WARBURG PINCUS WORLDPERKS TAX FREE MONEY FUND INC, 485APOS, 1999-02-26

WARBURG PINCUS WORLDPERKS TAX FREE MONEY FUND INC
485APOS, 1999-02-26

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<PAGE> 1

As Filed with the Securities and Exchange Commission
on February 26, 1999

Securities Act File No. 333-59805
Investment Company Act File No. 811-08901

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. 1 [x]

and/or

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

Amendment No. 3 [x]

(Check appropriate box or boxes)

Warburg, Pincus WorldPerks Tax Free Money Market Fund, Inc.
(formerly known as Warburg, Pincus Tax Free Money Market 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

Janna Manes, Esq.
Warburg, Pincus WorldPerks Tax Free Money Market Fund, Inc.
466 Lexington Avenue
New York, New York 10017-3147
(Name and Address of Agent for Services)

Copy to:

Rose F. DiMartino, Esq.
Willkie Farr & Gallagher
787 Seventh Avenue
New York, New York 10019-6099

<PAGE> 2

Approximate Date of Proposed Public Offering: April 30, 1999

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

[ ] immediately upon filing pursuant to paragraph (b)
[ ] on (date) pursuant to paragraph (b)
[ ] 60 days after filing pursuant to paragraph (a)(1)
[x] on April 30, 1999 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.

<PAGE> 3

SUBJECT TO COMPLETION, DATED FEBRUARY 26, 1999

[NORTHWEST AIRLINES
WORLDPERKS(R)
INVESTORMILES(SM) LOGO]

PROSPECTUS
April , 1999

WARBURG PINCUS
WORLDPERKS(R) MONEY MARKET FUND

WARBURG PINCUS
WORLDPERKS(R) TAX FREE MONEY MARKET FUND

[LOGO(SM)]

As with all mutual funds, the Securities and Exchange
Commission has not approved these funds, nor has it passed
upon the adequacy or accuracy of this Prospectus. It is a
criminal offense to state otherwise.

[Warburg Pincus Funds Logo]

THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE
MAY NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH
THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT
AN OFFER TO SELL THESE SECURITIES AND IS NOT SOLICITING AN OFFER TO BUY
THESE SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.

[LOGO IN BACKGROUND]

<PAGE> 4

[INSIDE FRONT COVER]

<PAGE> 5

CONTENTS

<TABLE>
<S> <C>
KEY POINTS.................... .................... 4
Goals and Principal Strategies.................. 4
A Word About Risk............................... 5
Investor Profile................................ 6
Yield........................................... 6
WorldPerks Investor Miles....................... 6
NORTHWEST AIRLINES WORLDPERKS(R)
INVESTORMILES................. .................. 7
The WorldPerks Program.......................... 7
How Your Mileage is Determined.................. 7
For More Information............................ 7
INVESTOR EXPENSES................ ................. 8
Fees and Fund Expenses.......................... 8
Example......................................... 9
THE FUNDS IN DETAIL............... ................ 10
The Management Firms............................ 10
Service......................................... 10
Fund Information Key............................ 11
MONEY MARKET FUND................ ................. 12
TAX FREE FUND.................. ................... 14
MORE ABOUT RISK................. .................. 16
Introduction.................................... 16
Types of Investment Risk........................ 16
Certain Investment Practices.................... 18
ABOUT YOUR ACCOUNT................ ................ 20
Share Valuation................................. 20
Buying and Selling Shares....................... 20
Account Statements.............................. 20
Distributions................................... 20
Taxes........................................... 21
OTHER INFORMATION................ ................. 23
About the Distributor........................... 23
FOR MORE INFORMATION............... ............... back cover
</TABLE>

<PAGE> 6

KEY POINTS
GOALS AND PRINCIPAL STRATEGIES

<TABLE>
<CAPTION>
FUND/RISK FACTORS GOAL STRATEGIES
<S> <C> <C>
WORLDPERKS High current income - Invests in high-quality
MONEY MARKET FUND consistent with money-market instruments:
Risk factors: preservation of capital - obligations issued or guaranteed
Credit risk and liquidity by the U.S. government, its
Income risk agencies or instrumentalities
Interest-rate risk - bank and corporate debt
Market risk obligations
Sector concentration - Concentrates its investments in
the financial-services sector
- Portfolio managers select
investments based on factors such
as yield, maturity and
liquidity, within the context of
their interest-rate outlook
- Seeks to maintain a stable share
price of $1
WORLDPERKS TAX FREE High current income - Invests in high-quality,
MONEY MARKET FUND exempt from federal short-term tax-exempt municipal
Risk factors: personal income taxes securities -- debt obligations
Credit risk consistent with issued by states and other
Income risk preservation of capital jurisdictions of the U.S. and
Interest-rate risk and liquidity their authorities, agencies and
Market risk instrumentalities
- Fund dividends derived from
interest on municipal securities
will be exempt from federal
personal income taxes
- Portfolio managers select
investments based on factors such
as yield, maturity and
liquidity, within the context of
their interest-rate outlook
- Seeks to maintain a stable share
price of $1
</TABLE>

<PAGE> 7

A WORD ABOUT RISK

All investments involve some level of risk. Simply defined, risk is the
possibility that you will lose money or not make money.

Principal risk factors for the funds are discussed below. Before you invest,
please make sure you understand the risks that apply to your fund.

Investments in the funds are not bank deposits and are not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency. Although each fund seeks to preserve the value of your investment at $1
per share, it is possible to lose money by investing in a fund.

CREDIT RISK
Both funds

The issuer of a security or the counterparty to a contract may default or
otherwise become unable to honor a financial obligation. An issuer's failure to
make scheduled interest or principal payments to a fund could reduce the fund's
income level and share price.

INCOME RISK
Both funds

A fund's income level may decline because of falling interest rates and other
market conditions. Each fund's yield will vary from day to day, generally
reflecting changes in overall short-term interest rates. This should be an
advantage when interest rates are rising but not when rates are falling.

INTEREST-RATE RISK
Both funds

Changes in interest rates may cause a decline in the market value of an
investment. With fixed-income securities, a rise in interest rates typically
causes a fall in values, while a fall in interest rates typically causes a rise
in values.

A sharp and unexpected rise in interest rates could cause a money market
fund's price to drop below a dollar. However, the extremely short maturity of
securities held in money market portfolios -- a means of achieving an overall
fund objective of principal safety -- reduces their potential for price
fluctuation.

MARKET RISK
Both funds

The market value of a security may move up and down, sometimes rapidly and
unpredictably. Market risk may affect a single issuer, industry, sector of the
economy, or the market as a whole. Market risk is common to most
investments -- including debt securities and the mutual funds that invest in
them.

SECTOR CONCENTRATION
Money Market Fund

Investing more than 25% of its assets in the financial-services sector will
subject the fund to risks associated with investing in financial-services
companies. These risks may include interest-rate, market, regulatory and other
risks.

5
<PAGE> 8

INVESTOR PROFILE

THESE FUNDS ARE DESIGNED FOR INVESTORS WHO:

- want to preserve the value of their investment

- are seeking a mutual fund for the money-market portion of an asset-
allocation portfolio

- want easy access to their money through checkwriting and wire-redemption
privileges

- are investing emergency reserves or other money for which safety and
accessibility are more important than total return

THEY MAY NOT BE APPROPRIATE IF YOU:

- are not interested in earning WorldPerks miles

- are seeking an investment for your IRA or other retirement plan

- want federal deposit insurance

- desire the higher income available from longer-term fixed-income funds

- are investing for capital appreciation

You should base your selection of a fund on your own goals, risk preferences
and time horizon.

YIELD

To obtain a fund's current 7-day yield, call toll-free 800-WARBURG.

WORLDPERKS INVESTORMILES

Investing in these funds makes you eligible to earn WorldPerks* Bonus Miles,
good toward free travel on Northwest Airlines, Continental Airlines, KLM Royal
Dutch Airlines and other WorldPerks partner airlines. If you are not a member of
the WorldPerks program, call Northwest Airlines at 800-44-PERKS to enroll before
making an investment in a fund.

*WorldPerks is a registered trademark of Northwest Airlines, Inc.

6
<PAGE> 9

NORTHWEST AIRLINES
WORLDPERKS(R) INVESTORMILES

THE WORLDPERKS PROGRAM

Investing in these funds makes you eligible to earn WorldPerks Bonus Miles in
Northwest Airlines' WorldPerks InvestorMiles(SM) Program. Mileage is based on
how much and how long you invest. The WorldPerks Program offers free and
discounted travel on Northwest Airlines, Continental Airlines, KLM Royal Dutch
Airlines and other WorldPerks partner airlines. If you are not a member of the
WorldPerks Program, call Northwest Airlines at 800 44-PERKS to enroll over the
phone before you invest.

HOW YOUR MILEAGE IS DETERMINED

Bonus Miles accrue daily at an annual rate of one mile per $4 invested in a
fund. Miles will be posted monthly to your WorldPerks account based on your
average daily fund account balance during the previous month.

EXAMPLE

Assume you invest $10,000 on the 16th day of a month that has 30 days and
maintain that balance through the end of the month.

Your miles would accrue daily at the rate of:

$10,000 X 1 mile per year/ $4 X 1 year/365 days = 6.8493 MILES PER DAY

Total miles for the 15-day period would be:

15 days X 6.8493 miles per day = 103 MILES

If you maintained your $10,000 balance, over the next 30-day month you would
earn:

30 days X 6.8493 miles per day = 206 MILES

As in the example, fractional miles are rounded up to the nearest whole mile
when credited. Reinvesting your fund dividends will add to your account balance
and increase the number of miles you earn.

FOR MORE INFORMATION

For information or assistance regarding the WorldPerks InvestorMiles Program,
call Warburg Pincus Funds at 800-WARBURG (800-927-2874). For information about
Northwest WorldPerks Program features, please refer to your member materials.
Northwest Airlines may change the WorldPerks Program rules, program partners,
regulations, benefits, conditions of participation or mileage levels at any time
without notice, even though changes may affect the value of mileage or
FlyWrite(SM) certificates already accumulated. Award travel is subject to seat
availability. The posting of WorldPerks Bonus miles in connection with fund
investments may be changed or discontinued at any time. Northwest Airlines
WorldPerks travel awards, mileage accrual and special offers are subject to
governmental regulations.

7
<PAGE> 10

INVESTOR EXPENSES

FEES AND FUND EXPENSES

This table describes the fees and expenses you may bear as a shareholder. Annual
fund operating expense figures are for the fiscal year ended December 31, 1998.

<S> <C> <C>
MONEY MARKET TAX FREE
FUND FUND
SHAREHOLDER FEES
(paid directly from your investment)
Sales charge "load" on purchases NONE NONE
Deferred sales charge "load" NONE NONE
Sales charge "load" on reinvested
distributions NONE NONE
Redemption fees NONE NONE
Exchange fees NONE NONE
ANNUAL FUND OPERATING EXPENSES
(deducted from fund assets)
Management fee .40% .40%
Distribution and service (12b-1) fee .25% .25%
Other expenses 1.17% 1.24%
TOTAL ANNUAL FUND OPERATING EXPENSES* 1.82% 1.89%
</TABLE>

* Actual fees and expenses for the fiscal period ended December 31, 1998 are
shown below. Fee waivers and expense reimbursements or credits reduced some
expenses during 1998 but may be discontinued at any time.

<TABLE>
<CAPTION>
EXPENSES AFTER WAIVERS MONEY TAX FREE
AND REIMBURSEMENTS MARKET FUND FUND
<S> <C> <C>
Management fee .25% .25%
Distribution and service (12b-1) fee .25% .25%
Other expenses .26% .26%
----- -----
TOTAL ANNUAL FUND OPERATING EXPENSES .76% .76%
</TABLE>

<PAGE> 11

EXAMPLE

This example may help you compare the cost of investing in these funds with the
cost of investing in other mutual funds. Because it uses hypothetical
conditions, your actual costs may be higher or lower.

Assume you invest $10,000, each fund returns 5% annually, expense ratios remain
as listed in the first table on the opposite page (before fee waivers and
expense reimbursements or credits) and you close your account at the end of each
of the time periods shown. Based on these assumptions, your cost would be:

<TABLE>
<CAPTION>
ONE YEAR THREE YEARS
<S> <C> <C>
MONEY MARKET FUND $185 $573
TAX FREE FUND $192 $594
</TABLE>

9
<PAGE> 12

THE FUNDS IN DETAIL

THE MANAGEMENT FIRMS

WARBURG PINCUS ASSET
MANAGEMENT, INC.
466 Lexington Avenue
New York, NY 10017-3147

- Investment adviser for the funds

- Responsible for determining each fund's investment program, including the
types, maturities and issuers of securities to be held by the fund

- Supervises the activities of BlackRock

- A professional investment-advisory firm providing investment services to
individuals since 1970 and to institutions since 1973

- Currently manages approximately $22 billion in assets

For easier reading, Warburg Pincus Asset Management, Inc. will be referred to
as "Warburg Pincus" or "we" throughout this Prospectus.
BLACKROCK INSTITUTIONAL MANAGEMENT CORPORATION
400 Bellevue Parkway
Wilmington, DE 19809
- Sub-investment adviser for the funds

- Responsible for providing investment research and credit analysis, and
managing the day-to-day operations of the funds

- A majority owned indirect subsidiary of PNC Bank, N.A.

- Currently manages approximately $50 billion
SERVICE

CREDIT SUISSE ASSET MANAGEMENT LIMITED
Beaufort House
15 St. Botolph Street
London, EC 3A 7JJ
- Provides the funds with administrative services

- A subsidiary of Credit Suisse Group, one of the world's leading banks

<PAGE> 13

FUND INFORMATION KEY

Concise fund-by-fund descriptions begin on the next page. Each description
provides the following information:

GOAL AND STRATEGIES
The fund's particular investment goal and the strategies it intends to use in
pursuing that goal. Percentages of fund assets are based on total assets unless
indicated otherwise.

PORTFOLIO INVESTMENTS
The primary types of securities in which the fund invests. Secondary
investments are described in "More About Risk."

RISK FACTORS
The major risk factors associated with the fund. Additional risk factors are
included in "More About Risk."

INVESTOR EXPENSES
Actual fund expenses for the 1998 fiscal period. Future expenses may be
higher or lower.

- MANAGEMENT FEE The fee paid to the investment adviser and sub-investment
adviser for providing investment advice to the fund. Expressed as a percentage
of average net assets after waivers.

- DISTRIBUTION AND SERVICE (12B-1) FEES Fees paid by the fund to the
distributor for making shares of the fund available to you. Expressed as a
percentage of average net assets.

- OTHER EXPENSES Fees paid by the fund for items such as administration,
transfer agency, custody, auditing, legal and registration fees and
miscellaneous expenses. Expressed as a percentage of average net assets after
waivers, credits and reimbursements.

FINANCIAL HIGHLIGHTS
A table showing the fund's audited financial performance for up to five
years.

- TOTAL RETURN How much you would have earned on an investment in the fund,
assuming you had reinvested all dividend and capital-gain distributions.
The Annual Report includes the auditor's report, along with the fund's
financial statements. It is available free upon request.

11
<PAGE> 14

MONEY MARKET FUND

GOAL AND STRATEGIES

The Money Market Fund seeks high current income consistent with preservation
of capital and liquidity. To pursue this goal, it invests in high-quality, U.S.
dollar-denominated money-market instruments. The fund seeks to maintain a stable
$1 share price.

In selecting securities, the portfolio managers may examine the relationships
among yields on various types and maturities of money-market securities in the
context of their outlook for interest rates. For example, commercial paper often
offers a yield advantage over Treasury bills. And if rates are expected to fall,
longer maturities may be purchased to try to preserve the fund's income level.
Conversely, shorter maturities may be favored if rates are expected to rise.

PORTFOLIO INVESTMENTS

This fund invests in the following types of money-market instruments:

- Government securities, including U.S. Treasury bills and other obligations of
the U.S. government, its agencies or instrumentalities

- U.S. and foreign bank obligations such as certificates of deposit, bankers'
acceptances, time deposits, commercial paper and debt obligations

- commercial paper and notes of other corporate issuers, including variable
rate master demand notes and other variable-rate obligations

- repurchase agreements

No more than 5% of assets may be invested in securities rated in the second-
highest short-term category (or unrated equivalents). The rest of the fund's
investments must be in the highest short-term category. Under normal conditions,
the fund will invest at least 25% of assets in the financial-services sector.

The fund maintains an average maturity of 90 days or less, and only invests
in securities which have (or are deemed by the SEC to have) remaining maturities
of 397 days or less at the date of purchase. To a limited extent, the fund may
also engage in other investment practices.

RISK FACTORS

This fund's principal risk factors are:

- credit risk

- income risk

- interest-rate risk

- market risk

- sector concentration risk

The fund's yield will vary with changes in interest rates. If interest rates
fall, your dividend income will likely decline.

Since it is managed to maintain a constant $1 share price, the fund should
have little risk of principal loss. However, there is no assurance the fund will
avoid principal losses in the rare event that fund holdings default or interest
rates rise sharply in an unusually short period.

Concentrating its investments in the financial-services sector will subject
the

12
<PAGE> 15

fund to risks associated with investing in financial-services companies. These
risks are discussed in "More About Risk." That section also details other
investment practices the fund may use. Please read "More About Risk" carefully
before you invest.

PORTFOLIO MANAGEMENT

Under the supervision of Warburg Pincus, a portfolio management team at
BlackRock Institutional Management Corporation, the fund's sub-investment
adviser, makes the fund's day-to-day investment decisions.

INVESTOR EXPENSES

<TABLE>
<CAPTION>
<S> <C>
Management fee .25%
Distribution and service
(12b-1) fee .25%
All other expenses .26%
------------
Total expenses .76%
</TABLE>

FINANCIAL HIGHLIGHTS

The figures below have been audited by the fund's independent auditors,
PricewaterhouseCoopers LLP.

<TABLE>
<CAPTION>
<S> <C> <C>
- ----------------------------------------------------------------------------
PERIOD ENDED: 12/98(1)
PER-SHARE DATA
- ----------------------------------------------------------------------------
Net asset value, beginning of period $1.00
- ----------------------------------------------------------------------------
Investment activities:
Net investment income 0.02
- ----------------------------------------------------------------------------
Total from investment activities 0.02
- ----------------------------------------------------------------------------
Distributions:
From net investment income (0.02)
- ----------------------------------------------------------------------------
Total distributions (0.02)
- ----------------------------------------------------------------------------
Net asset value, end of period $1.00
-----
-----
Total return 1.15%(2)
- ----------------------------------------------------------------------------
RATIOS AND SUPPLEMENTAL DATA
- ----------------------------------------------------------------------------
Net assets, end of period (000s omitted) $12,926
Ratio of expenses to average net assets .58%(3,4)
Ratio of net income to average net assets 5.13%(4)
Decrease reflected in above operating expense ratio due to
waivers/reimbursements 1.24%(4)
- ----------------------------------------------------------------------------
</TABLE>

(1) For the period October 1, 1998 (Commencement of Operations) through December
31, 1998.
(2) Not Annualized.
(3) Interest earned on uninvested cash balances is used to offset portions of
the transfer agent expense. These arrangements had no effect on the fund's
expense ratio.
(4) Annualized.

13
<PAGE> 16

TAX FREE FUND

GOAL AND STRATEGIES

The Tax Free Fund seeks high current income exempt from federal personal
income taxes consistent with preservation of capital and liquidity. To pursue
this goal, it invests in short-term, high-quality municipal securities. The fund
seeks to maintain a stable $1 share price.

In selecting securities, the portfolio managers may examine the relationships
among yields on various types and maturities of municipal securities in the
context of their outlook for interest rates. For example, if rates are expected
to fall, longer maturities may be purchased to try to preserve the fund's income
level. Conversely, shorter maturities may be favored if rates are expected to
rise.

PORTFOLIO INVESTMENTS

This fund invests at least 80% of assets in short-term, high-quality tax-
exempt municipal securities. These include:

- tax-exempt commercial paper

- variable-rate demand notes

- bonds

- municipal put bonds

- bond-anticipation notes

- revenue-anticipation notes

No more than 5% of assets may be invested in securities rated in the second-
highest short-term rating category (or unrated equivalents). The rest of the
fund's investments must be in the highest short-term category.

RISK FACTORS

This fund's principal risk factors are:

- credit risk

- income risk

- interest-rate risk

- market risk

The fund's yield will vary with changes in interest rates. If interest rates
fall, your dividend income will likely decline.

The fund's ability to maintain a stable share price also depends upon
guarantees from banks and other financial institutions that back certain
securities the fund invests in. Changes in the credit quality of these
institutions could cause losses to the fund and affect its share price.

"More About Risk" details certain investment practices the fund may use.
Please read that section carefully before you invest.

<PAGE> 17

PORTFOLIO MANAGEMENT

Under the supervision of Warburg Pincus, a portfolio-management team at
BlackRock Institutional Management Corporation, the fund's sub-investment
adviser, makes the fund's day-to-day investment decisions.
<TABLE>
<CAPTION>
<S> <C>
INVESTOR EXPENSES

Management fee .25%
Distribution and service
(12b-1) fee .25%
All other expenses .26%
------------

Total expenses .76%
</TABLE>

FINANCIAL HIGHLIGHTS

The figures below have been audited by the fund's independent auditors,
PricewaterhouseCoopers LLP.

<TABLE>
<CAPTION>
<S> <C> <C>
- ----------------------------------------------------------------------------
PERIOD ENDED: 12/98(1)
PER-SHARE DATA
- ----------------------------------------------------------------------------
Net asset value, beginning of period $1.00
- ----------------------------------------------------------------------------
Investment activities:
Net investment income 0.01
- ----------------------------------------------------------------------------
Total from investment activities 0.01
- ----------------------------------------------------------------------------
Distributions:
From net investment income (0.01)
- ----------------------------------------------------------------------------
Total distributions (0.01)
- ----------------------------------------------------------------------------
Net asset value, end of period $1.00
-----
-----
Total return .66%(2)
- ----------------------------------------------------------------------------
RATIOS AND SUPPLEMENTAL DATA
- ----------------------------------------------------------------------------
Net assets, end of period (000s omitted) $10,589
Ratio of expenses to average net assets .58%(3,4)
Ratio of net income to average net assets 2.91%(4)
Decrease reflected in above operating expense ratio due to
waivers/reimbursements 1.31%(4)
- ----------------------------------------------------------------------------
</TABLE>

15
<PAGE> 18

MORE ABOUT RISK

INTRODUCTION

A fund's goal and principal strategies largely determine its risk profile.
You will find a concise description of each fund's risk profile in "Key Points."
The fund-by-fund discussions contain more detailed information. This section
discusses other risks that may affect the funds.

The "Certain Investment Practices" table in this section takes a more
detailed look at certain investment practices the funds may use. Some of these
practices may have higher risks associated with them. However, each fund has
limitations and policies designed to reduce many of the risks.

TYPES OF INVESTMENT RISK

The following risks are referred to throughout this Prospectus.

CREDIT RISK The issuer of a security or the counterparty to a contract may
default or otherwise become unable to honor a financial obligation. An issuer's
failure to make scheduled interest or principal payments to a fund could reduce
the fund's income level and share price.

EXPOSURE RISK The risk associated with investments or practices that increase
the amount of money a fund could gain or lose on an investment.

- HEDGED Exposure risk could multiply losses generated by a practice used
for hedging purposes. Such losses should be substantially offset by gains
on the hedged investment. However, while hedging can reduce or eliminate
losses, it can also reduce or eliminate gains.

- SPECULATIVE To the extent that a derivative or practice is not used as a
hedge, the fund is directly exposed to its risks.

EXTENSION RISK An unexpected rise in interest rates may extend the life of a
mortgage-backed security beyond the expected prepayment time, typically reducing
the security's value.

INCOME RISK A fund's income level may decline because of falling interest
rates.

INTEREST-RATE RISK Changes in interest rates may cause a decline in the
market value of an investment. With bonds and other fixed-income securities, a
rise in interest rates typically causes a fall in values, while a fall in
interest rates typically causes a rise in values.

LIQUIDITY RISK Certain fund securities may be difficult or impossible to sell
at the time and the price that the fund would like. A fund may have to lower the
price, sell other securities instead or forego an investment opportunity. Any of
these could have a negative effect on fund management or performance.

MARKET RISK The market value of a security may move up and down, sometimes
rapidly and unpredictably. Market risk may affect a single issuer, industry,
sector of the economy, or the market as a whole. Market risk is common to most
investments --

<PAGE> 19

including debt securities and the mutual funds that invest in them.

NATURAL-EVENT RISK Losses attributable to natural disasters, crop failures
and similar events which are sustained by financial service companies, such as
insurance companies, may hurt issuers of portfolio investments.

POLITICAL RISK Foreign governments may expropriate assets, impose capital or
currency controls, impose punitive taxes, or nationalize a company or industry.
Any of these actions could have a severe effect on security prices and impair a
fund's ability to bring its capital or income back to the U.S. Other political
risks include economic policy changes, social and political instability,
military action and war.

PREPAYMENT RISK Securities with high stated interest rates may be prepaid
prior to maturity. During periods of falling interest rates, a fund would
generally have to reinvest the proceeds at lower rates.

REGULATORY RISK Governments, agencies or other regulatory bodies may adopt or
change laws or regulations that could adversely affect the issuer, the market
value of the security, or a fund's performance.

VALUATION RISK The lack of an active trading market may make it difficult to
obtain an accurate price for a fund security.

YEAR 2000 PROCESSING RISK The funds' investment adviser is working to address
the Year 2000 issue relating to the change from "99" to "00" on January 1, 2000,
and has obtained assurances from major service providers that they are taking
similar steps. The adviser is working on the Year 2000 issue pursuant to a plan
designed to address potential problems, and progress is proceeding according to
the plan. The adviser anticipates the completion of testing of internal systems
in the first part of 1999, and is developing contingency plans intended to
address any unexpected service problems.

The funds' operations are dependent upon interactions among many participants
in the financial-services and other related industries. There is no assurance
that preparations by the adviser and other industry participants will be
sufficient, and any noncompliant computer systems could hurt key fund
operations, such as shareholder servicing, pricing and trading.

The Year 2000 issue affects practically all companies, organizations,
governments, markets and economies throughout the world -- including companies
or governmental entities in which the funds invest and markets in which they
trade. However, at this time no one knows precisely what the degree of impact
will be. To the extent that the impact on a fund holding or on markets or
economies is negative, it could seriously affect a fund's performance.

17
<PAGE> 20

CERTAIN INVESTMENT PRACTICES

For each of the following practices, this table shows the applicable investment
limitation. Risks are indicated for each practice.

KEY TO TABLE:

<TABLE>
<S> <C>
[-] Permitted without limitation; does not indicate
actual use
20% Italic type (e.g., 20%) represents an investment
limitation as a percentage of NET fund assets; does
not indicate actual use
20% Roman type (e.g., 20%) represents an investment
limitation as a percentage of TOTAL fund assets; does
not indicate actual use
[ ] Permitted, but not expected to be used to a
significant extent
- -- Not permitted
</TABLE>

<TABLE>
MONEY TAX
MARKET FREE
FUND FUND
------ ----
<S> <C> <C>
INVESTMENT PRACTICE LIMIT
AMT SECURITIES Municipal securities whose interest is a
tax-preference item for purposes of the federal alternative
minimum tax. Credit, liquidity, market, interest-rate,
regulatory risks. [ ] 20%
- ----------------------------------------------------------------------------
EURODOLLAR AND YANKEE OBLIGATIONS U.S. dollar-denominated
certificates of deposit issued or backed by foreign banks
and foreign branches of U.S. banks. Credit, income,
interest-rate, market, political risks. [ ] [ ]
- ----------------------------------------------------------------------------
MORTGAGE-BACKED AND ASSET-BACKED SECURITIES Debt securities
backed by pools of mortgages, including passthrough
certificates and other senior classes of collateralized
mortgage obligations (CMOs), or other receivables. Credit,
extension, interest-rate, liquidity, prepayment risks. [ ] [ ]
- ----------------------------------------------------------------------------
MUNICIPAL SECURITIES Debt obligations issued by or on behalf
of a state or other jurisdiction of the U.S. and their
authorities, agencies and instrumentalities. May include
tax-exempt commercial paper, variable-rate demand notes,
bonds, municipal put bonds, bond-anticipation notes and
revenue-anticipation notes. Credit, interest-rate, market
risks. [ ] [-]
- ----------------------------------------------------------------------------
REPURCHASE AGREEMENTS The purchase of a security with a
commitment to resell the security back to the counterparty
at the same price plus interest. Credit risk [-] [ ]
- ----------------------------------------------------------------------------
RESTRICTED AND OTHER ILLIQUID SECURITIES Securities with
restrictions on trading, or those not actively traded. May
include private placements. Liquidity, market, valuation
risks. 10% 10%
- ----------------------------------------------------------------------------
SECTOR CONCENTRATION -- FINANCIAL SERVICES Investing more
than 25% of a fund's assets in money market instruments
issued by commercial and industrial banks, savings and loans
and their holding companies; consumer and industrial finance
companies; diversified financial service companies;
investment banking, securities brokerage and investment
advisory companies; leasing companies; insurance companies;
and other companies in the financial services sector.
Credit, interest-rate, market, regulatory and (in the case
of insurance companies) natural-event risks. [-] --
- ----------------------------------------------------------------------------
</TABLE>

18
<PAGE> 21

<TABLE>
MONEY TAX
MARKET FREE
FUND FUND
------ ----
<S> <C> <C>
INVESTMENT PRACTICE LIMIT
TEMPORARY DEFENSIVE TACTICS Placing some or all of a fund's
assets in defensive investments when the adviser or
subadviser believes that doing so would be in the best
interests of fund investors. For the Tax Free Fund, these
investments may include taxable securities. Although
intended to avoid losses in unusual market conditions,
defensive tactics might prevent a fund from achieving its
goal. [ ] [ ]
- ----------------------------------------------------------------------------
VARIABLE-RATE MASTER DEMAND NOTES Unsecured instruments that
provide for periodic adjustments in their interest rate and
permit the indebtedness of the issuer to vary. Credit,
interest-rate, liquidity, market risks. [ ] [ ]
- ----------------------------------------------------------------------------
WHEN-ISSUED SECURITIES AND FORWARD COMMITMENTS The purchase
or sale of securities for delivery at a future date; market
value may change before delivery. Liquidity, market,
speculative exposure risks. 20% 20%
- ----------------------------------------------------------------------------
</TABLE>

<PAGE> 22

ABOUT YOUR ACCOUNT

SHARE VALUATION

The price of your shares is also referred to as their net asset value (NAV).

The NAV is determined at 12:00 noon and at the close of regular trading on
the New York Stock Exchange (NYSE) (usually 4 p.m. Eastern Time) each day the
NYSE is open for business. It is calculated by dividing the fund's total assets,
less its liabilities, by the number of shares outstanding.

Each fund values its securities using amortized cost. This method values a
fund holding initially at its cost and then assumes a constant amortization to
maturity of any discount or premium. The amortized cost method ignores any
impact of fluctuating interest rates.

BUYING AND
SELLING SHARES

Retirement plans, trusts, corporations, partnerships and certain other legal
entities generally cannot invest in the funds. For Uniform Transfers-to-Minors
Act (UTMA) and Uniform Gifts-to-Minors Act (UGMA) accounts, WorldPerks Bonus
Miles will be credited only to the WorldPerks account of the minor child.
Currently, the Money Market Fund and the Tax Free Fund are the only Warburg
Pincus funds offering Northwest Airlines WorldPerks mileage credit. Each fund
reserves the right to:

- modify or terminate the check-redemption privilege

- limit the number of check redemptions

- begin charging a fee for checks

The accompanying Shareholder Guide explains how to invest directly with the
funds. You will find additional information about purchases, redemptions,
exchanges and services.

Each fund is open on those days when the NYSE is open, typically Monday
through Friday. Your transaction will be priced at the NAV next computed after
we receive your request in proper form.

ACCOUNT STATEMENTS

In general, you will receive account statements as follows:

- after every transaction that affects your account balance (except for
distribution reinvestments and automatic transactions)

- after any changes of name or address of the registered owner(s)

- otherwise, every quarter

You will also receive annual and semiannual financial reports.

DISTRIBUTIONS

As a fund investor, you are entitled to your share of the fund's net income
and gains on its investments. The fund passes these earnings along to its
shareholders as distributions.

Each fund earns interest from its investments. These are passed along as
dividend distributions. The fund may realize capital gains if it sells
securities for a higher price than it paid for them.

<PAGE> 23

These are passed along as capital-gain distributions. Money market funds usually
do not make capital-gain distributions.

The funds declare dividend distributions daily and pay them monthly. Each of
the funds typically distributes long-term capital gains (if any) to shareholders
annually, at the end of its fiscal year. The Tax Free Fund distributes
short-term capital gains (if any) at the end of its fiscal year; the Money
Market Fund distributes them periodically as determined by the Board of
Directors.

Most investors have their distributions reinvested in additional shares of
the same fund. Alternatively, you can choose to have a check for your
distributions mailed to you or sent by electronic transfer. Distributions will
be reinvested unless you select another option on your account application.

TAXES

As with any investment, you should consider how your investment in a fund
will be taxed. Please consult your tax professional concerning your own tax
situation.

Each fund intends to meet the requirements for being a tax-qualified
regulated investment company. As long as a fund continues to qualify, it pays no
federal income tax on the earnings it distributes to shareholders.

A redemption of fund shares (including a redemption as part of an exchange
into another fund) is a taxable event. As each fund seeks to maintain a stable
share price of $1 for both purchases and redemptions, you should not realize a
taxable gain or loss upon a redemption of shares. However, you should consult
your tax advisor regarding whether the crediting of WorldPerk miles as a result
of your investment in a fund could cause a reduction in the tax basis of your
shares and a taxable gain upon redemption.

The Form 1099 that is mailed to you every January details your distributions
and their federal-tax category.

MONEY MARKET FUND

Distributions you receive from the Money Market Fund, whether reinvested or
taken in cash, are generally considered taxable. The fund does not expect to
realize long-term capital gains or make capital-gain distributions.
Distributions from other sources are generally taxed as ordinary income.

Depending on provisions in your state's tax law, the portion of the fund's
income derived from "full faith and credit" U.S. Treasury obligations may be
exempt from state and local taxes. The fund will indicate each year the portion
of its income, if any, that may qualify for this exemption.

TAX FREE FUND

Interest income that the fund earns is distributed to shareholders as income
dividends. Interest that is federally tax-free when received by the fund remains
tax-free when it is distributed.

21
<PAGE> 24

However, gain on the sale of tax-free securities results in taxable
distributions. Short-term capital gains and a portion of the gain on bonds
purchased at a discount are distributed as dividends and taxed as ordinary
income. Although the fund does not expect to make them, long-term capital-gain
distributions would be taxed as long-term capital gains. Distributions of
capital gains are taxable whether you take them in cash or reinvest them.

The interest from some municipal securities is subject to the federal
alternative minimum tax. The fund may invest up to 100% of its assets in these
securities. Individuals who are subject to the tax must report this interest on
their tax returns. In addition, the fund may invest a portion of its assets in
securities that generate income that is not exempt from federal income tax.

A portion of the fund's dividends may be free from state or local taxes.
Income from investments in your state is often tax-free to you. The fund will
indicate each year a breakdown of the fund's income from each state to help you
calculate your taxes.

22
<PAGE> 25

OTHER INFORMATION

ABOUT THE DISTRIBUTOR

Counsellors Securities Inc., a wholly owned subsidiary of Warburg Pincus, is
responsible for:

- making the funds available to you

- payments related to the funds' participation in the Northwest Airlines
WorldPerks program

- account servicing and maintenance

- other administrative services related to the sale of shares

As part of their business strategies, each of the funds has adopted a Rule
12b-1 shareholder servicing and distribution plan to compensate Counsellors
Securities for the above services. Under the plan, Counsellors Securities
receives fees at an annual rate of 0.25% of average daily net assets of the
fund's shares. In the case of these funds, the distribution and service (12b-1)
fees are used primarily to pay for WorldPerks Investor Miles.

Because the fees are paid out of a fund's assets on an on-going basis, over
time they will increase the cost of your investment and may cost you more than
paying other types of sales charges.

Warburg Pincus or its affiliates may, out of their own resources, pay a
portion of the expense for the funds' participation in the WorldPerks program.

<PAGE> 26

FOR MORE INFORMATION

More information about these funds is available free upon request, including
the following:

SHAREHOLDER GUIDE

Explains how to buy and sell shares. The Shareholder Guide is incorporated by
reference into (is legally part of) this Prospectus.

ANNUAL/SEMIANNUAL REPORT TO SHAREHOLDERS

Includes financial statements, portfolio investments and detailed performance
information.

The Annual Report also contains a letter from the fund's manager discussing
market conditions and investment strategies that significantly affected fund
performance during its past fiscal year.

OTHER INFORMATION

A current Statement of Additional Information (SAI), which provides more
details about the funds, is on file with the Securities and Exchange Commission
(SEC) and is incorporated by reference.

You may visit the SEC's Internet Web site (www.sec.gov) to view the SAI,
material incorporated by reference, and other information. You can also obtain
copies by visiting the SEC's Public Reference Room in Washington, DC (phone
800-SEC-0330) or by sending your request and a duplicating fee to the SEC's
Public Reference Section, Washington, DC 20549-6009.

Please contact Warburg Pincus Funds to obtain information, without charge,
the SAI and Annual and Semiannual Reports and to make shareholder inquiries:

BY TELEPHONE:
800-WARBURG
(800-927-2874)

BY MAIL:
Warburg Pincus WorldPerks Funds
P.O. Box 9030
Boston, MA 02205-9030

BY OVERNIGHT OR COURIER SERVICE:
Boston Financial
Attn: Warburg Pincus WorldPerks Funds
2 Heritage Drive
North Quincy, MA 02171

ON THE INTERNET:
www.warburg.com

SEC FILE NUMBERS:

Warburg Pincus WorldPerks Money
Market Fund 811-08899

Warburg Pincus WorldPerks Tax Free
Money Market Fund 811-08901

[Warburg Pincus Funds Logo]

P.O. BOX 9030, BOSTON, MA 02205-9030
800-WARBURG (800-927-2874) - www.warburg.com
COUNSELLORS SECURITIES INC., DISTRIBUTOR. FFNW-1-0499

<PAGE> 27

Subject to Completion, Dated February 26, 1999

STATEMENT OF ADDITIONAL INFORMATION

APRIL __, 1999

WARBURG PINCUS WORLDPERKS MONEY MARKET FUND

WARBURG PINCUS WORLDPERKS TAX FREE MONEY MARKET FUND

This combined Statement of Additional Information provides information about
Warburg Pincus WorldPerks Money Market Fund (the "Money Market Fund") and
Warburg Pincus WorldPerks Tax Free Money Market Fund (the "Tax Free Fund" and
collectively with the Money Market Fund, the "Funds") which supplements the
information that is contained in the combined Prospectus for the Funds, dated
April __, 1999.

Each Fund's audited annual report dated December 31, 1998, 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.

This Statement of Additional Information is not a prospectus and should be read
in conjunction with the Prospectus. Copies of the Prospectus and the Annual
Report can be obtained by writing or telephoning:

Warburg Pincus WorldPerks Funds
P.O. Box 9030
Boston, Massachusetts 02205-9030
800-WARBURG

<PAGE> 28

Contents

Page

INVESTMENT OBJECTIVES..........................................................1
GENERAL........................................................................1
Price and Portfolio Maturity..............................................1
Portfolio Quality and Diversification.....................................1
INVESTMENT POLICIES............................................................2
Municipal Securities......................................................2
Bank Obligations..........................................................4
Variable Rate Master Demand Notes.........................................4
Government Securities.....................................................5
When-Issued Securities....................................................5
Repurchase Agreements.....................................................6
Reverse Repurchase Agreements and Borrowings..............................6
Stand-By Commitment Agreements............................................7
Third Party Puts..........................................................8
Taxable Investments.......................................................8
Other Investment Limitations..............................................9
Money Market Fund.....................................................9
Tax Free Fund........................................................10
PORTFOLIO VALUATION...........................................................12
PORTFOLIO TRANSACTIONS........................................................13
MANAGEMENT OF THE FUNDS.......................................................14
Officers and Board of Directors..........................................14
Directors' Total Compensation............................................17
Investment Advisers, Sub-Investment Adviser and Administrator
and Co-Administrator.....................................................17
Banking Laws.............................................................19
Custodian and Transfer Agent.............................................20
Organization of the Funds................................................20
Distribution and Shareholder Servicing...................................21
ADDITIONAL PURCHASE AND REDEMPTION INFORMATION................................23
Automatic Cash Withdrawal Plan...........................................23
EXCHANGE PRIVILEGE............................................................24
ADDITIONAL INFORMATION CONCERNING TAXES.......................................24
DETERMINATION OF YIELD........................................................27
INDEPENDENT ACCOUNTANTS AND COUNSEL...........................................28
MISCELLANEOUS.................................................................28
FINANCIAL STATEMENTS..........................................................29
APPENDIX.....................................................................A-1
DESCRIPTION OF COMMERCIAL PAPER RATINGS.................................A-1
DESCRIPTION OF MUNICIPAL SECURITIES RATINGS.............................A-1

(i)
<PAGE> 29

INVESTMENT OBJECTIVES

The following information supplements the discussion of each Fund's
investment objective and policies in the Prospectus. There are no assurances
that the Funds will achieve their investment objectives.

The investment objective of the Money Market Fund is to provide
investors with high current income consistent with liquidity and stability of
principal.

The investment objective of the Tax Free Fund is to provide investors
with as high a level of current income that is exempt from federal personal
income taxes as is consistent with preservation of capital and liquidity.

Unless otherwise indicated, each Fund is permitted to engage in the
following investment strategies. The Funds are not obligated to pursue any of
the following strategies and do not represent that these techniques are
available now or will be available at any time in the future.

GENERAL

Price and Portfolio Maturity. Each Fund invests only in securities
which are purchased with and payable in U.S. dollars and which have (or,
pursuant to regulations adopted by the Securities and Exchange Commission
("SEC"), are deemed to have) remaining maturities of 397 calendar days or less
at the date of purchase by a Fund. For this purpose, variable rate master demand
notes (as described below), which are payable on demand, or, under certain
conditions, at specified periodic intervals not exceeding 397 calendar days, in
either case on not more than 30 days' notice, will be deemed to have remaining
maturities of 397 calendar days or less. The Fund maintains a dollar-weighted
average portfolio maturity of 90 days or less. The Fund follows these policies
to maintain a constant net asset value of $1.00 per share, although there is no
assurance that it can do so on a continuing basis.

Portfolio Quality and Diversification. Each Fund will limit its
portfolio investments to securities that its Board determines present minimal
credit risks and which are "Eligible Securities" at the time of acquisition by a
Fund. The term Eligible Securities includes securities rated by the "Requisite
NRSROs" in one of the two highest short-term rating categories, securities of
issuers that have received such ratings with respect to other short-term debt
securities and comparable unrated securities. "Requisite NRSROs" means (i) any
two nationally recognized statistical rating organizations ("NRSROs") that have
issued a rating with respect to a security or class of debt obligations of an
issuer, or (ii) one NRSRO, if only one NRSRO has issued a rating with respect to
such security or issuer at the time that the Fund acquires the security. The
Funds may purchase securities that are unrated at the time of purchase that a
Fund's investment adviser and sub-investment adviser deem to be of comparable
quality to rated securities that the Fund may purchase. The NRSROs currently
designated as such by the SEC are Standard & Poor's Ratings Services ("S&P"),
Moody's Investors Service, Inc.

<PAGE> 30

("Moody's"), FitchIBCA, Inc. and Duff and Phelps, Inc. A discussion of the
ratings categories of the NRSROs is contained in the Appendix to the Fund's
Statement of Additional Information.

The Funds have adopted certain credit quality, maturity and
diversification requirements under Rule 2a-7 under the Investment Company Act of
1940, as amended (the "1940 Act"), as operating policies. Under these policies,
there are two tiers of Eligible Securities, first and second tier, based on
their ratings by NRSROs or, if the securities are unrated, on determinations by
a Fund's investment adviser and sub-investment adviser. These policies generally
restrict a Fund from investing more than 5% of its assets in second tier
securities and limit to 5% of assets the portion that may be invested in any one
issuer. In addition, the credit quality and diversification policies vary to
some extent between the Money Market and the Tax Free Funds because the Tax Free
Fund is a tax exempt fund.

INVESTMENT POLICIES

Municipal Securities. Under normal circumstances, at least 80% of the
Tax Free Fund's assets will be invested in Municipal Securities. Municipal
Securities include short-term debt obligations issued by governmental entities
to obtain funds for various public purposes, including the construction of a
wide range of public facilities, the refunding of outstanding obligations, the
payment of general operating expenses and the extension of loans to public
institutions and facilities. Private activity securities that are issued by or
on behalf of public authorities to finance various privately-operated facilities
are included within the term Municipal Securities if the interest paid thereon
is exempt from federal income tax.

The two principal types of Municipal Securities consist of "general
obligation" and "revenue" issues, and the Tax Free Fund's portfolio may include
"moral obligation" issues, which are normally issued by special purpose
authorities. General obligation bonds are secured by the issuer's pledge of its
full faith, credit and taxing power for the payment of principal and interest.
Revenue bonds are payable only from the revenues derived from a particular
facility or class of facilities or in some cases, from the proceeds of a special
excise tax or other specific revenue source such as the user of the facility
being financed. Private activity securities held by the Fund are in most cases
revenue bonds and are not payable from the unrestricted revenues of the issuer.
Consequently, the credit quality of such private activity securities is usually
directly related to the credit standing of the corporate user of the facility
involved.

There are, of course, variations in the quality of Municipal
Securities, both within a particular classification and between classifications,
and the yields on Municipal Securities depend upon a variety of factors,
including general money market conditions, the financial condition of the
issuer, general conditions of the municipal bond market, the size of a
particular offering, the maturity of the obligation and the rating of the issue.
The ratings of rating agencies represent their opinions as to the quality of
Municipal Securities. It should be emphasized, however, that ratings are general
and are not absolute standards of quality, and

-2-
<PAGE> 31

Municipal Securities with the same maturity, interest rate and rating may have
different yields while Municipal Securities of the same maturity and interest
rate with different ratings may have the same yield. Subsequent to its purchase
by the Tax Free Fund, an issue of Municipal Securities may cease to be rated or
its rating may be reduced below the minimum rating required for purchase by the
Fund. The Fund's investment adviser and sub-investment adviser will consider
such an event in determining whether the Fund should continue to hold the
obligation. See the Appendix attached hereto for further information concerning
ratings and their significance.

An issuer's obligations under its Municipal Securities are subject to
the provisions of bankruptcy, insolvency and other laws affecting the rights and
remedies of creditors, such as the Federal Bankruptcy Code, and laws, if any,
which may be enacted by federal or state legislatures extending the time for
payment of principal or interest, or both, or imposing other constraints upon
enforcement of such obligations or upon the ability of municipalities to levy
taxes. There is also the possibility that as a result of litigation or other
conditions, the power or ability of any one or more issuers to pay, when due,
principal of and interest on its, or their, Municipal Securities may be
materially adversely affected.

Among other instruments, the Tax Free Fund may purchase short-term Tax
Anticipation Notes, Bond Anticipation Notes, Revenue Anticipation Notes and
other forms of short-term loans. Such notes are issued with a short-term
maturity in anticipation of the receipt of tax funds, the proceeds of bond
placements or other revenues.

Special Considerations and Risk Factors Relating to the Money Market
Fund. To the extent that the Money Market Fund invests a significant portion of
its assets in money market instruments issued by companies in the banking
industry and the financial services sector, the Fund is subject to the risks
associated with investing in banking and financial services issuers. The
companies within the banking industry and the financial services sector are
subject to extensive regulation, rapid business changes, volatile performance
dependent upon the availability and cost of capital and prevailing interest
rates, and significant competition. General economic conditions significantly
affect these companies. Credit and other losses resulting from the financial
difficulty of borrowers or other third parties have a potentially adverse effect
on companies in this industry. Investment banking, securities brokerage and
investment advisory companies are particularly subject to government regulation
and the risks inherent in securities trading and underwriting activities.
Insurance companies are particularly subject to government regulation and rate
setting, potential antitrust and tax law changes, and industry-wide pricing and
competition cycles. Property and casualty insurance companies may also be
affected by weather and other catastrophes. Life and health insurance companies
may be affected by mortality and morbidity rates, including the effects of
epidemics. Individual insurance companies may be exposed to reserve
inadequacies, problems in investment portfolios and failures by reinsurance
carriers.

Special Considerations and Risk Factors Relating to the Tax Free Fund.
In seeking to achieve its investment objective the Tax Free Fund may invest all
or any part

-3-
<PAGE> 32

of its assets in Municipal Securities which are industrial development bonds.
Moreover, although the Fund does not currently intend to do so on a regular
basis, it may invest more than 25% of its assets in Municipal Securities the
interest on which is paid solely from revenues of economically related projects,
if such investment is deemed necessary or appropriate by the Fund's investment
adviser and sub-investment adviser. To the extent that the Fund's assets are
concentrated in Municipal Securities payable from revenues on economically
related projects and facilities, the Fund will be subject to the peculiar risks
presented by such projects to a greater extent than it would be if the Fund's
assets were not so concentrated.

The Tax Free Fund also invests in securities backed by guarantees from
banks and other financial institutions. The Fund's ability to maintain a stable
share price is largely dependent upon such guarantees, which are not supported
by federal deposit insurance. Consequently, changes in the credit quality of
these institutions could have an adverse impact on securities they have
guaranteed or backed, which could cause losses to the Fund and affect its share
price.

Bank Obligations. The Money Market Fund may purchase bank obligations,
including United States dollar-denominated instruments issued or supported by
the credit of the United States or foreign banks or savings institutions having
total assets at the time of purchase in excess of $1 billion. While the Fund
will invest in obligations of foreign banks or foreign branches of United States
banks only if the Fund's investment adviser and sub-investment adviser deem the
instrument to present minimal credit risks, such investments may nevertheless
entail risks that are different from those of investments in domestic
obligations of United States banks due to differences in political, regulatory
and economic systems and conditions. Such risks include future political and
economic developments, the possible imposition of withholding taxes on interest
income, possible establishment of exchange controls or the adoption of other
foreign governmental restrictions which might adversely affect the payment of
principal and interest on such obligations. The Fund may also make
interest-bearing savings deposits in commercial and savings banks in amounts not
in excess of 5% of its assets.

Variable Rate Master Demand Notes. Each Fund may also purchase variable
rate master demand notes, which are unsecured instruments that permit the
indebtedness thereunder to vary and provide for periodic adjustments in the
interest rate. Although the notes are not normally traded and there may be no
secondary market in the notes, a Fund may demand payment of principal and
accrued interest at any time and may resell the note at any time to a third
party. In the event an issuer of a variable rate master demand note defaulted on
its payment obligation, the Fund might be unable to dispose of the note because
of the absence of a secondary market and might, for this or other reasons,
suffer a loss to the extent of the default.

Variable rate master demand notes held by a Fund may have maturities of
more than thirteen months, provided: (i) the Fund is entitled to payment of
principal and accrued interest upon not more than seven days' notice and (ii)
the rate of interest on such notes is

-4-
<PAGE> 33

adjusted automatically at periodic intervals which may extend up to thirteen
months. In determining the Fund's average weighted portfolio maturity and
whether a variable rate master demand note has a remaining maturity of thirteen
months or less, each note will be deemed by the Fund to have a maturity equal to
the longer of the period remaining until its next interest rate adjustment or
the period remaining until the principal amount owed can be recovered through
demand. In determining whether an unrated variable rate master demand note is of
comparable quality at the time of purchase to instruments rated "high quality"
by any major rating service or when purchasing variable rate master demand
notes, the Fund's investment adviser and sub-investment adviser will consider
the earning power, cash flow and other liquidity ratios of the issuer of the
note and will continuously monitor its financial condition. In addition, when
necessary to ensure that a note is of "high quality," the Fund will require that
the issuer's obligation to pay the principal of the note be backed by an
unconditional bank letter of line of credit, guarantee or commitment to lend.

In the event an issuer of a variable rate master demand note defaults
on its payment obligation, a Fund might be unable to dispose of the note because
of the absence of a secondary market and might, for this or other reasons,
suffer a loss to the extent of the default. However, the Fund will invest in
such instruments only where its investment adviser and sub-investment adviser
believe that the risk of such loss is minimal. In determining average weighted
portfolio maturity, a variable rate master demand note will be deemed to have a
maturity equal to the longer of the period remaining to the next interest rate
adjustment or the demand note period.

Government Securities. Government Securities in which the Fund may
invest include Treasury Bills, Treasury Notes and Treasury Bonds; other
obligations that are supported by the full faith and credit of the United States
Treasury, such as Government National Mortgage Association pass-through
certificates; obligations that are supported by the right of the issuer to
borrow from the Treasury, such as securities of Federal Home Loan Banks; and
obligations that are supported only by the credit of the instrumentality, such
as Federal National Mortgage Association bonds.

When-Issued Securities. A Fund may purchase Municipal Securities or
portfolio securities, as the case may be, on a "when-issued" basis (i.e., for
delivery beyond the normal settlement date at a stated price and yield).
When-issued securities are securities purchased for delivery beyond the normal
settlement date at a stated price and yield. A Fund will generally not pay for
such securities or start earning interest on them until they are received.
Securities purchased on a when-issued basis are recorded as an asset and are
subject to changes in value based upon changes in the general level of interest
rates. The Fund expects that commitments to purchase when-issued securities will
not exceed 25% of the value of its total assets absent unusual market
conditions, and that a commitment by the Fund to purchase when-issued securities
will generally not exceed 45 days. The Fund does not intend to purchase
when-issued securities for speculative purposes but only in furtherance of its
investment objectives.

-5-
<PAGE> 34

When the Fund agrees to purchase when-issued securities, its custodian
will set aside cash or liquid securities in a segregated account equal to the
amount of the commitment. 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. Because the Fund will set
aside cash and liquid assets to satisfy its purchase commitments in the manner
described, the Fund's liquidity and ability to manage its portfolio might be
affected in the event its commitments to purchase when-issued securities ever
exceeded 25% of the value of its assets.

When a Fund engages in when-issued transactions, it relies on the
seller 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.

Repurchase Agreements. Each Fund may agree to purchase money market
instruments from financial institutions such as banks and broker-dealers subject
to the seller's agreement to repurchase them at an agreed-upon date and price
("repurchase agreements"). The repurchase price generally equals the price paid
by a Fund plus interest negotiated on the basis of current short-term rates
(which may be more or less than the rate on the securities underlying the
repurchase agreement). Default by a seller, if the Fund is delayed or prevented
from exercising its rights to dispose of the collateral securities, could expose
the Fund to possible loss, including the risk of a possible decline in the value
of the underlying securities during the period while the Fund seeks to assert
its rights thereto. Repurchase agreements are considered to be loans by the Fund
under the 1940 Act. The seller under a repurchase agreement will be required to
maintain the value of the securities subject to the agreement at not less than
the repurchase price (including accrued interest). Securities subject to
repurchase agreements will be held by the Fund's custodian or in the Federal
Reserve/Treasury book-entry system or another authorized securities depository.

Reverse Repurchase Agreements and Borrowings. A Fund may borrow funds
for temporary purposes and not for leverage by agreeing to sell portfolio
securities to financial institutions such as banks and broker-dealers and to
repurchase them at a mutually agreed-upon date and price. At the time the Fund
enters into such an arrangement (a "reverse repurchase agreement"), it will
place in a segregated custodial account cash or liquid securities having a value
equal to the repurchase price (including accrued interest) and will subsequently
monitor the account to ensure that such equivalent value is maintained. Reverse
repurchase agreements involve the risk that the market value of the securities
sold by the Fund may decline below the repurchase price of those securities.
Reverse repurchase agreements are considered to be borrowings by the Fund under
the 1940 Act.

-6-
<PAGE> 35

Stand-By Commitment Agreements (Tax Free Fund only). The Fund may
acquire "stand-by commitments" with respect to Municipal Securities held in its
portfolio. Under a stand-by commitment, a dealer agrees to purchase at the
Fund's option specified Municipal Securities at a specified price. Stand-by
commitments acquired by the Fund may also be referred to as "put" options. The
Fund's right to exercise stand-by commitments is unconditional and unqualified.
A stand-by commitment is not transferable by the Fund, although the Fund can
sell the underlying securities to a third party at any time.

The principal risk of a stand-by commitment is that the writer of a
commitment may default on its obligation to repurchase the securities acquired
with it. The Fund intends to enter into stand-by commitments only with brokers,
dealers and banks that, in the opinion of Warburg Pincus Asset Management, Inc.,
each Fund's investment adviser ("Warburg"), present minimal credit risks. In
evaluating the creditworthiness of the issuer of a stand-by commitment, Warburg
will periodically review relevant financial information concerning the issuer's
assets, liabilities and contingent claims.

The amount payable to the Fund upon its exercise of a stand-by
commitment is normally (i) the Fund's acquisition cost of the Municipal
Securities (excluding any accrued interest which the Fund paid on their
acquisition), less any amortized market premium or plus any amortized market or
original issue discount during the period the Fund owned the securities, plus
(ii) all interest accrued on the securities since the last interest payment date
during that period.

The Fund expects that stand-by commitments will generally be available
without the payment of any direct or indirect consideration. However, if
necessary or advisable, the Fund may pay for a stand-by commitment either
separately in cash or by paying a higher price for portfolio securities which
are acquired subject to the commitment (thus reducing the yield to maturity
otherwise available for the same securities). The total amount paid in either
manner for outstanding stand-by commitments held by the Fund will not exceed 1/2
of 1% of the value of its total assets calculated immediately after each
stand-by commitment is acquired.

The Fund would acquire stand-by commitments solely to facilitate
portfolio liquidity and does not intend to exercise its rights thereunder for
trading purposes. The acquisition of a stand-by commitment would not affect the
valuation or assumed maturity of the underlying Municipal Securities which, as
noted, would continue to be valued in accordance with the amortized cost method.
Stand-by commitments acquired by the Fund would be valued at zero in determining
net asset value. Where the Fund paid any consideration directly or indirectly
for a stand-by commitment, its cost would be reflected as unrealized
depreciation for the period during which the commitment was held by the Fund.
Stand-by commitments would not affect the average weighted maturity of the
Fund's portfolio.

The Internal Revenue Service has issued a revenue ruling to the effect
that a registered investment company will be treated for federal income tax
purposes as the owner of the Municipal Securities acquired subject to a stand-by
commitment and the interest on the Municipal Securities will be tax-exempt to
the Fund.

-7-
<PAGE> 36

Third Party Puts (Tax Free Fund only). The Fund may purchase long-term
fixed rate bonds that have been coupled with an option granted by a third party
financial institution allowing the Fund at specified intervals to tender (or
"put") the bonds to the institution and receive the face value thereof (plus
accrued interest). These third party puts are available in several different
forms, may be represented by custodial receipts or trust certificates and may be
combined with other features such as interest rate swaps. The Fund receives a
short-term rate of interest (which is periodically reset), and the interest rate
differential between that rate and the fixed rate on the bond is retained by the
financial institution. The financial institution granting the option does not
provide credit enhancement, and in the event that there is a default in the
payment of principal or interest, or downgrading of a bond to below investment
grade, or a loss of the bond's tax-exempt status, the put option will terminate
automatically, the risk to the Fund will be that of holding such a long-term
bond and the dollar-weighted average maturity of the Fund's portfolio would be
adversely affected.

These bonds coupled with puts may present the same tax issues as are
associated with stand-by commitments. As with any stand-by commitment, the Fund
intends to take the position that it is the owner of any municipal obligation
acquired subject to a third party put, and that tax-exempt interest earned with
respect to such municipal obligations will be tax-exempt in its hands. There is
no assurance that the Internal Revenue Service will agree with such position in
any particular case. Additionally, the federal income tax treatment of certain
other aspects of these investments, including the treatment of tender fees and
swap payments, in relation to various regulated investment company tax
provisions is unclear. However, Warburg intends to manage the Fund in a manner
designed to minimize any adverse impact from these investments.

Taxable Investments (Tax Free Fund only). Because the Fund's purpose is
to provide income excluded from gross income for federal income tax purposes,
the Fund generally will invest in taxable obligations only if and when the
investment adviser believes it would be in the best interests of the Fund's
investors to do so. Situations in which the Fund may invest up to 20% of its
total assets in taxable securities include: (i) pending investment of proceeds
of sales of Fund shares or the sale of its portfolio securities or (ii) when the
Fund requires highly liquid securities in order to meet anticipated redemptions.
The Fund may temporarily invest more than 20% of its total assets in taxable
securities to maintain a "defensive" posture when the Fund's investment adviser
determines that it is advisable to do so because of adverse market conditions
affecting the market for Municipal Securities generally.

Among the taxable investments in which the Fund may invest are
repurchase agreements and time deposits maturing in not more than seven days.
The Fund may agree to purchase money market instruments from financial
institutions such as banks and broker-dealers subject to the seller's agreement
to repurchase them at an agreed-upon date and price ("repurchase agreements").
The seller under a repurchase agreement will be required to maintain the value
of the securities subject to the agreement at not less than the repurchase price
(including accrued interest). Securities subject to repurchase agreements will
be held by the Fund's custodian or in the Federal Reserve/Treasury book-entry
system or another authorized securities depository.

-8-
<PAGE> 37

Other Investment Limitations

Money Market Fund. The investment limitations numbered 1 through 6 may
not be changed without the affirmative vote of the holders of a majority of the
Money Market Fund's outstanding shares. Such majority is defined as the lesser
of (i) 67% or more of the shares present at a 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. Investment limitations 7
and 12 may be changed by a vote of the Fund's Board of Directors (the "Board")
at any time.

The Money Market Fund may not:

1. Borrow money, issue senior securities or enter into reverse
repurchase agreements except 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
assets at the time of such borrowing; or mortgage, pledge or hypothecate any
assets except in connection with any such borrowing and in amounts not in excess
of the lesser of the dollar amounts borrowed or 10% of the value of the Fund's
assets at the time of such borrowing. The Fund does not currently intend to
enter into reverse repurchase agreements in amounts in excess of 5% of its
assets at the time the agreement is entered into. Whenever borrowings exceed 5%
of the value of the Fund's total assets, the Fund will not make any additional
investments.

2. 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 purchase
commercial paper issued by companies that invest in real estate or interests
therein.

3. Purchase the securities of any issuer if as a result more than 5% of
the value of the Fund's assets would be invested in the securities of such
issuer, except that this 5% limitation does not apply to securities issued or
guaranteed by the United States government, its agencies or instrumentalities,
and except that up to 25% of the value of the Fund's assets may be invested
without regard to this 5% limitation.

4. Purchase any securities which would cause more than 25% 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 obligations
issued or guaranteed by the United States, any state, territory or possession of
the United States, the District of Columbia or any of their authorities,
agencies, instrumentalities or political sub-divisions or certificates of
deposit, time deposits, savings deposits and bankers' acceptances.

5. Make loans except that the Fund may purchase or hold debt
obligations in accordance with its investment objective, policies and
limitations and enter into repurchase agreements.

-9-
<PAGE> 38

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

7. Purchase securities on margin, make short sales of securities or
maintain a short position.

8. Write or sell puts, calls, straddles, spreads or combinations
thereof.

9. Invest in common stocks, preferred stocks, warrants, other equity
securities, corporate bonds or indentures, state bonds, municipal bonds or
industrial revenue bonds.

10. Purchase securities of other investment companies except in
connection with a merger, consolidation, acquisition or reorganization.

11. Invest more than 10% of the value 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 after notice by the Fund, variable rate master demand notes
providing for settlement upon maturities longer than seven days and savings
accounts which require more than seven days' notice prior to withdrawal shall be
considered illiquid securities.

12. Invest in oil, gas or mineral leases.

If a percentage restriction (other than the percentage limitation set
forth in No. 1 and No. 11 above) 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 the Fund's assets will
not constitute a violation of such restriction.

Tax Free Fund. The investment limitations numbered 1 through 6 may not
be changed without the affirmative vote of the holders of a majority of the Tax
Free Fund's outstanding shares. Such majority is defined as the lesser of (i)
67% or more of the shares present at a 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. Investment limitations 7 and 11
may be changed by a vote of the Fund's Board of Directors at any time.

The Tax Free Fund may not:

1. Invest less than 80% of its assets in securities the interest on
which is exempt from federal income tax, except during temporary defensive
periods or under unusual market conditions, as determined by the Fund's
investment adviser.

2. Borrow money, issue senior securities or enter into reverse
repurchase agreements except for temporary or emergency purposes, and not for
leveraging, and then in

-10-
<PAGE> 39

amounts not in excess of 10% of the value of the Fund's assets at the time of
such borrowing; or mortgage, pledge or hypothecate any assets except in
connection with any such borrowing and in amounts not in excess of the lesser of
the dollar amounts borrowed or 10% of the value of the Fund's assets at the time
of such borrowing. The Fund does not currently intend to enter into reverse
repurchase agreements in amounts in excess of 5% of its assets at the time the
agreement is entered into. Whenever borrowings exceed 5% of the value of the
Fund's total assets, the Fund will not make any additional investments.

3. Purchase any securities which would cause more than 25% 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 (i)
obligations issued by the United States, any state, territory or possession of
the United States, the District of Columbia or any of their authorities,
agencies, instrumentalities or political sub-divisions, (ii) certificates of
deposit issued by United States branches of United States banks or (iii)
Municipal Securities the interest on which is paid solely from revenues of
economically related projects. For purposes of this restriction, private
activity securities ultimately payable by companies within the same industry are
treated as if they were issued by issuers in the same industry.

4. Make loans except that the Fund may purchase or hold debt
obligations and enter into repurchase agreements in accordance with its
investment objective, policies and limitations.

5. Underwrite any issue of securities except to the extent that the
purchase of debt obligations 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 debt
obligations secured by real estate, mortgages or interests therein.

7. Purchase securities on margin, make short sales of securities or
maintain short positions.

8. Write or sell puts, calls, straddles, spreads or combinations
thereof, except that the Fund may acquire stand-by commitments.

9. Purchase securities of other investment companies except in
connection with a merger, consolidation, acquisition or reorganization.

10. Invest more than 10% of the value 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 not readily available market
quotations. For purposes of this limitation, repurchase agreements with
maturities greater than seven days and variable rate master demand

-11-
<PAGE> 40

notes providing for settlement upon more than seven days notice by the Fund and
time deposits maturing in more than seven calendar days shall be considered
illiquid securities.

11. Invest in oil, gas or mineral leases.

If a percentage restriction (other than the percentage limitation set
forth in No. 2 and No. 10 above) 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 the Fund's assets will
not constitute a violation of such restriction.

PORTFOLIO VALUATION

Each Fund's securities are valued on the basis of amortized cost. Under
this method, a Fund values a portfolio security at cost on the date of purchase
and thereafter assumes a constant value of the security for purposes of
determining net asset value, which normally does not change in response to
fluctuating interest rates. Although the amortized cost method seems to provide
certainty in portfolio valuation, it may result in periods during which values,
as determined by amortized cost, are higher or lower than the amount the Fund
would receive if it sold the securities. In connection with amortized cost
valuation, the Board has established procedures that are intended to stabilize
the Fund's net asset value per share for purposes of sales and redemptions at
$1.00. These procedures include review by the Board, at such intervals as it
deems appropriate, to determine the extent, if any, to which the Fund's net
asset value per share calculated by using available market quotations deviates
from $1.00 per share. In the event such deviation exceeds 1/2 of 1%, the Board
will promptly consider what action, if any, should be initiated. If the Board
believes that the amount of any deviations from the Fund's $1.00 amortized cost
price per share may result in material dilution or other unfair results to
investors or existing shareholders, it will take such steps as it considers
appropriate to eliminate or reduce to the extent reasonably practicable any such
dilution or unfair results. These steps may include selling portfolio
instruments prior to maturity; shortening the Fund's average portfolio maturity;
withholding or reducing dividends; redeeming shares in kind; reducing the number
of the Fund's outstanding shares without monetary consideration; or utilizing a
net asset value per share determined by using available market quotations.

PORTFOLIO TRANSACTIONS

Warburg is responsible for establishing, reviewing, and, where
necessary, modifying a Fund's investment program to achieve its investment
objective. BlackRock Institutional Management Corporation ("BIMC") generally
will select specific portfolio investments and effect transactions for each
Fund. Purchases and sales of portfolio securities are usually principal
transactions without brokerage commissions effected directly with the issuer or
with dealers who specialize in money market instruments. BIMC seeks to obtain
the best net price and the most favorable execution of orders. To the extent
that the execution and price offered by more than one dealer are comparable,
BIMC may, in its discretion, effect

-12-
<PAGE> 41

transactions in portfolio securities with dealers who provide the relevant Fund
with research advice or other services.

Investment decisions for a Fund concerning specific portfolio
securities are made independently from those for other clients advised by BIMC.
Such other investment clients may invest in the same securities as the 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 BIMC believes to
be equitable to each client, including the Fund. 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, BIMC may aggregate the securities to be sold or purchased for
each Fund with those to be sold or purchased for such other investment clients
in order to obtain best execution.

In no instance will portfolio securities be purchased from or sold to
Warburg, BIMC, PNC Bank, National Association ("PNC") or Counsellors Securities
Inc. ("Counsellors Securities") or any affiliated person of such companies,
except pursuant to an exemption received from the SEC.

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

Each Fund does not intend to seek profits through short-term trading. A
Fund's annual portfolio turnover will be relatively high but is not expected to
have a material effect on its net income. Each Fund's turnover is expected to be
zero for regulatory reporting purposes.

-13-
<PAGE> 42

MANAGEMENT OF THE FUNDS

Officers and Board of Directors

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

Richard N. Cooper* (64) ........................... Director
Harvard University Professor at Harvard
1737 Cambridge Street University; National
Cambridge, Massachusetts 02138 Intelligence Council from
June 1995 until January
1997; Director or Trustee
of Circuit City Stores,
Inc. (retail electronics
and appliances) and
Phoenix Home Life
Insurance Company;
Director/Trustee of other
investment companies in
the Warburg Pincus family
of funds.

Jack W. Fritz (71)................................. Director
2425 North Fish Creek Road Private investor;
P.O. Box 483 Consultant and Director
Wilson, Wyoming 83014 of Fritz Broadcasting,
Inc. and Fritz
Communications
(developers and operators
of radio stations);
Director of Advo, Inc.
(direct mail
advertising);
Director/Trustee of other
investment companies in
the Warburg Pincus family
of funds.

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

Jeffrey E. Garten (51)............................. Director
Box 208200 Dean of Yale School of
New Haven, Connecticut 06520-8200 Management and William 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 in
the Warburg Pincus family
of funds.

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

-14-
<PAGE> 43

Thomas A. Melfe (66)............................... Director
30 Rockefeller Plaza Partner in the law firm
New York, New York 10112 of Piper & Marbury
L.L.P.; Partner in the
law firm of Donovan
Leisure Newton & Irvine
from April 1984 to April
1998; Chairman of the
Board, Municipal Fund for
New York Investors, Inc.;
Director/Trustee of other
investment companies in
the Warburg Pincus family
of funds.

Arnold M. Reichman* (50)........................... Director
466 Lexington Avenue Managing Director, Chief
New York, New York 10017-3147 Operating Officer and
Assistant Secretary of
Warburg; Director of The
RBB Fund, Inc.;
Associated with Warburg
since 1984; Director and
officer of Counsellors
Securities;
Director/Trustee of other
investment companies in
the Warburg Pincus family
of funds.

Alexander B. Trowbridge (68)....................... Director
1317 F Street, N.W., 5th Floor President of Trowbridge
Washington, DC 20004 Partners, Inc. (business
consulting) from January
1990 to November 1996;
Director or Trustee of
New England Mutual Life
Insurance Co., ICOS
Corporation
(biopharmaceuticals),
Waste Management, Inc.
(solid and hazardous
waste collection and
disposal), IRI
International (energy
services), 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 in
the Warburg Pincus family
of funds.

Eugene L. Podsiadlo (41)........................... President
466 Lexington Avenue Managing Director of
New York 10017-3147 Warburg; Associated with
Warburg since 1991; Vice
President of Citibank,
N.A. from 1987-1991;
Officer of Counsellors
Securities and other
investment companies in
the Warburg Pincus family
of funds.

-15-
<PAGE> 44

Steven B. Plump (40)............................... Executive Vice President
466 Lexington Avenue Senior Vice President of
New York, New York 10017-3147 Warburg; Associated with
Warburg since 1995;
Associated with Chemical
Investment Services and
its affiliates from 1993
until 1995. Officer of
Counsellors Securities
and other investment
companies in the Warburg
Pincus family of funds.

Stephen Distler (45)............................... Vice President
466 Lexington Avenue Managing Director of
New York, New York 10017-3147 Warburg; Associated with
Warburg since 1984;
Treasurer of Counsellors
Securities; Officer of
other investment
companies in the Warburg
Pincus family of funds.

Janna Manes, Esq. (31)............................. Vice President
466 Lexington Avenue and Secretary
New York, New York 10017-3147 Vice President of
Warburg; Associated with
Warburg since 1996;
Associated with the law
firm of Willkie Farr &
Gallagher from 1993 to
1996; Officer of other
investment companies in
the Warburg Pincus family
of funds.

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

Daniel S. Madden, CPA (32)......................... Treasurer and Chief
466 Lexington Avenue Accounting Officer
New York, New York 10017-3147 Vice President of
Warburg; Associated with
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 in
the Warburg Pincus family
of funds.

Stuart J. Cohen, Esq. (30)......................... Assistant Secretary
466 Lexington Avenue Vice President of
New York, New York 10017-3147 Warburg; Associated with
Warburg since 1997;
Associated with the law
firm of Gordon Altman
Butowsky Weitzen Shalov &
Wein from 1995 to 1997;
Officer of other
investment companies in
the Warburg Pincus family
of funds.

-16-
<PAGE> 45

No employee of Warburg, BIMC, PNC or PFPC Inc., the Fund's
co-administrator ("PFPC"), or any of their affiliates receives any compensation
from the Fund for acting as an officer or Director of the Fund. Each Director
who is not a director, officer or employee of Warburg, PFPC or any of their
affiliates receives an annual fee of $500, and $250 for each meeting of the
Board attended by him for his services as Director and is reimbursed for
expenses incurred in connection with his attendance at Board meetings. Each
member of the Audit Committee receives an annual fee of $250, and the chairman
of the Audit Committee receives an annual fee of $325.

Directors' Total Compensation
(for the fiscal period ended December 31, 1998)

<TABLE>
<CAPTION>
Total Compensation from
Compensation from all Investment Companies
Name of Director each Fund Managed by Warburg*
- ---------------- --------- ------------------
<S> <C> <C>
John L. Furth None** None**
Richard N. Cooper $1,750 $73,250
Jack W. Fritz $1,750 $73,250
Jeffrey E. Garten $1,750 $73,250
Arnold M. Reichman None** None**
Thomas A. Melfe $1,750 $73,250
Alexander B. Trowbridge $1,825 $76,025
</TABLE>

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

* Each Director also serves as a Director or Trustee of 39 investment
companies in the Warburg Pincus family of funds except for Mr. Melfe,
who serves as a Director/Trustee of 22 investment companies in the
Warburg Pincus family of funds.

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

[As of April 1, 1999, Directors and officers of a Fund as a group owned
of record less than 1% of the relevant Fund's outstanding common stock.]

Investment Advisers, Sub-Investment Adviser and Administrator
and Co-Administrator

Warburg serves as investment adviser to the Money Market Fund and Tax
Free Fund, BIMC serves as sub-investment adviser to each Fund, and Credit Suisse
Asset Management Ltd. ("Credit Suisse") and PFPC Inc. ("PFPC") serve as
co-administrators to the Funds pursuant to written agreements (the "Advisory
Agreement," the "Sub-Advisory Agreements" and the "Co-Administration Agreement,"
respectively, and collectively, the "Agreements").

-17-
<PAGE> 46

For the services provided pursuant to the Advisory Agreement, Warburg
is entitled to receive a fee, computed daily and payable monthly, at the annual
rate of .40% of the value of each Fund's average daily net assets, out of which
Warburg pays BIMC for sub-investment advisory services. Warburg, BIMC and each
Fund's administrators may voluntarily waive a portion of their fees from time to
time and temporarily limit the expenses to be paid by a Fund.

As sub-investment adviser, BIMC has agreed to implement each Fund's
investment program as determined by the Board and Warburg. BIMC will supervise
the day-to-day operations of the relevant Fund and perform the following
services: (i) providing investment research and credit analysis concerning the
Fund's investments, (ii) placing orders for all purchases and sales of the
Fund's portfolio investments and (iii) maintaining the books and records
required to support the Fund's operations. BIMC also calculates the Fund's net
asset value, provides accounting services for the Fund and assists in related
aspects of the Fund's operations.

The Funds employ Credit Suisse, a wholly-owned subsidiary of Credit
Suisse Group, as a co-administrator. As co-administrator, CSAM provides
shareholder liaison services to the Fund including responding to shareholder
inquiries and providing information on shareholder investments. CSAM also
performs a variety of other services, including furnishing certain executive and
administrative services, acting as liaison between a Fund and its various
service providers, furnishing corporate secretarial services, which include
preparing materials for meetings of the Board, assisting in the preparation of
proxy statements, annual and semiannual reports, tax returns and monitoring and
developing compliance procedures for the Fund. As compensation, each Fund pays
to CSAM a fee calculated at an annual rate of .10% of the Fund's average daily
net assets, exclusive of out-of-pocket expenses. CSAM may delegate to
Counsellors Funds Service, Inc., a wholly-owned subsidiary of Warburg,
responsibility for most of its co-administrative services. CSAM's principal
offices are located at Beaufort House, 15 St. Botolph Street, GB-London EC3A
7JJ.

The Funds also employ PFPC, an indirect, wholly owned subsidiary of PNC
Bank Corp., as a co-administrator. As a co-administrator, PFPC calculates a
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 to PFPC 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 average
daily net assets, and .05% of average daily net assets over $1.5 billion,
subject to a minimum annual fee and exclusive of out-of-pocket expenses. PFPC
has its principal offices at 400 Bellevue Parkway, Wilmington, Delaware 19809.

-18-
<PAGE> 47

MONEY MARKET FUND
Advisory and Sub-Advisory Fees paid to each of Warburg and BIMC