<PAGE>
<PAGE>
ANNUAL
REPORT
February 28, 1997
WARBURG PINCUS
CASH RESERVE FUND
WARBURG PINCUS
NEW YORK TAX EXEMPT FUND
[LOGO]
A Prospectus containing more complete information, including
charges and expenses, may be obtained by calling 800-WARBURG
(800-927-2874) or by writing to Warburg Pincus Funds, P.O. Box
9030, Boston, MA 02205-9030. Investors should read the
Prospectus carefully before investing.
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<PAGE>
The views of the Funds' management are as of the date of the letters and
portfolio holdings described in this annual report are as of February 28, 1997;
these views and portfolio holdings may have changed subsequent to these dates.
Nothing in this annual report is a recommendation to purchase or sell
securities.
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<PAGE>
WARBURG PINCUS CASH RESERVE FUND
- --------------------------------------------------------------------------------
Dear Shareholder: March 27, 1997
During the 12 months ended February 28, 1997, short-term interest rates
trended higher as favorable economic conditions began to fuel concerns of
potential inflation. Strong business fundamentals, combined with a recent
seven-year high in consumer confidence, were evident in the gross domestic
product data, which consistently exceeded Federal Reserve projections for
economic growth. Concerned and adamantly resolute regarding inflation, the
Federal Reserve remained biased toward a tightening of monetary policy, but made
no changes during the 12 months. Frequently, however, conflicting economic data
increased the level of market volatility and pushed many investors into the
safety of cash. Total taxable-money-market-fund assets rose to over $800
billion, according to IBC's Money Fund Report, up from about $700 billion a year
ago.
The annualized yield for Warburg Pincus Cash Reserve Fund for the seven-day
period ended February 28, 1997 was 4.96%, up from 4.89% on February 29, 1996*.
Net assets grew to $416.7 million, up from $383.6 million a year ago. The Fund's
average weighted maturity on February 28, 1997, was 61 days, 11 days longer than
last year, due to the more positively sloped yield curve recently and the
incremental yield it afforded.
The Fund will continue to emphasize the highest-quality securities in order
to provide competitive returns without compromising safety and stability of
principal. We appreciate your continued support and investment in the Fund.
Dale C. Christensen
President
- ------------
*From time to time, the Fund's 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. All figures
listed here represent past performance and do not guarantee future results.
Although the Fund seeks to maintain a constant value of $1.00 per share,
investments in Warburg Pincus Funds are neither insured nor guaranteed by the
U.S. government and there can be no assurance that the Fund will be able to
maintain a constant value of $1.00 per share.
1
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WARBURG PINCUS NEW YORK TAX EXEMPT FUND
- --------------------------------------------------------------------------------
Dear Shareholder: March 27, 1997
The tax-exempt money market continued, through the 12 months ended February
28, 1997, to see strong cash inflows. This had the effect of driving down yields
on short-term municipal securities, with yields finishing the period at
historically low levels.
New York state benefits from its broad and diverse economic base and its
substantial wealth and resources. While economic growth has been modest, the
state's financial condition has been improving. Fiscal 1997 is projected to
close with a significant surplus. This would be the fifth consecutive year since
the depths of the recession that positive budget results have been achieved. We
should not lose sight of the fact, however, that much of this year's surplus is
due to increased revenue resulting from a banner year in a single sector of the
state's economy, financial services. The state has yet to fully address its
ongoing structural imbalance. The fiscal 1998 budget process promises to be
contentious, as already-implemented and newly proposed tax cuts must be offset
by expenditure cuts in politically sensitive social services. New York City
continues to see slow but steady growth. While the City's tax coffers have also
benefited from a successful year on Wall Street, substantial shortfalls need to
be addressed in future budgets.
During the past year, assets in Warburg Pincus New York Tax Exempt Fund
ranged from a high of $151.9 million in March 1996 to a low of $91.5 million in
October 1996. As of the fiscal year end, February 28, 1997, the Fund's net
assets were $124.2 million. The Fund's 12-month total return was 2.92%, eight
basis points above IBC's New York tax-exempt funds average.* As the available
supply of New York municipal securities increased in mid-year, we kept the
Fund's average weighted maturity in the 50 to 60 day range, although we
shortened it to 27 days by fiscal year end as opportunities to extend the Fund's
maturity became fewer and less attractive.
The Fund seeks to provide investors with as high a level of current income
that is exempt from federal, New York state and New York City personal income
taxes as is consistent with preservation of capital and liquidity. We appreciate
your continued support and investment in the Fund.
Dale C. Christensen
President
- ------------
*From time to time, the Fund's 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. All figures
listed here represent past performance and do not guarantee future results.
Although the Fund seeks to maintain a constant value of $1.00 per share,
investments in Warburg Pincus Funds are neither insured nor guaranteed by the
U.S. government and there can be no assurance that the Fund will be able to
maintain a constant value of $1.00 per share.
2
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<PAGE>
WARBURG PINCUS CASH RESERVE FUND
STATEMENT OF NET ASSETS
February 28, 1997
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------
RATINGS=
PAR (MOODY'S/S&P) MATURITY RATE% VALUE
- ----------- ------------- -------- ----- ------------
<C> <S> <C> <C> <C> <C>
AGENCY OBLIGATIONS (2.5%)
$ 5,000,000 Federal Farm Credit Bank Note NR 04/01/97 5.45 $ 5,000,000
2,500,000 Federal Farm Credit Bank Note NR 05/01/97 5.34 2,500,000
3,000,000 Federal Farm Credit Bank Note NR 05/01/97 5.24 3,000,000
------------
TOTAL AGENCY OBLIGATIONS
(Cost $10,500,000) 10,500,000
------------
BANKERS' ACCEPTANCES (5.5%)
Domestic Bankers' Acceptances
2,000,000 Bank of America National Trust &
Savings Association (P-1, A-1+) 03/12/97 5.54 1,996,614
1,000,000 Bank of America National Trust &
Savings Association (P-1, A-1+) 03/24/97 5.54 996,461
1,700,000 Chase Manhattan Corp. (P-1, A-1) 03/11/97 5.45 1,697,426
3,000,000 Chase Manhattan Corp. (P-1, A-1) 03/19/97 5.54 2,991,690
2,000,000 Chase Manhattan Corp. (P-1, A-1) 04/28/97 5.30 1,982,922
546,270 Citibank, N.A. (P-1, A-1+) 06/26/97 5.80 535,973
1,500,000 CoreStates Bank, N.A. (P-1, A-1) 03/03/97 5.58 1,499,535
2,000,000 CoreStates Bank, N.A. (P-1, A-1) 03/06/97 5.30 1,998,528
1,800,000 CoreStates Bank, N.A. (P-1, A-1) 04/22/97 5.32 1,786,168
1,000,000 First National Bank of Chicago (P-1, A-1+) 03/17/97 5.45 997,578
2,000,000 First Union National Bank of NC (P-1, A-1) 03/07/97 5.46 1,998,180
1,000,000 First Union National Bank of NC (P-1, A-1) 03/12/97 5.32 998,374
1,000,000 Mellon Bank N.A. (P-1, A-1) 04/25/97 5.35 991,825
2,622,013 Suntrust Banks, Inc. (P-1, A-1+) 03/17/97 5.53 2,615,568
------------
TOTAL BANKERS' ACCEPTANCES
(Cost $23,086,842) 23,086,842
------------
CERTIFICATES OF DEPOSIT (21.6%)
Domestic Certificates Of Deposit (7.2%)
5,000,000 Bank of America Illinois (P-1, A-1+) 04/22/97 5.48 5,000,000
5,000,000 Chase Manhattan Corp. (P-1, A-1) 07/10/97 5.50 5,000,000
5,000,000 Chase Manhattan Bank (P-1, A-1) 07/28/97 5.55 5,000,000
5,000,000 Comerica Bank-Detroit (P-1, A-1) 08/13/97 5.77 4,998,778
5,000,000 Wilmington Trust Co. (NR, A-1) 07/07/97 5.45 5,000,000
5,000,000 Wilmington Trust Co. (NR, A-1) 07/21/97 5.53 5,000,000
------------
29,998,778
------------
</TABLE>
See Accompanying Notes to Financial Statements.
3
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<PAGE>
WARBURG PINCUS CASH RESERVE FUND
STATEMENT OF NET ASSETS (CONT'D)
February 28, 1997
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------
RATINGS=
PAR (MOODY'S/S&P) MATURITY RATE% VALUE
- ----------- ------------- -------- ----- ------------
<C> <S> <C> <C> <C> <C>
CERTIFICATES OF DEPOSIT (CONT'D)
Yankee Dollar Certificates Of Deposit (14.4%)
$ 5,000,000 Bank of Tokyo-Mitsubishi (P-1, A-1) 04/30/97 5.58 $ 5,000,000
5,000,000 Bank of Tokyo-Mitsubishi (P-1, A-1) 05/13/97 5.50 5,000,000
5,000,000 Barclays Bank PLC (P-1, A-1+) 01/16/98 5.81 5,000,382
10,000,000 Banque National de Paris (P-1, A-1) 07/25/97 5.57 10,001,150
5,000,000 Commonwealth Bank of Australia (P-1, A-1+) 07/21/97 5.37 4,894,092
10,000,000 Deutsche Bank (P-1, A-1+) 10/28/97 5.69 10,008,259
5,000,000 Industrial Bank of Japan (P-1, A-1) 03/19/97 5.34 5,000,025
5,000,000 Industrial Bank of Japan (P-1, A-1) 04/14/97 5.54 5,000,088
5,000,000 Sumitomo Bank (P-1, A-1) 04/14/97 5.50 5,000,000
5,000,000 Westdeutsche Landesbank Gironzentrale (P-1, A-1+) 07/30/97 5.52 5,000,204
------------
59,904,200
------------
TOTAL CERTIFICATES OF DEPOSIT
(Cost $89,902,978) 89,902,978
------------
COMMERCIAL PAPER (57.8%)
Asset Backed Securities (9.3%)
2,000,000 Beta Finance, Inc. (P-1, A-1+) 03/18/97 5.50 1,994,806
5,000,000 Beta Finance, Inc. (P-1, A-1+) 04/03/97 5.40 4,975,250
5,000,000 Beta Finance, Inc. (P-1, A-1+) 04/17/97 5.35 4,965,076
2,000,000 Beta Finance, Inc. (P-1, A-1+) 05/07/97 5.30 1,980,272
5,000,000 Corporate Receivables Corp. (P-1, A-1) 05/13/97 5.32 4,946,061
5,000,000 Sigma Finance, Inc. (P-1, A-1+) 03/24/97 5.48 4,982,494
5,000,000 Sigma Finance, Inc. (P-1, A-1+) 03/25/97 5.45 4,981,833
5,000,000 Sigma Finance, Inc. (P-1, A-1+) 03/25/97 5.48 4,981,733
5,000,000 Sigma Finance, Inc. (P-1, A-1+) 06/04/97 5.28 4,930,333
------------
38,737,858
------------
Banks (5.9%)
5,000,000 AMRO N.A. Finance, Inc. (P-1, A-1+) 07/09/97 5.34 4,903,583
10,000,000 Banc One Corp. (P-1, A-1+) 03/04/97 5.32 9,995,567
5,000,000 Svenska Handelsbanken, Inc. (P-1, A-1) 05/27/97 5.36 4,935,233
5,000,000 Toronto Dominion Holdings (USA), Inc. (P-1, A-1+) 05/02/97 5.32 4,954,189
------------
24,788,572
------------
Cigarettes (3.1%)
5,000,000 American Brands, Inc. (P-1, A-1) 05/08/97 5.35 4,949,472
8,000,000 American Brands, Inc. (P-1, A-1) 05/14/97 5.34 7,912,187
------------
12,861,659
------------
Conglomerates (1.2%)
5,000,000 BTR Dunlop Finance, Inc. PLC (P-1, A-1) 04/07/97 5.35 4,972,507
------------
</TABLE>
See Accompanying Notes to Financial Statements.
4
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<PAGE>
WARBURG PINCUS CASH RESERVE FUND
STATEMENT OF NET ASSETS (CONT'D)
February 28, 1997
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------
RATINGS=
PAR (MOODY'S/S&P) MATURITY RATE% VALUE
- ----------- ------------- -------- ----- ------------
<C> <S> <C> <C> <C> <C>
COMMERCIAL PAPER (CONT'D)
Finance Lessors (2.6%)
$ 1,000,000 General Electric Capital Corp. (P-1, A-1+) 04/08/97 5.33 $ 994,374
5,000,000 General Electric Capital Corp. (P-1, A-1+) 05/13/97 5.35 4,945,757
5,000,000 Pitney Bowes Credit Corp. (P-1, A-1+) 03/17/97 5.51 4,987,756
------------
10,927,887
------------
Finance Services (1.2%)
5,000,000 Dakota Certificates Program (P-1, A-1+) 05/14/97 5.33 4,945,219
------------
Grain Mills Products (0.9%)
3,600,000 General Mills, Inc. (P-1, A-1) 03/06/97 5.30 3,597,350
------------
Household Audio & Video Equipment (2.4%)
5,000,000 Toshiba America, Inc. (P-1, A-1) 04/01/97 5.34 4,977,008
5,000,000 Toshiba International Finance (UK)
PLC (P-1, A-1) 05/12/97 5.36 4,946,400
------------
9,923,408
------------
Motor Vehicles & Car Bodies (2.4%)
5,000,000 Daimler-Benz North America Corp. (P-1, A-1) 05/01/97 5.35 4,954,674
5,000,000 Daimler-Benz North America Corp. (P-1, A-1) 06/30/97 5.31 4,910,763
------------
9,865,437
------------
National Commercial Banks (2.4%)
5,000,000 Morgan (J.P.) & Co., Inc. (P-1, A-1+) 03/17/97 5.35 4,988,111
5,000,000 Santander Finance (De), Inc. (P-1, A-1+) 07/23/97 5.40 4,892,000
------------
9,880,111
------------
Personal Credit Institutions (4.1%)
2,000,000 Associates Corp. of North America (P-1, A-1+) 04/14/97 5.34 1,986,947
5,000,000 BMW U.S. Capital Corp. (NR, A-1) 03/07/97 5.34 4,995,550
2,000,000 Ford Motor Credit Corp. (P-1, A-1) 03/17/97 5.48 1,995,129
2,000,000 Ford Motor Credit Corp. (P-1, A-1) 03/31/97 5.39 1,991,017
1,000,000 Ford Motor Credit Corp. (P-1, A-1) 04/09/97 5.33 994,225
3,000,000 Ford Motor Credit Corp. (P-1, A-1) 04/14/97 5.33 2,980,457
2,000,000 Ford Motor Credit Corp. (P-1, A-1) 04/15/97 5.33 1,986,675
------------
16,930,000
------------
Plastic Syth. Resin/Rubber (0.7%)
3,000,000 Du Pont (E.I.) de Nemours & Co. (P-1, A-1+) 03/14/97 5.56 2,993,977
------------
</TABLE>
See Accompanying Notes to Financial Statements.
5
<PAGE>
<PAGE>
WARBURG PINCUS CASH RESERVE FUND
STATEMENT OF NET ASSETS (CONT'D)
February 28, 1997
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------
RATINGS=
PAR (MOODY'S/S&P) MATURITY RATE% VALUE
- ----------- ------------- -------- ----- ------------
<C> <S> <C> <C> <C> <C>
COMMERCIAL PAPER (CONT'D)
Security Brokers & Dealers (14.5%)
$ 5,000,000 Bear Stearns Companies, Inc. (P-1, A-1) 03/27/97 5.35 $ 4,980,681
5,000,000 Goldman Sachs Group L.P. (P-1, A-1+) 04/07/97 5.42 4,972,147
5,000,000 Goldman Sachs Group L.P. (P-1, A-1+) 04/21/97 5.35 4,962,104
5,000,000 Goldman Sachs Group L.P. (P-1, A-1+) 04/23/97 5.35 4,960,618
3,000,000 Goldman Sachs Group L.P. (P-1, A-1+) 05/15/97 5.30 2,966,875
5,000,000 Merrill Lynch & Co. (P-1, A-1+) 03/24/97 5.57 4,982,207
5,000,000 Merrill Lynch & Co. (P-1, A-1+) 04/02/97 5.45 4,975,778
3,000,000 Merrill Lynch & Co. (P-1, A-1+) 04/09/97 5.37 2,982,548
5,000,000 Merrill Lynch & Co. (P-1, A-1+) 08/14/97 5.30 4,877,806
5,000,000 Morgan Stanley Group, Inc. (P-1, A-1+) 05/14/97 5.31 4,945,425
5,000,000 Nomura Holding America, Inc. (P-1, A-1+) 05/12/97 5.37 4,946,300
10,000,000 Nomura Holding America, Inc. (P-1, A-1+) 03/13/97 5.35 9,982,167
------------
60,534,656
------------
Services -- Auto Rent & Lease (2.4%)
5,000,000 PHH Corp. (P-1, A-1) 03/11/97 5.32 4,992,611
5,000,000 PHH Corp. (P-1, A-1) 03/18/97 5.27 4,987,557
------------
9,980,168
------------
Services -- Equipment Rent & Lease (1.2%)
5,000,000 International Lease and Finance Corp. (P-1, A-1) 03/12/97 5.30 4,991,903
------------
Short-Term Business Credit Institutions (2.4%)
5,000,000 Corporate Asset Funding, Inc. (P-1, A-1+) 04/09/97 5.33 4,971,129
5,000,000 Transamerica Finance Corp. (P-1, A-1) 04/09/97 5.34 4,971,075
------------
9,942,204
------------
Telephone Communications (1.1%)
4,768,000 Bell Atlantic Financial Services,
Inc. (P-1, A-1) 03/24/97 5.26 4,751,977
------------
TOTAL COMMERCIAL PAPER
(Cost $240,624,893) 240,624,893
------------
VARIABLE RATE OBLIGATIONS (8.4%)
Asset Backed Securities (1.2%)
5,000,000 SMM Trust 1996-R+ (P-1, A-1+) 03/17/97 5.43 5,000,000
------------
Personal Credit Institutions (1.2%)
5,000,000 Associates Corp. of North America+ (P-1, A-1+) 03/01/97 5.34 4,996,367
------------
</TABLE>
See Accompanying Notes to Financial Statements.
6
<PAGE>
<PAGE>
WARBURG PINCUS CASH RESERVE FUND
STATEMENT OF NET ASSETS (CONT'D)
February 28, 1997
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------
RATINGS=
PAR (MOODY'S/S&P) MATURITY RATE% VALUE
- ----------- ------------- -------- ----- ------------
<C> <S> <C> <C> <C> <C>
VARIABLE RATE OBLIGATIONS (CONT'D)
Student Loan Marketing Association (6.0%)
$ 5,000,000 Student Loan Marketing Association
Floating Rate Note NR 03/04/97 5.33 $ 5,000,000
5,000,000 Student Loan Marketing Association
Floating Rate Note NR 03/04/97 5.46 5,000,006
15,000,000 Student Loan Marketing Association
Floating Rate Note NR 03/04/97 5.49 15,004,745
------------
25,004,751
------------
TOTAL VARIABLE RATE OBLIGATIONS
(Cost $35,001,118) 35,001,118
------------
REPURCHASE AGREEMENT (4.2%)
17,500,000 Repurchase agreement with Morgan 17,500,000
Stanley & Co., dated 02/28/97 at 5.39% to be ------------
repurchased on 03/03/97 at
$17,507,860. (Collateralized by
$17,226,000 U.S. Treasury Note at
6.75%, due 04/30/00. Market value of
collateral is $17,850,443) (Cost
$17,500,000)
TOTAL INVESTMENTS AT VALUE (100.0%) (Cost $416,615,831*) 416,615,831
OTHER ASSETS IN EXCESS OF LIABILITIES (0.0%) 119,399
------------
NET ASSETS (100.0%) (applicable to 416,738,104 shares) $416,735,230
------------
------------
NET ASSETS VALUE, offering and redemption price per share ($416,735,230[div]416,738,104) $1.00
------------
------------
INVESTMENT ABBREVIATIONS
NR = Not Rated
</TABLE>
- --------------------------------------------------------------------------------
= Credit ratings given by Moody's Investors Service, Inc. and Standard & Poor's
Ratings Group are unaudited.
+ The interest rate shown is the rate as of February 28, 1997 and the maturity
date is the next interest readjustment date.
* Also cost for Federal income tax purposes.
See Accompanying Notes to Financial Statements.
7
<PAGE>
<PAGE>
WARBURG PINCUS CASH RESERVE FUND
MATURITY SCHEDULE OF PORTFOLIO
February 28, 1997 (Unaudited)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
PERCENTAGE OF PORTFOLIO
MATURITY SCHEDULE -----------------------------
(DAYS) PAR AMOUNT (CUMULATIVE)
- ----------------- ------------
<S> <C> <C> <C>
1-7 $ 71,600,000 17.1% 17.1%
8-14 27,700,000 6.6 23.7
15-30 66,390,013 15.9 39.6
31-60 88,800,000 21.2 60.8
61-90 78,500,000 18.8 79.6
91-120 5,546,270 1.3 80.9
121-150 50,000,000 11.9 92.8
Over 150 30,000,000 7.2 100.0
------------ -----
$418,536,283 100.0%
------------ -----
------------ -----
</TABLE>
Average Weighted Maturity -- 61 days
See Accompanying Notes to Financial Statements.
8
<PAGE>
<PAGE>
WARBURG PINCUS NEW YORK TAX EXEMPT FUND
STATEMENT OF NET ASSETS
February 28, 1997
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------
RATINGS=
PAR (MOODY'S/S&P) MATURITY RATE% VALUE
- ---------- -------------- -------- ----- ------------
<C> <S> <C> <C> <C> <C>
NEW YORK (96.8%)
$1,500,000 Brewster Central School District
BANS (NR, NR) 06/26/97 4.38 $ 1,502,224
700,000 Erie County New York Water (VMIG-1,
Authority Series B VRDN+ A-1+) 03/07/97 3.15 700,000
1,000,000 Erie County Revenue Anticipation
Notes (Union Bank of Switzerland
LOC) RANS (MIG) 04/17/97 4.25 1,000,753
3,000,000 Hempstead New York USFD Series 1996 (VMIG-1,
TANS A-1+) 06/30/97 4.13 3,002,150
700,000 Metropolitan Transportation
Authority Commuter Facility Series
1991 (Multiple Credit Enhancer
LOC) VRDN+ (VMIG-1, A-1) 03/07/97 3.20 700,000
1,000,000 Monroe County Industrial
Development Agency Electronic
Navigational Industries Inc.
Series 1984 RB (NR, Aa1) 07/01/97 3.85 1,000,000
1,000,000 Monroe County New York Industrial
Development Agency (AJL
Manufacturing, Inc. Facility)
(Marine Midland LOC) VRDN+ (NR, A-1) 03/07/97 3.40 1,000,000
600,000 New York City General Obligation
Bonds (Bayerische Landerbank LOC) (VMIG-1,
VRDN+ A-1+) 03/07/97 3.25 600,000
500,000 New York City General Obligation
Bonds Series B10 (Union Bank of (VMIG-1,
Switzerland LOC) VRDN+ A-1+) 03/07/97 3.20 500,000
2,900,000 New York City General Obligation
Bonds Tax-Exempt Adjustable Rate
Bonds (Chase Manhattan LOC) VRDN+ (VMIG-1, A-1) 03/01/97 3.45 2,900,000
500,000 New York City General Obligation (VMIG-1,
Bonds (Mitsubishi Bank LOC) VRDN+ A-1+) 03/07/97 3.20 500,000
2,000,000 New York City General Obligation
Bonds 1996 Series J-2 (Commerzbank (VMIG-1,
LOC) VRDN+ A-1+) 05/14/97 3.40 2,000,000
2,000,000 New York City General Obligation
Series B (Chase Manhattan LOC)
TECP (VMIG-1, A-1) 05/12/97 3.35 2,000,000
3,100,000 New York City General Obligation
Series B-9 1995 (Chase Manhattan (VMIG-1,
LOC) TECP A-1+) 05/20/97 3.50 3,100,000
5,000,000 New York City General Obligation
(Morgan Guaranty LOC) VRDN+ (MIG-1, A-1+) 03/01/97 3.55 5,000,000
3,800,000 New York City General Obligation (VMIG-1,
1994 H-3 (State Street LOC) A-1+) 05/16/97 3.50 3,800,000
2,400,000 New York City General Obligation (VMIG-1,
1994 H-3 (State Street LOC) A-1+) 05/23/97 3.50 2,400,000
1,400,000 New York City General Obligation
Daily Series A-4 (Chemical Bank
LOC) VRDN+ (VMIG-1, A-1) 03/01/97 3.45 1,400,000
5,100,000 New York City Housing Development
Authority (York Ave Project)
(Chase Manhattan LOC) VRDN+ (NR, A-1) 03/07/97 3.30 5,100,000
1,000,000 New York City Housing Development
Corp. Multi Family Mortgage
(Columbus Gardens Project) (VMIG-1,
(Citibank LOC)RB A-1+) 03/07/97 3.20 1,000,000
1,800,000 New York City Housing Development
Corp.(E. 96th St. Project) (LOC
Mitsubishi Bank) VRDN+ (VMIG-1, NR) 03/07/97 3.30 1,800,000
2,650,000 New York City Housing Development
Corp. (Parkgate Tower) (Citibank (VMIG-1,
LOC) VRDN+ A-1+) 03/07/97 3.25 2,650,000
3,500,000 New York City Industrial
Development Agency (La Guardia
Project) Series 1985 (Indosuez
LOC) VRDN+ (NR, A-1) 03/07/97 3.40 3,500,000
</TABLE>
See Accompanying Notes to Financial Statements.
9
<PAGE>
<PAGE>
WARBURG PINCUS NEW YORK TAX EXEMPT FUND
STATEMENT OF NET ASSETS (CONT'D)
February 28, 1997
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------
RATINGS=
PAR (MOODY'S/S&P) MATURITY RATE% VALUE
- ---------- -------------- -------- ----- ------------
<C> <S> <C> <C> <C> <C>
NEW YORK (CONT'D)
$1,000,000 New York City Industrial
Development Agency (Columbia
Grammar and Preparatory School
Civic Facility) 1994 (Chemical
Bank LOC) VRDN+ (NR, A-1) 03/07/97 3.20 $ 1,000,000
1,600,000 New York City Industrial
Development Agency Field Hotel
Association (John Fitzgerald
Kennedy Project) Series 1985
(Banque Indosuez LOC) VRDN+ (VMIG-1, A-1) 03/07/97 3.40 1,600,000
400,000 New York City Industrial
Development Agency (Nippon Cargo
Airlines Company) (Ind. Bank of
Japan LOC) VRDN+ (NR, A-1) 03/01/97 3.85 400,000
2,000,000 New York City Municipal Water
(Canadian Imperial Bank LOC) TECP (P-1, A-1+) 03/13/97 3.35 2,000,000
1,447,000 New York City Trust For Cultural
Resources (Carnegie Hall)
(Dai-Ichi Kangyo LOC) VRDN+ (VMIG-1, A-1) 03/07/97 3.15 1,447,000
1,000,000 New York City Trust For Cultural
Resources Museum of Broadcasting
Series 1989 (Sumitomo Bank LOC)
VRDN+ (VMIG-1, A-1) 03/07/97 3.20 1,000,000
5,800,000 New York State Dormitory Authority
(Beverwyck Inc.) (Banque Paribas
LOC) VRDN+ (VMIG-1, A-2) 03/07/97 3.40 5,800,000
6,600,000 New York State Energy Research &
Development Pollution Control
Refunding Revenue Bonds (New York
State Electric & Gas Corp. Proj.)
(Union Bank of Switzerland LOC) (VMIG-1,
VRDN+ A-1+) 03/01/97 3.45 6,600,000
1,400,000 New York State Energy Research &
Development Authority Pollution
Control Revenue Refunding Bonds
(Niagara Mohawk) Series 1985B
(Toronto Dominion LOC) VRDN+ (NR, NR) 03/01/97 3.50 1,400,000
6,600,000 New York State Energy Research &
Development Authority Pollution
Control Revenue Refunding Bonds
(Rochester Gas & Electric) Series
1984 (Bank of New York LOC) VRDN+ (P-1, NR) 03/03/97 3.40 6,600,000
100,000 New York State Energy Research &
Development Authority Pollution
Control Revenue Refunding Bonds
Series 1985A (Niagara Mohawk)
(Toronto Dominion) VRDN+ (NR, A-1+) 03/01/97 3.55 100,000
1,600,000 New York State Energy Research &
Development Authority Pollution
Control Revenue Refunding Bonds
Series 1986B (Niagara
Mohawk)(Toronto Dominion LOC)
VRDN+ (P-1) 03/01/97 3.55 1,600,000
2,000,000 New York State Energy Research and
Development Authority Electric
Facilities Revenue Bonds 1995
Series A (Long Island Lighting
Company Project) (Union Bank of (VMIG-1,
Switzerland LOC) VRDN+ A-1+) 03/07/97 3.30 2,000,000
2,200,000 New York State Energy Research and
Development Authority Long Island
Lighting Company (Toronto Dominion (VMIG-1,
LOC) VRDN+ A-1+) 03/07/97 3.30 2,200,000
2,000,000 New York State Energy Research and
Development Authority Pollution
Control Refunding Revenue Bonds
(New York State Electric & Gas
Corp. Proj.) Series 1985 A (Morgan
Guaranty LOC) VRDN+ (P-1, A-1+) 03/15/97 3.30 2,000,000
</TABLE>
See Accompanying Notes to Financial Statements.
10
<PAGE>
<PAGE>
WARBURG PINCUS NEW YORK TAX EXEMPT FUND
STATEMENT OF NET ASSETS (CONT'D)
February 28, 1997
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------
RATINGS=
PAR (MOODY'S/S&P) MATURITY RATE% VALUE
- ---------- -------------- -------- ----- ------------
<C> <S> <C> <C> <C> <C>
NEW YORK (CONT'D)
$2,500,000 New York State Energy Research and
Development Authority Pollution
Control Revenue Bonds (Deutsche
Bank LOC) VRDN+ (VMIG-1, NR) 03/01/97 3.25 $ 2,500,000
2,000,000 New York State Housing Finance
Agency East 84th Street Housing
Revenue Bonds 1995 Series A (Fleet
Bank LOC) VRDN+ (VMIG-1, NR) 03/07/97 3.30 2,000,000
1,500,000 New York State Housing Finance
Agency Housing Revenue Bonds (Mt.
Sinai School of Medicine) Series
1984A (Golden State Sanwa LOC)
VRDN+ (VMIG-1, NR) 03/07/97 3.30 1,500,000
3,800,000 New York State Housing Finance
Agency Housing Revenue Bonds
(Normandie Court) Series 1991A
(Societe General LOC) VRDN+ (VMIG-1, NR) 03/07/97 3.20 3,800,000
1,200,000 New York State Housing Finance
Agency Multi-Family Housing
(Pleasant Creek Assoc.) 1988
Series A (AMBAC Insurance) VRDN+ (VMIG-1, NR) 03/07/97 3.20 1,200,000
1,300,000 New York State Housing Finance
Agency Union Square South Housing
Revenue Bonds 1996 Series A VRDN+ (VMIG-1, NR) 03/07/97 3.20 1,300,000
215,000 New York State Job Development
Authority State Guaranteed
Variable Rate Special Purpose
Bonds Series 1984C (Sumitomo Bank (VMIG-1,
LOC) VRDN+ A-1+) 03/03/97 3.70 215,000
100,000 New York State Job Development
Authority State Guaranteed
Variable Rate Special Purpose
Bonds Series 1984F (Sumitomo Bank (VMIG-1,
LOC) VRDN+ A-1+) 03/03/97 3.70 100,000
565,000 New York State Job Development
Authority State Guaranteed
Variable Rate Special Purpose
Bonds Series 1984G (Sumitomo Bank (VMIG-1,
LOC) VRDN+ A-1+) 03/03/97 3.70 565,000
740,000 New York State Job Development
Authority State Guaranteed
Variable Rate Special Purpose
Bonds Series 1984H (Sumitomo Bank (VMIG-1,
LOC) VRDN+ A-1+) 03/03/97 3.70 740,000
3,200,000 New York State Local Government
Assistance Corporation Variable
Rate Revenue Bonds Series 1995F (VMIG-1,
(Toronto Dominion LOC) VRDN+ A-1+) 03/07/97 3.20 3,200,000
1,300,000 New York State Medical Care
Facilities Finance Agency (Lenox
Hill Hospital Project) 1990 Series
A (Chemical Bank LOC) VRDN+ (VMIG-1, NR) 03/07/97 3.25 1,300,000
2,000,000 New York State Power Authority
(Citibank LOC) TECP (P-1, A-1) 05/15/97 3.40 2,000,000
600,000 New York State Research &
Development Authority Pollution
Control Refunding Revenue Bonds
(Orange & Rockland Utilities, Inc. (VMIG-1,
Project) (AMBAC Insurance) VRDN+ A-1+) 03/07/97 3.15 600,000
300,000 North Hempstead New York Solid
Waste Management Authority Series
A 1993 (National Westminster LOC)
VRDN+ (VMIG-1, NR) 03/07/97 3.30 300,000
2,000,000 Sachem Central School District At
Holbrook Suffolk County, New York
TAN 1996-97 (MIG, NR) 06/26/97 4.13 2,001,852
3,000,000 Smithtown Central School District
Suffolk County TANS (NR, NR) 06/26/97 4.50 3,006,010
</TABLE>
See Accompanying Notes to Financial Statements.
11
<PAGE>
<PAGE>
WARBURG PINCUS NEW YORK TAX EXEMPT FUND
STATEMENT OF NET ASSETS (CONT'D)
February 28, 1997
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------
RATINGS=
PAR (MOODY'S/S&P) MATURITY RATE% VALUE
- ---------- -------------- -------- ----- ------------
<C> <S> <C> <C> <C> <C>
NEW YORK (CONT'D)
$2,000,000 State of New York Power Authority
Adjustable Tender Notes (VMIG-1, A-1) 03/01/97 3.70 $ 2,000,000
570,000 State of New York Power Authority
Adjustable Tender Notes (VMIG-1, A-1) 03/01/97 3.70 570,000
3,600,000 Suffolk County Industrial
Development Authority (Nissequogue
Cogen) Series 1993 (Toronto (VMIG-1,
Dominion LOC) VRDN+ A-1+) 03/07/97 3.35 3,600,000
2,864,500 Tompkins County New York BANS (NR, NR) 06/19/97 4.25 2,867,902
1,800,000 Town of Babylon Industrial
Development Agency (J. D'addario &
Company, Inc. Proj.) Series 1994
(National Westminster LOC) VRDN+ (VMIG-1, NR) 03/07/97 3.35 1,800,000
100,000 Town of Montgomery Industrial
Development Agency Authority
(Service Merchandise Co., Inc.)
(Canadian Imperial Bank LOC) VRDN+ (NR, A-1+) 03/17/97 3.55 100,000
------------
TOTAL NEW YORK (cost $120,167,891) 120,167,891
------------
PUERTO RICO (2.8%)
300,000 Government Development Bank For
Puerto Rico Adjustable Refunding
Bonds Series 1985 (Credit Suisse (VMIG-1,
LOC) VRDN+ A-1+) 03/07/97 2.95 300,000
3,000,000 Government Development Bank For
Puerto Rico TECP (NR, A-1+) 03/13/97 3.35 3,000,000
200,000 Puerto Rico Highway and
Transportation Authority Highway
Revenue and Revenue Refunding
Bonds Series 1993 W and X
Additional Loc: Swiss Bank Corp.,
NY and Landesbank Hessen-Thuringen (VMIG-1,
(Swiss Bank LOC) VRDN+ A-1+) 03/07/97 2.95 200,000
------------
TOTAL PUERTO RICO (cost $3,500,000) 3,500,000
------------
</TABLE>
See Accompanying Notes to Financial Statements.
12
<PAGE>
<PAGE>
WARBURG PINCUS NEW YORK TAX EXEMPT FUND
STATEMENT OF NET ASSETS (CONT'D)
February 28, 1997
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
VALUE
------------
<S> <C>
TOTAL INVESTMENTS AT VALUE (99.6%) (Cost $123,667,891*) $123,667,891
OTHER ASSETS IN EXCESS OF LIABILITIES (0.4%) 522,935
------------
NET ASSETS (100.0%) (applicable to 124,203,945 shares) $124,190,826
------------
------------
NET ASSET VALUE, offering and redemption price per share
($124,190,826[div]124,203,945) $1.00
------------
------------
</TABLE>
<TABLE>
<S> <C> <C>
INVESTMENT ABBREVIATIONS
BANS = Bond Anticipation Notes
FGIC = Financial Guaranty Insurance Company
LOC = Letter of Credit
MB = Municipal Bonds
MBIA = Municipal Bond Insurance Association
NR = Not Rated
RANS = Revenue Anticipation Notes
RB = Revenue Bond
TANS = Tax Anticipation Notes
TECP = Tax Exempt Commercial Paper
VRDN = Variable Rate Demand Notes
</TABLE>
- --------------------------------------------------------------------------------
= Credit ratings given by Moody's Investors Service, Inc. and Standard &
Poor's Ratings Group are unaudited.
`D' The interest rate shown is the rate as of February 28, 1997 and the
maturity date shown is the longer of the next interest readjustment date or
the date the principal amount owed can be recovered through demand.
* Also represents cost for Federal income tax purposes.
See Accompanying Notes to Financial Statements.
13
<PAGE>
<PAGE>
WARBURG PINCUS NEW YORK TAX EXEMPT
MATURITY SCHEDULE OF PORTFOLIO
February 28, 1997 (Unaudited)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
PERCENTAGE OF PORTFOLIO
-----------------------------
MATURITY SCHEDULE PAR AMOUNT (CUMULATIVE)
- ----------------- ------------
<S> <C> <C> <C>
1- 7 days $ 86,887,000 70.3% 70.3%
8- 14 days 5,000,000 4.0 74.3
15- 30 days 2,100,000 1.7 76.0
31- 60 days 1,000,000 0.8 76.8
61- 90 days 15,300,000 12.4 89.2
91-120 days 9,364,500 7.6 96.8
121-150 days 4,000,000 3.2 100.0
------------ ---
$123,651,500 100.0%
------------ ---
------------ ---
Average Weighted Maturity -- 27 days
</TABLE>
See Accompanying Notes to Financial Statements.
14
<PAGE>
<PAGE>
WARBURG PINCUS FUNDS
STATEMENTS OF OPERATIONS
For the Year Ended February 28, 1997
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------
WARBURG PINCUS WARBURG PINCUS
CASH RESERVE NEW YORK TAX
FUND EXEMPT FUND
-------------- --------------
<S> <C> <C>
INTEREST INCOME: $ 23,929,079 $3,938,687
-------------- --------------
EXPENSES:
Investment advisory 1,092,344 287,156
Sub-investment advisory and administration 1,092,344 287,156
Administrative services 436,938 114,862
Audit 26,916 26,675
Custodian 86,557 23,235
Directors' 20,000 20,000
Insurance 12,428 4,240
Legal 27,652 22,065
Printing 15,911 2,367
Registration 55,945 12,947
Transfer agent 112,909 7,010
Miscellaneous 14,283 14,484
-------------- --------------
2,994,227 822,197
Less: fees waived and expenses reimbursed (591,070) (190,450)
-------------- --------------
Total expenses 2,403,157 631,747
-------------- --------------
Net investment income 21,525,922 3,306,940
-------------- --------------
NET REALIZED AND UNREALIZED GAIN (LOSS) FROM INVESTMENTS:
Net realized loss from security transactions (2,226) 0
-------------- --------------
Net increase in net assets resulting from
operations $ 21,523,696 $3,306,940
-------------- --------------
-------------- --------------
</TABLE>
See Accompanying Notes to Financial Statements.
15
<PAGE>
<PAGE>
WARBURG PINCUS FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------
WARBURG PINCUS WARBURG PINCUS
CASH RESERVE NEW YORK TAX
FUND EXEMPT FUND
------------------------------------- -------------------------------------
FOR THE YEAR ENDED FEBRUARY 28 OR 29, FOR THE YEAR ENDED FEBRUARY 28 OR 29,
------------------------------------- -------------------------------------
1997 1996 1997 1996
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
FROM OPERATIONS:
Net investment income $ 21,525,922 $ 16,771,726 $ 3,306,940 $ 2,899,499
Net realized gain (loss) from
security transactions (2,226) (507) 0 645
-------------- -------------- -------------- --------------
Net increase in net
assets resulting from
operations 21,523,696 16,771,219 3,306,940 2,900,144
-------------- -------------- -------------- --------------
FROM DISTRIBUTIONS:
Dividends from net investment
income:
Common shares (21,525,922) (16,771,726) (3,306,940) (2,810,063)
Series 2 shares 0 0 0 (89,436)
-------------- -------------- -------------- --------------
Net decrease in net assets
from distributions (21,525,922) (16,771,726) (3,306,940) (2,899,499)
-------------- -------------- -------------- --------------
FROM CAPITAL SHARE TRANSACTIONS
(AT $1 PER SHARE):
Proceeds from sale of shares 2,207,941,180 1,883,249,803 375,730,772 314,824,220
Reinvested dividends 14,490,731 10,583,684 1,179,911 1,142,300
Net asset value of shares
redeemed (2,189,302,165) (1,913,436,052) (349,303,606) (307,102,780)
-------------- -------------- -------------- --------------
Net increase (decrease)
in net assets from
capital share
transactions 33,129,746 (19,602,565) 27,607,077 8,863,740
-------------- -------------- -------------- --------------
Net increase (decrease)
in net assets 33,127,520 (19,603,072) 27,607,077 8,864,385
NET ASSETS:
Beginning of year 383,607,710 403,210,782 96,583,749 87,719,364
-------------- -------------- -------------- --------------
End of year $ 416,735,230 $ 383,607,710 $124,190,826 $ 96,583,749
-------------- -------------- -------------- --------------
-------------- -------------- -------------- --------------
</TABLE>
See Accompanying Notes to Financial Statements.
16
<PAGE>
<PAGE>
WARBURG PINCUS CASH RESERVE FUND
FINANCIAL HIGHLIGHTS
(For a Share of the Fund Outstanding Throughout Each Year)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------
FOR THE YEAR ENDED FEBRUARY 28 OR 29,
------------------------------------------------------
1997 1996 1995 1994 1993
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF YEAR $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
------ ------ ------ ------ ------
Income from Investment Operations:
Net Investment Income .0492 .0543 .0426 .0273 .0322
Less Distributions:
Dividends from net investment income (.0492) (.0543) (.0426) (.0273) (.0322)
------ ------ ------ ------ ------
NET ASSET VALUE, END OF YEAR $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
------ ------ ------ ------ ------
------ ------ ------ ------ ------
Total Return 5.03% 5.57% 4.35% 2.76% 3.27%
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Year (000s) 416,735 $383,607 $403,211 $277,557 $287,723
Ratios to average daily net assets:
Operating expenses .55% .55% .55% .54% .50%
Net investment income 4.93% 5.43% 4.41% 2.73% 3.22%
Decrease reflected in above operating
expense ratios due to
waivers/reimbursements .14% .16% .19% .13% .17%
</TABLE>
- --------------------------------------------------------------------------------
See Accompanying Notes to Financial Statements.
17
<PAGE>
<PAGE>
WARBURG PINCUS NEW YORK TAX EXEMPT FUND
FINANCIAL HIGHLIGHTS
(For a Share of the Fund Outstanding Throughout Each Year)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------
FOR THE YEAR ENDED FEBRUARY 28 OR 29,
-------------------------------------------------------
1997 1996 1995 1994 1993
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF YEAR $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
------- ------- ------- ------- -------
Income from Investment Operations:
Net Investment Income .0288 .0326 .0246 .0175 .0224
Less Distributions:
Dividends from net investment income (.0288) (.0326) (.0246) (.0175) (.0224)
------- ------- ------- ------- -------
NET ASSET VALUE, END OF YEAR $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
------- ------- ------- ------- -------
------- ------- ------- ------- -------
Total Return 2.92% 3.31% 2.48% 1.77% 2.26%
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Year (000s) $124,191 $96,584 $77,111 $65,984 $76,995
Ratios to average daily net assets:
Operating expenses .55% .55% .55% .54% .50%
Net investment income 2.88% 3.24% 2.46% 1.75% 2.23%
Decrease reflected in above operating
expense ratios due to
waivers/reimbursements .17% .27% .27% .19% .28%
</TABLE>
- --------------------------------------------------------------------------------
See Accompanying Notes to Financial Statements.
18
<PAGE>
<PAGE>
WARBURG PINCUS CASH RESERVE AND NEW YORK TAX EXEMPT FUNDS
NOTES TO FINANCIAL STATEMENTS
February 28, 1997
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES
The Warburg Pincus Cash Reserve Fund (the 'Cash Reserve Fund') and the
Warburg Pincus New York Tax Exempt Fund (the 'New York Tax Exempt Fund') are
registered under the Investment Company Act of 1940, as amended (the '1940
Act'), as diversified and non-diversified, open-end management investment
companies, respectively.
Investment objectives for each Fund are as follows: the Cash Reserve Fund is
designed to provide investors with high current income consistent with liquidity
and stability of principal; the New York Tax Exempt Fund is designed to provide
investors with as high a level of current income that is exempt from Federal,
New York State, and New York City personal income taxes as is consistent with
preservation of capital and liquidity.
Certain New York State and New York City municipal obligations in the New
York Tax Exempt Fund may be obligations of issues which rely in whole or in part
on New York state or New York City revenues, real property taxes, revenues from
health care institutions, or obligations secured by mortgages on real property.
Consequently, the possible effect of economic conditions in New York or of
changes in New York regulations on these obligations must be considered.
The net asset value of each Fund is determined as of noon and the close of
regular trading on the New York Stock Exchange on each day, except on days when
the Exchange is closed. Each Fund's investments are valued under the amortized
cost method which approximates current market value. Under this method,
investments are valued at cost when purchased and thereafter a constant
proportionate amortization of any discount or premium is recorded until maturity
of the investment.
Security transactions are accounted for on a trade date basis. Interest
income is recorded on the accrual basis. The cost of investments sold is
determined by use of the specific identification method for both financial
reporting and income tax purposes.
Dividends from net investment income are declared daily and paid monthly.
Distributions of net capital gains, if any, are declared and paid annually,
although the Cash Reserve Fund may declare and pay short-term capital gains, if
any, periodically as the Board of Directors determines. To the extent that a net
realized capital gain can be reduced by a capital loss carryover, such gain will
not be distributed. Income and capital gain distributions are determined in
accordance with Federal income tax regulations which may differ from generally
accepted accounting principles.
No provision is made for Federal taxes as it is each Fund's intention to
continue to qualify for and elect the tax treatment applicable to regulated
19
<PAGE>
<PAGE>
WARBURG PINCUS CASH RESERVE AND NEW YORK TAX EXEMPT FUNDS
NOTES TO FINANCIAL STATEMENTS (CONT'D)
February 28, 1997
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES (CONT'D)
investment companies under the Internal Revenue Code and make the requisite
distributions to its shareholders which will be sufficient to relieve it from
Federal income and excise taxes.
Each Fund may enter into repurchase agreement transactions. Under the terms
of a typical repurchase agreement, a Fund acquires an underlying security
subject to an obligation of the seller to repurchase. The value of the
underlying security collateral will be maintained at an amount at least equal to
the total amount of the purchase obligation, including interest. The collateral
is in the Fund's possession through its custodian.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
effect the reported amount 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.
The Cash Reserve Fund and the New York Tax Exempt Fund have, effective March
1, 1997, each changed their fiscal and tax year-ends from February 28th to
December 31st, which was approved by the Funds' board of directors on January
15, 1997.
The Funds have an arrangement with their transfer agent whereby interest
earned on uninvested cash balances was used to offset a portion of the transfer
agent expense. For the year ended February 28, 1997, each Fund received credits
or reimbursements as follows:
<TABLE>
<CAPTION>
FUND AMOUNT
- ----------------------------------------- ---------------------
<S> <C>
Cash Reserve $16,144
New York Tax Exempt 4,545
</TABLE>
2. INVESTMENT ADVISER AND SUB-ADVISER, CO-ADMINISTRATORS AND DISTRIBUTOR
Warburg, Pincus Counsellors, Inc. ('Warburg'), a wholly owned subsidiary of
Warburg, Pincus Counsellors G.P. ('Counsellors G.P.'), serves as each Fund's
investment adviser. For its investment advisory services, Warburg receives a fee
calculated at an annual rate of .25% of each Fund's average daily net assets.
For the year ended February 28, 1997, investment advisory fees and waivers were
as follows:
<TABLE>
<CAPTION>
GROSS NET
FUND ADVISORY FEE WAIVER ADVISORY FEE
- --------------------------- ------------------ --------- ------------------
<S> <C> <C> <C>
Cash Reserve $1,092,344 $(229,970) $862,374
New York Tax Exempt 287,156 (74,362) 212,794
</TABLE>
20
<PAGE>
<PAGE>
WARBURG PINCUS CASH RESERVE AND NEW YORK TAX EXEMPT FUNDS
NOTES TO FINANCIAL STATEMENTS (CONT'D)
February 28, 1997
- --------------------------------------------------------------------------------
PNC Institutional Management Corporation ('PIMC'), a wholly owned subsidiary
of PNC Bank, N.A., serves as each Fund's sub-investment adviser and
administrator. For its sub-investment advisory and administrative services, PIMC
receives a fee calculated at an annual rate of .25% of each Fund's average daily
net assets. For the year ended February 28, 1997, sub-investment advisory and
administration fees and waivers were as follows:
<TABLE>
<CAPTION>
GROSS SUB-ADVISORY NET SUB-ADVISORY
AND AND
FUND ADMINISTRATION FEE WAIVER ADMINISTRATION FEE
- --------------------------- ------------------ --------- ------------------
<S> <C> <C> <C>
Cash Reserve $1,092,344 $(344,956) $747,388
New York Tax Exempt 287,156 (111,543) 175,613
</TABLE>
Counsellors Funds Service, Inc. ('CFSI'), a wholly owned subsidiary of
Warburg, serves as each Fund's co-administrator. For its administrative
services, CFSI currently receives a fee calculated at an annual rate of .10% of
each Fund's average daily net assets. For the year ended February 28, 1997,
administrative services fees earned by CFSI were as follows:
<TABLE>
<CAPTION>
FUND CO-ADMINISTRATION FEE
- ----------------------------------------- ---------------------
<S> <C>
Cash Reserve $ 436,938
New York Tax Exempt 114,862
</TABLE>
Counsellors Securities Inc. ('CSI'), also a wholly owned subsidiary of
Warburg, serves as each Fund's distributor. No compensation is payable by the
Funds to CSI for distribution services.
3. 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 of New
York Tax Exempt Fund were designated as Series 2 Shares. Series 2 Shares ceased
being offered on June 9, 1995.
21
<PAGE>
<PAGE>
WARBURG PINCUS CASH RESERVE AND NEW YORK TAX EXEMPT FUNDS
NOTES TO FINANCIAL STATEMENTS (CONT'D)
February 28, 1997
- --------------------------------------------------------------------------------
3. CAPITAL SHARE TRANSACTIONS (CONT'D)
Transactions in shares of each Fund were as follows:
<TABLE>
<CAPTION>
NEW YORK TAX NEW YORK TAX
CASH RESERVE FUND EXEMPT FUND EXEMPT FUND
------------------------------- --------------------------- --------------
SERIES 2
COMMON SHARES COMMON SHARES SHARES
FOR THE YEAR ENDED FOR THE YEAR ENDED FOR THE PERIOD
FEBRUARY 28 OR 29, FEBRUARY 28 OR 29, MARCH 1, 1995
------------------------------- --------------------------- THROUGH JUNE
1997 1996 1997 1996 8, 1995
-------------- -------------- ------------ ------------ --------------
<S> <C> <C> <C> <C> <C>
Shares sold 2,207,941,180 1,883,249,027 375,730,772 300,237,798 14,586,422
Shares issued to shareholders
on
reinvestment of dividends 14,490,731 10,583,684 1,179,911 1,048,655 93,645
Shares redeemed (2,189,302,165) (1,913,436,052) (349,303,606) (281,813,622) (25,289,158)
-------------- -------------- ------------ ------------ --------------
Net increase (decrease) in
shares 33,129,746 (19,603,341) 27,607,077 19,472,831 (10,609,091)
-------------- -------------- ------------ ------------ --------------
-------------- -------------- ------------ ------------ --------------
</TABLE>
4. NET ASSETS
Net Assets at February 28, 1997, consisted of the following:
<TABLE>
<CAPTION>
CASH RESERVE FUND NEW YORK TAX EXEMPT FUND
----------------- ------------------------
<S> <C> <C>
Capital contributed, net $ 416,737,892 $124,203,952
Accumulated net realized loss from
security transactions (2,662) (13,126)
----------------- -----------
Net assets $ 416,735,230 $124,190,826
----------------- -----------
----------------- -----------
</TABLE>
5. CAPITAL LOSS CARRYOVER
At February 28, 1997, the Cash Reserve Fund and the New York Tax Exempt Fund
have capital loss carryovers of $2,733 and $13,126, respectively, to offset
possible future capital gains of each Fund. These carryovers expire as follows:
<TABLE>
<CAPTION>
FUND YEAR AMOUNT
- ---------------------------- ---- ------
<S> <C> <C>
Cash Reserve 2004 $ 507
2005 2,226
New York Tax Exempt 1997 4,822
1998 4,026
2000 4,089
2002 189
</TABLE>
22
<PAGE>
<PAGE>
WARBURG PINCUS CASH RESERVE AND NEW YORK TAX EXEMPT FUNDS
REPORT OF INDEPENDENT ACCOUNTANTS
- --------------------------------------------------------------------------------
To the Shareholders and Board of Directors of
WARBURG PINCUS CASH RESERVE AND NEW YORK TAX EXEMPT FUNDS:
We have audited the accompanying statements of net assets of Warburg Pincus Cash
Reserve Fund and Warburg Pincus New York Tax Exempt Fund as of February 28,
1997, and the related statements of operations for the year then ended, the
statements of changes in net assets for each of the two years in the period then
ended, and the financial highlights for each of the periods presented. These
financial statements and financial highlights are the responsibility of the
Funds' management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
February 28, 1997, by correspondence with the custodian and a broker. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Warburg Pincus Cash Reserve Fund and Warburg Pincus New York Tax Exempt Fund as
of February 28, 1997, and the results of their operations for the year then
ended, the changes in their net assets for each of the two years in the period
then ended, and the financial highlights for each of the periods presented, in
conformity with generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
2400 Eleven Penn Center
Philadelphia, Pennsylvania
April 4, 1997
23
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<PAGE>
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[LOGO]
P.O. Box 9030, Boston, MA 02205-9030
800-WARBURG (800-927-2874)
COUNSELLORS SECURITIES INC., DISTRIBUTOR WPMMF-2-0297
STATEMENT OF DIFFERENCES
------------------------
The division symbol shall be expressed as............................... [div]
The dagger symbol shall be expressed as................................. 'D'
