WARBURG PINCUS ADVISOR FUNDS OCTOBER 31, 2000
BALANCED FUND
VALUE FUND
CAPITAL APPRECIATION FUND
ANNUAL REPORT
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 800-222-8977 or by writing to Warburg Pincus Advisor Funds,
P.O. Box 9030, Boston, MA 02205-9030.
[GRAPHICS OMITTED]
WARBURG PINCUS FUNDS
PART OF CREDIT SUISSE ASSET MANAGEMENT
<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.
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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 Advisor Class shares of Warburg
Pincus Balanced Fund had a return of 7.95%, 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
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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
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WARBURG PINCUS BALANCED FUND
ANNUAL INVESTMENT ADVISER'S REPORT -- OCTOBER 31, 2000 (CONT'D)
--------------------------------------------------------------------------------
GROWTH OF $10,000 INVESTED IN ADVISOR CLASS SHARES OF WARBURG PINCUS
BALANCED FUND FROM JULY 31, 1995 AS OF OCTOBER 31, 2000
The graph below illustrates the hypothetical investment of $10,000 in Advisor
Class shares of Warburg Pincus Balanced Fund (the "Fund") from July 31, 1995 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 (Advisor Class shares)
Since Inception
1 year 3 year (7/31/95)
7.95% 8.69% 12.00%
Lehman
Fund Intermediate
(Advisor Shares) S&P 500 Lipper Balanced Govt. Corp.
7/31/95 $10,000.00 $10,000.00 $10,000.00 $10,000.00
8/31/95 10,382.50 10,017.40 10,078.00 10,091.00
9/30/95 10,493.60 10,439.50 10,318.70 10,164.10
10/31/95 10,241.30 10,408.60 10,292.70 10,277.30
11/30/95 10,727.20 10,856.40 10,612.60 10,412.40
12/31/95 10,902.20 11,066.80 10,779.60 10,521.60
1/31/96 11,215.00 11,448.80 10,974.20 10,612.40
2/29/96 11,234.00 11,549.70 10,979.40 10,487.90
3/31/96 11,242.20 11,662.70 11,020.80 10,434.00
4/30/96 11,546.30 11,834.30 11,093.90 10,397.20
5/31/96 11,802.90 12,138.60 11,207.30 10,389.40
6/30/96 11,517.50 12,184.80 11,244.30 10,499.80
7/31/96 11,012.60 11,647.40 10,955.00 10,531.00
8/31/96 11,374.60 11,893.20 11,127.80 10,539.30
9/30/96 11,721.50 12,561.30 11,539.40 10,686.10
10/31/96 11,865.10 12,907.30 11,784.20 10,874.90
11/30/96 12,248.20 13,881.10 12,333.40 11,018.50
12/31/96 12,280.50 13,606.40 12,182.20 10,948.00
1/31/97 12,522.80 14,455.60 12,555.10 10,990.50
2/28/97 12,435.60 14,568.90 12,601.60 11,011.50
3/31/97 12,153.40 13,972.10 12,235.50 10,935.70
4/30/97 12,338.90 14,805.00 12,603.20 11,064.20
5/31/97 12,973.40 15,704.70 13,119.20 11,156.00
6/30/97 13,373.30 16,407.30 13,545.90 11,257.80
7/31/97 14,138.60 17,711.20 14,317.00 11,486.90
8/31/97 13,952.20 16,720.70 13,863.00 11,429.30
9/30/97 14,713.90 17,635.10 14,415.80 11,562.20
10/31/97 14,133.60 17,047.80 14,153.00 11,690.30
11/30/97 14,054.50 17,835.50 14,412.00 11,716.00
12/31/97 14,244.20 18,142.20 14,625.30 11,809.80
1/31/98 14,190.10 18,342.50 14,729.20 11,964.50
2/28/98 14,831.50 19,663.60 15,313.90 11,955.50
3/31/98 15,159.30 20,670.50 15,782.20 11,993.90
4/30/98 15,398.80 20,878.50 15,892.80 12,054.00
5/31/98 15,246.30 20,520.40 15,732.30 12,141.90
6/30/98 15,513.20 21,353.90 16,022.40 12,219.90
7/31/98 15,403.00 21,127.20 15,834.60 12,263.00
8/31/98 13,989.00 18,073.00 14,470.50 12,455.80
9/30/98 14,398.90 19,230.90 15,095.00 12,768.70
10/31/98 14,828.00 20,795.00 15,659.80 12,756.20
11/30/98 15,323.20 22,055.20 16,232.90 12,755.20
12/31/98 15,661.90 23,325.30 16,831.70 12,806.40
1/31/99 15,853.00 24,300.30 17,100.90 12,876.70
2/28/99 15,290.20 23,545.30 16,689.80 12,687.50
3/31/99 15,537.90 24,487.10 17,101.70 12,782.10
4/30/99 16,476.40 25,435.30 17,661.70 12,821.30
5/31/99 16,621.30 24,834.80 17,389.40 12,722.80
6/30/99 17,221.40 26,213.10 17,870.20 12,731.50
7/31/99 16,870.10 25,395.20 17,536.00 12,720.10
8/31/99 16,628.80 25,267.50 17,351.90 12,729.70
9/30/99 16,484.20 24,575.20 17,129.80 12,848.10
10/31/99 16,812.20 26,130.80 17,626.60 12,881.30
11/30/99 16,993.80 26,661.20 17,816.90 12,896.70
12/31/99 17,795.90 28,228.90 18,344.30 12,854.20
1/31/00 17,162.30 26,811.80 17,883.90 12,806.60
2/29/00 17,148.60 26,305.10 17,841.00 12,911.60
3/31/00 18,196.40 28,878.50 18,891.40 13,046.30
4/30/00 18,003.50 28,009.80 18,545.70 13,016.70
5/31/00 18,003.50 27,435.10 18,371.20 13,037.00
6/30/00 18,077.30 28,111.60 18,664.40 13,267.00
7/31/00 17,911.00 27,672.20 18,613.70 13,367.90
8/31/00 18,702.70 29,390.10 19,444.60 13,525.80
9/30/00 17,924.60 27,838.60 19,035.20 13,648.90
10/31/00 18,146.90 27,720.90 19,018.50 13,711.00
FUND
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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 (7/31/95 to 9/30/00) ....................... 11.95%
----------
* 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
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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 Advisor Class shares of Warburg
Pincus Value Fund had a return of 5.47%, 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
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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
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WARBURG PINCUS VALUE FUND
ANNUAL INVESTMENT ADVISER'S REPORT -- OCTOBER 31, 2000 (CONT'D)
--------------------------------------------------------------------------------
GROWTH OF $10,000 INVESTED IN ADVISOR CLASS SHARES OF WARBURG PINCUS
VALUE FUND FROM MAY 15, 1995 AS OF OCTOBER 31, 2000
The graph below illustrates the hypothetical investment of $10,000 in Advisor
Class shares of Warburg Pincus Value Fund (the "Fund") from May 15, 1995 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 (Advisor Class shares)
Since Inception
1 year 3 year (5/15/95)
5.47% 9.72% 10.86%
Fund S&P 500
5/15/95 $10,000.00 $10,000.00
5/31/95 10,033.60 10,384.90
6/30/95 10,199.00 10,628.00
7/31/95 10,704.90 10,988.00
8/31/95 11,048.90 11,007.10
9/30/95 10,905.50 11,470.90
10/31/95 10,457.30 11,437.00
11/30/95 11,129.60 11,929.00
12/31/95 10,971.60 12,160.20
1/31/96 11,648.80 12,580.00
2/29/96 11,570.40 12,690.80
3/31/96 11,653.70 12,814.90
4/30/96 11,832.00 13,003.50
5/31/96 11,910.40 13,337.90
6/30/96 11,051.00 13,388.70
7/31/96 10,216.20 12,798.10
8/31/96 10,615.80 13,068.30
9/30/96 10,468.00 13,802.30
10/31/96 10,560.80 14,182.60
11/30/96 11,195.80 15,252.50
12/31/96 10,796.20 14,950.70
1/31/97 11,245.80 15,883.70
2/28/97 11,409.90 16,008.20
3/31/97 10,974.70 15,352.60
4/30/97 11,324.30 16,267.70
5/31/97 12,109.20 17,256.30
6/30/97 12,550.10 18,028.40
7/31/97 13,532.10 19,461.10
8/31/97 13,202.40 18,372.60
9/30/97 13,889.90 19,377.40
10/31/97 13,308.80 18,732.20
11/30/97 13,653.50 19,597.60
12/31/97 14,016.70 19,934.70
1/31/98 14,102.20 20,154.70
2/28/98 15,045.60 21,606.30
3/31/98 15,632.40 22,712.70
4/30/98 15,709.00 22,941.20
5/31/98 15,649.30 22,547.80
6/30/98 15,791.70 23,463.70
7/31/98 15,374.80 23,214.50
8/31/98 13,099.30 19,858.60
9/30/98 13,504.10 21,130.90
10/31/98 14,468.30 22,849.50
11/30/98 15,321.90 24,234.20
12/31/98 15,732.60 25,629.80
1/31/99 15,811.20 26,701.20
2/28/99 15,406.40 25,871.60
3/31/99 15,546.60 26,906.40
4/30/99 17,323.60 27,948.20
5/31/99 17,526.30 27,288.40
6/30/99 18,078.40 28,802.90
7/31/99 17,443.80 27,904.20
8/31/99 17,082.80 27,763.90
9/30/99 16,585.60 27,003.10
10/31/99 16,665.30 28,712.40
11/30/99 16,568.60 29,295.30
12/31/99 16,538.80 31,017.90
1/31/00 15,214.00 29,460.80
2/29/00 14,296.60 28,904.00
3/31/00 16,169.50 31,084.50
4/30/00 16,260.00 30,469.30
5/31/00 16,848.60 32,370.90
6/30/00 16,038.20 32,624.70
7/31/00 16,083.10 31,288.40
8/31/00 17,160.70 33,153.50
9/30/00 17,143.50 35,168.20
10/31/00 17,575.50 36,741.70
FUND
------
1 Year Total Return (9/30/99 to 9/30/00) ............................. 3.37%
3 Year Average Annual Total Return (9/30/97 to 9/30/00) .............. 7.27%
5 Year Average Annual Total Return (9/30/95 to 9/30/00) .............. 9.47%
Average Annual Total Return (5/15/95 to 9/30/00) ..................... 10.53%
----------
* 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
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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 Advisor Class shares of Warburg
Pincus Capital Appreciation Fund had a gain of 30.83%, 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
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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
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WARBURG PINCUS CAPITAL APPRECIATION FUND
ANNUAL INVESTMENT ADVISER'S REPORT -- OCTOBER 31, 2000 (CONT'D)
--------------------------------------------------------------------------------
GROWTH OF $10,000 INVESTED IN ADVISOR 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 Advisor
Class shares of Warburg Pincus Capital Appreciation Fund (the "Fund") from April
4, 1991 (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 (Advisor Class shares)
Since Inception
1 year 3 year 5 year (4/4/91)
30.83% 26.43% 26.74% 19.56%
Fund S&P 500
4/4/91 $10,000.00 $10,000.00
4/30/91 9,842.19 10,030.40
5/31/91 10,191.00 10,444.00
6/30/91 9,626.83 9,971.98
7/31/91 10,061.00 10,445.80
8/31/91 10,311.50 10,678.10
9/30/91 9,977.50 10,501.30
10/31/91 10,152.80 10,653.10
11/30/91 9,727.02 10,213.20
12/31/91 10,980.10 11,379.00
1/31/92 10,837.40 11,180.50
2/29/92 10,862.60 11,314.90
3/31/92 10,602.30 11,096.30
4/30/92 10,610.70 11,433.40
5/31/92 10,871.00 11,472.50
6/30/92 10,638.70 11,302.50
7/31/92 10,974.60 11,775.70
8/31/92 10,722.70 11,522.40
9/30/92 10,890.60 11,656.40
10/31/92 11,150.90 11,710.30
11/30/92 11,562.30 12,093.50
12/31/92 11,761.70 12,245.10
1/31/93 11,974.70 12,360.80
2/28/93 12,063.50 12,519.80
3/31/93 12,551.70 12,783.20
4/30/93 12,019.10 12,488.50
5/31/93 12,436.30 12,801.40
6/30/93 12,649.30 12,840.90
7/31/93 12,640.50 12,802.70
8/31/93 13,350.60 13,273.00
9/30/93 13,457.10 13,170.80
10/31/93 13,563.60 13,456.10
11/30/93 13,057.70 13,312.90
12/31/93 13,565.80 13,477.30
1/31/94 13,961.70 13,945.50
2/28/94 13,633.40 13,558.10
3/31/94 12,783.70 12,969.80
4/30/94 12,745.10 13,150.70
5/31/94 13,121.60 13,345.30
6/30/94 12,725.80 13,019.90
7/31/94 13,102.30 13,460.80
8/31/94 13,729.90 13,998.00
9/30/94 13,565.80 13,653.80
10/31/94 13,729.90 13,970.70
11/30/94 13,131.30 13,452.10
12/31/94 13,109.40 13,650.20
1/31/95 13,036.50 14,014.60
2/28/95 13,672.20 14,553.20
3/31/95 14,339.10 14,984.20
4/30/95 14,568.30 15,436.60
5/31/95 14,891.40 16,030.70
6/30/95 15,547.90 16,406.00
7/31/95 16,371.20 16,961.70
8/31/95 16,537.90 16,991.20
9/30/95 16,913.00 17,707.20
10/31/95 16,944.30 17,654.80
11/30/95 17,694.60 18,414.30
12/31/95 18,023.10 18,771.20
1/31/96 18,628.20 19,419.20
2/29/96 19,126.50 19,590.20
3/31/96 19,494.30 19,781.80
4/30/96 19,719.80 20,073.00
5/31/96 20,087.60 20,589.10
6/30/96 19,838.40 20,667.60
7/31/96 18,948.50 19,755.90
8/31/96 19,660.40 20,172.90
9/30/96 20,882.50 21,306.10
10/31/96 21,036.80 21,893.10
11/30/96 22,306.30 23,544.70
12/31/96 22,116.70 23,078.70
1/31/97 22,959.80 24,519.10
2/28/97 23,144.20 24,711.30
3/31/97 22,274.80 23,699.10
4/30/97 23,289.10 25,111.80
5/31/97 24,527.30 26,637.90
6/30/97 25,436.20 27,829.60
7/31/97 27,741.40 30,041.30
8/31/97 26,542.70 28,361.00
9/30/97 28,307.80 29,912.10
10/31/97 27,425.20 28,916.00
11/30/97 28,149.30 30,252.00
12/31/97 28,920.60 30,772.30
1/31/98 28,744.10 31,112.00
2/28/98 30,586.60 33,352.70
3/31/98 32,109.80 35,060.70
4/30/98 32,848.40 35,413.40
5/31/98 32,046.90 34,806.10
6/30/98 33,729.30 36,219.90
7/31/98 33,793.40 35,835.20
8/31/98 27,896.50 30,654.90
9/30/98 29,852.00 32,619.00
10/31/98 30,780.40 35,271.90
11/30/98 32,784.20 37,409.30
12/31/98 36,177.40 39,563.70
1/31/99 38,420.40 41,217.50
2/28/99 36,879.70 39,936.90
3/31/99 38,720.00 41,534.40
4/30/99 39,087.90 43,142.60
5/31/99 38,032.50 42,124.00
6/30/99 40,409.50 44,461.80
7/31/99 39,791.30 43,074.60
8/31/99 39,775.30 42,858.00
9/30/99 40,193.00 41,683.70
10/31/99 42,319.20 44,322.20
11/30/99 45,014.90 45,222.00
12/31/99 53,347.20 47,881.00
1/31/00 51,714.80 45,477.40
2/29/00 58,846.20 44,617.90
3/31/00 60,794.00 45,559.80
4/30/00 55,663.00 48,118.90
5/31/00 52,790.80 49,444.50
6/30/00 56,702.60 53,174.60
7/31/00 56,385.10 52,122.30
8/31/00 61,719.10 55,375.20
9/30/00 58,071.50 55,809.40
10/31/00 55,365.40 53,523.40
FUND
------
1 Year Total Return (9/30/99 to 9/30/00) ............................. 44.48%
3 Year Average Annual Total Return (9/30/97 to 9/30/00) .............. 27.10%
5 Year Average Annual Total Return (9/30/95 to 9/30/00) .............. 28.01%
Average Annual Total Return Since Inception (4/4/91 to 9/30/00) ...... 16.98%
----------
* 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 ADR1 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, BBB) 7.875 08/16/10 50 51,019
El Paso Energy Corp. (Baa2, BBB) 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, BB+) 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 08/01/06 466 451,980
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 $180,119,764) 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 an Advisor 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 $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>
See Accompanying Notes to Financial Statements.
26
<PAGE>
WARBURG PINCUS VALUE FUND
FINANCIAL HIGHLIGHTS
(For an Advisor Class share of the Fund Outstanding Throughout Each Period)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
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>
See Accompanying Notes to Financial Statements.
27
<PAGE>
WARBURG PINCUS CAPITAL APPRECIATION FUND
FINANCIAL HIGHLIGHTS
(For an Advisor 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 $ 25.28 $ 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>
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, 2000
--------------------------------------------------------------------------------
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, 2000
--------------------------------------------------------------------------------
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, 2000
--------------------------------------------------------------------------------
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:
<TABLE>
<CAPTION>
GROSS NET
FUND ADVISORY FEE WAIVER ADVISORY FEE
---- ------------ --------- --------------
<S> <C> <C> <C>
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
</TABLE>
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:
<TABLE>
<CAPTION>
AVERAGE DAILY
FUND NET ASSETS ANNUAL RATE
---- ------------------ --------------------------------
<S> <C> <C>
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
</TABLE>
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, 2000
--------------------------------------------------------------------------------
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, 2000
--------------------------------------------------------------------------------
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 ADVISOR CLASS SHARES
----------------------------------------------------------- -----------------------------------------------
FOR THE YEAR ENDED FOR THE YEAR ENDED FOR THE YEAR ENDED FOR THE YEAR ENDED
OCTOBER 31, 2000 OCTOBER 31, 1999 OCTOBER 31, 2000 OCTOBER 31, 1999
--------------------------- --------------------------- --------------------- ---------------------
SHARES VALUE SHARES VALUE SHARES VALUE SHARES VALUE
---------- ------------ ---------- ------------ ------- --------- ------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Shares sold 630,073 $ 8,400,006 524,219 $ 7,131,433 8,539 $ 111,493 11,886 $ 160,639
Shares issued in
reinvestment
of dividends 338,282 4,267,912 257,288 3,321,981 2,344 29,474 1,599 20,611
Shares
repurchased (1,305,450) (16,976,258) (1,050,316) (14,129,108) (25,788) (331,426) (6,792) (89,733)
---------- ------------ ---------- ------------ ------- --------- ------- ---------
Net increase/
(decrease) (337,095) $ (4,308,340) (268,809) $ (3,675,694) (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, Common Class shares,
representing equal pro rata interest in each of the respective Warburg Pincus
Equity Funds. The financial highlights for a Common Class share of each fund are
as follows:
<TABLE>
<CAPTION>
WARBURG PINCUS BALANCED FUND
---------------------------------------------------------------------------------
COMMON 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 $ 13.88 $ 13.50 $ 14.38 $ 14.24 $ 11.94 $ 11.12
------- ------- ------- ------- ------- -------
INVESTMENT ACTIVITIES:
Net investment income 0.27 0.27 0.25 0.03 0.23 0.16
Net gains on net investments
(both realized and unrealized) 0.82 1.45 0.42 0.16 2.46 0.94
------- ------- ------- ------- ------- -------
Total from investment activities 1.09 1.72 0.67 0.19 2.69 1.10
------- ------- ------- ------- ------- -------
LESS DIVIDENDS AND DISTRIBUTIONS:
Dividends from net investment income (0.27) (0.28) (0.26) (0.05) (0.24) (0.13)
Distributions from net realized gains (1.65) (1.06) (1.29) 0.00 (0.15) (0.15)
------- ------- ------- ------- ------- -------
Total dividends and distributions (1.92) (1.34) (1.55) (0.05) (0.39) (0.28)
------- ------- ------- ------- ------- -------
NET ASSET VALUE, END OF PERIOD $ 13.05 $ 13.88 $ 13.50 $ 14.38 $ 14.24 $ 11.94
======= ======= ======= ======= ======= =======
Total return 8.51% 13.61% 5.33% 1.30%3 23.03% 9.99%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000s omitted) $26,435 $32,805 $35,542 $38,294 $38,926 $30,853
Ratio of expenses to average net assets4 1.37% 1.35% 1.35% 1.35%5 1.35% 1.53%
Ratio of net income to average net assets 2.02% 1.94% 1.76% 1.38%5 1.76% 1.66%
Decrease reflected in above operating
expense ratios due to waviers/
reimbursements .63% .62% .62% .68%5 .55% .90%
Portfolio turnover rate 75% 116% 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 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>
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
---------------------------------------------------------------------------------------
COMMON 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 $ 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) (0.14)
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>
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
----------------------------------------------------------------------------------
COMMON 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 $ 25.82 $ 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>
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>
WARBURG PINCUS
ADVISOR FUNDS
CREDIT SUISSE ASSET
MANAGEMENT
SECURITIES, INC.,
DISTRIBUTOR
Credit Suisse Asset Management Securities, Inc., Distributor, located at 466
Lexington Avenue, New York, NY10017. Warburg Pincus Advisor Funds are advised by
Credit Suisse Asset Management LLC.
[GRAPHICS OMITTED]
WARBURG PINCUS FUNDS
PART OF CREDIT SUISSE ASSET MANAGEMENT
ADUSL-2-1000
