-----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, RqAlwcjiYesrOPXcfff3VnfzQuBEzFic9HuXR4TZ2o3WuCISAhAxGLzdtDLjY4ut BcRwkj24Sr0V25mG46Q47Q== 0000935069-01-000014.txt : 20010122 0000935069-01-000014.hdr.sgml : 20010122 ACCESSION NUMBER: 0000935069-01-000014 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20001031 FILED AS OF DATE: 20010108 FILER: COMPANY DATA: COMPANY CONFORMED NAME: WARBURG PINCUS FIXED INCOME FUND /NY/ CENTRAL INDEX KEY: 0000811142 STANDARD INDUSTRIAL CLASSIFICATION: [] FISCAL YEAR END: 1031 FILING VALUES: FORM TYPE: N-30D SEC ACT: SEC FILE NUMBER: 811-05039 FILM NUMBER: 1503501 BUSINESS ADDRESS: STREET 1: 400 BELLEVUE PARKWAY CITY: WILMINGTON STATE: DE ZIP: 19809 BUSINESS PHONE: 3027912919 MAIL ADDRESS: STREET 1: 466 LEXINGTON AVENUE CITY: NEW YORK STATE: NY ZIP: 10017-3147 FILER: COMPANY DATA: COMPANY CONFORMED NAME: WARBURG PINCUS GLOBAL FIXED INCOME FUND INC CENTRAL INDEX KEY: 0000866265 STANDARD INDUSTRIAL CLASSIFICATION: [] FISCAL YEAR END: 1031 FILING VALUES: FORM TYPE: N-30D SEC ACT: SEC FILE NUMBER: 811-06143 FILM NUMBER: 1503502 BUSINESS ADDRESS: STREET 1: 400 BELLEVUE PARKWAY CITY: WILMINGTON STATE: DE ZIP: 19809 BUSINESS PHONE: 3027912919 MAIL ADDRESS: STREET 1: 466 LEXINGTON AVENUE CITY: NEW YORK STATE: NY ZIP: 10017-3147 FORMER COMPANY: FORMER CONFORMED NAME: COUNSELLORS GLOBAL FIXED INCOME FUND INC DATE OF NAME CHANGE: 19920703 N-30D 1 0001.txt ANNUAL REPORT WARBURG PINCUS ADVISOR FUNDS OCTOBER 31, 2000 FIXED INCOME FUND GLOBAL FIXED INCOME FUND ANNUAL REPORT More complete information about the Funds, including charges and expenses, is provided in the PROSPECTUS, which must precede or accompany this document and which should be read carefully before investing. You may obtain additional copies by calling 800-222-8977 or by writing to Warburg Pincus Advisor Funds, P.O. Box 9030, Boston, MA 02205-9030. [GRAPHICS OMITTED] WARBURG PINCUS FUNDS PART OF CREDIT SUISSE ASSET MANAGEMENT FROM TIME TO TIME, THE FUNDS' INVESTMENT ADVISER AND CO-ADMINISTRATORS MAY WAIVE SOME FEES AND/OR REIMBURSE SOME EXPENSES, WITHOUT WHICH PERFORMANCE WOULD BE LOWER. WAIVERS AND/OR REIMBURSEMENTS ARE SUBJECT TO CHANGE. RETURNS ARE HISTORICAL AND INCLUDE CHANGE IN SHARE PRICE AND REINVESTMENT OF DIVIDENDS AND CAPITAL GAINS. PAST PERFORMANCE CANNOT GUARANTEE FUTURE RESULTS. RETURNS AND SHARE PRICE WILL FLUCTUATE, AND REDEMPTION VALUE MAY BE MORE OR LESS THAN ORIGINAL COST. INTERNATIONAL INVESTING ENTAILS SPECIAL RISK CONSIDERATIONS, INCLUDING CURRENCY FLUCTUATIONS, LOWER LIQUIDITY, ECONOMIC AND POLITICAL RISKS, AND DIFFERENCES IN ACCOUNTING METHODS. THE VIEWS OF THE FUNDS' MANAGEMENT ARE AS OF THE DATE OF THE LETTERS AND PORTFOLIO HOLDINGS DESCRIBED IN THIS DOCUMENT ARE AS OF OCTOBER 31, 2000; THESE VIEWS AND PORTFOLIO HOLDINGS MAY HAVE CHANGED SUBSEQUENT TO THESE DATES. NOTHING IN THIS DOCUMENT IS A RECOMMENDATION TO PURCHASE OR SELL SECURITIES. FUND SHARES ARE NOT DEPOSITS OR OTHER OBLIGATIONS OF CREDIT SUISSE ASSET MANAGEMENT, LLC ("CSAM") OR ANY AFFILIATE, ARE NOT FDICINSURED AND ARE NOT GUARANTEED BY CSAM OR ANY AFFILIATE. FUND INVESTMENTS ARE SUBJECT TO INVESTMENT RISKS, INCLUDING LOSS OF YOUR INVESTMENT. WARBURG PINCUS FIXED INCOME FUND ANNUAL INVESTMENT ADVISER'S REPORT-- OCTOBER 31, 2000 - -------------------------------------------------------------------------------- December 6, 2000 Dear Shareholder: For the 12 months ended October 31, 2000, the Advisor Class shares of Warburg Pincus Fixed Income Fund (the "Fund") had a gain of 5.33%. For the six months ended October 31, 2000, the Fund had a gain of 5.49%, vs. a return of 5.80% for the Lehman Brothers Aggregate Bond Index, the Fund's new benchmark effective May 1, 2000. For the six months ended April 30, 2000, the Fund had a gain of 0.10%, vs. a gain of 1.06% for the Lehman Brothers Intermediate Government/Corporate Bond Index, the Fund's benchmark prior to May 1, 2000. The 12 month period was ultimately a positive one for the U.S. bond market. While bonds struggled early on, sentiment became more favorable on the perception that the Federal Reserve was winding down its campaign to raise interest rates (in fact, the Fed last raised rates in May of this year). In short, the economy appeared to be slowing, and inflation remained subdued. Bonds also benefited from volatility in the stock market and worries over corporate profits late in the period, two factors that raised demand for liquidity and safety. By sector, high-quality securities such as Treasury bonds had the best results. High-quality corporate and mortgage-backed bonds also had positive total returns, although high-yield (non-investment-grade) corporate bonds were lackluster, hampered by the increasingly clouded profit outlook. The Fund's relative return was hindered by its underweighting in Treasury bonds (compared to both Lehman indexes cited above), as these securities outpaced the mortgage-backed and corporate bonds that we continued to favor. That notwithstanding, we believe that the Fund's non-Treasury holdings offer attractive yield differentials over Treasuries and, with regard to corporate bonds, have good potential for credit upgrades. We made one significant change to the Fund as a result of the change in benchmark. We raised the Fund's duration, from about 3.8 years in April to roughly 4.8 years as of October 31 (a level more in line with the duration of the Aggregate Bond Index). Otherwise, we made no dramatic shifts in strategy, remaining focused on high-quality bonds while favoring corporate and mortgage-backed securities, as noted. Bonds that were well-represented in the Fund included Fannie Mae mortgage-backed issues carrying coupons in the 7% to 8% range. We also maintained exposure to other agency mortgage-backed bonds as well as commercial mortgage-backed securities. In the corporate-bond sector, one 1 WARBURG PINCUS FIXED INCOME FUND ANNUAL INVESTMENT ADVISER'S REPORT -- OCTOBER 31, 2000 (CONT'D) - -------------------------------------------------------------------------------- noteworthy move we made was to add certain telecommunications bonds late in the period, when we viewed them as very attractively priced. Looking ahead, we believe that the bond market's underlying fundamentals will remain supportive as a "soft landing" scenario--i.e., moderate economic growth combined with low inflation--continues to unfold. While another Fed interest-rate hike cannot be ruled out, bonds are unlikely to face the sustained rate increases that restrained the group in 1999 and over the first part of this year. Set within a potentially more-favorable environment for bonds over the next year, we will maintain a relatively conservative portfolio while looking for opportunities to add value on the margin. M. Anthony E. van Daalen Portfolio Manager 2 WARBURG PINCUS FIXED INCOME FUND ANNUAL INVESTMENT ADVISER'S REPORT -- OCTOBER 31, 2000 (CONT'D) - -------------------------------------------------------------------------------- GROWTH OF $10,000 INVESTED IN ADVISOR CLASS SHARES OF WARBURG PINCUS FIXED INCOME FUND SINCE INCEPTION AS OF OCTOBER 31, 2000 The graph below illustrates the hypothetical investment of $10,000 in Advisor Class shares of Warburg Pincus Fixed Income Fund (the "Fund") from July 3, 1996 (inception) to October 31, 2000, compared to the Lehman Brothers Intermediate Government/Corporation Bond Index ("LIGC")1 for the same time period. Past performance does not predict future results. [GRAPHICS OMITTED] EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC Average Annual Total Returns for periods ended 10/31/00 (Advisor Class shares) Since Inception 1 year 3 year (7/3/96) 5.33% 4.04% 7.26% Fund LIGC 7/3/96 $10,000.00 $10,000.00 7/31/96 10,014.10 10,029.70 8/31/96 10,058.20 10,037.60 9/30/96 10,213.70 10,177.50 10/31/96 10,393.10 10,357.30 11/30/96 10,573.20 10,494.00 12/31/96 10,565.20 10,426.80 1/31/97 10,637.90 10,467.40 2/28/97 10,703.20 10,487.40 3/31/97 10,615.20 10,415.10 4/30/97 10,709.00 10,537.50 5/31/97 10,812.60 10,625.00 6/30/97 10,938.90 10,722.00 7/31/97 11,209.80 10,940.20 8/31/97 11,128.90 10,885.20 9/30/97 11,272.20 11,011.80 10/31/97 11,381.10 11,133.90 11/30/97 11,387.90 11,158.30 12/31/97 11,466.50 11,247.60 1/31/98 11,628.20 11,395.00 2/28/98 11,595.60 11,386.40 3/31/98 11,616.50 11,423.00 4/30/98 11,667.60 11,480.20 5/31/98 11,763.30 11,564.00 6/30/98 11,844.50 11,638.20 7/31/98 11,839.70 11,679.30 8/31/98 11,971.20 11,862.90 9/30/98 12,161.50 12,160.90 10/31/98 12,086.10 12,149.00 11/30/98 12,147.70 12,148.00 12/31/98 12,168.40 12,196.90 1/31/99 12,202.50 12,263.80 2/28/99 12,060.90 12,083.50 3/31/99 12,150.20 12,173.70 4/30/99 12,178.10 12,211.10 5/31/99 12,089.20 12,117.20 6/30/99 12,082.00 12,125.50 7/31/99 12,062.60 12,114.60 8/31/99 12,043.30 12,123.80 9/30/99 12,149.30 12,236.60 10/31/99 12,168.70 12,268.40 11/30/99 12,174.80 12,283.10 12/31/99 12,133.40 12,242.60 1/31/00 12,093.40 12,197.30 2/29/00 12,178.00 12,298.50 3/31/00 12,281.50 12,426.40 4/30/00 12,166.10 12,397.80 5/31/00 12,139.30 12,417.20 6/30/00 12,430.70 12,636.20 7/31/00 12,533.90 12,732.20 8/31/00 12,729.40 12,882.60 9/30/00 12,813.40 12,999.80 10/31/00 12,817.20 13,059.00 FUND ------ 1 Year Total Return (9/30/99 to 9/30/00) ........................... 5.46% 3 Year Average Annual Total Return (9/30/97 to 9/30/00) ............ 4.37% Average Annual Total Return Since Inception (7/3/96 to 9/30/00) ............................. 7.30% 1 The Lehman Brothers Intermediate Government/Corporate Bond Index is an unmanaged index (with no defined investment objective of intermediate-term government and corporate bonds, and is calculated by Lehman Brothers, Inc. 3 WARBURG PINCUS GLOBAL FIXED INCOME FUND ANNUAL INVESTMENT ADVISER'S REPORT-- OCTOBER 31, 2000 - -------------------------------------------------------------------------------- December 6, 2000 Dear Shareholder: For the 12 months ended October 31, 2000, Warburg Pincus Global Fixed Income Fund (the "Fund") had a gain of 3.88%, vs. gains of 7.30% for the Lehman Brothers Aggregate Bond Index, 6.67% for a Composite Benchmark and 7.76% for the Salomon Brothers World Government Bond Index (Currency-Hedged). The unhedged version of the Salomon index had a loss of 5.08% for the period. Most global bond markets had gains for the 12 months in terms of total return (i.e., bond-price changes plus coupon income), though overall results were restrained by ongoing interest-rate uncertainties. Concerned about a potential pick up in inflation, central banks in developed markets were biased toward raising interest rates over much of the period. By region, European bond markets had positive, albeit modest, returns, as did the Japanese and U.S. markets (U.S. Treasuries were quite strong, however, helped by a supportive supply backdrop for these securities). Emerging bond markets generally had good results, buoyed by optimism over revenue growth and credit upgrades with respect to emerging economies. Within this environment, the Fund had a gain but lagged its benchmarks for the period. One factor that hindered the Fund was its sizable weighting in U.S. corporate bonds, which lagged Treasuries. On the positive side, the Fund benefited from our continued bias in favor of the U.S. dollar (about 95% of the Fund was denominated in or hedged into dollars as of October 31), as the dollar strengthened vs. most major currencies in the period. The Fund's Latin American holdings also aided its return, buoyed by the region's improving macroeconomic backdrop. We made no material changes to the Fund in terms of basic strategy. We remained well-diversified by country, and maintained an emphasis on high-quality debt (the Fund's average credit rating was AA at the end of the period). However, we maintained a meaningful weighting in high-yield debt (about 10% of the Fund as of October 31), including U.S. and European high-yield corporate bonds as well as emerging-market government debt. In terms of regional emphasis, we remained biased in favor of the U.S., where we maintained a focus on corporate bonds. Recent underperformance notwithstanding, U.S. corporate bonds--including high-yield debt--have good longer-term prospects in our view. Barring an unforeseen recession, we believe that these bonds will benefit as credit spreads (the yield differentials between high-quality and lower-quality securities) begin to narrow from historically wide levels. Our U.S. exposure also included significant weightings in Treasuries and mortgage-backed securities. 4 WARBURG PINCUS GLOBAL FIXED INCOME FUND ANNUAL INVESTMENT ADVISER'S REPORT -- OCTOBER 31, 2000 (CONT'D) - -------------------------------------------------------------------------------- We maintained a relatively small position in Europe, where we generally saw a less-hospitable interest-rate environment compared to the rate outlook in the U.S. That said, we continued to deem certain bonds to be attractive, including government issues (e.g., sovereign Danish and German bonds) as well as corporate securities, such as a euro-denominated telecommunications bond. Elsewhere in developed markets, we maintained noteworthy weightings in Japan and Canada. Our emerging-market exposure was largely via Latin America, based on our generally favorable outlook on the region's inflation and interest-rate picture. We also maintained exposure to South Africa and emerging Europe, where we had small positions in Turkish and Bulgarian sovereign debt at the end of the period. Looking ahead, we foresee a generally favorable backdrop for global bond markets, notwithstanding the potential for volatility in certain areas, such as the high-yield and emerging-market segments. We believe that interest rates and credit spreads in many markets are potentially near cyclical peaks. In addition, we see interesting investment opportunities developing with respect to foreign currencies. The dollar may be near a peak itself, vs. other major currencies, given the potential for more-moderate growth in the U.S. and other factors, such as pending tax reform in Europe (such reform in our view will increase demand for the euro). Set within this environment, we will continue to focus on bonds and currencies we deem to have the best prospects. Charles C. Van Vleet Portfolio Manager INTERNATIONAL INVESTING ENTAILS SPECIAL RISK CONSIDERATIONS, INCLUDING CURRENCY FLUCTUATIONS, LOWER LIQUIDITY, ECONOMIC AND POLITICAL RISKS, AND DIFFERENCES IN ACCOUNTING METHODS. 5 WARBURG PINCUS GLOBAL FIXED INCOME FUND ANNUAL INVESTMENT ADVISER'S REPORT -- OCTOBER 31, 2000 (CONT'D) - -------------------------------------------------------------------------------- GROWTH OF $10,000 INVESTED IN ADVISOR CLASS SHARES OF WARBURG PINCUS GLOBAL FIXED INCOME FUND SINCE INCEPTION AS OF OCTOBER 31, 2000 The graph below illustrates the hypothetical investment of $10,000 in Advisor Class shares of Warburg Pincus Global Fixed Income Fund (the "Fund") from August 12, 1996 (inception) to October 31, 2000, compared to the Salomon Brothers World Government Bond Index (Currency-Hedged) ("Salomon"),1 the Lehman Brothers Aggregate Bond Index ("Lehman"),2 and a Composite Benchmark ("Composite")3 for the same time period. Past performance does not predict future results. [GRAPHICS OMITTED] EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC Average Annual Total Returns for periods ended 10/31/00 (Advisor Class shares) Since Inception 1 year 3 year (8/12/96) 3.88% 2.93% 6.72% Fund Solomon Lehman Composite 8/12/96 $10,000.00 $10,000.00 $10,000.00 $10,000.00 8/31/96 10,018.30 10,038.90 9,983.30 10,058.80 9/30/96 10,211.00 10,079.70 10,157.30 10,252.80 10/31/96 10,340.60 10,268.20 10,382.30 10,438.30 11/30/96 10,488.70 10,403.60 10,560.10 10,627.20 12/31/96 10,521.60 10,319.50 10,462.00 10,597.60 1/31/97 10,559.80 10,043.80 10,494.00 10,670.60 2/28/97 10,664.70 9,968.66 10,520.20 10,732.30 3/31/97 10,617.00 9,893.00 10,403.70 10,637.00 4/30/97 10,665.40 9,806.33 10,559.50 10,772.80 5/31/97 10,742.70 10,072.80 10,659.20 10,874.90 6/30/97 10,858.80 10,192.90 10,785.80 11,028.50 7/31/97 10,956.80 10,113.60 11,076.70 11,279.60 8/31/97 10,917.60 10,107.80 10,982.30 11,238.00 9/30/97 11,005.80 10,323.10 11,144.30 11,416.60 10/31/97 10,876.10 10,537.30 11,306.00 11,535.90 11/30/97 10,835.80 10,375.60 11,358.00 11,606.60 12/31/97 10,708.00 10,344.40 11,472.40 11,730.40 1/31/98 10,687.60 10,445.00 11,619.70 11,884.50 2/28/98 10,791.30 10,529.90 11,611.10 11,924.40 3/31/98 10,791.30 10,425.60 11,651.00 11,999.10 4/30/98 10,886.20 10,592.30 11,711.80 12,061.30 5/31/98 10,928.70 10,617.10 11,823.10 12,186.90 6/30/98 10,917.80 10,632.80 11,923.20 12,264.50 7/31/98 10,971.30 10,647.00 11,948.60 12,327.80 8/31/98 11,034.90 10,937.00 12,143.00 12,417.90 9/30/98 11,279.90 11,518.50 12,427.40 12,668.40 10/31/98 11,258.40 11,859.70 12,361.70 12,591.80 11/30/98 11,471.20 11,691.40 12,431.90 12,767.00 12/31/98 11,548.10 11,927.60 12,469.30 12,767.50 1/31/99 11,624.30 11,818.10 12,558.40 12,894.80 2/28/99 11,439.50 11,438.20 12,339.10 12,736.70 3/31/99 11,526.40 11,467.30 12,407.50 12,852.50 4/30/99 11,700.50 11,462.60 12,446.80 12,965.50 5/31/99 11,471.10 11,269.40 12,337.80 12,879.20 6/30/99 11,362.20 11,071.90 12,298.40 12,780.50 7/31/99 11,286.00 11,343.10 12,245.50 12,748.50 8/31/99 11,264.60 11,395.30 12,239.30 12,733.20 9/30/99 11,384.00 11,573.10 12,381.20 12,819.80 10/31/99 11,417.00 11,567.30 12,427.00 12,842.90 11/30/99 11,460.40 11,445.90 12,426.20 12,894.20 12/31/99 11,503.90 11,417.90 12,366.30 12,890.80 1/31/00 11,406.20 11,174.50 12,325.90 12,866.30 2/29/00 11,547.60 11,094.30 12,474.90 12,986.00 3/31/00 11,645.80 11,437.70 12,639.20 13,099.00 4/30/00 11,523.50 11,064.20 12,603.00 13,103.00 5/31/00 11,512.00 11,150.40 12,597.20 13,112.10 6/30/00 11,712.20 11,421.00 12,859.20 13,310.10 7/31/00 11,712.20 11,227.50 12,976.00 13,415.70 8/31/00 11,780.20 11,143.10 13,164.00 13,533.70 9/30/00 11,836.70 11,121.10 13,246.80 13,599.40 10/31/00 11,860.40 10,979.90 13,334.50 13,700.40 FUND ------ 1 Year Total Return (9/30/99 to 9/30/00) ........................... 3.98% 3 Year Average Annual Total Return (9/30/97 to 9/30/00) ............ 2.45% Average Annual Total Return Since Inception (8/12/96 to 9/30/00) ............................................ 6.76% 1 The Salomon Brothers World Government Bond Index (Currency-Hedged) is a market capitalization-weighted index designed to track major government debt markets and is currency-hedged into U.S. dollars. 2 The Lehman Brothers Aggregate Bond Index is composed of the Lehman Brothers Government/Corporate Bond Index and the Lehman Brothers Mortgage-Backed Securities Index. The Aggregate Index includes U.S. Treasury and agency issues, corporate bond issues and mortgage-backed securities rated investment-grade or higher by Moody's Investors Service, Standard & Poor's Corporation or Fitch Investors' Service. 3 The Composite Benchmark measures the weighted performance of three component indexes. The weights of the component indexes -- 50% Lehman Brothers Aggregate Bond Index, 35% Salomon Brothers World Government Bond Index Excluding the U.S. (Currency-Hedged), and 15% Merrill Lynch High Yield Master II Index -- correspond to the investment strategy of the fund's manager. The Merrill Lynch High Yield Master II Index provides a broad-based measure of the performance of the non-investment-grade U.S. domestic bond market. 6 WARBURG PINCUS FIXED INCOME FUND SCHEDULE OF INVESTMENTS October 31, 2000 - --------------------------------------------------------------------------------
RATINGS1 PAR (MOODY'S/S&P) MATURITY RATE% VALUE --- ------------- --------- ------ ------------ CORPORATE/FOREIGN BONDS (39.0%) $2,765,000 Abitibi-Consolidated, Inc. (Baa3, BBB-) 08/01/05 8.300 $ 2,787,261 2,000,000 ABN-AMRO Bank NV New York Branch Subordinate Deposit Notes (Callable 08/01/04 @ $100.00) (Aa2, AA-) 08/01/09 8.250 2,060,148 1,700,000 Adelphia Communications Corp. (B2, B+) 11/15/09 9.375 1,462,000 40,000 AFC Enterprises, Inc. (Callable 05/15/02 @ $105.12) (B2, B) 05/15/07 10.250 38,400 1,900,000 Allied Waste North America, Inc., Series B (Callable 08/01/04 @ $105.00) (B2, B+) 08/01/09 10.000 1,634,000 800,000 Amerada Hess Corp. (Baa1, BBB+) 10/01/29 7.875 804,000 950,000 American General Corp. (A2, AA-) 08/11/10 7.500 950,778 1,500,000 Anadarko Petroleum Corp. (Baa1, BBB+) 10/15/26 7.500 1,428,342 415,000 Argosy Gaming Co. (B2, B) 06/01/09 10.750 435,750 500,000 Associates Corp. NA (A1, A+) 11/01/18 6.950 462,748 920,000 AT&T Corp. (A2, A) 03/15/29 6.500 724,522 4,450,000 Bank of America Corp. (Aa3, A) 02/15/10 7.800 4,526,998 105,000 Brand Scaffold Services, Inc. (B3, B-) 02/15/08 10.250 95,025 700,000 British Sky Broadcasting Group PLC (Ba1, BB+) 10/15/06 7.300 634,602 750,000 Centurytel, Inc. (Baa2, BBB+) 10/15/10 8.375 751,093 900,000 Chase Manhattan Corp. (A1, A) 06/15/10 7.875 917,694 950,000 Cilcorp, Inc. (Baa2, BB+) 10/15/29 9.375 1,018,403 1,050,000 Citicorp Subordinate Notes, Series F (A1, A+) 11/15/08 6.375 987,825 3,100,000 Citigroup, Inc. (Aa3, A+) 10/01/10 7.250 3,080,656 4,580,000 Conseco, Inc. (B1, BB-) 10/15/06 9.000 2,885,400 1,750,000 Countrywide Home Loan Co. (A3, A) 04/15/09 6.250 1,575,950 550,000 Cox Communications, Inc. (Baa2, BBB) 08/15/09 7.875 554,982 585,000 CSC Holdings, Inc. (Ba1, BB+) 07/15/08 7.250 543,750 70,000 CSC Holdings, Inc. (Ba1, BB+) 07/15/09 8.125 68,238 700,000 CSX Corp. (Baa2, BBB) 05/01/27 7.950 677,893 65,000 Dayton Superior Corp. (B3, B-) 06/15/09 13.000 61,913 3,660,000 Dime Bancorp, Inc. (Ba1, BBB-) 07/25/01 7.000 3,646,722 1,550,000 Duke Energy Field Services (Baa2, BBB) 08/16/05 7.500 1,565,522 800,000 Enron Corp. (Baa1, BBB+) 06/15/03 7.875 815,494 1,600,000 Finova Capital Corp. (B3, BB) 09/21/09 7.625 912,048 1,650,000 Ford Motor Credit Co. (A2, A) 07/16/31 7.450 1,525,159 2,260,000 Ford Motor Credit Co. (A2, A) 06/15/10 7.875 2,282,803 1,600,000 GE Global Insurance Holding Corp. (Aa1, AA) 06/15/10 7.500 1,616,861 1,725,000 General Motors Corp. (A2, A) 05/01/28 6.750 1,503,353 1,675,000 Global Crossing Holdings, Ltd. (Ba2, BB) 11/15/09 9.500 1,608,000 3,115,000 Golden State Escrow Corp. (Callable @ Make Whole + 50 BP) (Ba1, BB+) 08/01/03 7.000 2,984,843 300,000 Goldman Sachs Group, Inc. (A1, A+) 01/28/10 7.800 303,403 35,000 Gothic Production Corp., Series B (B3, CCC) 05/01/05 11.125 36,925 480,000 Government of Bulgaria Series A Collateralized (B2, NR) 07/28/24 7.750 360,600 110,000 HCA - The Healthcare Company (Ba2, BB+) 09/01/10 8.750 111,170 2,980,000 HMH Properties, Inc.2 (Ba3, NR) 05/15/05 9.500 2,920,400 35,000 Hollinger International Publishing, Inc. (Ba2, BB) 03/15/05 8.625 35,175 See Accompanying Notes to Financial Statements. 7 WARBURG PINCUS FIXED INCOME FUND SCHEDULE OF INVESTMENTS (CONT'D) October 31, 2000 - -------------------------------------------------------------------------------- RATINGS1 PAR (MOODY'S/S&P) MATURITY RATE% VALUE --- ------------- --------- ------ ------------ CORPORATE/FOREIGN BONDS (CONT'D) $2,940,000 John Hancock Global Funding II (Aa2, AA+) 07/02/10 7.900 $ 3,014,864 1,205,000 K-Mart Corp. (Baa3, BB+) 12/01/04 8.375 1,044,055 850,000 Koninklijke Kpn NV, Series 144A (A3, A-) 10/01/30 8.375 834,275 1,500,000 Kroger Co. (A1, A+) 12/15/18 6.800 1,292,080 2,250,000 Lehman Brothers Holdings, Inc. (A2, A) 06/15/07 8.250 2,299,527 3,000,000 Level 3 Communications, Inc. Senior Notes (B3, B) 05/01/08 9.125 2,437,500 2,230,000 Lockheed Martin Corp. (Baa3, BBB-) 12/01/05 7.950 2,293,807 2,300,000 Lockheed Martin Corp. (Baa3, BBB-) 12/01/29 8.500 2,467,999 750,000 Long Island Savings Bank, Inc. (Baa3, BBB) 06/13/02 7.000 749,067 1,370,000 Magnum Hunter Resources, Inc. (B2, B) 06/01/07 10.000 1,349,450 780,000 MGM Grand, Inc. (Ba2, BB+) 06/01/07 9.750 813,150 1,100,000 MGM Mirage, Inc. (Callable at Make Whole +25BP) (Baa3, BBB-) 09/15/10 8.500 1,081,525 2,200,000 Morgan Stanley Dean Witter & Co. (Aa3, AA-) 06/15/05 7.750 2,247,755 40,000 Nextlink Communications, Inc. (B2, B) 11/15/08 10.750 35,200 415,000 Nextlink Communications, Inc. (B2, B) 06/01/09 10.750 366,237 1,000,000 Nextlink Communications, Inc. (B2, B) 12/01/09 10.500 870,000 1,610,000 Nextlink Communications, Inc. (B2, B) 12/01/09 12.125 784,875 700,000 Norfolk Southern Corp. (Baa1, BBB) 05/15/27 7.800 681,953 1,400,000 NTL Communications Corp. Class B2 (B2, B) 10/01/08 11.500 1,288,000 65,000 Nuevo Energy Co., Series 144A (B1, B+) 10/01/10 9.375 65,000 80,000 Owens-Illinois, Inc. (Ba1, BB) 05/15/08 7.350 54,800 800,000 Pacific Gas & Electric Co. (A2, A) 11/01/05 7.375 799,233 1,015,000 Park Place Entertainment Corp. (Ba2, BB+) 12/15/05 7.875 979,475 25,000 Parker Drilling Co., Series D (B1, B+) 11/15/06 9.750 24,625 550,000 Petroleum Geo-Services (Baa3, BBB) 07/15/29 8.150 535,876 500,000 Phillips Petroleum Co. (Baa2, BBB) 05/25/05 8.500 527,974 700,000 Phillips Petroleum Co. (Baa2, BBB) 05/25/10 8.750 765,924 2,000,000 Potomac Electric Power Co. (Callable 05/15/02 @ $103.21) (A1, A) 05/15/27 8.500 2,039,762 70,000 PSINet, Inc. (B3, B-) 02/15/05 10.000 33,775 800,000 Raytheon Co. (Baa2, BBB-) 08/15/27 7.200 734,954 1,605,600 Republic of Argentina Debentures (B1, BB-) 03/31/05 7.625 1,406,907 660,000 Republic of Argentina Global Notes (B1, BB-) 12/04/05 11.000 594,000 870,000 Republic of Argentina (B1, BB-) 03/31/23 6.000 572,569 750,000 Republic of Brazil, Series 30Yr (B1, B+) 04/15/01 7.375 576,094 1,970,256 Republic of Brazil (B1, B+) 04/15/14 8.000 1,467,841 1,550,000 Republic of Bulgaria, FLIRB, Series A (B2, B+) 07/28/12 2.750 1,101,469 1,450,000 Republic of Poland Collateralized Par Bonds (Baa1, BBB+) 10/27/24 3.500 913,500 420,000 Republic of Poland (Baa1, BBB+) 04/27/01 4.000 286,913 3,400,000 Riggs Capital Trust II Preferred Securities, Series C (Callable 03/15/07 @ $104.44) (Ba2, B+) 03/15/27 8.875 2,505,984 3,980,000 Russian Federation (B3, B-) 03/31/30 2.500 1,492,500 45,000 Ryland Group (Ba2, BB) 09/01/10 9.750 43,425 2,365,000 Safeway, Inc. (Callable @ Make Whole +12.5BP) (Baa2, BBB) 09/15/04 7.250 2,355,838 2,775,000 Saks, Inc. (Baa3, BB+) 07/15/04 7.000 1,873,125 See Accompanying Notes to Financial Statements. 8 WARBURG PINCUS FIXED INCOME FUND SCHEDULE OF INVESTMENTS (CONT'D) October 31, 2000 - -------------------------------------------------------------------------------- RATINGS1 PAR (MOODY'S/S&P) MATURITY RATE% VALUE --- ------------- --------- ------ ------------ CORPORATE/FOREIGN BONDS (CONT'D) $ 30,000 Salem Communications Corp., Series B (B3, B-) 10/01/07 9.500 $ 28,800 85,000 Scotts Co. (B2, B+) 01/15/09 8.625 81,175 1,750,000 Sprint Capital Corp. (Baa1, BBB+) 11/15/28 6.875 1,444,581 300,000 Target Corp. (A2, A) 08/15/10 7.500 298,804 1,950,000 Telefonica Europe (A2, A+) 09/15/05 7.350 1,957,827 1,850,000 Telefonica Europe (A2, A+) 09/15/10 7.750 1,861,685 900,000 Telefonica Europe (A2, A+) 09/15/30 8.250 927,444 3,195,000 Time Warner, Inc. (Baa3, BBB) 05/15/29 6.625 2,757,295 900,000 Tyco International Group SA (Baa1, A-) 01/15/29 6.875 789,524 1,650,000 U.S. West Capital Funding, Inc. (Baa1, BBB+) 08/15/01 6.875 1,649,050 550,000 Viacom, Inc. (Baa1, BBB+) 07/30/10 7.700 561,255 700,000 Viacom, Inc. (Baa1, BBB+) 07/30/30 7.875 707,524 750,000 Visteon Corp. (Baa2, BBB) 08/01/10 8.250 743,406 700,000 Voicestream Wireless Corp. (Callable 11/15/04 @ $105.19), Series 144A (B2, B-) 11/15/09 10.375 752,500 1,250,000 Voicestream Wireless Corp. (B2, B-) 11/15/09 909,375 2,075,000 Wal Mart Stores, Inc. (Aa2, AA) 02/15/30 7.550 2,160,212 700,000 Worldcom, Inc. (A3, A-) 08/15/28 6.950 618,156 1,180,000 Worldcom, Inc. (A3, A-) 05/15/06 8.000 1,210,968 ------------ TOTAL CORPORATE/FOREIGN BONDS (Cost $123,912,606) 120,559,312 ------------ ASSET/MORTGAGE BACKED SECURITIES (55.3%) 4,660,000 California Infrastructure, PG&E-1, Series 1997-1, Class A7 (Callable 09/25/06 @ $100.00) (Aaa, AAA) 09/25/08 6.420 4,566,427 2,500,000 Commonwealth Edison Co. (Baa1, A-) 02/01/22 8.625 2,546,230 5,650,000 Commonwealth Edison Transitional Funding Trust, Series 1998-1, Class A6 (Aaa, AAA) 06/25/09 5.630 5,316,791 171,127 Donaldson, Lufkin, & Jenrette, Inc. Acceptance Trust, Series 1989-1, Class F (Aaa, AAA) 03/31/00 11.000 185,523 9,800,000 Fannie Mae (Aaa, AAA) 07/01/15 7.000 9,751,000 12,248,000 Fannie Mae (Aaa, AAA) 02/18/21 5.750 11,737,258 4,733,952 Fannie Mae (Aaa, AAA) 03/01/28 8.000 4,794,606 835,504 Fannie Mae (Aaa, AAA) 05/01/29 7.500 834,721 60,867 Fannie Mae (Aaa, AAA) 07/01/29 7.500 60,810 32,461 Fannie Mae (Aaa, AAA) 08/01/29 7.500 32,431 570,026 Fannie Mae (Aaa, AAA) 08/01/29 7.500 569,492 75,791 Fannie Mae (Aaa, AAA) 08/01/29 7.500 75,721 648,928 Fannie Mae (Aaa, AAA) 08/01/29 7.500 648,320 24,308 Fannie Mae (Aaa, AAA) 08/01/29 7.500 24,285 316,774 Fannie Mae (Aaa, AAA) 09/01/29 7.000 310,736 25,907 Fannie Mae (Aaa, AAA) 09/01/29 7.500 25,883 35,805 Fannie Mae (Aaa, AAA) 09/01/29 7.500 35,772 107,484 Fannie Mae (Aaa, AAA) 09/01/29 7.500 107,383 542,182 Fannie Mae (Aaa, AAA) 10/01/29 7.500 541,674 514,742 Fannie Mae (Aaa, AAA) 10/01/29 7.500 514,260 See Accompanying Notes to Financial Statements. 9 WARBURG PINCUS FIXED INCOME FUND SCHEDULE OF INVESTMENTS (CONT'D) October 31, 2000 - -------------------------------------------------------------------------------- RATINGS1 PAR (MOODY'S/S&P) MATURITY RATE% VALUE --- ------------- --------- ------ ------------ ASSET/MORTGAGE BACKED SECURITIES (CONT'D) $ 79,945 Fannie Mae (Aaa, AAA) 10/01/29 7.500 $ 79,871 36,943 Fannie Mae (Aaa, AAA) 10/01/29 7.500 36,909 40,989 Fannie Mae (Aaa, AAA) 10/01/29 7.500 40,951 39,001 Fannie Mae (Aaa, AAA) 10/01/29 7.500 38,965 653,231 Fannie Mae (Aaa, AAA) 10/01/29 7.000 640,779 199,479 Fannie Mae (Aaa, AAA) 10/01/29 8.000 202,036 24,410 Fannie Mae (Aaa, AAA) 10/01/29 7.500 24,387 656,982 Fannie Mae (Aaa, AAA) 11/01/29 7.500 656,367 40,313 Fannie Mae (Aaa, AAA) 11/01/29 7.500 40,276 335,987 Fannie Mae (Aaa, AAA) 11/01/29 7.500 335,673 98,564 Fannie Mae (Aaa, AAA) 11/01/29 7.500 98,472 54,689 Fannie Mae (Aaa, AAA) 12/01/29 7.000 53,647 1,082,021 Fannie Mae (Aaa, AAA) 12/01/29 7.000 1,061,396 45,737 Fannie Mae (Aaa, AAA) 12/01/29 7.500 45,695 382,022 Fannie Mae (Aaa, AAA) 12/01/29 7.500 381,664 144,546 Fannie Mae (Aaa, AAA) 12/01/29 7.000 141,791 560,232 Fannie Mae (Aaa, AAA) 12/01/29 7.000 549,553 571,458 Fannie Mae (Aaa, AAA) 12/01/29 7.500 570,923 190,654 Fannie Mae (Aaa, AAA) 12/01/29 7.500 190,475 848,308 Fannie Mae (Aaa, AAA) 01/01/30 7.000 832,137 51,688 Fannie Mae (Aaa, AAA) 01/01/30 7.000 50,703 584,417 Fannie Mae (Aaa, AAA) 01/01/30 7.500 583,870 40,224 Fannie Mae (Aaa, AAA) 01/01/30 7.000 39,458 649,996 Fannie Mae (Aaa, AAA) 01/01/30 8.000 658,325 78,041 Fannie Mae (Aaa, AAA) 01/01/30 7.500 77,968 7,435,000 Fannie Mae (Aaa, AAA) 01/15/30 7.125 7,757,471 326,291 Fannie Mae (Aaa, AAA) 02/01/30 7.000 320,072 47,147 Fannie Mae (Aaa, AAA) 02/01/30 7.500 47,103 99,836 Fannie Mae (Aaa, AAA) 02/01/30 7.500 99,743 34,484 Fannie Mae (Aaa, AAA) 02/01/30 7.500 34,453 1,227,127 Fannie Mae (Aaa, AAA) 02/01/30 7.000 1,203,735 24,852 Fannie Mae (Aaa, AAA) 02/01/30 7.000 24,379 215,362 Fannie Mae (Aaa, AAA) 02/01/30 8.000 218,122 1,036,972 Fannie Mae (Aaa, AAA) 02/01/30 7.000 1,017,205 685,753 Fannie Mae (Aaa, AAA) 03/01/30 7.500 685,111 919,336 Fannie Mae (Aaa, AAA) 03/01/30 7.000 901,811 686,194 Fannie Mae (Aaa, AAA) 03/01/30 7.500 685,551 1,294,645 Fannie Mae (Aaa, AAA) 03/01/30 8.000 1,311,233 843,284 Fannie Mae (Aaa, AAA) 03/01/30 8.000 854,089 340,293 Fannie Mae (Aaa, AAA) 03/01/30 7.000 333,807 916,395 Fannie Mae (Aaa, AAA) 03/01/30 7.500 915,536 163,912 Fannie Mae (Aaa, AAA) 03/01/30 7.500 163,759 777,387 Fannie Mae (Aaa, AAA) 03/01/30 7.500 776,659 76,769 Fannie Mae (Aaa, AAA) 03/01/30 7.500 76,698 417,464 Fannie Mae (Aaa, AAA) 03/01/30 7.000 409,507 See Accompanying Notes to Financial Statements. 10 WARBURG PINCUS FIXED INCOME FUND SCHEDULE OF INVESTMENTS (CONT'D) October 31, 2000 - -------------------------------------------------------------------------------- RATINGS1 PAR (MOODY'S/S&P) MATURITY RATE% VALUE --- ------------- --------- ------ ------------ ASSET/MORTGAGE BACKED SECURITIES (CONT'D) $ 446,690 Fannie Mae (Aaa, AAA) 03/01/30 7.000 $ 438,176 63,214 Fannie Mae (Aaa, AAA) 03/01/30 7.500 63,155 665,872 Fannie Mae (Aaa, AAA) 03/01/30 7.500 665,248 1,472,134 Fannie Mae (Aaa, AAA) 03/01/30 7.000 1,444,072 634,563 Fannie Mae (Aaa, AAA) 03/01/30 7.000 622,467 69,158 Fannie Mae (Aaa, AAA) 03/01/30 7.500 69,093 172,081 Fannie Mae (Aaa, AAA) 03/01/30 7.500 171,920 490,327 Fannie Mae (Aaa, AAA) 03/01/30 7.000 480,981 723,120 Fannie Mae (Aaa, AAA) 03/01/30 7.000 709,336 271,120 Fannie Mae (Aaa, AAA) 03/01/30 7.000 265,952 825,744 Fannie Mae (Aaa, AAA) 03/01/30 7.500 824,970 993,898 Fannie Mae (Aaa, AAA) 03/01/30 7.500 992,967 563,176 Fannie Mae (Aaa, AAA) 03/01/30 8.000 570,392 915,751 Fannie Mae (Aaa, AAA) 03/01/30 8.000 927,484 565,083 Fannie Mae (Aaa, AAA) 03/01/30 8.000 572,324 9,600,000 Fannie Mae (Aaa, AAA) 06/01/30 7.000 9,411,000 28,800,000 Fannie Mae (Aaa, AAA) 06/01/30 8.000 29,151,000 3,038,000 Fannie Mae, Series 1993-196, Class J (Aaa, AAA) 10/25/08 5.500 2,895,472 4,920,000 Fannie Mae, Series 1997-51, Class KB Guaranteed REMIC TR (Aaa, AAA) 03/20/08 7.000 4,865,093 11,000,000 Fannie Mae, Series 1997-79, Class KB (Aaa, AAA) 07/18/26 6.000 10,030,350 4,700,000 Fannie Mae, Series 1998-M4, Class B (Aaa, AAA) 12/25/23 6.424 4,578,352 36,990 Federal Home Loan Mortgage Corp. PC (Aaa, AAA) 10/08/99 8.750 37,442 14,750,000 Ginnie Mae (Aaa, AAA) 07/01/30 7.500 14,805,312 800,000 Korea Asset Funding, Ltd., Series 2000-1A, Class 1 (Baa2, NR) 02/10/09 8.891 794,000 1,653,214 LB Commercial Conduit Mortgage Trust Class 99-C2 A1 (Aaa, NR) 07/15/08 7.105 1,666,612 1,000,000 MBNA Master Credit Card Trust, Series 99-J, Class A (Aaa, AAA) 02/15/12 7.000 1,004,350 3,300,000 Merrill Lynch Mortgage Investors, Inc., Series 1999-C1, Class A2 (NR, AAA) 09/15/09 7.560 3,390,222 2,664,335 Morgan Stanley Mortgage Trust, Series 40, Class 8 (NR, AAA) 07/20/21 7.000 2,634,300 4,000,000 Nomura Asset Securities Corp., Series 1993-1, Class B1 (NR, A) 12/15/01 6.680 3,966,050 788,853 Nomura Asset Securities Corp., Series 1994-4B, Class 4A (Aaa, AAA) 09/25/24 8.300 795,760 632,479 Residential Funding Mortgage Securities I, Series 96 - S2, Class A1 (NR, AAA) 01/25/11 6.750 628,527 2,500,000 Shurgard Pass-Through CTFS Trust (Nomura Asset Securities Corp.), Series 1, Class 1 (NR, NR) 11/15/00 8.240 2,501,943 994,096 Small Business Administration Guaranteed-Development Participation Certificate Debenture Series 1992-20D (Callable 10/01/02 @ $100.00) (Aaa, AAA) 12/22/03 8.200 1,023,341 ------------ TOTAL ASSET/MORTGAGE BACKED SECURITIES (Cost $173,520,587) 170,945,321 ------------ See Accompanying Notes to Financial Statements. 11 WARBURG PINCUS FIXED INCOME FUND SCHEDULE OF INVESTMENTS (CONT'D) October 31, 2000 - -------------------------------------------------------------------------------- RATINGS1 PAR (MOODY'S/S&P) MATURITY RATE% VALUE --- ------------- --------- ------ ------------ UNITED STATES TREASURY OBLIGATIONS (1.7%) $3,700,000 U.S. Treasury Notes (Aaa, AAA) 11/15/03 4.250 $3,533,752 1,100,000 U.S. Treasury Notes (Aaa, AAA) 09/30/02 6.000 1,101,503 100,000 U.S. Treasury Notes (Aaa, AAA) 11/15/04 5.875 100,068 450,000 U.S. Treasury Notes (Aaa, AAA) 05/15/05 6.750 466,664 ------------ TOTAL UNITED STATES TREASURY OBLIGATIONS (Cost $5,203,421) 5,201,987 ------------ NUMBER OF SHARES ------- PREFERRED STOCKS (3.2%) 36,800 Banco Totta & Acores Financial Corp., Series A (Callable 10/11/06 @ $25.00) 8.875 837,200 72,000 Equity Residential Properties Trust, Series D REIT (Callable 07/15/07 @ $25.00) 8.600 1,647,000 65,050 Natexis Bank, Series A (Callable 06/30/08 @ $100.00) 8.440 6,214,308 27,250 Prologis Trust, Series C REIT (Callable 11/13/26 @ $50.00) 8.540 1,181,119 ------------ TOTAL PREFERRED STOCKS (Cost $10,573,126) 9,879,627 ------------ SHORT TERM INVESTMENTS (16.1%) 34,850,559 Institutional Money Market Trust 34,850,559 14,967,214 RBB Money Market Portfolio 14,967,214 ------------ TOTAL SHORT TERM INVESTMENTS (Cost $49,817,773) 49,817,773 ------------ WARRANTS (0.0%) 65 Dayton Superior (strike price $0.01 for 0.69 share per warrant, expiration date 6/15/09) (Cost $1,300) 1,300 ------------ TOTAL INVESTMENTS ATVALUE (115.3%) (Cost $363,028,813 3) 356,405,320 LIABILITIES IN EXCESS OF OTHER ASSETS (-15.3%) (47,413,741) ------------ NET ASSETS (100.0%) $308,991,579 ============ NET ASSET VALUE, offering and redemption price per Common Class share ($302,187,709 / 30,885,076 shares) $9.78 ===== NET ASSET VALUE, offering and redemption price per Advisor Class share ($6,803,870 / 695,665 shares) $9.78 ===== INVESTMENT ABBREVIATIONS NR = Not Rated REMIC = Real Estate Mortgage Investment Conduit CTFS = Certificates REIT = Real Estate Investment Trust - -------------------------------------------------------------------------------- 1 Credit ratings given by Moody's Investors Service, Inc. and Standard & Poor's Ratings Group are unaudited. 2 Illiquid security. 3 Cost for federal income tax purposes is $363,048,276.
See Accompanying Notes to Financial Statements. 12 WARBURG PINCUS GLOBAL FIXED INCOME FUND SCHEDULE OF INVESTMENTS October 31, 2000 - --------------------------------------------------------------------------------
RATINGS2 PAR1 (MOODY'S/S&P) MATURITY RATE% VALUE -------- ------------- -------- ------- ------------ FOREIGN BONDS (32.7%) ARGENTINA (3.2%) 692,000 (A) Banco Hipotecario (Putable 12/03/01 @ $100.00) (B1, NR) 12/03/08 13.000 $ 683,350 740,000 (A) Republic of Argentina, Series XW (B1, BB) 12/04/05 11.000 666,000 1,000,800 (A)Repubic of Argentina, (B1, BB) 03/31/05 7.375 876,951 300,000 (A) Republic of Argentina, Series L-GP (B1, BB-) 03/31/23 6.000 197,438 1,484,000 (A) Telecom Argentina++ (B1, BBB-) 07/12/01 9.750 1,483,669 ------------ 3,907,408 ------------ BRAZIL (0.3%) 300,000 (A) Republic of Brazil (B2, B+) 04/15/24 7.375 230,438 189,000 (A) Republic of Brazil (B1, B+) 08/17/40 11.000 144,113 ------------ 374,551 ------------ BULGARIA (0.4%) 690,000 (A) Republic of Bulgaria, Discount Bond, Series A (B2, NR) 7/28/24 7.062 518,362 ------------ CANADA (3.5%) 6,845,000 Province of British Columbia (Aa2, AA-) 12/01/06 5.250 4,287,694 ------------ CHINA (0.7%) 985,000 (B) HSBC Capital Funding LP (NR, NR) 06/30/49 8.030 845,325 ------------ DENMARK (4.1%) 40,400,000 Kingdom of Denmark (Aaa, AAA) 11/15/07 7.000 4,993,448 ------------ GERMANY (6.7%) 1,173,000 (A) Deutsche Bank AG, Series 144A (Callable 06/30/09 @ $100.00) (A1, A+) 12/29/49 7.872 1,120,641 2,000,000 (B) German Government (Aaa, NR) 01/04/10 5.375 1,714,276 6,500,000 (B) German Government, Series 99 (Aaa, NR) 07/04/09 4.500 5,230,898 ------------ 8,065,815 ------------ ITALY (4.3%) 4,200,000 (B) Buoni Poliennali Del Tes (Aa3, AA) 05/01/03 4.750 3,517,741 2,255,000 (B) Buoni Poliennali Del Tes (Aa3, AA) 11/01/09 4.250 1,740,565 ------------ 5,258,306 ------------ JAPAN (4.8%) 580,000,000 Japan Government (Aa1, AAA) 12/20/05 2.900 5,782,679 ------------ RUSSIA (0.3%) 1,000,000 (A) Russian Federation, Series 144A (NR, B-) 03/31/30 2.500 375,000 ------------ SOUTH AFRICA (1.8%) 16,860,000 Republic of South Africa (Baa1, BBB+) 08/31/10 13.000 2,141,750 ------------ TURKEY (0.7%) 641,550,000 Republic of Turkey (NR, NR) 05/23/01 33.137 782,193 ------------ See Accompanying Notes to Financial Statements. 13 WARBURG PINCUS GLOBAL FIXED INCOME FUND SCHEDULE OF INVESTMENTS (CONT'D) October 31, 2000 - -------------------------------------------------------------------------------- RATINGS2 PAR1 (MOODY'S/S&P) MATURITY RATE% VALUE -------- ------------- -------- ------- ------------ FOREIGN BONDS (CONT'D) UNITED KINGDOM (1.9%) 1,456,000 (A) Lloyds TSB Bank PLC (Callable 07/15/09 @ 100 EUR) (Aa2, A+) 07/15/49 5.625 $ 1,181,941 1,000,000 (B) Royal Bank of Scotland PLC (A1, AA-) 03/31/49 6.770 852,993 295,000 (B) British Sky Broadcasting Inc. (Ba1, BB+) 10/15/06 7.300 267,440 ------------ 2,302,374 ------------ TOTAL FOREIGN BONDS (Cost $45,303,282) 39,634,905 ------------ UNITED STATES BONDS/NOTES (59.1%) 3,560,000 California Infrastructure San Diego Gas & Electric Rate Reduction Series 1997-1 Class A7 (Aaa, AAA) 12/26/09 6.370 3,455,532 305,000 CSC Holdings, Inc. (Ba1, BB+) 07/15/08 7.250 283,494 1,490,000 Conseco, Inc. (B1, BB-) 10/15/06 9.000 938,700 600,000 Duke Energy Field Services (Baa2, BBB) 08/16/05 7.500 606,008 615,717 Fannie Mae (Aaa, AAA) 10/01/24 6.500 592,243 1,500,000 Fannie Mae (Aaa, AAA) 11/01/30 7.000 1,470,469 280,000 Federal Home Loan Bank (Aaa, AAA) 08/15/06 6.375 277,437 197,000,000 (C) Ford Motor Credit Co. (A1, A+) 02/07/05 1.200 1,774,847 500,000 Ford Motor Credit Co. (A2, A) 06/15/10 7.875 505,045 300,000 GE Global Insurance (Aa1, AA) 06/15/10 7.500 303,161 2,729,228 Ginnie Mae (Aaa, AAA) 03/15/26 7.000 2,693,407 3,382,187 Ginnie Mae (Aaa, AAA) 03/15/29 6.500 3,268,039 640,000 Global Crossing Holdings, Ltd. (Callable 11/01/04 @ $104.75) (Ba2, BB) 11/15/09 9.500 614,400 2,931,000 (B) GMAC Swift Trust Series 1999-1 (Aaa, AAA) 01/18/05 5.000 2,419,974 1,600,000 Golden State Escrow Corp. (Callable @ Make Whole +50BP) (Ba1, BB+) 08/01/03 7.000 1,533,146 600,000 John Hancock Global Funding II Series 144A (NR, AA+) 07/02/10 7.900 615,278 2,435,000 Illinois Power Transitional Funding Trust, Series 1998-1, Class A6 (Aaa, AAA) 06/25/09 5.540 2,279,805 5,308,000 MBNA Master Credit Card Trust II Series 1997-I, Class A (NR, NR) 01/15/07 6.550 5,279,443 295,000 MGM Mirage, Inc. (Ba2, BB+) 06/01/07 9.750 307,538 800,000 Nextel Communications, Inc. (Callable 02/15/03 @ 104.97) (B1, B-) 02/15/08 10.737 598,000 600,000 Nextlink Communications, Inc. (B2, B) 12/01/09 15.113 292,500 360,000 Nextlink Communications, Inc. (B2, B) 12/01/09 10.500 313,200 1,840,000 NTL Communications Corp. Class B3 (B2, B) 10/01/08 11.500 1,692,800 400,000 Park Place Entertainment (Ba2, BB+) 12/15/05 7.875 386,000 5,070,000 PECO Energy Transition Trust (Aaa, AAA) 03/01/09 6.050 4,853,435 90,000 Phillips Petroleum Company (Baa2, BBB) 05/25/05 8.500 95,035 305,000 Rogers Wireless Communications, Sr. Sub. Notes (Callable 10/01/02 @ $104.40) (Ba2, BB-) 10/01/07 8.800 303,475 248,000,000 (C) Toyota Motor Credit Corp. (Aa1, AAA) 12/20/04 1.000 2,268,054 See Accompanying Notes to Financial Statements. 14 WARBURG PINCUS GLOBAL FIXED INCOME FUND SCHEDULE OF INVESTMENTS (CONT'D) October 31, 2000 - -------------------------------------------------------------------------------- RATINGS2 PAR1 (MOODY'S/S&P) MATURITY RATE% VALUE -------- ------------- -------- ------- ------------ UNITED STATES BONDS/NOTES (CONT'D) 1,165,000 U.S. Treasury Bonds (Aaa, AAA) 08/15/10 5.750 $ 1,164,273 10,800,000 U.S. Treasury Notes (Aaa, AAA) 05/15/05 6.750 11,199,946 11,355,000 U.S. Treasury Notes (Aaa, AAA) 08/15/09 6.000 11,476,464 830,000 U.S. Treasury Notes (Aaa, AAA) 02/15/10 6.500 869,102 5,661,000 U.S. Treasury Notes (Aaa, AAA) 08/15/29 6.125 5,864,445 300,000 U.S. Treasury Notes (Aaa, AAA) 05/15/30 6.250 319,641 800,000 Voicestream Wireless Holding, Series 144A (Callable 11/15/04 @ $105.19) (B2, B-) 11/15/09 10.375 860,000 ------------ TOTAL UNITED STATES BONDS/NOTES (Cost $73,236,887) 71,774,336 ------------ UNITED STATES TREASURY BILLS4 (0.1%) 10,000 U.S. Treasury Bills (Aaa, AAA) 03/01/01 5.873 9,798 20,000 U.S. Treasury Bills (Aaa, AAA) 03/01/01 6.025 19,595 5,000 U.S. Treasury Bills (Aaa, AAA) 03/01/01 6.059 4,899 15,000 U.S. Treasury Bills (Aaa, AAA) 03/01/01 6.060 14,696 ------------ TOTAL UNITED TREASURY BILLS (Cost $48,994) 48,988 ------------ NUMBER OF SHARES --------- PREFERRED STOCK (1.9%) 23,900 Natexis AMBS Co. Series A (Callable 06/30/08 @ $100.00) (Cost $2,387,492) 8.540 2,283,197 ------------ SHORT TERM INVESTMENT (4.1%) 4,977,211 RBB Money Market Portfolio (Cost $4,977,211) 4,977,211 ------------ TOTAL INVESTMENTS AT VALUE (97.8%) (Cost $125,953,866 5) 118,718,637 OTHER ASSETS IN EXCESS OF LIABILITIES (2.2%) 2,612,171 ------------ NET ASSETS (100.0%) $121,330,808 ============ NET ASSET VALUE, offering and redemption price per Common Class share ($121,309,151 / 12,488,897 shares) $ 9.71 ====== NET ASSET VALUE, offering and redemption price per Advisor Class share ($21,657 / 2,106 shares) $10.28 ====== INVESTMENT ABBREVIATIONS EUR = European Currency Unit NR = Not Rated - -------------------------------------------------------------------------------- 1 Unless otherwise indicated below, all securities are denominated in the currency of the issuers' country of origin. 2 Credit ratings given by Moody's Investors Service, Inc. and Standard & Poor's Ratings Group are unaudited. 3 Illiquid security 4 Collateralized against futures obligations. 5 Cost for federal income tax purposes is $125,956,030. (A)Denominated in U.S. Dollars. (B)Denominated in Euro. (C)Denominated in Japanese Yen.
See Accompanying Notes to Financial Statements. 15 WARBURG PINCUS FIXED INCOME FUNDS STATEMENTS OF ASSETS AND LIABILITIES October 31, 2000 - --------------------------------------------------------------------------------
WARBURG PINCUS WARBURG PINCUS GLOBAL FIXED INCOME FIXED INCOME FUND FUND -------------- ------------- ASSETS Investments at value (Cost $363,028,813 and $125,953,866, respectively) $356,405,320 $118,718,637 Cash 625 0 Receivable on forward currency contracts 0 183,155 Receivable for investments sold 30,531,273 4,550,309 Dividends and interest receivable 4,136,088 2,178,832 Receivable for fund shares sold 390,491 163,993 Margin receivable on futures 0 9,776 Prepaid expenses and other assets 36,482 31,700 ------------ ------------ Total Assets 391,500,279 125,836,402 ------------ ------------ LIABILITIES Advisory fee payable 126,361 43,935 Administrative fee payable 48,878 19,205 Directors fee payable 2,825 2,400 Payable for investments purchased 81,787,953 4,080,330 Payable for fund share redeemed 271,907 250,902 Dividends payable 159,416 0 Accrued expenses payable 111,360 108,822 ------------ ------------ Total Liabilities 82,508,700 4,505,594 ------------ ------------ NET ASSETS Capital stock, $ .001 par value 31,580 5,977 Paid-in capital 327,451,151 142,220,072 Accumulated undistributed net investment income 23,013 2,919,475 Accumulated net realized loss from investments and foreign currency related transactions (11,890,672) (16,702,354) Net unrealized depreciation from investments and foreign currency related translations (6,623,493) (7,112,362) ------------ ------------ Net Assets $308,991,579 $121,330,808 ============ ============ COMMON SHARES Net assets $302,187,709 $121,309,151 ------------ ------------ Shares outstanding 30,885,076 12,488,897 ------------ ------------ Net asset value, offering price and redemption price per share $ 9.78 $ 9.71 ============ ============ ADVISOR SHARES Net assets $ 6,803,870 $ 21,657 ------------ ------------ Shares outstanding 695,665 2,106 ------------ ------------ Net asset value, offering price and redemption price per share $ 9.78 $ 10.28 ============ ============
See Accompanying Notes to Financial Statements. 16 WARBURG PINCUS FIXED INCOME FUNDS STATEMENTS OF OPERATIONS For the Year Ended October 31, 2000 - --------------------------------------------------------------------------------
WARBURG PINCUS WARBURG PINCUS GLOBAL FIXED INCOME FIXED INCOME FUND FUND -------------- -------------- INVESTMENT INCOME: Dividends $ 862,030 $ 201,716 Interest 23,628,791 7,647,838 ----------- ----------- Total investment income 24,490,821 7,849,554 ----------- ----------- EXPENSES: Investment advisory fees 1,681,883 1,214,634 Administrative fees 529,569 194,076 Transfer agent fees 166,296 163,622 Printing expense 113,202 60,966 Custodian/Sub-custodian fees 66,541 79,354 Registration fees 33,999 29,660 Legal fees 26,225 16,337 Audit fees 25,100 20,893 Shareholder servicing/distribution fees 16,570 128 Directors/Trustees fees 10,820 10,161 Insurance expense 1,765 1,243 Interest expense 1,165 879 Miscellaneous expenses 13,178 5,182 ----------- ----------- 2,686,313 1,797,135 Less: fees waived and transfer agent offsets (146,918) (643,106) ----------- ----------- Total expenses 2,539,395 1,154,029 ----------- ----------- Net investment income 21,951,426 6,695,525 ----------- ----------- NET REALIZED AND UNREALIZED GAIN/(LOSS) ON INVESTMENTS AND FOREIGN CURRENCY TRANSACTIONS: Net realized gain/(loss) from: Investments (9,807,340) (3,011,156) Foreign currency forward transactions 0 6,830,514 Other foreign exchange transactions 0 (1,346,359) ----------- ----------- (9,807,340) 2,472,999 ----------- ----------- Net change in unrealized appreciation/(depreciation) from: Investments 5,206,499 (3,211,859) Futures contracts 0 21,434 Translation of assets and liabilities in foreign currencies 0 (678,518) ----------- ----------- 5,206,499 (3,868,943) ----------- ----------- Net loss on investments and foreign currency transactions (4,600,841) (1,395,944) ----------- ----------- Net increase in net assets resulting from operations $17,350,585 $ 5,299,581 =========== ===========
See Accompanying Notes to Financial Statements. 17 WARBURG PINCUS FIXED INCOME FUNDS STATEMENTS OF CHANGES IN NET ASSETS - --------------------------------------------------------------------------------
WARBURG PINCUS WARBURG PINCUS FIXED INCOME FUND GLOBAL FIXED INCOME FUND --------------------------------- -------------------------------- FOR THE YEAR ENDED FOR THE YEAR ENDED OCTOBER 31, OCTOBER 31, 2000 1999 2000 1999 ------------- ------------- ------------ ------------- FROM OPERATIONS: Net investment income $ 21,951,426 $ 23,252,281 $ 6,695,525 $ 7,389,712 Net realized gain/(loss) from investments and foreign currency related transactions (9,807,340) (1,962,658) 2,472,999 (2,940,729) Net change in unrealized appreciation/ (depreciation) from investments and foreign currency related translations 5,206,499 (17,380,764) (3,868,943) (981,559) ------------- ------------- ------------ ------------- Net increase in net assets resulting from operations 17,350,585 3,908,859 5,299,581 3,467,424 ------------- ------------- ------------ ------------- FROM DIVIDENDS AND DISTRIBUTIONS: Dividends from net investment income: Common Class shares (21,533,335) (23,048,992) (9,301,461) (8,236,456) Advisor Class shares (418,091) (203,289) (1,216) 0 Dividends in excess of net investment income: Common Class shares (39,026) (40,837) (2,563,464) (164,530) Advisor Class shares (763) (326) 0 (148,403) Distributions from net realized gains: Common Class shares 0 (1,625,676) 0 0 Advisor Class shares 0 (12,945) 0 0 Distributions in excess of net realized gains: Common Class shares 0 (61,094) 0 0 Advisor Class shares 0 0 0 0 ------------- ------------- ------------ ------------- Net decrease in net assets from dividends and distributions (21,991,215) (24,993,159) (11,866,141) (8,549,389) ------------- ------------- ------------ ------------- FROM CAPITAL SHARE TRANSACTIONS: Proceeds from sale of shares 190,117,460 189,568,336 42,765,183 77,765,560 Reinvestment of dividends and distributions 19,523,822 21,725,382 11,112,722 7,581,877 Net asset value of shares redeemed (296,259,076) (216,553,616) (61,376,243) (105,518,211) ------------- ------------- ------------ ------------- Net decrease in net assets from capital share transactions (86,617,794) (5,259,898) (7,498,338) (20,170,774) ------------- ------------- ------------ ------------- Net decrease in net assets (91,258,424) (26,344,198) (14,064,898) (25,252,739) NET ASSETS: Beginning of year 400,250,003 426,594,201 135,395,706 160,648,445 ------------- ------------- ------------- ------------- End of year $ 308,991,579 $ 400,250,003 $121,330,808 $ 135,395,706 ============= ============= ============ ============= Undistributed net investment income $ 23,013 $ 62,993 $ 2,919,475 $ 2,605,936 ============= ============= ============ =============
See Accompanying Notes to Financial Statements. 18 WARBURG PINCUS FIXED INCOME FUND FINANCIAL HIGHLIGHTS (For an Advisor Class Share of the Fund Outstanding Throughout Each Year) - --------------------------------------------------------------------------------
2000 1999 1998 1997 1996 1 ------ ------ ------ ------ ------ PER-SHARE DATA Net asset value, beginning of period $ 9.89 $10.41 $10.43 $10.10 $ 9.90 ------ ------ ------ ------ ------ INVESTMENT ACTIVITIES: Net investment income 0.62 0.54 0.56 0.60 0.19 Net gains (losses) on investments and foreign currency related transactions (both realized and unrealized) (0.11) (0.48) 0.07 0.33 0.20 ------ ------ ------ ------ ------ Total from investment activities 0.51 0.06 0.63 0.93 0.39 ------ ------ ------ ------ ------ LESS DIVIDENDS AND DISTRIBUTIONS: Dividends from net investment income (0.62) (0.54) (0.56) (0.60) (0.19) Distributions from net realized gains 0.00 (0.04) (0.09) 0.00 0.00 ------ ------ ------ ------ ------ Total dividends and distributions (0.62) (0.58) (0.65) (0.60) (0.19) ------ ------ ------ ------ ------ Net asset value, end of period $ 9.78 $ 9.89 $10.41 $10.43 $10.10 ====== ====== ====== ====== ====== Total return 5.33% 0.67% 6.21% 9.51% 3.93%2 RATIOS/SUPPLEMENTAL DATA: Net assets, end of period (000s omitted) $6,804 $6,817 $3,058 $3,963 $ 911 Ratio of expenses to average net assets3 1.02% 1.01% 1.00% 1.00% 1.00%4 Ratio of net income to average net assets 6.31% 5.38% 5.40% 5.62% 5.85%4 Decrease reflected in above operating ratios due to waivers/reimbursements 0.02% 0.05% 0.04% 0.08% 0.11%4 Portfolio turnover rate 247.21% 144.02% 124.04% 129.06% 194.23% - -------------------------------------------------------------------------------- 1 For the period July 3, 1996 (Commencement of Operations) through October 31, 1996. 2 Non-annualized. 3 Interest earned on uninvested cash balances is used to offset portions of the transfer agent expense. These arrangements resulted in a reduction to the Advisor Class shares' expense ratio by .02%, .01%, .00%, .00%, and .00% for the years or period ended October 31, 2000, 1999, 1998, 1997, and 1996, respectively. The Advisor Class shares' operating expense ratio after reflecting these arrangements was 1.00% for each of the years or period ended October 31, 2000, 1999, 1998, 1997, and 1996. 4 Annualized.
See Accompanying Notes to Financial Statements. 19 WARBURG PINCUS GLOBAL FIXED INCOME FUND FINANCIAL HIGHLIGHTS (For an Advisor Class Share of the Fund Outstanding Throughout Each Year) - --------------------------------------------------------------------------------
2000 1999 1998 1997 1996 1 ------ ------ ------ ------ ------ PER-SHARE DATA Net asset value, beginning of period $10.48 $10.57 $10.90 $11.17 $10.90 ------ ------ ------ ------ ------ INVESTMENT ACTIVITIES: Net investment income 0.52 2 0.44 2 0.37 0.41 0.10 Net gains (losses) on investments and foreign currency related transactions (both realized and unrealized) (0.12) (0.29) (0.02) 0.15 0.27 ------ ------ ------ ------ ------ Total from investment activities 0.40 0.15 0.35 0.56 0.37 ------ ------ ------ ------ ------ LESS DIVIDENDS AND DISTRIBUTIONS: Dividends from net investment income (0.60) (0.00) (0.68) (0.29) (0.10) Dividends in excess of net investment income 0.00 (0.24) 0.00 0.00 0.00 Distributions from net realized gains 0.00 0.00 0.00 (0.54) 0.00 ------ ------ ------ ------ ------ Total dividends and distributions (0.60) (0.24) (0.68) (0.83) (0.10) ------ ------ ------ ------ ------ Net asset value, end of period $10.28 $10.48 $10.57 $10.90 $11.17 ====== ====== ====== ====== ====== Total return 3.88% 1.41% 3.51% 5.18% 3.41%3 RATIOS/SUPPLEMENTAL DATA: Net assets, end of period (000s omitted) $ 22 $ 69 $6,518 $8,935 $ 39 Ratio of expenses to average net assets4 1.47% 1.45% 1.45% 1.45% 1.45%5 Ratio of net income to average net assets 4.90% 4.14% 4.75% 4.76% 5.69%5 Decrease reflected in above operating expense ratios due to waivers/reimbursements 0.51% 0.49% 0.37% 0.33% 0.21%5 Portfolio turnover rate 100.84% 365.02% 233.73% 202.92% 123.90% - -------------------------------------------------------------------------------- 1 For the period August 12, 1996 (Commencement of Operations) through October 31, 1996. 2 Per share information is calculated using the average outstanding shares method. 3 Non-annualized. 4 Interest earned on uninvested cash balances is used to offset portions of the transfer agent expense. These arrangements resulted in a reduction to the Advisor Class shares expense ratio by .02% for the year ended October 31, 2000. These arrangements had no effect on the Advisor Class shares expense ratio for each of the years or period ending October 31, 1999, 1998, 1997 and 1996. The Advisor Class shares operating expense ratio after reflecting these arrangements was 1.45% for each of the years or period ended October 31, 2000, 1999, 1998, 1997 and 1996. 5 Annualized.
See Accompanying Notes to Financial Statements. 20 WARBURG PINCUS FIXED INCOME FUNDS NOTES TO FINANCIAL STATEMENTS October 31, 2000 - -------------------------------------------------------------------------------- 1. SIGNIFICANT ACCOUNTING POLICIES The Warburg Pincus Fixed Income Fund (the "Fixed Income Fund"), a Massachusetts Business Trust, is registered under the Investment Company Act of 1940, as amended (1940 Act), as a diversified, open-end management investment company. The Warburg Pincus Global Fixed Income Fund (the "Global Fixed Income Fund"), a Maryland Corporation, is registered under the 1940 Act as a non-diversified, open-end management investment company (each, a "Fund" and collectively, the "Funds"). Investment objectives for each Fund are as follows: the Fixed Income Fund seeks to generate high current income consistent with reasonable risk and, secondarily, capital appreciation; and the Global Fixed Income Fund seeks to maximize total investment return consistent with prudent investment management, consisting of a combination of interest income, currency gains and capital appreciation. The Funds offer two classes of shares, one class being referred to as the Common Class shares and one class being referred to as the Advisor Class shares. Common and Advisor Class shares in each Fund represent an equal pro rata interest in each Fund, except that they bear different expenses which reflect the difference in the range of services provided to them. Advisor Class shares for each Fund bear expenses paid pursuant to a distribution plan adopted by each Fund at an annual rate not to exceed .75% of the average daily net asset value of each Fund's outstanding Advisor Class shares. The Advisor Class shares for the Fixed Income Fund currently bear expenses of .25% of average daily net assets. The Advisor Class shares of the Global Fixed Income Fund currently bear expenses of .50% of average daily net assets. The net asset value of each Fund is determined daily as of the close of regular trading on the New York Stock Exchange. Each Fund's investments are valued at market value, which is generally determined using market quotations. If no sales are reported, investments are generally valued at the mean between the last reported bid and asked prices. If market quotations are not readily available, securities and other assets are valued by another method that the Fund's Board believe accurately reflects fair value. Debt that will mature in 60 days or less is valued on the basis of amortized cost, which approximates market value, unless the Board determines that using this method would not reflect an investment's value. When a Fund writes or purchases a call or a put option, an amount equal to the premium received or paid by the Fund is recorded as an asset or a liability, 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 21 WARBURG PINCUS FIXED INCOME FUNDS NOTES TO FINANCIAL STATEMENTS (CONT'D) October 31, 2000 - -------------------------------------------------------------------------------- 1. SIGNIFICANT ACCOUNTING POLICIES -- (CONT'D) 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 on the underlying security. The potential loss associated with purchasing an option is limited to the premium paid, and the premium would partially offset any gains achieved from its use. The books and records of the Funds are maintained in U.S. dollars. Transactions denominated in foreign currencies are recorded at the current prevailing exchange rates. All assets and liabilities denominated in foreign currencies are translated into U.S. dollar amounts at the current exchange rate at the end of the period. Translation gains or losses resulting from changes in the exchange rate during the reporting period and realized gains and losses on the settlement of foreign currency transactions are reported in the results of operations for the current period. The Fixed Income Fund and the Global Fixed Income Fund isolate that portion of realized gains and losses on investments in debt securities which are due to changes in the foreign exchange rate from that which are due to changes in market prices of debt securities. The Funds may invest in securities of foreign countries and governments, which involve certain risks in addition to those inherent in domestic investments. Such risks generally include, among other things, currency risk (fluctuations in currency exchange rates), information risk (key information may be inaccurate or unavailable) and political risk (expropriation, nationalization or the imposition of capital or currency controls or punitive taxes). Other risks of investing in foreign securities include liquidity and valuation risks. The Funds' investments in securities of issuers located in less developed countries considered to be "emerging markets" involve risks in addition to those generally applicable to foreign securities. Focusing on emerging (less developed) markets involves higher levels of risk, including increased currency, information, liquidity, market, political and valuation risks. Deficiencies in regulatory oversight, market infrastructure, shareholder protections and company laws could expose the Funds to operational and other risks as well. Some countries may have restrictions that could limit the Funds access to attractive opportunities. Additionally, emerging markets often face serious economic problems (such as high external debt, inflation and unemployment) that could subject the portfolio to increased volatility or substantial declines in value. 22 WARBURG PINCUS FIXED INCOME FUNDS NOTES TO FINANCIAL STATEMENTS (CONT'D) October 31, 2000 - -------------------------------------------------------------------------------- 1. SIGNIFICANT ACCOUNTING POLICIES -- (CONT'D) The Funds may invest in fixed income securities rated below investment grade. While the market values of these securities tend to react less to fluctuations in interest rate levels than do those of investment grade securities, the market values of certain of these securities also tend to be more sensitive to individual corporate developments and changes in economic conditions than investment grade securities. In addition, these securities generally present a higher degree of credit risk. Issuers of such securities are often highly leveraged and may not have more traditional methods of financing available to them so that their ability to service their debt obligations during an economic downturn or during sustained periods of rising interest rates may be impaired. Each Fund may invest up to 15% of its net assets in non-publicly traded securities. Non-publicly traded securities may be less liquid than publicly- traded securities, and they may be difficult or impossible to sell at the time and at the price the Fund would like. In addition, the lack of an active market may make it difficult to obtain an accurate price for a Fund's security. Security transactions are accounted for on a trade date basis. Interest income is recorded on the accrual basis. Dividends are recorded on the ex-dividend date. Income, expenses (excluding class-specific expenses, principal distribution and shareholder servicing fees) and realized/unrealized gains/losses are allocated proportionately to each class of shares based upon the relative net asset value of the outstanding shares of that class. The cost of investments sold is determined by use of the specific identification method for both financial reporting and income tax purposes. Dividends from net investment income are declared daily and paid monthly for the Fixed Income Fund. Dividends from net investment income are declared and paid quarterly for the Global Fixed Income Fund. Distributions for all Funds of net realized capital gains, if any, are declared and paid at least annually for both Funds. However, to the extent that a net realized capital gain can be reduced by a capital loss carryover, such gain will not be distributed. Income and capital gain distributions are determined in accordance with federal income tax regulations which may differ from generally accepted accounting principles. No provision is made for federal taxes as it is each Fund's intention to continue to qualify for and elect the tax treatment applicable to regulated investment companies under the Internal Revenue Code of 1986, as amended (the "Code"), and make the requisite distributions to its shareholders which will be sufficient to relieve it from Federal income and excise taxes. 23 WARBURG PINCUS FIXED INCOME FUNDS NOTES TO FINANCIAL STATEMENTS (CONT'D) October 31, 2000 - -------------------------------------------------------------------------------- 1. SIGNIFICANT ACCOUNTING POLICIES -- (CONT'D) Pursuant to an exemptive order issued by the Securities and Exchange Commission, each Fund, along with other Funds advised by Credit Suisse Asset Management, LLC ("CSAM"), the Fund's investment adviser (collectively the "Warburg Funds"), may transfer uninvested cash balances to a pooled cash account, which is invested in repurchase agreements secured by U.S. government securities. Securities pledged as collateral for repurchase agreements are held by the Fund's custodian bank until the agreements mature. Each agreement requires that the market value of the collateral be sufficient to cover payments of interest and principal; however, in the event of default or bankruptcy by the other party to the agreement, retention of the collateral may be subject to legal proceedings. At October 31, 2000, the Funds had no investments in repurchase agreements. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates. The Funds have an arrangement with their transfer agent whereby interest earned on uninvested cash balances was used to offset a portion of their transfer agent expense. For the year ended October 31, 2000, the Funds received credits or reimbursements under this arrangement as follows: FUND AMOUNT ---- -------- Fixed Income $65,633 Global Fixed Income 23,380 2. INVESTMENT ADVISER, CO-ADMINISTRATORS AND DISTRIBUTOR Pursuant to Investment Advisory Agreements, CSAM, an indirect, wholly-owned subsidiary of Credit Suisse Group, serves as investment advisor for the Funds described herein. For its investment advisory services, CSAM receives the following fees based on each Fund's average daily net assets: FUND ANNUAL RATE ---- --------------------------------- Fixed Income .50% of average daily net assets Global Fixed Income 1.00% of average daily net assets 24 WARBURG PINCUS FIXED INCOME FUNDS NOTES TO FINANCIAL STATEMENTS (CONT'D) October 31, 2000 - -------------------------------------------------------------------------------- 2. INVESTMENT ADVISER, CO-ADMINISTRATORS AND DISTRIBUTOR-- (CONT'D) For the year ended October 31, 2000, investment advisory fees and voluntary waivers were as follows: GROSS NET FUND ADVISORY FEE WAIVER ADVISORY FEE ---- ------------ ---------- ----------- Fixed Income $1,681,883 $ (81,285) $1,600,598 Global Fixed Income 1,214,634 (619,726) 594,908 Credit Suisse Asset Management Securities, Inc. ("CSAMSI"), an affiliate of CSAM, serves as co-administrator to each Fund. PFPC Inc. ("PFPC"), an indirect subsidiary of PNC Financial Services Group, Inc., also serves as each Fund's co-administrator. For its administrative services, CSAMSI, currently receives a fee calculated at an annual rate of .10% of each Fund's average daily net assets. For the year ended October 31, 2000, administrative services fees earned by CSAMSI were as follows: FUND CO-ADMINISTRATION FEE ---- --------------------- Fixed Income $336,377 Global Fixed Income 121,463 For its administrative services through July 31, 2000, PFPC received a fee calculated at an annual rate of .05% of each Fund's average daily net assets, exclusive of out-of-pocket expenses. Effective August 1, 2000, for its administrative services, PFPC receives a fee, exclusive of out-of-pocket expenses, based on the following fee structure: AVERAGE DAILY NET ASSETS ANNUAL RATE --------------------------- -------------------------------- First $150 million .07% of average daily net assets Next $150 million .06% of average daily net assets Over $300 million .05% of average daily net assets For the year ended October 31, 2000, administrative services fees earned and voluntarily waived by PFPC (including out-of-pocket expenses) were as follows: NET FUND CO-ADMINISTRATION FEE WAIVER CO-ADMINISTRATION FEE ---- --------------------- ------ --------------------- Fixed Income $193,192 $0 $193,192 Global Fixed Income 72,613 0 72,613 In addition to serving as each Fund's 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. On August 1, 2000 CSAMSI replaced PDI as distributor to each Fund. No compensation is paid by the Common Class shares for distribution 25 WARBURG PINCUS FIXED INCOME FUNDS NOTES TO FINANCIAL STATEMENTS (CONT'D) October 31, 2000 - -------------------------------------------------------------------------------- 2. INVESTMENT ADVISER, CO-ADMINISTRATORS AND DISTRIBUTOR-- (CONT'D) services. Also, no compensation was payable by any of the Funds to PDI for distribution services. Pursuant to a distribution plan adopted by each Fund pursuant to Rule 12b-1 under the 1940 Act, CSAMSI receives a fee for its distribution services. This fee is calculated at an annual rate of .25% of the average daily net assets of the Advisor Class shares of the Fixed Income Fund, and .50% of the average daily net assets of the Advisor Class shares of the Global Fixed Income Fund. CSAMSI may use this fee to compensate service organizations for shareholder servicing and distribution services. For the year ended October 31, 2000, shareholder servicing and distribution fees were as follows: SHAREHOLDER SERVICING/ FUND DISTRIBUTION FEE ---- ---------------------- Fixed Income $16,570 Global Fixed Income 128 3. LINE OFCREDIT The Funds, together with other Funds advised by CSAM, have established a $350 million committed, and a $75 million uncommitted, unsecured, line of credit facility ("Credit Facility") with Deutsche Bank AG as administrative agent, State Street Bank and Trust Company as operations agent, Bank of Nova Scotia as syndication agent and certain other lenders, for temporary or emergency purposes primarily relating to unanticipated Fund share 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 entire amount of the Credit Facility which is allocated among the participating Funds in such manner as is determined by the governing Boards of the various Funds. In addition, the participating Funds will pay interest on borrowing at the Federal funds rate plus .50%. At October 31, 2000, the Funds had no borrowings under the credit facility. 4. INVESTMENTS IN SECURITIES For the year ended October 31, 2000, purchases and sales of investment securities (excluding short-term investments) and U.S. government and agency obligations were as follows:
U.S. GOVERNMENT AND INVESTMENT SECURITIES AGENCY OBLIGATIONS ---------------------------- ---------------------------- FUND PURCHASES SALES PURCHASES SALES ---- ------------ ------------ ------------ ------------ Fixed Income $136,351,756 $171,095,804 $683,899,887 $684,344,625 Global Fixed Income 72,941,156 96,495,201 42,788,727 28,585,252
26 WARBURG PINCUS FIXED INCOME FUNDS NOTES TO FINANCIAL STATEMENTS (CONT'D) October 31, 2000 - -------------------------------------------------------------------------------- 4. INVESTMENTS IN SECURITIES -- (CONT'D) For the year ended October 31, 2000, the net unrealized appreciation from investments for those securities having an excess of value over cost and net unrealized depreciation from investments for those securities having an excess of cost over value (based on cost for federal income tax purposes) were as follows:
NET UNREALIZED UNREALIZED UNREALIZED APPRECIATION/ FUND APPRECIATION DEPRECIATION (DEPRECIATION) ---- ------------ ------------ ------------------------ Fixed Income $2,518,023 $(9,160,979) $(6,642,956) Global Fixed Income 1,005,257 (8,242,650) (7,237,393)
5. FORWARD FOREIGN CURRENCY CONTRACTS The Funds may enter into forward currency contracts for the purchase or sale of a specific foreign currency at a fixed price on a future date. Risks may arise from movements in the value of a foreign currency relative to the U.S. dollar and from the potential default of counterparties to the contract. Each Fund will enter into forward contracts primarily for hedging purposes. However, on occasion the Funds may enter into forward contracts for speculative purposes, which may increase the Fund's investment risk. Forward currency contracts are adjusted by the daily exchange rate of the underlying currency and any gains or losses are recorded for financial statement purposes as unrealized until the contract settlement date. At October 31, 2000, the Global Fixed Income Fund had the following open forward foreign currency contracts:
UNREALIZED FOREIGN EXPIRATION FOREIGN CURRENCY CONTRACT CONTRACT EXCHANGE FORWARD CURRENCY CONTRACT DATE TO BE SOLD AMOUNT VALUE GAIN/(LOSS) - ------------------------- -------- -------------- ------------- ----------- ------------ European Economic Unit 01/19/01 20,555,000 $17,545,417 $17,484,083 $ 61,334 Japanese Yen 01/19/01 1,072,500,000 10,075,151 9,960,511 114,640 Danish Krona 01/19/01 42,400,000 4,852,369 4,842,449 9,920 South African Rand 01/19/01 7,000,000 915,451 918,189 (2,738) ----------- ----------- -------- $33,388,388 $33,205,232 $183,156 =========== =========== ========
6. FUTURES CONTRACTS Each Fund may enter into futures contracts to the extent permitted by its investment policies and objectives. Upon entering into a futures contract, a Fund is required to make a deposit of an initial margin with its custodian in a segregated account. Subsequent payments, which are dependent on the daily fluctuations in the value of the underlying instrument, are made or received 27 WARBURG PINCUS FIXED INCOME FUNDS NOTES TO FINANCIAL STATEMENTS (CONT'D) October 31, 2000 - -------------------------------------------------------------------------------- 6. FUTURES CONTRACTS -- (CONT'D) by a Fund each day (daily variation margin) and are recorded as unrealized gains or losses until the contracts are closed. When the contract is closed, a Fund records a realized gain or loss equal to the difference between the proceeds from (or cost of) the closing transactions and a Fund's basis in the contract. Risks of entering into futures contracts for hedging purposes include the possibility that a change in the value of the contract may not correlate with the changes in the value of the underlying instruments. In addition, the purchase of a futures contract involves the risk that a Fund could lose more than the original margin deposit and subsequent payments required for a futures transaction. At October 31, 2000, the Global Fixed Income Fund had the following open futures contracts:
UNREALIZED NUMBER OF EXPIRATION CONTRACT CONTRACT APPRECIATION/ FUTURES CONTRACTS CONTRACTS DATE AMOUNT VALUE (DEPRECIATION) - ----------------- --------- ---------- ----------- ---------- -------------- U.S. Treasury 30 Year Note Futures 6 12/01/2000 $ 596,661 $ 599,063 $(2,402) U.S. Treasury 10 Year Note Futures 26 12/19/2000 2,640,219 2,618,282 21,937 U.S. Treasury 5 Year Note Futures 4 12/19/2000 404,649 402,750 1,899 -- ---------- ---------- ------- 36 $3,641,529 $3,620,095 $21,434 == ========== ========== =======
7. CAPITAL SHARE TRANSACTIONS The Global Fixed Income Fund is authorized to issue three billion full and fractional shares of capital stock, $.001 par value per share, of which two billion shares are classified as the Advisor Class shares. The Fixed Income Fund is authorized to issue an unlimited number of full and fractional shares of beneficial interest, $.001 par value per share, of which an unlimited number of shares are classified as the Common Class and an unlimited number of shares are classified as the Advisor Class. Transactions in classes of each Fund were as follows:
FIXED INCOME FUND ----------------------------------------------------------------------------------------------------------- COMMON CLASS SHARES ADVISOR CLASS SHARES --------------------------------------------------------- ----------------------------------------------- FOR THE YEAR ENDED FOR THE YEAR ENDED FOR THE YEAR ENDED FOR THE YEAR ENDED OCTOBER 31, 2000 OCTOBER 31,1999 OCTOBER 31, 2000 OCTOBER 31,1999 --------------------------- --------------------------- ---------------------- --------------------- SHARES VALUE SHARES VALUE SHARES VALUE SHARES VALUE ----------- ------------- ----------- ------------- -------- ----------- ------- ---------- Shares sold 19,421,025 $ 189,250,352 18,227,693 $ 185,177,834 88,976 $ 867,108 439,586 $4,390,502 Shares issued in reinvestment of dividends 1,964,108 19,106,111 2,122,951 21,509,897 42,960 417,711 21,355 215,485 Shares repurchased (30,277,964) (295,032,990) (21,257,886) (215,896,103) (125,800) (1,226,086) (65,295) (657,513) ----------- ------------- ----------- ------------- -------- ----------- ------- ---------- Net increase/ (decrease) (8,892,831 $ (86,676,527) (907,242) $ (9,208,372) 6,136 $ 58,733 395,646 $3,948,474 =========== ============= =========== ============= ======== =========== ======= ==========
28 WARBURG PINCUS FIXED INCOME FUNDS NOTES TO FINANCIAL STATEMENTS (CONT'D) October 31, 2000 - -------------------------------------------------------------------------------- 7. CAPITAL SHARE TRANSACTIONS -- (CONT'D)
GLOBAL FIXED INCOME FUND --------------------------------------------------------------------------------------------------- COMMON CLASS SHARES ADVISOR CLASS SHARES ----------------------------------------------------- ------------------------------------------- FOR THE YEAR ENDED FOR THE YEAR ENDED FOR THE YEAR ENDED FOR THE YEAR ENDED OCTOBER 31, 2000 OCTOBER 31,1999 OCTOBER 31, 2000 OCTOBER 31,1999 ------------------------- ------------------------- ----------------- ---------------------- SHARES VALUE SHARES VALUE SHARES VALUE SHARES VALUE ---------- ------------ ---------- ------------ ------ -------- -------- ----------- Shares sold 4,318,956 $ 42,764,658 7,349,863 $ 77,695,811 51 $ 525 6,616 $ 69,749 Shares issued in reinvestment of dividends 1,126,679 11,111,508 712,944 7,433,475 117 1,214 14,067 148,402 Shares repurchased (6,164,691) (61,327,472) (9,371,367) (98,813,056) (4,637) (48,771) (630,756) (6,705,155) ---------- ------------ ---------- ------------ ------ -------- -------- ----------- Net increase/ (decrease) (719,056) $ (7,451,306) (1,308,560) $(13,683,770) (4,469) $(47,032) (610,073) $(6,487,004) ========== ============ ========== ============ ====== ======== ======== ===========
8. CAPITAL LOSS CARRYOVER At October 31, 2000, capital loss carryovers available to offset possible future capital gains of each Fund were as follows:
CAPITAL LOSS CARRYOVER EXPIRES IN -------------------------------------------------------------- TOTAL CAPITAL FUND 2002 2003 2006 2007 2008 LOSS CARRYOVER ------------ -------- -------- ---------- ---------- ---------- -------------- Fixed Income $ 0 $ 0 $ 0 $1,940,565 $9,930,643 $11,871,208 Global Fixed Income 517,856 329,870 6,945,772 5,824,681 3,060,576 16,678,755
9. RECLASSIFICATION OF COMPOSITION OF NET ASSETS At October 31, 2000, accumulated undistributed net investment income and accumulated net realized loss from investments and foreign currency related transactions have been adjusted for current period permanent book/tax differences which arose principally from differing book/tax treatments of foreign currency transactions. The Fixed Income and Global Fixed Income Funds reclassified ($191) and $5,484,155, respectively, from accumulated net realized loss on investments and foreign currency related transactions to accumulated undistributed net investment income. 29 WARBURG PINCUS FIXED INCOME FUNDS NOTES TO FINANCIAL STATEMENTS (CONT'D) October 31, 2000 - -------------------------------------------------------------------------------- 10. OTHER FINANCIAL HIGHLIGHTS Each Fund currently offers one other class of shares, the Common Class shares, representing equal pro rata interests in each of the respective Funds. The financial highlights for a Common Class share of each Fund are as follows:
FIXED INCOME FUND ---------------------------------------------------------------------------- COMMON CLASS ---------------------------------------------------------------------------- 2000 1999 1998 1997 1996 -------- -------- -------- -------- -------- PER-SHARE DATA Net asset value, beginning of year $ 9.89 $ 10.41 $ 10.43 $ 10.10 $ 10.07 -------- -------- -------- -------- -------- INVESTMENT ACTIVITIES: Net investment income 0.64 0.57 0.59 0.62 0.63 Net gains (losses) from investments and foreign currency related transactions (both realized and unrealized) (0.11) (0.48) 0.07 0.33 0.03 -------- -------- -------- -------- -------- Total from investment activities 0.53 0.09 0.66 0.95 0.66 -------- -------- -------- -------- -------- LESS DIVIDENDS AND DISTRIBUTIONS: Dividends from net investment income (0.64) (0.57) (0.59) (0.62) (0.63) Distributions from net realized gains 0.00 (0.04) (0.09) 0.00 0.00 -------- -------- -------- -------- -------- Total dividends and distributions (0.64) (0.61) (0.68) (0.62) (0.63) -------- -------- -------- -------- -------- NET ASSET VALUE, END OF YEAR $ 9.78 $ 9.89 $ 10.41 $ 10.43 $ 10.10 ======== ======== ======== ======== ======== Total return 5.59% 0.92% 6.48% 9.78% 6.80% RATIOS/SUPPLEMENTAL DATA: Net assets, end of year (000s omitted) $302,188 $393,433 $423,536 $265,453 $151,184 Ratio of expenses to average net assets1 0.77% 0.76% 0.75% 0.75% 0.76% Ratio of net income to average net assets 6.53% 5.63% 5.64% 6.05% 6.30% Decrease reflected in above operating ratios due to waivers/reimbursements 0.02% 0.04% 0.04% 0.08% 0.15% Portfolio turnover rate 247.21% 144.02% 124.04% 129.06% 194.23% - -------------------------------------------------------------------------------- 1 Interest earned on uninvested cash balances is used to offset portions of the transfer agent expense. These arrangements resulted in a reduction to the Common Class shares' expense ratio by .02%, .01%, .00%, .00% and .01% for the years ending October 31, 2000, 1999, 1998, 1997 and 1996, respectively. The Common Class shares' operating expense ratio after reflecting these arrangements was .75% for each of the years ended October 31, 2000, 1999, 1998, 1997 and 1996.
30 WARBURG PINCUS FIXED INCOME FUNDS NOTES TO FINANCIAL STATEMENTS (CONT'D) October 31, 2000 - -------------------------------------------------------------------------------- 10. OTHER FINANCIAL HIGHLIGHTS -- (CONT'D)
GLOBAL FIXED INCOME FUND ---------------------------------------------------------------------------- COMMON CLASS ---------------------------------------------------------------------------- 2000 1999 1998 1997 1996 -------- -------- -------- -------- -------- PER-SHARE DATA Net asset value, beginning of year $ 10.25 $ 10.62 $ 10.91 $ 11.17 $ 11.04 -------- -------- -------- -------- -------- INVESTMENT ACTIVITIES: Net investment income 0.56 0.52 0.58 0.54 0.62 Net gains (losses) from investments and foreign currency related transactions (both realized and unrealized) (0.13) (0.29) (0.16) 0.08 0.57 -------- -------- -------- -------- -------- Total from investment activities 0.43 0.23 0.42 0.62 1.19 -------- -------- -------- -------- -------- LESS DIVIDENDS AND DISTRIBUTIONS: Dividends from net investment income (0.76) (0.59) (0.71) (0.34) (1.06) Dividends in excess of net investment income (0.21) (0.01) 0.00 0.00 0.00 Distributions from net realized gains 0.00 0.00 0.00 (0.54) 0.00 -------- -------- -------- -------- -------- Total dividends and distributions (0.97) (0.60) (0.71) (0.88) (1.06) -------- -------- -------- -------- -------- NET ASSET VALUE, END OF YEAR $ 9.71 $ 10.25 $ 10.62 $ 10.91 $ 11.17 ======== ======== ======== ======== ======== Total return 4.37% 2.18% 4.10% 5.76% 11.35% RATIOS/SUPPLEMENTAL DATA: Net assets, end of year (000s omitted) $121,309 $135,327 $154,131 $194,731 $131,072 Ratio of expenses to average net assets1 0.97% 0.96% 0.95% 0.96% 0.95% Ratio of net income to average net assets 5.51% 5.00% 5.21% 5.40% 6.78% Decrease reflected in above operating ratios due to waivers/reimbursements 0.51% 0.57% 0.46% 0.39% 0.56% Portfolio turnover rate 100.84% 365.02% 233.73% 202.92% 123.90% - -------------------------------------------------------------------------------- 1 Interest earned on uninvested cash balances is used to offset portions of the transfer agent expense. These arrangements resulted in a reduction to the Common Class shares' expense ratio by .02%, .01%, .00%, .01% and .00% for the years ending October 31, 2000, 1999, 1998, 1997 and 1996, respectively. The Common Class shares' operating expense ratio after reflecting these arrangements was .95% for each of the years ended October 31, 2000, 1999, 1998, 1997 and 1996.
31 WARBURG PINCUS FUNDS REPORT OF INDEPENDENT ACCOUNTANTS - -------------------------------------------------------------------------------- To the Board of Directors and Shareholders of WARBURG, PINCUS FIXED INCOME FUND, INC.; WARBURG, PINCUS GLOBAL FIXED INCOME FUND, INC.: In our opinion, the accompanying statements of assets and liabilities, including the schedules of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects the financial position of the Warburg, Pincus Fixed Income Fund, Inc. and Warburg, Pincus Global Fixed Income Fund, Inc., (all funds collectively referred to as the "Funds") at October 31, 2000, the results of each of their operations for the year then ended, the changes in each of their net assets for each of the two years in the period then ended and their financial highlights for each of the years (or periods) presented, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as "financial statements") are the responsibility of the Funds' management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with auditing standards generally accepted in the United States of America, which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at October 31, 2000 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion. PRICEWATERHOUSECOOPERS LLP Two Commerce Square 2001 Market Street Philadelphia, Pennsylvania December 15, 2000 32 WARBURG PINCUS FIXED INCOME FUNDS SHAREHOLDER TAX INFORMATION (UNAUDITED) - -------------------------------------------------------------------------------- Each Fund is required by Subchapter M of the Code, to advise its shareholders within 60 days of each Fund's fiscal year end as to the U.S. federal tax status distributions received by the Fund's shareholders in respect of such fiscal year. During the fiscal year ended October 31, 2000, the following dividends and distributions per share were paid by each of the Funds: ORDINARY % OF ORDINARY INCOME DIVIDEND INCOME QUALIFYING FOR FUND PER SHARE DIVIDENDS RECEIVED DEDUCTION1 - ---------- ---------- ----------------------------- 1999 ---- PAYMENT DATES MONTH END - ------------- ---------- Fixed Income 8.68 Common Shares $0.1060 Advisor Shares 0.1019 PAYMENT DATE 12/07/99 - ---------------- -------- Global Fixed Income 2.15 Common Shares $0.3687 The above information was provided to calendar year taxpayers on Form 1099-DIV mailed in January of 2000. ORDINARY % OF ORDINARY INCOME DIVIDEND INCOME QUALIFYING FOR FUND PER SHARE DIVIDENDS RECEIVED DEDUCTION1 - ---------- --------- ----------------------------- 2000 ---- PAYMENT DATES MONTH END - ------------- --------- Fixed Income 2.80 Common Shares $0.5337 Advisor Shares 0.5134 PAYMENT DATES 03/31/00, 06/30/00, 09/29/00 - ------------- ---------------------------- Global Fixed Income 1.40 Common Shares $0.6000 Advisor Shares 0.6000 Because the fiscal year of the Funds is not a calendar year, another notification will be sent with respect to calendar year 2000. The second notification, which will reflect the amount to be used by calendar year taxpayers on their U.S. federal income tax returns, will be made in conjunction with Form 1099-DIV and will be mailed in January 2001. - ---------- 1 Available to Corporate Shareholders only. 33 This page intentionally left blank This page intentionally left blank This page intentionally left blank WARBURG PINCUS ADVISOR FUNDS CREDIT SUISSE ASSET MANAGEMENT SECURITIES, INC., DISTRIBUTOR Credit Suisse Asset Management Securities, Inc., Distributor, is located at 466 Lexington Ave., New York, NY 10017-3147. Warburg Pincus Funds are advised by Credit Suisse Asset Management, LLC. [GRAPHICS OMITTED] WARBURG PINCUS FUNDS PART OF CREDIT SUISSE ASSET MANAGEMENT ADBDF-2-1000 -----END PRIVACY-ENHANCED MESSAGE-----