(LOGO) WARBURG PINCUS FUNDS PART OF CREDIT | ASSET SUISSE | MANAGEMENT [GRAPHIC OMITTED] ANNUAL REPORT OCTOBER 31, 2000 WARBURG PINCUS EMERGING GROWTH FUND (BULLET) WARBURG PINCUS SMALL COMPANY VALUE FUND (BULLET) WARBURG PINCUS SMALL COMPANY GROWTH FUND More complete information about the Funds, including charges and expenses, is provided in the PROSPECTUS, which must precede or accompany this document and which should be read carefully before investing. You may obtain additional copies by calling 800-WARBURG (800-927-2874) or by writing to Warburg Pincus Funds, P.O. Box 9030, Boston, MA 02205-9030. Credit Suisse Asset Management Securities, Inc., Distributor, located at 466 Lexington Avenue, New York, NY 10017-3147. Telephone: 800-927-2874. 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. THE VIEWS OF THE FUNDS' MANAGEMENT ARE AS OF THE DATE OF THE LETTERS AND PORTFOLIO HOLDINGS DESCRIBED IN THIS DOCUMENT ARE AS OF OCTOBER 31, 2000; THESE VIEWS AND PORTFOLIO HOLDINGS MAY HAVE CHANGED SUBSEQUENT TO THESE DATES. NOTHING IN THIS DOCUMENT IS A RECOMMENDATION TO PURCHASE OR SELL SECURITIES. FUND SHARES ARE NOT DEPOSITS OR OTHER OBLIGATIONS OF CREDIT SUISSE ASSET MANAGEMENT, LLC ("CSAM") OR ANY AFFILIATE, ARE NOT FDIC INSURED AND ARE NOT GUARANTEED BY CSAM OR ANY AFFILIATE. FUND INVESTMENTS ARE SUBJECT TO INVESTMENT RISKS, INCLUDING LOSS OF YOUR INVESTMENT. WARBURG PINCUS EMERGING GROWTH FUND ANNUAL INVESTMENT ADVISER'S REPORT -- OCTOBER 31, 2000 - -------------------------------------------------------------------------------- December 6, 2000 Dear Shareholder: For the 12 months ended October 31, 2000, the Common Class shares of Warburg Pincus Emerging Growth Fund had a gain of 30.60%, vs. gains of 16.16% and 29.71%, respectively, for the Russell 2000 Growth Index and the Russell 2500 Growth Index. The period was a positive yet volatile one for growth-oriented small- and mid-cap stocks. The group initially surged, benefiting from investors' strong appetite for risk as Y2K fears evaporated and as a healthy U.S. economy buoyed profits. However, as in the large-cap market, these shares came under pressure as the economy's strength began to fuel inflation and interest-rate worries. Technology and telecommunications stocks, which had risen to generally lofty valuations, were especially volatile, falling sharply in April and May. Stocks were generally lackluster over the remainder of the period, with the economic and profit outlook becoming more clouded. However, certain market sectors performed well over the May-through-October span, with investors favoring defensive areas such as health care. Within this environment, the Fund had a good showing, both in absolute terms and compared to its benchmark. A number of the Fund's holdings contributed positively to its return, the late-period turmoil notwithstanding. Good performers for the Fund included its computer, oil-services, health-care and financial-services holdings. Stocks that hampered the Fund included certain of its telecommunications & equipment names. With regard to sector allocation, one notable change we made during the period was to raise the Fund's health-care position. Our heightened emphasis here was based on company-specific factors as well as on our belief that health-care fundamentals are improving. Companies that we added included a biotechnology/emerging pharmaceutical company whose technologies are used to develop products with enhanced therapeutic value. Other health-care companies we purchased included a medical-devices supplier. We also raised the Fund's weighting in the financial-services sector, where we generally focused on mid-cap companies with strong brand names. We added several companies we deemed attractive, given their valuations and their potential to benefit from what we believe will be a more-supportive interest-rate backdrop heading into 2001. 1 WARBURG PINCUS EMERGING GROWTH FUND ANNUAL INVESTMENT ADVISER'S REPORT -- OCTOBER 31, 2000 (CONT'D) - -------------------------------------------------------------------------------- We lowered the Fund's technology exposure over the course of the period, eliminating positions that we judged to have deteriorating prospects. Most of our selling activity was in the telecommunications area, where certain stocks in our view had become less attractive from a risk/reward perspective. That said, technology will continue to be a major theme in the Fund. The group in our view will remain a fount of opportunity, given such factors as a global emphasis on productivity enhancements and the rapid acceleration of Internet usage. Elsewhere of note, we ended the period with a roughly 10% weighting in the energy area, where we remained biased in favor of oil-services companies. We continue to have a positive view on the longer-term prospects for our energy holdings, and believe they can achieve good earnings growth even if energy prices began to decline going forward. Looking ahead, while the outlook for small- and mid-cap stocks over the next few months is certainly clouded, we remain of the view that a "soft landing" environment will prevail. Historically, a combination of subdued inflation and modest economic growth has tended to encourage investment in smaller companies, especially within the growth-oriented sectors targeted by the Fund. Of course, we will continue to monitor the flow of macroeconomic data and make adjustments to the portfolio as we deem appropriate from a risk/reward perspective. Elizabeth B. Dater Stephen J. Lurito Co-Portfolio Manager Co-Portfolio Manager INVESTING IN EMERGING-GROWTH COMPANIES ENTAILS SPECIAL RISK CONSIDERATIONS. THESE ARE DETAILED IN THE PROSPECTUS, WHICH SHOULD BE READ CAREFULLY BEFORE INVESTING. 2 WARBURG PINCUS EMERGING GROWTH FUND ANNUAL INVESTMENT ADVISER'S REPORT -- OCTOBER 31, 2000 (CONT'D) - -------------------------------------------------------------------------------- GROWTH OF $10,000 INVESTED IN COMMON CLASS SHARES OF WARBURG PINCUS EMERGING GROWTH FUND SINCE INCEPTION AS OF OCTOBER 31, 2000 The graph below illustrates a hypothetical investment of $10,000 in Common Class shares of Warburg Pincus Emerging Growth Fund (the "Fund") from January 21, 1988 (inception) to October 31, 2000, compared to the Russell 2000 Growth Index ("R2000G")* and the Russell 2500 Growth Index ("R2500G")** for the same time period. [GRAPHIC OMITTED] EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC Fund R2000G R2500G 1/21/88 $10,000.00 $10,000.00 $10,000.00 Feb-88 $10,480.00 $10,901.40 $10,926.20 Mar-88 $10,760.00 $11,411.20 $11,279.20 Apr-88 $10,860.00 $11,670.60 $11,393.90 May-88 $10,690.00 $11,357.00 $11,104.20 Jun-88 $11,696.60 $12,166.90 $11,925.10 Jul-88 $11,546.10 $12,051.50 $11,617.50 Aug-88 $11,104.80 $11,744.40 $11,192.20 Sep-88 $11,506.00 $12,055.80 $11,578.50 Oct-88 $11,245.20 $11,922.30 $11,444.00 Nov-88 $11,084.70 $11,527.30 $11,088.50 Dec-88 $11,696.20 $11,979.80 $11,557.80 Jan-89 $12,546.30 $12,514.90 $12,151.60 Feb-89 $12,720.40 $12,606.10 $12,194.30 Mar-89 $12,853.50 $12,903.50 $12,440.20 Apr-89 $13,601.20 $13,466.60 $13,116.30 May-89 $14,246.40 $14,046.60 $13,787.90 Jun-89 $14,183.10 $13,725.50 $13,442.60 Jul-89 $14,882.50 $14,255.80 $14,214.40 Aug-89 $15,067.60 $14,603.40 $14,632.30 Sep-89 $14,892.80 $14,649.80 $14,724.80 Oct-89 $13,967.10 $13,782.80 $14,074.40 Nov-89 $14,070.00 $13,875.30 $14,242.20 Dec-89 $14,238.40 $13,928.20 $14,390.30 Jan-90 $13,108.70 $12,711.40 $12,953.10 Feb-90 $13,503.00 $13,106.10 $13,342.90 Mar-90 $13,854.70 $13,615.80 $13,976.40 Apr-90 $13,396.40 $13,171.40 $13,620.70 May-90 $14,728.60 $14,103.70 $14,905.10 Jun-90 $14,821.50 $14,132.70 $15,016.00 Jul-90 $14,371.40 $13,510.80 $14,507.90 Aug-90 $12,903.20 $11,711.50 $12,514.20 Sep-90 $11,981.50 $10,675.30 $11,399.30 Oct-90 $11,606.50 $10,023.70 $10,887.50 Nov-90 $12,313.80 $10,788.00 $11,967.10 Dec-90 $12,834.80 $11,216.00 $12,635.10 Jan-91 $14,008.50 $12,230.30 $13,810.70 Feb-91 $15,149.80 $13,594.10 $15,303.60 Mar-91 $16,226.60 $14,551.00 $16,282.60 Apr-91 $15,645.10 $14,514.50 $15,917.20 May-91 $16,485.00 $15,206.40 $16,728.50 Jun-91 $15,249.50 $14,320.30 $15,810.60 Jul-91 $15,993.20 $14,822.80 $16,700.90 Aug-91 $16,920.00 $15,371.40 $17,423.40 Sep-91 $17,114.00 $15,491.80 $17,623.20 Oct-91 $18,288.70 $15,901.50 $18,219.90 Nov-91 $17,555.80 $15,166.20 $17,452.10 Dec-91 $20,039.30 $16,380.60 $19,587.40 Jan-92 $21,193.50 $17,707.90 $20,416.00 Feb-92 $21,215.50 $18,224.40 $20,617.30 Mar-92 $20,193.20 $17,607.70 $19,441.90 Apr-92 $18,808.10 $16,991.10 $18,428.60 May-92 $19,028.00 $17,217.10 $18,461.00 Jun-92 $18,401.40 $16,403.10 $17,457.10 Jul-92 $18,907.10 $16,973.90 $18,135.60 Aug-92 $18,709.20 $16,495.10 $17,600.60 Sep-92 $19,346.80 $16,875.40 $17,869.60 Oct-92 $20,094.30 $17,411.90 $18,629.00 Nov-92 $22,160.80 $18,744.20 $20,128.70 Dec-92 $22,472.20 $19,397.30 $20,721.90 Jan-93 $22,920.00 $20,053.90 $20,866.70 Feb-93 $21,755.60 $19,590.90 $19,819.00 Mar-93 $22,808.10 $20,226.60 $20,461.30 Apr-93 $22,427.40 $19,671.60 $19,698.10 May-93 $23,547.10 $20,542.00 $20,911.10 Jun-93 $23,871.80 $20,670.20 $20,961.70 Jul-93 $24,442.80 $20,955.70 $20,978.90 Aug-93 $25,909.60 $21,860.90 $22,084.50 Sep-93 $26,984.50 $22,477.90 $22,651.60 Oct-93 $26,581.40 $23,056.40 $23,097.20 Nov-93 $25,472.90 $22,297.90 $22,259.90 Dec-93 $26,541.10 $23,060.30 $23,238.70 Jan-94 $27,326.30 $23,783.20 $23,908.70 Feb-94 $26,874.20 $23,697.30 $23,949.30 Mar-94 $25,173.00 $22,446.40 $22,556.20 Apr-94 $24,744.70 $22,579.70 $22,530.70 May-94 $24,173.70 $22,326.30 $22,078.70 Jun-94 $23,804.90 $21,558.30 $21,098.70 Jul-94 $24,126.10 $21,922.70 $21,557.10 Aug-94 $25,553.70 $23,144.20 $23,142.00 Sep-94 $26,005.80 $23,066.90 $23,130.90 Oct-94 $26,624.40 $22,976.00 $23,528.50 Nov-94 $25,327.70 $22,048.20 $22,486.40 Dec-94 $26,160.40 $22,640.70 $22,942.70 Jan-95 $25,767.80 $22,355.20 $22,718.50 Feb-95 $27,088.40 $23,285.10 $23,954.00 Mar-95 $27,825.90 $23,686.10 $24,883.20 Apr-95 $28,611.10 $24,212.90 $25,164.80 May-95 $28,944.20 $24,629.10 $25,550.80 Jun-95 $31,430.60 $25,906.60 $27,101.80 Jul-95 $33,750.40 $27,399.10 $29,238.20 Aug-95 $34,975.70 $27,965.40 $29,481.80 Sep-95 $36,807.80 $28,465.20 $30,113.30 Oct-95 $35,653.80 $27,192.50 $29,049.40 Nov-95 $36,569.90 $28,334.90 $30,238.10 Dec-95 $38,251.40 $29,082.60 $30,639.30 Jan-96 $37,721.20 $29,051.80 $30,734.00 Feb-96 $39,160.40 $29,957.00 $32,086.30 Mar-96 $39,829.40 $30,566.70 $32,783.20 Apr-96 $43,163.20 $32,201.10 $35,027.60 May-96 $43,732.90 $33,470.10 $36,277.00 Jun-96 $42,106.10 $32,096.20 $34,458.80 Jul-96 $37,560.90 $29,292.90 $31,034.60 Aug-96 $39,770.40 $30,993.90 $33,171.70 Sep-96 $42,005.10 $32,205.20 $34,932.10 Oct-96 $41,412.80 $31,709.20 $33,845.40 Nov-96 $41,677.90 $33,015.60 $35,086.10 Dec-96 $42,032.20 $33,881.00 $35,258.00 Jan-97 $43,563.10 $34,558.20 $36,312.60 Feb-97 $41,627.30 $33,720.60 $34,721.80 Mar-97 $39,223.30 $32,129.60 $32,437.40 Apr-97 $39,311.90 $32,219.30 $32,583.40 May-97 $43,752.90 $35,803.60 $36,488.80 Jun-97 $45,574.90 $37,338.20 $37,709.40 Jul-97 $48,232.00 $39,075.50 $40,102.80 Aug-97 $49,244.20 $39,969.60 $41,081.30 Sep-97 $52,927.70 $42,895.00 $43,982.90 Oct-97 $50,180.70 $41,011.00 $41,238.80 Nov-97 $49,874.60 $40,744.40 $40,606.60 Dec-97 $50,966.90 $41,457.50 $40,462.40 Jan-98 $49,682.50 $40,803.70 $39,934.00 Feb-98 $54,645.80 $43,821.10 $43,362.30 Mar-98 $57,236.00 $45,628.30 $44,972.40 Apr-98 $57,762.60 $45,881.10 $45,381.20 May-98 $54,267.90 $43,409.90 $42,468.10 Jun-98 $56,536.30 $43,501.50 $42,779.40 Jul-98 $52,166.10 $39,980.10 $39,594.10 Aug-98 $41,925.90 $32,216.80 $30,596.70 Sep-98 $43,519.10 $34,738.00 $33,279.40 Oct-98 $45,464.40 $36,155.00 $35,526.50 Nov-98 $48,255.90 $38,049.10 $38,053.50 Dec-98 $53,935.60 $40,403.60 $41,717.30 Jan-99 $54,760.80 $40,940.60 $42,924.60 Feb-99 $49,306.60 $37,624.40 $39,441.70 Mar-99 $51,910.00 $38,211.70 $41,278.10 Apr-99 $51,910.00 $41,635.90 $44,571.20 May-99 $52,771.70 $42,244.20 $45,031.60 Jun-99 $56,872.10 $44,154.50 $48,214.50 Jul-99 $56,087.20 $42,944.60 $47,231.90 Aug-99 $54,830.90 $41,355.70 $46,211.20 Sep-99 $54,885.70 $41,364.80 $46,542.10 Oct-99 $59,002.20 $41,532.30 $48,808.70 Nov-99 $65,439.30 $44,012.20 $54,571.00 Dec-99 $76,478.90 $48,994.40 $64,863.10 Jan-00 $73,993.30 $48,205.60 $64,499.90 Feb-00 $89,028.80 $56,164.30 $81,044.10 Mar-00 $86,081.90 $52,463.10 $74,685.40 Apr-00 $77,077.80 $49,304.80 $67,408.80 May-00 $71,481.90 $46,431.30 $61,406.70 Jun-00 $79,473.60 $50,478.70 $69,525.30 Jul-00 $76,700.00 $48,854.80 $63,827.70 Aug-00 $85,888.60 $52,582.50 $72,147.00 Sep-00 $85,227.30 $51,037.10 $67,481.20 Oct-00 $77,062.50 $48,758.80 $63,308.20 Average Annual Total Returns for periods ended 10/31/00 (Common Shares) ------------------ 1 YEAR 30.60% ------------------ 3 YEAR 15.38% ------------------ 5 YEAR 16.67% ------------------ 10 YEAR 20.84% ------------------ FUND ------ 1 Year Total Return (9/30/99 to 9/30/00) ............................ 55.26% 3 Year Average Annual Total Return (9/30/97 to 9/30/00) ............. 17.21% 5 Year Average Annual Total Return (9/30/95 to 9/30/00 .............. 18.28% 10 Year Average Annual Total Return (9/30/90 to 9/30/00) ............ 21.68% Average Annual Total Return Since Inception (1/21/88 to 9/30/00) ............................................. 18.37% - ----------------- * The Russell 2000 Growth Index is an unmanaged index (with no defined investment objective) that measures the performance of those Russell 2000 companies with higher price-to-book ratios and higher forecasted growth values.It includes reinvestment of dividends, and is compiled by Frank Russell Company. ** The Russell 2500 Growth Index measures the performance of those companies in the Russell 2500 Index with higher price-to-book values and higher forecasted growth rates. The Russell 2500 Index is composed of the 2500 smallest companies in the Russell 3000 Index, which measures the performance of the 3000 largest US companies based on total market capitalization. The Russell 2500 Index represents approximately 17% of the total market capitalization of the Russell 3000 Index. 3 WARBURG PINCUS SMALL COMPANY VALUE FUND ANNUAL INVESTMENT ADVISER'S REPORT -- OCTOBER 31, 2000 - -------------------------------------------------------------------------------- December 6, 2000 Dear Shareholder: For the 12 months ended October 31, 2000, the Common Class shares of Warburg Pincus Small Company Value Fund (the "Fund") had a gain of 22.56%. For the six months ended October 31, 2000, the Fund had a gain of 8.15%, vs. a same-period gain of 8.41% for the Russell 2000 Value Index, the Fund's new benchmark effective May 2, 2000 (replacing the Russell 2000 Index). For the six months ended April 30, 2000, the Fund had a return of 13.07%, vs. a return of 18.72% for the Russell 2000 Index. The period was a positive one for small-capitalization stocks, though the group was volatile, as were stocks broadly. While the group's growth and value components posted roughly equal gains for the 12 months (with a slight edge to the value stocks), they hardly performed in tandem. Growth stocks dominated early in the period, when investors' tolerance for risk was high, buoyed by a strong economy and a rally in the technology sector. However, they tumbled over the March-through-May period on inflation and interest-rate uncertainties, and remained volatile. Value stocks outperformed their growth counterparts late in the period (within the small-cap arena and elsewhere), as investors took a more defensive stance due to worries over a slowing economy. Against this backdrop, the Fund had a competitive showing, with the Fund outpacing both Russell indexes cited above for the 12 months. Stocks that aided the Fund's return included its financial-services, health-care and utilities holdings. The Fund was also helped by its overweighting in the technology sector early in the period, when these stocks rallied (we subsequently reduced this position). On the negative side, stocks that hindered the Fund included certain of its materials & processing and consumer-related names. Our general strategy throughout the period was to focus on stocks that had good potential, in our estimation, to benefit from visible catalysts, such as positive earnings surprises or new product launches. This reflected our concerns that, amid general uncertainty and high market volatility, companies with visible improvements were the most likely to garner favorable investor attention (as opposed to companies merely trading at discounts to their underlying worth, for example). We made several noteworthy sector-weighting changes during the period. We raised our exposure to the financial segment, where we deemed a number of stocks to be attractive based on their valuations and on the prospects for a more-favorable interest-rate environment. These included insurance companies as well as real-estate investment trusts (we view REITs 4 WARBURG PINCUS SMALL COMPANY VALUE FUND ANNUAL INVESTMENT ADVISER'S REPORT -- OCTOBER 31, 2000 (CONT'D) - -------------------------------------------------------------------------------- as financial stocks due to their interest-rate sensitivity), with our position in REITs rising considerable late in the period. We also increased our weighting in the health-care sector, were our focus remained on services providers such as hospitals and acute-care companies. The major catalyst in this area is the restoration of "reimbursement" rates. These rates were reduced by the Balance Budget Act of 1997, sparking a slump in care-provider stocks, but Congress has recently been increasing the funding, and could continue to do so. Our health-care holdings also included laboratory-testing companies. We believe that these companies' profit margins will widen due to rising demand for testing related to new-drug development. Another increased area of emphasis for the Fund in the period was energy. We added companies that stood to benefit from an improving supply/demand backdrop for energy, including a number of electric-utility stocks we believed to represent good value. One sector weighting we reduced was technology. We had a significant position early in the period, based on the large amount of promising company-specific catalysts we were seeing here. We sold most of our technology holdings based on valuation factors as the period progressed; fortunately for the Fund, our exposure was minimal when the technology group declined sharply in April and May. Going forward, we will continue our efforts to identify companies with compelling valuations and good potential to benefit from industry trends and from company-specific catalysts. While the overall backdrop for equities could remain difficult for a spell, we believe that good opportunities will continue to exist within a range of sectors. As ever, we will attempt to ferret out hidden values that will receive wider market recognition over time. Kyle F. Frey Portfolio Manager INVESTING IN SMALL COMPANIES ENTAILS SPECIAL RISK CONSIDERATIONS. THESE ARE DETAILED IN THE PROSPECTUS, WHICH SHOULD BE READ CAREFULLY BEFORE INVESTING. 5 WARBURG PINCUS SMALL COMPANY VALUE FUND ANNUAL INVESTMENT ADVISER'S REPORT -- OCTOBER 31, 2000 (CONT'D) - -------------------------------------------------------------------------------- GROWTH OF $10,000 INVESTED IN COMMON CLASS SHARES OF WARBURG PINCUS SMALL COMPANY VALUE FUND SINCE INCEPTION AS OF OCTOBER 31, 2000 The graph below illustrates a hypothetical investment of $10,000 in Common Class shares of Warburg Pincus Small Company Fund (the "Fund") from December 29, 1995 (inception) to October 31, 2000, compared to the Russell 2000 Index ("R2000")* and the Russell 2000 Value Index ("R2000 Value")** for the same time period. [GRAPHIC OMITTED] EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC FUND R2000 R2000 VALUE 12/29/95 $10,000.00 $10,000.00 $10,000.00 Jan-96 $10,000.00 $9,989.40 $10,066.40 Feb-96 $10,650.00 $10,300.70 $10,224.10 Mar-96 $11,550.00 $10,510.30 $10,438.80 Apr-96 $12,619.50 $11,072.30 $10,723.60 May-96 $13,449.90 $11,508.60 $10,995.10 Jun-96 $13,339.60 $11,036.20 $10,865.40 Jul-96 $12,849.60 $10,072.30 $10,287.80 Aug-96 $13,539.60 $10,657.20 $10,734.20 Sep-96 $14,109.60 $11,073.70 $11,027.20 Oct-96 $14,379.10 $10,903.20 $11,155.10 Nov-96 $14,989.00 $11,352.40 $11,755.40 Dec-96 $15,618.60 $11,649.90 $12,137.00 Jan-97 $15,881.60 $11,882.80 $12,323.50 Feb-97 $15,598.30 $11,594.80 $12,440.50 Mar-97 $15,052.10 $11,047.70 $12,106.90 Apr-97 $15,112.80 $11,078.50 $12,284.90 May-97 $16,053.60 $12,311.00 $13,262.90 Jun-97 $17,156.20 $12,838.70 $13,934.00 Jul-97 $18,056.40 $13,436.00 $14,518.80 Aug-97 $18,663.20 $13,743.50 $14,749.20 Sep-97 $20,100.20 $14,749.40 $15,730.10 Oct-97 $18,986.70 $14,101.60 $15,302.50 Nov-97 $18,531.00 $14,009.90 $15,470.20 Dec-97 $18,608.80 $14,255.10 $15,994.70 Jan-98 $18,087.80 $14,030.30 $15,705.50 Feb-98 $19,154.90 $15,067.80 $16,654.90 Mar-98 $19,972.80 $15,689.20 $17,330.40 Apr-98 $20,098.70 $15,776.10 $17,416.00 May-98 $19,572.10 $14,926.40 $16,801.20 Jun-98 $19,742.40 $14,957.90 $16,706.50 Jul-98 $18,301.20 $13,747.10 $15,397.90 Aug-98 $15,396.80 $11,077.70 $12,986.40 Sep-98 $15,544.60 $11,944.60 $13,719.80 Oct-98 $15,193.30 $12,431.80 $14,127.10 Nov-98 $15,567.00 $13,083.10 $14,509.50 Dec-98 $15,839.50 $13,892.70 $14,964.40 Jan-99 $15,464.10 $14,077.30 $14,624.70 Feb-99 $14,270.20 $12,937.10 $13,626.30 Mar-99 $14,070.50 $13,139.00 $13,513.80 Apr-99 $15,065.20 $14,316.40 $14,747.50 May-99 $15,136.00 $14,525.60 $15,200.90 Jun-99 $15,862.60 $15,182.40 $15,751.30 Jul-99 $15,499.30 $14,766.40 $15,377.50 Aug-99 $14,504.30 $14,220.10 $14,815.50 Sep-99 $14,375.20 $14,223.20 $14,519.30 Oct-99 $14,598.00 $14,280.80 $14,228.80 Nov-99 $16,143.90 $15,133.50 $14,302.50 Dec-99 $17,035.10 $16,846.60 $14,742.00 Jan-00 $15,794.90 $16,575.40 $14,356.50 Feb-00 $15,610.10 $19,312.00 $15,234.00 Mar-00 $16,651.30 $18,039.30 $15,305.40 Apr-00 $16,506.40 $16,953.40 $15,396.00 May-00 $15,927.10 $15,965.30 $15,161.10 Jun-00 $16,376.20 $17,357.00 $15,604.10 Jul-00 $16,548.20 $16,798.60 $16,124.00 Aug-00 $17,642.00 $18,080.40 $16,844.90 Sep-00 $18,116.60 $17,549.00 $16,749.40 Oct-00 $17,891.90 $16,765.60 $16,689.90 Average Annual Total Returns for periods ended 10/31/00 (Common Shares) ------------------ 1 YEAR 22.56% ------------------ 3 YEAR -1.96% ------------------ SINCE INCEPTION (12/29/95) 12.76% ------------------ FUND ------ 1 Year Total Return (9/30/99 to 9/30/00) .............................. 26.01% 3 Year Average Annual Total Return (9/30/97 to 9/30/00) ............... -3.40% Average Annual Total Return Since Inception (12/29/95 to 9/30/00) . ............................................ 13.30% - ---------------- * The Russell 2000 Index is an unmanaged index (with no defined investment objective) of approximately 2,000 small-cap stocks, includes reinvestment of dividends, and is compiled by Frank Russell Company. ** The Russell 2000 Value Index is an unmanaged index (with no defined investment objective) that measures the performance of those Russell 2000 companies with lower price-to-book ratios and lower forecasted growth values. It includes reinvestment of dividends, and is compiled by Frank Russell Company. 6 WARBURG PINCUS SMALL COMPANY GROWTH FUND ANNUAL INVESTMENT ADVISER'S REPORT -- OCTOBER 31, 2000 - -------------------------------------------------------------------------------- December 6, 2000 Dear Shareholder: For the 12 months ended October 31, 2000, the Common Class shares of Warburg Pincus Small Company Growth Fund had a gain of 43.65%, vs. a gain of 16.16% for the Russell 2000 Growth Index. The period was an ultimately positive but very volatile one for small-capitalization stocks. The group had a strong start, but turned sharply down in April and May due to interest-rate worries and general concerns over valuations on technology companies. Small-cap stocks remained volatile, and ended the period on a difficult note due to some highly visible profit disappointments that tarnished stocks broadly. All told, most small-cap stocks gave up some but by no means all of their initial gains over the April-through-October span. Against this backdrop, the Fund had a strong showing, both in absolute terms and compared to that of its benchmark. The Fund's return was aided by good stock selection in general, especially within the computer, electronics and health-care sectors. Stocks that hindered the Fund, at least in relative terms, included specific consumer-related and communications holdings. We made no major changes to the Fund during the period with regard to overall strategy, remaining focused on rapidly growing companies with innovative, viable products and services. We continued to see a large number of such companies within the technology area, defined to include software, electronics and telecommunications companies. Notwithstanding the group's typically volatile nature, our longer-term outlook on these stocks remains positive based on accelerating Internet usage, the worldwide embrace of wireless technologies and a global push for better productivity. One noteworthy sector-weighting increase we made during the period was health care. We added several services providers as well as pharmaceutical companies and more-aggressive biotechnology stocks. On the services side, we deemed certain managed-care and hospital names to be attractive in the latter half of the period, based on what we viewed as improving fundamentals within the health-care industry. In addition, while the group's earnings-growth prospects remain relatively modest, these companies have good potential to meet expectations over the near-to-intermediate term. We believe that investors will continue to reward companies that can deliver such consistency. In the pharmaceutical/biotech area, we added several companies that stand to benefit over the longer term from breakthroughs in gene research and the launch of new products. 7 WARBURG PINCUS SMALL COMPANY GROWTH FUND ANNUAL INVESTMENT ADVISER'S REPORT -- OCTOBER 31, 2000 (CONT'D) - -------------------------------------------------------------------------------- We ended the period with a modest overweighting in the energy area, where we continued to emphasize oil-services providers. We believe these companies will continue to benefit from demand for their services, even if oil prices begin to decline. In our view, oil prices would have to fall dramatically to throttle activity in the oil-services industry. Despite the recent volatility in small caps, and the potential for choppy waters over the near term, we have a positive longer-term outlook on the group. We remain of the view that these stocks--and the group's growth-oriented names in particular--will benefit in due course from a historically supportive combination of benign inflation, relatively stable interest rates and modest economic growth. In addition, small caps currently trade at compelling valuations vs. those on larger-cap stocks, which should only add to their appeal from a risk-reward perspective as the economic picture becomes clearer. Our focus, as always, will remain on companies we deem to have the brightest long-term growth prospects. Stephen J. Lurito Sammy Oh Co-Portfolio Manager Co-Portfolio Manager INVESTING IN SMALL COMPANIES ENTAILS SPECIAL RISK CONSIDERATIONS. THESE ARE DETAILED IN THE PROSPECTUS, WHICH SHOULD BE READ CAREFULLY BEFORE INVESTING. 8 WARBURG PINCUS SMALL COMPANY GROWTH FUND ANNUAL INVESTMENT ADVISER'S REPORT -- OCTOBER 31, 2000 (CONT'D) - -------------------------------------------------------------------------------- GROWTH OF $10,000 INVESTED IN COMMON CLASS SHARES OF WARBURG PINCUS SMALL COMPANY GROWTH FUND SINCE INCEPTION AS OF OCTOBER 31, 2000 The graph below illustrates a hypothetical investment of $10,000 in Common Class shares of Warburg Pincus Small Company Growth Fund (the "Fund") from December 31, 1996 (inception) to October 31, 2000, compared to the Russell 2000 Growth Index ("R2000G")* for the same time period. [GRAPHIC OMITTED] EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC FUND R2000G 12/31/96 $10,000.00 $10,000.00 Jan-97 $10,350.00 $10,249.80 Feb-97 $10,020.00 $9,630.92 Mar-97 $9,250.00 $8,951.36 Apr-97 $8,940.00 $8,847.88 May-97 $10,280.00 $10,177.80 Jun-97 $10,840.00 $10,522.90 Jul-97 $11,370.00 $11,062.10 Aug-97 $11,650.00 $11,394.10 Sep-97 $12,930.00 $12,303.40 Oct-97 $12,250.00 $11,564.40 Nov-97 $12,069.90 $11,289.20 Dec-97 $12,229.20 $11,296.00 Jan-98 $11,927.20 $11,145.40 Feb-98 $12,802.60 $12,129.30 Mar-98 $13,637.40 $12,638.10 Apr-98 $13,496.90 $12,715.60 May-98 $12,360.50 $11,791.80 Jun-98 $12,591.60 $11,912.40 Jul-98 $11,414.30 $10,917.60 Aug-98 $8,949.95 $8,397.40 Sep-98 $9,844.94 $9,248.81 Oct-98 $10,166.90 $9,731.23 Nov-98 $11,092.10 $10,486.10 Dec-98 $12,057.10 $11,435.10 Jan-99 $12,620.10 $11,949.40 Feb-99 $11,644.60 $10,856.30 Mar-99 $12,499.30 $11,243.00 Apr-99 $12,991.80 $12,235.90 May-99 $13,061.90 $12,255.20 Jun-99 $14,570.60 $12,900.80 Jul-99 $14,400.10 $12,501.90 Aug-99 $14,390.00 $12,034.30 Sep-99 $15,154.20 $12,266.50 Oct-99 $16,692.30 $12,580.60 Nov-99 $19,136.00 $13,910.90 Dec-99 $24,021.50 $16,362.00 Jan-00 $23,824.50 $16,209.80 Feb-00 $32,634.80 $19,981.80 Mar-00 $28,921.00 $17,881.60 Apr-00 $24,530.80 $16,076.10 May-00 $22,195.40 $14,668.40 Jun-00 $26,625.60 $16,563.30 Jul-00 $23,710.10 $15,143.80 Aug-00 $27,425.50 $16,736.80 Sep-00 $25,609.90 $15,905.30 Oct-00 $23,981.20 $14,614.30 Average Annual Total Returns for periods ended 10/31/00 (Common Shares) ------------------ 1 YEAR 43.65% ------------------ 3 YEAR 25.10% ------------------ SINCE INCEPTION (12/31/96 25.59% ------------------ FUND ----- 1 Year Total Return (9/30/99 to 9/30/00) ............................. 68.99% 3 Year Average Annual Total Return (9/30/97 to 9/30/00) .............................................. 25.56% Average Annual Total Return Since Inception (12/31/96 to 9/30/00) ............................................. 28.47% - ------------------ * The Russell 2000 Index is an unmanaged index (with no defined investment objective) of approximately 2,000 small-cap stocks, includes reinvestment of dividends, and is compiled by Frank Russell Company. 9 WARBURG PINCUS EMERGING GROWTH FUND SCHEDULE OF INVESTMENTS--OCTOBER 31, 2000 - -------------------------------------------------------------------------------- NUMBER OF SHARES VALUE --------- -------------- COMMON STOCKS (90.6%) BUILDING & BUILDING MATERIALS (1.2%) Lennar Corp. 927,600 $ 29,799,150 -------------- BUSINESS SERVICES (6.2%) Cacheflow, Inc. 1 80,800 8,726,400 Commerce One, Inc. 1 512,500 32,896,094 New York Restaurant Group, Inc. 1,2 336,786 3,249,985 On Assignment, Inc. 1 1,472,520 37,089,097 Paychex, Inc. 509,550 28,885,116 TMP Worldwide, Inc. 1 374,550 26,072,191 West Teleservices Corp.1 430,500 10,977,750 -------------- 147,896,633 -------------- COMMUNICATIONS & MEDIA (2.6%) Ariba, Inc. 1 319,000 40,313,625 Finisar Corp. 1 687,000 19,794,187 Youthstream Media Networks, Inc. 1 995,344 1,928,479 -------------- 62,036,291 -------------- COMPUTERS (11.2%) Agile Software Corp. 1 25,200 1,899,450 BEA Systems, Inc. 1 670,000 48,072,500 Brocade Communications Systems, Inc. 173,000 39,335,875 Mercury Interactive Corp. 1 261,475 29,023,725 National Instruments Corp. 1 611,765 28,561,778 Network Appliance, Inc. 1 230,500 27,429,500 NVIDIA Corp. 1 390,200 24,247,272 Palm, Inc. 1 480,000 25,710,000 Phone.com, Inc. 1 190,000 17,586,875 Tech Data Corp. 1 641,000 26,681,625 -------------- 268,548,600 -------------- CONSUMER SERVICES (2.0%) DeVRY, Inc. 1 1,007,321 37,207,919 ITT Educational Services, Inc. 1 679,050 10,695,037 -------------- 47,902,956 -------------- ELECTRONICS (14.9%) Applied Micro Circuits Corp. 1 210,000 16,038,750 Bookham Technology PLC - ADR 1 662,500 22,317,969 Celestica, Inc. ADR 1 325,400 23,388,125 Emulex Corp. 1 172,000 25,262,500 Maxim Integrated Products, Inc. 1 1,132,390 75,091,612 Molex, Inc. 582,300 31,444,200 PMC-Sierra, Inc. 1 210,825 35,734,837 QLogic Corp. 1 240,000 23,220,000 Texas Instruments, Inc. 716,524 35,154,459 TranSwitch Corp. 1 575,000 33,206,250 See Accompanying Notes to Financial Statements. 10 WARBURG PINCUS EMERGING GROWTH FUND SCHEDULE OF INVESTMENTS (CONT'D)--OCTOBER 31, 2000 - -------------------------------------------------------------------------------- NUMBER OF SHARES VALUE --------- -------------- COMMON STOCKS (CONT'D) ELECTRONICS (cont'd) Vishay Intertechnology, Inc. 1 570,057 $ 17,101,710 Vitesse Semiconductor Corp. 1 264,000 18,463,500 -------------- 356,423,912 -------------- ENERGY (3.7%) Apache Corp. 562,500 31,113,281 Chaparral Resources, Inc. 1 13,889 90,278 Devon Energy Corp. 509,000 25,653,600 Noble Affiliates, Inc. 646,500 23,718,469 Southern Energy, Inc. 1 276,500 7,534,625 -------------- 88,110,253 -------------- FINANCIAL SERVICES (9.7%) Capital One Financial Corp. 205,000 12,940,625 Enhance Financial Services Group, Inc. 295,050 5,732,144 Franklin Resources, Inc. 560,100 23,994,684 Indymac Mortgage Holdings, Inc. 1 1,848,900 38,595,787 John Hancock Financial Services, Inc. 1 400,000 12,650,000 Lehman Brothers Holdings, Inc. 400,000 25,800,000 MBIA, Inc. 445,000 32,345,937 Reinsurance Group of America, Inc. 1,139,095 42,573,676 Sun Life Financial Services 550,000 11,275,000 XL Capital, Ltd., Class A 350,000 26,906,250 -------------- 232,814,103 -------------- FOOD, BEVERAGES & TOBACCO (0.1%) Foodtrader.Com, Inc. 1,2 966,183 2,000,000 -------------- HEALTHCARE (13.9%) ALZA Corp. 1 461,400 37,344,562 Coherent, Inc. 1 366,400 12,755,300 Community Health Systems, Inc. 1 557,600 15,717,350 Focal, Inc. 1 1 2 HCA-The Healthcare Co. 755,000 30,152,812 Health Management Associates, Inc., Class A 1 1,444,500 28,619,156 Inhale Therapeutic Systems, Inc. 1 275,000 13,681,250 Ivax Corp. 1,222,950 53,198,325 PE Corp - PE Biosystems Group 375,800 43,968,600 Stryker Corp. 282,000 13,289,250 Tenet Healthcare Corp. 964,000 37,897,250 Wellpoint Health Networks, Inc. 1 374,300 43,769,706 Softcom, Inc. 1,2 454,545 999,999 -------------- 331,393,562 -------------- LODGING & RESTAURANTS (0.7%) Park Place Entertainment Corp. 1 1,386,100 17,672,775 -------------- See Accompanying Notes to Financial Statements. 11 WARBURG PINCUS EMERGING GROWTH FUND SCHEDULE OF INVESTMENTS (CONT'D)--OCTOBER 31, 2000 - -------------------------------------------------------------------------------- NUMBER OF SHARES VALUE --------- -------------- COMMON STOCKS (CONT'D) OIL SERVICES (5.3%) Cooper Cameron Corp. 1 367,790 $ 20,044,555 Nabors Industries, Inc. 1 982,675 50,018,157 Noble Drilling Corp. 1 538,490 22,380,991 Pogo Producing Co. 424,000 10,600,000 Pride International, Inc. 1 913,100 23,112,844 -------------- 126,156,547 -------------- PHARMACEUTICALS (8.6%) Abgenix, Inc. 1 162,500 12,817,187 Barr Laboratories, Inc. 1 299,800 18,924,875 Biovail Corp. 1 1,055,100 44,380,144 Celgene Corp. 1 405,700 26,116,938 Elan Corp. PLC ADR 1 543,000 28,202,063 Gemini Genomics PLC ADR1 99,400 1,130,675 Human Genome Sciences, Inc. 1 155,000 13,700,547 Icos Corp.1 145,400 7,469,925 IDEC Pharmaceuticals Corp. 1 50,000 9,806,250 ImClone Systems, Inc. 1 65,000 3,554,688 Medarex, Inc. 1 230,300 14,077,088 Millennium Pharmaceuticals, Inc. 1 340,000 24,671,250 Protein Design Labs, Inc. 1 5,000 675,391 -------------- 205,527,021 -------------- REAL ESTATE (1.2%) Apartment Investment & Management Co, Class A 300,000 13,706,250 Boston Properties, Inc. 300,000 12,150,000 Prologis Trust 146,100 3,068,100 -------------- 28,924,350 -------------- TELECOMMUNICATIONS & EQUIPMENT (9.3%) ANTEC Corp. 1 250,000 3,046,875 Audiocodes, Ltd. 1 1,017,480 40,254,053 Avanex Corp. 1 220,600 22,404,688 McLeodUSA, Inc. 1 1,190,875 22,924,344 MRV Communications, Inc. 1 437,900 17,297,050 Polycom, Inc. 1 1,023,650 66,537,250 Redback Networks, Inc. 1 279,000 29,696,063 Scientific Atlanta, Inc. 313,400 21,448,313 -------------- 223,608,636 -------------- TOTAL COMMON STOCKS (Cost $1,509,482,200) 2,168,814,788 -------------- See Accompanying Notes to Financial Statements. 12 WARBURG PINCUS EMERGING GROWTH FUND SCHEDULE OF INVESTMENTS (CONT'D)--OCTOBER 31, 2000 - -------------------------------------------------------------------------------- NUMBER OF SHARES VALUE --------- -------------- WARRANTS (0.0%) Women First Healthcare, Inc. 1,2 (Cost $0) 5,516 $ 0 -------------- SHORT TERM INVESTMENTS (8.5%) Institutional Money Market Trust 90,491,206 90,491,206 RBB Money Market Portfolio 111,546,591 111,546,591 -------------- TOTAL SHORT TERM INVESTMENTS (Cost $202,037,797) 202,037,797 -------------- PREFERRED RATES (1.5%) BreezeCom, Ltd., Series B 1,2 1,509,955 28,028,540 Celltra, Ltd. 2 1,102,524 7,000,002 Opal Concepts, Inc., Series B 2 792,603 199,998 -------------- TOTAL PREFERRED (Cost $15,223,300) 35,228,540 -------------- PAR ----- BONDS (0.3%) Orckit Communications, Inc. (NR) 5.750% 04/01/05 $15,000,000 8,043,750 TimesSquareMedia.com, Inc. (NR)3,4 6.000% 11/22/02 2 2,900,000 0 -------------- TOTAL BONDS (Cost $17,900,000) 8,043,750 -------------- TOTAL INVESTMENTS AT VALUE (100.9%) (Cost $1,744,643,297 5) 2,414,124,875 LIABILITIES IN EXCESS OF OTHER ASSETS (0.9%) (21,585,381) -------------- NET ASSETS (100.0%) $2,392,539,494 ============== INVESTMENT ABBREVIATIONS ADR = American Depository Receipt NR = Not Rated - -------------------------------------------------------------------------------- 1 Non-income producing security. 2 Restricted security. 3 Bond is currently in deafult. 4 Illiquid security. 5 Cost for federal income tax purposes is $1,753,820,121. See Accompanying Notes to Financial Statements. 13 WARBURG PINCUS SMALL COMPANY VALUE FUND SCHEDULE OF INVESTMENTS--OCTOBER 31, 2000 - -------------------------------------------------------------------------------- NUMBER OF SHARES VALUE -------- ----------- COMMON STOCKS (84.6%) BANKS & SAVINGS & LOANS (5.9%) Century Bancorp, Inc. Class A 30,300 $ 416,625 Dime Bancorp, Inc. 18,500 452,094 Prosperity Bancshares, Inc. 38,000 717,250 ----------- 1,585,969 ----------- BUILDING & BUILDING MATERIALS (3.3%) LSI Industries, Inc. 12,300 230,625 The Stanley Works 10,200 271,575 Walter Industries, Inc. 50,500 375,594 ----------- 877,794 ----------- BUSINESS SERVICES (0.9%) National Data Corp. 3,400 129,625 Sensormatic Electronics Corp. 1 6,000 108,000 ----------- 237,625 ----------- COMPUTERS (1.5%) Avid Technology, Inc. 1 7,200 99,900 JDA Software Group, Inc. 1 4,820 72,601 Silicon Graphics, Inc. 1 18,700 84,150 Storage Technology Corp. 1 7,700 75,075 Transactions Systems Architects, Inc. Class A 1 4,700 63,450 ----------- 395,176 ----------- CONSUMER DURABLES (4.4%) Aftermarket Technology Corp. 1 45,800 243,312 Harman International Industries, Inc. 13,400 643,200 Lear Corp. 1 10,000 272,500 ----------- 1,159,012 ----------- CONSUMER NON-DURABLES (3.6%) Borg-Warner Automotive, Inc. 7,000 264,250 Cutter & Buck, Inc. 1 12,600 129,150 Phillips-Van Heusen Corp. 46,900 556,937 ----------- 950,337 ----------- CONSUMER SERVICES (1.6%) Lo-Jack Corp. 1 51,400 411,200 ----------- ELECTRONICS (2.6%) Avant Corp. 1 21,200 356,425 Integrated Device Technology, Inc. 1 1,300 73,206 M.D.C. Holdings, Inc. 9,332 255,464 ----------- 685,095 ----------- ELECTRIC - UTILITIES (9.1%) Energy East Corp. 17,000 357,319 Sierra Pacific Resources 23,100 397,031 DTE Energy Co. 9,200 332,350 See Accompanying Notes to Financial Statements. 14 WARBURG PINCUS SMALL COMPANY VALUE FUND SCHEDULE OF INVESTMENTS (CONT'D)--OCTOBER 31, 2000 - -------------------------------------------------------------------------------- NUMBER OF SHARES VALUE -------- ----------- COMMON STOCKS (CONT'D) ELECTRIC UTILITIES (cont'd) NSTAR 10,900 $ 421,694 UniSource Energy Corp. 16,200 241,988 Public Service Company of New Mexico 23,300 642,206 ----------- 2,392,588 ----------- ENERGY (3.3%) Cross Timbers Oil Co. 8,850 166,491 HS Resources, Inc. 1 5,400 168,075 Ocean Energy, Inc. 1 13,400 185,925 Newfield Exploration Co. 1 4,700 177,425 Tesoro Petroleum Corp. 1 17,900 185,712 ----------- 883,628 ----------- FINANCIAL SERVICES (14.5%) AmeriCredit Corp. 1 22,100 593,937 Delphi Financial Group, Inc. Class A 1 10,000 370,000 Fremont General Corp. 159,200 577,100 GATX Corp. 13,900 584,669 HCC Insurance Holdings, Inc. 12,000 228,750 National Western Life Insurance Co. Class A 1 2,500 221,250 Radian Group, Inc. 3,905 276,767 StanCorp Financial Group, Inc. 14,900 607,175 Webster Financial Corp. 15,200 370,500 ----------- 3,830,148 ----------- GAS UTILITIES (1.3%) MCN Energy Group, Inc. 14,300 352,138 ----------- HEALTHCARE (8.4%) Bergen Brunswig Corp. Class A 13,700 124,156 Health Management Associates, Inc. Class A 1 12,900 255,581 ICU Medical, Inc. 1 9,100 227,500 LifePoint Hospitals, Inc. 1 5,200 201,500 Morrison Management Specialists, Inc. 8,450 283,075 Omnicare, Inc. 28,500 498,750 Sunrise Assisted Living, Inc. 1 13,200 308,550 Universal Health Services, Inc. 3,700 310,337 ----------- 2,209,449 ----------- LEISURE & ENTERTAINMENT (1.1%) SCP Pool Corp. 1 11,319 292,879 ----------- OIL SERVICES (3.1%) Evergreen Resources, Inc. 1 13,100 360,250 Newpark Resources, Inc. 1 23,200 208,800 Pride International, Inc. 1 10,200 258,187 ----------- 827,237 ----------- See Accompanying Notes to Financial Statements. 15 WARBURG PINCUS SMALL COMPANY VALUE FUND SCHEDULE OF INVESTMENTS (CONT'D)--OCTOBER 31, 2000 - -------------------------------------------------------------------------------- NUMBER OF SHARES VALUE -------- ----------- COMMON STOCKS (CONT'D) PAPER & FORESTRY PRODUCTS (3.8%) Caraustar Industries, Inc. 30 $ 302 Ivex Packaging Corp. 1 68,900 676,081 Packaging Corporation of America 1 22,500 330,469 ----------- 1,006,852 ----------- REAL ESTATE (12.5%) BRE Properties, Inc. Class A 17,100 540,788 CenterPoint Properties Corp. 11,800 524,363 Essex Property Trust, Inc. 9,800 509,600 Home Properties of New York, Inc. 7,800 212,063 Manufactured Home Communities, Inc. 13,200 328,350 Mission West Properties, Inc. 49,386 663,624 Urban Shopping Centers, Inc. 10,900 522,519 ----------- 3,301,307 ----------- RETAIL (2.3%) Pathmark Stores, Inc. 1 38,700 607,106 ----------- TRANSPORTATION (1.4%) Landstar Systems, Inc. 1 7,700 363,825 ----------- TOTAL COMMON STOCKS (Cost $18,145,058) 22,369,365 ----------- SHORT TERM INVESTMENTS (14.9%) Institutional Money Market Trust 2,721,794 2,721,795 RBB Money Market Portfolio 1,205,652 1,205,652 ----------- TOTAL SHORT TERM INVESTMENTS (Cost $3,927,447) 3,927,447 ----------- RIGHTS & WARRANTS (0.0%) EA Industries, Inc. 2,3 (Cost $110,438) 1 0 ----------- TOTAL INVESTMENTS AT VALUE (99.5%) (Cost $22,182,943 4) 26,296,812 OTHER ASSETS IN EXCESS OF LIABILITIES (0.5%) 136,061 ----------- NET ASSETS (100.0%) $26,432,873 =========== INVESTMENT ABBREVIATIONS ADR = American Depository Receipt - -------------------------------------------------------------------------------- 1 Non-income producing security. 2 Restricted security. 3 Illiquid security. 4 Cost for federal income tax purposes is $22,230,177. See Accompanying Notes to Financial Statements. 16 WARBURG PINCUS SMALL COMPANY GROWTH FUND SCHEDULE OF INVESTMENTS--OCTOBER 31, 2000 - -------------------------------------------------------------------------------- NUMBER OF SHARES VALUE -------- ----------- COMMON STOCKS (92.6%) BUSINESS SERVICES (2.7%) Acxiom Corp. 1 17,800 $ 716,450 Getty Images, Inc. 1 11,200 355,600 QRS Corp. 1 5,650 47,672 Radvision Ltd. 1 2,700 59,737 Titan Corp. 1 8,200 109,675 ----------- 1,289,134 ----------- COMMUNICATIONS & MEDIA (2.8%) About.com, Inc. 2,200 52,800 IntraNet Solutions, Inc. 9,500 441,750 Pegasus Communications Corp. 1,004 35,705 Puma Technology, Inc. 3,500 47,469 Seachange International, Inc. 12,400 272,800 ValueVision International, Inc. 23,700 479,925 ----------- 1,330,449 ----------- COMPUTERS (12.3%) BackWeb Technologies, Ltd. 21,700 193,944 Concurrent Computer Corp. 1 31,700 558,712 Documentum, Inc. 1 8,700 739,500 Great Plains Software, Inc. 1 4,800 186,900 Informatica Corp. 1,500 141,750 Iona Technologies PLC ADR 1 7,500 493,125 Manugistics Group, Inc. 7,000 797,562 Marimba, Inc. 8,700 51,656 NetIQ Corp. 1 5,500 473,687 Peregrine Systems, Inc. 27,600 662,400 Planetweb, Inc. 1,2 27,600 150,144 Radiant Systems, Inc. 1 23,300 429,594 Remedy Corp. 1 8,900 152,412 RSA Security, Inc. 7,700 446,600 Unify Corp. 1 3,700 1,850 Zoran Corp. 1 7,900 395,987 ----------- 5,875,823 ----------- CONSUMER SERVICES (1.5%) Advantage Learning Systems, Inc. 13,800 409,687 Praecis Pharmaceuticals, Inc. 1 11,400 289,275 ----------- 698,962 ----------- ELECTRONICS (16.2%) Alpha Industries, Inc. 19,500 777,562 ANADIGICS, Inc. 1 15,750 352,406 Anaren Microwave, Inc. 1 5,350 556,400 Apw, Ltd. 1 18,200 840,612 Asyst Technologies, Inc. 1 11,500 172,500 Avant! Corp. 1 4,899 82,364 C-Cube Microsystems, Inc. 1 25,000 487,500 See Accompanying Notes to Financial Statements. 17 WARBURG PINCUS SMALL COMPANY GROWTH FUND SCHEDULE OF INVESTMENTS (CONT'D)--OCTOBER 31, 2000 - -------------------------------------------------------------------------------- NUMBER OF SHARES VALUE -------- ----------- COMMON STOCKS (CONT'D) ELECTRONICS (cont'd) Caliper Technologies Corp. 1 3,800 $ 214,225 Cymer, Inc. 9,700 242,500 DSP Group, Inc. 1 17,600 499,400 EMCORE Corp. 1 16,400 672,400 Exar Corp. 1 10,500 469,219 Interlink Electronics, Inc. 9,000 201,375 Mips Technologies, Inc. Class A 1 11,600 465,450 Photronics, Inc. 1 16,700 376,794 Plexus Corp. 1 1,467 92,513 PRI Automation, Inc. 9,200 208,150 Sipex Corp. 1 13,100 515,812 Telcom Semiconductor, Inc. 1 1,500 21,094 Varian Semiconductor Equipment Associates, Inc. 1 7,800 179,400 Veeco Instruments, Inc. 1 2,900 191,989 Zygo Corp. 1 2,205 109,147 ----------- 7,728,812 ----------- ENERGY (1.2%) Stone Energy Corp. 1 11,000 563,200 ----------- FINANCIAL SERVICES (3.9%) AmeriCredit Corp. 1 17,500 470,312 Compucredit Corp. 1 4,500 138,937 Enhance Financial Services Group, Inc. 4,200 48,825 Fidelity National Financial, Inc. 22,700 557,569 Mutual Risk Management, Ltd. 13,000 235,625 Reinsurance Group, Inc. 10,731 401,071 ----------- 1,852,339 ----------- FOOD, BEVERAGES & TOBACCO (0.7%) Hain Celestial Group, Inc. 1 8,300 329,406 ----------- HEALTHCARE (17.4%) Advance Paradigm, Inc. 1 21,800 1,065,475 AmeriSource Health Corp. Class A 1 18,100 786,219 Bindley Western Industries, Inc. 19,000 682,813 Coherent, Inc. 1 8,700 302,869 Community Health Care 1 29,600 834,350 Foundation Health Systems, Inc. Class A 1 42,700 862,006 Inhale Therapeutic Systems, Inc. 1 6,900 343,275 LifePoint Hospitals, Inc. 1 11,300 437,875 Mid Atlantic Medical Services, Inc. 1 29,100 494,700 MiniMed, Inc. 1 5,800 423,038 Oxford Health Plans, Inc. 1 28,000 945,000 Renal Care Group, Inc. 1 17,500 411,250 Universal Health Services, Inc. Class B 8,400 704,550 ----------- 8,293,420 ----------- See Accompanying Notes to Financial Statements. 18 WARBURG PINCUS SMALL COMPANY GROWTH FUND SCHEDULE OF INVESTMENTS (CONT'D)--OCTOBER 31, 2000 - -------------------------------------------------------------------------------- NUMBER OF SHARES VALUE -------- ----------- COMMON STOCKS (CONT'D) LEISURE & ENTERTAINMENT (3.1%) American Classic Voyages Co. 1 17,900 $ 247,244 Championship Auto Racing 1 16,600 412,925 Mandalay Resort Group 1 17,200 357,975 THQ, Inc. 1 21,600 442,800 ----------- 1,460,944 ----------- OIL SERVICES (5.8%) BJ Services Co. 1 8,000 419,500 Cooper Cameron Corp. 1 7,600 414,200 National-Oilwell, Inc. 1 14,100 412,425 Petroleum Geo - Services ADR 1 19,300 264,169 Precision Drilling Corp. 1 14,100 403,613 Rowan Companies, Inc. 1 16,000 403,000 Smith International, Inc. 1 6,300 444,150 ----------- 2,761,057 ----------- PHARMACEUTICALS (11.4%) Aclara Biosciences, Inc. 1 12,400 221,650 Alkermes, Inc. 1 21,000 778,313 Caremark Rx, Inc. 1 51,700 646,250 Cell Therapeutics, Inc. 1 9,000 602,016 Genencor International, Inc. 1 13,700 376,750 Intermune Pharmaceuticals, Inc. 2,900 145,000 K-V Pharmaceutical Co. 8,000 311,500 Lynx Therapeutics, Inc. 1 8,400 147,000 Maxim Pharmaceuticals, Inc. 4,800 213,000 Maxygen, Inc. 1 7,700 309,925 Medarex, Inc. 1 9,600 586,800 Medicis Pharmaceutical Corp. Class A 1 9,800 721,525 Titan Pharmaceuticals, Inc. 1 2,700 113,616 United Therapeutics Corp. 1 4,300 230,050 ----------- 5,403,395 ----------- TELECOMMUNICATIONS & EQUIPMENT (13.6%) Adaptive Broadband Corp. 1 1,900 30,519 Advanced Fibre Communications, Inc. 1 17,200 560,075 Aeroflex, Inc. 8,400 499,800 Antec Corp. 1 13,200 160,875 Audiocodes, Ltd. 1 11,900 470,794 Clarent Corp. 1 8,400 260,925 CTC Communications Corp. 1 8,850 85,458 Integrated Telecom Express, Inc. 1 22,700 320,638 MRV Communications, Inc. 1 10,800 426,600 Natural Microsystems Corp. 1 7,000 316,313 PECO II, Inc. 1 16,900 665,438 See Accompanying Notes to Financial Statements. 19 WARBURG PINCUS SMALL COMPANY GROWTH FUND SCHEDULE OF INVESTMENTS (CONT'D)--OCTOBER 31, 2000 - -------------------------------------------------------------------------------- NUMBER OF SHARES VALUE -------- ----------- COMMON STOCKS (CONT'D) TELECOMMUNICATIONS & EQUIPMENT (cont'd) Polycom, Inc. 9,800 $ 637,000 Powerwave Technologies, Inc. 1 14,700 707,438 Proxim, Inc. 10,400 630,500 Tekelec1 17,900 658,944 Viatel, Inc. 1 9,400 90,475 ----------- 6,521,792 ----------- TOTAL COMMON STOCKS (Cost $43,250,587) 44,108,733 ----------- SHORT TERM INVESTMENTS (6.6%) Institutional Money Market Trust 959,143 959,143 RBB Money Market Fund 2,208,176 2,208,176 ----------- TOTAL SHORT TERM INVESTMENTS (Cost $3,167,319) 3,167,319 ----------- TOTAL INVESTMENTS AT VALUE (98.9%) (COST $46,417,906 3) 47,276,052 OTHER ASSETS IN EXCESS OF LIABILITIES (1.1%) 623,460 ----------- NET ASSETS (100.0%) $47,899,512 =========== INVESTMENT ABBREVIATIONS ADR = American Depository Receipt - -------------------------------------------------------------------------------- 1 Non-income producing security. 2 Restricted security. 3 Cost for federal income tax purposes is $46,615,044. See Accompanying Notes to Financial Statements. 20 WARBURG PINCUS DOMESTIC EQUITY FUNDS STATEMENTS OF ASSETS AND LIABILITIES October 31, 2000 - -------------------------------------------------------------------------------- WARBURG PINCUS WARBURG PINCUS WARBURG PINCUS EMERGING GROWTH SMALL COMPANY SMALL COMPANY FUND VALUE FUND GROWTH FUND --------------- -------------- -------------- ASSETS Investments at value (cost - $1,744,643,297, $22,182,943 and $46,417,906, respectively) $2,414,124,875 $26,296,812 $47,276,052 Dividends and interest receivable 653,633 80,054 9,777 Receivable for fund shares sold 5,629,081 1,084,648 388,152 Receivable for investment sold unsettled 7,256,473 0 1,067,141 Cash 0 0 200 Prepaid expenses and other assets 86,657 190,043 35,801 -------------- ----------- ----------- 2,427,750,719 27,651,557 48,777,123 -------------- ----------- ----------- LIABILITIES Advisory fee payable 1,856,259 10,792 0 Administration services fee payable 206,251 2,113 3,942 Directors fee payable 3,000 2,725 3,869 Payable for investments purchased 25,894,563 1,162,562 792,321 Payable for fund shares redeemed 6,166,647 0 23,164 Payable for as of fund share 0 4,861 0 Accrued expenses payable 1,084,505 35,631 54,315 -------------- ----------- ----------- 35,211,225 1,218,684 877,611 -------------- ----------- ----------- NET ASSETS Capital stock, $0.001 par value 47,876 6,947 2,073 Paid-in capital 1,334,006,077 18,771,524 48,704,964 Undistributed net investment income 0 26,001 0 Accumulated net realized gain (loss) from security transactions 389,003,962 3,514,532 (1,665,672) Net unrealized appreciation from investments 669,481,579 4,113,869 858,146 -------------- ----------- ----------- Net Assets $2,392,539,494 $26,432,873 $47,899,512 ============== =========== =========== COMMON SHARES Net assets $2,114,737,396 $26,403,491 $47,899,512 -------------- ----------- ----------- Shares outstanding 42,096,024 1,945,293 2,072,823 -------------- ----------- ----------- Net asset value, offering price and redemption price per share $50.24 $13.57 $23.11 ====== ====== ====== ADVISOR SHARES Net assets $ 277,802,098 $ 29,382 -------------- ----------- Shares outstanding 5,784,998 2,185 -------------- ----------- Net asset value, offering price and redemption price per share $48.02 $13.45 ====== ====== See Accompanying Notes to Financial Statements. 21 WARBURG PINCUS DOMESTIC EQUITY FUNDS STATEMENTS OF OPERATIONS For the Year Ended October 31, 2000 - -------------------------------------------------------------------------------- WARBURG PINCUS WARBURG PINCUS WARBURG PINCUS EMERGING GROWTH SMALL COMPANY SMALL COMPANY FUND VALUE FUND GROWTH FUND --------------- -------------- -------------- INVESTMENT INCOME: Dividends $ 3,109,706 $ 399,806 $ 9,675 Interest 9,542,601 86,841 194,327 Foreign taxes withheld (4,575) 0 0 ------------ ---------- ----------- Total investment income 12,647,732 486,647 204,002 ------------ ---------- ----------- EXPENSES: Investment advisory fees 21,973,038 265,466 338,862 Administrative services fees 4,205,534 56,829 72,008 Shareholder servicing/Distribution fees 1,538,827 66,277 84,716 Transfer agent fees 1,783,382 13,455 28,499 Custodian/Sub-custodian fees 411,399 33,033 38,405 Printing fees 302,962 14,419 10,545 Legal fees 108,685 15,894 12,040 Audit fees 60,395 12,000 13,400 Registration fees 48,362 25,196 53,089 Insurance expense 15,175 1,524 1,453 Directors fees 12,825 10,624 13,517 Interest expense 12,425 0 1,631 Offering/Organizational costs 0 14,944 0 Miscellaneous expense 86,156 0 1,293 ------------ ---------- ----------- 30,559,165 529,661 669,458 ------------ ---------- ----------- Less: fees waived, expenses reimbursed and transfer agent offsets (477,369) (66,476) (195,051) ------------ ---------- ----------- Total expenses 30,081,796 463,185 474,407 ------------ ---------- ----------- Net investment income (loss) (17,434,064) 23,462 (270,405) ------------ ---------- ----------- NET REALIZED AND UNREALIZED GAIN (LOSS) FROM INVESTMENTS: Net realized loss from investments 419,040,087 3,733,200 (1,581,984) Net change in unrealized appreciation (depreciation) from investments 132,236,335 1,967,554 (1,139,253) ------------ ---------- ----------- Net realized and unrealized gain (loss) from investments 551,276,422 5,700,754 (2,721,237) ------------ ---------- ----------- Net increase (decrease) in net assets resulting from operations $533,842,358 $5,724,216 $(2,991,642) ============ ========== =========== See Accompanying Notes to Financial Statements. 22 This page intentionally left blank WARBURG PINCUS EMERGING GROWTH FUND STATEMENTS OF CHANGES IN NET ASSETS - -------------------------------------------------------------------------------- WARBURG PINCUS WARBURG PINCUS EMERGING GROWTH SMALL COMPANY VALUE FUND FUND -------------------------------- -------------------------- FOR THE FOR THE FOR THE FOR THE YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31, --------------- --------------- ------------ ----------- 2000 1999 2000 1999 --------------- --------------- ------------ ----------- FROM OPERATIONS: Net investment income (loss) $ (17,434,064) $ (15,518,919) $ 23,462 $ (354,167) Net realized gain (loss) from investments 419,040,087 300,644,500 3,733,200 3,792,545 Net change in unrealized appreciation (depreciation) from investments 132,236,335 205,391,594 1,967,554 (4,750,334) --------------- --------------- ------------ ----------- Net increase (decrease) in net assets resulting from operations 533,842,358 490,517,175 5,724,216 (1,311,956) --------------- --------------- ------------ ----------- FROM DISTRIBUTIONS: Distributions from realized gains (losses): Common Class Shares (225,635,097) 0 (3,505,579) (2,280,474) Advisor Class Shares (31,683,347) 0 (2,470) (1,680) --------------- --------------- ------------ ----------- Net decrease in net assets from distributions (257,318,444) 0 (3,508,049) (2,282,154) --------------- --------------- ------------ ----------- FROM CAPITAL SHARE TRANSACTIONS: Proceeds from sale of shares 1,307,801,851 724,682,855 18,117,399 30,617,506 Reinvested distributions 248,328,679 225 3,045,568 2,155,694 Net asset value of shares redeemed (1,260,954,165) (1,237,905,127) (26,177,249) (80,318,997) --------------- --------------- ------------ ----------- Net increase (decrease) in net assets from capital share transactions 295,176,365* (513,222,047) (5,014,282) (47,545,797) --------------- --------------- ------------ ----------- Net increase (decrease) in net assets 571,700,279 (22,704,872) (2,798,115) (51,139,907) NET ASSETS: Beginning of year 1,820,839,215 1,843,544,087 29,230,988 80,370,895 --------------- --------------- ------------ ----------- End of year $ 2,392,539,494 $ 1,820,839,215 $ 26,432,873 $29,230,988 =============== =============== ============ =========== UNDISTRIBUTED NET INVESTMENT INCOME: $ 0 $ 0 $ 26,001 $ 0 =============== =============== ============ =========== WARBURG PINCUS SMALL COMPANY GROWTH FUND ----------------------------- FOR THE FOR THE YEAR ENDED YEAR ENDED OCTOBER 31, OCTOBER 31, ------------ ------------ 2000 1999 ------------ ------------ FROM OPERATIONS: Net investment income (loss) $ (270,405) $ (69,300) Net realized gain (loss) from investments (1,581,984) 1,359,344 Net change in unrealized appreciation (depreciation) from investments (1,139,253) 1,785,904 ------------ ------------ Net increase (decrease) in net assets resulting from operations (2,991,642) 3,075,948 ------------ ------------ FROM DISTRIBUTIONS: Distributions from realized gains (losses): Common Class Shares (393,861) 0 Advisor Class Shares 0 0 ------------ ------------ Net decrease in net assets from distributions (393,861) 0 ------------ ------------ FROM CAPITAL SHARE TRANSACTIONS: Proceeds from sale of shares 97,628,775 11,768,644 Reinvested distributions 350,461 0 Net asset value of shares redeemed (55,714,596) (10,367,900) ------------ ------------ Net increase (decrease) in net assets from capital share transactions 42,264,640 1,400,744 ------------ ------------ Net increase (decrease) in net assets 38,879,137 4,476,692 NET ASSETS: Beginning of year 9,020,375 4,543,683 ------------ ------------ End of year $ 47,899,512 $ 9,020,375 ============ ============ UNDISTRIBUTED NET INVESTMENT INCOME: $ 0 $ 0 ============ ============ <FN> *Includes redemption of 7,924,407 as a result of redemption in-kind on March 31, 2000. </FN> See Accompanying Notes to Financial Statements. 24 & 25 WARBURG PINCUS EMERGING GROWTH FUND FINANCIAL HIGHLIGHTS (For a Common Class share of the Fund Outstanding Throughout Each Year) - -------------------------------------------------------------------------------- FOR THE YEAR ENDED OCTOBER 31, ------------------------------------------------------------------------------- 2000 1999 1998 1997 1996 ---------- ---------- --------- ---------- ---------- PER-SHARE DATA Net asset value, beginning of year $ 43.73 $ 33.69 $ 39.66 $ 32.80 $ 29.97 ---------- ---------- --------- ---------- ---------- INVESTMENT ACTIVITIES: Net investment loss (0.33) (0.33) (0.12) (0.19) (0.02) Net gains (losses) on investments (both realized and unrealized) 13.07 10.37 (3.46) 7.12 4.60 ---------- ---------- --------- ---------- ---------- Total from investment activities 12.74 10.04 (3.58) 6.93 4.58 ---------- ---------- --------- ---------- ---------- LESS DISTRIBUTIONS: Distributions from realized capital gains (6.23) 0.00 (2.39) (0.07) (1.75) ---------- ---------- --------- ---------- ---------- Total distributions 0.00 0.00 (2.39) (0.07) (1.75) ---------- ---------- --------- ---------- ---------- NET ASSET VALUE, END OF YEAR $ 50.24 $ 43.73 $ 33.69 $ 39.66 $ 32.80 ========== ========== ========= ========== ========== Total return 30.60% 29.80% (9.40)% 21.18% 16.14% RATIOS/SUPPLEMENTAL DATA: Net assets, end of year (000s omitted) $2,114,737 $1,592,595 $1,532,521 $1,515,385 $1,104,684 Ratio of expenses to average net assets 1.19%1 1.23%1 1.22%1 1.22%1 1.28% Ratio of net loss to average net assets (.65)% (.75)% (.48)% (.59)% (.63)% Portfolio turnover rate 190.82% 154.08% 91.60% 87.03% 65.77% <FN> - -------------------------------------------------------------------------------- 1 Interest earned on uninvested cash balances is used to offset portions of the transfer agent expense. These arrangements resulted in a reduction to the Common Class shares' expenses by .02% annualized for the year ended October 31, 2000, and by .01%, .00%, .01% and .01% for the years ending 1999, 1998, 1997 and 1996, respectively. The Common Class shares' operating expense ratio after reflecting these arrangements were 1.17% for the year ended October 31, 2000, and 1.22%, 1.22%, 1.21% and 1.27% for the years ending 1999, 1998, 1997 and 1996, respectively. </FN> See Accompanying Notes to Financial Statements. 26 WARBURG PINCUS SMALL COMPANY VALUE FUND FINANCIAL HIGHLIGHTS (For a Common Class share of the Fund Outstanding Throughout Each Period) - -------------------------------------------------------------------------------- FOR THE YEAR ENDED OCTOBER 31, ---------------------------------------------------------------------------- 2000 1999 1998 1997 1996 4 ------- ------- ------- -------- ------- PER-SHARE DATA Net asset value, beginning of period $ 12.47 $ 13.39 $ 18.77 $ 14.38 $ 10.00 ------- ------- ------- -------- ------- INVESTMENT ACTIVITIES: Net investment income/(loss) 0.01 (0.15) (0.12) (0.08) (0.02) Net gains (losses) on investments (both realized and unrealized) 2.65 (0.34) (3.33) 4.64 4.40 ------- ------- ------- -------- ------- Total from investment activities 2.66 (0.49) (3.45) 4.56 4.38 ------- ------- ------- -------- ------- LESS DISTRIBUTIONS: Distributions from realized capital gains (1.56) (0.43) (1.93) (0.17) 0.00 ------- ------- ------- -------- ------- Total distributions (1.56) (0.43) (1.93) (0.17) 0.00 ------- ------- ------- -------- ------- NET ASSET VALUE, END OF PERIOD $ 13.57 $ 12.47 $ 13.39 $ 18.77 $ 14.38 ======= ======= ======= ======== ======= Total return 22.56% (3.91)% (19.97)% 32.05% 43.80%2 RATIOS/SUPPLEMENTAL DATA: Net assets, end of period (000s omitted) $26,403 $29,201 $80,318 $223,675 $84,045 Ratio of expenses to average net assets 1.76%1 1.76%1 1.70%1 1.70%1 1.75%1,3 Ratio of net gain to average net assets .09% (.76)% (.46)% (.63)% (.43)%3 Decrease reflected in above operating expense ratios due to waivers/ reimbursements .23% .38% .01% .03% .44%3 Portfolio turnover rate 155.35% 168.57% 77.92% 105.87% 43.14%2 <FN> - -------------------------------------------------------------------------------- 1 Interest earned on uninvested cash balances is used to offset portions of the transfer agent expense. These arrangements resulted in a reduction to the Common Class shares' expenses by .02% annualized for the year ended October 31, 2000, and by .01%, .00%, .01% and .00% for the year or period ending 1999, 1998, 1997 and 1996, respectively. The Common Class shares' operating expense ratio after reflecting these arrangements were 1.74% for the year ended October 31, 2000, and 1.75%, 1.70%, 1.69% and 1.75% for the year or period ending 1999, 1998, 1997 and 1996, respectively. 2 Non-annualized. 3 Annualized. 4 For the period December 29, 1995 (commencement of operations) through October 31, 1996. </FN> See Accompanying Notes to Financial Statements. 27 WARBURG PINCUS SMALL COMPANY GROWTH FUND FINANCIAL HIGHLIGHTS (For a Common Class share of the Fund Outstanding Throughout Each Period) - -------------------------------------------------------------------------------- FOR THE YEAR ENDED OCTOBER 31, ------------------------------------------- 2000 1999 1998 4 1997 4 ------- ------- ------- ------- PER-SHARE DATA Net asset value, beginning of period $ 16.60 $ 10.11 $ 12.25 $ 10.00 ------- ------- ------- ------- INVESTMENT ACTIVITIES: Net investment loss (0.13) (0.13) (0.34) (0.04) Net gains (losses) on investments and foreign currency related items (both realized and unrealized) 7.28 6.62 (1.74) 2.29 ------- ------- ------- ------- Total from investment activities 7.15 6.49 (2.08) 2.25 ------- ------- ------- ------- LESS DIVIDENDS AND DISTRIBUTIONS: Dividends from net investment income (loss) 0.00 0.00 (0.06) 0.00 Distributions from net realized gains (0.64) 0.00 0.00 0.00 ------- ------- ------- ------- Total dividends and distributions (0.64) 0.00 (0.06) 0.00 ------- ------- ------- ------- NET ASSET VALUE, END OF PERIOD $ 23.11 $ 16.60 $ 10.11 $ 12.25 ======= ======= ======= ======= Total return 43.65% 64.19% (17)% 22.50%2 RATIOS/SUPPLEMENTAL DATA: Net assets, end of period (000s omitted) $47,900 $ 9,020 $ 4,544 $11,977 Ratio of expenses to average net assets 1.42%1 1.41%1 1.40%1 1.41%1,3 Ratio of net loss to average net assets (.80)% (1.06)% (.95)% (.53)%3 Decrease reflected in above operating expense ratios due to waivers/reimbursements .56% 2.13% 1.10% 3.66%3 Portfolio turnover rate 93.65% 191.65% 114.97% 123.24%2 <FN> - -------------------------------------------------------------------------------- 1 Interest earned on uninvested cash balances is used to offset portions of the transfer agent expense. These arrangements resulted in a reduction to the Common Class shares' expenses by .02% annualized for the year ended October 31, 2000, by .01%, .00%, .01%, for the year or period ended October 31, 1999, 1998 and 1997, respectively. The Common Class shares' operating expense ratio after reflecting these arrangements were 1.40% for the year ended October 31, 2000, 1.40%, 1.40% and 1.40% for the year or period ended October 31, 1999, 1998 and 1997, respectively. 2 Non-annualized. 3 Annualized. 4 For the period December 31, 1996 (commencement of operations) through October 31, 1997. </FN> See Accompanying Notes to Financial Statements. 28 WARBURG PINCUS DOMESTIC EQUITY FUNDS NOTES TO FINANCIAL STATEMENTS October 31, 2000 - -------------------------------------------------------------------------------- 1. SIGNIFICANT ACCOUNTING POLICIES The Warburg Pincus Emerging Growth Fund (the "Emerging Growth Fund"), Warburg Pincus Small Company Value (the "Small Company Value Fund"), and Warburg Pincus Small Company Growth Fund (the "Small Company Growth Fund") (each a "Fund" and collectively the "Funds") each a Maryland Corporation, are registered under the Investment Company Act of 1940, as amended (the "1940 Act") as diversified open-end management investment companies (except the Emerging Growth Fund), which is not diversified. Investment objectives for each Fund are as follows: the Emerging Growth Fund seeks maximum capital appreciation; the Small Company Value Fund seeks long-term capital appreciation; the Small Company Growth Fund seeks capital growth. Each Fund except the Small Company Growth Fund may invest up to 10% of its total assets in non-publicly traded securities (the Small Company Growth Fund may invest up to 15% of its net assets in such 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 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 security. Each Fund (except the Small Company Growth Fund) offers 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. The Small Company Growth Fund offers only Common Class shares. Common Class and Advisor Class shares in each Fund represent an equal pro rata interest in such Fund, except that they bear different expenses which reflect the difference in the range of services provided to them. Common Class shares for the Small Company Value Fund and the Small Company Growth Fund each bear expenses paid pursuant to a shareholder servicing and distribution plan at an annual rate of .25% of the average daily net asset value of each Fund's Common Class shares. Advisor Class shares bear expenses paid pursuant to a distribution plan at an annual rate not to exceed .75% of the average daily net asset value of the applicable Fund's Advisor Class shares. Advisor Class shares are currently bearing expenses of .50% of average daily net assets. At October 31, 2000, there were no outstanding Advisor Class shares for the Small Company Growth Fund. 29 WARBURG PINCUS DOMESTIC EQUITY FUNDS NOTES TO FINANCIAL STATEMENTS (CONT'D) October 31, 2000 - -------------------------------------------------------------------------------- 1. SIGNIFICANT ACCOUNTING POLICIES -- (CONT'D) 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 most recent bid price and if there is no bid price available, at the most recent ask price. If market quotations are not readily available, securities and other assets are valued by another method that the Board of Directors believes accurately reflects fair value. 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 accurately reflect an investment's value. The books and records of the Funds are maintained in U.S. dollars. Transactions denominated in foreign currencies are recorded at the current prevailing exchange rates. All assets and liabilities denominated in foreign currencies are translated into U.S. dollar amounts at the current exchange rate at the end of the period. Translation gains or losses resulting from changes in the exchange rate during the reporting period and realized gains and losses on the settlement of foreign currency transactions are reported in the results of operations for the current period. The Funds do not isolate that portion of realized gains and losses on investments in equity securities which are due to changes in the foreign exchange rate from that which is due to changes in market prices of equity securities. The Funds isolate that portion of realized gains and losses on investments in debt securities which are due to changes in the foreign exchange rate from that which are due to changes in market prices of debt securities. Security transactions are accounted for on a trade date basis. Interest income is recorded on the accrual basis. Dividends are recorded on the ex-dividend date. Income, expenses (excluding class-specific expenses, principally distribution and shareholder servicing fees) and realized/unrealized gains/losses are allocated proportionately to each class of shares based upon the relative net asset value of outstanding shares 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 and net realized capital gains, if any, are declared and paid at least annually. 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. 30 WARBURG PINCUS DOMESTIC EQUITY FUNDS NOTES TO FINANCIAL STATEMENTS (CONT'D) October 31, 2000 - -------------------------------------------------------------------------------- 1. SIGNIFICANT ACCOUNTING POLICIES -- (CONT'D) 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. Costs incurred in connection with organization of each Fund other than Emerging Growth Fund have been deferred and are being amortized over a period of five years from the date each Fund commenced its operations. Pursuant to an exemptive order issued by the Securities and Exchange Commission, each Fund, along with other Funds advised by Credit Suisse Asset Management, LLC ("CSAM"), can transfer uninvested cash balances to a pooled cash account, which can invest in repurchase agreements secured by U.S. government securities. Securities, pledged as collateral for repurchase agreements, are held by the Funds' custodian bank until the agreements mature. Each agreement requires that the market value of the collateral be sufficient to cover payments of interest and principal; however, in the event of default or bankruptcy by the counterpart to the agreement, retention of the collateral may be subject to legal proceedings. As of 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 ---- -------- Emerging Growth Fund $477,369 Small Company Value Fund 5,175 Small Company Growth Fund 6,058 31 WARBURG PINCUS DOMESTIC EQUITY FUNDS NOTES TO FINANCIAL STATEMENTS (CONT'D) October 31, 2000 - -------------------------------------------------------------------------------- 2. INVESTMENT ADVISER, CO-ADMINISTRATORS AND DISTRIBUTOR Pursuant to Investment Advisory Agreement, CSAM, an indirect, wholly-owned subsidiary of Credit Suisse Group, serves as investment advisor for each of 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 ------ --------------------------------- Emerging Growth Fund .90% of average daily net assets Small Company Value Fund 1.00% of average daily net assets Small Company Growth Fund 1.00% of average daily net assets For the year ended October 31, 2000, investment advisory fees and voluntary waivers were as follows: GROSS NET FUND ADVISORY FEE WAIVER ADVISORY FEE ---- ------------ --------- ------------ Emerging Growth Fund $21,973,038 $ 0 $21,973,038 Small Company Value Fund 265,467 (43,515) 221,952 Small Company Growth Fund 338,862 (166,999) 171,913 Credit Suisse Asset Management Securities, Inc. ("CSAMSI"), an affiliate of CSAM, serves as each Fund's co-administrator. PFPC Inc. ("PFPC") an indirect, wholly-owned subsidiary of PNC Bank Corp. ("PNC"), also serves as each Fund's co-administrator. For administrative services, CSAMSI currently receives a fee calculated at the rate of .10% of each Fund's daily net assets. For the year ended October 31, 2000, administrative services fees were as follows: FUND CO-ADMINISTRATION FEE ---- --------------------- Emerging Growth Fund $2,441,449 Small Company Value Fund 26,547 Small Company Growth Fund 33,886 For its administrative services through July 31, 2000, PFPC received a fee, exclusive of out-of-pocket expenses, based on the following fee structure: AVERAGE DAILY NET ASSETS ANNUAL RATE ------------------ -------------------------------- First $500 million .10% of average daily net assets Next $1 billion .075% of average daily net assets Over $1.5 billion .05% of average daily net assets Effective August 1, 2000, for its administrative services, PFPC receives a fee, exclusive of out-of-pocket expenses, based on the following fee structure: AVERAGE DAILY NET ASSETS ANNUAL RATE ------------------ -------------------------------- First $500 million .10% of average daily net assets Next $1 billion .08% of average daily net assets Over $1.5 billion .06% of average daily net assets 32 WARBURG PINCUS DOMESTIC EQUITY 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, 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 ---- --------------------- -------- --------------------- Emerging Growth Fund $1,764,085 $ 0 $1,764,085 Small Company Value Fund 30,282 (17,786) 12,496 Small Company Growth Fund 38,122 (22,044) 16,078 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 for each Fund. On August 1, 2000 CSAMSI replaced PDI as distributor to each Fund. No compensation was paid 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 selling services. This fee is calculated at an annual rate of .25% of the average daily net assets of the Common Class shares of the Small Company Value and Small Company Growth and at .50% of the average daily net assets of each Funds' Advisor Class shares. 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 ---- ---------------------- Emerging Growth Fund Advisor Class shares $1,538,827 ========== Small Company Value Fund Common Class shares $ 66,098 Advisor Class shares 179 ---------- $ 66,277 ========== Small Company Growth Fund Common Class shares $ 84,716 ========== 33 WARBURG PINCUS DOMESTIC EQUITY FUNDS NOTES TO FINANCIAL STATEMENTS (CONT'D) October 31, 2000 - -------------------------------------------------------------------------------- 3. LINE OF CREDIT The Funds, together with other funds advised by CSAM, have established a $350 million committed and a $75 million uncommitted, unsecured, line of credit facility ("Credit Facility") with Deutsche Bank, AG as administrative agent, State Street Bank and Trust Company as operations agents, 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%. During the year ending October 31, 2000, the following fund had borrowings under the line of credit agreement: MAXIMUM LOAN AVERAGE DAILY AVERAGE DAILY LOAN OUTSTANDING FUND LOAN BALANCE INTEREST RATE % OUTSTANDING 10/31/00 ---- ------------- --------------- ----------- ----------- Small Company Growth Fund $7,967 6.02 $671,000 $0 4. INVESTMENTS IN SECURITIES At October 31, 2000, purchases and sales of investment securities (excluding short-term investments) were as follows: FUND PURCHASES SALES ---- -------------- ----------- Emerging Growth Fund $4,281,122,199 $ 4,347,801 Small Company Value Fund 39,040,498 49,333,769 Small Company Growth Fund 68,172,491 31,291,489 At October 31, 2000, the net unrealized appreciation from investments for those securities having an excess of value over cost and net unrealized depreciation from investments for those securities having an excess of cost over value (based on cost for federal income tax purposes) was as follows: UNREALIZED UNREALIZED NET UNREALIZED FUND APPRECIATION DEPRECIATION APPRECIATION ---- ------------ ------------ -------------- Emerging Growth Fund $756,233,330 $(95,928,576) $660,304,754 Small Company Value Fund 4,804,848 (738,213) 4,066,635 Small Company Growth Fund 8,558,541 (7,897,533) 661,008 34 WARBURG PINCUS DOMESTIC EQUITY FUNDS NOTES TO FINANCIAL STATEMENTS (CONT'D) October 31, 2000 - -------------------------------------------------------------------------------- 5. RESTRICTED SECURITIES Certain Funds' investments are restricted as to resale, are not readily marketable and are valued as determined by or under the direction of each Fund's Board in good faith, at fair value. The table below shows the number of shares held, the acquisition dates, aggregate cost, fair value as of October 31, 2000, and share value of the securities and percent of net assets, which the securities comprise. PERCENTAGE SECURITY ACQUISITION MARKET OF NET FUND SECURITY DESCRIPTION TYPE DATE(S) COST VALUE ASSETS - ---- -------------------- -------- ----------- ----------- ---------- ---------- Emerging Growth Fund Foodtrader.com, Inc. Preferred 09/12/00 $ 2,000,000 $ 2,000,000 0.08% SoftCom, Inc. Preferred 12/21/99 999,999 999,999 0.04 Breeze Com, Ltd Series B Preferred 11/04/99 6,223,300 28,028,540 1.17 Celletra Limited Series C Preferred 04/05/00 7,000,000 7,000,002 0.29 TimesSquareMedia.com Bond 11/23/99 2,900,000 0 0.00 Chaparral Resources, Inc. Common 07/28/98 1,250,000 90,278 0.00 New York Restaurant Group, Inc. Common 10/30/97 3,249,985 3,249,985 0.14 Opal Concepts, Inc. Series B Preferred 08/31/95 2,000,000 199,998 0.01 Women First Healthcare, Inc. Warrants 03/18/99 0 0 0.00 ----------- ----------- ---- $25,623,284 $41,568,802 1.73% =========== =========== ===== Small Company Value Fund EA Industries, Inc. Warrants 03/31/98 $ 110,438 $ 0 0.00% Small Company Growth Fund Planetweb, Inc. Common 09/08/00 $ 150,144 $ 150,144 0.31% 6. FORWARD FOREIGN CURRENCY CONTRACTS Each Fund may enter into forward currency contracts for the purchase or sale of a specific foreign currency at a fixed price on a future date. Risks may arise upon entering into these contracts from the potential inability of counterparties to meet the terms of their contracts and from unanticipated movements in the value of a foreign currency relative to the U.S. dollar. Each Fund will enter into forward contracts primarily for hedging purposes. Forward currency contracts are adjusted by the daily exchange rate of the underlying currency and any gains or losses are recorded for financial statement purposes as unrealized until the contract settlement date or an offsetting position is entered into. At October 31, 2000, there were no open forward foreign currency contracts. 35 WARBURG PINCUS DOMESTIC EQUITY FUNDS NOTES TO FINANCIAL STATEMENTS (CONT'D) October 31, 2000 - -------------------------------------------------------------------------------- 7. CAPITAL SHARE TRANSACTIONS Each Fund is authorized to issue three billion full and fractional shares of capital stock, $.001 par value per share, of which one billion shares (two billion in the case of the Emerging Growth Fund) of each Fund are classified as the Advisor Class. Transactions in classes of each Fund were as follows: EMERGING GROWTH FUND ------------------------------------------------------------------- COMMON CLASS SHARES ------------------------------------------------------------------- FOR THE YEAR ENDED FOR THE YEAR ENDED OCTOBER 31, 2000 OCTOBER 31,1999 ------------------------------- ------------------------------- SHARES VALUE SHARES VALUE ------------ --------------- ------------ --------------- Shares sold 23,543,013 $ 1,217,208,366 17,598,528 $ 690,945,900 Shares issued in reinvestment of dividends 4,767,193 217,193,291 6 225 Shares repurchased (22,635,213) (1,156,532,309) (26,668,182) (1,047,436,237) ----------- --------------- ----------- --------------- Net increase/ (decrease) 5,674,993 $ 277,869,348 (9,069,648) $ (356,490,110) =========== =============== =========== =============== EMERGING GROWTH FUND ------------------------------------------------------------------- ADVISOR CLASS SHARES ------------------------------------------------------------------- FOR THE YEAR ENDED FOR THE YEAR ENDED OCTOBER 31, 2000 OCTOBER 31,1999 ------------------------------- ------------------------------- SHARES VALUE SHARES VALUE ------------ --------------- ------------ --------------- Shares sold 1,760,652 $ 90,593,485 882,074 $ 33,736,955 Shares issued in reinvestment of dividends 711,82 31,135,388 0 0 Shares repurchased (2,123,029) (104,421,856) (5,013,511) (190,468,890) ---------- ------------- ---------- ------------- Net increase/ (decrease) 349,452 $ 17,307,017 (4,131,437) $(156,731,935) ========== ============= ========== ============= SMALL COMPANY VALUE FUND ------------------------------------------------------------------- COMMON CLASS SHARES ------------------------------------------------------------------- FOR THE YEAR ENDED FOR THE YEAR ENDED OCTOBER 31, 2000 OCTOBER 31,1999 ------------------------------- ------------------------------- SHARES VALUE SHARES VALUE ------------ --------------- ------------ --------------- Shares sold 1,390,341 $ 17,797,30 2,370,859 $ 30,585,137 Shares issued in reinvestment of dividends 246,303 3,044,299 161,133 2,154,348 Shares repurchased (2,033,476) (25,851,039) (6,189,358) (80,265,308) ---------- ------------ ---------- ------------ Net (decrease) (396,832) $ (5,009,431) (3,657,366) $(47,525,823) ========== ============ ========== ============ SMALL COMPANY VALUE FUND ------------------------------------------------------------------- ADVISOR CLASS SHARES ------------------------------------------------------------------- FOR THE YEAR ENDED FOR THE YEAR ENDED OCTOBER 31, 2000 OCTOBER 31,1999 ------------------------------- ------------------------------- SHARES VALUE SHARES VALUE ------------ --------------- ------------ --------------- Shares sold 25,991 $ 320,090 2,662 $ 32,369 Shares issued in reinvestment of dividends 103 1,269 101 1,346 Shares repurchased (26,361) (326,210) (4,265) (53,689) ------- --------- ------ -------- Net (decrease) (267) $ (4,851) (1,502) $(19,974) ======= ========= ====== ======== 36 WARBURG PINCUS DOMESTIC EQUITY FUNDS NOTES TO FINANCIAL STATEMENTS (CONT'D) October 31, 2000 - -------------------------------------------------------------------------------- 7. CAPITAL SHARE TRANSACTIONS -- (CONT'D) SMALL COMPANY GROWTH FUND ---------------------------------------------------------- COMMON CLASS SHARES ---------------------------------------------------------- FOR THE YEAR ENDED FOR THE YEAR ENDED OCTOBER 31, 2000 OCTOBER 31,1999 -------------------------- --------------------------- SHARES VALUE SHARES VALUE ---------- ------------ -------- ------------ Shares sold 3,680,086 $ 97,628,775 859,778 $ 11,768,644 Shares issued in reinvestment of dividends 17,427 350,461 0 0 Shares repurchased (2,168,206) (55,714,596) (765,739) (10,367,900) ---------- ------------ -------- ------------ Net increase 1,529,307 $ 42,264,639 94,039 $ 1,400,744 ========== ============ ======== ============ 37 WARBURG PINCUS DOMESTIC EQUITY FUNDS NOTES TO FINANCIAL STATEMENTS (CONT'D) October 31, 2000 - -------------------------------------------------------------------------------- 8. OTHER FINANCIAL HIGHLIGHTS Each fund (other than the Small Company Growth Fund) currently offers one other class of shares, Advisor Class shares, representing equal pro rata interests in each of the respective Funds. The financial highlights for an Advisor Class share of each Fund are as follows: WARBURG PINCUS EMERGING GROWTH FUND ----------------------------------------------------------- ADVISOR CLASS SHARES ----------------------------------------------------------- YEAR ENDED: 2000 1999 1998 1997 1996 -------- -------- -------- -------- -------- PER-SHARE DATA Net asset value, beginning of period $ 41.99 $ 32.51 $ 38.50 $ 31.99 $ 29.38 -------- -------- -------- -------- -------- INVESTMENT ACTIVITIES: Net investment loss (0.61) (0.65) (0.49) (0.33) (0.09) Net gains or losses on investments and foreign currency related items (both realized and unrealized) 12.61 10.13 (3.11) 6.91 4.45 -------- -------- -------- -------- -------- Total from investment activities 12.00 9.48 (3.60) 6.58 4.36 -------- -------- -------- -------- -------- LESS DISTRIBUTIONS: Distributions from net realized capital gains (5.97) 0.00 (2.39) (0.07) (1.75) -------- -------- -------- -------- -------- Total distributions (5.97) 0.00 (2.39) (0.07) (1.75) -------- -------- -------- -------- -------- NET ASSET VALUE, END OF PERIOD $ 48.02 $ 41.99 $ 32.51 $ 38.50 $ 31.99 ======== ======== ======== ======== ======== Total return 29.96% 29.16% (9.75)% 20.62% 15.69% RATIOS/SUPPLEMENTAL DATA: Net assets, end of period (000s omitted) $277,802 $228,244 $311,023 $457,432 $362,696 Ratio of expenses to average net assets 1.69%1 1.72%1 1.62%1 1.63%1 1.70%1 Ratio of net loss to average net assets (1.15)% (1.25)% (.87)% (1.01)% (1.05)% Portfolio turnover rate 190.82% 154.08% 91.60% 87.03% 65.77% <FN> - -------------------------------------------------------------------------------- 1 Interest earned on uninvested cash balances is used to offset portions of transfer agent expense. These arrangements resulted in a reduction to the net expense ratio by .02% annualized for the year ended October 31, 2000 and by .01%, .00%, .00% and .01% for the year ended October 31, 2000, 1999, 1998, 1997 and 1996, respectively. The operating expense ratios after reflecting these arrangements were 1.67% for the year ended October 31, 2000, 1.71%, 1.62%, 1.63% and 1.69% for the year ended October 31, 2000, 1999, 1998, 1997 and 1996, respectively. </FN> 38 WARBURG PINCUS DOMESTIC EQUITY FUNDS NOTES TO FINANCIAL STATEMENTS (CONT'D) October 31, 2000 - -------------------------------------------------------------------------------- 8. OTHER FINANCIAL HIGHLIGHTS -- (CONT'D) WARBURG PINCUS SMALL COMPANY VALUE FUND --------------------------------------------------------------- ADVISOR CLASS SHARES ------------------------------------------------------------- DECEMBER 29, 1995 FOR THE YEAR ENDED OCTOBER 31, (COMMENCEMENT OF -------------------------------------- OPERATIONS) THROUGH PERIOD ENDED: 2000 1999 1998 1997 OCTOBER 31, 1996 ------ ------ ------ ------ ------------------- PER-SHARE DATA Net asset value, beginning of period $12.35 $13.30 $18.65 $14.46 $10.00 ------ ------ ------ ------ ------ INVESTMENT ACTIVITIES: Net investment loss (0.01) (0.18) (0.40) (0.08) (0.02) Net gains (losses) on investments and foreign currency related items (both realized and unrealized) 2.59 (0.34) (3.02) 4.44 4.48 ------ ------ ------ ------ ------ Total from investment activities 2.58 (0.52) (3.42) 4.36 4.46 ------ ------ ------ ------ ------ LESS DISTRIBUTIONS: Distributions from net realized capital gains (1.48) (0.43) (1.93) (0.17) 0.00 ------ ------ ------ ------ ------ Total distributions (1.48) (0.43) (1.93) (0.17) 0.00 ------ ------ ------ ------ ------ NET ASSET VALUE, END OF PERIOD $13.45 $12.35 $13.30 $18.65 $14.46 ====== ====== ====== ====== ====== Total return 22.04% (4.17)% (19.93)% 30.47% 44.60%2 RATIOS/SUPPLEMENTAL DATA: Net assets, end of period (000s omitted) $ 29 $ 30 $ 53 $ 255 $ 5 Ratio of expenses to average net assets 2.01%1 2.01%1 1.97%1 1.89%1 1.97%1, 3 Ratio of net loss to average net assets (.07)% (1.02)% (.92)% (0.78)% (.52)%3 Decrease reflected in above operating expense ratios due to waivers/reimbursements .23% .39% .27% .65% 1.46%3 Portfolio turnover rate 155.35% 168.57% 77.92% 105.87% 43.14%2 <FN> - -------------------------------------------------------------------------------- 1 Interest earned on uninvested cash balances is used to offset portions of transfer agent expense. These arrangements resulted in a reduction to the net expense ratio by .02% for the year ended October 31, 2000 and by .01%, .00%, .01% and .00% for the year or period ended October 31, 1999, 1998, 1997 and 1996, respectively. The operating expense ratios after reflecting these arrangements were 1.99% for the year ended October 31, 2000 and 2.00%, 1.97%, 1.88% and 1.97% for the year or period ended October 31, 2000, 1999, 1998, 1997 and 1996, respectively. 2 Non-annualized. 3 Annualized. </FN> 39 WARBURG PINCUS FUNDS REPORT OF INDEPENDENT ACCOUNTANTS - -------------------------------------------------------------------------------- To the Board of Directors and Shareholders of WARBURG, PINCUS EMERGING GROWTH FUND, INC.; WARBURG, PINCUS SMALL COMPANY VALUE FUND, INC.; WARBURG, PINCUS SMALL COMPANY GROWTH 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 Emerging Growth Fund, Inc., Warburg, Pincus Small Company Value Fund, Inc. and Warburg, Pincus Small Company Growth 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 40 WARBURG PINCUS FUNDS SHAREHOLDER TAX INFORMATION (UNAUDITED) - -------------------------------------------------------------------------------- Each Fund is required by Subchapter M of the Code to advise its shareholders within 60 days of Fund's fiscal year end as to the U.S. federal tax status of distributions received by the Fund's shareholders in respect of such fiscal year. During the fiscal year ended October 31, 2000, the following dividends and distributions per share were paid by each of the Funds: ORDINARY LONG-TERM % OF ORDINARY INCOME INCOME CAPITAL GAINS DIVIDEND QUALIFYING FOR FUND PER SHARE PER SHARE DIVIDENDS RECEIVED DEDUCTION* - ---- --------- ------------- ----------------------------- 1999 PAYMENT DATE 12/07/99 12/07/99 ------------ -------- -------- Emerging Growth 0.00 Common shares $0.0000 $6.2321 Advisor shares 0.0000 5.9659 Small Company Value 0.00 Common shares $0.0000 $1.5602 Advisor shares 0.0000 1.4833 Small Company Growth 0.33 Common shares 0.2074 0.4331 Advisor shares 0.0000 0.0237 The Emerging Growth Fund and the Small Company Growth Fund did not pay any ordinary income dividends or capital gain distributions during the current fiscal year. Further, the above information was provided to calendar year taxpayers via Form 1099-DIV mailed in January of 2000. 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 20001. - ------------- * Available to Corporate Shareholders only. 41 This page intentionally left blank This page intentionally left blank This page intentionally left blank (LOGO) WARBURG PINCUS FUNDS PART OF CREDIT | ASSET SUISSE | MANAGEMENT [GRAPHIC OMITTED] P.O. BOX 9030, BOSTON, MA 02205-9030 800-WARBURG (800-927-2874) o WWW.WARBURG.COM CREDIT SUISSE ASSET MANAGEMENT SECURITIES, INC., DISTRIBUTOR. WPUSS-2-1000