WARBURG PINCUS CAPITAL APPRECIATION FUND
N-30D, 2001-01-09
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                               [GRAPHIC OMITTED]

                     PART OF CREDIT SUISSE ASSET MANAGEMENT

                                     ANNUAL
                                     REPORT

                                OCTOBER 31, 2000

                                 WARBURG PINCUS
                                  BALANCED FUND

                                    (BULLET)

                                 WARBURG PINCUS
                                   VALUE FUND

                                    (BULLET)

                                 WARBURG PINCUS
                            CAPITAL APPRECIATION FUND


More complete  information about the Funds,  including charges and expenses,  is
provided in the  PROSPECTUS,  which must precede or accompany  this document and
which  should be read  carefully  before  investing.  You may obtain  additional
copies by calling  800-WARBURG(800-927-2874)  or by  writing  to Warburg  Pincus
Funds, P.O. Box 9030, Boston, MA 02205-9030.

Credit Suisse Asset Management Securities,  Inc., Distributor, is located at 466
Lexington  Ave.,  New York, NY  10017-3147.  Warburg Pincus Funds are advised by
Credit Suisse Asset Mangement, LLC.

<PAGE>

FROM TIME TO TIME, THE FUNDS' INVESTMENT ADVISER AND CO-ADMINISTRATORS MAY WAIVE
SOME FEES AND/OR  REIMBURSE SOME EXPENSES,  WITHOUT WHICH  PERFORMANCE  WOULD BE
LOWER. WAIVERS AND/OR REIMBURSEMENTS ARE SUBJECT TO CHANGE.

RETURNS ARE  HISTORICAL AND INCLUDE  CHANGE IN SHARE PRICE AND  REINVESTMENT  OF
DIVIDENDS AND CAPITAL GAINS.  PAST PERFORMANCE  CANNOT GUARANTEE FUTURE RESULTS.
RETURNS AND SHARE PRICE WILL FLUCTUATE, AND REDEMPTION VALUE MAY BE MORE OR LESS
THAN ORIGINAL COST.

THE  VIEWS  OF THE  FUNDS'  MANAGEMENT  ARE AS OF THE  DATE OF THE  LETTERS  AND
PORTFOLIO  HOLDINGS DESCRIBED IN THIS DOCUMENT ARE AS OF OCTOBER 31, 2000; THESE
VIEWS AND PORTFOLIO HOLDINGS MAY HAVE CHANGED SUBSEQUENT TO THESE DATES. NOTHING
IN THIS DOCUMENT IS A RECOMMENDATION TO PURCHASE OR SELL SECURITIES.


FUND  SHARES  ARE NOT  DEPOSITS  OR OTHER  OBLIGATIONS  OF CREDIT  SUISSE  ASSET
MANAGEMENT,  LLC  ("CSAM") OR ANY  AFFILIATE,  ARE NOT FDIC  INSURED AND ARE NOT
GUARANTEED BY CSAM OR ANY AFFILIATE.  FUND INVESTMENTS ARE SUBJECT TO INVESTMENT
RISKS, INCLUDING LOSS OF YOUR INVESTMENT.

<PAGE>

WARBURG  PINCUS  BALANCED FUND ANNUAL
INVESTMENT ADVISER'S REPORT -- OCTOBER 31, 2000
--------------------------------------------------------------------------------

                                                                December 6, 2000

Dear Shareholder:

   For the 12 months ended October 31, 2000,  the Common Class shares of Warburg
Pincus Balanced Fund had a return of 8.51%,  vs. returns of 7.89% for the Lipper
Balanced  Funds  Index,  6.10% for the S&P 500  Index  and 6.46% for the  Lehman
Brothers Intermediate Government/Corporate Bond Index.

   The period was an ultimately  positive one for financial  markets,  though it
was hardly  smooth  sailing  due to  uncertainties  regarding  the  economy  and
interest  rates.  Most major stock  indexes had sizable gains for the 12 months.
However,  the bulk of the gains were attributable to a strong rally early in the
period, when a robust economy fueled optimism over corporate profits. But as the
period progressed, the economy's health sparked worries that the Federal Reserve
would  aggressively  raise  interest  rates to contain  inflation.  These  fears
resulted  in  a  sharp  April/May   selloff,   with  technology  and  "dot  com"
stocks--whose valuations had become quite lofty--declining  substantially.  Over
the latter part of the period,  worries over interest rates eased thanks to some
encouraging  inflation  data.  But stocks  continued  to  struggle on fears that
previous  rate hikes were having a negative  impact on the economy and  profits.
Bonds  performed well late in the period,  recovering  from weakness in 1999 and
early in 2000.

   The Fund had a respectable  showing for the 12 months, both in absolute terms
and compared to its  benchmarks'  results.  The Fund  benefited  from good stock
selection,  with its financial-services,  energy and health-care holdings aiding
its  return   (stocks   that   hindered  the  Fund   included   certain  of  its
telecommunications  holdings).  The  Fund  was  also  helped  by  its  focus  on
high-quality   bonds,  as  these  securities   performed  well  when  the  stock
market--along with low-quality bonds--faltered late in the period.

   With  respect  to  basic  strategy,  we  continued  to hold a  roughly  60/40
stock-bond  allocation.  Our  stock  holdings  remained  well-diversified,  with
noteworthy weightings in the financial-services,  energy, health-care,  computer
and  consumer  areas.  The  Fund's  bond  component  remained   concentrated  on
high-quality,  intermediate-term  securities,  reflecting  our desire to provide
income and risk containment  while attempting to outperform via individual stock
selection.

                                        1

<PAGE>

WARBURG PINCUS BALANCED FUND
ANNUAL INVESTMENT  ADVISER'S REPORT -- OCTOBER 31, 2000 (CONT'D)
--------------------------------------------------------------------------------

   Looking out over the next year,  we see grounds for  optimism  regarding  the
prospects  for  financial  markets.  While a modest  increase in interest  rates
cannot be ruled out over the intermediate term, we believe that a "soft landing"
will prevail,  with the economy expanding  modestly with subdued  inflation.  Of
course,  we will continue to monitor the flow of economic and inflation data and
make  adjustments  to the  portfolio as we deem  appropriate  from a risk-reward
perspective.


Scott T. Lewis             M. Anthony E. van Daalen         Charles C. Van Vleet
Co-Portfolio Manager       Co-Portfolio Manager             Co-Portfolio Manager

                                        2

<PAGE>

WARBURG PINCUS BALANCED FUND
ANNUAL INVESTMENT ADVISER'S REPORT -- OCTOBER 31, 2000 (CONT'D)
--------------------------------------------------------------------------------

      GROWTH OF $10,000 INVESTED IN COMMON CLASS SHARES OF WARBURG PINCUS
          BALANCED FUND FROM SEPTEMBER 30, 1994* AS OF OCTOBER 31, 2000

   The graph below illustrates the hypothetical  investment of $10,000 in Common
Class shares of Warburg  Pincus  Balanced  Fund (the "Fund") from  September 30,
1994* to October 31, 2000,  compared to the S&P 500 Index,** the Lipper Balanced
Funds Index*** and the Lehman Intermediate  Government/Corporate  Bond Index****
for  the  same  time  period.   Past   performance   does  not  predict   future
results.

                               [GRAPHICS OMITTED]

           EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

             Average Annual Total Returns for periods ended 10/31/00


             1 year         3 year           5 year
              8.51%          9.10%           12.49%

                                                   Lipper    Lehman Intermediate
                    Fund          S&P 500         Balanced       Govt. Corp.

 9/30/94         $10,000.00      $10,000.00      $10,000.00      $10,000.00
10/31/94           9,842.59       10,232.10       10,031.10        9,998.70
 11/1/94           9,824.07        9,852.28        9,797.38        9,953.41
 12/1/94           9,840.75        9,997.41        9,891.53        9,988.64
  1/1/95           9,884.49       10,264.20       10,014.50       10,157.00
  2/1/95          10,343.70       10,658.70       10,306.30       10,367.60
  3/1/95          10,401.60       10,974.40       10,488.50       10,426.90
  4/1/95          10,632.70       11,305.70       10,685.20       10,555.60
  5/1/95          10,841.80       11,740.90       11,027.10       10,874.70
  6/1/95          11,272.70       12,015.70       11,222.50       10,947.50
  7/1/95          11,859.00       12,422.70       11,459.80       10,949.10
  8/1/95          12,301.50       12,444.30       11,549.10       11,048.70
  9/1/95          12,446.90       12,968.70       11,824.90       11,128.70
10/31/95          12,158.80       12,930.30       11,795.10       11,252.70
 11/1/95          12,724.00       13,486.60       12,161.70       11,400.60
 12/1/95          12,945.80       13,748.00       12,353.20       11,520.10
  1/1/96          13,317.20       14,222.60       12,576.10       11,619.50
  2/1/96          13,339.80       14,347.80       12,582.20       11,483.20
  3/1/96          13,358.10       14,488.20       12,629.60       11,424.20
  4/1/96          13,719.40       14,701.40       12,713.30       11,384.00
  5/1/96          14,024.30       15,079.40       12,843.20       11,375.50
  6/1/96          13,689.20       15,136.90       12,885.60       11,496.30
  7/1/96          13,088.60       14,469.20       12,554.10       11,530.40
  8/1/96          13,530.50       14,774.60       12,752.20       11,539.50
  9/1/96          13,943.50       15,604.50       13,223.90       11,700.30
10/31/96          14,114.30       16,034.40       13,504.40       11,907.00
 11/1/96          14,570.00       17,244.10       14,133.80       12,064.20
 12/1/96          14,613.70       16,902.80       13,960.50       11,987.00
  1/1/97          14,914.60       17,957.70       14,387.90       12,033.60
  2/1/97          14,798.90       18,098.50       14,441.10       12,056.60
  3/1/97          14,472.60       17,357.20       14,021.60       11,973.50
  4/1/97          14,705.10       18,391.80       14,442.90       12,114.20
  5/1/97          15,460.70       19,509.50       15,034.20       12,214.80
  6/1/97          15,945.30       20,382.40       15,523.30       12,326.30
  7/1/97          16,857.10       22,002.20       16,406.90       12,577.10
  8/1/97          16,646.40       20,771.60       15,886.60       12,514.00
  9/1/97          17,555.30       21,907.60       16,520.20       12,659.50
10/31/97          16,863.60       21,178.00       16,219.00       12,799.80
 11/1/97          16,769.20       22,156.50       16,515.80       12,827.90
 12/1/97          17,005.60       22,537.60       16,760.30       12,930.60
  1/1/98          16,966.50       22,786.40       16,879.20       13,100.00
  2/1/98          17,731.70       24,427.40       17,549.40       13,090.10
  3/1/98          18,118.30       25,678.40       18,086.00       13,132.20
  4/1/98          18,417.20       25,936.70       18,212.80       13,197.90
  5/1/98          18,234.90       25,491.90       18,028.80       13,294.30
  6/1/98          18,577.70       26,527.40       18,361.30       13,379.60
  7/1/98          18,447.70       26,245.70       18,146.10       13,426.90
  8/1/98          16,757.80       22,451.60       16,582.80       13,637.90
  9/1/98          17,247.20       23,890.10       17,298.50       13,980.50
10/31/98          17,759.40       25,833.00       17,945.70       13,966.80
 11/1/98          18,365.00       27,398.50       18,602.50       13,965.70
 12/1/98          18,765.40       28,976.40       19,288.70       14,021.80
  1/1/99          19,009.30       30,187.60       19,597.20       14,098.80
  2/1/99          18,336.40       29,249.70       19,126.00       13,891.60
  3/1/99          18,633.40       30,419.70       19,598.10       13,995.20
  4/1/99          19,771.90       31,597.50       20,239.90       14,038.20
  5/1/99          19,944.00       30,851.50       19,927.80       13,930.20
  6/1/99          20,657.90       32,563.80       20,478.80       13,939.80
  7/1/99          20,253.10       31,547.80       20,095.90       13,927.30
  8/1/99          19,963.40       31,389.10       19,884.90       13,937.90
  9/1/99          19,801.70       30,529.00       19,630.30       14,067.50
10/31/99          20,179.90       32,461.50       20,199.60       14,103.80
 11/1/99          20,412.00       33,120.50       20,417.80       14,120.70
 12/1/99          21,373.40       35,067.90       21,022.10       14,074.10
  1/1/00          20,612.50       33,307.50       20,494.50       14,022.00
  2/1/00          20,596.00       32,678.00       20,445.30       14,137.00
  3/1/00          21,850.30       35,874.90       21,649.10       14,284.50
  4/1/00          21,618.70       34,795.80       21,252.90       14,252.00
  5/1/00          21,636.00       34,081.80       21,052.90       14,274.30
  6/1/00          21,768.00       34,922.20       21,388.90       14,526.10
  7/1/00          21,567.70       34,376.40       21,330.80       14,636.60
  8/1/00          22,536.10       36,510.50       22,283.00       14,809.50
  9/1/00          21,596.40       34,583.10       21,813.90       14,944.20
10/31/00          21,898.70       34,436.80       21,794.70       15,012.20


                                                                           FUND
                                                                           ----
1 Year Total Return (9/30/99 to 9/30/00) ...............................   9.06%
3 Year Average Annual Total Return (9/30/97 to 9/30/00) ................   7.15%
Average Annual Total Return  (9/30/94* to 9/30/00) .....................  13.82%

----------
*    Warburg Pincus Asset  Management,  Inc.  ("WPAM") began to provide advisory
     services to the Fund in late September 1994.  Previous periods during which
     the Fund was not advised by Warburg are not shown.
**   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 Lipper  Balanced Funds Index is an  equal-weighted  performance  index,
     adjusted  for  capital-gains  distributions  and income  dividends,  of the
     largest qualifying funds in this investment  objective,  and is compiled by
     Lipper   Analytical    Services   Inc.
**** The Lehman  Intermediate  Government/Corporate  Bond Index is an  unmanaged
     index  (with  no  defined   investment   objective)  of   intermediate-term
     government and corporate bonds, and is calculated by Lehman Brothers Inc.

                                       3

<PAGE>

WARBURG PINCUS VALUE FUND
ANNUAL INVESTMENT ADVISER'S REPORT-- OCTOBER 31, 2000
--------------------------------------------------------------------------------

                                                                December 6, 2000
Dear Shareholder:

   For the 12 months ended October 31, 2000,  the Common Class shares of Warburg
Pincus  Value Fund had a return of 5.99%,  vs. a return of 6.10% for the S&P 500
Index.

   The period was an  ultimately  positive  but very  volatile  one for the U.S.
stock  market.  Stocks  began  the  period  on a bright  note,  supported  by an
expanding  economy and optimism over profit  growth.  The market turned  sharply
down in mid-period, however, as inflation and interest rates worries mounted and
as investors  began to question  generally  lofty  valuations on technology  and
Internet  stocks.   Equities   remained   volatile.   While  the  inflation  and
interest-rate  outlook  became more  encouraging,  fears that the economy  would
slow--along   with   profit    disappointments    from   some   highly   visible
companies--fueled  the  turmoil.  That said,  certain  market  sectors  had good
performance  over the latter part of the period,  with  investors  shifting away
from technology and  telecommunications  stocks in favor of energy,  health-care
and financial-services names.

   The Fund had a modest gain for the 12 months,  a return roughly equal to that
of its benchmark.  However,  unlike its benchmark (and the broader market),  the
Fund  initially  struggled but finished the period on a positive  note.  Factors
that benefited the Fund included its overweighting in the energy area, which was
aided  by a  supportive  supply/demand  backdrop  for oil and  gas.  The  Fund's
financial-services  and  health-care  stocks  also  helped  its  return.  On the
negative side, in absolute terms anyway,  stocks that hindered the Fund included
certain of its telecommunications holdings.

   We made no  material  changes to our basic  approach  during the  period.  We
remained focused on relatively  inexpensive  stocks of companies that we believe
have improving financial prospects,  due to shifting macroeconomic trends and/or
internal  positive  catalysts,  such  as  restructurings  or the  launch  of new
products or services.

   In terms of sector  emphasis,  we maintained an  overweighting  in the energy
area during  much of the period,  reflecting  our  positive  view of the group's
potential to benefit from ongoing mergers, restructurings and share-buybacks. We
also believe that the  supply/demand  backstop for the energy sector will remain
supportive.  While we reduced  our  exposure to the major  global oil names,  we
continue to favor North  American  natural gas  companies and select oil service
names.

                                        4

<PAGE>

WARBURG PINCUS VALUE FUND
ANNUAL  INVESTMENT  ADVISER'S  REPORT -- OCTOBER  31, 2000  (CONT'D)
--------------------------------------------------------------------------------

   We modestly raised our weighting in the financial-services  sector, where our
bias was toward  asset-management  and  insurance  companies  showing  sales and
cash-flow  improvements.  We also  maintained  a  significant  weighting  in the
banking sector,  where our largest holdings included globally oriented companies
as well  as a  Detroit-based  commercial  and  consumer  lender  focused  on the
Midwest.

   Elsewhere,    we    maintained    meaningful    exposure   to   the   retail,
capital-equipment,  health-care  and food,  beverages & tobacco areas,  where we
deemed a number of stocks to represent  compelling value. One weighting we pared
was  telecommunications  & equipment ,  eliminating  our  positions  in specific
companies we deemed to have weakening prospects.

   Looking  ahead,  while stocks could  continue to struggle over the near term,
they have good potential,  in our view, to benefit from subdued  inflation and a
U.S.  economy that has proven to be quite  resilient over the past few years. In
any event, we believe that good investment  opportunities will continue to exist
across a range of  industries,  due to  factors  such as market  volatility  and
positive company-specific  catalysts. As always, our efforts will remain devoted
to  uncovering  hidden values that will receive  wider market  recognition  over
time.


Scott T. Lewis                                       Robert E. Rescoe
Co-Portfolio Manager                                 Co-Portfolio Manager

                                        5
<PAGE>

WARBURG PINCUS VALUE FUND
ANNUAL INVESTMENT ADVISER'S REPORT -- OCTOBER 31, 2000 (CONT'D)
--------------------------------------------------------------------------------

      GROWTH OF $10,000 INVESTED IN COMMON CLASS SHARES OF WARBURG PINCUS
           VALUE FUND FROM DECEMBER 31, 1991* AS OF OCTOBER 31, 2000

   The graph below illustrates the hypothetical  investment of $10,000 in Common
Class shares of Warburg  Pincus Value Fund (the "Fund") from  December 31, 1991*
to October 31, 2000,  compared to the S&P 500 Index** for the same period.  Past
performance does not predict future results.

                               [GRAPHICS OMITTED]

           EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

             Average Annual Total Returns for periods ended 10/31/00


             1 year         3 year           5 year
              5.99%         10.21%           11.41%

                    Fund           S&P 500
12/31/91         $10,000.00      $10,000.00
  1/1/92           9,974.42        9,825.60
  2/1/92          10,264.30        9,943.70
  3/1/92          10,179.00        9,751.59
  4/1/92          10,341.50       10,047.80
  5/1/92          10,521.20       10,082.20
  6/1/92          10,341.50        9,932.79
  7/1/92          10,607.60       10,348.70
  8/1/92          10,290.10       10,126.10
  9/1/92          10,410.20       10,243.80
10/31/92          10,427.40       10,291.20
 11/1/92          10,573.80       10,628.00
 12/1/92          10,854.80       10,761.20
  1/1/93          11,027.60       10,862.90
  2/1/93          11,364.70       11,002.60
  3/1/93          12,133.80       11,234.00
  4/1/93          13,104.50       10,975.10
  5/1/93          14,179.30       11,250.00
  6/1/93          14,309.30       11,284.80
  7/1/93          14,543.80       11,251.20
  8/1/93          14,526.50       11,664.50
  9/1/93          14,005.20       11,574.70
10/31/93          14,318.70       11,825.40
 11/1/93          13,822.30       11,699.60
 12/1/93          14,739.90       11,844.10
  1/1/94          15,252.10       12,255.60
  2/1/94          15,855.40       11,915.10
  3/1/94          15,957.80       11,398.10
  4/1/94          15,604.00       11,557.00
  5/1/94          15,786.60       11,728.00
  6/1/94          15,352.80       11,442.10
  7/1/94          15,718.10       11,829.50
  8/1/94          16,619.90       12,301.70
  9/1/94          16,597.10       11,999.20
10/31/94          16,551.40       12,277.70
 11/1/94          15,786.60       11,821.90
 12/1/94          15,857.50       11,996.00
  1/1/95          15,950.50       12,316.20
  2/1/95          16,415.60       12,789.50
  3/1/95          16,939.90       13,168.40
  4/1/95          16,986.60       13,565.90
  5/1/95          17,418.50       14,088.10
  6/1/95          17,715.90       14,417.90
  7/1/95          18,606.40       14,906.20
  8/1/95          19,215.70       14,932.10
  9/1/95          18,964.40       15,561.40
10/31/95          18,196.90       15,515.30
 11/1/95          19,365.90       16,182.80
 12/1/95          19,095.40       16,496.40
  1/1/96          20,286.50       17,065.90
  2/1/96          20,150.00       17,216.20
  3/1/96          20,313.10       17,384.60
  4/1/96          20,636.10       17,640.50
  5/1/96          20,772.80       18,094.00
  6/1/96          19,281.10       18,163.00
  7/1/96          17,825.70       17,361.80
  8/1/96          18,534.80       17,728.30
  9/1/96          18,281.80       18,724.10
10/31/96          18,443.70       19,239.90
 11/1/96          19,564.50       20,691.40
 12/1/96          18,867.10       20,281.90
  1/1/97          19,664.10       21,547.70
  2/1/97          19,950.50       21,716.70
  3/1/97          19,202.40       20,827.10
  4/1/97          19,815.00       22,068.60
  5/1/97          21,190.20       23,409.80
  6/1/97          21,974.40       24,457.10
  7/1/97          23,692.70       26,400.70
  8/1/97          23,128.80       24,924.10
  9/1/97          24,345.40       26,287.20
10/31/97          23,327.80       25,411.90
 11/1/97          23,943.70       26,585.90
 12/1/97          24,578.20       27,043.20
  1/1/98          24,742.80       27,341.70
  2/1/98          26,398.10       29,310.90
  3/1/98          27,448.80       30,811.90
  4/1/98          27,583.30       31,121.80
  5/1/98          27,492.20       30,588.10
  6/1/98          27,753.40       31,830.60
  7/1/98          27,020.70       31,492.60
  8/1/98          23,037.90       26,940.00
  9/1/98          23,756.70       28,666.00
10/31/98          25,450.50       30,997.40
 11/1/98          26,949.50       32,875.90
 12/1/98          27,685.30       34,769.20
  1/1/99          27,840.30       36,222.60
  2/1/99          27,144.30       35,097.10
  3/1/99          27,399.40       36,501.00
  4/1/99          30,547.60       37,914.30
  5/1/99          30,905.00       37,019.20
  6/1/99          31,918.70       39,073.70
  7/1/99          30,801.60       37,854.60
  8/1/99          30,178.50       37,664.20
  9/1/99          29,309.30       36,632.20
10/31/99          29,464.70       38,951.10
 11/1/99          29,308.50       39,741.80
 12/1/99          29,267.50       42,078.60
  1/1/00          26,940.70       39,966.20
  2/1/00          25,316.20       39,210.90
  3/1/00          28,645.30       43,046.90
  4/1/00          28,805.70       41,752.00
  5/1/00          29,868.60       40,895.30
  6/1/00          28,449.80       41,903.80
  7/1/00          28,529.50       41,248.80
  8/1/00          30,461.00       43,809.50
  9/1/00          30,433.50       41,496.80
10/31/00          31,218.70       41,321.30

                                                                           FUND
                                                                           -----
1 Year Total Return (9/30/99 to 9/30/00) ..............................    3.87%
3 Year Average Annual Total Return (9/30/97 to 9/30/00) ...............    7.74%
5 Year Average Annual Total Return (9/30/95 to 9/30/00) ...............    9.93%
Average Annual Total Return (12/31/91* to 9/30/00) ....................   13.78%

----------
*  Warburg Pincus Asset  Management, Inc  ("Warburg")  began to provide advisory
   services to the Fund in late December 1991. Previous periods during which the
   Fund was not advised by Warburg are not shown.

** The  S&P  500  Index  is an  unmanaged  index  (with  no  defined  investment
   objective) of common  stocks,  includes  reinvestment  of  dividends,  and is
   registered trademark of MCGraw-Hill Co., Inc.

                                       6

<PAGE>
WARBURG PINCUS CAPITAL APPRECIATION FUND
ANNUAL INVESTMENT ADVISER'S REPORT-- OCTOBER 31, 2000
--------------------------------------------------------------------------------

                                                                December 6, 2000

Dear Shareholder:

   For the 12 months ended October 31, 2000,  the Common Class shares of Warburg
Pincus Capital  Appreciation Fund had a gain of 31.50%,  vs. a gain of 6.10% for
the S&P 500 Index.

   The period was a volatile one for the U.S.  equity  market.  Stocks began the
period on a strong note,  buoyed by optimism  over the economy and by the fading
of "Y2K" worries.  However, the market soon encountered turbulence on fears that
the  Federal  Reserve  would   aggressively  raise  interest  rates  to  contain
inflation.   Technology  and  telecommunications  stocks,  which  had  risen  to
generally lofty  valuations,  became  especially  volatile,  with the tech-heavy
NASDAQ index plunging almost 16% in April. An air of uncertainty hampered stocks
over the rest of the period.  While the economy  continued to grow and inflation
remained  subdued,  earnings  disappointments  from certain  major  corporations
weighed on stocks  broadly.  As the period drew to a close,  the market was also
hindered by rising oil costs, a weak euro and political uncertainties.

   Against this backdrop, the Fund had good performance,  both in absolute terms
and compared to that of its  benchmark.  The Fund's return  reflected good stock
selection as well as its sector allocation.  The Fund had a strong bias in favor
of technology  companies early in the period, when these stocks had solid gains.
We broadened  our approach as the period  progressed,  however,  increasing  our
exposure to areas in which we saw  compelling  opportunities  and  potential for
improved relative performance.  This move proved beneficial to the Fund's return
for the 12 months, as our targeted  areas--e.g.,  the energy  sector--outpaced a
struggling  technology  group over the latter  part of the  period.  Stocks that
hindered   the   Fund's   return,   in   absolute   terms,   included   specific
telecommunications-services providers.

   One sector weighting we raised was financial services.  We entered the period
with a relatively  small  position  here,  based on the difficult  interest-rate
backdrop we saw for banks and other  financial  companies in 1999  (indeed,  the
group  lagged the broader  market for the year).  However,  we added a number of
financial  stocks to the Fund this year,  viewing them as  attractively  priced,
given the potential  for a  stabilization  of interest  rates sooner rather than
later.  Our focus  remained on companies  with good capital  management,  strong
brand names and a presence  in  overseas  markets,  where  demand for  financial
services is growing significantly.

                                        7

<PAGE>

WARBURG PINCUS CAPITAL APPRECIATION FUND
ANNUAL INVESTMENT ADVISER'S REPORT -- OCTOBER 31, 2000 (CONT'D)
--------------------------------------------------------------------------------

   Another  increased  area of emphasis in the Fund was energy.  Our decision to
add here was  based on  company-specific  factors  as well as our view  that the
group will benefit from a favorable  supply/demand dynamic going forward. In the
natural  gas area,  our  focus  was on  contract  drillers  and  other  services
providers.

   We  also  raised  our   weighting   in  the   health-care   area,   including
pharmaceutical   stocks.  Our  holdings  continued  to  include  large-cap  drug
companies  with  broad  product  platforms  as  well  as  smaller  biotechnology
companies  poised  to  benefit  over the long term  from  breakthroughs  in gene
research.

   Weightings we lowered included the technology  segment, as noted; the bulk of
this  reduction was in the  telecommunications  & services  area. To be certain,
technology-related stocks remained a significant portion of the Fund through the
period (broadly  defined,  these stocks accounted for roughly 30% of the Fund as
of  October  31).  Our  technology  holdings  at the end of the 12  months  were
generally  focused on companies  central to the development of an ever-expanding
Internet, in terms of software, components and other hardware.

   Looking  ahead,  while the  market  could  remain  volatile  due to  periodic
earnings  disappointments and/or global political  developments,  we see grounds
for  encouragement.  In our view,  inflation  should remain  contained,  and the
Federal  Reserve,  which last  raised  interest  rates in May,  is  unlikely  to
increase rates anytime soon, unless the economy shows surprising strength (which
would in any case ease profit worries).  As ever, we will continue to attempt to
add value via careful  stock  selection,  while  remaining  focused on companies
possessing  industry  leadership,  healthy  balance  sheets and visible  revenue
sources.


Susan L. Black
Portfolio Manager

                                        8

<PAGE>

WARBURG PINCUS CAPITAL APPRECIATION FUND
ANNUAL INVESTMENT ADVISER'S REPORT -- OCTOBER 31, 2000 (CONT'D)
--------------------------------------------------------------------------------
      GROWTH OF $10,000 INVESTED IN COMMON CLASS SHARES OF WARBURG PINCUS
        CAPITAL APPRECIATION FUND SINCE INCEPTION AS OF OCTOBER 31, 2000

   The graph below illustrates the hypothetical  investment of $10,000 in Common
Class  shares of Warburg  Pincus  Capital  Appreciation  Fund (the  "Fund") from
August 17, 1987 (inception) to October 31, 2000,  compared to the S&P 500 Index*
for  the  same  time  period.   Past   performance   does  not  predict   future
results.

                               [GRAPHICS OMITTED]

           EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

             Average Annual Total Returns for periods ended 10/31/00


             1 year         3 year           5 year       10 year
             31.50%         27.04%           27.34%        21.82%

                    Fund           S&P 500
 8/17/87         $10,000.00      $10,000.00
  9/1/87           9,899.90        9,781.20
10/31/87           7,747.75        7,678.05
 11/1/87           7,297.30        7,046.37
 12/1/87           8,083.08        7,581.69
  1/1/88           8,234.45        7,911.11
  2/1/88           8,981.20        8,264.82
  3/1/88           9,051.84        8,013.48
  4/1/88           9,102.30        8,113.01
  5/1/88           9,041.75        8,163.55
  6/1/88           9,600.91        8,541.04
  7/1/88           9,529.71        8,520.54
  8/1/88           9,255.11        8,217.89
  9/1/88           9,550.05        8,569.62
10/31/88           9,631.42        8,817.62
 11/1/88           9,550.05        8,677.95
 12/1/88           9,810.72        8,831.90
  1/1/89          10,385.40        9,485.81
  2/1/89          10,197.30        9,239.84
  3/1/89          10,583.90        9,460.58
  4/1/89          11,169.00        9,962.66
  5/1/89          11,545.10       10,341.80
  6/1/89          11,574.60       10,290.10
  7/1/89          12,442.70       11,228.40
  8/1/89          12,801.20       11,433.20
  9/1/89          12,664.10       11,389.50
10/31/89          12,105.20       11,134.30
 11/1/89          12,347.80       11,349.30
 12/1/89          12,465.50       11,623.50
  1/1/90          11,561.80       10,856.70
  2/1/90          11,760.20       10,981.20
  3/1/90          12,035.70       11,279.60
  4/1/90          11,837.30       11,009.60
  5/1/90          12,763.10       12,053.90
  6/1/90          12,740.00       11,980.70
  7/1/90          12,651.00       11,952.20
  8/1/90          11,749.70       10,860.60
  9/1/90          11,182.20       10,340.10
10/31/90          10,881.80       10,305.50
 11/1/90          11,471.50       10,956.70
 12/1/90          11,784.10       11,263.10
  1/1/91          12,211.40       11,765.20
  2/1/91          13,122.20       12,590.40
  3/1/91          13,234.60       12,904.50
  4/1/91          13,324.60       12,943.80
  5/1/91          13,796.80       13,477.60
  6/1/91          13,029.70       12,868.40
  7/1/91          13,617.90       13,479.90
  8/1/91          13,957.20       13,779.60
  9/1/91          13,516.10       13,551.50
10/31/91          13,753.60       13,747.30
 11/1/91          13,188.10       13,179.70
 12/1/91          14,882.30       14,684.00
  1/1/92          14,700.00       14,427.90
  2/1/92          14,734.20       14,601.40
  3/1/92          14,392.30       14,319.30
  4/1/92          14,403.70       14,754.30
  5/1/92          14,768.30       14,804.70
  6/1/92          14,464.10       14,585.30
  7/1/92          14,920.70       15,196.00
  8/1/92          14,589.70       14,869.20
  9/1/92          14,818.00       15,042.10
10/31/92          15,183.30       15,111.60
 11/1/92          15,742.70       15,606.20
 12/1/92          16,014.70       15,801.70
  1/1/93          16,305.00       15,951.00
  2/1/93          16,426.00       16,156.20
  3/1/93          17,103.30       16,496.10
  4/1/93          16,389.70       16,115.90
  5/1/93          16,958.20       16,519.60
  6/1/93          17,256.90       16,570.60
  7/1/93          17,256.90       16,521.20
  8/1/93          18,237.90       17,128.20
  9/1/93          18,383.20       16,996.30
10/31/93          18,552.70       17,364.50
 11/1/93          17,850.30       17,179.70
 12/1/93          18,555.80       17,391.90
  1/1/94          19,110.20       17,996.10
  2/1/94          18,661.40       17,496.20
  3/1/94          17,513.20       16,737.00
  4/1/94          17,460.40       16,970.30
  5/1/94          17,975.20       17,221.50
  6/1/94          17,447.20       16,801.60
  7/1/94          17,975.20       17,370.50
  8/1/94          18,846.20       18,063.80
  9/1/94          18,635.00       17,619.60
10/31/94          18,859.40       18,028.50
 11/1/94          18,041.10       17,359.30
 12/1/94          18,024.30       17,615.00
  1/1/95          17,938.90       18,085.20
  2/1/95          18,821.60       18,780.20
  3/1/95          19,732.80       19,336.40
  4/1/95          20,060.20       19,920.20
  5/1/95          20,501.60       20,686.90
  6/1/95          21,424.70       21,171.20
  7/1/95          22,566.60       21,888.30
  8/1/95          22,809.30       21,926.40
  9/1/95          23,337.40       22,850.40
10/31/95          23,394.50       22,782.70
 11/1/95          24,436.40       23,762.80
 12/1/95          24,892.00       24,223.40
  1/1/96          25,736.90       25,059.60
  2/1/96          26,435.60       25,280.30
  3/1/96          26,955.50       25,527.60
  4/1/96          27,281.70       25,903.30
  5/1/96          27,802.80       26,569.30
  6/1/96          27,460.80       26,670.50
  7/1/96          26,242.10       25,494.10
  8/1/96          27,233.30       26,032.30
  9/1/96          28,940.80       27,494.50
10/31/96          29,169.50       28,252.00
 11/1/96          30,957.00       30,383.30
 12/1/96          30,687.60       29,782.00
  1/1/97          31,865.20       31,640.70
  2/1/97          32,136.90       31,888.80
  3/1/97          30,941.30       30,582.60
  4/1/97          32,372.40       32,405.70
  5/1/97          34,111.50       34,374.90
  6/1/97          35,379.60       35,912.90
  7/1/97          38,604.10       38,766.90
  8/1/97          36,955.70       36,598.60
  9/1/97          39,420.70       38,600.20
10/31/97          38,206.50       37,314.80
 11/1/97          39,238.10       39,038.80
 12/1/97          40,321.10       39,710.20
  1/1/98          40,099.30       40,148.60
  2/1/98          42,681.70       43,040.20
  3/1/98          44,824.30       45,244.20
  4/1/98          45,859.70       45,699.40
  5/1/98          44,754.50       44,915.70
  6/1/98          47,117.60       46,740.10
  7/1/98          47,249.50       46,243.80
  8/1/98          39,018.60       39,558.80
  9/1/98          41,753.80       42,093.30
10/31/98          43,077.40       45,516.70
 11/1/98          45,881.80       48,275.00
 12/1/98          50,708.50       51,055.20
  1/1/99          53,893.00       53,189.30
  2/1/99          51,748.10       51,536.70
  3/1/99          54,356.20       53,598.20
  4/1/99          54,888.90       55,673.50
  5/1/99          53,434.30       54,359.10
  6/1/99          56,800.70       57,376.00
  7/1/99          55,948.70       55,585.90
  8/1/99          55,948.70       55,306.30
  9/1/99          56,547.30       53,790.90
10/31/99          59,572.60       57,195.80
 11/1/99          63,403.10       58,356.90
 12/1/99          75,183.40       61,788.30
  1/1/00          72,875.30       58,686.50
  2/1/00          82,997.70       57,577.30
  3/1/00          85,761.50       63,210.10
  4/1/00          78,557.50       61,308.80
  5/1/00          74,535.40       60,050.70
  6/1/00          80,095.70       61,531.60
  7/1/00          79,663.20       60,569.80
  8/1/00          87,247.10       64,330.00
  9/1/00          82,099.60       60,934.00
10/31/00          78,331.20       60,676.30

                                                                          FUND
                                                                         -----
1 Year Total Return (9/30/99 to 9/30/00) ..............................  45.18%
3 Year Average Annual Total Return (9/30/97 to 9/30/00) ...............  27.70%
5 Year Average Annual Total Return (9/30/95 to 9/30/00) ...............  28.60%
10 Year Average Annual Total Return (9/30/90 to 9/30/00) ..............  22.06%
Average Annual Total Return Since  Inception  (8/17/87 to 9/30/00) ....  17.36%

----------
* 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.

                                      9
<PAGE>

WARBURG PINCUS BALANCED FUND
SCHEDULE OF INVESTMENTS--OCTOBER 31, 2000
--------------------------------------------------------------------------------

                                                 NUMBER
                                                   OF
                                                 SHARES        VALUE
                                                 ------     -----------
COMMON STOCKS (56.1%)
AEROSPACE & DEFENSE (0.9%)
    Textron, Inc.                                 4,500     $   226,969
                                                            -----------
BANKS & SAVINGS & LOANS (5.3%)
    Bank One Corp.                                8,000         292,000
    Chase Manhattan Corp.                         6,450         293,475
    Comerica, Inc.                                5,000         301,562
    FleetBoston Financial Corp.                   4,000         152,000
    U.S. Bancorp                                  6,000         145,125
    Wells Fargo & Co.                             4,800         222,300
                                                            -----------
                                                              1,406,462
                                                            -----------
CAPITAL EQUIPMENT (1.8%)
    American Standard Companies, Inc.1            3,200         146,800
    Ingersoll-Rand Co.                            4,100         154,775
    ITT Industries, Inc.                          5,000         162,812
                                                            -----------
                                                                464,387
                                                            -----------
COMMUNICATIONS & MEDIA (4.8%)
    Clear Channel Communications, Inc.1           1,880         112,917
    Comcast Corp., Class A1                       5,400         220,050
    Infinity Broadcasting, Inc.1                  6,550         217,787
    Infospace, Inc.1                              5,460         109,882
    Knight-Ridder, Inc.                           3,000         150,750
    Lamar Advertising Co.1                        2,300         110,400
    Time Warner, Inc.                             1,600         121,456
    USA Networks, Inc.1                          12,000         243,000
                                                            -----------
                                                              1,286,242
                                                            -----------
COMPUTERS (5.3%)
    Apple Computer, Inc.1                         4,000          78,250
    Compaq Computer Corp.                        10,600         322,346
    Descartes Systems Group, Inc.1                2,000          81,000
    Hewlett-Packard Co.                           2,600         120,737
    Microsoft Corp.1                              7,300         502,787
    Sun Microsystems, Inc.1                       2,700         299,363
                                                            -----------
                                                              1,404,483
                                                            -----------
CONGLOMERATES (0.9%)
    United Technologies Corp.                     3,300         230,381
                                                            -----------
CONSUMER DURABLES (2.7%)
    Delphi Automotive Systems Corp.              11,000         172,563
    Gentex Corp.1                                13,000         321,750
    Visteon Corp.                                12,000         212,250
                                                            -----------
                                                                706,563
                                                            -----------

                See Accompanying Notes to Financial Statements.

                                       10

<PAGE>
WARBURG PINCUS BALANCED FUND
SCHEDULE OF INVESTMENTS (CONT'D)--OCTOBER 31, 2000
--------------------------------------------------------------------------------

                                                 NUMBER
                                                   OF
                                                 SHARES        VALUE
                                                 ------     -----------
COMMON STOCKS (CONT'D)
CONSUMER NON-DURABLES (2.4%)
    Clorox Co.                                    4,900     $   218,663
    Colgate-Palmolive Co.                         3,000         176,280
    Procter & Gamble Co.                          3,400         242,888
                                                            -----------
                                                                637,831
                                                            -----------
ELECTRONICS (2.7%)
    Chartered Semiconductor Manufacturing
      Limited ADR 1                               3,000         139,500
    Intel Corp.                                   8,000         360,000
    Sanmina Corp.1                                2,000         228,625
                                                            -----------
                                                                728,125
                                                            -----------
ENERGY (2.6%)
    BP Amoco PLC  ADR                             4,384         223,310
    Devon Energy Corp.                            5,700         287,280
    Total Fina Elf SA ADR                         2,410         172,616
                                                            -----------
                                                                683,206
                                                            -----------
FINANCIAL SERVICES (3.5%)
    American General Corp.                        3,900         313,950
    Fannie Mae                                    3,000         231,000
    Jefferson-Pilot Corp.                         2,500         171,875
    Reinsurance Group of America, Inc.            5,300         198,088
                                                            -----------
                                                                914,913
                                                            -----------
FOOD, BEVERAGES & TOBACCO (2.3%)
    Anheuser-Busch Companies, Inc.                4,000         183,000
    General Mills, Inc.                           6,200         258,850
    Keebler Foods Co.                             3,900         157,950
                                                            -----------
                                                                599,800
                                                            -----------
HEALTHCARE (0.9%)
    Becton, Dickinson & Co.                       6,800         227,800
                                                            -----------
INDUSTRIAL MFG. & PROCESSING (2.0%)
    Eaton Corp.                                   1,200          81,675
    Johnson Controls, Inc.                        2,100         125,213
    Tyco International, Ltd.                      5,700         323,119
                                                            -----------
                                                                530,007
                                                            -----------
LEISURE & ENTERTAINMENT (0.9%)
    Harley-Davidson, Inc.                         5,000         240,938
                                                            -----------
OFFICE EQUIPMENT & SUPPLIES (0.4%)
    Pitney Bowes, Inc.                            4,000         118,750
                                                            -----------
OIL SERVICES (2.1%)
    Nabors Industries, Inc.1                      5,000         254,500
    R & B Falcon Corp.1                          12,500         312,500
                                                            -----------
                                                                567,000
                                                            -----------

                See Accompanying Notes to Financial Statements.

                                       11

<PAGE>

WARBURG PINCUS BALANCED FUND
SCHEDULE OF INVESTMENTS (CONT'D)--OCTOBER 31, 2000
--------------------------------------------------------------------------------

                                                 NUMBER
                                                   OF
                                                 SHARES        VALUE
                                                 ------     -----------
COMMON STOCKS (CONT'D)
PHARMACEUTICALS (3.4%)
    Lilly (Eli) & Co.                             1,500     $   134,063
    Pfizer, Inc.                                  4,025         173,830
    Pharmacia Corp.                               4,999         274,945
    Schering-Plough Corp.                         6,000         310,125
                                                            -----------
                                                                892,963
                                                            -----------
RETAIL (3.9%)
    Autonation, Inc.1                            15,500         104,625
    Federated Department Stores, Inc.1            7,000         227,938
    Lowe's Companies, Inc.                        3,100         141,631
    Safeway, Inc.1                                2,500         136,719
    Staples, Inc.1                               12,300         175,275
    TJX Companies, Inc.                           9,000         245,250
                                                            -----------
                                                              1,031,438
                                                            -----------
TELECOMMUNICATIONS & EQUIPMENT (6.8%)
    Avaya, Inc.1                                    208           2,795
    Loral Space & Communications, Ltd.1           8,000          45,500
    Lucent Technologies, Inc.                     2,500          58,281
    NTL, Inc.1                                    3,500         153,781
    Pinnacle Holdings, Inc.1                      4,100          64,575
    QUALCOMM, Inc.1                               1,600         104,175
    Qwest Communications International, Inc.1     6,410         311,686
    Tellabs, Inc.1                                1,900          94,881
    Time Warner Telecom, Inc., Class A1           3,000         178,875
    Verizon Communications                        4,000         231,250
    Western Wireless Corp., Class A1              4,400         209,000
    WorldCom, Inc.1                               6,600         156,750
    XO Communications, Inc.1                      6,000         202,406
                                                            -----------
                                                              1,813,955
                                                            -----------
TRANSPORTATION (0.5%)
    Landstar Systems, Inc.1                       2,900         137,025
                                                            -----------
TOTAL COMMON STOCKS (Cost $13,082,110)                       14,849,238
                                                            -----------
PREFERRED STOCKS (0.3%)
    Prologis Trust, Series C
      (Callable 11/13/26 @ $50.00) 6.25%
      (Cost $100,000)                             2,000          86,688
                                                            -----------


                 See Accompanying Notes to Financial Statements.

                                       12

<PAGE>

WARBURG PINCUS BALANCED FUND
SCHEDULE OF INVESTMENTS (CONT'D)--OCTOBER 31, 2000
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>

                                                     RATINGS 2                                     PAR
                                                   (MOODY'S/S&P)          RATE%     MATURITY DATE  (000)    VALUE
                                                 ----------------       --------    -------------  ----  -----------
<S>                                                  <C>                 <C>           <C>         <C>   <C>
CORPORATE BONDS (12.3%)
    Adelphia Communications Corp.                     (B2, B+)            9.375        11/15/09    $100   $   86,000
    Alcoa, Inc.                                       (A1, A+)            7.375        08/01/10      90       91,000
    Allied Waste North America, Inc.,
      Series B                                        (B2, B+)           10.000        08/01/09     100       86,000
    American General Corp.                           (A2, AA-)            7.500        08/11/10      40       40,033
    AT&T Capital Corp., Series MTNF                   (A1, A+)            6.600        05/15/05     210      196,207
    Bank of America Corp.                             (Aa3, A)            7.800        02/15/10     185      188,201
    Bayerische Landesbank Deposit Note,
      Series O
      (Callable 02/09/03 @ $100.00 )                 (Aaa, AAA            6.200        02/09/06     350      337,013
    Boeing Co.                                       (A1, AA-)            7.250        06/15/25      75       74,445
    Chase Manhattan Corp.                              (A1, A)            7.875        06/15/10     120      122,359
    Citigroup, Inc.                                  (Aa3, A+)            7.250        10/01/10      60       59,626
    Conoco, Inc.                                      (A3, A-)            6.350        04/15/09      95       90,672
    Countrywide Home Loan Co., Series H                (A3, A)            6.250        04/15/09     200      180,109
    Duke Energy Field Services LLC                   (Baa2, BB            7.875        08/16/10      50       51,019
    El Paso Energy Corp.                             (Baa2, BB            6.750        05/15/09     200      190,383
    First Union Corp.                                 (A2, A-)            6.300        04/15/28     260      236,879
    General Motors Corp.                               (A2, A)            6.750        05/01/28      70       61,006
    Household Finance Corp.                            (A2, A)            6.500        11/15/08     345      320,113
    K-Mart Corp.                                     (Baa3, BBB)          8.375        12/01/04     100       86,644
    Lehman Brothers Holdings, Inc.                     (A2, A)            7.750        01/15/05      80       80,270
    Level 3 Communications,
      Inc. Senior Notes                                (B3, B)            9.125        05/01/08     100       81,250
    Lowe's Companies, Inc.                             (A2, A)            7.110        05/15/37     160      157,022
    Potomac Electric Power Co.                         (A1, A)            8.500        05/15/27     150      152,982
    Safeway, Inc. Senior Notes
      (Callable @ Make
      Whole+12.5BP)                                  (Baa2, BBB)          7.250        09/15/04     200      199,225
    Saks, Inc.                                       (Baa3, BB+)          7.000        07/15/04     100       67,500
    Worldcom, Inc.                                    (A3, A-)            6.950        08/15/28      30       26,492
                                                                                                         -----------
TOTAL CORPORATE BONDS (Cost $3,454,118)                                                                    3,262,450
                                                                                                         -----------
MORTGAGE & ASSET BACKED SECURITIES (13 0%)
    Amresco Commercial Mortgage Funding I,
      Series 1997-C1, Class A1                       (Aaa, AAA)           6.730        06/17/29     397      394,978
    California Infrastructure
      Pacific Gas and Electric,
      Series 97-1, Class A7                          (Aaa, AAA)           6.420        09/25/08      70       68,594
    Commonwealth Edison Transitional
      Funding Trust, Series 1998-1,
      Class A6                                       (Aaa, AAA)           5.630        06/25/09     200      188,205
    Freddie Mac, Series 2072,
      Class Pk                                       (Aaa, AAA)           6.000        07/15/24     665      653,065
    GE Capital Mortgage Services, Inc.,
      Series 1994-7,
      Class A10                                      (Aaa, AAA)           6.000        02/25/09     348      344,348
    General Motors Acceptance Corp.,
      Class A2-98                                    (Aaa, AAA)           6.700        03/15/08     500      485,782
    Ginnie Mae Pass Through
      Pool #002217X                                  (Aaa, AAA)           6.500        08/15/03       3        2,737
    MBNA Master Credit Card Trust,
      Series 1997-I, Class A                         (Aaa, AAA)           6.550        01/15/07     300      298,386
    Mellon Residential Funding                       (NR, AAA)            5.610        10/25/28     720      697,978
    Morgan Stanley Mortgage Trust,
      Series 40, Class 8                             (NR,  AAA)           7.000        07/20/21     307      303,958
                                                                                                         -----------
TOTAL MORTGAGE & ASSET BACKED SECURITIES (Cost $3,510,862)                                               $ 3,438,031
                                                                                                         -----------
                 See Accompanying Notes to Financial Statements.

                                       13

<PAGE>

WARBURG PINCUS BALANCED FUND
SCHEDULE OF INVESTMENTS (CONT'D)--OCTOBER 31, 2000
--------------------------------------------------------------------------------

                                                     RATINGS 2                                     PAR
                                                   (MOODY'S/S&P)          RATE%     MATURITY DATE  (000)    VALUE
                                                 ----------------       --------    -------------  ----  -----------
AGENCY OBLIGATIONS (11.5%)
    Fannie Mae                                       (Aaa, AAA)           6.500        10/01/29    $248  $   239,008
    Fannie Mae                                       (Aaa, AAA)           7.000        12/01/29     390      382,883
    Fannie Mae                                       (Aaa, AAA)           7.500        12/01/29     392      391,989
    Fannie Mae                                       (Aaa, AAA)           7.500        03/01/30     381      380,420
    Fannie Mae                                       (Aaa, AAA)           8.000        03/01/30     383      387,774
    Fannie Mae N98512                                (Aaa, AAA)           6.000        08/01/0      466      451,980
    Fannie Mae, Series 1998-M4,
      Class B REMIC 98-M4                            (Aaa, AAA)           6.424        12/25/23     600      584,470
    Ginnie Mae Pool #505682                          (Aaa, AAA)           6.500        06/15/29     231      223,055
                                                                                                         -----------
TOTAL AGENCY OBLIGATIONS (Cost $3,025,478)                                                                 3,041,579
                                                                                                         -----------
U.S. TREASURY OBLIGATIONS (4.7%)
    U.S. Treasury Bond                               (Aaa, AAA)           9.250        02/15/16     245      323,968
    U.S. Treasury Bond                               (Aaa, AAA)           8.000        11/15/21     605      747,932
    U.S. Treasury Note                               (Aaa, AAA)           4.250        11/15/03     130      124,159
    U.S. Treasury Note                               (Aaa, AAA)           5.750        08/15/10      55       54,966
                                                                                                         -----------
TOTAL U.S. TREASURY OBLIGATIONS (Cost $1,192,262)                                                          1,251,025
                                                                                                         -----------
                                                                                           NUMBER
                                                                                              OF
                                                                                            SHARES
                                                                                           --------
SHORT TERM INVESTMENTS (2.2%)
    RBB Money Market Portfolio
      (Cost $595,893)                                                                       595,893          595,893
                                                                                                         -----------
TOTAL INVESTMENTS AT VALUE (100.1%) (Cost $24,960,723 3)                                                  26,524,904

LIABILITIES IN EXCESS OF OTHER ASSETS (-0.1%)                                                               (34,126)
                                                                                                         -----------
NET ASSETS (100.0%)                                                                                      $26,490,778
                                                                                                         ===========


                            INVESTMENT ABBREVIATIONS
                  ADR = American Depository Receipt
                   NR = Not Rated
                REMIC = Real Estate Mortgage Investment Conduit

--------------------------------------------------------------------------------
<FN>
1 Non-income producing security.
2 Credit Ratings by Moody's Investors Services Inc. and Standard & Poors Ratings
  Group are unaudited.
3 Cost for federal income tax purposes is $24,960,931.
</FN>
</TABLE>

                 See Accompanying Notes to Financial Statements.

                                       14

<PAGE>

WARBURG PINCUS VALUE FUND
SCHEDULE OF INVESTMENTS--OCTOBER 31, 2000
--------------------------------------------------------------------------------

                                                 NUMBER
                                                   OF
                                                 SHARES        VALUE
                                                 ------    ------------
COMMON STOCKS (94.0%)
AEROSPACE & DEFENSE (1.1%)
    Textron, Inc.                                62,000    $  3,127,125
                                                           ------------
BANKS & SAVINGS & LOANS (8.4%)
    Bank One Corp.                              168,600       6,153,900
    Chase Manhattan Corp.                        78,650       3,578,575
    Citigroup Inc.                               57,300       3,015,412
    Comerica, Inc.                               77,200       4,656,125
    FleetBoston Financial Corp.                  83,000       3,154,000
    Wells Fargo & Co.                            97,000       4,492,312
                                                           ------------
                                                             25,050,324
                                                           ------------
BUSINESS SERVICES (0.8%)
    IMS Health, Inc.                             98,900       2,336,512
                                                           ------------
CAPITAL EQUIPMENT (6.8%)
    American Standard Companies, Inc.1          158,400       7,266,600
    Ingersoll-Rand Co.                          154,700       5,839,925
    ITT Industries, Inc.                        128,600       4,187,537
    Navistar International Corp.                 84,500       2,793,781
                                                           ------------
                                                             20,087,843
                                                           ------------
CHEMICALS (0.6%)
    Rohm & Haas Co.                              56,300       1,692,519
                                                           ------------
COMMUNICATIONS & MEDIA (2.0%)
    Comcast Corp., Class A1                      72,000       2,934,000
    Knight-Ridder, Inc.                          60,500       3,040,125
                                                           ------------
                                                              5,974,125
                                                           ------------
COMPUTERS (2.5%)
    Compaq Computer Corp.                       243,200       7,395,712
                                                           ------------
CONGLOMERATES (1.8%)
    Harsco Corp.                                110,300       2,226,681
    TRW, Inc.                                    77,000       3,234,000
                                                           ------------
                                                              5,460,681
                                                           ------------
CONSUMER DURABLES (4.6%)
    Ford Motor Co.                              224,464       5,864,122
    Lear Corp.1                                 140,400       3,825,900
    Visteon Corp.                               230,784       4,081,992
                                                           ------------
                                                             13,772,014
                                                           ------------
ELECTRIC-UTILITIES (2.4%)
    Allegheny Energy, Inc.                      123,500       5,055,781
    American Electric Power Co., Inc.            48,800       2,025,200
                                                           ------------
                                                              7,080,981
                                                           ------------

                See Accompanying Notes to Financial Statements.

                                       15

<PAGE>

WARBURG PINCUS VALUE FUND
SCHEDULE OF INVESTMENTS (CONT'D)--OCTOBER 31, 2000
--------------------------------------------------------------------------------

                                                 NUMBER
                                                   OF
                                                 SHARES        VALUE
                                                 ------    ------------
COMMON STOCKS (CONT'D)
ENERGY (11.0%)
    Anadarko Petroleum Corp.                     75,590    $  4,841,539
    BP Amoco PLC ADR                             80,894       4,120,538
    Devon Energy Corp.                          111,500       5,619,600
    El Paso Energy Corp.                         73,100       4,582,456
    Exxon Mobil Corp.                            68,100       6,073,669
    Royal Dutch Petroleum Co. ADR                74,900       4,447,188
    Tosco Corp.                                  48,800       1,396,900
    Valero Energy Corp.                          50,400       1,666,350
                                                           ------------
                                                             32,748,240
                                                           ------------
FINANCIAL SERVICES (10.5%)
    Allied Capital Corp.                        252,900       5,216,063
    American General Corp.                       38,200       3,075,100
    Fannie Mae                                   79,800       6,144,600
    Jefferson-Pilot Corp.                        37,000       2,543,750
    Lehman Brothers Holdings, Inc.               95,000       6,127,500
    MBIA, Inc.                                   42,200       3,067,413
    MGIC Investment Corp.                        46,800       3,188,250
    Stilwell Financial, Inc.                     40,200       1,801,463
                                                           ------------
                                                             31,164,139
                                                           ------------
FOOD, BEVERAGES & TOBACCO (8.5%)
    Anheuser-Busch Companies, Inc.               91,000       4,163,250
    ConAgra Foods, Inc.                          85,500       1,827,563
    General Mills, Inc.                         173,600       7,247,800
    Keebler Foods Co.                           194,100       7,861,050
    Quaker Oats Co.                              49,700       4,053,656
                                                           ------------
                                                             25,153,319
                                                           ------------
HEALTHCARE (5.1%)
    Abbott Laboratories                          90,500       4,779,531
    Baxter International, Inc.                   76,700       6,303,781
    Becton, Dickinson & Co.                     124,600       4,174,100
                                                           ------------
                                                             15,257,412
                                                           ------------
INDUSTRIAL MFG. & PROCESSING (5.5%)
    Eaton Corp.                                  46,000       3,130,875
    Johnson Controls, Inc.                       58,500       3,488,063
    Minnesota Mining & Manufacturing Co.         40,400       3,903,650
    Tyco International, Ltd.                    105,100       5,957,856
                                                           ------------
                                                             16,480,444
                                                           ------------
OFFICE EQUIPMENT & SUPPLIES (0.9%)
    Pitney Bowes, Inc.                           87,200       2,588,750
                                                           ------------

                See Accompanying Notes to Financial Statements.

                                       16

<PAGE>

WARBURG PINCUS VALUE FUND
SCHEDULE OF INVESTMENTS (CONT'D)--OCTOBER 31, 2000
--------------------------------------------------------------------------------

                                                 NUMBER
                                                   OF
                                                 SHARES        VALUE
                                                 ------    ------------
COMMON STOCKS (CONT'D)
OIL SERVICES (6.2%)
    Nabors Industries, Inc.1                     95,500    $  4,860,950
    Parker Drilling Co.1                        209,608       1,257,648
    Pride International, Inc.1                  195,700       4,953,656
    R & B Falcon Corp.1                         299,400       7,485,000
                                                           ------------
                                                             18,557,254
                                                           ------------
PHARMACEUTICALS (4.2%)
    American Home Products Corp.                 66,100       4,197,350
    Lilly (Eli) & Co.                            42,900       3,834,188
    Pharmacia Corp.                              79,042       4,347,310
                                                           ------------
                                                             12,378,848
                                                           ------------
RETAIL (5.5%)
    Federated Department Stores, Inc.1          149,100       4,855,069
    Lowe's Companies, Inc.                       65,000       2,969,688
    Ross Stores, Inc.                           223,200       2,943,450
    Safeway, Inc.1                              102,400       5,600,000
                                                           ------------
                                                             16,368,207
                                                           ------------
TELECOMMUNICATIONS & EQUIPMENT (4.9%)
    SBC Communications, Inc.                    135,049       7,790,639
    Verizon Communications                       75,100       4,341,719
    WorldCom, Inc.1                             107,900       2,562,625
                                                           ------------
                                                             14,694,983
                                                           ------------
TRANSPORTATION (0.7%)
    Burlington Northern Santa Fe Corp.           81,200       2,156,875
                                                           ------------
TOTAL COMMON STOCKS (Cost $227,170,047)                     279,526,307
                                                           ------------
CONVERTIBLE PREFERRED STOCK (0.7%)
    Equity Residential Properties
      Series G 7.25%,
      Perpetual Convertible
      (Callable 09/15/02 @ $25.91)
      (Cost $2,512,171)                         101,000       2,247,250
                                                           ------------
SHORT TERM INVESTMENTS (5.3%)
    Institutional Money Market Trust          1,472,534       1,472,534
    RBB Money Market Portfolio               14,255,836      14,255,836
                                                           ------------
TOTAL SHORT TERM INVESTMENTS (Cost $15,728,370)              15,728,370
                                                           ------------
TOTAL INVESTMENTS AT VALUE (100.0%) (Cost $245,410,588 2)   297,501,927

LIABILITIES IN EXCESS OF OTHER ASSETS (0.0%)                   (102,169)
                                                           ------------
NET ASSETS (100.0%)                                        $297,399,758
                                                           ============

                            INVESTMENT ABBREVIATIONS
                        ADR = American Depository Receipt

--------------------------------------------------------------------------------
1 Non-income producing security.
2 Cost for federal income tax purposes is $245,909,140.

                See Accompanying Notes to Financial Statements.

                                       17

<PAGE>

WARBURG PINCUS CAPITAL APPRECIATION FUND
SCHEDULE OF INVESTMENTS--OCTOBER 31, 2000
--------------------------------------------------------------------------------

                                                NUMBER
                                                  OF
                                                SHARES        VALUE
                                              ---------  --------------
COMMON STOCKS (91.1%)
BANKS & SAVINGS & LOANS (6.8%)
    Citigroup, Inc.                           1,237,866  $   65,142,698
    Northern Trust Corp.                        375,900      32,092,462
    Wells Fargo & Co.                           316,900      14,676,431
                                                         --------------
                                                            111,911,591
                                                         --------------
BUSINESS SERVICES (0.7%)
    Omnicom Group, Inc.                         126,900      11,706,525
                                                         --------------
COMMUNICATIONS & MEDIA (7.6%)
    AT&T Corp. - Liberty Media Corp.,
      Class A1                                1,053,900      18,970,200
    Clear Channel Communications, Inc.1         153,900       9,243,619
    Comcast Corp., Class A1                     519,500      21,169,625
    Crown Media Holdings, Inc., Class A1        622,900       8,642,737
    Finisar Corp.1                              111,600       3,215,475
    Foundry Networks, Inc.1                      93,000       6,178,687
    Time Warner, Inc.                           294,300      22,340,313
    Viacom, Inc., Class B1                      642,392      36,536,045
                                                         --------------
                                                            126,296,701
                                                         --------------
COMPUTERS (10.9%)
    Brocade Communications Systems, Inc.1        45,200      10,277,350
    EMC Corp.1                                  374,100      33,318,281
    Microsoft Corp.1                            466,600      32,137,075
    Oracle Systems Corp.1                       691,500      22,819,500
    Palm, Inc.1                                 325,800      17,450,662
    Siebel Systems, Inc.1                       111,000      11,648,062
    Sun Microsystems, Inc.1                     321,000      35,590,875
    Verisign, Inc.1                              66,000       8,712,000
    Veritas Software Corp.1                      57,800       8,150,703
                                                         --------------
                                                            180,104,508
                                                         --------------
CONGLOMERATES (3.3%)
    General Electric Co.                        981,600      53,803,950
                                                         --------------
CONSUMER NON-DURABLES (0.8%)
    Procter & Gamble Co.                        187,900      13,423,106
                                                         --------------
ELECTRONICS (7.3%)
    Intel Corp.                                 905,200      40,734,000
    JDS Uniphase Corp.1                         157,000      12,775,875
    Maxim Integrated Products, Inc.1            198,700      13,176,294
    PMC-Sierra, Inc.1                            38,700       6,559,650
    Sanmina Corp.1                              293,100      33,504,994
    Tycom, Ltd.1                                434,900      14,569,150
                                                         --------------
                                                            121,319,963
                                                         --------------
ENERGY (2.7%)
    Bonneville Pacific Corp.1,2                  16,883               0
    BP Amoco PLC ADR                            273,500      13,931,406

                 See Accompanying Notes to Financial Statements.

                                       18

<PAGE>

WARBURG PINCUS CAPITAL APPRECIATION FUND
SCHEDULE OF INVESTMENTS (CONT'D)--OCTOBER 31, 2000
--------------------------------------------------------------------------------

                                                NUMBER
                                                  OF
                                                SHARES        VALUE
                                              ---------  --------------
COMMON STOCKS (CONT'D)
ENERGY (cont'd)
    Devon Energy Corp.                          540,100  $   27,221,040
    Southern Energy, Inc.1                       99,300       2,705,925
                                                         --------------
                                                             43,858,371
                                                         --------------
FINANCIAL SERVICES (13.8%)
    American Express Co.                        473,700      28,422,000
    American General Corp.                      293,300      23,610,650
    American International Group, Inc.          433,687      42,501,326
    Berkshire Hathaway, Inc., Class B1            3,560       7,486,680
    Freddie Mac                                 857,200      51,432,000
    MBNA Corp.                                  910,300      34,193,144
    Morgan Stanley, Dean Witter, & Co.          308,200      24,752,312
    Stilwell Financial, Inc.                    350,100      15,688,856
                                                         --------------
                                                            228,086,968
                                                         --------------
FOOD, BEVERAGES & TOBACCO (2.2%)
    Anheuser-Busch Companies, Inc.              779,700      35,671,275
                                                         --------------
GAS & UTILITIES (0.9%)
    Enron Corp.                                 190,700      15,649,319
                                                         --------------
HEALTHCARE (4.7%)
    Abbott Laboratories                         139,300       7,356,781
    ALZA Corp.1                                 161,700      13,087,594
    King Pharmaceuticals, Inc.1                 198,500       8,895,281
    Medtronic, Inc.                             326,800      17,749,325
    PE Corp.- PE Biosystems Group               256,500      30,010,500
                                                         --------------
                                                             77,099,481
                                                         --------------
INDUSTRIAL MANUFACTURING & PROCESSING (3.1%)
    Corning, Inc.                               171,600      13,127,400
    Tyco International, Ltd.                    660,100      37,419,419
                                                         --------------
                                                             50,546,819
                                                         --------------
LEISURE & ENTERTAINMENT (0.9%)
    Walt Disney Co.                             401,800      14,389,463
                                                         --------------
OIL SERVICES (3.5%)
    Cooper Cameron Corp.1                       223,700      12,191,650
    Nabors Industries, Inc.1                    351,000      17,865,900
    Noble Drilling Corp.1                       180,700       7,510,344
    Transocean Sedco Forex, Inc.                146,000       7,738,000
    Varco International, Inc.1                  749,900      12,935,775
                                                         --------------
                                                             58,241,669
                                                         --------------
PHARMACEUTICALS (10.6%)
    American Home Products Corp.                427,600      27,152,600
    Medimmune, Inc.1                            281,600      18,409,600
    Pfizer, Inc.                              1,226,275      52,959,752


                 See Accompanying Notes to Financial Statements.

                                       19

<PAGE>

WARBURG PINCUS CAPITAL APPRECIATION FUND
SCHEDULE OF INVESTMENTS (CONT'D)--OCTOBER 31, 2000
--------------------------------------------------------------------------------

                                                NUMBER
                                                  OF
                                                SHARES        VALUE
                                              ---------  --------------
COMMON STOCKS (CONT'D)
PHARMACEUTICALS (cont'd)
    Pharmacia Corp.                             845,128  $   46,482,040
    Schering-Plough Corp.                       596,700      30,841,931
                                                         --------------
                                                             175,845,923
                                                         --------------
PUBLISHING (0.6%)
    Reader's Digest Assn., Inc., Class A        286,000      10,492,625
                                                         --------------
RETAIL (1.7%)
    CVS Corp.                                    67,700       3,583,869
    Home Depot, Inc.                            142,650       6,133,950
    Safeway, Inc.1                              336,100      18,380,469
                                                         --------------
                                                             28,098,288
                                                         --------------
METALS & MINING (1.2%)
    Dynegy, Inc.                                413,000      19,127,063
                                                         --------------
TELECOMMUNICATIONS & EQUIPMENT (6.5%)
    CIENA Corp.1                                136,400      14,339,050
    Cisco Systems, Inc.1                        761,000      40,998,875
    Lucent Technologies, Inc.                   705,900      16,456,294
    Nortel Networks Corp.                       203,800       9,272,900
    Qwest Communications International, Inc.1   536,100      26,067,863
                                                         --------------
                                                             107,134,982
                                                         --------------
UTILITIES - ELECTRIC (1.4%)
    AES Corp.1                                  139,400       7,876,100
    Constellation Energy Group                  354,200      14,765,713
                                                         --------------
                                                             22,641,813
                                                         --------------
TOTAL COMMON STOCKS (Cost $1,145,023,953)                 1,505,450,403
                                                         --------------
PREFERRED STOCKS (0.0%)
    Fresenius National Medical, Inc., Class D1
      (Cost $18,553)                             90,000           2,655
                                                         --------------
SHORT TERM INVESTMENTS (10.9%)
    Institutional Money Market Trust        101,976,763     101,976,763
    RBB Money Market Portfolio               78,143,001      78,143,001
                                                         --------------
TOTAL SHORT TERM INVESTMENTS
  (Cost $180,119,7180,119,764)                              180,119,764
                                                         --------------
TOTAL INVESTMENTS AT VALUE (102.0%)
  (Cost $1,325,162,270 3)                                 1,685,572,822

LIABILITIES IN EXCESS OF OTHER ASSETS (-2.0%)               (33,368,256)
                                                         --------------
NET ASSETS (100.0%)                                      $1,652,204,566
                                                         ==============

                            INVESTMENT ABBREVIATIONS
                        ADR = American Depository Receipt
--------------------------------------------------------------------------------
1 Non-income producing security.
2 Bond is currently in default.
3 Costs for federal income tax purposes is $1,328,357,798.

                 See Accompanying Notes to Financial Statements.

                                       20

<PAGE>

WARBURG PINCUS DOMESTIC EQUITY FUNDS
STATEMENTS OF ASSETS AND LIABILITIES
October 31, 2000
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>

                                                  WARBURG PINCUS     WARBURG PINCUS       WARBURG PINCUS
                                                     BALANCED        VALUE  CAPITAL        APPRECIATION
                                                      FUND                FUND                 FUND
                                                  --------------     --------------       --------------
<S>                                                <C>                <C>                 <C>
ASSETS
  Investments at value (Cost - $24,960,723,
    $245,410,588, and $1,325,162,270,
    respectively)                                  $26,524,904        $297,501,927        $1,685,572,822
  Foreign currency (Cost - $9, $0, and $0,
    respectively)                                            8                   0                     0
  Receivable for investment securities sold            889,522           5,297,063            38,049,402
  Dividends, interest, and
    reclaim receivable                                 150,449             355,389               689,794
  Cash                                                 141,643                   0                     0
  Receivable for fund shares sold                        8,617             281,963             4,833,594
  Receivable from advisor                                5,543                   0                     0
  Prepaid expenses and other assets                     29,525              47,200                90,963
                                                   -----------        ------------        --------------
      Total Assets                                  27,750,211         303,483,542         1,729,236,575
                                                   -----------        ------------        --------------
LIABILITIES
  Advisory fee payable                                       0             182,978               975,007
  Administrative fee payable                             7,212              51,495               257,987
  Directors fee payable                                  2,575               2,992                 3,375
  Payable for investment purchases                   1,200,438           5,250,831            73,310,526
  Payable for fund shares redeemed                       1,489             313,659             1,989,043
  Accrued expenses payable                              47,719             281,829               496,071
                                                   -----------        ------------        --------------
      Total Liabilities                              1,259,433           6,083,784            77,032,009
                                                   -----------        ------------        --------------
NET ASSETS
  Capital stock, $0.001 par value                        2,031              17,160                53,978
  Paid-in capital                                   21,375,430         205,871,194         1,058,468,759
  Accumulated undistributed net
    investment income                                   49,217              15,908                     0
  Accumulated net realized gain
    from investments                                 3,499,983          39,404,157           233,271,277
  Net unrealized appreciation
    from investments                                 1,564,117          52,091,339           360,410,552
                                                   -----------        ------------        --------------
      Net Assets                                   $26,490,778        $297,399,758        $1,652,204,566
                                                   ===========        ============        ==============
COMMON SHARES
  Net assets                                       $26,435,279        $254,842,096        $1,618,146,863
                                                   -----------        ------------        --------------
  Shares outstanding                                 2,026,354          16,453,190            52,937,986
                                                   -----------        ------------        --------------
  Net asset value, offering price
    and redemption price per share                 $     13.05        $      15.49        $        30.57
                                                   ===========        ============        ==============
ADVISOR SHARES
  Net assets                                       $    55,499        $ 42,557,662        $   34,057,703
                                                   -----------        ------------        --------------
  Shares outstanding                                     4,260           2,747,617             1,139,790
                                                   -----------        ------------        --------------
  Net asset value, offering price
    and redemption price per share                 $     13.03        $      15.49        $        29.88
                                                   ===========        ============        ==============
</TABLE>

                 See Accompanying Notes to Financial Statements.

                                       21

<PAGE>

WARBURG PINCUS DOMESTIC EQUITY FUNDS
STATEMENTS OF OPERATIONS
For the Year Ended October 31, 2000
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>

                                                         WARBURG PINCUS     WARBURG PINCUS      WARBURG PINCUS
                                                            BALANCED            VALUE        CAPITAL APPRECIATION
                                                               FUND              FUND                FUND
                                                         --------------     --------------   --------------------
<S>                                                        <C>               <C>                 <C>
INVESTMENT INCOME:
    Dividends                                              $   188,397       $  6,646,417        $  4,670,287
    Interest                                                   814,817            428,139           6,787,530
    Foreign taxes withheld                                      (2,378)                 0             (40,830)
                                                           -----------       ------------        ------------
      Total investment income                                1,000,836          7,074,556          11,416,987
                                                           -----------       ------------        ------------
EXPENSES:
    Investment advisory fees                                   266,944          2,924,687          10,269,516
    Administrative services fees                                79,200            934,421           2,695,143
    Shareholder servicing/distribution fees                     74,546            265,419             164,997
    Transfer agent fees                                         43,652            334,547             632,800
    Printing expense                                            36,917             94,753             251,182
    Registration fees                                           29,169             52,745             166,238
    Custodian/Sub-custodian fees                                19,889             79,201             235,282
    Audit fees                                                  14,150             31,140              36,200
    Legal fees                                                  12,556             28,810              67,444
    Directors/Trustees fees                                     10,471             12,679              14,472
    Interest expense                                             2,453             12,350               7,719
    Insurance expense                                            1,602              9,599              10,381
    Miscellaneous expenses                                       3,309             20,672              32,284
                                                           -----------       ------------        ------------
                                                               594,858          4,801,023          14,583,658
                                                           -----------       ------------        ------------
    Less: fees waived and transfer
      agent offsets                                            193,985             77,642             277,889
                                                           -----------       ------------        ------------
      Total expenses                                           400,873          4,723,381          14,305,769
                                                           -----------       ------------        ------------
        Net investment income (loss)                           599,963          2,351,175          (2,888,782)
                                                           -----------       ------------        ------------
NET REALIZED AND UNREALIZED GAIN (LOSS) FROM
  INVESTMENTS AND FOREIGN CURRENCY TRANSACTIONS:
    Net realized gain from investments                       3,526,457         39,795,180         237,925,562
    Net realized loss from foreign
      currency transactions                                          0            (11,316)                  0
    Net change in unrealized
      appreciation/depreciation
      from investments                                      (1,581,193)       (37,443,839)         74,622,990
                                                           -----------       ------------        ------------
        Net realized and unrealized
          gain from investments                              1,945,264          2,340,025         312,548,552
                                                           -----------       ------------        ------------
Net increase in net assets
  resulting from operations                                $ 2,545,227       $  4,691,200        $309,659,770
                                                           ===========       ============        ============
</TABLE>

                 See Accompanying Notes to Financial Statements

                                       22

<PAGE>

                       This page intentionally left blank
<PAGE>

WARBURG PINCUS DOMESTIC EQUITY FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>



                                                                  WARBURG PINCUS                     WARBURG PINCUS
                                                                   BALANCED FUND                       VALUE FUND
                                                           -----------------------------     -------------------------------
                                                           FOR THE YEAR     FOR THE YEAR      FOR THE YEAR      FOR THE YEAR
                                                              ENDED           ENDED              ENDED            ENDED
                                                           OCTOBER 31,      OCTOBER 31,       OCTOBER 31,       OCTOBER 31,
                                                                2000            1999              2000             1999
                                                           ------------     ------------     -------------     -------------
<S>                                                        <C>              <C>              <C>               <C>
FROM OPERATIONS:
  Net investment income (loss)                             $    599,963     $    667,389     $   2,351,175     $   4,505,022
  Net realized gain from investments                          3,526,457        4,039,738        39,795,180       119,380,196
  Net realized loss from foreign currency transactions                0             (577)          (11,316)           (1,126)
  Net change in unrealized appreciation
    (depreciation) from investments                          (1,581,193)        (264,449)      (37,443,839)       (7,555,427)
                                                           ------------     ------------     -------------     -------------
  Net increase in net assets
    resulting from operations                                 2,545,227        4,442,101         4,691,200       116,328,665
                                                           ------------     ------------     -------------     -------------
FROM DIVIDENDS AND DISTRIBUTIONS:
  Dividends from net investment income:
    Common Class shares                                        (602,587)        (693,463)       (2,329,612)       (4,530,686)
    Advisor Class shares                                         (2,189)          (3,960)         (100,448)         (156,348)
  Distributions from net realized gains:
    Common Class shares                                      (3,994,518)      (2,782,788)     (103,988,288)      (21,637,029)
    Advisor Class shares                                        (27,294)         (16,488)      (14,935,526)       (2,951,282)
                                                           ------------     ------------     -------------     -------------
  Net decrease in net assets from
    dividends and distributions                              (4,626,588)      (3,496,699)     (121,353,874)      (29,275,345)
                                                           ------------     ------------     -------------     -------------
FROM CAPITAL SHARE TRANSACTIONS:
  Proceeds from sale of shares                                8,511,499        7,292,072        69,932,188       205,453,087
  Reinvestment of dividends and distributions                 4,297,386        3,342,592       118,061,173        28,469,978
  Net asset value of shares redeemed                        (17,307,684)     (14,218,841)     (447,785,129)     (447,327,821)
                                                           ------------     ------------     -------------     -------------
    Net increase (decrease) in net assets
      from capital share transactions                        (4,498,799)      (3,584,177)     (259,791,768)     (213,404,756)
                                                           ------------     ------------     -------------     -------------
  Net increase (decrease) in net assets                      (6,580,160)      (2,638,775)     (376,454,442)     (126,351,436)
NET ASSETS:
  Beginning of year                                          33,070,938       35,709,713       673,854,200       800,205,636
                                                           ------------     ------------     -------------     -------------
  End of year                                              $ 26,490,778     $ 33,070,938     $ 297,399,758     $ 673,854,200
                                                           ============     ============     =============     =============
  Undistributed net investment income:                     $     49,217     $     50,302     $      15,908     $      94,711
                                                           ============     ============     =============     =============





                                                                         WARBURG PINCUS
                                                                    CAPITAL APPRECIATION FUND
                                                               ----------------------------------
                                                                FOR THE YEAR        FOR THE YEAR
                                                                   ENDED               ENDED
                                                                 OCTOBER 31,         OCTOBER 31,
                                                                    2000                1999
                                                               --------------      --------------
<S>                                                            <C>                 <C>
FROM OPERATIONS:
  Net investment income (loss)                                 $   (2,888,782)     $   (2,181,859)
  Net realized gain from investments                              237,925,562         120,985,252
  Net realized loss from foreign currency transactions                      0                   0
  Net change in unrealized appreciation
    (depreciation) from investments                                74,622,990         146,455,307
                                                               --------------      --------------
  Net increase in net assets
    resulting from operations                                     309,659,770         265,258,700
                                                               --------------      --------------
FROM DIVIDENDS AND DISTRIBUTIONS:
  Dividends from net investment income:
    Common Class shares                                                     0            (220,220)
    Advisor Class shares                                                    0                   0
  Distributions from net realized gains:
    Common Class shares                                          (114,581,024)        (29,615,988)
    Advisor Class shares                                           (2,730,915)         (1,286,536)
                                                               --------------      --------------
  Net decrease in net assets from
    dividends and distributions                                  (117,311,939)        (31,122,744)
                                                               --------------      --------------
FROM CAPITAL SHARE TRANSACTIONS:
  Proceeds from sale of shares                                    771,966,396         366,818,755
  Reinvestment of dividends and distributions                     106,986,590          29,488,316
  Net asset value of shares redeemed                             (454,064,808)       (268,968,150)
                                                               --------------      --------------
    Net increase (decrease) in net assets
      from capital share transactions                             424,888,178         127,338,921
                                                               --------------      --------------
  Net increase (decrease) in net assets                           617,236,009         361,474,877
NET ASSETS:
  Beginning of year                                             1,034,968,557         673,493,680
                                                               --------------      --------------
  End of year                                                  $1,652,204,566      $1,034,968,557
                                                               ==============      ==============
  Undistributed net investment income:                         $            0      $            0

</TABLE>

                 See Accompanying Notes to Financial Statements.

                                    24 and 25

<PAGE>

WARBURG PINCUS BALANCED FUND
FINANCIAL HIGHLIGHTS
(For a Common Class share of the Fund Outstanding Throughout Each Period)
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>

                                                      2000            1999            1998
                                                     -------         -------         -------
<S>                                                  <C>             <C>             <C>
PER-SHARE DATA
Net asset value, beginning of period                 $ 13.88         $ 13.50         $ 14.38
                                                     -------         -------         -------
INVESTMENT ACTIVITIES:
  Net investment income                                 0.27            0.27            0.25
  Net gains on net investments
    (both realized and unrealized)                      0.82            1.45            0.42
                                                     -------         -------         -------
      Total from investment activities                  1.09            1.72            0.67
                                                     -------         -------         -------
LESS DIVIDENDS AND DISTRIBUTIONS:
  Dividends from net investment income                 (0.27)          (0.28)          (0.26)
  Distributions from net realized gains                (1.65)          (1.06)          (1.29)
                                                     -------         -------         -------
      Total dividends and distributions                (1.92)          (1.34)          (1.55)
                                                     -------         -------         -------
NET ASSET VALUE, END OF PERIOD                       $ 13.05         $ 13.88         $ 13.50
                                                     =======         =======         =======
      Total return                                      8.51%          13.61%           5.33%

RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000s omitted)             $26,435         $32,805         $35,542
  Ratio of expenses to average net assets4              1.37%           1.35%           1.35%
  Ratio of net income to average net assets             2.02%           1.94%           1.76%
  Decrease reflected in above operating
    expense ratios due to waviers/
    reimbursements                                       .63%            .62%            .62%
Portfolio turnover rate                                   75%            116%            132%



                                                        1997 1         1997 2          1996 2
                                                       -------        -------         -------
<S>                                                    <C>            <C>             <C>
PER-SHARE DATA
Net asset value, beginning of period                   $ 14.24        $ 11.94         $ 11.12
                                                       -------        -------         -------
INVESTMENT ACTIVITIES:
  Net investment income                                   0.03           0.23            0.16
  Net gains on net investments
    (both realized and unrealized)                        0.16           2.46            0.94
                                                       -------        -------         -------
      Total from investment activities                    0.19           2.69            1.10
                                                       -------        -------         -------
LESS DIVIDENDS AND DISTRIBUTIONS:
  Dividends from net investment income                   (0.05)         (0.24)          (0.13)
  Distributions from net realized gains                   0.00          (0.15)          (0.15)
                                                       -------        -------         -------
      Total dividends and distributions                  (0.05)         (0.39)          (0.28)
                                                       -------        -------         -------
NET ASSET VALUE, END OF PERIOD                         $ 14.38        $ 14.24         $ 11.94
                                                       =======        =======         =======
      Total return                                        1.30%3        23.03%           9.99%

RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000s omitted)               $38,294        $38,926         $30,853
  Ratio of expenses to average net assets4                1.35%5         1.35%           1.53%
  Ratio of net income to average net assets               1.38%5         1.76%           1.66%
  Decrease reflected in above operating
    expense ratios due to waviers/
    reimbursements                                         .68%5          .55%            .90%
Portfolio turnover rate                                     15%5          120%            108%

--------------------------------------------------------------------------------
<FN>
1 For the two months ended October 31, 1997.
2 For the year ended August 31.
3 Non-annualized.
4 Interest  earned on uninvested cash balances is used to offset portions of the
  transfer agent expense. These arrangements resulted in reduction to the Common
  Shares net expense  ratio by .02%  annualized  for the year ended  October 31,
  2000.  These  arrangements  had no effect on the funds expense  ratios for the
  previous  periods.  The Common Shares operating expense ratio after reflecting
  these arrangements was 1.35% for the year ended October 31, 2000.
5 Annualized.
</FN>
</TABLE>

                 See Accompanying Notes to Financial Statements.

                                       26
<PAGE>

WARBURG PINCUS VALUE FUND
FINANCIAL HIGHLIGHTS
(For a Common Class share of the Fund Outstanding Throughout Each Period)
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>

                                              2000          1999           1998          1997 1          1997 2          1996 2
                                            --------      --------       --------       --------        --------        --------
<S>                                         <C>           <C>            <C>            <C>             <C>             <C>
PER-SHARE DATA
Net asset value, beginning of period        $  18.93      $  16.97       $  18.56       $  18.44        $  14.90        $  16.40
                                            --------      --------       --------       --------        --------        --------
INVESTMENT ACTIVITIES:
  Net investment income                         0.11          0.13           0.14           0.02            0.14            0.11
  Net gains (losses) on net investments
    (both realized and unrealized)              0.70          2.49           1.36           0.14            3.53           (0.66)
                                            --------      --------       --------       --------        --------        --------
      Total from investment activities          0.81          2.62           1.50           0.16            3.67           (0.55)
                                            --------      --------       --------       --------        --------        --------
LESS DIVIDENDS AND
  DISTRIBUTIONS:
  Dividends from net investment income         (0.11)        (0.13)         (0.14)         (0.04)          (0.13)
  Distributions from net realized gains        (4.14)        (0.53)         (2.95)          0.00            0.00           (0.81)
                                            --------      --------       --------       --------        --------        --------
      Total dividends and distributions        (4.25)        (0.66)         (3.09)         (0.04)          (0.13)          (0.95)
                                            --------      --------       --------       --------        --------        --------
NET ASSET VALUE, END OF PERIOD              $  15.49      $  18.93       $  16.97       $  18.56        $  18.44        $  14.90
                                            ========      ========       ========       ========        ========        ========
      Total return                              5.99%        15.77%          9.11%          0.85%3         24.78%          (3.54)%

RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
  (000s omitted)                            $254,842      $602,282       $703,808       $608,205        $601,159        $727,627
    Ratio of expenses to average
      net assets4                               1.16%         1.14%          1.19%          1.18%5          1.15%           1.21%
    Ratio of net income to average
      net assets                                 .67%          .65%           .83%           .75%5           .80%            .69%
Portfolio turnover rate                           49%           78%            78%            19%5           148%             94%


--------------------------------------------------------------------------------
<FN>
1 For the two months ended October 31, 1997.
2 For the year ended August 31.
3 Non-annualized.
4 Interest  earned on uninvested cash balances is used to offset portions of the
  transfer agent expense. These arrangements resulted in reduction to the Common
  Shares net expense  ratio by .02% for the year ended  October 31, 2000.  These
  arrangements  had no effect  on the  funds  expense  ratios  for the  previous
  periods.  The Common Shares  operating  expense ratio after  reflecting  these
  arrangements was 1.14% for the year ended October 31, 2000.
5 Annualized.
</FN>
</TABLE>

                 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 Year)
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>

                                                      2000             1999                1998            1997            1996
                                                   ----------        ----------          --------        --------        --------
<S>                                                <C>               <C>                 <C>             <C>             <C>
PER-SHARE DATA
Net asset value, beginning of year                 $    25.82        $    19.52          $  21.09        $  17.95        $  16.39
                                                   ----------        ----------          --------        --------        --------
INVESTMENT ACTIVITIES:
  Net investment income (loss)                          (0.05)            (0.05)             0.01            0.11            0.08
  Net gains on investments
    (both realized and unrealized)                       7.72              7.27              2.31            4.93            3.53
                                                   ----------        ----------          --------        --------        --------
      Total from investment
        activities                                       7.67              7.22              2.32            5.04            3.61
                                                   ----------        ----------          --------        --------        --------
LESS DIVIDENDS AND DISTRIBUTIONS:
  Dividends from net investment income                   0.00             (0.01)            (0.08)          (0.10)          (0.01)
  Distributions from net realized gains                 (2.92)            (0.91)            (3.81)          (1.80)          (2.04)
                                                   ----------        ----------          --------        --------        --------
      Total dividends and distributions                 (2.92)            (0.92)            (3.89)          (1.90)          (2.05)
                                                   ----------        ----------          --------        --------        --------
NET ASSET VALUE, END OF YEAR                       $    30.57        $    25.82          $  19.52        $  21.09        $  17.95
                                                   ==========        ==========          ========        ========        ========
      Total return                                      31.50%            38.28%            12.75%          30.98%          24.67%

RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year (000s omitted)             $1,618,147        $1,005,670          $646,657        $587,091        $407,707
  Ratio of expenses to average net assets1                .98%             1.01%             1.00%           1.01%           1.04%
  Ratio of net income (loss) to average
    net assets                                           (.19)%            (.23)%             .05%            .54%            .59%
Portfolio turnover rate                                   140%              144%              169%            238%            171%

--------------------------------------------------------------------------------
<FN>
1 Interest  earned on uninvested cash balances is used to offset portions of the
  transfer  agent  expense.  These  arrangements  resulted in a reduction to the
  Common Shares net expense ratio by .02%  annualized for the year ended October
  31, 2000,  .01%,  .00%, .01% and .01% for the year or period ended October 31,
  1999, 1998, 1997, and 1996 respectively.  The Common Shares' operating expense
  ratio after reflecting these arrangements were .96% for the year ended October
  31, 2000,  1.00% for each of the years ended October 31, 1999,  1998, 1997 and
  1.03% for the year ended October 31, 1996.
</FN>
</TABLE>
                 See Accompanying Notes to Financial Statements.

                                       28

<PAGE>

WARBURG PINCUS DOMESTIC EQUITY FUNDS
NOTES TO FINANCIAL STATEMENTS
October 31, 2000
--------------------------------------------------------------------------------

1. SIGNIFICANT ACCOUNTING POLICIES

   The Warburg Pincus Balanced Fund (the "Balanced Fund"),  Warburg Pincus Value
Fund  (formerly,  Warburg Pincus Growth & Income Fund) (the "Value  Fund"),  and
Warburg Pincus Capital Appreciation Fund (the "Capital Appreciation Fund"), each
a Maryland corporation, are registered under the Investment Company Act of 1940,
as amended (the "1940 Act"),  as  diversified,  open-end  management  investment
companies (each, a "Fund" and collectively, the "Funds").

   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 Value Fund seeks
long-term growth of capital, income and a reasonable current return; the Capital
Appreciation Fund seeks long-term capital appreciation.

   Each Fund (except the Capital  Appreciation Fund) may invest up to 15% of its
net assets in non-publicly traded securities.  The Capital Appreciation Fund may
invest up to 10% of its total  assets in such  securities.  Non-publicly  traded
securities may be less liquid than publicly traded  securities,  and they may be
difficult or  impossible  to sell at the time and the price the Fund would like.
In  addition,  the lack of an active  market may make it  difficult to obtain an
accurate price for a Fund security.

   Each Fund  offers two classes of shares,  one class being  referred to as the
Common Class  shares and one class being  referred to as Advisor  Class  shares.
Common  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 bear expenses paid pursuant to a shareholder servicing and
distribution  plan at an annual rate not to exceed .25% of the average daily net
asset  value of each  Fund's  Common  Class  share.  Advisor  Class  shares bear
expenses paid pursuant to a distribution  plan adopted by each Fund at an annual
rate not to exceed  .75% of the  average  daily net asset  value of each  Fund's
Advisor Class shares.  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 the last reported
sales price. If no sales are reported,  investments are generally  valued at the
most recent bid price and if there is no bid price available, at the most recent
ask price. In the absence of market quotations, investments are generally valued
at fair value as  determined  by or under the  direction  of the  Fund's  Board.
Short-term investments that mature in 60 days or less are

                                       29

<PAGE>

WARBURG PINCUS DOMESTIC EQUITY FUNDS
NOTES TO FINANCIAL STATEMENTS (CONT'D)
October 31, 20001.
--------------------------------------------------------------------------------

1. SIGNIFICANT ACCOUNTING POLICIES-- (CONT'D)

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 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 realized/unrealized
gains/losses  are allocated  proportionately  to each class of shares based upon
the relative net asset value of outstanding shares. The cost of investments sold
is  determined by use of the high cost method for both  financial  reporting and
income tax purposes.

   Dividends from net investment  income and net realized capital gains, if any,
are declared and paid at least  annually  (except with respect to the Value Fund
and the Balanced Fund for which dividends, if any, are paid quarterly). 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 ("the
Code"),  and make the requisite  distributions to its shareholders which will be
sufficient to relieve it from federal income and excise taxes.

                                       30

<PAGE>

WARBURG PINCUS DOMESTIC EQUITY FUNDS
NOTES TO FINANCIAL STATEMENTS (CONT'D)
October 31, 20001.
--------------------------------------------------------------------------------

1. SIGNIFICANT ACCOUNTING POLICIES-- (CONT'D)

   Pursuant  to an  exemptive  order  issued  by  the  Securities  and  Exchange
Commission,  each Fund,  along with other Funds  advised by Credit  Suisse Asset
Management LLC, ("CSAM"), can transfer 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.  At  October  31,  2000  the  Funds  had no  investments  in
repurchase agreements.

   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  year  ended  October  31,  2000,  the  Funds  received  credits  or
reimbursements under this arrangement as follows:

           FUND                                                     AMOUNT
           ----                                                   --------
           Balanced Fund                                          $  5,863
           Value Fund                                               77,642
           Capital Appreciation Fund                               277,889

2. INVESTMENT ADVISER, CO-ADMINISTRATORS AND DISTRIBUTOR

   Pursuant to Investment Advisory Agreement,  CSAM, an indirect,  wholly- owned
subsidiary of Credit Suisse Group,  serves as investment advisor for each of the
Funds described herein.

   For its investment advisory services,  CSAM receives the following fees based
on each Fund's average daily net assets:

           FUND                                          ANNUAL RATE
           ------                            --------------------------------
           Balanced Fund                     .90% of average daily net assets
           Value Fund                        .75% of average daily net assets
           Capital Appreciation Fund         .70% of average daily net assets

                                       31

<PAGE>
WARBURG PINCUS DOMESTIC EQUITY FUNDS
NOTES TO FINANCIAL STATEMENTS (CONT'D)
October 31, 20002.
--------------------------------------------------------------------------------

2. INVESTMENT ADVISER, CO-ADMINISTRATORS AND DISTRIBUTOR-- (CONT'D)

   For the year ended October 31, 2000,  investment  advisory fees and voluntary
waivers were as follows:
                                    GROSS                           NET
           FUND                 ADVISORY FEE      WAIVER       ADVISORY FEE
           ----                 ------------      ------       ------------
           Balanced Fund         $  266,944     $(153,673)     $  113,271
           Value Fund             2,924,687             0       2,924,687
           Capital Appreciation
             Fund                10,269,516             0      10,269,516

   Credit Suisse Asset Managment  Securities,  Inc. ("CSAMSI"),  an affiliate of
CSAM, serves as each Fund's  co-administrator.  PFPC Inc. ("PFPC"), an indirect,
wholly-owned  subsidiary of PNC Bank Corp.  ("PNC"),  also serves as each Fund's
co-administrator.  For administrative services,  CSAMSI currently receives a fee
calculated  at an annual rate of .10% of each Fund's  average  daily net assets.
For the year  ended  October  31,  2000,  administrative  services  fees were as
follows:
           FUND                                       CO-ADMINISTRATION FEE
           ----                                       ---------------------
           Balanced Fund                                  $   29,660
           Value Fund                                        389,958
           Capital Appreciation Fund                       1,467,074

   For its  administrative  services through July 31, 2000, PFPC received a fee,
exclusive of out-of-pocket expenses, based on the following fee structure:

                           AVERAGE DAILY
  FUND                      NET ASSETS                   ANNUAL RATE
  ----                  ------------------     --------------------------------
  Balanced Fund &       First $500 million     .15% of average daily net assets
  Value Fund            Next $1 billion        .10% of average daily net assets
                        Over $1.5 billion      .05% of average daily net assets

  Capital Appreciation
    Fund                First $500 million     .10% of average daily net assets
                        Next $1 billion        .075% of average daily net assets
                        Over $1.5  billion     .05% of average daily net assets


   Effective August 1, 2000, for its  administrative  services,  PFPC receives a
fee, exclusive of out-of-pocket expenses, based on the following fee structure:


<TABLE>
<CAPTION>
                                AVERAGE DAILY
  FUND                            NET ASSETS                   ANNUAL RATE
  ----                        -------------------     ---------------------------------
  <S>                         <C>                    <C>
  Balanced Fund,              First $500 million     .10% of average  daily net assets
  Value Fund, &               Next $1 billion        .08% of average daily net assets
  Capital Appreciation Fund   Over $1.5 billion      .06% of average daily net assets
</TABLE>

                                       32

<PAGE>

WARBURG PINCUS FUNDS DOMESTIC EQUITY FUNDS
NOTES TO FINANCIAL STATEMENTS (CONT'D)
October 31, 2000
--------------------------------------------------------------------------------

2. INVESTMENT ADVISER, CO-ADMINISTRATORS AND DISTRIBUTOR-- (CONT'D)

   For the year ended October 31, 2000,  administrative  service fees earned and
voluntarily waived by PFPC (including out-of-pocket expenses) were as follows:\

<TABLE>
<CAPTION>
                                                                                    NET
           FUND                       CO-ADMINISTRATION FEE    WAIVER       CO-ADMINISTRATION FEE
           ----                       ---------------------    ------       ---------------------
           <S>                              <C>                <C>              <C>
           Balanced Fund                    $   49,540         $(34,449)        $   15,091
           Value Fund                          544,463                0            544,463
           Capital Appreciation Fund         1,228,069                0          1,228,069
</TABLE>

   In  addition  to serving as each Fund's  co-administrator,  CSAMSI  served as
distributor  of each Fund's  shares until  January 1, 2000.  On January 1, 2000,
Provident  Distributors,  Inc.  ("PDI")  replaced CSAMSI as distributor for each
Fund. On August 1, 2000,  CSAMSI  replaced PDI as  distributor  to each Fund. No
compensation  was  paid by any of the  Funds to PDI for  distribution  services.
Pursuant  to a  distribution  plan  adopted by each Fund  pursuant to Rule 12B-1
under the 1940 Act, CSAMSI receives a fee for its selling services.  This fee is
calculated  at an annual  rate of .25% of the  average  daily net  assets of the
Common Class shares of the  Balanced  Fund and at .50% of the average  daily net
assets  of  each  Funds'  Advisor  Class  shares.  CSAMSI  may use  this  fee to
compensate  service  organizations  for shareholder  servicing and  distribution
services.  For the year  ended  October  31,  2000,  shareholder  servicing  and
distribution fees were as follows:

                                                      SHAREHOLDER SERVICING/
           FUND                                         DISTRIBUTION FEE
           ----                                       ----------------------
           Balanced Fund
            Common shares                                  $ 73,631
            Advisor shares                                      915
                                                           --------
                                                           $ 74,546
                                                           ========
           Value Fund
            Advisor shares                                 $265,419
                                                           ========
           Capital Appreciation Fund
            Advisor shares                                 $164,997
                                                           ========

3. LINE OF CREDIT

   The Funds, together with other Funds advised by CSAM, have established a $350
million  committed  and a $75  million  uncommitted,  unsecured,  line of credit
facility  ("Credit  Facility")  with Deutsche Bank, AGas  administrative  agent,
State Street Bank and Trust Company as operations agents, Bank of Nova Scotia as
syndication  agent as well as certain other lenders,  for temporary or emergency
purposes primarily relating to unanticipated fund share

                                       33

<PAGE>

WARBURG PINCUS DOMESTIC EQUITY FUNDS
NOTES TO FINANCIAL STATEMENTS (CONT'D)
October 31, 20003.
--------------------------------------------------------------------------------

3. LINE OF CREDIT -- (CONT'D)

redemptions.  Under the terms of the Credit  Facility,  the Funds with access to
the Credit Facility pay an aggregate commitment fee at a rate of .075% per annum
on the  entire  amount  of the  Credit  Facility  which is  allocated  among the
participating  Funds in such manner as is determined by the governing  Boards of
the various Funds.  In addition,  the  participating  Funds will pay interest on
borrowing at the Federal Funds rate plus .50%. During the year ended October 31,
2000, the Funds had the following borrowings under the Credit Facility:

<TABLE>
<CAPTION>

                                                                                 MAXIMUM
                                      AVERAGE DAILY    AVERAGE INTEREST         DAILY LOAN
           FUND                        LOAN BALANCE         RATE %              OUTSTANDING
           ----                       -------------    ----------------         -----------
           <S>                           <C>                <C>                 <C>
           Balanced Fund                 $ 18,682           6.415%              $2,571,000
           Value Fund                     303,967           7.111%               7,864,000
           Capital Appreciation Fund           --              --                       --
</TABLE>

4. INVESTMENTS IN SECURITIES

   For the year  ended  October  31,  2000,  purchases  and sales of  investment
securities (excluding short-term investments) were as follows:

           FUND                                  PURCHASES            SALES
           ----                                -------------     --------------
           Balanced Fund                      $   21,887,305     $   30,568,128
           Value Fund                            193,287,636        546,309,575
           Capital Appreciation Fund           2,112,810,203      1,889,076,309

   At October 31, 2000, 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:

<TABLE>
<CAPTION>

                                                                   NET UNREALIZED
                                        UNREALIZED    UNREALIZED    APPRECIATION
           FUND                        APPRECIATION  DEPRECIATION  (DEPRECIATION)
           ----                        ------------  ------------  --------------
           <S>                        <C>           <C>            <C>
           Balanced Fund              $  3,009,411  $ (1,445,438)  $  1,563,973
           Value Fund                   59,566,687    (7,973,900)    51,592,787
           Capital Appreciation Fund   374,845,800   (17,630,776)   357,215,024
</TABLE>

5. CAPITAL SHARE TRANSACTIONS

   The  Balanced  Fund and the Value  Fund are each  authorized  to issue  three
billion full and fractional shares of capital stock,  $.001 par value per share,
of which one billion  shares of each Fund are  designated as Common Class shares
(two billion  shares for the Balanced Fund and the Value Fund) are designated as
the Advisor Class shares.  The Capital  Appreciation Fund is authorized to issue
an unlimited number of full and fractional shares of

                                       34

<PAGE>

WARBURG PINCUS DOMESTIC EQUITY FUNDS
NOTES TO FINANCIAL STATEMENTS (CONT'D)
October 31, 20005.
--------------------------------------------------------------------------------

5. CAPITAL SHARE TRANSACTIONS-- (CONT'D)

beneficial interest,  $.001 par value per share, of which an unlimited number of
shares are  classified  as the Common Class  shares and an unlimited  number are
classified as the Advisor Class shares.

   Transactions in shares of each Fund were as follows:

<TABLE>
<CAPTION>

                                               BALANCED FUND
                      -------------------------------------------------------------
                                            COMMON CLASS SHARES
                      -------------------------------------------------------------
                         FOR THE YEAR ENDED                  FOR THE YEAR ENDED
                          OCTOBER 31, 2000                    OCTOBER 31,1999
                      ---------------------------       ---------------------------
                        SHARES           VALUE            SHARES           VALUE
                      ----------     ------------       ----------     ------------
<S>                   <C>            <C>                <C>            <C>
Shares sold              630,073     $  8,400,006          524,219     $  7,131,433
Shares issued in
  reinvestment
  of dividends           338,282        4,267,912          257,288        3,321,981
Shares
  repurchased         (1,305,450)     (16,976,258)      (1,050,316)     (14,129,108)
                      ----------     ------------       ----------     ------------
Net increase/
  (decrease)            (337,095)    $ (4,308,340)        (268,809)    $ (3,675,694)
                      ==========     ============       ==========     ============


                                               BALANCED FUND
                      -----------------------------------------------------------
                                          ADVISOR CLASS SHARES
                       ----------------------------------------------------------
                          FOR THE YEAR ENDED                 FOR THE YEAR ENDED
                           OCTOBER 31, 2000                   OCTOBER 31,1999
                       ------------------------           -----------------------
                       SHARES           VALUE             SHARES          VALUE
                       -------        ---------           ------         --------
<S>                    <C>            <C>                 <C>            <C>
Shares sold              8,539        $ 111,493           11,886         $160,639
Shares issued in
  reinvestment
  of dividends           2,344           29,474            1,599           20,611
Shares
  repurchased          (25,788)        (331,426)          (6,792)         (89,733)
                       -------        ---------           ------         --------
Net increase/
  (decrease)           (14,905)       $(190,459)           6,693         $ 91,517
                       =======        =========           ======         ========
</TABLE>


<TABLE>
<CAPTION>

                                                  VALUE FUND
                      -----------------------------------------------------------------
                                             COMMON CLASS SHARES
                      -----------------------------------------------------------------
                           FOR THE YEAR ENDED                  FOR THE YEAR ENDED
                            OCTOBER 31, 2000                    OCTOBER  31,1999
                      -----------------------------       -----------------------------
                         SHARES           VALUE             SHARES            VALUE
                      -----------     -------------       -----------     -------------
<S>                   <C>             <C>                 <C>             <C>
Shares sold             4,058,711     $  59,269,718         9,715,085     $ 180,951,663
Shares issued in
  reinvestment
  of dividends          7,116,244       103,027,829         1,448,225        25,362,924
Shares
  repurchased         (26,536,100)     (406,562,677)      (20,825,196)     (384,878,733)
                      -----------     -------------       -----------     -------------
Net decrease          (15,361,145)    $(244,265,130)       (9,661,886)    $(178,564,146)
                      ===========     =============       ===========     =============


                                                   VALUE FUND
                      ----------------------------------------------------------------
                                             ADVISOR CLASS SHARES
                      ----------------------------------------------------------------
                           FOR THE YEAR ENDED                  FOR THE YEAR ENDED
                            OCTOBER 31, 2000                    OCTOBER 31,1999
                      ----------------------------        ----------------------------
                        SHARES            VALUE             SHARES            VALUE
                      ----------      ------------        ----------      ------------
<S>                   <C>             <C>                 <C>             <C>
Shares sold              674,944      $ 10,662,470         1,320,026      $ 24,501,424
Shares issued in
  reinvestment
  of dividends         1,037,565        15,033,344           178,885         3,107,054
Shares
  repurchased         (2,747,037)      (41,222,452)       (3,400,047)      (62,449,088)
                      ----------      ------------        ----------      ------------
Net decrease          (1,034,528)     $(15,526,638)       (1,901,136)     $(34,840,610)
                      ==========      ============        ==========      ============

</TABLE>


<TABLE>
<CAPTION>

                                          CAPITAL APPRECIATION FUND
                      ------------------------------------------------------------------
                                             COMMON CLASS SHARES
                      -----------------------------------------------------------------
                           FOR THE YEAR ENDED                  FOR THE YEAR ENDED
                            OCTOBER 31, 2000                     OCTOBER 31,1999
                      -----------------------------       -----------------------------
                        SHARES            VALUE              SHARES           VALUE
                      -----------      ------------       -----------      ------------
<S>                   <C>              <C>                <C>              <C>
Shares sold            24,588,163      $755,211,618        15,338,565      $358,830,227
Shares issued in
  reinvestment
  of dividends          3,946,691       104,311,032         1,395,652        28,206,125
Shares
  repurchased         (14,545,809)     (434,121,256)      (10,915,776)     (253,908,501)
                      -----------      ------------       -----------      ------------
Net increase/
  (decrease)           13,989,045      $425,401,394         5,818,441      $133,127,851
                      ===========      ============       ===========      ============


                                         CAPITAL APPRECIATION FUND
                     --------------------------------------------------------------
                                           ADVISOR CLASS SHARES
                     --------------------------------------------------------------
                        FOR THE YEAR ENDED                   FOR THE YEAR ENDED
                         OCTOBER 31, 2000                     OCTOBER 31,1999
                     --------------------------          --------------------------
                      SHARES          VALUE               SHARES          VALUE
                     --------      -----------           --------      ------------
<S>                  <C>           <C>                  <C>            <C>
Shares sold           553,034      $ 16,754,778           344,236       $ 7,988,528
Shares issued in
  reinvestment
  of dividends        103,144         2,675,558            64,497         1,282,191
Shares
  repurchased        (675,581)      (19,943,552)         (646,495)      (15,059,649)
                     --------      -----------           --------      ------------
Net increase/
  (decrease)          (19,403)     $  (513,216)          (237,762)     $ (5,788,930)
                     ========      ===========           ========      ============
</TABLE>

                                       35

<PAGE>

WARBURG PINCUS DOMESTIC EQUITY FUNDS
NOTES TO FINANCIAL STATEMENTS (CONT'D)
October 31, 2000
--------------------------------------------------------------------------------

6. OTHER FINANCIAL HIGHLIGHTS

   Each Fund currently  offers one other class of shares,  Advisor Class shares,
representing  equal pro rata interest in each of the  respective  Warburg Pincus
Equity Funds.  The financial  highlights for an Advisor Class share of each fund
are as follows:

<TABLE>
<CAPTION>

                                                                       WARBURG PINCUS BALANCED FUND
                                               ---------------------------------------------------------------------------
                                                                           ADVISOR CLASS SHARES
                                               ---------------------------------------------------------------------------
                                                                      FOR THE YEAR ENDED OCTOBER 31,
                                               ---------------------------------------------------------------------------
                                                2000           1999         1998        1997 1      1997 2       1996 2
                                               ------         ------       ------       ------      ------       ------
<S>                                            <C>            <C>          <C>          <C>         <C>          <C>
PER-SHARE DATA
  Net asset value, beginning of period         $13.85         $13.47       $14.37       $14.22      $11.94       $11.13
                                               ------         ------       ------       ------      ------       ------
INVESTMENT ACTIVITIES:
  Net investment income/(loss)                   0.38           0.26         0.21         0.03       (0.02)        0.37
  Net gains on investments
    (both realized and unrealized)               0.64           1.43         0.41         0.16        2.67         0.68
                                               ------         ------       ------       ------      ------       ------
      Total from investment activities           1.02           1.69         0.62         0.19        2.65         1.05
                                               ------         ------       ------       ------      ------       ------
LESS DIVIDENDS AND DISTRIBUTIONS:
  Dividends from net investment income          (0.19)         (0.25)       (0.23)       (0.04)      (0.22)       (0.09)
  Distributions from net realized gains         (1.65)         (1.06)       (1.29)        0.00       (0.15)       (0.15)
                                               ------         ------       ------       ------      ------       ------
      Total dividends and distributions         (1.84)         (1.31)       (1.52)       (0.04)      (0.37)       (0.24)
                                               ------         ------       ------       ------      ------       ------
NET ASSET VALUE, END OF PERIOD                 $13.03         $13.85       $13.47       $14.37      $14.22       $11.94
                                               ======         ======       ======       ======      ======       ======
Total return                                     7.95%         13.37%        4.93%        1.30%3     22.66%        9.56%

RATIOS AND SUPPLEMENTAL DATA:
Net Assets, end of period (000s omitted)       $   55         $  265       $  168       $  158      $  149       $   12
  Ratio of expenses to average
    net assets                                   1.62%4         1.60%4       1.60%4       1.60%4      1.60%4       1.71%
  Ratio of net income to average
    net assets                                   1.77%          1.69%        1.52%        1.13%5      1.53%       (4.11)%
  Decrease reflected in above operating
    expense ratios due to waivers/
    reimbursements                               0.63%          0.63%        1.19%        1.35%5      1.21%      203.35%
Portfolio turnover rate                            75%           117%         132%          15%5       120%         108%

--------------------------------------------------------------------------------
<FN>
1 For the two months ended October 31, 1997.
2 For the year ended August 31.
3 Non-Annualized.
4 Interest  earned on  uninvested  cash  balances is used to offset  portions of
  transfer  agent  expense.  These  arrangements  resulted in  reduction  to the
  Adviser  Shares net expense ratio by .02% for the year ended October 31, 2000.
  These  arrangements had no effect on the funds expense ratios for the previous
  periods.  The Advisor Shares  operating  expense ratio after  reflecting these
  arrangements was 1.60% for the year ended October 31, 2000.
5 Annualized.
</FN>
</TABLE>

                                       36

<PAGE>

WARBURG PINCUS DOMESTIC EQUITY FUNDS
NOTES TO FINANCIAL STATEMENTS (CONT'D)
October 31, 2000
--------------------------------------------------------------------------------

6. OTHER FINANCIAL HIGHLIGHTS-- (CONT'D)

<TABLE>
<CAPTION>

                                                                              WARBURG PINCUS VALUE FUND
                                             --------------------------------------------------------------------------------------
                                                                                ADVISOR CLASS SHARES
                                             --------------------------------------------------------------------------------------
                                                                           FOR THE YEAR ENDED OCTOBER 31,
                                             --------------------------------------------------------------------------------------
                                              2000            1999             1998        1997 1         1997 2          1996
                                             -------         -------         -------      -------        -------         -------
<S>                                          <C>             <C>             <C>          <C>            <C>             <C>
PER-SHARE DATA
  Net asset value, beginning of period       $ 18.92         $ 16.96         $ 18.55      $ 18.42        $ 14.88         $ 16.38
                                             -------         -------         -------      -------        -------         -------
INVESTMENT ACTIVITIES:
  Net investment income                         0.01            0.03            0.10         0.01           0.07            0.08
  Net gains (losses) on investments
    and foreign currency related items
    (both realized and unrealized)              0.73            2.49            1.35         0.14           3.55           (0.70)
                                             -------         -------         -------      -------        -------         -------
      Total from investment activities          0.74            2.52            1.45         0.15           3.62           (0.61)
                                             -------         -------         -------      -------        -------         -------
LESS DIVIDENDS AND DISTRIBUTIONS:
  Dividends from net investment income         (0.03)          (0.03)          (0.09)       (0.02)         (0.08)          (0.07)
  Distributions from net realized gains        (4.14)          (0.53)          (2.95)        0.00           0.00           (0.81)
                                             -------         -------         -------      -------        -------         -------
      Total dividends and distributions        (4.17)          (0.56)          (3.04)       (0.02)         (0.08)          (0.88)
                                             -------         -------         -------      -------        -------         -------
NET ASSET VALUE, END OF PERIOD               $ 15.49         $ 18.92         $ 16.96      $ 18.55        $ 18.42         $ 14.88
                                             =======         =======         =======      =======        =======         =======
Total return                                    5.47%          15.20%           8.70%        0.81%3        24.37%          (3.92)%

RATIOS AND SUPPLEMENTAL DATA:
Net Assets, end of period (000s omitted)     $42,558         $71,572         $96,397      $87,929        $84,867         $79,565
    Ratio of expenses to average
      net assets4                               1.66%           1.64%           1.55%        1.58%5         1.54%           1.59%
    Ratio of net income to average
      net assets                                0.17%           0.15%           0.47%        0.35%5         0.43%           0.28%
Portfolio turnover rate                           49%             78%             78%          19%5          148%             94%
--------------------------------------------------------------------------------
<FN>
1 For the two months ended October 31, 1997.
2 For the year ended August 31.
3 Non-Annualized.
4 Interest  earned on uninvested cash balances is used to offset portions of the
  transfer  agent  expense.  These  arrangements  resulted in  reduction  to the
  Advisor  Shares net expense  ratio by .02% for the year ended October 31, 2000
  and by .01% for the year  ended  October  31,  1999,  and .00% for the year or
  period ended 1998,  1997, and 1996.  These  arrangements  had no effect on the
  funds expense ratios for the previous  periods.  The Advisor Shares  operating
  expense ratio after reflecting these arrangements was 1.64% for the year ended
  October 31, 2000, and 1.63% for the year ended October 31, 1999.
5 Annualized.
</FN>
</TABLE>

                                       37

<PAGE>

WARBURG PINCUS DOMESTIC EQUITY FUNDS
NOTES TO FINANCIAL STATEMENTS (CONT'D)
October 31, 2000
--------------------------------------------------------------------------------

6. OTHER FINANCIAL HIGHLIGHTS-- (CONT'D)

<TABLE>
<CAPTION>

                                                                  WARBURG PINCUS CAPITAL APPRECIATION FUND
                                                 -----------------------------------------------------------------------
                                                                           ADVISOR CLASS SHARES
                                                 -----------------------------------------------------------------------
                                                                      FOR THE YEAR ENDED OCTOBER 31,
                                                 -----------------------------------------------------------------------
                                                  2000            1999             1998          1997             1996
                                                 -------         -------         -------         -------         -------
<S>                                              <C>             <C>             <C>             <C>             <C>
PER-SHARE DATA
  Net asset value, beginning of year             $ 25.28         $ 19.21         $ 20.82         $ 17.73         $ 16.26
                                                 -------         -------         -------         -------         -------
INVESTMENT ACTIVITIES:
  Net investment income/(loss)                     (0.21)          (0.20)          (0.09)           0.02            0.02
  Net gains on investments
    (both realized and unrealized)                  7.58            7.18            2.29            4.89            3.49
                                                 -------         -------         -------         -------         -------
      Total from investment activities              7.37            6.98            2.20            4.91            3.51
                                                 -------         -------         -------         -------         -------
LESS DIVIDENDS AND DISTRIBUTIONS:
  Dividends from net investment income              0.00            0.00            0.00           (0.01)           0.00
  Distributions from net realized gains            (2.77)          (0.91)          (3.81)          (1.81)          (2.04)
                                                 -------         -------         -------         -------         -------
      Total dividends and distributions            (2.77)          (0.91)          (3.81)          (1.82)          (2.04)
                                                 -------         -------         -------         -------         -------
NET ASSET VALUE, END OF YEAR                     $ 29.88         $ 25.28         $ 19.21         $ 20.82         $ 17.73
                                                 =======         =======         =======         =======         =======
Total return                                       30.83%          37.62%          12.23%          30.37%          24.15%

RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of year (000s omitted)           $34,058         $29,299         $26,836         $34,601         $23,440
  Ratio of expenses to average
    net assets1                                     1.48%           1.51%           1.43%           1.48%           1.53%
  Ratio of net income/(loss) to average
    net assets                                     (0.69)%         (0.73)%          0.39%           0.08%          (0.09)%
Portfolio turnover rate                              140%            144%            169%            238%            171%
--------------------------------------------------------------------------------
<FN>
1 Interest  earned on  uninvested  cash  balances is used to offset  portions of
  transfer  agent  expense.  These  arrangements  resulted in a reduction to the
  Advisor  Shares net expense ratio by .02% for the year ended October 31, 2000,
  .01%, .00%, .00% and .01% for the year or period ended October 31, 1999, 1998,
  1997 and 1996  respectively.  The Advisor Shares operating expense ratio after
  reflecting these  arrangements  were 1.46% for the year ended October 31, 2000
  1.50%,  1.43%,  1.48%, and 1.52% for each of the years ended October 31, 1999,
  1998, 1997 and 1996, respectively.
</FN>
</TABLE>

                                       38

<PAGE>

WARBURG PINCUS FUNDS
REPORT OF INDEPENDENT ACCOUNTANTS
--------------------------------------------------------------------------------

To the Board of Directors and Shareholders of

WARBURG, PINCUS BALANCED FUND, INC.;
WARBURG, PINCUS VALUE FUND, INC.;
WARBURG, PINCUS CAPITAL APPRECIATION FUND, INC.:

In our opinion, the accompanying statements of assets and liabilities, including
the schedules of  investments,  and the related  statements of operations and of
changes  in net assets  and the  financial  highlights  present  fairly,  in all
material respects the financial  position of the Warburg,  Pincus Balanced Fund,
Inc., Warburg,  Pincus Value Fund, Inc. and Warburg, Pincus Capital Appreciation
Fund, Inc., (all funds  collectively  referred to as the "Funds") at October 31,
2000,  the  results of each of their  operations  for the year then  ended,  the
changes in each of their net assets for each of the two years in the period then
ended  and  their  financial  highlights  for  each of the  years  (or  periods)
presented,  in conformity with accounting  principles  generally accepted in the
United States of America.  These financial  statements and financial  highlights
(hereafter referred to as "financial  statements") are the responsibility of the
Funds'  management;  our  responsibility  is to  express  an  opinion  on  these
financial  statements  based on our  audits.  We  conducted  our audits of these
financial statements in accordance with auditing standards generally accepted in
the United  States of America,  which require that we plan and perform the audit
to obtain reasonable  assurance about whether the financial  statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and  disclosures in the financial  statements,  assessing
the accounting principles used and significant estimates made by management, and
evaluating the overall  financial  statement  presentation.  We believe that our
audits,  which  included  confirmation  of  securities  at October  31,  2000 by
correspondence  with the custodian and brokers,  provide a reasonable  basis for
our opinion.


PRICEWATERHOUSECOOPERS LLP

Two Commerce Square
2001 Market Street
Philadelphia, Pennsylvania
December 15, 2000

                                       39

<PAGE>

WARBURG PINCUS DOMESTIC EQUITY FUNDS
SHAREHOLDER TAX INFORMATION  (UNAUDITED)
--------------------------------------------------------------------------------

   Each Fund is required by Subchapter M of the Code, to advise its shareholders
within 60 days of each Fund's fiscal year end as to the U.S.  federal tax status
distributions  received  by the Fund's  shareholders  in respect of such  fiscal
year. During the fiscal year ended October 31, 2000, the following dividends and
distributions per share were paid by each of the Funds:

<TABLE>
<CAPTION>

                                  ORDINARY      LONG-TERM         % OF ORDINARY INCOME
                                   INCOME     CAPITAL GAINS     DIVIDENDS QUALIFYING FOR
FUND                              PER SHARE     PER SHARE     DIVIDENDS RECEIVED DEDUCTION*
----                              ---------     ---------     -----------------------------
<S>                               <C>             <C>                     <C>
PAYMENT DATE                      12/07/99        12/07/99                1999
Balanced                                                                  3.34
  Common Shares                   $0.5056         $1.2050
  Advisor Shares                   0.4862          1.2050

Value                                                                     4.98
  Common Shares                    1.4048          2.7651
  Advisor Shares                   1.3805          2.7651

Capital Appreciation                                                     13.51
  Common Shares                    0.8460          2.0781
  Advisor Shares                   0.6948          2.0781
</TABLE>


   The above  information  was  provided  to  calendar  year  taxpayers  on Form
1099-DIV mailed in January of 2000.

<TABLE>
<CAPTION>

                                                                       % OF ORDINARY INCOME
                                                                     DIVIDENDS QUALIFYING FOR
FUND                                       ORDINARY INCOME         DIVIDENDS RECEIVED DEDUCTION*
----                                       ---------------         -----------------------------
<S>                                 <C>                                        <C>
PAYMENT DATES                       03/31/00, 06/30/00, 09/29/00               2000
Balanced                                                                       29.16
  Common Shares                                0.2057
  Advisor Shares                               0.1448

Value                                                                         100.00
  Common Shares                                0.0815
  Advisor Shares                               0.0413
</TABLE>

   Because  the  fiscal  year  of the  Funds  is not a  calendar  year,  another
notification  will be sent with  respect  to  calendar  year  2000.  The  second
notification,  which  will  reflect  the  amount  to be  used by  calendar  year
taxpayers on their U.S. federal income tax returns,  will be made in conjunction
with Form 1099-DIV and will be mailed in January 2001.

----------
* Available to Corporate Shareholders only.

                                       40

<PAGE>


                               [GRAPHICS OMITTED]

                              WARBURG PINCUS FUNDS

                     PART OF CREDIT SUISSE ASSET MANAGEMENT

                      P.O. BOX 9030, BOSTON, MA 02205-9030
                  800-WARBURG (800-927-2874) o WWW.WARBURG.COM

CREDIT SUISSE ASSET MANAGEMENT SECURITIES, INC., DISTRIBUTOR.       WPUSL-2-1000



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