-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Pjy2sPlDC+2jLr2md79aG6G6tQkykzqwMtb4x8EOkcZv6ThwXNFViCXdDbGUHNBA KqT9WLXIUY6mGGN+pWSxzA== 0000935069-99-000228.txt : 19991103 0000935069-99-000228.hdr.sgml : 19991103 ACCESSION NUMBER: 0000935069-99-000228 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19990831 FILED AS OF DATE: 19991102 FILER: COMPANY DATA: COMPANY CONFORMED NAME: WARBURG PINCUS INTERNATIONAL GROWTH FUND INC CENTRAL INDEX KEY: 0001067466 STANDARD INDUSTRIAL CLASSIFICATION: [] STATE OF INCORPORATION: MD FISCAL YEAR END: 0831 FILING VALUES: FORM TYPE: N-30D SEC ACT: SEC FILE NUMBER: 811-08933 FILM NUMBER: 99739552 BUSINESS ADDRESS: STREET 1: 466 LEXINGTON AVENUE CITY: NEW YORK STATE: NY ZIP: 10017-3147 BUSINESS PHONE: 2127166081 MAIL ADDRESS: STREET 1: 466 LEXINGTON AVENUE CITY: NEW YORK STATE: NY ZIP: 10017-3147 FILER: COMPANY DATA: COMPANY CONFORMED NAME: WARBURG PINCUS EUROPEAN EQUITY FUND INC CENTRAL INDEX KEY: 0001067130 STANDARD INDUSTRIAL CLASSIFICATION: [] STATE OF INCORPORATION: MD FISCAL YEAR END: 0831 FILING VALUES: FORM TYPE: N-30D SEC ACT: SEC FILE NUMBER: 811-08903 FILM NUMBER: 99739553 BUSINESS ADDRESS: STREET 1: 466 LEXINGTON AVENUE CITY: NEW YORK STATE: NY ZIP: 10017-3147 BUSINESS PHONE: 2127166081 MAIL ADDRESS: STREET 1: 466 LEXINGTON AVENUE CITY: NEW YORK STATE: NY ZIP: 10017-3147 FILER: COMPANY DATA: COMPANY CONFORMED NAME: WARBURG PINCUS EMERGING MARKETS II FUND INC CENTRAL INDEX KEY: 0001067468 STANDARD INDUSTRIAL CLASSIFICATION: [] STATE OF INCORPORATION: MD FISCAL YEAR END: 0831 FILING VALUES: FORM TYPE: N-30D SEC ACT: SEC FILE NUMBER: 811-08937 FILM NUMBER: 99739554 BUSINESS ADDRESS: STREET 1: 466 LEXINGTON AVENUE CITY: NEW YORK STATE: NY ZIP: 10017-3147 BUSINESS PHONE: 2127166081 MAIL ADDRESS: STREET 1: 466 LEXINGTON AVENUE CITY: NEW YORK STATE: NY ZIP: 10017-3147 FILER: COMPANY DATA: COMPANY CONFORMED NAME: WARBURG PINCUS GLOBAL TELECOMMUNICATIONS FUND INC CENTRAL INDEX KEY: 0001067469 STANDARD INDUSTRIAL CLASSIFICATION: [] STATE OF INCORPORATION: MD FISCAL YEAR END: 0831 FILING VALUES: FORM TYPE: N-30D SEC ACT: SEC FILE NUMBER: 811-08935 FILM NUMBER: 99739555 BUSINESS ADDRESS: STREET 1: 466 LEXINGTON AVENUE CITY: NEW YORK STATE: NY ZIP: 10017-3147 BUSINESS PHONE: 2127166081 MAIL ADDRESS: STREET 1: 466 LEXINGTON AVENUE CITY: NEW YORK STATE: NY ZIP: 10017-3147 FILER: COMPANY DATA: COMPANY CONFORMED NAME: WARBURG PINCUS US CORE EQUITY FUND INC CENTRAL INDEX KEY: 0001067470 STANDARD INDUSTRIAL CLASSIFICATION: [] STATE OF INCORPORATION: MD FISCAL YEAR END: 0831 FILING VALUES: FORM TYPE: N-30D SEC ACT: SEC FILE NUMBER: 811-08919 FILM NUMBER: 99739556 BUSINESS ADDRESS: STREET 1: 466 LEXINGTON AVENUE CITY: NEW YORK STATE: NY ZIP: 10017-3147 BUSINESS PHONE: 2127166081 MAIL ADDRESS: STREET 1: 466 LEXINGTON AVENUE CITY: NEW YORK STATE: NY ZIP: 10017-3147 FILER: COMPANY DATA: COMPANY CONFORMED NAME: WARBURG PINCUS US CORE FIXED INCOME FUND INC CENTRAL INDEX KEY: 0001067471 STANDARD INDUSTRIAL CLASSIFICATION: [] STATE OF INCORPORATION: MD FISCAL YEAR END: 0831 FILING VALUES: FORM TYPE: N-30D SEC ACT: SEC FILE NUMBER: 811-08917 FILM NUMBER: 99739557 BUSINESS ADDRESS: STREET 1: 466 LEXINGTON AVENUE CITY: NEW YORK STATE: NY ZIP: 10017-3147 BUSINESS PHONE: 2127166081 MAIL ADDRESS: STREET 1: 466 LEXINGTON AVENUE CITY: NEW YORK STATE: NY ZIP: 10017-3147 FILER: COMPANY DATA: COMPANY CONFORMED NAME: WARBURG PINCUS STRATEGIC GLOBAL FIXED INCOME FUND INC CENTRAL INDEX KEY: 0001067473 STANDARD INDUSTRIAL CLASSIFICATION: [] STATE OF INCORPORATION: MD FISCAL YEAR END: 0831 FILING VALUES: FORM TYPE: N-30D SEC ACT: SEC FILE NUMBER: 811-08931 FILM NUMBER: 99739558 BUSINESS ADDRESS: STREET 1: 466 LEXINGTON AVENUE CITY: NEW YORK STATE: NY ZIP: 10017-3147 BUSINESS PHONE: 2127166081 MAIL ADDRESS: STREET 1: 466 LEXINGTON AVENUE CITY: NEW YORK STATE: NY ZIP: 10017-3147 FILER: COMPANY DATA: COMPANY CONFORMED NAME: WARBURG PINCUS HIGH YIELD FUND INC CENTRAL INDEX KEY: 0001067474 STANDARD INDUSTRIAL CLASSIFICATION: [] STATE OF INCORPORATION: MD FISCAL YEAR END: 0831 FILING VALUES: FORM TYPE: N-30D SEC ACT: SEC FILE NUMBER: 811-08927 FILM NUMBER: 99739559 BUSINESS ADDRESS: STREET 1: 466 LEXINGTON AVENUE CITY: NEW YORK STATE: NY ZIP: 10017-3147 BUSINESS PHONE: 2127166081 MAIL ADDRESS: STREET 1: 466 LEXINGTON AVENUE CITY: NEW YORK STATE: NY ZIP: 10017-3147 FILER: COMPANY DATA: COMPANY CONFORMED NAME: WARBURG PINCUS MUNICIPAL BOND FUND INC CENTRAL INDEX KEY: 0001067475 STANDARD INDUSTRIAL CLASSIFICATION: [] STATE OF INCORPORATION: MD FISCAL YEAR END: 0831 FILING VALUES: FORM TYPE: N-30D SEC ACT: SEC FILE NUMBER: 811-08923 FILM NUMBER: 99739560 BUSINESS ADDRESS: STREET 1: 466 LEXINGTON AVENUE CITY: NEW YORK STATE: NY ZIP: 10017-3147 BUSINESS PHONE: 2127166081 MAIL ADDRESS: STREET 1: 466 LEXINGTON AVENUE CITY: NEW YORK STATE: NY ZIP: 10017-3147 FILER: COMPANY DATA: COMPANY CONFORMED NAME: WARBURG PINCUS LONG SHORT MARKET NEUTRAL FUND INC CENTRAL INDEX KEY: 0001067476 STANDARD INDUSTRIAL CLASSIFICATION: [] STATE OF INCORPORATION: MD FISCAL YEAR END: 0831 FILING VALUES: FORM TYPE: N-30D SEC ACT: SEC FILE NUMBER: 811-08925 FILM NUMBER: 99739561 BUSINESS ADDRESS: STREET 1: 466 LEXINGTON AVENUE CITY: NEW YORK STATE: NY ZIP: 10017-3147 BUSINESS PHONE: 2127166081 MAIL ADDRESS: STREET 1: 466 LEXINGTON AVENUE CITY: NEW YORK STATE: NY ZIP: 10017-3147 FILER: COMPANY DATA: COMPANY CONFORMED NAME: WARBURG PINCUS LONG SHORT EQUITY FUND INC CENTRAL INDEX KEY: 0001067477 STANDARD INDUSTRIAL CLASSIFICATION: [] STATE OF INCORPORATION: MD FISCAL YEAR END: 0831 FILING VALUES: FORM TYPE: N-30D SEC ACT: SEC FILE NUMBER: 811-08929 FILM NUMBER: 99739562 BUSINESS ADDRESS: STREET 1: 466 LEXINGTON AVENUE CITY: NEW YORK STATE: NY ZIP: 10017-3147 BUSINESS PHONE: 2127166081 MAIL ADDRESS: STREET 1: 466 LEXINGTON AVENUE CITY: NEW YORK STATE: NY ZIP: 10017-3147 FILER: COMPANY DATA: COMPANY CONFORMED NAME: WARBURG PINCUS SELECT ECONOMIC VALUE EQUITY FUND INC CENTRAL INDEX KEY: 0001067479 STANDARD INDUSTRIAL CLASSIFICATION: [] STATE OF INCORPORATION: MD FISCAL YEAR END: 0831 FILING VALUES: FORM TYPE: N-30D SEC ACT: SEC FILE NUMBER: 811-08921 FILM NUMBER: 99739563 BUSINESS ADDRESS: STREET 1: 466 LEXINGTON AVENUE CITY: NEW YORK STATE: NY ZIP: 10017-3147 BUSINESS PHONE: 2127166081 MAIL ADDRESS: STREET 1: 466 LEXINGTON AVENUE CITY: NEW YORK STATE: NY ZIP: 10017-3147 N-30D 1 WARBURG PINCUS CSAM A.R. [GRAPHIC OMITTED] [GRAPHIC OMITTED] Warburg Pincus Funds Credit Suisse/Asset Management INTERNATIONAL GROWTH FUND EMERGING MARKETS II FUND EUROPEAN EQUITY FUND U.S. CORE EQUITY FUND GLOBAL TELECOMMUNICATIONS FUND SELECT ECONOMIC VALUE EQUITY FUND LONG-SHORT MARKET NEUTRAL FUND LONG-SHORT EQUITY FUND U.S. CORE FIXED INCOME FUND STRATEGIC GLOBAL FIXED INCOME FUND HIGH YIELD FUND MUNICIPAL BOND FUND AUGUST 31, 1999 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. Institutional shareholders may obtain additional copies by calling 800-222-8977 or by writing to Warburg Pincus Funds, P.O. Box 8500, Boston, MA 02266-8500. Common shareholders may obtain additional copies by calling 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, 466 Lexington Avenue,New York, NY 10017. Telephone: 800-888-6878. Warburg Pincus Funds is a division of Credit Suisse Asset Management Securities, LLC. FROM TIME TO TIME, THE FUNDS' INVESTMENT ADVISER AND CO-ADMINISTRATORS MAY WAIVE SOME FEES AND/OR REIMBURSE SOME EXPENSES, WITHOUT WHICH PERFORMANCE WOULD BE LOWER. WAIVERS AND/OR REIMBURSEMENTS ARE SUBJECT TO CHANGE. RETURNS ARE HISTORICAL AND INCLUDE CHANGE IN SHARE PRICE AND REINVESTMENT OF DIVIDENDS AND CAPITAL GAINS. PAST PERFORMANCE CANNOT GUARANTEE FUTURE RESULTS. RETURNS AND SHARE PRICE WILL FLUCTUATE, AND REDEMPTION VALUE MAY BE MORE OR LESS THAN ORIGINAL COST. THE VIEWS OF THE FUNDS' MANAGEMENT ARE AS OF THE DATE OF THE LETTERS AND PORTFOLIO HOLDINGS DESCRIBED IN THIS DOCUMENT ARE AS OF AUGUST 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) 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. WARBURG PINCUS INTERNATIONAL GROWTH FUND PORTFOLIO MANAGERS' LETTER September 15, 1999 Dear Shareholders: We are writing to report on the results of the Warburg Pincus International Growth Fund (the "Fund") for the fiscal year ended August 31, 1999. At August 31, 1999, the net asset value ("NAV") of the Fund's institutional shares was $23.47, compared to an NAV of $22.70 on August 31, 1998. As a result, the institutional shares' total return was 13.9% (assuming the reinvestment of dividends and distributions totaling $2.27 per share). By comparison, the MSCI EAFE Index ("EAFE Index") returned 26.0% during the same period. At August 31,1999, the NAV of the Fund's common shares was $23.25, compared to an NAV of $22.56 on August 31, 1998. As a result, the common shares' total return was 13.5% (assuming the reinvestment of dividends and distributions totaling $2.26 per share). By comparison, EAFE Index returned 26.0% during the same period. The Fund underperformed its EAFE benchmark primarily due to the effects of our exposure to Europe, Asia and Japan: (BULLET) EUROPE. Our sectoral positioning in Europe proved unsuccessful. We adopted a defensive orientation late in the third quarter of 1998, for instance, at a time when market sentiment was intensely negative. This included the elimination of most of our holdings in major European banks. The Fund was thus heavily underweight in the latter sector during the fourth quarter, when interest-rate-sensitive companies worldwide sharply rallied as global rates fell. Our overall approach of "growth at a reasonable price" detracted from performance in the first half of 1999, furthermore, when investor preferences shifted toward value-oriented cyclical sectors. (BULLET) ASIA. We remained prudently cautious about the ability of most Asian economies to bounce back from the severe macroeconomic downturn that struck the region in 1997 and 1998. As a result, we were largely absent from major Asian markets like Singapore and Hong Kong, both of which generated extraordinary returns during the fiscal year. (BULLET) JAPAN. In Japan, we emphasized large blue-chip exporters such as Sony, Canon, TDK and Honda, which we believed would benefit from a weakening yen and a relatively low exposure to the depressed domestic economy. This positioning hurt performance particularly in the fourth quarter of 1998, when many of these stocks experienced profit-taking as the yen began to strengthen and investors favored the shares of the large Japanese banks and other sectors that had previously lagged the domestic market. As other developments occur in the international equity markets or at Credit Suisse Asset Management, we will be sure to keep you informed. Meanwhile, if you have questions, please feel free to call upon us at any time. Sincerely yours, Credit Suisse Asset Management International Equities Management Team Steven D. Bleiberg, Managing Director Richard W. Watt, Managing Director Emily Alejos, Director Robert B. Hrabchak, Director Alan Zlatar, Vice President INTERNATIONAL INVESTING ENTAILS SPECIAL RISK CONSIDERATIONS, INCLUDING CURRENCY FLUCTUATIONS, LOWER LIQUIDITY, ECONOMIC AND POLITICAL RISKS, AND DIFFERENCES IN ACCOUNTING METHODS. 1 WARBURG PINCUS INTERNATIONAL GROWTH FUND PORTFOLIO MANAGERS' LETTER (CONCLUDED COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN THE WARBURG PINCUS INTERNATIONAL GROWTH INSTITUTIONAL SHARES AND THE MSCI EAFE INDEX 1 FROM INCEPTION (9/30/92) AND AT EACH QUARTER END. (UNAUDITED) [GRAPHIC OMITTED] EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC Warburg Pincus International Growth MSCI EAFE Institutional Shares Index 1 10/01/92 $10,000 $10,000 11/30/92 $ 9,947 $ 9,571 02/28/93 $10,173 $ 9,918 05/31/93 $11,520 $12,062 08/31/93 $12,487 $12,962 11/30/93 $12,447 $11,928 02/28/94 $14,154 $13,841 05/31/94 $13,349 $13,735 08/31/94 $14,264 $14,405 11/30/94 $13,432 $13,732 02/28/95 $11,741 $13,258 05/31/95 $12,834 $14,451 08/31/95 $13,115 $14,517 11/30/95 $12,849 $14,815 02/29/96 $13,849 $15,539 5/31/96 $14,426 $16,041 8/31/96 $14,008 $15,706 11/30/96 $14,701 $16,606 2/28/97 $15,165 $16,090 5/31/97 $15,940 $17,303 8/31/97 $16,240 $17,179 11/30/97 $16,693 $16,588 2/28/98 $18,790 $18,633 5/31/98 $20,823 $19,278 8/31/98 $18,956 $17,201 11/30/98 $19,650 $19,370 2/28/99 $19,923 $19,610 5/31/99 $19,537 $20,175 8/31/99 $21,588 $21,678 INSTITUTIONAL SHARES -------------------- AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS ENDED AUGUST 31, 1999 One Year 13.88% Three Years 15.51% Five Years 8.64% From Inception (9/30/92) 11.76% COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN THE WARBURG PINCUS INTERNATIONAL GROWTH COMMON SHARES AND THE MSCI EAFE INDEX 1 FROM INCEPTION (11/1/96) [GRAPHIC OMITTED] EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC Warburg Pincus International Growth MSCI EAFE Common Shares Index 1 11/1/96 $10,000 $10,000 11/30/96 $10,356 $10,369 02/28/97 $10,673 $10,046 05/31/97 $11,208 $10,803 08/31/97 $11,414 $10,726 11/30/97 $11,728 $10,357 02/28/98 $13,189 $11,634 05/31/98 $14,596 $12,037 08/31/98 $13,278 $10,740 11/30/98 $13,754 $12,094 2/28/99 $13,939 $12,244 5/31/99 $13,660 $12,597 8/31/99 $15,073 $13,535 COMMON SHARES ------------- AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS ENDED AUGUST 31, 1999 One Year 13.52% From Inception (11/1/96) 15.59% Note: Past performance is not predictive of future performance. Investment return and principle value of an investment will fluctuate so that an investor's shares upon redemption may be worth more or less than their original cost. 1 The Morgan Stanley Europe, Australia and Far East Index is an unmanaged index (with no defined investment objective) of equities that includes reinvestments of dividends, and is the exclusive property of Morgan Stanley Capital Co., Incorporated. 2 WARBURG PINCUS INTERNATIONAL GROWTH FUND SCHEDULE OF INVESTMENTS AUGUST 31, 1999 NUMBER OF SHARES VALUE ---------- ------------ COMMON STOCKS -- 97.7% AUSTRALIA -- 1.8% BANKING -- 0.4% National Australia Bank, Ltd.# ................ 160,200 $ 2,418,110 ------------ BROADCASTING & PUBLISHING -- 0.3% Publishing & Broadcasting, Ltd. 331,538 1,947,658 ------------ BUSINESS & PUBLIC SERVICES -- 0.0% ecorp Limited** ............................... 66 83 ------------ ENERGY SOURCES -- 0.6% Broken Hill Proprietary Co., Ltd. ............. 396,073 4,252,298 ------------ MULTI-INDUSTRY -- 0.3% Southcorp Limited ............................. 474,903 1,784,066 ------------ REAL ESTATE -- 0.2% Lend Lease Corp., Ltd. ........................ 138,380 1,687,754 ------------ TOTAL AUSTRALIA ............................... 12,089,969 ------------ BRAZIL -- 0.3% ENERGY SOURCES -- 0.3% Petroleo Brasileiro S.A. ADR** ................ 160,200 2,142,162 ------------ TOTAL BRAZIL .................................. 2,142,162 ------------ CHILE -- 0.1% TELECOMMUNICATIONS -- 0.1% Compania de Telecomunicaciones de Chile S.A. ADR#** ........................ 29,000 652,500 ------------ TOTAL CHILE 652,500 ................................................. ------------ CHINA -- 0.2% METALS - STEEL -- 0.2% China Steel Corp. ADR ......................... 71,400 1,292,340 ------------ TOTAL CHINA ................................... 1,292,340 ------------ FINLAND -- 2.6% ELECTRICAL & ELECTRONICS -- 1.8% Nokia Oyj ..................................... 145,262 12,120,893 ------------ FOREST PRODUCTS & PAPER -- 0.8% UPM-Kymmene Oyj# .............................. 167,249 5,785,359 ------------ TOTAL FINLAND ................................. 17,906,252 ------------ FRANCE -- 15.9% AUTOMOBILES -- 0.9% Renault S.A. .................................. 116,344 6,267,144 ------------ BANKING -- 2.5% Banque Nationale de Paris - CVG** ....................................... 24,869 218,280 Banque Nationale de Paris# 133,538 10,211,721 Compagnie Financiere de Paribas ..................................... 18 1,914 Credit Lyonnais S.A.** ........................ 219,812 6,732,943 ------------ 17,164,858 ------------ NUMBER OF SHARES VALUE ---------- ------------ FRANCE -- (CONTINUED) BUSINESS & PUBLIC SERVICES -- 2.8% Cap Gemini S.A.# .............................. 37,571 $ 6,448,543 Suez Lyonnaise des Eaux ....................... 25,064 4,180,113 Vivendi# ...................................... 112,167 8,660,401 ----------- 19,289,057 ----------- ELECTRICAL & ELECTRONICS -- 1.2% Alcatel ....................................... 52,789 8,084,757 ----------- ELECTRONIC COMP. & INSTRUMENTS -- 1.3% STMicroelectronics N.V. ....................... 133,388 8,854,775 ----------- ENERGY SOURCES -- 1.2% Total Fina S.A. Cl. B# ........................ 65,395 8,426,746 ----------- FOOD & HOUSEHOLD PRODUCTS -- 1.2% Groupe Danone ................................. 32,993 8,161,391 ----------- HEALTH & PERSONAL CARE -- 0.6% Rhone-Poulenc S.A. ............................ 83,431 4,046,549 ----------- INSURANCE -- 1.1% AXA S.A. ...................................... 62,145 7,732,270 ----------- MERCHANDISING -- 1.6% Carrefour S.A.# ............................... 66,166 10,762,449 ----------- RECREATION & OTHER CONSUMER GOODS -- 1.5% Louis Vuitton Moet Hennessy# .................. 32,701 9,950,841 ----------- TOTAL FRANCE .................................. 108,740,837 ----------- GERMANY -- 7.7% BANKING -- 1.2% Deutsche Bank AG 116,772 7,949,085 ------------ BUSINESS & PUBLIC SERVICES -- 0.9% Systeme, Anwendungen, Produkte in der Datenverarbeitung AG Pfd. 5,913 2,344,228 Systeme, Anwendungen, Produkte in der Datenverarbeitung AG 11,897 4,121,609 ------------ 6,465,837 ------------ CHEMICALS -- 0.8% BASF AG 116,983 5,226,592 ------------ ELECTRICAL & ELECTRONICS -- 0.7% Siemans AG# 62,172 5,194,298 ------------ INSURANCE -- 0.9% Allianz AG Registered Shares# 23,498 6,150,178 ------------ MULTI-INDUSTRY -- 1.1% Preussag AG# 128,944 7,327,215 ------------ TELECOMMUNICATIONS -- 1.3% Mannesmann AG 57,223 8,648,997 ------------ UTILITIES - ELECTRICAL & GAS-- 0.8% Veba AG 90,003 5,670,521 ------------ TOTAL GERMANY 52,632,723 ------------ See Accompanying Notes to Financial Statements. 3 WARBURG PINCUS INTERNATIONAL GROWTH FUND (CONTINUED) NUMBER OF SHARES VALUE ---------- ------------ GREECE -- 0.5% BANKING -- 0.2% National Bank of Greece S.A. GDR** .................................. 106,508 $ 1,560,342 ------------ TELECOMMUNICATIONS -- 0.3% Hellenic Telecommunications Organization S.A. ADR#** .................... 205,320 2,117,362 ------------ TOTAL GREECE .................................. 3,677,704 ------------ Hong Kong -- 1.0% BANKING -- 0.2% Hang Seng Bank Limited ........................ 120,510 1,361,861 ------------ MULTI-INDUSTRY -- 0.3% Hutchison Whampoa, Ltd. ....................... 72,000 702,389 Swire Pacific, Ltd. ........................... 242,000 1,249,747 ------------ 1,952,136 ------------ REAL ESTATE -- 0.3% Cheung Kong Holdings, Ltd. .................... 156,000 1,356,097 Henderson Land Development Co., Ltd. ........................................ 160,900 851,648 ------------ 2,207,745 ------------ TELECOMMUNICATIONS -- 0.2% China Telecom (Hong Kong), Ltd.** ...................................... 460,800 1,433,151 ------------ TOTAL HONG KONG ............................... 6,954,893 ------------ ISRAEL -- 0.1% ELECTRICAL & ELECTRONICS -- 0.1% ECI Telecommunications, Ltd. ADR# ........................................ 28,670 813,511 ------------ INVESTMENT COMPANY -- 0.0% Geotek Communications, Inc. Series M** .................................. 600 0 ------------ TOTAL ISRAEL .................................. 813,511 ------------ ITALY -- 3.1% BANKING -- 0.8% Istituto Bancario San Paolo di Torino S.p.A.# .............................. 406,421 5,456,036 ------------ ENERGY SOURCES -- 1.2% ENI S.p.A ..................................... 1,351,474 8,122,234 ------------ INSURANCE -- 1.1% Assicurazioni Generali S.p.A. ................. 219,461 7,406,000 ------------ TOTAL ITALY ................................... 20,984,270 ------------ JAPAN -- 27.4% APPLIANCES & HOUSEHOLD DURABLES -- 1.8% Aiwa Co., Ltd. ................................ 48,900 1,409,356 Morgan Stanley "Sony Corp." - (CPS) ....................................... 1,750 3,707,468 Sony Corp. .................................... 53,900 6,970,913 Sony Corp. ADR ................................ 1,100 140,044 ------------ 12,227,781 ------------ NUMBER OF SHARES VALUE ---------- ------------ JAPAN -- (CONTINUED) AUTOMOBILES -- 2.6% Fuji Heavy Industries, Ltd.# .................. 333,000 $ 2,648,411 Mabuchi Motor Co., Ltd.# ...................... 30,248 3,763,013 Merrill Lynch "Honda Motor Corp." - (CPS) .............................. 3,200 3,043,840 Toyota Motor Corp. ............................ 286,600 8,443,127 ------------ 17,898,391 ------------ BANKING -- 3.0% Asahi Bank, Ltd. (The) ........................ 409,000 2,499,325 Bank of Tokyo - Mitsubishi, Ltd. (The) ....................................... 310,000 4,622,789 Sanwa Bank, Ltd. (The)# ....................... 253,000 3,461,277 Sumitomo Bank, Ltd. (The) ..................... 285,000 3,899,068 Sakura Bank, Ltd. (The) ....................... 611,000 3,232,167 Tokai Bank, Ltd. (The) ........................ 397,000 2,520,138 ------------ 20,234,764 ------------ BROADCASTING & PUBLISHING -- 0.3% Kadokawa Shoten Publishing Co., Ltd. ........................................ 8,700 1,944,061 ------------ Business & Public Services -- 2.1% Bellsystem 24, Inc. ........................... 1,900 953,105 Fuji Soft ABC, Inc. ........................... 32,200 2,232,000 Fujitsu Support & Service, Inc. ............... 8,500 2,193,967 Konami Co., Ltd. .............................. 36,200 3,166,298 NTT Data Corp. ................................ 385 3,722,127 Toyo Information Systems Co., Ltd.# ....................................... 47,000 2,036,180 ------------ 14,303,677 ------------ CHEMICALS -- 1.4% Mitsui Chemicals Industries ................... 495,800 3,617,605 Sumitomo Chemical Co., Ltd. ................... 442,000 2,265,600 Takeda Chemical Industries .................... 73,000 3,661,931 ------------ 9,545,136 ------------ CONSTRUCTION & HOUSING -- 0.6% Daiwa House Industry Co., Ltd. ................ 210,000 2,106,865 Sekisui House, Ltd. ........................... 209,000 2,243,610 ------------ 4,350,475 ------------ DATA PROCESSING & REPRODUCTION-- 1.0% Canon, Inc. ................................... 62,000 1,809,532 Fujitsu Limited ............................... 108,000 3,161,939 Morgan Stanley "Canon Corp." - (CPS) ....................................... 1,860 2,068,671 ------------ 7,040,142 ------------ ELECTRICAL & ELECTRONICS -- 0.9% Hikari Tsushin, Inc.# ......................... 6,500 3,426,619 NEC Corp.# .................................... 156,000 2,532,615 ------------ 5,959,234 ------------ See Accompanying Notes to Financial Statements 4 WARBURG PINCUS INTERNATIONAL GROWTH FUND (CONTINUED) NUMBER OF SHARES VALUE ---------- ------------ JAPAN -- (CONTINUED) ELECTRONIC COMP. & INSTRUMENTS -- 2.7% Fanuc, Ltd. ................................... 41,300 $ 2,486,100 Hoya Corp. .................................... 24,000 1,435,951 I-O Data Device, Inc. ......................... 12,300 445,369 Nemic-Lambda K.K. ............................. 11,300 608,072 NIDEC Corp.# .................................. 10,300 2,028,217 Rohm Co., Ltd. ................................ 27,700 5,507,581 TDK Corp. ..................................... 28,100 3,408,651 Tokyo Seimitsu Co., Ltd. ...................... 24,500 2,413,318 ------------ 18,333,259 ------------ FINANCIAL SERVICES -- 2.4% Acom Company, Ltd.# ........................... 37,700 3,820,147 Daiwa Securities Group, Inc.# ................. 174,000 1,572,706 Jafco Co., Ltd. ............................... 25,000 1,901,650 Nichiei Co., Ltd.# ............................ 32,468 2,990,898 Nomura Securities Co., Ltd. (The) ............. 298,000 4,362,304 Orix Corp.# ................................... 21,200 2,037,986 ------------ 16,685,691 ------------ FOOD & HOUSEHOLD PRODUCTS -- 0.5% Kao Corp. ..................................... 94,000 2,666,324 Yakult Honsha Co., Ltd. ....................... 69,000 1,000,624 ------------ 3,666,948 ------------ INDUSTRIAL COMPONENTS -- 0.4% Minebea Company# .............................. 151,000 1,817,923 Sumitomo Rubber Industries, Ltd. ........................................ 140,000 962,773 ------------ 2,780,696 ------------ MERCHANDISING -- 1.4% Avex, Inc. .................................... 1,800 356,252 Don Quijote Co., Ltd.# ........................ 4,200 907,867 FamilyMart Co., Ltd. .......................... 56,400 2,890,947 Ito-Yokado Co., Ltd.# ......................... 42,000 3,087,514 Ryohin Keikaku Co., Ltd. - New ................ 3,900 768,322 Ryohin Keikaku Co., Ltd.# ..................... 3,900 782,550 Shimamura Co. ................................. 5,500 727,370 ------------ 9,520,822 ------------ REAL ESTATE -- 0.5% Sumitomo Realty & Development Co., Ltd.# .................................. 793,000 3,175,136 ------------ RECREATION & OTHER CONSUMER GOODS-- 1.9% Aruze Corp. ................................... 17,000 1,612,527 Heiwa Corp. ................................... 41,700 1,262,696 Nintendo Co., Ltd. ............................ 42,900 7,434,222 Noritsu Koki Co., Ltd. ........................ 11,000 487,589 Sankyo Co., Ltd. .............................. 30,400 2,290,226 ------------ 13,087,260 ------------ NUMBER OF SHARES VALUE ---------- ------------ JAPAN -- (CONTINUED) TELECOMMUNICATIONS -- 2.2% Nippon Telegraph & Telephone .................. 967 $ 10,848,163 NTT Mobile Communication Network, Inc.# .............................. 36 597,583 NTT Mobile Communication Network, Inc. - New ......................... 200 3,301,667 ------------ 14,747,413 ------------ TEXTILES & APPAREL -- 0.3% WORLD Co., Ltd.# .............................. 14,900 1,732,691 ------------ TRANSPORTATION - ROAD & RAIL -- 0.4% Nippon Express Co., Ltd. ...................... 390,000 2,977,246 ------------ TRANSPORTATION - SHIPPING -- 0.1% Mitsui O.S.K. Lines Ltd. ...................... 418,000 800,609 ------------ WHOLESALE & INTERNATIONAL TRADE -- 0.9% Softbank Corp. ................................ 18,200 6,241,427 ------------ TOTAL JAPAN ................................... 187,252,859 ------------ MEXICO -- 1.1% MERCHANDISING -- 0.3% Cifra S.A. de C.V. Cl. V ADR#** ............... 94,020 1,567,877 ------------ TELECOMMUNICATIONS -- 0.8% Cemex S.A. de C.V., Cl. A ADR ................. 6,745 59,980 Cemex S.A. de C.V., Cl. B ADR ................. 175,600 1,559,644 Telefonos de Mexico S.A.,Cl. L ADR ......................................... 53,900 4,008,813 ------------ 5,628,437 ------------ TOTAL MEXICO .................................. 7,196,314 ------------ NETHERLANDS -- 4.5% APPLIANCES & HOUSEHOLD DURABLES -- 1.3% Koninklijke Philips Electronics N.V. ........................................ 84,521 8,708,581 ------------ BROADCASTING & PUBLISHING -- 1.0% VNU Verenigd Bezit ............................ 177,491 6,805,162 ------------ CHEMICALS -- 1.0% Akzo Nobel N.V. ............................... 147,159 6,846,810 ------------ FINANCIAL SERVICES -- 0.6% ING Groep N.V.# ............................... 71,496 3,919,265 ------------ INSURANCE -- 0.6% Fortis (NL) N.V. .............................. 123,457 4,179,259 ------------ TOTAL NETHERLANDS ............................. 30,459,077 ------------ PORTUGAL -- 1.2% Telecommunications -- 1.2% Portugal Telecom S.A. ......................... 190,205 7,953,585 ------------ TOTAL PORTUGAL ................................ 7,953,585 ------------ See Accompanying Notes to Financial Statements. 5 WARBURG PINCUS INTERNATIONAL GROWTH FUND (CONTINUED) NUMBER OF SHARES VALUE ---------- ------------ SINGAPORE -- 0.7% ELECTRONIC COMP. & INSTRUMENTS-- 0.2% Natsteel Electronics, Ltd. .................... 231,100 $ 1,152,571 ------------ REAL ESTATE -- 0.4% City Developments, Ltd. ....................... 208,790 1,264,440 DBS Land, Ltd. ................................ 835,387 1,904,615 ------------ 3,169,055 ------------ TRANSPORTATION - AIRLINES -- 0.1% Singapore Airlines, Ltd. ...................... 85,300 800,192 ------------ TOTAL SINGAPORE ............................... 5,121,818 ------------ SOUTH AFRICA -- 0.6% BEVERAGES & TOBACCO -- 0.2% South African Breweries plc ................... 186,303 1,531,634 ------------ INSURANCE -- 0.2% Liberty Life Association of Africa, Ltd. ........................................ 80,540 944,205 ------------ MULTI-INDUSTRY -- 0.2% Anglo American plc ............................ 23,431 1,289,856 ------------ REAL ESTATE -- 0.0% Liberty International plc ..................... 37,551 280,930 ------------ TOTAL SOUTH AFRICA ............................ 4,046,625 ------------ SOUTH KOREA -- 1.4% APPLIANCES & HOUSEHOLD DURABLES -- 0.1% Samsung Electronics Co. GDR#** ...................................... 5,948 552,867 ------------ METALS - STEEL -- 0.2% Pohang Iron & Steel Company, Ltd. ADR# ................................... 42,421 1,558,972 ------------ TELECOMMUNICATIONS -- 0.5% Korea Telecom Corp. ADR** ..................... 76,400 2,483,000 SK Telecom Co., Ltd. ADR** .................... 90,080 1,019,030 ------------ 3,502,030 ------------ UTILITIES - ELECTRICAL & GAS -- 0.6% Korea Electric Power Corp. ADR ................ 226,520 4,077,360 ------------ TOTAL SOUTH KOREA ............................. 9,691,229 ------------ SPAIN -- 2.5% BANKING -- 0.8% Banco Santander Central Hispano SA .......................................... 560,730 5,632,352 ------------ TELECOMMUNICATIONS -- 1.7% Telefonica S.A. ............................... 718,267 11,455,614 ------------ TOTAL SPAIN ................................... 17,087,966 ------------ NUMBER OF SHARES VALUE ---------- ------------ SWEDEN -- 1.9% ELECTRICAL & ELECTRONICS -- 0.9% Telefonaktiebolaget L.M. Ericsson Cl. B ....................................... 190,997 $ 6,151,667 ------------ INSURANCE -- 1.0% Skandia Forsakrings AB# ....................... 332,048 6,754,524 ------------ TOTAL SWEDEN .................................. 12,906,191 ------------ SWITZERLAND -- 4.6% BANKING -- 1.1% United Bank of Switzerland S.A. ............... 26,871 7,582,161 ------------ ELECTRICAL & ELECTRONICS -- 0.6% ABB AG - Bearer#** ............................ 44,281 4,515,636 ------------ HEALTH & PERSONAL CARE -- 1.9% Novartis AG Registered Shares ................. 3,832 5,513,851 Roche Holding AG .............................. 632 7,308,432 ------------ 12,822,283 ------------ INSURANCE -- 1.0% Zurich Allied AG** ............................ 11,440 6,712,755 ------------ TOTAL SWITZERLAND ............................. 31,632,835 ------------ TAIWAN -- 0.8% ELECTRICAL & ELECTRONICS -- 0.6% Taiwan Semiconductor Manufacturing Co., Ltd. ADR#** ...................................... 143,442 4,150,870 ------------ STRUCTURED INVESTMENT -- 0.2% Morgan Stanley Taiwan Opals ................... 12,964 1,688,302 ------------ TOTAL TAIWAN .................................. 5,839,172 ------------ UNITED KINGDOM -- 17.7% BANKING -- 2.9% Abbey National plc ............................ 260,098 4,466,777 Bank of Scotland .............................. 563,767 7,030,197 LLoyds TSB Holdings Group plc ................. 592,792 8,202,368 ------------ 19,699,342 ------------ BUSINESS & PUBLIC SERVICES -- 0.6% Reuters Group plc ............................. 308,457 4,521,030 ------------ ELECTRICAL & ELECTRONICS -- 1.3% General Electric Co. plc ...................... 892,294 8,924,510 ------------ ENERGY SOURCES -- 4.4% BP Amoco plc .................................. 992,111 18,425,882 Shell Transport & Trading Co. plc ......................................... 1,435,614 11,449,998 ------------ 29,875,880 ------------ FINANCIAL SERVICES -- 0.3% AMVESCAP plc .................................. 257,161 2,204,034 ------------ See Accompanying Notes to Financial Statements. 6 WARBURG PINCUS INTERNATIONAL GROWTH FUND (CONCLUDED) NUMBER OF SHARES VALUE ---------- ------------ UNITED KINGDOM -- (CONTINUED) HEALTH & PERSONAL CARE -- 3.0% Glaxo Wellcome ................................ 397,059 $ 10,445,383 SmithKline Beecham plc ........................ 762,243 9,934,191 ------------ 20,379,574 ------------ TELECOMMUNICATIONS -- 4.4% British Telecommunications plc ................ 639,459 9,799,223 Orange plc .................................... 370,125 6,243,239 Vodafone AirTouch plc ......................... 709,284 14,302,230 ------------ 30,344,692 ------------ TRANSPORTATION - SHIPPING -- 0.8% Peninsular & Oriental Steam Navigation Company (The) .................... 322,344 5,289,549 ------------ TOTAL UNITED KINGDOM .......................... 121,238,611 ------------ TOTAL COMMON STOCKS (Cost $595,998,532) ......................... $668,313,443 ------------ PAR (000) ----------- SHORT-TERM INVESTMENT -- 2.6% BBH Grand Cayman U.S. Dollar Time Deposit 4.500% 09/01/99 $18,025 $ 18,025,000 (Cost $18,025,000) ------------ TOTAL INVESTMENTS -- 100.3% (Cost $614,023,532*) $686,338,443 LIABILITIES IN EXCESS OF OTHER ASSETS-- (0.3%) (2,444,873) ------------ TOTAL NET ASSETS-- 100.0% $683,893,570 ============ * Cost for Federal income tax purposes at August 31, 1999 is $618,110,693. The gross appreciation (depreciation) on a tax basis is as follows: Gross Appreciation ...................................... $ 94,064,154 Gross Depreciation ...................................... (25,836,404) ------------ Net Appreciation ........................................ $ 68,227,750 ============ ** Non-income producing securities. # Security or a portion thereof is out on loan. INVESTMENT ABBREVIATIONS ADR ................................................American Depository Receipts CPS ...................................................Currency Protected Shares GDR ..................................................Global Depository Receipts See Accompanying Notes to Financial Statements. 7 WARBURG PINCUS EMERGING MARKETS II FUND PORTFOLIO MANAGERS' LETTER September 14, 1999 Dear Shareholders: We are writing to report on the results of the Warburg Pincus Emerging Markets II Fund (the "Fund") for the fiscal year ended August 31, 1999. At August 31,1999, the net asset value ("NAV") of the Fund was $14.88, compared to an NAV of $10.44 on August 31, 1998. As a result, the Fund's total return was 45.1% (assuming the reinvestment of distributions totaling $0.21 per share). By comparison, the MSCI Emerging Markets Free Index ("EMF Index") returned 72.3% during the same period. At August 31, 1999, the NAV of the Fund's common shares was $14.91, compared to an NAV of $10.48 on August 31, 1998. The common shares' total return between August 31, 1998 and August 31, 1999 was 44.7% (assuming the reinvestment of distributions totaling $0.19 per share). By comparison, the EMF Index returned 72.3% during the same period. Several factors were responsible for the Fund's underperformance of its EMF benchmark: (BULLET) SOUTH KOREA. Stock selection in South Korea was particularly ineffective, as we chose to emphasize growth-oriented Korean companies based on the impressive momentum of the nation's economic recovery. Unfortunately for the Fund, we did so during a period in which the shares of banks, brokers and other value-oriented sectors dramatically outperformed. (BULLET) BRAZIL. Returns were subpar in Brazil, particularly in February and March. We adopted a cautious stance in Brazil following its mid-January devaluation of the real. This was due both to the harsh "contagion" effect of Asian devaluations on financial markets throughout the emerging world and the historical tendency among Latin American nations to raise interest rates in devaluationary times. This approach proved unsuccessful, however, as the real's devaluation had little impact on other markets and Brazil subsequently pursued a course of sharply reducing interest rates. (BULLET) CASH. Prudence and long experience with the volatile nature of emerging equity markets prompted us to maintain a small -- yet meaningful -- level of the Fund's assets in cash reserves. The extraordinary performance of emerging equities caused this to be a drag on the Fund's overall return. (BULLET) POLAND AND HUNGARY. Our choice of stocks in Poland and Hungary proved unfavorable, notably our insufficient exposure to the strong Polish banking sector. Thank you for your support, and please feel free to call upon us at any time if you have questions. Sincerely yours, Credit Suisse Asset Management Emerging Markets Equities Management Team Richard W. Watt, Managing Director Steven D. Bleiberg, Managing Director Emily Alejos, Director Robert B. Hrabchak, Director Alan Zlatar, Vice President INTERNATIONAL INVESTING ENTAILS SPECIAL RISK CONSIDERATIONS, INCLUDING CURRENCY FLUCTUATIONS, LOWER LIQUIDITY, ECONOMIC AND POLITICAL RISKS, AND DIFFERENCES IN ACCOUNTING METHODS; THESE RISKS ARE GENERALLY HEIGHTENED FOR EMERGING MARKETS INVESTMENTS. 8 WARBURG PINCUS EMERGING MARKETS II FUND PORTFOLIO MANAGERS' LETTER (CONCLUDED) COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN THE WARBURG PINCUS EMERGING MARKETS II INSTITUTIONAL SHARES AND THE MSCI EMERGING MARKETS FREE INDEX 1 FROM INCEPTION (1/29/93) AND AT EACH QUARTER END. (UNAUDITED) [GRAPHIC OMITTED] EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC Warburg Pincus MSCI Emerging Emerging Markets II Markets Free Institutional Shares Index 1 02/01/93 $10,000 $10,000 02/28/93 $ 9,967 $10,159 05/31/93 $10,707 $10,923 08/31/93 $12,253 $12,443 11/30/93 $14,507 $14,648 02/28/94 $16,908 $17,058 05/31/94 $14,691 $15,724 08/31/94 $16,664 $18,257 11/30/94 $15,722 $17,189 02/28/95 $11,347 $13,765 05/31/95 $12,552 $15,243 08/31/95 $12,594 $15,263 11/30/95 $11,718 $14,349 02/29/96 $12,863 $15,795 5/31/96 $13,743 $16,481 8/31/96 $13,013 $15,846 11/30/96 $13,164 $15,817 2/28/97 $14,790 $17,699 5/31/97 $14,460 $17,759 8/31/97 $14,094 $16,573 11/30/97 $12,559 $13,717 2/28/98 $12,767 $14,298 5/31/98 $11,520 $12,734 8/31/98 $ 8,039 $ 8,360 11/30/98 $ 9,110 $10,644 2/28/99 $ 8,970 $10,420 5/31/99 $10,522 $13,175 8/31/99 $11,667 $14,402 INSTITUTIONAL SHARES -------------------- AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS ENDED AUGUST 31, 1999 One Year 45.12% Three Years (3.58)% Five Years (6.88)% From Inception (1/29/93) 2.37% COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN THE WARBURG PINCUS EMERGING MARKETS II COMMON SHARES AND THE MSCI EMERGING MARKETS FREE INDEX 1 FROM INCEPTION (11/1/96) AND AT EACH QUARTER END. (UNAUDITED) [GRAPHIC OMITTED] EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC Warburg Pincus MSCI Emerging Emerging Markets II Markets Free Common Shares Index 1 11/1/96 $10,000 $10,000 11/30/96 $10,171 $10,106 2/28/97 $11,394 $11,309 5/31/97 $11,134 $11,347 8/31/97 $10,841 $10,589 11/30/97 $ 9,652 $ 8,765 2/28/98 $ 9,818 $ 9,135 5/31/98 $ 8,867 $ 8,136 8/31/98 $ 6,195 $ 5,341 11/30/98 $ 7,016 $ 6,800 2/28/99 $ 6,900 $ 6,657 5/31/99 $ 8,078 $ 8,417 8/31/99 $ 8,962 $ 9,201 INSTITUTIONAL SHARES -------------------- AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS ENDED AUGUST 31, 1999 One Year 44.67% From Inception (11/1/96) (3.80)% Note: Past performance is not predictive of future performance. Investment return and principle value of an investment will fluctuate so that an investor's shares upon redemption may be worth more or less than their original cost. 1 The Morgan Stanley Emerging Markets Free Index is an unmanaged index (with no defined investment objective) of equities that include reinvestment of dividends and is compiled by Morgan Stanley Capital International. 9 WARBURG PINCUS EMERGING MARKETS II FUND SCHEDULE OF INVESTMENTS AUGUST 31, 1999 NUMBER OF SHARES VALUE ---------- ------------ COMMON STOCKS, WARRANTS AND RIGHTS -- 94.7% BRAZIL -- 3.5% BEVERAGES & TOBACCO -- 0.5% Companhia Cervejaria Brahma ................... 47,103 $ 24,976 Companhia Cervejaria Brahma ADR ......................................... 1,160 12,252 ------------ 37,228 ------------ ENERGY SOURCES -- 1.0% Petroleo Brasileiro S.A. ADR .................. 2,360 31,557 Petroleo Brasileiro S.A. PN ................... 264,669 35,464 ------------ 67,021 ------------ METALS - STEEL -- 0.5% Companhia Vale do Rio Doce ADR ......................................... 800 17,732 Companhia Vale do Rio Doce PN ................. 752 16,702 Companhia Vale do Rio Doce PN Cl. B .................................... 39,000 0 ------------ 34,434 ------------ MULTI-INDUSTRY -- 0.1% Serrana S.A. ON ............................... 10,210 2,715 Serrana S.A. PN ............................... 12,175 3,174 ------------ 5,889 ------------ TELECOMMUNICATIONS -- 1.2% Telecomunicacoes Brasileiras S.A. PN Block ............................... 500 37,094 Telecomunicacoes de Minas Gerais Celular S.A. PN ............................. 71,636 586 Telecomunicacoes de Minas Gerais S.A. PN ..................................... 71,636 1,662 Telecomunicacoes de Sao Paulo S.A. PN ..................................... 505,034 44,497 Telecomunicacoes do Rio de Janeiro S.A. PN ............................. 8,733 125 ------------ 83,964 ------------ UTILITIES - ELECTRICAL & GAS -- 0.2% Centrais Eletricas Brasileiras S.A. ADR** .................................. 2,086 16,335 ------------ TOTAL BRAZIL .................................. 244,871 ------------ CHILE -- 2.6% BEVERAGES & TOBACCO -- 0.3% Embotelladora Andina S.A. ADR, Series B .................................... 1,400 18,506 ------------ Merchandising -- 0.3% Distribucion Y Servicio D & S S.A. ADR ......................................... 1,325 21,862 ------------ NUMBER OF SHARES VALUE ---------- ------------ CHILE -- (CONTINUED) TELECOMMUNICATIONS -- 1.3% Compania de Telecomunicaciones de Chile S.A. ADR ........................... 3,802 $ 85,545 ------------ UTILITIES - ELECTRICAL & GAS-- 0.7% Chilectra S.A. ADR ............................ 2,167 42,525 Gener S.A. ADR ................................ 481 8,845 ------------ 51,370 ------------ TOTAL CHILE ................................... 177,283 ------------ CHINA -- 3.0% METALS - STEEL -- 3.0% China Steel Corp. ADR#** ...................... 11,300 204,530 ------------ TOTAL CHINA ................................... 204,530 ------------ COLUMBIA -- 0.0% BUILDING MATERIALS & COMPONENTS-- 0.0% Cementos Paz del Rio ADR ...................... 118 710 ------------ TOTAL COLUMBIA ................................ 710 ------------ GREECE -- 0.4% ELECTRICAL & ELECTRONICS -- 0.4% Intracom S.A. ................................. 286 24,797 ------------ TOTAL GREECE .................................. 24,797 ------------ HONG KONG -- 3.3% APPLIANCES & HOUSEHOLD DURABLES -- 0.4% Guangdong Kelon Electrical Holdings Co., Ltd. .......................... 27,300 27,951 ------------ CHEMICALS -- 0.4% Yizheng Chemical Fibre Co., Ltd. Cl. H ....................................... 96,000 28,436 ------------ ELECTRONIC COMP. & INSTRUMENTS -- 0.5% Legend Holdings, Ltd. ......................... 36,000 34,772 ------------ MISC. MATERIALS & COMMODITIES -- 0.2% Yanzhou Coal Mining Co., Ltd. ................. 36,000 15,879 ------------ MULTI-INDUSTRY -- 0.5% Beijing Enterprises Holdings, Ltd. ........................................ 17,100 34,134 ------------ TELECOMMUNICATIONS -- 0.7% China Telecom (Hong Kong), Ltd.** ...................................... 15,600 48,518 ------------ UTILITIES - ELECTRICAL & GAS -- 0.6% Shandong International Power Development Co., Ltd.** ..................... 197,700 39,464 ------------ TOTAL HONG KONG ............................... 229,154 ------------ See Accompanying Notes to Financial Statements. 10 WARBURG PINCUS EMERGING MARKETS II FUND SCHEDULE OF INVESTMENTS AUGUST 31, 1999 NUMBER OF SHARES VALUE ---------- ------------ HUNGARY -- 2.9% BANKING -- 0.7% OTP Bank GDR .................................. 1,000 $ 45,698 ------------ ENERGY SOURCES -- 1.2% MOL Magyar Olaj - es Gazipari GDR 144A .................................... 3,200 81,508 ------------ TELECOMMUNICATIONS -- 1.0% Magyar Tavkozlesi Rt. ADR ..................... 2,300 69,862 ------------ TOTAL HUNGARY ................................. 197,068 ------------ INDIA -- 10.7% AUTOMOBILE -- 0.2% Mahindra & Mahindra Ltd. Participation Notes ......................... 1,750 16,588 ------------ BANKING -- 1.3% Infosys Technologies, Ltd. ADR ................ 900 89,269 ------------ BEVERAGES & TOBACCO -- 1.5% ITC Agro-Tech, Ltd. GDR ....................... 3,500 107,275 ------------ CHEMICALS -- 0.9% Reliance Industries Ltd. 144A GDR .................................... 5,304 59,272 ------------ ELECTRICAL & ELECTRONICS -- 0.8% Bharat Heavy Electricals Ltd. Participation Notes ......................... 8,035 58,692 ------------ ENERGY SOURCES -- 2.8% Hindustan Petroleum Corporation Ltd. Participation Notes .................... 32,400 191,383 ------------ HEALTH & PERSONAL CARE -- 0.9% Ranbaxy Laboratories, Ltd. 144A GDR ......................................... 2,500 65,275 ------------ INVESTMENT COMPANY -- 0.7% Morgan Stanley India Investment Fund, Inc. .................................. 4,200 52,237 ------------ MACHINERY & ENGINEERING -- 0.3% Larsen & Toubro Ltd. Participation Notes ....................................... 2,093 18,852 ------------ METALS - NON-FERROUS -- 0.9% Hindalco Industries Ltd. GDR .................. 2,300 63,538 ------------ TELECOMMUNCATIONS -- 0.4% Mahanagar Telephone Nigam, Ltd. 144A GDR .................................... 2,700 29,363 ------------ TOTAL INDIA ................................... 751,744 ------------ NUMBER OF SHARES VALUE ---------- ------------ INDONESIA -- 2.6% BANKING -- 0.0% P.T. Bank Dagang Nasional Indonesia Warrants **/*** ................... 400 $ 0 P.T. Bank International Indonesia *** ............................... 34 0 P.T. Bank International Indonesia Options ..................................... 100 0 P.T. Bank International Indonesia Warrants .................................... 4 0 ------------ 0 ------------ BEVERAGES & TOBACCO -- 1.2% P.T. Hanjaya Mandala Sampoerna Tbk ......................................... 40,000 83,129 ------------ FOOD & HOUSEHOLD PRODUCTS -- 0.7% P.T. Indofood Sukses Makmur Tbk ......................................... 48,000 51,285 ------------ TELECOMMUNICATIONS -- 0.7% P.T. Telekomunikasi Indonesia ................. 79,300 30,481 P.T. Telekomunikasi Indonesia ADR ......................................... 2,400 18,450 ------------ 48,931 ------------ TOTAL INDONESIA ............................... 183,346 ------------ ISRAEL -- 2.3% BANKING -- 1.0% Bank Hapoalim Ltd. ............................ 30,408 70,111 ------------ BUILDING MATERIALS & COMPONENTS -- 0.9% Check Point Software Technologies, Ltd.** ...................................... 800 61,700 ------------ HEALTH & PERSONAL CARE -- 0.4% Teva Pharmaceutical Industries Ltd. ADR ......................................... 600 28,237 ------------ TOTAL ISRAEL .................................. 160,048 ------------ MEXICO -- 9.9% BEVERAGES & TOBACCO -- 0.5% Grupo Modelo S.A. de C.V. Cl. C ....................................... 13,403 35,893 ------------ BROADCASTING & PUBLISHING -- 1.6% Grupo Televisa S.A. de C.V. GDS ......................................... 3,001 109,161 ------------ BUILDING MATERIALS & COMPONENTS -- 1.2% Cementos Mexicanos S.A. de C.V. Cl. B** ..................................... 18,349 81,603 ------------ HEALTH & PERSONAL CARE -- 1.0% Kimberly-Clark de Mexico S.A. de C.V. Cl. A .................................. 22,437 71,240 ------------ See Accompanying Notes to Financial Statements. 11 WARBURG PINCUS EMERGING MARKETS II FUND (CONTINUED) NUMBER OF SHARES VALUE ---------- ------------ MEXICO -- (CONTINUED) MERCHANDISING -- 1.8% Cifra S.A. de C.V. Cl. V ADR** ................ 7,483 $ 124,786 ------------ TELECOMMUNICATIONS -- 3.8% Telefonos de Mexico S.A., Cl. L ADR ....................................... 3,500 260,312 ------------ TOTAL MEXICO .................................. 682,995 ------------ PHILIPPINES -- 1.6% REAL ESTATE -- 0.4% SM Prime Holdings ............................. 118,500 21,804 ------------ TELECOMMUNICATIONS -- 0.9% Philippine Long Distance Telephone Company ADR ................................. 2,701 63,980 ------------ UTILITIES - ELECTRICAL & GAS-- 0.3% Manila Electric Company ....................... 7,400 22,009 ------------ TOTAL PHILIPPINES ............................. 107,793 ------------ POLAND -- 2.0% BANKING -- 0.7% Bank Handlowy W. Warszawie 144A ADR .................................... 1,303 18,815 Bank Rozwoju Eksportu S.A. .................... 871 28,436 ------------ 47,251 ------------ METALS - NON-FERROUS -- 0.4% KGHM Polska Miedz S.A. ........................ 4,183 26,998 ------------ MULTI-INDUSTRY -- 0.3% Elektrim Spolka Akcyjna S.A. .................. 1,634 20,518 ------------ TELECOMMUNICATIONS -- 0.6% Telekomunikacja Polska GDR .................... 6,450 43,736 ------------ TOTAL POLAND .................................. 138,503 ------------ RUSSIA -- 0.8% Energy Sources -- 0.8% Lukoil Holding ADR ............................ 900 27,000 Surgutneftegaz ADR ............................ 3,800 30,020 ------------ 57,020 ------------ TOTAL RUSSIA .................................. 57,020 ------------ SINGAPORE -- 0.5% BANKING -- 0.0% Oversea-Chinese Banking Corp. Ltd. *** .................................... 231 1,618 ------------ BROADCASTING & PUBLISHING -- 0.0% Singapore Press Holdings Ltd.*** .............. 39 648 ------------ FOREST PRODUCTS & PAPER -- 0.5% Asia Pulp & Paper Co. Ltd. ADR** .............. 4,200 32,025 Asia Pulp & Paper Warrants** .................. 1,060 1,458 ------------ 33,483 ------------ TOTAL SINGAPORE ............................... 35,749 ------------ NUMBER OF SHARES VALUE ---------- ------------ SOUTH AFRICA -- 6.4% BANKING -- 0.8% Nedcor Limited ................................ 2,876 $ 57,219 Nedcor Rights ................................. 3,476 6 ------------ 57,225 ------------ BEVERAGES & TOBACCO -- 1.0% South African Breweries plc ................... 8,148 66,986 ------------ BUSINESS & PUBLIC SERVICES -- 1.1% Dimension Data Holdings Ltd. .................. 17,282 71,750 ------------ INSURANCE -- 0.9% Liberty Life Association of Africa, Ltd. ........................................ 5,566 65,253 ------------ MULTI-INDUSTRY -- 2.6% Anglo American Corp. of South Africa Ltd. ................................ 1,367 75,252 C.G. Smith Ltd. ............................... 26,713 71,155 Johnnies Industrial Corp. Ltd. ................ 4,960 33,845 ------------ 180,252 ------------ REAL ESTATE -- 0.0% Liberty International plc ..................... 1 7 ------------ TOTAL SOUTH AFRICA ............................ 441,473 ------------ SOUTH KOREA -- 17.6% APPLIANCES & HOUSEHOLD DURABLES -- 3.6% Samsung Electronics Co. ....................... 1,300 246,683 ------------ BANKING -- 1.1% Housing & Commercial Bank, Korea ....................................... 3,400 79,494 ------------ ELECTRICAL & ELECTRONICS -- 3.1% L.G. Information & Communication Ltd. ........................................ 2,400 214,492 ------------ METALS - STEEL -- 2.7% Pohang Iron & Steel Company, Ltd. ADR ......................................... 5,000 183,750 ------------ TELECOMMUNICATIONS -- 3.8% Korea Telecom Corp. ........................... 1,200 75,225 Korea Telecom Corp. ADR ....................... 5,800 188,500 ------------ 263,725 ------------ UTILITIES - ELECTRICAL & GAS-- 3.3% Korea Electric Power Corp.** .................. 2,800 104,366 Korea Electric Power Corp. ADR** ....................................... 7,100 127,800 ------------ 232,166 ------------ TOTAL SOUTH KOREA ............................. 1,220,310 ------------ See Accompanying Notes to Financial Statements. 12 WARBURG PINCUS EMERGING MARKETS II FUND (CONCLUDED) NUMBER OF SHARES VALUE ---------- ------------ TAIWAN -- 16.0% ELECTRIC COMP. & INSTRUMENTS -- 0.5% Advanced Semiconductor Engineering Inc. ............................ 2,080 $ 37,606 ------------ ELECTRICAL & ELECTRONICS -- 5.4% Taiwan Semiconductor Manufacturing Co., Ltd. ADR ................. 7,872 227,796 Yageo Corp. - GDR (Reg. S)** .................. 29,600 148,000 ------------ 375,796 ------------ INVESTMENT COMPANIES -- 2.6% R.O.C. Taiwan Fund ............................ 11,900 93,713 Taiwan Fund ................................... 4,800 87,900 ------------ 181,613 ------------ STRUCTURED INVESTMENT -- 6.0% Morgan Stanley Taiwan Opals ................... 3,200 416,736 ------------ TEXTILES & APPAREL -- 0.8% Siliconware Precision Industries GDR ......................................... 3,868 52,411 ------------ TRANSPORTATION - SHIPPING -- 0.7% Evergreen Marine Corp. ........................ 3,388 45,230 ------------ TOTAL TAIWAN .................................. 1,109,392 ------------ THAILAND -- 3.7% BANKING -- 1.5% Siam Commercial Bank Pfd.** ................... 63,800 72,360 Siam Commerical Bank - Warrants .................................... 75,000 33,732 ------------ 106,092 ------------ BROADCASTING & PUBLISHING -- 0.9% BEC World Public Co., Ltd.*** ................. 9,800 58,258 ------------ BUILDING MATERIALS & COMPONENTS -- 0.3% Siam City Cement Public Co. Ltd.**/*** .................................. 800 20,692 ------------ TELECOMMUNICATIONS -- 1.0% Advanced Information Services Public Co. Ltd.*** .......................... 5,100 69,943 ------------ TOTAL THAILAND ................................ 254,985 ------------ TURKEY -- 4.2% APPLIANCES & HOUSEHOLD DURABLES -- 1.1% Arcelik A.S. .................................. 3,430,668 78,917 ------------ BANKING -- 2.4% Akbank T.A.S. ................................. 7,453,432 98,691 Yapi Ve Kredi Bankasi A.S. .................... 5,235,831 68,153 ------------ 166,844 ------------ MERCHANDISING -- 0.7% Migros Turk T.A.S. ............................ 114,400 45,571 ------------ TOTAL TURKEY .................................. 291,332 ------------ NUMBER OF SHARES VALUE ---------- ------------ UNITED STATES -- 0.7% ELECTRONIC COMP. & INSTRUMENTS -- 0.7% Comverse Technology, Inc.** ................... 600 $ 46,800 ------------ TOTAL UNITED STATES ........................... 46,800 ------------ VENEZUELA -- 0.0% UTILITIES - ELECTRICAL & GAS-- 0.0% La Electricidad de Caracas .................... 2 1 ------------ TOTAL VENEZUELA ............................... 1 ------------ TOTAL COMMON STOCKS, WARRANTS AND RIGHTS (Cost $6,108,414) ........................... $ 6,559,904 ------------ PAR (000) ----------- SHORT-TERM INVESTMENT -- 5.8% BBH Grand Cayman U.S. Dollar Time 4.500% 09/01/99 $ 402 $ 402,000 (Cost $402,000) ------------ TOTAL INVESTMENTS -- 100.5% (Cost $6,510,414*) $ 6,961,904 LIABILITIES IN EXCESS OF OTHER ASSETS-- (0.5%) (37,165) ------------ TOTAL NET ASSETS-- 100.0% $ 6,924,739 ============ * Cost for Federal income tax purposes at August 31, 1999 is $6,658,596. The gross appreciation (depreciation) on a tax basis is as follows: Gross Appreciation ...................................... $ 814,276 Gross Depreciation ...................................... (510,968) --------- Net Appreciation ........................................ $ 303,308 ========= ** Non-incoming producing. *** Denotes foreign shares. # Security or a portion thereof is out on loan. INVESTMENT ABBREVIATIONS ADR ................................................American Depository Receipts ADS ..................................................American Depository Shares GDR ..................................................Global Depository Receipts See Accompanying Notes to Financial Statements. 13 WARBURG PINCUS EUROPEAN EQUITY FUND PORTFOLIO MANAGERS' LETTER September 15, 1999 Dear Shareholders: We are writing to report on the results of the Warburg Pincus European Equity Fund (the "Fund") from its inception of investment operations on January 28, 1999 to the end of its fiscal year on August 31, 1999. European equity markets were fairly flat during the period, as reflected by the 0.3% return of the MSCI Europe Index1. A number of meaningful positive and negative factors tended to offset each other. On the positive side, the European Central Bank unexpectedly cut short-term interest rates in Euroland by half a percentage point in April, and there was an ongoing stream of announcements of high-profile mergers or acquisitions in a variety of industries. The supportive effects of these and other developments, though, were ultimately canceled out by concern about U.S. interest rates and inflation; nervousness about persistent weakness in Continental economies, particularly that of Germany; disappointing weakness in the euro versus the U.S. dollar for much of the period; and the conflict in Kosovo. The Fund's results were most favorable in France, where we owned six of the ten strongest stocks during the period. Effective country allocations included our complete absence from Belgium, overweight in Germany and underweight in Finland. Conditions proved most challenging in the U.K. At August 31, 1999, the net asset value ("NAV") of the Fund's institutional and common shares was $9.80 and $9.79, respectively, compared to an NAV of $10.00 for both share classes on January 28, 1999 (Inception date). Looking ahead, we are optimistic about the prospects for European equity markets. Stocks on the Continent and in the U.K. should benefit from clearer signs of economic recovery; the likelihood that Euroland interest rates will remain stable; and vibrant corporate consolidation activity. The fundamental elements of our strategy include an emphasis on companies poised to benefit from an anticipated pick-up in economic activity, both regionally and globally. Overweight positions have been established in capital goods manufacturers, oil and oil service companies and information technology service providers, which reflect our belief that earnings will surprise on the upside as we move into the year 2000. Geographically, we have moved to underweight the U.K., where the interest-rate environment appears less favorable than on the Continent. However, we continue to find individual U.K. companies that are poised to benefit from the trends mentioned above. As other developments occur in the European equity markets or at Credit Suisse Asset Management, we will be sure to keep you informed. Meanwhile, if you have questions, please feel free to call upon us at any time. Sincerely yours, Credit Suisse Asset Management European Equities Management Team Harold W. Ehrlich, Managing Director Nancy Nierman, Director J. H. Cullum Clark, Director INTERNATIONAL INVESTING ENTAILS SPECIAL RISK CONSIDERATIONS, INCLUDING CURRENCY FLUCTUATIONS, LOWER LIQUIDITY, ECONOMIC AND POLITICAL RISKS, AND DIFFERENCES IN ACCOUNTING METHODS. SINCE THE FUND FOCUSES ITS INVESTMENTS ON COMPANIES IN EUROPE, AN INVESTMENT IN THE FUND MAY INVOLVE A GREATER DEGREE OF RISK THAN AN INVESTMENT IN A MORE GEOGRAPHICALLY DIVERSIFIED EQUITY FUND 1 The Morgan Stanley Capital International Europe Index is a market capitalization-weighted index of 15 European countries. The index is calculated on a total return basis with net dividends reinvested. 14 WARBURG PINCUS EUROPEAN EQUITY FUND SCHEDULE OF INVESTMENTS AUGUST 31, 1999 NUMBER OF SHARES VALUE ---------- ------------ COMMON STOCKS -- 93.6% AUSTRIA -- 1.1% ENERGY SOURCES -- 1.1% OMV AG ........................................ 2,600 $ 260,750 ------------ TOTAL AUSTRIA ................................. 260,750 ------------ DENMARK -- 2.0% BUSINESS & PUBLIC SERVICES -- 2.0% ISS International Service System A/S Cl. B ................................... 9,100 501,615 ------------ TOTAL DENMARK ................................. 501,615 ------------ FINLAND -- 4.5% ELECTRICAL & ELECTRONICS -- 1.8% Nokia Oyj ..................................... 5,242 437,401 ------------ FOREST PRODUCTS & PAPER -- 2.7% Metsa-Serla Oyj B Shares ...................... 23,300 220,505 UPM-Kymmene Oyj ............................... 12,679 438,583 ------------ 659,088 ------------ TOTAL FINLAND ................................. 1,096,489 ------------ FRANCE -- 20.9% BANKING -- 1.4% Banque Nationale de Paris ..................... 4,519 345,570 ------------ BUILDING MATERIALS & COMPONENTS -- 1.2% Compagnie de Saint-Gobain ..................... 1,505 290,900 ------------ BUSINESS & PUBLIC SERVICES -- 1.5% Cap Gemini S.A. ............................... 2,174 373,137 ------------ ELECTRICAL & ELECTRONICS -- 2.0% Alstom# ....................................... 14,700 494,984 ------------ ELECTRONIC COMP. & INSTRUMENTS -- 2.1% STMicroelectronics N.V. ....................... 7,770 515,801 ------------ ENERGY EQUIPMENT & SERVICES -- 0.9% Coflexip S.A. ADR** ........................... 4,900 221,725 ------------ ENERGY SOURCES -- 2.1% Total Fina S.A. Cl. B# ........................ 4,083 526,132 ------------ INDUSTRIAL COMPONENTS -- 1.1% Valeo S.A. .................................... 3,208 259,210 ------------ INSURANCE -- 1.8% AXA S.A. ...................................... 3,480 432,992 ------------ METALS - NON-FERROUS -- 2.5% Pechiney SA Cl. A ............................. 10,600 616,897 ------------ MISC. MATERIALS & COMMODITIES-- 1.0% Imetal SA ..................................... 1,600 254,845 ------------ MULTI-INDUSTRY -- 1.7% Lagardere SCA ................................. 10,166 412,322 ------------ NUMBER OF SHARES VALUE ---------- ------------ FRANCE -- (CONTINUED) RECREATION AND OTHER CONSUMER GOODS -- 1.6% Louis Vuitton Moet Hennessy ................... 1,303 $ 396,500 ------------ TOTAL FRANCE .................................. 5,141,015 ------------ GERMANY -- 10.3% CHEMICALS -- 1.8% BASF AG ....................................... 10,029 448,078 ------------ ELECTRONICAL & ELECTRONICS -- 1.1% Siemens AG .................................... 3,316 277,043 ------------ ELECTRONIC COMP. & INSTRUMENTS -- 2.8% Austria Technologie & Systemtechnik AG** .......................... 21,900 674,277 ------------ MULTI-INDUSTRY -- 3.4% Metallgesellschaft AG# ........................ 24,000 545,011 Preussag AG ................................... 4,984 283,215 ------------ 828,226 ------------ TELECOMMUNICATIONS -- 1.2% Mannesmann AG ................................. 2,000 302,291 ------------ TOTAL GERMANY ................................. 2,529,915 ------------ HUNGARY -- 0.8% BANKING -- 0.8% OTP Bank Rt. GDR 144A ......................... 4,400 201,072 ------------ TOTAL HUNGARY ................................. 201,072 ------------ IRELAND -- 2.6% BANKING -- 1.5% Bank of Ireland ............................... 40,000 362,073 ------------ TELECOMMUNICATIONS -- 1.1% Bord Telecom Eireann plc** .................... 62,200 283,351 ------------ TOTAL IRELAND ................................. 645,424 ------------ ITALY -- 2.0% INSURANCE -- 2.0% Mediolanum S.p.A. ............................. 62,765 501,181 ------------ TOTAL ITALY ................................... 501,181 ------------ NETHERLANDS -- 7.7% APPLIANCES & HOUSEHOLD DURABLES -- 1.6% Koninklijke Philips Electronics N.V. ........................................ 3,888 400,598 ------------ BUSINESS & PUBLIC SERVICES -- 1.8% Getronics N.V. ................................ 9,000 440,603 ------------ CONSTRUCTION & HOUSING -- 1.3% IHC Caland N.V. ............................... 6,600 310,561 ------------ FOOD & HOUSEHOLD PRODUCTS -- 0.8% Koninklijke Numico N.V.# ...................... 4,626 190,069 ------------ See Accompanying Notes to Financial Statements. 15 WARBURG PINCUS EUROPEAN EQUITY FUND (CONTINUED) NUMBER OF SHARES VALUE ---------- ------------ NETHERLANDS -- (CONTINUED) INSURANCE -- 0.8% AEGON N.V.# ................................... 2,321 $ 202,984 ------------ TELECOMMUNICATIONS -- 1.4% Versatel Telecom International N.V.** ...................................... 26,200 $ 359,749 ------------ TOTAL NETHERLANDS ............................. 1,904,564 ------------ PORTUGAL -- 1.4% TELECOMMUNICATIONS -- 1.4% Portugal Telecom S.A. ......................... 8,400 351,253 ------------ TOTAL PORTUGAL ................................ 351,253 ------------ SPAIN -- 5.2% BANKING -- 1.4% Banco Santander Central Hispano SA .......................................... 35,280 354,376 ------------ BROADCASTING & PUBLISHING -- 2.8% Sogecable S.A.** .............................. 25,000 680,736 ------------ ENERGY SOURCES -- 1.0% Repsol-YPF, SA ................................ 12,000 251,339 ------------ TOTAL SPAIN ................................... 1,286,451 ------------ SWEDEN -- 6.9% APPLIANCES & HOUSEHOLD DURABLES -- 1.0% Electrolux AB Series B ........................ 12,825 257,780 ------------ ELECTRICAL & ELECTRONICS -- 1.6% Telefonaktiebolaget L.M. Ericsson Cl. B ....................................... 12,477 401,862 ------------ INDUSTRIAL COMPONENTS -- 2.9% SKF AB Cl. B# ................................. 31,000 705,674 ------------ INSURANCE -- 1.4% Skandia Forsakrings AB ........................ 17,066 347,157 ------------ TOTAL SWEDEN .................................. 1,712,473 ------------ SWITZERLAND -- 5.5% BANKING -- 1.9% United Bank of Switzerland S.A. ............... 1,635 461,346 ------------ HEALTH & PERSONAL CARE -- 2.0% Roche Holding AG .............................. 43 497,251 ------------ INSURANCE -- 1.6% Zurich Allied AG .............................. 662 388,448 ------------ TOTAL SWITZERLAND ............................. 1,347,045 ------------ NUMBER OF SHARES VALUE ---------- ------------ UNITED KINGDOM -- 22.0% AEROSPACE & MILITARY TECHNOLOGY -- 2.1% British Aerospace plc ......................... 71,800 $ 524,452 ------------ BANKING -- 2.0% LLoyds TSB Holdings Group plc ................. 34,558 478,174 ------------ BROADCASTING & PUBLISHING -- 1.4% Reed International plc ........................ 50,200 333,986 ------------ ENERGY SOURCES -- 3.4% BP Amoco plc .................................. 22,056 409,633 Shell Transport & Trading Co. plc ......................................... 54,644 435,823 ------------ 845,456 ------------ HEALTH & PERSONAL CARE -- 3.4% AstraZeneca Group plc ......................... 11,600 460,724 SmithKline Beecham plc ........................ 28,500 371,436 ------------ 832,160 ------------ INSURANCE -- 2.0% Prudential Corporation plc .................... 33,500 500,164 ------------ MERCHANDISING -- 1.1% Marks & Spencer plc ........................... 40,516 270,697 ------------ TELECOMMUNICATIONS -- 5.4% British Telecommunications plc ................ 28,673 439,392 Cable & Wireless Communications plc** ....................................... 18,912 197,516 Orange plc** .................................. 22,463 378,904 Vodafone AirTouch plc ......................... 16,116 324,968 ------------ 1,340,780 ------------ TRANSPORTATION - SHIPPING -- 1.2% Peninsular & Oriental Steam Navigation Company (The) .................... 18,222 299,016 ------------ TOTAL UNITED KINGDOM .......................... 5,424,885 ------------ UNITED STATES -- 0.7% TELECOMMUNICATIONS -- 0.7% Viatel, Inc.** ................................ 4,400 170,225 ------------ TOTAL UNITED STATES ........................... 170,225 ------------ TOTAL COMMON STOCKS (Cost $22,125,067) .......................... $ 23,074,357 ------------ See Accompanying Notes to Financial Statements. 16 WARBURG PINCUS EUROPEAN EQUITY FUND (CONCLUDED) PAR (000) VALUE ---------- ------------ SHORT-TERM INVESTMENT -- 5.8% BBH Grand Cayman U.S. Dollar Time Deposit 4.500% 09/01/99 ............................. $1,430 $ 1,430,000 (Cost $1,430,000) ----------- TOTAL INVESTMENTS -- 99.4% (Cost $23,555,067*) ......................... $24,504,357 OTHER ASSETS IN EXCESS OF LIABILITIES-- 0.6% ....................... 152,087 ----------- TOTAL NET ASSETS-- 100.0% ..................... $24,656,444 =========== * The cost for Federal income tax purposes at August 31, 1999 is $23,662,430. The gross appreciation (depreciation) on a tax basis is as follows: Gross Appreciation ...................................... $1,706,230 Gross Depreciation ...................................... (864,303) ---------- Net Appreciation ........................................ $ 841,927 ========== ** Non-income producing securities. # Security or a portion thereof is out on loan. INVESTMENT ABBREVIATIONS ADR ................................................American Depository Receipts GDR ..................................................Global Depository Receipts See Accompanying Notes to Financial Statements. 17 WARBURG PINCUS U.S. CORE EQUITY FUND PORTFOLIO MANAGERS' LETTER September 15, 1999 Dear Shareholders: We are writing to report on the results of the Warburg Pincus U.S. Core Equity Fund (the "Fund") for the fiscal year ended August 31, 1999. At August 31, 1999, the net asset value ("NAV") of the Fund's institutional shares was $19.58, compared to an NAV of $21.73 on August 31, 1998. The institutional shares' total return was thus 38.1% (assuming the reinvestment of dividends and distributions totaling $9.78 per share). By comparison, the Standard & Poor's 500 Index (the "Index") returned 39.9% during the same period. At August 31, 1999, the NAV of the Fund's common shares was $19.53, compared to an NAV of $25.22 at their inception of investment operations on October 30, 1998. Including the effect of linkage to the institutional shares, the common shares' total return between August 31, 1998 and August 31, 1999 thus was 37.7% (assuming the reinvestment of dividends and distributions totaling $9.78 per share). By comparison, the Index returned 39.9% during the same period. We attribute the Fund's modest underperformance of its S&P 500 benchmark during the fiscal year to a combination of broad-based and sector-specific factors that prevailed in 1999 through the end of August. Broad market volatility was unusually high, as investors often were preoccupied with concerns about U.S. interest rates and inflation. As a result, two aspects of market activity worked against our particular investment discipline, which focuses on stock selection rather than macro-level or sector-related issues. First, there was a general unwillingness to commit to relatively long-term positions, which caused a choppier-than-usual trading environment. Second, there was an emphasis on positioning portfolios to benefit from expectations about interest rates by betting on industry sectors rather than individual stocks. In the latter trend, stocks within many sectors performed similarly, which negated the normal benefit we derive by highlighting companies with strong fundamentals. These macro effects particularly applied to the technology and financial sectors, which together constitute 40% of the S&P 500 index. Our stock selection within technology and financials was thus disappointing. Even when a stock selection discipline works well across most sectors -- as ours frequently did -- underperformance in such "super-sectors" can be sufficient to meaningfully reduce aggregate results. As developments occur that we believe would be of interest to you, we will keep you informed. Meanwhile, if you have any questions about your portfolio or the capital markets generally, please feel free to call upon us at any time. Sincerely yours, Credit Suisse Asset Management Structured Equities Management Team William W. Priest, Jr., Managing Director Eric N. Remole, Managing Director Marc E. Bothwell, Vice President Michael A. Welhoelter, Vice President 18 WARBURG PINCUS U.S. CORE EQUITY FUND PORTFOLIO MANAGERS' LETTER (CONCLUDED) [GRAPHIC OMITTED] EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC Warburg Pincus U.S. Core Equity S&P 500 Institutional Shares Index 1 09/01/94 $10,000 $10,000 11/30/94 $ 9,553 $ 9,615 02/28/95 $10,251 $10,398 05/31/95 $11,103 $11,455 08/31/95 $11,975 $12,149 11/30/95 $12,746 $13,168 02/29/96 $13,940 $14,007 5/31/96 $14,383 $14,720 8/31/96 $14,080 $14,421 11/30/96 $16,150 $16,837 2/28/97 $16,786 $17,672 5/31/97 $17,943 $19,049 8/31/97 $19,476 $20,275 11/30/97 $20,466 $21,625 2/28/98 $22,899 $23,838 5/31/98 $23,112 $24,880 8/31/98 $20,097 $21,917 11/30/98 $24,804 $26,754 2/28/99 $26,161 $28,560 5/31/99 $27,408 $30,125 8/31/99 $27,748 $30,661 INSTITUTIONAL SHARES -------------------- AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS ENDED AUGUST 31, 1999 One Year 38.07% Three Years 25.37% Five Years 22.64% From Inception (9/1/94) 22.62% Note: Past performance is not predictive of future performance. Investment return and principle value of an investment will fluctuate so that an investor's shares upon redemption may be worth more or less than their original cost. 1 The S&P 500 Index is an unmanaged index (with no defined investment objective) of common stocks, includes reinvestment of dividends, and is a registered trademark of Standard & Poor's Corporation. 19 WARBURG PINCUS U.S. CORE EQUITY FUND SCHEDULE OF INVESTMENTS AUGUST 31, 1999 NUMBER OF SHARES VALUE ---------- ------------ COMMON STOCKS -- 99.0% AEROSPACE -- 1.8% United Technologies Corp. ..................... 18,600 $ 1,229,925 ------------ AGRICULTURE -- 1.0% Archer-Daniels-Midland ........................ 53,600 696,800 ------------ AUTOMOTIVE -- 5.5% Ford Motor .................................... 48,100 2,507,212 General Motors Corp. .......................... 20,900 1,382,012 ------------ 3,889,224 ------------ CHEMICALS -- 2.1% Dow Chemical Co. (The) ........................ 12,800 1,454,400 ------------ COMPUTERS, SOFTWARE AND SERVICING-- 11.0% Dell Computer Corp.** ......................... 19,900 971,369 Electronic Data Systems Corp. ................. 15,800 886,775 EMC Corp.** ................................... 20,400 1,224,000 Hewlett-Packard Co. ........................... 21,200 2,233,950 Microsoft Corporation** ....................... 25,800 2,388,112 ------------ 7,704,206 ------------ CONGLOMERATES -- 4.9% General Electric Co. .......................... 30,700 3,447,994 ------------ CONSTRUCTION & BUILDING MATERIALS -- 1.0% Sherwin Williams Co. .......................... 28,000 682,500 ------------ ELECTRONICS -- 9.5% Cisco Systems** ............................... 49,400 3,349,937 Intel Corp. ................................... 40,200 3,303,937 ------------ 6,653,874 ------------ ENERGY & OIL EXPLORATION -- 8.1% DTE Energy .................................... 41,600 1,640,600 Edison International .......................... 23,300 591,238 Enron Corp. ................................... 46,600 1,951,375 Exxon Corporation ............................. 5,700 449,588 Unocal Corp. .................................. 25,400 1,063,625 ------------ 5,696,426 ------------ FINANCIAL SERVICES -- 14.4% Allstate Corporation .......................... 18,700 613,594 Chase Manhattan Corp. (The) ................... 31,200 2,611,050 Dun & Bradstreet Corp. (The) .................. 45,700 1,196,769 J.P. Morgan & Co., Inc. ....................... 15,700 2,028,244 Lehman Brothers Holdings, Inc. ........................................ 35,000 1,881,250 Merrill Lynch ................................. 23,800 1,776,075 ------------ 10,106,982 ------------ FOOD & BEVERAGES -- 3.1% Anheuser-Busch Companies, Inc. ........................................ 28,500 2,194,500 ------------ HEALTH CARE -- 3.0% Aetna, Inc. ................................... 19,000 1,477,250 Allergan, Inc. ................................ 6,100 609,238 ------------ 2,086,488 ------------ NUMBER OF SHARES VALUE ---------- ------------ INDUSTRIAL GOODS & MATERIALS -- 3.2% Illinois Tool Works, Inc. ..................... 28,900 $ 2,252,394 ------------ PHARMACEUTICALS -- 10.9% Bristol-Myers Squibb .......................... 39,200 2,758,700 Merck & Co. ................................... 40,700 2,734,531 Schering-Plough Corp. ......................... 28,400 1,492,775 Warner Lambert Co. ............................ 10,200 675,750 ------------ 7,661,756 ------------ PUBLISHING & INFORMATION SERVICES -- 2.9% Gannett Company, Inc. ......................... 30,000 2,038,125 ------------ RETAIL -- 6.7% Kroger Co. .................................... 66,600 1,540,125 Wal-Mart Stores# .............................. 72,100 3,194,931 ------------ 4,735,056 ------------ TELECOMMUNICATIONS -- 9.9% AT&T Corp. .................................... 7,600 342,000 BellSouth Corp. ............................... 52,600 2,380,150 Nortel Networks Corp. ......................... 57,900 2,377,519 Sprint Corp. (FON Group) ...................... 41,400 1,837,125 ------------ 6,936,794 ------------ TOTAL COMMON STOCKS (Cost $61,882,880) .......................... $ 69,467,444 ------------ PAR (000) ------- SHORT-TERM INVESTMENT -- 1.4% BBH Grand Cayman U.S. Dollar Time Deposit 4.500% 09/01/99 $1,001 $ 1,001,000 (Cost $1,001,000) ------------ TOTAL INVESTMENTS -- 100.4% (Cost $62,883,880*) $ 70,468,444 LIABILITIES IN EXCESS OF OTHER ASSETS-- (0.4%) (253,515) ------------ TOTAL NET ASSETS -- 100.0% $ 70,214,929 ============ * Cost for Federal income tax purposes at August 31, 1999 is $62,972,051. The gross appreciation (depreciation) on a tax basis is as follows: Gross Appreciation $ 9,408,712 Gross Depreciation (1,912,319) ----------- Net Appreciation $ 7,496,393 =========== ** Non-income producing securities. # Security or a portion thereof is out on loan. See Accompanying Notes to Financial Statements. 20 WARBURG PINCUS GLOBAL TELECOMMUNICATIONS FUND PORTFOLIO MANAGERS' LETTER September 14, 1999 Dear Shareholders: We are pleased to report on the results of the Warburg Pincus Global Telecommunications Fund (the "Fund") for the fiscal year ended August 31, 1999. At August 31, 1999, the net asset value ("NAV") of the Fund was $41.22, compared to an NAV of $20.54 on August 31, 1998. As a result, the Fund's total return was 120.7% (assuming the reinvestment of distributions totaling $2.84 per share). By comparison, the MSCI Telecommunications Index returned 36.6% during the same period. Several elements contributed to the Fund's outstanding performance: (BULLET) We effectively managed the balance of the portfolio's exposure to developed markets relative to emerging markets. During the first half of the year, for example, we generally steered clear of emerging markets, whose telecom stocks did not perform as well as those of most other emerging sectors. We gradually re-entered Latin America in the fourth quarter of 1998, though, when major Latin telecoms like Brazil's Telebras and Telesp were selling at bargain-basement valuations -- and in time for the early-1999 Latin rally. We deployed assets more meaningfully elsewhere in the emerging world starting in the second quarter of 1999. (BULLET) Stock selection was notably successful in developed Europe, where we fared especially well in the U.K. and Finland. (BULLET) We raised the Fund's allocation to Japan, where there is historically high positive correlation between the economy's strength and the performance of telecom stocks like the giant Nippon Telephone & Telegraph (NTT). Evidence of recovery in the Japanese economy now appears indisputable, which thus augurs well for telecom shares there. Another plus is that NTT, for instance, is undergoing a major corporate restructuring. We believe this will have very favorable implications for NTT's own shares as well as those of the broader Japanese telecom sector, in which we have built widely diversified exposure. Thank you for your support, and please feel free to call upon us at any time if you have questions. Sincerely yours, Credit Suisse Asset Management Global Telecommunications Management Team Steven D. Bleiberg, Managing Director Richard W. Watt, Managing Director Scott Lewis, Director James A. Abate, Director Emily Alejos, Director Robert B. Hrabchak, Director INTERNATIONAL INVESTING ENTAILS SPECIAL RISK CONSIDERATIONS, INCLUDING CURRENCY FLUCTUATIONS, LOWER LIQUIDITY, ECONOMIC AND POLITICAL RISKS, AND DIFFERENCES IN ACCOUNTING METHODS. SINCE THE FUND FOCUSES ITS INVESTMENTS ON COMPANIES INVOLVED IN TELECOMMUNICATIONS, AN INVESTMENT IN THE FUND MAY INVOLVE A GREATER DEGREE OF RISK THAN AN INVESTMENT IN OTHER MUTUAL FUNDS THAT SEEK CAPITAL APPRECIATION BY INVESTING IN A BROADER MIX OF ISSUES. MORE INFORMATION ABOUT THE FUND, INCLUDING CHARGES AND EXPENSES AND THE SPECIAL RISK CONSIDERATIONS ASSOCIATED WITH A SINGLE-INDUSTRY FUND, IS PROVIDED IN THE PROSPECTUS. 21 WARBURG PINCUS GLOBAL TELECOMMUNICATIONS FUND PORTFOLIO MANAGERS' LETTER (CONCLUDED) COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN THE WARBURG PINCUS GLOBAL TELECOMMUNICATIONS COMMON SHARES AND THE MSCI TELECOMMUNICATIONS INDEX 1 FROM INCEPTION (12/4/96) AND AT EACH QUARTER END. (UNAUDITED) [GRAPHIC OMITTED] EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC Warburg Pincus Global Morgan Stanley Telecommunications Composite Index Fund Telecommunications 1 12/4/96 $10,000 $10,000 2/28/97 $10,787 $10,253 5/31/97 $11,460 $10,727 8/31/97 $11,533 $10,729 11/30/97 $12,859 $12,107 2/28/98 $15,178 $13,864 5/31/98 $16,664 $15,022 8/31/98 $14,461 $15,079 11/30/98 $19,460 $17,255 2/28/99 $24,138 $20,840 5/31/99 $28,188 $21,044 8/31/99 $31,920 $20,598 COMMON SHARES ------------------ AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS ENDED AUGUST 31, 1999 One Year 120.73% From Inception (12/4/96) 52.69% Note: Past performance is not predictive of future performance. Investment return and principle value of an investment will fluctuate so that an investor's shares upon redemption may be worth more or less than their original cost. 1 The Morgan Stanley Telecommunications Index is an unmanaged index (with no defined investment objective) of telecommunciations equities that include reinvestment of dividends and is compiled by Morgan Stanley Capital International. 22 WARBURG PINCUS GLOBAL TELECOMMUNICATIONS FUND SCHEDULE OF INVESTMENTS AUGUST 31, 1999 NUMBER OF SHARES VALUE ---------- ------------ COMMON STOCKS -- 92.7% AUSTRIA -- 0.5% ELECTRONIC COMP. & INSTRUMENTS -- 0.5% Austria Technologie & Systemtechnik AG** .......................... 9,750 $ 300,192 ------------ TOTAL AUSTRIA ................................. 300,192 ------------ BELGIUM -- 0.0% TELECOMMUNICATIONS -- 0.0% Telinfo NV-Strip VVPR** ....................... 61 1 ------------ TOTAL BELGIUM ................................. 1 ------------ CANADA -- 1.1% TELECOMMUNICATIONS -- 1.1% BCE, Inc. ..................................... 4,317 201,820 Research in Motion Ltd.#** .................... 18,000 535,500 ------------ 737,320 ------------ TOTAL CANADA .................................. 737,320 ------------ CHINA -- 1.4% TELECOMMUNICATIONS -- 1.4% China Telecom (Hong Kong), Ltd. ADR#** ...................................... 14,300 889,281 ------------ TOTAL CHINA ................................... 889,281 ------------ FINLAND -- 2.5% TELECOMMUNICATIONS -- 2.5% Nokia Corp. ADR ............................... 10,700 892,112 Sonera Group Oyj .............................. 30,700 744,178 ------------ TOTAL FINLAND ................................. 1,636,290 ------------ GERMANY -- 2.1% TELECOMMUNICATIONS -- 2.1% Mannesmann AG ................................. 6,969 1,053,333 Telegate AG** ................................. 9,200 296,376 ------------ 1,349,709 ------------ TOTAL GERMANY ................................. 1,349,709 ------------ GREECE -- 1.2% TELECOMMUNICATIONS -- 1.2% Hellenic Telecommunications Organization S.A. ADR#** .................... 73,760 760,650 ------------ TOTAL GREECE .................................. 760,650 ------------ INDIA -- 2.1% TELECOMMUNICATIONS -- 2.1% Mahanagar Telephone Nigam, Ltd. 144A GDR** .................................. 48,000 522,000 Videsh Sanchar Nigam, Ltd. GDR# ........................................ 61,100 864,565 ------------ 1,386,565 ------------ TOTAL INDIA ................................... 1,386,565 ------------ NUMBER OF SHARES VALUE ---------- ------------ ITALY -- 0.4% TELECOMMUNICATIONS -- 0.4% Telecom Italia S.p.A .......................... 27,024 $ 272,018 ------------ TOTAL ITALY ................................... 272,018 ------------ JAPAN -- 20.1% BUSINESS & PUBLIC SERVICES -- 3.0% Fuji Soft ABC, Inc. ........................... 24,470 1,696,181 Trans Cosmos, Inc. ............................ 2,700 274,576 ------------ 1,970,757 ------------ ELECTRONIC COMP. & INSTRUMENTS -- 2.8% Internet Intitiative Japan, Inc. ADR** ....................................... 10,000 516,250 Megachips Corp. ............................... 3,000 413,164 Sony Corp. ADR ................................ 7,200 916,650 ------------ 1,846,064 ------------ TELECOMMUNICATIONS -- 14.3% Japan Telecom Co., Ltd. ....................... 35 692,712 KDD Corp. ..................................... 20,300 1,583,021 Nippon Telegraph & Telephone .................. 248 2,782,156 NTT Data Corp. ................................ 236 2,281,616 NTT Mobile Communication Network, Inc.# .............................. 55 912,975 NTT Mobile Communication Network, Inc. - New ......................... 64 1,056,533 ------------ 9,309,013 ------------ TOTAL JAPAN ................................... 13,125,834 ------------ NETHERLANDS -- 1.4% ELECTRICAL & ELECTRONICS -- 0.5% Equant N.V.** ................................. 3,484 308,190 ------------ TELECOMMUNICATIONS -- 0.9% Versatel Telecom International N.V.** ...................................... 44,100 605,532 ------------ TOTAL NETHERLANDS ............................. 913,722 ------------ PORTUGAL -- 3.4% TELECOMMUNICATIONS -- 3.4% Portugal Telecom S.A. ......................... 6,815 284,975 Telecel-Comunicacoes Pessoais S.A. ........................................ 14,751 1,903,918 ------------ 2,188,893 ------------ TOTAL PORTUGAL ................................ 2,188,893 ------------ SOUTH KOREA -- 0.7% TELECOMMUNICATIONS -- 0.7% SK Telecom Co., Ltd. ADR** .................... 38,310 433,382 ------------ TOTAL SOUTH KOREA ............................. 433,382 ------------ See Accompanying Notes to Financial Statements. 23 WARBURG PINCUS GLOBAL TELECOMMUNICATIONS FUND (CONTINUED) SCHEDULE OF INVESTMENTS AUGUST 31, 1999 NUMBER OF SHARES VALUE ---------- ------------ SPAIN -- 1.3% BROADCASTING & PUBLISHING -- 0.7% Sogecable S.A.** .............................. 17,000 $ 462,900 ------------ TELECOMMUNICATIONS -- 0.6% Telefonica S.A. ADR ........................... 8,100 390,319 ------------ TOTAL SPAIN ................................... 853,219 ------------ SWEDEN -- 1.0% TELECOMMUNICATIONS -- 1.0% Telefonaktiebolaget L.M. Ericsson ADR ................................ 5,054 164,571 Telefonaktiebolaget L.M. Ericsson Cl. B .............................. 14,550 468,629 ------------ 633,200 ------------ TOTAL SWEDEN .................................. 633,200 ------------ UNITED KINGDOM -- 8.0% ELECTRONIC COMP. & INSTRUMENTS -- 0.8% Arm Holdings plc** ............................ 35,744 505,217 ------------ TELECOMMUNICATIONS -- 7.2% British Telecommunications plc ................ 70,700 1,083,424 COLT Telecom Group plc ADR** .................. 15,963 1,398,758 Filtronic plc ................................. 26,000 346,170 Orange plc** .................................. 73,885 1,246,286 Vodafone AirTouch plc ......................... 18,026 363,492 Vodafone AirTouch plc ADR ..................... 1,467 294,225 ------------ 4,732,355 ------------ TOTAL UNITED KINGDOM .......................... 5,237,572 ------------ UNITED STATES -- 45.5% AEROSPACE & MILITARY TECHNOLOGY -- 1.2% General Motors Corp. Cl. H** .................. 4,543 233,964 Loral Space & Communications, Ltd.** ...................................... 30,260 556,027 ------------ 789,991 ------------ BROADCASTING & PUBLISHING -- 0.9% TCI Satellite Entertainment, Inc.** ...................................... 57,615 205,253 Time Warner, Inc. ............................. 6,197 367,560 ------------ 572,813 ------------ BUSINESS & PUBLIC SERVICES -- 1.1% Microsoft Corporation** ....................... 7,500 694,219 ------------ DATA PROCESSING & REPRODUCTION -- 2.1% Sun Microsystems, Inc.** ...................... 17,500 1,391,250 ------------ NUMBER OF SHARES VALUE ---------- ------------ UNITED STATES -- (CONTINUED) ELECTRONIC COMP. & INSTRUMENTS -- 7.6% America Online** .............................. 6,204 $ 566,503 Cisco Systems** ............................... 31,894 2,162,812 Go2Net, Inc.#** ............................... 11,700 760,500 JDS Uniphase Corp.** .......................... 8,380 888,804 Network Appliance, Inc.** ..................... 2,640 173,415 Yahoo, Inc.** ................................. 2,566 378,485 ------------ 4,930,519 ------------ TELECOMMUNICATIONS -- 32.6% Allegiance Telecom, Inc.** .................... 16,500 992,062 American Tower Corp., Cl. A** ................. 19,500 443,625 AT&T Corp. - Liberty Media Group Cl. A** ..................................... 17,600 563,200 Bell Atlantic Corp. ........................... 16,500 1,010,625 BellSouth Corp. ............................... 18,800 850,700 Broadcom Corp. Cl. A** ........................ 13,712 1,765,420 Cincinnati Bell, Inc. ......................... 30,300 560,550 Comcast Corp. - Special Cl. A** ............... 20,804 678,730 Cox Communications, Inc.** .................... 15,400 572,688 CTC Communications Corp.** .................... 33,000 497,062 EchoStar Communications Corp.** ..................................... 4,800 401,400 Global Crossing, Ltd.#** ...................... 11,327 293,086 Lucent Technologies ........................... 17,146 1,098,416 MCI WorldCom, Inc.** .......................... 21,495 1,628,246 MediaOne Group, Inc.** ........................ 2,372 155,959 Motorola, Inc. ................................ 7,300 673,425 Nextel Communications, Inc. Cl. A** ..................................... 9,000 520,313 NEXTLINK Communications, Inc.** ...................................... 10,000 503,750 Pacific Gateway Exchange, Inc.#** ..................................... 30,400 619,400 PMC-Sierra, Inc.** ............................ 16,200 1,506,600 QUALCOMM, Inc.** .............................. 4,000 768,750 Qwest Communications International, Inc.** ....................... 10,000 287,500 SBC Communications, Inc. ...................... 10,121 485,808 Sprint Corp. (FON Group) ...................... 21,000 931,875 Sprint Corp. (PCS Group)** .................... 10,708 639,803 Teligent, Inc. Cl. A** ........................ 10,792 680,571 Time Warner Telecom, Inc. Cl. A** ..................................... 16,000 432,000 Viatel, Inc.** ................................ 21,600 835,650 WinStar Communications, Inc.** ................ 18,000 914,625 ------------ 21,311,839 ------------ TOTAL UNITED STATES ........................... 29,690,631 ------------ TOTAL COMMON STOCKS (Cost $55,305,677) .......................... $ 60,408,479 ------------ See Accompanying Notes to Financial Statements. 24 WARBURG PINCUS GLOBAL TELECOMMUNICATIONS FUND (CONCLUDED) SCHEDULE OF INVESTMENTS AUGUST 31, 1999 PAR (000) VALUE ---------- ------------ SHORT-TERM INVESTMENT -- 8.1% BBH Grand Cayman U.S. Dollar Time Deposit 4.500% 09/01/99 ............................. $5,250 $ 5,250,000 (Cost $5,250,000) ----------- TOTAL INVESTMENTS -- 100.8% (Cost $60,555,677*) ......................... $65,658,479 LIABILITIES IN EXCESS OF OTHER ASSETS-- (0.8%) ....................... (492,988) ----------- TOTAL NET ASSETS-- 100.0% ..................... $65,165,491 =========== * Cost for Federal income tax purposes at August 31, 1999 is $60,556,454. The gross appreciation (depreciation) on a tax basis is as follows: Gross Appreciation $ 6,641,183 Gross Depreciation (1,539,158) ----------- Net Appreciation $ 5,102,025 =========== ** Non-income producing securities. # Security or a portion thereof is out on loan. INVESTMENT ABBREVIATIONS ADR ................................................American Depository Receipts GDR ..................................................Global Depository Receipts See Accompanying Notes to Financial Statements. 25 WARBURG PINCUS SELECT ECONOMIC VALUE EQUITY FUND PORTFOLIO MANAGERS' LETTER September 15, 1999 Dear Shareholders: We are writing to report on the results of the Warburg Pincus Select Economic Value Equity Fund (the "Fund") for the fiscal year ended August 31, 1999. At August 31, 1999, the net asset value ("NAV") of the Fund's institutional shares was $20.15, compared to an NAV of $13.17 on August 31, 1998. As a result, the institutional shares' total return was 53.2% (assuming the reinvestment of dividends totaling $0.02 per share). By comparison, the Standard & Poor's 500 Index (the "Index") returned 39.9% during the same period. At August 31, 1999, the NAV of the Fund's common shares was $20.11, compared to an NAV of $15.95 at their inception of investment operations on October 30, 1998. Including the effect of linkage to the institutional shares, the common shares' total return between August 31, 1998 and August 31, 1999 thus was 52.8% (assuming the reinvestment of dividends totaling $0.02 per share). By comparison, the Index returned 39.9% during the same period. We attribute the fund's substantial outperformance of the S&P benchmark during the fiscal year to a combination of sector weightings and stock selection whose timing proved to be advantageous. This was notably true in technology, basic materials and health care: (BULLET) TECHNOLOGY. Early in the fiscal year, we built a large overweight position in semiconductor manufacturers and equipment makers. Our thesis was that many of these companies were selling at unusually reduced valuations and would benefit from falling interest rates and improved economic conditions (particularly technology spending). This strategy paid off, as semiconductor stocks such as Motorola, Micron Technology and Applied Materials enjoyed an extraordinary rally during 1998's fourth quarter and well into 1999. We were subsequently able to re-enter selected technology positions at lower valuations and profited from the sector again. (BULLET) CYCLICALS. We chose to heavily overweight cyclical industries because they were available at historically depressed valuations at a time when prospects for global economic growth were improving. This succeeded, as basic materials and energy were among 1999's best-performing sectors through the end of August. In basic materials, we realized good gains from metals companies like Inco and Newmont Mining, chemicals giant DuPont and a variety of paper manufacturers. Energy exposure most benefited from an exploration and production company, Union Pacific Resources, and integrated oils like Exxon, Chevron and Marathon. (BULLET) HEALTH CARE. The Fund's holdings in health care -- our largest single sector exposure -- detracted from performance in the second half of the fiscal year. Notably weak names included Health Management Associates, Watson Pharmaceuticals and Mylan Labs. Nonetheless, health care was sufficiently strong in late 1998 to be a net positive for the portfolio's overall return. As developments occur that we believe would be of interest to you, we will keep you informed. Meanwhile, if you have any questions about your portfolio or the capital markets generally, please feel free to call upon us at any time. Sincerely yours, Credit Suisse Asset Management Select Economic Value Equities Management Team William W. Priest, Jr., Managing Director James A. Abate, Director D. Susan Everly, Vice President 26 WARBURG PINCUS SELECT ECONOMIC VALUE EQUITY FUND PORTFOLIO MANAGERS' LETTER (CONCLUDED) COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN THE WARBURG PINCUS SELECT ECONOMIC VALUE EQUITY INSTITUTIONAL SHARES AND THE S&P 500 INDEX 1 FROM INCEPTION (7/31/98) AND AT EACH QUARTER END. (UNAUDITED) [GRAPHIC OMITED] EDGAR REPRESENTATION OF DATA POINTS USED IN THE PRINTED GRAPHIC Warburg Pincus Select Economic Value Fund S&P 500 Institutional Shares Index 1 07/31/98 $10,000 $10,000 08/31/98 $ 8,780 $ 8,809 11/30/98 $11,447 $10,753 02/28/99 $11,770 $11,479 05/31/99 $12,744 $12,108 08/31/99 $13,452 $12,324 INSTITUTIONAL SHARES -------------------- AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS ENDED AUGUST 31, 1999 One Year 53.21% From Inception (7/31/98) 31.34% Note: Past performance is not predictive of future performance. Investment return and principle value of an investment will fluctuate so that an investor's shares upon redemption may be worth more or less than their original cost. 1 The S&P 500 Index is an unmanaged index (with no defined investment objective) of common stocks, includes reinvestment of dividends, and is a registered trademark of Standard & Poor's Corporation. 27 WARBURG PINCUS SELECT ECONOMIC VALUE EQUITY FUND SCHEDULE OF INVESTMENTS AUGUST 31, 1999 NUMBER OF SHARES VALUE ---------- ------------ COMMON STOCKS -- 99.5% AGRICULTURE -- 7.4% Archer-Daniels-Midland ........................ 102,375 $ 1,330,875 Monsanto Co. .................................. 31,800 1,305,787 ------------ 2,636,662 ------------ COMPUTERS, SOFTWARE & SERVICING-- 6.6% America Online** .............................. 3,000 273,937 I2 Technologies** ............................. 17,400 552,450 Metacreations Corp.** ......................... 8,740 54,625 Microsoft Corporation** ....................... 15,900 1,471,744 ------------ 2,352,756 ------------ CONSUMER PRODUCTS & SERVICES -- 10.8% Colgate-Palmolive Company ..................... 13,700 732,950 Fruit of The Loom, Inc.** ..................... 41,590 291,130 Procter & Gamble Co. (The) .................... 3,900 387,075 Unilever N.V. ADR ............................. 22,900 1,577,237 Wrigley (Wm.) Jr. Company ..................... 10,500 822,281 ------------ 3,810,673 ------------ ELECTRONICS -- 11.4% Advanced Micro Devices, Inc.** ................ 42,500 879,219 Atmel Corp.** ................................. 11,800 463,887 Cisco Systems** ............................... 10,200 691,687 LSI Logic Corp.** ............................. 7,100 402,925 Micron Technology, Inc.** ..................... 3,300 246,056 Motorola, Inc. ................................ 14,800 1,365,300 ------------ 4,049,074 ------------ ENERGY & OIL EXPLORATION -- 11.8% Chevron Corp. ................................. 18,400 1,697,400 Exxon Corporation ............................. 16,900 1,332,988 Noble Affiliates, Inc. ........................ 10,500 325,500 Union Pacific Resources Group, Inc. ........................................ 25,900 464,581 USX-Marathon Group ............................ 12,000 373,500 ------------ 4,193,969 ------------ FOOD & BEVERAGE -- 3.9% Coca-Cola Co. ................................. 23,400 1,399,613 ------------ HEALTH CARE -- 8.8% Columbia/HCA Healthcare Corp. ....................................... 37,900 933,288 Guidant Corp.** ............................... 15,200 892,050 Health Management Associates, Inc.** ...................................... 40,300 322,400 Medtronic, Inc. ............................... 12,300 962,475 ------------ 3,110,213 ------------ INVESTMENT TRUST -- 4.7% Nasdaq-100 Shares# ............................ 14,000 1,671,250 ------------ NUMBER OF SHARES VALUE ---------- ------------ METALS & MINING -- 9.9% Barrick Gold .................................. 36,590 $ 708,931 Cominco, Ltd. ................................. 22,900 397,888 Homestake Mining .............................. 50,000 425,000 Inco, Ltd. .................................... 21,800 446,900 Newmont Mining ................................ 47,900 978,956 Placer Dome, Inc. ............................. 54,000 560,250 ------------ 3,517,925 ------------ PHARMACEUTICALS -- 16.0% Coulter Pharmaceutical, Inc.#** ............... 3,540 70,579 Eli Lilly and Company ......................... 13,900 1,037,288 Merck & Co. ................................... 18,000 1,209,375 Mylan Laboratories, Inc. ...................... 30,100 596,356 Pfizer, Inc. .................................. 12,100 456,775 Schering-Plough Corp. ......................... 27,300 1,434,956 Watson Pharmaceuticals, Inc.** ................ 24,200 868,175 ------------ 5,673,504 ------------ RETAIL -- 3.4% Wal-Mart Stores ............................... 27,400 1,214,163 ------------ TELECOMMUNICATIONS -- 1.9% Nextel Communications, Inc. Cl. A** ..................................... 7,400 427,813 Sprint Corp. (PCS Group)** .................... 3,800 227,050 ------------ 654,863 ------------ TOBACCO -- 2.9% Philip Morris Companies, Inc. ................. 27,300 1,022,044 ------------ TOTAL COMMON STOCKS (Cost $33,911,614) .......................... $ 35,306,709 ------------ PAR (000) ------- SHORT-TERM INVESTMENT -- 0.3% BBH Grand Cayman U.S. Dollar Time Deposit 4.500% 09/01/99 ............................. $111 $ 111,304 (Cost $111,304) ------------ See Accompanying Notes to Financial Statements. 28 WARBURG PINCUS SELECT ECONOMIC VALUE EQUITY FUND (CONCLUDED) NUMBER OF SHARES VALUE ---------- ------------ OPTIONS -- 0.1% Call Option Bkx Index Oct99 830 ................................... 18 $ 30,375 Call Option Bkx Index Oct99 840 ................................... 17 22,100 ----------- TOTAL OPTIONS (Cost $146,880) ............................. $ 52,475 ----------- TOTAL INVESTMENTS -- 99.9% (Cost $34,169,798*) ......................... $35,470,488 OTHER ASSETS IN EXCESS OF LIABILITIES-- 0.1% ....................... 18,798 ----------- TOTAL NET ASSETS -- 100.0% .................... $35,489,286 =========== * Cost for Federal income tax purposes at August 31, 1999 is $34,256,977. The gross appreciation (depreciation) on a tax basis is as follows: Gross Appreciation ....................... $ 3,367,837 Gross Depreciation ....................... (2,154,326) ----------- Net Appreciation ......................... $ 1,213,511 =========== ** Non-income producing securities. INVESTMENT ABBREVIATIONS ADR ................................................American Depository Receipts See Accompanying Notes to Financial Statements. 29 WARBURG PINCUS LONG-SHORT MARKET NEUTRAL FUND PORTFOLIO MANAGERS' LETTER September 15, 1999 Dear Shareholders: We are writing to report on the results of the Warburg Pincus Long-Short Market Neutral Fund (the "Fund") for the fiscal year ended August 31, 1999. At August 31, 1999, the net asset value ("NAV") of the Fund's institutional shares was $14.21, compared to an NAV of $15.27 on August 31, 1998. As a result, the institutional shares' total return was down 5.7% (assuming the reinvestment of dividends and distributions totaling $0.20 per share). By comparison, the Salomon Smith Barney U.S. One-Month Treasury Bill Index benchmark (the "Index") returned 4.3% during the same period. At August 31, 1999, the NAV of the Fund's common shares was $14.19, compared to an NAV of $15.19 at their inception of investment operations on September 8, 1998. Including the effect of linkage to the institutional shares, the common shares' total return between August 31, 1998 and August 31, 1999 thus was down 5.8% (assuming the reinvestment of dividends and distributions totaling $0.20 per share). By comparison, the Index returned 4.3% during the same period. We attribute the Fund's underperformance of its benchmark during the fiscal year to a combination of broad-based and sector-specific factors that prevailed in 1999 through the end of August. Broad market volatility was unusually high, as investors often were preoccupied with concerns about U.S. interest rates and inflation. As a result, two aspects of market activity worked against our particular investment discipline, which focuses on stock selection rather than macro-level or sector-related issues. First, there was a general unwillingness to commit to relatively long-term positions, which caused a choppier-than- usual trading environment. Second, there was an emphasis on positioning portfolios to benefit from expectations about interest rates by betting on industry sectors rather than individual stocks. In the latter trend, stocks within many sectors performed similarly, which negated the normal benefit we derive by highlighting companies with especially strong or weak fundamentals. As developments occur that we believe would be of interest to you, we will keep you informed. Meanwhile, if you have any questions about your portfolio or the capital markets generally, please feel free to call upon us at any time. Sincerely yours, Credit Suisse Asset Management Structured Equities Management Team William W. Priest, Jr., Managing Director Eric N. Remole, Managing Director Marc E. Bothwell, Vice President Michael A. Welhoelter, Vice President INVESTING IN SHARES OF THE FUND CAN BE MORE VOLATILE AND RISKY THAN SOME OTHER FORMS OF INVESTMENTS. IN ADDITION, IF THE ADVISER TAKES LONG POSITIONS IN STOCKS THAT DECLINE OR SHORT POSITIONS IN STOCKS THAT INCREASE IN VALUE, THEN LOSSES OF THE FUND MAY EXCEED THOSE OF OTHER STOCK MUTUAL FUNDS THAT HOLD LONG POSITIONS ONLY. 30 WARBURG PINCUS LONG-SHORT MARKET NEUTRAL FUND PORTFOLIO MANAGERS' LETTER (CONCLUDED) COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN THE WARBURG PINCUS LONG-SHORT MARKET NEUTRAL INSTITUTIONAL SHARES AND THE 30-DAY U.S. TREASURY BILL INDEX 1 FROM INCEPTION (7/31/98) AND AT EACH QUARTER END. (UNAUDITED) Warburg Pincus Long-Short 30-Day Market Neutral U.S. Treasury Bill Institutional Shares Index 1 07/31/98 $10,000 $10,000 08/31/98 $10,180 $10,040 11/30/98 $ 9,927 $10,133 02/28/99 $10,061 $10,241 05/31/99 $ 9,804 $10,353 08/31/99 $ 9,601 $10,465 Note: Past performance is not predictive of future performance. Investment return and principle value of an investment will fluctuate so that an investor's shares upon redemption may be worth more or less than their original cost. 1 Monthly return equivalents of yield averages which are not marked to market. The 1 month T-Bill index consists of the last 1 month T-Bill issues. 31 WARBURG PINCUS LONG-SHORT MARKET NEUTRAL FUND SCHEDULE OF INVESTMENTS AUGUST 31, 1999 NUMBER OF SHARES VALUE ---------- ------------ COMMON STOCKS -- 87.0% AEROSPACE/DEFENSE -- 2.1% Textron, Inc. ................................. 2,000 $ 161,500 ------------ AIR TRANSPORT-FREIGHT -- 1.7% Southwest Airlines Co. ........................ 7,800 130,162 ------------ AUTOMOTIVE -- 13.5% Delphi Automotive Systems Corp. ....................................... 1,300 24,375 Ford Motor Co. ................................ 6,000 312,750 General Motors Corp. .......................... 1,900 125,638 Johnson Controls, Inc. ........................ 5,700 389,738 Navistar International Corp. .................. 4,100 199,363 ------------ 1,051,864 ------------ BEVERAGES & TOBACCO -- 0.3% Anheuser-Busch Cos., Inc. ..................... 300 23,100 ------------ CABLE -- 2.9% At Home Corp. Series A** ...................... 5,600 224,700 ------------ CHEMICALS -- 3.1% Air Products & Chemicals, Inc. ................ 4,200 142,800 Lyondell Petrochemical Co. .................... 6,700 97,569 ------------ 240,369 ------------ COMMUNICATIONS & MEDIA -- 1.3% A. H. Belo Corp. Cl. A ........................ 5,400 102,263 ------------ COMPUTERS, SOFTWARE & SERVICING-- 0.9% GTECH Holdings ................................ 1,200 30,300 RealNetworks, Inc.** .......................... 500 40,875 ------------ 71,175 ------------ CONSTRUCTION & BUILDING MATERIALS-- 4.0% Ingersoll-Rand Co. ............................ 2,500 159,063 Lafarge Corp. ................................. 2,500 68,750 Masco Corp. ................................... 3,000 84,938 ------------ 312,751 ------------ CONSUMER PRODUCTS & SERVICES -- 1.8% Avon Products ................................. 2,400 105,300 Nu Skin Enterprises, Inc.** ................... 3,200 34,200 ------------ 139,500 ------------ ELECTRIC UTILITIES -- 1.6% Niagara Mohawk Power .......................... 5,700 86,213 Pinnacle West Capital ......................... 1,100 41,800 ------------ 128,013 ------------ ELECTRONICS -- 7.4% Circuit City Stores ........................... 5,000 215,000 Cisco Systems, Inc.** ......................... 2,200 149,188 Halliburton Co. ............................... 400 18,550 Linear Technology Corp. ....................... 1,800 113,288 NUMBER OF SHARES VALUE ---------- ------------ ELECTRONICS -- (CONTINUED) Teradyne, Inc.** .............................. 500 $ 34,031 UtiliCorp United, Inc. ........................ 1,900 44,056 ------------ 574,113 ------------ ENERGY & OIL EXPLORATION -- 0.8% Tidewater Inc. ................................ 1,900 61,750 ------------ FINANCIAL SERVICES -- 15.5% 20th Century Industries ....................... 1,700 31,875 Fannie Mae .................................... 300 18,638 Hartford Financial Services, Inc. ............. 6,200 281,713 J.P. Morgan & Co. Inc. ........................ 2,400 310,050 Jefferson-Pilot Corp. ......................... 1,500 100,125 Lehman Brothers Holdings Inc. ................. 3,700 198,875 Regions Financial Corp. ....................... 2,100 74,156 T. Rowe Price Associates, Inc. ................ 1,400 43,313 UnionBanCal Corp. ............................. 3,000 115,125 Merrill Lynch & Co., Inc. ..................... 400 29,850 ------------ 1,203,720 ------------ FOOD & BEVERAGE -- 4.9% Coors, (Adolph) Cl. B ......................... 1,900 108,419 Fleming Companies, Inc. ....................... 12,800 154,400 U.S. Foodservice** ............................ 5,800 120,713 ------------ 383,532 ------------ FOREST PRODUCTS & PAPER -- 1.3% Weyerhaeuser Co. .............................. 1,800 101,250 ------------ GAS UTILITIES -- 0.6% Boise Cascade Corp. ........................... 500 18,188 Peoples Energy ................................ 700 25,506 ------------ 43,694 ------------ HEALTH CARE -- 2.7% Aetna Inc. .................................... 700 54,425 Wellpoint Health Networks, Inc.** ...................................... 2,100 153,038 ------------ 207,463 ------------ METALS & MINING -- 1.7% Bethlehem Steel Corp.** ....................... 3,200 24,600 Freeport-McMoran Copper & Gold, Inc. Cl. B ............................ 4,300 69,069 Ryerson Tull, Inc. ............................ 2,200 41,663 ------------ 135,332 ------------ OIL SERVICES -- 4.8% Enron Corp. ................................... 7,000 293,125 Pennzoil-Quaker State Co. ..................... 5,700 79,088 ------------ 372,213 ------------ PHARMACEUTICALS -- 0.2% Bergen Brunswig Corp. ......................... 1,000 15,438 ------------ See Accompanying Notes to Financial Statements. 32 WARBURG PINCUS LONG-SHORT MARKET NEUTRAL FUND (CONTINUED) NUMBER OF SHARES VALUE ---------- ------------ PUBLISHING & INFORMATION SERVICES-- 0.4% Donnelley (R.R.) & Sons Co. ................... 1,000 $ 31,375 ------------ REAL ESTATE -- 0.7% Host Marriott Corp. ........................... 1,700 15,725 Simon Debartolo Group ......................... 1,600 40,800 ------------ 56,525 ------------ RENTALS -- 0.6% Hertz Corp. ................................... 1,100 44,344 ------------ RETAIL-SPECIALTY APPAREL STORES-- 2.5% Dayton Hudson Corp. ........................... 1,000 58,000 Dollar Tree Stores** .......................... 1,500 49,500 Office Depot.** ............................... 5,900 61,581 Safeway, Inc.** ............................... 600 27,938 ------------ 197,019 ------------ TELECOMMUNICATIONS -- 9.7% AT&T Corp. .................................... 2,700 121,500 Galileo International, Inc. ................... 1,600 77,600 General Instrument Corp.** .................... 4,300 211,506 NEXTLINK Communications, Inc.** ...................................... 2,400 120,900 SBC Communications, Inc. ...................... 800 38,400 Tellabs, Inc. ................................. 3,100 184,644 ------------ 754,550 ------------ TOTAL COMMON STOCKS (Cost $7,156,349) ........................... $ 6,767,715 ------------ SECURITIES SOLD SHORT -- (91.0%) AEROSPACE & DEFENSE -- (3.1%) Lear Corp** ................................... (500) $ (20,094) Lockheed Martin Corp. ......................... (6,000) (222,000) ------------ (242,094) ------------ AGRICULTURE -- (0.6%) IMC Global, Inc. .............................. (3,000 (47,813) ------------ AUTOMOTIVE PARTS & EQUIPMENT-- (12.4%) Autonation, Inc.** ............................ (12,800) (165,600) General Motors Corp. Cl-H ..................... (6,900) (355,350) Genuine Parts Co. ............................. (1,100) (31,763) Goodyear Tire & Rubber Co. .................... (7,400) (415,325) ------------ (968,038) ------------ BUILDING & BUILDING MATERIALS -- (2.7%) Armstrong World Industries .................... (3,400) (165,113) Johns Manville Corp. .......................... (3,000) (43,125) ------------ (208,238) ------------ BUSINESS SERVICES -- (2.4%) ACNielsen Corp.** ............................. (1,300) (32,500) Catalina Marketing Corp.** .................... (1,700) (154,275) ------------ (186,775) ------------ NUMBER OF SHARES VALUE --------- ------------ COMMUNICATIONS & MEDIA -- (4.5%) America Online ................................ (2,100) $ (191,756) Chris-Craft Industries, Inc.** ................ (1,600) (81,000) USA Networks, Inc. ............................ (1,700) (76,288) ------------ (349,044) ------------ COMPUTERS, SOFTWARE & SERVICING -- (1.2%) Tandy Corp. ................................... (2,000) (94,500) ------------ CONGLOMERATES -- (0.3%) General Electric Co. .......................... (200) (22,463) ------------ CONSUMER PRODUCTS & SERVICES -- (6.4%) Colgate-Palmolive Co. ......................... (2,900) (155,150) Fruit of The Loom, Inc. Cl. A ................ (2,400) (16,800) Gillette Co. .................................. (3,300) (153,863) Newell Rubbermaid, Inc. ....................... (2,200) (90,200) Whitman Corp. ................................. (5,000) (83,438) ------------ (499,451) ------------ ELECTRIC UTILITIES -- (1.2%) Unicom Corp. .................................. (2,500) (96,563) ------------ ELECTRONICS -- (6.6%) Atmel Corp.** ................................. (11,700) (459,956) Vishay Intertechnology** ...................... (2,450) (52,522) ------------ (512,478) ------------ ENERGY & OIL EXPLORATION -- (4.6%) Baker Hughes, Inc. ............................ (2,500) (85,000) USX - Marathon Group .......................... (2,000) (62,250) Weatherford International, Inc.** ............. (6,000) (213,750) ------------ (361,000) ------------ ENVIRONMENTAL SERVICES -- (0.2%) Waste Management, Inc. ........................ (600) (13,088) ------------ FINANCIAL SERVICES -- (15.6%) American Financial Group ...................... (3,900) (115,050) American International Group Inc. ........................................ (750) (69,516) Bank of America Corp. ......................... (5,100) (308,550) CCB Financial Corp. ........................... (1,100) (51,975) Charles Schwab Corp. .......................... (2,000) (79,000) Cincinnati Financial Corp. .................... (1,100) (43,588) MBIA, Inc. .................................... (3,200) (166,000) MGIC Investment Corp. ......................... (2,400) (104,250) People's Bank/Connecticut ..................... (2,100) (55,125) PMI Group, Inc. ............................... (750) (31,875) Union Planters Corporation .................... (2,300) (97,031) Wachovia Corp. ................................ (1,200) (94,050) ------------ (1,216,010) ------------ FOOD & BEVERAGE -- (0.9%) Coca-Cola Co. ................................. (1,100) (65,794) ------------ HEALTH CARE -- (1.1%) PE Corp. - PE Biosystems Group ................ (1,200) (82,575) ------------ See Accompanying Notes to Financial Statements. 33 WARBURG PINCUS LONG-SHORT MARKET NEUTRAL FUND (CONCLUDED) PAR (000) VALUE ---------- ------------ INDUSTRIAL GOODS & MATERIALS -- (0.7%) Owens-Illinois, Inc.** ........................ (600) $ (14,850) Southdown, Inc. ............................... (700) (35,350) ------------ (50,200) ------------ MEDICAL EQUIPMENT -- (2.3%) Beckman Coulter, Inc. ......................... (3,800) (180,025) ------------ OFFICE EQUIPMENT & SUPPLIES -- (2.8%) Harland ( John H. ) Co. ....................... (10,900) (216,638) ------------ OIL SERVICES -- (2.8%) Amerada Hess Corp. ............................ (3,500) (217,219) ------------ PAPER & FORESTRY PRODUCTS -- (4.8%) Bowater Inc. ................................. (7,000) (375,375) ------------ PHARMACEUTICALS -- (1.5%) Dura Pharmaceuticals** ........................ (2,000) (26,625) Forest Laboratories, Inc.** ................... (1,300) (62,969) Monsanto Co. .................................. (600) (24,638) ------------ (114,232) ------------ REAL ESTATE -- (2.4%) Archstone Communities Trust ................... (1,600) (34,200) Starwood Hotels & Resorts Worldwide, Inc. ............................. (700) (16,669) Vornado Realty Trust .......................... (4,000) (136,500) ------------ (187,369) ------------ RETAIL-SPECIALTY APPAREL STORES-- (2.9%) Gap, Inc. ..................................... (1,500) (58,688) Ikon Office Solutions ......................... (7,300) (81,213) Kohls Corp.** ................................. (1,200) (85,500) ------------ (225,401) ------------ TELECOMMUNICATIONS -- (6.5%) AT&T Corp. - Liberty Media Group Cl. A** ............................... (1,100) (35,200) Cabletron Systems, Inc.** ..................... (4,700) (79,019) Citizens Utilities Co. Cl. B .................. (2,700) (29,700) McLeodUSA, Inc. Class A** ..................... (10,800) (360,450) ------------ (504,369) ------------ TRANSPORTATION -- (0.5%) Wisconsin Central Transportation Corp.** ..................................... (2,600) (41,438) ------------ TOTAL SECURITIES SOLD SHORT (Cost $6,989,392) ........................... $ (7,078,190) ------------ PAR (000) VALUE ---------- ------------ REPURCHASE AGREEMENT -- 3.4% Bear Stearns (Agreement dated 08/31/99, to be repurchased at $266,930, collateralized by $235,000 U.S. Treasury Bond 9.375% due 02/15/06. Market Value of collateral is $275,526.) 5.430% 09/01/99 ............................. $267 $ 266,889 (Cost $266,889) ------------ TOTAL INVESTMENTS -- (0.6%) (Cost $433,846*) ............................ $ (43,586) OTHER ASSETS IN EXCESS OF LIABILITIES-- 100.6% ..................... 7,829,167 ------------ TOTAL NET ASSETS-- 100.0% ..................... $ 7,785,581 ============ * Cost for Federal income tax purposes at August 31, 1999 is $1,638,288. The gross appreciation (depreciation) on a tax basis is as follows: Gross Appreciation - Investments ............................ $ 133,371 Gross Depreciation - Investments ............................ (833,185) Gross Appreciation - Short Sales ............................ 48,770 Gross Depreciation - Short Sales ............................ (1,030,830) ----------- Net Depreciation ......................................... $(1,681,874) =========== ** Non-income producing securities. See Accompanying Notes to Financial Statements. 34 WARBURG PINCUS LONG-SHORT EQUITY FUND PORTFOLIO MANAGERS' LETTER September 15, 1999 DEAR SHAREHOLDERS: We are writing to report on the results of the Warburg Pincus Long-Short Equity Fund (the "Fund") for the fiscal year ended August 31, 1999. At August 31, 1999, the net asset value ("NAV") of the Fund's institutional shares was $16.57, compared to an NAV of $15.00 at their inception of investment operations on September 11, 1998. As a result, the institutional shares' total return between September 11, 1998 and August 31, 1999 was 13.4% (assuming the reinvestment of dividends and distributions totaling $0.45 per share). By comparison, the Standard & Poor's 500 Index1 (the "Index") returned 36.5% during the same period. At August 31, 1999, the NAV of the Fund's common shares was $16.51, compared to an NAV of $15.72 at their inception of investment operations on October 30, 1998. The common shares' total return thus was 7.8% between October 30, 1998 and August 31, 1999 (assuming the reinvestment of dividends and distributions totaling $0.45 per share). By comparison, the Index returned 21.6% during the same period. We attribute the Fund's modest underperformance of its S&P 500 benchmark during the fiscal year to a combination of broad-based and sector-specific factors that prevailed in 1999 through the end of August. Broad market volatility was unusually high, as investors often were preoccupied with concerns about U.S. interest rates and inflation. As a result, two aspects of market activity worked against our particular investment discipline, which focuses on stock selection rather than macro-level or sector-related issues. First, there was a general unwillingness to commit to relatively long-term positions, which caused a choppier-than- usual trading environment. Second, there was an emphasis on positioning portfolios to benefit from expectations about interest rates by betting on industry sectors rather than individual stocks. In the latter trend, stocks within many sectors performed similarly, which negated the normal benefit we derive by highlighting companies with especially strong or weak fundamentals. An additional contributor to underperformance was the simple fact that, as a fairly new portfolio that was (and is) small and growing, the Fund periodically experienced disproportionate volatility in response to relatively large cash flows. We fully expect that the Fund's relative performance will more closely track that of the Warburg Pincus Long-Short Market Neutral Fund, whose shares form its primary asset, as the Fund continues to grow larger. As developments occur that we believe would be of interest to you, we will keep you informed. Meanwhile, if you have any questions about your portfolio or the capital markets generally, please feel free to call upon us at any time. Sincerely yours, Credit Suisse Asset Management Structured Equities Management Team William W. Priest, Jr., Managing Director Eric N. Remole, Managing Director Marc E. Bothwell, Vice President Michael A. Welhoelter, Vice President INVESTING IN SHARES OF THE FUND CAN BE MORE VOLATILE AND RISKY THAN SOME OTHER FORMS OF INVESTMENTS. IN ADDITION, IF THE ADVISER TAKES LONG POSITIONS IN STOCKS THAT DECLINE OR SHORT POSITIONS IN STOCKS THAT INCREASE IN VALUE, THEN THE LOSSES OF THE FUND MAY EXCEED THOSE OF OTHER STOCK MUTUAL FUNDS THAT HOLD LONG POSITIONS ONLY. 1 The S&P Index is an unmanaged index (with no defined investment objective) of common stocks, includes reinvestments of dividends, and is a registered trademark of Standard & Poor's Corporation. 35 WARBURG PINCUS LONG-SHORT EQUITY FUND SCHEDULE OF INVESTMENTS AUGUST 31, 1999 NUMBER OF SHARES VALUE ---------- ------------ INVESTMENT COMPANY -- 90.1% Warburg Pincus Long-Short Market Neutral Fund, Institutional Shares ........................ 75,910 $1,078,687 (Cost $1,128,538) ---------- TOTAL INVESTMENTS -- 90.1% (Cost $1,128,538*) .......................... $1,078,687 OTHER ASSETS IN EXCESS OF LIABILITIES-- 9.9% ....................... 118,837 ---------- TOTAL NET ASSETS -- 100.0% .................... $1,197,524 ========== * Cost for Federal income tax purposes at August 31, 1999 is $1,155,006. The gross appreciation (depreciation) on a tax basis is as follows: Gross and Net Depreciation .............................. $(76,319) ======== See Accompanying Notes to Financial Statements. 36 WARBURG PINCUS U.S. CORE FIXED INCOME FUND PORTFOLIO MANAGERS' LETTER September 17, 1999 Dear Shareholders: We are writing to report on the results of the Warburg Pincus U.S. Core Fixed Income Fund (the "Fund") for the fiscal year ended August 31, 1999. At August 31, 1999, the net asset value ("NAV") of the Fund's institutional shares was $15.01, compared to an NAV of $15.72 on August 31, 1998. As a result, the institutional shares' total return was 2.4% (assuming the reinvestment of dividends and distributions totaling $1.08 per share). By comparison, the Lehman Brothers Aggregate Bond Index (the "Index") returned 0.8% during the same period. At August 31, 1999, the NAV of the Fund's common shares was $14.99, compared to an NAV of $15.68 at their inception of investment operations on October 30, 1998. Including the effect of linkage to the institutional shares, the common shares' total return between August 31, 1998 and August 31, 1999 was 2.1% (assuming the reinvestment of dividends and distributions totaling $0.85 per share). By comparison, the Index returned 0.8% during the same period. We attribute the Fund's outperformance of the Index benchmark during the fiscal year to our decisions regarding the portfolio's exposure to "spread product" (i.e., debt securities whose market valuation is driven by the difference, known as the "spread," between their yields and those of U.S. Treasury debt). As the fiscal year began in September 1998, we continued to be overweighted in spread product relative to the Index. This stance hurt the Fund's performance in the middle of 1998, when an extraordinary confluence of events in global financial markets -- including a sharp decline in the currencies, securities and economies of many developing nations; rapidly deteriorating political and macroeconomic conditions in Russia; and the collapse of a major hedge fund, Long-Term Capital Management -- caused prices of non-Treasury debt to plummet and their yield spreads to dramatically widen. We increased our spread product positions into the new fiscal year because we believed that they represented attractive fundamental value and would eventually recover. Our patience was rewarded in the fourth quarter of 1998 and the first quarter of 1999, as yield spreads contracted and spread-based sectors generated healthy gains. The outlook for spread product turned less favorable in the second quarter, however, when we felt that prices had exhausted much of their near-term potential and investors began to focus on the potential for an increase in interest rates. We responded by taking some profits and raising the portfolio's overall credit quality, notably in our exposure to below-investment-grade sectors like high yield and emerging market debt. Our timing proved fortunate, as both sectors subsequently outperformed spread products. As developments occur in the fixed income markets or at Credit Suisse Asset Management that we believe would be of interest to you, we will be sure to keep you informed. Meanwhile, if you have questions, please feel free to call upon us at any time. Sincerely yours, Credit Suisse Asset Management Fixed Income Management Team Gregg M. Diliberto, Managing Director Mark K. Silverstein, Managing Director Jo Ann Corkran, Director Jose A. Rodriguez, Director 37 WARBURG PINCUS U.S. CORE FIXED INCOME FUND PORTFOLIO MANAGERS' LETTER (CONCLUDED) COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN THE WARBURG PINCUS U.S. CORE FIXED INCOME INSTITUTIONAL SHARES AND THE LEHMAN BROTHERS AGGREGATE BOND INDEX 1 FROM INCEPTION (3/31/94) AND AT EACH QUARTER END. (UNAUDITED) [GRAPHIC OMITTED] EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC Warburg Pincus U.S. Core Lehman Brothers Fixed Income Aggregate Bond Institutional Shares Index 1 04/01/94 $10,000 $10,000 05/31/94 $ 9,913 $ 9,999 08/31/94 $10,017 $10,188 11/30/94 $ 9,812 $10,007 02/28/95 $10,204 $10,520 05/31/95 $10,864 $11,148 08/31/95 $11,078 $11,342 11/30/95 $11,475 $11,775 02/29/96 $11,590 $11,809 5/31/96 $11,464 $11,638 8/31/96 $11,658 $11,806 11/30/96 $12,328 $12,488 2/28/97 $12,420 $12,442 5/31/97 $12,567 $12,607 8/31/97 $13,001 $12,991 11/30/97 $13,327 $13,437 2/28/98 $13,670 $13,735 5/31/98 $13,898 $13,985 8/31/98 $14,011 $14,364 11/30/98 $14,381 $14,706 2/28/99 $14,352 $14,594 5/31/99 $14,489 $14,591 8/31/09 $14,343 $14,476 INSTITUTIONAL SHARES -------------------- AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS ENDED AUGUST 31, 1999 One Year 2.37% Three Years 7.15% Five Years 7.44% From Inception (3/31/94) 6.88% Note: Past performance is not predictive of future performance. Investment return and principle value of an investment will fluctuate so that an investor's shares upon redemption may be worth more or less than their original cost. 1 The Lehman Brothers Aggregate Bond Index is composed of the Lehman Government/Corporate Index and the Mortgage-Backed Securities Index and includes treasury issues, agency issues, corporate bond issues, and mortgage-backed securities. Total return comprises price appreciation/depreciation and income as a percentage of the original investment. Indexes are rebalanced monthly by market capitalization. 38 WARBURG PINCUS U.S. CORE FIXED INCOME FUND SCHEDULE OF INVESTMENTS AUGUST 31, 1999 PAR (000) VALUE ---------- ------------ CORPORATE BONDS -- 40.1% AEROSPACE/DEFENSE EQUIPMENT -- 0.1% Boeing Co. Debentures 7.500% 08/15/42 ............................. $ 150 $ 145,312 Sequa Corp. Senior Notes 9.000% 08/01/09 ............................. 290 285,650 ------------ 430,962 ------------ AUTOMOTIVE -- 0.3% Delco Remy International, Inc. Gtd. Sr. Sub Notes 10.625% 08/01/06 ............................ 210 219,712 Hayes Lemmerz International, Inc. 144A Sr. Sub. Notes 8.250% 12/15/08 ............................. 285 266,475 Hayes Wheels International, Inc. Gtd. Notes 11.000% 07/15/06 ............................ 55 59,125 Lear Corp. 7.960% 05/15/05 ............................. 540 531,900 Oxford Automotive, Inc. Sr. Sub. Notes 10.125% 06/15/07 ............................ 75 74,250 ------------ 1,151,462 ------------ BANKING -- 7.1% Bangko Sentral Pilipinas Yankee Bonds 8.600% 06/15/27 ............................. 1,655 1,278,487 Bay View Capital Corp. Sub. Notes 9.125% 08/15/07 ............................. 1,060 980,500 Chase Manhattan Bank Corp. Sub. Notes 6.500% 08/01/05 ............................. 240 233,700 6.750% 09/15/06 ............................. 630 607,162 7.250% 06/01/07 ............................. 490 489,387 6.375% 04/01/08 ............................. 360 339,300 Citicorp Sub. Notes, Series F 6.375% 11/15/08 ............................. 1,550 1,447,312 Credit Lyonnais Perpetual Sub. Variable Rate Notes, Rule 144A 6.437%(DAGGER)/(DAGGER)(DAGGER)(DAGGER) ..... 2,830 2,596,525 Deutsche Bank Financial 144A Pfd. 7.872%(DAGGER)/(DAGGER)(DAGGER)(DAGGER) ..... 1,600 1,503,064 Dresdner Bank 8.151% 06/30/31 ............................. 640 587,200 First Republic Bank Sub. Notes 7.750% 09/15/12 ............................. 2,080 1,908,400 ForeningsSparbanken AB Perpetual Sr. Sub. FRN 5.926%(DAGGER)/(DAGGER)(DAGGER)(DAGGER) ..... 980 964,271 PAR (000) VALUE ---------- ------------ BANKING -- (CONTINUED) Fuji Finance (Cayman), Ltd. Medium Term Notes 7.300%(DAGGER)/(DAGGER)(DAGGER)(DAGGER) .. $ 850 $ 739,500 Perpetual Sub. Notes 6.573%(DAGGER)/(DAGGER)(DAGGER)(DAGGER) .. 540 467,100 Fuji JGB Investment L.L.C., Noncumulative Preferred Securities, Series A 9.870%(DAGGER)/(DAGGER)(DAGGER)(DAGGER) ..... 1,620 1,595,700 Okobank Perpetual Medium Term FRN 5.598%(DAGGER)/(DAGGER)(DAGGER)(DAGGER) ..... 2,000 1,910,000 Santander Financial Issuances Perpetual 6.087%(DAGGER)/(DAGGER)(DAGGER)(DAGGER) ..... 750 680,625 Sanwa Bank Ltd Global Sub Notes 8.350% 07/15/09 ............................. 1,780 1,782,225 Skandinaviska Enskilda Banken Perpetual Sub. FRN 6.625%(DAGGER)/(DAGGER)(DAGGER)(DAGGER) .. 2,280 2,234,400 144A Perpetual Sub. FRN 6.500%(DAGGER)(DAGGER)(DAGGER) ........... 1,200 1,119,769 Sumitomo Bank Int'l. Finance 8.500% 06/15/09 ............................. 1,500 1,518,750 ------------ 24,983,377 ------------ BROADCASTING -- 1.1% Chancellor Media Corp. 144A Sr. Sub. Notes 8.000% 11/01/08 ............................. 225 216,000 Fox/Liberty Networks L.L.C., Registered Sr. Notes 8.875% 08/15/07 ............................. 1,390 1,410,850 Granite Broadcasting Corp. 144A Sr. Sub. Notes 8.875% 05/15/08 ............................. 190 182,400 HMV Media Group plc Senior Subordinated Yankee Notes, Series B 10.250% 05/15/08 ............................ 115 112,700 TV Guide, Inc. 8.125% 03/01/09 ............................. 380 357,200 Turner Broadcasting Systems, Inc. Sr. Notes 7.400% 02/01/04 ............................. 1,450 1,468,125 ------------ 3,747,275 ------------ BUILDING MATERIALS -- 0.1% Jackson Products, Inc. Notes 9.500% 04/15/05 ............................. 345 317,400 ------------ See Accompanying Notes to Financial Statements. 39 WARBURG PINCUS U.S. CORE FIXED INCOME FUND (CONTINUED) PAR (000) VALUE ---------- ------------ CABLE -- 1.5% Belo (A.H.) Corp. Sr. Notes 6.875% 06/15/02 ............................. $ 2,635 $ 2,615,237 Classic Cable Sr. Sub. Notes 9.875% 08/01/08 ............................. 150 151,500 CSC Holdings Inc. Sr. Notes 7.875% 12/15/07 ............................. 1,080 1,047,600 7.250% 07/15/08 ............................. 320 296,800 Diamond Cable Communications plc, Yankee Sr. Discount Notes 10.750% 02/15/07(DAGGER)(DAGGER) ............ 815 623,475 James Cable Partners L.P. Sr. Notes, Series B 10.750% 08/15/04 ............................ 245 248,062 Videotron Holdings plc Yankee Sr. Discount Notes 11.000% 08/15/05(DAGGER)(DAGGER) ............ 95 94,219 ------------ 5,076,893 ------------ CHEMICALS -- 0.1% Lyondell Chemical, Inc. Senior Secured Notes, Series A 9.625% 05/01/07 ........................ 110 111,650 Series B 9.875% 05/01/07 ........................ 115 115,862 ------------ 227,512 ------------ COMPUTERS, SOFTWARE & SERVICES -- 0.5% PSINET, Inc. 144A Sr. Notes 11.500% 11/01/08 ............................ 220 223,300 Seagate Technology, Inc. Sr. Debentures 7.450% 03/01/37 ............................. 1,710 1,541,137 ------------ 1,764,437 ------------ CONSULTING SERVICES -- 1.4% Comdisco Inc Mtn 7.250% 09/01/02 ............................. 3,050 3,030,937 Comdisco, Inc Ser H Mtn 7.230% 08/16/01 ............................. 1,850 1,850,000 ------------ 4,880,937 ------------ ENERGY -- 2.3% Crown Central Petroleum Sr. Notes 10.875% 02/01/05 ............................ 150 132,000 Dresser Industries, Inc. Debentures 7.600% 08/15/49 ............................. 1,820 1,794,975 PAR (000) VALUE ---------- ------------ Energy -- (continued) Korea Electric Power Global Unsubordinated Notes 6.375% 12/01/03 .......................... $ 60 $ 56,100 Yankee Debentures 7.000% 02/01/27 .......................... 1,575 1,433,250 Yankee Notes 7.000% 10/01/02 .......................... 1,735 1,685,119 Valero Energy Corp. 144A Putable Asset Trusts 6.750% 12/15/02 ............................. 2,945 2,864,012 ------------ 7,965,456 ------------ ENTERTAINMENT -- 1.6% Regal Cinemas, Inc. Sr. Sub. Notes 9.500% 06/01/08 ............................. 300 213,000 Time Warner, Inc. Debentures 8.050% 01/15/16 ............................. 1,935 1,976,119 6.850% 01/15/26 ............................. 3,560 3,555,550 ------------ 5,744,669 ------------ FINANCIAL SERVICES -- 6.4% American General Institutional Capital Trust Co. 144A Gtd. Notes, Series B 8.125% 03/15/46 ............................. 2,605 2,634,306 AT&T Capital Corp. Medium Term Note, Series 4 6.470% 12/03/99 ............................. 960 961,098 6.480% 12/03/99 ............................. 2,805 2,808,277 Ford Motor Credit Corp. 5.800% 01/12/09 ............................. 2,750 2,475,000 6.700% 07/16/04 ............................. 350 345,187 Industrial Credit & Investment Corp. 144A Yankee Medium Term Notes 7.550% 08/15/07 ............................. 40 36,500 L'Auxiliare du Credit Foncier de France Gtd. Notes 5.000% 09/25/02(DAGGER) .................. 2,235 2,167,950 Gtd. Notes 5.000% 10/22/02(DAGGER) .................. 155 151,109 Lehman Brothers Holdings, Inc. Global Notes 6.625% 04/01/04 .......................... 1,310 1,270,700 Notes 7.000% 05/15/03 .......................... 550 545,875 Long Island Savings Bank, Inc. Notes 7.000% 06/13/02 ............................. 1,670 1,661,650 See Accompanying Notes to Financial Statements. 40 WARBURG PINCUS U.S. CORE FIXED INCOME FUND (CONTINUED) PAR (000) VALUE ---------- ------------ FINANCIAL SERVICES -- (CONTINUED) MBNA Master Credit Card Trust Series 1997-I, Class A 6.550% 01/15/07 .......................... $ 2,200 $ 2,173,552 Series 1999-G, Class A 6.350% 12/15/06 .......................... 1,800 1,767,366 Merrill Lynch & Co. Notes 6.875% 11/15/18 ............................. 1,220 1,116,300 Prudential Insurance Co. of America 144A Capital Notes 6.875% 04/15/03 ........................ 1,600 1,590,000 144A Sr. Notes 6.375% 07/23/06 ........................ 800 755,000 ------------ 22,459,870 ------------ FOOD & BEVERAGE -- 0.6% AmeriServ Food Distribution, Inc. Gtd. Sr. Notes 8.875% 10/15/06 ............................. 150 129,000 Archibald Candy Corp. 144A Gtd. Sr. Secured Notes 10.250% 07/01/04 ............................ 400 398,000 Kroger Co. 7.250% 06/01/09 ............................. 1,500 1,462,500 Pantry, Inc. Sr. Sub. Notes 10.250% 10/15/07 ............................ 100 99,500 Premier Intl Foods PLC 12.000% 09/01/09 ............................ 130 131,300 ------------ 2,220,300 ------------ HEALTH CARE -- 0.2% Columbia/HCA Healthcare Corp. Debentures 8.360% 04/15/24 ............................. 840 751,800 ------------ Industrial Goods & Materials -- 0.4% Motors & Gears Inc. Sr. Notes, Series D 10.750% 11/15/06 ............................ 335 330,812 Tyco Intl Group 6.125% 01/15/09 ............................. 1,250 1,139,063 ------------ 1,469,875 ------------ PACKAGING/CONTAINERS -- 0.8% Crown Cork & Seal Sr Notes 7.125% 09/01/02 ............................. 2,950 2,931,562 Crown Packaging Enterprises, Ltd. Yankee Sr. Secured Discount Notes 14.000% 08/01/06(DAGGER)(DAGGER) ............ 550 8,250 ------------ 2,939,812 ------------ PAR (000) VALUE ---------- ------------ PAPER & FOREST PRODUCTS -- 0.3% Fort James Corp. Notes 6.234% 03/15/01 ............................. $ 350 $ 348,688 P.T. Indah Kiat Pulp & Paper Corp. Sr. Secured Notes 8.875% 11/01/00 ............................. 290 255,809 10.000% 07/01/07 ............................ 425 263,500 Repap New Brunswick Sr. Yankee Notes 10.625% 04/15/05 ............................ 35 30,450 ------------ 898,447 ------------ REAL ESTATE -- 0.4% EOP Operating L.P. Mandatory Par Put Remarketed Securities 6.376% 02/15/02 ............................. 1,295 1,267,481 HMH Properties, Inc. Sr. Notes 8.450% 12/01/08 ............................. 255 239,063 ------------ 1,506,544 ------------ RESTAURANTS, HOTELS & CASINOS -- 0.1% Circus Circus Enterprise Sr. Sub. Notes 9.250% 12/01/05 ............................. 210 211,575 Hollywood Park Operating Sr. Sub. Notes 9.500% 08/01/07 ............................. 50 49,375 Horseshoe Gaming Holdings 144A Sr. Sub. Notes 8.625% 05/15/09 ............................. 235 227,363 ------------ 488,313 ------------ RETAIL TRADE -- 1.7% K Mart Corp. Notes 7.950% 02/01/23 .......................... 430 399,363 Pass Through Certificates, Series 1995 Class K3 8.540% 01/02/15 .......................... 1,656 1,713,658 Pathmark Stores Sr. Sub Notes 9.625% 05/01/03 ............................. 150 152,813 Wal Mart Notes 6.875% 08/10/09 ............................. 3,600 3,582,000 ------------ 5,847,834 ------------ STEEL -- 0.2% AK Steel Corp. 144A Sr. Notes 7.875% 02/15/09 ............................. 300 288,000 Gulf States Steel, Inc. First Mortgage Notes 13.500% 04/15/03 ............................ 145 26,100 See Accompanying Notes to Financial Statements. 41 WARBURG PINCUS U.S. CORE FIXED INCOME FUND (CONTINUED) PAR (000) VALUE ---------- ------------ STEEL -- (CONTINUED) Wheeling-Pittsburgh Corp. 144A Sr. Notes 9.250% 11/15/07 ............................. $ 215 $ 205,325 ------------ 519,425 ------------ TELECOMMUNICATIONS -- 7.0% Adelphia Communications Corp. Sr. Notes, Series B 9.250% 10/01/02 ............................. 310 313,100 8.375% 02/01/08 ............................. 150 140,250 BellSouth Telecommunications, Inc. Debentures 5.850% 11/15/45 ............................. 995 993,756 7.000% 12/01/45 ............................. 255 229,500 CenCall Communications Corp. Sr. Discount Notes 10.125% 01/15/04 ............................ 435 443,700 Charter Communications Holding LLC, Sr. Disc. Notes 144A 8.625% 04/01/09 ............................. 220 209,000 9.920% 04/01/11(DAGGER)(DAGGER) ............. 145 87,000 Echostar DBS Corp. Sr. Notes 9.250% 02/01/06 ............................. 400 398,000 GTE Corp. Debentures 6.840% 04/15/18 ............................. 1,150 1,078,125 6.940% 04/15/28 ............................. 1,160 1,080,250 GTE North, Inc. Debentures, Series D 6.900% 11/01/08 ............................. 395 389,075 Intermedia Communication, Inc. Sr. Notes, Series B 8.500% 01/15/08 ............................. 235 207,975 ITC Deltacom, Inc. 144A Sr. Notes 11.000% 06/01/07 ............................ 180 192,375 LCI International, Inc. Senior Notes 7.250% 06/15/07 ............................. 1,350 1,296,000 Level 3 Communications, Inc. 144A Sr. Notes 9.125% 05/01/08 ............................. 410 382,325 MCI Communications Corp. Sr. Discount Notes 6.125% 04/15/02 ............................. 1,615 1,588,756 MCI Communications Corp. Sr. Notes 6.500% 04/15/10 ............................. 20 18,850 McLeodUSA, Inc. 144A Sr. Sub. Notes 8.125% 02/15/09 ............................. 280 258,300 Metromedia Fiber Network, Inc. Sr. Notes, Series B 10.000% 11/15/08 ............................ 190 188,100 PAR (000) VALUE ---------- ------------ TELECOMMUNICATIONS -- (CONTINUED) Nextel Communications, Inc. Sr. Discount Notes 9.750% 08/15/04 .......................... $ 2,250 $ 2,250,000 9.750% 10/31/07(DAGGER)(DAGGER) .......... 225 158,625 144A Sr. Redeemable Discount Notes 10.650% 09/15/07(DAGGER)(DAGGER) ......... 5 3,663 144A Sr. Discount Notes 9.950% 02/15/08(DAGGER)(DAGGER) .......... 640 443,200 Nextlink Communications, Inc. Sr. Notes 9.625% 10/01/07 .......................... 115 112,988 144A Sr. Notes 10.750% 11/15/08 ......................... 300 304,500 Paging Network, Inc. Sr. Sub. Notes 8.875% 02/01/06 ............................. 550 302,500 10.000% 10/15/08 ............................ 720 405,000 10.125% 08/01/07 ............................ 270 151,875 Qwest Communications International, Inc. 144A Sr. Notes 7.250% 11/01/08 ............................. 310 302,250 TCI Communications, Inc. Notes 6.340% 02/01/02 ............................. 1,615 1,602,888 Telefonica de Argentina 144A Medium Term Notes 9.125% 05/07/08 ............................. 850 735,250 Teleport Communications Group, Inc. Sr. Discount Notes 9.650% 03/31/27 ............................. 1,545 1,755,506 US West Cap Funding 144A Notes 6.875% 08/15/01 ............................. 3,850 3,840,375 Worldcom Inc. Sr. Notes 7.750% 01/01/07 ............................. 2,665 2,751,613 ------------ 24,614,670 ------------ TRANSPORTATION -- 3.4% Continental Airlines, Inc. Sr. Notes 9.500% 12/15/01 ............................. 1,835 1,912,988 Grupo Transportacion Ferroviaria Mexicana, S.A. de CV 144A Gtd. Sr. Discount Notes 11.750% 06/15/09(DAGGER)(DAGGER) ............ 2,495 1,303,638 Norfolk Southern Corp. Notes 7.050% 05/01/04 ............................. 2,300 2,302,875 7.400% 09/15/06 ............................. 550 554,813 7.350% 05/15/07 ............................. 15 15,094 7.700% 05/15/17 ............................. 1,000 1,012,500 See Accompanying Notes to Financial Statements. 42 WARBURG PINCUS U.S. CORE FIXED INCOME FUND (CONTINUED) PAR (000) VALUE ---------- ------------ TRANSPORTATION -- (CONTINUED) Northwest Airlines, Inc. Gtd. Notes 7.625% 03/15/05 ............................. $ 3,085 $ 2,811,206 7.875% 03/15/08 ............................. 340 300,050 US Airways, Inc., Gtd. Sr. Notes 9.625% 02/01/01 ............................. 1,745 1,762,171 ------------ 11,975,335 ------------ UTILITIES -- 2.4% Beaver Valley Funding Corp. Secured Lease Obligation Bonds 9.000% 06/01/17 ............................. 2,400 2,541,000 Connecticut Light and Power Co. First Mortgage Bonds, Series C 7.750% 06/01/02 .......................... 770 778,663 First Mortgage Bonds, Series D 7.875% 10/01/24 .......................... 730 740,950 Niagara Mohawk Power Corp. First Mortgage Bonds 8.750% 04/01/22 ............................. 1,130 1,154,013 North Atlantic Energy Corp. Secured First Mortgage Notes, Series A 9.050% 06/01/02 ............................. 1,690 1,692,113 Texas Utilities Electric Capital Trust Preferred V 8.175% 01/30/37 ............................. 1,540 1,470,700 ------------ 8,377,439 ------------ WASTE MANAGEMENT -- 0.1% Allied Waste North America Series B 7.625% 01/01/06 ............................. 105 96,338 7.875% 01/01/09 ............................. 255 232,050 USA Waste Services, Inc. Sr. Notes 7.125% 10/01/07 ............................. 25 22,781 ------------ 351,169 ------------ TOTAL CORPORATE BONDS (Cost $146,502,256) ......................... $140,711,213 ------------ MUNICIPAL BONDS -- 0.2% Illinois State GO 4.750% 06/01/23 ............................. $ 850 $ 724,625 Tampa, FL Health Systems Revenue Bond 4.750% 11/15/28 ............................. 45 37,913 ------------ TOTAL MUNICIPAL BONDS (Cost $848,106) ............................. $ 762,538 ------------ PAR (000) VALUE ---------- ------------ FOREIGN GOVERNMENT BONDS -- 3.2% Empresa Nacional de Electricidad 8.125%(DAGGER)(DAGGER)(DAGGER) .............. $ 800 $ 654,000 Republic of Colombia Yankee Notes 12.471% 08/13/05(DAGGER) .................... 1,210 1,058,750 Republic of Ecuador Past Due Interest Notes 3.750% 02/26/00(DAGGER) ..................... 437 102,335 Republic of Philippines Global Bonds 9.875% 01/15/19 ............................. 1,025 969,906 Republic of Poland Past Due Interest Bonds 5.000% 10/27/14(DAGGER)(DAGGER) ............. 1,070 934,913 5.000% 10/27/14(DAGGER)(DAGGER) ............. 3,800 3,320,250 United Mexican States Global Bonds 11.500% 05/15/26 ......................... 20 21,725 Par Bonds, Series W-A 6.250% 12/31/19 .......................... 4,150 2,977,625 Par Bonds, Series W-B 6.250% 12/31/19 .......................... 1,350 968,625 ------------ TOTAL FOREIGN GOVERNMENT BONDS (Cost $11,693,811) .......................... $ 11,008,129 ------------ AGENCY OBLIGATIONS -- 54.5% FEDERAL HOME LOAN MORTGAGE CORPORATION -- 3.0% Various Pools: 7.000% 12/01/09 ............................. $ 151 $ 149,586 Series MACR 1860 Principle Only 8.5865% 02/15/24 ............................ 2,444 1,395,584 Discount Notes: 5.060% 11/30/99 ............................. 8,930 8,815,780 ------------ TOTAL FEDERAL HOME LOAN MORTGAGE CORPORATION ................................. $ 10,360,950 ------------ FEDERAL NATIONAL MORTGAGE ASSOCIATION -- 46.2% Various Pools: 10.000% 02/01/05 ............................. 159 168,728 10.000% 01/01/10 ............................. 721 777,962 6.500% 06/01/29 .............................. 6,081 5,757,706 6.500% 06/01/29 .............................. 2,744 2,597,753 6.500% 07/01/29 .............................. 7,023 6,649,873 6.500% 07/01/29 .............................. 3,711 3,513,639 6.500% 07/01/29 .............................. 5,895 5,585,632 6.500% 08/01/29 .............................. 1,887 1,786,159 6.500% 08/01/29 .............................. 11,373 10,768,515 6.500% 08/01/29 .............................. 30 28,400 6.000% 12/01/28 .............................. 145 133,427 6.000% 07/01/29 .............................. 16,188 14,888,255 6.000% 07/01/29 .............................. 18,520 17,032,787 6.000% 07/01/29 .............................. 601 552,479 See Accompanying Notes to Financial Statements. 43 WARBURG PINCUS U.S. CORE FIXED INCOME FUND (CONTINUED) PAR (000) VALUE ---------- ------------ FEDERAL NATIONAL MORTGAGE ASSOCIATION -- (CONTINUED) Various Pools: (continued) 6.000% 01/01/29 ............................. $ 3,867 $ 3,556,399 6.000% 01/01/29 ............................. 5,477 5,037,353 Global Notes 6.864% 06/01/17 ............................. 12,250 3,699,853 REMIC - PAC 1991-165 Class M 8.250% 12/25/21 ............................. 10 10,101 Series 1996-5 Class PX PO 7.959% 11/25/23 ............................. 224 130,602 Series 1997-16 Class M PO 9.160% 02/25/23 ............................. 170 97,298 15 Year TBA: 6.000% 01/15/11 ............................. 7,550 7,184,297 6.500% 05/01/13 ............................. 4,080 3,962,700 30 Year TBA: 8.000% 03/15/25 ............................. 32,350 32,774,594 6.000% 04/15/25 ............................. 5,300 4,871,031 6.500% 09/01/27 ............................. 3,100 2,935,313 7.000% 09/01/27 ............................. 19,460 18,900,525 Discount Notes: 4.930% 09/10/99 ............................. 8,975 8,963,760 ------------ TOTAL FEDERAL NATIONAL MORTGAGE ASSOCIATION ........................ $162,365,141 ------------ GOVERNMENT NATIONAL MORTGAGE ASSOCIATION -- 5.0% Various Pools: 6.500% 09/15/03 ............................. 5 5,035 8.250% 08/15/04 ............................. 1 277 9.000% 11/15/04 ............................. 1 623 9.000% 12/15/04 ............................. 1 677 8.250% 04/15/06 ............................. 1 936 13.500% 07/15/14 ............................ 1 900 9.000% 12/15/16 ............................. 24 25,570 8.000% 04/15/17 ............................. 74 75,035 9.000% 08/15/21 ............................. 340 357,023 30 Year TBA: 7.500% 08/01/28 ............................. 17,350 17,192,766 ------------ TOTAL GOVERNMENT NATIONAL MORTGAGE ASSOCIATION ................................. $ 17,658,842 ------------ MISCELLANEOUS -- 0.3% Government Trust Certificates Collateral Trust Series 1C 9.250% 11/15/01 ............................. 305 309,516 National Archives Facility Trust COP 8.500% 09/01/19 ............................. 670 750,001 Tennessee Valley Authority Debentures, Series B 6.235% 07/15/45 ............................. 60 60,450 ------------ 1,119,967 ------------ TOTAL AGENCY OBLIGATIONS (Cost $191,900,098) ......................... $191,504,900 ------------ PAR (000) VALUE ---------- ------------ ASSET BACKED SECURITIES -- 3.1% Green Tree Recreational Equipment and Consumer Trust Series 1997-C, Class A1 6.490% 02/15/18 ............................. $ 443 $ 428,510 Green Tree Securitized Net Interest Margin Trust, REMIC, Series 1994-A, Class A 6.900% 02/15/04 ............................. 504 501,059 Merrill Lynch Mortgage Investors, Inc., Manufactured Housing Retail Installment Sales Contracts, Series 1991-C, Class A 9.000% 07/15/11 ............................. 20 20,028 Morgan Stanley Inc. Capital I, Series 1998-Xl1, Class A3 6.480% 06/03/30 ............................. 5,100 4,814,273 National Westminster Bank Debentures Guaranteed Cap. Notes 9.375% 11/15/03 ............................. 680 739,500 PECO Energy Transition Trust 6.050% 03/01/09 ............................. 1,345 1,268,960 6.130% 03/01/09 ............................. 2,265 2,102,792 Prudential Securities Secured Financing Series 1999-C2, Class A2 7.193% 04/15/09 ............................. 850 834,815 Vanderbilt Mortgage Finance, Manufactured Housing Retail Installment Sales Contracts, Series 1995-B, Class A3 6.675% 05/07/06 ............................. 202 201,004 ------------ TOTAL ASSET BACKED SECURITIES (Cost $11,513,375) .......................... $ 10,910,941 ------------ COLLATERALIZED MORTGAGED BACKED SECURITIES -- 4.7% Nomura Asset Securitization Corp., Series 1998-D6, Class A1B 6.590% 03/15/28 ............................. $ 4,350 $ 4,126,867 Asset Securitization Corp., Series 1996-MD6, Class A6 7.587% 09/13/99 ............................. 760 703,831 Carousel Center Finance Inc., Series 1, Class C, Rule 144A 7.527% 11/15/07 ............................. 313 310,992 Cityscape Home Equity Loan Trust, Home Equity Loan Certificates, Series 1996-2, Class A2 7.200% 04/25/11 ............................. 119 120,412 See Accompanying Notes to Financial Statements. 44 WARBURG PINCUS U.S. CORE FIXED INCOME FUND (CONTINUED) PAR (000) VALUE ---------- ------------ COLLATERALIZED MORTGAGED BACKED SECURITIES -- (CONTINUED) Collateralized Mortgage Obligation Trust, REMIC Series 54, Class C 9.250% 11/01/13 ............................. $ 1 $ 908 Commercial Mortgage Asset Trust, Series 1999-C1, Class A3 6.640% 09/17/10 ............................. 4,315 4,056,898 Contimortgage Home Equity Loan Trust, Series 1996-4, Class A8 7.220% 01/15/28 ............................. 880 865,153 G3 Mortgage Reinsurance Corp., Class A 6.163% 09/27/99 ............................. 950 864,500 GMAC Commercial Mortgage Securities, Inc., Series 1997-C1 Class A2 6.853% 09/15/06 ............................. 540 536,331 Heller Financial Commercial Mortgage Asset Corp. Series 1999-PH1, Class A2 6.847% 05/15/31 ............................. 1,550 1,499,710 Option One Mortgage Loan Trust, Series 1999-2, Class A 9.660% 06/25/29 ............................. 1,979 1,961,579 Salomon Brothers Mortgage Securities VII, Series 1997-NC4, Class A 5.635% 09/27/99 ............................. 25 25,083 UCFC Home Equity Loan Trust, Series 1996-B1, Class A7 8.200% 09/15/27 ............................. 760 760,817 UCFC Home Equity Loan Trust, Series 1998-A1, Class A7 6.870% 07/15/29 ............................. 690 665,488 ------------ TOTAL COLLATERALIZED MORTGAGED BACKED SECURITIES (Cost $17,438,999) .......................... $ 16,498,569 ------------ NUMBER OF SHARES --------- COMMON STOCK -- 0.0% Packaging/Containers -- 0.0% Crown Packaging Enterprises, Ltd. ........................................ 45,544 $ 455 ------------ TOTAL COMMON STOCK (Cost $0) ................................... $ 455 ------------ NUMBER OF SHARES VALUE ---------- ------------ PREFERRED STOCKS -- 2.7% BANKING -- 2.5% California Federal Capital Corp., Series A 9.125% ............................. 97,170 $ 2,417,104 Centaur Funding Corp. 9.08% ................... 1,360 1,433,950 Citigroup, Inc. 6.213% ........................ 37,800 1,856,925 Lehman Brothers Holdings 5.94% ....................................... 18,320 806,080 Lehman Brothers Holdings 5.67% ....................................... 24,860 1,056,550 NationsBank Captial Corp. 8.35% ............... 48,000 1,200,000 ------------ 8,770,609 ------------ REAL ESTATE -- 0.2% American Real Estate Corp. 8.50% Cumulative, Series A .................. 30,800 783,475 ------------ TOTAL PREFERRED STOCKS (Cost $10,056,876) $ 9,554,084 ------------ PAR (000) -------- U.S. TREASURY OBLIGATIONS -- 3.5% U.S. TREASURY BILLS -- 0.2% 4.370% 09/16/99 ............................. $ 470 $ 467,741 4.520% 09/16/99 ............................. 100 99,614 ------------ 567,355 ------------ U.S. TREASURY BONDS -- 1.3% 8.000% 11/15/21 ............................. 3,770 4,439,128 ------------ U.S. TREASURY INFLATION PROTECTED NOTES -- 1.6% 3.875% 04/15/29 ............................. 5,750 5,660,596 ------------ U.S. TREASURY NOTES -- 0.1% 6.625% 06/30/01 ............................. 115 116,671 7.500% 02/15/05 ............................. 5 5,320 6.250% 02/15/07 ............................. 270 270,945 ------------ 392,936 ------------ U.S. TREASURY STRIP BONDS -- 0.3% 6.589% 11/15/16 ............................. 3,430 1,124,240 ------------ TOTAL U.S. TREASURY OBLIGATIONS (Cost $12,511,065) .......................... $ 12,184,255 ------------ See Accompanying Notes to Financial Statements. 45 WARBURG PINCUS U.S. CORE FIXED INCOME FUND (CONCLUDED) NUMBER OF SHARES VALUE ---------- ------------ RIGHTS/WARRANTS -- 0.0% Capital Pacific Holdings Group, Inc. strike $3.4 expires May 2002 .................................... 2,528 $ 1,264 Checkers Drive-In Restaurants strike $1.375 expires Dec. 2000 ................................... 2,642 248 Mexican Value Recovery Rights strike $1.188 expires June 2003 ................................... 1 0 Uniroyal Technology Corp. strike $4.375 expires 06/01/03 .................................... 10,800 91,800 ------------ TOTAL RIGHTS/WARRANTS (Cost $14,178) .............................. $ 93,312 ------------ PAR (000) --------- SHORT TERM INVESTMENT -- 12.3% BBH Grand Cayman U.S. Dollar Time Deposit 4.500% 09/01/99 ............................. $43,044 $ 43,044,000 ------------ TOTAL SHORT TERM INVESTMENT (Cost $43,044,000) .......................... $ 43,044,000 ------------ PAR (000) VALUE ---------- ------------ SECURITIES SOLD SHORT -- (1.1%) Federal National Mortgage Association 30 Year TBA 6.500% 09/01/29 ............................. $ (3,900) $ (3,692,813) (Cost ($3,757,406)) ------------ TOTAL INVESTMENTS -- 123.2% (Cost $441,765,791*) ........................ $432,579,583 LIABILITIES IN EXCESS OF OTHER ASSETS-- (23.2%) ...................... (81,631,972) ------------ TOTAL NET ASSETS -- 100.0% .................... $350,947,611 ============ * Cost for Federal income tax purposes at August 31, 1999 is $441,854,938. The gross appreciation (depreciation) on a tax basis is as follows: Gross Appreciation ...................................... $ 2,095,221 Gross Depreciation ...................................... (11,370,576) ------------ Net Depreciation ........................................ $ (9,275,355) ============ (DAGGER) Variable rate obligations -- The interest shown is the rate as of August 31, 1999. (DAGGER)(DAGGER) Step Bond-- The interest rate as of August 31, 1999 is 0% and will reset to interest rate shown at a future date. (DAGGER)(DAGGER)(DAGGER) Securities have no stated maturity date. INVESTMENT ABBREVIATIONS FRN ..........................................................Floating Rate Note MACR .....................Modified and Combinable Real Estate Investment Conduit PAC ..................................................Planned Amortization Class PO ...............................................................Principle Only REMIC ....................................RealEstate Mortgage Investment Conduit TBA .............................................................To Be Announced See Accompanying Notes to Financial Statements. 46 WARBURG PINCUS STRATEGIC GLOBAL FIXED INCOME FUND PORTFOLIO MANAGERS' LETTER September 16, 1999 Dear Shareholders: We are writing to report on the results of the Warburg Pincus Strategic Global Fixed Income Fund (the "Fund") for the fiscal year ended August 31, 1999. At August 31, 1999, the net asset value ("NAV") of the Fund's institutional shares was $14.97, compared to an NAV of $15.10 on August 31, 1998. As a result, the institutional shares' total return was 2.8% (assuming the reinvestment of dividends and distributions totaling $0.57 per share). By comparison, the unhedged J.P. Morgan Global Government Bond Index ("GBI") returned 3.0% during the same period. At August 31, 1999, the NAV of the Fund's common shares was $14.91, compared to an NAV of $16.10 at their inception of investment operations on October 30, 1998. Including the effect of linkage to the institutional shares, the common shares' total return between August 31, 1998 and August 31, 1999 was 2.3% (assuming the reinvestment of dividends and distributions totaling $0.56 per share). By comparison, the GBI returned 3.0% during the same period. The Fund's performance during the fiscal year was essentially a story of offsetting returns in the first and second halves of the year. In the first half, the Fund outperformed GBI as a result of our positions in "spread product" -- debt securities whose market valuation is greatly driven by the difference, known as the "spread," between their yields and those of U.S. Treasury debt -- and our positions in Japan. Prices of spread product had plummeted in the third quarter of 1998, as spreads dramatically widened in response to anxiety about Russia and severe problems at Long-Term Capital Management, a major hedge fund with significant debt exposure. These same prices strongly rebounded in the final months of 1998 and into early 1999, however, helping the Fund to outperform the GBI during this time period. This resurgence was particularly true in U.S. and emerging market securities, in which spreads sharply contracted. Our longstanding underweighting in Japan paid off especially well in December, when Japanese bond yields nearly tripled. We also chose to remain neutral in our exposure to the yen, which prevented the Fund from losing ground relative to GBI when the yen strengthened. Unfavorable conditions in the fiscal year's second half served to offset the gains we had accumulated in the first half, including: (BULLET) Widening spreads in much of 1999's spring and summer in anticipation of higher U.S. interest rates, which hurt our spread product holdings; (BULLET) Our underweighted positions in Japan which negated a number of successful steps we took with regard to regional allocations and duration; and one of the strongest developed-nation bond markets of the period in local-currency terms; (BULLET) OUR OVERWEIGHTING OF THE EURO VERSUS THE U.S. DOLLAR AT A TIME WHEN THE DOLLAR STRENGTHENED VERSUS THE EURO; AS WELL AS OUR MODEST UNDERWEIGHTING OF THE YEN, WHICH EXPERIENCED A VIGOROUS RALLY ALONG WITH JAPANESE BONDS. As developments occur in the global fixed income markets or at Credit Suisse Asset Management that we believe would be of interest to you, we will be sure to keep you informed. Meanwhile, if you have questions, please feel free to call upon us at any time. Sincerely yours, Credit Suisse Asset Management Global Fixed Income Management Team Gregg M. Diliberto, Managing Director Dilip K. Rasgotra, Managing Director Mark K. Silverstein, Managing Director Jo Ann Corkran, Director INTERNATIONAL INVESTING ENTAILS SPECIAL RISK CONSIDERATIONS, INCLUDING CURRENCY FLUCTUATIONS, LOWER LIQUIDITY, ECONOMIC AND POLITICAL RISKS, AND DIFFERENCES IN ACCOUNTING METHODS. 47 WARBURG PINCUS STRATEGIC GLOBAL FIXED INCOME FUND PORTFOLIO MANAGERS' LETTER (CONCLUDED) COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN THE WARBURG PINCUS STRATEGIC GLOBAL FIXED INCOME INSTITUTIONAL SHARES AND THE JPMORGAN GLOBAL GOVERNMENT BOND INDEX (UNHEDGED)1 FROM INCEPTION (6/27/94), PERIOD ENDED (7/31/94), AND AT EACH QUARTER END. (UNAUDITED) Warburg Pincus Strategic Global JP Morgan Global Fixed Income Govt. Bond Index Institutional Shares (Unhedged)1 06/28/94 $10,000 $10,000 07/31/94 $10,027 $10,115 08/31/94 $10,001 $10,089 11/30/94 $10,044 $10,161 02/28/95 $10,272 $10,659 05/31/95 $11,156 $11,696 08/31/95 $11,072 $11,496 11/30/95 $11,574 $12,003 02/29/96 $11,668 $11,957 5/31/96 $11,832 $11,907 8/31/96 $12,140 $12,283 11/30/96 $12,816 $12,776 2/28/97 $12,531 $12,284 5/31/97 $12,672 $12,408 8/31/97 $12,684 $12,487 11/30/97 $13,006 $12,878 2/28/98 $13,171 $13,089 5/31/98 $13,232 $13,247 8/31/98 $13,215 $13,689 11/30/98 $14,090 $14,560 2/28/99 $13,803 $14,220 5/31/99 $13,645 $14,001 8/31/99 $13,582 $14,105 INSTITUTIONAL SHARES -------------------- AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS ENDED AUGUST 31, 1999 One Year 2.78% Three Years 2.81% Five Years 6.31% From Inception (6/27/94) 6.08% Note: Past performance is not predictive of future performance. Investment return and principle value of an investment will fluctuate so that an investor's shares upon redemption may be worth more or less than their original cost. 1 The JP Morgan Global Government Bond Index Unhedged (including U.S. $) is market-capitalization index consisting of the government bond markets of the following countries: Australia, Belgium, Canada, Denmark, France, Germany, Italy, Japan, Netherlands, Spain, Sweden, the U.K. and the U.S. All issues have a remaining maturity of at least one year and the index is rebalanced monthly. 48 WARBURG PINCUS STRATEGIC GLOBAL FIXED INCOME FUND SCHEDULE OF INVESTMENTS AUGUST 31, 1999 PAR (000) VALUE --------- ------------ INTERNATIONAL BONDS -- 51.6% ARGENTINA -- 0.1% Argentina Bocon, Series Pro1 2.880% 04/01/07(DAGGER) ..................... $ 50 $ 33,546 ------------ ARUBA -- 0.4% Sanwa Bank Ltd. Global Sub. Notes 8.350% 07/15/09 ............................. 100 100,125 ------------ CANADA -- 3.8% Government of Canada Debenture 7.000% 12/01/06 .......................CND 250 179,605 6.000% 06/01/08 .......................... 1,250 851,199 ------------ 1,030,804 ------------ CHILE -- 0.2% Empresa Nacional de Electricidad 8.125%(DAGGER)(DAGGER)(DAGGER) .............. $ 55 44,962 ------------ COLOMBIA -- 0.2% Republic of Colombia, Yankee Notes 12.471% 08/13/05(DAGGER) .................... 55 48,125 ------------ DENMARK -- 2.6% Kingdom of Denmark Government Bonds 6.000% 11/15/09 ..........................DKK 4,800 713,978 ------------ ECUADOR -- 0.0% Republic of Ecuador Past Due Interest Notes 3.750% 02/29/00(DAGGER) ..................... $ 12 2,729 3.750% 02/27/15(DAGGER) ..................... 17 4,093 ------------ 6,822 ------------ FINLAND -- 0.2% Okobank Perpetual Medium Term FRN 5.598%(DAGGER)/(DAGGER)(DAGGER)(DAGGER) ..... 60 57,300 ------------ FRANCE -- 8.8% L'Auxiliare du Credit Foncier de France Gtd. Notes 5.000% 09/25/02(DAGGER) ..................... 125 121,250 Republic of France Treasury Bonds 7.500% 04/25/05 ..........................EUR 549 667,434 5.250% 04/25/08 ............................. 1,500 1,618,397 ------------ 2,407,081 ------------ PAR (000) VALUE ---------- ------------ GERMANY -- 11.7% Deutsche Bank Financial 144A Pfd. 6.000% 07/04/07 ..........................EUR 2,776 $ 3,143,704 Federal Republic of Germany Eurobonds 7.872% 12/29/49 ............................. 55 51,668 ------------ 3,195,372 ------------ JAPAN -- 0.4% Fuji Finance (Cayman), Ltd. Medium Term Notes 7.300%(DAGGER)/(DAGGER)(DAGGER)(DAGGER) .. $ 50 43,500 Perpetual Sub. FRN 6.573%(DAGGER)/(DAGGER)(DAGGER)(DAGGER) .. 80 69,200 ------------ 112,700 ------------ MAURITIUS -- 0.1% P.T. Indah Kiat Pulp & Paper Corp. Sr. Secured Notes 10.000% 07/01/07 ............................ 45 27,900 ------------ MEXICO -- 0.6% Grupo Transportacion Ferroviaria Mexicana, S.A. de CV 144A Gtd. Sr. Discount Notes 11.750% 06/15/09# ........................... 70 36,575 United Mexican States Global Bonds 11.500% 05/15/26 ............................ 120 130,350 ------------ 166,925 ------------ NETHERLANDS -- 4.2% Kingdom of Netherlands Government Bonds 5.750% 01/15/04 ..........................EUR 1,021 1,137,183 ------------ PHILIPPINES -- 0.6% Bangko Sentral Pilipinas Yankee Bonds 8.600% 06/15/27 ............................. $ 55 42,487 Republic of Philippines Global Bonds 9.875% 01/15/19 ............................. 125 118,281 ------------ 160,768 ------------ POLAND -- 1.0% Republic of Poland, Past Due Interest Bonds 5.000% 10/27/14(DAGGER)(DAGGER) ............. 20 17,475 5.000% 10/27/14(DAGGER)(DAGGER) ............. 305 266,494 ------------ 283,969 ------------ See Accompanying Notes to Financial Statements. 49 WARBURG PINCUS STRATEGIC GLOBAL FIXED INCOME FUND (CONTINUED) PAR (000) VALUE --------- ------------ SOUTH KOREA -- 0.4% Korea Electric Power, Yankee Debentures 7.000% 02/01/27 ............................. $ 55 $ 50,050 Korea Electric Power, Global Unsubordinated Notes 6.375% 12/01/03 ............................. 20 18,700 Korea Electric Power, Yankee Notes 7.000% 10/01/02 ............................. 45 43,706 ----------- 112,456 ----------- SUPRANATIONAL -- 8.3% European Investment Bank Eurobonds 5.000% 04/15/08 ..........................EUR 516 539,297 International Bank for Reconstruction & Development Japanese Yen Global Bonds 5.250% 03/20/02 ..........................JPY 170,000 1,739,281 ----------- 2,278,578 ----------- SWEDEN -- 0.8% Skandinaviska Enskilda Banken AB Perpetual Sub. FRN 7.500%(DAGGER)/(DAGGER)(DAGGER)(DAGGER) ..... 250 230,000 ----------- UNITED KINGDOM -- 7.2% U.K. Treasury Gilt Bonds 7.500% 12/07/06 ..........................GBP 1,100 1,964,960 ----------- TOTAL INTERNATIONAL BONDS (Cost $14,816,671) .......................... $14,113,554 ----------- U.S. BONDS -- 44.9% CORPORATE BONDS -- 17.4% AEROSPACE/DEFENSE EQUIPMENT -- 0.1% Sequa Corp. Senior Notes 9.000% 08/01/09 ............................. 20 19,700 ----------- AUTOMOTIVE -- 0.2% Delco Remy International, Inc. Gtd. Sr. Sub Notes 10.625% 08/01/06 ............................ 10 10,462 Hayes Lemmerz International, Inc. Sr. Sub Notes 9.125% 07/15/07 .......................... 5 4,962 Sr. Sub Notes 8.250% 12/15/08 .......................... 15 14,025 Lear Corp. 144A Sr. Notes 7.960% 05/15/05 ............................. 15 14,775 Oxford Automotive, Inc. Gtd. Sr. Sub. Notes 10.125% 06/15/07 ............................ 10 10,000 ----------- 54,224 ----------- PAR (000) VALUE --------- ------------ BANKING -- 1.1% Bay View Capital Corp. Sub. Notes 9.125% 08/15/07 ............................. $ 65 $ 60,125 Chase Manhattan Bank Corp. Sub. Notes 6.500% 08/01/05 ............................. 10 9,737 6.750% 09/15/06 ............................. 20 19,275 7.250% 06/01/07 ............................. 20 19,975 Citicorp Sub. Notes, Series F 6.375% 11/15/08 ............................. 65 60,694 Credit Lyonnais Perpetual Sub. Variable Rate Notes, Rule 144A 6.438%(DAGGER)/(DAGGER)(DAGGER)(DAGGER) ..... 90 82,575 First Republic Bank Sub. Notes 7.750% 09/15/12 ............................. 60 55,050 ------------ 307,431 ------------ BROADCASTING -- 0.5% Chancellor Media Corp. 144A Sr. Sub. Notes 8.000% 11/01/08 ............................. 10 9,600 Fox/Liberty Networks L.L.C., Registered Sr. Notes 8.875% 08/15/07 ............................. 90 91,350 Granite Broadcasting Corp. 144A Sr. Sub. Notes 8.875% 05/15/08 ............................. 10 9,600 HMV Media Group plc, Senior Subordinated Yankee Notes, Series B 10.250% 05/15/08 ............................ 10 9,800 Turner Broadcast Sr. Notes 7.400% 02/01/04 ............................. 10 10,125 ------------ 130,475 ------------ BUILDING MATERIALS -- 0.1% Jackson Products, Inc. Notes 9.500% 04/15/05 ............................. 20 18,400 ------------ CABLE -- 0.9% Belo (A.H.) Corp. Sr. Notes 6.875% 06/01/02 ............................. 35 34,737 7.125% 06/01/07 ............................. 50 48,437 Classic Cable Sr. Sub. Notes 9.875% 08/01/08 ............................. 10 10,100 CSC Holdings Inc. Sr. Notes 7.875% 12/15/07 ............................. 75 72,750 7.250% 07/15/08 ............................. 30 27,825 See Accompanying Notes to Financial Statements. 50 WARBURG PINCUS STRATEGIC GLOBAL FIXED INCOME FUND (CONTINUED) PAR (000) VALUE --------- ------------ CABLE -- (CONTINUED) Diamond Cable Communications plc, Yankee Sr. Discount Notes 10.750% 02/15/07(DAGGER)(DAGGER) ............ $ 40 $ 30,600 James Cable Partners L.P. Sr. Notes, Series B 10.750% 08/15/04 ............................ 20 20,250 ------------ 244,699 ------------ CHEMICALS -- 0.2% Huntsman ICI 144A Sr. Sub. Notes 10.125% 07/01/09 ............................ 35 34,912 Lyondell Chemical, Inc. Senior Secured Notes, Series A 9.625% 05/01/07 .......................... 10 10,150 Senior Secured Notes, Series B 9.875% 05/01/07 .......................... 5 5,038 ------------ 50,100 ------------ Computers, Software & Services -- 0.2% PSINET, Inc. 144A Sr. Notes 11.500% 11/01/08 ............................ 10 10,150 Seagate Technology, Inc. Sr. Debentures 7.450% 03/01/37 ............................. 60 54,075 ------------ 64,225 ------------ CONSULTING SERVICES -- 0.6% Comdisco Inc. MTN Series H 7.230% 08/16/01 .......................... 55 55,000 Senior Notes 7.250% 09/01/02 .......................... 100 99,375 ------------ 154,375 ------------ ENERGY -- 0.7% Bellwether Exploration Co. Gtd. Sr. Sub. Notes 10.875% 04/01/07 ............................ 25 22,750 Crown Central Petroleum Sr. Notes 10.875% 02/01/05 ............................ 10 8,800 Dresser Industries, Inc. Debentures 7.600% 08/15/45 ............................. 60 59,175 Valero Energy Corp. 144A Putable Asset Trusts 6.750% 12/15/02 ............................. 100 97,250 ------------ 187,975 ------------ PAR (000) VALUE --------- ------------ ENTERTAINMENT -- 0.8% Regal Cinemas, Inc. Sr. Sub. Notes 9.500% 06/01/08 ............................. $ 20 $ 14,200 Time Warner, Inc. Debentures 8.050% 01/15/16 ............................. 65 66,381 6.850% 01/15/26 ............................. 145 144,819 ------------ 225,400 ------------ FINANCIAL SERVICES -- 1.9% American General Institutional Capital Trust Co. 144A Gtd. Notes, Series B 8.125% 03/15/46 ............................. 80 80,900 EOP Operating LP Notes 6.500% 01/15/04 ............................. 30 28,800 Ford Motor Credit Corp. 6.700% 07/16/04 ............................. 10 9,862 5.800% 01/12/09 ............................. 85 76,500 Lehman Brothers Holdings, Inc. Global Notes 6.625% 04/01/04 .......................... 40 38,800 Notes 7.000% 05/15/03 .......................... 20 19,850 MBNA Master Credit Card Trust Series 1997-I, Class A 6.550% 01/15/07 .......................... 70 69,158 Series 1999-G, Class A 6.350% 12/15/06 .......................... 60 58,912 Merrill Lynch & Co. Notes 6.875% 11/15/18 ............................. 35 32,025 Prudential Insurance Co. of America 144A Sr. Notes 6.375% 07/23/06 ............................. 100 94,375 ------------ 509,182 ------------ FOOD & BEVERAGE -- 0.3% AmeriServ Food Distribution, Inc. Gtd. Sr. Notes 8.875% 10/15/06 ............................. 10 8,600 Archibald Candy Corp. 144A Gtd. Sr. Secured Notes 10.250% 07/01/04 ............................ 20 19,900 Kroger Co. 144A Notes 7.250% 06/01/09 ............................. 45 43,875 Pantry, Inc. Sr. Sub. Notes 10.250% 10/15/07 ............................ 10 9,950 Premier Intl. Foods plc Sr. Notes 12.000% 09/01/09 ............................ 5 5,050 ------------ 87,375 ------------ See Accompanying Notes to Financial Statements. 51 WARBURG PINCUS STRATEGIC GLOBAL FIXED INCOME FUND (CONTINUED) PAR (000) VALUE --------- ------------ HEALTH CARE -- 0.1% Columbia/HCA Healthcare Corp., Debentures 8.360% 04/15/24 ............................. $ 30 $ 26,850 ------------ INDUSTRIAL GOODS & MATERIALS -- 0.1% Motors & Gears Inc., Sr. Notes, Series D 10.750% 11/15/06 ............................ 30 29,625 ------------ MANUFACTURING -- 0.5% Crown Cork & Seal Sr. Notes 7.125% 09/01/02 ............................. 90 89,438 Tyco Intl. Group SA Sr. Notes 6.125% 01/15/09 ............................. 40 36,450 ------------ 125,888 ------------ REAL ESTATE -- 0.0% HMH Properties, Inc. Sr. Notes 8.450% 12/01/08 ............................. 15 14,062 ------------ RESTAURANTS, HOTELS & CASINOS -- 0.2% Circus Circus Enterprise Sr. Sub. Notes 9.250% 12/01/05 ............................. 20 20,150 Hollywood Park Operating Sr. Sub. Notes 9.500% 08/01/07 ............................. 10 9,875 Horseshoe Gaming Holdings 144A Sr. Sub. Notes 8.625% 05/15/09 ............................. 20 19,350 ------------ 49,375 ------------ RETAIL TRADE -- 1.5% K Mart Corp. Medium Term Notes Series C 7.820% 01/02/02 .......................... 100 101,125 7.840% 01/02/02 .......................... 100 101,125 Medium Term Notes Series D 7.770% 07/02/02 .......................... 100 101,125 Pathmark Stores Sr. Sub Notes 9.625% 05/01/03 ............................. 10 10,188 Wal Mart Stores Sr. Global Bonds 6.875% 08/10/09 ............................. 110 109,450 ------------ 423,013 ------------ STEEL -- 0.1% AK Steel Corp. 144A Sr. Notes 7.875% 02/15/09 ............................. 20 19,200 PAR (000) VALUE --------- ------------ STEEL -- (CONTINUED) Wheeling-Pittsburgh Corp. 144A Sr. Notes 9.250% 11/15/07 ............................. $ 15 $ 14,325 ------------ 33,525 ------------ TELECOMMUNICATIONS -- 3.8% Adelphia Communications Corp. Sr. Notes, Series B 9.250% 10/01/02 ............................. 15 15,150 8.375% 02/01/08 ............................. 10 9,350 AT&T Capital Corp. Co. Guaranteed Notes, Series F 6.875% 01/16/01 ............................. 95 94,763 CenCall Communications Corp. Sr. Discount Notes 10.125% 01/15/04 ............................ 15 15,300 Echostar DBS Corp. Sr. Notes 9.250% 02/01/06 ............................. 20 19,900 GTE Corp. Debentures 6.840% 04/15/18 ............................. 80 75,000 GTE North, Inc. Debentures, Series D 6.900% 11/01/08 ............................. 10 9,850 Intermedia Communication, Inc. Sr. Notes, Series B 8.500% 01/15/08 ............................. 10 8,850 ITC Deltacom, Inc. 144A Sr. Notes 11.000% 06/01/07 ............................ 10 10,688 LCI International Senior Notes 7.250% 06/15/07 ............................. 60 57,600 Level 3 Communications, Inc. 144A Sr. Notes 9.125% 05/01/08 ............................. 30 27,975 MCI Communications Corp. Sr. Discount Notes 6.125% 04/15/02(DAGGER) ..................... 45 44,269 McLeodUSA, Inc. 144A Sr. Sub. Notes 8.125% 02/15/09 ............................. 20 18,450 Metromedia Fiber Network, Inc. Sr. Notes, Series B 10.000% 11/15/08 ............................ 20 19,800 Nextel Communications, Inc. 144A Sr. Discount Notes 9.950% 02/15/08(DAGGER)(DAGGER) .......... 10 6,925 144A Sr. Redeemable Discount Notes 10.650% 09/15/07(DAGGER)(DAGGER) ......... 90 65,925 Sr. Discount Notes 9.750% 08/15/04 .......................... 120 120,000 See Accompanying Notes to Financial Statements. 52 WARBURG PINCUS STRATEGIC GLOBAL FIXED INCOME FUND (CONTINUED) PAR (000) VALUE --------- ------------ TELECOMMUNICATIONS -- (CONTINUED) Nextlink Communications, Inc. Sr. Notes 9.625% 10/01/07 .......................... $ 10 $ 9,825 144A Sr. Notes 10.750% 11/15/08 ......................... 15 15,225 Paging Network, Inc., Sr. Sub. Notes 8.875% 02/01/06 ............................. 20 11,000 10.125% 08/01/07 ............................ 15 8,438 10.000% 10/15/08 ............................ 70 39,375 Qwest Communications International, Inc. 144A Sr. Notes 7.250% 11/01/08 ............................. 15 14,625 TCI Communications, Inc. Notes 6.340% 02/01/02 ............................. 55 54,587 Teleport Communications Group, Inc. Sr. Discount Notes 9.650% 03/31/27 ............................. 50 56,812 US West Cap Funding 144A Notes 6.875% 08/15/01 ............................. 115 114,713 Worldcom Inc., Sr. Notes 7.750% 01/01/07 ............................. 85 87,763 ------------ 1,032,158 ------------ TRANSPORTATION -- 2.0% Continental Airlines, Inc. Sr. Notes 9.500% 12/15/01 ............................. 120 125,100 Norfolk Southern Corp. Notes 7.700% 05/15/17 ............................. 35 35,437 7.050% 05/01/37 ............................. 70 70,087 7.400% 09/15/06 ............................. 20 20,175 Northwest Airlines, Inc., Gtd. Notes 7.625% 03/15/05 ............................. 230 209,588 US Airways, Inc., Gtd. Sr. Notes 9.625% 02/01/01 ............................. 95 95,935 ------------ 556,322 ------------ UTILITIES -- 1.4% Beaver Valley Funding Corp. Secured Lease Obligation Bonds 9.000% 06/01/17 ............................. 150 158,813 PAR (000) VALUE --------- ------------ UTILITIES -- (CONTINUED) Connecticut Light and Power Co. First Mortgage Bonds, Series C 7.750% 06/01/02 .......................... $ 10 $ 10,113 First Mortgage Bonds, Series D 7.875% 10/01/24 .......................... 40 40,600 Niagara Mohawk Power Corp. First Mortgage Bonds 8.750% 04/01/22 ............................. 30 30,638 North Atlantic Energy Corp. Secured First Mortgage Notes, Series A 9.050% 06/01/02 ............................. 107 107,134 Texas Utilities Electric Capital Trust Preferred V 8.175% 02/01/37 ............................. 50 47,750 ------------ 395,048 ------------ WASTE MANAGEMENT -- 0.1% Allied Waste North America, Series B 7.625% 01/01/06 ............................. 10 9,175 7.875% 01/01/09 ............................. 25 22,750 ------------ 31,925 ------------ TOTAL CORPORATE BONDS (Cost $4,972,213) ........................... $ 4,771,352 ------------ MUNICIPAL BOND -- 0.0% Illinois State GO 4.750% 06/01/23 ............................. 15 12,788 (Cost $14,242) ------------ AGENCY OBLIGATIONS -- 17.0% FEDERAL HOME LOAN MORTGAGE CORPORATION -- 1.7% 7.000% 12/01/09 ............................ 287 284,214 6.500% 07/01/29 ............................ 180 170,409 ------------ 454,623 ------------ FEDERAL NATIONAL MORTGAGE ASSOCIATION -- 13.7% Various Pools: 6.000% 01/01/29 ............................. 122 112,544 6.000% 01/01/29 ............................. 362 333,277 6.000% 07/01/29 ............................. 400 367,839 6.000% 07/01/29 ............................. 348 319,626 6.500% 06/01/29 ............................. 52 48,855 6.500% 06/01/29 ............................. 113 107,216 6.500% 07/01/29 ............................. 220 208,076 6.500% 07/01/29 ............................. 240 227,228 6.500% 08/01/29 ............................. 145 136,968 6.500% 08/01/29 ............................. 35 33,130 See Accompanying Notes to Financial Statements. 53 WARBURG PINCUS STRATEGIC GLOBAL FIXED INCOME FUND (CONTINUED) PAR (000) VALUE --------- ------------ FEDERAL NATIONAL MORTGAGE ASSOCIATION -- (CONTINUED) 15-Year TBA: 6.000% 08/01/14 ............................. $ 270 $ 256,922 6.500% 08/01/14 ............................. 100 97,125 30-Year TBA: 6.000% 10/15/17 ............................. 25 22,977 6.500% 06/01/29 ............................. 25 23,672 7.000% 12/31/25 ............................. 480 465,900 8.000% 06/01/28 ............................. 820 830,762 Global Notes 6.860% 06/01/17 ............................. 390 117,791 Series 1997-16 Class M PO 9.160% 02/25/23 ............................. 80 45,787 ------------ 3,755,695 ------------ GOVERNMENT NATIONAL MORTGAGE ASSOCIATION -- 1.6% TBA 7.500% 08/01/28 ............................. 430 426,103 ------------ TOTAL AGENCY OBLIGATIONS (Cost $4,671,902) ........................... $ 4,636,421 ------------ ASSET BACKED SECURITIES -- 1.6% Green Tree Recreational, Equipment and Consumer Trust Series 1997-C, Class A1 6.490% 02/15/18 ............................. 131 126,966 Morgan Stanley Inc., Capital I, Series 1998-Xl1, Class A3 6.480% 06/03/30 ............................. 165 155,756 National Westminster Bank Debentures Guaranteed Cap Notes 9.375% 11/15/03 ............................. 15 16,312 PECO Energy Transition Trust 6.050% 03/01/09 ............................. 40 37,739 6.130% 03/01/09 ............................. 75 69,629 Prudential Securities Secured Financing Series 1999-C2, Class A2 7.193% 04/15/09 ............................. 30 29,464 ------------ TOTAL ASSET BACKED SECURITIES .................................. $ 435,866 (Cost $458,451) ------------ COLLATERALIZED MORTGAGE BACKED SECURITIES -- 2.0% Commercial Mortgage Asset Trust, Series 1999-C1, Class A3 6.640% 04/17/10 ............................. 145 136,327 Contimortgage Home Equity Loan Trust, Series 1996-4, Class A8 7.220% 01/15/28 ............................. 10 9,831 Donaldson Lufkin Jenrette Commercial Mortgage Corp., Series 1998-CG1, Class A1-B 6.410% 05/10/08 ............................. 100 93,590 PAR (000) VALUE --------- ------------ COLLATERALIZED MORTGAGE BACKED SECURITIES -- (CONTINUED) GMAC Commercial Mortgage Securities, Inc., Series 1997-C1 Class A2 6.853% 09/15/06 ............................. $ 20 $ 19,864 Heller Financial Commercial Mortgage Asset Corp. Series 1999-PH1, Class A2 6.847% 05/15/31 ............................. 50 48,378 Nomura Asset Securitization Corp., Series 1998-D6, Class A1B 6.590% 03/17/28 ............................. 140 132,819 Option One Mortgage Loan Trust, Series 1999-2, Class A 9.660% 06/25/29 ............................. 64 63,751 UCFC Home Equity Loan Trust, Series 1996-B1, Class A7 8.200% 09/15/27 .......................... 25 25,027 Series 1998-A1, Class A7 6.870% 07/15/29 .......................... 25 24,112 ------------ TOTAL COLLATERALIZED MORTGAGE BACKED SECURITIES .................................. $ 553,699 (Cost $586,201) ------------ U.S. TREASURY OBLIGATIONS -- 6.9% U.S. Treasury Bills -- 0.1% 4.315% 09/16/99 ............................. $ 10 $ 9,982 4.369% 09/16/99 ............................. 20 19,964 ------------ 29,946 ------------ U.S. TREASURY BONDS -- 1.7% 8.000% 11/15/21 ............................. 385 453,333 ------------ U.S. TREASURY INFLATION PROTECTED NOTES -- 0.7% 3.875% 04/15/29 ............................. 190 187,046 ------------ U.S. TREASURY NOTES -- 4.4% 7.250% 05/15/04 ............................. 1,055 1,107,781 6.250% 02/15/07 ............................. 95 95,332 ------------ 1,203,113 ------------ TOTAL U.S. TREASURY OBLIGATIONS (Cost $1,908,149) ........................... $ 1,873,438 ------------ TOTAL U.S. BONDS (Cost $12,611,158) .......................... $ 12,283,564 ------------ See Accompanying Notes to Financial Statements. 54 WARBURG PINCUS STRATEGIC GLOBAL FIXED INCOME FUND (CONCLUDED) NUMBER OF SHARES VALUE ---------- ------------ PREFERRED STOCKS -- 1.1% California Federal Capital Corp., Series A 9.125% ............................. 6,100 $ 151,738 Centaur Funding Corp. 9.08% ................... 40 42,175 Citigroup, Inc. 6.213% ........................ 1,200 58,950 Lehman Brothers Holdings, Inc. Pfd. Series C 5.94% ......................... 600 26,400 Pfd. Series D 5.67% ......................... 800 34,000 ------------ TOTAL PREFERRED STOCKS (Cost $327,171) ............................. $ 313,263 ------------ PAR (000) -------- SHORT-TERM INVESTMENT -- 6.9% BBH Grand Cayman U. S. Dollar Time Deposit 4.500% 09/01/99 ............................. $ 1,892 $ 1,892,000 (Cost $1,892,000) ------------ SECURITIES SOLD SHORT -- (0.3%) Federal National Mortgage Association TBA 6.500% 06/01/29 ............................. 90 $ (85,219) (Cost ($86,709)) ------------ TOTAL INVESTMENTS -- 104.2% (Cost $29,560,291*) ......................... $ 28,517,162 LIABILITIES IN EXCESS OF OTHER ASSETS-- (4.2%) ....................... (1,157,444) ------------ TOTAL NET ASSETS -- 100.0% .................... $ 27,359,718 ============ * Cost for Federal income tax purposes at August 31, 1999 is $29,575,906. The gross appreciation (depreciation) on a tax basis is as follows: Gross and Net Depreciation .............................. $ (1,058,744) ============ (DAGGER) Variable rate obligations -- The interest shown is the rate as of August 31, 1999. (DAGGER)(DAGGER) Step Bond-- The interest rate as of August 31, 1999 is 0% and will reset to interest rate shown at a future date. (DAGGER)(DAGGER)(DAGGER) Securities have no stated maturity date. CURRENCY ABBREVIATIONS CND ............................................................Canadian Dollars DKK ................................................................Danish Krone EUR ......................................................European Economic Unit GBP .......................................................United Kingdom Pounds JPY ................................................................Japanese Yen INVESTMENT ABBREVIATIONS FRB ..........................................................Floating Rate Bond FRN ..........................................................Floating Rate Note GO ..........................................................General Obligations See Accompanying Notes to Financial Statements. 55 WARBURG PINCUS HIGH YIELD FUND PORTFOLIO MANAGERS' LETTER September 17, 1999 Dear Shareholders: We are writing to report on the results of the Warburg Pincus High Yield Fund (the "Fund") for the fiscal year ended August 31, 1999. At August 31, 1999, the net asset value ("NAV") of the Fund's institutional shares was $15.32, compared to an NAV of $16.60 on August 31, 1998. As a result, the institutional shares' total return was 0.7% (assuming the reinvestment of dividends totaling $1.37 per share). By comparison, the Credit Suisse First Boston Global High Yield Index (the "Index") returned 4.7% during the same period. At August 31, 1999, the NAV of the Fund's common shares was $15.38, compared to an NAV of $16.62 on August 31, 1998. As a result, the common shares' total return was 0.4% (assuming the reinvestment of dividends totaling $1.29 per share). By comparison, the Index returned 4.7% during the same period. The Fund performed fairly well during most of the fiscal year, however, returns in the months of September, October and November 1998 were low. An extraordinary confluence of events during this time period in global financial markets -- including a relatively sharp decline in the currencies, securities and economies of many developing nations; rapidly deteriorating political and macroeconomic conditions in Russia; and the collapse of a major hedge fund, Long-Term Capital Management -- caused great instability in fixed income sectors generally. The Fund's relative returns in these months were sufficiently low to cause it to underperform the Index. We attribute this underperformance to the following factors: (BULLET) Our substantial overweighting in telecommunications left the portfolio more highly exposed than the benchmark to deferred-interest instruments such as zero-coupon bonds whose returns generally were lower than those of traditional cash-pay instruments. These lower returns reflected investors' preference at the time for higher-quality issues within the overall high yield universe. (BULLET) We underweighted utilities, which performed well during the period. (BULLET) A majority of our holdings in the transportation sector were with shipping companies, which were hurt by a combination of falling oil prices and declining Asian demand for oil. Bright spots for the Fund included our overweightings in cable/media and gaming, both of which performed much better than the benchmark;and underweightings in finance and energy, which were among the worst-performing sectors in the entire high yield market. As developments occur that we believe would be of interest to you, we will be sure to keep you informed. Meanwhile, if you have questions, please feel free to call upon us at anytime. Sincerely yours, Credit Suisse Asset Management High Yield Management Team Richard J. Lindquist, Managing Director Misia K. Dudley, Director Marianne Rossi, Director John M. Tobin, Director Mary Ann Thomas, Director HIGH YIELD BONDS ARE LOWER-QUALITY BONDS THAT ARE ALSO KNOWN AS "JUNK" BONDS. SUCH BONDS ENTAIL GREATER RISKS THAN THOSE FOUND IN HIGHER-RATED SECURITIES. INTERNATIONAL INVESTING ENTAILS SPECIAL RISK CONSIDERATIONS, INCLUDING CURRENCY FLUCTUATIONS, LOWER LIQUIDITY, ECONOMIC AND POLITICAL RISKS AND DIFFERENCES IN ACCOUNTING METHODS. 56 WARBURG PINCUS HIGH YIELD FUND PORTFOLIO MANAGERS' LETTER (CONCLUDED) COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN THE WARBURG PINCUS HIGH YIELD INSTITUTIONAL SHARES AND THE CS FIRST BOSTON HIGH YIELD INDEX 1 FROM INCEPTION (3/1/93) AND AT EACH QUARTER END. (UNAUDITED) [GRAPHIC OMITTED] EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC Warburg Pincus High Yield Fund CS First Boston Institutional Shares High Yield Index 1 03/01/93 $10,000 $10,000 05/31/93 $10,613 $10,419 08/31/93 $11,293 $10,809 11/30/93 $11,880 $11,209 02/28/94 $12,137 $11,570 05/31/94 $11,491 $11,143 08/31/94 $11,547 $11,201 11/30/94 $11,456 $11,123 02/28/95 $10,968 $11,638 05/31/95 $12,018 $12,370 08/31/95 $12,446 $12,680 11/30/95 $12,758 $13,029 02/29/96 $13,672 $13,516 5/31/96 $13,997 $13,662 8/31/96 $13,991 $13,965 11/30/96 $14,579 $14,547 2/28/97 $15,199 $15,219 5/31/97 $15,359 $15,488 8/31/97 $16,114 $16,119 11/30/97 $16,662 $16,553 2/28/98 $17,523 $17,120 5/31/98 $17,854 $17,387 8/31/98 $16,997 $16,354 11/30/98 $16,672 $16,840 2/28/99 $16,867 $16,924 5/31/99 $17,289 $17,268 8/31/99 $17,110 $17,131 INSTITUTIONAL SHARES -------------------- AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS ENDED AUGUST 31, 1999 One Year 0.67% Three Years 6.94% Five Years 8.18% From Inception (3/1/93) 8.59% COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN THE WARBURG PINCUS HIGH YIELD COMMON SHARES AND THE CS FIRST BOSTON HIGH YIELD INDEX 1 FROM INCEPTION (11/1/96) AND AT EACH QUARTER END. (UNAUDITED) [GRAPHIC OMITTED] EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC Warburg Pincus High Yield Fund CS First Boston Common Shares High Yield Index 1 11/1/96 $10,000 $10,000 11/30/96 $10,105 $10,156 2/28/97 $10,528 $10,625 5/31/97 $10,632 $10,813 8/31/97 $11,149 $11,253 11/30/97 $11,508 $11,556 2/28/98 $12,098 $11,952 5/31/98 $12,317 $12,138 8/31/98 $11,737 $11,417 11/30/98 $11,507 $11,756 2/28/99 $11,637 $11,815 5/31/99 $11,919 $12,055 8/31/99 $11,782 $11,960 COMMON SHARES -------------------- AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS ENDED AUGUST 31, 1999 One Year 0.39% From Inception (11/1/96) 5.96% Note: Past performance is not predictive of future performance. Investment return and principle value of an investment will fluctuate so that an investor's shares upon redemption may be worth more or less than their original cost. 1 The Credit Suisse First Boston High Yield Index is an unmanaged index (with no defined investment objective) of high yield bonds and is compiled by Credit Suisse First Boston, an affiliate of the fund's adviser. 57 WARBURG PINCUS HIGH YIELD FUND SCHEDULE OF INVESTMENTS AUGUST 31, 1999 PAR (000) VALUE ------ ------------ CORPORATE BONDS -- 90.1% AEROSPACE/DEFENSE -- 0.2% K&F Industries, Inc. Sr. Sub. Notes 9.250% 10/15/07 ............................. $ 250 $ 256,562 ------------ AUTOMOTIVE -- 3.2% Aetna Industries, Inc. Sr. Notes 11.875% 10/01/06 ............................ 500 558,750 Breed Technologies, Inc. 144A Sr. Sub. Notes 9.250% 04/15/08(DAGGER)(DAGGER) ............. 500 40,000 Cambridge Industries, Inc. Gtd. Sr. Sub. Notes, Series B 10.250% 07/15/07 ............................ 400 302,000 Collins & Aikman Products Corp. Gtd. Sr. Sub. Notes 11.500% 04/15/06 ............................ 350 353,500 Delco Remy International, Inc. Gtd. Sr. Sub. Notes 10.625% 08/01/06 ............................ 500 523,125 Hayes Lemmerz International, Inc. 144A Sr. Sub. Notes 8.250% 12/15/08 ............................. 400 374,000 Hayes Wheels International, Inc. Sr. Sub. Notes, Series B 9.125% 07/15/07 ............................. 350 347,375 LDM Technologies, Inc. 144A Sr. Sub. Notes, Series B 10.750% 01/05/07 ............................ 400 393,000 Oxford Automotive, Inc. Sr. Sub. Notes 10.125% 06/15/07 ............................ 500 495,000 Safelite Glass Corp. Sr. Sub. Notes 9.875% 12/15/06 ............................. 350 315,000 Titan Wheel International, Inc. Sr. Sub. Notes 8.750% 04/01/07 ............................. 250 249,375 United Rentals, Inc. 144A Sr. Sub. Notes 9.250% 01/15/09 ............................. 250 245,000 ------------ 4,196,125 ------------ BROADCASTING -- 4.1% Allbritton Communications Company Sr. Sub. Notes, Series B 9.750% 11/30/07 ............................. 250 250,625 8.875% 02/01/08 ............................. 250 240,625 American Radio Systems Corp. .................. Gtd. Sr. Sub. Notes 9.000% 02/01/06 ............................. 250 263,750 PAR (000) VALUE ------ ------------ BROADCASTING -- (CONTINUED) Australis Holdings Pty. Ltd. 144A Yankee Sr. Secured Discount Notes 15.000% 11/01/02(DAGGER)/(DAGGER)(DAGGER) ... $ 294 $ 2,940 Australis Media Ltd. Yankee Gtd. Sr. Sub. Discount Notes 15.750% 05/15/03(DAGGER)/(DAGGER)(DAGGER) ... 8 1 15.750% 05/15/03(DAGGER)(DAGGER) ............ 900 90 Big City Radio, Inc., 144A Sr. Bonds 11.250% 03/15/05(DAGGER) .................... 750 535,312 Capstar Broadcasting, Inc. Sr. Sub. Discount Notes 12.750% 02/01/09(DAGGER) .................... 500 428,750 Chancellor Media Corp. 144A Sr. Sub. Notes 8.000% 11/01/08 .......................... 300 288,000 Sr. Sub. Notes 9.375% 10/01/04 .......................... 250 252,500 Citadel Broadcasting Co. 144A Sr. Sub. Notes 9.250% 11/15/08 ............................. 250 248,750 Emmis Communications Corporation Sr. Sub.Notes, Series B 8.125% 03/15/09 ............................. 250 236,250 Granite Broadcasting Corp. 144A Sr. Sub Notes 8.875% 05/15/08 .......................... 250 240,000 Sr. Sub. Notes 9.375% 12/01/05 .......................... 450 447,750 HMV Media Group plc, Senior Subordinated Yankee Notes, Series B 10.250% 05/15/08 ............................ 350 343,000 Jacor Communications Co. Sr. Sub. Notes 9.750% 12/15/06 ............................. 250 266,250 Sinclair Broadcast Group Sr. Sub. Notes 10.000% 09/30/05 ............................ 400 410,000 Spanish Broadcasting System, Inc. 144A Sr. Notes 11.000% 03/15/04 ............................ 300 330,000 United International Holdings, 144A Sr. Discount Notes 10.750% 02/15/08(DAGGER) .................... 500 290,000 Young Broadcasting, Inc. Gtd. Sr. Sub. Notes, Series B 9.000% 01/15/06 ............................. 250 245,625 ------------ 5,320,218 ------------ See Accompanying Notes to Financial Statements. 58 WARBURG PINCUS HIGH YIELD FUND (CONTINUED) PAR (000) VALUE ------ ------------ BUILDING MATERIALS -- 0.7% Building One Services, Inc. 144A Sr. Sub. Notes 10.500% 05/01/09 ............................ $ 250 $ 233,750 It Group, Inc. 144A Sr. Sub. Notes 11.250% 04/01/09 ............................ 250 240,625 Jackson Products, Inc. Notes 9.500% 04/15/05 ............................. 400 368,000 ------------ 842,375 ------------ BUSINESS SERVICES -- 0.6% Iron Mountain, Inc. 144A Sr. Notes 8.750% 09/30/09 ............................. 500 478,750 U.S. Office Products Co. 144A Sr. Sub. Notes 9.750% 06/15/08 ............................. 400 232,000 ------------ 710,750 ------------ CABLE -- 10.6% Adelphia Communications Corp. Sr. Notes, Series B 10.500% 07/15/04 ............................ 400 420,000 Avalon Cable Holdings Sr. Discount Notes 11.875% 12/01/08 ............................ 500 330,000 Avalon Cable of Michigan, Inc. Sr. Sub. Notes 9.375% 12/01/08 ............................. 400 403,000 Century Communications, Sr. Discount Notes, Series B 10.785% 01/15/08 ............................ 500 207,500 Classic Cable Sr. Sub. Notes 9.875% 08/01/08 ............................. 500 505,000 Classic Communications, Inc. 144A Sr. Discount Notes 9.875% 08/01/09(DAGGER) ..................... 1,000 675,000 Coaxial Communications, Inc. Phoenix Associates Co. Gtd Notes 10.000% 08/15/06 ............................ 550 561,000 Coaxial L.L.C 144A Co. Gtd 12.875% 08/15/08(DAGGER) .................... 400 269,000 Comcast U.K. Cable Partners Ltd., Yankee Sr. Debentures 11.200% 11/15/07(DAGGER) .................... 750 678,750 CSC Holdings, Sr. Debentures 9.875% 02/15/13 ............................. 500 512,500 Diamond Cable Communications plc Sr. Discount Notes 11.750% 12/15/05(DAGGER) .................... 500 447,500 PAR (000) VALUE ------ ------------ CABLE -- (CONTINUED) DIVA Systems Corp. Sr. Disc. Notes Cl. B 12.625% 03/01/08(DAGGER) .................... $2,527 $ 707,560 Echostar DBS Corp. 144A Sr. Notes 9.375% 02/01/09 ............................. 500 500,000 Falcon Holding Group L.P./Falcon Funding Corp. 144A Debentures 9.285% 04/15/10(DAGGER) ..................... 500 355,000 8.375% 04/15/10 ............................. 400 397,000 Frontiervision Holdings L.P. Sr. Discount Notes 11.875% 09/15/07(DAGGER) .................... 500 428,750 Galaxy Telecom L.P. Sr. Sub. Notes 12.375% 10/01/05 ............................ 400 439,000 Golden Sky Systems, Inc. 144A Sr. Discount Notes 13.500% 03/01/07(DAGGER) .................... 750 448,125 Helicon Group L.P. Sr. Secured Notes, Series B 11.000% 11/01/03 ............................ 500 521,250 International CableTel, Inc. Sr. Deferred Coupon Notes, Series A 12.750% 04/15/05(DAGGER) .................... 750 731,250 James Cable Partners L.P. Sr. Notes, Series B 10.750% 08/15/04 ............................ 650 658,125 Jones Intercable, Inc. Sr. Notes 7.625% 04/15/08 ............................. 500 505,000 Lenfest Communications, Inc. Sr. Notes 8.375% 11/01/05 ............................. 300 310,875 Mediacom L.L.C. Capital 144A Sr. Notes 7.875% 02/15/11 ............................. 300 264,750 Northland Cable Television, 144A Sr. Sub. Notes 10.250% 11/15/07 ............................ 350 353,500 Rifkin Acquisition Partners L.P. Sr. Sub. Notes 11.125% 01/15/06 ............................ 500 561,250 Rogers Communications, Inc. Yankee Sr. Notes 9.125% 01/15/06 ............................. 550 565,125 Telewest Communications Group plc Yankee Sr. Discount Debentures 11.000% 10/01/07(DAGGER) .................... 700 617,750 Telewest Communications plc Senior Discount Notes 9.250% 04/15/09(DAGGER) ..................... 500 305,000 ------------ 13,678,560 ------------ See Accompanying Notes to Financial Statements. 59 WARBURG PINCUS HIGH YIELD FUND (CONTINUED) PAR (000) VALUE ------ ------------ CELLULAR/WIRELESS COMMUNICATIONS -- 1.3% Centennial Cellular Corp. Sr. Sub. Notes 10.750% 12/15/08 ............................ $ 400 $ 417,000 Dobson Communications 144A Sr. Notes 11.750% 04/15/07 ............................ 250 263,750 Microcell Telecommunications, Inc. Yankee Sr. Discount Notes, Series B 14.000% 06/01/06(DAGGER) .................... 500 411,250 Sprint Spectrum L.P./Sprint Spectrum Finance Corp. Sr. Notes 11.000% 08/15/06 ............................ 500 561,875 ------------ 1,653,875 ------------ CHEMICALS -- 1.7% ClimaChem, Inc. Notes, Series B 10.750% 12/01/07 ............................ 250 246,562 Huntsman Corp. 144A Sr. Sub. Notes 9.500% 07/01/07 ............................. 250 237,500 Lyondell Chemical, Inc. Senior Secured Notes, Series B 9.875% 05/01/07 ............................. 500 503,750 Philipp Brothers Chemicals, Inc. Co. Gtd. Sr. Notes 9.875% 06/01/08 ............................. 350 316,750 Pioneer Americas Acquistics Corp. Gtd. Sr. Secured Notes, Series B 9.250% 06/15/07 ............................. 250 182,500 Radnor Holdings Corp. Sr. Notes, Series B 10.000% 12/01/03 ............................ 500 505,000 Sterling Chemical Holdings, Inc. Sr. Secured Discount Notes 13.500% 08/15/08(DAGGER) .................... 700 175,000 ------------ 2,167,062 ------------ COMPUTERS, SOFTWARE & SERVICES -- 0.6% PSINET, Inc. 144A Sr. Notes 11.500% 11/01/08 ............................ 250 253,750 Verio, Inc. 144A Units 13.500% 06/15/04 ......................... 350 391,125 Sr. Notes 10.375% 04/01/05 ......................... 200 200,000 ------------ 844,875 ------------ PAR (000) VALUE ------ ------------ CONSTRUCTION & BUILDING MATERIALS -- 1.8% Collins & Aikman Floorcoverings, Inc. Sr. Sub. Notes, Series B 10.000% 01/15/07 ............................ $ 500 $ 501,250 Koppers Industry, Inc. Sr. Sub. Notes 9.875% 12/01/07 ............................. 250 247,500 Omega Cabinets, Ltd. Sr. Sub. Notes 10.500% 06/15/07 ............................ 400 392,000 Southdown, Inc. Sr. Sub. Notes, Series B 10.000% 03/01/06 ............................ 500 546,250 Uniforet, Inc. Yankee Gtd. Sr. Notes 11.125% 10/15/06 ............................ 500 358,750 Waxman Industries, Inc. Sr. Notes, Series B 12.750% 06/01/04 ............................ 600 306,000 ------------ 2,351,750 ------------ CONSUMER PRODUCTS & SERVICES -- 2.5% Coinstar, Inc. Sr. Discount Notes 13.000% 10/01/06(DAGGER) .................... 525 551,250 Drypers Corp. Sr. Notes, Series B 10.250% 06/15/07 ............................ 250 197,500 Group Maintenance America Corp. 144A Sr. Sub. Notes 9.750% 01/15/09 ............................. 250 246,562 Holmes Products Corp. 144A Sr. Sub. Notes 9.875% 11/15/07 ............................. 500 472,500 Hosiery Corp. of America, Inc. Sr. Sub. Notes 13.750% 08/01/02 ............................ 400 424,000 Packaged Ice, Inc. 144A Gtd. Sr. Notes 9.750% 02/01/05 ............................. 400 381,000 The Scotts Co. 144A Sr. Sub. Notes 8.625% 01/15/09 ............................. 300 294,000 Werner Holdings Co., Inc. Gtd. Sr. Sub. Notes, Series A 10.000% 11/15/07 ............................ 500 475,000 Worldtex, Inc. 144A Sr. Notes 9.625% 12/15/07 ............................. 250 220,000 ------------ 3,261,812 ------------ ELECTRIC UTILITIES -- 0.2% Integrated Electric Services, Inc. 144A Sr. Sub. Notes (B2, BB-) 9.375% 02/01/09 ............................. 250 247,500 ------------ See Accompanying Notes to Financial Statements. 60 WARBURG PINCUS HIGH YIELD FUND (CONTINUED) PAR (000) VALUE ------ ------------ ELECTRONICS -- 1.0% Ampex Corp. 144A Sr. Notes 12.000% 03/15/03 ............................ $ 500 $ 518,750 Elgar Holdings Inc., 144A Gtd. Sr. Notes 9.875% 02/01/08 ............................. 500 375,000 Unisys Corporation Sr. Notes, Series B 12.000% 04/15/03 ............................ 400 434,000 ------------ 1,327,750 ------------ ENERGY -- 3.2% Abraxas Petroleum, Inc. and Canadian Abraxas Petroleum Limited, Gtd. Sr. Notes, Series D 11.500% 11/01/04 ............................ 500 342,500 AEI Resources, Inc. 144A Sr. Sub. Notes 11.500% 12/15/06 ............................ 400 340,000 Bellwether Exploration Co. Gtd. Sr. Sub. Notes 10.875% 04/01/07 ............................ 250 227,500 Cliffs Drilling Company Gtd. Sr. Notes, Series D 10.250% 05/15/03 ............................ 350 347,375 CMS Energy Corp. Sr. Notes 7.500% 01/15/09 ............................. 500 458,125 Dailey International, Inc. Gtd. Sr. Notes, Series B 9.500% 02/15/08 ............................. 800 517,000 Eagle Geophysical, Inc. Co. Gtd. 10.750% 07/15/08(DAGGER)(DAGGER) ............ 500 95,000 HS Resources, Inc. Sr. Sub. Notes 9.250% 11/15/06 ............................. 400 396,000 Plains Resources, Inc. Gtd. Sr. Sub. Notes, Series B 10.250% 03/15/06 ............................ 250 251,250 Pogo Producing Co. Sr. Sub. Notes, Cl. B 8.750% 05/15/07 ............................. 500 470,000 Pride Petroleum Services, Inc. Sr. Notes 9.375% 05/01/07 ............................. 300 301,500 Southwest Royalties, Inc. Gtd. Sr. Notes, Series B 10.500% 10/15/04 ............................ 300 144,000 Wiser Oil Co. Gtd. Sr. Sub. Notes 9.500% 05/15/07 ............................. 250 206,250 ------------ 4,096,500 ------------ PAR (000) VALUE ------ ------------ ENERGY SOURCES -- 0.8% Key Energy Services, Inc. Units 144A 14.000% 01/15/09 ............................ $ 750 $ 795,000 Nuevo Energy Co. 144A Sr. Sub. Notes 9.500% 06/01/08 ............................. 250 250,000 ------------ 1,045,000 ------------ ENTERTAINMENT -- 3.1% Ackerley Group, Inc. Sr. Sub. Notes (B2, B) 9.000% 01/15/09 ............................. 250 245,000 AMC Entertainment, Inc. Sr. Sub. Notes 9.500% 03/15/09 ............................. 500 425,000 American Skiing Co. Sr. Sub. Notes, Series B 12.000% 07/15/06 ............................ 400 362,000 AMF Bowling Worldwide, Inc. Gtd. Sr. Discount Notes 12.250% 03/15/06 ......................... 350 280,000 Gtd. Sr. Discount Notes, Series B 10.875% 03/15/06(DAGGER) ................. 459 281,711 Booth Creek Ski Holdings, Inc. Gtd. Sr. Notes, Series B 12.500% 03/15/07 ............................ 400 336,000 Florida Panthers Holdings, Inc. 144A Sr. Sub. Notes 9.875% 04/15/09 ............................. 250 240,625 Imax Corp. Sr. Notes 7.875% 12/01/05 ............................. 250 236,875 KSL Recreation Group, Inc. Sr. Sub. Notes 10.250% 05/01/07 ............................ 500 511,250 Premier Parks Inc. Gtd. Sr. Notes 9.750% 01/15/07 ............................. 250 256,875 Premier Parks Inc. Sr. Notes 9.250% 04/01/06 ............................. 250 243,750 Regal Cinemas, Inc. 144A Sr. Sub. Notes 8.875% 12/15/10 ............................. 500 330,000 SFX Entertainment, Inc. 144A Sr. Sub. Notes 9.125% 12/01/08 ............................. 250 236,875 ------------ 3,985,961 ------------ ENVIRONMENTAL SERVICES -- 0.3% First Wave Marine Sr. Notes 11.000% 02/01/08 ............................ 500 415,000 ------------ See Accompanying Notes to Financial Statements. 61 WARBURG PINCUS HIGH YIELD FUND (CONTINUED) PAR (000) VALUE ------ ------------ FINANCIAL SERVICES -- 0.4% Oglebay Norton Co. 144A Sr. Sub. Notes 10.000% 02/01/09 ............................ $ 500 $ 490,000 ------------ FOOD & BEVERAGE -- 3.5% Agrilink Foods, Inc. Sr. Sub. Notes 11.875% 11/01/08 ............................ 250 255,000 AmeriServ Food Distribution, Inc. Gtd. Sr. Notes 8.875% 10/15/06 ............................. 250 215,000 Archibald Candy Corp. 144A Gtd. Sr. Secured Notes 10.250% 07/01/04 ............................ 300 298,500 Carrols Corp. 144A Sr. Sub. Notes 9.500% 12/01/08 ............................. 250 215,000 Delta Beverage Group, Inc. Sr. Notes 9.750% 12/15/03 ............................. 250 253,750 Eagle Family Foods, Inc. Sr. Sub. Notes 8.750% 01/15/08 ............................. 600 510,000 Fleming Companies, Inc. Sr. Gtd. Sub. Notes, Series B 10.500% 12/01/04 ............................ 150 142,500 International Home Foods, Inc. Gtd. Sr. Sub. Notes 10.375% 11/01/06 ............................ 250 269,375 Luigino's, Inc. 144A Sr. Sub. Notes 10.000% 02/01/06 ............................ 500 499,730 Mrs. Fields' Holding Co., Inc. 144A Units 14.000% 12/01/05(DAGGER) .................... 200 100,000 Mrs. Fields' Original Cookies Inc. 144A Gtd. Sr. Notes, Series A 10.125% 12/01/04 ......................... 250 229,375 Gtd. Sr. Notes, Series B 10.125% 12/01/04 ......................... 150 137,250 National Wine & Spirits Co. Gtd. 10.125% 01/15/09 ............................ 250 255,000 New World Pasta Co. 144A Sr. Sub. Notes 9.250% 02/15/09 ............................. 500 499,375 Pantry, Inc. Sr. Sub. Notes 10.250% 10/15/07 ............................ 250 248,750 Premium Standard Farm, Inc. Sr. Secured Notes 11.000% 09/17/03 ............................ 475 427,275 ------------ 4,555,880 ------------ PAR (000) VALUE ------ ------------ HEALTH CARE -- 2.7% Beverly Enterprises, Inc. Gtd. Sr. Notes 9.000% 02/15/06 ............................. $ 400 $ 360,000 Fountain View, Inc. Co. Gtd. 11.250% 04/15/08 ............................ 500 410,000 Genesis Health Ventures, Inc. Sr. Sub. Notes 9.875% 01/15/09 ............................. 500 305,000 InSight Health Services, Inc. Co. Gtd. Sr. Notes 9.625% 06/15/08 ............................. 400 379,000 Integrated Health Services, Inc. Sr. Sub. Notes, Series A 9.500% 09/15/07 ............................. 250 90,000 Oxford Health Plans, Inc. 144A Sr. Notes 11.000% 05/15/05 ............................ 400 414,000 Paracelsus Healthcare Corp. Sr. Sub. Notes 10.000% 08/15/06 ............................ 250 196,250 Quest Diagnostic, Inc. Sr. Sub. Notes 10.750% 12/15/06 ............................ 500 549,375 Tenet Healthcare Corp. Sr. Sub. Notes 8.625% 01/15/07 ............................. 250 240,000 Triad Hospitals, Inc. 144A Sr. Sub. Notes 11.000% 05/15/09 ............................ 500 505,000 ------------ 3,448,625 ------------ INDUSTRIAL GOODS & MATERIALS -- 1.6% Anchor Lamina, Inc./Anchor Lamina America, Inc. 144A Sr. Sub. Notes 9.875% 02/01/08 ............................. 250 225,625 Golden Ocean Group Ltd., 144A Gtd. Sr. Notes 10.000% 08/31/01 ............................ 657 88,695 Jordan Industries, Inc. Sr. Notes 10.375% 08/01/07 ............................ 500 488,750 MMI Products, Inc. 144A Sr. Sub. Notes, Series B 11.250% 04/15/07 ............................ 500 507,500 Morris Materials Handling, Inc. 144A Sr. Notes 9.500% 04/01/08 ............................. 250 97,500 Motors & Gears, Inc. Sr. Notes, Series D 10.750% 11/15/06 ............................ 500 493,750 Thermadyne Holdings Corp. Sr. Discount Debentures 12.500% 06/01/08(DAGGER) .................... 250 121,250 ------------ 2,023,070 ------------ See Accompanying Notes to Financial Statements. 62 WARBURG PINCUS HIGH YIELD FUND (CONTINUED) PAR (000) VALUE ------ ------------ LEISURE & ENTERTAINMENT -- 0.4% Hollywood Park, Inc. 144A Sr. Sub. Notes ) 9.250% 02/15/07 ............................. $ 500 $ 490,000 ------------ METALS & MINING -- 2.3% Bayou Steel Corp. Co. Gtd. 9.500% 05/15/08 ............................. 500 472,500 Golden Northwest Aluminum First Mortgage Notes 12.000% 12/15/06 ............................ 400 412,000 Haynes International, Inc. Sr. Notes 11.625% 09/01/04 ............................ 250 236,250 Ivaco, Inc. Yankee Sr. Notes 11.500% 09/15/05 ............................ 250 252,500 Kaiser Aluminum and Chemical, Inc. 144A Sr. Notes 10.875% 10/15/06 ............................ 250 256,250 Metallurg, Inc. Sr. Notes 11.000% 12/01/07 ............................ 500 488,125 Weirton Steel Corporation Sr. Notes 11.375% 07/01/04 ............................ 350 350,000 WHX Corp. Sr. Exchange Notes 10.500% 04/15/05 ............................ 500 476,250 ------------ 2,943,875 ------------ OFFICE EQUIPMENT & SUPPLIES -- 0.3% Knoll, Inc. Sr. Sub. Notes 10.875% 03/15/06 ............................ 325 357,094 ------------ PACKAGING/CONTAINERS -- 0.5% BPC Holding Corporation Sr. Secured Notes, Series B 12.500% 06/15/06 ............................ 400 393,000 Crown Packaging Enterprises, Ltd. Yankee Sr. Secured Discount Notes 14.000% 08/01/06(DAGGER) .................... 775 11,625 Stone Container Finance Co. Yankee Gtd. Sr. Notes 11.500% 08/15/06 ............................ 250 261,250 ------------ 665,875 ------------ PAPER & FOREST PRODUCTS -- 3.1% Ainsworth Lumber Co. Ltd. Yankee Sr. Secured PIK Notes 12.500% 07/15/07 ............................ 500 553,750 Bear Island Paper Company, L.L.C./ Bear Island Finance Company II Sr. Secured Notes, Series B 10.000% 12/01/07 ............................ 400 392,000 PAR (000) VALUE ------ ------------ PAPER & FOREST PRODUCTS -- (CONTINUED) Crown Paper Co. Sr. Sub. Notes 11.000% 09/01/05 ............................ $ 400 $ 306,000 Gaylord Container Corp. Sr. Notes 9.375% 06/15/07 ............................. 600 546,000 MAXXAM Group Holdings, Inc. 144A Sr. Secured Notes, Series B 12.000% 08/01/03 ............................ 400 408,000 Printpack, Inc. Sr. Sub. Notes, Series B 10.625% 08/15/06 ............................ 450 428,062 Repap New Brunswick Sr. Yankee Notes 10.625% 04/15/05 ............................ 450 391,500 S.D. Warren Co. Sr. Sub. Notes 12.000% 12/15/04 ............................ 400 429,000 Specialty Paperboard, Inc. 144A Sr. Notes 9.375% 10/15/06 ............................. 250 253,750 Tembec Industries, Inc. Sr. Co. Gtd. 8.625% 06/30/09 ............................. 250 245,000 ------------ 3,953,062 ------------ PHARMACEUTICALS -- 0.4% ICN Pharmaceutical, Inc. 144A Sr. Notes 8.750% 11/15/08 ............................. 500 490,000 ------------ PUBLISHING & INFORMATION SERVICES -- 3.7% American Media Operation 144A Sr. Sub Notes 10.250% 05/01/09 ............................ 500 486,250 Big Flower Press Holdings, Inc. Sr. Sub. Notes 8.625% 12/01/08 ............................. 250 233,750 Gray Communications Systems Gtd. Sr. Sub. Notes 10.625% 10/01/06 ............................ 200 209,500 Hollinger International Publishing Inc. Sr. Sub. Notes 9.250% 03/15/07 ............................. 250 251,250 InterAct Systems, Inc. 144A Sr. Discount Notes 14.000% 08/01/03 ............................ 700 258,125 Liberty Group Publishing, Inc. Sr. Discount Debentures 11.625% 02/01/09(DAGGER) .................... 300 170,625 Mail-Well, Inc. 144A Sr. Sub. Notes 8.750% 12/15/08 ............................. 400 387,000 See Accompanying Notes to Financial Statements. 63 WARBURG PINCUS HIGH YIELD FUND (CONTINUED) PAR (000) VALUE ------ ------------ PUBLISHING & INFORMATION SERVICES -- (CONTINUED) Mentus Media Corp. 144A Sr. Secured Notes 12.000% 02/01/03 ............................ $ 591 $ 576,225 Nebraska Book Co., 144A Sr. Sub. Notes 8.750% 02/15/08 ............................. 500 410,000 Phoenix Color Corp. 144A Sr. Sub. Notes 10.375% 02/01/09 ............................ 500 482,500 Sun Media Corp. Yankee Sr. Sub. Notes 9.500% 02/15/07 ............................. 194 200,790 9.500% 05/15/07 ............................. 65 67,275 Tri-State Outdoor Media Group, Inc. 144A Sr. Notes 11.000% 05/15/08 ............................ 500 501,250 World Color Press, Inc. 144A Sr. Sub. Notes 8.375% 11/15/08 ............................. 500 493,750 ------------ 4,728,290 ------------ REAL ESTATE -- 0.7% HMH Properties, Inc. Sr. Notes 8.450% 12/01/08 ............................. 300 281,250 Host Marriot Hotel Properties Sr. Notes (Ba2, BB) 7.875% 08/01/05 ............................. 400 371,000 Intrawest Corp. Yankee Sr Notes 9.750% 08/15/08 ............................. 250 245,000 ------------ 897,250 ------------ RESTAURANTS, HOTELS & GAMING -- 7.7% AFC Enterprises Sr. Sub. Notes 10.250% 05/15/07 ............................ 400 404,000 American Restaurant Group, Inc. 144A Sr. Notes 11.500% 02/15/03 ............................ 500 453,125 AmeriKing, Inc. Gtd. Sr. Notes 10.750% 12/01/06 ............................ 400 410,000 Ameristar Casinos, Inc. Gtd. Sr. Sub. Notes, Series B 10.500% 08/01/04 ............................ 500 502,500 Arogosy Gaming Co. 144A Sr. Sub. Notes 10.750% 06/01/09 ............................ 500 515,000 CapStar Hotel Co., 144A Sr. Sub. Notes 8.750% 08/15/07 ............................. 250 233,437 PAR (000) VALUE ------ ------------ RESTAURANTS, HOTELS & GAMING -- (CONTINUED) Casino Magic of Louisiana Corp. Gtd. First Mortgage Notes, Series B 13.000% 08/15/03 ............................ $ 600 $ 682,500 Circus Circus Enterprise Sr. Sub. Notes 9.250% 12/01/05 ............................. 450 453,375 Coast Hotels & Casino, Inc. 144A Sr. Sub. Notes 9.500% 04/01/09 ............................. 250 240,000 Hard Rock Hotel, Inc. 144A Sr. Sub. Notes 9.250% 04/01/05 ............................. 350 316,750 Harrahs Operating Co. Inc. Co. Gtd. 7.875% 12/15/05 ............................. 250 237,500 Harvey Casino Resorts Sr. Sub. Notes 10.625% 06/01/06 ............................ 450 464,625 Horseshoe Gaming L.L.C. Gtd. Sr. Sub. Notes, Series B 9.375% 06/15/07 ............................. 400 407,500 Isle of Capri Casinos 144A Sr. Sub Notes 8.750% 04/15/09 ............................. 500 465,000 Louisiana Casino Cruises, Inc. Secured 144A 11.000% 12/01/05 ............................ 500 501,250 Majestic Star Casino 144A Secured Notes 10.875% 07/01/06 ............................ 400 392,000 Mohegan Tribal Gaming Authority Sr. Sub. Notes 8.750% 01/01/09 ............................. 400 394,000 Park Place Entertainment, Inc. 144A Sr. Sub. Notes 7.875% 12/15/05 ............................. 250 235,625 Peninsula Gaming L.L.C. 144A Sr. Notes 12.250% 07/01/06 ............................ 250 246,875 Players International, Inc. Sr. Notes 10.875% 04/15/05 ............................ 250 265,000 Prime Hospitality Corp. Secured First Mortgage Notes 9.250% 01/15/06 ............................. 250 251,562 Red Roof Inns, Inc. Sr. Exchange Notes 9.625% 12/15/03 ............................. 250 256,250 Santa Fe Hotel, Inc. First Mortgage Notes 11.000% 12/15/00 ............................ 500 498,750 See Accompanying Notes to Financial Statements. 64 WARBURG PINCUS HIGH YIELD FUND (CONTINUED) PAR (000) VALUE ------ ------------ RESTAURANTS, HOTELS & GAMING -- (CONTINUED) Station Casinos, Inc. Sr. Sub. Notes 10.125% 03/15/06 ............................ $ 500 $ 515,000 Sun International Hotels Ltd. Yankee Gtd. Sr. Sub. Notes 9.000% 03/15/07 ............................. 400 391,000 Waterford Gaming L.L.C./Waterford Gaming Finance Corp. 144A Sr. Notes 9.500% 03/15/10 ............................. 250 249,375 ------------ 9,981,999 ------------ RETAIL TRADE -- 2.1% Advance Holding Corp Sr. Discount Debentures, Series B 12.875% 04/15/09(DAGGER) .................... 500 280,000 County Seat Stores, Inc. 144A Units 12.750% 11/01/04(DAGGER)(DAGGER) ............ 500 45,000 Finlay Enterprises, Inc. Sr. Secured Debentures 9.000% 05/01/08 ............................. 250 237,500 Jitney-Jungle Stores of America, Inc. Gtd. Sr. Notes 12.000% 03/01/06 ............................ 250 202,500 Jo-Ann Stores, Inc. 144A Sr. Sub Notes 10.375% 05/01/07 ............................ 250 246,250 K Mart Corp. Debentures 7.750% 10/01/12 ............................. 500 476,875 Pathmark Stores, Sr. Sub Notes 9.625% 05/01/03 ............................. 500 509,375 Pueblo Xtra International, Inc. Sr. Notes 9.500% 08/01/03 ............................. 400 352,000 Randall's Food Markets, Inc. Sr. Sub. Notes, Series B 9.375% 07/01/07 ............................. 350 382,812 ------------ 2,732,312 ------------ STEEL -- 0.0% Gulf States Steel, Inc. First Mortgage Notes 13.500% 04/15/03(DAGGER)(DAGGER) ............ 200 36,000 ------------ TELECOMMUNICATIONS -- 21.7% AMSC Acquisition Company, Inc. Senior Notes, Series B 12.250% 04/01/08 ............................ 500 380,000 Bresnan Communications Co. 144A Sr. Discount Notes 9.250% 02/01/09(DAGGER) .................. 1,000 657,500 144A Sr. Notes 8.000% 02/01/09 .......................... 250 247,500 PAR (000) VALUE ------ ------------ TELECOMMUNICATIONS -- (CONTINUED) Call-Net Enterprises, Inc. Sr. Discount Notes 8.000% 05/15/09(DAGGER) .................. $ 450 $ 254,250 Yankee Sr. Notes 9.375% 05/15/09 .......................... 400 373,000 Caprock Communications Corp. 144A Sr. Notes 11.500% 05/01/09 ............................ 400 397,000 Carrier1 144A Units 13.250% 02/15/09 ............................ 500 507,500 Charter Communications Holding LLC, Sr. Disc. Notes 144A 8.625% 04/01/09 ............................. 250 237,500 9.920% 04/01/11 ............................. 500 300,000 Clearnet Communications, Inc. Sr. Discount Notes 14.750% 12/15/05(DAGGER) .................... 750 697,500 Completel Europe NV Unit 14.000% 02/15/09(DAGGER) .................... 1,000 510,000 Covad Communication Group, Inc. Sr. Notes 144A 12.500% 02/15/09 ............................ 250 241,875 Dobson Sygnet Communications Sr. Notes 12.250% 12/15/08 ............................ 500 527,500 Dolphin Telecom plc 144A Sr. Discount Notes 14.000% 05/15/09(DAGGER) .................... 500 206,250 DTI Holdings, Inc. 144A Sr. Discount Notes 12.250% 03/01/08(DAGGER) .................... 600 210,000 E Spire Communications Sr. Discount Notes 13.000% 11/01/05(DAGGER) .................... 800 504,000 Focal Communications Corp., 144A Sr. Discount Notes 12.125% 02/15/08(DAGGER) .................... 550 313,500 Global Crossing Holdings, Ltd. 9.625% 05/15/08 ............................. 250 253,750 Globalstar L.P./ Globalstar Capital Corp. 144A Sr. Notes 10.750% 11/01/04 ............................ 100 66,000 Globix Corp. Sr Regulated Notes 13.000% 05/01/05 ............................ 600 550,500 GST Equipment Funding 144A Sr. Secured Exchange Notes 13.250% 05/01/07(DAGGER) .................... 250 273,125 GST USA, Inc. Gtd. Sr. Discount Exchange Notes 12.875% 12/15/05 ............................ 500 418,750 Hermes Europe Railtel BV Sr. Notes 10.375% 01/15/09 ............................ 250 250,000 See Accompanying Notes to Financial Statements. 65 WARBURG PINCUS HIGH YIELD FUND (CONTINUED) PAR (000) VALUE ------ ------------ TELECOMMUNICATIONS -- (CONTINUED) Hyperion Telecommunications, Inc. Sr. Discount Notes, Series B 13.000% 04/15/03(DAGGER) ................. $ 500 $ 420,000 Sr. Notes, Series B 12.250% 09/01/04 ......................... 250 263,750 ICG Holdings, Inc. Gtd. Senior Discount Notes 11.625% 03/15/07(DAGGER) .................... 300 216,000 ICG Services, Inc. 144A Sr. Discount Notes 10.000% 02/15/08(DAGGER) .................... 500 288,750 Intelcom Group (U.S.A.), Inc. Gtd. Sr. Exchangeable Discount Notes 12.500% 05/01/06(DAGGER) .................... 800 642,000 Intercel, Inc. Sr. Discount Notes 12.000% 02/01/06(DAGGER) .................... 500 428,750 Intermedia Communications, Inc. Sr. Discount Notes 11.250% 07/15/07(DAGGER) .................... 1,000 700,000 International Cabletel, Inc. Sr. Notes 11.500% 02/01/06(DAGGER) .................... 415 358,975 ITC Deltacom, Inc. 144A Sr. Notes 11.000% 06/01/07 ............................ 163 174,206 IXC Communications, Inc. Sr. Sub. Notes 9.000% 04/15/08 ............................. 350 345,625 Jordan Telecommunications Products, Inc. Sr. Discount Notes, Series B 11.750% 08/01/07(DAGGER) ................. 400 339,500 Sr. Notes 9.875% 08/01/07 .......................... 250 244,062 KMC Telecom Holdings, Inc. Sr. Discount Notes 12.500% 02/15/08(DAGGER) .................... 500 267,500 Knology Hldgs., Inc. Sr. Discount Notes 11.875% 10/15/07(DAGGER) .................... 550 313,500 Level 3 Communications, Inc. Gtd. Sr. Sub. Notes 8.500% 05/15/08 .......................... 250 245,938 8.000% 08/01/08 .......................... 250 245,000 Sr. Discount Notes 10.500% 12/01/08(DAGGER) ................. 500 288,750 Logix Communications Enterprises Sr. Notes 12.250% 06/15/08 ............................ 500 452,500 McCaw International Ltd. 144A Units 13.000% 04/15/07(DAGGER) .................... 500 287,500 PAR (000) VALUE ------ ------------ TELECOMMUNICATIONS -- (CONTINUED) McLeodUSA, Inc. 144A Sr. Sub. Notes 8.125% 02/15/09 ............................. $ 250 $ 230,625 McLeodUSA, Inc. Sr. Discount Notes 10.500% 03/01/07(DAGGER) ................. 600 462,000 Sr. Notes 9.250% 07/15/07 .......................... 300 296,250 MDC Communications Corp. Sr. Sub. Notes 10.500% 12/01/06 ............................ 400 407,000 Metromedia Fiber Network, Inc. Sr. Notes, Series B 10.000% 11/15/08 ............................ 500 495,000 MetroNet Communications Corp. Sr. Discount Notes 10.750% 11/01/07(DAGGER) ................. 400 319,500 Sr. Notes 12.000% 08/15/07 ......................... 400 464,000 MJD Communications, Inc. Sr. Sub. Notes 9.500% 05/01/08 ............................. 250 249,063 Nextel Communications, Inc. Sr. Discount Notes 9.750% 08/15/04 ............................. 500 500,000 Nextel Partners, Inc. 144A Sr. Discount Notes 14.000% 02/01/09(DAGGER) .................... 500 297,500 Nextlink Communications, Inc. 144A Sr. Notes 10.750% 11/15/08 ......................... 250 253,750 Sr. Discount Notes 9.450% 04/15/08(DAGGER) .................. 500 303,750 Nextlink Communications, L.L.C./ Nextlink Capital, Inc. Sr. Notes 12.500% 04/15/06 ............................ 250 272,500 NTL, Inc. 144A Sr. Notes 10.000% 02/15/07 ............................ 250 253,125 Optel, Inc. Sr. Notes 11.500% 07/01/08 ............................ 350 238,875 Orbital Imaging Corp., 144A Units 11.625% 03/01/05 ............................ 500 392,500 Orion Network Systems, Inc. Gtd. Sr. Notes 11.250% 01/15/07 ............................ 300 267,000 Pac-West Telecomm, Inc. 144A Sr. Notes 13.500% 02/01/09 ............................ 250 254,375 Pagemart Nationwide, Inc. Sr. Discount Notes 15.000% 02/01/05(DAGGER) .................... 750 706,875 See Accompanying Notes to Financial Statements. 66 WARBURG PINCUS HIGH YIELD FUND (CONTINUED) PAR (000) VALUE ------ ------------ TELECOMMUNICATIONS -- (CONTINUED) Pegasus Communications Corp. Sr. Notes, Series B 9.750% 12/01/06 ............................. $ 500 $ 493,750 PLD Telekom, Inc. 144A Sub. Notes 9.000% 06/01/06 .......................... 230 131,100 Yankee Co. Gtd. Notes 14.000% 06/01/04 ......................... 1,010 691,850 Price Comm Wireless, Inc. 144A Sr. Sub. Notes 11.750% 07/15/07 ............................ 250 274,375 Primus Telecommunications Group, Inc. 144A Sr. Notes 11.250% 01/15/09 ............................ 500 490,000 Qwest Communications International, Inc. Sr. Discount Notes 9.470% 10/15/07(DAGGER) .................. 750 583,125 Sr. Notes, Series B 10.875% 04/01/07 ......................... 130 148,038 RCN Corp. Sr. Discount Notes, Series B 10.000% 10/15/07(DAGGER) ................. 400 270,000 Sr. Discount Notes, Series B 9.800% 02/15/08(DAGGER) .................. 300 186,750 Sr. Notes, Series B 10.000% 10/15/07 ......................... 400 395,000 Rhythms Netconnections Sr. Discount Notes 12.750% 05/15/08(DAGGER) .................... 600 303,000 RSL Communications plc Yankee Co. Gtd 10.500% 11/15/08 ............................ 400 377,000 Startec Global Communications, Inc. Sr. Notes 12.000% 05/15/08 ............................ 400 358,500 Telewest Communications plc Debentures 9.625% 10/01/06 ............................. 250 253,125 Teligent Inc. Sr. Notes 11.500% 12/01/07 ............................ 250 240,000 Time Warner Telecom L.L.C./ Time Warner Telecom Inc., Sr. Notes 9.750% 07/15/08 ............................. 500 507,500 Viatel, Inc. Sr. Discount Notes 12.500% 04/15/08(DAGGER) .................... 600 372,000 WinStar Communications, Inc. Sr. Discount Notes 14.000% 10/15/05(DAGGER) .................... 500 437,500 ------------ 28,075,607 ------------ PAR (000) VALUE ------ ------------ TEXTILES & APPAREL -- 1.2% Advanced Glass Fiber Yarns Sr. Sub. Notes 144A 9.875% 01/15/09 ............................. $ 250 $ 236,250 Bgf Industries, Inc. Sr. Sub. Notes 144A 10.250% 01/15/09 ............................ 250 222,500 Maxim Group, Inc. Gtd. Sr. Sub. Notes, Series B 9.250% 10/15/07 ............................. 500 426,250 Phillips Van-Heusen Corp. Sr. Sub. Notes 9.500% 05/01/08 ............................. 250 243,125 William Carter Company Sr. Sub. Notes, Series A 10.375% 12/01/06 ............................ 450 451,125 ------------ 1,579,250 ------------ TRANSPORTATION -- 1.3% AirTran Airlines, Inc. Secured Notes 10.500% 04/15/01 ............................ 250 245,938 Atlantic Express Transportation Corp. Gtd. Sr. Secured Notes 10.750% 02/01/04 ............................ 250 245,000 Canadian Airlines Corp. Yankee Sr. Notes 12.250% 08/01/06 ............................ 250 162,500 Kitty Hawk, Inc. Sr. Notes 9.950% 11/15/04 ............................. 250 245,000 Pegasus Shipping (Hellas) Ltd. 144A Gtd. First Preferred Mortgage Notes, Series A 11.875% 11/15/04 ............................ 500 200,000 Trans World Airlines Sr. Notes 11.375% 03/01/06 ............................ 500 325,000 Transportation Manufacturing Operations, Inc., 144A Sr. Sub. Notes 11.250% 05/01/09 ............................ 250 243,750 ------------ 1,667,188 ------------ WASTE MANAGEMENT -- 0.6% Allied Waste North America, Series B 7.875% 01/01/09 ............................. 500 455,000 Waste Systems International, Inc. 144A Conv. Sub. Notes 7.000% 05/13/05 ............................. 400 348,000 ------------ 803,000 ------------ TOTAL CORPORATE BONDS (Cost $124,587,886) $116,320,052 ------------ See Accompanying Notes to Financial Statements. 67 WARBURG PINCUS HIGH YIELD FUND (CONTINUED) PAR (000) VALUE ------ ------------ ASSET BACKED SECURITY -- 0.4% Airplanes Pass Through Trust Series 1, Class D 10.875% 03/15/19 ............................ $ 600 $ 572,922 (Cost $600,000) ------------ NUMBER OF SHARES --------- RIGHTS & WARRANTS -- 0.9% BROADCASTING -- 0.0% Australis Holdings Pty. Ltd. Strike $0.01 expires 10/30/01 ............... 294 $ 3 ------------ CABLE -- 0.5% DIVA Systems Corp.(DAGGER)(DAGGER)(DAGGER) Strike $0.01 expires May 2006 ............... 2,250 544,500 DIVA Systems Corp.(DAGGER)(DAGGER)(DAGGER) Strike $0.01 expires May 2006 ............... 7,581 60,648 ------------ 605,148 ------------ CHEMICALS -- 0.3% Uniroyal Technology Corp. Strike $4.375 expires 06/01/03 .............. 43,500 369,750 ------------ CONSTRUCTION & BUILDING MATERIALS -- 0.0% Capital Pacific Holdings Group, Inc. ......................................... 12,640 6,320 ------------ CONSUMER PRODUCTS & SERVICES -- 0.0% Signature Brands USA, Inc. Strike $6.25 expires 08/15/02 ............... 250 0 ------------ ENERGY -- 0.0% Key Energy Services Inc. Strike $4.88 expires 01/15/09 ............... 750 11,344 ------------ INDUSTRIAL GOODS & MATERIALS -- 0.0% Golden Ocean Group, Ltd. Strike $46.20 expires 08/31/01 .............. 438 9 ------------ PUBLISHING & INFORMATION SERVICES -- 0.0% InterAct Systems, Inc. Strike $0.01 expires 08/01/03 ............... 700 0 Mentus Media Corp. 144A(DAGGER)(DAGGER)(DAGGER) Strike $0.01 expires 02/01/08 ............... 1,391 14 Source Media Inc. Strike $11.00 expires 06/23/00 .............. 5,587 25,144 ------------ 25,158 ------------ TELECOMMUNICATIONS -- 0.1% American Mobile Satellite Corporation Strike $12.51 expires 04/01/08 ............................ 500 35,000 Ampex Corp. 144A Strike $2.25 expires 03/15/03 ............... 17,000 14,960 DTI Holdings, Inc. 144A Strike $0.01 expires 03/01/08 ............... 3,000 30 NUMBER OF SHARES VALUE --------- ------------ TELECOMMUNICATIONS -- (CONTINUED) Globalstar, L.P. Strike $17.39 expires 02/15/04 .............. 200 $ 26,000 KMC Telecom Holdings, Inc. Strike $0.22 expires 04/15/08 ............... 500 12,500 McCaw International Ltd. Strike $36.45 expires 04/15/07 .............. 500 1,250 Orbital Imaging Corp. Strike $1.00 expires 03/01/05 ............... 500 10,000 PLD Telekom, Inc. Strike $1.00 expires June 2004 .............. 1,010 5,050 Primestar Inc. General Motors Cl. H Stock Appreciation Rts Strike $47.00 expires May 2000 .............. 3,828 35,998 Startec Global Communications Strike $24.20 expires 05/15/08 .............. 400 400 ------------ 141,188 ------------ TOTAL RIGHTS & WARRANTS (Cost $430,305) ............................. $ 1,158,920 ------------ COMMON STOCKS -- 1.4% COMPUTERS, SOFTWARE & SERVICES -- 0.3% Globix Corp. .................................. 2,112 101,508 Verio, Inc. ................................... 9,858 366,594 ------------ 468,102 ------------ CONSUMER PRODUCTS & SERVICES -- 0.1% Coinstar Inc. ................................. 3,671 84,892 ------------ PACKAGING/CONTAINERS -- 0.0% Crown Packaging Enterprises, Ltd. ........................................ 100,847 1,008 ------------ TELECOMMUNICATIONS -- 1.0% Advanced Radio Telecom Corp. .................. 10,117 110,655 AT&T Canada, Inc. ............................. 685 41,577 E Spire Communications, Inc. .................. 21,253 170,024 Intermedia Communications, Inc. ............... 2,421 62,946 Loral Space and Communications Ltd. ........................................ 181 3,326 Microcell Telecommunications, Inc. ........................................ 3,436 35,219 Price Communications Corp. .................... 40,269 830,561 ------------ 1,254,308 ------------ TOTAL COMMON STOCKS (Cost $605,604) ............................. $ 1,808,310 ------------ See Accompanying Notes to Financial Statements. 68 WARBURG PINCUS HIGH YIELD FUND (CONCLUDED) NUMBER OF SHARES VALUE --------- ------------ PREFERRED STOCKS -- 2.9% AEROSPACE/DEFENSE -- 0.7% GPA Group plc Convertible Cumulative Second Preference Shares 7.00% ................................ 1,750,000 $ 910,000 ------------ CABLE -- 0.0% DIVA Systems Corporation, Series C .................................... 11,890 35,670 ------------ CELLULAR/WIRELESS COMMUNICATIONS -- 0.2% Rural Cellular Corp. 144A PIK 11.375% ..................................... 2,859 283,781 ------------ INDUSTRIAL -- 0.3% International Utility Structures Inc. 13.00% ................................. 707 66,682 International Utility Structures Inc., Units 13.00% ................................ 3,492 332,661 ------------ 399,343 ------------ PUBLISHING & INFORMATION SERVICES -- 0.1% Source Media Inc. 144A PIK 13.50% ...................................... 12,617 126,180 ------------ RESTAURANTS, HOTELS & GAMING -- 0.1% AmeriKing, Inc. 13.00% Cum. Exchangeable ................................ 6,659 94,891 ------------ TELECOMMUNICATIONS -- 1.5% Classic Communications Inc .................... 3,000 50,010 E Spire Communications Inc. Jr. PIK 12.75% .............................. 1,200 528,000 Hyperion Telecommunications, Inc. 12.875% Sr. Exch. Redeemable, Series B .................................... 7 6,283 Intermedia Communications Inc. 144A 7.00% Jr. Convertible, Series E .................................... 20,000 510,000 Nextel Communications, Inc. 13.00% Exchangeable, Series D PIK ................................ 318 344,235 NEXTLINK Communications, Inc. 144A 14.00% Sr. Exchangeable PIK ......................................... 8,463 425,277 ------------ 1,863,805 ------------ TOTAL PREFERRED STOCKS (Cost $3,903,185) ........................... $ 3,713,670 ------------ PAR (000) VALUE ------ ------------ SHORT-TERM INVESTMENT -- 1.3% BBH grand Cayman U.S. Dollar Time Deposit 4.500% 09/01/99 ............................. $1,620 $ 1,620,000 (Cost $1,620,000) ------------ TOTAL INVESTMENTS -- 97.0% (Cost $131,746,980*) ........................ $125,193,874 OTHER ASSETS IN EXCESS OF LIABILITIES-- 3.0% ....................... 3,959,035 ------------ TOTAL NET ASSETS -- 100.0% .................... $129,152,909 ============ * Also cost for Federal income tax purposes at August 31, 1999. The gross appreciation (depreciation) on a tax basis is as follows: Gross Appreciation ................................... $ 5,380,428 Gross Depreciation ................................... (11,933,534) ------------ Net Depreciation ..................................... $ 6,553,106 ============ (DAGGER) Step Bond-- The interest rate as of August 31, 1999 is 0% and will reset to interest rate shown at a future date. (DAGGER)(DAGGER) Security in default. (DAGGER)(DAGGER)(DAGGER) Illiquid Security. INVESTMENT ABBREVIATIONS PIK .................................................................Pay In Kind See Accompanying Notes to Financial Statements. 69 WARBURG PINCUS MUNICIPAL BOND FUND PORTFOLIO MANAGERS' LETTER September 17, 1999 Dear Shareholders: We are writing to report on the results of the Warburg Pincus Municipal Bond Fund (the "Fund") for the fiscal year ended August 31, 1999. At August 31, 1999, the net asset value ("NAV") of the Fund's institutional shares was $14.30, compared to an NAV of $15.12 on August 31, 1998. As a result, the institutional shares' total return was 0.4% (assuming the reinvestment of dividends and distributions totaling $0.89 per share). By comparison, the Lehman Brothers Municipal Bond Index (the "Index") returned 0.5% in the same period. At August 31, 1999, the NAV of the Fund's common shares was $14.29, compared to an NAV of $15.14 at their inception of investment operations on October 30, 1998. Including the effect of linkage to the institutional shares, the common shares' total return between August 31, 1998 and August 31, 1999 was 0.1% (assuming the reinvestment of dividends and distributions totaling $0.73 per share). By comparison, the Index returned 0.5% in the same period. The Fund performed in line with its Index benchmark during the fiscal year. More importantly, however, was the Fund substantially outperformed the average general municipal fund which, as calculated by Lipper Inc., declined by 1.6%. We believe that the following factors contributed the most to this outperformance: (BULLET) We maintained a modest level of exposure to taxable instruments, primarily corporate bonds and mortgage-backed securities. This exposure helped the Fund's overall return because taxables in general outperformed the broad market for investment-grade debt instruments, and because of effective security selection within our taxable exposure. (BULLET) We continued to emphasize higher-quality municipal paper, which remained especially popular among muni buyers and which generally weathered market downturns better than lower-quality munis. Our allocation to non-callable muni securities typically was double that of the Index benchmark. As developments occur in the fixed income markets or at Credit Suisse Asset Management that we believe would be of interest to you, we will be sure to keep you informed. Meanwhile, if you have questions, please feel free to call upon us at any time. Sincerely yours, Credit Suisse Asset Management Fixed Income Management Team Gregg M. Diliberto, Managing Director Mark K. Silverstein, Managing Director Jo Ann Corkran, Director Jose A. Rodriguez, Director A PORTION OF INCOME MAY BE SUBJECT TO STATE AND CITY TAXES OF FEDERAL ALTERNATIVE MINIMUM TAX. 70 WARBURG PINCUS MUNICIPAL BOND FUND PORTFOLIO MANAGERS' LETTER (CONCLUDED) COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN THE WARBURG PINCUS MUNICIPAL BOND INSTITUTIONAL SHARES AND THE LEHMAN BROTHERS MUNICIPAL BOND INDEX 1 FROM INCEPTION (6/20/94), PERIOD ENDED (7/31/94) AND AT EACH QUARTER END. (UNAUDITED) [GRAPHIC OMITTED] EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC Warburg Pincus Lehman Brothers Municipal Bond Municipal Bond Institutional Shares Index 1 -------------------- --------------- 06/20/94 $10,000 $10,000 07/31/94 $10,040 $10,038 08/31/94 $10,040 $10,073 11/30/94 $9,647 $9,571 02/28/95 $10,350 $10,354 05/31/95 $10,846 $10,820 08/31/95 $10,886 $10,965 11/30/95 $11,193 $11,079 02/29/96 $11,216 $11,498 5/31/96 $10,937 $11,314 8/31/96 $11,134 $11,539 11/30/96 $11,643 $12,049 2/28/97 $11,731 $12,132 5/31/97 $11,835 $12,252 8/31/97 $12,218 $12,606 11/30/97 $12,508 $12,914 2/28/98 $12,812 $13,242 5/31/98 $12,971 $13,402 8/31/98 $13,149 $13,697 11/30/98 $13,370 $13,916 2/28/99 $13,446 $14,055 5/31/99 $13,483 $14,028 8/31/99 $13,195 $13,765 - ---------------------------------------------- INSTITUTIONAL SHARES ----------------------------- AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS ENDED AUGUST 31, 1999 One Year 0.36% Three Years 5.83% Five Years 5.62% From Inception (6/20/94) 5.47% - ---------------------------------------------- Note: Past performance is not predictive of future performance. Investment return and principle value of an investment will fluctuate so that an investor's shares upon redemption may be worth more or less than their original cost. 1 The Lehman Brothers Municipal Bond 10 Year Index is computed twice a month from prices on approximately 1,100 bonds. The index is composed of approximately 60% revenue bonds and 40% state government obligations. The issues in the index have a maturity of 8-12 years and the prices are supplied by Kenny Information Systems, Inc. 71 WARBURG PINCUS MUNICIPAL BOND FUND SCHEDULE OF INVESTMENTS AUGUST 31, 1999 PAR (000) VALUE ------ ----------- MUNICIPAL BONDS -- 76.0% CALIFORNIA -- 11.4% California State GO 6.300% 09/11/11 ............................. $ 670 $ 743,700 California State GO 5.125% 10/01/17 ............................. 825 793,031 Los Angeles CA, Department of Water & Power Water RB 4.500% 05/15/23 ............................. 705 588,675 San Diego CA Convention Center Expansion Financing Authority, Series A 4.750% 04/01/28 ............................. 535 456,087 ----------- 2,581,493 ----------- COLORADO -- 2.8% Colorado Springs CO, Utility RB 5.875% 11/15/17 ............................. 595 629,956 ----------- FLORIDA -- 5.9% Jacksonville FL, Electric Authority RB, 2nd Installment 6.000% 07/01/12 ............................. 610 639,737 Tallahassee FL, Electric RB, First Lien 6.100% 10/01/06 ............................. 670 698,475 ----------- 1,338,212 ----------- ILLINOIS -- 5.9% Chicago Illinois GO, Series 1993 5.250% 01/01/18 ............................. 705 665,344 Illinois State Sales Tax RB, Series Q 5.750% 06/15/14 ............................. 650 658,937 ----------- 1,324,281 ----------- INDIANA -- 0.1% Indianapolis IN, Public Improvement Board RB 6.000% 01/10/03 ............................. 25 25,781 ----------- LOUISIANA -- 3.1% New Orleans LA, Home Mortgage Authority SOB 6.250% 01/15/11 ............................. 635 693,737 ----------- MARYLAND -- 4.3% Maryland State Transportation Authority Project RB 6.800% 07/01/16 ............................. 850 962,625 ----------- PAR (000) VALUE ------ ----------- MASSACHUSETTS -- 2.7% Massachusetts State Water Resources Authority RB, Series B 5.000% 12/01/25 ............................. $ 660 $ 586,575 Massachusetts State Water Resources Authority, General RB, Series 92A 6.500% 07/15/19 ............................. 20 21,950 ----------- 608,525 ----------- NEW YORK -- 26.3% Metropolitan Transit Authority Commuter Facilities RB, Series A 5.000% 07/01/23 ............................. 600 543,000 New York State Dormitory Authority RB (Elizabeth Church Manor Nursing Home) 5.400% 08/01/23 ............................. 55 53,075 New York State Dormitory Authority RB (Episcopal Health Services) 7.550% 08/01/29 ............................. 435 448,041 New York State Dormitory Authority RB (Judicial Facilities Lease) 7.375% 07/01/16 ............................. 40 47,150 New York State Dormitory Authority RB (Park Ridge Housing Inc. Project) 7.850% 02/01/29 ............................. 530 539,158 New York State Local Government Assistance Corp. RB, Series B 4.875% 04/01/20 ............................. 580 516,925 New York State Power Authority General Purpose RB, Series R 7.000% 01/01/10 ............................. 360 413,550 New York State Throughway Authority General RB, Series B 5.000% 01/01/20 ............................. 30 27,450 New York, NY Municipal Water Finance Authority Water & Sewer System RB, Series B 5.125% 06/15/30 ............................. 295 265,131 New York, NY Municipal Water Finance Authority Water & Sewer System RB, Series D 4.875% 06/15/21 ............................. 400 353,500 See Accompanying Notes to Financial Statements. 72 WARBURG PINCUS MUNICIPAL BOND FUND (CONTINUED) PAR (000) VALUE ------ ----------- NEW YORK -- (CONTINUED) New York, NY Prerefunded GO, Series D 8.000% 08/01/01 ............................. $ 605 $ 656,425 New York, NY Prerefunded GO, Series D 6.000% 02/15/05 ............................. 5 5,369 New York, NY Prerefunded GO, Series H 7.200% 02/01/02 ............................. 530 572,400 New York, NY Transitional Finance Authority RB (Future Tax Secured), Series B 4.750% 11/15/14 ............................. 35 32,244 New York, NY Unrefunded Balance GO, Series D 8.000% 08/01/03 ............................. 45 48,487 6.000% 02/15/25 ............................. 10 10,112 New York, NY Unrefunded Balance GO, Series H 7.200% 02/01/13 ............................. 70 74,550 Suffolk County NY Water Authority, Waterworks RB, Series V 6.750% 06/01/12 ............................. 580 653,225 Triborough Bridge and Tunnel Authority, NY General Purpose RB, Series A 5.200% 01/01/20 ............................. 730 686,200 ----------- 5,945,992 ----------- PUERTO RICO -- 3.3% Commonwealth of Puerto Rico GO 5.400% 07/01/07 ............................. 730 755,550 ----------- SOUTH DAKOTA -- 0.1% Heartland Consumers Power District, SD Electric RB 6.375% 01/01/16 ............................. 25 26,719 ----------- TENNESSEE -- 0.1% Metropolitan Government of Nashville and Davidson County, TN Water and Sewer RB Series A 4.750% 01/01/22 ............................. 30 25,988 ----------- VIRGIN ISLANDS -- 3.1% Virgin Islands Public Finance Authority RB 7.700% 10/01/99 ............................. 690 706,008 ----------- VIRGINIA -- 3.3% Fairfax County, VA Redevelopment & Housing Authority (Island Walk Proj.), Mortgage RB 7.100% 04/01/19 ............................. 630 740,250 ----------- PAR (000) VALUE ------ ----------- WASHINGTON -- 3.6% King County, WA GO, Series A 6.200% 01/01/24 ............................. $ 40 $ 43,250 Seattle, WA Municipal Light & Power RB 5.125% 07/01/22 ............................. 100 93,000 Seattle, WA Water System RB 5.250% 12/01/23 ............................. 735 686,306 ----------- 822,556 ----------- TOTAL MUNICIPAL BONDS (Cost $16,817,122) .......................... $17,187,673 ----------- CORPORATE BONDS -- 8.0% BANKING -- 1.7% Bangko Sentral Pilipinas, Yankee Bonds 8.600% 06/15/27 ............................. 105 81,113 Bay View Capital Corp. Sub. Notes 9.125% 08/15/07 ............................. 65 60,125 Export-Import Bank of Korea, Global Bonds 6.500% 02/10/02 ............................. 25 24,250 Export-Import Bank of Korea, Yankee Notes 6.500% 05/15/00 ............................. 50 49,625 First Republic Bank Sub. Notes 7.750% 09/15/12 ............................. 25 22,938 Fuji JGB Investment L.L.C., Noncumulative Preferred Securities, Series A 9.870% 12/30/99 ............................. 45 44,325 Fuji Finance (Cayman), Ltd. Perpetual Sub. Notes 6.573%(DAGGER)(DAGGER)(DAGGER) .............. 120 103,800 ----------- 386,176 ----------- BROADCASTING -- 0.5% Fox/Liberty Networks L.L.C., Registered Sr. Notes 8.875% 08/15/07 ............................. 105 106,575 ----------- CABLE -- 0.6% CSC Holdings Inc., Sr. Notes 7.875% 12/15/07 ............................. 80 77,600 7.250% 07/15/08 ............................. 20 18,550 Diamond Cable Communications plc, Yankee Sr. Discount Notes 10.750% 02/15/07(DAGGER) .................... 50 38,250 ----------- 134,400 ----------- See Accompanying Notes to Financial Statements. 73 WARBURG PINCUS MUNICIPAL BOND FUND (CONTINUED) PAR (000) VALUE ------ ----------- HEALTH CARE -- 0.2% Columbia/HCA Healthcare Corp., Debentures 8.360% 04/15/24 ............................. $ 50 $ 44,750 ----------- PAPER & FOREST PRODUCTS -- 0.0% P.T. Indah Kiat Pulp & Paper Corp., Sr. Secured Notes 8.875% 11/01/00 ............................. 15 13,232 ----------- RETAIL -- 0.6% K Mart Corp. Notes 7.950% 02/01/23 ............................. 25 23,219 K Mart Corp. Pass Through Certificates, Series 1995 Class K3 8.540% 01/02/15 ............................. 103 106,156 ----------- 129,375 ----------- TELECOMMUNICATIONS -- 1.1% CenCall Communications Corp. Sr. Discount Notes 10.125% 01/15/04 ............................ 25 25,500 LCI International, Inc. Senior Notes 7.250% 06/15/07 ............................. 40 38,400 Nextel Communications, Inc. Sr. Discount Notes 9.750% 08/15/04 ............................. 130 130,000 Paging Network, Inc., Sr. Sub. Notes 8.875% 02/01/06 ............................. 10 5,500 10.125% 08/01/07 ............................ 50 28,125 10.000% 10/15/08 ............................ 35 19,688 ----------- 247,213 ----------- TRANSPORTATION -- 1.9% Continental Airlines, Inc. Sr. Notes 9.500% 12/15/01 ............................. 105 109,463 Grupo Transportacion Ferroviaria Mexicana, S.A. de CV 144A Gtd. Sr. Discount Notes 11.750% 06/15/09(DAGGER) .................... 110 57,475 Northwest Airlines, Inc., Gtd. Notes 7.625% 03/15/05 ............................. 200 182,250 US Airways, Inc., Gtd. Sr. Notes 9.625% 02/01/01 ............................. 95 95,935 ----------- 445,123 ----------- PAR (000) VALUE ------ ----------- UTILITIES -- 1.4% Beaver Valley Funding Corp. Secured Lease Obligation Bonds 9.000% 06/01/17 ............................. $ 140 $ 148,225 Connecticut Light and Power Co. First Mortgage Bonds, Series C 7.750% 06/01/02 ............................. 85 85,956 Series D 7.875% 10/01/24 ............................. 10 10,150 North Atlantic Energy Corp., Secured First Mortgage Notes, Series A 9.050% 06/01/02 ............................. 69 69,086 ----------- 313,417 ----------- TOTAL CORPORATE BONDS (Cost $1,899,919) ........................... $ 1,820,261 ----------- FOREIGN BONDS -- 2.0% Republic of Colombia, Yankee Notes 9.705% 11/13/99 ............................. 75 65,625 Republic of Philippines Global Bonds 9.875% 01/15/19 ............................. 60 56,775 Republic of Poland, Past Due Interest Bonds 5.000% 10/27/14 ............................. 310 270,863 United Mexican States, Global Bonds 11.500% 05/15/26 ............................ 50 54,313 ----------- TOTAL FOREIGN BONDS (Cost $460,074) ............................. $ 447,576 ----------- U.S. TREASURY OBLIGATIONS -- 1.6% U.S. Treasury Notes 7.250% 05/15/04 ............................. 140 147,004 6.250% 02/15/07 ............................. 135 135,472 U.S. Treasury Bonds 8.000% 11/15/21 ............................. 75 88,312 ----------- TOTAL U.S. TREASURY OBLIGATIONS (Cost $380,947) ............................. $ 370,788 ----------- See Accompanying Notes to Financial Statements. 74 WARBURG PINCUS MUNICIPAL BOND FUND (CONCLUDED) NUMBER OF SHARES VALUE --------- ----------- PREFERRED STOCKS -- 4.4% Blackrock Insured Municipal, Series M7 3.190%(DAGGER)(DAGGER) ...................... 10 $ 250,000 California Federal Capital Corp., Series A 9.125% ...................................... 5,725 142,409 Nuveen Insured Municipal Opportunity, Series W Pfd. 3.200%(DAGGER)(DAGGER) ...................... 8 200,000 Nuveen Insured Premium Income 2, Series W Pfd. 3.000%(DAGGER)(DAGGER) ...................... 8 200,000 Nuveen Maryland Premium Income 2, Series W Pfd. 3.000%(DAGGER)(DAGGER) ...................... 8 200,000 ----------- TOTAL PREFERRED STOCKS (Cost $996,417) $ 992,409 ----------- PAR (000) ------ SHORT-TERM INVESTMENT -- 7.5% BBH Grand Cayman U.S. Dollar Time Deposit 4.500% 09/01/99 ............................. $1,702 $ 1,702,000 (Cost $1,702,000) ----------- TOTAL INVESTMENTS -- 99.5% (Cost $22,256,479*) ......................... $22,520,707 OTHER ASSETS IN EXCESS OF LIABILITIES -- 0.5% ...................... 113,493 ----------- TOTAL NET ASSETS -- 100.0% .................... $22,634,200 =========== * Cost for Federal income tax purposes at August 31, 1999 is $22,257,927. The gross appreciation (depreciation) on a tax basis is as follows: Gross Appreciation ................................... $ 725,662 Gross Depreciation ................................... (462,882) --------- Net Appreciation ..................................... $ 262,780 ========= (DAGGER) Step Bond -- The interest rate as of August 31, 1999 is 0% and will reset to interest rate shown at a future date. (DAGGER)(DAGGER) Variable Rate Obligation -- The rate shown is the rate as of August 31, 1999. (DAGGER)(DAGGER)(DAGGER) Securities have no stated maturity date. The Moody's Investors Service, Inc. and Standard & Poor's Ratings Group ratings indicated are the most recent rating available at August 31, 1999 and are unaudited. INVESTMENT ABBREVIATIONS GO ..........................................................General Obligations RB .................................................................Revenue Bond SOB ....................................................Special Obligations Bond See Accompanying Notes to Financial Statements. 75 THE WARBURG PINCUS FUNDS STATEMENTS OF ASSETS AND LIABILITIES AUGUST 31, 1999
INTERNATIONAL EMERGING EUROPEAN U.S. CORE GROWTH FUND MARKETS II FUND EQUITY FUND EQUITY FUND ------------ --------------- ------------ ----------- ASSETS Investments, at value (cost - $614,023,532, $6,510,414, $23,555,067 and $62,883,880, respectively) .............. $686,338,443 $ 6,961,904 $24,504,357 $70,468,444 Collateral received for securities loaned ................. 91,414,446 171,200 2,260,671 2,914,000 Receivable for investments sold ........................... 3,649,284 -- 255,921 4,742,678 Receivable for Fund shares sold ........................... 62,694 -- 378,750 6,996 Receivable from investment advisor ........................ -- 53,845 33,778 -- Receivable for foreign tax reclaims ....................... 344,400 -- 22,197 -- Dividends and interest receivable ......................... 1,079,063 54,827 106,798 70,620 Prepaid expenses and other assets ......................... 96,863 40,314 45,669 14,174 ------------ ----------- ----------- ----------- Total Assets ............................................ 782,985,193 7,282,090 27,608,141 78,216,912 ------------ ----------- ----------- ----------- LIABILITIES Payable on securities loaned .............................. 91,414,446 171,200 2,260,671 2,914,000 Payable for investments purchased ......................... 5,506,983 -- 619,771 4,976,897 Payable for Fund shares repurchased ....................... 790,421 2,170 11,748 3,000 Overdraft liability ....................................... -- 141,390 -- -- Advisory fee payable ...................................... 437,570 1,432 -- 29,267 Distribution fee payable (Common shares) .................. 13,302 913 -- 157 Accrued expenses payable .................................. 928,901 40,246 59,507 78,662 ------------ ----------- ----------- ----------- Total Liabilities ....................................... 99,091,623 357,351 2,951,697 8,001,983 ------------ ----------- ----------- ----------- NET ASSETS Capital stock, $0.001 par value ........................... 29,144 61,706 2,520 3,585 Paid-in capital ........................................... 531,100,512 28,703,213 25,305,835 54,803,331 Undistributed net investment income ....................... 2,441,057 -- 135,265 131,333 Accumulated net realized gain/(loss) from investments, securities sold short, futures and foreign currency related transactions, if any ............................ 78,004,899 (22,282,438) (1,740,365) 7,692,116 Net unrealized appreciation on investments and other, if any ....................................... 72,317,958 442,258 953,189 7,584,564 ------------ ----------- ----------- ----------- Net Assets .............................................. $683,893,570 $ 6,924,739 $24,656,444 $70,214,929 ============ =========== =========== =========== INSTITUTIONAL SHARES Net assets ................................................ $675,117,900 $ 5,972,215 $ 98,055 $70,081,197 ------------ ----------- ----------- ----------- Shares outstanding ........................................ 28,766,447 401,418 10,003 3,578,351 ------------ ----------- ----------- ----------- Net asset value, offering price and redemption price per share ............................................... $ 23.47 $ 14.88 $ 9.80 $ 19.58 ============ =========== =========== =========== COMMON SHARES Net assets ................................................ $ 8,775,670 $ 952,524 $24,558,389 $ 133,732 ------------ ----------- ----------- ----------- Shares outstanding ........................................ 377,380 63,899 2,509,751 6,846 ------------ ----------- ----------- ----------- Net asset value, offering price and redemption price per share ............................................... $ 23.25 $ 14.91 $ 9.79 $ 19.53 ============ =========== =========== ===========
See Accompanying Notes to Financial Statements. 76 THE WARBURG PINCUS FUNDS STATEMENTS OF ASSETS AND LIABILITIES AUGUST 31, 1999
GLOBAL SELECT LONG-SHORT TELECOMMUNICATIONS ECONOMIC VALUE MARKET NEUTRAL LONG-SHORT FUND EQUITY FUND FUND EQUITY FUND ------------------ -------------- -------------- ----------- ASSETS Investments, at value (cost - $60,555,677, $34,169,798, $7,423,238 and $1,128,538, respectively) ................ $ 65,658,479 $ 35,470,488 $ 7,034,604 $ 1,078,687 Deposits with brokers and custodian bank for securities sold short or futures contracts ......................... -- -- 7,870,099 64 Cash ...................................................... -- -- -- 50,726 Collateral received for securities loaned ................. 4,614,130 1,676,400 -- -- Receivable for investments sold ........................... -- -- -- 55,415 Receivable for Fund shares sold ........................... 278,772 -- -- -- Receivable from investment adviser ........................ -- -- -- 65,537 Receivable on open futures contracts ...................... -- -- -- 6,570 Dividends and interest receivable ......................... 53,732 31,324 25,016 202 Receivable for foreign tax reclaims ....................... 15,964 -- -- -- Prepaid expenses and other assets ......................... -- 22,137 16,531 -- ------------ ------------ ----------- ----------- Total Assets ............................................ 70,621,077 37,200,349 14,946,250 1,257,201 ------------ ------------ ----------- ----------- LIABILITIES Securities sold short (proceeds $6,989,392 for Long-Short Market Neutral Fund) ......................... -- -- 7,078,190 -- Payable on securities loaned .............................. 4,614,130 1,676,400 -- -- Payable for investments purchased ......................... 491,198 10,517 -- -- Payable for Fund shares repurchased ....................... 127,588 -- 55,415 -- Overdraft liability ....................................... 71,594 -- -- -- Advisory fee payable ...................................... -- 1,709 6,982 -- Distribution fee payable (Common shares) .................. -- 46 6,341 513 Accrued expenses payable .................................. 151,076 22,391 13,741 59,164 ------------ ------------ ----------- ----------- Total Liabilities ....................................... 5,455,586 1,711,063 7,160,669 59,677 ------------ ------------ ----------- ----------- NET ASSETS Capital stock, $0.001 par value ........................... 1,580 1,761 548 72 Paid-in capital ........................................... 58,048,744 26,065,806 9,323,000 1,877,605 Undistributed net investment income/(loss) ................ -- 125,352 385,836 -- Accumulated net realized gain/(loss) from investments, securities sold short, futures and foreign currency related transactions, if any ............................ 2,012,194 7,995,677 (1,446,371) (636,904) Net unrealized appreciation/(depreciation) on investments and other, if any ........................... 5,102,973 1,300,690 (477,432) (43,249) ------------ ------------ ----------- ----------- Net Assets .............................................. $ 65,165,491 $ 35,489,286 $ 7,785,581 $ 1,197,524 ============ ============ =========== =========== INSTITUTIONAL SHARES Net assets ................................................ $ 35,394,151 $ 5,900,706 $ 109,237 ------------ ----------- ----------- Shares outstanding ........................................ 1,756,467 415,181 6,592 ------------ ----------- ----------- Net asset value, offering price and redemption price per share ............................................... $ 20.15 $ 14.21 $ 16.57 ============ =========== =========== COMMON SHARES Net assets ................................................ $ 65,165,491 $ 95,135 $ 1,884,875 $ 1,088,287 ------------ ------------ ----------- ----------- Shares outstanding ........................................ 1,580,761 4,731 132,798 65,910 ------------ ------------ ----------- ----------- Net asset value, offering price and redemption price per share ............................................... $ 41.22 $ 20.11 $ 14.19 $ 16.51 ============ ============ =========== ===========
See Accompanying Notes to Financial Statements. 77 THE WARBURG PINCUS FUNDS STATEMENTS OF ASSETS AND LIABILITIES AUGUST 31, 1999
STRATEGIC U.S. CORE FIXED GLOBAL FIXED HIGH YIELD MUNICIPAL INCOME FUND INCOME FUND FUND BOND FUND --------------- ------------ ------------ ----------- ASSETS Investments, at value (cost - $445,523,197, $29,647,000 $131,746,980 and $22,256,479, respectively) ............. $436,272,396 $28,602,381 $125,193,874 $22,520,707 Deposits with brokers and custodian bank for securities sold short or futures contracts ......................... 2,258,275 1,116 -- -- Cash ...................................................... 21,520 298,851 670,871 -- Receivable for investments sold ........................... 20,445,008 162,203 979,780 -- Receivable for Fund shares sold ........................... -- -- 1,665 -- Receivable from investment advisor ........................ -- 46,214 -- -- Receivable on forward currency contracts .................. -- 164,028 -- -- Dividends and interest receivable ......................... 3,528,724 406,660 2,508,321 294,482 Prepaid expenses and other assets ......................... 20,436 81,117 72,602 15,366 ------------ ----------- ------------ ----------- Total Assets ............................................ 462,546,359 29,762,570 129,427,113 22,830,555 ------------ ----------- ------------ ----------- LIABILITIES Securities sold short (proceeds $3,757,406 and $86,709 for U.S. Core Fixed Income Fund and Strategic Global Fixed Income Fund, respectively) ........................ 3,692,813 85,219 -- -- Payable for investments purchased ......................... 106,835,267 2,269,753 -- -- Payable for Fund shares repurchased ....................... 6,996 -- 157,628 157,000 Payable on open futures contracts ......................... 817,558 7,635 -- -- Overdraft liability ....................................... -- -- -- 9,920 Advisory fee payable ...................................... 59,252 2,637 31,187 -- Distribution fee payable (Common shares) .................. 60 25 14,568 -- Accrued expenses payable .................................. 186,802 37,583 70,821 29,435 ------------ ----------- ------------ ----------- Total Liabilities ....................................... 111,598,748 2,402,852 274,204 196,355 ------------ ----------- ------------ ----------- NET ASSETS Capital stock, $0.001 par value ........................... 23,385 1,828 8,431 1,583 Paid-in capital ........................................... 360,820,427 28,228,271 150,516,422 22,172,327 Undistributed net investment income ....................... 4,903,858 630,190 2,804,423 113,529 Accumulated net realized gain/(loss) from investments, securities sold short, futures and foreign currency related transactions, if any ............................ (6,007,052) (622,214) (17,623,263) (1,448) Net unrealized appreciation/(depreciation) on investments and other, if any ........................... (8,793,007) (878,357) (6,553,104) 348,209 ------------ ----------- ------------ ----------- Net Assets .............................................. $350,947,611 $27,359,718 $129,152,909 $22,634,200 ============ =========== ============ =========== INSTITUTIONAL SHARES Net assets ................................................ $350,843,675 $27,341,368 $ 95,129,177 $22,423,211 ------------ ----------- ------------ ----------- Shares outstanding ........................................ 23,378,237 1,826,677 6,208,727 1,568,517 ------------ ----------- ------------ ----------- Net asset value, offering price and redemption price per share ............................................... $ 15.01 $ 14.97 $ 15.32 $ 14.30 ============ =========== ============ =========== COMMON SHARES Net assets ................................................ $ 103,936 $ 18,350 $ 34,023,732 $ 210,989 ------------ ----------- ------------ ----------- Shares outstanding ........................................ 6,934 1,231 2,211,885 14,760 ------------ ----------- ------------ ----------- Net asset value, offering price and redemption price per share ............................................... $ 14.99 $ 14.91 $ 15.38 $ 14.29 ============ =========== ============ ===========
See Accompanying Notes to Financial Statements. 78 THE WARBURG PINCUS FUNDS STATEMENTS OF OPERATIONS FOR THE YEAR ENDED AUGUST 31, 1999
INTERNATIONAL EMERGING EUROPEAN U.S. CORE GROWTH FUND MARKETS II FUND EQUITY FUND* EQUITY FUND ------------- --------------- ------------ ----------- INVESTMENT INCOME Dividends ................................................. $11,323,865 $ 362,796 $ 402,172 $ 835,937 Interest .................................................. 1,466,580 68,974 48,985 58,257 Securities lending ........................................ 423,412 13,354 4,484 8,191 Foreign taxes withheld .................................... (754,665) (43,521) (20,970) (405) ----------- ----------- ----------- ----------- Total Investment Income ................................. 12,459,192 401,603 434,671 901,980 ----------- ----------- ----------- ----------- EXPENSES Investment advisory fees .................................. 5,508,687 188,384 152,482 517,425 Administration fees ....................................... 1,001,399 28,187 18,085 99,829 Custodian fees ............................................ 804,105 138,105 78,560 61,032 Audit fees ................................................ 59,220 1,659 10,196 13,201 Printing fees ............................................. 422,209 4,734 21,279 35,204 Registration fees ......................................... 46,928 19,604 27,345 35,790 Legal fees ................................................ 162,937 2,582 28,021 19,965 Transfer agent fees ....................................... 258,895 3,198 8,984 33,383 Insurance expense ......................................... 77,528 988 -- 5,414 Directors fees ............................................ 12,541 10,916 11,829 13,001 Organization expense ...................................... -- -- -- -- Distribution fees ......................................... 47,318 2,146 37,979 157 Miscellaneous fees ........................................ 25,541 3,866 5,803 9,589 ----------- ----------- ----------- ----------- 8,427,308 404,369 400,563 843,990 Less fees waived and reimbursed ........................... (70,067) (123,904) (179,633) (160,911) ----------- ----------- ----------- ----------- Total Expenses .......................................... 8,357,241 280,465 220,930 683,079 ----------- ----------- ----------- ----------- Net Investment Income ........................................ 4,101,951 121,138 213,741 218,901 ----------- ----------- ----------- ----------- REALIZED AND UNREALIZED GAIN/(LOSS)ON INVESTMENTS AND FOREIGN CURRENCY TRANSACTIONS Net realized gain/(loss) from: Security transactions ................................... 92,124,562 (3,565,121) (1,734,841) 7,659,607 Foreign exchange transactions ........................... (4,942,605) (258,257) (84,000) -- ----------- ----------- ----------- ----------- 87,181,957 (3,823,378) (1,818,841) 7,659,607 ----------- ----------- ----------- ----------- Net change in unrealized appreciation/(depreciation): Investments ............................................. 1,243,617 11,209,302 949,290 13,330,712 Translation of assets and liabilities in foreign currencies .................... (131,019) (6,645) 3,899 -- ----------- ----------- ----------- ----------- 1,112,598 11,202,657 953,189 13,330,712 ----------- ----------- ----------- ----------- Net Gain/(Loss) On Investments And Foreign Currency Transactions ........................... 88,294,555 7,379,279 (865,652) 20,990,319 ----------- ----------- ----------- ----------- Net Increase/(Decrease) In Net Assets Resulting From Operations ......................................... $92,396,506 $ 7,500,417 $ (651,911) $21,209,220 =========== =========== =========== =========== * Inception Date January 28, 1999.
See Accompanying Notes to Financial Statements. 79 THE WARBURG PINCUS FUNDS STATEMENTS OF OPERATIONS FOR THE YEAR ENDED AUGUST 31, 1999
GLOBAL SELECT LONG-SHORT TELECOMMUNICATIONS ECONOMIC VALUE MARKET NEUTRAL LONG-SHORT FUND EQUITY FUND FUND EQUITY FUND* ------------------ -------------- -------------- ------------ INVESTMENT INCOME Dividends ................................................. $ 126,076 $ 500,957 $ 267,060 $ 178 Interest .................................................. 126,868 3,091 897,074 33,753 Securities lending ........................................ 11,271 1,456 -- -- Foreign taxes withheld .................................... (10,016) (18,353) (38) -- ----------- ----------- ----------- ----------- Total Investment Income ................................. 254,199 487,151 1,164,096 33,931 ----------- ----------- ----------- ----------- EXPENSES Investment advisory fees .................................. 194,860 250,313 291,148 4,332 Administration fees ....................................... 34,101 47,067 31,235 7,383 Custodian fees ............................................ 63,707 50,349 66,711 8,742 Audit fees ................................................ 10,419 11,807 12,567 3,619 Printing fees ............................................. 16,060 21,965 2,629 38,520 Registration fees ......................................... 49,352 34,264 42,670 48,439 Legal fees ................................................ 14,318 31,034 20,857 31,651 Transfer agent fees ....................................... 39,476 7,825 11,042 19,289 Insurance expense ......................................... 1,011 1,092 10,287 1,822 Directors fees ............................................ 13,001 13,001 13,001 12,467 Dividend expense .......................................... -- -- 244,307 -- Interest expense .......................................... -- -- 2,475 -- Distribution fees ......................................... 48,715 46 25,941 9,838 Miscellaneous fees ........................................ 5,139 5,724 4,242 4,416 ----------- ----------- ----------- ----------- 490,159 474,487 779,112 190,518 Less fees waived and reimbursed ........................... (168,639) (144,106) (114,610) (70,941) ----------- ----------- ----------- ----------- Total Expenses .......................................... 321,520 330,381 664,502 119,577 ----------- ----------- ----------- ----------- Net Investment Income/(Loss) ................................. (67,321) 156,770 499,594 (85,646) ----------- ----------- ----------- ----------- REALIZED AND UNREALIZED GAIN/(LOSS) ON INVESTMENTS, FUTURES, SECURITIES SOLD SHORT AND FOREIGN CURRENCY TRANSACTIONS Net realized gain/(loss) from: Security transactions ................................... 2,165,040 8,033,361 4,455,545 (973,466) Futures tranactions ..................................... -- -- -- 360,202 Securities sold short ................................... -- -- (5,585,519) -- Foreign exchange transactions ........................... (85,679) -- -- -- ----------- ----------- ----------- ----------- 2,079,361 8,033,361 (1,129,974) (613,264) ----------- ----------- ----------- ----------- Net change in unrealized appreciation/(depreciation): Investments ............................................... 5,118,086 4,435,432 (685,565) (49,851) Futures ................................................... -- -- -- 6,602 Translation of assets and liabilities in foreign currencies ....................... (426) -- -- -- ----------- ----------- ----------- ----------- 5,117,660 4,435,432 (685,565) (43,249) ----------- ----------- ----------- ----------- Net Gain/(Loss) On Investments, Futures, Securities Sold Short and Foreign Currency Transactions ............ 7,197,021 12,468,793 (1,815,539) (656,513) ----------- ----------- ----------- ----------- Net Increase/(Decrease) In Net Assets Resulting From Operations ............................... $ 7,129,700 $12,625,563 $(1,315,945) $ (742,159) =========== =========== =========== =========== * Inception Date September 11, 1998
See Accompanying Notes to Financial Statements. 80 THE WARBURG PINCUS FUNDS STATEMENTS OF OPERATIONS FOR THE YEAR ENDED AUGUST 31, 1999
STRATEGIC U.S. CORE FIXED GLOBAL FIXED HIGH YIELD MUNICIPAL INCOME FUND INCOME FUND FUND BOND FUND --------------- ------------ ------------ ----------- INVESTMENT INCOME Dividends ................................................. $ 635,766 $ 13,721 $ 272,197 $ 23,381 Interest .................................................. 23,646,957 1,630,954 12,370,315 1,234,498 ----------- ---------- ----------- ----------- Total Investment Income ................................. 24,282,723 1,644,675 12,642,512 1,257,879 ----------- ---------- ----------- ----------- EXPENSES Investment advisory fees .................................. 1,436,025 144,265 903,069 160,667 Administration fees ....................................... 373,129 56,505 193,659 42,424 Custodian fees ............................................ 150,458 78,142 51,725 31,000 Audit fees ................................................ 26,051 6,604 9,283 2,354 Printing fees ............................................. 107,349 19,170 52,983 11,317 Registration fees ......................................... 46,463 7,650 31,779 31,055 Legal fees ................................................ 63,575 5,616 10,952 14,404 Transfer agent fees ....................................... 105,005 21,580 28,120 10,932 Insurance expense ......................................... 13,175 792 4,540 573 Directors fees ............................................ 14,954 13,001 13,001 13,001 Organization expense ...................................... 5,229 -- -- -- Interest expense .......................................... -- 1,445 29,319 -- Distribution fees ......................................... 111 25 63,586 247 Miscellaneous fees ........................................ 25,717 14,105 31,959 9,834 ----------- ---------- ----------- ----------- 2,367,241 368,900 1,423,975 327,808 Less fees waived and reimbursed ........................... (689,093) (153,930) (466,009) (100,339) ----------- ---------- ----------- ----------- Total Expenses .......................................... 1,678,148 214,970 957,966 227,469 ----------- ---------- ----------- ----------- Net Investment Income ........................................ 22,604,575 1,429,705 11,684,546 1,030,410 ----------- ---------- ----------- ----------- REALIZED AND UNREALIZED GAIN/(LOSS) ON INVESTMENTS, FUTURES AND FOREIGN CURRENCY TRANSACTIONS Net realized gain/(loss) from: Security transactions ................................... (5,389,818) (484,360) (2,208,892) 161,557 Futures tranactions ..................................... 621,347 (19,279) -- -- Foreign exchange transactions ........................... 175,213 (66,954) -- -- ----------- ---------- ----------- ----------- (4,593,258) (570,593) (2,208,892) 161,557 ----------- ---------- ----------- ----------- Net change in unrealized appreciation/(depreciation): Investments ............................................. (8,679,646) (386,311) (6,943,394) (1,105,750) Futures ................................................. 828,152 29,980 -- -- Translation of assets and liabilities in foreign currencies .................... (15,939) 356,164 -- -- ----------- ---------- ----------- ----------- (7,867,433) (167) (6,943,394) (1,105,750) ----------- ---------- ----------- ----------- Net Gain/(Loss) On Investments, Futures and Foreign Currency Transactions ................................... (12,460,691) (570,760) (9,152,286) (944,193) ----------- ---------- ----------- ----------- Net Increase In Net Assets Resulting From Operations ......................................... $10,143,884 $ 858,945 $ 2,532,260 $ 86,217 =========== ========== =========== ===========
See Accompanying Notes to Financial Statements. 81 THE WARBURG PINCUS FUNDS STATEMENTS OF CHANGES IN NET ASSETS
EUROPEAN INTERNATIONAL GROWTH FUND EMERGING MARKETS II FUND EQUITY FUND -------------------------------- -------------------------------- ------------------ FOR THE YEAR FOR THE YEAR FOR THE YEAR FOR THE YEAR FOR THE PERIOD ENDED ENDED ENDED ENDED JANUARY 28, 1999* AUGUST 31, 1999 AUGUST 31, 1998 AUGUST 31, 1999 AUGUST 31, 1998 TO AUGUST 31, 1999 --------------- --------------- --------------- --------------- ------------------ Increase/(decrease) in net assets: Operations: Net investment income .................. $ 4,101,951 $ 4,459,649 $ 121,138 $ 374,101 $ 213,741 Net gain/(loss) on investments and foreign currency transactions ........ 88,294,555 78,134,835 7,379,279 (25,007,447) (865,652) ------------ ------------ ----------- ----------- ----------- Net increase/(decrease) in net assets resulting from operations ............ 92,396,506 82,594,484 7,500,417 (24,633,346) (651,911) ------------ ------------ ----------- ----------- ----------- Dividends and Distributions to shareholders: From net investment income: Institutional shares ................. (7,632,495) -- -- (732,736) -- Common shares ........................ (344,430) -- -- (83) -- From net realized capital gains: Institutional shares ................. (54,241,925) (73,424,625) -- (649,941) -- Common shares ........................ (2,569,737) (167,102) -- (115) -- From capital: Institutional shares ................. -- -- (312,194) (3,255,728) -- Common shares ........................ -- -- (12,381) (580) -- ------------ ------------ ----------- ----------- ----------- Total distributions to shareholders ....... (64,788,587) (73,591,727) (324,575) (4,639,183) -- ------------ ------------ ----------- ----------- ----------- Net capital share transactions ............ 31,183,186 47,441,934 (25,105,168) (28,889,378) 25,308,355 ------------ ------------ ----------- ----------- ----------- Total increase/(decrease) in net assets .......................... 58,791,105 56,444,691 (17,929,326) (58,161,907) 24,656,444 Net Assets: Beginning of period .................... 625,102,465 568,657,774 24,854,065 83,015,972 -- ------------ ------------ ----------- ----------- ----------- End of period .......................... $683,893,570 $625,102,465 $ 6,924,739 $24,854,065 $24,656,444 ============ ============ =========== =========== =========== * Inception Date
See Accompanying Notes to Financial Statements. 82 THE WARBURG PINCUS FUNDS STATEMENTS OF CHANGES IN NET ASSETS
U.S. CORE EQUITY FUND GLOBAL TELECOMMUNICATIONS FUND -------------------------------- -------------------------------- FOR THE YEAR FOR THE YEAR FOR THE YEAR FOR THE YEAR ENDED ENDED ENDED ENDED AUGUST 31, 1999 AUGUST 31, 1998 AUGUST 31, 1999 AUGUST 31, 1998 --------------- --------------- --------------- --------------- Increase/(decrease) in net assets: Operations: Net investment income/(loss) ........... $ 218,901 $ 231,556 $ (67,321) $ (298) Net gain on investments and foreign currency transactions ................ 20,990,319 7,098,025 7,197,021 142,046 ------------ ------------ ----------- -------- Net increase in net assets resulting from operations ...................... 21,209,220 7,329,581 7,129,700 141,748 ------------ ------------ ----------- -------- Dividends and Distributions to shareholders: From net investment income: Institutional shares ................. (104,261) (472,680) -- -- Common shares ........................ (22) -- -- (138) From net realized capital gains: Institutional shares ................. (24,127,328) (12,679,702) -- -- Common shares ........................ (5,552) -- (179,290) (37,787) ------------ ------------ ----------- -------- Total distributions to shareholders ....... (24,237,163) (13,152,382) (179,290) (37,925) ------------ ------------ ----------- -------- Net capital share transactions ............ 9,728,907 (16,844,975) 57,496,988 44,798 ------------ ------------ ----------- -------- Total increase/(decrease) in net assets .......................... 6,700,964 (22,667,776) 64,447,398 148,621 Net Assets: Beginning of year ...................... 63,513,965 86,181,741 718,093 569,472 ------------ ------------ ----------- -------- End of year ............................ $ 70,214,929 $ 63,513,965 $65,165,491 $718,093 ============ ============ =========== ========
See Accompanying Notes to Financial Statements. 83 THE WARBURG PINCUS FUNDS STATEMENTS OF CHANGES IN NET ASSETS
LONG-SHORT SELECT ECONOMIC VALUE EQUITY FUND LONG-SHORT MARKET NEUTRAL FUND EQUITY FUND ----------------------------------- ------------------------------------ ------------------- FOR THE YEAR FOR THE PERIOD FOR THE YEAR FOR THE PERIOD FOR THE PERIOD ENDED JULY 31, 1998* ENDED JULY 31, 1998* SEPTEMBER 11, 1998* AUGUST 31, 1999 TO AUGUST 31, 1998 AUGUST 31, 1999 TO AUGUST 31, 1998 TO AUGUST 31, 1999 --------------- ------------------ --------------- ------------------ ------------------- Increase/(decrease) in net assets: Operations: Net investment income/(loss) ... $ 156,770 $ 18,161 $ 499,594 $ 21,200 $ (85,646) Net gain/(loss) on investments, futures and securities sold short ................... 12,468,793 (3,172,426) (1,815,539) 89,659 (656,513) ----------- ----------- ---------- ---------- ---------- Net increase/(decrease) in net assets resulting from operations ................... 12,625,563 (3,154,265) (1,315,945) 110,859 (742,159) ----------- ----------- ---------- ---------- ---------- Dividends and Distributions to shareholders: From net investment income: Institutional shares ......... (49,578) -- (30,279) -- -- Common shares ................ (1) -- (90,662) -- -- From net realized capital gains: Institutional shares ......... -- -- (52,082) -- (13,656) Common shares ................ -- -- (159,858) -- (338) From capital: Institutional shares ......... -- -- -- -- (15,857) Common shares ................ -- -- -- -- (388) ----------- ----------- ---------- ---------- ---------- Total distributions to shareholders ................... (49,579) -- (332,881) -- (30,239) ----------- ----------- ---------- ---------- ---------- Net capital share transactions .... 253,862 25,813,705 3,132,125 6,191,423 1,969,922 ----------- ----------- ---------- ---------- ---------- Total increase in net assets ...... 12,829,846 22,659,440 1,483,299 6,302,282 1,197,524 Net Assets: Beginning of period ............ 22,659,440 -- 6,302,282 -- -- ----------- ----------- ---------- ---------- ---------- End of period .................. $35,489,286 $22,659,440 $7,785,581 $6,302,282 $1,197,524 =========== =========== ========== ========== ========== * Inception Date.
See Accompanying Notes to Financial Statements. 84 THE WARBURG PINCUS FUNDS STATEMENTS OF CHANGES IN NET ASSETS
U.S. CORE FIXED INCOME FUND STRATEGIC GLOBAL FIXED INCOME FUND ----------------------------------- ---------------------------------- FOR THE YEAR FOR THE YEAR FOR THE YEAR FOR THE YEAR ENDED ENDED ENDED ENDED AUGUST 31, 1999 AUGUST 31, 1998 AUGUST 31, 1999 AUGUST 31, 1998 --------------- --------------- --------------- --------------- Increase/(decrease) in net assets: Operations: Net investment income ........................... $ 22,604,575 $ 13,581,467 $ 1,429,705 $ 1,809,232 Net gain/(loss) on investments, futures and foreign currency transactions ................. (12,460,691) 1,267,128 (570,760) (247,851) ------------ ------------ ----------- ------------ Net increase in net assets resulting from operations ............................... 10,143,884 14,848,595 858,945 1,561,381 ------------ ------------ ----------- ------------ Dividends and Distributions to shareholders: From net investment income: Institutional shares .......................... (22,277,216) (11,454,482) (548,508) (1,133,693) Common shares ................................. (2,149) -- (37) -- From net realized capital gains: Institutional shares .......................... (4,420,509) (2,782,277) (530,896) (1,162,260) Common shares ................................. (11) -- (18) -- ------------ ------------ ----------- ------------ Total distributions to shareholders ................ (26,699,885) (14,236,759) (1,079,459) (2,295,953) ------------ ------------ ----------- ------------ Net capital share transactions ..................... (26,029,500) 215,702,694 (903,152) (15,067,445) ------------ ------------ ----------- ------------ Total increase/(decrease) in net assets ................................... (42,585,501) 216,314,530 (1,123,666) (15,802,017) Net Assets: Beginning of year ............................... 393,533,112 177,218,582 28,483,384 44,285,401 ------------ ------------ ----------- ------------ End of year ..................................... $350,947,611 $393,533,112 $27,359,718 $ 28,483,384 ============ ============ =========== ============
See Accompanying Notes to Financial Statements. 85 THE WARBURG PINCUS FUNDS STATEMENTS OF CHANGES IN NET ASSETS
HIGH YIELD FUND MUNICIPAL BOND FUND ----------------------------------- ---------------------------------- FOR THE YEAR FOR THE YEAR FOR THE YEAR FOR THE YEAR ENDED ENDED ENDED ENDED AUGUST 31, 1999 AUGUST 31, 1998 AUGUST 31, 1999 AUGUST 31, 1998 --------------- --------------- --------------- --------------- Increase/(decrease) in net assets: Operations: Net investment income ........................... $ 11,684,546 $ 8,042,385 $ 1,030,410 $ 979,325 Net gain/(loss) on investments .................. (9,152,286) (3,054,518) (944,193) 541,320 ------------ ----------- ----------- ----------- Net increase in net assets resulting from operations ............................... 2,532,260 4,987,867 86,217 1,520,645 ------------ ----------- ----------- ----------- Dividends and Distributions to shareholders: From net investment income: Institutional shares .......................... (8,940,115) (7,732,581) (1,031,337) (976,336) Common shares ................................. (1,873,396) (169,975) (4,114) -- From net realized capital gains: Institutional shares .......................... -- -- (320,024) (154,615) Common shares ................................. -- -- (14) -- ------------ ----------- ----------- ----------- Total distributions to shareholders ................ (10,813,511) (7,902,556) (1,355,489) (1,130,951) ------------ ----------- ----------- ----------- Net capital share transactions ..................... 42,820,448 4,811,589 1,674,840 2,028,820 ------------ ----------- ----------- ----------- Total increase in net assets ....................... 34,539,197 1,896,900 405,568 2,418,514 Net Assets: Beginning of year ............................... 94,613,712 92,716,812 22,228,632 19,810,118 ------------ ----------- ----------- ----------- End of year ..................................... $129,152,909 $94,613,712 $22,634,200 $22,228,632 ============ =========== =========== ===========
See Accompanying Notes to Financial Statements. 86 THE WARBURG PINCUS FUNDS INTERNATIONAL GROWTH FUND FINANCIAL HIGHLIGHTS (FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
INSTITUTIONAL --------------------------------------------------- FOR THE YEAR ENDED AUGUST 31, --------------------------------------------------- 1999 1998 1997 1996 1995 -------- -------- -------- -------- -------- Net asset value, beginning of period ............ $ 22.70 $ 22.22 $ 19.41 $ 18.24 $ 20.73 -------- -------- -------- -------- -------- Income from investment operations Net investment income ....................... 0.14 0.15 0.18 0.19 0.06 Net gain/(loss) on investments and foreign currency transactions (both realized and unrealized) ............................... 2.90 3.26 2.89 1.05 (1.75) -------- -------- -------- -------- -------- Total from investment operations ............ 3.04 3.41 3.07 1.24 (1.69) -------- -------- -------- -------- -------- Less Distributions Dividends from net investment income ........ (0.28) -- (0.26) (0.07) -- Distributions from capital gains ............ (1.99) (2.93) -- -- (0.80) -------- -------- -------- -------- -------- Total distributions ......................... (2.27) (2.93) (0.26) (0.07) (0.80) -------- -------- -------- -------- -------- Net asset value, end of period $ 23.47 $ 22.70 $ 22.22 $ 19.41 $ 18.24 ======== ======== ======== ======== ======== Total return .................................... 13.88% 16.74% 15.93% 6.81%(d) (8.06)%(d) Ratios/Supplemental Data: Net assets, end of period (000s omitted) ...... $675,118 $623,482 $568,510 $682,271 $773,255 Ratio of expenses to average net assets ....... 1.21%(a) 1.14%(a) 1.16%(a) 1.19%(a) 1.25%(a) Ratio of net investment income (loss) to average net assets .......................... 0.60% 0.72% 0.71% 0.84% 0.35% Fund turnover rate ............................ 182% 141% 126% 86% 78%
COMMON ------------------------------------------ FOR THE YEAR ENDED FOR THE PERIOD AUGUST 31, NOVEMBER 1, 1996* ---------------------- to August 31, 1999 1998 1997 ------- ------ ----------------- Net asset value, beginning of period ............ $ 22.56 $22.17 $19.67 ------- ------ ------ Income from investment operations Net investment income ....................... 0.12(DAGGER) 0.03 0.36 Net gain/(loss) on investments and foreign currency transactions (both realized and unrealized) ............................... 2.83 3.29 2.40 ------- ------ ------ Total from investment operations ............ 2.95 3.32 2.76 ------- ------ ------ Less Distributions Dividends from net investment income ........ (0.27) -- (0.26) Distributions from capital gains ............ (1.99) (2.93) -- ------- ------ ------ Total distributions ......................... (2.26) (2.93) (0.26) ------- ------ ------ Net asset value, end of period $ 23.25 $22.56 $22.17 ======= ====== ====== Total return .................................... 13.52% 16.33% 14.14%(c) Ratios/Supplemental Data: Net assets, end of period (000s omitted) ...... $ 8,776 $1,620 $ 147 Ratio of expenses to average net assets ....... 1.50%(a) 1.40%(a) 1.43%(a)(b) Ratio of net investment income (loss) to average net assets .......................... 0.31% 0.58% 1.15%(b) Fund turnover rate ............................ 182% 141% 126%(c) (a) Without the voluntary waiver of advisory fees and administration fees, the ratios of expenses to average net assets for the Institutional Class would have been 1.22%, 1.23%, 1.25%, 1.22% and 1.26% for the years ended August 31, 1999, 1998, 1997, 1996 and 1995, respectively. Without the voluntary waiver of advisory fees and administration fees, the ratios of expenses to average net assets for the Common Class would have been 1.51% and 1.48% for the years ended August 31, 1999 and 1998, respectively, and 1.53% annualized for the period ended August 31, 1997. (b) Annualized. (c) Not annualized. (d) Redemption fees not reflected in total return. * Inception Date. (DAGGER) Per share information is calculated using the average share outstanding method.
See Accompanying Notes to Financial Statements. 87 THE WARBURG PINCUS FUNDS EMERGING MARKETS II FUND FINANCIAL HIGHLIGHTS (FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
INSTITUTIONAL ------------------------------------------------------- FOR THE YEAR ENDED AUGUST 31, ------------------------------------------------------- 1999 1998 1997 1996 1995 -------- ------- ------- ------- ------- Net asset value, beginning of period ............ $ 10.44 $ 19.64 $ 18.20 $ 17.67 $ 24.58 ------- ------- ------- ------- ------- Income from investment operations Net investment income ....................... 0.08(DAGGER) 0.12 0.21 0.10 0.02 Net gain/(loss) on investments and foreign currency transactions (both realized and unrealized) .................. 4.57 (8.08) 1.30 0.48 (5.94) ------- ------- ------- ------- -------- Total from investment operations ............ 4.65 (7.96) 1.51 0.58 (5.92) ------- ------- ------- ------- -------- Less Distributions Dividends from net investment income .................................... -- (0.20) (0.07) (0.05) (0.07) Distributions from capital gains ............ -- (0.17) -- -- (0.92) Return of Capital ........................... (0.21) (0.87) -- -- -- ------- ------- ------- ------- -------- Total distributions ......................... (0.21) (1.24) (0.07) (0.05) (0.99) ------- ------- ------- ------- -------- Net asset value, end of period .................. $ 14.88 $ 10.44 $ 19.64 $ 18.20 $ 17.67 ======= ======= ======= ======= ======== Total return .................................... 45.12% (42.96)% 8.31% 3.33%(d)(24.42)%(d) Ratios/Supplemental Data: Net assets, end of period (000s omitted) ...... $ 5,972 $24,217 $83,012 $114,691 $128,323 Ratio of expenses to average net assets ....... 1.48%(a) 1.50%(a) 1.49%(a) 1.49%(a) 1.50%(a) Ratio of net investment income (loss) to average net assets .......................... 0.66% 0.61% 0.99% 0.63% 0.02% Fund turnover rate ............................ 230% 179% 147% 79% 79%
COMMON ------------------------------------------ FOR THE YEAR ENDED FOR THE PERIOD AUGUST 31, NOVEMBER 1, 1996* ---------------------- to August 31, 1999 1998 1997 ------ ------ ----------------- Net asset value, beginning of period ............ $10.48 $19.60 $18.08 ------ ------ ------ Income from investment operations Net investment income ....................... 0.04 0.03 0.18 Net gain/(loss) on investments and foreign currency transactions (both realized and unrealized) .................. 4.58 (7.99) 1.40 ------ ------ ------ Total from investment operations ............ 4.62 (7.96) 1.58 ------ ------ ------ Less Distributions Dividends from net investment income .................................... -- (0.12) (0.06) Distributions from capital gains ............ -- (0.17) -- Return of Capital ........................... (0.19) (0.87) -- ------ ------ ------ Total distributions ......................... (0.19) (1.16) (0.06) ------ ------ ------ Net asset value, end of period .................. $14.91 $10.48 $19.60 ====== ====== ====== Total return .................................... 44.67% (42.86)% 8.76%(c) Ratios/Supplemental Data: Net assets, end of period (000s omitted) ...... $ 953 $ 636 $ 4 Ratio of expenses to average net assets ....... 1.75%(a) 1.75%(a) 1.75%(a)(b) Ratio of net investment income (loss) to average net assets .......................... 0.28% 1.08% 0.88%(b) Fund turnover rate ............................ 230% 179% 147%(c) (a) Without the voluntary waiver of advisory fees and administration fees, the ratios of expenses to average net assets for the Institutional Class would have been 2.13%, 2.01%, 1.63%, 1.62%, and 1.61% for the three years ended August 31, 1999, 1998, 1997, 1996 and 1995, respectively. Without the voluntary waiver of advisory fees and administration fees, the ratios of expenses to average net assets for the Common Class would have been 2.42% and 2.33% for the years ended August 31, 1999 and 1998, respectively, and 1.88% annualized for the period ended August 31, 1997. (b) Annualized. (c) Not annualized. (d) Redemption fees not reflected in total return. * Inception date. (DAGGER) Per share information is calculated using the average share outstanding method.
See Accompanying Notes to Financial Statements. 88 THE WARBURG PINCUS FUNDS EUROPEAN EQUITY FUND FINANCIAL HIGHLIGHTS (FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
INSTITUTIONAL COMMON ------------------ ------------------ FOR THE PERIOD FOR THE PERIOD JANUARY 28, 1999* JANUARY 28, 1999* TO AUGUST 31, 1999 TO AUGUST 31, 1999 ------------------ ------------------ Net asset value, beginning of period ........................ $10.00 $ 10.00 ------ ------- Income from investment operations Net investment income ................................... 0.09 0.08 Net loss on investments and foreign currency transactions (both realized and unrealized) ........................ (0.29) (0.29) ------ ------- Total from investment operations ........................ (0.20) (0.21) ------ ------- Less Distributions Dividends from net investment income .................... -- -- Distributions from capital gains ........................ -- -- ------ ------- Total distributions ..................................... -- -- ------ ------- Net asset value, end of period .............................. $ 9.80 $ 9.79 ====== ======= Total return .............................................. (2.00)%(c) (2.10)%(c) Ratios/Supplemental Data: Net assets, end of period (000s omitted) .................. $ 98 $24,588 Ratio of expenses to average net assets ................... 1.16%(a)(b) 1.46%(a)(b) Ratio of net investment income (loss) to average net assets 1.67%(b) 1.41%(b) Fund turnover rate ........................................ 161%(c) 161%(c) (a) Without the voluntary waiver of advisory fees and administration fees, the ratios of expenses to average net assets for the Institutional Class would have been 2.29% annualized for the period ended August 31, 1999. Without the voluntary waiver of advisory fees and administration fees, the ratios of expenses to average net assets for the Common Class would have been 2.64% annualized for the period ended August 31, 1999. (b) Annualized. (c) Not Annualized. * Inception Date.
See Accompanying Notes to Financial Statements. 89 THE WARBURG PINCUS FUNDS U.S. CORE EQUITY FUND FINANCIAL HIGHLIGHTS (FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
INSTITUTIONAL COMMON -------------------------------------------------------- ------------------ FOR THE YEAR FOR THE YEAR ENDED AUGUST 31, AUGUST 31, 1994* FOR THE PERIOD ------------------------------------- TO AUGUST 31, OCTOBER 30, 1998* 1999 1998 1997 1996 1995 TO AUGUST 31, 1999 -------- ------- ------- ------- ---------------- ------------------ Net asset value, beginning of period ............ $ 21.73 $ 24.40 $ 19.05 $ 17.86 $ 15.00 $25.22 ------- ------- ------- ------- ------- ------ Income from investment operations Net investment income ....................... 0.07 0.01 0.14 0.20 0.22 0.04 Net gain on investments (both realized and unrealized) ............ 7.56 0.88 6.82 2.81 2.72 4.05 ------- ------- ------- ------- ------- ------ Total from investment operations ............ 7.63 0.89 6.96 3.01 2.94 4.09 ------- ------- ------- ------- ------- ------ Less Distributions Dividends from net investment income ........ (0.04) (0.13) (0.20) (0.21) (0.08) (0.04) Distributions from capital gains ............ (9.74) (3.43) (1.41) (1.61) -- (9.74) ------- ------- ------- ------- ------- ------ Total distributions ......................... (9.78) (3.56) (1.61) (1.82) (0.08) (9.78) ------- ------- ------- ------- ------- ------ Net asset value, end of period .................. $ 19.58 $ 21.73 $ 24.40 $ 19.05 $ 17.86 $19.53 ======= ======= ======= ======= ======= ====== Total return .................................... 38.07% 3.18% 38.32% 17.59% 19.75% 18.67%(c) Ratios/Supplemental Data: Net assets, end of period (000s omitted) ...... $70,081 $63,514 $86,182 $59,015 $31,644 $ 134 Ratio of expenses to average net assets ....... 0.99%(a) 1.00%(a) 1.00%(a) 1.00%(a) 1.00%(a) 1.26%(a)(b) Ratio of net investment income (loss) to average net assets ....................... 0.32% 0.23% 0.67% 1.25% 1.59% 0.02%(b) Fund turnover rate ............................ 110% 164% 93% 127% 123% 110%(c) (a) Without the voluntary waiver of advisory fees and administration fees, the ratios of expenses to average net assets for the Institutional Class would have been 1.22%, 1.18%, 1.18%, 1.34% and 1.51% for the years ended August 31, 1999, 1998, 1997, 1996 and 1995 respectively. Without the voluntary waiver of advisory fees and administration fees, the ratios of expenses to average net assets for the Common Class would have been 1.51% annualized for the period ended August 31, 1999. (b) Annualized. (c) Not Annualized. * Inception Date.
See Accompanying Notes to Financial Statements. 90 THE WARBURG PINCUS FUNDS GLOBAL TELECOMMUNICATIONS FUND FINANCIAL HIGHLIGHTS (FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
COMMON ------------------------------------------------- FOR THE YEAR ENDED FOR THE PERIOD AUGUST 31, DECEMBER 4, 1996* -------------------------- TO AUGUST 31, 1999 1998 1997 ------- ------ ----------------- Net asset value, beginning of period .................................... $ 20.54 $17.30 $15.00 ------- ------ ------ Income from investment operations Net investment income/(loss) ........................................ (0.04) (0.01) 0.02 Net gain on investments and foreign currency transactions (both realized and unrealized) .................................... 23.56 4.29 2.28 ------- ------ ------ Total from investment operations .................................... 23.52 4.28 2.30 ------- ------ ------ Less Distributions Dividends from net investment income ................................ -- -- -- Distributions from capital gains .................................... (2.84) (1.04) -- ------- ------ ------ Total distributions ................................................. (2.84) (1.04) -- ------- ------ ------ Net asset value, end of period .......................................... $ 41.22 $20.54 $17.30 ======= ====== ====== Total return ............................................................ 120.73% 25.38% 15.33%(c) Ratios/Supplemental Data: Net assets, end of period (000s omitted) .............................. $65,165 $ 718 $ 569 Ratio of expenses to average net assets ............................... 1.65%(a) 1.65%(a) 1.65%(a)(b) Ratio of net investment income (loss) to average net assets ........... (0.35)% (0.03)% 0.16%(b) Fund turnover rate .................................................... 203% 169% 43%(c) (a) Without the voluntary waiver of advisory fees and administration fees, the ratios of expenses to average net assets for the Common Class would have been 2.52% and 6.86% for the years ended August 31, 1999 and 1998 and 8.38% annualized for the period ended August 31, 1997. (b) Annualized. (c) Not Annualized. * Inception Date.
See Accompanying Notes to Financial Statements. 91 THE WARBURG PINCUS FUNDS SELECT ECONOMIC VALUE EQUITY FUND FINANCIAL HIGHLIGHTS (FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
INSTITUTIONAL COMMON ------------------------------ ------------------ FOR THE YEAR FOR THE PERIOD ENDED JULY 31, 1998* FOR THE PERIOD AUGUST 31, TO AUGUST 31, OCTOBER 30, 1998* 1999 1998 TO AUGUST 31, 1999 ------------ -------------- ------------------ Net asset value, beginning of period ............................... $ 13.17 $ 15.00 $15.95 -------- ------- ------ Income from investment operations Net investment income .......................................... 0.08 0.01 0.02 Net gain/(loss) on investments (both realized and unrealized) .. 6.92 (1.84) 4.16 -------- ------- ------ Total from investment operations ............................... 7.00 (1.83) 4.18 -------- ------- ------ Less Distributions Dividends from net investment income ........................... (0.02) -- (0.02) Distributions from capital gains ............................... -- -- -- -------- ------- ------ Total distributions ............................................ (0.02) -- (0.02) -------- ------- ------ Net asset value, end of period ..................................... $ 20.15 $ 13.17 $20.11 ======== ======= ====== Total return ....................................................... 53.21% (12.20)%(c) 26.19%(c) Ratios/Supplemental Data: Net assets, end of period (000s omitted) ......................... $ 35,394 $22,659 $95 Ratio of expenses to average net assets .......................... 0.99%(a) 1.00%(a)(b) 1.29%(a)(b) Ratio of net investment income (loss) to average net assets ...... 0.47% 0.92%(b) 0.17%(b) Fund turnover rate ............................................... 209% 52%(c) 209%(c) (a) Without the voluntary waiver of advisory fees and administration fees, the ratios of expenses to average net assets for the Institutional Class would have been 1.42% for the year ended August 31, 1999 and 1.30% annualized for the period ended August 31, 1998. Without the voluntary waiver of advisory fees and administration fees, the ratios of expenses to average net assets for the Common Class would have been 1.74% annualized for the period ended August 31, 1999. (b) Annualized. (c) Not Annualized. * Inception Date.
See Accompanying Notes to Financial Statements. 92 THE WARBURG PINCUS FUNDS LONG-SHORT MARKET NEUTRAL FUND FINANCIAL HIGHLIGHTS (FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
INSTITUTIONAL COMMON ------------------------------ ------------------ FOR THE YEAR FOR THE PERIOD ENDED JULY 31, 1998* FOR THE PERIOD AUGUST 31, TO AUGUST 31, SEPTEMBER 8, 1998* 1999 1998 TO AUGUST 31, 1999 ------------ -------------- ------------------ Net asset value, beginning of period ...................................... $15.27 $15.00 $ 15.19 ------ ------ ------- Income from investment operations Net investment income ................................................. 0.39(DAGGER) 0.05 0.32(DAGGER) Net gain/(loss) on investments and securities sold short (both realized and unrealized) ...................................... (1.25) 0.22 (1.12) ------ ------ ------- Total from investment operations ...................................... (0.86) 0.27 (0.80) ------ ------ ------- Less Distributions Dividends from net investment income .................................. (0.07) -- (0.07) Distributions from capital gains ...................................... (0.13) -- (0.13) ------ ------ ------- Total distributions ................................................... (0.20) -- (0.20) ------ ------ ------- Net asset value, end of period ............................................ $14.21 $15.27 $ 14.19 ====== ====== ======= Total return .............................................................. (5.68)% 1.80%(c) (5.33)%(c) Ratios/Supplemental Data: Net assets, end of period (000s omitted) ................................ $5,901 $6,302 $ 1,885 Ratio of expenses to average net assets (including dividend expense) .... 3.33%(a) 4.32%(a)(b) 3.40%(a)(b) Ratio of expenses to average net assets (excluding dividend expense) .... 2.00%(a) 2.00%(a)(b) 2.24%(a)(b) Ratio of net investment income (loss) to average net assets ............. 2.65% 1.96%(b) 2.46%(b) Fund turnover rate ...................................................... 705% 130%(c) 705% (a) Without the voluntary waiver of advisory fees and administration fees, the ratios of expenses to average net assets for the Institutional Class would have been 2.56% (excluding dividend expense) and 3.93% (including dividend expense) for the year ended August 31, 1999 and 5.12% (excluding dividend expense) and 7.44% (including dividend expense) annualized for the period ended August 31, 1998. Without the voluntary waiver of advisory fees and administration fees, the ratios of expenses to average net assets for the Common Class would have been 2.84% (excluding dividend expense) and 4.00% (including dividend expense) annualized for the period ended August 31, 1999. (b) Annualized. (c) Not Annualized. * Inception Date. (DAGGER) Per share information is calculated using the average share outstanding method.
See Accompanying Notes to Financial Statements. 93 THE WARBURG PINCUS FUNDS LONG-SHORT EQUITY FUND FINANCIAL HIGHLIGHTS (FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
INSTITUTIONAL COMMON ------------------- ------------------ FOR THE PERIOD FOR THE PERIOD SEPTEMBER 11, 1998* OCTOBER 30, 1998* TO AUGUST 31, 1999 TO AUGUST 31, 1999 ------------------- ------------------ Net asset value, beginning of period ......................................... $15.00 $15.72 ------ ------ Income from investment operations Net investment loss ...................................................... (0.09)(DAGGER) (0.07)(DAGGER) Net gain on investments and futures (both realized and unrealized) ....... 2.11 1.31 ------ ------ Total from investment operations ......................................... 2.02 1.24 ------ ------ Less Distributions Distributions from capital gains ......................................... (0.21) (0.21) Return of capital ........................................................ (0.24) (0.24) ------ ------ Total distributions ...................................................... (0.45) (0.45) ------ ------ Net asset value, end of period ............................................... $16.57 $16.51 ====== ====== Total return ................................................................. 13.42%(c) 7.82%(c) Ratios/Supplemental Data: Net assets, end of period (000s omitted) ................................... $109 $1,088 Ratio of expenses to average net assets .................................... 2.48%(a)(b) 2.79%(a)(b) Ratio of net investment income (loss) to average net assets ................ 0.76%(b) (2.26)%(b) Fund turnover rate ......................................................... 951%(c) 951%(c) (a) Without the voluntary waiver of advisory fees and administration fees, the ratios of expenses to average net assets for the Institutional Class would have been 4.12% annualized for the period ended August 31, 1999. Without the voluntary waiver of advisory fees and administration fees, the ratios of expenses to average net assets for the Common Class would have been 4.43% annualized for the period ended August 31, 1999. (b) Annualized. (c) Not Annualized. * Inception Date. (DAGGER) Per share information is calculated using the average share outstanding method.
See Accompanying Notes to Financial Statements. 94 THE WARBURG PINCUS FUNDS U.S. CORE FIXED INCOME FUND FINANCIAL HIGHLIGHTS (FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
INSTITUTIONAL COMMON --------------------------------------------------- ------------------ FOR THE YEAR ENDED AUGUST 31, FOR THE PERIOD --------------------------------------------------- OCTOBER 30, 1998* 1999 1998 1997 1996 1995 TO AUGUST 31, 1999 ------- -------- -------- -------- ------- ------------------ Net asset value, beginning of period ............... $ 15.72 $ 15.65 $ 15.06 $ 15.42 $ 14.77 $15.68 ------- -------- -------- -------- ------- ------ Income from investment operations Net investment income .......................... 0.93 0.84 0.92 0.95 0.88 0.74 Net gain/(loss) on investments, futures and foreign currency transactions (both realized and unrealized) ............... (0.56) 0.33 0.76 (0.16) 0.61 (0.58) ------- -------- -------- -------- ------- ------ Total from investment operations ............... 0.37 1.17 1.68 0.79 1.49 0.16 ------- -------- -------- -------- ------- ------ Less Distributions Dividends from net investment income ........... (0.91) (0.87) (0.97) (0.93) (0.84) (0.68) Distributions from capital gains ............... (0.17) (0.23) (0.12) (0.22) -- (0.17) ------- -------- -------- -------- ------- ------ Total distributions ............................ (1.08) (1.10) (1.09) (1.15) (0.84) (0.85) ------- -------- -------- -------- ------- ------ Net asset value, end of period ..................... $ 15.01 $ 15.72 $ 15.65 $ 15.06 $ 15.42 $14.99 ======= ======== ======== ======== ======= ====== Total return ....................................... 2.37% 7.77% 11.53% 5.23% 10.60% 1.00%(c) Ratios/Supplemental Data: Net assets, end of period (000s omitted) ......... $350,844 $393,533 $177,219 $118,596 $99,250 $104 Ratio of expenses to average net assets .......... 0.44%(a) 0.47%(a) 0.50%(a) 0.50%(a) 0.50%(a) 0.70%(a)(b) Ratio of net investment income (loss) to average net assets ............................. 5.90% 5.87% 6.31% 6.43% 6.47% 5.82%(b) Fund turnover rate ............................... 569% 372% 372% 201% 304% 569%(c) (a) Without the voluntary waiver of advisory fees and administration fees, the ratios of expenses to average net assets for the Institutional Class would have been .62%, .74%, .78%, .78% and .84% for the years ended August 31, 1999, 1998, 1997, 1996 and 1995, respectively. Without the voluntary waiver of advisory fees and administration fees, the ratios of expenses to average net assets for the Common Class would have been .90% annualized for the period ended August 31, 1999. (b) Annualized. (c) Not Annualized. * Inception Date.
See Accompanying Notes to Financial Statements. 95 THE WARBURG PINCUS FUNDS STRATEGIC GLOBAL FIXED INCOME FUND FINANCIAL HIGHLIGHTS (FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
INSTITUTIONAL COMMON --------------------------------------------------- ------------------ FOR THE YEAR ENDED AUGUST 31, FOR THE PERIOD --------------------------------------------------- OCTOBER 30, 1998* 1999 1998 1997 1996 1995 TO AUGUST 31, 1999 ------- -------- -------- -------- ------- ------------------ Net asset value, beginning of period ...................... $ 15.10 $ 15.41 $ 15.75 $ 15.67 $ 15.00 $16.10 ------- ------- ------- ------- ------- ------ Income from investment operations Net investment income ................................. 0.79 0.87 0.85 0.87 1.06 0.63 Net gain/(loss) on investments, futures and foreign currency transactions (both realized and unrealized) ......................................... (0.35) (0.25) (0.16) 0.58 0.49 (1.26) ------- ------- ------- ------- ------- ------ Total from investment operations ...................... 0.44 0.62 0.69 1.45 1.55 (0.63) ------- ------- ------- ------- ------- ------ Less Distributions Dividends from net investment income .................. (0.29) (0.45) (0.71) (1.22) (0.88) (0.28) Distributions from capital gains ...................... (0.28) (0.48) (0.32) (0.15) -- (0.28) ------- ------- ------- ------- ------- ------ Total distributions ................................... (0.57) (0.93) (1.03) (1.37) (0.88) (0.56) ------- ------- ------- ------- ------- ------ Net asset value, end of period ............................ $ 14.97 $ 15.10 $ 15.41 $ 15.75 $ 15.67 $14.91 ======= ======= ======= ======= ======= ====== Total return .............................................. 2.78% 4.19% 4.48% 9.65% 10.72% (4.09)%(c) Ratios/Supplemental Data: Net assets, end of period (000s omitted) ................ $ 27,342 $28,483 $44,285 $38,348 $19,565 $ 18 Ratio of expenses to average net assets ................. 0.74%(a) 0.75%(a) 0.75%(a) 0.75%(a) 0.75%(a) 1.00%(a)(b) Ratio of net investment income (loss) to average net assets .................................... 4.96% 5.30% 5.31% 7.37% 7.26% 4.80%(b) Fund turnover rate ...................................... 305% 283% 98% 87% 91% 305%(c) (a) Without the voluntary waiver of advisory fees and administration fees, the ratios of expenses to average net assets for the Institutional Class would have been 1.27%, 1.17%, 0.98%, 1.07% and 1.29% for the years ended August 31, 1999, 1998, 1997, 1996 and 1995, respectively. Without the voluntary waiver of advisory fees and administration fees, the ratios of expenses to average net assets for the Common Class would have been 1.56% annualized for the period ended August 31, 1999. (b) Annualized. (c) Not Annualized. * Inception Date.
See Accompanying Notes to Financial Statements. 96 THE WARBURG PINCUS FUNDS HIGH YIELD FUND FINANCIAL HIGHLIGHTS (FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
INSTITUTIONAL COMMON ----------------------------------------------- ---------------------------------------- FOR THE YEAR ENDED FOR THE PERIOD FOR THE YEAR ENDED AUGUST 31, AUGUST 31, NOVEMBER 1, 1996* ----------------------------------------------- --------------------- TO AUGUST 31, 1999 1998 1997 1996 1995 1999 1998 1997 ------- ------- ------- ------- ------- ------- ------ ---------------- Net asset value, beginning of period ..... $ 16.60 $ 17.08 $ 16.09 $ 15.72 $ 15.94 $ 16.62 $17.08 $16.21 ------- ------- ------- ------- ------- ------- ------ ------ Income from investment operations Net investment income ................ 1.42 1.43 1.37 1.47 1.42 1.39(DAGGER) 1.36 0.93 Net gain/(loss) on investments (both realized and unrealized) ........... (1.33) (0.49) 0.96 0.40 (0.30) (1.34) (0.45) 0.87 ------- ------- ------- ------- ------- ------- ------ ------ Total from investment operations ......................... 0.09 0.94 2.33 1.87 1.12 0.05 0.91 1.80 ------- ------- ------- ------- ------- ------- ------ ------ Less Distributions Dividends from net investment income ............................. (1.37) (1.42) (1.34) (1.50) (1.34) (1.29) (1.37) (0.93) Distributions from capital gains ..... -- -- -- -- -- -- -- -- ------- ------- ------- ------- ------- ------- ------ ------ Total distributions .................. (1.37) (1.42) (1.34) (1.50) (1.34) (1.29) (1.37) (0.93) ------- ------- ------- ------- ------- ------- ------ ------ Net asset value, end of period ....... $ 15.32 $ 16.60 $ 17.08 $ 16.09 $ 15.72 $ 15.38 $16.62 $17.08 ======= ======= ======= ======= ======= ======= ====== ====== Total return ............................. 0.67% 5.48% 15.17% 12.42% 7.79%(d) 0.39% 5.27% 11.49%(c) Ratios/Supplemental Data: Net assets, end of period (000s omitted) ....................... $95,129 $94,044 $92,630 $75,849 $153,621 $34,024 $ 570 $ 86 Ratio of expenses to average net assets ........................... 0.69%(a) 0.70%(a) 0.70%(a) 0.88%(a) 1.00%(a) 0.95%(a) 0.95%(a) 0.96%(a)(b) Ratio of net investment income (loss) to average net assets ......... 9.10% 8.12% 8.44% 8.92% 9.37% 8.86% 7.96% 8.13%(b) Fund turnover rate ..................... 40% 60% 84% 143% 70% 40% 60% 84%(c) (a) Without the voluntary waiver of advisory fees and administration fees, the ratios of expenses to average net assets for the Institutional Class would have been 1.04%, 1.14%, 1.13%, 1.11%, and 1.08% for the years ended August 31, 1999, 1998, 1997, 1996, and 1995 respectively. Without the voluntary waiver of advisory fees and administration fees, the ratios of expenses to average net assets for the Common Class would have been 1.34% and 1.39% for the years ended August 31, 1999 and 1998, respectively, and 1.47% annualized for the period ended August 31, 1997. (b) Annualized. (c) Not annualized. (d) Redemption fees not reflected in total return. * Inception Date. (DAGGER) Per share information is calculated using the average share outstanding method.
See Accompanying Notes to Financial Statements. 97 THE WARBURG PINCUS FUNDS MUNICIPAL BOND FUND FINANCIAL HIGHLIGHTS (FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
INSTITUTIONAL COMMON ------------------------------------------------ ------------------ FOR THE YEAR ENDED AUGUST 31, FOR THE PERIOD ------------------------------------------------ OCTOBER 30, 1998* 1999 1998 1997 1996 1995 TO AUGUST 31, 1999 ------- ------- ------- ------- ------- ------------------ Net asset value, beginning of period .................... $ 15.12 $ 14.84 $ 14.65 $ 15.46 $ 15.06 $15.14 ------- ------- ------- ------- ------- ------ Income from investment operations Net investment income ............................... 0.67 0.70 0.72 0.73 0.71 0.54 Net gain/(loss) on investments (both realized and unrealized) ................................... (0.60) 0.40 0.65 (0.37) 0.50 (0.66) ------- ------- ------- ------- ------- ------ Total from investment operations .................... 0.07 1.10 1.37 0.36 1.21 (0.12) ------- ------- ------- ------- ------- ------ Less Distributions Dividends from net investment income ................ (0.68) (0.71) (0.72) (0.74) (0.76) (0.52) Distributions from capital gains .................... (0.21) (0.11) (0.46) (0.43) (0.05) (0.21) ------- ------- ------- ------- ------- ------ Total distributions ................................. (0.89) (0.82) (1.18) (1.17) (0.81) (0.73) ------- ------- ------- ------- ------- ------ Net asset value, end of period .......................... $ 14.30 $ 15.12 $ 14.84 $ 14.65 $ 15.46 $14.29 ======= ======= ======= ======= ======= ====== Total return ............................................ 0.36% 7.62% 9.74% 2.27% 8.42% (0.85)%(c) Ratios/Supplemental Data: Net assets, end of period (000s omitted) .............. $22,423 $22,229 $19,810 $19,581 $48,978 $ 211 Ratio of expenses to average net assets ............... 0.99%(a) 1.00%(a) 1.00%(a) 1.00%(a) 1.00%(a) 1.26%(a)(b) Ratio of net investment income (loss) to average net assets .................................. 4.49% 4.72% 4.88% 4.62% 4.76% 4.44%(b) Fund turnover rate .................................... 26% 57% 43% 34% 25% 26%(c) (a) Without the voluntary waiver of advisory fees and administration fees, the ratios of expenses to average net assets for the Institutional Class would have been 1.43%, 1.39%, 1.37%, 1.42% and 1.19% for the years ended August 31, 1999, 1998, 1997, 1996 and 1995, respectively. Without the voluntary waiver of advisory fees and administration fees, the ratios of expenses to average net assets for the Common Class would have been 1.71% annualized for the period ended August 31, 1999. (b) Annualized. (c) Not Annualized. * Inception Date.
See Accompanying Notes to Financial Statements. 98 THE WARBURG PINCUS FUNDS NOTES TO FINANCIAL STATEMENTS NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The Warburg Pincus Funds covered in this report are comprised of Warburg, Pincus International Growth Fund, Inc. ("International"), Warburg, Pincus Emerging Markets II Fund, Inc. ("Emerging Markets"), Warburg, Pincus European Equity Funds, Inc. ("European Equity"), Warburg, Pincus U.S. Core Equity Fund, Inc. ("Core Equity"), Warburg, Pincus Global Telecommunications Funds, Inc. ("Global Telecommunications"), Warburg, Pincus Select Economic Value Equity Fund, Inc. ("Select Economic"), Warburg, Pincus Long-Short Market Neutral Fund, Inc. ("Long-Short Neutral"), Warburg, Pincus Long-Short Equity Fund, Inc. ("Long-Short Equity"), Warburg, Pincus U.S. Core Fixed Income Fund, Inc. ("Core Fixed"), Warburg, Pincus Strategic Global Fixed Fund, Inc. ("Global Fixed"), Warburg, Pincus High Yield Fund, Inc. ("High Yield") and Warburg, Pincus Municipal Bond Fund, Inc. ("Municipal") (each, a "Fund" and collectively, the "Funds"), which are registered under the Investment Company Act of 1940 , as amended (the "1940 Act"), as non-diversified (other than European Equity which is diversified), open-end management investment companies. Each Fund is authorized to offer three classes of shares: Common, Advisor and Institutional, although only Common shares and Institutional shares of each Fund are currently offered. Common shares for each Fund bear expenses paid pursuant to a shareholder servicing and distribution at an annual rate not to exceed .25% of the average daily net asset value of the Fund's outstanding Common shares. In addition, the Common shares bear a co-administrative fee. On October 23, 1998, pursuant to an Agreement and Plan of Reorganization, each Fund (other than European Equity) acquired all of the assets and liabilities of a corresponding investment series of The RBB Fund, Inc. (each an "Acquired Fund" and collectively, the "Acquired Funds"). The acquisitions were accomplished by a tax-free exchange of the following shares of each Fund (other than European Equity), in each case for the same amount of shares of the corresponding class of the applicable Acquired Fund. Shares were reissued to shareholders at the time of the reorganization. FUND COMMON SHARES INSTITUTIONAL SHARES -------------------------- ------------- -------------------- International 145,719 27,622,659 Emerging Markets 62,181 1,508,675 Core Equity -- 2,578,272 Global Telecommunications 40,351 -- Select Economic -- 1,755,874 Long-Short Neutral -- 310,521 Long-Short Equity -- 7,168 Core Fixed -- 25,307,129 Global Fixed -- 1,875,514 High Yield 34,314 5,655,408 Municipal -- 1,483,582 The net assets of each Fund (other than European Equity) directly after the reorganization were the same as the corresponding Acquired Fund as described in the table below. Each Fund (other than European Equity) assumed the prior operating history of the corresponding Acquired Fund. UNREALIZED FUND NET ASSETS APPRECIATION/(DEPRECIATION)* -------------------------- ------------ ---------------------------- International $615,300,445 $46,755,858 Emerging Markets 17,766,403 (4,401,793) Core Equity 62,977,054 1,772,191 Global Telecommunications 943,831 112,975 Select Economic 27,207,148 994,655 Long-Short Neutral 4,693,517 26,972 Long-Short Equity 109,073 (2,142) Core Fixed 395,200,568 (3,009,982) Global Fixed 30,261,883 526,957 High Yield 87,873,344 (5,030,237) Municipal 22,404,233 1,280,536 *The amount of each Fund's net assets includes the amount of unrealized appreciation/(depreciation) listed above. 99 THE WARBURG PINCUS FUNDS NOTES TO FINANCIAL STATEMENTS (CONTINUED) NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Certain of the Funds are permitted to engage in the investment strategies described in the Notes to Financial Statements. The Funds are not obligated to pursue any of the following strategies and do not represent that these techniques are available now or will be available at any time in the future. Please refer to each Fund's prospectus(es) and statements of additional information for a description of its investment strategies. A) SECURITY VALUATION -- The net asset value of each Fund is determined daily as of the close of regular trading on The New York Stock Exchange Inc. Each Fund's securities for which market quotations are readily available are valued at market value, which is currently determined using the last reported sales price. If no sales are reported, as in the case of some securities traded over-the-counter, the securities are valued at the mean between the last reported bid and asked prices. All other securities and assets are valued as determined in good faith by the Fund's Board of Directors. Short-term obligations with a remaining maturity of 60 days or less are valued at amortized cost, which approximates market value. B) FOREIGN CURRENCY TRANSACTIONS -- Transactions denominated in foreign currencies are recorded in each Fund's records at the current prevailing exchange rates. Asset and liability accounts that are denominated in a foreign currency are adjusted daily to reflect current exchange rates. Transaction gains or losses resulting from changes in exchange rates during the reporting period or upon settlement of the foreign currency transaction are reported in operations for the current period. It is not practical to isolate that portion of both realized and unrealized gains and losses on investments in the statement of operations that result from fluctuations in foreign currency exchange rates. Each Fund reports certain foreign currency related transactions as components of realized gains for financial reporting purposes, whereas such components are treated as ordinary income (loss) for Federal income tax purposes. C) SECURITY TRANSACTIONS AND INVESTMENT INCOME -- Security transactions are accounted for on the trade date. The cost of investments sold is determined by use of the specific identification method for both financial reporting and income tax purposes. Interest income is recorded on the accrual basis. Dividends are recorded on the ex-dividend date. Certain expenses are class specific expenses and vary by class. Expenses not directly attributable to a specific Fund or class are allocated based on relative net assets of each Fund and class, respectively. D) DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS -- Each Fund calculates its dividends from net investment income. Net investment income includes interest accrued and dividends earned on the Fund's portfolio securities for the applicable period less applicable expense. International, Emerging Markets, European Equity, Core Equity, Global Telecommunications, Select Economic, Long-Short Neutral and Long-Short Equity will distribute substantially all of its net realized capital gains and all net investment income, if any, to its shareholders at least annually. Core Fixed, Global Fixed and High Yield will distribute substantially all if its net realized capital gains, if any, to its shareholders at least annually and will distribute net investment income at least quarterly. Municipal will distribute substantially all of its net realized capital gains, if any, at least annually and all net investment income monthly. The character of distributions made during the year for net investment income or net realized gains may differ from their ultimate characterization for federal income tax purposes due to generally accepted accounting principles (GAAP) and tax differences in the character of income and expense recognition. These differences are primarily due to differing treatments for net operating losses, paydowns on mortgage-backed securities, passive foreign investment companies, and forward foreign currency contracts. To the extent these differences are permanent in nature, such amounts are reclassified within capital accounts based on their U.S. federal tax-basis treatment. Temporary differences do not require reclassification. At August 31, 1999, International, Emerging Markets, European Equity, Global Telecommunications, Long-Short Neutral, Long-Short Equity, Core Fixed, Global Fixed, High Yield and Municipal reclassified $9,529,177, $(42,334), $(78,476), $67,581, $(2,533), $9,644, $248,422, $274,840, $37,862 and $71,099, respectively, from accumulated net realized gain/(loss) to undistributed net investment income. Emerging Markets, Long-Short Equity and Municipal reclassified $(202,844), $(82,601) and $373, respectively, from accumulated net investment income/(loss) to capital contributions. Emerging Markets, Core Equity, Long-Short 100 THE WARBURG PINCUS FUNDS NOTES TO FINANCIAL STATEMENTS (CONTINUED) NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Equity and Municipal reclassified $(5,371,360), $2,654,767, $(9,644) and $(11,128), respectively, from accumulated net realized gain/(loss) to capital contributions. E) FEDERAL INCOME TAXES -- No provision is made for Federal taxes as it is each Fund's intention to qualify for and elect the tax treatment applicable to regulated investment companies under the Internal Revenue Code of 1986, as amended, and make the requisite distributions to its shareholders which will be sufficient to relieve it from Federal income and excise taxes. F) USE OF ESTIMATES -- The preparation of financial statements in conformity with GAAP 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 those estimates. G) REPURCHASE AGREEMENTS -- Money market instruments may be purchased from banks and non-bank dealers subject to the seller's agreement to repurchase them at an agreed upon date and price. Collateral for repurchase agreements may have longer maturities than the maximum permissible remaining maturity of portfolio investments. The seller will be required on a daily basis to maintain the value of the securities subject to the agreement at not less than the repurchase price. The agreements are conditional upon the collateral being deposited under the Federal Reserve book-entry system or held in a separate account by each Fund's custodian or an authorized securities depository. Long-Short Neutral had an open repurchase agreement at August 31, 1999. H) FUTURES TRANSACTIONS -- A Fund invests in futures contracts for the purpose of hedging its existing portfolio securities, or securities that the Fund intends to purchase, against fluctuations in fair value caused by changes in prevailing market interest rates or securities prices, or for other purposes. Certain Fund's may enter into futures contracts subject to certain limitations. Upon entering into a futures contract, each Fund is required to deposit cash or pledge U.S. Government securities of an initial margin. Subsequent payments, which are dependent on the daily fluctuations in the value of the underlying instrument, are made or received by the Fund each day (daily variations margin) and are recorded as unrealized gains or losses until the contracts are closed. When the contracts are closed, the Fund records a realized gain or loss equal to the difference between the proceeds from (or cost of) the closing transaction and the Fund's basis in the contracts. Risks of entering into futures contracts include the possibility that there will be an imperfect price correlation between the futures contracts and the underlying securities. Second, it is possible that a lack of liquidity for futures contracts could exist in the secondary market, resulting in an inability to close a futures position prior to its maturity date. Third, the purchase of a futures contract involves the risk that a Fund could lose more than the original margin deposit required to initiate a futures transaction. As of August 31, 1999, Long-Short Equity held the following futures contracts:
FUTURES EXPIRATION CONTRACT CONTRACT UNREALIZED CONTRACTS DATE AMOUNT VALUE GAIN/LOSS ----------- ---------- ------------ ------------ --------- S&P 500 Index Futures 09/16/99 $ 983,475 $ 989,850 $ 6,375 S&P 500 Mini Futures 09/17/99 197,775 197,970 195
As of August 31, 1999, Core Fixed held the following futures contracts:
FUTURES EXPIRATION CONTRACT CONTRACT UNREALIZED CONTRACTS DATE AMOUNT VALUE GAIN/LOSS ----------- ---------- ------------ ------------ --------- U.S. Treasury 5 Year Note Futures 12/20/99 $ 6,163,110 $ 6,152,438 $ (10,672) U.S. Treasury 10 Year Note Futures 12/20/99 (27,947,922) (27,667,922) 280,000 U.S. Treasury Bond Futures 12/20/99 16,991,383 16,981,344 (10,039) Japan 10 Year Bond Futures 09/08/99 (15,785,870) (15,483,813) 302,057
101 THE WARBURG PINCUS FUNDS NOTES TO FINANCIAL STATEMENTS (CONTINUED) NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) As of August 31, 1999, Global Fixed held the following futures contracts:
FUTURES EXPIRATION CONTRACT CONTRACT UNREALIZED CONTRACTS DATE AMOUNT VALUE GAIN/LOSS ----------- ---------- ------------ ------------ --------- U.S. Treasury 2 year Note Futures 12/29/99 $ 9,137,563 $ 9,108,000 $(29,563) U.S. Treasury 5 Year Note Futures 12/20/99 1,194,243 1,187,313 (6,930) U.S. Treasury 10 Year Note Futures 12/20/99 (3,755,414) (3,718,219) 37,195 Euro 10 Year Bond Futures 09/10/99 806,555 797,543 (9,012)
I) OPTION TRANSACTIONS -- When a Fund writes or purchases a call or a put option, an amount equal to the premium received or paid by the Fund is recorded as a liability or asset, the value of which is marked-to-market daily to reflect the current market value of the option. When the option expires, the Fund realizes a gain or loss equal to the amount of the premium received or paid. When the Fund exercises an option or enters into a closing transaction by purchasing or selling an offsetting option, it realizes a gain or loss without regard to any unrealized gain or loss to underlying security. The potential loss associated with purchasing an option is limited to the premium paid, and the premium would partially offset any gains achieved from its use. J) TBA PURCHASE COMMITMENTS -- The Funds may enter into "TBA" (to be announced) purchases commitments to purchase securities for a fixed price at a future date, typically not exceeding 45 days. TBA purchase commitments may be considered securities in themselves, and involve a risk of loss if the value of the security to be purchased declines prior to settlement date. This risk is in addition to the risk of decline in each Fund's other assets. Unsettled TBA purchase commitments are valued at the current market value of the underlying securities, according to the procedures described under "Security Valuation" above. K) SECURITIES LENDING -- Loans of securities are required at all times to be secured by collateral at least equal to 102% of the market value of domestic securities on loan including any accrued interest thereon and 105% of the market value of foreign securities on loan including any accrued interest thereon. Cash collateral received by the Funds in connection with securities lending activity is invested in the Boston Global Investment Trust. However, in the event of default or bankruptcy by the other party to the agreement, realization and/or retention of the collateral may be subject to legal proceedings. The market value of securities on loan to brokers and the value of collateral held by each Fund with respect to such loans (including right to draw on letter of credit) at August 31, 1999 is as follows: MARKETS VALUE OF VALUE OF FUND SECURITIES LOANED COLLATERAL RECORDED ------------------------- ----------------- ------------------- International $86,757,007 $91,414,446 Emerging Markets 165,305 171,200 European Equity 2,145,915 2,260,671 Core Equity 2,821,000 2,914,000 Global Telecommunications 4,436,746 4,614,130 Select Economic 1,635,975 1,676,400 L) SHORT SALES -- When a Fund's investment adviser believes that a security is overvalued, it may sell the security short by borrowing the same security from a broker or other institution and selling the security. A Fund will incur a loss as a result of the short sale if the price of the borrowed security increases between the date of the short sale and the date on which the Fund replaces such security. A Fund will realize a gain if there is a decline in price of the security between those dates, which decline exceeds the cost of the borrowing the security and other transaction costs. There can be no assurance that a Fund will be able to close out a short position at any particular time or at an acceptable price. Although a Fund's gain is limited to the amount at which it has sold a security short, its potential loss is limited only by the maximum attainable price of the security less the price at which the security was sold. Until a Fund replaces a borrowed security, it will maintain at all times cash or liquid securities in an amount which, when added to any amount deposited with a broker as collateral will at least equal the current market value of the security sold short. Depending on arrangements made with brokers, a Fund may not receive any payments (including interest) on collateral deposited with them. Long-Short Neutral and Long-Short Equity will not make a 102 THE WARBURG PINCUS FUNDS NOTES TO FINANCIAL STATEMENTS (CONTINUED) NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) short sale if, after giving effect to such sale, the market value of all securities sold short exceeds 100% of the value of its net assets. M) OTHER -- Securities denominated in currencies other than U.S. dollars are subject to changes in value due to fluctuations in exchange rates. Some countries in which the Funds invest require governmental approval for the repatriation of investment income, capital or the proceeds of sales of securities by foreign investors. In addition, if there is a deterioration in a country's balance of payments or for other reasons, a country may impose temporary restrictions on foreign capital remittances abroad. The securities exchanges of certain foreign markets are substantially smaller, less liquid and more volatile than the major securities markets in the United States. Consequently, acquisition and disposition of securities by each Fund may be inhibited. In addition, a significant proportion of the aggregate market value of equity securities listed on the major securities exchanges in emerging markets are held by a smaller number of investors. This may limit the number of shares available for acquisition or disposition by a Fund. Lower-rated debt securities (commonly known as "junk bonds") possess speculative characteristics and are subject to greater market fluctuations and risk of lost income and principal than higher-rated debt securities for a variety of reasons. Also, during an economic downturn or substantial period of rising interest rates, highly leveraged issuers may experience financial stress which would adversely affect their ability to service their principal and interest payment obligations, to meet projected business goals and to obtain additional financing. In addition, periods of economic uncertainty and change can be expected to result in increased volatility of market prices of lower-rated debt securities and (to the extent a Fund invests in junk bonds) the Fund's net asset value. NOTE 2. TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES Effective July 6, 1999, the Funds' investment adviser, Credit Suisse Asset Management became Credit Suisse Asset Management, LLC. In addition, in connection with the closing of the acquisition of Warburg Pincus Asset Management, Inc. by Credit Suisse Group, Warburg Pincus Asset Management, Inc. was merged into Credit Suisse Asset Management, LLC. Credit Suisse Asset Management had previously changed its name from BEA Associates effective January 1, 1999. Pursuant to Investment Advisory Agreements, Credit Suisse Asset Management, LLC ("CSAM") an indirect, wholly-owned subsidiary of Credit Suisse Group, serves as investment advisor for each of the twelve Funds described herein. For its advisory services, CSAM is entitled to receive the following fees, computed daily and payable monthly on each Fund's average daily net assets (except Long-Short Neutral): FUND ANNUAL RATE -------------------------- ---------------------------------- International 0.80% of average daily net assets Emerging Markets 1.00% of average daily net assets European Equity 1.00% of average daily net assets Global Telecommunications 1.00% of average daily net assets Select Economic 0.75% of average daily net assets Long-Short Equity 0.10% of average daily net assets Core Equity 0.75% of average daily net assets Core Fixed 0.375% of average daily net assets Global Fixed 0.50% of average daily net assets High Yield 0.70% of average daily net assets Municipal 0.70% of average daily net assets For Long-Short Neutral, CSAM is entitled to receive from the Fund a monthly fee equal to an annual rate of 1.50% of the Fund's average daily net assets. In addition, starting in the thirteenth month of operation, CSAM is entitled to a monthly performance adjustment fee which may increase or decrease the total advisory fee by up to 0.50% per year. The performance adjustment fee decreased the total advisory fee by $3,395 or .50% of average daily net assets due to lower performance in comparison to the Salomon Smith Barney U.S. 1-Month Treasury Bill Index plus 5 percentage points for the twelve months ended August 31, 1999. 103 THE WARBURG PINCUS FUNDS NOTES TO FINANCIAL STATEMENTS (CONTINUED) NOTE 2. TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES (CONTINUED) CSAM may, at its discretion, voluntarily waive all or any portion of its advisory fee for any of the Funds. For the year ended August 31, 1999 advisory fees and waivers for each of the twelve investment Funds were as follows: GROSS NET FUND ADVISORY FEE WAIVER ADVISORY FEE -------------------------- ------------ -------- ------------ International $5,508,687 -- $5,508,687 Emerging Markets 188,384 (120,352) 68,032 European Equity 152,482 (152,482) -- Core Equity 517,425 (148,230) 369,195 Global Telecommunications 194,860 (101,660) 93,200 Select Economic 250,313 (139,116) 111,197 Long-Short Neutral 291,148 (97,341) 193,807 Long-Short Equity 4,332 (4,332) -- Core Fixed 1,436,025 (608,214) 827,811 Global Fixed 144,265 (144,265) -- High Yield 903,069 (405,408) 497,661 Municipal 160,667 (95,749) 64,918 CSAM reimbursed expenses of European Equity, Global Telecommunications, Long-Short Equity, and Global Fixed in the amounts of $19,556, $33,124, $66,605 and $3,649 respectively, for the year ended August 31, 1999. For its-sub-advisory services, Credit Suisse Asset Management Limited ("CSAM Limited"), an indirect, wholly-owned subsidiary of Credit Suisse Group, is entitled to receive from CSAM .30% of the daily net assets of each of Emerging Markets and Global Fixed and .50% of the average daily net assets of European Equity. For the year ended, August 31, 1999, CSAM Limited was entitled to receive $56,515, $86,559 and $76,241 from CSAM for sub-advisory services provided to Emerging Markets, Global Fixed and European Equity, respectively, all of which were waived. State Street Bank and Trust Company ("State Street"), serves as each Fund's transfer and dividend disbursement agent. State Street has delegated most of its Fund service obligations to Boston Financial Data Services, Inc. (BFDS), a 50% owned subsidiary of State Street. Counsellors Funds Service, Inc. ("CFSI"), a wholly-owned subsidiary of Credit Suisse Asset Management, LLC, and PFPC, Inc. ("PFPC"), an indirect, wholly-owned subsidiary of PNC Bank Corp., serve as each Fund's co-administrator. For administration services, each Fund, except European Equity, pays CFSI a fee calculated at an annual rate .05% of the Fund's first $125 million in average daily nets assets of the Common shares and .10% of average daily net assets of the Common shares over $125 million. For European Equity, CFSI is entitled to recieve from the Fund a monthly fee equal to an annual rate of .10% of average daily net asset of the Common shares. No compensation is payable by the Funds to CFSI for co-administration services for the Institutional shares. CFSI may, at its discretion, voluntarily waive all or any portion of its co-administration fees for any of the Funds. For the period October 24, 1998 to August 31, 1999, co-administration fees earned by CFSI on the Common shares were as follows: GROSS NET FUND ADMINISTRATION FEE WAIVER ADMINISTRATION FEE ------------------------- ------------------ ------- ------------------ International $ 9,292 $ -- $9,292 Emerging Markets 377 (142) 235 European Equity 15,192 (7,596) 7,596 Core Equity 31 (25) 6 Global Telecommunications 9,709 (9,463) 246 Select Economic 9 (7) 2 Long-Short Neutral 5,180 (4,144) 1,036 Long-Short Equity 1,968 -- 1,968 Core Fixed 22 (18) 4 Global Fixed 5 (4) 1 High Yield 12,663 (9,930) 2,733 Municipal 49 (40) 9 104 THE WARBURG PINCUS FUNDS NOTES TO FINANCIAL STATEMENTS (CONTINUED) NOTE 2. TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES (CONTINUED) Prior to October 23, 1998, Provident Distributors, Inc. ("PDI") served as administrative service agent. An administrative service fee was computed daily and payable quarterly at an annual rate of .15% of the average daily net assets of each Fund's (except European Equity) corresponding portfolio of The RBB Fund. The administrative agent may at its discretion voluntarily waive all or any portion of its administrative fee for any of the Funds. For the period September 1, 1998 through October 23, 1998, administrative service fees earned and waived by PDI were as follows: GROSS ADMINISTRATIVE NET ADMINISTRATIVE FUND SERVICE FEE WAIVER SERVICE FEE ------------------------- -------------------- -------- ------------------ International $131,374 $(70,067) $61,307 Emerging Markets 4,262 (3,409) 853 Core Equity 13,560 (12,656) 904 Global Telecommunications 34 (34) -- Select Economic 5,339 (4,984) 355 Long-Short Neutral 1,510 (1,224) 286 Long-Short Equity 3 (3) -- Core Fixed 86,637 (80,861) 5,776 Global Fixed 6,441 (6,012) 429 High Yield 19,734 (18,418) 1,316 Municipal 4,874 (4,548) 326 For administration services, PFPC currently receives a fee calculated at annual rate of .125% on each Fund's average daily net assets, subject to a minimum annual fee and exclusive of out-of-pocket expenses. PFPC may, at its discretion, voluntarily waive all or any portion of its administration fee for any of the Funds. For the year ended August 31, 1999, the co-administration fees earned and waived by PFPC were as follows: GROSS ADMINISTRATIVE NET ADMINISTRATIVE FUND SERVICE FEE WAIVER SERVICE FEE ------------------------- -------------------- -------- ------------------ International $860,732 $ -- $860,732 Emerging Markets 23,548 -- 23,548 European Equity 2,894 -- 2,894 Core Equity 86,237 -- 86,237 Global Telecommunications 24,357 (24,357) -- Select Economic 41,719 -- 41,719 Long-Short Neutral 24,545 (11,902) 12,643 Long-Short Equity 5,412 -- 5,412 Core Fixed 286,470 -- 286,470 Global Fixed 50,059 -- 50,059 High Yield 161,262 (32,252) 129,010 Municipal 37,500 -- 37,500 105 THE WARBURG PINCUS FUNDS NOTES TO FINANCIAL STATEMENTS (CONTINUED) NOTE 2. TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES (CONTINUED) Credit Suisse Asset Management Securities, Inc. ("CSI"), also a wholly-owned subsidiary of Credit Suisse Asset Management, LLC, serves as each Fund's distributor. No compensation is payable by any Fund to CSI for its distribution services for Institutional shares. For its distribution services for the Common shares, CSI receives a fee calculated at an annual rate .25% of the average daily net assets of the Common shares of each Fund. For the year ended August 31, 1999, distribution fees earned by CSI were as follows: FUND DISTRIBUTION FEE ----------------------------- ---------------- International $47,318 Emerging Markets 2,146 European Equity 37,979 Core Equity 157 Global Telecommunications 48,715 Select Economic 46 Long-Short Neutral 25,941 Long-Short Equity 9,838 Core Fixed 111 Global Fixed 25 High Yield 63,586 Municipal 247 NOTE 3. PURCHASES AND SALES OF SECURITIES For the period ended August 31, 1999, purchases and sales of investment securities (other than short-term investments) were as follows:
INVESTMENT SECURITIES SHORT SECURITIES ------------------------------- ---------------- FUND PURCHASES SALES SALES ----------------------------- -------------- --------------- ----------- International $1,194,403,607 $ 1,190,202,178 $ -- Emerging Markets 38,225,168 60,244,926 -- European Equity 63,543,115 39,683,207 -- Core Equity 73,400,111 78,539,205 -- Global Telecommunications 89,335,347 36,815,339 -- Select Economic 68,474,077 67,634,656 -- Long-Short Neutral 121,662,548 59,668,602 60,494,767 Long-Short Equity 34,374,838 32,274,697 -- Core Fixed 2,321,888,522 2,373,949,386 3,757,406 Global Fixed Income 88,117,516 90,559,751 86,709 High Yield 87,338,937 49,422,453 -- Municipal 6,458,587 5,674,568 --
106 THE WARBURG PINCUS FUNDS NOTES TO FINANCIAL STATEMENTS (CONTINUED) NOTE 4. CAPITAL SHARES Transactions in capital shares for each period were as follows:
INTERNATIONAL GROWTH FUND ------------------------------------------------------------------------------------------------------ INSTITUTIONAL COMMON -------------------------------------------------- ------------------------------------------------- FOR THE YEAR ENDED FOR THE YEAR ENDED FOR THE YEAR ENDED FOR THE YEAR ENDED AUGUST 31, 1999 AUGUST 31, 1998 AUGUST 31, 1999 AUGUST 31, 1998 ------------------------ ------------------------ ----------------------- ---------------------- SHARES VALUE SHARES VALUE SHARES VALUE SHARES VALUE ---------- ------------- ---------- ------------ ---------- ----------- -------- ----------- Shares sold 11,591,187 $ 257,783,566 4,245,007 $102,490,297 3,185,532 $ 71,124,892 211,487 $ 4,990,229 Shares issued in reinvestment of dividends 2,671,406 59,839,501 3,354,933 68,910,317 127,644 2,838,791 8,163 167,087 Shares repurchased (12,967,216) (293,781,727) (5,715,329) (125,473,547) (3,007,619) (66,621,836) (154,474) (3,642,448) ----------- ------------ ---------- ------------- ---------- ------------ -------- ----------- Net increase 1,295,377 $ 23,841,340 1,884,611 $ 45,927,067 305,557 $ 7,341,847 65,176 $ 1,514,868 =========== ============ ========== ============= ========== ============ ======== ===========
EMERGING MARKETS II FUND ------------------------------------------------------------------------------------------------------ INSTITUTIONAL COMMON -------------------------------------------------- ------------------------------------------------- FOR THE YEAR ENDED FOR THE YEAR ENDED FOR THE YEAR ENDED FOR THE YEAR ENDED AUGUST 31, 1999 AUGUST 31, 1998 AUGUST 31, 1999 AUGUST 31, 1998 ------------------------ ------------------------ ---------------------- ---------------------- SHARES VALUE SHARES VALUE SHARES VALUE SHARES VALUE ---------- ------------ ---------- ------------ ---------- --------- -------- ---------- Shares sold 46,493 $ 584,900 102,528 $ 1,830,455 69,187 $ 952,603 93,287 $1,457,394 Shares issued in reinvestment of dividends 27,063 308,248 245,801 4,154,034 60 690 46 775 Shares repurchased (1,991,203) (25,992,240) (2,256,500) (35,760,759) (66,044) (959,369) (32,820) (571,277) ---------- ------------ ---------- ------------ -------- --------- -------- ---------- Net increase/ (decrease) (1,917,647) $(25,099,092) (1,908,171) $(29,776,270) 3,203 $ (6,076) 60,513 $ 886,892 ========== ============ ========== ============ ======== ========= ======== ==========
EUROPEAN EQUITY FUND --------------------------------------------------------------------- INSTITUTIONAL COMMON -------------------------------- --------------------------------- FOR THE PERIOD JANUARY 28, 1999* FOR THE PERIOD JANUARY 28, 1999* THROUGH AUGUST 31, 1999 THROUGH AUGUST 31, 1999 -------------------------------- --------------------------------- SHARES VALUE SHARES VALUE ------ -------- ---------- ------------ Shares sold 10,003 $100,030 4,115,201 $ 40,639,910 Shares issued in reinvestment of dividends -- -- -- -- Shares repurchased -- -- (1,605,450) (15,431,585) ------ -------- ---------- ------------ Net increase 10,003 $100,030 2,509,751 $ 25,208,325 ====== ======== ========== ============ *Inception Date.
107 THE WARBURG PINCUS FUNDS NOTES TO FINANCIAL STATEMENTS (CONTINUED) NOTE 4. CAPITAL SHARES (CONTINUED)
U.S. CORE EQUITY FUND --------------------------------------------------------------------------------------- INSTITUTIONAL COMMON ---------------------------------------------------- -------------------------------- FOR THE YEAR ENDED FOR THE YEAR ENDED FOR THE PERIOD OCTOBER 30, 1998* AUGUST 31, 1999 AUGUST 31, 1998 THROUGH AUGUST 31, 1999 ----------------------- ------------------------- -------------------------------- SHARES VALUE SHARES VALUE SHARES VALUE --------- ------------ ---------- ------------ ------ -------- Shares sold 251,693 $ 5,039,021 682,212 $ 16,949,211 9,123 $193,824 Shares issued in reinvestment of dividends 1,230,678 22,619,857 568,713 12,778,985 156 2,861 Shares repurchased (827,554) (18,062,739) (1,859,405) (46,573,171) (2,433) (63,918) ---------- ------------ ---------- ------------ ------ -------- Net increase/(decrease) 654,817 $ 9,596,139 (608,480) $(16,844,975) 6,846 $132,767 ========== ============ ========== ============ ====== ========
GLOBAL TELECOMMUNICATIONS FUND ----------------------------------------------- COMMON ----------------------------------------------- FOR THE YEAR ENDED FOR THE YEAR ENDED AUGUST 31, 1999 AUGUST 31, 1998 ----------------------- --------------------- SHARES VALUE SHARES VALUE --------- ------------ ------- --------- Shares sold 1,820,386 $ 68,055,242 18,229 $ 414,135 Shares issued in reinvestment of dividends 5,883 167,194 2,037 37,921 Shares repurchased (280,472) (10,725,448) (18,228) (407,258) --------- ------------ ------- --------- Net increase 1,545,797 $ 57,496,988 2,038 $ 44,798 ========= ============ ======= =========
SELECT ECONOMIC VALUE EQUITY FUND ---------------------------------------------------------------------------------------- INSTITUTIONAL COMMON ---------------------------------------------------- -------------------------------- FOR THE YEAR ENDED FOR THE PERIOD JULY 31, 1998* FOR THE PERIOD OCTOBER 30, 1998* AUGUST 31, 1999 THROUGH AUGUST 31, 1998 THROUGH AUGUST 31, 1999 -------------------- ----------------------------- -------------------------------- SHARES VALUE SHARES VALUE SHARES VALUE -------- ---------- --------- ----------- ------ -------- Shares sold 420,175 $ 7,478,114 1,721,030 $25,813,705 5,210 $102,064 Shares issued in reinvestment of dividends 2,776 49,578 -- -- -- -- Shares repurchased (387,514) (7,367,592) -- -- (479) (8,302) -------- ----------- --------- ----------- ----- -------- Net increase 35,437 $ 160,100 1,721,030 $25,813,705 4,731 $ 93,762 ======== =========== ========= =========== ===== ========
LONG-SHORT MARKET NEUTRAL FUND --------------------------------------------------------------------------------------------- INSTITUTIONAL COMMON -------------------------------------------------------- --------------------------------- FOR THE YEAR ENDED FOR THE PERIOD JULY 31, 1998* FOR THE PERIOD SEPTEMBER 8, 1998* AUGUST 31, 1999 THROUGH AUGUST 31, 1998 THROUGH AUGUST 31, 1999 ------------------------- ----------------------------- --------------------------------- SHARES VALUE SHARES VALUE SHARES VALUE ---------- ------------ --------- ---------- ---------- ------------ Shares sold 2,702,645 $ 40,468,228 412,744 $6,191,423 3,454,318 $ 51,387,127 Shares issued in reinvestment of dividends 5,561 82,361 -- -- 16,915 250,336 Shares repurchased (2,705,769) (39,525,343) -- -- (3,338,435) (49,530,584) ---------- ------------ --------- ---------- ---------- ------------ Net increase 2,437 $ 1,025,246 412,744 $6,191,423 132,798 $ 2,106,879 ========== ============ ========= ========== ========== ============ *Inception Date.
108 THE WARBURG PINCUS FUNDS NOTES TO FINANCIAL STATEMENTS (CONTINUED) NOTE 4. CAPITAL SHARES (CONTINUED)
LONG-SHORT EQUITY FUND ----------------------------------------------------------------------- INSTITUTIONAL COMMON ---------------------------------- -------------------------------- FOR THE PERIOD SEPTEMBER 11, 1998* FOR THE PERIOD OCTOBER 30, 1998* THROUGH AUGUST 31, 1999 THROUGH AUGUST 31, 1999 ---------------------------------- -------------------------------- SHARES VALUE SHARES VALUE ------- ----------- ---------- ------------ Shares sold 65,686 $ 1,009,786 2,009,319 $ 35,443,765 Shares issued in reinvestment of dividends 1,757 29,512 43 720 Shares repurchased (60,851) (1,011,801) (1,943,452) (33,502,061) ------- ----------- ---------- ------------ Net increase 6,592 $ 27,497 65,910 $ 1,942,424 ======= =========== ========== ============
U.S. CORE FIXED INCOME FUND --------------------------------------------------------------------------------------- INSTITUTIONAL COMMON ---------------------------------------------------- -------------------------------- FOR THE YEAR ENDED FOR THE YEAR ENDED FOR THE PERIOD OCTOBER 30, 1998* AUGUST 31, 1999 AUGUST 31, 1998 THROUGH AUGUST 31, 1999 -------------------------- ------------------------ -------------------------------- SHARES VALUE SHARES VALUE SHARES VALUE ----------- ------------- ---------- ------------ ------ -------- Shares sold 16,356,857 $ 252,861,810 15,080,236 $237,240,219 10,093 $155,782 Shares issued in reinvestment of dividends 1,697,821 26,132,715 906,263 14,074,352 135 2,031 Shares repurchased (19,716,018) (305,132,292) (2,268,321) (35,611,876) (3,294) (49,547) ----------- ------------- ---------- ------------ ------ -------- Net increase/(decrease) (1,661,340) $ (26,137,767) 13,718,178 $215,702,695 6,934 $108,266 =========== ============= ========== ============ ====== ========
STRATEGIC GLOBAL FIXED INCOME FUND ------------------------------------------------------------------------------------ INSTITUTIONAL COMMON -------------------------------------------------- -------------------------------- FOR THE YEAR ENDED FOR THE YEAR ENDED FOR THE PERIOD OCTOBER 30, 1998* AUGUST 31, 1999 AUGUST 31, 1998 THROUGH AUGUST 31, 1999 ----------------------- ------------------------ -------------------------------- SHARES VALUE SHARES VALUE SHARES VALUE -------- ----------- ---------- ------------ ------ -------- Shares sold 56,355 $ 891,603 227,215 $ 3,505,185 2,478 $ 38,282 Shares issued in reinvestment of dividends 68,272 1,075,528 147,509 2,200,318 4 55 Shares repurchased (184,373) (2,889,584) (1,361,892) (20,772,949) (1,251) (19,035) -------- ----------- ---------- ------------ ------ -------- Net increase/(decrease) (59,746) $ (922,453) (987,168) $(15,067,446) 1,231 $ 19,302 ======== =========== ========== ============ ====== ========
HIGH YIELD FUND ------------------------------------------------------------------------------------------------------ INSTITUTIONAL COMMON -------------------------------------------------- ------------------------------------------------- FOR THE YEAR ENDED FOR THE YEAR ENDED FOR THE YEAR ENDED FOR THE YEAR ENDED AUGUST 31, 1999 AUGUST 31, 1998 AUGUST 31, 1999 AUGUST 31, 1998 ------------------------ ------------------------ ----------------------- ---------------------- SHARES VALUE SHARES VALUE SHARES VALUE SHARES VALUE ---------- ------------- ---------- ------------ ---------- ----------- -------- ----------- Shares sold 2,505,861 $ 39,359,915 2,248,712 $ 38,970,312 2,499,612 $39,264,516 266,018 $ 4,697,209 Shares issued in reinvestment of dividends 508,551 7,926,308 416,842 7,175,130 105,404 1,641,508 9,315 162,504 Shares repurchased (2,470,735) (38,614,790) (2,423,467) (41,922,050) (427,403) (6,757,008) (246,118) (4,271,516) ---------- ------------ ---------- ------------ --------- ----------- -------- ----------- Net increase 543,677 $ 8,671,433 242,087 $ 4,223,392 2,177,613 $34,149,016 29,215 $ 588,197 ========== ============ ========== ============ ========= =========== ======== =========== *Inception Date.
109 THE WARBURG PINCUS FUNDS NOTES TO FINANCIAL STATEMENTS (CONTINUED) NOTE 4. CAPITAL SHARES (CONTINUED)
MUNICIPAL BOND FUND ------------------------------------------------------------------------------------ INSTITUTIONAL COMMON -------------------------------------------------- -------------------------------- FOR THE YEAR ENDED FOR THE YEAR ENDED FOR THE PERIOD OCTOBER 30, 1998* AUGUST 31, 1999 AUGUST 31, 1998 THROUGH AUGUST 31, 1999 ----------------------- ------------------------ -------------------------------- SHARES VALUE SHARES VALUE SHARES VALUE -------- ----------- ---------- ----------- ------ -------- Shares sold 179,990 $ 2,675,315 217,663 $ 3,269,230 15,816 $236,022 Shares issued in reinvestment of dividends 86,580 1,287,465 70,888 1,064,203 279 4,072 Shares repurchased (168,278) (2,507,954) (153,265) (2,304,613) (1,335) (20,081) -------- ----------- -------- ----------- ------ -------- Net increase 98,292 $ 1,454,826 135,286 $ 2,028,820 14,760 $220,013 ======== =========== ======== =========== ====== ======== *Inception Date.
On August 31, 1999, the number of shareholders that held 5% or more of the outstanding shares are as follows:
NUMBER OF APPROXIMATE PERCENTAGE SHAREHOLDERS OF OUTSTANDING SHARES ------------ ---------------------- International Institutional shares 4 24.90% International Common shares 3 89.83 Emerging Markets Institutional shares 4 89.49 Emerging Markets Common shares 3 89.74 European Equity Institutional shares 1 99.97 European Equity Common shares 1 81.40 Core Equity Institutional shares 5 78.17 Core Equity Common shares 5 49.42 Select Economic Value Institutional Shares 2 94.03 Select Economic Value Common Shares 5 84.94 Long-Short Market Neutral Institutional shares 7 81.02 Long-Short Market Neutral Common shares 4 94.94 Long-Short Equity Institutional shares 1 100.00 Long-Short Equity Common shares 1 91.44 Core Fixed Institutional shares 6 43.89 Core Fixed Common shares 1 94.19 Global Fixed Institutional shares 3 96.34 Global Fixed Common shares 2 97.30 High Yield Institutional shares 4 59.93 High Yield Common shares 3 87.84 Municipal Institutional shares 4 70.71 Municipal Common shares 2 99.52
110 THE WARBURG PINCUS FUNDS NOTES TO FINANCIAL STATEMENTS (CONTINUED) NOTE 5. RESTRICTED SECURITIES One of International's investments is restricted as to resale and is valued at the direction of the Fund's Board of Directors in good faith, at fair value, after taking into consideration appropriate indications of value available. The table below shows the number of shares held, the acquisition date, value as of August 31, 1999, percentage of net assets which the security comprises, aggregate cost and unit value of the security.
NUMBER OF ACQUISITION 08/31/99 PERCENTAGE OF SECURITY VALUE PER SHARES DATE FAIR VALUE NET ASSETS COST UNIT --------- ----------- ---------- ------------- ---------- --------- Geotek Communications, Inc. Series M 600 5/26/95 0.00 0.0% $6,000,000 0.000 ---- ---------- 0.00 $6,000.000 ==== ==========
NOTE 6. FORWARD FOREIGN CURRENCY CONTRACTS The Funds will generally enter into forward foreign currency exchange contracts as a way of managing foreign exchange rate risk or to enhance total return. Each Fund may enter into these contracts to fix the U.S. dollar value of a security that it has agreed to buy or sell for the period between the date the trade was entered into and the date the security is delivered and paid for. Each Fund may also use these contracts to hedge the U.S. dollar value of securities denominated in foreign currencies that it already owns. The Fund may enter into these contracts for the purchase or sale of a specific foreign currency at a fixed price on a future date as a hedge or cross-hedge against either transactions or portfolio positions. Forward foreign currency contracts are valued at the forward rate, and are marked-to-market daily. The change in market value is recorded by each Fund as an unrealized gain or loss. When the contract is closed, each Fund records a realized gain or loss equal to the difference between the value of the contract at the time it was opened and the value at the time it was closed. Each Fund's policy is to include this portion of realized and unrealized gains and losses on investments that result from foreign currency changes with other foreign currency gains and losses on the Statement of Operations. The use of forward foreign currency contracts does not eliminate fluctuations in the underlying prices of each Fund's portfolio securities, but it does establish a rate of exchange that can be achieved in the future. Although forward foreign currency contracts limit the risk of loss due to a decline in the value of the hedged currency, they also limit any potential gain that might result should the value of the currency increase. In addition, the Fund could be exposed to risks if the counterparty to the contract is unable to meet the terms of their contract. During the year ended August 31, 1999, Global Fixed and Core Fixed entered into forward foreign currency contracts. Core Fixed had no open forward foreign contracts at August 31, 1999. The Global Fixed had open forward foreign currency contracts at August 31, 1999 as follows:
FOREIGN UNREALIZED FORWARD CURRENCY EXPIRATION CURRENCY CONTRACT CONTRACT FOREIGN EXCHANGE CONTRACT DATE TO BE SOLD AMOUNT VALUE GAIN/(LOSS) ------------------- ---------- ----------- ---------- ---------- ---------------- Danish Krona 09/28/99 $ 5,579,200 $ 783,926 $ 792,394 $ (8,468) Euro 09/15/99 1,360,092 1,415,427 1,441,417 (25,990) Great Britain Pound 09/15/99 600,000 932,913 965,808 (32,895) ---------- ---------- --------- $3,132,266 $3,199,619 $ (67,353) ========== ========== =========
111 THE WARBURG PINCUS FUNDS NOTES TO FINANCIAL STATEMENTS (CONCLUDED) NOTE 6. FORWARD FOREIGN CURRENCY CONTRACTS (CONTINUED)
FOREIGN UNREALIZED FORWARD CURRENCY EXPIRATION CURRENCY CONTRACT CONTRACT FOREIGN EXCHANGE CONTRACT DATE TO BE PURCHASED AMOUNT VALUE GAIN/(LOSS) ------------------- ---------- --------------- ----------- ----------- ---------------- Canadian Dollar 09/10/99 533,255 $ 359,337 $ 356,516 $ (2,821) Euro 09/10/99 3,794,314 3,954,813 4,019,485 64,672 Euro 09/15/99 3,444,338 3,602,912 3,650,287 47,375 Japanese Yen 11/10/99 212,948,837 1,876,201 1,970,713 94,512 Swedish Krona 09/10/99 4,939,859 573,070 600,713 27,643 ----------- ----------- -------- $10,366,333 $10,597,714 $231,381 =========== =========== ========
NOTE 7. LINE OF CREDIT The Funds, together with other funds advised by CSAM, have established a $250 million committed line of credit facility ("Credit Facility") with Deutche 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 borrowing at the Federal funds rate plus .50%. During the period ended August 31, 1999, the following fund had borrowings under the line of credit agreement:
AVERAGE DAILY AVERAGE MAXIMUM DAILY LOAN OUTSTANDING PORTFOLIO LOAN BALANCE INTEREST RATE % LOAN OUTSTANDING AT 8/31/99 ---------- ------------- --------------- ---------------- ---------------- High Yield $516,986 5.67% $10,500,000 $0
NOTE 8. CAPITAL LOSS CARRYOVER At August 31, 1999, capital loss carryovers were available to offset future realized gains as follows: $20,719,643 in Emerging Markets of which $88,398 expires in 2003, $9,829,561 expires in 2004, $68,462 expires in 2006 and $10,733,222 expires in 2007; $183,151 in Global Fixed which expires in 2007; and $15,551,561 in High Yield of which $6,869,153 expires in 2001, $4,986,021 expires in 2003, $3,354,749 expires in 2005 and $341,638 expires in 2007. 112 THE WARBURG PINCUS FUNDS REPORT OF INDEPENDENT ACCOUNTANTS To the Board of Directors and Shareholders Of The Warburg Pincus Funds: In our opinion, the accompanying statements of assets and liabilities, including the schedules of investments of Warburg Pincus International Growth Fund, Warburg Pincus Emerging Markets II Fund, Warburg Pincus European Equity Fund, Warburg Pincus U.S. Core Equity Fund, Warburg Pincus Global Telecommunications Fund, Warburg Pincus Select Economic Value Equity Fund, Warburg Pincus Long-Short Market Neutral Fund, Warburg Pincus Long-Short Equity Fund, Warburg Pincus U.S. Core Fixed Income Fund, Warburg Pincus Strategic Global Fixed Income Fund, Warburg Pincus High Yield Fund and Warburg Pincus Municipal Bond Fund (all funds collectively referred to as the "Funds"), as of August 31, 1999 and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of the Funds at August 31, 1999, and the results of each of their operations for the year (or period) then ended, the changes in each of their net assets for each of the two years (or periods) in the period then ended and their financial highlights for each of the years (or periods) presented, in conformity with generally accepted accounting principles. 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 August 31, 1999 by correspondence with the custodians and brokers, provide a reasonable basis for the opinion expressed above. PricewaterhouseCoopers LLP 2400 Eleven Penn Center Philadelphia, PA October 7, 1999 113 THE WARBURG PINCUS FUNDS TAX INFORMATION LETTERS IMPORTANT TAX INFORMATION FOR SHAREHOLDERS OF WARBURG PINCUS INTERNATIONAL GROWTH FUND (UNAUDITED) During the fiscal year ended August 31, 1999, the International Growth Fund - - Institutional Class distributed $5,684,280 of foreign source income on which the Fund paid foreign taxes of $606,655. This information is being furnished to you pursuant to notice requirements of Section 853(a) and 855(d) of the Internal Revenue Code 1986, as amended the "Code", and the Treasury Regulations thereunder. During the fiscal year ended August 31, 1999, the International Growth Fund - - Common Class distributed $258,106 of foreign source income on which the Fund paid foreign taxes of $28,741. This information is being furnished to you pursuant to notice requirements of Section 853(a) and 855(d) of the Code and the Treasury Regulations thereunder. IMPORTANT TAX INFORMATION FOR SHAREHOLDERS OF WARBURG PINCUS EMERGING MARKET II FUND (UNAUDITED) During the fiscal year ended August 31, 1999, the Emerging Market II Fund - Institutional Class distributed $371,643 of foreign source income on which the Fund paid foreign taxes of $62,881. This information is being furnished to you pursuant to notice requirements of Section 853(a) and 855(d) of the Code and the Treasury Regulations thereunder. During the fiscal year ended August 31, 1999, the Emerging Market II Fund - Common Class distributed $14,918 of foreign source income on which the Fund paid foreign taxes of $2,683. This information is being furnished to you pursuant to notice requirements of Section 853(a) and 855(d) of the Code and the Treasury Regulations thereunder. IMPORTANT TAX INFORMATION FOR CORPORATE SHAREHOLDERS (UNAUDITED) Corporate shareholders should note that for the fiscal year ended August 31, 1999, the percentage of Fund's investment income (i.e., net investment income plus short-term capital gains) that qualifies for the intercorporate dividends received deductions is as follows: Percentage ---------- Warburg Pincus U.S. Core Equity Fund 11.32% Warburg Pincus Select Economic Value Equity Fund 100.00% Warburg Pincus Long-Short Market Neutral Fund 20.78% IMPORTANT TAX INFORMATION FOR SHAREHOLDERS OF WARBURG PINCUS MUNICIPAL BOND FUND (UNAUDITED) In the twelve months ended August 31, 1999, (the end of the fiscal year), 75% of the dividends paid by the Fund were exempt-interest dividends for the purpose of federal income taxes and free from such taxes. In addition, none of such dividends were attributable to interest on private activity bonds which must be included in federal alternative minimum taxable income for purposes of determining liability for federal alternative minimum tax. In January 2000, you will be furnished with a schedule the yearly percentage breakdown by state or U.S. possession of the source of interest earned by the Fund in 1999. It is suggested that you consult your tax advisor concerning the applicability of State and local taxes to dividends paid by the Fund during the year. 114 THE WARBURG PINCUS FUNDS TAX INFORMATION LETTERS (CONCLUDED) IMPORTANT TAX INFORMATION FOR SHAREHOLDERS (UNAUDITED) During the year ended August 31, 1999, the Funds declared the following dividends from realized capital gains: SHORT-TERM LONG-TERM CAPITAL GAIN CAPITAL GAIN PER SHARE PER SHARE ---------- ---------- Warburg Pincus International Growth Fund $0.4142 $1.5771 Warburg Pincus U.S Core Equity Fund 2.9842 6.7583 Warburg Pincus Global Telecommunication Fund -- 2.8396 Warburg Pincus Long Short Market Neutral Fund 0.1266 -- Warburg Pincus Long-Short Equity Fund 0.1433 0.2079 Warburg Pincus U.S. Core Fixed Income Fund 0.1537 0.0196 Warburg Pincus Strategic Global Fixed Income Fund 0.1563 0.1270 Warburg Pincus Municipal Bond Fund 0.0397 0.1690 115 THE WARBURG PINCUS FUNDS YEAR 2000 COMPLIANCE NOT COVERED BY INDEPENDENT ACCOUNTANTS REPORT Many services provided to the Fund's and their shareholders by CSAM and certain of its affiliates ("CSAMService Providers") and the Fund's other service providers rely on the functioning of their respective computer systems. Many computer systems cannot distinguish the year 2000 from the year 1900, resulting in potential difficulty in performing various calculations ("Year 2000 Issue"). The Year 2000 could potentially have an adverse impact on the handling of security trades, the payment of interest and dividends, pricing, account services and other Fund operations. It has been reported that foreign institutions have made less progress in addressing the Year 2000 Issue than major U.S. entities, which could adversely affect the portfolios' foreign investments. The CSAM Service Providers recognize the importance of the Year 2000 Issue and are taking appropriate steps necessary in preparation for the year 2000. The CSAM Service Providers anticipate that their systems and those of the Fund's other service providers will be adapted in time for the Year 2000. The CSAM Service Providers have completed mission critical systems testing and have participated in industry-wide testing programs. In addition, the CSAM Service Providers are formulating a contingency plan to address the Year 2000 Issue and anticipate completion of the plan by the end of the third quarter of 1999. The CSAM Service Providers have also completed investigations of material operations of the Fund's other major service providers. The CSAM Service Providers continue to monitor the Year 2000 Issue and its potential impact on the Funds. However, there can be no assurance that these steps will be sufficient to avoid any adverse impact on the Funds nor can there be any assurance that the Year 2000 Issue will not have an adverse effect on the Fund's investments or on global markets or economics, generally. 116 P.O. Box 8500, Boston, MA 02266-8500 800-222-8977 CREDIT SUISSE ASSET MANAGEMENT SECURITIES, INC., DISTRIBUTOR -----END PRIVACY-ENHANCED MESSAGE-----