[GRAPHIC OMITTED] [GRAPHIC OMITTED]
WARBURG PINCUS FUNDS CREDIT ASSET
SUISSE MANAGEMENT
SEMIANNUAL
REPORT
FEBRUARY 29, 2000
(UNAUDITED)
WARBURG PINCUS
HIGH YIELD FUND
(BULLET)
WARBURG PINCUS
MUNICIPAL BOND 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.
Provident Distributors, Inc., Distributor, located at Four Falls Corporate
Center, 6th Floor, West Conshohocken, PA 19428-2961 is not affiliated with
Credit Suisse Asset Management, LLC. Warburg Pincus Funds are advised by Credit
Suisse Asset Management, 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 FEBRUARY 29, 2000; THESE
VIEWS AND PORTFOLIO HOLDINGS MAY HAVE CHANGED SUBSEQUENT TO THESE DATES. NOTHING
IN THIS DOCUMENT IS A RECOMMENDATION TO PURCHASE OR SELL SECURITIES.
FUND SHARES ARE NOT DEPOSITS OR OTHER OBLIGATIONS OF CREDIT SUISSE ASSET
MANAGEMENT, LLC ("CSAM") OR ANY AFFILIATE, ARE NOT FDIC INSURED AND ARE NOT
GUARANTEED BY CSAM OR ANY AFFILIATE. FUND INVESTMENTS ARE SUBJECT TO INVESTMENT
RISKS, INCLUDING LOSS OF YOUR INVESTMENT.
<PAGE>
WARBURG PINCUS HIGH YIELD FUND
PORTFOLIO MANAGERS' LETTER -- FEBRUARY 29, 2000
- --------------------------------------------------------------------------------
March 20, 2000
Dear Shareholders:
We are writing to report on the results of the Warburg Pincus High Yield Fund
(the "Fund") for the six months ended February 29, 2000.
On February 29, 2000, the net asset value ("NAV") of the Fund's institutional
shares was $15.46, compared to an NAV of $15.32 on August 31, 1999. The
institutional shares' total return was 6.4%, (assuming the reinvestment of
dividends totaling $0.7867 per share). By comparison, the Credit Suisse First
Boston Domestic + High Yield Index* (the "Index") returned 0.5% during the same
period.
At February 29, 2000, NAV of the Fund's common shares was $15.53, compared to
an NAV of $15.38 on August 31, 1999. The common shares' total return was 6.2%,
(assuming the reinvestment of dividends $0.7610 per share). By comparison, the
Index returned 0.5% during the same period.
The Fund meaningfully outperformed the Index based primarily on effective
sector allocation:
(BULLET) We maintained our longstanding overweight (relative to the Index) in
the telecommunications industry which rebounded sharply in the
period and was one of the better-performing groups in the high yield
universe.
The Fund's telecom holdings further helped because they provided us
with relatively high exposure to deferred-interest securities such
as zero-coupon bonds, which outperformed traditional cash-pay
issues.
(BULLET) We also overweighted cable and media companies, whose solid returns
additionally benefited the Fund's overall performance.
(BULLET) We selectively increased exposure in the last few months of 1999 to
economically sensitive industries such as paper and energy, which
performed moderately well.
(BULLET) We underweighted poorly performing sectors such as health care,
consumer products, and retail food and drug.
On a negative note, our overweight in the textile/apparel/shoe-manufacturing
sector, which fell sharply, detracted from performance.
1
<PAGE>
WARBURG PINCUS HIGH YIELD FUND
PORTFOLIO MANAGERS' LETTER -- FEBRUARY 29, 2000 (CONCLUDED)
- --------------------------------------------------------------------------------
As developments occur that we believe would be of interest to you, we will be
sure to keep you informed. Meanwhile, if you have questions, please feel free to
call upon us at any time.
Sincerely yours,
Credit Suisse Asset Management High Yield Management Team
Richard J. Lindquist, CFA, Managing Director
Misia K. Dudley, Director
Mary Ann Thomas, CFA, Director
John M. Tobin, CFA, Director
HIGH YIELD BONDS ARE LOWER-QUALITY BONDS THAT ARE ALSO KNOWN AS "JUNK" BONDS.
SUCH BONDS ENTAIL GREATER RISKS THAN THOSE FOUND IN HIGHER-RATED SECURITIES.
INTERNATIONAL INVESTING ENTAILS SPECIAL RISK CONSIDERATIONS, INCLUDING CURRENCY
FLUCTUATIONS, LOWER LIQUIDITY, ECONOMIC AND POLITICAL RISKS, AND DIFFERENCES IN
ACCOUNTING METHODS.
PERFORMANCE
SINCE
FIVE YEARS INCEPTION
SIX MONTHS ONE YEAR (3/1/95 - 2/29/00) 3/1/93
2/29/00 (3/1/99 - 2/29/00) (ANNUALIZED) (ANNUALIZED)
- --------------------------------------------------------------------------------
Warburg Pincus
High Yield Fund
(Institutional) 6.4% 7.9% 10.7% 8.9%
Warburg Pincus
High Yield Fund
(Common) 6.2% 7.5% 10.5% 8.8%
CSFB Domestic +
High Yield Index* 0.5% 1.1% 8.0%** 8.0%**
- --------------------------------------------------------------------------------
* THE CREDIT SUISSE FIRST BOSTON DOMESTIC + HIGH YIELD INDEX IS AN UNMANAGED
INDEX (WITH NO DEFINED INVESTMENT OBJECTIVE) OF DOMESTIC HIGH YIELD BONDS AND
IS COMPILED BY CREDIT SUISSE FIRST BOSTON, AN AFFILIATE OF THE FUND'S
ADVISER.
** INCLUDES RETURNS FOR CREDIT SUISSE FIRST BOSTON GLOBAL HIGH YIELD INDEX FOR
ALL PERIODS BEFORE 1/1/99 AND RETURNS FOR CREDIT SUISSE FIRST BOSTON DOMESTIC
+ HIGH YIELD INDEX FOR ALL PERIODS AFTER 1/1/99.
2
<PAGE>
WARBURG PINCUS MUNICIPAL BOND FUND
PORTFOLIO MANAGERS' LETTER -- FEBRUARY 29, 2000
- --------------------------------------------------------------------------------
March 20, 2000
Dear Shareholders:
We are writing to report on the results of the Warburg Pincus Municipal Bond
Fund (the "Fund") for the six months ended February 29, 2000.
On February 29, 2000, the net asset value ("NAV") of the Fund's institutional
shares was $13.89, compared to an NAV of $14.30 on August 31, 1999. As a result,
the institutional shares' total return was down 0.1%, (assuming the reinvestment
of dividends and distributions totaling $0.40 per share). By comparison, the
Lehman Brothers Municipal Bond Index* (the "Index") returned 0.0% over the same
period.
At February 29, 2000, NAV of the Fund's common shares was $13.90 compared to
an NAV of $14.29 on August 31, 1999. As a result, the common shares' total
return was down 0.1%, (assuming the reinvestment of dividends and distributions
totaling $0.37 per share). By comparison, the Index returned 0.0% during the
same period.
The Fund slightly underperformed the Index in the fiscal half-year. As the
period progressed, performance continued to improve, despite unstable conditions
in fixed income markets.
As the period opened in September 1999, the Fund was lagging the Index due to
its continued exposure to taxable securities. Valuations of taxables like
investment-grade and high yield bonds had declined during the third quarter
compared to those of tax-exempt instruments. The Fund's exposure to these
sectors thus negated gains from our municipal strategy of avoiding insured debt
and overweighting noncallable issues.
We became increasingly cautious as the end of the year approached, given the
widespread concern over possible Y2K-related computer problems and the possible
resulting squeeze on market liquidity. We moved to lessen the impact on the
portfolio from any such disruption by emphasizing bonds for which demand would
likely remain strong. These included high-quality municipal securities in
general, bonds from states with especially high income-tax rates, as well as
noncallable and prerefunded issues (for their stable cash flow and valuation
characteristics). We maintained exposure to deeply discounted tax-exempt paper
and taxable securities -- notably high yield bonds -- in an effort to benefit
from the upturn that we anticipated in these segments.
As it turned out, aggregate fixed income markets fell sharply in the last
three months of 1999. Municipals, moreover, turned in the worst performance
among the entire U.S. fixed income universe as institutional buying
3
<PAGE>
WARBURG PINCUS MUNICIPAL BOND FUND
PORTFOLIO MANAGERS'LETTER -- FEBRUARY 29, 2000 (CONT'D)
- --------------------------------------------------------------------------------
fell and retail selling rose. Investors' excessive selling of both low-coupon
municipals and lower-quality taxable bonds in particular hampered the Fund's
returns compared to those of the Index.
In the first two months of 2000, bond markets still had not stabilized due to
the Federal Reserve's interest rate increase and the Treasury's announced
buyback of some of its own long-term bonds in the open market. Nevertheless, the
Fund's performance began to improve, as investors recognized how cheap
deep-discount paper and high yield bonds had become. The rebound in prices that
began in January and February in these two sectors helped to improve overall
returns.
As developments occur in the fixed income markets or at Credit Suisse Asset
Management that we believe would be of interest to you, we will be sure to keep
you informed. Meanwhile, if you have questions, please feel free to call upon us
at any time.
Sincerely yours,
Credit Suisse Asset Management Fixed Income Management Team
Gregg M. Diliberto, Managing Director
Jo Ann Corkran, Managing Director
Mark K. Silverstein, Managing Director
Jose A. Rodriguez, Director
4
<PAGE>
WARBURG PINCUS MUNICIPAL BOND FUND
PORTFOLIO MANAGERS'LETTER -- FEBRUARY 29, 2000 (CONCLUDED)
- --------------------------------------------------------------------------------
PERFORMANCE
SINCE
FIVE YEARS INCEPTION
SIX MONTHS ONE YEAR (3/1/95 - 2/29/00) 6/17/94
2/29/00 (3/1/99 - 2/29/00) (ANNUALIZED) (ANNUALIZED)
- --------------------------------------------------------------------------------
Warburg Pincus
Municipal Bond Fund
(Institutional) (0.1%) (1.9%) 5.0% 5.0%
Warburg Pincus
Municipal Bond Fund
(Common) (0.1%) (2.1%) 4.9% 4.9%
Lehman Brothers
Municipal Bond Index* 0.0% (2.1%) 5.9% 5.8%
- --------------------------------------------------------------------------------
* THE LEHMAN BROTHERS MUNICIPAL BOND INDEX IS A BROAD MARKET PERFORMANCE
BENCHMARK FOR THE TAX-EXEMPT BOND MARKET. IT IS COMPUTED WEEKLY AND MONTHLY
FROM PRICES SUPPLIED BY MULLER DATA CORPORATION ON APPROXIMATELY 48,059
INVESTMENT GRADE MUNICIPAL BONDS WITH MATURITIES OF 1-22+ YEARS AND IS
CALCULATED BY LEHMAN BROTHERS, INC. THE INDEX IS COMPOSED OF STATE, LOCAL,
REVENUE, PREREFUNDED, AND INSURED DEBT, AND CONTAINS ISSUES SUBJECT TO THE
ALTERNATIVE MINIMUM TAX.
5
<PAGE>
WARBURG PINCUS HIGH YIELD FUND
SCHEDULE OF INVESTMENTS
February 29, 2000 (Unaudited)
- --------------------------------------------------------------------------------
PAR
(000) VALUE
------ ----------
CORPORATE BONDS (80.6%)
AEROSPACE/DEFENSE (0.2%)
K&F Industries, Inc.
Sr. Sub. Notes
9.250% 10/15/07 $ 250 $ 236,250
----------
APPAREL (0.2%)
Transportation Manufacturing
Operations
144A Sr. Sub. Notes
11.250% 05/01/09 250 245,000
----------
AUTOMOTIVE (2.3%)
Aetna Industries, Inc.
Sr. Notes
11.875% 10/01/06 500 491,875
Breed Technologies, Inc.
144A Sr. Sub. Notes
9.250% 04/15/08(DAGGER)(DAGGER) 500 11,250
Cambridge Industries, Inc.
Gtd. Sr. Sub. Notes,
Series B
10.250% 07/15/07 400 76,000
Collins & Aikman Products Corp.
Gtd. Sr. Sub. Notes
11.500% 04/15/06 350 343,875
Delco Remy International, Inc.
Gtd. Sr. Sub. Notes
10.625% 08/01/06 250 248,125
Hayes Lemmerz International, Inc.
144A Sr. Sub. Notes
8.250% 12/15/08 150 131,625
Hayes Wheels International, Inc.
Sr. Sub. Notes, Series B
9.125% 07/15/07 350 325,500
LDM Technologies, Inc.
144A Sr. Sub. Notes, Series B
10.750% 01/05/07 400 336,000
Oxford Automotive, Inc.
Sr. Sub. Notes
10.125% 06/15/07 500 468,750
Safelite Glass Corp.
Sr. Sub. Notes
9.875% 12/15/06 350 21,000
See Accompanying Notes to Financial Statements.
6
<PAGE>
WARBURG PINCUS HIGH YIELD FUND
SCHEDULE OF INVESTMENTS (CONT'D)
February 29, 2000 (Unaudited)
- --------------------------------------------------------------------------------
PAR
(000) VALUE
------ ----------
CORPORATE BONDS (CONT'D)
AUTOMOTIVE (cont'd)
Titan Wheel International, Inc.
Sr. Sub. Notes
8.750% 04/01/07 $ 250 $ 200,000
United Rentals, Inc.
144A Sr. Sub. Notes
9.250% 01/15/09 250 231,875
----------
2,885,875
----------
BROADCASTING (3.2%)
Allbritton Communications
Company Sr. Sub. Notes,
Series B
9.750% 11/30/07 250 245,625
8.875% 02/01/08 250 235,625
American Radio Systems Corp.
Gtd. Sr. Sub. Notes
9.000% 02/01/06 250 262,187
Australis Holdings Pty. Ltd.
144A Yankee Sr. Secured
Discount Notes(DAGGER)(DAGGER)
15.000% 11/01/02(DAGGER) 294 2,940
Australis Media Ltd.
Yankee Gtd. Sr. Sub. Discount
Notes(DAGGER)(DAGGER)
15.750% 05/15/03(DAGGER) 15 2
15.750% 05/15/03 900 90
Big City Radio, Inc.
144A Sr. Bonds
11.250% 03/15/05(DAGGER) 500 320,000
Capstar Broadcasting, Inc.
Sr. Sub. Discount Notes
12.750% 02/01/09(DAGGER) 500 450,000
Chancellor Media Corp.
144A Sr. Sub. Notes
8.000% 11/01/08 300 300,000
Citadel Broadcasting Co.
144A Sr. Sub. Notes
9.250% 11/15/08 250 240,937
Emmis Communications
Corporation Sr. Sub. Notes,
Series B
8.125% 03/15/09 250 234,375
See Accompanying Notes to Financial Statements.
7
<PAGE>
WARBURG PINCUS HIGH YIELD FUND
SCHEDULE OF INVESTMENTS (CONT'D)
February 29, 2000 (Unaudited)
- --------------------------------------------------------------------------------
PAR
(000) VALUE
------ ----------
CORPORATE BONDS (CONT'D)
BROADCASTING (cont'd)
Granite Broadcasting Corp.
144A Sr. Sub Notes
8.875% 05/15/08 $ 250 $ 232,500
Sr. Sub. Notes
9.375% 12/01/05 450 448,875
HMV Media Group plc,
Senior Subordinated Yankee
Notes, Series B
10.250% 05/15/08 250 191,250
Sinclair Broadcast Group
Sr. Sub. Notes
10.000% 09/30/05 400 391,000
United International Holdings,
144A Sr. Discount Notes
10.750% 02/15/08(DAGGER) 500 353,750
----------
3,909,156
----------
BUILDING MATERIALS (0.5%)
Building One Services, Inc.
144A Sr. Sub. Notes
10.500% 05/01/09 250 232,500
Jackson Products, Inc., Notes
9.500% 04/15/05 400 362,000
----------
594,500
----------
BUSINESS SERVICES (0.7%)
Iron Mountain, Inc.
144A Sr. Notes
8.750% 09/30/09 250 225,000
Sovereign Bancorp, Inc.
10.500% 11/15/06 500 503,750
U.S. Office Products Co.
144A Sr. Sub. Notes
9.750% 06/15/08 400 200,000
----------
928,750
----------
CABLE (7.7%)
Adelphia Communications Corp.
Sr. Notes, Series B
10.500% 07/15/04 400 406,000
Century Communications,
Sr. Discount Notes, Series B
7.226% 01/15/08 500 211,250
See Accompanying Notes to Financial Statements.
8
<PAGE>
WARBURG PINCUS HIGH YIELD FUND
SCHEDULE OF INVESTMENTS (CONT'D)
February 29, 2000 (Unaudited)
- --------------------------------------------------------------------------------
PAR
(000) VALUE
------ ----------
CORPORATE BONDS (CONT'D)
CABLE (cont'd)
Coaxial Communications, Inc.
Phoenix Associates Co. Gtd.
Notes
10.000% 08/15/06 $ 300 $ 288,000
Coaxial L.L.C.
144A Co. Gtd.
12.875% 08/15/08(DAGGER) 400 252,000
Comcast U.K. Cable Partners Ltd.,
Yankee Sr. Debentures
11.200% 11/15/07(DAGGER) 750 720,937
CSC Holdings, Sr. Debentures
9.875% 02/15/13 500 521,250
Diamond Cable Communications
plc Sr. Discount Notes
11.750% 12/15/05(DAGGER) 500 476,875
DIVA Systems Corp.
Sr. Disc. Notes Cl. B
12.625% 03/01/08(DAGGER) 2,527 1,339,310
Frontiervision Holdings L.P.
Sr. Discount Notes
11.875% 09/15/07(DAGGER) 500 443,750
Galaxy Telecom L.P.
Sr. Sub. Notes
12.375% 10/01/05 400 422,000
Golden Sky Systems, Inc.
144A Sr. Dicsount Notes
13.500% 03/01/07(DAGGER) 750 498,750
International CableTel, Inc.
Sr. Deferred Coupon Notes,
Series A
11.500% 04/15/05(DAGGER) 750 761,250
James Cable Partners L.P./James
Cable Finance Corp.
Sr. Notes, Series B
10.750% 08/15/04 400 400,000
Jones Intercable, Inc.
Sr. Notes
7.625% 04/15/08 500 493,125
Lenfest Communications, Inc.
Sr. Notes
8.375% 11/01/05 300 306,375
See Accompanying Notes to Financial Statements.
8
<PAGE>
WARBURG PINCUS HIGH YIELD FUND
SCHEDULE OF INVESTMENTS (CONT'D)
February 29, 2000 (Unaudited)
- --------------------------------------------------------------------------------
PAR
(000) VALUE
------ ----------
CORPORATE BONDS (CONT'D)
CABLE (cont'd)
Mediacom L.L.C. Capital
144A Sr. Notes
7.875% 02/15/11 $ 300 $ 258,000
Northland Cable Television,
144A Sr. Sub. Notes
10.250% 11/15/07 250 245,000
Rogers Communications, Inc.
Yankee Sr. Notes
9.125% 01/15/06 550 552,750
Telewest Communications Group
plc Yankee Sr. Discount
Debentures
11.000% 10/01/07(DAGGER) 700 664,125
Telewest Communications plc
Senior Discount Notes
9.250% 04/15/09(DAGGER) 500 300,000
----------
9,560,747
----------
CAPITAL GOODS - TECHNOLOGY (0.2%)
It Group, Inc.
Sr. Sub. Notes Series 144A
11.250% 04/01/09 250 241,250
----------
CELLULAR/WIRELESS COMMUNICATIONS (1.1%)
Centennial Cellular Corp.
Sr. Sub. Notes
10.750% 12/15/08 400 409,000
Microcell Telecommunications, Inc.
Yankee Sr. Discount Notes,
Series B (B3, B)
14.000% 06/01/06(DAGGER) 500 450,000
Sprint Spectrum L.P./Sprint
Spectrum Finance Corp.
Sr. Notes
11.000% 08/15/06 500 560,000
----------
1,419,000
----------
CHEMICALS (1.4%)
ClimaChem, Inc.
Notes, Series B
10.750% 12/01/07 250 65,000
Huntsman Corp.
144A Sr. Sub. Notes
9.500% 07/01/07 250 236,250
See Accompanying Notes to Financial Statements.
10
<PAGE>
WARBURG PINCUS HIGH YIELD FUND
SCHEDULE OF INVESTMENTS (CONT'D)
February 29, 2000 (Unaudited)
- --------------------------------------------------------------------------------
PAR
(000) VALUE
------ ----------
CORPORATE BONDS (CONT'D)
CHEMICALS (cont'd)
Lyondell Chemical, Inc.
Senior Secured Notes, Series B
9.875% 05/01/07 $ 500 $ 480,000
Philipp Brothers Chemicals, Inc.
Co. Gtd. Sr. Notes
9.875% 06/01/08 350 315,000
Pioneer Americas Acquistics Corp.
Gtd. Sr. Secured Notes,
Series B
9.250% 06/15/07 250 212,500
Radnor Holdings Corp.
Sr. Notes, Series B
10.000% 12/01/03 250 233,750
Sterling Chemical Holdings, Inc.
Sr. Secured Discount Notes
13.500% 08/15/08(DAGGER) 700 231,000
----------
1,773,500
----------
COMPUTERS, SOFTWARE & SERVICES (0.7%)
PSINET, Inc.
144A Sr. Notes
11.500% 11/01/08 250 253,750
Verio, Inc.
144A Units
13.500% 06/15/04 350 384,125
Sr. Notes
10.375% 04/01/05 200 200,750
----------
838,625
----------
CONSTRUCTION (0.1%)
Laroche Industries, Inc.
144A Sr. Sub. Notes
9.500% 09/15/07 500 158,750
----------
CONSTRUCTION & BUILDING MATERIALS (1.0%)
Collins & Aikman Floorcoverings,
Inc., Sr. Sub. Notes, Series B
10.000% 01/15/07 250 244,375
Koppers Industry, Inc.
Sr. Sub. Notes
9.875% 12/01/07 250 231,250
Omega Cabinets, Ltd.
Sr. Sub. Notes
10.500% 06/15/07 400 400,000
See Accompanying Notes to Financial Statements.
11
<PAGE>
WARBURG PINCUS HIGH YIELD FUND
SCHEDULE OF INVESTMENTS (CONT'D)
February 29, 2000 (Unaudited)
- --------------------------------------------------------------------------------
PAR
(000) VALUE
------ ----------
CORPORATE BONDS (CONT'D)
CONSTRUCTION & BUILDING MATERIALS (1.0%)
Uniforet, Inc.
Yankee Gtd. Sr. Notes
11.125% 10/15/06 $ 250 $ 90,000
Waxman Industries, Inc.
Sr. Notes, Series B
12.750% 06/01/04 600 288,000
----------
1,253,625
----------
CONSUMER PRODUCTS & SERVICES (2.2%)
Coinstar, Inc.
Sr. Discount Notes
13.000% 10/01/06(DAGGER) 525 535,500
Drypers Corp.
Sr. Notes, Series B
10.250% 06/15/07 400 324,000
Holmes Products Corp.
Sr. Sub. Notes, Series D
9.875% 11/15/07 500 366,250
Hosiery Corp. of America, Inc.
Sr. Sub. Notes
13.750% 08/01/02 400 418,000
Packaged Ice, Inc.
144A Gtd. Sr. Notes
9.750% 02/01/05 400 348,000
The Scotts Co.
144A Sr. Sub. Notes
8.625% 01/15/09 250 235,625
Werner Holdings Co., Inc.
Gtd. Sr. Sub. Notes, Series A
10.000% 11/15/07 250 243,125
Worldtex, Inc.
144A Sr. Notes
9.625% 12/15/07 250 199,375
----------
2,669,875
----------
ELECTRIC UTILITIES (0.2%)
Integrated Electric Services, Inc.
144A Sr. Sub. Notes
9.375% 02/01/09 250 215,000
----------
ELECTRONICS (1.0%)
Aavid Thermal Technologies, Inc.
12.750% 02/01/07 250 248,750
Ampex Corp. 144A Sr. Notes
12.000% 03/15/03 250 246,250
See Accompanying Notes to Financial Statements.
12
<PAGE>
WARBURG PINCUS HIGH YIELD FUND
SCHEDULE OF INVESTMENTS (CONT'D)
February 29, 2000 (Unaudited)
- --------------------------------------------------------------------------------
PAR
(000) VALUE
------ ----------
CORPORATE BONDS (CONT'D)
ELECTRONICS (cont'd)
Elgar Holdings, Inc.
144A Gtd. Sr. Notes
9.875% 02/01/08 $ 500 $ 310,000
Unisys Corporation
Sr. Notes, Series B
12.000% 04/15/03 400 426,000
----------
1,231,000
----------
ENERGY (3.4%)
Abraxas Petroleum Corp.
11.500% 11/01/04 350 311,500
Bellwether Exploration Co.
Gtd. Sr. Sub. Notes
10.875% 04/01/07 250 219,687
Cliffs Drilling Company
Gtd. Sr. Notes, Series D
10.250% 05/15/03 350 357,875
CMS Energy Corp.
Sr. Notes
7.500% 01/15/09 250 228,437
Frontier Oil Corp.
Sr. Notes
10.750% 07/15/08 500 55,000
11.750% 11/15/09 500 445,000
HS Resources, Inc.
Sr. Sub. Notes
9.250% 11/15/06 400 386,000
Nuevo Energy Co.
9.500% 06/01/08 250 242,500
Plains Resources, Inc.
144A Sr. Sub. Notes
10.250% 03/15/06 250 245,000
Gtd. Sr. Sub. Notes, Series B
10.250% 03/15/06 250 245,000
Pogo Producing Co.
Sr. Sub. Notes, Cl. B
8.750% 05/15/07 500 475,000
Pride Petroleum Services, Inc.
Sr. Notes
9.375% 05/01/07 300 291,000
Southwest Royalties, Inc.
Gtd. Sr. Notes, Series B
10.500% 10/15/04 300 171,000
See Accompanying Notes to Financial Statements.
13
<PAGE>
WARBURG PINCUS HIGH YIELD FUND
SCHEDULE OF INVESTMENTS (CONT'D)
February 29, 2000 (Unaudited)
- --------------------------------------------------------------------------------
PAR
(000) VALUE
------ ----------
CORPORATE BONDS (CONT'D)
ENERGY (cont'd)
The AES Corporation
Senior Notes
11.500% 12/15/06 $ 400 $ 96,000
9.500% 06/01/09 250 246,875
Wiser Oil Co.
Gtd. Sr. Sub. Notes
9.500% 05/15/07 250 200,000
----------
4,215,874
----------
ENERGY SOURCES (0.4%)
Key Energy Services, Inc.
Units 144A
14.000% 01/15/09 500 548,750
----------
ENGINES (0.2%)
Interact Operating Co.
14.000% 08/01/03 375 205,975
----------
ENTERTAINMENT (2.3%)
Ackerley Group, Inc.
Sr. Sub. Notes
9.000% 01/15/09 250 237,500
AMC Entertainment, Inc.
Sr. Sub. Notes
9.500% 03/15/09 250 195,000
American Skiing Co.
Sr. Sub. Notes, Series B
12.000% 07/15/06 400 344,000
AMF Bowling Worldwide, Inc.
Gtd. Sr. Discount Notes
10.875% 03/15/06 350 162,750
Gtd. Sr. Discount Notes,
Series B
12.250% 03/15/06(DAGGER) 459 156,060
Booth Creek Ski Holdings, Inc.
Gtd. Sr. Notes, Series B
12.500% 03/15/07 400 280,000
Florida Panthers Holdings, Inc.
144A Sr. Sub. Notes
9.875% 04/15/09 250 236,250
Imax Corp.
Sr. Notes
7.875% 12/01/05 250 233,125
See Accompanying Notes to Financial Statements.
14
<PAGE>
WARBURG PINCUS HIGH YIELD FUND
SCHEDULE OF INVESTMENTS (CONT'D)
February 29, 2000 (Unaudited)
- --------------------------------------------------------------------------------
PAR
(000) VALUE
------ ----------
CORPORATE BONDS (CONT'D)
ENTERTAINMENT (cont'd)
KSL Recreation Group, Inc.
Sr. Sub. Notes
10.250% 05/01/07 $ 250 $ 246,250
Premier Parks Inc.
Gtd. Sr. Notes
9.750% 01/15/07 250 250,000
Sr. Notes
9.250% 04/01/06 250 235,312
Regal Cinemas, Inc.
144A Sr. Sub. Notes
8.875% 12/15/10 500 310,000
----------
2,886,247
----------
ENVIRONMENTAL SERVICES (0.1%)
First Wave Marine
Sr. Notes
11.000% 02/01/08 150 107,250
----------
FINANCIAL (0.4%)
Arcadia Financial, Ltd.
Sr. Notes
11.500% 03/15/07 200 210,000
Polska Telefonica Cyfrowa
International Finance II SA
144A Co. Gtd.
11.250% 12/01/09 250 244,062
----------
454,062
----------
FINANCIAL SERVICES (0.6%)
Ameriserve Finance/Capital
144A Secured
12.000% 09/15/06 250 125,000
Insight Midwest/Insight Capital
144A Sr. Sub. Notes
9.750% 10/01/09 350 353,500
Oglebay Norton Co.
144A Sr. Sub. Notes
10.000% 02/01/09 250 235,000
----------
713,500
----------
FOOD & BEVERAGE (3.0%)
Agrilink Foods, Inc.
Sr. Sub. Notes
11.875% 11/01/08 250 246,875
See Accompanying Notes to Financial Statements.
15
<PAGE>
WARBURG PINCUS HIGH YIELD FUND
SCHEDULE OF INVESTMENTS (CONT'D)
February 29, 2000 (Unaudited)
- --------------------------------------------------------------------------------
PAR
(000) VALUE
------ ----------
CORPORATE BONDS (CONT'D)
FOOD & BEVERAGE (cont'd)
Archibald Candy Corp.
144A Gtd. Sr. Secured Notes
10.250% 07/01/04 $ 300 $ 288,000
Carrols Corp.
144A Sr. Sub. Notes
9.500% 12/01/08 250 218,750
Delta Beverage Group, Inc.
Sr. Notes
9.750% 12/15/03 250 247,500
Eagle Family Foods, Inc.
Sr. Sub. Notes
8.750% 01/15/08 350 269,500
Fleming Companies, Inc.
Sr. Gtd. Sub. Notes, Series B
10.500% 12/01/04 150 140,250
International Home Foods, Inc.
Gtd. Sr. Sub. Notes
10.375% 11/01/06 250 253,750
Luigino's, Inc.
144A Sr. Sub. Notes
10.000% 02/01/06 500 430,000
Mrs. Fields' Holding Co. Inc.
144A Units
14.000% 12/01/05(DAGGER) 200 112,000
Mrs. Fields' Original Cookies Inc.
144A Gtd. Sr. Notes, Series A
10.125% 12/01/04 250 202,500
Gtd. Sr. Notes, Series B
10.125% 12/01/04 150 121,500
National Wine & Spirits Co.
Gtd.
10.125% 01/15/09 280 278,600
New World Pasta Co.
144A Sr. Sub. Notes
9.250% 02/15/09 250 229,687
Pantry, Inc.
Sr. Sub. Notes
10.250% 10/15/07 250 237,500
Premium Standard Farm, Inc.
Sr. Secured Notes
11.000% 09/17/03 501 460,792
----------
3,737,204
----------
See Accompanying Notes to Financial Statements.
16
<PAGE>
WARBURG PINCUS HIGH YIELD FUND
SCHEDULE OF INVESTMENTS (CONT'D)
February 29, 2000 (Unaudited)
- --------------------------------------------------------------------------------
PAR
(000) VALUE
------ ----------
CORPORATE BONDS (CONT'D)
HEALTH (0.7%)
Triad Hospital Holdings, Inc.
Sr. Sub. Notes
11.000% 05/15/09 $ 500 $ 515,000
Unilab Finance Corp.
144A Sr. Sub. Notes
12.750% 10/01/09 400 408,000
----------
923,000
----------
HEALTH CARE (1.6%)
Beverly Enterprises, Inc.
Gtd. Sr. Notes
9.000% 02/15/06 400 366,000
Fountain View, Inc.
Co. Gtd.
11.250% 04/15/08 250 191,250
Genesis Health Ventures, Inc.
Sr. Sub. Notes
9.875% 01/15/09 500 97,500
InSight Health Services, Inc.
Co. Gtd. Sr. Notes
9.625% 06/15/08 400 370,000
Oxford Health Plans, Inc.
144A Sr. Notes
11.000% 05/15/05 400 387,500
Paracelsus Healthcare Corp.
Sr. Sub. Notes
10.000% 08/15/06(DAGGER)(DAGGER) 250 125,000
Quest Diagnostic, Inc.
Sr. Sub. Notes
10.750% 12/15/06 250 262,500
Tenet Healthcare Corp.
Sr. Sub. Notes
8.625% 01/15/07 250 240,313
----------
2,040,063
----------
INDUSTRIAL GOODS & MATERIALS (2.1%)
Anchor Lamina, Inc./Anchor
Lamina America, Inc.
144A Sr. Sub. Notes
9.875% 02/01/08 250 187,500
Carrier1
144A Sr. Notes, Series B
13.250% 02/15/09 250 266,250
See Accompanying Notes to Financial Statements.
17
<PAGE>
WARBURG PINCUS HIGH YIELD FUND
SCHEDULE OF INVESTMENTS (CONT'D)
February 29, 2000 (Unaudited)
- --------------------------------------------------------------------------------
PAR
(000) VALUE
------ ----------
CORPORATE BONDS (CONT'D)
Equinix, Inc.
8.750% 03/15/04 $ 500 $ 435,000
13.000% 12/01/07 450 464,625
Golden Ocean Group Ltd.
144A Gtd. Sr. Notes
10.000% 08/31/01(DAGGER)(DAGGER) 457 27,420
Jordan Industries, Inc.
Sr. Notes
10.375% 08/01/07 250 246,250
MMI Products, Inc.
144A Sr. Sub. Notes, Series B
11.250% 04/15/07 250 258,125
Morris Materials Handling, Inc.
144A Sr. Notes
9.500% 04/01/08 250 50,000
Motors & Gears, Inc.
Sr. Notes, Series D
10.750% 11/15/06 500 496,250
Thermadyne Holdings Corp.
Sr. Discount Debentures
12.500% 06/01/08(DAGGER) 250 115,000
----------
2,546,420
----------
LEISURE & ENTERTAINMENT (0.4%)
Hollywood Park, Inc.
144A Sr. Sub. Notes
9.250% 02/15/07 500 483,750
----------
MANUFACTURING (0.2%)
Holley Performance Products
144A Sr. Notes
12.250% 09/15/07 250 243,750
----------
METALS (0.2%)
Algoma Steel Inc.
1st Mortgage Yankee Notes
12.375% 07/15/05 250 248,125
----------
METALS & MINING (1.9%)
Bayou Steel Corp.
Co. Gtd.
9.500% 05/15/08 250 230,625
Golden Northwest Aluminum
First Mortgage Notes
12.000% 12/15/06 400 419,000
See Accompanying Notes to Financial Statements.
18
<PAGE>
WARBURG PINCUS HIGH YIELD FUND
SCHEDULE OF INVESTMENTS (CONT'D)
February 29, 2000 (Unaudited)
- --------------------------------------------------------------------------------
PAR
(000) VALUE
------ ----------
CORPORATE BONDS (CONT'D)
METALS & MINING (cont'd)
Haynes International, Inc.
Sr. Notes
11.625% 09/01/04 $ 250 $ 137,500
Ivaco, Inc.
Yankee Sr. Notes
11.500% 09/15/05 250 270,000
Kaiser Aluminum and Chemical, Inc.
144A Sr. Notes
10.875% 10/15/06 250 247,500
Metallurg, Inc.
Sr. Notes
11.000% 12/01/07 500 448,750
Weirton Steel Corporation
Sr. Notes
11.375% 07/01/04 350 358,750
WHX Corp.
Sr. Exchange Notes
10.500% 04/15/05 250 237,500
----------
2,349,625
----------
OFFICE EQUIPMENT & SUPPLIES (0.3%)
Knoll, Inc.
Sr. Sub. Notes
10.875% 03/15/06 325 331,500
----------
PACKAGING & CONTAINERS (0.5%)
BPC Holding Corporation
Sr. Secured Notes, Series B
12.500% 06/15/06 426 400,440
Crown Packaging Enterprises, Ltd.
Yankee Sr. Secured Discount
Notes
14.000% 08/01/06(DAGGER) 775 7,750
Stone Container Finance Co.
Yankee Gtd. Sr. Notes
11.500% 08/15/06 250 265,000
----------
673,190
----------
PAPER & ALLIED PRODUCTS (0.3%)
Charter Communications Holdings
10.250% 01/15/10 350 348,250
----------
See Accompanying Notes to Financial Statements.
19
<PAGE>
WARBURG PINCUS HIGH YIELD FUND
SCHEDULE OF INVESTMENTS (CONT'D)
February 29, 2000 (Unaudited)
- --------------------------------------------------------------------------------
PAR
(000) VALUE
------ ----------
CORPORATE BONDS (CONT'D)
PAPER & FOREST PRODUCTS (2.8%)
Ainsworth Lumber Co. Ltd.
Yankee Sr. Secured PIK Notes
12.500% 07/15/07 $ 500 $ 546,250
Bear Island Paper Company, L.L.C./
Bear Island Finance Company II
Sr. Secured Notes, Series B
10.000% 12/01/07 200 191,000
Crown Paper Co.
Sr. Sub. Notes
11.000% 09/01/05 500 230,000
Gaylord Container Corp.
Sr. Notes
9.375% 06/15/07 350 314,125
MAXXAM Group Holdings, Inc.
144A Sr. Secured Notes, Series B
12.000% 08/01/03 400 370,000
Printpack, Inc.
Sr. Sub. Notes, Series B
10.625% 08/15/06 450 435,375
Repap New Brunswick
Sr. Yankee Notes
10.625% 04/15/05 500 465,000
S.D. Warren Co.
Sr. Sub. Notes
12.000% 12/15/04 400 419,500
Specialty Paperboard, Inc.
144A Sr. Notes
9.375% 10/15/06 250 242,500
Tembec Industries, Inc.
Sr. Co. Gtd.
8.625% 06/30/09 250 241,250
---------
3,455,000
---------
PHARMACEUTICALS (0.4%)
ICN Pharmaceutical, Inc.
144A Sr. Notes
8.750% 11/15/08 500 467,500
---------
PUBLISHING & INFORMATION SERVICES (2.3%)
American Media Operation
144A Sr. Sub Notes
10.250% 05/01/09 250 248,750
See Accompanying Notes to Financial Statements.
20
<PAGE>
WARBURG PINCUS HIGH YIELD FUND
SCHEDULE OF INVESTMENTS (CONT'D)
February 29, 2000 (Unaudited)
- --------------------------------------------------------------------------------
PAR
(000) VALUE
------ ----------
CORPORATE BONDS (CONT'D)
PUBLISHING & INFORMATION SERVICES (cont'd)
Gray Communications Systems
Gtd. Sr. Sub. Notes
10.625% 10/01/06 $ 200 $ 204,500
Hollinger International Publishing
Inc., Sr. Sub. Notes
9.250% 03/15/07 250 236,875
Liberty Group Publishing, Inc.
Sr. Discount Debentures
11.625% 02/01/09(DAGGER) 300 159,000
Mail-Well, Inc.
144A Sr. Sub. Notes
8.750% 12/15/08 400 362,000
Mentus Media Corp.
144A Sr. Secured Notes
12.000% 02/01/03 626 212,840
Nebraska Book Co.
144A Sr. Sub. Notes
8.750% 02/15/08 250 207,500
Phoenix Color Corp.
144A Sr. Sub. Notes
10.375% 02/01/09 250 240,625
Sun Media Corp.
Yankee Sr. Sub. Notes
9.500% 02/15/07 194 187,695
9.500% 05/15/07 65 62,888
Tri-State Outdoor Media Group, Inc.
144A Sr. Notes
11.000% 05/15/08 500 487,500
World Color Press, Inc.
144A Sr. Sub. Notes
8.375% 11/15/08 250 240,000
----------
2,850,173
----------
REAL ESTATE (0.7%)
HMH Properties, Inc.
Sr. Notes
8.450% 12/01/08 300 270,000
Host Marriot Hotel Properties
Sr. Notes
7.875% 08/01/05 400 362,000
See Accompanying Notes to Financial Statements.
21
<PAGE>
WARBURG PINCUS HIGH YIELD FUND
SCHEDULE OF INVESTMENTS (CONT'D)
February 29, 2000 (Unaudited)
- --------------------------------------------------------------------------------
PAR
(000) VALUE
------ ----------
CORPORATE BONDS (CONT'D)
REAL ESTATE (cont'd)
Intrawest Corp.
Yankee Sr Notes
9.750% 08/15/08 $ 250 $ 240,000
----------
872,000
----------
RESTAURANTS, HOTELS & GAMING (7.0%)
AFC Enterprises
Sr. Sub. Notes
10.250% 05/15/07 400 398,000
American Restaurant Group, Inc.
144A Sr. Notes
11.500% 02/15/03 300 237,000
AmeriKing, Inc.
Gtd. Sr. Notes
10.750% 12/01/06 400 356,000
Ameristar Casinos, Inc.
Gtd. Sr. Sub. Notes, Series B
10.500% 08/01/04 350 346,500
Arogosy Gaming Co.
144A Co. Gtd.
10.750% 06/01/09 250 258,750
CapStar Hotel Co.
144A Sr. Sub. Notes
8.750% 08/15/07 250 223,750
Casino Magic of Louisiana Corp.
Gtd. First Mortgage Notes,
Series B
13.000% 08/15/03 350 385,000
Circus Circus Enterprise
Sr. Sub. Notes
9.250% 12/01/05 450 437,625
Coast Hotels & Casino, Inc.
144A Sr. Sub. Notes
9.500% 04/01/09 250 235,000
Hard Rock Hotel, Inc.
144A Sr. Sub. Notes
9.250% 04/01/05 500 411,250
Harrahs Operating Co. Inc.
Co. Gtd.
7.875% 12/15/05 250 235,000
Harvey Casino Resorts
Sr. Sub. Notes
10.625% 06/01/06 450 462,375
See Accompanying Notes to Financial Statements.
22
<PAGE>
WARBURG PINCUS HIGH YIELD FUND
SCHEDULE OF INVESTMENTS (CONT'D)
February 29, 2000 (Unaudited)
- --------------------------------------------------------------------------------
PAR
(000) VALUE
------ ----------
CORPORATE BONDS (CONT'D)
RESTAURANTS, HOTELS & GAMING (cont'd)
Horseshoe Gaming L.L.C.
Gtd. Sr. Sub. Notes, Series B
9.375% 06/15/07 $ 400 $ 390,000
Isle of Capri Casinos
144A Sr. Sub. Notes
8.750% 04/15/09 250 222,188
Jazz Casino Co., L.L.C.
Sr. Sub. Notes
5.927% 05/15/00 512 189,386
Louisiana Casino Cruises, Inc.
Secured 144A
11.000% 12/01/05 500 515,000
Majestic Star Casino Co.
Gtd., Series B
10.875% 07/01/06 400 388,000
Mohegan Tribal Gaming Authority
Sr. Sub. Notes
8.750% 01/01/09 400 385,000
Park Place Entertainment, Inc.
144A Sr. Sub. Notes
7.875% 12/15/05 250 233,750
Peninsula Gaming L.L.C.
144A Sr. Notes
12.250% 07/01/06 250 245,625
Players International, Inc.
Sr. Notes
10.875% 04/15/05 250 260,625
Prime Hospitality Corp.
Secured First Mortgage Notes
9.250% 01/15/06 250 245,000
Santa Fe Hotel, Inc.
First Mortgage Notes
11.000% 12/15/00 250 243,750
Sbarro Inc.
144A Sr. Notes
11.000% 09/15/09 250 256,250
Station Casinos, Inc.
Sr. Sub. Notes
10.125% 03/15/06 500 507,500
Sun International Hotels Ltd.
Yankee Gtd. Sr. Sub. Notes
9.000% 03/15/07 400 377,000
See Accompanying Notes to Financial Statements.
23
<PAGE>
WARBURG PINCUS HIGH YIELD FUND
SCHEDULE OF INVESTMENTS (CONT'D)
February 29, 2000 (Unaudited)
- --------------------------------------------------------------------------------
PAR
(000) VALUE
------ ----------
CORPORATE BONDS (CONT'D)
RESTAURANTS, HOTELS & GAMING (cont'd)
Waterford Gaming L.L.C./Waterford
Gaming Finance Corp.
144A Sr. Notes
9.500% 03/15/10 $ 239 $ 234,220
----------
8,679,544
----------
RETAIL TRADE (1.1%)
Advance Holding Corp
Sr. Discount Debentures, Series B
12.875% 04/15/09(DAGGER) 500 260,000
County Seat Stores, Inc.
144A Units
12.750% 11/01/04(DAGGER)(DAGGER) 500 7,500
Finlay Enterprises, Inc.
Sr. Secured Debentures
9.000% 05/01/08 250 226,250
Jo-Ann Stores, Inc.
144A Sr. Sub. Notes
10.375% 05/01/07 250 213,750
K Mart Corp.
Debentures
7.750% 10/01/12 250 229,848
Pathmark Stores
Sr. Sub Notes
9.625% 05/01/03 350 248,500
Pueblo Xtra International, Inc.
Sr. Notes
9.500% 08/01/03 400 180,000
----------
1,365,848
----------
STEEL (0.0%)
Gulf States Steel, Inc.
First Mortgage Notes
13.500% 04/15/03(DAGGER)(DAGGER) 200 30,000
----------
TELECOMMUNICATIONS (19.0%)
Airgate PCS Inc.
Sr. Sub. Notes
13.500% 10/01/09(DAGGER) 500 392,500
AMSC Acquisition Company, Inc.
Senior Notes, Series B
12.250% 04/01/08 250 221,250
See Accompanying Notes to Financial Statements.
24
<PAGE>
WARBURG PINCUS HIGH YIELD FUND
SCHEDULE OF INVESTMENTS (CONT'D)
February 29, 2000 (Unaudited)
- --------------------------------------------------------------------------------
PAR
(000) VALUE
------ ----------
CORPORATE BONDS (CONT'D)
TELECOMMUNICATIONS (cont'd)
Bresnan Communications Co.
144A Sr. Discount Notes
9.250% 02/01/09(DAGGER) $ 500 $ 356,250
144A Sr. Notes
8.000% 02/01/09 250 251,250
Call-Net Enterprises, Inc.
Sr. Discount Notes
10.800% 05/15/09(DAGGER) 450 216,000
Yankee Sr. Notes
9.375% 05/15/09 400 324,000
Caprock Communications Corp.
144A Sr. Notes
11.500% 05/01/09 400 408,000
Charter Communications Holdings
L.L.C. 144A Sr. Discount Notes
8.625% 04/01/09 250 229,375
9.920% 04/01/11(DAGGER) 500 290,000
Clearnet Communications, Inc.
Sr. Discount Notes
14.750% 12/15/05(DAGGER) 500 498,750
Covad Communication Group, Inc.
Sr. Notes 144A
12.500% 02/15/09 250 260,000
Dobson Sygnet Communications
Sr. Notes
12.250% 12/15/08 500 540,000
DTI Holdings, Inc.
144A Sr. Discount Notes
12.500% 03/01/08(DAGGER) 600 294,000
E Spire Communications
Sr. Discount Notes
13.000% 11/01/05(DAGGER) 550 387,750
Echostar DBS Corp.
Sr. Notes
9.375% 02/01/09 250 246,250
Focal Communications Corp.
144A Sr. Discount Notes
12.125% 02/15/08 550 371,250
Global Crossing Holdings, Ltd.
9.625% 05/15/08 350 341,250
Globalstar L.P./Globalstar Capital
Corp. 144A Sr. Notes
10.750% 11/01/04 100 57,500
See Accompanying Notes to Financial Statements.
25
<PAGE>
WARBURG PINCUS HIGH YIELD FUND
SCHEDULE OF INVESTMENTS (CONT'D)
February 29, 2000 (Unaudited)
- --------------------------------------------------------------------------------
PAR
(000) VALUE
------ ----------
CORPORATE BONDS (CONT'D)
TELECOMMUNICATIONS (cont'd)
Globix Corp.
Sr Regulated Notes
13.000% 05/01/05 $ 350 $ 373,188
GST Equipment Funding
144A Sr. Secured Exchange
Notes
13.250% 05/01/07(DAGGER) 250 251,250
GST USA, Inc.
Gtd. Sr. Discount Exchange Notes
13.875% 12/15/05 500 340,000
Hermes Europe Railtel
BV Sr. Notes
10.375% 01/15/09 250 233,750
Hyperion Telecommunications, Inc.
Sr. Discount Notes, Series B
13.000% 04/15/03(DAGGER) 500 460,000
Sr. Notes, Series B
12.250% 09/01/04 250 266,875
ICG Holdings, Inc.
Gtd. Senior Discount Notes
11.625% 03/15/07(DAGGER) 300 202,500
ICG Services, Inc.
144A Sr. Discount Notes
10.000% 02/15/08(DAGGER) 500 291,250
Intelcom Group (U.S.A.), Inc.
Gtd. Sr. Exchangeable Discount
Notes
12.500% 05/01/06(DAGGER) 550 451,000
Intercel, Inc.
Sr. Discount Notes
12.000% 02/01/06(DAGGER) 500 454,375
Intermedia Communications, Inc.
Sr. Discount Notes
11.250% 07/15/07(DAGGER) 1,000 795,000
International Cabletel, Inc.
Sr. Notes
11.500% 02/01/06(DAGGER) 415 389,063
ITC Deltacom, Inc.
144A Sr. Notes
11.000% 06/01/07 163 168,705
KMC Telecom Holdings, Inc.
Sr. Discount Notes
12.500% 02/15/08(DAGGER) 250 145,000
See Accompanying Notes to Financial Statements.
26
<PAGE>
WARBURG PINCUS HIGH YIELD FUND
SCHEDULE OF INVESTMENTS (CONT'D)
February 29, 2000 (Unaudited)
- --------------------------------------------------------------------------------
PAR
(000) VALUE
------ ----------
CORPORATE BONDS (CONT'D)
TELECOMMUNICATIONS (cont'd)
Knology Hldgs., Inc.
Sr. Discount Notes
11.875% 10/15/07(DAGGER) $ 550 $ 360,250
Level 3 Communications, Inc.
Gtd. Sr. Sub. Notes
8.500% 05/15/08 250 227,500
Sr. Discount Notes
10.500% 12/01/08(DAGGER) 250 148,125
Logix Communications Enterprises
Sr. Notes
12.250% 06/15/08 500 366,875
McLeodUSA, Inc.
144A Sr. Sub. Notes
8.125% 02/15/09 250 224,375
Sr. Discount Notes
10.500% 03/01/07(DAGGER) 350 281,750
Sr. Notes
9.250% 07/15/07 300 292,500
MDC Communications Corp.
Sr. Sub. Notes
10.500% 12/01/06 400 395,000
Metromedia Fiber Network, Inc.
Sr. Notes, Series B
10.000% 11/15/08 500 496,250
MetroNet Communications Corp.
Sr. Discount Notes
10.750% 11/01/07(DAGGER) 400 331,000
Sr. Notes
12.000% 08/15/07 400 460,000
MJD Communications, Inc.
Sr. Sub. Notes
9.500% 05/01/08 250 238,750
Nextel Partners, Inc.
144A Sr. Discount Notes
14.000% 02/01/09(DAGGER) 500 337,500
Nextlink Communications, Inc.
144A Sr. Notes
10.750% 11/15/08 250 251,250
Sr. Discount Notes
9.450% 04/15/08(DAGGER) 500 310,000
See Accompanying Notes to Financial Statements.
27
<PAGE>
WARBURG PINCUS HIGH YIELD FUND
SCHEDULE OF INVESTMENTS (CONT'D)
February 29, 2000 (Unaudited)
- --------------------------------------------------------------------------------
PAR
(000) VALUE
------ ----------
CORPORATE BONDS (CONT'D)
TELECOMMUNICATIONS (cont'd)
Nextlink Communications, L.L.C./
Nextlink Capital, Inc.
Sr. Notes
12.500% 04/15/06 $ 250 $ 266,250
NTL, Inc.
144A Sr. Notes
10.000% 02/15/07 250 250,625
Orbital Imaging Corp.
144A Units
11.625% 03/01/05 500 340,000
Orion Network Systems, Inc.
Gtd. Sr. Notes
11.250% 01/15/07 300 237,000
Pac-West Telecom, Inc.
144A Sr. Notes
13.500% 02/01/09 250 265,625
Pagemart Nationwide, Inc.
Sr. Discount Notes
15.000% 04/01/00(DAGGER) 250 245,000
Pegasus Communications Corp.
Sr. Notes, Series B
9.750% 12/01/06 250 243,750
Price Comm Wireless, Inc.
144A Sr. Sub. Notes
11.750% 07/15/07 250 273,125
Primus Telecommunications
Group, Inc.
144A Sr. Notes
11.250% 01/15/09 350 330,750
Qwest Communications
International, Inc.
Sr. Discount Notes
9.470% 10/15/07(DAGGER) 750 608,438
Sr. Discount Notes, Series B
8.290% 02/01/08(DAGGER) 250 192,500
Sr. Notes, Series B
10.875% 04/01/07 130 143,975
RCN Corp.
Sr. Discount Notes, Series B
9.800% 02/15/08(DAGGER) 300 186,750
Sr. Notes, Series B
10.000% 10/15/07(DAGGER) 400 373,000
See Accompanying Notes to Financial Statements.
28
<PAGE>
WARBURG PINCUS HIGH YIELD FUND
SCHEDULE OF INVESTMENTS (CONT'D)
February 29, 2000 (Unaudited)
- --------------------------------------------------------------------------------
PAR
(000) VALUE
------ ----------
CORPORATE BONDS (CONT'D)
TELECOMMUNICATIONS (cont'd)
Rhythms Netconnections
Sr. Discount Notes
13.500% 05/15/08(DAGGER) $ 600 $ 324,000
RSL Communications plc
Yankee Co. Gtd.
10.500% 11/15/08 400 358,000
Salem Communications Corp.
144A Co. Gtd., Series B
9.500% 10/01/07 400 388,000
Startec Global Communications, Inc.,
Sr. Notes
12.000% 05/15/08 400 339,500
Telewest Communications plc
Debentures
9.625% 10/01/06 250 246,250
Teligent Inc.
Sr. Notes
11.500% 12/01/07 250 241,875
Time Warner Telecom L.L.C./Time
Warner Telecom Inc.
Sr. Notes
9.750% 07/15/08 500 503,125
United Pan - Europe Comm
Industries 144A Sr. Notes
10.875% 11/01/07 350 353,500
US Unwired Inc.
144A Sr. Discount Notes
13.375% 11/01/09(DAGGER) 500 290,000
Viatel, Inc.
Sr. Discount Notes
12.500% 04/15/08(DAGGER) 600 360,000
Williams Communications
Group, Inc.
Sr. Notes
10.700% 10/01/07 500 515,000
WinStar Communications, Inc.
Sr. Discount Notes
14.000% 10/15/05(DAGGER) 500 507,500
----------
23,611,994
----------
TELEPHONE (0.3%)
Flooring America, Inc.
9.250% 10/15/07 500 397,500
----------
See Accompanying Notes to Financial Statements.
29
<PAGE>
WARBURG PINCUS HIGH YIELD FUND
SCHEDULE OF INVESTMENTS (CONT'D)
February 29, 2000 (Unaudited)
- --------------------------------------------------------------------------------
PAR
(000) VALUE
------ ----------
CORPORATE BONDS (CONT'D)
TEXTILES & APPAREL (0.9%)
Advanced Glass Fiber Yarns
Sr. Sub. Notes 144A
9.875% 01/15/09 $ 250 $ 230,625
Bgf Industries, Inc.
Sr. Sub. Notes 144A
10.250% 01/15/09 250 231,250
Phillips Van-Heusen Corp.
Sr. Sub. Notes
9.500% 05/01/08 250 231,250
William Carter Company
Sr. Sub. Notes, Series A
10.375% 12/01/06 450 397,125
----------
1,090,250
----------
TRANSPORT (3.3%)
Complete Europe NV Unit
14.000% 02/15/09(DAGGER) 1,000 650,000
Dolphin Telecom PLC
144A Sr. Discount Notes
14.000% 05/15/09(DAGGER) 500 203,750
Exodus Communications, Inc.
144A Senior Notes
10.750% 12/15/09 450 457,875
Gt Group Telecommunications
13.250% 02/01/10(DAGGER) 500 296,875
Metricom Financial
13.000% 02/15/10 300 254,250
Metromedia International 144A
10.500% 09/30/07 1,761 827,526
Norampac, Inc.
9.500% 02/01/08 250 248,750
PageMart Wireless, Inc.
Senior Subordinated Discount
Exchange Notes
15.000% 02/01/08(DAGGER) 250 131,250
Triton PCS, Inc.
Senior Subordinated Discount
Notes, Company Guaranteed
11.000% 05/01/08(DAGGER) 500 361,250
Viatel, Inc.
11.500% 03/15/09 172 162,925
Voicestream Wireless Holding
10.375% 11/15/09 500 518,750
----------
4,113,201
----------
See Accompanying Notes to Financial Statements.
30
<PAGE>
WARBURG PINCUS HIGH YIELD FUND
SCHEDULE OF INVESTMENTS (CONT'D)
February 29, 2000 (Unaudited)
- --------------------------------------------------------------------------------
PAR
(000) VALUE
------ ----------
CORPORATE BONDS (CONT'D)
TRANSPORTATION (1.0%)
AirTran Airlines, Inc.
Secured Notes
10.500% 04/15/01 $ 250 $ 243,750
Atlantic Express Transportation Corp.
Gtd. Sr. Secured Notes
10.750% 02/01/04 250 242,500
Canadian Airlines Corp.
Yankee Sr. Notes
12.250% 08/01/06(DAGGER)(DAGGER) 250 125,000
Kitty Hawk, Inc.
Sr. Notes
9.950% 11/15/04 250 246,875
Pegasus Shipping (Hellas) Ltd.
144A Gtd. First Preferred
Mortgage Notes, Series A
11.875% 11/15/04(DAGGER)(DAGGER) 500 195,000
Trans World Airlines
Sr. Notes
11.375% 03/01/06 500 185,000
----------
1,238,125
----------
WASTE MANAGEMENT (0.5%)
Allied Waste North America,
Series B (Ba2, BB)
7.875% 01/01/09 250 211,250
Waste Systems International, Inc.
144A Conv. Sub. Notes
7.000% 05/13/05 400 350,000
----------
561,250
----------
TOTAL CORPORATE BONDS (Cost $112,176,932) $ 99,949,823
----------
ASSET BACKED SECURITY (0.4%)
Airplanes Pass Through Trust
Series 1, Class D
10.875% 03/15/19 $ 594 $ 540,667
(Cost $594,120) ----------
NUMBER
OF
SHARES
------
RIGHTS & WARRANTS (2.7%)
BROADCASTING (0.0%)
Australis Holdings Pty. Ltd. strike
$0.01 expires Oct. 2001 294 $ 3
----------
See Accompanying Notes to Financial Statements.
31
<PAGE>
WARBURG PINCUS HIGH YIELD FUND
SCHEDULE OF INVESTMENTS (CONT'D)
February 29, 2000 (Unaudited)
- --------------------------------------------------------------------------------
NUMBER
OF
SHARES VALUE
------ -----
RIGHTS & WARRANTS (CONT'D)
CABLE (0.7%)
DIVA Systems Corp.(DAGGER)(DAGGER)(DAGGER) strike
$0.01 expires May 2006 2,250 $ 818,100
DIVA Systems Corp.(DAGGER)(DAGGER)(DAGGER) strike
$0.01 expires March 2008 7,581 90,972
----------
909,072
----------
CHEMICALS (1.1%)
Uniroyal Technology Corp.
strike $4.375 expires June 2003 23,500 1,304,250
----------
CONSTRUCTION & BUILDING MATERIALS (0.0%)
Capital Pacific Holdings Group, Inc. 12,640 126
----------
ELECTRONICS (0.0%)
Interact Electronic Marketing, Inc.
strike $0.01 expires Dec. 2009 700 7
----------
ENERGY (0.1%)
Abraxas Petroleum Corp.
expires Nov. 2004 29,809 298
Key Energy Services, Inc. strike
$4.88 expires Jan. 2009 750 45,000
Metricom, Inc. strike $87.00
expires Feb. 2010 300 42,000
----------
87,298
----------
INDUSTRIAL GOODS & MATERIALS (0.0%)
Golden Ocean Group, Ltd.
strike $46.20 expires Aug. 2001 438 0
----------
PUBLISHING & INFORMATION SERVICES (0.0%)
InterAct Systems, Inc.(DAGGER)(DAGGER)(DAGGER)
strike $0.01 expires Aug. 2003 700 17,500
Mentus Media Corp. 144A strike
$0.01 expires Feb. 2008 1,391 14
Source Media, Inc. strike $0.01
expires Nov. 2007 5,587 44,700
----------
62,214
----------
TELECOMMUNICATIONS (0.8%)
Airgate Pcs, Inc. strike $0.01
expires Oct. 2009 500 10,000
American Mobile Satellite
Corporation strike $12.28
expires April 2008 500 40,000
See Accompanying Notes to Financial Statements.
32
<PAGE>
WARBURG PINCUS HIGH YIELD FUND
SCHEDULE OF INVESTMENTS (CONT'D)
February 29, 2000 (Unaudited)
- --------------------------------------------------------------------------------
NUMBER
OF
SHARES VALUE
------ -----
RIGHTS & WARRANTS (CONT'D)
TELECOMMUNICATIONS (cont'd)
Ampex Corp. 144A strike $2.25
expires March 2003 17,000 $ 27,625
Carrier1 International strike $2.00
expires Feb. 2009 500 400,000
Completel Holdings Class B 144A 10,000 200,000
DTI Holdings, Inc. 144A strike
$0.01 expires March 2008 3,000 30
KMC Telecom Holdings, Inc.
strike $0.22 expires April 2008 500 12,500
McCaw International Ltd. strike
$36.45 expires April 2007 500 1,250
Orbital Imaging Corp. strike
$1.00 expires March 2005 500 15,000
PLD Telekom, Inc. strike
$1.00 expires June 2004 1,010 4,040
PLD Telekom, Inc. strike
$10.86 expires March 2003 230 1,038
PLD Telekom, Inc. strike $10.86
expires March 2003 1,010 8,476
Primestar, Inc. General Motors Cl.
H Stock Appreciation Rts strike
$47.00 expires May 2000 3,828 286,281
Startec Global Communications
strike $24.20 expires May 2008 400 720
----------
1,006,960
----------
TOTAL RIGHTS & WARRANTS (Cost $438,305) $3,369,930
----------
COMMON STOCKS (4.0%)
COMPUTERS, SOFTWARE & SERVICES (1.0%)
Globix Corp. 8,448 $ 442,992
Verio, Inc. 9,858 739,966
----------
1,182,958
----------
CONSUMER PRODUCTS (0.0%)
Coinstar, Inc. 3,671 51,394
----------
ENERGY (1.3%)
Abraxas Petroleum Corp. 29,809 40,987
Weatherford International, Inc. 15,162 682,290
Metretek Technologies, Inc. 150 871,200
----------
1,594,477
----------
PACKAGING & CONTAINERS (0.0%)
Crown Packaging Enterprises, Ltd. 100,847 1,008
----------
See Accompanying Notes to Financial Statements.
33
<PAGE>
WARBURG PINCUS HIGH YIELD FUND
SCHEDULE OF INVESTMENTS (CONT'D)
February 29, 2000 (Unaudited)
- --------------------------------------------------------------------------------
NUMBER
OF
SHARES VALUE
------ -----
COMMON STOCKS (CONT'D)
TELECOMMUNICATIONS (1.7%)
Advanced Radio Telecom Corp. 10,117 $ 386,975
AT&T Canada, Inc. 1,370 79,506
E Spire Communications, Inc. 21,253 265,663
Globalstar Telecommunications, Ltd. 1,651 47,071
Intermedia Communications, Inc. 3,097 196,093
Loral Space and Communications Ltd. 181 2,726
Microcell Telecommunications, Inc. 3,436 158,056
Price Communications Corp. 40,268 961,399
----------
2,097,489
----------
TOTAL COMMON STOCKS (Cost $1,640,920) $4,927,326
----------
PREFERRED STOCKS (3.8%)
AEROSPACE/DEFENSE (0.7%)
GPA Group plc Convertible
Cumulative Second Preference
Shares 7.00% 1,750,000 $ 840,000
----------
CABLE (0.1%)
DIVA Systems Corporation,
Series C 11,890 95,120
----------
CELLULAR/WIRELESS COMMUNICATIONS (0.3%)
Rural Cellular Corp. 144A PIK
11.375% 3,013 297,563
----------
ELECTRONICS (0.2%)
Interact Electronic Marketing,
Inc. 14.00% 700 178,500
----------
INDUSTRIAL (0.3%)
International Utility Structures,
Inc. 13.00% 960 79,920
International Utility Structures, Inc.,
Units 13.00% 3,500 312,813
----------
392,733
----------
MISCELLANEOUS (0.0%)
Peninsula Gaming LLC 1,760 10,563
----------
PUBLISHING & INFORMATION SERVICES (0.2%)
Source Media, Inc., 144A PIK
13.50% 13,484 296,653
----------
RESTAURANTS, HOTELS & GAMING (0.1%)
AmeriKing, Inc., 13.00% Cum.
Exchangeable 7,329 146,583
----------
See Accompanying Notes to Financial Statements.
34
<PAGE>
WARBURG PINCUS HIGH YIELD FUND
SCHEDULE OF INVESTMENTS (CONCLUDED)
February 29, 2000 (Unaudited)
- --------------------------------------------------------------------------------
NUMBER
OF
SHARES VALUE
------ -----
PREFERRED STOCKS (CONT'D)
TELECOMMUNICATIONS (1.9%)
Adelphia Business Solutions, Inc.
12.875% Pfd., Series B 8 $ 7,761
Classic Communications, Inc. 3,000 50,010
E.Spire Communications, Inc.
Jr. PIK 12.75% 1,277 453,501
Intermedia Communications, Inc.
144A 7.00% Jr. Convertible,
Series E 20,000 1,045,000
Nextel Communications, Inc.
13.00% Exchangeable,
Series D PIK 338 362,505
NEXTLINK Communications, Inc.
144A 14.00% Sr. Exchangeable
PIK 9,065 478,179
------------
2,396,956
------------
TOTAL PREFERRED STOCKS (Cost $4,042,955) $ 4,654,671
------------
PAR
(000)
------
SHORT-TERM INVESTMENT (0.6%)
BBH Grand Cayman U.S. Dollar Time Deposit
4.950% 03/01/00 $ 812 $ 812,000
------------
(Cost $812,000)
TOTAL INVESTMENTS (92.1%) (Cost $119,705,232*) $114,254,417
OTHER ASSETS IN EXCESS OF LIABILITIES (7.9%) $ 9,829,394
------------
TOTAL NET ASSETS (100.0%) $124,083,811
============
* Also cost for Federal income tax purposes at February 29, 2000. The gross
appreciation (depreciation) on a tax basis is as follows:
Gross Appreciation $ 10,548,946
Gross Depreciation (15,999,761)
------------
Net Depreciation $ (5,450,815)
============
(DAGGER) Step Bond-- The interest rate as of February 29, 2000 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.
35
<PAGE>
WARBURG PINCUS MUNICIPAL BOND FUND
SCHEDULE OF INVESTMENTS
February 29, 2000 (Unaudited)
- --------------------------------------------------------------------------------
PAR
(000) VALUE
----- ----------
MUNICIPAL BONDS (91.1%)
CALIFORNIA (15.3%)
California State GO
6.300% 09/11/11 $670 $ 733,650
5.125% 10/01/17 825 760,031
Los Angeles CA, Department of
Water & Power Water RB
4.500% 05/15/23 705 568,406
San Diego CA Convention Center
Expansion Financing Authority,
Series A
4.750% 04/01/28 535 436,025
----------
2,498,112
----------
COLORADO (3.8%)
Colorado Springs CO,
Utility RB
5.875% 11/15/17 595 612,850
----------
FLORIDA (3.8%)
Tallahassee FL, Electric RB,
First Lien
6.100% 10/01/06 600 621,000
----------
ILLINOIS (5.1%)
Chicago Illinois GO,
Series 1993
5.250% 01/01/18 200 182,000
Illinois State Sales Tax RB,
Series Q
5.750% 06/15/14 650 650,812
----------
832,812
----------
INDIANA (0.2%)
Indianapolis IN, Public
Improvement Board RB
6.000% 01/10/03 25 25,125
----------
LOUISIANA (4.2%)
New Orleans LA, Home Mortgage
Authority SOB
6.250% 01/15/11 635 678,656
----------
MARYLAND (5.8%)
Maryland State Transportation
Authority Project RB
6.800% 07/01/16 850 944,562
----------
See Accompanying Notes to Financial Statements.
36
<PAGE>
WARBURG PINCUS MUNICIPAL BOND FUND
SCHEDULE OF INVESTMENTS (CONT'D)
February 29, 2000 (Unaudited)
- --------------------------------------------------------------------------------
PAR
(000) VALUE
----- ----------
MUNICIPAL BONDS (CONT'D)
MASSACHUSETTS (3.6%)
Massachusetts State Water
Resources Authority RB,
Series B
5.000% 12/01/25 $660 $ 564,300
Massachusetts State Water
Resources Authority, General
RB, Series 92A
6.500% 07/15/19 20 21,400
----------
585,700
----------
NEW YORK (35.3%)
Metropolitan Transit Authority
Commuter Facilities RB,
Series A
5.000% 07/01/23 600 510,750
New York State Dormitory
Authority RB (Elizabeth Church
Manor Nursing Home)
5.400% 08/01/23 50 45,500
New York State Dormitory
Authority RB (Episcopal Health
Services)
7.550% 08/01/29 435 444,244
New York State Dormitory
Authority RB (Judicial Facilities
Lease)
7.375% 07/01/16 40 45,900
New York State Dormitory
Authority RB (Park Ridge
Housing Inc. Project)
7.850% 02/01/29 530 537,277
New York State Local Government
Assistance Corp. RB,
Series B
4.875% 04/01/20 580 491,550
New York State Power Authority
General Purpose RB,
Series R
7.000% 01/01/10 360 407,700
New York State Throughway
Authority General RB,
Series B
5.000% 01/01/20 30 26,175
See Accompanying Notes to Financial Statements.
37
<PAGE>
WARBURG PINCUS MUNICIPAL BOND FUND
SCHEDULE OF INVESTMENTS (CONT'D)
February 29, 2000 (Unaudited)
- --------------------------------------------------------------------------------
PAR
(000) VALUE
----- ----------
MUNICIPAL BONDS (CONT'D)
New York, NY Municipal Water
Finance Authority Water &
Sewer System RB,
Series B
5.125% 06/15/30 $295 $ 252,225
New York, NY Municipal Water
Finance Authority Water &
Sewer System RB,
Series D
4.875% 06/15/21 400 339,000
New York, NY Prerefunded GO,
Series D
8.000% 08/01/01 605 642,056
6.000% 02/15/05 5 5,256
New York, NY Prerefunded GO,
Series H
7.200% 02/01/02 530 561,137
New York, NY Transitional
Finance Authority RB
(Future Tax Secured), Series B
4.750% 11/15/14 35 31,106
New York, NY Unrefunded Balance
GO, Series D
8.000% 08/01/03 45 47,644
6.000% 02/15/25 10 9,800
New York, NY Unrefunded Balance
GO, Series H
7.200% 02/01/13 70 73,587
Suffolk County NY Water Authority,
Waterworks RB, Series V
6.750% 06/01/12 580 640,175
Triborough Bridge and Tunnel
Authority, NY General Purpose
RB, Series A
5.200% 01/01/20 730 652,438
----------
5,763,520
----------
PUERTO RICO (4.5%)
Commonwealth of Puerto Rico GO
5.400% 07/01/07 730 742,775
----------
See Accompanying Notes to Financial Statements.
38
<PAGE>
WARBURG PINCUS MUNICIPAL BOND FUND
SCHEDULE OF INVESTMENTS (CONT'D)
February 29, 2000 (Unaudited)
- --------------------------------------------------------------------------------
PAR
(000) VALUE
----- -----------
MUNICIPAL BONDS (CONT'D)
SOUTH DAKOTA (0.1%)
Heartland Consumers Power
District, SD Electric RB
6.375% 01/01/16 $ 20 $ 21,175
-----------
TENNESSEE (0.1%)
Metropolitan Government of
Nashville and Davidson County,
TN Water and Sewer RB
Series A
4.750% 01/01/22 30 24,863
-----------
VIRGINIA (4.4%)
Fairfax County, VA Redevelopment
& Housing Authority (Island
Walk Proj.), Mortgage RB
7.100% 04/01/19 630 715,050
-----------
WASHINGTON (4.9%)
King County, WA GO, Series A
6.200% 01/01/24 40 42,400
Seattle, WA Municipal Light &
Power RB
5.125% 07/01/22 100 87,250
Seattle, WA Water System RB
5.250% 12/01/23 735 663,338
-----------
792,988
-----------
TOTAL MUNICIPAL BONDS (Cost $14,921,226) $14,859,188
-----------
CORPORATE BONDS (6.2%)
BANKING (1.9%)
Bay View Capital Corp.
Sub. Notes
9.125% 08/15/07 $ 65 $ 53,625
Export-Import Bank of Korea,
Global Bonds
6.500% 02/10/02 25 24,375
Export-Import Bank of Korea,
Yankee Notes
6.500% 05/15/00 50 49,938
First Republic Bank Sub. Notes
7.750% 09/15/12 25 21,063
Fuji Finance (Cayman), Ltd.
Perpetual Sub. Notes
7.113% 08/08/00(DAGGER)(DAGGER)/(DAGGER)(DAGGER)(DAGGER) 120 115,200
See Accompanying Notes to Financial Statements.
39
<PAGE>
WARBURG PINCUS MUNICIPAL BOND FUND
SCHEDULE OF INVESTMENTS (CONT'D)
February 29, 2000 (Unaudited)
- --------------------------------------------------------------------------------
PAR
(000) VALUE
----- ----------
CORPORATE BONDS (CONT'D)
BANKING (cont'd)
Fuji JGB Investment L.L.C.,
Noncumulative Preferred
Securities, Series A
9.870% 06/30/00(DAGGER)(DAGGER) $ 45 $ 45,225
----------
309,426
----------
BROADCASTING (0.7%)
Fox/Liberty Networks L.L.C.,
Registered Sr. Notes
8.875% 08/15/07 105 106,575
----------
CABLE (0.1%)
CSC Holdings Inc.,
Sr. Notes
7.250% 07/15/08 20 18,800
----------
RETAIL (0.7%)
K Mart Corp. Notes
7.950% 02/01/23 25 20,969
K Mart Corp. Pass Through
Certificates, Series 1995
Class K3
8.540% 01/02/15 103 99,064
----------
120,033
----------
TELECOMMUNICATIONS (0.7%)
Nextlink Communications
144A Senior Notes
10.500% 12/01/09 40 40,000
Voicestream Wireless Holding,
Series 144A
10.375% 11/15/09(DAGGER) 60 37,800
10.375% 11/15/09 40 41,500
----------
119,300
----------
TRANSPORTATION (1.1%)
Northwest Airlines, Inc.,
Gtd. Notes
7.625% 03/15/05 200 178,000
----------
UTILITIES (1.0%)
Connecticut Light and Power Co.
First Mortgage Bonds,
Series C
7.750% 06/01/02 85 84,575
Series D
7.875% 10/01/24 10 10,000
See Accompanying Notes to Financial Statements.
40
<PAGE>
WARBURG PINCUS MUNICIPAL BOND FUND
SCHEDULE OF INVESTMENTS (CONCLUDED)
February 29, 2000 (Unaudited)
- --------------------------------------------------------------------------------
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 $ 69 $ 68,914
-----------
163,489
-----------
TOTAL CORPORATE BONDS (Cost $1,039,196) $ 1,015,623
-----------
U.S. TREASURY OBLIGATIONS (0.7%)
U.S. Treasury Bonds
8.000% 11/15/21 $ 65 $ 76,843
U.S. Treasury Notes
6.500% 02/15/10 30 30,195
-----------
TOTAL U.S. TREASURY OBLIGATIONS (Cost $103,276) $ 107,038
-----------
SHORT TERM INVESTMENT (0.6%)
BBH Grand Cayman U.S. Dollar
Time Deposit
4.950% 03/01/00 $106 $ 106,000
-----------
(Cost $106,000)
TOTAL INVESTMENTS (98.6%) (Cost $16,169,698*) $16,087,849
OTHER ASSETS IN EXCESS OF LIABILITIES (1.4%) $ 224,582
-----------
TOTAL NET ASSETS (100.0%) $16,312,431
===========
* Also cost for Federal income tax purposes at February 29, 2000. The gross
appreciation (depreciation) on a tax basis is as follows:
Gross Appreciation $ 500,503
Gross Depreciation (582,352)
---------
Net Depreciation $ (81,849)
=========
(DAGGER) Step Bond -- The interest rate as of February 29, 2000 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
February 29, 2000.
(DAGGER)(DAGGER)(DAGGER) Securities have no stated maturity date.
INVESTMENT ABBREVIATIONS
GO = General Obligations
RB = Revenue Bond
SOB = Special Obligations Bond
See Accompanying Notes to Financial Statements.
41
<PAGE>
WARBURG PINCUS FUND
STATEMENTS OF ASSETS AND LIABILITIES
February 29, 2000 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
HIGH YIELD MUNICIPAL
FUND BOND FUND
------------ ------------
<S> <C> <C>
ASSETS
Investments, at value (cost - $119,705,232 and
$16,169,698, respectively) $114,254,417 $16,087,849
Cash 34,507 270
Receivable for investments sold 2,783,357 --
Receivable for Fund shares sold 4,721,555 --
Receivable from investment adviser -- 3,623
Dividends and interest receivable 2,340,076 232,470
Prepaid expenses and other assets 52,482 13,040
------------ -----------
Total Assets 124,186,394 16,337,252
------------ -----------
LIABILITIES
Advisory fee payable 26,461 --
Distribution fee payable (Common shares) 5,319 43
Accrued expenses payable 70,803 24,778
------------ -----------
Total Liabilities 102,583 24,821
------------ -----------
NET ASSETS
Capital stock, $0.001 par value 8,016 1,173
Paid-in capital 145,021,756 16,380,665
Undistributed net investment income 1,870,259 72,919
Accumulated net realized loss from investments (17,365,405) (153,639)
Net unrealized appreciation/(depreciation) on
investments (5,450,815) 11,313
------------ -----------
Net Assets $124,083,811 $16,312,431
============ ===========
INSTITUTIONAL SHARES
Net assets $ 90,944,631 $16,095,264
------------ -----------
Shares outstanding 5,882,641 1,158,400
------------ -----------
Net asset value, offering price and redemption price
per share $ 15.46 $ 13.89
============ ===========
COMMON SHARES
Net assets $ 33,139,180 $ 217,167
------------ -----------
Shares outstanding 2,133,772 15,627
------------ -----------
Net asset value, offering price and redemption price
per share $ 15.53 $ 13.90
============ ===========
</TABLE>
See Accompanying Notes to Financial Statements.
42
<PAGE>
WARBURG PINCUS FUND
STATEMENTS OF OPERATIONS
For the Six Months Ended February 29, 2000 (Unaudited)
- --------------------------------------------------------------------------------
HIGH YIELD MUNICIPAL
FUND BOND FUND
---------- ---------
INVESTMENT INCOME
Dividends $ 140,784 $ 5,663
Interest 6,266,891 529,766
---------- ---------
Total Investment Income 6,407,675 535,429
---------- ---------
EXPENSES
Investment advisory fees 439,704 63,916
Administration fees 85,185 18,703
Registration fees 49,361 18,002
Distribution fees 33,331 273
Printing fees 29,646 10,227
Transfer agent fees 25,772 8,867
Custodian fees 22,216 13,792
Legal fees 16,197 2,989
Audit fees 12,440 6,597
Directors fees 5,246 5,276
Interest expense 990 679
Insurance expense 402 117
Miscellaneous fees 20,132 5,387
---------- ---------
740,622 154,825
Less fees waived and reimbursed (268,176) (62,898)
---------- ---------
Total Expenses 472,446 91,927
---------- ---------
Net Investment Income 5,935,229 443,502
---------- ---------
REALIZED AND UNREALIZED GAIN/(LOSS) ON INVESTMENTS:
Net realized gain/(loss) from security transactions 257,858 $(124,385)
Net change in unrealized appreciation/(depreciation)
from Investments 1,102,289 (336,896)
---------- ---------
Net Gain/(Loss) on Investments 1,360,147 (461,281)
---------- ---------
Net Increase/(Decrease) In Net Assets Resulting
From Operations $7,295,376 $ (17,779)
========== =========
See Accompanying Notes to Financial Statements.
43
<PAGE>
WARBURG PINCUS FUND
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
HIGH YIELD FUND MUNICIPAL BOND FUND
----------------------------------- -----------------------------------
FOR THE SIX MONTHS FOR THE YEAR FOR THE SIX MONTHS FOR THE YEAR
ENDED ENDED ENDED ENDED
FEBRUARY 29, 2000 AUGUST 31, 1999 FEBRUARY 29, 2000 AUGUST 31, 1999
------------------ --------------- ------------------ ---------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
INCREASE/(DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income $ 5,935,229 $ 11,684,546 $ 443,502 $ 1,030,410
Net gain/(loss) on investments 1,360,147 (9,152,286) (461,281) (944,193)
------------ ------------ ----------- -----------
Net increase/(decrease) in
net assets resulting from
operations. 7,295,376 2,532,260 (17,779) 86,217
------------ ------------ ----------- -----------
Dividends and Distributions to
shareholders:
From net investment income:
Institutional shares (5,522,389) (8,940,115) (478,614) (1,031,337)
Common shares (1,347,004) (1,873,396) (5,498) (4,114)
From net realized capital gains:
Institutional shares -- -- (27,430) (320,024)
Common shares -- -- (376) (14)
------------ ------------ ----------- -----------
Total distributions to shareholders (6,869,393) (10,813,511) (511,918) (1,355,489)
------------ ------------ ----------- -----------
Net capital share transactions (5,495,081) 42,820,448 (5,792,072) 1,674,840
------------ ------------ ----------- -----------
Total increase/(decrease)
in net assets (5,069,098) 34,539,197 (6,321,769) 405,568
NET ASSETS:
Beginning of period 129,152,909 94,613,712 22,634,200 22,228,632
----------- ------------ ----------- -----------
End of period $124,083,811 $129,152,909 $16,312,431 $22,634,200
============ ============ =========== ===========
Undistributed net investment
income $ 1,870,259 $ 2,804,423 $ 72,919 $ 113,529
============ ============ =========== ===========
</TABLE>
See Accompanying Notes to Financial Statements.
44
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
WARBURG PINCUS FUNDS
HIGH YIELD FUND FINANCIAL HIGHLIGHTS
(For a Share Outstanding Throughout each Period)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INSTITUTIONAL
--------------------------------------------------------------------
FOR THE SIX
MONTHS ENDED
FEBRUARY 29, FOR THE YEAR ENDED AUGUST 31,
2000 ----------------------------------------------------
(UNAUDITED) 1999 1998 1997 1996 1995
------------ ------- ------- ------- ------- --------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 15.32 $ 16.60 $ 17.08 $ 16.09 $ 15.72 $ 15.94
------- ------- ------- ------- ------- --------
Income from investment operations
Net investment income 0.71(DAGGER) 1.42 1.43 1.37 1.47 1.42
Net gain/(loss) on investments
(both realized and unrealized) 0.22 (1.33) (0.49) 0.96 0.40 (0.30)
------- ------- ------- ------- ------- --------
Total from investment operations 0.93 0.09 0.94 2.33 1.87 1.12
------- ------- ------- ------- ------- --------
Dividends from net investment income (0.79) (1.37) (1.42) (1.34) (1.50) (1.34)
------- ------- ------- ------- ------- --------
Net asset value, end of period $ 15.46 $ 15.32 $ 16.60 $ 17.08 $ 16.09 $ 15.72
======= ======= ======= ======= ======= ========
Total return 6.37%(c) 0.67% 5.48% 15.17% 12.42% 7.79%(d)
Ratios/Supplemental Data:
Net assets, end of period (000s omitted) $90,945 $95,129 $94,044 $92,630 $75,849 $153,621
Ratio of expenses to average net assets 0.70%(a)(b) 0.69%(a) 0.70%(a) 0.70%(a) 0.88%(a) 1.00%(a)
Ratio of net investment income to
average net assets 9.50%(b) 9.10% 8.12% 8.44% 8.92% 9.37%
Fund turnover rate 15%(c) 40% 60% 84% 143% 70%
</TABLE>
<TABLE>
<CAPTION>
COMMON
------------------------------------------------------
FOR THE SIX
MONTHS ENDED FOR THE YEAR ENDED FOR THE PERIOD
FEBRUARY 29, AUGUST 31, NOVEMBER 1, 1996*
2000 ------------------- to August 31,
(UNAUDITED) 1999 1998 1997
------------ ------- ------ -----------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period $ 15.38 $ 16.62 $17.08 $16.21
------- ------- ------ ------
Income from investment operations
Net investment income 0.69(DAGGER)1.39(DAGGER)1.36 0.93
Net gain/(loss) on investments
(both realized and unrealized) 0.22 (1.34) (0.45) 0.87
------- ------- ------ ------
Total from investment operations 0.91 0.05 0.91 1.80
------- ------- ------ ------
Dividends from net investment income (0.76) (1.29) (1.37) (0.93)
------- ------- ------ ------
Net asset value, end of period $ 15.53 $ 15.38 $16.62 $17.08
======= ======= ====== ======
Total return 6.23%(c) 0.39% 5.27% 11.49%(c)
Ratios/Supplemental Data:
Net assets, end of period (000s omitted) $33,139 $34,024 $ 570 $ 86
Ratio of expenses to average net assets 0.96%(a)(b) 0.95%(a) 0.95%(a) 0.96%(a)(b)
Ratio of net investment income to
average net assets 9.27%(b) 8.86% 7.96% 8.13%(b)
Fund turnover rate 15%(c) 40% 60% 84%(c)
<FN>
- ----------------------------
(a) Without the voluntary waiver of advisory fees and administration fees,
the ratios of expenses to average net assets for the Institutional Class
would have been 1.11% annualized for six months ended February 29, 2000 and
1.04%, 1.14%, 1.13%, 1.11% and 1.08% for the years ended August 31, 1999,
1998, 1997, 1996 and 1995, respectively. Without the voluntary waiver of
advisory fees and administration fees, the ratios of expenses to average
net assets for the Common Class would have been 1.42% annualized for six
months ended February 29, 2000 and 1.34% and 1.39 % for the years ended
August 31, 1999 and 1998, respectively, and 1.47% annualized for the period
ended August 31, 1997.
(b) Annualized.
(c) Not annualized.
(d) Redemption fees not reflected in total return.
* Inception Date.
(DAGGER)Per share information is calculated using the average share
outstanding method.
</FN>
</TABLE>
See Accompanying Notes to Financial Statements.
46-47
<PAGE>
WARBURG PINCUS FUNDS
MUNICIPAL BOND FUND FINANCIAL HIGHLIGHTS
(For a Share Outstanding Throughout Each Period)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INSTITUTIONAL
--------------------------------------------------------------
FOR THE SIX
MONTHS ENDED
FEBRUARY 29, FOR THE YEAR ENDED AUGUST 31,
2000 -----------------------------------------------
(UNAUDITED) 1999 1998 1997 1996 1995
------------ ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 14.30 $ 15.12 $ 14.84 $ 14.65 $ 15.46 $ 15.06
------- ------- ------- ------- ------- -------
Income from investment operations
Net investment income 0.34 0.67 0.70 0.72 0.73 0.71
Net gain/(loss) on investments
(both realized and unrealized) (0.35) (0.60) 0.40 0.65 (0.37) 0.50
------- ------- ------- ------- ------- -------
Total from investment operations (0.01) 0.07 1.10 1.37 0.36 1.21
------- ------- ------- ------- ------- -------
Less Distributions
Dividends from net investment income (0.38) (0.68) (0.71) (0.72) (0.74) (0.76)
Distributions from capital gains (0.02) (0.21) (0.11) (0.46) (0.43) (0.05)
------- ------- ------- ------- ------- -------
Total distributions (0.40) (0.89) (0.82) (1.18) (1.17) (0.81)
------- ------- ------- ------- ------- -------
Net asset value, end of period $ 13.89 $ 14.30 $ 15.12 $ 14.84 $ 14.65 $ 15.46
======= ======= ======= ======= ======= =======
Total return (0.07)%(c) 0.36% 7.62% 9.74% 2.27% 8.42%
Ratios/Supplemental Data:
Net assets, end of period (000s omitted) $16,095 $22,423 $22,229 $19,810 $19,581 $48,978
Ratio of expenses to average net assets 1.00%(a)(b) 0.99%(a) 1.00%(a) 1.00%(a) 1.00%(a) 1.00%(a)
Ratio of net investment income to
average net assets 4.86%(b) 4.49% 4.72% 4.88% 4.62% 4.76%
Fund turnover rate 3%(c) 26% 57% 43% 34% 25%
</TABLE>
COMMON
--------------------------------
FOR THE SIX
MONTHS ENDED FOR THE PERIOD
FEBRUARY 29, OCTOBER 30, 1998*
2000 to August 31,
(UNAUDITED) 1999
------------ -----------------
Net asset value, beginning of period $14.29 $15.14
------ ------
Income from investment operations
Net investment income 0.33 0.54
Net gain/(loss) on investments
(both realized and unrealized) (0.35) (0.66)
------ ------
Total from investment operations (0.02) (0.12)
------ ------
Less Distributions
Dividends from net investment income (0.35) (0.52)
Distributions from capital gains (0.02) (0.21)
------ ------
Total distributions (0.37) (0.73)
------ ------
Net asset value, end of period $13.90 $14.29
====== ======
Total return (0.07)%(c) (0.85)%(c)
Ratios/Supplemental Data:
Net assets, end of period (000s omitted) $ 217 $ 211
Ratio of expenses to average net assets 1.26%(a)(b) 1.26%(a)(b)
Ratio of net investment income to
average net assets 4.64%(b) 4.44%(b)
Fund turnover rate 3%(c) 26%(c)
- ----------------------------
(a) Without the voluntary waiver of advisory fees and administration fees, the
ratios of expenses to average net assets for the Institutional Class would
have been 1.68% annualized for the six months ended February 29, 2000 and
1.43%, 1.39%, 1.37%, 1.42% and 1.19% for the years ended August 31, 1999,
1998, 1997, 1996 and 1995, respectively. Without the voluntary waiver of
advisory fees and administration fees, the ratios of expenses to average net
assets for the Common Class would have been 2.00% annualized for the six
months ended February 29, 2000 and 1.71% annualized for the period ended
August 31, 1999.
(b) Annualized.
(c) Not Annualized.
* Inception Date.
See Accompanying Notes to Financial Statements.
48-49
<PAGE>
WARBURG PINCUS FUNDS
NOTES TO FINANCIAL STATEMENTS
February 29, 2000 (Unaudited)
- --------------------------------------------------------------------------------
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Warburg Pincus Funds covered in this report are comprised of Warburg,
Pincus High Yield Fund, Inc. ("High Yield") and Warburg, Pincus Municipal Bond
Fund, Inc. ("Municipal") (each, a "Fund" and collectively, the "Funds"), which
are registered under the Investment Company Act of 1940 , as amended (the "1940
Act"), as non-diversified, open-end management investment companies. Each Fund
is authorized to offer three classes of shares: Common, Advisor and
Institutional, although only Common shares and Institutional shares of each Fund
are currently offered. Common shares for each Fund bear expenses paid pursuant
to a shareholder servicing and distribution agreement at an annual rate not to
exceed .25% of the average daily net asset value of the Fund's outstanding
Common shares. In addition, the Common shares bear a co-administration fee.
Certain of the Funds are permitted to engage in the investment strategies
described in the Notes to Financial Statements. The Funds are not obligated to
pursue any of the following strategies and do not represent that these
techniques are available now or will be available at any time in the future.
Please refer to each Fund's prospectus(es) and statement of additional
information for a description of its investment strategies.
A) SECURITY VALUATION -- The net asset 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 maturities of 60 days or
less are valued at amortized cost, which approximates market value.
B) FOREIGN CURRENCY TRANSACTIONS -- Transactions denominated in
foreign currencies are recorded in each Fund's records at the current
prevailing exchange rates. Asset and liability accounts that are
denominated in a foreign currency are adjusted daily to reflect current
exchange rates. Transaction gains or losses resulting from changes in
exchange rates during the reporting period or upon settlement of the
foreign currency transaction are reported in operations for the current
period. It is not practical to isolate that portion of both realized and
unrealized gains and losses on investments in the statement of operations
that result from fluctuations in foreign currency exchange
50
<PAGE>
WARBURG PINCUS FUNDS
NOTES TO FINANCIAL STATEMENTS (CONT'D)
February 29, 2000 (Unaudited)
- --------------------------------------------------------------------------------
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- (CONT'D)
rates. Each Fund reports certain foreign currency related transactions as
components of realized gains for financial reporting purposes, whereas such
components are treated as ordinary income (loss) for Federal income tax
purposes.
C) SECURITY TRANSACTIONS AND INVESTMENT INCOME -- Security
transactions are accounted for on the trade date. The cost of investments
sold is determined by use of the specific identification method for both
financial reporting and income tax purposes. Interest income is recorded on
the accrual basis. Dividends are recorded on the ex-dividend date. Certain
expenses are class specific expenses and vary by class. Expenses not
directly attributable to a specific Fund or class are allocated based on
relative net assets of each Fund and class, respectively.
D) DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS -- Each Fund
calculates its dividends from net investment income. Net investment income
includes interest accrued and dividends earned on the Fund's portfolio
securities for the applicable period less applicable expense. High Yield
will distribute substantially all of its net realized capital gains, if
any, to its shareholders at least annually and will distribute net
investment income at least quarterly. The Municipal Fund will distribute
substantially all of its net realized capital gains, if any, at least
annually and all net investment income monthly.
The character of distributions made during the year for net
investment income or net realized gains may differ from their ultimate
characterization for federal income tax purposes due to generally accepted
accounting principles (GAAP) and tax differences in the character of income
and expense recognition. These differences are primarily due to differing
treatments for net operating losses, paydowns on mortgage-backed
securities, passive foreign investment companies, and forward foreign
currency contracts. To the extent these differences are permanent in
nature, such amounts are reclassified within capital accounts based on U.S.
tax-basis treatment. Temporary differences do not require reclassification
E) FEDERAL INCOME TAXES -- No provision is made for Federal taxes
as it is each Fund's intention to qualify for and elect the tax treatment
applicable to regulated investment companies under the Internal Revenue
Code of 1986, as amended and make the requisite distributions to its
shareholders which will be sufficient to relieve it from Federal income and
excise taxes.
51
<PAGE>
WARBURG PINCUS FUNDS
NOTES TO FINANCIAL STATEMENTS (CONT'D)
February 29, 2000 (Unaudited)
- --------------------------------------------------------------------------------
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- (CONT'D)
F) USE OF ESTIMATES -- The preparation of financial statements in
conformity with GAAP requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
G) REPURCHASE AGREEMENTS -- Money market instruments may be
purchased from banks and non-bank dealers subject
to the seller's agreement to repurchase them at an agreed upon date
and price. Collateral for repurchase agreements may have longer maturities
than the maximum permissible remaining maturity of portfolio investments.
The seller will be required on a daily basis to maintain the value of the
securities subject to the agreement at not less than the repurchase price.
The agreements are conditional upon the collateral being deposited under
the Federal Reserve book-entry system or held in a separate account by each
Fund's custodian or an authorized securities depository. Neither Fund had
open repurchase agreements at February 29, 2000.
H) FUTURES TRANSACTIONS -- A Fund invests in futures contracts for
the purpose of hedging its existing portfolio securities, or securities
that the Fund intends to purchase, against fluctuations in fair value
caused by changes in prevailing market interest rates or securities prices,
or for other purposes. Certain Fund's may enter into futures contracts
subject to certain limitations. Upon entering into a futures contract, each
Fund is required to deposit cash or liquid securities or pledge U.S.
Government securities of an initial margin. Subsequent payments, which are
dependent on the daily fluctuations in the value of the underlying
instrument, are made or received by the Fund each day (daily variations
margin) and are recorded as unrealized gains or losses until the contracts
are closed. When the contracts are closed, the Fund records a realized gain
or loss equal to the difference between the proceeds from (or cost of) the
closing transaction and the Fund's basis in the contracts. Risks of
entering into futures contracts include the possibility that there will be
a perfect price correlation between the futures contracts and the
underlying securities. Second, it is possible that a lack of liquidity for
futures contracts could exist in the secondary market, resulting in an
inability to close a futures position prior to its maturity date. Third,
the purchase of a futures contract involves the risk that a Fund could lose
more than the original margin deposit required to initiate a futures
transaction.
52
<PAGE>
WARBURG PINCUS FUNDS
NOTES TO FINANCIAL STATEMENTS (CONT'D)
February 29, 2000 (Unaudited)
- --------------------------------------------------------------------------------
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- (CONT'D)
I) OPTION TRANSACTIONS -- When a Fund writes or purchases a call
or a put option, an amount equal to the premium received or paid by the
Fund is recorded as a liability or asset, the value of which is
marked-to-market daily to reflect the current market value of the option.
When the option expires, the Fund realizes a gain or loss equal to the
amount of the premium received or paid. When the Fund exercises an option
or enters into a closing transaction by purchasing or selling an offsetting
option, it realizes a gain or loss without regard to any unrealized gain or
loss to underlying security. The potential loss associated with purchasing
an option is limited to the premium paid, and the premium would partially
offset any gains achieved from its use.
J) TBA PURCHASE COMMITMENTS -- The Funds may enter into "TBA" (to
be announced) purchases commitments to purchase securities for a fixed
price at a future date, typically not exceeding 45 days. TBA purchase
commitments may be considered securities in themselves, and involve a risk
of loss if the value of the security to be purchased declines prior to
settlement date. This risk is in addition to the risk of decline in each
Fund's other assets. Unsettled TBA purchase commitments are valued at the
current market value of the underlying securities, according to the
procedures described under "Security Valuation" above.
K) SECURITIES LENDING -- Loans of the securities are required at
all times to be secured by collateral at least equal to 102% of the market
value of domestic securities on loan including any accrued interest thereon
and 105% of the market value of foreign securities on loan including any
accrued interest thereon. Cash collateral received by the Fund in
connection with securities lending activity is invested in the Boston
Global Investment Trust. However, in the event of default or bankruptcy by
the other party to the agreement, realization and/or retention of the
collateral may be subject to legal proceedings. Neither Fund had any
securities on loan to brokers at February 29, 2000.
L) SHORT SALES -- When a Fund's investment adviser believes that a
security is overvalued, it may sell the security short by borrowing the
same security from a broker or other institution and selling the security.
A Fund will incur a loss as a result of the short sale if the price of the
borrowed security increases between the date of the short sale and the date
on which the Fund replaces such security. A Fund will realize a gain if
there is a decline in price of the security between those dates, and the
53
<PAGE>
WARBURG PINCUS FUNDS
NOTES TO FINANCIAL STATEMENTS (CONT'D)
February 29, 2000 (Unaudited)
- --------------------------------------------------------------------------------
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- (CONT'D)
decline exceeds the cost of the borrowing the security and other
transaction costs. There can be no assurance that a Fund will be able to
close out a short position at any particular time or at an acceptable
price. Although a Fund's gain is limited to the amount at which it is sold
a security short, its potential loss is limited only by the maximum
attainable price of the security less the price at which the security was
sold. Until a Fund replaces a borrowed security, it will maintain at all
times cash or other liquid securities in an amount which, when added to any
amount deposited with a broker as collateral will at least equal the
current market value of the security sold short. Depending on arrangements
made with brokers, a Fund may not receive any payments (including interest)
on collateral deposited with them.
M) OTHER -- Securities denominated in currencies other than U.S.
dollars are subject to changes in value due to fluctuations in exchange
rates.
Some countries in which the Funds invest require governmental
approval for the repatriation of investment income, capital or the proceeds
of sales of securities by foreign investors. In addition, if there is a
deterioration in a country's balance of payments or for other reasons, a
country may impose temporary restrictions on foreign capital remittances
abroad.
The securities exchanges of certain foreign markets are
substantially smaller, less liquid and more volatile than the major
securities markets in the United States. Consequently, acquisition and
disposition of securities by each Fund may be inhibited. In addition, a
significant proportion of the aggregate market value of equity securities
listed on the major securities exchanges in emerging markets are held by a
smaller number of investors. This may limit the number of shares available
for acquisition or disposition by a Fund.
Lower-rated debt securities (commonly known as "junk bonds")
possess speculative characteristics and are subject to greater market
fluctuations and risk of lost income and principal than higher-rated debt
securities for a variety of reasons. Also, during an economic downturn or
substantial period of rising interest rates, highly leveraged issuers may
experience financial stress which would adversely affect their ability to
service their principal and interest payment obligations, to meet projected
business goals and to obtain additional financing.
54
<PAGE>
WARBURG PINCUS FUNDS
NOTES TO FINANCIAL STATEMENTS (CONT'D)
February 29, 2000 (Unaudited)
- --------------------------------------------------------------------------------
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- (CONT'D)
In addition, periods of economic uncertainty and changes can be
expected to result in increased volatility of market prices of lower-rated
debt securities and (to the extent a Fund invests in junk bonds) the Fund's
net asset value.
NOTE 2. TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES
Pursuant to Investment Advisory Agreements, Credit Suisse Asset Management,
LLC ("CSAM") an indirect, wholly-owned subsidiary of Credit Suisse Group, serves
as investment advisor for each of ten Funds described herein.
For its advisory services, CSAM is entitled to receive the following fees,
computed daily and payable monthly on each Fund's average daily net assets:
FUND ANNUAL RATE
----- ---------------------------------
High Yield 0.70% of average daily net assets
Municipal 0.70% of average daily net assets
CSAM may, at its discretion, voluntarily waive all or any portion of its
advisory fee for any of the Funds. For the six months ended February 29, 2000
advisory fees and waivers for each of the two investment Funds were as follows:
GROSS NET
FUND ADVISORY FEE WAIVER ADVISORY FEE
------ ------------ ---------- ------------
High Yield $439,704 $(247,140) $192,564
Municipal 63,916 (56,534) 7,382
CSAM reimbursed expenses of Municipal in the amount of $6,320 for the six
months ended February 29, 2000.
State Street Bank and Trust Company ("State Street") , serves as each Fund's
transfer and dividend disbursement agent. State Street has delegated most of its
Fund service obligations to Boston Financial Data Services, Inc. (BFDS), a 50%
owned subsidiary of State Street.
Counsellors Fund Services, Inc. ("CFSI"), a wholly-owned subsidiary of Credit
Suisse Asset Management, LLC. served as co-administrator of each Fund until
November 1, 1999. On November 1, 1999, Credit Suisse Asset Management
Securities, Inc. ("CSAMSI") replaced CFSI as co-administrator to each portfolio.
PFPC Inc. ("PFPC"), an indirect subsidiary of PNC Financial Services Group, also
serves as each Fund's co-administrator. For administration services, each Fund
pays CSAMSI a fee calculated at
55
<PAGE>
WARBURG PINCUS FUNDS
NOTES TO FINANCIAL STATEMENTS (CONT'D)
February 29, 2000 (Unaudited)
- --------------------------------------------------------------------------------
NOTE 2. TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES -- (CONT'D)
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.
CSFI, at its discretion, voluntarily waived a portion of its
co-administration fees for the Funds. For the period September 1, 1999 to
October 31, 1999, co-administration fees earned and waived by CFSI on the Common
shares were as follows:
GROSS NET
FUND CO-ADMINISTRATION FEE WAIVER CO-ADMINISTRATION FEE
------ --------------------- -------- ---------------------
High Yield $2,188 $(1,750) $438
Municipal 18 (15) 3
CSAMSI may, at its discretion, voluntarily waive all or any portion of its
administrative fee for any of the Funds. For the period November 1, 1999 to
February 29, 2000, co-administrative service fees earned and waived by CSAMSI on
the Common shares were as following:
GROSS NET
FUND CO-ADMINISTRATION FEE WAIVER CO-ADMINISTRATION FEE
------ --------------------- -------- ---------------------
High Yield $4,478 $(3,583) $895
Municipal 37 (29) 8
For administration services, PFPC currently receives a fee calculated at
annual rate of .125% on each Fund's average daily net asset, 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 six months ended February 29, 2000, the
co-administration fee earned and waived by PFPC were as follows:
GROSS NET
FUND CO-ADMINISTRATION FEE WAIVER CO-ADMINISTRATION FEE
------ --------------------- -------- ---------------------
High Yield $78,519 $(15,704) $62,815
Municipal 18,648 -- 18,648
In addition to serving as each Funds co-administrator, CSAMSI served as
distributor of each Fund's shares until January 1, 2000. On January 1, 2000,
Provident Distributors, Inc. ("PDI") replaced CSAMSI as distributor to each
Fund. No compensation is payable by any of the Funds to PDI for distribution
services, but CSAMSI receives compensation from each Fund's Common shares under
the co-administration agreement for shareholder servicing and distribution. For
the Shareholder Servicing and Distribution Plan on the Common shares, CSAMSI
receives a fee calculated at an annual rate .25% of the average daily net assets
of the Common shares of each Fund. For the six
56
<PAGE>
WARBURG PINCUS FUNDS
NOTES TO FINANCIAL STATEMENTS (CONT'D)
February 29, 2000 (Unaudited)
- --------------------------------------------------------------------------------
NOTE 2. TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES -- (CONT'D)
months ended February 29, 2000, shareholder servicing and distribution fees,
earned by CSAMSI were as follows:
FUND DISTRIBUTION FEE
---- ----------------
High Yield $33,331
Municipal 273
NOTE 3. PURCHASES AND SALES OF SECURITIES
For the six months ended February 29, 2000, purchases and sales of investment
securities (other than short-term investments) were as follows:
INVESTMENT SECURITIES
------------------------------
FUND PURCHASES SALES
------ -------------- -------------
High Yield $18,489,083 $31,522,220
Municipal 507,438 4,159,271
NOTE 4. CAPITAL SHARES
Transactions in capital shares for each period were as follows:
<TABLE>
<CAPTION>
HIGH YIELD FUND
------------------------------------------------------------------------------------------------------------
INSTITUTIONAL COMMON
----------------------------------------------------- ----------------------------------------------------
FOR THE SIX MONTHS ENDED FOR THE SIX MONTHS ENDED
FEBRUARY 29, 2000 FOR THE YEAR ENDED FEBRUARY 29, 2000 FOR THE YEAR ENDED
(UNAUDITED) AUGUST 31, 1999 (UNAUDITED) AUGUST 31, 1999
------------------------ ------------------------ ------------------------ ------------------------
SHARES VALUE SHARES VALUE SHARES VALUE SHARES VALUE
------------------------ --------- ------------ --------- ----------- --------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Shares sold 1,033,057 $ 15,717,759 2,505,861 $ 39,359,915 880,515 $13,481,335 2,499,612 $39,264,516
Shares issued in
reinvestment
of dividends 332,277 4,900,053 508,551 7,926,308 81,579 1,208,563 105,404 1,641,508
Shares
repurchased (1,691,420) $(24,958,869) (2,470,735) (38,614,790) (1,040,206) (15,843,922) (427,403) (6,757,008)
---------- ------------ ---------- ------------ ---------- ----------- --------- -----------
Net increase/
(decrease) (326,086) $ (4,341,057) 543,677 $ 8,671,433 (78,112) $(1,154,024) 2,177,613 $34,149,016
========== ============ ========== ============ ========== =========== ========= ===========
</TABLE>
57
<PAGE>
WARBURG PINCUS FUNDS
NOTES TO FINANCIAL STATEMENTS (CONT'D)
February 29, 2000 (Unaudited)
- --------------------------------------------------------------------------------
NOTE 4. CAPITAL SHARES -- (CONT'D)
<TABLE>
<CAPTION>
MUNICIPAL BOND FUND
----------------------------------------------------------------------------------------------------------
INSTITUTIONAL COMMON
---------------------------------------------------- ---------------------------------------------------
FOR THE SIX MONTHS ENDED FOR THE SIX MONTHS ENDED FOR THE PERIOD
FEBRUARY 29, 2000 FOR THE YEAR ENDED FEBRUARY 29, 2000 OCTOBER 30, 1998*
(UNAUDITED) AUGUST 31, 1999 (UNAUDITED) THROUGH AUGUST 31, 1999
------------------------- ---------------------- ------------------------ -----------------------
SHARES VALUE SHARES VALUE SHARES VALUE SHARES VALUE
------- ----------- ------- ----------- ------ -------- ------ --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Shares sold 13,424 $ 80,042 179,990 $ 2,675,315 5,541 $ 78,517 15,816 $236,022
Shares issued in
reinvestment of
dividends 25,239 474,085 86,580 1,287,465 415 5,801 279 4,072
Shares
repurchased (448,780) (6,358,533) (168,278) (2,507,954) (5,089) (71,984) (1,335) (20,081)
-------- ----------- -------- ----------- ------ -------- ------ --------
Net increase/
(decrease) (410,117) $(5,804,406) 98,292 $ 1,454,826 867 $ 12,334 14,760 $220,013
======== =========== ======== =========== ====== ======== ====== ========
<FN>
*Inception Date.
</FN>
</TABLE>
On February 29, 2000, the number of shareholders that held 5% or more of the
outstanding shares are as follows:
Number of Approximate Percentage
Shareholders of Outstanding Shares
------------ ----------------------
High Yield Institutional shares 3 60.01%
High Yield Common shares 3 78.15
Municipal Institutional shares 3 67.87
Municipal Common shares 2 98.38
NOTE 5. LINE OF CREDIT
The Funds, together with other funds advised by CSAM, have established a $250
million committed line of credit facility ("Credit Facility") with Deutche Bank,
AG as administrative agent, State Street Bank and Trust Company as operations
agents, Bank of Nova Scotia as syndication agent and certain other lender, for
temporary or emergency purposes primarily relating to unanticipated portfolio
share redemption. Under the terms of the Credit Facility, the funds with access
to the Credit Facility pay an aggregate commitment fee at a rate of .075% per
annum on the average daily balance of the Credit Facility that is undisbursed
and uncanceled during the preceding quarter allocated among the participation
funds in such manner as is determined by the governing Boards of the various
funds. In addition the participating funds will pay interest on borrowing at the
Federal funds rate plus .50%. During the six months ending February 29, 2000,
the following fund had borrowings under line of credit agreement.
AVERAGE DAILY AVERAGE MAXIMUM DAILY LOAN OUTSTANDING
PORTFOLIO LOAN BALANCE INTEREST RATE % LOAN OUTSTANDING AT 02/29/00
---------- ------------- ------------- ------------------ ----------------
High Yield $24,176 6.00% $4,400,000 $0
58
<PAGE>
WARBURG PINCUS FUNDS
SPECIAL SHAREHOLDER MEETING RESULTS
February 29, 2000 (Unaudited)
- --------------------------------------------------------------------------------
WARBURG PINCUS HIGH YIELD FUND
WARBURG PINCUS MUNICIPAL BOND FUND
A special meeting of shareholders of each Fund was held on May 21, 1999. At the
special meeting, the following persons were elected as directors of each Fund,
constituting the entire Board of Directors: Richard H. Francis, Jack W. Fritz,
Jeffrey E. Garten, James S. Pasman, Jr., William W. Priest, Steven N. Rappaport,
Arnold M. Reichman and Alexander B.
Trowbridge.
In addition, shareholders of each Fund voted on the following matters:
Proposal 2: Ratification of the selection of PricewaterhouseCoopers
LLP as the independent accountants for each of the Funds
for the fiscal year ending August 31, 1999.
The voting results for each Fund were as follows:
Election of Directors:
- --------------------------------------------------------------------------------
HIGH YIELD For Withheld
- --------------------------------------------------------------------------------
Richard H. Francis 5,464,641.0590 2,279.8760
- --------------------------------------------------------------------------------
Jack W. Fritz 5,460,763.4240 6,157.5110
- --------------------------------------------------------------------------------
Jeffrey E. Garten 5,464,641.0590 2,279.8760
- --------------------------------------------------------------------------------
James S. Pasman, Jr. 5,460,763.4240 6,157.5110
- --------------------------------------------------------------------------------
William W. Priest 5,464,641.0590 2,279.8760
- --------------------------------------------------------------------------------
Steven N. Rappaport 5,464,641.0590 2,279.8760
- --------------------------------------------------------------------------------
Arnold M. Reichman 5,464,641.0590 2,279.8760
- --------------------------------------------------------------------------------
Alexander B. Trowbridge 5,464,641.0590 2,279.8760
- --------------------------------------------------------------------------------
Proposal 2:
- --------------------------------------------------------------------------------
% of Shares to Total % of Shares to Total Shares
Shares Outstanding Shares Vote
- --------------------------------------------------------------------------------
For 5,463,212.1834 59.8353% 99.9322%
- --------------------------------------------------------------------------------
Against 459.4244 0.0050% 0.0084%
- --------------------------------------------------------------------------------
Abstain 3,249.3272 0.0356% 0.0594%
- --------------------------------------------------------------------------------
59
<PAGE>
WARBURG PINCUS FUNDS
SPECIAL SHAREHOLDER MEETING RESULTS (CONT'D)
February 29, 2000 (Unaudited)
- --------------------------------------------------------------------------------
MUNICIPAL BOND For Withheld
- --------------------------------------------------------------------------------
Richard H. Francis 1,177,497.9240 0.0000
- --------------------------------------------------------------------------------
Jack W. Fritz 1,177,497.9240 0.0000
- --------------------------------------------------------------------------------
Jeffrey E. Garten 1,177,497.9240 0.0000
- --------------------------------------------------------------------------------
James S. Pasman, Jr. 1,177,497.9240 0.0000
- --------------------------------------------------------------------------------
William W. Priest 1,177,497.9240 0.0000
- --------------------------------------------------------------------------------
Steven N. Rappaport 1,177,497.9240 0.0000
- --------------------------------------------------------------------------------
Arnold M. Reichman 1,177,497.9240 0.0000
- --------------------------------------------------------------------------------
Alexander B. Trowbridge 1,177,497.9240 0.0000
- --------------------------------------------------------------------------------
Proposal 2:
- --------------------------------------------------------------------------------
% of Shares to Total % of Shares to Total Shares
Shares Outstanding Shares Vote
- --------------------------------------------------------------------------------
For 1,177,497.9240 72.7497% 100.0000%
- --------------------------------------------------------------------------------
Against 0.0000 0.0000% 0.0000%
- --------------------------------------------------------------------------------
Abstain 0.0000 0.0000% 0.0000%
- --------------------------------------------------------------------------------
60
<PAGE>
[GRAPHIC OMITTED]
WARBURG PINCUS FUNDS
P.O. Box 9030, Boston, MA 02205-9030
800-WARBURG (800-927-2874) (BULLET) www.warburg.com
PROVIDENT DISTRIBUTORS, INC., DISTRIBUTOR. WPHYM-3-0200
