ANNUAL
REPORT
December 31, 1998
WARBURG PINCUS
CASH RESERVE FUND
o
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>
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' yields 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.
The views of the funds' management are as of the date of the letters and
portfolio holdings described in this document are as of December 31, 1998; these
views and portfolio holdings may have changed subsequent to these dates. Nothing
in this document is a recommendation to purchase or sell securities.
<PAGE>
WARBURG PINCUS CASH RESERVE FUND
ANNUAL INVESTMENT ADVISER'S REPORT -- DECEMBER 31, 1998
- --------------------------------------------------------------------------------
February 5, 1999
Dear Shareholder:
The objective of the Warburg Pincus Cash Reserve Fund is high current income
consistent with liquidity and stability of principal.
The first half of 1998 was a period of relative calm for U.S. financial
markets, with equities and bonds both advancing, fueled by steady economic
growth and low inflation. The second half of the year saw considerable
volatility, however, particularly in the months of August and September, when
global financial markets went into a tailspin, buffeted by a host of concerns.
The extreme risk aversion that resulted weighed heavily on financial assets,
particularly those deemed risky, and only eased after a series of interest-rate
cuts by the Federal Reserve finally restored confidence.
The fund maintained an emphasis on high-quality securities throughout the 12
months, as is its general policy. As of December 31, the fund had net assets of
$430.0 million. Its annualized seven-day yield was 4.61% (without waivers and/or
reimbursements, the fund's annualized seven-day yield would have been 4.49%),
and its seven-day average weighted maturity was 41 days.
Going forward, the fund will continue to emphasize high-quality securities in
an effort to provide competitive returns without compromising safety and
stability of principal. We appreciate your continued support and investment in
the fund.
Eugene L. Podsiadlo BlackRock Institutional Management Corporation
President Sub-Investment Adviser
Warburg Pincus Funds
1
<PAGE>
WARBURG PINCUS NEW YORK TAX EXEMPT FUND
ANNUAL INVESTMENT ADVISER'S REPORT -- DECEMBER 31, 1998
- --------------------------------------------------------------------------------
February 5, 1999
Dear Shareholder:
The objective of the Warburg Pincus New York Tax-Exempt Fund is 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.
Fiscally, New York is in a better position than it has been in years. The
state reported a general fund operating surplus of $1.56 billion for fiscal-year
1998, which, combined with previous local government assistance corporation bond
issuance, eliminated the accumulated deficit and provided a surplus of $567
million. For the first eight months of fiscal-year 1999, the state's general
fund balance exceeded projections by almost $50 million. Current estimates for
the fiscal-year-end operating surplus range from $1 billion to $2 billion.
Credit concerns, however, remain on the horizon. A large and growing debt
burden, tax reductions that still require offsetting expenditure cuts, a heavy
dependence on the financial-services sector and a failure to build up reserves
during the economic expansion are factors that could negatively impact the state
should the nation enter into recession.
New York City's economy is projected to continue to expand, but at a slower
pace in 1999. Job creation has been at a record pace, and the state comptroller
is projecting a $1 billion budget surplus in fiscal 1998. Like the state, the
city has made substantial strides, but continues to face budgetary hurdles in
both its operating and capital plans. Out-year budget gaps, debt service and
significant capital needs are ongoing concerns that need to be addressed.
The fund had net assets of $174.7 million on December 31, 1998. Its seven-day
annualized yield as of that date was 3.08% (without waivers and/or
reimbursements, the fund's annualized seven-day yield would have been 2.84%).
Its seven-day average weighted maturity was 32 days.
The fund's assets experienced typical monthly cash flows through the reporting
period. October, however, was a particularly strong month for the fund, with
portfolio assets peaking at $180.7 million vs. $151.2 million on December 31,
1997. In terms of security selection, we emphasized high-quality municipal
securities throughout the 12 months. We placed particular emphasis on
variable-rate demand notes in the period from October through December, since we
found their yields to be very attractive vs. those on other types of securities.
Eugene L. Podsiadlo BlackRock Institutional Management Corporation
President Sub-Investment Adviser
Warburg Pincus Funds
A portion of income may be subject to state and city taxes or the federal
alternative minimum tax.
2
<PAGE>
WARBURG PINCUS CASH RESERVE FUND
STATEMENT OF NET ASSETS
December 31, 1998
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<TABLE>
<CAPTION>
RATINGS=
PAR (MOODY'S/S&P) MATURITY RATE% VALUE
--- ------------- -------- ----- -----
<C> <S> <C> <C> <C> <C>
CERTIFICATES OF DEPOSIT (5.8%)
Domestic Certificates of Deposit (5.8%)
$25,000,000 Fleet National Bank
(Cost $25,000,000) (A-1, P-1) 02/08/99 5.220 $ 25,000,000
------------
COMMERCIAL PAPER (39.5%)
Agricultural Services (2.1%)
9,000,000 Golden Peanut Co. (A-1+, P-1) 02/25/99 4.900 8,932,625
------------
Asset Backed Securities (5.8%)
25,000,000 Corporate Asset Funding, Inc. (A-1+, P-1) 01/12/99 5.150 24,960,660
------------
Business Credit Institutions (4.6%)
20,000,000 General Electric Capital Corp. (A-1+, P-1) 03/16/99 4.940 19,796,911
------------
Personal Credit Institutions (7.6%)
13,000,000 Associates Corp. of North America (A-1+, P-1) 02/25/99 4.950 12,901,687
20,000,000 Ford Motor Credit Corp. (A-1, P-1) 01/28/99 5.040 19,924,400
------------
32,826,087
------------
Pharmaceutical Preparations (3.0%)
13,000,000 Johnson & Johnson (A-1+, P-1) 04/20/99 4.750 12,813,035
------------
Plastic Syth. Resin/Rubber (4.6%)
20,000,000 Du Pont (E.I.) de Nemours (A-1+, P-1) 01/13/99 5.000 19,966,666
------------
Short-Term Business Credit Institutions (8.8%)
13,000,000 Penney (J.C.) Funding Corp. (A-1, P-1) 03/12/99 4.900 12,876,139
25,000,000 Sears Roebuck Acceptance Corp. (A-2, P-1) 01/27/99 5.100 24,907,917
------------
37,784,056
------------
Soaps & Detergent Cleaning (3.0%)
13,000,000 Procter & Gamble Co. (A-1+, P-1) 01/29/99 5.120 12,948,231
------------
TOTAL COMMERCIAL PAPER
(Cost $170,028,271) 170,028,271
------------
VARIABLE RATE OBLIGATIONS (16.3%)
Asset Backed Securities (1.2%)
5,000,000 SMM Trust 1998-B + (A-1+, P-1) 01/05/99 5.592 5,000,000
------------
Banks (9.3%)
20,000,000 Royal Bank of Canada + (A-1+, P-1) 01/14/99 5.424 19,990,181
20,000,000 U.S. National Bank of Oregon + (A-1, P-1) 01/20/99 5.487 20,000,000
------------
39,990,181
------------
Personal Credit Institutions (5.8%)
25,000,000 General Motors Acceptance Corp. + (A-1, P-1) 02/26/99 5.160 24,993,572
------------
TOTAL VARIABLE RATE OBLIGATIONS
(Cost $69,983,753) 69,983,753
------------
AGENCY OGLIBATIONS (31.2%)
40,000,000 Federal Home Loan Mortgage Corp. (A-1+, P-1) 02/19/99 5.000 39,727,778
20,000,000 Federal Home Loan Mortgage Corp. (A-1+, P-1) 04/09/99 4.850 19,735,944
75,000,000 Federal National Mortgage Association (A-1+, P-1) 02/04/99 4.960 74,648,667
------------
TOTAL AGENCY OBLIGATIONS
(Cost $134,112,389) 134,112,389
------------
</TABLE>
See Accompanying Notes to Financial Statements.
3
<PAGE>
WARBURG PINCUS CASH RESERVE FUND
STATEMENT OF NET ASSETS (CONT'D)
December 31, 1998
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<TABLE>
<CAPTION>
PAR VALUE
--- -----
<S> <C>
SHORT TERM INVESTMENT (9.2%)
$39,500,000 Repurchase agreement with Morgan
Stanley &
Co., dated 12/31/98 at 5.400% to be
repurchased on 01/04/99 at
$39,524,007.
(Collateralized by $37,145,000 U.S.
Treasury
Note at 8.000%, due 05/15/01 with a
market
value of $39,916,017 and $5,000 U.S.
Treasury Bill due 08/19/99 with a
market value
of $4,853.) (Cost $39,500,000) $ 39,500,000
------------
TOTAL INVESTMENTS AT VALUE (102.0%) (Cost $438,624,413*) 438,624,413
LIABILITIES IN EXCESS OF OTHER ASSETS (2.0%) (8,646,431)
------------
NET ASSETS (100.0%) (applicable to 430,126,853 shares) $429,977,982
============
NET ASSET VALUE, offering and redemption price per share
($429,977,982 divided by 430,126,853) $ 1.00
============
</TABLE>
INVESTMENT ABBREVIATIONS
NR = Not Rated
- --------------------------------------------------------------------------------
= Credit ratings given by Moody's Investor's Service, Inc. and Standard & Poor's
Ratings Services are unaudited.
+ The interest rate shown is as of December 31, 1998 and the maturity date is
the next interest readjustment date.
* Also cost for federal income tax purposes.
See Accompanying Notes to Financial Statements.
4
<PAGE>
WARBURG PINCUS CASH RESERVE FUND
MATURITY SCHEDULE OF PORTFOLIO
December 31, 1998 (Unaudited)
- --------------------------------------------------------------------------------
MATURITY SCHEDULE
(DAYS) PAR PERCENTAGE OF PORTFOLIO
----------------- ------------ ------------------------
(CUMULATIVE)
1-7 $ 44,500,000 10.1% 10.1%
8-14 65,000,000 14.8 24.9
15-30 78,000,000 17.7 42.6
31-60 187,000,000 42.4 85.0
61-90 33,000,000 7.5 92.5
91-120 33,000,000 7.5 100.0
121-150 0 0.0 100.0
Over 150 0 0.0 100.0
------------ -----
$440,500,000 100.0%
============ =====
Average Weighted Maturity -- 38.78 days
See Accompanying Notes to Financial Statements.
5
<PAGE>
WARBURG PINCUS NEW YORK TAX EXEMPT FUND
STATEMENT OF NET ASSETS
December 31, 1998
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<TABLE>
<CAPTION>
RATINGS=
PAR (MOODY'S/S&P) MATURITY RATE% VALUE
--- ------------- -------- ----- -----
<S> <C> <C> <C> <C> <C>
MUNICIPAL BONDS (99.8%)
NEW YORK (99.6%)
$1,055,000 Auburn IDA Revenue Bond Series 1997 (Fat
Tire, LLC Project) (Key Bank N.A. LOC)
VRDN+ (NR, NR) 01/07/99 4.200 $ 1,055,000
2,400,000 Babylon, New York IDA Resource Recovery
Series 1998 (Ogden Martin Project)
(Financial Service Assurance LOC) VRDN+ (A-1+, VMIG-1) 01/07/99 3.800 2,400,000
1,000,000 Chautauqua County IDA Series 1985 (The Red
Wing Co., Inc.) (Wachovia Bank of GA LOC)
VRDN+ (NR, NR) 01/07/99 3.500 1,000,000
1,740,000 Erie County, New York IDA VRDN+ (A-1, NR) 01/07/99 4.200 1,740,000
2,560,000 Kenmore -- Town of Tonawanda, New York
(Union Free School District) BAN (NR, NR) 05/06/99 4.125 2,563,165
2,330,000 Lancaster, IDA Revenue Bond (1997
Jiffy-Tite Co., Inc. Project) (Key Bank
N.A. LOC) VRDN+ (NR, NR) 01/07/99 4.200 2,330,000
2,600,000 Long Island Power Authority Electric
System Subordinated Revenue Bond
(Morgan Guaranty LOC) VRDN+ (A-1+, VMIG-1) 01/01/99 4.850 2,600,000
1,100,000 Long Island, New York Power Authority/
(Bayerische Landesbank Girozentrale LOC)
VRDN+ (A-1+, VMIG-1) 01/07/99 3.800 1,100,000
5,000,000 Metropolitan Transportation Authority
Series 1998A (ABN-AMRO Bank NV LOC) BAN (A-1+, P-1) 02/09/99 3.100 5,000,000
4,500,000 Metropolitan Transportation Authority
Transit Facilities Revenue Bond, Series
1998 C (ABN-AMRO Bank NV LOC) VRDN+ (A-1+, P-1) 01/07/99 4.150 4,500,000
1,000,000 Monroe County IDA Revenue Bond Series 1984
(Electronic Navigational Industries Inc.
Facilities) (NR, NR) 07/01/99 3.750 1,000,000
1,535,000 Monroe County, New York IDA Series A
(Collegiate Housing Foundation) (First
Union National Bank of North Carolina
LOC) VRDN+ (NR, VMIG-1) 01/07/99 4.000 1,535,000
1,220,000 Monroe County, New York IDA Series B
(JMT Properties) VRDN+ (NR, P-1) 01/07/99 4.500 1,220,000
1,400,000 Montgomery Town IDA (Industrial Bank of
Japan LOC) VRDN+ (A-1+, NR) 01/15/99 3.500 1,400,000
5,700,000 Municipal Acceptance Corp. for City of New
York,
New York (National Westminster LOC) VRDN+ (NR, VMIG-1) 01/07/99 4.100 5,700,000
1,000,000 New York City Eagle Tax Exempt
(Escrowed to Maturity in U.S. Treasuries)
VRDN+ (NR, VMIG-1) 01/07/99 4.100 1,000,000
1,200,000 New York City General Obligation
(FGIC Insurance LOC) VRDN+ (A-1+, VMIG-1) 01/07/99 4.050 1,200,000
3,000,000 New York City General Obligation
(Mitsubishi Bank LOC) VRDN+ (A-1+, VMIG-1) 01/07/99 3.900 3,000,000
900,000 New York City General Obligation
(Union Bank of Switzerland LOC) VRDN+ (A-1+, VMIG-1) 01/04/99 5.000 900,000
</TABLE>
See Accompanying Notes to Financial Statements.
6
<PAGE>
WARBURG PINCUS NEW YORK TAX EXEMPT FUND
STATEMENT OF NET ASSETS (CONT'D)
December 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
RATINGS=
PAR (MOODY'S/S&P) MATURITY RATE% VALUE
--- ------------- -------- ----- -----
<S> <C> <C> <C> <C> <C>
MUNICIPAL BONDS (CONT'D)
NEW YORK (CONT'D)
$1,000,000 New York City General Obligation Series
1992 B VRDN+ (A-1+, VMIG-1) 01/01/99 5.000 $ 1,000,000
5,500,000 New York City General Obligation Series
1994 H-3 (Financial Service Assurance
LOC) (A-1+, VMIG-1) 02/01/99 3.350 5,500,000
2,800,000 New York City General Obligation Series
1994 H-3 (Financial Service Assurance
LOC) (A-1+, VMIG-1) 02/09/99 3.100 2,800,000
2,800,000 New York City General Obligation Series
1994 H-3 (FInancial Service Assurance
LOC) (A-1+, VMIG-1) 02/10/99 3.000 2,800,000
5,000,000 New York City General Obligation Series
1994 H-4 (AMBAC Insurance LOC) (A-1+, VMIG-1) 02/19/99 3.300 5,000,000
4,000,000 New York City General Obligation Series
1994 H-4 (AMBAC Insurance LOC) (A-1+, VMIG-1) 02/10/99 3.100 4,000,000
2,000,000 New York City General Obligation Series
1994 H-5 (Landesbank Hessen-Thuringen
Girozentrale LOC) (A-1+, VMIG-1) 02/25/99 2.900 2,000,000
2,000,000 New York City General Obligation Series
1995 B-8 (Mitsubishi Bank LOC) VRDN+ (A-1+, VMIG-1) 01/07/99 3.900 2,000,000
1,000,000 New York City General Obligation Series
1995 F-4 (Hessen LOC) VRDN+ (A-1+, VMIG-1) 01/07/99 4.000 1,000,000
4,200,000 New York City General Obligation Fiscal
Series 1995 F-3 (Industrial Bank of Japan
LOC) VRDN+ (A-1+, VMIG-1) 01/07/99 4.050 4,200,000
200,000 New York City General Obligation Fiscal
Series 1995 F-7 (Union Bank of
Switzerland LOC) VRDN+ (A-1+, VMIG-1) 01/07/99 4.100 200,000
2,100,000 New York City General Obligation Series
H-3 (Financial Service Assurance LOC) (A-1+, VMIG-1) 02/11/99 2.900 2,100,000
3,000,000 New York City General Obligation Series
J-2 (Commerzbank LOC) (A-1+, VMIG-1) 01/07/99 3.050 3,000,000
1,000,000 New York City Health & Hospitals Health
System Revenue Bond, Series 1997 A
(Morgan Guaranty LOC) VRDN+ (A-1+, VMIG-1) 01/07/99 3.900 1,000,000
1,200,000 New York City Health & Hospitals Health
System Revenue Bond, Series 1997 C
(Toronto-Dominion Bank LOC) VRDN+ (A-1+, VMIG-1) 01/07/99 3.950 1,200,000
200,000 New York City Housing Development Corp.
Multi-Housing Revenue Bond Series 1997 A
(Columbus Green) (Federal National
Mortgage Association) VRDN+ (A-1+, NR) 01/07/99 3.750 200,000
1,200,000 New York City Housing Development Corp.
Multi-Family Mortgage Revenue Bond Series
1989 A (Queenswood Apartments) (National
City Bank of Cleveland LOC) VRDN+ (NR, VMIG-1) 01/07/99 4.000 1,200,000
700,000 New York City Housing Development Corp.
Multi-Family Mortgage Revenue Bond Series
1993 A, (Columbus Gardens Project)
(Citibank LOC) VRDN+ (A-1+, NR) 01/07/99 4.000 700,000
</TABLE>
See Accompanying Notes to Financial Statements.
7
<PAGE>
WARBURG PINCUS NEW YORK TAX EXEMPT FUND
STATEMENT OF NET ASSETS (CONT'D)
December 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
RATINGS=
PAR (MOODY'S/S&P) MATURITY RATE% VALUE
--- ------------- -------- ----- -----
<S> <C> <C> <C> <C> <C>
MUNICIPAL BONDS (CONT'D)
NEW YORK (CONT'D)
$1,800,000 New York City Housing Development Corp.
Multi-Family Rental Housing Revenue Bond
Series 1997 A (Monterey) VRDN+ (A-1+, NR) 01/07/99 3.800 $ 1,800,000
1,600,000 New York City Municipal Water & Finance
Authority Water and Sewer System Revenue
Bond Series 1995 A VRDN+ (A-1+, VMIG-1) 01/01/99 5.200 1,600,000
5,500,000 New York City, New York Transitional
Finance Authority Future Tax Revenue Bond
Series A (Banc One Funding Corp. LOC)
VRDN+ (A-1+, NR) 01/07/99 4.150 5,500,000
3,600,000 New York Housing Development Corp.
Multi-family Rental Housing Revenue Bond
Related F--(Carnegie Park), (Federal
National Mortgage Association LOC) VRDN+ (A-1+, NR) 01/07/99 3.750 3,600,000
1,100,000 New York Local Government Assistance Bond
(Toronto Dominion LOC) VRDN+ (A-1+, VMIG-1) 01/07/99 3.800 1,100,000
500,000 New York Local Government Assistance Corp.
(Societe Generale LOC) VRDN+ (A-1+, VMIG-1) 01/07/99 4.100 500,000
2,000,000 New York Metropolitan Authority Series
1998 A (ABN - AMRO Bank NV LOC) (A-1+, P-1) 02/11/99 3.050 2,000,000
1,000,000 New York State Dormitory Authority
Metropolitan Museum of Art Revenue Bond
Series 1993 B VRDN+ (A-1+, VMIG-1) 01/07/99 3.850 1,000,000
1,100,000 New York State Dormitory Authority Revenue
Bond Series 1992 B (New York Public
Library) (Canadian Imperial Bank of
Commerce LOC) VRDN+ (A-1+, VMIG-1) 01/07/99 3.800 1,100,000
3,440,000 New York State Dormitory Authority Revenue
Bond (Beverwyck Inc.) (Banque Paribas
LOC) VRDN+ (A-1, VMIG-1) 01/07/99 3.900 3,440,000
1,000,000 New York State Dormitory Authority Revenue
Bond (Rockefeller University) (A-1+, VMIG-1) 01/07/99 3.900 1,000,000
1,400,000 New York State Energy Research &
Development Authority Electric Facilities
Revenue Bond Series 1995 A (Long Island
Lighting Co. Project) (Union B) VRDN+ (NR, VMIG-1) 01/07/99 4.100 1,400,000
5,000,000 New York State Energy Research &
Development Authority New York State
Electric & Gas Series
1985 A (LOC Morgan Guaranty) (A-1+, NR) 03/15/99 3.580 5,000,000
4,500,000 New York State Energy Research &
Development Authority Pollution Control
Revenue Bond (Deutshe Bank LOC) (NR, VMIG-1) 03/01/99 3.580 4,500,000
1,500,000 New York State Energy Research &
Development Authority Pollution Control
Revenue Refunding Bond Series 1985 A
(Central Hudson Gas & Electric) VRDN+ (NR, P-1) 01/07/99 4.000 1,500,000
200,000 New York State Energy Research &
Development Authority Pollution Control
Revenue Bond Series 1987 B (Niagara
Mohawk Power) (Morgan Guaranty LOC) VRDN+ (A-1+, NR) 01/01/99 5.250 200,000
</TABLE>
See Accompanying Notes to Financial Statements.
8
<PAGE>
WARBURG PINCUS NEW YORK TAX EXEMPT FUND
STATEMENT OF NET ASSETS (CONT'D)
December 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
RATINGS=
PAR (MOODY'S/S&P) MATURITY RATE% VALUE
--- ------------- -------- ----- -----
<S> <C> <C> <C> <C> <C>
MUNICIPAL BONDS (CONT'D)
NEW YORK (CONT'D)
$1,100,000 New York State Energy Research &
Development Authority Pollution Control
Revenue Bond Series A (Niagara Mohawk
Power) VRDN+ (A-1+, NR) 01/01/99 5.200 $ 1,100,000
620,000 New York State Energy Research &
Development Gas Facilities Revenue Bond
(The Brooklyn Union Gas Co. Project)
(MBIA Insurance LOC) VRDN+ (A-1+, VMIG-1) 01/07/99 4.000 620,000
2,400,000 New York State Housing Finance Agency
Series A (Mount Sinai School of Medicine)
(Sanwa Bank LOC) VRDN+ (NR, VMIG-1) 01/07/99 3.700 2,400,000
470,000 New York State Job Development Authority
Special Purpose Bond Series 1984 G1 to
G55 (Sumitomo Bank LOC) VRDN+ (A-1+, VMIG-1) 01/04/99 3.150 470,000
2,125,000 New York State Job Development Authority
Special Purpose Bond Series 1986 A1 to
A14 (Sumitomo Bank LOC) VRDN+ (A-1+, VMIG-1) 01/30/99 3.250 2,125,000
695,000 New York State Job Development Authority
Special Purpose Bond Series C (Sumitomo
Bank LOC) VRDN+ (A-1+, VMIG-1) 01/30/99 3.250 695,000
180,000 New York State Job Development Authority
State Guaranteed Special Purpose Bond
Series 1984 C (Sumitomo Bank LOC) VRDN+ (A-1+, VMIG-1) 01/04/99 3.150 180,000
75,000 New York State Job Development Authority
State Guaranteed Special Purpose Bond
Series 1984 F (Sumitomo Bank LOC) VRDN+ (A-1+, VMIG-1) 01/04/99 3.150 75,000
495,000 New York State Job Development Authority
State Guaranteed Special Purpose Bond
Series 1984 H (Sumitomo Bank LOC) VRDN+ (A-1+, VMIG-1) 01/04/99 3.150 495,000
2,000,000 New York State Power Authority VRDN+ (A-1, VMIG-1) 03/01/99 3.450 2,000,000
2,300,000 New York State Power Authority VRDN+ (A-1, P-1) 03/08/99 3.100 2,300,000
5,000,000 New York State Power Authority VRDN+ (A-1, P-1) 03/25/99 3.050 5,000,000
10,300,000 Niagara County IDA Solid Waste Disposal
Facility Revenue Bond (American Ref-Fuel
Co. of Niagara) (Wachovia LOC) VRDN+ (A-1+, P-1) 01/07/99 4.100 10,300,000
1,255,000 North Greenbush, New York BAN (NR, NR) 10/01/99 3.800 1,257,262
3,000,000 Oneonta City Of, City School District
Otsego County, New York Series 1998 RAN (NR, NR) 06/18/99 4.000 3,003,314
1,500,000 Onondaga County IDA Revenue Bond Series
1998 (Plainville Turkey Farm, Inc.
Project) (Key Corp. Bank N.A. LOC) VRDN+ (NR, NR) 01/07/99 4.200 1,500,000
4,100,000 Oswego, County Of, IDA Revenue Bond
(Crysteel Manufacturing, Inc. Project)
(Key Corp. Bank N.A. LOC) VRDN+ (NR, NR) 01/01/99 4.200 4,100,000
3,800,000 Penfield Perinton New York Fire District (NR, NR) 05/07/99 4.125 3,804,044
3,700,000 Port Authority of New York & New Jersey
Versatile Structure Obligations VRDN+ (A-1+, VMIG-1) 01/01/99 5.100 3,700,000
</TABLE>
See Accompanying Notes to Financial Statements.
9
<PAGE>
WARBURG PINCUS NEW YORK TAX EXEMPT FUND
STATEMENT OF NET ASSETS (CONT'D)
December 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
RATINGS=
PAR (MOODY'S/S&P) MATURITY RATE% VALUE
--- ------------- -------- ----- -----
<S> <C> <C> <C> <C> <C>
MUNICIPAL BONDS (CONT'D)
NEW YORK (CONT'D)
$1,000,000 St. Lawrence County IDA Environmental
Facilities Revenue Bond Series 1998 A
(Aluminum Co. of America Project) VRDN+ (A-1, NR) 01/07/99 3.950 $ 1,000,000
1,200,000 St. Lawrence County IDA Environmental
Improvement Revenue Bond (Reynolds Metals
Co.) (Royal Bank of Canada LOC) VRDN+ (A-1+, VMIG-1) 01/07/99 3.850 1,200,000
500,000 State of New York Power Authority
Adjustable Tender Notes (A-1, VMIG-1) 03/01/99 3.450 500,000
5,000,000 Suffolk County, New York IDA Series 1998 A
(Episcopal Health Services) (Banque
Paribas LOC) VRDN+ (A-1, VMIG-1) 01/07/99 4.000 5,000,000
1,000,000 Syracuse IDA Civic Facility Revenue Bond
(Morgan Guaranty LOC) VRDN+ (A-1+, VMIG-1) 01/01/99 5.000 1,000,000
1,600,000 Town of Babylon IDA Series 1994 (J.
D'addario & Co., Inc. Project) (National
Westminster LOC) VRDN+ (NR, VMIG-1) 01/07/99 3.850 1,600,000
2,200,000 Ulster County IDA Revenue Bond Series 1998
A (Viking Industries, Inc. Project) (Key
Corp. Bank N.A. LOC) VRDN+ (NR, NR) 01/07/99 4.200 2,200,000
------------
TOTAL NEW YORK (Cost $174,007,785) 174,007,785
------------
PUERTO RICO (0.2%)
400,000 Puerto Rico Highway and Transportation
Authority Series 1993 X (Multiple Credit
Enhancements LOC) VRDN+ (Cost $400,000) (A-1+, VMIG-1) 01/07/99 3.600 400,000
------------
TOTAL INVESTMENTS AT VALUE (99.8%) (Cost $174,407,785*) 174,407,785
OTHER ASSETS IN EXCESS OF LIABILITIES (0.2%) 335,398
------------
NET ASSETS (100.0%) (applicable to 174,756,302 shares) $174,743,183
============
NET ASSET VALUE, offering and redemption price per share
($174,743,183 divided by 174,756,302) $ 1.00
============
</TABLE>
INVESTMENT ABBREVIATIONS
BAN = Bond Anticipation Note
IDA = Industrial Development Agency
NR = Not Rated
RAN = Revenue Anticipation Note
VRDN = Variable Rate Demand Note
- --------------------------------------------------------------------------------
= Credit ratings given by Moody's Investors Service, Inc. and Standard & Poor's
Ratings Services are unaudited.
+ The interest rate shown is the rate as of December 31, 1998 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.
10
<PAGE>
WARBURG PINCUS NEW YORK TAX EXEMPT FUND
MATURITY SCHEDULE OF PORTFOLIO
December 31, 1998 (Unaudited)
- --------------------------------------------------------------------------------
MATURITY SCHEDULE
(DAYS) PAR PERCENTAGE OF PORTFOLIO
----------------- ------------ ------------------------
(CUMULATIVE)
1-7 $108,060,000 62.0% 62.0%
8-14 0 0.0 62.0
15-30 4,220,000 2.4 64.4
31-60 38,200,000 21.9 86.3
61-90 12,300,000 7.1 93.4
91-120 0 0.0 93.4
121-150 6,360,000 3.6 97.0
Over 150 5,255,000 3.0 100.0
------------ -----
$174,395,000 100.0%
============ =====
Average Weighted Maturity -- 30.23 days
See Accompanying Notes to Financial Statements.
11
<PAGE>
WARBURG PINCUS CASH RESERVE AND NEW YORK TAX EXEMPT FUNDS
STATEMENT OF OPERATIONS
For the Year Ended December 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CASH RESERVE NEW YORK
FUND TAX EXEMPT FUND
------------ ---------------
<S> <C> <C>
INTEREST INCOME $28,829,863 $ 5,377,726
----------- -----------
EXPENSES:
Investment advisory 2,596,108 788,347
Sub-investment advisory and administration 519,004 157,551
Audit 22,150 22,150
Custodian 81,589 24,193
Directors 25,451 24,619
Insurance 9,689 2,616
Legal 25,540 19,634
Printing 25,080 6,119
Registration 44,729 24,467
Transfer agent 109,802 13,280
Miscellaneous 5,532 3,931
----------- -----------
3,464,674 1,086,907
Less fees waived, expenses reimbursed and transfer agent
fee offsets (610,150) (220,378)
----------- -----------
Total expenses 2,854,524 866,529
----------- -----------
Net investment income 25,975,339 4,511,197
----------- -----------
NET REALIZED LOSS FROM INVESTMENTS
Net realized loss from security transactions (128,038) 0
----------- -----------
Net increase in net assets resulting from operations $25,847,301 $ 4,511,197
=========== ===========
</TABLE>
See Accompanying Notes to Financial Statements.
12
<PAGE>
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13
<PAGE>
WARBURG PINCUS CASH RESERVE AND NEW YORK TAX EXEMPT FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CASH RESERVE FUND
---------------------------------------------------------
FOR THE FOR THE TEN FOR THE
YEAR ENDED MONTHS ENDED YEAR ENDED
DECEMBER 31, 1998 DECEMBER 31, 1997 FEBRUARY 28, 1997
----------------- ----------------- -----------------
<S> <C> <C> <C>
FROM OPERATIONS:
Net investment income $ 25,975,339 $ 20,526,496 $ 21,525,922
Net realized loss from security
transactions (128,038) (17,990) (2,226)
-------------- -------------- --------------
Net increase in net assets resulting
from operations 25,847,301 20,508,506 21,523,696
-------------- -------------- --------------
FROM DISTRIBUTIONS:
Dividends from net investment income (25,975,339) (20,526,496) (21,525,922)
-------------- -------------- --------------
FROM CAPITAL SHARE TRANSACTIONS (AT $1 PER
SHARE):
Proceeds from sale of shares 2,813,181,462 2,356,390,501 2,207,941,180
Reinvested dividends 17,073,030 13,364,994 14,490,731
Net asset value of shares redeemed (2,872,823,033) (2,313,798,174) (2,189,302,165)
-------------- -------------- --------------
Net increase (decrease) in net assets
from capital share transactions (42,568,541) 55,957,321 33,129,746
-------------- -------------- --------------
Net increase (decrease) in net assets (42,696,579) 55,939,331 33,127,520
NET ASSETS:
Beginning of period 472,674,561 416,735,230 383,607,710
-------------- -------------- --------------
End of period $ 429,977,982 $ 472,674,561 $ 416,735,230
============== ============== ==============
</TABLE>
14
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NEW YORK TAX EXEMPT FUND
-----------------------------------------------------------------
FOR THE FOR THE TEN FOR THE
YEAR ENDED MONTHS ENDED YEAR ENDED
DECEMBER 31, 1998 DECEMBER 31, 1997 FEBRUARY 28, 1997
----------------- ----------------- -----------------
<S> <C> <C> <C>
FROM OPERATIONS:
Net investment income $ 4,511,197 $ 3,673,641 $ 3,306,940
Net realized loss from security
transactions 0 0 0
------------ ------------ ------------
Net increase in net assets resulting
from operations 4,511,197 3,673,641 3,306,940
------------ ------------ ------------
FROM DISTRIBUTIONS:
Dividends from net investment income (4,511,197) (3,673,641) (3,306,940)
------------ ------------ ------------
FROM CAPITAL SHARE TRANSACTIONS (AT $1 PER
SHARE):
Proceeds from sale of shares 430,856,437 347,174,918 375,730,772
Reinvested dividends 2,192,770 1,663,509 1,179,911
Net asset value of shares redeemed (409,478,827) (321,856,450) (349,303,606)
------------ ------------ ------------
Net increase (decrease) in net assets
from capital share transactions 23,570,380 26,981,977 27,607,077
------------ ------------ ------------
Net increase (decrease) in net assets 23,570,380 26,981,977 27,607,077
NET ASSETS:
Beginning of period 151,172,803 124,190,826 96,583,749
------------ ------------ ------------
End of period $174,743,183 $151,172,803 $124,190,826
============ ============ ============
</TABLE>
See Accompanying Notes to Financial Statements.
15
<PAGE>
WARBURG PINCUS CASH RESERVE FUND
FINANCIAL HIGHLIGHTS
(For a Share of the Fund Outstanding Throughout Each Period)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE FOR THE TEN
YEAR ENDED MONTHS ENDED
DECEMBER 31, 1998 DECEMBER 31, 1997
PERIOD ENDED: ----------------- -----------------
<S> <C> <C>
PER-SHARE DATA
Net asset value, beginning of period: $ 1.00 $ 1.00
-------- --------
INVESTMENT ACTIVITIES:
Net investment income 0.0499 0.0428
-------- --------
DISTRIBUTIONS:
From net investment income (0.0499) (0.0428)
-------- --------
NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00
======== ========
Total Return 5.12% 4.28%(3)
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (000s omitted) $429,978 $472,675
Ratio of expenses to average net assets .56%(1) .55%(1,2)
Ratio of net income to average net assets 5.00% 5.11%(2)
Decrease reflected in above operating expense ratios due
to waivers/reimbursements .12% .12%(2)
</TABLE>
- --------------------------------------------------------------------------------
(1) Interest earned on uninvested cash balances is used to offset portions of
the transfer agent expense. These arrangements resulted in a reduction to
the fund's net expense ratio by .01%, .00%, .00% and .01% for the year
ended December 31, 1998, 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%, .55% and .55% for
the year ended December 31, 1998, the period ended December 31, 1997 and
the years ended February 28 or 29, 1997 and 1996, respectively.
(2) Annualized.
(3) Non annualized.
16
<PAGE>
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------
FOR THE YEAR ENDED FEBRUARY 28 OR 29,
--------------------------------------------------------------------------------
PERIOD ENDED: 1997 1996 1995 1994
-------- -------- -------- --------
<S> <C> <C> <C> <C>
PER-SHARE DATA
Net asset value, beginning of period: $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------- -------- -------- --------
INVESTMENT ACTIVITIES:
Net investment income 0.0492 0.0543 0.0426 0.0273
-------- -------- -------- --------
DISTRIBUTIONS:
From net investment income (0.0492) (0.0543) (0.0426) (0.0273)
-------- -------- -------- --------
NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ======== ========
Total Return 5.03% 5.57% 4.35% 2.76%
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (000s omitted) $416,735 $383,607 $403,211 $277,557
Ratio of expenses to average net assets .55%(1) .56%(1) .55% .54%
Ratio of net income to average net assets 4.93% 5.43% 4.41% 2.73%
Decrease reflected in above operating expense ratios due
to waivers/reimbursements .14% .16% .19% .13%
</TABLE>
- --------------------------------------------------------------------------------
See Accompanying Notes to Financial Statements.
17
<PAGE>
WARBURG PINCUS NEW YORK TAX EXEMPT FUND
FINANCIAL HIGHLIGHTS
(For a Share of the Fund Outstanding Throughout Each Period)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE FOR THE TEN
YEAR ENDED MONTHS ENDED
DECEMBER 31, 1998 DECEMBER 31, 1997
PERIOD ENDED: ----------------- -----------------
<S> <C> <C>
PER-SHARE DATA
Net asset value, beginning of period: $ 1.00 $ 1.00
-------- --------
INVESTMENT ACTIVITIES:
Net investment income 0.0287 0.0261
-------- --------
DISTRIBUTIONS:
From net investment income (0.0287) (0.0261)
-------- --------
NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00
======== ========
Total Return 2.92% 2.64%(3)
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (000s omitted) $174,743 $151,173
Ratios of expenses to average net assets .55%(1) .55%(1,2)
Ratio of net income to average net assets 2.86% 3.12%(2)
Decrease reflected in above operating expense ratios due
to waivers/reimbursements .14% .12%(2)
</TABLE>
- --------------------------------------------------------------------------------
(1) Interest earned on uninvested cash balances is used to offset portions of
the transfer agent expense. These arrangements resulted in a reduction to
the fund's net expense ratio by .00%, .00%, 00%, and .01% for the year
ended December 31, 1998, 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%, .55%, and .55%
for the year ended December 31, 1998, the period ended December 31, 1997
and the years ended February 28 or 29, 1997 and 1996, respectively.
(2) Annualized.
(3) Non annualized.
18
<PAGE>
<TABLE>
<CAPTION>
-----------------------------------------------------------------------
FOR THE YEAR ENDED FEBRUARY 28 OR 29,
----------------------------------------------------------
PERIOD ENDED: 1997 1996 1995 1994
-------- ------- ------- -------
<S> <C> <C> <C> <C>
PER-SHARE DATA
Net asset value, beginning of period: $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------- ------- ------- -------
INVESTMENT ACTIVITIES:
Net investment income 0.0288 0.0326 0.0246 0.0175
-------- ------- ------- -------
DISTRIBUTIONS:
From net investment income (0.0288) (0.0326) (0.0246) (0.0175)
-------- ------- ------- -------
NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======= ======= =======
Total Return 2.92% 3.31% 2.48% 1.77%
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (000s omitted) $124,191 $96,584 $77,111 $65,984
Ratios of expenses to average net assets .55%(1) .56%(1) .55% .54%
Ratio of net income to average net assets 2.88% 3.24% 2.46% 1.75%
Decrease reflected in above operating expense ratios due
to waivers/reimbursements .17% .27% .27% .19%
</TABLE>
- --------------------------------------------------------------------------------
See Accompanying Notes to Financial Statements.
19
<PAGE>
WARBURG PINCUS CASH RESERVE AND NEW YORK TAX EXEMPT FUNDS
NOTES TO FINANCIAL STATEMENTS
December 31, 1998
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES
The Warburg Pincus Cash Reserve Fund and the Warburg Pincus 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 approximates market value.
Amortized cost 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.
20
<PAGE>
WARBURG PINCUS CASH RESERVE AND NEW YORK TAX EXEMPT FUNDS
NOTES TO FINANCIAL STATEMENTS (CONT'D)
December 31, 1998
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES -- (CONT'D)
No provision is made for federal taxes as it is each fund's intention to
continue to qualify for and elect the tax treatment applicable to regulated
investment companies under the Internal Revenue Code of 1986, as amended, 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 collateral is in the fund's
possession through its custodian. Each agreement requires that the market value
of the collateral be sufficient to cover payments of interest and principal;
however, in the event of default or bankruptcy by the counterparty to the
agreement, retention of the collateral may be subject to legal proceedings.
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 funds have an arrangement with their transfer agent whereby interest
earned on uninvested cash balances was used to offset a portion of their
transfer agent expense. For the year ended December 31, 1998, each Fund received
credits or reimbursements under this arrangement as follows:
FUND AMOUNT
- ---- -------
Cash Reserve $15,554
New York Tax Exempt 4,911
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. For the year ended
December 31, 1998, investment advisory fees and voluntary waivers were as
follows:
21
<PAGE>
WARBURG PINCUS CASH RESERVE AND NEW YORK TAX EXEMPT FUNDS
NOTES TO FINANCIAL STATEMENTS (CONT'D)
December 31, 1998
- --------------------------------------------------------------------------------
2. INVESTMENT ADVISER AND SUB-ADVISER, CO-ADMINISTRATORS AND
DISTRIBUTOR -- (CONT'D)
<TABLE>
<CAPTION>
GROSS NET
FUND ADVISORY FEE WAIVER ADVISORY FEE
- ---- ------------ --------- ------------
<S> <C> <C> <C>
Cash Reserve $1,297,511 $(237,838) $1,059,673
New York Tax Exempt 393,877 (86,187) 307,690
</TABLE>
BlackRock Institutional Management Corporation ("BIMC"), formerly PNC
Institutional Management Corporation, 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, BIMC receives a fee
calculated at an annual rate of .25% of each fund's average daily net assets.
For the year ended December 31, 1998, sub-investment advisory and administration
fees and voluntary 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 $1,298,597 $(356,758) $941,839
New York Tax Exempt 394,470 (129,280) 265,190
</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 December 31, 1998,
administrative services fees earned by CFSI were as follows:
FUND CO-ADMINISTRATION FEE
- ---- ---------------------
Cash Reserve $519,004
New York Tax Exempt 157,551
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.
22
<PAGE>
WARBURG PINCUS CASH RESERVE AND NEW YORK TAX EXEMPT FUNDS
NOTES TO FINANCIAL STATEMENTS (CONT'D)
December 31, 1998
- --------------------------------------------------------------------------------
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 FOR THE
FOR THE TEN MONTHS FOR THE FOR THE TEN MONTHS FOR THE
YEAR ENDED ENDED YEAR ENDED YEAR ENDED ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31, FEBRUARY 28, DECEMBER 31, DECEMBER 31, FEBRUARY 28,
1998 1997 1997 1998 1997 1997
-------------- -------------- -------------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Shares sold 2,813,181,431 2,356,390,501 2,207,941,180 430,856,437 347,174,918 375,730,772
Shares issued to shareholders on
reinvestment of dividends 17,073,030 13,364,994 14,490,731 2,192,770 1,663,509 1,179,911
Shares redeemed (2,872,823,033) (2,313,798,174) (2,189,302,165) (409,478,828) (321,856,449) (349,303,606)
-------------- -------------- -------------- ------------ ------------ ------------
Net increase (decrease) in shares
outstanding (42,568,572) 55,957,321 33,129,746 23,570,379 26,981,978 27,607,077
============== ============== ============== ============ ============ ============
</TABLE>
4. LIABILITIES
At December 31, 1998 the funds had the following affiliated and investment
related liabilities:
<TABLE>
<CAPTION>
NEW YORK
CASH RESERVE FUND TAX EXEMPT FUND
----------------- ---------------
<S> <C> <C>
Dividends payable $627,866 $174,103
Investment advisory fee payable 82,499 26,994
Administration services fee payable 42,552 14,773
</TABLE>
5. NET ASSETS
At December 31, 1998, capital contributions and accumulated net realized loss
from security transactions have been adjusted for permanent book/tax
differences. The New York Tax Exempt Fund reclassified $4,026 from accumulated
net realized loss from security transactions to capital contributions.
Net Assets at December 31, 1998, consisted of the following:
<TABLE>
<CAPTION>
NEW YORK
CASH RESERVE FUND TAX EXEMPT FUND
----------------- ---------------
<S> <C> <C>
Capital contributed, net $430,126,672 $174,747,460
Accumulated net realized loss from security
transactions (148,690) (4,277)
------------ ------------
Net assets $429,977,982 $174,743,183
============ ============
</TABLE>
23
<PAGE>
WARBURG PINCUS CASH RESERVE AND NEW YORK TAX EXEMPT FUNDS
NOTES TO FINANCIAL STATEMENTS (CONT'D)
December 31, 1998
- --------------------------------------------------------------------------------
6. CAPITAL LOSS CARRYOVER
For the year ended December 31, 1998, the Cash Reserve Fund and the New York
Tax Exempt Fund have capital loss carryovers of $148,690 and $4,277,
respectively, to offset possible future capital gains of each fund. These
carryovers expire as follows:
FUND YEAR AMOUNT
- ---- ---- -------
Cash Reserve 2004 $ 2,662
2005 17,990
2006 128,038
New York Tax Exempt
2000 4,089
2002 188
24
<PAGE>
WARBURG PINCUS CASH RESERVE FUND
REPORT OF INDEPENDENT ACCOUNTANTS
- --------------------------------------------------------------------------------
To the Board of Directors and Shareholders of
WARBURG, PINCUS CASH RESERVE FUND, INC. AND
WARBURG, PINCUS NEW YORK TAX EXEMPT FUND, INC.:
In our opinion, the accompanying statements of net assets and the related
statements of operations and of changes in net assets and the financial
highlights present fairly, in all material respects, the financial position of
Warburg, Pincus Cash Reserve Fund, Inc. and Warburg, Pincus New York Tax Exempt
Fund, Inc. (the "Funds") at December 31, 1998, the results of their operations
for the year then ended, the changes in their net assets for each of the three
years (or periods) in the period then ended, and their financial highlights for
each of the years (or periods) presented, in conformity with generally accepted
accounting principles. These financial statements and financial highlights
(hereafter referred to as "financial statements") are the responsibility of the
Funds' management; our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our audits of these
financial statements in accordance with generally accepted auditing standards,
which require that we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits, which included
confirmation of securities at December 31, 1998 by correspondence with the
custodian and brokers, provide a reasonable basis for the opinion expressed
above.
PricewaterhouseCoopers LLP
2400 Eleven Penn Center
Philadelphia, Pennsylvania
February 5, 1999
25
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<PAGE>
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COUNSELLORS SECURITIES INC., DISTRIBUTOR. WPMMF-2-1298
