-----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, UP2AeJDM4e7avmNwSyEMbue1krSAIKsngB4/Io+gK5qFeC+AevG7BlM+2/HEnQTk I6VbLHVvNPeZbkxpR6T/2A== 0000935069-00-000209.txt : 20000503 0000935069-00-000209.hdr.sgml : 20000503 ACCESSION NUMBER: 0000935069-00-000209 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20000229 FILED AS OF DATE: 20000502 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: 616923 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: 616924 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 HIGH YIELD-MUNICIPAL BOND FUNDS [GRAPHIC OMITTED] [GRAPHIC OMITTED] WARBURG PINCUS FUNDS CREDIT ASSET SUISSE MANAGEMENT SEMIANNUAL REPORT FEBRUARY 29, 2000 (UNAUDITED) WARBURG PINCUS HIGH YIELD FUND (BULLET) WARBURG PINCUS MUNICIPAL BOND FUND More complete information about the funds, including charges and expenses, is provided in the PROSPECTUS, which must precede or accompany this document and which should be read carefully before investing. You may obtain additional copies by calling 800-WARBURG (800-927-2874) or by writing to Warburg Pincus Funds, P.O. Box 9030, Boston, MA 02205-9030. Provident Distributors, Inc., Distributor, located at Four Falls Corporate Center, 6th Floor, West Conshohocken, PA 19428-2961 is not affiliated with Credit Suisse Asset Management, LLC. Warburg Pincus Funds are advised by Credit Suisse Asset Management, 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. INTERNATIONAL INVESTING ENTAILS SPECIAL RISK CONSIDERATIONS, INCLUDING CURRENCY FLUCTUATIONS, LOWER LIQUIDITY, ECONOMIC AND POLITICAL RISKS, AND DIFFERENCES IN ACCOUNTING METHODS. THE VIEWS OF THE FUNDS' MANAGEMENT ARE AS OF THE DATE OF THE LETTERS AND PORTFOLIO HOLDINGS DESCRIBED IN THIS DOCUMENT ARE AS OF FEBRUARY 29, 2000; THESE VIEWS AND PORTFOLIO HOLDINGS MAY HAVE CHANGED SUBSEQUENT TO THESE DATES. NOTHING IN THIS DOCUMENT IS A RECOMMENDATION TO PURCHASE OR SELL SECURITIES. FUND SHARES ARE NOT DEPOSITS OR OTHER OBLIGATIONS OF CREDIT SUISSE ASSET MANAGEMENT, LLC ("CSAM") OR ANY AFFILIATE, ARE NOT FDIC INSURED AND ARE NOT GUARANTEED BY CSAM OR ANY AFFILIATE. FUND INVESTMENTS ARE SUBJECT TO INVESTMENT RISKS, INCLUDING LOSS OF YOUR INVESTMENT. WARBURG PINCUS HIGH YIELD FUND PORTFOLIO MANAGERS' LETTER -- FEBRUARY 29, 2000 - -------------------------------------------------------------------------------- March 20, 2000 Dear Shareholders: We are writing to report on the results of the Warburg Pincus High Yield Fund (the "Fund") for the six months ended February 29, 2000. On February 29, 2000, the net asset value ("NAV") of the Fund's institutional shares was $15.46, compared to an NAV of $15.32 on August 31, 1999. The institutional shares' total return was 6.4%, (assuming the reinvestment of dividends totaling $0.7867 per share). By comparison, the Credit Suisse First Boston Domestic + High Yield Index* (the "Index") returned 0.5% during the same period. At February 29, 2000, NAV of the Fund's common shares was $15.53, compared to an NAV of $15.38 on August 31, 1999. The common shares' total return was 6.2%, (assuming the reinvestment of dividends $0.7610 per share). By comparison, the Index returned 0.5% during the same period. The Fund meaningfully outperformed the Index based primarily on effective sector allocation: (BULLET) We maintained our longstanding overweight (relative to the Index) in the telecommunications industry which rebounded sharply in the period and was one of the better-performing groups in the high yield universe. The Fund's telecom holdings further helped because they provided us with relatively high exposure to deferred-interest securities such as zero-coupon bonds, which outperformed traditional cash-pay issues. (BULLET) We also overweighted cable and media companies, whose solid returns additionally benefited the Fund's overall performance. (BULLET) We selectively increased exposure in the last few months of 1999 to economically sensitive industries such as paper and energy, which performed moderately well. (BULLET) We underweighted poorly performing sectors such as health care, consumer products, and retail food and drug. On a negative note, our overweight in the textile/apparel/shoe-manufacturing sector, which fell sharply, detracted from performance. 1 WARBURG PINCUS HIGH YIELD FUND PORTFOLIO MANAGERS' LETTER -- FEBRUARY 29, 2000 (CONCLUDED) - -------------------------------------------------------------------------------- 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 any time. Sincerely yours, Credit Suisse Asset Management High Yield Management Team Richard J. Lindquist, CFA, Managing Director Misia K. Dudley, Director Mary Ann Thomas, CFA, Director John M. Tobin, CFA, 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. PERFORMANCE SINCE FIVE YEARS INCEPTION SIX MONTHS ONE YEAR (3/1/95 - 2/29/00) 3/1/93 2/29/00 (3/1/99 - 2/29/00) (ANNUALIZED) (ANNUALIZED) - -------------------------------------------------------------------------------- Warburg Pincus High Yield Fund (Institutional) 6.4% 7.9% 10.7% 8.9% Warburg Pincus High Yield Fund (Common) 6.2% 7.5% 10.5% 8.8% CSFB Domestic + High Yield Index* 0.5% 1.1% 8.0%** 8.0%** - -------------------------------------------------------------------------------- * THE CREDIT SUISSE FIRST BOSTON DOMESTIC + HIGH YIELD INDEX IS AN UNMANAGED INDEX (WITH NO DEFINED INVESTMENT OBJECTIVE) OF DOMESTIC HIGH YIELD BONDS AND IS COMPILED BY CREDIT SUISSE FIRST BOSTON, AN AFFILIATE OF THE FUND'S ADVISER. ** INCLUDES RETURNS FOR CREDIT SUISSE FIRST BOSTON GLOBAL HIGH YIELD INDEX FOR ALL PERIODS BEFORE 1/1/99 AND RETURNS FOR CREDIT SUISSE FIRST BOSTON DOMESTIC + HIGH YIELD INDEX FOR ALL PERIODS AFTER 1/1/99. 2 WARBURG PINCUS MUNICIPAL BOND FUND PORTFOLIO MANAGERS' LETTER -- FEBRUARY 29, 2000 - -------------------------------------------------------------------------------- March 20, 2000 Dear Shareholders: We are writing to report on the results of the Warburg Pincus Municipal Bond Fund (the "Fund") for the six months ended February 29, 2000. On February 29, 2000, the net asset value ("NAV") of the Fund's institutional shares was $13.89, compared to an NAV of $14.30 on August 31, 1999. As a result, the institutional shares' total return was down 0.1%, (assuming the reinvestment of dividends and distributions totaling $0.40 per share). By comparison, the Lehman Brothers Municipal Bond Index* (the "Index") returned 0.0% over the same period. At February 29, 2000, NAV of the Fund's common shares was $13.90 compared to an NAV of $14.29 on August 31, 1999. As a result, the common shares' total return was down 0.1%, (assuming the reinvestment of dividends and distributions totaling $0.37 per share). By comparison, the Index returned 0.0% during the same period. The Fund slightly underperformed the Index in the fiscal half-year. As the period progressed, performance continued to improve, despite unstable conditions in fixed income markets. As the period opened in September 1999, the Fund was lagging the Index due to its continued exposure to taxable securities. Valuations of taxables like investment-grade and high yield bonds had declined during the third quarter compared to those of tax-exempt instruments. The Fund's exposure to these sectors thus negated gains from our municipal strategy of avoiding insured debt and overweighting noncallable issues. We became increasingly cautious as the end of the year approached, given the widespread concern over possible Y2K-related computer problems and the possible resulting squeeze on market liquidity. We moved to lessen the impact on the portfolio from any such disruption by emphasizing bonds for which demand would likely remain strong. These included high-quality municipal securities in general, bonds from states with especially high income-tax rates, as well as noncallable and prerefunded issues (for their stable cash flow and valuation characteristics). We maintained exposure to deeply discounted tax-exempt paper and taxable securities -- notably high yield bonds -- in an effort to benefit from the upturn that we anticipated in these segments. As it turned out, aggregate fixed income markets fell sharply in the last three months of 1999. Municipals, moreover, turned in the worst performance among the entire U.S. fixed income universe as institutional buying 3 WARBURG PINCUS MUNICIPAL BOND FUND PORTFOLIO MANAGERS'LETTER -- FEBRUARY 29, 2000 (CONT'D) - -------------------------------------------------------------------------------- fell and retail selling rose. Investors' excessive selling of both low-coupon municipals and lower-quality taxable bonds in particular hampered the Fund's returns compared to those of the Index. In the first two months of 2000, bond markets still had not stabilized due to the Federal Reserve's interest rate increase and the Treasury's announced buyback of some of its own long-term bonds in the open market. Nevertheless, the Fund's performance began to improve, as investors recognized how cheap deep-discount paper and high yield bonds had become. The rebound in prices that began in January and February in these two sectors helped to improve overall returns. 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 Jo Ann Corkran, Managing Director Mark K. Silverstein, Managing Director Jose A. Rodriguez, Director 4 WARBURG PINCUS MUNICIPAL BOND FUND PORTFOLIO MANAGERS'LETTER -- FEBRUARY 29, 2000 (CONCLUDED) - -------------------------------------------------------------------------------- PERFORMANCE SINCE FIVE YEARS INCEPTION SIX MONTHS ONE YEAR (3/1/95 - 2/29/00) 6/17/94 2/29/00 (3/1/99 - 2/29/00) (ANNUALIZED) (ANNUALIZED) - -------------------------------------------------------------------------------- Warburg Pincus Municipal Bond Fund (Institutional) (0.1%) (1.9%) 5.0% 5.0% Warburg Pincus Municipal Bond Fund (Common) (0.1%) (2.1%) 4.9% 4.9% Lehman Brothers Municipal Bond Index* 0.0% (2.1%) 5.9% 5.8% - -------------------------------------------------------------------------------- * THE LEHMAN BROTHERS MUNICIPAL BOND INDEX IS A BROAD MARKET PERFORMANCE BENCHMARK FOR THE TAX-EXEMPT BOND MARKET. IT IS COMPUTED WEEKLY AND MONTHLY FROM PRICES SUPPLIED BY MULLER DATA CORPORATION ON APPROXIMATELY 48,059 INVESTMENT GRADE MUNICIPAL BONDS WITH MATURITIES OF 1-22+ YEARS AND IS CALCULATED BY LEHMAN BROTHERS, INC. THE INDEX IS COMPOSED OF STATE, LOCAL, REVENUE, PREREFUNDED, AND INSURED DEBT, AND CONTAINS ISSUES SUBJECT TO THE ALTERNATIVE MINIMUM TAX. 5 WARBURG PINCUS HIGH YIELD FUND SCHEDULE OF INVESTMENTS February 29, 2000 (Unaudited) - -------------------------------------------------------------------------------- PAR (000) VALUE ------ ---------- CORPORATE BONDS (80.6%) AEROSPACE/DEFENSE (0.2%) K&F Industries, Inc. Sr. Sub. Notes 9.250% 10/15/07 $ 250 $ 236,250 ---------- APPAREL (0.2%) Transportation Manufacturing Operations 144A Sr. Sub. Notes 11.250% 05/01/09 250 245,000 ---------- AUTOMOTIVE (2.3%) Aetna Industries, Inc. Sr. Notes 11.875% 10/01/06 500 491,875 Breed Technologies, Inc. 144A Sr. Sub. Notes 9.250% 04/15/08(DAGGER)(DAGGER) 500 11,250 Cambridge Industries, Inc. Gtd. Sr. Sub. Notes, Series B 10.250% 07/15/07 400 76,000 Collins & Aikman Products Corp. Gtd. Sr. Sub. Notes 11.500% 04/15/06 350 343,875 Delco Remy International, Inc. Gtd. Sr. Sub. Notes 10.625% 08/01/06 250 248,125 Hayes Lemmerz International, Inc. 144A Sr. Sub. Notes 8.250% 12/15/08 150 131,625 Hayes Wheels International, Inc. Sr. Sub. Notes, Series B 9.125% 07/15/07 350 325,500 LDM Technologies, Inc. 144A Sr. Sub. Notes, Series B 10.750% 01/05/07 400 336,000 Oxford Automotive, Inc. Sr. Sub. Notes 10.125% 06/15/07 500 468,750 Safelite Glass Corp. Sr. Sub. Notes 9.875% 12/15/06 350 21,000 See Accompanying Notes to Financial Statements. 6 WARBURG PINCUS HIGH YIELD FUND SCHEDULE OF INVESTMENTS (CONT'D) February 29, 2000 (Unaudited) - -------------------------------------------------------------------------------- PAR (000) VALUE ------ ---------- CORPORATE BONDS (CONT'D) AUTOMOTIVE (cont'd) Titan Wheel International, Inc. Sr. Sub. Notes 8.750% 04/01/07 $ 250 $ 200,000 United Rentals, Inc. 144A Sr. Sub. Notes 9.250% 01/15/09 250 231,875 ---------- 2,885,875 ---------- BROADCASTING (3.2%) Allbritton Communications Company Sr. Sub. Notes, Series B 9.750% 11/30/07 250 245,625 8.875% 02/01/08 250 235,625 American Radio Systems Corp. Gtd. Sr. Sub. Notes 9.000% 02/01/06 250 262,187 Australis Holdings Pty. Ltd. 144A Yankee Sr. Secured Discount Notes(DAGGER)(DAGGER) 15.000% 11/01/02(DAGGER) 294 2,940 Australis Media Ltd. Yankee Gtd. Sr. Sub. Discount Notes(DAGGER)(DAGGER) 15.750% 05/15/03(DAGGER) 15 2 15.750% 05/15/03 900 90 Big City Radio, Inc. 144A Sr. Bonds 11.250% 03/15/05(DAGGER) 500 320,000 Capstar Broadcasting, Inc. Sr. Sub. Discount Notes 12.750% 02/01/09(DAGGER) 500 450,000 Chancellor Media Corp. 144A Sr. Sub. Notes 8.000% 11/01/08 300 300,000 Citadel Broadcasting Co. 144A Sr. Sub. Notes 9.250% 11/15/08 250 240,937 Emmis Communications Corporation Sr. Sub. Notes, Series B 8.125% 03/15/09 250 234,375 See Accompanying Notes to Financial Statements. 7 WARBURG PINCUS HIGH YIELD FUND SCHEDULE OF INVESTMENTS (CONT'D) February 29, 2000 (Unaudited) - -------------------------------------------------------------------------------- PAR (000) VALUE ------ ---------- CORPORATE BONDS (CONT'D) BROADCASTING (cont'd) Granite Broadcasting Corp. 144A Sr. Sub Notes 8.875% 05/15/08 $ 250 $ 232,500 Sr. Sub. Notes 9.375% 12/01/05 450 448,875 HMV Media Group plc, Senior Subordinated Yankee Notes, Series B 10.250% 05/15/08 250 191,250 Sinclair Broadcast Group Sr. Sub. Notes 10.000% 09/30/05 400 391,000 United International Holdings, 144A Sr. Discount Notes 10.750% 02/15/08(DAGGER) 500 353,750 ---------- 3,909,156 ---------- BUILDING MATERIALS (0.5%) Building One Services, Inc. 144A Sr. Sub. Notes 10.500% 05/01/09 250 232,500 Jackson Products, Inc., Notes 9.500% 04/15/05 400 362,000 ---------- 594,500 ---------- BUSINESS SERVICES (0.7%) Iron Mountain, Inc. 144A Sr. Notes 8.750% 09/30/09 250 225,000 Sovereign Bancorp, Inc. 10.500% 11/15/06 500 503,750 U.S. Office Products Co. 144A Sr. Sub. Notes 9.750% 06/15/08 400 200,000 ---------- 928,750 ---------- CABLE (7.7%) Adelphia Communications Corp. Sr. Notes, Series B 10.500% 07/15/04 400 406,000 Century Communications, Sr. Discount Notes, Series B 7.226% 01/15/08 500 211,250 See Accompanying Notes to Financial Statements. 8 WARBURG PINCUS HIGH YIELD FUND SCHEDULE OF INVESTMENTS (CONT'D) February 29, 2000 (Unaudited) - -------------------------------------------------------------------------------- PAR (000) VALUE ------ ---------- CORPORATE BONDS (CONT'D) CABLE (cont'd) Coaxial Communications, Inc. Phoenix Associates Co. Gtd. Notes 10.000% 08/15/06 $ 300 $ 288,000 Coaxial L.L.C. 144A Co. Gtd. 12.875% 08/15/08(DAGGER) 400 252,000 Comcast U.K. Cable Partners Ltd., Yankee Sr. Debentures 11.200% 11/15/07(DAGGER) 750 720,937 CSC Holdings, Sr. Debentures 9.875% 02/15/13 500 521,250 Diamond Cable Communications plc Sr. Discount Notes 11.750% 12/15/05(DAGGER) 500 476,875 DIVA Systems Corp. Sr. Disc. Notes Cl. B 12.625% 03/01/08(DAGGER) 2,527 1,339,310 Frontiervision Holdings L.P. Sr. Discount Notes 11.875% 09/15/07(DAGGER) 500 443,750 Galaxy Telecom L.P. Sr. Sub. Notes 12.375% 10/01/05 400 422,000 Golden Sky Systems, Inc. 144A Sr. Dicsount Notes 13.500% 03/01/07(DAGGER) 750 498,750 International CableTel, Inc. Sr. Deferred Coupon Notes, Series A 11.500% 04/15/05(DAGGER) 750 761,250 James Cable Partners L.P./James Cable Finance Corp. Sr. Notes, Series B 10.750% 08/15/04 400 400,000 Jones Intercable, Inc. Sr. Notes 7.625% 04/15/08 500 493,125 Lenfest Communications, Inc. Sr. Notes 8.375% 11/01/05 300 306,375 See Accompanying Notes to Financial Statements. 8 WARBURG PINCUS HIGH YIELD FUND SCHEDULE OF INVESTMENTS (CONT'D) February 29, 2000 (Unaudited) - -------------------------------------------------------------------------------- PAR (000) VALUE ------ ---------- CORPORATE BONDS (CONT'D) CABLE (cont'd) Mediacom L.L.C. Capital 144A Sr. Notes 7.875% 02/15/11 $ 300 $ 258,000 Northland Cable Television, 144A Sr. Sub. Notes 10.250% 11/15/07 250 245,000 Rogers Communications, Inc. Yankee Sr. Notes 9.125% 01/15/06 550 552,750 Telewest Communications Group plc Yankee Sr. Discount Debentures 11.000% 10/01/07(DAGGER) 700 664,125 Telewest Communications plc Senior Discount Notes 9.250% 04/15/09(DAGGER) 500 300,000 ---------- 9,560,747 ---------- CAPITAL GOODS - TECHNOLOGY (0.2%) It Group, Inc. Sr. Sub. Notes Series 144A 11.250% 04/01/09 250 241,250 ---------- CELLULAR/WIRELESS COMMUNICATIONS (1.1%) Centennial Cellular Corp. Sr. Sub. Notes 10.750% 12/15/08 400 409,000 Microcell Telecommunications, Inc. Yankee Sr. Discount Notes, Series B (B3, B) 14.000% 06/01/06(DAGGER) 500 450,000 Sprint Spectrum L.P./Sprint Spectrum Finance Corp. Sr. Notes 11.000% 08/15/06 500 560,000 ---------- 1,419,000 ---------- CHEMICALS (1.4%) ClimaChem, Inc. Notes, Series B 10.750% 12/01/07 250 65,000 Huntsman Corp. 144A Sr. Sub. Notes 9.500% 07/01/07 250 236,250 See Accompanying Notes to Financial Statements. 10 WARBURG PINCUS HIGH YIELD FUND SCHEDULE OF INVESTMENTS (CONT'D) February 29, 2000 (Unaudited) - -------------------------------------------------------------------------------- PAR (000) VALUE ------ ---------- CORPORATE BONDS (CONT'D) CHEMICALS (cont'd) Lyondell Chemical, Inc. Senior Secured Notes, Series B 9.875% 05/01/07 $ 500 $ 480,000 Philipp Brothers Chemicals, Inc. Co. Gtd. Sr. Notes 9.875% 06/01/08 350 315,000 Pioneer Americas Acquistics Corp. Gtd. Sr. Secured Notes, Series B 9.250% 06/15/07 250 212,500 Radnor Holdings Corp. Sr. Notes, Series B 10.000% 12/01/03 250 233,750 Sterling Chemical Holdings, Inc. Sr. Secured Discount Notes 13.500% 08/15/08(DAGGER) 700 231,000 ---------- 1,773,500 ---------- COMPUTERS, SOFTWARE & SERVICES (0.7%) PSINET, Inc. 144A Sr. Notes 11.500% 11/01/08 250 253,750 Verio, Inc. 144A Units 13.500% 06/15/04 350 384,125 Sr. Notes 10.375% 04/01/05 200 200,750 ---------- 838,625 ---------- CONSTRUCTION (0.1%) Laroche Industries, Inc. 144A Sr. Sub. Notes 9.500% 09/15/07 500 158,750 ---------- CONSTRUCTION & BUILDING MATERIALS (1.0%) Collins & Aikman Floorcoverings, Inc., Sr. Sub. Notes, Series B 10.000% 01/15/07 250 244,375 Koppers Industry, Inc. Sr. Sub. Notes 9.875% 12/01/07 250 231,250 Omega Cabinets, Ltd. Sr. Sub. Notes 10.500% 06/15/07 400 400,000 See Accompanying Notes to Financial Statements. 11 WARBURG PINCUS HIGH YIELD FUND SCHEDULE OF INVESTMENTS (CONT'D) February 29, 2000 (Unaudited) - -------------------------------------------------------------------------------- PAR (000) VALUE ------ ---------- CORPORATE BONDS (CONT'D) CONSTRUCTION & BUILDING MATERIALS (1.0%) Uniforet, Inc. Yankee Gtd. Sr. Notes 11.125% 10/15/06 $ 250 $ 90,000 Waxman Industries, Inc. Sr. Notes, Series B 12.750% 06/01/04 600 288,000 ---------- 1,253,625 ---------- CONSUMER PRODUCTS & SERVICES (2.2%) Coinstar, Inc. Sr. Discount Notes 13.000% 10/01/06(DAGGER) 525 535,500 Drypers Corp. Sr. Notes, Series B 10.250% 06/15/07 400 324,000 Holmes Products Corp. Sr. Sub. Notes, Series D 9.875% 11/15/07 500 366,250 Hosiery Corp. of America, Inc. Sr. Sub. Notes 13.750% 08/01/02 400 418,000 Packaged Ice, Inc. 144A Gtd. Sr. Notes 9.750% 02/01/05 400 348,000 The Scotts Co. 144A Sr. Sub. Notes 8.625% 01/15/09 250 235,625 Werner Holdings Co., Inc. Gtd. Sr. Sub. Notes, Series A 10.000% 11/15/07 250 243,125 Worldtex, Inc. 144A Sr. Notes 9.625% 12/15/07 250 199,375 ---------- 2,669,875 ---------- ELECTRIC UTILITIES (0.2%) Integrated Electric Services, Inc. 144A Sr. Sub. Notes 9.375% 02/01/09 250 215,000 ---------- ELECTRONICS (1.0%) Aavid Thermal Technologies, Inc. 12.750% 02/01/07 250 248,750 Ampex Corp. 144A Sr. Notes 12.000% 03/15/03 250 246,250 See Accompanying Notes to Financial Statements. 12 WARBURG PINCUS HIGH YIELD FUND SCHEDULE OF INVESTMENTS (CONT'D) February 29, 2000 (Unaudited) - -------------------------------------------------------------------------------- PAR (000) VALUE ------ ---------- CORPORATE BONDS (CONT'D) ELECTRONICS (cont'd) Elgar Holdings, Inc. 144A Gtd. Sr. Notes 9.875% 02/01/08 $ 500 $ 310,000 Unisys Corporation Sr. Notes, Series B 12.000% 04/15/03 400 426,000 ---------- 1,231,000 ---------- ENERGY (3.4%) Abraxas Petroleum Corp. 11.500% 11/01/04 350 311,500 Bellwether Exploration Co. Gtd. Sr. Sub. Notes 10.875% 04/01/07 250 219,687 Cliffs Drilling Company Gtd. Sr. Notes, Series D 10.250% 05/15/03 350 357,875 CMS Energy Corp. Sr. Notes 7.500% 01/15/09 250 228,437 Frontier Oil Corp. Sr. Notes 10.750% 07/15/08 500 55,000 11.750% 11/15/09 500 445,000 HS Resources, Inc. Sr. Sub. Notes 9.250% 11/15/06 400 386,000 Nuevo Energy Co. 9.500% 06/01/08 250 242,500 Plains Resources, Inc. 144A Sr. Sub. Notes 10.250% 03/15/06 250 245,000 Gtd. Sr. Sub. Notes, Series B 10.250% 03/15/06 250 245,000 Pogo Producing Co. Sr. Sub. Notes, Cl. B 8.750% 05/15/07 500 475,000 Pride Petroleum Services, Inc. Sr. Notes 9.375% 05/01/07 300 291,000 Southwest Royalties, Inc. Gtd. Sr. Notes, Series B 10.500% 10/15/04 300 171,000 See Accompanying Notes to Financial Statements. 13 WARBURG PINCUS HIGH YIELD FUND SCHEDULE OF INVESTMENTS (CONT'D) February 29, 2000 (Unaudited) - -------------------------------------------------------------------------------- PAR (000) VALUE ------ ---------- CORPORATE BONDS (CONT'D) ENERGY (cont'd) The AES Corporation Senior Notes 11.500% 12/15/06 $ 400 $ 96,000 9.500% 06/01/09 250 246,875 Wiser Oil Co. Gtd. Sr. Sub. Notes 9.500% 05/15/07 250 200,000 ---------- 4,215,874 ---------- ENERGY SOURCES (0.4%) Key Energy Services, Inc. Units 144A 14.000% 01/15/09 500 548,750 ---------- ENGINES (0.2%) Interact Operating Co. 14.000% 08/01/03 375 205,975 ---------- ENTERTAINMENT (2.3%) Ackerley Group, Inc. Sr. Sub. Notes 9.000% 01/15/09 250 237,500 AMC Entertainment, Inc. Sr. Sub. Notes 9.500% 03/15/09 250 195,000 American Skiing Co. Sr. Sub. Notes, Series B 12.000% 07/15/06 400 344,000 AMF Bowling Worldwide, Inc. Gtd. Sr. Discount Notes 10.875% 03/15/06 350 162,750 Gtd. Sr. Discount Notes, Series B 12.250% 03/15/06(DAGGER) 459 156,060 Booth Creek Ski Holdings, Inc. Gtd. Sr. Notes, Series B 12.500% 03/15/07 400 280,000 Florida Panthers Holdings, Inc. 144A Sr. Sub. Notes 9.875% 04/15/09 250 236,250 Imax Corp. Sr. Notes 7.875% 12/01/05 250 233,125 See Accompanying Notes to Financial Statements. 14 WARBURG PINCUS HIGH YIELD FUND SCHEDULE OF INVESTMENTS (CONT'D) February 29, 2000 (Unaudited) - -------------------------------------------------------------------------------- PAR (000) VALUE ------ ---------- CORPORATE BONDS (CONT'D) ENTERTAINMENT (cont'd) KSL Recreation Group, Inc. Sr. Sub. Notes 10.250% 05/01/07 $ 250 $ 246,250 Premier Parks Inc. Gtd. Sr. Notes 9.750% 01/15/07 250 250,000 Sr. Notes 9.250% 04/01/06 250 235,312 Regal Cinemas, Inc. 144A Sr. Sub. Notes 8.875% 12/15/10 500 310,000 ---------- 2,886,247 ---------- ENVIRONMENTAL SERVICES (0.1%) First Wave Marine Sr. Notes 11.000% 02/01/08 150 107,250 ---------- FINANCIAL (0.4%) Arcadia Financial, Ltd. Sr. Notes 11.500% 03/15/07 200 210,000 Polska Telefonica Cyfrowa International Finance II SA 144A Co. Gtd. 11.250% 12/01/09 250 244,062 ---------- 454,062 ---------- FINANCIAL SERVICES (0.6%) Ameriserve Finance/Capital 144A Secured 12.000% 09/15/06 250 125,000 Insight Midwest/Insight Capital 144A Sr. Sub. Notes 9.750% 10/01/09 350 353,500 Oglebay Norton Co. 144A Sr. Sub. Notes 10.000% 02/01/09 250 235,000 ---------- 713,500 ---------- FOOD & BEVERAGE (3.0%) Agrilink Foods, Inc. Sr. Sub. Notes 11.875% 11/01/08 250 246,875 See Accompanying Notes to Financial Statements. 15 WARBURG PINCUS HIGH YIELD FUND SCHEDULE OF INVESTMENTS (CONT'D) February 29, 2000 (Unaudited) - -------------------------------------------------------------------------------- PAR (000) VALUE ------ ---------- CORPORATE BONDS (CONT'D) FOOD & BEVERAGE (cont'd) Archibald Candy Corp. 144A Gtd. Sr. Secured Notes 10.250% 07/01/04 $ 300 $ 288,000 Carrols Corp. 144A Sr. Sub. Notes 9.500% 12/01/08 250 218,750 Delta Beverage Group, Inc. Sr. Notes 9.750% 12/15/03 250 247,500 Eagle Family Foods, Inc. Sr. Sub. Notes 8.750% 01/15/08 350 269,500 Fleming Companies, Inc. Sr. Gtd. Sub. Notes, Series B 10.500% 12/01/04 150 140,250 International Home Foods, Inc. Gtd. Sr. Sub. Notes 10.375% 11/01/06 250 253,750 Luigino's, Inc. 144A Sr. Sub. Notes 10.000% 02/01/06 500 430,000 Mrs. Fields' Holding Co. Inc. 144A Units 14.000% 12/01/05(DAGGER) 200 112,000 Mrs. Fields' Original Cookies Inc. 144A Gtd. Sr. Notes, Series A 10.125% 12/01/04 250 202,500 Gtd. Sr. Notes, Series B 10.125% 12/01/04 150 121,500 National Wine & Spirits Co. Gtd. 10.125% 01/15/09 280 278,600 New World Pasta Co. 144A Sr. Sub. Notes 9.250% 02/15/09 250 229,687 Pantry, Inc. Sr. Sub. Notes 10.250% 10/15/07 250 237,500 Premium Standard Farm, Inc. Sr. Secured Notes 11.000% 09/17/03 501 460,792 ---------- 3,737,204 ---------- See Accompanying Notes to Financial Statements. 16 WARBURG PINCUS HIGH YIELD FUND SCHEDULE OF INVESTMENTS (CONT'D) February 29, 2000 (Unaudited) - -------------------------------------------------------------------------------- PAR (000) VALUE ------ ---------- CORPORATE BONDS (CONT'D) HEALTH (0.7%) Triad Hospital Holdings, Inc. Sr. Sub. Notes 11.000% 05/15/09 $ 500 $ 515,000 Unilab Finance Corp. 144A Sr. Sub. Notes 12.750% 10/01/09 400 408,000 ---------- 923,000 ---------- HEALTH CARE (1.6%) Beverly Enterprises, Inc. Gtd. Sr. Notes 9.000% 02/15/06 400 366,000 Fountain View, Inc. Co. Gtd. 11.250% 04/15/08 250 191,250 Genesis Health Ventures, Inc. Sr. Sub. Notes 9.875% 01/15/09 500 97,500 InSight Health Services, Inc. Co. Gtd. Sr. Notes 9.625% 06/15/08 400 370,000 Oxford Health Plans, Inc. 144A Sr. Notes 11.000% 05/15/05 400 387,500 Paracelsus Healthcare Corp. Sr. Sub. Notes 10.000% 08/15/06(DAGGER)(DAGGER) 250 125,000 Quest Diagnostic, Inc. Sr. Sub. Notes 10.750% 12/15/06 250 262,500 Tenet Healthcare Corp. Sr. Sub. Notes 8.625% 01/15/07 250 240,313 ---------- 2,040,063 ---------- INDUSTRIAL GOODS & MATERIALS (2.1%) Anchor Lamina, Inc./Anchor Lamina America, Inc. 144A Sr. Sub. Notes 9.875% 02/01/08 250 187,500 Carrier1 144A Sr. Notes, Series B 13.250% 02/15/09 250 266,250 See Accompanying Notes to Financial Statements. 17 WARBURG PINCUS HIGH YIELD FUND SCHEDULE OF INVESTMENTS (CONT'D) February 29, 2000 (Unaudited) - -------------------------------------------------------------------------------- PAR (000) VALUE ------ ---------- CORPORATE BONDS (CONT'D) Equinix, Inc. 8.750% 03/15/04 $ 500 $ 435,000 13.000% 12/01/07 450 464,625 Golden Ocean Group Ltd. 144A Gtd. Sr. Notes 10.000% 08/31/01(DAGGER)(DAGGER) 457 27,420 Jordan Industries, Inc. Sr. Notes 10.375% 08/01/07 250 246,250 MMI Products, Inc. 144A Sr. Sub. Notes, Series B 11.250% 04/15/07 250 258,125 Morris Materials Handling, Inc. 144A Sr. Notes 9.500% 04/01/08 250 50,000 Motors & Gears, Inc. Sr. Notes, Series D 10.750% 11/15/06 500 496,250 Thermadyne Holdings Corp. Sr. Discount Debentures 12.500% 06/01/08(DAGGER) 250 115,000 ---------- 2,546,420 ---------- LEISURE & ENTERTAINMENT (0.4%) Hollywood Park, Inc. 144A Sr. Sub. Notes 9.250% 02/15/07 500 483,750 ---------- MANUFACTURING (0.2%) Holley Performance Products 144A Sr. Notes 12.250% 09/15/07 250 243,750 ---------- METALS (0.2%) Algoma Steel Inc. 1st Mortgage Yankee Notes 12.375% 07/15/05 250 248,125 ---------- METALS & MINING (1.9%) Bayou Steel Corp. Co. Gtd. 9.500% 05/15/08 250 230,625 Golden Northwest Aluminum First Mortgage Notes 12.000% 12/15/06 400 419,000 See Accompanying Notes to Financial Statements. 18 WARBURG PINCUS HIGH YIELD FUND SCHEDULE OF INVESTMENTS (CONT'D) February 29, 2000 (Unaudited) - -------------------------------------------------------------------------------- PAR (000) VALUE ------ ---------- CORPORATE BONDS (CONT'D) METALS & MINING (cont'd) Haynes International, Inc. Sr. Notes 11.625% 09/01/04 $ 250 $ 137,500 Ivaco, Inc. Yankee Sr. Notes 11.500% 09/15/05 250 270,000 Kaiser Aluminum and Chemical, Inc. 144A Sr. Notes 10.875% 10/15/06 250 247,500 Metallurg, Inc. Sr. Notes 11.000% 12/01/07 500 448,750 Weirton Steel Corporation Sr. Notes 11.375% 07/01/04 350 358,750 WHX Corp. Sr. Exchange Notes 10.500% 04/15/05 250 237,500 ---------- 2,349,625 ---------- OFFICE EQUIPMENT & SUPPLIES (0.3%) Knoll, Inc. Sr. Sub. Notes 10.875% 03/15/06 325 331,500 ---------- PACKAGING & CONTAINERS (0.5%) BPC Holding Corporation Sr. Secured Notes, Series B 12.500% 06/15/06 426 400,440 Crown Packaging Enterprises, Ltd. Yankee Sr. Secured Discount Notes 14.000% 08/01/06(DAGGER) 775 7,750 Stone Container Finance Co. Yankee Gtd. Sr. Notes 11.500% 08/15/06 250 265,000 ---------- 673,190 ---------- PAPER & ALLIED PRODUCTS (0.3%) Charter Communications Holdings 10.250% 01/15/10 350 348,250 ---------- See Accompanying Notes to Financial Statements. 19 WARBURG PINCUS HIGH YIELD FUND SCHEDULE OF INVESTMENTS (CONT'D) February 29, 2000 (Unaudited) - -------------------------------------------------------------------------------- PAR (000) VALUE ------ ---------- CORPORATE BONDS (CONT'D) PAPER & FOREST PRODUCTS (2.8%) Ainsworth Lumber Co. Ltd. Yankee Sr. Secured PIK Notes 12.500% 07/15/07 $ 500 $ 546,250 Bear Island Paper Company, L.L.C./ Bear Island Finance Company II Sr. Secured Notes, Series B 10.000% 12/01/07 200 191,000 Crown Paper Co. Sr. Sub. Notes 11.000% 09/01/05 500 230,000 Gaylord Container Corp. Sr. Notes 9.375% 06/15/07 350 314,125 MAXXAM Group Holdings, Inc. 144A Sr. Secured Notes, Series B 12.000% 08/01/03 400 370,000 Printpack, Inc. Sr. Sub. Notes, Series B 10.625% 08/15/06 450 435,375 Repap New Brunswick Sr. Yankee Notes 10.625% 04/15/05 500 465,000 S.D. Warren Co. Sr. Sub. Notes 12.000% 12/15/04 400 419,500 Specialty Paperboard, Inc. 144A Sr. Notes 9.375% 10/15/06 250 242,500 Tembec Industries, Inc. Sr. Co. Gtd. 8.625% 06/30/09 250 241,250 --------- 3,455,000 --------- PHARMACEUTICALS (0.4%) ICN Pharmaceutical, Inc. 144A Sr. Notes 8.750% 11/15/08 500 467,500 --------- PUBLISHING & INFORMATION SERVICES (2.3%) American Media Operation 144A Sr. Sub Notes 10.250% 05/01/09 250 248,750 See Accompanying Notes to Financial Statements. 20 WARBURG PINCUS HIGH YIELD FUND SCHEDULE OF INVESTMENTS (CONT'D) February 29, 2000 (Unaudited) - -------------------------------------------------------------------------------- PAR (000) VALUE ------ ---------- CORPORATE BONDS (CONT'D) PUBLISHING & INFORMATION SERVICES (cont'd) Gray Communications Systems Gtd. Sr. Sub. Notes 10.625% 10/01/06 $ 200 $ 204,500 Hollinger International Publishing Inc., Sr. Sub. Notes 9.250% 03/15/07 250 236,875 Liberty Group Publishing, Inc. Sr. Discount Debentures 11.625% 02/01/09(DAGGER) 300 159,000 Mail-Well, Inc. 144A Sr. Sub. Notes 8.750% 12/15/08 400 362,000 Mentus Media Corp. 144A Sr. Secured Notes 12.000% 02/01/03 626 212,840 Nebraska Book Co. 144A Sr. Sub. Notes 8.750% 02/15/08 250 207,500 Phoenix Color Corp. 144A Sr. Sub. Notes 10.375% 02/01/09 250 240,625 Sun Media Corp. Yankee Sr. Sub. Notes 9.500% 02/15/07 194 187,695 9.500% 05/15/07 65 62,888 Tri-State Outdoor Media Group, Inc. 144A Sr. Notes 11.000% 05/15/08 500 487,500 World Color Press, Inc. 144A Sr. Sub. Notes 8.375% 11/15/08 250 240,000 ---------- 2,850,173 ---------- REAL ESTATE (0.7%) HMH Properties, Inc. Sr. Notes 8.450% 12/01/08 300 270,000 Host Marriot Hotel Properties Sr. Notes 7.875% 08/01/05 400 362,000 See Accompanying Notes to Financial Statements. 21 WARBURG PINCUS HIGH YIELD FUND SCHEDULE OF INVESTMENTS (CONT'D) February 29, 2000 (Unaudited) - -------------------------------------------------------------------------------- PAR (000) VALUE ------ ---------- CORPORATE BONDS (CONT'D) REAL ESTATE (cont'd) Intrawest Corp. Yankee Sr Notes 9.750% 08/15/08 $ 250 $ 240,000 ---------- 872,000 ---------- RESTAURANTS, HOTELS & GAMING (7.0%) AFC Enterprises Sr. Sub. Notes 10.250% 05/15/07 400 398,000 American Restaurant Group, Inc. 144A Sr. Notes 11.500% 02/15/03 300 237,000 AmeriKing, Inc. Gtd. Sr. Notes 10.750% 12/01/06 400 356,000 Ameristar Casinos, Inc. Gtd. Sr. Sub. Notes, Series B 10.500% 08/01/04 350 346,500 Arogosy Gaming Co. 144A Co. Gtd. 10.750% 06/01/09 250 258,750 CapStar Hotel Co. 144A Sr. Sub. Notes 8.750% 08/15/07 250 223,750 Casino Magic of Louisiana Corp. Gtd. First Mortgage Notes, Series B 13.000% 08/15/03 350 385,000 Circus Circus Enterprise Sr. Sub. Notes 9.250% 12/01/05 450 437,625 Coast Hotels & Casino, Inc. 144A Sr. Sub. Notes 9.500% 04/01/09 250 235,000 Hard Rock Hotel, Inc. 144A Sr. Sub. Notes 9.250% 04/01/05 500 411,250 Harrahs Operating Co. Inc. Co. Gtd. 7.875% 12/15/05 250 235,000 Harvey Casino Resorts Sr. Sub. Notes 10.625% 06/01/06 450 462,375 See Accompanying Notes to Financial Statements. 22 WARBURG PINCUS HIGH YIELD FUND SCHEDULE OF INVESTMENTS (CONT'D) February 29, 2000 (Unaudited) - -------------------------------------------------------------------------------- PAR (000) VALUE ------ ---------- CORPORATE BONDS (CONT'D) RESTAURANTS, HOTELS & GAMING (cont'd) Horseshoe Gaming L.L.C. Gtd. Sr. Sub. Notes, Series B 9.375% 06/15/07 $ 400 $ 390,000 Isle of Capri Casinos 144A Sr. Sub. Notes 8.750% 04/15/09 250 222,188 Jazz Casino Co., L.L.C. Sr. Sub. Notes 5.927% 05/15/00 512 189,386 Louisiana Casino Cruises, Inc. Secured 144A 11.000% 12/01/05 500 515,000 Majestic Star Casino Co. Gtd., Series B 10.875% 07/01/06 400 388,000 Mohegan Tribal Gaming Authority Sr. Sub. Notes 8.750% 01/01/09 400 385,000 Park Place Entertainment, Inc. 144A Sr. Sub. Notes 7.875% 12/15/05 250 233,750 Peninsula Gaming L.L.C. 144A Sr. Notes 12.250% 07/01/06 250 245,625 Players International, Inc. Sr. Notes 10.875% 04/15/05 250 260,625 Prime Hospitality Corp. Secured First Mortgage Notes 9.250% 01/15/06 250 245,000 Santa Fe Hotel, Inc. First Mortgage Notes 11.000% 12/15/00 250 243,750 Sbarro Inc. 144A Sr. Notes 11.000% 09/15/09 250 256,250 Station Casinos, Inc. Sr. Sub. Notes 10.125% 03/15/06 500 507,500 Sun International Hotels Ltd. Yankee Gtd. Sr. Sub. Notes 9.000% 03/15/07 400 377,000 See Accompanying Notes to Financial Statements. 23 WARBURG PINCUS HIGH YIELD FUND SCHEDULE OF INVESTMENTS (CONT'D) February 29, 2000 (Unaudited) - -------------------------------------------------------------------------------- PAR (000) VALUE ------ ---------- CORPORATE BONDS (CONT'D) RESTAURANTS, HOTELS & GAMING (cont'd) Waterford Gaming L.L.C./Waterford Gaming Finance Corp. 144A Sr. Notes 9.500% 03/15/10 $ 239 $ 234,220 ---------- 8,679,544 ---------- RETAIL TRADE (1.1%) Advance Holding Corp Sr. Discount Debentures, Series B 12.875% 04/15/09(DAGGER) 500 260,000 County Seat Stores, Inc. 144A Units 12.750% 11/01/04(DAGGER)(DAGGER) 500 7,500 Finlay Enterprises, Inc. Sr. Secured Debentures 9.000% 05/01/08 250 226,250 Jo-Ann Stores, Inc. 144A Sr. Sub. Notes 10.375% 05/01/07 250 213,750 K Mart Corp. Debentures 7.750% 10/01/12 250 229,848 Pathmark Stores Sr. Sub Notes 9.625% 05/01/03 350 248,500 Pueblo Xtra International, Inc. Sr. Notes 9.500% 08/01/03 400 180,000 ---------- 1,365,848 ---------- STEEL (0.0%) Gulf States Steel, Inc. First Mortgage Notes 13.500% 04/15/03(DAGGER)(DAGGER) 200 30,000 ---------- TELECOMMUNICATIONS (19.0%) Airgate PCS Inc. Sr. Sub. Notes 13.500% 10/01/09(DAGGER) 500 392,500 AMSC Acquisition Company, Inc. Senior Notes, Series B 12.250% 04/01/08 250 221,250 See Accompanying Notes to Financial Statements. 24 WARBURG PINCUS HIGH YIELD FUND SCHEDULE OF INVESTMENTS (CONT'D) February 29, 2000 (Unaudited) - -------------------------------------------------------------------------------- PAR (000) VALUE ------ ---------- CORPORATE BONDS (CONT'D) TELECOMMUNICATIONS (cont'd) Bresnan Communications Co. 144A Sr. Discount Notes 9.250% 02/01/09(DAGGER) $ 500 $ 356,250 144A Sr. Notes 8.000% 02/01/09 250 251,250 Call-Net Enterprises, Inc. Sr. Discount Notes 10.800% 05/15/09(DAGGER) 450 216,000 Yankee Sr. Notes 9.375% 05/15/09 400 324,000 Caprock Communications Corp. 144A Sr. Notes 11.500% 05/01/09 400 408,000 Charter Communications Holdings L.L.C. 144A Sr. Discount Notes 8.625% 04/01/09 250 229,375 9.920% 04/01/11(DAGGER) 500 290,000 Clearnet Communications, Inc. Sr. Discount Notes 14.750% 12/15/05(DAGGER) 500 498,750 Covad Communication Group, Inc. Sr. Notes 144A 12.500% 02/15/09 250 260,000 Dobson Sygnet Communications Sr. Notes 12.250% 12/15/08 500 540,000 DTI Holdings, Inc. 144A Sr. Discount Notes 12.500% 03/01/08(DAGGER) 600 294,000 E Spire Communications Sr. Discount Notes 13.000% 11/01/05(DAGGER) 550 387,750 Echostar DBS Corp. Sr. Notes 9.375% 02/01/09 250 246,250 Focal Communications Corp. 144A Sr. Discount Notes 12.125% 02/15/08 550 371,250 Global Crossing Holdings, Ltd. 9.625% 05/15/08 350 341,250 Globalstar L.P./Globalstar Capital Corp. 144A Sr. Notes 10.750% 11/01/04 100 57,500 See Accompanying Notes to Financial Statements. 25 WARBURG PINCUS HIGH YIELD FUND SCHEDULE OF INVESTMENTS (CONT'D) February 29, 2000 (Unaudited) - -------------------------------------------------------------------------------- PAR (000) VALUE ------ ---------- CORPORATE BONDS (CONT'D) TELECOMMUNICATIONS (cont'd) Globix Corp. Sr Regulated Notes 13.000% 05/01/05 $ 350 $ 373,188 GST Equipment Funding 144A Sr. Secured Exchange Notes 13.250% 05/01/07(DAGGER) 250 251,250 GST USA, Inc. Gtd. Sr. Discount Exchange Notes 13.875% 12/15/05 500 340,000 Hermes Europe Railtel BV Sr. Notes 10.375% 01/15/09 250 233,750 Hyperion Telecommunications, Inc. Sr. Discount Notes, Series B 13.000% 04/15/03(DAGGER) 500 460,000 Sr. Notes, Series B 12.250% 09/01/04 250 266,875 ICG Holdings, Inc. Gtd. Senior Discount Notes 11.625% 03/15/07(DAGGER) 300 202,500 ICG Services, Inc. 144A Sr. Discount Notes 10.000% 02/15/08(DAGGER) 500 291,250 Intelcom Group (U.S.A.), Inc. Gtd. Sr. Exchangeable Discount Notes 12.500% 05/01/06(DAGGER) 550 451,000 Intercel, Inc. Sr. Discount Notes 12.000% 02/01/06(DAGGER) 500 454,375 Intermedia Communications, Inc. Sr. Discount Notes 11.250% 07/15/07(DAGGER) 1,000 795,000 International Cabletel, Inc. Sr. Notes 11.500% 02/01/06(DAGGER) 415 389,063 ITC Deltacom, Inc. 144A Sr. Notes 11.000% 06/01/07 163 168,705 KMC Telecom Holdings, Inc. Sr. Discount Notes 12.500% 02/15/08(DAGGER) 250 145,000 See Accompanying Notes to Financial Statements. 26 WARBURG PINCUS HIGH YIELD FUND SCHEDULE OF INVESTMENTS (CONT'D) February 29, 2000 (Unaudited) - -------------------------------------------------------------------------------- PAR (000) VALUE ------ ---------- CORPORATE BONDS (CONT'D) TELECOMMUNICATIONS (cont'd) Knology Hldgs., Inc. Sr. Discount Notes 11.875% 10/15/07(DAGGER) $ 550 $ 360,250 Level 3 Communications, Inc. Gtd. Sr. Sub. Notes 8.500% 05/15/08 250 227,500 Sr. Discount Notes 10.500% 12/01/08(DAGGER) 250 148,125 Logix Communications Enterprises Sr. Notes 12.250% 06/15/08 500 366,875 McLeodUSA, Inc. 144A Sr. Sub. Notes 8.125% 02/15/09 250 224,375 Sr. Discount Notes 10.500% 03/01/07(DAGGER) 350 281,750 Sr. Notes 9.250% 07/15/07 300 292,500 MDC Communications Corp. Sr. Sub. Notes 10.500% 12/01/06 400 395,000 Metromedia Fiber Network, Inc. Sr. Notes, Series B 10.000% 11/15/08 500 496,250 MetroNet Communications Corp. Sr. Discount Notes 10.750% 11/01/07(DAGGER) 400 331,000 Sr. Notes 12.000% 08/15/07 400 460,000 MJD Communications, Inc. Sr. Sub. Notes 9.500% 05/01/08 250 238,750 Nextel Partners, Inc. 144A Sr. Discount Notes 14.000% 02/01/09(DAGGER) 500 337,500 Nextlink Communications, Inc. 144A Sr. Notes 10.750% 11/15/08 250 251,250 Sr. Discount Notes 9.450% 04/15/08(DAGGER) 500 310,000 See Accompanying Notes to Financial Statements. 27 WARBURG PINCUS HIGH YIELD FUND SCHEDULE OF INVESTMENTS (CONT'D) February 29, 2000 (Unaudited) - -------------------------------------------------------------------------------- PAR (000) VALUE ------ ---------- CORPORATE BONDS (CONT'D) TELECOMMUNICATIONS (cont'd) Nextlink Communications, L.L.C./ Nextlink Capital, Inc. Sr. Notes 12.500% 04/15/06 $ 250 $ 266,250 NTL, Inc. 144A Sr. Notes 10.000% 02/15/07 250 250,625 Orbital Imaging Corp. 144A Units 11.625% 03/01/05 500 340,000 Orion Network Systems, Inc. Gtd. Sr. Notes 11.250% 01/15/07 300 237,000 Pac-West Telecom, Inc. 144A Sr. Notes 13.500% 02/01/09 250 265,625 Pagemart Nationwide, Inc. Sr. Discount Notes 15.000% 04/01/00(DAGGER) 250 245,000 Pegasus Communications Corp. Sr. Notes, Series B 9.750% 12/01/06 250 243,750 Price Comm Wireless, Inc. 144A Sr. Sub. Notes 11.750% 07/15/07 250 273,125 Primus Telecommunications Group, Inc. 144A Sr. Notes 11.250% 01/15/09 350 330,750 Qwest Communications International, Inc. Sr. Discount Notes 9.470% 10/15/07(DAGGER) 750 608,438 Sr. Discount Notes, Series B 8.290% 02/01/08(DAGGER) 250 192,500 Sr. Notes, Series B 10.875% 04/01/07 130 143,975 RCN Corp. Sr. Discount Notes, Series B 9.800% 02/15/08(DAGGER) 300 186,750 Sr. Notes, Series B 10.000% 10/15/07(DAGGER) 400 373,000 See Accompanying Notes to Financial Statements. 28 WARBURG PINCUS HIGH YIELD FUND SCHEDULE OF INVESTMENTS (CONT'D) February 29, 2000 (Unaudited) - -------------------------------------------------------------------------------- PAR (000) VALUE ------ ---------- CORPORATE BONDS (CONT'D) TELECOMMUNICATIONS (cont'd) Rhythms Netconnections Sr. Discount Notes 13.500% 05/15/08(DAGGER) $ 600 $ 324,000 RSL Communications plc Yankee Co. Gtd. 10.500% 11/15/08 400 358,000 Salem Communications Corp. 144A Co. Gtd., Series B 9.500% 10/01/07 400 388,000 Startec Global Communications, Inc., Sr. Notes 12.000% 05/15/08 400 339,500 Telewest Communications plc Debentures 9.625% 10/01/06 250 246,250 Teligent Inc. Sr. Notes 11.500% 12/01/07 250 241,875 Time Warner Telecom L.L.C./Time Warner Telecom Inc. Sr. Notes 9.750% 07/15/08 500 503,125 United Pan - Europe Comm Industries 144A Sr. Notes 10.875% 11/01/07 350 353,500 US Unwired Inc. 144A Sr. Discount Notes 13.375% 11/01/09(DAGGER) 500 290,000 Viatel, Inc. Sr. Discount Notes 12.500% 04/15/08(DAGGER) 600 360,000 Williams Communications Group, Inc. Sr. Notes 10.700% 10/01/07 500 515,000 WinStar Communications, Inc. Sr. Discount Notes 14.000% 10/15/05(DAGGER) 500 507,500 ---------- 23,611,994 ---------- TELEPHONE (0.3%) Flooring America, Inc. 9.250% 10/15/07 500 397,500 ---------- See Accompanying Notes to Financial Statements. 29 WARBURG PINCUS HIGH YIELD FUND SCHEDULE OF INVESTMENTS (CONT'D) February 29, 2000 (Unaudited) - -------------------------------------------------------------------------------- PAR (000) VALUE ------ ---------- CORPORATE BONDS (CONT'D) TEXTILES & APPAREL (0.9%) Advanced Glass Fiber Yarns Sr. Sub. Notes 144A 9.875% 01/15/09 $ 250 $ 230,625 Bgf Industries, Inc. Sr. Sub. Notes 144A 10.250% 01/15/09 250 231,250 Phillips Van-Heusen Corp. Sr. Sub. Notes 9.500% 05/01/08 250 231,250 William Carter Company Sr. Sub. Notes, Series A 10.375% 12/01/06 450 397,125 ---------- 1,090,250 ---------- TRANSPORT (3.3%) Complete Europe NV Unit 14.000% 02/15/09(DAGGER) 1,000 650,000 Dolphin Telecom PLC 144A Sr. Discount Notes 14.000% 05/15/09(DAGGER) 500 203,750 Exodus Communications, Inc. 144A Senior Notes 10.750% 12/15/09 450 457,875 Gt Group Telecommunications 13.250% 02/01/10(DAGGER) 500 296,875 Metricom Financial 13.000% 02/15/10 300 254,250 Metromedia International 144A 10.500% 09/30/07 1,761 827,526 Norampac, Inc. 9.500% 02/01/08 250 248,750 PageMart Wireless, Inc. Senior Subordinated Discount Exchange Notes 15.000% 02/01/08(DAGGER) 250 131,250 Triton PCS, Inc. Senior Subordinated Discount Notes, Company Guaranteed 11.000% 05/01/08(DAGGER) 500 361,250 Viatel, Inc. 11.500% 03/15/09 172 162,925 Voicestream Wireless Holding 10.375% 11/15/09 500 518,750 ---------- 4,113,201 ---------- See Accompanying Notes to Financial Statements. 30 WARBURG PINCUS HIGH YIELD FUND SCHEDULE OF INVESTMENTS (CONT'D) February 29, 2000 (Unaudited) - -------------------------------------------------------------------------------- PAR (000) VALUE ------ ---------- CORPORATE BONDS (CONT'D) TRANSPORTATION (1.0%) AirTran Airlines, Inc. Secured Notes 10.500% 04/15/01 $ 250 $ 243,750 Atlantic Express Transportation Corp. Gtd. Sr. Secured Notes 10.750% 02/01/04 250 242,500 Canadian Airlines Corp. Yankee Sr. Notes 12.250% 08/01/06(DAGGER)(DAGGER) 250 125,000 Kitty Hawk, Inc. Sr. Notes 9.950% 11/15/04 250 246,875 Pegasus Shipping (Hellas) Ltd. 144A Gtd. First Preferred Mortgage Notes, Series A 11.875% 11/15/04(DAGGER)(DAGGER) 500 195,000 Trans World Airlines Sr. Notes 11.375% 03/01/06 500 185,000 ---------- 1,238,125 ---------- WASTE MANAGEMENT (0.5%) Allied Waste North America, Series B (Ba2, BB) 7.875% 01/01/09 250 211,250 Waste Systems International, Inc. 144A Conv. Sub. Notes 7.000% 05/13/05 400 350,000 ---------- 561,250 ---------- TOTAL CORPORATE BONDS (Cost $112,176,932) $ 99,949,823 ---------- ASSET BACKED SECURITY (0.4%) Airplanes Pass Through Trust Series 1, Class D 10.875% 03/15/19 $ 594 $ 540,667 (Cost $594,120) ---------- NUMBER OF SHARES ------ RIGHTS & WARRANTS (2.7%) BROADCASTING (0.0%) Australis Holdings Pty. Ltd. strike $0.01 expires Oct. 2001 294 $ 3 ---------- See Accompanying Notes to Financial Statements. 31 WARBURG PINCUS HIGH YIELD FUND SCHEDULE OF INVESTMENTS (CONT'D) February 29, 2000 (Unaudited) - -------------------------------------------------------------------------------- NUMBER OF SHARES VALUE ------ ----- RIGHTS & WARRANTS (CONT'D) CABLE (0.7%) DIVA Systems Corp.(DAGGER)(DAGGER)(DAGGER) strike $0.01 expires May 2006 2,250 $ 818,100 DIVA Systems Corp.(DAGGER)(DAGGER)(DAGGER) strike $0.01 expires March 2008 7,581 90,972 ---------- 909,072 ---------- CHEMICALS (1.1%) Uniroyal Technology Corp. strike $4.375 expires June 2003 23,500 1,304,250 ---------- CONSTRUCTION & BUILDING MATERIALS (0.0%) Capital Pacific Holdings Group, Inc. 12,640 126 ---------- ELECTRONICS (0.0%) Interact Electronic Marketing, Inc. strike $0.01 expires Dec. 2009 700 7 ---------- ENERGY (0.1%) Abraxas Petroleum Corp. expires Nov. 2004 29,809 298 Key Energy Services, Inc. strike $4.88 expires Jan. 2009 750 45,000 Metricom, Inc. strike $87.00 expires Feb. 2010 300 42,000 ---------- 87,298 ---------- INDUSTRIAL GOODS & MATERIALS (0.0%) Golden Ocean Group, Ltd. strike $46.20 expires Aug. 2001 438 0 ---------- PUBLISHING & INFORMATION SERVICES (0.0%) InterAct Systems, Inc.(DAGGER)(DAGGER)(DAGGER) strike $0.01 expires Aug. 2003 700 17,500 Mentus Media Corp. 144A strike $0.01 expires Feb. 2008 1,391 14 Source Media, Inc. strike $0.01 expires Nov. 2007 5,587 44,700 ---------- 62,214 ---------- TELECOMMUNICATIONS (0.8%) Airgate Pcs, Inc. strike $0.01 expires Oct. 2009 500 10,000 American Mobile Satellite Corporation strike $12.28 expires April 2008 500 40,000 See Accompanying Notes to Financial Statements. 32 WARBURG PINCUS HIGH YIELD FUND SCHEDULE OF INVESTMENTS (CONT'D) February 29, 2000 (Unaudited) - -------------------------------------------------------------------------------- NUMBER OF SHARES VALUE ------ ----- RIGHTS & WARRANTS (CONT'D) TELECOMMUNICATIONS (cont'd) Ampex Corp. 144A strike $2.25 expires March 2003 17,000 $ 27,625 Carrier1 International strike $2.00 expires Feb. 2009 500 400,000 Completel Holdings Class B 144A 10,000 200,000 DTI Holdings, Inc. 144A strike $0.01 expires March 2008 3,000 30 KMC Telecom Holdings, Inc. strike $0.22 expires April 2008 500 12,500 McCaw International Ltd. strike $36.45 expires April 2007 500 1,250 Orbital Imaging Corp. strike $1.00 expires March 2005 500 15,000 PLD Telekom, Inc. strike $1.00 expires June 2004 1,010 4,040 PLD Telekom, Inc. strike $10.86 expires March 2003 230 1,038 PLD Telekom, Inc. strike $10.86 expires March 2003 1,010 8,476 Primestar, Inc. General Motors Cl. H Stock Appreciation Rts strike $47.00 expires May 2000 3,828 286,281 Startec Global Communications strike $24.20 expires May 2008 400 720 ---------- 1,006,960 ---------- TOTAL RIGHTS & WARRANTS (Cost $438,305) $3,369,930 ---------- COMMON STOCKS (4.0%) COMPUTERS, SOFTWARE & SERVICES (1.0%) Globix Corp. 8,448 $ 442,992 Verio, Inc. 9,858 739,966 ---------- 1,182,958 ---------- CONSUMER PRODUCTS (0.0%) Coinstar, Inc. 3,671 51,394 ---------- ENERGY (1.3%) Abraxas Petroleum Corp. 29,809 40,987 Weatherford International, Inc. 15,162 682,290 Metretek Technologies, Inc. 150 871,200 ---------- 1,594,477 ---------- PACKAGING & CONTAINERS (0.0%) Crown Packaging Enterprises, Ltd. 100,847 1,008 ---------- See Accompanying Notes to Financial Statements. 33 WARBURG PINCUS HIGH YIELD FUND SCHEDULE OF INVESTMENTS (CONT'D) February 29, 2000 (Unaudited) - -------------------------------------------------------------------------------- NUMBER OF SHARES VALUE ------ ----- COMMON STOCKS (CONT'D) TELECOMMUNICATIONS (1.7%) Advanced Radio Telecom Corp. 10,117 $ 386,975 AT&T Canada, Inc. 1,370 79,506 E Spire Communications, Inc. 21,253 265,663 Globalstar Telecommunications, Ltd. 1,651 47,071 Intermedia Communications, Inc. 3,097 196,093 Loral Space and Communications Ltd. 181 2,726 Microcell Telecommunications, Inc. 3,436 158,056 Price Communications Corp. 40,268 961,399 ---------- 2,097,489 ---------- TOTAL COMMON STOCKS (Cost $1,640,920) $4,927,326 ---------- PREFERRED STOCKS (3.8%) AEROSPACE/DEFENSE (0.7%) GPA Group plc Convertible Cumulative Second Preference Shares 7.00% 1,750,000 $ 840,000 ---------- CABLE (0.1%) DIVA Systems Corporation, Series C 11,890 95,120 ---------- CELLULAR/WIRELESS COMMUNICATIONS (0.3%) Rural Cellular Corp. 144A PIK 11.375% 3,013 297,563 ---------- ELECTRONICS (0.2%) Interact Electronic Marketing, Inc. 14.00% 700 178,500 ---------- INDUSTRIAL (0.3%) International Utility Structures, Inc. 13.00% 960 79,920 International Utility Structures, Inc., Units 13.00% 3,500 312,813 ---------- 392,733 ---------- MISCELLANEOUS (0.0%) Peninsula Gaming LLC 1,760 10,563 ---------- PUBLISHING & INFORMATION SERVICES (0.2%) Source Media, Inc., 144A PIK 13.50% 13,484 296,653 ---------- RESTAURANTS, HOTELS & GAMING (0.1%) AmeriKing, Inc., 13.00% Cum. Exchangeable 7,329 146,583 ---------- See Accompanying Notes to Financial Statements. 34 WARBURG PINCUS HIGH YIELD FUND SCHEDULE OF INVESTMENTS (CONCLUDED) February 29, 2000 (Unaudited) - -------------------------------------------------------------------------------- NUMBER OF SHARES VALUE ------ ----- PREFERRED STOCKS (CONT'D) TELECOMMUNICATIONS (1.9%) Adelphia Business Solutions, Inc. 12.875% Pfd., Series B 8 $ 7,761 Classic Communications, Inc. 3,000 50,010 E.Spire Communications, Inc. Jr. PIK 12.75% 1,277 453,501 Intermedia Communications, Inc. 144A 7.00% Jr. Convertible, Series E 20,000 1,045,000 Nextel Communications, Inc. 13.00% Exchangeable, Series D PIK 338 362,505 NEXTLINK Communications, Inc. 144A 14.00% Sr. Exchangeable PIK 9,065 478,179 ------------ 2,396,956 ------------ TOTAL PREFERRED STOCKS (Cost $4,042,955) $ 4,654,671 ------------ PAR (000) ------ SHORT-TERM INVESTMENT (0.6%) BBH Grand Cayman U.S. Dollar Time Deposit 4.950% 03/01/00 $ 812 $ 812,000 ------------ (Cost $812,000) TOTAL INVESTMENTS (92.1%) (Cost $119,705,232*) $114,254,417 OTHER ASSETS IN EXCESS OF LIABILITIES (7.9%) $ 9,829,394 ------------ TOTAL NET ASSETS (100.0%) $124,083,811 ============ * Also cost for Federal income tax purposes at February 29, 2000. The gross appreciation (depreciation) on a tax basis is as follows: Gross Appreciation $ 10,548,946 Gross Depreciation (15,999,761) ------------ Net Depreciation $ (5,450,815) ============ (DAGGER) Step Bond-- The interest rate as of February 29, 2000 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. 35 WARBURG PINCUS MUNICIPAL BOND FUND SCHEDULE OF INVESTMENTS February 29, 2000 (Unaudited) - -------------------------------------------------------------------------------- PAR (000) VALUE ----- ---------- MUNICIPAL BONDS (91.1%) CALIFORNIA (15.3%) California State GO 6.300% 09/11/11 $670 $ 733,650 5.125% 10/01/17 825 760,031 Los Angeles CA, Department of Water & Power Water RB 4.500% 05/15/23 705 568,406 San Diego CA Convention Center Expansion Financing Authority, Series A 4.750% 04/01/28 535 436,025 ---------- 2,498,112 ---------- COLORADO (3.8%) Colorado Springs CO, Utility RB 5.875% 11/15/17 595 612,850 ---------- FLORIDA (3.8%) Tallahassee FL, Electric RB, First Lien 6.100% 10/01/06 600 621,000 ---------- ILLINOIS (5.1%) Chicago Illinois GO, Series 1993 5.250% 01/01/18 200 182,000 Illinois State Sales Tax RB, Series Q 5.750% 06/15/14 650 650,812 ---------- 832,812 ---------- INDIANA (0.2%) Indianapolis IN, Public Improvement Board RB 6.000% 01/10/03 25 25,125 ---------- LOUISIANA (4.2%) New Orleans LA, Home Mortgage Authority SOB 6.250% 01/15/11 635 678,656 ---------- MARYLAND (5.8%) Maryland State Transportation Authority Project RB 6.800% 07/01/16 850 944,562 ---------- See Accompanying Notes to Financial Statements. 36 WARBURG PINCUS MUNICIPAL BOND FUND SCHEDULE OF INVESTMENTS (CONT'D) February 29, 2000 (Unaudited) - -------------------------------------------------------------------------------- PAR (000) VALUE ----- ---------- MUNICIPAL BONDS (CONT'D) MASSACHUSETTS (3.6%) Massachusetts State Water Resources Authority RB, Series B 5.000% 12/01/25 $660 $ 564,300 Massachusetts State Water Resources Authority, General RB, Series 92A 6.500% 07/15/19 20 21,400 ---------- 585,700 ---------- NEW YORK (35.3%) Metropolitan Transit Authority Commuter Facilities RB, Series A 5.000% 07/01/23 600 510,750 New York State Dormitory Authority RB (Elizabeth Church Manor Nursing Home) 5.400% 08/01/23 50 45,500 New York State Dormitory Authority RB (Episcopal Health Services) 7.550% 08/01/29 435 444,244 New York State Dormitory Authority RB (Judicial Facilities Lease) 7.375% 07/01/16 40 45,900 New York State Dormitory Authority RB (Park Ridge Housing Inc. Project) 7.850% 02/01/29 530 537,277 New York State Local Government Assistance Corp. RB, Series B 4.875% 04/01/20 580 491,550 New York State Power Authority General Purpose RB, Series R 7.000% 01/01/10 360 407,700 New York State Throughway Authority General RB, Series B 5.000% 01/01/20 30 26,175 See Accompanying Notes to Financial Statements. 37 WARBURG PINCUS MUNICIPAL BOND FUND SCHEDULE OF INVESTMENTS (CONT'D) February 29, 2000 (Unaudited) - -------------------------------------------------------------------------------- PAR (000) VALUE ----- ---------- MUNICIPAL BONDS (CONT'D) New York, NY Municipal Water Finance Authority Water & Sewer System RB, Series B 5.125% 06/15/30 $295 $ 252,225 New York, NY Municipal Water Finance Authority Water & Sewer System RB, Series D 4.875% 06/15/21 400 339,000 New York, NY Prerefunded GO, Series D 8.000% 08/01/01 605 642,056 6.000% 02/15/05 5 5,256 New York, NY Prerefunded GO, Series H 7.200% 02/01/02 530 561,137 New York, NY Transitional Finance Authority RB (Future Tax Secured), Series B 4.750% 11/15/14 35 31,106 New York, NY Unrefunded Balance GO, Series D 8.000% 08/01/03 45 47,644 6.000% 02/15/25 10 9,800 New York, NY Unrefunded Balance GO, Series H 7.200% 02/01/13 70 73,587 Suffolk County NY Water Authority, Waterworks RB, Series V 6.750% 06/01/12 580 640,175 Triborough Bridge and Tunnel Authority, NY General Purpose RB, Series A 5.200% 01/01/20 730 652,438 ---------- 5,763,520 ---------- PUERTO RICO (4.5%) Commonwealth of Puerto Rico GO 5.400% 07/01/07 730 742,775 ---------- See Accompanying Notes to Financial Statements. 38 WARBURG PINCUS MUNICIPAL BOND FUND SCHEDULE OF INVESTMENTS (CONT'D) February 29, 2000 (Unaudited) - -------------------------------------------------------------------------------- PAR (000) VALUE ----- ----------- MUNICIPAL BONDS (CONT'D) SOUTH DAKOTA (0.1%) Heartland Consumers Power District, SD Electric RB 6.375% 01/01/16 $ 20 $ 21,175 ----------- TENNESSEE (0.1%) Metropolitan Government of Nashville and Davidson County, TN Water and Sewer RB Series A 4.750% 01/01/22 30 24,863 ----------- VIRGINIA (4.4%) Fairfax County, VA Redevelopment & Housing Authority (Island Walk Proj.), Mortgage RB 7.100% 04/01/19 630 715,050 ----------- WASHINGTON (4.9%) King County, WA GO, Series A 6.200% 01/01/24 40 42,400 Seattle, WA Municipal Light & Power RB 5.125% 07/01/22 100 87,250 Seattle, WA Water System RB 5.250% 12/01/23 735 663,338 ----------- 792,988 ----------- TOTAL MUNICIPAL BONDS (Cost $14,921,226) $14,859,188 ----------- CORPORATE BONDS (6.2%) BANKING (1.9%) Bay View Capital Corp. Sub. Notes 9.125% 08/15/07 $ 65 $ 53,625 Export-Import Bank of Korea, Global Bonds 6.500% 02/10/02 25 24,375 Export-Import Bank of Korea, Yankee Notes 6.500% 05/15/00 50 49,938 First Republic Bank Sub. Notes 7.750% 09/15/12 25 21,063 Fuji Finance (Cayman), Ltd. Perpetual Sub. Notes 7.113% 08/08/00(DAGGER)(DAGGER)/(DAGGER)(DAGGER)(DAGGER) 120 115,200 See Accompanying Notes to Financial Statements. 39 WARBURG PINCUS MUNICIPAL BOND FUND SCHEDULE OF INVESTMENTS (CONT'D) February 29, 2000 (Unaudited) - -------------------------------------------------------------------------------- PAR (000) VALUE ----- ---------- CORPORATE BONDS (CONT'D) BANKING (cont'd) Fuji JGB Investment L.L.C., Noncumulative Preferred Securities, Series A 9.870% 06/30/00(DAGGER)(DAGGER) $ 45 $ 45,225 ---------- 309,426 ---------- BROADCASTING (0.7%) Fox/Liberty Networks L.L.C., Registered Sr. Notes 8.875% 08/15/07 105 106,575 ---------- CABLE (0.1%) CSC Holdings Inc., Sr. Notes 7.250% 07/15/08 20 18,800 ---------- RETAIL (0.7%) K Mart Corp. Notes 7.950% 02/01/23 25 20,969 K Mart Corp. Pass Through Certificates, Series 1995 Class K3 8.540% 01/02/15 103 99,064 ---------- 120,033 ---------- TELECOMMUNICATIONS (0.7%) Nextlink Communications 144A Senior Notes 10.500% 12/01/09 40 40,000 Voicestream Wireless Holding, Series 144A 10.375% 11/15/09(DAGGER) 60 37,800 10.375% 11/15/09 40 41,500 ---------- 119,300 ---------- TRANSPORTATION (1.1%) Northwest Airlines, Inc., Gtd. Notes 7.625% 03/15/05 200 178,000 ---------- UTILITIES (1.0%) Connecticut Light and Power Co. First Mortgage Bonds, Series C 7.750% 06/01/02 85 84,575 Series D 7.875% 10/01/24 10 10,000 See Accompanying Notes to Financial Statements. 40 WARBURG PINCUS MUNICIPAL BOND FUND SCHEDULE OF INVESTMENTS (CONCLUDED) February 29, 2000 (Unaudited) - -------------------------------------------------------------------------------- PAR (000) VALUE ----- ----------- CORPORATE BONDS -- (CONT'D) UTILITIES (cont'd) North Atlantic Energy Corp., Secured First Mortgage Notes, Series A 9.050% 06/01/02 $ 69 $ 68,914 ----------- 163,489 ----------- TOTAL CORPORATE BONDS (Cost $1,039,196) $ 1,015,623 ----------- U.S. TREASURY OBLIGATIONS (0.7%) U.S. Treasury Bonds 8.000% 11/15/21 $ 65 $ 76,843 U.S. Treasury Notes 6.500% 02/15/10 30 30,195 ----------- TOTAL U.S. TREASURY OBLIGATIONS (Cost $103,276) $ 107,038 ----------- SHORT TERM INVESTMENT (0.6%) BBH Grand Cayman U.S. Dollar Time Deposit 4.950% 03/01/00 $106 $ 106,000 ----------- (Cost $106,000) TOTAL INVESTMENTS (98.6%) (Cost $16,169,698*) $16,087,849 OTHER ASSETS IN EXCESS OF LIABILITIES (1.4%) $ 224,582 ----------- TOTAL NET ASSETS (100.0%) $16,312,431 =========== * Also cost for Federal income tax purposes at February 29, 2000. The gross appreciation (depreciation) on a tax basis is as follows: Gross Appreciation $ 500,503 Gross Depreciation (582,352) --------- Net Depreciation $ (81,849) ========= (DAGGER) Step Bond -- The interest rate as of February 29, 2000 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 February 29, 2000. (DAGGER)(DAGGER)(DAGGER) Securities have no stated maturity date. INVESTMENT ABBREVIATIONS GO = General Obligations RB = Revenue Bond SOB = Special Obligations Bond See Accompanying Notes to Financial Statements. 41 WARBURG PINCUS FUND STATEMENTS OF ASSETS AND LIABILITIES February 29, 2000 (Unaudited) - --------------------------------------------------------------------------------
HIGH YIELD MUNICIPAL FUND BOND FUND ------------ ------------ ASSETS Investments, at value (cost - $119,705,232 and $16,169,698, respectively) $114,254,417 $16,087,849 Cash 34,507 270 Receivable for investments sold 2,783,357 -- Receivable for Fund shares sold 4,721,555 -- Receivable from investment adviser -- 3,623 Dividends and interest receivable 2,340,076 232,470 Prepaid expenses and other assets 52,482 13,040 ------------ ----------- Total Assets 124,186,394 16,337,252 ------------ ----------- LIABILITIES Advisory fee payable 26,461 -- Distribution fee payable (Common shares) 5,319 43 Accrued expenses payable 70,803 24,778 ------------ ----------- Total Liabilities 102,583 24,821 ------------ ----------- NET ASSETS Capital stock, $0.001 par value 8,016 1,173 Paid-in capital 145,021,756 16,380,665 Undistributed net investment income 1,870,259 72,919 Accumulated net realized loss from investments (17,365,405) (153,639) Net unrealized appreciation/(depreciation) on investments (5,450,815) 11,313 ------------ ----------- Net Assets $124,083,811 $16,312,431 ============ =========== INSTITUTIONAL SHARES Net assets $ 90,944,631 $16,095,264 ------------ ----------- Shares outstanding 5,882,641 1,158,400 ------------ ----------- Net asset value, offering price and redemption price per share $ 15.46 $ 13.89 ============ =========== COMMON SHARES Net assets $ 33,139,180 $ 217,167 ------------ ----------- Shares outstanding 2,133,772 15,627 ------------ ----------- Net asset value, offering price and redemption price per share $ 15.53 $ 13.90 ============ ===========
See Accompanying Notes to Financial Statements. 42 WARBURG PINCUS FUND STATEMENTS OF OPERATIONS For the Six Months Ended February 29, 2000 (Unaudited) - -------------------------------------------------------------------------------- HIGH YIELD MUNICIPAL FUND BOND FUND ---------- --------- INVESTMENT INCOME Dividends $ 140,784 $ 5,663 Interest 6,266,891 529,766 ---------- --------- Total Investment Income 6,407,675 535,429 ---------- --------- EXPENSES Investment advisory fees 439,704 63,916 Administration fees 85,185 18,703 Registration fees 49,361 18,002 Distribution fees 33,331 273 Printing fees 29,646 10,227 Transfer agent fees 25,772 8,867 Custodian fees 22,216 13,792 Legal fees 16,197 2,989 Audit fees 12,440 6,597 Directors fees 5,246 5,276 Interest expense 990 679 Insurance expense 402 117 Miscellaneous fees 20,132 5,387 ---------- --------- 740,622 154,825 Less fees waived and reimbursed (268,176) (62,898) ---------- --------- Total Expenses 472,446 91,927 ---------- --------- Net Investment Income 5,935,229 443,502 ---------- --------- REALIZED AND UNREALIZED GAIN/(LOSS) ON INVESTMENTS: Net realized gain/(loss) from security transactions 257,858 $(124,385) Net change in unrealized appreciation/(depreciation) from Investments 1,102,289 (336,896) ---------- --------- Net Gain/(Loss) on Investments 1,360,147 (461,281) ---------- --------- Net Increase/(Decrease) In Net Assets Resulting From Operations $7,295,376 $ (17,779) ========== ========= See Accompanying Notes to Financial Statements. 43 WARBURG PINCUS FUND STATEMENTS OF CHANGES IN NET ASSETS - --------------------------------------------------------------------------------
HIGH YIELD FUND MUNICIPAL BOND FUND ----------------------------------- ----------------------------------- FOR THE SIX MONTHS FOR THE YEAR FOR THE SIX MONTHS FOR THE YEAR ENDED ENDED ENDED ENDED FEBRUARY 29, 2000 AUGUST 31, 1999 FEBRUARY 29, 2000 AUGUST 31, 1999 ------------------ --------------- ------------------ --------------- (UNAUDITED) (UNAUDITED) INCREASE/(DECREASE) IN NET ASSETS: OPERATIONS: Net investment income $ 5,935,229 $ 11,684,546 $ 443,502 $ 1,030,410 Net gain/(loss) on investments 1,360,147 (9,152,286) (461,281) (944,193) ------------ ------------ ----------- ----------- Net increase/(decrease) in net assets resulting from operations. 7,295,376 2,532,260 (17,779) 86,217 ------------ ------------ ----------- ----------- Dividends and Distributions to shareholders: From net investment income: Institutional shares (5,522,389) (8,940,115) (478,614) (1,031,337) Common shares (1,347,004) (1,873,396) (5,498) (4,114) From net realized capital gains: Institutional shares -- -- (27,430) (320,024) Common shares -- -- (376) (14) ------------ ------------ ----------- ----------- Total distributions to shareholders (6,869,393) (10,813,511) (511,918) (1,355,489) ------------ ------------ ----------- ----------- Net capital share transactions (5,495,081) 42,820,448 (5,792,072) 1,674,840 ------------ ------------ ----------- ----------- Total increase/(decrease) in net assets (5,069,098) 34,539,197 (6,321,769) 405,568 NET ASSETS: Beginning of period 129,152,909 94,613,712 22,634,200 22,228,632 ----------- ------------ ----------- ----------- End of period $124,083,811 $129,152,909 $16,312,431 $22,634,200 ============ ============ =========== =========== Undistributed net investment income $ 1,870,259 $ 2,804,423 $ 72,919 $ 113,529 ============ ============ =========== ===========
See Accompanying Notes to Financial Statements. 44 [THIS PAGE INTENTIONALLY LEFT BLANK] WARBURG PINCUS FUNDS HIGH YIELD FUND FINANCIAL HIGHLIGHTS (For a Share Outstanding Throughout each Period) - --------------------------------------------------------------------------------
INSTITUTIONAL -------------------------------------------------------------------- FOR THE SIX MONTHS ENDED FEBRUARY 29, FOR THE YEAR ENDED AUGUST 31, 2000 ---------------------------------------------------- (UNAUDITED) 1999 1998 1997 1996 1995 ------------ ------- ------- ------- ------- -------- Net asset value, beginning of period $ 15.32 $ 16.60 $ 17.08 $ 16.09 $ 15.72 $ 15.94 ------- ------- ------- ------- ------- -------- Income from investment operations Net investment income 0.71(DAGGER) 1.42 1.43 1.37 1.47 1.42 Net gain/(loss) on investments (both realized and unrealized) 0.22 (1.33) (0.49) 0.96 0.40 (0.30) ------- ------- ------- ------- ------- -------- Total from investment operations 0.93 0.09 0.94 2.33 1.87 1.12 ------- ------- ------- ------- ------- -------- Dividends from net investment income (0.79) (1.37) (1.42) (1.34) (1.50) (1.34) ------- ------- ------- ------- ------- -------- Net asset value, end of period $ 15.46 $ 15.32 $ 16.60 $ 17.08 $ 16.09 $ 15.72 ======= ======= ======= ======= ======= ======== Total return 6.37%(c) 0.67% 5.48% 15.17% 12.42% 7.79%(d) Ratios/Supplemental Data: Net assets, end of period (000s omitted) $90,945 $95,129 $94,044 $92,630 $75,849 $153,621 Ratio of expenses to average net assets 0.70%(a)(b) 0.69%(a) 0.70%(a) 0.70%(a) 0.88%(a) 1.00%(a) Ratio of net investment income to average net assets 9.50%(b) 9.10% 8.12% 8.44% 8.92% 9.37% Fund turnover rate 15%(c) 40% 60% 84% 143% 70%
COMMON ------------------------------------------------------ FOR THE SIX MONTHS ENDED FOR THE YEAR ENDED FOR THE PERIOD FEBRUARY 29, AUGUST 31, NOVEMBER 1, 1996* 2000 ------------------- to August 31, (UNAUDITED) 1999 1998 1997 ------------ ------- ------ ----------------- Net asset value, beginning of period $ 15.38 $ 16.62 $17.08 $16.21 ------- ------- ------ ------ Income from investment operations Net investment income 0.69(DAGGER)1.39(DAGGER)1.36 0.93 Net gain/(loss) on investments (both realized and unrealized) 0.22 (1.34) (0.45) 0.87 ------- ------- ------ ------ Total from investment operations 0.91 0.05 0.91 1.80 ------- ------- ------ ------ Dividends from net investment income (0.76) (1.29) (1.37) (0.93) ------- ------- ------ ------ Net asset value, end of period $ 15.53 $ 15.38 $16.62 $17.08 ======= ======= ====== ====== Total return 6.23%(c) 0.39% 5.27% 11.49%(c) Ratios/Supplemental Data: Net assets, end of period (000s omitted) $33,139 $34,024 $ 570 $ 86 Ratio of expenses to average net assets 0.96%(a)(b) 0.95%(a) 0.95%(a) 0.96%(a)(b) Ratio of net investment income to average net assets 9.27%(b) 8.86% 7.96% 8.13%(b) Fund turnover rate 15%(c) 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 1.11% annualized for six months ended February 29, 2000 and 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 1.42% annualized for six months ended February 29, 2000 and 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. 46-47 WARBURG PINCUS FUNDS MUNICIPAL BOND FUND FINANCIAL HIGHLIGHTS (For a Share Outstanding Throughout Each Period) - --------------------------------------------------------------------------------
INSTITUTIONAL -------------------------------------------------------------- FOR THE SIX MONTHS ENDED FEBRUARY 29, FOR THE YEAR ENDED AUGUST 31, 2000 ----------------------------------------------- (UNAUDITED) 1999 1998 1997 1996 1995 ------------ ------- ------- ------- ------- ------- Net asset value, beginning of period $ 14.30 $ 15.12 $ 14.84 $ 14.65 $ 15.46 $ 15.06 ------- ------- ------- ------- ------- ------- Income from investment operations Net investment income 0.34 0.67 0.70 0.72 0.73 0.71 Net gain/(loss) on investments (both realized and unrealized) (0.35) (0.60) 0.40 0.65 (0.37) 0.50 ------- ------- ------- ------- ------- ------- Total from investment operations (0.01) 0.07 1.10 1.37 0.36 1.21 ------- ------- ------- ------- ------- ------- Less Distributions Dividends from net investment income (0.38) (0.68) (0.71) (0.72) (0.74) (0.76) Distributions from capital gains (0.02) (0.21) (0.11) (0.46) (0.43) (0.05) ------- ------- ------- ------- ------- ------- Total distributions (0.40) (0.89) (0.82) (1.18) (1.17) (0.81) ------- ------- ------- ------- ------- ------- Net asset value, end of period $ 13.89 $ 14.30 $ 15.12 $ 14.84 $ 14.65 $ 15.46 ======= ======= ======= ======= ======= ======= Total return (0.07)%(c) 0.36% 7.62% 9.74% 2.27% 8.42% Ratios/Supplemental Data: Net assets, end of period (000s omitted) $16,095 $22,423 $22,229 $19,810 $19,581 $48,978 Ratio of expenses to average net assets 1.00%(a)(b) 0.99%(a) 1.00%(a) 1.00%(a) 1.00%(a) 1.00%(a) Ratio of net investment income to average net assets 4.86%(b) 4.49% 4.72% 4.88% 4.62% 4.76% Fund turnover rate 3%(c) 26% 57% 43% 34% 25%
COMMON -------------------------------- FOR THE SIX MONTHS ENDED FOR THE PERIOD FEBRUARY 29, OCTOBER 30, 1998* 2000 to August 31, (UNAUDITED) 1999 ------------ ----------------- Net asset value, beginning of period $14.29 $15.14 ------ ------ Income from investment operations Net investment income 0.33 0.54 Net gain/(loss) on investments (both realized and unrealized) (0.35) (0.66) ------ ------ Total from investment operations (0.02) (0.12) ------ ------ Less Distributions Dividends from net investment income (0.35) (0.52) Distributions from capital gains (0.02) (0.21) ------ ------ Total distributions (0.37) (0.73) ------ ------ Net asset value, end of period $13.90 $14.29 ====== ====== Total return (0.07)%(c) (0.85)%(c) Ratios/Supplemental Data: Net assets, end of period (000s omitted) $ 217 $ 211 Ratio of expenses to average net assets 1.26%(a)(b) 1.26%(a)(b) Ratio of net investment income to average net assets 4.64%(b) 4.44%(b) Fund turnover rate 3%(c) 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 1.68% annualized for the six months ended February 29, 2000 and 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 2.00% annualized for the six months ended February 29, 2000 and 1.71% annualized for the period ended August 31, 1999. (b) Annualized. (c) Not Annualized. * Inception Date. See Accompanying Notes to Financial Statements. 48-49 WARBURG PINCUS FUNDS NOTES TO FINANCIAL STATEMENTS February 29, 2000 (Unaudited) - -------------------------------------------------------------------------------- NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The Warburg Pincus Funds covered in this report are comprised of 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, 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 agreement 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-administration fee. 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 statement 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 maturities 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 50 WARBURG PINCUS FUNDS NOTES TO FINANCIAL STATEMENTS (CONT'D) February 29, 2000 (Unaudited) - -------------------------------------------------------------------------------- NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- (CONT'D) 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. High Yield will distribute substantially all of its net realized capital gains, if any, to its shareholders at least annually and will distribute net investment income at least quarterly. The Municipal Fund 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 U.S. tax-basis treatment. Temporary differences do not require reclassification 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. 51 WARBURG PINCUS FUNDS NOTES TO FINANCIAL STATEMENTS (CONT'D) February 29, 2000 (Unaudited) - -------------------------------------------------------------------------------- NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- (CONT'D) 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. Neither Fund had open repurchase agreements at February 29, 2000. 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 liquid securities 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 a perfect 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. 52 WARBURG PINCUS FUNDS NOTES TO FINANCIAL STATEMENTS (CONT'D) February 29, 2000 (Unaudited) - -------------------------------------------------------------------------------- NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- (CONT'D) 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 the 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 Fund 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. Neither Fund had any securities on loan to brokers at February 29, 2000. 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, and the 53 WARBURG PINCUS FUNDS NOTES TO FINANCIAL STATEMENTS (CONT'D) February 29, 2000 (Unaudited) - -------------------------------------------------------------------------------- NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- (CONT'D) 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 is 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 other 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. 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. 54 WARBURG PINCUS FUNDS NOTES TO FINANCIAL STATEMENTS (CONT'D) February 29, 2000 (Unaudited) - -------------------------------------------------------------------------------- NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- (CONT'D) In addition, periods of economic uncertainty and changes 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 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 ten 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: FUND ANNUAL RATE ----- --------------------------------- High Yield 0.70% of average daily net assets Municipal 0.70% of average daily net assets CSAM may, at its discretion, voluntarily waive all or any portion of its advisory fee for any of the Funds. For the six months ended February 29, 2000 advisory fees and waivers for each of the two investment Funds were as follows: GROSS NET FUND ADVISORY FEE WAIVER ADVISORY FEE ------ ------------ ---------- ------------ High Yield $439,704 $(247,140) $192,564 Municipal 63,916 (56,534) 7,382 CSAM reimbursed expenses of Municipal in the amount of $6,320 for the six months ended February 29, 2000. 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 Fund Services, Inc. ("CFSI"), a wholly-owned subsidiary of Credit Suisse Asset Management, LLC. served as co-administrator of each Fund until November 1, 1999. On November 1, 1999, Credit Suisse Asset Management Securities, Inc. ("CSAMSI") replaced CFSI as co-administrator to each portfolio. PFPC Inc. ("PFPC"), an indirect subsidiary of PNC Financial Services Group, also serves as each Fund's co-administrator. For administration services, each Fund pays CSAMSI a fee calculated at 55 WARBURG PINCUS FUNDS NOTES TO FINANCIAL STATEMENTS (CONT'D) February 29, 2000 (Unaudited) - -------------------------------------------------------------------------------- NOTE 2. TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES -- (CONT'D) 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. CSFI, at its discretion, voluntarily waived a portion of its co-administration fees for the Funds. For the period September 1, 1999 to October 31, 1999, co-administration fees earned and waived by CFSI on the Common shares were as follows: GROSS NET FUND CO-ADMINISTRATION FEE WAIVER CO-ADMINISTRATION FEE ------ --------------------- -------- --------------------- High Yield $2,188 $(1,750) $438 Municipal 18 (15) 3 CSAMSI may, at its discretion, voluntarily waive all or any portion of its administrative fee for any of the Funds. For the period November 1, 1999 to February 29, 2000, co-administrative service fees earned and waived by CSAMSI on the Common shares were as following: GROSS NET FUND CO-ADMINISTRATION FEE WAIVER CO-ADMINISTRATION FEE ------ --------------------- -------- --------------------- High Yield $4,478 $(3,583) $895 Municipal 37 (29) 8 For administration services, PFPC currently receives a fee calculated at annual rate of .125% on each Fund's average daily net asset, 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 six months ended February 29, 2000, the co-administration fee earned and waived by PFPC were as follows: GROSS NET FUND CO-ADMINISTRATION FEE WAIVER CO-ADMINISTRATION FEE ------ --------------------- -------- --------------------- High Yield $78,519 $(15,704) $62,815 Municipal 18,648 -- 18,648 In addition to serving as each Funds co-administrator, CSAMSI served as distributor of each Fund's shares until January 1, 2000. On January 1, 2000, Provident Distributors, Inc. ("PDI") replaced CSAMSI as distributor to each Fund. No compensation is payable by any of the Funds to PDI for distribution services, but CSAMSI receives compensation from each Fund's Common shares under the co-administration agreement for shareholder servicing and distribution. For the Shareholder Servicing and Distribution Plan on the Common shares, CSAMSI receives a fee calculated at an annual rate .25% of the average daily net assets of the Common shares of each Fund. For the six 56 WARBURG PINCUS FUNDS NOTES TO FINANCIAL STATEMENTS (CONT'D) February 29, 2000 (Unaudited) - -------------------------------------------------------------------------------- NOTE 2. TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES -- (CONT'D) months ended February 29, 2000, shareholder servicing and distribution fees, earned by CSAMSI were as follows: FUND DISTRIBUTION FEE ---- ---------------- High Yield $33,331 Municipal 273 NOTE 3. PURCHASES AND SALES OF SECURITIES For the six months ended February 29, 2000, purchases and sales of investment securities (other than short-term investments) were as follows: INVESTMENT SECURITIES ------------------------------ FUND PURCHASES SALES ------ -------------- ------------- High Yield $18,489,083 $31,522,220 Municipal 507,438 4,159,271 NOTE 4. CAPITAL SHARES Transactions in capital shares for each period were as follows:
HIGH YIELD FUND ------------------------------------------------------------------------------------------------------------ INSTITUTIONAL COMMON ----------------------------------------------------- ---------------------------------------------------- FOR THE SIX MONTHS ENDED FOR THE SIX MONTHS ENDED FEBRUARY 29, 2000 FOR THE YEAR ENDED FEBRUARY 29, 2000 FOR THE YEAR ENDED (UNAUDITED) AUGUST 31, 1999 (UNAUDITED) AUGUST 31, 1999 ------------------------ ------------------------ ------------------------ ------------------------ SHARES VALUE SHARES VALUE SHARES VALUE SHARES VALUE ------------------------ --------- ------------ --------- ----------- --------- ----------- Shares sold 1,033,057 $ 15,717,759 2,505,861 $ 39,359,915 880,515 $13,481,335 2,499,612 $39,264,516 Shares issued in reinvestment of dividends 332,277 4,900,053 508,551 7,926,308 81,579 1,208,563 105,404 1,641,508 Shares repurchased (1,691,420) $(24,958,869) (2,470,735) (38,614,790) (1,040,206) (15,843,922) (427,403) (6,757,008) ---------- ------------ ---------- ------------ ---------- ----------- --------- ----------- Net increase/ (decrease) (326,086) $ (4,341,057) 543,677 $ 8,671,433 (78,112) $(1,154,024) 2,177,613 $34,149,016 ========== ============ ========== ============ ========== =========== ========= ===========
57 WARBURG PINCUS FUNDS NOTES TO FINANCIAL STATEMENTS (CONT'D) February 29, 2000 (Unaudited) - -------------------------------------------------------------------------------- NOTE 4. CAPITAL SHARES -- (CONT'D)
MUNICIPAL BOND FUND ---------------------------------------------------------------------------------------------------------- INSTITUTIONAL COMMON ---------------------------------------------------- --------------------------------------------------- FOR THE SIX MONTHS ENDED FOR THE SIX MONTHS ENDED FOR THE PERIOD FEBRUARY 29, 2000 FOR THE YEAR ENDED FEBRUARY 29, 2000 OCTOBER 30, 1998* (UNAUDITED) AUGUST 31, 1999 (UNAUDITED) THROUGH AUGUST 31, 1999 ------------------------- ---------------------- ------------------------ ----------------------- SHARES VALUE SHARES VALUE SHARES VALUE SHARES VALUE ------- ----------- ------- ----------- ------ -------- ------ -------- Shares sold 13,424 $ 80,042 179,990 $ 2,675,315 5,541 $ 78,517 15,816 $236,022 Shares issued in reinvestment of dividends 25,239 474,085 86,580 1,287,465 415 5,801 279 4,072 Shares repurchased (448,780) (6,358,533) (168,278) (2,507,954) (5,089) (71,984) (1,335) (20,081) -------- ----------- -------- ----------- ------ -------- ------ -------- Net increase/ (decrease) (410,117) $(5,804,406) 98,292 $ 1,454,826 867 $ 12,334 14,760 $220,013 ======== =========== ======== =========== ====== ======== ====== ======== *Inception Date.
On February 29, 2000, the number of shareholders that held 5% or more of the outstanding shares are as follows: Number of Approximate Percentage Shareholders of Outstanding Shares ------------ ---------------------- High Yield Institutional shares 3 60.01% High Yield Common shares 3 78.15 Municipal Institutional shares 3 67.87 Municipal Common shares 2 98.38 NOTE 5. 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 agents, Bank of Nova Scotia as syndication agent and certain other lender, for temporary or emergency purposes primarily relating to unanticipated portfolio share redemption. 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 participation 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 six months ending February 29, 2000, the following fund had borrowings under line of credit agreement. AVERAGE DAILY AVERAGE MAXIMUM DAILY LOAN OUTSTANDING PORTFOLIO LOAN BALANCE INTEREST RATE % LOAN OUTSTANDING AT 02/29/00 ---------- ------------- ------------- ------------------ ---------------- High Yield $24,176 6.00% $4,400,000 $0 58 WARBURG PINCUS FUNDS SPECIAL SHAREHOLDER MEETING RESULTS February 29, 2000 (Unaudited) - -------------------------------------------------------------------------------- WARBURG PINCUS HIGH YIELD FUND WARBURG PINCUS MUNICIPAL BOND FUND A special meeting of shareholders of each Fund was held on May 21, 1999. At the special meeting, the following persons were elected as directors of each Fund, constituting the entire Board of Directors: Richard H. Francis, Jack W. Fritz, Jeffrey E. Garten, James S. Pasman, Jr., William W. Priest, Steven N. Rappaport, Arnold M. Reichman and Alexander B. Trowbridge. In addition, shareholders of each Fund voted on the following matters: Proposal 2: Ratification of the selection of PricewaterhouseCoopers LLP as the independent accountants for each of the Funds for the fiscal year ending August 31, 1999. The voting results for each Fund were as follows: Election of Directors: - -------------------------------------------------------------------------------- HIGH YIELD For Withheld - -------------------------------------------------------------------------------- Richard H. Francis 5,464,641.0590 2,279.8760 - -------------------------------------------------------------------------------- Jack W. Fritz 5,460,763.4240 6,157.5110 - -------------------------------------------------------------------------------- Jeffrey E. Garten 5,464,641.0590 2,279.8760 - -------------------------------------------------------------------------------- James S. Pasman, Jr. 5,460,763.4240 6,157.5110 - -------------------------------------------------------------------------------- William W. Priest 5,464,641.0590 2,279.8760 - -------------------------------------------------------------------------------- Steven N. Rappaport 5,464,641.0590 2,279.8760 - -------------------------------------------------------------------------------- Arnold M. Reichman 5,464,641.0590 2,279.8760 - -------------------------------------------------------------------------------- Alexander B. Trowbridge 5,464,641.0590 2,279.8760 - -------------------------------------------------------------------------------- Proposal 2: - -------------------------------------------------------------------------------- % of Shares to Total % of Shares to Total Shares Shares Outstanding Shares Vote - -------------------------------------------------------------------------------- For 5,463,212.1834 59.8353% 99.9322% - -------------------------------------------------------------------------------- Against 459.4244 0.0050% 0.0084% - -------------------------------------------------------------------------------- Abstain 3,249.3272 0.0356% 0.0594% - -------------------------------------------------------------------------------- 59 WARBURG PINCUS FUNDS SPECIAL SHAREHOLDER MEETING RESULTS (CONT'D) February 29, 2000 (Unaudited) - -------------------------------------------------------------------------------- MUNICIPAL BOND For Withheld - -------------------------------------------------------------------------------- Richard H. Francis 1,177,497.9240 0.0000 - -------------------------------------------------------------------------------- Jack W. Fritz 1,177,497.9240 0.0000 - -------------------------------------------------------------------------------- Jeffrey E. Garten 1,177,497.9240 0.0000 - -------------------------------------------------------------------------------- James S. Pasman, Jr. 1,177,497.9240 0.0000 - -------------------------------------------------------------------------------- William W. Priest 1,177,497.9240 0.0000 - -------------------------------------------------------------------------------- Steven N. Rappaport 1,177,497.9240 0.0000 - -------------------------------------------------------------------------------- Arnold M. Reichman 1,177,497.9240 0.0000 - -------------------------------------------------------------------------------- Alexander B. Trowbridge 1,177,497.9240 0.0000 - -------------------------------------------------------------------------------- Proposal 2: - -------------------------------------------------------------------------------- % of Shares to Total % of Shares to Total Shares Shares Outstanding Shares Vote - -------------------------------------------------------------------------------- For 1,177,497.9240 72.7497% 100.0000% - -------------------------------------------------------------------------------- Against 0.0000 0.0000% 0.0000% - -------------------------------------------------------------------------------- Abstain 0.0000 0.0000% 0.0000% - -------------------------------------------------------------------------------- 60 [GRAPHIC OMITTED] WARBURG PINCUS FUNDS P.O. Box 9030, Boston, MA 02205-9030 800-WARBURG (800-927-2874) (BULLET) www.warburg.com PROVIDENT DISTRIBUTORS, INC., DISTRIBUTOR. WPHYM-3-0200 -----END PRIVACY-ENHANCED MESSAGE-----