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Warburg Pincus Advisor Funds October 31, 1997
Fixed Income Fund
Global Fixed Income Fund
Intermediate Maturity Government Fund
New York Intermediate Municipal Fund
A
ANNUAL REPORT
More complete information about the Funds,
including charges and expenses and, where applicable,
the special considerations and risks associated with inter-
national investing is provided in the Prospectus, which
must precede or accompany this report and which
should be read carefully before investing. You may obtain
additional copies by calling 800-369-2728 or by writing
to Warburg Pincus Advisor Funds, P.O. Box 9030,
Boston, MA 02205-9030.
[LOGO WARBURG PINCUS]
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From time to time, the Funds' investment adviser and co-administrator may waive
some fees and/or reimburse some expenses, without which performance would be
lower. Waivers and/or reimbursements are subject to change.
Returns are historical and include change in share price and reinvestment of
dividends and capital gains. Past performance cannot guarantee future results.
Returns and share price will fluctuate, and redemption value may be more or less
than original cost.
The views of the Funds' management are as of the date of the letters and
portfolio holdings described in this annual report are as of October 31, 1997;
these views and portfolio holdings may have changed subsequent to these dates.
Nothing in this annual report is a recommendation to purchase or sell
securities.
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WARBURG PINCUS ADVISOR FIXED INCOME FUND
ANNUAL INVESTMENT ADVISER'S REPORT -- OCTOBER 31, 1997
- --------------------------------------------------------------------------------
Dear Shareholder: December 18, 1997
The objective of Warburg Pincus Fixed Income Fund (the 'Fund') is high
current income consistent with reasonable risk and, secondarily, capital
appreciation. The Fund pursues its objective by investing in a diversified
portfolio of fixed-income securities, including both corporate and U.S.
government issues.
For the 12 months ended October 31, 1997, the Fund had a total return of
9.51%, vs. a 7.50% gain for the Lehman Intermediate Government/Corporate Bond
Index.
The reporting period was a positive one for the domestic bond market, pockets
of difficulty notwithstanding. Though interest rates fell over the
November-through-October span, frequent reports of strength in the economy and
fears that higher inflation would result made the decline a bumpy one.
Speculation that the Federal Reserve, which raised interest rates in March,
would continue a tighter monetary course put particular pressure on bonds, and
the yield on the U.S. Treasury's 30-year bond climbed to 7.17% by mid-April.
Evidence of an actual pickup in inflation failed to materialize, however,
causing the Fed to leave rates unchanged over the remainder of the period. Bonds
ultimately rallied, with the long bond's yield falling to 6.14% by the end of
October.
Given the above, management of interest-rate exposure played an important
role in the performance of fixed-income funds over the period. Our strategy
throughout was to avoid making interest-rate bets per se. Instead, we attempted
to optimally position the Fund on the yield curve, given our outlook on the
markets from a risk-vs.-reward perspective. Our efforts in this regard
contributed positively to the Fund's performance. Most notably, we maintained a
modestly longer-than-average duration (compared to that of the Fund's benchmark)
over much of the second half of the period, which proved beneficial, given the
bond market's rally.
We also aimed to enhance the Fund's return through sector allocation.
Treasuries accounted for the bulk of the Fund's assets during the period, as we
continued to find them most attractive on a risk-reward basis. We also held a
position in corporate bonds, a weighting we increased late in the period when
their widening yield spreads over Treasuries created a number of buying
opportunities (we saw particularly good values among A-rated bonds). The Fund's
corporate issues had a positive impact on its performance, thanks in large part
to the economy's continued good health.
1
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WARBURG PINCUS ADVISOR FIXED INCOME FUND
ANNUAL INVESTMENT ADVISER'S REPORT -- OCTOBER 31, 1997 (CONT'D)
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Elsewhere, we maintained a significant weighting in mortgage-backed
securities. We identified a number of what we deemed to be good values in both
government-agency and commercial mortgage-backed issues, and thus held sizable
positions in both. These issues helped the Fund's return over the 12 months, as
did the Fund's smaller positions in preferred securities and real-estate
investment trusts.
Dale C. Christensen M. Anthony E. van Daalen
Co-Portfolio Manager Co-Portfolio Manager
2
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WARBURG PINCUS ADVISOR FIXED INCOME FUND
ANNUAL INVESTMENT ADVISER'S REPORT (CONT'D)
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GROWTH OF $10,000 INVESTED IN ADVISOR SHARES OF WARBURG PINCUS ADVISOR
FIXED INCOME FUND SINCE INCEPTION AS OF OCTOBER 31, 1997
The graph below illustrates the hypothetical investment of $10,000 in Advisor
Shares of Warburg Pincus Advisor Fixed Income Fund (the 'Fund') from July 3,
1996 (inception) to October 31, 1997, compared to the Lehman Intermediate
Government/Corporate Bond Index ('LIGC')* for the same time period.
[GRAPHIC REPRESENTATION]
<TABLE>
<CAPTION>
AVERAGE ANNUAL
TOTAL RETURN
FOR PERIOD ENDED
FUND (ADVISOR SHARES) LIGC 10/31/97
10,000 10,000 (ADVISOR SHARES)
<S> <C> <C> <C>
7/31/96 10,014.10 10,029.70 ------------------------------------
8/30/96 10,058.16 10,037.62
9/30/96 10,213.65 10,177.45 1 year
10/31/96 10,393.07 10,357.28
11/29/96 10,573.20 10,494.00 ------------------------------------
12/31/96 10,565.20 10,426.84
1/31/97 10,637.86 10,467.40 9.51%
2/28/97 10,703.23 10,487.39
3/31/97 10,615.19 10,415.13 ------------------------------------
4/30/97 10,709.02 10,537.51
5/30/97 10,812.62 10,624.97 Since inception
6/30/97 10,938.87 10,721.98 (12/29/95)
7/31/97 11,209.83 10,940.17
8/29/97 11,128.89 10,885.25 ------------------------------------
9/30/97 11,272.24 11,011.85 10.20%
10/31/97 11,381.12 11,133.86 ------------------------------------
</TABLE>
<TABLE>
<CAPTION>
FUND
------
<S> <C>
1 Year Total Return (9/30/96-9/30/97)........................................ 10.36%
Average Annual Total Return Since Inception (7/3/96-9/30/97)................. 10.08%
</TABLE>
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* The Lehman Intermediate Government/Corporate Bond Index is an unmanaged index
(with no defined investment objective) of intermediate- term government and
corporate bonds, and is calculated by Lehman Brothers Inc.
3
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WARBURG PINCUS ADVISOR GLOBAL FIXED INCOME FUND
ANNUAL INVESTMENT ADVISER'S REPORT -- OCTOBER 31, 1997
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Dear Shareholder: December 18, 1997
The objective of Warburg Pincus Global Fixed Income Fund (the 'Fund') is
maximum total return -- consistent with prudent management -- through a
combination of interest income, currency gains and capital appreciation. The
Fund seeks to achieve its objective by investing in fixed-income obligations of
governmental and corporate issuers denominated in various currencies, including
convertible debt securities and preferred stock.
For the 12 months ended October 31, 1997, the Fund gained 5.18%, vs. gains of
10.33% for the Salomon Brothers World Government Bond Index (Currency-Hedged)
and 5.33% for the Lipper World Income Funds Average.
Supported by continued low inflation and declining interest rates, most
foreign bond markets saw gains for the 12 months in local-currency terms (in
dollar terms, these returns were less impressive, and in many cases negative, as
the dollar strengthened vs. most currencies over the period). Many markets were
volatile, however, and thus we maintained a cautious approach throughout. In
general, we found the most attractive inflation-adjusted yields (and risk-
adjusted total-return potential) among intermediate-term bonds.
In terms of geographic allocation, European and dollar-bloc countries
accounted for the bulk of the Fund during the period. In Europe, we focused on
high-quality bonds from the continent's 'core' economies, most specifically
Germany and Denmark. The Fund's European holdings contributed positively to its
performance for the period, buoyed by modest economic growth and lower budget
deficits across the region.
Within dollar-bloc markets, we emphasized the U.S., where we favored
intermediate-maturity Treasuries for their historically high inflation-adjusted
yields. These securities had a positive impact on the Fund's return, thanks to
continued subdued inflation and declining domestic interest rates over the
period. We also found value in Canadian and Australian issues, which likewise
helped the Fund's performance.
Elsewhere, we maintained a significant weighting in Asian securities, where
we held both convertible (including Thai and Malaysian issues) and conventional
(mainly Indonesian) bonds. The region's currency turmoil during the latter part
of the period hurt the Fund's performance, though since our holdings were all
dollar-denominated, the impact of the devaluations was indirect, and the Fund
was spared translation losses. Our longer-term outlook on
4
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WARBURG PINCUS ADVISOR GLOBAL FIXED INCOME FUND
ANNUAL INVESTMENT ADVISER'S REPORT -- OCTOBER 31, 1997 (CONT'D)
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the Fund's Asian holdings remains positive. Indeed, we viewed the recent selloff
as a buying opportunity, and selectively added to our position in the region.
We had a modest position in Latin America, mostly dollar-denominated
corporate issues of Brazilian banks. These contributed positively to the Fund's
performance for the 12 months, their weakness late in the period notwithstanding
(as with our Asian holdings, we used the pullback as a buying opportunity). In
addition to offering what we view as attractive risk-adjusted yields, the Fund's
Brazilian holdings include bonds carrying put options, which can help provide a
cushion in down markets.
We hedged the majority of the Fund's foreign-currency exposure during the
period (as of October 31, 99% of the Fund was dollar-denominated or hedged into
dollars). This proved beneficial to the Fund's return, given the dollar's
continued rise vs. most currencies.
Laxmi C. Bhandari Dale C. Christensen
Co-Portfolio Manager Co-Portfolio Manager
5
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WARBURG PINCUS ADVISOR GLOBAL FIXED INCOME FUND
ANNUAL INVESTMENT ADVISER'S REPORT (CONT'D)
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GROWTH OF $10,000 INVESTED IN ADVISOR SHARES OF WARBURG PINCUS ADVISOR
GLOBAL FIXED INCOME FUND SINCE INCEPTION AS OF OCTOBER 31, 1997
The graph below illustrates the hypothetical investment of $10,000 in Advisor
Shares of Warburg Pincus Advisor Global Fixed Income Fund (the 'Fund') from
August 12, 1996 (inception) to October 31, 1997, compared to the Salomon
Brothers World Government Bond Index (Currency-Hedged) ('Salomon')* and the
Lipper World Income Funds Average ('Lipper')** for the same time period.
[GRAPHIC REPRESENTATION]
<TABLE>
<CAPTION>
AVERAGE ANNUAL
TOTAL RETURNS
FOR PERIODS ENDED
10/31/97
FUND (ADVISOR SHARES) SALOMON LIPPER (ADVISOR SHARES)
<S> <C> <C> <C> <C>
8/12/96 10,000 10,000 10,000 1 Year
8/30/96 10,018.35 10,086.80 10,116.00
9/30/96 12,211.01 10,278.15 10,320.34
10/31/96 10,340.61 10,466.96 10,498.89 5.18%
11/29/96 10,488.73 10,655.36 10,745.61
12/31/96 10,521.64 10,630.85 10,744.53
1/31/97 10,559.80 10,723.13 10,670.40
2/28/97 10,664.73 10,769.99 10,692.80 Since inception
3/31/97 10,617.03 10,707.42 10,549.52 (8/12/96)
4/30/97 10,665.38 10,825.20 10,574.84
5/30/97 10,742.73 10,890.80 10,773.65
6/30/97 10,858.77 11,052.64 10,911.55
7/31/97 10,956.77 11,271.04 10,972.65 7.11%
8/29/97 10,917.57 11,246.69 10,935.35
9/30/97 11,005.77 11,428.66 11,175.93
10/31/97 10,876.06 11,548.32 11,047.40
</TABLE>
<TABLE>
<CAPTION>
FUND
-----
<S> <C>
1 Year Total Return (9/30/96-9/30/97)......................................... 7.78%
Average Annual Total Return Since Inception (8/12/96-9/30/97)................. 8.79%
</TABLE>
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* The Salomon Brothers World Government Bond Index (Currency-Hedged) is a
market capitalization-weighted index designed to track major government debt
markets and is currency-hedged into U.S. dollars.
** The Lipper World Income Fund Average is an arithmetic average of all world
income funds, tracked by Lipper Analytical Services, that invest in non-U.S.
dollar and U.S. dollar debt instruments with unspecified maturities and
durations, or other income producing securities.
6
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WARBURG PINCUS ADVISOR INTERMEDIATE MATURITY GOVERNMENT FUND
ANNUAL INVESTMENT ADVISER'S REPORT -- OCTOBER 31, 1997
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Dear Shareholder: December 18, 1997
The objective of Warburg Pincus Intermediate Maturity Government Fund (the
'Fund') is a high level of current income consistent with capital preservation.
The Fund invests primarily in obligations issued or guaranteed by the U.S.
government, its agencies or instrumentalities. Under normal market conditions,
the Fund will maintain a weighted average portfolio maturity of between three
and 10 years.
For the 2 months ended October 31, 1997, (the Fund's inception date was
August 15, 1997) the Fund had a total return of 2.22%, vs. a 2.27% return for
the Lehman Intermediate Government Bond Index.
The reporting period was ultimately a positive one for the U.S. bond market.
Against a backdrop of continued subdued inflation, interest rates generally
trended down for the 12 months, which had a favorable impact on bond prices. The
market suffered several bouts of volatility, however, as reports of a growing
economy and fears of a pickup in inflation periodically weighed on its
performance. This was particularly the case in March and April, when
inflationary concerns (along with fears that the Federal Reserve would raise
interest rates) put downward pressure on bond prices, pushing the yield on the
U.S. Treasury's 30-year bond above 7%. But inflation remained well-contained,
and the Fed's March 25 rate hike proved to be its only such move during the 12
months. Bonds rallied over the remainder of the period, with the long bond's
yield falling to 6.14% by October 31.
Our strategy throughout was to view the Fund's interest-rate exposure from a
risk-reward perspective. In practical terms, this meant extending the Fund's
duration when inflation-adjusted yields were, in our view, attractive, and
reducing duration when we believed market fundamentals were less favorable. We
sought to keep a firm hand on risk, and thus attempted to err on the side of
caution.
In terms of sectors, we held the majority of the Fund's assets in Treasuries
during the period, as we continued to find them most attractive on a risk-reward
basis. Other areas in which we found good values included mortgage-backed
securities, U.S.-agency issues and, to a lesser extent, asset-backed securities,
specifically issues backed by Small Business Administration loans.
Dale C. Christensen M. Anthony E. van Daalen
Co-Portfolio Manager Co-Portfolio Manager
7
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WARBURG PINCUS ADVISOR NEW YORK INTERMEDIATE MUNICIPAL FUND
ANNUAL INVESTMENT ADVISER'S REPORT -- OCTOBER 31, 1997
- --------------------------------------------------------------------------------
Dear Shareholder: December 18, 1997
The objective of Warburg Pincus New York Intermediate Municipal Fund (the
'Fund') is maximum current interest income -- exempt from federal income tax and
New York state and New York city personal income taxes -- to the extent
consistent with prudent investment and the preservation of capital. A portion of
the Fund's income may be subject to state and city taxes or the federal
alternative minimum tax.
For the 12 months ended October 31, 1997, the Fund had a total return of
5.19%, vs. gains of 6.36% for the Lehman 5-year Municipal Bond Index and 6.86%
for the Lipper New York Intermediate Municipal Debt Funds Average.
Like their taxable counterparts, municipal bonds benefited from declining
interest rates over the November-through-October period. The market, though, saw
frequent short-term setbacks, typically when news of continued economic strength
fueled concerns that higher inflation would result. Ultimately, however, an
actual pickup in inflation did not materialize, helping virtually all major
domestic fixed-income indexes to post gains for the 12 months.
Given the market's significant short-term volatility during the period, our
management of the Fund's interest-rate exposure was generally cautious. That
said, we did see a few opportunities to move somewhat further out on the yield
curve. In early April, for example, we replaced several of the Fund's
shorter-term (i.e., two- to three-year) maturities with longer ones.
Specifically, we added bonds with maturities in the four- to eight-year range,
where yields had risen to about 5%, a tax-equivalent rate of over 9% for New
York investors in the highest federal, state and local tax brackets.
In terms of credit quality, we placed the bulk of our emphasis on high-
quality (AAA- and AA-rated) debt through the period. In our judgment, yield
spreads between higher and lower-rated bonds generally remained too narrow to
justify assuming the higher risk of the latter. We found exceptions, however,
such as BBB-rated New York city general-obligation issues (these accounted for
about 10% of the Fund as of October 31), which we considered to be attractively
priced, given the city's vastly improved fiscal health. Of note, we selectively
added to our weighting in A-rated bonds late in the period (i.e., October), when
their yield spreads over higher-rated bonds began to widen to what we deemed to
be compelling margins.
8
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WARBURG PINCUS ADVISOR NEW YORK INTERMEDIATE MUNICIPAL FUND
ANNUAL INVESTMENT ADVISER'S REPORT -- OCTOBER 31, 1997 (CONT'D)
- --------------------------------------------------------------------------------
Regarding sector concentration, we made few significant changes to the Fund
over the period. We remained generally well-diversified, finding the best values
in education, general-obligation and infrastructure-related bonds, reflected by
the Fund's relatively large weightings in these areas. Our underweightings
included the hospital area, due to the potentially negative impact of ongoing
industry-wide consolidation on credit ratings. We also largely avoided utility
bonds, because of deregulation uncertainties.
Looking ahead, our outlook on the New York municipal market remains, in
general, positive, given near-term projections of relatively low issuance and
the likelihood that demand for tax-exempt securities in the state will remain
firm. Against this backdrop, we will continue to hold bonds that we deem to have
the most attractive risk-adjusted after-tax yields.
Sharon B. Parente Dale C. Christensen
Co-Portfolio Manager Co-Portfolio Manager
9
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WARBURG PINCUS ADVISOR NEW YORK INTERMEDIATE MUNICIPAL FUND
ANNUAL INVESTMENT ADVISER'S REPORT (CONT'D)
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GROWTH OF $10,000 INVESTED IN ADVISOR SHARES OF WARBURG PINCUS ADVISOR
NEW YORK INTERMEDIATE MUNICIPAL FUND SINCE INCEPTION
AS OF OCTOBER 31, 1997
The graph below illustrates the hypothetical investment of $10,000 in Advisor
Shares of Warburg Pincus Advisor New York Intermediate Municipal Fund (the
'Fund') from August 5, 1996 (inception) to October 31, 1997, compared to the
Lehman 5-year Municipal Bond Index ('LBMUNI')* and Lipper Intermediate Municipal
Debt Funds Average ('LIPIMUNI')** for the same time period.
[GRAPHIC REPRESENTATION]
AVERAGE ANNUAL
FUND (ADVISOR SHARES) LBMUNI LIPIMUNI TOTAL RETURNS
10,000 10,000 10,000 FOR PERIODS ENDED
------ ------ ------ 10/31/97
(ADVISOR SHARES)
8/30/96 9,947.17 10,008.80 10,000.00
9/30/96 10,026.56 10,091.27 10,087.00 ----------------------
10/31/96 10,087.82 10,179.27 10,184.84 1 YEAR
11/29/96 10,189.78 10,311.80 10,335.58 ----------------------
12/31/96 10,183.59 10,292.11 10,304.57
1/31/97 10,220.90 10,327.31 10,325.18 5.19%
2/28/97 10,288.92 10,402.70 10,400.56
3/31/97 10,220.96 10,289.51 10,291.35 ----------------------
4/30/97 10,251.07 10,333.55 10,341.78 SINCE INCEPTION
5/30/97 10,357.24 10,460.66 10,465.88 (8/5/96)
6/30/97 10,402.95 10,545.91 10,559.03 ----------------------
7/31/97 10,567.59 10,731.31 10,792.38
8/29/97 10,519.73 10,676.36 10,702.80 4.90%
9/30/97 10,582.64 10,770.96 10,808.76
10/31/97 10,610.91 10,827.07 10,858.48 ----------------------
<TABLE>
<CAPTION>
FUND
-----
<S> <C>
1 Year Total Return (9/30/96-9/30/97)......................................... 5.55%
Average Annual Total Return Since Inception (8/5/96-9/30/97).................. 5.03%
</TABLE>
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* The Lehman 5-Year Municipal Bond Index is an unmanaged index of municipal
bonds that is compiled by Lehman Brothers Inc. and has no defined investment
objective. The inception date of this index was 01/01/88.
** The Lipper Intermediate Municipal Debt Funds Average is an arithmetic average
of intermediate municipal debt funds' rates of returns on a monthly basis.
Lipper classifies intermediate municipal debt funds as those that invest in
municipal debt issues with dollar weighted average maturities of 5 to 10
years. The Lipper Average is unmanaged with no defined investment objective.
10
<PAGE>
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WARBURG PINCUS FIXED INCOME FUND
STATEMENT OF NET ASSETS
October 31, 1997
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<TABLE>
<CAPTION>
RATINGS'D'
PAR (MOODY'S/S&P) MATURITY RATE% VALUE
- ----------- ------------ -------- ------ ------------
<C> <S> <C> <C> <C> <C>
CORPORATE BONDS (32.9%)
$ 2,000,000 ABN-AMRO Bank NV New York Branch Subordinate
Deposit Notes (Callable 08/01/04 at $100.00) (Aa2, NR) 08/01/09 8.250 $ 2,145,000
1,250,000 Bank Plus Corp. Senior Notes (Callable
11/15/05 at $110.00) (NR, NR) 07/18/07 12.000 1,403,125
500,000 Belco Oil & Gas Corp. (Callable 09/15/02 at
$104.44) (B1, B) 09/15/07 8.875 500,000
1,300,000 Burlington Northern Santa Fe Debentures
(Putable 06/01/08 at $100.00) (Baa2, BBB) 06/01/36 7.290 1,381,250
2,270,000 Conagra, Inc. Senior Notes (Putable 08/01/00) (Baa1, BBB+) 08/01/27 6.700 2,312,562
1,550,000 Connecticut Lighting & Power Series A Notes (Ba1, BB+) 02/01/99 5.500 1,526,750
5,000,000 Countrywide Home Loan Inc. Medium Term Notes (A3, A) 10/08/02 6.380 5,025,000
4,340,000 First Industrial LP (Putable 05/15/02 at
$100.00) (Baa2, BBB) 05/15/27 7.150 4,475,625
5,930,000 First Union Corp. Subordinate Debentures
(Putable 10/15/05 at $100.00) (A2, A-) 10/15/35 6.550 6,004,125
1,000,000 Globalstar Capital Corp. Senior Notes
(Callable 02/15/02) (B3, B) 02/15/04 11.375 995,000
5,000,000 HSBC America Capital Trust (Callable 05/15/07
at $104.19) (A2, BBB+) 05/15/27 8.380 5,118,750
5,500,000 J.C. Penney & Co., Inc. Debentures (Putable
08/15/26 at $100.00) (A2, A) 08/15/26 6.900 5,720,000
1,000,000 Kingdom of Thailand Yankee Notes (Baa1, BBB) 08/15/01 7.840 941,250
4,580,000 Korea Electric Power Debentures (Putable
12/01/01 at $100.00) (A1, AA-) 12/01/26 6.000 4,465,500
2,175,000 Export-Import Bank Korea Global Bond (Putable
03/15/02 at $100.00) (A1, NR) 03/15/07 7.100 2,128,781
1,000,000 Lenfest Communications, Inc. Senior Notes (Ba3, BB+) 11/01/05 8.375 1,002,500
1,500,000 Leucadia Capital Trust I (Callable 01/15/07
at $104.28) (Ba1, BBB) 01/15/27 8.650 1,612,500
1,000,000 Local Financial Corp. (NR, NR) 09/08/04 11.000 1,052,500
3,000,000 Lowe's Companies (Putable 05/15/07 at
$100.00) (A2, A) 05/15/37 7.110 3,168,750
2,000,000 MBNA Capital I Series A (Callable 12/01/06 at
$14.14) (Baa3, BB+) 12/01/26 8.278 2,025,000
1,000,000 Mego Mortgage Corp. Senior Notes# (CAA1, NR) 12/01/01 12.500 1,012,500
500,000 Mego Mortgage Corp. Senior Subordinate Notes# (NR, NR) 12/01/01 12.500 507,500
2,045,000 Merck & Company, Inc. Medium Term Note
(Putable 05/03/99 at $100.00) (NR, AAA) 05/03/37 5.760 2,065,450
1,955,000 Midland Bank PLC Yankee Subordinate Notes
(Putable 05/01/07 at $100.00) (A3, A) 05/01/25 7.650 2,152,944
1,000,000 Norfolk Southern Bonds (Putable 05/01/04 at
$100.00) (Baa1, BBB+) 05/01/37 7.050 1,051,250
1,250,000 Paging Network, Inc. Senior Subordinate Notes
(Callable 08/01/00 at $105.06) (B2, B) 08/01/07 10.125 1,281,250
1,000,000 Peregrine Private Investment Finance (NR, NR) 12/01/00 4.500 765,000
3,250,000 Philip Morris Companies, Inc. Notes (A2, A) 07/15/05 7.000 3,302,812
2,750,000 Philips Electronics NV Notes (Putable
06/01/06 at $100.00) (A3, BBB+) 06/01/26 7.200 2,877,187
1,000,000 Resource America, Inc. (Callable 08/01/02 at
$106.00) (Caa1, NR) 08/01/04 12.000 1,047,500
1,000,000 Riggs Capital Trust II Preferred Securities
Series C (Callable 03/15/07 at $104.44) (Baa3, BB-) 03/15/27 8.875 1,070,000
3,990,000 Rohr Industries Subordinated Debenture
(Callable 11/30/97 at $104.63) (B2, B) 03/01/17 9.250 4,139,625
1,560,000 Rose Hills Acquisition Senior Subordinate
Notes (Callable 11/15/00 at $100.00) (B2, B) 11/15/04 9.500 1,638,000
5,175,000 Smith Barney Holdings, Inc. Note (A2, A) 10/01/04 6.375 5,155,594
1,000,000 State Street Boston Corp. Debentures (Putable
at 06/15/06) (A1, AA-) 06/15/26 7.350 1,096,250
1,000,000 TIG Capital Trust I Debentures (Callable
01/15/07 at $100.00) (Baa2, A-) 01/15/27 8.597 1,087,500
3,200,000 Times Mirror Co. Notes (Putable 09/15/04 at
$100.00) (A2, A+) 09/15/27 6.610 3,272,000
2,000,000 U.S. West Capital Funding Guaranteed (Putable
01/15/04 at $100.00) (Baa1, BBB+) 01/15/37 6.950 2,060,000
------------
TOTAL CORPORATE BONDS (Cost $87,052,477) 88,586,330
------------
</TABLE>
See Accompanying Notes to Financial Statements.
11
<PAGE>
<PAGE>
WARBURG PINCUS FIXED INCOME FUND
STATEMENT OF NET ASSETS (CONT'D)
October 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
RATINGS'D'
PAR (MOODY'S/S&P) MATURITY RATE% VALUE
- ----------- ------------ -------- ------ ------------
<C> <S> <C> <C> <C> <C>
MORTGAGE-BACKED SECURITIES (16.5%)
$ 2,350,000 Asset Securitization Corp. (Nomura Asset
Securities Corp.) Series 1996-D2, Class A2 + (NR, AA) 02/14/29 7.330 $ 2,470,805
339,288 Bankers Trust Co. Pass-Through CTFS Series
1988-1, Class 1D (NR, AAA) 04/01/18 8.625 349,485
445,943 Donaldson, Lufkin, & Jenrette, Inc.
Acceptance Trust Series 1989-1, Class F (Aaa, AAA) 08/01/19 11.000 480,499
3,000,000 EQI Financing Partnership LP Class B (Aaa, AAA) 12/20/15 7.370 3,113,437
234,436 Federal Home Loan Mortgage Corp. (Aaa, AAA) 10/01/01 8.750 240,640
2,257,283 Federal Home Loan Mortgage Corp. Series-1589,
Class Z (Aaa, AAA) 09/15/23 6.250 1,977,077
1,448,856 Federal Mortgage Assistance Corp. Loan
Receivables Trust (NR, NR) 11/15/18 6.688 1,454,289
4,920,000 Federal National Mortgage Association
Guaranteed REMIC Trust Series1997-51, Class
KB (Aaa, AAA) 03/20/08 7.000 5,010,693
1,000,000 First Street NB Commercial Mortgage
Pass-Through CTFS Series FSI, Class B (NR, NR) 10/20/23 7.607 1,010,900
1,500,000 General Motors Acceptance Corp. CMO 96C-2B (A, NR) 10/15/11 7.530 1,568,437
5,000,000 Morgan Stanley Mortgage Trust Series 40,
Class 8 (NR, AAA) 07/20/21 7.000 5,095,280
4,000,000 Nomura Asset Securities Corp. Series 1993-1,
Class B1 (NR, A) 12/15/01 6.680 4,021,875
1,287,871 Nomura Asset Securities Corp. Series 1994-4B,
Class 4A (Aaa, AAA) 09/25/24 8.300 1,331,739
7,450,661 Residential Funding Mortgage Securities I
Series 96-S2, Class A1 (NR, AAA) 01/25/11 6.750 7,479,960
4,000,000 Resolution Trust Corp. 1994-C1, Class B (NR, AA) 06/25/26 8.000 4,096,562
1,731,667 Resolution Trust Corp. Pass-Through CTFS
Series-95 C1, Class A-2C (Aaa, NR) 02/25/27 6.900 1,737,214
881,790 Security Pacific Corp. Home Equity Loan
Series 1991-1, Class B (Aaa, AAA) 05/15/98 8.850 893,974
2,000,000 Shurgard Pass-Through CTFS Trust (Nomura
Asset Securities Corp.) Series 1, Class 1 (NR, NR) 06/15/04 8.240 2,110,312
------------
TOTAL MORTGAGE-BACKED SECURITIES (Cost $43,054,030) 44,443,178
------------
UNITED STATES TREASURY OBLIGATIONS (39.9%)
42,150,000 U.S. Treasury Note (Aaa, AAA) 07/15/98 8.250 42,941,156
12,960,000 U.S. Treasury Note (Aaa, AAA) 05/15/01 8.000 13,880,030
27,702,000 U.S. Treasury Note (Aaa, AAA) 02/15/05 7.500 30,309,035
4,800,000 U.S. Treasury Note (Aaa, AAA) 08/15/02 6.375 4,919,328
17,000,000 U.S. Treasury Principal Strip (Aaa, AAA) 08/15/99 5.870 ## 15,399,960
------------
TOTAL UNITED STATES TREASURY OBLIGATIONS (Cost $106,471,875) 107,449,509
------------
AGENCY OBLIGATION (0.5%)
1,475,165 Small Business Administration
Guaranteed-Development Participation
Certificate Debenture Series 1992-20D
(Callable 04/01/97 at $100.00) (Cost
$1,475,165) (NR, NR) 04/01/12 8.200 1,578,427
------------
</TABLE>
See Accompanying Notes to Financial Statements.
12
<PAGE>
<PAGE>
WARBURG PINCUS FIXED INCOME FUND
STATEMENT OF NET ASSETS (CONT'D)
October 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER
OF SHARES RATE% VALUE
- ----------- ------ ------------
<C> <S> <C> <C>
PREFERRED STOCK (7.0%)
Banks & Savings & Loans (2.0%)
36,800 Banco Totta & Acores Financial Corp. Series A
(Callable 10/11/06 at $25.00) 8.875 $ 947,600
1,000 BankUnited Capital Trust Series B (Callable
12/31/06 at $105.125) 10.250 1,035,000
40,000 California Federal Preferred Capital Corp.
Series A (Callable 12/31/02 at $26.14) 9.125 1,062,500
50,000 Credit Lyonnaise Capital SCA Series DTC ADR
(Callable 07/12/03 at $25.00) 9.500 1,350,000
35,000 National Australia Bank. Ltd. (Convertible) 7.875 973,438
------------
5,368,538
------------
Communications & Media (1.2%)
5,263 American Radio Systems Series B (Callable
01/15/02 at $105.69) 11.375 626,297
2,317 Time Warner, Inc. Series M (Callable 07/01/06
at $1,051.30) 10.250 2,670,343
------------
3,296,640
------------
Financial Services (0.6%)
64,800 MEPC International Capital Series A (Callable
09/21/05 at $25.00) 9.125 1,713,150
------------
Real Estate (3.2%)
20,000 Crown American Realty Trust Class A REIT
(Callable 07/31/07 at $52.50) 11.000 1,085,000
72,000 Equity Residential Properties Series D REIT 8.600 1,881,000
58,200 Loewen Group Capital Series A REIT 9.450 1,553,213
76,650 Prime Retail, Inc. Series B (Convertible)
REIT (Callable 03/31/99 at $27.125) 8.500 1,880,320
26,250 Security Capital Industrial Trust Series C
REIT (Callable 11/13/26 at $50.00) 8.540 1,384,688
30,000 Walden Residential Properties, Inc. REIT
(Callable 12/31/06 at $25.00) 9.200 768,750
------------
8,552,971
------------
TOTAL PREFERRED STOCK (Cost $17,811,229) 18,931,299
------------
WARRANTS (0.1%)
Real Estate (0.1%)
80,000 Walden Residential Properties, Inc. REIT
(Warrant entitles holder to purchase .333
shares of common stock at $26.875, expires
01/01/02) 105,000
------------
Telecommunications & Equipment (0.0%)
1,000 Globalstar Telecommunications, Ltd. (Warrants
entitle holder to pruchase 4.129 shares of
common stock at $38.7875, expires 02/15/04) 100,000
------------
TOTAL WARRANTS (Cost $101,800) 205,000
------------
</TABLE>
See Accompanying Notes to Financial Statements.
13
<PAGE>
<PAGE>
WARBURG PINCUS FIXED INCOME FUND
STATEMENT OF NET ASSETS (CONT'D)
October 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PAR VALUE
- ----------- ------------
<C> <S> <C>
SHORT-TERM INVESTMENTS (1.8%)
$ 4,842,000 Repurchase agreement with Goldman Sachs & Co.
dated 10/31/97 at 5.65% to be repurchased at
$4,844,280 on 11/03/97. (Collateralized by a
pro rata amount of U.S. Treasury Notes
ranging in par values from
$830,000-$50,000,000, 5.125%-8.50%,
01/15/04-11/15/04. Market value of collateral
is $4,941,908.) (Cost $4,842,000) $ 4,842,000
------------
TOTAL INVESTMENTS AT VALUE (98.7%) (Cost $260,808,576*) 266,035,743
OTHER ASSETS IN EXCESS OF LIABILITIES (1.3%) 3,379,498
------------
NET ASSETS (100.0%) (applicable to 25,447,379 Common Shares and 380,042
Advisor Shares) $269,415,241
------------
------------
NET ASSET VALUE, offering and redemption price per Common Share
($265,452,567[div]25,447,379) $10.43
------
------
NET ASSET VALUE, offering and redemption price per Advisor Share
($3,962,674[div]380,042) $10.43
------
------
</TABLE>
INVESTMENT ABBREVIATIONS
ADR = American Depository Receipt
CMO = Collateralized Mortgage Obligation
CTFS = Certificates
LP = Limited Partnership
NR = Not Rated
REIT = Real Estate Investment Trust
REMIC = Real Estate Mortgage Investment Conduit
- --------------------------------------------------------------------------------
+ On instruments with variable rates, the interest rate shown reflects the
current rate as of October 31, 1997.
'D' Credit ratings given by Moody's Investors Service, Inc. and Standard &
Poor's Ratings Group are unaudited.
# Not readily marketable security.
## Rate shown refects yield to maturity on date of purchase.
* Cost for federal income tax purposes is $260,884,637.
See Accompanying Notes to Financial Statements.
14
<PAGE>
<PAGE>
WARBURG PINCUS GLOBAL FIXED INCOME FUND
STATEMENT OF NET ASSETS
October 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
RATINGS'D'
PAR+ (MOODY'S/S&P) MATURITY RATE% VALUE
- ---------- ----------- -------- ------ ------------
<C> <S> <C> <C> <C> <C>
BONDS (74.9%)
Argentina (1.4%)
2,000,000 Compania Internacional de
Telecomunicaciones SA Series A (NR,BB) 08/01/04 8.850 $ 1,840,000
1,000,000 Province of Mendoza (Ba1, BB-) 09/04/07 10.000 952,500
------------
2,792,500
------------
Australia (2.4%)
1,000,000 BMW Australia Finance (A1, NR) 07/09/01 9.000 771,432
2,000,000 Societe Generale Australia (AA2, AA-) 06/19/00 9.250 1,526,161
3,000,000 State Bank of New South Wales (Aaa, AAA) 02/26/01 12.250 2,509,462
------------
4,807,055
------------
Bermuda (2.4%)
5,000,000(A) Bacardi-Martini Finance BV (A, A) 07/23/98 5.750 4,986,035
------------
Brazil (7.0%)
1,000,000(A) Banco Bandeirantes SA Step Up Coupon
(Callable and Putable 12/12/99 at $100.00) (B1, BB-) 12/12/04 10.000 965,000
2,000,000(A) Banco Boavista SA Nassau (B, B) 09/20/00 10.000 1,850,000
1,500,000(A) Banco Bozano, Simonsen (Callable and
putable 03/20/02 at $100.00) (B1, NR) 03/20/05 9.125 1,402,500
1,000,000(A) Banco Braseg AG (B1, NR) 12/07/97 11.250 1,001,250
1,000,000(A) Banco Itamarati SA# (B1, NR) 11/23/97 11.625 1,000,000
1,500,000(A) Brazil Realty (Callable and Putable
07/22/02 at $99.75) (BB, BB) 07/22/05 10.050 1,425,000
1,000,000(A) Comp Paranaense de Energia (Callable
05/02/02 at $99.722) (Putable 05/02/02 at
$99.099) (BB, BB) 05/02/05 9.750 1,000,000
1,000,000(A) Parmalat Brazil# (BB, BB) 05/14/98 8.500 1,000,000
1,500,000(A) Petroquimica do Nordeste (Callable and
putable 08/25/02 at $98.40) (BB, BB) 06/25/07 9.000 1,380,000
1,000,000(A) Rocal, Ltd. (B, B) 08/03/98 10.250 1,000,000
2,500,000(A) Sharp do Brasil (Callable and Putable
10/30/00 at $99.324) (BB, BB) 10/30/05 9.625 2,362,500
------------
14,386,250
------------
Canada (3.6%)
10,000,000 Canadian Government (Aa1, AAA) 08/01/99 6.500 7,344,331
------------
Cayman Islands (1.8%)
450,000(A) Ayala Corp. International Finance (Zero
Coupon) (Convertible) (BBB, BBB) 12/08/00 8.28## 342,639
1,000,000(A) Ayala Corp. International Finance
(Convertible) (BBB, BBB) 07/30/02 0.500 930,000
2,000,000(A) APP Global Finance FRN (B3, NR) 04/17/02 10.093 1,800,000
1,000,000(A) JG Summit (Cayman), Ltd. (Convertible)
(Callable 12/23/96 at $100.00) (BB, BB) 12/23/03 3.500 625,000
------------
3,697,639
------------
</TABLE>
See Accompanying Notes to Financial Statements.
15
<PAGE>
<PAGE>
WARBURG PINCUS GLOBAL FIXED INCOME FUND
STATEMENT OF NET ASSETS (CONT'D)
October 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
RATINGS'D'
PAR+ (MOODY'S/S&P) MATURITY RATE% VALUE
- ---------- ----------- -------- ------ ------------
<C> <S> <C> <C> <C> <C>
BONDS (cont'd)
China (0.9%)
1,000,000(A) Guangdong Enterprises (Baa3, BB) 05/22/07 8.875 $ 953,750
950,000(A) Shanghai Investment Holdings, Ltd.
(Convertible) (Callable 06/12/99 at
$100.00)) (BBB, BBB) 06/12/02 1.000 914,375
------------
1,868,125
------------
Denmark (4.3%)
50,000,000 Kingdom of Denmark (Aaa, AAA) 11/15/07 7.000 8,089,703
3,988,000 Nykredit (Aa3, NR) 10/01/22 11.000 660,424
------------
8,750,127
------------
France (1.1%)
1,000,000(D) Banque National de Paris (Aa3, A+) 08/13/02 9.000 784,179
1,000,000(D) Credit Local de France (Aa1, AA+) 07/23/01 8.750 768,355
1,100,000(B) Electricite de France (Aaa, AAA) 07/20/98 5.375 644,101
------------
2,196,635
------------
Germany (20.1%)
6,000,000 Deutsche Genoss Bank FRN (A, A) 05/24/04 3.368 3,379,326
6,500,000 DSL Finance NV (Aaa, NR) 02/21/06 6.000 3,834,280
28,500,000 German Government (Aaa, AAA) 10/14/05 6.500 17,568,584
4,300,000 German Government (Aaa, AAA) 06/20/16 6.000 2,484,422
5,000,000 Land Hessen Step Up Coupon (Putable
11/29/03 at 100.00 DMK) (Aaa, AAA) 11/29/13 6.000 2,987,130
7,000,000 Landesbank Rheinland Finance (Aa1, AA+) 04/20/05 7.250 4,423,445
9,500,000 Treuhandanstalt (Aaa, AAA) 09/09/04 7.500 6,164,618
------------
40,841,805
------------
Ghana (0.4%)
1,000,000(A) Ashanti Capital, Ltd. (Convertible) (B, B) 03/15/03 5.500 855,000
------------
Hong Kong (1.5%)
2,000,000(A) Hong Kong Chinese Bank FRN (Callable (Baa3,
09/29/97 at $100.00)# BBB-) 03/27/07 7.250 1,940,000
1,500,000(A) Peregrine Investment Holdings
(Convertible) (Callable 02/02/97 at
$100.00) (BBB, BBB) 12/01/00 4.500 1,147,500
------------
3,087,500
------------
</TABLE>
See Accompanying Notes to Financial Statements.
16
<PAGE>
<PAGE>
WARBURG PINCUS GLOBAL FIXED INCOME FUND
STATEMENT OF NET ASSETS (CONT'D)
October 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
RATINGS'D'
PAR+ (MOODY'S/S&P) MATURITY RATE% VALUE
- ---------- ----------- -------- ------ ------------
<C> <S> <C> <C> <C> <C>
BONDS (cont'd)
Indonesia (3.4%)
(Baa3,
1,750,000(A) Bank Negara BBB-) 02/15/07 7.625 $ 1,476,562
500,000(A) Daya Guna Samudera International Finance
Co. BV (Callable 06/01/02 at $105.00) (Ba2, BB+) 06/01/07 10.000 480,000
1,500,000(A) FSW International Finance BV (Callable
11/01/01 at $106.25) (B1, NR) 11/01/06 12.500 1,410,000
50,000(A) Indah Kiat International Finance Co.
(Callable 06/15/01 at $106.25) (Ba2, BB) 06/15/06 12.500 52,125
2,000,000(A) Polymax (Convertible) (Putable 02/27/01 at
$125.10) (BBB, BBB) 02/27/06 2.000 1,660,000
2,000,000(A) Polysindo (Ba2, BB) 10/23/98 9.500 1,820,000
------------
6,898,687
------------
Japan (2.5%)
5,000,000(A) Fuji Bank Ltd. FRN (Callable 08/08/02 at
$100.00) (A3,NR) 08/29/49 6.643 4,925,000
------------
Korea (7.1%)
2,000,000(A) Artec FRN (Callable and Putable 06/07/98
at $100.00) (BBB, BBB) 06/07/00 6.664 1,990,000
1,625,000(A) Export-Import Bank Korea (A1, A+) 06/25/01 7.250 1,565,687
2,400,000(A) Korean Development Bank (A1, A+) 03/15/01 9.500 2,505,000
2,600,000(A) Korean Development Bank (A1, A+) 03/30/01 9.500 2,717,000
4,000,000(A) Korean Electric Power (A1, A+) 12/01/03 6.375 3,755,000
2,000,000(A) South Korea Telecom (A1, A+) 04/29/04 7.750 1,997,500
------------
14,530,187
------------
Lebanon (0.7%)
1,500,000(A) Lebanese Republic (A, A) 07/02/07 7.500 1,357,500
------------
Malaysia (0.4%)
1,000,000(A) Rashid Hussain (Convertible) (Callable
06/30/00 at $100) (Putable 06/30/00 at
$132.59) (BBB, BBB) 06/30/07 1.500 812,500
------------
Mexico (1.4%)
3,000,000(A) United Mexican States FRN (Callable
06/27/00 at $100.00) (Ba2, BB) 06/27/02 6.976 2,880,000
------------
Moldova (0.1%)
150,000(A) Republic of Moldova (Ba2, NA) 06/13/02 9.875 145,875
------------
Netherlands (4.0%)
3,000,000(B) ABN-AMRO Holdings NV (Aa2, NR) 04/15/98 6.125 1,756,429
11,000,000 Netherlands Government (Aaa, AAA) 01/15/01 9.000 6,348,982
------------
8,105,411
------------
Philippines (0.6%)
500,000(A) Filinvest Development Corp. (Convertible)
(Callable 05/15/01 at $100.00) (Putable
11/15/01 at $133.27) (BB, BB) 05/15/06 2.500 397,500
1,000,000(A) Filinvest Capital (Convertible)# (BB, BB) 02/01/02 3.750 795,000
------------
1,192,500
------------
</TABLE>
See Accompanying Notes to Financial Statements.
17
<PAGE>
<PAGE>
WARBURG PINCUS GLOBAL FIXED INCOME FUND
STATEMENT OF NET ASSETS (CONT'D)
October 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
RATINGS'D'
PAR+ (MOODY'S/S&P) MATURITY RATE% VALUE
- ---------- ----------- -------- ------ ------------
<C> <S> <C> <C> <C> <C>
BONDS (cont'd)
South Africa (1.5%)
3,000,000(A) South African Government (Baa3, BB+) 06/23/17 8.500 $ 3,063,750
------------
SupraNational (1.4%)
5,000,000(B) International Bank For Reconstruction and
Development (Aaa, AAA) 10/13/99 7.250 3,045,684
------------
Thailand (3.2%)
900,000(A) Finance One PLC (Convertible)** (D, D) 08/31/01 2.000 135,000
500,000(A) Hemaraj Land Development (Convertible)
(Callable and Putable 09/09/98 at $116.50) (B, B) 09/09/03 3.500 411,250
1,400,000(A) Industrial Finance Corp. of Thailand
(Putable 08/04/02 at $100.00) (Baa2, BBB) 08/04/07 7.500 1,286,250
500,000(A) Property Perfect Public Co., Ltd.
(Convertible)(Callable 03/28/99 at
$100.00) (Matures At $128.00)** (D, D) 03/28/01 3.250 92,500
2,000,000(A) Siam Commercial Bank (Baa1, BB+) 03/15/06 7.500 1,807,500
800,000(A) Siam Sindhorn BIV, Ltd. (Convertible)# (B, B) 07/31/00 2.000 304,000
2,000,000(A) Thailand Kingdom (Baa1, BBB) 08/01/99 8.700 1,970,000
500,000(A) United Communication Industry Public Co.,
Ltd. (Convertible) (Callable 04/04/99 at
$100) (Putable 04/04/01 at $126.33) (B, B) 04/04/06 2.750 412,500
------------
6,419,000
------------
United Kingdom (1.7%)
(Aa2,
2,000,000(C) North American Capital Corp. AA-) 11/17/03 8.250 3,466,548
------------
TOTAL BONDS (Cost $159,677,554) 152,455,644
------------
<CAPTION>
NUMBER OF
SHARES
- ----------
<C> <S> <C> <C> <C> <C>
PREFERRED STOCK (0.9%)
France (0.7%)
50,000 Credit Lyonnaise Capital SCA Series DTC
ADR (Callable 07/12/03 at $25.00) 9.500 1,350,000
------------
U.S. (0.2%)
15,000 WBK Strypes Trust (Convertible) 10.000 465,000
------------
TOTAL PREFERRED STOCK (Cost $1,516,900) 1,815,000
------------
RIGHTS & WARRANTS (0.0%)
Thailand (0.0%)
21,520 Land and House Public Co., Ltd. Warrants,
07/23/00 (Cost $0)
0
------------
</TABLE>
See Accompanying Notes to Financial Statements.
18
<PAGE>
<PAGE>
WARBURG PINCUS GLOBAL FIXED INCOME FUND
STATEMENT OF NET ASSETS (CONT'D)
October 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PAR MATURITY RATE% VALUE
- ---------- -------- ------ ------------
<C> <S> <C> <C> <C>
SHORT-TERM INVESTMENTS (22.3%)
CERTIFICATES OF DEPOSIT (2.5%)
5,000,000 HSBC Yankee CD (Cost $4,999,903) 11/10/97 5.590 $ 4,999,903
------------
TIME DEPOSITS (14.7%)
15,000,000 Bank of Montreal 11/03/97 5.687 15,000,000
15,000,000 C.I.B.C. Holdings, Inc. 11/06/97 5.550 15,000,000
------------
TOTAL TIME DEPOSITS (Cost $30,000,000) 30,000,000
------------
REPURCHASE AGREEMENT (5.1%)
10,450,000 Repurchase agreement with Goldman, Sachs &
Co. dated 10/31/97 at 5.65% to be
repurchased at $10,454,920 on 11/03/97.
(Collateralized by a pro rata amount of
U.S. Treasury Notes ranging in par value
from $830,000 - $50,000,000,
5.125% - 8.50%, 01/15/98 - 11/15/04.
Market value of collateral is
$10,665,622.) (Cost $10,450,000) 11/03/97 5.650 10,450,000
------------
TOTAL SHORT-TERM INVESTMENTS (Cost $45,449,903) 45,449,903
------------
TOTAL INVESTMENTS AT VALUE (98.1%) (Cost $206,644,357) 199,720,547
OTHER ASSETS IN EXCESS OF LIABILITIES (1.9%) 3,945,010
------------
NET ASSETS (100.0%) (applicable to 17,848,386 Common
Shares and 820,054 Advisor Shares) $203,665,557
------------
------------
NET ASSET VALUE, offering and redemption price per
Common Share ($194,730,512[div]17,848,386) $10.91
------------
------------
NET ASSET VALUE, offering and redemption price per
Common Share ($8,935,045[div]820,054) $10.90
------------
------------
</TABLE>
INVESTMENT ABBREVIATIONS
ADR = American Depository Receipt
DMK = German Marks
FRN = Floating Rate Note
NA = Not Available
NR = Not Rated
- --------------------------------------------------------------------------------
'D' Credit ratings given by Moody's Investors Service, Inc. and Standard &
Poor's Ratings Group are unaudited.
* Also cost for federal income tax purposes
** Security is in default.
# Not readily marketable security.
## Rate shown reflects yield to maturity on date of purchase.
+ Unless otherwise indicated below, all securities are denominated in the
currency of the issuers' country of origin.
++ Interest rate shown reflects current rate on instrument with variable rate
or step coupon rate.
(A) Denominated in U.S. Dollars.
(B) Denominated in German Marks.
(C) Denominated in British Pounds.
(D) Denominated in Australian Dollars.
See Accompanying Notes to Financial Statements.
19
<PAGE>
<PAGE>
WARBURG PINCUS INTERMEDIATE MATURITY GOVERNMENT FUND
STATEMENT OF NET ASSETS
October 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
RATINGS'D'
PAR (MOODY'S/S&P) MATURITY RATE% VALUE
- ----------- ------------- -------- ------ -----------
<C> <S> <C> <C> <C> <C>
AGENCY OBLIGATIONS (6.8%)
Small Business Administration (3.6%)
$ 763,054 Small Business Administration Guaranteed
Development Participation Certificate
Series 1992-10B (Aaa, AAA) 04/01/02 7.450 $ 776,407
946,950 Small Business Administration Guaranteed
Development Participation Certificate
Series 1992-10C (Aaa, AAA) 07/01/02 6.600 959,970
-----------
1,736,377
-----------
Other (3.2%)
1,500,000 Private Export Funding Corp. Secured Notes
Series BB (Aaa, AAA) 10/30/98 9.100 1,548,750
-----------
TOTAL AGENCY OBLIGATIONS (Cost $3,264,647) 3,285,127
-----------
MORTGAGE-BACKED SECURITIES (31.3%)
1,500,000 Federal Home Loan Banks (Aaa, AAA) 11/19/04 7.000 1,503,000
2,000,000 Federal Home Loan Banks Series Dt-02 Class 1 (Aaa, AAA) 12/20/02 6.250 1,997,200
2,000,000 Federal Home Loan Banks Series El-04 Class 1 (Aaa, AAA) 04/23/04 7.130 2,031,940
2,000,000 Federal Home Loan Mortgage Corp. Series 1275
Class VN (Aaa, AAA) 02/15/05 7.000 2,043,836
2,000,000 Federal Home Loan Mortgage Corp. Series 1490
Class CA (Aaa, AAA) 04/15/08 6.500 2,036,701
1,500,000 Federal National Mortgage Association Series
G97-1 Class J (Aaa, AAA) 02/18/04 6.750 1,514,705
2,000,000 Federal National Mortgage Association,
1997-51, Class KB (Aaa, AAA) 03/20/08 7.000 2,036,867
973,826 GE Capital Mortgage Services, Inc. Series
1994-7 Class A10 (Aaa, AAA) 02/25/09 6.000 952,828
1,000,000 Morgan Stanley Mortgage Trust Series 40 Class
8 (Aaa, AAA) 07/20/21 7.000 1,019,056
-----------
TOTAL MORTGAGE-BACKED SECURITIES (Cost $14,869,461) 15,136,133
-----------
UNITED STATES TREASURY OBLIGATIONS (58.5%)
11,300,000 U.S. Treasury Note (Aaa, AAA) 07/15/98 8.250 11,512,101
2,000,000 U.S. Treasury Note (Aaa, AAA) 04/15/99 7.000 2,038,100
4,320,000 U.S. Treasury Note (Aaa, AAA) 05/15/01 8.000 4,626,677
2,835,000 U.S. Treasury Note (Aaa, AAA) 02/15/05 7.500 3,101,802
2,000,000 U.S. Treasury Bond (Aaa, AAA) 11/15/11 14.000 3,103,220
3,000,000 U.S. Treasury Bond (Aaa, AAA) 11/15/12 10.375 3,962,460
-----------
TOTAL UNITED STATES TREASURY OBLIGATIONS (Cost $27,925,718) 28,344,360
-----------
SHORT-TERM INVESTMENTS (4.9%)
2,389,000 Repurchase agreement with Goldman, Sachs &
Co. dated 10/31/97 at 5.65% to be repurchased
at $2,390,125 on 11/03/97. (Collateralized by
a pro-rata amount of U.S. Treasury Notes
ranging in par values from
$830,000-$50,000,000, 5.125%-8.50%,
01/15/98-11/15/04. Market value of collateral
is $2,438,294.) (Cost $2,389,000) 2,389,000
-----------
TOTAL INVESTMENTS AT VALUE (101.5%) (Cost $48,448,826*) 49,154,620
LIABILITIES IN EXCESS OF OTHER ASSETS (1.5%) (730,915)
-----------
NET ASSETS (100.0%) (applicable to 4,817,979 Common Shares and
228 Advisor Shares) $48,423,705
-----------
-----------
NET ASSET VALUE, offering and redemption price per Common Share
($48,421,412[div]4,817,979) $10.05
-----------
-----------
NET ASSET VALUE, offering and redemption price per Advisor Share
($2,293[div]228) $10.06
-----------
-----------
</TABLE>
- --------------------------------------------------------------------------------
'D' Credit ratings given by Moody's Investors Service, Inc. and Standard &
Poor's Ratings Group are unaudited.
* Cost for federal income tax purposes is $48,645,604.
See Accompanying Notes to Financial Statements.
20
<PAGE>
<PAGE>
WARBURG PINCUS NEW YORK INTERMEDIATE MUNICIPAL FUND
STATEMENT OF NET ASSETS
October 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
RATINGS'D'
PAR (MOODY'S/S&P) MATURITY RATE% VALUE
- ---------- ------------------ -------- ------ -----------
<C> <S> <C> <C> <C> <C>
MUNICIPAL BONDS (98.7%)
New York (87.6%)
$ 750,000 Canandaigua New York City School District
General Obligation Bond (FGIC Insured) (Aaa, AAA) 06/01/99 7.125 $ 785,625
1,000,000 Housing NY Corp. Revenue Bond (A1, AA) 11/01/03 6.000 1,068,750
1,750,000 Metropolitan Transportation Authority
Commuter Facilities Revenue Bond Series C-1 (Aaa, AAA) 07/01/05 6.000 1,911,875
2,000,000 Metropolitan Transportation Authority
Commuter Facilities Revenue Bond Series C-2 (Aaa, AAA) 07/01/05 6.000 2,185,000
3,000,000 Municipal Assistance Corp. for New York City
Revenue Bond Series L (Aa2, AA-) 07/01/04 6.000 3,273,750
500,000 Municipal Assistance Corp. for New York City
Revenue Bond Series J (Aa2, AA-) 07/01/04 5.000 516,875
300,000 Municipal Assistance Corp. for New York City
Revenue Bond Series J (Aa2, AA-) 07/01/04 6.000 327,375
1,000,000 Municipal Assistance Corp. for New York City
Revenue Bond Series #67 (Callable 07/01/99 at
$102) 'D'D' (Aa2, AA) 07/01/01 7.600 1,075,000
640,000 Municipal Assistance Corp. for New York City
Revenue Bond Series #68 (Callable 07/01/99 at
$102) (Aa2, AA) 07/01/03 7.200 681,600
1,045,000 Nassau County New York General Obligation
Bond Series L
(FGIC Insured) (Escrowed To Maturity) (Aaa, AAA) 11/15/01 6.300 1,131,212
1,350,000 Nassau County New York General Obligation
Bond General Improvements Series R (FGIC
Insured) (Aaa, AAA) 11/01/02 5.125 1,400,625
950,000 New York City Municipal Water Finance
Authority Water & Sewer System Revenue Bond
Series 1995A + (Aaa, AAA) 06/15/25 3.750 950,000
2,000,000 New York City Municipal Water Finance
Authority Water & Sewer System Revenue Bond
Series C (Pre-refunded 06/15/01 at $101.50) (Aaa, A-) 06/15/01 7.750 2,267,500
2,000,000 New York City General Obligation Bond Series
L (Baa1, BBB+) 08/01/02 5.500 2,082,500
1,000,000 New York City General Obligation Bond Series
G (Baa1, BBB+) 02/01/06 5.750 1,056,250
3,000,000 New York City General Obligation Bond Series
A (Baa1, BBB) 08/01/06 7.000 3,442,500
2,000,000 New York City General Obligation Bond Series
E (Baa1, BBB) 08/01/10 5.900 2,102,500
2,000,000 New York State Dormitory Authority Revenue
Bond Education Facilities Improvement (Aaa, A-) 05/15/07 6.000 2,180,000
1,515,000 New York State Dormitory Authority Revenue
Bond City University Series B (FGIC Insured) (Aaa, AAA) 07/01/99 6.900 1,586,963
2,000,000 New York State Dormitory Authority Revenue
Bond State University Educational Facilities
Series A (A3, A-) 05/15/02 5.400 2,085,000
2,495,000 New York State Dormitory Authority Revenue
Bond State University Educational Facilities
Lease Revenue Series A (Aaa, AAA) 07/01/06 5.750 2,691,481
500,000 New York State Dormitory Authority Revenue
Bond City University 3rd General Reserve-2 (Baa1, BBB+) 07/01/98 4.500 502,735
1,000,000 New York State Dormitory Authority Revenue
Bond State University Educational Facilities
Series B (Pre-refunded 05/15/00 at $102) (Aaa, A-) 05/15/00 7.250 1,093,750
1,000,000 New York State Dormitory Authority Revenue
Bond Upstate Community Colleges Series A
(Pre-refunded 07/01/00 at $102) (Baa1, BBB+) 07/01/00 7.600 1,103,750
1,500,000 New York State Dormitory Authority Revenue
Bond City University Series B (AMBAC Insured) (Aaa, AAA) 07/01/03 6.000 1,623,750
</TABLE>
See Accompanying Notes to Financial Statements.
21
<PAGE>
<PAGE>
WARBURG PINCUS NEW YORK INTERMEDIATE MUNICIPAL FUND
STATEMENT OF NET ASSETS (CONT'D)
October 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
RATINGS'D'
PAR (MOODY'S/S&P) MATURITY RATE% VALUE
- ---------- ------------------ -------- ------ -----------
<C> <S> <C> <C> <C> <C>
MUNICIPAL BONDS (CONT'D)
$3,000,000 New York State Dormitory Authority Revenue
Bond City University Series A (Baa1, BBB+) 07/01/05 5.700 $ 3,172,500
225,000 New York State Dormitory Authority Revenue
Bond State University Educational Facilities
Series A (Pre-refunded 05/15/99 at $102) (A3, A-) 05/15/99 7.000 239,344
750,000 New York State Dormitory Authority Revenue
Bond Upstate Community Colleges Series A (Baa1, BBB+) 07/01/01 5.200 770,625
1,000,000 New York State Dormitory Authority Revenue
Bond Upstate Community Colleges Series A (Baa1, BBB+) 07/01/02 5.300 1,033,750
2,000,000 New York State General Obligation Bond Series
C (A2, A) 10/01/03 6.000 2,167,500
1,200,000 New York State General Obligation Bond Series
C (A2, A) 10/01/04 6.000 1,306,500
2,500,000 New York State Housing Finance Agency Service
Contract Obligation Revenue Bond Series C
(Pre-refunded 09/15/01 at $102) (Aaa, AAA) 09/15/01 7.300 2,821,875
1,000,000 New York State Local Government Assistance
Corp. Revenue Bond Series A (Aaa, AAA) 04/01/05 5.000 1,033,750
1,000,000 New York State Local Government Assistance
Corp. Revenue Bond Series A (A3, A+) 04/01/05 5.400 1,047,500
600,000 New York State Local Government Assistance
Corp. Revenue Bond Series A (A3, A+) 04/01/06 6.000 657,000
1,000,000 New York State Local Government Assistance
Corp. Revenue Bond Series A (A3, A+) 04/01/07 6.000 1,100,000
1,000,000 New York State Local Government Assistance
Corp. Revenue Bond Series A (A3, A+) 04/01/99 6.000 1,026,250
1,730,000 New York State Local Government Assistance
Corp. Revenue Bond Series B (Pre-refunded
04/01/01 at $102) (Aaa, AAA) 04/01/01 7.500 1,944,088
2,000,000 New York State Medical Care Facilities
Finance Agency Revenue Bond (Pre-refunded
02/15/99 at $102) (Aaa, AAA) 02/15/99 7.800 2,132,500
750,000 New York State Power Authority Revenue Bond
Series V (Callable 01/01/98 at $102) (Aa, AA-) 01/01/03 7.600 768,758
3,000,000 New York State Thruway Authority Service
Contract Revenue Bond Local Highway & Bridge
Series A (MBIA Insured) (Aaa, AAA) 01/01/04 6.000 3,266,250
2,000,000 New York State Thruway Authority General
Revenue Bond Series D (Aa3, AA-) 01/01/01 4.700 2,027,500
850,000 New York State Thruway Authority Service
Contract Revenue Bond Local Highway & Bridge
Series A (Baa1, BBB+) 04/01/01 5.500 877,625
1,000,000 New York State Urban Development Corp.
Revenue Bond Correctional Capital A (AMBAC
Insured) (Aaa, AAA) 01/01/06 5.400 1,051,250
2,500,000 New York State Urban Development Corp.
Revenue Bond Correctional Capital Facilities
Series 1 (Pre-refunded 01/01/00 at $102) (FSA
Insured) (Aaa, AAA) 01/01/00 7.500 2,721,875
3,000,000 Port Authority of New York & New Jersey
Revenue Bond Consolidated 72nd Series
(Pre-refunded 10/01/02 at $101) (A1, AA-) 10/01/02 7.350 3,427,500
880,000 Suffolk County New York Water Authority
Water-Works Revenue Bond (Pre-refunded
06/01/00 at $102) (AMBAC Insured) (Aaa, AAA) 06/01/00 6.875 954,800
1,000,000 Triborough Bridge & Tunnel Authority New York
Revenue Bond Series O (Pre-refunded 01/01/99
at $101.50) (Aaa, AAA) 01/01/99 7.700 1,056,250
2,000,000 Triborough Bridge & Tunnel Authority New York
Revenue Bond Series T (Pre-refunded 01/01/01
at $102) (Aaa, A+) 01/01/01 7.000 2,202,500
-----------
TOTAL NEW YORK (Cost $75,847,516) 77,933,856
-----------
</TABLE>
See Accompanying Notes to Financial Statements.
22
<PAGE>
<PAGE>
WARBURG PINCUS NEW YORK INTERMEDIATE MUNICIPAL FUND
STATEMENT OF NET ASSETS (CONT'D)
October 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
RATINGS'D'
PAR (MOODY'S/S&P) MATURITY RATE% VALUE
- ---------- ------------------ -------- ------ -----
<C> <S> <C> <C> <C> <C>
MUNICIPAL BONDS (CONT'D)
Puerto Rico (11.1%)
$ 180,000 Puerto Rico Commonwealth Aqueduct & Sewer
Authority Revenue Bond (Escrowed To Maturity)
(Callable 07/01/98 at $100) (Aaa, AAA) 07/01/99 7.875 $ 185,850
1,000,000 Puerto Rico Commonwealth Aqueduct & Sewer
Authority Revenue Bond (MBIA Insured) (Aaa, AAA) 07/01/07 6.000 1,110,000
1,000,000 Puerto Rico Commonwealth General Obligation
Bond (Baa1, A) 07/01/00 5.500 1,033,750
3,000,000 Puerto Rico Commonwealth General Obligation
Bond (MBIA Insured) (Aaa, AAA) 07/01/01 5.500 3,138,750
500,000 Puerto Rico Electric Power Authority Revenue
Bond Series N (Callable 07/01/99 at $101.50) (Baa1, BBB+) 07/01/00 6.800 527,500
2,000,000 Puerto Rico Electric Power Authority Revenue
Bond Series O (MBIA Insured) (Aaa, AAA) 07/01/99 6.400 2,080,000
1,700,000 Puerto Rico Public Building Authority Revenue
Bond Series I (FGIC Insured) (Aaa, AAA) 07/01/99 6.850 1,780,750
-----------
TOTAL PUERTO RICO (Cost $9,627,518) 9,856,600
-----------
TOTAL MUNICIPAL BONDS (Cost $85,475,033) 87,790,456
-----------
</TABLE>
<TABLE>
<CAPTION>
SHARES
- -----------
<C> <S> <C>
MONEY MARKET FUNDS (0.1%)
81,716 Federated Investments New York Municipal
Cash Trust 81,716
4,991 Nuveen Tax Exempt Money Fund 4,991
-----------
TOTAL MONEY MARKET FUNDS (Cost $86,707) 86,707
-----------
TOTAL INVESTMENTS AT VALUE (98.8%) (Cost $85,561,741*) 87,877,163
OTHER ASSETS IN EXCESS OF LIABILITIES (1.2%) 1,066,559
-----------
NET ASSETS (100.0%) (applicable to 8,597,673 Common Shares and 15 Advisor Shares) $88,943,722
-----------
-----------
NET ASSET VALUE, offering and redemption price per Common Share ($88,943,567[div]8,597,673) $10.35
-----------
-----------
NET ASSET VALUE, offering and redemption price per Advisor Share ($155[div]15) $10.33
-----------
-----------
</TABLE>
INVESTMENT ABBREVIATIONS
AMBAC = American Municipal Bond Assurance Corporation
FGIC = Financial Guaranty Insurance Company
FSA = Financial Security Assurance, Inc.
MBIA = Municipal Bonds Investors Assurance, Inc.
- --------------------------------------------------------------------------------
'D' Credit ratings given by Moody's Investors Service, Inc. and Standard &
Poor's Ratings Group are unaudited.
'D''D' Principal amount of $200,000 pledged as initial margin for futures
transactions.
+ On investments with variable rates, the interest rate shown reflects the
current rate as of October 31, 1997.
* Also cost for federal income tax purposes.
See Accompanying Notes to Financial Statements.
23
<PAGE>
<PAGE>
WARBURG PINCUS FIXED INCOME FUNDS
STATEMENTS OF OPERATIONS
For the Year Ended October 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
WARBURG PINCUS WARBURG PINCUS
WARBURG PINCUS INTERMEDIATE NEW YORK
WARBURG PINCUS GLOBAL MATURITY INTERMEDIATE
FIXED INCOME FIXED INCOME GOVERNMENT MUNICIPAL
FUND FUND FUND FUND
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends $ 1,448,898 $ 144,291 $ 0 $ 34,796
Interest 11,780,513 11,145,615 3,010,926 4,121,969
-------------- -------------- -------------- --------------
Total investment income 13,229,411 11,289,906 3,010,926 4,156,765
-------------- -------------- -------------- --------------
EXPENSES:
Investment advisory 973,381 1,783,032 234,862 332,574
Administrative services 292,014 267,454 70,458 124,716
Audit 14,637 14,943 12,139 12,025
Custodian/Sub-custodian 33,805 32,449 13,597 15,996
Directors/Trustees 10,000 10,000 10,000 10,000
Insurance 3,121 2,075 1,052 1,628
Interest 1,511 1,528 446 689
Legal 23,096 35,146 13,529 9,282
Printing 31,637 26,291 7,055 8,486
Registration 85,253 75,879 36,311 6,771
Shareholder
servicing/distribution 5,970 24,956 0 0
Transfer agent 118,364 139,363 26,513 18,661
Miscellaneous 34,695 22,762 14,841 24,986
-------------- -------------- -------------- --------------
1,627,484 2,435,878 440,803 565,814
Less: fees waived, expenses
reimbursed and transfer
agent offsets (161,443) (717,041) (158,968) (70,419)
-------------- -------------- -------------- --------------
Total expenses 1,466,041 1,718,837 281,835 495,395
-------------- -------------- -------------- --------------
Net investment income 11,763,370 9,571,069 2,729,091 3,661,370
-------------- -------------- -------------- --------------
NET REALIZED AND UNREALIZED GAIN
(LOSS) FROM INVESTMENTS AND
FOREIGN CURRENCY RELATED ITEMS:
Net realized gain from
security transactions 2,567,404 997,045 90,816 36,485
Net realized loss from
futures contracts 0 0 0 (200,642)
Net realized gain from
foreign currency related
items 0 5,666,273 0 0
Net change in unrealized
appreciation (depreciation)
from investments and
foreign currency related
items 4,335,965 (7,300,971) 353,152 1,078,145
-------------- -------------- -------------- --------------
Net realized and
unrealized gain
(loss) from
investments and
foreign currency
related items 6,903,369 (637,653) 443,968 913,988
-------------- -------------- -------------- --------------
Net increase in net
assets resulting from
operations $ 18,666,739 $ 8,933,416 $3,173,059 $4,575,358
-------------- -------------- -------------- --------------
-------------- -------------- -------------- --------------
</TABLE>
See Accompanying Notes to Financial Statements.
24
<PAGE>
<PAGE>
WARBURG PINCUS FIXED INCOME FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
WARBURG PINCUS
WARBURG PINCUS WARBURG PINCUS INTERMEDIATE MATURITY
FIXED INCOME FUND GLOBAL FIXED INCOME FUND GOVERNMENT FUND
--------------------------- --------------------------- ---------------------------
FOR THE YEAR ENDED OCTOBER FOR THE YEAR ENDED OCTOBER FOR THE YEAR ENDED OCTOBER
31, 31, 31,
1997 1996 1997 1996 1997 1996
------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
FROM OPERATIONS:
Net investment
income $ 11,763,370 $ 8,168,701 $ 9,571,069 $ 6,991,689 $ 2,729,091 $ 2,900,787
Net realized gain
from security
transactions 2,567,404 1,064,692 997,045 104,145 90,816 256,317
Net realized gain
(loss) from
futures contracts 0 0 0 0 0 0
Net realized gain
from foreign
currency related
items 0 0 5,666,273 2,480,864 0 0
Net change in
unrealized
appreciation
(depreciation)
from investments
and foreign
currency related
items 4,335,965 (385,137) (7,300,971) 1,114,089 353,152 (684,142)
------------ ------------ ------------ ------------ ------------ ------------
Net increase in
net assets
resulting from
operations 18,666,739 8,848,256 8,933,416 10,690,787 3,173,059 2,472,962
------------ ------------ ------------ ------------ ------------ ------------
FROM DISTRIBUTIONS:
Dividends from net
investment income:
Common Shares (11,629,029) (8,154,206) (5,284,076) (9,128,236) (2,729,076) (2,900,787)
Advisor Shares (134,341) (14,495) (138,557) (278) (15) 0
Distributions in
excess of net
investment income:
Common Shares (43,878) 0 0 0 0 0
Advisor Shares (507) 0 0 0 0 0
Distributions from
realized gains:
Common Shares (48,275) 0 (8,015,321) 0 (348,504) (458,455)
Advisor Shares (295) 0 (217,278) 0 0 0
Distributions in
excess of realized
gains:
Common Shares 0 0 0 0 (197,030) 0
Advisor Shares 0 0 0 0 0 0
------------ ------------ ------------ ------------ ------------ ------------
Net decrease in
net assets from
distributions (11,856,325) (8,168,701) (13,655,232) (9,128,514) (3,274,625) (3,359,242)
------------ ------------ ------------ ------------ ------------ ------------
FROM CAPITAL SHARE
TRANSACTIONS:
Proceeds from sale
of shares 162,592,301 66,060,140 143,481,964 119,701,285 22,575,023 20,816,314
Reinvested
dividends 10,208,471 6,574,716 11,976,799 7,544,393 2,608,543 2,533,448
Net asset value of
shares redeemed (62,291,323) (38,201,941) (78,182,283) (61,338,102) (24,347,987) (30,671,693)
------------ ------------ ------------ ------------ ------------ ------------
Net increase
(decrease) in
net assets from
capital share
transactions 110,509,449 34,432,915 77,276,480 65,907,576 835,579 (7,321,931)
------------ ------------ ------------ ------------ ------------ ------------
Net increase
(decrease) in
net assets 117,319,863 35,112,470 72,554,664 67,469,849 734,013 (8,208,211)
NET ASSETS:
Beginning of year 152,095,378 116,982,908 131,110,893 63,641,044 47,689,692 55,897,903
------------ ------------ ------------ ------------ ------------ ------------
End of year $269,415,241 $152,095,378 $203,665,557 $131,110,893 $ 48,423,705 $ 47,689,692
------------ ------------ ------------ ------------ ------------ ------------
------------ ------------ ------------ ------------ ------------ ------------
Undistributed net
investment income $ 0 $ 0 $ 4,259,525 $ 2,677,415 $ 0 $ 0
------------ ------------ ------------ ------------ ------------ ------------
------------ ------------ ------------ ------------ ------------ ------------
<CAPTION>
WARBURG PINCUS
NEW YORK INTERMEDIATE
MUNICIPAL FUND
-------------------------
FOR THE YEAR ENDED
OCTOBER 31,
1997 1996
----------- ------------
<S> <C> <C>
FROM OPERATIONS:
Net investment
income $ 3,661,370 $ 3,322,738
Net realized gain
from security
transactions 36,485 576,307
Net realized gain
(loss) from
futures contracts (200,642) 519,896
Net realized gain
from foreign
currency related
items 0 0
Net change in
unrealized
appreciation
(depreciation)
from investments
and foreign
currency related
items 1,078,145 (841,945)
----------- ------------
Net increase in
net assets
resulting from
operations 4,575,358 3,576,996
----------- ------------
FROM DISTRIBUTIONS:
Dividends from net
investment income:
Common Shares (3,661,362) (3,322,728)
Advisor Shares (8) (10)
Distributions in
excess of net
investment income:
Common Shares 0 0
Advisor Shares 0 0
Distributions from
realized gains:
Common Shares (950,202) (818,543)
Advisor Shares (2) 0
Distributions in
excess of realized
gains:
Common Shares 0 0
Advisor Shares 0 0
----------- ------------
Net decrease in
net assets from
distributions (4,611,574) (4,141,281)
----------- ------------
FROM CAPITAL SHARE
TRANSACTIONS:
Proceeds from sale
of shares 48,740,584 35,406,045
Reinvested
dividends 4,063,047 3,601,550
Net asset value of
shares redeemed (41,384,144) (34,244,336)
----------- ------------
Net increase
(decrease) in
net assets from
capital share
transactions 11,419,487 4,763,259
----------- ------------
Net increase
(decrease) in
net assets 11,383,271 4,198,974
NET ASSETS:
Beginning of year 77,560,451 73,361,477
----------- ------------
End of year $88,943,722 $ 77,560,451
----------- ------------
----------- ------------
Undistributed net
investment income $ 0 $ 0
----------- ------------
----------- ------------
</TABLE>
See Accompanying Notes to Financial Statements.
25
<PAGE>
<PAGE>
WARBURG PINCUS FIXED INCOME FUND
FINANCIAL HIGHLIGHTS
(For a Advisor Share of the Fund Outstanding Throughout Each Year)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
JULY 3, 1996
FOR THE (COMMENCEMENT OF
YEAR ENDED OPERATIONS) THROUGH
OCTOBER 31, 1997 OCTOBER 31, 1996
---------------- -----------------------
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $10.10 $ 9.90
----- ------
Income from Investment Operations:
Net Investment Income .60 .19
Net Gain on Securities and Foreign Currency Related
Items (both realized and unrealized) .33 .20
----- ------
Total from Investment Operations .93 .39
----- ------
Less Distributions:
Dividends from Net Investment Income (.60) (.19)
Distributions in Excess of Net Investment Income .00 .00
Distributions from Realized Gains .00 .00
----- ------
Total Distributions (.60) (.19)
----- ------
NET ASSET VALUE, END OF PERIOD $10.43 $ 10.10
----- ------
----- ------
Total Return 9.51% 3.93%'D'
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (000s) 3,963 $911
Ratios to average daily net assets:
Operating expenses 1.00%@ 1.00%*@
Net investment income 5.62% 5.85%*
Decrease reflected in above operating expense
ratios due to waivers/reimbursements .08% .11%*
Portfolio Turnover Rate 129.06% 194.23%'D'
</TABLE>
- --------------------------------------------------------------------------------
@ Interest earned on uninvested cash balances is used to offset portions of
the transfer agent expense. These arrangements had no effect on the Advisor
Shares' expense ratio.
'D' Non annualized.
* Annualized.
See Accompanying Notes to Financial Statements.
TAX STATUS OF 1997 DIVIDENDS (Unaudited)
Taxable dividends paid by the Fund on a per share basis were as follows:
Ordinary income $.60
Because the Fund's fiscal year is not the calendar year, amounts to be used
by calendar year taxpayers on their Federal return will be reflected on Form
1099-DIV and will be mailed in January 1998.
26
<PAGE>
<PAGE>
WARBURG PINCUS GLOBAL FIXED INCOME FUND
FINANCIAL HIGHLIGHTS
(For a Advisor Share of the Fund Outstanding Throughout Each Year)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
AUGUST 12, 1996
FOR THE (COMMENCEMENT OF
YEAR ENDED OPERATIONS) THROUGH
OCTOBER 31, 1997 OCTOBER 31, 1996
---------------- ------------------------
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $11.17 $10.90
----- -----
Income from Investment Operations:
Net Investment Income .41 .10
Net Gain on (Loss) Securities and Foreign Currency
Related Items (both realized and unrealized) .15 .27
----- -----
Total from Investment Operations .56 .37
----- -----
Less Distributions:
Dividends from Net Investment Income (.29) (.10)
Distributions from Realized Gains (.54) .00
----- -----
Total Distributions (.83) (.10)
----- -----
NET ASSET VALUE, END OF PERIOD $10.90 $11.17
----- -----
----- -----
Total Return 5.18% 3.41%'D'
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (000s) $8,935 $39
Ratios to average daily net assets:
Operating expenses 1.45%@ 1.45%*@
Net investment income 4.76% 5.69%*
Decrease reflected in above operating expense
ratios due to waivers/reimbursements .33% .21%*
Portfolio Turnover Rate 202.92% 123.90%'D'
</TABLE>
- --------------------------------------------------------------------------------
@ Interest earned on uninvested cash balances is used to offset portions of
the transfer agent expense. These arrangements had no effect on the Advisor
Shares' expense ratio.
'D' Non annualized.
* Annualized.
See Accompanying Notes to Financial Statements.
TAX STATUS OF 1997 DIVIDENDS (Unaudited)
Taxable dividends paid by the Fund on a per share basis were as follows:
Ordinary income $.83
Because the Fund's fiscal year is not the calendar year, amounts to be used
by calendar year taxpayers on their Federal return will be reflected on Form
1099-DIV and will be mailed in January 1998.
27
<PAGE>
<PAGE>
WARBURG PINCUS INTERMEDIATE MATURITY GOVERNMENT FUND
FINANCIAL HIGHLIGHTS
(For a Advisor Share of the Fund Outstanding Throughout Each Year)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
AUGUST 15, 1997
(COMMENCEMENT OF OPERATIONS)
THROUGH
OCTOBER 31, 1997
----------------------------
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 9.95
------
Income from Investment Operations:
Net Investment Income .11
Net Gain on Securities (both realized and unrealized) .11
------
Total from Investment Operations .22
------
Less Distributions:
Dividends from Net Investment Income (.11)
------
Total Distributions (.11)
------
NET ASSET VALUE, END OF PERIOD $ 10.06
------
------
Total Return 2.22'D'
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (000s) $2
Ratios to average daily net assets:
Operating expenses .85%*@
Net investment income 5.62%*
Decrease reflected in above operating expense ratio due to
waivers/reimbursements .00%
Portfolio Turnover Rate 104.34%*
</TABLE>
- --------------------------------------------------------------------------------
@ Interest earned on uninvested cash balances is used to offset portions of
the transfer agent expense. These arrangements had no effect on the Advisor
Shares' expense ratio.
'D' Non annualized.
* Annualized.
See Accompanying Notes to Financial Statements.
TAX STATUS OF 1997 DIVIDENDS (Unaudited)
Taxable dividends paid by the Fund on a per share basis were as follows:
Ordinary income $.11
Because the Fund's fiscal year is not the calendar year, amounts to be used
by calendar year taxpayers on their Federal return will be reflected on Form
1099-DIV and will be mailed in January 1998.
28
<PAGE>
<PAGE>
WARBURG PINCUS NEW YORK INTERMEDIATE MUNICIPAL FUND
FINANCIAL HIGHLIGHTS
(For a Advisor Share of the Fund Outstanding Throughout Each Year)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
AUGUST 5, 1996
FOR THE (COMMENCEMENT OF
YEAR ENDED OPERATIONS) THROUGH
OCTOBER 31, 1997 OCTOBER 31, 1996
---------------- -----------------------
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $10.34 $ 10.34
----- -----
Income from Investment Operations:
Net Investment Income .41 .09
Net Gain on Securities (both realized and
unrealized) .11 .00
----- -----
Total from Investment Operations .52 .09
----- -----
Less Distributions:
Dividends from Net Investment Income (.41) (.09)
Distributions from Realized Gains (.12) .00
----- -----
Total Distributions (.53) (.09)
----- -----
NET ASSET VALUE, END OF PERIOD $10.33 $ 10.34
----- -----
----- -----
Total Return 5.19% .88%'D'
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (000s) $0 $1
Ratios to average daily net assets:
Operating expenses 36.75%@ .63%*@
Net investment income 3.93% 3.88%*
Decrease reflected in above operating expense
ratios due to waivers/reimbursements 450.88% .01%*
Portfolio Turnover Rate 69.84% 69.23%'D'
</TABLE>
- --------------------------------------------------------------------------------
@ Interest earned on uninvested cash balances is used to offset portions of
the transfer agent expense. These arrangements resulted in a reduction to
the Advisor Shares' expenses by 35.92% and .00% for the year or period ended
October 31, 1997 and 1996, respectively. The Advisor Shares' operating
expense ratio after reflecting these arrangements were .83% and .63% for the
years ended October 31, 1997 and 1996, respectively.
'D' Non annualized.
* Annualized.
See Accompanying Notes to Financial Statements.
TAX STATUS OF 1997 DIVIDENDS (Unaudited)
Taxable dividends paid by the Fund on a per share basis were as follows:
Ordinary income $.05
Long-term capital gain .07
Because the Fund's fiscal year is not the calendar year, amounts to be used
by calendar year taxpayers on their Federal return will be reflected on Form
1099-DIV and will be mailed in January 1998.
29
<PAGE>
<PAGE>
WARBURG PINCUS FIXED INCOME FUNDS
NOTES TO FINANCIAL STATEMENTS
October 31, 1997
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES
The Warburg Pincus Fixed Income Funds (the 'Funds') are comprised of the
Warburg Pincus Fixed Income Fund (the 'Fixed Income Fund') and the Warburg
Pincus Intermediate Maturity Government Fund (the 'Intermediate Government
Fund') which are registered under the Investment Company Act of 1940, as amended
(the '1940 Act'), as diversified, open-end management investment companies and
the Warburg Pincus Global Fixed Income Fund (the 'Global Fixed Income Fund') and
the Warburg Pincus New York Intermediate Municipal Fund (the 'New York Municipal
Fund') which are registered under the 1940 Act as non-diversified, open-end
management investment companies.
Investment objectives for each Fund are as follows: the Fixed Income Fund
seeks to generate high current income consistent with reasonable risk with
capital appreciation a secondary objective; the Global Fixed Income Fund seeks
to maximize total investment return consistent with prudent investment
management, consisting of a combination of interest income, currency gains and
capital appreciation; the Intermediate Government Fund seeks to achieve as high
a level of current income as is consistent with preservation of capital; and the
New York Municipal Fund seeks to maximize current interest income exempt from
Federal income tax and New York State and New York City personal income tax to
the extent consistent with prudent investment and preservation of capital.
Each Fund offers two classes of shares, one class being referred to as Common
Shares and one class being referred to as Advisor Shares. Common and Advisor
Shares in each Fund represent an equal pro rata interest in each Fund, except
that they bear different expenses which reflect the difference in the range of
services provided to them. Advisor Shares for each fund bear expenses paid
pursuant to a distribution plan adopted by each Fund at an annual rate not to
exceed .75% of the average daily net asset value of each Fund's outstanding
Advisor Shares. The Advisor Shares for the Fixed Income Fund, the New York
Municipal Fund and the Intermediate Government Fund currently bear expenses of
.25% of average daily net assets. The Advisor Shares of the Global Fixed Income
Fund currently bear expenses of .50% of average daily net assets.
The net asset value of each Fund is determined daily as of the close of
regular trading on the New York Stock Exchange. Each Fund's investments are
valued at market value, which is generally determined using the last reported
sales price. If no sales are reported, investments are generally valued at the
mean between the last reported bid and asked price. In the absence of market
quotations, investments are generally valued at fair value as determined by or
under the direction of the Fund's Board. Short-term investments that mature in
60 days or less are valued on the basis of amortized cost, which approximates
market value.
When a Fund writes or purchases a call or a put option, an amount equal to
the premium received or paid by the Fund is recorded as a liability or asset,
the value
30
<PAGE>
<PAGE>
WARBURG PINCUS FIXED INCOME FUNDS
NOTES TO FINANCIAL STATEMENTS (CONT'D)
October 31, 1997
- --------------------------------------------------------------------------------
of which is marked-to-market daily to reflect the current market value of the
option. When the option expires, the Fund realizes a gain or loss equal to the
amount of the premium received or paid. When the Fund exercises an option or
enters into a closing transaction by purchasing or selling an offsetting option,
it realizes a gain or loss without regard to any unrealized gain or loss on the
underlying security. The potential loss associated with purchasing an option is
limited to the premium paid, and the premium would partially offset any gains
achieved from its use.
The books and records of the Funds are maintained in U.S. dollars.
Transactions denominated in foreign currencies are recorded at the current
prevailing exchange rates. All assets and liabilities denominated in foreign
currencies are translated into U.S. dollar amounts at the current exchange rate
at the end of the period. Translation gains or losses resulting from changes in
the exchange rate during the reporting period and realized gains and losses on
the settlement of foreign currency transactions are reported in the results of
operations for the current period. The Global Fixed Income Fund isolates that
portion of realized gains and losses on investments in debt securities which are
due to changes in the foreign exchange rate from that which are due to changes
in market prices of debt securities.
The Fixed Income and Global Fixed Income Funds may invest in securities of
foreign countries and governments which involve certain risks in addition to
those inherent in domestic investments. Such risks generally include, among
other things, fluctuations in currency exchange rates, revaluation of
currencies, future adverse political and economic developments and the
imposition of other foreign laws and restrictions. Securities of foreign issuers
are often subject to less rigorous regulatory practices and requirements than
those applied in the United States and may also be less liquid (and their prices
more volatile) than securities of comparable U.S companies. Moreover, individual
foreign economies may differ favorably or unfavorably from the U.S. economy in
many respects.
Fixed Income and Global Fixed Income Funds' investments in securities of
issuers located in less developed countries considered to be 'emerging markets'
involve risks in addition to those generally applicable to foreign securities.
Investments in the securities of issuers located in emerging markets expose the
Fund to economic structures that are generally less diverse and mature than, and
to political systems that can be expected to have less stability than, those of
developed countries. The typically small size of the markets for securities of
issuers located in emerging markets may also result in a lack of liquidity and
greater price volatility.
The Global Fixed Income Fund may also invest up to 15% of its assets in
non-publicly traded securities. Non-publicly traded securities may be less
liquid than publicly-traded securities, and the Fund may take longer to
liquidate these positions than would be the case for publicly traded securities.
Consequently,
31
<PAGE>
<PAGE>
WARBURG PINCUS FIXED INCOME FUNDS
NOTES TO FINANCIAL STATEMENTS (CONT'D)
October 31, 1997
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES (CONT'D)
these securities may involve a high degree of business and financial risk and
may result in substantial losses.
Security transactions are accounted for on a trade date basis. Interest
income is recorded on the accrual basis. Dividends are recorded on the
ex-dividend date. Income, expenses (excluding class-specific expenses,
principally distribution, shareholder servicing fees and transfer agency) and
realized/unrealized gains/losses are allocated proportionately to each class of
shares based upon the relative net asset value of the outstanding shares. The
cost of investments sold is determined by use of the specific identification
method for both financial reporting and income tax purposes.
Dividends from net investment income are declared daily and paid monthly for
the Fixed Income Fund, the Intermediate Government Fund and the New York
Municipal Fund. Dividends from net investment income are declared and paid
quarterly for the Global Fixed Income Fund. Distributions for all Funds of net
realized capital gains, if any, are declared and paid annually. However, to the
extent that a net realized capital gain can be reduced by a capital loss
carryover, such gain will not be distributed. Income and capital gain
distributions are determined in accordance with federal income tax regulations
which may differ from generally accepted accounting principles.
No provision is made for federal taxes as it is each Fund's intention to
continue to qualify for and elect the tax treatment applicable to regulated
investment companies under the Internal Revenue Code and make the requisite
distributions to its shareholders which will be sufficient to relieve it from
Federal income and excise taxes.
The Funds, together with other funds advised by Warburg Pincus Asset
Management, Inc., the Funds' investment adviser ('Warburg') (collectively the
'Warburg Funds'), have established committed and uncommitted lines of credit
facilities with certain banks for temporary or emergency purposes primarily
relating to fund share redemptions and funding payments of dividend or capital
gain distributions. Under the terms of the committed line of credit, the Warburg
Funds with access to the facility pay a commitment fee at a rate of .10% per
annum on the amount of the line of credit. In addition, under the terms of both
the committed and uncommitted facilities, the Warburg Funds will pay interest on
borrowings at the bank's base rate plus .55%. Aggregate borrowings for each fund
under these credit facilities may not exceed the lower of (a) the maximum amount
permitted by such fund's investment policies and restrictions or (b) thirty
three and one-third percent (33 1/3%) of such fund's total assets. At October
31, 1997, there were no outstanding balances under these line of credit
facilities for any of the Funds.
Pursuant to an Exemption Order issued by the Securities and Exchange
Commission, each Fund, along with other Warburg Funds, transfers uninvested cash
balances to a Pooled Cash Account, which is invested in repurchase
32
<PAGE>
<PAGE>
WARBURG PINCUS FIXED INCOME FUNDS
NOTES TO FINANCIAL STATEMENTS (CONT'D)
October 31, 1997
- --------------------------------------------------------------------------------
agreements secured by U.S. government securities. Securities pledged as
collateral for repurchase agreements are held by the Funds' custodian bank until
the agreements mature. Each agreement requires that the market value of the
collateral be sufficient to cover payments of interest and principal; however,
in the event of default or bankruptcy by the other party to the agreement,
retention of the collateral may be subject to legal proceedings.
The preparation of financial statements in conformity with generally accepted
accounting principles 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 these estimates.
The Funds have an arrangement with their transfer agent whereby interest
earned on uninvested cash balances was used to offset a portion of the transfer
agent expense. For the year ended October 31, 1997, the Funds received credits
or reimbursements under this arrangement as follows:
<TABLE>
<CAPTION>
FUND AMOUNT
- ---------------------------------------------------------------- ------
<S> <C>
Fixed Income $9,844
Global Fixed Income 9,110
Intermediate Government 2,564
New York Municipal 4,542
</TABLE>
2. INVESTMENT ADVISER, CO-ADMINISTRATORS AND DISTRIBUTOR
Warburg, which is indirectly controlled by Warburg, Pincus & Co., serves as
each Fund's investment adviser. For its investment advisory services, Warburg
receives the following fees based on each Fund's average daily net assets:
<TABLE>
<CAPTION>
FUND ANNUAL RATE
- ------------------------------------------------ ----------------------------------
<S> <C>
Fixed Income .50% of average daily net assets
Global Fixed Income 1.00% of average daily net assets
Intermediate Government .50% of average daily net assets
New York Municipal .40% of average daily net assets
</TABLE>
For the year ended October 31, 1997, investment advisory fees and voluntary
waivers were as follows:
<TABLE>
<CAPTION>
GROSS NET
FUND ADVISORY FEE WAIVER ADVISORY FEE
- --------------------------------------- ------------ --------- ------------
<S> <C> <C> <C>
Fixed Income $ 973,381 $(151,599) $ 821,782
Global Fixed Income 1,783,032 (707,931) 1,075,101
Intermediate Government 234,862 (133,433) 101,429
New York Municipal 332,574 (65,877) 266,697
</TABLE>
Counsellors Funds Service, Inc. ('CFSI'), a wholly-owned subsidiary of
Warburg, and PFPC Inc. ('PFPC'), an indirect, wholly-owned subsidiary of PNC
Bank Corp. ('PNC'), serve as each Fund's co-administrators. For administrative
services, CFSI currently receives a fee calculated at an annual rate of .10% of
each
33
<PAGE>
<PAGE>
WARBURG PINCUS FIXED INCOME FUNDS
NOTES TO FINANCIAL STATEMENTS (CONT'D)
October 31, 1997
- --------------------------------------------------------------------------------
2. INVESTMENT ADVISER, CO-ADMINISTRATORS AND DISTRIBUTOR (CONT'D)
Fund's average daily net assets. For the year ended October 31, 1997,
administrative services fees earned by CFSI were as follows:
<TABLE>
<CAPTION>
FUND CO-ADMINISTRATION FEE
- ------------------------------------------------------ ---------------------
<S> <C>
Fixed Income $ 194,676
Global Fixed Income 178,303
Intermediate Government 46,972
New York Municipal 83,144
</TABLE>
The Funds each pay PFPC a fee calculated at an annual rate of .05% of each
Fund's average daily net assets. For the year ended October 31, 1997,
administrative services fees earned and voluntarily waived by PFPC were as
follows:
<TABLE>
<CAPTION>
FUND CO-ADMINISTRATION FEE WAIVER NET CO-ADMINISTRATION
- ------------------------ --------------------- -------- -------------------------
<S> <C> <C> <C>
Fixed Income $97,338 $ 0 $97,338
Global Fixed Income 89,151 0 89,151
Intermediate Government 23,486 (22,971) 515
New York Municipal 41,572 0 41,572
</TABLE>
Counsellors Securities Inc. ('CSI'), also a wholly owned subsidiary of
Warburg, serves as each Fund's distributor. For its Shareholder servicing
distribution services, CSI receives a fee calculated at an annual rate of .25%
of the average daily net assets of the Advisor Shares of the Fixed Income Fund
and the New York Municipal Fund and .50% of the average daily net assets of the
Advisor shares of the Global Fixed Income Fund pursuant to Rule 12b-1 under the
1940 Act. For the year ended October 31, 1997, Shareholder servicing and
distribution fees earned by CSI were as follows:
<TABLE>
<CAPTION>
FUND DISTRIBUTION FEE
- ----------------------------------------------------------- ----------------
<S> <C>
Fixed Income $ 5,970
Global Fixed Income 24,956
</TABLE>
3. INVESTMENTS IN SECURITIES
For the year ended October 31, 1997, purchases and sales of investment
securities (excluding short-term investments) and United States government and
agency obligations were as follows:
<TABLE>
<CAPTION>
U.S. GOVERNMENT AND
INVESTMENT SECURITIES AGENCY OBLIGATIONS
----------------------------- -----------------------------
FUND PURCHASES SALES PURCHASES SALES
- ------------------------------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Fixed Income $128,822,626 $ 58,769,108 $223,802,138 $186,850,811
Global Fixed Income 171,030,182 118,372,009 167,705,434 167,998,297
Intermediate Government 0 0 49,270,489 47,957,654
New York Municipal 68,339,648 57,275,010 0 0
</TABLE>
At October 31, 1997, the net unrealized appreciation from investments for
those securities having an excess of value over cost and net unrealized
34
<PAGE>
<PAGE>
WARBURG PINCUS FIXED INCOME FUNDS
NOTES TO FINANCIAL STATEMENTS (CONT'D)
October 31, 1997
- --------------------------------------------------------------------------------
depreciation from investments for those securities having an excess of cost over
value (based on cost for federal income tax purposes) was as follows:
<TABLE>
<CAPTION>
NET UNREALIZED
UNREALIZED UNREALIZED APPRECIATION
FUND APPRECIATION DEPRECIATION (DEPRECIATION)
- ------------------------------------- ------------ ------------ --------------
<S> <C> <C> <C>
Fixed Income $5,688,134 $ (537,028) $ 5,151,106
Global Fixed Income 1,226,742 (8,150,552) (6,923,810)
Intermediate Government 514,777 (5,761) 509,016
New York Municipal 2,322,745 (7,323) 2,315,422
</TABLE>
4. FORWARD FOREIGN CURRENCY CONTRACTS
The Fixed Income Fund and the Global Fixed Income Fund may enter into forward
currency contracts for the purchase or sale of a specific foreign currency at a
fixed price on a future date. Risks may arise upon entering into these contracts
from the potential inability of counterparties to meet the terms of their
contracts and from unanticipated movements in the value of a foreign currency
relative to the U.S. dollar. The Funds will enter into forward contracts
primarily for hedging purposes. However, on occasion the Funds will enter into
forward contracts for speculative purposes, which may increase the Fund's
investment risk. The forward currency contracts are adjusted by the daily
exchange rate of the underlying currency and any gains or losses are recorded
for financial statement purposes as unrealized until the contract settlement
date.
At October 31, 1997, the Global Fixed Income Fund had the following open
forward foreign currency contracts:
<TABLE>
<CAPTION>
HEDGING TRANSACTIONS
- --------------------------------------------------------------------------------------------------
FORWARD FOREIGN UNREALIZED
CURRENCY EXPIRATION CURRENCY CONTRACT CONTRACT FOREIGN EXCHANGE
CONTRACT DATE TO BE SOLD AMOUNT VALUE GAIN (LOSS)
- -------------- ---------- ------------ ----------- ----------- ----------------
<S> <C> <C> <C> <C> <C>
British Pounds 11/17/97 1,580,000 $ 2,548,540 $ 2,648,870 ($100,330)
Danish Krone 11/17/97 56,920,000 8,510,766 8,678,946 (168,180)
German Marks 11/24/97 77,835,000 44,913,445 45,184,605 (271,160)
Netherlands
Guilder 01/15/98 13,000,000 6,852,925 6,714,529 138,396
Canadian
Dollar 02/02/98 9,800,000 7,163,743 6,985,530 178,213
Australian
Dollar 02/26/98 8,647,500 6,408,014 6,100,811 307,203
----------- ----------- -------
$76,397,433 $76,313,291 $ 84,142
----------- ----------- -------
----------- ----------- -------
</TABLE>
<TABLE>
<CAPTION>
SPECULATIVE TRANSACTIONS
- -------------------------------------------------------------------------------------------------
FORWARD FOREIGN UNREALIZED
CURRENCY EXPIRATION CURRENCY CONTRACT CONTRACT FOREIGN EXCHANGE
CONTRACT DATE TO BE BOUGHT AMOUNT VALUE GAIN (LOSS)
- -------------- ---------- ------------- ---------- ---------- ----------------
<S> <C> <C> <C> <C> <C>
Indonesian
Rupiah 10/03/02 6,350,000,000 $1,000,000 $ 945,085 ($54,915)
Indonesian
Rupiah 10/03/02 3,350,000,000 500,000 497,918 (2,082)
---------- ---------- ------
$1,500,000 $1,443,003 ($56,997)
---------- ---------- ------
---------- ---------- ------
</TABLE>
35
<PAGE>
<PAGE>
WARBURG PINCUS FIXED INCOME FUNDS
NOTES TO FINANCIAL STATEMENTS (CONT'D)
October 31, 1997
- --------------------------------------------------------------------------------
5. FUTURES CONTRACTS
Each Fund may enter into futures contracts to the extent permitted by its
investment policies and objectives. Upon entering into a futures contract, a
Fund is required to make a deposit of an initial margin with its custodian in a
segregated account. Subsequent payments, which are dependent on the daily
fluctuations in the value of the underlying instrument, are made or received by
a Fund each day (daily variation margin) and are recorded as unrealized gains or
losses until the contracts are closed. When the contract is closed, a Fund
records a realized gain or loss equal to the difference between the proceeds
from (or cost of) the closing transactions and a Fund's basis in the contract.
Risks of entering into futures contracts include the possibility that a change
in the value of the contract may not correlate with the changes in the value of
the underlying instruments. 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. During the year ended
October 31, 1997, the New York Municipal Fund entered into futures contracts
which resulted in net realized losses of $200,642. At October 31, 1997, the New
York Municipal Fund had the following open futures contracts:
<TABLE>
<CAPTION>
VALUE AT VALUE AT
NUMBER OF EXPIRATION TRADE OCTOBER 31, UNREALIZED
CONTRACTS TYPE DATE DATE 1997 DEPRECIATION
- --------- ---------------- --------- ---------- ----------- ------------
<S> <C> <C> <C> <C> <C>
35 Short Positions:
30 yr. T-Bond Dec. 1997 $4,021,719 $4,146,406 ($ 124,687)
</TABLE>
6. CAPITAL SHARE TRANSACTIONS
The Global Fixed Income Fund and the Intermediate Government Fund are each
authorized to issue three billion full and fractional shares of capital stock,
$.001 par value per share, of which two billion shares are designated Advisor
Shares. The Fixed Income Fund and the New York Municipal Fund are each
authorized to issue an unlimited number of full and fractional shares of
beneficial interest, $.001 par value per share, of which two billion shares are
designated Advisor Shares.
36
<PAGE>
<PAGE>
WARBURG PINCUS FIXED INCOME FUNDS
NOTES TO FINANCIAL STATEMENTS (CONT'D)
October 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FIXED INCOME FUND
-----------------------------------------------------------
COMMON SHARES ADVISOR SHARES
-------------------------- -------------------------------
FOR THE
PERIOD
JULY 3, 1996
(COMMENCEMENT
OF
FOR THE YEAR ENDED OPERATIONS)
OCTOBER 31, FOR THE THROUGH
-------------------------- YEAR ENDED OCTOBER 31,
1997 1996 OCTOBER 31, 1997 1996
------------ ------------ ---------------- -------------
<S> <C> <C> <C> <C>
Shares sold 15,469,113 6,500,524 412,064 91,451
Shares issued to shareholders on
reinvestment of dividends 983,594 655,650 13,154 1,432
Shares redeemed (5,971,763) (3,807,785) (135,350) (2,709)
------------ ------------ ---------------- -------------
Net increase (decrease) in shares
outstanding 10,480,944 3,348,389 289,868 90,174
------------ ------------ ---------------- -------------
------------ ------------ ---------------- -------------
Proceeds from sale of shares $158,412,176 $ 65,153,259 $ 4,180,125 $ 906,881
Reinvested dividends 10,073,335 6,560,447 135,136 14,269
Net asset value of shares redeemed (60,912,911) (38,174,913) (1,378,412) (27,028)
------------ ------------ ---------------- -------------
Net increase (decrease) from capital share
transactions $107,572,600 $ 33,538,793 $ 2,936,849 $ 894,122
------------ ------------ ---------------- -------------
------------ ------------ ---------------- -------------
</TABLE>
<TABLE>
<CAPTION>
GLOBAL FIXED INCOME FUND
------------------------------------------------------
COMMON SHARES ADVISOR SHARES
-------------------------- --------------------------
FOR THE
PERIOD
AUGUST 12,
1996
(COMMENCEMENT
OF
FOR THE YEAR ENDED FOR THE OPERATIONS)
OCTOBER 31, YEAR ENDED THROUGH
-------------------------- OCTOBER 31, OCTOBER 31,
1997 1996 1997 1996
------------ ------------ ----------- -------------
<S> <C> <C> <C> <C>
Shares sold 12,111,016 10,872,405 797,711 3,441
Shares issued to shareholders on reinvestment
of dividends 1,058,355 696,550 31,874 25
Shares redeemed (7,051,623) (5,602,659) (12,987) (10)
------------ ------------ ----------- ------
Net increase (decrease) in shares outstanding 6,117,748 5,966,296 816,598 3,456
------------ ------------ ----------- ------
------------ ------------ ----------- ------
Proceeds from sale of shares $134,607,066 $119,663,378 $8,874,898 $37,907
Reinvested dividends 11,625,183 7,544,115 351,616 278
Net asset value of shares redeemed (78,037,370) (61,337,990) (144,913) (112)
------------ ------------ ----------- ------
Net increase from capital share transactions $68,194,879 $ 65,869,503 9,081,601 $38,073
------------ ------------ ----------- ------
------------ ------------ ----------- ------
</TABLE>
<TABLE>
<CAPTION>
INTERMEDIATE GOVERNMENT FUND
-----------------------------------------
ADVISOR
COMMON SHARES SHARES
--------------------------- -------------
FOR THE
PERIOD
AUGUST 15,
1997
(COMMENCEMENT
OF
FOR THE YEAR ENDED OCTOBER OPERATIONS)
31, THROUGH
-------------------------- OCTOBER 31,
1997 1996 1997
------------ ------------ -------------
<S> <C> <C> <C>
Shares sold 2,276,846 2,068,125 227
Shares issued to shareholders on reinvestment of
dividends 263,058 250,112 1
Shares redeemed (2,460,001) (3,047,315) 0
------------ ------------ -----
Net increase (decrease) in shares outstanding 79,903 (729,078) 228
------------ ------------ -----
------------ ------------ -----
Proceeds from sale of shares $ 22,572,753 $ 20,816,314 $ 2,270
Reinvested dividends 2,608,528 2,533,448 15
Net asset value of shares redeemed (24,347,987) (30,671,693) 0
------------ ------------ -----
Net increase (decrease) from capital share transactions $ 833,294 $ 7,321,931 $ 2,285
------------ ------------ -----
------------ ------------ -----
</TABLE>
37
<PAGE>
<PAGE>
WARBURG PINCUS FIXED INCOME FUNDS
NOTES TO FINANCIAL STATEMENTS (CONT'D)
October 31, 1997
- --------------------------------------------------------------------------------
6. CAPITAL SHARE TRANSACTIONS (CONT'D)
<TABLE>
<CAPTION>
NEW YORK MUNICIPAL FUND
------------------------------------------------------
COMMON SHARES ADVISOR SHARES
-------------------------- --------------------------
FOR THE
PERIOD
AUGUST 5,
1996
(COMMENCEMENT
OF
FOR THE YEAR ENDED FOR THE OPERATIONS)
OCTOBER 31, YEAR ENDED THROUGH
-------------------------- OCTOBER 31, OCTOBER 31,
1997 1996 1997 1996
------------ ------------ ----------- -------------
<S> <C> <C> <C> <C>
Shares sold 4,731,647 3,417,172 0 111
Shares issued to shareholders on reinvestment
of dividends 394,988 348,363 0 1
Shares redeemed (4,029,651) (3,306,747) (97) 0
------------ ------------ ----------- -----
Net increase (decrease) in shares outstanding 1,096,984 458,788 (97) 112
------------ ------------ ----------- -----
------------ ------------ ----------- -----
Proceeds from sale of shares $ 48,740,584 $ 35,404,895 $ 0 $ 1,150
Reinvested dividends 4,063,047 3,601,541 0 9
Net asset value of shares redeemed (41,383,138) (34,244,336) (1,006) 0
------------ ------------ ----------- -----
Net increase (decrease) from capital share
transactions $ 11,420,493 $ 4,762,100 ($1,006) $ 1,159
------------ ------------ ----------- -----
------------ ------------ ----------- -----
</TABLE>
7. LIABILITIES
At October 31, 1997, each Fund had the following affiliated and investment
related liabilities:
<TABLE>
<CAPTION>
GLOBAL
FIXED FIXED INTERMEDIATE NEW YORK
INCOME FUND INCOME FUND GOVERNMENT FUND MUNICIPAL FUND
----------- ----------- --------------- --------------
<S> <C> <C> <C> <C>
Investment securities purchased
payable (at value) $ 975,538 $ 0 $ 1,500,000 $ 0
Investment advisory fee payable 86,126 122,062 19,822 30,063
Administrative services fees
payable 21,998 18,514 3,964 7,516
Payable for fund shares redeemed 0 623,812 23,569 301,104
Distributions payable 142,572 0 41,553 43,397
</TABLE>
38
<PAGE>
<PAGE>
WARBURG PINCUS FIXED INCOME FUNDS
NOTES TO FINANCIAL STATEMENTS (CONT'D)
October 31, 1997
- --------------------------------------------------------------------------------
8. NET ASSETS
At October 31, 1997, capital contributions, undistributed net investment
income, accumulated net realized gain (loss) from security transactions and
current period distributions have been adjusted for current period permanent
book/tax differences which arose principally from differing book/tax treatments
of foreign currency transactions and gains of securities certain corporations
designated as 'passive foreign investment companies'. The Fixed Income Fund
reclassified $44,385 of distributions in excess of net investment income from
undistributed net investment income to accumulated net realized gain (loss) from
security transactions. The Global Fixed Income reclassified $5,666,273 from
accumulated net realized gain on foreign currency related items to undistributed
net investment income and also reclassified $8,232,599 of distributions from
accumulated net realized gain (loss) from security transactions to undistributed
net investment income. The Intermediate Government Fund reclassified $2,599 of
distributions from accumulated net realized gain (loss) from security
transactions to contributed capital. Net investment income, net realized gain
(loss) on foreign currency related items and net assets were not affected by
this reclassification.
Net assets at October 31, 1997 consisted of the following:
<TABLE>
<CAPTION>
FIXED GLOBAL FIXED INTERMEDIATE NEW YORK
INCOME FUND INCOME FUND GOVERNMENT FUND MUNICIPAL FUND
------------ ------------ --------------- --------------
<S> <C> <C> <C> <C>
Capital contributed, net $261,683,848 $207,147,971 $47,917,540 $ 86,763,382
Undistributed net investment income 0 4,259,525 0 0
Accumulated net realized gain
(loss) from security transactions 2,504,226 (847,726) (199,629) (17,793)
Net unrealized appreciation
(depreciation) from investments
and foreign currency related items 5,227,167 (6,894,213) 705,794 2,198,133
------------ ------------ --------------- --------------
Net assets $269,415,241 $203,665,557 $48,423,705 $ 88,943,722
------------ ------------ --------------- --------------
------------ ------------ --------------- --------------
</TABLE>
9. CAPITAL LOSS CARRYOVER
At October 31, 1997, capital loss carryovers available to offset possible
future capital gains of each Fund were as follows:
<TABLE>
<CAPTION>
CAPITAL LOSS
CARRYOVER EXPIRES IN
--------------------------- TOTAL CAPITAL
FUND 2004 2005 LOSS CARRYOVER
- ------------------------------------------- ----------- ----------- --------------
<S> <C> <C> <C>
Global Fixed Income $ 847,726 $ 0 $847,726
Intermediate Government 0 181 181
New York Municipal 0 142,594 142,594
</TABLE>
39
<PAGE>
<PAGE>
WARBURG PINCUS FIXED INCOME FUNDS
NOTES TO FINANCIAL STATEMENTS (CONT'D)
October 31, 1997
- --------------------------------------------------------------------------------
10. OTHER FINANCIAL HIGHLIGHTS
Each Fund currently offers one other class of shares, Advisor Shares,
representing equal pro rata interests in each of the respective Warburg Pincus
Fixed Income Funds. The financial highlights for an Common Share of each Fund
are as follows:
<TABLE>
<CAPTION>
FIXED INCOME FUND
------------------------------------------------------
COMMON SHARES
------------------------------------------------------
FOR THE YEAR ENDED OCTOBER 31,
------------------------------------------------------
1997 1996 1995 1994 1993
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
NET VALUE, BEGINNING OF YEAR $10.10 $10.07 $ 9.61 $10.42 $ 9.90
------ ------ ------ ------ ------
Income from Investment Operations:
Net Investment Income .62 .63 .70 .63 .56
Net Gain (Loss) on Securities and
Foreign Currency Related Items (both
realized and unrealized) .33 .03 .46 (.70) .52
------ ------ ------ ------ ------
Total from Investment Operations .95 .66 1.16 (.07) 1.08
------ ------ ------ ------ ------
Less Distributions:
Dividends from Net Investment Income (.62) (.63) (.70) (.65) (.56)
Distributions in Excess of Net
Investment Income .00 .00 .00 .00 .00
Distributions from Realized Gains .00 .00 .00 (.09) .00
------ ------ ------ ------ ------
Total Distributions (.62) (.63) (.70) (.74) (.56)
------ ------ ------ ------ ------
NET ASSET VALUE, END OF YEAR $10.43 $10.10 $10.07 $ 9.61 $10.42
------ ------ ------ ------ ------
------ ------ ------ ------ ------
Total Return 9.78% 6.80% 12.59% (.60%) 11.63%
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Year (000s) $265,453 $151,184 $116,983 $102,246 $81,181
Ratios to average daily net assets:
Operating expenses .75%@ .76%@ .75% .75% .75%
Net investment income 6.05% 6.30% 7.25% 6.53% 5.99%
Decrease reflected in above operating
expense ratios due to
waivers/reimbursements .08% .15% .18% .18% .09%
Portfolio Turnover Rate 129.06% 194.23% 182.93% 179.44% 227.37%
</TABLE>
- --------------------------------------------------------------------------------
@ Interest earned on uninvested cash balances is used to offset portions of
transfer agent expense. These arrangements resulted in a reduction to the
Common Shares' expenses by .00% and .01% for the years ended October 31, 1997
and 1996, respectively. The Common Shares' operating expense ratio after
reflecting these arrangement were .75% and .75% for the years ended October
31, 1997 and 1996, respectively.
See Accompanying Notes to Financial Statements.
TAX STATUS OF 1997 DIVIDENDS (Unaudited)
Taxable dividends paid by the Fund on a per share basis were as follows:
Ordinary income $.62
Because the Fund's fiscal year is not the calendar year, amounts to be used
by calendar year taxpayers on their Federal return will be reflected on Form
1099-DIV and will be mailed in January 1998.
40
<PAGE>
<PAGE>
WARBURG PINCUS FIXED INCOME FUNDS
NOTES TO FINANCIAL STATEMENTS (CONT'D)
October 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GLOBAL FIXED INCOME FUND
------------------------------------------------------
COMMON SHARES
------------------------------------------------------
FOR THE YEAR ENDED OCTOBER 31,
------------------------------------------------------
1997 1996 1995 1994 1993
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF YEAR $11.17 $11.04 $10.45 $11.38 $10.68
------ ------ ------ ------ ------
Income from Investment Operations:
Net Investment Income .54 .62 .99 .34 .54
Net Gain (Loss) on Securities and Foreign
Currency Related Items (both realized
and unrealized) .08 .57 .09 (.64) 1.13
------ ------ ------ ------ ------
Total from Investment Operations .62 1.19 1.08 (.30) 1.67
------ ------ ------ ------ ------
Less Distributions:
Dividends from Net Investment Income (.34) (1.06) (.49) (.45) (.85)
Distributions from Realized Gains (.54) .00 .00 (.14) (.12)
Return of Capital .00 .00 .00 (.04) .00
------ ------ ------ ------ ------
Total Distributions (.88) (1.06) (.49) (.63) (.97)
------ ------ ------ ------ ------
NET ASSET VALUE, END OF YEAR $10.91 $11.17 $11.04 $10.45 $11.38
------ ------ ------ ------ ------
------ ------ ------ ------ ------
Total Return 5.76% 11.35% 10.65% (2.79%) 16.72%
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Year (000s) $194,731 $131,072 $63,641 $90,394 $61,994
Ratios to average daily net assets:
Operating expenses .96%@ .95%@ .95% .95% .49%
Net investment income 5.40% 6.78% 8.18% 6.96% 8.60%
Decrease reflected in above operating
expense ratios due to
waivers/reimbursements .39% .56% .63% .65% 1.44%
Portfolio Turnover Rate 202.92% 123.90% 128.70% 178.11% 109.54%
</TABLE>
- --------------------------------------------------------------------------------
@ Interest earned on uninvested cash balances is used to offset portions of
transfer agent expense. These arrangements resulted in a reduction to the
Common Shares' expenses by .01% and .00% for the years ended October 31, 1997
and 1996, respectively. The Common Shares' operating expense ratio after
reflecting these arrangements were .95% and .95% for the years ended October
31, 1997 and 1996, respectively.
See Accompanying Notes to Financial Statements.
TAX STATUS OF 1997 DIVIDENDS (Unaudited)
Taxable dividends paid by the Fund on a per share basis were as follows:
Ordinary income $.88
Because the Fund's fiscal year is not the calendar year, amounts to be used
by calendar year taxpayers on their Federal return will be reflected on Form
1099-DIV and will be mailed in January 1998.
41
<PAGE>
<PAGE>
WARBURG PINCUS FIXED INCOME FUNDS
NOTES TO FINANCIAL STATEMENTS (CONT'D)
October 31, 1997
- --------------------------------------------------------------------------------
10. OTHER FINANCIAL HIGHLIGHTS (CONT'D)
<TABLE>
<CAPTION>
INTERMEDIATE GOVERNMENT FUND
-----------------------------------------------------
COMMON SHARES
-----------------------------------------------------
FOR THE YEAR ENDED OCTOBER 31,
-----------------------------------------------------
1997 1996 1995 1994 1993
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF YEAR $10.07 $10.22 $ 9.66 $11.03 $11.23
------ ------ ------ ------ ------
Income from Investment Operations:
Net Investment Income .58 .58 .59 .54 .59
Net Gain (Loss) on Securities (both
realized and unrealized) .10 (.06) .56 (.73) .34
------ ------ ------ ------ ------
Total from Investment Operations .68 .52 1.15 (.19) .93
------ ------ ------ ------ ------
Less Distributions:
Dividends from Net Investment Income (.58) (.58) (.59) (.55) (.59)
Distributions from Realized Gains (.08) (.09) .00 (.63) (.54)
Distribution in Excess of Realized Gains (.04) .00 .00 .00 .00
------ ------ ------ ------ ------
Total Distributions (.70) (.67) (.59) (1.18) (1.13)
------ ------ ------ ------ ------
NET ASSET VALUE, END OF YEAR $10.05 $10.07 $10.22 $ 9.66 $11.03
------ ------ ------ ------ ------
------ ------ ------ ------ ------
Total Return 6.99% 5.16% 12.32% (1.78%) 8.79%
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Year (000s) $48,421 $47,690 $55,898 $46,734 $77,565
Ratios to average daily net assets:
Operating expenses .61%@ .61%@ .60% .60% .60%
Net investment income 5.81% 5.68% 6.00% 5.43% 5.34%
Decrease reflected in above operating
expense ratios due to
waivers/reimbursements .33% .46% .49% .42% .21%
Portfolio Turnover Rate 104.34% 163.59% 105.79% 115.37% 108.00%
</TABLE>
- --------------------------------------------------------------------------------
@ Interest earned on uninvested cash balances is used to offset portions of
transfer agent expense. These arrangements resulted in a reduction to the
Common Shares' expenses by .01% and .01% for the years ended October 31, 1997
and 1996, respectively. The Common Shares' operating expense ratio after
reflecting these arrangements were .60% and .60% for the years ended October
31, 1997 and 1996, respectively.
See Accompanying Notes to Financial Statements.
TAX STATUS OF 1997 DIVIDENDS (Unaudited)
Taxable dividends paid by the Fund on a per share basis were as follows:
Ordinary income $.70
Because the Fund's fiscal year is not the calendar year, amounts to be used
by calendar year taxpayers on their Federal return will be reflected on Form
1099-DIV and will be mailed in January 1998.
42
<PAGE>
<PAGE>
WARBURG PINCUS FIXED INCOME FUNDS
NOTES TO FINANCIAL STATEMENTS (CONT'D)
October 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NEW YORK INTERMEDIATE
MUNICIPAL FUND
----------------------------------------------------
COMMON SHARES
----------------------------------------------------
FOR THE YEAR ENDED OCTOBER 31,
----------------------------------------------------
1997 1996 1995 1994 1993
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF YEAR $10.34 $10.42 $10.07 $10.65 $10.02
------ ------ ------ ------ ------
Income from Investment Operations:
Net Investment Income .45 .45 .47 .46 .47
Net Gain (Loss) on Securities (both
realized and unrealized) .13 .04 .36 (.45) .68
------ ------ ------ ------ ------
Total from Investment Operations .58 .49 .83 .01 1.15
------ ------ ------ ------ ------
Less Distributions:
Dividends from Net Investment Income (.45) (.45) (.47) (.46) (.47)
Distributions from Realized Gains (.12) (.12) (.01) (.13) (.05)
------ ------ ------ ------ ------
Total Distributions (.57) (.57) (.48) (.59) (.52)
------ ------ ------ ------ ------
NET ASSET VALUE, END OF YEAR $10.35 $10.34 $10.42 $10.07 $10.65
------ ------ ------ ------ ------
------ ------ ------ ------ ------
Total Return 5.83% 4.87% 8.31% .04% 11.67%
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Year (000s) $88,944 $77,559 $73,361 $75,716 $69,578
Ratios to average daily net assets:
Operating expenses .60%@ .61%@ .60% .60% .58%
Net investment income 4.40% 4.41% 4.50% 4.41% 4.50%
Decrease reflected in above operating
expense ratios due to
waivers/reimbursements .08% .17% .26% .20% .20%
Portfolio Turnover Rate 69.84% 69.23% 105.17% 167.09% 115.98%
</TABLE>
- --------------------------------------------------------------------------------
@ Interest earned on uninvested cash balances is used to offset portions of
transfer agent expense. These arrangements resulted in a reduction to the
Common Shares' expenses by .00% and .01% for the years ended October 31, 1997
and 1996, respectively. The Common Shares operating expense ratio after
reflecting these arrangements were .60% and .60% for the years ended October
31, 1997 and 1996, respectively.
See Accompanying Notes to Financial Statements.
TAX STATUS OF 1997 DIVIDENDS (Unaudited)
Taxable dividends paid by the Fund on a per share basis were as follows:
Ordinary income $.05
Long-term capital gain .07
Because the Fund's fiscal year is not the calendar year, amounts to be used
by calendar year taxpayers on their Federal return will be reflected on Form
1099-DIV and will be mailed in January 1998.
43
<PAGE>
<PAGE>
WARBURG PINCUS FIXED INCOME FUNDS
REPORT OF INDEPENDENT ACCOUNTANTS
- --------------------------------------------------------------------------------
To the Board of Directors, Trustees and Shareholders of
WARBURG PINCUS FIXED INCOME FUNDS
We have audited the accompanying statements of net assets of Warburg Pincus
Fixed Income Fund, Warburg Pincus Global Fixed Income Fund, Warburg Pincus
Intermediate Maturity Government Fund and the Warburg Pincus New York
Intermediate Municipal Fund (all funds collectively referred to as the 'Warburg
Pincus Fixed Income Funds'), as of October 31, 1997, and the related statements
of operations for the year (or period) then ended, the related statements of
changes in assets for each of the two years (or periods) in the period then
ended, and the financial highlights for each of the years (or periods)
presented. These financial statements and financial highlights are the
responsibilty of the Warburg Pincus Fixed Income Funds' management. Our
responsibilty is to express an opinion on these financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts, and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
October 31, 1997 by correspondence with the custodians and brokers. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of each
of the Warburg Pincus Fixed Income Funds as of October 31, 1997, the results of
their operations for the year (or period) then ended, the changes in 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 generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
2400 Eleven Penn Center
Philadelphia, PA
December 19, 1997
44
<PAGE>
<PAGE>
WARBURG PINCUS
ADVISOR FUNDS
COUNSELLORS
SECURITIES, INC.,
DISTRIBUTOR
800-369-2728
[LOGO]
ADBDF-2-1097
STATEMENT OF DIFFERENCES
------------------------
The dagger symbol shall be expressed as ........................... 'D'
The division symbol shall be expressed as ......................... [div]
