WARBURG PINCUS GLOBAL POST VENTURE CAPITAL FUND INC, 485BPOS, 1998-02-23

WARBURG PINCUS GLOBAL POST VENTURE CAPITAL FUND INC
485BPOS, 1998-02-23

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<PAGE> 1

As filed with the U.S. Securities and Exchange Commission
on February 23, 1998

Securities Act File No. 333-08459
Investment Company Act File No. 811-07715

U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM N-1A

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [x]

Pre-Effective Amendment No. [ ]

Post-Effective Amendment No. 2 [x]

and/or

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT
OF 1940 [x]

Amendment No. 3 [x]

(Check appropriate box or boxes)

Warburg, Pincus Global Post-Venture Capital Fund, Inc.
.......................................
(Exact Name of Registrant as Specified in Charter)

466 Lexington Avenue
New York, New York 10017-3147
........................................................
(Address of Principal Executive Offices) (Zip Code)

Registrant's Telephone Number, including Area Code: (212) 878-0600

Mr. Eugene P. Grace
Warburg, Pincus Global Post-Venture Capital Fund, Inc.
466 Lexington Avenue
New York, New York 10017-3147
......................................
(Name and Address of Agent for Service)

Copy to:
Rose F. DiMartino, Esq.
Willkie Farr & Gallagher
One Citicorp Center
153 East 53rd Street
New York, New York 10022-4677

Approximate date of Proposed Public Offering: February 27, 1998

<PAGE> 2

It is proposed that this filing will become effective (check
appropriate box):

[ ] immediately upon filing pursuant to paragraph (b)

[X] on February 27, 1998 pursuant to paragraph (b)

[ ] 60 days after filing pursuant to paragraph (a)(1)

[ ] on (date) pursuant to paragraph (a)(1)

[ ] 75 days after filing pursuant to paragraph (a)(2)

[ ] on (date) pursuant to paragraph (a)(2) of Rule 485.

If appropriate, check the following box:

[ ] This post-effective amendment designates a new
effective date for a previously filed post-effective amendment.

Title of Securities being Registered: Common Stock, $.001 par value.

<PAGE> 3

WARBURG, PINCUS GLOBAL POST-VENTURE CAPITAL FUND, INC.

FORM N-1A

CROSS REFERENCE SHEET
___________________

<TABLE>
<CAPTION>
Part A
Item No. Prospectus Heading*
- -------- --------------------
<S> <C> <C>
1. Cover Page ....................... Cover Page

2. Synopsis ......................... The Funds' Expenses

3. Condensed Financial Information .. Financial Highlights

4. General Description of
Registrant...................... Cover Page; Investment
Objectives and
Policies; Special Risk
Considerations and
Certain Investment
Strategies; Investment
Guidelines; Additional
Information

5. Management of the Fund............ Management of the Funds

6. Capital Stock and Other
Securities...................... Additional Information

7. Purchase of Securities Being
Offered ........................ How to Open an Account; How to
Purchase Shares; Management
of the Funds; Net Asset Value

8. Redemption or Repurchase ......... How to Redeem and Exchange Shares

9. Pending Legal Proceedings ........ Not applicable
</TABLE>

________________________
* With respect to the Advisor Prospectus, all references to "the Funds" in
this cross reference sheet should be read as "the Fund."

<PAGE> 4

<TABLE>
<CAPTION>
Part B
Item No.
- --------
<S> <C> <C>
10. Cover Page ....................... Cover Page

11. Table of Contents ................ Contents

12. General Information and History .. Management of the Funds

13. Investment Objectives
and Policies ................... Investment Objective;
Investment Policies

14. Management of the Registrant ..... Management of the Funds

15. Control Persons and Principal
Holders of Securities .......... Management of the Funds;
See Prospectus--
"Management of the Funds"

16. Investment Advisory and
Other Services.................. Management of the Fund;
See Prospectus--
"Management of the Funds"

17. Brokerage Allocation
and Other Practices............ Investment Policies --
Portfolio Transactions See
Prospectus-- "Portfolio
Transactions and Turnover
Rate"

18. Capital Stock and Other
Securities...................... Management of the Funds--
Organization of the Fund;
See Prospectus-"General
Information"

19. Purchase, Redemption and Pricing
of Securities Being Offered .... Additional Purchase and
Redemption Information; See
Prospectus-"How to
Open an Account," "How to
Purchase Shares," "How to
Redeem and Exchange
Shares," "Net Asset Value"
</TABLE>

<PAGE> 5

<TABLE>
<S> <C> <C>
20. Tax Status ........................ Additional Information
Concerning Taxes; See
Prospectus--"Dividend,
Distributions and Taxes"

21. Underwriters ...................... Investment Policies--
Portfolio Transactions;
See Prospectus--
"Management of the Funds"

22. Calculation of Performance Data.... Determination of Performance

23. Financial Statements .............. Report of Independent
Accountants; Financial
Statements
</TABLE>

Part C

Information required to be included in Part C is set forth after the
appropriate item, so numbered, in Part C to this Registration Statement.

<PAGE> 6

PROSPECTUS

February 27, 1998

WARBURG PINCUS
CAPITAL APPRECIATION FUND

WARBURG PINCUS

GLOBAL POST-VENTURE CAPITAL FUND

WARBURG PINCUS

HEALTH SCIENCES FUND

WARBURG PINCUS

STRATEGIC VALUE FUND

LOGO
<PAGE> 7

PROSPECTUS February 27, 1998

Warburg Pincus Funds is a family of open-end mutual funds that offer investors a
variety of investment opportunities. Four funds are described in this
Prospectus:

WARBURG PINCUS CAPITAL APPRECIATION FUND seeks long-term capital appreciation by
investing primarily in a broadly diversified portfolio of equity securities of
domestic companies.

WARBURG PINCUS HEALTH SCIENCES FUND seeks capital appreciation by investing in
equity and debt securities of companies that are principally engaged in the
research, development, production or distribution of products or services
related to health care, medicine or the life sciences (collectively termed
"health sciences"). The Fund intends to invest at least 80% of its total assets
in equity securities of health sciences companies. THE FUND WILL CEASE OFFERING
ITS SHARES TO NEW INVESTORS WHEN TOTAL ASSETS REACH $150 MILLION.

WARBURG PINCUS STRATEGIC VALUE FUND seeks capital appreciation. The Fund will
pursue its investment objective by investing in companies and market sectors
that are considered to be relatively undervalued.

Because of the nature of the Global Post-Venture Capital Fund's investments and
certain strategies it may use, an investment in the Fund involves certain risks
and may not be appropriate for all investors.

NO LOAD CLASS OF COMMON SHARES
- --------------------------------------------------------------------------------

Common Shares that are "no load" is offered by this Prospectus (i) directly from
the Funds' distributor, Counsellors Securities Inc., and (ii) through various
brokerage firms including Charles Schwab & Company, Inc. Mutual Fund
OneSource(TM) Program; Fidelity Brokerage Services, Inc. FundsNetwork(TM)
Program; Jack White & Company, Inc.; and Waterhouse Securities, Inc.

LOW MINIMUM INVESTMENT
- --------------------------------------------------------------------------------

The minimum initial investment in each Fund is $2,500 ($500 for an IRA or
Uniform Transfers/Gifts to Minors Act account) and the minimum subsequent
investment is $100. Through the Automatic Monthly Investment Plan, subsequent
investment minimums may be as low as $50. See "How to Purchase Shares."

This Prospectus briefly sets forth certain information about the Funds that
investors should know before investing. Investors are advised to read this
Prospectus and retain it for future reference. Additional information about each
Fund has been filed with the Securities and Exchange Commission (the "SEC"). The
SEC maintains a Web site (http://www.sec.gov) that contains the Statement of
Additional Information, material incorporated by reference and other information
regarding the Funds. The Statement of Additional Information is also available
upon request and without charge by calling Warburg Pincus Funds at (800)
927-2874. Information regarding the status of shareholder accounts may be
obtained by calling Warburg Pincus Funds at (800) 927-2874. Warburg Pincus Funds
maintains a Web site at www.warburg.com. The Statement of Additional
Information, as amended or supplemented from time to time, bears the same date
as this Prospectus and is incorporated by reference in its entirety into this
Prospectus.

SHARES OF THE FUNDS ARE NOT DEPOSITS OR OBLIGATIONS OF OR GUARANTEED OR ENDORSED
BY ANY BANK, AND SHARES ARE NOT FEDERALLY INSURED BY THE FEDERAL DEPOSIT
INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER AGENCY.
INVESTMENTS IN SHARES OF THE FUNDS INVOLVE INVESTMENT RISKS, INCLUDING THE
POSSIBLE LOSS OF THE PRINCIPAL AMOUNT INVESTED.
- --------------------------------------------------------------------------------

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
- --------------------------------------------------------------------------------
<PAGE> 8

THE FUNDS' EXPENSES
- --------------------------------------------------------------------------------

Each of Warburg Pincus Capital Appreciation Fund (the "Capital Appreciation
Fund"), Warburg Pincus Global Post-Venture Capital Fund (the "Global
Post-Venture Capital Fund") and Warburg Pincus Strategic Value Fund (the
"Strategic Value Fund") currently offers two separate classes of shares: Common
Shares and Advisor Shares. Although authorized to offer Common Shares and
Advisor Shares, Warburg Pincus Health Sciences Fund (the "Health Sciences Fund")
currently offers only Common Shares. For a description of Advisor Shares see
"General Information." Common Shares of each Fund (except the Capital
Appreciation Fund) pay the Fund's distributor a 12b-1 fee. See "Management of
the Funds -- Distributor."

<TABLE>
<CAPTION>
Global
Capital Post-Venture Health Strategic
Appreciation Capital Sciences Value
Fund Fund Fund Fund
------------ ------------ -------- ---------
<S> <C> <C> <C> <C>
Shareholder Transaction Expenses
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price)............ 0 0 0 0
Annual Fund Operating Expenses
(as a percentage of average net assets)
Management Fees................................ .70% .40% .63% .49%
12b-1 Fees..................................... 0 .25% .25% .25%
Other Expenses................................. .31% 1.01% .71% .71%
----- ----- ----- -----
Total Fund Operating Expenses (after fee
waivers)+.................................... 1.01%* 1.66%* 1.59% 1.45%
===== ===== ===== =====
EXAMPLE
You would pay the following expenses on a
$1,000 investment, assuming (1) 5% annual
return and (2) redemption at the end of each
time period:
1 year........................................ $ 10 $ 17 $ 16 $ 15
3 years....................................... $ 32 $ 52 $ 50 $ 46
5 years....................................... $ 56 $ 90 $ 87 $ 79
10 years....................................... $124 $197 $189 $ 174
</TABLE>

- --------------------------------------------------------------------------------

+ Annual Fund Operating Expenses for the Funds are based on actual expenses for
the fiscal year ended October 31, 1997, net of any applicable fee waivers or
expense reimbursements. Absent such waivers and/or reimbursements, Management
Fees for the Global Post-Venture Capital, Health Sciences and Strategic Value
Funds would have equaled 1.25%, 1.00% and 1.00%, respectively; Other Expenses
would have equaled 6.64%, 2.17% and 2.62%, respectively; and Total Fund
Operating Expenses would have equaled 8.14%, 3.42% and 3.87%, respectively.
The investment adviser and co-administrator are under no obligation to
continue waivers and/or reimbursements.

* Operating expenses for the Capital Appreciation Fund and Global Post-Venture
Capital Fund were each reduced by .01% for the fiscal year ended October 31,
1997 as a result of certain arrangements that served to offset portions of the
Funds' transfer agent expense. After reflecting these arrangements, "Total
Fund Operating Expenses (after fee waivers)" for these Funds were 1.00% and
1.65%, respectively, for the fiscal year ended October 31, 1997.

----------------------------

The expense table shows the costs and expenses that an investor will bear
directly or indirectly as a Common Shareholder of each Fund. Certain broker-
dealers and financial institutions also may charge their clients fees in
connection with investments in a Fund's Common Shares, which fees are not
reflected in

2
<PAGE> 9

the table. The Example should not be considered a representation of past or
future expenses; actual Fund expenses may be greater or less than those shown.
Moreover, while the Example assumes a 5% annual return, each Fund's actual
performance will vary and may result in a return greater or less than 5%.
Long-term shareholders of each Fund other than the Capital Appreciation Fund may
pay more than the economic equivalent of the maximum sales charges permitted by
the National Association of Securities Dealers, Inc.

3
<PAGE> 10

FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
(FOR A COMMON SHARE OUTSTANDING THROUGHOUT EACH PERIOD)

The following information regarding each Fund for the five fiscal years ended
October 31, 1997 has been derived from information audited by Coopers & Lybrand
L.L.P., independent accountants, whose report dated December 19, 1997 is
incorporated by reference in the Statement of Additional Information. Further
information about the performance of the Funds is contained in the Funds' annual
report, dated October 31, 1997, copies of which may be obtained without charge
by calling Warburg Pincus Funds at (800) 927-2874.

CAPITAL APPRECIATION FUND

<TABLE>
<CAPTION>
For the Year Ended October 31,
--------------------------------------------------------------------------------------------------------
1997 1996 1995 1994 1993 1992 1991 1990 1989 1988
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF
PERIOD............... $17.95 $16.39 $14.29 $15.32 $13.30 $12.16 $9.78 $11.48 $9.47 $7.74
------ ------ ------ ------ ------ ------ ------ ------ ------ -----
Income from
Investment
Operations:
Net Investment Income
(Loss)............. 0.11 0.08 0.04 0.04 0.05 0.04 0.15 0.20 0.1 0.17
Net Gains (Loss) from
Securities and
Foreign Currency
Related Items (both
realized and
unrealized)........ 4.93 3.53 3.08 0.17 2.78 1.21 2.41 (1.28) 2.15 1.70
------ ------ ------ ------ ------ ------ ------ ------ ------ -----
Total from Investment
Operations......... 5.04 3.61 3.12 0.21 2.83 1.25 2.56 (1.08) 2.34 1.87
------ ------ ------ ------ ------ ------ ------ ------ ------ -----
Less Distributions
Dividends from net
investment
income............. (0.10) (0.01) (0.04) (0.05) (0.05) (0.06) (0.18) (0.21) (0.19) (0.14)
Distributions from
realized gains..... (1.80) (2.04) (0.98) (1.19) (0.76) (0.05) 0.00 (0.41) (0.14) 0.00
------ ------ ------ ------ ------ ------ ------ ------ ------ -----
Total
Distributions...... (1.90) (2.05) (1.02) (1.24) (0.81) (0.11) (0.18) (0.62) (0.33) (0.14)
------ ------ ------ ------ ------ ------ ------ ------ ------ -----
NET ASSET VALUE, END
OF PERIOD............ $21.09 $17.95 $16.39 $14.29 $15.32 $13.30 $12.16 $9.78 $11.48 $9.47
====== ====== ====== ====== ====== ====== ====== ====== ====== =====
Total Return.......... 30.98% 24.67% 24.05% 1.65% 22.19% 10.40% 26.39% (10.11%) 25.42% 24.31%
RATIOS/SUPPLEMENTAL
DATA:
Net Assets, End of
Year
(000s).............. $587,091 $407,707 $235,712 $159,346 $159,251 $117,900 $115,191 $76,537 $56,952 $29,351
Ratios to Average
Daily Net Assets:
Operating expenses... 1.01%@ 1.04%@ 1.12% 1.05% 1.01% 1.06% 1.08% 1.04% 1.10% 1.07%
Net investment
income............. .54% .59% .31% .26% .30% .41% 1.27% 2.07% 1.90% 2.00%
Decrease reflected in
above operating
expense ratios due
to waivers/
reimbursements..... .00% .00% .00% .01% .00% .01% .00% .01% .08% .91%
Portfolio Turnover
Rate................. 238.11% 170.69% 146.09% 51.87% 48.26% 55.83% 39.50% 37.10% 36.56% 33.16%
Average Commission
Rate#............... $0.0595 $0.0595 -- -- -- -- -- -- -- --
</TABLE>

- --------------------------------------------------------------------------------

@ Interest earned on uninvested cash balances is used to offset portions of
transfer agent expense. These arrangements resulted in a reduction to the
Common Shares' expenses by .01% and .01% for the years ended October 31, 1997
and 1996, respectively. The Common Shares' operating expense ratio after
reflecting these arrangements were 1.00% and 1.03% for the years ended October
31, 1997 and 1996, respectively.

# Computed by dividing the total amount of commissions paid by the total number
of shares purchased and sold during the period for which there was a
commission charged. The Average Commission Rate is not required for fiscal
periods beginning before September 1, 1995.

4
<PAGE> 11

GLOBAL POST-VENTURE CAPITAL FUND

<TABLE>
<CAPTION>
For the Period
September 30, 1996
(Commencement of
For the Operations)
Year Ended through
October 31, 1997 October 31, 1996
---------------- ------------------
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD......................................... $9.86 $10.00
------- -------
Income from Investment Operations:
Net Investment Income (Loss)................................................ (0.13) 0.00
Net Gains (Loss) from Securities and Foreign Currency Related Items (both
realized and unrealized).................................................. 1.42 (0.14)
------- -------
Total from Investment Operations............................................ 1.29 (0.14)
------- -------
Less Distributions:
Dividends from net investment income........................................ 0.00 0.00
Distributions from realized gains........................................... 0.00 0.00
------- -------
Total Distributions......................................................... 0.00 0.00
------- -------
NET ASSET VALUE, END OF PERIOD............................................... $11.15 $9.86
======= =======
Total Return................................................................. 13.08% (1.40%)+
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (000s)............................................. $3,197 $3,007
Ratios to Average Daily Net Assets:
Operating expenses.......................................................... 1.66%@ 165%*@
Net investment loss......................................................... (.96%) (.20%)*
Decrease reflected in above operating expense ratios due to
waivers/reimbursements.................................................... 6.48% 21.71%*
Portfolio Turnover Rate...................................................... 207.25% 5.85%+
Average Commission Rate#..................................................... $0.0504 $0.0323
</TABLE>

- --------------------------------------------------------------------------------

@ Interest earned on uninvested cash balances is used to offset portions of the
transfer agent expense. These arrangements resulted in a reduction to the
Common Shares' expenses by .01% and .00%, for the years ending October 31,
1997 and October 31, 1996, respectively. The Common Shares' operating expense
ratio after reflecting these arrangements were 1.65% and 1.65% for the years
ended October 31, 1997 and 1996, respectively.

# Computed by dividing the total amount of commissions paid by the total number
of shares purchased and sold during the period for which there was a
commission charged.

+ Non-annualized.

* Annualized.

HEALTH SCIENCES FUND

<TABLE>
<CAPTION>
For the Period
December 31, 1996
(Commencement of
Operations)
through
October 31, 1997
-----------------
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD........................................................ $10.00
-----
Income from Investment Operations:
Net Investment Loss........................................................................ (0.02)
Net Gain on Securities (both realized and unrealized)...................................... 2.24
-----
Total from Investment Operations........................................................... 2.22
-----
Less Distributions
Dividends from net investment income....................................................... 0.00
Distributions from realized gains.......................................................... 0.00
-----
Total Distributions........................................................................ 0.00
-----
NET ASSET VALUE, END OF PERIOD.............................................................. $12.22
=====
Total Return................................................................................ 22.20%+
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (000s)............................................................ $18,246
Ratios to Average Daily Net Assets:
Operating expenses......................................................................... 1.59%@*
Net investment loss........................................................................ (.24%)*
Decrease reflected in above operating expense ratio due to waivers/reimbursements.......... 1.83%*
Portfolio Turnover Rate..................................................................... 159.57%+
Average Commission Rate#.................................................................... $0.0580
</TABLE>

- --------------------------------------------------------------------------------

@ Interest earned on univested cash balances is used to offset portions of the
transfer agent expense. These arrangements had no effect on the Fund's expense
ratio.

+ Non-annualized.

* Annualized.

# Computed by dividing the total amount of commissions paid by the total number
of shares purchased and sold during the period for which there was a
commission charged.

5
<PAGE> 12

STRATEGIC VALUE FUND

<TABLE>
<CAPTION>
For the Period
December 31, 1996
(Commencement of
Operations)
through
October 31, 1997
-----------------
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD...................................................... $10.00
-----
Income from Investment Operations:
Net Investment Income.................................................................... 0.02
Net Gain on Securities (both realized and unrealized).................................... 1.55
-----
Total from Investment Operations......................................................... 1.57
-----
Less Distributions:
Dividends from Net Investment Income..................................................... 0.00
Distributions from Realized Gains........................................................ 0.00
-----
Total Distributions...................................................................... 0.00
-----
NET ASSET VALUE, END OF PERIOD............................................................ $11.57
=====
Total Return.............................................................................. 15.70%+
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (000s).......................................................... $12,108
Ratios to Average Daily Net Assets:
Operating expenses....................................................................... 1.45%@*
Net investment income.................................................................... .26%*
Decrease reflected in above operating expense ratio due to waivers/reimbursements........ 2.42%*
Portfolio Turnover Rate................................................................... 277.99%+
Average Commission Rate#.................................................................. $0.0556
</TABLE>

- --------------------------------------------------------------------------------

@ Interest earned on univested cash balances is used to offset portions of the
transfer agent expense. These arrangements had no effect on the Fund's expense
ratio.

+ Non-annualized.

* Annualized.

# Computed by dividing the total amount of commissions paid by the total number
of shares purchased and sold during the period for which there was a
commission charged.

INVESTMENT OBJECTIVES AND POLICIES
- --------------------------------------------------------------------------------
Each Fund's objective is a fundamental policy and may not be amended without
first obtaining the approval of a majority of the outstanding shares of that
Fund. Any investment involves risk and, therefore, there can be no assurance
that any Fund will achieve its investment objective. See "Portfolio Investments"
and "Certain Investment Strategies" for descriptions of certain types of
investments the Funds may make.

CAPITAL APPRECIATION FUND

The Capital Appreciation Fund seeks long-term capital appreciation. The Fund
is a diversified management investment company that pursues its investment
objective by investing primarily in a broadly diversified portfolio of equity
securities of domestic companies. The Fund will ordinarily invest substantially
all of its total assets -- but no less than 80% of its total assets -- in common
stocks, warrants and securities convertible into or exchangeable for common
stocks (collectively, "equity securities"). Depositary receipts relating to
equity securities will also be considered equity securities for purposes of this
investment policy.

Warburg Pincus Asset Management, Inc., the Funds' investment adviser
("Warburg"), will attempt to identify sectors of the market and companies within
market sectors that it believes will outperform the overall market. Warburg also
seeks to identify themes or patterns it believes to be associated with high
growth potential firms, such as significant fundamental changes

6
<PAGE> 13

(including senior management changes), generation of a large free cash flow or
company share repurchase programs.

The Fund seeks to invest in companies that Warburg believes can be purchased
at a reasonable price for their projected growth, analyzing such factors as
growth rate, including revenue, earnings and unit sales; cash flow; return on
equity; debt/equity ratio; and owner management. Warburg also seeks to identify
growth opportunities and sustainable growth prospects, such as a dynamic of
change or the development of proprietary products and services.

GLOBAL POST-VENTURE CAPITAL FUND

Because of the nature of the Fund's investments and certain strategies it may
use, such as investing in Private Funds (as defined below), an investment in the
Fund should be considered only for the aggressive portion of an investor's
portfolio and may not be appropriate for all investors.

The Global Post-Venture Capital Fund seeks long-term growth of capital. The
Fund is a diversified management investment company that pursues an aggressive
investment strategy. The Global Post-Venture Capital Fund pursues its investment
objective by investing primarily in equity securities of U.S. and foreign
issuers considered by Warburg, the Fund's investment adviser, to be in their
post-venture capital stage of development. The Fund intends to invest in
post-venture capital companies, as defined below, traded on national securities
exchanges and in over-the-counter markets and other public markets in various
developed countries as well as emerging securities markets.

Although the Fund may invest up to 10% of its assets in venture capital and
other investment funds, the Fund is not designed primarily to provide venture
capital financing. Rather, under normal market conditions, the Fund will invest
at least 65% of its total assets in equity securities of "post-venture capital
companies" which are located in at least three countries, including the United
States. A post-venture capital company is a company that has received venture
capital financing either (a) during the early stages of the company's existence
or the early stages of the development of a new product or service or (b) as
part of a restructuring or recapitalization of the company. The investment of
venture capital financing, distribution of such company's securities to venture
capital investors, or initial public offering ("IPO"), whichever is later, will
have been made within ten years prior to the Fund's purchase of the company's
securities. The Fund currently intends to invest at least 35% of its total
assets in non-U.S. post-venture capital and other companies. A company will be
considered to be located in the country where (i) the company is organized, (ii)
where its principal business activities are conducted and where at least 50% of
its revenues or profits from goods produced and sold are derived, investments
are made or services are performed or (iii) where the principal trading market
for the company's securities is located.

7
<PAGE> 14

Fortune 500 or the Morgan Stanley Capital International Europe, Australasia, Far
East ("EAFE") Index. Venture capitalists finance start-up companies, companies
in the early stages of developing new products or services and companies
undergoing a restructuring or recapitalization, since these companies may not
have access to conventional forms of financing (such as bank loans or public
issuances of stock). Venture capitalists may hold substantial positions in
companies that may have been acquired at prices significantly below the initial
public offering price. This may create a potential adverse impact in the
short-term on the market price of a company's stock due to sales in the open
market by a venture capitalist or others who acquired the stock at lower prices
prior to the company's IPO. Warburg will consider the impact of such sales in
selecting post-venture capital investments. Venture capitalists may be
individuals or funds organized by venture capitalists which are typically
offered only to large institutions, such as pension funds and endowments, and
certain accredited investors. Outside of the United States, venture capitalists
may also consist of merchant banks and other banking institutions that provide
venture capital financing in a manner similar to U.S. venture capitalists.
Venture capital participation in a company is often reduced when the company
engages in an IPO of its securities or when it is involved in a merger, tender
offer or acquisition.

Warburg has experience in researching smaller companies, companies in the
early stages of development and venture capital-financed companies. Its team of
analysts, led by Elizabeth Dater, Portfolio Manager of the Fund, regularly
monitors portfolio companies whose securities are held by over 250 of the larger
domestic venture capital funds. Ms. Dater has managed post-venture equity
securities in separate accounts for institutions since 1989 and currently
manages over $1 billion of such assets for investment companies and other
institutions. Robert Janis is an Associate Portfolio Manager and Research
Analyst for the Fund. Harold Ehrlich, an Associate Portfolio Manager and
Research Analyst for the Fund, is also an Associate Portfolio Manager and
Research Analyst for the Warburg Pincus International Equity Fund and other
international Warburg Pincus Funds. Warburg's international equity management
team manages over $5 billion in assets for investment companies and separate
accounts. Managers travel world-wide to meet with corporate management as well
as government and economic leaders. The managers evaluate each company's value
as a going concern as if they were buying the company itself, an approach
similar to that employed by venture capital and post-venture capital investors.

PRIVATE FUND INVESTMENTS. Up to 10% of the Fund's assets may be invested in
U.S. or foreign private limited partnerships or other investment funds ("Private
Funds") that themselves invest in equity or debt securities of (a) companies in
the venture capital or post-venture capital stages of development or (b)
companies engaged in special situations or changes in corporate control,
including buyouts. In selecting Private Funds for investment, Abbott Capital
Management, LLC, the Fund's sub-investment adviser with respect to

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<PAGE> 15

Private Funds ("Abbott"), attempts to invest in a mix of Private Funds that will
provide an above average internal rate of return (i.e., the discount rate at
which the present value of an investment's future cash inflows (dividend income
and capital gains) are equal to the cost of the investment). Warburg believes
that the Fund's investments in Private Funds offer individual investors a unique
opportunity to participate in venture capital and other private investment
funds, providing access to investment opportunities typically available only to
large institutions and accredited investors. Although the Fund's investments in
Private Funds are limited to a maximum of 10% of the Fund's assets, these
investments are highly speculative and volatile and may produce gains or losses
in this portion of the Fund that exceed those of the Fund's other holdings and
of more mature companies generally.

Because Private Funds generally are investment companies for purposes of the
Investment Company Act of 1940, as amended (the "1940 Act"), the Fund's ability
to invest in them will be limited. In addition, Fund shareholders will remain
subject to the Fund's expenses while also bearing their pro rata share of the
operating expenses of the Private Funds. The ability of the Fund to dispose of
interests in Private Funds is very limited and will involve the risks described
under "Risk Factors and Special Considerations -- Non-Publicly Traded
Securities; Rule 144A Securities." In valuing the Fund's holdings of interests
in Private Funds, the Fund will be relying on the most recent reports provided
by the Private Funds themselves prior to calculation of the Fund's net asset
value. These reports, which are provided on an infrequent basis, often depend on
the subjective valuations of the managers of the Private Funds and, in addition,
would not generally reflect positive or negative subsequent developments
affecting companies held by the Private Fund. See "Net Asset Value." Debt
securities held by a Private Fund will tend to be rated below investment grade
and may be rated as low as C by Moody's Investors Service, Inc. ("Moody's") or D
by Standard & Poor's Ratings Services ("S&P"). Securities in these rating
categories are in payment default or have extremely poor prospects of attaining
any investment standing. For a discussion of the risks of investing in below
investment grade debt, see "Investment Policies -- Below Investment Grade Debt
Securities" in the Statement of Additional Information. For a discussion of the
possible tax consequences of investing in foreign Private Funds, see "Additional
Information Concerning Taxes -- Investment in Passive Foreign Investment
Companies" in the Statement of Additional Information.

The Fund may also hold non-publicly traded equity securities of companies in
the venture capital and post-venture capital stages of development, such as
those of closely-held companies or private placements of public companies. The
portion of the Fund's assets invested in these non-publicly traded securities
will vary over time depending on investment opportunities and other factors. The
Fund's illiquid assets, including Private Funds and other non-publicly traded
securities, may not exceed 15% of the Fund's net assets.

9
<PAGE> 16

OTHER STRATEGIES. The Fund will invest in securities of post-venture capital
companies that are traded on a national securities exchange or in an organized
over-the-counter market, such as The Nasdaq Stock Market, Inc., and the Japan
Securities Dealers Association Automated Quotation System ("JASDAQ"), the
European Association of Securities Dealers Automated Quotation ("Easdaq") and
the U.K. Alternative Investment Market ("AIM"). The Fund may invest up to 35% of
its assets in exchange-traded and over-the-counter securities that do not meet
the definition of post-venture capital companies. The Fund may invest, directly
or through Private Funds, in securities of issuers engaged at the time of
purchase in "special situations," such as a restructuring or recapitalization;
an acquisition, consolidation, merger or tender offer; a change in corporate
control or investment by a venture capitalist. For temporary defensive purposes,
such as during times of international political or economic uncertainty, all of
the Fund's investments may be made temporarily in the United States.

Warburg believes that opportunities for growth of capital exist in post-
venture capital securities across global markets and that the Fund will provide
access to those opportunities. To attempt to reduce risk, the Fund will
diversify its investments over a broad range of issuers operating in a variety
of industries and in various countries. Although the Fund may invest anywhere in
the world, the Fund will not be invested in all countries at all times depending
upon available investments, market conditions and other factors. The Fund may
hold securities of companies of any size, and will not limit capitalization of
companies in which it selects to invest. However, due to the nature of the
venture capital to post-venture cycle, the Fund anticipates that the average
market capitalization of companies in which the Fund invests will be less than
$1 billion at the time of investment. Equity securities in which the Fund will
invest are common stock, preferred stock, warrants, securities convertible into
or exchangeable for common stock and partnership interests. The Fund may engage
in a variety of strategies to reduce risk or seek to enhance return, including
currency hedging and engaging in short selling (see "Certain Investment
Strategies").

HEALTH SCIENCES FUND

Warburg believes that the aging of the population in the United States and
other industrialized nations will have a fundamental impact on financial
markets. The Health Sciences Fund is designed to enable investors to participate
in the opportunities that changing demographic forces can be expected to create
as health sciences companies respond to the challenges ahead.

The Fund's investment objective is capital appreciation. The Fund is a
diversified management investment company. The Fund intends to invest at least
80% of its total assets in equity securities of health sciences companies, and
under normal market conditions will invest at least 65% of its assets in equity
and debt securities of health science companies. Equity securities are common
stocks, preferred stocks, warrants and securities convertible into or exchangea-

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<PAGE> 17

ble for common stocks. Health sciences companies are companies that are
principally engaged in the research, development, production or distribution of
products or services related to health care, medicine or the life sciences
(collectively termed "health sciences"). A company is considered to be
"principally engaged" in health sciences when at least 50% of its assets are
committed to, or at least 50% of its revenues or operating profits are derived
from, the activities described in the previous sentence. A company will also be
considered "principally engaged" in health sciences if, in the judgment of
Warburg, that company has the potential for capital appreciation primarily as a
result of particular products, technology, patents or other market advantages in
a health sciences business and (a) the company holds itself out to the public as
being primarily engaged in a health sciences business, and (b) a substantial
percentage of the company's expenses are related to a health sciences business
and these expenses exceed revenues from non-health sciences businesses.

Warburg believes that health sciences companies can be divided into four major
categories: (1) Buyers, notably HMOs; (2) Providers, including doctors and group
practices, and also services, including hospitals and nursing homes; (3)
Suppliers, including pharmaceuticals, equipment and devices; and (4) Innovators,
including biotechnology, gene therapy and drug delivery systems. Warburg
believes that active management of the Fund's portfolio among these categories
provides more diversification than a focus on any one category. The Fund may
invest in a variety of businesses in these categories, which may include:

Alternative Site Health Care Delivery

Biotechnology

Dental Products

Diagnostic and Therapeutic Laboratory Supplies and Equipment

Environmental Products and Services

Health Care Information Systems

Health Care, Life Sciences Pharmaceutical and Dental Products
Distribution

Health Care REITs

Hospital Management

Hospital Supply and Medical Device Technology

Long-Term Care, Sub-Acute Care, Rehabilitation Services and Home

Health Care

Managed Care: HMOs

Managed Care: Specialty Cost Containment

Medical, Diagnostic and Biochemical Research and Development

Nutrition and Food

Personal Care and Cosmetics

Pharmaceuticals (including Generics)

Physician Practice Management

Retail Drug and Other Health Stores

Vendors to Health Sciences Companies

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<PAGE> 18

The Fund intends to concentrate its investments in health sciences companies
in three industries: services, pharmaceuticals and medical devices. The Fund
will, under normal market conditions, invest at least 25% of its total assets in
the aggregate in these three industries. This policy may expose the Fund to
greater risk than a health sciences fund that invests more broadly among
industries.

The Fund may invest in companies of any size and may invest up to 35% of its
assets in foreign securities.

STRATEGIC VALUE FUND

The Strategic Value Fund seeks capital appreciation. The Fund will pursue its
investment objective by investing in companies and market sectors that Warburg
considers to be relatively undervalued. The Fund is a diversified management
investment company that pursues its objective by investing, under normal market
conditions, at least 65% of its total assets in equity securities, including
common stock, preferred stock, warrants and securities convertible into or
exchangeable for common stock. Warburg will seek to identify and invest in
companies which, in its opinion, are (i) undervalued or (ii) which may
themselves not be undervalued but which are in sectors which are undervalued as
a whole. Warburg will use various quantitative measures as a tool to identify
appropriate investment opportunities and the timing of sales. However, these
measures will not be applied rigidly but will be used as part of an active
portfolio management strategy. In implementing its investment strategy, the Fund
may take positions that are different from or inconsistent with those taken by
other mutual funds.

Warburg will determine whether a company or a market sector is undervalued
based on a variety of measures, including price/earnings ratio, price/ book
ratio, price/cash flow ratio, earnings growth, debt/capital ratio and absolute
and relative price history in relation to its peer group and to the market.
Other relevant factors, including a company's asset value, franchise value and
quality of management, will also be considered.

The Fund may hold securities of companies of any size, including securities of
companies with market capitalizations of less than $500 million, and may invest
without limit in the securities of issuers which have been in continuous
operation for less than three years. The Fund may hold from time to time various
foreign currencies pending investment in foreign securities or conversion into
U.S. dollars, but does not currently intend to invest more than 20% of its
assets in securities of foreign issuers. The Fund may also purchase without
limit dollar-denominated American Depository Receipts ("ADRs"). ADRs are issued
by domestic banks and evidence ownership of underlying foreign securities.

PORTFOLIO INVESTMENTS
- --------------------------------------------------------------------------------

DEBT SECURITIES. Each Fund may invest up to 20% of its total assets in debt
securities (in each case other than money market obligations) and, in the case

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<PAGE> 19

of the Health Sciences and Strategic Value Funds, they may do so for the purpose
of seeking capital appreciation. In the case of the Health Sciences and
Strategic Value Funds, these debt securities may be rated below investment
grade. The interest income to be derived may be considered as one factor in
selecting debt securities for investment by Warburg. Because the market value of
debt obligations can be expected to vary inversely to changes in prevailing
interest rates, investing in debt obligations may provide an opportunity for
capital appreciation when interest rates are expected to decline. The success of
such a strategy is dependent upon Warburg's ability to accurately forecast
changes in interest rates. The market value of debt obligations may also be
expected to vary depending upon, among other factors, the ability of the issuer
to repay principal and interest, any change in investment rating and general
economic conditions. A security will be deemed to be investment grade if it is
rated within the four highest grades by Moody's or S&P or, if unrated, is
determined to be of comparable quality by Warburg. Bonds rated in the fourth
highest grade may have speculative characteristics and changes in economic
conditions or other circumstances are more likely to lead to a weakened capacity
to make principal and interest payments than is the case with higher grade
bonds. Subsequent to its purchase by a Fund, an issue of securities may cease to
be rated or its rating may be reduced below the minimum required for purchase by
the Fund. Neither event will require sale of such securities, although Warburg
will consider such event in its determination of whether the Fund should
continue to hold the securities.

When Warburg believes that a defensive posture is warranted, each Fund may
invest temporarily without limit in investment grade debt obligations and in
domestic and foreign money market obligations, including repurchase agreements.
For a description of the risks associated with lower-rated securities, see "Risk
Factors and Special Considerations."

MONEY MARKET OBLIGATIONS. Each Fund is authorized to invest, under normal
market conditions, up to 20% of its total assets in domestic and foreign
short-term (one year or less remaining to maturity) and medium-term (five years
or less remaining to maturity) money market obligations. These instruments
consist of obligations issued or guaranteed by the U.S. government or a foreign
government, their agencies or instrumentalities; bank obligations (including
certificates of deposit, time deposits and bankers' acceptances of domestic or
foreign banks, domestic savings and loans and similar institutions) that are
high quality investments or, if unrated, deemed by Warburg to be high quality
investments; commercial paper rated no lower than A-2 by S&P or Prime-2 by
Moody's or the equivalent from another major rating service or, if unrated, of
an issuer having an outstanding, unsecured debt issue then rated within the
three highest rating categories; and repurchase agreements with respect to the
foregoing.

Repurchase Agreements. The Funds may invest in repurchase agreement
transactions with member banks of the Federal Reserve System and certain
non-bank dealers. Repurchase agreements are contracts under which the

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<PAGE> 20

buyer of a security simultaneously commits to resell the security to the seller
at an agreed-upon price and date. Under the terms of a typical repurchase
agreement, a Fund would acquire any underlying security for a relatively short
period (usually not more than one week) subject to an obligation of the seller
to repurchase, and the Fund to resell, the obligation at an agreed-upon price
and time, thereby determining the yield during the Fund's holding period. This
arrangement results in a fixed rate of return that is not subject to market
fluctuations during the Fund's holding period. The value of the underlying
securities will at all times be at least equal to the total amount of the
purchase obligation, including interest. The Fund bears a risk of loss in the
event that the other party to a repurchase agreement defaults on its obligations
or becomes bankrupt and the Fund is delayed or prevented from exercising its
right to dispose of the collateral securities, including the risk of a possible
decline in the value of the underlying securities during the period in which the
Fund seeks to assert this right. Warburg, acting under the supervision of the
Fund's Board of Directors or Board of Trustees as applicable (the "Board"),
monitors the creditworthiness of those bank and non-bank dealers with which each
Fund enters into repurchase agreements to evaluate this risk. A repurchase
agreement is considered to be a loan under the 1940 Act.

Money Market Mutual Funds. Where Warburg believes that it would be beneficial
to the Fund and appropriate considering the factors of return and liquidity,
each Fund may invest up to 5% of its assets in securities of money market mutual
funds that are unaffiliated with the Fund or Warburg. As a shareholder in any
mutual fund, a Fund will bear its ratable share of the mutual fund's expenses,
including management fees, and will remain subject to payment of the Fund's
administration fees and other expenses with respect to assets so invested.

U.S. GOVERNMENT SECURITIES. U.S. government securities in which a Fund may
invest include: direct obligations of the U.S. Treasury and obligations issued
by U.S. government agencies and instrumentalities, including instruments that
are supported by the full faith and credit of the United States, instruments
that are supported by the right of the issuer to borrow from the U.S. Treasury
and instruments that are supported by the credit of the instrumentality.
CONVERTIBLE SECURITIES. Convertible securities in which a Fund may invest,
including both convertible debt and convertible preferred stock, may be
converted at either a stated price or stated rate into underlying shares of
common stock. Because of this feature, convertible securities enable an investor
to benefit from increases in the market price of the underlying common stock.
Convertible securities provide higher yields than the underlying equity
securities, but generally offer lower yields than non-convertible securities of
similar quality. The value of convertible securities fluctuates in relation to
changes in interest rates like bonds and, in addition, fluctuates in relation to
the underlying common stock. Subsequent to purchase by a Fund, convertible
securities may cease to be rated or a rating may be reduced below the minimum

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<PAGE> 21

required for purchase by the Fund. Neither event will require sale of such
securities, although Warburg will consider such event in its determination of
whether a Fund should continue to hold the securities.

WARRANTS. Each Fund may invest up to 10% (15% in the case of the Health
Sciences Fund) of its total assets in warrants. Warrants are securities that
give the holder the right, but not the obligation, to purchase equity issues of
the company issuing the warrants, or a related company, at a fixed price either
on a date certain or during a set period.

RISK FACTORS AND SPECIAL CONSIDERATIONS
- --------------------------------------------------------------------------------

Investing in common stocks and securities convertible into common stocks is
subject to the inherent risk of fluctuations in the prices of such securities.
For certain additional risks relating to each Fund's investments, see "Portfolio
Investments" and "Certain Investment Strategies."

EMERGING GROWTH AND SMALLER COMPANIES; UNSEASONED ISSUERS. Investing in
securities of emerging growth, small- and medium-sized companies and companies
with continuous operations of less than three years ("unseasoned issuers") may
involve greater risks since these securities may have limited marketability and,
thus, may be more volatile than securities of larger, more established companies
or the market in general. Because such companies normally have fewer shares
outstanding than larger companies, it may be more difficult for a Fund to buy or
sell significant amounts of such shares without an unfavorable impact on
prevailing prices. These companies may have limited product lines, markets or
financial resources and may lack management depth. In addition, these companies
are typically subject to a greater degree of changes in earnings and business
prospects than are larger, more established companies. There is typically less
publicly available information concerning these companies than for larger, more
established ones. Securities of issuers in "special situations" also may be more
volatile, since the market value of these securities may decline in value if the
anticipated benefits do not materialize. Companies in "special situations"
include, but are not limited to, companies involved in an acquisition or
consolidation; reorganization; recapitalization; merger, liquidation or
distribution of cash, securities or other assets; a tender or exchange offer, a
breakup or workout of a holding company; or litigation which, if resolved
favorably, would improve the value of the companies' securities. Although
investing in securities of emerging growth companies, small- and medium-sized
companies, unseasoned issuers or issuers in "special situations" offers
potential for above-average returns if the companies are successful, the risk
exists that the companies will not succeed and the prices of the companies'
shares could significantly decline in value. Therefore, an investment in a Fund
may involve a greater degree of risk than an investment in other mutual funds
that seek capital appreciation by investing in more established, larger
companies.

NON-PUBLICLY TRADED SECURITIES; RULE 144A SECURITIES. The Funds may purchase
securities that are not registered under the Securities Act of 1933, as

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<PAGE> 22

amended (the "Securities Act"), but that can be sold to "qualified institutional
buyers" in accordance with Rule 144A under the Securities Act ("Rule 144A
Securities"). An investment in Rule 144A Securities will be considered illiquid
and therefore subject to each Fund's limitation on the purchase of illiquid
securities, unless the Fund's Board determines on an ongoing basis that an
adequate trading market exists for the security. In addition to an adequate
trading market, the Boards will also consider factors such as trading activity,
availability of reliable price information and other relevant information in
determining whether a Rule 144A Security is liquid. This investment practice
could have the effect of increasing the level of illiquidity in the Funds to the
extent that qualified institutional buyers become uninterested for a time in
purchasing Rule 144A Securities. The Board of each Fund will carefully monitor
any investments by the Fund in Rule 144A Securities. The Boards may adopt
guidelines and delegate to Warburg the daily function of determining and
monitoring the liquidity of Rule 144A Securities, although each Board will
retain ultimate responsibility for any determination regarding liquidity.

Non-publicly traded securities (including interests in Rule 144A Securities
and, with respect to the Global Post-Venture Capital Fund, Private Funds) may
involve a high degree of business and financial risk and may result in
substantial losses. These securities may be less liquid than publicly traded
securities, and a Fund may take longer to liquidate these positions than would
be the case for publicly traded securities. Although these securities may be
resold in privately negotiated transactions, the prices realized on such sales
could be less than those originally paid by the Fund. Further, companies whose
securities are not publicly traded may not be subject to the disclosure and
other investor protection requirements applicable to companies whose securities
are publicly traded. A Fund's investment in illiquid securities is subject to
the risk that should the Fund desire to sell any of these securities when a
ready buyer is not available at a price that is deemed to be representative of
their value, the value of the Fund's net assets could be adversely affected.

WARRANTS. At the time of issue, the cost of a warrant is substantially less
than the cost of the underlying security itself, and price movements in the
underlying security are generally magnified in the price movements of the
warrant. This leveraging effect enables the investor to gain exposure to the
underlying security with a relatively low capital investment but increases an
investor's risk in the event of a decline in the value of the underlying
security and can result in a complete loss of the amount invested in the
warrant. In addition, the price of a warrant tends to be more volatile than, and
may not correlate exactly to, the price of the underlying security. If the
market price of the underlying security is below the exercise price of the
warrant on its expiration date, the warrant will generally expire without value.

BELOW INVESTMENT GRADE SECURITIES. There are certain factors associated with
securities rated below investment grade. The Fund may invest in securities rated
as low as C by Moody's or D by S&P. The Fund may invest in unrated securities
considered to be of equivalent quality. Securities that are

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<PAGE> 23

rated C by Moody's comprise the lowest rated class and can be regarded as having
extremely poor prospects of ever attaining any real investment standing. Debt
rated D by S&P is in default or is expected to be in default upon maturity or
payment date.

Below investment grade and comparable unrated securities (commonly referred to
as "junk bonds") (i) will likely have some quality and protective
characteristics that, in the judgment of the rating organization, are outweighed
by large uncertainties or major risk exposures to adverse conditions and (ii)
are predominately speculative with respect to the issuer's capacity to pay
interest and repay principal in accordance with the terms of the obligation. The
market values of certain of these securities also tend to be more sensitive to
individual corporate developments and changes in economic conditions than higher
quality securities. In addition, these securities generally present a higher
degree of credit risk. The risk of loss due to default is significantly greater
because these securities generally are unsecured and frequently are subordinated
to the prior payment of senior indebtedness.

The market value of below investment grade securities is more volatile than
that of investment grade securities. In addition, the Fund may have difficulty
disposing of certain of these securities because there may be a thin trading
market. The lack of a liquid secondary market for certain securities may have an
adverse impact on the Fund's ability to dispose of particular issues and may
make it more difficult for the Fund to obtain accurate market quotations for
purposes of valuing the Fund's shares and calculating their respective net asset
values.

For a complete description of the rating systems of Moody's and S&P, see the
Appendix to the Statement of Additional Information.

HEALTH SCIENCES COMPANIES. An investment in a Fund may involve a greater
degree of risk than an investment in other mutual funds that seek capital
appreciation by investing in a broader mix of issuers. Companies engaged in
biotechnology, drugs and medical devices are affected by, among other things,
limited patent duration, intense competition, obsolescence brought about by
rapid technological change and regulatory requirements. In addition, many health
sciences companies are smaller and less seasoned, suffer from inexperienced
management, offer limited product lines (or may not yet offer products), and may
have persistent losses or erratic revenue patterns. Securities of these smaller
companies may have more limited marketability and, thus, may be more volatile.
Because small companies normally have fewer shares outstanding than larger
companies, it may be more difficult for the Fund to buy or sell significant
amounts of such shares without an unfavorable impact on prevailing prices. There
is also typically less publicly available information concerning smaller
companies than for larger, more established ones.

Other health sciences companies, including pharmaceutical companies, companies
undertaking research and development, and operators of health care facilities
and their suppliers are subject to government regulation, prod-

17
<PAGE> 24

uct or service approval and, with respect to medical devices, the receipt of
necessary reimbursement codes, which could have a significant effect on the
price and availability of such products and services, and may adversely affect
the revenues of these companies. These companies are also susceptible to product
liability claims and competition from manufacturers and distributors of generic
products. Companies engaged in the ownership or management of health care
facilities receive a substantial portion of their revenues from federal and
state governments through Medicare and Medicaid payments. These sources of
revenue are subject to extensive regulation and government appropriations to
fund these expenditures are under intense scrutiny. Numerous federal and state
legislative initiatives are being considered that seek to control health care
costs and, consequently, could affect the profitability and stock prices of
companies engaged in the health sciences.

SECTOR CONCENTRATION. At times the Strategic Value Fund may invest more than
25% of its assets in securities of issuers in one or more market sectors such
as, for example, the financial services sector. The Fund will only concentrate
its investments in a particular market sector if Warburg believes the investment
return available from concentration in that sector justifies any additional risk
associated with concentration in that sector. When the Fund concentrates its
investments in a market sector, financial, economic, business and other
developments affecting issuers in that sector will have a greater effect on the
Fund than if it had not concentrated its assets in that sector.

PORTFOLIO TRANSACTIONS AND TURNOVER RATE
- --------------------------------------------------------------------------------

A Fund will attempt to purchase securities with the intent of holding them for
investment but may purchase and sell portfolio securities whenever Warburg
believes it to be in the best interests of the relevant Fund. A Fund will not
consider portfolio turnover rate a limiting factor in making investment
decisions consistent with its investment objective and policies. High portfolio
turnover rates (100% or more) may result in dealer mark-ups or underwriting
commissions as well as other transaction costs, including correspondingly higher
brokerage commissions. In addition, short-term gains realized from portfolio
turnover may be taxable to shareholders as ordinary income. See "Dividends,
Distributions and Taxes -- Taxes" below and "Investment Policies -- Portfolio
Transactions" in the Statement of Additional Information.

All orders for transactions in securities or options on behalf of a Fund are
placed by Warburg with broker-dealers that it selects, including Counsellors
Securities Inc., the Funds' distributor ("Counsellors Securities"). A Fund may
utilize Counsellors Securities in connection with a purchase or sale of
securities when Warburg believes that the charge for the transaction does not
exceed usual and customary levels and when doing so is consistent with
guidelines adopted by the Board.

CERTAIN INVESTMENT STRATEGIES
- --------------------------------------------------------------------------------

Although there is no intention of doing so during the coming year, each Fund
is authorized to lend portfolio securities, to enter into reverse repurchase

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<PAGE> 25

agreements and dollar rolls, to purchase when-issued securities (except for the
Global Post-Venture Capital Fund) and enter into delayed-delivery transactions
(except for the Strategic Value Fund) and (in the case of the Strategic Value
Fund) to enter into forward currency transactions. Detailed information
concerning each Fund's strategies and related risks is contained below and in
the Statement of Additional Information.

STRATEGIES AVAILABLE TO ALL FUNDS

FOREIGN SECURITIES. Each Fund may invest in the securities of foreign issuers
(limited to 20% and 35% in the case of the Capital Appreciation and Health
Sciences Funds, respectively). There are certain risks involved in investing in
securities of companies and governments of foreign nations which are in addition
to the usual risks inherent in domestic investments. These risks include those
resulting from fluctuations in currency exchange rates, revaluation of
currencies, future adverse political and economic developments and the possible
imposition of currency exchange blockages or other foreign governmental laws or
restrictions, reduced availability of public information concerning issuers, the
lack of uniform accounting, auditing and financial reporting standards and other
regulatory practices and requirements that are often generally less rigorous
than those applied in the United States. Moreover, securities of many foreign
companies may be less liquid and their prices more volatile than those of
securities of comparable U.S. companies. Certain foreign countries are known to
experience long delays between the trade and settlement dates of securities
purchased or sold. In addition, with respect to certain foreign countries, there
is the possibility of expropriation, nationalization, confiscatory taxation and
limitations on the use or removal of funds or other assets of the Funds,
including the withholding of dividends. Foreign securities may be subject to
foreign government taxes that would reduce the net yield on such securities.
Moreover, individual foreign economies may differ favorably or unfavorably from
the U.S. economy in such respects as growth of gross national product, rate of
inflation, capital reinvestment, resource self-sufficiency and balance of
payments positions. Investment in foreign securities will also result in higher
operating expenses due to the cost of converting foreign currency into U.S.
dollars, the payment of fixed brokerage commissions on foreign exchanges, which
generally are higher than commissions on U.S. exchanges, higher valuation and
communications costs and the expense of maintaining securities with foreign
custodians.

DEPOSITARY RECEIPTS. Certain of the above risks may be involved with ADRs,
European Depositary Receipts ("EDRs") and International Depositary Receipts
("IDRs"), instruments that evidence ownership of underlying securities issued by
a foreign corporation. ADRs, EDRs and IDRs may not necessarily be denominated in
the same currency as the securities whose ownership they represent. ADRs are
typically issued by a U.S. bank or trust company. EDRs (sometimes referred to as
Continental Depositary Receipts) are issued in Europe and IDRs (sometimes
referred to as Global Depositary Receipts) are

19
<PAGE> 26

issued outside the United States, each typically by non-U.S. banks and trust
companies.

OPTIONS, FUTURES AND CURRENCY TRANSACTIONS. At the discretion of Warburg, each
Fund may, but is not required to, engage in a number of strategies involving
options, futures and forward currency contracts. These strategies, commonly
referred to as "derivatives," may be used (i) for the purpose of hedging against
a decline in value of the Fund's current or anticipated portfolio holdings, (ii)
as a substitute for purchasing or selling portfolio securities or (iii) to seek
to generate income to offset expenses or increase return. TRANSACTIONS THAT ARE
NOT CONSIDERED HEDGING SHOULD BE CONSIDERED SPECULATIVE AND MAY SERVE TO
INCREASE A FUND'S INVESTMENT RISK. Transaction costs and any premiums associated
with these strategies, and any losses incurred, will affect a Fund's net asset
value and performance. Therefore, an investment in a Fund may involve a greater
risk than an investment in other mutual funds that do not utilize these
strategies. The Funds' use of these strategies may be limited by position and
exercise limits established by securities and commodities exchanges and other
applicable regulatory authorities.

Securities Options and Stock Index Options. Each Fund may write covered call
and (except for the Capital Appreciation Fund) covered put options on up to 25%
of the net asset value of the stock and debt securities in its portfolio and
will realize fees (referred to as "premiums") for granting the rights evidenced
by the options. The Capital Appreciation Fund may utilize up to 2% of its assets
to purchase U.S. exchange-traded and over-the-counter ("OTC") options; the
Global Post-Venture Capital Fund and Health Sciences Fund may each utilize up to
10% of its assets to purchase options on stocks and debt securities that are
traded on U.S. and foreign exchanges, as well as OTC options. The purchaser of a
put option on a security has the right to compel the purchase by the writer of
the underlying security, while the purchaser of a call option on a security has
the right to purchase the underlying security from the writer. In addition to
purchasing and writing options on securities, each Fund may also utilize up to
10% of its total assets to purchase exchange-listed and OTC put and call options
on stock indexes, and may also write such options. A stock index measures the
movement of a certain group of stocks by assigning relative values to the common
stocks included in the index.

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. However, for an option writer the exposure to adverse price movements in
the underlying security or index is potentially unlimited during the exercise
period. Writing securities options may result in substantial losses to the Fund,
force the sale or purchase of portfolio securities at inopportune times or at
less advantageous prices, limit the amount of appreciation the Fund could
realize on its investments or require the Fund to hold securities it would
otherwise sell.
Futures Contracts and Related Options. Each Fund may enter into foreign
currency, interest rate and stock index futures contracts and purchase and

20
<PAGE> 27

write (sell) related options that are traded on an exchange designated by the
Commodity Futures Trading Commission (the "CFTC") or, if consistent with CFTC
regulations, on foreign exchanges. These futures contracts are standardized
contracts for the future delivery of foreign currency or an interest rate
sensitive security or, in the case of stock index and certain other futures
contracts, are settled in cash with reference to a specified multiplier times
the change in the specified index, exchange rate or interest rate. An option on
a futures contract gives the purchaser the right, in return for the premium
paid, to assume a position in a futures contract.
Aggregate initial margin and premiums required to establish positions other
than those considered by the CFTC to be "bona fide hedging" will not exceed 5%
of a Fund's net asset value, after taking into account unrealized profits and
unrealized losses on any such contracts. Although the Funds are limited in the
amount of assets that may be invested in futures transactions, there is no
overall limit on the percentage of Fund assets that may be at risk with respect
to futures activities.

Currency Exchange Transactions. The Funds will conduct their currency exchange
transactions either (i) on a spot (i.e., cash) basis at the rate prevailing in
the currency exchange market, (ii) through entering into futures contracts or
options on futures contracts (as described above), (iii) through entering into
forward contracts to purchase or sell currency or (iv) by purchasing exchange-
traded currency options. A forward currency contract involves an obligation to
purchase or sell a specific currency at a future date at a price set at the time
of the contract. An option on a foreign currency operates similarly to an option
on a security. Risks associated with currency forward contracts and purchasing
currency options are similar to those described in this Prospectus for futures
contracts and securities and stock index options. In addition, the use of
currency transactions could result in losses from the imposition of foreign
exchange controls, suspension of settlement or other governmental actions or
unexpected events. The Capital Appreciation and Health Sciences Funds will only
engage in currency exchange transactions for hedging purposes.

Hedging Considerations. The Funds may engage in options, futures and currency
transactions for, among other reasons, hedging purposes. A hedge is designed to
offset a loss on a portfolio position with a gain in the hedge position; at the
same time, however, a properly correlated hedge will result in a gain in the
portfolio position being offset by a loss in the hedge position. As a result,
the use of options, futures contracts and currency exchange transactions for
hedging purposes could limit any potential gain from an increase in value of the
position hedged. In addition, the movement in the portfolio position hedged may
not be of the same magnitude as movement in the hedge. A Fund will engage in
hedging transactions only when deemed advisable by Warburg, and successful use
of hedging transactions will depend on Warburg's ability to predict correctly
movements in the hedge and the hedged position and the correlation between them,
which could prove to be inaccu-

21
<PAGE> 28

rate. Even a well-conceived hedge may be unsuccessful to some degree because of
unexpected market behavior or trends.

Additional Considerations. To the extent that a Fund engages in the strategies
described above, the Fund may experience losses greater than if these strategies
had not been utilized. In addition to the risks described above, these
instruments may be illiquid and/or subject to trading limits, and the Fund may
be unable to close out a position without incurring substantial losses, if at
all. The Fund is also subject to the risk of a default by a counterparty to an
off-exchange transaction.

Asset Coverage. Each Fund will comply with applicable regulatory requirements
designed to eliminate any potential for leverage with respect to options written
by the Fund on securities, indexes and currencies; currency, interest rate and
stock index futures contracts and options on these futures contracts; and
forward currency contracts. The use of these strategies may require that the
Fund maintain cash or liquid securities in a segregated account with its
custodian or a designated sub-custodian to the extent the Fund's obligations
with respect to these strategies are not otherwise "covered" through ownership
of the underlying security, financial instrument or currency or by other
portfolio positions or by other means consistent with applicable regulatory
policies. Segregated assets cannot be sold or transferred unless equivalent
assets are substituted in their place or it is no longer necessary to segregate
them. As a result, there is a possibility that segregation of a large percentage
of the Fund's assets could impede portfolio management or the Fund's ability to
meet redemption requests or other current obligations.

STRATEGIES AVAILABLE TO THE GLOBAL POST-VENTURE CAPITAL,

HEALTH SCIENCES AND STRATEGIC VALUE FUNDS

SHORT SELLING. The Funds may from time to time sell securities short. A short
sale is a transaction in which a Fund sells securities it does not own in
anticipation of a decline in the market price of the securities. The current
market value of the securities sold short (excluding short sales "against the
box") will not exceed 10% of the Fund's assets.

A Fund's obligation to replace the securities borrowed in connection with a
short sale will be secured by cash or liquid securities deposited as collateral
with the broker. In addition, the Fund will place in a segregated account with

22
<PAGE> 29

its custodian or a qualified subcustodian an amount of cash or liquid securities
equal to the difference, if any, between (i) the market value of the securities
sold at the time they were sold short and (ii) any cash or liquid securities
deposited as collateral with the broker in connection with the short sale (not
including the proceeds of the short sale). Until it replaces the borrowed
securities, a Fund will maintain the segregated account daily at a level so that
(a) the amount deposited in the account plus the amount deposited with the
broker (not including the proceeds from the short sale) will equal the current
market value of the securities sold short and (b) the amount deposited in the
account plus the amount deposited with the broker (not including the proceeds
from the short sale) will not be less than the market value of the securities at
the time they were sold short.

Short Sales Against the Box. The Funds may enter into a short sale of
securities such that when the short position is open the Fund owns an equal
amount of the securities sold short or owns preferred stocks or debt securities,
convertible or exchangeable without payment of further consideration, into an
equal number of securities sold short. This kind of short sale, which is
referred to as one "against the box," may be entered into by the Fund to, for
example, lock in a sale price for a security the Fund does not wish to sell
immediately. The Fund will deposit, in a segregated account with its custodian
or a qualified subcustodian, the securities sold short or convertible or
exchangeable preferred stocks or debt securities in connection with short sales
against the box. Not more than 10% of the Fund's net assets (taken at current
value) may be held as collateral for short sales against the box at any one
time.

STRATEGY AVAILABLE TO THE GLOBAL POST-VENTURE CAPITAL AND STRATEGIC VALUE FUNDS

WHEN-ISSUED SECURITIES AND DELAYED-DELIVERY TRANSACTIONS. The Fund may utilize
up to 20% of its total assets to purchase securities on a when-issued basis and
purchase or sell securities on a delayed-delivery basis. In these transactions,
payment for and delivery of the securities occur beyond the regular settlement
dates. The Fund will not enter into a when-issued or delayed-delivery
transaction for the purpose of leverage, but may sell the right to acquire a
when-issued security prior to its acquisition or dispose of its right to deliver
or receive securities in a delayed-delivery transaction if Warburg deems it
advantageous to do so. The payment obligation and the interest rate that will be
received in when-issued and delayed-delivery transactions are fixed at the time
the buyer enters into the commitment. Due to fluctuations in the value of
securities purchased or sold on a when-issued or delayed-delivery basis, the
prices of such securities may be higher or lower than the prices available in
the market on the dates when the investments are actually delivered to the
buyers.

The Fund will establish a segregated account with its custodian consisting of
cash or liquid securities in an amount equal to the amount of its when-

23
<PAGE> 30

issued and delayed-delivery purchase commitments and will segregate the
securities underlying commitments to sell securities for delayed delivery.

STRATEGY AVAILABLE TO THE STRATEGIC VALUE FUND

ZERO COUPON SECURITIES. The Fund may invest without limit in "zero coupon
securities." Zero coupon securities pay no cash income to their holders until
they mature and are issued at substantial discounts from their value at
maturity. When held to maturity, their entire return comes from the difference
between their purchase price and their maturity value. Because interest on zero
coupon securities is not paid on a current basis, the values of securities of
this type are subject to greater fluctuations than are the values of securities
that distribute income regularly and may be more speculative than such other
securities. Accordingly, the values of these securities may be highly volatile
as interest rates rise or fall. Redemption of shares of the Fund that require it
to sell zero coupon securities prior to maturity may result in capital gains or
losses that may be substantial. In addition, the Fund's investments in zero
coupon securities will result in special tax consequences, which are described
below under "Dividends, Distributions and Taxes -- Taxes."

INVESTMENT GUIDELINES
- --------------------------------------------------------------------------------

Each Fund may invest up to 15% of its net assets (10% of total assets in the
case of the Capital Appreciation Fund) in securities with contractual or other
restrictions on resale and other instruments that are not readily marketable
("illiquid securities"), including (i) securities issued as part of a privately
negotiated transaction between an issuer and one or more purchasers; (ii)
repurchase agreements with maturities greater than seven days; (iii) time
deposits maturing in more than seven calendar days; and (iv) certain Rule 144A
Securities. Each Fund may borrow from banks for temporary or emergency purposes,
such as meeting anticipated redemption requests, provided that reverse
repurchase agreements and any other borrowing by the Fund may not exceed 30% of
its total assets (10% in the case of the Capital Appreciation Fund), and may
pledge its assets (up to 10% in the case of the Capital Appreciation Fund) to
the extent necessary to secure permitted borrowings. Whenever borrowings
(including reverse repurchase agreements) exceed 5% of the value of the Fund's
total assets (net assets in the case of the Global Post-Venture Capital Fund),
the Fund will not make any investments (including roll-overs). Except for the
limitations on borrowing, the investment guidelines set forth in this paragraph
may be changed at any time without shareholder consent by vote of the Board of
each Fund, subject to the limitations contained in the 1940 Act. A complete list
of investment restrictions that each Fund has adopted identifying additional
restrictions that cannot be changed without the approval of the majority of the
Fund's outstanding shares is contained in the Statement of Additional
Information.

24
<PAGE> 31

MANAGEMENT OF THE FUNDS
- --------------------------------------------------------------------------------

INVESTMENT ADVISER. Each Fund employs Warburg as its investment adviser and
the Global Post-Venture Capital Fund employs Abbott as its sub-investment
adviser. Warburg, subject to the control of each Fund's officers and the Board,
manages the investment and reinvestment of the assets of the Funds in accordance
with each Fund's investment objective and stated investment policies. Warburg
makes investment decisions for each Fund, places orders to purchase or sell
securities on behalf of each such Fund and with respect to the Global
Post-Venture Capital Fund, supervises the activities of Abbott. Warburg also
employs a support staff of management personnel to provide services to the Funds
and furnishes each Fund with office space, furnishings and equipment. Abbott, in
accordance with the investment objective and policies of the Global Post-Venture
Capital Fund, makes investment decisions for the Fund regarding investments in
Private Funds, effects transactions in interests in Private Funds on behalf of
the Fund and assists in administrative functions relating to investments in
Private Funds.

For the services provided by Warburg, the Capital Appreciation Fund, Global
Post-Venture Capital Fund, Health Sciences Fund and Strategic Value Fund pay
Warburg a fee calculated at an annual rate of .70%, 1.25% (out of which Warburg
pays Abbott for sub-investment advisory services), 1.00% and 1.00%,
respectively, of the Fund's average daily net assets. Warburg and each Fund's
co-administrators may voluntarily waive a portion of their fees from time to
time and temporarily limit the expenses to be borne by the Fund.

Warburg is a professional investment advisory firm which provides investment
services to investment companies, employee benefit plans, endowment funds,
foundations and other institutions and individuals. As of December 31, 1997,
Warburg managed approximately $19.7 billion of assets, including approximately
$11.3 billion of investment company assets. Incorporated in 1970, Warburg is
indirectly controlled by Warburg, Pincus & Co. ("WP&Co."), which has no business
other than being a holding company of Warburg and its affiliates. Lionel I.
Pincus, the managing partner of WP&Co., may be deemed to control both WP&Co. and
Warburg. Warburg's address is 466 Lexington Avenue, New York, New York
10017-3147.

Abbott. (Global Post-Venture Capital Fund only) Abbott is an independent
specialized investment firm with assets under management of approximately $2.3
billion. Abbott is a registered investment adviser which concentrates on venture
capital, buyout and special situations partnership investments. Abbott's
management team provides full-service private equity programs to clients. The
predecessor firm to Abbott was organized in 1986 as a Delaware limited
partnership and converted to a Delaware limited liability company effective July
1, 1997. Abbott's principal office is located at 50 Rowes Wharf, Suite 240,
Boston, Massachusetts 02110-3328.

PORTFOLIO MANAGERS. George U. Wyper and Susan L. Black have been Co-Portfolio
Managers of the Capital Appreciation Fund since December 1994.

25
<PAGE> 32

Mr. Wyper is a Managing Director of Warburg, which he joined in August 1994,
before which time he was chief investment officer of White River Corporation and
president of Hanover Advisors, Inc. Ms. Black is a Managing Director of Warburg
and has been with Warburg since 1985.

The Portfolio Manager of the Global Post-Venture Capital Fund is Elizabeth B.
Dater. Ms. Dater is a Managing Director of Warburg and has been a Portfolio
Manager of Warburg since 1978. Harold W. Ehrlich, Robert S. Janis and
Christopher M. Nawn are Associate Portfolio Managers and Research Analysts for
the Fund. Mr. Ehrlich is a Managing Director of Warburg and has been with
Warburg since February 1995, before which time he was a senior vice president,
portfolio manager and analyst at Templeton Investment Counsel Inc. Mr. Janis is
a Senior Vice President of Warburg and has been with Warburg since October 1994,
before which time he was a vice president and senior research analyst at U.S.
Trust Company of New York. Mr. Nawn is also a Senior Vice President of Warburg
and has been with Warburg since September 1994, before which time he was a
senior sector analyst and portfolio manager at the Dreyfus Corporation.

Raymond L. Held and Thaddeus I. Gray, Investment Managers and Managing
Directors of Abbott, manage the Global Post-Venture Capital Fund's investments
in Private Funds. Mr. Held and Mr. Gray have been associated with Abbott and its
predecessor firm since 1986 and 1989, respectively.

Ms. Black (described above) and Patricia F. Widner are Portfolio Managers of
the Health Sciences Fund. Ms. Widner is a Senior Vice President of Warburg and
has been with Warburg since 1991.

Anthony G. Orphanos, a Managing Director of Warburg, is the Portfolio Manager
of the Strategic Value Fund. Mr. Orphanos has been with Warburg since 1977.

CO-ADMINISTRATORS. The Funds employ Counsellors Funds Service, Inc.
("Counsellors Service"), a wholly owned subsidiary of Warburg, as a co-
administrator. As co-administrator, Counsellors Service provides shareholder
liaison services to the Funds including responding to shareholder inquiries and
providing information on shareholder investments. Counsellors Service also
performs a variety of other services, including furnishing certain executive and
administrative services, acting as liaison between the Funds and their various
service providers, furnishing corporate secretarial services, which include
preparing materials for meetings of the Board, preparing proxy statements and
annual and semiannual reports, assisting in the preparation of tax returns and
monitoring and developing compliance procedures for the Funds. As compensation,
each Fund pays Counsellors Service a fee calculated at an annual rate of .10% of
the Fund's average daily net assets.

Each Fund employs PFPC Inc., an indirect, wholly owned subsidiary of PNC Bank
Corp. ("PFPC"), as a co-administrator. As a co-administrator, PFPC calculates
the Fund's net asset value, provides all accounting services for the Fund and
assists in related aspects of the Fund's operations. As compensation the Capital
Appreciation, Health Sciences and Strategic Value Funds pay PFPC

26
<PAGE> 33

a fee calculated at an annual rate of .10% of the Fund's first $500 million in
average daily net assets, .075% of the next $1 billion in assets and .05% of
assets exceeding $1.5 billion, in each case exclusive of out-of-pocket expenses.
The Global Post-Venture Capital Fund pays PFPC a fee calculated at an annual
rate of .12% of the Fund's first $250 million in average daily net assets, .10%
of the next $250 million in average daily net assets, .08% of the next $250
million in average daily net assets and .05% of the average daily net assets
exceeding $750 million, exclusive of out-of-pocket expenses. PFPC has its
principal offices at 400 Bellevue Parkway, Wilmington, Delaware 19809.

CUSTODIANS. PNC Bank, National Association ("PNC") and State Street Bank &
Trust Company ("State Street") serve as custodian of each Fund's U.S. and
non-U.S. assets, respectively. Like PFPC, PNC is a subsidiary of PNC Bank Corp.
and its principal business address is 1600 Market Street, Philadelphia,
Pennsylvania 19103. State Street's principal business address is 225 Franklin
Street, Boston, Massachusetts 02110.

TRANSFER AGENT. State Street Bank also acts as shareholder servicing agent,
transfer agent and dividend disbursing agent for the Funds. It has delegated to
Boston Financial Data Services, Inc., a 50% owned subsidiary ("BFDS"),
responsibility for most shareholder servicing functions. BFDS's principal
business address is 2 Heritage Drive, North Quincy, Massachusetts 02171.

DISTRIBUTOR. Counsellors Securities serves as distributor of the shares of the
Funds. Counsellors Securities is a wholly owned subsidiary of Warburg and is
located at 466 Lexington Avenue, New York, New York 10017-3147. No compensation
is payable by the Capital Appreciation Fund to Counsellors Securities for
distribution services. Counsellors Securities receives a fee at an annual rate
equal to .25% of the average daily net assets of each of the Global Post-Venture
Capital, Health Sciences and Strategic Value Fund's Common Shares for
distribution services, pursuant to a shareholder servicing and distribution plan
(the "12b-1 Plan") adopted by the Fund pursuant to Rule 12b-1 under the 1940
Act. Amounts paid to Counsellors Securities under the 12b-1 Plan may be used by
Counsellors Securities to cover expenses that are primarily intended to result
in, or that are primarily attributable to, (i) the sale of the Common Shares,
(ii) ongoing servicing and/or maintenance of the accounts of Common Shareholders
of the Fund and (iii) sub-transfer agency services, subaccounting services or
administrative services related to the sale of the Common Shares, all as set
forth in the 12b-1 Plan. Payments under the 12b-1 Plan are not tied exclusively
to the distribution expenses actually incurred by Counsellors Securities and the
payments may exceed distribution expenses actually incurred. The Board of the
Small Company Value Fund evaluates the appropriateness of the 12b-1 Plan on a
continuing basis and in doing so considers all relevant factors, including
expenses borne by Counsellors Securities and amounts received under the 12b-1
Plan.

Warburg or its affiliates may, at their own expense, provide promotional
incentives for qualified recipients who support the sale of shares of the Funds,
consisting of securities dealers who have sold Fund shares or others, including

27
<PAGE> 34

banks and other financial institutions, under special arrangements. Incentives
may include opportunities to attend business meetings, conferences, sales or
training programs for recipients' employees or clients and other programs or
events and may also include opportunities to participate in advertising or sales
campaigns and/or shareholder services and programs regarding one or more Warburg
Pincus Funds. Warburg or its affiliates may pay for travel, meals and lodging in
connection with these promotional activities. In some instances, these
incentives may be offered only to certain institutions whose representatives
provide services in connection with the sale or expected sale of Fund shares.

DIRECTORS/TRUSTEES AND OFFICERS. The officers of each Fund manage its day-
to-day operations and are directly responsible to its Board. The Boards set
broad policies for each Fund and choose its officers. A list of the
Directors/Trustees and officers of each Fund and a brief statement of their
present positions and principal occupations during the past five years is set
forth in the Statement of Additional Information.

HOW TO OPEN AN ACCOUNT
- --------------------------------------------------------------------------------
In order to invest in a Fund, an investor must first complete and sign an
account application. To obtain an application, an investor may telephone Warburg
Pincus Funds at (800) 927-2874 An investor may also obtain an account
application by writing to:
Warburg Pincus Funds
P.O. Box 9030
Boston, Massachusetts 02205-9030
Completed and signed account applications should be mailed to Warburg Pincus
Funds at the above address.

RETIREMENT PLANS AND UTMA/UGMA ACCOUNTS. For information (i) about investing
in the Funds through a tax-advantaged retirement plan, such as an Individual
Retirement Account ("IRA") or (ii) about opening a Uniform Gifts to Minors Act
("UGMA") or Uniform Transfers to Minors Act ("UTMA") account, an investor should
telephone Warburg Pincus Funds at (800) 927-2874 or write to Warburg Pincus
Funds at the address set forth above. Investors should consult their own tax
advisers about the establishment of retirement plans and UTMA or UGMA accounts.

CHANGES TO ACCOUNT. For information on how to make changes to an account,
including changes to account registration, address and/or privileges, an
investor should telephone Warburg Pincus Funds at (800) 927-2874. Shareholders
are responsible for maintaining current account registrations and addresses with
a Fund. No interest will be paid on amounts represented by unsecured
distribution or redemption checks.

HOW TO PURCHASE SHARES
- --------------------------------------------------------------------------------

The Health Sciences Fund will cease offering its shares to new investors for a
period of at least six months when total assets reach $150 million. This
limitation will not

28
<PAGE> 35

apply to existing shareholders of record who will be permitted to continue to
authorize investment in the Fund and to reinvest any dividends or capital gains
distributions. After the Fund has been closed for six months, the Fund will
evaluate whether to re-open the Fund to new investors.

Common Shares of each Fund may be purchased either by mail or, with special
advance instructions, by wire and automated clearing house transactions ("ACH on
Demand"). The minimum initial investment in each Fund is $2,500 and the minimum
subsequent investment is $100, except that subsequent minimum investments can be
as low as $50 under the Automatic Monthly Investment Plan or by ACH on Demand,
as described below. For certain retirement plans (described above) and UTMA/UGMA
accounts, the minimum initial investment is $500. The Fund reserves the right to
change the initial and subsequent investment minimum requirements at any time.
In addition, each Fund may, in its sole discretion, waive the initial and
subsequent investment minimum requirements with respect to investors who are
employees of Warburg or its affiliates or persons with whom Warburg has entered
into an investment advisory agreement. Existing investors will be given 15 days'
notice by mail of any increase in minimum investment requirements.

After an investor has made his initial investment, additional shares may be
purchased at any time by mail or by wire in the manner outlined below. Wire
payments for initial and subsequent investments should be preceded by an order
placed with a Fund and should clearly indicate the investor's account number and
the name of the Fund in which shares are being purchased. In the interest of
economy and convenience, physical certificates representing shares in a Fund are
not normally issued.

BY MAIL. If the investor desires to purchase Common Shares by mail, a check or
money order made payable to a Fund or Warburg Pincus Funds (in U.S. currency)
should be sent along with the completed account application to Warburg Pincus
Funds through its distributor, Counsellors Securities, at the address set forth
above. Checks payable to the investor and endorsed to the order of the Fund or
Warburg Pincus Funds will not be accepted as payment and will be returned to the
sender. If payment is received in proper form prior to the close of regular
trading on The New York Stock Exchange, Inc. (the "NYSE") (currently 4:00 p.m.,
Eastern time) on a day that the Fund calculates its net asset value (a "business
day"), the purchase will be made at the Fund's net asset value calculated at the
end of that day. If payment is received at or after the close of regular trading
on the NYSE, the purchase will be effected at the Fund's net asset value
determined for the next business day after payment has been received. Checks or
money orders that are not in proper form or that are not accompanied or preceded
by a complete account application will be returned to the sender. Shares
purchased by check or money order are entitled to receive dividends and
distributions beginning on the day payment is received. Checks or money orders
in payment for shares of more than one Warburg Pincus Fund should be made
payable to Warburg Pincus Funds and

29
<PAGE> 36

should be accompanied by a breakdown of amounts to be invested in each fund. If
a check used for purchase does not clear, the Fund will cancel the purchase and
the investor may be liable for losses or fees incurred. For a description of the
manner of calculating the Fund's net asset value, see "Net Asset Value" below.

BY WIRE. Investors may also purchase Common Shares in the Fund by wiring funds
from their banks. Telephone orders by wire will not be accepted until a
completed account application in proper form has been received and an account
number has been established. Investors should place an order with the Fund prior
to wiring funds by telephoning (800) 927-2874. Federal funds may be wired using
the following wire address:

State Street Bank and Trust Company

ABA# 0110 000 28

Attn: Mutual Funds/Custody Department

[Insert Warburg Pincus Fund name(s) here]
DDA# 9904-649-2

F/F/C: [Account; Number and Account Registration]

If a telephone order is received prior to the close of regular trading on the
NYSE and payment by wire is received on the same day in proper form in
accordance with instructions set forth above, the shares will be priced
according to the net asset value of the Fund on that day and are entitled to
dividends and distributions beginning on that day. However, if a wire in proper
form that is not preceded by a telephone order is received at or after the close
of regular trading on the NYSE, the payment will be held uninvested until the
order is effected at the close of business on the next business day. Payment for
orders that are not accepted will be returned to the prospective investor after
prompt inquiry. If a telephone order is placed and payment by wire is not
received on the same day, the Fund will cancel the purchase and the investor may
be liable for losses or fees incurred.

AUTOMATIC MONTHLY INVESTMENT PLAN AND ACH ON DEMAND. The Automatic Monthly
Investment Plan allows shareholders to authorize a Fund or its agent to debit
their bank account monthly ($50 minimum) for the purchase of Fund shares on or
about either the tenth or twentieth calendar day of each month. Shareholders may
also purchase shares by calling (800) 927-2874 on any business day to request
direct debit or credit (for redemptions) of their bank account through an ACH on
Demand transaction.

To establish the Automatic Monthly Investment Plan and/or ACH on Demand
option, obtain a separate application or complete the relevant section of the
account application. Only an account maintained at a financial institution which
is an automated clearing house member may be used, and one common name must
appear on both the shareholder's Fund registration and bank account
registration. Shareholders using this service must satisfy the initial
investment minimum for the Fund prior to or concurrent with the start of any
Automatic Monthly Investment Plan or ACH on Demand transaction. Please contact
Warburg Pincus Funds at (800) 927-2874 for additional information.

30
<PAGE> 37

Investors should allow a period of up to 30 days in order to implement an
Automatic Monthly Investment Plan or ACH on Demand transaction. The failure to
provide complete information could result in further delays.

If an ACH on Demand transaction request is received prior to the close of
regular trading on the NYSE, the shares will be priced according to the net
asset value of Fund shares on that day and are entitled to dividends and
distributions are described above for wire purchases. If a request is received
at or after the close of regular trading on the NYSE, the shares will be priced
at the relevant Fund's net asset value on the following business day.

TELEPHONE TRANSACTIONS. Unless otherwise indicated on the account application
or if the ACH on Demand option is elected an investor may request transactions
by telephone. Investors should realize that in conducting transactions by
telephone they may be giving up a measure of security that they may have if they
were to conduct these transactions in writing. Neither a Fund nor its agents
will be liable for following instructions communicated by telephone that it
reasonably believes to be genuine. Reasonable procedures will be employed on
behalf of each Fund designed to give reasonable assurance that instructions
communicated by telephone are genuine. Such procedures include providing written
confirmation of telephone transactions, tape recording telephone instructions
and requiring specific personal information prior to acting upon telephone
instructions.

PURCHASES THROUGH INTERMEDIARIES. Common Shares of each Fund are available
through the Charles Schwab & Company, Inc. Mutual Fund OneSource(TM) Program;
Fidelity Brokerage Services, Inc. Funds-Network(TM) Program; Jack White &
Company, Inc.; and Waterhouse Securities, Inc. Generally, these programs require
customers to pay either no or low transaction fees in connection with purchases,
exchanges or redemptions. Each Fund is also available through certain
broker-dealers, financial institutions and other industry professionals
(including the brokerage firms offering the programs described above,
collectively, "Service Organizations"). Certain features of each Fund, such as
the initial and subsequent investment minimums, redemption fees and certain
trading restrictions, may be modified or waived by Service Organizations.
Service Organizations may impose transaction or administrative charges or other
direct fees, which charges or fees would not be imposed if Fund shares are
purchased directly from the Fund. Therefore, a client or customer should contact
the Service Organization acting on his behalf concerning the fees (if any)
charged in connection with a purchase, exchange or redemption of Fund shares and
should read this Prospectus in light of the terms governing his accounts with
the Service Organization. Service Organizations will be responsible for promptly
transmitting client or customer purchase and redemption orders to the Fund in
accordance with their agreements with the fund and with clients or customers.

Service Organizations or, if applicable, their designees may enter confirmed
purchase, exchange or redemption orders on behalf of clients and customers, with
payment to follow no later than a Fund's pricing on the following

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<PAGE> 38

business day. If payment is not received by such time, the Service Organization
could be held liable for resulting fees or losses. The Fund may be deemed to
have received a purchase or redemption order when a Service Organization, or, if
applicable, its authorized designee, accepts the order. Such orders received by
the Fund in proper form will be priced at the Fund's net asset value next
computed after they are accepted by the Service Organization or its authorized
designee.

For administration, subaccounting, transfer agency and/or other services,
Warburg, Counsellors Securities or their affiliates may pay Service
Organizations and certain recordkeeping organizations a fee of up to .40% (the
"Service Fee") of the average annual value of accounts with the Fund maintained
by such Service Organizations or recordkeepers. A portion of the Service Fee may
be borne by the Fund as a transfer agency fee. In addition, a Service
Organization or recordkeeper may directly or indirectly pay a portion of its
Service Fee to the Fund's custodian or transfer agent for costs related to
accounts of its clients or customers. The Service Fee payable to any one Service
Organization or recordkeeper is determined based upon a number of factors,
including the nature and quality of services provided, the operations processing
requirements of the relationship and the standardized fee schedule of the
Service Organization or recordkeeper.

GENERAL. Each Fund reserves the right to reject any specific purchase order,
including certain purchases made by exchange (see "How to Redeem and Exchange
Shares -- Exchange of Shares" below). Purchase orders may be refused if, in
Warburg's opinion, a Fund would be unable to invest the money effectively in
accordance with its investment objective and policies, or would otherwise
potentially be adversely affected. A Fund may discontinue sales of its shares if
management believes that a substantial further increase in assets may adversely
affect the Fund's ability to achieve its investment objective. In such event,
however, it is anticipated that existing shareholders would be permitted to
continue to authorize investment in the Fund and to reinvest any dividends or
capital gains distributions.

HOW TO REDEEM AND EXCHANGE SHARES
- --------------------------------------------------------------------------------
REDEMPTION OF SHARES. An investor in a Fund may redeem (sell) his shares on
any day that the Fund's net asset value is calculated (see "Net Asset Value"
below).

Common Shares of the Funds may either be redeemed by mail or by telephone. If
an investor desires to redeem his shares by mail, a written request for
redemption should be sent to Warburg Pincus Funds at the address indicated above
under "How to Open an Account." An investor should be sure that the redemption
request identifies the Fund, the number of shares to be redeemed and the
investor's account number. Payment of redemption proceeds may be delayed in
connection with account changes. Each mail redemption request must be signed by
the registered owner(s) (or his legal representative(s)) exactly as the shares
are registered. If an investor has ap-

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<PAGE> 39

plied for the telephone redemption feature on his account application, he may
redeem his shares by calling Warburg Pincus Funds at (800) 927-2874. An investor
making a telephone withdrawal should state (i) the name of the Fund, (ii) the
account number of the Fund, (iii) the name of the investor(s) appearing on the
Fund's records, (iv) the amount to be withdrawn and (v) the name of the person
requesting the redemption.

After receipt of the redemption request by mail or by telephone, the
redemption proceeds will, at the option of the investor, be paid by check and
mailed to the investor of record or be wired to the investor's bank as indicated
in the account application previously filled out by the investor. No Fund
currently imposes a service charge for effecting wire transfers but each Fund
reserves the right to do so in the future. During periods of significant
economic or market change, telephone redemptions may be difficult to implement.
If an investor is unable to contact Warburg Pincus Funds by telephone, an
investor may deliver the redemption request to Warburg Pincus Funds by mail at
the address shown above under "How to Open an Account." Although each Fund will
redeem shares purchased by check, through the Automatic Monthly Investment Plan
or by ACH on Demand before the funds or check clear, payments of the redemption
proceeds will be delayed for up to five days (for funds received through the
Automatic Monthly Investment Plan or by ACH on Demand) or up to 10 days (for
check purchases) from the date of purchase. Investors should consider purchasing
shares using a certified or bank check, money order or federal funds wire if
they anticipate an immediate need for redemption proceeds.

If a redemption order is received by a Fund or its agent prior to the close of
regular trading on the NYSE, the redemption order will be effected at the net
asset value per share as determined on that day. If a redemption order is
received at or after the close of regular trading on the NYSE, the redemption
order will be effected at the net asset value as next determined. Except as
noted above, redemption proceeds will normally be mailed or wired to an investor
on the next business day following the date a redemption order is effected. If,
however, in the judgment of Warburg, immediate payment would adversely affect a
Fund, each Fund reserves the right to pay the redemption proceeds within seven
days after the redemption order is effected. Furthermore, each Fund may suspend
the right of redemption or postpone the date of payment upon redemption (as well
as suspend or postpone the recordation of an exchange of shares) for such
periods as are permitted under the 1940 Act.

The proceeds paid upon redemption may be more or less than the amount invested
depending upon a share's net asset value at the time of redemption. If an
investor redeems all the shares in his account, all dividends and distributions
declared up to and including the date of redemption are paid along with the
proceeds of the redemption.

If, due to redemptions, the value of an investor's account drops to less than
$2,000 ($250 in the case of a retirement plan or UTMA/UGMA account), each Fund
reserves the right to redeem the shares in that account at net asset value.

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<PAGE> 40

Prior to any redemption, the Fund will notify an investor in writing that this
account has a value of less than the minimum. The investor will then have 60
days to make an additional investment before a redemption will be processed by
the Fund.

AUTOMATIC CASH WITHDRAWAL PLAN. Each Fund offers investors an automatic cash
withdrawal plan under which investors may elect to receive periodic cash
payments of at least $250 monthly or quarterly. To establish this service,
complete the "Automatic Withdrawal Plan" section of the account application and
attach a voided check from the bank account to be credited. For further
information regarding the automatic cash withdrawal plan or to modify or
terminate the plan, investors should contact Warburg Pincus Funds at (800)
927-2874.

EXCHANGE OF SHARES. An investor may exchange Common Shares of a Fund for
Common Shares of another Fund or for Common Shares of another Warburg Pincus
Fund at their respective net asset values. Exchanges may be effected by mail or
by telephone in the manner described under "Redemption of Shares" above. If an
exchange request is received by Warburg Pincus Funds or its agent prior to the
close of regular trading on the NYSE, the exchange will be made at each Fund's
net asset value determined at the end of that business day. Exchanges will be
effected without a sales charge but must satisfy the minimum dollar amount
necessary for new purchases. Currently, exchanges may be made among the Funds
and with the following other funds:

- - WARBURG PINCUS CASH RESERVE FUND -- a money market fund investing in
short-term, high quality money market instruments;
- - WARBURG PINCUS NEW YORK TAX EXEMPT FUND -- a money market fund investing in
short-term, high quality municipal obligations designed for New York investors
seeking income exempt from federal, New York State and New York City income
tax;

- - WARBURG PINCUS NEW YORK INTERMEDIATE MUNICIPAL FUND -- an intermediate-term
municipal bond fund designed for New York investors seeking income exempt from
federal, New York State and New York City income tax;

- - WARBURG PINCUS INTERMEDIATE MATURITY GOVERNMENT FUND -- an intermediate-term
bond fund investing in obligations issued or guaranteed by the U.S.
government, its agencies or instrumentalities;
- - WARBURG PINCUS FIXED INCOME FUND -- a bond fund seeking current income and,
secondarily, capital appreciation by investing in a diversified portfolio of
fixed-income securities;
- - WARBURG PINCUS GLOBAL FIXED INCOME FUND -- a bond fund investing in a
portfolio consisting of investment grade fixed-income securities of
governmental and corporate issuers denominated in various currencies,
including U.S. dollars;
- - WARBURG PINCUS BALANCED FUND -- a fund seeking maximum total return through a
combination of long-term growth of capital and current income consistent with
preservation of capital through diversified investments in equity and debt
securities;

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<PAGE> 41

- - WARBURG PINCUS GROWTH & INCOME FUND -- an equity fund seeking long-term growth
of capital and income and a reasonable current return;

- - WARBURG PINCUS SMALL COMPANY GROWTH FUND* -- an equity fund seeking capital
growth by investing in equity securities of small-sized domestic companies;

- - WARBURG PINCUS POST-VENTURE CAPITAL FUND -- an equity fund seeking long-term
growth of capital by investing principally in equity securities of issuers in
their post-venture capital stage of development;

- - WARBURG PINCUS MAJOR FOREIGN MARKETS FUND -- an equity fund seeking long-term
capital appreciation by investing in equity securities of issuers consisting
of companies in major foreign securities markets;

- - WARBURG PINCUS INTERNATIONAL EQUITY FUND -- an equity fund seeking long-term
capital appreciation by investing primarily in equity securities of non-United
States issuers;
- - WARBURG PINCUS EMERGING MARKETS FUND -- an equity fund seeking growth of
capital by investing primarily in securities of non-United States issuers
consisting of companies in emerging securities markets;
- - WARBURG PINCUS JAPAN GROWTH FUND -- an equity fund seeking long-term growth of
capital by investing primarily in equity securities of Japanese issuers; and
- - WARBURG PINCUS JAPAN OTC FUND -- an equity fund seeking long-term capital
appreciation by investing in a portfolio of securities traded in the Japanese
over-the-counter market.

The exchange privilege is available to shareholders residing in any state in
which the Common Shares being acquired may legally be sold. When an investor
effects an exchange of shares, the exchange is treated for federal income tax
purposes as a redemption. Therefore, the investor may realize a taxable gain or
loss in connection with the exchange. Investors wishing to exchange Common
Shares of a Fund for Common Shares in another Warburg Pincus Fund should review
the prospectus of the other fund prior to making an exchange. For further
information regarding the exchange privilege or to obtain a current prospectus
for another Warburg Pincus Fund, an investor should contact Warburg Pincus Funds
at (800) 927-2874.

The Funds reserve the right to refuse exchange purchases by any person or
group if, in Warburg's judgment, a Fund would be unable to invest the money
effectively in accordance with its investment objective and policies, or would
otherwise potentially be adversely affected. Examples of when an exchange
purchase could be refused are when the Fund receives or anticipates receiving
large exchange orders at or about the same time and/or when a pattern of
exchanges within a short period of time (often associated with a "market timing"
strategy) is discerned. The Fund may refuse exchange purchases at

- ---------------

* Warburg Pincus Small Company Growth Fund is currently closed to certain new
investors; the Small Company Growth Fund's prospectus describes the types of
investors that may purchase shares.

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<PAGE> 42

any time without prior notice. The Funds reserve the right to terminate or
modify the exchange privilege at any time upon 30 days' notice to shareholders.

DIVIDENDS, DISTRIBUTIONS AND TAXES

- --------------------------------------------------------------------------------
DIVIDENDS AND DISTRIBUTIONS. Each Fund calculates its dividends from net
investment income. Net investment income includes interest accrued and dividends
earned on the Fund's portfolio securities for the applicable period less
applicable expenses. Each Fund declares dividends from its net investment income
and net realized short-term and long-term capital gains annually and pays them
in the calendar year in which they are declared, generally in November or
December. Net investment income earned on weekends and when the NYSE is not open
will be computed as of the next business day. Unless an investor instructs a
Fund to pay dividends or distributions in cash, dividends and distributions will
automatically be reinvested in additional Common Shares of the relevant Fund at
net asset value. The election to receive dividends in cash may be made on the
account application or, subsequently, by writing to Warburg Pincus Funds at the
address set forth under "How to Open an Account" or by calling Warburg Pincus
Funds at (800) 927-2874.
A Fund may be required to withhold for U.S. federal income taxes 31% of all
distributions payable to shareholders who fail to provide the Fund with their
correct taxpayer identification number or to make required certifications, or
who have been notified by the U.S. Internal Revenue Service that they are
subject to backup withholding.
TAXES. Each Fund intends to qualify each year as a "regulated investment
company" within the meaning of the Code. Each Fund, if it qualifies as a
regulated investment company, will be subject to a 4% non-deductible excise tax
measured with respect to certain undistributed amounts of ordinary income and
capital gain. Each Fund expects to pay such additional dividends and to make
such additional distributions as are necessary to avoid the application of this
tax.
Dividends paid from net investment income and distributions of net realized
short-term capital gains are taxable to investors as ordinary income, and
distributions derived from net realized long-term capital gains are taxable to
investors as long-term capital gains, in each case regardless of how long the
shareholder has held Fund shares and whether received in cash or reinvested in
additional Fund shares. As a general rule, an investor's gain or loss on a sale
or redemption of his Fund shares will be a long-term capital gain or loss if he
has held his shares for more than one year and will be a short-term capital gain
or loss if he has held his shares for one year or less. However, any loss
realized upon the sale or redemption of shares within six months from the date
of their purchase will be treated as a long-term capital loss to the extent of
any amounts treated as distributions of long-term capital gain during such six-
month period with respect to such shares.

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<PAGE> 43

The Taxpayer Relief Act of 1997 made certain changes to the Code with respect
to taxation of long-term capital gains earned by taxpayers other than a
corporation. In general, for sales made after May 6, 1997, the maximum tax rate
for individual taxpayers on net long-term capital gains is lowered to 20% for
most assets (including long-term capital gains recognized by shareholders on the
sale or redemption of Fund shares that were held as capital assets). This 20%
rate applies to sales on or after July 29, 1997 only if the asset was held for
more than 18 months at the time of disposition. Capital gains on the disposition
of assets on or after July 29, 1997 held for more than one year and up to 18
months at the time of disposition will be taxed as "mid-term gain" at a maximum
rate of 28%. A rate of 18% instead of 20% will apply after December 31, 2000 for
assets held for more than 5 years. However, the 18% rate applies only to assets
acquired after December 31, 2000 unless the taxpayer elects to treat an asset
held prior to such date as sold for fair market value on January 1, 2001. In the
case of individuals whose ordinary income is taxed at a 15% rate, the 20% rate
is reduced to 10% and the 10% rate for assets held for more than 5 years is
reduced to 8%. The Funds will provide information relating to that portion of a
"capital gain dividend" that may be treated by investors as eligible for the
reduced capital gains rate for capital assets held for more than 18 months.

Investors may be proportionately liable for taxes on income and gains of the
Funds, but investors not subject to tax on their income will not be required to
pay tax on amounts distributed to them. A Fund's investment activities,
including short sales of securities, will not result in unrelated business
taxable income to a tax-exempt investor. The Funds will designate that portion
of each Fund's dividends that will qualify for the federal dividends received
deduction for corporations.

Special Tax Matters Relating to the Global Post-Venture Capital and Strategic
Value Funds. Dividends and interest received by a Fund may be subject to
withholding and other taxes imposed by foreign countries. However, tax
conventions between certain countries and the U.S. may reduce or eliminate such
taxes. If the Fund qualifies as a regulated investment company, if certain asset
and distribution requirements are satisfied and if more than 50% of the Fund's
total assets at the close of its fiscal year consist of stock or securities of
foreign corporations, the Fund may elect for U.S. income tax purposes to treat
foreign income taxes paid by it as paid by its shareholders. The Fund may
qualify for and make this election in some, but not necessarily all, of its
taxable years. If the Fund were to make the election, shareholders of the Fund
would be required to take into account an amount equal to their pro rata
portions of such foreign taxes in computing their taxable income and then treat
an amount equal to those foreign taxes as a U.S. federal income tax deduction or
as a foreign tax credit against their U.S. federal income taxes. Shortly after
any year for which it makes such an election, the Fund will report to its
shareholders the amount per share of such foreign tax that must be included in
each shareholder's gross income and the amount which will be available for the

37
<PAGE> 44

deduction or credit. No deduction for foreign taxes may be claimed by a
shareholder who does not itemize deductions. Certain limitations will be imposed
on the extent to which the credit (but not the deduction) for foreign taxes may
be claimed.

Special Tax Matters Relating to the Strategic Value Fund. The investments by
the Fund in zero coupon securities may create special tax consequences. Zero
coupon securities do not make interest payments, although a portion of the
difference between a zero coupon security's face value and its purchase price is
imputed as income to the Fund each year even though the Fund receives no cash
distribution until maturity. Under the U.S. federal tax laws, the Fund will not
be subject to tax on this income if it pays dividends to its shareholders
substantially equal to all the income received from, or imputed with respect to,
its investments during the year, including its zero coupon securities. These
dividends ordinarily will constitute taxable income to the shareholders of the
Fund.

GENERAL. Statements as to the tax status of each investor's dividends and
distributions are mailed annually. Each investor will also receive, if
applicable, various written notices after the close of a Fund's prior taxable
year with respect to certain dividends and distributions which were received
from the Fund during the Fund's prior taxable year. Investors should consult
their own tax advisers with specific reference to their own tax situations,
including their state and local tax liabilities.

NET ASSET VALUE
- --------------------------------------------------------------------------------

Each Fund's net asset value per share is calculated as of the close of regular
trading on the NYSE (currently 4:00 p.m., Eastern time) on each business day,
Monday through Friday, except on days when the NYSE is closed. The NYSE is
currently scheduled to be closed on New Year's Day, Dr. Martin Luther King, Jr.
Day, Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving Day and Christmas Day, and on the preceding Friday or subsequent
Monday when one of these holidays falls on a Saturday or Sunday, respectively.
The net asset value per share of each Fund generally changes each day.

The net asset value per Common Share of each Fund is computed by adding the
Common Shares' pro rata share of the value of the Fund's assets, deducting the
Common Shares' pro rata share of the Fund's liabilities and the liabilities
specifically allocated to Common Shares and then dividing the result by the
total number of outstanding Common Shares.
Securities listed on a U.S. securities exchange (including securities traded
through the Nasdaq National Market System) or foreign securities exchange or
traded in an over-the-counter market will be valued at the most recent sale
price when the valuation is made. Options and futures contracts will be valued
similarly. Debt obligations that mature in 60 days or less from the valuation
date are valued on the basis of amortized cost, unless the Board

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<PAGE> 45

determines that using this valuation method would not reflect the investments'
value.

The Global Post-Venture Capital Fund's investments in Private Funds will be
valued initially at cost and, thereafter, in accordance with periodic reports
received by Abbott from the Private Funds (generally quarterly). Because the
issuers of securities held by Private Funds are generally not subject to the
reporting requirements of the federal securities laws, interim changes in value
of investments in Private Funds will not generally be reflected in the Fund's
net asset value. However, Warburg will report to the Board of the Fund
information about certain holdings of Private Funds that, in its judgment, could
have a material impact on the valuation of a Private Fund. The Board of the Fund
will take these reports into account in valuing Private Funds.

Securities, options and futures contracts for which market quotations are not
readily available and other assets, including with respect to the Global
Post-Venture Capital Fund, Private Funds, will be valued at their fair value as
determined in good faith pursuant to consistently applied procedures established
by the Board. Further information regarding valuation policies is contained in
the Statement of Additional Information.

PERFORMANCE
- --------------------------------------------------------------------------------
The Funds quote the performance of Common Shares separately from Advisor
Shares. The net asset value of Common Shares is listed in The Wall Street
Journal each business day under the heading "Warburg Pincus Funds." From time to
time, each Fund may advertise the average annual total return of its Common
Shares over various periods of time. These total return figures show the average
percentage change in value of an investment in the Common Shares from the
beginning of the measuring period to the end of the measuring period. The
figures reflect changes in the price of the Common Shares assuming that any
income dividends and/or capital gain distributions made by the Fund during the
period were reinvested in Common Shares of the Fund. Total return will be shown
for recent one-, five- and ten-year periods, and may be shown for other periods
as well (such as from commencement of the Fund's operations or on a
year-by-year, quarterly or current year-to-date basis).
When considering average total return figures for periods longer than one
year, it is important to note that the annual total return for one year in the
period might have been greater or less than the average for the entire period.
When considering total return figures for periods shorter than one year,
investors should bear in mind that each Fund seeks long-term appreciation and
that such return may not be representative of any Fund's return over a longer
market cycle. Each Fund may also advertise aggregate total return figures of its
Common Shares for various periods, representing the cumulative change in value
of an investment in the Common Shares for the specific period (again reflecting
changes in share prices and assuming reinvestment of dividends and
distributions). Aggregate and average total returns may be shown by

39
<PAGE> 46

means of schedules, charts or graphs and may indicate various components of
total return (i.e., change in value of initial investment, income dividends and
capital gain distributions).
Investors should note that total return figures are based on historical
earnings and are not intended to indicate future performance. The Statement of
Additional Information describes the method used to determine the total return.
Current total return figures may be obtained by calling Warburg Pincus Funds at
(800) 927-2874.

Each Fund may compare its performance with (i) that of other mutual funds as
listed in the rankings prepared by Lipper Analytical Services, Inc. or similar
investment services that monitor the performance of mutual funds or as set forth
in the publications listed below; (ii) in the case of the Capital Appreciation
Fund, with appropriate indexes prepared by Frank Russell Company relating to
securities represented in the Fund, the S&P Midcap 400 Index and the S&P 500
Index; in the case of the Global Post-Venture Capital Fund, with the Venture
Capital 100 Index (compiled by Venture Capital Journal), appropriate indexes
prepared by Frank Russell Company relating to securities represented in the
Fund, the EAFE Index, the Salomon Russell Global Equity Index, the FT-Actuaries
World Indices (jointly compiled by The Financial Times, Ltd., Goldman, Sachs &
Co. and NatWest Securities Ltd.) and the S&P 500 Index, all of which are
unmanaged indexes of common stocks; in the case of the Health Sciences Fund,
various unmanaged indexes, developed and maintained by S&P, relating to the
securities of health sciences companies; and in the case of the Strategic Value
Fund, appropriate indexes prepared by Frank Russell Company relating to
securities represented in the Fund and the S&P 500 Index; or (iii) other
appropriate indexes of investment securities or with data developed by Warburg
derived from such indexes. A Fund may include evaluations of the Fund published
by nationally recognized ranking services and by financial publications that are
nationally recognized, such as Barron's, Business Week, Financial Times, Forbes,
Fortune, Inc., Institutional Investor, Investor's Business Daily, Money,
Morningstar, Mutual Fund Magazine, SmartMoney, The Wall Street Journal and
Worth. Morningstar, Inc. rates funds in broad categories based on risk/reward
analyses over various time periods. In addition, each Fund may from time to time
compare the expense ratio of its Common Shares to that of investment companies
with similar objectives and policies, based on data generated by Lipper
Analytical Services, Inc. or similar investment services that monitor mutual
funds.

In reports or other communications to investors or in advertising, each Fund
may also describe the general biography or work experience of the portfolio
managers of the Fund and may include quotations attributable to the portfolio
managers describing approaches taken in managing the Fund's investments,
research methodology underlying stock selection or the Fund's investment
objective. In addition, a Fund and its portfolio managers may render periodic
updates of Fund activity, which may include a discussion of significant
portfolio holdings; analysis of holdings by industry, country, credit quality

40
<PAGE> 47

and other characteristics; and comparison and analysis of the Fund with respect
to relevant market and industry benchmarks. The Global Post-Venture Capital Fund
may also discuss characteristics of venture capital financed companies and the
benefits expected to be achieved from investing in these companies. Each Fund
may also discuss measures of risk, the continuum of risk and return relating to
different investments and the potential impact of foreign stocks on a portfolio
otherwise composed of domestic securities.

GENERAL INFORMATION
- --------------------------------------------------------------------------------

ORGANIZATION. The Capital Appreciation Fund was organized on January 20, 1987
under the laws of The Commonwealth of Massachusetts and is a business entity
commonly known as "Massachusetts business trust." On February 26, 1992, the Fund
amended its Agreement and Declaration of Trust to change its name from
"Counsellors Capital Appreciation Fund" to "Warburg, Pincus Capital Appreciation
Fund." The Global Post-Venture Capital Fund was incorporated on July 16, 1996
under the laws of the State of Maryland under the name "Warburg, Pincus Global
Post-Venture Capital Fund, Inc." The Health Sciences Fund was incorporated on
October 31, 1996 under the laws of the State of Maryland under the name
"Warburg, Pincus Health Sciences Fund, Inc." The Strategic Value Fund was
incorporated on November 12, 1996 under the laws of the State of Maryland. On
December 4, 1996, the Fund changed its name from "Warburg, Pincus Special Equity
Fund, Inc." to "Warburg, Pincus Strategic Value Fund, Inc."

The Capital Appreciation Fund's Agreement and Declaration of Trust authorizes
the Board to issue an unlimited number of full and fractional shares of
beneficial interest, $.001 par value per share, of which an unlimited number are
designated Common Shares and an unlimited number are designated Advisor Shares.
The charter of each of the Global Post-Venture Capital Fund, Health Sciences
Fund and Strategic Value Fund authorizes the Board to issue three billion full
and fractional shares of capital stock, $.001 par value per share, of which
shares are designated Common Shares or Advisor Shares. Under each Fund's charter
documents, the Board has the power to classify or reclassify any unissued shares
of the Fund into one or more additional classes by setting or changing in any
one or more respects their relative rights, voting powers, restrictions,
limitations as to dividends, qualifications and terms and conditions of
redemption. A Board may similarly classify or reclassify any class of its shares
into one or more series and, without shareholder approval, may increase the
number of authorized shares of the Fund.

MULTI-CLASS STRUCTURE. Each Fund (except the Health Sciences Fund) offers a
separate class of shares, the Advisor Shares, pursuant to a separate prospectus.
Although it does not currently do so, the Health Sciences Fund is authorized to
offer Advisor Shares in the future. Individual investors may only purchase
Advisor Shares through institutional shareholders of record, broker-dealers,
financial institutions, depository institutions, retirement plans and financial
intermediaries. Shares of each class represent equal pro rata interests

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<PAGE> 48

in the respective Fund and accrue dividends and calculate net asset value and
performance quotations in the same manner. Because of the higher fees paid by
the Advisor Shares, the total return on such shares can be expected to be lower
than the total return on Common Shares. Investors may obtain information
concerning the Advisor Shares from their investment professional or by calling
Counsellors Securities at (800) 927-2874.

VOTING RIGHTS. Investors in a Fund are entitled to one vote for each full
share held and fractional votes for fractional shares held. Shareholders of a
Fund will vote in the aggregate except where otherwise required by law and
except that each class will vote separately on certain matters pertaining to its
distribution and shareholder servicing arrangements. There will normally be no
meetings of investors for the purpose of electing members of the governing Board
unless and until such time as less than a majority of the members holding office
have been elected by investors. Investors of record of no less than two-thirds
of the outstanding shares of the Capital Appreciation Fund may remove a Trustee
through a declaration in writing or by vote cast in person or by proxy at a
meeting called for that purpose. Any Director of the Global Post-Venture Capital
Fund, Health Sciences Fund or Strategic Value Fund may be removed from office
upon the vote of shareholders holding at least a majority of the relevant Fund's
outstanding shares, at a meeting called for that purpose. A meeting will be
called for the purpose of voting on the removal of a Board member at the written
request of holders of 10% of the outstanding shares of a Fund. Lionel I. Pincus
may be deemed to be a controlling person of the Capital Appreciation Fund,
Global Post-Venture Capital Fund and Strategic Value Fund because he may be
deemed to possess or share investment power over shares owned by clients of
Warburg.

SHAREHOLDER COMMUNICATIONS. Each investor will receive a quarterly statement
of his account, as well as a statement of his account after any transaction that
affects his share balance or share registration (other than the reinvestment of
dividends or distributions or investment made through the Automatic Investment
Program). Each Fund will also send to its investors a semiannual report and an
audited annual report, each of which includes a list of the investment
securities held by the Fund and a statement of the performance of the Fund.
Periodic listings of the investment securities held by a Fund, as well as
certain statistical characteristics of the Fund, may be obtained by calling
Warburg Pincus Funds at (800) 927-2874 or on the Warburg Pincus Funds Web site
at www.warburg.com.

The Common Share prospectuses of the Funds are combined in this Prospectus.
Each Fund offers only its own shares, yet it is possible that a Fund might
become liable for a misstatement, inaccuracy or omission in this Prospectus with
regard to another Fund.

------------------------------

NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, THE STATEMENT

42
<PAGE> 49

OF ADDITIONAL INFORMATION OR THE FUNDS' OFFICIAL SALES LITERATURE IN CONNECTION
WITH THE OFFERING OF SHARES OF THE FUNDS, AND IF GIVEN OR MADE, SUCH OTHER
INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY EACH FUND. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER OF THE COMMON SHARES
OF THE FUNDS IN ANY STATE IN WHICH, OR TO ANY PERSON TO WHOM, SUCH OFFER MAY NOT
LAWFULLY BE MADE.

43
<PAGE> 50

TABLE OF CONTENTS

<TABLE>
<S> <C>
The Funds' Expenses...................................... 2
Financial Highlights..................................... 4
Investment Objectives and Policies....................... 6
Portfolio Investments.................................... 12
Risk Factors and Special Considerations.................. 15
Portfolio Transactions and Turnover Rate................. 18
Certain Investment Strategies............................ 18
Investment Guidelines.................................... 24
Management of the Funds.................................. 25
How to Open an Account................................... 28
How to Purchase Shares................................... 28
How to Redeem and Exchange Shares........................ 32
Dividends, Distributions and Taxes....................... 36
Net Asset Value.......................................... 38
Performance.............................................. 39
General Information...................................... 41
</TABLE>

LOGO
P.O. BOX 9030, BOSTON, MA 02205-9030
800-WARBURG (800-927-2874)
www.warburg.com

COUNSELLORS SECURITIES INC., DISTRIBUTOR. WPUSL-1-0298

<PAGE> 51

WARBURG PINCUS ADVISOR FUNDS FEBRUARY 27, 1998

GLOBAL POST-VENTURE CAPITAL FUND

[LOGO]
<PAGE> 52

PROSPECTUS February 27, 1998

Warburg Pincus Advisor Funds is a family of open-end mutual funds that are
offered to investors who wish to buy shares through an investment professional,
to financial institutions investing on behalf of their customers and to
retirement plans that elect to make one or more Advisor Funds an investment
option for participants in the plans. One Advisor Fund is described in this
Prospectus:

WARBURG PINCUS GLOBAL POST-VENTURE CAPITAL FUND seeks long-term growth of
capital. The Fund will pursue its objective by investing primarily in equity
securities of U.S. and foreign issuers in their post-venture capital stage of
development and pursues an aggressive investment strategy. Because of the nature
of the Fund's investments and certain strategies it may use, an investment in
the Fund involves certain risks and may not be appropriate for all investors.

The Fund currently offers two classes of shares, one of which, the Advisor
Shares, is offered pursuant to this Prospectus. The Advisor Shares of the Fund,
as well as Advisor Shares of certain other Warburg Pincus-advised funds, are
sold under the name "Warburg Pincus Advisor Funds." Individual investors may
purchase Advisor Shares only through institutional shareholders of record,
broker-dealers, financial institutions, depository institutions, retirement
plans and other financial intermediaries ("Institutions"). The Advisor Shares
impose a 12b-1 fee of .50% per annum, which is the economic equivalent of a
sales charge. The Fund's Common Shares are available for purchase by individuals
directly and are offered by a separate prospectus.

NO MINIMUM INVESTMENT
- --------------------------------------------------------------------------------

There is no minimum amount of initial or subsequent purchases of shares imposed
on Institutions. See "How to Purchase Shares."

This Prospectus briefly sets forth certain information about the Fund that
investors should know before investing. Investors are advised to read this
Prospectus and retain it for future reference. Additional information about the
Fund has been filed with the Securities and Exchange Commission (the "SEC"). The
SEC maintains a Web site (http://www.sec.gov) that contains the Statement of
Additional Information, material incorporated by reference and other information
regarding the Fund. The Statement of Additional Information is also available
upon request and without charge by calling Warburg Pincus Advisor Funds at (800)
369-2728. Information regarding the status of shareholder accounts may also be
obtained by calling the Fund at the same number. Warburg Pincus Funds maintains
a Web site at www.warburg.com. The Statement of Additional Information, as
amended or supplemented from time to time, bears the same date as this
Prospectus and is incorporated by reference in its entirety into this
Prospectus.

SHARES OF THE FUND ARE NOT DEPOSITS OR OBLIGATIONS OF OR GUARANTEED OR ENDORSED
BY ANY BANK, AND SHARES ARE NOT FEDERALLY INSURED BY THE FEDERAL DEPOSIT
INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER AGENCY.
INVESTMENTS IN SHARES OF THE FUND INVOLVE INVESTMENT RISKS, INCLUDING THE
POSSIBLE LOSS OF THE PRINCIPAL AMOUNT INVESTED.
- --------------------------------------------------------------------------------

THE FUND'S EXPENSES
- --------------------------------------------------------------------------------

Warburg Pincus Global Post-Venture Capital Fund (the "Fund") currently offers
two separate classes of shares: Common Shares and Advisor Shares. See "General
Information." Because of the higher fees paid by Advisor Shares, the total
return on such shares can be expected to be lower than the total return on
Common Shares.

<TABLE>
<S> <C>
Shareholder Transaction Expenses
Maximum Sales Load Imposed on Purchases (as a percentage of offering
price).................................................................. 0
Annual Fund Operating Expenses
(as a percentage of average net assets)
Management Fees........................................................... .40%
12b-1 Fees................................................................ .50%+
Other Expenses............................................................ 1.00%
----
Total Fund Operating Expenses (after fee waivers)*........................ 1.90%
EXAMPLE
You would pay the following expenses on a $1,000 investment, assuming (1)
5% annual return and (2) redemption at the end of each time period:
1 year................................................................... $ 19
3 years.................................................................. $ 60
5 years.................................................................. $103
10 years.................................................................. $222
</TABLE>

- --------------------------------------------------------------------------------

+ 12b-1 fees are .50% out of a maximum .75% authorized under the Advisor
Shares' Distribution Plan.

* Annual Fund Operating Expenses for the Fund are based on actual expenses for
the fiscal year ended October 31, 1997, net of any applicable fee waivers or
expense reimbursements. Absent such waivers and/or reimbursements, Management
Fees would have equalled 1.25%, Other Expenses would have equalled 11.31% and
Total Fund Operating Expenses would have equalled 13.06%. The investment
adviser and co-administrator are under no obligation to continue waivers
and/or reimbursements.

---------------------------

The expense table shows the costs and expenses that an investor will bear
directly or indirectly as an Advisor Shareholder of the Fund. Institutions also
may charge their clients fees in connection with investments in Advisor Shares,
which fees are not reflected in the table. The Example should not be considered
a representation of past or future expenses; actual Fund expenses may be greater
or less than those shown. Moreover, while the Example assumes a 5% annual
return, the Fund's actual performance will vary and may result in a return
greater or less than 5%. Long-term holders of Advisor Shares may pay more than
the economic equivalent of the maximum sales charges permitted by the National
Association of Securities Dealers, Inc.

2
<PAGE> 54

FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
(FOR AN ADVISOR SHARE OUTSTANDING THROUGHOUT EACH PERIOD)

The following information regarding the Fund for the fiscal year ended October
31, 1997 and the fiscal period ended October 31, 1996 has been derived from
information audited by Coopers & Lybrand L.L.P., independent accountants, whose
report dated December 19 , 1997 is incorporated by reference in the Fund's
Statement of Additional Information. Further information about the performance
of the Fund is contained in the Fund's annual report, dated October 31, 1997,
copies of which may be obtained without charge by calling Warburg Pincus Advisor
Funds at (800) 369-2728.

<TABLE>
<CAPTION>
For the Period
September 30, 1996
(Commencement of
For the Year Operations)
Ended through
October 31, 1997 October 31, 1996
---------------- ------------------
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD................... $ 9.85 $ 10.00
------ ------
Income from Investment Operations
Net Investment Loss.................................. (0.15) 0.00
Net Loss on Securities and Foreign Currency Related
Items
(both realized and unrealized)..................... 1.41 (0.15)
------ ------
Total from Investment Operations..................... 1.26 (0.15)
------ ------
Less Distributions
Dividends from Net Investment Income................. 0.00 0.00
Distributions from Realized Gains.................... 0.00 0.00
------ ------
Total distributions.................................. 0.00 0.00
------ ------
NET ASSET VALUE, END OF PERIOD......................... $ 11.11 $ 9.85
====== ======
Total Return........................................... 12.79% (1.50)%+
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (000s)....................... $1.00 $6.00
Ratios to Average Daily Net Assets:
Operating expenses................................... 1.90%@ 1.90%*@
Net investment loss.................................. (1.15)% (.78)%*
Decrease reflected in above operating expense ratio
due to waivers/reimbursements...................... 11.16% 22.23%*
Portfolio Turnover Rate................................ 207.25% 5.85%+
Average Commission Rate #.............................. $0.0504 $0.0323
</TABLE>

- --------------------------------------------------------------------------------

@ Interest earned on uninvested cash balances is used to offset portions of the
transfer agent expense. These arrangements had no effect on the Advisor
Shares' expense ratio.

# Computed by dividing the total amount of commissions paid by the total number
of shares purchased and sold during the period for which there was a
commission charged.

+ Non-annualized.

* Annualized.

3
<PAGE> 55

INVESTMENT OBJECTIVE AND POLICIES
- --------------------------------------------------------------------------------
Because of the nature of the Fund's investments and certain strategies it may
use, such as investing in Private Funds (as defined below), an investment in the
Fund should be considered only for the aggressive portion of an investor's
portfolio and may not be appropriate for all investors.
The Fund seeks long-term growth of capital. This objective is a fundamental
policy and may not be amended without first obtaining the approval of a majority
of the outstanding shares of the Fund. Any investment involves risk and,
therefore, there can be no assurance that the Fund will achieve its investment
objective. See "Portfolio Investments" and "Certain Investment Strategies" for
descriptions of certain types of investments the Fund may make.

The Fund is a diversified management investment company that pursues an
aggressive investment strategy. The Fund pursues its investment objective by
investing primarily in equity securities of U.S. and foreign issuers considered
by Warburg Pincus Asset Management, Inc., the Fund's investment adviser
("Warburg") to be in their post-venture capital stage of development. The Fund
intends to invest in post-venture capital companies, as defined below, traded on
national securities exchanges and in over-the-counter markets and other public
markets in various developed countries as well as emerging securities markets.

Although the Fund may invest up to 10% of its assets in venture capital and
other investment funds, the Fund is not designed primarily to provide venture
capital financing. Rather, under normal market conditions, the Fund will invest
at least 65% of its total assets in equity securities of "post-venture capital
companies" located in at least three countries, including the United States. A
post-venture capital company is a company that has received venture capital
financing either (a) during the early stages of the company's existence or the
early stages of the development of a new product or service or (b) as part of a
restructuring or recapitalization of the company. The investment of venture
capital financing, distribution of such company's securities to venture capital
investors, or initial public offering ("IPO"), whichever is later, will have
been made within ten years prior to the Fund's purchase of the company's
securities. The Fund currently intends to invest at least 35% of total assets in
non-U.S. post-venture capital and other companies. A company will be considered
to be located in the country where (i) the company is organized, (ii) where its
principal business activities are conducted and where at least 50% of its
revenues or profits from goods produced or sold are derived, investments are
made or services are performed or (iii) where the principal trading market for
the company's securities is located.

Warburg believes that venture capital participation in a company's capital
structure can lead to revenue/earnings growth rates above those of older, public
companies such as those in the Dow Jones Industrial Average, the Fortune 500 or
the Morgan Stanley Capital International Europe, Australasia, Far East ("EAFE")
Index. Venture capitalists finance start-up companies, com-

4
<PAGE> 56

panies in the early stages of developing new products or services and companies
undergoing a restructuring or recapitalization, since these companies may not
have access to conventional forms of financing (such as bank loans or public
issuances of stock). Venture capitalists may hold substantial positions in
companies that may have been acquired at prices significantly below the initial
public offering price. This may create a potential adverse impact in the
short-term on the market price of a company's stock due to sales in the open
market by a venture capitalist or others who acquired the stock at lower prices
prior to the company's IPO. Warburg will consider the impact of such sales in
selecting post-venture capital investments. Venture capitalists may be
individuals or funds organized by venture capitalists which are typically
offered only to large institutions, such as pension funds and endowments, and
certain accredited investors. Outside of the United States, venture capitalists
may also consist of merchant banks and other banking institutions that provide
venture capital financing in a manner similar to U.S. venture capitalists.
Venture capital participation in a company is often reduced when the company
engages in an IPO of its securities or when it is involved in a merger, tender
offer or acquisition.

Warburg has experience in researching smaller companies, companies in the
early stages of development and venture capital-financed companies. Its team of
analysts, led by Elizabeth Dater, Portfolio Manager of the Fund, regularly
monitors portfolio companies whose securities are held by over 250 of the larger
domestic venture capital funds. Ms. Dater, also a Portfolio Manager of the
Warburg Pincus Post-Venture Capital Fund, has managed post-venture equity
securities in separate accounts for institutions since 1989 and currently
manages over $1 billion of such assets for investment companies and other
institutions. Robert Janis, an Associate Portfolio Manager and Research Analyst
for the Fund, is also an Associate Portfolio Manager and Research Analyst for
the Warburg Pincus Post-Venture Capital Fund. Warburg's international equity
management team manages over $5 billion in assets for investment companies and
separate accounts. Managers travel world-wide to meet with corporate management
as well as government and economic leaders. The managers evaluate each company's
value as a going concern as if they were buying the company itself, an approach
similar to that employed by venture capital and post-venture capital investors.
Harold Ehrlich, an Associate Portfolio Manager and Research Analyst for the
Fund, is also an Associate Portfolio Manager and Research Analyst for the
Warburg Pincus International Equity Fund and other international Warburg Pincus
Funds.

5
<PAGE> 57

Private Funds ("Abbott"), attempts to invest in a mix of Private Funds that will
provide an above average internal rate of return (i.e., the discount rate at
which the present value of an investment's future cash inflows (dividend income
and capital gains) are equal to the cost of the investment). Warburg believes
that the Fund's investments in Private Funds offers individual investors a
unique opportunity to participate in venture capital and other private
investment funds, providing access to investment opportunities typically
available only to large institutions and accredited investors. Although the
Fund's investments in Private Funds are limited to a maximum of 10% of the
Fund's assets, these investments are highly speculative and volatile and may
produce gains or losses in this portion of the Fund that exceed those of the
Fund's other holdings and of more mature companies generally.

6
<PAGE> 58

OTHER STRATEGIES. The Fund will invest in securities of post-venture capital
companies that are traded on a national securities exchange or in an organized
over-the-counter market, such as The Nasdaq Stock Market, Inc., the Japan
Securities Dealers Association Automated Quotation System ("JASDAQ"), the
European Association of Securities Dealers Automated Quotation ("Easdaq") and
the U.K. Alternative Investment Market ("AIM"). The Fund may invest up to 35% of
its assets in exchange-traded and over-the-counter securities that do not meet
the definition of post-venture capital companies without regard to market
capitalization. The Fund may invest, directly or through Private Funds, in
securities of issuers engaged at the time of purchase in "special situations,"
such as a restructuring or recapitalization; an acquisition, consolidation,
merger or tender offer; a change in corporate control or investment by a venture
capitalist. For temporary defensive purposes, such as during times of
international political or economic uncertainty, all of the Fund's investments
may be made temporarily in the United States.

Warburg believes that opportunities for growth of capital exist in post-
venture capital securities across global markets and that the Fund will provide
access to those opportunities. To attempt to reduce risk, the Fund will
diversify its investments over a broad range of issuers operating in a variety
of industries in various countries. Although the Fund may invest anywhere in the
world, the Fund will not be invested in all countries at all times depending
upon available investments, market conditions and other factors. The Fund may
hold securities of companies of any size, and will not limit capitalization of
companies it selects to invest in. However, due to the nature of the venture
capital to post-venture cycle, the Fund anticipates that the average market
capitalization of companies in which it invests will be less than $1 billion at
the time of investment. Equity securities in which the Fund will invest are
common stock, preferred stock, warrants, securities convertible into or
exchangeable for common stock and partnership interests. The Fund may engage in
a variety of strategies to reduce risk or seek to enhance return, including
currency hedging and engaging in short selling (see "Certain Investment
Strategies").

PORTFOLIO INVESTMENTS
- --------------------------------------------------------------------------------

DEBT SECURITIES. The Fund may invest up to 20% of its total assets in debt
securities (other than money market obligations) for the purpose of seeking
capital appreciation. The interest income to be derived may be considered as one
factor in selecting debt securities for investment by Warburg. Because the
market value of debt obligations can be expected to vary inversely to changes in
prevailing interest rates, investing in debt obligations may provide an
opportunity for growth of capital when interest rates are expected to decline.
The success of such a strategy is dependent upon Warburg's ability to accurately
forecast changes in interest rates. The market value of debt obligations may
also be expected to vary depending upon, among other factors, the ability

7
<PAGE> 59

of the issuer to repay principal and interest, any change in investment rating
and general economic conditions.
A security will be deemed to be investment grade if it is rated within the
four highest grades by Moody's or S&P or, if unrated, is determined to be of
comparable quality by Warburg. Bonds rated in the fourth highest grade have
speculative characteristics and changes in economic conditions or other
circumstances are more likely to lead to a weakened capacity to make principal
and interest payments than is the case with higher grade bonds. Subsequent to
its purchase by the Fund, an issue of securities may cease to be rated or its
rating may be reduced. Neither event will require sale of such securities,
although Warburg will consider such event in its determination of whether the
Fund should continue to hold the securities.
When Warburg believes that a defensive posture is warranted, the Fund may
invest temporarily without limit in investment grade debt obligations and in
domestic and foreign money market obligations, including repurchase agreements.
MONEY MARKET OBLIGATIONS. The Fund is authorized to invest, under normal
market conditions, up to 20% of its total assets in domestic and foreign
short-term (one year or less) and medium-term (five years or less remaining to
maturity) money market obligations and for temporary defensive purposes may
invest in these securities without limit. These instruments consist of
obligations issued or guaranteed by the U.S. government or a foreign government,
its agencies or instrumentalities; bank obligations (including certificates of
deposit, time deposits and bankers' acceptances of domestic or foreign banks,
domestic savings and loans and similar institutions) that are high quality
investments or, if unrated, deemed by Warburg to be high quality investments;
commercial paper rated no lower than A-2 by S&P or Prime-2 by Moody's or the
equivalent from another major rating service or, if unrated, of an issuer having
an outstanding, unsecured debt issue then rated within the three highest rating
categories; and repurchase agreements with respect to the foregoing.
Repurchase Agreements. The Fund may invest in repurchase agreement
transactions with member banks of the Federal Reserve System and certain non-
bank dealers. Repurchase agreements are contracts under which the buyer of a
security simultaneously commits to resell the security to the seller at an
agreed-upon price and date. Under the terms of a typical repurchase agreement,
the Fund would acquire any underlying security for a relatively short period
(usually not more than one week) subject to an obligation of the seller to
repurchase, and the Fund to resell, the obligation at an agreed-upon price and
time, thereby determining the yield during the Fund's holding period. This
arrangement results in a fixed rate of return that is not subject to market
fluctuations during the Fund's holding period. The value of the underlying
securities will at all times be at least equal to the total amount of the
purchase obligation, including interest. The Fund bears a risk of loss in the
event that the other party to a repurchase agreement defaults on its obligations
or be-

8
<PAGE> 60

comes bankrupt and the Fund is delayed or prevented from exercising its right to
dispose of the collateral securities, including the risk of a possible decline
in the value of the underlying securities during the period in which the Fund
seeks to assert this right. Warburg, acting under the supervision of the Fund's
Board of Directors (the "Board"), monitors the creditworthiness of those bank
and non-bank dealers with which the Fund enters into repurchase agreements to
evaluate this risk. A repurchase agreement is considered to be a loan under the
1940 Act.

Money Market Mutual Funds. Where Warburg believes that it would be beneficial
to the Fund and appropriate considering the factors of return and liquidity, the
Fund may invest up to 5% of its assets in securities of money market mutual
funds that are unaffiliated with the Fund or Warburg. As a shareholder in any
mutual fund, the Fund will bear its ratable share of the mutual fund's expenses,
including management fees, and will remain subject to payment of the Fund's
administration fees and other expenses with respect to assets so invested.

U.S. GOVERNMENT SECURITIES. U.S. government securities in which the Fund may
invest include: direct obligations of the U.S. Treasury and obligations issued
by U.S. government agencies and instrumentalities, including instruments that
are supported by the full faith and credit of the United States, instruments
that are supported by the right of the issuer to borrow from the U.S. Treasury
and instruments that are supported by the credit of the instrumentality.
CONVERTIBLE SECURITIES. Convertible securities in which the Fund may invest,
including both convertible debt and convertible preferred stock, may be
converted at either a stated price or stated rate into underlying shares of
common stock. Because of this feature, convertible securities enable an investor
to benefit from increases in the market price of the underlying common stock.
Convertible securities provide higher yields than the underlying equity
securities, but generally offer lower yields than nonconvertible securities of
similar quality. The value of convertible securities fluctuates in relation to
changes in interest rates like bonds and, in addition, fluctuates in relation to
the underlying common stock.
WARRANTS. The Fund may invest up to 10% of its total assets in warrants.
Warrants are securities that give the holder the right, but not the obligation,
to purchase equity issues of the company issuing the warrants, or a related
company, at a fixed price either on a date certain or during a set period.

RISK FACTORS AND SPECIAL CONSIDERATIONS
- --------------------------------------------------------------------------------

Investing in common stocks and securities convertible into common stocks is
subject to the inherent risk of fluctuations in the prices of such securities.
For certain additional risks relating to the Fund's investments, see "Portfolio
Investments" and "Certain Investment Strategies."

EMERGING GROWTH AND SMALLER COMPANIES; UNSEASONED ISSUERS. Investing in
securities of emerging growth, small- and medium-sized companies and

9
<PAGE> 61

companies with continuous operations of less than three years ("unseasoned
issuers") may involve greater risks since these securities may have limited
marketability and, thus, may be more volatile than securities of larger, more
established companies or the market in general. Because such companies normally
have fewer shares outstanding than larger companies, it may be more difficult
for the Fund to buy or sell significant amounts of such shares without an
unfavorable impact on prevailing prices. These companies may have limited
product lines, markets or financial resources and may lack management depth. In
addition, these companies are typically subject to a greater degree of changes
in earnings and business prospects than are larger, more established companies.
There is typically less publicly available information concerning these
companies than for larger, more established ones. Securities of issuers in
"special situations" also may be more volatile, since the market value of these
securities may decline in value if the anticipated benefits do not materialize.
Companies in "special situations" include, but are not limited to, companies
involved in an acquisition or consolidation; reorganization; recapitalization;
merger, liquidation or distribution of cash, securities or other assets; a
tender or exchange offer, a breakup or workout of a holding company; or
litigation which, if resolved favorably, would improve the value of the
companies' securities. Although investing in securities of emerging growth
companies, small- and medium-sized companies, unseasoned issuers or issuers in
"special situations" offers potential for above-average returns if the companies
are successful, the risk exists that the companies will not succeed and the
prices of the companies' shares could significantly decline in value. Therefore,
an investment in the Fund may involve a greater degree of risk than an
investment in other mutual funds that seek capital appreciation by investing
exclusively in more established, larger companies.

NON-PUBLICLY TRADED SECURITIES; RULE 144A SECURITIES. The Fund may purchase
securities that are not registered under the Securities Act of 1933, as amended
(the "Securities Act"), but that can be sold to "qualified institutional buyers"
in accordance with Rule 144A under the Securities Act ("Rule 144A Securities").
An investment in Rule 144A Securities will be considered illiquid and therefore
subject to the Fund's limitation on the purchase of illiquid securities, unless
the Board determines on an ongoing basis that an adequate trading market exists
for the security. In addition to an adequate trading market, the Board will
consider factors such as trading activity, availability of reliable price
information and other relevant information in determining whether a Rule 144A
Security is liquid. This investment practice could have the effect of increasing
the level of illiquidity in the Fund to the extent that qualified institutional
buyers become uninterested for a time in purchasing Rule 144A Securities. The
Board will carefully monitor any investments by the Fund in Rule 144A
Securities. The Board may adopt guidelines and delegate to Warburg the daily
function of determining and monitoring the liquidity of Rule 144A Securities,
although the Board will retain ultimate responsibility for any determination
regarding liquidity.

10
<PAGE> 62

Non-publicly traded securities (including interests in Private Funds and Rule
144A Securities) may involve a high degree of business and financial risk and
may result in substantial losses. These securities may be less liquid than
publicly traded securities, and the Fund may take longer to liquidate these
positions than would be the case for publicly traded securities. Although these
securities may be resold in privately negotiated transactions, the prices
realized on such sales could be less than those originally paid by the Fund.
Further, companies whose securities are not publicly traded may not be subject
to the disclosure and other investor protection requirements applicable to
companies whose securities are publicly traded. The Fund's investment in
illiquid securities is subject to the risk that should the Fund desire to sell
any of these securities when a ready buyer is not available at a price that is
deemed to be representative of their value, the value of the Fund's net assets
could be adversely affected.

BELOW INVESTMENT GRADE SECURITIES. There are certain factors associated with
securities rated below investment grade. Below investment grade and comparable
unrated securities (commonly referred to as "junk bonds") (i) will likely have
some quality and protective characteristics that, in the judgment of the rating
organization, are outweighed by large uncertainties or major risk exposures to
adverse conditions and (ii) are predominately speculative with respect to the
issuer's capacity to pay interest and repay principal in accordance with the
terms of the obligation. The market values of certain of these securities also
tend to be more sensitive to individual corporate developments and changes in
economic conditions than higher quality securities. In addition, these
securities generally present a higher degree of credit risk. The risk of loss
due to default is significantly greater because these securities generally are
unsecured and frequently are subordinated to the prior payment of senior
indebtedness.

11
<PAGE> 63

for purposes of valuing the Fund's shares and calculating their respective net
asset values.

For a complete description of the rating systems of Moody's and S&P, see the
Appendix to the Statement of Additional Information.

PORTFOLIO TRANSACTIONS AND TURNOVER RATE

- --------------------------------------------------------------------------------

The Fund will attempt to purchase securities with the intent of holding them
for investment but may purchase and sell portfolio securities whenever Warburg
believes it to be in the best interests of the Fund. The Fund will not consider
portfolio turnover rate a limiting factor in making investment decisions
consistent with its investment objective and policies. Higher portfolio turnover
rates (100% or more) may result in dealer mark-ups or underwriting commissions
as well as other transaction costs, including correspondingly higher brokerage
commissions. In addition, short-term gains realized from portfolio turnover may
be taxable to shareholders as ordinary income. See "Dividends, Distributions and
Taxes -- Taxes" below and "Investment Policies -- Portfolio Transactions" in the
Statement of Additional Information.

All orders for transactions in securities or options on behalf of the Fund are
placed by Warburg with broker-dealers that it selects, including Counsellors
Securities Inc., the Fund's distributor ("Counsellors Securities"). The Fund may
utilize Counsellors Securities in connection with a purchase or sale of
securities when Warburg believes that the charge for the transaction does not
exceed usual and customary levels and when doing so is consistent with
guidelines adopted by the Board.

CERTAIN INVESTMENT STRATEGIES
- --------------------------------------------------------------------------------

Although there is no intention of doing so during the coming year, the Fund is
authorized to lend portfolio securities and to enter into reverse repurchase
agreements, dollar rolls and delayed delivery transactions. Detailed information
concerning these strategies and their related risks is contained below and in
the Statement of Additional Information.

FOREIGN SECURITIES. There are certain risks involved in investing in
securities of companies and governments of foreign nations which are in addition
to the usual risks inherent in domestic investments. These risks include those
resulting from fluctuations in currency exchange rates, revaluation of
currencies, future adverse political and economic developments and the possible
imposition of currency exchange blockages or other foreign governmental laws or
restrictions, reduced availability of public information concerning issuers, the
lack of uniform accounting, auditing and financial reporting standards and other
regulatory practices and requirements that are often generally less rigorous
than those applied in the United States. Moreover, securities of many foreign
companies may be less liquid and their prices more volatile than those of
securities of comparable U.S. companies. Certain foreign countries are known to
experience long delays between the trade and settlement dates of securities
purchased or sold. In addition, with respect to certain foreign coun-

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<PAGE> 64

tries, there is the possibility of expropriation, nationalization, confiscatory
taxation and limitations on the use or removal of funds or other assets of the
Fund, including the withholding of dividends. Foreign securities may be subject
to foreign government taxes that would reduce the net yield on such securities.
Moreover, individual foreign economies may differ favorably or unfavorably from
the U.S. economy in such respects as growth of gross national product, rate of
inflation, capital reinvestment, resource self-sufficiency and balance of
payments positions. Investment in foreign securities will also result in higher
operating expenses due to the cost of converting foreign currency into U.S.
dollars, the payment of fixed brokerage commissions on foreign exchanges, which
generally are higher than commissions on U.S. exchanges, higher valuation and
communications costs and the expense of maintaining securities with foreign
custodians.

DEPOSITARY RECEIPTS. Certain of the above risks may be involved with American
Depositary Receipts ("ADRs"), European Depositary Receipts ("EDRs") and
International Depositary Receipts ("IDRs"), instruments that evidence ownership
of underlying securities issued by a foreign corporation. ADRs, EDRs and IDRs
may not necessarily be denominated in the same currency as the securities whose
ownership they represent. ADRs are typically issued by a U.S. bank or trust
company. EDRs (sometimes referred to as Continental Depositary Receipts) are
issued in Europe and IDRs (sometimes referred to as Global Depositary Receipts)
are issued outside the United States, each typically by non-U.S. banks and trust
companies.

OPTIONS, FUTURES AND CURRENCY TRANSACTIONS. At the discretion of Warburg, the
Fund may, but is not required to, engage in a number of strategies involving
options, futures and forward currency contracts. These strategies, commonly
referred to as "derivatives," may be used (i) for the purpose of hedging against
a decline in value of the Fund's current or anticipated portfolio holdings, (ii)
as a substitute for purchasing or selling portfolio securities or (iii) to seek
to generate income to offset expenses or increase return. TRANSACTIONS THAT ARE
NOT CONSIDERED HEDGING SHOULD BE CONSIDERED SPECULATIVE AND MAY SERVE TO
INCREASE THE FUND'S INVESTMENT RISK. Transaction costs and any premiums
associated with these strategies, and any losses incurred, will affect the
Fund's net asset value and performance. Therefore, an investment in the Fund may
involve a greater risk than an investment in other mutual funds that do not
utilize these strategies. The Fund's use of these strategies may be limited by
position and exercise limits established by securities and commodities exchanges
and other applicable regulatory authorities.

Securities Options and Stock Index Options. The Fund may write covered call
and put options on up to 25% of the net asset value of the stock and debt
securities in its portfolio and will realize fees (referred to as "premiums")
for granting the rights evidenced by the options. The Fund may utilize up to 10%
of its assets to purchase options on stocks and debt securities that are traded
on U.S. and foreign exchanges, as well as over-the-counter ("OTC") options. The
purchaser of a put option on a security has the right to compel the

13
<PAGE> 65

purchase by the writer of the underlying security, while the purchaser of a call
option on a security has the right to purchase the underlying security from the
writer. In addition to purchasing and writing options on securities, the Fund
may also utilize up to 10% of its total assets to purchase exchange-listed and
OTC put and call options on stock indexes, and may also write such options. A
stock index measures the movement of a certain group of stocks by assigning
relative values to the common stocks included in the index.
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. However, for an option writer the exposure to adverse price movements in
the underlying security or index is potentially unlimited during the exercise
period. Writing securities options may result in substantial losses to the Fund,
force the sale or purchase of portfolio securities at inopportune times or at
less advantageous prices, limit the amount of appreciation the Fund could
realize on its investments or require the Fund to hold securities it would
otherwise sell.
Futures Contracts and Related Options. The Fund may enter into foreign
currency, interest rate and stock index futures contracts and purchase and write
(sell) related options that are traded on an exchange designated by the
Commodity Futures Trading Commission (the "CFTC") or, if consistent with CFTC
regulations, on foreign exchanges. These futures contracts are standardized
contracts for the future delivery of foreign currency or an interest rate
sensitive security or, in the case of stock index and certain other futures
contracts, are settled in cash with reference to a specified multiplier times
the change in the specified index, exchange rate or interest rate. An option on
a futures contract gives the purchaser the right, in return for the premium
paid, to assume a position in a futures contract.
Aggregate initial margin and premiums required to establish positions other
than those considered by the CFTC to be "bona fide hedging" will not exceed 5%
of the Fund's net asset value, after taking into account unrealized profits and
unrealized losses on any such contracts. Although the Fund is limited in the
amount of assets that may be invested in futures transactions, there is no
overall limit on the percentage of Fund assets that may be at risk with respect
to futures activities.
Currency Exchange Transactions. The Fund will conduct its currency exchange
transactions either (i) on a spot (i.e., cash) basis at the rate prevailing in
the currency exchange market, (ii) through entering into futures contracts or
options on futures contracts (as described above), (iii) through entering into
forward contracts to purchase or sell currency or (iv) by purchasing exchange-
traded currency options. A forward currency contract involves an obligation to
purchase or sell a specific currency at a future date at a price set at the time
of the contract. An option on a foreign currency operates similarly to an option
on a security. Risks associated with currency forward contracts and purchasing
currency options are similar to those described in this Prospectus for futures
contracts and securities and stock index options. In addition, the use of

14
<PAGE> 66

currency transactions could result in losses from the imposition of foreign
exchange controls, suspension of settlement or other governmental actions or
unexpected events.

Hedging Considerations. The Fund may engage in options, futures and currency
transactions for, among other reasons, hedging purposes. A hedge is designed to
offset a loss on a portfolio position with a gain in the hedge position; at the
same time, however, a properly correlated hedge will result in a gain in the
portfolio position being offset by a loss in the hedge position. As a result,
the use of options, futures contracts and currency exchange transactions for
hedging purposes could limit any potential gain from an increase in value of the
position hedged. In addition, the movement in the portfolio position hedged may
not be of the same magnitude as movement in the hedge. The Fund will engage in
hedging transactions only when deemed advisable by Warburg, and successful use
of hedging transactions will depend on Warburg's ability to predict correctly
movements in the hedge and the hedged position and the correlation between them,
which could prove to be inaccurate. Even a well-conceived hedge may be
unsuccessful to some degree because of unexpected market behavior or trends.

Additional Considerations. To the extent that the Fund engages in the
strategies described above, the Fund may experience losses greater than if these
strategies had not been utilized. In addition to the risks described above,
these instruments may be illiquid and/or subject to trading limits, and the Fund
may be unable to close out a position without incurring substantial losses, if
at all. The Fund is also subject to the risk of a default by a counterparty to
an off-exchange transaction.

Asset Coverage. The Fund will comply with applicable regulatory requirements
designed to eliminate any potential for leverage with respect to options written
by the Fund on securities and indexes; currency, interest rate and stock index
futures contracts and options on these futures contracts; and forward currency
contracts. The use of these strategies may require that the Fund maintain cash
or liquid securities in a segregated account with its custodian or a designated
sub-custodian to the extent the Fund's obligations with respect to these
strategies are not otherwise "covered" through ownership of the underlying
security, financial instrument or currency or by other portfolio positions or by
other means consistent with applicable regulatory policies. Segregated assets
cannot be sold or transferred unless equivalent assets are substituted in their
place or it is no longer necessary to segregate them. As a result, there is a
possibility that segregation of a large percentage of the Fund's assets could
impede portfolio management or the Fund's ability to meet redemption requests or
other current obligations.
SHORT SELLING. The Fund may from time to time sell securities short. A short
sale is a transaction in which the Fund sells securities it does not own in
anticipation of a decline in the market price of the securities. The current
market value of the securities sold short (excluding short sales "against the
box") will not exceed 10% of the Fund's assets.

15
<PAGE> 67

To deliver the securities to the buyer, the Fund must arrange through a broker
to borrow the securities and, in so doing, the Fund becomes obligated to replace
the securities borrowed at their market price at the time of replacement,
whatever that price may be. The Fund will make a profit or incur a loss as a
result of a short sale depending on whether the price of the security decreases
or increases between the date of the short sale and the date on which the Fund
purchases the security to replace the borrowed securities that have been sold.
The amount of any loss would be increased (and any gain decreased) by any
premium or interest the Fund is required to pay in connection with a short sale.
The Fund's obligation to replace the securities borrowed in connection with a
short sale will be secured by cash or liquid securities deposited as collateral
with the broker. In addition, the Fund will place in a segregated account with
its custodian or a qualified subcustodian an amount of cash or liquid securities
equal to the difference, if any, between (i) the market value of the securities
sold at the time they were sold short and (ii) any cash or liquid securities
deposited as collateral with the broker in connection with the short sale (not
including the proceeds of the sort sale). Until it replaces the borrowed
securities, the Fund will maintain the segregated account daily at a level so
that (a) the amount deposited in the account plus the amount deposited with the
broker (not including the proceeds from the short sale) will equal the current
market value of the securities sold short and (b) the amount deposited in the
account plus the amount deposited with the broker (not including the proceeds
from the short sale) will not be less than the market value of the securities at
the time they were sold short.

Short Sales Against the Box. The Fund may, in addition to engaging in short
sales as described above, enter into a short sale of securities such that when
the short position is open the Fund owns an equal amount of the securities sold
short or owns preferred stocks or debt securities, convertible or exchangeable
without payment of further consideration, into an equal number of securities
sold short. This kind of short sale, which is referred to as one "against the
box," may be entered into by the Fund to, for example, lock in a sale price for
a security the Fund does not wish to sell immediately. The Fund will deposit, in
a segregated account with its custodian or a qualified subcustodian, the
securities sold short or convertible or exchangeable preferred stocks or debt
securities in connection with short sales against the box. Not more than 10% of
the Fund's net assets (taken at current value) may be held as collateral for
short sales against the box at any one time.

16
<PAGE> 68

right to deliver or receive securities in a delayed-delivery transaction if
Warburg deems it advantageous to do so. The payment obligation and the interest
rate that will be received in when-issued and delayed-delivery transactions are
fixed at the time the buyer enters into the commitment. Due to fluctuations in
the value of securities purchased or sold on a when-issued or delayed-delivery
basis, the prices of such securities may be higher or lower than the prices
available in the market on the dates when the investments are actually delivered
to the buyers.

The Fund will establish a segregated account with its custodian consisting of
cash or liquid securities in an amount equal to the amount of its when-issued
and delayed-delivery purchase commitments and will segregate the securities
underlying commitments to sell securities for delayed delivery.

INVESTMENT GUIDELINES
- --------------------------------------------------------------------------------
The Fund may invest up to 15% of its net assets in securities with contractual
or other restrictions on resale and other investments that are not readily
marketable, including (i) securities issued as part of a privately negotiated
transaction between an issuer and one or more purchasers, (ii) repurchase
agreements with maturities greater than seven days; (iii) time deposits maturing
in more than seven calendar days; and (iv) certain Rule 144A Securities. The
Fund may borrow from banks and enter into reverse repurchase agreements for
temporary or emergency purposes, such as meeting anticipated redemption
requests, provided that reverse repurchase agreements and any other borrowing by
the Fund may not exceed 30% of the Fund's total assets. The Fund may pledge its
assets to the extent necessary to secure permitted borrowings. Whenever
borrowings (including reverse repurchase agreements) exceed 5% of the value of
the Fund's net assets, the Fund will not make any investments (including
roll-overs). Except for the limitations on borrowing, the investment guidelines
set forth in this paragraph may be changed at any time without shareholder
consent by vote of the Board, subject to the limitations contained in the 1940
Act. A complete list of investment restrictions that the Fund has adopted
identifying additional restrictions that cannot be changed without the approval
of the majority of the Fund's outstanding shares is contained in the Statement
of Additional Information.

MANAGEMENT OF THE FUND
- --------------------------------------------------------------------------------
INVESTMENT ADVISERS. The Fund employs Warburg as investment adviser to the
Fund and Abbott as the sub-investment adviser to the Fund. Warburg, subject to
the control of the Fund's officers and the Board, manages the investment and
reinvestment of the assets of the Fund in accordance with its investment
objective and stated investment policies. Warburg makes investment decisions for
the Fund, places orders to purchase or sell securities on behalf of the Fund and
supervises the activities of Abbott. Warburg also employs a support staff of
management personnel to provide services to the Fund and furnishes the Fund with
office space, furnishings and equipment.

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<PAGE> 69

Abbott, in accordance with the investment objective and policies of the Fund,
makes investment decisions for the Fund regarding investments in Private Funds,
effects transactions in Private Funds on behalf of the Fund and assists in other
administrative functions relating to investments in Private Funds.
For the services provided by Warburg, the Fund pays Warburg a fee calculated
at an annual rate of 1.25% of the Fund's average daily net assets, out of which
Warburg pays Abbott for sub-advisory services. Warburg and the Fund's
co-administrators may voluntarily waive a portion of their fees from time to
time and temporarily limit the expenses to be borne by the Fund.

Warburg. Warburg is a professional investment advisory firm which provides
investment services to investment companies, employee benefit plans, endowment
funds, foundations and other institutions and individuals. As of December 31,
1997, Warburg managed approximately $19.7 billion of assets, including
approximately $11.3 billion of investment company assets. Incorporated in 1970,
Warburg is indirectly controlled by Warburg, Pincus & Co. ("WP&Co."), which has
no business other than being a holding company of Warburg and its affiliates.
Lionel I. Pincus, the managing partner of WP&Co, may be deemed to control both
WP&Co. and Warburg. Warburg's address is 466 Lexington Avenue, New York, New
York 10017-3147.

Abbott. Abbott is an independent specialized investment firm with assets under
management of approximately $2.3 billion. Abbott is a registered investment
adviser which concentrates on venture capital, buyout and special situations
partnership investments. Abbott's management team provides full-service private
equity programs to clients. The predecessor firm to Abbott was organized in 1986
as a Delaware limited partnership and converted to a Delaware limited liability
company effective July 1, 1997. Abbott's principal office is located at 50 Rowes
Wharf, Suite 240, Boston, Massachusetts 02110-3328.

PORTFOLIO MANAGER. The Portfolio Manager of the Fund is Elizabeth B. Dater.
Ms. Dater is a Managing Director of Warburg and has been a Portfolio Manager of
Warburg since 1978.

Harold W. Ehrlich, Robert S. Janis and Christopher M. Nawn are Associate
Portfolio Managers and Research Analysts for the Fund. Mr. Ehrlich is a Managing
Director of Warburg and has been with Warburg since February 1995, before which
time he was a senior vice president, portfolio manager and analyst at Templeton
Investment Counsel Inc. Mr. Janis is a Senior Vice President of Warburg and has
been with Warburg since October 1994, before which time he was a vice president
and senior research analyst at U.S. Trust Company of New York. Mr. Nawn is also
a Senior Vice President of Warburg and has been with Warburg since September
1994, before which time he was a senior sector analyst and portfolio manager at
the Dreyfus Corporation.

Raymond L. Held and Thaddeus I. Gray, Investment Managers and Managing
Directors of Abbott, manage the Fund's investments in Private Funds. Mr. Held
and Mr. Gray have been associated with Abbott and its predecessor firm since
1986 and 1989, respectively.

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<PAGE> 70

CO-ADMINISTRATORS. The Fund employs Counsellors Funds Service, Inc.
("Counsellors Service"), a wholly owned subsidiary of Warburg, as a co-
administrator. As co-administrator, Counsellors Service provides shareholder
liaison services to the Fund, including responding to shareholder inquiries and
providing information on shareholder investments. Counsellors Service also
performs a variety of other services, including furnishing certain executive and
administrative services, acting as liaison between the Fund and its various
service providers, furnishing corporate secretarial services, which include
preparing materials for meetings of the Board, preparing proxy statements and
annual and semiannual reports, assisting in the preparation of tax returns and
monitoring and developing compliance procedures for the Fund. As compensation,
the Fund pays Counsellors Service a fee calculated at an annual rate of .10% of
the Fund's average daily net assets.

The Fund employs PFPC Inc., an indirect, wholly owned subsidiary of PNC Bank
Corp., ("PFPC"), as a co-administrator. As a co-administrator, PFPC calculates
the Fund's net asset value, provides all accounting services for the Fund and
assists in related aspects of the Fund's operations. As compensation the Fund
pays PFPC a fee calculated at an annual rate of .12% of the Fund's first $250
million in average daily net assets, .10% of the next $250 million in average
daily net assets, .08% of the next $250 million in average daily net assets, and
.05% of average daily net assets over $750 million, exclusive of out-of-pocket
expenses. PFPC has its principal offices at 400 Bellevue Parkway, Wilmington,
Delaware 19809.

CUSTODIANS. PNC Bank, National Association ("PNC") and State Street Bank &
Trust Company ("State Street") serve as custodian of the Fund's U.S. and
non-U.S. assets, respectively. Like PFPC, PNC is a subsidiary of PNC Bank Corp.
and its principal business address is 1600 Market Street, Philadelphia,
Pennsylvania 19103. State Street's principal business address is 225 Franklin
Street, Boston, Massachusetts 02110.

TRANSFER AGENT. State Street Bank also serves as shareholder servicing agent,
transfer agent and dividend disbursing agent for the Fund. It has delegated to
Boston Financial Data Services, Inc., a 50% owned subsidiary ("BFDS"),
responsibility for most shareholder servicing functions. BFDS's principal
business address is 2 Heritage Drive, North Quincy, Massachusetts 02171.

DISTRIBUTOR. Counsellors Securities serves as distributor of the shares of the
Fund. Counsellors Securities is a wholly owned subsidiary of Warburg and is
located at 466 Lexington Avenue, New York, New York 10017-3147. No compensation
is payable by the Advisor Shares to Counsellors Securities for distribution
services.

Warburg or its affiliates may, at their own expense, provide promotional
incentives for qualified recipients who support the sale of shares of the Fund,
consisting of securities dealers who have sold Fund shares or others, including
banks and other financial institutions, under special arrangements. Incentives
may include opportunities to attend business meetings, conferences, sales or

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<PAGE> 71

training programs for recipients' employees or clients and other programs or
events and may also include opportunities to participate in advertising or sales
campaigns and/or shareholder services and programs regarding one or more Warburg
Pincus Funds. Warburg or its affiliates may pay for travel, meals and lodging in
connection with these promotional activities. In some instances, these
incentives may be offered only to certain institutions whose representatives
provide services in connection with the sale or expected sale of Fund shares.

DIRECTORS AND OFFICERS. The officers of the Fund manage its day-to-day
operations and are directly responsible to the Board. The Board sets broad
policies for the Fund and chooses its officers. A list of the Directors and
officers of the Fund and a brief statement of their present positions and
principal occupations during the past five years is set forth in the Statement
of Additional Information.

HOW TO OPEN AN ACCOUNT

- --------------------------------------------------------------------------------

In order to invest in the Fund, an account application must first be completed
and signed. To obtain an application, telephone the Fund at (800) 369-2728. An
application may also be obtained by writing to:

Warburg Pincus Advisor Funds

P.O. Box 4906

Grand Central Station

New York, New York 10163

Completed and signed applications should be mailed to the above address.
References in this Prospectus to shareholders or investors also including
Institutions which may act as record holders of the Advisor Shares

UTMA/UGMA ACCOUNTS. For information about opening a Uniform Transfers to
Minors Act ("UTMA") account or Uniform Gifts to Minors Act ("UGMA") account, an
Institution should telephone the Fund at (800) 369-2728 or write to the Fund at
the address set forth above. Individual investors should consult their own tax
advisors about the establishment of UTMA or UGMA accounts.

CHANGES TO ACCOUNT. For information on how to make changes to an account,
including changes to account registration, address and/or privileges, telephone
the Fund at (800) 369-2728. Institutions and their customers are responsible for
maintaining current account registrations and addresses with the Fund. No
interest will be paid on amounts represented by uncashed distribution or
redemption checks.

HOW TO PURCHASE SHARES
- --------------------------------------------------------------------------------

Individual investors may only purchase Warburg Pincus Advisor Fund shares
through Institutions. The Fund reserves the right to make Advisor Shares
available to other investors in the future.

Each Institution separately determines the rules applicable to its customers
investing in the Fund, including minimum initial and subsequent investment

20
<PAGE> 72

requirements and the procedures to be followed to effect purchases, redemptions
and exchanges of Advisor Shares. There is no minimum amount of initial or
subsequent purchases of Advisor Shares imposed on Institutions, although the
Fund reserves the right to impose minimums in the future.
Orders for the purchase of Advisor Shares are placed with an Institution by
its customers. The Institution is responsible for the prompt transmission of the
order to the Fund or its agent.

Advisor Shares may be purchased at any time by mail or by wire in the manner
outlined below. Wire payments for initial and subsequent investments should be
preceded by an order placed with the Fund and should clearly indicate the
account number and the name of the Fund in which shares are being purchased. In
the interest of economy and convenience, physical certificates representing
shares in the Fund are not normally issued.

BY MAIL. To purchase Advisor Shares by mail, a check or money order made
payable to the Fund or Warburg Pincus Advisor Funds (in U.S. currency) should be
sent along with a completed account application to Warburg Pincus Advisor Funds
at the address set forth above. Checks payable to the investor and endorsed to
the order of the Fund or Warburg Pincus Advisor Funds will not be accepted as
payment and will be returned to the sender. If payment is received in proper
form prior to the close of regular trading on The New York Stock Exchange, Inc.
(the "NYSE") (currently 4:00 p.m., Eastern time) on a day that the Fund
calculates its net asset value (a "business day"), the purchase will be made at
the Fund's net asset value calculated at the end of that day. If payment is
received at or after the close of regular trading on the NYSE, the purchase will
be effected at the Fund's net asset value determined for the next business day
after payment has been received. Checks or money orders that are not in proper
form or that are not accompanied or preceded by a complete account application
will be returned to the sender. Shares purchased by check or money order are
entitled to receive dividends and distributions beginning on the day payment is
received. Checks or money orders in payment for shares of more than one Fund
should be made payable to Warburg Pincus Advisor Funds and should be accompanied
by a breakdown of amounts to be invested in each Fund. If a check used for
purchase does not clear, the Fund will cancel the purchase and the investor may
be liable for losses or fees incurred. For a description of the manner of
calculating the Fund's net asset value, see "Net Asset Value" below.

BY WIRE. Advisor Shares in the Fund may also be purchased by wired funds from
a bank. Telephone orders by wire will not be accepted until a completed account
application in proper form has been received and an account number has been
established. Orders should be placed with the Fund

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<PAGE> 73

prior to wiring funds by telephoning (800) 369-2728. Federal funds may be wired
using the following wire address:

State Street Bank and Trust Company

ABA# 0110 000 28

Attn: Mutual Funds/Custody Department

Warburg Pincus Global Post-Venture Capital Fund

DDA# 9904-649-2

F/F/C: [Account Number and Account Registration]

TELEPHONE TRANSACTIONS. Unless otherwise indicated on the account application,
transactions may be conducted by telephone. Institutions should realize that in
conducting transactions by telephone they may be giving up a measure of security
that they may have if they were to conduct these transactions in writing.
Neither the Fund nor its agents will be liable for following instructions
communicated by telephone that it reasonably believes to be genuine. Reasonable
procedures will be employed on behalf of the Fund designed to give reasonable
assurance that instructions communicated by telephone are genuine. Such
procedures include providing written confirmation of telephone transactions,
tape recording telephone instructions and requiring specific personal
information prior to acting upon telephone instructions.

GENERAL. The Fund understands that some Institutions may impose certain
conditions on their clients or customers that invest in the Fund, which are in
addition to or different than those described in this Prospectus, and may charge
their clients or customers transaction or administrative charges or other direct
fees. Certain features of the Fund, such as the initial and subsequent
investment minimums, redemption fees and certain trading restrictions, may be
modified or waived by Institutions. Therefore, a client or customer should
contact the Institution acting on his behalf concerning the fees (if any)
charged in connection with a purchase, exchange or redemption of Fund shares and
should read this Prospectus in light of the terms governing his account with the
Institution. Institutions will be responsible for promptly transmitting client

22
<PAGE> 74

or customer purchase and redemption orders to the Fund in accordance with their
agreements with the Fund and with clients or customers.

Institutions or, if applicable, their designees may enter confirmed purchase,
exchange or redemption orders on behalf of clients and customers, with payment
to follow no later than the Fund's pricing on the following business day. If
payment is not received by such time, the Institution could be held liable for
resulting fees or losses. The Fund may be deemed to have received a purchase or
redemption order when an Institution, or, if applicable, its authorized
designee, accepts the order. Such orders received by the Fund in proper form
will be priced at the Fund's net asset value next computed after they are
accepted by the Institution or its authorized designee.

The Fund reserves the right to reject any specific purchase order, including
certain purchases made by exchange (see "How to Redeem and Exchange
Shares -- Exchange of Shares" below). Purchase orders may be refused if, in
Warburg's opinion, the Fund would be unable to invest the money effectively in
accordance with its investment objective and policies, or would otherwise
potentially be adversely affected. The Fund may discontinue sales of its shares
if management believes that a substantial further increase in assets may
adversely affect the Fund's ability to achieve its investment objective. In such
event, however, it is anticipated that existing shareholders would be permitted
to continue to authorize investment in the Fund and to reinvest any dividends or
capital gains distributions.

HOW TO REDEEM AND EXCHANGE SHARES
- --------------------------------------------------------------------------------
REDEMPTION OF SHARES. An investor of the Fund may redeem (sell) shares on any
day that the Fund's net asset value is calculated (see "Net Asset Value" below).
Requests for the redemption (or exchange) of Advisor Shares are placed with an
Institution by its customers, which is then responsible for the prompt
transmission of this request to the Fund or its agent.

Advisor Shares of the Fund may either be redeemed by mail or by telephone. If
an investor desires to redeem his shares by mail, a written request for
redemption should be sent to Warburg Pincus Advisor Funds at the address
indicated above under "How to Open an Account." An investor should be sure that
the redemption request identifies the Fund, the number of shares to be redeemed
and the investor's account number. Payment of redemption proceeds may be delayed
in connection with account changes. Each mail redemption request must be signed
by the registered owner(s) (or his legal representative(s)) exactly as the
shares are registered. Institutions may redeem Advisor Shares by calling Warburg
Pincus Advisor Funds at (800) 369-2728 between 9:00 a.m. and 4:00 p.m. (Eastern
time) on any business day. An Institution making a telephone withdrawal should
state (i) the name of the Fund, (ii) the account number of the Fund, (iii) the
name of the investor(s) appearing on the Fund's records, (iv) the amount to be
withdrawn and (v) the name of the person requesting the redemption.

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<PAGE> 75

After receipt of the redemption request by mail or by telephone, the
redemption proceeds will, at the option of the investor, be paid by check and
mailed to the investor of record or be wired to the investor's bank as indicated
in the account application previously filled out. The Fund currently does not
impose a service charge for effecting wire transfers but reserves the right to
do so in the future. During periods of significant economic or market change,
telephone redemptions may be difficult to implement. If an investor is unable to
contact Warburg Pincus Advisor Funds by telephone, an investor may deliver the
redemption request to Warburg Pincus Advisor Funds by mail at the address shown
above under "How to Open an Account." Although the Fund will redeem shares
purchased by check before the funds or check clear, payments of the redemption
proceeds will be delayed for up to 10 days from the date of purchase. Investors
should consider purchasing shares using a certified or bank check, money order
or federal funds wire if they anticipate an immediate need for redemption
proceeds.

If a redemption order is received by the Fund or its agent prior to the close
of regular trading on the NYSE, the redemption order will be effected at the net
asset value per share as determined on that day. If a redemption order is
received at or after the close of regular trading on the NYSE, the redemption
order will be effected at the net asset value as next determined. Except as
noted above, redemption proceeds will normally be mailed or wired to an investor
on the next business day following the date a redemption order is effected. If,
however, in the judgment of Warburg, immediate payment would adversely affect
the Fund, it reserves the right to pay the redemption proceeds within seven days
after the redemption order is effected. Furthermore, the Fund may suspend the
right of redemption or postpone the date of payment upon redemption (as well as
suspend or postpone the recordation of an exchange of shares) for such periods
as are permitted under the 1940 Act.

EXCHANGE OF SHARES. An Institution may exchange Advisor Shares of the Fund for
Advisor Shares of the other Warburg Pincus Advisor Funds at their respective net
asset values. Exchanges may be effected in the manner described under
"Redemption of Shares" above. If an exchange request is received by Warburg
Pincus Advisor Funds or their agent prior to the close of regular trading on the
NYSE, the exchange will be made at each fund's net asset value determined at the
end of that business day. Exchanges will be effected without a sales charge.

The exchange privilege is available to shareholders residing in any state in
which Advisor Shares being acquired may legally be sold. When an investor
effects an exchange of shares, the exchange is treated for federal income tax
purposes as a redemption. Therefore, the investor may realize a taxable gain

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<PAGE> 76

or loss in connection with the exchange. Investors wishing to exchange Advisor
Shares of the Fund for shares in another Warburg Pincus Advisor Fund should
review the prospectus of the other fund prior to making an exchange. For further
information regarding the exchange privilege or to obtain a current prospectus
for another Warburg Pincus Advisor Fund, an investor should contact Warburg
Pincus Advisor Funds at (800) 369-2728.

The Fund reserves the right to refuse exchange purchases by any person or
group if, in Warburg's judgment, the Fund would be unable to invest the money
effectively in accordance with its investment objective and policies, or would
otherwise potentially be adversely affected. Examples of when an exchange
purchase could be refused are when the Fund receives or anticipates receiving
large exchange orders at or about the same time and/or when a pattern of
exchanges within a short period of time (often associated with a "market timing"
strategy) is discerned. The Fund may refuse exchange purchases at any time
without prior notice. The Fund reserves the right to terminate or modify the
exchange privilege at any time upon 30 days' notice to shareholders.

DIVIDENDS, DISTRIBUTIONS AND TAXES
- --------------------------------------------------------------------------------

DIVIDENDS AND DISTRIBUTIONS. The Fund calculates its dividends from net
investment income. Net investment income includes interest accrued and dividends
earned on the Fund's portfolio securities for the applicable period less
applicable expenses. The Fund declares dividends from its net investment income
and net realized short-term and long-term capital gains annually and pays them
in the calendar year in which they are declared, generally in November or
December. Net investment income earned on weekends and when the NYSE is not open
will be computed as of the next business day. Unless an investor instructs the
Fund to pay dividends or distributions in cash, dividends and distributions will
automatically be reinvested in additional Advisor Shares of the Fund at net
asset value. The election to receive dividends in cash may be made on the
account application or, subsequently, by writing to Warburg Pincus Advisor Funds
at the address set forth under "How to Open an Account" or by calling Warburg
Pincus Advisor Funds at (800) 369-2728.

The Fund may be required to withhold for U.S. federal income taxes 31% of all
distributions payable to shareholders who fail to provide the Fund with their
correct taxpayer identification number or to make required certifications, or
who have been notified by the U.S. Internal Revenue Service that they are
subject to backup withholding.
TAXES. The Fund intends to qualify each year as a "regulated investment
company" within the meaning of the Code. The Fund, if it qualifies as a
regulated investment company, will be subject to a 4% non-deductible excise tax
measured with respect to certain undistributed amounts of ordinary income and
capital gain. The Fund expects to pay such additional dividends and

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<PAGE> 77

to make such additional distributions as are necessary to avoid the application
of this tax.
Dividends paid from net investment income and distributions of net realized
short-term capital gains are taxable to investors as ordinary income, and
distributions derived from net realized long-term capital gains are taxable to
investors as long-term capital gains, in each case regardless of the length of
time shareholders have held the Advisor Shares or whether received in cash or
reinvested in additional Advisor Shares. As a general rule, an investor's gain
or loss on a sale or redemption of its Fund shares will be a long-term capital
gain or loss if it has held its shares for more than one year and will be a
short-term capital gain or loss if it has held its shares for one year or less.
However, any loss realized upon the sale or redemption of shares within six
months from the date of their purchase will be treated as a long-term capital
loss to the extent of any amounts treated as distributions of long-term capital
gain during such six-month period with respect to such shares.

The Taxpayer Relief Act of 1997 made certain changes to the Code with respect
to taxation of long-term capital gains earned by taxpayers other than a
corporation. In general, for sales made after May 6, 1997, the maximum tax rate
for individual taxpayers on net long-term capital gains is lowered to 20% for
most assets (including long-term capital gains recognized by shareholders on the
sale or redemption of Fund shares that were held as capital assets). This 20%
rate applies to sales on or after July 29, 1997 only if the asset was held for
more than 18 months at the time of disposition. Capital gains on the disposition
of assets on or after July 29, 1997 held for more than one year and up to 18
months at the time of disposition will be taxed as "mid-term gain" at a maximum
rate of 28%. A rate of 18% instead of 20% will apply after December 31, 2000 for
assets held for more than 5 years. However, the 18% rate applies only to assets
acquired after December 31, 2000 unless the taxpayer elects to treat an asset
held prior to such date as sold for fair market value on January 1, 2001. In the
case of individuals whose ordinary income is taxed at a 15% rate, the 20% rate
is reduced to 10% and the 10% rate for assets held for more than 5 years is
reduced to 8%. The Fund will provide information relating to that portion of a
"capital gain dividend" that may be treated by investors as eligible for the
reduced capital gains rate for capital assets held for more than 18 months.

Investors may be proportionately liable for taxes on income and gains of the
Fund, but investors not subject to tax on their income will not be required to
pay tax on amounts distributed to them. The Fund's investment activities,
including short sales of securities, will not result in unrelated business
taxable income to a tax-exempt investor. The Fund will designate that portion of
its dividends that will qualify for the federal dividends received deduction for
corporations.

Dividends and interest received by the Fund may be subject to withholding and
other taxes imposed by foreign countries. However, tax conventions between
certain countries and the U.S. may reduce or eliminate such taxes. If the

26
<PAGE> 78

Fund qualifies as a regulated investment company, if certain asset and
distribution requirements are satisfied and if more than 50% of the Fund's total
assets at the close of its fiscal year consist of stock or securities of foreign
corporations, the Fund may elect for U.S. income tax purposes to treat foreign
income taxes paid by it as paid by its shareholders. The Fund may qualify for
and make this election in some, but not necessarily all, of its taxable years.
If the Fund were to make the election, shareholders of the Fund would be
required to take into account an amount equal to their pro rata portions of such
foreign taxes in computing their taxable income and then treat an amount equal
to those foreign taxes as a U.S. federal income tax deduction or as a foreign
tax credit against their U.S. federal income taxes. Shortly after any year for
which it makes such an election, the Fund will report to its shareholders the
amount per share of such foreign tax that must be included in each shareholder's
gross income and the amount which will be available for the deduction or credit.
No deduction for foreign taxes may be claimed by a shareholder who does not
itemize deductions. Certain limitations will be imposed on the extent to which
the credit (but not the deduction) for foreign taxes may be claimed.

GENERAL. Statements as to the tax status of each investor's dividends and
distributions are mailed annually. Each investor will also receive, if
applicable, various written notices after the close of the Fund's prior taxable
year with respect to certain dividends and distributions which were received
from the Fund during the Fund's prior taxable year. Investors should consult
their own tax advisers with specific reference to their own tax situations,
including their state and local tax liabilities. Individuals investing in the
Fund through Institutions should consult those Institutions or their own tax
advisers regarding the tax consequences of investing in the Fund.

NET ASSET VALUE
- --------------------------------------------------------------------------------

The Fund's net asset value per share is calculated as of the close of regular
trading on the NYSE (currently 4:00 p.m., Eastern time) on each business day,
Monday through Friday, except on days when the NYSE is closed. The NYSE is
currently scheduled to be closed on New Year's Day, Dr. Martin Luther King, Jr.
Day, Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving Day and Christmas Day, and on the preceding Friday or subsequent
Monday when one of these holidays falls on a Saturday or Sunday, respectively.
The net asset value per share of the Fund generally changes each day.

The net asset value per Advisor Share of the Fund is computed by adding the
Advisor Shares' pro rata share of the value of the Fund's assets, deducting the
Advisor Shares' pro rata share of the Fund's liabilities and the liabilities
specifically allocated to Advisor Shares and then dividing the result by the
total number of outstanding Advisor Shares.
Securities listed on a U.S. securities exchange (including securities traded
through the Nasdaq National Market System) or foreign securities exchange

27
<PAGE> 79

or traded in an over-the-counter market will be valued at the most recent sale
price when the valuation is made. Options and futures contracts will be valued
similarly. Debt obligations that mature in 60 days or less from the valuation
date are valued on the basis of amortized cost, unless the Board determines that
using this valuation method would not reflect the investments' value.
Investments in Private Funds will be valued initially at cost and, thereafter,
in accordance with periodic reports received by Abbott from the Private Funds
(generally quarterly). Because the issuers of securities held by Private Funds
are generally not subject to the reporting requirements of the federal
securities laws, interim changes in value of investments in Private Funds will
not generally be reflected in the Fund's net asset value. However, Warburg will
report to the Board of Directors information about certain holdings of Private
Funds that, in its judgment, could have a material impact on the valuation of a
Private Fund. The Board of Directors will take these reports into account in
valuing Private Funds.
Securities, options and futures contracts for which market quotations are not
readily available and other assets, including Private Funds, will be valued at
their fair value as determined in good faith pursuant to consistently applied
procedures established by the Board. Further information regarding valuation
policies is contained in the Statement of Additional Information.

PERFORMANCE
- --------------------------------------------------------------------------------
The Fund quotes the performance of Advisor Shares separately from Common
Shares. The net asset value of the Advisor Shares is listed in The Wall Street
Journal each business day under the heading Warburg Pincus Advisor Funds. From
time to time, the Fund may advertise the average annual total return of Advisor
Shares over various periods of time. These total return figures show the average
percentage change in value of an investment in the Advisor Shares from the
beginning of the measuring period to the end of the measuring period. The
figures reflect changes in the price of the Advisor Shares assuming that any
income dividends and/or capital gain distributions made by the Fund during the
period were reinvested in Advisor Shares. Total return will be shown for recent
one-, five- and ten-year periods, and may be shown for other periods as well
(such as on a year-by-year, quarterly or current year-to-date basis).
When considering average total return figures for periods longer than one
year, it is important to note that the annual total return for one year in the
period might have been greater or less than the average for the entire period.
When considering total return figures for periods shorter than one year,
investors should bear in mind that the Fund seeks long-term appreciation and
that such return may not be representative of the Fund's return over a longer
market cycle. The Fund may also advertise aggregate total return figures of
Advisor Shares for various periods, representing the cumulative change in value
of an investment in the Advisor Shares for the specific period (again reflecting
changes in share prices and assuming reinvestment of dividends

28
<PAGE> 80

and distributions). Aggregate and average total returns may be shown by means of
schedules, charts or graphs and may indicate various components of total return
(i.e., change in value of initial investment, income dividends and capital gain
distributions).
Investors should note that total return figures are based on historical
earnings and are not intended to indicate future performance. The Statement of
Additional Information describes the method used to determine total return.
Current total return figures may be obtained by calling Warburg Pincus Advisor
Funds at (800) 369-2728.

The Fund may compare its performance with (i) that of other mutual funds as
listed in the rankings prepared by Lipper Analytical Services, Inc. or similar
investment services that monitor the performance of mutual funds or as set forth
in the publications listed below; (ii) with the Venture Capital 100 Index
(compiled by Venture Capital Journal), appropriate indexes prepared by Frank
Russell Company relating to securities represented in the Fund, the EAFE Index,
the Salomon Russell Global Equity Index and the FT-Actuaries World Indices
(jointly complied by The Financial Times, Ltd., Goldman, Sachs & Co. and NatWest
Securities Ltd.) and the S&P 500 Index, which are unmanaged indexes of common
stocks; or (iii) other appropriate indexes of investment securities or with data
developed by Warburg derived from such indexes. The Fund may also make
comparisons using data and indexes compiled by the National Venture Capital
Association, VentureOne and Private Equity Analysts Newsletter and similar
organizations and publications. The Fund may also include evaluations published
by nationally recognized ranking services and by financial publications that are
nationally recognized, such as Barron's, Business Week, Financial Times, Forbes,
Fortune, Inc., Institutional Investor, Investor's Business Daily, Money,
Morningstar, Mutual Fund Magazine, SmartMoney, The Wall Street Journal and
Worth. Morningstar, Inc. rates funds in broad categories based on risk/reward
analyses over various time periods. In addition, the Fund may from time to time
compare the expense ratio of Advisor Shares to that of investment companies with
similar objectives and policies, based on data generated by Lipper Analytical
Services, Inc. or similar investment services that monitor mutual funds.

In reports or other communications to investors or in advertising, the Fund
may also describe the general biography or work experience of the portfolio
managers of the Fund and may include quotations attributable to the portfolio
managers describing approaches taken in managing the Fund's investments,
research methodology underlying stock selection or the Fund's investment
objective. In addition, the Fund and its portfolio managers may render updates
of Fund activity, which may include a discussion of significant portfolio
holdings; analysis of holdings by industry, country, credit quality and other
characteristics; and comparison and analysis of the Fund with respect to
relevant market and industry benchmarks. The Fund may also discuss measures of
risk, the continuum of risk and return relating to different investments

29
<PAGE> 81

and the potential impact of foreign stocks on a portfolio otherwise composed of
domestic securities.

GENERAL INFORMATION
- --------------------------------------------------------------------------------
ORGANIZATION. The Fund was incorporated on July 16, 1996 under the laws of the
State of Maryland under the name "Warburg, Pincus Global Post-Venture Capital
Fund, Inc." The Fund's charter authorizes the Board to issue three billion full
and fractional shares of capital stock, $.001 par value per share, of which two
billion shares are designated Common Shares and one billion shares are
designated Advisor Shares. Under the Fund's charter documents, the Board has the
power to classify or reclassify any unissued shares of the Fund into one or more
additional classes by setting or changing in any one or more respects their
relative rights, voting powers, restrictions, limitations as to dividends,
qualifications and terms and conditions of redemption. The Board may similarly
classify or reclassify any class of its shares into one or more series and,
without shareholder approval, may increase the number of authorized shares of
the Fund.
MULTI-CLASS STRUCTURE. The Fund offers a separate class of shares, the Common
Shares, directly to individuals pursuant to a separate prospectus. Shares of
each class represent equal pro rata interests in the Fund and accrue dividends
and calculate net asset value and performance quotations in the same manner,
except that Advisor Shares bear fees payable by the Fund to Institutions for
services they provide to the beneficial owners of such shares and enjoy certain
exclusive voting rights on matters relating to these fees. Because of the higher
fees paid by the Advisor Shares, the total return on such shares can be expected
to be lower than the total return on Common Shares. Investors may obtain
information concerning the Common Shares from their investment professional or
by calling Counsellors Securities at (800) 927-2874.
VOTING RIGHTS. Investors in the Fund are entitled to one vote for each full
share held and fractional votes for fractional shares held. Shareholders of the
Fund will vote in the aggregate except where otherwise required by law and
except that each class will vote separately on certain matters pertaining to its
distribution and shareholder servicing arrangements. There will normally be no
meetings of investors for the purpose of electing members of the Board unless
and until such time as less than a majority of the members holding office have
been elected by investors. Any member of the Board may be removed from office
upon the vote of shareholders holding at least a majority of the Fund's
outstanding shares, at a meeting called for that purpose. A meeting will be
called for the purpose of voting on the removal of a Board member at the written
request of holders of 10% of the outstanding shares of the Fund. Lionel I.
Pincus may be deemed to be a controlling person of the Fund because he may be
deemed to possess or share investment power over shares owned by clients of
Warburg.
SHAREHOLDER COMMUNICATIONS. Each investor will receive a quarterly statement
of its account, as well as a statement of its account after any transaction

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<PAGE> 82

that affects its share balance or share registration (other than the
reinvestment of dividends or distributions). The Fund will also send to its
investors a semiannual report and an audited annual report, each of which
includes a list of the investment securities held by the Fund and a statement of
the performance of the Fund. Periodic listings of the investment securities held
by the Fund, as well as certain statistical characteristics of the Fund, may be
obtained by calling Warburg Pincus Advisor Funds at (800) 369-2728 or on the
Warburg Pincus Funds Web site at www.warburg.com. Each Institution that is the
record owner of Advisor Shares on behalf of its customers will send a statement
to those customers periodically showing their indirect interest in Advisor
Shares, as well as providing other information about the Fund. See "Shareholder
Servicing."

SHAREHOLDER SERVICING
- --------------------------------------------------------------------------------

The Fund is authorized to offer Advisor Shares exclusively through
Institutions whose clients or customers (or participants in the case of
retirement plans) ("Customers") are owners of Advisor Shares. Either those
Institutions or companies providing certain services to Customers (together,
"Service Organizations") will enter into agreements ("Agreements") with the Fund
and/ or Counsellors Securities pursuant to a Distribution Plan as described
below. Such entities may provide certain distribution, shareholder servicing,
administrative and/or accounting services for its Customers. Distribution
services would be marketing or other services in connection with the promotion
and sale of Advisor Shares. Shareholder services that may be provided include
responding to Customer inquiries, providing information on Customer investments
and providing other shareholder liaison services. Administrative and accounting
services related to the sale of Advisor Shares may include (i) aggregating and
processing purchase and redemption requests from Customers and placing net
purchase and redemption orders with the Fund's transfer agent, (ii) processing
dividend payments from the Fund on behalf of Customers and (iii) providing
sub-accounting related to the sale of Advisor Shares beneficially owned by
Customers or the information to the Fund necessary for sub-accounting. The Board
has approved a Distribution Plan (the "Plan") pursuant to Rule 12b-1 under the
1940 Act under which each participating Service Organization will be paid, out
of the assets of the Fund (either directly or by Counsellors Securities on
behalf of the Fund), a negotiated fee on an annual basis not to exceed .75% (up
to a .25% annual service fee and a .50% annual distribution and/or
administrative services fee) of the value of the average daily net assets of its
Customers invested in Advisor Shares. The current 12b-1 fee is .50% per annum.
The Board evaluates the appropriateness of the Plan on a continuing basis and in
doing so considers all relevant factors.

Warburg, Counsellors Securities or their affiliates may, from time to time, at
their own expense, provide compensation to Service Organizations. To the extent
they do so, such compensation does not represent an additional expense to the
Fund or its shareholders. In addition, Warburg, Counsellors

31
<PAGE> 83

Securities or their affiliates may, from time to time, at their own expense, pay
certain Fund transfer agent fees and expenses related to accounts of Customers.
A Service Organization may directly or indirectly pay a portion of the fees paid
pursuant to the Plan to the Fund's custodian or transfer agent for costs related
to accounts of its Customers.

------------------------------

NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, THE FUND'S
STATEMENT OF ADDITIONAL INFORMATION OR THE FUND'S OFFICIAL SALES LITERATURE IN
CONNECTION WITH THE OFFERING OF SHARES OF THE FUND, AND IF GIVEN OR MADE, SUCH
OTHER INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE FUND. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER OF THE
ADVISOR SHARES IN ANY STATE IN WHICH, OR TO ANY PERSON TO WHOM, SUCH OFFER MAY
NOT LAWFULLY BE MADE.

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<PAGE> 85

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<PAGE> 86

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<PAGE> 87

TABLE OF CONTENTS

<TABLE>
<S> <C>
The Fund's Expenses...................................... 2
Financial Highlights..................................... 3
Investment Objective and Policies........................ 4
Portfolio Investments.................................... 7
Risk Factors and Special Considerations.................. 9
Portfolio Transactions and Turnover Rate................. 12
Certain Investment Strategies............................ 12
Investment Guidelines.................................... 17
Management of the Fund................................... 17
How to Open an Account................................... 20
How to Purchase Shares................................... 20
How to Redeem and Exchange Shares........................ 23
Dividends, Distributions and Taxes....................... 25
Net Asset Value.......................................... 27
Performance.............................................. 28
General Information...................................... 30
Shareholder Servicing.................................... 31
</TABLE>

[WARBURG PINCUS LOGO]

P.O. BOX 4906, GRAND CENTRAL STATION

NEW YORK, NY 10163

800-369-2728

COUNSELLORS SECURITIES INC., DISTRIBUTOR. ADGPV-1-0298

<PAGE> 88
STATEMENT OF ADDITIONAL INFORMATION

February 27, 1998

WARBURG PINCUS CAPITAL APPRECIATION FUND

WARBURG PINCUS GLOBAL POST-VENTURE CAPITAL FUND

WARBURG PINCUS HEALTH SCIENCES FUND

WARBURG PINCUS STRATEGIC VALUE FUND

P.O. Box 9030, Boston, Massachusetts 02205-9030
For information, call (800) WARBURG

CONTENTS
--------
Page
----

Investment Objectives...................................................... 2
Investment Policies........................................................ 2
Management of the Funds.................................................... 33
Additional Purchase and Redemption Information............................. 44
Exchange Privilege......................................................... 45
Additional Information Concerning Taxes.................................... 45
Determination of Performance............................................... 48
Independent Accountants and Counsel........................................ 51
Miscellaneous.............................................................. 51
Financial Statements....................................................... 53
Appendix -- Description of Ratings......................................... A-1

This combined Statement of Additional Information is meant to
be read in conjunction with the combined Prospectus for the Common Shares of
Warburg Pincus Capital Appreciation Fund (the "Capital Appreciation Fund"),
Warburg Pincus Global Post-Venture Capital Fund (the "Global Post-Venture
Capital Fund"), Warburg Pincus Health Sciences Fund (the "Health Sciences Fund")
and Warburg Pincus Strategic Value Fund (the "Strategic Value Fund" and
collectively, the "Funds"), and with the Prospectus for the Advisor Shares of
each Fund, each dated February 27, 1998, as amended or supplemented from time to
time, and is incorporated by reference in its entirety into those Prospectuses.
Because this Statement of Additional Information is not itself a prospectus, no
investment in shares of a Fund should be made solely upon the information
contained herein. Copies of the Funds' Prospectuses and information regarding
the Funds' current performance may be obtained by calling the Funds at (800)
927-2874. Information regarding the status of shareholder accounts may be
obtained by calling the Funds at the same number or by writing to the Funds,
P.O. Box 9030, Boston, Massachusetts 02205-9030.

<PAGE> 89
INVESTMENT OBJECTIVES

The investment objective of the Capital Appreciation Fund is
long-term capital appreciation. The investment objective of the Global
Post-Venture Capital Fund is long-term growth of capital. The investment
objective of each of the Health Sciences Fund and Strategic Value Fund is
capital appreciation.

INVESTMENT POLICIES

The following policies supplement the descriptions of each
Fund's investment objectives and policies in the Prospectuses.

Options, Futures and Currency Exchange Transactions

Securities Options. Each Fund may write covered call options,
and in the case of the Global Post-Venture Capital, Health Sciences and
Strategic Value Funds, covered put options on stock and debt securities and may
purchase such options that are traded on foreign and U.S. exchanges, as well as
over-the counter ("OTC").

Each Fund realizes fees (referred to as "premiums") for
granting the rights evidenced by the options it has written. A put option
embodies the right of its purchaser to compel the writer of the option to
purchase from the option holder an underlying security at a specified price for
a specified time period or at a specified time. In contrast, a call option
embodies the right of its purchaser to compel the writer of the option to sell
to the option holder an underlying security at a specified price for a specified
time period or at a specified time.

The principal reason for writing covered options on a security
is to attempt to realize, through the receipt of premiums, a greater return than
would be realized on the securities alone. In return for a premium, a Fund as
the writer of a covered call option forfeits the right to any appreciation in
the value of the underlying security above the strike price for the life of the
option (or until a closing purchase transaction can be effected). Nevertheless,
the Fund as a put or call writer retains the risk of a decline in the price of
the underlying security. The size of the premiums that a Fund may receive may be
adversely affected as new or existing institutions, including other investment
companies, engage in or increase their option-writing activities.

If security prices rise, a put writer would generally expect
to profit, although its gain would be limited to the amount of the premium it
received. If security prices remain the same over time, it is likely that the
writer will also profit, because it should be able to close out the option at a
lower price. If security prices fall, the put writer would expect to suffer a
loss. This loss should be less than the loss from purchasing the underlying
instrument directly, however, because the premium received for writing the
option should mitigate the effects of the decline.

<PAGE> 90
In the case of options written by a Fund that are deemed
covered by virtue of the Fund's holding convertible or exchangeable preferred
stock or debt securities, the time required to convert or exchange and obtain
physical delivery of the underlying common stock with respect to which the Fund
has written options may exceed the time within which the Fund must make delivery
in accordance with an exercise notice. In these instances, a Fund may purchase
or temporarily borrow the underlying securities for purposes of physical
delivery. By so doing, the Fund will not bear any market risk, since the Fund
will have the absolute right to receive from the issuer of the underlying
security an equal number of shares to replace the borrowed securities, but the
Fund may incur additional transaction costs or interest expenses in connection
with any such purchase or borrowing.

Additional risks exist with respect to certain of the
securities for which a Fund may write covered call options. For example, if the
Fund writes covered call options on mortgage-backed securities, the
mortgage-backed securities that it holds as cover may, because of scheduled
amortization or unscheduled prepayments, cease to be sufficient cover. If this
occurs, the Fund will compensate for the decline in the value of the cover by
purchasing an appropriate additional amount of mortgage-backed securities.

Options written by a Fund will normally have expiration dates
between one and nine months from the date written. The exercise price of the
options may be below, equal to or above the market values of the underlying
securities at the times the options are written. In the case of call options,
these exercise prices are referred to as "in-the-money," "at-the-money" and
"out-of-the-money," respectively. Each Fund may write (i) in-the-money call
options when Warburg Pincus Asset Management, Inc., each Fund's investment
adviser ("Warburg"), expects that the price of the underlying security will
remain flat or decline moderately during the option period, (ii) at-the-money
call options when Warburg expects that the price of the underlying security will
remain flat or advance moderately during the option period and (iii)
out-of-the-money call options when Warburg expects that the premiums received
from writing the call option plus the appreciation in market price of the
underlying security up to the exercise price will be greater than the
appreciation in the price of the underlying security alone. In any of the
preceding situations, if the market price of the underlying security declines
and the security is sold at this lower price, the amount of any realized loss
will be offset wholly or in part by the premium received. Out-of-the-money,
at-the-money and in-the-money put options (the reverse of call options as to the
relation of exercise price to market price) may be used in the same market
environments that such call options are used in equivalent transactions. To
secure its obligation to deliver the underlying security when it writes a call
option, each Fund will be required to deposit in escrow the underlying security
or other assets in accordance with the rules of the Options Clearing Corporation
(the "Clearing Corporation") and of the securities exchange on which the option
is written.

Prior to their expirations, put and call options may be sold
in closing sale or purchase transactions (sales or purchases by a Fund prior to
the exercise of options that it has purchased or written, respectively, of
options of the same series) in which the Fund may realize a profit or loss from
the sale. An option position may be closed out only where there exists a
secondary market for an option of the same series on a recognized securities
exchange

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or in the over-the-counter market. When a Fund has purchased an option
and engages in a closing sale transaction, whether the Fund realizes a profit or
loss will depend upon whether the amount received in the closing sale
transaction is more or less than the premium the Fund initially paid for the
original option plus the related transaction costs. Similarly, in cases where a
Fund has written an option, it will realize a profit if the cost of the closing
purchase transaction is less than the premium received upon writing the original
option and will incur a loss if the cost of the closing purchase transaction
exceeds the premium received upon writing the original option. A Fund may engage
in a closing purchase transaction to realize a profit, to prevent an underlying
security with respect to which it has written an option from being called or put
or, in the case of a call option, to unfreeze an underlying security (thereby
permitting its sale or the writing of a new option on the security prior to the
outstanding option's expiration). The obligation of a Fund under an option it
has written would be terminated by a closing purchase transaction, but the Fund
would not be deemed to own an option as a result of the transaction. So long as
the obligation of a Fund as the writer of an option continues, the Fund may be
assigned an exercise notice by the broker-dealer through which the option was
sold, requiring the Fund to deliver the underlying security against payment of
the exercise price. This obligation terminates when the option expires or the
Fund effects a closing purchase transaction. A Fund can no longer effect a
closing purchase transaction with respect to an option once it has been assigned
an exercise notice.

There is no assurance that sufficient trading interest will
exist to create a liquid secondary market on a securities exchange for any
particular option or at any particular time, and for some options no such
secondary market may exist. A liquid secondary market in an option may cease to
exist for a variety of reasons. In the past, for example, higher than
anticipated trading activity or order flow or other unforeseen events have at
times rendered certain of the facilities of the Clearing Corporation and various
securities exchanges inadequate and resulted in the institution of special
procedures, such as trading rotations, restrictions on certain types of orders
or trading halts or suspensions in one or more options. There can be no
assurance that similar events, or events that may otherwise interfere with the
timely execution of customers' orders, will not recur. In such event, it might
not be possible to effect closing transactions in particular options. Moreover,
a Fund's ability to terminate options positions established in the
over-the-counter market may be more limited than for exchange-traded options and
may also involve the risk that securities dealers participating in
over-the-counter transactions would fail to meet their obligations to the Fund.
Each Fund, however, intends to purchase over-the-counter options only from
dealers whose debt securities, as determined by Warburg, are considered to be
investment grade. If, as a covered call option writer, the Fund is unable to
effect a closing purchase transaction in a secondary market, it will not be able
to sell the underlying security until the option expires or it delivers the
underlying security upon exercise. In either case, the Fund would continue to be
at market risk on the security and could face higher transaction costs,
including brokerage commissions.

Securities exchanges generally have established limitations
governing the maximum number of calls and puts of each class which may be held
or written, or exercised within certain time periods by an investor or group of
investors acting in concert (regardless of whether the options are written on
the same or different securities exchanges or are held, written or exercised in
one or more accounts or through one or more brokers). It is possible

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that the Funds and other clients of Warburg and certain of its affiliates may be
considered to be such a group. A securities exchange may order the liquidation
of positions found to be in violation of these limits and it may impose certain
other sanctions. These limits may restrict the number of options a Fund will be
able to purchase on a particular security.

Securities Index Options. Each Fund may purchase and write
exchange-listed and OTC put and call options on securities indexes. A securities
index measures the movement of a certain group of securities by assigning
relative values to the securities included in the index, fluctuating with
changes in the market values of the securities included in the index. Securities
index options may be based on a broad or narrow market index or on a particular
industry or market segment.

Options on securities indexes are similar to options on
securities except that (i) the expiration cycles of securities index options are
monthly, while those of securities options are currently quarterly, and (ii) the
delivery requirements are different. Instead of giving the right to take or make
delivery of securities at a specified price, an option on a securities index
gives the holder the right to receive a cash "exercise settlement amount" equal
to (a) the amount, if any, by which the fixed exercise price of the option
exceeds (in the case of a put) or is less than (in the case of a call) the
closing value of the underlying index on the date of exercise, multiplied by (b)
a fixed "index multiplier." Receipt of this cash amount will depend upon the
closing level of the securities index upon which the option is based being
greater than, in the case of a call, or less than, in the case of a put, the
exercise price of the index and the exercise price of the option times a
specified multiple. The writer of the option is obligated, in return for the
premium received, to make delivery of this amount. Index options may be offset
by entering into closing transactions as described above for securities options.

OTC Options. Each Fund may purchase OTC or dealer options or
sell covered OTC options. Unlike exchange-listed options where an intermediary
or clearing corporation, such as the Clearing Corporation, assures that all
transactions in such options are properly executed, the responsibility for
performing all transactions with respect to OTC options rests solely with the
writer and the holder of those options. A listed call option writer, for
example, is obligated to deliver the underlying securities to the clearing
organization if the option is exercised, and the clearing organization is then
obligated to pay the writer the exercise price of the option. If a Fund were to
purchase a dealer option, however, it would rely on the dealer from whom it
purchased the option to perform if the option were exercised. If the dealer
fails to honor the exercise of the option by the Fund, the Fund would lose the
premium it paid for the option and the expected benefit of the transaction.

Listed options generally have a continuous liquid market while
dealer options have none. Consequently, a Fund will generally be able to realize
the value of a dealer option it has purchased only by exercising it or reselling
it to the dealer who issued it. Similarly, when a Fund writes a dealer option,
it generally will be able to close out the option prior to its expiration only
by entering into a closing purchase transaction with the dealer to which the
Fund originally wrote the option. Although each Fund will seek to enter into
dealer options

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only with dealers who will agree to and that are expected to be capable of
entering into closing transactions with the Fund, there can be no assurance that
the Fund will be able to liquidate a dealer option at a favorable price at any
time prior to expiration. The inability to enter into a closing transaction may
result in material losses to a Fund. Until the Fund, as a covered OTC call
option writer, is able to effect a closing purchase transaction, it will not be
able to liquidate securities (or other assets) used to cover the written option
until the option expires or is exercised. This requirement may impair a Fund's
ability to sell portfolio securities or, with respect to currency options,
currencies at a time when such sale might be advantageous. In the event of
insolvency of the other party, the Fund may be unable to liquidate a dealer
option.

Futures Activities. Each Fund may enter into foreign currency,
interest rate and stock index futures contracts and purchase and write (sell)
related options traded on exchanges designated by the Commodity Futures Trading
Commission (the "CFTC") or consistent with CFTC regulations on foreign
exchanges. These transactions may be entered into for "bona fide hedging"
purposes as defined in CFTC regulations and other permissible purposes including
hedging against changes in the value of portfolio securities due to anticipated
changes in currency values, interest rates and/or market conditions and
increasing return.

No Fund will enter into futures contracts and related options
for which the aggregate initial margin and premiums (discussed below) required
to establish positions other than those considered to be "bona fide hedging" by
the CFTC exceed 5% of the Fund's net asset value after taking into account
unrealized profits and unrealized losses on any such contracts it has entered
into. Each Fund reserves the right to engage in transactions involving futures
contracts and options on futures contracts to the extent allowed by CFTC
regulations in effect from time to time and in accordance with the Fund's
policies. Although the Fund is limited in the amount of assets it may invest in
futures transactions, there is no overall limit on the percentage of Fund assets
that may be at risk with respect to futures activities.

Futures Contracts. A foreign currency futures contract
provides for the future sale by one party and the purchase by the other party of
a certain amount of a specified non-U.S. currency at a specified price, date,
time and place. An interest rate futures contract provides for the future sale
by one party and the purchase by the other party of a certain amount of a
specific interest rate sensitive financial instrument (debt security) at a
specified price, date, time and place. Securities indexes are capitalization
weighted indexes which reflect the market value of the securities listed on the
indexes. A securities index futures contract is an agreement to be settled by
delivery of an amount of cash equal to a specified multiplier times the
difference between the value of the index at the close of the last trading day
on the contract and the price at which the agreement is made.

No consideration is paid or received by a Fund upon entering
into a futures contract. Instead, the Fund is required to deposit in a
segregated account with its custodian an amount of cash or liquid securities
acceptable to the broker, equal to approximately 1% to 10% of the contract
amount (this amount is subject to change by the exchange on which the contract
is traded, and brokers may charge a higher amount). This amount is known as
"initial margin" and is in the nature of a performance bond or good faith
deposit on the

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contract which is returned to a Fund upon termination of the futures contract,
assuming all contractual obligations have been satisfied. The broker will have
access to amounts in the margin account if the Fund fails to meet its
contractual obligations. Subsequent payments, known as "variation margin," to
and from the broker, will be made daily as the currency, financial instrument or
stock index underlying the futures contract fluctuates, making the long and
short positions in the futures contract more or less valuable, a process known
as "marking-to-market." A Fund will also incur brokerage costs in connection
with entering into futures transactions.

At any time prior to the expiration of a futures contract, a
Fund may elect to close the position by taking an opposite position, which will
operate to terminate the Fund's existing position in the contract. Positions in
futures contracts and options on futures contracts (described below) may be
closed out only on the exchange on which they were entered into (or through a
linked exchange). No secondary market for such contracts exists. Although each
Fund intends to enter into futures contracts only if there is an active market
for such contracts, there is no assurance that an active market will exist at
any particular time. Most futures exchanges limit the amount of fluctuation
permitted in futures contract prices during a single trading day. Once the daily
limit has been reached in a particular contract, no trades may be made that day
at a price beyond that limit or trading may be suspended for specified periods
during the day. It is possible that futures contract prices could move to the
daily limit for several consecutive trading days with little or no trading,
thereby preventing prompt liquidation of futures positions at an advantageous
price and subjecting the Fund to substantial losses. In such event, and in the
event of adverse price movements, the Fund would be required to make daily cash
payments of variation margin. In such situations, if a Fund had insufficient
cash, it might have to sell securities to meet daily variation margin
requirements at a time when it would be disadvantageous to do so. In addition,
if the transaction is entered into for hedging purposes, in such circumstances
the Fund may realize a loss on a futures contract or option that is not offset
by an increase in the value of the hedged position. Losses incurred in futures
transactions and the costs of these transactions will affect a Fund's
performance.

Options on Futures Contracts. Each Fund may purchase and write
put and call options on foreign currency, interest rate and stock index futures
contracts and may enter into closing transactions with respect to such options
to terminate existing positions. There is no guarantee that such closing
transactions can be effected; the ability to establish and close out positions
on such options will be subject to the existence of a liquid market.

An option on a currency, interest rate or securities index
futures contract, as contrasted with the direct investment in such a contract,
gives the purchaser the right, in return for the premium paid, to assume a
position in a futures contract at a specified exercise price at any time prior
to the expiration date of the option. The writer of the option is required upon
exercise to assume an offsetting futures position (a short position if the
option is a call and a long position if the option is a put). Upon exercise of
an option, the delivery of the futures position by the writer of the option to
the holder of the option will be accompanied by delivery of the accumulated
balance in the writer's futures margin account, which represents the amount by
which the market price of the futures contract exceeds, in the case of

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a call, or is less than, in the case of a put, the exercise price of the option
on the futures contract. The potential loss related to the purchase of an option
on futures contracts is limited to the premium paid for the option (plus
transaction costs). Because the value of the option is fixed at the point of
sale, there are no daily cash payments by the purchaser to reflect changes in
the value of the underlying contract; however, the value of the option does
change daily and that change would be reflected in the net asset value of a
Fund.

Currency Exchange Transactions. The value in U.S. dollars of
the assets of a Fund that are invested in foreign securities may be affected
favorably or unfavorably by changes in exchange control regulations, and the
Fund may incur costs in connection with conversion between various currencies.
Currency exchange transactions may be from any non-U.S. currency into U.S.
dollars or into other appropriate currencies. Each Fund will conduct its
currency exchange transactions (i) on a spot (i.e., cash) basis at the rate
prevailing in the currency exchange market, (ii) through entering into futures
contracts or options on such contracts (as described above), (iii) through
entering into forward contracts to purchase or sell currency or (iv) by
purchasing exchange-traded currency options.

Forward Currency Contracts. A forward currency contract
involves an obligation to purchase or sell a specific currency at a future date,
which may be any fixed number of days from the date of the contract as agreed
upon by the parties, at a price set at the time of the contract. These contracts
are entered into in the interbank market conducted directly between currency
traders (usually large commercial banks and brokers) and their customers.
Forward currency contracts are similar to currency futures contracts, except
that futures contracts are traded on commodities exchanges and are standardized
as to contract size and delivery date.

At or before the maturity of a forward contract, a Fund may
either sell a portfolio security and make delivery of the currency, or retain
the security and fully or partially offset its contractual obligation to deliver
the currency by negotiating with its trading partner to purchase a second,
offsetting contract. If a Fund retains the portfolio security and engages in an
offsetting transaction, the Fund, at the time of execution of the offsetting
transaction, will incur a gain or a loss to the extent that movement has
occurred in forward contract prices.

Currency Options. Each Fund may purchase exchange-traded put
and call options on foreign currencies. Put options convey the right to sell the
underlying currency at a price which is anticipated to be higher than the spot
price of the currency at the time the option is exercised. Call options convey
the right to buy the underlying currency at a price which is expected to be
lower than the spot price of the currency at the time the option is exercised.

Currency Hedging. Each Fund's currency hedging will be limited
to hedging involving either specific transactions or portfolio positions.
Transaction hedging is the purchase or sale of forward currency with respect to
specific receivables or payables of a Fund generally accruing in connection with
the purchase or sale of its portfolio securities. Position hedging is the sale
of forward currency with respect to portfolio security positions. No Fund

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<PAGE> 96
may position hedge to an extent greater than the aggregate market value (at the
time of entering into the hedge) of the hedged securities.

A decline in the U.S. dollar value of a foreign currency in
which a Fund's securities are denominated will reduce the U.S. dollar value of
the securities, even if their value in the foreign currency remains constant.
The use of currency hedges does not eliminate fluctuations in the underlying
prices of the securities, but it does establish a rate of exchange that can be
achieved in the future. For example, in order to protect against diminutions in
the U.S. dollar value of securities it holds, a Fund may purchase currency put
options. If the value of the currency does decline, the Fund will have the right
to sell the currency for a fixed amount in dollars and will thereby offset, in
whole or in part, the adverse effect on the U.S. dollar value of its securities
that otherwise would have resulted. Conversely, if a rise in the U.S. dollar
value of a currency in which securities to be acquired are denominated is
projected, thereby potentially increasing the cost of the securities, the Fund
may purchase call options on the particular currency. The purchase of these
options could offset, at least partially, the effects of the adverse movements
in exchange rates. The benefit to a Fund derived from purchases of currency
options, like the benefit derived from other types of options, will be reduced
by premiums and other transaction costs. Because transactions in currency
exchange are generally conducted on a principal basis, no fees or commissions
are generally involved. Currency hedging involves some of the same risks and
considerations as other transactions with similar instruments. Although currency
hedges limit the risk of loss due to a decline in the value of a hedged
currency, at the same time, they also limit any potential gain that might result
should the value of the currency increase. If a devaluation is generally
anticipated, a Fund may not be able to contract to sell a currency at a price
above the devaluation level it anticipates.

While the values of currency futures and options on futures,
forward currency contracts and currency options may be expected to correlate
with exchange rates, they will not reflect other factors that may affect the
value of a Fund's investments and a currency hedge may not be entirely
successful in mitigating changes in the value of the Fund's investments
denominated in that currency. A currency hedge, for example, should protect a
Yen-denominated bond against a decline in the Yen, but will not protect the Fund
against a price decline if the issuer's creditworthiness deteriorates.

Hedging. In addition to entering into options, futures and
currency exchange transactions for other purposes, including generating current
income to offset expenses or increase return, each Fund may enter into these
transactions as hedges to reduce investment risk, generally by making an
investment expected to move in the opposite direction of a portfolio position. A
hedge is designed to offset a loss in a portfolio position with a gain in the
hedged position; at the same time, however, a properly correlated hedge will
result in a gain in the portfolio position being offset by a loss in the hedged
position. As a result, the use of options, futures, contracts and currency
exchange transactions for hedging purposes could limit any potential gain from
an increase in the value of the position hedged. In addition, the movement in
the portfolio position hedged may not be of the same magnitude as movement in
the hedge. With respect to futures contracts, since the value of portfolio
securities will far exceed the value of the futures contracts sold by a Fund, an
increase in the value of the futures

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contracts could only mitigate, but not totally offset, the decline in the value
of the Fund's assets.

In hedging transactions based on an index, whether a Fund will
realize a gain or loss from the purchase or writing of options on an index
depends upon movements in the level of securities prices in the stock market
generally or, in the case of certain indexes, in an industry or market segment,
rather than movements in the price of a particular security. The risk of
imperfect correlation increases as the composition of a Fund's portfolio varies
from the composition of the index. In an effort to compensate for imperfect
correlation of relative movements in the hedged position and the hedge, the
Fund's hedge positions may be in a greater or lesser dollar amount than the
dollar amount of the hedged position. Such "over hedging" or "under hedging" may
adversely affect the Fund's net investment results if market movements are not
as anticipated when the hedge is established. Securities index futures
transactions may be subject to additional correlation risks. First, all
participants in the futures market are subject to margin deposit and maintenance
requirements. Rather than meeting additional margin deposit requirements,
investors may close futures contracts through offsetting transactions which
would distort the normal relationship between the securities index and futures
markets. Secondly, from the point of view of speculators, the deposit
requirements in the futures market are less onerous than margin requirements in
the securities market. Therefore, increased participation by speculators in the
futures market also may cause temporary price distortions. Because of the
possibility of price distortions in the futures market and the imperfect
correlation between movements in the securities index and movements in the price
of securities index futures, a correct forecast of general market trends by
Warburg still may not result in a successful hedging transaction.

Each Fund will engage in hedging transactions only when deemed
advisable by Warburg, and successful use by the Fund of hedging transactions
will be subject to Warburg's ability to predict trends in currency, interest
rate or securities markets, as the case may be, and to correctly predict
movements in the directions of the hedge and the hedged position and the
correlation between them, which predictions could prove to be inaccurate. This
requires different skills and techniques than predicting changes in the price of
individual securities, and there can be no assurance that the use of these
strategies will be successful. Even a well-conceived hedge may be unsuccessful
to some degree because of unexpected market behavior or trends. Losses incurred
in hedging transactions and the costs of these transactions will affect a Fund's
performance.

Asset Coverage for Forward Contracts, Options, Futures and
Options on Futures. As described in the Prospectuses, each Fund will comply with
guidelines established by the U.S. Securities and Exchange Commission (the
"SEC") with respect to coverage of forward currency contracts; options written
by the Fund on currencies, securities and indexes; and currency, interest rate
and index futures contracts and options on these futures contracts. These
guidelines may, in certain instances, require segregation by a Fund of cash or
liquid high-grade debt securities or other securities that are acceptable as
collateral to the appropriate regulatory authority.

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For example, a call option written by a Fund on securities may
require the Fund to hold the securities subject to the call (or securities
convertible into the securities without additional consideration) or to
segregate assets (as described above) sufficient to purchase and deliver the
securities if the call is exercised. A call option written by a Fund on an index
may require the Fund to own portfolio securities that correlate with the index
or to segregate assets (as described above) equal to the excess of the index
value over the exercise price on a current basis. A put option written by the
Fund may require the Fund to segregate assets (as described above) equal to the
exercise price. The Fund could purchase a put option if the strike price of that
option is the same or higher than the strike price of a put option sold by the
Fund. If a Fund holds a futures or forward contract, the Fund could purchase a
put option on the same futures or forward contract with a strike price as high
or higher than the price of the contract held. A Fund may enter into fully or
partially offsetting transactions so that its net position, coupled with any
segregated assets (equal to any remaining obligation), equals its net
obligation. Asset coverage may be achieved by other means when consistent with
applicable regulatory policies.

Additional Information on Other Investment Practices

Foreign Investments. Each Fund may invest in the securities of
foreign issuers. Investors should recognize that investing in foreign companies
involves certain risks, including those discussed below, which are not typically
associated with investing in U.S. issuers.

Foreign Currency Exchange. Since a Fund may invest in
securities denominated in currencies other than the U.S. dollar, and since the
Fund may temporarily hold funds in bank deposits or other money market
investments denominated in foreign currencies, the Fund may be affected
favorably or unfavorably by exchange control regulations or changes in the
exchange rate between such currencies and the dollar. A change in the value of a
foreign currency relative to the U.S. dollar will result in a corresponding
change in the dollar value of the Fund assets denominated in that foreign
currency. Changes in foreign currency exchange rates may also affect the value
of dividends and interest earned, gains and losses realized on the sale of
securities and net investment income and gains, if any, to be distributed to
shareholders by a Fund. The rate of exchange between the U.S. dollar and other
currencies is determined by the forces of supply and demand in the foreign
exchange markets. Changes in the exchange rate may result over time from the
interaction of many factors directly or indirectly affecting economic and
political conditions in the United States and a particular foreign country,
including economic and political developments in other countries. Of particular
importance are rates of inflation, interest rate levels, the balance of payments
and the extent of government surpluses or deficits in the United States and the
particular foreign country, all of which are in turn sensitive to the monetary,
fiscal and trade policies pursued by the governments of the United States and
foreign countries important to international trade and finance. Governmental
intervention may also play a significant role. National governments rarely
voluntarily allow their currencies to float freely in response to economic
forces. Sovereign governments use a variety of techniques, such as intervention
by a country's central bank or imposition of regulatory controls or taxes, to
affect the exchange rates of their currencies. Each Fund may use hedging
techniques with the objective of

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protecting against loss through the fluctuation of the value of foreign
currencies against the U.S. dollar, particularly the forward market in foreign
exchange, currency options and currency futures. See "Currency Transactions" and
"Futures Transactions" above.

Many of the foreign securities held by a Fund will not be
registered with, nor the issuers thereof be subject to reporting requirements
of, the SEC. Accordingly, there may be less publicly available information about
the securities and about the foreign company or government issuing them than is
available about a domestic company or government entity. Foreign companies are
generally not subject to uniform financial reporting standards, practices and
requirements comparable to those applicable to U.S. companies. In addition, with
respect to some foreign countries, there is the possibility of expropriation or
confiscatory taxation, limitations on the removal of funds or other assets of a
Fund, political or social instability, or domestic developments which could
affect U.S. investments in those countries. Moreover, individual foreign
economies may differ favorably or unfavorably from the U.S. economy in such
respects as growth of gross national product, rate of inflation, capital
reinvestment, resource self-sufficiency, and balance of payments positions. Each
Fund may invest in securities of foreign governments (or agencies or
instrumentalities thereof), and many, if not all, of the foregoing
considerations apply to such investments as well.

Delays. Securities of some foreign companies are less liquid
and their prices are more volatile than securities of comparable U.S. companies.
Certain foreign countries are known to experience long delays between the trade
and settlement dates of securities purchased or sold. Due to the increased
exposure of a Fund to market and foreign exchange fluctuations brought about by
such delays, and due to the corresponding negative impact on Fund liquidity,
each Fund will avoid investing in countries which are known to experience
settlement delays which may expose the Fund to unreasonable risk of loss.

Increased Expenses. The operating expenses of a Fund, to the
extent it invests in foreign securities, may be higher than that of an
investment company investing exclusively in U.S. securities, since the expenses
of the Fund, such as custodial costs, valuation costs and communication costs,
may be higher than those costs incurred by investment companies not investing in
foreign securities.

Dollar-Denominated Debt Securities of Foreign Issuers. The
returns on foreign debt securities reflect interest rates and other market
conditions prevailing in those countries. The relative performance of various
countries' fixed income markets historically has reflected wide variations
relating to the unique characteristics of each country's economy. Year-to-year
fluctuations in certain markets have been significant, and negative returns have
been experienced in various markets from time to time.

General. Individual foreign economies may differ favorably or
unfavorably from the U.S. economy in such respects as growth of gross national
product, rate of inflation, capital reinvestment, resource self-sufficiency, and
balance of payments positions. The Fund may invest in securities of foreign
governments (or agencies or instrumentalities thereof), and many, if not all, of
the foregoing considerations apply to such investments as well.

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U.S. Government Securities. Each Fund may invest in debt
obligations of varying maturities issued or guaranteed by the United States
government, its agencies or instrumentalities ("U.S. Government Securities").
Direct obligations of the U.S. Treasury include a variety of securities that
differ in their interest rates, maturities and dates of issuance. U.S.
Government Securities also include securities issued or guaranteed by the
Federal Housing Administration, Farmers Home Loan Administration, Export-Import
Bank of the United States, Small Business Administration, Government National
Mortgage Association ("GNMA"), General Services Administration, Central Bank for
Cooperatives, Federal Farm Credit Banks, Federal Home Loan Banks, Federal Home
Loan Mortgage Corporation ("FHLMC"), Federal Intermediate Credit Banks, Federal
Land Banks, Federal National Mortgage Association ("FNMA"), Maritime
Administration, Tennessee Valley Authority, District of Columbia Armory Board
and Student Loan Marketing Association. Each Fund may also invest in instruments
that are supported by the right of the issuer to borrow from the U.S. Treasury
and instruments that are supported by the credit of the instrumentality. Because
the U.S. government is not obligated by law to provide support to an
instrumentality it sponsors, a Fund will invest in obligations issued by such an
instrumentality only if Warburg determines that the credit risk with respect to
the instrumentality does not make its securities unsuitable for investment by
the Fund.

Securities of Other Investment Companies. Each Fund may invest
in securities of other investment companies, and in the case of the Global
Post-Venture Capital Fund, partnerships and other investment vehicles deemed to
be investment companies, to the extent permitted under the Investment Company
Act of 1940, as amended (the "1940 Act"). Presently, under the 1940 Act, a Fund
may hold securities of another investment company in amounts which (i) do not
exceed 3% of the total outstanding voting stock of such company, (ii) do not
exceed 5% of the value of the Fund's total assets and (iii) when added to all
other investment company securities held by the Fund, do not exceed 10% of the
value of the Fund's total assets.

Lending Portfolio Securities. Each Fund may lend portfolio
securities to brokers, dealers and other financial organizations that meet
capital and other credit requirements or other criteria established by the
Fund's Board of Directors/Trustees (the "Board"). These loans, if and when made,
may not exceed 20% of a Fund's total assets (33-1/3% of net assets in the case
of the Strategic Value Fund) taken at value. No Fund will lend portfolio
securities to affiliates of Warburg unless it has applied for and received
specific authority to do so from the SEC. Loans of portfolio securities will be
collateralized by cash, letters of credit or U.S. Government Securities, which
are maintained at all times in an amount equal to at least 100% of the current
market value of the loaned securities. Any gain or loss in the market price of
the securities loaned that might occur during the term of the loan would be for
the account of a Fund. From time to time, a Fund may return a part of the
interest earned from the investment of collateral received for securities loaned
to the borrower and/or a third party that is unaffiliated with the Fund and that
is acting as a "finder."

By lending its securities, a Fund can increase its income by
continuing to receive interest and any dividends on the loaned securities as
well as by either investing the collateral received for securities loaned in
short-term instruments or obtaining yield in the

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form of interest paid by the borrower when U.S. Government Securities are used
as collateral. Although the generation of income is not the primary investment
objective of any of the Funds, income received could be used to pay a Fund's
expenses and would increase an investor's total return. Each Fund will adhere to
the following conditions whenever its portfolio securities are loaned: (i) the
Fund must receive at least 100% cash collateral or equivalent securities of the
type discussed in the preceding paragraph from the borrower; (ii) the borrower
must increase such collateral whenever the market value of the securities rises
above the level of such collateral; (iii) the Fund must be able to terminate the
loan at any time; (iv) the Fund must receive reasonable interest on the loan, as
well as any dividends, interest or other distributions on the loaned securities
and any increase in market value; (v) the Fund may pay only reasonable custodian
fees in connection with the loan; and (vi) voting rights on the loaned
securities may pass to the borrower, provided, however, that if a material event
adversely affecting the investment occurs, the Board must terminate the loan and
regain the right to vote the securities. Loan agreements involve certain risks
in the event of default or insolvency of the other party including possible
delays or restrictions upon a Fund's ability to recover the loaned securities or
dispose of the collateral for the loan.

When-Issued Securities and Delayed-Delivery Transactions. When
a Fund agrees to purchase when-issued or delayed-delivery securities, its
custodian will set aside cash or liquid securities equal to the amount of the
commitment in a segregated account. Normally, the custodian will set aside
portfolio securities to satisfy a purchase commitment, and in such a case the
Fund may be required subsequently to place additional assets in the segregated
account in order to ensure that the value of the account remains equal to the
amount of the Fund's commitment. It may be expected that the Fund's net assets
will fluctuate to a greater degree when it sets aside portfolio securities to
cover such purchase commitments than when it sets aside cash. When the Fund
engages in when-issued or delayed-delivery transactions, it relies on the other
party to consummate the trade. Failure of the seller to do so may result in the
Fund's incurring a loss or missing an opportunity to obtain a price considered
to be advantageous.

Depositary Receipts. The assets of each Fund may be invested
in the securities of foreign issuers in the form of American Depositary Receipts
("ADRs"), European Depositary Receipts ("EDRs") and International Depositary
Receipts ("IDRs"). These securities may not necessarily be denominated in the
same currency as the securities into which they may be converted. ADRs are
receipts typically issued by a U.S. bank or trust company which evidence
ownership of underlying securities issued by a foreign corporation. EDRs, which
are sometimes referred to as Continental Depositary Receipts, are receipts
issued in Europe, and IDRs, which are sometimes referred to as Global Depositary
Receipts, are receipts issued outside the United States. EDRs and IDRs are
typically issued by non-U.S. banks and trust companies and evidence ownership of
either foreign or domestic securities. Generally, ADRs in registered form are
designed for use in U.S. securities markets and EDRs and IDRs in bearer form are
designed for use in European securities markets and non-U.S. securities markets,
respectively.

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<PAGE> 102

Warrants. Each Fund may purchase warrants issued by domestic
and foreign companies to purchase newly created equity securities consisting of
common and preferred stock. The equity security underlying a warrant is
outstanding at the time the warrant is issued or is issued together with the
warrant.

Investing in warrants can provide a greater potential for
profit or loss than an equivalent investment in the underlying security, and,
thus, can be a speculative investment. The value of a warrant may decline
because of a decline in the value of the underlying security, the passage of
time, changes in interest rates or in the dividend or other policies of the
company whose equity underlies the warrant or a change in the perception as to
the future price of the underlying security, or any combination thereof.
Warrants generally pay no dividends and confer no voting or other rights other
than to purchase the underlying security.

Non-Publicly Traded and Illiquid Securities. No Fund may
invest more than 15% of its net assets (10% of total assets in the case of the
Capital Appreciation Fund) in non-publicly traded and illiquid securities,
including securities that are illiquid by virtue of the absence of a readily
available market, Private Funds (in the case of the Global Post-Venture Capital
Fund and as defined in the Prospectus), certain Rule 144A Securities (as defined
below) and repurchase agreements which have a maturity of longer than seven
days. Securities that have legal or contractual restrictions on resale but have
a readily available market are not considered illiquid for purposes of this
limitation. Repurchase agreements subject to demand are deemed to have a
maturity equal to the notice period.

Historically, illiquid securities have included securities
subject to contractual or legal restrictions on resale because they have not
been registered under the Securities Act of 1933, as amended (the "Securities
Act"), securities which are otherwise not readily marketable and repurchase
agreements having a maturity of longer than seven days. Securities which have
not been registered under the Securities Act are referred to as private
placements or restricted securities and are purchased directly from the issuer
or in the secondary market. Limitations on resale may have an adverse effect on
the marketability of portfolio securities and a mutual fund might be unable to
dispose of restricted or other illiquid securities promptly or at reasonable
prices and might thereby experience difficulty satisfying redemptions within
seven days without borrowing. A mutual fund might also have to register such
restricted securities in order to dispose of them resulting in additional
expense and delay. Adverse market conditions could impede such a public offering
of securities.

In recent years, however, a large institutional market has
developed for certain securities that are not registered under the Securities
Act including repurchase agreements, commercial paper, foreign securities,
municipal securities and corporate bonds and notes. Institutional investors
depend on an efficient institutional market in which the unregistered security
can be readily resold or on an issuer's ability to honor a demand for repayment.
The fact that there are contractual or legal restrictions on resale to the
general public or to certain institutions may not be indicative of the liquidity
of such investments.

Rule 144A Securities. Rule 144A under the Securities Act
adopted by the SEC allows for a broader institutional trading market for
securities otherwise subject to restriction

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<PAGE> 103
on resale to the general public. Rule 144A establishes a "safe harbor" from the
registration requirements of the Securities Act for resales of certain
securities to qualified institutional buyers. Warburg anticipates that the
market for certain restricted securities such as institutional commercial paper
will expand further as a result of this regulation and use of automated systems
for the trading, clearance and settlement of unregistered securities of domestic
and foreign issuers, such as the PORTAL System sponsored by the National
Association of Securities Dealers, Inc.

An investment in Rule 144A Securities will be considered illiquid and
therefore subject to a Fund's limit on the purchase of illiquid securities
unless the Board or its delegates determines that the Rule 144A Securities are
liquid. In reaching liquidity decisions, the Board and its delegates may
consider, inter alia, the following factors: (i) the unregistered nature of the
security; (ii) the frequency of trades and quotes for the security; (iii) the
number of dealers wishing to purchase or sell the security and the number of
other potential purchasers; (iv) dealer undertakings to make a market in the
security and (v) the nature of the security and the nature of the marketplace
trades (e.g., the time needed to dispose of the security, the method of
soliciting offers and the mechanics of the transfer).

Reverse Repurchase Agreements and Dollar Rolls. A Fund may enter
into reverse repurchase agreements with the same parties with whom it may enter
into repurchase agreements. Reverse repurchase agreements involve the sale of
securities held by the Fund pursuant to its agreement to repurchase them at a
mutually agreed upon date, price and rate of interest. At the time the Fund
enters into a reverse repurchase agreement, it will establish and maintain a
segregated account with an approved custodian containing cash or liquid
securities having a value not less than the repurchase price (including accrued
interest). The assets contained in the segregated account will be
marked-to-market daily and additional assets will be placed in such account on
any day in which the assets fall below the repurchase price (plus accrued
interest). The Fund's liquidity and ability to manage its assets might be
affected when it sets aside cash or portfolio securities to cover such
commitments. Reverse repurchase agreements involve the risk that the market
value of the securities retained in lieu of sale may decline below the price of
the securities the Fund has sold but is obligated to repurchase. In the event
the buyer of securities under a reverse repurchase agreement files for
bankruptcy or becomes insolvent, such buyer or its trustee or receiver may
receive an extension of time to determine whether to enforce a Fund's obligation
to repurchase the securities, and the Fund's use of the proceeds of the reverse
repurchase agreement may effectively be restricted pending such decision.

A Fund also may enter into "dollar rolls," in which the Fund sells
fixed-income securities for delivery in the current month and simultaneously
contracts to repurchase similar but not identical (same type, coupon and
maturity) securities on a specified future date. During the roll period, the
Fund would forego principal and interest paid on such securities. The Fund would
be compensated by the difference between the current sales price and the forward
price for the future purchase, as well as by the interest earned on the cash
proceeds of the initial sale. At the time the Fund enters into a dollar roll
transaction, it will place in a segregated account maintained with an approved
custodian cash or liquid securities having a value not less than the repurchase
price (including accrued interest) and will subsequently

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<PAGE> 104
monitor the account to ensure that its value is maintained. Reverse repurchase
agreements are considered to be borrowings under the 1940 Act.

Borrowing. Each Fund may borrow up to 30% of its total assets (10% of
total assets in the case of the Capital Appreciation Fund) for temporary or
emergency purposes, including to meet portfolio redemption requests so as to
permit the orderly disposition of portfolio securities or to facilitate
settlement transactions on portfolio securities. Investments (including
roll-overs) will not be made when borrowings exceed 5% of a Fund's total assets
(net assets in the case of the Global Post-Venture Capital Fund). Although the
principal of such borrowings will be fixed, a Fund's assets may change in value
during the time the borrowing is outstanding. Each Fund expects that some of its
borrowings may be made on a secured basis. In such situations, either the
custodian will segregate the pledged assets for the benefit of the lender or
arrangements will be made with a suitable subcustodian, which may include the
lender.

Other Investment Policies and Practices

ALL FUNDS

Short Sales. In a short sale, the investor sells a borrowed
security and has a corresponding obligation to the lender to return the
identical security. The seller does not immediately deliver the securities sold
and is said to have a short position in those securities until delivery occurs.
If a Fund engages in a short sale, the collateral for the short position will be
maintained by the Fund's custodian or qualified sub-custodian. While the short
sale is open, the Fund will maintain in a segregated account an amount of
securities equal in kind and amount to the securities sold short or securities
convertible into or exchangeable for such equivalent securities. These
securities constitute the Fund's long position.

While a short sale is made by selling a security a Fund does not
own, a short sale is "against the box" to the extent that the Fund
contemporaneously owns or has the right to obtain, at no added cost, securities
identical to those sold short. The Funds do not intend to engage in short sales
against the box for investment purposes. A Fund may, however, make a short sale
as a hedge, when it believes that the price of a security may decline, causing a
decline in the value of a security owned by the Fund (or a security convertible
or exchangeable for such security), or when the Fund wants to sell the security
at an attractive current price, but also wishes to defer recognition of gain or
loss for U.S. federal income tax purposes and for purposes of satisfying certain
tests applicable to regulated investment companies under the Code. In such case,
any future losses in the Fund's long position should be offset by a gain in the
short position and, conversely, any gain in the long position should be reduced
by a loss in the short position. The extent to which such gains or losses are
reduced will depend upon the amount of the security sold short relative to the
amount the Fund owns. There will be certain additional transaction costs
associated with short sales against the box, but the Fund will endeavor to
offset these costs with the income from the investment of the cash proceeds of
short sales.

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<PAGE> 105

If a Fund effects a short sale of securities at a time when it
has an unrealized gain on the securities, it may be required to recognize that
gain as if it had actually sold the securities (as a "constructive sale") on the
date it effects the short sale. However, such constructive sale treatment may
not apply if the Fund closes out the short sale with securities other than the
appreciated securities held at the time of the short sale and if certain other
conditions are satisfied. Uncertainty regarding the tax consequences of
effecting short sales may limit the extent to which a Fund may effect short
sales.

GLOBAL POST-VENTURE CAPITAL FUND, HEALTH SCIENCES FUND AND STRATEGIC VALUE FUND

Emerging Growth and Small Companies; Unseasoned Issuers.
Investments in emerging growth and small-sized companies, as well as companies
with continuous operations of less than three years ("unseasoned issuers"),
involve considerations that are not applicable to investing in securities of
established, larger-capitalization issuers, including reduced and less reliable
information about issuers and markets, less stringent financial disclosure
requirements and accounting standards, illiquidity of securities and markets,
higher brokerage commissions and fees and greater market risk in general. In
addition, securities of emerging growth and small-sized companies and unseasoned
issuers may involve greater risks since these securities may have limited
marketability and, thus, may be more volatile.

Below Investment Grade Securities. The market values of below
investment grade securities and unrated securities of comparable quality tend to
react less to fluctuations in interest rate levels than do those of investment
grade securities, and the market values of certain of these securities also tend
to be more sensitive to individual corporate developments and changes in
economic conditions than investment grade securities. In addition, these
securities generally present a higher degree of credit risk. Issuers of these
securities are often highly leveraged and may not have more traditional methods
of financing available to them so that their ability to service their
obligations during an economic downturn or during sustained periods of rising
interest rates may be impaired.

The market for below investment grade securities and unrated
securities is relatively new and has not weathered a major economic recession.
Any such recession could disrupt severely the market for such securities and may
adversely affect the value of such securities and the ability of the issuers of
such securities to repay principal and pay interest thereon.

The Fund may have difficulty disposing of certain of these
securities because there may be a thin trading market. Because there is no
established retail secondary market for many of these securities, the Fund
anticipates that these securities could be sold only to a limited number of
dealers or institutional investors. To the extent a secondary trading market for
these securities does exist, it generally is not as liquid as the secondary
market for investment grade securities. The lack of a liquid secondary market,
as well as adverse publicity and investor perception with respect to these
securities, may have an adverse impact

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<PAGE> 106
on market price and the Fund's ability to dispose of particular issues when
necessary to meet the Fund's liquidity needs or in response to a specific
economic event such as a deterioration in the creditworthiness of the issuer.
The lack of a liquid secondary market for certain securities also may make it
more difficult for the Fund to obtain accurate market quotations for purposes of
valuing the Fund and calculating its net asset value.

The market value of below investment grade securities is more
volatile than that of investment grade securities. Factors adversely impacting
the market value of these securities will adversely impact the Fund's net asset
value. The Fund will rely on the judgment, analysis and experience of Warburg in
evaluating the creditworthiness of an issuer. In this evaluation, Warburg will
take into consideration, among other things, the issuer's financial resources,
its sensitivity to economic conditions and trends, its operating history, the
quality of the issuer's management and regulatory matters. Normally, these
securities are not intended for short-term investment. The Fund may incur
additional expenses to the extent it is required to seek recovery upon a default
in the payment of principal or interest on its portfolio holdings of such
securities. Adverse publicity regarding below investment grade securities may
depress the prices for such securities to some extent.

GLOBAL POST-VENTURE CAPITAL FUND

Private Funds. Although investments in Private Funds offer the
opportunity for significant capital gains, these investments involve a high
degree of business and financial risk that can result in substantial losses in
the portion of a Fund's portfolio invested in these investments. Among these are
the risks associated with investment in companies in an early stage of
development or with little or no operating history, companies operating at a
loss or with substantial variation in operation results from period to period,
companies with the need for substantial additional capital to support expansion
or to maintain a competitive position, or companies with significant financial
leverage. Such companies may also face intense competition from others including
those with greater financial resources or more extensive development,
manufacturing, distribution or other attributes, over which the Fund will have
no control.

Interests in the Private Funds in which a Fund may invest will
be subject to substantial restrictions on transfer and, in some instances, may
be non-transferable for a period of years. Private Funds may participate in only
a limited number of investments and, as a consequence, the return of a
particular Private Fund may be substantially adversely affected by the
unfavorable performance of even a single investment. Certain of the Private
Funds in which the Fund may invest may pay their investment managers a fee based
on the performance of the Fund, which may create an incentive for the manager to
make investments that are riskier or more speculative than would be the case if
the manager was paid a fixed fee. Private Funds are not registered under the
1940 Act and, consequently, are not subject to the restrictions on affiliated
transactions and other protections applicable to regulated investment companies.
The valuation of companies held by Private Funds, the securities of which are
generally unlisted and illiquid, may be

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<PAGE> 107

very difficult and will often depend on the subjective valuation of the managers
of the Private Funds, which may prove to be inaccurate. Inaccurate valuations of
a Private Fund's portfolio holdings may affect the Fund's net asset value
calculations. Private Funds in which the Fund invests will not borrow to
increase the amount of assets available for investment or otherwise engage in
leverage.

HEALTH SCIENCES FUND

Securities of Health Sciences Companies. Because the Fund will
focus its investments in securities of companies that are principally engaged in
the health sciences, the value of its shares will be especially affected by
factors relating to the health sciences, resulting in greater volatility in
share price than may be the case with funds that invest in a wider range of
industries.

Health sciences companies are generally subject to greater
governmental regulation than other industries at both the state and federal
levels. Changes in governmental policies may have a material effect on the
demand for or costs of certain products and services. A health sciences company
must receive government approval before introducing new drugs and medical
devices or procedures. This process may delay the introduction of these products
and services to the marketplace, resulting in increased development costs,
delayed cost-recovery and loss of competitive advantage to the extent that rival
companies have developed competing products or procedures, adversely affecting
the company's revenues and profitability. Expansion of facilities by health care
providers is subject to "determinations of need" by the appropriate government
authorities. This process not only increases the time and cost involved in these
expansions, but also makes expansion plans uncertain, limiting the revenue and
profitability growth potential of health care facilities operators, and
negatively affecting the price of their securities.

Certain health sciences companies depend on the exclusive
rights or patents for the products they develop and distribute. Patents have a
limited duration and, upon expiration, other companies may market substantially
similar "generic" products which have cost less to develop and may cause the
original developer of the product to lose market share and/or reduce the price
charged for the product, resulting in lower profits for the original developer.

Because the products and services of health sciences companies affect
the health and well-being of many individuals, these companies are especially
susceptible to product liability lawsuits. The share price of a health sciences
company can drop dramatically not only as a reaction to an adverse judicial
ruling, but also from the adverse publicity accompanying threatened litigation.

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STRATEGIC VALUE FUND

Zero Coupon Securities. The Strategic Value Fund may invest in
"zero coupon" U.S. Treasury, foreign government and U.S. and foreign corporate
convertible and nonconvertible debt securities, which are bills, notes and bonds
that have been stripped of their unmatured interest coupons and custodial
receipts or certificates of participation representing interests in such
stripped debt obligations and coupons. A zero coupon security pays no interest
to its holder prior to maturity. Accordingly, such securities usually trade at a
deep discount from their face or par value and will be subject to greater
fluctuations of market value in response to changing interest rates than debt
obligations of comparable maturities that make current distributions of
interest. The Fund anticipates that it will not normally hold zero coupon
securities to maturity. Federal tax law requires that a holder of a zero coupon
security accrue a portion of the discount at which the security was purchased as
income each year, even though the holder receives no interest payment on the
security during the year. Such accrued discount will be includible in
determining the amount of dividends the Fund must pay each year and, in order to
generate cash necessary to pay such dividends, the Fund may liquidate portfolio
securities at a time when it would not otherwise have done so.

Other Investment Limitations

All Funds. Certain investment limitations of each Fund may not
be changed without the affirmative vote of the holders of a majority of the
Fund's outstanding shares ("Fundamental Restrictions"). Such majority is defined
as the lesser of (i) 67% or more of the shares present at the meeting, if the
holders of more than 50% of the outstanding shares of the Fund are present or
represented by proxy, or (ii) more than 50% of the outstanding shares. If a
percentage restriction (other than the percentage limitation set forth in No. 2
of the Capital Appreciation Fund and the percentage limitation set forth in No.
1 of each of the Global Post-Venture Capital Fund, Health Sciences Fund and the
Strategic Value Fund) is adhered to at the time of an investment, a later
increase or decrease in the percentage of assets resulting from a change in the
values of portfolio securities or in the amount of a Fund's assets will not
constitute a violation of such restriction.

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Capital Appreciation Fund. The investment limitations numbered 1
through 11 are Fundamental Restrictions. Investment limitations 12 through 14
may be changed by a vote of the Board at any time.

The Capital Appreciation Fund may not:

1. Purchase the securities of any issuer if as a result more
than 5% of the value of the Fund's total assets would be invested in the
securities of such issuer, except that this 5% limitation does not apply to U.S.
Government Securities and except that up to 25% of the value of the Fund's total
assets may be invested without regard to this 5% limitation.

2. Borrow money or issue senior securities except that the Fund
may (a) borrow from banks for temporary or emergency purposes, and not for
leveraging, and then in amounts not in excess of 10% of the value of the Fund's
total assets at the time of such borrowing and (b) enter into futures contracts;
or mortgage, pledge or hypothecate any assets except in connection with any bank
borrowing and in amounts not in excess of the lesser of the dollar amounts
borrowed or 10% of the value of the Fund's total assets at the time of such
borrowing. Whenever borrowings described in (a) exceed 5% of the value of the
Fund's total assets, the Fund will not make any additional investments
(including roll-overs). For purposes of this restriction, (a) the deposit of
assets in escrow in connection with the purchase of securities on a when-issued
or delayed-delivery basis and (b) collateral arrangements with respect to
initial or variation margin for futures contracts will not be deemed to be
pledges of the Fund's assets.

3. Purchase any securities which would cause 25% or more of
the value of the Fund's total assets at the time of purchase to be invested in
the securities of issuers conducting their principal business activities in the
same industry; provided that there shall be no limit on the purchase of U.S.
Government Securities.

4. Make loans, except that the Fund may purchase or hold
publicly distributed fixed-income securities, lend portfolio securities and
enter into repurchase agreements.

5. Underwrite any issue of securities except to the extent
that the investment in restricted securities and the purchase of fixed-income
securities directly from the issuer thereof in accordance with the Fund's
investment objective, policies and limitations may be deemed to be underwriting.

6. Purchase or sell real estate, real estate investment trust
securities, commodities or commodity contracts, or invest in oil, gas or mineral
exploration or development programs, except that the Fund may invest in (a)
fixed-income securities secured by real estate, mortgages or interests therein,
(b) securities of companies that invest in or sponsor oil, gas or mineral
exploration or development programs and (c) futures contracts and related
options.

7. Make short sales of securities or maintain a short
position.

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<PAGE> 110
8. Purchase, write or sell puts, calls, straddles, spreads or
combinations thereof, except that the Fund may (a) purchase put and call options
on securities, (b) write covered call options on securities, (c) purchase and
write put and call options on stock indices and (d) enter into options on
futures contracts.

9. Purchase securities of other investment companies except in
connection with a merger, consolidation, acquisition, reorganization or offer of
exchange or as otherwise permitted under the 1940 Act.

10. Purchase more than 10% of the voting securities of any one
issuer, more than 10% of the securities of any class of any one issuer or more
than 10% of the outstanding debt securities of any one issuer; provided that
this limitation shall not apply to investments in U.S. government securities.

11. Purchase securities on margin, except that the Fund may
obtain any short-term credits necessary for the clearance of purchases and sales
of securities. For purposes of this restriction, the deposit or payment of
initial or variation margin in connection with futures contracts or related
options will not be deemed to be a purchase of securities on margin.

12. Invest more than 10% of the value of the Fund's total
assets in securities which may be illiquid because of legal or contractual
restrictions on resale or securities for which there are no readily available
market quotations. For purposes of this limitation, (a) repurchase agreements
with maturities greater than seven days and (b) time deposits maturing in more
than seven calendar days shall be considered illiquid securities.

13. Invest in warrants (other than warrants acquired by the
Fund as part of a unit or attached to securities at the time of purchase) if, as
a result, the investments (valued at the lower of cost or market) would exceed
10% of the value of the Fund's net assets.

14. Invest in oil, gas or mineral leases.

Global Post-Venture Capital Fund. The investment limitations
numbered 1 through 9 are Fundamental Restrictions. Investment limitations 10
through 13 may be changed by a vote of the Board at any time.

The Global Post-Venture Capital Fund may not:

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1. Borrow money except that the Fund may (a) borrow from banks
for temporary or emergency purposes and (b) enter into reverse repurchase
agreements; provided that reverse repurchase agreements, dollar roll
transactions that are accounted for as financings and any other transactions
constituting borrowing by the Fund may not exceed 30% of the value of the Fund's
total assets at the time of such borrowing. For purposes of this restriction,
short sales, the entry into currency transactions, options, futures contracts,
options on futures contracts, forward commitment transactions and dollar roll
transactions that are not accounted for as financings (and the segregation of
assets in connection with any of the foregoing) shall not constitute borrowing.

3. Purchase the securities of any issuer if as a result more
than 5% of the value of the Fund's total assets would be invested in the
securities of such issuer, except that this 5% limitation does not apply to U.S.
Government Securities and except that up to 25% of the value of the Fund's total
assets may be invested without regard to this 5% limitation.

4. Make loans, except that the Fund may purchase or hold
fixed-income securities, including loan participations, assignments and
structured securities, lend portfolio securities and enter into repurchase
agreements.

5. Underwrite any securities issued by others except to the
extent that the investment in restricted securities and the sale of securities
in accordance with the Fund's investment objective, policies and limitations may
be deemed to be underwriting.

6. Purchase or sell real estate or invest in oil, gas or
mineral exploration or development programs, except that the Fund may invest in
(a) securities secured by real estate, mortgages or interests therein and (b)
securities of companies that invest in or sponsor oil, gas or mineral
exploration or development programs.

7. Purchase securities on margin, except that the Fund may
obtain any short-term credits necessary for the clearance of purchases and sales
of securities. For purposes of this restriction, the deposit or payment of
initial or variation margin in connection with transactions in currencies,
options, futures contracts or related options will not be deemed to be a
purchase of securities on margin.

8. Invest in commodities, except that the Fund may purchase
and sell futures contracts, including those relating to securities, currencies
and indexes, and options on futures

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<PAGE> 112

contracts, securities, currencies or indexes, purchase and sell currencies on a
forward commitment or delayed-delivery basis and enter into stand-by
commitments.

9. Issue any senior security except as permitted in the
Fund's investment limitations.

10. Purchase securities of other investment companies except
in connection with a merger, consolidation, acquisition, reorganization or offer
of exchange, or as otherwise permitted under the 1940 Act.

11. Pledge, mortgage or hypothecate its assets, except to the
extent necessary to secure permitted borrowings and to the extent related to the
deposit of assets in escrow in connection with the purchase of securities on a
forward commitment or delayed-delivery basis and collateral and initial or
variation margin arrangements with respect to currency transactions, options,
futures contracts, and options on futures contracts.

12. Invest more than 15% of the Fund's net assets in
securities which may be illiquid because of legal or contractual restrictions on
resale or securities for which there are no readily available market quotations.
For purposes of this limitation, repurchase agreements with maturities greater
than seven days shall be considered illiquid securities.

13. Make additional investments (including roll-overs) if the
Fund's borrowings exceed
5% of its net assets.

Health Sciences Fund. The investment limitations numbered 1
through 9 are Fundamental Restrictions. Investment limitations 10 through 13 may
be changed by a vote of the Board at any time.

The Health Sciences Fund may not:

2. Purchase any securities which would cause 25% or more of
the value of the Fund's total assets at the time of purchase to be invested in
the securities of issuers conducting their principal business activities in the
same industry except that the Fund will invest at least 25% of its total assets
in the health services, pharmaceuticals and medical devices industries; provided
that there shall be no limit on the purchase of U.S. Government Securities.

25
<PAGE> 113

8. Invest in commodities, except that the Fund may purchase
and sell futures contracts, including those relating to securities, currencies
and indexes, and options on futures contracts, securities, currencies or
indexes, purchase and sell currencies on a forward commitment or
delayed-delivery basis and enter into stand-by commitments.

9. Issue any senior security except as permitted in the
Fund's investment limitations.

26
<PAGE> 114

13. Make additional investments (including roll-overs) if the
Fund's borrowings exceed 5% of its net assets.

Strategic Value Fund. The investment limitations numbered 1
through 10 are Fundamental Restrictions. Investment limitations 11 through 15
may be changed by a vote of the Board at any time.

The Strategic Value Fund may not:

1. Borrow money except that the Fund may (a) borrow from banks
for temporary or emergency purposes and (b) enter into reverse repurchase
agreements; provided that reverse repurchase agreements, dollar rolls that are
accounted for as financings and any other transactions constituting borrowing by
the Fund may not exceed 30% of the value of the Fund's total assets at the time
of such borrowing. For purposes of this restriction, short sales, the entry into
currency transactions, options, futures contracts, options on futures contracts,
forward commitment transactions and dollar roll transactions that are not
accounted for as financings (and the segregation of assets in connection with
any of the foregoing) shall not constitute borrowing.

2. Make loans, except that the Fund may purchase or hold
fixed-income securities, lend portfolio securities and enter into repurchase
agreements in accordance with its investment objective, policies and
limitations.

4. Purchase the securities of any issuer if as a result more
than 5% of the value of the Fund's total assets would be invested in the
securities of such issuer, except that this 5% limitation does not apply to U.S.
Government Securities and except that up to 25% of the value of the Fund's total
assets may be invested without regard to this 5% limitation.

5. Underwrite any securities issued by others except to the
extent that the investment in restricted securities and the sale of securities
or the purchase of securities directly from the issuer in accordance with the
Fund's investment objective, policies and limitations may be deemed to be
underwriting.

27
<PAGE> 115

6. Purchase or sell real estate, except that the Fund may
invest in (a) securities secured by real estate, mortgages or interests therein
or (b) issued by companies which invest in real estate or interests therein.

7. Make short sales of securities or maintain a short
position, except that the Fund may maintain short positions in options on
currencies, securities and stock indexes, futures contracts and options on
futures contracts and enter into short sales or short sales "against the box" in
accordance with the Fund's investment objective, policies and limitations.

8. Purchase securities on margin, except that the Fund may
obtain any short-term credits necessary for the clearance of purchases and sales
of securities. For purposes of this restriction, the deposit or payment of
initial or variation margin in connection with transactions in currencies,
options, futures contracts or related options will not be deemed to be a
purchase of securities on margin.

9. Invest in commodities, except that the Fund may (a)
purchase and sell futures contracts, including those relating to securities,
currencies and indexes, and options on futures contracts, securities, currencies
or indexes, (b) purchase and sell currencies on a forward commitment or
delayed-delivery basis and (c) enter into stand-by commitments.

10. Pledge, mortgage or hypothecate its assets, except (a) to
the extent necessary to secure permitted borrowings and (b) to the extent
related to the deposit of assets in escrow in connection with the purchase of
securities on a forward commitment or delayed-delivery basis and collateral and
initial or variation margin arrangements with respect to currency transactions,
options, futures contracts, and options on futures contracts.

11. Invest more than 15% of the Fund's net assets in
securities which may be illiquid because of legal or contractual restrictions on
resale or securities for which there are no readily available market quotations.
For purposes of this limitation, repurchase agreements with maturities greater
than seven days shall be considered illiquid securities.

12. Make additional investments (including roll-overs) if the
Fund's borrowings exceed 5% of its total assets.

13. Make investments for the purpose of exercising control
or management.

14. Purchase securities of other investment companies except
in connection with a merger, consolidation, acquisition, reorganization or offer
of exchange, or as otherwise permitted under the 1940 Act.

28
<PAGE> 116

15. Invest in oil, gas or mineral exploration or development
programs, except that the Fund may invest in securities of companies that invest
in or sponsor oil, gas or mineral exploration or development programs.

Portfolio Valuation

The Prospectuses discuss the time at which the net asset value
of each Fund is determined for purposes of sales and redemptions. The following
is a description of the procedures used by each Fund in valuing its assets.

Securities listed on a U.S. securities exchange (including
securities traded through the Nasdaq National Market System) or foreign
securities exchange or traded in an over-the-counter market will be valued at
the most recent sale as of the time the valuation is made or, in the absence of
sales, at the mean between the bid and asked quotations. If there are no such
quotations, the value of the securities will be taken to be the highest bid
quotation on the exchange or market. Options and futures contracts will be
valued similarly. A security which is listed or traded on more than one exchange
is valued at the quotation on the exchange determined to be the primary market
for such security. Short-term obligations with maturities of 60 days or less are
valued at amortized cost, which constitutes fair value as determined by the
Board. Amortized cost involves valuing a portfolio instrument at its initial
cost and thereafter assuming a constant amortization to maturity of any discount
or premium, regardless of the impact of fluctuating interest rates on the market
value of the instrument. The amortized cost method of valuation may also be used
with respect to other debt obligations with 60 days or less remaining to
maturity. Notwithstanding the foregoing, in determining the market value of
portfolio investments, each Fund may employ outside organizations (a "Pricing
Service") which may use a matrix, formula or other objective method that takes
into consideration market indexes, matrices, yield curves and other specific
adjustments. The procedures of Pricing Services are reviewed periodically by the
officers of each Fund under the general supervision and responsibility of the
Board, which may replace a Pricing Service at any time. Securities, options and
futures contracts for which market quotations are not available and certain
other assets of each Fund will be valued at their fair value as determined in
good faith pursuant to consistently applied procedures established by the Board.
In addition, the Board or its delegates may value a security at fair value if it
determines that such security's value determined by the methodology set forth
above does not reflect its fair value.

Trading in securities in certain foreign countries is
completed at various times prior to the close of business on each business day
in New York (i.e., a day on which The New York Stock Exchange, Inc. (the "NYSE")
is open for trading). In addition, securities trading in a particular country or
countries may not take place on all business days in New York. Furthermore,
trading takes place in various foreign markets on days which are not business
days in New York and days on which a Fund's net asset value is not calculated.
As a result, calculation of a Fund's net asset value may not take place
contemporaneously with the determination of the prices of certain foreign
portfolio securities used in such calculation. All assets and liabilities
initially expressed in foreign currency values will be converted into U.S.
dollar values at the prevailing rate as quoted by a Pricing Service. If such
quotations are

29
<PAGE> 117
not available, the rate of exchange will be determined in good faith pursuant to
consistently applied procedures established by the Board.

Portfolio Transactions

Warburg is responsible for establishing, reviewing and, where
necessary, modifying each Fund's investment program to achieve its investment
objective. Purchases and sales of newly issued portfolio securities are usually
principal transactions without brokerage commissions effected directly with the
issuer or with an underwriter acting as principal. In the case of the Global
Post-Venture Capital Fund, Private Funds may be purchased directly from the
issuer or may involve a broker or placement agent. Other purchases and sales may
be effected on a securities exchange or over-the-counter, depending on where it
appears that the best price or execution will be obtained. The purchase price
paid by a Fund to underwriters of newly issued securities usually includes a
concession paid by the issuer to the underwriter, and purchases of securities
from dealers, acting as either principals or agents in the after market, are
normally executed at a price between the bid and asked price, which includes a
dealer's mark-up or mark-down. Transactions on U.S. stock exchanges and some
foreign stock exchanges involve the payment of negotiated brokerage commissions.
On exchanges on which commissions are negotiated, the cost of transactions may
vary among different brokers. On most foreign exchanges, commissions are
generally fixed. Purchases of Private Funds through a broker or placement agent
may also involve a commission or other fee. There is generally no stated
commission in the case of securities traded in domestic or foreign
over-the-counter markets, but the price of securities traded in over-the-counter
markets includes an undisclosed commission or mark-up. U.S. Government
Securities are generally purchased from underwriters or dealers, although
certain newly issued U.S. Government Securities may be purchased directly from
the U.S. Treasury or from the issuing agency or instrumentality. No brokerage
commissions are typically paid on purchases and sales of U.S. Government
Securities.

Except for Private Funds managed by Abbott Capital Management,
L.L.C., the Global Post-Venture Capital Fund's sub-investment adviser with
request to Private Funds ("Abbott"), Warburg will select specific portfolio
investments and effect transactions for each Fund and in doing so seeks to
obtain the overall best execution of portfolio transactions. In evaluating
prices and executions, Warburg will consider the factors it deems relevant,
which may include the breadth of the market in the security, the price of the
security, the financial condition and execution capability of a broker or dealer
and the reasonableness of the commission, if any, for the specific transaction
and on a continuing basis. Warburg may, in its discretion, effect transactions
in portfolio securities with dealers who provide brokerage and research services
(as those terms are defined in Section 28(e) of the Securities Exchange Act of
1934) to a Fund and/or other accounts over which Warburg exercises investment
discretion. Warburg may place portfolio transactions with a broker or dealer
with whom it has negotiated a commission that is in excess of the commission
another broker or dealer would have charged for effecting the transaction if
Warburg determines in good faith that such amount of commission was reasonable
in relation to the value of such brokerage and research services provided by
such broker or dealer viewed in terms of either

30
<PAGE> 118

that particular transaction or of the overall responsibilities of Warburg.
Research and other services received may be useful to Warburg in serving both
the Fund and its other clients and, conversely, research or other services
obtained by the placement of business of other clients may be useful to Warburg
in carrying out its obligations to a Fund. Research may include furnishing
advice, either directly or through publications or writings, as to the value of
securities, the advisability of purchasing or selling specific securities and
the availability of securities or purchasers or sellers of securities;
furnishing seminars, information, analyses and reports concerning issuers,
industries, securities, trading markets and methods, legislative developments,
changes in accounting practices, economic factors and trends and portfolio
strategy; access to research analysts, corporate management personnel, industry
experts, economists and government officials; comparative performance evaluation
and technical measurement services and quotation services; and products and
other services (such as third party publications, reports and analyses, and
computer and electronic access, equipment, software, information and accessories
that deliver, process or otherwise utilize information, including the research
described above) that assist Warburg in carrying out its responsibilities. For
the fiscal year ended October 31, 1997, $695,822, $2,310, $38,543 and $21,810 of
total brokerage commissions for the Capital Appreciation Fund, Global
Post-Venture Capital Fund, Health Sciences Fund and Strategic Value Fund,
respectively, was paid to brokers and dealers who provided such research and
other services. Research received from brokers or dealers is supplemental to
Warburg's own research program. The fees to Warburg under its advisory agreement
with each Fund are not reduced by reason of its receiving any brokerage and
research services.

The following table details amounts paid by each Fund in
commissions to broker-dealers for execution of portfolio transactions during the
indicated fiscal years or period ended October 31.

<TABLE>
<CAPTION>
- ----------------------------------- -------- ---------------------
FUND YEAR COMMISSIONS
- ----------------------------------- -------- ---------------------
<S> <C> <C>
Capital Appreciation Fund 1995 $ 750,209
1996 $ 1,510,431
1997 $ 3,338,918
---------------------
- ----------------------------------- -------- ---------------------
Global Post-Venture Capital Fund 1996 $ 3,819
1997 $ 15,386
- ----------------------------------- ---------------------
Health Sciences Fund 1997 $ 66,762
---------------------
- ----------------------------------- -------- ---------------------
Strategic Value 1997 $ 79,155
- ----------------------------------- -------- ---------------------
</TABLE>

The increase in commission payments by the Capital
Appreciation and Global Post-Venture Capital Funds in the 1996 and 1997 fiscal
years was attributable to the increased size of each Fund and increased equity
investments.

31
<PAGE> 119

The table below shows the amount of outstanding repurchase
agreements that each Fund had, as of October 31, 1997, with Goldman, Sachs &
Co., one of the regular broker-dealers of each Fund.

<TABLE>
<CAPTION>
- --------------------------------------- --------------------------------------

<S> <C>
Capital Appreciation Fund $ 45,761,000
- --------------------------------------- --------------------------------------

Global Post-Venture Capital Fund $ 244,000
- --------------------------------------- --------------------------------------

Health Sciences Fund $ 1,436,000
- --------------------------------------- --------------------------------------

Strategic Value Fund $ 820,000
- --------------------------------------- --------------------------------------
</TABLE>

Investment decisions for each Fund concerning specific
portfolio securities are made independently from those for other clients advised
by Warburg or, in the case of the Global Post-Venture Capital Fund, Abbott. Such
other investment clients may invest in the same securities as a Fund. When
purchases or sales of the same security are made at substantially the same time
on behalf of such other clients, transactions are averaged as to price and
available investments allocated as to amount, in a manner which Warburg or
Abbott, as the case may be, believes to be equitable to each client, including
the Funds. In some instances, this investment procedure may adversely affect the
price paid or received by the Fund or the size of the position obtained or sold
for the Fund. To the extent permitted by law, securities to be sold or purchased
for a Fund may be aggregated with those to be sold or purchased for such other
investment clients in order to obtain best execution.

Any portfolio transaction for a Fund may be executed through
Counsellors Securities Inc., each Fund's distributor ("Counsellors Securities"),
if, in Warburg's judgment, the use of Counsellors Securities is likely to result
in price and execution at least as favorable as those of other qualified
brokers, and if, in the transaction, Counsellors Securities charges the Fund a
commission rate consistent with those charged by Counsellors Securities to
comparable unaffiliated customers in similar transactions. All transactions with
affiliated brokers will comply with Rule 17e-1 under the 1940 Act. No portfolio
transactions have been executed through Counsellors Securities since the
commencement of each Fund's operations.

In no instance will portfolio securities be purchased from or
sold to Warburg, Abbott (in the case of the Global Post-Venture Capital Fund) or
Counsellors Securities or any affiliated person of such companies. In addition,
the Fund will not give preference to any institutions with whom a Fund enters
into distribution or shareholder servicing agreements concerning the provision
of distribution services or support services. See the Prospectuses, "Shareholder
Servicing."

Transactions for a Fund may be effected on foreign securities
exchanges. In transactions for securities not actively traded on a foreign
securities exchange, a Fund will deal directly with the dealers who make a
market in the securities involved, except in those

32
<PAGE> 120
circumstances where better prices and execution are available elsewhere. Such
dealers usually are acting as principal for their own account. On occasion,
securities may be purchased directly from the issuer. Such portfolio securities
are generally traded on a net basis and do not normally involve brokerage
commissions. Securities firms may receive brokerage commissions on certain
portfolio transactions, including options, futures and options on futures
transactions and the purchase and sale of underlying securities upon exercise of
options.

A Fund may participate, if and when practicable, in bidding
for the purchase of securities for the Fund's portfolio directly from an issuer
in order to take advantage of the lower purchase price available to members of
such a group. A Fund will engage in this practice, however, only when Warburg,
in its sole discretion, believes such practice to be otherwise in the Fund's
interest.

Portfolio Turnover

Each Fund does not intend to seek profits through short-term
trading, but the rate of turnover will not be a limiting factor when the Fund
deems it desirable to sell or purchase securities. Each Fund's portfolio
turnover rate is calculated by dividing the lesser of purchases or sales of its
portfolio securities for the year by the monthly average value of the portfolio
securities. Securities with remaining maturities of one year or less at the date
of acquisition are excluded from the calculation.

Certain practices that may be employed by a Fund could result
in high portfolio turnover. For example, options on securities may be sold in
anticipation of a decline in the price of the underlying security (market
decline) or purchased in anticipation of a rise in the price of the underlying
security (market rise) and later sold. The Fund's investment in special
situation companies could result in high portfolio turnover. To the extent that
its portfolio is traded for the short-term, the Fund will be engaged essentially
in trading activities based on short-term considerations affecting the value of
an issuer's stock instead of long-term investments based on fundamental
valuation of securities. Because of this policy, portfolio securities may be
sold without regard to the length of time for which they have been held.
Consequently, the annual portfolio turnover rate of the Fund may be higher than
mutual funds having a similar objective that do not utilize these strategies.

MANAGEMENT OF THE FUNDS

Officers and Board of Directors/Trustees

The names (and ages) of the each Fund's Directors/Trustees and
officers, their addresses, present positions and principal occupations during
the past five years and other affiliations are set forth below.

33
<PAGE> 121

<TABLE>

<S> <C>
Richard N. Cooper* (63) Director/Trustee Professor at
Harvard University Harvard University; National
1737 Cambridge Street Intelligence Council from June
Cambridge, Massachusetts 02138 1995 until January 1997;
Director or Trustee of
Circuit City Stores, Inc.(retail
electronics and appliances) and
Phoenix Home Life Mutual
Insurance Company;
Director/Trustee of other
investment companies advised by
Warburg.

Jack W. Fritz (70) Director/Trustee Private
2425 North Fish Creek Road investor; Consultant and
P.O. Box 483 Director of Fritz Broadcasting,
Wilson, Wyoming 83014 Inc. and Fritz Communications
(developers and operators of
radio stations); Director of
Advo, Inc. (direct mail
advertising); Director/Trustee
of other investment companies
advised by Warburg.

John L. Furth* (67) Chairman of the Board Vice
466 Lexington Avenue Chairman, Managing Director and
New York, New York 10017-3147 Director of Warburg; Associated
with Warburg since 1970;
Director of Counsellors
Securities; Chairman of the
Board of other investment
companies advised by Warburg.

Jeffrey E. Garten (51) Director/Trustee Dean of Yale
Box 208200 School of Management and William
New Haven, Connecticut 06520-8200 S. Beinecke Professor in the
Practice of International Trade
and Finance; Undersecretary of
Commerce for International Trade
from November 1993 to October
1995; Professor at Columbia
University from September 1992
to November 1993;
Director/Trustee of other
investment companies advised by
Warburg.

Thomas A. Melfe (66) Director/Trustee Partner in the
30 Rockefeller Plaza law firm of Donovan Leisure
New York, New York 10112 Newton & Irvine; Chairman of the
Board, Municipal Fund for New
York Investors, Inc.;
Director/Trustee of other
investment companies advised by
Warburg.
</TABLE>

- --------
* Indicates a Director/Trustee who is an "interested person" of each
Fund as defined in the 1940 Act.

34
<PAGE> 122

<TABLE>

<S> <C>

Arnold M. Reichman* (49) Director/Trustee Managing
466 Lexington Avenue Director, Chief Operating
New York, New York 10017-3147 Officer and Assistant Secretary
of Warburg; Director of The RBB
Fund, Inc.; Associated with
Warburg since 1984; Director,
Secretary and Chief Operating
Officer of Counsellors
Securities; Director/Trustee of
other investment companies
advised by Warburg.

Alexander B. Trowbridge (68) Director/Trustee President of
1317 F Street, N.W., 5th Floor Trowbridge Partners, Inc.
Washington, DC 20004 (business consulting) from
January 1990-November 1996;
Director or Trustee of New
England Life Insurance Co., ICOS
Corporation
(biopharmaceuticals), WMX
Technologies Inc. (solid and
hazardous waste collection and
disposal), The Rouse Company
(real estate development),
Harris Corp. (electronics and
communications equipment), The
Gillette Co. (personal care
products) and Sun Company Inc.
(petroleum refining and
marketing); Director/Trustee of
other investment companies
advised by Warburg.

Eugene L. Podsiadlo (41) President Managing Director of
466 Lexington Avenue Warburg; Associated with Warburg
New York, New York 10017-3147 since 1991; Officer of
Counsellors Securities and other
investment companies advised by
Warburg.

Stephen Distler (44) Vice President Managing Director
466 Lexington Avenue of Warburg; Associated with
New York, New York 10017-3147 Warburg since 1984; Treasurer of
Counsellors Securities; Officer
of other investment companies
advised by Warburg.

Eugene P. Grace (46) Vice President and Secretary
466 Lexington Avenue Senior Vice President of
New York, New York 10017-3147 Warburg; Associated with Warburg
since April 1994;
Attorney-at-law from September
1989-April 1994; life insurance
agent, New York Life Insurance
Company from 1993-1994; Officer
of Counsellors Securities and
other investment companies
advised by Warburg.
</TABLE>

35
<PAGE> 123

Howard Conroy, CPA (44) Vice President and Chief Financial Officer
466 Lexington Avenue Vice President of Warburg; Associated with
New York, New York 10017-3147 Warburg since 1992; Officer of other
investment companies advised by Warburg.

Daniel S. Madden, CPA (32) Treasurer and Chief Accounting Officer
466 Lexington Avenue Vice President of Warburg; Associated with
New York, New York 10017-3147 Warburg since 1995; Associated with BlackRock
Financial Management, Inc. from September
1994 to October 1995; Associated with BEA
Associates from April 1993 to September 1994;
Associated with Ernst & Young LLP from 1990
to 1993; Officer of other investment
companies advised by Warburg.

Janna Manes, Esq. (30) Assistant Secretary
466 Lexington Avenue Vice President of Warburg; Associated with
New York, New York 10017-3147 Warburg since 1996; Associated with the law
firm of Willkie Farr & Gallagher from
1993-1996; Officer of other investment
companies advised by Warburg.

No employee of Warburg or PFPC Inc., the Funds' co-administrator ("PFPC"),
or any of their affiliates receives any compensation from the Funds for acting
as an officer or director/trustee of a Fund. Each Director/Trustee who is not a
director, trustee, officer or employee of Warburg, PFPC or any of their
affiliates receives an annual fee of $500 ($1,000 in the case of the Capital
Appreciation Fund), and $250 for each meeting of the Board attended by him for
his services as Director/Trustee and is reimbursed for expenses incurred in
connection with his attendance at Board meetings.

Directors/Trustees' Total Compensation
(for the fiscal year ended October 31, 1997)

<TABLE>
<CAPTION>
GLOBAL ALL INVESTMENT
CAPITAL POST-VENTURE COMPANIES
NAME OF DIRECTOR/TRUSTEE APPRECIATION FUND CAPITAL FUND HEALTH SCIENCES STRATEGIC VALUE MANAGED BY
FUND FUND WARBURG*
------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
John L. Furth** None None None None None
------------------------------------------------------------------------------------------------------------------------
Arnold M. Reichman** None None None None None
------------------------------------------------------------------------------------------------------------------------
Richard N. Cooper $2,000 $2,000 $1,500 $1,500 $44,500
------------------------------------------------------------------------------------------------------------------------
Donald J. Donahue*** $2,000 $2,000 $1,500 $1,500 $44,500
------------------------------------------------------------------------------------------------------------------------
Jack W. Fritz $2,000 $2,000 $1,500 $1,500 $44,500
------------------------------------------------------------------------------------------------------------------------
</TABLE>

<PAGE> 124

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Jeffrey E. Garten**** N/A N/A N/A N/A N/A
------------------------------------------------------------------------------------------------------------------------
Thomas A. Melfe $2,000 $2,000 $1,500 $1,500 $44,500
------------------------------------------------------------------------------------------------------------------------
Alexander B. Trowbridge $2,000 $2,000 $1,500 $1,500 $44,500
------------------------------------------------------------------------------------------------------------------------
</TABLE>

* Each Director/Trustee serves as a Director or Trustee of 24 investment
companies advised by Warburg.

** Mr. Furth and Mr. Reichman receive compensation as affiliates of Warburg,
and, accordingly, receive no compensation from any Fund or any other
investment company advised by Warburg.

*** Mr. Donahue resigned as a Director/Trustee of each Fund effective February
6, 1998.

**** Mr. Garten became a Director/Trustee of each Fund effective February 6,
1998 and, accordingly, received no compensation from the Funds for the
fiscal year ended October 31, 1997.

As of January 30, 1998, the Trustees/Directors and officers of each Fund
as a group owned less than 1% of the outstanding shares of each Fund.

Portfolio Managers

Capital Appreciation Fund. Mr. George U. Wyper is Co-Portfolio Manager of
the Capital Appreciation Fund. From 1987 until 1990 Mr. Wyper was the director
of fixed income investments at Fireman's Fund Insurance Company, and from 1990
until 1993 he was chief investment officer of Fund American Enterprises, Inc.
Mr. Wyper was chief investment officer of White River Corporation and president
of Hanover Advisers, Inc. from 1993 until he joined Warburg in August 1994 as a
Managing Director of Warburg. Mr. Wyper earned a B.S. degree in economics from
the Wharton School of Business of the University of Pennsylvania and a Masters
of Management from Yale University.

Ms. Susan L. Black, Co-Portfolio Manager of the Capital Appreciation Fund,
is also Co-Portfolio Manager of the Health Sciences Fund. Ms. Black is a
Managing Director of Warburg as well as the Director of Research and a Senior
Portfolio Manager of the Institutional Growth Equity product. From 1961 until
1973, Ms. Black was employed by Argus Research, first as a securities analyst,
then as director of research. From 1973 until 1977 and from 1978 until 1979 Ms.
Black was a vice president of research at Drexel Burnham Lambert. From 1977
until 1978 Ms. Black was a vice president of research at Donaldson, Lufkin &
Jenrette. From 1979 until 1985 Ms. Black was a partner at Century Capital
Associates. Ms. Black joined Warburg in 1985. Ms. Black received a B.A. degree
from Mount Holyoke College.

Global Post-Venture Capital Fund. Ms. Elizabeth B. Dater is the Portfolio
Manager of the Fund. Ms. Dater also manages an institutional post-venture
capital fund and is the former Director of Research for Warburg's investment
management activities. Prior to joining Warburg in 1978, she was a vice
president of research at Fiduciary Trust Company of New York and an
institutional sales assistant at Lehman Brothers. Ms. Dater has been a regular
panelist on Maryland Public Television's Wall Street Week with Louis Rukeyser
since 1976. Ms. Dater earned a B.A. degree from Boston University in
Massachusetts.

<PAGE> 125

Mr. Harold W. Ehrlich is an Associate Portfolio Manager and Research
Analyst of the Fund. Mr. Robert S. Janis and Christopher M. Nawn are Associate
Portfolio Managers and Research Analysts of the Fund and of other Warburg Pincus
Funds. Prior to joining Warburg in February 1995, Mr. Ehrlich was a senior vice
president, portfolio manager and analyst at Templeton Investment Counsel Inc.
from 1987 to 1995. He earned a B.S.B.A. degree from the University of Florida
and earned his Chartered Financial Analyst designation in 1990. Prior to joining
Warburg in October 1994, Mr. Janis was a vice president and senior research
analyst at U.S. Trust Company of New York. He earned B.A. and M.B.A. degrees
from the University of Pennsylvania. Prior to joining Warburg in September 1994,
Mr. Nawn was a senior sector analyst and portfolio manager at the Dreyfus
Corporation. He earned a B.A. degree from the Colorado College and an M.B.A.
degree from the University of Texas.

Raymond L. Held and Thaddeus I. Gray, Investment Managers and Managing
Directors of Abbott, manage the Fund's investments in Private Funds. Abbott also
acts as sub-investment adviser for other Warburg Pincus Funds. Prior to
co-founding a predecessor of Abbott in 1986, Mr. Held had been an investment
analyst and portfolio manager at Manufacturers Hanover Investment Corporation
since 1970, before which time he had been a security analyst with Weis, Voisin,
Cannon, Inc., L.M. Rosenthal & Co., Shearson, Hammill & Co. and Standard &
Poor's Corporation. Mr. Held earned an M.B.A. from New York University, an M.A.
from Columbia University and a B.A. from Queens College.

Prior to joining a predecessor of Abbott in 1989, Mr. Gray served as an
assistant vice president at Commerzbank Capital Markets Corporation and as an
associate with Credit Commercial de France in Paris in the Corporate Finance
Department. Mr. Gray received his B.A. in History from the University of
Pennsylvania and his M.B.A. in Finance from New York University. He is also a
Chartered Financial Analyst.

Health Sciences Fund. Ms. Susan L. Black (described above) is also
Co-Portfolio Manager of the Health Sciences Fund.

Ms. Patricia F. Widner is a Vice President of Research at Warburg, which
she joined in 1991 as the healthcare securities analyst for the firm. From 1985
to 1991, she was a vice president and securities analyst, investing in the
securities of venture capital and small capitalization healthcare companies, for
Citibank Investment Management, which changed its name in 1988 to Chancellor
Capital Management. From 1984 to 1985, Ms. Widner served as a marketing director
at Whittaker Health Services, a start-up HMO which later was sold to The
Travelers Group. In 1984, Ms. Widner was employed by Merrill Lynch as an
investment banker specializing in not-for-profit hospitals. Between 1979 and
1982, she was a practicing dietitian and a sales representative for Abbott
Laboratories. Ms. Widner received a B.S. from Marymount College, an M.B.A. from
The Wharton School, University of Pennsylvania and completed

<PAGE> 126

the Registered Dietitian program at Peter Bent Brigham Hospital in Boston,
Massachusetts.

Strategic Value Fund. Mr. Anthony G. Orphanos, Portfolio Manager of the
Strategic Value Fund, is also the Portfolio Manager of Warburg's institutional
value product. He has 24 years of investment experience. Prior to joining
Warburg, Mr. Orphanos was vice president and investment officer of Dreyfus
Leverage Fund, Inc. from 1972 to 1977. He received his A.B. degree from Harvard
University and his M.B.A. from New York University.

Investment Advisers and Co-Administrators

Warburg serves as investment adviser to each Fund, Abbott serves as
sub-investment adviser to the Global Post-Venture Capital Fund, Counsellors
Funds Service, Inc. ("Counsellors Service") and PFPC serve as co-administrators
to each Fund pursuant to separate written agreements (the "Advisory Agreement,"
the "Sub-Advisory Agreement," the "Counsellors Service Co-Administration
Agreement" and the "PFPC Co-Administration Agreement," respectively). The
services provided by, and the fees payable by a Fund to Warburg under the
Advisory Agreement, Abbott under the Sub-Advisory Agreement, Counsellors Service
under the Counsellors Service Co-Administration Agreement and PFPC under the
PFPC Co-Administration Agreement are described in the Prospectuses. Each class
of shares of the Fund bears its proportionate share of fees payable to Warburg,
Counsellors Service and PFPC in the proportion that its assets bear to the
aggregate assets of the Fund at the time of calculation. These fees are
calculated at an annual rate based on a percentage of a Fund's average daily net
assets. See the Prospectuses, "Management of the Fund(s)."

For the fiscal years ended October 31, 1995, October 31, 1996 and October
31, 1997 during which a Fund had investment operations, investment advisory fees
earned by Warburg, waivers and net advisory fees for each Fund were as follows:

<TABLE>
<CAPTION>
GROSS NET
FUND YEAR ADVISORY FEE WAIVER ADVISORY FEE
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Capital Appreciation Fund 1995 $1,367,729 0 $1,367,729
---------------------------------------------------------
1996 $2,323,788 0 $2,323,788
---------------------------------------------------------
1997 $3,847,872 0 $3,847,872
---------------------------------------------------------

- ----------------------------------------------------------------------------------------------------

Global Post-Venture Capital Fund
(commenced operations on 9/30/96) 1996 $ 2,470 $ 2,470 0
---------------------------------------------------------
1997 $ 49,452 $ 49,452 0
---------------------------------------------------------

- ----------------------------------------------------------------------------------------------------
Health Sciences Fund
(commenced operations on 12/31/96) 1997 $ 124,333 $ 124,333 0
---------------------------------------------------------
</TABLE>

<PAGE> 127

<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Strategic Value Fund
(commenced Common and Advisor Share 1997 $ 89,566 $ 89,566 0
operations on 12/31/96 and 1/9/97,
respectively)
- ----------------------------------------------------------------------------------------------------
</TABLE>

During the fiscal years ended October 31, 1995, October 31,
1996 and October 31, 1997 during which a Fund had investment operations, PFPC
and Counsellors Service earned the following amounts in co-administration fees.

<TABLE>
<CAPTION>
FUND YEAR PFPC COUNSELLORS SERVICE
---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Capital Appreciation Fund 1995 $195,390 $195,390
-----------------------------------------------------------------------
1996 $332,684 $332,684
-----------------------------------------------------------------------
1997 $535,580 $549,696
---------------------------------------------------------------------------------------------------------------------
Global Post-Venture Capital Fund 1996 $ 237* $ 198
-----------------------------------------------------------------------
1997 $ 4,747* $ 3,956
---------------------------------------------------------------------------------------------------------------------
Health Sciences Fund 1997 $ 12,433* $ 2,433

---------------------------------------------------------------------------------------------------------------------
Strategic Value Fund 1997 $ 8,956* $ 8,956
(commenced operations on 12/31/96)
---------------------------------------------------------------------------------------------------------------------
</TABLE>

*Fully Waived

Custodians and Transfer Agent

PNC Bank, National Association ("PNC") serves as custodian of the U.S.
assets of each Fund and State Street Bank & Trust Company ("State Street")
serves as custodian of the non-U.S. assets of each Fund pursuant to a custodian
agreement (the "State Street Custodian Agreement," and collectively with the PNC
Custodian Agreement, the "Custodian Agreements"). Under the Custodian
Agreements, PNC and State Street each (i) maintains a separate account or
accounts in the name of the Fund, (ii) holds and transfers portfolio securities
on account of the Fund, (iii) makes receipts and disbursements of money on
behalf of the Fund, (iv) collects and receives all income and other payments and
distributions on account of the Fund's portfolio securities and (v) makes
periodic reports to the Board concerning the Fund's custodial arrangements. PNC
may delegate its duties under its Custodian Agreement with a Fund to a wholly
owned direct or indirect subsidiary of PNC or PNC Bank Corp. upon notice to the
Fund and upon the satisfaction of certain other conditions. State Street is
authorized to select one or more foreign banking institutions and foreign
securities depositories to serve as sub-custodian on

<PAGE> 128

behalf of the Fund. PNC is an indirect, wholly owned subsidiary of PNC Bank
Corp. and its principal business address is 1600 Market Street, Philadelphia,
Pennsylvania 19103. The principal business address of State Street is 225
Franklin Street, Boston, Massachusetts 02110.

State Street serves as the shareholder servicing, transfer and dividend
disbursing agent of each Fund pursuant to a Transfer Agency and Service
Agreement, under which State Street (i) issues and redeems shares of the Fund,
(ii) addresses and mails all communications by the Fund to record owners of Fund
shares, including reports to shareholders, dividend and distribution notices and
proxy material for its meetings of shareholders, (iii) maintains shareholder
accounts and, if requested, sub-accounts and (iv) makes periodic reports to the
Board concerning the transfer agent's operations with respect to the Fund. State
Street has delegated to Boston Financial Data Services, Inc., a 50% owned
subsidiary ("BFDS"), responsibility for most shareholder servicing functions.
BFDS's principal business address is 2 Heritage Drive, North Quincy,
Massachusetts 02171.

Organization of the Fund

Capital Appreciation Fund. The Fund's Agreement and Declaration of Trust
(the "Trust Agreement") authorizes the Board to issue an unlimited number of
full and fractional shares of common stock, $.001 par value per share, of which
an unlimited number are designated "Common Shares" and an unlimited number are
designated "Advisor Shares."

Massachusetts law provides that shareholders could, under certain
circumstances, be held personally liable for the obligations of the Capital
Appreciation Fund. However, the Trust Agreement disclaims shareholder liability
for acts or obligations of the Fund and requires that notice of such disclaimer
be given in each agreement, obligation or instrument entered into or executed by
the Fund or a Trustee. The Trust Agreement provides for indemnification from the
Fund's property for all losses and expenses of any shareholder held personally
liable for the obligations of the Fund. Thus, the risk of a shareholder's
incurring financial loss on account of shareholder liability is limited to
circumstances in which the Fund would be unable to meet its obligations, a
possibility that Warburg believes is remote and immaterial. Upon payment of any
liability incurred by the Fund, the shareholder paying the liability will be
entitled to reimbursement from the general assets of the Fund. The Trustees
intend to conduct the operations of the Fund in such a way so as to avoid, as
far as possible, ultimate liability of the shareholders for liabilities of the
Fund.

Global Post-Venture Capital Fund, Health Sciences Fund and Strategic Value
Fund. Each Fund's charter authorizes the Board to issue three billion full and
fractional shares of common stock, $.001 par value per share, of which one
billion shares are designated "Common Shares" and two billion shares are
designated "Advisor Shares" in the case of the Global Post-Venture Capital Fund,
one billion shares are designated "Common Shares" and one billion shares are
designated "Advisor Shares" in the case of the Health Sciences Fund and two
billion shares are designated "Common Shares" and one billion shares are
designated "Advisor Shares" in the case of the Strategic Value Fund.

<PAGE> 129
All Funds. All shareholders of the Fund in each class, upon liquidation,
will participate ratably in the Fund's net assets. Shares do not have cumulative
voting rights, which means that holders of more than 50% of the shares voting
for the election of Directors/Trustees can elect all Directors/Trustees. Shares
are transferable but have no preemptive, conversion or subscription rights.

Distribution and Shareholder Servicing

Global Post-Venture Capital Fund, Health Sciences Fund and Strategic Value
Fund, Common Shares. The Global Post-Venture Capital Fund, Health Sciences Fund
and Strategic Value Fund have each entered into a Shareholder Servicing and
Distribution Plan (the "12b-1 Plan"), pursuant to Rule 12b-1 under the 1940 Act,
pursuant to which the Fund will pay Counsellors Securities, in consideration for
Services (as defined below), a fee calculated at an annual rate of .25% of the
average daily net assets of the Common Shares of the Fund. Services performed by
Counsellors Securities include (i) the sale of the Common Shares, as set forth
in the 12b-1 Plan ("Selling Services"), (ii) ongoing servicing and/or
maintenance of the accounts of Common Shareholders of the Fund, as set forth in
the 12b-1 Plan ("Shareholder Services"), and (iii) sub-transfer agency services,
subaccounting services or administrative services related to the sale of the
Common Shares, as set forth in the 12b-1 Plan ("Administrative Services" and
collectively with Selling Services and Administrative Services, "Services")
including, without limitation, (a) payments reflecting an allocation of overhead
and other office expenses of Counsellors Securities related to providing
Services; (b) payments made to, and reimbursement of expenses of, persons who
provide support services in connection with the distribution of the Common
Shares including, but not limited to, office space and equipment, telephone
facilities, answering routine inquiries regarding the Fund, and providing any
other Shareholder Services; (c) payments made to compensate selected dealers or
other authorized persons for providing any Services; (d) costs relating to the
formulation and implementation of marketing and promotional activities for the
Common Shares, including, but not limited to, direct mail promotions and
television, radio, newspaper, magazine and other mass media advertising, and
related travel and entertainment expenses; (e) costs of printing and
distributing prospectuses, statements of additional information and reports of
the Fund to prospective shareholders of the Fund; and (f) costs involved in
obtaining whatever information, analyses and reports with respect to marketing
and promotional activities that the Fund may, from time to time, deem advisable.

Pursuant to the 12b-1 Plan, Counsellors Securities provides the Board with
periodic reports of amounts expended under the 12b-1 Plan and the purpose for
which the expenditures were made. For the period or year ended October 31, 1997,
the Global Post-Venture Capital Fund, Health Sciences Fund and Strategic Value
Fund Common Shares paid the following amounts pursuant to the 12b-1 Plan, all of
which was spent on advertising, marketing communications and public relations.

<PAGE> 130

<TABLE>
<CAPTION>
FUND YEAR PAYMENT
- ---------------------------------------------------------------------------------------------
<S> <C> <C>
Global Post-Venture Capital Fund 1997 $ 9,887
- ---------------------------------------------------------------------------------------------
Health Sciences Fund 1997 $31,083
- ---------------------------------------------------------------------------------------------
Strategic Value Fund 1997 $22,366
- ---------------------------------------------------------------------------------------------
</TABLE>

All Funds, Advisor Shares. The Capital Appreciation, Global Post-Venture
Capital and Strategic Value Funds have, and the Health Sciences Fund (which
currently does not offer Advisor Shares) may, enter into agreements
("Agreements") with institutional shareholders of record, broker-dealers,
financial institutions, depository institutions, retirement plans and financial
intermediaries ("Institutions") to provide certain distribution, shareholder
servicing, administrative and/or accounting services for their clients or
customers (or participants in the case of retirement plans) ("Customers") who
are beneficial owners of Advisor Shares. See the Advisor Prospectuses,
"Shareholder Servicing." Agreements will be governed by a distribution plan (the
"Distribution Plan") pursuant to Rule 12b-1 under the 1940 Act, pursuant to
which the Fund will pay in consideration for services, a fee calculated at an
annual rate of .50% of the average daily net assets of the Advisor Shares of the
Fund. The Distribution Plan requires the Board, at least quarterly, to receive
and review written reports of amounts expended under the Distribution Plan and
the purposes for which such expenditures were made. The Funds' Advisor Shares
paid Institutions the following fees for the years ending October 31, 1995,
October 31, 1996 and October 31, 1997, all of which were paid to Institutions:

<TABLE>
<CAPTION>
FUND YEAR PAYMENT
- ---------------------------------------------------------------------------------------------
<S> <C> <C>
Capital Appreciation Fund 1997 $152,051
- ---------------------------------------------------------------------------------------------
Global Post-Venture Capital Fund 1997 $ 8
- ---------------------------------------------------------------------------------------------
Strategic Value Fund 1997 $ 51
- ---------------------------------------------------------------------------------------------
</TABLE>

An Institution with which a Fund has entered into an Agreement with
respect to its Advisor Shares may charge a Customer one or more of the following
types of fees, as agreed upon by the Institution and the Customer, with respect
to the cash management or other services provided by the Institution: (i)
account fees (a fixed amount per month or per year); (ii) transaction fees (a
fixed amount per transaction processed); (iii) compensation balance requirements
(a minimum dollar amount a Customer must maintain in order to obtain the
services offered); or (iv) account maintenance fees (a periodic charge based
upon the percentage of assets in the account or of the dividend paid on those
assets). Services provided by an Institution to Customers are in addition to,
and not duplicative of, the services to be provided under each Fund's
co-administration and distribution and shareholder servicing arrangements. A
Customer of an Institution should read the relevant Prospectus and this
Statement of Additional Information in conjunction with the Agreement and other
literature describing the services and related fees that would be provided by
the Institution to its

<PAGE> 131
Customers prior to any purchase of Fund shares. Prospectuses are available from
each Fund's distributor upon request. No preference will be shown in the
selection of Fund portfolio investments for the instruments of Institutions.

General. The Distribution Plans and the 12b-1 Plans will continue in
effect for so long as their continuance is specifically approved at least
annually by each Fund's Board, including a majority of the Directors/Trustees
who are not interested persons of the Fund and who have no direct or indirect
financial interest in the operation of the Distribution Plan or the 12b-1 Plan,
as the case may be ("Independent Directors/Trustees"). Any material amendment of
the Distribution Plan or the 12b-1 Plan would require the approval of the Board
in the manner described above. The Distribution Plan or the 12b-1 Plan may not
be amended to increase materially the amount to be spent thereunder without
shareholder approval of the Advisor Shares or the Common Shares, as the case may
be. The Distribution Plan or the 12b-1 Plan may be terminated at any time,
without penalty, by vote of a majority of the Independent Directors/Trustees or
by a vote of a majority of the outstanding voting securities of the Advisor
Shares or the Common Shares of a Fund, as the case may be.

ADDITIONAL PURCHASE AND REDEMPTION INFORMATION

The offering price of each Fund's shares is equal to the per share net
asset value of the relevant class of shares of the Fund. Information on how to
purchase and redeem Fund shares and how such shares are priced is included in
the Prospectuses under "Net Asset Value."

Under the 1940 Act, a Fund may suspend the right of redemption or postpone
the date of payment upon redemption for any period during which the NYSE is
closed, other than customary weekend and holiday closings, or during which
trading on the NYSE is restricted, or during which (as determined by the SEC) an
emergency exists as a result of which disposal or fair valuation of portfolio
securities is not reasonably practicable, or for such other periods as the SEC
may permit. (A Fund may also suspend or postpone the recordation of an exchange
of its shares upon the occurrence of any of the foregoing conditions.)

If the Board determines that conditions exist which make payment of
redemption proceeds wholly in cash unwise or undesirable, a Fund may make
payment wholly or partly in securities or other investment instruments which may
not constitute securities as such term is defined in the applicable securities
laws. If a redemption is paid wholly or partly in securities or other property,
a shareholder would incur transaction costs in disposing of the redemption
proceeds. Each Fund will comply with Rule 18f-1 promulgated under the 1940 Act
with respect to redemptions in kind.

Automatic Cash Withdrawal Plan. An automatic cash withdrawal plan (the
"Plan") is available to shareholders who wish to receive specific amounts of
cash periodically. Withdrawals may be made under the Plan by redeeming as many
shares of the relevant Fund as may be necessary to cover the stipulated
withdrawal payment. To the extent that

<PAGE> 132
withdrawals exceed dividends, distributions and appreciation of a shareholder's
investment in a Fund, there will be a reduction in the value of the
shareholder's investment and continued withdrawal payments may reduce the
shareholder's investment and ultimately exhaust it. Withdrawal payments should
not be considered as income from investment in a Fund. All dividends and
distributions on shares in the Plan are automatically reinvested at net asset
value in additional shares of the relevant Fund.

EXCHANGE PRIVILEGE

An exchange privilege with certain other funds advised by Warburg is
available to investors in each Fund. The funds into which exchanges of Common
Shares currently can be made are listed in the Common Share Prospectus.
Exchanges may also be made between certain Warburg Pincus Advisor Funds.

The exchange privilege enables shareholders to acquire shares in a fund
with a different investment objective when they believe that a shift between
funds is an appropriate investment decision. This privilege is available to
shareholders residing in any state in which the Common Shares or Advisor Shares
being acquired, as relevant, may legally be sold. Prior to any exchange, the
investor should obtain and review a copy of the current prospectus of the
relevant class of each fund into which an exchange is being considered.
Shareholders may obtain a prospectus of the relevant class of the fund into
which they are contemplating an exchange from Counsellors Securities.

Upon receipt of proper instructions and all necessary supporting
documents, shares submitted for exchange are redeemed at the then-current net
asset value of the relevant class and the proceeds are invested on the same day,
at a price as described above, in shares of the relevant class of the fund being
acquired. The exchange privilege may be modified or terminated at any time upon
30 days' notice to shareholders.

ADDITIONAL INFORMATION CONCERNING TAXES

The following is a summary of the material United States federal income
tax considerations regarding the purchase, ownership and disposition of shares
in each Fund. Each prospective shareholder is urged to consult his own tax
adviser with respect to the specific federal, state, local and foreign tax
consequences of investing in a Fund. The summary is based on the laws in effect
on the date of this Statement of Additional Information, which are subject to
change.

Each of the Funds intends to continue to qualify each year as a "regulated
investment company" under Subchapter M of the Code. If a Fund qualifies as a
regulated investment company, the Fund will pay no federal income taxes on its
taxable net investment income (that is, taxable income other than net realized
capital gains) and its net realized capital gains that are distributed to
shareholders. To qualify under Subchapter M, a Fund must, among other things:
(i) derive at least 90% of its gross income from

<PAGE> 133

dividends, interest, payments with respect to securities, loans and gains from
the sale or other disposition of securities, or other income (including, but not
limited to, gains from options, futures, and forward contracts) derived with
respect to the Fund's business of investing in securities; and (ii) diversify
its holdings so that, at the end of each fiscal quarter of the Fund (a) at least
50% of the market value of the Fund's assets is represented by cash, U.S.
government securities and other securities, with those other securities limited,
with respect to any one issuer, to an amount no greater in value than 5% of the
Fund's total assets and to not more than 10% of the outstanding voting
securities of the issuer, and (b) not more than 25% of the market value of the
Fund's assets is invested in the securities of any one issuer (other than U.S.
government securities or securities of other regulated investment companies) or
of two or more issuers that the Fund controls and that are determined to be in
the same or similar trades or businesses or related trades or businesses.

As a regulated investment company, each Fund will not be subject to United
States federal income tax on its net investment income (i.e., income other than
its net realized long- and short-term capital gains) and its net realized long-
and short-term capital gains, if any, that it distributes to its shareholders,
provided that an amount equal to at least 90% of the sum of its investment
company taxable income (i.e., 90% of its taxable income minus the excess, if
any, of its net realized long-term capital gains over its net realized
short-term capital losses (including any capital loss carryovers), plus or minus
certain other adjustments as specified in the Code) and its net tax-exempt
income for the taxable year is distributed, but will be subject to tax at
regular corporate rates on any taxable income or gains that it does not
distribute. Furthermore, each Fund will be subject to a United States corporate
income tax with respect to such distributed amounts in any year that it fails to
qualify as a regulated investment company or fails to meet this distribution
requirement. Any dividend declared by a Fund in October, November or December of
any calendar year and payable to shareholders of record on a specified date in
such a month shall be deemed to have been received by each shareholder on
December 31 of such calendar year and to have been paid by the Fund not later
than such December 31, provided that such dividend is actually paid by the Fund
during January of the following calendar year.

Each Fund's short sales against the box, if any, and transactions, if any,
in foreign currencies, forward contracts, options and futures contracts
(including options, futures contracts and forward contracts on foreign
currencies) will be subject to special provisions of the Code that, among other
things, may affect the character of gains and losses recognized by the Fund
(i.e., may affect whether gains or losses are ordinary or capital), accelerate
recognition of income to the Fund, defer Fund losses and cause the Fund to be
subject to hyperinflationary currency rules. These rules could therefore affect
the character, amount and timing of distributions to shareholders. These
provisions also (i) will require each Fund to mark-to-market certain types of
its positions (i.e., treat them as if they were closed out) and (ii) may cause
the Fund to recognize income without receiving cash with which to pay dividends
or make distributions in amounts necessary to satisfy the distribution
requirements for avoiding income and excise taxes. Each Fund will monitor its
transactions, will make the appropriate tax elections and will make the
appropriate entries in its books and records when it

<PAGE> 134
acquires any foreign currency, forward contract, option, futures contract or
hedged investment so that (a) neither the Fund nor its shareholders will be
treated as receiving a materially greater amount of capital gains or
distributions than actually realized or received, (b) the Fund will be able to
use substantially all of its losses for the fiscal years in which the losses
actually occur and (c) the Fund will continue to qualify as a regulated
investment company.

Upon the sale or exchange of shares, a shareholder will realize a taxable
gain or loss depending upon the amount realized and the basis in the shares.
Such gain or loss will be treated as capital gain or loss if the shares are
capital assets in the shareholder's hands, and, as described in the
Prospectuses, will be long-term or short-term depending upon the shareholder's
holding period for the shares. Any loss realized on a sale or exchange will be
disallowed to the extent the shares disposed of are replaced, including
replacement through the reinvestment of dividends and capital gains
distributions in the Fund, within a period of 61 days beginning 30 days before
and ending 30 days after the disposition of the shares. In such a case, the
basis of the shares acquired will be increased to reflect the disallowed loss.

A shareholder of a Fund receiving dividends or distributions in additional
shares should be treated for federal income tax purposes as receiving a
distribution in an amount equal to the amount of money that a shareholder
receiving cash dividends or distributions receives, and should have a cost basis
in the shares received equal to that amount. Investors considering buying shares
just prior to a dividend or capital gain distribution should be aware that,
although the price of shares purchased at that time may reflect the amount of
the forthcoming distribution, those who purchase just prior to a distribution
will receive a distribution that will nevertheless be taxable to them.

Each shareholder will receive an annual statement as to the United States
federal income tax status of his dividends, distributions and deemed
distributions attributable to undistributed capital gains made by a Fund to its
shareholders. Furthermore, shareholders will also receive, if appropriate,
various written notices after the close of a Fund's taxable year regarding the
federal income tax status of certain dividends and distributions that were paid
(or that are treated as having been paid) by the Fund to its shareholders during
the preceding year.

If a shareholder fails to furnish a correct taxpayer identification
number, fails to report fully dividend or interest income, or fails to certify
that he has provided a correct taxpayer identification number and that he is not
subject to "backup withholding," the shareholder may be subject to a 31% "backup
withholding" tax with respect to (i) taxable dividends and distributions and
(ii) the proceeds of any sales or repurchases of shares of a Fund. An
individual's taxpayer identification number is his social security number.
Corporate shareholders and other shareholders specified in the Code are or may
be exempt from backup withholding. The backup withholding tax is not an
additional tax and may be credited against a taxpayer's federal income tax
liability. Dividends and distributions also may be subject to state and local
taxes depending on each shareholder's particular situation.

<PAGE> 135

Passive Foreign Investment Companies

If a Fund purchases shares in certain foreign entities classified under
the Code as "passive foreign investment companies" ("PFICs"), the Fund may be
subject to federal income tax on a portion of an "excess distribution" or gain
from the disposition of the shares, even though the income may have to be
distributed as a taxable dividend by the Fund to its shareholders. In addition,
gain on the disposition of shares in a PFIC generally is treated as ordinary
income even though the shares are capital assets in the hands of the Fund.
Certain interest charges may be imposed on either the Fund or its shareholders
with respect to any taxes arising from excess distributions or gains on the
disposition of shares in a PFIC.

A Fund may be eligible to elect to include in its gross income its share
of earnings of a PFIC on a current basis. Generally, the election would
eliminate the interest charge and the ordinary income treatment on the
disposition of stock, but such an election may have the effect of accelerating
the recognition of income and gains by a Fund compared to a fund that did not
make the election. In addition, information required to make such an election
may not be available to a Fund.

Recently, legislation was enacted that provides a mark-to-market election
for regulated investment companies effective for taxable years beginning after
December 31, 1997. This election would result in a Fund being treated as if it
had sold and repurchased all of the PFIC stock at the end of each year. In this
case, the Fund would report gains as ordinary income and would deduct losses as
ordinary losses to the extent of previously recognized gains. The election, once
made, would be effective for all subsequent taxable years of the Fund, unless
revoked with the consent of the IRS. By making the election, the Fund could
potentially ameliorate the adverse tax consequences with respect to its
ownership of shares in a PFIC, but in any particular year may be required to
recognize income in excess of the distributions it receives from PFICs and its
proceeds from dispositions of PFIC company stock. The Fund may have to
distribute this "phantom" income and gain to satisfy its distribution
requirement and to avoid imposition of the 4% excise tax. The Fund will make the
appropriate tax elections, if possible, and take any additional steps that are
necessary to mitigate the effect of these rules.

THE FOREGOING IS ONLY A SUMMARY OF CERTAIN MATERIAL TAX CONSEQUENCES
AFFECTING A FUND AND ITS SHAREHOLDERS. SHAREHOLDERS ARE ADVISED TO
CONSULT THEIR OWN TAX ADVISERS WITH RESPECT TO THE PARTICULAR
TAX CONSEQUENCES TO THEM OF AN INVESTMENT IN THE FUND.

DETERMINATION OF PERFORMANCE

From time to time, a Fund may quote the total return of its Common Shares
and/or Advisor Shares in advertisements or in reports and other communications
to shareholders. With respect to a Funds' Common and Advisor Shares, the Fund's
average annual total returns for the period ended October 31, 1997 were as
follows

<PAGE> 136

(performance figures calculated without the waiver of fees, if any, are
noted in parenthesis):

COMMON SHARES

<TABLE>
<CAPTION>
FROM COMMENCEMENT OF
OPERATIONS OR TEN YEAR
FUND ONE-YEAR FIVE-YEAR (COMMENCEMENT DATE)
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Capital Appreciation 30.98% 20.27% 13.98%
(8/17/87)
- -------------------------------------------------------------------------------------------------------
Global Post-Venture 13.08% (3.55%) N/A 10.53% (0.55%)
Capital Fund
- -------------------------------------------------------------------------------------------------------
Health Sciences N/A N/A 22.20%+ (20.70%)+
(12/31/96)
- -------------------------------------------------------------------------------------------------------
Strategic Value N/A N/A 15.70%+ (13.70%)+
(12/31/96)
- -------------------------------------------------------------------------------------------------------
</TABLE>

+Non-annualized.

ADVISOR SHARES

<TABLE>
<CAPTION>
FROM COMMENCEMENT OF
OPERATIONS
FUND ONE-YEAR FIVE-YEAR (COMMENCEMENT DATE)
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Capital Appreciation 30.37% 19.72% 16.56%
(8/17/87)
- ----------------------------------------------------------------------------------------------------------
Global Post-Venture 12.79% (-109.85%) N/A 10.16% (-79.33%)
Capital Fund (9/30/96)
- ----------------------------------------------------------------------------------------------------------
Strategic Value N/A N/A 13.23%+ (-875.91%)
(12/31/96)
- ----------------------------------------------------------------------------------------------------------
</TABLE>

+Non-annualized.

These figures are calculated by finding the average annual compounded
rates of return for the one-, five- and ten- (or such shorter period as the
relevant class of shares has been offered) year periods that would equate the
initial amount invested to the ending redeemable value according to the
following formula: P (1 + T)(n) = ERV. For purposes of this formula, "P" is a
hypothetical investment of $1,000; "T" is average annual total return; "n" is
number of years; and "ERV" is the ending redeemable value of a hypothetical
$1,000 payment made at the beginning of the one-, five- or ten-year periods (or
fractional portion thereof). Total return or "T" is computed by finding the
average annual change in the value of an initial $1,000 investment over the
period and assumes that all dividends and distributions are reinvested during
the period. Investors should note that this performance may not be
representative of a Fund's total return over longer market cycles.

A Fund may advertise, from time to time, comparisons of the performance of
its Common Shares and/or Advisor Shares with that of one or more other mutual
funds with similar investment objectives. A Fund may advertise average annual
calendar year-to-date and

<PAGE> 137
calendar quarter returns, which are calculated according to the formula set
forth in the preceding paragraph, except that the relevant measuring period
would be the number of months that have elapsed in the current calendar year or
most recent three months, as the case may be. Investors should note that this
performance may not be representative of the Fund's total return in longer
market cycles.

The Fund may also advertise its yield. Yield is calculated by annualizing
the net investment income generated by the Fund over a specified thirty-day
period according to the following formula:

YIELD = 2[(a-b + 1)(6) -1]
-----------------
cd

For purposes of this formula: "a" is dividends and interest earned during
the period; "b" is expenses accrued for the period (net of reimbursements); "c"
is the average daily number of shares outstanding during the period that were
entitled to receive dividends; and "d" is the maximum offering price per share
on the last day of the period.

The performance of a class of Fund shares will vary from time to time
depending upon market conditions, the composition of a Fund's portfolio and
operating expenses allocable to it. As described above, total return is based on
historical earnings and is not intended to indicate future performance.
Consequently, any given performance quotation should not be considered as
representative of performance for any specified period in the future.
Performance information may be useful as a basis for comparison with other
investment alternatives. However, a Fund's performance will fluctuate, unlike
certain bank deposits or other investments which pay a fixed yield for a stated
period of time. Any fees charged by Institutions or other institutional
investors directly to their customers in connection with investments in Fund
shares are not reflected in a Fund's total return, and such fees, if charged,
will reduce the actual return received by customers on their investments.

The Global Post-Venture Capital Fund intends to diversify its assets among
countries, and in doing so, would expect to be able to reduce the risk arising
from economic problems affecting a single country. Warburg thus believes that,
by spreading risk throughout many diverse markets outside the United States, the
Fund may reduce its exposure to country-specific economic problems. Warburg also
believes that a diversified portfolio of international equity securities, when
combined with a similarly diversified portfolio of domestic equity securities,
tends to have a lower volatility than a portfolio composed entirely of domestic
securities. Furthermore, international equities have been shown to reduce
volatility in single asset portfolios regardless of whether the investments are
in all domestic equities or all domestic fixed-income instruments, and research
indicates that volatility can be significantly decreased when international
equities are added.

<PAGE> 138

Reference may be made in advertising a class of Fund shares to opinions of
Wall Street economists and analysts regarding economic cycles and their effects
historically on the performance of small companies, both as a class and relative
to other investments. A Fund may also discuss its beta, or volatility relative
to the market, and make reference to its relative performance in various market
cycles in the United States.

INDEPENDENT ACCOUNTANTS AND COUNSEL

Coopers & Lybrand L.L.P. ("Coopers & Lybrand"), with principal offices at
2400 Eleven Penn Center, Philadelphia, Pennsylvania 19103, serves as independent
accountants for each Fund. The financial statements for the fiscal year ended
October 31, 1997 that are incorporated by reference into this Statement of
Additional Information have been audited by Coopers & Lybrand, and have been
incorporated by reference herein in reliance upon the report of such firm of
independent accountants given upon their authority as experts in accounting and
auditing.

Willkie Farr & Gallagher serves as counsel for each Fund as well as
counsel to Warburg, Counsellors Service and Counsellors Securities.

MISCELLANEOUS

As of January 30, 1998, the name, address and percentage of ownership of
each person that owns of record 5% or more of each Fund's outstanding shares
were as follows:

<TABLE>
<CAPTION>
CAPITAL APPRECIATION FUND Common Shares Advisor Shares
<S> <C> <C>
Charles Schwab & Co., Inc.* 8.84%
Reinvest Account
Attn.: Mutual Funds Dept.
101 Montgomery Street
San Francisco, California 94104-4122

Connecticut General Life Ins. Co.* 98.22%
On behalf of its separate accounts
55E c/o Melissa Spencer M110
CIGNA Corp. PO Box 2975
Hartford, Connecticut 06104-2975
</TABLE>

<PAGE> 139

<TABLE>
<CAPTION>
GLOBAL POST-VENTURE CAPITAL FUND Common Shares Advisor Shares
<S> <C> <C>
Warburg, Pincus Asset Management, Inc. 36.71% 92.73%
Attn.: Stephen Distler
466 Lexington Avenue, 10th Fl
New York, NY 10017-3140

Beth Dater 7.35%
555 Park Avenue, Apt. 9E
New York, NY 10021-8166

Christopher M. Nawn 5.92%
44 Haddonfield Road
Short Hills, NJ 07078-3402
</TABLE>

<TABLE>
<CAPTION>
HEALTH SCIENCES FUND Common Shares Advisor Shares
<S> <C> <C>
Charles Schwab & Co., Inc.* 21.79%
Reinvest Account
Attn.: Mutual Funds Dept.
101 Montgomery Street
San Francisco, CA 94104-4122

National Financial Services Corp.* 18.04%
P.O. Box 3908
Church Street Station
New York, NY 10008-3908
</TABLE>

<TABLE>
<CAPTION>
STRATEGIC VALUE FUND Common Shares Advisor Shares
<S> <C> <C>
Boston Financial Data Services, Inc.* 32.21%
Corporate Actions Cash
Audit Account. #1 FD51
2 Heritage Drive, 8th Floor
North Quincy, MA 02171-2144

Boston Financial Data Services, Inc.* 33.89%
Corporate Actions Reinvest
Audit Account. #2 FD 51
2 Heritage Drive, 8th Floor
North Quincy, MA 02171-2144

Boston Financial Data Services, Inc.* 33.89%
Corporate Actions Fiduciary
Audit Account. #4 FD 51
2 Heritage Drive, 8th Floor
North Quincy, MA 02171-2144
</TABLE>

<PAGE> 140

<TABLE>
<S> <C>
Charles Schwab & Co. Inc.* 7.95%
Reinvest Account
Attn.: Mutual Funds Dept.
101 Montgomery Street
San Francisco, CA 94104-4122
</TABLE>

* The Funds believe these entities are not the beneficial owners of shares held
of record by them.

Mr. Lionel I. Pincus, Chairman of the Board and Chief Executive Officer of
Warburg, may be deemed to have beneficially owned 42.7%, 42.0%, 11.5% and 54.5%
of the outstanding shares of the Capital Appreciation, Global Post-Venture
Capital, Health Sciences and Strategic Value Funds, respectively, including
shares owned by clients for which Warburg has investment discretion and by
companies that Warburg may be deemed to control. Mr. Pincus disclaims ownership
of these shares and does not intend to exercise voting rights with respect to
these shares.

FINANCIAL STATEMENTS

Each Fund's audited annual report dated October 31, 1997, which either
accompanies this Statement of Additional Information or has previously been
provided to the investor to whom this Statement of Additional Information is
being sent, is incorporated herein by reference. Each Fund will furnish without
charge a copy of its annual report upon request by calling Warburg Pincus Funds
at (800) 927-2874.

<PAGE> 141

APPENDIX
DESCRIPTION OF RATINGS

Commercial Paper Ratings

Commercial paper rated A-1 by Standard & Poor's Ratings Services ("S&P")
indicates that the degree of safety regarding timely payment is strong. Those
issues determined to possess extremely strong safety characteristics are denoted
with a plus sign designation. Capacity for timely payment on commercial paper
rated A-2 is satisfactory, but the relative degree of safety is not as high as
for issues designated A-1.

The rating Prime-1 is the highest commercial paper rating assigned by
Moody's Investors Service, Inc. ("Moody's"). Issuers rated Prime-1 (or related
supporting institutions) are considered to have a superior capacity for
repayment of short-term promissory obligations. Issuers rated Prime-2 (or
related supporting institutions) are considered to have a strong capacity for
repayment of short-term promissory obligations. This will normally be evidenced
by many of the characteristics of issuers rated Prime-1 but to a lesser degree.
Earnings trends and coverage ratios, while sound, will be more subject to
variation. Capitalization characteristics, while still appropriate, may be more
affected by external conditions. Ample alternative liquidity is maintained.

Corporate Bond Ratings

The following summarizes the ratings used by S&P for corporate bonds:

AAA - This is the highest rating assigned by S&P to a debt obligation and
indicates an extremely strong capacity to pay interest and repay principal.

AA - Debt rated AA has a very strong capacity to pay interest and repay
principal and differs from AAA issues only in small degree.

A - Debt rated A has a strong capacity to pay interest and repay principal
although it is somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than debt in higher-rated categories.

BBB - This is the lowest investment grade. Debt rated BBB is regarded as
having an adequate capacity to pay interest and repay principal. Although it
normally exhibits adequate protection parameters, adverse economic conditions or
changing circumstances are more likely to lead to a weakened capacity to pay
interest and repay principal for bonds in this category than for bonds in higher
rated categories.

BB, B and CCC, CC and C - Debt rated BB and B are regarded, on balance, as
predominately speculative with respect to capacity to pay interest and repay
principal in accordance with the terms of the obligation. BB represents a lower
degree of speculation than B, and CCC the highest degree of speculation. While
such bonds will likely have some quality

A-1

<PAGE> 142
and protective characteristics, these are outweighed by large uncertainties or
major risk exposures to adverse conditions.

BB - Debt rated BB has less near-term vulnerability to default than other
speculative issues. However, they face major ongoing uncertainties or exposure
to adverse business, financial, or economic conditions, which could lead to
inadequate capacity to meet timely interest and principal payments. The BB
rating category is also used for debt subordinated to senior debt that is
assigned an actual or implied BBB rating.

B - Debt rated B has a greater vulnerability to default but currently has
the capacity to meet interest payments and principal repayments. Adverse
business, financial, or economic conditions will likely impair capacity or
willingness to pay interest and repay principal. The B rating category is also
used for debt subordinated to senior debt that is assigned an actual or implied
BB or BB- rating.

CCC - Debt rated CCC has a currently identifiable vulnerability to default
and is dependent upon favorable business, financial and economic conditions to
meet timely payment of interest and repayment of principal. In the event of
adverse business, financial or economic conditions, it is not likely to have the
capacity to pay interest and repay principal. The CCC rating category is also
used for debt subordinated to senior debt that is assigned an actual or implied
B or B- rating.

CC - This rating is typically applied to debt subordinated to senior debt
that is assigned an actual or implied CCC rating.

C - This rating is typically applied to debt subordinated to senior debt
which is assigned an actual or implied CCC- debt rating. The C rating may be
used to cover a situation where a bankruptcy petition has been filed, but debt
service payments are continued.

Additionally, the rating CI is reserved for income bonds on which no
interest is being paid. Such debt is rated between debt rated C and debt rated
D.

To provide more detailed indications of credit quality, the ratings may be
modified by the addition of a plus or minus sign to show relative standing
within this major rating category.

D - Debt rated D is in payment default. The D rating category is used when
interest payments or principal payments are not made on the date due even if the
applicable grace period has not expired, unless S&P believes that such payments
will be made during such grace period. The D rating also will be used upon the
filing of a bankruptcy petition if debt service payments are jeopardized.

The following summarizes the ratings used by Moody's for corporate bonds:

Aaa - Bonds that are rated Aaa are judged to be of the best quality. They
carry the smallest degree of investment risk and are generally referred to as
"gilt edged." Interest payments are protected by a large or exceptionally stable
margin and principal is secure.

A-2

<PAGE> 143
While the various protective elements are likely to change, such changes as can
be visualized are most unlikely to impair the fundamentally strong position of
such issues.

Aa - Bonds that are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally known as
high grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities or fluctuation of protective
elements may be of greater amplitude or there may be other elements present
which make the long-term risks appear somewhat larger than in Aaa securities.

A - Bonds which are rated A possess many favorable investment attributes
and are to be considered as upper-medium-grade obligations. Factors giving
security to principal and interest are considered adequate, but elements may be
present which suggest a susceptibility to impairment sometime in the future.

Baa - Bonds which are rated Baa are considered as medium-grade
obligations, i.e., they are neither highly protected nor poorly secured.
Interest payments and principal security appear adequate for the present but
certain protective elements may be lacking or may be characteristically
unreliable over any great length of time. Such bonds lack outstanding investment
characteristics and in fact have speculative characteristics as well.

Ba - Bonds which are rated Ba are judged to have speculative elements;
their future cannot be considered as well assured. Often the protection of
interest and principal payments may be very moderate and thereby not well
safeguarded during both good and bad times over the future. Uncertainty of
position characterizes bonds in this class.

B - Bonds which are rated B generally lack characteristics of desirable
investments. Assurance of interest and principal payments or of maintenance of
other terms of the contract over any long period of time may be small.

Moody's applies numerical modifiers (1, 2 and 3) with respect to the bonds
rated "Aa" through "B." The modifier 1 indicates that the bond being rated ranks
in the higher end of its generic rating category; the modifier 2 indicates a
mid-range ranking; and the modifier 3 indicates that the bond ranks in the lower
end of its generic rating category.

Caa - Bonds that are rated Caa are of poor standing. These issues may be
in default or present elements of danger may exist with respect to principal or
interest.

Ca - Bonds which are rated Ca represent obligations which are speculative
in a high degree. Such issues are often in default or have other marked
shortcomings.

C - Bonds which are rated C comprise the lowest rated class of bonds, and
issues so rated can be regarded as having extremely poor prospects of ever
attaining any real investment standing.

A-3
<PAGE> 144

PART C
OTHER INFORMATION

Item 24. Financial Statements and Exhibits

(a) Financial Statements --
(1) Financial Statements included in Part A:
(a) Financial Highlights

(2) Financial Statements included in Part B
(incorporated by reference to the Fund's Annual Report dated
October 31, 1997):

(a) Report of Coopers & Lybrand L.L.P.,
Independent Accountants
(b) Schedule of Investments
(c) Statement of Net Assets and
Liabilities
(d) Statement of Operations
(e) Statement of Changes in Net Assets
(f) Financial Highlights
(g) Notes to Financial Statements

(b) Exhibits:

<TABLE>
<CAPTION>
Exhibit No. Description of Exhibit
- ----------- ----------------------
<S> <C>
1(a) Articles of Incorporation.(1)
(b) Articles Supplementary.(2)
(c) Articles of Amendment.(2)

2(a) By-Laws.(1)

2(b) Amendment to By-Laws

3 Not applicable.

4 Registrant's Forms of Stock Certificates.(1)

5(a) Form of Investment Advisory Agreement
with Warburg, Pincus Counsellors, Inc.(1)
(b) Form of Sub-Investment Advisory Agreement
with Abbott Capital Management, L.P.(2)
(c) Form of Sub-Investment Advisory Agreement with Abbott
Capital Management, L.L.C.(2)

6 Form of Distribution Agreement.(2)

7 Not applicable.
</TABLE>

______________________
1 Incorporated by reference to Registrant's Registration Statement on Form N-1A
filed on July 19, 1996 (Securities Act file No. 333-08459).
2 Incorporated by reference to Post-Effective No. 1 to Registrant's
Registration Statement on Form N-1A, filed on February 21, 1997.

<PAGE> 145

<TABLE>
<S> <C>
8(a) Form of Custodian Agreement with PNC Bank, National
Association.(3)
(b) Form of Custodian Agreement with State Street Bank &
Trust Company.(4)

9(a) Form of Transfer Agency and Service Agreement with State
Street Bank & Trust Company.(3)
(b) Form of Co-Administration Agreement with Counsellors
Funds Service, Inc.(1)
(c) Form of Co-Administration Agreement with PFPC Inc.(1)

10(a) Opinion and Consent of Willkie Farr & Gallagher,
counsel to the Fund.

(b) Opinion and Consent of Venable, Baetjer and Howard,
LLP, Maryland counsel to the Fund.(5)

11 Consent of Coopers & Lybrand L.L.P., Independent
Accountants.

12 Not applicable.

13 Form of Purchase Agreement.(1)

14 Not applicable

15(a) Form of Shareholder Servicing and
Distribution Plan.(4)
(b) Form of Distribution Plan.(4)

16 Schedule for Computation of Total Return Performance
Quotation.

17(a) Financial Data Schedule - Common Shares.
(b) Financial Data Schedule - Advisor Shares.

18 Form of Rule 18f-3 Plan.(2)
</TABLE>

________________________
3 Incorporated by reference; material provisions of this exhibit substantially
similar to those of the corresponding exhibit in Pre-Effective Amendment
No. 1 to the Registration Statement on Form N-1A of Warburg, Pincus Trust
filed on June 14, 1995 (Securities Act File No. 33-58125).

4 Incorporated by reference;material provisions of this exhibit substantially
similar to those of the corresponding exhibit to the Registration Statement on
Form N-14 of the Warburg, Pincus Managed EAFE(R) Countries Fund, Inc. filed on
November 5, 1997 (Securities Act File No. 333-39611.

5 Incorporated by reference to Pre-Effective Amendment No. 1 to Registrant's
Registration Statement on Form N-1A, filed with the Securities and Exchange
commission on September 20, 1996.

<PAGE> 146

Item 25. Persons Controlled by or Under Common Control
with Registrant
---------------------------------------------

From time to time, Warburg Pincus Asset Management, Inc. ("Warburg") may
be deemed to control the Fund and other registered investment companies it
advises through its beneficial ownership of more than 25% of the relevant
fund's shares on behalf of discretionary advisory clients. Warburg has five
wholly-owned subsidiaries: Counsellors Securities Inc., a New York
corporation; Counsellors Funds Service Inc., a Delaware corporation;
Counsellors Agency Inc., a New York corporation; Warburg, Pincus Investments
International (Bermuda), Ltd., a Bermuda corporation; and Warburg Pincus Asset
Management International, Inc., a Delaware corporation.

Item 26. Number of Holders of Securities

<TABLE>
<CAPTION>
Number of Record Holders
Title of Class as of January 30, 1998
-------------- ------------------------
<S> <C>
Shares of common
stock, par value
$.001 per share --
Common Shares 178

Shares of common
stock, par value
$.001 share -
Advisor Shares 4
</TABLE>

Item 27. Indemnification

Registrant and officers and directors of Warburg, Counsellors Securities Inc.
("Counsellors Securities") and Registrant are covered by insurance policies
indemnifying them for liability incurred in connection with the operation of
Registrant. Discussion of this coverage is incorporated by reference to Item
27 of Part C of Post-Effective Amendment No. 1 to Registrant's Registration
Statement on Form N-1A, filed on February 21, 1997.

Item 28. Business and Other Connections of Investment Adviser

Warburg, a wholly owned subsidiary of Warburg, Pincus Asset Management
Holdings, Inc., acts as investment adviser to the Registrant. Warburg renders
investment advice to a wide variety of individual and institutional clients.
The list required by this Item 28 of officers and directors of Warburg,
together with information as to their other business, profession, vocation or
employment of a substantial nature during the past two years, is incorporated
by reference to Schedules A and D of Form ADV filed by Warburg (SEC File No.
801-07321).

Abbott Capital Management, L.L.C. ("Abbott") act as sub-investment adviser
for the Registrant. Abbott renders investment advice and provides full-service
private equity programs to

<PAGE> 147

clients. The list required by this Item 28 of officers and partners of Abbott,
together with information as to their other business, profession, vocation or
employment of a substantial nature during the past two years, is incorporated
by reference to schedules A and D of Form ADV filed by Abbott (SEC File No.
801-27914).

Item 29. Principal Underwriter

(a) Counsellors Securities will act as distributor for Registrant.
Counsellors Securities currently acts as distributor for The RBB Fund, Inc.;
Warburg Pincus Balanced Fund; Warburg Pincus Capital Appreciation Fund; Warburg
Pincus Cash Reserve Fund; Warburg Pincus Emerging Growth Fund; Warburg Pincus
Emerging Markets Fund; Warburg Pincus Fixed Income Fund; Warburg Pincus Global
Fixed Income Fund; Warburg Pincus Global Post-Venture Capital Fund; Warburg
Pincus Growth & Income Fund; Warburg Pincus Health Sciences Fund; Warburg
Pincus Institutional Fund, Inc.; Warburg Pincus Intermediate Maturity
Government Fund; Warburg Pincus International Equity Fund; Warburg Pincus Japan
Growth Fund; Warburg Pincus Japan OTC Fund; Warburg Pincus Major Foreign
Markets Fund; Warburg Pincus New York Intermediate Municipal Fund; Warburg
Pincus New York Tax Exempt Fund; Warburg Pincus Post-Venture Capital Fund;
Warburg, Pincus Small Company Growth Fund; Warburg Pincus Small Company Value
Fund; Warburg Pincus Strategic Value Fund; Warburg Pincus Trust; and Warburg
Pincus Trust II.

(b) For information relating to each director, officer or partner of
Counsellors Securities, reference is made to Form BD (SEC File No. 8-32482)
filed by Counsellors Securities under the Securities Exchange Act of 1934.

Item 30. Location of Accounts and Records

(1) Warburg, Pincus Global Post-Venture
Capital Fund, Inc.
466 Lexington Avenue
New York, New York 10017-3147
(Fund's Articles of Incorporation, By-Laws and minute books)

(2) Warburg Pincus Asset Management, Inc.
466 Lexington Avenue
New York, New York 10017-3147
(records relating to its functions as
investment adviser)

3) PFPC Inc.
400 Bellevue Parkway
Wilmington, Delaware 19809
(records relating to its functions as

<PAGE> 148

Co-administrator)

(4) Counsellors Funds Service, Inc.
466 Lexington Avenue
New York, New York 10017-3147
(records relating to its functions as
Co-administrator)

(5) State Street Bank and Trust Company
225 Franklin Street
Boston, Massachusetts 02110
(records relating to its functions as
custodian, transfer agent and
dividend disbursing agent)

(6) Boston Financial Data Services, Inc.
2 Heritage Drive
North Quincy, Massachusetts 02171
(records relating to its functions as transfer
agent and dividend disbursing agent)

(7) PNC Bank, National Association
1600 Market Street
Philadelphia, Pennsylvania 19103
(records relating to its functions as custodian)

(8) Counsellors Securities Inc.
466 Lexington Avenue
New York, New York 10017-3147
(records relating to its functions as distributor)

Item 31. Management Services

Not applicable.

Item 32. Undertakings.

(a) Registrant hereby undertakes to furnish each person to whom a
prospectus is delivered with a copy of the latest annual report to shareholders
for the relevant Portfolio, upon request and without charge.

(b) Registrant hereby undertakes to call a meeting of its shareholders
for the purpose of voting upon the question of removal of a director or
directors of Registrant when requested in writing to do so by the holders of at
least 10% of Registrant's outstanding shares. Registrant undertakes further,
in connection with the meeting, to comply with the provisions of Section 16(c)
of the 1940 Act relating to communications with the shareholders of certain
common-law trusts.

<PAGE> 149

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, as amended,
and the Investment Company Act of 1940, as amended, the Registrant certifies
that it meets all of the requirements for effectiveness of this Amendment to
the Registration Statement pursuant to Rule 485(b) under the Securities Act of
1933, as amended, and has duly caused this Amendment to be signed on its behalf
by the undersigned, thereunto duly authorized, in the City of New York and the
State of New York, on the 23rd day of February, 1998.

WARBURG, PINCUS GLOBAL POST-VENTURE CAPITAL
FUND, INC.

By:/s/Eugene L. Podsiadlo
----------------------------
Eugene L. Podsiadlo

President

Pursuant to the requirements of the Securities Act of 1933, as amended,
this Amendment has been signed below by the following persons in the capacities
and on the date indicated:

<TABLE>
<CAPTION>
Signature Title Date
- --------- ----- ----
<S> <C> <C>
/s/John L. Furth Chief Executive February 23, 1998
- -------------------------- Officer and Director
John L. Furth

/s/Eugene L. Podsiadlo President February 23, 1998
- --------------------------
Eugene L. Podsiadlo

/s/Howard Conroy Vice President and February 23, 1998
- -------------------------- Chief Financial
Howard Conroy Officer

/s/Daniel S. Madden Treasurer and Chief February 23, 1998
- -------------------------- Accounting Officer
Daniel S. Madden

/s/Richard N. Cooper Director February 23, 1998
- --------------------------
Richard N. Cooper

/s/Jack W. Fritz Director February 23, 1998
- --------------------------
Jack W. Fritz

/s/Jeffrey E. Garten Director February 23, 1998
- --------------------------
Jeffrey E. Garten

/s/Thomas A. Melfe Director February 23, 1998
- --------------------------
Thomas A. Melfe

/s/Arnold M. Reichman Director February 23, 1998
- --------------------------
**1 Arnold M. Reichman
</TABLE>

<PAGE> 150

<TABLE>
<S> <C> <C>
/s/Alexander B. Trowbridge Director February 23, 1998
- --------------------------
Alexander B. Trowbridge

</TABLE>

<PAGE> 151

INDEX TO EXHIBITS

<TABLE>
<CAPTION>
Exhibit No. Description of Exhibit
- ----------- ----------------------
<S> <C>
2(b) Amendment to By-Laws.

10 Opinion and Consent of Willkie Farr &
Gallagher, counsel to the Fund.

11 Consent of Coopers & Lybrand L.L.P.,
Independent Accountants.

16 Schedule for Computation of Total Return
Performance Quotation.

17(a) Financial Data Schedule - Common Shares.
(b) Financial Data Schedule - Advisor Shares.

</TABLE>

<PAGE> 1

WARBURG PINCUS FUNDS

AMENDMENT TO BY-LAWS

(Maryland Corporations)

RESOLVED, that pursuant to Article VIII of the Fund's By-Laws, Article IIA
entitled "Honorary Directors" be added to the Fund's By-Laws and shall read as
follows:

ARTICLE IIA
HONORARY DIRECTORS

Section 1. Number; Qualification; Term: The Board of Directors may from
time to time designate and appoint one or more qualified persons to the
position of "honorary director." Each honorary director shall serve for such
term as shall be specified in the resolution of the Board of Directors
appointing him or until his earlier resignation or removal. An honorary
director may be removed from such position with or without cause by the vote of
a majority of the Board of Directors given at any regular meeting or special
meeting.

Section 2. Duties; Remuneration: An honorary director shall be entitled
to attend at least one meeting of the Board of Directors each fiscal year at
the invitation of the Board of Directors. An honorary director shall not be a
"Director" or "officer" within the meaning of the Corporation's Articles of
Incorporation or of these By-Laws, shall not be deemed to be a member of an
"advisory board" within the meaning of the Investment Company Act of 1940, as
amended from time to time, shall not hold himself out as any of the foregoing,
and shall not be liable to any person for any act of the Corporation. Notice
of special meetings may be given to an honorary director but the failure to
give such notice shall not affect the validity of any meeting or the action
taken thereat. An honorary director shall not have the powers of a Director,
may not vote at meetings of the Board of Directors and shall not take part in
the operation or governance of the Corporation. An honorary director shall not
receive any compensation but shall be reimbursed for expenses incurred in
attending meetings of the Board of Directors.

Dated: February 6, 1998

<PAGE> 1

February 23, 1998

Warburg, Pincus Global Post-Venture Capital Fund, Inc.
466 Lexington Avenue
New York, New York 10017-3147

Re: Post-Effective Amendment No. 2 to Registration Statement
(Securities Act File No. 333-08459; Investment Company Act
File No. 811-07715) (the "Registration Statement")
---------------------------------------------------------

Ladies and Gentlemen:

You have requested us, as counsel to Warburg, Pincus Global Post-Venture
Capital Fund, Inc. (the "Fund"), a corporation organized under the laws of the
State of Maryland, to furnish you with this opinion in connection with the
Fund's filing of Post-Effective Amendment No. 2 to its Registration Statement
on Form N-1A (the "Amendment").

We have examined copies of the Fund's Articles of Incorporation, as amended or
supplemented (the "Articles"), the Fund's By-Laws, as amended (the "By-Laws"),
and the Amendment. We have also examined such other records, documents,
papers, statutes and authorities as we have deemed necessary to form a basis
for the opinion hereinafter expressed.

In our examination of material, we have assumed the genuineness of all
signatures, the authenticity of all documents submitted to us as originals and
the conformity to original documents of all copies submitted to us. As to
various questions of fact material to our opinion, we have relied upon
statements and certificates of officers and representatives of the Fund and
others.

Based upon the foregoing, we are of the opinion that the shares of common stock
of the Fund, par value $.001 per share (the "Shares"), when duly sold, issued
and paid for in accordance with the laws of applicable jurisdictions and the
terms of the Articles, the By-Laws and the Prospectuses and Statement of
Additional Information ("SAI") included as part of the Amendment, and assuming
that at the time of sale such Shares will be sold at a sales price in each case
in excess of the par value, will be valid, legally issued, fully paid and
non-assessable.

<PAGE> 2

Warburg, Pincus Global Post-Venture Capital Fund, Inc.
February 23, 1998
Page 2

We hereby consent to the filing of this opinion as an exhibit to the Amendment,
to the reference to our name under the heading "Independent Accountants and
Counsel" in the SAI included as part of the Amendment, and to the filing of
this opinion as an exhibit to any application made by or on behalf of the Fund
or any distributor or dealer in connection with the registration or
qualification of the Fund or the Shares under the securities laws of any state
or other jurisdiction.

We are members of the Bar of the State of New York only and do not opine as to
the laws of any jurisdiction other than the laws of the State of New York and
the laws of the United States, and the opinions set forth above are,
accordingly, limited to the laws of those jurisdictions.

Very truly yours,

/s/ Willkie Farr & Gallagher

<PAGE> 1

CONSENT OF INDEPENDENT ACCOUNTANTS

We consent to the incorporation by reference in this Post-Effective Amendment
No. 2 to the Registration Statement under the Securities Act of 1933 on Form
N-1A (File No. 333-08459) of our report dated December 19, 1997 of our audit of
the financial statements and financial highlights of Warburg, Pincus Global
Post-Venture Capital Fund, Inc. which report is included in the Annual Report
to Shareholders for the year ended October 31, 1997. We also consent to the
reference to our Firm under the caption "Financial Highlights" in the
Prospectus and under the caption "Independent Accountants and Counsel" in the
Statement of Additional Information.

/s/ Coopers & Lybrand L.L.P.

COOPERS & LYBRAND L.L.P.

2400 Eleven Penn Center
Philadelphia, Pennsylvania
February 19, 1998

<PAGE> 1

WARBURG PINCUS GLOBAL POST VENTURE FUND
SCHEDULE 16 CALCULATIONS AS OF 10/31/97

ANNUALIZED TOTAL RETURNS WITH WAIVERS
COMMON SHARES

1/1
One Year ((11,308.32/10000) -1)= 13.08%
1/3
Three Year ((00,000.00/10000) -1)= 0.00%
1/5
Five year ((00,000.00/10000) -1)= 0.00%
1/1.08767
From Inception ((11,150.00/10000) -1)= 10.53%

SERIES 2 SHARES
1/1
One Year ((11,279.18/10000) -1)= 12.79%
1/3
Three Year ((00,000.00/10000) -1)= 0.00%
1/5
Five year ((00,000.00/10000) -1)= 0.00%
1/1.08767
From Inception ((11,110.00/10000) -1)= 10.16%

ANNUALIZED TOTAL RETURNS WITHOUT WAIVERS
COMMON SHARES

1/1
One Year ((10,354.97/10000) -1)= 3.55%
1/3
Three Year ((00,000.00/10000) -1)= 0.00%
1/5
Five year ((00,000.00/10000) -1)= 0.00%
1/1.08767
From Inception ((10,060.00/10000) -1)= 0.55%

SERIES 2 SHARES

1/1
One Year ((-984.77/10000) -1)= -109.85%
1/3
Three Year ((00,000.00/10000) -1)= 0.00%
1/5
Five year ((00,000.00/10000 -1)= 0.00%
1/1.08767
From Inception ((-1,800.00/10000) -1)= -79.33%

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