[WARBURG PINCUS FUNDS LOGO] [CREDIT SUISSE LOGO] [ASSET MANAGEMENT LOGO]
ANNUAL
REPORT
October 31, 1999
WARBURG PINCUS INSTITUTIONAL FUND, INC.
o VALUE PORTFOLIO
o SMALL COMPANY VALUE PORTFOLIO
o SMALL COMPANY GROWTH PORTFOLIO
o POST-VENTURE CAPITAL PORTFOLIO
More complete information about the Fund and the Portfolios, including charges
and expenses, is provided in the Prospectus, which must precede or accompany
this document and which should be read carefully before investing. You may
obtain additional copies by calling 800-222-8977 or by writing to Warburg Pincus
Funds, P.O. Box 9030, Boston, MA 02205-9030.
Credit Suisse Asset Management Securities, Inc., Distributor, 466 Lexington
Avenue, New York, NY 10017. Telephone: 800-927-2874. Warburg Pincus Funds are
advised by Credit Suisse Asset Management, LLC.
<PAGE>
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 document are as of October 31, 1999; these views and
holdings may have changed subsequent to these dates. Nothing in this document is
a recommendation to purchase or sell securities.
Fund shares are not deposits or other obligations of Credit Suisse Asset
Management, LLC ("CSAM LLC") or any affiliate, are not FDIC insured and are not
guaranteed by CSAM LLC or any affiliate. Fund investments are subject to
investment risks, including loss of your investment.
<PAGE>
Warburg Pincus Institutional Fund -- Value Portfolio
Annual Investment Adviser's Report -- October 31, 1999
- --------------------------------------------------------------------------------
December 9, 1999
Dear Shareholder:
For the 12 months ended October 31, 1999, Warburg Pincus Institutional Fund
- -- Value Portfolio had a return of 16.82%, vs. a return of 25.65% for the S&P
500 Index. Note: Effective December 31, 1999, Scott T. Lewis will join Stacy
Dutton as Co-Portfolio Manager of the Portfolio. Brian S. Posner, will no longer
serve as Co-Portfolio Manager.
Manager Commentary
The U.S. stock market saw impressive performance for the 12 months, with
almost all major equity indexes advancing significantly. A positive tone was set
early on. Most of the world's central banks lowered interest rates late in 1998,
stabilizing global financial markets and placing the global economy on surer
footing. This encouraged investors to embrace risk, a sentiment that benefited
stocks generally and growth stocks (especially aggressive-growth stocks) in
particular. Stocks were, however, highly, and increasingly, volatile. The market
was also subjected to some dramatic shifts in investor sentiment with respect to
"style." For example, economically-sensitive stocks had a strong surge in April,
but then surrendered market leadership to growth stocks, partly on worries that
rising interest rates could hamper economic growth.
Against this backdrop, the Portfolio had positive performance, yet trailed
its benchmark. Hindering the Portfolio's relative return was the market's
ultimate preference for growth stocks for the 12 months. That notwithstanding,
we believe our efforts to identify undervalued stocks stand to generate
attractive longer-term returns in both absolute and relative terms.
We made few noteworthy changes to the Portfolio during the period in terms
of sector emphasis, remaining broadly diversified. We did, however, increase our
exposure to certain economically-sensitive industries, based on our view that
the global economy will, in fact, continue to grow, if not accelerate. We
significantly increased our exposure to the banking area, reflecting our
favorable view of the group's valuations, combined with these companies'
improving fundamentals. We added a number of bank stocks, focusing on regional
companies whose loan portfolios include commercial as well as residential loans.
We also raised our weighting in the energy sector. Our noteworthy moves
here included adding to our position in integrated multinational oil companies,
focusing on those that stand to realize significant cost savings over time. In
the oil-services area, our exposure at the end of period consisted of two
drilling companies that we believe have good longer-term prospects.
1
<PAGE>
Warburg Pincus Institutional Fund -- Value Portfolio
Annual Investment Adviser's Report -- October 31, 1999 (cont'd)
- --------------------------------------------------------------------------------
In general, fundamentals here are beginning to improve after 18 months of very
difficult operating conditions.
Other notable sector weightings for the Portfolio continued to include
capital equipment, a weighting we raised during the period, focusing on
companies with the potential for improving cash flows. We also had a significant
weighting in the retail sector, where companies are generally benefiting from
ongoing improvements in inventory management and where stocks are, on the whole,
reasonably priced.
We modestly lowered our exposure to technology companies during the period,
eliminating a few positions based on valuation considerations. Elsewhere, we
remained underweighted in the health-care and pharmaceutical sectors, though we
added a few drug stocks late in the period, and may increase our overall
exposure to heath care further during the next few months. Health-care stocks
have struggled over the past year, hampered by regulatory uncertainties, and we
believe potentially lucrative investment opportunities exist in specific stocks.
Our approach to the group will remain highly selective.
Looking out over 2000, we see grounds for optimism regarding stocks --
notwithstanding the potential for significant market volatility -- with
projected growth in the U.S. and abroad auguring well for earnings generally. We
have a particularly favorable outlook on the prospects for "cyclical" stocks,
given an improving global economic climate and these stocks' relatively
attractive valuations. (Not dissimilar to market conditions seen in March of
this year, stocks of companies that tend to be more sensitive to economic growth
have become quite compelling over the past few months.) In addition, increased
market volatility since the middle of this year has provided -- and is likely to
continue to provide -- selected buying opportunities in companies across a
number of industries. Set within this environment, we will continue to strive to
identify stocks with solid longer-term prospects while attempting to limit
overall portfolio volatility.
Brian S. Posner Stacy Dutton
Co-Portfolio Manager Co-Portfolio Manager
2
<PAGE>
Warburg Pincus Institutional Fund -- Value Portfolio
Annual Investment Adviser's Report -- October 31, 1999 (cont'd)
- --------------------------------------------------------------------------------
Growth of $10,000 Invested in
Warburg Pincus Institutional Fund, Inc. -- Value Portfolio
since Inception as of October 31, 1999
The graph below illustrates the hypothetical investment of $10,000 in
Warburg Pincus Institutional Fund, Inc. -- Value Portfolio (the "Portfolio")
from June 30, 1997 (inception) to October 31, 1999, compared to the S&P 500
Index ("S&P")* for the same time period. Past performance does not predict futue
results
[GRAPHIC OMITTED]
In the printed version of the document, a line graph
appears which depicts the following plot points:
Portfolio S&P
--------- -------
Jun-97 10000 10000
Jul-97 10790 10794.7
Aug-97 10560.2 10191
Sep-97 11090.3 10748.3
Oct-97 10640 10390.4
Nov-97 10910.3 10870.4
Dec-97 11192.9 11057.4
Jan-98 11273.5 11179.5
Feb-98 12033.3 11984.6
Mar-98 12519.4 12598.3
Apr-98 12640.9 12725.1
May-98 12600.4 12506.8
Jun-98 12721.4 13014.9
Jul-98 12386.8 12876.7
Aug-98 10584.5 11015.2
Sep-98 10908.4 11720.9
Oct-98 11678.5 12674.2
Nov-98 12377.4 13442.3
Dec-98 12730.9 14216.4
Jan-99 12833.4 14810.6
Feb-99 12515.9 14350.5
Mar-99 12628.5 14924.5
Apr-99 14113.6 15502.4
May-99 14287.8 15136.4
Jun-99 14748.7 15976.4
Jul-99 14226.6 15477.7
Aug-99 13950.6 15399.8
Sep-99 13561.4 14977.7
Oct-99 13642.8 15925.5
<TABLE>
<CAPTION>
Portfolio
---------
<S> <C>
1 Year Total Return (9/30/98 to 9/30/99) ................................ 24.31%
Average Annual Total Return Since Inception (6/30/97 to 9/30/99) ........ 14.47%
</TABLE>
- ------------
* 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 McGraw-Hill Co., Inc.
3
<PAGE>
Warburg Pincus Institutional Fund -- Small Company Value Portfolio
Annual Investment Adviser's Report -- October 31, 1999
- --------------------------------------------------------------------------------
December 9, 1999
Dear Shareholder:
For the 12 months ended October 31, 1999, Warburg Pincus Institutional Fund
- -- Small Company Value Portfolio had a loss of 3.85%, vs. a gain of 14.87% for
the Russell 2000 Index.
The reporting period was a lackluster one for the types of underfollowed
value stocks targeted by the Portfolio (the value component of the Russell 2000
Index had only a marginal gain for the 12 months, lagging the index's growth
component by nearly 29 percentage points, historically an astonishing
differential). The Portfolio was hampered by investor's clear preference for
growth-oriented companies during the period, and by weakness in specific areas,
for example the financial-services sector, which was hindered by inflation and
interest-rate uncertainties. Also weighing on the Portfolio was its avoidance,
through much of the period, of technology stocks, many of which had impressive
gains yet which for the most part remained expensive.
Given the continued difficult backdrop for small-cap value stocks, with the
group's extremely compelling relative valuations failing to draw much investor
interest, we made one noteworthy shift in strategy during the period. While we
remained focused on strict value disciplines, we increased our emphasis on
visible catalysts (e.g., a positive earnings surprise or the launch of a new
product) that could, in relatively short order, bring favorable attention to
certain value stocks, the ongoing growth-at-all-costs mentality notwithstanding.
In terms of sector and industry allocation, we made several adjustments
worthy of mention during the period. For one, we increased our weighting in the
technology area. We added a number of these stocks late in the period,
concentrating on names that had been struggling despite a favorable backdrop for
technology stocks, and which were trading at substantial discounts (as measured
by such factors as price-to-book and price-to-earnings ratios) to the broader
technology market. In each case, we identified a catalyst (e.g., a recent
strategic acquisition) that in our view could lead investors to favorably
reassess these stocks.
Other sector-weighting changes of note included our increased weighting in
cyclical, or economically-sensitive, areas of the market. This included the
addition of a few metals and mining companies. These companies stand to benefit
from the ongoing recovery in global economies, in particular Asian/Pacific
economies. Metal prices tumbled as the Asian crisis widened in 1997 and 1998 --
the region accounts for a large share of demand for gold,
4
<PAGE>
Warburg Pincus Institutional Fund -- Small Company Value Portfolio
Annual Investment Adviser's Report -- October 31, 1999 (cont'd)
- --------------------------------------------------------------------------------
copper, etc. -- and logic suggests that Asia's rebound, if sustained, should
support metal prices going forward.
One weighting we lowered was the financial area. While we view the
long-term prospects for smaller financial stocks favorably (due, e.g., to
industry consolidation), we deemed a more-modest weighting here to be
appropriate, given small financial companies' high sensitivity to interest-rate
worries. We also decreased our exposure to the health-care area, though we
believe certain health-care stocks are compelling, in particular those of
certain health-care "providers" (e.g., hospitals and nursing homes). The
catalyst that we believe will benefit these companies is an firmer supply/demand
backdrop. Their capacity growth rate, as measured by bed-count expansion, has
slowed over the past two years, and demand could improve due to political
forces. (We believe that the federal government will offer some relief in the
Medicare area, where funding for provider services was reduced in 1997. Indeed,
the House of Representatives overwhelmingly approved such legislation in early
November of this year.)
Heading into 2000, we are positive on the outlook for small-cap stocks,
including the types of stocks held by the Portfolio, the Portfolio's
disappointing recent performance notwithstanding. Valuations on small caps
remain compelling vs. those on large-cap stocks, which stands to draw evermore
favorable attention to the group, barring an unforeseen spike in interest rates
provided the global economy remains on track. In addition, we believe that
numerous attractive investment opportunities exist among the low-multiple and
underfollowed issues targeted by the Portfolio. A number of these stocks
represent companies undergoing fundamental, positive changes, and therefore
stand to be favorably reassessed by the market. Set within this environment, we
will continue to adhere to strict value disciplines, attempting to ferret out
undervalued stocks with the best longer-term prospects.
Kyle F. Frey
Portfolio Manager
Investing in small companies entails special risk considerations. These are
detailed in the Prospectus, which should be read carefully before investing.
5
<PAGE>
Warburg Pincus Institutional Fund -- Small Company Value Portfolio
Annual Investment Adviser's Report -- October 31, 1999 (cont'd)
- --------------------------------------------------------------------------------
Growth of $10,000 Invested in
Warburg Pincus Institutional Fund, Inc. -- Small Company Value Portfolio
since Inception as of October 31, 1999
The graph below illustrates the hypothetical investment of $10,000 in
Warburg Pincus Institutional Fund, Inc. -- Small Company Value Portfolio (the
"Portfolio") from October 31, 1997 (inception) to October 31, 1999, compared to
the Russell 2000 Index ("Russell")* for the same time period. Past performance
does not predict future results.
[GRAPHIC OMITTED]
In the printed version of the document, a line graph
appears which depicts the following plot points:
Portfolio Russell
--------- -------
Oct-97 10000 10000
Nov-97 9620 9935
Dec-97 9660.4 10108.9
Jan-98 9410.2 9949.45
Feb-98 9959.76 10685.2
Mar-98 10400 11125.9
Apr-98 10400 11187.5
May-98 10170.1 10584.9
Jun-98 10260.7 10607.3
Jul-98 9520.86 9748.62
Aug-98 7850.9 7855.63
Sep-98 7941.18 8470.41
Oct-98 7980.89 8815.92
Nov-98 8230.93 9277.79
Dec-98 8441.23 9851.9
Jan-99 8249.36 9982.83
Feb-99 7663.74 9174.22
Mar-99 7552.69 9317.43
Apr-99 8077.76 10152.4
May-99 8138.34 10300.7
Jun-99 8511.97 10766.5
Jul-99 8329.81 10471.5
Aug-99 7825.03 10084
Sep-99 7633.31 10086.3
Oct-99 7673.77 10127.1
<TABLE>
<CAPTION>
Portfolio
---------
<S> <C>
1 Year Total Return (9/30/98 to 9/30/99) .............................. -3.87%
Aggregate Total Return Since Inception (10/31/97 to 9/30/99) .......... -13.14%
</TABLE>
- -----------
* The Russell 2000 Index is an unmanaged index (with no defined investment
objective) of approximately 2,000 small-cap stocks, includes reinvestment
of dividends, and is compiled by Frank Russell Company.
6
<PAGE>
Warburg Pincus Institutional Fund -- Small Company Growth Portfolio
Annual Investment Adviser's Report -- October 31, 1999
- --------------------------------------------------------------------------------
December 9, 1999
Dear Shareholder:
For the 12 months ended October 31, 1999, Warburg Pincus Institutional Fund
- -- Small Company Growth Portfolio had a return of 38.79%, vs. a return of 29.28%
for the Russell 2000 Growth Index.
The period was a positive one for small-capitalization stocks, with
growth-oriented small caps showing particular strength. This reflected improving
economic and financial conditions abroad, which eased the risk-avoidance mindset
that had hindered small-cap stocks since the Asian crisis erupted in late 1997.
The group was also aided by a surprisingly healthy U.S. economy, which fueled
optimism over small companies' earnings prospects. The strengthening economy did
create inflation and interest-rate worries, however, which resulted in a rather
volatile environment for small caps, particularly over the latter part of the
period.
Against this backdrop, the Portfolio had a solid gain in absolute terms and
handily outpaced its benchmark. We significantly increased our weightings in the
technology and communications areas during the period, which proved a beneficial
move, as these stocks paced the market's advance through the 12 months. We
deemed a number of these stocks to be attractive, given their valuations and
their underlying companies' long-term growth prospects.
Some sector-weighting adjustments aside, we made no material changes to the
Portfolio during the period with respect to general strategy, remaining focused
on well-managed companies offering innovative products and services. With regard
to major investment themes, we continued to emphasize companies that stand to
benefit from a global push for enhanced productivity, as well as those standing
to benefit from the ongoing Internet-driven communications revolution. In this
context, our primary areas of concentration at the end of the period were the
electronics, computer, communications and media and telecommunications and
equipment sectors. The rest of the Portfolio was invested across a range of
sectors, including the business-services, oil-services and health-care areas.
Looking out to 2000 and beyond, we believe that while small-cap stocks will
likely remain volatile, they have solid longer-term growth potential, supported
by a confluence of positive factors. For one, despite the recent rally in these
issues, the group's valuations remain compelling compared to those on large-cap,
blue-chip stocks. Buttressing the group's relatively attractive valuations is a
favorable earnings outlook for these companies (the
7
<PAGE>
Warburg Pincus Institutional Fund -- Small Company Growth Portfolio
Annual Investment Adviser's Report -- October 31, 1999 (cont'd)
- --------------------------------------------------------------------------------
group's earnings growth is expected to exceed that of the large-cap group over
the coming year and over the longer term). Another factor that stands to broadly
support the group is merger and acquisition activity. Large companies have been
acquiring smaller ones at a frantic pace, a trend we believe will continue, if
not accelerate, with positive implications for acquirees' (and potential
acquirees') share prices. This stands to continue to draw investors to the
group, barring an unforeseen spike in interest rates and provided the global
economy stays on track. Set within this environment, we will continue to strive
to identify stocks with the brightest long-term prospects.
Stephen J. Lurito Elizabeth B. Dater Sammy Oh
Co-Portfolio Manager Co-Portfolio Manager Co-Portfolio Manager
Investing in small companies entails special risk considerations. These are
detailed in the Prospectus, which should be read carefully before investing.
8
<PAGE>
Warburg Pincus Institutional Fund -- Small Company Growth Portfolio
Annual Investment Adviser's Report -- October 31, 1999 (cont'd)
- --------------------------------------------------------------------------------
Growth of $10,000 Invested in
Warburg Pincus Institutional Fund, Inc. -- Small Company Growth
Portfolio since Inception as of October 31, 1999
The graph below ilustrates the hypothetical investment of $10,000 in
Warburg Pincus Institutional Fund -- Small Company Growth Portfolio (the
"Portfolio") from December 29, 1995 (inception) to October 31, 1999, compared to
the Russell 2000 Growth Index for the same time period. Past performance does
not predict future results.
[GRAPHIC OMMITTED]
In the printed version of the document, a line graph
appears which depicts the following plot points:
Portfolio Russell
--------- -------
12/29/96 10000 10000
Jan-96 9850 9917.3
Feb-96 10360 10369.5
Mar-96 11280 10574.5
Apr-96 12500 11386.3
May-96 13250 11970.2
Jun-96 12820 11192.5
Jul-96 11630 9826.26
Aug-96 12460 10553.7
Sep-96 13300 11097.2
Oct-96 12920 10618.6
Nov-96 12940 10913.9
Dec-96 13310 11126.7
Jan-97 13690 11404.7
Feb-97 12840 10716
Mar-97 11780 9959.92
Apr-97 11580 9844.78
May-97 13150 11324.5
Jun-97 13730 11708.6
Jul-97 14370 12308.5
Aug-97 14799.7 12677.9
Sep-97 16519.4 13689.6
Oct-97 15890 12867.4
Nov-97 15599.2 12560.8
Dec-97 15508.7 12567.8
Jan-98 15218.7 12400.3
Feb-98 16498.6 13495
Mar-98 17397.8 14061.1
Apr-98 17197.7 14147.3
May-98 15847.7 13119.5
Jun-98 16028.4 13253.7
Jul-98 14358.2 12146.9
Aug-98 11328.6 9342.88
Sep-98 12278 10290.2
Oct-98 12888.2 10826.9
Nov-98 13817.4 11666.7
Dec-98 14886.9 12722.6
Jan-99 15527 13294.8
Feb-99 13997.6 12078.6
Mar-99 14656.9 12508.9
Apr-99 14636.4 13613.5
May-99 14727.1 13635
Jun-99 16186.6 14353.3
Jul-99 16217.3 13909.5
Aug-99 16116.8 13389.3
Sep-99 16606.7 13647.6
Oct-99 17887.1 13997.1
Portfolio
---------
1 Year Total Return (9/30/98 to 9/30/99) ........................ 35.26%
3 Year Average Annual Total Return (9/30/96 to 9/30/99) ......... 7.69%
Aggregate Annual Total Return (12/29/95 to 9/30/99) ............. 14.45%
- ------------
* The Russell 2000 Growth Index is an unmanaged index (with no defined
investment objective) of those securities in the Russell 2000 Growth Index
with a greater-than-average growth orientation. The Russell 2000 Growth
Index includes reinvestment of dividends, and is compiled by Frank Russell
Company.
9
<PAGE>
Warburg Pincus Institutional Fund -- Post-Venture Capital Portfolio
Annual Investment Adviser's Report -- October 31, 1999
- --------------------------------------------------------------------------------
December 9, 1999
Dear Shareholder:
For the 12 months ended October 31, 1999, Warburg Pincus Institutional Fund
- -- Post-Venture Capital Portfolio had a return of 37.25%, vs. returns of 29.28%
for the Russell 2000 Growth Index, 37.39% for the Russell 2500 Growth Index and
50.17% for the NASDAQ Industrials Index.
The period saw healthy gains for the aggressive-growth stocks targeted by
the Portfolio, buoyed by favorable news regarding the global economy, most
specifically signs of rebound within Japan and emerging markets and
better-than-expected growth in the U.S. These developments eased risk concerns
(which had weighed heavily on aggressive-growth stocks over much of the previous
12 months) while fueling optimism over earnings generally.
Against this backdrop, the Portfolio registered a solid gain, with
respectable performance compared to its benchmarks. The Portfolio benefited from
the vastly improved environment for aggressive-growth stocks and from good
performances from a number of the Portfolio's holdings, especially its
technology and communications stocks.
We continued, through the period, to emphasize stocks of well-managed,
well-financed companies offering innovative products and services. In terms of
sector allocation, primary areas of emphasis for the Portfolio during the period
included the communications and media and telecommunications and equipment
sectors, weightings we raised during the period. This reflected our belief that
specific trends -- most notably, the ongoing Internet-driven communications
revolution -- stand to benefit numerous companies in these areas over time.
Other notable sector weightings included financial services, where we
maintained a mix of asset-management and insurance companies; computers, where
we remained biased toward domestically oriented software companies; and business
services. Our holdings within the last sector included companies specializing in
electronic-commerce distribution and fulfillment services, a number of which in
our view have significant potential for long-term growth.
10
<PAGE>
Warburg Pincus Institutional Fund -- Post-Venture Capital Portfolio
Annual Investment Adviser's Report -- October 31, 1999 (cont'd)
- --------------------------------------------------------------------------------
Going forward, we remain positive on the collective prospects for stocks of
post-venture-capital companies. (We define a post-venture-capital company as one
that has 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, will have been made within 10 years of the
Portfolio's investment.) This reflects optimism over the asset class.
Venture-backed companies tend to occupy the economy's rapid-growth industries
(e.g., software, biotechnology, semiconductors and electronics, and
communications), and they have historically generated rapid growth of earnings
relative to companies that lacked such backing. We would caution investors,
however, that investing in post-venture-capital companies involves certain risks
- -- e.g., the risk of heightened volatility -- along with the potential for
significant long-term rewards. But for those with a long-term view and a
sufficiently high risk threshold, we believe that stocks of venture-backed
companies are well worthy of consideration. As ever, we will continue to devote
our efforts to identifying those companies we deem to have the best long-term
prospects.
Elizabeth B. Dater Robert S. Janis
Co-Portfolio Manager Co-Portfolio Manager
Because of the nature of the Portfolio's holdings and certain strategies it
may use, an investment in the Portfolio involves certain risks and may not be
appropriate for all investors. The Prospectus contains more complete information
on the special risk considerations associated with post-venture-capital
investments. It should be read carefully before investing.
11
<PAGE>
Warburg Pincus Institutional Fund -- Post-Venture Capital Portfolio
Annual Investment Adviser's Report -- October 31, 1999 (cont'd)
- --------------------------------------------------------------------------------
Growth of $10,000 Invested in
Warburg Pincus Institutional Fund, Inc. -- Post-Venture Capital Portfolio
since Inception as of October 31, 1999
The graph below ilustrates the hypothetical investment of $10,000 in
Warburg Pincus Institutional Fund -- Post-Venture Capital Portfolio (the
"Portfolio") from October 31, 1997 (inception) to October 31, 1999, compared to
the Russell 2000 Growth Index ("R2000G"),* Russell 2500 Growth Index
("R2500G")** and the NASDAQ Industrials Index ("NASDAQ")*** for the same time
period. Past performance does not predict future results.
[GRAPHIC OMITTED]
In the printed version of the document, a line graph
appears which depicts the following plot points:
Portfolio R2000G R2500G NASDAQ
--------- -------- -------- --------
Oct-97 10000 10000 10000 10000
Nov-97 9870 9762 9846.7 9856.5
Dec-97 9739.72 9767.86 9811.74 9624.58
Jan-98 9540.05 9637.65 9683.6 9559.32
Feb-98 10419.6 10488.5 10514.9 10331.4
Mar-98 11319.9 10928.5 10905.4 10733.9
Apr-98 11150.1 10995.5 11004.5 10951.1
May-98 10399.7 10196.6 10298.1 10490.3
Jun-98 10609.8 10300.9 10373.6 10514.9
Jul-98 9310.08 9440.71 9601.18 9923.45
Aug-98 7110.11 7261.41 7419.41 7637.49
Sep-98 7690.29 7997.65 8069.94 8132.47
Oct-98 8230.15 8414.81 8614.82 8790.39
Nov-98 8640.18 9067.54 9227.6 9579.33
Dec-98 9493.22 9888.16 10116 10280.6
Jan-99 9943.86 10332.9 10408.8 11098.6
Feb-99 9222.83 9387.67 9564.22 10277.5
Mar-99 10054 9722.06 10009.5 10930.1
Apr-99 10084.1 10580.6 10808.1 11746
May-99 9973.94 10597.3 10919.7 11582.5
Jun-99 10835.2 11155.6 11691.5 12857.3
Jul-99 10474.4 10810.7 11453.3 12497.7
Aug-99 10534.1 10406.3 11205.8 12338.5
Sep-99 10564.6 10607.1 11286 12686
Oct-99 11295.7 10878.7 11835.6 13201
Portfolio
---------
1 Year Total Return (9/30/98 to 9/30/99) ........................... 37.38%
Aggregate Total Return Since Inception (10/31/97 to 9/30/99) ....... 2.91%
- -----------
* The Russell 2000 Growth Index is an unmanaged index (with no defined
investment objective) of those securities in the Russell 2000 Growth Index
with a greater-than-average growth orientation. It includes reinvestment of
dividends, and is compiled by Frank Russell Company.
** The Russell 2500 Growth Index measures the performance of those companies
in the Russell 2500 Index with higher price-to-book values and higher
forecasted growth rates. The Russell 2500 Index is composed of the 2500
smallest companies in the Russell 3000 Index, which measures the
performance of the 3000 largest U.S. companies based on total market
capitalization. The Russell 2500 Index represents approximately 17% of the
total market capitalization of the Russell 3000 Index.
*** The NASDAQ Industrial Index measures the stock price performance of more
than 3000 industrial issues included in the NASDAQ OTC Composite Index. The
NASDAQ OTC Composite Index represents 4500 stocks traded over the counter.
12
<PAGE>
Warburg Pincus Institutional Fund, Inc. -- Value Portfolio
Statement of Net Assets--October 31, 1999
- --------------------------------------------------------------------------------
Number
of
Shares Value
------ ----------
COMMON STOCK (91.2%)
Aerospace & Defense (0.8%)
General Dynamics Corp. 3,100 $ 171,856
Litton Industries, Inc.+ 2,800 131,425
----------
303,281
----------
Banks & Savings & Loans (9.2%)
AmSouth Bancorp 11,142 286,906
Comerica, Inc. 22,200 1,319,512
Compass Bancshares, Inc. 6,000 160,125
Golden West Financial Corp. 4,600 514,050
Suntrust Banks, Inc. 3,200 234,200
UnionBanCal Corp. 6,200 269,312
Wachovia Corp. 6,300 543,375
----------
3,327,480
----------
Building & Building Materials (1.5%)
USG Corp.+ 10,800 535,275
----------
Business Services (1.3%)
WPP Group PLC 45,200 489,884
----------
Capital Equipment (8.7%)
AlliedSignal, Inc. 5,000 284,687
American Standard Cos., Inc.+ 11,000 420,062
Case Corp. 6,900 365,700
Caterpillar, Inc. 5,200 287,300
Emerson Electric Co. 3,600 216,225
Ingersoll-Rand Co. 11,900 621,775
ITT Industries, Inc. 8,600 294,012
Navistar International Corp.+ 8,800 366,850
Parker-Hannifin Corp. 6,700 306,944
----------
3,163,555
----------
Chemicals (2.0%)
Ferro Corp. 12,600 256,725
Rhone Poulenc SA ADR Series A 8,500 471,750
----------
728,475
----------
Communications & Media (1.0%)
New York Times Co. Class A 8,800 354,200
----------
Computers (4.5%)
Hewlett-Packard Co. 2,900 214,781
International Business Machines Corp. 3,600 354,150
Tech Data Corp.+ 5,900 110,994
Teradyne, Inc.+ 5,900 227,150
Unisys Corp. 30,400 737,200
----------
1,644,275
----------
See Accompanying Notes to Financial Statements.
13
<PAGE>
Warburg Pincus Institutional Fund, Inc. -- Value Portfolio
Statement of Net Assets (cont'd)--October 31, 1999
- --------------------------------------------------------------------------------
Number
of
Shares Value
------ ----------
COMMON STOCK (cont'd)
Conglomerates (1.1%)
Harsco Corp. 13,600 $ 400,350
----------
Consumer Durables (2.4%)
Ford Motor Co. 12,700 696,912
Meritor Automotive, Inc. 10,000 169,375
----------
866,287
----------
Distribution (0.5%)
CDW Computer Centers, Inc.+ 2,700 166,725
----------
Energy (11.3%)
Amerada Hess Corp. 8,500 487,687
BP Amoco PLC ADR 22,000 1,270,500
Devon Energy Corp. 7,700 299,337
Exxon Corp. 10,800 799,875
Royal Dutch Petroleum Co. ADR 8,600 515,462
Total Fina SA ADR 7,300 486,819
Union Pacific Resources Group, Inc. 17,200 249,400
----------
4,109,080
----------
Financial Services (12.8%)
Allstate Corp. 4,000 115,000
Countrywide Credit Industries, Inc. 15,000 509,062
Fannie Mae 4,900 346,675
Household International, Inc. 13,100 584,588
Labranche & Co., Inc.+ 9,500 127,063
Lehman Brothers Holdings, Inc. 9,100 670,556
MBIA, Inc. 4,300 245,369
MGIC Investment Corp. 10,400 621,400
PMI Group, Inc. 15,450 801,469
Terra Nova Bermuda Holdings, Ltd. Class A 13,000 410,313
XL Capital Ltd., Class A+ 3,800 204,013
----------
4,635,508
----------
Food, Beverages & Tobacco (3.6%)
Anheuser-Busch Companies, Inc. 1,800 129,263
General Mills, Inc. 6,700 584,156
Keebler Foods Co.+ 18,800 600,425
----------
1,313,844
----------
Healthcare (2.9%)
Baxter International, Inc. 5,500 356,813
Becton, Dickinson & Co. 14,500 367,938
Trigon Healthcare, Inc.+ 11,400 323,475
----------
1,048,226
----------
See Accompanying Notes to Financial Statements.
14
<PAGE>
Warburg Pincus Institutional Fund, Inc. -- Value Portfolio
Statement of Net Assets (cont'd)--October 31, 1999
- --------------------------------------------------------------------------------
Number
of
Shares Value
------ ----------
COMMON STOCK (cont'd)
Industrial Manufacturing & Processing (2.6%)
Dana Corp. 4,800 $ 141,900
Eaton Corp. 3,600 270,900
Minnesota Mining & Manufacturing Co. 5,600 532,350
----------
945,150
----------
Metals & Mining (2.0%)
Alcoa, Inc. 12,000 729,000
----------
Office Equipment & Supplies (0.6%)
Pitney Bowes, Inc. 4,800 218,700
----------
Oil Services (1.5%)
Pride International, Inc.+ 14,800 203,500
R & B Falcon Corp.+ 26,300 327,106
----------
530,606
----------
Pharmaceuticals (2.8%)
American Home Products Corp. 5,100 266,475
Lilly (Eli) & Co. 7,400 509,675
Pharmacia & Upjohn, Inc. 4,800 258,900
----------
1,035,050
----------
Retail (8.9%)
Federated Department Stores, Inc.+ 8,600 367,113
Gap, Inc. 7,700 285,863
May Department Stores Co. 19,300 669,469
Payless ShoeSource, Inc.+ 4,000 183,250
Ross Stores, Inc. 27,000 556,875
Safeway, Inc.+ 7,700 271,906
TJX Cos., Inc. 20,200 547,925
Toys `R' Us, Inc.+ 25,400 358,775
----------
3,241,176
----------
Telecommunications & Equipment (6.6%)
AT&T Corp. 12,300 575,025
Bell Atlantic Corp. 13,300 863,669
SBC Communications, Inc. 18,591 946,979
----------
2,385,673
----------
Transportation (0.5%)
Burlington Northern Santa Fe Corp. 6,000 191,250
----------
See Accompanying Notes to Financial Statements.
15
<PAGE>
Warburg Pincus Institutional Fund, Inc. -- Value Portfolio
Statement of Net Assets (cont'd)--October 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Number
of
Shares Value
------ ----------
<S> <C> <C>
COMMON STOCK (cont'd)
Utilities-Electric (2.1%)
Allegheny Energy, Inc. 9,500 $ 302,219
American Electric Power Co., Inc. 4,100 141,450
Illinova Corp. 6,300 200,419
Wisconsin Energy Corp. 6,200 138,725
-----------
782,813
-----------
TOTAL COMMON STOCK (Cost $29,268,985) 33,145,863
-----------
PREFERRED STOCK (0.3%)
Real Estate (0.3%)
Equity Residential Properties Series G 7.25%
(Convertible) (Callable 09/15/02 @ $25.91) REIT 4,400 89,100
-----------
TOTAL PREFERRED STOCK (Cost $110,379) 89,100
-----------
SHORT TERM INVESTMENTS (9.4%)
Institutional Money Market Trust 1,664,622 1,664,622
RBB Money Market Portfolio 1,752,130 1,752,130
-----------
TOTAL SHORT TERM INVESTMENTS (Cost $3,416,752) 3,416,752
-----------
TOTAL INVESTMENTS AT VALUE (100.9%) (Cost $32,796,116*) 36,651,715
LIABILITIES IN EXCESS OF OTHER ASSETS (0.9%) (319,746)
-----------
NET ASSETS (100.0%) (applicable to 2,728,095 shares outstanding) $36,331,969
===========
NET ASSET VALUE, offering and redemption price per share ($36,331,969 / 2,728,095) $ 13.32
===========
</TABLE>
INVESTMENT ABBREVIATIONS
ADR = American Depository Receipt
REIT = Real Estate Investment Trust
- -------------
+ Non-income producing security.
* Cost for federal income tax purposes is $32,852,668.
See Accompanying Notes to Financial Statements.
16
<PAGE>
Warburg Pincus Institutional Fund, Inc. -- Small Company Value Portfolio
Statement of Net Assets--October 31, 1999
- --------------------------------------------------------------------------------
Number
of
Shares Value
------ -------
COMMON STOCK (93.1%)
Aerospace & Defense (1.8%)
TriStar Aerospace Co.+ 1,700 $11,262
-------
Banks & Savings & Loans (7.1%)
Astoria Financial Corp. 300 10,800
Century Bancorp, Inc. Class A 655 11,708
Prosperity Bancshares, Inc. 900 14,456
Texas Regional Bancshares, Inc. 300 8,381
-------
45,345
-------
Building & Building Materials (2.2%)
Elcor Corp. 550 13,544
Juno Lighting, Inc.+ 31 325
-------
13,869
-------
Business Services (5.0%)
ACNielsen Corp.+ 500 11,000
Graco, Inc. 371 12,428
Wilmar Industries, Inc.+ 700 8,575
-------
32,003
-------
Chemicals (2.2%)
C.K. Witco Corp. 700 6,562
Ferro Corp. 350 7,131
-------
13,693
-------
Computers (9.9%)
Computer Network Technology Corp.+ 600 9,637
Hyperion Solutions Corp.+ 700 17,062
JDA Software Group, Inc.+ 650 5,850
Network Associates, Inc.+ 450 8,241
New Era of Networks, Inc.+ 250 8,109
Quantum Corp.-DLT & Storage Systems Group+ 400 6,175
RadiSys Corp.+ 150 7,950
-------
63,024
-------
Conglomerates (1.9%)
Gaylord Containers Corp. Class A+ 1,431 8,049
Watts Industries, Inc. Class A 305 4,175
-------
12,224
-------
Consumer Durables (3.6%)
Harman International Industries, Inc. 300 12,262
Superior Industries International, Inc. 400 10,675
-------
22,937
-------
See Accompanying Notes to Financial Statements.
17
<PAGE>
Warburg Pincus Institutional Fund, Inc. -- Small Company Value Portfolio
Statement of Net Assets (cont'd)--October 31, 1999
- --------------------------------------------------------------------------------
Number
of
Shares Value
------ -------
COMMON STOCK (cont'd)
Consumer Non-Durables (8.1%)
Liz Claiborne, Inc. 250 $10,000
Saucony, Inc. Class B+ 1,000 17,125
Timberland Co. (The), Class A+ 250 12,344
WestPoint Stevens, Inc. 650 12,309
-------
51,778
-------
Electronics (1.4%)
Avant! Corp.+ 500 6,437
Supertex, Inc.+ 200 2,425
-------
8,862
-------
Engineering & Construction (1.0%)
McDermott International, Inc. 350 6,344
-------
Financial Services (10.1%)
AmeriCredit Corp. 800 13,900
HCC Insurance Holdings, Inc. 582 6,547
Radian Group, Inc. 269 14,207
StanCorp Financial Group, Inc. 650 16,494
Webster Financial Corp. 450 12,881
-------
64,029
-------
Healthcare (3.6%)
Health Management Associates, Inc. Class A+ 700 6,213
Morrison Management Specialists 400 8,550
Omnicare, Inc. 900 8,325
-------
23,088
-------
Industrial Manufacturing & Processing (1.0%)
Bethlehem Steel Corp.+ 700 4,856
CIRCOR International, Inc.+ 152 1,444
-------
6,300
-------
Leisure & Entertainment (6.4%)
Hollywood Entertainment Corp.+ 750 10,594
Midway Games, Inc.+ 950 18,941
SCP Pool Corp.+ 500 11,344
-------
40,879
-------
Metals & Mining (3.6%)
Freeport-McMoRan Copper & Gold, Inc. Class B+ 750 12,516
Kaiser Aluminum Corp.+ 100 644
Ryerson Tull, Inc. 483 9,902
-------
23,062
-------
See Accompanying Notes to Financial Statements.
18
<PAGE>
Warburg Pincus Institutional Fund, Inc. -- Small Company Value Portfolio
Statement of Net Assets (cont'd)--October 31, 1999
- --------------------------------------------------------------------------------
Number
of
Shares Value
------ -------
COMMON STOCK (cont'd)
Oil Services (6.5%)
Evergreen Resources, Inc.+ 600 $12,975
Global Industries, Ltd.+ 950 7,600
Pride International, Inc.+ 800 11,000
Varco International, Inc.+ 925 9,770
-------
41,345
-------
Paper & Forest Products (3.4%)
Abitibi-Consolidated, Inc.+ 900 10,856
Caraustar Industries, Inc. 400 9,650
Wausau-Mosinee Paper Corp. 100 1,263
-------
21,769
-------
Publishing (1.4%)
Ziff-Davis, Inc.+ 600 8,963
-------
Real Estate (2.4%)
Mission West Properties, Inc.+ 1,200 9,225
Western Water Co.+ 4,000 6,000
-------
15,225
-------
Retail (2.9%)
J. Baker, Inc. 1,400 7,788
Value City Department Stores, Inc.+ 700 10,763
-------
18,551
-------
Telecommunications & Equipment (0.8%)
Triton PCS Holdings, Inc. Class A+ 150 5,288
-------
Transportation (4.9%)
Airborne Freight Corp. 400 8,600
Landstar Systems, Inc.+ 300 12,150
M.S. Carriers, Inc.+ 364 10,283
-------
31,033
-------
Utilities-Electric (1.9%)
NSTAR 315 11,990
-------
TOTAL COMMON STOCK (Cost $584,508) 592,863
-------
See Accompanying Notes to Financial Statements.
19
<PAGE>
Warburg Pincus Institutional Fund, Inc. -- Small Company Value Portfolio
Statement of Net Assets (cont'd)--October 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Number
of
Shares Value
------ -------
<S> <C> <C>
SHORT TERM INVESTMENTS (9.1%)
Institutional Money Market Trust 27,828 $ 27,829
RBB Money Market Portfolio 30,325 30,325
--------
TOTAL SHORT TERM INVESTMENTS (Cost $58,154) 58,154
--------
TOTAL INVESTMENTS AT VALUE (102.2%) (Cost $642,662*) 651,017
LIABILITIES IN EXCESS OF OTHER ASSETS (2.2%) (13,821)
--------
NET ASSETS (100.0%) (applicable to 83,806 shares outstanding) $637,196
========
NET ASSET VALUE, offering and redemption price per share ($637,196 O 83,806) $ 7.60
========
</TABLE>
- ------------
+ Non-income producing security.
* Cost for federal income tax purposes is $662,067.
See Accompanying Notes to Financial Statements.
20
<PAGE>
Warburg Pincus Institutional Fund, Inc. -- Small Company Growth Portfolio
Statement of Net Assets--October 31, 1999
- --------------------------------------------------------------------------------
Number
of
Shares Value
------ -------
COMMON STOCK (96.7%)
Aerospace & Defense (1.7%)
Prescient Systems, Inc.# 21,615 $1,999,999
TriStar Aerospace Co.+ 292,300 1,936,487
----------
3,936,486
----------
Business Services (6.4%)
Acxiom Corp.+ 166,740 2,751,210
E-Stamp Corp.+ 18,700 434,775
Getty Images, Inc.+ 134,800 4,153,525
Iron Mountain, Inc.+ 80,200 2,426,050
Metamor Worldwide, Inc.+ 90,300 1,704,412
QRS Corp.+ 55,899 3,109,382
StarTek, Inc.+ 14,800 671,550
----------
15,250,904
----------
Communications & Media (12.4%)
Aether Systems, Inc.+ 30,200 2,100,787
Go2Net, Inc.+ 20,700 1,456,762
Hispanic Broadcasting Corp.+ 22,116 1,791,396
InfoSpace.com, Inc.+ 68,600 3,815,875
Network Event Theater, Inc.+# 153,768 3,536,664
Radio One, Inc.+ 54,300 2,708,212
Salem Communications Corp. Class A+ 86,200 2,144,225
ValueVision International, Inc. Class A+ 94,700 3,095,506
VerticalNet, Inc.+ 39,800 2,228,800
Westwood One, Inc.+ 83,150 3,835,294
Xoom.com, Inc.+ 41,083 2,567,687
----------
29,281,208
----------
Computers (20.0%)
Aspect Development, Inc.+ 100,600 3,558,725
Business Objects SA ADR+ 65,300 4,701,600
Emulex Corp.+ 31,100 4,849,656
Legato Systems, Inc.+ 59,200 3,182,000
Mercury Interactive Corp.+ 41,300 3,350,462
National Instruments Corp.+ 92,073 2,767,945
PC-Tel, Inc.+ 66,300 1,989,000
Peregrine Systems, Inc.+ 99,200 4,352,400
Radiant Systems, Inc.+ 171,200 2,696,400
Remedy Corp.+ 95,700 4,115,100
Research in Motion, Ltd.+ 56,200 1,728,150
RSA Security , Inc.+ 72,600 2,577,300
Women.com Networks, Inc.+# 487,277 6,870,606
ZapMe! Corp.+ 81,200 609,000
----------
47,348,344
----------
See Accompanying Notes to Financial Statements.
21
<PAGE>
Warburg Pincus Institutional Fund, Inc. -- Small Company Growth Portfolio
Statement of Net Assets (cont'd)--October 31, 1999
- --------------------------------------------------------------------------------
Number
of
Shares Value
------ -----------
COMMON STOCK (cont'd)
Consumer Services (1.4%)
DeVry, Inc.+ 104,004 $ 2,190,584
Strayer Education, Inc. 63,200 1,109,950
-----------
3,300,534
-----------
Electronics (15.1%)
Adaptive Broadband Corp.+ 57,700 2,131,294
Alpha Industries, Inc.+ 58,900 3,254,225
Avant! Corp.+ 142,531 1,835,087
Burr-Brown Corp.+ 96,551 3,795,661
C-Cube Microsystems, Inc.+ 73,700 3,279,650
DSP Group, Inc.+ 45,000 2,148,750
Electronics For Imaging, Inc.+ 64,500 2,600,156
Etec Systems, Inc.+ 57,800 2,207,237
Galileo Technology, Ltd.+ 114,200 2,612,325
Novellus Systems, Inc.+ 32,800 2,542,000
Photronics, Inc.+ 97,900 2,049,781
SanDisk Corp.+ 26,800 1,624,750
Telcom Semiconductor, Inc.+ 155,500 1,438,375
TriQuint Semiconductor, Inc.+ 52,100 4,168,000
-----------
35,687,291
-----------
Energy (1.5%)
Stone Energy Corp.+ 72,000 3,501,000
-----------
Financial Services (0.5%)
Enhance Financial Services Group, Inc.+ 61,100 1,115,075
-----------
Food, Beverages & Tobacco (0.8%)
Ben & Jerry's Homemade, Inc. Class A+ 117,900 1,989,562
-----------
Healthcare (5.5%)
Advanced Paradigm, Inc.+ 63,200 2,693,900
Core, Inc.+ 228,400 1,441,775
Foundation Health Systems, Inc. Class A+ 298,600 1,978,225
Hanger Orthopedic Group, Inc.+ 153,500 1,889,969
MiniMed, Inc.+ 41,000 3,108,312
Renal Care Group, Inc.+ 102,250 1,904,406
-----------
13,016,587
-----------
Leisure & Entertainment (3.0%)
Fairfield Communities, Inc.+ 231,100 2,830,975
Sunterra Corp.+ 191,300 1,913,000
THQ, Inc.+ 56,800 2,335,900
-----------
7,079,875
-----------
See Accompanying Notes to Financial Statements.
22
<PAGE>
Warburg Pincus Institutional Fund, Inc. -- Small Company Growth Portfolio
Statement of Net Assets (cont'd)--October 31, 1999
- --------------------------------------------------------------------------------
Number
of
Shares Value
------ -----------
COMMON STOCK (cont'd)
Oil Services (4.7%)
BJ Services Co.+ 86,800 $ 2,978,325
Cooper Cameron Corp.+ 76,600 2,963,463
Petroleum Geo-Services ADR+ 179,262 2,621,707
Smith International, Inc.+ 75,400 2,606,013
Southern Mineral Corp.+# 58,875 8,243
------------
11,177,751
------------
Pharmaceuticals (2.8%)
Alkermes, Inc.+ 117,600 4,152,750
ChiRex, Inc.+ 87,000 2,457,750
------------
6,610,500
------------
Retail (3.2%)
99 Cents Only Stores+ 36,525 1,091,184
Ames Department Stores, Inc.+ 75,300 2,386,069
AnnTaylor Stores Corp. 47,300 2,013,206
Linens 'N Things, Inc.+ 40,700 1,617,825
Pacific Sunwear of California, Inc.+ 17,200 519,225
------------
7,627,509
------------
Telecommunications & Equipment (16.9%)
Advanced Fibre Communications, Inc.+ 162,300 3,550,313
Antec Corp.+ 93,100 4,515,350
AudioCodes, Ltd.+ 61,700 3,732,850
Concentric Network Corp.+ 117,700 3,016,063
Gilat Satellite Networks, Ltd.+ 49,200 2,564,550
Omnipoint Corp.+ 49,500 4,089,938
PairGain Technologies, Inc.+ 239,700 2,936,325
Powertel, Inc.+ 53,700 3,161,588
Powerwave Technologies, Inc.+ 47,600 3,096,975
Proxim, Inc.+ 77,000 3,604,563
Viatel, Inc.+ 96,400 3,217,350
Western Wireless Corp. Class A+ 45,300 2,395,238
------------
39,881,103
------------
Transportation (0.8%)
Swift Transportation Co., Inc.+ 115,200 2,008,800
------------
TOTAL COMMON STOCK (Cost $170,606,754) 228,812,529
------------
See Accompanying Notes to Financial Statements.
23
<PAGE>
Warburg Pincus Institutional Fund, Inc. -- Small Company Growth Portfolio
Statement of Net Assets (cont'd)--October 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Par
(000) Value
----- -----------
<S> <C> <C>
CORPORATE BONDS (0.4%)
Mansur Industries 8.250%, 02/23/03 # (Cost $2,257,850) 2,258 $ 1,050,061
------------
Number
of
Shares
---------
SHORT TERM INVESTMENT (1.0%)
RBB Money Market Portfolio (Cost $2,353,815) 2,353,815 2,353,815
------------
TOTAL INVESTMENTS AT VALUE (98.1%) (Cost $175,218,419*) 232,216,405
OTHER ASSETS IN EXCESS OF LIABILITIES (1.9%) 4,462,507
------------
NET ASSETS (100.0%) (applicable to 13,227,915 shares outstanding) $236,678,912
============
NET ASSET VALUE, offering and redemption price per share
($236,678,912 / 13,227,915) $ 17.89
============
</TABLE>
INVESTMENT ABBREVIATIONS
ADR = American Depository Receipt
- -----------
+ Non-income producing security.
# Restricted security
* Cost for federal income tax purposes is $175,291,517.
See Accompanying Notes to Financial Statements.
24
<PAGE>
Warburg Pincus Institutional Fund, Inc. -- Post-Venture Capital Portfolio
Statement of Net Assets--October 31, 1999
- --------------------------------------------------------------------------------
Number
of
Shares Value
------ --------
COMMON STOCK (94.1%)
Business Services (8.5%)
ACNielsen Corp.+ 400 $ 8,800
BISYS Group, Inc.+ 300 15,300
Lason Holdings, Inc.+ 500 18,578
On Assignment, Inc.+ 400 11,500
QRS Corp.+ 600 33,375
Saatchi & Saatchi PLC ADR 1,000 19,125
--------
106,678
--------
Communications & Media (18.6%)
America Online, Inc.+ 100 12,969
AMFM, Inc.+ 300 21,000
CMGI, Inc.+ 200 21,887
Corus Entertainment, Inc. Class B+ 300 4,691
Excite@Home Corp. Series A+ 400 14,950
Hispanic Broadcasting Corp.+ 400 32,400
Outdoor Systems, Inc.+ 700 29,662
Shaw Communications, Inc. Class B 900 27,000
USA Networks, Inc.+ 800 36,050
Westwood One, Inc.+ 300 13,837
Yahoo!, Inc.+ 100 17,906
--------
232,352
--------
Computers (12.2%)
BMC Software, Inc.+ 200 12,837
Citrix Systems, Inc.+ 400 25,650
Concord Communications, Inc.+ 300 15,581
Intuit, Inc.+ 900 26,212
Network Appliance, Inc.+ 200 14,800
VeriSign, Inc.+ 200 24,700
VERITAS Software Corp.+ 300 32,362
--------
152,142
--------
Consumer Non-Durables (0.7%)
Dial Corp. 400 9,350
--------
Consumer Services (1.3%)
DeVry, Inc.+ 800 16,850
--------
Electronics (15.7%)
Flextronics International, Ltd. 400 28,400
JDS Uniphase Corp.+ 300 50,062
KLA-Tencor Corp.+ 200 15,838
Maxim Integrated Products, Inc.+ 500 39,469
Synopsys, Inc.+ 200 12,463
Vitesse Semiconductor Corp.+ 400 18,350
Xilinx, Inc.+ 400 31,450
--------
196,032
--------
See Accompanying Notes to Financial Statements.
25
<PAGE>
Warburg Pincus Institutional Fund, Inc. -- Post-Venture Capital Portfolio
Statement of Net Assets (cont'd)--October 31, 1999
- --------------------------------------------------------------------------------
Number
of
Shares Value
------ -------
COMMON STOCK (cont'd)
Financial Services (4.1%)
AMBAC Financial Group, Inc. 200 $11,950
Amvescap PLC ADR+ 300 13,463
T. Rowe Price Associates, Inc. 300 10,650
3i Group PLC 1,200 14,945
-------
51,008
-------
Food, Beverages & Tobacco (0.7%)
Ben & Jerry's Homemade, Inc. Class A+ 500 8,438
-------
Healthcare (1.1%)
Oxford Health Plans, Inc.+ 700 8,269
Women First HealthCare, Inc.+ 800 5,950
-------
14,219
-------
Leisure & Entertainment (2.6%)
Fairfield Communities, Inc.+ 500 6,125
Premier Parks, Inc.+ 900 26,044
-------
32,169
-------
Oil Services (3.1%)
Cooper Cameron Corp.+ 400 15,475
Nabors Industries, Inc.+ 500 11,344
Petroleum Geo - Services ADR+ 800 11,700
-------
38,519
-------
Pharmaceuticals (3.1%)
Amgen, Inc.+ 200 15,950
MedImmune, Inc.+ 200 22,400
-------
38,350
-------
Publishing (4.6%)
Central Newspapers, Inc. Class A 800 34,350
Scholastic Corp.+ 500 23,250
-------
57,600
-------
Retail (2.7%)
Amazon.com, Inc.+ 200 14,125
Ross Stores, Inc.+ 400 8,250
Saks, Inc. 700 12,031
-------
34,406
-------
See Accompanying Notes to Financial Statements.
26
<PAGE>
Warburg Pincus Institutional Fund, Inc. -- Post-Venture Capital Portfolio
Statement of Net Assets (cont'd)--October 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Number
of
Shares Value
------ --------
<S> <C> <C>
COMMON STOCK (cont'd)
Telecommunications & Equipment (15.1%)
CIENA Corp. 300 $ 10,575
Cisco Systems, Inc. 600 44,400
Covad Communications Group, Inc. 200 9,600
Exodus Communications, Inc. 400 34,400
Gilat Satellite Networks, Ltd. 500 26,063
MCI WorldCom, Inc. 300 25,744
Pinnacle Holdings, Inc. 900 21,600
Viatel, Inc. 500 16,688
----------
189,070
----------
TOTAL COMMON STOCK (Cost $821,479) 1,177,183
----------
SHORT TERM INVESTMENTS (7.0%)
Institutional Money Market Trust 28,477 28,477
RBB Money Market Portfolio 59,043 59,043
----------
TOTAL SHORT TERM INVESTMENTS (Cost $87,520) 87,520
----------
TOTAL INVESTMENTS AT VALUE (101.1%) (Cost $908,999*) 1,264,703
LIABILITIES IN EXCESS OF OTHER ASSETS (1.1%) (14,046)
----------
NET ASSETS (100.0%) (applicable to 110,848 shares outstanding) $1,250,657
==========
NET ASSET VALUE, offering and redemption price per share
($1,250,657 O 110,848) $ 11.28
==========
</TABLE>
INVESTMENT ABBREVIATIONS
ADR = American Depository Receipt
- ------------
+ Non-income producing security.
* Also cost for federal income tax purposes.
See Accompanying Notes to Financial Statements.
27
<PAGE>
Warburg Pincus Institutional Fund, Inc.
Statements of Operations
For the Year Ended October 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Small Company Small Company Post-Venture
Value Portfolio Value Portfolio Growth Portfolio Capital Portfolio
--------------- --------------- ---------------- -----------------
<S> <C> <C> <C> <C>
Investment Income:
Dividends $ 681,141 $ 7,116 $ 69,481 $ 1,210
Interest 188,203 3,537 633,232 4,050
Foreign taxes withheld (11,205) (14) 0 (62)
----------- ------------ ------------ ---------
Total investment income 858,139 10,639 702,713 5,198
----------- ------------ ------------ ---------
Expenses:
Investment advisory 365,121 9,775 2,045,138 13,924
Administrative services 101,793 4,695 458,868 5,436
Audit 12,216 10,216 16,016 10,219
Custodian/Sub-custodian 29,520 36,487 63,454 22,801
Directors 1,997 1,830 2,422 1,830
Insurance 2,155 445 5,751 396
Interest 519 18 2,884 0
Legal 5,548 0 26,595 130
Offering/Organizational costs 0 28,332 0 28,332
Printing 12,017 0 34,000 0
Registration 18,376 16,000 20,253 15,619
Transfer agent 11,381 7,574 30,891 5,758
Miscellaneous 1,690 677 4,415 1,153
----------- ------------ ------------ ---------
562,333 116,049 2,710,687 105,598
Less: fees waived, expenses
reimbursed and transfer agent
offsets (197,212) (105,296) (461,037) (89,775)
----------- ------------ ------------ ---------
Total expenses 365,121 10,753 2,249,650 15,823
----------- ------------ ------------ ---------
Net investment income (loss) 493,018 (114) (1,546,937) (10,625)
----------- ------------ ------------ ---------
Net Realized and Unrealized Gain (Loss)
from Investments and Foreign Currency
Related Items:
Net realized gain (loss) from security
and other related transactions 7,670,519 (179,993) 25,105,695 (112,024)
Net realized gain (loss) from foreign
currency related items (85) 0 (1,672) 16
Net change in unrealized appreciation
(depreciation) from investments and
foreign currency related items 835,987 113,672 49,843,000 516,319
----------- ------------ ------------ ---------
Net realized and unrealized gain (loss)
from investments and foreign currency
related items 8,506,421 (66,321) 74,947,023 404,311
----------- ------------ ------------ ---------
Net increase (decrease) in net assets
resulting from operations $ 8,999,439 $ (66,435) $ 73,400,086 $ 393,686
=========== ============ ============ =========
</TABLE>
See Accompanying Notes to Financial Statements.
28
<PAGE>
This page intentionally left blank
<PAGE>
Warburg Pincus Institutional Fund, Inc.
Statements of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Small Company
Value Portfolio Value Portfolio
------------------------------------ -------------------------------------
For the For the For the For the
Year Ended Year Ended Year Ended Year Ended
October 31, 1999 October 31, 1998 October 31, 1999 October 31, 1998
---------------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C>
From Operations:
Net investment income (loss) $ 493,018 $ 646,777 $ (114) $ 5,666
Net realized gain (loss) from security
and other related transactions 7,670,519 (2,230,950) (179,993) (394,793)
Net realized gain (loss) from foreign
currency related items (85) (547) 0 0
Net change in unrealized appreciation
(depreciation) from investments and
foreign currency related items 835,987 3,269,632 113,672 (105,317)
------------ ------------ ----------- ------------
Net increase (decrease) in net assets
resulting from operations 8,999,439 1,684,912 (66,435) (494,444)
------------ ------------ ----------- ------------
From Dividends and Distributions:
Dividends from net investment income (687,635) (122,223) (15,984) 0
Distributions from realized gains 0 (79,452) 0 0
------------ ------------ ----------- ------------
Net decrease in net assets from
dividends and distributions (687,635) (201,675) (15,984) 0
------------ ------------ ----------- ------------
From Capital Share Transactions:
Proceeds from sale of shares 9,544,903 58,860,184 435,220 12,534,862
Reinvested dividends and distributions 687,038 201,675 15,976 0
Net asset value of shares redeemed (41,121,863) (17,199,887) (1,515,450) (10,257,549)
------------ ------------ ----------- ------------
Net increase (decrease) in net assets
from capital share transactions (30,889,922) 41,861,972 (1,064,254) 2,277,313
------------ ------------ ----------- ------------
Net increase (decrease) in net assets (22,578,118) 43,345,209 (1,146,673) 1,782,869
Net Assets:
Beginning of year 58,910,087 15,564,878 1,783,869 1,000
------------ ------------ ----------- ------------
End of year $ 36,331,969 $ 58,910,087 $ 637,196 $ 1,783,869
============ ============ =========== ============
Undistributed Net Investment Income: $ 450,480 $ 605,017 $ 28,233 $ 15,999
============ ============ =========== ============
</TABLE>
See Accompanying Notes to Financial Statements.
30
<PAGE>
<TABLE>
<CAPTION>
Small Company Post-Venture
Growth Portfolio Capital Portfolio
------------------------------------ -----------------------------------
For the For the For the For the
Year Ended Year Ended Year Ended Year Ended
October 31, 1999 October 31, 1998 October 31, 1999 October 31, 1998
---------------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C>
From Operations:
Net investment income (loss) $ (1,546,937) $ (1,206,170) $ (10,625) $ (12,385)
Net realized gain (loss) from security
and other related transactions 25,105,695 (5,366,049) (112,024) (106,357)
Net realized gain (loss) from foreign
currency related items (1,672) 0 16 0
Net change in unrealized appreciation
(depreciation) from investments and
foreign currency related items 49,843,000 (38,365,672) 516,319 (160,610)
------------- ------------- ------------- -----------
Net increase (decrease) in net assets
resulting from operations 73,400,086 (44,937,891) 393,686 (279,352)
------------- ------------- ------------- -----------
From Dividends and Distributions:
Dividends from net investment income 0 0 (1,664) 0
Distributions from realized gains 0 0 0 0
------------- ------------- ------------- -----------
Net decrease in net assets from
dividends and distributions 0 0 (1,664) 0
------------- ------------- ------------- -----------
From Capital Share Transactions:
Proceeds from sale of shares 32,672,892 44,664,142 0 1,915,476
Reinvested dividends and distributions 0 0 471 0
Net asset value of shares redeemed (63,557,835) (23,423,489) (321,988) (456,972)
------------- ------------- ------------- -----------
Net increase (decrease) in net assets
from capital share transactions (30,884,943) 21,240,653 (321,517) 1,458,504
------------- ------------- ------------- -----------
Net increase (decrease) in net assets 42,515,143 (23,697,238) 70,505 1,179,152
Net Assets:
Beginning of year 194,163,769 217,861,007 1,180,152 1,000
------------- ------------- ------------- -----------
End of year $ 236,678,912 $ 194,163,769 $ 1,250,657 $ 1,180,152
============= ============= ============= ===========
Undistributed Net Investment Income: $ 0 $ 0 $ 17,721 $ 1,662
============= ============= ============= ===========
</TABLE>
See Accompanying Notes to Financial Statements.
31
<PAGE>
Warburg Pincus Institutional Fund, Inc. -- Value Portfolio
Financial Highlights
(For a Share of the Portfolio Outstanding Throughout Each Period)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1999 1998 1997**
------ ------- -------
<S> <C> <C> <C>
PERIOD ENDED:
Per-share data
Net asset value, beginning of period $11.53 $ 10.64 $ 10.00
------ ------- -------
Investment activities:
Net investment income 0.16 0.16 0.03
Net gains on investments and foreign currency related items
(both realized and unrealized) 1.76 0.86 0.61
------ ------- -------
Total from investment activities 1.92 1.02 0.64
------ ------- -------
Less Dividends and Distributions:
Dividends from net investment income (0.13) (0.08) 0.00
Distributions from realized capital gains 0.00 (0.05) 0.00
------ ------- -------
Total dividends and distributions (0.13) (0.13) 0.00
------ ------- -------
Net asset value, end of period $13.32 $ 11.53 $ 10.64
====== ======= =======
Total return 16.82% 9.76% 6.40%+
Ratios and Supplemental Data:
Net assets, end of period (000s omitted) $36,332 $58,910 $15,565
Ratio of expenses to average net assets .76%@ .75%@ .75%*@
Ratio of net income to average net assets 1.01% 1.27% 1.60%*
Decrease reflected in above operating expense ratios
due to waivers/reimbursments .39% .44% 1.67%*
Portfolio turnover rate 79.06% 70.74% 34.81%+
</TABLE>
- ---------
* Annualized.
@ 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 net expense ratio by .01%, .00%, and .00% for the years
ended October 31, 1999 and 1998 and the period ended October 31, 1997,
respectively. The Portfolio's operating expense ratios after reflecting
these arrangements were .75%, .75% and .75% for the years ending October
31, 1999, 1998 and the period ended October 31, 1997, respectively.
+ Non annualized.
** For the period June 30, 1997 (commencement of operations) through October
31, 1997.
See Accompanying Notes to Financial Statements.
32
<PAGE>
Warburg Pincus Institutional Fund, Inc. -- Small Company Value Portfolio
Financial Highlights
(For a Share of the Portfolio Outstanding Throughout Each Period)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1999 1998**
------- -------
<S> <C> <C>
PERIOD ENDED:
Per-share data
Net asset value, beginning of period $ 7.98 $ 10.00
------- -------
Investment activities:
Net investment income 0.01 0.03
Net losses on investments
(both realized and unrealized) (0.31) (2.05)
------- -------
Total from investment activities (0.30) (2.02)
------- -------
Less Dividends:
Dividends from net investment income (0.08) 0.00
------- -------
Net asset value, end of period $ 7.60 $ 7.98
======= =======
Total return (3.85)% (20.20)%
Ratios and Supplemental Data:
Net assets, end of period (000s omitted) $ 637 $ 1,784
Ratio of expenses to average net assets .99%@ .99%@
Ratio of net income (loss) to average net assets (.01)% .09%
Decrease reflected in above operating expense ratios
due to waivers/reimbursments 9.69% 1.65%
Portfolio turnover rate 194.20% 248.40%
</TABLE>
- -----------
** For the period October 31, 1997 (commencement of operations) through
October 31, 1998.
@ 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.
See Accompanying Notes to Financial Statements.
33
<PAGE>
Warburg Pincus Institutional Fund, Inc. -- Small Company Growth Portfolio
Financial Highlights
(For a Share of the Portfolio Outstanding Throughout Each Period)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1999 1998 1997 1996**
-------- -------- -------- -------
<S> <C> <C> <C> <C>
PERIOD ENDED:
Per-share data
Net asset value, beginning of period $ 12.89 $ 15.89 $ 12.92 $ 10.00
-------- -------- -------- -------
Investment activities:
Net investment loss (0.12) (0.08) (0.05) (0.01)
Net gains or (losses) on investments and foreign currency
related items (both realized and unrealized) 5.12 (2.92) 3.02 2.93
-------- -------- -------- -------
Total from investment activities 5.00 (3.00) 2.97 2.92
-------- -------- -------- -------
Net asset value, end of period $ 17.89 $ 12.89 $ 15.89 $ 12.92
======== ======== ======== =======
Total return 38.79% (18.88)% 22.99% 29.20%+
Ratios and Supplemental Data:
Net assets, end of period (000s omitted) $236,679 $194,164 $217,861 $96,827
Ratio of expenses to average net assets 1.00%@ .99%@ .99%@ .99%*@
Ratio of net loss to average net assets (.68)% (.54)% (.53)% (.18)%*
Decrease reflected in above operating expense ratios
due to waivers/reimbursments .19% .18% .20% .69%*
Portfolio turnover rate 107.56% 75.20% 91.59% 57.38%+
</TABLE>
- -------------
* Annualized
@ 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 net expense ratio by .01%, .00%, .00%, and .00% for the
years ended October 31, 1999, 1998 and 1997 and the period ended October
31, 1996, respectively. The Portfolio's operating expense ratios after
reflecting these arrangements were .99%, .99%, .99% and .99% for the years
ending October 31, 1999, 1998, 1997 and the period ended October 31, 1996,
respectively.
+ Non annualized
** For the period December 29, 1995 (commencement of operations) through
October 31, 1996.
See Accompanying Notes to Financial Statements.
34
<PAGE>
Warburg Pincus Institutional Fund, Inc. -- Post-Venture Capital Portfolio
Financial Highlights
(For a Share of the Portfolio Outstanding Throughout Each Period)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1999 1998**
------ ------
<S> <C> <C>
PERIOD ENDED:
Per-share data
Net asset value, beginning of period $ 8.23 $10.00
------ ------
Investment activities:
Net investment loss (0.08) (0.09)
Net gains or (losses) on investments and foreign currency
related items (both realized and unrealized) 3.14 (1.68)
------ ------
Total from investment activities 3.06 (1.77)
------ ------
Less Dividends:
Dividends from net investment income (0.01) 0.00
------ ------
Net asset value, end of period $11.28 $ 8.23
====== ======
Total return 37.25% (17.70)%
Ratios and Supplemental Data:
Net assets, end of period (000s omitted) $1,251 $1,180
Ratio of expenses to average net assets 1.25%@ 1.25%@
Ratio of net loss to average net assets (.84)% (.76)%
Decrease reflected in above operating expense ratios
due to waivers/reimbursments 7.09% 4.19%
Portfolio turnover rate 93.67% 98.89%
</TABLE>
- -------------
** For the year October 31, 1997 (commencement of operations) through October
31, 1998.
@ 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.
See Accompanying Notes to Financial Statements.
35
<PAGE>
Warburg Pincus Institutional Fund, Inc.
Notes to Financial Statements
October 31, 1999
- --------------------------------------------------------------------------------
1. Significant Accounting Policies
Warburg Pincus Institutional Fund, Inc. is an open-end management
investment company registered under the Investment Company Act of 1940, as
amended, ("the 1940 Act") and currently offers seven managed investment Funds
("Portfolios") of which four are contained in this report. The Value Portfolio
("Value"), the Small Company Value Portfolio ("Small Company Value") and the
Post-Venture Capital Portfolio ("Post-Venture Capital") are classified as
diversified, and the Small Company Growth Portfolio ("Small Company Growth") is
non-diversified (each a "Portfolio" and collectively, the "Portfolios").
Investment objectives for each Portfolio are as follows: Value seeks total
return; Small Company Value seeks long-term capital appreciation; Small Company
Growth seeks capital growth; and Post-Venture Capital seeks long-term growth of
capital.
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. If market quotations
are not readily available, securities and other assets are valued by another
method that the Board of Directors believes accurately reflects fair value. Debt
that will mature in 60 days or less is valued on the basis of amortized cost,
which approximates market value, unless the Board determines that using this
method would not reflect an investment's value.
Post-Venture Capital initially values its investments in private-equity
portfolios at cost. After that the Portfolio values these investments according
to reports from the private-equity portfolios that Abbott Capital Management,
LLC ("Abbott"), the Portfolio's sub-investment adviser, generally receives on a
quarterly basis. The Portfolio's net asset value typically will not reflect
interim changes in the values of its private-equity-portfolio investments.
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
36
<PAGE>
Warburg Pincus Institutional Fund, Inc.
Notes to Financial Statements (cont'd)
October 31, 1999
- --------------------------------------------------------------------------------
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 countries and
governments which involve certain risks in addition to those inherent in
domestic investments. Such risks generally include, among others, currency risk
(fluctuations in currency exchange rates), information risk (key information may
be inaccurate or unavailable) and political risk (expropriation, nationalization
or the imposition of capital or currency controls or punitive taxes). Other
risks of investing in foreign securities include liquidity and valuation risks.
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.
Dividends from net investment income and distributions of net realized
capital gains, if any, are declared and paid at least 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 of
1986, as amended (the "Code"), and make the requisite distributions to its
shareholders which will be sufficient to relieve it from federal income and
excise taxes.
Pursuant to an exemptive order issued by the Securities and Exchange
Commission, each Portfolio, along with other Warburg Pincus Funds can transfer
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. At
October 31, 1999, none of the Portfolios had investments in repurchase
agreements.
37
<PAGE>
Warburg Pincus Institutional Fund, Inc.
Notes to Financial Statements (cont'd)
October 31, 1999
- --------------------------------------------------------------------------------
1. Significant Accounting Policies -- (cont'd)
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
their transfer agent expense. For the year ended October 31, 1999, the
Portfolios received credits or reimbursements under this arrangement as follows:
Portfolio Amount
--------- -------
Value $ 5,122
Small Company Value 52
Small Company Growth 26,789
Post-Venture Capital 77
2. Investment Adviser, Co-Administrators and Distributor
On July 6, 1999, Credit Suisse Asset Management, LLC ("CSAM LLC") became
each Portfolios' investment adviser as a result of the acquisition of Warburg
Pincus Asset Management, Inc. ("Warburg Pincus") by Credit Suisse Group ("Credit
Suisse"). Warburg Pincus was combined with CSAM LLC, which is an indirect
wholly-owned U.S. subsidiary of Credit Suisse. For its investment advisory
services, CSAM LLC receives the following fees based on each Portfolio's average
daily net assets:
Portfolio Annual Rate
------------ ---------------------------------
Value .75% of average daily net assets
Small Company Value .90% of average daily net assets
Small Company Growth .90% of average daily net assets
Post-Venture Capital 1.10% of average daily net assets
For the year ended October 31, 1999, 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>
Value $ 365,121 $(158,857) $ 206,264 $ 0
Small Company Value 9,775 (9,775) 0 (94,383)
Small Company Growth 2,045,138 (434,248) 1,610,890 0
Post-Venture Capital 13,924 (13,924) 0 (74,508)
</TABLE>
Abbott Capital Management, LLC ("Abbott") serves as sub-investment adviser
for the Post-Venture Capital Portfolio's assets invested in U.S. or foreign
private limited partnerships or other investment funds (Private Fund
Investments). From its investment advisory fee, CSAM LLC pays Abbott a
38
<PAGE>
Warburg Pincus Institutional Fund, Inc.
Notes to Financial Statements (cont'd)
October 31, 1999
- --------------------------------------------------------------------------------
2. Investment Adviser, Co-Administrators and Distributor -- (cont'd)
quarterly fee at the annual rate of 1.00% of the value of the Portfolio's
Private Fund Investments as of the end of each calendar quarter. No compensation
is paid by the Post-Venture Capital Portfolio to Abbott for its sub-investment
advisory services.
Counsellors Fund Service, Inc, ("CFSI"), a wholly-owned subsidiary of CSAM
served as co-administrator of each Portfolio until November 1, 1999. On November
1, 1999, Credit Suisse Asset Management Securities, Inc. ("CSAMSI") replaced
CFSI as co-administrator to each Portfolio. PFPC Inc. ("PFPC"), an indirect,
wholly-owned subsidiary of PNC Bank Corp. ("PNC"), serves as each Portfolio's
co-administrator. For administrative services, CSAMSI receives a fee calculated
at an annual rate of .10% of each Portfolios' average daily net assets. For the
year ended October 31, 1999, administrative services fees were as follows:
Portfolio Co-Administration Fee
-------- ---------------------
Value $ 48,683
Small Company Value 1,086
Small Company Growth 227,237
Post-Venture Capital 1,266
For administrative services, PFPC currently receives a fee, exclusive of
out-of-pocket expenses, based on the following fee structure
Average Daily Net Assets Annual Rate
---------------------- ---------------------------------
First $500 million .10% of average daily net assets
Next $1 billion .075% of average daily net assets
Over $1.5 billion .05% of average daily net assets
For the year ended October 31, 1999, administrative service fees earned and
voluntarily waived by PFPC (including out-of-pocket expenses) were as follows:
Gross Net
Co-Administration Co-Administration
Portfolio Fee Waiver Fee
-------- ----------------- -------- -----------------
Value $ 53,110 $(33,233) $ 19,877
Small Company Value 3,609 (1,086) 2,523
Small Company Growth 231,631 0 231,631
Post-Venture Capital 4,170 (1,266) 2,904
CSAMSIalso serves as distributor of each Portfolio's shares without
compensation. Provident Distributors, Inc. will become the Fund's distributor
effective January 3, 2000.
39
<PAGE>
Warburg Pincus Institutional Fund, Inc.
Notes to Financial Statements (cont'd)
October 31, 1999
- --------------------------------------------------------------------------------
3. Line of Credit
The Portfolios, together with other Funds advised by CSAM LLC, have
established a $250 million committed, unsecured, line of credit facility
("Credit Facility") with Deutsche Bank, AG as administrative agent, State Street
Bank and Trust Company as operations agent, Bank of Nova Scotia as syndication
agent and certain other lenders, for temporary or emergency purposes primarily
relating to unanticipated Portfolio share redemptions. Under the terms of the
Credit Facility, the Funds with access to the Credit Facility pay an aggregate
committment fee at a rate of .075% per annum on the average daily balance of the
Credit Facility that is undisbursed and uncanceled during the preceeding quarter
allocated among the participating Funds in such manner as is determined by the
governing boards of the various Funds. In addition, the participating Funds will
pay interest on borrowings at the Federal funds rate plus .50%. At October 31,
1999, there were no loans outstanding for any of the Portfolios. During the year
ended October 31, 1999, the Portfolios had borrowings under the Credit Facility:
Average Daily Average Maximum Daily
Portfolio Loan Balance Interest Rate% Loan Outstanding
-------- ------------- ------------- ----------------
Small Company Value $ 3,828 5.43% $121,000
Small Company Growth 12,641 6.12% 2,767,000
Post-Venture Capital 567 5.55% 71,000
4. Investments in Securities
For the year ended October 31, 1999, purchases and sales of investment
securities (excluding short-term investments) were as follows:
Portfolio Purchases Sales
-------- ------------ ------------
Value $ 35,693,731 $ 65,741,004
Small Company Value 2,010,966 2,973,015
Small Company Growth 233,905,744 262,451,441
Post-Venture Capital 1,103,614 1,466,997
At October 31, 1999, 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:
Net Unrealized
Unrealized Unrealized Appreciation
Portfolio Appreciation Depreciation (Depreciation)
-------- ------------- ------------ ---------------
Value $ 4,943,124 $ (1,144,077) $ 3,799,047
Small Company Value 61,156 (72,206) (11,050)
Small Company Growth 72,963,759 (16,035,871) 56,924,888
Post-Venture Capital 385,258 (29,554) 355,704
40
<PAGE>
Warburg Pincus Institutional Fund, Inc.
Notes to Financial Statements (cont'd)
October 31, 1999
- --------------------------------------------------------------------------------
5. Restricted Securities
Certain Small Company Growth investments are restricted as to resale and
are valued as determined by or under the direction of the Board in good faith,
at fair value. The table below shows the acquisition dates, aggregate cost, fair
value as of October 31, 1999 and percent of net assets which the securities
represent.
<TABLE>
<CAPTION>
Percentage
Security Security Acquisition Market of Net
Portfolio Description Type Date(s) Cost Value Assets
- --------- --------------------------- -------- ------------ ---------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
Small Company Growth
Prescient Systems, Inc. Common 02/23/98 $2,000,000 $ 1,999,999 0.85%
Network Event Theater, Inc. Common 06/24/97 605,462 3,536,664 1.49%
Women.com Networks, Inc. Common 05/06/99 313,500 442,035 0.19%
06/04/98 1,500,000 6,428,571 2.72%
Southern Mineral Corp. Common 12/20/96 264,938 8,243 0.00%
Mansur Industries
8.25%, 02/23/03 Bond 08/23/99 89,447 41,600 0.02%
02/23/99 85,903 39,951 0.02%
08/23/98 82,500 38,368 0.02%
02/23/98 2,000,000 930,142 0.39%
---------- ----------
$6,941,750 $13,465,573
========== ===========
</TABLE>
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, four of which constitute the
interests in the Portfolios.
Transactions in shares of each Portfolio were as follows:
<TABLE>
<CAPTION>
Value Small Company Value
------------------------------------ ------------------------------------
For the For the For the For the
Year Ended Year Ended Year Ended Year Ended
October 31, 1999 October 31, 1998 October 31, 1999 October 31, 1998
---------------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C>
Shares sold 739,899 5,143,230 51,791 1,249,442
Shares issued to shareholders
on reinvestment of dividends
and distributions 57,158 18,726 1,948 0
Shares redeemed (3,179,428) (1,515,002) (193,379) (1,026,096)
---------- ---------- ---------- ----------
Net increase (decrease) in shares
outstanding (2,382,371) 3,646,954 (139,640) 223,346
========== ========== ========== ==========
</TABLE>
41
<PAGE>
Warburg Pincus Institutional Fund, Inc.
Notes to Financial Statements (cont'd)
October 31, 1999
- --------------------------------------------------------------------------------
6. Capital Share Transactions -- (cont'd)
<TABLE>
<CAPTION>
Small Company Growth Post-Venture Capital
------------------------------------ ------------------------------------
For the For the For the For the
Year Ended Year Ended Year Ended Year Ended
October 31, 1999 October 31, 1998 October 31, 1999 October 31, 1998
---------------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C>
Shares sold 2,255,112 2,901,804 0 189,315
Shares issued to shareholders on
reinvestment of dividends 0 0 55 0
Shares redeemed (4,095,159) (1,547,500) (32,651) (45,971)
---------- ---------- ---------- ----------
Net increase (decrease) in shares
outstanding (1,840,047) 1,354,304 (32,596) 143,344
========== ========== ========== ===========
</TABLE>
7. Liabilities
At October 31, 1999, each Portfolio had the following affiliated and
investment related liabilities:
<TABLE>
<CAPTION>
Small Company Small Company Post-Venture
Value Value Growth Capital
---------- ------------- ------------- ------------
<S> <C> <C> <C> <C>
Payable for securities purchased $ 696,192 $ 15,646 $2,300,055 $ 12,208
Administration services fee payable 3,042 55 19,262 100
Investment advisory fee payable 7,920 0 136,742 0
Payable for fund shares redeemed 0 0 593,952 0
---------- ---------- ---------- ----------
$ 707,154 $ 15,701 $3,050,011 $ 12,308
========== ========== ========== ==========
</TABLE>
8. Net Assets
At October 31, 1999, 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. Value, Small Company Growth and Post-Venture Capital
reclassified ($85), ($1,672) and $16 from accumulated net realized gain/(loss)
from foreign currency related items to undistributed net investment income.
Small Company Value and Post-Venture Capital reclassified ($28,332) and
($28,332), respectively, from accumulated net investment income to capital
contributions. Value reclassified ($7,506) from undistributed net investment
income to capital contributions and ($32,659) from accumulated net investment
income to accumulated net realized gain from security transactions. Small
Company Growth Portfolio reclassified ($1,548,609) from accumulated net
investment loss to accumulated net realized gain from security transactions.
42
<PAGE>
Warburg Pincus Institutional Fund, Inc.
Notes to Financial Statements (cont'd)
October 31, 1999
- --------------------------------------------------------------------------------
8. Net Assets -- (cont'd)
Net assets at October 31, 1999, consisted of the following:
<TABLE>
<CAPTION>
Small Company Small Company Post-Venture
Value Value Growth Capital
------------ ------------- ------------- ------------
<S> <C> <C> <C> <C>
Capital contributed, net $ 26,629,119 $ 1,175,394 $163,798,916 $ 1,095,608
Undistributed net investment income 450,480 28,233 0 17,721
Accumulated net realized gain (loss) from
security transactions 5,396,720 (574,786) 15,882,009 (218,381)
Net unrealized appreciation (depreciation)
from investments and foreign currency
related items 3,855,650 8,355 56,997,987 355,709
------------ ------------ ------------ ------------
Net assets $ 36,331,969 $ 637,196 $236,678,912 $ 1,250,657
============ ============ ============ ============
</TABLE>
9. Capital Loss Carryover
At October 31, 1999, capital loss carryovers available to offset possible
future gains of each Portfolio were as follows:
Capital Loss Carryover Expiring in
---------------------------------- Total Capital
2006 2007 Loss Carryover
-------- -------- --------------
Small Company Value $367,783 $187,598 $555,381
Post-Venture Capital 98,472 119,909 218,381
During the fiscal year ended October 31, 1999, Value and Small Company
Growth utilized $2,111,801 and $7,533,362, respectively, of capital losses.
43
<PAGE>
Warburg Pincus Institutional Fund, Inc.
Report of Independent Accountants
- --------------------------------------------------------------------------------
To the Board of Directors and Shareholders of
WARBURG, PINCUS INSTITUTIONAL FUND, INC.:
In our opinion, the accompanying statement of net assets and the related
statements of operations and of changes in net assets and the financial
highlights present fairly, in all material respects, the financial position of
Warburg, Pincus Institutional Fund, Inc. - Value Portfolio, Small Company Value
Portfolio, Small Company Growth Portfolio and Post-Venture Capital Portfolio
(all portfolios collectively referred to as the "Fund") at October 31, 1999, and
the results of each of their operations for the year then ended, the changes in
each of their net assets for each of the two years in the period then ended and
the financial highlights for each of the years (or periods) presented, in
conformity with generally accepted accounting principles. These financial
statements and financial highlights (hereafter referred to as "financial
statements") are the responsibility of the Fund's management; our responsibility
is to express an opinion on these financial statements based on our audits. We
conducted our audits of these financial statements in accordance with generally
accepted auditing standards, which require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits, which included confirmation of securities at October 31, 1999 by
correspondence with the custodians and brokers, provide a reasonable basis for
the opinion expressed above.
PricewaterhouseCoopers LLP
2400 Eleven Penn Center
Philadelphia, Pennsylvania
December 10, 1999
44
<PAGE>
ANNUAL REPORT
October 31, 1999
WARBURG, PINCUS INSTITUTIONAL FUND
VALUE PORTFOLIO
SMALL COMPANY VALUE PORTFOLIO
SMALL COMPANY GROWTH PORTFOLIO
POST-VENTURE CAPITAL PORTFOLIO
Shareholder Meeting Results
A special meeting of shareholders of the Fund was held on May 21, 1999. At the
special meeting, the following persons were elected as directors of the Fund,
constituting the entire Board of Directors: Richard H. Francis, Jack W. Fritz,
Jeffrey E. Garten, James S. Pasman, Jr., William W. Priest, Steven N. Rappaport,
Arnold M. Reichman and Alexander B. Trowbridge.
In addition, shareholders of the Fund voted on the following matters:
<TABLE>
<S> <C>
Proposal 1: Ratification of the selection of
PricewaterhouseCoopers LLP as the independent
accountants for the Fund for the fiscal year
ending October 31, 1999.
</TABLE>
Shareholders of each Portfolio also voted on the following matter:
<TABLE>
<S> <C>
Proposal 2: Approval of a new investment advisory agreement
between the Fund and Credit Suisse Asset
Management, LLC.
</TABLE>
Shareholders of the Post-Venture Capital Portfolio also voted on the following
matter:
<TABLE>
<S> <C>
Proposal 3: Approval of a new sub-investment advisory
agreement between the Fund, Credit Suisse Asset
Management, LLC and Abbott Capital Management,
LLC.
</TABLE>
<PAGE>
The voting results for the Fund and each Portfolio were as follows:
Election of Directors:
<TABLE>
<S> <C> <C>
| FOR | WITHHELD |
|Richard H. Francis 54,604,239.4770 | 26,524.0000 |
|Jack W. Fritz 54,604,239.4770 | 26,524.0000 |
|Jeffrey E. Garten 54,603,375.3200 | 27,388.1570 |
|James S. Pasman, Jr. 54,597,580.6490 | 33,182.8280 |
|William W. Priest 54,597,580.6490 | 33,182.8280 |
|Steven N. Rappaport 54,597,580.6490 | 33,182.8280 |
|Arnold M. Reichman 54,604,239.4770 | 26,524.0000 |
|Alexander B. Trowbridge 54,604,239.4770 | 26,524.0000 |
</TABLE>
Proposal 1:
<TABLE>
<S> <C>
| TOTAL NUMBER |
| OF VOTES |
|Approve 54,571,357.8628 |
|Disapprove 17,644.5940 |
|Abstain 41,761.0000 |
</TABLE>
Proposal 2:
<TABLE>
<S> <C> <C> <C> <C> <C>
| | SMALL COMPANY | SMALL COMPANY | POST-VENTURE |
| VALUE | VALUE | GROWTH | CAPITAL |
-------------- ------------- --------------- ------------
| TOTAL NUMBER | TOTAL NUMBER | TOTAL NUMBER | TOTAL NUMBER |
| OF VOTES | OF VOTES | OF VOTES | OF VOTES |
Approve | 4,268,776.8370 | 55,848.0200 | 10,271,006.1100 | 126,447.0320 |
Disapprove | 36,357.0000 | 0 | 0 | 0 |
Abstain | 38,116.0000 | 0 | 0 | 0 |
</TABLE>
Proposal 3:
<TABLE>
<S> <C>
| POST-VENTURE CAPITAL |
--------------------
| TOTAL NUMBER |
| OF VOTES |
|Approve 126,447.0320 |
|Disapprove 0 |
|Abstain 0 |
</TABLE>
<PAGE>
Warburg Pincus Institutional Fund, Inc.
Shareholder Tax Information (Unaudited)
- --------------------------------------------------------------------------------
Each Portfolio is required by Subchapter M of the Code to advise its
shareholders within 60 days of each Portfolio's fiscal year end as to the U.S.
federal tax status of dividends and distributions received by the Portfolio's
shareholders in respect of such fiscal year. During the fiscal year ended
October 31, 1999, the following dividends and distributions per share were paid
by each of the Portfolios:
Ordinary Long-term %of Ordinary Income Dividend
Income Capital Gains Qualifying for
Portfolio Per Share Per Share Dividends Received Deduction*
- -------------------- --------- ------------- ----------------------------
Payment date 12/04/98 12/04/98 1998
Value $0.1344 $0.0000 97.65
Small Company Value 0.0787 0.0000 100
Post-Venture Capital 0.0119 0.0000 100
Small Company Growth did not pay any ordinary income dividends or capital
gain distributions during the current fiscal year. Further, the above
information was provided to calendar year taxpayers on Form 1099-DIV mailed in
January of 1999. Because the fiscal year of the Portfolios is not a calendar
year, another notification will be sent with respect to calendar year 1999. The
second notification, which will reflect the amount to be used by calendar year
taxpayers on their U.S. federal income tax returns, will be made in conjunction
with Form 1099-DIV and will be mailed in January 2000.
- -------------------
* Available to Corporate Shareholders only.
45
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[WARBURG PINCUS FUNDS LOGO]
P.O. BOX 9030, BOSTON, MA 02205-9030
800-222-8977 o www.warburg.com
CREDIT SUISSE ASSET MANAGEMENT SECURITIES, INC., DISTRIBUTOR. WPINU-2-1099
