SEMIANNUAL
REPORT
April 30, 1999
WARBURG PINCUS
EMERGING GROWTH FUND
o
WARBURG PINCUS
SMALL COMPANY VALUE FUND
o
WARBURG PINCUS
SMALL COMPANY GROWTH FUND
o
WARBURG PINCUS
POST-VENTURE CAPITAL FUND
More complete information about the funds, including charges and expenses, is
provided in the Prospectus, which must precede or accompany this document and
which should be read carefully before investing. You may obtain additional
copies by calling 800-WARBURG (800-927-2874) or by writing to Warburg Pincus
Funds, P.O. Box 9030, Boston, MA 02205-9030.
[LOGO]
<PAGE>
From time to time, the funds' investment adviser and co-administrator may waive
some fees and/or reimburse some expenses, without which performance would be
lower. Waivers and/or reimbursements are subject to change.
Returns are historical and include change in share price and reinvestment of
dividends and capital gains. Past performance cannot guarantee future results.
Returns and share price will fluctuate, and redemption value may be more or less
than original cost.
The views of the funds' management are as of the date of the letters, and
portfolio holdings described in this document are as of April 30, 1999; these
views and portfolio holdings may have changed subsequent to these dates. Nothing
in this document is a recommendation to purchase or sell securities.
<PAGE>
Warburg Pincus Emerging Growth Fund
Semiannual Investment Adviser's Report -- April 30, 1999
- --------------------------------------------------------------------------------
June 15, 1999
Dear Shareholder:
For the six months ended April 30, 1999 Warburg Pincus Emerging Growth Fund
had a gain of 14.19%, vs. gains of 25.74% and 25.76%, respectively, for the
Russell 2000 Growth Index* and the Russell 2500 Growth Index.** The fund's
one-year return through April 30, 1999 was -10.14%. Its five-year, 10-year and
since-inception (on January 21, 1988) average annual total returns through April
30, 1999 were 15.97%, 14.33% and 15.72%, respectively.
The reporting period was a volatile, yet ultimately positive, one for
smaller-company and emerging-growth stocks. These issues were buoyed by several
favorable developments, foremost a more-accommodative monetary policy (the
Federal Reserve cut interest rates three times in the latter half of 1998), some
better-than-expected economic reports and evidence that emerging markets were
recovering from financial turmoil. All told, this encouraged investors to assume
more short-term risk in pursuit of potentially higher long-term returns, to the
benefit of emerging-growth stocks.
Against this backdrop, the fund had a positive return, yet trailed its
benchmark for the six months. The fund performed roughly in line with its
benchmark through much of the period, but lagged in April, due largely to its
avoidance of certain larger-cap Internet stocks that finished the period on a
strong note. While this hampered the fund, we continued to view those stocks as
expensive based on their long-term growth prospects.
We made no material changes to the fund in terms of overall strategies
during the period, remaining focused on well-financed, innovative companies with
broad domestic customer bases (the last characteristic reflects our favorable
view of the U.S. economy vs. most economies). We did make several noteworthy
adjustments in terms of sector exposure, however. These included raising our
weightings in the electronics and telecommunications & equipment sectors. We had
relatively limited exposure to both entering the period, but took advantage of
market volatility to add a number of stocks in these areas we judged to be
attractive.
Sector weightings we reduced during the period included the
financial-services and business-services areas, reflecting profit-taking in
certain stocks. We continued to see attractively priced stocks in those areas,
however, particularly with respect to the latter group, a direct beneficiary of
a strong institutional-outsourcing trend.
1
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Warburg Pincus Emerging Growth Fund
Semiannual Investment Adviser's Report -- April 30, 1999 (cont'd)
- --------------------------------------------------------------------------------
Looking ahead, we remain optimistic regarding the longer-term prospects for
smaller-company and emerging-growth stocks. Valuations on these stocks remain
well below those on large-cap stocks, and the group stands to enjoy a brighter
earnings picture, given the ongoing health of the U.S. economy (most small-cap
companies are domestically oriented businesses, in contrast to large-cap
companies, many of which derive a substantial portion of their revenues from
overseas operations). Set within this environment, we will continue to strive to
identify stocks that we deem to have the best long-term growth prospects.
Elizabeth B. Dater Stephen J. Lurito
Co-Portfolio Manager Co-Portfolio Manager
Investing in small companies entails special risk considerations. These are
detailed in the Prospectus, which should be read carefully before investing.
- -------------
* The Russell 2000 Growth Index is an unmanaged index (with no defined
investment objective) of those securities in the Russell 2000 Index
with a greater-than-average growth orientation. The Russell 2000
Growth Index includes reinvestment of dividends, and is compiled by
Frank Russell Company.
** The Russell 2500 Growth Index measures the performance of those
companies in the Russell 2500 Index with higher price-to-book values
and higher forecasted growth rates. The Russell 2500 Index is composed
of the 2,500 smallest companies in the Russell 3000 Index, which
measures the performance of the 3,000 largest U.S. companies based on
total market capitalization. The Russell 2500 Index represents
approximately 22% of the total market capitalization of the Russell
3000 Index.
2
<PAGE>
Warburg Pincus Small Company Value Fund
Semiannual Investment Adviser's Report -- April 30, 1999
- --------------------------------------------------------------------------------
June 15, 1999
Dear Shareholder:
For the six months ended April 30, 1999, Warburg Pincus Small Company Value
Fund had a return of -0.83%, vs. a return of 15.17% for the Russell 2000 Index.*
The fund's one-year return through April 30, 1999 was -25.02%. Its
since-inception (on December 29, 1995) average annual total return through April
30, 1999 was 13.07%.
The reporting period was a difficult one for the fund's holdings and, more
broadly, the underfollowed small-capitalization stocks targeted by the fund.
While investors warmed to small caps collectively, as a result of three Federal
Reserve interest-rate cuts late last year, they focused almost exclusively on
the group's better-known growth stocks, especially its technology names. (The
growth component of the Russell 2000 Index outperformed the value component by
about 20 percentage points during the period.) This preference for growth stocks
clearly hampered the fund (though small-cap value stocks did manage to finish
the period on a bright note). Also weighing on the fund was weakness in certain
areas, most specifically the financial area, which was hindered by growing fears
that a strong economy would prompt the Federal Reserve to reverse course and
raise short-term interest rates.
The fund's disappointing performance for the six months notwithstanding, we
believe that adherence to strict value disciplines stands to benefit investors
over time. In this context, we made no material changes to the fund during the
period in terms of broad strategies. We remained focused on underfollowed,
undervalued stocks that we believe stand to receive wider market recognition
over the longer term, due, e.g., to improving cash flows.
With respect to sector allocation, we made few significant changes to the
fund through the period, though we did make a number of adjustments. One was to
increase our exposure to consumer stocks, broadly defined. We added several
consumer-type stocks that we judged to represent good value against an improving
economic backdrop.
We also purchased several energy stocks, an area we largely avoided
throughout 1998 due to our concerns regarding commodity prices. Our decision to
add some energy exposure reflected our more-positive view of the industry's
fundamentals (specifically, the stabilization of oil prices early this year and
the prospects for production cuts by both OPEC and non-OPEC countries). Our
focus here was on oil-services companies specializing in maintenance services
(which tend to have more-stable cash flows compared to companies that focus on,
for example, rig construction).
3
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Warburg Pincus Small Company Value Fund
Semiannual Investment Adviser's Report -- April 30, 1999 (cont'd)
- --------------------------------------------------------------------------------
Looking ahead, we are optimistic regarding the longer-term prospects for
small-cap stocks, both in absolute and relative terms. Notably, valuations on
these stocks remain historically compelling compared to those on large-cap
stocks. In addition, the earnings outlook for most of these companies appears
likely to remain healthy, at minimum, supported by the strong economy. Set
within this environment, we will continue to strive to identify underfollowed
stocks we deem to have the best longer-term appreciation potential, focusing on
factors such as price-to-book and price-to-cash flow ratios.
Kyle F. Frey
Portfolio Manager
Investing in small companies entails special risk considerations. These are
detailed in the Prospectus, which should be read carefully before investing.
- ----------------
* The Russell 2000 Index is an unmanaged index (with no defined
investment objective) of approximately 2,000 small-cap stocks,
includes reinvestment of dividends, and is compiled by Frank Russell
Company.
4
<PAGE>
Warburg Pincus Small Company Growth Fund
Semiannual Investment Adviser's Report -- April 30, 1999
- --------------------------------------------------------------------------------
June 15, 1999
Dear Shareholder:
For the six months ended April 30, 1999, Warburg Pincus Small Company
Growth Fund had a gain of 22.95%, vs. a gain of 25.74% for the Russell 2000
Growth Index.* The fund's one-year return through April 30, 1999 was -3.73%. Its
since-inception (on December 31, 1996) average annual total return through April
30, 1999 was 11.89%. Note: Effective March 31, 1999, Elizabeth B. Dater and
Sammy Oh serve as Co-Portfolio Managers of the fund. Stephen J. Lurito, formerly
Portfolio Manager, continues to serve as Co-Portfolio Manager.
Manager Commentary
Small-cap stocks rallied during the six months, supported by a buoyant
domestic economy, a series of Federal Reserve interest-rate cuts, and a
perception that financial conditions abroad were improving. All told, this
increased investors' willingness to assume more risk in pursuit of potentially
higher longer-term rewards, to the benefit of small caps, in particular
growth-oriented small caps.
Against this backdrop, the fund had a solid return, both in absolute terms
and compared to its benchmark. The fund's performance reflected investors'
positive sentiment toward small-cap-growth stocks during the period as well as
good showings from the fund's media and telecommunications holdings in
particular.
We made few material changes to the fund during the period with respect to
overall strategies. We continued to emphasize companies offering
productivity-enhancing products and services (including outsourcing services),
as well as those standing to benefit from higher levels of discretionary income.
In terms of sector/industry emphasis, our largest areas of concentration
remained the technology, business-services, leisure & entertainment and
communications areas. One sector weighting we lowered was financial services,
reflecting profit-taking in specific issues.
Looking ahead, we remain optimistic regarding the longer-term prospects for
small-cap stocks, for several reasons. Foremost, despite the group's recent
rally, valuations on small caps remain well below those on large-cap stocks.
Buttressing these valuations is the potential for a brighter earnings picture,
given the ongoing health of the U.S. economy (most small-cap companies are
domestically oriented businesses, in contrast to large-cap companies, many
5
<PAGE>
Warburg Pincus Small Company Growth Fund
Semiannual Investment Adviser's Report -- April 30, 1999 (cont'd)
- --------------------------------------------------------------------------------
of which derive a substantial portion of their revenues from overseas
operations). Set within this environment, we will continue to strive to identify
stocks that we deem to have the best long-term growth prospects.
Stephen J. Lurito Elizabeth B. Dater
Co-Portfolio Manager Co-Portfolio Manager
Sammy Oh
Co-Portfolio Manager
Investing in small companies entails special risk considerations. These are
detailed in the Prospectus, which should be read carefully before investing.
- -----------------
* The Russell 2000 Growth Index is an unmanaged index (with no defined
investment objective) of those securities in the Russell 2000 Index
with a greater-than-average growth orientation. The Russell 2000
Growth Index includes reinvestment of dividends, and is compiled by
Frank Russell Company.
6
<PAGE>
Warburg Pincus Post-Venture Capital Fund
Semiannual Investment Adviser's Report -- April 30, 1999
- --------------------------------------------------------------------------------
June 15, 1999
Dear Shareholder:
For the six months ended April 30, 1999, Warburg Pincus Post-Venture
Capital Fund had a gain of 22.11%, vs. gains of 25.74% for the Russell 2000
Growth Index,* 25.47% for the Russell 2500 Growth Index** and 33.62% for the
NASDAQ Industrial Index.*** The fund's one-year total return through April 30,
1999 was -4.30%. Its since-inception (on September 29, 1995) average annual
total return through April 30, 1999 was 20.70%. Note: Effective March 31, 1999,
Stephen J. Lurito and Christopher M. Nawn no longer serve as the fund's
Co-Portfolio Manager and Associate Co-Portfolio Manager, respectively. Robert S.
Janis, formerly Associate Portfolio Manager, joins Elizabeth B. Dater as the
fund's Co-Portfolio Manager.
Manager commentary
The period was a positive one for the smaller-cap and aggressive-growth
stocks targeted by the fund, buoyed by growing optimism regarding global
financial markets and a related increase in investors' risk tolerance. The fund
benefited from this relatively favorable backdrop, and good performances from
the fund's technology, communications and media holdings in particular. One weak
spot for the fund, in relative terms at least, was the financial area, which was
hampered somewhat by fears of rising interest rates.
We made no noteworthy changes to the fund during the period in terms of
broad strategies, remaining focused on well-financed, well-managed companies
offering breakthrough products and services. That said, we made several notable
sector-weighting adjustments, foremost an increase in our exposure to the
communications & media and telecommunications & equipment sectors. This largely
reflected our desire to further extend our already-significant Internet theme.
Other notable sector weightings continued to include financial services,
where we maintained a mix of asset-management and insurance companies;
computers, where we remained biased toward domestically oriented software
companies; and business services. We lowered our weighting in the last area,
however, reflecting profit-taking in certain stocks as well as our desire to
take advantage of opportunities we saw developing elsewhere.
Going forward, we remain positive on the collective prospects for stocks of
post-venture-capital companies. (We define a post-venture capital company as one
that has received venture-capital financing either during the early stages of
the company's existence or the development of a new product or service, or as
part of a restructuring or recapitalization. The investment of
7
<PAGE>
Warburg Pincus Post-Venture Capital Fund
Semiannual Investment Adviser's Report -- April 30, 1999 (cont'd)
- --------------------------------------------------------------------------------
venture-capital financing, distribution of securities to venture-capital
investors or initial public offering, whichever is later, will have been made
within 10 years of the fund's investment.) As ever, we will continue to devote
our efforts to identifying those companies we deem to have best long-term
prospects.
Elizabeth B. Dater Robert S. Janis
Co-Portfolio Manager Co-Portfolio Manager
Because of the nature of the fund's holdings and certain strategies it may
use, an investment in the fund involves certain risks and may not be appropriate
for all investors. The Prospectus contains more complete information on the
special risk considerations associated with post-venture-capital investments. It
should be read carefully before investing.
- --------------
* The Russell 2000 Growth Index is an unmanaged index (with no defined
investment objective) of those securities in the Russell 2000 Index
with a greater-than-average growth orientation. The Russell 2000
Growth Index includes reinvestment of dividends, and is compiled by
Frank Russell Company.
** The Russell 2500 Growth Index measures the performance of those
companies in the Russell 2500 Index with higher price-to-book values
and higher forecasted growth rates. The Russell 2500 Index is composed
of the 2,500 smallest companies in the Russell 3000 Index, which
measures the performance of the 3,000 largest U.S. companies based on
total market capitalization. The Russell 2500 Index represents
approximately 22% of the total market capitalization of the Russell
3000 Index.
*** The NASDAQ Industrial Index measures the stock price performance of
more than 3,000 industrial issues included in the NASDAQ OTC Composite
Index. The NASDAQ OTC Composite Index represents 4,500 stocks traded
over the counter.
8
<PAGE>
Warburg Pincus Emerging Growth Fund
Statement of Net Assets--April 30, 1999 (Unaudited)
- --------------------------------------------------------------------------------
Number of
Shares Value
--------- -----
COMMON STOCK (93.1%)
Aerospace & Defense (1.4%)
Gulfstream Aerospace Corp.+ 528,000 $ 25,740,000
------------
Banks & Savings & Loans (1.1%)
Peoples Heritage Financial
Group, Inc. 1,043,800 20,223,625
------------
Business Services (11.4%)
BISYS Group, Inc.+ 442,100 22,436,575
Career Blazers, Inc. Private
Placement+# 91,000 204,750
Catalina Marketing Corp. 271,000 23,153,562
CB Richard Ellis
Services, Inc.+ 1,146,500 23,073,312
CSG Systems
International, Inc.+ 517,700 19,996,162
Fiserv, Inc.+ 318,300 18,640,444
Harte-Hanks
Communications, Inc. 551,000 13,912,750
New York Restaurant
Group, Inc.+# 336,786 3,249,985
Nielsen Media Research, Inc. 595,000 16,288,125
On Assignment, Inc.+ 745,400 22,594,937
Preview Travel, Inc.+ 390,500 10,153,000
QRS Corp.+ 654,267 35,984,685
------------
209,688,287
------------
Communications & Media (10.1%)
Abovenet Communications,
Inc+ 80,000 6,850,000
Adelphia Communications
Corp. Class A+ 369,500 25,218,375
Central European Media
Enterprises, Ltd. Class A+ 1,379,453 11,294,271
Earthlink Network, Inc. + 212,800 14,669,900
Heftel Broadcasting Corp.+ 406,700 22,114,312
Infoseek Corp.+ 390,000 19,914,375
Network Event Theater, Inc+# 761,905 11,190,480
Network Event Theater, Inc.+# 888,889 4,000,000
Outdoor Systems, Inc.+ 1,427,288 35,949,804
TCA Cable Television, Inc. 704,800 35,107,850
------------
186,309,367
------------
Computers (12.8%)
Citrix Systems, Inc.+ 1,795,300 76,300,250
Comdisco,Inc 910,300 23,952,269
Critical Path, Inc.+ 92,400 9,193,800
Excalibur Technologies Corp.+ 200,000 3,100,000
Excalibur Technologies
Corp.+# 200,000 2,000,000
National Instruments Corp.+ 644,917 21,927,178
Number of
Shares Value
--------- -----
COMMON STOCK (cont'd)
Computers (cont'd)
Network Appliance, Inc. 201,200 $ 10,122,875
Safeguard Scientific, Inc.+ 170,500 13,810,500
Siebel Systems, Inc.+ 442,400 17,004,750
Transactions Systems
Architects, Inc. Class A+ 1,323,500 42,931,031
Verisign, Inc+ 119,500 13,742,500
Visual Networks, Inc.+ 15,000 420,937
------------
234,506,090
------------
Consumer Non-Durables (0.9%)
Central Garden & Pet Co.+ 1,167,600 16,346,400
------------
Consumer Services (2.7%)
DeVRY, Inc.+ 1,221,896 32,227,507
ITT Educational Services, Inc.+ 723,950 17,782,022
------------
50,009,529
------------
Electronics (12.3%)
Avant! Corp.+ 997,900 13,471,650
Burr-Brown Corp.+ 865,397 22,933,020
Cognex Corp.+ 628,600 18,229,400
Conexant Systems, Inc.+ 355,000 14,466,250
General Instrument Corp. + 424,900 15,508,850
Lattice Semiconductor Corp.+ 63,900 2,611,912
LSI Logic Corp.+ 500,400 17,013,600
Maxim Integrated Products,
Inc.+ 566,700 31,735,200
Novellus Systems, Inc.+ 156,100 7,375,725
Synopsys, Inc.+ 303,100 14,283,587
Uniphase Corp.+ 333,600 40,490,700
Vitesse Semiconductor Corp.+ 585,200 27,102,075
------------
225,221,969
------------
Energy (0.0%)
Chaparral Resources, Inc.+# 13,889 215,278
------------
Financial Services (3.4%)
Ambac Financial Group, Inc. 500,400 30,211,650
Reinsurance Group of
America, Inc. 1,070,150 32,372,037
------------
62,583,687
------------
Food, Beverages & Tobacco (0.2%)
Ben & Jerry's Homemade, Inc.
Class A+ 146,800 4,266,375
------------
Healthcare (4.5%)
Alternative Living Services,
Inc.+ 660,100 14,687,225
Concentra Managed Care,
Inc. 1,422,400 19,291,300
See Accompanying Notes to Financial Statements.
9
<PAGE>
Warburg Pincus Emerging Growth Fund
Statement of Net Assets (cont'd)--April 30, 1999 (Unaudited)
- --------------------------------------------------------------------------------
Number of
Shares Value
--------- -----
COMMON STOCK (cont'd)
Healthcare (cont'd)
Focal, Inc.+ 899,570 $ 7,758,791
Schein (Henry), Inc.+ 773,400 20,253,412
Sunrise Assisted Living, Inc.+ 504,200 20,168,000
------------
82,158,728
------------
Industrial Manufacturing
& Processing (0.8%)
Electronics for Imaging, Inc.+ 298,100 14,103,856
------------
Leisure & Entertainment (7.7%)
Coach USA, Inc.+ 743,900 17,667,625
Electronic Arts, Inc. 458,600 23,302,613
Fairfield Communities, Inc.+ 1,485,200 19,121,950
Family Golf Centers, Inc.+ 201,300 1,446,844
Premier Parks, Inc.+ 998,100 34,496,831
Sunterra Corp.+ 1,928,600 20,732,450
Vistana, Inc.+ 1,672,400 24,876,950
------------
141,645,263
------------
Lodging & Restaurants (1.9%)
Extended Stay America, Inc.+ 1,175,500 12,342,750
Promus Hotel Corp.+ 601,200 21,643,200
------------
33,985,950
------------
Oil Services (2.9%)
Nabors Industries, Inc.+ 1,175,000 24,160,938
Petroleum Geo-Services
ADR+ 1,742,038 29,179,137
------------
53,340,075
------------
Pharmaceuticals (1.1%)
Teva Pharmaceutical Industries,
Ltd. PLC ADR 436,500 19,969,875
------------
Publishing (2.7%)
Reader's Digest Assn., Inc.
Class A 119,100 4,235,494
Scholastic Corporation+ 514,900 24,345,116
Wiley (John) & Sons, Inc.
Class A 536,600 21,698,763
------------
50,279,373
------------
Real Estate (0.2%)
Indymac Mortgage
Holdings, Inc. 174,200 2,874,300
------------
Retail (6.4%)
BJ's Wholesale Club, Inc. 662,300 17,592,344
Insight Enterprises, Inc. 611,600 16,513,200
Payless ShoeSource, Inc.+ 487,100 23,593,906
PETsMART, Inc.+ 2,974,800 27,702,825
Number of
Shares Value
--------- -----
COMMON STOCK (cont'd)
Retail (cont'd)
Ross Stores, Inc. 352,900 $ 16,211,344
Williams-Sonoma, Inc.+ 552,400 16,019,600
--------------
117,633,219
--------------
Telecommunications & Equipment (7.7%)
Concentric Networking Corp.+ 182,100 15,205,350
Corecomm Ltd.+ 63,900 2,979,338
Exodus Communications, Inc.+ 193,400 17,430,175
FORE Systems, Inc+ 795,500 26,848,125
Gilat Satellite Networks+ 340,300 17,695,600
McLeodUSA, Inc.+ 217,500 12,193,594
RCN Corp.+ 421,700 20,505,163
Scientific Atlanta, Inc. 345,700 10,975,975
Western Wireless Corp.
Class A 436,200 17,911,463
--------------
141,744,783
--------------
Transportation (0.9%)
Mark VII, Inc.+ 1,119,538 15,953,417
--------------
TOTAL COMMON STOCK
(Cost $1,326,303,837) 1,708,799,446
--------------
PREFERRED STOCK (0.5%)
Consumer Services (0.1%)
Opal Concepts, Inc. Series B# 792,603 2,000,000
--------------
Healthcare (0.1%)
Women First Healthcare,
Inc.+# 150,000 1,500,000
--------------
Transportation (0.3%)
Dealer Solutions
Holdings, Inc.+# 2,222,222 5,000,000
--------------
TOTAL PREFERRED STOCK
(Cost $8,499,999) 8,500,000
--------------
Par
-----
BONDS (0.4%)
Comptek Research, Inc. 8.5%
Convertible Debenture Due
04/01/04# $ 7,000,000 7,000,000
Women First Healthcare 9%
Promissory Note Due
03/01/00# 680,000 680,000
--------------
TOTAL BONDS
(Cost $7,680,000) 7,680,000
--------------
See Accompanying Notes to Financial Statements.
10
<PAGE>
Warburg Pincus Emerging Growth Fund
Statement of Net Assets (cont'd)--April 30, 1999 (Unaudited)
- --------------------------------------------------------------------------------
Par Value
--- -----
WARRANTS (0.0%)
Dealer Solutions Holdings,
Inc. Warrants# $ 431,111 $ 0
Women First Healthcare
Warrants# 5,516 0
--------------
TOTAL WARRANTS
(Cost $0) 0 0
--------------
SHORT-TERM INVESTMENTS (5.6%)
Institutional Money Market
Trust 14,210,719 14,210,719
RBB Money Market Fund 87,998,488 87,998,488
--------------
TOTAL SHORT TERM INVESTMENTS
(Cost $102,209,207) 102,209,207
--------------
TOTAL INVESTMENTS AT VALUE (99.5%)
(Cost $1,444,693,043*) 1,827,188,653
--------------
OTHER ASSETS IN EXCESS
OF LIABILITIES (0.5%) 9,592,328
--------------
NET ASSETS (100%) (applicable to
40,435,068 Common Class shares and
7,589,427 Advisor Class shares) $1,836,780,981
==============
NET ASSET VALUE, offering and
redemption price per Common Class
shares ($1,555,696,693 divided
by 40,435,068) $ 38.47
==============
NET ASSET VALUE, offering and
redemption price per Advisor Class shares
($281,084,288 divided by 7,589,427) $ 37.04
==============
INVESTMENT ABBREVIATIONS
ADR = American Depository Receipt
- --------------------------------------------------------------------------------
+ Non-income producing security.
# Restricted security.
* Cost for federal income tax purposes is $1,445,408,834.
See Accompanying Notes to Financial Statements.
11
<PAGE>
Warburg Pincus Small Company Value Fund
Statement of Net Assets--April 30, 1999 (Unaudited)
- --------------------------------------------------------------------------------
Number of
Shares Value
--------- -----
COMMON STOCK (95.0%)
Aerospace & Defense (3.3%)
REMEC, Inc.+ 22,300 $ 288,506
Tristar Aerospace Co.+ 100,700 1,069,937
----------
1,358,443
----------
Banks & Savings & Loans (6.9%)
Century Bancorp, Inc. Class A 56,700 1,013,512
Imperial Bancorp 32,700 629,475
Prosperity Bancshares, Inc.+ 42,350 555,844
Quaker City Bancorp, Inc.+ 14,421 225,328
Texas Regional Bancshares, Inc. 13,818 395,972
----------
2,820,131
----------
Building & Building Materials (6.3%)
Cavalier Homes, Inc. 20,592 194,337
Elcor Corp. 15,400 594,825
Juno Lighting, Inc. 43,274 984,483
Walter Industries, Inc.+ 70,500 801,937
----------
2,575,582
----------
Business Services (2.8%)
Graco, Inc. 21,000 661,500
Interim Services, Inc.+ 28,500 495,188
----------
1,156,688
----------
Capital Equipment (2.9%)
Applied Power, Inc. Class A 38,200 1,205,688
----------
Chemicals (1.6%)
Ferro Corp. 23,300 645,119
----------
Conglomerates (4.3%)
Gaylord Containers Corp.,
Class A+ 142,351 1,192,190
Watts Industries, Inc. Class A 37,461 575,963
----------
1,768,153
----------
Consumer Durables (10.7%)
Harman International
Industries, Inc. 26,800 1,231,125
Heilig-Meyers Co. 188,479 1,107,314
La-Z-Boy, Inc. 25,986 511,599
Sturm, Ruger & Co., Inc. 53,900 572,688
Superior Industries
International, Inc. 38,077 951,925
----------
4,374,651
----------
Consumer Non-Durables (8.5%)
Central Garden & Pet Co.+ 57,168 800,352
Home Products International,
Inc.+ 65,610 565,886
Nautica Enterprises, Inc. 13,100 177,669
Number of
Shares Value
--------- -----
COMMON STOCK (cont'd)
Consumer Non-Durables (cont'd)
Nine West Group, Inc.+ 6,100 $ 173,850
Timberland Co. (The), Class A+ 8,700 602,475
Westpoint Stevens, Inc.+ 33,500 1,147,375
----------
3,467,607
----------
Electronics (1.5%)
Avant! Corp.+ 29,100 392,850
Burr-Brown Corp.+ 8,000 212,000
----------
604,850
----------
Financial Services (12.2%)
Amerin Corp.+ 43,100 1,010,156
Commerce Group, Inc. 20,400 464,100
HCC Insurance Holdings, Inc. 43,825 925,803
National Western Life Insurance
Co. Class A+ 11,700 1,161,225
StanCorp Financial Group, Inc.+ 19,000 457,188
Terra Nova (Bermuda)
Holdings, Ltd. 18,185 408,026
Webster Financial Corp. 18,300 562,725
----------
4,989,223
----------
Healthcare (3.5%)
Foundation Health Systems, Inc.
Class A+ 23,900 330,119
Morrison Health Care, Inc. 30,200 566,250
Total Renal Care Holdings, Inc.+ 37,200 516,150
----------
1,412,519
----------
Leisure & Entertainment (2.9%)
SCP Pool Corp.+ 63,513 1,167,051
----------
Lodging & Restaurants (1.4%)
Ryan's Family Steak
Houses, Inc.+ 46,418 574,423
----------
Metals & Mining (1.7%)
Ryerson Tull, Inc. 29,793 675,929
----------
Oil Services (4.8%)
Evergreen Resources, Inc.+ 18,500 420,875
Global Industries, Ltd.+ 68,900 848,331
Varco International, Inc.+ 61,652 697,438
----------
1,966,644
----------
Paper & Forest Products (4.6%)
Caraustar Industries, Inc. 28,730 732,615
Wausau-Mosinee Paper Corp. 68,880 1,136,520
----------
1,869,135
----------
Real Estate (2.2%)
Western Water Co.+ 239,300 897,375
----------
See Accompanying Notes to Financial Statements.
12
<PAGE>
Warburg Pincus Small Company Value Fund
Statement of Net Assets (cont'd)--April 30, 1999 (Unaudited)
- --------------------------------------------------------------------------------
Number of
Shares Value
--------- -----
COMMON STOCK (cont'd)
Retail (2.1%)
Finish Line, Inc.+ 26,900 $ 405,181
Ross Stores, Inc. 10,100 463,969
-----------
869,150
-----------
Transportation (5.3%)
Coach USA, Inc.+ 23,500 558,125
Landstar Systems, Inc.+ 29,419 1,145,502
M.S. Carriers, Inc.+ 14,500 462,188
-----------
2,165,815
-----------
Utilities-Electric (5.5%)
Commonwealth Energy System 23,800 965,388
Idacorp, Inc. 29,142 917,973
UniSource Energy Corp.+ 35,600 384,925
-----------
2,268,286
-----------
TOTAL COMMON STOCK
(Cost $35,722,047) 38,832,462
-----------
Par
---
CONVERTIBLE BONDS (0.4%)
Electronics (0.4%)
Ea Industries, Inc. Series A
Convertible Notes 6.00%,
4/30/99 (NR,NR)(1)+
(Cost $1,500,000)
$ 1,500,000 150,000
-----------
SHORT TERM INVESTMENTS (0.0%)
RBB Money Market Fund
(Cost $464) 464 464
-----------
WARRANTS (0.0%)
Ea Industries, Inc. Six Month
Warrants (Exercisable for
purchase of 75,000 Common
Shares.)(1) (Cost $110,437) 1 0
-----------
Value
-----
TOTAL INVESTMENTS AT VALUE (95.4%)
(Cost $37,332,949**) $39,982,926
-----------
OTHER ASSETS IN EXCESS
OF LIABILITIES (4.6%) 1,905,326
-----------
NET ASSETS (100%) (applicable to
3,172,288 Common Class shares
and 4,080 Advisor Class shares) $40,888,252
===========
NET ASSET VALUE, offering and
redemption price per Common Class shares
($40,836,136 divided by 3,172,288) $ 12.87
===========
NET ASSET VALUE, offering and
redemption price per Advisor Class shares
($52,116 divided by 4,080) $ 12.77
===========
INVESTMENT ABBREVIATIONS
NR = Not Rated
- --------------------------------------------------------------------------------
+ Non-income producing security.
* Restricted security.
1 Illiquid security.
+ Credit ratings given by Moody's Investors Service, Inc. and Standard & Poor's
Ratings Group are unaudited.
** Cost for federal income tax purposes is $37,349,161.
See Accompanying Notes to Financial Statements.
13
<PAGE>
Warburg Pincus Small Company Growth Fund
Statement of Net Assets--April 30, 1999 (Unaudited)
- --------------------------------------------------------------------------------
Number of
Shares Value
--------- -----
COMMON STOCK (90.1%)
Aerospace & Defense (1.1%)
Tristar Aerospace Co.+ 6,300 $ 66,937
--------
Building & Building Materials (1.0%)
American Woodmark Corp. 1,600 61,600
--------
Business Services (8.2%)
Acxiom Corp. 2,800 70,700
Getty Images, Inc.+ 3,800 98,800
INSpire Insurance Solutions, Inc.+ 5,300 115,275
Kroll-O'Gara Co. + 2,800 67,025
Market Guide, Inc.+ 3,100 56,575
QRS Corp.+ 1,500 82,500
--------
490,875
--------
Communications & Media (10.3%)
Central European Media
Enterprises, Ltd. Class A+ 3,800 31,112
Digital River, Inc. 1,100 42,487
Entercom Communications Corp. 1,600 59,400
Granite Broadcasting Corp.+ 7,600 57,475
Heftel Broadcasting Corp.+ 1,900 103,312
Infospace.Com, Inc. 500 71,656
Metro Networks, Inc.+ 1,300 58,500
Mpath Interactive, Inc.+ 1,800 70,875
Network Event Theater, Inc. 6,600 96,937
Xoom.com, Inc. 400 28,000
--------
619,754
--------
Computers (12.9%)
Business Objects S.A. ADR+ 2,600 60,937
Concord Communications, Inc. 400 17,900
Emulex Corp. 1,500 66,187
Excalibur Technologies Corp.+ 2,900 44,950
Exodus Communications, Inc. 600 54,075
Harmonic Lightwaves, Inc. 1,200 54,750
Legato Systems, Inc. 800 32,350
Mercury Interactive Corp.+ 1,600 45,100
Micrografx, Inc.+ 3,000 24,187
Radiant Systems, Inc.+ 16,200 184,275
Remedy Corp.+ 2,800 49,000
Safeguard Scientific, Inc. 300 24,300
Transactions Systems Architects,
Inc. Class A+ 1,800 58,387
Verticalnet, Inc. 500 56,750
--------
773,148
--------
Consumer Non-Durables (0.8%)
Central Garden & Pet Co.+ 3,400 47,600
--------
Number of
Shares Value
--------- -----
COMMON STOCK (cont'd)
Consumer Services (1.9%)
DeVRY, Inc.+ 1,800 $ 47,475
ITT Educational Services, Inc.+ 600 14,737
Strayer Education, Inc. 1,500 51,938
--------
114,150
--------
Electronics (13.1%)
ATMI Inc.+ 2,100 48,300
Avant! Corp.+ 3,099 41,837
Burr-Brown Corp.+ 2,600 68,900
Cerprobe Corp.+ 3,100 34,875
Concentric Networking Corp. 1,300 108,550
DII Group, Inc. 1,500 46,500
Etec Systems, Inc.+ 2,100 64,838
Novellus Systems, Inc. 2,400 113,400
Pairgain Technologies, Inc. 7,800 99,938
Peregrine Systems, Inc. 1,900 42,750
Photronics, Inc. 3,100 74,206
TranSwitch Corp. 1,000 44,000
--------
788,094
--------
Energy (0.8%)
Stone Energy Corp.+ 1,500 50,906
--------
Environmental Services (1.0%)
Casella Waste Systems, Inc.+ 2,300 57,500
--------
Financial Services (0.6%)
Reinsurance Group of
America, Inc.+ 1,200 36,300
--------
Food, Beverages & Tobacco (3.4%)
Ben & Jerry's Homemade,
Inc. Class A 3,200 93,000
Foodmaker, Inc. 2,100 50,663
NPC International, Inc. 3,400 61,200
--------
204,863
--------
Healthcare (7.6%)
Advance Paradigm, Inc.+ 1,700 89,250
Hanger Orthopedic Group, Inc.+ 4,000 58,500
Mid Atlantic Medical Services, Inc.+ 3,400 31,025
Minimed, Inc.+ 1,600 100,000
Renal Care Group, Inc.+ 2,700 56,363
Sunrise Assisted Living, Inc.+ 1,400 56,000
VWR Corp.+ 2,500 64,063
--------
455,201
--------
Industrial Manufacturing & Processing (1.2%)
Advanced Energy Industries, Inc. 2,600 71,988
--------
See Accompanying Notes to Financial Statements.
14
<PAGE>
Warburg Pincus Small Company Growth Fund
Statement of Net Assets (cont'd)--April 30, 1999 (Unaudited)
- --------------------------------------------------------------------------------
Number of
Shares Value
--------- -----
COMMON STOCK (cont'd)
Leisure & Entertainment (8.9%)
American Classic Voyages Co. 3,100 $ 55,413
Championship Auto Racing
Teams, Inc. + 2,100 64,706
Coach USA, Inc.+ 2,000 47,500
Fairfield Communities, Inc.+ 12,400 159,650
Premier Parks, Inc.+ 2,400 82,950
Sunterra Corp. 4,800 51,600
Vistana, Inc.+ 4,700 69,913
--------
531,732
--------
Miscellaneous (1.0%)
MedQuist, Inc.+ 1,700 58,225
--------
Oil Services (4.0%)
BJ Services Co. 3,200 85,600
Cooper Cameron Corp.+ 800 30,900
Petroleum Geo - Services ADR+ 3,900 65,325
Smith International, Inc.+ 1,300 58,338
--------
240,163
--------
Pharmaceuticals (4.4%)
Accredo Health, Inc. 2,900 64,163
ChiRex, Inc. + 2,600 67,600
Sepracor Inc.+ 800 67,600
Serologicals Corp.+ 2,850 21,375
Telebanc Financial Corp. 400 41,450
--------
262,188
--------
Retail (1.9%)
99 Cents Only Stores + 825 38,878
ONSALE, Inc. 1,400 35,525
Value America, Inc. 1,000 39,438
--------
113,841
--------
Number of
Shares Value
--------- -----
COMMON STOCK (cont'd)
Telecommunications & Equipment (5.0%)
Gilat Satellite Networks+ 1,400 $ 72,800
Omnipoint Corp. 1,500 26,625
Powerwave Technologies, Inc. 2,000 60,750
Stanford Communications, Inc. 3,300 59,400
Viatel, Inc. 1,700 78,200
----------
297,775
----------
Transportation (1.0%)
Varlen Corp. 2,200 61,600
----------
TOTAL COMMON STOCK
(Cost $4,681,209) 5,404,440
----------
SHORT-TERM INVESTMENTS (10.1%)
Institutional Money Market Trust 319,523 319,523
Institutional Money Market Trust 286,740 286,740
----------
TOTAL SHORT TERM INVESTMENTS
(Cost $606,263) 606,263
----------
TOTAL INVESTMENTS AT VALUE
(100.2%)(Cost $5,287,472*) 6,010,703
----------
LIABILITIES IN EXCESS OF
OTHER ASSETS (0.2%) (13,090)
----------
NET ASSETS (100.0%) (applicable to
464,229 Common Class shares) 5,997,613
==========
NET ASSET VALUE, offering and
redeemption price per Common Class shares
($5,997,613 divided by 464,229) $ 12.92
==========
INVESTMENT ABBREVIATIONS
ADR = American Depository Receipt
- --------------------------------------------------------------------------------
+ Non-income producing security.
* Cost for federal income tax purposes is $5,306,120.
See Accompanying Notes to Financial Statements.
15
<PAGE>
Warburg Pincus Post-Venture Capital Fund
Statement of Net Assets--April 30, 1999 (Unaudited)
- --------------------------------------------------------------------------------
Number of
Shares Value
--------- -----
COMMON STOCK (94.2%)
Aerospace & Defense (1.3%)
Orbital Sciences Corp.+ 37,200 $ 783,525
----------
Business Services (10.3%)
BISYS Group, Inc.+ 17,200 872,900
Career Blazers, Inc.+# 4,000 9,000
CSG Systems International,
Inc.+ 21,800 842,025
Lason Holdings, Inc.+ 18,000 712,125
New York Restaurant Group,
Inc.+# 77,720 749,998
On Assignment, Inc.+ 20,100 609,281
Pharmaceutical Product
Development, Inc.+ 30,600 891,225
QRS Corp.+ 16,300 896,500
Saatchi & Saatchi PLC ADR 30,700 590,975
----------
6,174,029
----------
Communications & Media (15.8%)
America Online, Inc.+ 8,000 1,142,000
At Home Corp. Series A+ 8,800 1,266,650
Central European Media
Enterprises, Ltd. Class A+ 60,600 496,162
Chancellor Media Corp.
Class A+ 14,000 768,250
Heftel Broadcasting Corp.+ 30,900 1,680,187
Infoseek Corp.+ 8,100 413,606
Outdoor Systems, Inc.+ 35,075 883,452
USA Networks, Inc.+ 36,600 1,367,925
Yahoo! Inc.+ 8,400 1,467,375
----------
9,485,607
----------
Computers (10.5%)
Citrix Systems, Inc.+ 16,900 718,250
Concord Communications,
Inc.+ 14,500 648,875
Exodus Communications,
Inc.+ 14,400 1,297,800
Intuit, Inc.+ 9,000 775,125
Micrografx, Inc.+ 37,500 302,344
Novell, Inc.+ 31,200 694,200
Transactions Systems
Architects, Inc. Class A+ 17,900 580,631
Verisign, Inc+ 4,500 517,500
Women.com Networks+# 227,964 750,002
----------
6,284,727
----------
Consumer Non-Durables (1.4%)
Dial Corp. 25,200 856,800
----------
Consumer Services (2.1%)
DeVRY, Inc.+ 48,300 1,273,912
----------
Number of
Shares Value
--------- -----
COMMON STOCK (cont'd)
Electronics (10.5%)
KLA-Tencor Corp.+ 12,100 $ 600,462
Maxim Integrated Products,
Inc.+ 28,300 1,584,800
Solectron Corp.+ 11,100 538,350
Electronics (cont'd)
Uniphase Corp.+ 12,800 1,553,600
Vitesse Semiconductor Corp.+ 27,400 1,268,962
Xilinx, Inc.+ 17,200 784,750
----------
6,330,924
----------
Energy (0.1%)
Chaparral Resources, Inc.+# 5,556 86,111
----------
Financial Services (6.8%)
Amvescap PLC ADR 18,560 1,012,680
E*Trade Group, Inc.+ 9,400 1,085,700
Nationwide Financial Services,
Inc. 23,800 1,103,725
Reinsurance Group of America,
Inc. 30,000 907,500
----------
4,109,605
----------
Food, Beverages & Tobacco (1.7%)
Ben & Jerry's Homemade, Inc.
Class A+ 34,400 999,750
----------
Foreign Currency (0.0%)
UK Sterling 6 9
----------
Healthcare (2.0%)
AmeriSource Health Corp.
Class A+ 21,400 592,512
Concentra Managed Care,
Inc.+ 22,900 310,581
Total Renal Care Holdings,
Inc.+ 22,900 317,737
----------
1,220,830
----------
Leisure & Entertainment (2.9%)
Coach USA, Inc.+ 20,700 491,625
Premier Parks, Inc. 35,400 1,223,513
----------
1,715,138
----------
Lodging & Restaurants (1.0%)
Tricon Global Restaurants, Inc.+ 9,400 605,125
----------
Oil Services (2.4%)
Cooper Cameron Corp.+ 19,100 737,738
Petroleum Geo - Services+ 41,300 691,775
----------
1,429,513
----------
Pharmaceuticals (3.5%)
Geltex Pharmaceuticals, Inc.+ 29,500 505,188
Medimmune, Inc. 10,000 551,250
Watson Pharmaceuticals, Inc.+ 25,600 1,036,800
----------
2,093,238
----------
See Accompanying Notes to Financial Statements.
16
<PAGE>
Warburg Pincus Post-Venture Capital Fund
Statement of Net Assets (cont'd)--April 30, 1999 (Unaudited)
- --------------------------------------------------------------------------------
Number of
Shares Value
--------- -----
COMMON STOCK (cont'd)
Publishing (4.0%)
Central Newspapers, Inc. Class A+ 37,400 $1,269,263
Scholastic Corp.+ 23,700 1,120,566
----------
2,389,829
----------
Real Estate (0.5%)
Fairfield Communities, Inc.+ 23,300 299,988
----------
Retail (3.6%)
Amazon.com, Inc.+ 3,000 516,188
CdNow, Inc.+ 31,000 600,625
Staples, Inc.+ 35,100 1,053,000
----------
2,169,813
----------
Number of
Shares Value
--------- -----
COMMON STOCK (cont'd)
Telecommunications & Equipment (13.8%)
Carrier Access Corp.+ 2,015 $ 104,654
Cisco Systems, Inc.+ 16,950 1,933,359
CMGI, Inc.+ 2,600 661,863
Gilat Satellite Networks, Ltd.+ 22,600 1,175,200
MCI WorldCom, Inc.+ 21,700 1,783,469
Pinnacle Holdings, Inc.+ 30,100 617,050
Shaw Communications,
Inc. Class B+ 46,900 1,899,450
Viatel, Inc.+ 2,200 101,200
----------
8,276,245
----------
TOTAL COMMON STOCK
(Cost $41,514,520) 56,584,718
----------
<TABLE>
<CAPTION>
Par
Maturity Date (000) Value
-------------- ------ ------
<S> <C> <C> <C>
UNITED STATES TREASURY OBLIGATIONS (1.4%)
U.S. Treasury Bills (0.6%)**
U.S. Treasury Bills 4.280% 06/03/99 $234 $ 233,120
U.S. Treasury Bills 4.290% 01/06/00 114 110,497
----------
343,617
----------
U.S. Treasury Notes (0.8%)**
U.S. Treasury Notes 5.875% 11/15/99 250 251,445
U.S. Treasury Notes 5.875% 11/30/01 260 264,608
----------
516,053
----------
TOTAL UNITED STATES TREASURY OBLIGATIONS (Cost $852,787) 859,670
----------
</TABLE>
<TABLE>
<CAPTION>
Capital
Share
-------
<S> <C> <C>
PRIVATE FUND INVESTMENTS (2.5%)
Boston Ventures V, LP 284,613 $ 284,613
New Enterprise Associates VII, LP 1,230,066 1,230,066
----------
TOTAL PRIVATE FUND INVESTMENTS (Cost $1,044,506) 1,514,679
----------
<CAPTION>
Number of
Shares
---------
<S> <C> <C>
SHORT TERM FUND INVESTMENTS (2.5%)
RBB Money Market Fund (Cost $1,477,917) 1,477,917 1,477,917
----------
TOTAL INVESTMENTS AT VALUE (100.6%) (Cost $44,889,730*) 60,436,984
LIABILITIES IN EXCESS OF OTHER ASSETS (0.6%) (383,307)
----------
NET ASSETS (100%) (applicable to 2,987,402 Common Class shares and
73,928 Advisor Class shares) $60,053,677
==========
NET ASSET VALUE, offering and redemption price per Common Class shares
($58,623,803 divided by 2,987,402) $ 19.62
==========
NET ASSET VALUE, offering and redemption price per Advisor Class shares
($1,429,874 divided by 73,928) $ 19.34
==========
</TABLE>
INVESTMENT ABBREVIATIONS
ADR = American Depository Receipt
-------------------------------------------------------------------------------
+ Non-income producing security.
# Restricted security.
* Cost for federal income tax purposes is $44,889,730.
** These securities have been segregated with the fund's custodian to cover open
capital commitments of $842,370 in private fund investments.
17
<PAGE>
Warburg Pincus Funds
Statements of Operations
For the Six Months Ended April 30, 1999 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Warburg Pincus
Emerging Growth
Fund
------------------
<S> <C>
Investment Income:
Dividends $ 1,041,697
Interest 3,127,387
-------------
Total investment income 4,169,084
-------------
Expenses:
Investment Advisory 8,680,727
Administrative services 1,698,063
Audit 23,604
Custodian/Sub-custodian 174,692
Directors/Trustees 7,219
Interest 5,951
Legal 61,178
Offering/Organizational costs 0
Printing 115,810
Registration 58,569
Shareholder servicing/Distribution 786,828
Transfer agent 525,988
Miscelleneous 44,230
-------------
12,182,859
Less: fees waived, expenses reimbursed and transfer agent offsets (40,168)
-------------
Total expenses 12,142,691
-------------
Net investment loss (7,973,607)
-------------
Net Realized and Unrealized Gain (Loss) from Investments and
Foreign Currency Related Items:
Net realized gain from security and other related transactions 214,905,773
Net change in unrealized appreciation (depreciation) from investments and
foreign currency related items 50,641,959
-------------
Net realized and unrealized gain (loss) from investments and
foreign currency related items 265,547,732
-------------
Net increase (decrease) in net assets resulting from operations $ 257,574,125
=============
</TABLE>
18
<PAGE>
<TABLE>
<CAPTION>
Warburg Pincus Warburg Pincus Warburg Pincus
Small Company Small Company Post-Venture
Value Fund Growth Fund Capital Fund
-------------- -------------- --------------
<S> <C> <C> <C>
Investment Income:
Dividends $ 217,598 $ 0 $ 23,057
Interest 60,056 5,614 45,455
------------- ------------- -------------
Total investment income 277,654 5,614 68,512
------------- ------------- -------------
Expenses:
Investment Advisory 285,290 25,980 430,780
Administrative services 58,327 7,114 70,928
Audit 5,900 5,343 6,321
Custodian/Sub-custodian 18,948 14,140 10,426
Directors/Trustees 6,041 5,245 5,562
Interest 1,412 0 2,591
Legal 14,876 10,581 7,095
Offering/Organizational costs 7,390 0 15,989
Printing 13,822 2,221 7,169
Registration 28,187 13,960 18,526
Shareholder servicing/Distribution 71,387 6,206 87,593
Transfer agent 79,114 4,819 55,723
Miscelleneous 4,202 1,130 2,732
------------- ------------- -------------
594,896 96,739 721,435
Less: fees waived, expenses reimbursed and transfer agent offsets (95,574) (60,367) (151,369)
------------- ------------- -------------
Total expenses 499,322 36,372 570,066
------------- ------------- -------------
Net investment loss (221,668) (30,758) (501,554)
------------- ------------- -------------
Net Realized and Unrealized Gain (Loss) from Investments and
Foreign Currency Related Items:
Net realized gain from security and other related transactions 5,106,698 758,530 11,449,490
Net change in unrealized appreciation (depreciation) from investments and
foreign currency related items (5,246,671) 511,735 3,605,703
------------- ------------- -------------
Net realized and unrealized gain (loss) from investments and
foreign currency related items (139,973) 1,270,265 15,055,193
------------- ------------- -------------
Net increase (decrease) in net assets resulting from operations $ (361,641) $ 1,239,507 $ 14,553,639
============= ============= =============
</TABLE>
See Accompanying Notes to Financial Statements.
19
<PAGE>
Warburg Pincus Funds
Statements of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Warburg Pincus
Emerging Growth
Fund
-------------------------------------
For the For the
Six Months Ended Year Ended
April 30, October 31,
---------------- ----------------
1999 1998
---------------- ----------------
(Unaudited)
<S> <C> <C>
From Operations:
Net Investment Loss $ (7,973,607) $ (11,226,871)
Net Realized gain/(loss) from security transactions 214,905,773 (47,452,269)
Net Realized gain from foreign currency related items 0 0
Net change in unrealized appreciation (depreciation) from
investments and foreign currency related items 50,641,959 (136,862,010)
--------------- ---------------
Net decrease in net assets resulting from operations 257,574,125 (195,541,150)
--------------- ---------------
From Distributions:
Distributions from net investment income
Common Shares 0 0
Advisor Shares 0 0
Distributions from realized gains
Common Shares 0 (92,762,400)
Advisor Shares 0 (25,707,966)
Distributions in excess of realized gains
Common Shares 0 0
Advisor Shares 0 0
--------------- ---------------
Net decrease in net assets from distributions 0 (118,470,366)
--------------- ---------------
From Capital Share Transactions:
Proceeds from sale of shares 339,624,049 883,019,817
Reinvested dividends 225 114,956,027
Net asset value of shares redeemed (603,961,505) (813,237,032)
--------------- ---------------
Net increase (decrease) in net assets from capital share
transactions (264,337,231) 184,738,812
--------------- ---------------
Net increase (decrease in net assets (6,763,106) (129,272,704)
Net Assets:
Beginning of period 1,843,544,087 1,972,816,791
--------------- ---------------
End of Period $ 1,836,780,981 $ 1,843,544,087
=============== ===============
Undistributed net investment income: $ 0 $ 0
=============== ===============
</TABLE>
20
<PAGE>
<TABLE>
<CAPTION>
Warburg Pincus
Small Company Value
Fund
----------------------------------
For the For the
Six Months Ended Year Ended
April 30, October 31,
---------------- --------------
1999 1998
---------------- --------------
(Unaudited)
<S> <C> <C>
From Operations:
Net Investment Loss $ (221,668) $ (709,432)
Net Realized gain/(loss) from security transactions 5,106,698 3,618,297
Net Realized gain from foreign currency related items 0 0
Net change in unrealized appreciation (depreciation) from
investments and foreign currency related items (5,246,671) (23,857,296)
--------------- ---------------
Net decrease in net assets resulting from operations (361,641) (20,948,431)
--------------- ---------------
From Distributions:
Distributions from net investment income
Common Shares 0 0
Advisor Shares 0 0
Distributions from realized gains
Common Shares (2,280,474) (20,763,827)
Advisor Shares (1,680) (35,216)
Distributions in excess of realized gains
Common Shares 0 0
Advisor Shares 0 0
--------------- ---------------
Net decrease in net assets from distributions (2,282,154) (20,799,043)
--------------- ---------------
From Capital Share Transactions:
Proceeds from sale of shares 20,825,740 63,737,618
Reinvested dividends 2,155,694 19,972,777
Net asset value of shares redeemed (59,820,282) (185,521,859)
--------------- ---------------
Net increase (decrease) in net assets from capital share
transactions (36,838,848) (101,811,464)
--------------- ---------------
Net increase (decrease in net assets (39,482,643) (143,558,938)
Net Assets:
Beginning of period 80,370,895 223,929,833
--------------- ---------------
End of Period $ 40,888,252 $ 80,370,895
=============== ===============
Undistributed net investment income: $ 0 $ 0
=============== ===============
</TABLE>
<TABLE>
<CAPTION>
Warburg Pincus
Small Company Growth
Fund
------------------------------------
For the For the
Six Months Ended Year Ended
April 30, October 31,
---------------- ------------
1999 1998
---------------- ------------
(Unaudited)
<S> <C> <C>
From Operations:
Net Investment Loss $ (30,758) $ (100,538)
Net Realized gain/(loss) from security transactions 758,530 (627,473)
Net Realized gain from foreign currency related items 0 0
Net change in unrealized appreciation (depreciation) from
investments and foreign currency related items 511,735 (1,065,613)
--------------- ---------------
Net decrease in net assets resulting from operations 1,239,507 (1,793,624)
--------------- ---------------
From Distributions:
Distributions from net investment income
Common Shares 0 (62,775)
Advisor Shares 0 0
Distributions from realized gains
Common Shares 0 0
Advisor Shares 0 0
Distributions in excess of realized gains
Common Shares 0 0
Advisor Shares 0 0
--------------- ---------------
Net decrease in net assets from distributions 0 (62,775)
--------------- ---------------
From Capital Share Transactions:
Proceeds from sale of shares 1,358,272 7,623,711
Reinvested dividends 0 53,996
Net asset value of shares redeemed (1,143,849) (13,254,497)
--------------- ---------------
Net increase (decrease) in net assets from capital share
transactions 214,423 (5,576,790)
--------------- ---------------
Net increase (decrease in net assets 1,453,930 (7,433,189)
Net Assets:
Beginning of period 4,543,683 11,976,872
--------------- ---------------
End of Period $ 5,997,613 $ 4,543,683
=============== ===============
Undistributed net investment income: $ 0 $ 0
=============== ===============
</TABLE>
<TABLE>
<CAPTION>
Warburg Pincus
Post-Venture Capital
Fund
-----------------------------------
For the For the
Six Months Ended Year Ended
April 30, October 31,
---------------- ------------
1999 1998
---------------- ------------
(Unaudited)
<S> <C> <C>
From Operations:
Net Investment Loss $ (501,554) $ (1,218,879)
Net Realized gain/(loss) from security transactions 11,449,490 2,591,623
Net Realized gain from foreign currency related items 0 0
Net change in unrealized appreciation (depreciation) from
investments and foreign currency related items 3,605,703 (7,014,438)
--------------- ---------------
Net decrease in net assets resulting from operations 14,553,639 (5,641,694)
--------------- ---------------
From Distributions:
Distributions from net investment income
Common Shares 0 0
Advisor Shares 0
Distributions from realized gains
Common Shares (96,730) 0
Advisor Shares (1,306) 0
Distributions in excess of realized gains
Common Shares 0 0
Advisor Shares 0 0
--------------- ---------------
Net decrease in net assets from distributions (98,036) 0
--------------- ---------------
From Capital Share Transactions:
Proceeds from sale of shares 11,239,507 33,368,512
Reinvested dividends 93,862 0
Net asset value of shares redeemed (34,649,992) (68,656,533)
--------------- ---------------
Net increase (decrease) in net assets from capital share
transactions (23,316,623) (35,288,021)
--------------- ---------------
Net increase (decrease in net assets (8,861,020) (40,929,715)
Net Assets:
Beginning of period 68,914,697 109,844,412
--------------- ---------------
End of Period $ 60,053,677 $ 68,914,697
=============== ===============
Undistributed net investment income: $ 0 $ 0
=============== ===============
</TABLE>
See Accompanying Notes to Financial Statements.
21
<PAGE>
Warburg Pincus Emerging Growth Fund
Financial Highlights
(For a Common Class Share of the Fund Outstanding Throughout Each Period)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the Six
Months Ended For the Year Ended October 31,
April 30, 1999 -------------------------------------------------------------------
PERIOD ENDED: (Unaudited) 1998 1997 1996 1995 1994
------------ ---------- ---------- ---------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Per-share data
Net asset value,
beginning of period $ 33.69 $ 39.66 $ 32.80 $ 29.97 $ 22.38 $ 23.74
---------- ---------- ---------- ---------- -------- --------
Investment Activities:
Net investment loss (0.20) (0.12) (0.19) (0.02) (0.05) (0.06)
Net gains or losses on
investments and foreign
currency related items (both
realized and unrealized) 4.98 (3.46) 7.12 4.60 7.64 0.06
---------- ---------- ---------- ---------- -------- --------
Total from investment
activities 4.78 (3.58) 6.93 4.58 7.59 0.00
---------- ---------- ---------- ---------- -------- --------
Distributions:
From net investment income 0.00 0.00 0.00 0.00 0.00 0.00
From realized capital gains 0.00 (2.39) (0.07) (1.75) 0.00 (1.36)
---------- ---------- ---------- ---------- -------- --------
Total distributions 0.00 (2.39) (0.07) (1.75) 0.00 (1.36)
---------- ---------- ---------- ---------- -------- --------
Net asset value, end of period $ 38.47 $ 33.69 $ 39.66 $ 32.80 $ 29.97 $ 22.38
========== ========== ========== ========== ======== ========
Total return 14.19%+ (9.40)% 21.18% 16.14% 33.91% 0.16%
Ratios/Supplemental Data:
Net assets, end of period
(000s omitted) $1,555,697 $1,532,521 $1,515,385 $1,104,684 $487,537 $240,664
Ratio of expenses to
average net assets 1.18%*@ 1.22%@ 1.22%@ 1.28%@ 1.26% 1.22%
Ratio of net loss to
average net assets (0.75)%* (0.48)% (0.59)% (0.63)% (0.58)% (0.58)%
Decrease reflected in above
operating expense ratios
due to waivers/
reimbursements 0.00% 0.00% 0.00% 0.00% 0.00% 0.04%
Portfolio turnover rate 78.35%+ 91.60% 87.03% 65.77% 84.82% 60.38%
</TABLE>
- --------------------------------------------------------------------------------
+ Non-annualized.
* Annualized.
@ Interest earned on uninvested cash balances is used to offset portions of
the transfer agent expense. These arrangements resulted in a reduction to
the net expense ratio by .00% for the six months ended April 30, 1999 and
by .00%, .01% and .01% for the three years ended October 31, 1998, 1997 and
1996, respectively. The operating expense ratios after reflecting these
arrangements were 1.18% for the six months ended April 30, 1999 and 1.22%,
1.21% and 1.27% for the years ended October 31, 1998, 1997 and 1996,
respectively.
22
<PAGE>
Warburg Pincus Small Company Value Fund
Financial Highlights
(For a Common Class Share of the Fund Outstanding Throughout Each Period)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the Six
Months Ended For the Year Ended October 31,
April 30, 1999 ----------------------------------------
PERIOD ENDED: (Unaudited) 1998 1997 1996**
------------ -------- ---------- --------
<S> <C> <C> <C> <C>
Per-share data
Net asset value, beginning of period $ 13.39 $ 18.77 $ 14.38 $ 10.00
----------- ----------- ----------- -----------
Investment Activities:
Net investment loss (0.17) (0.12) (0.08) (0.02)
Net gains or losses on investments and
foreign currency related items
(both realized and unrealized) 0.08 (3.33) 4.64 4.40
----------- ----------- ----------- -----------
Total from investment activities (0.09) (3.45) 4.56 4.38
----------- ----------- ----------- -----------
Distributions:
From net investment income 0.00 0.00 0.00 0.00
From realized capital gains (0.43) (1.93) (0.17) 0.00
----------- ----------- ----------- -----------
Total distributions (0.43) (1.93) (0.17) 0.00
----------- ----------- ----------- -----------
Net asset value, end of period $ 12.87 $ 13.39 $ 18.77 $ 14.38
=========== =========== =========== ===========
Total return (0.83)%+ (19.97)% 32.05% 43.80%+
Ratios/Supplemental Data:
Net assets, end of period (000s omitted) $ 40,836 $ 80,318 $ 223,675 $ 84,045
Ratio of expenses to average net assets 1.75%*@ 1.70%@ 1.70%@ 1.75%*@
Ratio of net loss to average net assets (0.78)%* (0.46)% (0.63)% (0.43)%*
Decrease reflected in above operating expense
ratios due to waivers/reimbursements 0.33%* 0.01% 0.03% 0.44%*
Portfolio turnover rate 71.60%+ 77.92% 105.87% 43.14%+
</TABLE>
- --------------------------------------------------------------------------------
@ Interest earned on uninvested cash balances is used to offset portions of
the transfer agent expense. These arrangements resulted in a reduction to
the net expense ratio by .00% for the six months ended April 30, 1999, and
by .00%, .01% and .00% for the year or period ended October 31, 1998, 1997
and 1996, respectively. The Common Shares' operating expense ratios after
reflecting these arrangements were 1.75% for the six months ended April 30,
1999 and 1.70%, 1.69% and 1.75% for the year or period ended October 31,
1998, 1997 and 1996, respectively.
+ Non-annualized.
* Annualized.
** For the period December 29, 1995 (commencement of operations) through October
31, 1996.
See Accompanying Notes to Financial Statements.
23
<PAGE>
Warburg Pincus Small Company Growth Fund
Financial Highlights
(For a Common Class Share of the Fund Outstanding Throughout Each Period)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the Six For the
Months Ended Year Ended October 31,
April 30, 1999 ------------------------
PERIOD ENDED: (Unaudited) 1998 1997**
------------ --------- ----------
<S> <C> <C> <C>
Per-share data
Net asset value, beginning of period $ 10.11 $12.25 $ 10.00
---------- -------- ----------
Investment Activities:
Net investment loss (0.06) (0.34) (0.04)
Net gains or losses on investments
(both realized and unrealized) 2.87 (1.74) 2.29
---------- -------- ----------
Total from investment activities 2.81 (2.08) 2.25
---------- -------- ----------
Distributions:
From net investment income 0.00 (0.06) 0.00
From realized capital gains 0.00 0.00 0.00
---------- -------- ----------
Total distributions 0.00 (0.06) 0.00
---------- -------- ----------
Net asset value, end of period $ 12.92 $10.11 $ 12.25
========== ======== ==========
Total return 22.95%+ (17.00)% 22.50%+
Ratios/Supplemental data:
Net assets, end of period (000s omitted) $ 5,998 $4,544 $11,977
Ratio of expenses to average net assets 1.40%*@ 1.40%@ 1.41%*@
Ratio of net loss to average net assets (1.18)%* (0.95)% (0.53)%*
Decrease reflected in above operating
expense ratios due to waivers/reimbursements 2.32%* 1.10% 3.66%*
Portfolio turnover rate 111.63%+ 114.97% 123.24%+
</TABLE>
- --------------------------------------------------------------------------------
@ Interest earned on uninvested cash balances is used to offset portions of
the transfer agent expense. These arrangements resulted in a reduction to
the net expense ratio by .00% for the six months ended April 30, 1999 and
by .00%, .01%, for the year or period ended October 31, 1998 and 1997,
respectively. The Common Shares' operating expense ratios after reflecting
these arrangements were 1.40% for the six months ended April 30, 1999 and
1.40% and 1.40% for the year or period ended October 31, 1998 and 1997,
respectively.
+ Non-annualized.
* Annualized.
** For the period December 31, 1996 (commencement of operations) through
October 31, 1997.
24
<PAGE>
Warburg Pincus Post-Venture Capital Fund
Financial Highlights
(For a Common Class Share of the Fund Outstanding Throughout Each Period)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the Six
Months Ended For the Year Ended October 31,
April 30, 1999 -------------------------------------------------------
PERIOD ENDED: (Unaudited) 1998 1997 1996 1995**
------------ -------- -------- -------- ------
<S> <C> <C> <C> <C> <C>
Per-Share data
Net asset value, beginning of period $ 16.09 $ 17.61 $ 16.03 $ 10.69 $ 10.00
----------- ----------- ----------- ----------- -----------
Investment Activities:
Net investment income or loss (0.55) (0.50) (0.35) (0.11) 0.00
Net gains or losses on investments
and foreign currency related items
(both realized and unrealized) 4.10 (1.02) 1.93 5.45 0.69
----------- ----------- ----------- ----------- -----------
Total from investment activities 3.55 (1.52) 1.58 5.34 0.69
----------- ----------- ----------- ----------- -----------
Distributions:
From net investment income 0.00 0.00 0.00 0.00 0.00
From realized capital gains (0.02) 0.00 0.00 0.00 0.00
----------- ----------- ----------- ----------- -----------
Total distributions (0.02) 0.00 0.00 0.00 0.00
----------- ----------- ----------- ----------- -----------
Net asset value, end of period $ 19.62 $ 16.09 $ 17.61 $ 16.03 $ 10.69
=========== =========== =========== =========== ===========
Total return 22.11%+ (8.63)% 9.86% 49.95% 6.90%+
Ratios/Supplemental Data:
Net assets, end of period (000s omitted) $ 58,624 $ 68,572 $ 109,575 $ 165,081 $ 3,024
Ratio of expenses to average net assets 1.65%*@ 1.65%@ 1.66%@ 1.66%@ 1.65%*
Ratio of net loss to average net assets (1.45)%* (1.30)% (1.27)% (1.13)% 0.25%*
Decrease reflected in above operating
expense ratios due to waivers/
reimbursements 0.44%* 0.41% 0.41% 0.66% 23.76%*
Portfolio turnover rate 50.50%+ 111.51% 197.56% 168.46% 16.90%+
</TABLE>
- --------------------------------------------------------------------------------
@ Interest earned on uninvested cash balances is used to offset portions of
the transfer agent expense. These arrangements resulted in a reduction to
the net expense ratio by .00% for the six months ended April 30, 1999 and
by .00%, .01% and .01% for the year or period ended October 31, 1998, 1997
and 1996, respectively. The operating expense ratios after reflecting these
arrangements were 1.65% for the six months ended April 30, 1999 and 1.65%,
1.65% and 1.65% for the year ended October 31, 1998, 1997 and 1996,
respectively.
+ Non-annualized.
* Annualized.
** For the period September 29, 1995 (commencement of operations) through
October 31, 1995.
See Accompanying Notes to Financial Statements.
25
<PAGE>
Warburg Pincus Funds
Notes to Financial Statements
April 30, 1999 (Unaudited)
- --------------------------------------------------------------------------------
1. Significant Accounting Policies
The Warburg Pincus Small Company Value Fund, Warburg Pincus Small Company
Growth Fund and the Warburg Pincus Post-Venture Capital Fund are registered
under the Investment Company Act of 1940, as amended (1940 Act), as diversified,
open-end management investment companies. The Warburg Pincus Emerging Growth
Fund is registered under the 1940 Act as a non-diversified, open-end management
investment company
Investment objectives for each Fund are as follows: the Emerging Growth
Fund seeks maximum capital appreciation; the Small Company Value Fund seeks
long-term capital appreciation; the Small Company Growth Fund seeks capital
growth; the Post-Venture Capital Fund seeks long-term growth of capital.
Each fund offers two classes of shares, one class being referred to as the
Common Class and one class being referred to as the Advisor Class. Effective
November 7, 1997, the Small Company Growth Fund closed generally to new
investors; the fund re-opened to all investors on November 10, 1998. Common
Class and Advisor Class shares in each fund represent an equal pro rata interest
in such fund, except that they bear different expenses which reflect the
difference in the range of services provided to them. Common Class shares for
the Small Company Value Fund, the Small Company Growth Fund and the Post-Venture
Capital Fund bear expenses paid pursuant to a shareholder servicing and
distribution plan at an annual rate .25% of the average daily net asset value of
each fund's Common Class. Advisor Class shares bear expenses paid pursuant to a
distribution plan at an annual rate not to exceed .75% of the average daily net
asset value of each fund's Advisor Class. Advisor Class shares are currently
bearing expenses of 50% of average daily net assets. At April 30, 1999, there
were no outstanding Advisor Class shares for the Small Company Growth Fund.
The net asset value of each fund is determined daily as of the close of
regular trading on the New York Stock Exchange. Each fund's investments are
valued at market value, which is generally determined using market quotations.
If no sales are reported, investments are generally valued at the mean between
the last reported bid and asked prices. If market quotations are not readily
available, securities and other assets are valued by another method that the
Board of Directors/Trustees believes accurately reflects fair value. Debt that
will mature in 60 days or less is valued on the basis of amortized cost, which
approximates market value, unless the Board determines that using this method
would not reflect an investment's value.
26
<PAGE>
Warburg Pincus Funds
Notes to Financial Statements (cont'd)
April 30, 1999 (Unaudited)
- --------------------------------------------------------------------------------
1. Significant Accounting Policies -- (cont'd)
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 is 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 of that class. The cost of
investments sold is determined by use of the specific identification method for
both financial reporting and income tax purposes.
Dividends from net investment income, if any, are declared and paid
annually. Distributions of net realized capital gains, if any, are declared and
paid annually for all funds. However, to the extent that a net realized capital
gain can be reduced by a capital loss carryover, such gain will not be
distributed. Income and capital gain distributions are determined in accordance
with federal income tax regulations which may differ from generally accepted
accounting principles.
No provision is made for federal taxes, as it is each fund's intention to
continue to qualify for and elect the tax treatment applicable to regulated
investment companies under the Internal Revenue Code of 1986, as amended, and
make the requisite distributions to its shareholders, which will be sufficient
to relieve it from federal income and excise taxes.
27
<PAGE>
Warburg Pincus Funds
Notes to Financial Statements (cont'd)
April 30, 1999 (Unaudited)
- --------------------------------------------------------------------------------
1. Significant Accounting Policies -- (cont'd)
Costs incurred in connection with organization of shares of each fund other
than Emerging Growth Fund have been deferred and are being amortized over a
period of five years from the date each fund commenced its operations.
Pursuant to an exemptive order issued by the Securities and Exchange
Commission, each fund, along with other Warburg Funds, transfers uninvested cash
balances to a pooled cash account, which is invested in repurchase agreements
secured by U.S. government securities. Securities, pledged as collateral for
repurchase agreements, are held by the funds' custodian bank until the
agreements mature. Each agreement requires that the market value of the
collateral be sufficient to cover payments of interest and principal; however,
in the event of default or bankruptcy by the counterpart to the agreement,
retention of the collateral may be subject to legal proceedings.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities at the
date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from these
estimates.
The funds have an arrangement with their transfer agent whereby interest
earned on uninvested cash balances was used to offset a portion of their
transfer agent expense. For the six months ended April 30, 1999, the funds
received credits or reimbursements under this arrangement as follows:
Fund Amount
---- --------
Emerging Growth $40,168
Small Company Value 902
Small Company Growth 104
Post-Venture Capital 1,230
2. Investment Adviser, Co-Administrators and Distributor
Warburg Pincus Asset Management, Inc. (Warburg), who is indirectly
controlled by Warburg, Pincus & Co., serves as each fund's investment adviser.
On February 15, 1999, Warburg Pincus & Co. and Credit Suisse Group announced
that they reached an agreement for Credit Suisse to acquire Warburg. Under the
terms of the arrangement, no immediate changes are planned to Warburg investment
portfolio managers and investment professionals. The Warburg Pincus Funds' Board
of Directors and shareholders have approved the "assignment" of each fund's
current invest-
28
<PAGE>
Warburg Pincus Funds
Notes to Financial Statements (cont'd)
April 30, 1999 (Unaudited)
- --------------------------------------------------------------------------------
2. Investment Adviser, Co-Administrators and Distributor -- (cont'd)
ment advisory agreement with Warburg. The transaction is expected to be
completed in mid-1999. For its advisory services, Warburg receives the following
fees based on each fund's average daily net assets:
Fund Annual Rate
------ -------------------------------------
Emerging Growth .90% of average daily net assets
Small Company Value 1.00% of average daily net assets
Small Company Growth 1.00% of average daily net assets
Post-Venture Capital 1.25% of average daily net assets
For the six months ended April 30, 1999, investment advisory fees,
voluntary waivers and reimbursements were as follows:
Gross Net Expense
Fund Advisory Fee Waiver Advisory Fee Reimbursements
- ---- -------------- ------ ------------ --------------
Emerging Growth $8,680,727 $ 0 $8,680,727 $ 0
Small Company Value 285,290 (83,710) 201,580 0
Small Company Growth 25,980 (25,980) 0 (31,685)
Post-Venture Capital 430,780 (150,139) 280,641 0
Abbott Capital Management, LLC (Abbott) serves as sub-investment adviser
for the Post-Venture Capital Fund's assets invested in U.S. or foreign private
limited partnerships or other investment funds (Private Fund Investments). From
its investment advisory fee, Warburg pays Abbott a quarterly fee at the annual
rate of 1.00% of the value of the fund's Private Fund Investments as of the end
of each calendar quarter. No compensation is paid by the Post-Venture Capital
Fund to Abbott for its sub-investment advisory services.
Counsellors Funds Service, Inc. (CFSI), a wholly-owned subsidiary of
Warburg, and PFPC Inc. (PFPC), an indirect, wholly-owned subsidiary of PNC Bank
Corp. (PNC) serves as each fund's co-administrators. For its administrative
services, CFSI currently receives a fee calculated at an annual rate of .10% of
each fund's average daily net assets. For the six month ended April 30, 1999,
administrative services fees earned by CFSI were as follows:
Fund Co-Administration Fee
---- -------------------------
Emerging Growth $964,525
Small Company Value 28,529
Small Company Growth 2,598
Post-Venture Capital 34,462
For administrative services, PFPC currently receives a fee calculated at an
annual rate of .10% on each fund's first $500 million in average daily net
assets, .075% on the next $1 billion in average daily net assets and .05% of
average daily net assets in excess of $1.5 billion.
29
<PAGE>
Warburg Pincus Funds
Notes to Financial Statements (cont'd)
April 30, 1999 (Unaudited)
- --------------------------------------------------------------------------------
2. Investment Adviser, Co-Administrators and Distributor -- (cont'd)
For the six months ended April 30, 1999, administrative service fees earned
and voluntarily waived by PFPC (including out-of-pocket expenses) were as
follows:
Net
Fund Co-Administration Fee Waiver Co-Administration Fee
- ---- --------------------- -------- ---------------------
Emerging Growth $733,538 $ 0 $733,538
Small Company Value 29,798 (10,962) 18,836
Small Company Growth 4,516 (2,598) 1,918
Post-Venture Capital 36,466 0 36,466
Counsellors Securities Inc. (CSI), also a wholly-owned subsidiary of
Warburg serves as each fund's distributor. No compensation is paid by the
Emerging Growth Fund to CSI for distribution services. For its shareholder and
distribution services, CSI receives a fee calculated at an annual rate of .25%
of the average daily net assets of the Common Class of the Post-Venture Capital
Fund, the Small Company Value Fund and the Small Company Growth Fund pursuant to
a shareholder servicing and distribution plan adopted by each Fund pursuant to
Rule 12b-1 under the 1940 Act. For its distribution services, CSI receives a fee
at an annual rate of .50% of the average daily net assets of each fund's Advisor
Class pursuant to distribution plan adopted by each fund pursuant to Rule 12b-1
under the 1940 Act. For the six months ended April 30, 1999, shareholder
servicing and distribution fees paid to CSI were as follows:
Shareholder Servicing/
Fund Distribution Fee
---- -------------------------
Emerging Growth
Advisor Class $786,828
========
Small Company Value
Common Class $ 71,258
Advisor Class 129
--------
$ 71,387
========
Small Company Growth
Common Class $ 6,206
========
Post-Venture Capital
Common Class $ 84,720
Advisor Class 2,873
---------
$ 87,593
========
30
<PAGE>
Warburg Pincus Funds
Notes to Financial Statements (cont'd)
April 30, 1999 (Unaudited)
- --------------------------------------------------------------------------------
3. Line of Credit
The funds, together with certain other Warburg Pincus Funds have
established committed and uncommitted line of credit facilities with PNC for
temporary or emergency purposes primarily relating to unanticipated fund share
redemptions. Under the terms of the committed line of credit, the Warburg Pincus
Funds with access to the facility pay a commitment fee at a rate of .07% per
annum on the average daily balance of the line of credit, which is undisbursed
and uncanceled during the preceding quarter. In addition, the Warburg Pincus
Funds will pay interest on borrowings at the bank's base rate plus .45%. Under
the terms of the uncommitted lines of credit, the Warburg funds will pay
interest on borrowings at the banks base rate plus .55%. Aggregate borrowings
for each fund under the committed and uncommitted lines of credit with PNC may
not exceed the lowest of (a) thirty-three and one-third percent (33 1/3%) of the
assets of such fund, for any Fund that does not invest at least sixty-five
percent (65%) of its assets in international equity or fixed income securities
(an International Fund) and twenty-five percent (25%) of the assets of any Fund
that is an International Fund or (b) the maximum amount permitted by such fund's
investment policies and restrictions. At April 30, 1999 and during the six
months ended April 30, 1999, the following funds had borrowings under these line
of credit agreements:
Maximum Loan
Average Daily Average Daily Loan Outstanding
Fund Loan Balance Interest Rate% Outstanding at 4/30/99
- ---- ------------- -------------- ----------- -----------
Small Company Value $52,657 5.94 $2,119,000 $336,000
Post-Venture Capital 96,873 5.31 3,972,000 0
4. Investments in Securities
At April 30, 1999, purchases and sales of investment securities (excluding
short-term investments) were as follows:
Fund Purchases Sales
---- -------------- --------------
Emerging Growth $1,421,850,178 $1,614,648,420
Small Company Value 39,785,512 71,882,133
Small Company Growth 5,615,536 5,745,854
Post-Venture Capital 34,036,751 55,490,494
At April 30, 1999, the net unrealized appreciation from investments for
those securities having an excess of value over cost and net unrealized depre-
31
<PAGE>
Warburg Pincus Funds
Notes to Financial Statements (cont'd)
April 30, 1999 (Unaudited)
- --------------------------------------------------------------------------------
4. Investments in Securities -- (cont'd)
ciation from investments for those securities having an excess of cost over
value (based on cost for federal income tax purposes) was as follows:
Net Unrealized
Unrealized Unrealized Appreciation
Fund Appreciation Depreciation (Depreciation)
- ---- -------------- -------------- ------------------
Emerging Growth $445,825,020 $(64,045,201) $381,779,819
Small Company Value 70,325,536 (4,691,771) 2,633,765
Small Company Growth 1,108,578 (403,995) 704,583
Post-Venture Capital 17,565,588 (2,018,334) 15,547,254
5. Restricted Securities
Certain funds' investments are restricted as to resale and are valued as
determined by or under the direction of each fund's Board of Directors in good
faith, at fair value. The table below shows the number of shares held, the
acquisition dates, aggregate cost, fair value as of April 30, 1999, and share
value of the securities and percent of net assets, which the securities
comprise.
<TABLE>
<CAPTION>
Percentage
Security Acquisition Market of Net
Fund Security Description Type Date(s) Cost Value Assets
- ---- -------------------- -------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Emerging Growth
Fund
Career Blazers, Inc. Common 11/16/95 $ 1,001,000 $ 204,750 0.00%
Chaparral Resources, Inc. Common 07/28/98 1,250,000 215,278 0.00
Comptek Research, Inc. Bond 03/24/99 7,000,000 7,000,000 0.40
Dealer Solutions Holdings, Inc.
Series A Preferred 04/29/98 5,000,000 5,000,000 0.30
Dealer Solutions Holdings, Inc. Warrants 04/29/98 0 0 0.00
Excalibur Technololgies Corp. Common 03/30/99 2,000,000 2,000,000 0.10
Network Event Theater, Inc. Common 06/24/97 3,000,001 11,190,480 0.60
Network Event Theater, Inc. Common 02/06/98 4,000,000 4,000,000 0.20
New York Restaurant Group, Inc. Common 10/30/97 3,249,985 3,249,985 0.20
Opal Concepts, Inc. Series B Preferred 08/31/95 2,000,000 2,000,000 0.10
Women First Healthcare, Inc. Bond 03/18/99 680,000 680,000 0.00
Women First Healthcare, Inc. Preferred 01/08/98 1,500,000 1,500,000 0.10
Women First Healthcare, Inc. Warrants 03/18/99 0 0 0.00
----------- ----------- ----
$30,680,986 $37,040,493 2.00%
=========== =========== ====
Post-Venture
Capital Fund
Career Blazers Common 11/16/95 $ 44,000 $ 9,000 0.00%
Chaparral Resources, Inc. Common 07/28/98 500,000 86,111 0.10
New York Restaurant Group, Inc. Common 10/30/97 749,998 749,998 1.09
Women.com Networks Common 06/04/98 750,002 750,002 1.20
----------- ----------- ----
$ 2,044,000 $ 1,595,111 2.39%
=========== =========== ====
Small Company
Value Fund
EA Industries, Inc. Warrants 03/31/98 $ 110,438 $ 0 0.00%
=========== =========== ====
</TABLE>
32
<PAGE>
Warburg Pincus Funds
Notes to Financial Statements (cont'd)
April 30, 1999 (Unaudited)
- --------------------------------------------------------------------------------
6. Capital Share Transactions
Each fund is 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 classified as the Advisor Class.
Transactions in shares of each fund were as follows:
<TABLE>
<CAPTION>
Emerging Growth Fund
--------------------------------------------------------------------
Common Class Advisor Class
-------------------------------- --------------------------------
For the For the
Six Months For the Six Months For the
Ended Year Ended Ended Year Ended
April 30, 1999 October 31, April 30, 1999 October 31,
(Unaudited) 1998 (Unaudited) 1998
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
Shares sold 8,722,422 21,883,507 365,431 1,347,745
Shares issued to shareholders on reinvestment
of dividends 6 2,487,833 0 739,355
Shares redeemed (13,778,039) (45,490,679) (2,342,987) (4,400,677)
------------- ------------- ------------- -------------
Net increase (decrease) in shares outstanding (5,055,611) (21,119,339) (1,977,556) (2,313,577)
============= ============= ============= =============
Proceeds from sale of shares $ 326,780,045 $ 832,153,742 $ 12,844,004 $ 50,866,075
Reinvested dividends 225 89,263,454 0 25,692,573
Net asset value of shares redeemed (517,952,198) (649,384,554) (86,009,307) (163,852,478)
------------- ------------- ------------- -------------
Net increase (decrease) from capital share
transactions $(191,171,928) $ 272,032,642 $ (73,165,303) $ (87,293,830)
============= ============= ============= =============
</TABLE>
<TABLE>
<CAPTION>
Small Company Value Fund
--------------------------------------------------------------------
Common Class Advisor Class
-------------------------------- --------------------------------
For the For the
Six Months For the Six Months For the
Ended Year Ended Ended Year Ended
April 30, 1999 October 31, April 30, 1999 October 31,
(Unaudited) 1998 (Unaudited) 1998
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
Shares sold 1,613,887 3,790,193 1,723 124,701
Shares issued to shareholders on reinvestment
of dividends 161,133 1,261,331 101 1,980
Shares redeemed (4,602,224) (10,971,376) (1,697) (136,386)
------------- ------------- ------------- -------------
Net increase (decrease) in shares outstanding (2,827,204) (5,919,852) 127 (9,705)
============= ============= ============= =============
Proceeds from sale of shares $ 20,805,380 $ 61,572,814 $ 20,360 $ 2,164,804
Reinvested dividends 2,154,348 19,941,713 1,346 31,064
Net asset value of shares redeemed (59,799,684) (183,185,391) (20,598) (2,336,468)
------------- ------------- ------------- -------------
Net increase (decrease) from capital share
transactions $ (36,839,956) $(101,670,864) $ 1,108 $ (140,600)
============= ============= ============= =============
</TABLE>
33
<PAGE>
Warburg Pincus Funds
Notes to Financial Statements (cont'd)
April 30, 1999 (Unaudited)
- --------------------------------------------------------------------------------
6. Capital Share Transactions -- (cont'd)
Small Company Growth Fund
--------------------------------
Common Class
--------------------------------
For the
Six Months For the
Ended Year Ended
April 30, 1999 October 31,
(Unaudited) 1998
-------------- --------------
Shares sold 113,615 619,229
Shares issued to shareholders on reinvestment
of dividends 0 4,732
Shares redeemed (98,864) (1,151,947)
------------ ------------
Net increase (decrease) in shares outstanding 14,751 (527,986)
============ ============
Proceeds from sale of shares $ 1,358,272 $ 7,623,711
Reinvested dividends 0 53,996
Net asset value of shares redeemed (1,143,849) (13,254,497)
------------ ------------
Net increase (decrease) from capital share
transactions $ 214,423 $ (5,576,790)
============ ============
<TABLE>
<CAPTION>
Post-Venture Capital Fund
---------------------------------------------------------------
Common Class Advisor Class
---------------------------- ------------------------------
For the For the
Six Months For the Six Months For the
Ended Year Ended Ended Year Ended
April 30, 1999 October 31, April 30, 1999 October 31,
(Unaudited) 1998 (Unaudited) 1998
-------------- ------------- -------------- --------------
<S> <C> <C> <C> <C>
Shares sold 556,178 1,777,588 55,016 21,227
Shares issued to shareholders on reinvestment
of dividends 5,346 0 75 0
Shares redeemed (1,835,774) (3,738,272) (2,713) (15,152)
------------ ------------ ------------ ------------
Net increase (decrease) in shares outstanding (1,274,250) (1,960,684) 52,378 6,075
============ ============ ============ ============
Proceeds from sale of shares $ 10,284,402 $ 33,045,233 955,105 $ 323,280
Reinvested dividends 92,588 0 1,274 0
Net asset value of shares redeemed (34,601,050) (68,403,457) (48,942) (253,076)
------------ ------------ ------------ ------------
Net increase (decrease) from capital share
transactions $(24,224,060) $(35,358,224) $ 907,437 $ 70,204
============ ============ ============ ============
</TABLE>
34
<PAGE>
Warburg Pincus Funds
Notes to Financial Statements (cont'd)
April 30, 1999 (Unaudited)
- --------------------------------------------------------------------------------
7. Liabilities
At April 30, 1999, each fund had the following liabilities:
<TABLE>
<CAPTION>
Emerging Small Company Small Company Post-Venture
Growth Value Growth Capital
Fund Fund Fund Fund
------------ ------------ ----------- -------------
<S> <C> <C> <C> <C>
Payable for securities purchased (at value) $35,747,732 $ 0 $ 412,464 $ 1,786,483
Investment advisory fee payable 1,377,136 21,509 0 45,241
Administrative services fees payable 270,619 3,460 460 10,381
Distribution fees payable 0 8,640 1,150 12,678
Fund shares redeemed payable 0 0 0 0
----------- ----------- ----------- -----------
$37,395,487 $ 33,609 $ 414,074 $ 1,854,783
=========== =========== =========== ===========
</TABLE>
8. Net Assets
At April 30, 1999, capital contributions, undistributed net investment
income (loss) and accumulated net realized gain (loss) on security transactions
have been adjusted for current year permanent book/tax differences. The Emerging
Growth Fund, the Small Company Value Fund, the Small Company Growth Fund and the
Post-Venture Capital Fund reclassified $7,973,607, $221,670, $30,758 and
$501,554, respectively, from accumulated net investment loss to capital
contributions. The Post-Venture Capital Fund reclassified $362 from accumulated
net realized gain from foreign currency related items to capital contributions.
<TABLE>
<CAPTION>
Emerging Small Company Small Company Post-Venture
Growth Value Growth Capital
Fund Fund Fund Fund
------------ ------------ ----------- -------------
<S> <C> <C> <C> <C>
Capital contributed, net $1,239,379,599 $ 34,131,578 $ 4,515,852 $ 33,056,932
Undistributed net investment income 0 0 0 0
Accumulated net realized gain (loss) from
security transactions 214,905,773 5,106,698 758,530 11,449,490
Net unrealized appreciation (depreciation)
from investments and foreign currency
related items 382,495,609 1,649,977 723,230 15,547,254
-------------- -------------- -------------- --------------
Net assets $1,836,780,981 $ 40,888,252 $ 5,997,613 $ 60,053,677
============== ============== ============== ==============
</TABLE>
9. Capital Loss Carryover
At April 30, 1999, capital loss carryovers available to offset possible
future capital gains of each fund were as follows:
Capital Loss Carryover
Expiring in
-------------------------------------- Total Capital
Fund 2004 2005 2006 Loss Carryover
- ---- -------- -------- ---------- --------------
Emerging Growth $ 0 $ 0 $45,528,485 $45,528,485
Small Company Growth 0 314,372 603,484 917,856
35
<PAGE>
Warburg Pincus Funds
Notes to Financial Statements (cont'd)
April 30, 1999 (Unaudited)
- --------------------------------------------------------------------------------
10. Other Financial Highlights
Each fund currently offers one other class of shares, Advisor Class,
representing equal pro rata interests in each of the respective funds. The
financial highlights for an Advisor Class of each Fund are as follows:
<TABLE>
<CAPTION>
Warburg Pincus Emerging Growth Fund
-------------------------------------------------------------------------------------------
Advisor Class
-------------------------------------------------------------------------------------------
For the Six
Months Ended For the Year Ended October 31,
April 30, 1999 ----------------------------------------------------------------------
PERIOD ENDED: (Unaudited) 1998 1997 1996 1995 1994
-------------- --------- --------- --------- --------- --------
<S> <C> <C> <C> <C> <C> <C>
Per-share data
Net asset value, beginning of period $ 32.51 $ 38.50 $ 31.99 $ 29.38 $ 22.05 $ 23.51
--------- --------- --------- --------- --------- ---------
Investment activities:
Net investment gain/(loss) (0.54) (0.49) (0.33) (0.09) (0.09) (0.08)
Net gains or losses on investments
and foreign currency related items
(both realized and unrealized) 5.07 (3.11) 6.91 4.45 7.42 (0.02)
--------- --------- --------- --------- --------- ---------
Total from investment activities 4.53 (3.60) 6.58 4.36 7.33 (0.10)
--------- --------- --------- --------- --------- ---------
Distributions:
From net investment income 0.00 0.00 0.00 0.00 0.00 0.00
From realized capital gains 0.00 (2.39) (0.07) (1.75) 0.00 (1.36)
--------- --------- --------- --------- --------- ---------
Total distributions 0.00 (2.39) (0.07) (1.75) 0.00 (1.36)
--------- --------- --------- --------- --------- ---------
Net asset value, end of period $ 37.04 $ 32.51 $ 38.50 $ 31.99 $ 29.38 $ 22.05
========= ========= ========= ========= ========= =========
Total return 13.93%+ (9.75)% 20.62% 15.69% 33.24% (0.29)%
Ratios/Supplemental Data:
Net assets, end of period (000s omitted) $ 281,084 $ 311,023 $ 457,432 $ 362,696 $ 167,225 $ 64,009
Ratio of expenses to average
net assets 1.68%*@ 1.62%@ 1.63%@ 1.70%@ 1.76% 1.72%
Ratio of net income or loss to
average net assets (1.24)%* (0.87)% (1.01)% (1.05)% (1.08)% (1.08)%
Decrease reflected in above
operating expense ratios due to
waviers/reimbursements 0.00 0.00 0.00 0.00 0.00 0.04
Portfolio turnover rate 78.35%+ 91.60% 87.03% 65.77% 84.82% 60.38%
</TABLE>
- --------------------------------------------------------------------------------
@ Interest earned on uninvested cash balances is used to offset portions of
transfer agent expense. These arrangements resulted in a reduction to the
net expense ratio by .00% for the six months ended April 30, 1999 and by
.00%, .00% and .01% for the year ended October 31, 1998, 1997 and 1996,
respectively. The operating expense ratios after reflecting these
arrangements were 1.68% for the six months ended April 30, 1999, 1.62%,
1.63% and 1.69% for the year ended October 31, 1998, 1997 and 1996,
respectively.
* Annualized.
+ Non-annualized.
36
<PAGE>
Warburg Pincus Funds
Notes to Financial Statements (cont'd)
April 30, 1999 (Unaudited)
- --------------------------------------------------------------------------------
10. Other Financial Highlights -- (cont'd)
<TABLE>
<CAPTION>
Warburg Pincus Small Company Value Fund
----------------------------------------------------------------------
Advisor Class
----------------------------------------------------------------------
For the Six December 29, 1995
Months Ended For the Year Ended October 31, (Commencement of
April 30, 1999 ---------------------------- Operations) Through
PERIOD ENDED: (Unaudited) 1998 1997 October 31, 1996
-------------- ------- ------- -------------------
<S> <C> <C> <C> <C>
Per-share data
Net asset value, beginning of period $ 13.30 $ 18.65 $ 14.46 $ 10.00
------- ------- ------- -------
Investment activities:
Net investment gain/(loss) (0.05) (0.40) (0.08) (0.02)
Net gains or losses on investments
and foreign currency related items
(both realized and unrealized) (0.05) (3.02) 4.44 4.48
------- ------- ------- -------
Total from investment activities (0.10) (3.42) 4.36 4.46
------- ------- ------- -------
Distributions:
From net investment income 0.00 0.00 0.00 0.00
From realized capital gains (0.43) (1.93) (0.17) 0.00
------- ------- ------- -------
Total distributions (0.43) (1.93) (0.17) 0.00
------- ------- ------- -------
Net asset value, end of period $ 12.77 $ 13.30 $ 18.65 $ 14.46
======= ======= ======= =======
Total return (0.91)%+ (19.93)% 30.47% 44.60+
Ratios/Supplemental Data:
Net assets, end of period (000s omitted) $ 52 $ 53 $ 255 $ 5
Ratio of expenses to average
net assets 2.00%*@ 1.97%@ 1.89%@ 1.97%*@
Ratio of net income or loss to
average net assets (1.06)%* (0.92)% (0.78)% (0.52)%*
Decrease reflected in above
operating expense ratios due to
waviers/reimbursements 0.36%* 0.27% 0.00% 1.46%*
Portfolio turnover rate 71.60%+ 77.92% 105.87% 43.14%+
</TABLE>
- --------------------------------------------------------------------------------
@ Interest earned on uninvested cash balances is used to offset portions of
transfer agent expense. These arrangements resulted in a reduction to the
net expense ratio by .00% for the six months ended April 30, 1999 and by
.00%, .01% and .00% for the year or period ended October 31, 1998, 1997 and
1996, respectively. The operating expense ratios after reflecting these
arrangements were 2.00% for the six months ended April 30, 1999, 1.97%,
1.88% and 1.97% for the year or period ended October 31, 1998, 1997 and
1996, respectively.
+ Non-annualized.
* Annualized.
37
<PAGE>
Warburg Pincus Funds
Notes to Financial Statements (cont'd)
April 30, 1999 (Unaudited)
- --------------------------------------------------------------------------------
10. Other Financial Highlights -- (cont'd)
<TABLE>
<CAPTION>
Warburg Pincus Post-Venture Capital Fund
-------------------------------------------------------------------------------
Advisor Class
-------------------------------------------------------------------------------
For the Period
For the Six September 29, 1995
Months Ended For the Year Ended October 31, (Commencement of
April 30, 1999 --------------------------------------- Operations) Through
PERIOD ENDED: (Unaudited) 1998 1997 1996 October 31, 1996
-------------- ------- ------- ------- -------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 15.90 $ 17.44 $ 15.93 $ 10.68 $ 10.00
--------- --------- --------- --------- ---------
Investment activities:
Net investment gain/(loss) 0.08 (0.01) (0.22) (0.05) 0.00
Net gains or losses on investments
and foreign currency related items
(both realized and unrealized) 3.38 (1.53) 1.73 5.30 0.68
--------- --------- --------- --------- ---------
Total from investment activities 3.46 (1.54) 1.51 5.25 0.68
--------- --------- --------- --------- ---------
Distributions:
From net investment income 0.00 0.00 0.00 0.00 0.00
From realized capital gains (0.02) 0.00 0.00 0.00 0.0
--------- --------- --------- --------- ---------
Total distributions (0.02) 0.00 0.00 0.00 0.00
--------- --------- --------- --------- ---------
Net asset value, end of period $ 19.34 $ 15.90 $ 17.44 $ 15.93 $ 10.88
========= ========= ========= ========= =========
Total return 21.80%+ (8.83)% 9.48% 49.16% 6.80%+
Ratios/Supplemental Data:
Net assets, end of period (000s omitted) $ 1,430 $ 343 $ 270 $ 204 $ 1
Ratio of expenses to average
net assets 1.90%*@ 1.90%@ 1.91%@ 1.90%@ 2.15%*
Ratio of net income or loss to
average net assets (1.73)%* (1.65)% (1.52)% (1.41)% 0.09%*
Decrease reflected in above
operating expense ratios due to
waviers/reimbursements 0.43%* 0.66% 0.70% 0.75% 9.25%*
Portfolio turnover rate 50.50%+ 111.51% 197.56% 168.46% 16.90%+
</TABLE>
- --------------------------------------------------------------------------------
@ Interest earned on uninvested cash balances is used to offset portions of
transfer agent expense. These arrangements resulted in a reduction to the
net expense ratio by .00% for the six months ended April 30, 1999 and by
.00%, .01% and .00% for the year or period ended October 31, 1998, 1997 and
1996, respectively. The operating expense ratios after reflecting these
arrangements were 1.90% for the six months ended April 30 1999, 1.90%,
1.90% and 1.90% for the year or period ended October 31, 1998, 1997 and
1996, respectively.
+ Non-annualized.
* Annualized.
38
<PAGE>
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800-WARBURG (800-927-2874) o www.warburg.com
COUNSELLORS SECURITIES INC., DISTRIBUTOR. WPUSS-3-0499
