-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, SLgDAwcwK6y1v/H0QMR8TTMPiWQZYgZzdngDim//CyyWU0y2r557c2VTMIzaLnOF DqKHuil/jXcP8FLMcOrzAQ== 0000935069-00-000208.txt : 20000503 0000935069-00-000208.hdr.sgml : 20000503 ACCESSION NUMBER: 0000935069-00-000208 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20000229 FILED AS OF DATE: 20000502 FILER: COMPANY DATA: COMPANY CONFORMED NAME: WARBURG PINCUS WORLDPERKS TAX FREE MONEY FUND INC CENTRAL INDEX KEY: 0001066776 STANDARD INDUSTRIAL CLASSIFICATION: [] STATE OF INCORPORATION: MD FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: N-30D SEC ACT: SEC FILE NUMBER: 811-08901 FILM NUMBER: 616916 BUSINESS ADDRESS: STREET 1: 466 LEXINGTON AVENUE CITY: NEW YORK STATE: NY ZIP: 10017-3167 BUSINESS PHONE: 2128789548 MAIL ADDRESS: STREET 1: 466 LEXINGTON AVENUE CITY: NEW YORK STATE: NY ZIP: 10017-3167 FORMER COMPANY: FORMER CONFORMED NAME: WARBURG PINCUS TAX FREE MONEY MARKET FUND INC DATE OF NAME CHANGE: 19980723 N-30D 1 WARBURG PINCUS LONG-SHORT MARKET NEUTRAL FUND SAR [GRAPHIC OMITTED] [GRAPHIC OMITTED] WARBURG PINCUS FUNDS CREDIT SUISSE ASSET MANAGEMENT SEMIANNUAL REPORT FEBRUARY 29, 2000 (UNAUDITED) WARBURG PINCUS LONG-SHORT MARKET NEUTRAL FUND More complete information about the Funds, including charges and expenses, is provided in the PROSPECTUS, which must precede or accompany this document and which should be read carefully before investing. You may obtain additional copies by calling 800-WARBURG (800-927-2874) or by writing to Warburg Pincus Funds, P.O. Box 9030, Boston, MA 02205-9030. Provident Distributors, Inc., Distributor, located at Four Falls Corporate Center, 6th Floor, West Conshohocken, PA 19428-2961 is not affiliated with Credit Suisse Asset Management, LLC. Warburg Pincus Funds are advised by Credit Suisse Asset Management, LLC. FROM TIME TO TIME, THE FUNDS' INVESTMENT ADVISER AND CO-ADMINISTRATORS MAY WAIVE SOME FEES AND/OR REIMBURSE SOME EXPENSES, WITHOUT WHICH PERFORMANCE WOULD BE LOWER. WAIVERS AND/OR REIMBURSEMENTS ARE SUBJECT TO CHANGE. RETURNS ARE HISTORICAL AND INCLUDE CHANGE IN SHARE PRICE AND REINVESTMENT OF DIVIDENDS AND CAPITAL GAINS. PAST PERFORMANCE CANNOT GUARANTEE FUTURE RESULTS. RETURNS AND SHARE PRICE WILL FLUCTUATE, AND REDEMPTION VALUE MAY BE MORE OR LESS THAN ORIGINAL COST. INVESTMENT IN SHARES OF THE FUNDS CAN BE MORE VOLATILE AND RISKY THAN SOME OTHER FORMS OF INVESTMENT. IN ADDITION, IF THE ADVISER TAKES LONG POSITIONS IN STOCKS THAT DECLINE OR SHORT POSITIONS IN STOCKS THAT INCREASE IN VALUE, THEN THE LOSSES OF THE FUNDS MAY EXCEED THOSE OF OTHER STOCK MUTUAL FUNDS THAT HOLD LONG POSITIONS ONLY. THE VIEWS OF THE FUNDS' MANAGEMENT ARE AS OF THE DATE OF THE LETTERS AND PORTFOLIO HOLDINGS DESCRIBED IN THIS DOCUMENT ARE AS OF FEBRUARY 29, 2000; THESE VIEWS AND PORTFOLIO HOLDINGS MAY HAVE CHANGED SUBSEQUENT TO THESE DATES. NOTHING IN THIS DOCUMENT IS A RECOMMENDATION TO PURCHASE OR SELL SECURITIES. FUND SHARES ARE NOT DEPOSITS OR OTHER OBLIGATIONS OF CREDIT SUISSE ASSET MANAGEMENT, LLC ("CSAM") OR ANY AFFILIATE, ARE NOT FDIC INSURED AND ARE NOT GUARANTEED BY CSAM OR ANY AFFILIATE. FUND INVESTMENTS ARE SUBJECT TO INVESTMENT RISKS, INCLUDING LOSS OF YOUR INVESTMENT. WARBURG PINCUS LONG-SHORT MARKET NEUTRAL FUND PORTFOLIO MANAGERS' LETTER -- FEBRUARY 29, 2000 - -------------------------------------------------------------------------------- March 24, 2000 Dear Shareholders: We are writing to report on the results of the Warburg Pincus Long-Short Market Neutral Fund (the "Fund") for the six months ended February 29, 2000. At February 29, 2000, the net asset value ("NAV") of the Fund's institutional shares was $15.50, compared to an NAV of $14.21 on August 31, 1999. As a result, the institutional shares' total return was 17.8%, (assuming the reinvestment of dividends and distributions totaling $1.1220 per share). By comparison, the Salomon Smith Barney U.S. 1-Month Treasury Bill Index1 benchmark (the "Index") returned 2.3% during the same period. At February 29, 2000, NAV of the Fund's common shares was $15.67, compared to an NAV of $14.19 on August 31, 1999. As a result, the common shares' total return was 17.6%, (assuming the reinvestment of dividends and distributions totaling $.9290 per share). By comparison, the Index returned 2.3% during the same period. The Fund significantly outperformed the Index during the fiscal half-year due to a positive combination of market conditions and our weighting of fundamental stock selection factors that our research concluded would most effectively discriminate between attractive and unattractive stocks. The factors that we correctly emphasized were earnings revisions, which were plentiful in a buoyant macroeconomic environment; operating performance, as reflected by companies' income statements rather than their balance sheets; and long-term relative strength. Unlike earlier periods, the market's high level of overall volatility helped performance. This served to create a number of opportunities of which we took advantage. Share-price momentum and relative valuation worked notably well during the period in this regard. Although our investment discipline is based on stock selection and does not significantly overweight or underweight industry sectors relative to the benchmark, results during the period were particularly strong in two sectors, technology and consumer cyclicals. Within technology, the Fund's long holdings were positioned to benefit from strong global demand for computer and Internet-related equipment, while short holdings were more oriented toward mainframe computers and older technology. Within consumer cyclicals, we profited from shorting companies that were more sensitive to a potential increase in commodity prices and owning the shares of companies that were more end-product-oriented. 1 WARBURG PINCUS LONG-SHORT MARKET NEUTRAL FUND PORTFOLIO MANAGERS' LETTER -- FEBRUARY 29, 2000 (CONCLUDED) - -------------------------------------------------------------------------------- Perhaps the weakest spot in the portfolio was the media sector. Our media stocks experienced disappointing relative performance, as several long positions did not benefit from improving earnings expectations and shorts were not penalized for their deficiencies as much as we had expected. As developments occur that we believe would be of interest to you, we will keep you informed. Meanwhile, if you have any questions about your portfolio or the capital markets generally, please feel free to call upon us at any time. Sincerely yours, Credit Suisse Asset Management Structured Equities Management Team William W. Priest, Jr., Managing Director Eric N. Remole, Managing Director Marc E. Bothwell, Vice President Michael A. Welhoelter, Vice President INVESTING IN SHARES OF THE FUND CAN BE MORE VOLATILE AND RISKY THAN SOME OTHER FORMS OF INVESTMENTS. IN ADDITION, IF THE ADVISER TAKES LONG POSITIONS IN STOCKS THAT DECLINE OR SHORT POSITIONS IN STOCKS THAT INCREASE IN VALUE, THEN LOSSES OF THE FUND MAY EXCEED THOSE OF OTHER STOCK MUTUAL FUNDS THAT HOLD LONG POSITIONS ONLY. PERFORMANCE SINCE SIX MONTHS ONE YEAR INCEPTION 2/29/00 (3/1/99 - 2/29/00) (ANNUALIZED) - -------------------------------------------------------------------------------- Warburg Pincus Long-Short Market Neutral Fund (Institutional) 2 17.8% 12.4% 8.1% Warburg Pincus Long-Short Market Neutral Fund (Common) 3 17.6% 12.2% 7.5% Salomon Smith Barney U.S. One-Month Treasury Index1 2.3% 4.6% 7.1% 4 - -------------------------------------------------------------------------------- 1 MONTHLY RETURN EQUIVALENTS OF YIELD AVERAGES WHICH ARE NOT MARKED TO MARKET. THE SALOMON SMITH BARNEY ONE-MONTH TREASURY INDEX CONSISTS OF THE LAST ONE-MONTH TREASURY BILL ISSUES. 2 INCEPTION: 7/31/98 3 INCEPTION: 9/8/98 4 SINCE INCEPTION OF INSTITUTIONAL SHARES 2 WARBURG PINCUS LONG-SHORT MARKET NEUTRAL FUND SCHEDULE OF INVESTMENTS February 29, 2000 (Unaudited) - -------------------------------------------------------------------------------- NUMBER OF SHARES VALUE ------ ------- COMMON STOCKS 82.0% AEROSPACE/DEFENSE 1.3% Textron, Inc. 1,600 $ 97,600 ----------- AIR TRANSPORT-FREIGHT 1.5% Southwest Airlines Co. 6,000 110,625 ----------- AUTOMOTIVE 7.8% Ford Motor Co. 4,200 174,825 General Motors Corp. 1,700 129,306 Johnson Controls, Inc. 3,800 202,825 PACCAR Inc. 1,300 55,981 ----------- 562,937 ----------- BEVERAGES & TOBACCO 1.7% Anheuser-Busch Cos., Inc. 400 25,650 Philip Morris Cos., Inc. 1,300 26,081 Tootsie Roll Industries 2,300 68,281 ----------- 120,012 ----------- BROADCASTING & PUBLISHING 0.8% AMFM, Inc.** 1,000 61,375 ----------- CABLE 3.2% At Home Corp. Series A** 3,400 116,663 Cablevision Systems Corp.** 1,800 115,538 ----------- 232,201 ----------- CHEMICALS 1.7% Air Products & Chemicals, Inc. 3,200 82,400 Occidental Petroleum Corp. 2,700 43,369 ----------- 125,769 ----------- COMPUTERS, SOFTWARE & SERVICES 4.4% Earthlink, Inc.** 1,876 46,666 RealNetworks, Inc.** 800 56,250 VERITAS Software Corp.** 1,100 217,663 ----------- 320,579 ----------- CONSTRUCTION & BUILDING MATERIALS 1.0% Ingersoll-Rand Co. 1,800 68,963 ----------- CONSUMER PRODUCTS & SERVICES 0.9% Avon Products 1,800 48,713 Nu Skin Enterprises, Inc.** 1,700 15,194 ----------- 63,907 ----------- See Accompanying Notes to Financial Statements. 3 WARBURG PINCUS LONG-SHORT MARKET NEUTRAL FUND SCHEDULE OF INVESTMENTS (CONT'D) February 29, 2000 (Unaudited) - -------------------------------------------------------------------------------- NUMBER OF SHARES VALUE ------ ------- COMMON STOCKS (CONT'D) ELECTRIC UTILITIES 1.4% FirstEnergy Corp. 1,100 $ 20,556 Niagara Mohawk Power 2,900 34,075 Pinnacle West Capital 1,600 44,200 ----------- 98,831 ----------- ELECTRONICS 8.7% Circuit City Stores 2,100 84,788 JDS Uniphase Corp.** 200 52,750 Linear Technology Corp. 1,300 136,419 Motorola, Inc. 1,767 301,274 Teradyne, Inc.** 600 52,200 ----------- 627,431 ----------- ENERGY & OIL EXPLORATION 1.9% Apache Corp. 1,200 43,800 Burlington Resources, Inc. 1,800 49,725 Tidewater, Inc. 1,500 42,469 ----------- 135,994 ----------- FINANCIAL SERVICES 10.7% Hartford Financial Services, Inc. 5,400 168,750 J.P. Morgan & Co., Inc. 1,600 177,600 Jefferson-Pilot Corp. 3,000 156,188 Legg Mason, Inc. 2,000 78,500 Merrill Lynch & Co., Inc. 300 30,750 Regions Financial Corp. 1,700 34,425 UnionBanCal Corp. 3,300 106,013 USX - Marathon Group 1,000 21,625 ----------- 773,851 ----------- FOOD & BEVERAGE 3.8% Coors, (Adolph) Class B 1,500 65,813 Darden Restaurants, Inc. 2,700 35,606 Fleming Companies, Inc. 6,000 92,625 U.S. Foodservice 4,400 77,825 ----------- 271,869 ----------- GAS UTILITIES 0.2% Peoples Energy 500 14,469 ----------- HEALTH CARE 4.0% Abbott Laboratories 1,300 42,575 Aetna, Inc. 400 16,450 Boston Scientific Corp. 700 12,775 Cigna Corp. 1,400 103,338 Wellpoint Health Networks, Inc.** 1,700 114,750 ----------- 289,888 ----------- See Accompanying Notes to Financial Statements. 4 WARBURG PINCUS LONG-SHORT MARKET NEUTRAL FUND SCHEDULE OF INVESTMENTS (CONT'D) February 29, 2000 (Unaudited) - -------------------------------------------------------------------------------- NUMBER OF SHARES VALUE ------ ------- COMMON STOCKS (CONT'D) INTERNET CONTENT 3.0% Extreme Networks, Inc.** 500 $ 55,625 InfoSpace.com, Inc. 300 65,100 Priceline.Com, Inc.** 1,700 95,094 ----------- 215,819 ----------- METALS & MINING 1.7% Barrick Gold Corp. 2,300 37,519 Bethlehem Steel Corp. 2,500 14,219 Freeport-McMoran Copper & Gold, Inc. Class B** 3,300 45,375 Ryerson Tull, Inc. 1,800 23,850 ----------- 120,963 ----------- OIL SERVICES 3.8% Enron Corp. 3,400 234,600 Pennzoil-Quaker State Co. 4,400 38,500 ----------- 273,100 ----------- PAPER & FOREST PRODUCTS 1.3% Weyerhaeuser Co. 1,800 92,363 ----------- PHARMACEUTICALS 2.6% Chiron Corp.** 600 30,000 ICOS Corp.** 3,000 157,125 ----------- 187,125 ----------- REAL ESTATE 4.3% Apartment Investment & Management Company, Class A 3,200 118,400 Equity Residential Properties Trust 1,100 43,931 General Growth Properties, Inc. 3,400 98,388 Host Marriott Corp. 1,800 15,975 Simon Debartolo Group 1,600 37,600 ----------- 314,294 ----------- RENTALS 0.3% Hertz Corp. 700 25,069 ----------- RETAIL - SPECIALTY APPAREL STORES 3.2% Intimate Brands, Inc. Class A 2,900 94,794 Safeway, Inc.** 500 19,281 Target Corp. 700 41,300 Ticketmaster Online-CitySearch, Inc.** 2,100 73,270 ----------- 228,645 ----------- SEMICONDUCTOR 2.1% Broadcom Corp.** 400 78,950 National Semiconductor Corp.** 1,000 75,125 ----------- 154,075 ----------- See Accompanying Notes to Financial Statements. 5 WARBURG PINCUS LONG-SHORT MARKET NEUTRAL FUND SCHEDULE OF INVESTMENTS (CONT'D) February 29, 2000 (Unaudited) - -------------------------------------------------------------------------------- NUMBER OF SHARES VALUE ------ ------- COMMON STOCKS (CONT'D) TELECOMMUNICATIONS 4.9% A. H. Belo Corp. Class A 4,200 $ 54,075 American Tower Corporation, Class A** 700 34,475 AT&T Corp. 2,000 98,875 Galileo International, Inc. 1,300 22,100 MCI WorldCom, Inc.** 1,000 44,625 Nextel Communications, Inc.** 500 68,156 NEXTLINK Communications, Inc.** 300 33,056 ----------- 355,362 ----------- TOTAL COMMON STOCKS (Cost $6,102,083) $ 5,943,117 ----------- PAR (000) ----- REPURCHASE AGREEMENT 14.0% Bear Stearns (Agreement dated 02/29/00, to be repurchased at $1,014,141, collateralized by $1,065,000 U.S. Treasury Inflation Index Note 3.875% due 01/15/09. Market value of collateral is $1,036,206.) 5.760% 03/01/00 $1,014 $ 1,013,979 (Cost $1,013,979) ----------- NUMBER OF SHARES ------ SECURITIES SOLD SHORT (81.9%) ACCIDENT & HEALTH INSURANCE (1.1%) UAL Corp.** (1,600) $ (78,000) ----------- AEROSPACE/DEFENSE (5.0%) AMR Corp.** (1,400) (74,025) Lear Corp.** (1,800) (38,025) Lockheed Martin Corp. (3,500) (61,031) T.R.W., Inc. (4,000) (192,000) ----------- (365,081) ----------- ARRANGEMENT OF TRANSPORTATION OF FREIGHT & CARGO (3.0%) Avnet, Inc. (3,200) (214,000) ----------- AUTOMOBILE PARTS & EQUIPMENT (3.6%) Autonation, Inc.** (9,300) (70,331) Dana Corp. (3,100) (66,069) Genuine Parts Co. (900) (20,306) Goodyear Tire & Rubber Co. (4,600) (104,363) ----------- (261,069) ----------- See Accompanying Notes to Financial Statements. 6 WARBURG PINCUS LONG-SHORT MARKET NEUTRAL FUND SCHEDULE OF INVESTMENTS (CONT'D) February 29, 2000 (Unaudited) - -------------------------------------------------------------------------------- NUMBER OF SHARES VALUE ------ ------- SECURITIES SOLD SHORT (CONT'D) BUILDING & BUILDING MATERIALS (1.0%) Armstrong World Industries (2,600) $ (49,400) Johns Manville Corp. (2,400) (19,500) ----------- (68,900) ----------- BUSINESS SERVICES (2.5%) ACNielsen Corp. (1,000) (16,938) Catalina Marketing Corp.** (1,400) (119,175) Keane, Inc.** (2,000) (48,000) ----------- (184,113) ----------- CABLE (1.3%) Cox Communications, Inc.** (2,100) (95,419) ----------- CAPITAL IMPROVEMENT (1.3%) American Standard Companies** (2,800) (97,650) ----------- COMMUNICATIONS & MEDIA (2.1%) Chris-Craft Industries, Inc.** (1,300) (85,556) Telephone and Data Systems, Inc. (600) (63,300) ----------- (148,856) ----------- COMPUTERS, SOFTWARE & SERVICES (4.5%) BMC Software, Inc.** (3,100) (142,600) Citrix Systems, Inc.** (600) (63,263) Storage Technology Corp.** (1,000) (12,750) Tandy Corp. (2,900) (110,381) ----------- (328,994) ----------- CONGLOMERATE (1.1%) General Electric Co. (600) (79,313) ----------- CONSUMER PRODUCTS & SERVICES (3.2%) Colgate-Palmolive Co. (1,500) (78,281) Gillette Co. (2,600) (91,650) Newell Rubbermaid, Inc. (700) (16,188) Whitman Corp. (3,800) (47,500) ----------- (233,619) ----------- ELECTRIC UTILITIES (1.0%) Unicom Corp. (1,900) (71,844) ----------- ELECTRONICS (5.0%) Arrow Electronics, Inc.** (3,500) (105,875) Atmel Corp.** (2,900) (143,550) Texas Instruments, Inc. (700) (116,550) ----------- (365,975) ----------- See Accompanying Notes to Financial Statements. 7 WARBURG PINCUS LONG-SHORT MARKET NEUTRAL FUND SCHEDULE OF INVESTMENTS (CONT'D) February 29, 2000 (Unaudited) - -------------------------------------------------------------------------------- NUMBER OF SHARES VALUE ------ ------- SECURITIES SOLD SHORT (CONT'D) ENVIRONMENTAL SERVICES (0.2%) Waste Management, Inc. (1,000) $ (15,000) ----------- FINANCIAL SERVICES (10.1%) American Express Co. (400) (53,675) American Financial Group (3,100) (65,100) CCB Financial Corp. (900) (33,413) Charles Schwab Corp. (1,500) (62,719) Cincinnati Financial Corp. (900) (26,888) Franklin Resources (5,200) (141,375) MBIA, Inc. (2,600) (99,775) MGIC Investment Corp. (2,000) (74,750) People's Bank (1,600) (31,925) PMI Group, Inc. (700) (25,419) Starwood Financial, Inc. (900) (15,188) Union Planters Corporation (1,800) (49,275) Wachovia Corp. (900) (51,469) ----------- (730,971) ----------- FOOD & BEVERAGE (2.8%) Coca-Cola Co. (3,500) (169,531) Tricon Global Restaurants, Inc.** (1,200) (31,950) ----------- (201,481) ----------- HEALTH CARE (6.7%) Beckman Coulter, Inc. (3,000) (144,375) PE Corp. - PE Biosystems Group (1,800) (189,900) Stryker Corp. (900) (52,650) United Healthcare (2,000) (102,250) ----------- (489,175) ----------- INDUSTRIAL GOODS & MATERIALS (2.6%) Southdown, Inc. (500) (24,813) Spx Corp.** (1,900) (165,419) ----------- (190,232) ----------- LEISURE (0.6%) International Game Technology (2,600) (46,313) ----------- OIL SERVICES (5.8%) Amerada Hess Corp. (1,500) (75,844) National Fuel Gas Co. (1,500) (61,406) R & B Falcon Corp.** (4,600) (71,013) Texaco, Inc. (2,000) (94,875) Weatherford International, Inc.** (2,600) (117,000) ----------- (420,138) ----------- See Accompanying Notes to Financial Statements. 8 WARBURG PINCUS LONG-SHORT MARKET NEUTRAL FUND SCHEDULE OF INVESTMENTS (CONT'D) February 29, 2000 (Unaudited) - -------------------------------------------------------------------------------- NUMBER OF SHARES VALUE ------ ------- SECURITIES SOLD SHORT (CONT'D) PAPER & FOREST PRODUCTS (3.7%) Bowater, Inc. (3,400) $ (167,238) Georgia-Pacific Group (3,000) (104,063) ----------- (271,301) ----------- PHARMACEUTICALS (3.3%) FMC Corp.** (1,700) (82,131) Forest Laboratories, Inc.** (400) (27,325) IMC Global, Inc. (2,400) (32,400) Monsanto Co. (1,500) (58,219) Watson Pharmaceuticals, Inc.** (1,000) (40,000) ----------- (240,075) ----------- PUBLISHING (1.6%) Harland (John H.) Co. (1,100) (16,981) Investment Technology Group, Inc. (2,600) (100,750) ----------- (117,731) ----------- RETAIL - SPECIALTY APPAREL STORES (4.4%) Cintas Corp. (700) (27,956) Dillard's, Inc. Class A (4,100) (71,238) Gap, Inc. (1,200) (57,975) Ikon Office Solutions (5,700) (39,900) Payless ShoeSource, Inc.** (900) (35,550) Penney, J.C. Co. (5,700) (89,775) ----------- (322,394) ----------- TELECOMMUNICATIONS (3.8%) Alltel Corp. (1,700) (98,600) AT&T Corp. - Liberty Media Group Class A** (1,600) (83,600) Citizens Utilities Co. Class B** (2,000) (30,500) Lucent Technologies (1,000) (59,500) ----------- (272,200) ----------- See Accompanying Notes to Financial Statements. 9 WARBURG PINCUS LONG-SHORT MARKET NEUTRAL FUND SCHEDULE OF INVESTMENTS (CONCLUDED) February 29, 2000 (Unaudited) - -------------------------------------------------------------------------------- NUMBER OF SHARES VALUE ------ ------- SECURITIES SOLD SHORT (CONT'D) TRANSPORTATION (0.3%) Wisconsin Central Transportation Corp.** (2,000) $ (24,750) ----------- TOTAL SECURITIES SOLD SHORT (Cost $6,678,039) $(5,934,595) ----------- TOTAL INVESTMENTS 14.1% (Cost $438,023*) $ 1,022,501 OTHER ASSETS IN EXCESS OF LIABILITIES 85.9% $ 6,224,875 ----------- TOTAL NET ASSETS 100.0% $ 7,247,376 =========== * Cost for Federal income tax purposes at February 29, 2000 is $469,914. The gross appreciation (depreciation) on a tax basis is as follows: Gross Appreciation - Investments $ 845,425 Gross Depreciation - Investments (1,017,947) Gross Appreciation - Short Sales 1,259,158 Gross Depreciation - Short Sales (534,049) ----------- Net Appreciation $ 552,587 =========== ** Non-income producing securities. See Accompanying Notes to Financial Statements. 10 WARBURG PINCUS LONG-SHORT MARKET NEUTRAL FUND STATEMENT OF ASSETS AND LIABILITIES February 29, 2000 (Unaudited) - -------------------------------------------------------------------------------- ASSETS Investments, at value (cost - $7,116,062) $ 6,957,096 Deposits with brokers and custodian bank for securities sold short or futures contract 6,132,722 Cash 73,621 Receivable for Fund shares sold 4,955 Receivable from investment adviser 3,239 Dividends and interest receivable 19,816 Prepaid expenses and other assets 10,480 ----------- Total Assets 13,201,929 ----------- LIABILITIES Securities sold short (proceeds $6,678,039) 5,934,595 Distribution fee payable (Common shares) 610 Accrued expenses payable 19,348 ----------- Total Liabilities 5,954,553 ----------- NET ASSETS Capital stock, $0.001 par value 465 Paid-in capital 8,158,428 Undistributed net investment income 27,299 Accumulated net realized loss from investments and securities sold short (1,523,294) Net unrealized appreciation on investments and other, if any 584,478 ----------- Net Assets $ 7,247,376 =========== INSTITUTIONAL SHARES Net assets $ 3,750,252 ----------- Shares outstanding 241,912 ----------- Net asset value, offering price and redemption price per share $ 15.50 =========== COMMON SHARES Net assets $ 3,497,124 ----------- Shares outstanding 223,134 ----------- Net asset value, offering price and redemption price per share $ 15.67 =========== See Accompanying Notes to Financial Statements. 11 WARBURG PINCUS LONG-SHORT MARKET NEUTRAL FUND STATEMENT OF OPERATIONS For the Six Months Ended February 29, 2000 (Unaudited) - -------------------------------------------------------------------------------- INVESTMENT INCOME Dividends $ 46,301 Interest 176,605 ---------- Total Investment Income 222,906 ---------- EXPENSES Investment advisory fees 38,351 Administration fees 4,816 Dividend expense 37,434 Printing fees 33,701 Registration fees 19,721 Audit fees 7,559 Transfer agent fees 6,283 Directors fees 5,300 Legal fees 3,631 Distribution fees 2,794 Custodian fees 1,080 Insurance expense (3,731) Miscellaneous fees 3,079 ---------- 160,018 Less fees waived and reimbursed (51,692) ---------- Total Expenses 108,326 ---------- Net Investment Income 114,580 ---------- REALIZED AND UNREALIZED GAIN/(LOSS) ON INVESTMENTS Net realized gain/(loss) from: Security transactions 311,942 Securities sold short (388,865) ---------- (76,923) ---------- Net change in unrealized appreciation from Investments 1,061,910 ---------- Net Gain On Investments 984,987 ---------- Net Increase In Net Assets Resulting From Operations $1,099,567 ========== See Accompanying Notes to Financial Statements. 12 WARBURG PINCUS LONG-SHORT MARKET NEUTRAL FUND STATEMENT OF CHANGES IN NET ASSETS - --------------------------------------------------------------------------------
FOR THE SIX FOR THE YEAR MONTHS ENDED ENDED FEBRUARY 29, 2000 AUGUST 31, 1999 ----------------- --------------- (UNAUDITED) INCREASE/(DECREASE) IN NET ASSETS: OPERATIONS: Net investment income $ 114,580 $ 499,594 Net gain/(loss) on investments 984,987 (1,815,539) ----------- ----------- Net increase/(decrease) in net assets resulting from operations. 1,099,567 (1,315,945) ----------- ----------- Dividends and Distributions to shareholders: From net investment income: Institutional shares (345,792) (30,279) Common shares (127,325) (90,662) From net realized capital gains: Institutional shares -- (52,082) Common shares -- (159,858) ----------- ----------- Total distributions to shareholders (473,117) (332,881) ----------- ----------- Net capital share transactions (1,164,655) 3,132,125 ----------- ----------- Total increase/(decrease) in net assets (538,205) 1,483,299 NET ASSETS: Beginning of period 7,785,581 6,302,282 ----------- ----------- End of period $ 7,247,376 $ 7,785,581 =========== =========== Undistributed net investment income $ 27,299 $ 385,836 =========== ===========
See Accompanying Notes to Financial Statements. 13 WARBURG PINCUS LONG-SHORT MARKET NEUTRAL FUND LONG-SHORT MARKET NEUTRAL FUND FINANCIAL HIGHLIGHTS (For a Share Outstanding Throughout Each Period) - --------------------------------------------------------------------------------
INSTITUTIONAL COMMON ------------------------------------------------- ------------------------------------- FOR THE SIX FOR THE YEAR FOR THE PERIOD FOR THE SIX MONTHS ENDED ENDED JULY 31, 1998* MONTHS ENDED FOR THE PERIOD FEBRUARY 29, AUGUST 31, TO AUGUST 31, FEBRUARY 29, SEPTEMBER 8, 1998* 2000 1999 1998 2000 TO AUGUST 31, 1999 ------------ ----------- -------------- ------------- -------------------- (UNAUDITED) (UNAUDITED) Net asset value, beginning of period $14.21 $15.27 $15.00 $14.19 $15.19 ------ ------ ------ ------ ------ Income from investment operations Net investment income 0.25 + 0.39 + 0.05 0.24 + 0.32 + Net gain/(loss) on investments and securities sold short (both realized and unrealized) 2.16 (1.25) 0.22 2.17 (1.12) ------ ------ ------ ------ ------ Total from investment operations 2.41 (0.86) 0.27 2.41 (0.80) ------ ------ ------ ------ ------ Less Distributions Dividends from net investment income (1.12) (0.07) -- (0.93) (0.07) Distributions from capital gains-- -- (0.13) -- -- (0.13) ------ ------ ------ ------ ------ Total distributions (1.12) (0.20) -- (0.93) (0.20) ------ ------ ------ ------ ------ Net asset value, end of period $15.50 $14.21 $15.27 $15.67 $14.19 ====== ====== ====== ====== ====== Total return 17.76%(c) (5.68)% 1.80%(c) 17.63%(c) (5.33)%(c) Ratios/Supplemental Data: Net assets, end of period (000s omitted) $3,750 $5,901 $6,302 $3,497 $1,885 Ratio of expenses to average net assets (including dividend expense) 3.09%(a)(b) 3.33%(a) 4.32%(a)(b) 3.37%(a)(b) 3.40%(a)(b) Ratio of expenses to average net assets (excluding dividend expense) 2.00%(a)(b) 2.00%(a) 2.00%(a)(b) 2.26%(a)(b) 2.24%(a)(b) Ratio of net investment income to average net assets 3.43%(b) 2.65% 1.96%(b) 3.23%(b) 2.46%(b) Fund turnover rate 147%(c) 705% 130%(c) 147%(c) 705% - --------------------- (a) Without the voluntary waiver of advisory fees and administration fees, the ratios of expenses to average net assets for the Institutional Class would have been 3.46% (excluding dividend expense) and 4.55% (including dividend expense) annualized for the six months ended February 29, 2000, 2.56% (excluding dividend expense) and 3.93% (including dividend expense) for the year ended August 31, 1999 and 5.12% (excluding dividend expense) and 7.44% (including dividend expense) annualized for the period ended August 31, 1998. Without the voluntary waiver of advisory fees and administration fees, the ratios of expenses to average net assets for the Common Class would have been 3.90% (excluding dividend expense) and 5.18% (including dividend expense) annualized for the six months ended February 29, 2000 and 2.84% (excluding dividend expense) and 4.00% (including dividend expense) annualized for the period ended August 31, 1999. (b) Annualized. (c) Not Annualized. * Inception Date. + Per share information is calculated using the average share outstanding method.
See Accompanying Notes to Financial Statements. 14 WARBURG PINCUS LONG-SHORT MARKET NEUTRAL FUND NOTES TO FINANCIAL STATEMENTS February 29, 2000 (Unaudited) - -------------------------------------------------------------------------------- NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Warburg, Pincus Long-Short Market Neutral Fund, Inc. (the "Fund"), is registered under the Investment Company Act of 1940 , as amended (the "1940 Act"), as non-diversified, open-end management investment company. The Fund is authorized to offer three classes of shares: Common, Advisor and Institutional, although only Common shares and Institutional shares of the Fund are currently offered. Common shares for the Fund bear expenses paid pursuant to a shareholder servicing and distribution agreement at an annual rate not to exceed .25% of the average daily net asset value of the Fund's outstanding Common shares. In addition, the Common shares bear a co-administration fee. The Fund is permitted to engage in the investment strategies described in the Notes to Financial Statements. The Fund is not obligated to pursue any of the following strategies and does not represent that these techniques are available now or will be available at any time in the future. Please refer to the Fund's prospectus and statement of additional information for a description of its investment strategies. A) SECURITY VALUATION -- The net asset value of the Fund is determined daily as of the close of regular trading on The New York Stock Exchange Inc. The Fund's securities for which market quotations are readily available are valued at market value, which is currently determined using the last reported sales price. If no sales are reported, as in the case of some securities traded over-the-counter, the securities are valued at the mean between the last reported bid and asked prices. All other securities and assets are valued as determined in good faith by the Fund's Board of Directors. Short-term obligations with maturities of 60 days or less are valued at amortized cost, which approximates market value. B) FOREIGN CURRENCY TRANSACTIONS -- Transactions denominated in foreign currencies are recorded in the Fund's records at the current prevailing exchange rates. Asset and liability accounts that are denominated in a foreign currency are adjusted daily to reflect current exchange rates. Transaction gains or losses resulting from changes in exchange rates during the reporting period or upon settlement of the foreign currency transaction are reported in operations for the current period. It is not practical to isolate that portion of both realized and unrealized gains and losses on investments in the statement of operations that result from fluctuations in foreign currency exchange rates. The Fund reports certain foreign currency related transactions as 15 WARBURG PINCUS LONG-SHORT MARKET NEUTRAL FUND NOTES TO FINANCIAL STATEMENTS (CONT'D) February 29, 2000 (Unaudited) - -------------------------------------------------------------------------------- NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) components of realized gains for financial reporting purposes, whereas such components are treated as ordinary income (loss) for Federal income tax purposes. C) SECURITY TRANSACTIONS AND INVESTMENT INCOME -- Security transactions are accounted for on the trade date. The cost of investments sold is determined by use of the specific identification method for both financial reporting and income tax purposes. Interest income is recorded on the accrual basis. Dividends are recorded on the ex-dividend date. Certain expenses are class specific expenses and vary by class. Expenses not directly attributable to a specific Fund or class are allocated based on relative net assets of each Fund and class, respectively. D) DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS -- The Fund calculates its dividends from net investment income. Net investment income includes interest accrued and dividends earned on the Fund's portfolio securities for the applicable period less applicable expense. The Fund will distribute substantially all of its net realized capital gains and all net investment income, if any, to its shareholders at least annually. The character of distributions made during the year for net investment income or net realized gains may differ from their ultimate characterization for federal income tax purposes due to generally accepted accounting principles (GAAP) and tax differences in the character of income and expense recognition. These differences are primarily due to differing treatments for net operating losses, paydowns on mortgage-backed securities, passive foreign investment companies, and forward foreign currency contracts. To the extent these differences are permanent in nature, such amounts are reclassified within capital accounts based on U.S. tax-basis treatment. Temporary differences do not require reclassification E) FEDERAL INCOME TAXES -- No provision is made for Federal taxes as it is the Fund's intention to qualify for and elect the tax treatment applicable to regulated investment companies under the Internal Revenue Code of 1986, as amended and make the requisite distributions to its shareholders which will be sufficient to relieve it from Federal income and excise taxes. 16 WARBURG PINCUS LONG-SHORT MARKET NEUTRAL FUND NOTES TO FINANCIAL STATEMENTS (CONT'D) February 29, 2000 (Unaudited) - -------------------------------------------------------------------------------- NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) F) USE OF ESTIMATES -- The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. G) REPURCHASE AGREEMENTS -- Money market instruments may be purchased from banks and non-bank dealers subject to the seller's agreement to repurchase them at an agreed upon date and price. Collateral for repurchase agreements may have longer maturities than the maximum permissible remaining maturity of portfolio investments. The seller will be required on a daily basis to maintain the value of the securities subject to the agreement at not less than the repurchase price. The agreements are conditional upon the collateral being deposited under the Federal Reserve book-entry system or held in a separate account by the Fund's custodian or an authorized securities depository. The Fund had an open repurchase agreement at February 29, 2000. H) FUTURES TRANSACTIONS -- A Fund invests in futures contracts for the purpose of hedging its existing portfolio securities, or securities that the Fund intends to purchase, against fluctuations in fair value caused by changes in prevailing market interest rates or securities prices, or for other purposes. The Fund may enter into futures contracts subject to certain limitations. Upon entering into a futures contract, each Fund is required to deposit cash or liquid securities or pledge U.S. Government securities of an initial margin. Subsequent payments, which are dependent on the daily fluctuations in the value of the underlying instrument, are made or received by the Fund each day (daily variations margin) and are recorded as unrealized gains or losses until the contracts are closed. When the contracts are closed, the Fund records a realized gain or loss equal to the difference between the proceeds from (or cost of) the closing transaction and the Fund's basis in the contracts. Risks of entering into futures contracts include the possibility that there will be a perfect price correlation between the futures contracts and the underlying securities. Second, it is possible that a lack of liquidity for futures contracts could exist in the secondary market, resulting in an inability to close a futures position prior to its maturity date. Third, the purchase of a futures contract involves the risk that a Fund could lose more than the original margin deposit required to initiate a futures transaction. 17 WARBURG PINCUS LONG-SHORT MARKET NEUTRAL FUND NOTES TO FINANCIAL STATEMENTS (CONT'D) February 29, 2000 (Unaudited) - -------------------------------------------------------------------------------- NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) I) OPTION TRANSACTIONS -- When a Fund writes or purchases a call or a put option, an amount equal to the premium received or paid by the Fund is recorded as a liability or asset, the value of which is marked-to-market daily to reflect the current market value of the option. When the option expires, the Fund realizes a gain or loss equal to the amount of the premium received or paid. When the Fund exercises an option or enters into a closing transaction by purchasing or selling an offsetting option, it realizes a gain or loss without regard to any unrealized gain or loss to underlying security. The potential loss associated with purchasing an option is limited to the premium paid, and the premium would partially offset any gains achieved from its use. J) TBA PURCHASE COMMITMENTS -- The Funds may enter into "TBA" (to be announced) purchases commitments to purchase securities for a fixed price at a future date, typically not exceeding 45 days. TBA purchase commitments may be considered securities in themselves, and involve a risk of loss if the value of the security to be purchased declines prior to settlement date. This risk is in addition to the risk of decline in each Fund's other assets. Unsettled TBA purchase commitments are valued at the current market value of the underlying securities, according to the procedures described under "Security Valuation" above. K) SECURITIES LENDING -- Loans of the securities are required at all times to be secured by collateral at least equal to 102% of the market value of domestic securities on loan including any accrued interest thereon and 105% of the market value of foreign securities on loan including any accrued interest thereon. Cash collateral received by the Fund in connection with securities lending activity is invested in the Boston Global Investment Trust. However, in the event of default or bankruptcy by the other party to the agreement, realization and/or retention of the collateral may be subject to legal proceedings. The Fund had no securities on loan to brokers at February 29, 2000. L) SHORT SALES -- When a Fund's investment adviser believes that a security is overvalued, it may sell the security short by borrowing the same security from a broker or other institution and selling the security. A Fund will incur a loss as a result of the short sale if the price of the borrowed security increases between the date of the short sale and the date on which the Fund replaces such security. A Fund will realize a gain if there is a decline in price of the security between those dates, and the decline exceeds the cost of the borrowing the security and other 18 WARBURG PINCUS LONG-SHORT MARKET NEUTRAL FUND NOTES TO FINANCIAL STATEMENTS (CONT'D) February 29, 2000 (Unaudited) - -------------------------------------------------------------------------------- NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) transaction costs. There can be no assurance that a Fund will be able to close out a short position at any particular time or at an acceptable price. Although a Fund's gain is limited to the amount at which it is sold a security short, its potential loss is limited only by the maximum attainable price of the security less the price at which the security was sold. Until a Fund replaces a borrowed security, it will maintain at all times cash or other liquid securities in an amount which, when added to any amount deposited with a broker as collateral will at least equal the current market value of the security sold short. Depending on arrangements made with brokers, a Fund may not receive any payments (including interest) on collateral deposited with them. The Fund will not make a short sale if, after giving effect to such sale, the market value of all securities sold short exceeds 100% of its net asset. M) OTHER -- Securities denominated in currencies other than U.S. dollars are subject to changes in value due to fluctuations in exchange rates. Some countries in which the Funds invest require governmental approval for the repatriation of investment income, capital or the proceeds of sales of securities by foreign investors. In addition, if there is a deterioration in a country's balance of payments or for other reasons, a country may impose temporary restrictions on foreign capital remittances abroad. The securities exchanges of certain foreign markets are substantially smaller, less liquid and more volatile than the major securities markets in the United States. Consequently, acquisition and disposition of securities by each Fund may be inhibited. In addition, a significant proportion of the aggregate market value of equity securities listed on the major securities exchanges in emerging markets are held by a smaller number of investors. This may limit the number of shares available for acquisition or disposition by a Fund. Lower-rated debt securities (commonly known as "junk bonds") possess speculative characteristics and are subject to greater market fluctuations and risk of lost income and principal than higher-rated debt securities for a variety of reasons. Also, during an economic downturn or substantial period of rising interest rates, highly leveraged issuers may experience financial stress which would adversely affect their ability to service their principal and interest payment obligations, to meet projected business goals and to obtain additional financing. 19 WARBURG PINCUS LONG-SHORT MARKET NEUTRAL FUND NOTES TO FINANCIAL STATEMENTS (CONT'D) February 29, 2000 (Unaudited) - -------------------------------------------------------------------------------- NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) In addition, periods of economic uncertainty and changes can be expected to result in increased volatility of market prices of lower-rated debt securities and (to the extent a Fund invests in junk bonds) the Fund's net asset value. NOTE 2. TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES Pursuant to Investment Advisory Agreements, Credit Suisse Asset Management, LLC ("CSAM") an indirect, wholly-owned subsidiary of Credit Suisse Group, serves as investment advisor for the Fund described herein. CSAM is entitled to receive from the Fund a monthly fee equal to an annual rate of 1.50% of the Fund's average daily net assets. In addition, CSAM is entitled to a monthly performance adjustment fee, which may increase or decreased the total advisory fee by up to 0.50% per year. The performance adjustment fee decreased the total advisory fee by $12,724 or .37% (annualized) of average daily net assets due to lower performance in comparison to the Salomon Smith Barney U.S. 1-Month Treasury Bill Index plus 5 percentage points for the twelve months ended February 29, 2000. CSAM may, at its discretion, voluntarily waive all or any portion of its advisory fee for the Fund. For the six months ended February 29, 2000 advisory fees and waivers for the investment Fund was as follows: GROSS NET ADVISORY FEE WAIVER ADVISORY FEE ------------ ---------- ------------ $38,351 $(37,753) $598 CSAM reimbursed expenses of the Fund in the amount of $11,458 for the six months ended February 29, 2000. State Street Bank and Trust Company ("State Street") , serves as the Fund's transfer and dividend disbursement agent. State Street has delegated most of its Fund service obligations to Boston Financial Data Services, Inc. (BFDS), a 50% owned subsidiary of State Street. Counsellors Fund Services, Inc. ("CFSI"), a wholly-owned subsidiary of Credit Suisse Asset Management, LLC. served as co-administrator of the Fund until November 1, 1999. On November 1, 1999, Credit Suisse Asset Management Securities, Inc. ("CSAMSI") replaced CFSI as co-administrator to the portfolio. PFPC Inc. ("PFPC"), an indirect subsidiary of PNC Financial Services Group, also serves as the Fund's co-administrator. For administration services, the Fund pays CSAMSI a fee calculated at an annual rate .05% of the Fund's first $125 million in average daily nets assets of the Common shares and .10% of average daily net assets of the Common shares over $125 million. 20 WARBURG PINCUS LONG-SHORT MARKET NEUTRAL FUND NOTES TO FINANCIAL STATEMENTS (CONT'D) February 29, 2000 (Unaudited) - -------------------------------------------------------------------------------- NOTE 2. TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES (CONTINUED) CSFI, at its discretion, voluntarily waived a portion of its co-administration fees for the Fund. For the period September 1, 1999 to October 31, 1999, co-administration fees earned and waived by CFSI on the Common shares were as follows: GROSS NET CO-ADMINISTRATION FEE WAIVER CO-ADMINISTRATION FEE --------------------- -------- --------------------- $163 $(131) $32 CSAMSI may, at its discretion, voluntarily waive all or any portion of its administrative fee for any of the Funds. For the period November 1, 1999 to February 29, 2000, co-administrative service fees earned and waived by CSAMSI on the Common shares were as following: GROSS NET CO-ADMINISTRATION FEE WAIVER CO-ADMINISTRATION FEE --------------------- -------- --------------------- $396 $(316) $80 For administration services, PFPC currently receives a fee calculated at annual rate of .125% on the Fund's average daily net asset subject to a minimum annual fee and exclusive of out-of-pocket expenses. PFPC may, at its discretion, voluntarily waive all or any portion of its administration fee for the Fund. For the six months ended February 29, 2000, the co-administration fee earned and waived by PFPC was as follows: GROSS CO-ADMINISTRATIVE NET CO-ADMINISTRATIVE FEE WAIVER FEE ----------------------- -------- --------------------- $4,257 $(2,034) $2,223 In addition to serving as the Funds co-administrator, CSAMSI served as distributor of the Fund's shares until January 1, 2000. On January 1, 2000, Provident Distributors, Inc. ("PDI") replaced CSAMSI as distributor to the Fund. No compensation is payable by the Fund to PDI for distribution services, but CSAMSI receives compensation from the Fund's Common shares under the co-administration agreement for shareholder servicing and distribution. For the Shareholder Servicing and Distribution Plan on the Common shares, CSAMSI receives a fee calculated at an annual rate .25% of the average daily net assets of the Common shares of the Fund. For the six months ended February 29, 2000, shareholder servicing and distribution fees, earned by CSAMSI were $2,794. 21 WARBURG PINCUS LONG-SHORT MARKET NEUTRAL FUND NOTES TO FINANCIAL STATEMENTS (CONT'D) February 29, 2000 (Unaudited) - -------------------------------------------------------------------------------- NOTE 3. PURCHASES AND SALES OF SECURITIES For the six months ended February 29, 2000, purchases and sales of investment securities (other than short-term investments) were as follows: INVESTMENT SECURITIES SHORT SECURITIES --------------------- ---------------- PURCHASES SALES SALES ---------- ---------- ---------------- $9,062,357 $4,997,065 $4,749,860 NOTE 4. CAPITAL SHARES Transactions in capital shares for each period were as follows:
INSTITUTIONAL COMMON ----------------------------------------------------- ----------------------------------------------------- FOR THE SIX MONTHS ENDED FOR THE SIX MONTHS ENDED FOR THE PERIOD FEBRUARY 29, 2000 FOR THE YEAR ENDED FEBRUARY 29, 2000 SEPTEMBER 8, 1998* (UNAUDITED) AUGUST 31, 1999 (UNAUDITED) THROUGH AUGUST 31, 1999 -------------------------- ------------------------- -------------------------- -------------------------- SHARES VALUE SHARES VALUE SHARES VALUE SHARES VALUE --------- ---------- ---------- ------------ ------- ---------- ---------- ------------ Shares sold 46,893 $ 630,344 2,702,645 $ 40,468,228 111,084 $1,689,509 3,454,318 $ 51,387,127 Shares issued in reinvestment of dividends 21,825 307,514 5,561 82,361 8,769 124,965 16,915 250,336 Shares repurchased (241,987) (3,479,365) (2,705,769) (39,525,343) (29,517) (437,622) (3,338,435) (49,530,584) -------- ----------- ---------- ------------ ------- ---------- ---------- ------------ Net increase/ (decrease) (173,269) $(2,541,507) 2,437 $ 1,025,246 90,336 $1,376,852 132,798 $ 2,106,879 ======== =========== ========== ============ ======= ========== ========== ============ *Inception Date.
On February 29, 2000, six Institutional Class shareholders held 5% or more of the outstanding shares which represented approximately 90.07% of the outstanding shares. NOTE 5. LINE OF CREDIT The Fund together with other funds advised by CSAM, have established a $250 million committed line of credit facility ("Credit Facility") with Deutche Bank, AG as administrative agent, State Street Bank and Trust Company as operations agents, Bank of Nova Scotia as syndication agent and certain other lender, for temporary or emergency purposes primarily relating to unanticipated portfolio share redemption. Under the terms of the Credit Facility, the funds with access to the Credit Facility pay an aggregate commitment fee at a rate of .075% per annum on the average daily balance of the Credit Facility that is undisbursed and uncanceled during the preceding quarter allocated among the participation funds in such manner as is determined by the governing Boards of the various funds. In addition the participating funds will pay interest on borrowing at the Federal funds rate plus .50%. During the six months ending February 29, 2000, the Fund did not have any borrowings under line of credit agreement. 22 WARBURG LONG-SHORT MARKET NEUTRAL FUND SPECIAL SHAREHOLDER MEETING RESULTS February 29, 2000 (Unaudited) - -------------------------------------------------------------------------------- A special meeting of shareholders of the Fund was held on May 21, 1999. At the special meeting, the following persons were elected as directors of each Fund, constituting the entire Board of Directors: Richard H. Francis, Jack W. Fritz, Jeffrey E. Garten, James S. Pasman, Jr., William W. Priest, Steven N. Rappaport, Arnold M. Reichman and Alexander B. Trowbridge. In addition, shareholders voted on the following matters: Proposal 2: Ratification of the selection of PricewaterhouseCoopers LLP as the independent accountants for each of the Funds for the fiscal year ending August 31, 1999. The voting results for the Fund were as follows: Election of Directors: For Withheld - -------------------------------------------------------------------------------- Richard H. Francis 1,006,652.5040 0.0000 - -------------------------------------------------------------------------------- Jack W. Fritz 1,006,652.5040 0.0000 - -------------------------------------------------------------------------------- Jeffrey E. Garten 1,006,652.5040 0.0000 - -------------------------------------------------------------------------------- James S. Pasman, Jr. 1,006,652.5040 0.0000 - -------------------------------------------------------------------------------- William W. Priest 1,006,652.5040 0.0000 - -------------------------------------------------------------------------------- Steven N. Rappaport 1,006,652.5040 0.0000 - -------------------------------------------------------------------------------- Arnold M. Reichman 1,006,652.5040 0.0000 - -------------------------------------------------------------------------------- Alexander B. Trowbridge 1,006,652.5040 0.0000 - -------------------------------------------------------------------------------- Proposal 2: % of Shares to Total % of Shares to Total Shares Shares Outstanding Shares Vote - -------------------------------------------------------------------------------- For 1,006,652.5040 58.3092% 100.0000% - -------------------------------------------------------------------------------- Against 0.0000 0.0000% 0.0000% - -------------------------------------------------------------------------------- Abstain 0.0000 0.0000% 0.0000% - -------------------------------------------------------------------------------- 23 [THIS PAGE INTENTIONALLY LEFT BLANK] [THIS PAGE INTENTIONALLY LEFT BLANK] [GRAPHIC OMITTED] WARBURG PINCUS FUNDS P.O. BOX 9030, BOSTON, MA 02205-9030 800-WARBURG (800-927-2874) o WWW.WARBURG.COM PROVIDENT DISTRIBUTORS, INC., DISTRIBUTOR. WPLSN-3-0200 -----END PRIVACY-ENHANCED MESSAGE-----