[GRAPHICS OMITTED]
WARBURG PINCUS FUNDS
CREDIT SUISSE ASSET MANAGEMENT
ANNUAL
REPORT
AUGUST 31, 2000
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.
Credit Suisse Asset Management Securities, Inc., Distributor, is located at 466
Lexington Ave., New York, NY 10017-3147. 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.
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.
THE VIEWS OF THE FUNDS' MANAGEMENT ARE AS OF THE DATE OF THE LETTERS AND
PORTFOLIO HOLDINGS DESCRIBED IN THIS DOCUMENT ARE AS OF AUGUST 31, 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 FDICINSURED AND ARE NOT
GUARANTEED BY CSAM OR ANY AFFILIATE. FUND INVESTMENTS ARE SUBJECT TO INVESTMENT
RISKS, INCLUDING LOSS OF YOUR INVESTMENT.
<PAGE>
WARBURG PINCUS HIGH YIELD FUND
PORTFOLIO MANAGERS' LETTER -- AUGUST 31, 2000
--------------------------------------------------------------------------------
September 19, 2000
Dear Shareholders:
We are writing to report on the results of the Warburg Pincus High Yield Fund
(the "Fund") for the fiscal year ended August 31, 2000.
At August 31, 2000, the net asset value ("NAV") of the Fund's Common shares
was $14.18, compared to an NAV of $15.38 on August 31, 1999. Assuming
distributions and the reinvestment of dividends totaling $1.44 per share, the
Common shares' total return was 1.6%. By comparison, the Credit Suisse First
Boston Domestic+ High Yield Index1 (the "Index") returned 0.8% during the same
period.
The Fund outperformed the Index during a period that proved to be very
challenging for high yield securities. Although the fiscal year began well, the
overall investment climate for high yield deteriorated at the beginning of 2000
and remained poor through May. This was initially due to the U.S. Treasury
Department's announced buy-back of a small portion of its higher-cost debt. A
combination of additional factors, including fears surrounding the Federal
Reserve's aggressiveness in slowing the U.S. economy, extreme volatility in
global equity markets and resulting flights to quality, contributed to a
punishing climate for higher-risk securities.
Selling became especially pronounced among low-quality debt. A volatile
NASDAQ heightened worries that corporations would enact measures detrimental to
bondholders, while weakness in technology, media and telecommunications stocks
weighed heavily on the high yield telecom sector. The environment for fixed
income began to improve in June, however, when data reflected moderating
economic growth. Interest rates started to stabilize, equities broadly recovered
and lower-grade debt sectors rebounded.
Our approach during the year contributed to our relative outperformance. We
maintained our emphasis on issues with favorable industry and company
fundamentals such as telecom, cable/media and gaming. Toward the latter half of
the period, we began reducing risk by marginally paring positions with less
certain prospects, raising cash and selectively adding to positions in energy
and economically sensitive industries like paper.
1
<PAGE>
WARBURG PINCUS HIGH YIELD FUND
PORTFOLIO MANAGERS' LETTER -- AUGUST 31, 2000 (CONT'D)
--------------------------------------------------------------------------------
Sector overweights (I.E., relative to the Index) that especially benefited
the Fund's performance were media, energy and gaming. Underweights in poorly
performing industries such as non-bank financial companies and defensive sectors
like tobacco and consumer products, contributed positively to our relative
results.
Allocations that detracted from our performance included a continued
overweight in telecommunications and underweights in utilities and banks.
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.
2
<PAGE>
WARBURG PINCUS HIGH YIELD FUND
PORTFOLIO MANAGERS' LETTER -- AUGUST 31, 2000 (CONT'D)
--------------------------------------------------------------------------------
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN THE WARBURG PINCUS
HIGH YIELD FUND COMMON SHARES AND THE CREDIT SUISSE FIRST BOSTON DOMESTIC+
HIGH YIELD INDEX1 FROM INCEPTION (11/1/96) AND AT EACH QUARTER END. (UNAUDITED)
[GRAPHIC OMITTED]
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
Warburg Pincus
High Yield Fund CSFB Domestic
Common Shares High Yield Index 1,2
11/1/96 $10,000 $10,000
11/30/96 10,105 10,156
2/28/97 10,528 10,626
5/31/97 10,632 10,813
8/31/97 11,149 11,253
11/30/97 11,508 11,556
2/28/98 12,098 11,952
5/31/98 12,317 12,138
8/31/98 11,737 11,417
11/30/98 11,507 11,756
2/28/99 11,637 11,833
5/31/99 11,919 12,022
8/31/99 11,782 11,902
11/30/99 11,763 11,856
2/29/00 12,516 11,966
5/31/00 11,934 11,582
8/31/00 11,968 11,992
Average Annual Total Returns for the periods ended 8/31/00
(Common Shares) (Unaudited)
SINCE INCEPTION
1 YEAR 3 YEARS (11/1/96)
1.58% 2.39% 4.80%
Note: Past performance is not predictive of future performance. Investment
return and principle value of an investment will fluctuate so that an investor's
shares upon redemption may be worth more or less than their original cost.
1 The 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.
2 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.
3
<PAGE>
WARBURG PINCUS MUNICIPAL BOND FUND
PORTFOLIO MANAGERS' LETTER-- AUGUST 31, 2000
--------------------------------------------------------------------------------
September 20, 2000
Dear Shareholders:
We are writing to report on the results of the Warburg Pincus Municipal Bond
Fund (the "Fund") for the fiscal year ended August 31, 2000.
At August 31, 2000, the net asset value ("NAV") of the Fund's Common shares
was $14.47, compared to an NAV of $14.29 on August 31, 1999. Assuming the
reinvestment of dividends and distributions totaling $0.70 per share, the Common
shares' total return was 6.4%. By comparison, the Lehman Brothers Municipal Bond
Index1 returned 7.2% in the same period.
Despite a good start, the Fund underperformed the Index by fiscal year-end.
Initially, overall market conditions were reasonably stable; however, the
investment climate for fixed income securities deteriorated as 2000 unfolded and
remained poor through May. This was initially due to the U.S. Treasury
Department's announced buy-back of a small portion of its higher-cost debt.
A combination of additional factors, including fears that the Federal Reserve
would intensify interest-rate hikes, extreme volatility in global equity markets
and resulting flights to quality, contributed to a punishing climate for
non-Treasury debt. Municipal bonds fared better for sector-specific reasons.
During this challenging period, we positioned the Fund more defensively. We
marginally upgraded quality while maintaining targeted risk levels. Relative to
the benchmark, we continued to overweight non-callable and pre-refunded issues,
as well as bonds from the high-tax states of New York and California, and
underweighted insured bonds. This strategy helped buffer the portfolio's asset
value against volatile conditions.
The broader environment began to improve in June, when data reflected
moderating economic growth and inflationary pressures. Interest rates started to
stabilize, equities broadly recovered and debt markets rebounded.
Circumstances unique to the tax-exempt market further contributed to its
strong upturn. New supply had continued to drop sharply throughout the year as
interest rates rose, curtailing the issuance of refunding bonds. Ratings
upgrades allowed municipalities to reduce their interest burden. Meanwhile,
specialty bonds (I.E., issues from high-tax states) continued to outperform.
On the negative side, pre-refunded returns were generally in line with those
of shorter-maturity municipals, which underperformed the Index.
4
<PAGE>
WARBURG PINCUS MUNICIPAL BOND FUND
PORTFOLIO MANAGERS' LETTER -- AUGUST 31, 2000 (CONT'D)
--------------------------------------------------------------------------------
Against this backdrop, the Fund's sector allocation prompted its lower
relative results. Although we eliminated taxable bond holdings in response to
rising credit concerns (or security-specific risk) in the corporate bond market,
the Fund's exposure to corporates for the period detracted. An overweight in
pre-refunded issues, as well as underweights in insured and zero-coupon bonds,
also marginally restrained results. Hence, efforts to more conservatively
position and diversify the portfolio impeded the Fund's performance somewhat
versus the Index.
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
Jo Ann Corkran, Managing Director
Gregg M. Diliberto, Managing Director
Mark K. Silverstein, Managing Director
Jose A. Rodriguez, Director
A PORTION OF INCOME MAY BE SUBJECT TO STATE AND CITY TAXES OR FEDERAL
ALTERNATIVE MINIMUM TAX.
5
<PAGE>
WARBURG PINCUS MUNICIPAL BOND FUND
PORTFOLIO MANAGERS' LETTER -- AUGUST 31, 2000 (CONT'D)
--------------------------------------------------------------------------------
COMPARISON OF CHANGE INVALUE OF $10,000 INVESTMENT IN THE WARBURG PINCUS
MUNICIPAL BOND FUND COMMON SHARES AND THE LEHMAN BROTHERS
MUNICIPAL BOND INDEX1 FROM INCEPTION (10/30/98)
AND AT EACH QUARTER END. (UNAUDITED)
[GRAPHIC OMITTED]
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
Warburg Pincus
Municipal Bond Lehman Brothers
Common Shares Municipal Bond Index
10/30/98 $10,000 $10,000
11/30/98 10,076 10,030
2/28/99 10,123 10,123
5/31/99 10,145 10,047
8/31/99 9,915 9,890
11/30/99 9,904 9,961
2/29/00 9,908 9,947
5/31/00 9,975 10,080
8/31/00 10,552 10,657
Average Annual Total Returns for the periods ended 8/31/00
(Common Shares) (Unaudited)
SINCE INCEPTION
1 YEAR 3 YEARS (10/30/98)
6.42% 2.39% 2.96%
Note:Past performance is not predictive of future performance. Investment return
and principle value of an investment will fluctuate so that an investor's shares
upon redemption may be worth more or less than their original cost.
1 The 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 3700
fixed-rate investment grade municipal bonds with maturities of 22+ years. The
Index is composed of state, local, revenue, prerefunded, and insured debt, as
well as certificates of participation and bonds subject to the alternative
minimum tax, with a minimum $50 million issuance size and at least $5 million
par value outstanding that were issued on or after 1/1/91. Taxable,
floating-rate and derivative instruments are excluded.
6
<PAGE>
WARBURG PINCUS HIGH YIELD FUND
SCHEDULE OF INVESTMENTS
August 31, 2000
--------------------------------------------------------------------------------
PAR
(000) VALUE
----- -----
CORPORATE BONDS (89.5%)
AEROSPACE & DEFENSE EQUIPMENT (0.2%)
K&F Industries, Inc.,
Senior Subordinate Notes
9.250% 10/15/07 $ 250 $ 241,875
Sequa Corp.,
Senior Notes
9.000% 08/01/09 15 15,037
------------
256,912
------------
AUTOMOTIVE (2.6%)
Aetna Industries, Inc.,
Senior Notes
11.875% 10/01/06 500 402,500
Breed Technologies, Inc.,
Senior Subordinate Notes
9.250% 04/15/08++ 500 5,625
Cambridge Industries, Inc.,
Guaranteed Senior Subordinate
Notes, Series B
10.250% 07/15/07++ 400 119,000
Collins & Aikman Products Corp. ..
Guaranteed Senior Subordinate
Notes
11.500% 04/15/06 350 345,625
Delco Remy International, Inc.,
Guaranteed Senior Subordinate
Notes
10.625% 08/01/06 280 279,650
Hayes Lemmerz International, Inc.,
Senior Subordinate Notes
8.250% 12/15/08 190 166,725
Hayes Wheels International, Inc.,
Senior Subordinate Notes,
Series B
9.125% 07/15/07 350 323,750
LDM Technologies, Inc.,
Senior Subordinate Notes,
Series B
10.750% 01/05/07 400 306,000
Oxford Automotive, Inc.,
Senior Subordinate Notes
10.125% 06/15/07 500 457,500
See Accompanying Notes to Financial Statements.
7
<PAGE>
WARBURG PINCUS HIGH YIELD FUND
SCHEDULE OF INVESTMENTS (CONT'D)
August 31, 2000
--------------------------------------------------------------------------------
PAR
(000) VALUE
----- -----
CORPORATE BONDS (CONT'D)
AUTOMOTIVE (cont'd)
Safelite Glass Corp.,
Senior Subordinate Notes
9.875% 12/15/06++ $1,350 $ 16,875
Titan Wheel International, Inc.,
Senior Subordinate Notes
8.750% 04/01/07 250 163,750
Transportation Manufacturing
Operations,
Senior Subordinate Notes
11.250% 05/01/09 250 196,250
United Rentals, Inc.,
Senior Subordinate Notes
9.250% 01/15/09 250 233,750
------------
3,017,000
------------
BROADCASTING (3.6%)
Allbritton Communications Co.,
Senior Subordinate Notes,
Series B
9.750% 11/30/07 250 242,500
8.875% 02/01/08 250 234,375
American Radio Systems Corp.
Guaranteed Senior Subordinate
Notes
9.000% 02/01/06 250 255,625
Australis Holdings Party Limited,
Yankee Senior Secured
Discount Notes
15.000% 11/01/02+/++ 294 29
Australis Media Limited,
Yankee Guaranteed Senior
Subordinate Discount Notes
15.750% 05/15/03+/++ 15 1
15.750% 05/15/03++ 900 81
Big City Radio, Inc.,
Senior Bonds
11.250% 03/15/05+ 500 297,500
Capstar Broadcasting, Inc.,
Senior Subordinate Discount
Notes
12.750% 02/01/09+ 500 467,500
See Accompanying Notes to Financial Statements.
8
<PAGE>
WARBURG PINCUS HIGH YIELD FUND
SCHEDULE OF INVESTMENTS (CONT'D)
August 31, 2000
--------------------------------------------------------------------------------
PAR
(000) VALUE
----- -----
CORPORATE BONDS (CONT'D)
BROADCASTING (cont'd)
Chancellor Media Corp.,
Senior Subordinate Notes
8.000% 11/01/08 $ 310 $ 315,037
Citadel Broadcasting Co.,
Senior Subordinate Notes
9.250% 11/15/08 500 505,000
Emmis Communications Corp.,
Senior Subordinate Notes,
Series B
8.125% 03/15/09 250 236,875
Granite Broadcasting Corp.,
Senior Subordinate Notes 9.375% 12/01 450 373,500
Senior Subordinate Notes
8.875% 05/15/08 265 200,075
HMV Media Group plc,
Senior Subordinated Yankee
Notes, Series B
10.250% 05/15/08 250 165,312
Sinclair Broadcast Group
Senior Subordinate Notes
10.000% 09/30/05 400 395,000
United International Holdings,
Senior Discount Notes
10.750% 02/15/08+ 750 528,750
------------
4,217,160
------------
BUSINESS SERVICES (0.7%)
Iron Mountain, Inc.,
Senior Notes
8.750% 09/30/09 350 332,500
Sovereign Bancorp, Inc.,
Senior Notes
10.500% 11/15/06 500 508,750
------------
841,250
------------
CABLE (12.7%)
Adelphia Communications Corp.,
Senior Notes, Series B
9.250% 10/01/02 15 15,000
10.500% 07/15/04 400 401,000
See Accompanying Notes to Financial Statements.
9
<PAGE>
WARBURG PINCUS HIGH YIELD FUND
SCHEDULE OF INVESTMENTS (CONT'D)
August 31, 2000
--------------------------------------------------------------------------------
PAR
(000) VALUE
----- -----
CORPORATE BONDS (CONT'D)
CABLE (cont'd)
Century Communications,
Senior Discount Notes,
Series B
0.000% 01/15/08 $ 500 $ 209,375
Charter Communications Holdings
10.250% 01/15/10 350 351,750
Charter Communications Holdings
L.L.C., Senior Notes
8.625% 04/01/09 260 238,550
9.920% 04/01/11+ 540 325,350
Classic Cable
Unsecured Senior Subordinate
Notes
10.500% 03/01/10 500 420,000
Coaxial Communications, Inc.,
Company Guaranteed Notes
10.000% 08/15/06 300 297,000
Coaxial L.L.C.,
Company Guaranteed
12.875% 08/15/08+ 400 272,000
Comcast U.K. Cable Partners
Limited,
Yankee Senior Debentures
11.200% 11/15/07+ 750 718,125
CSC Holdings, Inc.,
Senior Notes
7.875% 12/15/07 85 83,783
7.250% 07/15/08 35 33,004
CSC Holdings,
Senior Debentures
9.875% 02/15/13 500 511,250
Diamond Cable Communications
plc
Senior Discount Notes
11.750% 12/15/05+ 500 477,500
Yankee Senior Discount Notes
10.750% 02/15/07+ 40 31,000
DIVA Systems Corp.,
Senior Discount Notes Class B
12.625% 03/01/08+ 2,527 1,061,340
See Accompanying Notes to Financial Statements.
10
<PAGE>
WARBURG PINCUS HIGH YIELD FUND
SCHEDULE OF INVESTMENTS (CONT'D)
August 31, 2000
--------------------------------------------------------------------------------
PAR
(000) VALUE
----- -----
CORPORATE BONDS (CONT'D)
CABLE (cont'd)
Echostar DBS Corp.,
Senior Notes
9.250% 02/01/06 $ 30 $ 29,850
9.375% 02/01/09 500 498,125
Frontiervision Holdings L.P.,
Senior Discount Notes
11.875% 09/15/07+ 500 441,250
Galaxy Telecom L.P.,
Senior Subordinate Notes
12.375% 10/01/05 500 422,500
Golden Sky Systems, Inc.,
Senior Discount Notes
13.500% 03/01/07+ 750 536,250
Insight Midwest
Senior Notes
9.750% 10/01/09 500 505,000
Intermedia Communications, Inc.,
Senior Discount Notes
11.250% 07/15/07+ 1,000 685,000
Intermedia Communications, Inc.,
Senior Notes, Series B
8.500% 01/15/08 30 24,900
International CableTel, Inc.,
Senior Deferred Coupon Notes,
Series A
12.750% 04/15/05+ 750 772,500
International Cabletel, Inc.,
Senior Notes
11.500% 02/01/06+ 415 392,694
James Cable Partners L.P.,
Senior Notes, Series B
10.750% 08/15/04 410 358,750
Jones Intercable, Inc.,
Senior Notes
7.625% 04/15/08 500 498,750
Lenfest Communications, Inc.,
Senior Notes
8.375% 11/01/05 300 311,625
Mediacom L.L.C. Capital,
Senior Notes
7.875% 02/15/11 600 528,000
See Accompanying Notes to Financial Statements.
11
<PAGE>
WARBURG PINCUS HIGH YIELD FUND
SCHEDULE OF INVESTMENTS (CONT'D)
August 31, 2000
--------------------------------------------------------------------------------
PAR
(000) VALUE
----- -----
CORPORATE BONDS (CONT'D)
CABLE (cont'd)
Northland Cable Television,
Senior Subordinate Notes
10.250% 11/15/07 $ 250 $ 198,750
NTL, Inc.,
Senior Notes
10.000% 02/15/07 250 243,750
Pegasus Communications Corp.,
Senior Notes, Series B
9.750% 12/01/06 250 250,000
Rogers Communications, Inc.,
Yankee Senior Notes
9.125% 01/15/06 550 554,125
Salem Communications Corp.,
Company Guaranteed,
Series B
9.500% 10/01/07 500 493,125
Telewest Communications Group
plc Yankee Senior Discount
Debentures
11.000% 10/01/07+ 700 672,000
Telewest Communications plc
9.250% 04/15/09+ 500 285,000
Telewest Communications plc
Debentures
9.625% 10/01/06 250 238,750
United Pan - Europe Comm
Industries,
Senior Notes
10.875% 11/01/07 350 306,250
------------
14,692,971
------------
CAPITAL GOODS - TECHNOLOGY (0.2%)
It Group, Inc.,
Senior Subordinate Notes
11.250% 04/01/09 250 221,250
------------
CELLULAR/WIRELESS COMMUNICATIONS (1.2%)
Centennial Cellular Corp.,
Senior Subordinate Notes
10.750% 12/15/08 400 394,000
See Accompanying Notes to Financial Statements.
12
<PAGE>
WARBURG PINCUS HIGH YIELD FUND
SCHEDULE OF INVESTMENTS (CONT'D)
August 31, 2000
--------------------------------------------------------------------------------
PAR
(000) VALUE
----- -----
CORPORATE BONDS (CONT'D)
CELLULAR/WIRELESS COMMUNICATIONS (cont'd)
Microcell Telecommunications, Inc.
Yankee Senior Discount Notes, Series B
14.000% 06/01/06+ $ 500 $ 480,000
Sprint Spectrum L.P./Sprint
Spectrum Finance Corp.,
Senior Notes
11.000% 08/15/06 500 537,500
------------
1,411,500
------------
CHEMICALS (1.8%)
ClimaChem, Inc., Notes,
Series B
10.750% 12/01/07 250 63,750
Four M Corp.,
Guaranteed Senior Secured
Notes, Series B
12.000% 06/01/06 250 243,750
Huntsman Corp.,
Rule 144A, Senior Subordinate
Notes
9.500% 07/01/07 250 220,000
Laroche Industries, Inc.,
Senior Subordinate Notes
9.500% 09/15/07++ 500 47,500
Lyondell Chemical, Inc.,
Senior Secured Notes, Series A
9.625% 05/01/07 20 20,375
Senior Secured Notes, Series B
9.875% 05/01/07 520 529,750
Philipp Brothers Chemicals, Inc.,
Company Guaranteed Senior
Notes
9.875% 06/01/08 350 262,500
Pioneer Americas Acquistics Corp.,
Guaranteed Senior Secured
Notes, Series B
9.250% 06/15/07 250 137,500
Radnor Holdings Corp.,
Senior Notes, Series B
10.000% 12/01/03 250 231,250
See Accompanying Notes to Financial Statements.
13
<PAGE>
WARBURG PINCUS HIGH YIELD FUND
SCHEDULE OF INVESTMENTS (CONT'D)
August 31, 2000
--------------------------------------------------------------------------------
PAR
(000) VALUE
----- -----
CORPORATE BONDS (CONT'D)
CHEMICALS (cont'd)
Sterling Chemical Holdings, Inc.,
Senior Secured Discount Notes
13.500% 08/15/08+ $ 700 $ 297,500
------------
2,053,875
------------
COMPUTERS, SOFTWARE & SERVICES (0.7%)
PSINET, Inc.,
Senior Notes
11.500% 11/01/08 250 220,625
Verio, Inc.,
Units
13.500% 06/15/04 350 413,000
Senior Notes
10.375% 04/01/05 200 220,000
------------
853,625
------------
CONSTRUCTION & BUILDING MATERIALS (1.0%)
Collins & Aikman Floorcoverings,
Inc., Senior Subordinate Notes,
Series B
10.000% 01/15/07 350 345,625
Koppers Industry, Inc.,
Senior Subordinate Notes
9.875% 12/01/07 250 236,250
Omega Cabinets,
Limited Senior Subordinate
Notes
10.500% 06/15/07 400 370,000
Waxman Industries, Inc.,
Senior Notes, Series B
12.750% 06/01/04+/++ 600 153,000
------------
1,104,875
------------
CONSUMER PRODUCTS & SERVICES (2.4%)
Coinstar, Inc.,
Senior Discount Notes
13.000% 10/01/06 525 535,500
Drypers Corp.,
Senior Notes, Series B
10.250% 06/15/07 400 56,000
See Accompanying Notes to Financial Statements.
14
<PAGE>
WARBURG PINCUS HIGH YIELD FUND
SCHEDULE OF INVESTMENTS (CONT'D)
August 31, 2000
--------------------------------------------------------------------------------
PAR
(000) VALUE
----- -----
CORPORATE BONDS (CONT'D)
CONSUMER PRODUCTS & SERVICES (cont'd)
Holmes Products Corp.,
Senior Subordinate Notes,
Series D
9.875% 11/15/07 $ 500 $ 297,500
Hosiery Corp. of America, Inc.,
Senior Subordinate Notes
13.750% 08/01/02 400 362,000
Jackson Products, Inc.,
Notes
9.500% 04/15/05 450 421,312
Packaged Ice, Inc.,
Guaranteed Senior Notes
9.750% 02/01/05 400 354,000
Scotts Company,
Rule 144A, Senior Subordinate
Notes
8.625% 01/15/09 500 492,500
Werner Holdings Co., Inc.,
Guaranteed Senior Subordinate
Notes, Series A
10.000% 11/15/07 250 243,750
Worldtex, Inc.,
Senior Notes
9.625% 12/15/07 250 71,250
------------
2,833,812
------------
ELECTRIC UTILITIES (0.2%)
Integrated Electric Services, Inc.
Senior Subordinate Notes
9.375% 02/01/09 250 221,875
------------
ELECTRONIC COMP. & INSTRUMENTS (0.7%)
Aavid Thermal Technologies, Inc.
12.750% 02/01/07 250 238,750
Flextronics Intl. Ltd.,
Rule 144A, Senior Subordinate
Notes
9.875% 07/01/10 500 520,000
------------
758,750
------------
ELECTRONICS (0.8%)
Ampex Corp.,
Senior Notes
12.000% 03/15/03 250 188,750
See Accompanying Notes to Financial Statements.
15
<PAGE>
WARBURG PINCUS HIGH YIELD FUND
SCHEDULE OF INVESTMENTS (CONT'D)
August 31, 2000
--------------------------------------------------------------------------------
PAR
(000) VALUE
----- -----
CORPORATE BONDS (CONT'D)
ELECTRONICS (cont'd)
Elgar Holdings, Inc.,
Guaranteed Senior Notes
9.875% 02/01/08 $ 500 $ 263,125
Interact Operating Company
Rule 144A Notes
14.000% 08/01/03 401 93,667
Orbital Imaging Corp.,
Units
11.625% 03/01/05 500 187,500
Rogers Communications, Inc.,
Senior Notes
8.875% 07/15/07 250 251,250
------------
984,292
------------
ENERGY (5.3%)
Abraxas Petroleum Corp.
11.500% 11/01/04 350 308,000
Bellwether Exploration, Company
Guaranteed Notes
10.875% 04/01/07 250 240,937
Calpine Corp.,
Senior Notes
7.750% 04/15/09 350 331,625
Cliffs Drilling Company
Guaranteed Senior Notes,
Series D
10.250% 05/15/03 350 364,000
CMS Energy Corp.,
Senior Notes
7.500% 01/15/09 500 452,074
Crown Central Petroleum
Senior Notes
10.875% 02/01/05 20 17,700
Eagle Geophysical, Inc.
Senior Notes
10.750% 07/15/08++ 500 46,250
Frontier Oil Corp.,
Senior Notes
11.750% 11/15/09 500 517,500
HS Resources, Inc.,
Senior Subordinate Notes
9.250% 11/15/06 400 406,000
See Accompanying Notes to Financial Statements.
16
<PAGE>
WARBURG PINCUS HIGH YIELD FUND
SCHEDULE OF INVESTMENTS (CONT'D)
August 31, 2000
--------------------------------------------------------------------------------
PAR
(000) VALUE
----- -----
CORPORATE BONDS (CONT'D)
ENERGY (cont'd)
Magnum Hunter Resources, Inc.,
Company Guaranteed Notes
10.000% 06/01/07 $ 500 $ 490,000
Nuevo Energy Company
Unsecured Senior Subordinate
Notes, Series B
9.500% 06/01/08 500 505,000
Ocean Energy, Inc.,
Senior Notes
7.875% 08/01/03 30 30,000
Plains Resources, Inc.,
Rule 144A, Senior Subordinate
Notes
10.250% 03/15/06 250 258,750
Guaranteed Senior Subordinate
Notes, Series B
10.250% 03/15/06 250 258,750
Pogo Producing Company
Senior Subordinate Notes,
Class B
8.750% 05/15/07 500 485,000
Pride Petroleum Services, Inc.,
Senior Notes
9.375% 05/01/07 300 307,500
Southwest Royalties, Inc.,
Guaranteed Senior Notes,
Series B
10.500% 10/15/04 300 220,500
The AEI Corporation,
Rule 144A, Senior Notes
11.500% 12/15/06 400 29,000
Senior Notes
9.500% 06/01/09 250 255,312
Universal Compression, Inc.,
Senior Discount Notes
9.875% 02/15/08+ 500 377,500
Wiser Oil Company
Guaranteed Senior Subordinate
Notes
9.500% 05/15/07 250 191,250
------------
6,092,648
------------
See Accompanying Notes to Financial Statements.
17
<PAGE>
WARBURG PINCUS HIGH YIELD FUND
SCHEDULE OF INVESTMENTS (CONT'D)
August 31, 2000
--------------------------------------------------------------------------------
PAR
(000) VALUE
----- -----
CORPORATE BONDS (CONT'D)
ENERGY SOURCES (0.5%)
Key Energy Services, Inc.,
Units
14.000% 01/15/09 $ 500 $ 562,500
------------
ENTERTAINMENT (2.3%)
Ackerley Group, Inc.,
Senior Subordinate Notes
9.000% 01/15/09 250 237,500
AMC Entertainment, Inc.,
Senior Subordinate Notes
9.500% 03/15/09 250 90,000
American Skiing Company
Senior Subordinate Notes,
Series B
12.000% 07/15/06 400 330,000
AMF Bowling Worldwide, Inc.,
Guaranteed Senior Discount
Notes
10.875% 03/15/06 350 63,000
Series B
12.25% 03/15/06+ 459 64,260
Booth Creek Ski Holdings, Inc.,
Guaranteed Senior Notes,
Series B
12.500% 03/15/07 400 303,000
Florida Panthers Holdings, Inc.,
Senior Subordinate Notes
9.875% 04/15/09 250 241,250
Imax Corp.,
Senior Notes
7.875% 12/01/05 500 481,250
KSL Recreation Group, Inc.,
Senior Subordinate Notes
10.250% 05/01/07 250 243,750
Premier Parks Inc.,
Guaranteed Senior Notes
9.750% 01/15/07 250 238,750
Senior Notes
9.250% 04/01/06 250 235,000
Regal Cinemas, Inc.,
Senior Subordinate Notes
8.875% 12/15/10 500 45,000
See Accompanying Notes to Financial Statements.
18
<PAGE>
WARBURG PINCUS HIGH YIELD FUND
SCHEDULE OF INVESTMENTS (CONT'D)
August 31, 2000
--------------------------------------------------------------------------------
PAR
(000) VALUE
----- -----
CORPORATE BOND (CONT'D)
ENTERTAINMENT (cont'd)
SFX Entertainment, Inc.,
Senior Subordinated Notes,
Series B, Company Guaranteed
9.125% 02/01/08 $ 75 $ 78,844
------------
2,651,604
------------
ENVIRONMENTAL SERVICES (0.1%)
First Wave Marine
Senior Notes
11.000% 02/01/08 150 88,875
------------
FINANCIAL SERVICES (0.5%)
Ameriserve Finance/Capital,
Rule 144A, Secured
12.000% 09/15/06++ 250 50,937
Oglebay Norton Company,
Senior Subordinate Notes
10.000% 02/01/09 250 237,500
Polska Telefonica Cyfrowa
International Finance II SA,
Company Guaranteed
11.250% 12/01/09 250 255,000
------------
543,437
------------
FOOD & BEVERAGE (4.2%)
Agrilink Foods, Inc.,
Senior Subordinate Notes
11.875% 11/01/08 250 193,750
Archibald Candy Corp.,
Guaranteed Senior Secured
Notes
10.250% 07/01/04 320 180,000
Aurora Foods, Inc.
Cl-B
9.875% 02/15/07 600 471,000
Carrols Corp.,
Senior Subordinate Notes
9.500% 12/01/08 250 213,750
Delta Beverage Group, Inc.,
Senior Notes
9.750% 12/15/03 250 257,500
Eagle Family Foods, Inc.,
Senior Subordinate Notes
8.750% 01/15/08 350 187,250
See Accompanying Notes to Financial Statements.
19
<PAGE>
WARBURG PINCUS HIGH YIELD FUND
SCHEDULE OF INVESTMENTS (CONT'D)
August 31, 2000
--------------------------------------------------------------------------------
PAR
(000) VALUE
----- -----
CORPORATE BONDS (CONT'D)
FOOD & BEVERAGE (cont'd)
Fleming Companies, Inc.,
Senior Guaranteed Subordinate
Notes, Series B
10.500% 12/01/04 $ 150 $ 135,750
International Home Foods, Inc.,
Guaranteed Senior Subordinate
Notes
10.375% 11/01/06 250 268,125
Luigino's, Inc.,
Senior Subordinate Notes
10.000% 02/01/06 500 397,500
Mrs. Fields Holding Company
Units
14.000% 12/01/05+ 200 91,000
Mrs. Fields' Original Cookies Inc.
Guaranteed Senior Notes,
Series A
10.125% 12/01/04 400 350,000
National Wine & Spirits Company
Guaranteed
10.125% 01/15/09 380 370,500
New World Pasta Company,
Guaranteed Senior Subordinate
Notes
9.250% 02/15/09 250 152,500
Pantry, Inc.,
Senior Subordinate Notes
10.250% 10/15/07 260 256,100
Premier International Foods plc
12.000% 09/01/09 400 338,000
Premium Standard Farm, Inc.,
Senior Secured Notes
11.000% 09/17/03 501 450,775
Sbarro, Inc.,
Senior Notes
11.000% 09/15/09 265 277,587
Stater Brothers Holdings,
Senior Notes
10.750% 08/15/06 250 222,500
------------
4,813,587
------------
See Accompanying Notes to Financial Statements.
20
<PAGE>
WARBURG PINCUS HIGH YIELD FUND
SCHEDULE OF INVESTMENTS (CONT'D)
August 31, 2000
--------------------------------------------------------------------------------
PAR
(000) VALUE
----- -----
CORPORATE BONDS (CONT'D)
HEALTH (0.8%)
Triad Hospital Holdings, Inc.,
Senior Subordinate Notes
11.000% 05/15/09 $ 500 $ 525,000
Unilab Finance Corp.,
Senior Subordinate Notes
12.750% 10/01/09 400 434,000
------------
959,000
------------
HEALTH CARE (1.5%)
Beverly Enterprises, Inc.,
Guaranteed Senior Notes
9.000% 02/15/06 400 362,000
Fountain View, Inc.,
Company Guaranteed
11.250% 04/15/08++ 250 38,750
InSight Health Services, Inc.,
Company Guaranteed Senior
Notes
9.625% 06/15/08 400 368,000
Oxford Health Plans, Inc.,
Senior Notes
11.000% 05/15/05 400 422,000
Paracelsus Healthcare Corp.,
Senior Subordinate Notes
10.000% 08/15/06 250 78,750
Quest Diagnostic, Inc.,
Senior Subordinate Notes
10.750% 12/15/06 250 265,000
Tenet Healthcare Corp.,
Senior Subordinate Notes
8.625% 01/15/07 250 247,500
------------
1,782,000
------------
INDUSTRIAL GOODS & MATERIALS (1.7%)
Doman Industries, Limited
Senior Notes
8.750% 03/15/04 500 403,750
Equinix, Inc.
Senior Notes
13.000% 12/01/07 450 362,250
Golden Ocean Group Limited,
Guaranteed Senior Notes
10.000% 08/31/01++ 457 75,405
See Accompanying Notes to Financial Statements.
21
<PAGE>
WARBURG PINCUS HIGH YIELD FUND
SCHEDULE OF INVESTMENTS (CONT'D)
August 31, 2000
--------------------------------------------------------------------------------
PAR
(000) VALUE
----- -----
CORPORATE BONDS (CONT'D)
INDUSTRIAL GOODS & MATERIALS (cont'd)
Jordan Industries, Inc.,
Senior Notes
10.375% 08/01/07 $ 250 $ 235,000
MMI Products, Inc.,
Senior Subordinate Notes,
Series B
11.250% 04/15/07 250 248,750
Morris Materials Handling, Inc.,
Senior Notes
9.500% 04/01/08++ 250 15,625
Motors & Gears, Inc.,
Senior Notes, Series D
10.750% 11/15/06 550 537,625
Thermadyne Holdings Corp.,
Senior Discount Debentures
12.500% 06/01/08+ 250 91,562
------------
1,969,967
------------
LEISURE & ENTERTAINMENT (0.8%)
Aztar Corp.,
Senior Subordinate Notes
8.875% 05/15/07 250 244,375
Hollywood Park, Inc.,
Senior Subordinate Notes
9.250% 02/15/07 500 513,750
Pentacon, Inc.,
Company Guaranteed, Series B
12.250% 04/01/09 250 141,250
------------
899,375
------------
MANUFACTURING (0.1%)
Holley Performance Products
Unsecured Senior Subordinate
Notes, Series B
12.250% 09/15/07 250 151,250
------------
METALS & MINING (2.5%)
AK Steel Corp.
Company Guaranteed
7.875% 02/15/09 20 18,700
Senior Notes
9.125% 12/15/06 250 251,875
See Accompanying Notes to Financial Statements.
22
<PAGE>
WARBURG PINCUS HIGH YIELD FUND
SCHEDULE OF INVESTMENTS (CONT'D)
August 31, 2000
--------------------------------------------------------------------------------
PAR
(000) VALUE
----- -----
CORPORATE BONDS (CONT'D)
METALS & MINING (cont'd)
Algoma Steel, Inc.,
1st Mortgage Yankee Notes
12.375% 07/15/05 $ 250 $ 207,500
Bayou Steel Corp.
Company Guaranteed
9.500% 05/15/08 250 208,750
Golden Northwest Aluminum
First Mortgage Notes
12.000% 12/15/06 400 410,000
Gulf States Steel, Inc.,
First Mortgage Notes
13.500% 04/15/03++ 200 10,000
Haynes International, Inc.,
Senior Notes
11.625% 09/01/04 250 198,750
Ivaco, Inc.,
Yankee Senior Notes
11.500% 09/15/05 250 266,250
Kaiser Aluminum and Chemical,
Inc.,
Senior Notes
10.875% 10/15/06 250 244,375
Metallurg, Inc.,
Senior Notes
11.000% 12/01/07 500 412,500
National Steel Corp.,
First Mortgage Notes
(Metals LOC)
9.875% 03/01/09 150 128,250
Weirton Steel Corporation
Senior Notes
11.375% 07/01/04 350 328,125
WHX Corp.,
Senior Exchange Notes
10.500% 04/15/05 250 173,750
------------
2,858,825
------------
OFFICE EQUIPMENT & SUPPLIES (0.3%)
Knoll, Inc.,
Senior Subordinate Notes
10.875% 03/15/06 325 324,594
------------
See Accompanying Notes to Financial Statements.
23
<PAGE>
WARBURG PINCUS HIGH YIELD FUND
SCHEDULE OF INVESTMENTS (CONT'D)
August 31, 2000
--------------------------------------------------------------------------------
PAR
(000) VALUE
----- -----
CORPORATE BONDS (CONT'D)
OIL & GAS EXPLORATION (0.4%)
Canadian Forest Oil, Limited
8.750% 09/15/07 $ 500 $ 492,500
------------
OIL SERVICES (0.2%)
Parker Drilling Co.,
Company Guaranteed Series D
9.750% 11/15/06 250 251,875
------------
PACKAGING & CONTAINERS (0.6%)
BPC Holding Corporation
Senior Secured Notes, Series B
12.500% 06/15/06 454 374,733
Crown Packaging Enterprises, Ltd.,
Yankee Senior Secured
Discount Notes
14.000% 08/01/06+/++ 775 23,250
Stone Container Finance Co.,
Yankee Guaranteed Senior
Notes
11.500% 08/15/06 250 258,125
------------
656,108
------------
PAPER & FOREST PRODUCTS (3.0%)
Ainsworth Lumber Company
Limited Yankee Senior Secured
Pay-In-Kind Notes
12.500% 07/15/07 600 574,500
Bear Island Paper Company, L.L.C./
Bear Island Finance Company II
Senior Secured Notes, Series B
10.000% 12/01/07 200 181,000
Crown Paper Company
Senior Subordinate Notes
11.000% 09/01/05++ 500 137,500
Gaylord Container Corp.,
Senior Notes
9.375% 06/15/07 350 278,250
MAXXAM Group Holdings, Inc.,
Senior Secured Notes, Series B
12.000% 08/01/03 400 371,000
Norampac, Inc.,
Senior Notes
9.500% 02/01/08 500 508,750
See Accompanying Notes to Financial Statements.
24
<PAGE>
WARBURG PINCUS HIGH YIELD FUND
SCHEDULE OF INVESTMENTS (CONT'D)
August 31, 2000
--------------------------------------------------------------------------------
PAR
(000) VALUE
----- -----
CORPORATE BONDS (CONT'D)
PAPER & FOREST PRODUCTS (cont'd)
Printpack, Inc., Senior Subordinate
Notes, Series B
10.625% 08/15/06 $ 450 $ 436,500
Repap New Brunswick
Senior Yankee Notes
10.625% 04/15/05 500 517,500
Specialty Paperboard, Inc.,
Senior Notes
9.375% 10/15/06 250 246,250
Tembec Industries, Inc.,
Senior Company Guaranteed
8.625% 06/30/09 250 250,000
------------
3,501,250
------------
PHARMACEUTICALS (0.4%)
ICN Pharmaceutical, Inc.,
Rule 144A, Senior Notes
8.750% 11/15/08 500 494,375
------------
PUBLISHING & INFORMATION SERVICES (3.2%)
American Media Operation,
Senior Subordinate Notes
10.250% 05/01/09 250 250,625
Gray Communications Systems
Guaranteed Senior Subordinate
Notes
10.625% 10/01/06 200 201,250
Hollinger International Publishing
Inc., Senior Subordinate Notes
9.250% 03/15/07 250 252,500
Liberty Group Publishing, Inc.,
Senior Discount Debentures
11.625% 02/01/09+ 300 166,500
Mail-Well, Inc.,
Senior Subordinate Notes
8.750% 12/15/08 400 348,000
MDC Communications Corp.,
Senior Subordinate Notes
10.500% 12/01/06 400 386,000
Mentus Media Corp.,
Senior Secured Notes,
Series B
12.000% 02/01/03 664 265,424
See Accompanying Notes to Financial Statements.
25
<PAGE>
WARBURG PINCUS HIGH YIELD FUND
SCHEDULE OF INVESTMENTS (CONT'D)
August 31, 2000
--------------------------------------------------------------------------------
PAR
(000) VALUE
----- -----
CORPORATE BONDS (CONT'D)
PUBLISHING & INFORMATION SERVICES (cont'd)
Nebraska Book Co.,
Senior Subordinate Notes
8.750% 02/15/08 $ 250 $ 196,250
Phoenix Color Corp.,
Senior Subordinate Notes
10.375% 02/01/09 250 211,250
Premier Graphics Company
Guaranteed Unsecured Senior
Guaranteed
11.500% 12/01/05++ 500 50,000
Sun Media Corp.,
Yankee Senior Subordinate
Notes
9.500% 02/15/07 194 194,485
9.500% 05/15/07 65 65,163
Tri-State Outdoor Media Group,
Inc., Senior Notes
11.000% 05/15/08 500 437,500
World Color Press, Inc.,
Senior Subordinate Notes
8.375% 11/15/08 250 243,438
Ziff Davis Media, Inc.,
Rule 144A
12.000% 07/15/10 400 416,500
------------
3,684,885
------------
REAL ESTATE (0.8%)
HMH Properties, Inc.,
Senior Notes
8.450% 12/01/08 310 301,863
Host Marriot Hotel Properties
Senior Notes
7.875% 08/01/05 400 383,000
Intrawest Corp.
Yankee Senior Notes
9.750% 08/15/08 250 251,875
------------
936,738
------------
RESTAURANTS, HOTELS & CASINOS (7.9%)
AFC Enterprises
Senior Subordinate Notes
10.250% 05/15/07 400 402,000
See Accompanying Notes to Financial Statements.
26
<PAGE>
WARBURG PINCUS HIGH YIELD FUND
SCHEDULE OF INVESTMENTS (CONT'D)
August 31, 2000
--------------------------------------------------------------------------------
PAR
(000) VALUE
----- -----
CORPORATE BONDS (CONT'D)
RESTAURANTS, HOTELS & CASINOS (cont'd)
American Restaurant Group, Inc.,
Senior Notes
11.500% 02/15/03 $ 300 $ 266,250
AmeriKing, Inc.,
Guaranteed Senior Notes
10.750% 12/01/06 400 278,000
Ameristar Casinos, Inc.,
Guaranteed Senior Subordinate
Notes, Series B
10.500% 08/01/04 600 611,250
Argosy Gaming Co.,
Company Guaranteed
10.750% 06/01/09 500 529,375
CapStar Hotel Co.,
Senior Subordinate Notes
8.750% 08/15/07 250 235,313
Circus Circus Enterprise
Senior Subordinate Notes
9.250% 12/01/05 520 516,100
Coast Hotels & Casino, Inc.,
Senior Subordinate Notes
9.500% 04/01/09 250 246,250
Hard Rock Hotel, Inc.,
Senior Subordinate Notes
9.250% 04/01/05 500 467,500
Harrahs Operating Co. Inc.,
Company Guaranteed
7.875% 12/15/05 250 243,750
Harvey Casino Resorts
Senior Subordinate Notes
10.625% 06/01/06 450 465,750
Horseshoe Gaming Holdings
Senior Subordinated Notes
8.625% 05/15/09 20 19,550
Horseshoe Gaming L.L.C
Guaranteed Senior Subordinate
Notes, Series B
9.375% 06/15/07 500 502,500
Isle of Capri Casinos,
Senior Subordinate Notes
8.750% 04/15/09 250 235,625
See Accompanying Notes to Financial Statements.
27
<PAGE>
WARBURG PINCUS HIGH YIELD FUND
SCHEDULE OF INVESTMENTS (CONT'D)
August 31, 2000
--------------------------------------------------------------------------------
PAR
(000) VALUE
----- -----
CORPORATE BONDS (CONT'D)
RESTAURANTS, HOTELS & CASINOS (cont'd)
Jazz Casino Co., L.L.C
Senior Subordinate Notes
5.987% 11/15/00 $ 527 $ 94,892
Louisiana Casino Cruises, Inc.,
Secured
11.000% 12/01/05 500 537,500
Majestic Star Casino Company
Guaranteed, Series B
10.875% 07/01/06 400 354,000
MGM Grand, Inc., Company
Guaranteed Notes
9.750% 06/01/07 500 526,250
Mohegan Tribal Gaming
Senior Subordinate Notes
8.750% 01/01/09 500 491,250
Park Place Entertainment, Inc.,
Senior Subordinate Notes
7.875% 12/15/05 250 243,125
Peninsula Gaming L.L.C.,
Senior Notes
12.250% 07/01/06 250 246,875
Prime Hospitality Corp.,
Secured First Mortgage Notes
9.250% 01/15/06 250 252,500
Santa Fe Hotel, Inc.,
First Mortgage Notes
11.000% 12/15/00 250 251,250
Station Casinos, Inc.,
Senior Subordinate Notes
10.125% 03/15/06 500 502,500
Sun International Hotels
Limited Yankee Guaranteed
Senior Subordinate Notes
9.000% 03/15/07 400 382,000
Waterford Gaming L.L.C./
Waterford Gaming Finance Corp.,
Rule 144A, Senior Notes
9.500% 03/15/10 239 232,726
------------
9,134,081
------------
See Accompanying Notes to Financial Statements.
28
<PAGE>
WARBURG PINCUS HIGH YIELD FUND
SCHEDULE OF INVESTMENTS (CONT'D)
August 31, 2000
--------------------------------------------------------------------------------
PAR
(000) VALUE
----- -----
CORPORATE BONDS (CONT'D)
RETAIL TRADE (2.4%)
Advance Holding Corp.,
Senior Discount Debentures,
Series B
12.875% 04/15/09+ $ 500 $ 202,500
County Seat Stores, Inc.,
Units
12.750% 11/01/04++ 500 7,500
Finlay Enterprises, Inc.,
Senior Secured Debentures
9.000% 05/01/08 250 223,750
Jo-Ann Stores, Inc.,
Senior Subordinate Notes
10.375% 05/01/07 250 206,250
Jostens, Inc.,
Rule 144A, Units
12.750% 05/01/10 500 513,125
K Mart Corp.
Debentures
7.750% 10/01/12 250 215,625
Leslie's Poolmart,
Senior Notes
10.375% 07/15/04 500 392,500
NBTY, Inc.,
Senior Subordinated Notes,
Series B
8.625% 09/15/07 250 215,000
Pathmark Stores,
Senior Subordinate Notes
9.625% 05/01/03++ 350 260,750
Pep Boys - Manny Moe Jack
Medium Term Note, Series A
6.710% 11/03/04 500 344,126
Pueblo Xtra International, Inc.,
Senior Notes
9.500% 08/01/03 400 190,000
------------
2,771,126
------------
TELECOMMUNICATIONS (18.7%)
Airgate PCS Inc.,
Senior Subordinate Notes
13.500% 10/01/09+ 500 317,500
See Accompanying Notes to Financial Statements.
29
<PAGE>
WARBURG PINCUS HIGH YIELD FUND
SCHEDULE OF INVESTMENTS (CONT'D)
August 31, 2000
--------------------------------------------------------------------------------
PAR
(000) VALUE
----- -----
CORPORATE BONDS (CONT'D)
TELECOMMUNICATIONS (cont'd)
AMSC Acquisition Company, Inc.,
Senior Notes, Series B
12.250% 04/01/08 $ 250 $ 187,500
Call-Net Enterprises, Inc.,
Senior Discount Notes
10.800% 05/15/09+ 450 159,750
Yankee Senior Notes
9.375% 05/15/09 400 238,000
Caprock Communications Corp.,
Senior Notes
11.500% 05/01/09 400 250,000
Carrier1,
Senior Notes, Series B
13.250% 02/15/09 250 233,750
Clearnet Communications, Inc.,
Senior Discount Notes
14.750% 12/15/05+ 500 526,250
Completel Europe NV Unit
14.000% 02/15/09+ 1,000 495,000
Covad Communication Group, Inc.,
Senior Notes
12.500% 02/15/09 250 197,500
Dobson Sygnet Communications
Senior Notes
12.250% 12/15/08 500 521,250
Dolphin Telecom PLC,
Senior Discount Notes
14.000% 05/15/09+ 500 110,000
DTI Holdings, Inc.,
Senior Discount Notes
12.500% 03/01/08+ 600 244,500
E Spire Communications
Senior Discount Notes
13.000% 11/01/05+ 550 247,500
Exodus Communications, Inc.
10.750% 12/15/09 450 443,813
Focal Communications Corp.,
Senior Discount Notes
12.125% 02/15/08+ 550 346,500
Global Crossing Holdings, Ltd.
9.625% 05/15/08 350 354,375
See Accompanying Notes to Financial Statements.
30
<PAGE>
WARBURG PINCUS HIGH YIELD FUND
SCHEDULE OF INVESTMENTS (CONT'D)
August 31, 2000
--------------------------------------------------------------------------------
PAR
(000) VALUE
----- -----
CORPORATE BONDS (CONT'D)
TELECOMMUNICATIONS (cont'd)
Global Crossing Holdings, Ltd.,
Company Guaranteed Yankee
Notes
9.500% 11/15/09 $ 150 $ 151,125
Globalstar L.P./Globalstar Capital
Corp., Senior Notes
10.750% 11/01/04 100 28,500
GST Equipment Funding,
Senior Secured Exchange
Notes
13.250% 05/01/07 250 160,625
GST USA, Inc.,
Guaranteed Senior Discount
Exchange Notes
13.875% 12/15/05+ 500 226,250
GT Group Telecommunications
13.250% 02/01/10+ 500 260,000
Hermes Europe Railtel BV
Senior Notes
10.375% 01/15/09 250 161,250
Hyperion Telecommunications, Inc.,
Senior Discount Notes, Series B
13.000% 04/15/03+ 500 431,250
Senior Notes, Series B
12.250% 09/01/04 250 241,250
ICG Holdings, Inc.,
Guaranteed Senior Discount
Notes
11.625% 03/15/07+ 300 130,500
ICG Services, Inc.,
Senior Discount Notes
10.000% 02/15/08+ 500 170,000
Intelcom Group (U.S.A.), Inc.,
Guaranteed Senior Exchangeable
Discount Notes
12.500% 05/01/06+ 550 261,250
Intercel, Inc.,
Senior Discount Notes
12.000% 02/01/06+ 500 502,500
Ipcs, Inc.,
Units
14.000% 07/15/10 500 300,000
See Accompanying Notes to Financial Statements.
31
<PAGE>
WARBURG PINCUS HIGH YIELD FUND
SCHEDULE OF INVESTMENTS (CONT'D)
August 31, 2000
--------------------------------------------------------------------------------
PAR
(000) VALUE
----- -----
CORPORATE BONDS (CONT'D)
TELECOMMUNICATIONS (cont'd)
ITC Deltacom, Inc.,
Senior Notes
11.000% 06/01/07 $ 193 $ 170,805
KMC Telecom Holdings, Inc.,
Senior Discount Notes
12.500% 02/15/08+ 250 96,250
Knology Holdings, Inc.,
Senior Discount Notes
11.875% 10/15/07+ 550 288,063
Level 3 Communications, Inc.,
Guaranteed Senior Subordinate
Notes
8.500% 05/15/08 250 228,750
Senior Notes
9.125% 05/01/08 45 40,556
Senior Discount Notes
10.500% 12/01/08+ 250 153,750
McLeodUSA, Inc.,
Senior Subordinate Notes
8.125% 02/15/09 265 241,813
McLeodUSA, Inc.,
Senior Discount Notes
10.500% 03/01/07+ 350 295,750
Senior Notes
9.250% 07/15/07 300 287,250
Metricom Financial
13.000% 02/15/10 300 202,500
Metromedia Fiber Network, Inc.,
Senior Notes, Series B
10.000% 11/15/08 560 554,400
Metromedia International,
10.500% 03/30/02 1,761 801,116
MetroNet Communications Corp.,
Senior Discount Notes
10.750% 11/01/07+ 400 351,500
Senior Notes
12.000% 08/15/07 400 450,000
MJD Communications, Inc.,
Senior Subordinate Notes
9.500% 05/01/08 250 216,250
Nextel Partners, Inc.,
Senior Discount Notes
14.000% 02/01/09+ 325 227,500
See Accompanying Notes to Financial Statements.
32
<PAGE>
WARBURG PINCUS HIGH YIELD FUND
SCHEDULE OF INVESTMENTS (CONT'D)
August 31, 2000
--------------------------------------------------------------------------------
PAR
(000) VALUE
----- -----
CORPORATE BONDS (CONT'D)
TELECOMMUNICATIONS (cont'd)
NEXTLINK Communications, Inc.,
Senior Notes
10.750% 11/15/08 $ 280 $ 272,300
Senior Discount Notes
9.450% 04/15/08+ 500 308,750
Senior Notes
12.500% 04/15/06 250 259,375
9.625% 10/01/07 10 9,275
Orange plc
Yankee Senior Notes
9.000% 06/01/09 500 522,500
Orion Network Systems, Inc.,
Guaranteed Senior Notes
11.250% 01/15/07 300 184,500
Pac-West Telecommunications, Inc.,
Senior Notes
13.500% 02/01/09 500 482,500
Pagemart Nationwide, Inc.,
Senior Discount Notes
15.000% 10/01/00 250 236,250
PageMart Wireless, Inc.,
Senior Subordinated Discount
Exchange Notes
11.250% 02/01/08+ 250 101,250
Price Communications Wireless, Inc.,
Company Guaranteed
9.125% 12/15/06 250 253,750
Senior Subordinate
Notes
11.750% 07/15/07 250 270,625
Primus Telecommunications
Group, Inc.,
Senior Notes
11.250% 01/15/09 350 222,250
Qwest Communications
International, Inc.,
Senior Notes
7.250% 11/01/08 10 9,675
Senior Discount Notes
9.470% 10/15/07+ 750 655,313
Senior Discount Notes, Series B
8.290% 02/01/08+ 250 205,313
Senior Notes, Series B
10.875% 04/01/07 130 141,538
See Accompanying Notes to Financial Statements.
33
<PAGE>
WARBURG PINCUS HIGH YIELD FUND
SCHEDULE OF INVESTMENTS (CONT'D)
August 31, 2000
--------------------------------------------------------------------------------
PAR
(000) VALUE
----- -----
CORPORATE BONDS (CONT'D)
TELECOMMUNICATIONS (cont'd) RCN Corp.
Senior Discount Notes, Series B
9.800% 02/15/08+ $ 300 $ 161,250
Senior Notes, Series B
10.000% 10/15/07 400 324,000
Rhythms Netconnections
Senior Discount Notes
13.500% 05/15/08+ 600 234,000
RSL Communications plc
Yankee Company Guaranteed
10.500% 11/15/08 400 106,000
Startec Global Communications, Inc.,
Senior Notes
12.000% 05/15/08 400 306,000
Telecorp PCS, Inc.
Rule 144A, Notes
10.625% 07/15/10+ 500 522,500
Telecorp PCS, Inc.,
Notes Company Guaranteed
Senior Subordinate
Unsecured Notes
11.625% 04/15/09 200 139,000
Teligent Inc.,
Senior Notes
11.500% 12/01/07 250 157,500
Time Warner Telecom L.L.C./
Time Warner Telecom Inc.,
Senior Notes
9.750% 07/15/08 500 485,000
Tritel Pcs, Inc.,
Senior Subordinate Unsecured
Notes
12.750% 05/15/09 250 175,625
Triton PCS, Inc.,
Senior Subordinated Discount
Notes, Company Guaranteed
11.000% 05/01/08+ 600 459,000
US Unwired, Inc.,
Senior Discount Notes
13.375% 11/01/09+ 500 283,750
See Accompanying Notes to Financial Statements.
34
<PAGE>
WARBURG PINCUS HIGH YIELD FUND
SCHEDULE OF INVESTMENTS (CONT'D)
August 31, 2000
--------------------------------------------------------------------------------
PAR
(000) VALUE
----- -----
CORPORATE BONDS (CONT'D)
TELECOMMUNICATIONS (cont'd)
Viatel, Inc.,
Senior Discount Notes
12.500% 04/15/08+ $ 600 $ 207,000
11.500% 03/15/09 171 98,613
Voicestream Wireless Holding, Inc.
Senior Discount Notes
11.875% 11/15/09+ 110 80,850
Senior Notes
10.375% 11/15/09 570 618,450
Williams Communications Group,
Inc., Senior Notes
10.700% 10/01/07 500 486,875
Xm Satellite Radio, Inc.
Rule 144A Note
14.000% 03/15/10 250 196,250
------------
21,680,768
------------
TEXTILES & APPAREL (1.3%)
Advanced Glass Fiber Yarns,
Senior Subordinate Notes
9.875% 01/15/09 250 223,438
BGF Industries, Inc.,
Senior Subordinate Notes
10.250% 01/15/09 250 235,000
Flooring America, Inc.,
Company Guaranteed
9.250% 10/15/07 370 216,275
Galey & Lord, Inc.
9.125% 03/01/08 350 183,750
Phillips Van-Heusen Corp.,
Senior Subordinate Notes
9.500% 05/01/08 250 237,500
William Carter Company
Senior Subordinate Notes,
Series A
10.375% 12/01/06 450 436,500
------------
1,532,463
------------
TRANSPORTATION (1.0%)
AirTran Airlines, Inc.,
Secured Notes
10.500% 04/15/01 250 243,750
See Accompanying Notes to Financial Statements.
35
<PAGE>
WARBURG PINCUS HIGH YIELD FUND
SCHEDULE OF INVESTMENTS (CONT'D)
August 31, 2000
--------------------------------------------------------------------------------
PAR
(000) VALUE
----- -----
CORPORATE BONDS (CONT'D)
TRANSPORTATION (cont'd)
Atlantic Express Transportation Corp.
Guaranteed Senior Secured
Notes
10.750% 02/01/04 $ 250 $ 218,750
Kitty Hawk, Inc.,
Senior Notes
9.950% 11/15/04++ 250 146,250
Northwest Airlines, Inc.,
Guaranteed Notes
7.625% 03/15/05 30 27,975
Pegasus Shipping (Hellas) Limited,
Guaranteed First Preferred
Mortgage Notes, Series A
11.875% 11/15/04++ 500 172,500
Trans World Airlines
Senior Notes
11.375% 03/01/06 500 202,500
US Airways, Inc.,
Guaranteed Senior Notes
9.625% 02/01/01 120 119,033
------------
1,130,758
------------
WASTE MANAGEMENT (0.2%)
Allied Waste North America,
Series B
7.875% 01/01/09 265 240,156
------------
TOTAL CORPORATE BONDS (Cost $122,540,483) $103,673,892
------------
ASSET BACKED SECURITIES (0.4%)
Airplanes Pass Through Trust
Series 1, Class D
10.875% 03/15/19 593 $ 483,459
------------
(Cost $592,620)
NUMBER
OF
SHARES
------
RIGHTS & WARRANTS (1.6%)
BROADCASTING (0.0%)
Australis Holdings Pty. Limited,
Strike $0.20 expires
October 2001 294 $ 3
------------
See Accompanying Notes to Financial Statements.
36
<PAGE>
WARBURG PINCUS HIGH YIELD FUND
SCHEDULE OF INVESTMENTS (CONT'D)
August 31, 2000
--------------------------------------------------------------------------------
NUMBER
OF
SHARES VALUE
------ -----
RIGHTS & WARRANTS (CONT'D)
CABLE (1.2%)
DIVA Systems Corp.,+++ strike
$0.01 expires May 2006 2,250 $ 1,237,500
DIVA Systems Corp.,+++ strike
$0.01 expires March 2008 7,581 106,134
Next Generations, strike $0.01
expires February 2008 1,391 14
------------
1,343,648
------------
CONSTRUCTION & BUILDING MATERIALS (0.0%)
Capital Pacific Holdings Group,
Inc., strike $3.40, expires
May 2002 12,640 31,600
------------
ELECTRONICS (0.0%)
Aavid Thermal Tech Warrants,
strike $0.01 expires
February 2007 250 2,500
Ampex Corp.
strike $2.25 expires
March 2003 17,000 170
Interact Electronic Marketing,
Inc.,+++
strike $0.01 expires
December 2009 700 7
Orbital Imaging Corp., strike
$1.00 expires March 2005 500 15,000
------------
17,677
------------
ENERGY (0.1%)
Abraxas Petroleum Corp., strike
$5.68 expires December 2000 29,809 11,178
Key Energy Services, Inc., strike
$4.88 expires January 2009 750 48,750
Metretek Technologies, Inc.,
strike $4.00 expires
September 2003 15,000 1,875
Metricom, Inc., strike
$87.00 expires February 2010 300 9,000
------------
70,803
------------
FOOD & BEVERAGE (0.0%)
Mrs. Fields Holding Co.
Warrants 200 2,100
------------
See Accompanying Notes to Financial Statements.
37
<PAGE>
WARBURG PINCUS HIGH YIELD FUND
SCHEDULE OF INVESTMENTS (CONT'D)
August 31, 2000
--------------------------------------------------------------------------------
NUMBER
OF
SHARES VALUE
------ -----
RIGHTS & WARRANTS (CONT'D)
INDUSTRIAL GOODS & MATERIALS (0.1%)
Equinix, Inc., strike $0.01 expires
December 2007 450 $ 74,250
Golden Ocean Group, Limited,
strike $46.20 expires
August 2001 438 0
------------
74,250
------------
PUBLISHING & INFORMATION SERVICES (0.0%)
InterAct Systems, Inc., strike
$0.01 expires August 2003 700 7
Source Media, Inc., strike
$0.01 expires November 2007 5,587 19,556
------------
19,563
------------
TELECOMMUNICATIONS (0.2%)
Airgate Pcs, Inc., strike
$0.01 expires October 2009 500 70,000
Carrier1 International, strike
$2.00 expires February 2009 500 150,000
DTI Holdings, Inc.
strike $0.01 expires
March 2008 3,000 30
KMC Telecom Holdings, Inc.,
strike $0.22 expires
April 2008 500 1,250
McCaw International Limited,
strike $36.45 expires
April 2007 500 1,250
Metromedics International, Inc.
strike $10.86 expire
March 2003 642 763
Metromedics International, Inc.
strike $1.00 expires
June 2004 1,010 101
Metromedics International, Inc.
strike $10.86 expires
March 2003 146 173
Motient Corp. Warrant
strike $12.28 expires
April 2008 500 15,000
See Accompanying Notes to Financial Statements.
38
<PAGE>
WARBURG PINCUS HIGH YIELD FUND
SCHEDULE OF INVESTMENTS (CONT'D)
August 31, 2000
--------------------------------------------------------------------------------
NUMBER
OF
SHARES VALUE
------ -----
RIGHTS & WARRANTS (CONT'D)
TELECOMMUNICATIONS (cont'd)
Startec Global Communications,
strike $24.20 expires
May 2008 400 $ 1,400
Xm Satellite Radio,
strike $49.50 expires
March 2010 250 32,500
------------
272,467
------------
TOTAL RIGHTS & WARRANTS (Cost $479,101) $ 1,832,111
------------
COMMON STOCKS (3.3%)
CABLE (0.1%)
Classic Communications, Inc.
Rule 144A 3,000 $ 50,010
------------
COMPUTERS, SOFTWARE & SERVICES (0.7%)
Globix Corp. 8,448 226,512
Verio, Inc. 9,858 590,864
------------
817,376
------------
CONSUMER PRODUCTS (0.0%)
Coinstar, Inc. 3,671 42,217
------------
ENERGY (1.0%)
Grant Prideco, Inc. 15,162 356,307
Metretek Technologies, Inc. 30,000 125,625
Weatherford International, Inc. 15,162 711,666
------------
1,193,598
------------
PACKAGING & CONTAINERS (0.0%)
Crown Packaging Enterprises,
Ltd 100,847 1,008
------------
TELECOMMUNICATIONS (1.5%)
Advanced Radio Telecom Corp. 10,117 103,699
AT&T Canada, Inc. 1,370 45,493
Completel Europe NV 50,000 425,000
E Spire Communications, Inc. 21,253 86,340
Globalstar Telecommunications,
Limited 1,651 16,310
Intermedia Communications,
Inc 3,510 72,837
Loral Space and Communications
Limited 181 1,391
See Accompanying Notes to Financial Statements.
39
<PAGE>
WARBURG PINCUS HIGH YIELD FUND
SCHEDULE OF INVESTMENTS (CONT'D)
August 31, 2000
--------------------------------------------------------------------------------
NUMBER
OF
SHARES VALUE
------ -----
COMMON STOCKS (CONT'D)
TELECOMMUNICATIONS (cont'd)
Microcell Telecommunications,
Inc 3,436 $ 127,562
Price Communications Corp. 40,268 825,494
------------
1,704,126
------------
TOTAL COMMON STOCKS (Cost $1,435,414) $ 3,808,335
------------
PREFERRED STOCKS (3.1%)
AEROSPACE/DEFENSE (0.8%)
GPA Group plc Convertible
Cumulative Second Preference
Shares 7.00% 1,750,000 $ 875,000
------------
CABLE (0.2%)
Adelphia Business Solutions,
Inc., 12.875% Preferred,
Series B 8 6,082
Diva Systems Corp. Series C 11,890 166,460
------------
172,542
------------
CELLULAR/WIRELESS COMMUNICATIONS (0.2%)
Rural Cellular Corp.,
Rule 144A, PIK 11.375% 3,187 280,467
------------
ENGINES (0.1%)
Interact Electronic Marketing,
Inc., 14.00% 700 140,000
------------
INDUSTRIAL (0.3%)
International Utility Structures,
Inc., Rule 144A 13.00% 124 85,952
International Utility Structures,
Inc., Rule 144A Units 13.00% 350 269,500
------------
355,452
------------
MISCELLANEOUS (0.1%)
Peninsula Gaming LLC 1,760 10,563
Metretek Technologies, Inc.
8.00% 150 172,500
------------
183,063
------------
PUBLISHING & INFORMATION SERVICES (0.1%)
Source Media, Inc.,
PIK 13.50% 14,409 72,048
------------
See Accompanying Notes to Financial Statements.
40
<PAGE>
WARBURG PINCUS HIGH YIELD FUND
SCHEDULE OF INVESTMENTS (CONT'D)
August 31, 2000
--------------------------------------------------------------------------------
NUMBER
OF
SHARES VALUE
------ -----
PREFERRED STOCKS (CONT'D)
RESTAURANTS, HOTELS & GAMING (0.0%)
AmeriKing, Inc., 13.00%
Cumulative Exchangeable 7,813 $ 48,833
------------
TELECOMMUNICATIONS (1.3%)
E Spire Communications, Inc.,
Junior PIK 12.75% 1,360 302,636
Intermedia Communications, Inc.,
Rule 144A, 7.00% Junior
Convertible, Series E 20,000 400,000
Nextel Communications, Inc.,
13.00% Exchangeable,
Series D PIK 360 385,550
NEXTLINK Communications,
Inc., 14% Senior Exchangeable
PIK 9,710 432,124
------------
1,520,310
------------
TOTAL PREFERRED STOCKS (Cost $4,294,586) $3,647,715
------------
TOTAL INVESTMENTS (97.9%) (Cost $129,342,204*) 113,445,512
OTHER ASSETS IN EXCESS OF LIABILITIES (2.1%) 2,414,015
------------
TOTAL NET ASSETS (100.0%) $115,859,527
============
* Cost for Federal income tax purposes at August 31, 2000 is $129,346,892.
The gross appreciation (depreciation) on a tax basis is as follows:
Gross Appreciation $ 7,370,014
Gross Depreciation (23,271,394)
-----------
Net Depreciation $(15,901,380)
============
+ Step Bond-- The interest rate as of August 31, 2000 is 0% and will reset to
interest rate shown at a future date.
++ Security in default.
+++ Illiquid Security.
INVESTMENT ABBREVIATIONS
PIK Payment-In-Kind
See Accompanying Notes to Financial Statements.
41
<PAGE>
WARBURG PINCUS MUNICIPAL BOND FUND
SCHEDULE OF INVESTMENTS
August 31, 2000
--------------------------------------------------------------------------------
PAR
(000) VALUE
------ --------
MUNICIPAL BONDS (95.0%)
CALIFORNIA (17.8%)
California State GO
6.300% 09/11/11 $670 $ 778,051
5.125% 10/01/17 825 827,706
Los Angeles CA, Department of
Water & Power Water RB
4.500% 05/15/23 705 613,364
San Diego CA Convention Center
Expansion Financing Authority,
Series A
4.750% 04/01/28 535 481,168
----------
2,700,289
----------
COLORADO (4.2%)
Colorado Springs CO, Utility RB
5.875% 11/15/17 595 632,253
----------
FLORIDA (4.1%)
Tallahassee FL, Electric RB,
First Lien
6.100% 10/01/06 600 625,578
----------
ILLINOIS (5.7%)
Chicago Illinois GO, Series 1993
5.250% 01/01/18 200 195,318
Illinois State Sales Tax RB,
Series Q
5.750% 06/15/14 650 664,059
----------
859,377
----------
LOUISIANA (4.6%)
New Orleans LA, Home
Mortgage Authority Special
Obligations Bond
6.250% 01/15/11 635 699,599
----------
MARYLAND (6.5%)
Maryland State Transportation
Authority Project RB
6.800% 07/01/16 850 979,480
----------
MASSACHUSETTS (0.8%)
Massachusetts State GO
Construction Loan, Series A
5.300% 11/01/05 100 103,870
See Accompanying Notes to Financial Statements.
42
<PAGE>
WARBURG PINCUS MUNICIPAL BOND FUND
SCHEDULE OF INVESTMENTS
August 31, 2000
--------------------------------------------------------------------------------
PAR
(000) VALUE
------- -----------
MUNICIPAL BONDS (CONT'D)
MASSACHUSETTS (cont'd)
Massachusetts State Water
Resources Authority, General
RB, Series 92A
6.500% 07/15/19 $ 20 $ 22,581
----------
126,451
----------
NEW YORK (35.2%)
Metropolitan Transit Authority
Commuter Facilities RB,
Series A
5.000% 07/01/23 600 555,348
New York State Dormitory
Authority RB (Judicial
Facilities Lease)
7.375% 07/01/16 40 47,126
New York State Dormitory
Authority RB (Park Ridge
Housing Inc. Project)
7.850% 02/01/29 530 533,641
New York State Local Government
Assistance Corp. RB, Series B
4.875% 04/01/20 580 533,600
New York State Power Authority
General Purpose RB, Series R
7.000% 01/01/10 360 423,659
New York, NY Municipal Water
Finance Authority Water &
Sewer System RB, Series B
5.125% 06/15/30 295 273,580
New York, NY Municipal Water
Finance Authority Water &
Sewer System RB, Series D
4.875% 06/15/21 400 362,368
New York, NY Prerefunded GO,
Series D
8.000% 08/01/01 625 654,700
New York, NY Prerefunded GO,
Series H
7.200% 02/01/02 550 579,150
Suffolk County NY Water
Authority, Waterworks RB,
Series V
6.750% 06/01/12 580 666,449
See Accompanying Notes to Financial Statements.
43
<PAGE>
WARBURG PINCUS MUNICIPAL BOND FUND
SCHEDULE OF INVESTMENTS (CONT'D)
August 31, 2000
--------------------------------------------------------------------------------
PAR
(000) VALUE
------- --------
MUNICIPAL BONDS (CONT'D)
NEW YORK (cont'd)
Triborough Bridge and Tunnel
Authority, NY General
Purpose RB, Series A
5.200% 01/01/20 $730 $ 702,399
----------
5,332,020
----------
PUERTO RICO (5.1%)
Commonwealth of Puerto Rico
GO
5.400% 07/01/07 730 767,726
----------
SOUTH DAKOTA (0.1%)
Heartland Consumers Power
District, SD Electric RB
6.375% 01/01/16 20 22,038
----------
TEXAS (0.7%)
Houston, TX Sewer Systems RB
6.375% 10/01/08 100 108,001
----------
VIRGINIA (4.9%)
Fairfax County, VA
Redevelopment & Housing
Authority (Island Walk Proj.),
Mortgage RB
7.100% 04/01/19 630 746,317
-----------
WASHINGTON (5.2%)
Seattle, WA Municipal Light &
Power RB
5.125% 07/01/22 100 94,051
Seattle, WA Water System RB
5.250% 12/01/23 735 700,808
-----------
794,859
-----------
Total Municipal Bonds
(Cost $13,767,278) $14,393,988
-----------
See Accompanying Notes to Financial Statements.
44
<PAGE>
WARBURG PINCUS MUNICIPAL BOND FUND
SCHEDULE OF INVESTMENTS (CONT'D)
August 31, 2000
--------------------------------------------------------------------------------
PAR
(000) VALUE
------ --------
SHORT TERM INVESTMENT (3.6%)
BBH Grand Cayman U.S. Dollar
Time Deposit
5.710% 09/01/00 $547 $ 547,000
(Cost $547,000) -----------
TOTAL INVESTMENTS (98.6%) (Cost $14,314,278*) 14,940,988
OTHER ASSETS IN EXCESS OF LIABILITIES (1.4%) 211,116
-----------
TOTAL NET ASSETS (100.0%) $15,152,104
===========
* Also cost for Federal income tax purposes at August 31, 2000. The gross
appreciation (depreciation) on a tax basis is as follows:
Gross Appreciation $ 835,131
Gross Depreciation (208,421)
---------
Net Appreciation $ 626,710
=========
INVESTMENT ABBREVIATIONS
GO = GeneralObligation
RB = Revenue Bond
See Accompanying Notes to Financial Statements.
45
<PAGE>
WARBURG PINCUS FUNDS
STATEMENTS OF ASSETS AND LIABILITIES
August 31, 2000
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
HIGH YIELD MUNICIPAL
FUND BOND FUND
------------ -----------
<S> <C> <C>
ASSETS
Investments, at value (cost -
$129,342,204 and $14,314,278, respectively) $113,445,512 $14,940,988
Cash -- 16,176
Receivable for Fund shares sold 110,203 --
Dividends and interest receivable 2,470,695 206,200
Prepaid expenses and other assets 45,292 30,333
------------ -----------
Total Assets 116,071,702 15,193,697
------------ -----------
LIABILITIES
Payable for Fund shares repurchased 71,126 --
Due to custodian 43,689 --
Advisory fee payable 14,071 8,856
Distribution fee payable (Common shares) 4,440 67
Accrued expenses payable 78,849 32,670
------------ -----------
Total Liabilities 212,175 41,593
------------ -----------
NET ASSETS
Capital stock, $0.001 par value 8,205 1,011
Paid-in capital 147,128,509 14,623,363
Undistributed net investment income 2,032,917 43,075
Accumulated net realized loss from
investments (17,413,412) (221,046)
Net unrealized appreciation/(depreciation) on
investments (15,896,692) 705,701
------------ -----------
Net Assets $115,859,527 $15,152,104
============ ===========
INSTITUTIONAL SHARES
Net assets $ 94,333,043 $14,627,797
------------ -----------
Shares outstanding 6,686,454 1,010,860
------------ -----------
Net asset value, offering price and redemption price
per share $ 14.11 $ 14.47
============ ===========
COMMON SHARES
Net assets $ 21,526,484 $ 524,307
------------ -----------
Shares outstanding 1,518,381 36,227
------------ -----------
Net asset value, offering price and redemption price
per share $ 14.18 $ 14.47
============ ===========
</TABLE>
See Accompanying Notes to Financial Statements.
46
<PAGE>
WARBURG PINCUS FUNDS
STATEMENTS OF OPERATIONS
For the Year Ended August 31, 2000
--------------------------------------------------------------------------------
HIGH YIELD MUNICIPAL
FUND BOND FUND
----------- ---------
INVESTMENT INCOME:
Dividends $ 288,592 $ 5,663
Interest 12,175,713 975,781
----------- ---------
Total Investment Income 12,464,305 981,444
----------- ---------
EXPENSES:
Investment advisory fees 848,380 118,517
Administration fees 158,120 35,341
Registration fees 110,887 30,799
Printing fees 84,742 24,648
Distribution fees 60,149 622
Transfer agent fees 49,012 22,697
Custodian fees 37,412 21,216
Audit fees 25,922 14,658
Legal fees 23,158 9,805
Interest expense 13,822 729
Directors fees 10,040 10,094
Insurance expense 1,034 690
Miscellaneous fees 46,029 12,317
----------- ---------
1,468,707 302,133
Less fees waived, expenses reimbursed and
transfer agent offsets (552,318) (131,794)
----------- ---------
Total Expenses 916,389 170,339
----------- ---------
Net Investment Income 11,547,916 811,105
----------- ---------
REALIZED AND UNREALIZED GAIN/(LOSS) ON INVESTMENTS:
Net realized gain/(loss) from security transactions 171,989 (187,501)
Net change in unrealized appreciation/(depreciation)
from investments (9,343,588) 357,493
----------- ---------
Net gain/(loss) on investments (9,171,599) 169,992
----------- ---------
Net increase in net assets resulting
from operations $ 2,376,317 $ 981,097
=========== =========
See Accompanying Notes to Financial Statements.
47
<PAGE>
WARBURG PINCUS FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
HIGH YIELD FUND MUNICIPAL BOND FUND
-------------------------------- --------------------------------
FOR THE YEAR FOR THE YEAR FOR THE YEAR FOR THE YEAR
ENDED ENDED ENDED ENDED
AUGUST 31, 2000 AUGUST 31, 1999 AUGUST 31, 2000 AUGUST 31, 1999
--------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
FROM OPERATIONS:
Net investment income $ 11,547,916 $ 11,684,546 $ 811,105 $ 1,030,410
Net gain/(loss) on investments and
foreign currency transactions (9,171,599) (9,152,286) 169,992 (944,193)
------------ ------------ ----------- -----------
Net increase/(decrease) in
net assets resulting from
operations 2,376,317 2,532,260 981,097 86,217
------------ ------------ ----------- -----------
FROM DIVIDENDS AND DISTRIBUTIONS
TO SHAREHOLDERS:
Net investment income:
Institutional shares (9,960,821) (8,940,115) (840,967) (1,031,337)
Common shares (2,320,739) (1,873,396) (12,785) (4,114)
Net realized capital gains:
Institutional shares -- -- (27,430) (320,024)
Common shares -- -- (376) (14)
------------ ------------ ----------- -----------
Net decrease in net assets from
dividends and distributions (12,281,560) (10,813,511) (881,558) (1,355,489)
------------ ------------ ----------- -----------
NET CAPITAL SHARE TRANSACTIONS (3,388,139) 42,820,448 (7,581,635) 1,674,840
------------ ------------ ----------- -----------
Total increase/(decrease)
in net assets (13,293,382) 34,539,197 (7,482,096) 405,568
NET ASSETS:
Beginning of year 129,152,909 94,613,712 22,634,200 22,228,632
------------ ------------ ----------- -----------
End of year $115,859,527 $129,152,909 $15,152,104 $22,634,200
============ ============ =========== ===========
Undistributed net investment
income $ 2,032,917 $ 2,804,423 $ 43,075 $ 113,529
============ ============ =========== ===========
</TABLE>
See Accompanying Notes to Financial Statements.
48
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
WARBURG PINCUS HIGH YIELD FUND
FINANCIAL HIGHLIGHTS
(For a Share Outstanding Throughout each Period)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INSTITUTIONAL COMMON
---------------------------------------------- -----------------------------------------
FOR THE PERIOD
NOVEMBER 1,
FOR THE YEAR 1996* TO
FOR THE YEAR ENDED AUGUST 31, ENDED AUGUST 31, AUGUST 31,
---------------------------------------------- -------------------------- -----------
2000 1999 1998 1997 1996 2000 1999 1998 1997
------- ------- ------- ------- ------- ------- ------- ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PER SHARE DATA:
Net asset value, beginning of period $ 15.32 $ 16.60 $ 17.08 $ 16.09 $ 15.72 $ 15.38 $ 16.62 $17.08 $16.21
------- ------- ------- ------- ------- ------- ------- ------ ------
INVESTMENT ACTIVITIES:
Net investment income 1.41+ 1.42 1.43 1.37 1.47 1.38+ 1.39+ 1.36 0.93
Net gain/(loss) on investments
(both realized and unrealized) (1.13) (1.33) (0.49) 0.96 0.40 (1.14) (1.34) (0.45) 0.87
------- ------- ------- ------- ------- ------- ------- ------ ------
Total from investment operations 0.28 0.09 0.94 2.33 1.87 0.24 0.05 0.91 1.80
------- ------- ------- ------- ------- ------- ------- ------ ------
DIVIDENDS FROM NET INVESTMENT INCOME (1.49) (1.37) (1.42) (1.34) (1.50) (1.44) (1.29) (1.37) (0.93)
------- ------- ------- ------- ------- ------- ------- ------ ------
NET ASSET VALUE, END OF PERIOD $ 14.11 $ 15.32 $ 16.60 $ 17.08 $ 16.09 $ 14.18 $ 15.38 $16.62 $17.08
======= ======= ======= ======= ======= ======= ======= ====== ======
Total return 1.84% 0.67% 5.48% 15.17% 12.42% 1.58% 0.39% 5.27% 11.49%3
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000s omitted) $94,333 $95,129 $94,044 $92,630 $75,849 $21,526 $34,024 $ 570 $ 86
Ratio of expenses to average net assets 0.70%1,2 0.69%1 0.70%1 0.70%1 0.88%1 0.96%1,2 0.95%1 0.95%1 0.96%1,4
Ratio of net investment income to
average net assets 9.59% 9.10% 8.12% 8.44% 8.92% 9.29% 8.86% 7.96% 8.13%4
Fund turnover rate 31% 40% 60% 84% 143% 31% 40% 60% 84%3
<FN>
---------------------
1 Without the voluntary waiver of advisory fees and administration fees, the
ratios of expenses to average net assets for the Institutional Class would
have been 1.15%, 1.04%, 1.14%, 1.13%, and 1.11% for the years ended August 31,
2000, 1999, 1998, 1997, and 1996, 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 1.45%, 1.34% and 1.39% for the
years ended August 31, 2000, 1999 and 1998, respectively, and 1.47% annualized
for the period ended August 31, 1997.
2 Interest earned on uninvested cash balances is used to offset portions of the
transfer agent expense. These arrangements had no effect on the fund's expense
ratio.
3 Not annualized.
4 Annualized.
* Inception Date.
+ Per share information is calculated using the average share outstanding
method.
</FN>
</TABLE>
See Accompanying Notes to Financial Statements.
50-51
<PAGE>
WARBURG PINCUS MUNICIPAL BOND FUND
FINANCIAL HIGHLIGHTS
(For a Share Outstanding Throughout Each Period)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INSTITUTIONAL COMMON
----------------------------------------------- -------------------------------
FOR THE YEAR FOR THE PERIOD
FOR THE YEAR ENDED AUGUST 31, ENDED OCTOBER 30, 1998*
----------------------------------------------- AUGUST 31, TO AUGUST 31,
2000 1999 1998 1997 1996 2000 1999
------- ------- ------- ------- ------- ------------ -----------------
<S> <C> <C> <C> <C> <C> <C> <C>
PER SHARE DATA:
Net asset value, beginning of period $ 14.30 $ 15.12 $ 14.84 $ 14.65 $ 15.46 $14.29 $15.14
------- ------- ------- ------- ------- ------ ------
INVESTMENT ACTIVITIES:
Net investment income 0.69 0.67 0.70 0.72 0.73 0.63 0.54
Net gain/(loss) on investments
(both realized and unrealized) 0.21 (0.60) 0.40 0.65 (0.37) 0.25 (0.66)
------- ------- ------- ------- ------- ------ ------
Total from investment operations 0.90 0.07 1.10 1.37 0.36 0.88 (0.12)
------- ------- ------- ------- ------- ------ ------
LESS DIVIDENDS AND DISTRIBUTIONS:
Dividends from net investment income (0.71) (0.68) (0.71) (0.72) (0.74) (0.68) (0.52)
Distributions from net realized
capital gains (0.02) (0.21) (0.11) (0.46) (0.43) (0.02) (0.21)
------- ------- ------- ------- ------- ------ ------
Total dividends and distributions (0.73) (0.89) (0.82) (1.18) (1.17) (0.70) (0.73)
------- ------- ------- ------- ------- ------ ------
NET ASSET VALUE, END OF PERIOD $ 14.47 $ 14.30 $ 15.12 $ 14.84 $ 14.65 $14.47 $14.29
======= ======= ======= ======= ======= ====== ======
Total return 6.62% 0.36% 7.62% 9.74% 2.27% 6.42% (0.85)%3
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000s omitted) $14,628 $22,423 $22,229 $19,810 $19,581 $ 524 $ 211
Ratio of expenses to average net assets 1.00%1,2 0.99%1 1.00%1 1.00%1 1.00%1 1.27%1,2 1.26%1,4
Ratio of net investment income to
average net assets 4.79% 4.49% 4.72% 4.88% 4.62% 4.55% 4.44%4
Fund turnover rate 5% 26% 57% 43% 34% 5% 26%3
<FN>
-------------------
1 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 1.78%, 1.43%, 1.39%, 1.37%, and 1.42% for the years ended August 31,
2000, 1999, 1998, 1997, and 1996, 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 2.09% for the year ended
August 31, 2000 and 1.71% annualized for the period ended August 31, 1999.
2 Interest earned on uninvested cash balances is used to offset portions of the
transfer agent expense. These arrangements had no effect on the fund's expense
ratio.
3 Not annualized.
4 Annualized.
* Inception Date.
</FN>
</TABLE>
52-53
<PAGE>
WARBURG PINCUS FUNDS
NOTES TO FINANCIAL STATEMENTS
August 31, 2000
--------------------------------------------------------------------------------
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 co-administration fees.
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) 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.
C) 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. Municipal will distribute
substantially all of its net realized capital gains, if any, at least
annually and all net investment income monthly.
54
<PAGE>
WARBURG PINCUS FUNDS
NOTES TO FINANCIAL STATEMENTS (CONT'D)
August 31, 2000
--------------------------------------------------------------------------------
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES-- (CONT'D)
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. 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.
At August 31, 2000, High Yield and Municipal reclassified $37,862
and $27,807 from undistributed net investment income to accumulated net
realized loss, respectively. Municipal reclassified $32,098 from
accumulated net realized loss to capital contributions.
D) 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.
E) 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.
F) 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. At August 31, 2000, none of the Funds
had any open repurchase agreements.
55
<PAGE>
WARBURG PINCUS FUNDS
NOTES TO FINANCIAL STATEMENTS (CONT'D)
August 31, 2000
--------------------------------------------------------------------------------
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES-- (CONT'D)
G) 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. High Yield may enter into futures contracts subject
to certain limitations. Upon entering into a futures contract, High Yield
is required to deposit cash or pledge U.S. Government securities of an
initial margin. Subsequent payments, which are dependent on the daily
fluctuations in the value of the underlying instrument, are made or
received by the Fund each day (daily variations margin) and are recorded as
unrealized gains or losses until the contracts are closed. When the
contracts are closed, High Yield records a realized gain or loss equal to
the difference between the proceeds from (or cost of) the closing
transaction and the Fund's basis in the contracts. Risks of entering into
futures contracts include the possibility that there will be an imperfect
price correlation between the futures contracts and the underlying
securities. Second, it is possible that a lack of liquidity for futures
contracts could exist in the secondary market, resulting in an inability to
close a futures position prior to its maturity date. Third, the purchase of
a futures contract involves the risk that a Fund could lose more than the
original margin deposit required to initiate a futures transaction. At
August 31, 2000, High Yield did not have any open futures contracts.
H) 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. None of the Funds had any
securities on loan to brokers at August 31, 2000.
I) OTHER -- 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
56
<PAGE>
WARBURG PINCUS FUNDS
NOTES TO FINANCIAL STATEMENTS (CONT'D)
August 31, 2000
--------------------------------------------------------------------------------
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES-- (CONT'D)
adversely affect their ability to service their principal and interest
payment obligations, to meet projected business goals and to obtain
additional financing.
In addition, periods of economic uncertainty and changes can be
expected to result in increased volatility of market prices of lower-rated
debt securities and (to the extent a Fund invests in junk bonds) the Fund's
net asset value.
NOTE 2. TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES
Pursuant to Investment Advisory Agreements, Credit Suisse Asset Management,
LLC ("CSAM") an indirect, wholly-owned subsidiary of Credit Suisse Group, serves
as investment adviser for both of the Funds described herein.
For its advisory services, CSAM is entitled to receive a fee, computed daily
and payable monthly at 0.70% of average daily net assets of each Fund.
CSAM may, at its discretion, voluntarily waive all or any portion of its
advisory fee for any of the Funds. For the year ended August 31, 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 $848,380 $(512,979) $335,401
Municipal 118,517 (102,278) 16,239
CSAM reimbursed expenses of Municipal in the amount of $29,397 for the year
ended August 31, 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.
The Funds have an arrangement with their transfer agent whereby interest
earned on uninvested cash balances is used to offset a portion of their transfer
agent expense.
For the year ended August 31, 2000, the Funds received credits or
reimbursements under this arrangement as follows:
FUND AMOUNT
-------------------------- ----------------
High Yield $1,873
Municipal 19
57
<PAGE>
WARBURG PINCUS FUNDS
NOTES TO FINANCIAL STATEMENTS (CONT'D)
August 31, 2000
--------------------------------------------------------------------------------
NOTE 2. TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES-- (CONT'D)
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 Fund. PFPC Inc.
("PFPC"), an indirect, wholly-owned subsidiary of PNC Financial Services Group,
Inc., also serves as each Fund's co-administrator. For administration services,
each Fund pays CSAMSI a fee calculated at an annual rate .05% of the Fund's
first $125 million in average daily net assets of the Common shares and .10% of
average daily net assets of the Common shares over $125 million. No compensation
is payable by the Funds to CSAMSI for co-administration services for the
Institutional shares.
CFSI, 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
August 31, 2000, co-administrative service fees earned and waived by CSAMSI on
the Common shares were as follows:
GROSS NET
FUND CO-ADMINISTRATION FEE WAIVER CO-ADMINISTRATION FEE
------------------ --------------------- -------- ---------------------
High Yield $9,842 $(7,874) $1,968
Municipal 106 (84) 22
For administration services, PFPC received a fee, for the period
September 1, 1999 to July 31, 2000, calculated at an annual rate of .125% on
each Fund's average daily net assets subject to a minimum annual fee and
exclusive of out-of-pocket expenses. As of August 1, 2000, PFPC receives a fee
calculated on each Fund's average daily net assets, subject to a minimum annual
fee and exclusive of out-of-pocket expenses, as follows:
ANNUAL RATE
---------------------------
.07% for first $150 million
.06% for next $150 million
.05% for over $300 million
58
<PAGE>
WARBURG PINCUS FUNDS
NOTES TO FINANCIAL STATEMENTS (CONT'D)
August 31, 2000
--------------------------------------------------------------------------------
NOTE 2. TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES-- (CONT'D)
PFPC may, at its discretion, voluntarily waive all or any portion of it
administration fee for any of the Funds. For the year ended August 31, 2000, the
co-administration fees earned and waived by PFPC were as follows:
GROSS NET
FUND CO-ADMINISTRATION FEE WAIVER CO-ADMINISTRATION FEE
---------------- --------------------- --------- ---------------------
High Yield $146,090 $(27,842) $118,248
Municipal 35,217 -- 35,217
In addition to serving as each Fund's 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. On August 1, 2000, CSAMSI replaced PDI as distributor to each Fund.
No compensation is payable by any of the Funds to PDI or CSAMSI 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 of .25% of the average daily net
assets of the Common shares of each Fund. For the year ended August 31, 2000,
shareholder services fees, earned by CSAMSI were as follows:
FUND DISTRIBUTION FEE
---- ----------------
High Yield $60,149
Municipal 622
NOTE 3. PURCHASES AND SALES OF SECURITIES
For the year ended August 31, 2000, purchases and sales of investment
securities (other than short-term investments) were as follows:
INVESTMENT SECURITIES
----------------------------
FUND PURCHASES SALES
------ ------------ -----------
High Yield $35,763,561 $40,011,396
Municipal 796,379 6,649,325
59
<PAGE>
WARBURG PINCUS FUNDS
NOTES TO FINANCIAL STATEMENTS (CONT'D)
August 31, 2000
--------------------------------------------------------------------------------
NOTE 4. CAPITAL SHARES
Transactions in capital shares for each period were as follows:
<TABLE>
<CAPTION>
HIGH YIELD FUND
-------------------------------------------------------------------------------------------------------
INSTITUTIONAL COMMON
--------------------------------------------------- -------------------------------------------------
FOR THE YEAR ENDED FOR THE YEAR ENDED FOR THE YEAR ENDED FOR THE YEAR ENDED
AUGUST 31, 2000 AUGUST 31, 1999 AUGUST 31, 2000 AUGUST 31, 1999
------------------------ ------------------------ ------------------------ ----------------------
SHARES VALUE SHARES VALUE SHARES VALUE SHARES VALUE
---------- ------------ ---------- ------------ ---------- ------------ --------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Shares sold 2,155,537 $ 32,053,915 2,505,861 $ 39,359,915 1,632,299 $ 24,548,579 2,499,612 $39,264,516
Shares issued in
reinvestment
of dividends 598,187 8,761,962 508,551 7,926,308 118,785 1,750,906 105,404 1,641,508
Shares
repurchased (2,275,997) (33,390,183) (2,470,735) (38,614,790) (2,444,588) (37,113,318) (427,403) (6,757,008)
---------- ------------ ---------- ------------ ---------- ------------ --------- -----------
Net increase/
(decrease) 477,727 $ 7,425,694 543,677 $ 8,671,433 (693,504) $(10,813,833) 2,177,613 $34,149,016
========== ============ ========== ============ ========== ============ ========= ===========
</TABLE>
<TABLE>
<CAPTION>
MUNICIPAL BOND FUND
------------------------------------------------------------------------------------
INSTITUTIONAL COMMON
---------------------------------------------- -----------------------------------
FOR THE PERIOD
FOR THE YEAR ENDED FOR THE YEAR ENDED FOR THE YEAR ENDED OCTOBER 30, 1998*
AUGUST 31, 2000 AUGUST 31, 1999 AUGUST 31, 2000 THROUGH AUGUST 31, 1999
---------------------- --------------------- ---------------- ----------------
SHARES VALUE SHARES VALUE SHARES VALUE SHARES VALUE
--------- ----------- -------- ----------- ------ -------- ------ --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Shares sold 5,754 $ 80,042 179,990 $ 2,675,315 25,803 $369,861 15,816 $236,022
Shares issued in
reinvestment of
dividends 58,141 817,246 86,580 1,287,465 929 13,086 279 4,072
Shares
repurchased (621,552) (8,787,386) (168,278) (2,507,954) (5,265) (74,484) (1,335) (20,081)
--------- ----------- -------- ----------- ------ -------- ------ --------
Net increase/
(decrease) (557,657) $(7,890,098) 98,292 $ 1,454,826 21,467 $308,463 14,760 $220,013
========= =========== ======== =========== ====== ======== ====== ========
<FN>
*Inception Date.
</FN>
</TABLE>
On August 31, 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 2 60.60%
High Yield Common shares 3 77.01
Municipal Institutional shares 2 72.57
Municipal Common shares 3 90.49
60
<PAGE>
WARBURG PINCUS FUNDS
NOTES TO FINANCIAL STATEMENTS (CONT'D)
August 31, 2000
--------------------------------------------------------------------------------
NOTE 5. LINE OF CREDIT
The Funds, together with other funds advised by CSAM, have established a $350
million committed and a $75 million uncommitted, unsecured, 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 Fund 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 entire amount of
the Credit Facility, which is allocated among the participating funds in such
manner as is determined by the governing Boards of the various funds. In
addition the participating funds will pay interest on borrowing at the Federal
funds rate plus .50%. During the year ending August 31, 2000, the following fund
had borrowings under the line of credit agreement.
AVERAGE DAILY AVERAGE MAXIMUM DAILY LOAN OUTSTANDING
PORTFOLIO LOAN BALANCE INTEREST RATE % LOAN OUTSTANDING AT 08/31/00
---------- ------------ --------------- ---------------- ---------------
High Yield $12,055 6.00% $4,400,000 $0
NOTE 6. CAPITAL LOSS CARRYOVER
At August 31, 2000, capital loss carryovers were available to offset future
realized gains as follows: $139,168 in Municipal which expires in 2008, and
$17,408,723 in High Yield of which $6,869,153 expires in 2001, $4,986,021
expires in 2003, $3,354,749 expires in 2005, $341,638 expires in 2007 and
$1,857,162 expires in 2008.
61
<PAGE>
WARBURG PINCUS FUNDS
REPORT OF INDEPENDENT ACCOUNTANTS
--------------------------------------------------------------------------------
To the Board of Directors and Shareholders of
Warburg, Pincus High Yield Fund, Inc.;
Warburg, Pincus Municipal Bond Fund, Inc.:
In our opinion, the accompanying statements of assets and liabilities
including the schedules of investments of Warburg, Pincus High Yield Fund, Inc.
and Warburg, Pincus Municipal Bond Fund, Inc., (all funds collectively referred
to as the "Funds") as of August 31, 2000, and the related statements of
operations and of changes in net assets and the financial highlights present
fairly, in all material respects the financial position of the Funds at August
31, 2000, the results of each of their operations for the year then ended, the
changes in each of their net assets for each of the two years (or periods) in
the period then ended and their financial highlights for each of the years (or
periods) presented, in conformity with accounting principles generally accepted
in the United States of America. These financial statements and financial
highlights (hereafter referred to as "financial statements") are the
responsibility of the Funds' management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these financial statements in accordance with auditing standards
generally accepted in the United States of America, which require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits, which included confirmation of securities at August
31, 2000 by correspondence with the custodian and brokers, provide a reasonable
basis for our opinion.
PricewaterhouseCoopers LLP
Two Commerce Square
2001 Market Street
Philadelphia, Pennsylvania
October 13, 2000
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WARBURG PINCUS FUNDS
TAX INFORMATION LETTERS
--------------------------------------------------------------------------------
IMPORTANT TAX INFORMATION FOR SHAREHOLDERS OF WARBURG PINCUS MUNICIPAL BOND FUND
(UNAUDITED)
In the twelve months ended August 31, 2000, (the end of the fiscal year), 87%
of the dividends paid by the Fund were exempt-interest dividends for the purpose
of federal income taxes and free from such taxes. In addition, none of such
dividends were attributable to interest on private activity bonds which must be
included in federal alternative minimum taxable income for purposes of
determining liability for federal alternative minimum tax.
In January 2001, you will be furnished with a schedule of the yearly
percentage breakdown by state or U.S. possession of the source of interest
earned by the Fund in 2000. It is suggested that you consult your tax advisor
concerning the applicability of State and local taxes to dividends paid by the
Fund during the year.
IMPORTANT TAX INFORMATION FOR SHAREHOLDERS (UNAUDITED)
During the year ended August 31, 2000, the Warburg Pincus Municipal Bond Fund
declared $0.0235 per share from realized short-term capital gains.
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WARBURG PINCUS FUNDS
P.O. BOX 9030, BOSTON, MA 02205-9030
800-WARBURG (800-927-2874) (BULLET) www.warburg.com
CREDIT SUISSE ASSET MANAGEMENT SECURITIES, INC., DISTRIBUTOR. WPHYM-2-0800
