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SEMIANNUAL
REPORT
April 30, 1998
WARBURG PINCUS INSTITUTIONAL FUND, INC.
INTERNATIONAL EQUITY PORTFOLIO
SMALL COMPANY GROWTH PORTFOLIO
EMERGING MARKETS PORTFOLIO
VALUE PORTFOLIO
JAPAN GROWTH PORTFOLIO
POST-VENTURE CAPITAL PORTFOLIO
SMALL COMPANY VALUE PORTFOLIO
More complete information about the Fund, including charges and expenses
and, where applicable, the special considerations and risks associated
with international investing is provided in the Prospectus, which must
precede or accompany this report and which should be read carefully before
investing. You may obtain additional copies by calling 800-369-2728 or by
writing to Warburg Pincus, P.O. Box 4906, Grand Central Station, New York,
NY 10163.
[Warburg Pincus Logo]
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From time to time, the Portfolios' 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.
The views of the Portfolios' management are as of the date of the letters and
holdings described in this semiannual report are as of April 30, 1998; these
views and holdings may have changed subsequent to these dates. Nothing in this
semiannual report is a recommendation to purchase or sell securities.
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WARBURG PINCUS INSTITUTIONAL FUND -- INTERNATIONAL EQUITY PORTFOLIO
SEMIANNUAL INVESTMENT ADVISER'S REPORT -- APRIL 30, 1998
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Dear Shareholder: June 16, 1998
The objective of Warburg Pincus Institutional Fund -- International Equity
Portfolio (the 'Portfolio') is long-term capital appreciation. The Portfolio
pursues its objective by investing, under normal market conditions,
substantially all of its assets -- but no less than 65% of its total
assets -- in common stocks and securities convertible into or exchangeable for
common stocks of non-U.S. issuers.
For the six months ended April 30, the Portfolio had a total return of
12.85%, vs. a return of 15.44% for the Morgan Stanley Europe, Australasia and
Far East ('EAFE') Index.* The Portfolio's one-year return through April 30 was
11.37%. Its five-year and since-inception (on September 1, 1992) average annual
total returns through April 30 were 12.71% and 14.46%, respectively.
The reporting period saw a marked divergence in performance among foreign
equity markets. European markets showed across-the-board strength, propelled by
robust corporate profits, improved economic growth and optimism toward the
prospects for European Monetary Union. Virtually all of Europe's markets had
double-digit gains for the period in U.S. dollar terms, and a handful (Italy,
Spain and Portugal) had returns in excess of 40%. The performance of most other
non-U.S. markets was less inspiring. Asian-Pacific markets generally fell, with
a number falling sharply, weighed down by worries over the region's spiraling
economic difficulties. Most Latin American markets also posted losses, while the
smaller emerging markets of Eastern Europe, the Middle East and Africa were
mixed.
Warburg Pincus Institutional Fund -- International Equity Portfolio managed a
healthy gain for the period, albeit one that trailed the rise in its benchmark,
the EAFE Index. Most, if not all, of that underperformance stemmed from the
Portfolio's higher-than-index weighting in the Asia-Pacific region heading into
the period. Though the Portfolio's overweighting at the time was relatively
small, virtually any additional exposure to the region proved harmful in terms
of relative performance, particularly on an opportunity-cost basis, given the
strong run-up in European markets. (It should be noted that we reduced the
Portfolio's Asian-Pacific stake as the period progressed, based on a combination
of macroeconomic and company-specific concerns, and by period end the Portfolio
was underweighted vs. the EAFE Index.) For the same reason, the Portfolio was
also held back somewhat by its exposure to Latin America, a region not
represented in the benchmark. Latin America accounted for approximately 6% of
the Portfolio as of April 30.
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* The Morgan Stanley Europe, Australasia and Far East Index is an unmanaged
index (with no defined investment objective) of international equities that
includes reinvestment of dividends, and is the exclusive property of Morgan
Stanley & Co. Incorporated.
1
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WARBURG PINCUS INSTITUTIONAL FUND -- INTERNATIONAL EQUITY PORTFOLIO
SEMIANNUAL INVESTMENT ADVISER'S REPORT -- APRIL 30, 1998 (CONT'D)
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At the other end of the spectrum, performance-wise, the Portfolio saw very
strong gains from its holdings in Europe, benefiting from these markets' general
upward bias and from good stock selection. Among the better performers for the
Portfolio were its holdings in France and Italy, as well as its Nordic stocks
collectively. We increased Europe's weighting in the Portfolio steadily through
the period (from approximately 44% on October 31 to roughly 65% on April 30),
reflecting our belief that the region's positive fundamental backdrop warranted
a higher level of exposure, especially viewed from a risk-adjusted perspective.
This geographical shift -- i.e., into Europe, at the expense of Asia -- was the
most noteworthy strategic move in the Portfolio during the six months.
Looking out over the remainder of 1998 and into 1999, we see both substantial
opportunity and a fair amount of risk in foreign markets. Some of the most
promising investments continue to reside in Europe, we believe, given the
dynamics surrounding the launch of the single currency and the growing number of
positive developments on the corporate front. Particularly encouraging, with
regard to the latter, is the increasing emphasis among European corporate
managements on building shareholder value, a trend that suggests improved
efficiencies and rising per-share profitability over time. We also see pockets
of opportunity in Asia, including Japan, but are approaching these markets with
higher degrees of caution, given the ongoing economic and political
uncertainties. The same holds for our approach to emerging markets in general.
All told, we believe the Portfolio is well positioned, with regard to both
country weightings and specific holdings, to benefit from the type of investment
environment we foresee in the coming months, and we look forward to the
opportunities ahead.
<TABLE>
<S> <C>
Richard H. King Harold W. Ehrlich
Portfolio Manager Associate Portfolio Manager
P. Nicholas Edwards Vincent J. McBride
Associate Portfolio Manager Associate Portfolio Manager
</TABLE>
International investing entails special risk considerations, including currency
fluctuations, lower liquidity, economic and political risks, and differences in
accounting methods.
2
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WARBURG PINCUS INSTITUTIONAL FUND -- SMALL COMPANY GROWTH PORTFOLIO
SEMIANNUAL INVESTMENT ADVISER'S REPORT -- APRIL 30, 1998
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Dear Shareholder: June 16, 1998
The objective of Warburg Pincus Institutional Fund -- Small Company Growth
Portfolio (the 'Portfolio') is capital growth. The Portfolio pursues its
objective by investing primarily in a portfolio of equity securities of small
market capitalization domestic companies. The Portfolio considers a 'small'
company to be one that has a market capitalization, measured at the time the
Portfolio purchases a security of that company, within the range of
capitalizations of companies represented in the Russell 2000 Index. (As of
January 31, 1998, the Russell 2000 Index included companies with market
capitalizations between $23.7 million and $2.7 billion.)
For the six months ended April 30, 1998, the Portfolio had a total return of
8.24%, vs. returns of 9.96% for the Russell 2000 Growth Index* and 10.22% for
the Lipper Small Cap Funds Index.** The Portfolio's one-year return through
April 30 was 48.53%.
The reporting period saw solid gains, in general, for the type of smaller-
company, growth-oriented stocks in which the Portfolio invests. Supporting the
group were these companies' continued strong earnings growth, both in absolute
terms and relative to larger companies, and the stocks' relatively attractive
valuations. One factor that weighed on the group's performance, though, at least
in relative terms, was concern stemming from the Asian financial crisis. Asia's
difficulties triggered a general 'flight to quality' among investors, which
worked to the advantage of large-cap, blue-chip stocks at the expense of smaller
issues. The net result was solid gains for smaller-company stocks, albeit gains
that lagged those of large-cap, S&P 500-type companies.
Warburg Pincus Institutional Fund -- Small Company Growth Portfolio managed a
healthy gain for the period, though it trailed its benchmark. In terms of
performance attribution, the Portfolio benefited from strong showings from
holdings in a number of areas, particularly business services, technology and
financial services. At the other end of the spectrum, performance-wise, were the
Portfolio's energy and oil-services stocks, which
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* The Russell 2000 Growth Index is an unmanaged index (with no defined
investment objective) of those securities in the Russell 2000 Index with a
greater-than-average growth orientation. The Russell 2000 Growth Index
includes reinvestment of dividends, and is compiled by Frank Russell Company.
** The Lipper Small Cap Funds Index is an equal-weighted performance index,
adjusted for capital-gains distributions and income dividends, of the largest
qualifying funds in this investment objective, and is compiled by Lipper
Analytical Services Inc.
3
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WARBURG PINCUS INSTITUTIONAL FUND -- SMALL COMPANY GROWTH PORTFOLIO
SEMIANNUAL INVESTMENT ADVISER'S REPORT -- APRIL 30, 1998 (CONT'D)
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were hurt by concerns related to falling oil prices and additional supply/demand
worries.
There were few significant changes in the Portfolio during the six months in
terms of its sector concentrations. The Portfolio remained broadly diversified
throughout, with slight overweightings in the consumer, financial and
business-services areas. This reflected our ability to find attractive
opportunities across a range of industries, as well as our desire to temper the
Portfolio's volatility by avoiding overconcentration in any one area.
Looking ahead, our outlook on the prospects for small-cap growth stocks
remains largely positive, although investors' general bias toward large-cap
issues may limit the group's relative showing in the immediate term. Still,
based on trailing and projected profits, small caps' valuations now look more
attractive vs. those of large-cap issues than they have sometimes. This should,
ultimately, draw increasing amounts of investor attention to the small-cap arena
in the coming months, which stands to be reflected in much-improved relative
performance. All told, we remain optimistic, and will continue to strive to
identify those companies with the best prospects for capital growth.
<TABLE>
<S> <C>
Elizabeth B. Dater Stephen J. Lurito
Co-Portfolio Manager Co-Portfolio Manager
</TABLE>
4
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WARBURG PINCUS INSTITUTIONAL FUND -- EMERGING MARKETS PORTFOLIO
SEMIANNUAL INVESTMENT ADVISER'S REPORT -- APRIL 30, 1998
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Dear Shareholder: June 16, 1998
The objective of Warburg Pincus Institutional Fund -- Emerging Markets
Portfolio (the 'Portfolio') is growth of capital. The Portfolio pursues its
objective by investing primarily in equity securities of non-U.S. issuers
consisting of companies in emerging securities markets.
For the six months ended April 30, 1998, the Portfolio had a total return of
1.11%, vs. returns of 0.89% for the Lipper Emerging Markets Funds Index* and
3.65% for the Morgan Stanley Emerging Capital International Markets Free
Index.** The Portfolio's one-year return through April 30 was - 14.35%. Its
average annual total return since inception (on September 30, 1996) was
- 3.00%.
The reporting period was a difficult one for emerging markets, due in large
measure to continued economic and political instability in the Asian-Pacific
region. The region's woes cast a pall over emerging markets collectively, with
investors largely shunning the group in favor of the developed markets of Europe
and the U.S. While there were some bright spots for emerging markets -- several
East Asian markets rallied strongly in the initial months of 1998, recouping a
portion of their earlier losses, and a handful of markets elsewhere (e.g., in
Latin America and the Middle East) notched solid gains -- by period end the
group had little if any upward momentum, and ultimately closed the six months
with less-than-inspiring results.
Set against this backdrop, Warburg Pincus Institutional Fund -- Emerging
Markets Portfolio posted a modest gain for the six months. In terms of
performance attribution, broadly speaking, the Portfolio was hindered by its
Asian exposure, though several holdings actually performed well over the period,
notwithstanding the region's general weakness. The Portfolio's Latin American
issues had mixed results but overall fared better, and the Portfolio benefited
from the fact that its largest country weighting throughout was Brazil, the
region's top performer for the six months. Returns for the Portfolio's smaller
weightings in Eastern Europe and the Middle East varied.
In terms of geographic emphasis, the most significant development in the
Portfolio during the period was a reduction in its Asian-Pacific weighting (to
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* The Lipper Emerging Markets Funds Index is an equal-weighted performance
index, adjusted for capital-gains distributions and income dividends, of the
largest qualifying funds in this investment objective, and is compiled by
Lipper Analytical Services Inc.
** The Morgan Stanley Capital International Emerging Markets Free Index is a
market-capitalization-weighted index of emerging-market countries determined
by Morgan Stanley. The index includes only those countries open to non-local
investors.
5
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WARBURG PINCUS INSTITUTIONAL FUND -- EMERGING MARKETS PORTFOLIO
SEMIANNUAL INVESTMENT ADVISER'S REPORT -- APRIL 30, 1998 (CONT'D)
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32.77% as of April 30, from 43.08% on October 31), and a redeployment of those
assets to stocks in other regions, most notably Latin America and the Middle
East. This reflected general concern over the Asian-Pacific region's
considerable currency, economic and political turmoil, but more specifically the
broadly negative impact of such on corporate earnings. In cases where we
believed a given holding had suffered a marked deterioration in fundamentals,
one not yet fully reflected in its share price, we sold our position and
invested elsewhere. Such sales notwithstanding, we maintained a fair amount of
exposure to the Asian-Pacific region, with noteworthy concentrations in
China/Hong Kong and Singapore, and in fact did some selective buying of stocks
we believed had been sold off unjustly vis-a-vis the companies' earnings
prospects.
As noted, much of the proceeds from the Portfolio's reduced weighting in
Asian/Pacific countries was reallocated to Latin America, with particular
emphasis on Brazil. We were drawn to the Brazilian market based on the generally
attractive level of prices (Brazil was Latin America's cheapest market through
the six months, judged on such measures as price relative to cash flow and price
relative to book value) and on the pro-business steps being taken by the
Brazilian government, which we believed created a favorable backdrop for the
stock market.
Looking ahead, our outlook on the immediate-term prospects for emerging
markets remains somewhat guarded, given the still-unsettled state of affairs in
Asia and investors' general wariness toward the group. Once Asia finally
stabilizes, however, we believe there is the potential for a broad rally in the
asset class, and for particularly large gains in individual stocks, given how
far many of these issues have fallen. A vast number of stocks across the
emerging-market universe have been driven down to record- or near-record-low
valuations, while the earnings prospects for specific companies remain quite
strong. We believe that this disconnect between earnings prospects and
valuations is unlikely to persist indefinitely, and hence view the present time
as a potentially attractive buying opportunity for individuals with a
sufficiently long-term (i.e., minimum two- to three-year) investment horizon.
As ever, though, the potential for substantial short-term volatility remains,
given the nature of emerging markets, and we would encourage investors to
approach the asset class with a realistic view of the potential risks involved.
<TABLE>
<S> <C>
Richard H. King Vincent J. McBride
Co-Portfolio Manager Co-Portfolio Manager
</TABLE>
International investing entails special risk considerations, including currency
fluctuations, lower liquidity, economic and political risks, and differences in
accounting methods.
6
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WARBURG PINCUS INSTITUTIONAL FUND -- VALUE PORTFOLIO
SEMIANNUAL INVESTMENT ADVISER'S REPORT -- APRIL 30, 1998
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Dear Shareholder: June 16, 1998
The objective of Warburg Pincus Institutional Fund -- Value Portfolio (the
'Portfolio') is total return. The Portfolio pursues its objective by investing
primarily in the equity securities of large capitalization domestic companies
that we considered to be relatively undervalued.
For the six months ended April 30, 1998, the Portfolio had a return of
18.81%, vs. a 22.47% return for the S&P 500 Index.* The Portfolio's total return
since inception (on June 30, 1997) as of April 30 was 12.74%.
The U.S. stock market as a whole had strong performance over the
November-through-April period. Asia-related earnings uncertainties
notwithstanding, investor sentiment toward equities remained favorable through
the period, supported by a continued healthy economy and subdued inflation. The
Portfolio benefited from this positive sentiment, and from good performances
from its financial, telecommunications and aerospace holdings in particular.
Stocks that hampered the Portfolio's return included its energy and
tobacco-related holdings, which lagged the broader market during the period.
We made few noteworthy changes to the Portfolio in terms of sector allocation
during the period. We remained well-diversified by industry, seeing little
incentive, from a risk-vs.-reward perspective, to heavily overweight specific
areas, given continued narrow stock valuations across and within sectors. It
should be stressed, however, that sector-management strategies aside, we
continued to employ a strictly bottom-up stock-selection process, one based on a
security's risk-adjusted total-return prospects over the longer term.
Our noteworthy areas of concentration included the financial-services
industry, a weighting we increased over the course of the period. We found
several attractive buying opportunities here during the six months, mostly in
the insurance area. Elsewhere in the financial industry, we maintained a limited
exposure to banking stocks, since we viewed most as expensive. That said, we
found several issues we deemed to be attractively priced, including First
Chicago NBD, which we purchased in the wake of its announced merger with Banc
One Corp. In our view, the synergies created by the merger are significant and
should support the stock's long-term performance.
We also maintained a significant weighting in the consumer area during the
six months. This included exposure to the consumer-durables sector, where our
largest position throughout the period was Chrysler. We also continued to have a
significant weighting in the retail sector. We made a few
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* The S&P 500 Index is an unmanaged index (with no defined investment objective)
of common stocks, includes reinvestment of dividends, and is a registered
trademark of Standard & Poor's Corporation.
7
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WARBURG PINCUS INSTITUTIONAL FUND -- VALUE PORTFOLIO
SEMIANNUAL INVESTMENT ADVISER'S REPORT -- APRIL 30, 1998 (CONT'D)
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adjustments here during the six months, most notably establishing a position in
Sears Roebuck and reducing our position in Wal-Mart, on profit-taking.
Another noteworthy sector weighting during the period was the capital-
equipment area, where we remained focused on companies with strong cash flows
and good prospects for earnings improvements. Our largest position here at the
end of the period was ITT Industries, a designer and manufacturer of products
used in the automotive, fluid technology and defense & electronics areas.
Elsewhere of note, we maintained a position in the telecommunications area,
primarily holding stocks of regional Bell operating companies, though we found
what we deemed to be good values in the long-distance area as well.
The rest of the Portfolio remained invested across of broad range of
industries, including technology, where we found the best risk-adjusted growth
prospects in the computer sector; health care, where we focused primarily on
managed-care companies with good pricing flexibility and steady enrollment
growth; and energy, where we emphasized stocks of multinational oil producers
during the period.
Looking ahead to the next several months and beyond, we believe Asia-related
downward earnings revisions will continue to hamper specific issues,
necessitating continued careful stock selection. Set within this environment,
our efforts will remain focused on striving to identify stocks with the most
attractive risk-adjusted total-return potential over the longer term.
Brian S. Posner
Portfolio Manager
8
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WARBURG PINCUS INSTITUTIONAL FUND -- JAPAN GROWTH PORTFOLIO
SEMIANNUAL INVESTMENT ADVISER'S REPORT -- APRIL 30, 1998
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Dear Shareholder: June 16, 1998
The objective of Warburg Pincus Institutional Fund -- Japan Growth Portfolio
(the 'Portfolio') is long-term growth of capital. The Portfolio pursues its
objective by investing primarily in equity securities of Japanese issuers that
present attractive opportunities for growth.
For the six months ended April 30, 1998, the Portfolio had a total return of
5.99%, vs. returns of - 7.21% for the Lipper Japanese Funds Average* and
- 12.44% for the U.S.-dollar-denominated Tokyo Stock Exchange Price Index
('Topix').**
The reporting period was a trying one for investors in Japanese equities. The
market was buffeted by negative sentiment stemming from East Asia's financial
crisis, as well as specific concerns over the Japanese economy. All major
Japanese stock indexes showed losses for the six months, and particularly steep
losses in dollar terms, given the yen's roughly 10% fall in value against the
dollar.
This largely hostile environment notwithstanding, Warburg Pincus
Institutional Fund -- Japan Growth Portfolio posted a respectable gain for the
period, outdistancing both its peers and its benchmark by a wide margin. This
resulted from good stock selection, primarily, but also from our decision to
keep the Portfolio's yen exposure fully hedged throughout, which spared the
Portfolio currency-translation losses. In terms of specific stocks, the
Portfolio benefited from relatively strong showings from its holdings in the
so-called Nifties, which are large, blue-chip, export-oriented companies.
Examples of such include electronics firm Sony, one of the Portfolio's largest
positions through the period and one of its better performers.
Looking ahead, though investor sentiment toward Japan is largely negative at
this point, we believe there are grounds for encouragement, particularly if one
is willing to look past the immediate term. On a macroeconomic level, Japan's
government recently announced an economic-stimulus package worth some $125
billion, its largest ever. Though the package has been derided by some in terms
of its likely effectiveness, it should ultimately do much to halt the economy's
recent slide and ease related fears among investors. Equally noteworthy is the
fact that Japan's commitment to
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* The Lipper Japanese Funds Average measures the average total return of all
Japanese funds tracked by Lipper Analytical Services Inc.
** The Tokyo Stock Exchange Price Index ('Topix') is a capitalization- weighted
index designed to reflect the general movement of the Japanese stock market.
The index consists of all shares listed on the First Section of the Tokyo
Stock Exchange, which is generally reserved for Japan's larger companies.
9
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WARBURG PINCUS INSTITUTIONAL FUND -- JAPAN GROWTH PORTFOLIO
SEMIANNUAL INVESTMENT ADVISER'S REPORT -- APRIL 30, 1998 (CONT'D)
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financial-sector deregulation has remained firm, despite the economy's troubles,
as evidenced by the recent on-schedule launch of 'Big Bang.' (Effective April 1,
most restraints on foreign-exchange trading were removed, and brokerage
commissions in the securities industry were deregulated.) This suggests that
broader reform and liberalization of Japan's economy is merely a matter of time.
On the company level, meanwhile, there is a quiet revolution taking place in
corporate governance. Japanese companies are paying increasing heed to their
shareholders and are taking concrete steps to enhance shareholder value, as
witnessed by the record number of share buybacks announced so far this year.
This represents a sea change in mindset among the Japanese, who have largely
ignored their shareholders in the past, and stands to unleash a tremendous
amount of value in the stock market as the trend gathers pace.
A final, perhaps nearer-term, reason for optimism regarding the Japanese
stock market is the current level of valuations. Much of the market is trading
at or near historically low multiples. Indeed, as of this writing, well over
half of the Tokyo Stock Exchange's First Section (representing larger companies)
is trading below book value, and smaller-company valuations as a rule are even
more compelling. Contrast this with the record multiples across most of Europe
and in the U.S., and the Japanese market's appeal from a value perspective is
clear.
All told, we remain optimistic about Japan, particularly as a longer-term
investment thesis, and continue our efforts to identify those companies with the
best prospects for appreciation.
P. Nicholas Edwards
Portfolio Manager
International investing entails special risk considerations, including currency
fluctuations, lower liquidity, economic and political risks, and differences in
accounting methods.
10
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WARBURG PINCUS INSTITUTIONAL FUND -- POST-VENTURE CAPITAL PORTFOLIO
SEMIANNUAL INVESTMENT ADVISER'S REPORT -- APRIL 30, 1998
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Dear Shareholder: June 16, 1998
The objective of Warburg Pincus Institutional Fund -- Post-Venture Capital
Portfolio (the 'Portfolio') is long-term growth of capital. The Portfolio
pursues its objective by investing primarily in equity securities of companies
that we consider to be in their post-venture capital stage of development.
For the six months ended April 30, 1998, the Portfolio had a return of
11.50%, vs. a return of 9.95% for the Russell 2000 Growth Index.*
The period was a positive, albeit volatile, one for the types of stocks
targeted by the Portfolio, i.e., stocks of relatively young companies within the
rapidly growing industries favored by venture capitalists (e.g., the software,
biotechnology and communications industries). These issues struggled early in
the period, largely due to an Asia-related 'flight to safety' that placed a
premium on large-cap, highly liquid stocks. Sentiment toward small-cap and
high-growth companies dramatically improved over the second half of the period,
however, spurred by growing recognition of these companies' strong earnings
gains vs. those of large companies and their stocks' relatively attractive
valuations. The Portfolio benefit from this improved sentiment, and from good
stock selection generally.
We made few noteworthy changes to the Portfolio's industry exposure during
the reporting period. We maintained a large presence in the technology area,
where venture capital continues to account for a critical share of research &
development spending aimed at discovering potentially lucrative breakthrough
products and services. Indeed, according to a recent study,** R&D spending by
venture-backed companies is growing at a rate about three times that of Fortune
500 companies. In terms of specific strategies, we emphasized domestically
oriented technology companies, given the relatively difficult pricing
environment faced by many export-dependent companies.
Elsewhere, we maintained a significant weighting in the telecommunications &
equipment sector during the period. We believe this area will continue to
benefit from an ever-expanding Internet, ongoing worldwide deregulation of the
telecommunications industry and a high degree of innovation generally. Our
holdings during the period included Paging Network. The company, a recipient of
venture-capital financing in its start-up phase, went public in 1991 and
currently owns and operates the most extensive wireless communications network
in the U.S.
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* The Russell 2000 Growth Index is an unmanaged index (with no defined
investment objective) of those securities in the Russell 2000 Index with a
greater-than-average growth orientation. It includes reinvestment of
dividends, and is compiled by Frank Russell Company.
** Eighth Annual Economic Impact of Venture Capital Study, National Venture
Capital Association/Coopers & Lybrand L.L.P. (U.S.A.), 1998.
11
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WARBURG PINCUS INSTITUTIONAL FUND -- POST-VENTURE CAPITAL PORTFOLIO
SEMIANNUAL INVESTMENT ADVISER'S REPORT -- APRIL 30, 1998 (CONT'D)
- --------------------------------------------------------------------------------
The rest of the Portfolio remained invested across a wide range of sectors,
including the financial, business-services, health-care and communications &
media areas. We also maintained a position in consumer-type stocks, where our
largest area of concentration at the end of the period was the leisure &
entertainment sector. This area increasingly stands to benefit from a maturing
population's growing levels of discretionary income, a trend that has not gone
unnoticed by venture-capital investors.
Going forward, our outlook on the collective prospects for stocks of post-
venture companies (which we define as those that have received venture-capital
financing either during the early stages of the company's existence or the
development of a new product or service, or as part of a restructuring or
recapitalization -- the investment of venture-capital financing, distribution of
securities to venture-capital investors or initial public offering, whichever is
later, having been made within 10 years of the Portfolio's investment) remains
positive, and our efforts will continue to be devoted to identifying those with
the best long-term growth potential. We would caution investors, however, that
investing in venture-backed companies entails potential risks (e.g., that of
heightened volatility) along with the potential for significant long-term
rewards. Because of the nature of the Portfolio's holdings and certain
strategies it may use, an investment in the Portfolio should only be considered
for the aggressive portion of an investor's assets and may not be appropriate
for all investors. Investors should review the Prospectus carefully before
purchase.
<TABLE>
<S> <C>
Elizabeth B. Dater Stephen J. Lurito
Co-Portfolio Manager Co-Portfolio Manager
</TABLE>
12
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WARBURG PINCUS INSTITUTIONAL FUND -- SMALL COMPANY VALUE PORTFOLIO
SEMIANNUAL INVESTMENT ADVISER'S REPORT -- APRIL 30, 1998
- --------------------------------------------------------------------------------
Dear Shareholder: June 16, 1998
The objective of Warburg Pincus Institutional Fund -- Small Company Value
Portfolio (the 'Portfolio') is long-term capital appreciation. The Portfolio
invests primarily in the equity securities of small capitalization companies
that we believed to be relatively undervalued. The Portfolio considers a 'small'
company to be one that has a market capitalization, measured at the time the
Portfolio purchases a security of that company, within the range of
capitalizations of companies represented in the Russell 2000 Index.* As of
January 31, 1998, the Russell 2000 Index included companies with market
capitalizations between $23.7 million and $2.7 billion.
Effective March 6, 1998, George U. Wyper, who left Warburg Pincus Asset
Management to start his own investment firm, no longer serves as a Co-Portfolio
Manager. Kyle F. Frey, previously Associate Portfolio Manager and Research
Analyst of the Portfolio, now serves as Portfolio Manager, also effective March
6. The Portfolio's investment disciplines have not changed.
MANAGER COMMENTARY
For the six months ended April 30, 1998, the Portfolio gained 4.00%, vs. a
gain of 11.88% for the Russell 2000 Index.
Small-cap stocks collectively continued to lag their large-cap brethren.
Their underperformance of large caps is mostly attributable to the November-
through-January span, when investors voted overwhelmingly in favor of
larger-capitalization stocks against a backdrop of considerable Asia-related
market volatility. In this context, the Portfolio's bias toward the smaller end
of the small-cap area proved to be a particular liability (the Portfolio's
average market-cap, which we raised during the period, nonetheless remained
significantly below that of its benchmark throughout).
The Portfolio was also hampered by its limited exposure to the strong-
performing technology area, where stocks generally remained expensive by our
investment criteria. Another factor behind the Portfolio's underperformance was
its lack of utility stocks. These issues, comprising roughly 10% of the
Portfolio's benchmark, were good performers for the six months, buoyed by a
favorable interest-rate environment. In our view, small-cap utilities remained
unattractive from a cash-flow perspective, thus we continued to avoid them in
favor of what we deemed to be more-attractive stocks.
The Portfolio's largest area of concentration during the period remained the
financial industry. We continued to find a large number of financial stocks
- ------------
* The Russell 2000 Index is an unmanaged index (with no defined investment
objective) of approximately 2000 stocks, includes reinvestment of dividends,
and is compiled by Frank Russell Company.
13
<PAGE>
<PAGE>
WARBURG PINCUS INSTITUTIONAL FUND -- SMALL COMPANY VALUE PORTFOLIO
SEMIANNUAL INVESTMENT ADVISER'S REPORT -- APRIL 30, 1998 (CONT'D)
- --------------------------------------------------------------------------------
we deemed to be fundamentally undervalued, primarily in the insurance area,
though we found selected value in the banking sector as well. Our financial
holdings aided the Portfolio's return for the period, supported in part by a
benign inflationary backdrop.
Another significant weighting for the Portfolio was the transportation
sector, one we raised as the period progressed. We added several trucking
companies that we viewed as particularly attractive against a supportive
backdrop of declining fuel prices and a strong economy.
Elsewhere, we maintained exposure to a broad range of industries, including
the building & building materials, real-estate, retail and industrial areas. One
name we added from the last group during the period was Inland Steel Industries.
We established the position in February believing that management, spurred by
shareholder activism, would act to revive the stock, which had been a laggard
among steel stocks generally, despite Inland's significant asset base. As it
happened, Ispat International, a European steel company, agreed to acquire
Inland's steel-making division in March. This had a favorable impact on the
stock's performance, and exemplifies the type of investment opportunities we
seek. In general, we look for companies that stand to benefit from improving
business fundamentals that also have solid underlying asset values and cash
flows (to potentially limit downside risk).
Looking ahead to the balance of 1998, we believe several factors stand to
improve the relative performance of small-cap stocks. Foremost among these is
the group's valuations vs. those of large caps, which are now at historically
compelling levels, particularly in terms of price-to-book and price-to-sales
measures. We believe this will prompt investors to diversify further into small
caps to a potentially significant degree. In this context, we will continue to
seek out underfollowed and beaten-down small-cap stocks that have what we deem
to be the best longer-term prospects.
Kyle F. Frey
Portfolio Manager
14
<PAGE>
<PAGE>
WARBURG PINCUS INSTITUTIONAL FUND, INC. --
INTERNATIONAL EQUITY PORTFOLIO
STATEMENT OF NET ASSETS
April 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
----------- --------------
<S> <C> <C>
COMMON STOCKS (88.6%)
Argentina (2.7%)
Telefonica de Argentina SA ADR 403,100 $ 15,544,544
YPF SA ADR 589,100 20,544,862
--------------
36,089,406
--------------
Australia (0.3%)
Burns, Philp & Co., Ltd. 10,626,301 1,385,627
Foodland Associated, Ltd. 381,374 2,759,995
--------------
4,145,622
--------------
Austria (3.0%)
Bank Austria AG 266,800 20,620,508
Maculan Holding AG Vorzuege#'D' 409 2,915
V.A. Technologie AG 95,191 13,681,579
Vae AG 60,575 5,837,780
--------------
40,142,782
--------------
Belgium (0.5%)
Dexia Belgium 48,720 6,670,006
--------------
Brazil (0.7%)
Companhia de Saneamento Basico do Estado de Sao Paulo 21,854,000 4,966,731
Telecomunicacoes Brasileiras SA ADR 32,300 3,934,544
--------------
8,901,275
--------------
China (1.1%)
Cosco Pacific, Ltd. 15,233,000 10,324,391
Guangshen Railway Co., Ltd.'D' 12,714,053 2,379,971
Guangshen Railway Co., Ltd. ADR 139,121 1,365,125
--------------
14,069,487
--------------
Denmark (2.2%)
International Service System AS Class B 193,450 10,459,538
SAS Danmark AS 430,000 7,666,027
Unidanmark AS 128,600 10,805,649
--------------
28,931,214
--------------
Finland (1.7%)
Huhtamaki OY Class I 279,250 16,145,796
Rauma OY 337,855 6,325,375
--------------
22,471,171
--------------
</TABLE>
See Accompanying Notes to Financial Statements.
15
<PAGE>
<PAGE>
WARBURG PINCUS INSTITUTIONAL FUND, INC. --
INTERNATIONAL EQUITY PORTFOLIO
STATEMENT OF NET ASSETS (CONT'D)
April 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
----------- --------------
<S> <C> <C>
COMMON STOCKS (CONT'D)
France (9.1%)
Banque Nationale de Paris 214,500 $ 18,071,758
Compagnie de Saint Gobain 85,672 14,265,000
Elf Aquitaine SA 121,000 15,864,541
Lagardere Groupe SCA 364,964 13,948,998
Rhone-Poulenc SA Class A 471,849 23,060,207
Societe Generale d'Entreprises SA 520,800 20,294,528
Total SA Class B 125,256 14,882,288
--------------
120,387,320
--------------
Germany (5.7%)
Degussa AG 248,500 13,653,998
Fresenius Medical Care AG 148,800 10,190,872
Hannover Rueckversicherungs AG 105,800 13,430,616
Hoechst AG 329,400 13,271,452
Mannesmann AG 8,340 6,571,613
Muenchener Rueckversicherungs-Gesellschaft AG 28,600 13,196,322
Schmalbach Lubeca AG 20,400 5,033,781
--------------
75,348,654
--------------
Hong Kong (2.0%)
First Pacific Co., Ltd. 11,239,359 5,404,898
HSBC Holdings PLC 636,000 18,145,506
HSBC Holdings PLC (UK) 829 26,155
Jardine Matheson Holdings, Ltd. 783,699 3,307,210
--------------
26,883,769
--------------
India (0.9%)
Bharat Petroleum Corp., Ltd. 100 1,007
Hindalco Industries, Ltd. 124,375 2,364,424
Reliance Industries, Ltd. 498,800 2,402,629
State Bank of India, Ltd. 701,350 5,187,675
State Bank of India, Ltd. GDR 89,700 1,708,785
Tata Engineering & Locomotive Co., Ltd. 450 3,148
--------------
11,667,668
--------------
Ireland (0.4%)
Greencore Group PLC 853,300 5,213,115
--------------
</TABLE>
See Accompanying Notes to Financial Statements.
16
<PAGE>
<PAGE>
WARBURG PINCUS INSTITUTIONAL FUND, INC. --
INTERNATIONAL EQUITY PORTFOLIO
STATEMENT OF NET ASSETS (CONT'D)
April 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
----------- --------------
<S> <C> <C>
COMMON STOCKS (CONT'D)
Israel (1.4%)
ECI Telecommunications Limited Designs 420,050 $ 12,811,525
Orbotech, Ltd.'D' 160,000 5,780,000
--------------
18,591,525
--------------
Italy (5.1%)
Assicurazioni Generali SpA 422,400 12,705,729
Ente Nazionale Idrocarburi SpA 2,302,100 15,453,865
Parmalat Finanziaria SpA 5,928,900 13,367,167
Seat SpA 12,901,000 6,406,997
Telecom Italia SpA 2,631,400 19,676,653
--------------
67,610,411
--------------
Japan (10.5%)
Advantest Corp. 76,230 5,134,692
Aiwa Co., Ltd. 51,000 1,524,635
Fujitsu, Ltd. 1,313,000 15,352,946
Hankyu Realty Co., Ltd. 561,000 2,657,882
Kirin Beverage Corp. 3,000 58,806
Minebea Co., Ltd. 1,504,000 16,846,437
Mitsubishi Estate Co., Ltd. 412,000 3,991,220
NEC Corp. 1,354,000 15,268,748
Nichiei Co., Ltd. 47,720 3,719,942
Orix Corp. 297,200 20,581,091
Rohm Co., Ltd. 168,000 18,995,835
Sony Corp. 154,600 12,882,356
Takefuji Corp. 124,000 6,522,363
TDK Corp. 195,000 15,437,067
--------------
138,974,020
--------------
Luxembourg (0.2%)
Millicom International Cellular SA'D' 61,000 2,386,625
--------------
Mexico (0.8%)
Fomento Economico Mexicano SA de CV Series B 130,000 975,437
Gruma SA de CV Class B 851,904 1,954,771
Panamerican Beverages, Inc. Class A 198,908 7,931,456
--------------
10,861,664
--------------
</TABLE>
See Accompanying Notes to Financial Statements.
17
<PAGE>
<PAGE>
WARBURG PINCUS INSTITUTIONAL FUND, INC. --
INTERNATIONAL EQUITY PORTFOLIO
STATEMENT OF NET ASSETS (CONT'D)
April 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
----------- --------------
<S> <C> <C>
COMMON STOCKS (CONT'D)
Netherlands (6.2%)
CSM NV 118,700 $ 6,421,107
Hagemeyer NV 241,400 11,529,317
ING Groep NV 404,300 26,272,867
Koninklijke Pakhoed NV 131,400 4,812,448
Philips Electronics NV 378,500 33,344,552
--------------
82,380,291
--------------
New Zealand (1.4%)
Brierley Investments, Ltd. 16,119,083 9,314,831
Fletcher Challenge Building 2,952,212 5,971,044
Sky City, Ltd. 716,675 2,018,978
Wrightson, Ltd. 3,271,735 1,145,302
--------------
18,450,155
--------------
Norway (1.4%)
Smedvig ASA Class B 294,700 5,927,137
Smedvig ASA Class B ADR 30,625 612,500
Sparebanken NOR 97,500 3,372,857
Transocean Offshore, Inc. 146,100 8,163,337
--------------
18,075,831
--------------
Portugal (2.0%)
Banco Mello SA 123,500 1,838,904
Cimpor Cimentos de Portugal SA 469,100 17,348,661
Portugal Telecom SA ADR 130,700 7,025,125
--------------
26,212,690
--------------
Singapore (1.8%)
DBS Land, Ltd. 2,878,300 4,344,288
Development Bank of Singapore, Ltd. 2,108,262 13,979,723
Development Bank of Singapore, Ltd. ADR 38,225 1,022,519
Development Bank of Singapore, Ltd. Class A 632,478 4,114,029
--------------
23,460,559
--------------
</TABLE>
See Accompanying Notes to Financial Statements.
18
<PAGE>
<PAGE>
WARBURG PINCUS INSTITUTIONAL FUND, INC. --
INTERNATIONAL EQUITY PORTFOLIO
STATEMENT OF NET ASSETS (CONT'D)
April 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
----------- --------------
<S> <C> <C>
COMMON STOCKS (CONT'D)
South Korea (1.9%)
Hyundai Heavy 128,800 $ 4,143,957
L.G. Electronics 663,960 7,898,960
Pohang Iron & Steel Co., Ltd. 310 16,780
Samsung Display Devices Co. 151,757 7,550,944
Samsung Heavy Industries Co., Ltd. 708,500 5,004,293
--------------
24,614,934
--------------
Spain (1.9%)
Argentaria SA 137,200 11,432,207
Iberdrola SA 865,100 13,906,078
--------------
25,338,285
--------------
Sweden (5.9%)
ABB AB Series B 787,800 12,215,816
Biora AB ADR'D' 66,500 2,086,437
Electrolux AB Series B 268,600 24,989,856
Nordbanken Holding AB 2,936,753 21,630,548
SKF AB Series B 834,700 16,825,976
--------------
77,748,633
--------------
Switzerland (4.4%)
Julius Baer Holding AG 6,930 19,127,565
Oerlikon-Buehrle Holding AG 63,700 10,871,902
Schweizerische Rueckversicherungs-Gesellschaft 5,800 12,799,179
Sulzer AG 11,620 8,328,000
TAG Heuer International SA 67,304 7,089,638
--------------
58,216,284
--------------
Thailand (0.0%)
Siam Cement Co., Ltd. 21,700 306,352
--------------
</TABLE>
See Accompanying Notes to Financial Statements.
19
<PAGE>
<PAGE>
WARBURG PINCUS INSTITUTIONAL FUND, INC. --
INTERNATIONAL EQUITY PORTFOLIO
STATEMENT OF NET ASSETS (CONT'D)
April 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
----------- --------------
<S> <C> <C>
COMMON STOCKS (CONT'D)
United Kingdom (13.4%)
British Airport Authority PLC 1,037,712 $ 10,557,743
Cookson Group PLC 4,302,257 19,314,093
Dixons Group PLC 1,515,100 14,496,420
Glaxo Wellcome PLC 366,400 10,353,230
Imperial Chemical Industries PLC 531,400 9,649,061
Medeva PLC 2,523,600 7,489,495
Orange PLC 2,560,300 18,375,317
Perpetual PLC 80,100 5,383,841
Pilkington PLC 5,766,300 12,099,701
Rolls-Royce PLC 2,606,000 12,156,605
Royal & Sun Alliance Insurance Group PLC 1,004,100 11,214,686
Safeway PLC 502,500 2,995,224
Standard Chartered Bank PLC 733,600 11,235,398
Thistle Hotels PLC 2,385,052 6,998,559
Williams PLC 3,296,500 25,298,772
--------------
177,618,145
--------------
TOTAL COMMON STOCKS (Cost $1,001,577,473) 1,171,767,893
--------------
PREFERRED STOCK (3.1%)
Brazil (1.6%)
Companhia Vale do Rio Doce 277,400 6,546,914
Petroleo Brasileiro SA 22,375,000 5,671,885
Telecomunicacoes de Sao Paulo SA 20,032,000 6,811,461
Telecomunicacoes do Rio de Janeiro SA 16,828,000 2,647,716
--------------
21,677,976
--------------
Germany (1.4%)
GEA AG 25,600 10,342,714
KSB AG 25,066 8,325,069
--------------
18,667,783
--------------
United Kingdom (0.1%)
Singer & Friedlander Group PLC 8.50% (Convertible) 348,947 1,131,866
--------------
TOTAL PREFERRED STOCK (Cost $34,953,467) 41,477,625
--------------
</TABLE>
See Accompanying Notes to Financial Statements.
20
<PAGE>
<PAGE>
WARBURG PINCUS INSTITUTIONAL FUND, INC. --
INTERNATIONAL EQUITY PORTFOLIO
STATEMENT OF NET ASSETS (CONT'D)
April 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
----------- --------------
<S> <C> <C>
CALL OPTIONS (0.0%)
New Zealand (0.0%)
Air New Zealand, Ltd., 05/01/98 (Strike Price $2.4615) 3,750,000 $ 0
Air New Zealand, Ltd., 05/01/98 (Strike Price $2.5895) 3,750,000 0
--------------
TOTAL CALL OPTIONS (Cost $615,275) 0
--------------
PAR
-----------
CORPORATE BOND (0.1%)
New Zealand (0.1%)
Brierley Investments, Ltd. (Convertible) 9.00%, 06/30/98
(Cost $589,952) (A)1,028,875 571,694
--------------
SHORT TERM INVESTMENTS (6.2%)
Repurchase agreement with Goldman, Sachs & Co. dated
04/30/98 at 5.47% to be repurchased at $81,362,361 on
05/01/98. (Collateralized by pro rata amount of U.S.
Treasury Notes ranging in par values from $39,650,000 to
$50,000,000, 5.75%-7.25%, 09/30/01-05/15/04. Market value
of collateral is $83,037,014) (Cost $81,350,000) $81,350,000 81,350,000
--------------
TOTAL INVESTMENTS AT VALUE (98.0%) (Cost $1,119,086,167*) 1,295,167,212
OTHER ASSETS IN EXCESS OF LIABILITIES (2.0%) 26,808,985
--------------
NET ASSETS (100.0%) (applicable to 77,945,638 shares outstanding) $1,321,976,197
--------------
--------------
NET ASSET VALUE, Offering and redemption price per share
($1,321,976,197[div]77,945,638) $16.96
------
------
</TABLE>
INVESTMENT ABBREVIATIONS
ADR = American Depository Receipt.
GDR = Global Depository Receipt.
- --------------------------------------------------------------------------------
'D' Non-income producing security.
# Illiquid security.
(A) Denominated in New Zealand Dollars.
* Cost for federal income tax purposes is $1,119,723,883.
See Accompanying Notes to Financial Statements.
21
<PAGE>
<PAGE>
WARBURG PINCUS INSTITUTIONAL FUND, INC. --
SMALL COMPANY GROWTH PORTFOLIO
STATEMENT OF NET ASSETS
April 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
---------- ------------
<S> <C> <C>
COMMON STOCK (96.2%)
Aerospace & Defense (2.7%)
Prescient Systems, Inc. (Private Placement) 20,000 $ 2,000,000
REMEC, Inc.'D' 94,200 2,343,225
Tristar Aerospace Co.'D' 153,600 2,534,400
------------
6,887,625
------------
Banks & Savings & Loans (2.2%)
City National Corp. 61,300 2,279,594
HUBCO, Inc. 31,727 1,165,967
Silicon Valley Bancshares'D' 36,600 2,388,150
------------
5,833,711
------------
Building & Building Materials (1.8%)
D.R. Horton, Inc. 116,200 2,156,962
Nobility Homes, Inc.'D' 144,750 2,388,375
------------
4,545,337
------------
Business Services (9.0%)
Corporate Express, Inc.'D' 145,000 1,459,062
Getty Images, Inc.'D' 114,000 2,607,750
Hypercom Corp.'D' 145,300 1,888,900
Kroll-O'Gara Co.'D' 64,000 1,364,000
May & Speh, Inc.'D' 165,900 2,467,762
PMT Services, Inc.'D' 172,000 3,354,000
QuickResponse Services, Inc.'D' 57,933 2,722,851
Sitel Corp.'D' 153,700 1,805,975
Tag-It Pacific, Inc.'D' 142,800 464,100
Technology Solutions Co.'D' 91,450 2,937,831
Wilmar Industries, Inc.'D' 93,400 2,229,925
------------
23,302,156
------------
Communications & Media (4.7%)
Central European Media Enterprises, Ltd. Class A'D' 97,647 2,728,013
Granite Broadcasting Corp.'D' 216,600 2,517,975
Heftel Broadcasting Corp. Class A'D' 71,800 3,150,225
Metro Networks, Inc.'D' 70,100 2,786,475
Network Event Theater, Inc.'D' 253,968 1,063,491
------------
12,246,179
------------
</TABLE>
See Accompanying Notes to Financial Statements.
22
<PAGE>
<PAGE>
WARBURG PINCUS INSTITUTIONAL FUND, INC. --
SMALL COMPANY GROWTH PORTFOLIO
STATEMENT OF NET ASSETS (CONT'D)
April 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
---------- ------------
<S> <C> <C>
COMMON STOCK (CONT'D)
Computers (9.6%)
ACT Networks, Inc.'D' 105,800 $ 1,587,000
Arbor Software Corp. 40,700 1,915,444
Boole & Babbage Inc.'D' 110,950 2,662,800
Business Objects S.A. ADR'D' 151,100 2,852,012
Check Point Software Technologies, Ltd.'D' 45,000 1,321,875
DataWorks Corp.'D' 4,600 101,775
JDA Software Group, Inc.'D' 50,600 2,558,462
Manhattan Associates, Inc.'D' 29,300 662,912
National Instruments Corp.'D' 81,383 2,889,079
Radiant Systems, Inc.'D' 113,000 2,542,500
Tecnomatix Technologies, Ltd.'D' 88,700 2,250,762
Transactions Systems Architects, Inc. Class A'D' 89,400 3,754,800
------------
25,099,421
------------
Consumer Non-Durables (4.7%)
Central Garden & Pet Co.'D' 81,600 2,794,800
dELiA*s, Inc.'D' 99,000 2,499,750
Interface, Inc. 81,400 3,454,412
Scotts Co. Class A'D' 33,100 1,208,150
U.S. Home & Garden, Inc.'D' 347,000 2,320,562
------------
12,277,674
------------
Consumer Services (4.9%)
DeVRY, Inc.'D' 71,852 2,721,394
ITT Educational Services, Inc.'D' 66,000 1,951,125
Prepaid Legal Services, Inc.'D' 70,100 2,650,656
Service Experts, Inc.'D' 80,800 2,686,600
Strayer Education, Inc. 76,200 2,800,350
------------
12,810,125
------------
Electronics (7.2%)
Aavid Thermal Technologies, Inc.'D' 80,100 2,798,494
ADE Corp.'D' 74,500 1,331,687
ATMI Inc.'D' 9,600 267,600
Avant! Corp.'D' 125,731 3,646,199
Burr-Brown Corp.'D' 88,251 2,686,140
Cerprobe Corp.'D' 98,100 1,630,912
Etec Systems, Inc.'D' 41,500 2,355,125
Uniphase Corp.'D' 52,400 2,842,700
Vitesse Semiconductor Corp.'D' 20,500 1,182,594
------------
18,741,451
------------
</TABLE>
See Accompanying Notes to Financial Statements.
23
<PAGE>
<PAGE>
WARBURG PINCUS INSTITUTIONAL FUND, INC. --
SMALL COMPANY GROWTH PORTFOLIO
STATEMENT OF NET ASSETS (CONT'D)
April 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
---------- ------------
<S> <C> <C>
COMMON STOCK (CONT'D)
Energy (2.9%)
Brown (Tom), Inc.'D' 65,689 $ 1,354,836
Chieftain International, Inc.'D' 92,700 2,074,163
KCS Energy, Inc. 104,800 1,624,400
Stone Energy Corp.'D' 67,900 2,601,419
------------
7,654,818
------------
Environmental Services (1.6%)
Allied Waste Industries, Inc. 100,000 2,750,000
Casella Waste Systems, Inc.'D' 48,400 1,506,450
------------
4,256,450
------------
Financial Services (5.0%)
Amerin Corp.'D' 78,000 2,481,375
Life Re Corp. 44,600 3,211,200
Sirrom Capital Corp. 88,500 2,643,938
Terra Nova Bermuda Holdings, Ltd. 72,200 2,211,125
Triad Guaranty, Inc.'D' 70,100 2,488,550
------------
13,036,188
------------
Food, Beverages & Tobacco (1.6%)
Ben & Jerry's Homemade, Inc. Class A'D' 13,900 258,888
Consolidated Cigar Holdings, Inc.'D' 116,900 1,614,681
Suiza Foods Corp.'D' 37,700 2,233,725
------------
4,107,294
------------
Healthcare (7.7%)
Assisted Living Concepts, Inc.'D' 133,200 2,447,550
Core, Inc.'D' 186,800 2,194,900
Hanger Orthopedic Group, Inc.'D' 42,300 790,481
InControl, Inc.'D' 209,520 1,139,265
Mentor Corp. 44,900 1,220,719
Mid Atlantic Medical Services, Inc.'D' 168,000 2,152,500
Minimed, Inc.'D' 55,300 2,765,000
NovaCare, Inc.'D' 155,900 2,172,856
Renal Care Group, Inc.'D' 68,500 2,620,125
Trex Medical Corp.'D' 74,300 1,411,700
VWR Corp.'D' 34,300 1,127,613
------------
20,042,709
------------
Industrial Mfg. & Processing (0.7%)
Total Control Products, Inc.'D' 183,600 1,950,750
------------
</TABLE>
See Accompanying Notes to Financial Statements.
24
<PAGE>
<PAGE>
WARBURG PINCUS INSTITUTIONAL FUND, INC. --
SMALL COMPANY GROWTH PORTFOLIO
STATEMENT OF NET ASSETS (CONT'D)
April 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
---------- ------------
<S> <C> <C>
COMMON STOCK (CONT'D)
Leisure & Entertainment (7.5%)
Ambassadors International, Inc.'D' 76,600 $ 2,298,000
Championship Auto Racing Teams, Inc.'D' 62,900 1,187,238
Coach USA, Inc.'D' 66,500 3,154,594
Family Golf Centers, Inc.'D' 71,900 3,028,788
N2K, Inc. 'D' 41,666 1,046,858
Premier Parks, Inc. 71,000 3,949,375
Signature Resorts, Inc.'D' 107,200 1,916,200
Vistana, Inc.'D' 114,700 2,896,175
------------
19,477,228
------------
Lodging & Restaurants (0.9%)
Bob Evans Farms, Inc. 120,100 2,447,038
------------
Oil Services (3.6%)
Global Industries, Ltd.'D' 128,000 2,904,000
Petroleum Geo-Services ADR'D' 56,431 3,710,338
Pride International, Inc.'D' 101,100 2,457,994
Southern Mineral Corp.'D' 58,875 209,742
------------
9,282,074
------------
Pharmaceuticals (6.4%)
Alkermes, Inc.'D' 100,000 2,387,500
ChiRex, Inc.'D' 106,500 1,870,406
Gilead Sciences, Inc.'D' 52,535 1,996,311
Owens & Minor, Inc. Holding Co. 133,200 2,372,625
SangStat Medical Corp.'D' 76,400 2,583,275
Sepracor, Inc.'D' 51,200 2,368,000
Serologicals Corp.'D' 102,550 3,076,500
------------
16,654,617
------------
Real Estate (3.6%)
Cabot Industrial Trust'D' 52,100 1,178,763
Fairfield Communities, Inc.'D' 154,800 3,618,450
LaSalle Partners, Inc.'D' 77,700 2,670,938
Trammell Crow Co.'D' 70,300 1,862,950
------------
9,331,101
------------
Retail (1.2%)
Borders Group, Inc.'D' 93,600 3,006,900
------------
</TABLE>
See Accompanying Notes to Financial Statements.
25
<PAGE>
<PAGE>
WARBURG PINCUS INSTITUTIONAL FUND, INC. --
SMALL COMPANY GROWTH PORTFOLIO
STATEMENT OF NET ASSETS (CONT'D)
April 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
---------- ------------
<S> <C> <C>
COMMON STOCK (CONT'D)
Telecommunications & Equipment (3.7%)
General Communication, Inc.'D' 184,500 $ 1,303,031
Intermedia Communications of Florida, Inc.'D' 51,600 3,765,994
McLeodUSA , Inc. Class A'D' 79,500 3,657,000
Teledata Communications, Ltd.'D' 59,700 947,738
------------
9,673,763
------------
Transportation (3.0%)
Heartland Express, Inc.'D' 93,450 2,324,569
Mark VII, Inc.'D' 112,862 2,144,378
Simon Transportation Services, Inc.'D' 113,000 953,438
Swift Transportation Co., Inc.'D' 107,600 2,461,350
------------
7,883,735
------------
TOTAL COMMON STOCK (Cost $195,433,130)# 250,538,344
------------
PAR
----------
CONVERTIBLE NOTE (0.8%)
Mansur Industries, Inc. 8.25%, 02/23/03 (Cost $2,000,000)# $2,000,000 2,000,000
------------
SHORT TERM INVESTMENTS (2.2%)
Repurchase agreement with Goldman, Sachs & Co. dated
04/30/98 at 5.47% to be repurchased at $5,885,894 on
05/01/98. (Collateralized by pro rata amount of
U.S. Treasury Notes ranging in par values from $39,650,000
to $50,000,000, 5.75%-7.25%, 09/30/01-05/15/04. Market value
of collateral is $6,007,042) (Cost $5,885,000) 5,885,000 5,885,000
------------
TOTAL INVESTMENTS AT VALUE (99.2%) (Cost $203,318,130*) 258,423,344
OTHER ASSETS IN EXCESS OF LIABILITIES (0.8%) 2,019,210
------------
NET ASSETS (100.0%) (applicable to 15,145,146 shares
outstanding) $260,442,554
------------
------------
NET ASSET VALUE, Offering and redemption price per share
($260,422,554[div]15.145,146) $17.20
------
------
</TABLE>
INVESTMENT ABBREVIATIONS
ADR = American Depository Receipt.
- --------------------------------------------------------------------------------
'D' Non-income producing security.
# Restricted Security.
* Cost for federal income tax purposes is $203,320,963.
See Accompanying Notes to Financial Statements.
26
<PAGE>
<PAGE>
WARBURG PINCUS INSTITUTIONAL FUND, INC. --
EMERGING MARKETS PORTFOLIO
STATEMENT OF NET ASSETS
April 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
----------- -----------
<S> <C> <C>
COMMON STOCKS (78.2%)
Argentina (4.4%)
Banco de Galicia & Buenos Aires SA de CV ADR 22,460 $ 550,270
Telefonica de Argentina SA ADR 6,400 246,800
YPF SA ADR 23,700 826,537
-----------
1,623,607
-----------
Brazil (8.9%)
CIA de Saneamento Basico do Estado de Sao Paulo'D' 4,586,500 1,042,368
Companhia de Eletricidade da Bahia 11,809,000 665,793
Telecomunicacoes Brasileiras SA 4,239,670 418,030
Telecomunicacoes Brasileiras SA ADR 4,500 548,156
Uniao de Bancos Brasileiros SA GDR 15,500 616,125
-----------
3,290,472
-----------
Chile (4.4%)
Banco de Santander Chile ADR 52,600 736,400
Supermercados Unimarc SA ADR 84,300 911,494
-----------
1,647,894
-----------
China (3.8%)
Cosco Pacific, Ltd. 1,290,000 874,317
Guangshen Railway Co., Ltd.'D' 1,244,000 232,867
Guangshen Railway Co., Ltd. ADR'D' 27,100 265,919
Tingyi Holding Co.'D' 408,000 40,031
-----------
1,413,134
-----------
Hong Kong (4.1%)
First Pacific Co., Ltd. 620,435 298,361
HSBC Holdings PLC 19,600 559,201
Jardine Matheson Holdings, Ltd. 24,283 102,474
Wing Hang Bank, Ltd. 205,100 577,221
-----------
1,537,257
-----------
India (4.0%)
Hindalco Industries, Ltd. GDR 26,100 508,950
Indo Rama Synthetics GDR 10,000 50,862
Reliance Industries, Ltd. GDS 29,700 271,012
State Bank of India, Ltd. GDR 33,600 640,080
-----------
1,470,904
-----------
</TABLE>
See Accompanying Notes to Financial Statements.
27
<PAGE>
<PAGE>
WARBURG PINCUS INSTITUTIONAL FUND, INC. --
EMERGING MARKETS PORTFOLIO
STATEMENT OF NET ASSETS (CONT'D)
April 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
----------- -----------
<S> <C> <C>
COMMON STOCKS (CONT'D)
Indonesia (1.6%)
P.T. Semen Gresik 255,100 $ 170,593
P.T. Telekomunikasi Indonesia ADR 54,002 432,016
-----------
602,609
-----------
Israel (9.7%)
Blue Square Israel Co., Ltd. ADR 55,800 892,800
ECI Telecommunications, Ltd. 30,400 927,200
Formula Systems, Ltd.'D' 5,500 212,196
Formula Systems, Ltd. ADR'D' 700 28,525
Orbotech, Ltd.'D' 26,000 939,250
Teva Pharmaceutical Industries, Ltd. ADR 13,644 583,281
-----------
3,583,252
-----------
Kazakhstan (3.1%)
Hurricane Hydrocarbons, Ltd. (USA)'D' 24,300 148,837
Hurricane Hydrocarbons, Ltd. (CA)'D' 162,000 990,995
-----------
1,139,832
-----------
Luxembourg (1.6%)
Millicom International Cellular SA'D' 15,100 590,787
-----------
Malaysia (0.2%)
Technology Resources Industries BHD 72,000 73,925
-----------
Mexico (9.6%)
Apasco SA de CV 32,000 217,114
Cintra SA'D' 705,400 681,343
Consorcio Hogar SA de CV Series B'D' 421,000 606,988
Fomento Economico Mexicano SA de CV 35,000 262,618
Grupo Industrial Durango SA ADR 48,500 697,187
Grupo Industrial Saltillo SA de CV 259,000 1,104,396
-----------
3,569,646
-----------
Philippines (1.7%)
C & P Homes, Inc. 1,596,000 135,153
Filinvest Land, Inc. 300,000 20,922
Hi Cement Corp. 4,009,000 479,282
-----------
635,357
-----------
Poland (2.7%)
Bank Slaski SA 11,700 1,002,405
-----------
</TABLE>
See Accompanying Notes to Financial Statements.
28
<PAGE>
<PAGE>
WARBURG PINCUS INSTITUTIONAL FUND, INC. --
EMERGING MARKETS PORTFOLIO
STATEMENT OF NET ASSETS (CONT'D)
April 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
----------- -----------
<S> <C> <C>
COMMON STOCKS (CONT'D)
Portugal (2.4%)
Banco Mello SA 23,100 $ 343,957
Mota e Companhia SA 32,400 532,808
-----------
876,765
-----------
Russia (0.8%)
The Russian Prosperity Fund A'D' 15,244 312,502
-----------
Singapore (6.3%)
DBS Land, Ltd. 228,000 344,126
Development Bank of Singapore, Ltd. 153,000 1,014,531
Development Bank of Singapore, Ltd. Class A 45,900 298,562
Keppel Bank 253,200 329,394
Keppel Land Ltd. 281,000 333,618
-----------
2,320,231
-----------
South Korea (4.9%)
L.G. Electronics 13,200 157,037
Pohang Iron & Steel Co., Ltd. 5,340 289,050
Samsung Display Devices Co. 12,106 602,356
Samsung Heavy Industries Co., Ltd. 107,980 762,687
Ssangyong Oil Refining Co., Ltd.'D' 230 1,663
-----------
1,812,793
-----------
Thailand (1.5%)
Hana Microelectronics Public Co., Ltd. 68,200 298,016
Siam Cement Co., Ltd. 19,700 278,117
-----------
576,133
-----------
United Kingdom (1.6%)
Standard Chartered Bank PLC 38,500 589,644
-----------
Turkey (0.9%)
Yapi Ve Kredi Bankasi AS 6,602,000 323,466
-----------
TOTAL COMMON STOCKS (Cost $29,709,756) 28,992,615
-----------
PREFERRED STOCK (11.3%)
Brazil (8.8%)
Companhia Vale do Rio Doce 18,800 443,699
Petroleo Brasileiro SA 4,634,500 1,174,809
Telecomunicacoes de Sao Paulo SA 2,198,000 747,384
Telecomunicacoes do Rio de Janeiro SA 5,783,000 909,897
-----------
3,275,789
-----------
</TABLE>
See Accompanying Notes to Financial Statements.
29
<PAGE>
<PAGE>
WARBURG PINCUS INSTITUTIONAL FUND, INC. --
EMERGING MARKETS PORTFOLIO
STATEMENT OF NET ASSETS (CONT'D)
April 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
----------- -----------
<S> <C> <C>
PREFERRED STOCK (CONT'D)
Russia (0.4%)
LUKoil Holding 16,400 $ 141,860
-----------
South Korea (2.1%)
L.G. Electronics 86,200 312,164
Samsung Display Devices Co. 26,700 481,209
-----------
793,373
-----------
TOTAL PREFERRED STOCK (Cost $3,710,228) 4,211,022
-----------
PAR
-----------
CORPORATE BONDS (2.5%)
Malaysia (0.1%)
Technology Resources Industries BHD 2.75%, 11/28/04 $ 50,000 53,530
-----------
Philippines (1.4%)
Metro Pacific Capital 2.50%, 04/11/03 572,000 507,250
-----------
South Korea (1.0%)
Ssangyong Oil 3.75%, 12/31/08 425,000 355,300
-----------
TOTAL CORPORATE BONDS (Cost $748,791) 916,080
-----------
SHORT TERM INVESTMENTS (7.5%)
Repurchase agreement with Goldman, Sachs & Co. dated
04/30/98 at 5.47% to be repurchased at $2,772,421 on
05/01/98. (Collateralized by pro rata amount of
U.S. Treasury Notes ranging in par values from $39,650,000
to $50,000,000, 5.75%-7.25%, 09/30/01-05/15/04. Market
value of collateral is $2,829,485) (Cost $2,772,000) 2,772,000 2,772,000
-----------
TOTAL INVESTMENTS AT VALUE (99.5%) (Cost $36,940,775*) 36,891,717
OTHER ASSETS IN EXCESS OF LIABILITIES (0.5%) 189,520
-----------
NET ASSETS (100.0%) (applicable to 4,300,262 shares outstanding) $37,081,237
-----------
-----------
NET ASSET VALUE, Offering and redemption price
per share ($37,081,237[div]4,300,262) $8.62
-----
-----
</TABLE>
INVESTMENT ABBREVIATIONS
ADR = American Depository Receipt.
GDR = Global Depository Receipt.
GDS = Global Depository Share.
- --------------------------------------------------------------------------------
'D' Non-income producing security.
* Also cost for federal income tax purposes.
See Accompanying Notes to Financial Statements.
30
<PAGE>
<PAGE>
WARBURG PINCUS INSTITUTIONAL FUND, INC. --
VALUE PORTFOLIO
STATEMENT OF NET ASSETS
April 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
---------- -----------
<S> <C> <C>
COMMON STOCKS (87.8%)
Aerospace & Defense (4.6%)
Gulfstream Aerospace Corp.'D' 18,900 $ 792,619
Litton Industries, Inc.'D' 6,600 396,000
Lockheed Martin Corp. 5,800 645,975
Raytheon Co. Class A 23,400 1,291,387
-----------
3,125,981
-----------
Agriculture (0.5%)
IMC Global, Inc. 8,900 320,400
-----------
Banks & Savings & Loans (3.7%)
Bank of New York Co., Inc. 7,300 431,156
Citicorp 10,750 1,617,875
First Chicago NBD Corp. 5,600 520,100
-----------
2,569,131
-----------
Building & Building Materials (1.2%)
USG Corp.'D' 16,250 834,844
-----------
Business Services (0.8%)
Block, (H&R) Inc. 5,600 252,000
Deluxe Corp. 8,200 274,700
-----------
526,700
-----------
Capital Equipment (4.5%)
AlliedSignal, Inc. 12,900 565,181
American Standard Co., Inc.'D' 12,800 623,200
Caterpillar, Inc. 5,800 330,237
Emerson Electric Co. 7,400 470,825
Harnischfeger Industries, Inc. 10,900 307,925
ITT Industries, Inc. 21,600 787,050
-----------
3,084,418
-----------
Chemicals (2.5%)
Ferro Corp. 13,350 384,647
Rhone Poulenc SA ADR Series A 13,800 683,100
Union Carbide Corp. 13,500 654,750
-----------
1,722,497
-----------
</TABLE>
See Accompanying Notes to Financial Statements.
31
<PAGE>
<PAGE>
WARBURG PINCUS INSTITUTIONAL FUND, INC. --
VALUE PORTFOLIO
STATEMENT OF NET ASSETS (CONT'D)
April 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
---------- -----------
<S> <C> <C>
COMMON STOCKS (CONT'D)
Computers (5.7%)
Adaptec, Inc. 4,200 $ 99,488
Automatic Data Processing, Inc. 4,500 301,219
Compaq Computer Corp. 49,400 1,386,287
Hewlett-Packard Co. 4,000 301,250
International Business Machines Corp. 11,950 1,384,706
Sun Microsystems, Inc.'D' 10,900 448,944
-----------
3,921,894
-----------
Conglomerates (3.2%)
Harsco Corp. 17,450 802,700
TRW, Inc. 13,600 718,250
United Technologies Corp. 6,900 679,219
-----------
2,200,169
-----------
Consumer Durables (4.8%)
Chrysler Corp. 42,500 1,707,969
Ford Motor Co. 16,200 742,162
Maytag Corp. 5,000 257,500
Philips Electronics NV 6,700 603,000
-----------
3,310,631
-----------
Consumer Non-Durables (2.0%)
Premark International, Inc. 20,000 667,500
Rubbermaid, Inc. 13,000 372,125
Unilever NV 4,400 328,350
-----------
1,367,975
-----------
Electronics (1.2%)
Dallas Semiconductor Corp. 6,200 239,087
Lexmark International Group, Inc. Class A'D' 7,000 405,125
National Semiconductor Corp.'D' 8,900 195,800
-----------
840,012
-----------
Energy (6.1%)
British Petroleum Co. PLC ADR 21,316 2,014,362
Burlington Resources, Inc. 14,400 676,800
Occidental Petroleum Corp. 21,900 644,681
Total SA ADR 15,400 904,750
-----------
4,240,593
-----------
Environmental Services (1.3%)
USA Waste Services, Inc.'D' 17,600 863,500
-----------
</TABLE>
See Accompanying Notes to Financial Statements.
32
<PAGE>
<PAGE>
WARBURG PINCUS INSTITUTIONAL FUND, INC. --
VALUE PORTFOLIO
STATEMENT OF NET ASSETS (CONT'D)
April 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
---------- -----------
<S> <C> <C>
COMMON STOCKS (CONT'D)
Financial Services (10.6%)
American Express Co. 2,650 $ 270,300
Associates First Capital Corp. Class A 4,260 318,399
Berkley (W.R.) Corp. 4,700 219,137
Fannie Mae 11,800 706,525
FINOVA Group, Inc. 11,700 685,181
Freddie Mac 9,200 426,075
HCC Insurance Holdings, Inc. 1,100 23,925
Lehman Brothers Holdings, Inc. 6,700 476,119
MBIA, Inc. 12,800 955,200
Provident Companies, Inc. 13,000 507,812
Terra Nova (Bermuda) Holdings, Ltd. Class A 9,000 275,625
The PMI Group, Inc. 22,000 1,787,500
Travelers Group, Inc. 4,800 293,700
Travelers Property Casualty Corp. 8,200 344,400
-----------
7,289,898
-----------
Food, Beverages & Tobacco (5.3%)
Anheuser-Busch Companies, Inc. 23,100 1,058,269
Corn Products International, Inc.'D' 12,300 438,187
Keebler Foods Co.'D' 18,850 537,225
Philip Morris Companies, Inc. 14,600 544,762
Ralston Purina Group 3,700 392,200
Sara Lee Corp. 7,500 446,719
Swedish Match Co. AB ADR 6,250 218,750
-----------
3,636,112
-----------
Healthcare (5.6%)
Baxter International, Inc. 12,500 692,969
Foundation Health Systems, Inc. Class A'D' 19,800 572,962
Tenet Healthcare Corp.'D' 13,800 516,637
Trigon Healthcare, Inc.'D' 38,100 1,157,287
Wellpoint Health Networks, Inc.'D' 13,100 944,838
-----------
3,884,693
-----------
Industrial Mfg. & Processing (1.6%)
UNOVA, Inc.'D' 46,800 1,088,100
-----------
Leisure & Entertainment (1.9%)
Polaroid Corp. 29,700 1,306,800
-----------
</TABLE>
See Accompanying Notes to Financial Statements.
33
<PAGE>
<PAGE>
WARBURG PINCUS INSTITUTIONAL FUND, INC. --
VALUE PORTFOLIO
STATEMENT OF NET ASSETS (CONT'D)
April 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
---------- -----------
<S> <C> <C>
COMMON STOCKS (CONT'D)
Metals & Mining (1.2%)
Alumax, Inc.'D' 7,300 $ 360,438
Aluminum Company of America 6,200 480,500
-----------
840,938
-----------
Office Equipment & Supplies (0.4%)
Pitney Bowes, Inc. 6,200 297,600
-----------
Oil Services (1.3%)
Noble Drilling Corp.'D' 16,100 520,231
R & B Falcon Corp.'D' 12,576 403,218
-----------
923,449
-----------
Pharmaceuticals (2.3%)
American Home Products Corp. 4,600 428,375
Merck & Co., Inc. 9,500 1,144,750
-----------
1,573,125
-----------
Real Estate (0.4%)
Equity Residential Properties Trust REIT 6,100 299,663
-----------
Retail (5.9%)
Federated Department Stores, Inc.'D' 27,800 1,367,413
May Department Stores Co. 10,800 666,225
Neiman-Marcus Group, Inc.'D' 9,300 341,194
Payless ShoeSource, Inc.'D' 5,226 373,659
Proffitt's, Inc.'D' 8,500 337,875
Sears, Roebuck and Co. 11,600 688,025
Wal-Mart Stores, Inc. 6,000 303,375
-----------
4,077,766
-----------
Telecommunications & Equipment (5.7%)
ALLTEL Corp. 5,900 252,225
Ameritech Corp. 14,500 617,156
AT&T Corp. 12,300 738,769
Bell Atlantic Corp. 11,159 1,044,064
BellSouth Corp. 9,700 622,619
SBC Communications, Inc. 16,400 679,575
-----------
3,954,408
-----------
Transportation (1.1%)
Burlington Northern Santa Fe Corp. 3,700 366,300
CSX Corp. 7,800 409,500
-----------
775,800
-----------
</TABLE>
See Accompanying Notes to Financial Statements.
34
<PAGE>
<PAGE>
WARBURG PINCUS INSTITUTIONAL FUND, INC. --
VALUE PORTFOLIO
STATEMENT OF NET ASSETS (CONT'D)
April 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
---------- -----------
<S> <C> <C>
COMMON STOCKS (CONT'D)
Utilities -- Electric (2.4%)
Allegheny Energy, Inc. 12,200 $ 373,625
American Electric Power Co., Inc. 7,700 367,675
DQE, Inc. 2,200 75,625
Entergy Corp. 9,100 226,363
Illinova Corp. 9,000 275,063
Wisconsin Energy Corp. 11,800 359,900
-----------
1,678,251
-----------
TOTAL COMMON STOCK (Cost $54,637,896) 60,555,348
-----------
PREFERRED STOCK (1.8%)
Capital Equipment (0.6%)
Ingersoll-Rand Co. Series G 0.78%, (Convertible 5/15/01)
PRIDES 22,400 459,200
-----------
Communications & Media (0.7%)
AirTouch Communications, Inc. Series B 6.00% (Callable
08/16/99 @ $35.96) 10,400 461,500
-----------
Real Estate (0.5%)
Equity Residential Properties Series G 7.25% (Callable
09/15/02 @ $25.91) REIT 13,600 343,400
-----------
TOTAL PREFERRED STOCK (Cost $1,208,646) 1,264,100
-----------
FOREIGN STOCKS (0.5%)
United Kingdom (0.5%)
WPP Group PLC 50,900 322,971
-----------
TOTAL FOREIGN STOCKS (Cost $275,889) 322,971
-----------
PAR
CONVERTIBLE BONDS (1.1%)
Diamond Offshore Drilling, Inc. 3.75%, 02/15/07 $ 470,000 629,800
Rite Aid Corp. 144A (Callable 09/15/00 @ 102.10) 5.25%,
09/15/02 101,000 113,878
-----------
TOTAL BONDS (Cost $710,087) 743,678
-----------
SHORT TERM INVESTMENTS (9.9%)
Repurchase agreement with Goldman, Sachs & Co. dated
04/30/98 at 5.47% to be repurchased at $6,892,047 on
05/01/98. (Collateralized by pro rata amount of
U.S. Treasury Notes ranging in par values from $39,650,000
to $50,000,000, 5.75%-7.25%, 09/30/01-05/15/04. Market value
of collateral is $7,033,904.) (Cost $6,891,000) 6,891,000 6,891,000
-----------
TOTAL INVESTMENTS AT VALUE (101.1%) (Cost $63,723,518*) 69,777,097
LIABILITIES IN EXCESS OF OTHER ASSETS (1.1%) (778,115)
-----------
NET ASSETS (100.0%) (applicable to 5,528,703 shares outstanding) $68,998,982
-----------
-----------
NET ASSET VALUE, Offering and redemption price per share
($68,998,982[div]5,528,703) $12.48
------
------
</TABLE>
INVESTMENT ABBREVIATIONS
REIT = Real Estate Investment Trust.
PRIDES = Preferred Redeemable Increased Divides Equities Securities.
- --------------------------------------------------------------------------------
'D' Non-income producing security.
* Also cost for federal income tax purposes.
See Accompanying Notes to Financial Statements.
35
<PAGE>
<PAGE>
WARBURG PINCUS INSTITUTIONAL FUND, INC. --
JAPAN GROWTH PORTFOLIO
STATEMENT OF NET ASSETS
April 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
--------- ----------
<S> <C> <C>
COMMON STOCKS (79.2%)
Banks & Savings & Loans (5.3%)
Fuji Bank, Ltd. 15,000 $ 84,576
----------
Electronics (49.8%)
Advantest Corp. 1,100 74,094
Brother Industries, Ltd. 20,000 74,623
Fanuc, Ltd. 2,000 73,867
Fujikura, Ltd. 10,000 51,616
Minebea Co., Ltd. 7,000 78,408
Rohm Co., Ltd. 1,000 113,070
Sony Corp. 1,000 83,327
TDK Corp. 1,000 79,164
Tokyo Electronics, Ltd. 2,000 78,710
Tokyo Seimitsu Co., Ltd. 3,000 88,322
----------
795,201
----------
Financial Services (13.6%)
Orix Corp. 1,000 69,250
Shohkoh Fund & Co., Ltd. 300 95,588
Takefuji Corp. 1,000 52,600
----------
217,438
----------
Industrial Mfg. & Processing (2.1%)
Hoya Corp. 1,000 33,149
----------
Pharmaceuticals (4.7%)
Sankyo Co., Ltd. 3,000 74,472
----------
Telecommunications & Equipment (3.7%)
Nippon Television Network Corp. 200 59,184
----------
TOTAL COMMON STOCKS (Cost $1,270,918) 1,264,020
----------
PAR
---------
U.S. TREASURY NOTES (24.3%)
U.S. Treasury Note 4.92%, 07/30/98 (Cost $388,225) $393,000 388,112
----------
TOTAL INVESTMENTS AT VALUE (103.5%) (Cost $1,659,143*) 1,652,132
LIABILITIES IN EXCESS OF OTHER ASSETS (3.5%) (56,580)
----------
NET ASSETS (100.0%) (applicable to 151,897 shares outstanding) $1,595,552
----------
----------
NET ASSET VALUE, offering and redemption price per share
($1,595,552[div]151,897) $10.50
------
------
</TABLE>
- --------------------------------------------------------------------------------
'D' Non-income producing security.
* Also cost for federal income tax purposes.
See Accompanying Notes to Financial Statements.
36
<PAGE>
<PAGE>
WARBURG PINCUS INSTITUTIONAL FUND, INC. --
POST-VENTURE CAPITAL PORTFOLIO
STATEMENT OF NET ASSETS
April 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
--------- ----------
<S> <C> <C>
COMMON STOCK (95.6%)
Aerospace & Defense (4.4%)
Gulfstream Aerospace Corp.'D' 2,000 $ 83,875
----------
Business Services (0.8%)
Protection One, Inc.'D' 1,200 14,662
----------
Communications & Media (2.9%)
Central European Media Enterprises, Ltd. Class A'D' 2,000 55,875
----------
Computers (27.0%)
BMC Software, Inc.'D' 900 84,206
Brio Technology, Inc.'D' 200 2,200
Cambridge Technology Partners, Inc.'D' 1,600 83,600
Check Point Software Technologies, Ltd.'D' 1,200 35,250
Computer Associates International, Inc. 1,200 70,275
JDA Software Group, Inc.'D' 1,800 91,012
PeopleSoft, Inc.'D' 1,600 74,400
PLATINUM Technology, Inc.'D' 2,100 53,550
Tecnomatix Technologies Ltd.'D' 1,000 25,375
----------
519,868
----------
Consumer Non-Durables (3.9%)
Central Garden & Pet Co.'D' 2,200 75,350
----------
Consumer Services (0.2%)
Service Experts, Inc.'D' 100 3,325
----------
Electronics (12.9%)
Avant! Corp.'D' 2,400 69,600
Linear Technology Corp. 800 64,400
Maxim Integrated Products, Inc.'D' 1,700 68,637
Xilinx, Inc.'D' 1,000 45,750
----------
248,387
----------
Energy (2.7%)
Forcenergy Gas Exploration, Inc.'D' 1,800 41,513
KCS Energy, Inc. 700 10,850
----------
52,363
----------
Environmental Services (1.5%)
USA Waste Services, Inc.'D' 600 29,438
----------
Healthcare (3.0%)
NovaCare, Inc.'D' 4,200 58,538
----------
Industrial Manufacturing & Processing (1.9%)
Mettler-Toledo International, Inc.'D' 1,800 36,225
----------
</TABLE>
See Accompanying Notes to Financial Statements.
37
<PAGE>
<PAGE>
WARBURG PINCUS INSTITUTIONAL FUND, INC. --
POST-VENTURE CAPITAL PORTFOLIO
STATEMENT OF NET ASSETS (CONT'D)
April 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
--------- ----------
<S> <C> <C>
COMMON STOCK (CONT'D)
Leisure & Entertainment (4.9%)
Coach USA, Inc.'D' 2,000 $ 94,875
----------
Metals & Mining (3.0%)
Metals USA, Inc.'D' 3,000 58,500
----------
Pharmaceuticals (6.4%)
Alkermes, Inc.'D' 2,000 47,750
ChiRex, Inc.'D' 2,800 49,175
MedImmune, Inc. 500 26,375
----------
123,300
----------
Real Estate (1.7%)
AMB Property Corp.'D' 1,400 32,200
----------
Retail (4.2%)
Barnes & Noble, Inc.'D' 1,600 54,200
Borders Group, Inc.'D' 800 25,700
----------
79,900
----------
Telecommunications & Equipment (14.2%)
Gilat Communications, Ltd.'D' 2,600 25,025
Intermedia Communications, Inc.'D' 1,400 102,178
McLeodUSA, Inc.'D' 1,200 55,200
Paging Network, Inc.'D' 4,200 59,063
Teledata Communications, Ltd.'D' 2,000 31,750
----------
273,216
----------
TOTAL COMMON STOCK (Cost $1,624,499) 1,839,897
----------
PAR
---------
SHORT TERM INVESTMENTS (3.9%)
Repurchase agreement with Goldman, Sachs & Co. dated
04/30/98 at 5.47% to be repurchased at $76,012 on
05/01/98. (Collateralized by pro rata amount of
U.S. Treasury Notes ranging in par values from $39,650,000
to $50,000,000, 5.75%-7.25%, 09.30/01-05/15/04. Market
value of collateral is $77,576) (Cost $76,000) $76,000 76,000
----------
TOTAL INVESTMENTS AT VALUE (99.5%) (Cost $1,700,499*) 1,915,897
OTHER ASSETS IN EXCESS OF LIABILITIES (0.5%) 8,583
----------
NET ASSETS (100.0%) (applicable to 172,546 shares outstanding) $1,924,480
----------
----------
NET ASSET VALUE, Offering and redemption price per share
($1,924,480[div]172,546) $11.15
------
------
</TABLE>
- --------------------------------------------------------------------------------
'D' Non-income producing security.
* Also cost for federal income tax purposes.
See Accompanying Notes to Financial Statements.
38
<PAGE>
<PAGE>
WARBURG PINCUS INSTITUTIONAL FUND, INC. --
SMALL COMPANY VALUE PORTFOLIO
STATEMENT OF NET ASSETS
April 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
--------- -----------
<S> <C> <C>
COMMON STOCK (90.9%)
Banks & Savings & Loans (6.1%)
Quaker City Bancorp, Inc.'D' 4,200 $ 95,025
Riggs National Corp. 4,300 123,894
Texas Regional Bancshares, Inc. 5,200 171,600
-----------
390,519
-----------
Building & Building Materials (4.8%)
Cavalier Homes, Inc. 11,800 141,600
Walter Industries, Inc.'D' 8,000 165,000
-----------
306,600
-----------
Business Services (2.6%)
John H. Harland Co. 4,600 81,937
Tokheim Corp.'D' 5,500 87,312
-----------
169,249
-----------
Capital Equipment (4.3%)
Allied Products Corp. 3,200 73,400
Avondale Industries, Inc.'D' 4,600 123,625
Stewart & Stevenson Services, Inc. 3,500 77,875
-----------
274,900
-----------
Consumer Durables (6.2%)
Citation Corp.'D' 3,700 77,237
La-Z-Boy, Inc. 3,200 167,400
Triangle Pacific Corp.'D' 3,500 152,250
-----------
396,887
-----------
Consumer Non-Durables (5.5%)
American Safety Razor Corp.'D' 3,700 67,062
Home Products International, Inc.'D' 9,400 126,900
Standex International Corp. 2,600 79,138
Zag Industries, Ltd.'D' 5,900 80,756
-----------
353,856
-----------
Electronics (1.9%)
ADE Corp.'D' 4,200 75,075
EA Industries, Inc.'D' 10,600 43,063
-----------
118,138
-----------
</TABLE>
See Accompanying Notes to Financial Statements.
39
<PAGE>
<PAGE>
WARBURG PINCUS INSTITUTIONAL FUND, INC. --
SMALL COMPANY VALUE PORTFOLIO
STATEMENT OF NET ASSETS (CONT'D)
April 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
--------- -----------
<S> <C> <C>
COMMON STOCK (CONT'D)
Energy (3.5%)
Forest Oil Corp.'D' 7,200 $ 112,500
KCS Energy, Inc. 2,900 44,950
Petsec Energy Ltd.'D' 3,100 63,744
-----------
221,194
-----------
Engineering & Construction (1.9%)
Gradall Industries, Inc.'D' 7,100 122,475
-----------
Financial Services (19.6%)
Commerce Group, Inc. 4,900 184,975
Delphi Financial Group, Inc. Class A'D' 1,860 106,020
HCC Insurance Holdings, Inc. 4,200 91,350
Life USA Holding, Inc. 4,400 66,550
Long Beach Financial Corp.'D' 8,100 105,806
NAC Re Corp. 2,300 115,000
National Western Life Insurance Co. Class A'D' 1,500 155,625
PICO Holdings, Inc.'D' 17,600 92,400
Terra Nova (Bermuda) Holdings Ltd. Class A 5,700 174,563
White River Corp.'D' 1,800 157,500
-----------
1,249,789
-----------
Food, Beverages & Tobacco (0.8%)
Pilgrim's Pride Corp. 2,900 49,300
-----------
Industrial Mfg. & Processing (4.2%)
Roanoke Electric Steel Corp. 3,800 76,950
UNOVA, Inc.'D' 8,100 188,325
-----------
265,275
-----------
Leisure & Entertainment (1.4%)
SCP Pool Corp.'D' 3,900 92,138
-----------
Lodging & Restaurants (1.7%)
Ryan's Family Steak Houses, Inc.'D' 10,600 106,000
-----------
Metals & Mining (4.7%)
Inland Steel Industries, Inc. 4,100 120,181
Universal Stainless & Alloy Products, Inc.'D' 16,400 180,400
-----------
300,581
-----------
</TABLE>
See Accompanying Notes to Financial Statements.
40
<PAGE>
<PAGE>
WARBURG PINCUS INSTITUTIONAL FUND, INC. --
SMALL COMPANY VALUE PORTFOLIO
STATEMENT OF NET ASSETS (CONT'D)
April 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
--------- -----------
<S> <C> <C>
COMMON STOCK (CONT'D)
Real Estate (8.5%)
Equity Inns, Inc. 8,500 $ 125,375
U.S. Restaurant Properties, Inc. REIT 4,400 121,550
Weeks Corp. 4,900 154,350
Western Water Co.'D' 12,600 141,750
-----------
543,025
-----------
Retail (6.0%)
AnnTaylor Stores Corp.'D' 9,800 156,188
Filene's Basement Corp.'D' 14,500 80,656
Fingerhut Co. 5,000 148,125
-----------
384,969
-----------
Telecommunications & Equipment (1.7%)
General Cable Corp. 2,350 106,484
-----------
Transportation (5.5%)
Allied Holdings, Inc.'D' 5,000 99,688
Landstar Systems, Inc.'D' 5,400 176,850
M.S. Carriers, Inc. 600 20,400
MTL, Inc.'D' 700 27,256
U S Xpress Enterprises, Inc. 1,400 27,300
-----------
351,494
-----------
TOTAL COMMON STOCK (Cost $5,352,313) 5,802,873
-----------
PAR
---------
SHORT TERM INVESTMENTS (9.3%)
Repurchase agreement with Goldman, Sachs & Co. dated
04/30/98 at 5.47% to be repurchased at $588,089 on 05/01/98.
(Collateralized by pro rata amount of
U.S. Treasury Notes ranging in par values from $39,650,000
to $50,000,000, 5.75%-7.25%, 09/30/01-05/15/04. Market
value of collateral is $600,194) (Cost $588,000) $588,000 588,000
-----------
TOTAL INVESTMENTS AT VALUE (100.2%) (Cost $5,940,313*) 6,390,873
LIABILITIES IN EXCESS OF OTHER ASSETS (0.2%) (10,226)
-----------
NET ASSETS (100.0%) (applicable to 613,725 shares outstanding) $6,380,647
-----------
-----------
NET ASSET VALUE, Offering and redemption price per share
($6,380,647[div]613,725) $10.40
------
------
</TABLE>
INVESTMENT ABBREVIATIONS
REIT = Real Estate Investment Trust.
- --------------------------------------------------------------------------------
'D' Non-income producing security.
* Also cost for federal income tax purposes.
See Accompanying Notes to Financial Statements.
41
<PAGE>
<PAGE>
WARBURG PINCUS INSTITUTIONAL FUND, INC.
STATEMENT OF OPERATIONS
For the Six Months Ended April 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INTERNATIONAL EQUITY SMALL COMPANY
PORTFOLIO GROWTH PORTFOLIO
-------------------- --------------------
<S> <C> <C>
INVESTMENT INCOME:
Dividends $ 11,128,262 $ 155,081
Interest 2,940,896 429,074
Foreign taxes withheld (1,398,143) 0
----------- ----------
Total investment income 12,671,015 584,155
----------- ----------
EXPENSES:
Investment advisory 4,733,000 1,038,614
Administrative services 1,073,397 230,802
Audit 14,767 6,329
Custodian/Sub-Custodian 426,465 29,861
Directors 620 470
Insurance 6,369 698
Interest 2,497 353
Legal 55,828 5,405
Offering/Organizational costs 0 4,803
Printing 20,044 1,261
Registration 61,575 22,514
Transfer agent 10,764 1,488
Miscellaneous 45,240 4,719
----------- ----------
6,450,566 1,347,317
Less: fees waived, expenses reimbursed and
transfer agent offsets (830,128) (204,842)
----------- ----------
Total expenses 5,620,438 1,142,475
----------- ----------
Net investment income (loss) 7,050,577 (558,320)
----------- ----------
NET REALIZED AND UNREALIZED GAIN FROM INVESTMENTS AND
FOREIGN CURRENCY RELATED ITEMS:
Net realized gain (loss) from security and other
related transactions (59,673,870) 11,323,724
Net realized gain (loss) from foreign currency
related items 21,212,876 0
Net change in unrealized appreciation
(depreciation) from investments and foreign
currency related items 182,679,704 9,584,555
----------- ----------
Net realized and unrealized gain from investments
and foreign currency related items 144,218,710 20,908,279
----------- ----------
Net increase in net assets resulting from
operations $151,269,287 $ 20,349,959
----------- ----------
----------- ----------
</TABLE>
See Accompanying Notes to Financial Statements.
42
<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SMALL COMPANY
EMERGING MARKETS VALUE JAPAN GROWTH POST-VENTURE VALUE
PORTFOLIO PORTFOLIO PORTFOLIO CAPITAL PORTFOLIO PORTFOLIO
---------------- ---------- ------------ ----------------- -------------
<S> <C> <C> <C> <C>
$ 356,316 $ 277,403 $ 4,082 $ 4,167 $ 35,399
131,612 95,028 13,329 1,041 9,826
(59,105) (728) (612) 0 0
---------------- ---------- ------ ------- -------------
428,823 371,703 16,799 5,208 45,225
---------------- ---------- ------ ------- -------------
176,253 137,668 6,868 9,755 39,486
42,776 36,712 1,373 2,589 8,774
5,972 8,559 5,951 5,951 6,277
44,696 12,496 375 8,485 13,500
670 646 1,947 852 479
211 248 183 85 175
78 50 50 50 2,583
1,358 1,539 992 992 3,674
0 20,400 7,527 5,259 4,043
527 750 1,944 1,713 2,974
311 18,708 10,236 5,121 4,471
676 1,271 168 376 1,703
1,941 3,086 2,000 1,687 3,173
---------------- ---------- ------ ------- -------------
275,469 242,133 39,614 42,915 91,312
(55,152) (104,464) (31,809) (31,830) (47,878)
---------------- ---------- ------ ------- -------------
220,317 137,669 7,805 11,085 43,434
---------------- ---------- ------ ------- -------------
208,506 234,034 8,994 (5,877) 1,791
---------------- ---------- ------ ------- -------------
(6,208,968) 544,535 (161) (27,365) (135,945)
(18,714) (278) 43,809 0 0
6,430,646 6,303,363 21,935 215,398 450,560
---------------- ---------- ------ ------- -------------
202,964 6,847,620 65,583 188,033 314,615
---------------- ---------- ------ ------- -------------
$ 411,470 $7,081,654 $ 74,577 $ 182,156 $ 316,406
---------------- ---------- ------ ------- -------------
---------------- ---------- ------ ------- -------------
</TABLE>
43
<PAGE>
<PAGE>
WARBURG PINCUS INSTITUTIONAL FUND, INC.
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SMALL COMPANY
INTERNATIONAL EQUITY PORTFOLIO GROWTH PORTFOLIO
--------------------------------- ---------------------------------
FOR THE FOR THE
SIX MONTHS SIX MONTHS
ENDED FOR THE ENDED FOR THE
APRIL 30, 1998 YEAR ENDED APRIL 30, 1998 YEAR ENDED
(UNAUDITED) OCTOBER 31, 1997 (UNAUDITED) OCTOBER 31, 1997
-------------- ---------------- -------------- ----------------
<S> <C> <C> <C> <C>
FROM OPERATIONS:
Net investment income (loss) $ 7,050,577 $ 11,581,658 $ (558,320) $ (825,692)
Net realized gain (loss) from security
transactions and other related
transactions (59,673,870) 58,513,022 11,323,724 (1,525,965)
Net realized gain (loss) from foreign
currency related items 21,212,876 23,820,080 0 0
Net change in unrealized appreciation
(depreciation) from
investments and foreign currency
related items 182,679,704 (39,639,490) 9,584,555 42,310,135
-------------- ---------------- -------------- ----------------
Net increase (decrease) in net
assets resulting from operations 151,269,287 54,275,270 20,349,959 39,958,478
-------------- ---------------- -------------- ----------------
FROM DISTRIBUTIONS:
Dividends from net investment income (5,921,777) (7,904,857) 0 0
Distributions from realized gains (93,443,539) (29,169,050) 0 0
-------------- ---------------- -------------- ----------------
Net decrease in net assets from
distributions (99,365,316) (37,073,907) 0 0
-------------- ---------------- -------------- ----------------
FROM CAPITAL SHARE TRANSACTIONS:
Proceeds from sale of shares 118,781,350 383,795,316 32,614,070 109,080,019
Reinvested dividends 89,134,715 32,747,095 0 0
Net asset value of shares redeemed (107,660,643) (201,370,170) (10,382,482) (28,004,573)
-------------- ---------------- -------------- ----------------
Net increase in net assets from
capital share transactions 100,255,422 215,172,241 22,231,588 81,075,446
-------------- ---------------- -------------- ----------------
Net increase (decrease) in net
assets 152,159,393 232,373,604 42,581,547 121,033,924
NET ASSETS:
Beginning of period 1,169,816,804 937,443,200 217,861,007 96,827,083
-------------- ---------------- -------------- ----------------
End of period $1,321,976,197 $1,169,816,804 $260,442,554 $217,861,007
-------------- ---------------- -------------- ----------------
-------------- ---------------- -------------- ----------------
UNDISTRIBUTED NET INVESTMENT INCOME: $ 1,228,163 $ 14,484,339 $ 0 $ 0
-------------- ---------------- -------------- ----------------
-------------- ---------------- -------------- ----------------
</TABLE>
See Accompanying Notes to Financial Statements.
44
<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
POST-VENTURE SMALL COMPANY
EMERGING MARKETS JAPAN GROWTH CAPITAL VALUE
PORTFOLIO VALUE PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
--------------------------------- ------------------------------------- -------------- -------------- --------------
FOR THE FOR THE FOR THE PERIOD FOR THE FOR THE FOR THE
SIX MONTHS SIX MONTHS JUNE 30, 1997 SIX MONTHS SIX MONTHS SIX MONTHS
ENDED FOR THE ENDED (COMMENCEMENT OF ENDED ENDED ENDED
APRIL 30, 1998 YEAR ENDED APRIL 30, 1998 OPERATIONS) THROUGH APRIL 30, 1998 APRIL 30, 1998 APRIL 30, 1998
(UNAUDITED) OCTOBER 31, 1997 (UNAUDITED) OCTOBER 31, 1997 (UNAUDITED) (UNAUDITED) (UNAUDITED)
-------------- ---------------- -------------- -------------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C> <C>
$ 208,506 $ 346,114 $ 234,034 $ 47,540 $ 8,994 $ (5,877) $ 1,791
(6,208,968) 2,515,798 544,535 69,262 (161) (27,365) (135,945)
(18,714) (144,915) (278) 0 43,809 0 0
6,430,646 (6,041,288) 6,303,363 (249,969) 21,935 215,398 450,560
-------------- ---------------- -------------- ---------- -------------- -------------- --------------
411,470 (3,324,291) 7,081,654 (133,167) 74,577 182,156 316,406
-------------- ---------------- -------------- ---------- -------------- -------------- --------------
(214,313) (208,151) (122,223) 0 (8,999) 0 0
(2,772,577) (5,335) (79,452) 0 0 0 0
-------------- ---------------- -------------- ---------- -------------- -------------- --------------
(2,986,890) (213,486) (201,675) 0 (8,999) 0 0
-------------- ---------------- -------------- ---------- -------------- -------------- --------------
1,259,833 14,718,591 50,759,427 16,031,704 1,524,019 1,915,476 12,484,355
2,985,126 213,486 201,675 0 8,999 0 0
(1,869,605) (3,811,119) (4,406,977) (333,659) (4,044) (174,152) (6,421,114)
-------------- ---------------- -------------- ---------- -------------- -------------- --------------
2,375,354 11,120,958 46,554,125 15,698,045 1,528,974 1,741,324 6,063,241
-------------- ---------------- -------------- ---------- -------------- -------------- --------------
(200,066) 7,583,181 53,434,104 15,564,878 1,594,552 1,923,480 6,379,647
37,281,303 29,698,122 15,564,878 0 1,000 1,000 1,000
-------------- ---------------- -------------- ---------- -------------- -------------- --------------
$ 37,081,237 $ 37,281,303 $ 68,998,982 $ 15,564,878 $1,595,552 $1,924,480 $6,380,647
-------------- ---------------- -------------- ---------- -------------- -------------- --------------
-------------- ---------------- -------------- ---------- -------------- -------------- --------------
$ 0 $ (218,637) $ 171,710 $ 60,177 $ 4,135 $ 0 $ 1,791
-------------- ---------------- -------------- ---------- -------------- -------------- --------------
-------------- ---------------- -------------- ---------- -------------- -------------- --------------
</TABLE>
45
<PAGE>
<PAGE>
WARBURG PINCUS INSTITUTIONAL FUND, INC. -- INTERNATIONAL EQUITY PORTFOLIO
FINANCIAL HIGHLIGHTS
(For a Share of the Portfolio Outstanding Throughout Each Period)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE
SIX MONTHS FOR THE YEAR ENDED
ENDED OCTOBER 31,
APRIL 30, 1998 --------------------------------------------------
(UNAUDITED) 1997 1996 1995 1994 1993
-------------- ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $16.51 $16.14 $15.10 $16.34 $13.49 $ 9.62
----- ------ ------ ------ ------ ------
Income from Investment Operations:
Net Investment Income 0.11 0.20 0.26 0.15 0.17 0.10
Net Gain/(Loss) from Securities
and Foreign Currency Related
Items (both realized and
unrealized) 1.74 0.78 1.28 (0.64) 2.87 3.87
----- ------ ------ ------ ------ ------
Total from Investment
Operations 1.85 0.98 1.54 (0.49) 3.04 3.97
----- ------ ------ ------ ------ ------
Less Distributions:
Dividends from Net Investment
Income (0.08) (0.13) (0.50) (0.18) (0.07) (0.10)
Distributions from Net Realized
Gains (1.32) (0.48) 0.00 (0.57) (0.12) 0.00
----- ------ ------ ------ ------ ------
Total Distributions (1.40) (0.61) (0.50) (0.75) (0.19) (0.10)
----- ------ ------ ------ ------ ------
NET ASSET VALUE, END OF PERIOD $16.96 $16.51 $16.14 $15.10 $16.34 $13.49
----- ------ ------ ------ ------ ------
----- ------ ------ ------ ------ ------
Total Return 12.85%'D' 6.20% 10.48% (2.83%) 22.62% 41.61%
RATIOS /SUPPLEMENTAL DATA:
Net Assets, End of Period (000s) $1,321,976 $1,169,817 $937,443 $507,759 $331,297 $109,280
Ratios to average daily net assets:
Operating expenses .96%*@ .95%@ .96%@ .95% .95% .95%
Net investment income .83%* .98% 1.05% 1.20% .59% .75%
Decrease reflected in above
operating expense ratios due to
waivers/reimbursements. .14%* .14% .18% .23% .29% .44%
Portfolio Turnover Rate 49.08%'D' 69.99% 29.91% 39.70% 19.34% 19.40%
</TABLE>
- --------------------------------------------------------------------------------
@ Interest earned on uninvested cash balances is used to offset portions of the
transfer agent expense. These arrangements resulted in a reduction to the
Portfolio's expenses by .01%, .00% and .01% for the period ended April 30,
1998, and for the years ended October 31, 1997 and 1996, respectively. The
operating expense ratio after reflecting these arrangements were .95%, .95%
and .95% for the period ended April 30, 1998, and for the years ended October
31, 1997 and 1996, respectively.
'D' Non-annualized.
* Annualized.
See Accompanying Notes to Financial Statements.
46
<PAGE>
<PAGE>
WARBURG PINCUS INSTITUTIONAL FUND, INC. -- SMALL COMPANY GROWTH PORTFOLIO
FINANCIAL HIGHLIGHTS
(For a Share of the Portfolio Outstanding Throughout Each Period)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE
SIX MONTHS DECEMBER 29, 1995
ENDED FOR THE YEAR (COMMENCEMENT OF
APRIL 30, 1998 ENDED OPERATIONS) THROUGH
(UNAUDITED) OCTOBER 31, 1997 OCTOBER 31, 1996
-------------- ---------------- -------------------
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $15.89 $12.92 $ 10.00
----- ----- -----
Income from Investment Operations:
Net Investment Loss (0.03) (0.05) (0.01)
Net Gain on Securities
(both realized and unrealized) 1.34 3.02 2.93
----- ----- -----
Total from Investment Operations 1.31 2.97 2.92
----- ----- -----
NET ASSET VALUE, END OF PERIOD $17.20 $15.89 $ 12.92
----- ----- -----
----- ----- -----
Total Return 8.24%'D' 22.99% 29.20%'D'
RATIOS /SUPPLEMENTAL DATA:
Net Assets, End of Period (000s) $260,442 $217,861 $96,827
Ratios to average daily net assets:
Operating expenses .99%*@ .99%@ .99%*@
Net investment loss (.48)%* (.53)% (.18%)*
Decrease reflected in above operating
expense ratios due to
waivers/reimbursements. .17%* .20% .69%*
Portfolio Turnover Rate 36.61%'D' 91.59% 57.38%'D'
</TABLE>
- --------------------------------------------------------------------------------
@ Interest earned on uninvested cash balances is used to offset portions of
the transfer agent expense. These arrangements had no effect on the
Portfolio's expense ratio.
'D' Non-annualized.
* Annualized.
See Accompanying Notes to Financial Statements.
47
<PAGE>
<PAGE>
WARBURG PINCUS INSTITUTIONAL FUND, INC. -- EMERGING MARKETS PORTFOLIO
FINANCIAL HIGHLIGHTS
(For a Share of the Portfolio Outstanding Throughout Each Period)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE SEPTEMBER 30, 1996
SIX MONTHS (COMMENCEMENT OF
ENDED FOR THE YEAR OPERATIONS)
APRIL 30, 1998 ENDED THROUGH
(UNAUDITED) OCTOBER 31, 1997 OCTOBER 31, 1996
-------------- ---------------- ------------------
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 9.36 $ 9.86 $10.00
--- --- -----
Income from Investment Operations:
Net Investment Income 0.02 0.10 0.01
Net Gain/(Loss) from Securities and
Foreign Currency Related Items
(both realized and unrealized) 0.00 (0.53) (0.15)
--- --- -----
Total from Investment Operations 0.02 (0.43) (0.14)
--- --- -----
Less Distributions:
Dividends from Net Investment Income (0.06) (0.02) 0.00
Distributions from Realized Gain (0.70) (0.05) 0.00
--- --- -----
Total Distributions (0.76) (0.07) 0.00
--- --- -----
NET ASSET VALUE, END OF PERIOD $ 8.62 $ 9.36 $ 9.86
--- --- -----
--- --- -----
Total Return 1.11%'D' (4.43%) (1.40%)'D'
RATIOS /SUPPLEMENTAL DATA:
Net Assets, End of Period (000s) $37,081 $37,281 $29,698
Ratios to average daily net assets:
Operating expenses 1.26%*@ 1.25%@ 1.25%*@
Net investment income .42%* .92% 1.75%*
Decrease reflected in above operating
expense ratios due to
waivers/reimbursements .31%* .40% 2.18%*
Portfolio Turnover Rate 75.15%'D' 107.21% 2.39%'D'
</TABLE>
- --------------------------------------------------------------------------------
@ Interest earned on uninvested cash balances is used to offset portions of
the transfer agent expense. These arrangements resulted in a reduction to
the Portfolio's expenses by .01%, .00% and .00% for the period ended
April 30, 1998, and for the years ended October 31, 1997 and 1996,
respectively. The operating expenses ratio after reflecting these
arrangements were 1.25%, 1.25% and 1.25% for the period ended April 30,
1998, and for the years ended October 31, 1997 and 1996, respectively.
'D' Non-annualized.
* Annualized.
See Accompanying Notes to Financial Statements.
48
<PAGE>
<PAGE>
WARBURG PINCUS INSTITUTIONAL FUND, INC. -- VALUE PORTFOLIO
FINANCIAL HIGHLIGHTS
(For a Share of the Portfolio Outstanding Throughout Each Period)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE JUNE 30, 1997
SIX MONTHS (COMMENCEMENT OF
ENDED OPERATIONS)
APRIL 30, 1998 THROUGH
(UNAUDITED) OCTOBER 31, 1997
------------------- ----------------
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.64 $10.00
----- -----
Income from Investment Operations:
Net investment income 0.08 0.03
Net Gain/(Loss) from Securities and Foreign
Currency Related Items
(both realized and unrealized) 1.89 0.61
----- -----
Total from Investment Operations 1.97 0.64
----- -----
Less Distributions:
Dividends from Net Investment Income (0.08) 0.00
Distributions from Net Realized Gains (0.05) 0.00
----- -----
Total Distributions (0.13) 0.00
----- -----
NET ASSET VALUE, END OF PERIOD $ 12.48 $10.64
----- -----
----- -----
Total Return 18.81%'D' 6.40%'D'
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (000s) $68,999 $15,565
Ratios to average daily net assets:
Operating expenses .75%*@ .75%*@
Net investment income 1.27%* 1.60%*
Decrease reflected in above operating expense
ratios due to
waivers/reimbursements .56%* 1.67%*
Portfolio Turnover Rate 35.13%'D' 34.81%'D'
</TABLE>
- --------------------------------------------------------------------------------
@ Interest earned on uninvested cash balances is used to offset portions of
the transfer agent expense. These arrangements had no effect on the
Portfolio's expense ratio.
'D' Non-annualized.
* Annualized.
See Accompanying Notes to Financial Statements.
49
<PAGE>
<PAGE>
WARBURG PINCUS INSTITUTIONAL FUND, INC. -- JAPAN GROWTH PORTFOLIO
FINANCIAL HIGHLIGHTS
(For a Share of the Portfolio Outstanding Throughout Each Period)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE
SIX MONTHS
ENDED
APRIL 30, 1998
(UNAUDITED)
--------------
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $10.00
-----
Income from Investment Operations:
Net investment income 0.09
Net Gain/(Loss) from Securities and Foreign Currency Related Items
(both realized and unrealized) 0.50
-----
Total from Investment Operations 0.59
-----
Less Distributions:
Dividends from Net Investment Income (0.09)
Distributions from Net Realized Gains 0.00
-----
Total Distributions (0.09)
-----
NET ASSET VALUE, END OF PERIOD $10.50
-----
-----
Total Return 5.99%'D'
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (000s) $1,596
Ratios to average daily net assets:
Operating expenses 1.25%*@
Net investment income 1.44%*
Decrease reflected in above operating expense ratios due to
waivers/reimbursements 5.09%*
Portfolio Turnover Rate .00%'D'
</TABLE>
- --------------------------------------------------------------------------------
@ Interest earned on uninvested cash balances is used to offset portions of
the transfer agent expense. These arrangements had no effect on the
Portfolio's expense ratio.
'D' Non-annualized.
* Annualized.
See Accompanying Notes to Financial Statements.
50
<PAGE>
<PAGE>
WARBURG PINCUS INSTITUTIONAL FUND, INC. -- POST VENTURE CAPITAL PORTFOLIO
FINANCIAL HIGHLIGHTS
(For a Share of the Portfolio Outstanding Throughout Each Period)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE
SIX MONTHS
ENDED
APRIL 30, 1998
(UNAUDITED)
--------------
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $10.00
-----
Income from Investment Operations:
Net investment income (0.03)
Net Gain/(Loss) from Securities and Foreign Currency Related Items
(both realized and unrealized) 1.18
-----
Total from Investment Operations 1.15
-----
NET ASSET VALUE, END OF PERIOD $11.15
-----
-----
Total Return 11.50%'D'
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (000s) $1,924
Ratios to average daily net assets:
Operating expenses 1.25%*@
Net investment income (.66)%*
Decrease reflected in above operating expense ratios due to
waivers/reimbursements 3.39%*
Portfolio Turnover Rate 41.63%'D'
</TABLE>
- --------------------------------------------------------------------------------
@ Interest earned on uninvested cash balances is used to offset portions of
the transfer agent expense. These arrangements had no effect on the
Portfolio's expense ratio.
'D' Non-annualized.
* Annualized.
See Accompanying Notes to Financial Statements.
51
<PAGE>
<PAGE>
WARBURG PINCUS INSTITUTIONAL FUND, INC. -- SMALL COMPANY VALUE PORTFOLIO
FINANCIAL HIGHLIGHTS
(For a Share of the Portfolio Outstanding Throughout Each Period)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE
SIX MONTHS
ENDED
APRIL 30, 1998
(UNAUDITED)
--------------
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $10.00
-----
Income from Investment Operations:
Net investment income 0.00
Net Gain/(Loss) from Securities and Foreign Currency Related Items
(both realized and unrealized) 0.40
-----
Total from Investment Operations 0.40
-----
NET ASSET VALUE, END OF PERIOD $10.40
-----
-----
Total Return 4.00%'D'
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (000s) $6,381
Ratios to average daily net assets:
Operating expenses .99%*@
Net investment income .04%*
Decrease reflected in above operating expense ratios due to
waivers/reimbursements 1.09%*
Portfolio Turnover Rate 119.61%'D'
</TABLE>
- --------------------------------------------------------------------------------
@ Interest earned on uninvested cash balances is used to offset portions of
the transfer agent expense. These arrangements had no effect on the
Portfolio's expense ratio.
'D' Non-annualized.
* Annualized.
See Accompanying Notes to Financial Statements.
52
<PAGE>
<PAGE>
WARBURG PINCUS INSTITUTIONAL FUND, INC.
NOTES TO FINANCIAL STATEMENTS
April 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES
Warburg Pincus Institutional Fund, Inc. (the 'Fund') is an open-end
management investment company and currently offers eight managed investment
funds (the 'Portfolios'): International Equity Portfolio, which commenced
operations on September 1, 1992, seeks long-term capital appreciation by
investing in common stocks and securities convertible into or exchangeable for
common stocks of non-United States issuers; Small Company Growth Portfolio,
which commenced operations on December 29, 1995, seeks capital growth by
investing primarily in equity securities of small-sized domestic companies;
Global Fixed Income Portfolio, which as of April 30, 1998, had not commenced
operations, seeks to maximize total investment return consistent with prudent
investment management while preserving capital by investing in investment grade
fixed income securities of United States and foreign issuers; Emerging Markets
Portfolio, which commenced operations on September 30, 1996, seeks long-term
growth of capital by investing primarily in equity securities of non-U.S.
issuers consisting of companies in emerging securities markets; Value Portfolio,
which commenced operations on June 30, 1997, seeks total return by investing
primarily in equity securities of large-sized domestic companies; Japan Growth
Portfolio, which commenced operations on October 31, 1997, seeks long-term
growth of capital by investing primarily in equity securities of Japanese
issuers; Post-Venture Capital Portfolio, which commenced operations on October
31, 1997, seeks long-term growth of capital by investing primarily in equity
securities of issuers in their post-venture capital stage of development and
pursues an aggressive investment strategy; and Small Company Value Portfolio,
which commenced operations on October 31, 1997, seeks long-term capital
appreciation by investing primarily in a portfolio of equity securities of small
capitalization companies.
The net asset value of each Portfolio is determined daily as of the close of
regular trading on the New York Stock Exchange. Each Portfolio's investments are
valued at market value, which is generally determined using the last reported
sales price. If no sales are reported, investments are generally valued at the
mean between the last reported bid and asked prices. 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. Short-term investments that mature in
60 days or less are valued on the basis of amortized cost, which approximates
market value.
When a Portfolio writes or purchases a call or a put option, an amount equal
to the premium received or paid by the Portfolio 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 Portfolio realizes a
gain or loss equal to the amount of the premium received or paid. When the
Portfolio exercises an option or enters into a closing transaction by purchasing
or selling an offsetting
53
<PAGE>
<PAGE>
WARBURG PINCUS INSTITUTIONAL FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONT'D)
April 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES (CONT'D)
option, it realizes a gain or loss without regard to any unrealized gain or loss
on the 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.
The books and records of the Portfolios are maintained in U.S. dollars.
Transactions denominated in foreign currencies are recorded at the current
prevailing exchange rates. All assets and liabilities denominated in foreign
currencies are translated into U.S. dollar amounts at the current exchange rate
at the end of the period. Translation gains or losses resulting from changes in
the exchange rate during the reporting period and realized gains and losses on
the settlement of foreign currency transactions are reported in the results of
operations for the current period. The Portfolios do not isolate that portion of
realized gains and losses on investments in equity securities which are due to
changes in the foreign exchange rate from that which are due to changes in
market prices of equity securities. The Portfolios isolate that portion of
realized gains and losses on investments in debt securities which are due to
changes in the foreign exchange rate from that which are due to changes in
market prices of debt securities.
The Portfolios may invest in securities of foreign issuers which involve
certain risks in addition to those inherent in domestic investments. Such risks
generally include, among other things, fluctuations in currency exchange rates,
revaluation of currencies, adverse political and economic developments and the
imposition of other laws and restrictions. Securities of foreign issuers are
often subject to less rigorous regulatory practices and requirements than those
applied in the United States and may also be less liquid (and their prices more
volatile) than securities of comparable U.S. companies. Moreover, individual
foreign economies may differ favorably or unfavorably from the U.S. economy in
many respects.
The International Equity and Emerging Markets Portfolios' investments in
securities of issuers located in less developed countries considered to be
'emerging markets' involve risks in addition to those generally applicable to
foreign securities. Investments in the securities of issuers located in emerging
markets expose the Portfolio to economic structures that are generally less
diverse and mature than, and to political systems that can be expected to have
less stability than, those of developed countries. The typically small size of
the markets for securities of issuers located in emerging markets may also
result in a lack of liquidity and greater price volatility.
Security transactions are accounted for on a trade date basis. Interest
income is recorded on the accrual basis. Dividends are recorded on the
ex-dividend date. The cost of investments sold is determined by use of the
specific identification method for both financial reporting and income tax
purposes.
54
<PAGE>
<PAGE>
WARBURG PINCUS INSTITUTIONAL FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONT'D)
April 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
Dividends from net investment income and 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.
No provision is made for federal taxes as it is the Fund's intention to have
each Portfolio continue to qualify for and elect the tax treatment applicable to
regulated investment companies under the Internal Revenue Code and make the
requisite distributions to its shareholders which will be sufficient to relieve
it from federal income and excise taxes.
Costs incurred in connection with offering of shares have been deferred and
are being amortized over a period of one year from the date each Portfolio
commenced its operations.
The Portfolios, together with other Funds advised by Warburg Pincus Asset
Management, Inc. ('Warburg') (collectively the 'Warburg Funds') have established
committed and uncommitted lines of credit facilities with PNC Bank, National
Association ('PNC') and an uncommitted line of credit facility with Deutsche
Bank, AG ('Deutsche Bank') for temporary or emergency purposes primarily
relating to unanticipated share redemptions. Effective December 31, 1997, the
terms of the committed line of credit with PNC was amended. Under the terms of
the committed line of credit, the Warburg Funds with access to the facility pay
a commitment fee at a rate of .07% per annum on the average daily balance of the
line of credit, which is undisbursed and uncanceled during the preceding
quarter. In addition, the Warburg Funds will pay interest on borrowings at the
bank's base rate plus .45%. Under the terms of the Uncommitted lines of credit,
the Warburg Funds will pay interest on borrowings at the bank's base rate plus
.55%. Aggregate borrowings for each fund under the committed and uncommitted
lines of credit with PNC may not exceed the lowest of (a) thirty-three and
one-third percent (33 1/3%) of the assets of such fund, for any fund that does
not invest at least sixty-five percent (65%) of its assets in international
equity or fixed income securities (an 'International Fund') and twenty-five
percent (25%) of the assets of any fund that is an International Fund or (b) the
maximum amount permitted by such fund's investment policies and restrictions.
Aggregate borrowings for each fund under the uncommitted line of credit facility
with Deutsche Bank may not exceed thirty-three and one-third percent (33 1/3%)
of the net assets of such fund. At April 30, 1998 and during the six months
ended 4/30/98, the following portfolio had borrowings under these line of credit
facilities.
<TABLE>
<CAPTION>
AVERAGE DAILY AVERAGE MAXIMUM DAILY LOAN OUTSTANDING
PORTFOLIO LOAN BALANCE INTEREST RATE % LOAN OUTSTANDING AT 04/30/98
- ------------------- -------------- --------------- ---------------- ----------------
<S> <C> <C> <C> <C>
Small Company Value $ 83,271 6.14% $1,560,000 $ 0
</TABLE>
55
<PAGE>
<PAGE>
WARBURG PINCUS INSTITUTIONAL FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONT'D)
April 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES (CONT'D)
Pursuant to an Exemptive Order issued by the Securities and Exchange
Commission, each Portfolio, along with the Warburg Funds, transfers uninvested
cash balances to a pooled cash account, which is invested in repurchase
agreements secured by U.S. government securities. Securities pledged as
collateral for repurchase agreements are held by the Portfolios' custodian bank
until the agreements mature. 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 other party 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 amounts of assets and liabilities at the date of the
financial statement and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from these estimates.
The Portfolios have an arrangement with their transfer agent whereby interest
earned on uninvested cash balances was used to offset a portion of the transfer
agent expense. For the period ended April 30, 1998, the Portfolios received
credits or reimbursements under this arrangement as follows:
<TABLE>
<CAPTION>
PORTFOLIO AMOUNT
- ---------------------------------- --------------
<S> <C>
International Equity $ 29,643
Small Company Growth 4,878
Emerging Markets 892
Value 785
Japan Growth 23
Post-Venture Capital 31
Small Company Value 145
</TABLE>
2. INVESTMENT ADVISER, CO-ADMINISTRATORS AND DISTRIBUTOR
Warburg, which is indirectly controlled by Warburg, Pincus & Co., serves as
each Portfolio's investment adviser. For its investment advisory services,
Warburg is entitled to receive the following fees computed daily and payable
monthly based on each Portfolio's average daily net assets:
<TABLE>
<CAPTION>
PORTFOLIO ANNUAL RATE
- ------------------------------------------------ ----------------------------------
<S> <C>
International Equity .80% of average daily net assets
Small Company Growth .90% of average daily net assets
Emerging Markets 1.00% of average daily net assets
Value .75% of average daily net assets
Japan Growth 1.10% of average daily net assets
Post-Venture Captial 1.10% of average daily net assets
Small Company Value .90% of average daily net assets
</TABLE>
56
<PAGE>
<PAGE>
WARBURG PINCUS INSTITUTIONAL FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONT'D)
April 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
For the period ended April 30, 1998, investment advisory fees, voluntary
waivers and reimbursements were as follows:
<TABLE>
<CAPTION>
GROSS NET EXPENSE
PORTFOLIO ADVISORY FEE WAIVER ADVISORY FEE REIMBURSEMENTS
- ------------------------- ------------ --------- ------------ --------------
<S> <C> <C> <C> <C>
International Equity $4,733,000 $(800,485) $3,932,515 $ 0
Small Company Growth 1,038,614 (199,964) 838,650 0
Emerging Markets 176,253 (33,110) 143,143 0
Value 137,668 (84,771) 52,897 (552)
Japan Growth 6,868 (6,868) 0 (24,169)
Post-Venture Captial 9,755 (9,755) 0 (21,157)
Small Company Value 39,486 (36,006) 3,480 (7,340)
</TABLE>
Counsellors Funds Service, Inc. ('CFSI'), a wholly owned subsidiary of
Warburg, and PFPC Inc. ('PFPC'), an indirect, wholly owned subsidiary of PNC
Bank Corp. ('PNC'), serve as each Portfolio's co-administrators. For
administrative services, CFSI receives a fee calculated at an annual rate of
.10% of the Portfolios' average daily net assets. For the period ended April 30,
1998, administrative services fees earned by CFSI were as follows:
<TABLE>
<CAPTION>
PORTFOLIO CO-ADMINISTRATION FEE
- ------------------------------------------------------ ---------------------
<S> <C>
International Equity $ 591,625
Small Company Growth 115,401
Emerging Markets 17,625
Value 18,356
Japan Growth 624
Post-Venture Capital 887
Small Company Value 4,387
</TABLE>
For administrative services for the Small Company Growth Portfolio, the Value
Portfolio, the Post-Venture Capital Portfolio and the Small Company Value
Portfolio, PFPC currently receives a fee calculated at an annual rate of .10% on
each Fund's first $500 million in average daily net assets, .075% on the next $1
billion in average daily net assets and .05% of average daily net assets in
excess of $1.5 billion. For the International Equity Portfolio, the Emerging
Markets Portfolio and the Japan Growth Portfolio, PFPC receives a fee based on
the following fee structure:
<TABLE>
<CAPTION>
AVERAGE DAILY NET ASSETS ANNUAL RATE
- ------------------------------------------------- ---------------------------------
<S> <C>
First $250 million .12% of average daily net assets
Second $250 million .10% of average daily net assets
Third $250 million .08% of average daily net assets
Over $750 million .05% of average daily net assets
</TABLE>
57
<PAGE>
<PAGE>
WARBURG PINCUS INSTITUTIONAL FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONT'D)
April 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
2. INVESTMENT ADVISER, CO-ADMINISTRATORS AND DISTRIBUTOR (CONT'D)
For the period ended April 30, 1998, administrative service fees earned and
voluntarily waived by PFPC were as follows:
<TABLE>
<CAPTION>
NET
PORTFOLIO CO-ADMINISTRATION FEE WAIVER CO-ADMINISTRATION FEE
- -------------------------- --------------------- --------- ---------------------
<S> <C> <C> <C>
International Equity $ 481,772 $ 0 $ 481,772
Small Company Growth 115,401 0 115,401
Emerging Markets 25,151 (21,150) 4,001
Value 18,356 (18,356) 0
Japan Growth 749 (749) 0
Post-Venture Capital 1,702 (887) 815
Small Company Value 4,387 (4,387) 0
</TABLE>
Counsellors Securities Inc. ('CSI'), also a wholly owned subsidiary of
Warburg, serves as distributor of each Portfolio's shares without compensation.
3. INVESTMENTS IN SECURITIES
Purchases and sales of investment securities for the period ended April 30,
1998 (excluding short-term investments) were as follows:
<TABLE>
<CAPTION>
PORTFOLIO PURCHASES SALES
- ------------------------------------------------ ------------ ------------
<S> <C> <C>
International Equity $567,051,045 $531,508,877
Small Company Growth 108,168,519 81,707,886
Emerging Markets 23,708,151 23,881,911
Value 54,392,548 12,628,600
Japan Growth 1,270,919 0
Post-Venture Capital 2,266,005 616,341
Small Company Value 14,027,173 8,538,916
</TABLE>
At April 30, 1998, the net unrealized appreciation from investments for those
securities having an excess of value over cost and net depreciation from
investments for those securities having an excess of cost over value (based on
cost for Federal income tax purposes) was as follows:
<TABLE>
<CAPTION>
NET UNREALIZED
UNREALIZED UNREALIZED APPRECIATION
PORTFOLIO APPRECIATION DEPRECIATION (DEPRECIATION)
- ----------------------------------- ------------ ------------ --------------
<S> <C> <C> <C>
International Equity $247,497,372 $(72,054,043) $175,443,329
Small Company Growth 63,514,441 (8,412,060) 55,102,381
Emerging Markets 3,793,872 (3,842,930) (49,058)
Value 6,378,639 (325,060) 6,053,579
Japan Growth 68,687 (75,698) (7,011)
Post-Venture Capital 306,823 (91,425) 215,398
Small Company Value 641,549 (190,989) 450,560
</TABLE>
58
<PAGE>
<PAGE>
WARBURG PINCUS INSTITUTIONAL FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONT'D)
April 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
4. FORWARD FOREIGN CURRENCY CONTRACTS
The Portfolios may enter into forward currency contracts for the purchase or
sale of a specific foreign currency at a fixed price on a future date. Risks may
arise upon entering into these contracts from the potential inability of
counterparties to meet the terms of their contracts and from unanticipated
movements in the value of a foreign currency relative to the U.S. dollar. Each
Portfolio will enter into forward contracts primarily for hedging purposes.
Forward currency contracts are adjusted by the daily exchange rate of the
underlying currency and any gains or losses are recorded for financial statement
purposes as unrealized until the contract settlement date.
At April 30, 1998, the International Equity Portfolio had the following open
forward foreign currency contract:
<TABLE>
<CAPTION>
FORWARD FOREIGN UNREALIZED
CURRENCY EXPIRATION CURRENCY CONTRACT CONTRACT FOREIGN EXCHANGE
CONTRACT DATE TO BE SOLD AMOUNT VALUE GAIN (LOSS)
- ------------- ---------- -------------- ------------ ------------ ----------------
<S> <C> <C> <C> <C> <C>
Japanese Yen 05/29/98 16,092,000,000 $126,683,724 $122,305,100 $4,378,624
</TABLE>
At April 30, 1998, the Japan Growth Portfolio had the following open forward
foreign currency contract:
<TABLE>
<CAPTION>
FORWARD FOREIGN UNREALIZED
CURRENCY EXPIRATION CURRENCY CONTRACT CONTRACT FOREIGN EXCHANGE
CONTRACT DATE TO BE SOLD AMOUNT VALUE GAIN (LOSS)
- ------------- ---------- ----------- -------- -------- ----------------
<S> <C> <C> <C> <C> <C>
Japanese Yen 05/29/98 107,000,000 $842,354 $813,239 $ 29,115
</TABLE>
5. EQUITY SWAP TRANSACTIONS
The International Equity Portfolio and the Emerging Markets Portfolio each
entered into a Korean equity swap agreement dated March 21, 1997, where each
Portfolio receives a quarterly payment, representing the total return (defined
as market appreciation and dividend income) on a basket of Korean common stocks
('Common Stocks'). In return, the International Equity Portfolio and the
Emerging Markets Portfolio pay quarterly the LIBOR rate (London Interbank
Offered Rate), plus, 1.97% and 2.00%, respectively, per annum on the market
value of the Common Stocks ('Notional Amount'). The Notional Amount is
marked-to-market on each quarterly reset date. In the event that the Common
Stocks decline in value, the Portfolios will be required to pay quarterly the
amount of any depreciation in value of the Notional Amount from the previous
quarter.
During the term of the equity swap transactions, changes in the value of the
Common Stocks as compared to the Notional Amount and the difference between the
accrued interest expense and dividend income are recognized as unrealized gain
or loss. At the quarterly reset date, the change in value of the Common Stocks,
adjusted for accrued interest expense and dividend income, is recognized as
realized gain or loss. At April 30, 1998, each Portfolio realized a loss of
$2,133,026 and $133,735, respectively, on the equity swap transaction which is
included in the net realized gain (loss) from security and other related
transactions. As of April 30, 1998, each Portfolio no longer held a position in
the swap.
59
<PAGE>
<PAGE>
WARBURG PINCUS INSTITUTIONAL FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONT'D)
April 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
6. CAPITAL SHARE TRANSACTIONS
The Fund is authorized to issue up to thirteen billion full and fractional
shares of common stock of separate series having a $.001 par value per share.
Shares of nine series have been classified, eight of which constitute the
interests in the Portfolios.
Transactions in shares of each Portfolio were as follows:
<TABLE>
<CAPTION>
INTERNATIONAL EQUITY SMALL COMPANY GROWTH
PORTFOLIO PORTFOLIO
----------------------------------- --------------------------------------
FOR THE SIX FOR THE SIX
MONTHS ENDED FOR THE MONTHS ENDED FOR THE
APRIL 30,1998 YEAR ENDED APRIL 30,1998 YEAR ENDED
(UNAUDITED) OCTOBER 31, 1997 (UNAUDITED) OCTOBER 31, 1997
---------------- ---------------- ---------------- -------------------
<S> <C> <C> <C> <C>
Shares sold 7,700,758 22,310,155 2,088,458 8,212,874
Shares issued to shareholders on
reinvestment of dividends 6,263,859 2,054,397 0 0
Shares redeemed (6,879,652) (11,573,856) (656,970) (1,992,855)
---------------- ---------------- -------- --------
Net increase in shares outstanding 7,084,965 12,790,696 1,431,488 6,220,019
---------------- ---------------- -------- --------
---------------- ---------------- -------- --------
</TABLE>
<TABLE>
<CAPTION>
VALUE
EMERGING MARKETS PORTFOLIO
PORTFOLIO --------------------------------------
----------------------------------- FOR THE PERIOD
FOR THE SIX FOR THE SIX JUNE 30, 1997
MONTHS ENDED FOR THE MONTHS ENDED (COMMENCEMENT OF
APRIL 30,1998 YEAR ENDED APRIL 30,1998 OPERATIONS) THROUGH
(UNAUDITED) OCTOBER 31, 1997 (UNAUDITED) OCTOBER 31, 1997
---------------- ---------------- ---------------- -------------------
<S> <C> <C> <C> <C>
Shares sold 149,483 1,322,864 4,433,012 1,494,737
Shares issued to shareholders on
reinvestment of dividends 388,183 21,478 18,726 0
Shares redeemed (221,130) (372,624) (386,547) (31,225)
------ ------- -------- -------
Net increase in shares outstanding 316,536 971,718 4,065,191 1,463,512
------ ------- -------- -------
------ ------- -------- -------
</TABLE>
<TABLE>
<CAPTION>
POST-VENTURE SMALL COMPANY
JAPAN GROWTH CAPITAL VALUE
PORTFOLIO PORTFOLIO PORTFOLIO
---------------- ---------------- ----------------
FOR THE SIX FOR THE SIX FOR THE SIX
MONTHS ENDED MONTHS ENDED MONTHS ENDED
APRIL 30, 1998 APRIL 30, 1998 APRIL 30, 1998
(UNAUDITED) (UNAUDITED) (UNAUDITED)
---------------- ---------------- ----------------
<S> <C> <C> <C>
Shares sold 151,230 189,314 1,244,466
Shares issued to shareholders on
reinvestment of
dividends 963 0 0
Shares redeemed (396) (16,868) (630,841)
------ ------ -------
Net increase in shares outstanding 151,797 172,446 613,625
------ ------ -------
------ ------ -------
</TABLE>
60
<PAGE>
<PAGE>
WARBURG PINCUS INSTITUTIONAL FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONT'D)
April 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
7. LIABILITIES
At April 30, 1998, the Portfolios had the following affiliated and investment
related liabilities:
<TABLE>
<CAPTION>
INTERNATIONAL SMALL COMPANY
EQUITY GROWTH EMERGING MARKETS VALUE
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
------------- ------------- ---------------- ----------
<S> <C> <C> <C> <C>
Payable for securities purchased (at
value) $ 9,444,315 $ 9,314,754 $386,385 $1,456,061
Administration services fee payable 108,445 21,382 3,063 4,656
Investment advisory fee payable 725,370 157,343 24,509 15,969
</TABLE>
<TABLE>
<CAPTION>
JAPAN POST-VENTURE SMALL COMPANY
GROWTH CAPITAL VALUE
PORTFOLIO PORTFOLIO PORTFOLIO
------------- ------------- ----------------
<S> <C> <C> <C>
Payable for securities purchased (at value) $95,303 $ 4,700 $ 83,688
Administration services fee payable 130 161 630
Investment advisory fee payable 0 0 0
</TABLE>
8. NET ASSETS
At April 30, 1998, capital contributions, undistributed net investment
income, accumulated net realized gain/(loss) from security transactions and
current period distributions have been adjusted for current period permanent
book/tax differences which arose principally from differing book/tax treatments
of foreign currency and equity swap transactions. The International Equity
Portfolio, the Emerging Markets Portfolio, the Value Portfolio and the Japan
Growth Portfolio reclassified $(4,816,558), $(152,449), $(278) and $4,140,
respectively, from accumulated net realized gain/(loss) from foreign currency
related items to undistributed net investment income. The Small Company Growth
Portfolio, the Emerging Markets Portfolio and the Post-Venture Capital Portfolio
reclassified $558,320, $231,978 and $5,877, respectively, from accumulated net
investment income (loss) to capital contributions. In addition, the
International Equity Portfolio and the Emerging Markets Portfolio reclassified
$9,568,418 and $(144,915), respectively, of book distributions of realized
gains/(losses) to distributions of net investment income. Net investment income,
net realized gain/(loss) on investments and net assets were not affected by this
reclassification.
61
<PAGE>
<PAGE>
WARBURG PINCUS INSTITUTIONAL FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONT'D)
April 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
8. NET ASSETS (CONT'D)
Net assets at April 30, 1998, consisted of the following:
<TABLE>
<CAPTION>
INTERNATIONAL EQUITY SMALL COMPANY GROWTH EMERGING MARKETS VALUE
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
-------------------- -------------------- ---------------- ---------------
<S> <C> <C> <C> <C>
Capital contributed, net $1,181,471,573 $196,322,644 $ 43,300,003 $62,239,533
Undistributed net investment
income 1,228,163 0 0 171,710
Accumulated net realized gain
(loss) from security
transactions (41,111,037) 9,014,696 (6,168,456) 534,345
Net unrealized appreciation
(depreciation) from investments
and foreign currency related
items 180,387,498 55,105,214 (50,310) 6,053,394
-------------------- ----------- ---------------- ---------------
Net assets $1,321,976,197 $260,442,554 $ 37,081,237 $68,998,982
-------------------- ----------- ---------------- ---------------
-------------------- ----------- ---------------- ---------------
</TABLE>
<TABLE>
<CAPTION>
POST-VENTURE SMALL COMPANY
JAPAN GROWTH CAPITAL VALUE
PORTFOLIO PORTFOLIO PORTFOLIO
------------ ------------ -------------
<S> <C> <C> <C>
Capital contributed, net $1,529,974 $1,736,447 $ 6,064,241
Undistributed net investment
income 4,135 0 1,791
Accumulated net realized gain
(loss) from security
transactions 39,508 (27,365) (135,945)
Net unrealized appreciation
(depreciation) from
investments and foreign
currency related items 21,935 215,398 450,560
------------ ------------ -------------
Net assets $1,595,552 $1,924,480 $ 6,380,647
------------ ------------ -------------
------------ ------------ -------------
</TABLE>
9. CAPITAL CAPITAL LOSS CARRYOVER
At April 30, 1998, the Small Company Growth Portfolio had capital loss
carryovers of $773,601 and $1,532,594 expiring in 2004 and 2005, respectively.
62
<PAGE>
<PAGE>
WARBURG PINCUS INSTITUTIONAL FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONT'D)
April 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
10. YEAR 2000 COMPLIANCE
Many services provided to the Portfolios and their shareholders by Warburg
and certain of its affiliates (the 'Warburg Service Providers') and the
Portfolios' other service providers rely on the functioning of their respective
computer systems. Many computer systems cannot distinguish the year 2000 from
the year 1900, with resulting potential difficulty in performing various
calculations (the 'Year 2000 Issue'). The Year 2000 Issue could potentially have
an adverse impact on the handling of security trades, the payment of interest
and dividends, pricing, account services and other Portfolio operations.
The Warburg Service Providers recognize the importance of the Year 2000 Issue
and are taking appropriate steps necessary in preparation for the year 2000. At
this time, there can be no assurance that these steps will be sufficient to
avoid any adverse impact on the Portfolios nor can there be any assurance that
the Year 2000 Issue will not have an adverse effect on the Portfolios'
investments or on global markets or economies, generally. In addition, it has
been reported that foreign institutions have made less progress in addressing
the Year 2000 Issue than major U.S. entities, which could adversely affect the
Portfolios' foreign investments.
The Warburg Service Providers anticipate that their systems and those of the
Portfolios' other service providers will be adapted in time for the year 2000.
To further this goal, the Warburg Service Providers have coordinated a plan to
repair, adapt or replace systems that are not year 2000 compliant, and are
seeking to obtain similar representations from the Portfolios' other major
service providers. The Warburg Service Providers will be monitoring the Year
2000 Issue in an effort to ensure appropriate preparation.
63
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<PAGE>
<PAGE>
[Warburg Pincus Logo]
ASSET MANAGEMENT
P.O. Box 4906, Grand Central Station,
New York, NY 10163
800-369-2728
www.warburg.com
COUNSELLORS SECURITIES INC., DISTRIBUTOR. WPINS-3-0498
STATEMENT OF DIFFERENCES
------------------------
The dagger symbol shall be expressed as .......................... 'D'
The division sign shall be expressed as .......................... [div]
