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[Logo]
SEMIANNUAL
REPORT
APRIL 30, 1995
[ ] WARBURG PINCUS SHORT-TERM TAX-ADVANTAGED BOND FUND
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WARBURG PINCUS SHORT-TERM TAX-ADVANTAGED BOND FUND
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June 15, 1995
Dear Shareholder:
The primary investment objective of Warburg Pincus Short-Term
Tax-Advantaged Bond Fund (the 'Fund') is maximum income after the effects of
federal income taxes, with capital appreciation as a secondary objective. The
Fund pursues its objectives by investing primarily in taxable and tax-exempt
debt instruments.
For the six months ended April 30, 1995, the Fund's Institutional Shares
had a return of 2.34%, vs. a return of 2.73% for the Lipper Short-Term Municipal
Debt Funds Average and a return of 3.41% for the Lehman Brothers Three-Year
Municipal Bond Index. The Fund's 30-day annualized current yield was 4.30% for
Institutional Shares and 4.04% for Gamma Shares on April 30. Its total net
assets were $24,751,720.
At the close of the reporting period, the Fund held the bulk of its
portfolio (87%) in a diversified selection of municipal issues, with the
remainder (13%) in liquid assets.
The Fund was created to provide corporate treasury managers and other
institutional investors in high federal tax brackets with potentially greater
after-tax returns than would otherwise be available from a portfolio consisting
solely of taxable or tax-exempt securities.
The average maturity of the Fund will not exceed three years, and no single
security held in the portfolio will have a remaining maturity of greater than
five years. Although longer-term securities often provide higher yields, they
are subject to greater volatility in price and more risk of capital loss than
shorter-term securities.
The Fund will vary the portion of its assets invested in taxable and
tax-exempt securities so that it may seek out and take advantage of the higher
after-tax yields available on taxable issues at certain times.
A substantial minimum investment in the Fund's Institutional
Shares -- $250,000 -- is intended to restrict shareholders to corporations,
institutions and other large investors. By so doing, the Fund is able to keep
its expenses at a low level. A second class of shares, with a somewhat higher
expense ratio and a $2,500 minimum, is also available. These 'Gamma Shares' are
designed for smaller investors seeking a similar increase in after-tax returns
on their investments.
<TABLE>
<S> <C>
Sharon B. Parente M. Anthony E. van Daalen
Co-Portfolio Manager Co-Portfolio Manager
</TABLE>
1
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WARBURG PINCUS SHORT-TERM TAX-ADVANTAGED BOND FUND
STATEMENT OF NET ASSETS
April 30, 1995 (Unaudited)
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<TABLE>
<CAPTION>
RATINGS
PAR SECURITY DESCRIPTION (MOODY'S/S&P) MATURITY RATE VALUE
- ---------- --------------------------------------------- --------- --------- ------ -----------
<S> <C> <C> <C> <C> <C>
MUNICIPAL BONDS (87.0%)
Alabama (4.0%)
$1,000,000 Mobile, Alabama Industrial Development Board
(Scott Paper) Series C RB (Aaa/AAA) 12/01/19 4.65% $ 1,000,000
-----------
Arizona (6.3%)
1,500,000 Salt River Project, Arizona Agricultural
Improvement & Power District [Pre-refunded
01/01/96 @ $102] RB (Aaa/AAA) 01/01/96 7.500 1,560,000
-----------
Illinois (12.4%)
2,000,000 Illinois State Toll Highway Authority
[Pre-refunded 01/01/96 @ $102] RB (Aaa/A+) 01/01/96 7.375 2,077,500
1,000,000 Southwestern Illinois Development Authority
Solid Waste Disposal (Shell Oil) Series 1991
RB (Aa2/AAA) 08/01/21 5.050 1,000,000
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3,077,500
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Massachusetts (6.2%)
1,500,000 Massachusetts State Consolidated Loan Bonds
Series D (MBIA Insured) GO (Aaa/AAA) 10/01/96 6.700 1,543,125
-----------
Minnesota (10.6%)
1,500,000 Southern Minnesota Municipal Power Agency
[Pre-refunded 01/01/96 @ $102] (Aaa/AAA) 01/01/96 9.500 1,578,750
1,000,000 Southern Minnesota Municipal Power Agency
Series C RB (Aaa/AAA) 01/01/96 7.125 1,037,500
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2,616,250
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Montana (4.0%)
1,000,000 Forsythe, Montana Pollution Control PCR
(Portland/General Electric) Series A RB (Aaa/AAA) 06/01/13 4.150 1,000,000
-----------
</TABLE>
See Accompanying Notes to Financial Statements.
2
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WARBURG PINCUS SHORT-TERM TAX-ADVANTAGED BOND FUND
STATEMENT OF NET ASSETS (CONT'D)
April 30, 1995 (Unaudited)
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<TABLE>
<CAPTION>
RATINGS
PAR SECURITY DESCRIPTION (MOODY'S/S&P) MATURITY RATE VALUE
- ---------- --------------------------------------------- --------- --------- ------ -----------
<S> <C> <C> <C> <C> <C>
MUNICIPAL BONDS (CONT'D)
New York (14.6%)
$1,000,000 New York State Medical Care Facility Finance
Agency Pooled Equipment Loan Programs RB
[Pre-refunded 01/15/96 @ $102] (Aaa/AAA) 01/15/96 8.875% $ 1,050,000
500,000 New York State Power Authority Revenue &
General Purpose Bond Series T [Pre-refunded
01/01/96 @ $102] (Aaa/AA-) 01/01/96 7.375 519,375
1,000,000 New York State Urban Development Correctional
Facilities Series B RB [Pre-refunded 01/01/96
@ $102] (AAA/BBB) 01/01/96 8.000 1,042,500
1,000,000 New York City Series F-7 GO (Aaa/AAA) 02/15/12 4.700 1,000,000
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3,611,875
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Pennsylvania (4.0%)
1,000,000 Pennsylvania State Higher Education
Assistance Agency Student Loan Series 1988 B
RB (Aaa/AAA) 07/01/18 4.600 1,000,000
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South Carolina (16.6%)
1,290,000 Charleston, South Carolina Waterworks & Sewer
Revenue [Pre-refunded 01/01/96 @ $102] (Aaa/AAA) 01/01/96 9.625 1,357,725
1,145,000 Columbia, South Carolina Waterworks & Sewer
Systems RB (Aaa/AA) 01/01/96 6.400 1,160,744
1,500,000 Piedmont, South Carolina Municipal Power
Agency Electric Series 1985 B RB
[Pre-refunded 01/01/96 @ $103] (Aaa/AAA) 01/01/96 9.700 1,593,750
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4,112,129
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Texas (4.0%)
1,000,000 Gulf Coast, Texas Waste Disposal Authority
Pollution Control (Amoco Oil Company Project)
Series 1994 RB (Aa1/AAA) 06/01/24 5.050 1,000,000
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</TABLE>
See Accompanying Notes to Financial Statements.
3
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WARBURG PINCUS SHORT-TERM TAX-ADVANTAGED BOND FUND
STATEMENT OF NET ASSETS (CONT'D)
April 30, 1995 (Unaudited)
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<TABLE>
<CAPTION>
RATINGS
PAR SECURITY DESCRIPTION (MOODY'S/S&P) MATURITY RATE VALUE
- ---------- --------------------------------------------- --------- --------- ------ -----------
<S> <C> <C> <C> <C> <C>
MUNICIPAL BONDS (CONT'D)
Utah (4.3%)
$1,000,000 InterMountain Power Agency, Utah Power Supply
RB (Aa/AA) 07/01/15 9.000% $ 1,026,250
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TOTAL MUNICIPAL BONDS
(Cost $21,511,016) 21,547,219
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COMMERCIAL PAPER (6.1%)
1,500,000 Ford Motor Credit Company (Aaa/AAA) 05/04/95 6.030 1,499,195
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(Cost $1,499,246)
SHORT-TERM INVESTMENTS (4.6%)
1,135,000 Repurchase agreement with State Street Bank &
Trust Co. dated 04/28/95 at 5.87% to be
repurchased at $1,135,555 on 05/01/95.
(Collateralized by $1,155,000 U.S. Treasury
Note 6.25%, due 08/31/96, with a market value
of $1,161,441.) (Cost $1,135,000) 05/01/95 5.870 1,135,000
-----------
TOTAL INVESTMENTS AT VALUE (97.7%)(Cost $24,145,262*) 24,181,414
OTHER ASSETS IN EXCESS OF LIABILITIES (2.3%) 570,306
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NET ASSETS (100.0%) (applicable to 2,343,628 Institutional Shares and 135,529 Gamma
shares) $24,751,720
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NET ASSET VALUE, offering and redemption price per Institutional Share
($23,397,884[div]2,343,628) $9.98
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NET ASSET VALUE, offering and redemption price per Gamma Share
($1,353,836[div]135,529) $9.99
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------
</TABLE>
INVESTMENT ABBREVIATIONS
GO = General Obligations
RB = Revenue Bonds
* Also cost for Federal income tax purposes.
See Accompanying Notes to Financial Statements.
4
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WARBURG PINCUS SHORT-TERM TAX-ADVANTAGED BOND FUND
STATEMENT OF OPERATIONS
For the Six Months Ended April 30, 1995 (Unaudited)
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<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest $620,274
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EXPENSES:
Investment advisory 67,567
Administrative services 47,097
Audit 8,928
Custodian 13,486
Distribution 1,441
Insurance 3,472
Legal 9,917
Organizational 17,405
Printing 5,256
Registration 16,720
Transfer agent 19,836
Trustees 4,959
Miscellaneous 2,480
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218,564
Less fees waived and expenses reimbursed (167,983)
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Total expenses 50,581
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Net investment income 569,693
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NET REALIZED AND UNREALIZED GAIN FROM INVESTMENTS:
Net realized loss from security transactions (31,284)
Net change in unrealized appreciation from investments 67,869
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Net realized and unrealized gain from investments 36,585
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Net increase in net assets resulting from operations $606,278
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</TABLE>
See Accompanying Notes to Financial Statements.
5
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WARBURG PINCUS SHORT-TERM TAX-ADVANTAGED BOND FUND
STATEMENTS OF CHANGES IN NET ASSETS
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<TABLE>
<CAPTION>
For the Period
September 30, 1994
For the Six (Commencement of
Months Ended Operations)
April 30, 1995 through October
(Unaudited) 31, 1994
-------------- ------------------
<S> <C> <C>
FROM OPERATIONS:
Net investment income $ 569,693 $ 46,514
Net realized loss from security transactions (31,284) 0
Net change in unrealized appreciation (depreciation)
from investments 67,869 (31,717)
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Net increase in net assets resulting from operations 606,278 14,797
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FROM DISTRIBUTIONS:
Dividends from net investment income:
Institutional shares (543,770) (45,742)
Gamma shares (25,923) (772)
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Net decrease from distributions (569,693) (46,514)
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FROM CAPITAL SHARE TRANSACTIONS:
Proceeds from sale of shares 14,347,032 24,203,350
Reinvested dividends 475,447 45,766
Net asset value of shares redeemed (10,925,743) (3,500,000)
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Net increase in net assets from capital share transactions 3,896,736 20,749,116
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Net increase in net assets 3,933,321 20,717,399
NET ASSETS:
Beginning of period 20,818,399 101,000
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End of period $ 24,751,720 $ 20,818,399
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</TABLE>
See Accompanying Notes to Financial Statements.
6
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WARBURG PINCUS SHORT-TERM TAX-ADVANTAGED BOND FUND
FINANCIAL HIGHLIGHTS
(For a share of the Fund Outstanding Throughout Each Period)
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<TABLE>
<CAPTION>
Institutional Shares Gamma Shares
---------------------------------------- --------------------------------
September 30, 1994 September 30, 1994
For the Six (Commencement For the Six (Commencement
Months Ended of Operations) Months Ended of Operations)
April 30, 1995 through April 30, 1995 through
(Unaudited) October 31, 1994 (Unaudited) October 31, 1994
-------------------- ------------------ ------------ ------------------
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 9.98 $10.00 $10.00 $10.00
------- ------- ------------ -------
Income From Investment Operations:
Net Investment Income .23 .03 .22 .03
Net Gain (Loss) from Securities (both
realized and unrealized) .00 (.02) (.01) .00
------- ------- ------------ -------
Total from Investment Operations .23 .01 .21 .03
------- ------- ------------ -------
Less Distributions:
Dividends from net investment income (.23) (.03) (.22) (.03)
------- ------- ------------ -------
NET ASSET VALUE, END OF PERIOD $ 9.98 $ 9.98 $ 9.99 $10.00
------- ------- ------------ -------
------- ------- ------------ -------
Total Return 4.77%* 1.72%* 4.28%* 3.62%*
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (000s) $23,398 $20,614 $1,354 $205
Ratios to average daily net assets
Operating expenses .40%* .40%* .65%* .55%*
Net investment income 4.64%* 5.15%* 4.50%* 3.99%*
Decrease reflected in above expense
ratios due to waivers/reimbursements (1.37%)* (3.49%)* (1.37%)* (4.74%)*
Portfolio turnover rate 313.28%* 235.11%* 313.28%* 235.11%*
</TABLE>
* Annualized
See Accompanying Notes to Financial Statements.
7
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WARBURG PINCUS SHORT-TERM TAX-ADVANTAGED BOND FUND
NOTES TO FINANCIAL STATEMENTS
April 30, 1995 (Unaudited)
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1. SIGNIFICANT ACCOUNTING POLICIES
Warburg Pincus Managed Bond Trust (the 'Trust') currently offers one
investment fund, Warburg Pincus Short-Term Tax-Advantaged Bond Fund (the 'Fund')
which commenced operations on September 30, 1994. The Fund is registered under
the Investment Company Act of 1940, as amended, as a non-diversified, open-end
management investment company. The Fund's portfolio is designed to generate
maximum income after the effect of Federal income taxes as a primary investment
objective and capital appreciation as a secondary objective.
The net asset value of the Fund is determined daily as of the close of
regular trading on the New York Stock Exchange. The Fund's investments are
valued at market value, which is currently determined using the last reported
sales price. If no sales are reported, investments are generally valued at the
last reported bid price. In the absence of market quotations, investments are
generally valued at fair value as determined by or under the direction of the
Fund's Board of Trustees. Short-term investments that mature in 60 days or less
are valued on the basis of amortized cost, which attempts to approximate market
value.
Security transactions are accounted for on trade date. Interest income is
recorded on the accrual basis. Dividends are recorded on the ex-dividend date.
Income, expenses (excluding class-specific expenses) and realized/unrealized
gains/losses are allocated proportionately to each class of shares based upon
the relative net asset value of outstanding shares. 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 realized capital gains, if any, are declared and paid
annually. However, 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.
The Fund intends to continue to comply with the special provisions of the
Internal Revenue Code available to investment companies and therefore no Federal
income tax provision is required.
Costs incurred by the Fund in connection with its organization have been
deferred and are being amortized over a period of five years from the date the
Fund commenced its operations.
The Fund may enter into repurchase agreement transactions. Under the terms
of a typical repurchase agreement, the Fund acquires an underlying security for
a relatively short period 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 amount of the purchase obligation, including interest. The
collateral is in the Fund's possession.
8
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WARBURG PINCUS SHORT-TERM TAX-ADVANTAGED BOND FUND
NOTES TO FINANCIAL STATEMENTS (CONT'D)
April 30, 1995 (Unaudited)
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2. INVESTMENT ADVISER, CO-ADMINISTRATORS AND DISTRIBUTOR
Warburg, Pincus Counsellors, Inc. ('Counsellors'), a wholly owned
subsidiary of Warburg, Pincus Counsellors G.P. ('Counsellors G.P.'), serves as
the Fund's investment adviser. The Fund pays Counsellors an investment advisory
fee calculated at an annual rate of .55% of the Fund's average daily net assets.
For the six months ended April 30, 1995, Counsellors earned and waived $67,567
in advisory fees and reimbursed the Fund for $100,416 in expenses.
Counsellors Funds Service, Inc. ('CFSI'), a wholly owned subsidiary of
Counsellors, and PFPC Inc. ('PFPC'), an indirect, wholly owned subsidiary of PNC
Bank Corp. ('PNC'), serve as the Fund's co-administrators. For administrative
services, CFSI and PFPC each receive a fee calculated at an annual rate of .10%
of the Fund's average daily net assets. For the six months ended April 30, 1995,
CFSI earned $12,285 in administrative services fees. For the six months ended
April 30, 1995, PFPC earned $34,812 in administrative services fees.
Counsellors Securities Inc. ('CSI'), also a wholly owned subsidiary of
Counsellors, acts as distributor of the Fund's shares. For distribution services
with respect to the Gamma Shares, the Fund pays CSI a fee calculated at an
annual rate of .25% of the Gamma Shares' average daily net assets; no
compensation is payable to CSI with respect to distribution of the Institutional
Shares. For the six months ended April 30, 1995, CSI earned $1,441 in
distribution fees.
3. INVESTMENT IN SECURITIES
The Fund's purchases and sales of investment securities for the six months
ended April 30, 1995 (excluding short-term investments and U.S. government
obligations) were $21,955,730 and $16,203,100, respectively. Purchases and sales
of United States government and agency obligations were $15,946,064 and
$10,977,866, respectively.
At April 30, 1995, the net unrealized appreciation from investments of
$36,152 was comprised of appreciation of $37,383 for those securities having an
excess of value over cost, and depreciation of $1,231 for those securities
having an excess of cost over value (based on cost for Federal income tax
purposes).
4. CAPITAL SHARE TRANSACTIONS
The Trust is authorized to issue an unlimited number of full and fractional
shares of beneficial interest, par value of $.001 per share. Currently, one
series of shares has been authorized for sale to the public, which has two
classes, Institutional Shares and Gamma Shares. The Trustees of the Fund may
classify or reclassify any unissued shares into one or more additional classes.
These shares are identical in all respects except that Gamma Shares bear the
expense of payments made pursuant to a distribution and shareholder servicing
plan adopted by the Fund in an amount not to exceed .25% (on an annualized
basis) of the average daily net assets of the Gamma Shares.
9
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WARBURG PINCUS SHORT-TERM TAX-ADVANTAGED BOND FUND
NOTES TO FINANCIAL STATEMENTS (CONT'D)
April 30, 1995 (Unaudited)
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Transactions in shares of the Fund were as follows:
<TABLE>
<CAPTION>
Institutional Shares Gamma Shares
-------------------------------- --------------------------------
For the Period For the Period
September 30, September 30,
1994 1994
For the Six (Commencement For the Six (Commencement
Months Ended of Operations) Months Ended of Operations)
April 30, 1995 through October April 30, 1995 through October
(Unaudited) 31, 1994 (Unaudited) 31, 1994
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
Shares sold 1,056,991 2,051,518 383,949 370,320
Shares issued to shareholders on reinvestment
of dividends 46,035 4,545 1,701 40
Shares redeemed (825,461) 0 (270,581) (350,000)
-------------- -------------- -------------- --------------
Net increase in shares outstanding 277,565 2,056,063 115,069 20,360
-------------- -------------- -------------- --------------
-------------- -------------- -------------- --------------
Proceeds from sale of shares $ 10,520,388 $ 20,500,150 $3,826,644 $ 3,703,200
Reinvested dividends 458,520 45,361 16,927 405
Net asset value of shares redeemed (8,232,804) 0 (2,692,939) (3,500,000)
-------------- -------------- -------------- --------------
Net increase from capital share transactions $ 2,746,104 $ 20,545,511 $1,150,632 $ 203,605
-------------- -------------- -------------- --------------
-------------- -------------- -------------- --------------
</TABLE>
5. NET ASSETS
Net assets at April 30, 1995, consisted of the following:
<TABLE>
<CAPTION>
Institutional Shares Gamma Shares Total
-------------------- ------------ -----------
<S> <C> <C> <C>
Capital contributed, net $ 23,391,635 $1,355,217 $24,746,852
Accumulated net realized loss from security
transactions (30,683) (601) (31,284)
Net unrealized appreciation (depreciation) from
investments 36,932 (780) 36,152
-------------------- ------------ -----------
Net assets $ 23,397,884 $1,353,836 $24,751,720
-------------------- ------------ -----------
-------------------- ------------ -----------
</TABLE>
10
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<PAGE>
FURTHER INFORMATION IS CONTAINED IN THE
PROSPECTUS, WHICH MUST PRECEDE OR
ACCOMPANY THIS REPORT.
WARBURG PINCUS FUNDS
P.O. BOX 9030
BOSTON, MASSACHUSETTS 02205-9030
SHAREHOLDER SERVICES
1-800-888-6878
PROPECTUSES
1-800-257-5614
[LOGO]
SEMIANNUAL
REPORT
APRIL 30, 1995
[ ] WARBURG PINCUS
SHORT-TERM TAX-ADVANTAGED BOND FUND
COUNSELLORS SECURITIES INC., DISTRIBUTOR
WPMGD-3-0495
