[GRAPHIC OMITTED]
SEMIANNUAL
REPORT
FEBRUARY 29, 2000
(UNAUDITED)
WARBURG PINCUS
FOCUS FUND
(FORMERLY WARBURG PINCUS SELECT
ECONOMIC VALUE EQUITY 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.
THE VIEWS OF THE FUNDS' MANAGEMENT ARE AS OF THE DATE OF THE LETTERS AND
PORTFOLIOHOLDINGS 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 FOCUS FUND
PORTFOLIO MANAGERS' LETTER -- FEBRUARY 29, 2000
- --------------------------------------------------------------------------------
March 27, 2000
Dear Shareholders:
We are writing to report on the results of the Warburg Pincus Focus Fund1
(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 $16.34, compared to an NAV of $20.15 on August 31, 1999. As a result,
the institutional shares' total return was 13.6%, (assuming the reinvestment of
distributions totaling $5.77 per share). By comparison, the Standard & Poor's
500 Index2 (the "Index") returned 4.1% during the same period.
At February 29, 2000, NAV of the Fund's common shares was $16.26, compared to
an NAV of $20.11 on August 31, 1999. As a result, the common shares' total
return was 13.4%, (assuming the reinvestment of distributions totaling $5.77 per
share). By comparison, the Index returned 4.1% during the same period.
Effective stock selection in two industry sectors drove the Fund's
outperformance of its Index benchmark in the fiscal half-year. These were
technology and health care:
o TECHNOLOGY. In technology, we focused on semiconductor and software
companies with proprietary products and clear market leadership. Prospects
for semiconductor makers brightened in late 1999 as chip prices rose. Our
selection both of companies that produce the chips themselves and those
that make chip-manufacturing equipment proved especially timely. By the
end of the year, the stocks' rising valuations persuaded us to realize
much of our gains and trim the Fund's technology exposure.
As for software, we invested selectively in names that ended up faring
especially well during the period. Results in technology were additionally
notable because the sector's high valuation levels caused us to
underweight it relative to the Index.
o HEALTH CARE. Health care, which remained the Fund's largest sector
exposure, contributed positively to overall performance after detracting
from it through the summer of 1999. We emphasized names within medical
technology, hospital management and pharmaceuticals. These included
Guidant Corp., a major manufacturer of medical devices whose shares began
to rebound from what we considered a bout of overly pessimistic investor
sentiment. The fact that Guidant was the portfolio's biggest individual
holding magnified its favorable effect on performance.
X1
<PAGE>
WARBURG PINCUS FOCUS FUND
PORTFOLIO MANAGERS' LETTER -- FEBRUARY 29, 2000 (CONT'D)
- --------------------------------------------------------------------------------
On the negative side of the ledger, we took advantage of the significant
value available in the stocks of large U.S.-based consumer companies that
generate substantial portions of their revenues and earnings elsewhere in the
world. Unfortunately, most such companies were distinctly out of favor, as the
market overwhelmingly preferred so-called "New Economy" sectors like technology,
media and telecommunications.
Several consumer companies were among the Fund's biggest positions, including
Coca-Cola, Philip Morris, Nabisco and Archer-Daniels-Midland. All lost ground
during the fiscal half-year.
As developments occur that we believe would be of interest to you, we will
keep you informed. Meanwhile, if you have any questions about your portfolio or
the capital markets generally, please feel free to call upon us at any time.
Sincerely yours,
Credit Suisse Asset Management Select Equity Management Team
James A. Abate, Managing Director
D. Susan Everly, Director
2
<PAGE>
WARBURG PINCUS FOCUS FUND
PORTFOLIO MANAGERS' LETTER -- FEBRUARY 29, 2000 (CONCLUDED)
- --------------------------------------------------------------------------------
PERFORMANCE
SINCE
SIX MONTHS ONE YEAR INCEPTION
2/29/00 (3/1/99 - 2/29/00) (ANNUALIZED)
- ------------------------------------------------------------------------------
Warburg Pincus
Focus Fund (Institutional)3 13.6% 29.9% 30.7%
Warburg Pincus
Focus Fund (Common)4 13.4% 29.4% 30.7%
Standard & Poor's
500 Index2 4.1% 11.7% 24.6%5
- --------------------------------------------------------------------------------
1 NAME CHANGED FROM WARBURG PINCUS SELECT ECONOMIC VALUE EQUITY FUND EFFECTIVE
JANUARY 1, 2000
2 THE STANDARD & POOR'S 500 INDEX IS AN UNMANAGED INDEX (WITH NO DEFINED
INVESTMENT OBJECTIVE) OF COMMON STOCKS, INCLUDES REINVESTMENT OF DIVIDENDS,
AND IS A REGISTERED TRADEMARK OF MCGRAW-HILL CO., INC.
3 INCEPTION DATE: 7/31/98
4 INCEPTION DATE: 10/30/98
5 SINCE INCEPTION OF INSTITUTIONAL SHARES
FROM CREDIT SUISSE ASSET MANAGEMENT:
The Fund's Board of Directors voted during the fourth quarter of 1999 to change
the Fund's name to Warburg Pincus Focus Fund from Warburg Pincus Select Economic
Value Equity Fund. This was done in order to better reflect the Fund's
investment strategy.
3
<PAGE>
WARBURG PINCUS FOCUS FUND
SCHEDULE OF INVESTMENTS
February 29, 2000 (Unaudited)
- --------------------------------------------------------------------------------
NUMBER
OF
SHARES VALUE
------ -----
COMMON STOCKS (97.8%)
AGRICULTURE (7.4%)
Archer-Daniels-Midland 27,900 $ 280,744
----------
Monsanto Co. 7,900 306,619
-------
587,363
----------
AIR TRANSPORT (3.8%)
Lockheed Martin Corp. 17,300 301,669
----------
CHEMICALS (6.4%)
E. I. du Pont de Nemours and Co. 5,700 287,850
IMC Global, Inc. 10,600 143,100
Nova Chemicals Corp. 4,700 75,200
----------
506,150
COMPUTERS, SOFTWARE & SERVICES (19.7%)
America Online** 2,000 118,000
BMC Software, Inc.** 2,600 119,600
Citrix Systems, Inc.** 1,600 168,700
Dell Computer Corp.** 1,800 73,463
i2 Technologies** 1,600 261,600
Inktomi Corp.** 800 109,700
Metacreations Corp.** 1,800 39,600
Microsoft Corporation** 3,700 330,687
RealNetworks, Inc.** 400 28,125
Siebel Systems, Inc.** 800 110,950
VERITAS Software Corp.** 800 158,300
Yahoo! Inc.** 200 31,938
----------
1,550,663
----------
CONSUMER PRODUCTS & SERVICES (6.3%)
Unilever N.V. ADR 6,800 309,400
Wrigley (Wm.) Jr. Company 2,800 189,350
----------
498,750
----------
ELECTRONICS (13.0%)
Advanced Micro Devices, Inc.** 4,000 156,500
Atmel Corp.** 4,400 217,800
Cisco Systems** 1,700 224,719
Lucent Technologies 5,300 315,350
Micron Technology, Inc.** 1,100 107,869
----------
1,022,238
----------
See Accompanying Notes to Financial Statements.
4
<PAGE>
WARBURG PINCUS FOCUS FUND
SCHEDULE OF INVESTMENTS (CONT'D)
February 29, 2000 (Unaudited)
- --------------------------------------------------------------------------------
NUMBER
OF
SHARES VALUE
------ -----
COMMON STOCKS (CONT'D)
FOOD & BEVERAGE (6.6%)
Coca-Cola Co. 6,900 $334,219
Nabisco Group Holdings Corp. 22,000 189,750
----------
523,969
----------
HEALTH CARE (12.1%)
Boston Scientific Corp.** 12,000 219,000
Cardinal Health, Inc. 3,600 148,500
Gilead Sciences, Inc.** 1,500 114,750
Guidant Corp.** 5,900 397,512
Medtronic, Inc. 1,500 72,656
----------
952,418
----------
METALS & MINING (0.1%)
Cominco, Ltd. 500 7,250
----------
PHARMACEUTICALS (10.7%)
Eli Lilly and Company 3,000 178,312
Merck & Co. 1,000 61,562
Mylan Laboratories, Inc. 8,500 195,500
Pfizer, Inc. 6,100 195,962
Schering-Plough Corp. 2,200 76,725
Watson Pharmaceuticals, Inc.** 3,400 136,000
----------
844,061
----------
TELECOMMUNICATIONS (7.8%)
MCI WorldCom, Inc.** 6,650 296,756
SBC Communications, Inc. 8,400 319,200
----------
615,956
----------
TOBACCO (3.9%)
Philip Morris Companies, Inc. 15,500 310,969
----------
TOTAL COMMON STOCKS (Cost $7,468,553) $7,721,456
----------
PAR
(000)
-------
SHORT-TERM INVESTMENT (2.1%)
BBH Grand Cayman U.S. Dollar Time Deposit
4.950% 03/01/00
(Cost $163,048) $ 163 $ 163,048
----------
See Accompanying Notes to Financial Statements.
5
<PAGE>
WARBURG PINCUS FOCUS FUND
SCHEDULE OF INVESTMENTS (CONCLUDED)
February 29, 2000 (Unaudited)
- --------------------------------------------------------------------------------
VALUE
------
TOTAL INVESTMENTS (99.9%) (Cost $7,631,601*) $7,884,504
OTHER ASSETS IN EXCESS OF LIABILITIES (0.1%) 6,355
----------
TOTAL NET ASSETS (100.0%) $7,890,859
==========
* Cost for Federal income tax purposes at February 29, 2000 is $8,089,421. The
gross appreciation (depreciation) on a tax basis is as follows:
Gross Appreciation $ 657,621
Gross Depreciation (862,538)
----------
Net Depreciation $(204,917)
==========
** Non-income producing securities.
INVESTMENT ABBREVIATIONS
ADR =American Depository Receipts
See Accompanying Notes to Financial Statements.
6
<PAGE>
WARBURG PINCUS FOCUS FUND
STATEMENT OF ASSETS AND LIABILITIES
February 29, 2000 (Unaudited)
- --------------------------------------------------------------------------------
ASSETS
Investments, at value (cost - $7,631,601) $7,884,504
Receivable for investments sold 422,883
Receivable for Fund shares sold 74,500
Receivable from investment adviser 11,085
Dividends and interest receivable 2,877
Prepaid expenses and other assets 15,739
----------
Total Assets 8,411,588
----------
LIABILITIES
Payable for investments purchased 493,073
Overdraft liability 2,716
Distribution fee payable (Common shares) 173
Accrued expenses payable 24,767
----------
Total Liabilities 520,729
----------
NET ASSETS
Capital stock, $0.001 par value 483
Paid-in capital 7,508,051
Undistributed net investment loss (10,220)
Accumulated net realized gain from investments 139,641
Net unrealized appreciation on investments 252,904
----------
Net Assets $7,890,859
==========
INSTITUTIONAL SHARES
Net assets $6,945,113
----------
Shares outstanding 424,971
----------
Net asset value, offering price and redemption price
per share $ 16.34
==========
COMMON SHARES
Net assets $ 945,746
----------
Shares outstanding 58,153
----------
Net asset value, offering price and redemption price
per share $ 16.26
==========
See Accompanying Notes to Financial Statements.
7
<PAGE>
WARBURG PINCUS FOCUS FUND
STATEMENT OF OPERATIONS
For the Six Months Ended February 29, 2000 (Unaudited)
- --------------------------------------------------------------------------------
INVESTMENT INCOME
Dividends $ 58,459
Interest 6,870
Securities lending 1,586
Foreign taxes withheld (234)
----------
Total Investment Income 66,681
----------
EXPENSES
Investment advisory fees 57,633
Administration fees 9,735
Custodian fees 26,341
Registration fees 22,504
Printing fees 19,172
Transfer agent fees 11,434
Audit fees 7,618
Directors fees 5,246
Legal fees 3,349
Distribution fees 652
Insurance expense 164
Miscellaneous fees 1,295
----------
165,143
Less fees waived and reimbursed (88,195)
----------
Total Expenses 76,948
----------
Net Investment Loss (10,267)
----------
REALIZED AND UNREALIZED GAIN/(LOSS) ON INVESTMENTS
Net realized gain from security transactions 1,242,602
Net change in unrealized appreciation from Investments (1,047,786)
----------
Net Gain on Investments 194,816
----------
Net Increase In Net Assets Resulting
From Operations $ 184,549
==========
See Accompanying Notes to Financial Statements.
8
<PAGE>
WARBURG PINCUS FOCUS FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE SIX MONTHS FOR THE YEAR
ENDED ENDED
FEBRUARY 29, 2000 AUGUST 31, 1999
------------------ ---------------
(UNAUDITED)
INCREASE/(DECREASE) IN NET ASSETS:
OPERATIONS:
<S> <C> <C>
Net investment income/(loss) $ (10,267) $ 156,770
Net gain on investments 194,816 12,468,793
------------ -----------
Net increase in net assets resulting from operations 184,549 12,625,563
------------ -----------
Dividends and Distributions to shareholders:
From net investment income:
Institutional shares (124,682) (49,578)
Common shares (623) (1)
From net realized capital gains:
Institutional shares (9,020,862) --
Common shares (77,776) --
------------ -----------
Total distributions to shareholders (9,223,943) (49,579)
------------ -----------
Net capital share transactions (18,559,033) 253,862
------------ -----------
Total increase/(decrease) in net assets (27,598,427) 12,829,846
NET ASSETS:
Beginning of period 35,489,286 22,659,440
------------ -----------
End of period $ 7,890,859 $35,489,286
============ ===========
Undistributed net investment income/(loss) $ (10,220) $ 125,352
============ ===========
</TABLE>
See Accompanying Notes to Financial Statements.
9
<PAGE>
WARBURG PINCUS FOCUS FUND
FOCUS FUND FINANCIAL HIGHLIGHTS
(For a Share Outstanding Throughout Each Period)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INSTITUTIONAL
-----------------------------------------------------------------------
FOR THE SIX FOR THE SIX
MONTHS ENDED FOR THE YEAR FOR THE PERIOD
FEBRUARY 29, ENDED JULY 31, 1998*
2000 AUGUST 31, TO AUGUST 31,
(UNAUDITED) 1999 1998
-------------- -------------- --------------
<S> <C> <C> <C>
Net asset value, beginning of period $20.15 $ 13.17 $ 15.00
------ ------- -------
Income from investment operations
Net investment income/(loss) (0.01)+ 0.08 0.01 (0.02)+
Net gain (loss) on investments
(both realized and unrealized) 1.97 6.92 (1.84)
------ ------- -------
Total from investment operations 1.96 7.00 (1.83)
------ ------- -------
Less Distributions
Dividends from net investment
income (0.07) (0.02) --
Distributions from capital gains (5.70) -- --
------ ------- -------
Total distributions (5.77) (0.02) --
------ ------- -------
Net asset value, end of period $16.34 $ 20.15 $ 13.17
====== ======= =======
Total return 13.64%(c) 53.21%(12.20)%(c)
Ratios/Supplemental Data:
Net assets, end of period
(000s omitted) $6,945 $35,394 $22,659
Ratio of expenses to average
net assets 1.00%(a)(b) 0.99%(a) 1.00%(a)(b)
Ratio of net investment income/
(loss) to average net assets (0.13)%(b) 0.47% 0.92%(b)
Fund turnover rate 123%(c) 209% 52%(c)
COMMON
-------------------------------------------
MONTHS ENDED
FEBRUARY 29, FOR THE PERIOD
2000 OCTOBER 30, 1998*
(UNAUDITED) TO AUGUST 31, 1999
-------------- ------------------
<S> <C> <C>
Net asset value, beginning of period $20.11 $15.95
------ ------
Income from investment operations
Net investment income/(loss) (0.01)+ 0.02
Net gain (loss) on investments
(both realized and unrealized) 1.94 4.16
------ ------
Total from investment operations 1.92 4.18
------ ------
Less Distributions
Dividends from net investment
income (0.07) (0.02)
Distributions from capital gains (5.70) --
------ ------
Total distributions (5.77) (0.02)
------ ------
Net asset value, end of period $16.26 $20.11
====== ======
Total return 13.40%(c) 26.19%(c)
Ratios/Supplemental Data:
Net assets, end of period
(000s omitted) $ 946 $ 95
Ratio of expenses to average
net assets 1.25%(a)(b) 1.29%(a)(b)
Ratio of net investment income/
(loss) to average net assets (0.27)%(b) 0.17%(b)
Fund turnover rate 123%(c) 209%(c)
<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 2.07% annualized for the six months ended February 29, 2000, 1.42%
for the year ended August 31, 1999 and 1.30% annualized for the period ended
August 31, 1998. Without the voluntary waiver of advisory fees and
administration fees, the ratios of expenses to average net assets for the
Common Class would have been 4.33% annualized for the six months ended
February 29, 2000 and 1.74% 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.
10
<PAGE>
WARBURG PINCUS FOCUS FUND
NOTES TO FINANCIAL STATEMENTS
February 29, 2000 (Unaudited)
- --------------------------------------------------------------------------------
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Warburg, Pincus Focus Fund, Inc. (formerly, Warburg, Pincus Select Economic
Value Equity Fund, Inc), (the "Fund"), is registered under the Investment
Company Act of 1940 , as amended (the "1940 Act"), as a 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 bears 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
11
<PAGE>
WARBURG PINCUS FOCUS FUND
NOTES TO FINANCIAL STATEMENTS (CONT'D)
February 29, 2000 (Unaudited)
- --------------------------------------------------------------------------------
WARBURG PINCUS FOCUS FUND
NOTES TO FINANCIAL STATEMENTS (CONT'D)
February 29, 2000 (Unaudited)
- --------------------------------------------------------------------------------
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- (CONT'D)
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 the 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.
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
12
<PAGE>
WARBURG PINCUS FOCUS FUND
NOTES TO FINANCIAL STATEMENTS (CONT'D)
February 29, 2000 (Unaudited)
- --------------------------------------------------------------------------------
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- (CONT'D)
liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. Actual
results could differ from those estimates.
G) REPURCHASE AGREEMENTS -- Money market instruments may be
purchased from banks and non-bank dealers subject to the seller's agreement
to repurchase them at an agreed upon date and price. Collateral for
repurchase agreements may have longer maturities than the maximum
permissible remaining maturity of portfolio investments. The seller will be
required on a daily basis to maintain the value of the securities subject
to the agreement at not less than the repurchase price. The agreements are
conditional upon the collateral being deposited under the Federal Reserve
book-entry system or held in a separate account by each Fund's custodian or
an authorized securities depository.
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, the 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 the Fund could lose more than the
original margin deposit required to initiate a futures transaction.
I) OPTION TRANSACTIONS -- When the 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
13
<PAGE>
WARBURG PINCUS FOCUS FUND
NOTES TO FINANCIAL STATEMENTS (CONT'D)
February 29, 2000 (Unaudited)
- --------------------------------------------------------------------------------
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- (CONT'D)
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 Fund may enter into "TBA" (to
be announced) purchase 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 the
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 the 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.
The 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. The 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
transaction costs. There can be no assurance that the Fund will be able to
close out a short position at any particular time or at an acceptable
price. Although the Fund's gain is limited to the
14
<PAGE>
WARBURG PINCUS FOCUS FUND
NOTES TO FINANCIAL STATEMENTS (CONT'D)
February 29, 2000 (Unaudited)
- --------------------------------------------------------------------------------
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- (CONT'D)
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 the 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, the Fund may not receive any
payments (including interest) on collateral deposited with them.
M) OTHER -- Securities denominated in currencies other than U.S.
dollars are subject to changes in value due to fluctuations in exchange
rates.
Some countries in which the Fund invests 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 the 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 the Fund.
Lower-rated debt securities (commonly known as "junk bonds")
possess speculative characteristics and are subject to greater market
fluctuations and risk of lost income and principal than higher-rated debt
securities for a variety of reasons. Also, during an economic downturn or
substantial period of rising interest rates, highly leveraged issuers may
experience financial stress which would adversely affect their ability to
service their principal and interest payment obligations, to meet projected
business goals and to obtain additional financing.
In addition, periods of economic uncertainty and changes can be
expected to result in increased volatility of market prices of lower-rated
debt securities and (to the extent the Fund invests in junk bonds) the
Fund's net asset value.
15
<PAGE>
WARBURG PINCUS FOCUS FUND
NOTES TO FINANCIAL STATEMENTS (CONT'D)
February 29, 2000 (Unaudited)
- --------------------------------------------------------------------------------
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.
For its advisory services, CSAM is entitled to receive from the Fund a
monthly fee equal to an annual rate of 0.75% of the Fund's average daily net
assets.
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, the
advisory fee and waiver for the Fund was as follows:
GROSS NET
ADVISORY FEE WAIVER ADVISORY FEE
------------ ------ ------------
$57,633 $(38,917) $18,716
CSAM reimbursed expenses of the Fund in the amount of $49,173 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 each 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. No compensation is
payable by the Fund to CSAMSI for co-administration services for the
Institutional shares.
CFSI, 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, the co-administration fee earned and waived by CFSI on the Common
shares was as follows:
GROSS NET
CO-ADMINISTRATION FEE WAIVER CO-ADMINISTRATION FEE
--------------------- ------ ---------------------
$10 $(8) $2
16
<PAGE>
NOTE 2. TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES -- (CONT'D)
CSAMSI may, at its discretion, voluntarily waive all or any portion of its
administrative fee for the Fund. For the period November 1, 1999 to February 29,
2000, the co-administrative service fee earned and waived by CSAMSI on the
Common shares was as following:
GROSS CO-ADMINISTRATIVE NET CO-ADMINISTRATIVE
FEE WAIVER FEE
----------------------- ------ ---------------------
$120 $(96) $24
For administration services, PFPC currently receives a fee calculated at
annual rate of .125% on the Fund's average daily net asset. 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 by PFPC was as follows:
CO-ADMINISTRATIVE
FEE
-----------------
$9,605
In addition to serving as the Fund's 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,
the shareholder servicing and distribution fee, earned by CSAMSI was $652.
NOTE 3. PURCHASES AND SALES OF SECURITIES
For the six months ended February 29, 2000, the purchases and sales of
investment securities (other than short-term investments) were $16,964,238 and
$44,795,089, respectively.
17
<PAGE>
NOTE 4. CAPITAL SHARES
Transactions in capital shares for each period were as follows:
<TABLE>
<CAPTION>
INSTITUTIONAL
-------------------------------------------------------------------
FOR THE SIX MONTHS ENDED
FEBRUARY 29, 2000 FOR THE YEAR ENDED
(UNAUDITED) AUGUST 31, 1999
----------------------------- ---------------------------
SHARES VALUE SHARES VALUE
---------- ------------ -------- -----------
<S> <C> <C> <C> <C>
Shares sold 130,973 $ 2,259,970 420,175 $ 7,478,114
Shares issued in
reinvestment
of dividends 86,540 1,293,067 2,776 49,578
Shares repurchased (1,549,010) (23,013,298) (387,514) (7,367,592)
---------- ------------ ------ -----------
Net increase/
(decrease) (1,331,497) $(19,460,261) 35,437 $ 160,100
========== ============ ====== ===========
COMMON
----------------------------------------------------------------
FOR THE SIX MONTHS ENDED FOR THE PERIOD
FEBRUARY 29, 2000 OCTOBER 30, 1998*
(UNAUDITED) THROUGH AUGUST 31, 1999
-------------------------- -------------------------
SHARES VALUE SHARES VALUE
------- ---------- ------- --------
<S> <C> <C> <C> <C>
Shares sold 60,517 $1,045,848 5,210 $102,064
Shares issued in
reinvestment
of dividends 4,960 75,842 -- --
Shares repurchased (12,054) (220,462) (479) (8,302)
------ ---------- ----- --------
Net increase/
(decrease) 53,423 $ 901,228 4,731 $ 93,762
====== ========== ===== ========
<FN>
*Inception Date
</FN>
</TABLE>
On February 29, 2000, the number of shareholders that held 5% or more of the
outstanding shares are as follows:
NUMBER OF APPROXIMATE PERCENTAGE
SHAREHOLDERS OF OUTSTANDING SHARES
------------ ---------------------
Focus Fund Institutional shares 4 85.88%
Focus Fund Common shares 6 73.75
NOTE 5. LINE OF CREDIT
The Fund, together with other funds advised by CSAM, has 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%. For the six months ended February 29, 2000, the
Fund had no borrowings under the credit facility.
18
<PAGE>
WARBURG PINCUS FOCUS 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 1,648,986.3950 3,023.7183
Jack W. Fritz 1,648,986.3950 3,023.7183
Jeffrey E. Garten 1,648,986.3950 3,023.7183
James S. Pasman, Jr. 1,648,986.3950 3,023.7183
William W. Priest 1,648,986.3950 3,023.7183
Steven N. Rappaport 1,648,986.3950 3,023.7183
Arnold M. Reichman 1,648,986.3950 3,023.7183
Alexander B. Trowbridge 1,648,986.3950 3,023.7183
Proposal 2:
% of Shares to
% of Shares to Total Total Shares
Shares Outstanding Shares Vote
For 1,652,010.1140 70.7373% 100.0000%
Against 0.0000 0.0000% 0.0000%
Abstain 0.0000 0.0000% 0.0000%
19
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800-WARBURG (800-927-2874) (TM) www.warburg.com
PROVIDENT DISTRIBUTORS, INC., DISTRIBUTOR WPFOC-3-0200
