SEMIANNUAL
REPORT
June 30, 1998
WARBURG PINCUS TRUST
/ / INTERNATIONAL EQUITY PORTFOLIO
/ / SMALL COMPANY GROWTH PORTFOLIO
/ / POST-VENTURE CAPITAL PORTFOLIO
/ / GROWTH & INCOME PORTFOLIO
/ / EMERGING MARKETS PORTFOLIO
The Warburg Pincus Trust (the "Trust") Shares are not available directly to
individual investors but may be offered only through certain insurance products
and pension and retirement plans.
More complete information about the Trust, including charges and expenses and,
where applicable, the special considerations and risks associated with
international investing is provided in the Prospectus, which must precede or
accompany this document and which should be read carefully before investing. You
may obtain additional copies by calling 800-369-2728 or by writing to Warburg
Pincus, P.O. Box 4906, Grand Central Station, New York, NY 10163.
[LOGO]
<PAGE>
From time to time, the Portfolios' investment adviser and co-administrator may
waive some fees and/or reimburse some expenses, without which performance would
be lower. Waivers and/or reimbursements are subject to change.
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
Portfolio holdings described in this document are as of June 30, 1998; these
views and Portfolio holdings may have changed subsequent to these dates. Nothing
in this document is a recommendation to purchase or sell securities.
<PAGE>
WARBURG PINCUS TRUST -- INTERNATIONAL EQUITY PORTFOLIO
SEMIANNUAL INVESTMENT ADVISER'S REPORT -- JUNE 30, 1998
- --------------------------------------------------------------------------------
August 10, 1998
Dear Shareholder:
The objective of Warburg Pincus Trust -- International Equity Portfolio (the
"Portfolio") is long-term capital appreciation. The Portfolio pursues its
objective by investing primarily in a broadly diversified portfolio of equity
securities of companies that have their principal business activities and
interests outside the U.S.
For the six months ended June 30, 1998, the Portfolio had a total return of
13.25%, vs. a return of 15.93% for the Morgan Stanley Capital International
Europe, Australasia and Far East ("EAFE") Index.* The Portfolio's one-year and
since-inception (on June 30, 1995) average annual total returns were -3.73% and
9.32%, respectively.
The reporting period saw a marked divergence in performance among foreign
equity markets. European markets showed across-the-board strength, propelled by
robust corporate profits, improved economic growth and optimism toward the
prospects for European Monetary Union. Virtually all of Europe's markets had
double-digit gains for the period in U.S. dollar terms. The performance of most
other non-U.S. markets was less inspiring. Asian-Pacific markets generally fell,
with a number falling sharply, weighed down by worries over the region's
spiraling economic difficulties. Most Latin American markets also posted losses,
while the smaller emerging markets of Eastern Europe, the Middle East and Africa
were mixed.
Warburg Pincus Trust -- International Equity Portfolio managed a healthy gain
for the period, albeit one that trailed the rise in its benchmark, the EAFE
Index. Most, if not all, of that underperformance stemmed from the Portfolio's
higher-than-index weighting in the Asia-Pacific region heading into the period.
Though the Portfolio's overweighting at the time was relatively small, virtually
any additional exposure to the region proved harmful in terms of relative
performance, particularly on an opportunity-cost basis, given the strong run-up
in European markets. (It should be noted that we reduced the Portfolio's
Asian-Pacific stake as the period progressed, based on a combination of
macroeconomic and company-specific concerns, and by period end the Portfolio was
underweighted vs. the EAFE Index.) For the same reason, the Portfolio was also
held back somewhat by its exposure to Latin America, a region not represented in
the benchmark.
At the other end of the spectrum, performance-wise, the Portfolio saw very
strong gains from its holdings in Europe, benefiting from these markets' general
upward bias and from good stock selection. Among the better performers for the
Portfolio were its holdings in France and Italy, as well as its
1
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WARBURG PINCUS TRUST -- INTERNATIONAL EQUITY PORTFOLIO
SEMIANNUAL INVESTMENT ADVISER'S REPORT -- JUNE 30, 1998 (cont'd)
- --------------------------------------------------------------------------------
Nordic stocks collectively. We increased Europe's weighting in the Portfolio
steadily through the period, reflecting our belief that the region's positive
fundamental backdrop warranted a higher level of exposure, especially viewed
from a risk-adjusted perspective. This geographical shift -- i.e., into Europe,
at the expense of Asia -- was the most noteworthy strategic move in the
Portfolio during the six months.
Looking out over the remainder of 1998 and into 1999, we see both substantial
opportunity and a fair amount of risk in foreign markets. Some of the most
promising investments continue to reside in Europe, we believe, given the
dynamics surrounding the launch of the single currency and the growing number of
positive developments on the corporate front. Particularly encouraging, with
regard to the latter, is the increasing emphasis among European corporate
managements on building shareholder value, a trend that suggests improved
efficiencies and rising per-share profitability over time. We also see pockets
of opportunity in Asia, including Japan, but are approaching these markets with
far greater degrees of caution, given the ongoing economic and political
uncertainties. The same holds for our approach to emerging markets in general.
All told, we believe the Portfolio is well positioned, with regard to both
country weightings and specific holdings, to benefit from the type of investment
environment we foresee in the coming months, and we look forward to a positive
performance.
<TABLE>
<S> <C> <C>
Richard H. King Harold W. Ehrlich Vincent J. McBride
Co-Portfolio Manager Co-Portfolio Manager Co-Portfolio Manager
</TABLE>
- ------------------
* The Morgan Stanley Capital International Europe, Australasia and Far East
Index is an unmanaged index (with no defined investment objective) of
international equities that includes reinvestment of dividends, and is the
exclusive property of Morgan Stanley & Co. Incorporated.
2
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WARBURG PINCUS TRUST -- SMALL COMPANY GROWTH PORTFOLIO
SEMIANNUAL INVESTMENT ADVISER'S REPORT -- JUNE 30, 1998
- --------------------------------------------------------------------------------
August 10, 1998
Dear Shareholder:
The objective of Warburg Pincus Trust -- Small Company Growth Portfolio (the
"Portfolio") is capital growth. The Portfolio pursues its objective by investing
in a portfolio of equity securities of small-sized domestic companies.
For the six months ended June 30, 1998, the Portfolio had a total return of
4.79%, vs. returns of 5.46% for the Russell 2000 Growth Index* and 6.45% for the
Lipper Small Cap Funds Index.** The Portfolio's one-year and since-inception (on
June 30, 1995) average annual total returns were 18.13% and 19.98%,
respectively.
The reporting period saw respectable gains, in general, for the types of
smaller-company, growth-oriented stocks in which the Portfolio invests.
Supporting the group were these companies' continued strong earnings growth,
both in absolute terms and relative to larger companies, and the stocks'
relatively attractive valuations. One factor that weighed on the group's
performance, though, at least in relative terms, was concern stemming from the
Asian financial crisis. Asia's difficulties triggered a general "flight to
quality" among investors, which worked to the advantage of large-cap, blue-chip
stocks at the expense of smaller issues. The net result was solid gains for
smaller-company stocks, albeit gains that lagged those of large-cap companies.
Warburg Pincus Trust -- Small Company Growth Portfolio managed a healthy gain
for the period, though it trailed its benchmark by a narrow margin. In terms of
performance attribution, the Portfolio benefited from strong showings from
holdings in a number of areas, particularly business services, technology and
financial services. At the other end of the spectrum, performance-wise, were the
Portfolio's energy and oil-services stocks, which were hurt by concerns related
to falling oil prices and additional supply/demand worries.
There were few significant changes in the Portfolio during the six months in
terms of its sector concentrations. The Portfolio remained broadly diversified
throughout, with slight overweightings in the consumer, financial and
business-services areas. This reflected our ability to find attractive
opportunities across a range of industries, as well as our desire to temper the
Portfolio's volatility by avoiding overconcentration in any one area.
Looking ahead, our outlook on the prospects for small-cap growth stocks
remains largely positive, although investors' general bias toward large-cap
3
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WARBURG PINCUS TRUST -- SMALL COMPANY GROWTH PORTFOLIO
SEMIANNUAL INVESTMENT ADVISER'S REPORT -- JUNE 30, 1998 (cont'd)
- --------------------------------------------------------------------------------
issues may limit the group's relative showing in the immediate term. Still,
based on trailing and projected profits, small caps' valuations now look more
attractive vs. those of large-cap issues than they have in nearly a decade. This
should, ultimately, draw increasing amounts of investor attention to the small-
cap arena in the coming months, which stands to be reflected in vastly improved
relative performance. All told, we remain optimistic, and will continue to
strive to identify those companies with the best prospects for appreciation.
<TABLE>
<S> <C>
Elizabeth B. Dater Stephen J. Lurito
Co-Portfolio Manager Co-Portfolio Manager
</TABLE>
- ------------------
* The Russell 2000 Growth Index is an unmanaged index (with no defined
investment objective) of those securities in the Russell 2000 Index with a
greater-than-average growth orientation. The Russell 2000 Growth Index
includes reinvestment of dividends, and is compiled by Frank Russell Company.
** The Lipper Small Cap Funds Index is an equal-weighted performance index,
adjusted for capital-gains distributions and income dividends, of the
largest qualifying funds in this investment objective, and is compiled by
Lipper Analytical Services Inc.
4
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WARBURG PINCUS TRUST -- POST-VENTURE CAPITAL PORTFOLIO
SEMIANNUAL INVESTMENT ADVISER'S REPORT -- JUNE 30, 1998
- --------------------------------------------------------------------------------
August 10, 1998
Dear Shareholder:
The objective of Warburg Pincus Trust -- Post-Venture Capital Portfolio (the
"Portfolio") is long-term growth of capital. The Portfolio pursues its objective
by investing primarily in equity securities of companies considered to be in
their post-venture-capital stage of development.
For the six months ended June 30, 1998, the Portfolio had a return of 13.20%,
vs. a return of 5.46% for the Russell 2000 Growth Index* and 23.98% for the
Warburg Pincus/Venture Economics Post-Venture Capital Index (PVCI).** The
Portfolio's respective one-year and since-inception (on September 30, 1996)
average annual total returns as of June 30 were 24.10% and 13.71%.
The period was a positive one for the types of stocks targeted by the
Portfolio, i.e., stocks of relatively young companies within the rapid-growth
industries favored by venture capitalists (e.g., the software, biotechnology and
communications industries). These stocks were, though, highly volatile, due to a
somewhat uncertain near-term earnings environment. Against this backdrop, the
Portfolio had a solid return, buoyed by its computer and consumer stocks in
particular. It did, however, lag the PVCI, due primarily to its underweighting
in certain large-cap Internet stocks that powered the index's advance. We viewed
most of these as expensive, and avoided them in favor of stocks we deemed to
have more reasonable valuations relative to their long-term prospects.
We made few noteworthy changes to the Portfolio's industry exposure during the
period. We maintained a large presence in the technology area, where venture
capital has long played a critical role in the launch of breakthrough products
and services and should continue to do so. According to a recent study,***
research & development spending by venture-backed companies is growing at a rate
about three times that of Fortune 500 companies. In terms of specific
strategies, we continued to emphasize domestically oriented technology
companies, given the relatively difficult pricing environment faced by many
export-dependent companies. One stock we added was New Era of Networks, a
developer of application integration software products. The company, which went
public last June, focuses primarily on financial institutions, though it
continues to expand into other areas as well.
Elsewhere, we maintained a significant weighting in the telecommunications &
equipment sector during the period. We believe this area will continue to
benefit from an ever-expanding Internet, ongoing worldwide deregulation of the
telecommunications industry and a high degree of innovation generally. Our
particular focus remained on competitive local exchange carriers ("CLECs"), such
as Intermedia Communications of Florida, which compete
5
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WARBURG PINCUS TRUST -- POST-VENTURE CAPITAL PORTFOLIO
SEMIANNUAL INVESTMENT ADVISER'S REPORT -- JUNE 30, 1998 (cont'd)
- --------------------------------------------------------------------------------
directly with regional "Baby Bell" companies. Our other telecommunications
holdings during the period included Paging Network. The company, a recipient of
venture-capital financing in its start-up phase, went public in 1991 and
currently owns and operates the most extensive wireless communications network
in the U.S.
The rest of the Portfolio was invested across a wide range of sectors,
including the financial, business-services, health-care and communications &
media areas. We also maintained a position in consumer-type stocks, where our
largest area of concentration at the end of the period was the leisure &
entertainment sector. This area increasingly stands to benefit from a maturing
population's growing levels of discretionary income, a trend that has not gone
unnoticed by venture-capital investors.
Going forward, our outlook on the collective prospects for stocks of post-
venture companies (which we define as those that have received venture-capital
financing either during the early stages of the company's existence or the
development of a new product or service, or as part of a restructuring or
recapitalization -- the investment of venture-capital financing, distribution of
securities to venture-capital investors or initial public offering, whichever is
later, having been made within 10 years of the Portfolio's investment) remains
positive, and our efforts will continue to be devoted to identifying those with
the best long-term growth potential. We would caution investors, however, that
investing in venture-backed companies entails potential risks (e.g., that of
heightened volatility) along with the potential for significant long-term
rewards. Because of the nature of the Portfolio's holdings and certain
strategies it may use, an investment in the Portfolio should only be considered
for the aggressive portion of an investor's assets and may not be appropriate
for all investors. Investors should review the Prospectus carefully before
purchase.
<TABLE>
<S> <C>
Elizabeth B. Dater Stephen J. Lurito
Co-Portfolio Manager Co-Portfolio Manager
</TABLE>
- ------------------
* The Russell 2000 Growth Index is an unmanaged index (with no defined
investment objective) of those securities in the Russell 2000 Index with a
greater-than-average growth orientation. It includes reinvestment of
dividends, and is compiled by Frank Russell Company.
** The Warburg Pincus/Venture Economics Post-Venture Capital Index is a
market-valued index that measures the performance of public stocks of
companies that received financing from a U.S. venture capital or buyouts
limited partnership prior to or during public trading status, without
dividends. Companies remain in the index for 10 years from the date of first
inclusion or until the price data is no longer available, for example, due
to a merger or acquisition. The index is calculated monthly and has a first
index period of January 1986 with the index initialized at 100. The index is
a joint project of Venture Economics and Warburg Pincus Asset Management,
Inc.
*** Eighth Annual Economic Impact of Venture Capital Study, National Venture
Capital Association/Coopers & Lybrand L.L.P. (U.S.A.), 1998.
6
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WARBURG PINCUS TRUST -- GROWTH & INCOME PORTFOLIO
SEMIANNUAL INVESTMENT ADVISER'S REPORT -- JUNE 30, 1998
- --------------------------------------------------------------------------------
August 10, 1998
Dear Shareholder:
The objective of Warburg Pincus Trust -- Growth & Income Portfolio (the
"Portfolio") is long-term growth of capital and income and a reasonable current
return. The Portfolio pursues its objective by investing primarily in equity
securities.
For the six months ended June 30, 1998, the Portfolio had a gain of 12.39%,
vs. gains of 17.70% for the S&P 500 Index* and 11.62% for the Lipper Growth &
Income Funds Index.** The Portfolio's total return since its inception (on
October 31, 1997) as of June 30 was 16.77%.
The U.S. stock market as a whole had strong performance over the six months.
Asia-related earnings uncertainties notwithstanding, investor sentiment toward
equities remained favorable through the period, supported by a continued healthy
economy and subdued inflation. The Portfolio benefited from this positive
sentiment, and from good performances from its financial, telecommunications and
consumer holdings in particular. Stocks that hampered the Portfolio's return
included its energy and tobacco-related holdings, which lagged the broader
market during the period.
We made few noteworthy changes to the Portfolio in terms of sector allocation
during the period. We remained well-diversified by industry, seeing little
incentive, from a risk-vs.-reward perspective, to heavily overweight specific
areas, given continued narrow stock valuations across and within sectors. That
said, we continued to select stocks strictly on a bottom-up basis, emphasizing
companies with good cash-flow generation and potential for significant earnings
growth.
Our noteworthy areas of concentration included the financial-services
industry, a weighting we increased over the course of the period. We found
several attractive buying opportunities here during the six months, mostly in
the insurance area. Elsewhere in the financial industry, we maintained a limited
exposure to banking stocks, since we viewed most as expensive. We did, however,
find several issues we deemed to be attractively priced, including First Chicago
NBD, which we purchased in the wake of its announced merger with Banc One Corp.
In our view, the synergies created by the merger should support the stock's
long-term performance.
We also maintained a significant weighting in the consumer area during the six
months. This included exposure to the consumer-durables sector, where our
largest position throughout the period was Chrysler. The stock contributed
positively to the Portfolio's performance for the period, rising
7
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WARBURG PINCUS TRUST -- GROWTH & INCOME PORTFOLIO
SEMIANNUAL INVESTMENT ADVISER'S REPORT -- JUNE 30, 1998 (cont'd)
- --------------------------------------------------------------------------------
sharply on news that it would merge with Daimler-Benz. We also continued to have
a significant weighting in the retail sector. Our noteworthy moves here included
selling our position in Wal-Mart, after it hit our sell target, and adding
Consolidated Stores, a brand-name retailer targeting cost-conscious consumers.
Another noteworthy sector weighting during the period was the capital-
equipment area, where, as elsewhere, we remained focused on companies with
strong cash flows and good prospects for earnings improvements. Our largest
position here at the end of the period was ITT Industries, a designer and
manufacturer of products used in the automotive, fluid technology and defense &
electronics areas.
The rest of the Portfolio was invested across of broad range of industries,
including technology, where we found the best risk-adjusted growth prospects in
the computer sector; health care, where we focused primarily on managed-care
companies with good pricing flexibility and steady enrollment growth; and
telecommunications & equipment, where we held both long-distance and local
service providers.
Looking ahead to the next several months and beyond, we believe the stock
market will continue to be characterized by generally lofty equity valuations
and considerable volatility. As a result, we will continue to place a premium on
risk management, holding only those stocks we deem to have good longer-term
risk-adjusted performance potential.
Brian S. Posner
Portfolio Manager
- ------------------
* The S&P 500 Index is an unmanaged index (with no defined investment
objective) of common stocks, includes reinvestment of dividends, and is a
registered trademark of Standard & Poor's Corporation.
** The Lipper Growth & Income Funds Index is an equal-weighted index, adjusted
for capital gains and income dividends, of the largest qualifying funds in
this investment objective, and is compiled by Lipper Analytical Services,
Inc.
8
<PAGE>
WARBURG PINCUS TRUST -- EMERGING MARKETS PORTFOLIO
SEMIANNUAL INVESTMENT ADVISER'S REPORT -- JUNE 30, 1998
- --------------------------------------------------------------------------------
August 10, 1998
Dear Shareholder:
The objective of Warburg Pincus Trust -- Emerging Markets Portfolio (the
"Portfolio") is long-term growth of capital. The Portfolio pursues its objective
by investing primarily in equity securities of non-United States issuers
consisting of companies in emerging securities markets.
For the six months ended June 30, 1998, the Portfolio had a total return of
- -4.70%, vs. returns of -18.87% for the Morgan Stanley Capital International
Emerging Markets Free Index* and -17.00% for the Lipper Emerging Markets Funds
Index.**
The six months was an extremely difficult period for emerging markets, due in
large measure to the continued economic and financial instability in the
Asian-Pacific region. The region's woes cast a pall over emerging markets
collectively, with investors largely shunning the group in favor of the
developed markets of the U.S. and Europe. While a handful of emerging markets
managed gains for the period, notably several from the Middle East and Eastern
Europe, the vast majority fell, and many fell sharply, with losses in excess of
20% in dollar terms more the rule than the exception.
Set against this backdrop, the Portfolio lost 4.70% over the six months, a
disappointing showing in absolute terms but a strong one vs. relevant
benchmarks. The Portfolio's relative strength was attributable to a combination
of timely regional allocations -- specifically, we had relatively limited
exposure to the hard-hit Southeast Asian markets through the period, and a
relatively large weighting in the Middle East and Eastern Europe (e.g., in
Israel and Poland, two markets that posted solid gains) -- and to the fact that
we had an atypically large cash weighting in January, a particularly bad month
for the asset class. (The Portfolio commenced operations on December 31, 1997.)
Looking ahead, our near- to immediate-term outlook on emerging markets is
somewhat guarded, given the still-unsettled environment in Asia and investors'
general wariness toward the asset class. Our longer-term outlook remains
positive, however. Most of these markets, after their recent setbacks, are now
significantly below their all-time highs, and stock valuations have been driven
down to, in many cases, record-low levels. We believe this has created a
substantial amount of opportunity for selective, risk-tolerant investors who are
willing to take a longer-term (i.e., minimum two- to three-year) outlook.
Accordingly, we continue to devote our efforts to identifying
9
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WARBURG PINCUS TRUST -- EMERGING MARKETS PORTFOLIO
SEMIANNUAL INVESTMENT ADVISER'S REPORT -- JUNE 30, 1998 (cont'd)
- --------------------------------------------------------------------------------
those businesses with the best individual prospects, and believe those efforts
will prove rewarding to shareholders over time.
As ever, though, the potential for short-term volatility remains, given the
nature of emerging markets, and we would encourage investors to approach the
asset class with a realistic view of the potential risks involved.
<TABLE>
<S> <C>
Richard H. King Vincent J. McBride
Co-Portfolio Manager Co-Portfolio Manager
</TABLE>
- ------------------
* The Morgan Stanley Capital International Emerging Markets Free Index is a
market-capitalization-weighted index of emerging-market countries determined
by Morgan Stanley. The index includes only those countries open to non-local
investors.
** The Lipper Emerging Markets Funds Index is an equal-weighted performance
index, adjusted for capital-gains distributions and income dividends, of the
largest qualifying funds in this investment objective, and is compiled by
Lipper Analytical Services Inc.
10
<PAGE>
WARBURG PINCUS TRUST -- INTERNATIONAL EQUITY PORTFOLIO
STATEMENT OF NET ASSETS
June 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER
OF
SHARES VALUE
------ -----
<S> <C> <C>
COMMON STOCKS (89.6%)
Argentina (1.7%)
Telefonica de Argentina SA ADR 96,000 $ 3,114,000
YPF SA ADR 122,300 3,676,644
------------
6,790,644
------------
Australia (0.1%)
Foodland Associated, Ltd. 87,900 533,434
------------
Austria (3.9%)
Bank Austria AG 67,800 5,514,652
OMV AG 28,850 3,864,384
V.A. Technologie AG 26,385 3,282,799
Wienerberger Baustoffindustrie AG 11,860 2,869,036
------------
15,530,871
------------
Belgium (0.6%)
Dexia Belgium 14,930 2,246,922
------------
Brazil (0.5%)
Companhia de Saneamento Basico do Estado de Sao Paulo 6,604,200 793,685
Telecomunicacoes Brasileiras SA ADR 9,700 1,059,119
------------
1,852,804
------------
China (0.6%)
Cosco Pacific, Ltd. 4,607,000 1,649,906
Guangshen Railway Co., Ltd. 3,828,068 508,856
Guangshen Railway Co., Ltd. ADR 52,247 355,933
------------
2,514,695
------------
Denmark (2.5%)
International Service System AS Class B 38,100 2,216,076
SAS Danmark AS 121,400 2,436,113
Tele Danmark AS Class B 10,700 1,026,898
Unidanmark AS 47,700 4,286,537
------------
9,965,624
------------
Finland (1.8%)
Huhtamaki OY Class I 89,900 5,145,120
Rauma OY 102,460 2,100,937
------------
7,246,057
------------
</TABLE>
See Accompanying Notes to Financial Statements.
11
<PAGE>
WARBURG PINCUS TRUST -- INTERNATIONAL EQUITY PORTFOLIO
STATEMENT OF NET ASSETS (cont'd)
June 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
COMMON STOCKS (cont'd)
NUMBER
OF
SHARES VALUE
------ -----
<S> <C> <C>
France (10.7%)
Banque Nationale de Paris 62,400 $ 5,098,486
Compagnie de Saint Gobain 26,339 4,883,538
Elf Aquitaine SA 45,000 6,326,465
Lagardere Groupe SCA 109,879 4,574,331
PSA Peugeot Citroen 22,500 4,837,885
Rhone-Poulenc Ltd. Class A 105,863 5,970,742
Societe Generale d'Enterprises SA 129,400 6,118,967
Total SA Class B 40,423 5,255,098
------------
43,065,512
------------
Germany (11.4%)
Commerzbank AG 105,500 4,032,897
Degussa AG 104,300 6,419,688
Fresenius Medical Care AG 45,600 2,854,689
Hannover Rueckversicherungs Gesellschaft AG 37,500 4,321,258
Hoechst AG 127,900 6,384,265
Mannesmann AG 25,040 2,540,027
Muenchener Rueckversicherung AG 16,100 7,982,970
Preussag AG 16,400 5,851,205
Viag Ag 7,770 5,251,658
------------
45,638,657
------------
Hong Kong (1.7%)
First Pacific Co., Ltd. 3,399,471 1,425,846
HSBC Holdings PLC 140,400 3,433,636
Smartone Telecommunications 858,000 2,092,796
------------
6,952,278
------------
India (0.1%)
Hindalco Industries, Ltd. 30,000 472,566
------------
Ireland (0.3%)
Greencore Group PLC 200,700 1,091,783
------------
Israel (2.1%)
Blue Square Israel Co., Ltd. ADR 115,500 1,783,031
ECI Telecommunications Limited Designs 131,250 4,971,094
Orbotech, Ltd. 47,900 1,742,363
------------
8,496,488
------------
</TABLE>
See Accompanying Notes to Financial Statements.
12
<PAGE>
WARBURG PINCUS TRUST -- INTERNATIONAL EQUITY PORTFOLIO
STATEMENT OF NET ASSETS (cont'd)
June 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
COMMON STOCKS (cont'd)
NUMBER
OF
SHARES VALUE
------ -----
<S> <C> <C>
Italy (4.1%)
Assicurazioni Generali SpA 132,000 $ 4,292,200
Seat SpA 8,283,000 3,914,219
Telecom Italia SpA 1,105,000 8,134,187
------------
16,340,606
------------
Japan (9.0%)
Advantest Corp. 74,500 4,004,539
Fujitsu, Ltd. 301,000 3,166,480
Hankyu Realty Co., Ltd. 230,000 1,012,573
Minebea Co., Ltd. 539,000 5,363,396
Nichiei Co., Ltd. 17,800 1,210,736
Orix Corp. 69,500 4,692,257
Rohm Co., Ltd. 53,000 5,441,870
Shohkoh Fund & Co., Ltd. 8,500 2,088,482
Sony Corp. 46,000 3,960,802
Takefuji Corp. 36,000 1,660,122
TDK Corp. 48,000 3,545,051
------------
36,146,308
------------
Luxembourg (0.2%)
Millicom International Cellular SA+ 19,750 864,063
------------
Mexico (0.7%)
Fomento Economico Mexicano SA de CV ADR + 68,600 2,160,900
Gruma SA de CV Class B 264,642 576,638
------------
2,737,538
------------
Netherlands (5.7%)
Hagemeyer NV 71,500 3,093,077
ING Groep NV 89,200 5,840,784
Koninklijke Pakhoed NV 112,000 3,633,825
Philips Electronics NV 64,400 5,413,574
Vedior NV 72,628 2,052,929
Vendex NV 73,600 2,767,842
------------
22,802,031
------------
New Zealand (1.1%)
Brierley Investments, Ltd. 6,116,500 3,048,013
Fletcher Challenge Building 1,041,350 1,297,331
------------
4,345,344
------------
</TABLE>
See Accompanying Notes to Financial Statements.
13
<PAGE>
WARBURG PINCUS TRUST -- INTERNATIONAL EQUITY PORTFOLIO
STATEMENT OF NET ASSETS (cont'd)
June 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
COMMON STOCKS (cont'd)
NUMBER
OF
SHARES VALUE
------ -----
<S> <C> <C>
Norway (0.8%)
Smedvig ASA ADR Class B 43,300 $ 492,538
Smedvig ASA Class B 75,000 850,325
Transocean Offshore, Inc. 44,100 1,962,450
------------
3,305,313
------------
Portugal (0.2%)
Banco Mello SA 76,000 936,834
------------
Singapore (1.0%)
Development Bank of Singapore, Ltd. 705,810 3,906,127
------------
South Korea (1.2%)
Hyundai Heavy 38,595 815,189
L.G. Electronics 202,560 1,659,722
Samsung Display Devices Co. 45,503 1,242,798
Samsung Heavy Industries Co., Ltd. 212,100 1,058,182
------------
4,775,891
------------
Spain (1.8%)
Argentaria SA 94,400 2,121,209
Endesa SA 228,100 4,998,860
------------
7,120,069
------------
Sweden (6.5%)
ABB AB Series B 293,320 4,082,599
Biora AB ADR + 102,400 2,784,000
Electrolux AB Series B 210,839 3,621,959
Ericsson LM Series B 95,200 2,781,409
Kinnevik AB Series B 55,900 1,818,952
Nordbanken Holding AB 905,789 6,644,387
SKF AB Series B 240,300 4,369,118
------------
26,102,424
------------
Switzerland (2.4%)
SAIA-Burgess Electronics AG + 4,800 1,291,131
Sulzer AG 4,975 3,926,052
Swiss Reinsurance 1,700 4,299,286
------------
9,516,469
------------
</TABLE>
See Accompanying Notes to Financial Statements.
14
<PAGE>
WARBURG PINCUS TRUST -- INTERNATIONAL EQUITY PORTFOLIO
STATEMENT OF NET ASSETS (cont'd)
June 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
COMMON STOCKS (cont'd)
NUMBER
OF
SHARES VALUE
------ -----
<S> <C> <C>
United Kingdom (16.9%)
Barclays PLC 180,500 $ 5,204,118
Bass PLC 211,100 3,955,435
British Airport Authority PLC+ 363,736 3,926,601
British Energy PLC 595,700 5,208,169
British Sky Broadcasting Group PLC 390,400 2,804,201
Cookson Group PLC 1,110,543 3,817,058
Dixons Group PLC 424,200 3,429,183
Glaxo Wellcome PLC 113,500 3,406,852
Medeva PLC 1,135,200 3,238,879
Orange PLC 833,000 8,825,614
Perpetual PLC 24,300 1,639,013
Pilkington PLC 1,878,400 3,478,863
Rolls-Royce PLC 1,202,840 4,967,173
Royal & Sun Alliance Insurance Group PLC 337,400 3,487,487
Safeway PLC 156,000 1,021,623
Standard Chartered Bank PLC 278,600 3,165,588
Williams Holdings PLC 987,403 6,383,992
------------
67,959,849
------------
TOTAL COMMON STOCKS (Cost $336,355,728) $359,257,201
------------
PREFERRED STOCK (1.9%)
Brazil (0.7%)
Companhia Vale do Rio Doce Class A 82,500 $ 1,676,235
Telecomunicacoes de Sao Paulo Cellular SA Class B 11,436,000 949,202
Telecomunicacoes do Rio de Janeiro Celular SA Class B 6,962,000 414,069
------------
3,039,506
------------
Germany (1.2%)
GEA AG 8,100 3,181,609
KSB AG 6,290 1,568,118
------------
4,749,727
------------
TOTAL PREFERRED STOCK (Cost $7,926,818) 7,789,233
------------
</TABLE>
See Accompanying Notes to Financial Statements.
15
<PAGE>
WARBURG PINCUS TRUST -- INTERNATIONAL EQUITY PORTFOLIO
STATEMENT OF NET ASSETS (cont'd)
June 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER
OF
SHARES VALUE
------ -----
<S> <C> <C>
RIGHTS/WARRANTS (0.1%)
Austria (0.0%)
Bank Austria AG Rts., 07/13/98 67,800 $ 3,513
------------
Sweden (0.1%)
Societe Europeene de Communication SA 50,310 239,723
Non-Voting Rts., 08/18/98
Societe Europeene de Communication SA 5,590 26,636
Voting Rts., 08/18/98
------------
266,359
------------
TOTAL RIGHTS/WARRANTS (Cost $0) 269,872
------------
PAR
(000)
----------
REPURCHASE AGREEMENT (8.5%)
Repurchase agreement with State Street Bank & Trust Co.
dated 06/30/98 at 5.75% to be
repurchased at $34,008,430 on 07/01/98. (Collateralized by
a pro rata amount of
U.S. Treasury Notes ranging in par values from $35,760,000
- $50,000,000,
6.875% - 8.125%, 08/15/21 - 08/15/25. Market value of
collateral is $34,683,323.)
(Cost $34,003,000) 34,003 34,003,000
------------
TOTAL INVESTMENTS AT VALUE (100.1%) (Cost $378,285,546*) 401,319,306
------------
LIABILITIES IN EXCESS OF OTHER ASSETS (0.1%) (262,413)
------------
NET ASSETS (100.0%) (applicable to 33,760,515 shares
outstanding) $401,056,893
============
NET ASSET VALUE, Offering and redemption price per share
($401,056,893 divided by 33,760,515) $ 11.88
============
</TABLE>
INVESTMENT ABBREVIATIONS
ADR = American Depository Receipt
- --------------------------------------------------------------------------------
+ Non-income producing security.
* Cost for federal income tax purposes is $379,178,353.
See Accompanying Notes to Financial Statements.
16
<PAGE>
WARBURG PINCUS TRUST -- SMALL COMPANY GROWTH PORTFOLIO
SCHEDULE OF NET ASSETS
June 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER
OF
SHARES VALUE
------ -----
<S> <C> <C>
COMMON STOCK (97.1%)
Aerospace & Defense (1.0%)
Tristar Aerospace Co. + 463,300 $ 7,181,150
------------
Banks & Savings & Loans (2.4%)
Commonwealth Bancorp, Inc. 250,000 5,734,375
Silicon Valley Bancshares + 210,200 7,481,806
Texas Regional Bancshares, Inc. Class A 150,000 4,912,500
------------
18,128,681
------------
Building & Building Materials (0.7%)
D.R. Horton, Inc. 260,300 5,433,762
------------
Business Services (11.3%)
BISYS Group, Inc. + 153,000 6,273,000
Bowne & Co., Inc. 160,000 7,200,000
Corporate Express, Inc. + 347,900 4,413,981
Hypercom Corp. + 413,000 4,130,000
On Assignment, Inc. + 185,600 6,484,400
PMT Services, Inc. + 530,000 13,481,875
Protection One, Inc. 656,200 7,177,187
QRS Corp. + 222,700 8,379,087
Robert Half International, Inc. + 182,750 10,211,156
Sterling Commerce, Inc. + 169,000 8,196,500
Technology Solutions Co. + 254,400 8,061,300
------------
84,008,486
------------
Communications & Media (4.7%)
Central European Media Enterprises, Ltd. Class A + 234,200 5,064,575
Granite Broadcasting Corp. + 321,600 3,819,000
Heftel Broadcasting Corp. + 125,600 5,620,600
Metro Networks, Inc. + 181,500 7,827,187
Outdoor Systems, Inc. + 446,063 12,489,750
------------
34,821,112
------------
Computers (10.6%)
Arbor Software Corp. + 172,200 5,413,537
Boole & Babbage, Inc. + 332,700 7,943,212
Business Objects SA ADR + 374,100 6,312,937
Cambridge Technology Partners of Massachusetts, Inc. + 152,000 8,303,000
Citrix Systems, Inc. + 215,550 14,738,231
JDA Software Group, Inc. + 193,600 8,470,000
National Instruments Corp. + 221,250 7,909,687
Radiant Systems, Inc. + 401,000 5,814,500
Tecnomatix Technologies, Ltd. + 224,500 4,490,000
Transactions Systems Architects, Inc. Class A + 243,100 9,359,350
------------
78,754,454
------------
</TABLE>
See Accompanying Notes to Financial Statements.
17
<PAGE>
WARBURG PINCUS TRUST -- SMALL COMPANY GROWTH PORTFOLIO
SCHEDULE OF NET ASSETS (cont'd)
June 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
COMMON STOCK (cont'd)
NUMBER
OF
SHARES VALUE
------ -----
<S> <C> <C>
Consumer Non-Durables (5.2%)
Central Garden & Pet Co. + 232,100 $ 7,224,112
Coinmach Laundry Corp. + 291,000 6,874,875
dELIA's, Inc. +* 379,200 5,925,000
Interface, Inc. 523,500 10,568,156
Scotts Co. Class A +** 219,800 8,187,550
------------
38,779,693
------------
Consumer Services (3.7%)
DeVry, Inc. + 414,200 9,086,512
ITT Educational Services, Inc. + 241,600 7,791,600
Pre-Paid Legal Services, Inc. + 201,200 6,350,375
Service Experts, Inc. + 20,000 690,000
Youth Services International, Inc. + 454,400 3,393,800
------------
27,312,287
------------
Electronics (5.2%)
ADE Corp. + 347,200 5,077,800
Avant! Corp. + 449,900 11,135,025
Burr-Brown Corp. + 254,400 5,342,400
Richardson Electronics, Ltd. 169,700 2,290,950
Uniphase Corp. + 82,200 5,160,619
Vitesse Semiconductor Corp. + 322,800 9,966,450
------------
38,973,244
------------
Energy (2.3%)
Chieftain International, Inc. + 273,400 6,476,162
KCS Energy, Inc. 328,100 3,752,644
Stone Energy Corp. + 197,000 7,005,813
------------
17,234,619
------------
Environmental Services (0.7%)
Casella Waste Systems, Inc. + 194,500 5,251,500
------------
Financial Services (4.2%)
Allmerica Financial Corp. 165,100 10,731,500
Amerin Corp. + 229,800 6,707,288
Legg Mason, Inc. 110,666 6,370,212
Protective Life Corp. 196,000 7,190,750
WMF Group, Ltd. + 20,366 468,418
------------
31,468,168
------------
</TABLE>
See Accompanying Notes to Financial Statements.
18
<PAGE>
WARBURG PINCUS TRUST -- SMALL COMPANY GROWTH PORTFOLIO
SCHEDULE OF NET ASSETS (cont'd)
June 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
COMMON STOCK (cont'd)
NUMBER
OF
SHARES VALUE
------ -----
<S> <C> <C>
Food, Beverages & Tobacco (0.6%)
Consolidated Cigar Holdings, Inc. + 338,900 $ 4,151,525
------------
Healthcare (8.0%)
Alternative Living Services, Inc. 264,100 7,130,700
ARV Assisted Living, Inc. + 268,200 3,352,500
Core, Inc. + 690,600 5,567,963
Mentor Corp. 219,800 5,330,150
Mid Atlantic Medical Services, Inc. + 531,200 6,108,800
MiniMed, Inc. + 160,700 8,416,663
NovaCare, Inc. + 467,100 5,488,425
ProMedeCo Management Co. + 143,300 1,468,825
Renal Care Group, Inc. + 201,700 8,887,406
Sunrise Assisted Living, Inc. + 116,500 4,004,688
VWR Scientific Products Corp. + 147,000 3,619,875
------------
59,375,995
------------
Leisure & Entertainment (5.2%)
Coach USA, Inc. + 199,700 9,111,313
Family Golf Centers, Inc. + 269,850 6,830,578
Premier Parks, Inc. + 157,000 10,460,125
Signature Resorts, Inc. + 321,800 5,309,700
Vistana, Inc. + 377,900 6,943,913
------------
38,655,629
------------
Lodging & Restaurants (1.0%)
Bob Evans Farms, Inc. 349,400 7,402,913
------------
Metals & Mining (1.0%)
Metals USA, Inc. + 434,100 7,488,225
------------
Office Equipment & Supplies (1.2%)
Miller (Herman), Inc. 381,200 9,267,925
------------
Oil Services (2.7%)
Global Industries, Ltd. + 364,000 6,142,500
Petroleum Geo-Services ADR + 335,000 10,217,500
Pride International, Inc. + 181,900 3,080,931
Southern Mineral Corp. + 176,625 607,148
------------
20,048,079
------------
</TABLE>
See Accompanying Notes to Financial Statements.
19
<PAGE>
WARBURG PINCUS TRUST -- SMALL COMPANY GROWTH PORTFOLIO
SCHEDULE OF NET ASSETS (cont'd)
June 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
COMMON STOCK (cont'd)
NUMBER
OF
SHARES VALUE
------ -----
<S> <C> <C>
Pharmaceuticals (7.3%)
Alkermes, Inc. + 341,000 $ 6,095,375
Aviron + 240,000 7,485,000
ChiRex, Inc. + 257,800 4,527,613
Gilead Sciences, Inc. + 151,300 4,851,056
PharMerica, Inc. + 570,000 6,875,625
SangStat Medical Corp. + 226,200 7,097,025
Sepracor, Inc. + 153,400 6,366,100
Serologicals Corp. + 328,800 10,603,800
------------
53,901,594
------------
Publishing (0.8%)
Central Newspapers, Inc. Class A 81,300 5,670,675
------------
Real Estate (4.9%)
Apartment Investment & Management Co. Class A REIT 155,588 6,145,726
CB Richard Ellis Services, Inc. + 212,300 7,098,781
Fairfield Communities, Inc. + 453,000 8,691,938
Trammell Crow Co. + 235,900 7,887,906
U.S. Restaurant Properties, Inc. REIT 249,850 6,761,566
------------
36,585,917
------------
Retail (5.7%)
Barnes & Noble, Inc. + 190,400 7,128,100
Borders Group, Inc. + 189,600 7,015,200
Fingerhut Companies, Inc. 252,900 8,345,700
Payless ShoeSource, Inc. + 97,100 7,155,056
Staples, Inc. + 434,100 12,561,769
------------
42,205,825
------------
Telecommunications & Equipment (4.3%)
Gilat Satellite Networks, Ltd. + 175,000 5,851,563
Intermedia Communications of Florida, Inc. + 334,600 14,032,288
McLeodUSA, Inc. Class A + 228,000 8,863,500
Teledata Communications, Ltd. + 315,400 3,489,113
------------
32,236,464
------------
Transportation (2.2%)
Heartland Express, Inc. + 279,650 5,662,913
Mark VII, Inc. + 269,800 4,856,400
Swift Transportation Co., Inc. + 311,500 6,171,594
------------
16,690,907
------------
TOTAL COMMON STOCK (Cost $576,315,381) 721,028,829
------------
</TABLE>
See Accompanying Notes to Financial Statements.
20
<PAGE>
WARBURG PINCUS TRUST -- SMALL COMPANY GROWTH PORTFOLIO
SCHEDULE OF NET ASSETS (cont'd)
June 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PAR
(000) VALUE
----- -----
<S> <C> <C>
REPURCHASE AGREEMENT (2.9%)
Repurchase agreement with State Street Bank & Trust Co.
dated 06/30/98 at 5.75% to be repurchased at
$21,618,452 on 07/01/98. (Collateralized by a pro rata
amount of U.S. Treasury Notes ranging in par values
from $35,760,000 - $50,000,000, 6.875% - 8.125%,
08/15/21 - 08/15/25. Market value of collateral is
$22,047,467.) (Cost $21,615,000) $21,615 $ 21,615,000
------------
TOTAL INVESTMENTS (100.0%) (Cost $597,930,381*) 742,643,829
------------
LIABILITIES IN EXCESS OF OTHER ASSETS (0.0%) 259,982
------------
NET ASSETS (100.0%) (applicable to 43,023,408 shares
outstanding) $742,903,811
============
NET ASSET VALUE, Offering and redemption price per share
($742,903,811 divided by 43,023,408) $ 17.27
============
</TABLE>
INVESTMENT ABBREVIATIONS
ADR = American Depository Receipt
REIT = Real Estate Investment Trust
- --------------------------------------------------------------------------------
+ Non-income producing security.
* Cost for federal income tax purposes is $598,056,484.
See Accompanying Notes to Financial Statements.
21
<PAGE>
WARBURG PINCUS TRUST -- POST-VENTURE CAPITAL PORTFOLIO
SCHEDULE OF NET ASSETS
June 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER
OF
SHARES VALUE
------ -----
<S> <C> <C>
COMMON STOCK (93.7%)
Aerospace & Defense (1.0%)
Gulfstream Aerospace Corp. + 11,100 $ 516,150
-----------
Agriculture (0.6%)
Hines Horticulture, Inc. + 31,300 344,300
-----------
Building & Building Materials (0.9%)
Comfort Systems USA, Inc. + 21,500 502,562
-----------
Business Services (10.1%)
CSG Systems International, Inc. + 12,500 585,937
LaSalle Partners, Inc. + 15,300 680,850
On Assignment, Inc. + 8,400 293,475
PMT Services, Inc. + 31,600 803,825
Protection One, Inc. 43,200 472,500
QRS Corp. + 14,700 553,087
Robert Half International, Inc. + 8,900 497,287
Technology Solutions Co. + 16,400 519,675
Trammell Crow Co. + 15,400 514,938
Young & Rubicam, Inc. + 16,100 515,200
-----------
5,436,774
-----------
Communications & Media (3.4%)
Central European Media Enterprises, Ltd. Class A + 21,000 454,125
Clear Channel Communications, Inc. + 4,760 519,435
Outdoor Systems, Inc. + 31,031 868,854
-----------
1,842,414
-----------
Computers (16.1%)
BMC Software, Inc. + 18,800 976,425
Business Objects SA ADR + 22,400 378,000
Cambridge Technology Partners of Massachusetts, Inc. + 9,200 502,550
Citrix Systems, Inc. + 12,700 868,362
JDA Software Group, Inc. + 11,900 520,625
Micrografx, Inc. + 39,100 557,175
National Instruments Corp. + 17,550 627,412
New Era of Networks, Inc. + 17,900 545,950
Object Design, Inc. + 38,700 232,200
Parametric Technology Corp. + 14,800 401,450
PeopleSoft, Inc. + 14,800 695,600
PLATINUM Technology, Inc. + 18,100 516,981
</TABLE>
See Accompanying Notes to Financial Statements.
22
<PAGE>
WARBURG PINCUS TRUST -- POST-VENTURE CAPITAL PORTFOLIO
SCHEDULE OF NET ASSETS (cont'd)
June 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
COMMON STOCK (cont'd)
NUMBER
OF
SHARES VALUE
------ -----
<S> <C> <C>
Computers (cont'd)
Radiant Systems, Inc. + 31,600 $ 458,200
Tecnomatix Technologies, Ltd. + 13,400 268,000
Transactions Systems Architects, Inc. Class A + 13,600 523,600
Vantive Corp. + 14,300 293,150
Women.ComNetworks +#+ 75,988 250,001
-----------
8,615,681
-----------
Consumer Non-Durables (3.3%)
Central Garden & Pet Co. + 17,000 529,125
Coinmach Laundry Corp. + 10,000 236,250
Jostens, Inc. 22,900 552,462
Westpoint Stevens, Inc. + 13,100 432,300
-----------
1,750,137
-----------
Consumer Services (1.0%)
Service Experts, Inc. + 15,500 534,750
-----------
Distribution (0.8%)
Transportation Components, Inc. + 44,700 419,062
-----------
Electric Utilities (0.8%)
AES Corp. + 8,500 446,781
-----------
Electronics (7.4%)
Avant! Corp. + 25,500 631,125
Cable Design Technologies, Inc. + 5,100 105,187
Linear Technology Corp. 6,000 361,875
Maxim Integrated Products, Inc. + 24,000 760,500
Sanmina Corp. + 7,500 325,312
Uniphase Corp. + 12,400 778,487
Vitesse Semiconductor Corp. + 19,400 598,975
Xilinx, Inc. + 12,500 425,000
-----------
3,986,461
-----------
Energy (1.7%)
Forcenergy, Inc. + 18,600 331,313
KCS Energy, Inc. 18,600 212,738
Stone Energy Corp. + 10,900 387,631
-----------
931,682
-----------
</TABLE>
See Accompanying Notes to Financial Statements.
23
<PAGE>
WARBURG PINCUS TRUST -- POST-VENTURE CAPITAL PORTFOLIO
SCHEDULE OF NET ASSETS (cont'd)
June 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
COMMON STOCK (cont'd)
NUMBER
OF
SHARES VALUE
------ -----
<S> <C> <C>
Environmental Services (1.9%)
American Disposal Services, Inc. + 10,900 $ 510,938
USA Waste Services, Inc. + 10,200 503,625
-----------
1,014,563
-----------
Financial Services (7.5%)
Amerin Corp. + 13,500 394,031
AMVESCAP PLC ADR 9,700 476,513
Life Re Corp. 7,200 590,400
Mid Ocean, Ltd. 6,700 525,950
Nationwide Financial Services, Inc. 10,000 510,000
Reinsurance Group of America, Inc. 8,000 410,500
Sirrom Capital Corp. 21,200 551,200
SunAmerica, Inc. 10,000 574,375
-----------
4,032,969
-----------
Food, Beverages & Tobacco (0.8%)
Consolidated Cigar Holdings, Inc. + 34,300 420,175
-----------
Healthcare (3.6%)
Advanced Paradigm, Inc. + 16,300 599,025
Mentor Corp. 15,900 385,575
Quorum Health Group, Inc. + 18,500 490,250
Steris Corp. + 7,000 445,156
-----------
1,920,006
-----------
Leisure & Entertainment (5.3%)
Coach USA, Inc. + 14,500 661,563
N2K, Inc. +#+ 25,000 490,625
Premier Parks, Inc. + 10,200 679,575
Signature Resorts, Inc. + 34,600 570,900
Vistana, Inc. + 23,600 433,650
-----------
2,836,313
-----------
Lodging & Restaurants (0.9%)
Garden Fresh Restaurant Corp. + 26,700 480,600
-----------
Metals & Mining (1.1%)
Metals USA, Inc. + 35,400 610,650
-----------
</TABLE>
See Accompanying Notes to Financial Statements.
24
<PAGE>
WARBURG PINCUS TRUST -- POST-VENTURE CAPITAL PORTFOLIO
SCHEDULE OF NET ASSETS (cont'd)
June 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
COMMON STOCK (cont'd)
NUMBER
OF
SHARES VALUE
------ -----
<S> <C> <C>
Oil Services (1.6%)
Petroleum Geo Services ADR + 22,000 $ 671,000
Pride International, Inc. + 11,200 189,700
-----------
860,700
-----------
Pharmaceuticals (5.3%)
Alkermes Inc. + 27,300 487,988
Aviron + 13,200 411,675
Gilead Sciences, Inc. + 12,800 410,400
INCYTE Pharmaceuticals, Inc. + 15,300 522,113
PharMerica, Inc. + 45,000 542,813
Watson Pharmaceuticals, Inc. + 10,300 480,881
-----------
2,855,870
-----------
Publishing (1.3%)
Petersen Companies, Inc. Class A + 18,500 474,063
Scholastic Corp. + 5,500 219,313
-----------
693,376
-----------
Real Estate (2.6%)
AMB Property Corp. 19,600 480,200
CB Richard Ellis Services, Inc. + 14,300 478,156
Fairfield Communities, Inc. + 22,000 422,125
-----------
1,380,481
-----------
Retail (7.0%)
Borders Group, Inc. + 13,900 514,300
K & G Men's Center, Inc. 12,200 276,025
Payless ShoeSource, Inc. + 5,800 427,388
Profitt's Inc. + 12,200 492,575
Rite Aid Corp. 14,900 559,681
software.Net Corp. + 5,200 99,450
Stage Stores, Inc. + 4,900 221,725
Staples, Inc. + 25,500 737,906
Whole Foods Market, Inc. + 7,100 429,550
-----------
3,758,600
-----------
</TABLE>
See Accompanying Notes to Financial Statements.
25
<PAGE>
WARBURG PINCUS TRUST -- POST-VENTURE CAPITAL PORTFOLIO
SCHEDULE OF NET ASSETS (cont'd)
June 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
COMMON STOCK (cont'd)
NUMBER
OF
SHARES VALUE
------ -----
<S> <C> <C>
Telecommunications & Equipment (5.9%)
Cisco Systems, Inc. + 6,250 $ 575,391
Intermedia Communications of Florida, Inc. + 18,200 763,263
Loral Space & Communications, Ltd. + 14,600 412,450
McLeodUSA, Inc. Class A + 14,200 552,025
Newbridge Networks Corp. + 16,600 397,363
Paging Network, Inc. + 34,600 484,400
-----------
3,184,892
-----------
Transportation (1.7%)
Greyhound Lines, Inc. + 78,000 472,875
Swift Transportation Co., Inc. + 22,400 443,800
-----------
916,675
-----------
TOTAL COMMON STOCK
(Cost $42,498,247) 50,292,624
-----------
</TABLE>
<TABLE>
<CAPTION>
PAR VALUE
--- -----
<S> <C> <C>
REPURCHASE AGREEMENT (10.4%)
Repurchase agreement with State Street Bank & Trust Co.
dated 06/30/98 at 5.75% to be repurchased at $5,599,897.07
on 07/01/98. (Collateralized by a pro rata amount of
U.S. Treasury Notes ranging in par values from $35,760,000
- $50,000,000, 6.875% - 8.125%, 08/15/21 - 08/15/25.
Market value of collateral is $5,711,023.) 5,599,980 5,599,000
-----------
TOTAL INVESTMENTS (104.2%)
(Cost $48,097,247*) 55,891,624
-----------
LIABILITIES IN EXCESS OF OTHER ASSETS (4.2%) (2,234,590)
-----------
NET ASSETS (100.0%) (applicable to 4,284,098 shares
outstanding) $53,657,034
===========
NET ASSET VALUE, Offering and redemption price per share
($53,657,034 divided by 4,284,098) $ 12.52
===========
</TABLE>
INVESTMENT ABBREVIATIONS
ADR = American Depository Receipt
- --------------------------------------------------------------------------------
+ Non-income producing security.
# Restricted security.
+ Not readily marketable security.
* Cost for federal income tax purposes is $48,176,212.
See Accompanying Notes to Financial Statements.
26
<PAGE>
WARBURG PINCUS TRUST -- GROWTH & INCOME PORTFOLIO
SCHEDULE OF NET ASSETS
June 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER
OF
SHARES VALUE
------ -----
<S> <C> <C>
COMMON STOCK (86.0%)
Aerospace & Defense (4.4%)
Gulfstream Aerospace Corp. + 2,300 $ 106,950
Litton Industries, Inc. + 750 44,250
Lockheed Martin Corp. 650 68,819
Raytheon Co. Class A 2,950 169,994
----------
390,013
----------
Banks & Savings & Loans (3.8%)
Bank of New York Co., Inc. 900 54,619
Citicorp 1,350 201,487
First Chicago NBD Corp. 900 79,762
----------
335,868
----------
Building & Building Materials (1.5%)
USG Corp. 2,400 129,900
----------
Business Services (1.4%)
Block (H&R), Inc. 850 35,806
Deluxe Corp. 900 32,231
WPP Group PLC 8,800 57,667
----------
125,704
----------
Capital Equipment (4.1%)
AlliedSignal, Inc. 1,500 66,562
American Standard Co., Inc. + 1,500 67,031
Caterpillar, Inc. 700 37,012
Emerson Electric Co. 950 57,356
Harnischfeger Industries, Inc. 1,200 33,975
ITT Industries, Inc. 2,700 100,912
----------
362,848
----------
Chemicals (2.5%)
Ferro Corp. 1,750 44,297
Rhone Poulenc SA Series A ADR 1,750 98,328
Union Carbide Corp. 1,550 82,731
----------
225,356
----------
Computers (5.2%)
Compaq Computer Corp. 6,300 178,762
International Business Machines Corp. 1,500 172,219
Sun Microsystems, Inc. + 1,700 73,844
Teradyne, Inc. + 1,400 37,450
----------
462,275
----------
</TABLE>
See Accompanying Notes to Financial Statements.
27
<PAGE>
WARBURG PINCUS TRUST -- GROWTH & INCOME PORTFOLIO
SCHEDULE OF NET ASSETS (cont'd)
June 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
COMMON STOCK (cont'd)
NUMBER
OF
SHARES VALUE
------ -----
<S> <C> <C>
Conglomerates (3.0%)
Harsco Corp. 2,300 $ 105,369
TRW, Inc. 1,600 87,400
United Technologies Corp. 850 78,625
----------
271,394
----------
Consumer Durables (4.3%)
Chrysler Corp. 3,200 180,400
Ford Motor Co. 2,100 123,900
Maytag Corp. 650 32,094
Philips Electronics NV 600 51,000
----------
387,394
----------
Consumer Non-Durables (2.3%)
Premark International, Inc. 3,200 103,200
Rubbermaid, Inc. 2,100 69,694
Unilever NV 450 35,522
----------
208,416
----------
Electronics (1.0%)
Dallas Semiconductor Corp. 900 27,900
Motorola, Inc. 900 47,306
National Semiconductor Corp. 1,100 14,506
----------
89,712
----------
Energy (5.8%)
British Petroleum Co. PLC ADR 2,711 239,246
Burlington Resources, Inc. 1,800 77,512
Occidental Petroleum Corp. 2,600 70,200
Total SA ADR 2,000 130,750
----------
517,708
----------
Environmental Services (1.3%)
USA Waste Services, Inc. 2,400 118,500
----------
Financial Services (10.3%)
American Express Co. 400 45,600
Associates First Capital Corp. Class A 514 39,514
Fannie Mae 1,400 85,050
FINOVA Group, Inc. 1,450 82,106
Freddie Mac 1,100 51,769
Lehman Brothers Holdings, Inc. 750 58,172
MBIA, Inc. 1,700 127,287
</TABLE>
See Accompanying Notes to Financial Statements.
28
<PAGE>
WARBURG PINCUS TRUST -- GROWTH & INCOME PORTFOLIO
SCHEDULE OF NET ASSETS (cont'd)
June 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
COMMON STOCK (cont'd)
NUMBER
OF
SHARES VALUE
------ -----
<S> <C> <C>
Financial Services (cont'd)
Provident Companies, Inc. 1,550 $ 53,475
Terra Nova (Bermuda) Holdings, Ltd. Class A 1,150 36,081
The PMI Group, Inc. 3,550 260,481
Travelers Group, Inc. 600 36,375
Travelers Property Casualty Corp. 900 38,587
----------
914,497
----------
Food, Beverages & Tobacco (4.7%)
Anheuser-Busch Companies, Inc. 2,850 134,484
Corn Products International, Inc. + 1,450 49,119
Keebler Foods Co. + 2,150 59,125
Philip Morris Companies, Inc. 2,000 78,750
Ralston Purina Group 400 46,725
Sara Lee Corp. 850 47,547
----------
415,750
----------
Healthcare (6.3%)
Baxter International, Inc. 1,750 94,172
Foundation Health Systems, Inc. Class A + 2,400 63,300
Tenet Healthcare Corp. + 1,650 51,562
Trigon Healthcare, Inc. + 3,050 110,372
United HealthCare Corp. 1,800 114,300
Wellpoint Health Networks, Inc. + 1,700 125,800
----------
559,506
----------
Industrial Manufacturing & Processing (1.5%)
UNOVA, Inc. 6,300 135,450
----------
Leisure & Entertainment (1.7%)
Polaroid Corp. 4,350 154,697
----------
Metals & Mining (0.7%)
Alumax, Inc. 261 12,104
Aluminum Company of America 750 49,453
----------
61,557
----------
Office Equipment & Supplies (0.4%)
Pitney Bowes, Inc. 800 38,500
----------
Oil Services (0.9%)
Noble Drilling Corp. + 1,850 44,516
R & B Falcon Corp. + 1,431 32,376
----------
76,892
----------
</TABLE>
See Accompanying Notes to Financial Statements.
29
<PAGE>
WARBURG PINCUS TRUST -- GROWTH & INCOME PORTFOLIO
SCHEDULE OF NET ASSETS (cont'd)
June 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
COMMON STOCK (cont'd)
NUMBER
OF
SHARES VALUE
------ -----
<S> <C> <C>
Pharmaceuticals (1.9%)
Merck & Co., Inc. 1,250 $ 167,188
----------
Publishing (0.5%)
Donnelley (R.R.) & Sons, Inc. 900 41,175
----------
Real Estate (0.5%)
Equity Residential Properties Trust REIT 900 42,694
----------
Retail (6.7%)
Consolidated Stores Corp. + 2,400 87,000
Federated Department Stores, Inc. + 3,650 196,416
May Department Stores Co. 1,300 85,150
Neiman-Marcus Group, Inc. + 950 41,266
Payless ShoeSource, Inc. + 628 46,276
Profitt's Inc. + 950 38,356
Rite Aid Corp. 300 11,269
Sears Roebuck and Co. 1,500 91,594
----------
597,327
----------
Telecommunications & Equipment (6.1%)
ALLTEL Corp. 600 27,900
Ameritech Corp. 1,800 80,775
AT&T Corp. 2,200 125,675
Bell Atlantic Corp. 3,000 136,875
BellSouth Corp. 1,100 73,838
Loral Space & Communications, Ltd. + 1,400 39,550
SBC Communications, Inc. 1,400 56,000
----------
540,613
----------
Transportation (1.1%)
Burlington Northern Santa Fe Corp. 500 49,094
CSX Corp. 1,000 45,500
----------
94,594
----------
Utilities-Electric (2.1%)
Allegheny Energy, Inc. 1,850 55,731
American Electric Power Co., Inc. 1,000 45.375
Illinova Corp. 1,100 33,000
Wisconsin Energy Corp. 1,800 54,675
----------
188,781
----------
TOTAL COMMON STOCK (Cost $7,276,309) 7,654,309
----------
</TABLE>
See Accompanying Notes to Financial Statements.
30
<PAGE>
WARBURG PINCUS TRUST -- GROWTH & INCOME PORTFOLIO
SCHEDULE OF NET ASSETS (cont'd)
June 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER
OF
SHARES VALUE
------ -----
<S> <C> <C>
PREFERRED STOCK (1.6%)
Capital Equipment (0.7%)
Ingersoll-Rand Co. Series G 0.78% (Convertible 5/15/01),
PRIDES 3,100 $ 62,388
----------
62,388
----------
Communications & Media (0.7%)
AirTouch Communications, Inc. Series B 6% (Convertible)
(Callable 08/16/99 @ $35.96) 1,278 61,664
----------
61,664
----------
Real Estate (0.2%)
Equity Residential Properties Series G 7.25%
(Convertible) (Callable 09/15/02 @ $25.91) REIT 800 19,400
----------
TOTAL PREFERRED STOCK (Cost $136,196) 143,452
----------
<CAPTION>
PAR
(000)
-----
<S> <C> <C>
BONDS (0.8%)
Diamond Offshore Drilling, Inc. 3.75%, 2/15/07 40 46,400
National Semiconductor Corp. 6.50%, 10/01/02 30 27,525
----------
TOTAL CONVERTIBLE BONDS (Cost $78,571) 73,925
----------
REPURCHASE AGREEMENT (12.8%)
Repurchase agreement with State Street Bank & Trust Co.
dated 06/30/98 at 5.75% to be repurchased at $1,142,182
on 07/01/98. Collateralized by a pro rata amount of
U.S. Treasury Notes ranging in par values from
$35,760,000 - $50,000,000, 6.875% - 8.125%,
08/15/21 - 08/15/25. Market value of collateral is
$1,164,849.) (Cost $1,142,000) 1,142 1,142,000
----------
TOTAL INVESTMENTS (101.2%) (Cost $8,633,076*) 9,013,686
----------
LIABILITIES IN EXCESS OF OTHER ASSETS (1.2%) (111,876)
----------
NET ASSETS (100.0%) (applicable to 766,903 shares
outstanding) $8,901,810
==========
NET ASSET VALUE, Offering and redemption price per share
($8,901,810 divided by 766,903) $ 11.61
==========
</TABLE>
INVESTMENT ABBREVIATIONS
ADR = American Depository Receipt
REIT = Real Estate Investment Trust
PRIDES = Preferred Redeemable Increased Dividends Equity Security
- --------------------------------------------------------------------------------
+ Non-income producing security.
* Also cost for federal income tax purposes.
See Accompanying Notes to Financial Statements.
31
<PAGE>
WARBURG PINCUS TRUST -- EMERGING MARKETS PORTFOLIO
SCHEDULE OF NET ASSETS
June 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
------ -----
<S> <C> <C>
COMMON STOCK (72.0%)
Argentina (4.1%)
Banco de Galicia & Buenos Aires SA ADR 600 $ 10,950
Telefonica de Argentina SA ADR 300 9,731
YPF SA ADR 820 24,651
----------
45,332
----------
Australia (0.3%)
Novus Petroleum, Ltd. 2,500 3,096
----------
Brazil (4.8%)
CIA de Saneamento Basico do Estado de Sao Paulo 137,300 16,501
Companhia de Eletricidad do Estado da Bahia 309,000 11,782
Telecomunicacoes Brasileiras SA 115,090 9,155
Uniao de Bancos Brasileriros SA GDR 500 14,750
----------
52,188
----------
Chile (4.1%)
Banco de Santander Chile ADR 1,900 24,462
Supermercados Unimarc SA ADR 2,700 20,925
----------
45,387
----------
China (2.3%)
Cosco Pacific, Ltd. 54,000 19,339
Guangshen Railway Co., Ltd. ADR 900 6,131
----------
25,470
----------
Croatia (1.5%)
Pliva GDR 1,000 16,175
----------
Greece (4.7%)
Hellenic Petroleum SA + 1,950 15,925
STET Hellas Telecomunications SA ADR + 860 35,690
----------
51,615
----------
Honk Kong (6.3%)
First Pacific Co., Ltd. 40,000 16,777
HSBC Holdings PLC 800 19,565
Smartone Telecommunications 5,000 12,196
Wing Hang Bank, Ltd. 15,000 20,036
----------
68,574
----------
India (1.5%)
State Bank of India, Ltd. GDR 1,400 16,520
----------
</TABLE>
See Accompanying Notes to Financial Statements.
32
<PAGE>
WARBURG PINCUS TRUST -- EMERGING MARKETS PORTFOLIO
SCHEDULE OF NET ASSETS (cont'd)
June 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
------- ----------
COMMON STOCK (cont'd)
SHARES VALUE
------ -----
<S> <C> <C>
Indonesia (0.9%)
P.T. Telekomunikasi Indonesia ADR 1,700 $ 9,881
----------
Israel (8.1%)
Blue Square Israel Co., Ltd. ADR 1,191 18,386
ECI Telecommunications, Ltd. 550 20,831
Formula Systems, Ltd. ADR + 100 3,488
Formula Systems, Ltd. + 100 3,498
Orbotech, Ltd. 960 34,920
Teva Pharmaceutical Industries, Ltd. ADR 208 7,319
----------
88,442
----------
Kazakhstan (2.9%)
Hurricane Hydrocarbons, Ltd. + (USA) 800 3,850
Hurricane Hydrocarbons, Ltd. + (CAN) 5,700 27,521
----------
31,371
----------
Luxembourg (1.6%)
Millicom International Cellular SA ADR 400 17,500
----------
Mexico (9.3%)
Cintra SA 28,000 25,862
Consorcio Hogar SA de CV Series B + 16,000 14,244
Fomento Economico Mexicano SA de CV ADR + 800 25,200
Grupo Industrial Durango SA ADR 1,540 13,764
Grupo Industrial Saltillo SA de CV 5,000 16,693
Panamerican Beverages, Inc. Class A 200 6,288
----------
102,051
----------
Poland (2.8%)
Bank Slaski SA 453 30,399
----------
Portugal (2.3%)
Banco Mello SA 800 9,861
Mota e Companhia SA 900 15,201
----------
25,062
----------
Russia (0.8%)
LUKoil Holding + 1,100 9,405
----------
</TABLE>
See Accompanying Notes to Financial Statements.
33
<PAGE>
WARBURG PINCUS TRUST -- EMERGING MARKETS PORTFOLIO
SCHEDULE OF NET ASSETS (cont'd)
June 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
COMMON STOCK (cont'd)
SHARES VALUE
------ -----
<S> <C> <C>
Singapore (4.4%)
DBS Land, Ltd. 8,000 $ 6,629
Development Bank of Singapore, Ltd. 4,500 24,904
Keppel Bank 11,000 9,050
Keppel Land Ltd. 8,000 7,340
----------
47,923
----------
South Africa (0.8%)
Sappi, Ltd. + 2,400 9,066
----------
South Korea (2.0%)
L.G. Electronics 30 246
Samsung Display Devices co. 244 6,664
Samsung Heavy Industries Co., Ltd. 3,080 15,366
----------
22,276
----------
Thailand (2.4%)
Hana Microelectronics Public Co., Ltd. 9,800 25,021
Siam Cement Co., Ltd. 200 965
----------
25,986
----------
Turkey (1.7%)
Turkiye Is Bankasi AS Class C 206,125 8,318
Yapi Ve Kredi Bankasi AS 386,640 9,869
----------
18,187
----------
United Kingdom (2.4%)
London Forfaiting Co. PLC 1,700 7,729
Standard Chartered Bank PLC 1,600 18,180
----------
25,909
----------
TOTAL COMMON STOCKS (Cost $911,065) $ 787,815
----------
PREFERRED STOCK (9.6%)
Brazil (8.1%)
Companhia Vale do Rio Doce Class A 300 6,095
Petroleo Brasileiro SA 78,900 14,667
Telecomunicacoes do Parna SA 54,000 13,540
Telerj Celullar 470,000 27,953
Telesp Celular SA 310,000 25,730
----------
87,985
----------
</TABLE>
See Accompanying Notes to Financial Statements.
34
<PAGE>
WARBURG PINCUS TRUST -- EMERGING MARKETS PORTFOLIO
SCHEDULE OF NET ASSETS (cont'd)
June 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
------ -----
<S> <C> <C>
PREFERRED STOCK (cont'd)
Russia (0.3%)
LUKoil Holding 800 $ 2,960
----------
South Korea (1.2%)
LG Electronics 1,700 3,702
Samsung Display Devices Co. 900 9,636
----------
13,338
----------
TOTAL PREFERRED STOCK (Cost $128,589) 104,283
----------
RIGHTS AND WARRANTS (0.0%)
Brazil (0.0%)
Telecomunicacoes do Parana SA Rts., 07/08/98 1,824 0
----------
TOTAL RIGHTS AND WARRANTS (Cost $0) 0
----------
</TABLE>
<TABLE>
<CAPTION>
PAR
(000)
-----
<S> <C> <C>
CORPORATE BONDS (2.4%)
Philippines (1.3%)
Metro Pacific Capital 2.50%, 4/11/03 18 14,294
----------
South Korea (1.1%)
Ssangyong Refining Co., Ltd. 3.75%, 12/31/08 15 11,700
----------
TOTAL CORPORATE BONDS (Cost $23,172) 25,994
----------
REPURCHASE AGREEMENTS (18.5%)
Repurchase agreement with State Street Bank & Trust Co.
dated 06/30/98 at 5.75% to be repurchased at $202,032 on
07/01/98. (Collateralized by a pro rata amount of U.S.
Treasury Notes ranging in par values from
$35,760,000 - $50,000,000, 6.875% - 8.125%,
08/15/21 - 08/15/25. Market value of collateral is
$202,042.) (Cost $202,000) 202 202,000
----------
TOTAL INVESTMENTS (102.5%) (Cost $1,264,826*) 1,120,092
LIABILITIES IN EXCESS OF OTHER ASSETS (2.5%) (27,352)
----------
NET ASSETS (100.0%) (applicable to 114,679 shares
outstanding) $1,092,740
==========
NET ASSET VALUE, Offering and redemption price per share
($1,092,740 divided by 114,679) $ 9.53
==========
</TABLE>
INVESTMENT ABBREVIATIONS
ADR = American Depository Receipt
GDR = Global Depository Receipt
- --------------------------------------------------------------------------------
+ Non-income producing security.
* Also cost for federal income tax purposes.
See Accompanying Notes to Financial Statements.
35
<PAGE>
WARBURG PINCUS TRUST
STATEMENTS OF OPERATIONS
For the Six Months Ended June 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INTERNATIONAL SMALL COMPANY POST-VENTURE GROWTH & EMERGING
EQUITY GROWTH CAPITAL INCOME MARKETS
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
------------- ------------- ------------ --------- ---------
<S> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends $ 4,857,748 $ 1,220,301 $ 44,008 $ 36,991 $ 15,508
Interest 610,689 1,130,557 94,237 18,982 7,952
Foreign taxes withheld (473,704) 0 0 (1,131) (2,393)
----------- ----------- ---------- -------- --------
Total investment income 4,994,733 2,350,858 138,245 54,842 21,067
----------- ----------- ---------- -------- --------
EXPENSES:
Investment advisory 1,878,255 3,184,985 255,988 18,095 5,431
Administrative services 401,191 682,035 40,958 6,528 1,443
Audit 9,025 8,529 8,529 5,951 5,951
Custodian/Sub-custodian 153,480 64,150 16,882 15,555 1,019
Directors 1,006 927 893 860 893
Insurance 2,283 3,273 271 (570) 330
Interest 743 1,092 62 26 0
Legal 16,756 16,733 1,767 1,456 1,488
Offering/Organizational costs 6,170 6,149 13,566 14,774 12,397
Printing 4,807 5,813 4,358 2,966 1,699
Registration 50 (8) (33) 0 50
Transfer agent 704 1,640 1,548 406 318
Miscellaneous 16,039 8,119 2,784 656 1,483
----------- ----------- ---------- -------- --------
2,490,509 3,983,437 347,573 66,703 32,502
Less fees waived, expenses
reimbursed and transfer
agent offsets (8,773) (15,388) (60,867) (42,577) (24,899)
----------- ----------- ---------- -------- --------
Total expenses 2,481,736 3,968,049 286,706 24,126 7,603
----------- ----------- ---------- -------- --------
Net investment income
(loss) 2,512,997 (1,617,191) (148,461) 30,716 13,464
----------- ----------- ---------- -------- --------
NET REALIZED AND UNREALIZED GAIN
FROM INVESTMENTS AND FOREIGN
CURRENCY RELATED ITEMS:
Net realized gain from
security and other related
transactions 17,818,003 16,147,062 505,667 66,183 76,543
Net realized gain (loss) from
foreign currency related
items 6,550,347 0 0 (51) (3,776)
Net change in unrealized
appreciation (depreciation)
from investments and foreign
currency related items 18,465,886 17,659,559 4,369,405 312,614 (144,748)
----------- ----------- ---------- -------- --------
Net realized and
unrealized gain (loss)
from investments and
foreign currency related
items 42,834,236 33,806,621 4,875,072 378,746 (71,981)
----------- ----------- ---------- -------- --------
Net increase (decrease) in net
assets resulting from operations $45,347,233 $32,189,430 $4,726,611 $409,462 $(58,517)
=========== =========== ========== ======== ========
</TABLE>
See Accompanying Notes to Financial Statements.
36
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
37
<PAGE>
WARBURG PINCUS TRUST
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C> <C>
INTERNATIONAL EQUITY
PORTFOLIO
-------------------------------------
FOR THE
SIX MONTHS
ENDED FOR THE
JUNE 30, 1998 YEAR ENDED
(UNAUDITED) DECEMBER 31, 1997
------------- -----------------
FROM OPERATIONS:
Net investment income (loss) $ 2,512,997 $ 2,371,553
Net realized gain (loss) from security and other related
transactions 17,818,003 (18,668,797)
Net realized gain (loss) from foreign currency related
items 6,550,347 11,010,785
Net change in unrealized appreciation (depreciation) from
investments and foreign currency related items 18,465,886 (7,070,165)
------------ ------------
Net increase (decrease) in net assets resulting from
operations 45,347,233 (12,356,624)
------------ ------------
FROM DISTRIBUTIONS:
Dividends from net investment income 0 (305,296)
Distributions in excess of net investment income 0 0
Return of capital 0 0
Distributions in excess of realized capital gains 0 (21,970,160)
------------ ------------
Net decrease in net assets from distributions 0 (22,275,456)
------------ ------------
FROM CAPITAL SHARE TRANSACTIONS:
Proceeds from sale of shares 175,167,292 169,935,030
Reinvested dividends 0 22,275,452
Net asset value of shares redeemed (166,686,614) (108,567,703)
------------ ------------
Net increase in net assets from capital share
transactions 8,480,678 83,642,779
------------ ------------
Net increase in net assets 53,827,911 49,010,699
NET ASSETS:
Beginning of period 347,228,982 298,218,283
------------ ------------
End of period $401,056,893 $347,228,982
============ ============
Undistributed net investment income $ 8,160,544 $ (902,800)
============ ============
</TABLE>
See Accompanying Notes to Financial Statements.
38
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
EMERGING MARKETS
SMALL COMPANY GROWTH POST-VENTURE CAPITAL GROWTH & INCOME PORTFOLIO
PORTFOLIO PORTFOLIO PORTFOLIO -------------------
- --------------------------------- --------------------------------- ----------------------------------- FOR THE PERIOD
FOR THE FOR THE FOR THE FOR THE PERIOD DECEMBER 31, 1997
SIX MONTHS SIX MONTHS SIX MONTHS OCTOBER 31, 1997 (COMMENCEMENT OF
ENDED FOR THE ENDED FOR THE ENDED (COMMENCEMENT OF OPERATIONS) THROUGH
JUNE 30, 1998 YEAR ENDED JUNE 30, 1998 YEAR ENDED JUNE 30, 1998 OPERATIONS) THROUGH JUNE 30, 1998
(UNAUDITED) DECEMBER 31, 1997 (UNAUDITED) DECEMBER 31, 1997 (UNAUDITED) DECEMBER 31, 1997 (UNAUDITED)
- ------------- ----------------- ------------- ----------------- ------------- ------------------- -------------------
<S> <C> <C> <C> <C> <C> <C>
$ (1,617,191) $ (2,695,081) $ (148,461) $ (230,112) $ 30,716 $ 5,697 $ 13,464
16,147,062 1,317,196 505,667 (179,000) 66,183 (8,068) 76,543
0 0 0 (51) 0 (3,776)
17,659,559 80,858,786 4,369,405 3,246,410 312,614 67,978 (144,748)
- ------------ ------------ ----------- ----------- ---------- ---------- ----------
32,189,430 79,480,901 4,726,611 2,837,298 409,462 65,607 (58,517)
- ------------ ------------ ----------- ----------- ---------- ---------- ----------
0 0 0 (4,291) 0 (5,697) 0
0 0 0 (129) 0 0 0
0 0 0 0 0 (4,497) 0
0 0 0 0 0 0 0
- ------------ ------------ ----------- ----------- ---------- ---------- ----------
0 0 0 (4,420) 0 (10,194) 0
- ------------ ------------ ----------- ----------- ---------- ---------- ----------
207,173,244 473,863,814 56,731,558 67,627,302 7,225,905 1,927,534 1,150,269
0 0 0 4,420 0 10,194 0
(162,852,519) (226,348,615) (38,321,324) (52,343,943) (726,698) 0 (112)
- ------------ ------------ ----------- ----------- ---------- ---------- ----------
44,320,725 247,515,199 18,410,234 15,287,779 6,499,207 1,937,728 1,150,157
- ------------ ------------ ----------- ----------- ---------- ---------- ----------
76,510,155 326,996,100 23,136,845 18,120,657 6,908,669 1,993,141 1,091,640
666,393,657 339,397,557 30,520,189 12,399,532 1,993,141 0 1,100
- ------------ ------------ ----------- ----------- ---------- ---------- ----------
$742,903,812 $666,393,657 $53,657,034 $30,520,189 $8,901,810 $1,993,141 $1,092,740
============ ============ =========== =========== ========== ========== ==========
$ 0 $ 0 $ 0 $ 0 $ 30,665 $ 0 $ 9,688
============ ============ =========== =========== ========== ========== ==========
</TABLE>
See Accompanying Notes to Financial Statements.
39
<PAGE>
WARBURG PINCUS TRUST -- INTERNATIONAL EQUITY PORTFOLIO
FINANCIAL HIGHLIGHTS
(For a Share of the Portfolio Outstanding Throughout Each Period)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE PERIOD
FOR THE SIX FOR THE YEAR ENDED JUNE 30, 1995
MONTHS ENDED DECEMBER 31, (COMMENCEMENT OF
JUNE 30, 1998 ------------------- OPERATIONS) THROUGH
(UNAUDITED) 1997 1996 DECEMBER 31, 1995
------------- ---- ---- -------------------
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.49 $ 11.48 $ 10.65 $ 10.00
-------- -------- -------- -------
Income from Investment Operations:
Net Investment Income 0.08 0.10 0.00 0.03
Net Gain (Loss) from Securities and
Foreign Currency Related Items (both
realized and unrealized) 1.31 (0.37) 1.06 0.70
-------- -------- -------- -------
Total From Investment Operations 1.39 (0.27) 1.06 0.73
-------- -------- -------- -------
Less Distributions:
Dividends from Net Investment Income 0.00 (0.01) (0.06) (0.01)
Distributions in Excess of Net
Investment Income 0.00 0.00 (0.10) (0.07)
Distributions from Realized Gains 0.00 0.00 (0.06) 0.00
Distributions in Excess of Realized
Gains 0.00 (0.71) (0.01) 0.00
-------- -------- -------- -------
Total Distributions 0.00 (0.72) (0.23) (0.08)
-------- -------- -------- -------
NET ASSET VALUE, END OF PERIOD $ 11.88 $ 10.49 $ 11.48 $ 10.65
======== ======== ======== =======
Total Return 13.25%+ (2.26)% 9.98% 7.30%+
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (000s) $401,057 $347,229 $298,218 $64,537
Ratios to average daily net assets:
Operating expenses 1.33%*@ 1.36%@ 1.36%@ 1.44%*
Net investment income 1.34%* 0.66% 0.64% 0.48%*
Decrease reflected in above operating
expense ratios due to
waivers/reimbursements 0.00% 0.00% 0.04% 0.77%*
Portfolio Turnover Rate 105.04%* 78.65% 30.82% 8.31%+
</TABLE>
- --------------------------------------------------------------------------------
@ Interest earned on uninvested cash balances is used to offset portions of
transfer agent expense. These arrangements resulted in a reduction to the
Portfolios' expenses by .01%, .01% and .00% for the period ending June 30,
1998, and for the years ended December 31, 1997 and 1996, respectively. The
Portfolios' operating expense ratio after reflecting these arrangements were
1.32%, 1.35% and 1.36% for the period ending June 30, 1998, and for the years
ended December 31, 1997 and 1996, respectively.
+ Non-Annualized.
* Annualized.
See Accompanying Notes to Financial Statements.
40
<PAGE>
WARBURG PINCUS TRUST -- SMALL COMPANY GROWTH PORTFOLIO
FINANCIAL HIGHLIGHTS
(For a Share of the Portfolio Outstanding Throughout Each Period)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE PERIOD
FOR THE SIX FOR THE YEAR ENDED JUNE 30, 1995
MONTHS ENDED DECEMBER 31, (COMMENCEMENT OF
JUNE 30, 1998 ------------------- OPERATIONS) THROUGH
(UNAUDITED) 1997 1996 DECEMBER 31, 1995
------------- -------- -------- -------------------
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 16.48 $ 14.25 $ 12.51 $ 10.00
-------- -------- -------- -------
Income from Investment Operations:
Net Investment Loss (0.03) (0.07) (0.06) (0.01)
Net Gain on Securities (both realized
and unrealized) 0.82 2.30 1.80 2.52
-------- -------- -------- -------
Total From Investment Operations 0.79 2.23 1.74 2.51
-------- -------- -------- -------
NET ASSET VALUE, END OF PERIOD $ 17.27 $ 16.48 $ 14.25 $ 12.51
======== ======== ======== =======
Total Return 4.79%+ 15.65% 13.91% 25.10%+
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (000s) $742,904 $666,394 $339,398 $97,445
Ratios to average daily net assets:
Operating expenses 1.13%*@ 1.15%@ 1.16%@ 1.25%*
Net investment loss (0.46)%* (0.56)% (0.66)% (0.36)%*
Decrease reflected in above operating
expense ratios due to
waivers/reimbursements 0.00% 0.00% 0.01% 0.25%*
Portfolio Turnover Rate 61.04%* 92.45% 101.50% 34.25%+
</TABLE>
- --------------------------------------------------------------------------------
@ Interest earned on uninvested cash balances is used to offset portions of
transfer agent expense. These arrangements resulted in a reduction to the
Portfolios' expenses by .01%, .01% and .00% for the period ending June 30,
1998, and for the years ended December 31, 1997 and 1996, respectively. The
Portfolios' operating expense ratio after reflecting these arrangements were
1.12%, 1.14% and 1.16% for the period ending June 30, 1998, and for the years
ended December 31, 1997 and 1996, respectively.
+ Non-annualized.
* Annualized.
See Accompanying Notes to Financial Statements.
41
<PAGE>
WARBURG PINCUS TRUST -- POST-VENTURE CAPITAL PORTFOLIO
FINANCIAL HIGHLIGHTS
(For a Share of the Portfolio Outstanding Throughout Each Period)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE PERIOD
FOR THE SIX SEPTEMBER 30, 1996
MONTHS ENDED FOR THE (COMMENCEMENT OF
JUNE 30, 1998 YEAR ENDED OPERATIONS) THROUGH
(UNAUDITED) DECEMBER 31, 1997 DECEMBER 31, 1996
------------- ----------------- -------------------
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 11.06 $ 9.76 $ 10.00
------- ------- -------
Income from Investment Operations:
Net Investment Loss (0.01) (0.08) 0.00
Net Gain (Loss) from Securities (both
realized and unrealized) 1.47 1.38 (0.24)
------- ------- -------
Total From Investment Operations 1.46 1.30 (0.24)
------- ------- -------
NET ASSET VALUE, END OF PERIOD $ 12.52 $ 11.06 $ 9.76
======= ======= =======
Total Return 13.20%+ 13.34% (2.40)%+
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (000s) $53,657 $30,520 $12,400
Ratios to average daily net assets:
Operating expenses 1.41%*@ 1.40%@ 1.41%*@
Net investment income (loss) (0.72)%* (0.75)% 0.80%*
Decrease reflected in above operating
expense ratios due to
waivers/reimbursements 0.29%* 0.18% 4.16%*
Portfolio Turnover Rate 41.40%* 238.12% 6.80%+
</TABLE>
- --------------------------------------------------------------------------------
@ Interest earned on uninvested cash balances is used to offset portions of
transfer agent expense. These arrangements resulted in a reduction to the
Portfolios' expenses by .01%, .00% and .01% for the period ending June 30,
1998, and for the year or period ended December 31, 1997 and 1996,
respectively. The Portfolios' operating expense ratio after reflecting these
arrangements were 1.40%, 1.40% and 1.40% for the period ending June 30, 1998,
and for the year or period ended December 31, 1997 and 1996, respectively.
+ Non-Annualized.
* Annualized.
See Accompanying Notes to Financial Statements.
42
<PAGE>
WARBURG PINCUS TRUST -- GROWTH & INCOME PORTFOLIO
FINANCIAL HIGHLIGHTS
(For a Share of the Portfolio Outstanding Throughout the Period)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE PERIOD
FOR THE SIX OCTOBER 31, 1997
MONTHS ENDED (COMMENCEMENT OF
JUNE 30, 1998 OPERATIONS) THROUGH
(UNAUDITED) DECEMBER 31, 1997
------------- -------------------
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.33 $ 10.00
------- -------
Income from Investment Operations:
Net Investment Income 0.05 0.04
Net Gain on Securities and Foreign Currency Related Items
(both realized and unrealized) 1.23 0.35
------- -------
Total From Investment Operations 1.28 0.39
------- -------
Less Distributions:
Dividends from Net Investment Income 0.00 (0.03)
Return of Capital 0.00 (0.03)
------- -------
Total Distributions 0.00 (0.06)
------- -------
NET ASSET VALUE, END OF PERIOD $ 11.61 $ 10.33
======= =======
Total Return 12.39%+ 3.89%+
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (000s) $ 8,902 $ 1,993
Ratios to average daily net assets:
Operating expenses 1.00%*@ 1.00%*@
Net investment income 1.27%* 2.08%*
Decrease reflected in above operating expense ratios due
to waivers/reimbursements 1.76%* 9.37%*
Portfolio Turnover Rate 44.32%* 64.38%*
</TABLE>
- --------------------------------------------------------------------------------
@ Interest earned on uninvested cash balances is used to offset portions of
transfer agent expense. These arrangements had no effect on the Portfolios'
expense ratio.
+ Non-Annualized.
* Annualized.
See Accompanying Notes to Financial Statements.
43
<PAGE>
WARBURG PINCUS TRUST -- EMERGING MARKETS PORTFOLIO
FINANCIAL HIGHLIGHTS
(For a Share of the Portfolio Outstanding Throughout the Period)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE SIX
MONTHS ENDED
JUNE 30, 1998
(UNAUDITED)
-------------
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.00
-------
Income from Investment Operations:
Net Investment Income 0.12
Net Gain/(Loss) from Securities and Foreign Currency
Related Items (both realized and unrealized) (0.59)
-------
Total From Investment Operations (0.47)
-------
NET ASSET VALUE, END OF PERIOD $ 9.53
=======
Total Return (4.70)%+
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (000s) $ 1,093
Ratios to average daily net assets:
Operating expenses 1.40%*@
Net investment income 2.48%*
Decrease reflected in above operating expense ratios due
to waivers/reimbursements. 4.58%*
Portfolio Turnover Rate 30.55%*
</TABLE>
- --------------------------------------------------------------------------------
@ Interest earned on uninvested cash balances is used to offset portions of the
transfer agent expense. These arrangements had no effect on the Portfolios'
expense ratio.
+ Non-annualized.
* Annualized.
See Accompanying Notes to Financial Statements.
44
<PAGE>
WARBURG PINCUS TRUST
NOTES TO FINANCIAL STATEMENTS
June 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES
Warburg Pincus Trust (the "Trust") is an open-end management investment
company registered under the Investment Company Act of 1940, as amended, and
currently offers five investment funds (the "Portfolios"): International Equity
Portfolio is a diversified investment fund that seeks long-term capital
appreciation by investing primarily in a broadly diversified portfolio of equity
securities of companies that have their principal business activities and
interests outside of the U.S.; Small Company Growth Portfolio is a
non-diversified investment fund that seeks capital growth by investing in a
portfolio of equity securities of small-sized domestic companies; Post-Venture
Capital Portfolio is a diversified investment fund that seeks long-term growth
of capital by investing primarily in equity securities, of companies considered
to be in their post-venture-capital stage of development; Growth & Income
Portfolio is a diversified investment fund that seeks long-term growth of
capital and income by investing primarily in equity securities;and Emerging
Markets Portfolio is a non-diversified investment fund that seeks long-term
growth of capital by investing primarily in equity securities of non-United
States issuers consisting of companies in emerging securities markets. Shares of
a Portfolio are not available directly to individual investors but may be
offered only to certain (a) life insurance companies for allocation to certain
of their separate accounts established for the purpose of funding variable
annuity contracts and variable life insurance contracts and (b) tax-qualified
pension and retirement plans ("Plans"), including participant-directed Plans
which elect to make a Portfolio an investment option for Plan participants.
The net asset value of each Portfolio is determined daily as of the close of
regular trading on the New York Stock Exchange. Each Portfolio's investments are
valued at market value, which is generally determined using the last reported
sales price. If no sales are reported, investments are generally valued at the
mean between the last reported bid and asked prices. In the absence of market
quotations, investments are generally valued at fair value as determined by or
under the direction of the Trust's Board of Trustees. Short-term investments
that mature in 60 days or less are valued on the basis of amortized cost, which
approximates market value.
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
45
<PAGE>
WARBURG PINCUS TRUST
NOTES TO FINANCIAL STATEMENTS (CONT'D)
June 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES -- (CONT'D)
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
gains and losses on investments in equity securities which are due to changes in
the foreign exchange rate from that which are due to changes in market prices of
equity securities. The Portfolios isolate that portion of 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 International Equity Portfolio 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 other
things, fluctuations in currency exchange rates, revaluation of currencies,
future adverse political and economic developments and the imposition of other
foreign laws and restrictions. Securities of foreign issuers are often subject
to less rigorous regulatory practices and requirements than those applied in the
United States and may also be less liquid (and their prices more volatile) than
securities of comparable U.S. companies. Moreover, individual foreign economies
may differ favorably or unfavorably from the U.S. economy in many respects.
A Portfolio's investments in securities of issuers located in less developed
countries considered to be "emerging markets" involve risks in addition to those
generally applicable to foreign securities. Investments in the securities of
issuers located in emerging markets expose the Trust to economic structures that
are generally less diverse and mature than, and to political systems that can be
expected to have less stability than, those of developed countries. The
typically small size of the markets for securities of issuers located in
emerging markets may also result in a lack of liquidity and greater price
volatility.
When a Portfolio writes or purchases a call or a put option, an amount equal
to the premium received or paid by the Portfolio is recorded as a liability or
asset, the value of which is marked-to-market daily to reflect the current
market value of the option. When the option expires, the Portfolio realizes a
gain or loss equal to the amount of the premium received or paid. When the
Portfolio exercises an option or enters into a closing transaction by purchasing
or selling an offsetting option, it realizes a gain or loss without regard to
any unrealized gain in the underlying security. The potential loss associated
with purchasing an option is limited to the premium paid, and the premium would
partially offset any gains achieved from its use.
46
<PAGE>
WARBURG PINCUS TRUST
NOTES TO FINANCIAL STATEMENTS (CONT'D)
June 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES -- (CONT'D)
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 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.
For U.S. federal income tax purposes, realized losses incurred after October
31, 1997, within the fiscal year, are deemed to arise on the first business day
of the following fiscal year. The International Equity Portfolio incurred and
elected to defer such losses of $25,346,474.
No provision is made for federal income taxes as it is the Trust's intention
to have each Portfolio continue to qualify for and elect the tax treatment
applicable to regulated investment companies under the Internal Revenue Code and
make the requisite distributions to its shareholders which will be sufficient to
relieve it from federal income and excise taxes.
Costs incurred by the Trust in connection with its organization have been
deferred and are being amortized over a period of five years from the date the
Trust commenced its operations. Costs incurred by the Portfolios in connection
with the offering of their shares have been deferred and are being amortized
over a one year period from the date each Portfolio commenced its operations.
Pursuant to an Exemptive Order issued by the Securities and Exchange
Commission, each Portfolio, along with other funds advised by Warburg Pincus
Asset Management, Inc., the Portfolios' investment adviser ("Warburg")
(collectively the "Warburg Funds"), transfers uninvested cash balances to a
Pooled Cash Account, which is invested in repurchase agreements collateralized
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.
47
<PAGE>
WARBURG PINCUS TRUST
NOTES TO FINANCIAL STATEMENTS (CONT'D)
June 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES -- (CONT'D)
The Portfolios, together with other Warburg Funds, have established committed
and uncommitted lines of credit facilities with PNC Bank, National Association
("PNC") and an uncommitted line of credit facility with Deutsche Bank, AG
("Deutsche Bank") for temporary or emergency purposes primarily relating to
unanticipated fund share redemptions. Effective December 31, 1997, the terms of
the committed line of credit with PNC were amended. Under the terms of the
committed line of credit, the Warburg Funds with access to the facility pay a
commitment fee at a rate of .07% per annum on the average daily balance of the
line of credit, which is undisbursed and uncanceled during the preceding
quarter. In addition, the Warburg Funds will pay interest on borrowings at the
bank's base rate plus .45%. Under the terms of the uncommitted lines of credit,
the Warburg funds will pay interest on borrowings at the bank's base rate plus
.55%. Aggregate borrowings for each fund under the committed and uncommitted
lines of credit with PNC may not exceed the lowest of (a) thirty-three and
one-third percent (33 1/3%) of the assets of such fund, for any Fund that does
not invest at least sixty-five percent (65%) of its assets in international
equity or fixed income securities (an "International Fund") and twenty-five
percent (25%) of the assets of any Fund that is an International Fund or (b) the
maximum amount permitted by such fund's investment policies and restrictions.
Aggregate borrowings for each fund under the uncommitted line of credit facility
with Deutsche Bank may not exceed thirty-three and one-third percent (33 1/3%)
of the net assets of such fund. At June 30, 1998 and during the six months ended
June 30, 1998, none of the Portfolios had borrowings under those lines of credit
facilities.
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 period ended June 30, 1998, the Portfolios
received credits or reimbursements under the arrangement as follows:
48
<PAGE>
WARBURG PINCUS TRUST
NOTES TO FINANCIAL STATEMENTS (CONT'D)
June 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES -- (CONT'D)
<TABLE>
<CAPTION>
PORTFOLIO AMOUNT
- --------- -------
<S> <C>
International Equity $ 8,773
Small Company Growth 15,388
Post-Venture Capital 1,084
Growth & Income 109
Emerging Markets 21
</TABLE>
2. INVESTMENT ADVISER, CO-ADMINISTRATORS AND DISTRIBUTOR
Warburg, which is indirectly controlled by Warburg, Pincus & Co., serves as
each Portfolio's investment adviser. For its investment advisory services,
Warburg receives the following fees based on each Portfolio's average daily net
assets:
<TABLE>
<CAPTION>
PORTFOLIO ANNUAL RATE
- --------- -----------
<S> <C>
International Equity 1.00% of average daily net assets
Small Company Growth 0.90% of average daily net assets
Post-Venture Capital 1.25% of average daily net assets
Growth & Income 0.75% of average daily net assets
Emerging Markets 1.25% of average daily net assets
</TABLE>
For the year or period ended June 30, 1998, investment advisory fees,
voluntary waivers and reimbursements were as follows:
<TABLE>
<CAPTION>
GROSS NET EXPENSE
FUND ADVISORY FEE WAIVER ADVISORY FEE REIMBURSEMENTS
- ---- ------------ -------- ------------ --------------
<S> <C> <C> <C> <C>
International Equity $1,878,255 $ 0 $1,878,255 $ 0
Small Company Growth 3,184,985 0 3,184,985 0
Post-Venture Capital 255,988 (39,304) 216,684 0
Growth & Income 18,095 (18,095) 0 (20,754)
Emerging Markets 5,431 (5,431) 0 (18,795)
</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").
Pursuant to the sub-advisory agreement between Abbott and Warburg, Abbott is
entitled to a quarterly fee from Warburg at the annual rate of 1.00% of the net
asset value of Private Fund Investments, which fee amount or a portion thereof
may be waived by Abbott. No compensation is paid by the Post-Venture Capital
Fund to Abbott for its sub-investment advisory services.
Counsellors Funds Service, Inc. ("CFSI"), a wholly owned subsidiary of
Warburg, and PFPC Inc. ("PFPC"), an indirect, wholly owned subsidiary of PNC
Bank Corp. ("PNC"), serve as each Portfolio's co-administrators. For its
administrative services, CFSI currently receives a fee calculated at an annual
rate of .10% of each Portfolio's average daily net assets. For the period ended
June 30, 1998, administrative services fees earned by CFSI were as follows:
49
<PAGE>
WARBURG PINCUS TRUST
NOTES TO FINANCIAL STATEMENTS (CONT'D)
June 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
2. INVESTMENT ADVISER, CO-ADMINISTRATORS AND DISTRIBUTOR -- (CONT'D)
<TABLE>
<CAPTION>
FUND CO-ADMINISTRATION FEE
- ---- ---------------------
<S> <C>
International Equity $187,825
Small Company Growth 353,887
Post-Venture Capital 20,479
Growth & Income 2,413
Emerging Markets 543
</TABLE>
For its administrative services for the Small Company Growth Portfolio and the
Post-Venture Capital Portfolio, PFPC currently receives a fee calculated at an
annual rate of .10% on each Portfolio's first $500 million in average daily net
assets, .075% on the next $1 billion in average daily net assets and .05% of
average daily net assets in excess of $1.5 billion. For the International Equity
Portfolio and the Emerging Markets Portfolio, PFPC receives a fee calculated at
an annual rate of .12% on the Portfolio's first $250 million in average daily
net assets, .10% on the next $250 million in average daily net assets, .08% on
the next $250 million in average daily net assets and .05% of the average daily
net assets over $750 million. For the Growth & Income Portfolio, PFPC receives a
fee calculated at an annual rate of .15% on the Portfolio's first $500 million
in average daily net assets, .10% on the next $1 billion in average daily net
assets and .05% of average daily net assets over $1.5 billion. For the period
ended June 30, 1998, adminstrative service fees earned and waived by PFPC were
as follows:
<TABLE>
<CAPTION>
NET
FUND CO-ADMINISTRATION FEE WAIVER CO-ADMINISTRATION FEE
- ---- --------------------- -------- ---------------------
<S> <C> <C> <C>
International Equity $213,366 $ 0 $213,366
Small Company Growth 328,148 0 328,148
Post-Venture Capital 20,479 (20,479) 0
Growth & Income 4,115 (3,619) 496
Emerging Markets 900 (652) 248
</TABLE>
Counsellors Securities Inc. ("CSI"), also a wholly owned subsidiary of
Warburg, serves as each Portfolio's distributor. No compensation is paid by the
Portfolios to CSI for its distribution services.
3. INVESTMENTS IN SECURITIES
For the period ended June 30, 1998, purchases and sales of investment
securities (excluding short-term investments) were as follows:
<TABLE>
<CAPTION>
PORTFOLIO PURCHASES SALES
- --------- ------------ ------------
<S> <C> <C>
International Equity $198,333,651 $182,017,470
Small Company Growth 279,563,502 204,413,359
Post-Venture Capital 33,359,360 17,651,535
Growth & Income 6,762,138 968,749
Emerging Markets 1,485,928 488,726
</TABLE>
50
<PAGE>
WARBURG PINCUS TRUST
NOTES TO FINANCIAL STATEMENTS (CONT'D)
June 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
At June 30, 1998, the net unrealized appreciation from investments for those
securities having an excess of value over cost and net unrealized depreciation
from investments for those securities having an excess of cost over value (based
on cost for federal income tax purposes) was as follows:
<TABLE>
<CAPTION>
NET UNREALIZED
UNREALIZED UNREALIZED APPRECIATION
PORTFOLIO APPRECIATION DEPRECIATION (DEPRECIATION)
- --------- ------------ ------------ --------------
<S> <C> <C> <C>
International Equity $ 53,673,801 $(31,532,848) $ 22,140,953
Small Company Growth 184,984,508 (40,397,163) 144,587,345
Post-Venture Capital 9,946,395 (2,230,983) 7,715,412
Growth & Income 531,091 (150,481) 380,610
Emerging Markets 45,748 (190,482) (144,734)
</TABLE>
4. FORWARD FOREIGN CURRENCY CONTRACTS
The Portfolios may enter into forward currency contracts for the purchase or
sale of a specific foreign currency at a fixed price on a future date. Risks may
arise upon entering into these contracts from the potential inability of
counterparties to meet the terms of their contracts and from unanticipated
movements in the value of a foreign currency relative to the U.S. dollar. The
Portfolios will enter into forward contracts primarily for hedging purposes. The
forward currency contracts are adjusted daily by the daily exchange rate of the
underlying currency and any gains or losses are recorded for financial statement
purposes as unrealized until the contract settlement date.
At June 30, 1998, the International Equity Portfolio had the following open
forward currency contract:
<TABLE>
<CAPTION>
FORWARD FOREIGN UNREALIZED
CURRENCY EXPIRATION CURRENCY CONTRACT CONTRACT FOREIGN EXCHANGE
CONTRACT DATE TO BE SOLD AMOUNT VALUE GAIN/LOSS
-------- ---------- ------------- ----------- ----------- ----------------
<S> <C> <C> <C> <C> <C>
Japanese Yen 08/31/98 4,640,000,000 $34,180,141 $33,741,160 $113,590
</TABLE>
5. RESTRICTED SECURITIES
A summary of the restricted securities held at June 30, 1998 follows:
<TABLE>
<CAPTION>
SECURITY ACQUISITION MARKET PERCENTAGE
PORTFOLIO DESCRIPTION DATE COST VALUE OF NET ASSETS
--------- ---------------------- ----------- ------- ------- -------------
<S> <C> <C> <C> <C> <C>
Post-Venture Capital
Portfolio N2K Inc. Series G Pfd. 04/25/97 300,000 490,625 0.91%
</TABLE>
6. EQUITY SWAP TRANSACTIONS
The International Equity Portfolio entered into a Korean equity swap agreement
dated March 21, 1997, where the Portfolio receives a quarterly payment,
representing the total return (defined as market appreciation and dividend
income) on a basket of Korean common stocks ("Common Stocks").
51
<PAGE>
WARBURG PINCUS TRUST
NOTES TO FINANCIAL STATEMENTS (CONT'D)
June 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
6. EQUITY SWAP TRANSACTIONS -- (CONT'D)
In return, the Portfolio pays quarterly the LIBOR rate (London Interbank Offered
Rate), plus 2.00% per annum on the market value of the Common Stocks ("Notional
Amount"). The Notional Amount is marked-to-market on each quarterly reset date.
In the event that the Common Stocks decline in value, the Portfolio will be
required to pay quarterly, the amount of any depreciation in value from the
Notional Amount.
During the term of the equity swap transaction, changes in the value of the
Common Stocks as compared to the Notional Amount and the difference between the
accrued interest expense and dividend income are recognized as unrealized gain
or loss. At the quarterly reset date, the change in value of the Common Stock
adjusted for accrued interest expense and dividend income, is recognized as
realized gain or loss. At June 30, 1998, the Portfolio no longer held a position
in the swap.
7. CAPITAL SHARE TRANSACTIONS
Each Portfolio is authorized to issue an unlimited number of full and
fractional shares of beneficial interest, par value of $.001 per share.
Transactions in shares of each Portfolio were as follows:
<TABLE>
<CAPTION>
SMALL COMPANY
INTERNATIONAL EQUITY PORTFOLIO GROWTH PORTFOLIO POST-VENTURE CAPITAL GROWTH & INCOME
------------------------------ --------------------------- -------------------------- -------------
FOR THE SIX FOR THE SIX FOR THE SIX FOR THE SIX
MONTHS ENDED MONTHS ENDED MONTHS ENDED MONTHS ENDED
JUNE 30, 1998 JUNE 30, 1998 JUNE 30, 1998 JUNE 30, 1998
(UNAUDITED) 1997 (UNAUDITED) 1997 (UNAUDITED) 1997 (UNAUDITED)
--------------- ------------ ------------- ----------- ------------- ---------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Shares sold 14,795,113 13,953,274 12,139,227 31,306,018 4,703,199 6,512,613 637,670
Shares issued to
shareholders on
reinvestment of
dividends 0 2,160,568 0 0 0 421 0
Shares redeemed (14,139,953) (8,988,051) (9,541,012) (14,702,808) (3,177,534) (5,025,372) (63,749)
----------- ---------- ---------- ----------- ---------- ---------- -------
Net increase in
shares outstanding 655,160 7,125,791 2,598,215 16,603,210 1,525,665 1,487,662 573,921
=========== ========== ========== =========== ========== ========== =======
<CAPTION>
EMERGING
MARKETS
-------------------
GROWTH & INCOME
----------------- DECEMBER 31, 1997
(COMMENCEMENT OF
FOR THE TWO OPERATIONS) THROUGH
MONTHS ENDED JUNE 30, 1998
DECEMBER 31, 1997 (UNAUDITED)
----------------- -------------------
<S> <C> <C>
Shares sold 191,971 113,590
Shares issued to
shareholders on
reinvestment of
dividends 1,011 0
Shares redeemed 0 (11)
------- -------
Net increase in
shares outstanding 192,982 113,579
======= =======
</TABLE>
8. LIABILITIES
At June 30, 1998, the Portfolios had the following affiliated and investment
related liabilities:
52
<PAGE>
WARBURG PINCUS TRUST
NOTES TO FINANCIAL STATEMENTS (CONT'D)
June 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INTERNATIONAL SMALL COMPANY POST-VENTURE EMERGING
EQUITY GROWTH CAPITAL GROWTH & INCOME MARKETS
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
------------- ------------- ------------ --------------- ---------
<S> <C> <C> <C> <C> <C>
Payable for securities purchased
(at value) $2,655,176 $ 1,497,213 $2,310,736 $130,384 $32,021
Investment advisory fee payable 325,227 526,483 44,841 0 0
Administration services fee
payable 32,522 58,498 3,932 663 87
</TABLE>
9. NET ASSETS
At June 30, 1998, capital contributions, undistributed net investment income,
accumulated net realized gain/(loss) from security transactions and current
period distributions have been adjusted for current period permanent book/tax
differences which arose principally from differing book/tax treatments of
foreign currency and equity swap transactions. The International Equity
Portfolio reclassified $689,884 from accumulated net realized loss from security
transactions to undistributed net investment income. The Small Company Growth
Portfolio and the Post-Venture Capital Portfolio reclassified $2,695,081 and
$230,241, respectively, from accumulated net investment loss to capital
contributions. Net investment income, net realized gain/(loss) on investments
and net assets were not affected by this reclassification.
Net assets at June 30, 1998, consisted of the following:
<TABLE>
<CAPTION>
INTERNATIONAL SMALL COMPANY POST-VENTURE EMERGING
EQUITY GROWTH CAPITAL GROWTH & INCOME MARKETS
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
------------- ------------- ------------ --------------- ----------
<S> <C> <C> <C> <C> <C>
Capital contributed, net $380,079,237 $599,336,517 $45,584,090 $8,432,438 $1,151,257
Undistributed net investment
income 8,160,544 0 0 30,665 9,688
Accumulated net realized gain
(loss) from security
transactions (10,600,860) (1,146,153) 278,567 58,115 76,543
Net unrealized appreciation
(depreciation) from
investments and foreign
currency related items 23,417,972 144,713,448 7,794,377 380,592 (144,748)
------------ ------------ ----------- ---------- ----------
Net assets $401,056,893 $742,903,812 $53,657,034 $8,801,810 $1,092,740
============ ============ =========== ========== ==========
</TABLE>
10. CAPITAL LOSS CARRYOVER
At June 30, 1998, capital loss carryovers available to offset possible future
capital gains of each Portfolio were as follows:
<TABLE>
<CAPTION>
CAPITAL LOSS
CARRYOVER EXPIRING IN
--------------------- TOTAL CAPITAL
PORTFOLIO 2004 2005 LOSS CARRYOVER
- --------- ----------- ------- --------------
<S> <C> <C> <C>
Small Company Growth $17,167,113 $ 0 $17,167,113
Post-Venture Capital 47,891 71,085 118,976
Growth & Income 0 8,068 8,068
</TABLE>
53
<PAGE>
WARBURG PINCUS TRUST
NOTES TO FINANCIAL STATEMENTS (CONT'D)
June 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
11. YEAR 2000 COMPLIANCE
Many services provided to the Portfolios and their shareholders by Warburg and
certain of its affiliates (the "Warburg Service Providers") and the Portfolios'
other service providers rely on the functioning of their respective computer
systems. Many computer systems cannot distinguish the year 2000 from the year
1900, resulting in potential difficulty in performing various calculations (the
"Year 2000 Issue"). The Year 2000 Issue could potentially have an adverse impact
on the handling of security trades, the payment of interest and dividends,
pricing, account services and other Portfolio operations.
The Warburg Service Providers recognize the importance of the Year 2000 Issue
and are taking appropriate steps necessary in preparation for the year 2000. At
this time, there can be no assurance that these steps will be sufficient to
avoid any adverse impact on the Portfolios nor can there be any assurance that
the Year 2000 Issue will not have an adverse effect on the Portfolios'
investments or on global markets or economies, generally. In addition, it has
been reported that foreign institutions have made less progress in addressing
the Year 2000 Issue than major U.S. entities, which could adversely effect the
Portfolios' foreign investments.
The Warburg Service Providers anticipate that their systems and those of the
Portfolios' other service providers will be adapted in time for the year 2000.
To further this goal, the Warburg Service Providers have coordinated a plan to
repair, adapt or replace systems that are not year 2000 compliant, and are
seeking to obtain similar representations from the Portfolios' other major
service providers. The Warburg Service Providers will be monitoring the Year
2000 Issue in an effort to ensure appropriate preparation.
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