<PAGE>
<PAGE>
Warburg Pincus Advisor Funds October 31, 1997
Capital Appreciation Fund
Emerging Growth Fund
Post-Venture Capital Fund
Small Company Value Fund
Small Company Growth Fund
Strategic Value Fund
Growth & Income Fund
Balanced Fund
A
ANNUAL REPORT
More complete information about the Funds, including charges and expenses and,
where applicable, the special considerations and risks associated with
international 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.
WARBURG PINCUS
ASSET MANAGEMENT
<PAGE>
<PAGE>
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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<PAGE>
WARBURG PINCUS ADVISOR CAPITAL APPRECIATION FUND
ANNUAL INVESTMENT ADVISER'S REPORT -- OCTOBER 31, 1997
- --------------------------------------------------------------------------------
Dear Shareholder: December 18, 1997
The objective of Warburg Pincus Capital Appreciation Fund (the 'Fund') is
long-term capital appreciation. The Fund invests primarily in a broadly
diversified portfolio of equity securities of U.S. companies. The Fund attempts
to identify sectors of the market and companies within market sectors that it
believes will outperform the overall market.
For the 12 months ended October 31, 1997, the Fund gained 30.37%, vs. returns
of 32.08% for the S&P 500 Index and 28.42% for the Lipper Growth Funds Index.
The Fund fared well vs. its peers for the 12 months, but modestly trailed the
S&P 500 Index. That underperformance largely reflects our limited exposure,
through the period, to the handful of large-cap growth stocks that powered the
index's advance. In our view, most of these stocks were expensive on a
risk-reward basis, thus we continued to underweight them in favor of stocks that
we deemed to have more compelling valuations.
We found a number of such stocks within the financial industry, against a
backdrop of significant top-line growth, ongoing industry-wide merger and
acquisition activity and favorable demographic trends. We held significant
weightings in both the banking and financial-services area, with a bias toward
the latter. The Fund's financial holdings contributed positively to its return
for the period.
We also maintained a significant position in energy stocks, a weighting we
began to increase last year in anticipation of a more favorable supply/demand
scenario. This had a positive impact on the Fund's return, as
lower-than-expected domestic oil reserves and a continued strong economy helped
push energy stocks higher for the 12 months.
Another noteworthy sector for the Fund during the period, and one that proved
beneficial to its performance, was technology. We were significantly
underweighted in technology stocks in the first half of the period, which proved
timely, given the sector's severe correction early this year. We began to
increase our position in May, however, as continued volatility in the area had
created a number of attractive buying opportunities. As a result, the Fund had a
substantially higher weighting in technology over the July-through-September
span, a time of considerable strength in the area. We reduced our position late
in the period, taking profits as valuations headed back toward what we viewed as
generally expensive territory.
1
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<PAGE>
WARBURG PINCUS ADVISOR CAPITAL APPRECIATION FUND
ANNUAL INVESTMENT ADVISER'S REPORT -- OCTOBER 31, 1997 (CONT'D)
- --------------------------------------------------------------------------------
Elsewhere, we maintained a significant presence in consumer-related stocks,
reflecting our view that a strengthening economy and a modest but steady rise in
wages would continue to support the industry in general. We emphasized the
restaurant, lodging and retail areas, where we saw the best relative values.
The remainder of the Fund was diversified broadly by sector; areas in which
we also found stocks offering growth at a reasonable price included the
aerospace & defense, transportation, chemical and communications & media
industries. Our holdings in these sectors contributed positively to the Fund's
performance for the 12 months.
George U. Wyper Susan L. Black
Co-Portfolio Manager Co-Portfolio Manager
2
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<PAGE>
WARBURG PINCUS ADVISOR CAPITAL APPRECIATION FUND
ANNUAL INVESTMENT ADVISER'S REPORT (CONT'D)
- --------------------------------------------------------------------------------
GROWTH OF $10,000 INVESTED IN ADVISOR SHARES OF WARBURG PINCUS ADVISOR
CAPITAL APPRECIATION 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 Capital Appreciation Fund (the 'Fund') from
April 4, 1991 (inception) to October 31, 1997, compared to the S&P 500* for the
same time period.
<TABLE>
<CAPTION>
Average Annual Total Returns
for periods ended 10/31/97
Fund (Advisor Shares) S&P 500 (Advisor Shares)
--------------------- ------- ----------------------------
<S> <C> <C> <C>
4/4/91 10,000 10,000 1 year
10/31/91 10,153 10,653 30.37%
10/31/92 11,151 11,710
10/31/93 13,564 13,456 5 year
10/31/94 13,730 13,971 19.72%
10/31/95 16,944 17,655
10/31/96 21,037 21,893 Since Inception
10/31/97 27,425 28,916 (4/4/91)
16.56%
</TABLE>
<TABLE>
<CAPTION>
FUND
------
<S> <C>
1 Year Total Return (9/30/96-9/30/97)....................................... 35.56%
5 Year Average Annual Total Return (9/30/92-9/30/97)........................ 21.05%
Average Annual Total Return Since Inception (8/17/87-9/30/97)............... 17.37%
</TABLE>
- ------------
* The S&P 500 Index is an unmanaged index (with no defined investment objective)
of common stocks, includes reinvestment of dividends, and is a registered
trademark of Standard & Poor's Corporation.
3
<PAGE>
<PAGE>
WARBURG PINCUS ADVISOR EMERGING GROWTH FUND
ANNUAL INVESTMENT ADVISER'S REPORT -- OCTOBER 31, 1997
- --------------------------------------------------------------------------------
Dear Shareholder: December 18, 1997
The objective of Warburg Pincus Emerging Growth Fund (the 'Fund') is maximum
capital appreciation. The Fund pursues its objective by investing primarily in
common stocks and warrants of emerging-growth companies that represent
attractive opportunities for maximum capital appreciation. Emerging growth
companies are defined as small or medium-sized companies that have passed their
start-up phase, show positive earnings and are deemed to have prospects of
achieving significant profit and gains in share price in a relatively short
period of time.
For the 12 months ended October 31, 1997, the Fund had a total return of
20.62%, vs. returns of 18.58% for the Lipper Small Cap Funds Index, 21.18% for
the Russell 2000 Growth Index, and 32.08% for the S&P 500 Index.
The reporting period was ultimately a solid one for smaller-cap and
aggressive-growth issues. These stocks, which were weak performers over the
November-through-April span, bounced back strongly in the second half of the
period, spurred, most notably, by growing recognition of their appeal on a
valuation basis. Other factors driving the rally in smaller, high-growth stocks
included a reduction in the capital-gains tax, a relative lack of competition
from IPOs and a perception that the U.S. was a 'safe haven' from the currency
volatility in Southeast Asia. The Fund benefited from these developments and
from strength in specific areas. Top performers for the Fund over the period
included its financial, technology, energy, pharmaceutical and consumer-oriented
issues.
We maintained a significant position in technology over the 12 months.
Collectively, technology stocks continued to sell at only modest premiums (by
historical measures) over lower-growth, non-technology issues through the
period, and we found a number of opportunities to increase our exposure. Names
we added during the period included Adobe Systems, a manufacturer of
graphics-production software. We believe an expanding Internet -- specifically
the continued launching of graphically sophisticated Web sites -- will remain a
source of increased demand for the company's products. Another position we
established was PeopleSoft (one of the Fund's largest holdings as of October
31), a developer of client/server applications for large and mid-sized
corporations.
We also held a sizable weighting in the business-services area during the 12
months. We believe a strong trend of outsourcing by Corporate America remains in
force, and that specific, niche-oriented smaller companies will continue to
benefit as a result. The Fund's positions here during the period
4
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<PAGE>
WARBURG PINCUS ADVISOR EMERGING GROWTH FUND
ANNUAL INVESTMENT ADVISER'S REPORT -- OCTOBER 31, 1997 (CONT'D)
- --------------------------------------------------------------------------------
included temporary-staff providers Robert Half International and On Assignment,
the latter specializing in scientific and environmental staffing needs.
Another area of emphasis for the Fund, and one we increased as the period
progressed, was financial companies. Against a generally favorable backdrop for
these companies -- declining interest rates, ongoing industry-wide merger and
acquisition activity, a strong stock market -- we continued to find reasonably
priced stocks, particularly within the financial-services area.
Elsewhere, the Fund had significant weightings in the health-care, energy,
and consumer-related industries; other noteworthy positions included the
telecommunications and real-estate sectors. One theme common to our stock
selection in these areas was consolidation. Specifically, we believe that merger
activity, which has been strong in certain areas (e.g., financial services and
waste management), will become more prevalent in other industries as well.
Against this backdrop, we remain focused on identifying companies whose strong
growth rates will merit special attention from larger companies seeking to grow
via takeovers and mergers.
Elizabeth B. Dater
Co-Portfolio Manager
Stephen J. Lurito
Co-Portfolio Manager
Medha Vora
Co-Profolio Manager
5
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<PAGE>
WARBURG PINCUS ADVISOR EMERGING GROWTH FUND
ANNUAL INVESTMENT ADVISER'S REPORT (CONT'D)
- --------------------------------------------------------------------------------
GROWTH OF $10,000 INVESTED IN ADVISOR SHARES OF WARBURG PINCUS ADVISOR
EMERGING GROWTH 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 Emerging Growth Fund (the 'Fund') from April 4,
1991 (inception) to October 31, 1997, compared to the S&P 500* and the Lipper
Small Cap Funds Index** for the same time period.
<TABLE>
<CAPTION>
Average Annual Total Returns
for periods ended 10/31/97
Fund (Advisor Shares) Lipper Small Cap Funds Index S&P 500 (Advisor Shares)
--------------------- ---------------------------- ------- ----------------------------
<S> <C> <C> <C> <C>
4/4/91 10,000 10,000 10,000 1 year
10/31/91 11,197 11,226 10,653 20.62%
10/31/92 12,223 12,017 11,710
10/31/93 16,094 15,559 13,456 5 year
10/31/94 16,048 15,885 13,971 19.54%
10/31/95 21,382 19,631 17,655
10/31/96 24,738 22,997 21,893 Since Inception
10/31/97 29,838 27,294 28,916 (4/4/91)
18.06%
</TABLE>
<TABLE>
<CAPTION>
FUND
-----
<S> <C>
1 Year Total Return (9/30/96-9/30/97)........................................ 25.56%
5 Year Average Annual Total Return (9/30/92-9/30/97)......................... 21.75%
Average Annual Total Return Since Inception (1/21/88-9/30/97)................ 19.30%
</TABLE>
- ------------
* The S&P 500 Index is an unmanaged index (with no defined investment
objective) of common stocks, includes reinvestment of dividends, and is a
registered trademark of Standard & Poor's Corporation.
** The Lipper Small Cap Funds Index is an equal-weighted performance index,
adjusted for capital-gains distributions and income dividends, of the largest
qualifying funds in this investment objective, and is compiled by Lipper
Analytical Services Inc.
6
<PAGE>
<PAGE>
WARBURG PINCUS ADVISOR POST-VENTURE CAPITAL FUND
ANNUAL INVESTMENT ADVISER'S REPORT -- OCTOBER 31, 1997
- --------------------------------------------------------------------------------
Dear Shareholder: December 18, 1997
The objective of Warburg Pincus Post-Venture Capital Fund (the 'Fund') is
long-term growth of capital. The Fund pursues its objective by investing
primarily in equity securities of U.S. companies considered to be in their post-
venture-capital stage of development.
For the 12 months ended October 31, 1997, the Fund had a return of 9.48%, vs.
returns of 28.42% for the Lipper Growth Funds Index, 21.18% for the Russell 2000
Growth Index, and 6.48% for the Warburg Pincus/Venture Economics Post-Venture
Capital Index. The Fund's average annual total return since inception (on
September 29, 1995) through October 31 was 31.04%.
The Fund lagged its Lipper and Russell benchmarks by wide margins for the 12
months, which is largely attributable to its underperformance over the
November-through-April span. This was an extremely difficult period for the
Fund's holdings and, more broadly, the types of stocks in which the Fund invests
(i.e., smaller-cap and aggressive-growth stocks). Many technology stocks
suffered sizable losses over the first half of the period, which weighed heavily
on the Fund's performance, given its significant presence in the industry
(stocks that particularly hampered the Fund included some of its larger software
holdings, which were hurt by reports of slowing revenue sales early this year).
That notwithstanding, we remain committed to technology as a long-term
investment theme, and believe that well-financed, innovative technology
companies, such as those held in the Fund, will continue to be the engines of
global economic growth.
We maintained a sizable weighting in the electronics industry through the
period, an area we have long viewed as a particularly innovative segment of
technology. Our holdings here canvassed the market-cap spectrum, and included
Linear Technology, whose integrated circuits are used in a variety of products,
such as telecommunication equipment and computer peripherals; and Microchip
Technology, a manufacturer of specialty microprocessors.
We also held a substantial weighting in computer stocks. Our largest
positions in this area, and ones that contributed positively to the Fund's
return for the 12 months, included PeopleSoft, a provider of various
client/server application products, and BMC Software. We remain upbeat on the
long-term prospects of both stocks. BMC, for example, has developed products
that we believe will place it as a strategic partner among the likes of
Hewlett-Packard, IBM and Microsoft.
7
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<PAGE>
WARBURG PINCUS ADVISOR POST-VENTURE CAPITAL FUND
ANNUAL INVESTMENT ADVISER'S REPORT -- OCTOBER 31, 1997 (CONT'D)
- --------------------------------------------------------------------------------
The other chief component of our technology exposure was the
telecommunications and equipment sector. Our optimism regarding the area's
longer-term prospects is based on the continued expansion of the Internet, as
well as an ongoing global deregulation trend in the networking and telephone
industries.
Elsewhere, our significant weightings included the business-services sector,
which we believe will continue to benefit from a strong trend toward corporate
outsourcing. Our focus was on companies that stand to take particular advantage
of this trend, namely benefit-, personnel- and inventory-management companies,
as well as product-development and manufacturing contractors.
The rest of the Fund was invested across a range of industries, including the
financial-services, health-care, energy and consumer-related areas. Regarding
that last, notable changes we made during the period included raising our
positions in the retail and leisure/entertainment sectors. In these areas, which
we have increasingly come to favor as diversification tools, we added several
stocks we deemed attractive on a valuation basis.
Going forward, our outlook on the collective prospects for stocks of post-
venture-capital companies (which we define as those that have received
venture-capital financing either during the early stages of their existence or
the early stages of the development of a new product or service, or as part of a
restructuring or recapitalization) remains positive, the Fund's underperformance
for the period notwithstanding. We will continue to devote our efforts to
selecting stocks with the best long-term prospects, employing our broader themes
such as outsourcing and the global adoption of U.S. technology. We would caution
investors, however, that investing in these securities entails potential risks
(e.g., that of heightened volatility) as well as rewards. Because of the nature
of the Fund's holdings and certain strategies it may use, an investment in the
Fund should be considered only for the aggressive portion of an investor's
portfolio and may not be appropriate for all investors. Investors should review
the prospectus carefully before purchase.
Elizabeth B. Dater Stephen J. Lurito
Co-Portfolio Manager Co-Portfolio Manager
8
<PAGE>
<PAGE>
WARBURG PINCUS ADVISOR POST-VENTURE CAPITAL FUND
ANNUAL INVESTMENT ADVISER'S REPORT (CONT'D)
- --------------------------------------------------------------------------------
GROWTH OF $10,000 INVESTED IN ADVISOR SHARES OF WARBURG PINCUS ADVISOR
POST-VENTURE CAPITAL 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 Post-Venture Capital Fund (the 'Fund') from
September 29, 1995 (inception) to October 31, 1997, compared to the Lipper
Growth Funds Index ('Lipper')*, the Russell 2000 Growth Index ('Russell')** and
the Warburg Pincus/Venture Economics Post-Venture Capital Index ('PVCI')*** for
the same time period.
<TABLE>
<CAPTION>
Average Annual Total Returns
for periods ended 10/31/97
Fund (Advisor Shares) Russell Lipper PVCI (Advisor Shares)
--------------------- ------- ------ ---- ----------------------------
<S> <C> <C> <C> <C> <C>
9/29/95 10,000.00 10,000.00 10,000.00 10,000.00 1 year
10/31/95 10,669.33 9,508.20 9,867.30 10,142.90 9.48%
11/30/95 12,887.11 9,927.99 10,201.31 10,486.44
12/29/95 13,816.18 10,147.89 10,244.46 10,411.36 Since Inception
1/31/96 14,115.88 10,063.97 10,492.07 10,497.77 (9/29/95)
2/29/96 15,234.77 10,522.89 10,656.79 11,030.32 30.44%
3/29/96 15,634.37 10,730.92 10,706.13 10,968.88
4/30/96 17,392.61 11,554.74 10,974.54 12,051.84
5/31/96 17,852.15 12,147.26 11,169.23 12,480.29
6/28/96 16,693.31 11,358.06 11,060.10 11,731.09
7/31/96 14,305.69 9,971.58 10,462.08 10,441.49
8/30/96 15,194.81 10,709.77 10,772.81 11,097.43
9/30/96 16,453.55 11,261.33 11,375.01 12,050.25
10/31/96 15,914.09 10,775.63 11,538.81 11,537.64
11/29/96 16,103.90 11,075.30 12,268.06 12,115.21
12/31/96 16,133.87 11,291.26 12,036.19 11,961.59
1/31/97 16,603.40 11,573.32 12,667.73 12,365.41
2/28/97 15,474.53 10,874.52 12,570.70 11,534.09
3/31/97 14,305.69 10,107.22 11,995.46 10,371.80
4/30/97 14,235.76 9,990.38 12,523.14 10,202.11
5/30/97 15,884.16 11,492.03 13,389.74 11,868.43
6/30/97 16,213.79 11,881.73 13,890.25 11,760.07
7/31/97 17,682.32 12,490.55 15,014.89 12,925.49
8/29/97 17,462.54 12,865.39 14,485.94 12,890.20
9/30/97 18,681.32 13,892.04 15,313.96 13,517.57
10/31/97 17,422.58 13,057.69 14,819.78 12,285.85
</TABLE>
/<TABLE>
<CAPTION>
FUND
------
<S> <C>
1 Year Total Return (9/30/96-9/30/97)........................................ 13.54%
Average Annual Total Return Since Inception (9/29/95-9/30/97)................ 36.57%
</TABLE>
- ------------
* The Lipper Growth Funds Index is an equal-weighted performance index,
adjusted for capital-gains distributions and income dividends, of the largest
qualifying funds in this investment objective, and is compiled by Lipper
Analytical Services Inc.
** The Russell 2000 Growth Index is an unmanaged index (with no defined
investment objective) of those securities in the Russell 2000 Growth Index
with a greater-than-average growth orientation. It includes reinvestment of
dividends, and is compiled by Frank Russell Company.
*** The Warburg Pincus/Venture Economics Post-Venture Capital Index is a
market-valued index that measures the performance of public stocks of
companies that received financing from a U.S. venture capital or buyouts
limited partnership prior to or during public trading status, without
dividends. Companies remain in the index for ten years from the date of
first inclusion or until the price data is no longer available, for example,
due to a merger or acquisition. The index is calculated monthly and has a
first index period of January 1986 with the index value initialized at 100.
The index is a joint project of Venture Economics and Warburg, Pincus Asset
Management, Inc.
9
<PAGE>
<PAGE>
WARBURG PINCUS ADVISOR SMALL COMPANY VALUE FUND
ANNUAL INVESTMENT ADVISER'S REPORT -- OCTOBER 31, 1997
- --------------------------------------------------------------------------------
Dear Shareholder: December 18, 1997
The objective of Warburg Pincus Small Company Value Fund (the 'Fund') is
long-term capital appreciation. The Fund invests primarily in a portfolio of
equity securities of small-capitalization companies (i.e., those with stock-
market capitalizations of $1 billion or less at the time of initial purchase)
that are considered to be relatively undervalued.
For the 12 months ended October 31, 1997, the Fund gained 30.47%, vs. a gain
of 29.33% for the Russell 2000 Index.
The Fund's solid return for the reporting period reflects the small-cap
market's strong rebound over the May-through-October span, as well as good stock
selection in general. Small caps initially (i.e., through April) lagged their
larger-cap counterparts by a sizable margin, with investors clearly preferring
the latter group's greater liquidity and perceived earnings stability. This
trend began to reverse, however, as the market took note of small-caps'
compelling valuations and more-favorable earnings prospects vs. those of large
caps. Additionally, several blue-chip companies that had previously paced the
market's advance issued profit warnings in the latter part of the reporting
period. This combination prompted many investors to shift assets toward the
small-cap area, including small-cap-value stocks.
The Fund's financial stocks, which represented the Fund's largest sector
weighting throughout the period, were particularly good performers, buoyed in
part by a favorable interest-rate environment and ongoing industry-wide
consolidation. (It should be stressed that our sector weightings are byproducts
of our company-by-company stock-selection process, and not bets on specific
industries.) We found a number of very attractively valued stocks in the
insurance area, as well as in the brokerage and banking areas.
The Fund saw good showings from stocks in a variety of other industries as
well. These included shipbuilder Avondale Industries, which benefited from an
increase in both defense and commercial contracts, and from consolidation among
defense contractors in general. Another holding that contributed positively to
the Fund's performance for the period was EA Industries, a manufacturer of
electronic circuit boards. The stock performed poorly in 1996 due to rapidly
deteriorating fundamentals, and it continued to languish into 1997. In our view,
the stock had become significantly undervalued, given the arrival of new
management and the stock's low price-to-revenue ratio relative to companies with
similar business profiles, hence our decision to buy early this year. An
improvement in the company's
10
<PAGE>
<PAGE>
WARBURG PINCUS ADVISOR SMALL COMPANY VALUE FUND
ANNUAL INVESTMENT ADVISER'S REPORT -- OCTOBER 31, 1997 (CONT'D)
- --------------------------------------------------------------------------------
revenue flow and balance sheet helped the stock rise strongly in the latter part
of the period.
Looking ahead to 1998, we remain positive regarding the prospects for
small-cap stocks, particularly the low-multiple and underfollowed issues
targeted by the Fund. Small-cap stocks, while somewhat more expensive as a
result of their recent rally, continue to present very attractive opportunities.
In this context, we will remain focused on identifying companies undergoing
changes (such as restructurings or new management) that stand to significantly
improve longer-term profitability and stock performance.
<TABLE>
<S> <C>
George U. Wyper Kyle F. Frey
Portfolio Manager Associate Portfolio Manager
</TABLE>
11
<PAGE>
<PAGE>
WARBURG PINCUS ADVISOR SMALL COMPANY VALUE FUND
ANNUAL INVESTMENT ADVISER'S REPORT (CONT'D)
- --------------------------------------------------------------------------------
GROWTH OF $10,000 INVESTED IN ADVISOR SHARES OF WARBURG PINCUS ADVISOR
SMALL COMPANY VALUE 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 Small Company Value Fund (the 'Fund') from
December 29, 1995 (inception) to October 31, 1997, compared to the Russell 2000
Index ('Russell')* for the same time period.
<TABLE>
<CAPTION>
Average Annual
Total Returns
for period ended
10/31/97
Fund (Advisor Shares) Russell (Advisor Shares)
--------------------- --------- ----------------
<S> <C> <C> <C>
10,000.00 10,000.00
1/31/96 10,000.00 9,989.40
2/29/96 10,650.00 10,300.67
3/29/96 11,550.00 10,510.29 1 Year
4/30/96 12,620.00 11,072.27 30.47%
5/31/96 13,440.00 11,508.63
6/28/96 13,330.00 11,036.20
7/31/96 12,840.00 10,072.30
8/30/96 13,530.00 10,657.20
9/30/96 14,090.00 11,073.68
10/31/96 14,460.00 10,903.15
11/29/96 15,060.00 11,352.36
12/31/96 15,699.60 11,649.90
1/31/97 15,962.61 11,882.78 Since Inception
2/28/97 15,669.25 11,594.75 (12/29/95)
3/31/97 15,123.01 11,047.71 41.10%
4/30/97 15,173.58 11,078.53
5/30/97 16,124.46 12,311.01
6/30/97 17,227.08 12,838.66
7/31/97 17,955.41 13,436.05
8/29/97 18,552.24 13,743.46
9/30/97 19,978.55 14,749.35
10/31/97 18,865.82 14,101.56
</TABLE>
<TABLE>
<CAPTION>
FUND
-------
<S> <C>
1 Year Total Return (9/30/96-9/30/97)...................................... 41.79%
Average Annual Total Return Since Inception (12/29/95-9/30/97)............. 48.21%
</TABLE>
- ------------
* The Russell 2000 Growth Index is an unmanaged index (with no defined
investment objective) of those securities in the Russell 2000 Growth Index
with a greater-than-average growth orientation. It includes reinvestment of
dividends, and is compiled by Frank Russell Company.
12
<PAGE>
<PAGE>
WARBURG PINCUS ADVISOR STRATEGIC VALUE FUND
ANNUAL INVESTMENT ADVISER'S REPORT -- OCTOBER 31, 1997
- --------------------------------------------------------------------------------
Dear Shareholder: December 18, 1997
The objective of Warburg Pincus Strategic Value Fund (the 'Fund') is capital
appreciation. The Fund invests in companies and market sectors that are
considered to be relatively undervalued. The Fund may hold securities of
companies of any size, including securities of companies with market
capitalizations of less than $500 million.
For the 10 months ended October 31, 1997 (the Fund's inception date was
December 31, 1996), the Fund had a gain of 13.23%, vs. a return of 25.29% for
the S&P 500 Index.
The Fund's performance over the January-through-October span can be viewed as
having two distinct components. Over the first four months of the reporting
period, the Fund lagged the S&P 500 Index by a wide margin, which is
attributable to two factors. First, we held a large stake in the
financial-services and banking sectors, reflecting our optimism regarding the
financial area's long-term prospects. Our holdings in these areas were hampered,
early in the year, by rising interest rates (the Federal Reserve raised rates in
late March, and fears of further increases continued to weigh on the financial
sector through much of April). Second, we were, at this time, building our
position in smaller-cap companies, since we viewed valuations in the sector as
increasingly attractive vs. those of large-cap stocks. This increased weighting
proved somewhat premature, as small caps continued to underperform their
large-cap brethren.
Fortunately, however, these strategies met with good results over the
remainder of the period. The Fund's financial holdings rallied, spurred by
declining interest rates and ongoing acquisition activity in the industry. The
Fund's small-cap stocks also rebounded strongly, against an improved backdrop
for small caps (small-cap indices such as the Russell 2000 Index and the NASDAQ
were among the market's strongest over this period). Here, the Fund saw
particularly good performances from its technology and health-care holdings. As
a result of these rallies, the Fund outpaced the S&P 500 Index over much of the
May-through-October span. It lost ground vs. its benchmark in the final weeks of
the period, though, when a volatile market had a particularly negative impact on
technology stocks, those held by the Fund not excepted.
We remain, however, optimistic regarding the longer-term prospects of our
technology holdings. For one, we believe that, being domestically oriented
companies, these holdings were unduly punished by fears regarding Asia's
economic troubles. In addition, technology companies held in the Fund (as of
13
<PAGE>
<PAGE>
WARBURG PINCUS ADVISOR STRATEGIC VALUE FUND
ANNUAL INVESTMENT ADVISER'S REPORT -- OCTOBER 31, 1997 (CONT'D)
- --------------------------------------------------------------------------------
October 31) have reported better-than-expected third-quarter earnings and/or
unit sales. And while our holdings in this area have relatively high P/E ratios,
these companies continue to exhibit rapid growth rates (including, notably,
companies providing solutions to the 'Year 2000 problem,' several of which we
held at the end of the period). Thus, these stocks remain attractively valued in
our view.
Going forward, we believe good values exist across the market-cap spectrum,
and we expect that both large- and smaller-cap stocks will continue to figure
prominently in the Fund. We remain focused on identifying out-of-favor stocks
that stand to benefit over the longer term from factors such as management
changes, restructurings, new products and services and product-cycle
transitions.
Anthony G. Orphanos
Portfolio Manager
14
<PAGE>
<PAGE>
WARBURG PINCUS ADVISOR STRATEGIC VALUE FUND
ANNUAL INVESTMENT ADVISER'S REPORT (CONT'D)
- --------------------------------------------------------------------------------
GROWTH OF $10,000 INVESTED IN ADVISOR SHARES OF WARBURG PINCUS ADVISOR
STRATEGIC VALUE 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 Strategic Value Fund (the 'Fund') from December
31, 1996 (inception) to October 31, 1997, compared to the Standard & Poor's 500
Index* for the same time period.
<TABLE>
<CAPTION>
Aggregate
Total Return
for period ended
10/31/97
Fund (Advisor Shares) S&P 500 (Advisor Shares)
--------------------- ------- -----------------
<S> <C> <C> <C>
12/31/96 10,000.00 10,000.00
1/31/97 10,236.9 10,624.1
2/28/97 10,187.6 10,707.4
3/31/97 9,615 10,268.8
4/31/97 9,842.05 10,880.9 Since Inception
5/31/97 10,612 11,542.2 (12/31/96)
6/31/97 10,750.2 12,058.6 13.23% +
7/31/97 11,875.6 13,016.9
8/31/97 11,668.3 12,228.8
9/30/97 12,458 12,960.9
10/31/97 11,322.8 12,529.3
</TABLE>
<TABLE>
<CAPTION>
FUND
-------
<S> <C>
Aggregate Total Return Since Inception (12/31/96-9/30/97).................. 24.58%+
</TABLE>
- ------------
* The S&P 500 Index is an unmanaged index (with no defined investment objective)
of common stocks, includes reinvestment of dividends, and is a registered
trademark of Standard & Poor's Corporation.
+ Not annualized.
15
<PAGE>
<PAGE>
WARBURG PINCUS ADVISOR GROWTH & INCOME FUND
ANNUAL INVESTMENT ADVISER'S REPORT -- OCTOBER 31, 1997
- --------------------------------------------------------------------------------
Dear Shareholder: December 18, 1997
The objective of Warburg Pincus Growth & Income Fund (the 'Fund') is
long-term growth of capital and income and a reasonable current return. The Fund
pursues its objective by investing primarily in equity securities.
For the 12 months ended October 31, 1997, the Fund had a gain of 26.02%, vs.
a gain of 32.08% for the S&P 500 Index.
The Fund's change in portfolio management (effective January 9) during the
reporting period resulted in a portfolio restructuring. The Fund participated in
the market's continued rise during the year's first calendar quarter, and was
competitive with its benchmark over the remainder of the period, buoyed by its
financial-services, technology and energy holdings in particular.
In terms of specific strategies, we reoriented the Fund using a total-return
approach, focusing on equities with what we deemed to be the best risk-
adjusted-return prospects. We looked for stocks that were temporarily depressed
for cyclical or other identifiable reasons. We placed particular emphasis on
factors such as management changes, restructurings, and new products and
services that could potentially improve earnings and free cash flow. Because of
this, many of the Fund's holdings were purchased at P/E multiples significantly
below that of the S&P 500 Index. Examples include deep-water-drilling stocks
Noble Drilling, Reading & Bates, and Transocean Offshore, which we bought early
this year, when fears of declining oil prices drove their P/Es down to about 10
times estimated 1998 earnings. We viewed these securities as oversold, given the
companies' potentially lucrative contracts for projects in the Gulf of Mexico
and the North Sea.
Other areas that contained a number of what we believed to be undervalued
stocks included retail. One such stock was Wal-Mart, which we purchased at a P/E
ratio of about 15 times estimated 1998 earnings. In our view, the market had
underestimated the company's potential to improve its return on assets, given
Wal-Mart's recent restructuring and expansion overseas. The stock, one of our
largest positions during the period, contributed positively to the Fund's
performance.
With regard to sectors, the Fund's industry weightings generally approximated
those of its benchmark through much of 1997. We saw little incentive to heavily
overweight sectors, given prevailing market conditions, though it should be
stressed that we will significantly increase specific industry weightings as
stock valuations warrant.
16
<PAGE>
<PAGE>
WARBURG PINCUS ADVISOR GROWTH & INCOME FUND
ANNUAL INVESTMENT ADVISER'S REPORT -- OCTOBER 31, 1997 (CONT'D)
- --------------------------------------------------------------------------------
Looking ahead, we believe that the relatively high degree of market
volatility witnessed over the past few months will likely persist into 1998, and
thus individual stock selection remains critical. In this context, we will
continue to focus on identifying stocks with the potential to perform relatively
well in both down and up markets, emphasizing companies with strong cash flows
and improving earnings prospects.
Brian S. Posner
Portfolio Manager
17
<PAGE>
<PAGE>
WARBURG PINCUS ADVISOR GROWTH & INCOME FUND
ANNUAL INVESTMENT ADVISER'S REPORT (CONT'D)
- --------------------------------------------------------------------------------
GROWTH OF $10,000 INVESTED IN ADVISOR SHARES OF WARBURG PINCUS
GROWTH & 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 Growth & Income Fund from May 15, 1995 (inception) to
October 31, 1997, assuming the reinvestment of dividends and capital gains at
net asset value, compared to the S&P 500* for the same time period.
<TABLE>
<CAPTION>
Average Annual
Total Returns
for periods ended
10/31/97
Fund (Advisor Shares) S&P 500 (Advisor Shares)
--------------------- ------- -----------------
<S> <C> <C> <C>
1 Year
26.02%
5/31/95 10,000 10,000
10/31/95 10,457.3 11,437 Since Inception
10/31/96 10,560.8 14,182.6 (5/15/95)
10/31/97 13,308.8 18,732.2 12.28%
</TABLE>
<TABLE>
<CAPTION>
FUND
------
<S> <C>
1 Year Total Return (9/30/96-9/30/97)....................................... 32.69%
Average Annual Total Return Since Inception (5/15/95-9/30/97)............... 14.78%
</TABLE>
- ------------
* The S&P 500 Index is an unmanaged index (with no defined investment objective)
of common stocks, includes reinvestment of dividends, and is a registered
trademark of Standard & Poor's Corporation.
18
<PAGE>
<PAGE>
WARBURG PINCUS ADVISOR BALANCED FUND
ANNUAL INVESTMENT ADVISER'S REPORT -- OCTOBER 31, 1997
- --------------------------------------------------------------------------------
Dear Shareholder: December 18, 1997
The objective of Warburg Pincus Balanced Fund (the 'Fund') is maximum total
return through a combination of long-term growth of capital and current income,
consistent with preservation of capital. The Fund pursues its objective by
investing in a diversified portfolio of equity and debt securities, and employs
a multi-manager approach, using up to five different sector teams.
For the 12 months ended October 31, 1997, the Fund had a total return of
19.12%, vs. gains of 20.10% for the Lipper Balanced Funds Index and 32.08% for
the S&P 500 Index.
Supported by relatively stable interest rates and subdued inflation, most
major stock and bond indexes turned in good performances over the 12 months.
Equities, though often volatile, were particularly robust, fueled by continued
strength in corporate profits. Throughout the period, we sought to provide solid
returns at a relatively low level of volatility. In practical terms, this meant
maintaining broad exposure to both the equity and fixed-income markets, making
adjustments as we deemed necessary on a risk-vs.-reward basis.
The Fund's equities, accounting for 65% of its assets at the close of the
period, included a diversified mix of domestic and foreign stocks. Of particular
note, we maintained a substantial weighting in domestic small-cap stocks
throughout the period. These securities initially took a toll on the Fund's
performance, as the market favored the relative safety of larger-cap,
more-liquid stocks through the first part of the reporting period. Sentiment
toward smaller companies improved dramatically over the May-through-October
span, however, as investors took note of small-caps' compelling valuations and
earnings-growth rates, and the Fund's holdings rallied to contribute positively
to its return for the 12 months.
Elsewhere, we held a sizable position in larger-cap domestic stocks, which
collectively performed well and helped offset the higher volatility of small
caps. We also maintained a modest weighting in foreign equities (note: per a
recent investment-policy change, the Fund may now invest as much as 15% of its
assets in foreign stocks, up from 10% previously). Our foreign holdings, which
were well-diversified by country, on balance also contributed positively to the
Fund's return for the period.
Within the fixed-income area, we concentrated primarily on Treasuries, as we
continued to find them attractive on a risk-reward basis, though we also
19
<PAGE>
<PAGE>
WARBURG PINCUS ADVISOR BALANCED FUND
ANNUAL INVESTMENT ADVISER'S REPORT -- OCTOBER 31, 1997 (CONT'D)
- --------------------------------------------------------------------------------
identified select values among mortgage-backed and corporate bonds. Because we
view the Fund's fixed-income component mostly as a provider of income, rather
than as a potential source of capital appreciation, we emphasized
intermediate-term, high-quality securities across the bond market to minimize
interest-rate and credit risk.
We look forward to continuing to provide shareholders with a diversified
portfolio of equity and fixed-income securities. As ever, the Fund's asset
allocation between stocks and bonds will be based on our view on the markets
from a risk-reward perspective.
Dale C. Christensen Anthony G. Orphanos
Co-Portfolio Strategist Co-Portfolio Strategist
20
<PAGE>
<PAGE>
WARBURG PINCUS ADVISOR BALANCED FUND
ANNUAL INVESTMENT ADVISER'S REPORT (CONT'D)
- --------------------------------------------------------------------------------
GROWTH OF $10,000 INVESTED IN ADVISOR SHARES OF WARBURG PINCUS BALANCED
FUND SINCE INCEPTION AS OF OCTOBER 31, 1997
The graph below illustrates the hypothetical investment of $10,000 in Advisor
Shares of Warburg Pincus Balanced Fund from July 31, 1995 (inception) to October
31, 1996 assuming the reinvestment of dividends and capital gains at net asset
value, compared to the S&P 500* and Lipper Balanced Funds Index ('LBFI')** for
the same time period.
<TABLE>
<CAPTION>
Average Annual
Total Returns
for periods ended
10/31/97
Fund (Advisor Shares) S&P 500 LBFI (Advisor Shares)
--------------------- ------- ---- -----------------
<S> <C> <C> <C> <C>
1 Year
19.12%
7/31/95 10,000 10,000 10,000
10/31/95 10,241.3 10,408.6 10,292.7 Since Inception
10/31/96 11,865.1 12,907.4 11,784.2 (7/31/95)
10/31/97 14,133.6 17,047.8 14,153 16.56%
</TABLE>
<TABLE>
<CAPTION>
FUND
------
<S> <C>
1 Year Total Return (9/30/96-9/30/97)....................................... 25.53%
Average Annual Total Return Since Inception (7/31/95-9/30/97)............... 19.45%
</TABLE>
- ------------
* The S&P 500 Index is an unmanaged index (with no defined investment
objective) of common stocks, includes reinvestment of dividends, and is a
registered trademark of Standard & Poor's Corporation.
** The Lipper Balanced Funds Index is an equal-weighted performance index,
adjusted for capital-gains distributions and income dividends, of the largest
qualifying funds in this investment objective, and is compiled by Lipper
Analytical Services Inc.
21
<PAGE>
<PAGE>
WARBURG PINCUS CAPITAL APPRECIATION FUND
STATEMENT OF NET ASSETS
October 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
--------- ------------
<S> <C> <C>
COMMON STOCK (92.5%)
Aerospace & Defense (3.5%)
Loral Space & Communications, Ltd. 'D' 893,300 $ 18,759,300
Raytheon Co. 50,000 2,712,500
------------
21,471,800
------------
Agriculture (1.2%)
Monsanto Co. 180,000 7,695,000
------------
Banks & Savings & Loans (11.6%)
BankAmerica Corp. 170,000 12,155,000
Bank of New York Co., Inc. 143,200 6,739,350
Barnett Banks, Inc. 80,000 5,520,000
Citicorp 69,000 8,629,312
CoreStates Financial Corp. 68,400 4,976,100
Credit Suisse Group ADR 364,400 12,868,422
Eagle Financial Corp. 55,000 2,763,750
Northern Trust Corp. 80,000 4,680,000
PNC Bank Corp. 179,900 8,545,250
Swiss Bank Corp. ADR 200,000 5,392,400
------------
72,269,584
------------
Building & Building Materials (1.9%)
USG Corp. 'D' 250,000 11,796,875
------------
Business Services (0.1%)
Butler International, Inc. 'D' 20,000 373,750
------------
Capital Equipment (0.6%)
AlliedSignal, Inc. 110,000 3,960,000
------------
Chemicals (2.1%)
Avery-Dennison Corp. 240,000 9,555,000
Ciba Specialty Chemicals Holding, Inc. ADR 'D' 19,730 971,387
Solutia, Inc. 115,000 2,544,375
------------
13,070,762
------------
Communications & Media (4.2%)
U.S. West, Inc. -- Media Group 'D' 738,800 18,654,700
Viacom, Inc. Class B 240,000 7,260,000
------------
25,914,700
------------
</TABLE>
See Accompanying Notes to Financial Statements.
22
<PAGE>
<PAGE>
WARBURG PINCUS CAPITAL APPRECIATION FUND
STATEMENT OF NET ASSETS (CONT'D)
October 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
--------- ------------
<S> <C> <C>
COMMON STOCK (CONT'D)
Computers (4.7%)
Automatic Data Processing, Inc. 150,000 $ 7,668,750
COMPAQ Computer, Corp. 100,000 6,375,000
International Business Machines Corp. 155,000 15,199,687
------------
29,243,437
------------
Conglomerates (3.1%)
Oglebay Norton Co. 184,000 5,704,000
United Technologies Corp. 80,000 5,600,000
Westinghouse Electric Corp. 300,000 7,931,250
------------
19,235,250
------------
Consumer Non-Durables (1.7%)
Unilever NV 200,000 10,675,000
------------
Electronics (2.7%)
Intel Corp. 70,000 5,390,000
NextLevel Systems, Inc. 350,000 4,725,000
Texas Instruments, Inc. 61,200 6,529,275
------------
16,644,275
------------
Energy (7.6%)
Amoco Corp. 85,000 7,793,437
Chevron Corp. 110,000 9,123,125
Enserch Exploration, Inc. 1,000,100 9,000,900
Gulf Canada Resources, Ltd. 'D' 800,000 6,700,000
Pioneer Natural Resources Co. 283,000 11,337,688
San Juan Basin Royalty Trust 340,000 3,378,750
------------
47,333,900
------------
</TABLE>
See Accompanying Notes to Financial Statements.
23
<PAGE>
<PAGE>
WARBURG PINCUS CAPITAL APPRECIATION FUND
STATEMENT OF NET ASSETS (CONT'D)
October 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
--------- ------------
<S> <C> <C>
COMMON STOCK (CONT'D)
Financial Services (17.7%)
Ace, Ltd. 50,000 $ 4,646,875
American Express Co. 70,000 5,460,000
Berkshire Hathaway, Inc. Class A 'D' 180 7,866,000
Berkshire Hathaway, Inc. Class B 'D' 3,320 4,877,080
Edwards (A.G.), Inc. 134,300 4,406,719
Financial Security Assurance Holdings, Ltd. 98,100 4,267,350
Freddie Mac 200,000 7,575,000
Household International, Inc. 35,000 3,963,750
Legg Mason, Inc. 110,000 5,396,875
Leucadia National Corp. 210,000 7,271,250
Liberty Financial Companies, Inc. 100,000 5,200,000
Morgan Stanley Dean Witter Discover & Co. 175,300 8,589,700
Nationwide Financial Services, Inc. 140,000 4,261,250
Provident Companies, Inc. 175,800 5,867,325
ReliaStar Financial Corp. 340,000 12,707,500
SLM Holding Corp. 64,800 9,096,300
Travelers Group, Inc. 120,000 8,400,000
------------
109,852,974
------------
Food, Beverages & Tobacco (0.4%)
Smucker (J.M.) Co. Class A 48,600 1,321,312
Smucker (J.M.) Co. Class B 50,000 1,262,500
------------
2,583,812
------------
Healthcare (1.1%)
Becton, Dickinson & Co. 150,000 6,909,375
------------
Industrial Mfg. & Processing (2.0%)
Material Sciences Corp. 125,000 1,859,375
Schnitzer Steel Industries, Inc. Class A 147,500 4,295,937
Silgan Holdings, Inc. 'D' 180,000 6,345,000
------------
12,500,312
------------
Lodging & Restaurants (3.2%)
La Quinta Inns, Inc. 691,500 12,360,563
McDonald's Corp. 171,500 7,685,344
------------
20,045,907
------------
</TABLE>
See Accompanying Notes to Financial Statements.
24
<PAGE>
<PAGE>
WARBURG PINCUS CAPITAL APPRECIATION FUND
STATEMENT OF NET ASSETS (CONT'D)
October 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
--------- ------------
<S> <C> <C>
COMMON STOCK (CONT'D)
Oil Services (4.3%)
Nabors Industries, Inc. 'D' 50,000 $ 2,056,250
Noble Drilling Corp. 'D' 340,000 12,091,250
Reading & Bates Corp. 'D' 190,000 8,051,250
Smith International, Inc. 'D' 40,000 3,050,000
Transmontaigne Oil Co. 'D' 75,000 1,293,750
------------
26,542,500
------------
Pharmaceuticals (3.9%)
Bristol-Myers Squibb Corp. 88,200 7,739,550
SmithKline Beecham PLC ADR 100,000 4,762,500
Warner Lambert Co. 79,700 11,412,044
------------
23,914,094
------------
Publishing (1.8%)
Harcourt General, Inc. 120,000 6,007,500
Wiley (John) & Sons, Inc. Class A 111,800 4,905,225
------------
10,912,725
------------
Real Estate (1.9%)
Crescent Real Estate Equities Co. (REIT) 196,800 7,084,800
Security Capital Group, Inc. Class B (REIT) 65,700 2,102,400
Vornado Realty Trust (REIT) 61,600 2,748,900
------------
11,936,100
------------
Retail (4.8%)
AnnTaylor Stores Corp. 'D' 400,000 5,725,000
CVS Corp. 140,000 8,583,750
Home Depot, Inc. 118,350 6,583,219
Rite Aid Corp. 150,000 8,906,250
------------
29,798,219
------------
Telecommunications & Equipment (2.0%)
BCE, Inc. 411,700 11,501,869
Southern New England Telecommunications Corp. 20,000 857,500
Tellabs, Inc. 'D' 5,000 270,000
------------
12,629,369
------------
</TABLE>
See Accompanying Notes to Financial Statements.
25
<PAGE>
<PAGE>
WARBURG PINCUS CAPITAL APPRECIATION FUND
STATEMENT OF NET ASSETS (CONT'D)
October 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
--------- ------------
<S> <C> <C>
COMMON STOCK (CONT'D)
Transportation (4.4%)
Continental Airlines, Inc. Class B 90,000 $ 3,892,500
CSX Corp. 70,000 3,828,125
Kansas City Southern Industries, Inc. 305,400 9,314,700
USAir Group, Inc. 'D' 225,000 10,546,875
------------
27,582,200
------------
TOTAL COMMON STOCK (Cost $484,401,374) 574,891,920
------------
PREFERRED STOCK (0.0%)
Healthcare (0.0%)
Fresenius National Medical, Inc. Class D 'D' (Cost
$18,553) 90,000 5,400
------------
<CAPTION>
PAR
(000)
---------
<S> <C>
SHORT-TERM INVESTMENTS (7.4%)
Repurchase agreement with Goldman, Sachs & Co. dated
10/31/97 at 5.65% to be repurchased at $45,782,546 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 $46,705,219.) (Cost
$45,761,000) $45,761 45,761,000
------------
TOTAL INVESTMENTS AT VALUE (99.8%) (Cost $530,180,927*) 620,658,320
OTHER ASSETS IN EXCESS OF LIABILITIES (0.2%) 1,033,872
------------
NET ASSETS (100.0%) (applicable to 27,842,249 Common Shares and
1,662,231 Advisor Shares) $621,692,192
------------
------------
NET ASSET VALUE, offering and redemption price per Common
Share ($587,090,774 [div] 27,842,249) $21.09
------
------
NET ASSET VALUE, offering and redemption price per Advisor Share
($34,601,418 [div] 1,662,231) $20.82
------
------
</TABLE>
INVESTMENT ABBREVIATIONS
ADR = American Depository Receipt
REIT = Real Estate Investment Trust
- --------------------------------------------------------------------------------
'D' Non-income producing security.
* Cost for federal income tax purposes is $531,935,501.
See Accompanying Notes to Financial Statements.
26
<PAGE>
<PAGE>
WARBURG PINCUS EMERGING GROWTH FUND
STATEMENT OF NET ASSETS
October 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
------------ --------------
<S> <C> <C>
COMMON STOCK (90.7%)
Aerospace & Defense (2.8%)
Gulfstream Aerospace Corp. 'D' 720,500 $ 20,894,500
Loral Space & Communications, Ltd. 'D' 828,500 17,398,500
Tracor, Inc. 'D' 669,000 17,895,750
--------------
56,188,750
--------------
Banks & Savings & Loans (2.2%)
Bank United Corp. Class A 437,900 18,391,800
Cullen/Frost Bankers, Inc. 344,800 17,412,400
First Security Corp. 259,550 7,526,950
--------------
43,331,150
--------------
Business Services (10.2%)
Corporate Express, Inc. 'D' 1,036,100 15,217,719
New York Restaurant Group, Inc. 'D' # 336,786 3,249,985
Norrell Corp. 456,588 13,298,125
On Assignment, Inc. 'D' 733,400 17,876,625
Outdoor Systems, Inc. 'D' 862,550 26,523,412
QuickResponse Services, Inc. 'D' 470,767 15,299,927
Robert Half International, Inc. 'D' 976,500 39,975,469
Staffing Resources, Inc. 'D' # 91,000 1,001,000
Sterling Commerce, Inc. 'D' 516,000 17,124,750
Stewart Enterprises, Inc. 377,000 15,645,500
SunGard Data Systems, Inc. 'D' 787,200 18,597,600
WPP Group PLC ADR 365,000 16,835,625
--------------
200,645,737
--------------
Communications & Media (3.2%)
Central European Media Enterprises, Ltd. Class A 'D' 760,753 22,252,025
General Cable Corp. 576,000 18,648,000
Harte-Hanks Communications, Inc. 547,500 19,025,625
Network Event Theater, Inc. 'D' 761,905 3,904,763
--------------
63,830,413
--------------
Computers (8.3%)
Adobe Systems, Inc. 357,800 17,084,950
BMC Software, Inc. 'D' 774,000 46,730,250
Cambridge Technology Partners of Massachusetts, Inc. 'D' 488,000 17,812,000
Harbinger Corp. 'D' 458,250 13,632,937
National Instruments Corp. 'D' 538,145 24,485,597
PeopleSoft, Inc. 'D' 706,000 44,389,750
Siebel Systems, Inc. 'D' 1,193 48,149
--------------
164,183,633
--------------
</TABLE>
See Accompanying Notes to Financial Statements.
27
<PAGE>
<PAGE>
WARBURG PINCUS EMERGING GROWTH FUND
STATEMENT OF NET ASSETS (CONT'D)
October 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
------------ --------------
<S> <C> <C>
COMMON STOCK (CONT'D)
Consumer Non-Durables (2.4%)
Central Garden & Pet Co. 'D' 789,900 $ 20,734,875
Hughes Supply, Inc. 246,300 8,589,713
Jones Apparel Group, Inc. 'D' 355,000 18,060,625
--------------
47,385,213
--------------
Consumer Services (1.9%)
Budget Group, Inc. 'D' 135,000 4,725,000
DeVRY, Inc. 'D' 628,948 16,588,503
ITT Educational Services, Inc. 'D' 690,450 16,657,106
--------------
37,970,609
--------------
Electronics (9.3%)
Altera Corp. 'D' 329,900 14,639,312
Burr-Brown Corp. 'D' 585,665 17,716,366
KLA-Tencor Corp. 'D' 521,400 22,909,012
Maxim Integrated Products, Inc. 'D' 875,500 58,001,875
Microchip Technology, Inc. 'D' 598,150 23,851,231
Solectron Corp. 'D' 379,000 14,875,750
Vitesse Semiconductor Corp. 'D' 318,700 13,823,612
Xilinx, Inc. 'D' 489,500 16,704,187
--------------
182,521,345
--------------
Energy (3.3%)
Brown (Tom), Inc. 'D' 682,611 16,894,622
KCS Energy, Inc. 829,700 21,831,481
Meridian Resource Corp. 'D' 786,254 10,270,443
United Meridian Corp. Series A 'D' 450,000 15,271,875
--------------
64,268,421
--------------
Environmental Services (2.4%)
Allied Waste Industries, Inc. 'D' 922,403 18,793,961
USA Waste Services, Inc. 'D' 786,106 29,085,922
--------------
47,879,883
--------------
</TABLE>
See Accompanying Notes to Financial Statements.
28
<PAGE>
<PAGE>
WARBURG PINCUS EMERGING GROWTH FUND
STATEMENT OF NET ASSETS (CONT'D)
October 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
------------ --------------
<S> <C> <C>
COMMON STOCK (CONT'D)
Financial Services (9.1%)
Allmerica Financial Corp. 506,090 $ 23,722,969
City National Corp. 604,500 18,172,781
FINOVA Group, Inc. 285,800 12,557,338
Green Tree Financial Corp. 395,000 16,639,375
NAC Re Corp. 273,000 12,148,500
Nationwide Financial Services, Inc. 616,700 18,770,805
Penncorp Financial Group, Inc. 353,900 11,523,869
Price (T. Rowe) Associates, Inc. 280,500 18,583,125
SunAmerica, Inc. 200,000 7,187,500
Transaction Systems Architects, Inc. Class A 'D' 1,011,600 39,578,850
--------------
178,885,112
--------------
Food, Beverages & Tobacco (1.7%)
Consolidated Cigar Holdings, Inc. 'D' 669,200 26,266,100
Swisher International Group, Inc. 'D' 359,400 7,120,613
--------------
33,386,713
--------------
Healthcare (4.0%)
AmeriSource Health Corp. Class A 'D' 304,300 18,067,813
InControl, Inc. 'D' 1,098,560 8,513,840
Mid Atlantic Medical Services, Inc. 'D' 1,233,000 17,955,563
NovaCare, Inc. 'D' 1,408,400 18,397,225
Oxford Health Plans, Inc. 'D' 252,500 6,517,656
Trex Medical Corp. 'D' 40,000 515,000
Universal Health Services, Inc. 'D' 202,000 8,900,625
--------------
78,867,722
--------------
Leisure & Entertainment (0.4%)
N2K, Inc. 'D'# 108,333 2,242,498
Radical Entertainment Holdings, Inc. 'D'# 500,000 2,500,000
Mirage Resorts, Inc. 'D' 100,000 2,500,000
--------------
7,242,498
--------------
Lodging & Restaurants (1.4%)
CKE Restaurants, Inc. 250,000 9,984,375
Doubletree Corp. 'D' 428,976 17,856,126
--------------
27,840,501
--------------
Office Equipment & Supplies (2.3%)
Herman Miller, Inc. 573,800 28,044,475
U.S. Office Products Co. 'D' 525,000 16,406,250
--------------
44,450,725
--------------
</TABLE>
See Accompanying Notes to Financial Statements.
29
<PAGE>
<PAGE>
WARBURG PINCUS EMERGING GROWTH FUND
STATEMENT OF NET ASSETS (CONT'D)
October 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
------------ --------------
<S> <C> <C>
COMMON STOCK (CONT'D)
Oil Services (6.3%)
Global Industries, Ltd. 'D' 944,600 $ 19,010,075
Nabors Industries, Inc. 'D' 755,000 31,049,375
Petroleum Geo Services ADR 'D' 545,069 37,746,028
Pride International, Inc. 'D' 1,100,100 36,303,300
--------------
124,108,778
--------------
Pharmaceuticals (3.1%)
Cardinal Health, Inc. 250,500 18,599,625
Cell Genesys, Inc. 'D' 0 4
Elan Corp. PLC ADR 'D' 330,000 16,458,750
Gilead Sciences, Inc. 'D' 411,565 14,044,656
Watson Pharmaceuticals, Inc. 'D' 377,000 11,969,750
--------------
61,072,785
--------------
Publishing (1.1%)
Petersen Companies, Inc. Class A 'D' 554,200 10,945,450
Wiley (John) & Sons, Inc. Class A 258,300 11,332,913
--------------
22,278,363
--------------
Real Estate (3.2%)
CarrAmerica Realty Corp. 581,400 17,332,988
NHP, Inc. 'D' 779,002 22,006,807
Security Capital Industrial Trust (REIT) 281,800 6,921,713
Security Capital Pacific Trust (REIT) 749,942 16,779,952
--------------
63,041,460
--------------
Retail (7.1%)
Barnes & Noble, Inc. 'D' 480,300 12,277,669
Borders Group, Inc. 'D' 1,259,000 32,655,313
CompUSA, Inc. 'D' 476,000 15,589,000
Family Dollar Stores, Inc. 858,750 20,180,625
Payless ShoeSource, Inc. 'D' 389,900 21,736,925
Proffitt's, Inc. 'D' 70,000 2,008,125
Staples, Inc. 'D' 755,000 19,818,750
Williams-Sonoma, Inc. 'D' 397,500 15,949,688
--------------
140,216,095
--------------
</TABLE>
See Accompanying Notes to Financial Statements.
30
<PAGE>
<PAGE>
WARBURG PINCUS EMERGING GROWTH FUND
STATEMENT OF NET ASSETS (CONT'D)
October 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
------------ --------------
<S> <C> <C>
COMMON STOCK (CONT'D)
Telecommunications & Equipment (3.1%)
Essex International, Inc. 'D' 437,900 $ 14,505,438
McLeodUSA, Inc. 'D' 657,200 24,398,550
Nexus Telecommunication Systems, Ltd. 'D'# 375,000 2,250,000
Paging Network, Inc. 'D' 1,670,800 20,676,150
--------------
61,830,138
--------------
Transportation (0.9%)
Mark VII, Inc. 'D' 550,069 16,983,380
--------------
Utilities-Gas (1.0%)
Williams Cos., Inc. 400,000 20,375,000
--------------
TOTAL COMMON STOCK (Cost $1,320,284,925) 1,788,784,424
--------------
PREFERRED STOCK (0.2%)
Computers (0.1%)
Focal, Inc. Series E 'D'# 1,149,425 2,000,000
--------------
Consumer Services (0.1%)
Opal Concepts, Inc. Series B 'D'# 792,603 1,999,999
--------------
TOTAL PREFERRED STOCK (Cost $4,000,001) 3,999,999
--------------
WARRANTS (0.0%)
Industrial Mfg. & Processing
Stratasys, Inc. 11/03/98 'D' # 21,428 0
--------------
Pharmaceuticals
Cell Genesys 06/28/98 'D' 80,850 0
--------------
Real Estate
Security Capital Group, Inc. 09/18/98 REIT 'D' 44,917 216,163
--------------
TOTAL WARRANTS (Cost $0) 216,163
--------------
</TABLE>
See Accompanying Notes to Financial Statements.
31
<PAGE>
<PAGE>
WARBURG PINCUS EMERGING GROWTH FUND
STATEMENT OF NET ASSETS (CONT'D)
October 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PAR
(000) VALUE
------------ --------------
<S> <C> <C>
SHORT-TERM INVESTMENTS (10.3%)
Repurchase agreement with Goldman, Sachs & Co. dated
10/31/97 at 5.65% to be repurchased at $203,901,959 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
$208,011,274.) (Cost $203,806,000) $203,806 $ 203,806,000
--------------
TOTAL INVESTMENTS AT VALUE (101.2%) (Cost $1,528,090,926*) 1,996,806,586
LIABILITIES IN EXCESS OF OTHER ASSETS (1.2%) (23,989,795)
--------------
NET ASSETS (100.0%) (applicable to 38,213,442 Common Shares and
11,880,560 Advisor Shares) $1,972,816,791
--------------
--------------
NET ASSET VALUE, offering and redemption price per Common Share
($1,515,384,691 [div] 38,213,442) $39.66
------
------
NET ASSET VALUE, offering and redemption price per Advisor Share
($457,432,100 [div] 11,880,560) $38.50
------
------
</TABLE>
INVESTMENT ABBREVIATIONS
ADR = American Depository Receipt
REIT = Real Estate Investment Trust
- --------------------------------------------------------------------------------
'D' Non-income producing security.
# Restricted security.
* Cost for federal income tax purposes is $1,528,785,343.
See Accompanying Notes to Financial Statements.
32
<PAGE>
<PAGE>
WARBURG PINCUS POST-VENTURE CAPITAL FUND
SCHEDULE OF INVESTMENTS
October 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
--------- ------------
<S> <C> <C>
COMMON STOCK (97.2%)
Aerospace & Defense (2.2%)
Gulfstream Aerospace Corp. 'D' 43,700 $ 1,267,300
Loral Space & Communications, Ltd. 'D' 52,000 1,092,000
------------
2,359,300
------------
Business Services (9.0%)
Boron, LePore & Associates, Inc. 'D' 25,400 619,125
Corporate Express, Inc. 'D' 63,800 937,062
New York Restaurant Group, Inc. 'D'# 77,720 749,998
Outdoor Systems, Inc. 'D' 63,900 1,964,925
Paraxel International Corp. 'D' 21,300 769,463
QuickResponse Services, Inc. 'D' 31,800 1,033,500
Robert Half International, Inc. 'D' 7,700 315,219
Staffing Resources, Inc. 'D'# 4,000 44,000
Technology Solutions Co. 'D' 35,600 1,121,400
Universal Outdoor Holdings, Inc. 'D' 24,200 1,022,450
Wilmar Industries, Inc. 'D' 42,200 1,107,750
------------
9,684,892
------------
Communications & Media (0.7%)
Central European Media Enterprises, Ltd. Class A 'D' 25,000 731,250
------------
Computers (15.4%)
Adobe Systems, Inc. 20,200 964,550
BMC Software, Inc. 'D' 43,300 2,614,237
Cambridge Technology Partners of Massachusetts, Inc. 'D' 38,600 1,408,900
Check Point Software Technologies, Ltd. 'D' 10,000 426,250
Computer Associates International, Inc. 15,100 1,125,894
Hyperion Software Corp. 'D' 43,300 1,650,812
JDA Software Group, Inc. 'D' 30,000 937,500
Micrografx, Inc. 'D' 14,800 120,250
PeopleSoft, Inc. 'D' 47,000 2,955,125
PLATINUM technology, Inc. 'D' 54,600 1,324,050
QuadraMed Corp. 'D' 23,300 547,550
Siebel Systems, Inc. 'D' 67 2,706
Tecnomatix Technologies, Ltd. 'D' 49,700 1,534,487
Teradyne, Inc. 'D' 25,000 935,937
------------
16,548,248
------------
Consumer Durables (0.4%)
Aftermarket Technology Corp. 'D' 19,200 388,800
------------
Consumer Non-Durables (2.4%)
Central Garden & Pet Co. 'D' 53,900 1,414,875
Jones Apparel Group, Inc. 'D' 22,000 1,119,250
------------
2,534,125
------------
</TABLE>
See Accompanying Notes to Financial Statements.
33
<PAGE>
<PAGE>
WARBURG PINCUS POST-VENTURE CAPITAL FUND
SCHEDULE OF INVESTMENTS (CONT'D)
October 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
--------- ------------
<S> <C> <C>
COMMON STOCK (CONT'D)
Electronics (15.7%)
Aavid Thermal Technologies 'D' 16,200 $ 481,950
Altera Corp. 'D' 25,000 1,109,375
Avant! Corp. 'D' 40,800 1,071,000
Etec Systems, Inc. 'D' 23,000 1,026,375
KLA-Tencor Corp. 'D' 25,000 1,098,437
Linear Technology Corp. 32,600 2,049,725
Maxim Integrated Products, Inc. 'D' 45,100 2,987,875
Microchip Technology, Inc. 'D' 31,000 1,236,125
Solectron Corp. 'D' 42,000 1,648,500
Structural Dynamics Research Corp. 'D' 57,200 1,093,950
Texas Instruments, Inc. 18,000 1,920,375
Vitesse Semiconductor Corp. 'D' 26,200 1,136,425
------------
16,860,112
------------
Energy (6.3%)
Coho Energy, Inc. 'D' 92,600 1,088,050
Forcenergy, Inc. 'D' 61,700 2,012,963
KCS Energy, Inc. 81,600 2,147,100
Stone Energy Corp. 'D' 44,800 1,495,200
------------
6,743,313
------------
Environmental Services (2.9%)
American Disposal Services, Inc. 'D' 33,900 1,194,975
USA Waste Services, Inc. 'D' 52,700 1,949,900
------------
3,144,875
------------
Financial Services (7.2%)
Amvescap PLC ADR 'D' 27,280 1,793,660
ARM Financial Group, Inc. Class A 61,300 1,325,612
Franklin Resources, Inc . 15,900 1,429,012
Price (T. Rowe) Associates, Inc. 22,200 1,470,750
Transaction Systems Architects, Inc. Class A 'D' 44,700 1,748,887
------------
7,767,921
------------
Healthcare (4.4%)
American Oncology Resources, Inc. 'D' 73,100 1,069,087
Gulf South Medical Supply, Inc. 'D' 25,700 848,100
Heartport, Inc. 'D' 6,100 153,262
NovaCare, Inc. 'D' 81,800 1,068,513
Quorum Health Group, Inc. 'D' 20,000 485,000
United Healthcare Corp. 22,600 1,046,663
------------
4,670,625
------------
</TABLE>
See Accompanying Notes to Financial Statements.
34
<PAGE>
<PAGE>
WARBURG PINCUS POST-VENTURE CAPITAL FUND
SCHEDULE OF INVESTMENTS (CONT'D)
October 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
--------- ------------
<S> <C> <C>
COMMON STOCK (CONT'D)
Leisure & Entertainment (3.4%)
N2K, Inc. 'D'# 75,000 $ 1,578,750
Premier Parks, Inc. 'D' 51,100 2,044,000
------------
3,622,750
------------
Metals & Mining (1.2%)
Metals USA, Inc. 'D' 87,300 1,287,675
------------
Oil Services (3.4%)
Petroleum Geo Services ADR 'D' 20,000 1,385,000
Pride International, Inc. 'D' 69,000 2,277,000
------------
3,662,000
------------
Pharmaceuticals (3.5%)
ChiRex, Inc. 'D' 50,500 1,028,938
SangStat Medical Corp. 'D' 39,300 1,223,213
Watson Pharmaceuticals, Inc. 'D' 48,800 1,549,400
------------
3,801,551
------------
Publishing (1.3%)
Petersen Companies, Inc. Class A 'D' 70,000 1,382,500
------------
Retail (6.1%)
Barnes & Noble, Inc. 'D' 20,000 511,250
Borders Group, Inc. 'D' 72,600 1,883,063
Family Dollar Stores, Inc. 53,100 1,247,850
Rite Aid Corp. 29,750 1,766,406
Staples, Inc. 'D' 43,800 1,149,750
------------
6,558,319
------------
Telecommunications & Equipment (10.3%)
Cisco Systems, Inc. 'D' 18,000 1,476,563
Intermedia Communications of Florida, Inc. 'D' 31,700 1,438,388
McLeodUSA, Inc. Class A 'D' 67,700 2,513,363
Paging Network, Inc. 'D' 112,100 1,387,238
Teledata Communications, Ltd. 'D' 36,100 1,119,100
Tellabs, Inc. 'D' 21,400 1,155,600
WorldCom, Inc. 'D' 57,765 1,942,348
------------
11,032,600
------------
Transportation (1.4%)
Coach USA, Inc. 'D' 49,300 1,466,675
------------
TOTAL COMMON STOCK (Cost $85,296,757) 104,247,531
------------
</TABLE>
See Accompanying Notes to Financial Statements.
35
<PAGE>
<PAGE>
WARBURG PINCUS POST-VENTURE CAPITAL FUND
SCHEDULE OF INVESTMENTS (CONT'D)
October 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PAR
MATURITY (000) VALUE
--------- ------------ -----
<S> <C> <C> <C>
UNITED STATES TREASURY OBLIGATIONS (1.4%)
U.S. Treasury Bills (0.8%)**
U.S. Treasury Bills 5.000% 12/04/97 $307 $ 305,601
U.S. Treasury Bills 4.959% 01/29/98 550 543,261
U.S. Treasury Bills 5.110% 04/16/98 30 29,307
------------
878,169
------------
U.S. Treasury Notes (0.6%)**
U.S. Treasury Notes 5.625% 11/30/98 90 90,037
U.S. Treasury Notes 5.875% 11/15/99 250 251,010
U.S. Treasury Notes 5.875% 11/30/01 260 260,871
------------
601,918
------------
TOTAL UNITED STATES TREASURY OBLIGATIONS (Cost
$1,476,979) 1,480,087
------------
CAPITAL
PRIVATE FUND INVESTMENTS (0.5%) SHARE
--------
Boston Ventures L.P. V 199,139 199,139
New Enterprise Associates VII, L.P. 355,122 355,122
------------
TOTAL PRIVATE FUND INVESTMENTS (Cost $552,473) 554,261
------------
<CAPTION>
PAR
SHORT-TERM INVESTMENTS (0.9%) (000)
--------
<S> <C> <C>
Repurchase agreement with Goldman, Sachs &
Co. dated 10/31/97 at 5.65% to be repurchased
at $926,436 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 $945,107.) (Cost $926,000) $926 926,000
------------
TOTAL INVESTMENTS AT VALUE (100.0%) (Cost
$88,252,209*) $107,207,879
------------
------------
</TABLE>
INVESTMENT ABBREVIATIONS
ADR = American Depository Receipt
- --------------------------------------------------------------------------------
'D' Non-income producing security.
# Restricted security.
* Cost for federal income tax purposes is $88,323,551.
** These securities have been segregated with the Fund's custodian to cover
open capital commitments of $1,440,000 in private fund investments.
See Accompanying Notes to Financial Statements.
36
<PAGE>
<PAGE>
WARBURG PINCUS SMALL COMPANY VALUE FUND
STATEMENT OF NET ASSETS
October 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
---------- ------------
<S> <C> <C>
COMMON STOCK (93.5%)
Aerospace & Defense (1.2%)
Tracor, Inc. 'D' 100,200 $ 2,680,350
------------
Banks & Savings & Loans (4.6%)
Quaker City Bancorp, Inc. 'D' 256,037 5,248,758
Texas Regional Bancshares, Inc. 175,300 4,996,050
------------
10,244,808
------------
Building & Building Materials (0.5%)
Cavalier Homes, Inc. 65,400 641,737
Walter Industries, Inc. 'D' 25,000 500,000
------------
1,141,737
------------
Business Services (2.4%)
Copart, Inc. 'D' 98,900 1,718,387
Thomas Group, Inc. 'D' 340,100 3,656,075
------------
5,374,462
------------
Capital Equipment (6.0%)
Allied Products Corp. 261,550 6,898,381
Avondale Industries, Inc. 'D' 239,800 6,474,600
------------
13,372,981
------------
Communications & Media (2.5%)
General Cable Corp. 173,700 5,623,537
------------
Conglomerates (0.6%)
Oglebay Norton Co. 45,000 1,395,000
------------
Consumer Durables (5.9%)
Citation Corp. 'D' 332,300 5,649,100
La-Z-Boy, Inc. 63,200 2,362,100
Triangle Pacific Corp. 'D' 154,800 5,069,700
------------
13,080,900
------------
Consumer Non-Durables (11.4%)
American Safety Razor Corp. 'D' 325,700 5,374,050
Gibson Greetings, Inc. 'D' 148,200 3,649,425
Home Products International, Inc. 'D' 316,400 3,777,025
Standex International Corp. 171,100 5,988,500
USA Detergents, Inc. 'D' 273,500 2,871,750
Zag Industries, Ltd. 'D' 377,500 3,916,562
------------
25,577,312
------------
Electronics (1.5%)
EA Industries, Inc. 'D' 551,100 3,444,375
------------
</TABLE>
See Accompanying Notes to Financial Statements.
37
<PAGE>
<PAGE>
WARBURG PINCUS SMALL COMPANY VALUE FUND
STATEMENT OF NET ASSETS (CONT'D)
October 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
---------- ------------
<S> <C> <C>
COMMON STOCK (CONT'D)
Energy (6.9%)
Forcenergy Gas Exploration, Inc. 'D' 114,100 $ 3,722,513
Forest Oil Corp. 'D' 318,000 6,002,250
KCS Energy, Inc. 220,000 5,788,750
------------
15,513,513
------------
Engineering & Construction (1.8%)
Gradall Industries, Inc. 'D' 253,300 3,957,813
------------
Financial Services (17.8%)
Commerce Group, Inc. 193,200 6,182,400
Delphi Financial Group Class A 'D' 120,900 4,987,125
Interstate/Johnson Lane, Inc. 56,000 1,512,000
Long Beach Financial Corp. 'D' 181,300 2,266,250
NAC Re Corp. 116,500 5,184,250
National Western Life Insurance Co. Class A 'D' 56,700 5,698,350
PICO Holdings, Inc. 'D' 577,900 3,611,875
Terra Nova (Bermuda) Holdings, Ltd. Class A 266,185 6,887,537
United Companies Financial Corp. 100,900 2,554,031
White River Corp. 'D' 13,700 1,000,100
------------
39,883,918
------------
Food, Beverages & Tobacco (0.5%)
Smucker (J.M.) Co. Class A 39,800 1,082,063
------------
Industrial Mfg. & Processing (2.6%)
Roanoke Electric Steel Corp. 49,200 959,400
Schnitzer Steel Industries, Inc. Class A 166,900 4,860,963
------------
5,820,363
------------
Leisure & Entertainment (1.4%)
SCP Pool Corp. 'D' 128,350 3,080,400
------------
Lodging & Restaurants (1.3%)
Fresh Choice, Inc. 'D' 378,900 1,610,325
Morton's Restaurant Group, Inc. 'D' 57,000 1,232,625
------------
2,842,950
------------
Metals & Mining (2.6%)
Universal Stainless & Alloy Products, Inc. 'D' 388,100 5,918,525
------------
Office Equipment & Supplies (0.5%)
New England Business Service, Inc. 39,500 1,150,438
------------
Paper & Forest Products (0.9%)
Ivex Packaging Corp. 'D' 94,900 2,004,763
------------
</TABLE>
See Accompanying Notes to Financial Statements.
38
<PAGE>
<PAGE>
WARBURG PINCUS SMALL COMPANY VALUE FUND
STATEMENT OF NET ASSETS (CONT'D)
October 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
---------- ------------
<S> <C> <C>
COMMON STOCK (CONT'D)
Real Estate (5.6%)
Equity Inns, Inc. (REIT) 201,900 $ 3,179,925
U.S. Restaurant Properties, Inc. (REIT) 'D' 104,100 2,556,956
Weeks Corp. (REIT) 85,900 2,577,000
Western Water Co. 'D' 298,500 4,179,000
------------
12,492,881
------------
Retail (5.5%)
AnnTaylor Stores Corp. 'D' 202,000 2,891,125
Filene's Basement Corp. 'D' 482,400 3,557,700
Fingerhut Companies, Inc. 239,800 5,305,575
Sotheby's Holdings, Inc. 32,600 611,250
------------
12,365,650
------------
Transportation (9.5%)
Allied Holdings, Inc. 'D' 186,200 3,188,675
Atlas Air, Inc. 'D' 166,600 4,623,150
M.S. Carriers, Inc. 'D' 138,600 3,512,644
MTL, Inc. 'D' 161,200 4,412,850
OMI Corp. 'D' 462,500 5,521,094
------------
21,258,413
------------
TOTAL COMMON STOCK (Cost $178,553,207) 209,307,152
------------
CONVERTIBLE BONDS (0.7%)
<CAPTION>
PAR
(000)
----------
<S> <C> <C>
Electronics (0.7%)
EA Industries, Inc. Series A #
6.00%, 04/30/99 (NR, NR) + (Cost $1,500,000) $1,500 1,500,000
------------
SHORT-TERM INVESTMENTS (3.2%)
Repurchase agreement with Goldman, Sachs & Co. dated
10/31/97 at 5.65% to be repurchased at $7,268,421 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
$7,414,904.) (Cost $7,265,000) 7,265 7,265,000
------------
TOTAL INVESTMENTS AT VALUE (97.4%) (Cost $187,318,207*) 218,072,152
OTHER ASSETS IN EXCESS OF LIABILITIES (2.6%) 5,857,681
------------
NET ASSETS (100.0%) (applicable to 11,919,344 Common Shares and 13,658
Advisor Shares) $223,929,833
------------
------------
NET ASSET VALUE, offering and redemption price per Common
Share ($223,675,115 [div] 11,919,344) $18.77
------
------
NET ASSET VALUE, offering and redemption price per Advisor
Share ($254,718 [div] 13,658) $18.65
------
------
</TABLE>
INVESTMENT ABBREVIATIONS
ADR = American Depository Receipt
REIT = Real Estate Investment Trust
- --------------------------------------------------------------------------------
'D' Non-income producing security.
# Restricted security.
* Cost for federal income tax purposes is $187,460,809.
+ Credit ratings given by Moody's Investors Service, Inc. and Standard &
Poor's Rating Group are unaudited.
See Accompanying Notes to Financial Statements.
39
<PAGE>
<PAGE>
WARBURG PINCUS STRATEGIC VALUE FUND
SCHEDULE OF INVESTMENTS
October 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
--------- -----------
<S> <C> <C>
COMMON STOCK (92.5%)
Agriculture (4.3%)
Archer-Daniels-Midland Co. 21,000 $ 467,250
-----------
Banks & Savings & Loans (6.0%)
Chase Manhattan Corp. 3,500 403,812
First Chicago NBD Corp. 3,500 254,625
-----------
658,437
-----------
Business Services (3.3%)
Computer Sciences Corp. 'D' 5,000 354,687
-----------
Capital Equipment (2.6%)
Allied-Signal, Inc. 8,000 288,000
-----------
Communications & Media (2.2%)
At Home Corp. Series A 'D' 10,000 241,250
-----------
Computers (25.2%)
Accelr8 Technology Corp. 'D' 13,000 258,375
Adobe Systems, Inc. 3,500 167,125
Chromatics Color Science Intl., Inc. 'D' 5,000 71,875
Cognicase, Inc. 'D' 15,000 189,375
Comdisco,Inc. 11,000 347,187
Computer Horizons Corp. 'D' 13,000 394,875
Data Dimensions, Inc. 'D' 17,000 459,000
Information Analysis, Inc. 'D' 15,000 240,000
Intuit, Inc. 'D' 5,000 163,125
Keane, Inc. 'D' 8,000 237,000
Peritus Software Service 'D' 12,000 222,000
Siebel Systems, Inc. 'D' 11 471
-----------
2,750,408
-----------
Consumer Services (2.0%)
Avis Rent A Car, Inc. 'D' 8,000 219,500
-----------
Electronics (3.5%)
AMP, Inc. 'D' 8,500 382,500
-----------
Financial Services (7.0%)
Crawford & Co. Class B 15,000 307,500
Fidelity National Financial, Inc. 21,000 456,750
-----------
764,250
-----------
Healthcare (5.7%)
ALZA Corp. 'D' 12,000 312,750
Healthcare Recoveries, Inc. 'D' 8,500 157,250
Technical Chemicals and Products, Inc. 'D' 8,500 150,344
-----------
620,344
-----------
Industrial Mfg. & Processing (3.5%)
Goodrich (B.F.) Co. 8,500 378,781
-----------
</TABLE>
See Accompanying Notes to Financial Statements.
40
<PAGE>
<PAGE>
WARBURG PINCUS STRATEGIC VALUE FUND
SCHEDULE OF INVESTMENTS (CONT'D)
October 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
--------- -----------
<S> <C> <C>
COMMON STOCK (CONT'D)
Lodging & Restaurants (6.1%)
CKE Restaurants 'D' 11,000 $ 439,313
Shells Seafood Restaurants, Inc. 'D' 11,000 116,875
WSMP, Inc. 'D' 5,500 115,500
-----------
671,688
-----------
Oil Services (1.6%)
Halliburton Co. 3,000 178,875
-----------
Pharmaceuticals (8.0%)
Columbia Laboratories, Inc. 'D' 23,000 368,000
Forest Laboratories, Inc. 'D' 8,000 370,000
Owens & Minor, Inc. Holding Co. 'D' 10,000 140,000
-----------
878,000
-----------
Retail (2.4%)
CUC International, Inc. 'D' 9,000 265,500
-----------
Telecommunications & Equipment (7.8%)
DSC Communication Corp. 'D' 16,000 390,000
GTE Corp. 'D' 11,000 466,813
-----------
856,813
-----------
Utilities-Electric (1.3%)
Niagara Mohawk Power Corp. 'D' 15,000 145,313
-----------
TOTAL COMMON STOCK (Cost $9,502,312) 10,121,596
-----------
<CAPTION>
PAR
(000)
---------
<S> <C> <C>
SHORT-TERM INVESTMENTS (7.5%)
Repurchase agreement with Goldman, Sachs & Co. dated
10/31/97 at 5.65% to be repurchased at $820,386 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 $836,920.) (Cost $820,000) $ 820 820,000
-----------
TOTAL INVESTMENTS AT VALUE (100.0%) (Cost $10,322,312*) $10,941,596
-----------
-----------
</TABLE>
INVESTMENT ABBREVIATIONS
ADR = American Depository Receipt
- --------------------------------------------------------------------------------
'D' Non-income producing security.
* Cost for federal income tax purposes is $10,322,478.
See Accompanying Notes to Financial Statements.
41
<PAGE>
<PAGE>
WARBURG PINCUS GROWTH & INCOME FUND
STATEMENT OF NET ASSETS
October 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
--------- ------------
<S> <C> <C>
COMMON STOCK (88.2%)
Aerospace & Defense (4.9%)
Gulfstream Aerospace Corp. 'D' 297,600 $ 8,630,400
Litton Industries, Inc. 'D' 142,600 7,236,950
Lockheed Martin Corp. 87,000 8,270,437
Raytheon Co. 180,000 9,765,000
------------
33,902,787
------------
Banks & Savings & Loans (2.9%)
Bank of New York Co., Inc. 105,000 4,941,562
Citicorp 121,300 15,170,081
------------
20,111,643
------------
Building & Building Materials (1.8%)
USG Corp. 'D' 265,100 12,509,406
------------
Business Services (0.8%)
Block (H & R), Inc. 75,000 2,775,000
Deluxe Corp. 85,000 2,783,750
------------
5,558,750
------------
Capital Equipment (5.5%)
AlliedSignal, Inc. 167,900 6,044,400
American Standard Companies 'D' 167,000 5,970,250
Cummins Engine Co., Inc. 91,200 5,557,500
Dresser Industries, Inc. 65,000 2,738,125
Emerson Electric Co. 87,300 4,577,794
Ingersoll-Rand Co. 111,150 4,327,903
ITT Industries, Inc. 284,700 8,985,844
------------
38,201,816
------------
Chemicals (3.4%)
Ferro Corp. 100,000 3,743,750
Olin Corp. 151,500 6,883,781
Rhone-Poulenc SA ADR 77,286 3,265,333
Union Carbide Corp. 219,800 10,042,112
------------
23,934,976
------------
Computers (6.8%)
Automatic Data Processing, Inc. 258,700 13,226,037
Hewlett-Packard Co. 109,500 6,754,781
International Business Machines Corp. 163,000 15,984,187
Seagate Technology, Inc. 'D' 251,300 6,816,512
Sun Microsystems, Inc. 'D' 140,000 4,795,000
------------
47,576,517
------------
Conglomerates (2.3%)
Harsco Corp. 149,600 6,208,400
United Technologies Corp. 137,800 9,646,000
------------
15,854,400
------------
</TABLE>
See Accompanying Notes to Financial Statements.
42
<PAGE>
<PAGE>
WARBURG PINCUS GROWTH & INCOME FUND
STATEMENT OF NET ASSETS (CONT'D)
October 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
--------- ------------
<S> <C> <C>
COMMON STOCK (CONT'D)
Consumer Durables (5.5%)
Chrysler Corp. 572,500 $ 20,180,625
Ford Motor Co. 215,300 9,405,919
Maytag Corp. 120,165 4,010,507
Volvo AB ADR 175,400 4,560,400
------------
38,157,451
------------
Consumer Non-Durables (2.4%)
Newell Co. 70,200 2,693,925
Premark International, Inc. 30,000 811,875
RJR Nabisco Holdings Corp. 181,900 5,763,956
Unilever NV 140,000 7,472,500
------------
16,742,256
------------
Electronics (0.5%)
Western Digital Corp. 'D' 122,200 3,658,362
------------
Energy (7.9%)
British Petroleum Co. PLC ADR 250,439 21,976,022
Exxon Corp. 240,000 14,745,000
Mobil Corp. 70,100 5,104,156
Pioneer Natural Resources Co. 105,000 4,206,563
Total SA ADR 165,000 9,157,500
------------
55,189,241
------------
Financial Services (7.3%)
American Express Co. 41,750 3,256,500
Berkley (W.R.) Corp. 120,000 4,935,000
Equitable of Iowa Companies 40,800 2,731,050
Fannie Mae 160,000 7,750,000
Freddie Mac 127,500 4,829,063
General Re Corp. 12,900 2,543,719
Household International, Inc. 38,800 4,394,100
Lehman Brothers Holdings, Inc. 95,000 4,470,938
MBIA, Inc. 115,900 6,925,025
Provident Companies, Inc. 170,000 5,673,750
Terra Nova (Bermuda) Holdings, Ltd. Class A 123,600 3,198,150
------------
50,707,295
------------
Food, Beverages & Tobacco (6.1%)
Anheuser-Busch Companies, Inc. 265,100 10,587,431
PepsiCo, Inc. 154,800 5,698,575
Philip Morris Companies, Inc. 352,000 13,948,000
Ralston Purina Group 42,500 3,814,375
Sara Lee Corp. 97,600 4,989,800
Swedish Match Co. ADR 119,700 3,740,625
------------
42,778,806
------------
</TABLE>
See Accompanying Notes to Financial Statements.
43
<PAGE>
<PAGE>
WARBURG PINCUS GROWTH & INCOME FUND
STATEMENT OF NET ASSETS (CONT'D)
October 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
--------- ------------
<S> <C> <C>
COMMON STOCK (CONT'D)
Healthcare (3.3%)
Baxter International, Inc. 148,400 $ 6,863,500
Foundation Health Systems, Inc. 'D' 94,800 2,725,500
Tenet Healthcare Corp. 'D' 185,000 5,654,063
Trigon Healthcare, Inc. 'D' 95,500 2,333,781
Wellpoint Health Networks, Inc. 'D' 114,100 5,220,075
------------
22,796,919
------------
Industrial Mfg. & Processing (0.4%)
Eaton Corp. 30,200 2,918,075
------------
Leisure & Entertainment (0.8%)
Polaroid Corp. 122,700 5,513,831
------------
Lodging & Restaurants (1.2%)
La Quinta Inns, Inc. 481,800 8,612,175
------------
Metals & Mining (2.2%)
Alumax, Inc. 'D' 292,300 9,499,750
Aluminum Company of America 75,000 5,475,000
------------
14,974,750
------------
Office Equipment & Supplies (0.7%)
Pitney Bowes, Inc. 62,200 4,933,238
------------
Oil Services (4.3%)
Noble Drilling Corp. 'D' 281,000 9,993,063
Reading & Bates Corp. 'D' 124,400 5,271,450
Transocean Offshore, Inc. 154,800 8,359,200
Western Atlas, Inc. 'D' 77,400 6,670,913
------------
30,294,626
------------
Pharmaceuticals (2.7%)
American Home Products Corp. 115,300 8,546,613
Merck & Co., Inc. 117,200 10,460,100
------------
19,006,713
------------
</TABLE>
See Accompanying Notes to Financial Statements.
44
<PAGE>
<PAGE>
WARBURG PINCUS GROWTH & INCOME FUND
STATEMENT OF NET ASSETS (CONT'D)
October 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
--------- ------------
<S> <C> <C>
COMMON STOCK (CONT'D)
Retail (6.7%)
Carson Pirie Scott & Co. 'D' 110,000 $ 5,300,625
Federated Department Stores, Inc. 'D' 255,000 11,220,000
May Department Stores Co. 95,000 5,118,125
Neiman-Marcus Group, Inc. 'D' 125,000 4,148,438
Payless ShoeSource, Inc. 'D' 125,000 6,968,750
Rite Aid Corp. 47,700 2,832,188
Sotheby's Holdings, Inc. Class A 139,400 2,613,750
Wal-Mart Stores, Inc. 240,000 8,430,000
------------
46,631,876
------------
Telecommunications & Equipment (4.4%)
ALLTEL Corp. 80,000 2,830,000
Ameritech Corp. 92,500 6,012,500
Bell Atlantic Corp. 154,720 12,358,260
SBC Communications, Inc. 150,000 9,543,750
------------
30,744,510
------------
Transportation (1.5%)
Burlington Northern Santa Fe Corp. 47,500 4,512,500
CSX Corp. 110,000 6,015,625
------------
10,528,125
------------
Utilities-Electric (1.9%)
Allegheny Energy, Inc. 75,000 2,118,750
American Electric Power Co., Inc. 95,000 4,488,750
DQE, Inc. 50,000 1,546,875
Entergy Corp. 110,000 2,688,125
Illinova Corp. 100,000 2,225,000
------------
13,067,500
------------
TOTAL COMMON STOCK (Cost $543,145,376) 614,906,044
------------
CONVERTIBLE PREFERRED STOCK (3.9%)
Business Services (0.5%)
Merrill Lynch Series IGL 6.25% (Callable 07/01/01 @
$46.28) 100,000 3,612,500
------------
Financial Services (1.9%)
Allstate Corp. Exchangable Notes 6.76% (Callable 04/15/98
@ $41.50) 269,600 13,429,450
------------
Real Estate (0.9%)
Equity Residential Properties Series G 7.25%
(Callable 09/15/02 @ $25.91) 246,700 6,182,919
------------
Telecommunications & Equipment (0.6%)
AirTouch Communications, Inc. Series B 6.00% (Callable
08/16/99 @ $35.96) 115,000 4,017,813
------------
TOTAL CONVERTIBLE PREFERRED STOCK (Cost $26,288,024) 27,242,682
------------
</TABLE>
See Accompanying Notes to Financial Statements.
45
<PAGE>
<PAGE>
WARBURG PINCUS GROWTH & INCOME FUND
STATEMENT OF NET ASSETS (CONT'D)
October 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PAR
RATE MATURITY (000) VALUE
---- -------- ----- -----
<S> <C> <C> <C> <C>
CORPORATE BOND (0.5%)
Retail (0.5%)
Rite Aid Corp. Convertible Notes
(Callable 09/15/00 @ $102.10)
(Baa2, BBB)+ (Cost $3,232,500) 4.00% 09/15/02 $ 3,000 $ 3,232,500
------------
ZERO COUPON BONDS (0.9%)
Insurance (0.5%)
USF&G Corp. Convertible Notes (Callable
03/03/99 @ $64.08) (Baa3, BBB-)+ 3.21%# 03/03/09 4,900 3,227,875
Retail (0.4%)
Costco Companies, Inc. Convertible
Subordinate Notes
(Putable 08/19/02 @ $59.42)(A3,BBB+)+ 3.40%# 08/19/07 5,300 2,842,125
------------
TOTAL ZERO COUPON BONDS (Cost $6,135,709) 6,070,000
<CAPTION>
------------
SHARES
------
<S> <C>
WARRANTS (0.1%)
Chemicals (0.1%)
Rhone-Poulenc SA ADR 11/05/01 'D'
(Cost $71,754) 32,586 97,757
------------
<CAPTION>
PAR
(000)
----
<S> <C>
SHORT-TERM INVESTMENTS (6.7%)
Repurchase agreement with Goldman, Sachs & Co. dated
10/31/97 at 5.65% to be repurchased at $46,833,040 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
$47,776,885.) (Cost $46,811,000) $46,811 46,811,000
------------
TOTAL INVESTMENTS AT VALUE (100.3%) (Cost
$625,684,363*) 698,359,983
LIABILITIES IN EXCESS OF OTHER ASSETS (0.3%) (2,226,645)
------------
NET ASSETS (100.0%) (applicable to 32,764,946 Common
Shares and 4,739,392 Advisor Shares) $696,133,338
------------
------------
NET ASSET VALUE, offering and redemption price per
Common Share ($608,204,730 [div] 32,764,946) $18.56
------
------
NET ASSET VALUE, offering and redemption price per
Advisor Share ($87,928,608 [div] 4,739,392) $18.55
------
------
</TABLE>
INVESTMENT ABBREVIATIONS
ADR = American Depository Receipt
- --------------------------------------------------------------------------------
'D' Non-income producing security.
+ Credit ratings given by Moody's Investors Service Inc. and Standard & Poor's
Ratings Group are unaudited.
# Rate shown reflects yield to maturity on date of purchase.
* Cost for federal income tax purposes is $626,014,533.
See Accompanying Notes to Financial Statements.
46
<PAGE>
<PAGE>
WARBURG PINCUS BALANCED FUND
STATEMENT OF NET ASSETS
October 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
---------- -----------
<S> <C> <C>
COMMON STOCK (53.5%)
Aerospace & Defense (1.3%)
Loral Space & Communications, Ltd. 'D' 14,500 $ 304,500
Raytheon Co. 1,600 86,800
Tracor, Inc. 'D' 4,400 117,700
-----------
509,000
-----------
Agriculture (0.7%)
Archer-Daniels- Midland Co. 4,500 100,125
Monsanto Co. 3,600 153,900
-----------
254,025
-----------
Banks & Savings & Loans (2.4%)
Bank of New York Co., Inc. 2,400 112,950
Bank United Corp. Class A 1,300 54,600
Chase Manhattan Corp. 800 92,300
Citicorp 800 100,050
First Chicago NBD Corp. 800 58,200
Quaker City Bancorp, Inc. 'D' 8,000 164,000
Texas Regional Bancshares, Inc. 4,350 123,975
Washington Mutual, Inc. 3,150 215,578
-----------
921,653
-----------
Business Services (1.5%)
Computer Sciences Corp. 'D' 1,000 70,937
Copart, Inc. 'D' 3,400 59,075
Corporate Express, Inc. 'D' 3,600 52,875
First Data Corp. 3,000 87,187
Outdoor Systems, Inc. 'D' 2,000 61,500
Robert Half International, Inc. 'D' 3,000 122,812
Sterling Commerce, Inc. 'D' 2,000 66,375
SunGard Data Systems, Inc. 'D' 2,400 56,700
-----------
577,461
-----------
Capital Equipment (1.0%)
Allied Products Corp. 7,350 193,856
AlliedSignal, Inc. 1,500 54,000
Avondale Industries, Inc. 'D' 5,250 141,750
-----------
389,606
-----------
</TABLE>
See Accompanying Notes to Financial Statements.
47
<PAGE>
<PAGE>
WARBURG PINCUS BALANCED FUND
STATEMENT OF NET ASSETS (CONT'D)
October 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
---------- -----------
<S> <C> <C>
COMMON STOCK (CONT'D)
Chemicals (0.8%)
Avery-Dennison Corp. 3,400 $ 135,362
Du Pont (E.I.) De Nemours & Co. 1,300 73,937
Morton International, Inc. 2,000 66,000
Solutia, Inc.'D' 720 15,930
-----------
291,229
-----------
Communications & Media (1.8%)
@Entertainment, Inc. 'D' 5,000 57,500
At Home Corp. Series A 'D' 2,100 50,662
General Cable Corp. 'D' 4,000 129,500
Harte-Hanks Communications, Inc. 4,000 139,000
U.S. West, Inc.-Media Group 'D' 8,100 204,525
Viacom, Inc. Class B 'D' 4,100 124,025
-----------
705,212
-----------
Computers (4.7%)
Accelr8 Technology Corp.'D' 3,000 59,625
Adobe Systems, Inc. 800 38,200
BMC Software, Inc. 'D' 1,700 102,637
Cambridge Technology Partners of Massachusetts, Inc. 'D' 1,500 54,750
Citrix Systems, Inc. 'D' 1,600 117,500
Cognicase, Inc.'D' 3,000 37,875
Comdisco, Inc. 2,500 78,906
COMPAQ Computer Corp. 'D' 2,350 149,812
Computer Horizons Corp. 'D' 3,000 91,125
Data Dimensions, Inc. 'D' 3,500 94,500
Harbinger Corp. 'D' 1,500 44,625
Information Analysis, Inc. 'D' 3,000 48,000
International Business Machines Corp. 4,400 431,475
Intuit, Inc. 'D' 800 26,100
Keane, Inc. 'D' 1,500 44,437
National Instruments Corp. 'D' 2,000 91,000
PeopleSoft, Inc. 'D' 2,700 169,762
Peritus Software Services, Inc. 'D' 500 9,250
PLATINUM technology, Inc. 'D' 2,000 48,500
Seagate Technology, Inc. 'D' 3,400 92,225
Siebel Systems, Inc. 'D' 2 108
-----------
1,830,412
-----------
</TABLE>
See Accompanying Notes to Financial Statements.
48
<PAGE>
<PAGE>
WARBURG PINCUS BALANCED FUND
STATEMENT OF NET ASSETS (CONT'D)
October 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
---------- -----------
<S> <C> <C>
COMMON STOCK (CONT'D)
Conglomerates (1.1%)
Oglebay Norton Co. 3,600 $ 111,600
United Technologies Corp. 1,600 112,000
Westinghouse Electric Corp. 6,840 180,832
-----------
404,432
-----------
Consumer Durables (0.9%)
Autoliv, Inc. 682 26,896
Citation Corp. 'D' 7,500 127,500
La-Z-Boy, Inc. 1,600 59,800
Triangle Pacific Corp. 'D' 3,500 114,625
-----------
328,821
-----------
Consumer Non-Durables (1.7%)
American Safety Razor Corp. 'D' 6,000 99,000
Gibson Greetings, Inc. 'D' 4,700 115,737
Home Products International, Inc. 'D' 7,900 94,306
Standex International Corp. 4,400 154,000
USA Detergents, Inc. 'D' 5,900 61,950
Westpoint Stevens, Inc. 'D' 1,200 49,200
Zag Industries, Ltd. 'D' 8,200 85,075
-----------
659,268
-----------
Consumer Services (0.2%)
DeVRY, Inc. 'D' 2,000 52,750
ITT Educational Services, Inc. 'D' 1,650 39,806
-----------
92,556
-----------
</TABLE>
See Accompanying Notes to Financial Statements.
49
<PAGE>
<PAGE>
WARBURG PINCUS BALANCED FUND
STATEMENT OF NET ASSETS (CONT'D)
October 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
---------- -----------
<S> <C> <C>
COMMON STOCK (CONT'D)
Electronics (3.4%)
Altera Corp. 'D' 1,200 $ 53,250
AMP, Inc. 1,500 67,500
Avant! Corp. 'D' 3,600 94,500
Burr-Brown Corp. 'D' 1,500 45,375
EA Industries, Inc. 'D' 26,100 163,125
Etec Systems, Inc. 'D' 1,500 66,937
Intel Corp. 2,200 169,400
KLA-Tencor Corp. 'D' 1,600 70,300
Linear Technology Corp. 1,500 94,312
Maxim Integrated Products, Inc. 'D' 2,600 172,250
Microchip Technology, Inc. 'D' 1,500 59,812
Solectron Corp. 'D' 1,200 47,100
Texas Instruments, Inc. 900 96,019
Vitesse Semiconductor Corp. 'D' 1,500 65,062
Xilinx, Inc. 'D' 1,700 58,012
-----------
1,322,954
-----------
Energy (3.7%)
Amoco Corp. 1,400 128,362
Anadarko Petroleum Corp. 1,300 95,225
Chevron Corp. 2,100 174,169
Chieftain International, Inc. 'D' 2,000 49,000
Enserch Exploration, Inc. 14,600 131,400
Forcenergy, Inc. 'D' 5,100 166,387
Forest Oil Corp. 'D' 9,000 169,875
KCS Energy, Inc. 8,000 210,500
Meridian Resource Corp. 'D' 10,000 130,625
Pioneer Natural Resources Co. 2,300 92,144
United Meridian Corp. Series A 'D' 2,000 67,875
-----------
1,415,562
-----------
Engineering & Construction (0.3%)
Gradall Industries, Inc. 'D' 6,900 107,812
-----------
Entertainment (0.4%)
SCP Pool Corp. 'D' 6,600 158,400
-----------
Environmental Services (0.4%)
Allied Waste Industries, Inc. 'D' 2,800 57,050
USA Waste Services, Inc. 'D' 2,800 103,600
-----------
160,650
-----------
</TABLE>
See Accompanying Notes to Financial Statements.
50
<PAGE>
<PAGE>
WARBURG PINCUS BALANCED FUND
STATEMENT OF NET ASSETS (CONT'D)
October 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
---------- -----------
<S> <C> <C>
COMMON STOCK (CONT'D)
Financial Services (9.4%)
Allstate Corp. 1,000 $ 82,937
Berkshire Hathaway, Inc. Class B 'D' 100 146,900
City National Corp. 2,700 81,169
Commerce Group, Inc. 4,600 147,200
Crawford & Co. Class B 3,500 71,750
Delphi Financial Group, Inc. Class A 'D' 3,000 123,750
Fidelity National Financial, Inc. 4,000 87,000
Financial Security Assurance Holdings, Ltd. 1,500 65,250
Freddie Mac 6,400 242,400
Fund American Enterprises Holdings, Inc. 700 83,650
Household International, Inc. 600 67,950
Interstate/Johnson Lane, Inc. 5,600 151,200
Legg Mason, Inc. 6,665 327,051
Life Re Corp. 1,000 55,125
Morgan Stanley Dean Witter Discover & Co. 2,600 127,400
NAC Re Corp. 2,850 126,825
National Western Life Insurance Co. Class A 'D' 1,500 150,750
Nationwide Financial Services, Inc. 3,400 103,488
Penncorp Financial Group, Inc. 1,800 58,613
PICO Holdings, Inc. 'D' 14,800 92,500
PMT Services, Inc. 'D' 3,000 48,375
Provident Companies, Inc. 2,800 93,450
ReliaStar Financial Corp. 11,786 440,502
SLM Holding Corp. 'D' 1,000 140,375
Terra Nova (Bermuda) Holdings, Ltd. Class A 6,550 169,481
Transaction Systems Architects, Inc. Class A 'D' 3,800 148,675
United Companies Finance Corp. 2,900 73,406
White River Corp. 'D' 1,400 102,200
-----------
3,609,372
-----------
Food, Beverages & Tobacco (0.4%)
Consolidated Cigar Holdings, Inc. 'D' 3,100 121,675
Smucker (J.M.) Co. Class A 900 24,469
-----------
146,144
-----------
</TABLE>
See Accompanying Notes to Financial Statements.
51
<PAGE>
<PAGE>
WARBURG PINCUS BALANCED FUND
STATEMENT OF NET ASSETS (CONT'D)
October 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
---------- -----------
<S> <C> <C>
COMMON STOCK (CONT'D)
Healthcare (1.5%)
ALZA Corp. 'D' 3,000 $ 78,188
Ballard Medical Products 2,500 56,406
Becton Dickinson & Co. 3,200 147,400
HealthCare COMPARE Corp. 'D' 3,000 161,250
Healthcare Recoveries, Inc. 'D' 2,000 37,000
NovaCare, Inc. 'D' 4,500 58,781
Technical Chemicals and Products, Inc. 'D' 1,500 26,531
-----------
565,556
-----------
Industrial Mfg. & Processing (0.6%)
Goodrich (B.F.) Co. 2,000 89,125
Roanoke Electric Steel Corp. 1,600 31,200
Schnitzer Steel Industries, Inc. Class A 4,100 119,413
-----------
239,738
-----------
Lodging & Restaurants (0.9%)
CKE Restaurants, Inc. 2,100 83,869
Doubletree Corp. 'D' 2,000 83,250
McDonald's Corp. 2,600 116,513
Shells Seafood Restaurants 'D' 2,000 21,250
WSMP, Inc. 'D' 1,000 21,000
-----------
325,882
-----------
Metals & Mining (0.5%)
Universal Stainless & Alloy Products, Inc. 'D' 12,000 183,000
-----------
Office Equipment & Supplies (0.1%)
U.S. Office Products Co. 'D' 1,500 46,875
-----------
Oil Services (2.4%)
Global Industries, Ltd. 'D' 4,000 80,500
Halliburton Co. 500 29,813
Nabors Industries, Inc. 'D' 2,000 82,250
Pride International, Inc. 'D' 3,000 99,000
Smith International, Inc. 'D' 8,000 610,000
-----------
901,563
-----------
Paper & Forest Products (0.1%)
Ivex Packaging Corp. 'D' 2,600 54,925
-----------
</TABLE>
See Accompanying Notes to Financial Statements.
52
<PAGE>
<PAGE>
WARBURG PINCUS BALANCED FUND
STATEMENT OF NET ASSETS (CONT'D)
October 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
---------- -----------
<S> <C> <C>
COMMON STOCK (CONT'D)
Pharmaceuticals (2.7%)
Bristol-Myers Squibb Corp. 2,700 $ 236,925
ChiRex, Inc. 'D' 2,100 42,788
Columbia Laboratories, Inc. 'D' 5,000 80,000
Elan Corp. PLC ADR 'D' 1,200 59,850
Forest Laboratories, Inc. 'D' 1,500 69,375
Gilead Sciences, Inc. 'D' 2,000 68,250
Human Genome Sciences, Inc. 'D' 3,000 123,000
Merck & Co., Inc. 1,100 98,175
Owens & Minor, Inc. Holding Co. 2,000 28,000
Warner-Lambert Co. 1,200 171,825
Watson Pharmaceuticals, Inc. 'D' 2,000 63,500
-----------
1,041,688
-----------
Publishing (0.1%)
Petersen Companies, Inc. Class A 'D' 2,500 49,375
-----------
Real Estate (2.0%)
Berkshire Realty Co., Inc. (REIT) 9,000 100,125
Crescent Real Estate Equities Co. (REIT) 3,000 108,000
Equity Inns, Inc. (REIT) 7,500 118,125
Healthcare Realty Trust (REIT) 7,500 208,594
Security Capital Group, Inc. Class B (REIT) 'D' 900 28,800
Vornado Realty Trust (REIT) 900 40,163
Weeks Corp. (REIT) 1,700 51,000
Western Water Co. 'D' 7,400 103,600
-----------
758,407
-----------
</TABLE>
See Accompanying Notes to Financial Statements.
53
<PAGE>
<PAGE>
WARBURG PINCUS BALANCED FUND
STATEMENT OF NET ASSETS (CONT'D)
October 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
---------- -----------
<S> <C> <C>
COMMON STOCK (CONT'D)
Retail (3.3%)
AnnTaylor Stores Corp. 'D' 2,800 $ 40,075
Barnes & Noble, Inc. 'D' 2,000 51,125
Borders Group, Inc. 'D' 4,000 103,750
CompUSA, Inc. 'D' 1,500 49,125
CUC International, Inc. 'D' 2,000 59,000
CVS Corp. 2,300 141,019
Family Dollar Stores, Inc. 2,100 49,350
Filene's Basement Corp. 'D' 15,700 115,788
Fingerhut Companies, Inc. 6,100 134,963
Home Depot, Inc. 1,950 108,469
Payless ShoeSource, Inc. 'D' 1,200 66,900
Rite Aid Corp. 3,400 201,875
Sotheby's Holdings, Inc. Class A 4,400 82,500
Staples, Inc. 'D' 3,000 78,750
-----------
1,282,689
-----------
Telecommunications & Equipment (1.3%)
DSC Communication Corp. 'D' 4,000 97,500
Essex International, Inc.'D' 1,500 49,688
GTE Corp. 2,500 106,094
Intermedia Communications of Florida, Inc. 'D' 1,500 68,063
McLeodUSA, Inc. Class A 'D' 1,500 55,688
QUALCOMM, Inc. 'D' 1,200 67,650
WorldCom, Inc. 'D' 2,100 70,613
-----------
515,296
-----------
Transportation (1.8%)
Allied Holdings, Inc. 'D' 4,600 78,775
Atlas Air, Inc. 'D' 4,100 113,775
Coach USA, Inc. 'D' 2,000 59,500
Heartland Express, Inc. 'D' 2,250 61,875
Mark VII, Inc. 'D' 1,700 52,488
M.S. Carriers, Inc. 'D' 2,500 63,359
MTL, Inc. 'D' 4,450 121,819
OMI Corp. 'D' 11,300 134,894
-----------
686,485
-----------
Utilities -- Electric (0.1%)
Niagara Mohawk Power Corp. 'D' 3,500 33,906
-----------
TOTAL COMMON STOCKS (Cost $16,304,742) 20,569,954
-----------
</TABLE>
See Accompanying Notes to Financial Statements.
54
<PAGE>
<PAGE>
WARBURG PINCUS BALANCED FUND
STATEMENT OF NET ASSETS (CONT'D)
October 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
FOREIGN STOCKS (9.9%)
Australia (0.4%)
Boral, Ltd. 57,000 $ 149,929
-----------
Austria (0.9%)
Radex-Heraklith Industries 3,700 143,544
VA Technologie AG 1,165 206,601
-----------
350,145
-----------
Brazil (0.2%)
CIA Saneamento 175,000 32,381
Telebras ADR 540 54,810
-----------
87,191
-----------
Denmark (0.4%)
ISS International Service System B 3,200 97,015
SAS Danmark AS 3,700 63,697
-----------
160,712
-----------
Finland (0.3%)
Rauma OY 5,340 100,042
-----------
France (0.9%)
Axa-UAP SA 2,600 178,042
Compagnie Francaise de Petroleum Total 1,355 150,339
Rhone Poulenc, Ltd. Class A 100 4,360
-----------
332,741
-----------
Germany (0.4%)
Hoechst AG 4,300 165,155
-----------
Hong Kong (0.2%)
First Pacific Co., Ltd. 21,700 13,683
Guangshen Railway Co., Ltd. 44,500 13,814
Guangshen Railway Co., Ltd. ADR 2,800 40,950
Hong Kong Land Holdings 6,066 13,830
-----------
82,277
-----------
Israel (0.1%)
Orbotech, Ltd. 800 34,200
-----------
Italy (0.4%)
Assicurazioni Generali SPA 7,450 166,509
-----------
</TABLE>
See Accompanying Notes to Financial Statements.
55
<PAGE>
<PAGE>
WARBURG PINCUS BALANCED FUND
STATEMENT OF NET ASSETS (CONT'D)
October 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
---------- -----------
<S> <C> <C>
FOREIGN STOCKS (CONT'D)
Japan (2.0%)
Fujitsu, Ltd. 7,000 $ 76,763
Kao Corp. 7,000 97,699
Orix Corp. 2,000 136,579
Sankyo Company, Ltd. 3,000 98,945
Sony Corp. 1,700 141,090
Sumitomo Bank, Ltd. 6,000 63,803
Tokyo Electronics, Ltd. 3,300 164,493
-----------
779,372
-----------
Mexico (0.2%)
PanAmerican Beverages, Inc. Class A 1,900 58,900
-----------
Netherlands (0.5%)
Philips Electronics NV 2,650 207,116
-----------
New Zealand (0.5%)
Brierley Investments, Ltd. 225,500 174,119
-----------
Norway (0.6%)
SAS Norge ASA Class B 3,000 50,440
Smedvig ASA ADR Class B 'D' 5,600 162,400
-----------
212,840
-----------
Philippines (0.2%)
Millicom International Cellular SA 1,435 60,270
-----------
Portugal (0.6%)
Portugal Telecommunications SA ADR 'D' 5,200 214,500
-----------
South Korea (0.1%)
Samsung Electronics Co., Ltd. GDR 86 1,789
Samsung Electronics GDR 'D' 5,300 53,981
-----------
55,770
-----------
Switzerland (0.5%)
Julius Baer Holdings AG Class B 120 178,951
-----------
United Kingdom (0.6%)
Hanson PLC 28,750 147,837
Pilkington PLC 32,500 82,333
-----------
230,170
-----------
TOTAL FOREIGN STOCKS (Cost $3,572,247) 3,800,909
-----------
</TABLE>
See Accompanying Notes to Financial Statements.
56
<PAGE>
<PAGE>
WARBURG PINCUS BALANCED FUND
STATEMENT OF NET ASSETS (CONT'D)
October 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
---------- -----------
PREFERRED STOCK (1.6%)
<S> <C> <C>
Real Estate (1.6%)
Equity Residential Properties Trust Series C 9.125%
(Callable 09/09/06 @ $25.00) (REIT) 10,000 $ 273,750
MEPC International Capital Series A 9.125% (Callable
09/21/05 @ $25.00) 5,000 118,969
Oasis Residential, Inc. Series A 9.000% (Callable 04/30/01 @
$25.00) (REIT) 5,000 121,563
Security Capital Industries Series C 8.540% (Callable
11/13/26 @ $50.00) 2,000 105,500
-----------
TOTAL PREFERRED STOCK (Cost $606,320) 619,782
-----------
</TABLE>
<TABLE>
<CAPTION>
PAR
RATE MATURITY (000)
------- -------- ------
<S> <C> <C> <C> <C>
U.S. CORPORATE BONDS (4.8%)
Financial Services (2.0%)
Countrywide Home Loan Medium Term Note (A3, A) + 6.380 10/08/02 250 251,250
First Union Corp. Subordinated Debentures
(Putable 10/15/05 @ $100.00) (A2, A-) + 6.550% 10/15/35 $ 250 253,125
Smith Barney Holdings Notes (A2, A) + 6.375 10/01/04 250 249,063
-----------
753,438
-----------
Industrial (1.1%)
Lowe's Companies Medium Term Note (Putable
05/15/07 @ $100.00) (A2, A) + 7.110 05/15/37 160 169,000
Times Mirror Co. Notes (Putable 09/15/04 @
$100.00) (A2, A+) + 6.610 09/15/27 250 255,625
-----------
424,625
-----------
Retail (0.9%)
Penney (J.C.) & Co. Debentures (Putable 08/15/03
@ $100.00) (A2, A) + 6.900 08/15/26 325 338,000
-----------
Utilities -- Electric (0.8%)
Korea Electric Power Debentures (Putable 12/01/01
@ $100.00)
(A1, AA-) + 6.000 12/01/26 325 316,875
-----------
TOTAL U.S. CORPORATE BONDS (Cost $1,799,877) 1,832,938
-----------
CALL OPTIONS (0.0%)
Singapore (0.0%)
DBS 50 Index 01/26/98, (Strike Price $407.39) 'D'
(Cost $17,000) 383 0
-----------
U.S. TREASURY OBLIGATIONS (22.3%)
U.S. Treasury Note 8.500 11/15/00 4,000 4,302,080
U.S. Treasury Note 8.000 05/15/01 1,270 1,360,157
U.S. Treasury Note 6.500 05/31/01 1,250 1,279,850
U.S. Treasury Note 7.500 02/15/05 1,480 1,619,283
-----------
TOTAL U.S. TREASURY OBLIGATIONS (Cost $8,404,842) 8,561,370
-----------
</TABLE>
See Accompanying Notes to Financial Statements.
57
<PAGE>
<PAGE>
WARBURG PINCUS BALANCED FUND
STATEMENT OF NET ASSETS (CONT'D)
October 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
PAR
RATE MATURITY (000) VALUE
------- -------- ------ -----------
<S> <C> <C> <C> <C>
MORTGAGE BACKED SECURITIES (2.8%)
GE Capital Mortgage Services, Inc. Series 1994-7
Class A10 (Aaa, AAA) + 6.000% 02/25/09 $ 484 $ 473,102
Government National Mortgage Association Pass
Through (Aaa, AAA) + 6.500 08/15/03 9 8,701
Morgan Stanley Mortgage Trust Series 40 Class 8
(NR, AAA) + 7.000 07/20/21 600 611,434
-----------
TOTAL MORTGAGE BACKED SECURITIES (Cost $1,065,470) 1,093,237
-----------
FOREIGN CORPORATE BONDS (0.0%)
Thailand (0.0%)
Bangkok Bank Public Co., Ltd. (Convertible) (NR,
NR)+ (Cost $24,029) 3.250 03/03/04 25 12,073
-----------
SHORT-TERM INVESTMENTS (3.0%)
Repurchase agreement with Goldman, Sachs & Co.
dated 10/31/97 at 5.65% to be repurchased at
$1,141,537 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
$1,164,543.) (Cost $1,141,000) 1,141 1,141,000
-----------
TOTAL INVESTMENTS AT VALUE (97.9%) (Cost
$32,935,527*) 37,631,263
OTHER ASSETS IN EXCESS OF LIABILITIES (2.1%) 820,491
-----------
NET ASSETS (100.0%) (applicable to 2,663,504 Common Shares and
10,974 Advisor Shares) $38,451,754
-----------
-----------
NET ASSET VALUE, offering and redemption price per Common Share
($38,294,108 [div] 2,663,504) $14.38
------
------
NET ASSET VALUE, offering and redemption price per Advisor
Share ($157,646 [div] 10,974) $14.37
------
------
</TABLE>
INVESTMENT ABBREVIATIONS
ADR = American Depository Receipt
GDR = Global Depository Receipt
REIT = Real Estate Investment Trust
- --------------------------------------------------------------------------------
'D' Non-income producing security.
+ Credit ratings given by Moody's Investors Service Inc. and Standard & Poor's
Ratings Group are unaudited.
* Cost for federal income tax purposes is $32,973,357.
See Accompanying Notes to Financial Statements.
58
<PAGE>
<PAGE>
WARBURG PINCUS POST-VENTURE CAPITAL FUND
STATEMENT OF ASSETS AND LIABILITIES
October 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS
Investments at value (Cost $88,252,209) $107,207,879
Receivable for investment securities sold 6,050,519
Receivable for fund shares sold 328,395
Deferred organizational/offering costs 88,238
Dividends and interest receivable 39,202
Other assets 1,785
------------
TOTAL ASSETS 113,716,018
------------
LIABILITIES
Payable for investment securities purchased 2,765,677
Payable for fund shares redeemed 877,442
Accrued expenses payable 228,257
Other liabilities 230
------------
TOTAL LIABILITIES 3,871,606
------------
NET ASSETS, applicable to 6,222,335 Common Shares outstanding and 15,474
Advisor Shares outstanding $109,844,412
------------
------------
NET ASSET VALUE, offering and redemption price per Common Share
($109,574,554 [div] 6,222,335) $17.61
------
------
NET ASSET VALUE, offering and redemption price per Advisor Share
($269,858 [div] 15,474) $17.44
------
------
</TABLE>
See Accompanying Notes to Financial Statements.
59
<PAGE>
<PAGE>
WARBURG PINCUS STRATEGIC VALUE FUND
STATEMENT OF ASSETS AND LIABILITIES
October 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS
Investments at value (Cost $10,322,312) $10,941,596
Receivable for investment securities sold 1,243,627
Deferred organizational/offering costs 32,302
Dividends and interest receivable 2,517
Receivable for fund shares sold 2,187
Other assets 858
-----------
TOTAL ASSETS 12,223,087
-----------
LIABILITIES
Payable for investment securities purchased 80,313
Accrued expenses payable 34,302
-----------
TOTAL LIABILITIES 114,615
-----------
NET ASSETS, applicable to 1,046,312 Common Shares outstanding and 15 Advisor
Shares outstanding $12,108,472
-----------
-----------
NET ASSET VALUE, offering and redemption price per Common Share
($12,108,300 [div] 1,046,312) $11.57
------
------
NET ASSET VALUE, offering and redemption price per Advisor Share
($172 [div] 15) $11.47
------
------
</TABLE>
See Accompanying Notes to Financial Statements.
60
<PAGE>
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
61
<PAGE>
<PAGE>
WARBURG PINCUS DOMESTIC EQUITY FUNDS
STATEMENTS OF OPERATIONS
For the Year or Period Ended October 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
WARBURG PINCUS
CAPITAL WARBURG PINCUS WARBURG PINCUS
APPRECIATION EMERGING POST-VENTURE
FUND GROWTH FUND CAPITAL FUND
-------------- -------------- --------------
<S> <C> <C> <C>
INVESTMENT INCOME:
Dividends $ 7,384,725 $ 4,283,837 $ 149,463
Interest 1,266,065 6,067,803 371,589
Foreign taxes withheld (132,244) (25,476) 0
-------------- -------------- --------------
Total investment income 8,518,546 10,326,164 521,052
-------------- -------------- --------------
EXPENSES:
Investment advisory 3,847,872 14,879,436 1,704,057
Administrative services 1,085,276 2,977,461 272,648
Audit 23,236 34,304 13,385
Custodian/Sub-custodian 99,293 263,513 40,424
Directors/Trustees 10,000 10,000 7,500
Insurance 8,473 25,977 2,608
Interest 4,507 13,216 1,812
Legal 58,722 136,603 51,055
Offering/Organizational costs 0 0 30,270
Printing 53,395 93,727 27,762
Registration 83,625 159,213 52,146
Shareholder servicing/Distribution 152,051 1,969,695 341,403
Transfer agent 221,048 1,036,122 231,104
Miscellaneous 61,973 146,088 34,644
-------------- -------------- --------------
5,709,471 21,745,355 2,810,818
Less: fees waived, expenses reimbursed and
transfer agent offsets (27,223) (71,027) (560,871)
-------------- -------------- --------------
Total expenses 5,682,248 21,674,328 2,249,947
-------------- -------------- --------------
Net investment income (loss) 2,836,298 (11,348,164) (1,728,895)
-------------- -------------- --------------
NET REALIZED AND UNREALIZED GAIN (LOSS) FROM
INVESTMENTS AND FOREIGN CURRENCY RELATED ITEMS:
Net realized gain (loss) from security
transactions 111,900,128 121,625,395 7,402,996
Net realized loss from futures contracts 0 0 0
Net realized loss from foreign currency related
items 0 0 (3,944)
Net change in unrealized appreciation
(depreciation) from investments and foreign
currency related items 25,907,351 204,574,943 4,279,725
-------------- -------------- --------------
Net realized and unrealized gain (loss) from
investments and foreign currency related items 137,807,479 326,200,338 11,678,777
-------------- -------------- --------------
Net increase in net assets resulting from operations $140,643,777 $314,852,174 $ 9,949,882
-------------- -------------- --------------
-------------- -------------- --------------
</TABLE>
- --------------------------------------------------------------------------------
(1) For the period December 31, 1996 (Commencement of Operations) through
October 31, 1997.
See Accompanying Notes to Financial Statements.
62
<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
WARBURG PINCUS WARBURG PINCUS
SMALL COMPANY STRATEGIC
VALUE FUND VALUE FUND(1)
-------------- --------------
<S> <C> <C>
$ 1,104,309 $ 92,258
752,659 61,150
0 0
-------------- --------------
1,856,968 153,408
-------------- --------------
1,735,893 89,566
347,178 17,912
13,514 12,000
50,397 20,866
7,500 7,500
1,850 61
2,500 61
35,364 26,960
20,950 100,077
18,483 14,317
93,010 6,450
439,465 22,417
225,281 9,810
27,857 10,793
-------------- --------------
3,019,242 338,790
(64,823) (208,893)
-------------- --------------
2,954,419 129,897
-------------- --------------
(1,097,451) 23,511
-------------- --------------
21,703,083 621,060
0 (33,411)
0
22,597,554 619,284
-------------- --------------
44,300,637 1,206,933
-------------- --------------
$ 43,203,186 $1,230,444
-------------- --------------
-------------- --------------
</TABLE>
- --------------------------------------------------------------------------------
63
<PAGE>
<PAGE>
WARBURG PINCUS DOMESTIC EQUITY FUNDS
STATEMENTS OF OPERATIONS (CONT'D)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
WARBURG PINCUS WARBURG PINCUS
GROWTH & INCOME FUND BALANCED FUND
-------------------------------- --------------------------------
FOR THE TWO FOR THE FOR THE TWO FOR THE
MONTHS ENDED YEAR ENDED MONTHS ENDED YEAR ENDED
OCTOBER 31, AUGUST 31, OCTOBER 31, AUGUST 31,
1997 1997 1997 1997
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends $ 1,859,373 $ 10,144,739 $ 52,125 $ 312,837
Interest 457,003 2,121,388 130,689 791,393
Foreign taxes withheld (51) (168,513) (550) (4,015)
-------------- -------------- -------------- --------------
Total investment income 2,316,325 12,097,614 182,264 1,100,215
-------------- -------------- -------------- --------------
EXPENSES:
Investment advisory 901,812 4,637,851 60,121 319,264
Administrative services 290,159 1,483,450 16,700 88,685
Custodian/Sub-custodian 20,428 121,205 10,468 34,614
Directors/Trustees 1,250 7,500 1,250 10,269
Insurance 0 50,579 0 1,576
Interest 0 27,426 0 309
Printing 13,000 161,821 2,000 11,100
Professional fees 61,000 10,350 20,000 14,752
Shareholder servicing/Distribution 75,076 372,841 16,766 88,903
Transfer agent 104,666 503,805 6,338 45,571
Miscellaneous 12,000 41,233 2,000 57,964
-------------- -------------- -------------- --------------
1,479,391 7,418,061 135,643 673,007
Less: fees waived, expenses reimbursed
and transfer agent offsets (2,466) (6,724) (45,396) (193,893)
-------------- -------------- -------------- --------------
Total expenses 1,476,925 7,411,337 90,247 479,114
-------------- -------------- -------------- --------------
Net investment income 839,400 4,686,277 92,017 621,101
-------------- -------------- -------------- --------------
NET REALIZED AND UNREALIZED GAIN (LOSS)
FROM INVESTMENTS AND FOREIGN CURRENCY
RELATED ITEMS:
Net realized gain from security
transactions 24,005,015 88,134,951 1,219,920 2,259,328
Net realized gain (loss) from foreign
currency related items 0 0 590 (1,211)
Net change in unrealized appreciation
(depreciation) from investments and
foreign currency related items (19,596,522) 41,534,862 (755,058) 4,514,953
-------------- -------------- -------------- --------------
Net realized and unrealized gain
(loss) from investments and foreign
currency related items 4,408,493 129,669,813 465,452 6,773,070
-------------- -------------- -------------- --------------
Net increase in net assets resulting from
operations $ 5,247,893 $134,356,090 $ 557,469 $7,394,171
-------------- -------------- -------------- --------------
-------------- -------------- -------------- --------------
</TABLE>
- --------------------------------------------------------------------------------
See Accompanying Notes to Financial Statements.
64
<PAGE>
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
65
<PAGE>
<PAGE>
WARBURG PINCUS DOMESTIC EQUITY FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
WARBURG PINCUS WARBURG PINCUS
CAPITAL APPRECIATION EMERGING GROWTH
FUND FUND
------------------------------ -------------------------------
FOR THE YEAR ENDED OCTOBER 31, FOR THE YEAR ENDED OCTOBER 31,
------------------------------ ------------------------------
1997 1996 1997 1996
------------ ------------ -------------- --------------
<S> <C> <C> <C> <C>
FROM OPERATIONS:
Net investment income (loss) $ 2,836,298 $ 1,851,566 $ (11,348,164) $ (7,972,465)
Net realized gain (loss) from security
transactions 111,900,128 45,879,867 121,625,395 7,182,552
Net realized loss from futures
contracts 0 0 0 0
Net realized loss from foreign currency
related items 0 0 0 0
Net change in unrealized appreciation
(depreciation) from investments and
foreign currency related items 25,907,351 22,240,359 204,574,943 128,715,987
------------ ------------ -------------- --------------
Net increase in net assets
resulting from operations 140,643,777 69,971,792 314,852,174 127,926,074
------------ ------------ -------------- --------------
FROM DISTRIBUTIONS:
Dividends from net investment income:
Common Shares (2,397,108) (205,824) 0 0
Advisor Shares (7,341) 0 0 0
Distributions from realized gains:
Common Shares (44,111,908) (29,718,914) (2,393,545) (29,520,521)
Advisor Shares (2,454,855) (2,066,408) (797,896) (10,992,686)
------------ ------------ -------------- --------------
Net decrease in net assets from
distributions (48,971,212) (31,991,146) (3,191,441) (40,513,207)
------------ ------------ -------------- --------------
FROM CAPITAL SHARE TRANSACTIONS:
Proceeds from sale of shares 230,321,097 200,852,137 781,530,558 1,002,644,154
Reinvested dividends 45,501,901 31,176,989 3,051,789 38,944,251
Net asset value of shares redeemed (176,950,390) (86,168,618) (590,806,401) (316,383,771)
------------ ------------ -------------- --------------
Net increase (decrease) in net
assets from capital share
transactions 98,872,608 145,860,508 193,775,946 725,204,634
------------ ------------ -------------- --------------
Net increase (decrease) in net
assets 190,545,173 183,841,154 505,436,679 812,617,501
NET ASSETS:
Beginning of period 431,147,019 247,305,865 1,467,380,112 654,762,611
------------ ------------ -------------- --------------
End of period $621,692,192 $431,147,019 $1,972,816,791 $1,467,380,112
------------ ------------ -------------- --------------
------------ ------------ -------------- --------------
Undistributed net investment income $ 2,077,591 $ 1,645,742 $ 0 $ 0
------------ ------------ -------------- --------------
------------ ------------ -------------- --------------
</TABLE>
See Accompanying Notes to Financial Statements.
66
<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
WARBURG PINCUS WARBURG PINCUS WARBURG PINCUS
POST-VENTURE CAPITAL SMALL COMPANY VALUE STRATEGIC VALUE
FUND FUND FUND
------------------------------- ---------------------------------- -------------------
FOR THE PERIOD FOR THE PERIOD
DECEMBER 29, 1995 DECEMBER 31, 1996
(COMMENCEMENT OF (COMMENCEMENT OF
FOR THE YEAR ENDED OCTOBER 31, OPERATIONS) THROUGH OPERATIONS) THROUGH
--------------------------------------------- OCTOBER 31, OCTOBER 31,
1997 1996 1997 1996 1997
------------ ---------------- ------------ ------------------- -------------------
<S> <C> <C> <C> <C> <C>
$ (1,728,895) $ (1,137,886) $ (1,097,451) $ (119,741) $ 23,511
7,402,996 (9,967,147) 21,703,083 1,349,283 621,060
0 0 0 0 (33,411)
(3,944) (7,090) 0 0 0
4,279,725 14,511,504 22,597,554 8,156,391 619,284
------------ ---------------- ------------ ---------- ----------
9,949,882 3,399,381 43,203,186 9,385,933 1,230,444
------------ ---------------- ------------ ---------- ----------
0 0 0 0 0
0 0 0 0 0
0 0 (1,184,453) 0 0
0 0 (56) 0 0
------------ ---------------- ------------ ---------- ----------
0 0 (1,184,509) 0 0
------------ ---------------- ------------ ---------- ----------
67,881,239 249,245,203 258,418,030 85,549,967 14,786,437
0 0 1,093,316 0 0
(133,272,027) (90,384,695) (161,650,157) (10,985,933) (4,008,409)
------------ ---------------- ------------ ---------- ----------
(65,390,788) 158,860,508 97,861,189 74,564,034 10,778,028
------------ ---------------- ------------ ---------- ----------
(55,440,906) 162,259,889 139,879,866 83,949,967 12,008,472
165,285,318 3,025,429 84,049,967 100,000 100,000
------------ ---------------- ------------ ---------- ----------
$109,844,412 $165,285,318 $223,929,833 $84,049,967 $12,108,472
------------ ---------------- ------------ ---------- ----------
------------ ---------------- ------------ ---------- ----------
$ 0 $ 0 $ 0 $ 0 $ 121,045
------------ ---------------- ------------ ---------- ----------
------------ ---------------- ------------ ---------- ----------
</TABLE>
67
<PAGE>
<PAGE>
WARBURG PINCUS DOMESTIC EQUITY FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
WARBURG PINCUS WARBURG PINCUS
GROWTH & INCOME BALANCED
FUND FUND
---------------------------------------------------- ----------------------------------------------------
FOR THE TWO FOR THE FOR THE FOR THE TWO FOR THE FOR THE
MONTHS ENDED YEAR ENDED YEAR ENDED MONTHS ENDED YEAR ENDED YEAR ENDED
OCTOBER 31, 1997 AUGUST 31, 1997 AUGUST 31, 1996 OCTOBER 31, 1997 AUGUST 31, 1997 AUGUST 31, 1996
---------------- --------------- --------------- ---------------- --------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
FROM OPERATIONS:
Net investment
income $ 839,400 $ 4,686,277 $ 6,958,699 $ 92,017 $ 621,101 $ 314,297
Net realized gain
from security
transactions 24,005,015 88,134,951 20,871,086 1,219,920 2,259,328 490,109
Net realized gain
(loss) from
foreign
currency
related items 0 0 0 590 (1,211) 37
Net change in
unrealized
appreciation
(depreciation)
from
investments and
foreign
currency
related items (19,596,522) 41,534,862 (67,018,131) (755,058) 4,514,953 472,314
---------------- --------------- --------------- ------------ --------------- ---------------
Net increase
in net
assets
resulting
from
operations 5,247,893 134,356,090 (39,188,346) 557,469 7,394,171 1,276,757
---------------- --------------- --------------- ------------ --------------- ---------------
FROM DISTRIBUTIONS:
Dividends from
net investment
income:
Common Shares (1,281,060) (4,434,607) (8,430,598) (125,542) (655,603) (212,883)
Advisor
Shares (90,595) (348,996) (306,084) (385) (1,449) (10)
Distributions
from realized
gains:
Common Shares 0 0 (49,915,078) 0 (395,800) (149,992)
Advisor
Shares 0 0 (3,362,883) 0 (809) (16)
---------------- --------------- --------------- ------------ --------------- ---------------
Net decrease
in net
assets from
distributions (1,371,655) (4,783,603) (62,014,643) (125,927) (1,053,661) (362,901)
---------------- --------------- --------------- ------------ --------------- ---------------
FROM CAPITAL SHARE
TRANSACTIONS:
Proceeds from
sale of shares 45,408,918 276,013,445 370,678,850 2,285,470 19,977,419 33,327,987
Reinvested
dividends 1,309,646 4,560,726 58,584,414 122,038 1,014,239 345,753
Net asset value
of shares
redeemed (40,487,822) (531,312,507) (615,963,314) (3,462,909) (19,120,778) (9,065,222)
---------------- --------------- --------------- ------------ --------------- ---------------
Net increase
(decrease)
in net
assets from
capital
share
transactions 6,230,742 (250,738,336) (186,700,050) (1,055,401) 1,870,880 24,608,518
---------------- --------------- --------------- ------------ --------------- ---------------
Net increase
(decrease)
in net
assets 10,106,980 (121,165,849) (287,903,039) (623,859) 8,211,390 25,522,374
NET ASSETS:
Beginning of
period 686,026,358 807,192,207 1,095,095,246 39,075,613 30,864,223 5,341,849
---------------- --------------- --------------- ------------ --------------- ---------------
End of period $696,133,338 $ 686,026,358 $ 807,192,207 $ 38,451,754 $39,075,613 $30,864,223
---------------- --------------- --------------- ------------ --------------- ---------------
---------------- --------------- --------------- ------------ --------------- ---------------
Undistributed net
investment income $ 0 $ 577,858 $ 675,184 $ 38,284 $ 71,417 $ 108,542
---------------- --------------- --------------- ------------ --------------- ---------------
---------------- --------------- --------------- ------------ --------------- ---------------
</TABLE>
See Accompanying Notes to Financial Statements.
68
<PAGE>
<PAGE>
WARBURG PINCUS CAPITAL APPRECIATION FUND
FINANCIAL HIGHLIGHTS
(For an Advisor Share of the Fund Outstanding Throughout Each Year)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE YEAR ENDED OCTOBER 31,
-----------------------------------------------
1997 1996 1995 1994 1993
------- ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF YEAR $ 17.73 $16.26 $14.22 $15.28 $13.28
------- ------ ------ ------ ------
Income from Investment Operations:
Net Investment Income (Loss) .02 .02 .00 (.08) .00
Net Gain on Securities (both realized and unrealized) 4.88 3.49 3.02 .23 2.76
------- ------ ------ ------ ------
Total from Investment Operations 4.90 3.51 3.02 .15 2.76
------- ------ ------ ------ ------
Less Distributions:
Dividends from Net Investment Income (.01) .00 .00 (.02) .00
Distributions from Realized Gains (1.80) (2.04) (.98) (1.19) (.76)
------- ------ ------ ------ ------
Total Distributions (1.81) (2.04) (.98) (1.21) (.76)
------- ------ ------ ------ ------
NET ASSET VALUE, END OF YEAR $ 20.82 $17.73 $16.26 $14.22 $15.28
------- ------ ------ ------ ------
------- ------ ------ ------ ------
Total Return 30.37% 24.15% 23.41% 1.23% 21.64%
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Year (000s) $34,601 $23,440 $11,594 $8,169 $10,437
Ratios to average daily net assets:
Operating expenses 1.48%@ 1.54%@ 1.62% 1.55% 1.51%
Net investment income (loss) .08% .09% (.18%) (.24%) (.25%)
Decrease reflected in above operating expense ratios
due to waivers/reimbursements .00% .00% .00% .01% .00%
Portfolio Turnover Rate 238.11% 170.69% 146.09% 51.87% 48.26%
Average Commission Rate # $.0595 $.0595 -- -- --
</TABLE>
- --------------------------------------------------------------------------------
@ Interest earned on uninvested cash balances is used to offset portions of
transfer agent expense. These arrangements resulted in a reduction to the
Advisor Shares' expenses by .00% and .01% for the years ended October 31, 1997
and 1996, respectively. The Advisor Shares' operating expense ratio after
reflecting these arrangements were 1.48% and 1.53% for the years ended October
31, 1997 and 1996, respectively.
# Computed by dividing the total amount of commissions paid by the total number
of shares purchased and sold during the period for which there was a
commission charged. The Average Commission Rate is not required for fiscal
periods beginning before September 1, 1995.
TAX STATUS OF 1997 DIVIDENDS (Unaudited)
Taxable dividends paid by the Fund on a per share basis were as follows:
Ordinary income $.84
Long-term capital gain .97
Ordinary income dividends qualifying for the dividends received deduction
available to corporate shareholders was 30.74%.
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.
69
<PAGE>
<PAGE>
WARBURG PINCUS EMERGING GROWTH FUND
FINANCIAL HIGHLIGHTS
(For an Advisor of the Fund Outstanding Throughout Each Year)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE YEAR ENDED OCTOBER 31,
--------------------------------------------------
1997 1996 1995 1994 1993
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF YEAR $31.99 $29.38 $22.05 $23.51 $18.19
------ ------ ------ ------ ------
Income from Investment Operations:
Net Investment Loss (.33) (.09) (.09) (.08) (.08)
Net Gain (Loss) on Securities (both realized
and unrealized) 6.91 4.45 7.42 (.02) 5.77
------ ------ ------ ------ ------
Total from Investment Operations 6.58 4.36 7.33 (.10) 5.69
------ ------ ------ ------ ------
Less Distributions:
Dividends from Net Investment Income .00 .00 .00 .00 .00
Distributions from Realized Gains (.07) (1.75) .00 (1.36) (.37)
------ ------ ------ ------ ------
Total Distributions (.07) (1.75) .00 (1.36) (.37)
------ ------ ------ ------ ------
NET ASSET VALUE, END OF YEAR $38.50 $31.99 $29.38 $22.05 $23.51
------ ------ ------ ------ ------
------ ------ ------ ------ ------
Total Return 20.62% 15.69% 33.24% (.29%) 31.67%
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Year (000s) $457,432 $362,696 $167,225 $64,009 $26,029
Ratios to average daily net assets:
Operating expenses 1.63%@ 1.70%@ 1.76% 1.72% 1.73%
Net investment loss (1.01%) (1.05%) (1.08%) (1.08%) (1.09%)
Decrease reflected in above operating expense
ratios due to waivers/reimbursements .00% .00% .00% .04% .00%
Portfolio Turnover Rate 87.03% 65.77% 84.82% 60.38% 68.35%
Average Commission Rate # $.0566 $.0567 -- -- --
</TABLE>
- --------------------------------------------------------------------------------
@ Interest earned on uninvested cash balances is used to offset portions of
transfer agent expense. These arrangements resulted in a reduction to the
Advisor Shares' expenses by .00% and .01% for the years ended October 31, 1997
and 1996, respectively. The Advisor Shares' operating expense ratio after
reflecting these arrangements were 1.63% and 1.69% for the years ended October
31, 1997 and 1996, respectively.
# Computed by dividing the total amount of commissions paid by the total number
of shares purchased and sold during the period for which there was a
commission charged. The Average Commission Rate is not required for fiscal
periods beginning before September 30, 1995.
TAX STATUS OF 1997 DIVIDENDS (Unaudited)
Taxable dividends paid by the Fund on a per share basis were as follows:
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.
70
<PAGE>
<PAGE>
WARBURG PINCUS POST-VENTURE CAPITAL FUND
FINANCIAL HIGHLIGHTS
(For an Advisor Share of the Fund Outstanding Throughout Each Period)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE PERIOD
SEPTEMBER 29, 1995
(COMMENCEMENT OF
FOR THE YEAR ENDED OCTOBER 31, OPERATIONS)
----------------------------------- THROUGH
1997 1996 OCTOBER 31, 1995
--------------- --------------- ------------------
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 15.93 $ 10.68 $10.00
----- ----- -----
Income from Investment Operations:
Net Investment Loss (.22) (.05) .00
Net Gain on Securities and Foreign
Currency Related Items both (realized
and unrealized) 1.73 5.30 .68
----- ----- -----
Total from Investment Operations 1.51 5.25 .68
----- ----- -----
Less Distributions:
Dividends from Net Investment Income .00 .00 .00
Distributions from Realized Gains .00 .00 .00
----- ----- -----
Total Distributions .00 .00 .00
----- ----- -----
NET ASSET VALUE, END OF PERIOD $ 17.44 $ 15.93 $10.68
----- ----- -----
----- ----- -----
Total Return 9.48% 49.16% 6.80%'D'
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (000s) $270 $204 $1
Ratios to average daily net assets:
Operating expenses 191%@ 1.90%@ 2.15%*
Net investment income (loss) (1.52%) (1.41%) .09%*
Decrease reflected in above operating
expense ratios due to
waivers/reimbursements .70% .75% 9.25%*
Portfolio Turnover Rate 197.56% 168.46% 16.90%'D'
Average Commission Rate # $.0401 $.0529 --
</TABLE>
- --------------------------------------------------------------------------------
@ Interest earned on uninvested cash balances is used to offset portions of
transfer agent expense. These arrangements resulted in a reduction to the
Advisor Shares' expenses by .01% and .00% for the years ended October 31,
1997 and 1996, respectively. The Advisor Shares' operating expense ratio
after reflecting these arrangements were 1.90% and 1.90% for the years ended
October 31, 1997 and 1996, respectively.
'D' Non-annualized.
* Annualized.
# Computed by dividing the total amount of commissions paid by the total
number of shares purchased and sold during the period for which there was a
commission charged. The Average Commission Rate is not required for fiscal
periods beginning before September 1, 1995.
See Accompanying Notes to Financial Statements.
71
<PAGE>
<PAGE>
WARBURG PINCUS SMALL COMPANY VALUE FUND
FINANCIAL HIGHLIGHTS
(For an Advisor Share of the Fund Outstanding Throughout Each Period)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DECEMBER 29, 1995
FOR THE (COMMENCEMENT OF
YEAR ENDED OPERATIONS) THROUGH
OCTOBER 31, 1997 OCTOBER 31, 1996
---------------- ------------------------
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $14.46 $10.00
----- -----
Income from Investment Operations:
Net Investment Loss (.08) (.02)
Net Gain on Securities (both realized and
unrealized) 4.44 4.48
----- -----
Total from Investment Operations 4.36 4.46
----- -----
Less Distributions:
Dividends from Net Investment Income .00 .00
Distributions from Realized Gains (.17) .00
----- -----
Total Distributions (.17) .00
----- -----
NET ASSET VALUE, END OF PERIOD $18.65 $14.46
----- -----
----- -----
Total Return 30.47% 44.60'D'
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (000s) $255 $5
Ratios to average daily net assets:
Operating expenses 1.89%@ 1.97%@*
Net investment loss (.78%) (.52%)*
Decrease reflected in above operating expense
ratios due to waivers/reimbursements .00% 1.46%*
Portfolio Turnover Rate 105.87% 43.14%'D'
Average Commission Rate # $.0555 $.0570
</TABLE>
- --------------------------------------------------------------------------------
@ Interest earned on uninvested cash balances is used to offset portions of
transfer agent expense. These arrangements resulted in a reduction to the
Advisor Shares' expenses by .01% 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 1.88% and 1.97% for
the years ended October 31, 1997 and 1996, respectively.
'D' Non-annualized.
* Annualized.
# Computed by dividing the total amount of commissions paid by the total
number of shares purchased and sold during the period for which there was a
commission charged.
TAX STATUS OF 1997 DIVIDENDS (Unaudited)
Taxable dividends paid by the Fund on a per share basis were as follows:
Ordinary income $.17
Ordinary income dividends qualifying for the dividends received deduction
available to corporate shareholders was 93.23%.
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.
72
<PAGE>
<PAGE>
WARBURG PINCUS STRATEGIC VALUE FUND
FINANCIAL HIGHLIGHTS
(For an Advisor Share of the Fund Outstanding Throughout the Period)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
JANUARY 9, 1997
(COMMENCEMENT OF
OPERATIONS) THROUGH
OCTOBER 31, 1997
--------------------
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $10.13
-----
Income from Investment Operations:
Net Investment Income .02
Net Gain on Securities (both realized and unrealized) 1.32
-----
Total from Investment Operations 1.34
-----
Less Distributions:
Dividends from Net Investment Income .00
Distributions from Capital Gains .00
-----
Total Distributions .00
-----
NET ASSET VALUE, END OF PERIOD $11.47
-----
-----
Total Return 13.23%'D'
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (000s) $0
Ratios to average daily net assets:
Operating expenses 1.70%@*
Net investment loss 1.76%*
Decrease reflected in above operating expense ratio due to
waivers/reimbursements 12.76%*
Portfolio Turnover Rate 277.99%'D'
Average Commission Rate # $.0556
</TABLE>
- --------------------------------------------------------------------------------
@ Interest earned on uninvested cash balances is used to offset portions of
transfer agent expense. These arrangements resulted in a reduction to the
Advisor Shares' expenses by .01% for the period ended October 31, 1997. The
Advisor Shares' operating expense ratio after reflecting these arrangements
was 1.69% for the period ended October 31, 1997.
'D' Non-annualized.
* Annualized.
# Computed by dividing the total amount of commissions paid by the total
number of shares purchased and sold during the period for which there was a
commission charged.
See Accompanying Notes to Financial Statements.
73
<PAGE>
<PAGE>
WARBURG PINCUS GROWTH & INCOME FUND
FINANCIAL HIGHLIGHTS
(For an Advisor Share of the Fund Outstanding Throughout Each Period)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE PERIOD
MAY 15, 1995
FOR THE TWO FOR THE YEARS ENDED AUGUST 31, (COMMENCEMENT
MONTHS ENDED --------------------------------- OF OPERATIONS)
OCTOBER 31, 1997 1997 1996 TO AUGUST 31, 1995
---------------- -------------- ---------------- ------------------
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF
PERIOD $18.42 $14.88 $16.38 $14.87
------ ------ ------ ------
Income From Investment
Operations:
Net Investment Income .0118 0.0727 .0800 0.0236
Net Gain (Loss) on Securities
(both
realized and unrealized) .1377 3.5474 (.6931) 1.5323
------ ------ ------ ------
Total from Investment
Operations .1495 3.6201 (.6131) 1.5559
------ ------ ------ ------
Less Distributions:
Dividends from Net Investment
Income (.0193) (0.0808) (.0736) (0.0459)
Distribution from Realized Gains -- -- (.8133) --
------ ------ ------ ------
Total Distributions (.0193) (0.0808) (.8869) (0.0459)
------ ------ ------ ------
NET ASSET VALUE, END OF PERIOD $18.55 $18.42 $14.88 $16.38
------ ------ ------ ------
------ ------ ------ ------
Total Returns .81%'D' 24.37% (3.92%) 10.49%'D'
RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Period (000) $ 87,929 $ 84,867 $ 79,565 $ 56,902
Ratios to average daily net assets:
Operating expenses 1.58%@* 1.54%@ 1.59%@ 1.92%*
Net investment income .35%* .43% .28% .43%*
Decrease reflected in above
operating expense ratios due
to waivers/reimbursements .00% .00% .00% .00%
Portfolio Turnover Rate 19%'D' 148% 94% 109%*
Average Commission Rate # $.0600 $0.0587 $0.0596 --
</TABLE>
- --------------------------------------------------------------------------------
@ Interest earned on uninvested cash balances is used to offset portions of
the transfer agent expense. These arrangements had no effect on the Fund's
expense ratio.
'D' Non-annualized.
* Annualized.
# Computed by dividing the total amount of commissions paid by the total
number of shares purchased and sold during the period for which there was a
commission charged. The Average Commission Rate is not required for fiscal
periods beginning before September 1, 1995.
TAX STATUS OF 1997 DIVIDENDS (Unaudited)
Taxable dividends paid by the Fund on a per share basis were as follows:
Ordinary income $.0193
Ordinary income dividends qualifying for the dividends received deduction
available to corporate shareholders was 100.00%.
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.
74
<PAGE>
<PAGE>
WARBURG PINCUS BALANCED FUND
FINANCIAL HIGHLIGHTS
(For an Advisor Share of the Fund Outstanding Throughout Each Period)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE PERIOD
JULY 31, 1995
FOR THE TWO FOR THE YEAR ENDED AUGUST 31, (COMMENCEMENT
MONTHS ENDED --------------------------------- OF OPERATIONS)
OCTOBER 31, 1997 1997 1996 TO AUGUST 31, 1995
---------------- -------------- ---------------- ------------------
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF
PERIOD $14.22 $11.94 $11.13 $10.72
----- ------ ------ ------
Income From Investment
Operations:
Net Investment Income .0275 (0.0233) 0.3689 0.0170
Net Gain on Securities and
Foreign Currency Related Items
(both realized and unrealized) .1527 2.6774 0.6815 0.3930
----- ------ ------ ------
Total from Investment
Operations .1802 2.6541 1.0504 0.4100
----- ------ ------ ------
Less Distributions:
Dividends from Net Investment
Income (.0364) (0.2226) (0.0942) 0.0000
Distributions from Realized
Gains -- (0.1511) (0.1462) 0.0000
----- ------ ------ ------
Total Distributions (.0364) (0.3737) (0.2404) 0.0000
----- ------ ------ ------
NET ASSET VALUE, END OF PERIOD $14.37 $14.22 $11.94 $11.13
----- ------ ------ ------
----- ------ ------ ------
Total Returns 1.30%'D' 22.66% 9.56% 3.82%'D'
RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Period (000) $158 $149 $12 $1
Ratios to average daily net assets:
Operating expenses 1.60%@* 1.60%@ 1.71%@ 1.76%*
Net investment income 1.13%* 1.53% (4.11%) 2.00%*
Decrease reflected in above
operating expense ratios due
to waivers/reimbursements 1.35%* 1.21% 203.35% 626.71%*
Portfolio Turnover Rate 15%'D' 120% 108% 107%*
Average Commission Rate # $0.0430 $ 0.0400 $ 0.0453 --
</TABLE>
- --------------------------------------------------------------------------------
@ Interest earned on uninvested cash balances is used to offset portions of
the transfer agent expense. These arrangements had no effect on the Fund's
expense ratio.
'D' Non-annualized.
* Annualized.
# Computed by dividing the total amount of commissions paid by the total
number of shares purchased and sold during the period for which there was a
commission charged. The Average Commission Rate is not required for fiscal
periods beginning before September 1, 1995.
TAX STATUS OF 1997 DIVIDENDS (Unaudited)
Taxable dividends paid by the Fund on a per share basis were as follows:
Ordinary income $.0364
Ordinary income dividends qualifying for the dividends received deduction
available to corporate shareholders was 41.39%.
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.
75
<PAGE>
<PAGE>
WARBURG PINCUS DOMESTIC EQUITY FUNDS
NOTES TO FINANCIAL STATEMENTS
October 31, 1997
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES
The Warburg Pincus Domestic Equity Funds (the 'Funds') are comprised of
Warburg Pincus Capital Appreciation Fund (the 'Capital Appreciation Fund'),
Warburg Pincus Post-Venture Capital Fund (the 'Post-Venture Capital Fund'),
Warburg Pincus Small Company Value Fund (the 'Small Company Value Fund'),
Warburg Pincus Small Company Growth Fund (the 'Small Company Growth Fund'),
Warburg Pincus Strategic Value Fund (the 'Strategic Value Fund'), Warburg Pincus
Growth & Income Fund (the 'Growth & Income Fund') and the Warburg Pincus
Balanced Fund which are registered under the Investment Company Act of 1940, as
amended (the '1940 Act'), as diversified, open-end management investment
companies, and Warburg Pincus Emerging Growth Fund (the 'Emerging Growth Fund')
which is registered under the 1940 Act as a non-diversified, open-end management
investment company.
Investment objectives for each Fund are as follows: the Capital Appreciation
Fund and and the Small Company Value Fund seek long-term capital appreciation;
the Emerging Growth Fund seeks maximum capital appreciation; the Post-Venture
Capital Fund seeks long-term growth of capital; the Strategic Value Fund seeks
capital appreciation; the Small Company Growth Funds seeks capital growth; the
Growth & Income Fund seeks long-term growth of capital and income; the Balanced
Fund seeks maximum total return through a combination of long-term growth of
capital and current income.
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 such Fund, except
that they bear different expenses which reflect the difference in the range of
services provided to them. Common Shares for the Post-Venture Capital Fund, the
Small Company Value Fund, the Small Company Growth Fund, the Strategic Value
Fund and the Balanced Fund bear expenses paid pursuant to a shareholder
servicing and distribution plan adopted by each Fund at an annual rate not to
exceed .25% of the average daily net asset value of each Fund's outstanding
Common Shares. 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.
Advisor Shares are currently bearing expenses of .50% of average daily net
assets. At October 31, 1997 there were no outstanding Advisor Shares for the
Small Company Growth Fund.
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
76
<PAGE>
<PAGE>
WARBURG PINCUS DOMESTIC EQUITY FUNDS
NOTES TO FINANCIAL STATEMENTS (CONT'D)
October 31, 1997
- --------------------------------------------------------------------------------
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.
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 Funds do not isolate that portion of
realized gains and losses on investments in equity securities which are due to
changes in the foreign exchange rate from that which are due to changes in
market prices of equity securities. The Funds isolate 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.
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 agent fees) and
realized/unrealized gains/losses are allocated proportionately to each class of
shares based upon the relative net asset value of 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, if any, are declared and paid annually
(except with respect to the Growth & Income Fund and the Balanced Fund which
dividends, if any, are paid quarterly). Distributions of net realized capital
gains, if any, are declared and paid annually for all Funds. 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.
77
<PAGE>
<PAGE>
WARBURG PINCUS DOMESTIC EQUITY FUNDS
NOTES TO FINANCIAL STATEMENTS (CONT'D)
October 31, 1997
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES (CONT'D)
Costs incurred in connection with organization and offering of shares have
been deferred and are being amortized over a period of five years and one year,
respectively, from the date each Fund commenced its operations.
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 banks 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. For the year
or period ended October 31, 1997, loan related activity was as follows:
<TABLE>
<CAPTION>
AVERAGE DAILY AVERAGE MAXIMUM DAILY LOAN OUTSTANDING
FUND LOAN BALANCE INTEREST RATE % LOAN OUTSTANDING AT 10/31/97
- ------------------- -------------- --------------- ---------------- ----------------
<S> <C> <C> <C> <C>
Post-Venture
Capital $ 9,041 5.86 $2,800,000 $0
Small Company Value 17,879 6.52 3,489,000 0
</TABLE>
The average debt per average share outstanding for each Fund is as follows:
<TABLE>
<CAPTION>
AVERAGE SHARES AVERAGE DEBT
FUND OUTSTANDING PER SHARE
- -------------------------------------------------- -------------- ------------
<S> <C> <C>
Post-Venture Capital 8,306,014 $.0011
Small Company Value 10,315,769 .0017
</TABLE>
Pursuant to an Exemptive 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 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 counterparty 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
78
<PAGE>
<PAGE>
WARBURG PINCUS DOMESTIC EQUITY FUNDS
NOTES TO FINANCIAL STATEMENTS (CONT'D)
October 31, 1997
- --------------------------------------------------------------------------------
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 or period ended October 31, 1997, the Funds received
credits or reimbursements under this arrangement as follows:
<TABLE>
<CAPTION>
FUND AMOUNT
- ---------------------------------------------------------------- -------
<S> <C>
Capital Appreciation $27,223
Emerging Growth 71,027
Post-Venture Capital 7,628
Small Company Value 8,857
Strategic Value 461
Growth & Income 2,466
Balanced 138
</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 advisory services, Warburg is entitled
to receive the following fees based on each Fund's average daily net assets:
<TABLE>
<CAPTION>
FUND ANNUAL RATE
- --------------------------------------------- -----------------------------------
<S> <C>
Capital Appreciation .70% of average daily net assets
Emerging Growth .90% of average daily net assets
Post-Venture Capital 1.25% of average daily net assets
Small Company Value 1.00% of average daily net assets
Strategic Value 1.00% of average daily net assets
Growth & Income .75% of average daily net assets
Balanced .90% of average daily net assets
</TABLE>
For the year or period ended October 31, 1997, investment advisory fees,
voluntary waivers and reimbursements were as follows:
<TABLE>
<CAPTION>
GROSS NET EXPENSE
FUND ADVISORY FEE WAIVER ADVISORY FEE REIMBURSEMENT
- -------------------------------- ------------ ---------- ------------ -------------
<S> <C> <C> <C> <C>
Capital Appreciation $ 3,847,872 $ 0 $ 3,847,872 $ 0
Emerging Growth 14,879,436 0 14,879,436 0
Post-Venture Capital 1,704,057 (553,243) 1,150,814 0
Small Company Value 1,735,893 (55,966) 1,679,927 0
Strategic Value 89,566 (89,566) 0 (109,910)
Growth & Income 901,812 0 901,812 0
Balanced 60,121 (35,238) 24,883 0
</TABLE>
79
<PAGE>
<PAGE>
WARBURG PINCUS DOMESTIC EQUITY FUNDS
NOTES TO FINANCIAL STATEMENTS (CONT'D)
October 31, 1997
- --------------------------------------------------------------------------------
2. INVESTMENT ADVISER, CO-ADMINISTRATORS AND DISTRIBUTOR (CONT'D)
Abbott Capital Management, LLC ('Abbott') serves as sub-investment adviser
for the Post-Venture Capital Fund's assets invested in U.S. or foreign private
limited partnerships or other investment funds ('Private Fund Investments').
From its investment advisory fee, Warburg pays Abbott a fee of .55% per annum of
the value of Private Fund Investments as of the end of each calendar quarter.
Effective January 17, 1997, the Sub-Advisory Agreement was amended. Under the
amended Agreement, Warburg pays Abbott a quarterly fee at the annual rate of
1.00% of the Fund's value of Private Fund Investments as of the end of each
calendar quarter. No compensation is paid by the Post-Venture Capital Fund to
Abbott for its sub-investment advisory services.
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 its
administrative services, CFSI currently receives a fee calculated at an annual
rate of .10% of each Fund's average daily net assets. For the year or period
ended October 31, 1997, administrative services fees earned by CFSI were as
follows:
<TABLE>
<CAPTION>
FUND CO-ADMINISTRATION FEE
- ------------------------------------------------------ ---------------------
<S> <C>
Capital Appreciation $ 549,696
Emerging Growth 1,653,283
Post-Venture Capital 136,324
Small Company Value 173,589
Strategic Value 8,956
Growth & Income 109,797
Balanced 6,680
</TABLE>
For its administrative services, PFPC currently receives a fee calculated at
an annual rate of .10% on each Fund's first $500 million in average daily net
assets, .075% on the next $1 billion in average daily net assets and .05% of
average daily net assets in excess of $1.5 billion (for the Growth & Income Fund
and the Balanced Fund, .15% of each Fund's first $500 million of average daily
net assets, .10% of the next $1 billion and .05% of each Fund's average daily
net assets over $1.5 billion).
80
<PAGE>
<PAGE>
WARBURG PINCUS DOMESTIC EQUITY FUNDS
NOTES TO FINANCIAL STATEMENTS (CONT'D)
October 31, 1997
- --------------------------------------------------------------------------------
For the year or period ended October 31, 1997, administrative service fees
earned and voluntarily waived by PFPC were as follows:
<TABLE>
<CAPTION>
NET
FUND CO-ADMINISTRATION FEE WAIVER CO-ADMINISTRATION FEE
- ----------------------------------- --------------------- -------- ---------------------
<S> <C> <C> <C>
Capital Appreciation $ 535,580 $ 0 $ 535,580
Emerging Growth 1,324,178 0 1,324,178
Post-Venture Capital 136,324 0 136,324
Small Company Value 173,589 0 173,589
Strategic Value 8,956 (8,956) 0
Growth & Income 180,362 0 180,362
Balanced 10,020 (10,020) 0
</TABLE>
Counsellors Securities Inc. ('CSI'), also a wholly-owned subsidiary of
Warburg, serves as each Fund's distributor. No compensation is paid by the
Capital Appreciation Fund, the Emerging Growth Fund or the Growth & Income Fund
to CSI for distribution services. For its distribution services, CSI receives a
fee calculated at an annual rate of .25% of the average daily net assets of the
Common Shares of the Post-Venture Capital Fund, the Small Company Value Fund,
the Small Company Growth Fund, the Strategic Value Fund and the Balanced Fund
pursuant to a shareholder servicing and distribution plan adopted by each Fund
pursuant to Rule 12b-1 under the 1940 Act. For its shareholder servicing and
distribution services, CSI receives a fee at an annual rate of .50%,
respectively, of the average daily net assets of each Funds' Advisor Shares
pursuant to distribution plan adopted by each Fund pursuant to Rule 12b-1 under
the 1940 Act. For the year or period ended October 31, 1997, shareholder
servicing and distribution fees earned by CSI were as follows:
<TABLE>
<CAPTION>
FUND DISTRIBUTION FEE
- -------------------------------------------- ----------------
<S> <C>
Capital Appreciation
Advisor Shares $ 152,01
--------
--------
Emerging Growth
Advisor Shares $1,969,695
--------
--------
</TABLE>
81
<PAGE>
<PAGE>
WARBURG PINCUS DOMESTIC EQUITY FUNDS
NOTES TO FINANCIAL STATEMENTS (CONT'D)
October 31, 1997
- --------------------------------------------------------------------------------
2. INVESTMENT ADVISER, CO-ADMINISTRATORS AND DISTRIBUTOR (CONT'D)
<TABLE>
<CAPTION>
FUND DISTRIBUTION FEE
- -------------------------------------------- ----------------
<S> <C>
Post-Venture Capital
Common Shares $ 340,220
Advisor Shares 1,183
--------
$ 341,403
--------
--------
Small Company Value
Common Shares $ 428,482
Advisor Shares 10,983
--------
$ 439,465
--------
--------
Strategic Value
Common Shares $ 22,366
Advisor Shares 51
--------
$ 22,417
--------
--------
Growth & Income
Advisor Shares $ 75,076
--------
--------
Balanced
Common Shares $ 16,635
Advisor Shares 131
--------
$ 16,766
--------
--------
</TABLE>
3. INVESTMENTS IN SECURITIES
For the year or period ended October 31, 1997, purchases and sales of
investment securities (excluding short-term investments) were as follows:
<TABLE>
<CAPTION>
FUND PURCHASES SALES
- ---------------------------------------------- -------------- --------------
<S> <C> <C>
Capital Appreciation $1,272,979,376 $1,232,636,692
Emerging Growth 1,372,740,217 1,306,051,222
Post-Venture Capital 250,562,106 309,711,945
Small Company Value 247,140,260 158,211,795
Strategic Value 33,238,947 24,367,189
Growth & Income 125,103,034 128,688,026
Balanced 5,617,695 8,100,530
</TABLE>
At October 31, 1997, the net unrealized appreciation from investments for
those securities having an excess of value over cost and net unrealized
depreciation from investments for those securities having an excess of cost over
value (based on cost for federal income tax purposes) was as follows:
82
<PAGE>
<PAGE>
WARBURG PINCUS DOMESTIC EQUITY FUNDS
NOTES TO FINANCIAL STATEMENTS (CONT'D)
October 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NET UNREALIZED
UNREALIZED UNREALIZED APPRECIATION
FUND APPRECIATION DEPRECIATION (DEPRECIATION)
- --------------------------------- ------------ ------------- --------------
<S> <C> <C> <C>
Capital Appreciation $ 93,888,423 $ (5,165,604) $ 88,722,819
Emerging Growth 497,883,517 (29,862,274) 468,021,243
Post-Venture Capital 21,333,844 (2,449,516) 18,884,328
Small Company Value 32,919,279 (2,307,936) 30,611,343
Strategic Value 1,019,834 (400,716) 619,118
Growth & Income 84,028,676 (11,683,226) 72,345,450
Balanced 5,351,123 (693,217) 4,657,906
</TABLE>
For the year ended October 31, 1996, sales of the Emerging Growth Fund
included $24,910,031 of investment securities delivered to shareholders in
exchange for 729,399 Common Shares resulting in a gain of $7,807,518.
4. RESTRICTED SECURITIES
Certain of the Fund's investments are restricted as to resale and are valued
under procedures established by the Fund's Board of Directors in good faith, at
fair value, after taking into consideration available indications of value.
<TABLE>
<CAPTION>
PERCENTAGE
SECURITY ACQUISITION MARKET OF NET
FUND SECURITY DESCRIPTION TYPE DATE(S) COST VALUE ASSETS
- -------------------- --------------------------- ------- ------------------ ----------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
Emerging Growth Focal, Inc. Series E Preferred 03/15/96 $ 2,000,001 $ 2,000,000 .10%
New York Restaurant Group,
Inc. Common 10/30/97 3,249,985 3,249,985 .16
Nexus Telecommunication
Systems, Ltd. Common 11/21/95-11/28/96 1,593,760 2,250,000 .11
NK2, Inc. Common 04/25/97 1,300,000 2,242,498 .11
Opal Concepts, Inc. Series
B Preferred 08/31/95 2,000,000 1,999,999 .10
Radical Entertainment
Holdings, Inc. Common 10/06/97 2,500,000 2,500,000 .13
Staffing Resources, Inc. Common 11/16/95 1,001,000 1,001,000 .05
Stratasys, Inc. Warrants 10/31/95 0 0 .00
----------- ----------- --
$13,644,746 $15,243,482 .76%
----------- ----------- --
----------- ----------- --
Post-Venture Capital New York Restaurant Group,
Inc. Common 10/30/97 749,998 749,999 .68%
NK2, Inc. Common 04/25/97 900,000 1,578,750 1.44
Staffing Resources, Inc. Common 11/16/95 44,000 44,000 .04
----------- ----------- --
$ 1,693,998 $ 2,372,749 2.16%
----------- ----------- --
----------- ----------- --
Small Company Value EA Industries, Inc. Series A Bond 04/17/97 $ 1,500,00 $ 1,500,000 .67%
----------- ----------- --
----------- ----------- --
</TABLE>
5. FORWARD FOREIGN CURRENCY CONTRACTS
Each 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. 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 or an
83
<PAGE>
<PAGE>
WARBURG PINCUS DOMESTIC EQUITY FUNDS
NOTES TO FINANCIAL STATEMENTS (CONT'D)
October 31, 1997
- --------------------------------------------------------------------------------
5. FORWARD FOREIGN CURRENCY CONTRACTS (CONT'D)
offsetting position is entered into. At October 31, 1997, there were no open
forward foreign currency contracts.
6. 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 enterings 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 period
ended October 31, 1997 the Strategic Value Fund entered into futures contracts
which resulted in net realized losses of $33,411. At October 31, 1997, there
were no open futures contracts.
84
<PAGE>
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
85
<PAGE>
<PAGE>
WARBURG PINCUS DOMESTIC EQUITY FUNDS
NOTES TO FINANCIAL STATEMENTS (CONT'D)
October 31, 1997
- --------------------------------------------------------------------------------
7. CAPITAL SHARE TRANSACTIONS
The Capital Appreciation Fund is authorized to issue three billion of full
and fractional shares of beneficial interest, $.001 par value per share, of
which one billion shares are classified as Advisor Shares. The Emerging Growth
Fund, the Post-Venture Capital Fund, the Small Company Value Fund, the Small
Company Growth Fund and the Strategic Value Fund are each authorized to issue
three billion full and fractional shares of capital stock, $.001 par value per
share, of which one billion shares of each Fund (two billion shares for the
Growth & Income Fund and Balanced Fund) are designated as the Advisor Shares.
Transactions in shares of each Fund were as follows:
<TABLE>
<CAPTION>
CAPITAL APPRECIATION FUND
COMMON SHARES ADVISOR SHARES
------------------------------------ ------------------------------------
FOR THE YEAR ENDED OCTOBER 31,
-----------------------------------------------------------------------------
1997 1996 1997 1996
-------------- ----------------- -------------- -----------------
<S> <C> <C> <C> <C>
Shares sold 11,782,145 10,910,433 606,375 1,088,505
Shares issued to
shareholders on
reinvestment of
dividends 2,594,315 1,964,279 149,768 140,666
Shares redeemed (9,249,789) (4,541,337) (416,279) (619,616)
-------------- ----------------- -------------- -----------------
Net increase
(decrease) in
shares outstanding 5,126,671 8,333,375 339,864 609,555
-------------- ----------------- -------------- -----------------
-------------- ----------------- -------------- -----------------
Proceeds from sale
of shares $ 219,247,482 $ 182,785,188 $ 11,073,615 $ 18,066,949
Reinvested dividends 43,039,712 29,110,611 2,462,189 2,066,378
Net asset value of
shares redeemed (169,218,861) (75,988,938) (7,731,529) (10,179,680)
-------------- ----------------- -------------- -----------------
Net increase
(decrease) from
capital share
transactions $ 93,068,333 $ 135,906,861 $ 5,804,275 $ 9,953,647
-------------- ----------------- -------------- -----------------
-------------- ----------------- -------------- -----------------
</TABLE>
<TABLE>
<CAPTION>
POST-VENTURE CAPITAL FUND
COMMON SHARES ADVISOR SHARES
------------------------------------ ------------------------------------
FOR THE YEAR ENDED OCTOBER 31,
-----------------------------------------------------------------------------
1997 1996 1997 1996
-------------- ----------------- -------------- -----------------
<S> <C> <C> <C> <C>
Shares sold 4,136,567 15,683,612 3,331 13,545
Shares issued to
shareholders on
reinvestment of
dividends 0 0 0 0
Shares redeemed (8,215,079) (5,665,702) (675) (846)
-------------- ----------------- ------ -------
Net increase
(decrease) in
shares outstanding (4,078,512) 10,017,910 2,656 12,699
-------------- ----------------- ------ -------
-------------- ----------------- ------ -------
Proceeds from sale
of shares $ 67,826,803 $ 249,017,481 $ 54,436 $ 227,722
Reinvested dividends 0 0 0 0
Net asset value of
shares redeemed (133,261,256) (90,369,709) (10,771) (14,986)
-------------- ----------------- ------ -------
Net increase
(decrease) from
capital share
transactions $(65,434,453) $ 158,647,772 $ 43,665 $ 212,736
-------------- ----------------- ------ -------
-------------- ----------------- ------ -------
</TABLE>
86
<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
EMERGING GROWTH FUND
COMMON SHARES ADVISOR SHARES
------------------------------------ -------------------------------------
FOR THE YEAR ENDED OCTOBER 31,
------------------------------------------------------------------------------
1997 1996 1997 1996
-------------- ----------------- --------------- -----------------
<S> <C> <C> <C> <C>
19,332,805 25,903,237 2,777,965 5,757,390
69,725 976,986 25,320 392,736
(14,870,553) (9,467,243) (2,261,139) (503,703)
-------------- ----------------- --------------- -----------------
4,531,977 17,412,980 542,146 5,646,423
-------------- ----------------- --------------- -----------------
-------------- ----------------- --------------- -----------------
$ 685,993,625 $ 823,521,694 $ 95,536,933 $ 179,122,460
2,254,198 27,951,581 797,591 10,992,670
(518,210,531) (301,193,801) (72,595,870) (15,189,970)
-------------- ----------------- --------------- -----------------
$ 170,037,292 $ 550,279,474 $ 23,738,654 $ 174,925,160
-------------- ----------------- --------------- -----------------
-------------- ----------------- --------------- -----------------
</TABLE>
<TABLE>
<CAPTION>
SMALL COMPANY VALUE FUND
COMMON SHARES ADVISOR SHARES
-------------------------------------- --------------------------------------
FOR THE PERIOD FOR THE PERIOD
DECEMBER 29, 1995 DECEMBER 29, 1995
(COMMENCEMENT OF (COMMENCEMENT OF
FOR THE YEAR OPERATIONS) FOR THE OPERATIONS)
ENDED THROUGH YEAR ENDED THROUGH
OCTOBER 31, 1997 OCTOBER 31, 1996 OCTOBER 31, 1997 OCTOBER 31, 1996
---------------- ----------------- ---------------- -----------------
<S> <C> <C> <C> <C>
15,162,610 6,643,221 502,401 228
73,225 0 4 0
(9,160,818) (808,794) (489,074) (1)
---------------- ----------------- -------- -----
6,075,017 5,834,427 13,331 227
---------------- ----------------- -------- -----
---------------- ----------------- -------- -----
$250,655,885 $ 85,546,767 $7,762,145 $ 3,200
1,093,260 0 56 0
(153,324,594) (10,985,928) (8,325,563) (5)
---------------- ----------------- -------- -----
$ 98,424,551 $ 74,560,839 $ (563,362) $ 3,195
---------------- ----------------- -------- -----
---------------- ----------------- -------- -----
</TABLE>
87
<PAGE>
<PAGE>
WARBURG PINCUS DOMESTIC EQUITY FUNDS
NOTES TO FINANCIAL STATEMENTS (CONT'D)
October 31, 1997
- --------------------------------------------------------------------------------
7. CAPITAL SHARE TRANSACTIONS (CONT'D)
<TABLE>
<CAPTION>
STRATEGIC VALUE FUND
COMMON SHARES ADVISOR SHARES
-------------------- --------------------
FOR THE PERIOD FOR THE PERIOD
DECEMBER 31, 1996 JANUARY 9, 1997
(COMMENCEMENT OF (COMMENCEMENT OF
OPERATIONS) THROUGH OPERATIONS) THROUGH
OCTOBER 31, 1997 OCTOBER 31, 1997
-------------------- --------------------
<S> <C> <C>
Shares sold 1,389,517 5,938
Shares issued to
shareholders on
reinvestment of
dividends 0 0
Shares redeemed (353,205) (5,923)
---------- ------
Net increase
(decrease) in
shares outstanding 1,036,312 15
---------- ------
---------- ------
Proceeds from sale
of shares $ 14,726,411 $ 60,026
Reinvested dividends 0 0
Net asset value of
shares redeemed (3,945,392) (63,017)
---------- ------
Net increase
(decrease) from
capital share
transactions $ 10,781,019 $ (2,991)
---------- ------
---------- ------
</TABLE>
<TABLE>
<CAPTION>
GROWTH & INCOME FUND
COMMON SHARES ADVISOR SHARES
---------------------------------------------------- ----------------------------------------------------
FOR THE TWO FOR THE YEAR FOR THE YEAR FOR THE TWO FOR THE YEAR FOR THE YEAR
MONTHS ENDED ENDED ENDED MONTHS ENDED ENDED ENDED
OCTOBER 31, 1997 AUGUST 31, 1997 AUGUST 31, 1996 OCTOBER 31, 1997 AUGUST 31, 1997 AUGUST 31, 1996
---------------- ---------------- ---------------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C> <C> <C>
Shares sold 2,174,608 16,219,671 20,913,915 197,822 739,244 2,135,316
Shares issued to
shareholders on
reinvestment of
dividends 62,949 261,793 3,538,291 4,665 20,096 237,054
Shares redeemed (2,073,583) (32,720,263) (38,907,636) (70,415) (1,497,975) (499,292)
---------------- ---------------- ---------------- ---------------- ---------------- ----------------
Net increase
(decrease) in
shares outstanding 163,974 (16,238,799) (14,455,430) 132,072 (738,635) 1,873,078
---------------- ---------------- ---------------- ---------------- ---------------- ----------------
---------------- ---------------- ---------------- ---------------- ---------------- ----------------
Proceeds from sale
of shares $ 41,615,463 $ 263,366,857 $ 336,297,357 $ 3,793,455 $ 12,646,588 $ 34,381,493
Reinvested dividends 1,219,324 4,211,791 54,915,454 90,322 348,935 3,668,960
Net asset value of
shares redeemed (39,147,600) (508,011,387) (608,244,172) (1,340,222) (23,301,120) (7,719,142)
---------------- ---------------- ---------------- ---------------- ---------------- ----------------
Net increase
(decrease) from
capital share
transactions $ 3,687,187 $ (240,432,739) $ (217,031,361) $ 2,543,555 $(10,305,597) $ 30,331,311
---------------- ---------------- ---------------- ---------------- ---------------- ----------------
---------------- ---------------- ---------------- ---------------- ---------------- ----------------
</TABLE>
88
<PAGE>
<PAGE>
WARBURG PINCUS DOMESTIC EQUITY FUNDS
NOTES TO FINANCIAL STATEMENTS (CONT'D)
October 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
BALANCED FUND
COMMON SHARES ADVISOR SHARES
------------------------------------------------------ -------------------------------------------------------
FOR THE TWO FOR THE TWO
MONTHS ENDED FOR THE YEAR FOR THE YEAR MONTHS ENDED FOR THE YEAR FOR THE YEAR
OCTOBER 31, ENDED ENDED OCTOBER 31, ENDED ENDED
1997 AUGUST 31, 1997 AUGUST 31, 1996 1997 AUGUST 31, 1997 AUGUST 31, 1996
-------------- ----------------- ----------------- --------------- ----------------- -----------------
<S> <C> <C> <C> <C> <C> <C>
Shares sold 152,757 1,550,047 2,799,590 1,762 10,558 45,037
Shares issued to
shareholders on
reinvestment of
dividends 8,126 80,179 29,983 26 146 2
Shares redeemed (231,496) (1,480,328) (725,370) (1,313) (1,184) (44,170)
-------------- ----------------- ----------------- ------ ------- -------
Net increase
(decrease) in
shares
outstanding (70,613) 149,898 2,104,158 475 9,520 869
-------------- ----------------- ----------------- ------ ------- -------
-------------- ----------------- ----------------- ------ ------- -------
Proceeds from
sale of shares $ 2,259,503 $ 19,842,484 $32,792,373 $25,967 $ 134,935 $ 535,614
Reinvested
dividends 121,653 1,012,371 345,728 385 1,868 25
Net asset value
of shares
redeemed (3,443,737) (19,105,605) (8,530,390) (19,172) (15,173) (534,832)
-------------- ----------------- ----------------- ------ ------- -------
Net increase
(decrease) from
capital share
transactions $ (1,062,581) $ 1,749,250 $24,607,711 $ 7,180 $ 121,630 $ 807
-------------- ----------------- ----------------- ------ ------- -------
-------------- ----------------- ----------------- ------ ------- -------
</TABLE>
89
<PAGE>
<PAGE>
WARBURG PINCUS DOMESTIC EQUITY FUNDS
NOTES TO FINANCIAL STATEMENTS (CONT'D)
October 31, 1997
- --------------------------------------------------------------------------------
8. LIABILITIES
At October 31, 1997, each Fund had the following affiliated and investment
related liabilities:
<TABLE>
<CAPTION>
CAPITAL EMERGING POST-VENTURE
APPRECIATION GROWTH CAPITAL
FUND FUND FUND
------------ ----------- -------------
<S> <C> <C> <C>
Payable for
securities
purchased (at
value) $6,405,197 $23,605,835 $ 2,765,677
Investment advisory
fee payable 387,381 1,577,034 98,308
Administrative
services fees
payable 55,340 175,226 10,139
Distribution fees
payable 0 0 25,288
Payable for Fund
share's redeemed 435,868 1,378,150 877,442
</TABLE>
9. NET ASSETS
At October 31, 1997, capital contributions, undistributed net investment
income and accumulated net realized gain (loss) on security transactions have
been adjusted for current period permanent book/tax differences. The Emerging
Growth Fund and the Post-Venture Capital Fund reclassified $11,348,164 and
$1,732,839, respectively, from accumulated net investment loss to capital
contributions. The Small Company Value Fund reclassified $1,097,451 from
accumulated net investment loss to accumulated net realized gain (loss) from
security transactions. The Small Company Growth Fund reclassified offering costs
of $97,777 from accumulated net investment loss to capital contributions. The
Strategic Value Fund reclassified offering costs of $97,534 from undistributed
net investment income to capital contributions. The Growth and Income Fund
reclassified $45,603 of distributions from accumulated net realized gain (loss)
from security transactions to undistributed net investment income. The Balanced
Fund reclassified $187 in paydown gains from accumulated net realized gain
(loss) from security transactions to undistributed net investment income. The
Post-Venture Capital Fund and the Balanced Fund reclassified $3,944 and $590,
respectively, from accumulated net realized gain/loss from foreign currency
related items to undistributed net investment income/loss. Net investment
income, net realized gain (loss) on security transactions and net assets were
not affected by this reclassification.
Net Assets at October 31, 1997 consisted of the following:
<TABLE>
<CAPTION>
CAPITAL EMERGING POST-VENTURE
APPRECIATION GROWTH CAPITAL
FUND FUND FUND
------------ -------------- -------------
<S> <C> <C> <C>
Capital contributed,
net $418,060,943 $1,386,502,710 $ 93,479,777
Undistributed net
investment income 2,077,591 0 0
Accumulated net
realized gain
(loss) from
security
transactions 111,076,265 117,598,421 (2,591,035)
Net unrealized
appreciation
(depreciation) from
investments and
foreign currency
related items 90,477,393 468,715,660 18,955,670
------------ -------------- -------------
Net assets $621,692,192 $1,972,816,791 $ 109,844,412
------------ -------------- -------------
------------ -------------- -------------
</TABLE>
90
<PAGE>
<PAGE>
WARBURG PINCUS DOMESTIC EQUITY FUNDS
NOTES TO FINANCIAL STATEMENTS (CONT'D)
October 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SMALL COMPANY STRATEGIC
VALUE VALUE GROWTH & INCOME BALANCED
FUND FUND FUND FUND
------------- ----------- --------------- -----------
<S> <C> <C> <C> <C>
$1,136,236 $80,313 $23,101,583 $208,869
207,550 0 463,039 12,072
21,247 1,138 56,430 3,381
53,062 2,846 0 8,417
343,483 0 6,070,067 17,190
</TABLE>
<TABLE>
<CAPTION>
SMALL COMPANY STRATEGIC
VALUE VALUE GROWTH & INCOME BALANCED
FUND FUND FUND FUND
------------- ----------- --------------- -----------
<S> <C> <C> <C> <C>
$172,519,177 $10,780,494 $ 512,752,652 $30,232,413
0 121,045 0 38,284
20,656,711 587,649 110,705,066 3,483,388
30,753,945 619,284 72,675,620 4,697,669
------------- ----------- --------------- -----------
$223,929,833 $12,108,472 $ 696,133,338 $38,451,754
------------- ----------- --------------- -----------
------------- ----------- --------------- -----------
</TABLE>
91
<PAGE>
<PAGE>
WARBURG PINCUS DOMESTIC EQUITY FUNDS
NOTES TO FINANCIAL STATEMENTS (CONT'D)
October 31, 1997
- --------------------------------------------------------------------------------
10. 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
EXPIRING IN
----------------------- TOTAL CAPITAL
FUND 2004 2005 LOSS CARRYOVER
- -------------------- ---------- -------- --------------
<S> <C> <C> <C>
Post-Venture Capital $2,519,692 $ 0 $2,519,692
</TABLE>
92
<PAGE>
<PAGE>
WARBURG PINCUS DOMESTIC EQUITY FUNDS
NOTES TO FINANCIAL STATEMENTS (CONT'D)
October 31, 1997
- --------------------------------------------------------------------------------
11. OTHER FINANCIAL HIGHLIGHTS
Each Fund currently offers one other class of shares, Common Shares,
representing equal pro rata interests in each of the respective Warburg Pincus
Equity Funds. The financial highlights for a Common Share of each Fund are as
follows:
<TABLE>
<CAPTION>
CAPITAL APPRECIATION 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 $17.95 $16.39 $14.29 $15.32 $13.30
------ ------ ------ ------ ------
Income from Investment Operations:
Net Investment Income .11 .08 .04 .04 .05
Net Gain on Securities (both realized and
unrealized) 4.93 3.53 3.08 .17 2.78
------ ------ ------ ------ ------
Total from Investment Operations 5.04 3.61 3.12 .21 2.83
------ ------ ------ ------ ------
Less Distributions:
Dividends from Net Investment Income (.10) (.01) (.04) (.05) (.05)
Distributions from Realized Gains (1.80) (2.04) (.98) (1.19) (.76)
------ ------ ------ ------ ------
Total Distributions (1.90) (2.05) (1.02) (1.24) (.81)
------ ------ ------ ------ ------
NET ASSET VALUE, END OF YEAR $21.09 $17.95 $16.39 $14.29 $15.32
------ ------ ------ ------ ------
------ ------ ------ ------ ------
Total Return 30.98% 24.67% 24.05% 1.65% 22.19%
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Year (000s) $587,091 $407,707 $235,712 $159,346 $159,251
Ratios to average daily net assets:
Operating expenses 1.01%@ 1.04%@ 1.12% 1.05% 1.01%
Net investment income .54% .59% .31% .26% .30%
Decrease reflected in above operating expense
ratios due to waivers/reimbursements .00% .00% .00% .01% .00%
Portfolio Turnover Rate 238.11% 170.69% 146.09% 51.87% 48.26%
Average Commission Rate # $.0595 $.0595 -- -- --
</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 1.00% and 1.03% for the years ended October
31, 1997 and 1996, respectively.
# Computed by dividing the total amount of commissions paid by the total number
of shares purchased and sold during the period for which there was a
commission charged. The Average Commission Rate is not required for fiscal
periods beginning before September 1, 1995.
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 $ .93
Long-term capital gain .97
Ordinary income dividends qualifying for the dividends received deduction
available to corporate shareholders was 30.74%.
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.
93
<PAGE>
<PAGE>
WARBURG PINCUS DOMESTIC EQUITY FUNDS
NOTES TO FINANCIAL STATEMENTS (CONT'D)
October 31, 1997
- --------------------------------------------------------------------------------
11. OTHER FINANCIAL HIGHLIGHTS (CONT'D)
<TABLE>
<CAPTION>
EMERGING GROWTH 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 $32.80 $29.97 $22.38 $23.74 $18.28
------ ------ ------ ------ ------
Income from Investment Operations:
Net Investment Loss (.19) (.02) (.05) (.06) (.10)
Net Gain on Securities (both realized and
unrealized) 7.12 4.60 7.64 .06 5.93
------ ------ ------ ------ ------
Total from Investment
Operations 6.93 4.58 7.59 .00 5.83
------ ------ ------ ------ ------
Less Distributions:
Dividends from Net Investment Income .00 .00 .00 .00 .00
Distributions from Realized Gains (.07) (1.75) .00 (1.36) (.37)
------ ------ ------ ------ ------
Total Distributions (.07) (1.75) .00 (1.36) (.37)
------ ------ ------ ------ ------
NET ASSET VALUE, END OF YEAR $39.66 $32.80 $29.97 $22.38 $23.74
------ ------ ------ ------ ------
------ ------ ------ ------ ------
Total Return 21.18% 16.14% 33.91% .16% 32.28%
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Year (000s) $1,515,385 $1,104,684 $487,537 $240,664 $165,525
Ratios to average daily net assets:
Operating expenses 1.22%@ 1.28%@ 1.26% 1.22% 1.23%
Net investment loss (.59%) (.63%) (.58%) (.58%) (.60%)
Decrease reflected in above operating expense
ratios due to waivers/reimbursements .00% .00% .00% .04% .00%
Portfolio Turnover Rate 87.03% 65.77% 84.82% 60.38% 68.35%
Average Commission Rate # $.0566 $.0567 -- -- --
</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 1.21% and 1.27% for the years ended October
31, 1997 and 1996, respectively.
# Computed by dividing the total amount of commissions paid by the total number
of shares purchased and sold during the period for which there was a
commission charged. The Average Commission Rate is not required for fiscal
periods beginning before September 1, 1995.
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:
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.
94
<PAGE>
<PAGE>
WARBURG PINCUS DOMESTIC EQUITY FUNDS
NOTES TO FINANCIAL STATEMENTS (CONT'D)
October 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
POST-VENTURE CAPITAL FUND
---------------------------------------------------
COMMON SHARES
---------------------------------------------------
FOR THE PERIOD
SEPTEMBER 29, 1995
FOR THE YEAR ENDED (COMMENCEMENT OF
OCTOBER 31, OPERATIONS)
---------------- THROUGH
1997 1996 OCTOBER 31, 1995
----------- ----------- ------------------
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 16.03 $ 10.69 $10.00
----- ----- -----
Income from Investment Operations:
Net Investment Loss (.35) (.11) .00
Net Gain on Securities and Foreign Currency
Related Items (both realized and unrealized) 1.93 5.45 .69
----- ----- -----
Total from Investment Operations 1.58 5.34 .69
----- ----- -----
Less Distributions:
Dividends from Net Investment Income .00 .00 .00
Distributions from Realized Gains .00 .00 .00
----- ----- -----
Total Distributions .00 .00 .00
----- ----- -----
NET ASSET VALUE, END OF PERIOD $ 17.61 $ 16.03 $10.69
----- ----- -----
----- ----- -----
Total Return 9.86% 49.95% 6.90%'D'
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (000s) $109,575 $165,081 $3,024
Ratios to average daily net assets:
Operating expenses 1.66%@ 1.66%@ 1.65%*
Net investment income (loss) (1.27%) (1.13%) .25%*
Decrease reflected in above operating expense
ratios due to waivers/reimbursements .41% .66% 23.76%*
Portfolio Turnover Rate 197.56% 168.46% 16.90%'D'
Average Commission Rate # $.0401 $.0529 --
</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 1,65% and 1.65% for the years ended
October 31, 1997 and 1996, respectively.
'D' Non-annualized.
* Annualized.
# Computed by dividing the total amount of commissions paid by the total
number of shares purchased and sold during the period for which there was a
commission charged. The Average Commission Rate is not required for fiscal
periods beginning before September 1, 1995.
See Accompanying Notes to Financial Statements.
95
<PAGE>
<PAGE>
WARBURG PINCUS DOMESTIC EQUITY FUNDS
NOTES TO FINANCIAL STATEMENTS (CONT'D)
October 31, 1997
- --------------------------------------------------------------------------------
11. OTHER FINANCIAL HIGHLIGHTS (CONT'D)
<TABLE>
<CAPTION>
SMALL COMPANY VALUE FUND
-----------------------------------------
COMMON SHARES
-----------------------------------------
FOR THE PERIOD
DECEMBER 29, 1995
FOR THE (COMMENCEMENT OF
YEAR ENDED OPERATIONS) THROUGH
OCTOBER 31, 1997 OCTOBER 31, 1996
---------------- -------------------
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 14.38 $ 10.00
------- ------
Income from Investment Operations:
Net Investment Loss (.08) (.02)
Net Gain on Securities (both realized and unrealized) 4.64 4.40
------- ------
Total from Investment Operations 4.56 4.38
------- ------
Less Distributions:
Dividends from Net Investment Income .00 .00
Distributions from Realized Gains (.17) .00
------- ------
Total Distributions (.17) .00
------- ------
NET ASSET VALUE, END OF PERIOD $ 18.77 $ 14.38
------- ------
------- ------
Total Return 32.05% 43.80%'D'
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (000s) $223,675 $84,045
Ratios to average daily net assets:
Operating expenses 1.70%@ 1.75%@*
Net investment loss (.63%) (.43%)*
Decrease reflected in above operating expense ratios
due to waivers/reimbursements .03% .44%*
Portfolio Turnover Rate 105.87% 43.14%'D'
Average Commission Rate # $.0555 $.0570
</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 year or period ended
October 31, 1997 and 1996, respectively. The Common Shares' operating
expense ratio after reflecting these arrangements were 1.69% and 1.75% for
the years ended October 31, 1997 and 1996, respectively.
'D' Non-annualized.
* Annualized.
# Computed by dividing the total amount of commissions paid by the total
number of shares purchased and sold during the period for which there was a
commission charged.
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 $ .17
Ordinary income dividends qualifying for the dividends received deduction
available to corporate shareholders was 93.23%.
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.
96
<PAGE>
<PAGE>
WARBURG PINCUS DOMESTIC EQUITY FUNDS
NOTES TO FINANCIAL STATEMENTS (CONT'D)
October 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
STRATEGIC VALUE
FUND
-------------------
COMMON SHARES
-------------------
FOR THE PERIOD
DECEMBER 31, 1996
(COMMENCEMENT OF
OPERATIONS) THROUGH
OCTOBER 31, 1997
-------------------
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.00
------
Income from Investment Operations:
Net Investment Income .02
Net Gain on Securities (both realized and unrealized) 1.55
------
Total from Investment Operations 1.57
------
Less Distributions:
Dividends from Net Investment Income .00
Distributions from Realized Gains .00
------
Total Distributions .00
------
NET ASSET VALUE, END OF PERIOD $ 11.57
------
------
Total Return 15.70%'D'
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (000s) $12,108
Ratios to average daily net assets:
Operating expenses 1.45%@*
Net investment income .26%*
Decrease reflected in above operating expense ratio due to
waivers/reimbursements 2.42%*
Portfolio Turnover Rate 277.99%'D'
Average Commission Rate # $.0556
</TABLE>
- --------------------------------------------------------------------------------
@ Interest earned on uninvested cash balances is used to offset portions of
the transfer agent expense. These arrangements had no effect on the Fund's
expense ratio.
'D' Non-annualized.
* Annualized.
# Computed by dividing the total amount of commissions paid by the total
number of shares purchased and sold during the period for which there was a
commission charged.
See Accompanying Notes to Financial Statements.
97
<PAGE>
<PAGE>
WARBURG PINCUS DOMESTIC EQUITY FUNDS
NOTES TO FINANCIAL STATEMENTS (CONT'D)
October 31, 1997
- --------------------------------------------------------------------------------
11. OTHER FINANCIAL HIGHLIGHTS (CONT'D)
<TABLE>
<CAPTION>
WARBURG PINCUS
GROWTH & INCOME FUND
---------------------------------------------------------------------------------
COMMON SHARES
---------------------------------------------------------------------------------
FOR THE TWO FOR THE YEARS ENDED AUGUST 31,
MONTHS ENDED ------------------------------------------------------------
OCTOBER 31, 1997 1997 1996 1995 1994 1993
---------------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING
OF PERIOD $18.44 $ 14.90 $ 16.40 $ 14.56 $ 16.72 $ 11.99
----- -------- -------- -------- -------- --------
Income from Investment
Operations:
Net Investment Income .0239 0.1393 0.1116 0.2224 0.0785 0.0464
Net Gain (Loss) on
Securities (both
realized and
unrealized) .1383 3.5352 (0.6633) 1.9834 1.8151 4.8499
----- -------- -------- -------- -------- --------
Total from Investment
Operations .1622 3.6745 (0.5517) 2.2058 1.8936 4.8963
----- -------- -------- -------- -------- --------
Less Distributions:
Dividends from Net
Investment Income (.0391) (0.1332) (0.1350) (0.1824) (0.0785) (0.0875)
Distributions from
Realized Gains -- -- (0.8133) (0.1834) (3.9751) (0.0788)
----- -------- -------- -------- -------- --------
Total Distributions (.0391) (0.1332) (0.9483) (0.3658) (4.0536) (0.1663)
----- -------- -------- -------- -------- --------
NET ASSET VALUE, END OF
PERIOD $18.56 $ 18.44 $ 14.90 $ 16.40 $ 14.56 $ 16.72
----- -------- -------- -------- -------- --------
----- -------- -------- -------- -------- --------
Total Returns .85%'D' 24.78% (3.54%) 15.62% 14.41% 41.17%
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period
(000) $608,205 $601,159 $727,627 $1,038,193 $410,658 $60,689
Ratios to average daily net
assets:
Operating expenses 1.18%@* 1.15%@ 1.21%@ 1.22% 1.28% 1.14%
Net investment income .75%* .80% .69% 1.64% .41% .30%
Decrease reflected in
above operating expense
ratios due to
waivers/reimbursements .00% .00% .00% .00% .00% .00%
Portfolio Turnover Rate 19%'D' 148% 94% 109% 150% 344%
Average Commission Rate # $.0600 $0.0587 $0.0596 -- -- --
</TABLE>
- --------------------------------------------------------------------------------
@ Interest earned on uninvested cash balances is used to offset portions of
the transfer agent expense. These arrangements had no effect on the Fund's
expense ratio.
'D' Non-annualized.
* Annualized.
# Computed by dividing the total amount of commissions paid by the total
number of shares purchased and sold during the period for which there was a
commission charged. The Average Commission Rate is not required for fiscal
periods beginning before September 1, 1995.
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 $.0391
Ordinary income dividends qualifying for the dividends received deduction
available to corporate shareholders was 100.00%.
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.
98
<PAGE>
<PAGE>
WARBURG PINCUS DOMESTIC EQUITY FUNDS
NOTES TO FINANCIAL STATEMENTS (CONT'D)
October 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
WARBURG PINCUS
BALANCED FUND
---------------------------------------------------------------------------------
COMMON SHARES
---------------------------------------------------------------------------------
FOR THE TWO FOR THE YEARS ENDED AUGUST 31,
MONTHS ENDED ------------------------------------------------------------
OCTOBER 31, 1997 1997 1996 1995 1994 1993
---------------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING
OF PERIOD $14.24 $ 11.94 $ 11.12 $ 11.01 $ 11.71 $ 12.04
----- -------- -------- -------- -------- --------
Income from Investment
Operations:
Net Investment Income .0348 0.2275 0.1573 0.2080 0.4132 0.5555
Net Gain on Securities
and Foreign Currency
Related Items (both
realized and
unrealized) .1521 2.4649 0.9389 1.7225 0.3248 1.1253
----- -------- -------- -------- -------- --------
Total from Investment
Operations .1869 2.6924 1.0962 1.9305 0.7380 1.6808
----- -------- -------- -------- -------- --------
Less Distributions:
Dividends from Net
Investment Income (.0468) (0.2429) (0.1300) (0.3136) (0.4586) (0.5412)
Distributions from
Realized Gains -- (0.1511) (0.1462) (1.5069) (0.9794) (1.4696)
----- -------- -------- -------- -------- --------
Total Distributions (.0468) (0.3940) (0.2762) (1.8205) (1.4380) (2.0108)
----- -------- -------- -------- -------- --------
NET ASSET VALUE, END OF
PERIOD $14.38 $ 14.24 $ 11.94 $ 11.12 $ 11.01 $ 11.71
----- -------- -------- -------- -------- --------
----- -------- -------- -------- -------- --------
Total Returns 1.30%'D' 23.03% 9.99% 21.56% 6.86% 15.27%(a)
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period
(000) $38,294 $38,926 $30,853 $5,342 $808 $762
Ratios to average daily net
assets:
Operating expenses 1.35%@* 1.35%@ 1.53%@ 1.53% 0% 0%
Net investment income 1.38%* 1.76% 1.66% 2.30% 3.76% 4.13%
Decrease reflected in
above operating expense
ratios due to
waivers/reimbursements .68%* .55% .90% 4.51% 5.46% 5.37%
Portfolio Turnover Rate 15%'D' 120% 108% 107% 32% 30%
Average Commission Rate # $.0430 $0.0400 $0.0453 -- -- --
</TABLE>
- --------------------------------------------------------------------------------
@ Interest earned on uninvested cash balances is used to offset portions of
the transfer agent expense. These arrangements had no effect on the Fund's
expense ratio.
'D' Non-annualized.
* Annualized.
# Computed by dividing the total amount of commissions paid by the total
number of shares purchased and sold during the period for which there was a
commission charged. The Average Commission Rate is not required for fiscal
periods beginning before September 1, 1995.
(a) Sales load not reflected in total return. The sales load was eliminated
effective August 31, 1994.
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 $.0468
Ordinary income dividends qualifying for the dividends received deduction
available to corporate shareholders was 41.39%.
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.
99
<PAGE>
<PAGE>
WARBURG PINCUS EQUITY FUNDS
REPORT OF INDEPENDENT ACCOUNTANTS
- --------------------------------------------------------------------------------
To the Boards of Directors, Trustees and Shareholders of
WARBURG PINCUS EQUITY FUNDS
We have audited the accompanying statements of assets and liabilities, including
the schedules of investments of Warburg Pincus Post-Venture Capital Fund,
Warburg Pincus Small Company Growth Fund and Warburg Pincus Strategic Value Fund
and the statements of net assets of Warburg Pincus Capital Appreciation Fund,
Warburg Pincus Emerging Growth Fund, Warburg Pincus Small Company Value Fund,
Warburg Pincus Growth & Income Fund and Warburg Pincus Balanced Fund (all funds
collectively referred to as the 'Warburg Pincus Equity Funds'), as of October
31, 1997, and the related statements of operations, changes in net assets and
the financial highlights for each of the years (or periods) presented. These
financial statements and financial highlights are the responsibility of the
Warburg Pincus Equity Funds' management. Our responsibility 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 Equity Funds as of October 31, 1997, the results of their
operations, the changes in their net assets 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, Pennsylvania
December 19, 1997
100
<PAGE>
<PAGE>
WARBURG PINCUS
ADIVSOR FUNDS
COUNSELLORS
SECURITIES INC.,
DISTRIBUTOR
800-369-2728
WARBURG PINCUS
ASSET MANAGEMENT ADDSF-2-1097
STATEMENT OF DIFFERENCES
------------------------
The dagger symbol shall be expressed as............................... 'D'
The division symbol shall be expressed as............................. [div]
