[GRAPHIC OMITTED] [GRAPHIC OMITTED]
WARBURG PINCUS FUNDS CREDIT SUISSE ASSET MANAGEMENT
SEMIANNUAL
REPORT
FEBRUARY 29, 2000
(UNAUDITED)
WARBURG PINCUS
LONG-SHORT MARKET NEUTRAL FUND
More complete information about the Funds, including charges and expenses, is
provided in the PROSPECTUS, which must precede or accompany this document and
which should be read carefully before investing. You may obtain additional
copies by calling 800-WARBURG (800-927-2874) or by writing to Warburg Pincus
Funds, P.O. Box 9030, Boston, MA 02205-9030.
Provident Distributors, Inc., Distributor, located at Four Falls Corporate
Center, 6th Floor, West Conshohocken, PA 19428-2961 is not affiliated with
Credit Suisse Asset Management, LLC. Warburg Pincus Funds are advised by Credit
Suisse Asset Management, LLC.
<PAGE>
FROM TIME TO TIME, THE FUNDS' INVESTMENT ADVISER AND CO-ADMINISTRATORS MAY
WAIVE SOME FEES AND/OR REIMBURSE SOME EXPENSES, WITHOUT WHICH PERFORMANCE WOULD
BE LOWER. WAIVERS AND/OR REIMBURSEMENTS ARE SUBJECT TO CHANGE.
RETURNS ARE HISTORICAL AND INCLUDE CHANGE IN SHARE PRICE AND REINVESTMENT OF
DIVIDENDS AND CAPITAL GAINS. PAST PERFORMANCE CANNOT GUARANTEE FUTURE RESULTS.
RETURNS AND SHARE PRICE WILL FLUCTUATE, AND REDEMPTION VALUE MAY BE MORE OR LESS
THAN ORIGINAL COST.
INVESTMENT IN SHARES OF THE FUNDS CAN BE MORE VOLATILE AND RISKY THAN SOME
OTHER FORMS OF INVESTMENT. IN ADDITION, IF THE ADVISER TAKES LONG POSITIONS IN
STOCKS THAT DECLINE OR SHORT POSITIONS IN STOCKS THAT INCREASE IN VALUE, THEN
THE LOSSES OF THE FUNDS MAY EXCEED THOSE OF OTHER STOCK MUTUAL FUNDS THAT HOLD
LONG POSITIONS ONLY.
THE VIEWS OF THE FUNDS' MANAGEMENT ARE AS OF THE DATE OF THE LETTERS AND
PORTFOLIO HOLDINGS DESCRIBED IN THIS DOCUMENT ARE AS OF FEBRUARY 29, 2000; THESE
VIEWS AND PORTFOLIO HOLDINGS MAY HAVE CHANGED SUBSEQUENT TO THESE DATES. NOTHING
IN THIS DOCUMENT IS A RECOMMENDATION TO PURCHASE OR SELL SECURITIES.
FUND SHARES ARE NOT DEPOSITS OR OTHER OBLIGATIONS OF CREDIT SUISSE ASSET
MANAGEMENT, LLC ("CSAM") OR ANY AFFILIATE, ARE NOT FDIC INSURED AND ARE NOT
GUARANTEED BY CSAM OR ANY AFFILIATE. FUND INVESTMENTS ARE SUBJECT TO INVESTMENT
RISKS, INCLUDING LOSS OF YOUR INVESTMENT.
<PAGE>
WARBURG PINCUS LONG-SHORT MARKET NEUTRAL FUND
PORTFOLIO MANAGERS' LETTER -- FEBRUARY 29, 2000
- --------------------------------------------------------------------------------
March 24, 2000
Dear Shareholders:
We are writing to report on the results of the Warburg Pincus Long-Short
Market Neutral Fund (the "Fund") for the six months ended February 29, 2000.
At February 29, 2000, the net asset value ("NAV") of the Fund's institutional
shares was $15.50, compared to an NAV of $14.21 on August 31, 1999. As a result,
the institutional shares' total return was 17.8%, (assuming the reinvestment of
dividends and distributions totaling $1.1220 per share). By comparison, the
Salomon Smith Barney U.S. 1-Month Treasury Bill Index1 benchmark (the "Index")
returned 2.3% during the same period.
At February 29, 2000, NAV of the Fund's common shares was $15.67, compared to
an NAV of $14.19 on August 31, 1999. As a result, the common shares' total
return was 17.6%, (assuming the reinvestment of dividends and distributions
totaling $.9290 per share). By comparison, the Index returned 2.3% during the
same period.
The Fund significantly outperformed the Index during the fiscal half-year due
to a positive combination of market conditions and our weighting of fundamental
stock selection factors that our research concluded would most effectively
discriminate between attractive and unattractive stocks.
The factors that we correctly emphasized were earnings revisions, which were
plentiful in a buoyant macroeconomic environment; operating performance, as
reflected by companies' income statements rather than their balance sheets; and
long-term relative strength.
Unlike earlier periods, the market's high level of overall volatility helped
performance. This served to create a number of opportunities of which we took
advantage. Share-price momentum and relative valuation worked notably well
during the period in this regard.
Although our investment discipline is based on stock selection and does not
significantly overweight or underweight industry sectors relative to the
benchmark, results during the period were particularly strong in two sectors,
technology and consumer cyclicals.
Within technology, the Fund's long holdings were positioned to benefit from
strong global demand for computer and Internet-related equipment, while short
holdings were more oriented toward mainframe computers and older technology.
Within consumer cyclicals, we profited from shorting companies that were more
sensitive to a potential increase in commodity prices and owning the shares of
companies that were more end-product-oriented.
1
<PAGE>
WARBURG PINCUS LONG-SHORT MARKET NEUTRAL FUND
PORTFOLIO MANAGERS' LETTER -- FEBRUARY 29, 2000 (CONCLUDED)
- --------------------------------------------------------------------------------
Perhaps the weakest spot in the portfolio was the media sector. Our media
stocks experienced disappointing relative performance, as several long positions
did not benefit from improving earnings expectations and shorts were not
penalized for their deficiencies as much as we had expected.
As developments occur that we believe would be of interest to you, we will
keep you informed. Meanwhile, if you have any questions about your portfolio or
the capital markets generally, please feel free to call upon us at any time.
Sincerely yours,
Credit Suisse Asset Management Structured Equities Management Team
William W. Priest, Jr., Managing Director
Eric N. Remole, Managing Director
Marc E. Bothwell, Vice President
Michael A. Welhoelter, Vice President
INVESTING IN SHARES OF THE FUND CAN BE MORE VOLATILE AND RISKY THAN SOME OTHER
FORMS OF INVESTMENTS. IN ADDITION, IF THE ADVISER TAKES LONG POSITIONS IN STOCKS
THAT DECLINE OR SHORT POSITIONS IN STOCKS THAT INCREASE IN VALUE, THEN LOSSES OF
THE FUND MAY EXCEED THOSE OF OTHER STOCK MUTUAL FUNDS THAT HOLD LONG POSITIONS
ONLY.
PERFORMANCE
SINCE
SIX MONTHS ONE YEAR INCEPTION
2/29/00 (3/1/99 - 2/29/00) (ANNUALIZED)
- --------------------------------------------------------------------------------
Warburg Pincus Long-Short Market
Neutral Fund (Institutional) 2 17.8% 12.4% 8.1%
Warburg Pincus Long-Short Market
Neutral Fund (Common) 3 17.6% 12.2% 7.5%
Salomon Smith Barney
U.S. One-Month Treasury Index1 2.3% 4.6% 7.1% 4
- --------------------------------------------------------------------------------
1 MONTHLY RETURN EQUIVALENTS OF YIELD AVERAGES WHICH ARE NOT MARKED TO MARKET.
THE SALOMON SMITH BARNEY ONE-MONTH TREASURY INDEX CONSISTS OF THE LAST
ONE-MONTH TREASURY BILL ISSUES.
2 INCEPTION: 7/31/98
3 INCEPTION: 9/8/98
4 SINCE INCEPTION OF INSTITUTIONAL SHARES
2
<PAGE>
WARBURG PINCUS LONG-SHORT MARKET NEUTRAL FUND
SCHEDULE OF INVESTMENTS
February 29, 2000 (Unaudited)
- --------------------------------------------------------------------------------
NUMBER
OF
SHARES VALUE
------ -------
COMMON STOCKS 82.0%
AEROSPACE/DEFENSE 1.3%
Textron, Inc. 1,600 $ 97,600
-----------
AIR TRANSPORT-FREIGHT 1.5%
Southwest Airlines Co. 6,000 110,625
-----------
AUTOMOTIVE 7.8%
Ford Motor Co. 4,200 174,825
General Motors Corp. 1,700 129,306
Johnson Controls, Inc. 3,800 202,825
PACCAR Inc. 1,300 55,981
-----------
562,937
-----------
BEVERAGES & TOBACCO 1.7%
Anheuser-Busch Cos., Inc. 400 25,650
Philip Morris Cos., Inc. 1,300 26,081
Tootsie Roll Industries 2,300 68,281
-----------
120,012
-----------
BROADCASTING & PUBLISHING 0.8%
AMFM, Inc.** 1,000 61,375
-----------
CABLE 3.2%
At Home Corp. Series A** 3,400 116,663
Cablevision Systems Corp.** 1,800 115,538
-----------
232,201
-----------
CHEMICALS 1.7%
Air Products & Chemicals, Inc. 3,200 82,400
Occidental Petroleum Corp. 2,700 43,369
-----------
125,769
-----------
COMPUTERS, SOFTWARE & SERVICES 4.4%
Earthlink, Inc.** 1,876 46,666
RealNetworks, Inc.** 800 56,250
VERITAS Software Corp.** 1,100 217,663
-----------
320,579
-----------
CONSTRUCTION & BUILDING MATERIALS 1.0%
Ingersoll-Rand Co. 1,800 68,963
-----------
CONSUMER PRODUCTS & SERVICES 0.9%
Avon Products 1,800 48,713
Nu Skin Enterprises, Inc.** 1,700 15,194
-----------
63,907
-----------
See Accompanying Notes to Financial Statements.
3
<PAGE>
WARBURG PINCUS LONG-SHORT MARKET NEUTRAL FUND
SCHEDULE OF INVESTMENTS (CONT'D)
February 29, 2000 (Unaudited)
- --------------------------------------------------------------------------------
NUMBER
OF
SHARES VALUE
------ -------
COMMON STOCKS (CONT'D)
ELECTRIC UTILITIES 1.4%
FirstEnergy Corp. 1,100 $ 20,556
Niagara Mohawk Power 2,900 34,075
Pinnacle West Capital 1,600 44,200
-----------
98,831
-----------
ELECTRONICS 8.7%
Circuit City Stores 2,100 84,788
JDS Uniphase Corp.** 200 52,750
Linear Technology Corp. 1,300 136,419
Motorola, Inc. 1,767 301,274
Teradyne, Inc.** 600 52,200
-----------
627,431
-----------
ENERGY & OIL EXPLORATION 1.9%
Apache Corp. 1,200 43,800
Burlington Resources, Inc. 1,800 49,725
Tidewater, Inc. 1,500 42,469
-----------
135,994
-----------
FINANCIAL SERVICES 10.7%
Hartford Financial Services, Inc. 5,400 168,750
J.P. Morgan & Co., Inc. 1,600 177,600
Jefferson-Pilot Corp. 3,000 156,188
Legg Mason, Inc. 2,000 78,500
Merrill Lynch & Co., Inc. 300 30,750
Regions Financial Corp. 1,700 34,425
UnionBanCal Corp. 3,300 106,013
USX - Marathon Group 1,000 21,625
-----------
773,851
-----------
FOOD & BEVERAGE 3.8%
Coors, (Adolph) Class B 1,500 65,813
Darden Restaurants, Inc. 2,700 35,606
Fleming Companies, Inc. 6,000 92,625
U.S. Foodservice 4,400 77,825
-----------
271,869
-----------
GAS UTILITIES 0.2%
Peoples Energy 500 14,469
-----------
HEALTH CARE 4.0%
Abbott Laboratories 1,300 42,575
Aetna, Inc. 400 16,450
Boston Scientific Corp. 700 12,775
Cigna Corp. 1,400 103,338
Wellpoint Health Networks, Inc.** 1,700 114,750
-----------
289,888
-----------
See Accompanying Notes to Financial Statements.
4
<PAGE>
WARBURG PINCUS LONG-SHORT MARKET NEUTRAL FUND
SCHEDULE OF INVESTMENTS (CONT'D)
February 29, 2000 (Unaudited)
- --------------------------------------------------------------------------------
NUMBER
OF
SHARES VALUE
------ -------
COMMON STOCKS (CONT'D)
INTERNET CONTENT 3.0%
Extreme Networks, Inc.** 500 $ 55,625
InfoSpace.com, Inc. 300 65,100
Priceline.Com, Inc.** 1,700 95,094
-----------
215,819
-----------
METALS & MINING 1.7%
Barrick Gold Corp. 2,300 37,519
Bethlehem Steel Corp. 2,500 14,219
Freeport-McMoran Copper &
Gold, Inc. Class B** 3,300 45,375
Ryerson Tull, Inc. 1,800 23,850
-----------
120,963
-----------
OIL SERVICES 3.8%
Enron Corp. 3,400 234,600
Pennzoil-Quaker State Co. 4,400 38,500
-----------
273,100
-----------
PAPER & FOREST PRODUCTS 1.3%
Weyerhaeuser Co. 1,800 92,363
-----------
PHARMACEUTICALS 2.6%
Chiron Corp.** 600 30,000
ICOS Corp.** 3,000 157,125
-----------
187,125
-----------
REAL ESTATE 4.3%
Apartment Investment &
Management Company, Class A 3,200 118,400
Equity Residential Properties Trust 1,100 43,931
General Growth Properties, Inc. 3,400 98,388
Host Marriott Corp. 1,800 15,975
Simon Debartolo Group 1,600 37,600
-----------
314,294
-----------
RENTALS 0.3%
Hertz Corp. 700 25,069
-----------
RETAIL - SPECIALTY APPAREL STORES 3.2%
Intimate Brands, Inc. Class A 2,900 94,794
Safeway, Inc.** 500 19,281
Target Corp. 700 41,300
Ticketmaster Online-CitySearch, Inc.** 2,100 73,270
-----------
228,645
-----------
SEMICONDUCTOR 2.1%
Broadcom Corp.** 400 78,950
National Semiconductor Corp.** 1,000 75,125
-----------
154,075
-----------
See Accompanying Notes to Financial Statements.
5
<PAGE>
WARBURG PINCUS LONG-SHORT MARKET NEUTRAL FUND
SCHEDULE OF INVESTMENTS (CONT'D)
February 29, 2000 (Unaudited)
- --------------------------------------------------------------------------------
NUMBER
OF
SHARES VALUE
------ -------
COMMON STOCKS (CONT'D)
TELECOMMUNICATIONS 4.9%
A. H. Belo Corp. Class A 4,200 $ 54,075
American Tower Corporation, Class A** 700 34,475
AT&T Corp. 2,000 98,875
Galileo International, Inc. 1,300 22,100
MCI WorldCom, Inc.** 1,000 44,625
Nextel Communications, Inc.** 500 68,156
NEXTLINK Communications, Inc.** 300 33,056
-----------
355,362
-----------
TOTAL COMMON STOCKS (Cost $6,102,083) $ 5,943,117
-----------
PAR
(000)
-----
REPURCHASE AGREEMENT 14.0%
Bear Stearns (Agreement dated
02/29/00, to be repurchased at
$1,014,141, collateralized by
$1,065,000 U.S. Treasury Inflation
Index Note 3.875% due 01/15/09.
Market value of collateral is
$1,036,206.)
5.760% 03/01/00 $1,014 $ 1,013,979
(Cost $1,013,979) -----------
NUMBER
OF
SHARES
------
SECURITIES SOLD SHORT (81.9%)
ACCIDENT & HEALTH INSURANCE (1.1%)
UAL Corp.** (1,600) $ (78,000)
-----------
AEROSPACE/DEFENSE (5.0%)
AMR Corp.** (1,400) (74,025)
Lear Corp.** (1,800) (38,025)
Lockheed Martin Corp. (3,500) (61,031)
T.R.W., Inc. (4,000) (192,000)
-----------
(365,081)
-----------
ARRANGEMENT OF TRANSPORTATION OF
FREIGHT & CARGO (3.0%)
Avnet, Inc. (3,200) (214,000)
-----------
AUTOMOBILE PARTS & EQUIPMENT (3.6%)
Autonation, Inc.** (9,300) (70,331)
Dana Corp. (3,100) (66,069)
Genuine Parts Co. (900) (20,306)
Goodyear Tire & Rubber Co. (4,600) (104,363)
-----------
(261,069)
-----------
See Accompanying Notes to Financial Statements.
6
<PAGE>
WARBURG PINCUS LONG-SHORT MARKET NEUTRAL FUND
SCHEDULE OF INVESTMENTS (CONT'D)
February 29, 2000 (Unaudited)
- --------------------------------------------------------------------------------
NUMBER
OF
SHARES VALUE
------ -------
SECURITIES SOLD SHORT (CONT'D)
BUILDING & BUILDING MATERIALS (1.0%)
Armstrong World Industries (2,600) $ (49,400)
Johns Manville Corp. (2,400) (19,500)
-----------
(68,900)
-----------
BUSINESS SERVICES (2.5%)
ACNielsen Corp. (1,000) (16,938)
Catalina Marketing Corp.** (1,400) (119,175)
Keane, Inc.** (2,000) (48,000)
-----------
(184,113)
-----------
CABLE (1.3%)
Cox Communications, Inc.** (2,100) (95,419)
-----------
CAPITAL IMPROVEMENT (1.3%)
American Standard Companies** (2,800) (97,650)
-----------
COMMUNICATIONS & MEDIA (2.1%)
Chris-Craft Industries, Inc.** (1,300) (85,556)
Telephone and Data Systems, Inc. (600) (63,300)
-----------
(148,856)
-----------
COMPUTERS, SOFTWARE & SERVICES (4.5%)
BMC Software, Inc.** (3,100) (142,600)
Citrix Systems, Inc.** (600) (63,263)
Storage Technology Corp.** (1,000) (12,750)
Tandy Corp. (2,900) (110,381)
-----------
(328,994)
-----------
CONGLOMERATE (1.1%)
General Electric Co. (600) (79,313)
-----------
CONSUMER PRODUCTS & SERVICES (3.2%)
Colgate-Palmolive Co. (1,500) (78,281)
Gillette Co. (2,600) (91,650)
Newell Rubbermaid, Inc. (700) (16,188)
Whitman Corp. (3,800) (47,500)
-----------
(233,619)
-----------
ELECTRIC UTILITIES (1.0%)
Unicom Corp. (1,900) (71,844)
-----------
ELECTRONICS (5.0%)
Arrow Electronics, Inc.** (3,500) (105,875)
Atmel Corp.** (2,900) (143,550)
Texas Instruments, Inc. (700) (116,550)
-----------
(365,975)
-----------
See Accompanying Notes to Financial Statements.
7
<PAGE>
WARBURG PINCUS LONG-SHORT MARKET NEUTRAL FUND
SCHEDULE OF INVESTMENTS (CONT'D)
February 29, 2000 (Unaudited)
- --------------------------------------------------------------------------------
NUMBER
OF
SHARES VALUE
------ -------
SECURITIES SOLD SHORT (CONT'D)
ENVIRONMENTAL SERVICES (0.2%)
Waste Management, Inc. (1,000) $ (15,000)
-----------
FINANCIAL SERVICES (10.1%)
American Express Co. (400) (53,675)
American Financial Group (3,100) (65,100)
CCB Financial Corp. (900) (33,413)
Charles Schwab Corp. (1,500) (62,719)
Cincinnati Financial Corp. (900) (26,888)
Franklin Resources (5,200) (141,375)
MBIA, Inc. (2,600) (99,775)
MGIC Investment Corp. (2,000) (74,750)
People's Bank (1,600) (31,925)
PMI Group, Inc. (700) (25,419)
Starwood Financial, Inc. (900) (15,188)
Union Planters Corporation (1,800) (49,275)
Wachovia Corp. (900) (51,469)
-----------
(730,971)
-----------
FOOD & BEVERAGE (2.8%)
Coca-Cola Co. (3,500) (169,531)
Tricon Global Restaurants, Inc.** (1,200) (31,950)
-----------
(201,481)
-----------
HEALTH CARE (6.7%)
Beckman Coulter, Inc. (3,000) (144,375)
PE Corp. - PE Biosystems Group (1,800) (189,900)
Stryker Corp. (900) (52,650)
United Healthcare (2,000) (102,250)
-----------
(489,175)
-----------
INDUSTRIAL GOODS & MATERIALS (2.6%)
Southdown, Inc. (500) (24,813)
Spx Corp.** (1,900) (165,419)
-----------
(190,232)
-----------
LEISURE (0.6%)
International Game Technology (2,600) (46,313)
-----------
OIL SERVICES (5.8%)
Amerada Hess Corp. (1,500) (75,844)
National Fuel Gas Co. (1,500) (61,406)
R & B Falcon Corp.** (4,600) (71,013)
Texaco, Inc. (2,000) (94,875)
Weatherford International, Inc.** (2,600) (117,000)
-----------
(420,138)
-----------
See Accompanying Notes to Financial Statements.
8
<PAGE>
WARBURG PINCUS LONG-SHORT MARKET NEUTRAL FUND
SCHEDULE OF INVESTMENTS (CONT'D)
February 29, 2000 (Unaudited)
- --------------------------------------------------------------------------------
NUMBER
OF
SHARES VALUE
------ -------
SECURITIES SOLD SHORT (CONT'D)
PAPER & FOREST PRODUCTS (3.7%)
Bowater, Inc. (3,400) $ (167,238)
Georgia-Pacific Group (3,000) (104,063)
-----------
(271,301)
-----------
PHARMACEUTICALS (3.3%)
FMC Corp.** (1,700) (82,131)
Forest Laboratories, Inc.** (400) (27,325)
IMC Global, Inc. (2,400) (32,400)
Monsanto Co. (1,500) (58,219)
Watson Pharmaceuticals, Inc.** (1,000) (40,000)
-----------
(240,075)
-----------
PUBLISHING (1.6%)
Harland (John H.) Co. (1,100) (16,981)
Investment Technology Group, Inc. (2,600) (100,750)
-----------
(117,731)
-----------
RETAIL - SPECIALTY APPAREL STORES (4.4%)
Cintas Corp. (700) (27,956)
Dillard's, Inc. Class A (4,100) (71,238)
Gap, Inc. (1,200) (57,975)
Ikon Office Solutions (5,700) (39,900)
Payless ShoeSource, Inc.** (900) (35,550)
Penney, J.C. Co. (5,700) (89,775)
-----------
(322,394)
-----------
TELECOMMUNICATIONS (3.8%)
Alltel Corp. (1,700) (98,600)
AT&T Corp. - Liberty Media
Group Class A** (1,600) (83,600)
Citizens Utilities Co.
Class B** (2,000) (30,500)
Lucent Technologies (1,000) (59,500)
-----------
(272,200)
-----------
See Accompanying Notes to Financial Statements.
9
<PAGE>
WARBURG PINCUS LONG-SHORT MARKET NEUTRAL FUND
SCHEDULE OF INVESTMENTS (CONCLUDED)
February 29, 2000 (Unaudited)
- --------------------------------------------------------------------------------
NUMBER
OF
SHARES VALUE
------ -------
SECURITIES SOLD SHORT (CONT'D)
TRANSPORTATION (0.3%)
Wisconsin Central Transportation Corp.** (2,000) $ (24,750)
-----------
TOTAL SECURITIES SOLD SHORT (Cost $6,678,039) $(5,934,595)
-----------
TOTAL INVESTMENTS 14.1% (Cost $438,023*) $ 1,022,501
OTHER ASSETS IN EXCESS OF LIABILITIES 85.9% $ 6,224,875
-----------
TOTAL NET ASSETS 100.0% $ 7,247,376
===========
* Cost for Federal income tax purposes at February 29, 2000 is $469,914. The
gross appreciation (depreciation) on a tax basis is as follows:
Gross Appreciation - Investments $ 845,425
Gross Depreciation - Investments (1,017,947)
Gross Appreciation - Short Sales 1,259,158
Gross Depreciation - Short Sales (534,049)
-----------
Net Appreciation $ 552,587
===========
** Non-income producing securities.
See Accompanying Notes to Financial Statements.
10
<PAGE>
WARBURG PINCUS LONG-SHORT MARKET NEUTRAL FUND
STATEMENT OF ASSETS AND LIABILITIES
February 29, 2000 (Unaudited)
- --------------------------------------------------------------------------------
ASSETS
Investments, at value (cost - $7,116,062) $ 6,957,096
Deposits with brokers and custodian bank for securities
sold short or futures contract 6,132,722
Cash 73,621
Receivable for Fund shares sold 4,955
Receivable from investment adviser 3,239
Dividends and interest receivable 19,816
Prepaid expenses and other assets 10,480
-----------
Total Assets 13,201,929
-----------
LIABILITIES
Securities sold short (proceeds $6,678,039) 5,934,595
Distribution fee payable (Common shares) 610
Accrued expenses payable 19,348
-----------
Total Liabilities 5,954,553
-----------
NET ASSETS
Capital stock, $0.001 par value 465
Paid-in capital 8,158,428
Undistributed net investment income 27,299
Accumulated net realized loss from investments and
securities sold short (1,523,294)
Net unrealized appreciation on
investments and other, if any 584,478
-----------
Net Assets $ 7,247,376
===========
INSTITUTIONAL SHARES
Net assets $ 3,750,252
-----------
Shares outstanding 241,912
-----------
Net asset value, offering price and redemption price
per share $ 15.50
===========
COMMON SHARES
Net assets $ 3,497,124
-----------
Shares outstanding 223,134
-----------
Net asset value, offering price and redemption price
per share $ 15.67
===========
See Accompanying Notes to Financial Statements.
11
<PAGE>
WARBURG PINCUS LONG-SHORT MARKET NEUTRAL FUND
STATEMENT OF OPERATIONS
For the Six Months Ended February 29, 2000 (Unaudited)
- --------------------------------------------------------------------------------
INVESTMENT INCOME
Dividends $ 46,301
Interest 176,605
----------
Total Investment Income 222,906
----------
EXPENSES
Investment advisory fees 38,351
Administration fees 4,816
Dividend expense 37,434
Printing fees 33,701
Registration fees 19,721
Audit fees 7,559
Transfer agent fees 6,283
Directors fees 5,300
Legal fees 3,631
Distribution fees 2,794
Custodian fees 1,080
Insurance expense (3,731)
Miscellaneous fees 3,079
----------
160,018
Less fees waived and reimbursed (51,692)
----------
Total Expenses 108,326
----------
Net Investment Income 114,580
----------
REALIZED AND UNREALIZED GAIN/(LOSS) ON INVESTMENTS
Net realized gain/(loss) from:
Security transactions 311,942
Securities sold short (388,865)
----------
(76,923)
----------
Net change in unrealized appreciation from
Investments 1,061,910
----------
Net Gain On Investments 984,987
----------
Net Increase In Net Assets
Resulting From Operations $1,099,567
==========
See Accompanying Notes to Financial Statements.
12
<PAGE>
WARBURG PINCUS LONG-SHORT MARKET NEUTRAL FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE SIX FOR THE YEAR
MONTHS ENDED ENDED
FEBRUARY 29, 2000 AUGUST 31, 1999
----------------- ---------------
(UNAUDITED)
<S> <C> <C>
INCREASE/(DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income $ 114,580 $ 499,594
Net gain/(loss) on investments 984,987 (1,815,539)
----------- -----------
Net increase/(decrease) in net assets resulting
from operations. 1,099,567 (1,315,945)
----------- -----------
Dividends and Distributions to
shareholders:
From net investment income:
Institutional shares (345,792) (30,279)
Common shares (127,325) (90,662)
From net realized capital gains:
Institutional shares -- (52,082)
Common shares -- (159,858)
----------- -----------
Total distributions to shareholders (473,117) (332,881)
----------- -----------
Net capital share transactions (1,164,655) 3,132,125
----------- -----------
Total increase/(decrease) in net assets (538,205) 1,483,299
NET ASSETS:
Beginning of period 7,785,581 6,302,282
----------- -----------
End of period $ 7,247,376 $ 7,785,581
=========== ===========
Undistributed net investment income $ 27,299 $ 385,836
=========== ===========
</TABLE>
See Accompanying Notes to Financial Statements.
13
<PAGE>
WARBURG PINCUS LONG-SHORT MARKET NEUTRAL FUND
LONG-SHORT MARKET NEUTRAL FUND FINANCIAL HIGHLIGHTS
(For a Share Outstanding Throughout Each Period)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INSTITUTIONAL COMMON
------------------------------------------------- -------------------------------------
FOR THE SIX FOR THE YEAR FOR THE PERIOD FOR THE SIX
MONTHS ENDED ENDED JULY 31, 1998* MONTHS ENDED FOR THE PERIOD
FEBRUARY 29, AUGUST 31, TO AUGUST 31, FEBRUARY 29, SEPTEMBER 8, 1998*
2000 1999 1998 2000 TO AUGUST 31, 1999
------------ ----------- -------------- ------------- --------------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $14.21 $15.27 $15.00 $14.19 $15.19
------ ------ ------ ------ ------
Income from investment operations
Net investment income 0.25 + 0.39 + 0.05 0.24 + 0.32 +
Net gain/(loss) on investments and
securities sold short (both realized
and unrealized) 2.16 (1.25) 0.22 2.17 (1.12)
------ ------ ------ ------ ------
Total from investment operations 2.41 (0.86) 0.27 2.41 (0.80)
------ ------ ------ ------ ------
Less Distributions
Dividends from net investment income (1.12) (0.07) -- (0.93) (0.07)
Distributions from capital gains-- -- (0.13) -- -- (0.13)
------ ------ ------ ------ ------
Total distributions (1.12) (0.20) -- (0.93) (0.20)
------ ------ ------ ------ ------
Net asset value, end of period $15.50 $14.21 $15.27 $15.67 $14.19
====== ====== ====== ====== ======
Total return 17.76%(c) (5.68)% 1.80%(c) 17.63%(c) (5.33)%(c)
Ratios/Supplemental Data:
Net assets, end of period (000s omitted) $3,750 $5,901 $6,302 $3,497 $1,885
Ratio of expenses to average net assets
(including dividend expense) 3.09%(a)(b) 3.33%(a) 4.32%(a)(b) 3.37%(a)(b) 3.40%(a)(b)
Ratio of expenses to average net assets
(excluding dividend expense) 2.00%(a)(b) 2.00%(a) 2.00%(a)(b) 2.26%(a)(b) 2.24%(a)(b)
Ratio of net investment income to
average net assets 3.43%(b) 2.65% 1.96%(b) 3.23%(b) 2.46%(b)
Fund turnover rate 147%(c) 705% 130%(c) 147%(c) 705%
<FN>
- ---------------------
(a) Without the voluntary waiver of advisory fees and administration fees, the
ratios of expenses to average net assets for the Institutional Class would
have been 3.46% (excluding dividend expense) and 4.55% (including dividend
expense) annualized for the six months ended February 29, 2000, 2.56%
(excluding dividend expense) and 3.93% (including dividend expense) for the
year ended August 31, 1999 and 5.12% (excluding dividend expense) and 7.44%
(including dividend expense) annualized for the period ended August 31,
1998. Without the voluntary waiver of advisory fees and administration fees,
the ratios of expenses to average net assets for the Common Class would have
been 3.90% (excluding dividend expense) and 5.18% (including dividend
expense) annualized for the six months ended February 29, 2000 and 2.84%
(excluding dividend expense) and 4.00% (including dividend expense)
annualized for the period ended August 31, 1999.
(b) Annualized.
(c) Not Annualized.
* Inception Date.
+ Per share information is calculated using the average share outstanding
method.
</FN>
</TABLE>
See Accompanying Notes to Financial Statements.
14
<PAGE>
WARBURG PINCUS LONG-SHORT MARKET NEUTRAL FUND
NOTES TO FINANCIAL STATEMENTS
February 29, 2000 (Unaudited)
- --------------------------------------------------------------------------------
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Warburg, Pincus Long-Short Market Neutral Fund, Inc. (the "Fund"), is
registered under the Investment Company Act of 1940 , as amended (the "1940
Act"), as non-diversified, open-end management investment company. The Fund is
authorized to offer three classes of shares: Common, Advisor and Institutional,
although only Common shares and Institutional shares of the Fund are currently
offered. Common shares for the Fund bear expenses paid pursuant to a shareholder
servicing and distribution agreement at an annual rate not to exceed .25% of the
average daily net asset value of the Fund's outstanding Common shares. In
addition, the Common shares bear a co-administration fee.
The Fund is permitted to engage in the investment strategies described in the
Notes to Financial Statements. The Fund is not obligated to pursue any of the
following strategies and does not represent that these techniques are available
now or will be available at any time in the future. Please refer to the Fund's
prospectus and statement of additional information for a description of its
investment strategies.
A) SECURITY VALUATION -- The net asset value of the Fund is
determined daily as of the close of regular trading on The New York Stock
Exchange Inc. The Fund's securities for which market quotations are readily
available are valued at market value, which is currently determined using
the last reported sales price. If no sales are reported, as in the case of
some securities traded over-the-counter, the securities are valued at the
mean between the last reported bid and asked prices. All other securities
and assets are valued as determined in good faith by the Fund's Board of
Directors. Short-term obligations with maturities of 60 days or less are
valued at amortized cost, which approximates market value.
B) FOREIGN CURRENCY TRANSACTIONS -- Transactions denominated in
foreign currencies are recorded in the Fund's records at the current
prevailing exchange rates. Asset and liability accounts that are
denominated in a foreign currency are adjusted daily to reflect current
exchange rates. Transaction gains or losses resulting from changes in
exchange rates during the reporting period or upon settlement of the
foreign currency transaction are reported in operations for the current
period. It is not practical to isolate that portion of both realized and
unrealized gains and losses on investments in the statement of operations
that result from fluctuations in foreign currency exchange rates. The Fund
reports certain foreign currency related transactions as
15
<PAGE>
WARBURG PINCUS LONG-SHORT MARKET NEUTRAL FUND
NOTES TO FINANCIAL STATEMENTS (CONT'D)
February 29, 2000 (Unaudited)
- --------------------------------------------------------------------------------
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
components of realized gains for financial reporting purposes, whereas such
components are treated as ordinary income (loss) for Federal income tax
purposes.
C) SECURITY TRANSACTIONS AND INVESTMENT INCOME -- Security
transactions are accounted for on the trade date. The cost of investments
sold is determined by use of the specific identification method for both
financial reporting and income tax purposes. Interest income is recorded on
the accrual basis. Dividends are recorded on the ex-dividend date. Certain
expenses are class specific expenses and vary by class. Expenses not
directly attributable to a specific Fund or class are allocated based on
relative net assets of each Fund and class, respectively.
D) DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS -- The Fund
calculates its dividends from net investment income. Net investment income
includes interest accrued and dividends earned on the Fund's portfolio
securities for the applicable period less applicable expense. The Fund will
distribute substantially all of its net realized capital gains and all net
investment income, if any, to its shareholders at least annually.
The character of distributions made during the year for net
investment income or net realized gains may differ from their ultimate
characterization for federal income tax purposes due to generally accepted
accounting principles (GAAP) and tax differences in the character of income
and expense recognition. These differences are primarily due to differing
treatments for net operating losses, paydowns on mortgage-backed
securities, passive foreign investment companies, and forward foreign
currency contracts. To the extent these differences are permanent in
nature, such amounts are reclassified within capital accounts based on U.S.
tax-basis treatment. Temporary differences do not require reclassification
E) FEDERAL INCOME TAXES -- No provision is made for Federal taxes
as it is the Fund's intention to qualify for and elect the tax treatment
applicable to regulated investment companies under the Internal Revenue
Code of 1986, as amended and make the requisite distributions to its
shareholders which will be sufficient to relieve it from Federal income and
excise taxes.
16
<PAGE>
WARBURG PINCUS LONG-SHORT MARKET NEUTRAL FUND
NOTES TO FINANCIAL STATEMENTS (CONT'D)
February 29, 2000 (Unaudited)
- --------------------------------------------------------------------------------
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
F) USE OF ESTIMATES -- The preparation of financial statements in
conformity with GAAP requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
G) REPURCHASE AGREEMENTS -- Money market instruments may be
purchased from banks and non-bank dealers subject to the seller's agreement
to repurchase them at an agreed upon date and price. Collateral for
repurchase agreements may have longer maturities than the maximum
permissible remaining maturity of portfolio investments. The seller will be
required on a daily basis to maintain the value of the securities subject
to the agreement at not less than the repurchase price. The agreements are
conditional upon the collateral being deposited under the Federal Reserve
book-entry system or held in a separate account by the Fund's custodian or
an authorized securities depository. The Fund had an open repurchase
agreement at February 29, 2000.
H) FUTURES TRANSACTIONS -- A Fund invests in futures contracts for
the purpose of hedging its existing portfolio securities, or securities
that the Fund intends to purchase, against fluctuations in fair value
caused by changes in prevailing market interest rates or securities prices,
or for other purposes. The Fund may enter into futures contracts subject to
certain limitations. Upon entering into a futures contract, each Fund is
required to deposit cash or liquid securities or pledge U.S. Government
securities of an initial margin. Subsequent payments, which are dependent
on the daily fluctuations in the value of the underlying instrument, are
made or received by the Fund each day (daily variations margin) and are
recorded as unrealized gains or losses until the contracts are closed. When
the contracts are closed, the Fund records a realized gain or loss equal to
the difference between the proceeds from (or cost of) the closing
transaction and the Fund's basis in the contracts. Risks of entering into
futures contracts include the possibility that there will be a perfect
price correlation between the futures contracts and the underlying
securities. Second, it is possible that a lack of liquidity for futures
contracts could exist in the secondary market, resulting in an inability to
close a futures position prior to its maturity date. Third, the purchase of
a futures contract involves the risk that a Fund could lose more than the
original margin deposit required to initiate a futures transaction.
17
<PAGE>
WARBURG PINCUS LONG-SHORT MARKET NEUTRAL FUND
NOTES TO FINANCIAL STATEMENTS (CONT'D)
February 29, 2000 (Unaudited)
- --------------------------------------------------------------------------------
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
I) OPTION TRANSACTIONS -- When a Fund writes or purchases a call
or a put option, an amount equal to the premium received or paid by the
Fund is recorded as a liability or asset, the value of which is
marked-to-market daily to reflect the current market value of the option.
When the option expires, the Fund realizes a gain or loss equal to the
amount of the premium received or paid. When the Fund exercises an option
or enters into a closing transaction by purchasing or selling an offsetting
option, it realizes a gain or loss without regard to any unrealized gain or
loss to underlying security. The potential loss associated with purchasing
an option is limited to the premium paid, and the premium would partially
offset any gains achieved from its use.
J) TBA PURCHASE COMMITMENTS -- The Funds may enter into "TBA" (to
be announced) purchases commitments to purchase securities for a fixed
price at a future date, typically not exceeding 45 days. TBA purchase
commitments may be considered securities in themselves, and involve a risk
of loss if the value of the security to be purchased declines prior to
settlement date. This risk is in addition to the risk of decline in each
Fund's other assets. Unsettled TBA purchase commitments are valued at the
current market value of the underlying securities, according to the
procedures described under "Security Valuation" above.
K) SECURITIES LENDING -- Loans of the securities are required at
all times to be secured by collateral at least equal to 102% of the market
value of domestic securities on loan including any accrued interest thereon
and 105% of the market value of foreign securities on loan including any
accrued interest thereon. Cash collateral received by the Fund in
connection with securities lending activity is invested in the Boston
Global Investment Trust. However, in the event of default or bankruptcy by
the other party to the agreement, realization and/or retention of the
collateral may be subject to legal proceedings. The Fund had no securities
on loan to brokers at February 29, 2000.
L) SHORT SALES -- When a Fund's investment adviser believes that a
security is overvalued, it may sell the security short by borrowing the
same security from a broker or other institution and selling the security.
A Fund will incur a loss as a result of the short sale if the price of the
borrowed security increases between the date of the short sale and the date
on which the Fund replaces such security. A Fund will realize a gain if
there is a decline in price of the security between those dates, and the
decline exceeds the cost of the borrowing the security and other
18
<PAGE>
WARBURG PINCUS LONG-SHORT MARKET NEUTRAL FUND
NOTES TO FINANCIAL STATEMENTS (CONT'D)
February 29, 2000 (Unaudited)
- --------------------------------------------------------------------------------
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
transaction costs. There can be no assurance that a Fund will be able to
close out a short position at any particular time or at an acceptable
price. Although a Fund's gain is limited to the amount at which it is sold
a security short, its potential loss is limited only by the maximum
attainable price of the security less the price at which the security was
sold. Until a Fund replaces a borrowed security, it will maintain at all
times cash or other liquid securities in an amount which, when added to any
amount deposited with a broker as collateral will at least equal the
current market value of the security sold short. Depending on arrangements
made with brokers, a Fund may not receive any payments (including interest)
on collateral deposited with them. The Fund will not make a short sale if,
after giving effect to such sale, the market value of all securities sold
short exceeds 100% of its net asset.
M) OTHER -- Securities denominated in currencies other than U.S.
dollars are subject to changes in value due to fluctuations in exchange
rates.
Some countries in which the Funds invest require governmental
approval for the repatriation of investment income, capital or the proceeds
of sales of securities by foreign investors. In addition, if there is a
deterioration in a country's balance of payments or for other reasons, a
country may impose temporary restrictions on foreign capital remittances
abroad.
The securities exchanges of certain foreign markets are
substantially smaller, less liquid and more volatile than the major
securities markets in the United States. Consequently, acquisition and
disposition of securities by each Fund may be inhibited. In addition, a
significant proportion of the aggregate market value of equity securities
listed on the major securities exchanges in emerging markets are held by a
smaller number of investors. This may limit the number of shares available
for acquisition or disposition by a Fund.
Lower-rated debt securities (commonly known as "junk bonds")
possess speculative characteristics and are subject to greater market
fluctuations and risk of lost income and principal than higher-rated debt
securities for a variety of reasons. Also, during an economic downturn or
substantial period of rising interest rates, highly leveraged issuers may
experience financial stress which would adversely affect their ability to
service their principal and interest payment obligations, to meet projected
business goals and to obtain additional financing.
19
<PAGE>
WARBURG PINCUS LONG-SHORT MARKET NEUTRAL FUND
NOTES TO FINANCIAL STATEMENTS (CONT'D)
February 29, 2000 (Unaudited)
- --------------------------------------------------------------------------------
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
In addition, periods of economic uncertainty and changes can be
expected to result in increased volatility of market prices of lower-rated
debt securities and (to the extent a Fund invests in junk bonds) the Fund's
net asset value.
NOTE 2. TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES
Pursuant to Investment Advisory Agreements, Credit Suisse Asset Management,
LLC ("CSAM") an indirect, wholly-owned subsidiary of Credit Suisse Group, serves
as investment advisor for the Fund described herein.
CSAM is entitled to receive from the Fund a monthly fee equal to an annual
rate of 1.50% of the Fund's average daily net assets. In addition, CSAM is
entitled to a monthly performance adjustment fee, which may increase or
decreased the total advisory fee by up to 0.50% per year. The performance
adjustment fee decreased the total advisory fee by $12,724 or .37% (annualized)
of average daily net assets due to lower performance in comparison to the
Salomon Smith Barney U.S. 1-Month Treasury Bill Index plus 5 percentage points
for the twelve months ended February 29, 2000.
CSAM may, at its discretion, voluntarily waive all or any portion of its
advisory fee for the Fund. For the six months ended February 29, 2000 advisory
fees and waivers for the investment Fund was as follows:
GROSS NET
ADVISORY FEE WAIVER ADVISORY FEE
------------ ---------- ------------
$38,351 $(37,753) $598
CSAM reimbursed expenses of the Fund in the amount of $11,458 for the six
months ended February 29, 2000.
State Street Bank and Trust Company ("State Street") , serves as the Fund's
transfer and dividend disbursement agent. State Street has delegated most of its
Fund service obligations to Boston Financial Data Services, Inc. (BFDS), a 50%
owned subsidiary of State Street.
Counsellors Fund Services, Inc. ("CFSI"), a wholly-owned subsidiary of Credit
Suisse Asset Management, LLC. served as co-administrator of the Fund until
November 1, 1999. On November 1, 1999, Credit Suisse Asset Management
Securities, Inc. ("CSAMSI") replaced CFSI as co-administrator to the portfolio.
PFPC Inc. ("PFPC"), an indirect subsidiary of PNC Financial Services Group, also
serves as the Fund's co-administrator. For administration services, the Fund
pays CSAMSI a fee calculated at an annual rate .05% of the Fund's first $125
million in average daily nets assets of the Common shares and .10% of average
daily net assets of the Common shares over $125 million.
20
<PAGE>
WARBURG PINCUS LONG-SHORT MARKET NEUTRAL FUND
NOTES TO FINANCIAL STATEMENTS (CONT'D)
February 29, 2000 (Unaudited)
- --------------------------------------------------------------------------------
NOTE 2. TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES (CONTINUED)
CSFI, at its discretion, voluntarily waived a portion of its
co-administration fees for the Fund. For the period September 1, 1999 to October
31, 1999, co-administration fees earned and waived by CFSI on the Common shares
were as follows:
GROSS NET
CO-ADMINISTRATION FEE WAIVER CO-ADMINISTRATION FEE
--------------------- -------- ---------------------
$163 $(131) $32
CSAMSI may, at its discretion, voluntarily waive all or any portion of its
administrative fee for any of the Funds. For the period November 1, 1999 to
February 29, 2000, co-administrative service fees earned and waived by CSAMSI on
the Common shares were as following:
GROSS NET
CO-ADMINISTRATION FEE WAIVER CO-ADMINISTRATION FEE
--------------------- -------- ---------------------
$396 $(316) $80
For administration services, PFPC currently receives a fee calculated at
annual rate of .125% on the Fund's average daily net asset subject to a minimum
annual fee and exclusive of out-of-pocket expenses. PFPC may, at its discretion,
voluntarily waive all or any portion of its administration fee for the Fund. For
the six months ended February 29, 2000, the co-administration fee earned and
waived by PFPC was as follows:
GROSS CO-ADMINISTRATIVE NET CO-ADMINISTRATIVE
FEE WAIVER FEE
----------------------- -------- ---------------------
$4,257 $(2,034) $2,223
In addition to serving as the Funds co-administrator, CSAMSI served as
distributor of the Fund's shares until January 1, 2000. On January 1, 2000,
Provident Distributors, Inc. ("PDI") replaced CSAMSI as distributor to the Fund.
No compensation is payable by the Fund to PDI for distribution services, but
CSAMSI receives compensation from the Fund's Common shares under the
co-administration agreement for shareholder servicing and distribution. For the
Shareholder Servicing and Distribution Plan on the Common shares, CSAMSI
receives a fee calculated at an annual rate .25% of the average daily net assets
of the Common shares of the Fund. For the six months ended February 29, 2000,
shareholder servicing and distribution fees, earned by CSAMSI were $2,794.
21
<PAGE>
WARBURG PINCUS LONG-SHORT MARKET NEUTRAL FUND
NOTES TO FINANCIAL STATEMENTS (CONT'D)
February 29, 2000 (Unaudited)
- --------------------------------------------------------------------------------
NOTE 3. PURCHASES AND SALES OF SECURITIES
For the six months ended February 29, 2000, purchases and sales of investment
securities (other than short-term investments) were as follows:
INVESTMENT SECURITIES SHORT SECURITIES
--------------------- ----------------
PURCHASES SALES SALES
---------- ---------- ----------------
$9,062,357 $4,997,065 $4,749,860
NOTE 4. CAPITAL SHARES
Transactions in capital shares for each period were as follows:
<TABLE>
<CAPTION>
INSTITUTIONAL COMMON
----------------------------------------------------- -----------------------------------------------------
FOR THE SIX MONTHS ENDED FOR THE SIX MONTHS ENDED FOR THE PERIOD
FEBRUARY 29, 2000 FOR THE YEAR ENDED FEBRUARY 29, 2000 SEPTEMBER 8, 1998*
(UNAUDITED) AUGUST 31, 1999 (UNAUDITED) THROUGH AUGUST 31, 1999
-------------------------- ------------------------- -------------------------- --------------------------
SHARES VALUE SHARES VALUE SHARES VALUE SHARES VALUE
--------- ---------- ---------- ------------ ------- ---------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Shares sold 46,893 $ 630,344 2,702,645 $ 40,468,228 111,084 $1,689,509 3,454,318 $ 51,387,127
Shares issued in
reinvestment of
dividends 21,825 307,514 5,561 82,361 8,769 124,965 16,915 250,336
Shares
repurchased (241,987) (3,479,365) (2,705,769) (39,525,343) (29,517) (437,622) (3,338,435) (49,530,584)
-------- ----------- ---------- ------------ ------- ---------- ---------- ------------
Net increase/
(decrease) (173,269) $(2,541,507) 2,437 $ 1,025,246 90,336 $1,376,852 132,798 $ 2,106,879
======== =========== ========== ============ ======= ========== ========== ============
<FN>
*Inception Date.
</FN>
</TABLE>
On February 29, 2000, six Institutional Class shareholders held 5% or more of
the outstanding shares which represented approximately 90.07% of the outstanding
shares.
NOTE 5. LINE OF CREDIT
The Fund together with other funds advised by CSAM, have established a $250
million committed line of credit facility ("Credit Facility") with Deutche Bank,
AG as administrative agent, State Street Bank and Trust Company as operations
agents, Bank of Nova Scotia as syndication agent and certain other lender, for
temporary or emergency purposes primarily relating to unanticipated portfolio
share redemption. Under the terms of the Credit Facility, the funds with access
to the Credit Facility pay an aggregate commitment fee at a rate of .075% per
annum on the average daily balance of the Credit Facility that is undisbursed
and uncanceled during the preceding quarter allocated among the participation
funds in such manner as is determined by the governing Boards of the various
funds. In addition the participating funds will pay interest on borrowing at the
Federal funds rate plus .50%. During the six months ending February 29, 2000,
the Fund did not have any borrowings under line of credit agreement.
22
<PAGE>
WARBURG LONG-SHORT MARKET NEUTRAL FUND
SPECIAL SHAREHOLDER MEETING RESULTS
February 29, 2000 (Unaudited)
- --------------------------------------------------------------------------------
A special meeting of shareholders of the Fund was held on May 21, 1999. At the
special meeting, the following persons were elected as directors of each Fund,
constituting the entire Board of Directors: Richard H. Francis, Jack W. Fritz,
Jeffrey E. Garten, James S. Pasman, Jr., William W. Priest, Steven N. Rappaport,
Arnold M. Reichman and Alexander B.
Trowbridge.
In addition, shareholders voted on the following matters:
Proposal 2: Ratification of the selection of PricewaterhouseCoopers LLP
as the independent accountants for each of the Funds for the
fiscal year ending August 31, 1999.
The voting results for the Fund were as follows:
Election of Directors:
For Withheld
- --------------------------------------------------------------------------------
Richard H. Francis 1,006,652.5040 0.0000
- --------------------------------------------------------------------------------
Jack W. Fritz 1,006,652.5040 0.0000
- --------------------------------------------------------------------------------
Jeffrey E. Garten 1,006,652.5040 0.0000
- --------------------------------------------------------------------------------
James S. Pasman, Jr. 1,006,652.5040 0.0000
- --------------------------------------------------------------------------------
William W. Priest 1,006,652.5040 0.0000
- --------------------------------------------------------------------------------
Steven N. Rappaport 1,006,652.5040 0.0000
- --------------------------------------------------------------------------------
Arnold M. Reichman 1,006,652.5040 0.0000
- --------------------------------------------------------------------------------
Alexander B. Trowbridge 1,006,652.5040 0.0000
- --------------------------------------------------------------------------------
Proposal 2:
% of Shares to Total % of Shares to Total Shares
Shares Outstanding Shares Vote
- --------------------------------------------------------------------------------
For 1,006,652.5040 58.3092% 100.0000%
- --------------------------------------------------------------------------------
Against 0.0000 0.0000% 0.0000%
- --------------------------------------------------------------------------------
Abstain 0.0000 0.0000% 0.0000%
- --------------------------------------------------------------------------------
23
<PAGE>
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<PAGE>
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<PAGE>
[GRAPHIC OMITTED]
WARBURG PINCUS FUNDS
P.O. BOX 9030, BOSTON, MA 02205-9030
800-WARBURG (800-927-2874) o WWW.WARBURG.COM
PROVIDENT DISTRIBUTORS, INC., DISTRIBUTOR. WPLSN-3-0200
