<PAGE>
[WARBURG LOGO]
[GLOBE LOGO]
SEMIANNUAL REPORT
FEBRUARY 28, 1995
[ ] WARBURG PINCUS GROWTH & INCOME FUND
[ ] WARBURG PINCUS BALANCED FUND
<PAGE>
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WARBURG PINCUS FUNDS
SEMIANNUAL REPORT
February 28, 1995
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ECONOMIC OVERVIEW
Currently, our assessment of the investment environment leads us to be
cautious. The domestic stock market as measured by the Standard & Poor's 500
Index is in record-breaking territory, while the domestic bond market has also
experienced a strong rally since the end of the 1994 calendar year. Weakness
throughout most international markets, especially emerging markets, has tended
to fuel U.S. stock and bond prices as money has been withdrawn from overseas and
invested domestically.
The recent performance of U.S. stock and bond markets has exceeded our
expectations, leaving us to conclude that both these markets are somewhat
overvalued. At the same time, the economy has continued to grow, which we
believe will cause a modest rise in interest rates and producer prices over the
short term. As higher producer prices get passed on to consumers, inflation
should also rise temporarily. The combination of slightly higher interest rates
and inflation is likely to cause some weakness in U.S. stock and bond prices.
Additionally, the flow of investments from overseas may subside when
international markets stabilize.
The result, we believe, is that the outlook for U.S. financial assets is
somewhat cloudy over the next several months. We are finding it relatively
difficult to uncover stocks that meet our value-oriented investment criteria. In
order for the stock market to become attractive to us at current price levels,
interest rates would have to decline substantially or the growth in corporate
earnings would have to accelerate. Neither of these conditions is likely to be
met soon. As already discussed, we expect to see slightly higher interest rates
over the short term. We also do not consider it likely that the economy, now in
its fourth year of an expansion, will give rise to accelerated growth in
corporate earnings. While the long-term outlook for our stock holdings is
positive, we remain cautious about adding new positions.
Similarly, in formulating a strategy for our fixed income investments, we
have taken a conservative approach and positioned our holdings to have a
relatively short average maturity. A further interest-rate hike by the Federal
Reserve in the near future would not surprise us. Our positioning should protect
us from suffering significant principal loss in the event of such a hike. When
we believe interest rates have peaked, we will then extend the average maturity
of our holdings to lock in higher yields.
WARBURG PINCUS GROWTH & INCOME FUND
The investment objectives of Warburg Pincus Growth & Income Fund are the
long-term growth of capital and income and a reasonable current return. The Fund
primarily invests in equity securities, particularly common stocks that we
believe are selling below their true value. The levels of dividend and interest
income provided by the Fund vary significantly over time depending on market
conditions and the relative attractiveness of stocks, bonds, and money market
instruments.
For the six months ended February 28, 1995, Warburg Pincus Growth & Income
Fund declined 1.23%. During the same period, the Lipper Growth & Income Fund
Index was up 0.90% and the Standard & Poor's 500 Index rose 3.96%. Over the 12
months ended February 28, the Fund gained
1
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<PAGE>
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WARBURG PINCUS FUNDS
SEMIANNUAL REPORT (CONT'D)
February 28, 1995
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3.53%, versus the 3.80% increase in the Lipper Index, while the S&P 500 advanced
7.34%. The Fund paid an income dividend of $.0667 per share on December 16,
1994.
For reasons detailed in the Economic Overview, we have continued to
maintain a relatively low exposure to the stock market and have ended the fiscal
year with 36% of the Fund's portfolio in money market instruments and other
short-term assets. Until stock valuations improve, we do not anticipate making a
significant reduction in the Fund's defensive money market position.
The Fund currently has 19% of its assets invested in the banking,
financial-services, and insurance sectors. As interest rates rose during much of
the past year, many stocks in these sectors were beaten down. In addition, the
stocks of banking and financial-services companies declined even further when
derivatives were blamed for several financial setbacks. Fears that companies
would pay heavily for their involvement with derivatives resulted in some issues
becoming available at attractive prices. Going forward, as investors eventually
realize that not all of the companies in these sectors have problems related to
derivatives, we believe selectively chosen banking and financial-services stocks
will perform well. Our major investments in these sectors and the insurance
sector include Allstate, BankAmerica, the Federal Home Loan Mortgage
Corporation, Travelers, and USF&G.
The metals & mining sector now represents 11% of the Fund's assets. We
continue to like gold, which is experiencing strong demand both from jewelry
makers and from those wishing to hold the metal as an investment. Developing
nations in Asia, particularly China, have been increasing their purchases. Gold
production, meanwhile, has not risen for several years. Although the stocks of
gold-mining companies have been weak over the past year, we believe increased
demand will soon put upward pressure on these stocks, and we have invested
accordingly. Our holdings include Homestake Mining, Newmont Mining, Pegasus
Gold, and Placer Dome.
The broadcasting, entertainment, and telecommunications sectors account for
9% of the Fund's assets. Many companies in these sectors continue to benefit
from strong revenues and cash flows. We believe there is potential for solid
growth in these sectors as the prospect for reduced government regulation looms.
In addition to our previous holdings, which include Acclaim Entertainment,
Comcast, and Tele-Communications, we recently added Cox Communications. This new
company was created when Cox combined its cable properties with those of Times
Mirror in a joint venture that was then offered to the public.
Oil and oil-services companies make up another 4% of the Fund's assets.
Stock valuations for some of these companies are low, largely due to an abundant
supply of oil over the past few years. Demand from both developed and
underdeveloped countries is now rising, however. In particular, the
underdeveloped countries are relying on oil to fuel electric utilities because
they are finding oil-fired plants the least costly to construct. Consequently,
we expect a balance to be restored in the marketplace. As demand increases, we
believe this demand will begin to put pressure on supplies, whose stock values
have not grown in years. That should benefit companies involved in oil
exploration and related services,
2
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WARBURG PINCUS FUNDS
SEMIANNUAL REPORT (CONT'D)
February 28, 1995
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whose stock values have been depressed. Our investment positions now consist of
Baker Hughes and Halliburton.
In an effort to enhance our management capabilities, we recently welcomed
Linda H. Diaz to our firm. She will be serving as a research analyst and
assistant portfolio manager for Warburg Pincus Growth & Income Fund. Prior to
joining us, Linda worked in the Asset Management Division at Kidder Peabody &
Co. from 1991 to 1994.
Although we are concerned about some near-term risks in the stock market,
we are optimistic about the long-term growth potential of the companies we have
chosen. As always, we are actively searching for additional companies that meet
our value-oriented investment criteria.
WARBURG PINCUS BALANCED FUND
The investment objective of Warburg Pincus Balanced Fund is to maximize
total return through a combination of long-term growth of capital and current
income consistent with preservation of capital. We pursue this objective by
means of a multi-manager approach. Investments in the Fund are primarily
distributed among five sectors, which consist of the Fixed Income Sector and
four Equity Sectors: U.S. Value, U.S. Small Company, U.S. Mid-Cap, and
International Equity. Sector allocations vary over time, and every equity sector
might not always be utilized.
For the six months ended February 28, 1995, Warburg Pincus Balanced Fund
gained 2.22%, which compared favorably to a 0.94% rise in the Lipper Balanced
Fund Index. Over the 12 months ended February 28, the Fund advanced 5.91%
compared to a 1.03% increase in the Lipper Index. It is important to note that
we assumed portfolio management of the Fund on September 30, 1994. The Fund was
formerly named RBB Balanced Portfolio and was managed by another investment
adviser.
As of the fiscal year-end, the Fund's assets are allocated as follows: 45%
in the Fixed Income Sector, 41% in the U.S. Value Sector, and 14% in money
market instruments and other short-term assets.
The Fund's Fixed Income allocation solely consists of U.S. Treasury bonds
with an average maturity of about three years. This is a conservative position,
both in terms of average maturity and credit quality. At the present time, we
believe the incremental yield offered by corporate bonds is insufficient to
justify the added risk that they entail over Treasury bonds. Looking ahead, if
interest rates move higher, we would expect to lock in greater yields by
extending the average maturity of the bonds and possibly adding corporate bonds
as well.
At February 28, 1995, the Fund's allocation to stocks is entirely within
the U.S. Value Sector. Our holdings include investments in banking, financial
services, insurance, metals & mining, broadcasting, entertainment,
telecommunications, and oil services.
After the recent sell-offs in many international markets, especially
emerging markets, we believe certain foreign stocks are now offered at
attractive values. Therefore, in the near future, we expect to
3
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<PAGE>
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WARBURG PINCUS FUNDS
SEMIANNUAL REPORT (CONT'D)
February 28, 1995
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allocate a portion of the Balanced Fund's assets to the International Equity
Sector. On a longer-term basis, we believe U.S. stocks will become attractively
priced. As this occurs, we will consider making allocations to the U.S. Small
Company and U.S. Mid-Cap Sectors.
With the addition of the Balanced Fund to the Warburg Pincus family, we
would like to welcome a whole new group of shareholders. Despite the obvious
challenges posed by today's markets, we believe the Fund's flexibility to pursue
its balanced investment objective using multiple sectors gives it an unique
opportunity to satisfy investors. We will work hard to continue the Fund's
record of success.
<TABLE>
<S> <C>
Anthony G. Orphanos Dale C. Christensen
Anthony G. Orphanos Dale C. Christensen
Portfolio Manager Co-Portfolio Strategist
Warburg Pincus Growth & Income Fund Warburg Pincus Balanced Fund
and
Co-Portfolio Strategist
Warburg Pincus Balanced Fund
</TABLE>
4
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<PAGE>
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WARBURG PINCUS GROWTH & INCOME FUND
STATEMENT OF NET ASSETS
February 28, 1995 (Unaudited)
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<TABLE>
<CAPTION>
NUMBER
OF SHARES VALUE
---------- ------------
<S> <C> <C>
COMMON STOCKS AND WARRANTS (63.5%)
Air Conditioning & Heating Management Systems (1.0%)
Johnson Controls, Inc. 156,500 $ 7,785,875
------------
Aerospace (3.5%)
Allied-Signal, Inc. 333,600 12,676,800
Rockwell International Corp. 368,000 14,168,000
------------
26,844,800
------------
Automotive Parts & Equipment (1.0%)
Quaker State Corp. 500,000 7,250,000
------------
Banking (3.6%)
First Interstate Bancorp 180,000 14,647,500
NationsBank Corp. 55,000 2,743,125
Norwest Corp. 400,000 10,300,000
------------
27,690,625
------------
Broadcasting (0.7%)
Cox Communications, Inc. Class A** 317,700 5,440,612
------------
Computers (3.6%)
GRC International, Inc.** 602,000 10,384,500
Honeywell, Inc. 490,000 17,823,750
------------
28,208,250
------------
Construction (2.5%)
Stone & Webster, Inc. 592,900 19,639,813
------------
Electronics & Other Electrical Equipment (1.1%)
EG&G, Inc. 600,200 8,627,875
------------
Entertainment (4.0%)
Acclaim Entertainment, Inc.** 1,155,000 16,458,750
Boardwalk Casino, Inc.** 525,000 2,887,500
Boardwalk Casino Inc. Warrants ** 475,000 1,009,375
Time Warner, Inc. 285,000 11,008,125
------------
31,363,750
------------
Financial Services (7.8%)
BankAmerica Corp. 470,000 22,618,750
Crestar Financial Corp. 175,000 7,546,875
Federal Home Loan Mortgage Corporation 369,000 21,402,000
Federal National Mortgage Association 76,100 5,869,213
Shawmut National Corp. 120,000 3,075,000
------------
60,511,838
------------
Industrial Materials -- Specialty (2.8%)
Corning, Inc. 674,800 21,677,950
------------
Insurance (7.3%)
Allstate Corp. 690,000 18,975,000
Chubb Corp. 150,600 11,840,925
Travelers, Inc. 144,000 5,598,000
Travelers, Inc. Warrants** 550,000 5,156,250
USF&G Corp. 1,089,100 15,519,675
------------
57,089,850
------------
</TABLE>
See Accompanying Notes to Financial Statements.
5
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<PAGE>
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WARBURG PINCUS GROWTH & INCOME FUND
STATEMENT OF NET ASSETS (CONT'D)
February 28, 1995 (Unaudited)
- - --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER
OF SHARES VALUE
---------- ------------
<S> <C> <C>
COMMON STOCKS AND WARRANTS (CONT'D)
Manufacturing (1.3%)
Trinity Industries, Inc. 300,300 $ 9,984,975
------------
Medical & Medical Services (0.3%)
Acuson Corp.** 210,000 2,598,750
Metals & Mining (11.2%)
Homestake Mining Co. 940,000 14,570,000
Inco Ltd. 550,000 14,781,250
Newmont Mining Corp. 444,000 16,039,500
Pegasus Gold, Inc.** 1,200,000 12,750,000
Placer Dome, Inc. 890,000 18,133,750
Prime Resources Group, Inc.** 1,152,000 6,411,456
Prime Resources Group, Inc. Warrants** 238,000 1,324,589
Rayrock Yellowknife Research, Inc.** 281,100 3,028,990
------------
87,038,554
------------
Oil (0.4%)
Parker & Parsley Petroleum Co. 150,000 2,737,500
------------
Oil Services (3.9%)
Baker Hughes, Inc. 605,000 11,646,250
Halliburton Co. 505,000 18,811,250
------------
30,457,500
------------
Steel (3.6%)
Bethlehem Steel Corp.** 624,000 9,750,000
CBI Industries, Inc. 600,700 14,566,975
WHX Corp.** 384,000 4,080,000
------------
28,396,975
------------
Technology (0.0%)
General Magic Corp.** 15,000 273,750
------------
Telecommunications (3.9%)
Comcast Corp. Special Class A Non-Voting** 789,700 12,437,775
Tele-Communications, Inc. Class A** 789,500 17,961,125
------------
30,398,900
------------
TOTAL COMMON STOCKS AND WARRANTS (Cost $482,519,524) 494,018,142
------------
MATURITY PAR (000)
-------- --------
UNITED STATES TREASURY OBLIGATIONS (23.1%)
U.S. Treasury Bills
5.55% 03/02/95 $50,000 49,992,589
5.65% 03/09/95 50,000 49,939,242
5.47% 03/30/95 40,000 39,828,059
5.60% 04/06/95 40,000 39,775,974
------------
TOTAL U.S. TREASURY OBLIGATIONS (Cost $179,529,100) 179,535,864
------------
</TABLE>
See Accompanying Notes to Financial Statements.
6
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<PAGE>
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WARBURG PINCUS GROWTH & INCOME FUND
STATEMENT OF NET ASSETS (CONT'D)
February 28, 1995 (Unaudited)
- - --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MATURITY PAR (000) VALUE
-------- -------- ------------
<S> <C> <C> <C>
REPURCHASE AGREEMENTS (12.0%)
Greenwich Capital Markets Inc., 6.15% 03/01/95 $93,643 $ 93,643,000
(Agreement dated 02/28/95 to be repurchased at $93,658,997, collateralized by
$90,050,000 U.S. Treasury Bonds 7.8751% due 11/15/04. Market value of
collateral is $95,652,911).
------------
TOTAL REPURCHASE AGREEMENTS (Cost $93,643,000) 93,643,000
------------
TOTAL INVESTMENTS AT VALUE (Cost $755,691,624*) (98.6%) 767,197,006
OTHER ASSETS IN EXCESS OF LIABILITIES (1.4%) 10,836,998
------------
NET ASSETS (Applicable to 55,121,051 Warburg Pincus shares) (100.0%) $778,034,004
------------
------------
NET ASSETS VALUE, OFFERING AND REDEMPTION PRICE PER SHARE
($778,034,004 [div] 55,121,051) $14.12
------
------
</TABLE>
* Also cost for Federal income tax purposes. The gross appreciation
(depreciation) on a tax basis is as follows:
<TABLE>
<S> <C>
Gross Appreciation $29,658,331
Gross Depreciation (18,152,949)
-----------
Net Appreciation $11,505,382
-----------
-----------
</TABLE>
** Non-income producing.
See Accompanying Notes to Financial Statements.
7
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<PAGE>
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WARBURG PINCUS GROWTH & INCOME FUND
STATEMENT OF OPERATIONS
For the Six Months Ended February 28, 1995 (Unaudited)
- - --------------------------------------------------------------------------------
<TABLE>
<S> <C>
INVESTMENT INCOME:
Dividends $ 3,774,262
Interest 5,912,681
------------
Total investment income 9,686,943
------------
EXPENSES:
Investment advisory fees 2,244,996
Administration fees 748,332
Custodian fees 65,844
Transfer agent fees 284,195
Legal fees 21,380
Audit fees 17,210
Registration fees 159,472
Insurance expense 8,578
Printing expense 15,001
Other expenses 8,154
------------
Total expenses 3,573,162
------------
Net investment income 6,113,781
------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized loss on investments (1,238,402)
Decrease in net unrealized appreciation on investments (9,477,983)
------------
Net loss on investments (10,716,385)
------------
Net decrease in net assets resulting from operations $ (4,602,604)
------------
------------
</TABLE>
See Accompanying Notes to Financial Statements.
8
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<PAGE>
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WARBURG PINCUS GROWTH & INCOME FUND
STATEMENTS OF CHANGES IN NET ASSETS
- - --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the For the
Six Months Ended Year Ended
February 28, 1995 August 31, 1994
---------------- ---------------
(Unaudited)
<S> <C> <C>
Increase (decrease) in net assets:
Operations:
Net investment income $ 6,113,781 $ 572,031
Net gain (loss) on investments (10,716,385) 17,971,937
---------------- --------------
Net increase (decrease) in net assets resulting from operations (4,602,604) 18,543,968
---------------- --------------
Distributions to shareholders:
Dividends to shareholders from net investment income:
($.0667 and $.0785, respectively, per share) (2,934,070) (572,031)
Distributions to shareholders from net realized capital gains:
($.1834 and $3.9751, respectively, per share) (8,067,592) (10,054,939)
---------------- --------------
Total distributions to shareholders (11,001,662) (10,626,970)
---------------- --------------
Net capital share transactions 382,980,642 342,051,251
---------------- --------------
Total increase in net assets 367,376,376 349,968,249
Net Assets:
Beginning of period 410,657,628 60,689,379
---------------- --------------
End of period $778,034,004 $ 410,657,628
---------------- --------------
---------------- --------------
</TABLE>
See Accompanying Notes to Financial Statements.
9
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<PAGE>
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WARBURG PINCUS BALANCED FUND
STATEMENT OF NET ASSETS
February 28, 1995 (Unaudited)
- - --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER
OF SHARES VALUE
--------- ----------
<S> <C> <C>
COMMON STOCKS (40.7%)
Aerospace (2.1%)
Allied-Signal, Inc. 300 $ 11,400
Rockwell International Corp. 300 11,550
----------
22,950
----------
Automotive Parts & Equipment (0.7%)
Quaker State Corp. 500 7,250
----------
Banking (1.5%)
First Interstate Bancorp 100 8,138
Norwest Corp. 300 7,725
----------
15,863
----------
Broadcasting (0.3%)
Cox Communications, Inc. Class A** 200 3,425
----------
Computers (1.0%)
Honeywell, Inc. 300 10,913
----------
Construction (3.1%)
Stone & Webster, Inc. 1,000 33,125
----------
Electronics & Other Electrical Equipment (0.7%)
EG&G, Inc. 500 7,187
----------
Entertainment (1.7%)
Acclaim Entertainment, Inc.** 500 7,125
Time Warner, Inc. 300 11,588
----------
18,713
----------
Financial Services (3.0%)
Crestar Financial Corp. 300 12,938
Federal Home Loan Mortgage Corporation 200 11,600
Federal National Mortgage Association 100 7,712
----------
32,250
----------
Industrial Materials -- Specialty (1.5%)
Corning, Inc. 500 16,062
----------
</TABLE>
See Accompanying Notes to Financial Statements.
10
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<PAGE>
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WARBURG PINCUS BALANCED FUND
STATEMENT OF NET ASSETS (CONT'D)
February 28, 1995 (Unaudited)
- - --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER
OF SHARES VALUE
--------- ----------
<S> <C> <C>
COMMON STOCKS (CONT'D)
Insurance (4.4%)
Allstate Corp. 500 $ 13,750
Chubb Corp. 200 15,725
USF&G Corp. 1,300 18,525
----------
48,000
----------
Metals & Mining (5.4%)
Homestake Mining Co. 500 7,750
Inco, Ltd. 300 8,063
Newmont Mining Corp. 300 10,838
Pegasus Gold, Inc.** 500 5,313
Placer Dome, Inc. 1,000 20,375
Prime Resources Group, Inc.** 1,000 5,566
----------
57,905
----------
Oil Services (2.9%)
Baker Hughes, Inc. 500 9,625
Halliburton Co. 300 11,175
Unocal Corp. 400 11,350
----------
32,150
----------
Steel (1.5%)
Bethlehem Steel Corp.** 300 4,687
WHX Corp.** 1,100 11,687
----------
16,374
----------
Technology (8.4%)
General Magic Corp.** 5,000 91,250
----------
</TABLE>
See Accompanying Notes to Financial Statements.
11
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<PAGE>
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WARBURG PINCUS BALANCED FUND
STATEMENT OF NET ASSETS (CONT'D)
February 28, 1995 (Unaudited)
- - --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER
OF SHARES VALUE
--------- ----------
<S> <C> <C>
COMMON STOCKS (CONT'D)
Telecommunications (2.5%)
Comcast Corp. Special Class A Non-Voting** 1,000 $ 15,750
Tele-Communications, Inc. Class A** 500 11,375
----------
27,125
----------
TOTAL COMMON STOCKS (Cost $412,193) 440,542
----------
</TABLE>
<TABLE>
<CAPTION>
PAR
MATURITY (000)
-------- -----
<S> <C> <C> <C>
UNITED STATES TREASURY OBLIGATIONS (45.0%)
U.S. Treasury Notes
5.875% 05/31/96 $ 200 198,354
6.875% 10/31/96 75 75,180
8.125% 02/15/98 20 20,640
8.50% 11/15/00 180 191,768
----------
TOTAL U.S. TREASURY OBLIGATIONS (Cost $475,860) 485,942
----------
REPURCHASE AGREEMENTS (11.9%)
State Street Bank 6.00% 03/01/95 $ 129 129,000
(Agreement dated 02/28/95 to be repurchased at $129,022, collateralized by
$135,000
U.S. Treasury Notes 4.00% due 01/31/96. Market value of collateral is $132,638)
----------
TOTAL REPURCHASE AGREEMENTS (Cost $129,000) 129,000
----------
TOTAL INVESTMENTS AT VALUE (Cost $1,017,053*) (97.6%) 1,055,484
OTHER ASSETS IN EXCESS OF LIABILITIES (2.4%) 26,503
----------
NET ASSETS (Applicable to 114,399 Warburg Pincus shares) (100.0%) $1,081,987
----------
----------
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE ($1,081,987[div]114,399) $9.46
-----
-----
</TABLE>
* Also cost for Federal income tax purposes. The gross appreciation
(depreciation) on a tax basis is as follows:
<TABLE>
<S> <C>
Gross Appreciation $46,686
Gross Depreciation (8,255)
-------
Net Appreciation $38,431
-------
-------
</TABLE>
** Non-income producing
See Accompanying Notes to Financial Statements.
12
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<PAGE>
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WARBURG PINCUS BALANCED FUND
STATEMENT OF OPERATIONS
For the Six Months Ended February 28, 1995 (Unaudited)
- - --------------------------------------------------------------------------------
<TABLE>
<S> <C>
INVESTMENT INCOME:
Dividends $ 2,025
Interest 16,978
--------
Total investment income 19,003
--------
EXPENSES:
Investment advisory fees 3,415
Administration fees 848
Distribution fees 1,012
Custodian fees 7,200
Transfer agent fees 8,800
Registration fees 6,000
Other expenses 4,209
--------
31,484
Less fees waived (5,111)
Less expense reimbursement by advisor (20,945)
--------
Total expenses 5,428
--------
Net investment income 13,575
--------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain on investments 52,902
Decrease in net unrealized appreciation on investments (46,174)
--------
Net gain on investments 6,728
--------
Net increase in net assets resulting from operations $ 20,303
--------
--------
</TABLE>
See Accompanying Notes to Financial Statements.
13
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<PAGE>
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WARBURG PINCUS BALANCED FUND
STATEMENTS OF CHANGES IN NET ASSETS
- - --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the For the
Six Months Ended Year Ended
February 28, 1995 August 31, 1994
----------------- ---------------
(Unaudited)
<S> <C> <C>
Increase (decrease) in net assets:
Operations:
Net investment income $ 13,575 $ 29,100
Net gain on investments 6,728 23,057
---------- ---------
Net increase in net assets resulting from operations 20,303 52,157
---------- ---------
Distributions to shareholders:
Dividends to shareholders from net investment income:
($.1993 and $.4586, respectively, per share) (14,732) (31,049)
Distributions to shareholders from net realized capital gains:
($1.5069 and $.9794, respectively, per share) (111,945) (63,790)
---------- ---------
Total distributions to shareholders (126,677) (94,839)
---------- ---------
Net capital share transactions 380,333 88,893
---------- ---------
Total increase in net assets 273,959 46,211
Net Assets:
Beginning of period 808,028 761,817
---------- ---------
End of period $1,081,987 $ 808,028
---------- ---------
---------- ---------
</TABLE>
See Accompanying Notes to Financial Statements.
14
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<PAGE>
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WARBURG PINCUS GROWTH & INCOME FUND
FINANCIAL HIGHLIGHTS
(For a Share Outstanding Throughout Each Period)
- - --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the For the Years Ended August 31,
Six Months Ended ------------------------------------------------------
February 28, 1995 1994 1993 1992 1991
---------------- ------- ------ ------ ------
(Unaudited)
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $14.56 $ 16.72 $11.99 $12.11 $11.00
------ ------- ------ ------ ------
Income From Investment Operations:
Net Investment Income .1244 .0785 .0464 .1912 .3744
Net Gains (Losses) on Securities
(both realized and unrealized) (.3143) 1.8151 4.8499 .0402 1.6891
------ ------- ------ ------ ------
Total From Investment Operations (.1899) 1.8936 4.8963 .2314 2.0635
------ ------- ------ ------ ------
Less Distributions:
Dividends (from net investment
income) (.0667) (.0785) (.0875) (.1871) (.4043)
Distributions (from capital gains) (.1834) (3.9751) (.0788) (.1643) (.5492)
------ ------- ------ ------ ------
Total Distributions (.2501) (4.0536) (.1663) (.3514) (.9535)
------ ------- ------ ------ ------
NET ASSET VALUE, END OF PERIOD $14.12 $ 14.56 $16.72 $11.99 $12.11
------ ------- ------ ------ ------
------ ------- ------ ------ ------
Total Returns (1.23%)(c) 14.41% 41.17% 1.99% 19.91%
RATIOS/SUPPLEMENTAL DATA:
Net Assets, end of period (000) $778,034 $410,658 $60,689 $28,976 $24,726
Ratios of Expenses to Average Net Assets 1.19%(a)(b) 1.28%(a) 1.14%(a) 1.25%(a) 1.30%(a)
Ratios of Net Investment Income to
Average Net Assets 2.04%(b) .41% .30% 1.66% 3.42%
Portfolio Turnover Rate 65%(c) 150% 344% 175% 41%
</TABLE>
(a) Without the waiver of advisory and administration fees and without the
reimbursement of certain operating expenses, the ratios of expenses to
average net assets for Warburg Pincus Growth & Income Fund would have been
1.19% for the six months ended February 28, 1995, 1.28%, 1.14%, 1.28% and
2.17% for the years ended August 31, 1994, 1993, 1992 and 1991,
respectively.
(b) Annualized.
(c) Not Annualized.
See Accompanying Notes to Financial Statements.
15
- - --------------------------------------------------------------------------------
<PAGE>
- - --------------------------------------------------------------------------------
WARBURG PINCUS BALANCED FUND
FINANCIAL HIGHLIGHTS
(For a Share Outstanding Throughout Each Period)
- - --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the For the Years Ended August 31,
Six Months Eended -------------------------------------------------
February 28, 1995 1994 1993 1992 1991
----------------- ------- ------- ------- ------
(Unaudited)
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 11.01 $ 11.71 $ 12.04 $ 12.05 $10.60
------- ------- ------- ------- ------
Income From Investment Operations:
Net Investment Income .1416 .4132 .5555 .4408 .4213
Net Gains (Losses) on Securities (both
realized and unrealized) .0146 .3248 1.1253 .5155 1.7196
------- ------- ------- ------- ------
Total From Investment Operations .1562 .7380 1.6808 .9563 2.1409
------- ------- ------- ------- ------
Less Distributions:
Dividends (from net investment income) (.1993) (.4586) (.5412) (.3713) (.4128)
Distributions (from capital gains) (1.5069) (.9794) (1.4696) (.5950) (.2781)
------- ------- ------- ------- ------
Total Distributions (1.7062) (1.4380) (2.0108) (.9663) (.6909)
------- ------- ------- ------- ------
NET ASSET VALUE, END OF PERIOD $ 9.46 $ 11.01 $ 11.71 $ 12.04 $12.05
------- ------- ------- ------- ------
------- ------- ------- ------- ------
Total Returns 2.22%(c) 6.86% 15.27% 8.07% 21.18%
RATIOS/SUPPLEMENTAL DATA:
Net Assets, end of period (000) $1,082 $808 $762 $1,026 $1,290
Ratios of Expenses to Average Net Assets 1.34%(a)(b) 0%(a) 0%(a) .67%(a) 1.40%(a)
Ratios of Net Investment Income to
Average Net Assets 3.35%(b) 3.76% 4.13% 3.68% 3.58%
Portfolio Turnover Rate 86%(c) 32% 30% 93% 76%
</TABLE>
(a) Without the waiver of advisory and administration fees and without the
reimbursement of certain operating expenses, the ratios of expenses to
average net assets for Warburg Pincus Balanced Fund would have been 7.77%
annualized for the six months ended February 28, 1995, 5.46%, 5.37%, 3.88%
and 3.89% for the years ended August 31, 1994, 1993, 1992 and 1991,
respectively.
(b) Annualized.
(c) Not Annualized.
See Accompanying Notes to Financial Statements.
16
- - --------------------------------------------------------------------------------
<PAGE>
- - --------------------------------------------------------------------------------
WARBURG PINCUS FUNDS
NOTES TO FINANCIAL STATEMENTS
February 28, 1995 (Unaudited)
- - --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES
The RBB Fund, Inc. (the 'Company') is registered under the Investment
Company Act of 1940, as amended, as an open-end management investment company.
The Company was incorporated in Maryland on February 29, 1988, and currently has
eighteen investment portfolios, two of which are included in this financial
statement.
The Company has authorized capital of thirty billion shares of common stock
of which 10.7 billion are currently classified into sixty-two classes. Each
class represents an interest in one of eighteen investment portfolios of the
Company, sixteen of which are currently in operation. The classes have been
grouped into sixteen separate 'families', eight of which have begun investment
operations: the Warburg Pincus Family, the RBB Family, the BEA Family, the
Sansom Street Family, the Bedford Family, the Cash Preservation Family, the
Laffer/Canto Family and the Bradford Family. The Warburg Pincus Family
represents interests in two portfolios, which are covered by this report.
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 securities are
valued at market value, which is currently determined using the last report
sales price. If no sales are reported, as in the case of some securities traded
over-the-counter, portfolio securities are valued at the mean between the last
reported bid and asked prices. Corporate bonds and government securities are
valued on the basis of quotations provided by an independent pricing service
which uses information with respect to transactions on bonds, quotations from
bond dealers, market transactions in comparable securities and various
relationships between securities in determining value. Short-term obligations
with maturities of 60 days or less are valued at amortized cost which
approximates market value.
Security transactions are accounted for on the trade date. The cost of
investments sold is determined by use of the specific identification method for
both financial reporting and income tax purposes. Interest income is recorded on
the accrual basis. Dividends are recorded on the ex-dividend date. Certain
expenses, principally distribution, transfer agent and printing, are class
specific expenses and vary by class. Expenses not directly attributable to a
specific portfolio or class are allocated based on relative net assets of each
Portfolio and class, respectively.
Dividends from net investment income, if any, are declared and paid at
least quarterly. Any net realized capital gains will be distributed at least
annually. Income distributions and capital gain distributions are determined in
accordance with income tax regulations which may differ from generally accepted
accounting principals.
No provision is made for Federal taxes as it is the Company's intention to
have each portfolio continue to qualify for and elect the tax treatment
applicable to regulated investment companies under the Internal Revenue Code and
make the requisite distributions to its shareholders which will be sufficient to
relieve it from Federal income and excise taxes.
Money market instruments may be purchased subject to the seller's agreement
to repurchase them at an agreed upon date and price. The seller will be
required, on a daily basis, to maintain the value of the securities subject to
the agreement at not less than the repurchase price. The agreements are
conditioned upon the collateral being deposited under the Federal Reserve
book-entry system or with the Fund's custodian or a third party sub-custodian.
17
- - --------------------------------------------------------------------------------
<PAGE>
- - --------------------------------------------------------------------------------
WARBURG PINCUS FUNDS
NOTES TO FINANCIAL STATEMENTS (CONT'D)
February 28, 1995 (Unaudited)
- - --------------------------------------------------------------------------------
2. INVESTMENT ADVISER, CO-ADMINISTRATORS AND DISTRIBUTOR
Warburg, Pincus Counsellors, Inc. ('Counsellors'), a wholly owned
subsidiary of Warburg, Pincus Counsellors G.P. ('Counsellors G.P.') serves as
investment advisor for Warburg Pincus Growth & Income Fund. The advisory fee is
computed daily and payable monthly at the annual rate of .75% of Warburg Pincus
Growth & Income Fund's average daily net assets.
Pursuant to a vote on September 30, 1994, shareholders approved a new
advisory contract between Warburg Pincus Balanced Fund and Counsellors. Under
the new agreement, Warburg Pincus Balanced Fund pays Counsellors an advisory fee
at an annual rate of .90% of the Fund's average daily net assets. The prior
advisory agreement between the Fund and PNC Institutional Management Corp.
('PIMC') was terminated as of that date.
Counsellors may, at its discretion, voluntarily waive all or any portion of
its advisory fees for any of the Funds. For the six months ended February 28,
1995, investment advisory fees and waivers were as follows:
<TABLE>
<CAPTION>
GROSS NET
ADVISORY FEE WAIVER ADVISORY FEE
------------ -------- ------------
<S> <C> <C> <C>
Warburg Pincus Growth & Income Fund $2,244,996 $ -- $2,244,996
Warburg Pincus Balanced Fund 3,415 (3,415) --
</TABLE>
Also, PFPC Inc. ('PFPC'), an indirect wholly owned subsidiary of PNC Bank
Corp., and Counsellors Fund Services, Inc. ('CFSI'), a wholly owned subsidiary
of Counsellors, serve as co-administrators for each of the Funds. For Warburg
Pincus Growth & Income Fund, the co-administration fees are computed daily and
payable monthly at an annual rate of .20% of the first $125 million of average
daily net assets and .15% of average daily net assets in excess of $125 million
for PFPC and .05% of the first $125 million of average daily net assets and .10%
of average daily net assets in excess of $125 million for CFSI.
For Warburg Pincus Balanced Fund, the co-administration fees are computed
daily and payable monthly at an annual rate of .15% of average daily net assets
for PFPC and .10% of average daily net assets for CFSI.
CFSI and PFPC may, at their discretion, voluntarily waive all or any
portion of their co-administration fees for any of the Funds. For the six months
ended February 28, 1995, PFPC's co-administration fees and waivers were as
follows:
<TABLE>
<CAPTION>
GROSS NET
CO-ADMINISTRATION FEES WAIVERS CO-ADMINISTRATION FEES
---------------------- ------- ----------------------
<S> <C> <C> <C>
Warburg Pincus Growth & Income Fund $748,332 $-- $748,332
Warburg Pincus Balanced Fund 848 (848) --
</TABLE>
18
- - --------------------------------------------------------------------------------
<PAGE>
- - --------------------------------------------------------------------------------
WARBURG PINCUS FUNDS
NOTES TO FINANCIAL STATEMENTS (CONT'D)
February 28, 1995 (Unaudited)
- - --------------------------------------------------------------------------------
Counsellors Securities Inc. ('CSI'), also a wholly owned subsidiary of
Counsellors, serves as each Fund's distributor. No compensation is payable by
Warburg Pincus Growth & Income Fund. For distribution services with respect to
Warburg Pincus Balanced Fund, CSI receives a fee at the annual rate of .25%,
computed daily and payable monthly, on average daily net assets. CSI may, at its
discretion, voluntarily waive all or any portion of its distribution fees. For
the six months ended February 28, 1995, distribution fees and waivers were as
follows:
<TABLE>
<CAPTION>
GROSS NET
DISTRIBUTION FEES WAIVER DISTRIBUTION FEES
----------------- ------ -----------------
<S> <C> <C> <C>
Warburg Pincus Balanced Fund $ 1,012 $(848) $ 164
</TABLE>
3. INVESTMENT IN SECURITIES
For the six months ended February 28, 1995, purchases and sales of
investment securities (other than short-term investments) were as follows:
<TABLE>
<CAPTION>
INVESTMENT SECURITIES
----------------------------
PURCHASES SALES
------------ ------------
<S> <C> <C>
Warburg Pincus Growth & Income Fund $496,036,880 $247,914,184
Warburg Pincus Balanced Fund $ 810,178 $ 594,063
</TABLE>
19
- - --------------------------------------------------------------------------------
<PAGE>
- - --------------------------------------------------------------------------------
WARBURG PINCUS FUNDS
NOTES TO FINANCIAL STATEMENTS (CONT'D)
February 28, 1995 (Unaudited)
- - --------------------------------------------------------------------------------
4. CAPITAL SHARES
Transactions in capital shares for each period were as follows:
<TABLE>
<CAPTION>
WARBURG PINCUS GROWTH & INCOME FUND WARBURG PINCUS BALANCED FUND
------------------------------------------------------- ---------------------------------------------------
For the Six Months Ended For the Year Ended For the Six Months Ended For the Year Ended
February 28, 1995 August 31, 1994 February 28, 1995 August 31, 1994
-------------------------- -------------------------- ------------------------- ------------------------
Shares Value Shares Value Shares Value Shares Value
----------- ------------ ----------- ------------ ----------- ----------- ------------ ----------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Shares Sold 29,098,888 $413,113,690 29,256,806 $410,956,025 29,679 $ 278,768 609 $ 6,495
Shares issued in
reinvestment of
dividends 4,276 57,858 67,788 894,152 13,780 124,847 8,690 93,303
Shares repurchased (2,195,489) (30,190,906) (4,741,678) (69,798,926) (2,439) (23,282) (982) (10,905)
----------- ------------ ----------- ------------ ----------- ---------- ----------- ---------
Net increase 26,907,675 $382,980,642 24,582,916 $342,051,251 41,020 $ 380,333 8,317 $ 88,893
----------- ------------ ----------- ------------ ----------- ---------- ----------- ---------
----------- ------------ ----------- ------------ ----------- ---------- ----------- ---------
Shares authorized 100,000,000 100,000,000 100,000,000 100,000,000
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
</TABLE>
5. NET ASSETS
At February 28, 1995, net assets consisted of the following: (Unaudited)
<TABLE>
<CAPTION>
WARBURG PINCUS WARBURG PINCUS
GROWTH & INCOME FUND BALANCED FUND
---------------------- --------------
<S> <C> <C>
Capital paid-in $771,950,109 $ 1,038,448
Undistributed net income 3,179,711 7,187
Accumulated net realized gain (loss) on
investments (8,601,198) (2,079)
Unrealized appreciation on investments 11,505,382 38,431
------------ ------------
$778,034,004 $ 1,081,987
------------ ------------
------------ ------------
</TABLE>
6. DERIVATIVE FINANCIAL INSTRUMENTS
The Funds may trade financial instruments with off-balance sheet risk in
the normal course of investing activities and to assist in managing exposure to
market risks such as interest rates and financial indices. These financial
instruments include futures contacts.
The notional or contractual amount of these instruments represents the
investment the Funds have in particular classes of financial instruments and do
not necessarily represent the amounts potentially subject to risk. The
measurement of the risks associated with these instruments is meaningful only
when all related and offsetting transactions are considered.
Each of the Funds may enter into financial futures contracts for the
delayed delivery of securities, currency or contracts based on financial indices
on a future date. A Fund is required to deposit either in cash or securities an
amount equal to a specified percentage of the contract amount. Subsequent
payments are made or received by a Fund each day, depending on daily
fluctuations in the value of the underlying security, and are recorded for
financial statement purposes as unrealized gains or losses. A
20
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<PAGE>
- - --------------------------------------------------------------------------------
WARBURG PINCUS FUNDS
NOTES TO FINANCIAL STATEMENTS (CONT'D)
February 28, 1995 (Unaudited)
- - --------------------------------------------------------------------------------
Fund's investment in financial futures contracts is designed to hedge against
anticipated future changes in interest or exchange rates. However, the Growth &
Income Fund may invest in futures and options for non-hedging purposes so long
as aggregate initial margins and premiums required for non-hedging positions do
not exceed 5% of its net assets, after taking into account any unrealized
profits and losses on any such contracts it has entered into. Should interest or
exchange rates move unexpectedly, a Fund may not achieve the anticipated
benefits of the financial futures contracts and may realize a loss.
At February 28, 1995, Warburg Pincus Growth & Income Fund had outstanding 5
futures contracts on the S&P 500 Stock Index, expiring March 16, 1995. The value
of such contracts on February 28, 1995 was $1,221,375, thereby resulting in an
unrealized loss of $14,625.
Futures transactions entered into for the six months ended February 28,
1995, are summarized as follows:
<TABLE>
<CAPTION>
NUMBER OPENING
OF CONTRACTS VALUE
------------ ----------
<S> <C> <C>
Short futures contracts opened 5 $1,206,750
- ----------
Outstanding short futures contracts at end of period 5 $1,206,750
- ----------
- ----------
</TABLE>
21
- - --------------------------------------------------------------------------------
<PAGE>
FURTHER INFORMATION IS CONTAINED
IN THE PROSPECTUS, WHICH MUST
PRECEDE OR ACCOMPANY THIS REPORT.
WARBURG PINCUS FUNDS
P.O. BOX 9030
BOSTON, MASSACHUSETTS 02205-9030
SHAREHOLDER SERVICES
1-800-888-6878
PROSPECTUSES
1-800-257-5614
[WARBURG LOGO]
[GLOBAL LOGO]
<TABLE>
<S> <C>
SEMIANNUAL REPORT
</TABLE>
FEBRUARY 28, 1995
[ ] WARBURG PINCUS
GROWTH & INCOME FUND
[ ] WARBURG PINCUS
BALANCED FUND
COUNSELLORS SECURITIES INC., DISTRIBUTOR
WPGBF-3-0295
<PAGE>
STATEMENT OF DIFFERENCES
<TABLE>
<CAPTION>
<S> <C>
The mathematical division symbol shall be expressed as ....... [div]
</TABLE>
