SEMIANNUAL
REPORT
April 30, 1999
WARBURG PINCUS
BALANCED FUND
o
WARBURG PINCUS
GROWTH & INCOME FUND
o
WARBURG PINCUS
CAPITAL APPRECIATION FUND
o
WARBURG PINCUS
HEALTH SCIENCES FUND
More complete information about the funds, including charges and expenses, is
provided in the Prospectus, which must precede or accompany this document and
which should be read carefully before investing. You may obtain additional
copies by calling 800-WARBURG (800-927-2874) or by writing to Warburg Pincus
Funds, P.O. Box 9030, Boston, MA 02205-9030.
[GRAPHIC OF WARBURG PINCUS FUNDS]
<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 document are as of April 30, 1999; these
views and portfolio holdings may have changed subsequent to these dates. Nothing
in this document is a recommendation to purchase or sell securities.
<PAGE>
Warburg Pincus Balanced Fund
Semiannual Investment Adviser's Report -- April 30, 1999
- --------------------------------------------------------------------------------
June 15, 1999
Dear Shareholder:
For the six months ended April 30, 1999, Warburg Pincus Balanced Fund had a
return of 11.32%, vs. returns of 12.78% for the Lipper Balanced Funds Index,*
22.32% for the S&P 500 Index** and 0.52% for the Lehman Brothers Intermediate
Government/Corporate Bond Index.*** The fund's one-year return through April 30,
1999 was 7.34%. Its five-year, 10-year and since-inception (on October 6, 1988)
average annual total returns through April 30, 1999 were 15.47%, 13.39% and
13.26%,**** respectively. Note: Effective December 24, 1998, Dale C. Christensen
no longer serves as Co-Portfolio Manager of the fund. As of that date, M.
Anthony E. van Daalen and Charles C. Van Vleet joined Brian S. Posner and Scott
T. Lewis as the fund's Co-Portfolio Managers.
Manager Commentary
Domestic financial markets had decidedly mixed results during the period.
Most major stock indexes had impressive gains, buoyed by a surprisingly healthy
U.S. economy and investors' increased optimism regarding corporate profits.
Notably, the rally in stocks extended to recently struggling areas, namely
smaller-cap and cyclical stocks (though large-cap growth stocks continued to
pace the market's advance). Most bond indexes, on the other hand, had modest
gains, at best, in terms of total return. Hindering bonds were fears that the
Federal Reserve--which cut interest rates three times between September and
November--would, given the economy's strength, reverse course in order to
contain potential inflation. This sentiment particularly weighed on Treasuries,
with the yield on the 30-year Treasury bond rising 50 basis points to end the
period at 5.65%.
Against this backdrop, the fund had a good return in absolute terms,
performing roughly in line with its Lipper benchmark. The fund's performance in
part reflected its relatively conservative asset allocation. We maintained a
roughly 60/40 balance between stocks and bonds throughout, seeing little
incentive to take a more-aggressive stance, given overall market conditions.
With respect to the fund's stock holdings, we maintained a value-based
approach, emphasizing out-of-favor stocks of companies that stand to
significantly improve their earnings (due, e.g., to a restructuring). This
hampered the fund somewhat, since growth stocks outpaced value stocks for the
six months (though the latter finished the period quite strongly). In terms of
sector allocation, we made few noteworthy changes to the fund, though
1
<PAGE>
Warburg Pincus Balanced Fund
Semiannual Investment Adviser's Report -- April 30, 1999 (cont'd)
- --------------------------------------------------------------------------------
we added to our weighting in the banks and savings & loan area. These stocks
came under pressure during the latter part of 1998, on concerns regarding credit
quality, creating several compelling buying opportunities in our view.
With regard to bond strategies, we maintained a bias toward high-quality,
intermediate-term issues, which we viewed as attractive from a risk-adjusted
perspective, and remained well-diversified by sector. One notable move we made
here was to significantly increase our exposure to mortgage-backed bonds. Yield
spreads between these securities and Treasuries widened significantly in the
latter part of 1998, prompting us to add a number of mortgage-backed bonds we
judged to be good values. All told, our bond strategies contributed positively
to the fund's return.
Going forward, we will continue to strive to provide competitive levels of
longer-term total return, while attempting to limit overall volatility. In
practice, this means focusing on mid- and large-capitalization stocks we believe
have the best risk-adjusted expected returns, based on their earnings prospects
and current valuations. Within the fund's bond component, our emphasis will
remain on high-quality, intermediate-term issues that have what we deem to be
attractive risk-adjusted yields as well as potential for longer-term
appreciation.
Brian S. Posner M. Anthony E. van Daalen
Co-Portfolio Manager Co-Portfolio Manager
Scott T. Lewis Charles C. Van Vleet
Co-Portfolio Manager Co-Portfolio Manager
- ----------
* The Lipper Balanced Funds Index is an equal-weighted performance index,
adjusted for capital-gain distributions and income dividends, of the
largest qualifying funds in this investment objective, and is compiled by
Lipper Inc.
** 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 McGraw-Hill Co., Inc.
*** The Lehman Brothers Intermediate Government/Corporate Bond Index is an
unmanaged index (with no defined investment objective) of intermediate-term
government and corporate bonds, and is calculated by Lehman Brothers Inc.
**** Warburg Pincus Asset Management, Inc. assumed management of the fund on
September 30, 1994.
2
<PAGE>
Warburg Pincus Growth & Income Fund
Semiannual Investment Adviser's Report -- April 30, 1999
- --------------------------------------------------------------------------------
June 15, 1999
Dear Shareholder:
For the six months ended April 30, 1999, Warburg Pincus Growth & Income Fund
had a gain of 20.02%, vs. a gain of 22.32% for the S&P 500 Index.* The fund's
one-year return through April 30, 1999 was 10.75%. Its five-year, 10-year and
since-inception (on October 6, 1988) average annual total returns through April
30, 1999 were 14.38%, 14.96% and 14.95%,** respectively.
The period was a positive one for the U.S. stock market as a whole. Buoyed by
better-than-expected economic data and continued subdued inflation, most major
domestic stock indexes rallied to finish the six months standing at or near
all-time highs. Notably, while a relatively small group of large-cap growth
stocks paced the market's advance through most of the period, investors
"rotated" heavily toward value-type stocks (including recently out-of-favor
cyclical stocks) in April. This may or may not imply a longer-term trend, but we
view the recent broadening of the market's rally as a welcome development, and a
sign that investors are focusing more intensely on valuations, both on an
absolute and relative basis.
Against this backdrop, the fund had a positive return, performing roughly in
line with its benchmark. The fund trailed its benchmark by a fairly significant
margin through much of the six months, but ended the period on a strong note,
reflecting its continued focus on value stocks.
We made no noteworthy changes to the fund during the period in terms of broad
strategies. We continued to emphasize companies with good cash flows and
improving longer-term earnings potential, due, for example, to a restructuring
or to the launch of new products or services. In terms of sector strategies, we
remained well-diversified, seeing little incentive to aggressively overweight
any particular areas. That said, we significantly increased our weighting in the
financial area, with a particular focus on bank stocks. We took advantage of
weakness in the area (largely caused by concerns, late last year, that slowing
economic growth would have a negative impact on credit quality) to add a number
of bank stocks we deemed to be attractively priced.
We also raised our exposure to cyclical stocks, primarily by adding to our
weighting in the capital-equipment sector. Stocks we purchased included
agricultural-equipment manufacturers that we judged to have improving earnings
prospects.
3
<PAGE>
Warburg Pincus Growth & Income Fund
Semiannual Investment Adviser's Report -- April 30, 1999 (cont'd)
- --------------------------------------------------------------------------------
Sector weightings we lowered during the period included food, beverages &
tobacco, reflecting our valuation-based decision to eliminate certain positions
here as well as our desire to further increase our weighting in cyclical-type
stocks. Another area we de-emphasized was the telecommunications & equipment
sector, also due to generally high valuations in the sector.
Looking ahead, we believe that, the market's generally high valuations
notwithstanding, many attractive investment opportunities exist. In this
context, we will continue to strive to identify stocks that we deem to be
fundamentally undervalued, based on factors such as price-to-book and
debt-to-equity ratios.
Brian S. Posner
Portfolio Manager
- ------------------
* 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 McGraw-Hill Co., Inc.
** Warburg Pincus Asset Management, Inc. assumed management of the Fund on
January 1, 1992.
4
<PAGE>
Warburg Pincus Capital Appreciation Fund
Semiannual Investment Adviser's Report -- April 30, 1999
- --------------------------------------------------------------------------------
June 15, 1999
Dear Shareholder:
For the six months ended April 30, 1999, Warburg Pincus Capital Appreciation
Fund had a gain of 27.41%, vs. a gain of 22.32% for the S&P 500 Index.* The
fund's one-year return through April 30, 1999 was 19.68%.
Its five-year, 10-year and since-inception (on August 17, 1987) average annual
total returns through April 30, 1999 were 25.74%, 17.23% and 15.61%,
respectively.
The period was a robust one for the U.S. stock market as a whole, with
large-cap stocks performing especially well. Buoyed by a continued healthy mix
of economic growth and low inflation, along with some encouraging news from
emerging markets, most major domestic stock indexes rallied to end the period
standing at or near record levels.
Against this backdrop, the fund had a solid return, both in absolute terms
and relative to its benchmark. Helping the fund were good performances from a
number of its holdings, in particular its technology, financial, media and
telecommunications stocks.
We made few noteworthy changes to the fund during the six months in terms of
overall strategies, remaining biased toward market sectors offering growth rates
significantly greater than that of the overall economy. This proved beneficial
to the fund's return, as stocks of growth-oriented companies outpaced those of
cyclical (i.e., economically sensitive) companies during the period.
With respect to sector exposure, notable areas of concentration for the fund
continued to include the media & communications sector, a weighting we raised as
the period progressed. Our primary focus here was on the cable area, reflecting
our view that cable stocks stand to benefit over the longer term from the
introduction of new cable models and digital television. Our cable holdings
included service providers as well as content providers. We also maintained
exposure to the radio area, which we believe will continue to grow in popularity
as an advertising medium.
Another area of emphasis for the fund was technology, including
telecommunications-equipment companies. Our emphasis here remained on companies
that we believe are well-positioned to benefit from the longer-term expansion of
the Internet. In this context, our holdings included Internet equipment/software
providers and companies offering information-management products and services.
5
<PAGE>
Warburg Pincus Capital Appreciation Fund
Semiannual Investment Adviser's Report -- April 30, 1999 (cont'd)
- --------------------------------------------------------------------------------
Other notable sector weightings for the fund continued to include retail,
where we remained focused on niche-type retailers; and financial services, where
we maintained a bias toward asset-management companies.
Looking ahead, we continue to see ample grounds for optimism regarding U.S.
large-cap stocks, encouraged by the absence of serious inflationary pressures
and by the resilient nature of the U.S. economy. That said, we believe that
careful stock selection will remain paramount, given the market's generally
lofty valuations and investors' propensity to abandon stocks that disappoint,
even marginally, on the earnings front. In this context, we will continue to
attempt to identify stocks that have what we deem to be good longer-term
prospects, both in absolute terms and compared to the broader market.
Susan L. Black
Portfolio Manager
- ----------------------
* 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 McGraw-Hill Co., Inc.
6
<PAGE>
Warburg Pincus Health Sciences Fund
Semiannual Investment Adviser's Report -- April 30, 1999
- --------------------------------------------------------------------------------
June 15, 1999
Dear Shareholder:
For the six months ended April 30, 1999, Warburg Pincus Health Sciences Fund
had a loss of 0.21%, vs. gains of 9.88% and 22.32%, respectively, for the Lipper
Health/Biotechnology Funds Index* and the S&P 500 Index.** The fund's one-year
return through April 30, 1999 was 0.28%. Its since-inception (on December 31,
1996) average annual total return through April 30, 1999 was 19.92%. Note:
Effective February 25, 1999, Patricia F. Widner no longer serves as Co-Portfolio
Manager of the fund. Susan L. Black, formerly the fund's Co-Portfolio Manager,
continues to serve as Portfolio Manager.
Manager Commentary
Health-care stocks saw mixed results during the six months. Areas that saw
positive performance included pharmaceutical stocks, especially large-cap
pharmaceutical stocks, buoyed by continued optimism over demand for these
companies' products. Health-care stocks that struggled included those of
services providers such as hospitals, reflecting an uncertain reimbursement
environment.
Against this backdrop, the fund had a disappointing return for the six
months, both in absolute and relative terms. Hampering the fund was its
relatively large weighting in small- and mid-cap stocks, which lagged large-cap
stocks. The fund was also hurt by weakness in certain areas, most notably the
drug-retail area. This underperformance notwithstanding, we plan to continue to
employ a relatively diversified approach (e.g., with respect to market
capitalization, since small- and mid-cap stocks comprise the bulk of the
health-care-stock universe) to an industry offering compelling long-term growth
prospects (due to a maturing population, health-care spending, which already
accounts for a large share of national income, is projected to rise
significantly over the next decade). In our view, such an approach stands to
better serve investors over time compared to a focus on any one area, given the
highly innovative, competitive and ever-changing nature of health care.
We made few noteworthy changes to the fund's holdings during the period,
since, with few exceptions, we continued to have a positive view of their
long-term prospects. We maintained positions in a number of pharmaceutical
companies, emphasizing those with broad product lines and substantial
commitments to research & development. Our long-term outlook for these stocks
remains positive. As the baby-boomer population continues to age, demand for
pharmaceuticals, already strong, should continue to rise, buttressed by the
launch of new drugs.
7
<PAGE>
Warburg Pincus Health Sciences Fund
Semiannual Investment Adviser's Report -- April 30, 1999 (cont'd)
- --------------------------------------------------------------------------------
We also maintained a position in managed-care providers (e.g.,
health-maintenance companies). We continued to limit our exposure to companies
significantly dependent on Medicare, however, reflecting our concerns over the
program's uncertain regulatory future.
Elsewhere, we maintained positions in a wide range of companies, including
biotechnology companies, outsourcing companies (e.g., in the bloodwork area) and
health-care retailers, most notably drug retailers.
Susan L. Black
Portfolio Manager
Since the fund focuses its investments on companies involved in the health
sciences, an investment in the fund may involve a greater degree of risk than an
investment in other mutual funds that seek capital appreciation by investing in
a broader mix of issuers.
- ---------------------
* The Lipper Health/Biotechnology Funds Index is an equal-weighted
performance index, adjusted for capital-gain distributions and income
dividends, of the largest qualifying funds in this investment objective,
and is compiled by Lipper Inc.
** 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 McGraw-Hill, Inc.
8
<PAGE>
Warburg Pincus Balanced Fund
Statement of Net Assets -- April 30, 1999 (Unaudited)
- --------------------------------------------------------------------------------
Number of
Shares Value
---------- --------
COMMON STOCKS (55.3%)
Aerospace & Defense (1.6%)
Boeing Co. 1,600 $ 65,000
Gulfstream Aerospace Corp.+ 10,000 487,500
----------
552,500
----------
Banks & Savings & Loans (3.6%)
Banc One Corp. 4,800 283,200
Citigroup, Inc. 2,000 150,500
Comerica, Inc. 1,500 97,594
Compass Bancshares, Inc. 7,550 205,737
Union Bank of California Corp. 3,000 102,375
Wachovia Corp. 1,100 96,662
Washington Mutual, Inc. 6,875 282,734
----------
1,218,802
----------
Building & Building Materials (0.7%)
USG Corp.+ 4,300 251,012
----------
Capital Equipment (3.7%)
American Standard Cos., Inc.+ 3,800 173,850
Case Corp. 2,500 86,562
Federal-Mogul Corp. 8,000 351,000
Ingersoll-Rand Co. 4,400 304,425
Kennametal, Inc. 2,300 61,094
Navistar International Corp.+ 5,400 282,487
----------
1,259,418
----------
Chemicals (0.9%)
Avery-Dennison Corp. 2,900 197,925
Ferro Corp. 4,300 119,056
----------
316,981
----------
Communications & Media (2.1%)
Clear Channel Communications,
Inc.+ 2,500 173,750
Fox Entertainment Group, Inc. 5,000 128,125
MediaOne Group, Inc.+ 2,900 236,531
Outdoor Systems, Inc.+ 7,000 176,312
----------
714,718
----------
Computers (5.4%)
BMC Software, Inc. + 7,500 322,969
Citrix Systems, Inc.+ 2,400 102,000
COMPAQ Computer Corp. + 4,300 95,944
Hewlett-Packard Co. 5,300 418,037
International Business Machines
Corp 1,300 271,944
Novell, Inc.+ 5,000 111,250
Sun Microsystems, Inc.+ 5,400 322,987
Unisys Corp.+ 6,700 210,631
----------
1,855,762
----------
Number of
Shares Value
---------- --------
COMMON STOCKS (cont'd)
Conglomerates (1.2%)
Harsco Corp. 6,900 $ 226,406
United Technologies Corp. 1,300 188,337
----------
414,743
----------
Consumer Durables (0.8%)
Ford Motor Co. 4,500 287,719
----------
Consumer Non-Durables (1.0%)
Jones Apparel Group, Inc. 2,100 69,300
Premark International, Inc. 5,100 187,744
Procter & Gamble Co. 1,100 103,194
----------
360,238
----------
Electronics (2.6%)
Gentex Corp. 11,900 357,744
Intel Corp. 6,200 379,362
Maxim Integrated Products, Inc.+ 2,600 145,600
----------
882,706
----------
Energy (1.6%)
Amerada Hess Corp. 2,000 114,000
Exxon Corp. 4,000 332,250
Union Pacific Resources Group,
Inc 8,000 112,000
----------
558,250
----------
Environmental Services (0.9%)
Allied Waste Industries, Inc.+ 11,100 196,331
Waste Management, Inc. 2,300 129,950
----------
326,281
----------
Financial Services (7.5%)
Berkshire Hathaway, Inc. Class B + 100 247,000
Countrywide Credit Industries, Inc. 4,800 217,500
FINOVA Group, Inc. 8,000 386,500
Household International, Inc. 8,200 412,562
Lehman Brothers Holdings, Inc. 4,200 233,362
MBIA, Inc. 1,800 121,050
Merrill Lynch & Co., Inc. 1,100 92,331
National Western Life Insurance Co.
Class A+ 1,500 148,875
PMI Group, Inc. 8,600 479,987
Terra Nova (Bermuda) Holdings,
Ltd. Class A 7,050 158,184
Waddell & Reed Financial, Inc.,
Class A 2,400 54,150
----------
2,551,501
----------
See Accompanying Notes to Financial Statements.
9
<PAGE>
Warburg Pincus Balanced Fund
Statement of Net Assets (cont'd) -- April 30, 1999 (Unaudited)
- --------------------------------------------------------------------------------
Number of
Shares Value
---------- --------
COMMON STOCKS (cont'd)
Food, Beverages & Tobacco (3.0%)
Anheuser-Busch Cos., Inc. 3,100 $ 226,687
Heinz (H.J.) Co. 4,700 219,431
Keebler Foods Co.+ 7,000 224,875
Philip Morris Companies, Inc. 10,000 350,625
----------
1,021,618
----------
Healthcare (2.4%)
Baxter International, Inc. 1,400 88,200
Becton, Dickinson & Co. 7,800 290,063
Tenet Healthcare Corp.+ 8,500 200,813
Trigon Healthcare, Inc.+ 7,400 234,950
----------
814,026
----------
Industrial Mfg. & Processing (2.4%)
Eaton Corp. 1,200 110,025
Tyco International Ltd. 5,200 422,500
UNOVA, Inc.+ 20,200 273,963
----------
806,488
----------
Lodging & Restaurants (0.7%)
Promus Hotel Corp.+ 6,500 234,000
----------
Oil Services (0.8%)
Baker Hughes, Inc. 5,600 167,300
Halliburton Co. 2,400 102,300
----------
269,600
----------
Pharmaceuticals (1.3%)
Bristol-Myers Squibb Co. 5,000 317,813
Merck & Co., Inc. 1,600 112,400
----------
430,213
----------
Real Estate (0.6%)
Healthcare Realty Trust, Inc.
(REIT) 9,900 215,944
----------
Retail (3.5%)
Federated Department Stores, Inc.+ 2,300 107,381
Home Depot, Inc. 1,700 101,894
May Department Stores Co. 4,950 197,072
OfficeMax, Inc.+ 12,000 121,500
Ross Stores, Inc. 3,900 179,156
Safeway, Inc.+ 2,100 113,269
Saks, Inc. 7,700 218,006
TJX Cos., Inc. 5,000 166,563
----------
1,204,841
----------
Telecommunications & Equipment (5.4%)
Bell Atlantic Corp. 9,000 518,625
BellSouth Corp. 2,000 89,500
EchoStar Communications Corp. 1,000 100,313
Number of
Shares Value
---------- --------
COMMON STOCKS (cont'd)
Telecommunications & Equipment (cont'd)
Globalstar Telecommunications,
LTD.+ 5,000 $ 100,625
MCI WorldCom, Inc.+ 3,800 312,313
Nextel Communications, Inc.
Class A 6,000 245,625
QUALCOMM, Inc.+ 1,000 200,000
SBC Communications, Inc. 4,400 246,400
U S West, Inc. 700 36,619
----------
1,850,020
----------
Transportation (0.5%)
Landstar Systems, Inc.+ 2,900 112,919
Mark VII, Inc.+ 3,400 48,450
----------
161,369
----------
Utilities- Electric (1.1%)
Allegheny Energy, Inc. 2,600 88,563
American Electric Power Co., Inc. 2,900 120,169
Wisconsin Energy Corp. 5,900 158,563
----------
367,295
----------
TOTAL COMMON STOCKS
(Cost $14,895,174) 18,926,045
----------
FOREIGN STOCKS (3.8%)
Bermuda (0.3%)
Ace, Ltd. 3,300 99,825
----------
France (1.0%)
Rhone-Poulenc SA ADR 2,350 110,744
Total SA ADR 3,210 218,280
----------
329,024
----------
Netherlands (1.3%)
Royal Dutch Petroleum Co. ADR 7,300 428,419
----------
United Kingdom (1.3%)
BP Amoco PLC ADR 2,192 248,107
WPP Group PLC ADR 2,200 193,050
----------
441,157
----------
TOTAL FOREIGN STOCKS
(Cost $989,768) 1,298,425
PREFERRED SECURITIES (1.0%)
Equity Residential Properties
Trust Series C 9.125% (REIT)
(Callable 09/09/06 @ $25.00) 10,000 263,125
Prologis Trust Series C 8.540%
(Callable 11/13/26 @ $50.00) 2,000 93,250
----------
TOTAL PREFERRED SECURITIES
(Cost $365,500) 356,375
----------
See Accompanying Notes to Financial Statements.
10
<PAGE>
Warburg Pincus Balanced Fund
Statement of Net Assets (cont'd) -- April 30, 1999 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Ratings
(Moody's/S&P) Rate% Maturity Date Par Value
---------------- -------- ---------------- ----- -------
(000)
<S> <C> <C> <C> <C> <C>
U.S. CORPORATE BONDS (9.5%)
Banks & Savings & Loans (2.7%)
African Development Bank Debentures
(Yankee Bond 6.37) (Aa1, AA-) 9.300 07/01/00 $ 370 $384,800
Bayerische Landesbank Deposit Note Series D
(Callable 02/09/03 @ $100.00) (Aaa, AAA) 6.200 02/09/06 350 348,250
Countrywide Home Loan Co. (A3, A) 6.250 04/15/09 200 195,000
---------
928,050
Capital Equipment (1.1%)
Federal-Mogul Co. (Ba2, BB+) 7.375 01/15/06 150 147,188
Ingersoll-Rand Meduim Term Note
(Putable 11/19/03 @ $100.00) (A3, A-) 6.230 11/19/27 245 249,288
---------
396,476
Finance-Corporate (0.8%)
Sears Roebuck Acceptance Corp. (A2, A-) 6.250 05/01/09 285 281,782
---------
Financial Services (1.8%)
First Union Corp. (Callable 04/15/08 @ $100.00,
Putable 04/15/08 @ $100.00) (A2, A-) 6.300 04/15/08 260 257,725
Household Finance Corp. (A2, A) 6.500 11/15/08 345 345,000
---------
602,725
Industrial Mfg. & Processing (1.2%)
Philip Morris Cos., Inc. (Putable 06/01/01 @ $100.00) (A2, A) 6.950 06/01/06 200 202,500
Qwest Communications International, Inc.
Sr. Notes 144A (Ba1, BB+) 7.500 11/01/08 190 199,500
---------
402,000
Retail (0.5%)
Lowe's Companies (A2, A) 7.110 05/15/37 160 166,600
---------
Telecommunications (0.9%)
AT&T Capital Corp., Series MTNF (Baa3, BBB) 6.600 05/15/05 150 151,500
Echostar DBS Corp., Series 144A
(Callable 02/01/04 @ $104.688) (B2, B) 9.375 02/01/09 150 156,750
---------
308,250
Utilities - Electric (0.5%)
Potomac Electric Power
(Callable 05/15/02 @ $103.21) (A1, A) 8.500 05/15/27 150 157,875
---------
TOTAL U.S. CORPORATE BONDS (Cost $3,232,665) 3,243,758
---------
ASSET/MORTGAGE BACKED SECURITIES (16.7%)
Amresco Commercial Mortgage Funding I
Series 1997-C1, Class A1 (Aaa, AAA) 6.730 06/17/29 452 461,531
California Infrastructure Pacific Gas and Electric,
Series 97-1, Class A7 (NR, NR) 6.420 09/25/08 70 71,610
Commonwealth Edison Transitional Funding
Trust Series 1998-1 Cl-A6 (Aaa, AAA) 5.630 06/25/09 200 194,835
</TABLE>
See Accompanying Notes to Financial Statements.
11
<PAGE>
Warburg Pincus Balanced Fund
Statement of Net Assets (cont'd) -- April 30, 1999 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Ratings
(Moody's/S&P) Rate% Maturity Date Par Value
---------------- -------- ---------------- ----- -------
(000)
<S> <C> <C> <C> <C> <C>
ASSET/MORTGAGE BACKED SECURITIES (cont'd)
First USA Credit Card Master Trust,
Series 1998-4, Class A (Aaa, AAA) 5.120 03/18/08 $ 700 $ 698,331
Freddie Mac, Series 2072, Class Pk (Aaa, AAA) 6.000 07/15/24 580 578,885
GE Capital Mortgage Services, Inc.
Series 1994-7, Class A10 (Aaa, AAA) 6.000 02/25/09 484 478,167
General Motors Acceptance Corp.
Class A2 98 (Aaa, AAA) 6.700 01/08/08 500 506,353
Government National Mortgage Association
Pass Through Pool# 002217X (Aaa, AAA) 6.500 08/15/03 5 5,302
MBNA Master Credit Card Trust,
Series 1996-K, Class A (Aaa, AAA) 5.665 03/15/06 480 476,832
Mellon Residential Funding (NR, NR) 5.610 10/25/28 720 701,663
Morgan Stanley Mortgage Trust
Series 40, Class 8 (NR, AAA) 7.000 07/20/21 590 597,857
Mortgage Capital Funding, Series A2 9.55 AL (NR, AAA) 6.663 01/18/08 330 335,466
Nomura Asset Securities Corp. (Aaa, AAA) 6.690 03/16/13 600 591,855
----------
TOTAL ASSET/MORTGAGE BACKED SECURITIES
(Cost $5,725,440) 5,698,687
----------
U.S. TREASURY BONDS (6.1%)
U.S. Treasury Bond (Aaa, AAA) 8.000 11/15/21 1,145 1,437,532
U.S. Treasury Bond (Aaa, AAA) 9.250 02/15/16 480 649,778
----------
TOTAL U.S. TREASURY BONDS (Cost $2,148,171) 2,087,310
----------
AGENCY OBLIGATIONS (5.3%)
Fannie Mae (Aaa, AAA) 6.560 12/10/07 480 483,927
Fannie Mae (Aaa, AAA) 5.690 12/01/08 349 335,951
Fannie Mae, Series 1998-M4,
Class B REMIC 98-M4 (Aaa, AAA) 6.424 12/25/23 600 603,819
Federal Home Loan Bank (Aaa, AAA) 5.125 09/15/03 410 402,519
----------
TOTAL AGENCY OBLIGATIONS (Cost $1,856,950) 1,826,216
----------
</TABLE>
See Accompanying Notes to Financial Statements.
12
<PAGE>
Warburg Pincus Balanced Fund
Statement of Net Assets (cont'd) -- April 30, 1999 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Number of
Shares Value
---------- --------
<S> <C> <C>
SHORT TERM INVESTMENTS (2.3%)
RBB Money Market Fund (Cost $773,800) 773,800 $ 773,800
-----------
TOTAL INVESTMENTS AT VALUE (100.0%) (Cost $29,987,477*) 34,210,616
-----------
OTHER ASSETS IN EXCESS OF LIABILITIES (0.0%) 6,484
-----------
NET ASSETS (100.0%) (applicable to 2,476,341 Common Class
shares and 16,421 Advisor Class shares) $34,217,100
===========
NET ASSETS VALUE, offering and redemption price per
Common Class share ($33,992,290 divided by 2,476,341) $ 13.73
===========
NET ASSET VALUE, offering and redemption price per Advisor
Class share ($224,810 divided by 16,421) $ 13.69
===========
</TABLE>
INVESTMENT ABBREVIATIONS
ADR = American Depository Receipt
NR = Not Rated
REIT = Real Estate Investment Trust
REMIC = Real Estate Mortgage Investment Conduit
- --------------------------------------------------------------------------------
+ Non-income producing security.
* Cost for federal income tax purposes is $30,018,760.
See Accompanying Notes to Financial Statements.
13
<PAGE>
Warburg Pincus Growth & Income Fund
Statement of Net Assets -- April 30, 1999 (Unaudited)
- --------------------------------------------------------------------------------
Number of
Shares Value
---------- --------
COMMON STOCKS (92.9%)
Aerospace & Defense (4.1%)
Boeing Co. 83,500 $ 3,392,187
Gulfstream Aerospace Corp.+ 139,000 6,776,250
Litton Industries, Inc.+ 130,500 8,172,562
Raytheon Co. 183,000 12,661,312
-----------
31,002,311
-----------
Banks & Savings & Loans (6.5%)
Citigroup Inc. 86,800 6,531,700
Comerica Inc. 227,800 14,821,237
Compass Bancshares, Inc. 102,100 2,782,225
UnionBanCal Corp. 117,700 4,016,512
Wachovia Corp. 105,200 9,244,450
Washington Mutual, Inc. 304,800 12,534,900
-----------
49,931,024
-----------
Building & Building Materials (1.5%)
USG Corp.+ 194,400 11,348,100
-----------
Business Services (0.7%)
WPP Group PLC 585,100 5,171,962
-----------
Capital Equipment (8.5%)
AlliedSignal, Inc. 106,700 6,268,625
American Standard Cos., Inc.+ 183,700 8,404,275
Case Corp. 241,650 8,367,131
Deere & Co. 132,900 5,714,700
Emerson Electric Co. 58,300 3,760,350
Federal-Mogul Corp. 182,800 8,020,350
Ingersoll-Rand Co. 187,000 12,938,062
ITT Industries, Inc. 104,300 3,754,800
Kennametal, Inc. 43,700 1,160,781
Navistar International Corp. 131,600 6,884,325
-----------
65,273,399
-----------
Chemicals (2.8%)
Dow Chemical Co. 54,200 7,110,362
Ferro Corp. 225,100 6,232,456
Rhone-Poulenc SA ADR
Series A 166,086 7,826,803
-----------
21,169,621
-----------
Number of
Shares Value
---------- --------
Computers (7.2%)
BMC Software, Inc.+ 303,600 $13,073,775
COMPAQ Computer Corp.+ 126,800 2,829,225
Hewlett-Packard Co. 163,600 12,903,950
International Business Machines
Corp 64,700 13,534,431
Unisys Corp.+ 398,500 12,527,844
-----------
54,869,225
-----------
Conglomerates (1.1%)
Harsco Corp. 254,350 8,345,859
-----------
Consumer Durables (2.3%)
Ford Motor Co. 275,900 17,640,356
-----------
Consumer Non-Durables (0.8%)
Premark International, Inc. 172,900 6,364,881
-----------
Energy (7.7%)
Amerada Hess Corp. 138,700 7,905,900
BP Amoco PLC Sponsored ADR 143,897 16,287,342
Royal Dutch Petroleum Co. ADR 426,600 25,036,087
Total SA ADR 89,000 6,052,000
Union Pacific Resources Group,
Inc 284,100 3,977,400
-----------
59,258,729
-----------
Environmental Services (2.7%)
Allied Waste Industries, Inc.+ 270,100 4,777,394
Waste Management Inc. 281,000 15,876,500
-----------
20,653,894
-----------
Financial Services (13.9%)
Ace, Ltd. 74,900 2,265,725
American Express Co. 17,050 2,228,222
Banc One Corp. 305,900 18,048,100
Countrywide Credit Industries,
Inc 225,800 10,231,562
FINOVA Group, Inc. 94,000 4,541,375
Household International, Inc. 246,600 12,407,062
Lehman Brothers Holdings, Inc. 185,200 10,290,175
MBIA, Inc. 192,800 12,965,800
Old Republic International Corp. 190,100 3,718,831
See Accompanying Notes to Financial Statements.
14
<PAGE>
Warburg Pincus Growth & Income Fund
Statement of Net Assets (cont'd) -- April 30, 1999 (Unaudited)
- --------------------------------------------------------------------------------
Number of
Shares Value
---------- --------
COMMON STOCKS (cont'd)
Financial Services (cont'd)
MGICInvestment Corp. 179,100 $ 8,697,544
PMI Group, Inc. 234,900 13,110,356
Terra Nova Bermuda Holdings,
Ltd. Class A 273,200 6,129,925
Waddell & Reed Financial, Inc.,
Class A 90,700 2,046,419
------------
106,681,096
------------
Food, Beverages & Tobacco (4.9%)
Anheuser-Busch Cos., Inc. 85,500 6,252,187
Corn Products International,
Inc 167,900 4,848,112
Heinz (H.J.) Co. 76,800 3,585,600
Keebler Foods Co.+ 263,600 8,468,150
Philip Morris Companies, Inc. 412,300 14,456,269
------------
37,610,318
------------
Healthcare (4.0%)
Baxter International, Inc. 144,000 9,072,000
Tenet Healthcare Corp.+ 234,250 5,534,156
Trigon Healthcare, Inc.+ 264,350 8,393,113
Wellpoint Health Networks,
Inc.+ 104,400 7,334,100
------------
30,333,369
------------
Industrial Mfg. & Processing (3.5%)
Dana Corp. 79,700 3,755,863
Eaton Corp. 68,200 6,253,088
Raychem Corp. 99,200 2,622,600
UNOVA, Inc. 1,013,900 13,751,019
------------
26,382,570
------------
Metals & Mining (1.8%)
Alcoa, Inc. 222,108 13,826,223
------------
Office Equipment & Supplies (0.6%)
Pitney Bowes, Inc. 70,600 4,937,588
------------
Oil Services (1.6%)
Baker Hughes, Inc. 183,700 5,488,038
Halliburton Co. 99,700 4,249,713
Weatherford International, Inc. 77,000 2,608,375
------------
12,346,126
------------
Number of
Shares Value
---------- --------
COMMON STOCKS (cont'd)
Real Estate (0.3%)
Equity Residential Properties
Trust (REIT) 45,800 $ 2,118,250
-----------
Retail (8.3%)
Consolidated Stores Corp.+ 245,400 8,435,625
Federated Department Stores,
Inc.+ 181,300 8,464,444
May Department Stores Co. 228,300 9,089,194
OfficeMax, Inc.+ 316,100 3,200,513
Payless ShoeSource, Inc.+ 74,512 3,609,175
Ross Stores, Inc. 261,200 11,998,875
Saks, Inc. 186,175 5,271,080
Sears, Roebuck and Co. 164,300 7,557,800
TJX Cos., Inc. 179,200 5,969,600
-----------
63,596,306
-----------
Telecommunications & Equipment (4.8%)
Ameritech Corp. 185,600 12,702,000
Bell Atlantic Corp. 268,640 15,480,380
SBC Communications, Inc. 154,100 8,629,600
-----------
36,811,980
-----------
Transportation (0.6%)
Burlington Northern Santa Fe
Corp 117,700 4,310,763
-----------
Utilities - Electric (2.7%)
Allegheny Energy, Inc. 178,700 6,086,969
American Electric Power Co.,
Inc 113,600 4,707,300
DQE, Inc. 48,400 1,993,475
Illinova Corp. 118,500 3,110,625
Wisconsin Energy Corp. 175,100 4,705,813
-----------
20,604,182
-----------
TOTAL COMMON STOCKS
(Cost $572,822,075) 710,588,132
-----------
CONVERTIBLE PREFERRED STOCK (0.4%)
Equity Residential Properties
Series G 7.25% Convertible
(Callable 09/15/02 @ $25.91)
(Cost $3,649,429) 146,000 3,348,875
-----------
See Accompanying Notes to Financial Statements.
15
<PAGE>
Warburg Pincus Growth & Income Fund
Statement of Net Assets (cont'd) -- April 30, 1999 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Ratings
(Moody's/S&P) Rate% Maturity Date Par Value
---------------- -------- ---------------- ----- -------
(000)
<S> <C> <C> <C> <C> <C>
CORPORATE BONDS (0.5%)
National Semiconductor Corp.
(Convertible) (Cost $4,251,642) (Ba2, BB) 6.500 10/01/02 $4,480 $3,830,400
</TABLE>
<TABLE>
<CAPTION>
Number
of
Shares
--------
<S> <C> <C>
SHORT TERM INVESTMENTS (6.5%)
Institutional Money Market Trust
12,797,799 12,797,800
RBB Money Market Fund 36,967,506 36,967,506
---------------
TOTAL SHORT TERM INVESTMENTS (Cost $49,765,306) 49,765,306
---------------
TOTAL INVESTMENTS AT VALUE (100.3%)
(Cost $630,488,452*) 767,532,713
---------------
LIABILITIES IN EXCESS OF OTHER ASSETS (0.3%) (2,176,622)
---------------
NET ASSETS (100.0%) (applicable to 34,570,516)
Common Class shares and 4,291,524
Advisor Class shares) $ 765,356,091
===============
NET ASSETS VALUE, offering and redemption price per
Common Class share ($680,870,930 divided by 34,570,516) $ 19.70
===============
NET ASSET VALUE, offering and redemption price per Advisor
Class share ($84,485,161 divided by 4,291,524) $ 19.69
===============
</TABLE>
INVESTMENT ABBREVIATIONS
ADR = American Depository Receipt
REIT = Real Estate Investment Trust
- --------------------------------------------------------------------------------
+ Non-income producing security.
* Cost for federal income tax purposes is $630,945,543.
See Accompanying Notes to Financial Statements.
16
<PAGE>
Warburg Pincus Capital Appreciation Fund
Statement of Net Assets--April 30, 1999 (Unaudited)
- --------------------------------------------------------------------------------
Number of
Shares Value
---------- --------
COMMON STOCK (95.9%)
Aerospace & Defense (0.9%)
Boeing Co. 206,800 $ 8,401,250
------------
Banks & Savings & Loans (5.9%)
Banc One Corp. 222,600 13,133,400
Bank of New York Co., Inc. 320,900 12,836,000
Morgan (J.P.) & Co., Inc. 128,600 17,328,850
Northern Trust Corp. 107,500 10,010,937
------------
53,309,187
------------
Business Services (1.2%)
Omnicom Group, Inc. 149,200 10,817,000
------------
Capital Equipment (1.0%)
Navistar International Corp.+ 177,000 9,259,312
------------
Communications & Media (16.8%)
America Online, Inc.+ 62,400 8,907,600
AT&T Corp. - Liberty Media-A+ 335,500 21,430,062
CBS Corp. 484,400 22,070,475
Chancellor Media Corp.
Class A+ 135,800 7,452,025
Clear Channel Communications,
Inc.+ 66,200 4,600,900
Comcast Corp. Class A 70,900 4,457,837
Fox Entertainment Group, Inc. 162,500 4,164,062
Mediaone Group, Inc.+ 425,000 34,664,062
Seagram Co. Ltd. 157,000 9,007,875
Shaw Communications, Inc.
Class B+ 285,300 11,554,650
Time Warner, Inc. 253,500 17,745,000
USA Networks, Inc. 150,500 5,624,937
Westwood One, Inc.+ 25,000 856,250
------------
152,535,735
------------
Computers (10.4%)
Dell Computer Corp.+ 107,500 4,427,656
EMC Corp.+ 202,700 22,081,631
International Business
Machines Corp. 64,000 13,388,000
Microsoft Corp.+ 281,800 22,913,862
Novell, Inc.+ 215,100 4,785,975
Sun Microsystems, Inc.+ 291,100 17,411,419
Unisys Corp.+ 297,500 9,352,656
------------
94,361,199
------------
Conglomerates (2.8%)
General Electric Co. 240,000 25,320,000
------------
Number of
Shares Value
---------- --------
COMMON STOCK (cont'd)
Consumer Durables (0.7%)
Ford Motor Co. 93,500 $ 5,978,156
-----------
Consumer Non-Durables (1.3%)
Jones Apparel Group, Inc.+ 98,500 3,250,500
Procter & Gamble Co. 90,500 8,490,031
-----------
11,740,531
-----------
Consumer Services (0.9%)
Apollo Group, Inc.+ 165,100 4,086,225
DeVRY, Inc.+ 154,100 4,064,387
-----------
8,150,612
-----------
Electronics (5.0%)
Gentex Corp.+ 177,800 5,345,112
Intel Corp. 229,400 14,036,412
Lexmark International Group,
Inc. Class A+ 37,400 4,618,900
Motorola, Inc. 58,100 4,655,262
Texas Instruments, Inc. 129,000 13,174,125
Xilinx, Inc.+ 84,100 3,837,063
-----------
45,666,874
-----------
Energy (2.4%)
Alberta Energy Co., Ltd. 127,500 3,761,250
Bonneville Pacific Corp.+ 16,883 102,353
Royal Dutch Petroleum Co.
ADR 153,000 8,979,188
Texaco, Inc. 148,800 9,337,200
-----------
22,179,991
-----------
Financial Services (9.2%)
American International Group,
Inc 113,800 13,364,388
Associates First Capital Corp.
Class A 374,400 16,590,600
Berkshire Hathaway, Inc.
Class A+ 120 9,168,000
Capital One Financial Corp.+ 63,700 11,063,894
Charles Schwab Corp. 47,400 5,202,150
Freddie Mac 168,200 10,554,550
Morgan Stanley, Dean Witter,
& Co. 172,000 17,060,250
-----------
83,003,832
-----------
Food, Beverages & Tobacco (1.8%)
Anheuser-Busch Cos., Inc. 120,200 8,789,625
Keebler Foods Co.+ 223,500 7,179,938
-----------
15,969,563
-----------
See Accompanying Notes to Financial Statements.
17
<PAGE>
Warburg Pincus Capital Appreciation Fund
Statement of Net Assets (cont'd) -- April 30, 1999 (Unaudited)
- --------------------------------------------------------------------------------
Number of
Shares Value
---------- --------
COMMON STOCK (cont'd)
Industrial Manufacturing & Processing (1.9%)
Tyco International Ltd. 211,900 $17,216,875
-----------
Leisure & Entertainment (0.8%)
Carnival Corp. 181,700 7,495,125
-----------
Lodging & Restaurants (0.7%)
Marriott International, Inc.
Class A 158,100 6,620,438
-----------
Office Equipment & Supplies (2.2%)
Pitney Bowes, Inc. 166,100 11,616,619
Xerox Corp. 140,400 8,248,500
-----------
19,865,119
-----------
Oil Services (3.8%)
Halliburton Co. 388,400 16,555,550
Schlumberger, Ltd. 282,600 18,051,075
-----------
34,606,625
-----------
Pharmaceuticals (7.0%)
Bristol-Myers Squibb Co. 255,600 16,246,575
Lilly ( Eli ) & Co. 113,200 8,334,350
Merck & Co., Inc. 111,400 7,825,850
Pfizer, Inc. 125,400 14,428,838
Warner Lambert Co. 239,400 16,264,238
-----------
63,099,851
-----------
Publishing (2.5%)
Reader's Digest Assn., Inc.
Class A 233,800 8,314,513
Wiley (John) & Sons, Inc.
Class A 357,000 14,436,188
-----------
22,750,701
-----------
Retail (6.5%)
Bed, Bath & Beyond, Inc.+ 259,200 9,250,200
Costco Companies, Inc.+ 103,200 8,352,750
Dayton Hudson Corp. 69,400 4,671,488
Home Depot, Inc. 236,700 14,187,206
Ross Stores, Inc. 102,700 4,717,781
Safeway, Inc.+ 166,400 8,975,200
Staples, Inc.+ 279,400 8,382,000
-----------
58,536,625
-----------
Number of
Shares Value
---------- --------
COMMON STOCK (cont'd)
Telecommunications & Equipment (8.6%)
AirTouch Communications,
Inc.+ 93,000 $ 8,683,875
Bell Atlantic Corp. 84,700 4,880,838
Cisco Systems, Inc.+ 199,800 22,789,688
EchoStar Communications
Corp.+ 78,700 7,894,594
Exodus Communications, Inc.+ 37,400 3,370,675
Infinity Broadcasting Inc.+ 145,000 4,014,688
Lucent Technologies, Inc. 148,500 8,928,563
MCI Worldcom, Inc.+ 152,600 12,541,813
Nextel Communications, Inc.
Class A+ 112,400 4,601,375
------------
77,706,109
------------
Transportation (1.6%)
FDX Corp.+ 132,900 14,959,556
------------
Total Common Stock
(Cost $638,008,533) 869,550,266
------------
preferred stock (0.0%)
Fresenius National Medical, Inc.
Class D+ (Cost $18,553) 90,000 2,520
------------
SHORT TERM INVESTMENTS (3.3%)
RBB Money Market Fund
(Cost $29,431,422) 29,431,422 29,431,422
------------
TOTAL INVESTMENTS AT VALUE
(99.2%) (Cost $667,458,508*) 898,984,208
------------
OTHER ASSETS IN EXCESS
OF LIABILITIES (0.8%) 7,403,388
------------
NET ASSETS (100.0%) (applicable to
36,933,840) Common Class shares
and 1,185,456 Advisor Class shares) $906,387,596
============
NET ASSETS VALUE, offering and
redemption price per Common Class
share ($878,708,813 divided by 36,933,840) $ 23.79
============
NET ASSET VALUE, offering and
redemption price per Advisor Class
share ($27,678,783 divided by 1,185,456) $ 23.35
============
INVESTMENT ABBREVIATIONS
ADR = American Depository Receipt
- --------------------
+ Non-income producing security.
* Cost for federal income tax purposes is $668,461,543.
See Accompanying Notes to Financial Statements.
18
<PAGE>
Warburg Pincus Health Sciences Fund
Schedule of Investments--April 30, 1999 (Unaudited)
- --------------------------------------------------------------------------------
Number of
Shares Value
---------- --------
COMMON STOCK (98.9%)
Agriculture (2.3%)
Monsanto Co. 30,000 $ 1,357,500
-----------
Business Services (2.5%)
Catalina Marketing Corp.+ 16,900 1,443,894
-----------
Consumer Non-Durables (2.8%)
Procter & Gamble Co. 17,700 1,660,481
-----------
Electronics (3.0%)
Perkin Elmer Corp.+ 16,400 1,773,250
-----------
Financial Services (3.7%)
Cigna Corp. 25,400 2,214,562
-----------
Healthcare (33.6%)
Abbott Laboratories 47,600 2,305,625
Allergan, Inc. 17,300 1,554,837
Bausch & Lomb, Inc. 25,800 1,935,000
Baxter International, Inc. 18,900 1,190,700
Boston Scientific Corp.+ 42,600 1,813,162
C.R. Bard, Inc. 14,000 686,000
Health Management Associates,
Inc. Class A+ 56,200 878,125
Hooper Holmes, Inc. 135,100 2,153,156
Johnson & Johnson 34,200 3,334,500
Medtronic, Inc. 32,600 2,345,162
Trigon Healthcare, Inc.+ 31,200 990,600
Wellpoint Health Networks,
Inc.+ 10,500 737,625
-----------
19,924,492
-----------
Industrial Manufacturing & Processing (3.0%)
Tyco International Ltd. 21,800 1,771,250
-----------
Pharmaceuticals (48.0%)
ALPHARMA, Inc. Class A 27,900 823,050
American Home Products Corp. 29,800 1,817,800
Amgen, Inc.+ 30,200 1,855,412
Aviron+ 18,300 345,413
Biogen, Inc.+ 19,100 1,815,694
Bristol-Myers Squibb Co. 32,500 2,065,781
Cardinal Health, Inc. 5,200 311,025
Duramed Pharmaceuticals, Inc.+ 40,600 367,938
Genetech, Inc.+ 16,700 1,413,238
Gilead Sciences, Inc.+ 8,000 368,500
IDEC Pharmaceuticals Corp.+ 10,000 507,500
Immunex Corp.+ 10,000 955,000
Lilly (Eli) & Co. 24,100 1,774,363
Medimmune, Inc. 9,800 540,225
Merck & Co., Inc. 25,400 1,784,350
Pfizer, Inc. 20,800 2,393,300
Pharmacia & Upjohn, Inc. 26,200 1,467,200
Number of
Shares Value
---------- --------
COMMON STOCK (cont'd)
Pharmaceuticals (cont'd)
Schering-Plough Corp. 30,300 $ 1,463,869
SmithKline Beecham PLC ADR 42,500 2,791,719
Warner-Lambert Co. 53,300 3,621,069
-----------
28,482,446
-----------
TOTAL COMMON STOCK
(Cost $49,605,680) 58,627,875
-----------
SHORT TERM INVESTMENTS (1.1%)
RBB Money Market Fund
(Cost $673,853) 673,853 673,853
-----------
TOTAL INVESTMENTS AT VALUE
(100.0%) (Cost $50,279,533*) $59,301,728
===========
INVESTMENT ABBREVIATIONS
ADR = American Depository Receipt
- --------------------------------------------------------------------------------
+ Non-income producing security.
* Cost for federal income tax purposes is $49,633,215.
See Accompanying Notes to Financial Statements.
19
<PAGE>
Warburg Pincus Health Sciences Fund
Statement of Assets and Liabilities
April 30, 1999 (Unaudited)
- --------------------------------------------------------------------------------
Assets
Investments at value (Cost $50,279,533) $59,301,728
Receivable for investment sold 4,511,397
Dividend receivable 58,626
Receivable for fund shares sold 39,444
Deferred Offering Costs 17,226
Prepaid Insurance 2,195
Interest receivable 1,868
-----------
Total Assets 63,932,484
-----------
Liabilities
Payable for investments purchased 2,174,223
Accrued expenses payable 91,945
-----------
Total Liabilities 2,266,168
-----------
Net assets, applicable to 4,288,261 Common Class shares $61,666,316
===========
Net Asset Value, offering and redemption price per
Common Class share ($61,366,316 divided by 4,288,261) $ 14.38
===========
See Accompanying Notes to Financial Statements.
20
<PAGE>
Warburg Pincus Funds
Statements of Operations
For the Six Months Ended April 30, 1999 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Warburg Pincus Warburg Pincus
Balanced Growth & Income
Fund Fund
-------------- --------------
<S> <C> <C>
Investment Income:
Dividends $ 115,467 $ 5,084,384
Interest 462,352 1,502,708
Foreign taxes withheld 127 0
------------- -------------
Total investment income 577,946 6,587,092
------------- -------------
Expenses:
Investment advisory 156,891 2,904,393
Administrative services 47,401 903,762
Audit 5,380 13,167
Custodian/Sub-custodian 10,485 66,614
Directors/Trustees 5,449 4,895
Insurance 335 13,266
Interest (79) 220
Legal 26,048 40,441
Printing 7,821 53,635
Registration 14,596 62,801
Shareholder servicing/distribution 43,860 227,053
Transfer agent 20,262 412,354
Miscellaneous 4,081 11,102
------------- -------------
342,530 4,713,703
Less: fees waived, expenses reimbursed and transfer agent offsets (106,914) (15,646)
------------- -------------
Total expenses 235,616 4,698,057
------------- -------------
Net investment income (loss) 342,330 1,889,035
------------- -------------
Net Realized and Unrealized Gain (Loss) from Investments and
Foreign Currency Related Items:
Net realized gain from security transactions 2,582,282 99,441,225
Net realized loss from foreign currency related items (3) (653)
Net change in unrealized appreciation (depreciation) from
investments and foreign currency related items 813,193 39,953,612
Net realized and unrealized gain (loss) from investments and
foreign currency related items 3,395,472 139,394,184
------------- -------------
Net increase in net assets resulting from operations $ 3,737,802 $ 141,283,219
============= =============
</TABLE>
See Accompanying Notes to Financial Statements.
21
<PAGE>
Warburg Pincus Funds
Statements of Operations
For the Six Months Ended April 30, 1999 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Warburg Pincus Warburg Pincus
Capital Appreciation Health Sciences
Fund Fund
-------------------- ---------------
<S> <C> <C>
Investment Income:
Dividends $ 2,372,018 $ 255,319
Interest 799,437 134,412
------------- -------------
Total investment income 3,171,455 389,731
------------- -------------
Expenses:
Investment advisory 2,813,328 370,980
Administrative services 767,306 75,900
Audit 13,791 5,847
Custodian/Sub-custodian 67,549 11,918
Directors/Trustees 6,669 5,728
Insurance 9,082 323
Interest 2,479 0
Legal 28,859 9,247
Organizational Costs 0 2,442
Printing 33,407 3,418
Registration 42,941 19,411
Shareholder servicing/distribution 76,666 92,745
Transfer agent 155,755 43,858
Miscellaneous 9,264 6,422
------------- -------------
4,027,096 648,239
Less: fees waived, expenses reimbursed and transfer agent offsets (16,292) (59,354)
------------- -------------
Total expenses 4,010,804 588,885
------------- -------------
Net investment income (loss) (839,349) (199,154)
------------- -------------
Net Realized and Unrealized Gain (Loss) from Investments and
Foreign Currency Related Items:
Net realized gain from security transactions 94,539,565 1,993,728
Net change in unrealized appreciation (depreciation) from
investments and foreign currency related items 92,193,444 (1,626,571)
Net realized and unrealized gain (loss) from investments and
foreign currency related items 186,733,009 367,157
------------- -------------
Net increase in net assets resulting from operations $185,893,660 $ 168,003
============= =============
</TABLE>
See Accompanying Notes to Financial Statements.
22
<PAGE>
This page intentionally left blank
<PAGE>
Warburg Pincus Funds
Statements of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Warburg Pincus
Balanced Fund
-----------------------------------
For the
Six Months
Ended For the
April 30, 1999 Year Ended
(Unaudited) October 31, 1998
-------------- ----------------
<S> <C> <C>
From Operations:
Net investment income (loss) $ 342,330 $ 683,836
Net realized gain (loss) from security transactions 2,582,282 2,812,164
Net realized gain (loss) from foreign currency related items (3) (135)
Net change in unrealized appreciation (depreciation) from
investments and foreign currency related items 813,193 (1,287,911)
------------- -------------
Net decrease in net assets resulting from operations 3,737,802 2,207,954
------------- -------------
From Distributions:
Dividends from net investment income:
Common Shares (376,236) (719,467)
Advisor Shares (1,998) (2,872)
Distributions from realized gains:
Common Shares (2,782,788) (3,441,034)
Advisor Shares (16,488) (14,992)
------------- -------------
Net decrease in net assets from distributions (3,177,510) (4,178,365)
------------- -------------
From Capital Share Transactions:
Proceeds from sale of shares 3,463,726 11,352,063
Reinvested dividends 3,037,668 4,064,531
Net asset value of shares redeemed (8,554,299) (16,188,224)
------------- -------------
Net increase (decrease) in net assets from capital share
transactions (2,052,905) (771,630)
------------- -------------
Net increase (decrease) in net assets (1,492,613) (2,742,041)
Net Assets:
Beginning of period 35,709,713 38,451,754
------------- -------------
End of Period $ 34,217,100 $ 35,709,713
============= =============
Undistributed net investment income $ 39,026 $ 74,933
============= =============
</TABLE>
24
<PAGE>
<TABLE>
<CAPTION>
Warburg Pincus
Growth & Income Fund
------------------------------------
For the
Six Months
Ended For the
April 30, 1999 Year Ended
(Unaudited) October 31, 1998
-------------- ----------------
<S> <C> <C>
From Operations:
Net investment income (loss) $ 1,889,035 $ 6,380,894
Net realized gain (loss) from security transactions 99,441,225 24,894,866
Net realized gain (loss) from foreign currency related items (653) (3,613)
Net change in unrealized appreciation (depreciation) from
investments and foreign currency related items 39,953,612 24,414,986
------------- -------------
Net decrease in net assets resulting from operations 141,283,219 55,687,133
------------- -------------
From Distributions:
Dividends from net investment income:
Common Shares (2,051,986) (5,674,968)
Advisor Shares (58,137) (427,925)
Distributions from realized gains:
Common Shares (21,637,029) (96,860,727)
Advisor Shares (2,951,282) (14,171,470)
------------- -------------
Net decrease in net assets from distributions (26,698,434) (31,120,504)
------------- -------------
From Capital Share Transactions:
Proceeds from sale of shares 122,266,163 386,958,954
Reinvested dividends 25,985,095 113,559,285
Net asset value of shares redeemed (297,685,588) (137,675,857)
------------- -------------
Net increase (decrease) in net assets from capital share
transactions (149,434,330) 165,520,255
------------- -------------
Net increase (decrease) in net assets (34,849,545) 104,072,298
Net Assets:
Beginning of period 800,205,636 696,133,338
------------- -------------
End of Period $ 765,356,091 $ 800,205,636
============= =============
Undistributed net investment income $ 56,109 $ 277,849
============= =============
</TABLE>
<TABLE>
<CAPTION>
Warburg Pincus
Capital Appreciation Fund
------------------------------------
For the
Six Months
Ended For the
April 30, 1999 Year Ended
(Unaudited) October 31, 1998
-------------- ----------------
<S> <C> <C>
From Operations:
Net investment income (loss) $ (839,349) $ 210,812
Net realized gain (loss) from security transactions 94,539,565 29,522,830
Net realized gain (loss) from foreign currency related items 0 0
Net change in unrealized appreciation (depreciation) from
investments and foreign currency related items 92,193,444 48,854,862
------------- -------------
Net decrease in net assets resulting from operations 185,893,660 78,588,504
------------- -------------
From Distributions:
Dividends from net investment income:
Common Shares (217,980) (2,188,710)
Advisor Shares 0 0
Distributions from realized gains:
Common Shares (29,615,988) (106,778,405)
Advisor Shares (1,286,536) (6,058,534)
------------- -------------
Net decrease in net assets from distributions (31,120,504) (115,025,649)
------------- -------------
From Capital Share Transactions:
Proceeds from sale of shares 186,308,301 232,010,450
Reinvested dividends 29,488,316 111,165,032
Net asset value of shares redeemed (28,953,042) (40,178,401)
------------- -------------
Net increase (decrease) in net assets from capital share
transactions 78,120,760 88,238,632
------------- -------------
Net increase (decrease) in net assets 232,893,916 51,801,488
Net Assets:
Beginning of period 673,493,680 621,692,192
------------- -------------
End of Period $ 906,387,596 $ 673,493,680
============= =============
Undistributed net investment income $ (957,636) $ 99,693
============= =============
</TABLE>
<TABLE>
<CAPTION>
Warburg Pincus
Health Sciences Fund
------------------------------------
For the
Six Months
Ended For the
April 30, 1999 Year Ended
(Unaudited) October 31, 1998
-------------- ----------------
<S> <C> <C>
From Operations:
Net investment income (loss) $ (199,154) $ (252,273)
Net realized gain (loss) from security transactions 1,993,728 (2,123,333)
Net realized gain (loss) from foreign currency related items 0 0
Net change in unrealized appreciation (depreciation) from
investments and foreign currency related items (1,626,571) 8,834,442
------------- -------------
Net decrease in net assets resulting from operations 168,003 6,458,836
------------- -------------
From Distributions:
Dividends from net investment income:
Common Shares 0 (65,740)
Advisor Shares 0 0
Distributions from realized gains:
Common Shares 0 (1,174,998)
Advisor Shares 0 0
------------- -------------
Net decrease in net assets from distributions 0 (1,240,738)
------------- -------------
From Capital Share Transactions:
Proceeds from sale of shares 26,115,265 79,882,699
Reinvested dividends 0 1,167,405
Net asset value of shares redeemed (28,953,042) (40,178,401)
------------- -------------
Net increase (decrease) in net assets from capital share
transactions (2,837,777) 40,871,703
------------- -------------
Net increase (decrease) in net assets (2,669,774) 46,089,801
Net Assets:
Beginning of period 64,336,090 18,246,289
------------- -------------
End of Period $ 61,666,316 $ 64,336,090
============= =============
Undistributed net investment income $ (199,154) $ 0
============= =============
</TABLE>
See Accompanying Notes to Financial Statements.
25
<PAGE>
Warburg Pincus Balanced Fund
Financial Highlights
(For a Common Class Share of the Fund Outstanding Throughout Each Period)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the Six
Months Ended
April 30, 1999
PERIOD ENDED: (Unaudited) 1998 1997** 1997+
-------------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Per-share data
Net asset value,
beginning of period $ 13.50 $ 14.38 $ 14.24 $ 11.94
---------- ---------- ---------- ----------
Investment activities:
Net investment income 0.14 0.25 0.03 0.23
Net gains on investments
(both realized and
unrealized) 1.30 0.42 0.15 2.46
---------- ---------- ---------- ----------
Total from investment
activities 1.44 0.67 0.19 2.69
---------- ---------- ---------- ----------
Distributions:
From net investment income (0.15) (0.26) (0.05) (0.24)
From realized capital gains (1.06) (1.29) -- (0.15)
---------- ---------- ---------- ----------
Total distributions (1.21) (1.55) (0.05) (0.39)
---------- ---------- ---------- ----------
Net asset value, end of period $ 13.73 $ 13.50 $ 14.38 $ 14.24
========== ========== ========== ==========
Total return 11.32%! 5.33% 1.30%! 23.03%
Ratios/Supplemental Data:
Net assets, end of period
(000s omitted) $ 33,992 $ 35,542 $ 38,294 $ 38,926
Ratio of expenses to
average net assets 1.35%*@ 1.35%@ 1.35%*@ 1.35%@
Ratio of net loss to
average net assets 1.97%* 1.76% 1.38%* 1.76%
Decrease reflected in above
operating expense ratios
due to waviers/
reimbursements 0.61%* 0.62% 0.68%* 0.55%
Portfolio turnover rate 63.75%! 132.01% 15%! 120%
</TABLE>
<TABLE>
<CAPTION>
PERIOD ENDED: 1996+ 1995+ 1994+
---------- ---------- ----------
<S> <C> <C> <C>
Per-share data
Net asset value,
beginning of period $ 11.12 $ 11.01 $ 11.71
---------- ---------- ----------
Investment activities:
Net investment income 0.16 0.21 0.41
Net gains on investments
(both realized and
unrealized) 0.94 1.72 0.32
---------- ---------- ----------
Total from investment
activities 1.10 1.93 0.74
---------- ---------- ----------
Distributions:
From net investment income (0.13) (0.31) (0.46)
From realized capital gains (0.15) (1.51) (0.98)
---------- ---------- ----------
Total distributions (0.28) (1.82) (1.44)
---------- ---------- ----------
Net asset value, end of period $ 11.94 $ 11.12 $ 11.01
========== ========== ==========
Total return 7.37% 1.00% (5.98)%(a)
Ratios/Supplemental Data:
Net assets, end of period
(000s omitted) $ 30,853 $ 5,342 $ 808
Ratio of expenses to
average net assets 1.53%@ 1.53%@ 0%@
Ratio of net loss to
average net assets 1.66% 2.30% 3.76%
Decrease reflected in above
operating expense ratios
due to waviers/
reimbursements 0.90% 4.51% 5.46%
Portfolio turnover rate 108% 107% 32%
</TABLE>
- --------------------------------------------------------------------------------
** For the two months ended October 31, 1997.
@ 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.
+ For the period ended August 31.
! Non-annualized.
* Annualized.
(a) Sales load not reflected in total return. The sales load was eliminated
effective August 31, 1994.
See Accompanying Notes to Financial Statements.
26
<PAGE>
Warburg Pincus Growth & Income Fund
Financial Highlights
(For a Common Class Share of the Fund Outstanding Throughout Each Period)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the Six
Months Ended
April 30, 1999
PERIOD ENDED: (Unaudited) 1998 1997** 1997+
-------------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Per-share data
Net asset value,
beginning of period $ 16.97 $ 18.56 $ 18.44 $ 14.90
------------- ------------- ------------- -------------
Investment activities:
Net investment income 0.05 0.14 0.02 0.14
Net gains or losses on
investments (both realized
and unrealized) 3.26 1.36 0.14 3.54
------------- ------------- ------------- -------------
Total from investment
activities 3.31 1.50 0.16 3.67
------------- ------------- ------------- -------------
Distributions:
From net investment income (0.05) (0.14) (0.04) (0.13)
From realized capital gains (0.53) (2.95) -- --
------------- ------------- ------------- -------------
Total distributions (0.58) (3.09) (0.04) (0.13)
------------- ------------- ------------- -------------
Net asset value, end of period $ 19.70 $ 16.97 $ 18.56 $ 18.44
============= ============= ============= =============
Total return 20.02%! 9.11% 0.85%! 24.78%
Ratios/Supplemental Data:
Net assets, end of period
(000s omitted) $ 680,871 $ 703,808 $ 608,205 $ 601,159
Ratio of expenses to
average net assets 1.15%*@ 1.19%@ 1.18%*@ 1.15%@
Ratio of net income to
average net assets 0.54%* 0.83% 0.75%* 0.80%
Decrease reflected in above
operating expense ratios
due to waviers/
reimbursements 0.00%* 0.00% 0.00% 0.00%
Portfolio turnover rate 37.57%! 78.33% 19%! 148%
</TABLE>
<TABLE>
<CAPTION>
PERIOD ENDED: 1996+ 1995+ 1994+
---------- ---------- ----------
<S> <C> <C> <C>
Per-share data
Net asset value,
beginning of period $ 16.40 $ 14.56 $ 16.72
------------- ------------- -------------
Investment activities:
Net investment income 0.11 0.22 0.08
Net gains or losses on
investments (both realized
and unrealized) (0.66) 1.98 1.81
------------- ------------- -------------
Total from investment
activities (0.55) 2.21 1.89
------------- ------------- -------------
Distributions:
From net investment income (0.14) (0.18) (0.08)
From realized capital gains (0.81) (0.18) (3.98)
------------- ------------- -------------
Total distributions (0.95) (0.37) (4.05)
------------- ------------- -------------
Net asset value, end of period $ 14.90 $ 16.40 $ 14.56
============= ============= =============
Total return (3.54)% 15.62% 14.41%
Ratios/Supplemental Data:
Net assets, end of period
(000s omitted) $ 727,627 $ 1,038,193 $ 410,658
Ratio of expenses to
average net assets 1.21%@ 1.22% 1.28%
Ratio of net income to
average net assets 0.69% 1.64% 0.41%
Decrease reflected in above
operating expense ratios
due to waviers/
reimbursements 0.00% 0.00% 0.00%
Portfolio turnover rate 94% 109% 150%
</TABLE>
- --------------------------------------------------------------------------------
** For the two months ended October 31, 1997.
@ 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.
+ For the period ended August 31.
! Non-annualized.
* Annualized.
See Accompanying Notes to Financial Statements.
27
<PAGE>
Warburg Pincus Capital Appreciation Fund
Financial Highlights
(For a Common Class Share of the Fund Outstanding Throughout Each Period)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the Six
Months Ended For the Year Ended October 31,
April 30, 1999 ----------------------------------------------------------------
PERIOD ENDED: (Unaudited) 1998 1997 1996 1995 1994
-------------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Per-share data
Net asset value,
beginning of period $ 19.52 $ 21.09 $ 17.95 $ 16.39 $ 14.29 $ 15.32
-------- -------- -------- -------- -------- --------
Investment activities:
Net investment income or loss (0.02) 0.01 0.11 0.08 0.04 0.04
Net gains or losses on
investments (both realized
and unrealized) 5.21 2.31 4.93 3.53 3.08 0.17
-------- -------- -------- -------- -------- --------
Total from investment
activities 5.19 2.32 5.04 3.61 3.12 0.21
-------- -------- -------- -------- -------- --------
Distributions:
From net investment income (0.01) (0.08) (0.10) (0.01) (0.04) (0.05)
From realized capital gains (0.91) (3.81) (1.80) (2.04) (0.98) (1.19)
-------- -------- -------- -------- -------- --------
Total distributions (0.92) (3.89) (1.90) (2.05) (1.02) (1.24)
-------- -------- -------- -------- -------- --------
Net asset value, end of period $ 23.79 $ 19.52 $ 21.09 $ 17.95 $ 16.39 $ 14.29
======== ======== ======== ======== ======== ========
Total return 27.41%+ 12.75% 30.98% 24.67% 24.05% 1.65%
Ratios/Supplemental Data:
Net assets, end of period
(000s omitted) $878,709 $646,657 $587,091 $407,707 $235,712 $159,346
Ratio of expenses to
average net assets 0.98%*@ 1.00%@ 1.01%@ 1.04%@ 1.12%@ 1.05%
Ratio of net loss to
average net assets (0.19)%* 0.05% 0.54% 0.59% 0.31% 0.26%
Net investment income 0.05% 0.54% 0.59% 0.31% 0.26%
Decrease reflected in above
operating expense ratios
due to waviers/
reimbursements 0.00%* 0.00% 0.00% 0.00% 0.00% 0.01%
Portfolio turnover rate 75.02%+ 168.67% 238.11% 170.69% 146.09% 51.87%
</TABLE>
- --------------------------------------------------------------------------------
@ Interest earned on uninvested cash balances is used to offset portions of the
transfer agent expense. These arrangements resulted in a reduction to the net
expense ratio by .00% for the six months ended April 30, 1999 and by .00%,
.01% and .01% for the year endedOctober 31, 1998, 1997 and 1996,
respectively. The operating expense ratios after reflecting these
arrangements were .98% for the six months ended April 30, 1999 and 1.00%,
1.00% and 1.03% for the year ended October 31, 1998, 1997 and 1996,
respectively.
+ Non-annualized.
* Annualized.
See Accompanying Notes to Financial Statements.
28
<PAGE>
Warburg Pincus Health Sciences Fund
Financial Highlights
(For a Common Class Share of the Fund Outstanding Throughout Each Period)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the Six
Months Ended For the Year Ended October 31,
April 30, 1999 ------------------------------
(Unaudited) 1998 1997**
-------------- ------- -------
<S> <C> <C> <C>
PERIOD ENDED:
Per-share data
Net asset value, beginning of period $ 14.41 $ 12.22 $ 10.00
------- ------- -------
Investment activities:
Net investment loss (0.05) (0.06) (0.02)
Net gains on investments (both realized and unrealized) 0.02 2.97 2.24
------- ------- -------
Total from investment activities (0.03) 2.91 2.22
------- ------- -------
Distributions:
From net investment income 0.00 (0.04) --
From realized capital gains 0.00 (0.68) --
------- ------- -------
Total distributions 0.00 (0.72) --
------- ------- -------
Net asset value, end of period $ 14.38 $ 14.41 $ 12.22
======= ======= =======
Total return (0.21)%+ 25.25% 22.20%+
Ratios/Supplemental Data:
Net assets, end of period (000s omitted) $61,666 $64,336 $18,246
Ratio of expenses to average net assets 1.59%*@ 1.59%@ 1.59%*@
Ratio of net loss to average net assets (0.54)%* (0.58)% (0.24)%*
Decrease reflected in above operating expense
ratios due to waviers/reimbursements 0.16%* 0.38% 1.83%*
Portfolio turnover rate 93.65%+ 62.89% 159.57%+
</TABLE>
- --------------------------------------------------------------------------------
** For the two months ended December 31, 1996 (commencement of operations)
through October 31, 1997.
@ 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.
+ Non-annualized.
* Annualized.
See Accompanying Notes to Financial Statements.
29
<PAGE>
Warburg Pincus Funds
Notes to Financial Statements
April 30, 1999 (Unaudited)
- --------------------------------------------------------------------------------
1. Significant Accounting Policies
The Warburg Pincus Balanced Fund, Warburg Pincus Growth & Income Fund, the
Warburg Pincus Capital Appreciation Fund, and the Warburg Pincus Health Sciences
Fund are registered under the Investment Company Act of 1940, as amended (1940
Act), as diversified, open-end management investment companies.
Investment objectives for each fund are as follows: the Balanced Fund seeks
maximum total return (through a combination of long-term growth of capital, and
current income) consistent with preservation of capital; the Growth & Income
Fund seeks long-term growth of capital, income and a reasonable current return;
the Capital Appreciation Fund seeks long-term capital appreciation and the
Health Sciences Fund seeks capital appreciation.
Each fund (except the Health Sciences Fund) offers two classes of shares, one
class being referred to as the Common Class and one class being referred to as
the Advisor Class. The Health Sciences Fund currently offers only the Common
Class. Common Class and Advisor Class 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 Class
shares for the Balanced Fund and the Health Sciences Fund bear expenses paid
pursuant to a shareholder servicing and distribution plan at an annual rate of
.25% of the average daily net asset value of each fund's Common Class. Advisor
Class shares bear expenses paid pursuant to a distribution plan at an annual
rate not to exceed .75% of the average daily net asset value of each fund's
Advisor Class. Advisor Class shares are currently bearing expenses of .50% of
average daily net assets.
The net asset value of each fund is determined daily as of the close of
regular trading on the New York Stock Exchange. Each fund's investments are
valued at market value, which is generally determined using market quotations.
If no sales are reported, investments are generally valued at the mean between
the last reported bid and asked prices. If market quotations are not readily
available, securities and other assets are valued by another method that the
Board of Directors/Trustees believes accurately reflects fair value. Dept that
will mature in 60 days or less is valued on the basis of amortized cost, which
approximates market value, unless the Board determines that using this method
would not reflect an investment's 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
30
<PAGE>
Warburg Pincus Funds
Notes to Financial Statements (cont'd)
April 30, 1999 (Unaudited)
- --------------------------------------------------------------------------------
1. Significant Accounting Policies -- (cont'd)
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 and 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 of that
class. Effective November 1, 1998, class-specific expenses no longer include
transfer agent fees; accordingly these fees will be allocated proportionately
based upon the relative net asset value of outstanding shares of the fund. 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 of 1986, as amended, and
make the requisite distributions to its shareholders which will be sufficient to
relieve it from federal income and excise taxes.
Costs incurred in connection with organization of shares of the Health
Sciences Fund have been deferred and are being amortized over a period of five
years from the date the fund commenced its operations.
31
<PAGE>
Warburg Pincus Funds
Notes to Financial Statements (cont'd)
April 30, 1999 (Unaudited)
- --------------------------------------------------------------------------------
1. Significant Accounting Policies -- (cont'd)
Pursuant to an exemptive order issued by the Securities and Exchange
Commission, each fund, along with other Warburg Pincus 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 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 their
transfer agent expense. For the six months ended April 30, 1999, the funds
received credits or reimbursements under this arrangement as follows:
Fund Amount
---- ------
Balanced $ 651
Growth & Income 15,646
Capital Appreciation 16,292
Health Sciences 1,357
2. Investment Adviser, Co-Administrators and Distributor
Warburg Pincus Asset Management, Inc. (Warburg) which is indirectly
controlled by Warburg, Pincus & Co., serves as each fund's investment adviser.
On February 15, 1999, Warburg, Pincus & Co. and Credit Suisse Group announced
that they reached an agreement for Credit Suisse to acquire Warburg. Under the
terms of the arrangement, no immediate changes are planned to Warburg investment
portfolio managers and investment professionals. The Warburg Pincus Funds, Board
of Directors/Trustees and shareholders have approved the "assignment" of each
fund's current investment advisory agreement with Warburg. The transaction is
expected to be completed in mid-1999. For its investment advisory services,
Warburg receives the following fees based on each fund's average daily net
assets:
32
<PAGE>
Warburg Pincus Funds
Notes to Financial Statements (cont'd)
April 30, 1999 (Unaudited)
- --------------------------------------------------------------------------------
2. Investment Adviser, Co-Administrators and Distributor -- (cont'd)
Fund Annual Rate
---- ---------------------------------
Balanced .90% of average daily net assets
Growth & Income .75% of average daily net assets
CapitalAppreciation .70% of average daily net assets
Health Sciences 1.00% of average daily net assets
For the six months ended April 30, 1999, investment advisory fees, voluntary
waivers and reimbursements were as follows:
Gross Net
Fund Advisory Fee Waiver Advisory Fee
---- ------------- -------- -------------
Balanced $ 156,891 $(80,114) $ 76,777
Growth & Income 2,907,880 0 2,907,880
Capital Appreciation 2,813,328 0 2,813,328
Health Sciences 370,980 (57,997) 312,983
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 six months ended April 30, 1999,
administrative services fees earned by CFSI were as follows:
Fund Co-Administration Fee
---- ---------------------
Balanced $ 17,432
Growth & Income 387,717
Capital Appreciation 401,904
Health Sciences 37,098
(For administrative services to the Balanced Fund and the Growth & Income
Fund, PFPC receives a fee calculated at an annual rate of .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). For the Capital
Appreciation Fund and Health Sciences Fund, PFPC 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.
33
<PAGE>
Warburg Pincus Funds
Notes to Financial Statements (cont'd)
April 30, 1999 (Unaudited)
- --------------------------------------------------------------------------------
2. Investment Adviser, Co-Administrators and Distributor -- (cont'd)
For the six months ended April 30, 1999, administrative service fees earned
and voluntarily waived by PFPC (including out-of-pocket expenses) were as
follows:
Net
Fund Co-Administration Fee Waiver Co-Administration Fee
- ---- --------------------- --------- ---------------------
Balanced $29,969 $(26,149) $ 3,820
Growth & Income 516,045 0 516,045
Capital Appreciation 365,402 0 365,402
Health Sciences 38,802 0 38,802
Counsellors Securities Inc. (CSI), also a wholly-owned subsidiary of Warburg,
serves as each fund's distributor. No compensation is payable by the Capital
Appreciation Fund or the Growth & Income Fund to CSI for distribution services.
For its shareholder and distribution services to the Balanced Fund and the
Health Sciences Fund, CSI receives a fee calculated at an annual rate of .25% of
the average daily net assets of the Common Class of each fund pursuant to a
shareholder servicing and distribution plan adopted by each Fund pursuant to
Rule 12b-1 under the 1940 Act. For its distribution services for the Adviser
Class of each fund except the Health Sciences Fund, CSI receives a fee at an
annual rate of .50%, of the average daily net assets of each funds' Advisor
Class pursuant to distribution plan adopted by each fund pursuant to Rule 12b-1
under the 1940 Act. CSI pays all of the Advisor Class fees to institutions and
financial-services firms that offer the Adviser Class. For the six months ended
April 30, 1999, shareholder servicing and distribution fees paid to CSI were as
follows:
Shareholder Servicing/
Fund Distribution Fee
---- ----------------------
Balanced
Common Class $ 43,302
Advisor Class 558
--------
$ 43,860
========
Growth & Income
Advisor Class $227,053
========
Capital Appreciation
Advisor Class $ 76,666
========
Health Sciences
Common Class $ 92,745
========
3. Line of Credit
The funds, together with certain other Warburg Pincus Funds have established
committed and uncommitted line of credit facilities with PNC for
34
<PAGE>
Warburg Pincus Funds
Notes to Financial Statements (cont'd)
April 30, 1999 (Unaudited)
- --------------------------------------------------------------------------------
3. Line of Credit -- (cont'd)
temporary or emergency purposes primarily relating to unanticipated fund share
redemptions. Under the terms of the committed line of credit, the Warburg Pincus
Funds with access to the facility pay a commitment fee at a rate of .07% per
annum on the average daily balance of the line of credit, which is undisbursed
and uncanceled during the preceding quarter. In addition, the Warburg Pincus
Funds will pay interest on borrowings at the bank's base rate plus .45%. Under
the terms of the uncommitted lines of credit, the Warburg Pincus Funds will pay
interest on borrowings at the banks base rate plus .55%. Aggregate borrowings
for each fund under the committed and uncommitted lines of credit with PNC may
not exceed the lowest of (a) thirty-three and one-third percent (33 1/3%) of the
assets of such fund, for any fund that does not invest at least sixty-five
percent (65%) of its assets in international equity or fixed income securities
(an International Fund) and twenty-five percent (25%) of the assets of any fund
that is an International Fund or (b) the maximum amount permitted by such fund's
investment policies and restrictions. At April 30, 1999, there were no
outstanding balances under these line of credit facilities for any of the funds.
4. Investments in Securities
For the six months ended April 30, 1999, purchases and sales of investment
securities (excluding short-term investments) were as follows:
Fund Purchases Sales
---- ------------ ------------
Balanced $ 21,021,595 $ 23,304,034
Growth & Income 274,280,152 421,644,175
Capital Appreciation 633,306,419 587,097,934
Health Sciences 63,550,887 62,321,995
At April 30, 1999, 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:
Net Unrealized
Unrealized Unrealized Appreciation
Fund Appreciation Depreciation (Depreciation)
---- ------------ ------------ --------------
Balanced $ 4,778,743 $ (580,403) $ 4,198,340
Growth & Income 155,153,434 (18,566,264) 136,587,170
Capital Appreciation 240,935,508 (3,009,455) 237,926,053
Health Sciences 10,219,298 (550,785) 9,668,513
35
<PAGE>
Warburg Pincus Funds
Notes to Financial Statements (cont'd)
April 30, 1999 (Unaudited)
- --------------------------------------------------------------------------------
5. Capital Share Transactions
The Balanced Fund, the Growth & Income Fund and the Health Sciences 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 Balanced Fund and the Growth & Income Fund) are
classified as the Advisor Class. 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 the Advisor
Class.
Transactions in shares of each fund were as follows:
<TABLE>
<CAPTION>
Balanced Fund
-------------------------------------------------------------------------
Common Class Advisor Class
---------------------------------- ---------------------------------
Six Months For the Six Months For the
Ended Year Ended Ended Year Ended
April 30, 1999 October 31, April 30, 1999 October 31,
(Unaudited) 1998 (Unaudited) 1998
-------------- ------------ -------------- ------------
<S> <C> <C> <C> <C>
Shares sold 253,102 827,546 7,605 7,713
Shares issued to shareholders on reinvestment
of dividends 235,562 313,898 1,445 1,373
Shares redeemed (644,582) (1,172,690) (5,102) (7,587)
------------ ------------ ------------ ------------
Net increase (decrease) in shares outstanding (155,918) (31,246) 3,948 1,499
============ ============ ============ ============
Proceeds from sale of shares $ 3,362,533 $ 11,246,690 $ 101,193 $ 105,373
Reinvested dividends 3,019,195 4,046,855 18,473 17,676
Net asset value of shares redeemed (8,488,022) (16,087,173) (66,277) (101,051)
------------ ------------ ------------ ------------
Net increase (decrease) from capital share
transactions $ (2,106,294) $ (793,628) $ 53,389 $ 21,998
============ ============ ============ ============
</TABLE>
<TABLE>
<CAPTION>
Growth & Income Fund
-------------------------------------------------------------------------
Common Class Advisor Class
---------------------------------- ---------------------------------
Six Months For the Six Months For the
Ended Year Ended Ended Year Ended
April 30, 1999 October 31, April 30, 1999 October 31,
(Unaudited) 1998 (Unaudited) 1998
-------------- ------------ -------------- ------------
<S> <C> <C> <C> <C>
Shares sold 5,773,799 20,772,224 1,063,615 1,286,304
Shares issued to shareholders on reinvestment
of dividends 1,326,339 6,140,028 173,844 907,279
Shares redeemed (14,005,842) (18,200,978) (2,629,216) (1,249,695)
------------- ------------- ------------ ------------
Net increase (decrease) in shares outstanding (6,905,704) 8,711,274 (1,391,757) 943,888
============= ============= ============ ============
Proceeds from sale of shares $ 102,888,036 $ 364,404,734 $ 19,378,127 $ 22,554,220
Reinvested dividends 22,975,846 98,961,339 3,009,249 14,597,946
Net asset value of shares redeemed (250,422,047) (313,659,176) (47,263,541) (21,338,807)
------------- ------------- ------------ ------------
Net increase (decrease) from capital share
transactions $(124,558,165) $ 149,706,897 $(24,876,165) $ 15,813,359
============= ============= ============ ============
</TABLE>
36
<PAGE>
Warburg Pincus Funds
Notes to Financial Statements (cont'd)
April 30, 1999 (Unaudited)
- --------------------------------------------------------------------------------
5. Capital Share Transactions -- (cont'd)
<TABLE>
<CAPTION>
Capital Appreciation Fund
-------------------------------------------------------------------
Common Class Advisor Class
------------------------------ -------------------------------
Six Months For the Six Months For the
Ended Year Ended Ended Year Ended
April 30, 1999 October 31, April 30, 1999 October 31,
(Unaudited) 1998 (Unaudited) 1998
-------------- ------------- -------------- ------------
<S> <C> <C> <C> <C>
Shares sold 8,115,754 11,397,212 197,001 213,912
Shares issued to shareholders on reinvestment
of dividends 1,395,652 5,891,863 64,497 343,403
Shares redeemed (5,708,066) (12,000,823) (472,997) (822,591)
------------- ------------- ------------ ------------
Net increase (decrease) in shares outstanding 3,803,340 5,288,252 (211,499) (265,276)
============= ============= ============ ============
Proceeds from sale of shares $ 181,864,893 $ 227,847,570 $ 4,443,408 $ 4,162,880
Reinvested dividends 28,206,125 105,110,845 1,282,191 6,054,187
Net asset value of shares redeemed (126,801,246) (238,511,569) (10,874,611) (16,425,281)
------------- ------------- ------------ ------------
Net increase (decrease) from capital share
transactions $ 83,269,722 $ 94,446,846 $ (5,149,012) $ (6,208,214)
============= ============= ============ ============
<CAPTION>
Health Sciences Fund
----------------------------
Common Class
----------------------------
Six Months For the
Ended Year Ended
April 30, 1999 October 31,
(Unaudited) 1998
-------------- -------------
<S> <C> <C>
Shares sold 1,709,357 5,822,876
Shares issued to shareholders on reinvestment
of dividends 0 101,162
Shares redeemed (1,884,988) (2,953,447)
------------- -------------
Net increase (decrease) in shares outstanding (175,631) 2,970,591
============= =============
Proceeds from sale of shares $ 26,115,265 $ 79,882,699
Reinvested dividends 0 1,167,405
Net asset value of shares redeemed (28,953,042) (40,178,401)
------------- -------------
Net increase (decrease) from capital share
transactions $ (2,837,777) $ 40,871,703
============= =============
</TABLE>
6. Liabilities
At April 30, 1999, each fund had the following liabilities:
<TABLE>
<CAPTION>
Capital Health
Balanced Growth & Income Appreciation Sciences
Fund Fund Fund Fund
-------- -------------- ------------ ------------
<S> <C> <C> <C> <C>
Payable for securities purchased (at value) $790,688 $8,547,365 $32,113,805 $2,174,223
Investment advisory fee payable 11,717 453,321 532,176 45,898
Administration services fee payable 2,789 60,443 76,025 5,705
Distribution fees payable 6,929 -- -- 14,262
-------- ---------- ----------- ----------
$812,123 $9,061,129 $32,722,006 $2,240,088
======== ========== =========== ==========
</TABLE>
37
<PAGE>
Warburg Pincus Funds
Notes to Financial Statements (cont'd)
April 30, 1999 (Unaudited)
- --------------------------------------------------------------------------------
7. Net Assets
Net assets at April 30, 1999 consisted of the following:
<TABLE>
<CAPTION>
Capital Health
Balanced Growth & Income Appreciation Sciences
Fund Fund Fund Fund
-------- -------------- ------------ ------------
<S> <C> <C> <C> <C>
Capital contributed, net $27,407,534 $529,650,545 $583,458,763 $52,782,913
Undistributed net investment income 39,026 56,109 0 0
Accumulated net realized gain (loss) from security
transactions 2,547,589 98,605,218 91,403,134 (138,792)
Net unrealized appreciation (depreciation) from
investments and foreign currency related items 4,222,951 137,044,219 231,525,699 9,022,195
----------- ------------ ------------ -----------
Net assets $34,217,100 $765,356,091 $906,387,596 $61,666,316
=========== ============ ============ ===========
</TABLE>
8. Capital Loss Carryover
At April 30, 1999, there were no capital loss carryovers available to offset
possible future capital gains of any fund.
38
<PAGE>
Warburg Pincus Funds
Notes to Financial Statements (cont'd)
April 30, 1999 (Unaudited)
- --------------------------------------------------------------------------------
9. Other Financial Highlights
Each fund (other than the Health Sciences Fund) currently offers one other
class of shares, the Advisor Class, representing equal pro rata interests in
each of the respective funds. The financial highlights for an Advisor Class
share of each fund are as follows:
<TABLE>
<CAPTION>
Warburg Pincus Balanced Fund
----------------------------------------------------------------------
Advisor Class
----------------------------------------------------------------------
For the Six
Months Ended For the Year Ended October 31,
April 30, 1999 ------------------------------------------------------
PERIOD ENDED: (Unaudited) 1998 1997** 1997# 1996# 1995##
-------------- ------- ------ ------ ------- -------
<S> <C> <C> <C> <C> <C> <C>
Per-share data
Net asset value, beginning of period $13.47 $ 14.37 $14.22 $11.94 $ 11.13 $ 10.72
------ ------- ------ ------ ------- -------
Investment activities:
Net investment income (loss) 0.13 0.21 0.03 (0.02) 0.37 0.01
Net gains or losses on investments
(both realized and unrealized) 1.28 0.41 0.15 2.68 0.68 0.39
------ ------- ------ ------ ------- -------
Total from investment activities 1.41 0.62 0.18 2.65 1.05 0.41
------ ------- ------ ------ ------- -------
Distributions:
From net investment income (0.13) (0.23) (0.04) (0.22) (0.09) --
From realized capital gains (1.06) (1.29) -- (0.15) (0.15) --
------ ------- ------ ------ ------- -------
Total distributions (1.19) (1.52) (0.04) (0.37) (0.24) --
------ ------- ------ ------ ------- -------
Net asset value, end of period $13.69 $ 13.47 $14.37 $14.22 $ 11.94 $ 11.13
====== ======= ====== ====== ======= =======
Total return 11.11%+ 4.93% 1.30%+ 22.66% 9.56% 3.82%+
Ratios/Supplemental Data:
Net assets, end of period (000s omitted) $ 225 $ 168 $ 158 $ 149 $ 12 $ 1
Ratio of expenses to average net assets 1.60%*@ 1.60%@ 1.60%*@ 1.60%@ 1.71%@ 1.76%*
Ratio of net loss to average net assets 1.71%* 1.52% 1.13%* 1.53% (4.11)% 2.00%*
Decrease reflected in above operating
expense ratios due to waviers/
reimbursements 0.62%* 1.19%* 1.35%* 1.21% 203.35% 626.71%*
Portfolio turnover rate 63.75%+ 132.01% 15%+ 120% 108% 107%+
- -------------------------------------------------------------------------------------------------------------------
</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.
+ Non-annualized.
* Annualized.
** For the two months ended October 31, 1997.
# For the years ended August 31.
## For the period July 31, 1995 (Commencement of Operations) to August 31, 1995.
39
<PAGE>
Warburg Pincus Funds
Notes to Financial Statements (cont'd)
April 30, 1999 (Unaudited)
- --------------------------------------------------------------------------------
9. Other Financial Highlights -- (cont'd)
<TABLE>
<CAPTION>
Warburg Pincus Growth & Income Fund
----------------------------------------------------------------------
Advisor Class
----------------------------------------------------------------------
For the Six
Months Ended For the Year Ended October 31,
April 30, 1999 ------------------------------------------------------
PERIOD ENDED: (Unaudited) 1998 1997** 1997# 1996# 1995##
-------------- ------- ------ ------ ------- -------
<S> <C> <C> <C> <C> <C> <C>
Per-share data
Net asset value, beginning of period $ 16.96 $ 18.55 $ 18.42 $ 14.88 $ 16.38 $ 14.87
------- ------- ------- ------- ------- -------
Investment activities:
Net investment income -- 0.10 0.01 0.07 0.08 0.02
Net gains or losses on investments
(both realized and unrealized) 3.27 1.35 0.14 3.55 (0.69) 1.53
------- ------- ------- ------- ------- -------
Total from investment activities 3.27 1.45 0.15 3.62 (0.61) 1.56
------- ------- ------- ------- ------- -------
Distributions:
From net investment income (0.01) (0.09) (0.02) (0.08) (0.07) (0.05)
From realized capital gains (0.53) (2.95) -- -- (0.81) --
------- ------- ------- ------- ------- -------
Total distributions (0.54) (3.04) (0.02) (0.08) (0.89) (0.05)
------- ------- ------- ------- ------- -------
Net asset value, end of period $ 19.69 $ 16.96 $ 18.55 $ 18.42 $ 14.88 $ 16.38
====== ======= ======= ======= ======= =======
Total return 19.74%+ 8.70% .81%+ 24.37% (3.92)% 10.49%+
Ratios/Supplemental Data:
Net assets, end of period (000s omitted) $84,485 $96,397 $87,929 $84,867 $79,565 $56,902
Ratio of expenses to average net assets 1.65%*@ 1.55%@ 1.58%*@ 1.54%@ 1.59%@ 1.92%*
Ratio of net income to average net assets 0.05%* 0.47% 0.35%* 0.43% 0.28% 0.43%*
Decrease reflected in above operating
expense ratios due to waviers/
reimbursements 0.00%* 0.00% 0.00% 0.00% 0.00% 0.00%
Portfolio turnover rate 37.57%+ 78.33% 19%+ 148% 94% 109%*
- -------------------------------------------------------------------------------------------------------------------
</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.
+ Non-annualized.
* Annualized.
** For the two months ended October 31, 1997.
# For the years ended August 31.
## For the period May 15, 1995 (Commencement of Operations) to August 31, 1995.
40
<PAGE>
Warburg Pincus Funds
Notes to Financial Statements (cont'd)
April 30, 1999 (Unaudited)
- --------------------------------------------------------------------------------
9. Other Financial Highlights -- (cont'd)
<TABLE>
<CAPTION>
Warburg Pincus Capital Appreciation Fund
----------------------------------------------------------------------
Advisor Class
----------------------------------------------------------------------
For the Six
Months Ended For the Year Ended October 31,
April 30, 1999 ------------------------------------------------------
PERIOD ENDED: (Unaudited) 1998 1997** 1997# 1996# 1995##
-------------- ------- ------ ------ ------- -------
<S> <C> <C> <C> <C> <C> <C>
Per-share data
Net asset value, beginning of period $ 19.21 $ 20.82 $ 17.73 $ 16.26 $ 14.22 $ 15.28
------- ------- -------- ------- ------- -------
Investment activities:
Net investment income (loss) (0.10) (0.09) 0.02 0.02 -- (0.08)
Net gains or losses on investments
(both realized and unrealized) 5.15 2.29 4.88 3.49 3.02 .23
------- ------- ------- ------- ------- -------
Total from investment activities 5.05 2.20 4.90 3.51 3.02 0.15
------- ------- ------- ------- ------- -------
Distributions:
From net investment income -- -- (0.01) -- -- (0.02)
From realized capital gains (0.91) (3.81) (1.80) (2.04) (0.98) (1.19)
------- ------- ------- ------- ------- -------
Total distributions (0.91) (3.81) (1.81) (2.04) (0.98) (1.21)
------- ------- ------- ------- ------- -------
Net asset value, end of period $ 23.35 $ 19.21 $ 20.82 $ 17.73 $ 16.26 $ 14.22
======= ======= ======= ======= ======= =======
Total return 27.12%+ 12.23% 30.37% 24.15% 23.41% 1.23%
Ratios/Supplemental Data:
Net assets, end of period (000s omitted) $27,679 $26,836 $34,601 $23,440 $11,594 $8,169
Ratio of expenses to average net assets 1.48%*@ 1.43%@ 1.48%@ 1.54%@ 1.62% 1.55%
Ratio of net loss to average net assets (0.69)%* (0.39)% 0.08% 0.09% (0.18)% (0.24)%
Decrease reflected in above operating
expense ratios due to waviers/
reimbursements -- -- -- -- -- 0.01%
Portfolio turnover rate 75.02%+ 168.67% 238.11% 170.69% 146.09% 51.87%
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
@ Interest earned on uninvested cash balances is used to offset portions of the
transfer agent expense. These arrangements resulted in a reduction to the net
expenses ratio by .00% for the six months ended April 30, 1999 and by .00%,
.00%, and .01% for the year ended October 31, 1998, 1997 and 1996,
respectively. The operating expense ratios, after reflecting these
arrangements were 1.48% for the six months ended April 30, 1999 and 1.43%,
1.48%, and 1.53% for the year ended October 31, 1998, 1997 and 1996,
respectively.
41
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[Warburg Pincus Funds LOGO]
P.O. Box 9030, Boston, MA 02205-9030
800-WARBURG (800-927-2874) o www.warburg.com
COUNSELLORS SECURITIES INC., DISTRIBUTOR. WPUSL-3-0499
