<PAGE>
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ANNUAL
REPORT
October 31, 1997
WARBURG PINCUS
INTERNATIONAL EQUITY FUND
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WARBURG PINCUS
JAPAN OTC FUND
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WARBURG PINCUS
EMERGING MARKETS FUND
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WARBURG PINCUS
JAPAN GROWTH FUND
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WARBURG PINCUS
GLOBAL POST-VENTURE CAPITAL FUND
More complete information about the Funds, including charges and expenses
and, where applicable, the special considerations and risks associated
with international investing is provided in the Prospectus, which must
precede or accompany this report and which should be read carefully before
investing. You may obtain additional copies by calling 800-WARBURG
(800-927-2874) or by writing to Warburg Pincus Funds, P.O. Box 9030,
Boston, MA 02205-9030.
[Logo]
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From time to time, the Funds' investment adviser and co-administrator may waive
some fees and/or reimburse some expenses, without which performance would be
lower. Waivers and/or reimbursements are subject to change.
Returns are historical and include change in share price and reinvestment of
dividends and capital gains. Past performance cannot guarantee future results.
Returns and share price will fluctuate, and redemption value may be more or less
than original cost.
The views of the Funds' management are as of the date of the letters and
portfolio holdings described in this annual report are as of October 31, 1997;
these views and portfolio holdings may have changed subsequent to these dates.
Nothing in this annual report is a recommendation to purchase or sell
securities.
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WARBURG PINCUS INTERNATIONAL EQUITY FUND
ANNUAL INVESTMENT ADVISER'S REPORT -- OCTOBER 31, 1997
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Dear Shareholder: December 18, 1997
The objective of Warburg Pincus International Equity Fund ('the Fund') is
long-term capital appreciation. The Fund pursues its objective by investing
primarily in a broadly diversified portfolio of equity securities of companies
that have their principal business activities and interests outside of the U.S.
For the 12 months ended October 31, 1997, the Fund gained 4.54%, vs. a gain
of 4.63% for the Morgan Stanley Europe, Australasia and Far East ('EAFE') Index.
Foreign stock markets had geographically mixed results for the period. By
region, the most noteworthy performances came from Europe, whose markets rallied
strongly on the combination of low interest rates, increased optimism toward
European Monetary Union, and signs of improving economic growth. Two additional
catalysts for these markets were merger and acquisition activity and, in the
case of specific companies, an announced commitment to improving shareholder
value.
Asian-Pacific markets, conversely, struggled, hurt by mounting economic and
currency concerns. Most of the region's stock markets had losses in dollar terms
for the 12 months, with the sharpest setbacks occurring in East Asia,
particularly Southeast Asia, where several markets suffered losses exceeding
50%. Elsewhere, Latin American markets showed near-universal strength, and the
emerging markets of Europe, the Middle East and Africa also generally rose.
In terms of performance attribution, the Fund's European exposure
(approximately 46% of the portfolio at the end of the period) made a significant
contribution to its return. We found attractive opportunities across the region
through the period, though we were highly selective in terms of stock picking.
This reflected our view that many stocks were trading at relatively expensive
valuations, given a realistic assessment of the underlying companies' earnings
prospects. By country, some of the strongest performances for the Fund came from
its holdings in Spain, France, the Netherlands and Germany, and from its Nordic
holdings collectively.
The Fund's Asian-Pacific exposure (which, excluding Japan, Australia and New
Zealand, comprised 11% of the portfolio at period-end) generally proved a
liability. Fortunately for the Fund, we had comparatively little exposure to the
hard-hit Southeast Asian markets through the period, which spared the Fund the
more-sizable losses suffered by funds with larger holdings in that region. In
the end, though, almost any exposure to Asian markets proved harmful, as the
1
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WARBURG PINCUS INTERNATIONAL EQUITY FUND
ANNUAL INVESTMENT ADVISER'S REPORT -- OCTOBER 31, 1997 (CONT'D)
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contagion from Southeast Asia swept through the region, and the Fund's weighting
took a toll on its performance.
We maintained a fairly significant stake in Japan during the 12 months.
Though this weighting proved less than timely -- the Japanese market, as
measured by most benchmarks, suffered a loss for the period -- we managed to
significantly outperform the Japanese broad-market averages, a function of good
stock selection. We also hedged much of the Fund's yen exposure through the
period. This served the Fund well, given the yen's decline in value vs. the U.S.
dollar.
Finally, the Fund's Latin American holdings (6.5% of the portfolio at the end
of the period) also contributed positively to its performance. Our exposure was
concentrated primarily in Argentina, Brazil and, to a lesser extent, Mexico, and
these stocks all showed strong gains for the 12 months.
Looking ahead, the near-term environment for international markets appears
likely to remain, at the very least, challenging. Asian markets have yet to
stabilize, and worries over that region's difficulties have impacted markets
globally. For longer-term investors, however -- those with three- to five-year
time horizons who can tolerate near-term volatility -- this has created, and
continues to create, some excellent investment opportunities. In Asia,
specifically, it is increasingly possible to find strong, well-managed companies
with solid cash flows and relatively little debt trading at record-low
valuations. For selective investors who pick the right stocks, the potential
upside would appear to be sizable. With that view, we continue our efforts to
identify the most promising candidates for long-term growth, and encourage our
investors to maintain a similarly long-term orientation.
Richard H. King
Portfolio Manager
Harold W. Ehrlich
Associate Portfolio Manager
P. Nicholas Edwards
Associate Portfolio Manager
2
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WARBURG PINCUS INTERNATIONAL EQUITY FUND
ANNUAL INVESTMENT ADVISER'S REPORT (CONT'D)
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GROWTH OF $10,000 INVESTED IN COMMON SHARES OF WARBURG PINCUS
INTERNATIONAL EQUITY FUND SINCE INCEPTION AS OF OCTOBER 31, 1997
The graph below illustrates the hypothetical investment of $10,000 in Common
Shares of Warburg Pincus International Equity Fund (the 'Fund') from May 2, 1989
(inception) to October 31, 1997, compared to the Morgan Stanley Europe,
Australasia and Far East Index ('EAFE')* for the same time period.
[PERFORMANCE GRAPH]
AVERAGE ANNUAL TOTAL RETURNS
FOR PERIODS ENDED 10/31/97
(COMMON SHARES)
Fund (Common Shares) EAFE
10,000 10,000 1 YEAR
11,350 10,029.4 4.54%
12,021.5 8,744.36
14,356.2 9,352.69 5 YEAR
13,144.9 8,116.84 13.90%
18,492.4 11,157.6
22,417.3 12,284.8 SINCE INCEPTION
21,846.4 12,239.9 (5/02/89)
24,108.9 13,522 11.48%
25,201.5 14,148.2
<TABLE>
<CAPTION>
FUND
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<S> <C>
1 Year Total Return (9/30/96-9/30/97)........................................ 16.63%
5 Year Average Annual Total Return (9/30/92-9/30/97)......................... 16.13%
Average Annual Total Return Since Inception (5/02/89-9/30/97)................ 13.21%
</TABLE>
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* The Morgan Stanley Europe, Australasia and Far East Index is an unmanaged
index of international equities (with no defined investment objective) of
international equities that includes reinvestment of dividends, and is the
exclusive property of Morgan Stanley & Co., Incorporated.
3
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WARBURG PINCUS JAPAN OTC FUND
ANNUAL INVESTMENT ADVISER'S REPORT -- OCTOBER 31, 1997
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Dear Shareholder: December 18, 1997
The objective of Warburg Pincus Japan OTC Fund ('the Fund') is long-term
capital appreciation. The Fund invests primarily in securities traded in the
Japanese over-the-counter (OTC) market. At all times, except during temporary
defensive periods, the Fund will maintain at least 65% of its total assets in
these OTC securities.
For the 12 months ended October 31, 1997, the Fund had a return of -23.98%,
vs. returns of -37.33% and -40.73% for the yen- and dollar-denominated JASDAQ
indexes, respectively.
The 12 months proved extremely difficult for Japan's small-company stocks.
Weighing on the group were several forces, the most damaging of which was
investors' general bearishness toward Japanese equities, a reflection of renewed
worries over the country's economy. Small-cap stocks were hurt further by an
unfavorable supply-demand balance, as companies continued to issue shares on the
OTC market despite diminishing buying interest. A final impediment to the group
was global investors' general preference for larger, more-liquid stocks.
Perhaps the best thing that can be said about the period, from the Fund's
perspective, is that we managed to significantly outdistance our benchmark. This
reinforces our view that it is possible to add considerable value via stock
selection in the OTC market, and we expect this to remain the case going
forward. The market's poor recent returns notwithstanding, there reside some
very attractive opportunities among the ranks of Japan's smaller companies,
businesses with promising products and/or services that stand to do quite well
over the longer term, particularly as Japan's economy deregulates. There are
also companies whose prospects are, at best, limited. We believe the portfolio's
current holdings stand squarely among the former, and we expect this to be more
fully reflected in their share prices once the current bearishness towards Japan
subsides.
In terms of its sector exposure through the reporting period, the Fund
remained well diversified, but with a fairly large weighting in retail through
the period's first seven months (i.e., from November 1996 through May of this
year). This concentration largely reflected the views of SPARX Investment &
Research, USA, Inc., which was then serving as the Fund's sub-advisor. Following
the Fund's change in management, however (effective May 23, 1997, SPARX gave up
its sub-advisory role, and Warburg Pincus Asset Management assumed all
investment-management responsibilities for the Fund), that retail weighting was
4
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WARBURG PINCUS JAPAN OTC FUND
ANNUAL INVESTMENT ADVISER'S REPORT -- OCTOBER 31, 1997 (CONT'D)
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trimmed substantially, with much of the proceeds being invested in the
technology sector. We believe this reallocation has put the Fund in much better
position going forward, in terms of performance potential, given the substantial
opportunity we see among technology companies. A second noteworthy change in
sector weightings as a result of the management change was an increased emphasis
on financial stocks.
All told, we consider the Fund to be well placed, with regard to both sector
concentrations and specific holdings, to benefit from a recovery in Japan's
small-cap sector, and we look forward to a hopefully vastly improved year in
1998.
<TABLE>
<S> <C>
P. Nicholas Edwards Richard H. King
Co-Portfolio Manager Co-Portfolio Manager
</TABLE>
5
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WARBURG PINCUS JAPAN OTC FUND
ANNUAL INVESTMENT ADVISER'S REPORT (CONT'D)
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GROWTH OF $10,000 INVESTED IN COMMON SHARES OF WARBURG PINCUS
JAPAN OTC FUND SINCE INCEPTION AS OF OCTOBER 31, 1997
The graph below illustrates the hypothetical investment of $10,000 in Common
Shares of Warburg Pincus Japan OTC Fund (the 'Fund') from September 30, 1994
(inception) to October 31, 1997, compared to the JASDAQ Over-The-Counter
Composite Index ('JASDAQ Index')* for the same time period.
[PERFORMANCE GRAPH]
AVERAGE ANNUAL TOTAL RETURNS
FOR PERIODS ENDED
10/31/97
(COMMON SHARES)
Fund (Common Shares) JASDAQ Index** JASDAQI Index***
10,000 10,000 10,000 1 YEAR
9,850 9,698.9 9,901 -23.98%
9,090 8,192.2 97,930.4 SINCE INCEPTION
8,836.61 8,211.7 2,7146.1 (9/30/94)
6,716.94 5,146.45 4,235.12 -12.08%
<TABLE>
<CAPTION>
FUND
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<S> <C>
1 Year Total Return (9/30/96-9/30/97)...................................... - 22.33%
Average Annual Total Return Since Inception (9/30/94-9/30/97).............. - 10.17%
</TABLE>
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* The JASDAQ Over-The-Counter Composite Index is an unmanaged index (with no
defined investment objective) comprised of stocks traded over-the- counter in
Japan.
** Stated in Yen
*** Stated in U.S. dollars
6
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WARBURG PINCUS EMERGING MARKETS FUND
ANNUAL INVESTMENT ADVISER'S REPORT -- OCTOBER 31, 1997
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Dear Shareholder: December 18, 1997
The objective of Warburg Pincus Emerging Markets Fund ('the Fund') is growth
of capital. The Fund pursues its objective by investing primarily in equity
securities of non-U.S. issuers consisting of companies in emerging securities
markets.
For the 12 months ended October 31, 1997, the Fund had a loss of 10.71%, vs.
a loss of 8.48% for the Morgan Stanley Emerging Markets Free Index.
Emerging markets had geographically mixed results for the fiscal year. Most
Asian-Pacific markets suffered losses in dollar terms, with the sharpest losses
coming from Southeast Asia, the epicenter of the region's difficulties. Latin
American, European, Middle Eastern and African markets generally rose, though
virtually all were negatively impacted at the end of the period by the troubles
in Asia.
The Fund's performance was largely a function of its geographic exposure. The
portfolio had a fairly sizable concentration in Asian markets, including a
roughly 20% weighting in Southeast Asia, heading into July, when the region's
difficulties began following the July 2 devaluation of the Thai baht, the
country's currency. The subsequent sharp setbacks in Southeast Asian markets
and, ultimately, the weakness throughout much of the rest of Asia took a heavy
toll on the Fund's returns.
Mitigating this, to an extent, were positive showings from the Fund's non-
Asian holdings. Particularly strong performers for the Fund were its Latin
American stocks (26.3% of the Fund as of October 31), as these markets showed
near-universal strength for the 12 months. The Fund's largest country weightings
here through the period were Brazil, Argentina, Mexico and Chile.
The Fund also saw good performances from its holdings in the Middle East and
Europe. Two specific markets that we emphasized during the period, to good
effect, were Israel, where we found a number of what we deemed to be very
attractive investment opportunities, and Portugal. Both were among the top
performers in the emerging-market universe for the 12 months.
Looking ahead, our near-term outlook on the prospects for emerging markets is
guarded. The macroeconomic environment in many of these countries, particularly
in Asia, remains unsettled, making the stock-selection process particularly
challenging. Additionally, sentiment toward the group, given the recent
substantial volatility, is largely negative, suggesting that these markets may
stay in the doldrums for a time before they can stage a recovery. (Though when
these markets do finally bounce back, we expect their performance to be
7
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WARBURG PINCUS EMERGING MARKETS FUND
ANNUAL INVESTMENT ADVISER'S REPORT -- OCTOBER 31, 1997 (CONT'D)
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potentially quite strong, given the currently depressed level of valuations and
the likelihood of a strong improvement in corporate earnings.) Given this
climate, we are being extremely cautious in terms of country allocations and
stock selection, concentrating our exposure on those companies that we believe
are best-positioned to weather the current unease. We are also assembling a list
of buy candidates, i.e., companies whose shares have been battered and may yet
have further to fall but show strong promise over a three- to five-year period,
since at some point conditions will warrant taking a more-aggressive stance.
Our intermediate- and longer-term outlook, it goes without saying, remains
positive. The world's developing countries will continue to show substantially
higher economic growth rates than their more-established counterparts,
presenting considerable opportunity from an investment perspective. Investors
who pick their stocks carefully and have a sufficiently long time horizon stand,
we believe, to be more than sufficiently compensated for weathering short-term
bouts of volatility. We would encourage our investors to take a similarly long-
term view, and to view the recent gyrations in these markets accordingly.
<TABLE>
<S> <C>
Richard H. King Vincent J. McBride
Co-Portfolio Manager Co-Portfolio Manager
</TABLE>
8
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WARBURG PINCUS EMERGING MARKETS FUND
ANNUAL INVESTMENT ADVISER'S REPORT (CONT'D)
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GROWTH OF $10,000 INVESTED IN COMMON SHARES OF WARBURG PINCUS
EMERGING MARKETS FUND SINCE INCEPTION AS OF OCTOBER 31, 1997
The graph below illustrates the hypothetical investment of $10,000 in Common
Shares of Warburg Pincus Emerging Markets Fund (the 'Fund') from December 30,
1994 (inception) to October 31, 1997, compared to the Lipper Emerging Markets
Funds Index ('Lipper')* and the Morgan Stanley Emerging Markets Free Index
('MSCI')** for the same time period.
[PERFORMANCE GRAPH]
AVERAGE ANNUAL
TOTAL RETURNS
FOR PERIODS ENDED
10/31/97
(COMMON SHARES)
Fund (Common Shares) MSCI Lipper 1 YEAR
10,000 10,000 10,000 -10.71
11,332.6 9,241.98 9,249.53 SINCE INCEPTION
12,403.1 9,841.77 10,134.5 (12/30/94)
10,809.8 9,007.49 9,745.46 3.66%
<TABLE>
<CAPTION>
FUND
------
<S> <C>
1 Year Total Return (9/30/96-9/30/97)........................................ 8.21%
Average Annual Total Return Since Inception (12/30/94-9/30/97)............... 12.48%
</TABLE>
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* The Lipper Emerging Markets Funds Index is an equal-weighted performance
index, adjusted for capital-gains distributions and income dividends, of the
largest qualifying funds in this investment objective, and is compiled by
Lipper Analytical Services Inc.
** The Morgan Stanley Emerging Markets Free Index is a market-capitalization-
weighted index of emerging-market countries determined by Morgan Stanley. The
index includes only those countries open to non-local investors.
9
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WARBURG PINCUS JAPAN GROWTH FUND
ANNUAL INVESTMENT ADVISER'S REPORT -- OCTOBER 31, 1997
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Dear Shareholder: December 18, 1997
The objective of Warburg Pincus Japan Growth Fund (the 'Fund') is long-term
growth of capital. The Fund pursues its objective by investing primarily in
equity securities of Japanese issuers that present attractive opportunities for
growth. Under current market conditions, the Fund intends to invest at least 80%
of its total assets -- but will invest no less than 65% of its assets under
normal market conditions -- in common and preferred stocks, warrants and other
rights, securities convertible into or exchangeable for common stocks, and
American Depository Receipts ('ADRs') of Japanese issuers.
For the 12 months ended October 31, 1997, the Fund had a total return of
1.47%, vs. returns of -10.54% for the Lipper Japanese Funds Average and -21.48%
for the U.S.-dollar-denominated Tokyo Stock Exchange Index ('Topix').
The period was obviously a difficult one for Japanese equities. Weighing on
share prices were a host of concerns, most of which centered on prospects for
Japan's economy. Sentiment toward the market turned particularly negative at the
end of the period, as the currency and economic turmoil in Asia intensified and
spread, triggering fears of a spillover effect on Japan and a potentially sharp
deceleration in Japan's already-slowing economic growth.
Set against this backdrop, the Fund posted a modest return for the 12 months,
but managed to significantly outperform its peer group and Japanese broad-market
averages, reflecting good stock selection. In general terms, the Fund benefited
from a fairly large weighting in the so-called 'Nifties,' which are large,
blue-chip, export-oriented firms. Collectively, these companies were direct
beneficiaries of the yen's weakness vs. the U.S. dollar during the period, and
their stocks were among the market's best performers. Particularly strong
performers for the Fund from this group, and relatively large positions in the
portfolio during the period, were Canon, Honda and Sony, all of which had
double-digit gains for the 12 months. We continue to find value in the Nifties,
their strong performance through the period notwithstanding, and they remain
well represented in the portfolio.
The Fund also saw relatively good performances from a number of its more
domestically oriented holdings, including those in the banking and financial-
services sectors, two areas of concentration in the portfolio. Though several of
these stocks suffered losses at the end of the period -- banks, in particular,
fell sharply -- we believe their longer-term prospects remain very favorable, in
large
10
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WARBURG PINCUS JAPAN GROWTH FUND
ANNUAL INVESTMENT ADVISER'S REPORT (CONT'D)
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measure due to the substantial opportunity presented by 'Big Bang,' the planned
deregulation of Japan's financial industry.
The Fund's performance was also helped by currency hedging. We hedged much of
the Fund's yen exposure through the period, which proved beneficial, given the
yen's decline in value vs. the dollar.
Though the Japanese market performed poorly through the period, and has
continued to struggle in the weeks following, our longer-term outlook remains
positive. Deregulation of Japan's economy continues, albeit slowly; it now
appears more a question of when, rather than if, the government will take
decisive steps to resolve the banking sector's problems; and, significantly,
there is a growing emphasis on shareholder value among Japanese corporations,
though the trend is still far from universal. Combined, this argues for a
considerable improvement in the Japanese stock market in 1998 and beyond,
though, as we have said previously, stock selection will likely remain a
critical determinant of performance. Operating within this context, we will
continue our efforts to identify those companies that have what we deem to be
the best prospects for growth.
P. Nicholas Edwards
Portfolio Manager
11
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WARBURG PINCUS JAPAN GROWTH FUND
ANNUAL INVESTMENT ADVISER'S REPORT (CONT'D)
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GROWTH OF $10,000 INVESTED IN COMMON SHARES OF WARBURG PINCUS
JAPAN GROWTH FUND SINCE INCEPTION AS OF OCTOBER 31, 1997
The graph below illustrates the hypothetical investment of $10,000 in Common
Shares of Warburg Pincus Japan Growth Fund (the 'Fund') from December 29, 1995
(inception) to October 31, 1997, compared to the Lipper Japanese Funds Average
('Lipper')* and the Tokyo Stock Exchange Index ('Topix')** for the same time
period.
[PERFORMANCE GRAPH]
AVERAGE ANNUAL
TOTAL RETURN
FOR PERIOD ENDED
10/31/97
(COMMON SHARES)
Fund (Common Shares) Topix Lipper
10,000 10,000 10,000 1 year
9,880 9,864 10,010
9,660 9,701 9,814 1.47%
10,080 10,020 10,092
10,779 10,688 10,717
10,649 10,164 10,345 Since Inception
11,079 10,208 10,504 (12/29/95)
10,469 9,706 10,077
10,189 9,292 9,684 -0.03%
10,369 9,554 9,844
9,849 8,913 9,293
9,859 8,979 9,305
9,450 8,291 8,881
9,204 7,402 8,347
9,337 7,549 8,450
9,286 7,272 8,277
9,676 7,450 8,557
10,856 8,377 9,525
11,328 8,920 9,933
11,985 8,572 9,959
10,826 7,809 8,904
10,929 7,569 8,770
9,995 6,995 8,216
<TABLE>
<CAPTION>
FUND
------
<S> <C>
1 Year Total Return (9/30/96-9/30/97)........................................ 5.38%
Average Annual Total Return Since Inception (12/29/95-9/30/97)............... 5.18%
</TABLE>
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* The Lipper Japanese Funds Average measures the average total return of all
Japanese funds tracked by Lipper Analytical Services Inc.
** The Topix is an unmanaged capitalization-weighted index (with no defined
investment objective) designed to reflect the general movement of the
Japanese stock market. The index consists of all shares listed on the First
Section of the Tokyo Stock Exchange, which is generally reserved for Japan's
larger companies.
12
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WARBURG PINCUS GLOBAL POST-VENTURE CAPITAL FUND
ANNUAL INVESTMENT ADVISER'S REPORT -- OCTOBER 31, 1997
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Dear Shareholder: December 18, 1997
The objective of Warburg Pincus Global Post-Venture Capital Fund (the 'Fund')
is long-term growth of capital. The Fund invests primarily in equity securities
of U.S. and foreign companies considered to be in their post-venture-capital
stage of development.
For the 12 months ended October 31, 1997, the Fund gained 13.08%, vs. returns
of 17.94% for the Lipper Global Funds Index and 21.18% for the Russell 2000
Growth Index.
The reporting period was a volatile one for domestic and foreign
post-venture-capital companies. A number of these issues, due to their
smaller-cap and aggressive-growth characteristics, suffered sizable losses over
the first half of the period when investors voted overwhelmingly for the
perceived earnings stability of large-cap stocks. This trend reversed course in
May, however, as the market began to notice that many smaller-cap and
aggressive-growth stocks were selling at significant discounts to their
projected growth rates, sparking a strong rally in these areas over the
remainder of the period.
In terms of industry exposure, we held a substantial weighting in the
technology area during the 12 months. This reflects our view that increased
capital spending, fueled by the growing global acceptance of free-market
competition and the need for productivity-boosting products and services, stands
to have a favorable impact on technology stocks over the long term. We
maintained sizable positions in both the computer and electronics sectors, as
well as in the telecommunications and equipment area, where we held companies we
deemed best-positioned to take advantage of the ongoing deregulation of global
telecommunications markets and the continued growth of the Internet.
Another area in which we maintained a significant weighting was the
business-services sector, which also stands to benefit from a global push for
increased productivity. Specifically, we focused on smaller, innovative
companies poised to grow via outsourcing contracts with large, efficiency-minded
organizations (including government agencies as well as corporations).
Other significant sector weightings included financial services, where we
emphasized asset-management companies; energy, including oil-service companies;
and health care, including pharmaceuticals.
13
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WARBURG PINCUS GLOBAL POST-VENTURE CAPITAL FUND
ANNUAL INVESTMENT ADVISER'S REPORT -- OCTOBER 31, 1997 (CONT'D)
- --------------------------------------------------------------------------------
Our outlook on the prospects of global post-venture-capital companies remains
positive.We believe these companies are particularly well-positioned to take
advantage of the ongoing worldwide substitution of capital for labor, and we
will continue to search for those with the best long-term prospects. Investors
should be aware, however, that because we target companies that aggressively
pursue breakthrough products and services, the Fund should only be considered
for the aggressive portion of an investor's portfolio and is only appropriate
for those willing to accept the risks of this aggressive strategy. Investors
should carefully review the Fund's prospectus before purchase.
Elizabeth B. Dater
Portfolio Manager
14
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WARBURG PINCUS GLOBAL POST-VENTURE CAPITAL FUND
ANNUAL INVESTMENT ADVISER'S REPORT (CONT'D)
- --------------------------------------------------------------------------------
GROWTH OF $10,000 INVESTED IN COMMON SHARES OF WARBURG PINCUS
GLOBAL POST-VENTURE CAPITAL FUND SINCE INCEPTION AS OF SEPTEMBER 30, 1996
The graph below illustrates the hypothetical investment of $10,000 in Common
Shares of Warburg Pincus Global Post-Venture Capital Fund (the 'Fund') from
September 30, 1996 (inception) to October 31, 1996, compared to the Lipper
Global Funds Index* ('Lipper') and the Russell 2000 Growth Index** ('Russell')
for the same time period.
[PERFORMANCE GRAPH]
AVERAGE ANNUAL
TOTAL RETURNS
FOR PERIODS ENDED
10/31/97
Global Post Venture Russell Lipper (COMMON SHARES)
10,000 10,000 10,000
9,860 9,568.7 10,003 1 year
10,020 9,834.81 10,476.1
10,060 10,026.6 10,492.9 13.08%
10,340 10,277 10,726.9
9,760 9,656.52 10,792.3 Since Inception
9,140 8,975.16 10,662.8 (9/30/96)
9,180 8,871.4 10,798.2
10,120 10,204.9 11,458 10.53%
10,380 10,550.9 11,948.4
11,160 11,091.5 12,545.8
10,970 11,424.1 11,850.8
11,760 12,336.1 12,589.1
11,150 11,595.2 11,797.2
<TABLE>
<CAPTION>
FUND
------
<S> <C>
1 Year Total Return (9/30/96-9/30/97)........................................ 17.60%
Average Annual Total Return Since Inception (9/30/96-9/30/97)................ 17.55%
</TABLE>
- ------------
* The Lipper Global Funds Index is an equal-weighted performance index,
adjusted for capital-gains distributions and income dividends, of the largest
qualifying funds in this investment objective, and is compiled by Lipper
Analytical Services Inc.
** The Russell 2000 Growth Index is an unmanaged index (with no defined
investment objective) of those securities in the Russell 2000 Index with a
greater-than-average growth orientation. It includes reinvestment of
dividends, and is compiled by Frank Russell Company.
15
<PAGE>
<PAGE>
WARBURG PINCUS INTERNATIONAL EQUITY FUND
SCHEDULE OF INVESTMENTS
October 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
------------ --------------
<S> <C> <C>
COMMON STOCK (92.4%)
Argentina (3.2%)
Banco de Galicia & Buenos Aires SA 1,425,695 $ 8,844,616
Banco Frances del Rio de la Plata SA 607,107 5,011,640
Banco Frances del Rio de la Plata SA ADR 587,948 14,478,220
Telefonica de Argentina SA ADR 514,100 14,459,063
YPF SA Sponsored ADR 1,355,500 43,376,000
--------------
86,169,539
--------------
Australia (5.2%)
Boral, Ltd. 4,476,905 11,775,791
Burns Philp & Company, Ltd. 29,436,810 15,527,181
Foodland Associated, Ltd. 3,309,867 24,674,992
National Australia Bank, Ltd. 3,233,300 44,228,909
Oil Search, Ltd. 4,329,955 7,856,764
Pasminco, Ltd. 9,288,386 11,497,238
Qantas Airways, Ltd. 8,715,102 15,629,795
Qantas Airways, Ltd. ADR 270,300 4,858,372
Reinsurance Australia Corp., Ltd. 2,209,801 5,719,283
--------------
141,768,325
--------------
Austria (3.2%)
Boehler-Uddeholm AG 157,040 11,253,639
Maculan Holdings AG Vorzuege 'D' 12,343 0
Radex-Heraklith Industries 754,237 29,261,202
V.A. Technologie AG 264,024 46,822,097
--------------
87,336,938
--------------
Brazil (0.8%)
CIA de Saneamento Basico do Estado de Sao Paulo 56,335,700 10,424,021
Telecomunicacoes Brasileiras SA Sponsored ADR 127,720 12,963,580
--------------
23,387,601
--------------
China (0.7%)
China Telecom, Ltd. 'D' 2,524,000 4,031,740
Guangshen Railway Co., Ltd. 17,546,790 5,446,847
Guangshen Railway Co., Ltd. ADR 767,017 11,217,624
--------------
20,696,211
--------------
Denmark (1.8%)
International Service System AS Class B 'D' 949,910 28,798,746
SAS Danmark AS 1,122,169 19,318,560
--------------
48,117,306
--------------
Finland (1.2%)
Rauma OY 722,773 13,540,826
Upm-Kymmene Corp. 833,150 18,521,239
--------------
32,062,065
--------------
</TABLE>
See Accompanying Notes to Financial Statements.
16
<PAGE>
<PAGE>
WARBURG PINCUS INTERNATIONAL EQUITY FUND
SCHEDULE OF INVESTMENTS (CONT'D)
October 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
------------ --------------
<S> <C> <C>
COMMON STOCK (CONT'D)
France (9.1)
Axa-UAP SA 'D' 488,080 $ 33,422,603
Banque Nationale de Paris 141,000 6,233,206
Compagnie de Saint Gobain 113,380 16,274,923
Compagnie Generale des Eaux 41,900 4,888,563
France Telecom SA 'D' 350,000 13,245,670
Lagardere Groupe SCA 1,389,687 39,968,288
Rhone Poulenc Ltd., Class A 848,488 36,994,389
Societe Generale Paris 200,600 27,473,259
Societe Generale d'Entreprises SA 1,287,100 32,979,106
Total Cie Franc des Petroles Class B 320,605 35,571,520
--------------
247,051,527
--------------
Germany (3.8%)
Bayerische Motoren Werke AG 28,021 20,306,250
Deutsche Bank AG 233,550 15,421,964
Fresenius Medical Care AG 'D' 283,700 20,476,926
Hoechst AG 964,230 37,034,169
Schmalbach Lubeca AG 57,200 10,628,210
--------------
103,867,519
--------------
Hong Kong (2.0%)
Cheung Kong Holdings, Ltd. 1,265,000 8,794,380
First Pacific Co., Ltd. 10,452,383 6,590,619
Hong Kong Land Holdings, Ltd. 1,801,690 4,107,853
HSBC Holdings PLC (UK) 4,506 112,262
Jardine Matheson Holdings, Ltd. 5,411,401 34,632,966
--------------
54,238,080
--------------
India (2.6%)
Bharat Petroleum Corp., Ltd. 200 2,398
Hindalco Industries, Ltd. 438,925 11,452,998
Reliance Industries, Ltd. 4,026,100 20,866,931
Reliance Industries, Ltd. GDS 558,100 11,720,100
State Bank of India, Ltd. 2,625,800 20,554,730
State Bank of India, Ltd. GDR 52,100 958,640
Tata Engineering & Locomotive Co., Ltd. 720,200 6,307,035
Tata Engineering & Locomotive Co., Ltd. GDR 15,440 160,576
--------------
72,023,408
--------------
Indonesia (1.2%)
P.T. Bank International Indonesia 7,908,480 1,700,159
P.T. Hanjaya Mandal Sampoerna 7,961,000 13,857,219
P.T. Indosat 1,627,000 3,666,956
P.T. Lippo Securities 99,484,400 10,348,585
P.T. Semen Gresik 2,886,000 2,801,942
P.T. Sinar Mas Multiartha 645,300 138,726
--------------
32,513,587
--------------
</TABLE>
See Accompanying Notes to Financial Statements.
17
<PAGE>
<PAGE>
WARBURG PINCUS INTERNATIONAL EQUITY FUND
SCHEDULE OF INVESTMENTS (CONT'D)
October 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
------------ --------------
<S> <C> <C>
COMMON STOCK (CONT'D)
Ireland (0.0%)
Kerry Group PLC Class A 117,000 $ 1,415,977
--------------
Israel (1.7%)
ECI Telecommunications Limited Designs 1,462,100 40,390,513
Orbotech, Ltd. 'D' 120,800 5,164,200
--------------
45,554,713
--------------
Italy (3.3%)
Assicurazioni Generali SPA 855,200 19,113,859
Ente Nazionale Idrocarburi SPA 5,931,500 33,343,891
Parmalat Finanziaria SPA 10,911,700 15,141,715
Telecom Italia SPA 3,678,000 23,043,153
--------------
90,642,618
--------------
Japan (17.4%)
Canon, Inc. ADR 40 4,905
Daibiru Corp. 263,000 2,818,559
Daimaru, Inc. 874,000 3,405,383
DDI Corp. 1,345 4,491,900
Fuji Bank, Ltd. 2,941,000 25,410,318
Fujitsu, Ltd. 2,741,000 30,058,320
Hankyu Realty Co., Ltd. 1,449,000 9,401,587
Isuzu Motors, Ltd. 3,960,000 9,277,395
Jusco Co., Ltd. 676,000 15,107,086
KAO Corp. 1,578,500 22,031,071
Kawasaki Heavy Industries 2,587,400 6,018,709
Matsushita Electric Works 495,000 4,482,429
Murata Manufacturing Co., Ltd. 310 12,568
Mycal Corp. 688,500 6,577,843
NEC Corp. 3,335,000 36,572,236
Nichiei Co., Ltd. 116,500 12,775,609
Nikko Securities Co., Ltd. 500 1,807
Nippon Communication Systems Corp. 700 8,490
Orix Corp. 920,100 62,833,115
Rohm Co., Ltd. 423,000 41,818,559
Sankyo Co., Ltd. 508,000 16,754,673
Shohkoh Fund & Co., Ltd. 60,000 19,440,060
Sony Corp. 475,100 39,430,498
Sony Corp. ADR 113,500 9,576,563
Sumitomo Bank, Ltd. 2,047,000 21,767,550
Toho Co., Ltd. 38,824 5,096,114
Toray Industries, Inc. 4,917,000 27,368,863
Tsuchiya Home Co. 246,382 1,330,467
Uny Co., Ltd. 753,500 12,206,738
Yamanouchi Pharmaceutical Co., Ltd. 650,000 15,984,049
Yokogawa Electric 1,686,000 10,715,211
--------------
472,778,675
--------------
</TABLE>
See Accompanying Notes to Financial Statements.
18
<PAGE>
<PAGE>
WARBURG PINCUS INTERNATIONAL EQUITY FUND
SCHEDULE OF INVESTMENTS (CONT'D)
October 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
------------ --------------
<S> <C> <C>
COMMON STOCK (CONT'D)
Mexico (2.5%)
Alfa SA Series A 3,325,976 $ 24,423,585
Gruma SA De CV Class B 'D' 2,955,246 11,573,978
Panamerican Beverages, Inc. Class A 1,067,946 33,106,326
--------------
69,103,889
--------------
Netherlands (3.6%)
ASM Lithography Holding NV ADR 'D' 426,200 31,219,150
Philips Electronics NV 864,400 67,559,029
--------------
98,778,179
--------------
New Zealand (4.0%)
Brierley Investments, Ltd. 42,847,604 33,084,692
Fletcher Challenge Building 7,831,322 23,651,336
Fletcher Challenge Forestry 23,395,269 22,580,763
Fletcher Challenge Paper 6,205,544 10,201,468
Sky City, Ltd. 3,139,000 11,434,734
Wrightson, Ltd. 14,548,459 7,791,020
--------------
108,744,013
--------------
Norway (0.7%)
SAS Norge ASA Series B 1,151,850 19,366,547
--------------
Philippines (0.2%)
Millicom International Cellular SA 'D' 138,530 5,818,260
--------------
Portugal (1.5%)
Portugal Telecom SA 142,200 5,834,365
Portugal Telecom SA ADR 860,900 35,512,125
--------------
41,346,490
--------------
Singapore (2.4%)
DBS Land, Ltd. 8,799,600 14,973,288
Development Bank of Singapore, Ltd. 4,939,950 46,106,200
Development Bank of Singapore, Ltd. ADR 79,500 2,981,250
--------------
64,060,738
--------------
South Africa (0.7%)
De Beers Centenary AG 789,700 18,826,199
--------------
South Korea (0.9%)
Hana Bank 198,565 1,214,024
Korea Europe Fund, Ltd. 'D' 1,210 1,467,125
Korea Long Term Credit Bank 852,429 6,854,766
L.G. Construction Co., Ltd. 330,670 2,912,637
Samsung Electronics Co., Ltd. 104,159 4,090,804
Ssangyong Investment & Securities Co., Ltd. 'D' 381,640 2,115,828
Yukong Co., Ltd. 422,750 5,695,078
--------------
24,350,262
--------------
Spain (0.6%)
Banco de Santander ADR 607,500 16,516,406
--------------
</TABLE>
See Accompanying Notes to Financial Statements.
19
<PAGE>
<PAGE>
WARBURG PINCUS INTERNATIONAL EQUITY FUND
SCHEDULE OF INVESTMENTS (CONT'D)
October 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
------------ --------------
<S> <C> <C>
COMMON STOCK (CONT'D)
Sweden (3.1%)
ABB AB Series B 2,665,000 $ 30,731,416
Electrolux AB Series B 640,900 52,972,591
--------------
83,704,007
--------------
Switzerland (2.5%)
Julius Baer Holding AG 'D' 14,500 21,623,261
Oerlikon-Buehrle Holding AG 'D' 210,240 26,851,916
Tag Heuer International SA 'D' 160,960 18,375,740
Tag Heuer International SA ADR 'D' 160,700 1,848,050
--------------
68,698,967
--------------
Taiwan (0.5%)
China Steel Corp. 17,846,050 13,665,634
--------------
Thailand (0.6%)
Bangkok Bank Public Co., Ltd. 299,600 1,039,504
Industrial Finance Corp. of Thailand 8,651,200 7,289,735
Siam Cement Public Co., Ltd. 224,600 1,903,673
Thai Military Bank Public Co., Ltd. 1,900,600 765,421
Thai Telephone & Communication Public Co., Ltd. 'D' 22,211,300 4,954,193
--------------
15,952,526
--------------
United Kingdom (11.4%)
Biocompatibles International PLC 'D' 379,600 3,598,230
British Airport Authority PLC 4,136,164 38,165,833
Care First Group PLC 5,849,900 14,132,703
Cookson Group PLC 10,803,635 43,319,368
Hanson PLC 4,885,262 25,120,752
Imperial Chemical Industries PLC 2,091,054 30,871,819
London Pacific Group, Ltd. 3,005,000 10,511,504
Medeva PLC 4,823,100 16,628,474
Orange PLC 'D' 5,088,100 19,441,435
Pilkington PLC 8,006,000 20,281,816
Rolls-Royce PLC 8,116,000 29,138,696
Singer & Friedlander Group PLC 7,274,400 16,475,752
Thistle Hotels PLC 4,749,800 12,232,015
Williams Holdings PLC 4,966,291 29,828,368
--------------
309,746,765
--------------
TOTAL COMMON STOCK (Cost $2,504,651,503) 2,518,302,971
--------------
PREFERRED STOCK (0.2%)
South Korea (0.0%)
Samsung Electronics Co., Ltd. 37,201 661,908
--------------
United Kingdom (0.2%)
Singer & Friedlander Group PLC 8.50% (Convertible) 1,435,737 3,733,541
--------------
TOTAL PREFERRED STOCK (Cost $4,285,040) 4,395,449
--------------
</TABLE>
See Accompanying Notes to Financial Statements.
20
<PAGE>
<PAGE>
WARBURG PINCUS INTERNATIONAL EQUITY FUND
SCHEDULE OF INVESTMENTS (CONT'D)
October 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
------------ --------------
<S> <C> <C>
STOCK WARRANTS (0.1%)
France (0.1%)
Compagnie Generale des Eaux, 05/02/01 (Strike Price 900
FRF) 'D' 180,300 $ 95,334
Rhone-Poulenc Class A, 11/05/01 (Strike Price 303 FRF) 'D' 585,000 1,901,557
--------------
1,996,891
--------------
Indonesia (0.0%)
P.T. Bank International Indonesia, 01/17/00 (Strike Price
1,000 IDR) 'D' 1,079,900 61,109
P.T. Sinar Mas Multiartha, 11/28/01 (Strike Price 1,000
IDR) 'D' 106,665 2,663
--------------
63,772
--------------
Israel (0.0%)
Ampal-American Israel Corp. Class A, 01/31/99 (Strike Price
$16) 'D' 455,000 28,438
--------------
TOTAL STOCK WARRANTS (Cost $2,446,802) 2,089,101
--------------
CALL OPTIONS (0.0%)
New Zealand (0.0%)
Air New Zealand, Ltd., 05/01/98 (Strike Price $2.4615) 'D' 21,250,000 3,613
Air New Zealand, Ltd., 05/01/98 (Strike Price $2.5895) 'D' 21,250,000 1,275
--------------
4,888
--------------
Singapore (0.0%)
DBS 50 Index, 01/22/98 (Strike Price $402.7127) 'D' 40,089 0
DBS 50 Index, 01/23/98 (Strike Price $406.912) 'D' 38,935 0
DBS 50 Index, 01/26/98 (Strike Price $407.3930652) 'D' 38,353 0
DBS 50 Index, 02/26/98 (Strike Price $404.0032) 'D' 7,507 2
--------------
2
--------------
TOTAL CALL OPTIONS (Cost $8,916,565) 4,890
--------------
CONVERTIBLE BONDS/NOTES (1.3%)
<CAPTION>
PAR
------------
<S> <C> <C>
Japan (0.9%)
Matsushita Electric Works, Ltd. 2.70%, 05/31/02 (A)2,465,000,000 24,574,229
--------------
New Zealand (0.0%)
Brierley Investments, Ltd. 9.00%, 06/30/98 (B)1,314,875 1,015,278
--------------
Thailand (0.4%)
Bangkok Bank Public Co., Ltd. 3.25%, 03/03/04 $22,430,000 10,831,447
--------------
TOTAL CONVERTIBLE BONDS/NOTES (Cost $50,044,414) 36,420,954
--------------
</TABLE>
See Accompanying Notes to Financial Statements.
21
<PAGE>
<PAGE>
WARBURG PINCUS INTERNATIONAL EQUITY FUND
SCHEDULE OF INVESTMENTS (CONT'D)
October 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PAR VALUE
------------ --------------
<S> <C> <C>
REPURCHASE AGREEMENT (6.0%)
Repurchase agreement with Goldman, Sachs & Co. dated 10/31/97
at 5.65% to be
repurchased at $162,862,645 on 11/03/97. (Collateralized by a
pro rata amount of U.S. Treasury Notes ranging in par values
from $830,000-$50,000,000, 5.125%-8.50%, 01/15/98-11/15/04.
Market value of collateral is $166,139,392.) (Cost
$162,786,000) $162,786,000 $ 162,786,000
--------------
TOTAL INVESTMENTS AT VALUE (100.0%) (Cost $2,733,130,324*) $2,723,999,365
--------------
--------------
</TABLE>
INVESTMENT ABBREVIATIONS
<TABLE>
<S> <C>
ADR = American Depository Receipt
GDR = Global Depository Receipt
</TABLE>
- --------------------------------------------------------------------------------
'D' Non-income producing security.
* Cost for federal income tax purposes is $2,735,275,774.
(A) Denominated in Japanese Yen.
(B) Denominated in New Zealand Dollars.
See Accompanying Notes to Financial Statements.
22
<PAGE>
<PAGE>
WARBURG PINCUS JAPAN OTC FUND
SCHEDULE OF INVESTMENTS
October 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
----------- -----------
<S> <C> <C>
COMMON STOCK (91.5%)
Building Materials (0.3%)
Emoto Industry Co. 74,000 $ 143,549
-----------
Communications & Media (1.9%)
Hikari Tsushin, Inc. 16,050 746,698
-----------
Computers (10.8%)
ASCII Corp. 70,000 843,233
I.O. Data Device, Inc. 70,000 1,058,403
Miroku Jyoho Service Co., Ltd. 100,000 880,618
Nidec Corp. 39,200 1,530,614
-----------
4,312,868
-----------
Electrical Equipment (4.4%)
Tokyo Electron, Ltd. 35,000 1,744,621
-----------
Electronics (22.8%)
Advantest Corp. 15,000 1,239,927
Innotech Corp. 70,000 1,186,342
Mimasu Semiconductor Industry 60,000 1,121,542
Nemic-Lambda K.K. 47,500 793,179
Nihon Electric Wire & Cable Co. 100,000 498,463
Rohm Co., Ltd. 30,000 2,965,855
Yamaichi Electronics Co., Ltd. 64,000 1,249,481
-----------
9,054,789
-----------
Engineering & Construction (0.8%)
Masaru Corp.+ 98,000 325,663
-----------
Financial Services (14.2%)
Orix Corp. 35,000 2,390,131
Shohkoh Fund & Co., Ltd. 10,000 3,240,010
-----------
5,630,141
-----------
Food Processing (4.7%)
Ariake Japan Co., Ltd. 50,000 1,860,929
-----------
Industrial Mfg. & Processing (2.1%)
Arisawa Manufacturing Co., Ltd. 65,000 853,203
-----------
Machinery (Electric) (5.6%)
Misumi Corp. 88,000 1,432,915
Nissei ASB Machine Co. 80,000 797,541
-----------
2,230,456
-----------
Machinery (Non-Electric) (4.0%)
THK Co., Ltd. 120,000 1,605,051
-----------
Manufacturing (10.7%)
Disco Corp. 60,000 1,929,052
Nitta Industrial Corp. 50,000 581,540
Shinkawa, Ltd. 63,700 1,111,323
Ube-Nitto Kasei Co., Ltd. 123,000 620,263
-----------
4,242,178
-----------
</TABLE>
See Accompanying Notes to Financial Statements.
23
<PAGE>
<PAGE>
WARBURG PINCUS JAPAN OTC FUND
SCHEDULE OF INVESTMENTS (CONT'D)
October 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
----------- -----------
<S> <C> <C>
COMMON STOCK (CONT'D)
Scientific Instruments (2.7%)
GL Sciences, Inc. 60,000 $ 1,071,696
-----------
Telecommunications (3.8%)
Bellsystem 24, Inc. 11,000 1,516,989
-----------
Transportation (2.7%)
Yusen Air & Sea Services Co., Ltd. 34,000 1,073,357
-----------
TOTAL COMMON STOCK (Cost $45,691,659) 36,412,188
-----------
<CAPTION>
PAR
-----------
<S> <C> <C>
CONVERTIBLE BONDS (5.4%)
Credia Co., Ltd. 1.00%, 03/31/04+ (A)25,000,000 179,654
Credit Saison Co., Ltd. 0.50%, 03/31/03+ (A)52,000,000 696,818
Credit Saison Co., Ltd. 0.60%, 03/31/05 (A)98,000,000 1,282,296
-----------
TOTAL CONVERTIBLE BONDS (Cost $1,566,007) 2,158,768
-----------
REPURCHASE AGREEMENT (3.1%)
Repurchase agreement with Goldman, Sachs & Co. dated 10/31/97 at
5.65% to be repurchased at $1,212,571 on 11/03/97.
(Collateralized by a pro rata amount of U.S. Treasury Notes
ranging in par values from $830,000-$50,000,000, 5.125%-8.50%,
01/15/98-11/15/04. Market value of collateral is $1,236,967.)
(Cost $1,212,000) $1,212,000 1,212,000
-----------
TOTAL INVESTMENTS AT VALUE (100.0%) (Cost $48,469,666*) $39,782,956
-----------
-----------
</TABLE>
- --------------------------------------------------------------------------------
'D' Non-income producing security.
+ Not readily marketable security.
* Also cost for federal income tax purposes.
(A) Denominated in Japanese Yen.
See Accompanying Notes to Financial Statements.
24
<PAGE>
<PAGE>
WARBURG PINCUS EMERGING MARKETS FUND
SCHEDULE OF INVESTMENTS
October 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
----------- ------------
<S> <C> <C>
COMMON STOCKS (96.5%)
Argentina (4.7%)
Banco de Galicia & Buenos Aires SA ADR 70,100 $ 1,698,830
YPF SA Sponsored ADR 159,600 5,107,200
------------
6,806,030
------------
Australia (4.8%)
Accor Asia Pacific Co., Ltd. 5,279,512 1,856,540
Cue Energy Resources NL 'D' 13,227,637 1,674,539
Novus Petroleum, Ltd. 1,046,423 3,422,164
------------
6,953,243
------------
Brazil (7.7%)
CIA de Saneamento Basico do Estado de Sao Paulo 33,238,500 6,150,253
Companhia de Eletricidade do Estado da Bahia 'D' 38,857,000 2,114,667
Light Participacoes SA 'D' 4,967,000 1,270,471
Telecomunicacoes Brasileiras SA Sponsored ADR 16,800 1,705,200
------------
11,240,591
------------
Chile (5.9%)
Banco de A. Edwards ADR 204,550 3,554,056
Santa Isabel SA ADR 113,700 2,103,450
Supermercados Unimarc SA ADR 'D' 195,566 2,933,490
------------
8,590,996
------------
China (8.3%)
China Hong Kong Photo Products Holdings, Ltd. 4,128,600 1,041,295
China Southern Airlines Co., Ltd. Class H 'D' 4,370,000 1,935,879
China Telecom, Ltd. 'D' 2,820,000 4,504,559
Guangshen Railway Co., Ltd. 1,298,921 403,209
Guangshen Railway Co., Ltd. ADR 176,668 2,583,770
Qingling Motors Co., Ltd. Series H 2,437,500 1,592,107
------------
12,060,819
------------
Egypt (1.3%)
Commercial International Bank, Ltd. 33,110 765,349
Mibbank International 6,472 1,084,215
Suez Cement Co., Ltd. 1,000 21,896
------------
1,871,460
------------
Finland (3.3%)
Hartwall OY AB 59,480 4,882,378
------------
France (2.4%)
Bouygues Offshore SA ADR 144,600 3,506,550
------------
</TABLE>
See Accompanying Notes to Financial Statements.
25
<PAGE>
<PAGE>
WARBURG PINCUS EMERGING MARKETS FUND
SCHEDULE OF INVESTMENTS (CONT'D)
October 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
----------- ------------
<S> <C> <C>
COMMON STOCKS (CONT'D)
Hong Kong (3.2%)
First Pacific Co., Ltd. 3,131,275 $ 1,974,386
Jardine Matheson Holdings, Ltd. 129,617 829,549
Wing Hang Bank, Ltd. 739,100 1,902,359
------------
4,706,294
------------
India (9.7%)
Aptech, Ltd. 'D' 80,600 1,669,598
Bombay Suburban Electric Supply Co., Ltd. 313,750 1,570,066
Grasim Industries, Ltd. 1,025 9,272
Hindalco Industries, Ltd. 37,275 972,627
Indo Rama Synthetics GDR 'D' 305,000 1,748,870
Reliance Industries, Ltd. 78,000 404,267
Reliance Industries, Ltd. GDS 55,300 1,161,300
State Bank Of India, Ltd. 119,900 938,576
State Bank Of India, Ltd. GDR 63,000 1,159,200
Tata Engineering & Locomotive Co., Ltd. 293,950 2,574,219
Videsh Sanchar Nigam Co., Ltd. 82,800 1,935,138
------------
14,143,133
------------
Indonesia (5.8%)
P.T. Bank NISP 3,199,000 798,641
P.T. Dynaplast, Ltd. 7,608,630 1,741,226
P.T. Hanjaya Mandala Sampoerna 1,496,000 2,603,994
P.T. Semen Gresik 3,182,600 3,089,903
P.T. Sinar Mas Multiartha 640,500 137,694
P.T. Steady Safe Transportation Service 71,907 19,448
------------
8,390,906
------------
Israel (7.3%)
Blue Square Israel Co., Ltd. ADR 'D' 334,700 3,890,888
ECI Telecommunications Limited Designs 176,100 4,864,763
Teva Pharmaceutical Industries, Ltd. ADR 41,100 1,921,425
------------
10,677,076
------------
Mexico (8.3%)
Alfa SA de CV Series A 434,300 3,189,188
Cintra SA 'D' 2,072,600 1,959,999
Consorcio Hogar SA de CV Series B 'D' 1,236,000 2,287,522
Gruma SA de CV Class B 'D' 474,234 1,857,299
Panamerican Beverages, Inc. Class A 91,800 2,845,800
------------
12,139,808
------------
</TABLE>
See Accompanying Notes to Financial Statements.
26
<PAGE>
<PAGE>
WARBURG PINCUS EMERGING MARKETS FUND
SCHEDULE OF INVESTMENTS (CONT'D)
October 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
----------- ------------
<S> <C> <C>
COMMON STOCKS (CONT'D)
Philippines (1.5%)
Millicom International Cellular SA ADR 'D' 38,800 $ 1,629,600
Solid Group, Inc. 8,684,281 534,040
------------
2,163,640
------------
Poland (2.0%)
Bank Slaski SA 49,000 2,854,232
------------
Portugal (5.5%)
Mota e Companhia SA 213,500 3,581,604
Portugal Telecom SA 11,100 455,425
Portugal Telecom SA ADR 97,200 4,009,500
------------
8,046,529
------------
Russia (2.2%)
The Russian Prosperity Fund A 'D' 105,278 3,294,149
------------
Singapore (7.0%)
DBS Land, Ltd. 1,300,000 2,212,063
Development Bank of Singapore, Ltd. 464,000 4,330,667
Keppel Bank 2,278,000 3,717,117
------------
10,259,847
------------
South Korea (2.4%)
Hana Bank 16,328 99,829
Kookmin Bank 625 5,052
Korea Long Term Credit Bank 47,755 384,019
L.G. Construction Co., Ltd. 66,080 582,052
Samsung Electronics Co., Ltd. 17,517 687,973
Samsung Electronics Co., Ltd. GDR 2,134 44,387
Yukong Co., Ltd. 125,500 1,690,674
------------
3,493,986
------------
Taiwan (0.2%)
Tatung Co., Ltd. 480 475
Wan Hai Lines Co., Ltd. 195,510 287,422
------------
287,897
------------
</TABLE>
See Accompanying Notes to Financial Statements.
27
<PAGE>
<PAGE>
WARBURG PINCUS EMERGING MARKETS FUND
SCHEDULE OF INVESTMENTS (CONT'D)
October 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
----------- ------------
<S> <C> <C>
COMMON STOCKS (CONT'D)
Thailand (3.0%)
Hana Microelectronics Public Co., Ltd. 350,300 $ 633,752
Industrial Finance Corp. of Thailand 1,420,100 1,196,615
Jasmine International Public Co., Ltd. 248,100 138,346
Land and House Public Co., Ltd. 8,888 7,710
Precious Shipping Public Co., Ltd. 539,968 424,882
Ruam Pattana Fund II 3,614,000 689,660
Siam Cement Co., Ltd. 97,900 829,784
Thai Military Bank Public Co., Ltd. 407,100 163,950
Thai Telephone & Communication Public Co., Ltd. 'D' 1,260,600 281,175
------------
4,365,874
------------
TOTAL COMMON STOCK (Cost $168,101,801) 140,735,438
------------
PREFERRED STOCK (1.1%)
Brazil (1.0%)
Petroleo Brasileiro SA 7,756,100 1,442,177
------------
South Korea (0.1%)
Samsung Electronics Co., Ltd. 4,515 80,334
------------
TOTAL PREFERRED STOCK (Cost $2,578,418) 1,522,511
------------
RIGHTS & WARRANTS (0.4%)
Hong Kong (0.0%)
Jardine Strategic Holdings, Ltd. Wts., 05/02/98 (Strike
Price $3.57) 'D' 21,000 5,250
------------
Indonesia (0.0%)
P.T. Sinar Mas Multiartha Wts., 11/28/01 (Strike Price
1,000 IDR) 'D' 340,425 8,499
------------
Thailand (0.4%)
Hana Microelectronics Public Co., Ltd. Rts., 12/02/97
(Exercise Price 10THB) 'D' 350,300 546,937
------------
TOTAL RIGHTS & WARRANTS (Cost $905,511) 560,686
------------
CALL OPTIONS (0.0%)
Singapore (0.0%)
DBS 50 Index, 01/22/98 (Strike Price $402.7127) 'D' 2,712 0
DBS 50 Index, 01/23/98 (Strike Price $406.912) 'D' 2,633 0
DBS 50 Index, 01/26/98 (Strike Price $407.3930652) 'D' 2,594 0
DBS 50 Index, 02/26/98 (Strike Price $404.0032) 'D' 568 0
------------
0
------------
TOTAL CALL OPTIONS (Cost $370,000) 0
------------
</TABLE>
See Accompanying Notes to Financial Statements.
28
<PAGE>
<PAGE>
WARBURG PINCUS EMERGING MARKETS FUND
SCHEDULE OF INVESTMENTS (CONT'D)
October 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PAR VALUE
----------- ------------
<S> <C> <C>
CONVERTIBLE BONDS/NOTES (2.0%)
China (1.1%)
Qingling Motors Co., Ltd. 3.50%, 01/22/02 $1,454,000 $ 1,635,168
------------
Thailand (0.9%)
Bangkok Bank Public Co., Ltd. 3.25%, 03/03/04 2,736,000 1,321,214
------------
TOTAL CONVERTIBLE BONDS/NOTES (Cost $4,071,702) 2,956,382
------------
TOTAL INVESTMENTS AT VALUE (100.0%) (Cost $176,027,432*) $145,775,017
------------
------------
</TABLE>
INVESTMENT ABBREVIATIONS
<TABLE>
<C> <S>
ADR = American Depository Receipt
GDR = Global Depository Receipt
GDS = Global Depository Share
</TABLE>
- --------------------------------------------------------------------------------
'D' Non-income producing security.
* Cost for federal income tax purposes is $176,341,442.
See Accompanying Notes to Financial Statements.
29
<PAGE>
<PAGE>
WARBURG PINCUS JAPAN GROWTH FUND
SCHEDULE OF INVESTMENTS
October 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
--------- -----------
<S> <C> <C>
COMMON STOCK (95.4%)
Banks & Savings & Loans (13.4%)
Fuji Bank, Ltd. 72,000 $ 622,082
Sakura Bank, Ltd. 90,000 367,118
Sanwa Bank 50,000 502,617
Sumitomo Bank, Ltd. 65,000 691,202
Toyo Trust & Banking 80,000 597,491
-----------
2,780,510
-----------
Broadcasting (3.1%)
Nippon Television Network 1,800 640,027
-----------
Computers (7.6%)
Net One System Co., Ltd.'D' 33 179,023
Nidec Corp. 14,000 546,648
Tokyo Electronics, Ltd. 17,300 862,341
-----------
1,588,012
-----------
Electrical Equipment (5.4%)
Fujitsu, Ltd. 70,000 767,633
Shinmei Electric Co. 18,000 343,940
-----------
1,111,573
-----------
Electronics (25.4%)
Advantest Corp. 10,700 884,481
Nippon Electric Corp. 80,000 877,295
Rohm Co., Ltd. 11,000 1,087,480
Sony Corp. 11,800 979,330
Tokyo Seimitsu Co., Ltd. 39,000 1,053,003
Toshiba Ceramics Co. 60,000 385,312
-----------
5,266,901
-----------
Financial Services (12.8%)
Japan Asia Investment Co., Ltd.'D' 50,000 153,693
Nomura Securities Co., Ltd. 50,000 581,540
Orix Corp. 14,000 956,052
Shohkoh Fund & Co., Ltd. 3,000 972,003
-----------
2,663,288
-----------
Industrial Mfg. & Processing (4.6%)
Fujikura, Ltd. 95,000 651,117
Nitta Industrial Corp. 26,000 302,401
-----------
953,518
-----------
</TABLE>
See Accompanying Notes to Financial Statements.
30
<PAGE>
<PAGE>
WARBURG PINCUS JAPAN GROWTH FUND
SCHEDULE OF INVESTMENTS (CONT'D)
October 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
--------- -----------
<S> <C> <C>
COMMON STOCK (CONT'D)
Pharmaceuticals (8.9%)
Sankyo Co., Ltd. 30,000 $ 989,449
Yamanouchi Pharmaceutical Co., Ltd. 35,000 860,680
-----------
1,850,129
-----------
Real Estate (10.5%)
Daibiru Corp. 26,000 278,641
Hankyu Realty Co., Ltd. 62,000 402,276
Meiwa Estate Co., Ltd. 23,400 276,049
Mitsubishi Estate Co., Ltd. 24,000 303,066
Mitsui Fudosan Co., Ltd. 60,000 677,910
Tachihi Enterprise Co., Ltd. 10,000 236,770
-----------
2,174,712
-----------
Retail (3.7%)
Credit Saison Co. 29,000 778,184
-----------
TOTAL COMMON STOCK (Cost $21,170,381) 19,806,854
-----------
REPURCHASE AGREEMENT (4.6%) PAR
---------
Repurchase agreement with Goldman, Sachs & Co. dated
10/31/97 at 5.65% to be repurchased at $953,449 on
11/03/97. (Collateralized by a pro rata amount of U.S.
Treasury Notes ranging in par values from
$830,000-$50,000,000, 5.125%-8.50%, 01/15/98-11/15/04.
Market value of collateral is $972,632.) (Cost $953,000) $953,000 953,000
-----------
TOTAL INVESTMENTS AT VALUE (100.0%) (Cost $22,123,381*) $20,759,854
-----------
-----------
</TABLE>
- --------------------------------------------------------------------------------
'D' Non-income producing security.
* Cost for federal income tax purposes is $22,134,533.
See Accompanying Notes to Financial Statements.
31
<PAGE>
<PAGE>
WARBURG PINCUS GLOBAL POST-VENTURE CAPITAL FUND
STATEMENT OF NET ASSETS
October 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
---------- ----------
<S> <C> <C>
COMMON STOCK (67.9%)
Business Services (4.9%)
Boron, LePore & Associates, Inc.'D' 800 $ 19,500
Outdoor Systems, Inc.'D' 1,850 56,887
Parexel International Corp.'D' 600 21,675
QuickResponse Services, Inc.'D' 900 29,250
Wilmar Industries, Inc.'D' 1,100 28,875
----------
156,187
----------
Communications & Media (1.8%)
Central European Media Enterprises, Ltd. Class A'D' 2,000 58,500
----------
Computers (9.7%)
Adobe Systems, Inc. 500 23,875
BMC Software, Inc.'D' 1,000 60,375
Hyperion Software Corp.'D' 1,200 45,750
PeopleSoft , Inc.'D' 1,100 69,162
PLATINUM Technology, Inc.'D' 2,000 48,500
QuadraMed Corp.'D' 700 16,450
Siebel Systems, Inc.'D' 2 67
Tecnomatix Technologies, Ltd.'D' 1,500 46,312
----------
310,491
----------
Consumer Non-Durables (1.2%)
Central Garden & Pet Co.'D' 1,400 36,750
----------
Electronics (12.6%)
Altera Corp.'D' 800 35,500
ASM Lithography Holding NV'D' 500 36,625
Etec Systems, Inc.'D' 200 8,925
Galileo Technology Corp.'D' 600 20,625
KLA-Tencor Corp.'D' 700 30,756
Linear Technology Corp. 800 50,300
Maxim Integrated Products, Inc.'D' 1,000 66,250
Microchip Technology, Inc.'D' 800 31,900
Solectron Corp.'D' 400 15,700
Texas Instruments, Inc. 500 53,344
Vitesse Semiconductor Corp.'D' 600 26,025
Xilinx, Inc.'D' 800 27,300
----------
403,250
----------
Energy (3.4%)
Coho Energy, Inc.'D' 2,600 30,550
Forcenergy, Inc.'D' 1,500 48,937
Stone Energy Corp.'D' 900 30,037
----------
109,524
----------
</TABLE>
See Accompanying Notes to Financial Statements.
32
<PAGE>
<PAGE>
WARBURG PINCUS GLOBAL POST-VENTURE CAPITAL FUND
STATEMENT OF NET ASSETS (CONT'D)
October 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
---------- ----------
<S> <C> <C>
COMMON STOCK (CONT'D)
Environmental Services (2.1%)
American Disposal Services, Inc.'D' 900 $ 31,725
USA Waste Services, Inc.'D' 1,000 37,000
----------
68,725
----------
Financial Services (4.5%)
ARM Financial Group, Inc. Class A 1,700 36,763
Franklin Resources, Inc. 300 26,963
Price (T. Rowe) Associates, Inc. 600 39,750
Transaction Systems Architects, Inc. Class A'D' 1,000 39,125
----------
142,601
----------
Healthcare (2.0%)
American Oncology Resources, Inc.'D' 1,800 26,325
NovaCare, Inc.'D' 2,200 28,738
Oxford Health Plans, Inc.'D' 400 10,325
----------
65,388
----------
Industrial Mfg. & Processing (1.7%)
Elbit Vision Systems, Inc.'D' 4,300 53,213
----------
Leisure & Entertainment (2.0%)
N2K, Inc.'D' 800 21,050
Premier Parks, Inc.'D' 1,100 44,000
----------
65,050
----------
Metals & Mining (1.1%)
Metals USA, Inc.'D' 2,300 33,925
----------
Oil Services (1.8%)
Pride International, Inc.'D' 1,700 56,100
----------
Pharmaceuticals (3.5%)
ChiRex, Inc.'D' 2,000 40,750
SangStat Medical Corp.'D' 1,500 46,688
Watson Pharmaceuticals, Inc.'D' 800 25,400
----------
112,838
----------
Retail (2.5%)
Family Dollar Stores, Inc. 1,500 35,250
Rite Aid Corp. 770 45,719
----------
80,969
----------
</TABLE>
See Accompanying Notes to Financial Statements.
33
<PAGE>
<PAGE>
WARBURG PINCUS GLOBAL POST-VENTURE CAPITAL FUND
STATEMENT OF NET ASSETS (CONT'D)
October 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
---------- ----------
<S> <C> <C>
COMMON STOCK (CONT'D)
Telecommunications & Equipment (11.3%)
Cisco Systems, Inc.'D' 900 $ 73,828
Intermedia Communications, Inc.'D' 700 31,763
McLeodUSA, Inc. Class A'D' 1,900 70,538
Paging Network, Inc.'D' 3,700 45,788
Teledata Communications, Ltd.'D' 1,000 31,000
Tellabs, Inc.'D' 600 32,400
TTI Team Telecom International, Ltd.'D' 6,900 39,675
WorldCom, Inc.'D' 1,080 36,315
----------
361,307
----------
Transportation (1.8%)
Coach USA, Inc.'D' 1,900 56,525
----------
TOTAL COMMON STOCK (Cost $1,779,448) 2,171,343
----------
FOREIGN COMMON STOCKS (24.1%)
Chile (0.9%)
Santa Isabel SA ADR 1,600 29,600
----------
Germany (1.2%)
SAP AG ADR 400 39,740
----------
Japan (2.4%)
Orix Corp. 1,100 75,118
----------
Netherlands (1.1%)
Security Capital U.S. Realty Class A REIT 'D' 2,500 35,250
----------
Norway (1.3%)
Petroleum Geo Services ADR'D' 600 41,550
----------
Sweden (3.1%)
Electrolux AB Series B 1,191 98,440
----------
United Kingdom (14.1%)
3i Group PLC 5,583 44,351
AMVESCAP PLC ADR 1,320 86,790
British-Borneo Petroleum Syndicate PLC 5,050 40,329
Cookson Group PLC 8,970 35,967
EMAP PLC 3,100 44,493
Expro International Group PLC 4,700 47,311
Hays PLC 5,836 68,537
Sema Group PLC 1,900 42,714
Thistle Hotels PLC 6,900 17,769
Williams Holdings PLC 3,600 21,622
----------
449,883
----------
TOTAL FOREIGN COMMON STOCKS (Cost $682,276) 769,581
----------
</TABLE>
See Accompanying Notes to Financial Statements.
34
<PAGE>
<PAGE>
WARBURG PINCUS GLOBAL POST-VENTURE CAPITAL FUND
STATEMENT OF NET ASSETS (CONT'D)
October 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PAR VALUE
---------- ----------
<S> <C> <C>
REPURCHASE AGREEMENT (7.6%)
Repurchase agreement with Goldman, Sachs & Co. dated 10/31/97
at 5.65% to be
repurchased at $244,115 on 11/03/97. (Collateralized by a pro
rata amount of U.S.
Treasury Notes ranging in par values from
$830,000-$50,000,000, 5.125%-8.50%,
01/15/98-11/15/04. Market value of collateral is $249,602.)
(Cost $244,000) $ 244,000 $ 244,000
----------
TOTAL INVESTMENTS AT VALUE (99.6%) (Cost $2,705,724*) 3,184,924
OTHER ASSETS IN EXCESS OF LIABILITIES (0.4%) 13,593
----------
NET ASSETS (100.0%) (applicable to 286,826 Common Shares and 108 Advisor
Shares) $3,198,517
----------
----------
NET ASSETS VALUE offering and redemption price per Common Share
($3,197,317[div]286,826) $11.15
----------
----------
NET ASSETS VALUE offering and redemption price per Advisor Share
($1,200[div]108) $11.11
----------
----------
</TABLE>
INVESTMENT ABBREVIATIONS
ADR = American Depository Receipt
REIT = Real Estate Investment Trust
- --------------------------------------------------------------------------------
'D' Non-income producing security.
* Cost for federal income tax purposes is $2,710,669.
See Accompanying Notes to Financial Statements.
35
<PAGE>
<PAGE>
WARBURG PINCUS INTERNATIONAL EQUITY FUND
STATEMENT OF ASSETS AND LIABILITIES
October 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS
Investments at value (Cost $2,733,130,324) $2,723,999,365
Receivable for investments sold (Cost $144,926,248) 144,997,893
Receivable for unrealized gains on forward contracts 15,418,292
Dividends, interest, and reclaims receivable (Cost $11,660,074) 11,588,388
Receivable for fund shares sold 8,055,013
Foreign currency (Cost $2,199,284) 2,197,002
Other assets 194,876
--------------
TOTAL ASSETS 2,906,450,829
--------------
LIABILITIES
Payable for investments purchased (Cost $59,892,885) 60,222,772
Payable for fund shares redeemed 13,928,391
Payable for realized losses on Korean Swap 10,168,960
Accrued expenses payable 5,258,558
Unrealized depreciation from Korean Swap 2,175,063
Payable for realized losses on forward currency contracts 2,130,431
Other liabilities 51,426
--------------
TOTAL LIABILITIES 93,935,601
--------------
NET ASSETS, applicable to 111,396,312 Common Shares and 24,367,400 Advisor
Shares $2,812,515,228
--------------
--------------
NET ASSET VALUE, offering and redemption price per Common Share
($2,312,042,130[div]111,396,312) $20.76
--------------
--------------
NET ASSET VALUE, offering and redemption price per Advisor Share
($500,473,098[div]24,367,400) $20.54
--------------
--------------
</TABLE>
See Accompanying Notes to Financial Statements.
36
<PAGE>
<PAGE>
WARBURG PINCUS JAPAN OTC FUND
STATEMENT OF ASSETS AND LIABILITIES
October 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS
Investments at value (Cost $48,469,666) $39,782,956
Receivable for investments sold (Cost $1,480,303) 1,481,795
Receivable for fund shares sold 562,712
Prepaid organizational cost 82,002
Dividends, interest, and reclaims receivable (Cost $75,410) 75,633
Foreign currency (Cost $11,976) 11,901
Other assets 610
-----------
TOTAL ASSETS 41,997,609
-----------
LIABILITIES
Payable for fund shares redeemed 73,926
Payable for unrealized losses on forward contracts 60,691
Payable for realized losses on forward contracts 56,965
Accrued expenses payable 175,387
-----------
TOTAL LIABILITIES 366,969
-----------
NET ASSETS, applicable to 6,539,099 Common Shares and 497 Advisor Shares $41,630,640
-----------
-----------
NET ASSET VALUE, offering and redemption price per Common Share
($41,627,474[div]6,539,099) $6.37
-----------
-----------
NET ASSET VALUE, offering and redemption price per Advisor Share
($3,166[div]497) $6.37
-----------
-----------
</TABLE>
See Accompanying Notes to Financial Statements.
37
<PAGE>
<PAGE>
WARBURG PINCUS EMERGING MARKETS FUND
STATEMENT OF ASSETS AND LIABILITIES
October 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS
Investments at value (Cost $176,027,432) $145,775,017
Receivable for investments sold (Cost $11,459,892) 11,472,724
Foreign currency (Cost $1,828,683) 1,822,719
Receivable for fund shares sold 1,458,186
Dividends, interest, and reclaims receivable (Cost $262,496) 261,521
Prepaid organizational cost 97,427
Other assets 15,115
------------
TOTAL ASSETS 160,902,709
------------
LIABILITIES
Payable for fund shares redeemed 1,847,806
Payable for realized losses on Korean Swap 1,243,871
Unrealized depreciation from Korean Swap 266,452
Accrued expenses payable 664,213
Other liabilities 807,989
------------
TOTAL LIABILITIES 4,830,331
------------
NET ASSETS, applicable to 14,393,663 Common Shares and 24,482 Advisor
Shares $156,072,378
------------
------------
NET ASSET VALUE, offering and redemption price per Common Share
($155,806,140[div]14,393,663) $10.82
------------
------------
NET ASSET VALUE, offering and redemption price per Advisor Share
($266,238[div]24,482) $10.87
------------
------------
</TABLE>
See Accompanying Notes to Financial Statements.
38
<PAGE>
<PAGE>
WARBURG PINCUS JAPAN GROWTH FUND
STATEMENT OF ASSETS AND LIABILITIES
October 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS
Investments at value (Cost $22,123,381) $20,759,854
Receivable for investments sold (Cost $2,272,598) 2,273,976
Receivable for fund shares sold 1,026,001
Receivable for unrealized gains on forward contracts 842,976
Receivable for realized gains on forward contracts 132,282
Dividends, interest, and reclaims receivable (Cost $46,196) 46,406
Prepaid organizational cost 13,687
Other assets 233
-----------
TOTAL ASSETS 25,095,415
-----------
LIABILITIES
Accrued expenses payable 69,022
Payable for fund shares redeemed 54,336
Other liabilities 414
-----------
TOTAL LIABILITIES 123,772
-----------
NET ASSETS, applicable to 2,563,208 Common Shares and 1,735 Advisor Shares $24,971,643
-----------
-----------
NET ASSET VALUE, offering and redemption price per Common Share
($24,954,476[div]2,563,208) $9.74
-----------
-----------
NET ASSET VALUE, offering and redemption price per Advisor Share
($17,167[div]1,735) $9.89
-----------
-----------
</TABLE>
See Accompanying Notes to Financial Statements.
39
<PAGE>
<PAGE>
WARBURG PINCUS INTERNATIONAL EQUITY FUNDS
STATEMENTS OF OPERATIONS
For the Year Ended October 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INTERNATIONAL EQUITY JAPAN OTC EMERGING MARKETS JAPAN GROWTH GLOBAL POST-VENTURE
FUND FUND FUND FUND CAPITAL FUND
-------------------- ------------ ---------------- ------------ -------------------
<S> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends $ 63,782,838 $ 393,592 $ 4,391,995 $ 119,853 $ 16,747
Interest 6,355,244 148,089 788,250 49,075 12,062
Foreign taxes
withheld (6,762,923) (59,336) (464,223) (17,978) (1,411)
----------- ------------ ---------------- ------------ -------
Total investment
income 63,375,159 482,345 4,716,022 150,950 27,398
----------- ------------ ---------------- ------------ -------
EXPENSES:
Investment advisory 33,440,864 927,417 3,124,684 260,741 49,452
Administrative
services 5,391,129 163,225 547,599 45,890 8.703
Audit 83,534 20,918 13,468 12,008 12,012
Custodian/Sub-custodian 2,271,663 60,331 320,394 10,483 28,227
Directors 10,000 7,500 7,500 7,500 7,500
Insurance 62,112 2,917 4,285 367 43
Interest 36,312 26,430 70,834 9,275 386
Legal 298,506 29,843 40,000 20,595 35,808
Offering/Organizational
costs 0 42,333 45,001 19,013 118,266
Printing 235,854 9,370 28,848 10,568 11,188
Registration 80,100 60,124 67,009 45,911 23,809
Shareholder
servicing/distribution 2,710,056 185,486 625,520 52,159 9,895
Transfer agent 1,969,862 103,485 247,734 23,396 5,558
Miscellaneous 346,120 40,928 142,102 16,938 11,104
----------- ------------ ---------------- ------------ -------
46,936,112 1,680,307 5,284,978 534,844 321,951
Less: fees waived,
expenses reimbursed
and transfer agent
offsets (156,179) (381,919) (1,159,812) (169,796) (256,671)
----------- ------------ ---------------- ------------ -------
Total expenses 46,779,933 1,298,388 4,125,166 365,048 65,280
----------- ------------ ---------------- ------------ -------
Net investment
income (loss) 16,595,226 (816,043) 590,856 (214,098) (37,882)
----------- ------------ ---------------- ------------ -------
NET REALIZED AND
UNREALIZED GAIN (LOSS)
FROM INVESTMENTS AND
FOREIGN CURRENCY
RELATED ITEMS:
Net realized gain
(loss) from
security and other
related
transactions 242,233,285 (29,824,743) 3,573,949 (3,584,648) 40,384
Net realized gain
(loss) from foreign
currency related
items 81,782,235 6,929,625 (692,650) 2,225,388 736
Net change in
unrealized
appreciation
(depreciation) from
investments and
foreign currency
related items (164,531,003) 4,776,152 (19,880,535) 643,764 514,579
----------- ------------ ---------------- ------------ -------
Net realized and
unrealized gain
(loss) from
investments and
foreign currency
related items 159,484,517 (18,118,966) (16,999,236) (715,496) 555,699
----------- ------------ ---------------- ------------ -------
Net increase
(decrease) in net
assets resulting
from operations $176,079,743 $(18,935,009) $(16,408,380) $ (929,594) $517,817
----------- ------------ ---------------- ------------ -------
----------- ------------ ---------------- ------------ -------
</TABLE>
See Accompanying Notes to Financial Statements.
40
<PAGE>
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
41
<PAGE>
<PAGE>
WARBURG PINCUS INTERNATIONAL EQUITY FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INTERNATIONAL EQUITY FUND JAPAN OTC FUND
------------------------------- -----------------------------
FOR THE FOR THE
YEAR ENDED YEAR ENDED
OCTOBER 31, OCTOBER 31,
------------------------------- -----------------------------
1997 1996 1997 1996
-------------- -------------- ------------- -------------
<S> <C> <C> <C> <C>
FROM OPERATIONS:
Net investment income (loss) $ 16,595,226 $ 16,989,294 $ (816,043) $ (2,657,124)
Net realized gain (loss) from security
and other related transactions 242,233,285 101,648,594 (29,824,743) (19,857,477)
Net realized gain (loss) from foreign
currency related items 81,782,235 101,555,138 6,929,625 28,749,231
Net change in unrealized appreciation
(depreciation) from investments and
foreign currency related items (164,531,003) 31,834,726 4,776,152 (13,291,445)
-------------- -------------- ------------- -------------
Net increase (decrease) in net
assets resulting from operations 176,079,743 252,027,752 (18,935,009) (7,056,815)
-------------- -------------- ------------- -------------
FROM DISTRIBUTIONS:
Dividends from net investment income:
Common Shares (15,677,127) (61,542,500) 0 (8,403,581)
Advisor Shares (959,277) (8,824,069) 0 (42)
Distributions in excess of net
investment income:
Common Shares 0 0 0 0
Advisor Shares 0 0 0 0
Distributions from realized gains:
Common Shares (101,110,864) 0 (1,134,461) 0
Advisor Shares (17,984,137) 0 0 0
Distributions in excess of realized
gains:
Common Shares 0 0 0 0
Advisor Shares 0 0 0 0
-------------- -------------- ------------- -------------
Net decrease in net assets from
distributions (135,731,405) (70,366,569) (1,134,461) (8,403,623)
-------------- -------------- ------------- -------------
FROM CAPITAL SHARE TRANSACTIONS:
Proceeds from sale of shares 910,099,943 1,465,419,751 83,695,394 252,768,825
Reinvested dividends 122,187,954 62,026,272 1,057,739 7,560,373
Net asset value of shares redeemed (1,646,039,200) (709,132,860) (177,514,277) (268,976,988)
-------------- -------------- ------------- -------------
Net increase (decrease) in net
assets from capital share
transactions (613,751,303) 818,313,163 (92,761,144) (8,647,790)
-------------- -------------- ------------- -------------
Net increase (decrease) in net
assets (573,402,965) 999,974,346 (112,830,614) (24,108,228)
NET ASSETS:
Beginning of period 3,385,918,193 2,385,943,847 154,461,254 178,569,482
-------------- -------------- ------------- -------------
End of period $2,812,515,228 $3,385,918,193 $ 41,630,640 $ 154,461,254
-------------- -------------- ------------- -------------
-------------- -------------- ------------- -------------
Undistributed net investment income $ 31,630,382 $ 67,301,533 $ 510,516 $ 0
-------------- -------------- ------------- -------------
-------------- -------------- ------------- -------------
</TABLE>
See Accompanying Notes to Financial Statements.
42
<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GLOBAL POST-VENTURE
EMERGING MARKETS FUND JAPAN GROWTH FUND CAPITAL FUND
---------------------------- ------------------------------------ ---------------------------------
FOR THE PERIOD FOR THE PERIOD
FOR THE YEAR ENDED FOR THE DECEMBER 29, 1995 FOR THE SEPTEMBER 30, 1996
OCTOBER 31, YEAR ENDED (COMMENCEMENT OF YEAR ENDED (COMMENCEMENT OF
---------------------------- OCTOBER 31, OPERATIONS) THROUGH OCTOBER 31, OPERATIONS) THROUGH
1997 1996 1997 OCTOBER 31,1996 1997 OCTOBER 31, 1996
------------- ------------ -------------- ------------------- ----------- -------------------
<S> <C> <C> <C> <C> <C> <C>
$ 590,856 $ 442,913 $ (214,098) $ (123,689) $ (37,882) $ (401)
3,573,949 798,938 (3,584,648) (105,167) 40,384 (15,394)
(692,650) (155,026) 2,225,388 382,638 736 (421)
(19,880,535) (10,622,287) 643,764 (1,162,727) 514,579 (35,333)
------------- ------------ -------------- ---------- ----------- --------
(16,408,380) (9,535,462) (929,594) (1,008,945) 517,817 (51,549)
------------- ------------ -------------- ---------- ----------- --------
(559,579) (114,242) 0 0 0 0
0 (6) 0 0 0 0
0 0 (394,010) 0 0 0
0 0 0 0 0 0
(717,029) (103,802) 0 0 0 0
(55) (8) 0 0 0 0
0 0 (91,320) 0 0 0
0 0 0 0 0 0
------------- ------------ -------------- ---------- ----------- --------
(1,276,663) (218,058) (485,330) 0 0 0
------------- ------------ -------------- ---------- ----------- --------
209,438,660 309,206,911 43,567,995 33,728,391 2,110,772 2,972,288
1,143,771 191,486 436,422 0 0 0
(255,395,357) (87,855,459) (37,776,299) (12,660,997) (2,443,987) (6,824)
------------- ------------ -------------- ---------- ----------- --------
(44,812,926) 221,542,938 6,228,118 21,067,394 (333,215) 2,965,464
------------- ------------ -------------- ---------- ----------- --------
(62,497,969) 211,789,418 4,813,194 20,058,449 184,602 2,913,915
218,570,347 6,780,929 20,158,449 100,000 3,013,915 100,000
------------- ------------ -------------- ---------- ----------- --------
$ 156,072,378 $218,570,347 $ 24,971,643 $ 20,158,449 $ 3,198,517 $ 3,013,915
------------- ------------ -------------- ---------- ----------- --------
------------- ------------ -------------- ---------- ----------- --------
$ (2,119,820) $ 183,857 $ 0 $ 258,949 $ 0 $ 0
------------- ------------ -------------- ---------- ----------- --------
------------- ------------ -------------- ---------- ----------- --------
</TABLE>
43
<PAGE>
<PAGE>
WARBURG PINCUS INTERNATIONAL EQUITY FUND
FINANCIAL HIGHLIGHTS
(For a Common Share of the Fund Outstanding Throughout Each Period)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE YEAR ENDED OCTOBER 31,
--------------------------------------------------------------------
1997 1996 1995 1994 1993
---------- ---------- ---------- ---------- --------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $20.69 $19.30 $20.51 $17.00 $12.22
---------- ---------- ---------- ---------- --------
Income from Investment
Operations:
Net Investment Income (Loss) 0.04 0.22 0.12 0.09 0.09
Net Gain (Loss) from Securities
and Foreign Currency Related
Items (both realized and
unrealized) 0.88 1.73 (0.67) 3.51 4.84
---------- ---------- ---------- ---------- --------
Total from Investment
Operations 0.92 1.95 (0.55) 3.60 4.93
---------- ---------- ---------- ---------- --------
Less Distributions:
Dividends from Net Investment
Income (0.11) (0.56) (0.13) (0.04) (0.02)
Distributions in Excess of Net
Investment Income 0.00 0.00 0.00 (0.01) 0.00
Distributions from Realized Gains (0.74) 0.00 (0.53) (0.04) (0.13)
---------- ---------- ---------- ---------- --------
Total Distributions (0.85) (0.56) (0.66) (0.09) (0.15)
---------- ---------- ---------- ---------- --------
NET ASSET VALUE, END OF PERIOD $20.76 $20.69 $19.30 $20.51 $17.00
---------- ---------- ---------- ---------- --------
---------- ---------- ---------- ---------- --------
Total Return 4.54% 10.35% (2.55%) 21.22% 40.68%
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (000s) $2,312,042 $2,885,453 $2,068,207 $1,533,872 $378,661
Ratios to average daily net assets:
Operating expenses 1.33%@ 1.38%@ 1.39% 1.44% 1.48%
Net investment income .56% .62% .69% .19% .38%
Portfolio Turnover Rate 61.80% 32.49% 39.24% 17.02% 22.60%
Average Commission Rate # $0.0169 $0.0170 -- -- --
</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 Shares' expenses by .01% and .01%, for the years ending October 31,
1997 and 1996, respectively. The Common Shares' operating expense ratio after
reflecting these arrangements were 1.32% and 1.37% for the years ended October
31, 1997 and 1996, respectively.
# Computed by dividing the total amount of commissions paid by the total number
of shares purchased and sold during the period for which there was a
commission charged.
See Accompanying Notes to Financial Statements.
TAX STATUS OF 1997 DIVIDENDS (Unaudited)
Taxable dividends paid by the Fund on a per share basis were as follows:
Ordinary income $.55
Long-term capital gain $.30
Because the Fund's fiscal year is not the calendar year, amounts to be used
by calendar year taxpayers on their Federal return will be reflected on Form
1099-DIV and will be mailed in January 1998.
44
<PAGE>
<PAGE>
WARBURG PINCUS JAPAN OTC FUND
FINANCIAL HIGHLIGHTS
(For a Common Share of the Fund Outstanding Throughout Each Period)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE PERIOD
SEPTEMBER 30, 1994
FOR THE YEAR ENDED OCTOBER 31, (COMMENCEMENT OF
------------------------------------ OPERATIONS) THROUGH
1997 1996 1995 OCTOBER 31, 1994
-------- -------- -------- --------------------
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $8.47 $9.09 $9.85 $10.00
-------- -------- -------- ------
Income from Investment Operations:
Net Investment Loss (1.22) (0.23) 0.00 0.00
Net Loss from Securities and Foreign
Currency Related Items (both
realized and unrealized) (0.79) (0.01) (0.76) (0.15)
-------- -------- -------- ------
Total from Investment Operations (2.01) (0.24) (0.76) (0.15)
-------- -------- -------- ------
Less Distributions:
Dividends from Net Investment Income 0.00 (0.38) 0.00 0.00
Distributions from Realized Gains (0.09) 0.00 0.00 0.00
-------- -------- -------- ------
Total Distributions (0.09) (0.38) 0.00 0.00
-------- -------- -------- ------
NET ASSET VALUE, END OF PERIOD $6.37 $8.47 $9.09 $9.85
-------- -------- -------- ------
-------- -------- -------- ------
Total Return (23.98%) (2.79%) (7.72%) (1.50%)'D'
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (000s) $41,627 $154,460 $178,568 $19,878
Ratios to average daily net assets:
Operating expenses 1.76%@ 1.76%@ 1.41% 1.00%*
Net investment income (loss) (1.10%) (1.22%) (.15%) .49%*
Decrease reflected in above operating
expense ratios due to
waivers/reimbursements .51% .29% 1.35% 4.96%*
Portfolio Turnover Rate 100.60% 95.23% 82.98% .00%
Average Commission Rate # $0.0742 $0.0968 -- --
</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 Shares' expenses by .01% and .01%, for the years ending October 31,
1997 and 1996, respectively. The Common Shares' operating expense ratio after
reflecting these arrangements were 1.75% and 1.75% for the years ended October
31, 1997 and 1996, respectively.
# Computed by dividing the total amount of commissions paid by the total number
of shares purchased and sold during the period for which there was a
commission charged.
'D' Non annualized.
* Annualized.
See Accompanying Notes to Financial Statements.
TAX STATUS OF 1997 DIVIDENDS (Unaudited)
Taxable dividends paid by the Fund on a per share basis were as follows:
Ordinary income $.09
Because the Fund's fiscal year is not the calendar year, amounts to be used
by calendar year taxpayers on their Federal return will be reflected on Form
1099-DIV and will be mailed in January 1998.
45
<PAGE>
<PAGE>
WARBURG PINCUS EMERGING MARKETS FUND
FINANCIAL HIGHLIGHTS
(For a Common Share of the Fund Outstanding Throughout Each Period)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE PERIOD
FOR THE YEAR ENDED DECEMBER 30, 1994
OCTOBER 31, (COMMENCEMENT OF
------------------------- OPERATIONS) THROUGH
1997 1996 OCTOBER 31, 1995
-------- -------- -------------------
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $12.19 $11.28 $10.00
-------- -------- -----
Income from Investment Operations:
Net Investment Income (Loss) 0.04 0.07 0.08
Net Gain (Loss) from Securities and Foreign
Currency Related Items (both realized and
unrealized) (1.34) 0.99 1.25
-------- -------- -----
Total from Investment Operations (1.30) 1.06 1.33
-------- -------- -----
Less Distributions:
Dividends from Net Investment Income (0.03) (0.08) (0.05)
Distributions from Realized Gains (0.04) (0.07) 0.00
-------- -------- -----
Total Distributions (0.07) (0.15) (0.05)
-------- -------- -----
NET ASSET VALUE, END OF PERIOD $10.82 $12.19 $11.28
-------- -------- -----
-------- -------- -----
Total Return (10.71%) 9.46% 13.33%'D'
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (000s) $155,806 $218,421 $6,780
Ratios to average daily net assets:
Operating expenses 1.66%@ 1.62%@ 1.00%*
Net investment income (loss) .24% .31% 1.25%*
Decrease reflected in above operating expense
ratios due to waivers/reimbursements .46% .77% 11.08%*
Portfolio Turnover Rate 92.48% 61.84% 57.76%'D'
Average Commission Rate # $0.0053 $0.0135 --
</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 Shares' expenses by .01% and .01%, for the years ending October 31,
1997 and 1996, respectively. The Common Shares' operating expense ratio after
reflecting these arrangements were 1.65% and 1.61% for the years ended October
31, 1997 and 1996, respectively.
# Computed by dividing the total amount of commissions paid by the total number
of shares purchased and sold during the period for which there was a
commission charged.
'D' Non annualized.
* Annualized.
See Accompanying Notes to Financial Statements.
TAX STATUS OF 1997 DIVIDENDS (Unaudited)
Taxable dividends paid by the Fund on a per share basis were as follows:
Ordinary income $.06
Long-term capital gain $.01
Because the Fund's fiscal year is not the calendar year, amounts to be used
by calendar year taxpayers on their Federal return will be reflected on Form
1099-DIV and will be mailed in January 1998.
46
<PAGE>
<PAGE>
WARBURG PINCUS JAPAN GROWTH FUND
FINANCIAL HIGHLIGHTS
(For a Common Share of the Fund Outstanding Throughout Each Period)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE PERIOD
DECEMBER 29, 1995
FOR THE (COMMENCEMENT OF
YEAR ENDED OPERATIONS) THROUGH
OCTOBER 31, 1997 OCTOBER 31, 1996
---------------- -------------------
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $9.85 $10.00
------ ------
Income from Investment Operations:
Net Investment Loss (0.07) (0.06)
Net Gain/(Loss) from Securities and Foreign Currency
Related Items (both realized and unrealized) 0.21 (0.09)
------ ------
Total from Investment Operations 0.14 (0.15)
------ ------
Less Distributions:
Distributions in Excess of Net Investment Income (0.20) 0.00
Distributions in Excess of Realized Gains (0.05) 0.00
------ ------
Total Distributions (0.25) 0.00
------ ------
NET ASSET VALUE, END OF PERIOD $9.74 $9.85
------ ------
------ ------
Total Return 1.47% (1.50%)'D'
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (000s) $24,954 $20,157
Ratios to average daily net assets:
Operating expenses 1.75%@ 1.76%*@
Net investment loss (1.03)% (1.03%)*
Decrease reflected in above operating expense ratios
due to waivers/reimbursements .81% 1.79%*
Portfolio Turnover Rate 93.84% 51.72%'D'
Average Commission Rate # $0.0530 $0.0717
</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 Shares' expenses by .00% and .01%, for the years ending October 31,
1997 and 1996, respectively. The Common Shares' operating expense ratio after
reflecting these arrangements were 1.75% and 1.75% for the years ended October
31, 1997 and 1996, respectively.
# Computed by dividing the total amount of commissions paid by the total number
of shares purchased and sold during the period for which there was a
commission charged.
'D' Non annualized.
* Annualized.
See Accompanying Notes to Financial Statements.
TAX STATUS OF 1997 DIVIDENDS (Unaudited)
Taxable dividends paid by the Fund on a per share basis were as follows:
Ordinary income $.25
Because the Fund's fiscal year is not the calendar year, amounts to be used
by calendar year taxpayers on their Federal return will be reflected on Form
1099-DIV and will be mailed in January 1998.
47
<PAGE>
<PAGE>
WARBURG PINCUS GLOBAL POST-VENTURE CAPITAL FUND
FINANCIAL HIGHLIGHTS
(For a Common Share of the Fund Outstanding Throughout Each Period)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE PERIOD
SEPTEMBER 30, 1996
(COMMENCEMENT OF
FOR THE OPERATIONS)
YEAR ENDED THROUGH
OCTOBER 31, 1997 OCTOBER 31, 1996
---------------- ------------------
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $9.86 $10.00
------ ------
Income from Investment Operations:
Net Investment Loss (0.13) 0.00
Net Gain (Loss) from Securities and Foreign Currency
Related Items (both realized and unrealized) 1.42 (0.14)
------ ------
Total from Investment Operations 1.29 (0.14)
------ ------
NET ASSET VALUE, END OF PERIOD $11.15 $9.86
------ ------
------ ------
Total Return 13.08% (1.40%)'D'
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (000s) $3,197 $3,007
Ratios to average daily net assets:
Operating expenses 1.66%@ 1.65%*@
Net investment loss (.96%) (.20%)*
Decrease reflected in above operating expense ratios
due to waivers/reimbursements 6.48% 21.71%*
Portfolio Turnover Rate 207.25% 5.85%'D'
Average Commission Rate # $0.0504 $0.0323
</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 Shares' expenses by .01% and .00%, for the years ending October 31,
1997 and 1996, respectively. The Common Shares' operating expense ratio after
reflecting these arrangements were 1.65% and 1.65% for the years ended October
31, 1997 and 1996, respectively.
# Computed by dividing the total amount of commissions paid by the total number
of shares purchased and sold during the period for which there was a
commission charged.
'D' Non annualized.
* Annualized.
See Accompanying Notes to Financial Statements.
48
<PAGE>
<PAGE>
WARBURG PINCUS INTERNATIONAL EQUITY FUNDS
NOTES TO FINANCIAL STATEMENTS
October 31, 1997
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES
The Warburg Pincus International Equity Funds (the 'Funds') are comprised of
Warburg Pincus International Equity Fund (the 'International Equity Fund') and
Warburg Pincus Global Post-Venture Capital Fund (the 'Global Post-Venture
Capital Fund') which are registered under the Investment Company Act of 1940, as
amended (the '1940 Act'), as a diversified, open-end management investment
company, and Warburg Pincus Japan OTC Fund (the 'Japan OTC Fund'), Warburg
Pincus Emerging Markets Fund (the 'Emerging Markets Fund') and Warburg Pincus
Japan Growth Fund (the 'Japan Growth Fund') which are registered under the 1940
Act as non-diversified, open-end management investment companies.
Investment objectives for each Fund are as follows: the International Equity
Fund and the Japan OTC Fund seek long-term capital appreciation; the Emerging
Markets Fund seeks growth of capital; and the Japan Growth Fund and the Global
Post-Venture Capital Fund seek long-term growth of capital.
Each Fund offers two classes of shares, one class being referred to as Common
Shares and one class being referred to as Advisor Shares. Common and Advisor
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 Shares for the Japan OTC Fund, the Emerging
Markets Fund, the Japan Growth Fund and the Global Post-Venture Capital Fund
bear expenses paid pursuant to a shareholder servicing and distribution plan
adopted by each Fund at an annual rate not to exceed .25% of the average daily
net asset value of each Fund's outstanding Common Shares. Advisor Shares for
each Fund bear expenses paid pursuant to a distribution plan adopted by each
Fund at an annual rate not to exceed .75% of the average daily net asset value
of each Fund's outstanding Advisor Shares. Advisor Shares are currently bearing
expenses of .50% of average daily net assets.
The net asset value of each Fund is determined daily as of the close of
regular trading on the New York Stock Exchange. Each Fund's investments are
valued at market value, which is generally determined using the last reported
sales price. If no sales are reported, investments are generally valued at the
mean between the last reported bid and asked price. In the absence of market
quotations, investments are generally valued at fair value as determined by or
under the direction of the Fund's Board.
Short-term investments that mature in 60 days or less are valued on the basis
of amortized cost, which approximates market value.
When a Fund writes or purchases a call or a put option, an amount equal to
the premium received or paid by the Fund is recorded as a liability or asset,
the value of which is marked-to-market daily to reflect the current market value
of the option. When the option expires, the Fund realizes a gain or loss equal
to the
49
<PAGE>
<PAGE>
WARBURG PINCUS INTERNATIONAL EQUITY FUNDS
NOTES TO FINANCIAL STATEMENTS (CONT'D)
October 31, 1997
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES (CONT'D)
amount of the premium received or paid. When the Fund exercises an option or
enters into a closing transaction by purchasing or selling an offsetting option,
it realizes a gain or loss without regard to any unrealized gain or loss on the
underlying security. The potential loss associated with purchasing an option is
limited to the premium paid, and the premium would partially offset any gains
achieved from its use.
The books and records of the Funds are maintained in U.S. dollars.
Transactions denominated in foreign currencies are recorded at the current
prevailing exchange rates. All assets and liabilities denominated in foreign
currencies are translated into U.S. dollar amounts at the current exchange rate
at the end of the period. Translation gains or losses resulting from changes in
the exchange rate during the reporting period and realized gains and losses on
the settlement of foreign currency transactions are reported in the results of
operations for the current period. The Funds do not isolate that portion of
realized gains and losses on investments in equity securities which are due to
changes in the foreign exchange rate from that which are due to changes in
market prices of equity securities. The Funds isolate that portion of realized
gains and losses on investments in debt securities which are due to changes in
the foreign exchange rate from that which are due to changes in market prices of
debt securities.
Security transactions are accounted for on a trade date basis. Interest
income is recorded on the accrual basis. Dividends are recorded on the
ex-dividend date. Income, expenses (excluding class-specific expenses,
principally distribution, shareholder servicing fees and transfer agent fees)
and realized/unrealized gains/losses are allocated proportionately to each class
of shares based upon the relative net asset value of outstanding shares. The
cost of investments sold is determined by use of the specific identification
method for both financial reporting and income tax purposes.
The Funds may invest in securities of foreign countries and governments which
involve certain risks in addition to those inherent in domestic investments.
Such risks generally include, among other things, fluctuations in currency
exchange rates, revaluation of currencies, future adverse political and economic
developments and the imposition of other foreign laws and restrictions.
Securities of foreign issuers are often subject to less rigorous regulatory
practices and requirements than those applied in the United States and may also
be less liquid (and their prices more volatile) than securities of comparable
U.S. companies. Moreover, individual foreign economies may differ favorably or
unfavorably from the U.S. economy in many respects.
A Funds' investments in securities of issuers located in less developed
countries considered to be 'emerging markets' involve risks in addition to those
50
<PAGE>
<PAGE>
WARBURG PINCUS INTERNATIONAL EQUITY FUNDS
NOTES TO FINANCIAL STATEMENTS (CONT'D)
October 31, 1997
- --------------------------------------------------------------------------------
generally applicable to foreign securities. Investments in the securities of
issuers located in emerging markets expose the Fund to economic structures that
are generally less diverse and mature than, and to political systems that can be
expected to have less stability than, those of developed countries. The
typically small size of the markets for securities of issuers located in
emerging markets may also result in a lack of liquidity and greater price
volatility.
Dividends from net investment income and distributions of net realized
capital gains, if any, are declared and paid annually for all Funds. However, to
the extent that a net realized capital gain can be reduced by a capital loss
carryover, such gain will not be distributed. Income and capital gain
distributions are determined in accordance with federal income tax regulations
which may differ from generally accepted accounting principles.
No provision is made for federal taxes as it is each Fund's intention to
continue to qualify for and elect the tax treatment applicable to regulated
investment companies under the Internal Revenue Code 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 and offering of shares have
been deferred and are being amortized over a period of five years and one year,
respectively, from the date each Fund commenced its operations.
The Funds, together with other funds advised by Warburg Pincus Asset
Management Inc., the Funds' investment adviser ('Warburg') (collectively the
'Warburg Funds'), have established committed and uncommitted lines of credit
facilities with certain banks for temporary or emergency purposes primarily
relating to fund share redemptions and funding payments of dividend or capital
gain distributions. Under the terms of the committed line of credit, the Warburg
Funds with access to the facility pay a commitment fee at a rate of .10% per
annum on the amount of the line of credit. In addition, under the terms of both
the committed and uncommitted facilities, the Warburg Funds will pay interest on
borrowings at the banks base rate plus .55%. Aggregate borrowings for each fund
under these credit facilities may not exceed the lower of (a) the maximum amount
permitted by such fund's investment policies and restrictions or (b) thirty
three and one-third percent (33 1/3%) of such fund's total assets. During the
fiscal year ended October 31, 1997, the amount outstanding under the line of
credit agreement for each Fund was as follows:
51
<PAGE>
<PAGE>
WARBURG PINCUS INTERNATIONAL EQUITY FUNDS
NOTES TO FINANCIAL STATEMENTS (CONT'D)
October 31, 1997
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES (CONT'D)
<TABLE>
<CAPTION>
AVERAGE DAILY AVERAGE MAXIMUM DAILY
FUND LOAN BALANCE INTEREST RATE% LOAN OUTSTANDING
- -------------------------------------------- ------------- -------------- ----------------
<S> <C> <C> <C>
International Equity $ 79,726 6.00 $ 7,600,000
Japan OTC 413,770 6.11 11,698,000
Emerging Markets 748,690 6.14 18,840,000
Japan Growth 149,899 6.00 2,743,000
Global Post-Venture Capital 6,077 6.11 449,000
</TABLE>
The average debt per average share outstanding for each Fund is as follows:
<TABLE>
<CAPTION>
AVERAGE SHARES AVERAGE DEBT
FUND OUTSTANDING PER SHARE
- ------------------------------------------------------ -------------- ------------
<S> <C> <C>
International Equity 151,464,434 $ 0.0005
Japan OTC 10,091,714 0.0410
Emerging Markets 18,112,573 0.0413
Japan Growth 2,061,284 0.0727
Global Post-Venture Capital 381,301 0.0159
</TABLE>
Pursuant to an Exemptive Order issued by the Securities and Exchange
Commission, each Fund, along with other Warburg funds, transfers uninvested cash
balances to a Pooled Cash Account, which is invested in repurchase agreements
secured by U.S. government securities. Securities pledged as collateral for
repurchase agreements are held by the Funds' custodian bank until the agreements
mature. Each agreement requires that the market value of the collateral be
sufficient to cover payments of interest and principal; however, in the event of
default or bankruptcy by the other party to the agreement, retention of the
collateral may be subject to legal proceedings.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from these estimates.
The Funds have an arrangement with their transfer agent whereby interest
earned on uninvested cash balances was used to offset a portion of the transfer
agent expense. For the year ended October 31, 1997, the Funds received credits
or reimbursements under this arrangement as follows:
<TABLE>
<CAPTION>
FUND AMOUNT
- -------------------------------------------------------------- --------
<S> <C>
International Equity $156,179
Japan OTC 4,095
Emerging Markets 13,317
Japan Growth 946
Global Post-Venture Capital 212
</TABLE>
52
<PAGE>
<PAGE>
WARBURG PINCUS INTERNATIONAL EQUITY FUNDS
NOTES TO FINANCIAL STATEMENTS (CONT'D)
October 31, 1997
- --------------------------------------------------------------------------------
2. INVESTMENT ADVISER, CO-ADMINISTRATORS AND DISTRIBUTOR
Warburg, which is indirectly controlled by Warburg, Pincus & Co., serves as
each Fund's investment adviser. For its investment advisory services, Warburg
receives the following fees based on each Fund's average daily net assets:
<TABLE>
<CAPTION>
FUND ANNUAL RATE
- ------------------------------------------------ ----------------------------------
<S> <C>
International Equity 1.00% of average daily net assets
Japan OTC 1.25% of average daily net assets
Emerging Markets 1.25% of average daily net assets
Japan Growth 1.25% of average daily net assets
Global Post-Venture Capital 1.25% of average daily net assets
</TABLE>
For the year ended October 31, 1997, 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>
International Equity $33,440,864 $ 0 $33,440,864 $ 0
Japan OTC 927,417 (357,562) 569,855 0
Emerging Markets 3,124,684 (1,146,495) 1,978,189 0
Japan Growth 260,741 (143,819) 116,922 0
Global Post-Venture
Capital 49,452 (49,452) 0 (202,260)
</TABLE>
SPARX Investment & Research, USA, Inc. ('SPARX USA') had served as sub-
investment adviser for the Japan OTC Fund. From its investment advisory fee,
Warburg paid SPARX USA a fee at an annual rate of .625% of the average daily net
assets of the Japan OTC Fund. No compensation was paid by the Japan OTC Fund to
SPARX USA for its sub-investment advisory services. On May 23, 1997, SPARX USA
ceased serving as sub-investment adviser and Warburg assumed total investment
management responsibilities for the Japan OTC Fund.
Abbott Capital Management, LLC ('Abbott') serves as sub-investment adviser
for the Global Post-Venture Fund's assets invested in U.S. or foreign private
limited partnerships or other investment funds ('Private Fund Investments').
From its investment advisory fee, Warburg paid Abbott a fee of .55% per annum of
the value of Private Fund Investments as of the end of each calendar quarter.
Effective January 17, 1997, the Sub-Advisory Agreement was amended. Under the
amended Agreement, Warburg pays Abbott a quarterly fee at the annual rate of
1.00% of the Fund's average daily net assets. No compensation is paid by the
Global Post-Venture Capital Fund to Abbott for its sub-investment advisory
services.
Counsellors Funds Service, Inc. ('CFSI'), a wholly owned subsidiary of
Warburg, and PFPC Inc. ('PFPC'), an indirect, wholly owned subsidiary of PNC
Bank Corp. ('PNC'), serve as each Fund's co-administrators. For its
administrative services, CFSI currently receives a fee calculated at an annual
rate of .10% of each Fund's average daily net assets. For the year ended October
31, 1997, administrative services fees earned by CFSI were as follows:
53
<PAGE>
<PAGE>
WARBURG PINCUS INTERNATIONAL EQUITY FUNDS
NOTES TO FINANCIAL STATEMENTS (CONT'D)
October 31, 1997
- --------------------------------------------------------------------------------
2. INVESTMENT ADVISER, CO-ADMINISTRATORS AND DISTRIBUTOR (CONT'D)
<TABLE>
<CAPTION>
FUND CO-ADMINISTRATION FEE
- ------------------------------------------------------ ---------------------
<S> <C>
International Equity $ 3,344,086
Japan OTC 74,193
Emerging Markets 249,975
Japan Growth 20,859
Global Post-Venture Capital 3,956
</TABLE>
For its administrative services, PFPC receives a fee calculated at an annual
rate of .12% on each Fund's first $250 million in average daily net assets, .10%
on the next $250 million in average daily net assets, .08% on the next $250
million in average daily net assets, and .05% of the average daily net assets
over $750 million. For the year ended October 31, 1997, administrative service
fees earned and voluntarily waived by PFPC were as follows:
<TABLE>
<CAPTION>
NET
FUND CO-ADMINISTRATION FEE WAIVER CO-ADMINISTRATION FEE
- --------------------------- --------------------- -------- ---------------------
<S> <C> <C> <C>
International Equity $ 2,047,043 $ 0 $ 2,047,043
Japan OTC 89,032 (20,262) 68,770
Emerging Markets 297,624 0 297,624
Japan Growth 25,031 (25,031) 0
Global Post-Venture Capital 4,747 (4,747) 0
</TABLE>
Counsellors Securities Inc. ('CSI'), also a wholly-owned subsidiary of
Warburg, serves as each Fund's distributor. No compensation is paid by the
International Equity Fund to CSI for distribution services. For its shareholder
servicing and distribution services, CSI receives a fee at an annual rate of
.25% of the average daily net assets of each Fund's Common Shares pursuant to a
shareholder servicing and distribution plan adopted by each Fund pursuant to
Rule 12b-1 under the 1940 Act. For its shareholder servicing and distribution
services, CSI receives a fee at an annual rate of .50%, respectively, of the
average daily net assets of the Advisor Shares of the Japan OTC Fund, the
Emerging Markets Fund, the Japan Growth Fund and the Global Post-Venture Capital
Fund pursuant to distribution plan adopted by each Fund pursuant to Rule 12b-1
under the 1940 Act. For the year ended October 31, 1997, shareholder servicing
and distribution fees earned by CSI were as follows:
54
<PAGE>
<PAGE>
WARBURG PINCUS INTERNATIONAL EQUITY FUNDS
NOTES TO FINANCIAL STATEMENTS (CONT'D)
October 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FUND DISTRIBUTION FEE
- ----------------------------------------------------- -----------------
<S> <C>
International Equity
Common shares $ 2,710,056
--------
--------
Japan OTC
Common shares $ 185,480
Advisor shares 6
--------
$ 185,486
--------
--------
Emerging Markets
Common shares $ 624,354
Advisor shares 1,166
--------
$ 625,520
--------
--------
Japan Growth
Common shares $ 52,138
Advisor shares 21
--------
$ 52,159
--------
--------
Global Post-Venture
Common shares $ 9,887
Advisor shares 8
--------
$ 9,895
--------
--------
</TABLE>
3. INVESTMENTS IN SECURITIES
For the year ended October 31, 1997, purchases and sales of investment
securities (excluding short-term investments) were as follows:
<TABLE>
<CAPTION>
PORTFOLIO PURCHASES SALES
- ---------------------------------------------- -------------- --------------
<S> <C> <C>
International Equity $1,931,665,548 $2,716,124,315
Japan OTC 70,350,371 149,992,675
Emerging Markets 215,321,329 264,411,961
Japan Growth 20,161,880 17,869,460
Global Post-Venture Capital 7,438,851 7,759,426
</TABLE>
At October 31, 1997, the net unrealized appreciation from investments for
those securities having an excess of value over cost and net unrealized
depreciation from investments for those securities having an excess of cost over
value (based on cost for federal income tax purposes) was as follows:
<TABLE>
<CAPTION>
NET UNREALIZED
UNREALIZED UNREALIZED APPRECIATION
APPRECIATION DEPRECIATION (DEPRECIATION)
------------ ------------- --------------
<S> <C> <C> <C>
International Equity $365,610,345 $(376,886,754) $(11,276,409)
Japan OTC 2,746,946 (11,433,656) (8,686,710)
Emerging Markets 15,916,679 (46,483,104) (30,566,425)
Japan Growth 2,000,655 (3,375,334) (1,374,679)
Global Post-Venture Capital 536,160 (61,905) 474,255
</TABLE>
4. 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
55
<PAGE>
<PAGE>
WARBURG PINCUS INTERNATIONAL EQUITY FUNDS
NOTES TO FINANCIAL STATEMENTS (CONT'D)
October 31, 1997
- --------------------------------------------------------------------------------
4. FORWARD FOREIGN CURRENCY CONTRACTS (CONT'D)
to meet the terms of their contracts and from unanticipated movements in
the value of a foreign currency relative to the U.S. dollar. The Funds
will enter into forward contracts primarily for hedging purposes. The
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, 1997, the International Equity Fund, the Japan OTC Fund and
the Japan Growth Fund had the following open forward foreign currency contracts:
<TABLE>
<CAPTION>
INTERNATIONAL EQUITY FUND
- ----------------------------------------------------------------------------------------------------------------
UNREALIZED
FOREIGN FOREIGN
EXPIRATION CURRENCY CONTRACT CONTRACT EXCHANGE
FORWARD CURRENCY CONTRACT DATE TO BE SOLD AMOUNT VALUE GAIN/(LOSS)
- ----------------------------- ---------- -------------- ------------ ------------ -----------
<S> <C> <C> <C> <C> <C>
Japanese Yen 11/28/97 20,000,000,000 $172,787,670 $166,844,356 $ 5,943,314
Japanese Yen 11/28/97 15,644,447,765 135,215,625 130,509,391 4,706,234
Japanese Yen 11/28/97 12,000,000,000 103,448,276 100,106,614 3,341,662
Japanese Yen 11/28/97 5,000,000,000 42,485,576 41,711,089 774,487
Japanese Yen 11/28/97 2,369,980,000 20,177,598 19,770,889 406,709
Japanese Yen 11/28/97 1,118,270,000 9,502,231 9,328,852 173,379
Japanese Yen 11/28/97 247,160,000 2,134,370 2,061,863 72,507
------------ ------------ -----------
$485,751,346 $470,333,054 $15,418,292
------------ ------------ -----------
------------ ------------ -----------
</TABLE>
<TABLE>
<CAPTION>
JAPAN OTC FUND
- ----------------------------------------------------------------------------------------------------------------
UNREALIZED
FOREIGN FOREIGN
EXPIRATION CURRENCY CONTRACT CONTRACT EXCHANGE
FORWARD CURRENCY CONTRACT DATE TO BE SOLD AMOUNT VALUE GAIN/(LOSS)
- ------------------------------ ---------- ------------- ------------ ------------ -----------
<S> <C> <C> <C> <C> <C>
Japanese Yen 11/28/97 4,726,397,000 $ 39,367,942 $ 39,428,633 $ (60,691)
------------ ------------ -----------
------------ ------------ -----------
</TABLE>
<TABLE>
<CAPTION>
JAPAN GROWTH FUND
- ---------------------------------------------------------------------------------------------------------------
UNREALIZED
FOREIGN FOREIGN
EXPIRATION CURRENCY CONTRACT CONTRACT EXCHANGE
FORWARD CURRENCY CONTRACT DATE TO BE SOLD AMOUNT VALUE GAIN/(LOSS)
- -------------------------------- ---------- ------------- ----------- ----------- ----------
<S> <C> <C> <C> <C> <C>
Japanese Yen 11/28/97 2,873,511,750 $24,814,437 $23,971,461 $842,976
----------- ----------- ----------
----------- ----------- ----------
</TABLE>
5. EQUITY SWAP TRANSACTIONS
The International Equity Fund and the Emerging Markets Fund entered into a
Korean equity swap agreement (which represents approximately 1.20% and 2.65%,
respectively, of the Fund's net assets at October 31, 1997) dated March 21,
1997, where each Fund receives a quarterly payment, representing the total
return (defined as market appreciation and dividend income) on a basket of
Korean common stocks ('Common Stocks'). In return, the International Equity Fund
and the Emerging Markets Fund pay quarterly the LIBOR rate (London
56
<PAGE>
<PAGE>
WARBURG PINCUS INTERNATIONAL EQUITY FUNDS
NOTES TO FINANCIAL STATEMENTS (CONT'D)
October 31, 1997
- --------------------------------------------------------------------------------
Interbank Offered Rate), plus 2.00% and 1.97%, respectively, per annum (7.76%
and 7.73% on October 31, 1997) on the market value of the Common Stocks
('Notional Amount') which is currently $35,980,700 and $4,405,800, respectively.
The Notional Amount is marked-to-market on each quarterly reset date. In the
event that the Common Stocks decline in value, each Fund will be required to pay
quarterly, the amount of any depreciation in value from the Notional Amount. The
equity swap agreement will terminate on April 3, 2000.
During the term of the equity swap transaction, changes in the value of the
Common Stocks as compared to the Notional Amount and the difference between the
accrued interest expense and dividend income are recognized as unrealized gain
or loss. At the quarterly reset date, the change in value of the Common Stock,
adjusted for accrued interest expense and dividend income, is recognized as
realized gain or loss. At October 31, 1997, each Fund realized a loss of
$15,368,660 and $1,880,743, respectively, on the equity swap transaction which
is included in the net realized gain (loss) from security and other related
transactions. At October 31, 1997, each Fund has recorded unrealized losses of
$2,175,063 and $266,452, respectively, on the equity swap transaction.
57
<PAGE>
<PAGE>
WARBURG PINCUS INTERNATIONAL EQUITY FUNDS
NOTES TO FINANCIAL STATEMENTS (CONT'D)
October 31, 1997
- --------------------------------------------------------------------------------
6. CAPITAL SHARE TRANSACTIONS
Each Fund, except the Global Post-Venture Capital Fund, is each authorized to
issue three billion full and fractional shares of capital stock, $.001 par value
per share, of which two billion shares of each Fund are designated as Advisor
Shares. The Global Post-Venture Capital Fund is authorized to issue three
billion full and fractional shares of capital stock, $.001 par value per share,
of which one billion shares are designated as Advisor Shares.
Transactions in shares of each Fund were as follows:
<TABLE>
<CAPTION>
INTERNATIONAL EQUITY FUND
COMMON SHARES ADVISOR SHARES
--------------------------------------- ---------------------------------------
FOR THE YEAR ENDED OCTOBER 31,
-----------------------------------------------------------------------------------
1997 1996 1997 1996
----------------- ----------------- ----------------- -----------------
<S> <C> <C> <C> <C>
Shares sold 37,712,671 62,925,567 3,593,153 8,409,095
Shares issued to
shareholders on
reinvestment of
dividends 5,078,533 2,770,933 937,692 462,235
Shares redeemed (70,827,349) (33,441,506) (4,577,298) (1,042,298)
----------------- ----------------- ----------------- -----------------
Net increase
(decrease) in
shares outstanding (28,036,145) 32,254,994 (46,453) 7,829,032
----------------- ----------------- ----------------- -----------------
----------------- ----------------- ----------------- -----------------
Proceeds from sale
of shares $ 832,097,028 $ 1,293,010,856 $ 78,002,915 $ 172,408,895
Reinvested dividends 103,246,572 53,202,204 18,941,382 8,824,068
Net asset value of
shares redeemed (1,548,688,920) (687,911,641) (97,350,280) (21,221,219)
----------------- ----------------- ----------------- -----------------
Net increase
(decrease) from
capital share
transactions $ (613,345,320) $ 658,301,419 $ (405,983) $ 160,011,744
----------------- ----------------- ----------------- -----------------
----------------- ----------------- ----------------- -----------------
</TABLE>
<TABLE>
<CAPTION>
JAPAN OTC FUND
COMMON SHARES ADVISOR SHARES
--------------------------------------- ---------------------------------------
FOR THE YEAR ENDED OCTOBER 31,
-----------------------------------------------------------------------------------
1997 1996 1997 1996
----------------- ----------------- ----------------- -----------------
<S> <C> <C> <C> <C>
Shares sold 11,479,393 27,475,535 7,459 5
Shares issued to
shareholders on
reinvestment of
dividends 132,383 862,068 0 5
Shares redeemed (23,316,894) (29,739,842) (7,086) (1)
----------------- ----------------- ----------------- -----------------
Net increase
(decrease) in
shares outstanding (11,705,118) (1,402,239) 373 9
----------------- ----------------- ----------------- -----------------
----------------- ----------------- ----------------- -----------------
Proceeds from sale
of shares $ 83,642,891 $ 252,768,775 $ 52,503 $ 50
Reinvested dividends 1,057,739 7,560,332 0 41
Net asset value of
shares redeemed (177,463,703) (268,976,982) (50,574) (6)
----------------- ----------------- ----------------- -----------------
Net increase
(decrease) from
capital share
transactions $ (92,763,073) $ (8,647,875) $ 1,929 $ 85
----------------- ----------------- ----------------- -----------------
----------------- ----------------- ----------------- -----------------
</TABLE>
58
<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
EMERGING MARKETS FUND
COMMON SHARES ADVISOR SHARES
--------------------------------------- ---------------------------------------
FOR THE YEAR ENDED OCTOBER 31,
-----------------------------------------------------------------------------------
1997 1996 1997 1996
----------------- ----------------- ----------------- -----------------
<S> <C> <C> <C> <C>
15,395,660 24,216,832 13,980 12,119
92,759 17,172 4 1
(19,011,433) (6,918,123) (1,743) (1)
----------------- ----------------- ------- -------
(3,523,014) 17,315,881 12,241 12,119
----------------- ----------------- ------- -------
----------------- ----------------- ------- -------
$ 209,234,551 $ 309,055,609 $ 204,109 $ 151,302
1,143,716 191,472 55 14
(255,371,760) (87,855,453) (23,597) (6)
----------------- ----------------- ------- -------
$ (44,993,493) $ 221,391,628 $ 180,567 $ 151,310
----------------- ----------------- ------- -------
----------------- ----------------- ------- -------
</TABLE>
<TABLE>
<CAPTION>
JAPAN GROWTH FUND
COMMON SHARES ADVISOR SHARES
--------------------------------------- ---------------------------------------
FOR THE PERIOD FOR THE PERIOD
DECEMBER 29, 1995 DECEMBER 29, 1995
FOR THE YEAR (COMMENCEMENT FOR THE YEAR (COMMENCEMENT
ENDED OF OPERATIONS) ENDED OF OPERATIONS)
OCTOBER 31, 1997 THROUGH OCTOBER 31, 1997 THROUGH
----------------- ----------------- ----------------- -----------------
<S> <C> <C> <C> <C>
4,196,591 3,251,155 3,036 20
46,477 0 0 0
(3,725,607) (1,215,308) (1,421) (1)
----------------- ----------------- ------ -------
517,461 2,035,847 1,615 19
----------------- ----------------- ------ -------
----------------- ----------------- ------ -------
$ 43,536,325 $ 33,728,191 $ 31,670 $ 200
436,422 0 0 0
(37,761,784) (12,660,992) (14,515) (5)
----------------- ----------------- ------ -------
$ 6,210,963 $ 21,067,199 $ 17,155 $ 195
----------------- ----------------- ------ -------
----------------- ----------------- ------ -------
</TABLE>
59
<PAGE>
<PAGE>
WARBURG PINCUS INTERNATIONAL EQUITY FUNDS
NOTES TO FINANCIAL STATEMENTS (CONT'D)
October 31, 1997
- --------------------------------------------------------------------------------
6. CAPITAL SHARE TRANSACTIONS (CONT'D)
<TABLE>
<CAPTION>
GLOBAL POST-VENTURE CAPITAL FUND
COMMON SHARES ADVISOR SHARES
--------------------------------------- ---------------------------------------
FOR THE YEAR ENDED OCTOBER 31,
-----------------------------------------------------------------------------------
1997 1996 1997 1996
----------------- ----------------- ----------------- -----------------
<S> <C> <C> <C> <C>
Shares sold 209,142 295,856 15 557
Shares redeemed (227,374) (698) (564) 0
----------------- -------- ------ -----
Net increase
(decrease) in
shares outstanding (18,232) 295,158 (549) 557
----------------- -------- ------ -----
----------------- -------- ------ -----
Proceeds from sale
of shares $ 2,110,622 $ 2,966,681 $ 150 $ 5,607
Reinvested dividends 0 0 0 0
Net asset value of
shares redeemed (2,438,359) (6,824) (5,627) 0
----------------- -------- ------ -----
Net increase
(decrease) from
capital share
transactions $ (327,737) $ 2,959,857 $(5,477) $ 5,607
----------------- -------- ------ -----
----------------- -------- ------ -----
</TABLE>
7. LIABILITIES
At October 31, 1997, each Fund had the following affiliated and investment
related liabilities:
<TABLE>
<CAPTION>
GLOBAL
EMERGING JAPAN POST-VENTURE
INTERNATIONAL JAPAN OTC MARKETS GROWTH CAPITAL
EQUITY FUND FUND FUND FUND FUND
------------- ---------- ---------- ------- ------------
<S> <C> <C> <C> <C> <C>
Payable for securities purchased
(at value) $60,222,772 $ 0 $ 0 $ 0 $ 9,675
Investment advisory fee payable 2,696,195 42,249 189,097 26,530 11,156
Payable for Korean Swap 10,168,960 0 1,243,871 0 0
Administrative services fee payable 269,620 3,901 17,261 2,300 304
Distribution fee payable 0 9,753 43,086 5,749 760
Payable for Fund shares redeemed 13,928,391 73,926 1,847,806 54,336 75
Payable for forward contracts 2,130,431 56,965 0 0 0
</TABLE>
8. NET ASSETS
At October 31, 1997, capital contributions, undistributed net investment
income, accumulated net realized gain (loss) from security transactions and
current period distribution have been adjusted for current period permanent
book/tax differences which arose principally from differing book/tax treatments
of foreign currency and equity swap transactions. The International Equity Fund,
the Japan OTC Fund, the Emerging Markets Fund, the Japan Growth Fund and the
Global Post-Venture Capital Fund reclassified $22,480,227, $1,824,715,
($2,489,980), ($77,686) and $736, respectively, from accumulated net realized
gain (loss) on foreign currency related items to undistributed net investment
income. The Japan Growth Fund and the Global Post-Venture Capital Fund
reclassified $426,845 and $37,146, respectively, from accumulated net investment
loss to capital contributions. In addition the
60
<PAGE>
<PAGE>
WARBURG PINCUS INTERNATIONAL EQUITY FUNDS
NOTES TO FINANCIAL STATEMENTS (CONT'D)
October 31, 1997
- --------------------------------------------------------------------------------
International Equity Fund, Japan OTC Fund and the Emerging Markets Fund
reclassified $58,110,200, $498,156 and ($155,026), respectively, of book
distributions from realized gains to distributions of net investment income. Net
investment income, net realized gain (loss) on investments and net assets were
not affected by this reclassification.
Net Assets at October 31, 1997, consisted of the following:
<TABLE>
<CAPTION>
GLOBAL
EMERGING JAPAN POST-VENTURE
INTERNATIONAL JAPAN OTC MARKETS GROWTH CAPITAL
EQUITY FUND FUND FUND FUND FUND
-------------- ------------ ------------ ----------- ------------
<S> <C> <C> <C> <C> <C>
Capital contributed, net $2,475,569,293 $ 74,210,594 $183,407,562 $26,968,668 $2,694,281
Undistributed net
investment income 31,630,382 510,516 (2,119,820) 0 0
Accumulated net realized
gain (loss) from security
transactions 301,528,999 (24,344,709) 5,296,516 (1,478,062) 24,990
Net unrealized appreciation
(depreciation) from
investments and foreign
currency related items 3,786,554 (8,745,761) (30,511,880) (518,963) 479,246
-------------- ------------ ------------ ----------- ------------
Net assets $2,812,515,228 $ 41,630,640 $156,072,378 $24,971,643 $3,198,517
-------------- ------------ ------------ ----------- ------------
-------------- ------------ ------------ ----------- ------------
</TABLE>
9. CAPITAL LOSS CARRYOVER
At October 31, 1997, capital loss carryovers available to offset possible
future capital gains of each Fund were as follows:
<TABLE>
<CAPTION>
CAPITAL LOSS CARRYOVER TOTAL CAPITAL
FUND EXPIRING IN 2005 LOSS CARRYOVER
- -------------------------------------------------------- ---------------------- --------------
<S> <C> <C>
Japan OTC $ 24,405,400 $ 24,405,400
Japan Growth 623,934 623,934
</TABLE>
61
<PAGE>
<PAGE>
WARBURG PINCUS INTERNATIONAL EQUITY FUNDS
NOTES TO FINANCIAL STATEMENTS (CONT'D)
October 31, 1997
- --------------------------------------------------------------------------------
10. OTHER FINANCIAL HIGHLIGHTS
Each Fund currently offers one other class of shares, Advisor Shares,
representing equal prorata interests in each of the respective Warburg Pincus
International Funds. The financial highlights for an Advisor Share of each Fund
are as follows:
<TABLE>
<CAPTION>
INTERNATIONAL EQUITY FUND
--------------------------------------------------------
ADVISOR SHARES
--------------------------------------------------------
FOR THE YEAR ENDED OCTOBER 31,
--------------------------------------------------------
1997 1996 1995 1994 1993
------------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 20.50 $19.16 $20.38 $16.91 $12.20
------ ------ ------ ------ ------
Income from Investment Operations:
Net Investment Income (Loss) 0.04 0.18 0.03 0.16 (0.01)
Net Gain (Loss) from Securities and
Foreign Currency Related Items (both
realized and unrealized) 0.78 1.68 (0.67) 3.35 4.86
------ ------ ------ ------ ------
Total from Investment Operations 0.82 1.86 (0.64) 3.51 4.85
------ ------ ------ ------ ------
Less Distributions:
Dividends from Net Investment Income (0.04) (0.52) (0.05) 0.00 (0.01)
Distributions from Realized Gains (0.74) 0.00 (0.53) (0.04) (0.13)
------ ------ ------ ------ ------
Total Distributions (0.78) (0.52) (0.58) (0.04) (0.14)
------ ------ ------ ------ ------
NET ASSET VALUE, END OF PERIOD $ 20.54 $20.50 $19.16 $20.38 $16.91
------ ------ ------ ------ ------
------ ------ ------ ------ ------
Total Return 4.04% 9.89% (3.04%) 20.77% 40.06%
RATIOS /SUPPLEMENTAL DATA:
Net Assets, End of Period (000s) $500,473 $500,465 $317,736 $199,404 $44,244
Ratios to average daily net assets:
Operating expenses 1.76%@ 1.81%@ 1.89% 1.94% 2.00%
Net investment income (loss) .15% .18% .20% (.29%) (.36%)
Portfolio Turnover Rate 61.80% 32.49% 39.24% 17.02% 22.60%
Average Commission Rate # $0.0169 $0.0170 -- -- --
</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
Advisor Shares' expenses by .00% and .01%, for the years ending October 31,
1997 and 1996, respectively. The Advisor Shares' operating expense ratio after
reflecting these arrangements were 1.76% and 1.80% for the years ended October
31, 1997 and 1996, respectively.
# Computed by dividing the total amount of commissions paid by the total number
of shares purchased and sold during the period for which there was a
commission charged.
See Accompanying Notes to Financial Statements.
TAX STATUS OF 1997 DIVIDENDS (Unaudited)
Taxable dividends paid by the Fund on a per share basis were as follows:
Ordinary income $.48
Long-term capital gain $.30
Because the Funds' fiscal year is not a calendar year, amounts to be used by
calendar year taxpayers on their Federal return will be reflected on Form
1099-DIV and will be mailed in January 1998.
62
<PAGE>
<PAGE>
WARBURG PINCUS INTERNATIONAL EQUITY FUNDS
NOTES TO FINANCIAL STATEMENTS (CONT'D)
October 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
JAPAN OTC FUND
------------------------------------------------------
ADVISOR SHARES
------------------------------------------------------
FOR THE PERIOD
SEPTEMBER 30, 1994
(COMMENCEMENT OF
FOR THE YEAR ENDED OCTOBER 31, OPERATIONS)
------------------------------ THROUGH
1997 1996 1995 OCTOBER 31, 1994
------ ------ ------ ------------------
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 8.45 $ 9.08 $ 9.85 $10.00
------ ------ ------ -----
Income from Investment Operations:
Net Investment Income (Loss) 0.35 (0.13) (0.02) 0.00
Net Loss from Securities and Foreign
Currency Related Items (both realized
and unrealized) (2.43) (0.14) (0.75) (0.15)
------ ------ ------ -----
Total from Investment Operations (2.08) (0.27) (0.77) (0.15)
------ ------ ------ -----
Less Distributions:
Dividends from Net Investment Income 0.00 (0.36) 0.00 0.00
------ ------ ------ -----
NET ASSET VALUE, END OF PERIOD $ 6.37 $ 8.45 $ 9.08 $ 9.85
------ ------ ------ -----
------ ------ ------ -----
Total Return (24.62%) (3.17%) (7.82%) (1.50%)'D'
RATIOS /SUPPLEMENTAL DATA:
Net Assets, End of Period (000s) $3 $1 $1 $1
Ratios to average daily net assets:
Operating expenses 2.00%@ 2.01%@ 1.31% 1.18%*
Net investment income (1.10%) (1.57%) (.19%) .12%*
Decrease reflected in above operating
expense ratios due to
waivers/reimbursements 6.69% .28% 1.83% 4.74%*
Portfolio Turnover Rate 100.60%'D' 95.23% 82.98% 0.00%
Average Commission Rate # $0.0742 $0.0968 -- --
</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
Advisor Shares' expenses by .00% and .01%, for the years ending October 31,
1997 and 1996, respectively. The Advisor Shares' operating expense ratio after
reflecting these arrangements were 2.00% and 2.00% for the years ended October
31, 1997 and 1996, respectively.
# Computed by dividing the total amount of commissions paid by the total number
of shares purchased and sold during the period for which there was a
commission charged.
'D' Non annualized.
* Annualized.
See Accompanying Notes to Financial Statements.
63
<PAGE>
<PAGE>
WARBURG PINCUS INTERNATIONAL EQUITY FUNDS
NOTES TO FINANCIAL STATEMENTS (CONT'D)
October 31, 1997
- --------------------------------------------------------------------------------
10. OTHER FINANCIAL HIGHLIGHTS (CONT'D)
<TABLE>
<CAPTION>
EMERGING MARKETS FUND
------------------------------------------
ADVISOR SHARES
------------------------------------------
FOR THE PERIOD
FOR THE YEAR ENDED DECEMBER 30, 1994
OCTOBER 31, (COMMENCEMENT OF
------------------ OPERATIONS) THROUGH
1997 1996 OCTOBER 31, 1995
------ ------ -------------------
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $12.21 $11.30 $ 10.00
------ ------ -----
Income from Investment Operations:
Net Investment Income (Loss) 0.00 (0.08) 0.14
Net Gain from Securities and Foreign Currency
Related Items (both realized and unrealized) (1.32) 1.11 1.19
------ ------ -----
Total from Investment Operations (1.32) 1.03 1.33
------ ------ -----
Less Distributions:
Dividends from Net Investment Income 0.00 (0.05) (0.03)
Distributions from Realized Gains (0.01) (0.07) 0.00
------ ------ -----
Total Distributions (0.01) (0.12) (0.03)
------ ------ -----
NET ASSET VALUE, END OF PERIOD $10.88 $12.21 $ 11.30
------ ------ -----
------ ------ -----
Total Return (10.94%) 9.20% 13.29%'D'
RATIOS /SUPPLEMENTAL DATA:
Net Assets, End of Period (000s) $266 $149 $1
Ratios to average daily net assets:
Operating expenses 1.90%@ 1.90%@ 1.22%*
Net investment income (.09%) (.57%) 1.76%*
Decrease reflected in above operating expense ratios
due to waivers/reimbursements .58% .65% 16.36%*
Portfolio Turnover Rate 92.48% 61.84% 57.76%'D'
Average Commission Rate # $0.0053 $0.0135 --
</TABLE>
- --------------------------------------------------------------------------------
@ Interest earned on uninvested cash balances is used to offset portions of the
transfer agent expense. These arrangements had no effect on the Advisor
Shares' expense ratio.
# Computed by dividing the total amount of commissions paid by the total number
of shares purchased and sold during the period for which there was a
commission charged.
'D' Non annualized.
* Annualized.
See Accompanying Notes to Financial Statements.
TAX STATUS OF 1997 DIVIDENDS (Unaudited)
Taxable dividends paid by the Fund on a per share basis were as follows:
Long-term capital gain $.01
Because the Funds' fiscal year is not a calendar year, amounts to be used by
calendar year taxpayers on their Federal return will be reflected on Form
1099-DIV and will be mailed in January 1998.
64
<PAGE>
<PAGE>
WARBURG PINCUS INTERNATIONAL EQUITY FUNDS
NOTES TO FINANCIAL STATEMENTS (CONT'D)
October 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
JAPAN GROWTH FUND
-----------------------------------------
ADVISOR SHARES
-----------------------------------------
FOR THE PERIOD
DECEMBER 29, 1995
FOR THE YEAR (COMMENCEMENT OF
ENDED OPERATIONS) THROUGH
OCTOBER 31, 1997 OCTOBER 31, 1996
---------------- -------------------
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 9.83 $ 10.00
----- -----
Income from Investment Operations:
Net Investment Loss 0.05 (0.09)
Net Loss from Securities and Foreign Currency
Related Items (both realized and unrealized) 0.01 (0.08)
----- -----
Total from Investment Operations 0.06 (0.17)
----- -----
NET ASSET VALUE, END OF PERIOD $ 9.89 $ 9.83
----- -----
----- -----
Total Return 0.61% (1.70%)'D'
RATIOS /SUPPLEMENTAL DATA:
Net Assets, End of Period (000s) $17 $1
Ratios to average daily net assets:
Operating expenses 2.00%@ 2.00%*@
Net investment loss (1.42%) (1.08%)*
Decrease reflected in above operating expense ratios
due to waivers/reimbursements 7.25% 3.43%*
Portfolio Turnover Rate 93.84% 51.72%'D'
Average Commission Rate # $0.0530 $0.0717
</TABLE>
- --------------------------------------------------------------------------------
@ Interest earned on uninvested cash balances is used to offset portions of the
transfer agent expense. These arrangements had no effect on the Advisor
Shares' expense ratio.
# Computed by dividing the total amount of commissions paid by the total number
of shares purchased and sold during the period for which there was a
commission charged.
'D' Non annualized.
* Annualized.
See Accompanying Notes to Financial Statements.
65
<PAGE>
<PAGE>
WARBURG PINCUS INTERNATIONAL EQUITY FUNDS
NOTES TO FINANCIAL STATEMENTS (CONT'D)
October 31, 1997
- --------------------------------------------------------------------------------
10. OTHER FINANCIAL HIGHLIGHTS (CONT'D)
<TABLE>
<CAPTION>
GLOBAL POST-VENTURE CAPITAL FUND
----------------------------------------
ADVISOR SHARES
----------------------------------------
FOR THE PERIOD
SEPTEMBER 30, 1996
(COMMENCEMENT OF
FOR THE YEAR OPERATIONS)
ENDED THROUGH
OCTOBER 31, 1997 OCTOBER 31, 1996
---------------- ------------------
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 9.85 $10.00
----- -----
Income from Investment Operations:
Net Investment Loss (0.15) 0.00
Net Loss from Securities and Foreign Currency
Related Items (both realized and unrealized) 1.41 (0.15)
----- -----
Total from Investment Operations 1.26 (0.15)
----- -----
NET ASSET VALUE, END OF PERIOD $11.11 $ 9.85
----- -----
----- -----
Total Return 12.79% (1.50%)'D'
RATIOS /SUPPLEMENTAL DATA:
Net Assets, End of Period (000s) $1 $6
Ratios to average daily net assets:
Operating expenses 1.90%@ 1.90%*@
Net investment loss (1.15%) (.78%)*
Decrease reflected in above operating expense ratios
due to waivers/reimbursements 11.16% 22.23%*
Portfolio Turnover Rate 207.25% 5.85%'D'
Average Commission Rate # $0.0504 $0.0323
</TABLE>
- --------------------------------------------------------------------------------
@ Interest earned on uninvested cash balances is used to offset portions of the
transfer agent expense. These arrangements had no effect on the Advisor
Shares' expense ratio.
# Computed by dividing the total amount of commissions paid by the total number
of shares purchased and sold during the period for which there was a
commission charged.
'D' Non annualized.
* Annualized.
See Accompanying Notes to Financial Statements.
66
<PAGE>
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
- --------------------------------------------------------------------------------
To the Board of Directors, Trustees and Shareholders of
WARBURG PINCUS INTERNATIONAL EQUITY FUNDS:
We have audited the accompanying statements of assets and liabilities, including
the schedules of investments of Warburg Pincus International Equity Fund,
Warburg Pincus Japan OTC Fund, Warburg Pincus Emerging Markets Fund and Warburg
Pincus Japan Growth Fund and the statement of net assets of Warburg Pincus
International Equity Fund, Warburg Pincus Japan OTC Fund, Warburg Pincus
Emerging Markets Fund, Warburg Pincus Japan Growth Fund and Warburg Pincus
Global Post-Venture Capital Fund (all funds collectively referred to as the
'Warburg Pincus International Equity Funds'), as of October 31, 1997, and the
related statements of operations for the year (or period) then ended, the
related statements of changes in net assets for each of the two years (or
periods) in the period then ended, and the financial highlights for each of the
years (or periods) presented. These financial statements and financial
highlights are the responsibility of the Warburg Pincus International Equity
Funds' management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
October 31, 1997 by correspondence with the custodians and brokers. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of each
of the Warburg Pincus International Equity Funds as of October 31, 1997, the
results of their operations for the year (or period) then ended, the changes in
their net assets for each of the two years (or periods) in the period then
ended, and their financial highlights for each of the years (or periods)
presented, in conformity with generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
2400 Eleven Penn Center
Philadelphia, Pennsylvania
December 19, 1997
67
<PAGE>
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
<PAGE>
[Logo]
P.O. BOX 9030, BOSTON, MA 02205-9030
800-WARBURG (800-927-2874)
WWW.WARBURG.COM
COUNSELLORS SECURITIES INC., DISTRIBUTOR. WPISF-2-1097
STATEMENT OF DIFFERENCES
------------------------
The dagger symbol shall be expressed as................... 'D'
The division sign shall be expressed as................... [div]
