<PAGE>
<PAGE>
ANNUAL
REPORT
December 31, 1997
WARBURG PINCUS
CASH RESERVE FUND
-
WARBURG PINCUS
NEW YORK TAX EXEMPT 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.
[Logo]
<PAGE>
<PAGE>
From time to time, the Funds' investment adviser and co-administrator may waive
some fees and/or reimburse some expenses, without which performance would be
lower. Waivers and/or reimbursements are subject to change.
Performance data represent past performance and are not a guarantee of future
performance. The Funds' yield will fluctuate. Each Fund seeks to maintain a
constant net asset value of $1.00 per share; there can be no assurance that it
can do so on a continuing basis. An investment in each Fund is neither insured
nor guaranteed by the U.S. government. For Warburg Pincus New York Tax Exempt
Fund, a portion of income may be subject to state and city taxes or the federal
alternative minimum tax.
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 December 31, 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.
<PAGE>
<PAGE>
WARBURG PINCUS CASH RESERVE FUND
ANNUAL INVESTMENT ADVISER'S REPORT -- DECEMBER 31, 1997
- --------------------------------------------------------------------------------
Dear Shareholder: February 9, 1998
As 1997 began, the nation's economy was expanding at a strong annualized 4%
pace, and higher prices for goods and services were widely anticipated. The
Federal Reserve, increasingly concerned about future inflationary pressures,
raised short-term rates by 25 basis points on March 25 to 5.50%, and its action
appears to have achieved the desired results. The economy slowed slightly to a
3.1% pace in the third quarter while inflation fell to its lowest level in a
decade. As the year came to an end, the financial crisis among Asian economies
made it all the more unlikely that the Fed would raise interest rates over the
near term, and bonds continued to rally.
The annualized current yield for Warburg Pincus Cash Reserve Fund (the
'Fund') for the seven-day period ended December 31, 1997, was 5.26% (5.05%
without waivers and/or reimbursements), up from 5.03% for the period ended
December 31, 1996. Net assets increased to $472.7 million, up from $451.6
million 12 months ago. The Fund's average weighted maturity on December 31,
1997, was 51.40 days.
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.
<TABLE>
<S> <C>
Eugene L. Podsiadlo PNC Institutional Management Corp.
President Sub-Advisor Investor
Warburg Pincus Funds
</TABLE>
1
<PAGE>
<PAGE>
WARBURG PINCUS NEW YORK TAX EXEMPT FUND
ANNUAL INVESTMENT ADVISER'S REPORT -- DECEMBER 31, 1997
- --------------------------------------------------------------------------------
Dear Shareholder: February 9, 1998
New York state's debt was upgraded in August of 1997 by Standard & Poor's, to
A from A-, reflecting the state's improved economic climate and financial
position. The fiscal 1998 budget is firmly balanced as a result of relatively
conservative revenue and expenditure projections. Currently, the state
anticipates a $530 million surplus at the end of its fiscal year in March.
Fiscally, the state is in a better position than it has been in years; however,
several credit issues loom. A highly politicized budget process, tax reductions
that still require offsetting expenditure cuts, and an increasing dependence on
the financial-services sector are factors that prevent complacency, particularly
as New York enters an election year.
New York City, meanwhile, has continued to benefit from Wall Street's
strength. First-quarter fiscal 1998 tax revenues were $244 million above
expectations, while the public-assistance caseload dropped by almost 5%. The
City's improved cash position is reflected in its reduced need for short-term
borrowing. Like the state, the City has made substantial strides, but continues
to face formidable budgetary hurdles in both its operating and capital plans.
Tax-free money-market assets continued to hit record highs, increasing 23%
for the year ended December 31, 1997. As the second-fastest-growing money-market
category, tax-free money-market-fund assets peaked at $162.5 billion in
December. Net assets for Warburg Pincus New York Tax Exempt Fund (the 'Fund')
grew by more than 30% during the year to $151.2 million.
The Fund took the opportunity to lock in relatively high rates early in 1997
by adding a variety of attractive notes and commercial paper, in anticipation of
seasonal declines often experienced in the first quarter of a new year. The
average weighted maturity of the Fund was maintained in the 40- to 50-day range
during the latter part of the year, remaining in close proximity to the industry
average of 50 days (the Fund's average weighted maturity was 43.41 days as of
December 31, 1997). The Fund's seven-day annualized yield was 3.37% (3.30%
without waivers and/or reimbursements) on December 31.
The Fund seeks to provide investors with a high level of current income that
is exempt from federal, New York state and New York City personal income taxes
as is consistent with the preservation of capital and liquidity. We appreciate
your continued support and investment in the Fund.
<TABLE>
<S> <C>
Eugene L. Podsiadlo PNC Institutional Management Corp.
President Sub-Advisor Investor
Warburg Pincus Funds
</TABLE>
2
<PAGE>
<PAGE>
WARBURG PINCUS CASH RESERVE FUND
STATEMENT OF NET ASSETS
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
RATINGS=
PAR (MOODY'S/S&P) MATURITY RATE% VALUE
- ----------- ------------- ---------- ----- ------------
<C> <S> <C> <C> <C> <C>
CERTIFICATES OF DEPOSIT (26.4%)
Bank Notes (2.1%)
$ 5,000,000 First National Bank of Boston (A-1, P-1) 01/09/98 5.710 $ 5,000,000
5,000,000 First National Bank of Boston (A-1, P-1) 04/06/98 5.700 5,000,000
------------
10,000,000
------------
Banks (5.9%)
10,000,000 Bank of Nova Scotia (A-1+, P-1) 02/19/98 5.750 10,000,000
5,000,000 Bank of Tokyo-Mitsubishi (A-1+, P-1) 01/16/98 5.810 5,000,018
5,000,000 First National Bank of Boston (A-1, P-1) 02/17/98 5.750 5,000,000
5,000,000 First National Bank of Boston (A-1, P-1) 04/27/98 5.800 5,000,000
3,000,000 Morgan Guaranty Trust Co. of New
York (A-1+, P-1) 06/22/98 5.965 2,999,522
------------
27,999,540
------------
Domestic Certificates of Deposit (4.6%)
2,000,000 Bankers Trust Co. (A-1, P-1) 06/19/98 5.980 1,999,824
5,000,000 Bankers Trust Co. (A-1, P-1) 07/07/98 6.000 5,001,667
5,000,000 Bankers Trust Co. (A-1, P-1) 07/14/98 5.900 4,997,528
5,000,000 Wilmington Trust Co. (A-1, P-1) 01/12/98 5.720 5,000,000
5,000,000 Wilmington Trust Co. (A-1, P-1) 05/18/98 5.830 5,000,000
------------
21,999,019
------------
National Commercial Banks (3.2%)
5,000,000 Australia & New Zealand Banking
Group (A-1+, P-1) 02/19/98 5.645 4,998,675
10,000,000 Swiss Bank Corp. (A-1+, P-1) 02/17/98 5.740 9,999,976
------------
14,998,651
------------
Yankee Dollar Certificates of Deposit (10.6%)
10,000,000 Bank of Montreal (A-1+, P-1) 02/18/98 5.760 10,000,132
5,000,000 Banque Nationale de Paris (A-1, P-1) 02/13/98 5.720 5,000,083
5,000,000 Banque Nationale de Paris (A-1, P-1) 02/18/98 5.770 5,000,066
5,000,000 Banque Nationale de Paris (A-1, P-1) 03/16/98 5.730 5,000,704
5,000,000 Royal Bank of Canada (A-1+, P-1) 04/01/98 6.010 5,000,840
5,000,000 Royal Bank of Canada (A-1+, P-1) 06/25/98 5.940 4,998,624
5,000,000 Societe Generale (A-1+, P-1) 01/30/98 5.800 4,999,675
5,000,000 Societe Generale (A-1+, P-1) 03/03/98 5.850 4,999,573
5,000,000 Swedbank (A-2, P-1) 01/27/98 5.710 5,000,036
------------
49,999,733
------------
TOTAL CERTIFICATES OF DEPOSIT
(Cost $124,996,943) 124,996,943
------------
</TABLE>
See Accompanying Notes to Financial Statements.
3
<PAGE>
<PAGE>
WARBURG PINCUS CASH RESERVE FUND
STATEMENT OF NET ASSETS (CONT'D)
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
RATINGS=
PAR (MOODY'S/S&P) MATURITY RATE% VALUE
- ----------- ------------- ---------- ----- ------------
COMMERCIAL PAPER (61.9%)
<C> <S> <C> <C> <C> <C>
Agricultural Services (1.5%)
$ 7,000,000 Golden Peanut Co. (A-1+, P-1) 02/02/98 5.500 $ 6,965,778
------------
Asset Backed Securities (15.2%)
7,500,000 Beta Finance Inc. (A-1+, P-1) 03/06/98 5.590 7,425,467
5,000,000 Beta Finance Inc. (A-1+, P-1) 03/12/98 5.580 4,945,750
5,000,000 CC (USA) Inc. (A-1+, P-1) 01/08/98 5.520 4,994,633
5,000,000 CC (USA) Inc. (A-1+, P-1) 02/12/98 5.700 4,966,750
5,000,000 CC (USA) Inc. (A-1+, P-1) 03/09/98 5.570 4,948,168
5,000,000 CC (USA) Inc. (A-1+, P-1) 03/20/98 5.680 4,938,467
5,000,000 Corporate Receivables Corp. (A-1, P-1) 01/16/98 5.520 4,988,500
5,000,000 Corporate Receivables Corp. (A-1, P-1) 03/10/98 5.750 4,945,694
5,000,000 Corporate Receivables Corp. (A-1, P-1) 03/11/98 5.680 4,945,567
10,000,000 CXC, Inc. (A-1+, P-1) 02/10/98 5.820 9,935,333
5,000,000 Dakota Certificates Program (A-1+, P-1) 02/04/98 5.800 4,972,611
5,000,000 Dakota Certificates Program (A-1+, P-1) 02/05/98 5.700 4,972,292
5,000,000 Windmill Funding (A-1+, P-1) 02/25/98 5.850 4,955,312
------------
71,934,544
------------
Banks (7.9%)
15,000,000 AB Spintab Swedbank (A-2, P-1) 04/15/98 5.740 14,751,267
5,000,000 Banque Nationale de Paris Canada (A-1, P-1) 03/17/98 5.730 4,940,312
5,000,000 Svenska Handelsbanken Inc. (A-1, P-1) 01/12/98 5.520 4,991,567
12,975,000 Swedish Export Credit Corp. (A-1+, P-1) 01/07/98 5.520 12,963,063
------------
37,646,209
------------
Conglomerates (2.1%)
10,000,000 BTR Dunlop Finance Inc (A-1, P-1) 01/29/98 5.740 9,955,356
------------
Converted Paper & Paperboard (2.5%)
7,000,000 Rexam PLC (A-1, P-1) 01/23/98 5.700 6,975,617
5,000,000 Rexam PLC (A-1, P-1) 02/02/98 5.610 4,975,067
------------
11,950,684
------------
Finance Lessors (2.6%)
12,284,000 General Electric Capital Corp. (A-1+, P-1) 02/13/98 5.600 12,201,834
------------
Metal Mining (2.2%)
10,400,000 BHP Finance (USA) Inc. (A-1, P-1) 02/24/98 5.770 10,309,988
------------
</TABLE>
See Accompanying Notes to Financial Statements.
4
<PAGE>
<PAGE>
WARBURG PINCUS CASH RESERVE FUND
STATEMENT OF NET ASSETS (CONT'D)
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
RATINGS=
PAR (MOODY'S/S&P) MATURITY RATE% VALUE
- ----------- ------------- ---------- ----- ------------
COMMERCIAL PAPER (CONT'D)
<C> <S> <C> <C> <C> <C>
Miscellaneous Business Credit Institutions (3.1%)
$ 5,000,000 Unifunding Inc. (A-1, P-1) 02/02/98 5.550 $ 4,975,333
10,000,000 Unifunding Inc. (A-1, P-1) 02/12/98 5.680 9,933,733
------------
14,909,066
------------
Motor Vehicles & Car Bodies (5.3%)
10,000,000 Daimler-Benz North America Corp. (A-1, P-1) 01/20/98 5.530 9,970,814
5,000,000 Daimler-Benz North America Corp. (A-1, P-1) 03/19/98 5.620 4,939,897
5,000,000 Daimler-Benz North America Corp. (A-1, P-1) 03/26/98 5.560 4,935,133
5,000,000 Ford Credit Europe PLC (A-1, P-1) 01/16/98 5.520 4,988,500
------------
24,834,344
------------
Retail -- Department Stores (2.1%)
10,000,000 St. Michael Finance Ltd. (A-1+, P-1) 01/13/98 5.520 9,981,600
------------
Security Brokers & Dealers (8.4%)
5,000,000 Bear Stearns Companies, Inc. (A-1, P-1) 02/10/98 5.520 4,969,333
5,000,000 Bear Stearns Companies, Inc. (A-1, P-1) 02/26/98 5.590 4,956,522
5,000,000 Bear Stearns Companies, Inc. (A-1, P-1) 03/12/98 5.700 4,944,583
5,000,000 Goldman Sachs Group L.P. (A-1+, P-1) 03/09/98 5.720 4,946,772
5,000,000 Goldman Sachs Group L.P. (A-1+, P-1) 03/10/98 5.700 4,946,167
5,000,000 Merrill Lynch & Co. Canandian DCP (A-1+, P-1) 02/27/98 5.530 4,956,221
5,000,000 Merrill Lynch & Co. Canandian DCP (A-1+, P-1) 03/17/98 5.740 4,940,208
5,000,000 Morgan Stanley Group, Inc. (A-1, P-1) 03/23/98 5.720 4,935,650
------------
39,595,456
------------
Services -- Auto Rent & Lease (1.1%)
5,000,000 PHH Corp. (A-1, P-1) 01/23/98 5.550 4,983,042
------------
Short-Term Business Credit Institutions (3.1%)
5,000,000 Block Financial Corp. (A-1, P-1) 01/22/98 5.520 4,983,900
10,000,000 Penney (J.C.) Funding Corp. (A-1, P-1)# 02/09/98 5.580 9,939,550
------------
14,923,450
------------
Telecommunications (1.7%)
8,000,000 France Telecom (A-1+, P-1) 03/13/98 5.720 7,909,751
------------
U.S. Treasury Bills (3.1%)
9,600,000 Dun & Bradstreet Corp. (A-1, NR) 03/05/98 5.730 9,503,736
5,000,000 Dun & Bradstreet Corp. (A-1, NR) 03/24/98 5.720 4,934,856
------------
14,438,592
------------
TOTAL COMMERCIAL PAPER
(Cost $292,539,694) 292,539,694
------------
</TABLE>
See Accompanying Notes to Financial Statements.
5
<PAGE>
<PAGE>
WARBURG PINCUS CASH RESERVE FUND
STATEMENT OF NET ASSETS (CONT'D)
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
RATINGS=
PAR (MOODY'S/S&P) MATURITY RATE% VALUE
- ----------- ------------- ---------- ----- ------------
VARIABLE RATE OBLIGATIONS (10.8%)
<C> <S> <C> <C> <C> <C>
Asset Backed Securities (4.2%)
$ 5,000,000 SMM Trust 1996-R + (A-1+, P-1) 01/15/98 5.961 $ 5,000,000
15,100,000 SMM Trust 1997-X + (A-1+, P-1) 01/12/98 6.000 15,100,000
------------
20,100,000
------------
Domestic Certificates of Deposit (1.7%)
8,000,000 Bankers Trust Co. + (A-1, P-1) 01/01/98 5.700 7,999,146
------------
Personal Credit Institutions (1.1%)
5,000,000 Associates Corp. of North America + (A-1+, P-1) 01/01/98 5.620 4,999,404
------------
Repurchase Agreements (1.7%)
8,000,000 Dean Witter, Discover & Co. + (A-1, P-1) 01/21/98 6.001 8,003,348
------------
Security Brokers & Dealers (2.1%)
5,000,000 Bear Stearns Companies, Inc. + (A-1, P-1) 02/17/98 6.225 5,007,483
5,000,000 Morgan Stanley Group, Inc. + (A-1+, P-1) 01/07/98 5.960 5,000,000
------------
10,007,483
------------
TOTAL VARIABLE RATE OBLIGATIONS
(Cost $51,109,381) 51,109,381
------------
REPURCHASE AGREEMENTS (2.2%)
10,200,000 Repurchase agreement with Morgan
Stanley & Co., dated 12/31/97 at
6.70% to be repurchased on
01/02/98 at $10,203,797.
(Collateralized by U.S. Treasury
Notes ranging in par values from
$10,000 - $2,426,000,
5.625% - 5.75%,
02/15/98 - 02/15/04. Market value
of collateral is $10,410,919.)
(Cost $10,200,000) 01/02/98 6.700 10,200,000
------------
TIME DEPOSITS (1.1%)
5,000,000 Canadian Imperial Bank of Commerce
(Cost $4,999,354) (A-1+, P-1) 03/17/98 5.940 4,999,354
------------
TOTAL INVESTMENTS AT VALUE (102.4%) (Cost $483,845,372*) 483,845,372
------------
LIABILITES IN EXCESS OF OTHER ASSETS (2.4%) (11,170,811)
------------
NET ASSETS (100.0%) (applicable to 472,695,425 shares) $472,674,561
------------
------------
NET ASSET VALUE, offering and redemption price
per share ($472,674,561 [div] 472,695,425) $ 1.00
------------
------------
INVESTMENT ABBREVIATIONS
NR = Not Rated
</TABLE>
- --------------------------------------------------------------------------------
= Credit ratings given by Moody's Investors Services, Inc. and Standard & Poor's
Ratings Group are unaudited.
# Denotes long-term debt ratings of parent company.
+ The interest rate shown is as of December 31, 1997 and the maturity date is
the next interest readjustment date.
* Also cost for federal income tax purposes.
See Accompanying Notes to Financial Statements.
6
<PAGE>
<PAGE>
WARBURG PINCUS CASH RESERVE FUND
MATURITY SCHEDULE OF PORTFOLIO
December 31, 1997 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MATURITY SCHEDULE
(DAYS) PAR PERCENTAGE OF PORTFOLIO
- ----------------- ------------ -----------------------
(CUMULATIVE)
<S> <C> <C> <C>
1-7 $ 41,175,000 8.5% 8.5%
8-14 45,100,000 9.3 17.8
15-30 75,000,000 15.4 33.2
31-60 159,684,000 32.9 66.1
61-90 110,100,000 22.7 88.8
91-120 30,000,000 6.2 95.0
121-150 5,000,000 1.0 96.0
Over 150 20,000,000 4.0 100.0
------------ ---
$486,059,000 100.0%
------------ ---
------------ ---
</TABLE>
Average Weighted Maturity -- 51.40 days
See Accompanying Notes to Financial Statements.
7
<PAGE>
<PAGE>
WARBURG PINCUS NEW YORK TAX EXEMPT FUND
STATEMENT OF NET ASSETS
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
RATINGS=
PAR (MOODY'S/S&P) MATURITY RATE% VALUE
--------- ------------ -------- ---- -----
NEW YORK (96.5%)
<C> <S> <C> <C> <C> <C>
$2,070,000 Auburn Industrial Development
Authority RB Series 1997 (Fat
Tire, LIC Project) (Key Corp.
Bank N.A. LOC) VRDN (NR, NR) 01/07/98 4.460 $ 2,070,000
1,000,000 Caledonia-Mumford Central School
District BANS, GO (NR, NR) 06/18/98 4.250 1,001,557
2,250,000 Erie County, New York IDA (Marine
Midland LOC) VRDN (A-1, NR) 01/07/98 3.750 2,250,000
2,950,000 Galway, New York, Central School
District BANS, GO (NR, NR) 06/18/98 4.125 2,953,584
4,400,000 Horseheads, New York Central
School District BANS, GO (NR, NR) 03/24/98 4.000 4,402,937
1,000,000 Monroe County IDA (Ajl
Manufacturing, Inc. Facility)
(Marine Midland LOC) VRDN (A-1, NR) 01/07/98 3.750 1,000,000
1,000,000 Monroe County IDA Electronic
Navigational Industries Inc.
Facility City Series 1984 RB (NR, NR) 07/01/98 3.780 1,000,000
100,000 Montgomery Town IDA, RB
(Canadian, Imperial Bank LOC)
VRDN+ (A-1+, NR) 01/15/98 3.800 100,000
1,500,000 N.Y. State Energy Research &
Development Adjustable Rate
Pollution Control RB (Long
Island Lighting Co. Project)
(Deutsche Bank LOC) (NR, VMIG-1) 03/01/98 3.600 1,500,000
1,900,000 N.Y. State Energy Research &
Development Authority Pollution
Control RB (Rochester Gas and
Electric Corp.) 1997 Series C
(MBIA Insurance LOC) (A-1+, VMIG-1) 01/07/98 3.550 1,900,000
4,000,000 New Paltz, New York, Central
School District BANS, GO (NR, NR) 06/15/98 4.125 4,004,090
3,800,000 New York City GO 1994 Series H-3 (A-1+, VMIG-1) 03/23/98 3.750 3,800,000
5,500,000 New York City GO 1994 Series H-3
(State Street Bank & CO LOC) (A-1+, VMIG-1) 02/24/98 3.750 5,500,000
2,000,000 New York City GO 1995 Series B
(Chemical Bank LOC) (A-1, VMIG-1) 02/26/98 3.800 2,000,000
3,100,000 New York City GO 1995 Series B-9
(Chemical Bank LOC) (A-1, VMIG-1) 01/29/98 3.750 3,100,000
4,200,000 New York City GO 1995 Series F-3
DN (Morgan Guaranty LOC) (A-1, VMIG-1) 01/07/98 3.650 4,200,000
200,000 New York City GO 1995 Series F-7
(Union Bank of Switzerland LOC)
VRDN (A-1+, P-1) 01/07/98 3.600 200,000
4,100,000 New York City GO (Bayerische
Landesbank LOC) VRDN (A-1+, VMIG-1) 01/07/98 3.600 4,100,000
500,000 New York City GO (Bayerische
Landesbank LOC) VRDN (A-1+, VMIG-1) 01/07/98 3.600 500,000
1,400,000 New York City GO (Morgan Guaranty
LOC) (A-1+, VMIG-1) 01/07/98 3.650 1,400,000
600,000 New York City GO Series B10
(Union Bank of Switzerland LOC)
VRDN (A-1+, VMIG-1) 01/07/98 3.500 600,000
1,500,000 New York City GO Series H-3 (J.P.
Morgan LOC) (A-1+, VMIG-1) 02/20/98 3.800 1,500,000
2,000,000 New York City G0 Series H-3
(State Street Bank & Co. LOC) (A-1, VMIG-1) 02/17/98 3.800 2,000,000
2,100,000 New York City GO Series H-3 (FSA
Insurance) (State Street Bank &
CO LOC) (A-1+, P-1) 03/20/98 3.800 2,100,000
5,600,000 New York City GO Trust Receipts
RANS Series 1997 (Bank of New
York LOC) VRDN (NR, VMIG-1) 01/01/98 4.150 5,600,000
</TABLE>
See Accompanying Notes to Financial Statements.
8<PAGE>
<PAGE>
WARBURG PINCUS NEW YORK TAX EXEMPT FUND
STATEMENT OF NET ASSETS (CONT'D)
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
RATINGS=
PAR (MOODY'S/S&P) MATURITY RATE% VALUE
- ---------- -------------- ---------- ----- ------------
<C> <S> <C> <C> <C> <C>
NEW YORK (CONT'D)
$ 800,000 New York City Health & Hospitals
Health System Bonds, RB 1997
Series A (Morgan Guaranty LOC)
VRDN (A-1+, VMIG-1) 01/07/98 3.500 $ 800,000
3,700,000 New York City Housing Development
Corp. (Bayerische Landesbank
Girozentrale LOC) (A-1+, NR) 01/07/98 3.600 3,700,000
5,000,000 New York City Housing Development
Corp. Multi-Family Rental
Housing RB (Monterey) 1997
Series A (FNMA Coll) VRDN (A-1+, NR) 01/07/98 3.550 5,000,000
3,000,000 New York City Housing Development
Corp. Multi-Family Rental RB
(Columbus Green) 1997 Series A
(FNMA LOC) VRDN (A-1+, NR) 01/07/98 3.550 3,000,000
1,600,000 New York City IDA RB (Field Hotel
Project) (JFK Airport) (Banque
Indosuez LOC) VRDN+ (A-1, VMIG-1) 01/07/98 3.650 1,600,000
400,000 New York City IDA RB (Nippon
Cargo Airlines Company) (Ind.
Bank of Japan LOC) VRDN+ (A-1, NR) 01/01/98 4.250 400,000
3,700,000 New York City IDA RB, Laguardia
Airport (Banque Indosuez LOC)
VRDN+ (A-1, NR) 01/07/98 3.650 3,700,000
1,100,000 New York City Municipal Water
Finance Authority RB Series
1994G (A-1+, VMIG-1) 01/01/98 4.300 1,100,000
2,900,000 New York City Municipal Water
Finance Authority Series 5-B
(Westdeutsche Landesbank
Gironzentrale LOC) (A-1+, P-1) 02/26/98 3.750 2,900,000
1,300,000 New York City, New York GO Series
B (A-1+, VMIG-1) 01/01/98 4.150 1,300,000
1,447,000 New York City Trust for Cultural
Resources RB (Carnegie Hall)
(West Deutschelands BK LOC)
VRDN+ (A-1, VMIG-1) 01/07/98 3.650 1,447,000
2,100,000 New York Job Development
Authority Daily Demand Special
Purpose Bonds (Sumitomo Bank
LOC) (A-1, VMIG-1) 01/07/98 4.600 2,100,000
3,000,000 New York Local Government
Assistance Corp. RB Series
1994-B (LOC Credit Suisse) VRDN+ (A-1+, VMIG-1) 01/07/98 3.500 3,000,000
1,700,000 New York Municipal Assistance
Corp. RB (Public Benefit Corp.
of State of N.Y.) (Bayerische
Landesbank Girozentrale LOC)
VRDN (A-1+, VMIG-1) 01/07/98 3.550 1,700,000
3,000,000 New York State Dormitory
Authority RB (Beverwyck Inc.)
(Banque Paribas LOC) (A-1, VMIG-1) 01/07/98 3.650 3,000,000
2,000,000 New York State Energy Research &
Development Authority Electric
Facilities RB 1995 Series A
(Long Island Lighting Company
Project) (Union Bank of
Switzerland LOC) VRDN (NR, VMIG-1) 01/07/98 3.800 2,000,000
2,600,000 New York State Energy Research &
Development Authority Pollution
Control RB (Niagara Mohawk
Power) Series A VRDN (A-1+, NR) 01/01/98 4.150 2,600,000
600,000 New York State Energy Research &
Development Authority Pollution
Control Revenue Refunding Bonds
Series 1985B (Central Hudson Gas
& Electric) (Deutsche Bank)
VRDN+ (A-1+, VMIG-1) 01/07/98 3.850 600,000
2,200,000 New York State Energy Research &
Development Electric Facilities
RB 1993 Series B (Long Island
Lighting Co. Project) (Toronto
Dominion LOC) VRDN (NR, VMIG-1) 01/07/98 3.850 2,200,000
</TABLE>
See Accompanying Notes to Financial Statements.
9
<PAGE>
<PAGE>
WARBURG PINCUS NEW YORK TAX EXEMPT FUND
STATEMENT OF NET ASSETS (CONT'D)
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
RATINGS=
PAR (MOODY'S/S&P) MATURITY RATE% VALUE
- ---------- -------------- ---------- ----- ------------
NEW YORK (CONT'D)
<C> <S> <C> <C> <C> <C>
$ 600,000 New York State Energy Research &
Develpoment Authority Pollution
Control Refunding RB (Orange &
Rockland Utilities Inc. Project)
1995 Series A (Deutsche Bank AG
LOC) VRDN (NR, P-1) 01/07/98 3.550 $ 600,000
5,000,000 New York State Energy Research &
Development Authority Pollution
Control RB New York State
Electric & Gas Series 1985-A
(LOC Morgan Guaranty)+ (A-1+, P-1) 03/15/98 3.650 5,000,000
2,500,000 New York State Energy Research &
Development Authority Pollution
Control RB (Deutsche Bank LOC)+ (NR, VMIG-1) 03/01/98 3.600 2,500,000
4,200,000 New York State Environmental
Quality GO Series 1997 A
(Bayerische Landesbank
Girozentrale LOC) (A-1+, VMIG-1) 01/20/98 3.800 4,200,000
3,000,000 New York State Environmental
Quality GO Series 1997 A
(Bayerische Landesbank
Girozentrale LOC) (A-1+, VMIG-1) 03/13/98 3.800 3,000,000
1,400,000 New York State Housing Finance
Agency RB, Series A (Mount Sinai
School of Medicine) (Chase
Manhattan Bank LOC) VRDN+ (NR, VMIG-1) 01/07/98 3.900 1,400,000
2,000,000 New York State Housing Finance
Agency East 84th Street Housing
RB 1995 Series A (Fleet Bank
LOC) VRDN+ (NR, VMIG-1) 01/07/98 3.600 2,000,000
1,200,000 New York State Housing Finance
Agency Multi-family Mortgage RB
(AMBAC Insurance) VRDN+ (NR, VMIG-1) 01/07/98 3.600 1,200,000
2,100,000 New York State Housing Finance
Agency Union Square South
Housing RB 1996 Series A VRDN (NR, VMIG-1) 01/07/98 3.550 2,100,000
4,000,000 New York State Housing Finance
Authority Revenue Bonds Tribeca
Park Housing Authority Series A
(Bayerische Landesbank
Girozentrale LOC) VRDN (NR, VMIG-1) 01/07/98 3.550 4,000,000
465,000 New York State Job Development
Authority Special Purpose Bonds
Series 1984 G1 to G33 (Sumitomo
Bank LOC) VRDN+ (A-1+, VMIG-1) 01/01/98 4.300 465,000
200,000 New York State Job Development
Authority State Guaranteed
Variable Rate Special Purpose
Bonds Series 1984c (Sumitomo
Bank LOC) VRDN+ (A-1, VMIG-1) 01/01/98 4.300 200,000
90,000 New York State Job Development
Authority State Guaranteed
Variable Rate Special Purpose
Bonds Series 1984f (Sumitomo
Bank LOC) VRDN+ (A-1+, VMIG-1) 01/01/98 4.300 90,000
570,000 New York State Job Development
Authority State Guaranteed
Variable Rate Special Purpose
Bonds Series 1984h (Sumitomo
Bank LOC) VRDN+ (A-1+, VMIG-1) 01/01/98 4.300 570,000
2,000,000 New York State Power Authority
(Citibank LOC) (A-1, P-1) 03/18/98 3.800 2,000,000
2,000,000 New York State Power Authority RB (A-1, VMIG-1) 03/01/98 3.750 2,000,000
4,000,000 New York State Series U (A-1+, P-1) 01/21/98 3.700 4,000,000
1,560,000 Penfield NY BANS, GO (NR, NR) 12/23/98 4.125 1,564,017
2,000,000 Smithtown New York Central School
District TANS, GO (NR, NR) 06/29/98 4.100 2,001,872
</TABLE>
See Accompanying Notes to Financial Statements.
10
<PAGE>
<PAGE>
WARBURG PINCUS NEW YORK TAX EXEMPT FUND
STATEMENT OF NET ASSETS (CONT'D)
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
RATINGS=
PAR (MOODY'S/S&P) MATURITY RATE% VALUE
- ---------- -------------- ---------- ----- ------------
NEW YORK (CONT'D)
<C> <S> <C> <C> <C> <C>
$ 535,000 State of New York Power Authority
Adjustable Tender Notes (A-1, VMIG-1) 03/01/98 3.750 $ 535,000
1,700,000 Town of Babylon IDA (J. D'addario
& Company, Inc Proj.) Series
1994 (National Westminster LOC)
VRDN+ (NR, VMIG-1) 01/07/98 3.700 1,700,000
2,300,000 Triborough Bridge & Tunnel
Authority RB,
(FGIC Insurance) VRDN (A-1+, VMIG-1) 01/07/98 3.550 2,300,000
1,576,000 Williamson, Town Of, New York
BANS, GO (NR, NR) 12/23/98 4.250 1,581,918
------------
TOTAL NEW YORK (cost
$145,936,975) 145,936,975
------------
PUERTO RICO (2.6%)
3,300,000 Puerto Rico Government
Development Bank 85
(Credit Suisse LOC) VRDN+ (A-1+, VMIG-1) 01/07/98 3.350 3,300,000
400,000 Puerto Rico Highway &
Transportation Authority Series
1993x (Union Bank of Switzerland
LOC) VRDN (A-1+, VMIG-1) 01/07/98 3.350 400,000
200,000 Puerto Rico Industrial Medical
Health Education & Environmental
PCR (Anna G. Mendez Project)
(Bank of Tokyo Mitsubish LOC)
VRDN (A-1+, NR) 01/07/98 4.150 200,000
------------
TOTAL PUERTO RICO (cost
$3,900,000) 3,900,000
------------
149,836,975
------------
TOTAL INVESTMENTS AT VALUE (99.1%) (Cost $149,836,975*) 149,836,975
OTHER ASSETS IN EXCESS OF LIABILITIES (0.9%) 1,335,828
------------
NET ASSETS (100.0%) (applicable to 151,185,923 shares) $151,172,803
------------
------------
NET ASSET VALUE, offering and redemption price per share
($151,172,803 [div] 151,185,923) $1.00
------------
------------
</TABLE>
INVESTMENT ABBREVIATIONS
AMBAC = American Municipal Bond Assurance Corporation
BANS = Bond Anticipation Notes
FGIC = Financial Guaranty Insurance Company
FNMA Coll = Federal National Mortgage Association Collateral Agreement
FNMA LOC = Federal National Mortgage Association Letter of Credit
FSA = Financial Security Assurance Corporation
IDA = Industrial Development Agency
LOC = Letter of Credit
MB = Municipal Bond
MBIA = Municipal Bond Insurance Association
NR = Not Rated
RANS = Revenue Anticipation Notes
RB = Revenue Bond
TANS = Tax Anticipation Notes
VRDN = Variable Rate Demand Notes
- --------------------------------------------------------------------------------
= Credit ratings given by Moody's Investors Services, Inc. and Standard &
Poor's Ratings Group are unaudited.
+ The interest rate shown is the rate as of December 31, 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 cost for federal income tax purposes.
See Accompanying Notes to Financial Statements.
11
<PAGE>
<PAGE>
WARBURG PINCUS NEW YORK TAX EXEMPT FUND
MATURITY SCHEDULE OF PORTFOLIO
December 31, 1997 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MATURITY SCHEDULE
(DAYS) PAR PERCENTAGE OF PORTFOLIO
- ----------------- ------------ -----------------------------
(CUMULATIVE)
<S> <C> <C> <C>
1- 7 $ 83,592,000 55.8% 55.8%
8- 14 0 0.0% 55.8%
15- 30 11,400,000 7.6% 63.4%
31- 60 20,435,000 13.6% 77.0%
61- 90 20,300,000 13.6% 90.6%
91-120 0 0.0% 90.6%
121-150 0 0.0% 90.6%
Over 150 14,086,000 9.4% 100.0%
------------ ---
$149,813,000 100.0%
------------ ---
------------ ---
Average Weighted Maturity -- 43.41 days
</TABLE>
See Accompanying Notes to Financial Statements.
12
<PAGE>
<PAGE>
WARBURG PINCUS CASH RESERVE AND NEW YORK TAX EXEMPT FUNDS
STATEMENTS OF OPERATIONS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CASH RESERVE FUND NEW YORK TAX EXEMPT FUND
----------------------------- -----------------------------
FOR THE TEN FOR THE FOR THE TEN FOR THE
MONTHS ENDED YEAR ENDED MONTHS ENDED YEAR ENDED
DECEMBER 31, FEBRUARY 28, DECEMBER 31, FEBRUARY 28,
1997 1997 1997 1997
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
INTEREST INCOME: $22,737,262 $23,929,079 $4,321,247 $3,938,687
------------ ------------ ------------ ------------
EXPENSES:
Investment advisory 1,004,894 1,092,344 294,367 287,156
Sub-investment advisory and
administration 1,004,894 1,092,344 294,367 287,156
Administrative services 401,957 436,938 117,747 114,862
Custodian 61,889 86,557 17,647 23,235
Directors 7,500 20,000 7,500 20,000
Insurance 7,135 12,428 1,879 4,240
Professional services 33,584 54,568 26,008 48,740
Printing 14,487 15,911 7,961 2,367
Registration 35,908 55,945 12,276 12,947
Transfer agent 107,794 112,909 11,122 7,010
Miscellaneous 29,744 14,283 9,203 14,484
------------ ------------ ------------ ------------
2,709,786 2,994,227 800,077 822,197
Less fees waived (499,020) (591,070) (152,471) (190,450)
------------ ------------ ------------ ------------
Total expenses 2,210,766 2,403,157 647,606 631,747
------------ ------------ ------------ ------------
Net investment income 20,526,496 21,525,922 3,673,641 3,306,940
------------ ------------ ------------ ------------
NET REALIZED LOSS FROM INVESTMENTS:
Net realized loss from security
transactions (17,990) (2,226) 0 0
------------ ------------ ------------ ------------
Net increase in net assets
resulting from operations $20,508,506 $21,523,696 $3,673,641 $3,306,940
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
</TABLE>
See Accompanying Notes to Financial Statements.
13
<PAGE>
<PAGE>
WARBURG PINCUS CASH RESERVE AND NEW YORK TAX EXEMPT FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CASH RESERVE FUND NEW YORK TAX EXEMPT FUND
----------------------------------------------------- -----------------------------------------------
FOR THE TEN FOR THE FOR THE FOR THE TEN FOR THE FOR THE
MONTHS ENDED YEAR ENDED YEAR ENDED MONTHS ENDED YEAR ENDED YEAR ENDED
DECEMBER 31, FEBRUARY 28, FEBRUARY 29, DECEMBER 31, FEBRUARY 28, FEBRUARY 29,
1997 1997 1996 1997 1997 1996
--------------- --------------- --------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
FROM OPERATIONS:
Net investment
income $ 20,526,496 $ 21,525,922 $ 16,771,726 $ 3,673,641 $ 3,306,940 $ 2,899,499
Net realized loss
from security
transactions (17,990) (2,226) (507) 0 0 645
--------------- --------------- --------------- ------------- ------------- -------------
Net increase in
net assets
resulting from
operations 20,508,506 21,523,696 16,771,219 3,673,641 3,306,940 2,900,144
--------------- --------------- --------------- ------------- ------------- -------------
FROM DISTRIBUTIONS:
Dividends from net
investment income:
Common Shares (20,526,496) (21,525,922) (16,771,726) (3,673,641) (3,306,940) (2,810,063)
Series 2 Shares 0 0 0 0 0 (89,436)
--------------- --------------- --------------- ------------- ------------- -------------
Net decrease in net
assets from
distributions (20,526,496) (21,525,922) (16,771,726) (3,673,641) (3,306,940) (2,899,499)
--------------- --------------- --------------- ------------- ------------- -------------
FROM CAPITAL SHARE
TRANSACTIONS
(AT $1 PER SHARE):
Proceeds from sale
of shares 2,356,390,501 2,207,941,180 1,883,249,803 347,174,918 375,730,772 314,824,220
Reinvested dividends 13,364,994 14,490,731 10,583,684 1,663,509 1,179,911 1,142,300
Net asset value of
shares redeemed (2,313,798,174) (2,189,302,165) (1,913,436,052) (321,856,450) (349,303,606) (307,102,780)
--------------- --------------- --------------- ------------- ------------- -------------
Net increase
(decrease) in
net assets from
capital share
transactions 55,957,321 33,129,746 (19,602,565) 26,981,977 27,607,077 8,863,740
--------------- --------------- --------------- ------------- ------------- -------------
Net increase
(decrease) in
net assets 55,939,331 33,127,520 (19,603,072) 26,981,977 27,607,077 8,864,385
NET ASSETS:
Beginning of period 416,735,230 383,607,710 403,210,782 124,190,826 96,583,749 87,719,364
--------------- --------------- --------------- ------------- ------------- -------------
End of period $ 472,674,561 $ 416,735,230 $ 383,607,710 $151,172,803 $ 124,190,826 $ 96,583,749
--------------- --------------- --------------- ------------- ------------- -------------
--------------- --------------- --------------- ------------- ------------- -------------
</TABLE>
See Accompanying Notes to Financial Statements.
14
<PAGE>
<PAGE>
WARBURG PINCUS CASH RESERVE FUND
FINANCIAL HIGHLIGHTS
(For a Share of the Fund Outstanding Throughout Each Period)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE TEN FOR THE YEAR ENDED FEBRUARY 28 OR 29,
MONTHS ENDED ------------------------------------------------------
DECEMBER 31, 1997 1997 1996 1995 1994 1993
----------------- ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
----- ------ ------ ------ ------ ------
Income from
Investment
Operations:
Net Investment Income 0.0428 0.0492 0.0543 0.0426 0.0273 0.0322
Less Distributions:
Dividends from net
investment income (0.0428) (0.0492) (0.0543) (0.0426) (0.0273) (0.0322)
----- ------ ------ ------ ------ ------
NET ASSET VALUE, END OF
PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
----- ------ ------ ------ ------ ------
----- ------ ------ ------ ------ ------
Total Return 4.28%'D' 5.03% 5.57% 4.35% 2.76% 3.27%
RATIOS/SUPPLEMENTAL
DATA:
Net Assets, End of
Period (000s) $472,675 $416,735 $383,607 $403,211 $277,557 $287,723
Ratios to average daily
net assets:
Operating expenses .55%@* .55%@ .56%@ .55% .54% .50%
Net investment income 5.11%* 4.93% 5.43% 4.41% 2.73% 3.22%
Decrease reflected in
above operating
expense ratios due
to
waivers/reimbursements .12%* .14% .16% .19% .13% .17%
</TABLE>
- --------------------------------------------------------------------------------
@ Interest earned on uninvested cash balances is used to offset portions of the
transfer agent expense. These arrangements resulted in a reduction to the
Fund's expenses by .00%, .00% and .01% for the period ended December 31, 1997
and the years ended February 28 or 29, 1997 and 1996, respectively. The
operating expense ratio after reflecting these arrangements was .55%, .55% and
.55% for the period ended December 31, 1997 and the years ended February 28 or
29, 1997 and 1996, respectively.
* Annualized.
'D' Non annualized.
See Accompanying Notes to Financial Statements.
15
<PAGE>
<PAGE>
WARBURG PINCUS NEW YORK TAX EXEMPT FUND
FINANCIAL HIGHLIGHTS
(For a Share of the Fund Outstanding Throughout Each Period)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE TEN FOR THE YEAR ENDED FEBRUARY 28 OR 29,
MONTHS ENDED -------------------------------------------------------
DECEMBER 31, 1997 1997 1996 1995 1994 1993
----------------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING
OF
PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
------ ------- ------- ------- ------- -------
Income from Investment
Operations:
Net Investment Income 0.0261 0.0288 0.0326 0.0246 0.0175 0.0224
Less Distributions:
Dividends from Net
Investment Income (0.0261) (0.0288) (0.0326) (0.0246) (0.0175) (0.0224)
------ ------- ------- ------- ------- -------
NET ASSET VALUE, END OF
PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
------ ------- ------- ------- ------- -------
------ ------- ------- ------- ------- -------
Total Return 2.64%'D' 2.92% 3.31% 2.48% 1.77% 2.26%
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period
(000s) $151,173 $124,191 $96,584 $77,111 $65,984 $76,995
Ratios to average daily net
assets:
Operating expenses .55%@* .55%@ .56%@ .55% .54% .50%
Net investment income 3.12%* 2.88% 3.24% 2.46% 1.75% 2.23%
Decrease reflected in
above operating
expense ratios due to
waivers/reimbursements .12%* .17% .27% .27% .19% .28%
</TABLE>
- --------------------------------------------------------------------------------
@ Interest earned on uninvested cash balances is used to offset portions of the
transfer agent expense. These arrangements resulted in a reduction to the
Fund's expenses by .00%, .00% and .01% for the period ended December 31, 1997
and the years ended February 28 or 29, 1997 and 1996, respectively. The
operating expense ratio after reflecting these arrangements was .55%, .55% and
.55% for the period ended December 31, 1997 and the years ended February 28 or
29, 1997 and 1996, respectively.
* Annualized.
'D' Non annualized.
See Accompanying Notes to Financial Statements.
16
<PAGE>
<PAGE>
WARBURG PINCUS CASH RESERVE AND NEW YORK TAX EXEMPT FUNDS
NOTES TO FINANCIAL STATEMENTS
December 31, 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 issuers 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. Each Fund's investments are
valued under the amortized cost method, which involves valuing a portfolio
instrument at its cost initially and thereafter assuming a constant amortization
to maturity of any discount or premium, regardless of the impact of fluctuating
interest rates on the market value of the instrument.
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
investment companies under the Internal Revenue Code and make the requisite
17
<PAGE>
<PAGE>
WARBURG PINCUS CASH RESERVE AND NEW YORK TAX EXEMPT FUNDS
NOTES TO FINANCIAL STATEMENTS (CONT'D)
December 31, 1997
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES (CONT'D)
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
affect 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' Boards 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 their
transfer agent expense. Each Fund received credits or reimbursements as follows:
<TABLE>
<CAPTION>
FOR THE TEN
MONTH PERIOD FOR THE
ENDED YEAR ENDED
FUND DECEMBER 31, 1997 FEBRUARY 28, 1997
- ---------------------------------- ----------------- -----------------
<S> <C> <C>
Cash Reserve $18,435 $16,144
New York Tax Exempt 5,426 4,545
</TABLE>
2. INVESTMENT ADVISER AND SUB-ADVISER, CO-ADMINISTRATORS AND DISTRIBUTOR
Warburg Pincus Asset Management, Inc. ('Warburg'), which is indirectly
controlled by Warburg, Pincus & Co., 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. Investment advisory
fees and voluntary waivers were as follows:
<TABLE>
<CAPTION>
CASH RESERVE FUND NEW YORK TAX EXEMPT FUND
--------------------------------------- ---------------------------------------
FOR THE TEN FOR THE FOR THE TEN FOR THE
MONTHS ENDED YEAR ENDED MONTHS ENDED YEAR ENDED
DECEMBER 31, 1997 FEBRUARY 28, 1997 DECEMBER 31, 1997 FEBRUARY 28, 1997
----------------- ----------------- ----------------- -----------------
<S> <C> <C> <C> <C>
Gross Investment Advisory
Fee $ 1,004,894 $ 1,092,344 $ 294,367 $ 287,156
Waiver (192,234) (229,970) (58,818) (74,362)
-------- -------- ------- -------
Net Investment Advisory
Fee $ 812,660 $ 862,374 $ 235,549 $ 212,794
-------- -------- ------- -------
-------- -------- ------- -------
</TABLE>
18
<PAGE>
<PAGE>
WARBURG PINCUS CASH RESERVE AND NEW YORK TAX EXEMPT FUNDS
NOTES TO FINANCIAL STATEMENTS (CONT'D)
December 31, 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. Sub-investment advisory and administration fees and voluntary
waivers were as follows:
<TABLE>
<CAPTION>
CASH RESERVE FUND NEW YORK TAX EXEMPT FUND
--------------------------------------- ---------------------------------------
FOR THE TEN FOR THE FOR THE TEN FOR THE
MONTHS ENDED YEAR ENDED MONTHS ENDED YEAR ENDED
DECEMBER 31, 1997 FEBRUARY 28, 1997 DECEMBER 31, 1997 FEBRUARY 28, 1997
----------------- ----------------- ----------------- -----------------
<S> <C> <C> <C> <C>
Gross Sub-Advisory and
Administration Fee $ 1,004,894 $ 1,092,344 $ 294,367 $ 287,156
Waiver (288,351) (344,956) (88,227) (111,543)
-------- -------- ------- -------
Net Sub-Advisory and
Administration Fee $ 716,543 $ 747,388 $ 206,140 $ 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. Administrative services fees earned by
CFSI were as follows:
<TABLE>
<CAPTION>
CASH RESERVE FUND NEW YORK TAX EXEMPT FUND
--------------------------------------- ---------------------------------------
FOR THE TEN FOR THE FOR THE TEN FOR THE
MONTHS ENDED YEAR ENDED MONTHS ENDED YEAR ENDED
DECEMBER 31, 1997 FEBRUARY 28, 1997 DECEMBER 31, 1997 FEBRUARY 28, 1997
----------------- ----------------- ----------------- -----------------
<S> <C> <C> <C> <C>
Co-Administration Fee $ 401,957 $ 436,938 $ 117,747 $ 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 two billion shares are
designated Advisor Shares. Neither Fund currently offers Advisor Shares.
19
<PAGE>
<PAGE>
WARBURG PINCUS CASH RESERVE AND NEW YORK TAX EXEMPT FUNDS
NOTES TO FINANCIAL STATEMENTS (CONT'D)
December 31, 1997
- --------------------------------------------------------------------------------
3. CAPITAL SHARE TRANSACTIONS (CONT'D)
Transactions in shares of each Fund were as follows:
<TABLE>
<CAPTION>
CASH RESERVE FUND NEW YORK TAX EXEMPT FUND
--------------------------------------------------------- ---------------------------------------------------------
FOR THE TEN FOR THE FOR THE FOR THE TEN FOR THE FOR THE
MONTHS ENDED YEAR ENDED YEAR ENDED MONTHS ENDED YEAR ENDED YEAR ENDED
DECEMBER 31, 1997 FEBRUARY 28, 1997 FEBRUARY 29, 1996 DECEMBER 31, 1997 FEBRUARY 28, 1997 FEBRUARY 29, 1996
----------------- ----------------- ----------------- ----------------- ----------------- -----------------
<S> <C> <C> <C> <C> <C> <C>
Shares sold 2,356,390,501 2,207,941,180 1,883,249,027 347,174,918 375,730,772 300,237,798
Shares
issued to
shareholders
on
reinvestment
of
dividends 13,364,994 14,490,731 10,583,684 1,663,509 1,179,911 1,048,655
Shares
redeemed (2,313,798,174) (2,189,302,165) (1,913,436,052) (321,856,449) (349,303,606) (281,813,622)
----------------- ----------------- ----------------- ----------------- ----------------- -----------------
Net increase
(decrease)
in shares 55,957,321 33,129,746 (19,603,341) 26,981,978 27,607,077 19,472,831
----------------- ----------------- ----------------- ----------------- ----------------- -----------------
----------------- ----------------- ----------------- ----------------- ----------------- -----------------
</TABLE>
4. LIABILITIES
At December 31, 1997 the Funds had the following affiliated and investment
related liabilities:
<TABLE>
<CAPTION>
CASH RESERVE FUND NEW YORK TAX EXEMPT FUND
----------------- ------------------------
<S> <C> <C>
Dividends Payable $805,053 $227,141
Investment advisory fee payable 81,839 27,518
Administrative services fee payable 44,133 12,571
Payable for Fund shares redeemed 18,651,936 869,526
</TABLE>
5. NET ASSETS
At December 31, 1997, capital contributions and accumulated net realized loss
on security transactions have been adjusted for current period permanent
book/tax differences. The New York Tax Exempt Fund reclassified expired capital
loss carryover of $4,823 to capital contributions.
Net Assets at December 31, 1997, consisted of the following:
<TABLE>
<CAPTION>
CASH RESERVE FUND NEW YORK TAX EXEMPT FUND
----------------- ------------------------
<S> <C> <C>
Capital contributed, net $ 472,695,213 $151,181,106
Accumulated net realized loss from
security transactions (20,652) (8,303)
----------------- -----------
Net assets $ 472,674,561 $151,172,803
----------------- -----------
----------------- -----------
</TABLE>
20
<PAGE>
<PAGE>
WARBURG PINCUS CASH RESERVE AND NEW YORK TAX EXEMPT FUNDS
NOTES TO FINANCIAL STATEMENTS (CONT'D)
December 31, 1997
- --------------------------------------------------------------------------------
6. CAPITAL LOSS CARRYOVER
For the period ended December 31, 1997, the Cash Reserve Fund and the New
York Tax Exempt Fund have capital loss carryovers of $20,216 and $8,303,
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 $2,226
2005 17,990
New York Tax Exempt 1998 4,026
2000 4,089
2002 188
</TABLE>
21
<PAGE>
<PAGE>
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 (all funds collectively
referred to as the 'Warburg Pincus Money Market Funds'), as of December 31,
1997, and the related statements of operations, the related statements of
changes in net assets, and the financial highlights for each of the years (or
periods) presented. These financial statements and financial highlights are the
responsibility of the Warburg Pincus Money Market 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
December 31, 1997, by correspondence with the custodian and brokers. 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 each
of the Warburg Pincus Money Market Funds as of December 31, 1997, the results of
their operations, the changes in their net assets, and their financial
highlights for each of the years (or periods) presented, in conformity with
generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
2400 Eleven Penn Center
Philadelphia, Pennsylvania
February 9, 1998
22
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800-WARBURG (800-927-2874)
WWW.WARBURG.COM
COUNSELLORS SECURITIES INC., DISTRIBUTOR. WPMMF-2-1297
STATEMENT OF DIFFERENCES
------------------------
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