[GRAPHIC OMITTED]
WARBURG PINCUS FUNDS
PART OF CREDIT SUISSE ASSET MANAGEMENT
ANNUAL
REPORT
October 31, 2000
WARBURG PINCUS
JAPAN GROWTH FUND
(BULLET)
WARBURG PINCUS
JAPAN SMALL COMPANY FUND
More complete information about the Funds, including charges and expenses, is
provided in the PROSPECTUS, which must precede or accompany this document and
which should be read carefully before investing. You may obtain additional
copies by calling 800-WARBURG(800-927-2874) or by writing to Warburg Pincus
Funds, P.O. Box 9030, Boston, MA 02205-9030.
Credit Suisse Asset Management Securities, Inc., Distributor, is located at 466
Lexington Ave., New York, NY 10017-3147. Warburg Pincus Funds are advised by
Credit Suisse Asset Management, LLC.
<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, 2000; 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") OR ANY AFFILIATE, ARE NOT FDIC INSURED AND ARE NOT
GUARANTEED BY CSAM 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, 2000
--------------------------------------------------------------------------------
December 6, 2000
Dear Shareholder:
For the 12 months ended October 31, 2000, the Common Class shares of Warburg
Pincus Japan Growth Fund had a loss of 40.04%, vs. a loss of 15.14% for the
U.S.-dollar-denominated Tokyo Stock Exchange Index. In light of the current
state of the Japanese market, the Fund's performance may be further adversely
affected for periods after October 31, 2000.
The period was a negative one for Japanese stocks. The market initially
rallied, capping a very positive 1999, with technology and Internet-related
names accounting for the bulk of the gains. However, as 2000 progressed, the
market turned down and the previously favored high-tech names fell stunningly
out of favor. Investors, already skeptical about Japan's economic recovery, were
quick to take profits on any negative news, for example, revenue shortfalls that
were announced by leading Japanese Internet companies. The situation worsened
over the March-through-May span amid a global selloff in technology and
telecommunications stocks. This "Nasdaq contagion" lowered investors' tolerance
for risk in general while hampering a dominant market sector in Japan. Over the
latter part of the period, Japan's market had occasional rallies that proved to
be false starts.
It was obviously a very disappointing year for the Fund and its shareholders.
The downturn in the technology stocks that we continued to focus on weighed
heavily on the Fund's return, and resulted in the Fund surrendering a large part
of the gain it generated in 1999. Certain Internet-related holdings proved to be
particular liabilities for the 12 months. The Fund's poor performance for the
period notwithstanding, we remain committed to investing in companies that we
believe represent the best of a "new Japanese economy." We define these as
companies well-positioned to benefit from the spread of a Western management
philosophy in Japan combined with rising levels of information-technology
commitments.
In terms of sector focus, we continued to emphasize the software,
communications and electronic-component areas. We believe these companies have
good long-term prospects, driven by such trends as increased computer demand
within Japan and the accelerating usage of Internet and wireless communications
globally.
We also maintained a large position in the financial-services sector, where a
number of companies stand to gain from Japan's expanding equity culture. Such a
culture is becoming a top priority due to extensive underfunded pension
liabilities. Over time, and with an eye on retirement, more and more
1
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WARBURG PINCUS JAPAN GROWTH FUND
ANNUAL INVESTMENT ADVISER'S REPORT -- OCTOBER 31, 2000 (CONT'D)
--------------------------------------------------------------------------------
Japanese investors are likely to shift from safe, but low-yielding bonds in
favor of equities, a lucrative area for asset-management companies. In addition,
Japan continues to see an acceleration of merger and acquisition activity and
the growth of venture financing, two developments driving demand for
financial-services companies here.
Going forward, we believe that certain positive catalysts can help Japan's
market to right itself. Japan's economic recovery, in our view, remains on track
and has good potential to deliver better-than-expected news in the long-term.
Recent encouraging data include an upturn in Gross Domestic Product ("GDP"),
good industrial production growth and the ongoing creation of new jobs. And
recent TANKAN surveys (conducted by the Bank of Japan) indicate that Japanese
manufacturers have become more optimistic.
Another encouraging development is the above-noted growth of
information-technology ("IT") expenditures in Japan. We believe this will be the
true engine pulling the economy forward, as opposed to government spending
programs, which can aid consumption but have little overall long-term positive
impact. Based on our extensive contact with Japanese managements, we believe the
commitment to IT capital will remain substantial, helping to boost productivity
and profits as it has in the U.S.
Of course, certain factors could continue to restrain Japan's equity market,
at least over the near term. Many investors, in particular foreign (i.e.,
non-Japanese) investors, could remain concerned that Japan's economic rebound
will prove temporary. Some of this concern is understandable, especially in the
wake of the Bank of Japan's surprise interest-rate hike in August. News of
bankruptcies--including the collapse of a major Japanese retailer this
summer--has no doubt contributed to the skepticism.
But all told, we believe that investors' attention to Japan could well
increase heading into next year, especially given the compelling valuations
stocks here currently offer. Most Japanese equities were well below their
historic highs even at the end of last year's strong rally. Now, many are
trading at very compelling prices, especially as measured by price-to-book
values. We believe that this could draw renewed investor interest in Japan,
provided that the overall mix of economic and profit news remains encouraging.
Exactly how much good news is required to rekindle interest in Japan as an
asset class is uncertain. Foreign investors--the source of selling pressure in
Japan this year--may remain on the sidelines until Japan logs two or three more
quarters of GDP growth, for example, or until sentiment improves in the
technology sector. In any event, when foreign investors do return to Japan, the
impact could be substantial. Japan remains the world's second-
2
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WARBURG PINCUS JAPAN GROWTH FUND
ANNUAL INVESTMENT ADVISER'S REPORT -- OCTOBER 31, 2000 (CONT'D)
--------------------------------------------------------------------------------
largest economy, and stands to account for a much larger, proportionate share of
global portfolios once investors become more confident in the market. As ever,
we will continue to focus on those companies we believe have the brightest
long-term 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.
3
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WARBURG PINCUS JAPAN GROWTH FUND
ANNUAL INVESTMENT ADVISER'S REPORT -- OCTOBER 31, 2000 (CONT'D)
--------------------------------------------------------------------------------
GROWTH OF $10,000 INVESTED IN COMMON CLASS SHARES OF WARBURG PINCUS JAPAN GROWTH
FUND SINCE INCEPTION AS OF OCTOBER 31, 2000
The graph below illustrates a hypothetical investment of $10,000 in Common
Class shares of Warburg Pincus Japan Growth Fund (the "Fund") from December 29,
1995 (inception) to October 31, 2000, compared to the Tokyo Stock Exchange Index
("Topix")1 for the same time period. Past performance does not predict future
results.
[GRAPHIC OMITTED]
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
AVERAGE ANNUAL TOTAL RETURNS FOR PERIODS ENDED 10/31/00 (COMMON CLASS SHARES)
1 year 3 year Since Inception (12/29/95)
(40.04)% 14.30% 8.62%
Fund Tokyo Stock Exchange Index
12/29/95 $10,000.00 $10,000.00
1/31/96 $ 9,880.00 $ 9,864.70
2/29/96 $ 9,659.68 $ 9,701.14
3/31/96 $10,079.90 $10,020.90
4/30/96 $10,779.40 $10,688.40
5/31/96 $10,649.00 $10,164.80
6/30/96 $11,079.20 $10,208.30
7/31/96 $10,468.70 $ 9,706.84
8/31/96 $10,189.20 $ 9,292.84
9/30/96 $10,369.60 $ 9,554.80
10/31/96 $ 9,850.06 $ 8,913.58
11/30/96 $ 9,859.91 $ 8,979.54
12/31/96 $ 9,450.72 $ 8,291.71
1/31/97 $ 9,204.06 $ 7,402.59
2/28/97 $ 9,337.52 $ 7,549.23
3/31/97 $ 9,286.16 $ 7,272.33
4/30/97 $ 9,676.18 $ 7,450.94
5/31/97 $10,856.70 $ 8,377.39
6/30/97 $11,328.90 $ 8,920.49
7/31/97 $11,986.00 $ 8,572.95
8/31/97 $10,827.00 $ 7,809.01
9/30/97 $10,929.80 $ 7,569.67
10/31/97 $ 9,996.42 $ 6,995.28
11/30/97 $ 9,842.47 $ 6,468.54
12/31/97 $ 9,596.41 $ 5,962.70
1/31/98 $10,355.50 $ 6,600.59
2/28/98 $10,314.10 $ 6,655.50
3/31/98 $10,129.40 $ 6,207.06
4/30/98 $10,427.20 $ 6,125.43
5/31/98 $10,293.80 $ 5,838.15
6/30/98 $10,293.80 $ 5,875.92
7/31/98 $11,125.50 $ 5,798.24
8/31/98 $10,150.90 $ 5,202.18
9/30/98 $ 9,360.17 $ 5,093.46
10/31/98 $ 8,816.34 $ 5,909.94
11/30/98 $ 9,884.00 $ 6,191.25
12/31/98 $ 9,719.92 $ 6,419.09
1/31/99 $10,438.20 $ 6,451.19
2/28/99 $10,705.50 $ 6,297.65
3/31/99 $12,378.70 $ 7,144.05
4/30/99 $13,825.80 $ 7,484.11
5/31/99 $13,282.40 $ 7,148.82
6/30/99 $17,388.00 $ 7,857.98
7/31/99 $19,255.50 $ 8,659.50
8/31/99 $21,000.00 $ 8,934.87
9/30/99 $23,431.80 $ 9,521.00
10/31/99 $24,898.70 $10,086.50
11/30/99 $30,092.50 $10,817.80
12/31/99 $35,584.40 $11,336.00
1/31/00 $30,752.10 $10,754.50
2/29/00 $33,535.10 $10,551.20
3/31/00 $29,235.90 $11,221.20
4/30/00 $24,640.00 $10,297.70
5/31/00 $20,096.40 $ 9,550.08
6/30/00 $20,610.90 $10,163.20
7/31/00 $17,004.00 $ 8,963.94
8/31/00 $20,454.10 $ 9,588.73
9/30/00 $17,737.80 $ 9,212.85
10/31/00 $14,929.90 $ 8,559.66
FUND
-------
1 Year Total Return (9/30/99 to 9/30/00) .................. (24.30)%
3 Year Average Annual Total Return (9/30/97 to 9/30/00) ... 17.51%
Average Annual Total Return Since Inception
(12/29/95 to 9/30/00) .................................. 12.78%
---------------------------
1 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.
4
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WARBURG PINCUS JAPAN SMALL COMPANY FUND
ANNUAL INVESTMENT ADVISER'S REPORT -- OCTOBER 31, 2000
--------------------------------------------------------------------------------
December 6, 2000
Dear Shareholder:
For the 12 months ended October 31, 2000, the Common Class shares of Warburg
Pincus Japan Small Company Fund had a loss of 41.53%, vs. losses of 18.80% and
22.40% for the yen- and dollar-denominated JASDAQ indexes, respectively, and a
loss of 15.78% for the Morgan Stanley Japan Small Company Index. In light of the
current state of the Japanese market, the Fund's performance may be further
adversely affected for periods after October 31, 2000.
Japanese equities suffered a dramatic setback in the period, with weakness
evident across the market-capitalization spectrum. These stocks initially
surged, capping a very positive 1999, with technology and Internet-related names
accounting for the bulk of the gains. However, the market soon turned down and
the previously favored high-tech names fell stunningly out of favor. Investors,
already skeptical about Japan's economic recovery, were quick to take profits on
any negative news, for example, revenue shortfalls that were announced by
leading Japanese Internet companies. The situation worsened over the
March-through-May span amid a global selloff in technology and
telecommunications stocks. This "Nasdaq contagion" lowered investors' tolerance
for risk in general while hampering a dominant market sector in Japan. Sentiment
toward Japanese equities remained weak through the end of the period.
It was clearly a disappointing year for the Fund and its shareholders. It was
also a frustrating one from a manager's perspective, as the turmoil occurred
despite a general continued improvement in Japan's economy and profit backdrop.
The Fund was hurt by the negative sentiment toward Japan as an asset class in
2000 and by its focus on technology and communications stocks. The downturn in
the technology stocks that we continued to focus on weighed heavily on the
Fund's return, and resulted in the Fund surrendering a large part of the gain it
generated in 1999. Certain Internet-related holdings especially hampered the
Fund's return. The Fund's poor showing notwithstanding, we remain committed to
investing in companies that we believe represent the best of a "new Japanese
economy." By which we refer not to "dot com" companies, but rather companies
well-positioned to benefit from the Western management philosophy that is taking
hold in Japan combined with an increased emphasis on information technology.
With respect to sector and industry concentration, we continued to emphasize
the technology group, defined to include software, communications and
electronic-component stocks. We believe a number of these companies have good
long-term prospects, driven by such trends as increased computer
5
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WARBURG PINCUS JAPAN SMALL COMPANY FUND
ANNUAL INVESTMENT ADVISER'S REPORT -- OCTOBER 31, 2000 (CONT'D)
--------------------------------------------------------------------------------
demand within Japan and the accelerating usage of Internet and wireless
communications globally. We also maintained a large position in the
financial-services sector, where we believe a number of companies stand to gain
from Japan's ongoing embrace of equity investing.
Looking out over 2001 and beyond, we believe certain trends could help
Japan's market right itself and resume an upward if volatile path. One factor we
view as especially encouraging is the growth of information-technology ("IT")
expenditures in Japan. We believe this will be the true engine pulling the
economy forward, as opposed to government spending programs, which can provide
temporary benefits while adding to long-term debt. Based on our contact with
Japanese managements, we believe that the commitment to IT capital is
increasing, as well as broadening to include more and more medium and
small-sized companies.
There were some interesting developments in the period on the IT and
"E-Japan" front. In September, Japan's government launched a potentially very
important initiative to spur IT-fueled productivity improvements. While aspects
of the package are dubious, it contains in our view a number of useful measures.
These include incentives for learning computer skills and the introduction, in
2001, of required computer studies in Japanese schools. We expect to see a
significant rise in computer sales and Internet usage as a result of these
developments, to the benefit of a number of small Japanese companies. The plan
also has a compelling deregulation component, one that should facilitate the
growth of business-related e-mail while further liberating Japan's domestic
telecommunications market.
We also see grounds for optimism regarding Japan's economy. While projected
Gross Domestic Product ("GDP") growth here is hardly robust, we believe that a
steady recovery is on track, one that will particularly benefit Japan's
domestically oriented small companies over time. Recent encouraging data include
better-than-expected GDP numbers, good industrial production growth and the
ongoing creation of new jobs. And recent TANKAN surveys (conducted by the Bank
of Japan) indicate that Japanese manufacturers are becoming more optimistic.
To be sure, certain factors could continue to weigh on Japan's equity market
over the near-to-intermediate term. Investors could remain concerned that
Japan's economic rebound will prove temporary. And worries over Japan's large
debt burden could keep investors at bay, especially in the wake of the Bank of
Japan's surprise interest-rate hike in August (our view is that sustained
economic growth will ease Japan's debt load over the next five years, as it has
in the U.S. and Europe).
6
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WARBURG PINCUS JAPAN SMALL COMPANY FUND
ANNUAL INVESTMENT ADVISER'S REPORT -- OCTOBER 31, 2000 (CONT'D)
--------------------------------------------------------------------------------
But all told, we believe that investor attention to Japan could well increase
heading into next year, especially given the compelling valuations stocks here
currently offer. Most Japanese equities were well below their historic highs
even at the end of last year's strong rally. Now, many are trading at very
compelling prices, especially as measured by price-to-book values. This could
draw renewed investor interest in Japan, provided that the overall mix of
economic and profit news remains encouraging.
Exactly what sparks a revival in Japanese stocks, including the market's
small-cap securities, is of course unknown. But when investors, especially
foreign (i.e., non-Japanese) investors, do become more positive on Japan as an
asset class the potential impact could be dramatic. Japan is after all the
world's second-largest economy, and in better times would account for a much
larger, proportionate share of global portfolios than it does at present. As
ever, we will continue in our attempt to add value over the long term via
careful company selection.
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.
7
<PAGE>
WARBURG PINCUS JAPAN SMALL COMPANY FUND
ANNUAL INVESTMENT ADVISER'S REPORT -- OCTOBER 31, 2000 (CONT'D)
--------------------------------------------------------------------------------
GROWTH OF $10,000 INVESTED IN COMMON CLASS SHARES OF WARBURG PINCUS JAPAN SMALL
COMPANY FUND SINCE INCEPTION AS OF OCTOBER 31, 2000
The graph below illustrates a hypothetical investment of $10,000 in Common
Class shares of Warburg Pincus Japan Small Company Fund (the "Fund") from
September 30, 1994 (inception) to October 31, 2000, compared to the JASDAQ
Over-The Counter-Composite Index ("JASDAQ Index")1 and the Morgan Stanley
Capital International Japan Small Company Index ("MSCI")2 for the same time
period. Past performance does not predict future results.
[GRAPHIC OMITTED]
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
AVERAGE ANNUAL TOTAL RETURNS FOR PERIODS ENDED 10/31/00 (COMMON CLASS SHARES)
1 year 3 year 5 year Since Inception (9/30/94)
(41.53)% 20.42% 5.23% 2.65%
Fund JASDAQ(US$) MSCI JASDAG(YEN)
9/30/94 $10,000.00 $10,000.00 $10,000.00 $10,000.00
Oct-94 $ 9,850.00 $ 9,901.00 $10,163.60 $ 9,698.90
Nov-94 $ 9,160.00 $ 9,126.64 $ 9,334.35 $ 9,124.92
Dec-94 $ 9,630.00 $ 9,472.36 $ 9,621.94 $ 9,548.50
Jan-95 $ 9,010.00 $ 8,669.48 $ 9,275.36 $ 8,666.98
Feb-95 $ 8,620.00 $ 8,030.11 $ 8,544.65 $ 7,845.09
Mar-95 $ 7,870.00 $ 8,419.25 $ 8,988.46 $ 7,349.44
Apr-95 $ 7,850.00 $ 8,603.88 $ 9,217.03 $ 7,304.02
May-95 $ 7,320.00 $ 8,170.25 $ 8,270.44 $ 6,987.24
Jun-95 $ 7,300.00 $ 7,949.73 $ 7,781.08 $ 6,819.48
Jul-95 $ 8,290.00 $ 8,364.87 $ 8,557.40 $ 7,440.73
Aug-95 $ 9,010.00 $ 8,079.96 $ 8,590.26 $ 7,996.11
Sep-95 $ 9,080.00 $ 8,327.77 $ 8,453.50 $ 8,300.44
Oct-95 $ 9,090.00 $ 7,930.04 $ 8,127.03 $ 8,192.29
Nov-95 $ 9,190.00 $ 7,881.82 $ 8,603.68 $ 8,085.71
Dec-95 $ 9,525.18 $ 8,149.49 $ 9,014.59 $ 8,493.63
Jan-96 $ 9,660.81 $ 8,060.33 $ 9,197.59 $ 8,706.99
Feb-96 $ 9,201.76 $ 8,046.79 $ 8,995.15 $ 8,550.18
Mar-96 $ 9,358.26 $ 8,411.15 $ 9,249.89 $ 9,075.76
Apr-96 $ 9,838.17 $ 9,085.30 $10,085.20 $ 9,615.40
May-96 $ 9,702.54 $ 8,783.04 $ 9,615.19 $ 9,593.57
Jun-96 $10,224.20 $ 8,875.96 $ 9,556.15 $ 9,836.77
Jul-96 $ 9,744.27 $ 8,597.17 $ 8,799.30 $ 9,270.47
Aug-96 $ 9,441.72 $ 8,063.11 $ 8,479.54 $ 8,846.99
Sep-96 $ 9,326.96 $ 7,773.16 $ 8,485.56 $ 8,746.67
Oct-96 $ 8,836.61 $ 7,146.10 $ 7,884.87 $ 8,211.72
Nov-96 $ 8,440.17 $ 6,729.48 $ 7,676.39 $ 7,737.99
Dec-96 $ 8,278.12 $ 6,298.12 $ 6,703.71 $ 7,386.61
Jan-97 $ 7,571.58 $ 5,650.05 $ 6,019.94 $ 6,930.11
Feb-97 $ 7,318.49 $ 5,549.70 $ 5,974.36 $ 6,768.57
Mar-97 $ 7,181.40 $ 5,159.39 $ 5,444.08 $ 6,454.85
Apr-97 $ 7,445.03 $ 5,148.30 $ 5,330.79 $ 6,602.34
May-97 $ 8,193.75 $ 5,836.16 $ 6,351.74 $ 6,872.18
Jun-97 $ 8,330.84 $ 6,081.57 $ 6,499.86 $ 7,032.23
Jul-97 $ 8,499.57 $ 5,421.05 $ 5,804.05 $ 6,484.70
Aug-97 $ 7,571.42 $ 4,744.40 $ 5,111.57 $ 5,766.13
Sep-97 $ 7,244.33 $ 4,320.58 $ 4,264.23 $ 5,270.36
Oct-97 $ 6,716.94 $ 4,235.12 $ 4,392.28 $ 5,146.46
Nov-97 $ 6,315.94 $ 3,480.42 $ 3,601.89 $ 4,487.50
Dec-97 $ 6,165.62 $ 3,305.70 $ 2,979.77 $ 4,343.18
Jan-98 $ 6,758.76 $ 3,904.37 $ 3,834.49 $ 5,002.18
Feb-98 $ 6,608.04 $ 3,854.82 $ 4,124.07 $ 4,920.64
Mar-98 $ 6,284.90 $ 3,443.36 $ 3,718.51 $ 4,639.82
Apr-98 $ 6,651.31 $ 3,445.84 $ 3,571.03 $ 4,600.66
May-98 $ 6,661.96 $ 3,290.95 $ 3,429.58 $ 4,606.92
Jun-98 $ 6,801.86 $ 3,179.38 $ 3,476.50 $ 4,457.84
Jul-98 $ 7,351.45 $ 3,212.86 $ 3,488.56 $ 4,686.93
Aug-98 $ 6,672.17 $ 2,932.38 $ 3,128.58 $ 4,183.08
Sep-98 $ 6,122.39 $ 2,849.33 $ 2,924.78 $ 3,919.46
Oct-98 $ 6,003.61 $ 3,167.86 $ 3,358.50 $ 3,729.60
Nov-98 $ 6,725.85 $ 3,487.62 $ 3,648.78 $ 4,332.12
Dec-98 $ 6,952.51 $ 3,887.31 $ 3,690.99 $ 4,430.98
Jan-99 $ 7,545.56 $ 4,047.81 $ 3,766.73 $ 4,755.77
Feb-99 $ 8,149.20 $ 4,513.84 $ 3,725.18 $ 5,411.64
Mar-99 $ 9,442.48 $ 5,351.65 $ 4,202.49 $ 6,404.84
Apr-99 $10,843.70 $ 6,061.82 $ 4,509.53 $ 7,311.76
May-99 $10,412.20 $ 5,444.60 $ 4,207.88 $ 6,701.38
Jun-99 $13,914.80 $ 7,462.32 $ 4,741.48 $ 9,127.14
Jul-99 $15,672.20 $ 8,312.27 $ 5,008.43 $ 9,640.18
Aug-99 $17,062.40 $ 9,439.42 $ 5,257.85 $10,459.20
Sep-99 $19,077.40 $10,677.90 $ 5,364.06 $11,488.50
Oct-99 $20,058.00 $11,555.60 $ 5,338.31 $12,186.80
Nov-99 $25,263.10 $13,557.00 $ 5,302.54 $13,999.10
Dec-99 $29,800.30 $14,756.70 $ 4,913.76 $15,263.70
Jan-00 $26,516.30 $15,057.90 $ 4,988.16 $16,288.40
Feb-00 $29,799.10 $17,770.70 $ 4,917.77 $19,727.70
Mar-00 $24,259.40 $16,491.70 $ 5,318.67 $17,093.20
Apr-00 $19,463.30 $14,391.00 $ 4,750.21 $15,717.20
May-00 $15,899.60 $12,358.60 $ 4,930.53 $13,448.50
Jun-00 $17,001.40 $13,258.30 $ 5,652.51 $14,176.60
Jul-00 $13,890.20 $10,194.70 $ 4,839.90 $11,289.50
Aug-00 $16,582.10 $12,095.80 $ 5,378.73 $13,035.90
Sep-00 $14,371.70 $10,779.70 $ 4,994.20 $11,772.80
Oct-00 $11,727.30 $ 8,967.59 $ 4,496.58 $ 9,896.24
FUND
-------
1 Year Total Return (9/30/99 to 9/30/00) ....................... (24.67)%
3 Year Average Annual Total Return (9/30/97 to 9/30/00) ........ 25.66%
Average Annual Total Return Since Inception
(9/30/94 to 9/30/00) ........................................ 6.23%
---------------------------
1 The JASDAQ Over-The-Counter Composite Index is an unmanaged index (with no
defined investment objective) composed of stocks traded over-the-counter in
Japan.
2 The Morgan Stanley Capital International Japan Small Company Index is composed
of small-cap Japanese stocks.
8
<PAGE>
WARBURG PINCUS JAPAN GROWTH FUND
SCHEDULE OF INVESTMENTS
October 31, 2000
--------------------------------------------------------------------------------
NUMBER
OF
SHARES VALUE
-------- ------
COMMON STOCKS (95.3%)
COMMERCIAL SERVICES & SUPPLIES (3.8%)
Trans Cosmos, Inc. 94,500 $ 6,828,743
------------
COMMUNICATIONS EQUIPMENT (1.6%)
Yozan, Inc.1 60 2,857,502
------------
COMPUTERS & PERIPHERALS (3.6%)
Obic Co., Ltd. 19,400 6,485,247
------------
DIVERSIFIED FINANCIALS (19.6%)
Daiwa Securities Group, Inc. 808,000 8,946,838
Nomura Securities Co., Ltd. 583,000 12,360,939
Orix Corp. 104,700 10,979,539
Shohkoh Fund & Co., Ltd. 35,940 2,949,294
------------
35,236,610
------------
DIVERSIFIED TELECOMMUNICATIONS SERVICES (1.7%)
Japan Telecom Co., Ltd. 150 3,022,358
------------
ELECTRICAL EQUIPMENT (4.2%)
Furukawa Electric Co., Ltd. 287,000 7,543,896
------------
HEALTH CARE EQUIPMENT & SUPPLIES (7.2%)
Hoya Corp. 157,000 12,969,945
------------
HOUSEHOLD DURABLES (5.8%)
Sony Corp. 129,200 10,318,366
------------
INTERNET SOFTWARE & SERVICES (6.2%)
Internet Intitiative Japan, Inc. ADR1 132,700 3,317,500
Softbank Corp. 131,400 7,882,584
------------
11,200,084
------------
IT CONSULTING & SERVICES (4.7%)
Fujitsu Support & Service, Inc. 70,000 8,501,068
------------
MEDIA (1.0%)
Kadokawa Shoten Publishing Co., Ltd. 26,000 852,488
Kadokawa Shoten Publishing Co., Ltd. New1 26,000 857,251
------------
1,709,739
------------
SEMICONDUCTOR EQUIPMENT & PRODUCTS (19.1%)
Disco Corp. 97,500 9,188,654
Rohm Co., Ltd. 44,000 11,086,008
Tokyo Electronics, Ltd. 115,000 8,994,720
Tokyo Seimitsu Co., Ltd. 70,000 4,936,518
------------
34,205,900
------------
SOFTWARE (7.8%)
Konami Co., Ltd. 165,500 13,944,975
------------
See Accompanying Notes to Financial Statements.
9
<PAGE>
WARBURG PINCUS JAPAN GROWTH FUND
SCHEDULE OF INVESTMENTS (CONT'D)
October 31, 2000
--------------------------------------------------------------------------------
NUMBER
OF
SHARES VALUE
-------- ------
COMMON STOCKS (CONT'D)
TECHNOLOGY HARDWARE & EQUIPMENT (2.1%)
Seikoh Giken Co., Ltd. 11,700 $ 3,739,756
------------
WIRELESS TELECOMMUNICATIONS SERVICES (6.9%)
NTT DoCoMo, Inc. 500 12,318,398
------------
TOTAL COMMON STOCKS (Cost $151,095,963) 170,882,587
------------
TOTAL INVESTMENTS AT VALUE (95.3%) (Cost $151,095,963 2) 170,882,587
OTHER ASSETS IN EXCESS OF LIABILITIES (4.7%) 8,451,474
------------
NET ASSETS (100.0%) $179,334,061
============
INVESTMENT ABBREVIATIONS
ADR = American Depository Receipt
--------------------------------------------------------------------------------
1 Non-income producing security.
2 Cost for federal income tax purposes is $151,184,296.
See Accompanying Notes to Financial Statements.
10
<PAGE>
WARBURG PINCUS JAPAN SMALL COMPANY FUND
SCHEDULE OF INVESTMENTS
October 31, 2000
--------------------------------------------------------------------------------
NUMBER
OF
SHARES VALUE
-------- ------
COMMON STOCKS (94.1%)
CAPITAL GOODS (3.5%)
Funai Electric Co., Ltd. 84,000 $ 6,339,258
------------
COMMERCIAL SERVICES & SUPPLIES (5.1%)
Trans Cosmos, Inc. 125,400 9,061,633
------------
COMMUNICATIONS EQUIPMENT (1.6%)
Yozan, Inc.1 60 2,857,502
------------
COMPUTERS & PERIPHERALS (5.3%)
Obic Co., Ltd. 28,400 9,493,867
------------
DIVERSIFIED FINANCIALS (8.2%)
Daiwa Securities Group, Inc. 922,000 10,209,140
Shohkoh Fund & Co., Ltd. 55,330 4,540,468
------------
14,749,608
------------
ELECTRICAL EQUIPMENT (12.9%)
Megachips Corp. 220,000 8,643,943
Furukawa Electric Co., Ltd. 555,000 14,588,371
------------
23,232,314
------------
ELECTRONIC EQUIPMENT & INSTRUMENTS (1.1%)
Seikoh Giken Co., Ltd. 6,400 2,045,678
------------
HOUSEHOLD DURABLES (6.0%)
Sony Corp. 136,000 10,861,438
------------
INTERNET SOFTWARE & SERVICES (8.4%)
Internet Intitiative Japan, Inc. ADR1 242,900 6,072,500
Softbank Corp. 150,500 9,028,378
------------
15,100,878
------------
IT CONSULTING & SERVICES (5.4%)
Fujitsu Support & Service, Inc. 80,000 9,715,506
------------
MEDIA (1.8%)
Kadokawa Shoten Publishing Co., Ltd. 48,000 1,573,824
Kadokawa Shoten Publishing Co., Ltd. New1 48,000 1,582,616
------------
3,156,440
------------
REAL ESTATE (0.0%)
Goldcrest Co., Ltd. 300 28,108
------------
SEMICONDUCTOR EQUIPMENT & PRODUCTS (15.0%)
Disco Corp. 112,600 10,611,718
Tokyo Electronics, Ltd. 140,000 10,950,094
Tokyo Seimitsu Co., Ltd. 76,400 5,387,856
------------
26,949,668
------------
SOFTWARE (9.5%)
Konami Co., Ltd. 203,000 17,104,713
------------
See Accompanying Notes to Financial Statements.
11
<PAGE>
WARBURG PINCUS JAPAN SMALL COMPANY FUND
SCHEDULE OF INVESTMENTS (CONT'D)
October 31, 2000
--------------------------------------------------------------------------------
NUMBER
OF
SHARES VALUE
-------- ------
COMMON STOCKS (CONT'D)
SOFTWARE & SERVICES (2.2%)
Trend Micro, Inc.1 41,500 $ 3,914,869
------------
SPECIALTY RETAIL (1.0%)
Jac Holdings Co., Ltd. 90,700 1,752,757
------------
WIRELESS TELECOMMUNICATIONS SERVICES (7.1%)
NTT Mobile Communications Network, Inc. 515 12,687,951
------------
TOTAL COMMON STOCKS (Cost $139,032,388) 169,052,188
------------
TOTAL INVESTMENTS AT VALUE (94.1%) (Cost $139,032,388 2) 169,052,188
OTHER ASSETS IN EXCESS OF LIABILITIES (5.9%) 10,676,608
------------
NET ASSETS (100.0%) $179,728,796
============
INVESTMENT ABBREVIATIONS
ADR = American Depository Receipt
--------------------------------------------------------------------------------
1 Non-income producing security.
2 Cost for federal income tax purposes is $139,305,426.
See Accompanying Notes to Financial Statements.
12
<PAGE>
WARBURG PINCUS JAPAN FUNDS
STATEMENTS OF ASSETS AND LIABILITIES
October 31, 2000
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
JAPAN GROWTH JAPAN SMALL
FUND COMPANY FUND
------------ ------------
<S> <C> <C>
ASSETS
Investments at value (Cost $151,095,963 and
$139,032,388, respectively) $170,882,587 $169,052,188
Cash 32,169 1,064
Receivable for investments sold 10,098,626 13,574,829
Receivable for fund shares sold 5,200,284 3,732,375
Dividends and interest receivable 202,955 195,560
Prepaid expenses 98,814 72,853
------------ ------------
Total Assets 186,515,435 186,628,869
------------ ------------
LIABILITIES
Advisory fee payable 22,191 236
Administrative service fee payable 17,712 18,522
Directors fees payable 11,582 13,396
Loan payable 6,290,000 5,866,000
Payable for fund shares redeemed 615,617 546,113
Distribution fees payable 54,693 52,353
Accrued expenses payable 169,579 403,453
------------ ------------
Total Liabilities $ 7,181,374 $ 6,900,073
------------ ------------
NET ASSETS
Capital stock, $0.001 par value 15,546 37,979
Paid-in capital 132,408,255 99,904,025
Accumulated net realized gain from investments and
foreign currency related transactions 27,153,651 49,806,884
Net unrealized appreciation from investments and
foreign currency related transactions 19,756,609 29,979,908
------------ ------------
Net Assets $179,334,061 $179,728,796
============ ============
COMMON SHARES
Net assets $177,080,299 $177,991,517
Shares outstanding 15,348,229 36,492,499
------------ ------------
Net asset value, offering price and redemption
price per share $ 11.54 $ 4.88
============ ============
ADVISOR SHARES
Net assets $ 2,253,762 $ 1,737,279
Shares outstanding 197,384 355,482
------------ ------------
Net asset value, offering price and redemption
price per share $ 11.42 $ 4.89
============ ============
</TABLE>
See Accompanying Notes to Financial Statements.
13
<PAGE>
WARBURG PINCUS JAPAN FUNDS
STATEMENTS OF OPERATIONS
For the Year Ended October 31, 2000
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
JAPAN GROWTH JAPAN SMALL
FUND COMPANY FUND
------------- -------------
<S> <C> <C>
INVESTMENT INCOME:
Dividends $ 1,375,881 $ 1,475,912
Interest 430,979 336,617
Foreign Taxes Withheld (206,382) (221,387)
------------- -------------
Total investment income 1,600,478 1,591,142
------------- -------------
EXPENSES:
Investment advisory fees 5,839,311 7,327,621
Administrative fees 961,581 1,154,423
Interest expense 1,730,474 1,732,108
Shareholder servicing/distribution fees 1,180,452 1,476,771
Transfer agent fees 456,881 812,841
Custodian/Sub-custodian fees 214,814 290,431
Printing fees 163,488 223,316
Registration fees 127,299 68,110
Legal fees 56,783 61,095
Audit fees 16,550 18,400
Directors fees 11,582 13,396
Insurance expense 4,512 4,887
Miscellaneous expenses 15,703 22,269
------------- -------------
10,779,430 13,205,668
Less: fees waived and transfer agent offsets (2,591,972) (2,935,944)
------------- -------------
Total expenses 8,187,458 10,269,724
------------- -------------
Net investment loss (6,586,980) (8,678,582)
------------- -------------
NET REALIZED AND UNREALIZED GAIN (LOSS) FROM
INVESTMENTS AND FOREIGN CURRENCY TRANSACTIONS:
Net realized gain/(loss) from:
Investments 99,778,442 242,167,808
Foreign currency forward transactions (14,594,802) (28,828,151)
Other foreign exchange transactions 988,999 1,907,917
------------- -------------
86,172,639 215,247,574
------------- -------------
Net change in unrealized appreciation/(depreciation) from:
Investments (166,472,399) (291,119,161)
Translation of assets and liabilities in foreign currencies 1,894,177 4,811,215
------------- -------------
(164,578,222) (286,307,946)
------------- -------------
Net loss on investments and foreign currency transactions (78,405,583) (71,060,372)
------------- -------------
Net decrease in net assets resulting from operations $ (84,992,563) $ (79,738,954)
============= =============
</TABLE>
See Accompanying Notes to Financial Statements.
14
<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,
------------------------------------ --------------------------------------
2000 1999 2000 1999
--------------- --------------- ---------------- ----------------
<S> <C> <C> <C> <C>
FROM OPERATIONS:
Net investment loss $ (6,586,980) $ (2,173,969) $ (8,678,582) $ (3,594,635)
Net realized gain from investments
and foreign currency related transactions 86,172,639 7,953,641 215,247,574 39,405,017
Net change in unrealized appreciation
(depreciation) from investments and
foreign currency related translations (164,578,222) 186,680,181 (286,307,946) 321,862,663
--------------- --------------- --------------- ---------------
Net increase (decrease) in net assets
resulting from operations (84,992,563) 192,459,853 (79,738,954) 357,673,045
--------------- --------------- --------------- ---------------
FROM DISTRIBUTIONS:
Distributions from net realized gains
Common Class shares (54,535,191) 0 (160,439,960) 0
Advisor Class shares (765,619) 0 (1,251,909) 0
--------------- --------------- --------------- ---------------
Net decrease in net assets from
distributions (55,300,810) 0 (161,691,869) 0
--------------- --------------- --------------- ---------------
FROM CAPITAL SHARE TRANSACTIONS:
Proceeds from sale of shares 3,501,145,734 1,406,117,931 1,461,402,087 2,308,528,324
Reinvestment of distributions 51,303,038 0 150,012,156 0
Net asset value of shares redeemed,
net of redemption fees (3,761,685,250)1 (1,110,254,065) (2,048,946,583)2 (1,844,809,099)
--------------- --------------- --------------- ---------------
Net increase (decrease) in net assets
from capital share transactions (209,236,478) 295,863,866 (437,532,340) 463,719,225
--------------- --------------- --------------- ---------------
Net increase (decrease) in net assets (349,529,851) 488,323,719 (678,963,163) 821,392,270
NET ASSETS:
Beginning of year 528,863,912 40,540,193 858,691,959 37,299,689
--------------- --------------- --------------- ---------------
End of year $ 179,334,061 $ 528,863,912 $ 179,728,796 $ 858,691,959
=============== =============== =============== ===============
<FN>
--------------------------------------------------------------------------------
1 Includes $1,346,475 of redemption fees.
2 Includes $6,727,130 of redemption fees.
</FN>
</TABLE>
See Accompanying Notes to Financial Statements.
15
<PAGE>
WARBURG PINCUS JAPAN GROWTH FUND
FINANCIAL HIGHLIGHTS
(For a Common Share of the Fund Outstanding Throughout Each Period)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
2000 1999 1998 1997 1996 1
-------- -------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
PER-SHARE DATA
Net asset value, beginning of period $ 24.26 $ 8.59 $ 9.74 $ 9.85 $ 10.00
-------- -------- ------- ------- -------
INVESTMENT ACTIVITIES:
Net investment loss (0.42) (0.10) (0.07)2 (0.07) (0.06)
Net gains (losses) from investments and
foreign currency related transactions
(both realized and unrealized) (8.64) 15.77 (1.08) 0.21 (0.09)
-------- -------- ------- ------- -------
Total from investment activities (9.06) 15.67 (1.15) 0.14 (0.15)
-------- -------- ------- ------- -------
LESS DIVIDENDS AND DISTRIBUTIONS:
Dividends from net investment income 0.00 0.00 0.00 (0.20) 0.00
Distributions from net realized gains (3.75) 0.00 0.00 0.00 0.00
Distributions in excess of net
realized gains 0.00 0.00 0.00 (0.05) 0.00
-------- -------- ------- ------- -------
Total dividends and distributions (3.75) 0.00 0.00 (0.25) 0.00
-------- -------- ------- ------- -------
REDEMPTION FEES: 0.09 0.00 0.00 0.00 0.00
-------- -------- ------- ------- -------
NET ASSET VALUE, END OF PERIOD $ 11.54 $ 24.26 $ 8.59 $ 9.74 $ 9.85
======== ======== ======= ======= =======
Total return (40.04)% 182.42% (11.81)% 1.47% (1.50)%3
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000s omitted) $177,080 $525,489 $40,519 $24,954 $20,157
Ratio of expenses to average net assets 5 1.77% 1.76% 1.75% 1.75% 1.76%4
Ratio of net investment loss to average
net assets (1.41)% (1.32)% (.76)% (1.03)% (1.03)%4
Decrease reflected in above operating expense
ratios due to waivers/reimbursements 0.53% 0.45% 0.53% 0.81% 1.79%4
Portfolio turnover rate 117.59% 171.12% 75.82% 93.84% 51.72%
<FN>
--------------------------------------------------------------------------------
1 For the period December 29, 1995 (commencement of operations) through October
31, 1996.
2 Per share information is calculated using the average shares outstanding
method.
3 Non-annualized.
4 Annualized.
5 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' expense ratio by .02% for the year ended October 31, 2000
and .01%, .00%, .00%, and .01% for the years ending October 31, 1999, 1998,
1997 and for the period ending October 31, 1996, respectively. The Common
Class shares' operating expense ratios after reflecting these arrangements
were 1.75% for each of the years ended October 31, 2000, 1999, 1998, 1997 and
for the period ending October 31, 1996.
</FN>
</TABLE>
See Accompanying Notes to Financial Statements.
16
<PAGE>
WARBURG PINCUS JAPAN SMALL COMPANY FUND
FINANCIAL HIGHLIGHTS
(For a Common Share of the Fund Outstanding Throughout Each Year)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
2000 1999 1998 1997 1996
-------- -------- ------- ------- --------
<S> <C> <C> <C> <C> <C>
PER-SHARE DATA
Net asset value, beginning of year $ 18.61 $ 5.57 $ 6.37 $ 8.47 $ 9.09
-------- -------- ------- ------- --------
INVESTMENT ACTIVITIES:
Net investment loss (0.24) (0.08) (0.01) (1.22) (0.23)
Net gains (losses) from investments and
foreign currency related transactions
(both realized and unrealized) (5.74) 13.12 (0.67) (0.79) (0.01)
-------- -------- ------- ------- --------
Total from investment activities (5.98) 13.04 (0.68) (2.01) (0.24)
-------- -------- ------- ------- --------
LESS DIVIDENDS AND DISTRIBUTIONS:
Dividends from net investment income 0.00 0.00 0.00 0.00 (0.38)
Distributions from net realized gains (7.93) 0.00 (0.07) (0.09) 0.00
Return of capital 0.00 0.00 (0.05) 0.00 0.00
-------- -------- ------- ------- --------
Total dividends and distributions (7.93) 0.00 (0.12) (0.09) (0.38)
-------- -------- ------- ------- --------
REDEMPTION FEES: 0.18 0.00 0.00 0.00 0.00
-------- -------- ------- ------- --------
NET ASSET VALUE, END OF YEAR $ 4.88 $ 18.61 $ 5.57 $ 6.37 $ 8.47
======== ======== ======= ======= ========
Total return (41.53)% 234.11% (10.61)% (23.98)% (2.79)%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of year
(000s omitted) $177,992 $855,282 $37,299 $41,627 $154,460
Ratio of expenses to
average net assets 1 1.77% 1.76% 1.75% 1.76% 1.76%
Ratio of net investment loss
to average net assets (1.48)% (1.25)% (0.84)% (1.10)% (1.22)%
Decrease reflected in above operating expense
ratios due to waivers/reimbursements (0.48)% 0.43% 0.81% 0.51% 0.29%
Portfolio turnover rate 46.02% 249.79% 112.68% 100.60% 95.23%
<FN>
--------------------------------------------------------------------------------
1 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' expense ratio by .02% for the year ended October 31, 2000
and .01%, .00%, .01% and .01% for the years ending October 31, 1999, 1998,
1997 and 1996, respectively. The Common Class shares' operating expense ratios
after reflecting these arrangements were 1.75% for each of the years ended
October 31, 2000, 1999, 1998, 1997 and 1996.
</FN>
</TABLE>
See Accompanying Notes to Financial Statements.
17
<PAGE>
WARBURG PINCUS JAPAN FUNDS
NOTES TO FINANCIAL STATEMENTS
October 31, 2000
--------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES
The Warburg Pincus Japan Growth Fund ("Japan Growth") and the Warburg Pincus
Japan Small Company Fund ("Japan Small Company"), each a Maryland Corporation,
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 shares.
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
most recent bid price and if there is no bid price available, at the most recent
ask 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
18
<PAGE>
WARBURG PINCUS JAPAN FUNDS
NOTES TO FINANCIAL STATEMENTS (CONT'D)
October 31, 2000
--------------------------------------------------------------------------------
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 invest in securities of foreign countries and governments
(primarily Japan) 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. 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.
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.
19
<PAGE>
WARBURG PINCUS JAPAN FUNDS
NOTES TO FINANCIAL STATEMENTS (CONT'D)
October 31, 2000
--------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES -- (CONT'D)
Pursuant to an exemptive order issued by the Securities and Exchange
Commission, each Fund, along with other Funds advised by Credit Suisse Asset
Management, LLC ("CSAM"), 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, 2000, 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, 2000, the Funds received credits or
reimbursements under this arrangement as follows:
FUND AMOUNT
---- --------
Japan Growth $106,355
Japan Small Company 136,890
2. INVESTMENT ADVISER, CO-ADMINISTRATORS AND DISTRIBUTOR
Pursuant to Investment Advisory Agreements, CSAM, an indirect, wholly-owned
subsidiary of Credit Suisse Group, serves as investment advisor for the Funds
described herein.
For it's investment advisory services, CSAM receives 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
20
<PAGE>
WARBURG PINCUS JAPAN FUNDS
NOTES TO FINANCIAL STATEMENTS (CONT'D)
October 31, 2000
--------------------------------------------------------------------------------
2. INVESTMENT ADVISER, CO-ADMINISTRATORS AND DISTRIBUTOR -- (CONT'D)
For the year ended October 31, 2000, investment advisory fees and voluntary
waivers were as follows:
GROSS NET
FUND ADVISORY FEE WAIVER ADVISORY FEE
---- -------------- ------------ --------------
Japan Growth $5,839,311 $(2,485,617) $3,353,694
Japan SmallCompany 7,327,621 (2,799,054) 4,528,567
Credit Suisse Asset Management Securities, Inc. ("CSAMSI"), an affiliate of
CSAM, serves as co-administrator to each Fund. PFPC, Inc. ("PFPC"), an indirect
subsidiary of PNC Financial Services Group, Inc., 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, 2000, administrative services fees earned
by CSAMSI were as follows:
FUND CO-ADMINISTRATION FEE
---- ---------------------
Japan Growth $467,145
Japan Small Company 586,210
For its administrative services through July 31, 2000, PFPC received 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
Next $250 million .10% of average daily net assets
Next $250 million .08% of average daily net assets
Over $750 million .05% of average daily net assets
Effective August 1, 2000, for its administrative services, PFPC receives a
fee, exclusive of out-of-pocket expenses, based on the following fee structure:
AVERAGE DAILY NET ASSETS ANNUAL RATE
---------------------- --------------------------------
First $500 million .11% of average daily net assets
Next $1 billion .09% of average daily net assets
Over $1.5 billion .07% of average daily net assets
For the year ended October 31, 2000, administrative services fees earned by
PFPC (including out of pocket expenses) were as follows:
FUND CO-ADMINISTRATION FEE
---- ---------------------------
Japan Growth $494,436
Japan Small Company 568,213
21
<PAGE>
WARBURG PINCUS JAPAN FUNDS
NOTES TO FINANCIAL STATEMENTS (CONT'D)
October 31, 2000
--------------------------------------------------------------------------------
2. INVESTMENT ADVISER, CO-ADMINISTRATORS AND DISTRIBUTOR -- (CONT'D)
CSAMSI served as distributor of each Fund's shares until January 1, 2000. On
January 1, 2000, Provident Distributors, Inc. ("PDI") replaced CSAMSI as
distributor to each Fund. On August 1, 2000, CSAMSI replaced PDI as distributor
to each Fund. No compensation was payable by any of the Funds to PDI for
distribution services. Pursuant to a distribution plan adopted by each Fund
pursuant to Rule 12b-1 under the 1940 Act, CSAMSI receives a fee for its
distribution services. This fee is calculated at an annual rate of .25% and .50%
of the average daily net assets of each Fund's Common Class shares and Advisor
Class shares, respectively. CSAMSI may use this fee to compensate service
organizations for shareholder servicing and distribution services. For the year
ended October 31, 2000, shareholder servicing and distribution fees were as
follows:
SHAREHOLDER SERVICING/
FUND DISTRIBUTION FEE
---- ----------------------------
Japan Growth
Common Class shares $1,155,608
Advisor Class shares 24,844
----------
$1,180,452
==========
Japan Small Company
Common Class shares $1,454,662
Advisor Class shares 22,109
----------
$1,476,771
==========
3. LINE OF CREDIT
The Funds, together with other Funds advised by CSAM, have established a $350
million committed and a $75 million uncommitted, 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 Fund 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 entire amount of
the Credit Facility which is 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, 2000 and during the year ended October 31,
2000, the Funds had the following borrowings under the Credit Facility:
22
<PAGE>
WARBURG PINCUS JAPAN FUNDS
NOTES TO FINANCIAL STATEMENTS (CONT'D)
October 31, 2000
--------------------------------------------------------------------------------
3. LINE OFCREDIT -- (CONT'D)
<TABLE>
<CAPTION>
AVERAGE MAXIMUM LOAN
AVERAGE DAILY INTEREST DAILY LOAN OUTSTANDING
FUND LOAN BALANCE RATE % OUTSTANDING AT 10/31/2000
---- -------------- -------- ------------- -------------
<S> <C> <C> <C> <C>
Japan Growth $24,795,389 6.496% $146,214,000 $6,290,000
Japan Small Company 22,812,254 6.490% 173,637,000 5,866,000
</TABLE>
4. INVESTMENTS IN SECURITIES
For the year ended October 31, 2000, purchases and sales of investment
securities (excluding short-term investments) were as follows:
FUND PURCHASES SALES
---- ------------ ------------
Japan Growth $550,661,413 $747,937,541
Japan Small Company 276,751,000 789,611,970
At October 31, 2000, 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) were as follows:
UNREALIZED UNREALIZED NET UNREALIZED
FUND APPRECIATION DEPRECIATION APPRECIATION
---- -------------- ------------ -------------
Japan Growth $45,558,560 $(25,860,269) $19,698,291
Japan Small Company 60,465,517 (30,718,755) 29,746,762
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.
At October 31, 2000, Japan Growth and Japan Small Company had no open forward
foreign currency contracts.
23
<PAGE>
WARBURG PINCUS JAPAN FUNDS
NOTES TO FINANCIAL STATEMENTS (CONT'D)
October 31, 2000
--------------------------------------------------------------------------------
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 one billion shares of each
Fund are designated Common Class shares and two billion shares of each Fund are
designated 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 FOR THE YEAR ENDED FOR THE YEAR ENDED FOR THE YEAR ENDED
OCTOBER 31, 2000 OCTOBER 31,1999 OCTOBER 31, 2000 OCTOBER 31,1999
------------------------------ ---------------------------- ---------------------- --------------------
SHARES VALUE SHARES VALUE SHARES VALUE SHARES VALUE
------------ --------------- ----------- --------------- -------- ------------ ------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Shares sold 129,177,753 $ 3,485,417,398 79,744,093 $ 1,401,756,841 547,543 $ 15,728,336 206,249 $ 4,361,090
Shares issued in
reinvestment
of dividends 3,470,068 50,768,758 0 0 37,405 534,280 0 0
Shares
repurchased (138,961,817) (3,747,382,096)1 (62,797,016) (1,108,802,345) (527,138) (14,303,154)1 (69,146) (1,451,720)
------------ --------------- ----------- --------------- -------- ------------ ------- -----------
Net increase
(decrease) (6,313,996) $ (211,195,940) 16,947,077 $ 292,954,496 57,810 $ 1,959,462 137,103 $ 2,909,370
============ =============== =========== =============== ======== ============ ======= ===========
</TABLE>
<TABLE>
<CAPTION>
JAPAN SMALL COMPANY
-------------------------------------------------------------------------------------------------------------
COMMON CLASS SHARES ADVISOR CLASS SHARES
-------------------------------------------------------------- ----------------------------------------------
FOR THE YEAR ENDED FOR THE YEAR ENDED FOR THE YEAR ENDED FOR THE YEAR ENDED
OCTOBER 31, 2000 OCTOBER 31,1999 OCTOBER 31, 2000 OCTOBER 31,1999
------------------------------ ----------------------------- ---------------------- --------------------
SHARES VALUE SHARES VALUE SHARES VALUE SHARES VALUE
------------ --------------- ----------- ---------------- -------- ------------ ------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Shares sold 71,833,920 $ 1,447,025,279 171,281,858 $ 2,303,201,289 709,514 $ 14,376,808 335,309 $ 5,327,035
Shares issued in
reinvestment
of dividends 22,943,279 148,923,879 0 0 167,189 1,088,277 0 0
Shares
repurchased (104,246,883) (2,034,403,932)2 (132,021,198) (1,842,311,404)(703,904) (14,542,651)2 (152,747) (2,497,695)
------------ --------------- ------------ --------------- ------- ------------ -------- -----------
Net increase
(decrease) (9,469,684) $ (438,454,774) 39,260,660 $ 460,889,885 172,799 $ 922,434 182,562 $ 2,829,340
============ =============== ============ =============== ======= ============ ======== ===========
<FN>
--------------------------------------------------------------------------------
1 Includes $1,342,097 and $4,378 of redemption fees for the Common Class shares
and Advisor Class shares respectively.
2 Includes $6,682,191 and $44,939 of redemption fees for the Common Class shares
and Advisor Class shares respectively.
</FN>
</TABLE>
24
<PAGE>
WARBURG PINCUS JAPAN FUNDS
NOTES TO FINANCIAL STATEMENTS (CONT'D)
October 31, 2000
--------------------------------------------------------------------------------
6. CAPITAL SHARE TRANSACTIONS (CONT'D)
On March 20, 2000, the Board of Directors of the Warburg Pincus Japan Growth
Fund approved the imposition of a redemption fee plan, whereby 2% of the value
of shares redeemed or exchanged less than six months from the date of purchase
will be charged to shareholders. The Board also approved on this date, a plan
whereby the redemption fee currently imposed by the Japan Small Company Fund was
increased from 1% to 2%. These fees apply only to shares purchased on or after
May 30, 2000 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, 2000, accumulated undistributed net investment loss and
accumulated net realized gain from investments and foreign currency related
transactions have been adjusted for current period permanent book/tax
differences. The Japan Growth and Japan Small Company Funds reclassified
($6,586,980) and ($8,678,582) respectively, from accumulated undistributed net
investment loss to accumulated net realized gain from investments and foreign
currency related transactions.
25
<PAGE>
WARBURG PINCUS JAPAN FUNDS
NOTES TO FINANCIAL STATEMENTS (CONT'D)
October 31, 2000
--------------------------------------------------------------------------------
7. OTHER FINANCIAL HIGHLIGHTS
Each Fund currently offers one other class of shares, the Advisor Class
shares, representing equal pro rata interests in each Fund. The financial
highlights for an Advisor Class share of each Fund are as follows:
<TABLE>
<CAPTION>
JAPAN GROWTH
---------------------------------------------------------------------
ADVISOR CLASS SHARES
---------------------------------------------------------------------
2000 1999 1998 1997 1996 1
-------- -------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
PER-SHARE DATA
NET ASSET VALUE, BEGINNING OF PERIOD $ 24.18 $ 8.71 $ 9.89 $ 9.83 $ 10.00
-------- -------- ------- ------- -------
INVESTMENT ACTIVITIES:
Net investment income (loss) (0.42) (0.06) (0.11)2 0.05 (0.09)
Net gains (losses) from investments
and foreign currency related transactions
(both realized and unrealized) (8.63) 15.53 (1.07) 0.01 (0.08)
-------- -------- ------- ------- -------
Total from investment activities (9.05) 15.47 (1.18) 0.06 (0.17)
-------- -------- ------- ------- -------
LESS DISTRIBUTIONS:
Distributions from net realized gains (3.73) 0.00 0.00 0.00 0.00
-------- -------- ------- ------- -------
Total distributions (3.73) 0.00 0.00 0.00 0.00
-------- -------- ------- ------- -------
REDEMPTION FEES: 0.02 0.00 0.00 0.00 0.00
-------- -------- ------- ------- -------
NET ASSET VALUE, END OF PERIOD: $ 11.42 $ 24.18 $ 8.71 $ 9.89 $ 9.83
======== ======== ======= ======= =======
Total return (40.47)% 177.61% (11.93)% 0.61% (1.70)%3
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (000s omitted) $ 2,254 $ 3,375 $ 22 $ 17 $ 1
Ratio of expenses to average net assets 5 2.02% 2.01% 2.00% 2.00% 2.00%4
Ratio of net loss to average net assets (1.66)% (1.55)% (1.11)% (1.42)% (1.08)%4
Decrease reflected in above
operating expense ratios
due to waivers/reimbursements 0.58% 0.54% 0.58% 7.25% 3.43%4
Portfolio turnover rate 117.59% 171.12% 75.82% 93.84% 51.72%3
<FN>
--------------------------------------------------------------------------------
1 For the period December 29, 1995 (commencement of operations) through October
31, 1996.
2 Per share information is calculated using the average shares outstanding
method.
3 Non annualized.
4 Annualized.
5 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' expense ratio by .02% for the year ended October 31,
2000 and .01%, .00%, .00% and .00% for the years ending October 31, 1999,
1998, 1997 and for the period ending October 31, 1996, respectively. The
Advisor Class shares' operating expense ratios after reflecting these
arrangements were 2.00% for each of the years ended October 31, 2000, 1999,
1998, 1997 and for the period ending October 31, 1996.
</FN>
</TABLE>
26
<PAGE>
WARBURG PINCUS JAPAN FUNDS
NOTES TO FINANCIAL STATEMENTS (CONT'D)
October 31, 2000
--------------------------------------------------------------------------------
7. OTHER FINANCIAL HIGHLIGHTS -- (CONT'D)
<TABLE>
<CAPTION>
JAPAN SMALL COMPANY
---------------------------------------------------------------------
ADVISOR CLASS SHARES
---------------------------------------------------------------------
2000 1999 1998 1997 1996
-------- -------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
PER-SHARE DATA
Net asset value, beginning of year $ 18.66 $ 5.57 $ 6.37 $ 8.45 $ 9.08
-------- -------- ------- ------- -------
INVESTMENT ACTIVITIES:
Net investment income (loss) (0.22) (0.06) (0.62) 0.35 (0.13)
Net gains (losses) from investments
and foreign currency related transactions
(both realized and unrealized) (5.81) 13.15 (0.06) (2.43) (0.14)
-------- -------- ------- ------- -------
Total from investment activities (6.03) 13.09 (0.68) (2.08) (0.27)
-------- -------- ------- ------- -------
LESS DIVIDENDS AND DISTRIBUTIONS:
Dividends from net investment income 0.00 0.00 0.00 0.00 (0.36)
Distributions from net realized gains (7.87) 0.00 (0.07) 0.00 0.00
Return of capital 0.00 0.00 (0.05) 0.00 0.00
-------- -------- ------- ------- -------
Total dividends and distributions (7.87) 0.00 (0.12) 0.00 (0.36)
-------- -------- ------- ------- -------
REDEMPTION FEES: 0.13 0.00 0.00 0.00 0.00
-------- -------- ------- ------- -------
NET ASSET VALUE, END OF YEAR: $ 4.89 $ 18.66 $ 5.57 $ 6.37 $ 8.45
======== ======== ======= ======= =======
Total return (41.99)% 235.01% (10.63)% (24.62)% (3.17)%
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of year (000s omitted) $ 1,737 $ 3,410 $ 1 $ 3 $ 1
Ratio of expenses to average net assets 1 2.02% 2.01% 2.01% 2.00% 2.01%
Ratio of net loss to average net assets 1.75% (1.53)% (1.18)% (1.10)% (1.57)%
Decrease reflected in above operating expense
ratios due to waivers/reimbursements 0.53% 0.51% 22.81% 6.69% 0.28%
Portfolio turnover rate 46.02% 249.79% 112.68% 100.60% 95.23%
<FN>
--------------------------------------------------------------------------------
1 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 .02% for the year ended October 31,
2000 and .01%, .01%, .00% and .01% for the years ending October 31, 1999,
1998, 1997 and 1996, respectively. TheAdvisor Class shares' operating expense
ratios after reflecting these arrangements were 2.00% for each of the years
ended October 31, 2000, 1999, 1998, 1997 and 1996.
</FN>
</TABLE>
27
<PAGE>
WARBURG PINCUS FUNDS
REPORT OF INDEPENDENT ACCOUNTANTS
--------------------------------------------------------------------------------
To the Board of Directors and Shareholders of
WARBURG, PINCUS JAPAN GROWTH FUND, INC.;
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 the Warburg, Pincus Japan Growth
Fund, Inc. and Warburg, Pincus Japan Small Company Fund, Inc., (all funds
collectively referred to as the "Funds") at October 31, 2000, 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 their
financial highlights for each of the years (or periods) presented, in conformity
with accounting principles generally accepted in the United States of America.
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 auditing standards generally accepted in the United States of America,
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, 2000 by correspondence with the
custodian and brokers, provide a reasonable basis for our opinion.
PRICEWATERHOUSECOOPERS LLP
Two Commerce Square
2001 Market Street
Philadelphia, Pennsylvania
December 15, 2000
28
<PAGE>
WARBURG PINCUS JAPAN FUNDS
SHAREHOLDER TAX INFORMATION (UNAUDITED)
--------------------------------------------------------------------------------
Each Fund is required by Subchapter M of the Internal Revenue Code of 1986,
as amended, to advise its shareholders within 60 days of each Fund's fiscal year
end as to the U.S. federal tax status of distributions received by the Fund's
shareholders in respect of such fiscal year. During the fiscal year ended
October 31, 2000, the following dividends and distributions per share were paid
by each of the Funds:
ORDINARY FOREIGN SOURCE FOREIGN TAXES
INCOME INCOME PAID OR WITHHELD
FUND PER SHARE PER SHARE PER SHARE
---- -------- ------------- -------------
PAYMENT DATE 12/07/99
Japan Growth Fund
Common shares $0.1148 $0.0048 $0.0028
Advisor shares 0.1148 0.0039 0.0028
Japan Small Company Fund
Common shares 0.0486 0.0069 0.0030
Advisor shares 0.0536 0.0067 0.0030
The above information was provided to calendar year taxpayers via Form
1099-DIV mailed in January of 2000.
ORDINARY LONG-TERM FOREIGN SOURCE FOREIGN TAXES
INCOME CAPITAL GAINS INCOME PAID OR WITHHELD
FUND PER SHARE PER SHARE PER SHARE PER SHARE
---- ---------- ----------- ------------- -------------
PAYMENT DATE 08/14/00 08/14/00
Japan Growth Fund
Common shares $3.0675 $0.5721 $0.0783 $0.0123
Advisor shares 3.0385 0.5721 0.0781 0.0123
Japan Small Company Fund
Common shares 7.8425 0.0344 0.0612 0.0097
Advisor shares 7.7850 0.0344 0.0607 0.0097
Because the fiscal year of the Funds is not a calendar year, another
notification will be sent with respect to calendar year 2000. The second
notification, which will reflect the amount to be used by calendar year
taxpayers on their U.S. federal income tax returns, will be made in conjunction
with form 1099-DIV and will be mailed in January 2001.
29
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[GRAPHIC OMITTED]
WARBURG PINCUS FUNDS
PART OF CREDIT SUISSE ASSET MANAGEMENT
P.O. BOX 9030, BOSTON, MA 02205-9030
800-WARBURG (800-927-2874) (BULLET) www.warburg.com
CREDIT SUISSE ASSET MANAGEMENT SECURITIES, INC., DISTRIBUTOR. WPJPN-2-1000