TIME, THE FUNDS' INVESTMENT ADVISER AND CO-ADMINISTRATORS MAY
WAIVE SOME FEES AND/OR REIMBURSE SOME EXPENSES, WITHOUT WHICH PERFORMANCE WOULD
BE LOWER. WAIVERS AND/OR REIMBURSEMENTS ARE SUBJECT TO CHANGE.
RETURNS ARE HISTORICAL AND INCLUDE CHANGE IN SHARE PRICE AND REINVESTMENT OF
DIVIDENDS AND CAPITAL GAINS. PAST PERFORMANCE CANNOT GUARANTEE FUTURE RESULTS.
RETURNS AND SHARE PRICE WILL FLUCTUATE, AND REDEMPTION VALUE MAY BE MORE OR LESS
THAN ORIGINAL COST.
INTERNATIONAL INVESTING ENTAILS SPECIAL RISK CONSIDERATIONS, INCLUDING
CURRENCY FLUCTUATIONS, LOWER LIQUIDITY, ECONOMIC AND POLITICAL RISKS, AND
DIFFERENCES IN ACCOUNTING METHODS.
THE VIEWS OF THE FUNDS' MANAGEMENT ARE AS OF THE DATE OF THE LETTERS AND
PORTFOLIO HOLDINGS DESCRIBED IN THIS DOCUMENT ARE AS OF AUGUST 31, 1999; THESE
VIEWS AND PORTFOLIO HOLDINGS MAY HAVE CHANGED SUBSEQUENT TO THESE DATES. NOTHING
IN THIS DOCUMENT IS A RECOMMENDATION TO PURCHASE OR SELL SECURITIES.
FUND SHARES ARE NOT DEPOSITS OR OTHER OBLIGATIONS OF CREDIT SUISSE ASSET
MANAGEMENT, LLC (CSAM) OR ANY AFFILIATE, ARE NOT FDICINSURED AND ARE NOT
GUARANTEED BY CSAM OR ANY AFFILIATE. FUND INVESTMENTS ARE SUBJECT TO INVESTMENT
RISKS, INCLUDING LOSS OF YOUR INVESTMENT.
<PAGE>
WARBURG PINCUS U.S. CORE FIXED INCOME FUND
PORTFOLIO MANAGERS' LETTER -- AUGUST 31, 1999
- --------------------------------------------------------------------------------
September 17, 1999
Dear Shareholders:
We are writing to report on the results of the Warburg Pincus U.S. Core Fixed
Income Fund (the "Fund") for the fiscal year ended August 31, 1999.
At August 31, 1999, the net asset value ("NAV") of the Fund's institutional
shares was $15.01, compared to an NAV of $15.72 on August 31, 1998. As a result,
the institutional shares' total return was 2.4% (assuming the reinvestment of
dividends and distributions totaling $1.08 per share). By comparison, the Lehman
Brothers Aggregate Bond Index (the "Index") returned 0.8% during the same
period.
At August 31, 1999, the NAV of the Fund's common shares was $14.99, compared
to an NAV of $15.68 at their inception of investment operations on October 30,
1998. Including the effect of linkage to the institutional shares, the common
shares' total return between August 31, 1998 and August 31, 1999 was 2.1%
(assuming the reinvestment of dividends and distributions totaling $0.85 per
share). By comparison, the Index returned 0.8% during the same period.
We attribute the Fund's outperformance of the Index benchmark during the
fiscal year to our decisions regarding the portfolio's exposure to "spread
product" (I.E., debt securities whose market valuation is driven by the
difference, known as the "spread," between their yields and those of U.S.
Treasury debt).
As the fiscal year began in September 1998, we continued to be overweighted
in spread product relative to the Index. This stance hurt the Fund's performance
in the middle of 1998, when an extraordinary confluence of events in global
financial markets -- including a sharp decline in the currencies, securities and
economies of many developing nations; rapidly deteriorating political and
macroeconomic conditions in Russia; and the collapse of a major hedge fund,
Long-Term Capital Management -- caused prices of non-Treasury debt to plummet
and their yield spreads to dramatically widen.
We increased our spread product positions into the new fiscal year because we
believed that they represented attractive fundamental value and would eventually
recover. Our patience was rewarded in the fourth quarter of 1998 and the first
quarter of 1999, as yield spreads contracted and spread-based sectors generated
healthy gains.
1
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WARBURG PINCUS U.S. CORE FIXED INCOME FUND
PORTFOLIO MANAGERS' LETTER -- AUGUST 31, 1999 (CONT'D)
- --------------------------------------------------------------------------------
The outlook for spread product turned less favorable in the second quarter,
however, when we felt that prices had exhausted much of their near-term
potential and investors began to focus on the potential for an increase in
interest rates. We responded by taking some profits and raising the portfolio's
overall credit quality, notably in our exposure to below-investment-grade
sectors like high yield and emerging market debt. Our timing proved fortunate,
as both sectors subsequently outperformed spread products.
As developments occur in the fixed income markets or at Credit Suisse Asset
Management that we believe would be of interest to you, we will be sure to keep
you informed. Meanwhile, if you have questions, please feel free to call upon us
at any time.
Sincerely yours,
Credit Suisse Asset Management Fixed Income Management Team
Gregg M. Diliberto, Managing Director
Mark K. Silverstein, Managing Director
Jo Ann Corkran, Director
Jose A. Rodriguez, Director
2
<PAGE>
WARBURG PINCUS U.S. CORE FIXED INCOME FUND
PORTFOLIO MANAGERS' LETTER -- AUGUST 31, 1999 (CONT'D)
- --------------------------------------------------------------------------------
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN THE
WARBURG PINCUS U.S. CORE FIXEDINCOME INSTITUTIONAL SHARES AND THE
LEHMAN BROTHERS AGGREGATE BOND INDEX 1 FROM INCEPTION
(3/31/94) AND AT EACH QUARTER END. (UNAUDITED)
[GRAPHIC OMITTED]
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
Warburg Pincus Lehman Brothers
U.S. Core Fixed Income Aggregate Bond
Fund Index 1
04/01/94 $10,000 $10,000
05/31/94 $ 9,913 $ 9,999
08/31/94 $10,017 $10,188
11/30/94 $ 9,812 $10,007
02/28/95 $10,204 $10,520
05/31/95 $10,864 $11,148
08/31/95 $11,078 $11,342
11/30/95 $11,475 $11,775
02/29/96 $11,590 $11,809
05/31/96 $11,464 $11,638
08/31/96 $11,658 $11,806
11/30/96 $12,328 $12,488
02/28/97 $12,420 $12,442
05/31/97 $12,567 $12,607
08/31/97 $13,001 $12,991
11/30/97 $13,327 $13,437
02/28/98 $13,670 $13,735
05/31/98 $13,898 $13,985
08/31/98 $14,011 $14,364
11/30/98 $14,381 $14,706
02/28/99 $14,352 $14,594
05/31/99 $14,489 $14,591
08/31/09 $14,343 $14,476
Average Annual Total Returns for the periods ended 8/31/99
(Institutional Shares) (Unaudited)
1 YEAR
2.37%
3 YEARS
7.15%
5 YEARS
7.44%
SINCE INCEPTION
(3/31/94)
6.88%
Note:Past performance is not predictive of future performance. Investment return
and principle value of an investment will fluctuate so that an investor's shares
upon redemption may be worth more or less than their original cost.
1 The Lehman Brothers Aggregate Bond Index is composed of the Lehman
Government/Corporate Index and the Mortgage-Backed Securities Index and includes
treasury issues, agency issues, corporate bond issues, and mortgage-backed
securities. Total return comprises price appreciation/depreciation and income as
a percentage of the original investment. Indexes are rebalanced monthly by
market capitalization.
3
<PAGE>
WARBURG PINCUS HIGH YIELD FUND
PORTFOLIO MANAGERS' LETTER -- AUGUST 31, 1999
- --------------------------------------------------------------------------------
September 17, 1999
Dear Shareholders:
We are writing to report on the results of the Warburg Pincus High Yield Fund
(the "Fund") for the fiscal year ended August 31, 1999.
At August 31, 1999, the net asset value ("NAV") of the Fund's institutional
shares was $15.32, compared to an NAV of $16.60 on August 31, 1998. As a result,
the institutional shares' total return was 0.7% (assuming the reinvestment of
dividends totaling $1.37 per share). By comparison, the Credit Suisse First
Boston Global High Yield Index (the "Index") returned 4.7% during the same
period.
At August 31, 1999, the NAV of the Fund's common shares was $15.38, compared
to an NAV of $16.62 on August 31, 1998. As a result, the common shares' total
return was 0.4% (assuming the reinvestment of dividends totaling $1.29 per
share). By comparison, the Index returned 4.7% during the same period.
The Fund performed fairly well during most of the fiscal year, however,
returns in the months of September, October and November 1998 were low. An
extraordinary confluence of events during this time period in global financial
markets -- including a relatively sharp decline in the currencies, securities
and economies of many developing nations; rapidly deteriorating political and
macroeconomic conditions in Russia; and the collapse of a major hedge fund,
Long-Term Capital Management -- caused great instability in fixed income sectors
generally.
The Fund's relative returns in these months were sufficiently low to cause it
to underperform the Index. We attribute this underperformance to the following
factors:
(BULLET) Our substantial overweighting in telecommunications left the
portfolio more highly exposed than the benchmark to
deferred-interest instruments such as zero-coupon bonds whose
returns generally were lower than those of traditional cash-pay
instruments. These lower returns reflected investors' preference at
the time for higher-quality issues within the overall high yield
universe.
(BULLET) We underweighted utilities, which performed well during the period.
(BULLET) A majority of our holdings in the transportation sector were with
shipping companies, which were hurt by a combination of falling oil
prices and declining Asian demand for oil.
4
<PAGE>
WARBURG PINCUS HIGH YIELD FUND
PORTFOLIO MANAGERS' LETTER -- AUGUST 31, 1999 (CONT'D)
- --------------------------------------------------------------------------------
Bright spots for the Fund included our overweightings in cable/media and
gaming, both of which performed much better than the benchmark; and
underweightings in finance and energy, which were among the worst-performing
sectors in the entire high yield market.
As developments occur that we believe would be of interest to you, we will be
sure to keep you informed. Meanwhile, if you have questions, please feel free to
call upon us at anytime.
Sincerely yours,
Credit Suisse Asset Management High Yield Management Team
Richard J. Lindquist, Managing Director
Misia K. Dudley, Director
Marianne Rossi, Director
John M. Tobin, Director
Mary Ann Thomas, Director
HIGH YIELD BONDS ARE LOWER-QUALITY BONDS THAT ARE ALSO KNOWN AS "JUNK" BONDS.
SUCH BONDS ENTAIL GREATER RISKS THAN THOSE FOUND IN HIGHER-RATED SECURITIES.
INTERNATIONAL INVESTING ENTAILS SPECIAL RISK CONSIDERATIONS, INCLUDING CURRENCY
FLUCTUATIONS, LOWER LIQUIDITY, ECONOMIC AND POLITICAL RISKS AND DIFFERENCES IN
ACCOUNTING METHODS.
5
<PAGE>
WARBURG PINCUS HIGH YIELD FUND
PORTFOLIO MANAGERS' LETTER -- AUGUST 31, 1999 (CONT'D)
- --------------------------------------------------------------------------------
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN THE WARBURG PINCUS HIGH
YIELD INSTITUTIONAL SHARES AND THE CS FIRST BOSTON HIGH YIELD INDEX1 FROM
INCEPTION (3/1/93) AND AT EACH QUARTER END. (UNAUDITED)
[GRAPHIC OMITTED]
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
Warburg Pincus
High Yield Fund CS First Boston
Institutional Shares High Yield Index 1
03/01/93 $10,000 $10,000
05/31/93 $10,613 $10,419
08/31/93 $11,293 $10,809
11/30/93 $11,880 $11,209
02/28/94 $12,137 $11,570
05/31/94 $11,491 $11,143
08/31/94 $11,547 $11,201
11/30/94 $11,456 $11,123
02/28/95 $10,968 $11,638
05/31/95 $12,018 $12,370
08/31/95 $12,446 $12,680
11/30/95 $12,758 $13,029
02/29/96 $13,672 $13,516
05/31/96 $13,997 $13,662
08/31/96 $13,991 $13,965
11/30/96 $14,579 $14,547
02/28/97 $15,199 $15,219
05/31/97 $15,359 $15,488
08/31/97 $16,114 $16,119
11/30/97 $16,662 $16,553
02/28/98 $17,523 $17,120
05/31/98 $17,854 $17,387
08/31/98 $16,997 $16,354
11/30/98 $16,672 $16,840
02/28/99 $16,867 $16,924
05/31/99 $17,289 $17,268
08/31/99 $17,110 $17,131
Average Annual Total Returns for the periods ended 8/31/99
(Institutional Shares) (Unaudited)
1 YEAR
0.67%
3 YEARS
6.94%
5 YEARS
8.18%
SINCE INCEPTION
(3/1/93)
8.59%
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN THE WARBURG PINCUS
HIGH YIELD COMMON SHARES AND THE CS FIRST BOSTON HIGH YIELD INDEX 1 FROM
INCEPTION (11/1/96) AND AT EACH QUARTER END. (UNAUDITED)
[GRAPHIC OMITTED]
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
Warburg Pincus
High Yield Fund CS First Boston
Common Shares High Yield Index 1
11/01/96 $10,000 $10,000
11/30/96 $10,105 $10,156
02/28/97 $10,528 $10,625
05/31/97 $10,632 $10,813
08/31/97 $11,149 $11,253
11/30/97 $11,508 $11,556
02/28/98 $12,098 $11,952
05/31/98 $12,317 $12,138
08/31/98 $11,737 $11,417
11/30/98 $11,507 $11,756
02/28/99 $11,637 $11,815
05/31/99 $11,919 $12,055
08/31/99 $11,782 $11,960
Average Annual Total Returns for the periods ended 8/31/99
(Common Shares)(Unaudited)
1 YEAR
0.39%
SINCE INCEPTION
(11/1/96)
5.96%
Note:Past performance is not predictive of future performance. Investment return
and principle value of an investment will fluctuate so that an investor's shares
upon redemption may be worth more or less than their original cost.
1 The Credit Suisse First Boston High Yield Index is an unmanaged index (with no
defined investment objective) of high yield bonds and is compiled by Credit
Suisse First Boston, an affiliate of the fund's adviser.
6
<PAGE>
WARBURG PINCUS MUNICIPAL BOND FUND
PORTFOLIO MANAGERS' LETTER -- AUGUST 31, 1999
- --------------------------------------------------------------------------------
September 17, 1999
Dear Shareholders:
We are writing to report on the results of the Warburg Pincus Municipal Bond
Fund (the "Fund") for the fiscal year ended August 31, 1999.
At August 31, 1999, the net asset value ("NAV") of the Fund's institutional
shares was $14.30, compared to an NAV of $15.12 on August 31, 1998. As a result,
the institutional shares' total return was 0.4% (assuming the reinvestment of
dividends and distributions totaling $0.89 per share). By comparison, the Lehman
Brothers Municipal Bond Index (the "Index") returned 0.5% in the same period.
At August 31, 1999, the NAV of the Fund's common shares was $14.29, compared
to an NAV of $15.14 at their inception of investment operations on October 30,
1998. Including the effect of linkage to the institutional shares, the common
shares' total return between August 31, 1998 and August 31, 1999 was 0.1%
(assuming the reinvestment of dividends and distributions totaling $0.73 per
share). By comparison, the Index returned 0.5% in the same period.
The Fund performed in line with its Index benchmark during the fiscal year.
More importantly, however, was the Fund substantially outperformed the average
general municipal fund which, as calculated by Lipper Inc., declined by 1.6%. We
believe that the following factors contributed the most to this outperformance:
(BULLET) We maintained a modest level of exposure to taxable instruments,
primarily corporate bonds and mortgage-backed securities. This
exposure helped the Fund's overall return because taxables in
general outperformed the broad market for investment-grade debt
instruments, and because of effective security selection within our
taxable exposure.
(BULLET) We continued to emphasize higher-quality municipal paper, which
remained especially popular among muni buyers and which generally
weathered market downturns better than lower-quality munis. Our
allocation to non-callable muni securities typically was double
that of the Index benchmark.
7
<PAGE>
WARBURG PINCUS MUNICIPAL BOND FUND
PORTFOLIO MANAGERS'LETTER -- AUGUST 31, 1999 (CONT'D)
- --------------------------------------------------------------------------------
As developments occur in the fixed income markets or at Credit Suisse Asset
Management that we believe would be of interest to you, we will be sure to keep
you informed. Meanwhile, if you have questions, please feel free to call upon us
at any time.
Sincerely yours,
Credit Suisse Asset Management Fixed Income Management Team
Gregg M. Diliberto, Managing Director
Mark K. Silverstein, Managing Director
Jo Ann Corkran, Director
Jose A. Rodriguez, Director
A PORTION OF INCOME MAY BE SUBJECT TO STATE AND CITY TAXES OF FEDERAL
ALTERNATIVE MINIMUM TAX.
8
<PAGE>
WARBURG PINCUS MUNICIPAL BOND FUND
PORTFOLIO MANAGERS' LETTER -- AUGUST 31, 1999 (CONT'D)
- --------------------------------------------------------------------------------
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN THE
WARBURG PINCUS MUNICIPAL BOND INSTITUTIONAL SHARES AND THE LEHMAN BROTHERS
MUNICIPAL BOND INDEX 1 FROM INCEPTION (6/20/94),
PERIOD ENDED (7/31/94) AND AT EACH QUARTER END. (UNAUDITED)
[GRAPHIC OMITTED]
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
Warburg Pincus Lehman Brothers
Municipal Bond Fund Municipal Bond Index 1
06/20/94 $10,000 $10,000
07/31/94 $10,040 $10,038
08/31/94 $10,040 $10,073
11/30/94 $9,647 $9,571
02/28/95 $10,350 $10,354
05/31/95 $10,846 $10,820
08/31/95 $10,886 $10,965
11/30/95 $11,193 $11,079
02/29/96 $11,216 $11,498
05/31/96 $10,937 $11,314
08/31/96 $11,134 $11,539
11/30/96 $11,643 $12,049
02/28/97 $11,731 $12,132
05/31/97 $11,835 $12,252
08/31/97 $12,218 $12,606
11/30/97 $12,508 $12,914
02/28/98 $12,812 $13,242
05/31/98 $12,971 $13,402
08/31/98 $13,149 $13,697
11/30/98 $13,370 $13,916
02/28/99 $13,446 $14,055
05/31/99 $13,483 $14,028
08/31/99 $13,195 $13,765
Average Annual Total Returns for the periods ended 8/31/99
(Institutional Shares) (Unaudited)
1 YEAR
0.36%
3 YEARS
5.83%
5 YEARS
5.62%
SINCE INCEPTION
(6/20/94)
5.47%
Note:Past performance is not predictive of future performance. Investment return
and principle value of an investment will fluctuate so that an investor's shares
upon redemption may be worth more or less than their original cost.
1 The Lehman Brothers Municipal Bond 10 Year Index is computed twice a month
from prices on approximately 1,100 bonds. The index is composed of approximately
60% revenue bonds and 40% state government obligations. The issues in the index
have a maturity of 8-12 years and the prices are supplied by Kenny Information
Systems, Inc.
9
<PAGE>
WARBURG PINCUS STRATEGIC GLOBAL FIXED INCOME FUND
PORTFOLIO MANAGERS' LETTER -- AUGUST 31, 1999
- --------------------------------------------------------------------------------
September 16, 1999
Dear Shareholders:
We are writing to report on the results of the Warburg Pincus Strategic
Global Fixed Income Fund (the "Fund") for the fiscal year ended August 31, 1999.
At August 31, 1999, the net asset value ("NAV") of the Fund's institutional
shares was $14.97, compared to an NAV of $15.10 on August 31, 1998. As a result,
the institutional shares' total return was 2.8% (assuming the reinvestment of
dividends and distributions totaling $0.57 per share). By comparison, the
unhedged J.P. Morgan Global Government Bond Index ("GBI") returned 3.0% during
the same period.
At August 31, 1999, the NAV of the Fund's common shares was $14.91, compared
to an NAV of $16.10 at their inception of investment operations on October 30,
1998. Including the effect of linkage to the institutional shares, the common
shares' total return between August 31, 1998 and August 31, 1999 was 2.3%
(assuming the reinvestment of dividends and distributions totaling $0.56 per
share). By comparison, the GBI returned 3.0% during the same period.
The Fund's performance during the fiscal year was essentially a story of
offsetting returns in the first and second halves of the year.
In the first half, the Fund outperformed GBI as a result of our positions in
"spread product" -- debt securities whose market valuation is greatly driven by
the difference, known as the "spread," between their yields and those of U.S.
Treasury debt -- and our positions in Japan.
Prices of spread product had plummeted in the third quarter of 1998, as
spreads dramatically widened in response to anxiety about Russia and severe
problems at Long-Term Capital Management, a major hedge fund with significant
debt exposure. These same prices strongly rebounded in the final months of 1998
and into early 1999, however, helping the Fund to outperform the GBI during this
time period. This resurgence was particularly true in U.S. and emerging market
securities, in which spreads sharply contracted.
Our longstanding underweighting in Japan paid off especially well in
December, when Japanese bond yields nearly tripled. We also chose to remain
neutral in our exposure to the yen, which prevented the Fund from losing ground
relative to GBI when the yen strengthened.
10
<PAGE>
WARBURG PINCUS STRATEGIC GLOBAL FIXED INCOME FUND
PORTFOLIO MANAGERS' LETTER -- AUGUST 31, 1999 (CONT'D)
- --------------------------------------------------------------------------------
Unfavorable conditions in the fiscal year's second half served to offset the
gains we had accumulated in the first half, including:
(BULLET) Widening spreads in much of 1999's spring and summer in
anticipation of higher U.S. interest rates, which hurt our spread
product holdings;
(BULLET) Our underweighted positions in Japan which negated a number of
successful steps we took with regard to regional allocations and
duration; and one of the strongest developed-nation bond markets of
the period in local-currency terms;
(BULLET) Our overweighting of the Euro versus the U.S. dollar at a time when
the dollar strengthened versus the Euro; as well as our modest
underweighting of the yen, which experienced a vigorous rally along
with Japanese bonds.
As developments occur in the global fixed income markets or at Credit Suisse
Asset Management that we believe would be of interest to you, we will be sure to
keep you informed. Meanwhile, if you have questions, please feel free to call
upon us at any time.
Sincerely yours,
Credit Suisse Asset Management Global Fixed Income Management Team
Gregg M. Diliberto, Managing Director
Dilip K. Rasgotra, Managing Director
Mark K. Silverstein, Managing Director
Jo Ann Corkran, Director
INTERNATIONAL INVESTING ENTAILS SPECIAL RISK CONSIDERATIONS, INCLUDING CURRENCY
FLUCTUATIONS, LOWER LIQUIDITY, ECONOMIC AND POLITICAL RISKS, AND DIFFERENCES IN
ACCOUNTING METHODS.
11
<PAGE>
WARBURG PINCUS STRATEGIC GLOBAL FIXED INCOME FUND
PORTFOLIO MANAGERS' LETTER -- AUGUST 31, 1999 (CONT'D)
- --------------------------------------------------------------------------------
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN THE WARBURG PINCUS
STRATEGIC GLOBAL FIXED INCOME INSTITUTIONAL SHARES AND THE JPMORGAN GLOBAL
GOVERNMENT BOND INDEX (UNHEDGED)1 FROM INCEPTION (6/27/94), PERIOD ENDED
(7/31/94), AND AT EACH QUARTER END. (UNAUDITED)
[GRAPHIC OMITTED]
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
Warburg Pincus JP Morgan
Strategic Global Fixed Income Global Govt. Bond Index
Fund (Unhedged) 1
06/28/94 $10,000 $10,000
07/31/94 $10,027 $10,115
08/31/94 $10,001 $10,089
11/30/94 $10,044 $10,161
02/28/95 $10,272 $10,659
05/31/95 $11,156 $11,696
08/31/95 $11,072 $11,496
11/30/95 $11,574 $12,003
02/29/96 $11,668 $11,957
05/31/96 $11,832 $11,907
08/31/96 $12,140 $12,283
11/30/96 $12,816 $12,776
02/28/97 $12,531 $12,284
05/31/97 $12,672 $12,408
08/31/97 $12,684 $12,487
11/30/97 $13,006 $12,878
02/28/98 $13,171 $13,089
05/31/98 $13,232 $13,247
08/31/98 $13,215 $13,689
11/30/98 $14,090 $14,560
02/28/99 $13,803 $14,220
05/31/99 $13,645 $14,001
08/31/99 $13,582 $14,105
Average Annual Total Returns for the periods ended 8/31/99
(Institutional Shares) (Unaudited)
1 YEAR
2.78%
3 YEARS
2.81%
5 YEARS
6.31%
SINCE INCEPTION
(6/27/94)
6.08%
Note:Past performance is not predictive of future performance. Investment return
and principle value of an investment will fluctuate so that an investor's shares
upon redemption may be worth more or less than their original cost.
1 The JP Morgan Global Government Bond Index Unhedged (including U.S. $) is
market-capitalization index consisting of the government bond markets of the
following countries: Australia, Belgium, Canada, Denmark, France, Germany,
Italy, Japan, Netherlands, Spain, Sweden, the U.K. and the U.S. All issues have
a remaining maturity of at least one year and the index is rebalanced monthly.
12
<PAGE>
WARBURG PINCUS U.S. CORE FIXED INCOME FUND
SCHEDULE OF INVESTMENTS
August 31, 1999
- --------------------------------------------------------------------------------
PAR
(000) VALUE
------ ----------
CORPORATE BONDS (40.1%)
AEROSPACE/DEFENSE EQUIPMENT (0.1%)
Boeing Co. Debentures
7.500% 08/15/42 $ 150 $ 145,312
Sequa Corp.
Senior Notes
9.000% 08/01/09 290 285,650
----------
430,962
----------
AUTOMOTIVE (0.3%)
Delco Remy International, Inc.
Gtd. Sr. Sub Notes
10.625% 08/01/06 210 219,712
Hayes Lemmerz International, Inc.
144A Sr. Sub. Notes
8.250% 12/15/08 285 266,475
Hayes Wheels International, Inc.
Gtd. Notes
11.000% 07/15/06 55 59,125
Lear Corp.
7.960% 05/15/05 540 531,900
Oxford Automotive, Inc.
Sr. Sub. Notes
10.125% 06/15/07 75 74,250
----------
1,151,462
----------
BANKING (7.1%)
Bangko Sentral Pilipinas
Yankee Bonds
8.600% 06/15/27 1,655 1,278,487
Bay View Capital Corp.
Sub. Notes
9.125% 08/15/07 1,060 980,500
Chase Manhattan Bank Corp.
Sub. Notes
6.500% 08/01/05 240 233,700
Chase Manhattan Bank Corp. Sub. Notes (A1, A)
6.750% 09/15/06 630 607,162
Chase Manhattan Bank Corp. Sub. Notes (A1, A)
7.250% 06/01/07 490 489,387
Chase Manhattan Bank Corp. Sub. Notes (A1, A)
6.375% 04/01/08 360 339,300
Citicorp Sub. Notes, Series F
6.375% 11/15/08 1,550 1,447,312
Credit Lyonnais
Perpetual Sub. Variable Rate Notes, Rule 144A
6.437%(DAGGER)/(DAGGER)(DAGGER)(DAGGER) 2,830 2,596,525
See Accompanying Notes to Financial Statements.
13
<PAGE>
WARBURG PINCUS U.S. CORE FIXED INCOME FUND
SCHEDULE OF INVESTMENTS (CONT'D)
August 31, 1999
- --------------------------------------------------------------------------------
PAR
(000) VALUE
------- -----------
CORPORATE BONDS (CONT'D)
BANKING (cont'd)
Deutsche Bank Financial
144A Pfd.
7.872%(DAGGER)/(DAGGER)(DAGGER)(DAGGER) $ 1,600 $ 1,503,064
Dresdner Bank
8.151% 06/30/31 640 587,200
First Republic Bank
Sub. Notes
7.750% 09/15/12 2,080 1,908,400
ForeningsSparbanken AB
Perpetual Sr. Sub. FRN
5.926%(DAGGER)/(DAGGER)(DAGGER)(DAGGER) 980 964,271
Fuji Finance (Cayman), Ltd.
Medium Term Notes
7.300%(DAGGER)/(DAGGER)(DAGGER)(DAGGER) 850 739,500
Perpetual Sub. Notes
6.573%(DAGGER)/(DAGGER)(DAGGER)(DAGGER) 540 467,100
Fuji JGB Investment L.L.C.,
Noncumulative Preferred Securities, Series A
9.870%(DAGGER)/(DAGGER)(DAGGER)(DAGGER) 1,620 1,595,700
Okobank Perpetual Medium
Term FRN
5.598%(DAGGER)/(DAGGER)(DAGGER)(DAGGER) 2,000 1,910,000
Santander Financial Issuances
Perpetual
6.087%(DAGGER)/(DAGGER)(DAGGER)(DAGGER) 750 680,625
Sanwa Bank Ltd Global
Sub Notes
8.350% 07/15/09 1,780 1,782,225
Skandinaviska Enskilda Banken
Perpetual Sub. FRN
6.625%(DAGGER)/(DAGGER)(DAGGER)(DAGGER) 2,280 2,234,400
144A Perpetual Sub. FRN
6.500%(DAGGER)(DAGGER)(DAGGER) 1,200 1,119,769
Sumitomo Bank Int'l. Finance
8.500% 06/15/09 1,500 1,518,750
----------
24,983,377
----------
BROADCASTING (1.1%)
Chancellor Media Corp.
144A Sr. Sub. Notes
8.000% 11/01/08 225 216,000
See Accompanying Notes to Financial Statements.
14
<PAGE>
WARBURG PINCUS U.S. CORE FIXED INCOME FUND
SCHEDULE OF INVESTMENTS (CONT'D)
August 31, 1999
- --------------------------------------------------------------------------------
PAR
(000) VALUE
------- -----------
CORPORATE BONDS (CONT'D)
BROADCASTING (cont'd)
Fox/Liberty Networks L.L.C.,
Registered Sr. Notes
8.875% 08/15/07 $ 1,390 $ 1,410,850
Granite Broadcasting Corp.
144A Sr. Sub. Notes
8.875% 05/15/08 190 182,400
HMV Media Group plc
Senior Subordinated Yankee Notes, Series B
10.250% 05/15/08 115 112,700
TV Guide, Inc.
8.125% 03/01/09 380 357,200
Turner Broadcasting Systems, Inc.
Sr. Notes
7.400% 02/01/04 1,450 1,468,125
----------
3,747,275
----------
BUILDING MATERIALS (0.1%)
Jackson Products, Inc. Notes
9.500% 04/15/05 345 317,400
----------
CABLE (1.5%)
Belo (A.H.) Corp.
Sr. Notes
6.875% 06/15/02 2,635 2,615,237
Classic Cable
Sr. Sub. Notes
9.875% 08/01/08 150 151,500
CSC Holdings Inc.
Sr. Notes
7.875% 12/15/07 1,080 1,047,600
CSC Holdings Inc., Sr. Notes (Ba2, BB+)
7.250% 07/15/08 320 296,800
Diamond Cable Communications
plc, Yankee Sr. Discount Notes
10.750% 02/15/07(DAGGER)(DAGGER) 815 623,475
James Cable Partners L.P.
Sr. Notes, Series B
10.750% 08/15/04 245 248,062
Videotron Holdings plc
Yankee Sr. Discount Notes
11.000% 08/15/05(DAGGER)(DAGGER) 95 94,219
----------
5,076,893
----------
See Accompanying Notes to Financial Statements.
15
<PAGE>
WARBURG PINCUS U.S. CORE FIXED INCOME FUND
SCHEDULE OF INVESTMENTS (CONT'D)
August 31, 1999
- --------------------------------------------------------------------------------
PAR
(000) VALUE
------ ---------
CORPORATE BONDS (CONT'D)
CHEMICALS (0.1%)
Lyondell Chemical, Inc.
Senior Secured Notes,
Series A
9.625% 05/01/07 $ 110 $ 111,650
Series B
9.875% 05/01/07 115 115,862
----------
227,512
----------
COMPUTERS, SOFTWARE & SERVICES (0.5%)
PSINET, Inc.
144A Sr. Notes
11.500% 11/01/08 220 223,300
Seagate Technology, Inc.
Sr. Debentures
7.450% 03/01/37 1,710 1,541,137
----------
1,764,437
----------
CONSULTING SERVICES (1.4%)
Comdisco Inc Mtn
7.250% 09/01/02 3,050 3,030,937
Comdisco, Inc Ser H Mtn
7.230% 08/16/01 1,850 1,850,000
----------
4,880,937
----------
ENERGY (2.3%)
Crown Central Petroleum
Sr. Notes
10.875% 02/01/05 150 132,000
Dresser Industries, Inc.
Debentures
7.600% 08/15/49 1,820 1,794,975
Korea Electric Power
Global Unsubordinated Notes
6.375% 12/01/03 60 56,100
Yankee Debentures
7.000% 02/01/27 1,575 1,433,250
Yankee Notes
7.000% 10/01/02 1,735 1,685,119
Valero Energy Corp.
144A Putable Asset Trusts
6.750% 12/15/02 2,945 2,864,012
----------
7,965,456
----------
See Accompanying Notes to Financial Statements.
16
<PAGE>
WARBURG PINCUS U.S. CORE FIXED INCOME FUND
SCHEDULE OF INVESTMENTS (CONT'D)
August 31, 1999
- --------------------------------------------------------------------------------
PAR
(000) VALUE
------ ----------
CORPORATE BONDS (CONT'D)
ENTERTAINMENT (1.6%)
Regal Cinemas, Inc.
Sr. Sub. Notes
9.500% 06/01/08 $ 300 $ 213,000
Time Warner, Inc.
Debentures
8.050% 01/15/16 1,935 1,976,119
Time Warner, Inc. Debentures (Baa3, BBB)
6.850% 01/15/26 3,560 3,555,550
----------
5,744,669
----------
FINANCIAL SERVICES (6.4%)
American General Institutional Capital Trust Co.
144A Gtd. Notes,
Series B
8.125% 03/15/46 2,605 2,634,306
AT&T Capital Corp.
Medium Term Note, Series 4
6.470% 12/03/99 960 961,098
AT&T Capital Corp. Medium Term Note,
Series 4 (Baa3, BBB)
6.480% 12/03/99 2,805 2,808,277
Ford Motor Credit Corp.
5.800% 01/12/09 2,750 2,475,000
Ford Motor Credit Corp. (A1, A)
6.700% 07/16/04 350 345,187
Industrial Credit & Investment Corp.
144A Yankee Medium Term Notes
7.550% 08/15/07 40 36,500
L'Auxiliare du Credit Foncier de France
Gtd. Notes
5.000% 09/25/02(DAGGER) 2,235 2,167,950
Gtd. Notes
5.000% 10/22/02(DAGGER) 155 151,109
Lehman Brothers Holdings, Inc.
Global Notes
6.625% 04/01/04 1,310 1,270,700
Notes
7.000% 05/15/03 550 545,875
Long Island Savings Bank, Inc.
Notes
7.000% 06/13/02 1,670 1,661,650
MBNA Master Credit Card Trust
Series 1997-I, Class A
6.550% 01/15/07 2,200 2,173,552
Series 1999-G, Class A
6.350% 12/15/06 1,800 1,767,366
See Accompanying Notes to Financial Statements.
17
<PAGE>
WARBURG PINCUS U.S. CORE FIXED INCOME FUND
SCHEDULE OF INVESTMENTS (CONT'D)
August 31, 1999
- --------------------------------------------------------------------------------
PAR
(000) VALUE
------- -----------
CORPORATE BONDS (CONT'D)
FINANCIAL SERVICES (cont'd)
Merrill Lynch & Co.
Notes
6.875% 11/15/18 $ 1,220 $ 1,116,300
Prudential Insurance Co. of America
144A Capital Notes
6.875% 04/15/03 1,600 1,590,000
144A Sr. Notes
6.375% 07/23/06 800 755,000
-----------
22,459,870
-----------
FOOD & BEVERAGE (0.6%)
AmeriServ Food Distribution, Inc.
Gtd. Sr. Notes
8.875% 10/15/06 150 129,000
Archibald Candy Corp.
144A Gtd. Sr. Secured Notes
10.250% 07/01/04 400 398,000
Kroger Co.
7.250% 06/01/09 1,500 1,462,500
Pantry, Inc.
Sr. Sub. Notes
10.250% 10/15/07 100 99,500
Premier Intl Foods
PLC
12.000% 09/01/09 130 131,300
-----------
2,220,300
-----------
HEALTH CARE (0.2%)
Columbia/HCA Healthcare Corp.
Debentures
8.360% 04/15/24 840 751,800
-----------
INDUSTRIAL GOODS & MATERIALS (0.4%)
Motors & Gears Inc.
Sr. Notes, Series D
10.750% 11/15/06 335 330,812
Tyco Intl Group
6.125% 01/15/09 1,250 1,139,063
-----------
1,469,875
-----------
PACKAGING/CONTAINERS (0.8%)
Crown Cork & Seal
Sr Notes
7.125% 09/01/02 2,950 2,931,562
See Accompanying Notes to Financial Statements.
18
<PAGE>
WARBURG PINCUS U.S. CORE FIXED INCOME FUND
SCHEDULE OF INVESTMENTS (CONT'D)
August 31, 1999
- --------------------------------------------------------------------------------
PAR
(000) VALUE
------- ----------
CORPORATE BONDS (CONT'D)
PACKAGING/CONTAINERS (cont'd)
Crown Packaging Enterprises, Ltd.
Yankee Sr. Secured Discount Notes
14.000% 08/01/06(DAGGER)(DAGGER) $ 550 $ 8,250
----------
2,939,812
----------
PAPER & FOREST PRODUCTS (0.3%)
Fort James Corp.
Notes
6.234% 03/15/01 350 348,688
P.T. Indah Kiat Pulp & Paper Corp.
Sr. Secured Notes
8.875% 11/01/00 290 255,809
P.T. Indah Kiat Pulp & Paper Corp. Sr.
Secured Notes (CAA1, CCC+)
10.000% 07/01/07 425 263,500
Repap New Brunswick
Sr. Yankee Notes
10.625% 04/15/05 35 30,450
----------
898,447
----------
REAL ESTATE (0.4%) EOP Operating L.P.
Mandatory Par Put Remarketed Securities
6.376% 02/15/02 1,295 1,267,481
HMH Properties, Inc.
Sr. Notes
8.450% 12/01/08 255 239,063
----------
1,506,544
----------
RESTAURANTS, HOTELS & CASINOS (0.1%)
Circus Circus Enterprise
Sr. Sub. Notes
9.250% 12/01/05 210 211,575
Hollywood Park Operating
Sr. Sub. Notes
9.500% 08/01/07 50 49,375
Horseshoe Gaming Holdings
144A Sr. Sub. Notes
8.625% 05/15/09 235 227,363
----------
488,313
----------
See Accompanying Notes to Financial Statements.
19
<PAGE>
WARBURG PINCUS U.S. CORE FIXED INCOME FUND
SCHEDULE OF INVESTMENTS (CONT'D)
August 31, 1999
- --------------------------------------------------------------------------------
PAR
(000) VALUE
------ ----------
CORPORATE BONDS (CONT'D)
RETAIL TRADE (1.7%)
K Mart Corp.
Notes
7.950% 02/01/23 $ 430 $ 399,363
Pass Through Certificates,
Series 1995 Class K3
8.540% 01/02/15 1,656 1,713,658
Pathmark Stores
Sr. Sub Notes
9.625% 05/01/03 150 152,813
Wal Mart Notes
6.875% 08/10/09 3,600 3,582,000
----------
5,847,834
----------
STEEL (0.2%)
AK Steel Corp.
144A Sr. Notes
7.875% 02/15/09 300 288,000
Gulf States Steel, Inc.
First Mortgage Notes
13.500% 04/15/03 145 26,100
Wheeling-Pittsburgh Corp.
144A Sr. Notes
9.250% 11/15/07 215 205,325
----------
519,425
----------
TELECOMMUNICATIONS (7.0%)
Adelphia Communications Corp.
Sr. Notes, Series B
9.250% 10/01/02 310 313,100
Adelphia Communications Corp. Sr. Notes,
Series B (B1, B+)
8.375% 02/01/08 150 140,250
BellSouth Telecommunications, Inc.
Debentures
5.850% 11/15/45 995 993,756
BellSouth Telecommunications, Inc.
Debentures (Aaa, AAA)
7.000% 12/01/45 255 229,500
CenCall Communications Corp.
Sr. Discount Notes
10.125% 01/15/04 435 443,700
Charter Communications Holding LLC,
Sr. Disc. Notes 144A
8.625% 04/01/09 220 209,000
Charter Communications Holding LLC, Sr. Disc.
Notes 144A (B2, B+)
9.920% 04/01/11(DAGGER)(DAGGER) 145 87,000
See Accompanying Notes to Financial Statements.
20
<PAGE>
WARBURG PINCUS U.S. CORE FIXED INCOME FUND
SCHEDULE OF INVESTMENTS (CONT'D)
August 31, 1999
- --------------------------------------------------------------------------------
PAR
(000) VALUE
------ ----------
CORPORATE BONDS (CONT'D)
TELECOMMUNICATIONS (cont'd)
Echostar DBS Corp.
Sr. Notes
9.250% 02/01/06 $ 400 $ 398,000
GTE Corp.
Debentures
6.840% 04/15/18 1,150 1,078,125
GTE Corp. Debentures (Baa1, A)
6.940% 04/15/28 1,160 1,080,250
GTE North, Inc.
Debentures, Series D
6.900% 11/01/08 395 389,075
Intermedia Communication, Inc.
Sr. Notes, Series B
8.500% 01/15/08 235 207,975
ITC Deltacom, Inc.
144A Sr. Notes
11.000% 06/01/07 180 192,375
LCI International, Inc.
Senior Notes
7.250% 06/15/07 1,350 1,296,000
Level 3 Communications, Inc.
144A Sr. Notes
9.125% 05/01/08 410 382,325
MCI Communications Corp.
Sr. Discount Notes
6.125% 04/15/02 1,615 1,588,756
MCI Communications Corp.
Sr. Notes
6.500% 04/15/10 20 18,850
McLeodUSA, Inc.
144A Sr. Sub. Notes
8.125% 02/15/09 280 258,300
Metromedia Fiber Network, Inc.
Sr. Notes, Series B
10.000% 11/15/08 190 188,100
Nextel Communications, Inc.
Sr. Discount Notes
9.750% 08/15/04 2,250 2,250,000
Nextel Communications, Inc. Sr.
Discount Notes (B2, B-)
9.750% 10/31/07(DAGGER)(DAGGER) 225 158,625
144A Sr. Redeemable Discount Notes
10.650% 09/15/07(DAGGER)(DAGGER) 5 3,663
144A Sr. Discount Notes
9.950% 02/15/08(DAGGER)(DAGGER) 640 443,200
See Accompanying Notes to Financial Statements.
21
<PAGE>
WARBURG PINCUS U.S. CORE FIXED INCOME FUND
SCHEDULE OF INVESTMENTS (CONT'D)
August 31, 1999
- --------------------------------------------------------------------------------
PAR
(000) VALUE
------ ----------
CORPORATE BONDS (CONT'D)
TELECOMMUNICATIONS (cont'd)
Nextlink Communications, Inc.
Sr. Notes
9.625% 10/01/07 $ 115 $ 112,988
144A Sr. Notes
10.750% 11/15/08 300 304,500
Paging Network, Inc.
Sr. Sub. Notes
8.875% 02/01/06 550 302,500
10.000% 10/15/08 720 405,000
10.125% 08/01/07 270 151,875
Qwest Communications International, Inc.
144A Sr. Notes
7.250% 11/01/08 310 302,250
TCI Communications, Inc.
Notes
6.340% 02/01/02 1,615 1,602,888
Telefonica de Argentina
144A Medium Term Notes
9.125% 05/07/08 850 735,250
Teleport Communications Group, Inc.
Sr. Discount Notes
9.650% 03/31/27 1,545 1,755,506
US West Cap Funding
144A Notes
6.875% 08/15/01 3,850 3,840,375
Worldcom Inc.
Sr. Notes
7.750% 01/01/07 2,665 2,751,613
-----------
24,614,670
-----------
TRANSPORTATION (3.4%)
Continental Airlines, Inc.
Sr. Notes
9.500% 12/15/01 1,835 1,912,988
Grupo Transportacion Ferroviaria
Mexicana, S.A. de CV
144A Gtd. Sr. Discount Notes
11.750% 06/15/09(DAGGER)(DAGGER) 2,495 1,303,638
Norfolk Southern Corp.
Notes
7.050% 05/01/04 2,300 2,302,875
7.400% 09/15/06 550 554,813
7.350% 05/15/07 15 15,094
7.700% 05/15/17 1,000 1,012,500
See Accompanying Notes to Financial Statements.
22
<PAGE>
WARBURG PINCUS U.S. CORE FIXED INCOME FUND
SCHEDULE OF INVESTMENTS (CONT'D)
August 31, 1999
- --------------------------------------------------------------------------------
PAR
(000) VALUE
------- -----------
CORPORATE BONDS (CONT'D)
TRANSPORTATION (cont'd)
Northwest Airlines, Inc.
Gtd. Notes 667281AL3
7.625% 03/15/05 $ 3,085 $ 2,811,206
7.875% 03/15/08 340 300,050
US Airways, Inc.,
Gtd. Sr. Notes 911546VV8
9.625% 02/01/01 1,745 1,762,171
-----------
11,975,335
-----------
UTILITIES (2.4%)
Beaver Valley Funding Corp.
Secured Lease Obligation Bonds
9.000% 06/01/17 2,400 2,541,000
Connecticut Light and Power Co.
First Mortgage Bonds,
Series C
7.750% 06/01/02 770 778,663
First Mortgage Bonds,
Series D
7.875% 10/01/24 730 740,950
Niagara Mohawk Power Corp.
First Mortgage Bonds
8.750% 04/01/22 1,130 1,154,013
North Atlantic Energy Corp.
Secured First Mortgage Notes,
Series A
9.050% 06/01/02 1,690 1,692,113
Texas Utilities Electric Capital Trust
Preferred V
8.175% 01/30/37 1,540 1,470,700
-----------
8,377,439
-----------
WASTE MANAGEMENT (0.1%)
Allied Waste North America
Series B
7.625% 01/01/06 105 96,338
7.875% 01/01/09 255 232,050
USA Waste Services, Inc.
Sr. Notes
7.125% 10/01/07 25 22,781
-----------
351,169
-----------
TOTAL CORPORATE BONDS (Cost $146,502,256) $140,711,213
-----------
See Accompanying Notes to Financial Statements.
23
<PAGE>
WARBURG PINCUS U.S. CORE FIXED INCOME FUND
SCHEDULE OF INVESTMENTS (CONT'D)
August 31, 1999
- --------------------------------------------------------------------------------
PAR
(000) VALUE
------- ----------
MUNICIPAL BONDS (0.2%)
Illinois State GO
4.750% 06/01/23 $ 850 $ 724,625
Tampa, FL Health Systems
Revenue Bond
4.750% 11/15/28 45 37,913
-----------
TOTAL MUNICIPAL BONDS (Cost $848,106) $ 762,538
-----------
FOREIGN GOVERNMENT BONDS (3.2%)
Empresa Nacional de Electricidad
8.125%(DAGGER)(DAGGER)(DAGGER) $ 800 $ 654,000
Republic of Colombia
Yankee Notes
12.471% 08/13/05(DAGGER) 1,210 1,058,750
Republic of Ecuador
Past Due Interest Notes
3.750% 02/26/00(DAGGER) 437 102,335
Republic of Philippines
Global Bonds
9.875% 01/15/19 1,025 969,906
Republic of Poland
Past Due Interest Bonds
5.000% 10/27/14(DAGGER)(DAGGER) 1,070 934,913
Republic of Poland, Past Due Interest
Bonds (Baa3, BBB)
5.000% 10/27/14(DAGGER)(DAGGER) 3,800 3,320,250
United Mexican States
Global Bonds
11.500% 05/15/26 20 21,725
Par Bonds, Series W-A
6.250% 12/31/19 4,150 2,977,625
Par Bonds, Series W-B
6.250% 12/31/19 1,350 968,625
-----------
TOTAL FOREIGN GOVERNMENT BONDS (Cost $11,693,811) $11,008,129
-----------
AGENCY OBLIGATIONS (54.5%)
FEDERAL HOME LOAN MORTGAGE CORPORATION (3.0%)
Various Pools:
7.000% 12/01/09 $ 151 $ 149,586
Series MACR 1860 Principle Only
8.5865% 02/15/24 2,444 1,395,584
Discount Notes:
5.060% 11/30/99 8,930 8,815,780
------------
TOTAL FEDERAL HOME LOAN MORTGAGE CORPORATION $ 10,360,950
------------
See Accompanying Notes to Financial Statements.
24
<PAGE>
WARBURG PINCUS U.S. CORE FIXED INCOME FUND
SCHEDULE OF INVESTMENTS (CONT'D)
August 31, 1999
- --------------------------------------------------------------------------------
PAR
(000) VALUE
------ ----------
AGENCY OBLIGATIONS (CONT'D)
FEDERAL NATIONAL MORTGAGE ASSOCIATION (46.2%)
Various Pools:
10.000% 02/01/05 $ 159 $ 168,728
10.000% 01/01/10 721 777,962
6.500% 06/01/29 6,081 5,757,706
6.500% 06/01/29 2,744 2,597,753
6.500% 07/01/29 7,023 6,649,873
6.500% 07/01/29 3,711 3,513,639
6.500% 07/01/29 5,895 5,585,632
6.500% 08/01/29 1,887 1,786,159
6.500% 08/01/29 11,373 10,768,515
6.500% 08/01/29 30 28,400
6.000% 12/01/28 145 133,427
6.000% 07/01/29 16,188 14,888,255
6.000% 07/01/29 18,520 17,032,787
6.000% 07/01/29 601 552,479
6.000% 01/01/29 3,867 3,556,399
6.000% 01/01/29 5,477 5,037,353
Global Notes
6.864% 06/01/17 12,250 3,699,853
REMIC - PAC 1991-165 Class M
8.250% 12/25/21 10 10,101
Series 1996-5 Class PX PO
7.959% 11/25/23 224 130,602
Series 1997-16 Class M PO
9.160% 02/25/23 170 97,298
15 Year TBA:
6.000% 01/15/11 7,550 7,184,297
6.500% 05/01/13 4,080 3,962,700
30 Year TBA:
8.000% 03/15/25 32,350 32,774,594
6.000% 04/15/25 5,300 4,871,031
6.500% 09/01/27 3,100 2,935,313
7.000% 09/01/27 19,460 18,900,525
Discount Notes:
4.930% 09/10/99 8,975 8,963,760
------------
TOTAL FEDERAL NATIONAL MORTGAGE ASSOCIATION $162,365,141
------------
See Accompanying Notes to Financial Statements.
25
<PAGE>
WARBURG PINCUS U.S. CORE FIXED INCOME FUND
SCHEDULE OF INVESTMENTS (CONT'D)
August 31, 1999
- --------------------------------------------------------------------------------
PAR
(000) VALUE
------ ------------
AGENCY OBLIGATIONS (CONT'D)
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION (5.0%)
Various Pools:
6.500% 09/15/03 $ 5 $ 5,035
8.250% 08/15/04 1 277
9.000% 11/15/04 1 623
9.000% 12/15/04 1 677
8.250% 04/15/06 1 936
13.500% 07/15/14 1 900
9.000% 12/15/16 24 25,570
8.000% 04/15/17 74 75,035
9.000% 08/15/21 340 357,023
30 Year TBA:
7.500% 08/01/28 17,350 17,192,766
------------
TOTAL GOVERNMENT NATIONAL MORTGAGE ASSOCIATION $ 17,658,842
------------
MISCELLANEOUS (0.3%)
Government Trust Certificates
Collateral Trust
Series 1C
9.250% 11/15/01 305 309,516
National Archives Facility Trust
COP
8.500% 09/01/19 670 750,001
Tennessee Valley Authority
Debentures, Series B
6.235% 07/15/45 60 60,450
------------
1,119,967
------------
TOTAL AGENCY OBLIGATIONS (Cost $191,900,098) $191,504,900
------------
ASSET BACKED SECURITIES (3.1%)
Green Tree Recreational Equipment and
Consumer Trust Series 1997-C, Class A1
6.490% 02/15/18 $ 443 $ 428,510
Green Tree Securitized Net Interest Margin Trust,
REMIC, Series 1994-A, Class A
6.900% 02/15/04 504 501,059
Merrill Lynch Mortgage Investors, Inc.,
Manufactured Housing Retail Installment
Sales Contracts, Series 1991-C,
Class A
9.000% 07/15/11 20 20,028
See Accompanying Notes to Financial Statements.
26
<PAGE>
WARBURG PINCUS U.S. CORE FIXED INCOME FUND
SCHEDULE OF INVESTMENTS (CONT'D)
August 31, 1999
- --------------------------------------------------------------------------------
PAR
(000) VALUE
------- -----------
ASSET BACKED SECURITIES (CONT'D)
Morgan Stanley Inc.
Capital I, Series 1998-Xl1,
Class A3
6.480% 06/03/30 $ 5,100 $ 4,814,273
National Westminster Bank
Debentures Guaranteed Cap. Notes
9.375% 11/15/03 680 739,500
PECO Energy Transition Trust
6.050% 03/01/09 1,345 1,268,960
PECO Energy Transition Trust (Aaa, AAA)
6.130% 03/01/09 2,265 2,102,792
Prudential Securities Secured
Financing Series 1999-C2,
Class A2
7.193% 04/15/09 850 834,815
Vanderbilt Mortgage Finance,
Manufactured Housing Retail
Installment Sales Contracts,
Series 1995-B, Class A3
6.675% 05/07/06 202 201,004
------------
TOTAL ASSET BACKED SECURITIES (Cost $11,513,375) $ 10,910,941
------------
COLLATERALIZED MORTGAGED BACKED SECURITIES (4.7%)
Nomura Asset Securitization Corp.,
Series 1998-D6, Class A1B
6.590% 03/15/28 $ 4,350 $ 4,126,867
Asset Securitization Corp.,
Series 1996-MD6, Class A6
7.587% 09/13/99 760 703,831
Carousel Center Finance Inc.,
Series 1, Class C, Rule 144A
7.527% 11/15/07 313 310,992
Cityscape Home Equity Loan Trust,
Home Equity Loan Certificates,
Series 1996-2, Class A2
7.200% 04/25/11 119 120,412
Collateralized Mortgage Obligation Trust,
REMIC Series 54, Class C
9.250% 11/01/13 1 908
Commercial Mortgage Asset Trust,
Series 1999-C1, Class A3
6.640% 09/17/10 4,315 4,056,898
Contimortgage Home Equity Loan Trust,
Series 1996-4, Class A8
7.220% 01/15/28 880 865,153
See Accompanying Notes to Financial Statements.
27
<PAGE>
WARBURG PINCUS U.S. CORE FIXED INCOME FUND
SCHEDULE OF INVESTMENTS (CONT'D)
August 31, 1999
- --------------------------------------------------------------------------------
PAR
(000) VALUE
------ -----------
COLLATERALIZED MORTGAGED BACKED SECURITIES (CONT'D)
G3 Mortgage Reinsurance Corp.,
Class A
6.163% 09/27/99 $ 950 $ 864,500
GMAC Commercial Mortgage Securities, Inc.,
Series 1997-C1 Class A2
6.853% 09/15/06 540 536,331
Heller Financial Commercial Mortgage Asset Corp.
Series 1999-P, Class A2
6.847% 05/15/31 1,550 1,499,710
Option One Mortgage Loan Trust,
Series 1999-2, Class A
9.660% 06/25/29 1,979 1,961,579
Salomon Brothers Mortgage Securities VII,
Series 1997-NC4, Class A
5.635% 09/27/99 25 25,083
UCFC Home Equity Loan Trust,
Series 1996-B1, Class A7
8.200% 09/15/27 760 760,817
UCFC Home Equity Loan Trust,
Series 1998-A1, Class A7
6.870% 07/15/29 690 665,488
-----------
TOTAL COLLATERALIZED MORTGAGED BACKED
SECURITIES (Cost $17,438,999) $16,498,569
-----------
NUMBER
OF
SHARES
--------
COMMON STOCK (0.0%)
PACKAGING/CONTAINERS (0.0%)
Crown Packaging Enterprises, Ltd. 45,544 $ 455
----------
TOTAL COMMON STOCK (Cost $0) $ 455
----------
PREFERRED STOCKS (2.7%)
BANKING (2.5%)
California Federal Capital Corp.,
Series A 9.125% 97,170 $ 2,417,104
Centaur Funding Corp.
9.08% 1,360 1,433,950
Citigroup, Inc.
6.213% 37,800 1,856,925
Lehman Brothers Holdings
5.94% 18,320 806,080
See Accompanying Notes to Financial Statements.
28
<PAGE>
WARBURG PINCUS U.S. CORE FIXED INCOME FUND
SCHEDULE OF INVESTMENTS (CONT'D)
August 31, 1999
- --------------------------------------------------------------------------------
NUMBER
OF
SHARES VALUE
------- -----------
PREFERRED STOCKS (CONT'D)
BANKING (cont'd)
Lehman Brothers Holdings
5.67% 24,860 $ 1,056,550
NationsBank Captial Corp.
8.35% 48,000 1,200,000
-----------
8,770,609
-----------
REAL ESTATE (0.2%)
American Real Estate Corp.
8.50% Cumulative, Series A 30,800 783,475
-----------
TOTAL PREFERRED STOCKS (Cost $10,056,876) $ 9,554,084
-----------
PAR
(000)
------
U.S. TREASURY OBLIGATIONS (3.5%)
U.S. TREASURY BILLS (0.2%)
4.370% 09/16/99 $ 470 $ 467,741
4.520% 09/16/99 100 99,614
----------
567,355
----------
U.S. TREASURY BONDS (1.3%)
8.000% 11/15/21 3,770 4,439,128
----------
U.S. TREASURY INFLATION PROTECTED NOTES (1.6%)
3.875% 04/15/29 5,750 5,660,596
----------
U.S. TREASURY NOTES (0.1%)
6.625% 06/30/01 115 116,671
7.500% 02/15/05 5 5,320
6.250% 02/15/07 270 270,945
-----------
392,936
-----------
U.S. TREASURY STRIP BONDS (0.3%)
6.589% 11/15/16 3,430 1,124,240
-----------
TOTAL U.S. TREASURY OBLIGATIONS (Cost $12,511,065) $12,184,255
-----------
NUMBER
OF
SHARES
------
RIGHTS/WARRANTS (0.0%)
Capital Pacific Holdings Group, Inc.
strike $3.4 expires May 2002 2,528 $ 1,264
Checkers Drive-In Restaurants
strike $1.375 expires Dec. 2000 2,642 248
See Accompanying Notes to Financial Statements.
29
<PAGE>
WARBURG PINCUS U.S. CORE FIXED INCOME FUND
SCHEDULE OF INVESTMENTS (CONT'D)
August 31, 1999
- --------------------------------------------------------------------------------
NUMBER
OF
SHARES VALUE
-------- --------
RIGHTS/WARRANTS (CONT'D)
Mexican Value Recovery Rights
strike $1.188 expires June 2003 1 $ 0
Uniroyal Technology Corp.
strike $4.375 expires 06/01/03 10,800 91,800
------------
TOTAL RIGHTS/WARRANTS (Cost $14,178) $ 93,312
------------
PAR
(000)
------
SHORT TERM INVESTMENT (12.3%)
BBH Grand Cayman U.S. Dollar Time Deposit
4.500% 09/01/99 $43,044 $ 43,044,000
------------
TOTAL SHORT TERM INVESTMENT (Cost $43,044,000) $ 43,044,000
------------
SECURITIES SOLD SHORT (-1.1%)
Federal National Mortgage Association
30 Year TBA
6.500% 09/01/29 $ (3,900) $ (3,692,813)
------------
(Cost ($3,757,406))
TOTAL INVESTMENTS (123.2%) (Cost $441,765,791*) $432,579,583
LIABILITIES IN EXCESS OF OTHER ASSETS (23.2%) (81,631,972)
------------
TOTAL NET ASSETS (100.0%) $350,947,611
============
* Cost for Federal income tax purposes at August 31, 1999 is $441,854,938.
The gross appreciation (depreciation) on a tax basis is as follows:
Gross Appreciation $ 2,095,221
Gross Depreciation (11,370,576)
------------
Net Depreciation $ (9,275,355)
============
(DAGGER) Variable rate obligations -- The interest shown is the rate as of
August 31, 1999.
(DAGGER)(DAGGER) Step Bond-- The interest rate as of August 31, 1999 is 0% and
will reset to interest rate shown at a future date.
(DAGGER)(DAGGER)(DAGGER) Securities have no stated maturity date.
INVESTMENT ABBREVIATIONS
FRN = Floating Rate Note
MACR = Modified and Combinable Real Estate Investment Conduit
PAC = Planned Amortization Class
PO = Principle Only
REMIC = RealEstate Mortgage Investment Conduit
TBA = To Be Announced
See Accompanying Notes to Financial Statements.
30
<PAGE>
WARBURG PINCUS HIGH YIELD FUND
SCHEDULE OF INVESTMENTS
August 31, 1999
- --------------------------------------------------------------------------------
PAR
(000) VALUE
-------- ------
CORPORATE BONDS (90.1%)
AEROSPACE/DEFENSE (0.2%)
K&F Industries, Inc.
Sr. Sub. Notes
9.250% 10/15/07 $ 250 $ 256,562
----------
AUTOMOTIVE (3.2%)
Aetna Industries, Inc.
Sr. Notes
11.875% 10/01/06 500 558,750
Breed Technologies, Inc.
144A Sr. Sub. Notes
9.250% 04/15/08(DAGGER)(DAGGER) 500 40,000
Cambridge Industries, Inc.
Gtd. Sr. Sub. Notes,
Series B
10.250% 07/15/07 400 302,000
Collins & Aikman Products Corp.
Gtd. Sr. Sub. Notes
11.500% 04/15/06 350 353,500
Delco Remy International, Inc.
Gtd. Sr. Sub. Notes
10.625% 08/01/06 500 523,125
Hayes Lemmerz International, Inc.
144A Sr. Sub. Notes
8.250% 12/15/08 400 374,000
Hayes Wheels International, Inc.
Sr. Sub. Notes, Series B
9.125% 07/15/07 350 347,375
LDM Technologies, Inc.
144A Sr. Sub. Notes,
Series B
10.750% 01/05/07 400 393,000
Oxford Automotive, Inc.
Sr. Sub. Notes
10.125% 06/15/07 500 495,000
Safelite Glass Corp.
Sr. Sub. Notes
9.875% 12/15/06 350 315,000
Titan Wheel International, Inc.
Sr. Sub. Notes
8.750% 04/01/07 250 249,375
United Rentals, Inc.
144A Sr. Sub. Notes
9.250% 01/15/09 250 245,000
----------
4,196,125
----------
See Accompanying Notes to Financial Statements.
31
<PAGE>
WARBURG PINCUS HIGH YIELD FUND
SCHEDULE OF INVESTMENTS (CONT'D)
August 31, 1999
- --------------------------------------------------------------------------------
PAR
(000) VALUE
-------- ------
CORPORATE BONDS (CONT'D)
BROADCASTING (4.1%)
Allbritton Communications Company
Sr. Sub. Notes, Series B
9.750% 11/30/07 $ 250 $ 250,625
8.875% 02/01/08 250 240,625
American Radio Systems Corp.
Gtd. Sr. Sub. Notes
9.000% 02/01/06 250 263,750
Australis Holdings Pty. Ltd.
144A Yankee Sr. Secured Discount Notes
15.000% 11/01/02(DAGGER)/(DAGGER)(DAGGER) 294 2,940
Australis Media Ltd.
Yankee Gtd. Sr. Sub. Discount Notes
15.750% 05/15/03(DAGGER)/(DAGGER)(DAGGER) 8 1
15.750% 05/15/03(DAGGER)(DAGGER) 900 90
Big City Radio, Inc.,
144A Sr. Bonds
11.250% 03/15/05(DAGGER) 750 535,312
Capstar Broadcasting, Inc.
Sr. Sub. Discount Notes
12.750% 02/01/09(DAGGER) 500 428,750
Chancellor Media Corp.
144A Sr. Sub. Notes
8.000% 11/01/08 300 288,000
Sr. Sub. Notes
9.375% 10/01/04 250 252,500
Citadel Broadcasting Co.
144A Sr. Sub. Notes
9.250% 11/15/08 250 248,750
Emmis Communications Corporation
Sr. Sub.Notes, Series B
8.125% 03/15/09 250 236,250
Granite Broadcasting Corp.
144A Sr. Sub Notes
8.875% 05/15/08 250 240,000
Sr. Sub. Notes
9.375% 12/01/05 450 447,750
HMV Media Group plc,
Senior Subordinated Yankee
Notes, Series B
10.250% 05/15/08 350 343,000
Jacor Communications Co.
Sr. Sub. Notes
9.750% 12/15/06 250 266,250
See Accompanying Notes to Financial Statements.
32
<PAGE>
WARBURG PINCUS HIGH YIELD FUND
SCHEDULE OF INVESTMENTS (CONT'D)
August 31, 1999
- --------------------------------------------------------------------------------
PAR
(000) VALUE
-------- -----
CORPORATE BONDS (CONT'D)
BROADCASTING (cont'd)
Sinclair Broadcast Group
Sr. Sub. Notes
10.000% 09/30/05 $ 400 $ 410,000
Spanish Broadcasting System, Inc.
144A Sr. Notes
11.000% 03/15/04 300 330,000
United International Holdings,
144A Sr. Discount Notes
10.750% 02/15/08(DAGGER) 500 290,000
Young Broadcasting, Inc.
Gtd. Sr. Sub. Notes, Series B
9.000% 01/15/06 250 245,625
----------
5,320,218
----------
BUILDING MATERIALS (0.7%)
Building One Services, Inc.
144A Sr. Sub. Notes
10.500% 05/01/09 250 233,750
It Group, Inc.
144A Sr. Sub. Notes
11.250% 04/01/09 250 240,625
Jackson Products, Inc. Notes
9.500% 04/15/05 400 368,000
----------
842,375
----------
BUSINESS SERVICES (0.6%)
Iron Mountain, Inc.
144A Sr. Notes
8.750% 09/30/09 500 478,750
U.S. Office Products Co.
144A Sr. Sub. Notes
9.750% 06/15/08 400 232,000
----------
710,750
----------
CABLE (10.6%)
Adelphia Communications Corp.
Sr. Notes, Series B
10.500% 07/15/04 400 420,000
Avalon Cable Holdings
Sr. Discount Notes
11.875% 12/01/08 500 330,000
Avalon Cable of Michigan, Inc.
Sr. Sub. Notes
9.375% 12/01/08 400 403,000
See Accompanying Notes to Financial Statements.
33
<PAGE>
WARBURG PINCUS HIGH YIELD FUND
SCHEDULE OF INVESTMENTS (CONT'D)
August 31, 1999
- --------------------------------------------------------------------------------
PAR
(000) VALUE
-------- ------
CORPORATE BONDS (CONT'D)
CABLE (cont'd)
Century Communications,
Sr. Discount Notes, Series B
10.785% 01/15/08 $ 500 $ 207,500
Classic Cable Sr. Sub. Notes
9.875% 08/01/08 500 505,000
Classic Communications, Inc.
144A Sr. Discount Notes
9.875% 08/01/09(DAGGER) 1,000 675,000
Coaxial Communications, Inc.
Phoenix Associates Co. Gtd. Notes
10.000% 08/15/06 550 561,000
Coaxial L.L.C.
144A Co. Gtd.
12.875% 08/15/08(DAGGER) 400 269,000
Comcast U.K. Cable Partners Ltd.,
Yankee Sr. Debentures
11.200% 11/15/07(DAGGER) 750 678,750
CSC Holdings,
Sr. Debentures
9.875% 02/15/13 500 512,500
Diamond Cable Communications
plc Sr. Discount Notes
11.750% 12/15/05(DAGGER) 500 447,500
DIVA Systems Corp.
Sr. Disc. Notes Cl. B
12.625% 03/01/08(DAGGER) 2,527 707,560
Echostar DBS Corp.
144A Sr. Notes
9.375% 02/01/09 500 500,000
Falcon Holding Group L.P./Falcon Funding Corp.
144A Debentures
9.285% 04/15/10(DAGGER) 500 355,000
8.375% 04/15/10 400 397,000
Frontiervision Holdings L.P.
Sr. Discount Notes
11.875% 09/15/07(DAGGER) 500 428,750
Galaxy Telecom L.P.
Sr. Sub. Notes
12.375% 10/01/05 400 439,000
Golden Sky Systems, Inc.
144A Sr. Discount Notes
13.500% 03/01/07(DAGGER) 750 448,125
See Accompanying Notes to Financial Statements.
34
<PAGE>
WARBURG PINCUS HIGH YIELD FUND
SCHEDULE OF INVESTMENTS (CONT'D)
August 31, 1999
- --------------------------------------------------------------------------------
PAR
(000) VALUE
-------- ---------
CORPORATE BONDS (CONT'D)
CABLE (cont'd)
Helicon Group L.P.
Sr. Secured Notes, Series B
11.000% 11/01/03 $ 500 $ 521,250
International CableTel, Inc.
Sr. Deferred Coupon Notes, Series A
12.750% 04/15/05(DAGGER) 750 731,250
James Cable Partners L.P.
Sr. Notes, Series B
10.750% 08/15/04 650 658,125
Jones Intercable, Inc.
Sr. Notes
7.625% 04/15/08 500 505,000
Lenfest Communications, Inc.
Sr. Notes
8.375% 11/01/05 300 310,875
Mediacom L.L.C. Capital
144A Sr. Notes
7.875% 02/15/11 300 264,750
Northland Cable Television,
144A Sr. Sub. Notes
10.250% 11/15/07 350 353,500
Rifkin Acquisition Partners L.P.
Sr. Sub. Notes
11.125% 01/15/06 500 561,250
Rogers Communications, Inc.
Yankee Sr. Notes
9.125% 01/15/06 550 565,125
Telewest Communications Group
plc Yankee Sr. Discount Debentures
11.000% 10/01/07(DAGGER) 700 617,750
Telewest Communications plc
Senior Discount Notes
9.250% 04/15/09(DAGGER) 500 305,000
-----------
13,678,560
-----------
CELLULAR/WIRELESS COMMUNICATIONS (1.3%)
Centennial Cellular Corp.
Sr. Sub. Notes
10.750% 12/15/08 400 417,000
Dobson Communications
144A Sr. Notes
11.750% 04/15/07 250 263,750
See Accompanying Notes to Financial Statements.
35
<PAGE>
WARBURG PINCUS HIGH YIELD FUND
SCHEDULE OF INVESTMENTS (CONT'D)
August 31, 1999
- --------------------------------------------------------------------------------
PAR
(000) VALUE
-------- ------
CORPORATE BONDS (CONT'D)
CELLULAR/WIRELESS COMMUNICATIONS (cont'd)
Microcell Telecommunications, Inc.
Yankee Sr. Discount Notes, Series B
14.000% 06/01/06(DAGGER) $ 500 $ 411,250
Sprint Spectrum L.P./Sprint
Spectrum Finance Corp.
Sr. Notes
11.000% 08/15/06 500 561,875
----------
1,653,875
----------
CHEMICALS (1.7%) ClimaChem, Inc.
Notes, Series B
10.750% 12/01/07 250 246,562
Huntsman Corp.
144A Sr. Sub. Notes
9.500% 07/01/07 250 237,500
Lyondell Chemical, Inc.
Senior Secured Notes, Series B
9.875% 05/01/07 500 503,750
Philipp Brothers Chemicals, Inc.
Co. Gtd. Sr. Notes
9.875% 06/01/08 350 316,750
Pioneer Americas Acquistics Corp.
Gtd. Sr. Secured Notes, Series B
9.250% 06/15/07 250 182,500
Radnor Holdings Corp.
Sr. Notes, Series B
10.000% 12/01/03 500 505,000
Sterling Chemical Holdings, Inc.
Sr. Secured Discount Notes
13.500% 08/15/08(DAGGER) 700 175,000
----------
2,167,062
----------
COMPUTERS, SOFTWARE & SERVICES (0.6%)
PSINET, Inc.
144A Sr. Notes
11.500% 11/01/08 250 253,750
Verio, Inc.
144A Units
13.500% 06/15/04 350 391,125
Sr. Notes
10.375% 04/01/05 200 200,000
----------
844,875
----------
See Accompanying Notes to Financial Statements.
36
<PAGE>
WARBURG PINCUS HIGH YIELD FUND
SCHEDULE OF INVESTMENTS (CONT'D)
August 31, 1999
- --------------------------------------------------------------------------------
PAR
(000) VALUE
-------- ---------
CORPORATE BONDS (CONT'D)
CONSTRUCTION & BUILDING MATERIALS (1.8%)
Collins & Aikman Floorcoverings, Inc.
Sr. Sub. Notes, Series B
10.000% 01/15/07 $ 500 $ 501,250
Koppers Industry, Inc.
Sr. Sub. Notes
9.875% 12/01/07 250 247,500
Omega Cabinets, Ltd.
Sr. Sub. Notes
10.500% 06/15/07 400 392,000
Southdown, Inc.
Sr. Sub. Notes, Series B
10.000% 03/01/06 500 546,250
Uniforet, Inc.
Yankee Gtd. Sr. Notes
11.125% 10/15/06 500 358,750
Waxman Industries, Inc.
Sr. Notes, Series B
12.750% 06/01/04 600 306,000
----------
2,351,750
----------
CONSUMER PRODUCTS & SERVICES (2.5%)
Coinstar, Inc.
Sr. Discount Notes
13.000% 10/01/06(DAGGER) 525 551,250
Drypers Corp.
Sr. Notes, Series B
10.250% 06/15/07 250 197,500
Group Maintenance America Corp.
144A Sr. Sub. Notes
9.750% 01/15/09 250 246,562
Holmes Products Corp.
144A Sr. Sub. Notes
9.875% 11/15/07 500 472,500
Hosiery Corp. of America, Inc.
Sr. Sub. Notes
13.750% 08/01/02 400 424,000
Packaged Ice, Inc.
144A Gtd. Sr. Notes
9.750% 02/01/05 400 381,000
The Scotts Co.
144A Sr. Sub. Notes
8.625% 01/15/09 300 294,000
See Accompanying Notes to Financial Statements.
37
<PAGE>
WARBURG PINCUS HIGH YIELD FUND
SCHEDULE OF INVESTMENTS (CONT'D)
August 31, 1999
- --------------------------------------------------------------------------------
PAR
(000) VALUE
-------- ------
CORPORATE BONDS (CONT'D)
CONSUMER PRODUCTS & SERVICES (cont'd)
Werner Holdings Co., Inc.
Gtd. Sr. Sub. Notes, Series A
10.000% 11/15/07 $ 500 $ 475,000
Worldtex, Inc.
144A Sr. Notes
9.625% 12/15/07 250 220,000
----------
3,261,812
----------
ELECTRIC UTILITIES (0.2%)
Integrated Electric Services, Inc.
144A Sr. Sub. Notes (B2, BB-)
9.375% 02/01/09 250 247,500
----------
ELECTRONICS (1.0%)
Ampex Corp.
144A Sr. Notes
12.000% 03/15/03 500 518,750
Elgar Holdings Inc.,
144A Gtd. Sr. Notes
9.875% 02/01/08 500 375,000
Unisys Corporation
Sr. Notes, Series B
12.000% 04/15/03 400 434,000
----------
1,327,750
----------
ENERGY (3.2%)
Abraxas Petroleum, Inc. and Canadian
Abraxas Petroleum Limited,
Gtd. Sr. Notes, Series D
11.500% 11/01/04 500 342,500
AEI Resources, Inc.
144A Sr. Sub. Notes
11.500% 12/15/06 400 340,000
Bellwether Exploration Co.
Gtd. Sr. Sub. Notes
10.875% 04/01/07 250 227,500
Cliffs Drilling Company
Gtd. Sr. Notes, Series D
10.250% 05/15/03 350 347,375
CMS Energy Corp.
Sr. Notes
7.500% 01/15/09 500 458,125
See Accompanying Notes to Financial Statements.
38
<PAGE>
WARBURG PINCUS HIGH YIELD FUND
SCHEDULE OF INVESTMENTS (CONT'D)
August 31, 1999
- --------------------------------------------------------------------------------
PAR
(000) VALUE
-------- ------
CORPORATE BONDS (CONT'D)
ENERGY (cont'd)
Dailey International, Inc.
Gtd. Sr. Notes, Series B
9.500% 02/15/08 $ 800 $ 517,000
Eagle Geophysical, Inc. Co.
Gtd.
10.750% 07/15/08(DAGGER)(DAGGER) 500 95,000
HS Resources, Inc.
Sr. Sub. Notes
9.250% 11/15/06 400 396,000
Plains Resources, Inc.
Gtd. Sr. Sub. Notes,
Series B
10.250% 03/15/06 250 251,250
Pogo Producing Co.
Sr. Sub. Notes, Cl. B
8.750% 05/15/07 500 470,000
Pride Petroleum Services, Inc.
Sr. Notes
9.375% 05/01/07 300 301,500
Southwest Royalties, Inc.
Gtd. Sr. Notes, Series B
10.500% 10/15/04 300 144,000
Wiser Oil Co.
Gtd. Sr. Sub. Notes
9.500% 05/15/07 250 206,250
----------
4,096,500
----------
ENERGY SOURCES (0.8%)
Key Energy Services, Inc.
Units 144A
14.000% 01/15/09 750 795,000
Nuevo Energy Co.
144A Sr. Sub. Notes
9.500% 06/01/08 250 250,000
----------
1,045,000
----------
ENTERTAINMENT (3.1%)
Ackerley Group, Inc.
Sr. Sub. Notes (B2, B)
9.000% 01/15/09 250 245,000
AMC Entertainment, Inc.
Sr. Sub. Notes
9.500% 03/15/09 500 425,000
See Accompanying Notes to Financial Statements.
39
<PAGE>
WARBURG PINCUS HIGH YIELD FUND
SCHEDULE OF INVESTMENTS (CONT'D)
August 31, 1999
- --------------------------------------------------------------------------------
PAR
(000) VALUE
-------- ----------
CORPORATE BONDS (CONT'D)
ENTERTAINMENT (cont'd)
American Skiing Co.
Sr. Sub. Notes, Series B
12.000% 07/15/06 $ 400 $ 362,000
AMF Bowling Worldwide, Inc.
Gtd. Sr. Discount Notes
12.250% 03/15/06 350 280,000
Gtd. Sr. Discount Notes,
Series B
10.875% 03/15/06(DAGGER) 459 281,711
Booth Creek Ski Holdings, Inc.
Gtd. Sr. Notes, Series B
12.500% 03/15/07 400 336,000
Florida Panthers Holdings, Inc.
144A Sr. Sub. Notes
9.875% 04/15/09 250 240,625
Imax Corp.
Sr. Notes
7.875% 12/01/05 250 236,875
KSL Recreation Group, Inc.
Sr. Sub. Notes
10.250% 05/01/07 500 511,250
Premier Parks Inc.
Gtd. Sr. Notes
9.750% 01/15/07 250 256,875
Premier Parks Inc.
Sr. Notes
9.250% 04/01/06 250 243,750
Regal Cinemas, Inc.
144A Sr. Sub. Notes
8.875% 12/15/10 500 330,000
SFX Entertainment, Inc.
144A Sr. Sub. Notes
9.125% 12/01/08 250 236,875
----------
3,985,961
----------
ENVIRONMENTAL SERVICES (0.3%)
First Wave Marine
Sr. Notes
11.000% 02/01/08 500 415,000
----------
FINANCIAL SERVICES (0.4%)
Oglebay Norton Co.
144A Sr. Sub. Notes
10.000% 02/01/09 500 490,000
----------
See Accompanying Notes to Financial Statements.
40
<PAGE>
WARBURG PINCUS HIGH YIELD FUND
SCHEDULE OF INVESTMENTS (CONT'D)
August 31, 1999
- --------------------------------------------------------------------------------
PAR
(000) VALUE
------- ---------
CORPORATE BONDS (CONT'D)
FOOD & BEVERAGE (3.5%)
Agrilink Foods, Inc.
Sr. Sub. Notes
11.875% 11/01/08 $ 250 $ 255,000
AmeriServ Food Distribution, Inc.
Gtd. Sr. Notes
8.875% 10/15/06 250 215,000
Archibald Candy Corp.
144A Gtd. Sr. Secured Notes
10.250% 07/01/04 300 298,500
Carrols Corp.
144A Sr. Sub. Notes
9.500% 12/01/08 250 215,000
Delta Beverage Group, Inc.
Sr. Notes
9.750% 12/15/03 250 253,750
Eagle Family Foods, Inc.
Sr. Sub. Notes
8.750% 01/15/08 600 510,000
Fleming Companies, Inc.
Sr. Gtd. Sub. Notes, Series B
10.500% 12/01/04 150 142,500
International Home Foods, Inc.
Gtd. Sr. Sub. Notes
10.375% 11/01/06 250 269,375
Luigino's, Inc.
144A Sr. Sub. Notes
10.000% 02/01/06 500 499,730
Mrs. Fields' Holding Co., Inc.
144A Units
14.000% 12/01/05(DAGGER) 200 100,000
Mrs. Fields' Original Cookies Inc.
144A Gtd. Sr. Notes, Series A
10.125% 12/01/04 250 229,375
Gtd. Sr. Notes, Series B
10.125% 12/01/04 150 137,250
National Wine & Spirits Co.
Gtd.
10.125% 01/15/09 250 255,000
New World Pasta Co.
144A Sr. Sub. Notes
9.250% 02/15/09 500 499,375
See Accompanying Notes to Financial Statements.
41
<PAGE>
WARBURG PINCUS HIGH YIELD FUND
SCHEDULE OF INVESTMENTS (CONT'D)
August 31, 1999
- --------------------------------------------------------------------------------
PAR
(000) VALUE
-------- -----
CORPORATE BONDS (CONT'D)
FOOD & BEVERAGE (cont'd)
Pantry, Inc.
Sr. Sub. Notes
10.250% 10/15/07 $ 250 $ 248,750
Premium Standard Farm, Inc.
Sr. Secured Notes
11.000% 09/17/03 475 427,275
----------
TOTAL FOOD & BEVERAGE 4,555,880
----------
HEALTH CARE (2.7%)
Beverly Enterprises, Inc.
Gtd. Sr. Notes
9.000% 02/15/06 400 360,000
Fountain View, Inc. Co.
Gtd.
11.250% 04/15/08 500 410,000
Genesis Health Ventures, Inc.
Sr. Sub. Notes
9.875% 01/15/09 500 305,000
InSight Health Services, Inc. Co.
Gtd. Sr. Notes
9.625% 06/15/08 400 379,000
Integrated Health Services, Inc.
Sr. Sub. Notes, Series A
9.500% 09/15/07 250 90,000
Oxford Health Plans, Inc.
144A Sr. Notes
11.000% 05/15/05 400 414,000
Paracelsus Healthcare Corp.
Sr. Sub. Notes
10.000% 08/15/06 250 196,250
Quest Diagnostic, Inc.
Sr. Sub. Notes
10.750% 12/15/06 500 549,375
Tenet Healthcare Corp.
Sr. Sub. Notes
8.625% 01/15/07 250 240,000
Triad Hospitals, Inc.
144A Sr. Sub. Notes
11.000% 05/15/09 500 505,000
----------
3,448,625
----------
See Accompanying Notes to Financial Statements.
42
<PAGE>
WARBURG PINCUS HIGH YIELD FUND
SCHEDULE OF INVESTMENTS (CONT'D)
August 31, 1999
- --------------------------------------------------------------------------------
PAR
(000) VALUE
-------- -----
CORPORATE BONDS (CONT'D)
INDUSTRIAL GOODS & MATERIALS (1.6%)
Anchor Lamina, Inc./Anchor
Lamina America, Inc.
144A Sr. Sub. Notes
9.875% 02/01/08 $ 250 $ 225,625
Golden Ocean Group Ltd.,
144A Gtd. Sr. Notes
10.000% 08/31/01 657 88,695
Jordan Industries, Inc.
Sr. Notes
10.375% 08/01/07 500 488,750
MMI Products, Inc.
144A Sr. Sub. Notes, Series B
11.250% 04/15/07 500 507,500
Morris Materials Handling, Inc.
144A Sr. Notes
9.500% 04/01/08 250 97,500
Motors & Gears, Inc.
Sr. Notes, Series D
10.750% 11/15/06 500 493,750
Thermadyne Holdings Corp.
Sr. Discount Debentures
12.500% 06/01/08(DAGGER) 250 121,250
----------
2,023,070
----------
LEISURE & ENTERTAINMENT (0.4%)
Hollywood Park, Inc.
144A Sr. Sub. Notes )
9.250% 02/15/07 500 490,000
----------
METALS & MINING (2.3%)
Bayou Steel Corp. Co.
Gtd. 073051AE4
9.500% 05/15/08 500 472,500
Golden Northwest Aluminum
First Mortgage Notes
12.000% 12/15/06 400 412,000
Haynes International, Inc.
Sr. Notes
11.625% 09/01/04 250 236,250
Ivaco, Inc.
Yankee Sr. Notes
11.500% 09/15/05 250 252,500
See Accompanying Notes to Financial Statements.
43
<PAGE>
WARBURG PINCUS HIGH YIELD FUND
SCHEDULE OF INVESTMENTS (CONT'D)
August 31, 1999
- --------------------------------------------------------------------------------
PAR
(000) VALUE
-------- -----
CORPORATE BONDS (CONT'D)
METALS & MINING (cont'd)
Kaiser Aluminum and Chemical, Inc.
144A Sr. Notes
10.875% 10/15/06 $ 250 $ 256,250
Metallurg, Inc.
Sr. Notes
11.000% 12/01/07 500 488,125
Weirton Steel Corporation
Sr. Notes
11.375% 07/01/04 350 350,000
WHX Corp.
Sr. Exchange Notes
10.500% 04/15/05 500 476,250
----------
2,943,875
----------
OFFICE EQUIPMENT & SUPPLIES (0.3%)
Knoll, Inc.
Sr. Sub. Notes
10.875% 03/15/06 325 357,094
----------
PACKAGING/CONTAINERS (0.5%)
BPC Holding Corporation
Sr. Secured Notes, Series B
12.500% 06/15/06 400 393,000
Crown Packaging Enterprises, Ltd.
Yankee Sr. Secured Discount Notes
14.000% 08/01/06(DAGGER) 775 11,625
Stone Container Finance Co.
Yankee Gtd. Sr. Notes
11.500% 08/15/06 250 261,250
----------
665,875
----------
PAPER & FOREST PRODUCTS (3.1%)
Ainsworth Lumber Co. Ltd.
Yankee Sr. Secured PIK Notes
12.500% 07/15/07 500 553,750
Bear Island Paper Company, L.L.C./
Bear Island Finance Company II
Sr. Secured Notes, Series B
10.000% 12/01/07 400 392,000
Crown Paper Co.
Sr. Sub. Notes
11.000% 09/01/05 400 306,000
See Accompanying Notes to Financial Statements.
44
<PAGE>
WARBURG PINCUS HIGH YIELD FUND
SCHEDULE OF INVESTMENTS (CONT'D)
August 31, 1999
- --------------------------------------------------------------------------------
PAR
(000) VALUE
-------- -----
CORPORATE BONDS (CONT'D)
PAPER & FOREST PRODUCTS (cont'd)
Gaylord Container Corp.
Sr. Notes
9.375% 06/15/07 $ 600 $ 546,000
MAXXAM Group Holdings, Inc.
144A Sr. Secured Notes,
Series B
12.000% 08/01/03 400 408,000
Printpack, Inc.
Sr. Sub. Notes, Series B
10.625% 08/15/06 450 428,062
Repap New Brunswick
Sr. Yankee Notes
10.625% 04/15/05 450 391,500
S.D. Warren Co.
Sr. Sub. Notes
12.000% 12/15/04 400 429,000
Specialty Paperboard, Inc.
144A Sr. Notes
9.375% 10/15/06 250 253,750
Tembec Industries, Inc.
Sr. Co. Gtd.
8.625% 06/30/09 250 245,000
----------
3,953,062
----------
PHARMACEUTICALS (0.4%)
ICN Pharmaceutical, Inc.
144A Sr. Notes
8.750% 11/15/08 500 490,000
----------
PUBLISHING & INFORMATION SERVICES (3.7%)
American Media Operation
144A Sr. Sub Notes
10.250% 05/01/09 500 486,250
Big Flower Press Holdings, Inc.
Sr. Sub. Notes
8.625% 12/01/08 250 233,750
Gray Communications Systems
Gtd. Sr. Sub. Notes
10.625% 10/01/06 200 209,500
Hollinger International Publishing
Inc. Sr. Sub. Notes
9.250% 03/15/07 250 251,250
See Accompanying Notes to Financial Statements.
45
<PAGE>
WARBURG PINCUS HIGH YIELD FUND
SCHEDULE OF INVESTMENTS (CONT'D)
August 31, 1999
- --------------------------------------------------------------------------------
PAR
(000) VALUE
-------- -----
CORPORATE BONDS (CONT'D)
PUBLISHING & INFORMATION SERVICES (cont'd)
InterAct Systems, Inc.
144A Sr. Discount Notes
14.000% 08/01/03 $ 700 $ 258,125
Liberty Group Publishing, Inc.
Sr. Discount Debentures
11.625% 02/01/09(DAGGER) 300 170,625
Mail-Well, Inc.
144A Sr. Sub. Notes
8.750% 12/15/08 400 387,000
Mentus Media Corp.
144A Sr. Secured Notes
12.000% 02/01/03 591 576,225
Nebraska Book Co.,
144A Sr. Sub. Notes
8.750% 02/15/08 500 410,000
Phoenix Color Corp.
144A Sr. Sub. Notes
10.375% 02/01/09 500 482,500
Sun Media Corp.
Yankee Sr. Sub. Notes
9.500% 02/15/07 194 200,790
Sun Media Corp. Yankee Sr. Sub. Notes (B1, BB-)
9.500% 05/15/07 65 67,275
Tri-State Outdoor Media Group, Inc.
144A Sr. Notes
11.000% 05/15/08 500 501,250
World Color Press, Inc.
144A Sr. Sub. Notes
8.375% 11/15/08 500 493,750
----------
4,728,290
----------
REAL ESTATE (0.7%)
HMH Properties, Inc.
Sr. Notes
8.450% 12/01/08 300 281,250
Host Marriot Hotel Properties
Sr. Notes (Ba2, BB)
7.875% 08/01/05 400 371,000
Intrawest Corp.
Yankee Sr Notes
9.750% 08/15/08 250 245,000
----------
897,250
----------
See Accompanying Notes to Financial Statements.
46
<PAGE>
WARBURG PINCUS HIGH YIELD FUND
SCHEDULE OF INVESTMENTS (CONT'D)
August 31, 1999
- --------------------------------------------------------------------------------
PAR
(000) VALUE
-------- -----
CORPORATE BONDS (CONT'D)
RESTAURANTS, HOTELS & GAMING (7.7%)
AFC Enterprises
Sr. Sub. Notes
10.250% 05/15/07 $ 400 $ 404,000
American Restaurant Group, Inc.
144A Sr. Notes
11.500% 02/15/03 500 453,125
AmeriKing, Inc.
Gtd. Sr. Notes
10.750% 12/01/06 400 410,000
Ameristar Casinos, Inc.
Gtd. Sr. Sub. Notes,
Series B
10.500% 08/01/04 500 502,500
Arogosy Gaming Co.
144A Sr. Sub. Notes
10.750% 06/01/09 500 515,000
CapStar Hotel Co.,
144A Sr. Sub. Notes
8.750% 08/15/07 250 233,437
Casino Magic of Louisiana Corp.
Gtd. First Mortgage Notes, Series B
13.000% 08/15/03 600 682,500
Circus Circus Enterprise
Sr. Sub. Notes
9.250% 12/01/05 450 453,375
Coast Hotels & Casino, Inc.
144A Sr. Sub. Notes
9.500% 04/01/09 250 240,000
Hard Rock Hotel, Inc.
144A Sr. Sub. Notes
9.250% 04/01/05 350 316,750
Harrahs Operating Co. Inc. Co.
Gtd. 413627A
7.875% 12/15/05 250 237,500
Harvey Casino Resorts
Sr. Sub. Notes
10.625% 06/01/06 450 464,625
Horseshoe Gaming L.L.C.
Gtd. Sr. Sub. Notes,
Series B 44075LAF8
9.375% 06/15/07 400 407,500
See Accompanying Notes to Financial Statements.
47
<PAGE>
WARBURG PINCUS HIGH YIELD FUND
SCHEDULE OF INVESTMENTS (CONT'D)
August 31, 1999
- --------------------------------------------------------------------------------
PAR
(000) VALUE
-------- -----
CORPORATE BONDS (CONT'D)
RESTAURANTS, HOTELS & GAMING (cont'd)
Isle of Capri Casinos
144A Sr. Sub Notes
8.750% 04/15/09 $ 500 $ 465,000
Louisiana Casino Cruises, Inc.
Secured 144A
11.000% 12/01/05 500 501,250
Majestic Star Casino
144A Secured Notes
10.875% 07/01/06 400 392,000
Mohegan Tribal Gaming Authority
Sr. Sub. Notes
8.750% 01/01/09 400 394,000
Park Place Entertainment, Inc.
144A Sr. Sub. Notes
7.875% 12/15/05 250 235,625
Peninsula Gaming L.L.C.
144A Sr. Notes
12.250% 07/01/06 250 246,875
Players International, Inc.
Sr. Notes
10.875% 04/15/05 250 265,000
Prime Hospitality Corp. Secured
First Mortgage Notes
9.250% 01/15/06 250 251,562
Red Roof Inns, Inc.
Sr. Exchange Notes
9.625% 12/15/03 250 256,250
Santa Fe Hotel, Inc.
First Mortgage Notes
11.000% 12/15/00 500 498,750
Station Casinos, Inc.
Sr. Sub. Notes
10.125% 03/15/06 500 515,000
Sun International Hotels Ltd.
Yankee Gtd. Sr. Sub. Notes
9.000% 03/15/07 400 391,000
Waterford Gaming L.L.C./Waterford
Gaming Finance Corp.
144A Sr. Notes
9.500% 03/15/10 250 249,375
----------
9,981,999
----------
See Accompanying Notes to Financial Statements.
48
<PAGE>
WARBURG PINCUS HIGH YIELD FUND
SCHEDULE OF INVESTMENTS (CONT'D)
August 31, 1999
- --------------------------------------------------------------------------------
PAR
(000) VALUE
-------- -----
CORPORATE BONDS (CONT'D)
RETAIL TRADE (2.1%)
Advance Holding Corp
Sr. Discount Debentures, Series B
12.875% 04/15/09(DAGGER) $ 500 $ 280,000
County Seat Stores, Inc.
144A Units
12.750% 11/01/04(DAGGER)(DAGGER) 500 45,000
Finlay Enterprises, Inc.
Sr. Secured Debentures
9.000% 05/01/08 250 237,500
Jitney-Jungle Stores of America, Inc.
Gtd. Sr. Notes
12.000% 03/01/06 250 202,500
Jo-Ann Stores, Inc.
144A Sr. Sub Notes
10.375% 05/01/07 250 246,250
K Mart Corp.
Debentures
7.750% 10/01/12 500 476,875
Pathmark Stores,
Sr. Sub Notes
9.625% 05/01/03 500 509,375
Pueblo Xtra International, Inc.
Sr. Notes
9.500% 08/01/03 400 352,000
Randall's Food Markets, Inc.
Sr. Sub. Notes, Series B
9.375% 07/01/07 350 382,812
----------
2,732,312
----------
STEEL (0.0%)
Gulf States Steel, Inc.
First Mortgage Notes
13.500% 04/15/03(DAGGER)(DAGGER) 200 36,000
----------
TELECOMMUNICATIONS (21.7%)
AMSC Acquisition Company, Inc.
Senior Notes, Series B
12.250% 04/01/08 500 380,000
Bresnan Communications Co.
144A Sr. Discount Notes
9.250% 02/01/09(DAGGER) 1,000 657,500
144A Sr. Notes
8.000% 02/01/09 250 247,500
See Accompanying Notes to Financial Statements.
49
<PAGE>
WARBURG PINCUS HIGH YIELD FUND
SCHEDULE OF INVESTMENTS (CONT'D)
August 31, 1999
- --------------------------------------------------------------------------------
PAR
(000) VALUE
-------- ----------
CORPORATE BONDS (CONT'D)
TELECOMMUNICATIONS (cont'd)
Call-Net Enterprises, Inc.
Sr. Discount Notes
8.000% 05/15/09(DAGGER) $ 450 $ 254,250
Yankee Sr. Notes
9.375% 05/15/09 400 373,000
Caprock Communications Corp.
144A Sr. Notes
11.500% 05/01/09 400 397,000
Carrier1 144A Units
13.250% 02/15/09 500 507,500
Charter Communications Holding LLC,
Sr. Disc. Notes 144A
8.625% 04/01/09 250 237,500
9.920% 04/01/11 500 300,000
Clearnet Communications, Inc.
Sr. Discount Notes
14.750% 12/15/05(DAGGER) 750 697,500
Completel Europe NV Unit
14.000% 02/15/09(DAGGER) 1,000 510,000
Covad Communication Group, Inc.
Sr. Notes 144A
12.500% 02/15/09 250 241,875
Dobson Sygnet Communications
Sr. Notes
12.250% 12/15/08 500 527,500
Dolphin Telecom plc
144A Sr. Discount Notes
14.000% 05/15/09(DAGGER) 500 206,250
DTI Holdings, Inc.
144A Sr. Discount Notes
12.250% 03/01/08(DAGGER) 600 210,000
E Spire Communications
Sr. Discount Notes
13.000% 11/01/05(DAGGER) 800 504,000
Focal Communications Corp.,
144A Sr. Discount Notes
12.125% 02/15/08(DAGGER) 550 313,500
Global Crossing Holdings, Ltd.
9.625% 05/15/08 250 253,750
Globalstar L.P./ Globalstar Capital
Corp. 144A Sr. Notes
10.750% 11/01/04 100 66,000
See Accompanying Notes to Financial Statements.
50
<PAGE>
WARBURG PINCUS HIGH YIELD FUND
SCHEDULE OF INVESTMENTS (CONT'D)
August 31, 1999
- --------------------------------------------------------------------------------
PAR
(000) VALUE
-------- -----
CORPORATE BONDS (CONT'D)
TELECOMMUNICATIONS (cont'd)
Globix Corp.
Sr Regulated Notes
13.000% 05/01/05 $ 600 $ 550,500
GST Equipment Funding
144A Sr. Secured Exchange Notes
13.250% 05/01/07(DAGGER) 250 273,125
GST USA, Inc.
Gtd. Sr. Discount Exchange Notes
12.875% 12/15/05 500 418,750
Hermes Europe Railtel
BV Sr. Notes
10.375% 01/15/09 250 250,000
Hyperion Telecommunications, Inc.
Sr. Discount Notes, Series B
13.000% 04/15/03(DAGGER) 500 420,000
Sr. Notes, Series B
12.250% 09/01/04 250 263,750
ICG Holdings, Inc.
Gtd. Senior Discount Notes
11.625% 03/15/07(DAGGER) 300 216,000
ICG Services, Inc.
144A Sr. Discount Notes
10.000% 02/15/08(DAGGER) 500 288,750
Intelcom Group (U.S.A.), Inc.
Gtd. Sr. Exchangeable Discount Notes
12.500% 05/01/06(DAGGER) 800 642,000
Intercel, Inc.
Sr. Discount Notes
12.000% 02/01/06(DAGGER) 500 428,750
Intermedia Communications, Inc.
Sr. Discount Notes
11.250% 07/15/07(DAGGER) 1,000 700,000
International Cabletel, Inc.
Sr. Notes
11.500% 02/01/06(DAGGER) 415 358,975
ITC Deltacom, Inc.
144A Sr. Notes
11.000% 06/01/07 163 174,206
IXC Communications, Inc.
Sr. Sub. Notes
9.000% 04/15/08 350 345,625
See Accompanying Notes to Financial Statements.
51
<PAGE>
WARBURG PINCUS HIGH YIELD FUND
SCHEDULE OF INVESTMENTS (CONT'D)
August 31, 1999
- --------------------------------------------------------------------------------
PAR
(000) VALUE
-------- -----
CORPORATE BONDS (CONT'D)
TELECOMMUNICATIONS (cont'd)
Jordan Telecommunications Products, Inc.
Sr. Discount Notes, Series B
11.750% 08/01/07(DAGGER) $ 400 $ 339,500
Sr. Notes
9.875% 08/01/07 250 244,062
KMC Telecom Holdings, Inc.
Sr. Discount Notes
12.500% 02/15/08(DAGGER) 500 267,500
Knology Hldgs., Inc.
Sr. Discount Notes
11.875% 10/15/07(DAGGER) 550 313,500
Level 3 Communications, Inc.
Gtd. Sr. Sub. Notes
8.500% 05/15/08 250 245,938
Sr. Sub. Notes (B2, B)
8.000% 08/01/08 250 245,000
Sr. Discount Notes
10.500% 12/01/08(DAGGER) 500 288,750
Logix Communications Enterprises
Sr. Notes
12.250% 06/15/08 500 452,500
McCaw International Ltd.
144A Units
13.000% 04/15/07(DAGGER) 500 287,500
McLeodUSA, Inc.
144A Sr. Sub. Notes
8.125% 02/15/09 250 230,625
McLeodUSA, Inc.
Sr. Discount Notes
10.500% 03/01/07(DAGGER) 600 462,000
Sr. Notes
9.250% 07/15/07 300 296,250
MDC Communications Corp.
Sr. Sub. Notes
10.500% 12/01/06 400 407,000
Metromedia Fiber Network, Inc.
Sr. Notes, Series B
10.000% 11/15/08 500 495,000
MetroNet Communications Corp.
Sr. Discount Notes
10.750% 11/01/07(DAGGER) 400 319,500
Sr. Notes
12.000% 08/15/07 400 464,000
See Accompanying Notes to Financial Statements.
52
<PAGE>
WARBURG PINCUS HIGH YIELD FUND
SCHEDULE OF INVESTMENTS (CONT'D)
August 31, 1999
- --------------------------------------------------------------------------------
PAR
(000) VALUE
-------- -----
CORPORATE BONDS (CONT'D)
TELECOMMUNICATIONS (cont'd)
MJD Communications, Inc.
Sr. Sub. Notes
9.500% 05/01/08 $ 250 $ 249,063
Nextel Communications, Inc.
Sr. Discount Notes
9.750% 08/15/04 500 500,000
Nextel Partners, Inc.
144A Sr. Discount Notes
14.000% 02/01/09(DAGGER) 500 297,500
Nextlink Communications, Inc.
144A Sr. Notes
10.750% 11/15/08 250 253,750
Sr. Discount Notes
9.450% 04/15/08(DAGGER) 500 303,750
Nextlink Communications, L.L.C./
Nextlink Capital, Inc.
Sr. Notes
12.500% 04/15/06 250 272,500
NTL, Inc.
144A Sr. Notes
10.000% 02/15/07 250 253,125
Optel, Inc.
Sr. Notes
11.500% 07/01/08 350 238,875
Orbital Imaging Corp.,
144A Units
11.625% 03/01/05 500 392,500
Orion Network Systems, Inc.
Gtd. Sr. Notes
11.250% 01/15/07 300 267,000
Pac-West Telecomm, Inc.
144A Sr. Notes
13.500% 02/01/09 250 254,375
Pagemart Nationwide, Inc.
Sr. Discount Notes
15.000% 02/01/05(DAGGER) 750 706,875
Pegasus Communications Corp.
Sr. Notes, Series B
9.750% 12/01/06 500 493,750
PLD Telekom, Inc.
144A Sub. Notes
9.000% 06/01/06 230 131,100
Yankee Co. Gtd. Notes
14.000% 06/01/04 1,010 691,850
See Accompanying Notes to Financial Statements.
53
<PAGE>
WARBURG PINCUS HIGH YIELD FUND
SCHEDULE OF INVESTMENTS (CONT'D)
August 31, 1999
- --------------------------------------------------------------------------------
PAR
(000) VALUE
-------- ---------
CORPORATE BONDS (CONT'D)
TELECOMMUNICATIONS (cont'd)
Price Comm Wireless, Inc.
144A Sr. Sub. Notes
11.750% 07/15/07 $ 250 $ 274,375
Primus Telecommunications Group, Inc.
144A Sr. Notes
11.250% 01/15/09 500 490,000
Qwest Communications International, Inc.
Sr. Discount Notes
9.470% 10/15/07(DAGGER) 750 583,125
Sr. Notes, Series B
10.875% 04/01/07 130 148,038
RCN Corp.
Sr. Discount Notes, Series B
10.000% 10/15/07(DAGGER) 400 270,000
Sr. Discount Notes, Series B
9.800% 02/15/08(DAGGER) 300 186,750
Sr. Notes, Series B
10.000% 10/15/07 400 395,000
Rhythms Netconnections
Sr. Discount Notes
12.750% 05/15/08(DAGGER) 600 303,000
RSL Communications plc
Yankee Co. Gtd.
10.500% 11/15/08 400 377,000
Startec Global Communications, Inc.
Sr. Notes
12.000% 05/15/08 400 358,500
Telewest Communications plc
Debentures
9.625% 10/01/06 250 253,125
Teligent Inc.
Sr. Notes
11.500% 12/01/07 250 240,000
Time Warner Telecom L.L.C./
Time Warner Telecom Inc.,
Sr. Notes
9.750% 07/15/08 500 507,500
Viatel, Inc.
Sr. Discount Notes
12.500% 04/15/08(DAGGER) 600 372,000
See Accompanying Notes to Financial Statements.
54
<PAGE>
WARBURG PINCUS HIGH YIELD FUND
SCHEDULE OF INVESTMENTS (CONT'D)
August 31, 1999
- --------------------------------------------------------------------------------
PAR
(000) VALUE
-------- -----
CORPORATE BONDS (CONT'D)
TELECOMMUNICATIONS (cont'd)
WinStar Communications, Inc.
Sr. Discount Notes
14.000% 10/15/05(DAGGER) $ 500 $ 437,500
-----------
28,075,607
-----------
TEXTILES & APPAREL (1.2%)
Advanced Glass Fiber Yarns
Sr. Sub. Notes 144A
9.875% 01/15/09 250 236,250
Bgf Industries, Inc.
Sr. Sub. Notes 144A
10.250% 01/15/09 250 222,500
Maxim Group, Inc.
Gtd. Sr. Sub. Notes, Series B
9.250% 10/15/07 500 426,250
Phillips Van-Heusen Corp.
Sr. Sub. Notes
9.500% 05/01/08 250 243,125
William Carter Company
Sr. Sub. Notes, Series A
10.375% 12/01/06 450 451,125
-----------
1,579,250
-----------
TRANSPORTATION (1.3%)
AirTran Airlines, Inc.
Secured Notes
10.500% 04/15/01 250 245,938
Atlantic Express Transportation Corp.
Gtd. Sr. Secured Notes
10.750% 02/01/04 250 245,000
Canadian Airlines Corp.
Yankee Sr. Notes
12.250% 08/01/06 250 162,500
Kitty Hawk, Inc.
Sr. Notes
9.950% 11/15/04 250 245,000
Pegasus Shipping (Hellas) Ltd.
144A Gtd. First Preferred
Mortgage Notes, Series A
11.875% 11/15/04 500 200,000
Trans World Airlines
Sr. Notes
11.375% 03/01/06 500 325,000
See Accompanying Notes to Financial Statements.
55
<PAGE>
WARBURG PINCUS HIGH YIELD FUND
SCHEDULE OF INVESTMENTS (CONT'D)
August 31, 1999
- --------------------------------------------------------------------------------
PAR
(000) VALUE
----- --------
CORPORATE BONDS (CONT'D)
TRANSPORTATION (cont'd)
Transportation Manufacturing
Operations, Inc.,
144A Sr. Sub. Notes
11.250% 05/01/09 $ 250 $ 243,750
------------
1,667,188
------------
WASTE MANAGEMENT (0.6%)
Allied Waste North America,
Series B
7.875% 01/01/09 500 455,000
Waste Systems International, Inc.
144A Conv. Sub. Notes
7.000% 05/13/05 400 348,000
------------
803,000
------------
TOTAL CORPORATE BONDS (Cost $124,587,886) $116,320,052
------------
ASSET BACKED SECURITY (0.4%)
Airplanes Pass Through Trust
Series 1, Class D
10.875% 03/15/19 $ 600 $ 572,922
------------
(Cost $600,000)
NUMBER
OF SHARES
-------------
RIGHTS & WARRANTS (0.9%)
BROADCASTING (0.0%)
Australis Holdings Pty. Ltd.
Strike $0.01 expires 10/30/01 294 $ 3
--------
CABLE (0.5%)
DIVA Systems Corp.(DAGGER)(DAGGER)(DAGGER)
Strike $0.01 expires May 2006 2,250 544,500
DIVA Systems Corp.(DAGGER)(DAGGER)(DAGGER)
Strike $0.01 expires May 2006 7,581 60,648
--------
TOTAL CABLE 605,148
--------
CHEMICALS (0.3%)
Uniroyal Technology Corp.
Strike $4.375 expires 06/01/03 43,500 369,750
--------
CONSTRUCTION & BUILDING MATERIALS (0.0%)
Capital Pacific Holdings Group, Inc. 12,640 6,320
--------
See Accompanying Notes to Financial Statements.
56
<PAGE>
WARBURG PINCUS HIGH YIELD FUND
SCHEDULE OF INVESTMENTS (CONT'D)
August 31, 1999
- --------------------------------------------------------------------------------
PAR
(000) VALUE
-------- -----
RIGHTS & WARRANTS (CONT'D)
CONSUMER PRODUCTS & SERVICES (0.0%)
Signature Brands USA, Inc.
Strike $6.25 expires 08/15/02 250 $ 0
----------
ENERGY (0.0%)
Key Energy Services Inc.
Strike $4.88 expires 01/15/09 750 11,344
----------
INDUSTRIAL GOODS & MATERIALS (0.0%)
Golden Ocean Group, Ltd.
Strike $46.20 expires 08/31/01 438 9
----------
PUBLISHING & INFORMATION SERVICES (0.0%)
InterAct Systems, Inc.
Strike $0.01 expires 08/01/03 700 0
Mentus Media Corp. 144A(DAGGER)(DAGGER)(DAGGER)
Strike $0.01 expires 02/01/08 1,391 14
Source Media Inc.
Strike $11.00 expires 06/23/00 5,587 25,144
----------
25,158
----------
TELECOMMUNICATIONS (0.1%)
American Mobile Satellite Corporation
Strike $12.51 expires 04/01/08 500 35,000
Ampex Corp. 144A
Strike $2.25 expires 03/15/03 17,000 14,960
DTI Holdings, Inc. 144A
Strike $0.01 expires 03/01/08 3,000 30
Globalstar, L.P.
Strike $17.39 expires 02/15/04 200 26,000
KMC Telecom Holdings, Inc.
Strike $0.22 expires 04/15/08 500 12,500
McCaw International Ltd.
Strike $36.45 expires 04/15/07 500 1,250
Orbital Imaging Corp.
Strike $1.00 expires 03/01/05 500 10,000
PLD Telekom, Inc.
Strike $1.00 expires June 2004 1,010 5,050
Primestar Inc. General Motors Cl.
H Stock Appreciation Rts
Strike $47.00 expires May 2000 3,828 35,998
Startec Global Communications
Strike $24.20 expires 05/15/08 400 400
----------
141,188
----------
TOTAL RIGHTS & WARRANTS (Cost $430,305) $1,158,920
----------
See Accompanying Notes to Financial Statements.
57
<PAGE>
WARBURG PINCUS HIGH YIELD FUND
SCHEDULE OF INVESTMENTS (CONT'D)
August 31, 1999
- --------------------------------------------------------------------------------
PAR
(000) VALUE
-------- --------
COMMON STOCKS (1.4%)
COMPUTERS, SOFTWARE & SERVICES (0.3%)
Globix Corp. 2,112 $ 101,508
Verio, Inc. 9,858 366,594
----------
468,102
----------
CONSUMER PRODUCTS & SERVICES (0.1%)
Coinstar Inc. 3,671 84,892
----------
PACKAGING/CONTAINERS (0.0%)
Crown Packaging Enterprises, Ltd. 100,847 1,008
----------
TELECOMMUNICATIONS (1.0%)
Advanced Radio Telecom Corp. 10,117 110,655
AT&T Canada, Inc. 685 41,577
E Spire Communications, Inc. 21,253 170,024
Intermedia Communications, Inc. 2,421 62,946
Loral Space and Communications Ltd. 181 3,326
Microcell Telecommunications, Inc. 3,436 35,219
Price Communications Corp. 40,269 830,561
----------
1,254,308
----------
TOTAL COMMON STOCKS (Cost $605,604) $ 1,808,310
----------
PREFERRED STOCKS (2.9%)
AEROSPACE/DEFENSE (0.7%)
GPA Group plc Convertible
Cumulative Second Preference
Shares 7.00% 1,750,000 $ 910,000
----------
CABLE (0.0%)
DIVA Systems Corporation,
Series C 11,890 35,670
----------
CELLULAR/WIRELESS COMMUNICATIONS (0.2%)
Rural Cellular Corp. 144A PIK
11.375% 2,859 283,781
----------
INDUSTRIAL (0.3%)
International Utility Structures Inc.
13.00% 707 66,682
International Utility Structures Inc.,
Units 13.00% 3,492 332,661
----------
399,343
----------
PUBLISHING & INFORMATION SERVICES (0.1%)
Source Media Inc. 144A PIK
13.50% 12,617 126,180
----------
See Accompanying Notes to Financial Statements.
58
<PAGE>
WARBURG PINCUS HIGH YIELD FUND
SCHEDULE OF INVESTMENTS (CONT'D)
August 31, 1999
- --------------------------------------------------------------------------------
PAR
(000) VALUE
------ ----------
PREFERRED STOCKS (CONT'D)
RESTAURANTS, HOTELS & GAMING (0.1%)
AmeriKing, Inc. 13.00% Cum.
Exchangeable 6,659 $ 94,891
----------
TELECOMMUNICATIONS (1.5%)
Classic Communications Inc 3,000 50,010
E Spire Communications Inc.
Jr. PIK 12.75% 1,200 528,000
Hyperion Telecommunications, Inc.
12.875% Sr. Exch. Redeemable,
Series B 7 6,283
Intermedia Communications Inc.
144A 7.00% Jr. Convertible,
Series E 20,000 510,000
Nextel Communications, Inc.
13.00% Exchangeable,
Series D PIK 318 344,235
NEXTLINK Communications, Inc.
144A 14.00% Sr. Exchangeable PIK 8,463 425,277
----------
1,863,805
----------
TOTAL PREFERRED STOCKS (Cost $3,903,185) $3,713,670
----------
PAR
(000)
------
SHORT-TERM INVESTMENT (1.3%)
BBH grand Cayman U.S. Dollar Time Deposit
4.500% 09/01/99 09/01/99 $1,620 $ 1,620,000
------------
(Cost $1,620,000)
TOTAL INVESTMENTS (97.0%) (Cost $131,746,980*) $125,193,874
OTHER ASSETS IN EXCESS OF LIABILITIES (3.0%) 3,959,035
------------
TOTAL NET ASSETS (100.0%) $129,152,909
============
* Also cost for Federal income tax purposes at August 31, 1999. The gross
appreciation (depreciation) on a tax basis is as follows:
Gross Appreciation $ 5,380,428
Gross Depreciation (11,933,534)
------------
Net Depreciation $ 6,553,106
============
(DAGGER) Step Bond-- The interest rate as of August 31, 1999 is 0% and will
reset to interest rate shown at a future date.
(DAGGER)(DAGGER) Security in default.
(DAGGER)(DAGGER)(DAGGER) Illiquid Security.
INVESTMENT ABBREVIATIONS
PIK = PAY IN KIND
See Accompanying Notes to Financial Statements.
59
<PAGE>
WARBURG PINCUS MUNICIPAL BOND FUND
SCHEDULE OF INVESTMENTS
August 31, 1999
- --------------------------------------------------------------------------------
PAR
(000) VALUE
-------- -----
MUNICIPAL BONDS (76.0%)
CALIFORNIA (11.4%)
California State GO
6.300% 09/11/11 $ 670 $ 743,700
California State GO
5.125% 10/01/17 825 793,031
Los Angeles CA, Department of Water &
Power Water RB
4.500% 05/15/23 705 588,675
San Diego CA Convention Center Expansion
Financing Authority,
Series A
4.750% 04/01/28 535 456,087
----------
TOTAL CALIFORNIA 2,581,493
----------
COLORADO (2.8%)
Colorado Springs CO,
Utility RB
5.875% 11/15/17 595 629,956
----------
FLORIDA (5.9%)
Jacksonville FL, Electric Authority
RB, 2nd Installment
6.000% 07/01/12 610 639,737
Tallahassee FL, Electric RB,
First Lien
6.100% 10/01/06 670 698,475
----------
1,338,212
----------
ILLINOIS (5.9%)
Chicago Illinois GO,
Series 1993
5.250% 01/01/18 705 665,344
Illinois State Sales Tax RB,
Series Q
5.750% 06/15/14 650 658,937
----------
1,324,281
----------
INDIANA (0.1%)
Indianapolis IN, Public
Improvement Board RB
6.000% 01/10/03 25 25,781
----------
LOUISIANA (3.1%)
New Orleans LA, Home Mortgage Authority SOB
6.250% 01/15/11 635 693,737
----------
See Accompanying Notes to Financial Statements.
60
<PAGE>
WARBURG PINCUS MUNICIPAL BOND FUND
SCHEDULE OF INVESTMENTS (CONT'D)
August 31, 1999
- --------------------------------------------------------------------------------
PAR
(000) VALUE
-------- -----
MUNICIPAL BONDS (CONT'D)
MARYLAND (4.3%)
Maryland State Transportation
Authority Project RB
6.800% 07/01/16 $ 850 $ 962,625
----------
MASSACHUSETTS (2.7%)
Massachusetts State Water
Resources Authority RB,
Series B
5.000% 12/01/25 660 586,575
Massachusetts State Water
Resources Authority, General
RB, Series 92A
6.500% 07/15/19 20 21,950
----------
608,525
----------
NEW YORK (26.3%)
Metropolitan Transit Authority
Commuter Facilities RB,
Series A
5.000% 07/01/23 600 543,000
New York State Dormitory
Authority RB (Elizabeth Church
Manor Nursing Home)
5.400% 08/01/23 55 53,075
New York State Dormitory
Authority RB (Episcopal Health
Services)
7.550% 08/01/29 435 448,041
New York State Dormitory
Authority RB (Judicial Facilities Lease)
7.375% 07/01/16 40 47,150
New York State Dormitory
Authority RB (Park Ridge
Housing Inc. Project)
7.850% 02/01/29 530 539,158
New York State Local Government
Assistance Corp. RB,
Series B
4.875% 04/01/20 580 516,925
New York State Power Authority
General Purpose RB,
Series R
7.000% 01/01/10 360 413,550
See Accompanying Notes to Financial Statements.
61
<PAGE>
WARBURG PINCUS MUNICIPAL BOND FUND
SCHEDULE OF INVESTMENTS (CONT'D)
August 31, 1999
- --------------------------------------------------------------------------------
PAR
(000) VALUE
-------- -----
MUNICIPAL BONDS (CONT'D)
NEW YORK (cont'd)
New York State Throughway Authority
General RB, Series B
5.000% 01/01/20 $ 30 $ 27,450
New York, NY Municipal Water Finance Authority
Water & Sewer System RB,
Series B
5.125% 06/15/30 295 265,131
New York, NY Municipal Water Finance Authority
Water & Sewer System RB,
Series D
4.875% 06/15/21 400 353,500
New York, NY Prerefunded GO,
Series D
8.000% 08/01/01 605 656,425
New York, NY Prerefunded GO,
Series D
6.000% 02/15/05 5 5,369
New York, NY Prerefunded GO,
Series H
7.200% 02/01/02 530 572,400
New York, NY Transitional Finance Authority RB
(Future Tax Secured), Series B
4.750% 11/15/14 35 32,244
New York, NY Unrefunded
Balance GO, Series D
8.000% 08/01/03 45 48,487
New York, NY Unrefunded Balance GO, Series D (A3, A-)
6.000% 02/15/25 10 10,112
New York, NY Unrefunded Balance
GO, Series H
7.200% 02/01/13 70 74,550
Suffolk County NY Water Authority,
Waterworks RB, Series V
6.750% 06/01/12 580 653,225
Triborough Bridge and Tunnel Authority,
NY General Purpose
RB, Series A
5.200% 01/01/20 730 686,200
----------
5,945,992
----------
PUERTO RICO (3.3%)
Commonwealth of Puerto Rico GO
5.400% 07/01/07 730 755,550
----------
See Accompanying Notes to Financial Statements.
62
<PAGE>
WARBURG PINCUS MUNICIPAL BOND FUND
SCHEDULE OF INVESTMENTS (CONT'D)
August 31, 1999
- --------------------------------------------------------------------------------
PAR
(000) VALUE
-------- -----
MUNICIPAL BONDS (CONT'D)
SOUTH DAKOTA (0.1%)
Heartland Consumers Power
District, SD Electric RB
6.375% 01/01/16 $ 25 $ 26,719
-----------
TENNESSEE (0.1%)
Metropolitan Government of
Nashville and Davidson County,
TN Water and Sewer RB
Series A
4.750% 01/01/22 30 25,988
-----------
VIRGIN ISLANDS (3.1%)
Virgin Islands Public Finance
Authority RB
7.700% 10/01/99 690 706,008
-----------
VIRGINIA (3.3%)
Fairfax County, VA
Redevelopment & Housing
Authority (Island Walk Proj.),
Mortgage RB
7.100% 04/01/19 630 740,250
-----------
WASHINGTON (3.6%)
King County, WA GO, Series A
6.200% 01/01/24 40 43,250
Seattle, WA Municipal Light &
Power RB
5.125% 07/01/22 100 93,000
Seattle, WA Water System RB
5.250% 12/01/23 735 686,306
-----------
822,556
-----------
TOTAL MUNICIPAL BONDS (Cost $16,817,122) $17,187,673
-----------
CORPORATE BONDS (8.0%)
BANKING (1.7%)
Bangko Sentral Pilipinas,
Yankee Bonds
8.600% 06/15/27 105 81,113
Bay View Capital Corp.
Sub. Notes
9.125% 08/15/07 65 60,125
See Accompanying Notes to Financial Statements.
63
<PAGE>
WARBURG PINCUS MUNICIPAL BOND FUND
SCHEDULE OF INVESTMENTS (CONT'D)
August 31, 1999
- --------------------------------------------------------------------------------
PAR
(000) VALUE
-------- -----
CORPORATE BONDS (CONT'D)
BANKING (cont'd)
Export-Import Bank of Korea,
Global Bonds
6.500% 02/10/02 $ 25 $ 24,250
Export-Import Bank of Korea,
Yankee Notes
6.500% 05/15/00 50 49,625
First Republic Bank Sub. Notes
7.750% 09/15/12 25 22,938
Fuji JGB Investment L.L.C.,
Noncumulative Preferred
Securities, Series A
9.870% 12/30/99 45 44,325
Fuji Finance (Cayman), Ltd.
Perpetual Sub. Notes
6.573%(DAGGER)(DAGGER)(DAGGER) 120 103,800
---------
386,176
---------
BROADCASTING (0.5%)
Fox/Liberty Networks L.L.C.,
Registered Sr. Notes
8.875% 08/15/07 105 106,575
---------
CABLE (0.6%)
CSC Holdings Inc.,
Sr. Notes
7.875% 12/15/07 80 77,600
CSC Holdings Inc., Sr. Notes (Ba2, BB+)
7.250% 07/15/08 20 18,550
Diamond Cable Communications
plc, Yankee Sr. Discount Notes
10.750% 02/15/07(DAGGER) 50 38,250
---------
134,400
---------
HEALTH CARE (0.2%)
Columbia/HCA Healthcare Corp.,
Debentures
8.360% 04/15/24 50 44,750
---------
PAPER & FOREST PRODUCTS (0.0%)
P.T. Indah Kiat Pulp & Paper Corp.,
Sr. Secured Notes
8.875% 11/01/00 15 13,232
---------
RETAIL (0.6%)
K Mart Corp. Notes
7.950% 02/01/23 25 23,219
See Accompanying Notes to Financial Statements.
64
<PAGE>
WARBURG PINCUS MUNICIPAL BOND FUND
SCHEDULE OF INVESTMENTS (CONT'D)
August 31, 1999
- --------------------------------------------------------------------------------
PAR
(000) VALUE
-------- -----
CORPORATE BONDS (CONT'D)
RETAIL (cont'd)
K Mart Corp. Pass Through
Certificates, Series 1995
Class K3
8.540% 01/02/15 $ 103 $ 106,156
----------
TOTAL RETAIL 129,375
----------
TELECOMMUNICATIONS (1.1%)
CenCall Communications Corp.
Sr. Discount Notes
10.125% 01/15/04 25 25,500
LCI International, Inc.
Senior Notes
7.250% 06/15/07 40 38,400
Nextel Communications, Inc.
Sr. Discount Notes
9.750% 08/15/04 130 130,000
Paging Network, Inc.,
Sr. Sub. Notes
8.875% 02/01/06 10 5,500
Paging Network, Inc., Sr. Sub. Notes (B2, B)
10.125% 08/01/07 50 28,125
Paging Network, Inc., Sr. Sub. Notes (B2, B)
10.000% 10/15/08 35 19,688
----------
247,213
----------
TRANSPORTATION (1.9%)
Continental Airlines, Inc.
Sr. Notes
9.500% 12/15/01 105 109,463
Grupo Transportacion Ferroviaria
Mexicana, S.A. de CV
144A Gtd. Sr. Discount Notes
11.750% 06/15/09(DAGGER) 110 57,475
Northwest Airlines, Inc.,
Gtd. Notes
7.625% 03/15/05 200 182,250
US Airways, Inc.,
Gtd. Sr. Notes
9.625% 02/01/01 95 95,935
---------
445,123
---------
See Accompanying Notes to Financial Statements.
65
<PAGE>
WARBURG PINCUS MUNICIPAL BOND FUND
SCHEDULE OF INVESTMENTS (CONT'D)
August 31, 1999
- --------------------------------------------------------------------------------
PAR
(000) VALUE
-------- -----
CORPORATE BONDS (CONT'D)
UTILITIES (1.4%)
Beaver Valley Funding Corp.
Secured Lease Obligation Bonds
9.000% 06/01/17 $ 140 $ 148,225
Connecticut Light and Power Co.
First Mortgage Bonds,
Series C
7.750% 06/01/02 85 85,956
Series D
7.875% 10/01/24 10 10,150
North Atlantic Energy Corp.,
Secured First Mortgage Notes,
Series A
9.050% 06/01/02 69 69,086
----------
313,417
----------
TOTAL CORPORATE BONDS (Cost $1,899,919) $1,820,261
----------
FOREIGN BONDS (2.0%)
Republic of Colombia,
Yankee Notes
9.705% 11/13/99 75 65,625
Republic of Philippines Global
Bonds
9.875% 01/15/19 60 56,775
Republic of Poland,
Past Due Interest Bonds
5.000% 10/27/14 310 270,863
United Mexican States,
Global Bonds
11.500% 05/15/26 50 54,313
----------
TOTAL FOREIGN BONDS (Cost $460,074) $ 447,576
----------
U.S. TREASURY OBLIGATIONS (1.6%)
U.S. Treasury Notes
7.250% 05/15/04 140 147,004
6.250% 02/15/07 135 135,472
U.S. Treasury Bonds
8.000% 11/15/21 75 88,312
----------
TOTAL U.S. TREASURY OBLIGATIONS (Cost $380,947) $ 370,788
----------
See Accompanying Notes to Financial Statements.
66
<PAGE>
WARBURG PINCUS MUNICIPAL BOND FUND
SCHEDULE OF INVESTMENTS (CONT'D)
August 31, 1999
- --------------------------------------------------------------------------------
PAR
(000) VALUE
------ -----------
PREFERRED STOCKS (4.4%)
Blackrock Insured Municipal,
Series M7
3.190%(DAGGER)(DAGGER) 10 $ 250,000
California Federal Capital Corp.,
Series A
9.125% 5,725 142,409
Nuveen Insured Municipal
Opportunity, Series W Pfd.
3.200%(DAGGER)(DAGGER) 8 200,000
Nuveen Insured Premium
Income 2, Series W Pfd.
3.000%(DAGGER)(DAGGER) 8 200,000
Nuveen Maryland Premium
Income 2, Series W Pfd.
3.000%(DAGGER)(DAGGER) 8 200,000
-----------
TOTAL PREFERRED STOCKS (Cost $996,417) $ 992,409
-----------
PAR
(000)
--------
SHORT-TERM INVESTMENT (7.5%)
BBH Grand Cayman U.S. Dollar Time Deposit
4.500% 09/01/99 $1,702 $ 1,702,000
-----------
(Cost $1,702,000)
TOTAL INVESTMENTS (99.5%) (Cost $22,256,479*) $22,520,707
OTHER ASSETS IN EXCESS OF LIABILITIES (0.5%) 113,493
-----------
TOTAL NET ASSETS (100.0%) $22,634,200
===========
* Cost for Federal income tax purposes at August 31, 1999 is $22,257,927. The
gross appreciation (depreciation) on a tax basis is as follows:
Gross Appreciation $ 725,662
Gross Depreciation (462,882)
---------
Net Appreciation $ 262,780
=========
(DAGGER) Step Bond -- The interest rate as of August 31, 1999 is 0% and will
reset to interest rate shown at a future date.
(DAGGER)(DAGGER) Variable Rate Obligation -- The rate shown is the rate as of
August 31, 1999.
(DAGGER)(DAGGER)(DAGGER) Securities have no stated maturity date.
The Moody's Investors Service, Inc. and Standard & Poor's Ratings Group
ratings indicated are the most recent rating available at August 31, 1999 and
are unaudited.
INVESTMENT ABBREVIATIONS
GO = GeneralObligations
RB = Revenue Bond
SOB = Special Obligations Bond
See Accompanying Notes to Financial Statements.
67
<PAGE>
WARBURG PINCUS STRATEGIC GLOBAL FIXED INCOME FUND
SCHEDULE OF INVESTMENTS
August 31, 1999
- --------------------------------------------------------------------------------
PAR
(000) VALUE
----- ----------
INTERNATIONAL BONDS (51.6%)
ARGENTINA (0.1%)
Argentina Bocon,
Series Pr
2.880% 04/01/07(DAGGER) $ 50 $ 33,546
-----------
ARUBA (0.4%)
Sanwa Bank Ltd.
Global Sub. Notes
8.350% 07/15/09 100 100,125
-----------
CANADA (3.8%)
Government of Canada
Debenture
7.000% 12/01/06 CND 250 179,605
6.000% 06/01/08 1,250 851,199
-----------
1,030,804
-----------
CHILE (0.2%)
Empresa Nacional de Electricidad
8.125%(DAGGER)(DAGGER)(DAGGER) $ 55 44,962
-----------
COLOMBIA (0.2%)
Republic of Colombia,
Yankee Notes
12.471% 08/13/05(DAGGER) 55 48,125
-----------
DENMARK (2.6%)
Kingdom of Denmark Government
Bonds
6.000% 11/15/09 DKK 4,800 713,978
-----------
ECUADOR (0.0%)
Republic of Ecuador
Past Due Interest Notes
3.750% 02/29/00(DAGGER) $ 12 2,729
Republic of Ecuador Past Due
Interest Notes (B3, NR)
3.750% 02/27/15(DAGGER) 17 4,093
-----------
6,822
-----------
FINLAND (0.2%)
Okobank Perpetual
Medium Term FRN
5.598%(DAGGER)/(DAGGER)(DAGGER)(DAGGER) 60 57,300
-----------
FRANCE (8.8%)
L'Auxiliare du Credit Foncier de
France Gtd. Notes
5.000% 09/25/02(DAGGER) 125 121,250
See Accompanying Notes to Financial Statements.
68
<PAGE>
WARBURG PINCUS STRATEGIC GLOBAL FIXED INCOME FUND
SCHEDULE OF INVESTMENTS (CONT'D)
August 31, 1999
- --------------------------------------------------------------------------------
PAR
(000) VALUE
------ -----
INTERNATIONAL BONDS (CONT'D)
FRANCE (cont'd)
Republic of France Treasury Bonds
7.500% 04/25/05 EUR $ 549 $ 667,434
5.250% 04/25/08 1,500 1,618,397
-----------
2,407,081
-----------
GERMANY (11.7%)
Deutsche Bank Financial
144A Pfd.
6.000% 07/04/07 EUR 2,776 3,143,704
Federal Republic of Germany
Eurobonds
7.872% 12/29/49 55 51,668
-----------
3,195,372
-----------
JAPAN (0.4%)
Fuji Finance (Cayman), Ltd.
Medium Term Notes
7.300%(DAGGER)/(DAGGER)(DAGGER)(DAGGER) $ 50 43,500
Perpetual Sub. FRN
6.573%(DAGGER)/(DAGGER)(DAGGER)(DAGGER) 80 69,200
-----------
112,700
-----------
MAURITIUS (0.1%)
P.T. Indah Kiat Pulp & Paper Corp.
Sr. Secured Notes
10.000% 07/01/07 45 27,900
-----------
MEXICO (0.6%)
Grupo Transportacion Ferroviaria
Mexicana, S.A. de CV
144A Gtd. Sr. Discount Notes
11.750% 06/15/09# 70 36,575
United Mexican States Global
Bonds
11.500% 05/15/26 120 130,350
-----------
166,925
-----------
NETHERLANDS (4.2%)
Kingdom of Netherlands
Government Bonds
5.750% 01/15/04 EUR 1,021 1,137,183
-----------
PHILIPPINES (0.6%)
Bangko Sentral Pilipinas
Yankee Bonds
8.600% 06/15/27 $ 55 42,487
See Accompanying Notes to Financial Statements.
69
<PAGE>
WARBURG PINCUS STRATEGIC GLOBAL FIXED INCOME FUND
SCHEDULE OF INVESTMENTS (CONT'D)
August 31, 1999
- --------------------------------------------------------------------------------
PAR
(000) VALUE
------ ----------
INTERNATIONAL BONDS (CONT'D)
PHILIPPINES (cont'd)
Republic of Philippines
Global Bonds
9.875% 01/15/19 $ 125 118,281
-----------
160,768
-----------
POLAND (1.0%)
Republic of Poland,
Past Due Interest Bonds
5.000% 10/27/14(DAGGER)(DAGGER) 20 17,475
Republic of Poland, Past Due Interest
Bonds (Baa3, BBB)
5.000% 10/27/14(DAGGER)(DAGGER) 305 266,494
-----------
283,969
-----------
SOUTH KOREA (0.4%)
Korea Electric Power,
Yankee Debentures
7.000% 02/01/27 55 50,050
Korea Electric Power,
Global Unsubordinated Notes
6.375% 12/01/03 20 18,700
Korea Electric Power,
Yankee Notes
7.000% 10/01/02 45 43,706
-----------
112,456
-----------
SUPRANATIONAL (8.3%)
European Investment Bank
Eurobonds
5.000% 04/15/08 EUR 516 539,297
International Bank for
Reconstruction & Development
Japanese Yen Global Bonds
5.250% 03/20/02 JPY 170,000 1,739,281
-----------
2,278,578
-----------
SWEDEN (0.8%)
Skandinaviska Enskilda Banken
AB Perpetual Sub. FRN
7.500%(DAGGER)/(DAGGER)(DAGGER)(DAGGER) $ 250 230,000
-----------
UNITED KINGDOM (7.2%)
U.K. Treasury Gilt Bonds
7.500% 12/07/06 GBP 1,100 1,964,960
-----------
TOTAL INTERNATIONAL BONDS (Cost $14,816,671) $14,113,554
-----------
See Accompanying Notes to Financial Statements.
70
<PAGE>
WARBURG PINCUS STRATEGIC GLOBAL FIXED INCOME FUND
SCHEDULE OF INVESTMENTS (CONT'D)
August 31, 1999
- --------------------------------------------------------------------------------
PAR
(000) VALUE
------ ----------
U.S. BONDS (44.9%)
CORPORATE BONDS (17.4%)
AEROSPACE/DEFENSE EQUIPMENT (0.1%)
Sequa Corp. Senior Notes
9.000% 08/01/09 $ 20 $ 19,700
-----------
AUTOMOTIVE (0.2%)
Delco Remy International, Inc.
Gtd. Sr. Sub Notes
10.625% 08/01/06 10 10,462
Hayes Lemmerz International, Inc.
Sr. Sub Notes
9.125% 07/15/07 5 4,962
Sr. Sub Notes
8.250% 12/15/08 15 14,025
Lear Corp. 144A
Sr. Notes
7.960% 05/15/05 15 14,775
Oxford Automotive, Inc.
Gtd. Sr. Sub. Notes
10.125% 06/15/07 10 10,000
-----------
54,224
-----------
BANKING (1.1%)
Bay View Capital Corp.
Sub. Notes
9.125% 08/15/07 65 60,125
Chase Manhattan Bank Corp.
Sub. Notes
6.500% 08/01/05 10 9,737
6.750% 09/15/06 20 19,275
7.250% 06/01/07 20 19,975
Citicorp Sub. Notes, Series F
6.375% 11/15/08 65 60,694
Credit Lyonnais
Perpetual Sub. Variable Rate
Notes, Rule 144A
6.438%(DAGGER)/(DAGGER)(DAGGER)(DAGGER) 90 82,575
First Republic Bank
Sub. Notes
7.750% 09/15/12 60 55,050
-----------
307,431
-----------
BROADCASTING (0.5%)
Chancellor Media Corp.
144A Sr. Sub. Notes
8.000% 11/01/08 10 9,600
See Accompanying Notes to Financial Statements.
71
<PAGE>
WARBURG PINCUS STRATEGIC GLOBAL FIXED INCOME FUND
SCHEDULE OF INVESTMENTS (CONT'D)
August 31, 1999
- --------------------------------------------------------------------------------
PAR
(000) VALUE
------ ----------
CORPORATE BONDS (CONT'D)
BROADCASTING (cont'd)
Fox/Liberty Networks L.L.C.,
Registered Sr. Notes
8.875% 08/15/07 $ 90 $ 91,350
Granite Broadcasting Corp.
144A Sr. Sub. Notes
8.875% 05/15/08 10 9,600
HMV Media Group plc,
Senior Subordinated Yankee
Notes, Series B
10.250% 05/15/08 10 9,800
Turner Broadcast Sr. Notes
7.400% 02/01/04 10 10,125
-----------
130,475
-----------
BUILDING MATERIALS (0.1%)
Jackson Products, Inc.
Notes
9.500% 04/15/05 20 18,400
-----------
CABLE (0.9%)
Belo (A.H.) Corp.
Sr. Notes
6.875% 06/01/02 35 34,737
7.125% 06/01/07 50 48,437
Classic Cable
Sr. Sub. Notes
9.875% 08/01/08 10 10,100
CSC Holdings Inc.
Sr. Notes
7.875% 12/15/07 75 72,750
7.250% 07/15/08 30 27,825
Diamond Cable Communications
plc, Yankee Sr. Discount Notes
10.750% 02/15/07(DAGGER)(DAGGER) 40 30,600
James Cable Partners L.P.
Sr. Notes, Series B
10.750% 08/15/04 20 20,250
-----------
244,699
-----------
See Accompanying Notes to Financial Statements.
72
<PAGE>
WARBURG PINCUS STRATEGIC GLOBAL FIXED INCOME FUND
SCHEDULE OF INVESTMENTS (CONT'D)
August 31, 1999
- --------------------------------------------------------------------------------
PAR
(000) VALUE
------ ----------
CORPORATE BONDS (CONT'D)
CHEMICALS (0.2%)
Huntsman ICI
144A Sr. Sub. Notes
10.125% 07/01/09 $ 35 $ 34,912
Lyondell Chemical, Inc.
Senior Secured Notes,
Series A
9.625% 05/01/07 10 10,150
Senior Secured Notes,
Series B
9.875% 05/01/07 5 5,038
-----------
50,100
-----------
COMPUTERS, SOFTWARE & SERVICES (0.2%)
PSINET, Inc.
144A Sr. Notes
11.500% 11/01/08 10 10,150
Seagate Technology, Inc.
Sr. Debentures
7.450% 03/01/37 60 54,075
-----------
64,225
-----------
CONSULTING SERVICES (0.6%)
Comdisco Inc.
MTN Series H
7.230% 08/16/01 55 55,000
Senior Notes
7.250% 09/01/02 100 99,375
-----------
154,375
-----------
ENERGY (0.7%)
Bellwether Exploration Co.
Gtd. Sr. Sub. Notes
10.875% 04/01/07 25 22,750
Crown Central Petroleum
Sr. Notes
10.875% 02/01/05 10 8,800
Dresser Industries, Inc.
Debentures
7.600% 08/15/45 60 59,175
Valero Energy Corp.
144A Putable Asset Trusts
6.750% 12/15/02 100 97,250
-----------
187,975
-----------
See Accompanying Notes to Financial Statements.
73
<PAGE>
WARBURG PINCUS STRATEGIC GLOBAL FIXED INCOME FUND
SCHEDULE OF INVESTMENTS (CONT'D)
August 31, 1999
- --------------------------------------------------------------------------------
PAR
(000) VALUE
------ ----------
CORPORATE BONDS (CONT'D)
ENTERTAINMENT (0.8%)
Regal Cinemas, Inc.
Sr. Sub. Notes
9.500% 06/01/08 $ 20 $ 14,200
Time Warner, Inc.
Debentures
8.050% 01/15/16 65 66,381
Time Warner, Inc. Debentures (Baa3, BBB)
6.850% 01/15/26 145 144,819
-----------
225,400
-----------
FINANCIAL SERVICES (1.9%)
American General Institutional Capital
Trust Co.
144A Gtd. Notes, Series B
8.125% 03/15/46 80 80,900
EOP Operating LP
Notes
6.500% 01/15/04 30 28,800
Ford Motor Credit Corp.
6.700% 07/16/04 10 9,862
Ford Motor Credit Corp. (A1, A)
5.800% 01/12/09 85 76,500
Lehman Brothers Holdings, Inc.
Global Notes
6.625% 04/01/04 40 38,800
Notes
7.000% 05/15/03 20 19,850
MBNA Master Credit Card Trust
Series 1997-I, Class A
6.550% 01/15/07 70 69,158
Series 1999-G, Class A
6.350% 12/15/06 60 58,912
Merrill Lynch & Co. Notes
6.875% 11/15/18 35 32,025
Prudential Insurance Co. of America
144A Sr. Notes
6.375% 07/23/06 100 94,375
-----------
509,182
-----------
FOOD & BEVERAGE (0.3%)
AmeriServ Food Distribution, Inc.
Gtd. Sr. Notes
8.875% 10/15/06 10 8,600
Archibald Candy Corp.
144A Gtd. Sr. Secured Notes
10.250% 07/01/04 20 19,900
See Accompanying Notes to Financial Statements.
74
<PAGE>
WARBURG PINCUS STRATEGIC GLOBAL FIXED INCOME FUND
SCHEDULE OF INVESTMENTS (CONT'D)
August 31, 1999
- --------------------------------------------------------------------------------
PAR
(000) VALUE
------ ----------
CORPORATE BONDS (CONT'D)
FOOD & BEVERAGE (cont'd)
Kroger Co.
144A Notes
7.250% 06/01/09 $ 45 $ 43,875
Pantry, Inc.
Sr. Sub. Notes
10.250% 10/15/07 10 9,950
Premier Intl. Foods plc
Sr. Notes
12.000% 09/01/09 5 5,050
-----------
87,375
-----------
HEALTH CARE (0.1%)
Columbia/HCA Healthcare Corp.,
Debentures
8.360% 04/15/24 30 26,850
-----------
INDUSTRIAL GOODS & MATERIALS (0.1%)
Motors & Gears Inc.,
Sr. Notes, Series D
10.750% 11/15/06 30 29,625
-----------
MANUFACTURING (0.5%)
Crown Cork & Seal
Sr. Notes
7.125% 09/01/02 90 89,438
Tyco Intl. Group SA
Sr. Notes
6.125% 01/15/09 40 36,450
-----------
125,888
-----------
REAL ESTATE (0.0%)
HMH Properties, Inc.
Sr. Notes
8.450% 12/01/08 15 14,062
-----------
RESTAURANTS, HOTELS & CASINOS (0.2%)
Circus Circus Enterprise
Sr. Sub. Notes
9.250% 12/01/05 20 20,150
Hollywood Park Operating
Sr. Sub. Notes
9.500% 08/01/07 10 9,875
Horseshoe Gaming Holdings
144A Sr. Sub. Notes
8.625% 05/15/09 20 19,350
-----------
49,375
-----------
See Accompanying Notes to Financial Statements.
75
<PAGE>
WARBURG PINCUS STRATEGIC GLOBAL FIXED INCOME FUND
SCHEDULE OF INVESTMENTS (CONT'D)
August 31, 1999
- --------------------------------------------------------------------------------
PAR
(000) VALUE
------ ----------
CORPORATE BONDS (CONT'D)
RETAIL TRADE (1.5%)
K Mart Corp.
Medium Term Notes
Series C
7.820% 01/02/02 $ 100 $ 101,125
7.840% 01/02/02 100 101,125
Medium Term Notes
Series D
7.770% 07/02/02 100 101,125
Pathmark Stores
Sr. Sub Notes
9.625% 05/01/03 10 10,188
Wal Mart Stores
Sr. Global Bonds
6.875% 08/10/09 110 109,450
-----------
423,013
-----------
STEEL (0.1%)
AK Steel Corp.
144A Sr. Notes
7.875% 02/15/09 20 19,200
Wheeling-Pittsburgh Corp.
144A Sr. Notes
9.250% 11/15/07 15 14,325
-----------
33,525
-----------
TELECOMMUNICATIONS (3.8%)
Adelphia Communications Corp.
Sr. Notes, Series B
9.250% 10/01/02 15 15,150
Adelphia Communications Corp. Sr. Notes,
Series B (B1, B+)
8.375% 02/01/08 10 9,350
AT&T Capital Corp. Co.
Guaranteed Notes, Series F
6.875% 01/16/01 95 94,763
CenCall Communications Corp.
Sr. Discount Notes
10.125% 01/15/04 15 15,300
Echostar DBS Corp.
Sr. Notes
9.250% 02/01/06 20 19,900
GTE Corp.
Debentures
6.840% 04/15/18 80 75,000
GTE North, Inc.
Debentures, Series D
6.900% 11/01/08 10 9,850
See Accompanying Notes to Financial Statements.
76
<PAGE>
WARBURG PINCUS STRATEGIC GLOBAL FIXED INCOME FUND
SCHEDULE OF INVESTMENTS (CONT'D)
August 31, 1999
- --------------------------------------------------------------------------------
PAR
(000) VALUE
------ ----------
CORPORATE BONDS (CONT'D)
TELECOMMUNICATIONS (cont'd)
Intermedia Communication, Inc.
Sr. Notes, Series B
8.500% 01/15/08 $ 10 $ 8,850
ITC Deltacom, Inc.
144A Sr. Notes
11.000% 06/01/07 10 10,688
LCI International
Senior Notes
7.250% 06/15/07 60 57,600
Level 3 Communications, Inc.
144A Sr. Notes
9.125% 05/01/08 30 27,975
MCI Communications Corp.
Sr. Discount Notes
6.125% 04/15/02(DAGGER) 45 44,269
McLeodUSA, Inc.
144A Sr. Sub. Notes
8.125% 02/15/09 20 18,450
Metromedia Fiber Network, Inc.
Sr. Notes, Series B
10.000% 11/15/08 20 19,800
Nextel Communications, Inc.
144A Sr. Discount Notes
9.950% 02/15/08(DAGGER)(DAGGER) 10 6,925
144A Sr. Redeemable Discount Notes
10.650% 09/15/07(DAGGER)(DAGGER) 90 65,925
Sr. Discount Notes
9.750% 08/15/04 120 120,000
Nextlink Communications, Inc.
Sr. Notes
9.625% 10/01/07 10 9,825
144A Sr. Notes
10.750% 11/15/08 15 15,225
Paging Network, Inc.,
Sr. Sub. Notes
8.875% 02/01/06 20 11,000
10.125% 08/01/07 15 8,438
10.000% 10/15/08 70 39,375
Qwest Communications
International, Inc.
144A Sr. Notes
7.250% 11/01/08 15 14,625
TCI Communications, Inc.
Notes
6.340% 02/01/02 55 54,587
See Accompanying Notes to Financial Statements.
77
<PAGE>
WARBURG PINCUS STRATEGIC GLOBAL FIXED INCOME FUND
SCHEDULE OF INVESTMENTS (CONT'D)
August 31, 1999
- --------------------------------------------------------------------------------
PAR
(000) VALUE
------ ----------
CORPORATE BONDS (CONT'D)
TELECOMMUNICATIONS (cont'd)
Teleport Communications
Group, Inc.
Sr. Discount Notes
9.650% 03/31/27 $ 50 $ 56,812
US West Cap Funding
144A Notes
6.875% 08/15/01 115 114,713
Worldcom Inc.,
Sr. Notes
7.750% 01/01/07 85 87,763
-----------
1,032,158
-----------
TRANSPORTATION (2.0%)
Continental Airlines, Inc.
Sr. Notes
9.500% 12/15/01 120 125,100
Norfolk Southern Corp.
Notes
7.700% 05/15/17 35 35,437
7.050% 05/01/37 70 70,087
7.400% 09/15/06 20 20,175
Northwest Airlines, Inc.,
Gtd. Notes
7.625% 03/15/05 230 209,588
US Airways, Inc.,
Gtd. Sr. Notes
9.625% 02/01/01 95 95,935
-----------
556,322
-----------
UTILITIES (1.4%)
Beaver Valley Funding Corp.
Secured Lease Obligation
Bonds
9.000% 06/01/17 150 158,813
Connecticut Light and Power Co.
First Mortgage Bonds,
Series C
7.750% 06/01/02 10 10,113
First Mortgage Bonds,
Series D
7.875% 10/01/24 40 40,600
Niagara Mohawk Power Corp.
First Mortgage Bonds
8.750% 04/01/22 30 30,638
See Accompanying Notes to Financial Statements.
78
<PAGE>
WARBURG PINCUS STRATEGIC GLOBAL FIXED INCOME FUND
SCHEDULE OF INVESTMENTS (CONT'D)
August 31, 1999
- --------------------------------------------------------------------------------
PAR
(000) VALUE
-------- -----
CORPORATE BONDS (CONT'D)
UTILITIES (cont'd)
North Atlantic Energy Corp.
Secured First Mortgage Notes,
Series A
9.050% 06/01/02 $ 107 $ 107,134
Texas Utilities Electric Capital
Trust Preferred V
8.175% 02/01/37 50 47,750
-----------
395,048
-----------
WASTE MANAGEMENT (0.1%)
Allied Waste North America,
Series B
7.625% 01/01/06 10 9,175
Allied Waste North America,
Series B (Ba3, BB-)
7.875% 01/01/09 25 22,750
-----------
31,925
-----------
TOTAL CORPORATE BONDS (Cost $4,972,213) $ 4,771,352
-----------
MUNICIPAL BOND (0.0%)
Illinois State GO
4.750% 06/01/23 15 12,788
-----------
(Cost $14,242)
AGENCY OBLIGATIONS (17.0%)
FEDERAL HOME LOAN MORTGAGE CORPORATION (1.7%)
7.000% 12/01/09 287 284,214
6.500% 07/01/29 180 170,409
-----------
454,623
-----------
FEDERAL NATIONAL MORTGAGE ASSOCIATION (13.7%)
Various Pools:
6.000% 01/01/29 122 112,544
6.000% 01/01/29 362 333,277
6.000% 07/01/29 400 367,839
6.000% 07/01/29 348 319,626
6.500% 06/01/29 52 48,855
6.500% 06/01/29 113 107,216
6.500% 07/01/29 220 208,076
6.500% 07/01/29 240 227,228
6.500% 08/01/29 145 136,968
6.500% 08/01/29 35 33,130
15-Year TBA:
6.000% 08/01/14 270 256,922
6.500% 08/01/14 100 97,125
See Accompanying Notes to Financial Statements.
79
<PAGE>
WARBURG PINCUS STRATEGIC GLOBAL FIXED INCOME FUND
SCHEDULE OF INVESTMENTS (CONT'D)
August 31, 1999
- --------------------------------------------------------------------------------
PAR
(000) VALUE
------ ----------
AGENCY OBLIGATIONS (CONT'D)
FEDERAL NATIONAL MORTGAGE ASSOCIATION (cont'd)
30-Year TBA:
6.000% 10/15/17 $ 25 $ 22,977
6.500% 06/01/29 25 23,672
7.000% 12/31/25 480 465,900
8.000% 06/01/28 820 830,762
Global Notes
6.860% 06/01/17 390 117,791
Series 1997-16 Class M PO
9.160% 02/25/23 80 45,787
-----------
3,755,695
-----------
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION (1.6%)
TBA
7.500% 08/01/28 430 426,103
-----------
TOTAL AGENCY OBLIGATIONS (Cost $4,671,902) $ 4,636,421
------------
ASSET BACKED SECURITIES (1.6%)
Green Tree Recreational,
Equipment and Consumer Trust
Series 1997-C, Class A1
6.490% 02/15/18 131 126,966
Morgan Stanley Inc., Capital I,
Series 1998-Xl1, Class A3
6.480% 06/03/30 165 155,756
National Westminster Bank
Debentures Guaranteed Cap.
Notes
9.375% 11/15/03 15 16,312
PECO Energy Transition Trust
6.050% 03/01/09 40 37,739
6.130% 03/01/09 75 69,629
Prudential Securities Secured
Financing Series 1999-C2,
Class A2
7.193% 04/15/09 30 29,464
-----------
TOTAL ASSET BACKED SECURITIES (Cost $458,451) $ 435,866
-----------
COLLATERALIZED MORTGAGE BACKED SECURITIES (2.0%)
Commercial Mortgage Asset Trust,
Series 1999-C1, Class A3
6.640% 04/17/10 145 136,327
Contimortgage Home Equity Loan
Trust, Series 1996-4, Class A8
7.220% 01/15/28 10 9,831
See Accompanying Notes to Financial Statements.
80
<PAGE>
WARBURG PINCUS STRATEGIC GLOBAL FIXED INCOME FUND
SCHEDULE OF INVESTMENTS (CONT'D)
August 31, 1999
- --------------------------------------------------------------------------------
PAR
(000) VALUE
------ ----------
COLLATERALIZED MORTGAGE BACKED SECURITIES (CONT'D)
Donaldson Lufkin Jenrette
Commercial Mortgage Corp.,
Series 1998-C, Class A1-B
6.410% 05/10/08 $ 100 $ 93,590
GMAC Commercial Mortgage
Securities, Inc., Series 1997-C1
Class A2
6.853% 09/15/06 20 19,864
Heller Financial Commercial
Mortgage Asset Corp.
Series 1999-P, Class A2
6.847% 05/15/31 50 48,378
Nomura Asset Securitization Corp.,
Series 1998-D6, Class A1B
6.590% 03/17/28 140 132,819
Option One Mortgage Loan Trust,
Series 1999-2, Class A
9.660% 06/25/29 64 63,751
UCFC Home Equity Loan Trust,
Series 1996-B1, Class A7
8.200% 09/15/27 25 25,027
Series 1998-A1, Class A7
6.870% 07/15/29 25 24,112
-----------
TOTAL COLLATERALIZED MORTGAGE BACKED
SECURITIES (Cost $586,201) $ 553,699
-----------
U.S. TREASURY OBLIGATIONS (6.9%)
U.S. TREASURY BILLS (0.1%)
4.315% 09/16/99 $ 10 $ 9,982
4.369% 09/16/99 20 19,964
-----------
29,946
-----------
U.S. TREASURY BONDS (1.7%)
8.000% 11/15/21 385 453,333
-----------
U.S. TREASURY INFLATION PROTECTED NOTES (0.7%)
3.875% 04/15/29 190 187,046
-----------
U.S. TREASURY NOTES (4.4%)
7.250% 05/15/04 1,055 1,107,781
6.250% 02/15/07 95 95,332
-----------
1,203,113
-----------
TOTAL U.S. TREASURY OBLIGATIONS (Cost $1,908,149) $ 1,873,438
-----------
TOTAL U.S. BONDS (Cost $12,611,158) $12,283,564
-----------
See Accompanying Notes to Financial Statements.
80
<PAGE>
WARBURG PINCUS STRATEGIC GLOBAL FIXED INCOME FUND
SCHEDULE OF INVESTMENTS (CONT'D)
August 31, 1999
- --------------------------------------------------------------------------------
PAR
(000) VALUE
------ ----------
COLLATERALIZED MORTGAGE BACKED SECURITIES (CONT'D)
Donaldson Lufkin Jenrette
Commercial Mortgage Corp.,
Series 1998-C, Class A1-B
6.410% 05/10/08 $ 100 $ 93,590
GMAC Commercial Mortgage
Securities, Inc., Series 1997-C1
Class A2
6.853% 09/15/06 20 19,864
Heller Financial Commercial
Mortgage Asset Corp.
Series 1999-P, Class A2
6.847% 05/15/31 50 48,378
Nomura Asset Securitization Corp.,
Series 1998-D6, Class A1B
6.590% 03/17/28 140 132,819
Option One Mortgage Loan Trust,
Series 1999-2, Class A
9.660% 06/25/29 64 63,751
UCFC Home Equity Loan Trust,
Series 1996-B1, Class A7
8.200% 09/15/27 25 25,027
Series 1998-A1, Class A7
6.870% 07/15/29 25 24,112
-----------
TOTAL COLLATERALIZED MORTGAGE BACKED
SECURITIES (Cost $586,201) $ 553,699
-----------
U.S. TREASURY OBLIGATIONS (6.9%)
U.S. TREASURY BILLS (0.1%)
4.315% 09/16/99 $ 10 $ 9,982
4.369% 09/16/99 20 19,964
-----------
29,946
-----------
U.S. TREASURY BONDS (1.7%)
8.000% 11/15/21 385 453,333
-----------
U.S. TREASURY INFLATION PROTECTED NOTES (0.7%)
3.875% 04/15/29 190 187,046
-----------
U.S. TREASURY NOTES (4.4%)
7.250% 05/15/04 1,055 1,107,781
6.250% 02/15/07 95 95,332
-----------
1,203,113
-----------
TOTAL U.S. TREASURY OBLIGATIONS (Cost $1,908,149) $ 1,873,438
-----------
TOTAL U.S. BONDS (Cost $12,611,158) $12,283,564
-----------
See Accompanying Notes to Financial Statements.
81
<PAGE>
WARBURG PINCUS STRATEGIC GLOBAL FIXED INCOME FUND
SCHEDULE OF INVESTMENTS (CONT'D)
August 31, 1999
- --------------------------------------------------------------------------------
PAR
(000) VALUE
------ ----------
PREFERRED STOCKS (1.1%)
California Federal Capital Corp.,
Series A 9.125% 6,100 $ 151,738
Centaur Funding Corp. 9.08% 40 42,175
Citigroup, Inc. 6.213% 1,200 58,950
Lehman Brothers Holdings, Inc.
Pfd. Series C 5.94% 600 26,400
Pfd. Series D 5.67% 800 34,000
-----------
TOTAL PREFERRED STOCKS (Cost $327,171) $ 313,263
-----------
PAR
(000)
------
SHORT-TERM INVESTMENT (6.9%)
BBH Grand Cayman U. S. Dollar Time Deposit
4.500% 09/01/99 $1,892 $ 1,892,000
-----------
(Cost $1,892,000)
SECURITIES SOLD SHORT (-0.3%)
Federal National Mortgage Association TBA
6.500% 06/01/29 90 $ (85,219)
-----------
(Cost -$86,709)
TOTAL INVESTMENTS (104.2%) (Cost $29,560,291*) $28,517,162
LIABILITIES IN EXCESS OF OTHER ASSETS (-4.2%) (1,157,444)
-----------
TOTAL NET ASSETS (100.0%) $27,359,718
===========
* Cost for Federal income tax purposes at August 31, 1999 is $29,575,906.
The gross appreciation (depreciation) on a tax basis is as follows:
Gross and Net Depreciation $(1,058,744)
===========
(DAGGER) Variable rate obligations -- The interest shown is the rate as of
August 31, 1999.
(DAGGER)(DAGGER) Step Bond-- The interest rate as of August 31, 1999 is 0%
and will reset to interest rate shown at a future date.
(DAGGER)(DAGGER)(DAGGER) Securities have no stated maturity date.
CURRENCY ABBREVIATIONS
CND = Canadian Dollars
DKK = Danish Krone
EUR = European Economic Unit
GBP = United Kingdom Pounds
JPY = Japanese Yen
INVESTMENT ABBREVIATIONS
FRB = Floating Rate Bond
FRN = FloatingRateNote
GO = General Obligations
See Accompanying Notes to Financial Statements.
82
<PAGE>
WARBURG PINCUS FUND
STATEMENTS OF ASSETS AND LIABILITIES
August 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
STRATEGIC
U.S. CORE FIXED HIGH YIELD MUNICIPAL GLOBAL FIXED
INCOME FUND FUND BOND FUND INCOME FUND
--------------- ------------ ----------- ------------
<S> <C> <C> <C> <C>
ASSETS
Investments, at value (cost - $445,523,197,
$22,256,479, $131,746,980 and
$29,647,000, respectively) $436,272,396 $125,193,874 $22,520,707 $28,602,381
Deposits with brokers and custodian bank for
securities sold short or futures contracts 2,258,275 -- -- 1,116
Cash 21,520 670,871 -- 298,851
Receivable for investments sold 20,445,008 979,780 -- 162,203
Receivable for Fund shares sold -- 1,665 -- --
Receivable from investment advisor -- -- -- 46,214
Receivable on forward currency contracts -- -- -- 164,028
Dividends and interest receivable 3,528,724 2,508,321 294,482 406,660
Prepaid expenses and other assets 20,436 72,602 15,366 81,117
------------ ------------ ----------- -----------
Total Assets 462,546,359 129,427,113 22,830,555 29,762,570
------------ ------------ ----------- -----------
LIABILITIES
Securities sold short (proceeds $3,757,406
and $86,709 for U.S. Core Fixed Income
Fund and Strategic Global Fixed Income
Fund, respectively) 3,692,813 -- -- 85,219
Payable for investments purchased 106,835,267 -- -- 2,269,753
Payable for Fund shares repurchased 6,996 157,628 157,000 --
Payable on open futures contracts 817,558 -- -- 7,635
Overdraft liability -- -- 9,920 --
Advisory fee payable 59,252 31,187 -- 2,637
Distribution fee payable (Common shares) 60 14,568 -- 25
Accrued expenses payable 186,802 70,821 29,435 37,583
------------ ------------ ----------- -----------
Total Liabilities 111,598,748 274,204 196,355 2,402,852
------------ ------------ ----------- -----------
NET ASSETS
Capital stock, $0.001 par value 23,385 8,431 1,583 1,828
Paid-in capital 360,820,427 150,516,422 22,172,327 28,228,271
Undistributed net investment income 4,903,858 2,804,423 113,529 630,190
Accumulated net realized loss from
investments, securities sold short, futures
and foreign currency related transactions,
if any (6,007,052) (17,623,263) (1,448) (622,214)
Net unrealized appreciation/(depreciation) on
investments and other, if any (8,793,007) (6,553,104) 348,209 (878,357)
------------ ------------ ----------- -----------
Net Assets $350,947,611 $129,152,909 $22,634,200 $27,359,718
============ ============ =========== ===========
INSTITUTIONAL SHARES
Net assets $350,843,675 $ 95,129,177 $22,423,211 $27,341,368
------------ ------------ ----------- -----------
Shares outstanding 23,378,237 6,208,727 1,568,517 1,826,677
------------ ------------ ----------- -----------
Net asset value, offering price and redemption
price per share $ 15.01 $ 15.32 $ 14.30 $ 14.97
============ ============ =========== ===========
COMMON SHARES
Net assets $ 103,936 $ 34,023,732 $ 210,989 $ 18,350
------------ ------------ ----------- -----------
Shares outstanding 6,934 2,211,885 14,760 1,231
------------ ------------ ----------- -----------
Net asset value, offering price and redemption
price per share $ 14.99 $ 15.38 $ 14.29 $ 14.91
============ ============ =========== ===========
</TABLE>
See Accompanying Notes to Financial Statements.
83
<PAGE>
WARBURG PINCUS FUND
STATEMENTS OF OPERATIONS
For the Year Ended August 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
STRATEGIC
U.S. CORE FIXED HIGH YIELD MUNICIPAL GLOBAL FIXED
INCOME FUND FUND BOND FUND INCOME FUND
--------------- ---------- --------- ------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME
Dividends $ 635,766 $ 272,197 $ 23,381 $ 13,721
Interest 23,646,957 12,370,315 1,234,498 1,630,954
----------- ----------- ---------- ----------
Total Investment Income 24,282,723 12,642,512 1,257,879 1,644,675
----------- ----------- ---------- ----------
EXPENSES
Investment advisory fees 1,436,025 903,069 160,667 144,265
Administration fees 373,129 193,659 42,424 56,505
Custodian fees 150,458 51,725 31,000 78,142
Audit fees 26,051 9,283 2,354 6,604
Printing fees 107,349 52,983 11,317 19,170
Registration fees 46,463 31,779 31,055 7,650
Legal fees 63,575 10,952 14,404 5,616
Transfer agent fees 105,005 28,120 10,932 21,580
Insurance expense 13,175 4,540 573 792
Directors fees 14,954 13,001 13,001 13,001
Organization expense 5,229 -- -- --
Interest expense -- 29,319 -- 1,445
Distribution fees 111 63,586 247 25
Miscellaneous fees 25,717 31,959 9,834 14,105
----------- ----------- ---------- ----------
2,367,241 1,423,975 327,808 368,900
Less fees waived and reimbursed (689,093) (466,009) (100,339) (153,930)
----------- ----------- ---------- ----------
Total Expenses 1,678,148 957,966 227,469 214,970
----------- ----------- ---------- ----------
Net Investment Income 22,604,575 11,684,546 1,030,410 1,429,705
----------- ----------- ---------- ----------
Realized and Unrealized Gain/
(Loss) on Investments, Futures
and Foreign Currency
Transactions
Net realized gain/(loss) from:
Security transactions (5,389,818) (2,208,892) 161,557 (484,360)
Futures tranactions 621,347 -- -- (19,279)
Foreign exchange transactions 175,213 -- -- (66,954)
----------- ----------- ---------- ----------
(4,593,258) (2,208,892) 161,557 (570,593)
----------- ----------- ---------- ----------
Net change in unrealized
appreciation/ (depreciation):
Investments (8,679,646) (6,943,394) (1,105,750) (386,311)
Futures 828,152 -- -- 29,980
Translation of assets and
liabilities in foreign
currencies (15,939) -- -- 356,164
----------- ----------- ---------- ----------
(7,867,433) (6,943,394) (1,105,750) (167)
----------- ----------- ---------- ----------
Net Loss On Investments, Futures
and Foreign Currency
Transactions (12,460,691) (9,152,286) (944,193) (570,760)
----------- ----------- ---------- ----------
Net Increase In Net Assets
Resulting From Operations $10,143,884 $ 2,532,260 $ 86,217 $ 858,945
=========== =========== ========== ==========
</TABLE>
See Accompanying Notes to Financial Statements.
84
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
85
<PAGE>
WARBURG PINCUS FUND
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
U.S. CORE FIXED INCOME FUND HIGH YIELD FUND
-------------------------------- --------------------------------
FOR THE YEAR FOR THE YEAR FOR THE YEAR FOR THE YEAR
ENDED ENDED ENDED ENDED
AUGUST 31, 1999 AUGUST 31, 1998 AUGUST 31, 1999 AUGUST 31, 1998
--------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
INCREASE/(DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income .............. $ 22,604,575 $ 13,581,467 $ 11,684,546 $ 8,042,385
Net gain/(loss) on investments,
futures and foreign currency
transactions ..................... (12,460,691) 1,267,128 (9,152,286) (3,054,518)
------------- ------------- ------------- -------------
Net increase in net assets resulting
from operations .................. 10,143,884 14,848,595 2,532,260 4,987,867
------------- ------------- ------------- -------------
Dividends and Distributions to
shareholders:
From net investment income:
Institutional shares ........... (22,277,216) (11,454,482) (8,940,115) (7,732,581)
Common shares .................... (2,149) -- (1,873,396) (169,975)
From net realized capital gains:
Institutional shares ............. (4,420,509) (2,782,277) -- --
Common shares .................... (11) -- -- --
------------- ------------- ------------- -------------
Total distributions to shareholders (26,699,885) (14,236,759) (10,813,511) (7,902,556)
------------- ------------- ------------- -------------
Net capital share transactions ....... (26,029,500) 215,702,694 42,820,448 4,811,589
------------- ------------- ------------- -------------
Total increase/(decrease)
in net assets .................... (42,585,501) 216,314,530 34,539,197 1,896,900
NET ASSETS:
Beginning of year .................. 393,533,112 177,218,582 94,613,712 92,716,812
------------- ------------- ------------- -------------
End of year ........................ $ 350,947,611 $ 393,533,112 $ 129,152,909 $ 94,613,712
============= ============= ============= =============
MUNICIPAL BOND FUND STRATEGIC GLOBAL FIXED INCOME FUND
-------------------------------- --------------------------------
FOR THE YEAR FOR THE YEAR FOR THE YEAR FOR THE YEAR
ENDED ENDED ENDED ENDED
AUGUST 31, 1999 AUGUST 31, 1998 AUGUST 31, 1999 AUGUST 31, 1998
--------------- --------------- --------------- ---------------
INCREASE/(DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income .............. $ 1,030,410 $ 979,325 $ 1,429,705 $ 1,809,232
Net gain/(loss) on investments,
futures and foreign currency
transactions ..................... (944,193) 541,320 (570,760) (247,851)
------------- ------------- ------------- -------------
Net increase in net assets resulting
from operations .................. 86,217 1,520,645 858,945 1,561,381
------------- ------------- ------------- -------------
Dividends and Distributions to
shareholders:
From net investment income:
Institutional shares ........... (1,031,337) (976,336) (548,508) (1,133,693)
Common shares .................... (4,114) -- (37) --
From net realized capital gains:
Institutional shares ............. (320,024) (154,615) (530,896) (1,162,260)
Common shares .................... (14) -- (18) --
------------- ------------- ------------- -------------
Total distributions to shareholders (1,355,489) (1,130,951) (1,079,459) (2,295,953)
------------- ------------- ------------- -------------
Net capital share transactions ....... 1,674,840 2,028,820 (903,152) (15,067,445)
------------- ------------- ------------- -------------
Total increase/(decrease)
in net assets .................... 405,568 2,418,514 (1,123,666) (15,802,017)
NET ASSETS:
Beginning of year .................. 22,228,632 19,810,118 28,483,384 44,285,401
------------- ------------- ------------- -------------
End of year ........................ $ 22,634,200 $ 22,228,632 $ 27,359,718 $ 28,483,384
============= ============= ============= =============
</TABLE>
See Accompanying Notes to Financial Statements.
86 & 87
<PAGE>
WARBURG PINCUS FUNDS
U.S. CORE FIXED INCOME FUND FINANCIAL HIGHLIGHTS
(For a Share Outstanding Throughout Each Period)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INSTITUTIONAL COMMON
------------------------------------------------------- -----------------
FOR THE PERIOD
FOR THE YEAR ENDED AUGUST 31, OCTOBER 30, 1998*
------------------------------------------------------- TO AUGUST 31,
1999 1998 1997 1996 1995 1999
------- ------- ------- ------- ------- -----------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 15.72 $ 15.65 $ 15.06 $ 15.42 $ 14.77 $15.68
------- ------- ------- ------- ------- ------
Income from investment operations
Net investment income 0.93 0.84 0.92 0.95 0.88 0.74
Net gain/(loss) on investments,
futures and foreign currency
transactions (both realized and
unrealized) (0.56) 0.33 0.76 (0.16) 0.61 (0.58)
------- ------- ------- ------- ------- ------
Total from investment operations 0.37 1.17 1.68 0.79 1.49 0.16
------- ------- ------- ------- ------- ------
Less Distributions
Dividends from net investment
income (0.91) (0.87) (0.97) (0.93) (0.84) (0.68)
Distributions from capital gains (0.17) (0.23) (0.12) (0.22) -- (0.17)
------- ------- ------- ------- ------- ------
Total distributions (1.08) (1.10) (1.09) (1.15) (0.84) (0.85)
------- ------- ------- ------- ------- ------
Net asset value, end of period $ 15.01 $ 15.72 $ 15.65 $ 15.06 $ 15.42 $14.99
======= ======= ======= ======= ======= ======
Total return 2.37% 7.77% 11.53% 5.23% 10.60% 1.00%(c)
Ratios/Supplemental Data:
Net assets, end of period
(000s omitted) $350,844 $393,533 $177,219 $118,596 $99,250 $104
Ratio of expenses to average
net assets 0.44%(a) 0.47%(a) 0.50%(a) 0.50%(a) 0.50%(a) 0.70%(a)(b)
Ratio of net investment income
(loss) to average net assets 5.90% 5.87% 6.31% 6.43% 6.47% 5.82%(b)
Fund turnover rate 569% 372% 372% 201% 304% 569%(c)
<FN>
- --------------------------------------------------------------------------------------------------------------------------
(a) Without the voluntary waiver of advisory fees and administration fees, the
ratios of expenses to average net assets for the Institutional Class would
have been .62%, .74%, .78%, .78% and .84% for the years ended August 31,
1999, 1998, 1997, 1996 and 1995, respectively. Without the voluntary waiver
of advisory fees and administration fees, the ratios of expenses to average
net assets for the Common Class would have been .90% annualized for the
period ended August 31, 1999.
(b) Annualized.
(c) Not Annualized.
* Inception Date.
</FN>
</TABLE>
See Accompanying Notes to Financial Statements.
88
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
89
<PAGE>
WARBURG PINCUS FUNDS
HIGH YIELD FUND FINANCIAL HIGHLIGHTS
(For a Share Outstanding Throughout each Period)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INSTITUTIONAL
---------------------------------------------------
FOR THE YEAR ENDED AUGUST 31,
---------------------------------------------------
1999 1998 1997 1996 1995
------- ------- ------- ------- ------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period . $16.60 $ 17.08 $ 16.09 $15.72 $15.94
------ ------- ------- ------ ------
Income from investment operations
Net investment income 1.42 1.43 1.37 1.47 1.42
Net gain/(loss) on investments (both
realized and unrealized) (1.33) (0.49) 0.96 0.40 (0.30)
------ ------- ------- ------ ------
Total from investment operations 0.09 0.94 2.33 1.87 1.12
------ ------- ------- ------ ------
Less Distributions
Dividends from net investment income (1.37) (1.42) (1.34) (1.50) (1.34)
Distributions from capital gains -- -- -- -- --
------ ------- ------- ------ ------
Total distributions (1.37) (1.42) (1.34) (1.50) (1.34)
------ ------- ------- ------ ------
Net asset value, end of period $15.32 $ 16.60 $ 17.08 $16.09 $15.72
====== ======= ======= ====== ======
Total return 0.67% 5.48% 15.17% 12.42% 7.79%(d)
Ratios/Supplemental Data:
Net assets, end of period (000s omitted) $95,129 $94,044 $92,630 $75,849 $153,621
Ratio of expenses to average
net assets 0.69%(a) 0.70%(a) 0.70%(a) 0.88%(a) 1.00%(a)
Ratio of net investment income (loss)
to average net assets 9.10% 8.12% 8.44% 8.92% 9.37%
Fund turnover rate 40% 60% 84% 143% 70%
</TABLE>
<TABLE>
<CAPTION>
COMMON
---------------------------------------------------
FOR THE PERIOD
FOR THE YEAR ENDED AUGUST 31, NOVEMBER 1, 1996*
----------------------------- TO AUGUST 31,
1999 1998 1997
------ ------ ------
<S> <C> <C> <C>
Net asset value, beginning of period . $16.62 $17.08 $16.21
------ ------ ------
Income from investment operations
Net investment income 1.39(DAGGER) 1.36 0.93
Net gain/(loss) on investments (both
realized and unrealized) (1.34) (0.45) 0.87
------ ------ ------
Total from investment operations 0.05 0.91 1.80
------ ------ ------
Less Distributions
Dividends from net investment income (1.29) (1.37) (0.93)
Distributions from capital gains -- -- --
------ ------ ------
Total distributions (1.29) (1.37) (0.93)
------ ------ ------
Net asset value, end of period $15.38 $16.62 $17.08
====== ====== ======
Total return 0.39% 5.27% 11.49%(c)
Ratios/Supplemental Data:
Net assets, end of period (000s omitted) $34,024 $ 570 $ 86
Ratio of expenses to average
net assets 0.95%(a) 0.95%(a) 0.96%(a)(b)
Ratio of net investment income (loss) to
average net assets 8.86% 7.96% 8.13%(b)
Fund turnover rate 40% 60% 84%(c)
<FN>
- ----------------------------
(a)Without the voluntary waiver of advisory fees and administration fees, the
ratios of expenses to average net assets for the Institutional Class would
have been 1.04%, 1.14%, 1.13%, 1.11%, and 1.08% for the years ended August
31, 1999, 1998, 1997, 1996, and 1995 respectively. Without the voluntary
waiver of advisory fees and administration fees, the ratios of expenses to
average net assets for the Common Class would have been 1.34% and 1.39% for
the years ended August 31, 1999 and 1998, respectively, and 1.47% annualized
for the period ended August 31, 1997.
(b) Annualized.
(c) Not annualized.
(d) Redemption fees not reflected in total return.
* Inception Date.
(DAGGER)Per share information is calculated using the average share outstanding
method.
</FN>
</TABLE>
See Accompanying Notes to Financial Statements.
90 & 91
<PAGE>
WARBURG PINCUS FUNDS
MUNICIPAL BOND FUND FINANCIAL HIGHLIGHTS
(For a Share Outstanding Throughout Each Period)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INSTITUTIONAL COMMON
--------------------------------------------------- -----------------
FOR THE PERIOD
FOR THE YEAR ENDED AUGUST 31, OCTOBER 30, 1998*
--------------------------------------------------- TO AUGUST 31,
1999 1998 1997 1996 1995 1999
------- ------- ------- ------- ------- ------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 15.12 $ 14.84 $ 14.65 $ 15.46 $ 15.06 $15.14
------- ------- ------- ------- ------- ------
Income from investment operations
Net investment income 0.67 0.70 0.72 0.73 0.71 0.54
Net gain/(loss) on investments
(both realized and unrealized) (0.60) 0.40 0.65 (0.37) 0.50 (0.66)
------- ------- ------- ------- ------- ------
Total from investment operations 0.07 1.10 1.37 0.36 1.21 (0.12)
------- ------- ------- ------- ------- ------
Less Distributions
Dividends from net investment
income (0.68) (0.71) (0.72) (0.74) (0.76) (0.52)
Distributions from capital gains (0.21) (0.11) (0.46) (0.43) (0.05) (0.21)
------- ------- ------- ------- ------- ------
Total distributions (0.89) (0.82) (1.18) (1.17) (0.81) (0.73)
------- ------- ------- ------- ------- ------
Net asset value, end of period $ 14.30 $ 15.12 $ 14.84 $ 14.65 $ 15.46 $14.29
======= ======= ======= ======= ======= ======
Total return 0.36% 7.62% 9.74% 2.27% 8.42% (0.85)%(c)
Ratios/Supplemental Data:
Net assets, end of period
(000s omitted) $22,423 $22,229 $19,810 $19,581 $48,978 $ 211
Ratio of expenses to average
net assets 0.99%(a) 1.00%(a) 1.00%(a) 1.00%(a) 1.00%(a) 1.26%(a)(b)
Ratio of net investment income
(loss) to average net assets 4.49% 4.72% 4.88% 4.62% 4.76% 4.44%(b)
Fund turnover rate 26% 57% 43% 34% 25% 26%(c)
<FN>
- -------------------
(a) Without the voluntary waiver of advisory fees and administration fees, the
ratios of expenses to average net assets for the Institutional Class would
have been 1.43%, 1.39%, 1.37%, 1.42% and 1.19% for the years ended August
31, 1999, 1998, 1997, 1996 and 1995, respectively. Without the voluntary
waiver of advisory fees and administration fees, the ratios of expenses to
average net assets for the Common Class would have been 1.71% annualized for
the period ended August 31, 1999.
(b) Annualized.
(c) Not Annualized.
* Inception Date.
</FN>
</TABLE>
See Accompanying Notes to Financial Statements.
92
<PAGE>
WARBURG PINCUS FUNDS
STRATEGIC GLOBAL FIXED INCOME FUND FINANCIAL HIGHLIGHTS
(For a Share Outstanding Throughout Each Period)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INSTITUTIONAL COMMON
------------------------------------------------------------- ------------------
FOR THE PERIOD
FOR THE YEAR ENDED AUGUST 31, OCTOBER 30, 1998*
------------------------------------------------------------- TO AUGUST 31,
1999 1998 1997 1996 1995 1999
------- ------- ------- ------- ------- ------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 15.10 $ 15.41 $ 15.75 $ 15.67 $ 15.00 $16.10
------- ------- ------- ------- ------- ------
Income from investment operations
Net investment income 0.79 0.87 0.85 0.87 1.06 0.63
Net gain/(loss) on investments, futures
and foreign currency transactions
(both realized and unrealized) (0.35) (0.25) (0.16) 0.58 0.49 (1.26)
------- ------- ------- ------- ------- ------
Total from investment operations 0.44 0.62 0.69 1.45 1.55 (0.63)
------- ------- ------- ------- ------- ------
Less Distributions
Dividends from net
investment income (0.29) (0.45) (0.71) (1.22) (0.88) (0.28)
Distributions from capital gains (0.28) (0.48) (0.32) (0.15) -- (0.28)
------- ------- ------- ------- ------- ------
Total distributions (0.57) (0.93) (1.03) (1.37) (0.88) (0.56)
------- ------- ------- ------- ------- ------
Net asset value, end of period $ 14.97 $ 15.10 $ 15.41 $ 15.75 $ 15.67 $14.91
======= ======= ======= ======= ======= ======
Total return 2.78% 4.19% 4.48% 9.65% 10.72% (4.09)%(c)
Ratios/Supplemental Data:
Net assets, end of period
(000s omitted) $27,342 $28,483 $44,285 $38,348 $19,565 $ 18
Ratio of expenses to
average net assets 0.74%(a) 0.75%(a) 0.75%(a) 0.75%(a) 0.75%(a) 1.00%(a)(b)
Ratio of net investment
income (loss) to average
net assets 4.96% 5.30% 5.31% 7.37% 7.26% 4.80%(b)
Fund turnover rate 305% 283% 98% 87% 91% 305%(c)
<FN>
- ----------------
(a) Without the voluntary waiver of advisory fees and administration fees, the
ratios of expenses to average net assets for the Institutional Class would
have been 1.27%, 1.17%, 0.98%, 1.07% and 1.29% for the years ended August
31, 1999, 1998, 1997, 1996 and 1995, respectively. Without the voluntary
waiver of advisory fees and administration fees, the ratios of expenses to
average net assets for the Common Class would have been 1.56% annualized for
the period ended August 31, 1999.
(b) Annualized.
(c) Not Annualized.
* Inception Date.
</FN>
</TABLE>
See Accompanying Notes to Financial Statements.
93
<PAGE>
WARBURG PINCUS FUNDS
NOTES TO FINANCIAL STATEMENTS
August 31, 1999
- --------------------------------------------------------------------------------
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Warburg Pincus Funds covered in this report are comprised of Warburg,
Pincus U.S. Core Fixed Income Fund, Inc. ("Core Fixed"), Warburg, Pincus High
Yield Fund, Inc. ("High Yield"), Warburg, Pincus Municipal Bond Fund, Inc.
("Municipal") and Warburg, Pincus Strategic Global Fixed Fund, Inc. ("Global
Fixed"), (each, a "Fund" and collectively, the "Funds"), which are registered
under the Investment Company Act of 1940 , as amended (the "1940 Act"), as
non-diversified, open-end management investment companies. Each Fund is
authorized to offer three classes of shares: Common, Advisor and Institutional,
although only Common shares and Institutional shares of each Fund are currently
offered. Common shares for each Fund bear expenses paid pursuant to a
shareholder servicing and distribution at an annual rate not to exceed .25% of
the average daily net asset value of the Fund's outstanding Common shares. In
addition, the common shares bear a co-administrative fee.
On October 23, 1998, pursuant to an Agreement and Plan of Reorganization,
each Fund acquired all of the assets and liabilities of a corresponding
investment series of The RBB Fund, Inc. (each an "Acquired Fund" and
collectively, the "Acquired Funds"). The acquisitions were accomplished by a
tax-free exchange of the following shares of each Fund, in each case for the
same amount of shares of the corresponding class of the applicable Acquired
Fund. Shares were reissued to shareholders at the time of the reorganization.
FUND COMMON SHARES INSTITUTIONAL SHARES
----------------------- -------------- --------------------
Core Fixed -- 25,307,129
High Yield 34,314 5,655,408
Municipal -- 1,483,582
Global Fixed -- 1,875,514
The net assets of each Fund directly after the reorganization were the same
as the corresponding Acquired Fund as described in the table below. Each Fund
assumed the prior operating history of the corresponding Acquired Fund.
UNREALIZED
FUND NET ASSETS APPRECIATION/(DEPRECIATION)*
------ ----------------- ----------------------------
Core Fixed $395,200,568 $(3,009,982)
High Yield 87,873,344 (5,030,237)
Municipal 22,404,233 1,280,536
Global Fixed 30,261,883 526,957
- -------------------
*The amount of each Fund's net assets includes the amount of unrealized
appreciation/(depreciation) listed above.
94
<PAGE>
WARBURG PINCUS FUNDS
NOTES TO FINANCIAL STATEMENTS (CONT'D)
August 31, 1999
- --------------------------------------------------------------------------------
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- (CONT'D)
Certain of the Funds are permitted to engage in the investment strategies
described in the Notes to Financial Statements. The Funds are not obligated to
pursue any of the following strategies and do not represent that these
techniques are available now or will be available at any time in the future.
Please refer to each Fund's prospectus(es) and statements of additional
information for a description of its investment strategies.
A) SECURITY VALUATION -- The net asset value of each Fund is
determined daily as of the close of regular trading on The New York Stock
Exchange Inc. Each Fund's securities for which market quotations are
readily available are valued at market value, which is currently determined
using the last reported sales price. If no sales are reported, as in the
case of some securities traded over-the-counter, the securities are valued
at the mean between the last reported bid and asked prices. All other
securities and assets are valued as determined in good faith by the Fund's
Board of Directors. Short-term obligations with a remaining maturity of 60
days or less are valued at amortized cost, which approximates market value.
B) FOREIGN CURRENCY TRANSACTIONS -- Transactions denominated in
foreign currencies are recorded in each Fund's records at the current
prevailing exchange rates. Asset and liability accounts that are
denominated in a foreign currency are adjusted daily to reflect current
exchange rates. Transaction gains or losses resulting from changes in
exchange rates during the reporting period or upon settlement of the
foreign currency transaction are reported in operations for the current
period. It is not practical to isolate that portion of both realized and
unrealized gains and losses on investments in the statement of operations
that result from fluctuations in foreign currency exchange rates. Each Fund
reports certain foreign currency related transactions as components of
realized gains for financial reporting purposes, whereas such components
are treated as ordinary income (loss) for Federal income tax purposes.
C) SECURITY TRANSACTIONS AND INVESTMENT INCOME -- Security
transactions are accounted for on the trade date. The cost of investments
sold is determined by use of the specific identification method for both
financial reporting and income tax purposes. Interest income is recorded on
the accrual basis. Dividends are recorded on the ex-dividend date. Certain
expenses are class specific expenses and vary by class. Expenses not
directly attributable to a specific Fund or class are
95
<PAGE>
WARBURG PINCUS FUNDS
NOTES TO FINANCIAL STATEMENTS (CONT'D)
August 31, 1999
- --------------------------------------------------------------------------------
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- (CONT'D)
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. Core Fixed,
Global Fixed and High Yield will distribute substantially all if its net
realized capital gains, if any, to its shareholders at least annually and
will distribute net investment income at least quarterly. Municipal will
distribute substantially all of its net realized capital gains, if any, at
least annually and all net investment income monthly.
The character of distributions made during the year for net
investment income or net realized gains may differ from their ultimate
characterization for federal income tax purposes due to generally accepted
accounting principles (GAAP) and tax differences in the character of income
and expense recognition. These differences are primarily due to differing
treatments for net operating losses, paydowns on mort gage-backed
securities, passive foreign investment companies, and forward foreign
currency contracts. To the extent these differences are permanent in
nature, such amounts are reclassified within capital accounts based on
their U.S. federal tax-basis treatment. Temporary differences do not
require reclassification. At August 31, 1999, Core Fixed, High Yield,
Municipal and Global Fixed reclassified $248,422, 37,862, $71,099 and
$274,840, respectively, from accumulated net realized gain/(loss) to
undistributed net investment income. Municipal reclassified $373 from
accumulated net investment income/(loss) to capital contributions.
Municipal reclassified $(11,128) from accumulated net realized gain/(loss)
to capital contributions.
E) FEDERAL INCOME TAXES -- No provision is made for Federal taxes
as it is each Fund's intention to qualify for and elect the tax treatment
applicable to regulated investment companies under the Internal Revenue
Code of 1986, as amended, and make the requisite distributions to its
shareholders which will be sufficient to relieve it from Federal income and
excise taxes.
F) USE OF ESTIMATES -- The preparation of financial statements in
conformity with GAAP requires management to make estimates and assumptions
that affect the reported amounts of assets and
96
<PAGE>
WARBURG PINCUS FUNDS
NOTES TO FINANCIAL STATEMENTS (CONT'D)
August 31, 1999
- --------------------------------------------------------------------------------
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- (CONT'D)
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 securitiesdepository. None of the Funds had an open
repurchase agreement at August 31, 1999.
H) FUTURES TRANSACTIONS -- A Fund invests in futures contracts for
the purpose of hedging its existing portfolio securities, or securities
that the Fund intends to purchase, against fluctuations in fair value
caused by changes in prevailing market interest rates or securities prices,
or for other purposes. Certain Fund's may enter into futures contracts
subject to certain limitations. Upon entering into a futures contract, each
Fund is required to deposit cash or pledge U.S. Government securities of an
initial margin. Subsequent payments, which are dependent on the daily
fluctuations in the value of the underlying instrument, are made or
received by the Fund each day (daily variations margin) and are recorded as
unrealized gains or losses until the contracts are closed. When the
contracts are closed, the Fund records a realized gain or loss equal to the
difference between the proceeds from (or cost of) the closing transaction
and the Fund's basis in the contracts. Risks of entering into futures
contracts include the possibility that there will be an imperfect price
correlation between the futures contracts and the underlying securities.
Second, it is possible that a lack of liquidity for futures contracts could
exist in the secondary market, resulting in an inability to close a futures
position prior to its maturity date. Third, the purchase of a futures
contract involves the risk that a Fund could lose more than the original
margin deposit required to initiate a futures transaction.
97
<PAGE>
WARBURG PINCUS FUNDS
NOTES TO FINANCIAL STATEMENTS (CONT'D)
August 31, 1999
- --------------------------------------------------------------------------------
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- (CONT'D)
As of August 31, 1999, Core Fixed held the following futures contracts:
<TABLE>
<CAPTION>
FUTURES EXPIRATION CONTRACT CONTRACT UNREALIZED
CONTRACTS DATE AMOUNT VALUE GAIN/LOSS
----------- -------- ------------ ------------ ---------
<S> <C> <C> <C> <C>
U.S. Treasury 5 Year Note Futures 12/20/99 $ 6,163,110 $ 6,152,438 $ (10,672)
U.S. Treasury 10 Year Note Futures 12/20/99 (27,947,922) (27,667,922) 280,000
U.S. Treasury Bond Futures 12/20/99 16,991,383 16,981,344 (10,039)
Japan 10 Year Bond Futures 09/08/99 (15,785,870) (15,483,813) 302,057
</TABLE>
As of August 31, 1999, Global Fixed held the following futures contracts:
<TABLE>
<CAPTION>
FUTURES EXPIRATION CONTRACT CONTRACT UNREALIZED
CONTRACTS DATE AMOUNT VALUE GAIN/LOSS
----------- -------- ------------ ------------ ---------
<S> <C> <C> <C> <C>
U.S. Treasury 2 year Note Futures 12/29/99 $ 9,137,563 $ 9,108,000 $(29,563)
U.S. Treasury 5 Year Note Futures 12/20/9 1,194,243 1,187,313 (6,930)
U.S. Treasury 10 Year Note Futures 12/20/99 (3,755,414) (3,718,219) 37,195
Euro 10 Year Bond Futures 09/10/99 806,555 797,543 (9,012)
</TABLE>
I) OPTION TRANSACTIONS -- When a Fund writes or purchases a call
or a put option, an amount equal to the premium received or paid by the
Fund is recorded as a liability or asset, the value of which is
marked-to-market daily to reflect the current market value of the option.
When the option expires, the Fund realizes a gain or loss equal to the
amount of the premium received or paid. When the Fund exercises an option
or enters into a closing transaction by purchasing or selling an offsetting
option, it realizes a gain or loss without regard to any unrealized gain or
loss to underlying security. The potential loss associated with purchasing
an option is limited to the premium paid, and the premium would partially
offset any gains achieved from its use.
J) TBA PURCHASE COMMITMENTS -- The Funds may enter into "TBA" (to
be announced) purchases commitments to purchase securities for a fixed
price at a future date, typically not exceeding 45 days. TBA purchase
commitments may be considered securities in themselves,and involve a risk
of loss if the value of the security to be purchased declines prior to
settlement date. This risk is in addition to the risk of decline in each
Fund's other assets. Unsettled TBA purchase commitments are valued at the
current market value of the underlying securities, according to the
procedures described under "Security Valuation" above.
K) SECURITIES LENDING -- Loans of securities are required at all
times to be secured by collateral at least equal to 102% of the market
value of domestic securities on loan including any accrued interest thereon
and 105% of the market value of foreign securities on loan
98
<PAGE>
WARBURG PINCUS FUNDS
NOTES TO FINANCIAL STATEMENTS (CONT'D)
August 31, 1999
- --------------------------------------------------------------------------------
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- (CONT'D)
including any accrued interest thereon. Cash collateral received by the
Funds in connection with securities lending activity is invested in the
Boston Global Investment Trust. However, in the event of default or
bankruptcy by the other party to the agreement, realization and/or
retention of the collateral may be subject to legal proceedings.
None of the Funds had any securities on loan to brokers at Augut 31, 1999.
L) SHORT SALES -- When a Fund's investment adviser believes that a
security is overvalued, it may sell the security short by borrowing the
same security from a broker or other institution and selling the security.
A Fund will incur a loss as a result of the short sale if the price of the
borrowed security increases between the date of the short sale and the date
on which the Fund replaces such security. A Fund will realize a gain if
there is a decline in price of the security between those dates, which
decline exceeds the cost of the borrowing the security and other
transaction costs. There can be no assurance that a Fund will be able to
close out a short position at any particular time or at an acceptable
price. Although a Fund's gain is limited to the amount at which it has sold
a security short, its potential loss is limited only by the maximum
attainable price of the security less the price at which the security was
sold. Until a Fund replaces a borrowed security, it will maintain at all
times cash or liquid securities in an amount which, when added to any
amount deposited with a broker as collateral will at least equal the
current market value of the security sold short. Depending on arrangements
made with brokers, a Fund may not receive any payments (including interest)
on collateral deposited with them.
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.
99
<PAGE>
WARBURG PINCUS FUNDS
NOTES TO FINANCIAL STATEMENTS (CONT'D)
August 31, 1999
- --------------------------------------------------------------------------------
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- (CONT'D)
The securities exchanges of certain foreign markets are
substantially smaller, less liquid and more volatile than the major
securities markets in the United States. Consequently, acquisition and
disposition of securities by each Fund may be inhibited. In addition, a
significant proportion of the aggregate market value of equity securities
listed on the major securities exchanges in emerging markets are held by a
smaller number of investors. This may limit the number of shares available
for acquisition or disposition by a Fund.
Lower-rated debt securities (commonly known as "junk bonds")
possess speculative characteristics and are subject to greater market
fluctuations and risk of lost income and principal than higher-rated debt
securities for a variety of reasons. Also, during an economic downturn or
substantial period of rising interest rates, highly leveraged issuers may
experience financial stress which would adversely affect their ability to
service their principal and interest payment obligations, to meet projected
business goals and to obtain additional financing.
In addition, periods of economic uncertainty and change can be
expected to result in increased volatility of market prices of lower-rated
debt securities and (to the extent a Fund invest in junk bonds) the Fund's
net asset value.
NOTE 2. TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES
Effective July 6, 1999, the Funds' investment adviser, Credit Suisse Asset
Management became Credit Suisse Asset Management, LLC. In addition, in
connection with the closing of the acquisition of Warburg Pincus Asset
Management, Inc. by Credit Suisse Group, Warburg Pincus Asset Management, Inc.
was merged into Credit Suisse Asset Management, LLC. Credit Suisse Asset
Management had previously changed its name from BEA Associates effective January
1, 1999.
Pursuant to Investment Advisory Agreements, Credit Suisse Asset Management,
LLC ("CSAM") an indirect, wholly-owned subsidiary of Credit Suisse Group, serves
as investment advisor for each of the four 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:
100
<PAGE>
WARBURG PINCUS FUNDS
NOTES TO FINANCIAL STATEMENTS (CONT'D)
August 31, 1999
- --------------------------------------------------------------------------------
NOTE 2. TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES -- (CONT'D)
FUND ANNUAL RATE
-------------------------- ----------------------------------
Core Fixed 0.375% of average daily net assets
High Yield 0.70% of average daily net assets
Municipal 0.70% of average daily net assets
Global Fixed 0.50% of average daily net assets
CSAM may, at its discretion, voluntarily waive all or any portion of its
advisory fee for any of the Funds. For the year ended August 31, 1999 advisory
fees and waivers for each of the four investment Funds were as follows:
GROSS NET
FUND ADVISORY FEE WAIVER ADVISORY FEE
------ ------------ ---------- ------------
Core Fixed $1,436,025 $(608,214) $827,811
High Yield 903,069 (405,408) 497,661
Municipal 160,667 (95,749) 64,918
Global Fixed 144,265 (144,265) --
CSAM reimbursed expenses of Global Fixed in the amount of $3,649 for the year
ended August 31, 1999.
For its-sub-advisory services, Credit Suisse Asset Management Limited ("CSAM
Limited"), an indirect, wholly-owned subsidiary of Credit Suisse Group, is
entitled to receive from CSAM .30% of the daily net assets of Global Fixed. For
the year ended, August 31, 1999, CSAM Limited was entitled to receive $86,559
from CSAM for sub-advisory services provided to Global Fixed which was waived.
State Street Bank and Trust Company ("State Street"), serves as each Fund's
transfer and dividend disbursement agent. State Street has delegated most of its
Fund service obligations to Boston Financial Data Services, Inc. (BFDS), a 50%
owned subsidiary of State Street.
Counsellors Funds Service, Inc. ("CFSI"), a wholly-owned subsidiary of Credit
Suisse Asset Management, LLC, and PFPC, Inc. ("PFPC"), an indirect, wholly-owned
subsidiary of PNC Bank Corp., serve as each Fund's co-administrator. For
administration services, each Fund pays CFSI a fee calculated at an annual rate
.05% of the Fund's first $125 million in average daily nets assets of the Common
shares and .10% of average daily net assets of the Common shares over $125
million. No compensation is payable by the Funds to CFSI for co-administration
services for the Institutional shares. CFSI may, at its discretion, voluntarily
waive all or any portion of its co-administration fees for any of the Funds. For
the period October 24, 1998 to August 31, 1999, co-administration fees earned by
CFSI on the Common shares were as follows:
101
<PAGE>
WARBURG PINCUS FUNDS
NOTES TO FINANCIAL STATEMENTS (CONT'D)
August 31, 1999
- --------------------------------------------------------------------------------
NOTE 2. TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES -- (CONT'D)
GROSS NET
FUND ADMINISTRATION FEE WAIVER ADMINISTRATION FEE
------ ------------------ ------- ------------------
Core Fixed $ 22 $ (18) $ 4
High Yield 12,663 (9,930) 2,733
Municipal 49 (40) 9
Global Fixed 5 (4) 1
Prior to October 23, 1998, Provident Distributors, Inc. ("PDI") served as
administrative service agent. An administrative service fee was computed daily
and payable quarterly at an annual rate of .15% of the average daily net assets
of each Fund's corresponding portfolio of The RBB Fund.
The administrative agent may at its discretion voluntarily waive all or any
portion of its administrative fee for any of the Funds. For the period September
1, 1998 through October 23, 1998, administrative service fees earned and waived
by PDI were as follows:
GROSS ADMINISTRATIVE NET ADMINISTRATIVE
FUND SERVICE FEE WAIVER SERVICE FEE
------ ------------------- --------- -----------------
Core Fixed $86,637 $(80,861) $5,776
High Yield 19,734 (18,418) 1,316
Municipal 4,874 (4,548) 326
Global Fixed 6,441 (6,012) 429
For administration services, PFPC currently receives a fee calculated at
annual rate of .125% on each Fund's average daily net assets, subject to a
minimum annual fee and exclusive of out-of-pocket expenses. PFPC may, at its
discretion, voluntarily waive all or any portion of its administration fee for
any of the Funds. For the year ended August 31, 1999, the co-administration fees
earned and waived by PFPC were as follows:
GROSS ADMINISTRATIVE NET ADMINISTRATIVE
FUND SERVICE FEE WAIVER SERVICE FEE
------ ------------------- -------- -----------------
Core Fixed $286,470 $ -- $286,470
High Yield 161,262 (32,252) 129,010
Municipal 37,500 -- 37,500
Global Fixed 50,059 -- 50,059
102
<PAGE>
WARBURG PINCUS FUNDS
NOTES TO FINANCIAL STATEMENTS (CONT'D)
August 31, 1999
- --------------------------------------------------------------------------------
NOTE 2. TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES -- (CONT'D)
Credit Suisse Asset Management Securities Inc. ("CSI"), also a wholly-owned
subsidiary of Credit Suisse Asset Management, LLC, serves as each Fund's
distributor. No compensation is payable by any Fund to CSI for its distribution
services for Institutional shares. For its distribution services for the Common
shares, CSI receives a fee calculated at an annual rate .25% of the average
daily net assets of the Common shares of each Fund. For the year ended August
31, 1999, distribution fees earned by CSI were as follows:
FUND DISTRIBUTION FEE
------ ----------------
Core Fixed $ 111
High Yield 63,586
Municipal 247
Global Fixed 25
NOTE 3. PURCHASES AND SALES OF SECURITIES
For the period ended August 31, 1999, purchases and sales of investment
securities (other than short-term investments) were as follows:
INVESTMENT SECURITIES SHORT SECURITIES
------------------------------- ----------
FUND PURCHASES SALES SALES
------ -------------- -------------- ----------
Core Fixed $2,321,888,522 $2,373,949,386 $3,757,406
High Yield 87,338,937 49,422,453 --
Municipal 6,458,587 5,674,568 --
Global Fixed 88,117,516 90,559,751 86,709
NOTE 4. CAPITAL SHARES
Transactions in capital shares for each period were as follows:
<TABLE>
<CAPTION>
U.S. CORE FIXED INCOME FUND
---------------------------------------------------------------------------------------
INSTITUTIONAL COMMON
------------------------------------------------------ ---------------------------------
FOR THE YEAR ENDED FOR THE YEAR ENDED FOR THE PERIOD OCTOBER 30, 1998*
AUGUST 31, 1999 AUGUST 31, 1998 THROUGH AUGUST 31, 1999
------------------------- ------------------------- ---------------------------------
SHARES VALUE SHARES VALUE SHARES VALUE
---------- ------------- ---------- ------------ -------- --------
<S> <C> <C> <C> <C> <C> <C>
Shares sold 16,356,857 $ 252,861,810 15,080,236 $237,240,219 10,093 $155,782
Shares issued in
reinvestment of
dividends 1,697,821 26,132,715 906,263 14,074,352 135 2,031
Shares repurchased (19,716,018) (305,132,292) (2,268,321) (35,611,876) (3,294) (49,547)
Net increase/(decrease) (1,661,340) $ (26,137,767) 13,718,178 $215,702,695 6,934 $108,266
<FN>
- ------------------
*Inception Date.
</FN>
</TABLE>
103
<PAGE>
WARBURG PINCUS FUNDS
NOTES TO FINANCIAL STATEMENTS (CONT'D)
August 31, 1999
- --------------------------------------------------------------------------------
NOTE 4. CAPITAL SHARES -- (CONT'D)
<TABLE>
<CAPTION>
HIGH YIELD FUND
----------------------------------------------------------------------------------------------------
INSTITUTIONAL COMMON
------------------------------------------------------- --------------------------------------
FOR THE YEAR ENDED FOR THE YEAR ENDED FOR THE YEAR ENDED FOR THE YEAR ENDED
AUGUST 31, 1999 AUGUST 31, 1998 AUGUST 31, 1999 AUGUST 31, 1998
------------------------ ------------------------ ---------------------- ---------------------
SHARES VALUE SHARES VALUE SHARES VALUE SHARES VALUE
---------- ------------ ---------- ------------ --------- ----------- -------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Shares sold 2,505,861 $ 39,359,915 2,248,712 $ 38,970,312 2,499,612 $39,264,516 266,018 $ 4,697,209
Shares issued in
reinvestment of
dividends 508,551 7,926,308 416,842 7,175,130 105,404 1,641,508 9,315 162,504
Shares repurchased (2,470,735) (38,614,790) (2,423,467 (41,922,050) (427,403) (6,757,008) (246,118) (4,271,516)
---------- ------------ ---------- ------------ --------- ----------- -------- -----------
Net increase 543,677 $ 8,671,433 242,087 $ 4,223,392 2,177,613 $34,149,016 29,215 $ 588,197
========== ============ ========== ============ ========= =========== ======== ===========
</TABLE>
<TABLE>
<CAPTION>
MUNICIPAL BOND FUND
----------------------------------------------------------------------------------------
INSTITUTIONAL COMMON
----------------------------------------------------- ---------------------------------
FOR THE YEAR ENDED FOR THE YEAR ENDED FOR THE PERIOD OCTOBER 30, 1998*
AUGUST 31, 1999 AUGUST 31, 1998 THROUGH AUGUST 31, 1999
------------------------ ------------------------ ---------------------------------
SHARES VALUE SHARES VALUE SHARES VALUE
--------- ------------- --------- ------------ -------- ---------
<S> <C> <C> <C> <C> <C> <C>
Shares sold 179,990 $ 2,675,315 217,663 $ 3,269,230 15,816 $236,022
Shares issued in
reinvestment of
dividends 86,580 1,287,465 70,888 1,064,203 279 4,072
Shares repurchased (168,278) (2,507,954) (153,265) (2,304,613) (1,335) (20,081)
-------- ----------- -------- ----------- ------ --------
NET INCREASE 98,292 $ 1,454,826 135,286 $ 2,028,820 14,760 $220,013
======== =========== ======== =========== ====== ========
</TABLE>
<TABLE>
<CAPTION>
STRATEGIC GLOBAL FIXED INCOME FUND
-----------------------------------------------------------------------------------------
INSTITUTIONAL COMMON
------------------------------------------------------ ---------------------------------
FOR THE YEAR ENDED FOR THE YEAR ENDED FOR THE PERIOD OCTOBER 30, 1998*
AUGUST 31, 1999 AUGUST 31, 1998 THROUGH AUGUST 31, 1999
------------------------- ------------------------- ---------------------------------
SHARES VALUE SHARES VALUE SHARES VALUE
---------- ------------- ---------- ------------ -------- ---------
<S> <C> <C> <C> <C> <C> <C>
Shares sold 56,355 $ 891,603 227,215 $ 3,505,185 2,478 $38,282
Shares issued in
reinvestment of
dividends 68,272 1,075,528 147,509 2,200,318 4 55
Shares repurchased (184,373) (2,889,584) (1,361,892) (20,772,949) (1,251) (19,035)
-------- ----------- --------- ------------ ------ -------
Net increase/(decrease) (59,746) $ (922,453) (987,168) $(15,067,446) 1,231 $19,302
======== =========== ========= ============ ====== =======
<FN>
- ------------------
*Inception Date.
</FN>
</TABLE>
104
<PAGE>
WARBURG PINCUS FUNDS
NOTES TO FINANCIAL STATEMENTS (CONT'D)
August 31, 1999
- --------------------------------------------------------------------------------
NOTE 4. CAPITAL SHARES -- (CONT'D)
On August 31, 1999, the number of shareholders that held 5% or more of the
outstanding shares are as follows:
NUMBER OF APPROXIMATE PERCENTAGE
SHAREHOLDERS OF OUTSTANDING SHARES
-------------- --------------------
Core Fixed Institutional shares 6 43.89%
Core Fixed Common shares 1 94.19
High Yield Institutional shares 4 59.93
High Yield Common shares 3 87.84
Municipal Institutional shares 4 70.71
Municipal Common shares 2 99.52
Global Fixed Institutional shares 3 96.34
Global Fixed Common shares 2 97.30
NOTE 5. FORWARD FOREIGN CURRENCY CONTRACTS
The Funds will generally enter into forward foreign currency exchange
contracts as a way of managing foreign exchange rate risk or to enhance total
return. Each Fund may enter into these contracts to fix the U.S. dollar value of
a security that it has agreed to buy or sell for the period between the date the
trade was entered into and the date the security is delivered and paid for. Each
Fund may also use these contracts to hedge the U.S. dollar value of securities
denominated in foreign currencies that it already owns. The Fund may enter into
these contracts for the purchase or sale of a specific foreign currency at a
fixed price on a future date as a hedge or cross-hedge against either
transactions or portfolio positions.
Forward foreign currency contracts are valued at the forward rate, and are
marked-to-market daily. The change in market value is recorded by each Fund as
an unrealized gain or loss. When the contract is closed, each Fund records a
realized gain or loss equal to the difference between the value of the contract
at the time it was opened and the value at the time it was closed. Each Fund's
policy is to include this portion of realized and unrealized gains and losses on
investments that result from foreign currency changes with other foreign
currency gains and losses on the Statement of Operations.
The use of forward foreign currency contracts does not eliminate fluctuations
in the underlying prices of each Fund's portfolio securities, but it does
establish a rate of exchange that can be achieved in the future. Although
forward foreign currency contracts limit the risk of loss due to a decline in
the value of the hedged currency, they also limit any potential gain that might
result should the value of the currency increase. In addition, the Fund could be
exposed to risks if the counterparty to the contract is unable to meet the terms
of their contract. During the year ended August 31, 1999,
105
<PAGE>
WARBURG PINCUS FUNDS
NOTES TO FINANCIAL STATEMENTS (CONT'D)
August 31, 1999
- --------------------------------------------------------------------------------
NOTE 5. FORWARD FOREIGN CURRENCY CONTRACTS -- (CONT'D)
Global Fixed and Core Fixed entered into forward foreign currency contracts.
Core Fixed had no open forward foreign contracts at August 31, 1999.
The Global Fixed had open forward foreign currency contracts at August 31,
1999 as follows:
<TABLE>
<CAPTION>
FOREIGN UNREALIZED
FORWARD CURRENCY EXPIRATION CURRENCY CONTRACT CONTRACT FOREIGN EXCHANGE
CONTRACT DATE TO BE SOLD AMOUNT VALUE GAIN/(LOSS)
---------------- --------- ---------- ---------- ---------- ---------------
<S> <C> <C> <C> <C> <C>
Danish Krona 09/28/99 $5,579,200 $ 783,926 $ 792,394 $ (8,468)
Euro 09/15/99 1,360,092 1,415,427 1,441,417 (25,990)
Great Britain Pound 09/15/99 600,000 932,913 965,808 (32,895)
---------- ---------- --------
$3,132,266 $3,199,619 $(67,353)
========== ========== ========
</TABLE>
<TABLE>
<CAPTION>
FOREIGN UNREALIZED
FORWARD CURRENCY EXPIRATION CURRENCY CONTRACT CONTRACT FOREIGN EXCHANGE
CONTRACT DATE TO BE PURCHASED AMOUNT VALUE GAIN/(LOSS)
---------------- --------- --------------- ----------- ----------- ---------------
<S> <C> <C> <C> <C> <C>
CANADIAN DOLLAR 09/10/99 533,255 $ 359,337 $ 356,516 $ (2,821)
Euro 09/10/99 3,794,314 3,954,813 4,019,485 64,672
Euro 09/15/99 3,444,338 3,602,912 3,650,287 47,375
Japanese Yen 11/10/99 212,948,837 1,876,201 1,970,713 94,512
Swedish Krona 09/10/99 4,939,859 573,070 600,713 27,643
----------- ----------- --------
$10,366,333 $10,597,714 $231,381
=========== =========== ========
</TABLE>
NOTE 6. LINE OF CREDIT
The Funds, together with other funds advised by CSAM, have established a $250
million committed line of credit facility ("Credit Facility") with Deutche Bank,
AG as administrative agent, State Street Bank and Trust Company as operations
agent, Bank of Nova Scotia as syndication agent and certain other lenders, for
temporary or emergency purposes primarily relating to unanticipated portfolio
share redemptions. Under the terms of the Credit Facility, the funds with access
to the Credit Facility pay an aggregate commitment fee at a rate of .075% per
annum on the average daily balance of the Credit Facility that is undisbursed
and uncanceled during the preceding quarter allocated among the participating
funds in such manner as is determined by the governing Boards of the various
funds. In addition, the participating funds will pay interest on borraowing at
the Federal funds rate plus .50%. During the period ended August 31, 1999, the
following fund had borrowings under the line of credit agreement:
<TABLE>
<CAPTION>
AVERAGE DAILY AVERAGE MAXIMUM DAILY LOAN OUTSTANDING
PORTFOLIO LOAN BALANCE INTEREST RATE % LOAN OUTSTANDING AT 8/31/99
---------- ------------- --------------- ---------------- ----------------
<S> <C> <C> <C> <C>
High Yield $516,986 5.67% $10,500,000 $0
</TABLE>
106
<PAGE>
WARBURG PINCUS FUNDS
NOTES TO FINANCIAL STATEMENTS (CONT'D)
August 31, 1999
- --------------------------------------------------------------------------------
NOTE 7. CAPITAL LOSS CARRYOVER
At August 31, 1999, capital loss carryovers were available to offset future
realized gains as follows $15,551,561 in High Yield of which $6,869,153 expires
in 2001, $4,986,021 expires in 2003, $3,354,749 expires in 2005 and $341,638
expires in 2007 and $183,151 in Global Fixed which expires in 2007.
107
<PAGE>
WARBURG PINCUS FUNDS
REPORT OF INDEPENDENT ACCOUNTANTS
- --------------------------------------------------------------------------------
To the Board of Directors and Shareholders Of
Warburg Pincus U.S. Core Fixed Income Fund,
Warburg Pincus High Yield Fund,
Warburg Pincus Municipal Bond Fund and
Warburg Pincus Strategic Global Fixed Income Fund:
In our opinion, the accompanying statements of assets and liabilities,
including the schedules of investments of Warburg Pincus U.S. Core Fixed Income
Fund, Warburg Pincus High Yield Fund, Warburg Pincus Municipal Bond Fund and
Warburg Pincus Strategic Global Fixed Income Fund (all funds collectively
referred to as the "Funds"), and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of the Funds at August 31, 1999, and
the results of each of their operations for the year then ended, the changes in
each of their net assets for each of the two years in the period then ended and
their financial highlights for each of the years (or periods) presented, in
conformity with generally accepted accounting principles. These financial
statements and financial highlights (hereafter referred to as "financial
statements") are the responsibility of the Funds' management; our responsibility
is to express an opinion on these financial statements based on our audits. We
conducted our audits of these financial statements in accordance with generally
accepted auditing standards, which require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits, which included confirmation of securities at August 31, 1999 by
correspondence with the custodian and brokers, provide a reasonable basis for
the opinion expressed above.
PricewaterhouseCoopers LLP
2400 Eleven Penn Center
Philadelphia, PA
October 7, 1999
108
<PAGE>
WARBURG PINCUS FUNDS
TAX INFORMATION LETTERS
- --------------------------------------------------------------------------------
IMPORTANT TAX INFORMATION FOR SHAREHOLDERS OF WARBURG PINCUS MUNICIPAL BOND FUND
(UNAUDITED)
In the twelve months ended August 31, 1999, (the end of the fiscal year), 75%
of the dividends paid by the Fund were exempt-interest dividends for the purpose
of federal income taxes and free from such taxes. In addition, none of such
dividends were attributable to interest on private activity bonds which must be
included in federal alternative minimum taxable income for purposes of
determining liability for federal alternative minimum tax.
In January 2000, you will be furnished with a schedule the yearly percentage
breakdown by state or U.S. possession of the source of interest earned by the
Fund in 1999. It is suggested that you consult your tax advisor concerning the
applicability of State and local taxes to dividends paid by the Fund during the
year.
IMPORTANT TAX INFORMATION FOR SHAREHOLDERS (UNAUDITED)
During the year ended August 31, 1999, the Funds declared the following
dividends from realized capital gains:
SHORT-TERM LONG-TERM
CAPITAL GAIN CAPITAL GAIN
PER SHARE PER SHARE
---------- ----------
Warburg Pincus U.S. Core Fixed Income Fund $0.1537 $0.0196
Warburg Pincus Municipal Bond Fund 0.0397 0.1690
Warburg Pincus Strategic Global Fixed Income Fund 0.1563 0.1270
109
<PAGE>
WARBURG PINCUS FUNDS
YEAR 2000 COMPLIANCE
Not Covered by Independent Accountants Reports
- --------------------------------------------------------------------------------
Many services provided to the Fund's and their shareholders by CSAM and
certain of its affiliates ("CSAMService Providers") and the Fund's other service
providers rely on the functioning of their respective computer systems. Many
computer systems cannot distinguish the year 2000 from the year 1900, resulting
in potential difficulty in performing various calculations ("Year 2000 Issue").
The Year 2000 could potentially have an adverse impact on the handling of
security trades, the payment of interest and dividends, pricing, account
services and other Fund operations. It has been reported that foreign
institutions have made less progress in addressing the Year 2000 Issue than
major U.S. entities, which could adversely affect the portfolios' foreign
investments.
The CSAM Service Providers recognize the importance of the Year 2000 Issue
and are taking appropriate steps necessary in preparation for the year 2000. The
CSAM Service Providers anticipate that their systems and those of the Fund's
other service providers will be adapted in time for the Year 2000. The CSAM
Service Providers have completed mission critical systems testing and have
participated in industry-wide testing programs. In addition, the CSAM Service
Providers are formulating a contingency plan to address the Year 2000 Issue and
anticipate completion of the plan by the end of the third quarter of 1999. The
CSAM Service Providers have also completed investigations of material operations
of the Fund's other major service providers. The CSAM Service Providers continue
to monitor the Year 2000 Issue and its potential impact on the Funds. However,
there can be no assurance that these steps will be sufficient to avoid any
adverse impact on the Funds nor can there be any assurance that the Year 2000
Issue will not have an adverse effect on the Fund's investments or on global
markets or economics, generally.
110
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<PAGE>
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<PAGE>
WARBURG PINCUS FUNDS (LOGO)
[GRAPHIC OMITTED]
P.O. BOX 9030, BOSTON, MA 02205-9030
800-WARBURG (800-927-2874) (TRADE MARK) WWW.WARBURG.COM
CREDIT SUISSE ASSET MANAGEMENT SECURITIES, INC., DISTRIBUTOR. WPBDT-2-0899
