WARBURG PINCUS ADVISOR FUNDS OCTOBER 31, 1999
EMERGING GROWTH FUND
SMALL COMPANY VALUE FUND
POST-VENTURE CAPITAL FUND
A
ANNUAL REPORT
More complete information about the Funds, including charges and expenses, is
provided in the Prospectus, which must precede or accompany this document and
which should be read carefully before investing. You may obtain additional
copies by calling 800-222-8977 or by writing to Warburg Pincus Advisor Funds,
P.O. Box 9030, Boston, MA 02205-9030.
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WARBURG PINCUS
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CREDIT SUISSE
ASSET MANAGEMENT
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From time to time, the Funds' investment adviser and co-administrators may waive
some fees and/or reimburse some expenses, without which performance would be
lower. Waivers and/or reimbursements are subject to change.
Returns are historical and include change in share price and reinvestment of
dividends and capital gains. Past performance cannot guarantee future results.
Returns and share price will fluctuate, and redemption value may be more or less
than original cost.
The views of the Funds' management are as of the date of the letters and
portfolio holdings described in this document are as of October 31, 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.
Fund shares are not deposits or other obligations of Credit Suisse Asset
Management, LLC ("CSAM LLC") or any affiliate, are not FDIC insured and are not
guaranteed by CSAM LLC or any affiliate. Fund investments are subject to
investment risks, including loss of your investment.
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Warburg Pincus Emerging Growth Fund
Annual Investment Adviser's Report -- October 31, 1999
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December 9, 1999
Dear Shareholder:
For the 12 months ended October 31, 1999, the Advisor Class shares of
Warburg Pincus Emerging Growth Fund had a return of 29.16%, vs. returns of
29.28% for the Russell 2000 Growth Index and 37.39% for the Russell 2500 Growth
Index.
The period was a positive one for small-capitalization and emerging-growth
stocks, reflecting an easing of concerns that had hampered these stocks over
much of the previous 12 months. Encouraged by positive reports concerning both
emerging-market and developed economies, investors were more willing to embrace
risk in pursuit of potentially significant long-term rewards. This worked to the
advantage of the rapid-growth stocks targeted by the fund, though these stocks
were frequently volatile, particularly late in the period, due to inflation and
interest-rate uncertainties.
Set against this backdrop, the Fund had a solid gain, supported by the
favorable sentiment toward small-cap and emerging-growth stocks and by strength
in certain areas, for example, the electronics and communications areas. One
factor that hampered the Fund, in relative terms at least, was its
underweighting in specific large-cap Internet stocks that had good showings, yet
which remained expensive in our view.
We made no material changes to the Fund during the period in terms of
overall strategy, focusing on well-managed companies with innovative products
and services and compelling, sustainable business models. In terms of
sector-weighting adjustments, one noteworthy move we made was to raise our
exposure to the technology area (broadly defined to include computer-related,
electronics and telecommunications stocks). We deemed a number of these stocks
to be attractive, given their underlying companies' improving growth prospects.
Elsewhere, we maintained exposure to a wide range of sectors, with noteworthy
weightings in the business-services, health-care, financial-services, energy and
consumer-related areas.
Looking out to 2000 and beyond, we believe that while small-cap and
emerging-growth stocks will likely remain volatile, they have solid longer-term
growth potential, supported by a confluence of positive factors. For one,
despite the recent rally in these issues, the group's valuations remain
compelling compared to those on large-cap, blue-chip stocks. Buttressing the
group's relatively attractive valuations is a favorable earnings outlook for
these companies (the group's earnings growth is expected to exceed that of the
large-cap group over the coming year and over the longer term). Another
1
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Warburg Pincus Emerging Growth Fund
Annual Investment Adviser's Report -- October 31, 1999 (cont'd)
- --------------------------------------------------------------------------------
factor that stands to broadly support the group is merger and acquisition
activity. Large companies have been acquiring smaller ones at a frantic pace, a
trend that we believe will continue, if not accelerate, with positive
implications for numerous small companies' share prices. These factors stand to
continue to draw investors to the group, barring an unforeseen sharp rise in
interest rates and provided the global economy stays on track. Set within this
environment, we will continue to strive to identify stocks with the brightest
long-term prospects.
Elizabeth B. Dater Stephen J. Lurito
Co-Portfolio Manager Co-Portfolio Manager
Investing in emerging-growth companies entails special risk considerations.
These are detailed in the Prospectus, which should be read carefully before
investing.
2
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Warburg Pincus Emerging Growth Fund
Annual Investment Adviser's Report -- October 31, 1999 (cont'd)
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Growth of $10,000 Invested in Advisor Class shares of Warburg Pincus
Emerging Growth Fund since Inception as of October 31, 1999
The graph below illustrates a hypothetical investment of $10,000 in Advisor
Class shares of Warburg Pincus Emerging Growth Fund (the "Fund") from January
21, 1988 (inception) to October 31, 1999, compared to the Russell 2000 Growth
Index ("R2000G")* and the Russell 2500 Growth Index ("R2500G")** for the same
time period.
[GRAPHIC OMITTED]
In the printed version of the document, a line graph appears
which depicts the following plot points:
Fund R2000G R2500G
-------- -------- -------
10000 10000 10000
Apr-91 9571.81 9974.9 9775.6
May-91 10085.6 10450.4 10273.9
Jun-91 9325.16 9841.46 9710.14
Jul-91 9779.89 10186.8 10256.9
Aug-91 10346.7 10563.8 10700.6
Sep-91 10458.7 10646.5 10823.4
Oct-91 11196.8 10928.1 11189.8
Nov-91 10755.2 10422.8 10718.3
Dec-91 12243.5 11257.4 12029.7
Jan-92 12942.3 12169.5 12538.5
Feb-92 12949 12524.5 12662.2
Mar-92 12317.4 12100.7 11940.3
Apr-92 11470.7 11676.9 11318
May-92 11598.3 11832.2 11337.9
Jun-92 11215.3 11272.8 10721.3
Jul-92 11517.7 11665.1 11138.1
Aug-92 11390 11336 10809.5
Sep-92 11773.1 11597.4 10974.7
Oct-92 12223.3 11966.1 11441.1
Nov-92 13479.9 12881.8 12362.1
Dec-92 13656.8 13330.6 12726.4
Jan-93 13930.6 13781.8 12815.4
Feb-93 13218.6 13463.6 12171.9
Mar-93 13855.3 13900.5 12566.4
Apr-93 13615.7 13519 12097.7
May-93 14286.5 14117.3 12842.7
Jun-93 14478.2 14205.4 12873.7
Jul-93 14820.5 14401.5 12884.3
Aug-93 15703.6 15023.7 13563.3
Sep-93 16347 15447.7 13911.6
Oct-93 16093.8 15845.3 14185.2
Nov-93 15422.9 15324 13671
Dec-93 16055 15847.9 14272.1
Jan-94 16528.1 16344.7 14683.6
Feb-94 16251.5 16285.7 14708.6
Mar-94 15218 15426 13853
Apr-94 14948.8 15517.6 13837.3
May-94 14599.4 15343.5 13559.7
Jun-94 14366.5 14815.7 12957.8
Jul-94 14555.8 15066.1 13239.4
Aug-94 15414.6 15905.6 14212.8
Sep-94 15683.8 15852.4 14205.9
Oct-94 16047.7 15790 14450.1
Nov-94 15261.7 15152.4 13810.1
Dec-94 15756.6 15559.5 14090.3
Jan-95 15509.2 15363.3 13952.7
Feb-95 16302.4 16002.4 14711.4
Mar-95 16739.1 16278 15282.1
Apr-95 17197.6 16640 15455.1
May-95 17394.1 16926.1 15692.2
Jun-95 18886.1 17804 16644.7
Jul-95 20268.9 18829.7 17956.8
Aug-95 20989.4 19218.9 18106.3
Sep-95 22081.1 19562.4 18494.2
Oct-95 21382.4 18687.7 17840.8
Nov-95 21921 19472.8 18570.8
Dec-95 22928.2 19986.7 18817.3
Jan-96 22595.6 19965.5 18875.4
Feb-96 23454 20587.6 19705.9
Mar-96 23848.4 21006.6 20133.9
Apr-96 25828 22129.8 21512.3
May-96 26160.5 23001.9 22279.7
Jun-96 25178.4 22057.7 21163
Jul-96 22448.7 20131.2 19060
Aug-96 23755.6 21300.2 20372.5
Sep-96 25077.9 22132.6 21453.7
Oct-96 24737.7 21791.8 20786.3
Nov-96 24884.6 22689.6 21548.3
Dec-96 25087 23284.3 21653.9
Jan-97 25993.7 23749.8 22301.5
Feb-97 24823.5 23174.1 21324.5
Mar-97 23382 22080.7 19921.6
Apr-97 23428.5 22142.3 20011.2
May-97 26063.5 24605.6 22409.8
Jun-97 27140.7 25660.2 23159.4
Jul-97 28714 26854.2 24629.3
Aug-97 29303 27468.6 25230.2
Sep-97 31488.5 29479.1 27012.2
Oct-97 29837.8 28184.3 25327
Nov-97 29652.8 28001.2 24938.7
Dec-97 30290.3 28491.2 24850.2
Jan-98 29520.9 28041.9 24525.6
Feb-98 32461.2 30115.6 26631.2
Mar-98 33993.4 31357.5 27620
Apr-98 34292.5 31531.2 27871
May-98 32204.1 29833 26082
Jun-98 33537.4 29895.9 26273.2
Jul-98 30928.2 27475.8 24316.9
Aug-98 24847.7 22140.6 18791.1
Sep-98 25784.4 23873.3 20438.7
Oct-98 26926.7 24847.1 21818.7
Nov-98 28566.5 26148.8 23370.7
Dec-98 31920.2 27766.9 25620.8
Jan-99 32402.2 28135.9 26362.3
Feb-99 29155.5 25856.9 24223.2
Mar-99 30689.1 26260.6 25351.1
Apr-99 30679.9 28613.8 27373.6
May-99 31176.9 29031.8 27656.4
Jun-99 33577.5 30344.6 29611.1
Jul-99 33104.1 29513.2 29007.6
Aug-99 32349.3 28421.2 28380.8
Sep-99 32365.5 28427.5 28584
Oct-99 34776.7 28542.6 29976
Fund
------
1 Year Total Return (9/30/98 to 9/30/99) ............................ 25.54%
3 Year Average Annual Total Return (9/30/96 to 9/30/99) ............. 8.88%
5 Year Average Annual Total Return (9/30/94 to 9/30/99) ............. 15.59%
10 Year Average Annual Total Return (9/30/89 to 9/30/99) ............ 13.52%
Average Annual Total Return Since Inception (1/21/88 to 9/30/99) .... 15.30%
- --------------
* The Russell 2000 Growth 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.
** 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 2500
smallest companies in the Russell 3000 Index, which measures the performance
of the 3000 largest UScompanies based on total market capitalization. The
Russell 2500 Index represents approximately 17% of the total market
capitalization of the Russell 3000 Index.
3
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Warburg Pincus Small Company Value Fund
Annual Investment Adviser's Report -- October 31, 1999
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December 9, 1999
Dear Shareholder:
For the 12 months ended October 31, 1999, the Advisor Class shares of
Warburg Pincus Small Company Value Fund had a loss of 4.17%, vs. a gain of
14.87% for the Russell 2000 Index. The Fund's since-inception (on December 29,
1995) annualized total return through October 31, 1999 was 10.35%, vs. a
same-period return of 9.74% for the Russell 2000 Index.
The reporting period was a lackluster one for the types of underfollowed
value stocks targeted by the Fund (the value component of the Russell 2000 Index
had only a marginal gain for the 12 months, lagging the index's growth component
by nearly 29 percentage points, historically an astonishing differential). The
Fund was hampered by investors' clear preference for growth-oriented companies
during the period, and by weakness in specific areas, for example the
financial-services sector, which was hindered by inflation and interest-rate
uncertainties. Also weighing on the Fund was its avoidance, through much of the
period, of technology stocks, many of which had impressive gains yet which for
the most part remained expensive.
Given the continued difficult backdrop for small-cap value stocks, with the
group's extremely compelling relative valuations failing to draw much investor
interest, we made one noteworthy shift in strategy during the period. While we
remained focused on strict value disciplines, we increased our emphasis on
visible catalysts (for example, a positive earnings surprise or the launch of a
new product) that could, in relatively short order, bring favorable attention to
certain value stocks, the ongoing growth-at-all-costs mentality notwithstanding.
In terms of sector and industry allocation, we made several adjustments
worthy of mention during the period. For one, we increased our weighting in the
technology area. We added a number of these stocks late in the period,
concentrating on names that had been struggling despite a favorable backdrop for
technology stocks, and which were trading at substantial discounts (as measured
by such factors as price-to-book and price-to-earnings ratios) to the broader
technology market. In each case, we identified a catalyst (e.g., a recent
strategic acquisition) that in our view could lead investors to favorably
reassess these stocks.
Other sector-weighting changes of note included our increased weighting in
cyclical, or economically-sensitive, areas of the market. This included the
addition of a few metals & mining companies. These companies stand to benefit
from the ongoing recovery in global economies, in particular
4
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Warburg Pincus Small Company Value Fund
Annual Investment Adviser's Report -- October 31, 1999 (cont'd)
- --------------------------------------------------------------------------------
Asian/Pacific economies. Metal prices tumbled as the Asian crisis widened in
1997 and 1998-the region accounts for a large share of demand for gold, copper,
etc.-and logic suggests that Asia's rebound, if sustained, should support metal
prices going forward.
One weighting we lowered was the financial area. While we view the
long-term prospects for smaller financial stocks favorably (due, for example.,
to industry consolidation), we deemed a more-modest weighting here to be
appropriate, given small financial companies' high sensitivity to interest-rate
worries. We also decreased our exposure to the health-care area, though we
believe certain health-care stocks are compelling, in particular those of
certain heath-care "providers" (for example, hospitals and nursing homes). The
catalyst that we believe will benefit these companies is an firmer supply/demand
backdrop. Their capacity growth rate, as measured by bed-count expansion, has
slowed over the past two years, and demand could improve due to political
forces. (We believe that the federal government may offer some relief in the
Medicare area, where funding for provider services was reduced in 1997. Indeed,
the House overwhelmingly approved such legislation in early November of this
year.)
Heading into 2000, we are positive on the outlook for small-cap stocks,
including the types of stocks held by the Fund, the Fund's clearly disappointing
recent performance notwithstanding. Valuations on small caps remain compelling
vs. those on large-cap stocks, which stands to draw ever-more favorable
attention to the group, barring an unforeseen sharp rise in interest rates or a
deterioration in the global economy. In addition, we believe that numerous
attractive investment opportunities exist among the low-multiple and
underfollowed issues targeted by the Fund. A number of these stocks represent
companies undergoing fundamental, positive changes, and therefore stand to be
favorably reassessed by the market. Set within this environment, we will
continue to adhere to strict value disciplines, attempting to ferret out
undervalued stocks with the best longer-term prospects.
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.
5
<PAGE>
Warburg Pincus Small Company Value Fund
Annual Investment Adviser's Report -- October 31, 1999 (cont'd)
- --------------------------------------------------------------------------------
Growth of $10,000 Invested in Advisor Class shares of Warburg Pincus
Small Company Value Fund since Inception as of October 31, 1999
The graph below illustrates a hypothetical investment of $10,000 in Advisor
Class shares of Warburg Pincus Small Company Fund (the "Fund") from December 29,
1995 (inception) to October 31, 1999, compared to the Russell 2000 Index
("R2000")* for the same time period.
[GRAPHIC OMITTED]
In the printed version of the document, a line graph appears
which depicts the following plot points:
Fund R2000
------- -------
12/29/95 10000 10000
Jan-96 10000 9989.4
Feb-96 10650 10300.7
Mar-96 11549.9 10510.3
Apr-96 12619.5 11072.3
May-96 13439.7 11508.6
Jun-96 13329.5 11036.2
Jul-96 12839 10072.3
Aug-96 13528.4 10657.2
Sep-96 14088.5 11073.7
Oct-96 14459 10903.2
Nov-96 15059.1 11352.4
Dec-96 15699.1 11649.9
Jan-97 15962.8 11882.8
Feb-97 15669.1 11594.8
Mar-97 15122.3 11047.7
Apr-97 15172.2 11078.5
May-97 16123.5 12311
Jun-97 17226.3 12838.7
Jul-97 17955 13436
Aug-97 18551.1 13743.5
Sep-97 19977.7 14749.4
Oct-97 18864.9 14101.6
Nov-97 18410.3 14009.9
Dec-97 18489.4 14255.1
Jan-98 17955.1 14030.3
Feb-98 19010.9 15067.8
Mar-98 19805.5 15689.2
Apr-98 19930.3 15776.1
May-98 19408.1 14926.4
Jun-98 19600.2 14957.9
Jul-98 18202.8 13747.1
Aug-98 15306.7 11077.7
Sep-98 15442.9 11944.6
Oct-98 15101.6 12431.8
Nov-98 15476.2 13083.1
Dec-98 15748.5 13892.7
Jan-99 15361.1 14077.3
Feb-99 14178.3 12937.1
Mar-99 13978.4 13139
Apr-99 14962.5 14316.4
May-99 15032.8 14525.6
Jun-99 15736.3 15182.4
Jul-99 15372.8 14766.4
Aug-99 14389 14220.1
Sep-99 14259.5 14223.2
Oct-99 14470.5 14280.8
Fund
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1 Year Total Return (9/30/98 to 9/30/99) ......................... -7.65%
3 Year Average Annual Total Return (9/30/96 to 9/30/99) .......... .41%
Average Annual Total Return Since Inception
(12/29/95 to 9/30/99) ......................................... 9.91%
- ---------------
* 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.
6
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Warburg Pincus Post-Venture Capital Fund
Annual Investment Adviser's Report -- October 31, 1999
- --------------------------------------------------------------------------------
December 9, 1999
Dear Shareholder:
For the 12 months ended October 31, 1999, the Advisor Class shares of
Warburg Pincus Post-Venture Capital Fund had a return of 43.15%, vs. returns of
29.28% for the Russell 2000 Growth Index, 37.39% for the Russell 2500 Growth
Index and 50.17% for the NASDAQ Industrial Index.
The period saw healthy gains for the aggressive-growth stocks targeted by
the Fund, buoyed by favorable news regarding the global economy, most
specifically signs of rebound within Japan and emerging markets and
better-than-expected growth in the U.S. These developments eased risk concerns
(which had weighed heavily on aggressive-growth stocks over much of the previous
12 months) while fueling optimism over earnings generally.
Against this backdrop, the Fund registered a solid gain, with respectable
performance compared to its benchmarks. The Fund benefited from the vastly
improved environment for aggressive-growth stocks and from good performances
from a number of the fund's holdings, especially its technology and
communications stocks.
We continued, through the period, to emphasize stocks of well-managed,
well-financed companies offering innovative products and services. In terms of
sector allocation, primary areas of emphasis for the Fund during the period
included the communications & media and telecommunications & equipment sectors,
weightings we raised during the period. This reflected our belief that specific
trends most notably, the ongoing Internet-driven communications revolution stand
to benefit numerous companies in these areas over time.
Other notable sector weightings included 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. Our holdings within the last sector included companies specializing in
electronic-commerce distribution and fulfillment services, a number of which in
our view have significant potential for long-term growth.
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 venture-capital
financing, distribution of securities to venture-capital
7
<PAGE>
Warburg Pincus Post-Venture Capital Fund
Annual Investment Adviser's Report -- April 30, 1999 (cont'd)
- --------------------------------------------------------------------------------
investors or initial public offering, whichever is later, will have been made
within 10 years of the Fund's investment.) This reflects optimism over the asset
class. Venture-backed companies tend to occupy the economy's rapid-growth
industries (for example, software, biotechnology, semiconductors and
electronics, and communications) and they have historically generated rapid
growth of earnings relative to companies that lacked such backing. We would
caution investors, however, that investing in post-venture-capital companies
involves certain risks for example, the risk of heightened volatility along with
the potential for significant long-term rewards. But for those with a long-term
view and a sufficiently high risk threshold, we believe that stocks of
venture-backed companies are well worthy of consideration. As ever, we will
continue to devote our efforts to identifying those companies we deem to have
the 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.
8
<PAGE>
Warburg Pincus Post-Venture Capital Fund
Annual Investment Adviser's Report -- October 31, 1999 (cont'd)
- --------------------------------------------------------------------------------
Growth of $10,000 Invested in Advisor Class shares of Warburg Pincus
Post-Venture Capital Fund since Inception as of October 31, 1999
The graph below illustrates a hypothetical investment of $10,000 in Advisor
Class shares of Warburg Pincus Post-Venture Capital Fund (the "Fund") from
September 29, 1995 (inception) to October 31, 1999, compared to the Russell 2000
Growth Index ("R2000G")*, Russell 25000 Growth Index ("R2500G")** and the NASDAQ
Industrials Index ("NASDAQ")*** for the same time period.
[GRAPHIC OMITTED]
In the printed version of the document, a line graph appears
which depicts the following plot points:
NASDAQ
Fund R2000G Industrials R2500G
------- ------- ----------- -------
9/29/95 10000 10000 10000 10000
Oct-95 10669.3 9508.2 9583.8 9646.7
Nov-95 12887.1 9927.99 9893.36 10041.4
Dec-95 13816.2 10147.9 9827.17 10174.7
Jan-96 14115.9 10064 9876.8 10206.1
Feb-96 15234.8 10522.9 10250.4 10655.2
Mar-96 15634.4 10730.9 10439.7 10886.6
Apr-96 17392.6 11554.7 11397.5 11631.9
May-96 17852.2 12147.3 12059 12046.8
Jun-96 16693.3 11358.1 11311.8 11443.1
Jul-96 14305.7 9971.58 10055.3 10306
Aug-96 15194.8 10709.8 10705.9 11015.6
Sep-96 16453.6 11261.3 11283.9 11600.2
Oct-96 15914.1 10775.6 10968.1 11239.3
Nov-96 16103.9 11075.3 11368.1 11651.4
Dec-96 16133.9 11291.3 11304.2 11708.5
Jan-97 16603.4 11573.3 11807.2 12058.7
Feb-97 15474.5 10874.5 11171.2 11530.4
Mar-97 14305.7 10107.2 10370.9 10771.8
Apr-97 14235.8 9990.38 10156.3 10820.3
May-97 15844.2 11492 11554.6 12117.2
Jun-97 16213.8 11881.7 12048.7 12522.5
Jul-97 17682.3 12490.5 12842.1 13317.3
Aug-97 17462.5 12865.4 13079.8 13642.2
Sep-97 18681.3 13892 14010.3 14605.8
Oct-97 17422.6 13057.7 12925.1 13694.6
Nov-97 17403.4 12746.9 12739.6 13484.6
Dec-97 17614 12754.6 12439.8 13436.7
Jan-98 17173.6 12584.5 12355.5 13261.3
Feb-98 18932.2 13695.5 13353.4 14399.7
Mar-98 20200.7 14270 13873.7 14934.4
Apr-98 20291.6 14357.5 14154.3 15070.2
May-98 18883.3 13314.4 13558.7 14102.8
Jun-98 19693.4 13450.6 13590.6 14206.2
Jul-98 18114 12327.4 12826.1 13148.4
Aug-98 14467.7 9481.73 9871.5 10160.5
Sep-98 15477.5 10443.1 10511.3 11051.4
Oct-98 15887.7 10987.8 11361.6 11797.6
Nov-98 17136.4 11840.1 12381.3 12636.8
Dec-98 18951.2 12911.7 13287.8 13853.4
Jan-99 19489.4 13492.4 14345 14254.4
Feb-99 18123.2 12258.1 13283.7 13097.8
Mar-99 19540.4 12694.8 14127.2 13707.6
Apr-99 19290.3 13815.8 15181.8 14801.2
May-99 19629.8 13837.7 14970.5 14954.1
Jun-99 21427.9 14566.6 16618.1 16011
Jul-99 20735.8 14116.2 16153.3 15684.7
Aug-99 20756.5 13588.3 15947.5 15345.8
Sep-99 20704.6 13850.4 16396.8 15455.7
Oct-99 23483.2 14205.1 17062.3 16208.3
Fund
------
1 Year Total Return (9/30/98 to 9/30/99) .......................... 29.55%
3 Year Average Annual Total Return (9/30/96 to 9/30/99) ........... 6.81%
Average Annual Total Return Since Inception
(9/29/95 to 9/30/99) ........................................... 18.98%
- ---------------
* The Russell 2000 Growth 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.
** 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 2500
smallest companies in the Russell 3000 Index, which measures the performance
of the 3000 largest UScompanies based on total market capitalization. The
Russell 2500 Index represents approximately 17% of the total market
capitalization of the Russell 3000 Index.
*** The NASDAQ Industrial Index measures the stock price performance of more
than 3000 industrial issues included in the NASDAQ OTC Composite Index. The
NASDAQ OTC Composite Index represents 4500 stocks traded over the counter. 9
9
<PAGE>
Warburg Pincus Emerging Growth Fund
Statement of Net Assets--October 31, 1999
- --------------------------------------------------------------------------------
Number
of
Shares Value
--------- ------------
COMMON STOCK (94.3%)
Agriculture (0.5%)
Seminis, Inc+ 1,079,700 $ 8,435,156
------------
Business Services (8.2%)
CB Richard Ellis Services, Inc.+ 1,181,500 14,547,219
Concord EFS, Inc.+ 1,205,650 32,627,903
DoubleClick, Inc.+ 130,000 18,200,000
Express Scripts, Inc., Class A+ 162,538 7,984,679
On Assignment, Inc.+ 745,400 21,430,250
QRS Corp.+ 631,250 35,113,281
TMP Worldwide, Inc.+ 297,800 18,593,887
------------
148,497,219
------------
Communications & Media (6.6%)
Cybergold, Inc.+ 180,000 1,215,000
EarthLink Network, Inc.+ 331,000 13,922,687
Hispanic Broadcasting Corp.+ 234,513 18,995,553
Lamar Advertising Co.+ 50,000 2,700,000
Liquid Audio, Inc.+ 500,500 17,642,625
Net Perceptions, Inc.+ 14,000 224,000
Network Event Theater, Inc.+ 761,905 17,523,815
Network Event Theater, Inc.+ # 888,889 15,458,335
Paxson Communications Corp.+ 976,100 11,469,175
Spanish Broadcasting System, Inc.+ 300,000 7,987,500
VerticalNet, Inc.+ 240,000 13,440,000
------------
120,578,690
------------
Computers (15.8%)
Accrue Software, Inc.+ 245,100 13,174,125
Citrix Systems, Inc.+ 977,700 62,695,012
Edwards (J.D.) & Co.+ 741,800 17,756,837
I2 Technologies, Inc.+ 242,500 19,142,344
Mercury Interactive Corp.+ 317,200 25,732,850
National Instruments Corp.+ 617,125 18,552,320
Packeteer, Inc.+ 300,000 10,200,000
RealNetworks, Inc.+ 255,300 28,003,219
Safeguard Scientifics, Inc.+ 258,000 21,704,250
Siebel Systems, Inc.+ 268,300 29,462,694
VeriSign, Inc+ 232,100 28,664,350
Verity, Inc.+ 190,000 13,086,250
------------
288,174,251
------------
Conglomerates (0.8%)
Viad Corp. 580,000 14,246,250
------------
Consumer Services (2.0%)
DeVry, Inc.+ 912,896 19,227,872
ITT Educational Services, Inc.+ 860,950 17,003,762
------------
36,231,634
------------
See Accompanying Notes to Financial Statements.
10
<PAGE>
Warburg Pincus Emerging Growth Fund
Statement of Net Assets(cont'd)--October 31, 1999
- --------------------------------------------------------------------------------
Number
of
Shares Value
--------- ------------
COMMON STOCK (cont'd)
Electronics (18.9%)
Alpha Industries, Inc.+ 282,600 $ 15,613,650
Avant! Corp.+ 997,900 12,847,963
Burr-Brown Corp.+ 865,397 34,020,920
Cognex Corp.+ 674,500 20,192,844
Electronics for Imaging, Inc.+ 572,300 23,070,844
JDS Uniphase Corp.+ 414,400 69,153,000
KLA-Tencor Corp.+ 230,800 18,276,475
Maxim Integrated Products, Inc.+ 754,800 59,582,025
Novellus Systems, Inc.+ 231,700 17,956,750
PMC-Sierra, Inc.+ 175,000 16,493,750
Vishay Intertechnology, Inc.+ 1,044,625 25,528,023
Vitesse Semiconductor Corp.+ 686,600 31,497,775
------------
344,234,019
------------
Energy (0.0%)
Chaparral Resources, Inc.+# 13,888 83,333
------------
Financial Services (5.3%)
AmeriCredit Corp.+ 953,000 16,558,375
Enhance Financial Services Group, Inc. 806,600 14,720,450
IndyMac Mortgage Holding, Inc. 1,242,100 17,311,769
MBIA, Inc. 173,600 9,906,050
Reinsurance Group of America, Inc. 1,162,395 38,649,634
------------
97,146,278
------------
Food, Beverages & Tobacco (0.3%)
Ben & Jerry's Homemade, Inc. Class A+ 317,400 5,356,125
------------
Healthcare (5.1%)
Caremark Rx, Inc.+ 3,507,600 17,099,550
First Health Group Corp.+ 661,300 15,375,225
Focal, Inc.+ 925,070 4,683,167
Health Management Associates, Inc. Class A+ 2,094,600 18,589,575
IVAX, Inc.+ 864,300 15,179,269
Visx, Inc.+ 348,300 21,790,519
------------
92,717,305
------------
Leisure & Entertainment (2.4%)
Fairfield Communities, Inc.+ 1,485,200 18,193,700
International Speedway Corp. Class A 101,000 5,214,125
Sunterra Corp.+ 2,077,600 20,776,000
------------
44,183,825
------------
See Accompanying Notes to Financial Statements.
11
<PAGE>
Warburg Pincus Emerging Growth Fund
Statement of Net Assets(cont'd)--October 31, 1999
- --------------------------------------------------------------------------------
Number
of
Shares Value
--------- ------------
COMMON STOCK (cont'd)
Lodging & Restaurants (0.6%)
Extended Stay America, Inc.+ 1,309,500 $ 10,885,219
-------------
Oil Services (4.1%)
Cooper Cameron Corp.+ 560,900 21,699,819
Nabors Industries, Inc.+ 1,225,000 27,792,188
Petroleum Geo-Services ADR+ 1,772,038 25,916,056
-------------
75,408,063
-------------
Publishing (1.0%)
Wiley (John) & Sons, Inc. Class A 1,089,200 18,380,250
-------------
Retail (2.8%)
Bed, Bath & Beyond, Inc.+ 504,500 16,806,156
BJ's Wholesale Club, Inc.+ 548,900 16,912,981
Ethan Allen Interiors, Inc. 342,100 12,165,931
New York Restaurant Group, Inc.+# 336,786 3,249,985
Payless ShoeSource, Inc.+ 21,000 962,063
-------------
50,097,116
-------------
Telecommunications & Equipment (19.9%)
Advanced Fibre Communications, Inc.+ 1,381,400 30,218,125
Amdocs, Ltd.+ 617,200 17,165,875
ANTEC Corp.+ 416,400 20,195,400
Audiocodes, Ltd.+ 421,900 25,524,950
Cabletron Systems, Inc.+ 1,050,900 17,405,531
CoreComm Ltd.+ 351,900 13,856,063
DSP Communications, Inc.+ 1,107,400 38,966,638
ITC DeltaCom, Inc.+ 490,983 11,783,592
McLeodUSA, Inc. Class A+ 720,800 32,165,700
Polycom, Inc.+ 378,800 18,940,000
Scientific-Atlanta, Inc. 609,700 34,905,325
VoiceStream Wireless Corp.+ 661,400 65,313,250
Western Wireless Corp. Class A+ 676,400 35,764,650
-------------
362,205,099
-------------
TOTAL COMMON STOCK (Cost $1,179,952,022) 1,716,859,832
-------------
See Accompanying Notes to Financial Statements.
12
<PAGE>
Warburg Pincus Emerging Growth Fund
Statement of Net Assets(cont'd)--October 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Number
of
Shares Value
------------ ---------------
<S> <C> <C>
PREFERRED STOCK (0.2%)
Consumer Services (0.2%)
Opal Concepts, Inc. Series B+# 792,603 $ 2,000,000
Women First Healthcare, Inc. Pfd.+# 274,500 1,837,434
---------------
TOTAL PREFERRED STOCK (Cost $3,500,000) 3,837,434
---------------
Par
-----------
BONDS (0.4%)
Comptek Research, Inc. 8.5%
Convertible Debenture Due 04/01/04 #
(Cost $7,000,000) $ 7,000,000 7,000,000
---------------
WARRANTS (0.0%)
Women First Healthcare, Inc. Warrants #
(Cost $0) 5,516 0
---------------
Number
of
Shares
-----------
SHORT TERM INVESTMENT (5.1%)
Institutional Money Market Trust 7,723,810 7,723,810
RBB Money Market Portfolio 85,873,616 85,873,616
---------------
TOTAL SHORT TERM INVESTMENT
(Cost $93,597,426) 93,597,426
---------------
TOTAL INVESTMENTS AT VALUE (100.0%) (Cost $1,284,049,448*) 1,821,294,692
LIABILITIES IN EXCESS OF OTHER ASSETS (0.0%) (455,477)
---------------
NET ASSETS (100.0%) (applicable to 36,421,032 Common Class shares
and 5,435,546 Advisor Class shares) $ 1,820,839,215
===============
NET ASSET VALUE, offering and redemption price per
Common Class share ($1,592,594,958 / 36,421,032) $ 43.73
===============
NET ASSET VALUE, offering and redemption price per
Advisor Class share ($228,244,257 / 5,435,546) $ 41.99
===============
</TABLE>
INVESTMENT ABBREVIATIONS
ADR = American Depository Receipt
- ------------------
+ Non-income producing security.
# Restricted security.
* Cost for federal income tax purposes is $1,288,852,930.
See Accompanying Notes to Financial Statements.
13
<PAGE>
Warburg Pincus Small Company Value Fund
Schedule of Investments--October 31, 1999
- --------------------------------------------------------------------------------
Number
of
Shares Value
------- ----------
COMMON STOCK (92.2%)
Aerospace & Defense (1.7%)
TriStar Aerospace Co.+ 75,000 $ 496,875
----------
Banks & Savings & Loans (9.2%)
Astoria Financial Corp. 17,200 619,200
Century Bancorp, Inc. Class A 39,500 706,062
Prosperity Bancshares, Inc. 46,900 753,331
Texas Regional Bancshares, Inc. 21,318 595,572
----------
2,674,165
----------
Building & Building Materials (2.4%)
Elcor Corp. 27,900 687,037
----------
Business Services (5.8%)
ACNielsen Corp.+ 22,600 497,200
Graco, Inc. 15,900 532,650
Wilmar Industries, Inc.+ 53,500 655,375
----------
1,685,225
----------
Chemicals (2.1%)
C.K. Witco Corp. 65,300 612,187
----------
Computers (12.4%)
Computer Network Technology Corp. + 39,600 636,075
Hyperion Solutions Corp. + 39,700 967,687
Network Associates, Inc. + 19,955 365,426
New Era of Networks, Inc. + 15,500 502,781
Quantum Corp.-DLT & Storage Systems Group+ 42,600 657,637
RadiSys Corp.+ 9,600 508,800
----------
3,638,406
----------
Conglomerates (1.9%)
Gaylord Container Corp., + 60,351 339,474
Watts Industries, Inc. Class A 15,300 209,419
----------
548,893
----------
Consumer Durables (3.2%)
Harman International Industries, Inc. 8,600 351,525
Superior Industries International, Inc. 22,377 597,186
----------
948,711
----------
Consumer Non-Durables (9.2%)
Jones Apparel Group, Inc.+ 9,400 297,275
Polo Ralph Lauren Corp. + 15,400 284,900
Saucony, Inc. Class B + 48,800 835,700
Timberland Company, Class A + 12,800 632,000
Westpoint Stevens, Inc. 33,000 624,937
----------
2,674,812
----------
See Accompanying Notes to Financial Statements.
14
<PAGE>
Warburg Pincus Small Company Value Fund
Schedule of Investments (cont'd)--October 31, 1999
- --------------------------------------------------------------------------------
Number
of
Shares Value
------- ----------
COMMON STOCKS (cont'd)
Electronics (1.0%)
Avant! Corp.+ 21,600 $ 278,100
----------
Engineering & Construction (1.4%)
McDermott International, Inc. 23,000 416,875
----------
Financial Services (6.9%)
AmeriCredit Corp.+ 8,900 154,637
National Western Life Insurance Co. Class A + 4,400 375,925
Radian Group Inc. 11,405 602,327
StanCorp Financial Group, Inc. 9,100 230,912
Webster Financial Corp. 23,000 658,375
----------
2,022,176
----------
Healthcare (5.9%)
Health Management Associates, Inc. Class A + 53,600 475,700
Morrison Management Specialists, Inc. 31,500 673,313
Omnicare, Inc. 61,100 565,175
----------
1,714,188
----------
Industrial Manufacturing & Processing (1.1%)
Bethlehem Steel Corp.+ 34,800 241,425
CIRCOR International, Inc.+ 8,600 81,700
----------
323,125
----------
Leisure & Entertainment (5.7%)
Hollywood Entertainment Corp.+ 10,200 144,075
Midway Games, Inc.+ 50,200 1,000,863
SCP Pool Corp. + 23,313 528,914
----------
1,673,852
----------
Metals & Mining (2.8%)
Freeport-McMoran Copper & Gold, Inc. Class B+ 11,000 183,563
Kaiser Aluminum Corp. 3,900 25,106
Ryerson Tull, Inc. 29,293 600,507
----------
809,176
----------
Oil Services (4.4%)
Evergreen Resources, Inc. + 11,200 242,200
Global Industries, Ltd. + 59,100 472,800
Varco International, Inc. 54,352 574,093
----------
1,289,093
----------
Paper & Forest Products (6.5%)
Abitibi-Consolidated, Inc. 55,200 665,850
Caraustar Industries, Inc. 24,630 594,199
Wausau-Mosinee Paper Corp. 50,100 632,513
----------
1,892,562
----------
See Accompanying Notes to Financial Statements.
15
<PAGE>
Warburg Pincus Small Company Value Fund
Schedule of Investments (cont'd)--October 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Number
of
Shares Value
----------- -----------
<S> <C> <C>
COMMON STOCKS (cont'd)
Real Estate (1.4%)
Mission West Properties, Inc. 52,286 $ 401,949
-----------
Retail (2.1%)
Value City Department Stores, Inc.+ 39,445 606,467
-----------
Telecommunications and Equipment (0.0%)
Triton PCS. Holdings, Inc. Class A+ 2,000 70,500
-----------
Transportation (3.5%)
Landstar Systems, Inc. + 14,200 575,100
M.S. Carriers, Inc. + 15,700 443,525
-----------
1,018,625
-----------
Utilities-Electric (1.6%)
NSTAR 12,600 479,588
-----------
Total Common Stock (Cost $23,355,834) 26,962,587
-----------
Par
-----------
Convertible Bonds (0.5%)
Electronics (0.5%)
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 (11.6%)
Institutional Money Market Trust 1,948,081 1,948,081
RBB Money Market Portfolio 1,441,129 1,441,129
-----------
Total Short Term Investments (Cost $3,389,210) 3,389,210
-----------
Warrants (0.0%)
EA Industries, Inc. Six Month Warrants
(Exercisable for purchase of 75,000 Common Shares @ $5.375/share.)(1)
(Cost $110,438) 1 0
-----------
Total Investments At Value (104.3%) (Cost $28,355,482*) 30,501,797
===========
</TABLE>
INVESTMENT ABBREVIATIONS
NR = Not Rated
- ---------------
+ Non-income producing security.
1 Illiquid security.
* Cost for federal tax purposes is $28,569,655.
# Bond is currently in default.
See Accompanying Notes to Financial Statements.
16
<PAGE>
Warburg Pincus Post-Venture Capital Fund
Statement of Net Assets--October 31, 1999
- --------------------------------------------------------------------------------
Number
of
Shares Value
------- -----------
COMMON STOCK (91.3%)
Business Services (6.5%)
BISYS Group, Inc. + 17,200 $ 877,200
Princeton Video Image, Inc.+# 90,909 500,000
QRS Corp. + 24,450 1,360,031
Saatchi & Saatchi plc ADR 30,700 587,137
StarTek, Inc. + 2,500 113,437
TMP Worldwide, Inc. + 9,000 561,937
-----------
3,999,742
-----------
Communications & Media (22.6%)
America Online, Inc. + 6,600 855,937
AMFM, Inc. + 14,000 980,000
Excite @ HomeCorp. Series A + 15,200 568,100
CMGI, Inc. + 9,400 1,028,713
Hispanic Broadcasting Corp. + 12,400 1,004,400
MaMamedia, Inc. +# 92,592 499,997
Outdoor Systems, Inc. + 15,475 655,753
Radio Unica Communications + 18,800 538,150
Shaw Communications, Inc. Class B 31,100 933,000
USA Networks, Inc. + 36,600 1,649,287
Westwood One, Inc.+ 13,650 629,606
Women.com Networks, Inc. +# 243,639 3,435,310
Yahoo! Inc. + 6,700 1,199,719
-----------
13,977,972
-----------
Computers (9.9%)
BMC Software, Inc. + 9,800 629,037
Citrix Systems, Inc. + 16,900 1,083,712
Concord Communications, Inc. + 14,500 753,094
Intuit, Inc. + 37,500 1,092,187
VeriSign, Inc + 9,000 1,111,500
VERITAS Software Corp.+ 13,400 1,445,525
-----------
6,115,055
-----------
Consumer Non-Durables (1.0%)
Dial Corp. 25,200 589,050
-----------
Consumer Services (1.6%)
DeVry, Inc. + 48,300 1,017,319
-----------
Electronics (14.8%)
Flextronics International Ltd. + 15,900 1,128,900
JDS Uniphase Corp. + 14,500 2,419,688
KLA-Tencor Corp. + 6,900 546,394
Maxim Integrated Products, Inc. + 20,600 1,626,113
Solectron Corp. + 11,100 835,275
Synopsys, Inc. + 8,100 504,731
Vitesse Semiconductor Corp. + 16,200 743,175
Xilinx, Inc. + 17,200 1,352,350
-----------
9,156,626
-----------
See Accompanying Notes to Financial Statements.
17
<PAGE>
Warburg Pincus Post-Venture Capital Fund
Statement of Net Assets (cont'd)--October 31, 1999
- --------------------------------------------------------------------------------
Number
of
Shares Value
------ ----------
COMMON STOCKS (cont'd)
Energy (0.9%)
Chaparral Resources, Inc. +# 5,555 $ 33,333
Newfield Exploration Co. + 16,900 497,494
----------
530,827
----------
Financial Services (3.0%)
Ambac Financial Group, Inc. 8,500 507,875
AMVESCAP PLC ADR 18,560 832,880
Price T. Rowe Associates, Inc. 14,300 507,650
----------
1,848,405
----------
Healthcare (1.0%)
Oxford Health Plans, Inc. + 31,600 373,275
Women First HealthCare, Inc. + 34,600 257,338
----------
630,613
----------
Leisure & Entertainment (2.1%)
Fairfield Communities, Inc. + 23,300 285,425
Premier Parks, Inc.+ 35,400 1,024,388
----------
1,309,813
----------
Oil Services (3.0%)
Cooper Cameron Corp. + 19,100 738,931
Nabors Industries, Inc. + 23,200 526,350
Petroleum Geo - Services + 41,300 604,013
----------
1,869,294
----------
Pharmaceuticals (2.8%)
Amgen, Inc. + 8,000 638,000
MedImmune, Inc. + 10,000 1,120,000
----------
1,758,000
----------
Publishing (3.9%)
Central Newspapers, Inc. Class A 30,000 1,288,125
Scholastic Corp. + 23,700 1,102,050
----------
2,390,175
----------
Retail (4.3%)
Amazon.com, Inc. + 6,000 423,750
Bed, Bath & Beyond, Inc. + 14,400 479,700
New York Restaurant Group, Inc. +# 77,720 749,998
Ross Stores, Inc. 21,600 445,500
Saks, Inc. + 31,300 537,969
----------
2,636,917
----------
See Accompanying Notes to Financial Statements.
18
<PAGE>
Warburg Pincus Post-Venture Capital Fund
Statement of Net Assets (cont'd)--October 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Number
of
Shares Value
------ ------------
<S> <C> <C>
COMMON STOCKS (cont'd)
Telecommunications & Equipment (13.9%)
Amdocs, Ltd. (USA) + 17,800 $ 495,063
ANTEC Corp. + 4,400 213,400
Carrier Access Corp. + 1,797 88,839
CIENA Corp.+ 14,300 504,075
Cisco Systems, Inc. + 28,010 2,072,740
Covad Communications Group, Inc.+ 10,900 523,200
Exodus Communications, Inc. + 22,300 1,917,800
Gilat Satellite Networks + 22,600 1,178,025
MCI WorldCom, Inc. + 9,500 815,219
NEXTLINK Communications, Inc.+ 1,347 80,567
Pinnacle Holdings, Inc. + 30,100 722,400
------------
8,611,328
------------
TOTAL COMMON STOCK (Cost $34,632,050) 56,441,136
------------
FOREIGN COMMON STOCKS (0.3%)
Canada (0.3%)
Corus Entertainment, Inc. Class B +
(Cost $75,476) 10,366 162,090
------------
Par
Maturity Date (000)
------------- -----
UNITED STATES TREASURY OBLIGATIONS (0.7%**)
U.S. Treasury Bill 4.710% 12/02/99 $ 35 34,866
U.S. Treasury Bill 4.710% 03/30/00 115 112,657
U.S. Treasury Note 5.875% 11/30/01 260 260,312
------------
TOTAL U.S. TREASURY OBLIGATIONS (Cost $406,760) 407,835
------------
</TABLE>
See Accompanying Notes to Financial Statements.
19
<PAGE>
Warburg Pincus Post-Venture Capital Fund
Statement of Net Assets (cont'd)--October 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Number
of
Shares Value
-------- ------------
<S> <C> <C>
PRIVATE FUND INVESTMENTS (4.1%)
Boston Ventures V, LP# 463,267 $ 463,267
New Enterprise Associates VII, LP# 2,071,355 2,071,355
------------
TOTAL PRIVATE FUND INVESTMENTS (Cost $1,368,653) 2,534,622
------------
Number
of
Shares
--------
SHORT TERM FUND INVESTMENTS (4.2%)
RBB Money Market Portfolio
(Cost $2,624,311) 2,624,311 2,624,311
------------
TOTAL INVESTMENTS AT VALUE (100.6%) (Cost $39,107,250*) 62,170,003
LIABILITIES IN EXCESS OF OTHER ASSETS (0.6%) (378,503)
------------
NET ASSETS (100.0%) (applicable to 2,549,911 Common Class shares and
127,650 Advisor Class shares) $ 61,791,491
============
NET ASSET VALUE, offering and redeemption preice per Common Class shares
($58,889,924 / 2,549,911) $ 23.09
============
NET ASSET VALUE, offering and redeemption preice per Advisor Class shares
($2,901,567 / 127,650) $ 22.73
============
</TABLE>
INVESTMENT ABBREVIATIONS
ADR = American Depository Receipt
- -------------
+ Non-income producing security.
# Restricted security, not readily marketable.
* Also cost for federal tax purposes.
** These securities have been segregated with the fund's custodian to cover
open capital Commitments of $448,073 in private fund investments.
See Accompanying Notes to Financial Statements.
20
<PAGE>
Warburg Pincus Small Company Value Fund
Statement of Assets and Liabilities--October 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C> <C>
Assets
Investments at value (Cost $28,355,482) $30,501,797
Receivable for investment securities sold 3,068,747
Receivable for fund shares sold 34,624
Deferred organizational/offering costs 17,363
Dividends and interest receivable 71,086
-----------
Total Assets 33,693,617
-----------
Liabilities
Payable for investment securities purchased 3,271,423
Payable for fund shares redeemed 1,033,285
Accrued expenses payable` 157,921
-----------
Total Liabilities 4,462,629
-----------
Net assets, applicable to 2,342,126 Common Class shares outstanding and
2,451 Advisor Class shares outstanding $29,230,988
===========
Net Asset Value, offering and redemption price per Common Class share ($29,200,709 / 2,342,126) $ 12.47
===========
Net Asset Value, offering and redemption price per Advisor Class share ($30,279 / 2,451) $ 12.35
===========
</TABLE>
See Accompanying Notes to Financial Statements.
21
<PAGE>
Warburg Pincus Domestic Equity Funds
Statements of Operations
For the Year Ended October 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Warburg Pincus Warburg Pincus Warburg Pincus
Emerging Growth Small Company Post-Venture
Fund Value Fund Capital Fund
--------------- -------------- --------------
<S> <C> <C> <C>
Investment Income:
Dividends $ 3,117,181 $ 356,518 $ 51,110
Interest 5,712,845 102,147 106,187
Foreign taxes withheld (14,420) 0 0
------------- ------------- -------------
Total investment income 8,815,606 458,665 157,297
------------- ------------- -------------
Expenses:
Investment Advisory 16,912,762 464,414 791,089
Administrative services 3,323,092 95,125 130,074
Custodian/Sub-custodian 340,998 39,434 18,564
Directors/Trustees 19,624 13,095 12,731
Legal 156,381 31,051 17,993
Offering/Organizational costs 0 14,903 27,509
Printing 317,416 13,930 24,429
Registration 115,063 44,986 48,502
Shareholder servicing/Distribution 1,413,608 116,210 162,412
Transfer agent 1,713,859 134,274 118,545
Audit 59,538 11,139 12,353
Insurance 32,178 3,122 0
Interest 18,712 1,803 2,762
Miscellaneous 54,049 7,422 7,499
------------- ------------- -------------
24,477,280 990,908 1,374,462
Less: fees waived, expenses reimbursed
and transfer agent offsets (142,755) (178,076) (324,531)
------------- ------------- -------------
Total expenses 24,334,525 812,832 1,049,931
------------- ------------- -------------
Net investment loss (15,518,919) (354,167) (892,636)
------------- ------------- -------------
Net Realized and Unrealized Gain (Loss)
from Investments and Foreign
Currency Related Items:
Net realized gain from security and
other related transactions 300,644,500 3,792,545 13,768,581
Net change in unrealized appreciation
(depreciation) from investments and
foreign currency related items 205,391,594 (4,750,334) 11,121,513
------------- ------------- -------------
Net realized and unrealized gain (loss)
from investments and
foreign currency related items 506,036,094 (957,789) 24,890,094
------------- ------------- -------------
Net increase (decrease) in net assets
resulting from operations $ 490,517,175 $ (1,311,956) $ 23,997,458
============= ============= =============
</TABLE>
See Accompanying Notes to Financial Statements.
22
<PAGE>
This page intentionally left blank
23
<PAGE>
Warburg Pincus Domestic Equity Funds
Statements of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Warburg Pincus
Emerging Growth
Fund
----------------------------------
For the For the
Year Ended Year Ended
October 31, October 31,
--------------- ---------------
1999 1998
--------------- ---------------
<S> <C> <C>
From Operations:
Net Investment Loss $ (15,518,919) $ (11,226,871)
Net Realized gain (loss) from security transactions 300,644,500 (47,452,269)
Net Realized (loss) from foreign currency related items 0 0
Net change in unrealized appreciation (depreciation)
from investments and foreign currency related items 205,391,594 (136,862,010)
--------------- ---------------
Net increase (decrease) in net assets resulting
from operations 490,517,175 (195,541,150)
--------------- ---------------
From Dividends and Distributions:
Dividends from net investment income
Common Class shares 0 0
Advisor Class shares 0 0
Distributions from realized gains
Common Class shares 0 (92,762,400)
Advisor Class shares 0 (25,707,966)
--------------- ---------------
Net decrease in net assets from dividends
and distributions 0 (118,470,366)
--------------- ---------------
From Capital Share Transactions:
Proceeds from sale of shares 724,682,855 883,019,817
Reinvested dividends and distributions 225 114,956,027
Net asset value of shares redeemed (1,237,905,127) (813,237,032)
--------------- ---------------
Net increase (decrease) in net assets from
capital share transactions (513,222,047) 184,738,812
--------------- ---------------
Net increase (decrease) in net assets (22,704,872) (129,272,704)
Net Assets:
Beginning of year 1,843,544,087 1,972,816,791
--------------- ---------------
End of year $ 1,820,839,215 $ 1,843,544,087
=============== ===============
Undistributed Net Investment Income: $ 0 $ 0
=============== ===============
</TABLE>
See Accompanying Notes to Financial Statements.
24
<PAGE>
<TABLE>
<CAPTION>
Warburg Pincus Warburg Pincus
Small Company Value Post-Venture Capital
Fund Fund
---------------------------------- ----------------------------------
For the For the For the For the
Year Ended Year Ended Year Ended Year Ended
October 31, October 31, October 31, October 31,
--------------- --------------- --------------- ---------------
1999 1998 1999 1998
--------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
From Operations:
Net Investment Loss $ (354,167) $ (709,432) $ (892,636) $ (1,218,879)
Net Realized gain (loss) from security transactions 3,792,545 3,618,297 13,768,886 2,591,623
Net Realized (loss) from foreign currency related items 0 0 (305) 0
Net change in unrealized appreciation (depreciation)
from investments and foreign currency related items (4,750,334) (23,857,296) 11,121,513 (7,014,438)
--------------- --------------- --------------- ---------------
Net increase (decrease) in net assets resulting
from operations (1,311,956) (20,948,431) 23,997,458 (5,641,694)
--------------- --------------- --------------- ---------------
From Dividends and Distributions:
Dividends from net investment income
Common Class shares 0 0 0 0
Advisor Class shares 0 0 0 0
Distributions from realized gains
Common Class shares (2,280,474) (20,763,827) (96,730) 0
Advisor Class shares (1,680) (35,216) (1,306) 0
--------------- --------------- --------------- ---------------
Net decrease in net assets from dividends
and distributions (2,282,154) (20,799,043) (98,036) 0
--------------- --------------- --------------- ---------------
From Capital Share Transactions:
Proceeds from sale of shares 30,617,506 63,737,618 18,419,537 33,368,512
Reinvested dividends and distributions 2,155,694 19,972,777 93,862 0
Net asset value of shares redeemed (80,318,997) (185,521,859) (49,536,027) (68,656,533)
--------------- --------------- --------------- ---------------
Net increase (decrease) in net assets from
capital share transactions (47,545,797) (101,811,464) (31,022,628) (35,288,021)
--------------- --------------- --------------- ---------------
Net increase (decrease) in net assets (51,139,907) (143,558,938) (7,123,206) (40,929,715)
Net Assets:
Beginning of year 80,370,895 223,929,833 68,914,697 109,844,412
--------------- --------------- --------------- ---------------
End of year $ 29,230,988 $ 80,370,895 $ 61,791,491 $ 68,914,697
=============== =============== =============== ===============
Undistributed Net Investment Income: $ 0 $ 0 $ 0 $ 0
=============== =============== =============== ===============
</TABLE>
See Accompanying Notes to Financial Statements.
25
<PAGE>
Warburg Pincus Emerging Growth Fund
Financial Highlights
(For an Advisor Class share of the Fund Outstanding Throughout Each Year)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the Year Ended October 31
------------------------------------------------------------
YEAR ENDED: 1999 1998 1997 1996 1995
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Per-share data
Net asset value, beginning of year $ 32.51 $ 38.50 $ 31.99 $ 29.38 $ 22.05
-------- -------- -------- -------- --------
Investment activities:
Net investment loss (0.65) (0.49) (0.33) (0.09) (0.09)
Net gains or losses on investments
and foreign currency related items
(both realized and unrealized) 10.13 (3.11) 6.91 4.45 7.42
-------- -------- -------- -------- --------
Total from investment activities 9.48 (3.60) 6.58 4.36 7.33
-------- -------- -------- -------- --------
Less Distributions:
Distributions from realized capital gains 0.00 (2.39) (0.07) (1.75) 0.00
-------- -------- -------- -------- --------
Total distributions 0.00 (2.39) (0.07) (1.75) 0.00
-------- -------- -------- -------- --------
Net asset value, end of year $ 41.99 $ 32.51 $ 38.50 $ 31.99 $ 29.38
======== ======== ======== ======== ========
Total return 29.16% (9.75)% 20.62% 15.69% 33.24%
Ratios/Supplemental Data:
Net assets, end of year (000s omitted) $228,244 $311,023 $457,432 $362,696 $167,225
Ratio of expenses to average
net assets 1.72%@ 1.62%@ 1.63%@ 1.70%@ 1.76%
Ratio of net loss to average net assets (1.25)% (.87)% (1.01)% (1.05)% (1.08)%
Portfolio turnover rate 154.08% 91.60% 87.03% 65.77% 84.82%
</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 .01% for the year ended October 31, 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 1.71% for the year ended October 31, 1999, 1.62%, 1.63%
and 1.69% for the year ended October 31, 1998, 1997 and 1996, respectively.
See Accompanying Notes to Financial Statements.
26
<PAGE>
Warburg Pincus Small Company Value Fund
Financial Highlights
(For an Advisor Class share of the Fund Outstanding Throughout Each Period)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
December 29, 1995
For the Year Ended October 31, (Commencement of
------------------------- Operations) Through
PERIOD ENDED: 1999 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 loss (0.18) (0.40) (0.08) (0.02)
Net gains (losses) on investments
and foreign currency related items
(both realized and unrealized) (0.34) (3.02) 4.44 4.48
------ ------ ------ ------
Total from investment activities (0.52) (3.42) 4.36 4.46
------ ------ ------ ------
Less Distributions:
Distributions 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 $12.35 $13.30 $18.65 $14.46
====== ====== ====== ======
Total return (4.17)% (19.93)% 30.47% 44.60+
Ratios/Supplemental Data:
Net assets, end of period (000s omitted) $ 30 $ 53 $ 255 $ 5
Ratio of expenses to average
net assets 2.01%@ 1.97%@ 1.89%@ 1.97%*@
Ratio of net loss to average net assets (1.02)% (.92)% (.78)% (.52)%*
Decrease reflected in above
operating expense ratios due to
waivers/reimbursements .39% .27% .00% 1.46%*
Portfolio turnover rate 168.57% 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 .01% for the year ended October 31, 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 year ended October 31, 1999 and 1.97%, 1.88%
and 1.97% for the year or period ended October 31, 1998, 1997 and 1996,
respectively.
+ Non-annualized.
* Annualized.
See Accompanying Notes to Financial Statements.
27
<PAGE>
Warburg Pincus Post-Venture Capital Fund
Financial Highlights
(For an Advisor Class share of the Fund Outstanding Throughout Each Period)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the Period
September, 1995
For the Year Ended October 31, (Commencement of
----------------------------------------- Operations) Through
PERIOD ENDED: 1999 1998 1997 1996 October 31, 1995
------ ------- ------- ------- ------
<S> <C> <C> <C> <C> <C>
Per-share data
Net asset value, beginning of period $15.90 $ 17.44 $ 15.93 $ 10.68 $10.00
------ ------- ------- ------- ------
Investment activities:
Net investment gain (loss) (0.21) (0.01) (0.22) (0.05) 0.00
Net gains (losses) on investments
and foreign currency related items
(both realized and unrealized) 7.06 (1.53) 1.73 5.30 0.68
------ ------- ------- ------- ------
Total from investment activities 6.85 (1.54) 1.51 5.25 0.68
------ ------- ------- ------- ------
Less Distributions:
Distributions 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 $22.73 $ 15.90 $ 17.44 $ 15.93 $10.68
====== ======= ======= ======= ======
Total return 43.15% (8.83)% 9.48% 49.16% 6.80%+
Ratios/Supplemental Data:
Net assets, end of period (000s omitted) $2,902 $ 343 $ 270 $ 204 $ 1
Ratio of expenses to average
net assets 1.91%@ 1.90%@ 1.91%@ 1.90%@ 2.15%*
Ratio of net income or loss to
average net assets (1.64)% (1.65)% (1.52) (1.41)% .09%*
Decrease reflected in above
operating expense ratios due to
waivers/reimbursements .56% .66% .70% .75% 9.25%*
Portfolio turnover rate 83.94% 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 .01% for the year ended October 31, 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 year ended October 31, 1999 and 1.90%, 1.90%
and 1.90% for the year or period ended October 31, 1998, 1997 and 1996,
respectively.
+ Non-annualized.
* Annualized
See Accompanying Notes to Financial Statements.
28
<PAGE>
Warburg Pincus Domestic Equity Funds
Notes to Financial Statements
October 31, 1999
- --------------------------------------------------------------------------------
1. Significant Accounting Policies
The Warburg Pincus Emerging Growth Fund (the "Emerging Growth Fund") is
registered under the 1940 Act as a non-diversified, open-end management
investment company. The Warburg Pincus Small Company Value Fund (the "Small
Company Value Fund") and the Warburg Pincus Post-Venture Capital Fund (the "Post
Venture Capital Fund") are registered under the Investment Company Act of 1940,
as amended (the "1940 Act"), as diversified, open-end management investment
companies (each a "Fund" and collectively, the "Funds").
Investment objectives for each Fund are as follows: the Emerging Growth
Fund seeks maximum capital appreciation; the Small Company Value Fund seeks
long-term capital appreciation and the Post-Venture Capital Fund seeks long-term
growth of capital.
Each Fund may invest up to 15% of its assets in non-publicly traded
securities. Non-publicly traded securities may be less liquid than publicly
traded securities, and they may be difficult or impossible to sell at the time
and the price the Fund would like. In addition, the lack of an active market may
make it difficult to obtain an accurate price for a Fund security.
Each Fund offers two classes of shares, one class being referred to as the
Common Class shares and one class being referred to as the Advisor Class shares.
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 and the Post-Venture Capital Fund each bear
expenses paid pursuant to a shareholder servicing and distribution plan at an
annual rate of .25% of the average daily net asset value of each Fund's Common
Class shares. 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 the applicable Fund's Advisor Class shares. Advisor Class shares are
currently bearing expenses of .50% of average daily net assets.
29
<PAGE>
Warburg Pincus Domestic Equity Funds
Notes to Financial Statements (cont'd)
October 31, 1999
- --------------------------------------------------------------------------------
1. Significant Accounting Policies -- (cont'd)
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 accurately reflect an investment's value.
The Post-Venture Capital Fund initially values its investments in
private-equity portfolios at cost. After that, the Fund values these investments
according to reports from the private-equity portfolios that Abbott Capital
Management, LLC ("Abbott"), the Fund's sub-investment adviser, generally
receives on a quarterly basis. The Fund's net asset value typically will not
reflect interim changes in the values of its private-equity-portfolio
investments.
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.
30
<PAGE>
Warburg Pincus Domestic Equity Funds
Notes to Financial Statements (cont'd)
October 31, 1999
- --------------------------------------------------------------------------------
1. Significant Accounting Policies -- (cont'd)
Dividends from net investment income and net realized capital gains, if
any, are declared and paid at least annually. However, to the extent that a net
realized capital gain can be reduced by a capital loss carryover, such gain will
not be distributed. Income and capital gain distributions are determined in
accordance with federal income tax regulations which may differ from generally
accepted accounting principles.
No provision is made for federal taxes, as it is each Fund's intention to
continue to qualify for and elect the tax treatment applicable to regulated
investment companies under the Internal Revenue Code of 1986, as amended, (the
"Code") and make the requisite distributions to its shareholders, which will be
sufficient to relieve it from federal income and excise taxes.
Costs incurred in connection with organization 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 Funds advised by Credit Suisse Asset
Management, LLC ("CSAM LLC"), can transfer uninvested cash balances to a pooled
cash account, which can invest 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. As of October 31, 1999 the Funds had no
investments in repurchase agreements.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities at the
date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from these
estimates.
31
<PAGE>
Warburg Pincus Domestic Equity Funds
Notes to Financial Statements (cont'd)
October 31, 1999
- --------------------------------------------------------------------------------
The Funds have an arrangement with their transfer agent whereby interest
earned on uninvested cash balances was used to offset a portion of their
transfer agent expense. For the year ended October 31, 1999, the Funds received
credits or reimbursements under this arrangement as follows:
Fund Amount
---- --------
Emerging Growth $142,755
Small Company Value 2,287
Post-Venture Capital 3,732
2. Investment Adviser, Co-Administrators and Distributor
On July 6, 1999, CSAM LLC became each Funds' investment adviser as a result
of the previously announced acquisition of Warburg Pincus Asset Management, Inc.
("Warburg Pincus") by Credit Suisse Group ("Credit Suisse"). Warburg Pincus was
combined with CSAM LLC, which is an indirect wholly-owned U.S. subsidiary of
Credit Suisse. For its investment advisory services, CSAM LLC 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
Post-Venture Capital 1.25% of average daily net assets
For the year ended October 31, 1999, investment advisory fees, voluntary
waivers and reimbursements were as follows:
<TABLE>
<CAPTION>
Gross Net Expense
Fund Advisory Fee Waiver Advisory Fee Reimbursements
---- ------------ -------- ------------ --------------
<S> <C> <C> <C> <C>
Emerging Growth $16,912,762 $ 0 $16,912,762 $ 0
Small Company Value 464,414 (146,999) 317,415 0
Post-Venture Capital 791,089 (297,084) 494,005 0
</TABLE>
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,
CSAM LLC pays Abbott a quarterly fee at the annual rate of 1.00% of the value of
the Post-Venture Capital 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.
32
<PAGE>
Warburg Pincus Domestic Equity Funds
Notes to Financial Statements (cont'd)
October 31, 1999
- --------------------------------------------------------------------------------
2. Investment Adviser, Co-Administrators and Distributor -- (cont'd)
Counsellors Funds Service, Inc. ("CFSI"), a wholly-owned subsidiary of CSAM
served as co-administrator of each Fund until November 1, 1999. On November 1,
1999, Credit Suisse Asset Management Securities, Inc. ("CSAMSI") replaced CFSI
as co-administrator to each Fund. PFPC Inc. ("PFPC"), an indirect, wholly-owned
subsidiary of PNC Bank Corp. ("PNC"), also serves as each Fund's
co-administrator. For its administrative services, CSAMSI currently receives a
fee calculated at the rate of .10% of each Fund's daily net assets. For the year
ended October 31, 1999, administrative services fees were as follows:
Fund Co-Administration Fee
---- ---------------------
Emerging Growth $1,879,196
Small Company Value 46,441
Post-Venture Capital 63,287
For administrative services, PFPC currently receives a fee, exclusive of
out-of-pocket expenses, calculated as follows:
Average Daily
Net Assets Annual Rate
------------------ -----------
First $500 million 0.10%
Next $1 Billion 0.075%
Over $1.5 Billion 0.05%
================== ======
For the year ended October 31, 1999, administrative services fees earned
and voluntarily waived by PFPC (including out-of-pocket expenses) were as
follows:
<TABLE>
<CAPTION>
Net
Fund Co-Administration Fee Waiver Co-Administration Fee
---- --------------------- -------- ---------------------
<S> <C> <C> <C>
Emerging Growth $1,443,896 $ 0 $1,443,896
Small Company Value 48,684 (28,790) 19,894
Post-Venture Capital 66,787 (23,715) 43,072
</TABLE>
CSAMSI also serves as each Fund's distributor. No compensation is paid by
the Common Class shares of the Emerging Growth Fund to CSAMSI for distribution
services. Provident Distributors, Inc. will become each Fund's distributor
effective January 3, 2000. For its shareholder and selling services, CSAMSI
receives a fee calculated at an annual rate of .25% of the average daily net
assets of the Post-Venture Capital Fund and the Small Company Value Fund
pursuant to a shareholder servicing and distribution plan adopted by each Fund
pursuant to Rule 12b-1 under the 1940 Act. CSAMSI receives a fee at an annual
rate of .50% of the average daily net assets of each Fund's Advisor Class shares
pursuant to a distribution plan adopted by each Fund pursuant to Rule 12b-1
under the 1940 Act which CSAMSI may
33
<PAGE>
Warburg Pincus Domestic Equity Funds
Notes to Financial Statements (cont'd)
October 31, 1999
- --------------------------------------------------------------------------------
2. Investment Adviser, Co-Administrators and Distributor -- (cont'd)
use to compensate service organizations for shareholder servicing and
distribution services. For the year ended October 31, 1999, shareholder
servicing and distribution fees were as follows:
Shareholder Servicing/
Fund Distribution Fee
---- ----------------------
Emerging Growth
Advisor Class shares $1,413,608
==========
Small Company Value
Common Class shares $ 115,996
Advisor Class shares 214
----------
$ 116,210
==========
Post-Venture Capital
Common Class shares $ 154,023
Advisor Class shares 8,389
----------
$ 162,412
==========
3. Line of Credit
The Funds, together with other Funds advised by CSAM LLC, have established
a $250 million committed, unsecured, line of credit facility ("Credit Facility")
with Deutsche Bank AG as administrative agent, State Street Bank and Trust
Company as operations agent, Bank of Nova Scotia as syndication agent as well as
certain other lenders, for temporary or emergency purposes primarily relating to
unanticipated portfolio share redemptions. Under the terms of the Credit
Facility, the Funds with access to the Credit Facility pay an aggregate
commitment fee at a rate of .075% per annum on the average daily balance of the
Credit Facility that is undisbursed and uncanceled during the preceding quarter
allocated among the participating Funds in such manner as is determined by the
governing Boards of the various Funds. In addition, the participating Funds will
pay interest on borrowing at the Federal funds rate plus .50%. At October 31,
1999, there were no loans outstanding for any of the Funds. During the year
ended October 31, 1999, the Funds had the following borrowings under the Credit
Facility:
Maximum
Average Daily Average Daily Loan
Fund Loan Balance Interest Rate % Outstanding
- ---- ------------- --------------- -----------
Small Company Value $30,671 5.36 $2,119,000
Post-Venture Capital 55,488 5.38 3,972,000
34
<PAGE>
Warburg Pincus Domestic Equity Funds
Notes to Financial Statements (cont'd)
October 31, 1999
- --------------------------------------------------------------------------------
4. Investments in Securities
At October 31, 1999, purchases and sales of investment securities (excluding
short-term investments) were as follows:
Fund Purchases Sales
---- -------------- --------------
Emerging Growth $2,726,104,845 $3,160,068,235
Small Company Value 76,073,610 117,882,752
Post-Venture Capital 51,850,574 81,923,591
At October 31, 1999, the net unrealized appreciation from investments for
those securities having an excess of value over cost and net unrealized
depreciation from investments for those securities having an excess of cost over
value (based on cost for federal income tax purposes) was as follows:
Unrealized Unrealized Net Unrealized
Fund Appreciation Depreciation Appreciation
---- ------------ ------------ -------------
Emerging Growth $595,974,191 $(63,532,429) $532,441,762
Small Company Value 3,758,722 (1,826,580) 1,932,142
Post-Venture Capital 24,172,680 (1,109,927) 23,062,753
5. Restricted Securities
Certain Funds' investments are restricted as to resale, are not readily
marketable and are valued as determined by or under the direction of each Fund's
Board in good faith, at fair value. The table below shows the number of shares
held, the acquisition dates, aggregate cost, fair value as of October 31, 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>
Emerging
Growth
Fund
Chaparral Resources, Inc. Common 07/28/98 $ 1,250,000 $ 83,333 0.00
Comptek Research, Inc. Bond 03/24/99 7,000,000 7,000,000 0.40
Network Event Theater, Inc. Common 02/06/98 4,000,001 15,458,335 0.80
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. Preferred 01/08/98 1,500,000 1,837,434 0.10
Women First Healthcare, Inc. Warrants 03/18/99 0 0 0.00
----------- ----------- ----
$18,999,986 $29,629,087 1.60%
=========== =========== ====
</TABLE>
35
<PAGE>
Warburg Pincus Domestic Equity Funds
Notes to Financial Statements (cont'd)
October 31, 1999
- --------------------------------------------------------------------------------
5. Restricted Securities -- (cont'd)
<TABLE>
<CAPTION>
Percentage
Security Acquisition Market of Net
Fund Security Description Type Date(s) Cost Value Assets
- ---- -------------------- -------- ---------- ----=------ ----------- ----------
<S> <C> <C> <C> <C> <C>
Small Company
Value Fund
EA Industries, Inc. Bond 04/17/97 $ 1,500,000 $ 150,000 0.50%
EA Industries, Inc. Warrants 03/31/98 $ 110,438 $ 0 0.00%
----------- ---------- -----
$ 1,610,438 $ 150,000 0.50%
=========== ========== =====
Post-Venture
Capital Fund
Boston Ventures V, L.P. Private 09/01/96 $ 520,499 $ 463,267 0.70
Chaparral Resources, Inc. Common 07/28/98 500,000 33,333 0.10
MaMaMedia, Inc. Common 09/13/99 499,997 499,997 0.80
New Enterprise Associates VII, L.P. Private 12/01/96 848,154 2,071,355 3.40
New York Restaurant Group, Inc. Common 10/30/97 749,998 749,998 1.20
Princeton Video Image, Inc. Common 10/21/99 500,000 500,000 0.80
Women.com Networks Common 06/04/98 906,752 3,435,310 5.60
---------- ---------- -----
$4,525,400 $ 7,753,260 12.60%
========== =========== =====
</TABLE>
6. Forward Foreign Currency Contracts
Each Fund may enter into forward currency contracts for the purchase or sale
of a specific foreign currency at a fixed price on a future date. Risks may
arise upon entering into these contracts from the potential inability of
counterparties to meet the terms of their contracts and from unanticipated
movements in the value of a foreign currency relative to the U.S. dollar. Each
Fund will enter into forward contracts primarily for hedging purposes. Forward
currency contracts are adjusted by the daily exchange rate of the underlying
currency and any gains or losses are recorded for financial statement purposes
as unrealized until the contract settlement date or an offsetting position is
entered into. At October 31, 1999, there were no open forward foreign currency
contracts.
7. Futures Contracts
Each Fund may enter into futures contracts to the extent permitted by its
investment policies and objectives. Upon entering into a futures contract, a
Fund is required to make a deposit of an initial margin with its custodian in a
segregated account. Subsequent payments, which are dependent on the daily
fluctuations in a value of the underlying instrument, are made or received by a
Fund each day (daily variation margin) and are recorded as unrealized gains or
losses until the contracts are closed. When the contract is closed, a Fund
records a realized gain or loss equal to the difference between the proceeds
from (or cost of) the closing transactions and a Fund's basis in the
36
<PAGE>
Warburg Pincus Domestic Equity Funds
Notes to Financial Statements (cont'd)
October 31, 1999
- --------------------------------------------------------------------------------
7. Futures Contracts -- (cont'd)
contract. Risks of enterings into futures contracts include the possibility
that a change in the value of the contract may not correlate with the changes in
the value of the underlying instruments. Second, it is possible that a lack of
liquidity for futures contracts could exist in the secondary market, resulting
in an inability to close a futures position prior to its maturity date. Third,
the purchase of a futures contract involves the risk that a Fund could lose more
than the original margin deposit required to initiate a futures transaction. At
October 31, 1999, there were no open futures contracts.
8. 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 (two
billion in the case of the Emerging Growth Fund) of each Fund are classified as
the Advisor Class.
Transactions in classes of each Fund were as follows:
<TABLE>
<CAPTION>
Emerging Growth Fund
---------------------------------------------------------------------------
Common Class shares Advisor Class shares
----------------------------------- -----------------------------------
For the For the For the For the
Year Ended Year Ended Year Ended Year Ended
October 31, October 31, October 31, October 31,
1999 1998 1999 1998
--------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
Shares sold 17,598,528 21,883,507 882,074 1,347,746
Shares issued to shareholders on reinvestment
of dividends 6 2,487,833 0 739,355
Shares redeemed (26,668,182) (17,094,103) (5,013,511) (4,400,677)
--------------- --------------- --------------- ---------------
Net increase (decrease) in shares outstanding (9,069,648) (7,277,237) (4,131,437) (2,313,576)
=============== =============== =============== ===============
Proceeds from sale of shares $ 690,945,900 $ 832,153,742 $ 33,736,955 $ 50,866,075
Reinvested distributions 225 89,263,454 0 25,692,573
Net asset value of shares redeemed (1,047,436,237) (649,384,554) (190,468,890) (163,852,478)
--------------- --------------- --------------- ---------------
Net increase (decrease) from capital share
transactions $ (356,490,110) $ 272,032,642 $ (156,731,935) $ (87,293,830)
=============== =============== =============== ===============
</TABLE>
37
<PAGE>
Warburg Pincus Domestic Equity Funds
Notes to Financial Statements (cont'd)
October 31, 1999
- --------------------------------------------------------------------------------
8. Capital Share Transactions -- (cont'd)
<TABLE>
<CAPTION>
Small Company Value Fund
-------------------------------------------------------------------
Common Class shares Advisor Class shares
------------------------------- -------------------------------
For the For the For the For the
Year Ended Year Ended Year Ended Year Ended
October 31, October 31, October 31, October 31,
1999 1998 1999 1998
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Shares sold 2,370,859 3,790,193 2,662 124,701
Shares issued to shareholders on reinvestment
of dividends 161,133 1,261,331 101 1,980
Shares redeemed (6,189,358) (10,971,376) (4,265) (136,386)
------------- ------------- ------------- -------------
Net decrease in shares outstanding (3,657,366) (5,919,852) (1,502) (9,705)
============= ============= ============= =============
Proceeds from sale of shares $ 30,585,137 $ 61,572,814 $ 32,369 $ 2,164,804
Reinvested distributions 2,154,348 19,941,713 1,346 31,064
Net asset value of shares redeemed (80,265,308) (183,185,391) (53,689) (2,336,468)
------------- ------------- ------------- -------------
Net decrease from capital share
transactions $ (47,525,823) $(101,670,864) $ (19,974) $ (140,600)
============= ============= ============= =============
<CAPTION>
Post-Venture Capital Fund
-------------------------------------------------------------------
Common Class shares Advisor Class shares
------------------------------- -------------------------------
For the For the For the For the
Year Ended Year Ended Year Ended Year Ended
October 31, October 31, October 31, October 31,
1999 1998 1999 1998
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Shares sold 831,935 1,777,588 125,859 21,227
Shares issued to shareholders on reinvestment
of dividends 5,346 0 75 0
Shares redeemed (2,549,022) (3,738,272) (19,834) (15,152)
------------- ------------- ------------- -------------
Net increase (decrease) in shares outstanding (1,711,741) (1,960,684) 106,100 6,075
============= ============= ============= =============
Proceeds from sale of shares $ 16,031,249 $ 33,045,233 2,388,288 $ 323,279
Reinvested distributions 92,588 0 1,274 0
Net asset value of shares redeemed (49,138,027) (68,403,457) (398,000) (253,076)
------------- ------------- ------------- -------------
Net increase (decrease) from capital share
transactions $ (33,014,190) $ (35,358,224) $ 1,991,562 $ 70,203
============= ============= ============= =============
</TABLE>
38
<PAGE>
Warburg Pincus Domestic Equity Funds
Notes to Financial Statements (cont'd)
October 31, 1999
- --------------------------------------------------------------------------------
9. Liabilities
At October 31, 1999, each Fund had the following liabilities:
<TABLE>
<CAPTION>
Emerging Small Company Post-Venture
Growth Value Capital
Fund Fund Fund
----------- ----------- -----------
<S> <C> <C> <C>
Payable for securities purchased $36,916,055 $ 3,271,423 $ 1,233,134
Investment advisory fee payable 1,321,199 25,350 18,483
Administrative services fees payable 264,115 3,672 6,454
Distribution fees payable 0 6,210 11,297
Fund shares redeemed payable 13,253,859 1,033,285 27,069
----------- ----------- -----------
$51,755,227 $ 4,339,940 $ 1,296,436
=========== =========== ===========
</TABLE>
10. Net Assets
At October 31, 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 and Small Company Value Fund reclassified ($15,518,919) and
($354,167) respectively, from accumulated net investment loss to capital
contributions. The Post Venture Capital Fund reclassified ($892,636), from
accumulated net investment loss to accumulated net realized gain from security
transactions.
Net Assets at October 31, 1999 consisted of the following:
<TABLE>
<CAPTION>
Emerging Small Company Post-Venture
Growth Value Capital
Fund Fund Fund
-------------- -------------- --------------
<S> <C> <C> <C>
Capital contributed, net $1,031,110,657 $ 23,795,291 $ 25,950,249
Accumulated net realized gain from
security transactions 252,483,314 3,289,382 12,778,497
Net unrealized appreciation (depreciation)
from investments and foreign currency
related items 537,245,244 2,146,315 23,062,745
-------------- -------------- --------------
Net assets $1,820,839,215 $ 29,230,988 $ 61,791,491
============== ============== ==============
</TABLE>
11. Proposed Acquisition of Post-Venture Capital
On October 23, 1999, the Board of Directors reviewed and unanimously approved
a proposal for the Warburg, Pincus Global Post-Venture Capital Fund, Inc. (the
"Acquiring Fund") to acquire the Warburg, Pincus Post-Venture Capital Fund, Inc.
(the "Acquired Fund"). Under the terms of the proposal, the Acquiring Fund would
acquire all or substantially all of the assets and liabilities of the Acquired
Fund.
39
<PAGE>
Warburg Pincus Domestic Equity Funds
Notes to Financial Statements (cont'd)
October 31, 1999
- --------------------------------------------------------------------------------
11. Proposed Acquisition of Post-Venture Capital -- (cont'd)
Upon completion of the acquisition, each shareholder of the Acquired Fund
would become a shareholder of the Acquiring Fund and receive shares of the same
class of the Acquired Fund with a value equal to the value of the shareholder's
investment in the Fund. The Acquired fund will be liquidated upon consummation
of the Acquisition. Shareholders of record as of November 16, 1999, will be
entitled to vote on this proposal. Proxy materials describing the proposed
acquisition were/will be mailed to shareholders of the Acquired Fund in
anticipation of a special meeting of shareholders, which is scheduled for
January 27, 2000. Completion of the acquisition is expected to occur January 28,
2000.
40
<PAGE>
Warburg Pincus Domestic Equity Funds
Notes to Financial Statements (cont'd)
October 31, 1999
- --------------------------------------------------------------------------------
12. Other Financial Highlights
Each fund currently offers one other class of shares, Common Class shares,
representing equal pro rata interests in each of the respective Funds. The
financial highlights for a Common Class share of each Fund are as follows:
<TABLE>
<CAPTION>
Warburg Pincus Emerging Growth Fund
----------------------------------------------------------------------
Common Class shares
----------------------------------------------------------------------
YEAR ENDED: 1999 1998 1997 1996 1995
---------- ---------- ---------- ---------- --------
<S> <C> <C> <C> <C> <C>
Per-share data
Net asset value,
beginning of year $ 33.69 $ 39.66 $ 32.80 $ 29.97 $ 22.38
---------- ---------- ---------- ---------- --------
Investment Activities:
Net investment loss (0.33) (0.12) (0.19) (0.02) (0.05)
Net gains (losses) on
investments and foriegn
currency related items (both
realized and unrealized) 10.37 (3.46) 7.12 4.60 7.64
---------- ---------- ---------- ---------- --------
Total from investment
activities 10.04 (3.58) 6.93 4.58 7.59
---------- ---------- ---------- ---------- --------
Less Distributions:
Distributions from realized capital gains 0.00 (2.39) (0.07) (1.75) 0.00
---------- ---------- ---------- ---------- --------
Total distributions 0.00 (2.39) (0.07) (1.75) 0.00
---------- ---------- ---------- ---------- --------
Net asset value, end of year $ 43.73 $ 33.69 $ 39.66 $ 32.80 $ 29.97
========== ========== ========== ========== ========
Total return 29.80% (9.40)% 21.18% 16.14% 33.91%
Ratios/Supplemental Data:
Net assets, end of year (000s omitted) $1,592,595 $1,532,521 $1,515,385 $1,104,684 $487,537
Ratio of expenses to
average net assets 1.23%@ 1.22%@ 1.22%@ 1.28%@ 1.26%
Ratio of net loss to
average net assets (.75)% (.48)% (.59)% (.63)% (.58)%
Portfolio turnover rate 154.08% 91.60% 87.03% 65.77% 84.82%
</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 Common Class shares' expenses by .01% for the year ended October 31,
1999, and by .00%, .01% and .01% for the years ending 1998, 1997 and 1996,
respectively. The Common Class shares' operating expense ratio after
reflecting these arrangements were 1.22% for the year ended October 31,
1999, and 1.22%, 1.21% and 1.27% for the years ending 1998, 1997 and 1996,
respectively.
41
<PAGE>
Warburg Pincus Domestic Equity Funds
Notes to Financial Statements (cont'd)
October 31, 1999
- --------------------------------------------------------------------------------
12. Other Financial Highlights -- (cont'd)
<TABLE>
<CAPTION>
Warburg Pincus Small Company Value Fund
------------------------------------------------------
Common Class shares
------------------------------------------------------
For the Year Ended October 31,
------------------------------------------------------
YEAR ENDED: 1999 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 (0.15) (0.12) (0.08) (0.02)
Net gains (losses) on investments and
foreign currency related items
(both realized and unrealized) (0.34) (3.33) 4.64 4.40
------- ------- ------- -------
Total from investment activities (0.49) (3.45) 4.56 4.38
------- ------- ------- -------
Less Distributions:
Distributions 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 $ 12.47 $ 13.39 $ 18.77 $ 14.38
======= ======= ======= =======
Total return (3.91)% (19.97)% 32.05% 43.80%+
Ratios/Supplemental Data:
Net assets, end of period (000s omitted) $29,201 $80,318 $223,675 $84,045
Ratio of expenses to average net assets 1.76%@ 1.70%@ 1.70%@ 1.75%*@
Ratio of net loss to average net assets (.76)% (.46)% (.63)% (.43)%*
Decrease reflected in above operating expense
ratios due to waivers/reimbursements .38% .01% .03% .44%*
Portfolio turnover rate 168.57% 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 Common Class shares' expenses by .01% for the year ending October 31,
1999, and by .00%, .01% and .00% for the year or period ending 1998, 1997
and 1996, respectively. The Common Class shares' operating expense ratio
after reflecting these arrangements were 1.75% for the year ended October
31, 1999 and 1.70%, 1.69% and 1.75% for the year or period ending 1998,
1997 and 1996, respectively.
+ Non-annualized.
* Annualized.
** For the period December 29, 1995 (commencement of operations) through
October 31, 1996.
42
<PAGE>
Warburg Pincus Domestic Equity Funds
Notes to Financial Statements (cont'd)
October 31, 1999
- --------------------------------------------------------------------------------
12. Other Financial Highlights -- (cont'd)
<TABLE>
<CAPTION>
Warburg Pincus Post-Venture Capital Fund
---------------------------------------------------------
Common Class share
---------------------------------------------------------
For the Year Ended October 31,
---------------------------------------------------------
PERIOD ENDED: 1999 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 (0.34) (0.50) (0.35) (0.11) 0.00
Net gains (losses) on investments
and foreign currency related items
(both realized and unrealized) 7.36 (1.02) 1.93 5.45 0.69
------- ------- -------- --------- ------
Total from investment activities 7.02 (1.52) 1.58 5.34 0.69
------- ------- -------- --------- ------
Less Distributions:
Distributions 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 $ 23.09 $ 16.09 $ 17.61 $ 16.03 $10.69
======= ======= ======== ========= ======
Total return 43.70% (8.63)% 9.86% 49.95% 6.90%+
Ratios/Supplemental Data:
Net assets, end of period (000s omitted) $58,890 $68,572 $109,575 $165,081 $3,024
Ratio of expenses to average net assets 1.66%@ 1.65%@ 1.66%@ 1.66%@ 1.65%*@
Ratio of net gain (loss) to average net assets (1.41)% (1.30)% (1.27)% (1.13)% .25%*
Decrease reflected in above operating
expense ratios due to waivers/
reimbursements .51% .41% .41% .66% 23.76%*
Portfolio turnover rate 83.94% 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 Common Class shares' expenses by .01% for the year ended October 31,
1999 and by .00%, .01% and .01% for the year or period ended October 31,
1998, 1997 and 1996, respectively. The Common Class shares operating
expense ratios after reflecting these arrangements were 1.65% for the years
ending October 31, 1999, 1998, 1997 and 1996, respectively.
+ Non-annualized.
* Annualized.
** For the period September 29, 1995 (commencement of operations) through
October 31, 1995.
43
<PAGE>
Warburg Pincus Funds
Report of Independent Accountants
- --------------------------------------------------------------------------------
To the Board of Directors and Shareholders of
Warburg, Pincus Emerging Growth Fund, Inc.;
Warburg, Pincus Small Company Value Fund, Inc.;
Warburg, Pincus Post-Venture Capital Fund, Inc.:
In our opinion, the accompanying statement of assets and liabilities, including
the schedule of investments of Warburg, Pincus Small Company Value Fund, Inc.,
and the statements of net assets of Warburg, Pincus Emerging Growth Fund, Inc.,
and Warburg, Pincus, Post-Venture Capital Fund, Inc. (all funds collectively
referred to as the "Funds") at October 31, 1999, and the related statements of
operations and of changes in net assets and the financial highlights present
fairly, in all material respects, the financial position of each of the Funds at
October 31, 1999, the results of each of their operations for the year then
ended, the changes in each of their net assets for each of the two years in the
period then ended and the financial highlights for each of the years (or
periods) presented, in conformity with generally accepted accounting principles.
These financial statements and financial highlights (hereafter referred to as
"financial statements") are the responsibility of the Funds' management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these financial statements in accordance
with generally accepted auditing standards, which require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits, which included confirmation of securities at October
31, 1999 by correspondence with the custodians and brokers, provide a reasonable
basis for the opinion expressed above.
PricewaterhouseCoopers LLP
2400 Eleven Penn Center
Philadelphia, Pennsylvania
December 10, 1999
44
<PAGE>
ANNUAL REPORT
October 31, 1999
WARBURG PINCUS EMERGING GROWTH FUND
WARBURG PINCUS SMALL COMPANY GROWTH FUND
WARBURG PINCUS SMALL COMPANY VALUE FUND
WARBURG PINCUS POST-VENTURE CAPITAL FUND
Shareholder Meeting Results
A special meeting of shareholders of each Fund was held on May 21, 1999. At the
special meeting, the following persons were elected as directors of each Fund,
constituting the entire Board of Directors: Richard H. Francis, Jack W. Fritz,
Jeffrey E. Garten, James S. Pasman, Jr., William W. Priest, Steven N. Rappaport,
Arnold M. Reichman and Alexander B. Trowbridge.
In addition, shareholders of each Fund voted on the following matters:
<TABLE>
<S> <C>
Proposal 1: Approval of a new investment advisory agreement
between each Fund and Credit Suisse Asset
Management, LLC.
Proposal 2: Ratification of the selection of
PricewaterhouseCoopers
LLP as the independent accountants for each of
the Funds for the fiscal year ending October 31,
1999.
</TABLE>
Shareholders of the Post-Venture Capital Fund also voted on the following
matter:
<TABLE>
<S> <C>
Proposal 3: Approval of a new sub-investment advisory
agreement between the Fund, Credit Suisse Asset
Management, LLC and Abbott Capital Management,
LLC.
</TABLE>
The voting results for each Fund were as follows:
Election of Directors:
<TABLE>
<S> <C> <C>
|EMERGING GROWTH FOR | WITHHELD |
|Richard H. Francis 29,237,120.5210 | 380,267.5830 |
|Jack W. Fritz 29,243,920.7210 | 373,467.3830 |
|Jeffrey E. Garten 29,249,698.6660 | 367,689.4380 |
|James S. Pasman, Jr. 29,239,242.4570 | 378,145.6470 |
|William W. Priest 29,243,484.5650 | 373,903.5390 |
|Steven N. Rappaport 29,242,785.0820 | 374,603.0220 |
|Arnold M. Reichman 29,246,610.9290 | 370,777.1750 |
|Alexander B. Trowbridge 29,243,507.0550 | 373,881.0490 |
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
|SMALL COMPANY GROWTH FOR | WITHHELD |
|Richard H. Francis 328,498.4029 | 1,330.0291 |
|Jack W. Fritz 328,498.4029 | 1,330.0291 |
|Jeffrey E. Garten 328,498.4029 | 1,330.0291 |
|James S. Pasman, Jr. 328,498.4029 | 1,330.0291 |
|William W. Priest 328,498.4029 | 1,330.0291 |
|Steven N. Rappaport 328,498.4029 | 1,330.0291 |
|Arnold M. Reichman 328,498.4029 | 1,330.0291 |
|Alexander B. Trowbridge 328,498.4029 | 1,330.0291 |
|SMALL COMPANY VALUE FOR | WITHHELD |
|Richard H. Francis 2,411,597.8009 | 69,128.9621 |
|Jack W. Fritz 2,408,973.9179 | 71,752.8451 |
|Jeffrey E. Garten 2,418,534.8009 | 62,191.9621 |
|James S. Pasman, Jr. 2,417,545.8009 | 63,180.9621 |
|William W. Priest 2,418,534.8009 | 62,191.9621 |
|Steven N. Rappaport 2,418,242.8009 | 62,483.9621 |
|Arnold M. Reichman 2,419,500.0499 | 61,226.7131 |
|Alexander B. Trowbridge 2,414,946.6689 | 65,780.0941 |
|POST-VENTURE CAPITAL FOR | WITHHELD |
|Richard H. Francis 2,220,774.6731 | 61,880.8179 |
|Jack W. Fritz 2,218,746.5141 | 63,908.9769 |
|Jeffrey E. Garten 2,223,313.1041 | 59,342.3869 |
|James S. Pasman, Jr. 2,222,020.4281 | 60,635.0629 |
|William W. Priest 2,220,268.7831 | 62,386.7079 |
|Steven N. Rappaport 2,221,785.7651 | 60,869.7259 |
|Arnold M. Reichman 2,223,120.0251 | 59,535.4659 |
|Alexander B. Trowbridge 2,218,821.5781 | 63,833.9129 |
</TABLE>
<PAGE>
Proposal 1:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
| EMERGING | SMALL COMPANY | SMALL COMPANY | POST-VENTURE |
| GROWTH | GROWTH | VALUE | CAPITAL |
--------------- ------------- -------------- --------------
| TOTAL NUMBER | TOTAL NUMBER | TOTAL NUMBER | TOTAL NUMBER |
| OF VOTES | OF VOTES | OF VOTES | OF VOTES |
Approve | 28,689,748.4068 | 325,089.4476 | 2,396,996.6691 | 2,171,955.0888 |
Disapprove | 337,657.0190 | 3,443.0283 | 46,560.6670 | 79,066.7684 |
Abstain | 589,982.6782 | 1,295.9561 | 37,169.4269 | 31,633.6338 |
</TABLE>
Proposal 2:
<TABLE>
<S> <C> <C> <C> <C> <C>
| EMERGING | SMALL COMPANY | SMALL COMPANY | POST-VENTURE |
| GROWTH | GROWTH | VALUE | CAPITAL |
--------------- ------------- -------------- --------------
| TOTAL NUMBER | TOTAL NUMBER | TOTAL NUMBER | TOTAL NUMBER |
| OF VOTES | OF VOTES | OF VOTES | OF VOTES |
Approve | 29,168,747.9235 | 328,264.7980 | 2,438,623.1574 | 2,238,264.5022 |
Disapprove | 137,312.8652 | 1,179.2667 | 14,989.5926 | 23,329.4720 |
Abstain | 311,327.3153 | 384.3673 | 27,114.0130 | 21,061.5168 |
</TABLE>
Proposal 3:
<TABLE>
<S> <C>
| TOTAL NUMBER |
|POST-VENTURE CAPITAL OF VOTES |
|Approve 2,158,292.1618 |
|Disapprove 75,771.8558 |
|Abstain 48,591.4734 |
</TABLE>
<PAGE>
Warburg Pincus Domestic Equity Funds
Shareholder Tax Information (Unaudited)
- --------------------------------------------------------------------------------
Each Fund is required by Subchapter M of the Code to advise its shareholders
within 60 days of the Fund's fiscal year end as to the U.S. federal tax status
of distributions received by the Fund's shareholders in respect of such fiscal
year. During the fiscal year ended October 31, 1999, the following dividends and
distributions per share were paid by each of the Funds:
<TABLE>
<CAPTION>
Ordinary Long-term % of ordinary income
income capital gains dividend qualifying for
Fund per share per share dividends received deduction*
- ---- --------- ------------- ------------------------------
1998
Payment date 12/04/98 12/04/98
------------ -------- --------
<S> <C> <C> <C>
Small Company Value 0.00
Common shares $0.0000 $0.4250
Advisor shares 0.0000 0.4250
Post Venture Capital 0.00
Common shares 0.0000 0.0237
Advisor shares 0.0000 0.0237
</TABLE>
The Emerging Growth Fund did not pay any ordinary income dividends or capital
gain distributions during the current fiscal year. Further, the above
information was provided to calendar year taxpayers via Form 1099-DIV mailed in
January of 1999.
Because the fiscal year of the Funds is not a calendar year, another
notification will be sent with respect to calendar year 1999. The second
notification, which will reflect the amount to be used by calendar year
taxpayers on their U.S. federal income tax returns, will be made in conjunction
with Form 1099-DIV and will be mailed in January 2000.
- --------------
* Available to Corporate Shareholders only.
45
<PAGE>
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<PAGE>
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<PAGE>
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<PAGE>
WARBURG PINCUS
ADVISOR FUNDS
CREDIT SUISSE
ASSET MANAGEMENT
SECURITIES, INC.,
DISTRIBUTOR
Credit Suisse Asset Management Securities, Inc., Distributor, 466 Lexington
Avenue, New York, NY 10017. Telephone: 800-927-2874. Warburg Pincus Advisor
Funds are advised by Credit Suisse Asset Management, LLC.
[GRAPHIC OMITTED]
WARBURG PINCUS
ADUSS-2-1099
