WARBURG PINCUS ADVISOR FUNDS OCTOBER 31, 1999
JAPAN GROWTH FUND
JAPAN SMALL COMPANY FUND
A
ANNUAL REPORT
More complete information about the Funds, including charges and expenses, is
provided in the Prospectus, which must precede or accompany this document and
which should be read carefully before investing. You may obtain additional
copies by calling 800-222-8977 or by writing to Warburg Pincus Advisor Funds,
P.O. Box 9030, Boston, MA 02205-9030.
WARBURG PINCUS
[GRAPHIC OMITTED]
CREDIT SUISSE
ASSET MANAGEMENT
[GRAPHIC OMITTED]
<PAGE>
From time to time, the Funds' investment adviser and co-administrators may waive
some fees and/or reimburse some expenses, without which performance would be
lower. Waivers and/or reimbursements are subject to change.
Returns are historical and include change in share price and reinvestment of
dividends and capital gains. Past performance cannot guarantee future results.
Returns and share price will fluctuate, and redemption value may be more or less
than original cost.
International investing entails special risk considerations, including currency
fluctuations, lower liquidity, economic and political risks, and differences in
accounting methods.
The views of the Funds' management are as of the date of the letters and
portfolio holdings described in this document are as of October 31, 1999; these
views and portfolio holdings may have changed subsequent to these dates. Nothing
in this document is a recommendation to purchase or sell securities.
Fund shares are not deposits or other obligations of Credit Suisse Asset
Management, LLC ("CSAM LLC") or any affiliate, are not FDIC insured and are not
guaranteed by CSAM LLC or any affiliate. Fund investments are subject to
investment risks, including loss of your investment.
<PAGE>
Warburg Pincus Japan Growth Fund
Annual Investment Adviser's Report -- October 31, 1999
- --------------------------------------------------------------------------------
December 9, 1999
Dear Shareholder:
For the 12 months ended October 31, 1999, the Advisor Class shares of
Warburg Pincus Japan Growth Fund had a return of 177.61%, vs. a return of 70.67%
for the U.S.-dollar-denominated Tokyo Stock Exchange Index ("Topix").
The Japanese stock market staged a remarkable rally during the period,
fueled by optimism that the country's long-suffering economy had finally turned
the corner. Factors behind this optimism included strikingly robust
first-quarter 1999 economic growth, which was followed by more-modest, though
still better-than-expected, second-quarter growth (the encouraging economic news
had a particularly beneficial impact on smaller-cap shares, most of which
represent companies with strong domestic biases). Also buoying the market were
numerous corporate-restructuring announcements, which lent further credence to
the notion that Japan is truly in the midst of a fundamental change.
Against this backdrop, the Fund generated a strong return for the period,
aided by the market's broad strength and good stock selection. By sector, the
Fund's best performers were its technology issues, our largest area of
concentration through the 12 months. Particularly good performers within this
group were the Fund's semiconductor and semiconductor-equipment holdings,
beneficiaries of a strong global upturn in chip sales. The Fund also benefited
from robust gains in its retailing and telecommunications stocks and its
smaller-company holdings. Another factor that helped the Fund included our
timely decision to add several bank stocks late in the period (we had no
exposure here entering the period). These issues subsequently rallied, buoyed by
expectations of increased merger and acquisition activity in the industry.
Looking ahead to the next year and beyond, we have a favorable view on the
prospects for Japanese equities. Reasons for our optimism are several, not the
least of which is the Japanese government's apparent commitment to keeping the
economic recovery on track. Notably, the government's efforts have not been
limited to fiscal-stimulus programs, but have also included recent corporate and
personal-income tax cuts, which are longer-term and structural in nature. The
government has also continued to encourage other longer-term structural reforms.
Recent noteworthy actions on its part include its decision to press on with the
latest phase of "Big Bang," or financial-sector reform, which liberalized
commissions on stock trades and allowed banks' subsidiaries to begin dealing in
equities.
1
<PAGE>
Warburg Pincus Japan Growth Fund
Annual Investment Adviser's Report -- October 31, 1999 (cont'd)
- --------------------------------------------------------------------------------
Also promising for the economy is the Bank of Japan's recent shift in
monetary policy. The central bank's previously overly tight policy -- near-zero
short-term interest rates notwithstanding -- had played a central role in the
economy's inability to gain and sustain a footing over the past two years. That
the bank now appears willing to ease policy as necessary augurs well for a
longer-term economic recovery.
In addition to the potentially favorable combination of benign fiscal and
monetary policies, there is a vast change in mindset taking place at Japan's
corporate level. Japanese companies in increasing numbers are shedding their old
ways of thinking about their business, abandoning the focus on market share and
replacing it with an emphasis on profitability. Record numbers of companies are
announcing aggressive restructurings, and each passing month provides additional
confirmation that the announced measures are, in fact, being acted upon.
Companies are also, for the first time, taking active steps to increase
shareholder value, witnessed by the large number of firms buying back their own
shares.
Nonetheless, prudence suggests some caution, at least in the near term.
While optimism over Japan's economy, the main driver of recent market
performance, does seem justified, growth could prove slow and stuttering for a
period, given the negative short-term effects (e.g., the potential for rising
unemployment and falling consumer confidence) of restructuring. In this context,
any underwhelming economic reports could prompt investors to step to the
sidelines, at least temporarily, resulting in significant short-term market
volatility.
But given the factors at play, we remain positive on the longer-term
outlook for Japan, and on the Fund's prospects in particular. As the Fund's
since-inception performance vs. its benchmarks and its competitive universe
suggests, it is possible to generate very competitive performance in Japan via
good security selection, and we are encouraged by our efforts in that regard to
date. As ever, we will continue to strive to identify stocks with the best
long-term growth potential.
P. Nicholas Edwards Todd Jacobson
Co-Portfolio Manager Co-Portfolio Manager
International investing entails special risk considerations, including
currency fluctuations, lower liquidity, economic and political risks, and
differences in accounting methods. There are also risks associated with
investing in Japan, including the risk of investing in a single-country fund.
These are detailed in the Fund's Prospectus, which should be read carefully
before investing.
2
<PAGE>
Warburg Pincus Japan Growth Fund
Annual Investment Adviser's Report -- October 31, 1999 (cont'd)
- --------------------------------------------------------------------------------
Growth of $10,000 Invested in Advisor Class shares of Warburg Pincus
Japan Growth Fund since Inception as of October 31, 1999
The graph below illustrates a hypothetical investment of $10,000 in Advisor
Class shares of Warburg Pincus Japan Growth Fund (the "Fund") from December 29,
1995 (inception) to October 31, 1999, compared to the Tokyo Stock Exchange Index
("Topix")* for the same time period. Past performance does not predict future
results.
[GRAPHIC]
In the printed version of the document, a line graph appears
which depicts the following plot points:
Japan Tokyo Stock
Growth Exchange Index (US$)
------ --------------------
Dec-95 10000 10000
Jan-96 9880 9864.7
Feb-96 9650 9701.14
Mar-96 10070 10020.9
Apr-96 10770 10688.4
May-96 10640 10164.8
Jun-96 11060 10208.3
Jul-96 10460 9706.84
Aug-96 10170 9292.84
Sep-96 10350 9554.8
Oct-96 9830 8913.58
Nov-96 9840 8979.54
Dec-96 9420 8291.71
Jan-97 9180 7402.59
Feb-97 9300 7549.23
Mar-97 9260 7272.33
Apr-97 9640 7450.94
May-97 10820 8377.39
Jun-97 11370 8920.49
Jul-97 12100 8572.95
Aug-97 10930 7809.01
Sep-97 10970 7569.67
Oct-97 9890 6995.28
Nov-97 10040.3 6468.54
Dec-97 10287.3 5962.7
Jan-98 11088.7 6600.59
Feb-98 11056.5 6655.5
Mar-98 10850.9 6207.06
Apr-98 11164.5 6125.43
May-98 11012.7 5838.15
Jun-98 11023.7 5875.92
Jul-98 11901.1 5798.24
Aug-98 10861 5202.18
Sep-98 10005.1 5093.46
Oct-98 9430.84 5909.94
Nov-98 10568.2 6191.25
Dec-98 10384.3 6419.09
Jan-99 11152.8 6451.19
Feb-99 11433.8 6297.65
Mar-99 13209.5 7144.05
Apr-99 14574 7484.11
May-99 13999.8 7148.82
Jun-99 18308.9 7857.98
Jul-99 20279 8659.5
Aug-99 22087.9 8934.87
Sep-99 24643.4 9521
Oct-99 26181.2 10086.5
Fund
------
1 Year Total Return (9/30/98 to 9/30/99) ............................ 146.32%
3 Year Average Annual Total Return (9/30/96 to 9/30/99) ............. 30.04%
Average Annual Total Return Since Inception
(12/29/95 to 9/30/99) ............................................ 24.46%
- ------------
* 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.
3
<PAGE>
Warburg Pincus Japan Small Company Fund
Annual Investment Adviser's Report -- October 31, 1999
- --------------------------------------------------------------------------------
December 9, 1999
Dear Shareholder:
For the 12 months ended October 31, 1999, the Advisor Class shares of
Warburg Pincus Japan Small Company Fund had a return of 235.01%, vs. returns of
226.78% and 264.83% for the yen- and dollar-denominated JASDAQ indexes,
respectively, and a return of 58.94% for the Morgan Stanley Capital
International Japan Small Company Index.
The Japanese stock market rallied strongly through the period, buoyed by
optimism over the country's long-struggling economy and by some very encouraging
developments of the corporate-restructuring front. The market's
smaller-capitalization stocks, which entered the period trading at about 10% of
their 1991 highs (as measured by the JASDAQ), were especially robust. The
group's extremely cheap valuations proved a strong lure to investors, given the
country's brightening economic prospects (Japan's small companies generally have
strong ties to the domestic economy).
Against this backdrop, the Fund had a large gain, supported by the rally in
Japanese smaller-cap shares and by good stock selection generally, particularly
within the technology and telecommunications areas. One factor that hampered the
Fund somewhat, at least compared to its dollar-denominated benchmark, was our
overall currency-hedging strategy. We periodically hedged some or all of our yen
exposure as a defensive measure, and this ultimately worked against the Fund, as
the yen strengthened vs. the U.S. dollar over the 12 months.
There were few significant changes in the Fund during the period in terms
of sector or industry weightings. The Fund's largest area of concentration
remained the technology sector (broadly defined to include computer-related and
electronics companies), where we continued to find what we considered to be
among the most attractive values in the asset class. We also maintained
good-sized weightings in the telecommunications, financial-services and
manufacturing areas.
Looking ahead, we believe the prospects for Japan's small-company market
remain positive. Economic readings continue, on balance, to provide cause for
optimism, and corporate-restructuring announcements continue to flow steadily.
In addition, there is growing evidence that the Japanese government is
committed, finally, to keeping the economy on track, and not only via spending
packages, but by via "supply side" policies as well (evidenced by recent cuts in
marginal tax rates and by some business-friendly tax reforms). Japan's monetary
authorities appear similarly keen to
4
<PAGE>
Warburg Pincus Japan Small Company Fund
Annual Investment Adviser's Report -- October 31, 1999 (cont'd)
- --------------------------------------------------------------------------------
resolve the country's financial and economic difficulties. Other positive
developments include a recent surge in merger and acquisition activity, a
relatively new concept for Japan, and one that stands to ultimately benefit
stocks of numerous small companies. All told, we see ample reason for optimism,
and remain bullish on the small-cap market's prospects, notwithstanding its
more-than-doubling over the past 12 months.
Nonetheless, prudence suggests some caution, at least in the near term.
While optimism over Japan's economy, the main driver of recent market
performance, does seem justified, growth could prove slow and stuttering for a
period, given the negative short-term effects (e.g., the potential for rising
unemployment and falling consumer confidence) of restructuring. In this context,
any underwhelming economic reports could prompt investors to step to the
sidelines, at least temporarily, resulting in significant short-term market
volatility.
But for those with a sufficiently long time horizon and a sufficiently high
threshold for risk, we think the present time could prove to be a potentially
attractive entry point into the small-cap market, given the forces at play.
Against this backdrop, we will continue our efforts to identify those individual
companies with the best growth prospects.
P. Nicholas Edwards Todd Jacobson
Co-Portfolio Manager Co-Portfolio Manager
International investing entails special risk considerations, including
currency fluctuations, lower liquidity, economic and political risks, and
differences in accounting methods. There are also risks associated with
investing in Japan, including the risk of investing in a single-country fund.
These are detailed in the Fund's Prospectus, which should be read carefully
before investing.
4
<PAGE>
Warburg Pincus Japan Small Company Fund
Annual Investment Adviser's Report -- October 31, 1999 (cont'd)
- --------------------------------------------------------------------------------
Growth of $10,000 Invested in Advisor Class shares of Warburg Pincus
Japan Small Company Fund since Inception as of October 31, 1999
The graph below illustrates a hypothetical investment of $10,000 in Advisor
Class shares of Warburg Pincus Japan Small Company Fund (the "Fund") from
September 30, 1994 (inception) to October 31, 1999, compared to the JASDAQ
Over-The Counter-Composite Index ("JASDAQ Index")* and the Morgan Stanley Japan
Small Company Index ("MSCI")** for the same time period. Past performance does
not predict future results.
[GRAPHIC]
In the printed version of the document, a line graph appears
which depicts the following plot points:
Japan OTC JASDAQ (Yen) JASDAQ (US$) MS-Japan Small Cap Index
--------- ------------ ------------ ------------------------
Sep-94 10000 10000 10000 10000
Oct-94 9850 9698.9 9901 10163.6
Nov-94 9150 9124.92 9126.64 9334.35
Dec-94 9630 9548.5 9472.36 9621.94
Jan-95 9000 8666.98 8669.48 9275.36
Feb-95 8610 7845.09 8030.11 8544.65
Mar-95 7860 7349.44 8419.25 8988.46
Apr-95 7840 7304.02 8603.88 9217.03
May-95 7310 6987.24 8170.25 8270.44
Jun-95 7290 6819.48 7949.73 7781.08
Jul-95 8280 7440.73 8364.87 8557.4
Aug-95 9000 7996.11 8079.96 8590.26
Sep-95 9080 8300.44 8327.77 8453.5
Oct-95 9080 8192.29 7930.04 8127.03
Nov-95 9180 8085.71 7881.82 8603.68
Dec-95 9510.28 8493.63 8149.49 9014.59
Jan-96 9645.55 8706.99 8060.33 9197.59
Feb-96 9187.73 8550.18 8046.79 8995.15
Mar-96 9333.4 9075.76 8411.15 9249.89
Apr-96 9812.03 9615.4 9085.3 10085.2
May-96 9666.36 9593.57 8783.04 9615.19
Jun-96 10197 9836.77 8875.96 9556.15
Jul-96 9707.98 9270.47 8597.17 8799.3
Aug-96 9406.23 8846.99 8063.11 8479.54
Sep-96 9291.78 8746.67 7773.16 8485.56
Oct-96 8792.33 8211.72 7146.1 7884.87
Nov-96 8407.34 7737.91 6729.48 7676.39
Dec-96 8240.86 7386.6 6298.12 6703.71
Jan-97 7533.31 6930.11 5650.05 6019.94
Feb-97 7283.59 6768.57 5549.7 5974.36
Mar-97 7137.92 6454.85 5159.39 5444.08
Apr-97 7408.45 6602.34 5148.3 5330.79
May-97 8063.97 6872.18 5836.16 6351.74
Jun-97 8188.83 7032.23 6081.57 6499.86
Jul-97 8365.72 6484.7 5421.05 5804.05
Aug-97 7450.07 5766.13 4744.4 5111.57
Sep-97 7127.51 5270.36 4320.58 4264.23
Oct-97 6628.06 5146.45 4235.12 4392.28
Nov-97 6232.37 4487.71 3480.42 3601.89
Dec-97 6082.79 4343.2 3305.7 2979.77
Jan-98 6667.96 5002.2 3904.37 3834.49
Feb-98 6529.93 4920.66 3854.82 4124.07
Mar-98 6210.62 4639.84 3443.36 3718.51
Apr-98 6572.07 4600.68 3445.84 3571.03
May-98 6582.59 4606.94 3290.95 3429.58
Jun-98 6720.82 4457.86 3179.38 3476.5
Jul-98 7252.44 4686.95 3212.86 3488.56
Aug-98 6582.32 4183.1 2932.38 3128.58
Sep-98 6039.93 3919.48 2849.33 2924.78
Oct-98 5922.76 3729.62 3167.86 3358.5
Nov-98 6645.93 4332.14 3487.62 3648.78
Dec-98 6858.6 4431 3887.31 3690.99
Jan-99 7453.92 4755.79 4047.81 3766.73
Feb-99 8081.54 5411.66 4513.84 3725.18
Mar-99 9357.62 6404.87 5351.65 4202.49
Apr-99 10751 7311.8 6061.82 4509.53
May-99 10314.5 6701.41 5444.6 4207.88
Jun-99 13770.9 9127.18 7462.32 4741.48
Jul-99 15514.2 9640.22 8312.27 5008.43
Aug-99 16885.7 10459.2 9439.42 5257.85
Sep-99 18874.8 11488.5 10677.9 5364.06
Oct-99 19843.1 12186.8 11555.6 5338.31
Fund
------
1 Year Total Return (9/30/98 to 9/30/99) ....................... 212.50%
3 Year Average Annual Total Return (9/30/96 to 9/30/99) ........ 26.65%
Average Annual Total Return Since Inception
(9/30/94 to 9/30/99) ........................................ 13.53%
- -------------
* 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.
** The Morgan Stanley Japan Small Company Index is composed of small-cap
Japanese stocks.
6
<PAGE>
Warburg Pincus Japan Growth Fund
Schedule of Investments--October 31, 1999
- --------------------------------------------------------------------------------
Number
of
Shares Value
--------- -----------
COMMON STOCKS (93.8%)
Automobiles (2.3%)
Jac Co., Ltd. 31,000 $10,842,271
-----------
Banking (2.7%)
Sanwa Bank, Ltd. 860,000 12,781,328
-----------
Banks & Savings & Loans (6.4%)
Fuji Bank, Ltd. 912,000 12,496,736
Sakura Bank, Ltd. 2,013,000 17,282,935
-----------
29,779,671
-----------
Communications & Media (3.7%)
Avex, Inc. 81,000 17,075,500
-----------
Computers (9.6%)
Fujitsu Support & Service, Inc. 35,000 9,826,557
Internet Intitiative Japan, Inc. ADR+ 84,200 4,525,750
Nidec Corp. 42,900 8,324,306
Obic Co., Ltd. 26,400 12,395,548
Trans Cosmos, Inc. 73,500 9,331,875
-----------
44,404,036
-----------
Consumer Durables (3.2%)
Sony Corp. 96,000 14,957,448
-----------
Consumer Non-Durables (1.7%)
World Co., Ltd. 77,000 7,784,109
-----------
Electric Components (10.3%)
Densei-Lambda K.K 90,900 4,355,115
Funai Electric Co., Ltd.+ 41,000 18,543,494
Rohm Co., Ltd. 61,000 13,677,648
Tokyo Electronics, Ltd. 134,000 11,119,581
-----------
47,695,838
-----------
Electronics (14.1%)
Advantest Corp. 74,500 11,207,833
Fujitsu, Ltd. 355,000 10,681,290
Megachips Corp. 126,000 9,417,397
Sharp Corp. 360,000 5,726,329
Tokyo Seimitsu Co., Ltd. 88,000 10,717,511
Trend Micro, Inc. 90,000 17,851,659
-----------
65,602,019
-----------
See Accompanying Notes to Financial Statements.
7
<PAGE>
Warburg Pincus Japan Growth Fund
Schedule of Investments (cont'd)--October 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Number
of
Shares Value
--------- ------------
<S> <C> <C>
COMMON STOCKS (cont'd)
Financial Services (10.9%)
Daiwa Securities Group Inc. 930,000 $ 9,918,451
Industrial Bank of Japan, Ltd. 585,000 7,903,887
Nikko Securities Co., Ltd. 1,500,000 14,085,850
Orix Corp. 77,000 10,329,623
Shohkoh Fund & Co., Ltd. 13,460 8,228,704
------------
50,466,515
------------
Manufacturing (5.5%)
Disco Corp. 85,000 11,810,075
Sony Precision Technology, Inc. 75,000 2,357,224
Takasago Electric Industry Co., Ltd. 147,500 11,165,671
------------
25,332,970
------------
Publishing (1.4%)
Kadokawa Shoten Publishing Co., Ltd. 26,000 6,480,066
------------
Real Estate (1.5%)
Goldcrest Co., Ltd. 50,000 6,827,325
------------
Retail (4.5%)
Softbank Corp. 50,000 20,745,486
------------
Software (2.9%)
Konami Co., Ltd. 140,000 13,549,246
------------
Telecommunications (11.2%)
Hikari Tsushin, Inc. 26,000 20,902,635
Japan Telecom Co., Ltd. 422 14,476,421
NTT Mobile Communications Network, Inc. 616 16,350,318
------------
51,729,374
------------
Telecommunications & Equipment (1.9%)
KDD Corp. 70,100 8,799,440
------------
TOTAL COMMON STOCKS (Cost $248,593,649) 434,852,642
------------
SHORT TERM INVESTMENTs (6.2%)
Institutional Money Market Trust 7,526,855 7,526,855
RBB Money Market Portfolio 21,455,056 21,455,056
------------
TOTAL SHORT TERM INVESTMENTS (Cost $28,981,911) 28,981,911
------------
TOTAL INVESTMENTS AT VALUE (100%) (Cost $277,575,560*) $463,834,553
============
</TABLE>
INVESTMENT ABBREVIATIONS
ADR = American Depository Receipt
- --------------------------------------------------------------------------------
+ Non-income producing security.
* Cost for federal income tax purposes is $279,714,896.
See Accompanying Notes to Financial Statements.
8
<PAGE>
Warburg Pincus Japan Small Company Fund
Schedule of Investments--October 31, 1999
- --------------------------------------------------------------------------------
Number
of
Shares Value
--------- -----------
COMMON STOCKS (100%)
Automobiles (2.4%)
Jac Co., Ltd. 50,000 $ 17,487,535
------------
Banks & Savings & Loans (1.7%)
Bank Of Yokohama, Ltd. 1,100,000 6,166,153
Yamaguchi Bank, Ltd. 620,000 6,416,248
------------
12,582,401
------------
Communications & Media (5.0%)
Avex, Inc. 172,500 36,364,490
------------
Computers (13.8%)
Drake Beam Morin-Japan, Inc. 58,000 16,784,200
Fujitsu Support & Service, Inc. 40,000 11,230,351
I.O. Data Device, Inc. 272,000 9,513,219
Internet Intitiative Japan, Inc. ADR+ 161,600 8,686,000
Nidec Corp. 80,000 15,523,181
Obic Co., Ltd. 38,400 18,029,888
Trans Cosmos, Inc. 163,600 20,771,358
------------
100,538,197
------------
Consumer Durables (2.1%)
Sony Corp. 100,000 15,580,675
------------
Consumer Non-Durables (2.5%)
World Co., Ltd. 178,800 18,075,308
------------
Credit (0.8%)
Orient Corp. 1,350,000 6,028,169
------------
Distribution (0.2%)
Impact 21 Co., Ltd. 56,500 1,188,362
------------
Electrical Components (8.3%)
Densei-Lambda K.K 181,900 8,715,021
Funai Electric Co., Ltd. 73,000 33,016,466
Tokyo Electronics, Ltd. 225,000 18,670,938
------------
60,402,425
------------
Electronics (17.8%)
Advantest Corp. 132,000 19,858,174
Capcom Co., Ltd. 220,000 10,730,160
Fujitsu, Ltd. 461,000 13,870,633
Megachips Corp. 220,000 16,443,074
Tokyo Seimitsu Co., Ltd. 240,000 29,229,576
Towa Corp. 110,000 3,657,530
Trend Micro, Inc. 180,000 35,703,317
------------
129,492,464
------------
See Accompanying Notes to Financial Statements.
9
<PAGE>
Warburg Pincus Japan Small Company Fund
Schedule of Investments (cont'd)--October 31, 1999
- --------------------------------------------------------------------------------
Number
of
Shares Value
--------- ------------
COMMON STOCKS (cont'd)
Financial Services (10.9%)
Daiwa Securities Group, Inc. 1,870,000 $ 19,943,551
Nikko Securities Co., Ltd. 2,550,000 23,945,945
Orix Corp. 152,700 20,484,850
Shohkoh Fund & Co., Ltd. 24,910 15,228,605
------------
79,602,951
------------
Manufacturing (5.1%)
Disco Corp. 130,000 18,062,467
Sony Precision Technology, Inc. 70,000 2,200,076
Takasago Electric Industry Co., Ltd. 220,000 16,653,882
------------
36,916,425
------------
Publishing (1.6%)
Kadokawa Shoten Publishing Co., Ltd. 48,000 11,963,199
------------
Real Estate (2.0%)
Goldcrest Co., Ltd. 64,000 8,738,976
Relocation Services Corp.+ 45,000 5,648,713
------------
14,387,689
------------
Retail (5.5%)
Softbank Corp. 96,000 39,831,334
------------
Software (3.7%)
Konami Co., Ltd. 275,000 26,614,590
------------
Telecommunications (14.3%)
Hikari Tsushin, Inc. 54,850 44,096,520
Japan Telecom Co., Ltd. 876 30,050,580
NTT Mobile Communications Network, Inc. 1,130 29,993,278
------------
104,140,378
------------
Telecommunications & Equipment (2.3%)
KDD Corp. 133,400 16,745,297
------------
TOTAL COMMON STOCKS (Cost $406,802,984) 727,941,889
------------
SHORT TERM INVESTMENTS (0.0%)
RBB Money Market Portfolio (Cost $1) 1 1
------------
TOTAL INVESTMENTS AT VALUE (100.0%) (Cost $406,802,985*) $727,941,890
============
INVESTMENT ABBREVIATIONS
ADR = American Depository Receipt
- --------------------------------------------------------------------------------
+ Non-income producing security.
* Cost for federal income tax purposes is $408,993,400.
See Accompanying Notes to Financial Statements.
10
<PAGE>
Warburg Pincus Japan Growth Fund
Statement of Assets and Liabilities
October 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
Assets
<S> <C>
Investments at value (Cost $277,575,560) $463,834,553
Receivable for fund shares sold 82,629,867
Dividends and interest receivable 267,593
Receivable for realized gains on forward contracts 157,722
Foreign currency at value 5,386
Prepaid insurance 406
------------
Total Assets 546,895,527
------------
Liabilities
Payable for fund shares redeemed 9,759,883
Payable for investments purchased 5,738,172
Unrealized losses on forward contracts 1,929,186
Accrued expenses payable 376,406
Investment advisory fee payable 192,816
Administrative services fee payable 35,152
------------
Total Liabilities 18,031,615
------------
Net Assets, applicable to 21,662,225 Common Class shares and 139,574 Advisor Class shares outstanding $528,863,912
============
Net Asset Value, offering and redemption price per Common Class share
($525,488,957 (divided by) 21,662,225) $ 24.26
============
Net Asset Value, offering and redemption price per Advisor Class share
($3,374,955 (divided by) 139,574) $ 24.18
============
Net Assets
Capital contributed, net $341,660,279
Accumulated net realized gain from security transactions 2,868,802
Net unrealized appreciation (depreciation) from investments and foreign
currency related items 184,334,831
------------
Net assets $528,863,912
============
</TABLE>
See Accompanying Notes to Financial Statements.
11
<PAGE>
Warburg Pincus Japan Small Company Fund
Statement of Assets and Liabilities
October 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
Assets
<S> <C>
Investments at value (Cost $406,802,985) $727,941,890
Receivable for fund shares sold 152,753,334
Receivable for investments sold 1,133,960
Dividends and interest receivable 447,504
Receivable for realized gains on forward contracts 229,036
Foreign currency at value 10,144
Prepaid insurance 429
------------
Total Assets 882,516,297
------------
Liabilities
Overdraft liability 7,094,027
Loan payable 5,489,000
Payable for fund shares redeemed 5,382,080
Unrealized losses on forward contracts 4,861,125
Accrued expenses payable 658,659
Investment advisory fee payable 279,897
Administrative services fee payable 59,550
------------
Total Liabilities 23,824,338
------------
Net Assets, applicable to 45,962,183 Common Class shares and 182,683 Advisor Class shares outstanding $858,691,959
============
Net Asset Value, offering and redemption price per Common Class share
($855,282,305 (divided by) 45,962,183) $ 18.61
============
Net Asset Value, offering and redemption price per Advisor Class share
($3,409,654 (divided by) 182,683) $ 18.66
============
Net Assets
Capital contributed, net $537,474,344
Accumulated net realized gain from security transactions 4,929,761
Net unrealized appreciation (depreciation) from investments and foreign
currency related items 316,287,854
------------
Net assets $858,691,959
============
</TABLE>
See Accompanying Notes to Financial Statements.
12
<PAGE>
Warburg Pincus Japan Funds
Statements of Operations
For the Year Ended October 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Japan Growth Japan Small
Fund Company Fund
------------- -------------
<S> <C> <C>
Investment Income:
Dividends $ 447,635 $ 857,927
Interest 327,426 724,414
Foreign taxes withheld (67,145) (128,689)
------------- -------------
Total investment income 707,916 1,453,652
------------- -------------
Expenses:
Investment advisory 2,057,582 3,604,722
Administrative services 362,555 607,879
Custodian/Sub-custodian 64,544 115,618
Directors 13,048 14,876
Interest 259,891 556,715
Legal 40,467 69,561
Offering/Organizational costs 9,457 39,551
Registration 219,856 297,351
Shareholder servicing/distribution 412,790 722,621
Transfer agent 132,061 207,591
Printing 49,978 60,984
Audit 11,061 12,103
Insurance 1,644 1,694
Miscellaneous 3,411 3,500
------------- -------------
3,638,345 6,314,766
Less: fees waived, expenses reimbursed and transfer agent offsets (756,460) (1,266,479)
------------- -------------
Total expenses 2,881,885 5,048,287
------------- -------------
Net investment loss (2,173,969) (3,594,635)
------------- -------------
Net Realized and Unrealized Gain from Investments and
Foreign Currency Related Items:
Net realized gain from security transactions 15,057,930 52,341,786
Net realized loss from foreign currency related items (793,627) (4,327,783)
Net realized foreign currency forward loss (6,310,662) (8,608,986)
Net change in unrealized appreciation (depreciation) from investments and
foreign currency related items 186,680,181 321,862,663
------------- -------------
Net realized and unrealized gain from investments and
foreign currency related items 194,633,822 361,267,680
------------- -------------
Net increase in net assets resulting from operations $ 192,459,853 $ 357,673,045
============= =============
</TABLE>
See Accompanying Notes to Financial Statements.
13
<PAGE>
Warburg Pincus Japan Funds
Statements of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Japan Growth Fund Japan Small Company Fund
---------------------------------- ----------------------------------
For the For the
Year Ended Year Ended
October 31, October 31,
---------------------------------- ----------------------------------
1999 1998 1999 1998
--------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
From Operations:
Net investment loss $ (2,173,969) $ (264,779) $ (3,594,635) $ (353,141)
Net realized gain (loss) from security and
other related transactions 15,057,930 (7,102,916) 52,341,786 (12,646,910)
Net realized gain (loss) from foreign
currency related items (793,627) 5,755,149 (4,327,783) 6,159,309
Net realized foreign currency forward loss (6,310,662) 0 (8,608,986) 0
Net change in unrealized appreciation
(depreciation) from investments and
foreign currency related items 186,680,181 (1,826,387) 321,862,663 3,170,952
--------------- --------------- --------------- ---------------
Net increase (decrease) in net assets
resulting from operations 192,459,853 (3,438,933) 357,673,045 (3,669,790)
--------------- --------------- --------------- ---------------
From Dividends and Distributions:
Distributions from realized gains
Common Class shares 0 0 0 (510,478)
Advisor Class shares 0 0 0 (38)
Return of Capital
Common Class shares 0 0 0 (316,158)
Advisor Class shares 0 0 0 (23)
--------------- --------------- --------------- ---------------
Net decrease in net assets from
dividends and distributions 0 0 0 (826,697)
--------------- --------------- --------------- ---------------
From Capital Share Transactions:
Proceeds from sale of shares 1,406,117,931 112,575,483 2,308,528,324 104,180,700
Reinvested dividends and distributions 0 0 0 764,550
Net asset value of shares redeemed (1,110,254,065) (93,568,000) (1,844,809,099) (104,779,714)
--------------- --------------- --------------- ---------------
Net increase in net assets from
capital share transactions 295,863,866 19,007,483 463,719,225 165,536
--------------- --------------- --------------- ---------------
Net increase (decrease) in net assets 488,323,719 15,568,550 821,392,270 (4,330,951)
Net Assets:
Beginning of year 40,540,193 24,971,643 37,299,689 41,630,640
--------------- --------------- --------------- ---------------
End of year $ 528,863,912 $ 40,540,193 $ 858,691,959 $ 37,299,689
=============== =============== =============== ===============
</TABLE>
See Accompanying Notes to Financial Statements.
14
<PAGE>
Warburg Pincus Japan Growth Fund
Financial Highlights
(For an Advisor Class share of the Fund Outstanding Throughout Each Period)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1999 1998 1997 1996**
------- ------- ------ ------
<S> <C> <C> <C> <C>
PERIOD ENDED:
Per-share data
Net asset value, beginning of period $ 8.71 $ 9.89 $ 9.83 $10.00
------- ------- ------ ------
Investment activities:
Net investment income (loss) (0.06) (0.11)(a) 0.05 (0.09)
Net gains (losses) on investments and foreign
currency related items (both realized and unrealized) 15.53 (1.07) 0.01 (0.08)
------- ------- ------ ------
Total from investment activities 15.47 (1.18) 0.06 (0.17)
------- ------- ------ ------
Net asset value, end of period: $ 24.18 $ 8.71 $ 9.89 $ 9.83
======= ======= ====== ======
Total return 177.61% (11.93)% 0.61% (1.70)%+
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ 3,375 $ 22 $ 17 $ 1
Ratio of expenses to average net assets 2.01%@ 2.00%@ 2.00%@ 2.00%*@
Ratio of net loss to average net assets (1.55)% (1.11)% (1.42)% (1.08)%*
Decrease reflected in above operating expense ratios
due to waivers/reimbursements .54% .58% 7.25% 3.43%*
Portfolio turnover rate 171.12% 75.82% 93.84% 51.72%+
</TABLE>
- -----------
* Annualized.
(a) Per share information is calculated using the average shares outstanding
method.
@ 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 Class shares' expenses ratio by .01%, .00%, .00% and .00% for
the years ending October 31, 1999, 1998, 1997 and for the period ending
1996, respectively. The Advisor Class shares' operating expense ratio after
reflecting these arrangements were 2.00%, 2.00%, 2.00% and 2.00% for the
years ended October 31, 1999, 1998, 1997 and for the period ending 1996,
respectively.
+ Non annualized.
** For the period December 29, 1995 (commencement of operations) through
October 31, 1996.
See Accompanying Notes to Financial Statements.
15
<PAGE>
Warburg Pincus Japan Small Company Fund
Financial Highlights
(For an Advisor Class share of the Fund Outstanding Throughout Each Year)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1999 1998 1997 1996 1995
------- ------- ------- ------ ------
<S> <C> <C> <C> <C> <C>
YEAR ENDED:
Per-share data
Net asset value, beginning of year $ 5.57 $ 6.37 $ 8.45 $ 9.08 $ 9.85
------- ------- ------- ------ ------
Investment activities:
Net investment income (loss) (0.06) (0.62) 0.35 (0.13) (0.02)
Net gains (losses) from investments
and foreign currency related items
(both realized and unrealized) 13.15 (0.06) (2.43) (0.14) (0.75)
------- ------- ------- ------ ------
Total from investment activities 13.09 (0.68) (2.08) (0.27) (0.77)
------- ------- ------- ------ ------
Less Dividends and Distributions:
Dividends from net investment income 0.00 0.00 0.00 (0.36) 0.00
Distributions from realized capital gains 0.00 (0.07) 0.00 0.00 0.00
Return of capital 0.00 (0.05) 0.00 0.00 0.00
------- ------- ------- ------ ------
Total dividends and distributions 0.00 (0.12) 0.00 (0.36) 0.00
------- ------- ------- ------ ------
Net asset value, end of year: $ 18.66 $ 5.57 $ 6.37 $ 8.45 $ 9.08
======= ======= ======= ====== ======
Total return 235.01% (10.63)% (24.62)% (3.17)% (7.82)%
Ratios/supplemental data:
Net assets, end of year (000s omitted) $ 3,410 $ 1 $ 3 $ 1 $ 1
Ratio of expenses to average net assets 2.01%@ 2.01%@ 2.00%@ 2.01%@ 1.31%
Ratio of net loss to average net assets (1.53)% (1.18)% (1.10)% (1.57)% (.19)%
Decrease reflected in above operating expense
ratios due to waivers/reimbursements .51% 22.81% 6.69% .28% 1.83%
Portfolio turnover rate 249.79% 112.68% 100.60% 95.23% 82.98%
</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 Class shares' expenses ratio by .01%, .01%, .00% and .01% for
the years ending October 31, 1999, 1998, 1997 and 1996, respectively.
TheAdvisor Class shares' operating expense ratio after reflecting these
arrangements were 2.00%, 2.00%, 2.00% and 2.00% for the years ended October
31, 1999, 1998, 1997 and 1996, respectively.
See Accompanying Notes to Financial Statements.
16
<PAGE>
Warburg Pincus Japan Funds
Notes to Financial Statements
October 31, 1999
- --------------------------------------------------------------------------------
1. Significant Accounting Policies
The Warburg Pincus Japan Growth Fund ("Japan Growth") and the Warburg
Pincus Japan Small Company Fund ("Japan Small Company") are registered under the
Investment Company Act of 1940, as amended (the "1940 Act"), as non-diversified,
open-end management investment companies (each, a "Fund" and collectively, the
"Funds).
Investment objectives for each Fund are as follows: Japan Growth seeks
long-term growth of capital and Japan Small Company seeks long-term capital
appreciation.
Both Funds offer two classes of shares, one class being referred to as the
Common Class shares and one class being referred to as the Advisor Class class.
Common and Advisor Class shares in each Fund represent an equal pro rata
interest in such Fund, except that they bear different expenses which reflect
the difference in the range of services provided to them. Common Class shares
for both Funds bear expenses paid pursuant to a shareholder servicing and
distribution plan adopted by each Fund at an annual rate of .25% of the average
daily net asset value of each Fund's outstanding Common Class shares. Advisor
Class 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 Advisor Class shares. Advisor Class shares are
currently bearing expenses of .50% of average daily net assets.
The net asset value of each Fund is determined daily as of the close of
regular trading on the New York Stock Exchange. Each Fund's investments are
valued at market value, which is generally determined using the last reported
sales price. If no sales are reported, investments are generally valued at the
mean between the last reported bid and asked price. If market quotations are not
readily available, securities and other assets are valued by another method that
the Board of Directors believes accurately reflects fair value.
The books and records of the Funds are maintained in U.S. dollars.
Transactions denominated in foreign currencies are recorded at the current
prevailing exchange rates. All assets and liabilities denominated in foreign
currencies are translated into U.S. dollar amounts at the current exchange rate
at the end of the period. Translation gains or losses resulting from changes in
the exchange rate during the reporting period and realized gains and losses on
the settlement of foreign currency transactions are reported in the results of
operations for the current period. The Funds do not isolate that portion of
realized gains and losses on investments in equity securities which
17
<PAGE>
Warburg Pincus Japan Funds
Notes to Financial Statements (cont'd)
October 31, 1999
- --------------------------------------------------------------------------------
1. Significant Accounting Policies -- (cont'd)
is due to changes in the foreign exchange rate from that which is due to changes
in market prices of equity securities. The Funds isolate that portion of
realized gains and losses on investments in debt securities which is due to
changes in the foreign exchange rate from that which is due to changes in market
prices of debt securities.
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 others, currency risk
(fluctuations in currency exchange rates), information risk (key information may
be inaccurate or unavailable) and political risk (expropriation, nationalization
or the imposition of capital or currency controls or punitive taxes). Other
risks of investing in foreign securities include liquidity and valuation risks.
In addition, focusing investments in a single country, such as Japan, involves
increased risks.
Security transactions are accounted for on a trade date basis. Interest
income is recorded on the accrual basis. Dividends are recorded on the
ex-dividend date. Income, expenses (excluding class-specific expenses,
principally distribution and shareholder servicing fees) and realized/unrealized
gains/losses are allocated proportionately to each class of shares based upon
the relative net asset value of outstanding shares. Effective November 1, 1998
class specific expenses no longer include transfer agent fees; accordingly these
fees will be allocated proportionately 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.
Dividends from net investment income and distributions of net realized
capital gains, if any, are declared and paid at least annually for both 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.
During the fiscal year ended October 31, 1999, Japan Growth and Japan Small
Company utilized $7,424,217 and $36,006,682, respectively, of capital losses.
No provision is made for federal taxes, as it is each Fund's intention to
continue to qualify for and elect the tax treatment applicable to regulated
investment companies under the Internal Revenue Code of 1986, as amended (the
"Code"), and make the requisite distributions to its shareholders which will be
sufficient to relieve it from federal income and excise taxes.
18
<PAGE>
Warburg Pincus Japan Funds
Notes to Financial Statements (cont'd)
October 31, 1999
- --------------------------------------------------------------------------------
1. Significant Accounting Policies -- (cont'd)
Costs incurred in connection with the organization of shares have been
deferred and are being amortized over a period of five years, from the date each
Fund commenced its operations.
Pursuant to an exemptive order issued by the Securities and Exchange
Commission, each Fund, along with other Warburg Pincus Funds can transfer
uninvested cash balances to a pooled cash account, which is invested in
repurchase agreements secured by U.S. government securities. Securities pledged
as collateral for repurchase agreements are held by the Funds' custodian bank
until the agreements mature. Each agreement requires that the market value of
the collateral be sufficient to cover payments of interest and principal;
however, in the event of default or bankruptcy by the other party to the
agreement, retention of the collateral may be subject to legal proceedings. At
October 31, 1999 neither Fund was invested in repurchase agreements.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities at the
date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from these
estimates.
The Funds have an arrangement with their transfer agent whereby interest
earned on uninvested cash balances was used to offset a portion of their
transfer agent expense.
For the year ended October 31, 1999, the Funds received credits or
reimbursements under this arrangement as follows:
Fund Amount
---- --------
Japan Growth $18,883
Japan Small Company 28,669
2. Investment Adviser, Co-Administrator and Distributor
On July 6, 1999, Credit Suisse Asset Management, LLC ("CSAM") became each
Funds' investment adviser as a result of the acquisition of Warburg Pincus Asset
Management, Inc. ("Warburg Pincus") by Credit Suisse Group ("Credit Suisse").
Warburg Pincus was combined with CSAM, which is an indirect wholly-owned U.S.
subsidiary of Credit Suisse. For it's investment advisory services, CSAM
receives the following fees based on each Fund's average daily net assets:
19
<PAGE>
Warburg Pincus Japan Funds
Notes to Financial Statements (cont'd)
October 31, 1999
- --------------------------------------------------------------------------------
2. Investment Adviser, Co-Administrators and Distributor -- (cont'd)
For its investment advisory services, CSAMreceives the following fees based
on each Fund's average daily net assets:
Fund Annual Rate
------ ---------------------------------
Japan Growth 1.25% of average daily net assets
Japan Small Company 1.25% of average daily net assets
For the year ended October 31, 1999, investment advisory fees and voluntary
waivers were as follows:
Gross Net
Fund Advisory Fee Waiver Advisory Fee
---- ------------ ----------- --------------
Japan Growth $2,057,582 $ (716,702) $1,340,880
Japan Small Company 3,604,722 (1,223,067) 2,381,655
Counsellors Funds Service, Inc. ("CFSI"), a wholly-owned subsidiary of CSAM
served as co-administrator of each Fund until November 1, 1999. On November 1,
1999, Credit Suisse Asset Management Securities, Inc. ("CSAMSI") replaced CFSI
as co-administrator to each Fund. PFPC, Inc. ("PFPC"), an indirect, wholly-owned
subsidiary of PNC Bank Corp. ("PNC"), also serves as each Fund's
co-administrator. For its administrative services, CSAMSI currently receives a
fee calculated at an annual rate of .10% of each Fund's average daily net
assets. For the year ended October 31, 1999, administrative services fees earned
by CFSI were as follows:
Fund Co-Administration Fee
---- ---------------------
Japan Growth $164,606
Japan Small Company 288,378
For its administrative services, PFPC currently receives a fee, exclusive
of out-of-pocket expenses, based on the following fee structure:
Average Daily Net Assets Annual Rate
---------------------- --------------------------------
First $250 million .12% of average daily net assets
Second $250 million .10% of average daily net assets
Third $250 million .08% of average daily net assets
Over $750 million .05% of average daily net assets
For the year ended October 31, 1999, administrative service fees earned and
voluntarily waived by PFPC (including out of pocket expenses) were as follows:
<TABLE>
<CAPTION>
Gross Net
Fund Co-Administration Fee Waiver Co-Administration Fee
---- --------------------- ------ ---------------------
<S> <C> <C> <C>
Japan Growth $197,949 $(20,875) $177,074
Japan Small Company 319,501 (14,743) 304,758
</TABLE>
20
<PAGE>
Warburg Pincus Japan Funds
Notes to Financial Statements (cont'd)
October 31, 1999
- --------------------------------------------------------------------------------
2. Investment Adviser, Co-Administrators and Distributor -- (cont'd)
CSAMSI also serves as each Fund's distributor. Provident Distributors, Inc.
will become each Fund's distributor effective January 3, 2000. For its
shareholder servicing and selling services, CSAMSI receives a fee at an annual
rate of .25% of the average daily net assets of each Fund's Common Class 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, CSAMSI receives a fee at an annual rate of .50% of the
average daily net assets of each Fund's Advisor Class pursuant to a distribution
plan adopted by each Fund pursuant to Rule 12b-1 under the 1940 Act. CSAMSI pays
all of the Advisor Class fees to institutional and financial service firms that
offer the Advisor Class shares. For the year ended October 31, 1999, shareholder
servicing and distribution fees were as follows:
Shareholder Servicing/
Fund Distribution Fee
---- ----------------------
Japan Growth
Common Class shares $410,245
Advisor Class shares 2,545
--------
$412,790
========
Japan Small Company
Common Class shares $719,267
Advisor Class shares 3,354
--------
$722,621
========
3. Line of Credit
The Funds, together with other Funds advised by CSAM, have established a
$250 million committed, unsecured, line of credit facility ("Credit Facility")
with Deutsche Bank, AG as administrative agent, State Street Bank and Trust
Company as operations agent, Bank of Nova Scotia as syndication agent and
certain other lenders, for temporary or emergency purposes primarily relating to
unanticipated portfolio share redemptions. Under the terms of the Credit
Facility, the Funds with access to the Credit Facility pay an aggregate
commitment fee at a rate of .075% per annum on the average daily balance of the
Credit Facility that is undisbursed and uncanceled during the preceding quarter
allocated among the participating Funds in such manner as is determined by the
governing Boards of the various Funds. In addition, the participating Funds will
pay interest on borrowings at the Federal funds rate plus .50%. At October 31,
1999 and during the year ended October 31, 1999, the Funds had the following
borrowings under the Credit Facility:
21
<PAGE>
Warburg Pincus Japan Funds
Notes to Financial Statements (cont'd)
October 31, 1999
- --------------------------------------------------------------------------------
3. Line of Credit -- (cont'd)
<TABLE>
<CAPTION>
Average Maximum Loan
Average Daily Interest Daily Loan Outstanding
Fund Loan Balance Rate % Outstanding at 10/31/99
---- ------------- -------- ------------ -----------
<S> <C> <C> <C> <C>
Japan Growth $4,140,134 5.667% $ 78,459,000 $ --
Japan Small Company 9,253,718 5.695% 160,051,000 5,489,000
</TABLE>
4. Investments in Securities
For the year ended October 31, 1999, purchases and sales of investment
securities (excluding short-term investments) were as follows:
Fund Purchases Sales
---- -------------- ------------
Japan Growth $ 475,667,514 $279,197,187
Japan Small Company 1,007,385,183 695,615,409
At October 31, 1999, the net unrealized appreciation from investments for
those securities having an excess of value over cost and net unrealized
depreciation from investments for those securities having an excess of cost over
value (based on cost for federal income tax purposes) was as follows:
Net Unrealized
Unrealized Unrealized Appreciation
Fund Appreciation Depreciation (Depreciation)
---- ------------ ------------ --------------
Japan Growth $186,364,591 $(2,244,934) $184,119,657
Japan Small Company 324,179,285 (5,230,795) 318,948,490
5. 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 from movements in the value of a foreign currency relative to the U.S.
dollar and from the potential default of counterparties to the contracts. Each
Fund will enter into forward contracts primarily for hedging purposes. Forward
currency contracts are adjusted by the daily exchange rate of the underlying
currency and any gains or losses are recorded for financial statement purposes
as unrealized until the contract settlement date or the date on which an
offsetting position is entered into.
22
<PAGE>
Warburg Pincus Japan Funds
Notes to Financial Statements (cont'd)
October 31, 1999
- --------------------------------------------------------------------------------
5. Forward Foreign Currency Contracts -- (cont'd)
At October 31, 1999, Japan Growth and Japan Small Company had the following
open forward foreign currency contracts:
<TABLE>
<CAPTION>
Japan Growth
- ------------------------------------------------------------------------------------------------
Unrealized
Foreign
Forward Currency Expiration Foreign Currency Contract Exchange
Contract Date To Be Sold Amount Contract Value Gain/(Loss)
---------------- ---------- ---------------- ------------ -------------- ------------
<S> <C> <C> <C> <C> <C>
Japanese Yen 02/29/2000 7,999,000,000 $ 77,802,959 $ 78,215,754 $ (412,795)
Japanese Yen 02/29/2000 20,000,000,000 196,202,501 195,563,830 638,671
Japanese Yen 02/29/2000 3,489,000,000 33,976,045 34,116,110 (140,065)
Japanese Yen 02/29/2000 2,253,000,000 21,448,155 22,030,265 (582,110)
Japanese Yen 02/29/2000 2,007,000,000 19,082,482 19,624,830 (542,348)
Japanese Yen 02/29/2000 2,374,000,000 22,590,161 23,213,427 (623,266)
Japanese Yen 02/29/2000 1,721,000,000 16,652,314 16,828,269 (175,955)
Japanese Yen 02/29/2000 1,669,000,000 16,250,584 16,319,802 (69,218)
Japanese Yen 02/29/2000 1,658,000,000 16,190,142 16,212,242 (22,100)
------------ ------------ ------------
$420,195,343 $422,124,529 $(1,929,186)
============ ============ ===========
</TABLE>
<TABLE>
<CAPTION>
Japan Small Company
- -----------------------------------------------------------------------------------------------------------
Unrealized
Foreign
Forward Currency Expiration Foreign Currency Contract Exchange
Contract Date To Be Sold Amount Contract Value Gain/(Loss)
---------------- ---------- ---------------- ------------ -------------- ------------
<S> <C> <C> <C> <C> <C>
Japanese Yen 02/29/2000 15,437,000,000 $150,893,416 $150,945,942 $ (52,526)
Japanese Yen 02/29/2000 21,000,000,000 206,060,130 205,342,022 718,108
Japanese Yen 02/29/2000 4,618,000,000 44,926,549 45,155,688 (229,139)
Japanese Yen 02/29/2000 4,120,000,000 39,208,222 40,286,149 (1,077,927)
Japanese Yen 02/29/2000 8,207,000,000 78,083,821 80,249,618 (2,165,797)
Japanese Yen 02/29/2000 4,497,000,000 42,800,038 43,972,527 (1,172,489)
Japanese Yen 02/29/2000 1,317,000,000 12,684,806 12,877,878 (193,072)
Japanese Yen 02/29/2000 4,205,000,000 40,701,164 41,117,295 (416,131)
Japanese Yen 02/29/2000 5,950,000,000 57,939,120 58,180,240 (241,120)
Japanese Yen 02/29/2000 3,751,000,000 36,646,964 36,677,996 (31,032)
------------ ------------ ------------
$709,944,230 $714,805,355 $(4,861,125)
============ ============ ===========
</TABLE>
23
<PAGE>
Warburg Pincus Japan Funds
Notes to Financial Statements (cont'd)
October 31, 1999
- --------------------------------------------------------------------------------
6. Capital Share Transactions
Both Funds are 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 classified as the Advisor Class shares.
Transactions in classes of each Fund were as follows:
<TABLE>
<CAPTION>
JAPAN GROWTH
Common Class shares Advisor Class shares
---------------------------------- ----------------------------------
For the Year Ended October 31,
------------------------------------------------------------------------
1999 1998 1999 1998
--------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
Shares sold 79,744,093 11,622,806 206,249 2,099
Shares redeemed (62,797,016) (9,470,866) (69,146) (1,363)
--------------- --------------- --------------- ---------------
Net increase in shares outstanding 16,947,077 2,151,940 137,103 736
=============== =============== =============== ===============
Proceeds from sale of shares $ 1,401,756,841 $ 112,554,751 $ 4,361,090 $ 20,732
Net asset value of shares redeemed (1,108,802,345) (93,554,214) (1,451,720) (13,786)
--------------- --------------- --------------- ---------------
Net increase from capital share transactions $ 292,954,496 $ 19,000,537 $ 2,909,370 $ 6,946
=============== =============== =============== ===============
</TABLE>
<TABLE>
<CAPTION>
JAPAN SMALL COMPANY
Common Class shares Advisor Class shares
---------------------------------- ----------------------------------
For the Year Ended October 31,
------------------------------------------------------------------------
1999 1998 1999 1998
--------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
Shares sold 171,281,858 17,082,160 335,309 8
Shares issued to shareholders on reinvestment
of dividends and distributions 0 136,273 0 11
Shares redeemed (132,021,198) (17,056,009) (152,747) (395)
--------------- --------------- --------------- ---------------
Net increase (decrease) in shares outstanding 39,260,660 162,424 182,562 (376)
=============== =============== =============== ===============
Proceeds from sale of shares $ 2,303,201,289 $ 104,180,652 $ 5,327,035 $ 48
Reinvested dividends and distributions 0 764,489 0 61
Net asset value of shares redeemed (1,842,311,404) (104,777,285) (2,497,695) (2,429)
--------------- --------------- --------------- ---------------
Net increase (decrease) from capital share
transactions $ 460,889,885 $ 167,856 $ 2,829,340 $ (2,320)
=============== =============== =============== ===============
</TABLE>
24
<PAGE>
Warburg Pincus Japan Funds
Notes to Financial Statements (cont'd)
October 31, 1999
- --------------------------------------------------------------------------------
6. Capital Share Transactions (cont'd)
On August 19, 1999, the Board of Directors of the Warburg Pincus Japan
Small Company Fund approved the imposition of a redemption fee plan, whereby 1%
of the value of shares redeemed or exchanged less than six months from the date
of purchase will be charged to shareholders. The fee applies only to shares
purchased on or after November 17, 1999 that are held for less than six months.
Reinvested dividends and distributions are not subject to the fee. The fee will
be charged based on the value of shares at redemption, and will be paid directly
to the Fund and become part of the Fund's daily net asset value calculation.
When shares are redeemed that are subject to the fee, reinvested dividends and
distributions will be redeemed first, followed by the shares held longest.
7. Reclassification of Composition of Net Assets
At October 31, 1999, capital contributions, undistributed net investment
income, accumulated net realized gain (loss) from security transactions and
current period dividends and distributions have been adjusted for current period
permanent book/tax differences which arose principally from differing book/tax
treatments of foreign currency. Japan Growth and Japan Small Company
reclassified $793,627 and $4,327,783, respectively, from accumulated net
realized loss on foreign currency related items to undistributed net investment
income. Japan Growth and Japan Small Company reclassified $2,967,596 and
$7,922,418, respectively, from accumulated net investment loss to accumulated
net realized gain from security transaction. Net investment income, net realized
gain (loss) on investments and net assets were not affected by these
reclassifications.
25
<PAGE>
Warburg Pincus Japan Funds
Notes to Financial Statements (cont'd)
October 31, 1999
- --------------------------------------------------------------------------------
8. Other Financial Highlights
Each Fund currently offers one other class of shares, the Common Class
shares, representing equal pro rata interests in each Fund. The financial
highlights for a Common Class share of each Fund are as follows:
<TABLE>
<CAPTION>
Japan Growth
------------------------------------------------------
Common Class shares
------------------------------------------------------
PERIOD ENDED: 1999 1998 1997 1996**
-------- ------- ------- -------
<S> <C> <C> <C> <C>
Per-share data
Net asset value, beginning of period $ 8.59 $ 9.74 $ 9.85 $ 10.00
-------- ------- ------- -------
Investment activities:
Net investment loss (0.10) (0.07)(a) (0.07) (0.06)
Net gains (losses) on investments and foreign
currency related items (both realized and unrealized) 15.77 (1.08) 0.21 (0.09)
-------- ------- ------- -------
Total from investment activities 15.67 (1.15) 0.14 (0.15)
-------- ------- ------- -------
Less Dividends and Distributions:
Dividends from net investment income 0.00 0.00 (0.20) 0.00
Distributions in excess of realized capital gains 0.00 0.00 (0.05) 0.00
-------- ------- ------- -------
Total dividends and distributions 0.00 0.00 (0.25) 0.00
-------- ------- ------- -------
Net asset value, end of period $ 24.26 $ 8.59 $ 9.74 $ 9.85
======== ======= ======= =======
Total return 182.42% (11.81)% 1.47% (1.50)%+
Ratios and supplemental data
Net assets, end of period (000s omitted) $525,489 $40,519 $24,954 $20,157
Ratio of expenses to average net assets 1.76%@ 1.75%@ 1.75%@ 1.76%*@
Ratio of net loss to average net assets (1.32)% (.76)% (1.03)% (1.03)%*
Decrease reflected in above operating expense ratios
due to waivers/reimbursements .45% .53% .81% 1.79%*
Portfolio turnover rate 171.12% 75.82% 93.84% 51.72%+
</TABLE>
- ---------------
* Annualized.
(a) Per share information is calculated using the average shares outstanding
method.
@ Interest earned on uninvested cash balances is used to offset portions of
the transfer agent expense. These arrangements resulted in a reduction to
the Common Class shares' expenses by .01%, .00%, .00%, and .01% for the
years ending October 31, 1999, 1998, 1997 and for the period ending 1996,
respectively. The Common Class shares' operating expense ratios after
reflecting these arrangements were 1.75%, 1.75%, 1.75% and 1.75% for the
years ended October 31, 1999, 1998, 1997 and for the period ending 1996,
respectively.
+ Non annualized.
** For the period December 29, 1995 (commencement of operations) through
October 31, 1996.
26
<PAGE>
Warburg Pincus Japan Funds
Notes to Financial Statements (cont'd)
October 31, 1999
- --------------------------------------------------------------------------------
9. Other Financial Highlights -- (cont'd)
<TABLE>
<CAPTION>
Japan Small Company
----------------------------------------------------------------------
Common Class shares
----------------------------------------------------------------------
1999 1998 1997 1996 1995
-------- ------- ------- -------- --------
<S> <C> <C> <C> <C> <C>
YEAR ENDED:
Per-share data
Net asset value,
beginning of year $ 5.57 $ 6.37 $ 8.47 $ 9.09 $ 9.85
-------- ------- ------- -------- --------
Investment activities:
Net investment loss (0.08) (0.01) (1.22) (0.23) 0.00
Net gains (losses) from investments and
foreign currency related items
(both realized and unrealized) 13.12 (0.67) (0.79) (0.01) (0.76)
-------- ------- ------- -------- --------
Total from investment
activities 13.04 (0.68) (2.01) (0.24) (0.76)
-------- ------- ------- -------- --------
Less Dividends and Distributions:
Dividends from net investment income 0.00 0.00 0.00 (0.38) 0.00
Distributions from realized capital gains 0.00 (0.07) (0.09) 0.00 0.00
Return of capital 0.00 (0.05) 0.00 0.00 0.00
-------- ------- ------- -------- --------
Total dividends and distributions 0.00 (0.12) (0.09) (0.38) 0.00
-------- ------- ------- -------- --------
Net asset value, end of year $ 18.61 $ 5.57 $ 6.37 $ 8.47 $ 9.09
======== ======= ======= ======== ========
Total return 234.11% (10.61)% (23.98)% (2.79)% (7.72)%
Ratios and supplemental data
Net assets, end of year (000s omitted $855,282 $37,299 $41,627 $154,460 $178,568
Ratio of expenses to average net assets 1.76%@ 1.75%@ 1.76%@ 1.76%@ 1.41%
Ratio of net loss to average net assets (1.25)% (.84)% (1.10)% (1.22)% (.15)%
Decrease reflected in above operating expense
ratios due to waivers/reimbursements .43% .81% .51% .29% 1.35%
Portfolio turnover rate 249.79% 112.68% 100.60% 95.23% 82.98%
</TABLE>
- ------------
@ Interest earned on uninvested cash balances is used to offset portions of
the transfer agent expense. These arrangements resulted in a reduction to
the Common Class shares' expenses by .01%, .00%, .01% and .01% for the years
ending October 31, 1999, 1998, 1997 and 1996, respectively. The Common Class
shares'operating expense ratio after reflecting these arrangements were
1.75%, 1.75%, 1.75% and 1.75%, for the years ended October 31, 1999, 1998,
1997 and 1996, respectively.
27
<PAGE>
Warburg Pincus Funds
Report of Independent Accountants
- --------------------------------------------------------------------------------
To the Board of Directors and Shareholders of
Warburg, Pincus Japan Growth Fund, Inc. and
Warburg, Pincus Japan Small Company Fund, Inc.:
In our opinion, the accompanying statements of assets and liabilities, including
the schedules of investments and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of Warburg, Pincus Japan Growth Fund,
Inc. and Warburg, Pincus Japan Small Company Fund, Inc., (all funds collectively
referred to as the "Funds") and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of the Funds at October 31, 1999, and
the results of each of their operations for the year then ended, the changes in
each of their net assets for each of the two years in the period then ended and
the financial highlights for each of the years (or periods) presented, in
conformity with generally accepted accounting principles. These financial
statements and financial highlights (hereafter referred to as "financial
statements") are the responsibility of the Funds' management; our responsibility
is to express an opinion on these financial statements based on our audits. We
conducted our audits of these financial statements in accordance with generally
accepted auditing standards, which require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits, which included confirmation of securities at October 31, 1999 by
correspondence with the custodian and brokers, provide a reasonable basis for
the opinion expressed above.
PricewaterhouseCoopers LLP
2400 Eleven Penn Center
Philadelphia, Pennsylvania
December 10, 1999
28
<PAGE>
ANNUAL REPORT
October 31, 1999
WARBURG PINCUS JAPAN GROWTH FUND
WARBURG PINCUS JAPAN SMALL COMPANY FUND
Shareholder Meeting Results
A special meeting of shareholders of each Fund was held on May 21, 1999. At the
special meeting, the following persons were elected as directors of each Fund,
constituting the entire Board of Directors: Richard H. Francis, Jack W. Fritz,
Jeffrey E. Garten, James S. Pasman, Jr., William W. Priest, Steven N. Rappaport,
Arnold M. Reichman and Alexander B. Trowbridge.
In addition, shareholders of each Fund voted on the following matters:
<TABLE>
<S> <C>
Proposal 1: Approval of a new investment advisory agreement
between each Fund and Credit Suisse Asset
Management, LLC.
Proposal 2: Ratification of the selection of
PricewaterhouseCoopers
LLP as the independent accountants for each of
the Funds for the fiscal year ending October 31,
1999.
</TABLE>
The voting results for each Fund were as follows:
Election of Directors:
<TABLE>
<S> <C> <C>
|JAPAN GROWTH FOR | WITHHELD |
|Richard H. Francis 3,989,895.6154 | 322,662.5826 |
|Jack W. Fritz 4,006,805.3564 | 305,752.8416 |
|Jeffrey E. Garten 3,990,374.3644 | 322,153.8336 |
|James S. Pasman, Jr. 3,989,455.3054 | 323,102.8926 |
|William W. Priest 3,990,232.5994 | 322,325.5986 |
|Steven N. Rappaport 3,990,404.3644 | 322,153.8336 |
|Arnold M. Reichman 4,009,686.4154 | 302,871.7826 |
|Alexander B. Trowbridge 4,007,577.1214 | 304,981.0766 |
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
|JAPAN SMALL COMPANY FOR | WITHHELD |
|Richard H. Francis 13,516,851.8661 | 276,676.5789 |
|Jack W. Fritz 13,517,564.6491 | 275,963.7959 |
|Jeffrey E. Garten 13,517,087.2561 | 276,441.1889 |
|James S. Pasman, Jr. 13,516,953.0351 | 276,575.4099 |
|William W. Priest 13,524,189.2791 | 269,339.1659 |
|Steven N. Rappaport 13,519,260.5431 | 274,267.9019 |
|Arnold M. Reichman 13,512,614.5431 | 280,913.9019 |
|Alexander B. Trowbridge 13,521,085.2661 | 272,443.1789 |
</TABLE>
Proposal 1:
<TABLE>
<CAPTION>
<S> <C> <C>
| JAPAN GROWTH | JAPAN SMALL COMPANY |
-------------- -------------------
| TOTAL NUMBER | TOTAL NUMBER |
| OF VOTES | OF VOTES |
|Approve 3,953,538.5718 | 13,331,724.4793 |
|Disapprove 303,820.6146 | 336,241.2018 |
|Abstain 55,199.0116 | 125,562.7639 |
</TABLE>
Proposal 2:
<TABLE>
<S> <C> <C>
| JAPAN GROWTH | JAPAN SMALL COMPANY |
-------------- -------------------
| TOTAL NUMBER | TOTAL NUMBER |
| OF VOTES | OF VOTES |
|Approve 4,002,552.4875 | 13,442,317.0279 |
|Disapprove 267,240.9400 | 219,341.2391 |
|Abstain 42,764.7705 | 131,870.1780 |
</TABLE>
<PAGE>
Warburg Pincus Japan Funds
Shareholder Tax Information (Unaudited)
- --------------------------------------------------------------------------------
Each Fund is required by Subchapter M of the Code to advise its
shareholders within 60 days of each Fund's fiscal year end as to the U.S.
federal tax status of dividends and distributions received by the Fund's
shareholders in respect of such fiscal year.
Japan Growth and Japan Small Company did not pay any ordinary income
dividends or capital gain distributions during the current fiscal year.
Because the fiscal year of the Funds is not a calendar year, another
notification will be sent with respect to calendar year 1999. The second
notification, which will reflect the amount to be used by calendar year
taxpayers on their U.S. federal income tax returns, will be made in conjunction
with Form 1099-DIV and will be mailed January 2000.
29
<PAGE>
This page intentionally left blank
<PAGE>
This page intentionally left blank
<PAGE>
This page intentionally left blank
<PAGE>
WARBURG PINCUS
ADVISOR FUNDS
CREDIT SUISSE
ASSET MANAGEMENT
SECURITIES, INC.,
DISTRIBUTOR
Credit Suisse Asset Management Securities, Inc., Distributor, 466 Lexington
Avenue, New York, NY 10017. Telephone: 800-927-2874. Warburg Pincus Advisor
Funds are advised by Credit Suisse Asset Management, LLC.
WARBURG PINCUS
[GRAPHIC OMITTED]
