WARBURG PINCUS FIXED INCOME FUND /NY/, 485APOS, 1996-01-16

WARBURG PINCUS FIXED INCOME FUND /NY/
485APOS, 1996-01-16

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<PAGE>1

As filed with the U.S. Securities and Exchange Commission
on January 16, 1996

Securities Act File No. 33-12343
Investment Company Act File No. 811-5039

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

FORM N-1A

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]

Pre-Effective Amendment No. [ ]

Post-Effective Amendment No. 13 [X]

and/or

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

Amendment No. 16 [X]

(Check appropriate box or boxes)

Warburg, Pincus Fixed Income Fund
(formerly Counsellors Fixed Income Fund)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(Exact Name of Registrant as Specified in Charter)

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

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

Mr. Eugene P. Grace
Warburg, Pincus Fixed Income Fund
466 Lexington Avenue
New York, New York 10017-3147
.........................................
(Name and Address of Agent for Service)

Copy to:

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

<PAGE>2

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)
[X] 60 days after filing pursuant to paragraph (a)(1)
[ ] on (date) pursuant to paragraph (a)(1)
[ ] 75 days after filing pursuant to paragraph (a)(2)
[ ] on (date) pursuant to paragraph (a)(2) of Rule 485.

If appropriate, check the following box:

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

DECLARATION PURSUANT TO RULE 24f-2
Registrant has registered an indefinite number or amount of securities under
the Securities Act of 1933, as amended (the "1933 Act"), pursuant to Section
(a)(1) of Rule 24f-2 under the Investment Company Act of 1940, as amended (the
"1940 Act"), and to the number or amount presently registered is added an
indefinite number or amount of such securities. The Rule 24f-2 Notice for
Registrant's fiscal year ended October 31, 1995 was filed on December 19,
1995.

<PAGE>3

WARBURG, PINCUS FIXED INCOME FUND

FORM N-1A

CROSS REFERENCE SHEET
________________________________

Part A
Item No. Prospectus Heading*
- -------- -------------------
1. Cover Page . . . . . . . . . . . . . . Cover Page

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

3. Condensed Financial
Information . . . . . . . . . . . . Financial Highlights

4. General Description of
Registrant . . . . . . . . . . . . . Cover Page; Investment
Objective and Policies; Portfolio
Investments; Risk Factors and
Special Considerations; Certain
Investment Strategies; Investment
Guidelines; General Information

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

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

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

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

9. Legal Proceedings . . . . . . . . . . Not applicable

- ------------------------
* Relates to Registrant's Common Share Prospectus, which is substantially
similar to Registrant's Advisor Share prospectus.

<PAGE>4

Part B Heading in Statement
Item No. of Additional Information
- -------- -------------------------

10. Cover Page . . . . . . . . . . . . . . Cover Page

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

12. General Information and
History . . . . . . . . . . . . . . Management of the Fund;
Notes to Financial Statements;
See Prospectus--"General
Information"
13. Investment Objectives and
Policies . . . . . . . . . . . . . . Investment Objective;
Investment Policies
14. Management of the
Registrant . . . . . . . . . . . . . Management of the Fund;
See Prospectus--"Management of
the Funds"
15. Control Persons and
Principal Holders of
Securities . . . . . . . . . . . . . Management of the Fund;
Miscellaneous; See Prospectus--"-
General Information"
16. Investment Advisory and
Other Services . . . . . . . . . . . Management of the Fund;
See Prospectus--"Management of
the Funds" and "Shareholder
Servicing"

17. Brokerage Allocation . . . . . . . . . Investment Policies;
See Prospectus--"Portfolio
Transactions and Turnover Rate"
18. Capital Stock and Other
Securities . . . . . . . . . . . . . Management of the Fund--
Organization of the Fund; See
Prospectus-- "General
Information"

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

<PAGE>5

Part B Heading in Statement
Item No. of Additional Information
- -------- -------------------------

20. Tax Status . . . . . . . . . . . . . . Additional Information
Concerning Taxes; See
Prospectus--"Dividends,
Distributions and Taxes"

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

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

23. Financial Statements . . . . . . . . . Report of Independent
Auditors; Financial Statements

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

<PAGE>
<PAGE>
[Logo]

PROSPECTUS

, 1996

[ ] WARBURG PINCUS FIXED INCOME FUND
[ ] WARBURG PINCUS GLOBAL FIXED INCOME FUND
[ ] WARBURG PINCUS INTERMEDIATE MATURITY GOVERNMENT FUND
[ ] WARBURG PINCUS NEW YORK INTERMEDIATE MUNICIPAL FUND

Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any State in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such State.

Subject to Completion, dated January 16, 1996

WARBURG PINCUS FUNDS
P.O. BOX 9030
BOSTON, MASSACHUSETTS 02205-9030
TELEPHONE NUMBER: (800) 888-6878

, 1996
PROSPECTUS

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

WARBURG PINCUS FIXED INCOME FUND is a bond fund seeking current income and,
secondarily, capital appreciation by investing in a diversified portfolio of
fixed income securities.

WARBURG PINCUS GLOBAL FIXED INCOME FUND is a bond fund investing in a portfolio
principally consisting of investment grade fixed income securities of
governmental and corporate issuers denominated in various currencies, including
U.S. dollars.

WARBURG PINCUS INTERMEDIATE MATURITY GOVERNMENT FUND is an intermediate-term
bond fund investing in obligations issued or guaranteed by the U.S. government,
its agencies or instrumentalities.

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

NO LOAD CLASS OF COMMON SHARES

Each Fund offers two classes of shares. A class of Common Shares that is 'no
load' is offered by this Prospectus (i) directly from the
Funds' distributor, Counsellors Securities Inc., and (ii) through various
brokerage firms including Charles Schwab & Company, Inc. Mutual Fund
OneSource'tm' Program; Fidelity Brokerage Services, Inc. FundsNetwork'tm'
Program; Jack White & Company, Inc.; and Waterhouse Securities, Inc.

LOW MINIMUM INVESTMENT

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

This Prospectus briefly sets forth certain information about the Funds that
investors should know before investing. Investors are advised to read this
Prospectus and retain it for future reference. Additional information about each
Fund, contained in a Statement of Additional Information, has been filed with
the Securities and Exchange Commission (the 'SEC') and is available to investors
without charge by calling Warburg Pincus Funds at (800) 927-2874. Information
regarding the status of shareholder accounts may be obtained by calling Warburg
Pincus Funds at (800) 888-6878. The Statements of Additional Information, as
amended or supplemented from time to time, bear the same date as this Prospectus
and are incorporated by reference in their entirety into this Prospectus.

<PAGE>
<PAGE>
THE FUNDS' EXPENSES

Each of Warburg Pincus Fixed Income Fund, Global Fixed Income Fund,
Intermediate Government Fund and New York Municipal Fund (the 'Funds') currently
offers two separate classes of shares: Common Shares and Advisor Shares. For a
description of Advisor Shares see 'General Information.'

<TABLE>
<CAPTION>
GLOBAL INTERMEDIATE NEW YORK
FIXED INCOME FIXED INCOME GOVERNMENT MUNICIPAL
FUND FUND FUND FUND
------------ ------------ ------------ ---------
<S> <C> <C> <C> <C>
Shareholder Transaction Expenses
Maximum Sales Load Imposed on Purchases (as a
percentage of offering price)...................... 0 0 0 0
Annual Fund Operating Expenses (as a percentage of average
net assets)
Management Fees...................................... .35% .44% .05% .19%
12b-1 Fees........................................... 0 0 0 0
Other Expenses....................................... .40% .51% .55% .41%
--- ----- --- ---
Total Fund Operating Expenses (after fee
waivers)`D'........................................ .75% .95% .60% .60%
EXAMPLE
You would pay the following expenses
on a $1,000 investment, assuming (1) 5% annual return and
(2) redemption at the end of each time period:
1 year.............................................. $ 7 $ 10 $ 6 $ 6
3 years............................................. $24 $ 30 $19 $19
5 years............................................. $42 $ 53 $33 $33
10 years............................................. $93 $117 $75 $75
</TABLE>

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

`D' Management Fees, Other Expenses and Total Fund Operating Expenses are based
on actual expenses for the fiscal year ended October 31, 1995, net of any
fee waivers or expense reimbursements. Without such waivers or
reimbursements, Management Fees for the Fixed Income, Global Fixed Income,
Intermediate Government and New York Municipal Funds would have equalled
.50%, 1.00%, .50% and .40%, respectively; Other Expenses would have equalled
.43%, .58%, .59% and .46%, respectively; and Total Fund Operating Expenses
would have equalled .93%, 1.58%, 1.09% and .86%, respectively. The Funds'
investment adviser and co-administrator are under no obligation to continue
these waivers.

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

The expense table shows the costs and expenses that an investor will bear
directly or indirectly as a shareholder of each Fund. Certain broker-dealers and
financial institutions also may charge their clients fees in connection with
investments in Fund shares, which fees are not reflected in the table. The
Example should not be considered a representation of past or future expenses;
actual Fund expenses may be greater or less than those shown. Moreover, while
the Example assumes a 5% annual return, each Fund's actual performance will vary
and may result in a return greater or less than 5%.

<PAGE>
<PAGE>
FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)

The information regarding each Fund for the three fiscal years ended
October 31, 1995 has been derived from information audited by Coopers & Lybrand
L.L.P., independent auditors, whose report dated December 14, 1995 appears in
the relevant Fund's Statement of Additional Information. The information for the
two prior fiscal years ended October 31, 1992 has been audited by Ernst & Young
LLP, whose report was unqualified. Further information about the performance of
the Funds is contained in the Funds' annual report, dated October 31, 1995,
copies of which appear in the Funds' Statements of Additional Information or may
be obtained without charge by calling Warburg Pincus Funds at (800) 927-2874.

FIXED INCOME FUND

<TABLE>
<CAPTION>
FOR THE YEAR ENDED OCTOBER 31,
----------------------------------------------------------------------------------
1995 1994 1993 1992 1991 1990 1989 1988
-------- -------- ------- -------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period........ $ 9.61 $ 10.42 $ 9.90 $ 9.61 $ 8.95 $ 9.74 $ 9.93 $ 9.62
-------- -------- ------- -------- ------- ------- ------- -------
Income from Investment Operations
Net Investment Income.................... .70 .63 .56 .67 .73 .88 .91 .88
Net Gains (Losses) from Securities and
Foreign Currency Related Items (both
realized and unrealized)............... .46 (.70) .52 .29 .66 (.79) (.18) .31
-------- -------- ------- -------- ------- ------- ------- -------
Total from Investment Operations......... 1.16 (.07) 1.08 .96 1.39 .09 .73 1.19
-------- -------- ------- -------- ------- ------- ------- -------
Less Distributions
Dividends (from net investment income)... (.70) (.65) (.56) (.67) (.73) (.88) (.91) (.88)
Distributions (from capital gains)....... .00 (.09) .00 .00 .00 .00 (.01) .00
-------- -------- ------- -------- ------- ------- ------- -------
Total Distributions...................... (.70) (.74) (.56) (.67) (.73) (.88) (.92) (.88)
-------- -------- ------- -------- ------- ------- ------- -------
Net Asset Value, End of Period.............. $ 10.07 $ 9.61 $ 10.42 $ 9.90 $ 9.61 $ 8.95 $ 9.74 $ 9.93
-------- -------- ------- -------- ------- ------- ------- -------
-------- -------- ------- -------- ------- ------- ------- -------
Total Return................................ 12.59% (.60%) 11.63% 10.28% 16.08% .88% 7.78% 12.67%
Ratios/Supplemental Data
Net Assets, End of Period (000s)............ $116,983 $102,246 $81,181 $ 65,095 $61,908 $60,815 $87,258 $75,499
Ratios to Average Daily Net Assets:
Operating expenses....................... .75% .75% .75% .75% .75% .75% .75% .74%
Net investment income.................... 7.25% 6.53% 5.99% 6.82% 7.85% 9.35% 9.34% 8.80%
Decrease reflected in above expense
ratios due to waivers/reimbursements... .18% .18% .09% .27% .24% .06% .08% .26%
Portfolio Turnover Rate..................... 182.93% 179.44% 227.37% 122.04% 150.61% 132.01% 78.25% 55.80%

<CAPTION>
FOR THE PERIOD
AUGUST 17, 1987
(COMMENCEMENT OF
OPERATIONS)
THROUGH OCTOBER
31, 1987
----------------
<S> <C>
Net Asset Value, Beginning of Period........ $ 10.00
------
Income from Investment Operations
Net Investment Income.................... .19
Net Gains (Losses) from Securities and
Foreign Currency Related Items (both
realized and unrealized)............... (.38)
------
Total from Investment Operations......... (.19)
------
Less Distributions
Dividends (from net investment income)... (.19)
Distributions (from capital gains)....... .00
------
Total Distributions...................... (.19)
------
Net Asset Value, End of Period.............. $ 9.62
------
------
Total Return................................ (9.17%)*
Ratios/Supplemental Data
Net Assets, End of Period (000s)............ $ 26,291
Ratios to Average Daily Net Assets:
Operating expenses....................... .70%*
Net investment income.................... 9.10%*
Decrease reflected in above expense
ratios due to waivers/reimbursements... .80%*
Portfolio Turnover Rate..................... 30.00%*
</TABLE>

- ------------
* Annualized.
GLOBAL FIXED INCOME FUND

<TABLE>
<CAPTION>
FOR THE YEAR ENDED OCTOBER 31,
--------------------------------------------
1995 1994 1993 1992
------- ------- -------- -------
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Period........................................... $ 10.45 $ 11.38 $ 10.68 $ 10.40
------- ------- -------- -------
Income from Investment Operations
Net Investment Income....................................................... .99 .34 .54 .86
Net Gains from Securities and Foreign Currency Related Items (both realized
and unrealized)........................................................... .09 (.64) 1.13 .28
------- ------- -------- -------
Total from Investment Operations............................................ 1.08 (.30) 1.67 1.14
------- ------- -------- -------
Less Distributions
Dividends (from net investment income)...................................... (.49) (.45) (.85) (.67)
Distributions (from capital gains).......................................... .00 (.14) (.12) (.19)
Return of Capital........................................................... .00 (.04) .00 .00
------- ------- -------- -------
Total Distributions......................................................... (.49) (.63) (.97) (.86)
------- ------- -------- -------
Net Asset Value, End of Period................................................. $ 11.04 $ 10.45 $ 11.38 $ 10.68
------- ------- -------- -------
------- ------- -------- -------
Total Return................................................................... 10.65% (2.79%) 16.72% 11.08%
Ratios/Supplemental Data
Net Assets, End of Period (000s)............................................... $63,641 $90,394 $ 61,994 $17,092
Ratios to Average Daily Net Assets:
Operating expenses.......................................................... .95% .95% .49% .45%
Net investment income....................................................... 8.18% 6.96% 8.60% 8.66%
Decrease reflected in above expense ratios due to waivers/reimbursements.... .63% .65% 1.44% 2.42%
Portfolio Turnover Rate........................................................ 128.70% 178.11% 109.54% 93.14%

1991*
-------
<S> <C>
Net Asset Value, Beginning of Period........................................... $ 10.00
-------
Income from Investment Operations
Net Investment Income....................................................... .59
Net Gains from Securities and Foreign Currency Related Items (both realized
and unrealized)........................................................... .14
-------
Total from Investment Operations............................................ .73
-------
Less Distributions
Dividends (from net investment income)...................................... (.33)
Distributions (from capital gains).......................................... .00
Return of Capital........................................................... .00
-------
Total Distributions......................................................... (.33)
-------
Net Asset Value, End of Period................................................. $ 10.40
-------
-------
Total Return................................................................... 7.66%
Ratios/Supplemental Data
Net Assets, End of Period (000s)............................................... $12,160
Ratios to Average Daily Net Assets:
Operating expenses.......................................................... 1.09%
Net investment income....................................................... 7.45%
Decrease reflected in above expense ratios due to waivers/reimbursements.... 2.73%
Portfolio Turnover Rate........................................................ 185.74%
</TABLE>

- ------------
* The Fund commenced operations on November 1, 1990.

<PAGE>
<PAGE>
INTERMEDIATE GOVERNMENT FUND

<TABLE>
<CAPTION>
FOR THE YEAR ENDED OCTOBER 31,
---------------------------------------------------------------------
1995 1994 1993 1992 1991 1990 1989
------- ------- -------- -------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period.......... $ 9.66 $ 11.03 $ 11.23 $ 10.83 $ 10.24 $ 10.33 $ 10.27
------- ------- -------- -------- ------- ------- -------
Income from Investment Operations
Net Investment Income..................... .59 .54 .59 .68 .76 .79 .82
Net Gains (Losses) from Securities (both
realized and unrealized)................ .56 (.73) .34 .41 .59 (.09) .06
------- ------- -------- -------- ------- ------- -------
Total from Investment Operations.......... 1.15 (.19) .93 1.09 1.35 .70 .88
------- ------- -------- -------- ------- ------- -------
Less Distributions
Dividends (from net investment income).... (.59) (.55) (.59) (.68) (.76) (.79) (.82)
Distributions (from capital gains)........ .00 (.63) (.54) (.01) .00 .00 .00
------- ------- -------- -------- ------- ------- -------
Total Distributions....................... (.59) (1.18) (1.13) (.69) (.76) (.79) (.82)
------- ------- -------- -------- ------- ------- -------
Net Asset Value, End of Period................ $ 10.22 $ 9.66 $ 11.03 $ 11.23 $ 10.83 $ 10.24 $ 10.33
------- ------- -------- -------- ------- ------- -------
------- ------- -------- -------- ------- ------- -------
Total Return.................................. 12.32% (1.78%) 8.79% 10.34% 13.71% 7.10% 9.05%
Ratios/Supplemental Data
Net Assets, End of Period (000s).............. $55,898 $46,734 $ 77,565 $113,336 $89,006 $63,663 $26,861
Ratios to Average Daily Net Assets:
Operating expenses........................ .60% .60% .60% .60% .57% .50% .50%
Net investment income..................... 6.00% 5.43% 5.34% 6.10% 7.29% 7.78% 8.07%
Decrease reflected in above expense ratios
due to waivers/reimbursements........... .49% .42% .21% .25% .30% .44% 1.53%
Portfolio Turnover Rate....................... 105.79% 115.37% 108.00% 165.70% 39.13% 112.69% 22.55%

<CAPTION>
FOR THE PERIOD
AUGUST 22, 1988
(COMMENCEMENT OF
OPERATIONS)
THROUGH
OCTOBER 31, 1988
----------------
<S> <C>
Net Asset Value, Beginning of Period.......... $ 10.00
-------
Income from Investment Operations
Net Investment Income..................... .16
Net Gains (Losses) from Securities (both
realized and unrealized)................ .27
-------
Total from Investment Operations.......... .43
-------
Less Distributions
Dividends (from net investment income).... (.16)
Distributions (from capital gains)........ .00
-------
Total Distributions....................... (.16)
-------
Net Asset Value, End of Period................ $ 10.27
-------
-------
Total Return.................................. 24.36%*
Ratios/Supplemental Data
Net Assets, End of Period (000s).............. $ 6,640
Ratios to Average Daily Net Assets:
Operating expenses........................ .50%*
Net investment income..................... 8.22%*
Decrease reflected in above expense ratios
due to waivers/reimbursements........... 3.64%*
Portfolio Turnover Rate....................... 27.97%
</TABLE>

- ------------
* Annualized.

NEW YORK MUNICIPAL FUND

<TABLE>
<CAPTION>
FOR THE YEAR ENDED OCTOBER 31,
------------------------------------------------------------------------------
1995 1994 1993 1992 1991 1990 1989 1988
------- -------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of
Period.............................. $ 10.07 $ 10.65 $ 10.02 $ 9.88 $ 9.57 $ 9.59 $ 9.71 $ 9.39
------- -------- ------- ------- ------- ------- ------- -------
Income from Investment Operations
Net Investment Income............. .47 .46 .47 .50 .53 .60 .58 .55
Net Gains (Losses) from Securities
(both realized and
unrealized)..................... .36 (.45) .68 .14 .31 (.02) (.12) .32
------- -------- ------- ------- ------- ------- ------- -------
Total from Investment
Operations...................... .83 .01 1.15 .64 .84 .58 .46 .87
------- -------- ------- ------- ------- ------- ------- -------
Less Distributions
Dividends (from net investment
income)......................... (.47) (.46) (.47) (.50) (.53) (.60) (.58) (.55)
Distributions (from capital
gains).......................... (.01) (.13) (.05) .00 .00 .00 .00 .00
------- -------- ------- ------- ------- ------- ------- -------
Total Distributions............... (.48) (.59) (.52) (.50) (.53) (.60) (.58) (.55)
------- -------- ------- ------- ------- ------- ------- -------
Net Asset Value, End of Period........ $ 10.42 $ 10.07 $ 10.65 $ 10.02 $ 9.88 $ 9.57 $ 9.59 $ 9.71
------- -------- ------- ------- ------- ------- ------- -------
------- -------- ------- ------- ------- ------- ------- -------
Total Return.......................... 8.31% .04% 11.67% 6.63% 9.43% 6.18% 4.91% 9.43%
Ratios/Supplemental Data
Net Assets, End of Period (000s)...... $73,361 $ 75,716 $69,578 $54,012 $29,016 $21,916 $20,048 $27,596
Ratios to Average Daily Net Assets:
Operating expenses................ .60% .60% .58% .55% .55% .55% .56% .54%
Net investment income............. 4.50% 4.41% 4.50% 4.99% 5.84% 6.21% 6.14% 5.70%
Decrease reflected in above
expense ratios due to
waivers/reimbursements.......... .26% .20% .20% .40% .65% .76% .72% 1.01%
Portfolio Turnover Rate............... 105.17 167.09% 115.98% 47.79% 66.53% 70.45% 74.03% 145.20%

<CAPTION>
FOR THE PERIOD
APRIL 1, 1987
(COMMENCEMENT OF
OPERATIONS)
THROUGH OCTOBER
31, 1987
----------------
<S> <C>
Net Asset Value, Beginning of
Period.............................. $ 10.00
-------
Income from Investment Operations
Net Investment Income............. .30
Net Gains (Losses) from Securities
(both realized and
unrealized)..................... (.61)
-------
Total from Investment
Operations...................... (.31)
-------
Less Distributions
Dividends (from net investment
income)......................... (.30)
Distributions (from capital
gains).......................... .00
-------
Total Distributions............... (.30)
-------
Net Asset Value, End of Period........ $ 9.39
-------
-------
Total Return.......................... (5.30%)*
Ratios/Supplemental Data
Net Assets, End of Period (000s)...... $ 10,410
Ratios to Average Daily Net Assets:
Operating expenses................ .50%*
Net investment income............. 5.50%*
Decrease reflected in above
expense ratios due to
waivers/reimbursements.......... 2.10%*
Portfolio Turnover Rate............... 28.00%
</TABLE>

- ------------
* Annualized.

<PAGE>
<PAGE>
INVESTMENT OBJECTIVES AND POLICIES

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

FIXED INCOME FUND

The Fixed Income Fund seeks to generate high current income consistent with
reasonable risk; capital appreciation is a secondary objective. The Fund is a
diversified management investment company which pursues its investment
objectives by investing, under normal market conditions, at least 65% of its
total assets in fixed income securities, such as corporate bonds, debentures and
notes, convertible debt securities, preferred stocks, government obligations,
Municipal Obligations (as described below under 'New York Municipal Fund') and
repurchase agreements with respect to portfolio securities. Under normal market
conditions, the Fund intends that its portfolio of fixed income securities will
have a weighted average remaining maturity not exceeding 10 years. The Fund may
invest without limit in U.S. dollar-denominated, investment grade foreign
securities, but limits to 35% of its assets the portion that may be invested in
securities of foreign issuers that either are rated below investment grade or
are denominated in a currency other than U.S. dollars.

Under normal market conditions, at least 65% of all of the fixed income
securities in the Fund will be rated investment grade. A security will be
considered investment grade if it is rated at the time of purchase within the
four highest grades assigned by Moody's Investors Service, Inc. ('Moody's') or
Standard & Poor's Ratings Group ('S&P'). The Fund may hold up to 35% of its net
assets in fixed income securities rated below investment grade and as low as C
by Moody's or D by S&P and may invest in unrated issues that are believed by
Warburg to have financial characteristics that are comparable and that are
otherwise similar in quality to the rated issues it purchases.

GLOBAL FIXED INCOME FUND

The Global Fixed Income Fund seeks to maximize total investment return
consistent with prudent investment management, consisting of a combination of
interest income, currency gains and capital appreciation. The Fund is a non-
diversified management investment company which seeks to achieve its objective
by investing, under normal market conditions, at least 65% of its total assets
in fixed income obligations of governmental and corporate issuers denominated in
various currencies (including U.S. dollars, or in multinational currency units
such as European Currency Units ('ECUs')), including convertible debt securities
and preferred stock. Issuers of these securities will be located in at least
three countries and issuers located in any one country (other than the United
States) will not represent more than 40% of the Fund's total assets. In
addition, the Fund will not invest 25% or more of its assets in the securities
issued by any one foreign government, its agencies, instrumentalities or
political subdivisions. The Fund may invest up to 20% of its total assets in
equity securities, including common stock, warrants and rights. For temporary
defensive purposes or during times of international political or economic
uncertainty, all of the Fund's investments may be made temporarily in the United
States or denominated in U.S. dollars.

organized or supported by several national governments, such as the
International Bank for Reconstruction and Development (the 'World Bank') or the
European Investment Bank. The Fund may also purchase fixed income obligations of
foreign corporations that are issued in a currency other than U.S. dollars.
Because of fluctuating currency values, the Fund may engage in certain currency
transactions, as described under 'Certain Investment Strategies -- Options,
Futures and Currency Transactions' below.

Under normal economic and market conditions, the dollar-weighted average
maturity of the Fund's portfolio of fixed income securities will be between 3
and 10 years, using for purposes of this calculation the maturity of a security
on its date of purchase. Individual issues may have maturities shorter or longer
than 3 to 10 years.

Warburg will allocate investments among securities of particular issuers on
the basis of its views as to the best values then currently available in the
marketplace. Such values are a function of yield, maturity, issue classification
and quality characteristics, coupled with expectations regarding the economy,
movements in the general level and term of interest rates, currency values,
political developments and variations in the supply of funds available for
investment in the world bond market relative to the demands placed upon it.
Fixed income securities denominated in currencies other than the U.S. dollar or
in multinational currency units are evaluated on the strength of the particular
currency against the U.S. dollar as well as on the current and expected levels
of interest rates in the country or countries. Currencies generally are
evaluated on the basis of fundamental economic criteria (e.g., relative
inflation and interest rate levels and trends, growth rate forecasts, balance of
payments status and economic policies) as well as technical and political data.
In addition to the foregoing, the Fund may seek to take advantage of differences
in relative values of fixed income securities among various countries.

The Fund may hold up to 35% of its net assets in fixed income securities
rated below investment grade, or in unrated securities considered to be of
equivalent quality.

INTERMEDIATE GOVERNMENT FUND

The Intermediate Government Fund seeks to achieve as high a level of
current income as is consistent with the preservation of capital. The Fund is a
diversified management investment company which pursues its investment objective
by investing, under normal market conditions, at least 65% of its total assets
in obligations issued or guaranteed by the United States government, its
agencies or instrumentalities ('Government Securities'). Under normal market
conditions, the Fund will maintain a weighted average portfolio maturity of
between 3 and 10 years. Investments by the Fund in repurchase agreements on
Government Securities are not included in determining the percentage of assets
invested in Government Securities.

The Fund may invest in Government Trust Certificates. Each Certificate
evidences an undivided fractional interest in a Government Trust (each, a
'Trust'). The assets of each Trust consist of a promissory note, payable in U.S.
Dollars (the 'Loan Note'), representing a loan made by the Trust to the
government of Israel (the 'Borrower'), backed by a full faith and credit
guaranty issued by the United States of America, acting through the Defense
Security Assistance Agency of the Department of Defense (the 'Guaranty'), of the
due and punctual payment of 90% of payments of principal and interest due on the
Loan Note and a security interest in collateral, consisting of non-callable
securities issued or guaranteed by the United States government, or derivatives
thereof, such as trust receipts or other securities evidencing an interest in
such United States government securities, sufficient to pay the remaining 10% of
all payments of principal and interest due on the Loan Notes. Each Certificate
issued by a Trust represents the right to receive a

portion of the payments due on the Loan Note held by that Trust. The
Certificates are not subject to prepayment or acceleration. Each Guaranty is
entitled to the full faith and credit of the United States of America. A
Certificateholder's right to receive any payments with respect to the Guaranty
will be subject to termination if such holder breaches the terms of its
Certificate.

Certificates are not considered by the Fund to be Government Securities.
The Certificates represent undivided fractional interests in the Loan Notes, but
the Certificates are not direct obligations of, and are not guaranteed by, the
Borrower. Thus, in the event of a failure to pay principal and/or interest when
due, the Fund may be subject to delays, expenses and risks that are greater than
those that would have been involved if the Fund had purchased a direct
obligation of the Borrower.

NEW YORK MUNICIPAL FUND

The New York Municipal Fund seeks to maximize current interest income
exempt from federal income tax and New York State and New York City personal
income tax to the extent consistent with prudent investment and the preservation
of capital. The Fund is a non-diversified management investment company which
pursues its investment objective by investing, under normal market conditions,
at least 65% of its total assets in investment grade 'New York Municipal
Obligations.' New York Municipal Obligations are debt obligations (other than
short-term securities), the interest on which is excluded from gross income for
federal income tax purposes and exempt from New York State and New York City
personal income tax. Under normal market conditions, the Fund will maintain a
weighted average portfolio maturity of between 3 and 10 years. If Warburg,
Pincus Counsellors, Inc., each Fund's investment adviser ('Warburg'), believes
that suitable New York Municipal Obligations are not available, the Fund may for
temporary defensive reasons invest without limit in (i) municipal obligations
that pay interest which is excluded from gross income for federal income tax
purposes but which is not exempt from New York State and New York City personal
income taxes and (ii) taxable or tax-exempt money market obligations. It is a
fundamental policy of the Fund that, except during temporary defensive periods,
the Fund will have at least 80% of its assets invested in obligations issued by
or on behalf of states (including the State of New York), territories and
possessions of the United States and the District of Columbia and their
political subdivisions, agencies and instrumentalities ('Municipal
Obligations'). This fundamental policy may not be amended without first
obtaining the approval of holders of a majority of the outstanding shares of the
Fund. The Fund may invest up to 20% of its total assets in debt obligations
other than Municipal Obligations. The Fund may invest in unrated issues that are
believed by Warburg to have financial characteristics that are comparable and
that are otherwise similar in quality to the rated issues it purchases.
Investors should be aware that ratings are relative and subjective and are not
absolute standards of quality.

PORTFOLIO INVESTMENTS

MONEY MARKET OBLIGATIONS. Each Fund is authorized to invest, under normal
conditions, up to 35% of its total assets in short-term money market obligations
having remaining maturities of less than one year at the time of purchase. These
short-term instruments consist of Government Securities; bank obligations
(including certificates of deposit, time deposits and bankers' acceptances of
domestic or foreign banks, domestic savings and loans and similar institutions)
that are high quality investments or, if unrated, deemed by Warburg to be high
quality investments; commercial paper rated no lower than A-2 by S&P or Prime-2
by Moody's or the equivalent from another major rating service or, if unrated,
of an issuer having an outstanding, unsecured debt issue then rated within the
three

highest rating categories; in the case of the Fixed Income Fund and the Global
Fixed Income Fund, obligations of foreign governments, their agencies or
instrumentalities; and repurchase agreements with respect to portfolio
securities. The short-term money market obligations in which the New York
Municipal Fund is authorized to invest generally will be tax-exempt obligations;
however, the Fund may invest in taxable obligations when suitable tax-exempt
obligations are unavailable or to maintain liquidity for meeting anticipated
redemptions and paying operating expenses. Tax-exempt money market obligations
in which the New York Municipal Fund may invest consist of investment grade
tax-exempt notes and tax-exempt commercial paper rated no lower than A-2 by S&P
or Prime-2 by Moody's or the equivalent from another major rating service or, if
not rated, of municipal issuers having an issue of outstanding Municipal
Obligations rated within the three highest grades by Moody's or S&P.

For temporary defensive purposes or, in the case of the Global Fixed Income
Fund, during times of international political or economic uncertainty, each Fund
other than the Intermediate Government Fund may invest without limit in
short-term money market obligations, and the Intermediate Government Fund may
invest without limit in short-term Government Securities.

Repurchase Agreements. Under normal market conditions, each Fund may invest
up to 20% of its total assets in repurchase agreement transactions with member
banks of the Federal Reserve System and certain non-bank dealers. Repurchase
agreements are contracts under which the buyer of a security simultaneously
commits to resell the security to the seller at an agreed-upon price and date.
Under the terms of a typical repurchase agreement, a Fund would acquire any
underlying security for a relatively short period (usually not more than one
week) subject to an obligation of the seller to repurchase, and the Fund to
resell, the obligation at an agreed-upon price and time, thereby determining the
yield during the Fund's holding period. This arrangement results in a fixed rate
of return that is not subject to market fluctuations during the Fund's holding
period. The value of the underlying securities will at all times be at least
equal to the total amount of the purchase obligation, including interest. The
Fund bears a risk of loss in the event that the other party to a repurchase
agreement defaults on its obligations or becomes bankrupt and the Fund is
delayed or prevented from exercising its right to dispose of the collateral
securities, including the risk of a possible decline in the value of the
underlying securities during the period while the Fund seeks to assert this
right. Warburg, acting under the supervision of the governing Board of each
Fund (the 'governing Board' or 'Board'), monitors the creditworthiness of
those bank and non-bank dealers with which each Fund enters into repurchase
agreements to evaluate this risk. A repurchase agreement is considered to be a
loan under the Investment Company Act of 1940, as amended (the '1940 Act').

Money Market Mutual Funds. Where Warburg believes that it would be
beneficial to the Fund and appropriate considering the factors of return and
liquidity, each Fund may invest up to 5% of its assets in securities of money
market mutual funds that are unaffiliated with the Fund, Warburg or the Funds'
co-administrator, PFPC Inc. ('PFPC'). A money market mutual fund is an
investment company that invests in short-term high quality money market
instruments. A money market mutual fund generally does not purchase securities
with a remaining maturity of more than one year. The Intermediate Government
Fund and the New York Municipal Fund would invest in money market mutual funds
that invest in Government Securities and tax-exempt securities, respectively. As
a shareholder in any mutual fund, a Fund will bear its ratable share of the
mutual fund's expenses, including management fees, and will remain subject to
payment of

the Fund's administration fees and other expenses with respect to assets so
invested.

U.S GOVERNMENT SECURITIES. The obligations issued or guaranteed by the U.S.
government in which a Fund may invest include direct obligations of the U.S.
Treasury and obligations issued by U.S. government agencies and
instrumentalities. Included among direct obligations of the United States are
Treasury Bills, Treasury Notes and Treasury Bonds, which differ principally in
terms of their maturities. Treasury Bills have maturities of less than one year,
Treasury Notes have maturities of one to 10 years and Treasury Bonds generally
have maturities of greater than 10 years at the date of issuance. Included among
the obligations issued by agencies and instrumentalities of the United States
are: instruments that are supported by the full faith and credit of the United
States (such as certificates issued by the Government National Mortgage
Association ('GNMA')); instruments that are supported by the right of the issuer
to borrow from the U.S. Treasury (such as securities of Federal Home Loan
Banks); and instruments that are supported by the credit of the instrumentality
(such as Federal National Mortgage Association ('FNMA') and Federal Home Loan
Mortgage Corporation ('FHLMC') bonds).

CONVERTIBLE SECURITIES. Convertible securities in which the Fixed Income and
Global Fixed Income Funds may invest, including both convertible debt and
convertible preferred stock, may be converted at either a stated price or stated
rate into underlying shares of common stock. Because of this feature,
convertible securities enable an investor to benefit from increases in the
market price of the underlying common stock. Convertible securities provide
higher yields than the underlying equity securities, but generally offer lower
yields than non-convertible securities of similar quality. The value of
convertible securities fluctuates in relation to changes in interest rates like
bonds and, in addition, fluctuates in relation to the underlying common stock.

STRUCTURED SECURITIES. The Funds may purchase any type of publicly traded or
privately negotiated fixed income security, including mortgage-backed
securities; structured notes, bonds or debentures; and assignments of and
participations in loans.

Mortgage-Backed Securities. Mortgage-backed securities are collateralized
by mortgages or interests in mortgages and may be issued by government or
non-government entities. Mortgage-backed securities issued by GNMA, FNMA or
FHLMC provide a monthly payment consisting of interest and principal payments,
and additional payments will be made out of unscheduled prepayments of
principal. Neither the value of nor the yield on these mortgage-backed
securities or shares of the Funds is guaranteed by the U.S. Government.
Non-government issued mortgage-backed securities may offer higher yields than
those issued by government entities, but may be subject to greater price
fluctuations. The value of mortgaged-backed securities may change due to shifts
in the market's perceptions of issuers, and regulatory or tax changes may
adversely affect the mortgage securities market as a whole. Foreclosures and
prepayments, which occur when unscheduled or early payments are made on the
underlying mortgages, may shorten the effective maturities on these securities.
The Funds' yield may be affected by reinvestment of prepayments at higher or
lower rates than the original investment. Prepayments may tend to increase due
to refinancing of mortgages as interest rates decline. In addition, like other
debt securities, the values of mortgage-backed securities will generally
fluctuate in response to interest rates.

upon maturity or redemption may be increased or decreased depending upon changes
in the applicable Reference. The terms of the structured securities may provide
that in certain circumstances no principal is due at maturity and, therefore,
may result in the loss of a Fund's entire investment. The value of structured
securities may move in the same or the opposite direction as the value of the
Reference, so that appreciation of the Reference may produce an increase or
decrease in the interest rate or value of the security at maturity. In addition,
the change in interest rate or the value of the security at maturity may be a
multiple of the change in the value of the Reference so that the security may be
more or less volatile than the Reference, depending on the multiple.
Consequently, structured securities may entail a greater degree of market risk
and volatility than other types of debt obligations.

Assignments and Participations. Each Fund may invest in assignments of and
participations in loans issued by banks and other financial institutions.

When a Fund purchases assignments from lending financial institutions, the
Fund will acquire direct rights against the borrower on the loan. However, since
assignments are generally arranged through private negotiations between
potential assignees and potential assignors, the rights and obligations acquired
by a Fund as the purchaser of an assignment may differ from, and be more limited
than, those held by the assigning lender.

Participations in loans will typically result in a Fund having a
contractual relationship with the lending financial institution, not the
borrower. A Fund would have the right to receive payments of principal, interest
and any fees to which it is entitled only from the lender of the payments from
the borrower. In connection with purchasing a participation, a Fund generally
will have no right to enforce compliance by the borrower with the terms of the
loan agreement relating to the loan, nor any rights of set-off against the
borrower, and the Fund may not benefit directly from any collateral supporting
the loan in which it has purchased a participation. As a result, a Fund
purchasing a participation will assume the credit risk of both the borrower and
the lender selling the participation. In the event of the insolvency of the
lender selling the participation, the Fund may be treated as a general creditor
of the lender and may not benefit from any set-off between the lender and the
borrower.

A Fund may have difficulty disposing of assignments and participations
because there is no liquid market for such securities. The lack of a liquid
secondary market will have an adverse impact on the value of such securities and
on a Fund's ability to dispose of particular assignments or participations when
necessary to meet the Fund's liquidity needs or in response to a specific
economic event, such as a deterioration in the creditworthiness of the borrower.
The lack of a liquid market for assignments and participations also may make it
more difficult for a Fund to assign a value to these securities for purposes of
valuing the Fund's portfolio and calculating its net asset value.

With respect to the New York Municipal Fund, income derived from
participations or assignments may not be tax-exempt, depending on the structure
of the particular securities. To the extent such income is not tax-exempt it
will be subject to the New York Municipal Fund's 20% limit on investing in
non-municipal securities.

RISK FACTORS AND SPECIAL
CONSIDERATIONS

For certain additional risks related to each Fund's investments, see
'Portfolio Investments' beginning at page 7 and 'Certain Investment Strategies'
beginning at page 13.

Among the factors that may be considered in deciding whether to invest in a
security are the issuer's financial resources, its sensitivity to eco-

nomic conditions and trends, its operating history and the ability of the
issuer's management. Bond prices generally vary inversely in relation to changes
in the level of interest rates, as well as in response to other market factors
and changes in the creditworthiness of the issuers of the securities. Government
Securities are considered to be of the highest credit quality available.
Government Securities, however, will be affected by general changes in interest
rates. The price volatility of a Fund's shares where the Fund invests in
intermediate maturity bonds will be substantially less than that of long-term
bonds. An intermediate maturity bond will generally have a lower yield than that
of a long-term bond. Longer-term securities in which the Funds may invest
generally offer a higher current yield than is offered by shorter-term
securities, but also generally involve greater volatility of price and risk of
capital than shorter-term securities.

NEW YORK MUNICIPAL OBLIGATIONS. The New York Municipal Fund's ability to achieve
its investment objective is dependent upon the ability of the issuers of New
York Municipal Obligations to meet their continuing obligations for the payment
of principal and interest. New York State and New York City face long-term
economic problems that could seriously affect their ability and that of other
issuers of New York Municipal Obligations to meet their financial obligations.
Certain substantial issuers of New York Municipal Obligations (including issuers
whose obligations may be acquired by the Fund) have experienced serious
financial difficulties in recent years. These difficulties have at times
jeopardized the credit standing and impaired the borrowing abilities of all New
York issuers and have generally contributed to higher interest costs for their
borrowings and fewer markets for their outstanding debt obligations. In recent
years, several different issues of municipal securities of New York State and
its agencies and instrumentalities and of New York City have been downgraded by
S&P and Moody's. On the other hand, strong demand for New York Municipal
Obligations has at times had the effect of permitting New York Municipal
Obligations to be issued with yields relatively lower, and after issuance, to
trade in the market at prices relatively higher than comparably rated municipal
obligations issued by other jurisdictions. A recurrence of the financial
difficulties previously experienced by certain issuers of New York Municipal
Obligations could result in defaults or declines in the market values of those
issuers' existing obligations and, possibly, in the obligations of other issuers
of New York Municipal Obligations. Although as of the date of this Prospectus,
no issuers of New York Municipal Obligations are in default with respect to the
payment of their municipal obligations, the occurrence of any such default could
affect adversely the market values and marketability of all New York Municipal
Obligations and, consequently, the net asset value of the New York Municipal
Fund's portfolio. Other considerations affecting the New York Municipal Fund's
investments in New York Municipal Obligations are summarized in the Fund's
Statement of Additional Information.

NON-DIVERSIFIED STATUS. The Global Fixed Income Fund and the New York Municipal
Fund are each classified as a non-diversified investment company under the 1940
Act, which means that the Funds are not limited by the 1940 Act in the
proportion of their assets that they may invest in the obligations of a single
issuer. The Funds will, however, comply with diversification requirements
imposed by the Internal Revenue Code of 1986, as amended (the 'Code'), for
qualification as a regulated investment company. As non-diversified investment
companies, the Funds may invest a greater proportion of their assets in the
obligations of a small number of issuers and, as a result, may be subject to
greater risk with respect to portfolio securities. To the extent that the Funds
assume large positions in the securities of a small number of issuers, their
return may fluctuate to a greater extent than that of a diversified company as a
result of changes in

the financial condition or in the market's assessment of the issuers.

LOWER-RATED SECURITIES. There are certain risk factors associated with
lower-rated securities. Securities rated in the fourth highest grade have
speculative characteristics, and securities rated B have speculative elements
and a greater vulnerability to default than higher-rated securities. Investors
should be aware that ratings are relative and subjective and are not absolute
standards of quality. Subsequent to its purchase by a Fund, an issue of
securities may cease to be rated or its rating may be reduced below the minimum
required for purchase by the Fund. Neither event will require sale of such
securities by the Fund, although Warburg will consider such event in its
determination of whether the Fund should continue to hold the securities.

The Fixed Income Fund and the Global Fixed Income Fund may invest in
securities rated as low as C by Moody's or D by S&P. Each Fund may invest in
unrated securities considered to be of equivalent quality. Securities that are
rated C by Moody's are the lowest rated class and can be regarded as having
extremely poor prospects of ever attaining any real investment standing. Debt
rated D by S&P is in default or is expected to default upon maturity or payment
date.

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

The market value of securities in lower-rated categories is more volatile
than that of higher quality securities. In addition, the Fixed Income Fund and
the Global Fixed Income Fund may have difficulty disposing of certain of these
securities because there may be a thin trading market. The lack of a liquid
secondary market for certain securities may have an adverse impact on the Funds'
ability to dispose of particular issues and may make it more difficult for the
Fixed Income Fund and the Global Fixed Income Fund to obtain accurate market
quotations for purposes of valuing the Funds and calculating their respective
net asset values.

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

NON-PUBLICLY TRADED SECURITIES; RULE 144A SECURITIES. The Funds may purchase
securities that are not registered under the Securities Act of 1933, as amended
(the '1933 Act'), but that can be sold to 'qualified institutional buyers' in
accordance with Rule 144A under the 1933 Act ('Rule 144A Securities'). A Rule
144A Security will be considered illiquid and therefore subject to each Fund's
limitation on the purchase of illiquid securities, unless the Fund's governing
Board determines on an ongoing basis that an adequate trading market exists for
the security. In addition to an adequate trading market, the Board will also
consider factors such as trading activity, availability of reliable price
information and other relevant information in determining whether a Rule 144A
Security is liquid. This investment practice could have the effect of increasing
the level of illiquidity in the Funds to the extent that qualified institutional
buyers

become uninterested for a time in purchasing Rule 144A Securities. The Board of
each Fund will carefully monitor any investments by the Fund in Rule 144A
Securities. The Boards may adopt guidelines and delegate to Warburg the daily
function of determining and monitoring the liquidity of Rule 144A Securities,
although each Board will retain ultimate responsibility for any determination
regarding liquidity.

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

PORTFOLIO TRANSACTIONS AND
TURNOVER RATE

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

Newly issued Government Securities normally are purchased by a Fund
directly from the issuer or from an underwriter acting as a principal. Other
purchases and sales usually are placed by the Fund with those dealers which
Warburg determines offer the best price and execution. The purchase price paid
by the Fund to underwriters of newly issued securities usually includes a
concession paid by the issuer to the underwriter, and purchases of securities
from a dealer in the after market normally are executed at a price between the
bid and asked prices.

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

CERTAIN INVESTMENT STRATEGIES

Although there is no intention of doing so during the coming year, each
Fund may enter into reverse repurchase agreements and dollar rolls. Detailed
information concerning each Fund's strategies and related risks is contained

below and in the Fund's Statement of Additional Information.

STRATEGIES AVAILABLE TO ALL FUNDS

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

Securities and Index Options. The Funds may purchase and write covered put
and call options traded on U.S. and foreign exchanges as well as
over-the-counter ('OTC') without limit on the net asset value of the stock and
debt securities in its portfolio and will realize fees (referred to as
'premiums') for granting the rights evidenced by the options. The purchaser of a
put option on a security has the right to compel the purchase by the writer of
the underlying security, while the purchaser of a call option has the right to
purchase the underlying security from the writer. In addition to purchasing and
writing options on securities, each Fund may also purchase and write without
limit exchange-listed and OTC put and call options on securities indexes. A
securities index measures the movement of a certain group of securities by
assigning relative values to the securities included in the index.

The potential loss associated with purchasing an option is limited to the
premium paid, and the premium would partially offset any gains achieved from its
use. However, for an option writer the exposure to adverse price movements in
the underlying security or index is potentially unlimited during the exercise
period. Writing securities options may result in substantial losses to the Fund,
force the sale or purchase of portfolio securities at inopportune times or at
less advantageous prices, limit the amount of appreciation the Fund could
realize on its investments or require the Fund to hold securities it would
otherwise sell.

Futures Contracts and Related Options. Each Fund may enter into interest
rate, securities index and, in the case of the Fixed Income and Global Fixed
Income Funds, currency futures contracts and purchase and write (sell) related
options that are traded on an exchange designated by the Commodity Futures
Trading Commission (the 'CFTC') or, if consistent with CFTC regulations, on
foreign exchanges. These futures contracts are standardized contracts for the
future delivery of foreign currency or an interest rate sensitive security or,
in the case of securities index and certain other futures contracts, are settled
in cash with reference to a specified multiplier times the change in the
specified interest rate, index or exchange rate. An option on a futures contract
gives the purchaser the right, in return for the premium paid, to assume a
position in a futures contract.

tracts. Although the Funds are limited in the amount of assets that may be
invested in futures transactions, there is no overall limit on the percentage
of Fund assets that may be at risk with respect to futures activities.

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

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

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

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

ability to meet redemption requests or other current obligations.

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

WHEN-ISSUED SECURITIES AND DELAYED-DELIVERY TRANSACTIONS. The Fixed Income Fund,
the Global Fixed Income Fund and the Intermediate Government Fund may each
utilize up to 20% of its total assets to purchase securities on a when-issued
basis and purchase or sell securities on a delayed-delivery basis. The New York
Municipal Fund may without limit purchase Municipal Obligations on a when-issued
basis. In these transactions, payment for and delivery of the securities occur
beyond the regular settlement dates, normally within 30-45 days after the
transaction. A Fund will not enter into a when-issued or delayed-delivery
transaction for the purpose of leverage, but may sell the right to acquire a
when-issued security prior to its acquisition or dispose of its right to deliver
or receive securities in a delayed-delivery transaction if Warburg deems it
advantageous to do so. The payment obligation and the interest rate that will be
received in when-issued and delayed-delivery transactions are fixed at the time
the buyer enters into the commitment. Due to fluctuations in the value of
securities purchased or sold on a when-issued or delayed-delivery basis, the
yields obtained on such securities may be higher or lower than the yields
available in the market on the dates when the investments are actually delivered
to the buyers. When-issued securities may include securities purchased on a
'when, as and if issued' basis under which the issuance of the security depends
on the occurrence of a subsequent event, such as approval of a merger, corporate
reorganization or debt restructuring. A Fund will establish a segregated account
with its custodian consisting of cash, Government Securities or other liquid
high-grade debt obligations in an amount equal to the amount of its when-issued
and delayed-delivery purchase commitments, and will segregate the securities
underlying commitments to sell securities for delayed delivery.

INTEREST RATE, INDEX, MORTGAGE AND CURRENCY SWAPS; INTEREST RATE CAPS, FLOORS
AND COLLARS. Each Fund may enter into interest rate, index and mortgage swaps
and interest rate caps, floors and collars for hedging purposes or to seek to
increase total return; the Fixed Income and Global Fixed Income Funds may enter
into currency swaps for hedging purposes. Interest rate swaps involve the
exchange by the Fund with another party of their respective commitments to pay
or receive interest, such as an exchange of fixed rate payments for floating
rate payments. Index swaps involve the exchange by the Fund with another party
of the respective amounts payable with respect to a notional principal amount at
interest rates equal to two specified indexes. Mortgage swaps are similar to
interest rate swaps in that they represent commitments to pay and receive
interest. The notional principal amount, however, is tied to a reference pool or
pools of mortgages. Currency swaps involve the exchange of their respective

rights to make or receive payments in specified currencies. The purchase of an
interest rate cap entitles the purchaser, to the extent that a specified index
exceeds a predetermined interest rate, to receive payment of interest on a
notional principal amount from the party selling such interest rate cap. The
purchase of an interest rate floor entitles the purchaser, to the extent that a
specified index falls below a predetermined interest rate, to receive payments
of interest on a notional principal amount from the party selling the interest
rate floor. An interest rate collar is the combination of a cap and a floor that
preserves a certain return within a predetermined range of interest rates.

A Fund will enter into interest rate, index and mortgage swaps only on a
net basis, which means that the two payment streams are netted out, with the
Fund receiving or paying, as the case may be, only the net amount of the two
payments. Interest rate, index and mortgage swaps do not involve the delivery of
securities, other underlying assets or principal. Accordingly, the risk of loss
with respect to interest rate, index and mortgage swaps is limited to the net
amount of interest payments that the Fund is contractually obligated to make. If
the other party to an interest rate, index or mortgage swap defaults, the Fund's
risk of loss consists of the net amount of interest payments that the Fund is
contractually entitled to receive. In contrast, currency swaps usually involve
the delivery of a gross payment stream in one designated currency in exchange
for the gross payment stream in another designated currency. Therefore, the
entire payment stream under a currency swap is subject to the risk that the
other party to the swap will default on its contractual delivery obligations. To
the extent that the net amount payable by the Fund under an interest rate, index
or mortgage swap and the entire amount of the payment stream payable by the Fund
under a currency swap or an interest rate cap, floor or collar are held in a
segregated account consisting of cash, Government Securities or high-grade
liquid debt securities, the Funds and Warburg believe that swaps do not
constitute senior securities under the 1940 Act and, accordingly, will not treat
them as being subject to each Fund's borrowing restriction.

The Fund will not enter into interest rate, index, mortgage or currency
swaps, or interest rate cap, floor or collar transactions unless the unsecured
commercial paper, senior debt or claims paying ability of the other party is
rated either AA or A-1 or better by S&P or Aa or P-1 or better by Moody's or, if
unrated by such rating organizations, determined to be of comparable quality by
Warburg.

STRATEGIES AVAILABLE TO THE FIXED INCOME FUND, THE GLOBAL FIXED INCOME FUND AND
THE INTERMEDIATE GOVERNMENT FUND

SHORT SALES AGAINST THE BOX. The Fixed Income Fund, the Global Fixed Income Fund
and the Intermediate Government Fund may each enter into a short sale of
securities such that when the short position is open the Fund owns an equal
amount of the securities sold short or owns preferred stocks or debt securities,
convertible or exchangeable without payment of further consideration, into an
equal number of securities sold short. This kind of short sale, which is
referred to as one 'against the box,' will be entered into by a Fund for the
purpose of receiving a portion of the interest earned by the executing broker
from the proceeds of the sale. The proceeds of the sale will generally be held
by the broker until the settlement date when the Fund delivers securities to
close out its short position. Although prior to delivery the Fund will have to
pay an amount equal to any dividends paid on the securities sold short, the Fund
will receive the dividends from the securities sold short or the dividends from
the preferred stock or interest from the debt securities convertible or
exchangeable into the securities sold short, plus a portion of the interest
earned from the proceeds of the short sale. The Fund will deposit, in a
segregated account with its custodian or a qualified subcus-

todian, the securities sold short or convertible or exchangeable preferred
stocks or debt securities in connection with short sales against the box. Each
Fund will endeavor to offset transaction costs associated with short sales
against the box with the income from the investment of the cash proceeds. Not
more than 10% of a Fund's net assets (taken at current value) may be held as
collateral for short sales against the box at any one time. The extent to which
the Fund may make short sales may be limited by the requirement contained in the
Code.

STRATEGIES AVAILABLE TO THE FIXED INCOME FUND AND THE GLOBAL FIXED INCOME FUND

FOREIGN SECURITIES. The Fixed Income and Global Fixed Income Funds may invest in
the securities of foreign issuers. There are certain risks involved in investing
in securities of companies and governments of foreign nations which are in
addition to the usual risks inherent in domestic investments. These risks
include those resulting from fluctuations in currency exchange rates,
revaluation of currencies, future adverse political and economic developments
and the possible imposition of currency exchange blockages or other foreign
governmental laws or restrictions, reduced availability of public information
concerning issuers, the lack of uniform accounting, auditing and financial
reporting standards and other regulatory practices and requirements that are
often less rigorous than those applied in the United States. The yield of the
Funds may be adversely affected by fluctuations in the value of one or more
currencies relative to the U.S. dollar. Moreover, securities of many foreign
companies may be less liquid and their prices more volatile than those of
securities of comparable U.S. companies. Certain foreign countries are known to
experience long delays between the trade and settlement dates of securities
purchased or sold. Due to the increased exposure of the Funds to market and
foreign exchange fluctuations brought about by such delays and due to the
corresponding negative impact on the Funds' liquidity, the Funds will avoid
investing in countries that are known to experience settlement delays which may
expose the Funds to unreasonable risk of loss. In addition, with respect to
certain foreign countries, there is the possibility of expropriation,
nationalization, confiscatory taxation and limitations on the use or removal of
funds or other assets of the Funds, including the withholding of dividends.
Moreover, individual foreign economies may differ favorably or unfavorably from
the U.S. economy in such respects as growth of gross national product, rate of
inflation, capital reinvestment, resource self-sufficiency and balance of
payments positions.

Investment in foreign securities may also result in higher operating
expenses due to the cost of converting foreign currency into U.S. dollars, the
payment of fixed brokerage commissions on foreign exchanges, which generally are
higher than commissions on U.S. exchanges, higher valuation and communications
costs and the expense of maintaining securities with foreign custodians.

REITS. The Fixed Income Fund and the Global Fixed Income Fund may invest in real
estate investment trusts ('REITs'), which are pooled investment vehicles that
invest primarily in income-producing real estate or real estate related loans or
interests. Like regulated investment companies such as the Funds, REITs are not
taxed on income distributed to shareholders provided they comply with several
requirements of the Code. A Fund investing in a REIT will indirectly bear its
proportionate share of any expenses paid by the REIT in addition to the expenses
of the Fund.

of financing projects. REITs are subject to heavy cash flow dependency, default
by borrowers, self-liquidation, the possibilities of failing to qualify for the
exemption from tax for distributed income under the Code and failing to maintain
their exemptions from the 1940 Act. REITs are also subject to interest rate
risks.

STRATEGY AVAILABLE TO THE FIXED INCOME FUND AND THE INTERMEDIATE GOVERNMENT FUND

LENDING OF PORTFOLIO SECURITIES. The Fixed Income Fund and the Intermediate
Government Fund may lend portfolio securities to brokers, dealers and other
financial organizations. By lending its securities, a Fund can increase its
income by continuing to receive interest and any dividends on the loaned
securities as well as by either investing the cash collateral in short-term
instruments or obtaining yield in the form of interest paid by the borrower when
Government Securities are used as collateral. These loans, if and when made, may
not exceed 20% and 30%, respectively, of the total assets of the Fixed Income
Fund and the Intermediate Government Fund, respectively, taken at value and will
be collateralized by cash, letters of credit or Government Securities, which are
maintained at all times in an amount at least equal to the current market value
of the loaned securities. Any gain or loss in the market price of the securities
loaned that might occur during the term of the loan would be for the account of
the Fund. From time to time, the Fund may pay a part of the interest earned from
the investment collateral received for securities loaned to the borrower and/or
a third party that is unaffiliated with the Fund and that is acting as a
'finder.' The Fund bears a risk of loss in the event that the other party to the
loan agreement defaults on its obligations or becomes bankrupt and the Fund is
delayed or prevented from exercising its right to retrieve and dispose of the
loaned securities, including the risk of a possible decline in the value of the
loaned securities during the period in which the Fund seeks to assert its
rights.

STRATEGIES AVAILABLE TO THE FIXED INCOME FUND AND THE NEW YORK MUNICIPAL FUND

NEW YORK MUNICIPAL OBLIGATIONS. New York Municipal Obligations include debt
obligations of the State of New York and its political subdivisions, agencies
and public authorities issued to obtain funds for various public purposes and
debt obligations issued by other governmental entities (such as Puerto Rico) if
such debt obligations generate interest income which is excluded from gross
income for federal taxable income purposes and exempt from New York State and
New York City personal income taxes.

MUNICIPAL OBLIGATIONS. The two principal types of Municipal Obligations, in
terms of the source of payment of debt service on the bonds, are general
obligation bonds and revenue bonds and a Fund may hold both in any proportion.
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 or other
specific revenue source but not from the general taxing power. There are, of
course, variations in the security of Municipal Obligations, both within a
particular classification and between classifications.

A Fund may invest without limit in Municipal Obligations that are repayable
out of revenue streams generated from economically related projects or
facilities or Municipal Obligations whose issuers are located in the same state.
Sizeable investments in such obligations could involve an increased risk to the
Fund should any of such related projects or facilities experience financial
difficulties. Each Fund intends during the coming year to limit investments in
such obligations to less than 25% of its assets.

ALTERNATIVE MINIMUM TAX BONDS. The Funds may invest without limit in
'Alternative Minimum Tax Bonds,' which are certain bonds issued after August 7,
1986 to finance certain non-governmental activities. While the income from
Alternative Minimum Tax Bonds is exempt from regular federal income tax, it is a
tax preference item for purposes of the federal individual and corporate
'alternative minimum tax.' The alternative minimum tax is a special tax that
applies to a limited number of taxpayers who have certain adjustments or tax
preference items. Available returns on Alternative Minimum Tax Bonds acquired by
a Fund may be lower than those from other Municipal Obligations acquired by a
Fund due to the possibility of federal, state and local alternative minimum or
minimum income tax liability on Alternative Minimum Tax Bonds. At present, the
Fixed Income Fund does not intend to purchase Alternative Minimum Tax Bonds.

VARIABLE RATE AND MASTER DEMAND NOTES. Municipal Obligations purchased by a Fund
may include variable rate and master demand notes issued by industrial
development authorities and other governmental entities. Variable rate demand
notes are tax-exempt Municipal Obligations that provide for a periodic
adjustment in the interest rate paid on the notes. Master demand notes are
tax-exempt Municipal Obligations that provide for a periodic adjustment in the
interest rate paid (usually tied to the Treasury Bill auction rate) and permit
daily changes in the amount borrowed. While there may be no active secondary
market with respect to a particular variable rate or master demand note
purchased by a Fund, the Fund may, upon the notice specified in the note, demand
payment of the principal of and accrued interest on the note at any time and may
resell the note at any time to a third party. The absence of such an active
secondary market, however, could make it difficult for the Fund to dispose of
the variable rate or master demand note involved in the event the issuer of the
note defaulted on its payment obligations, and a Fund could, for this or other
reasons, suffer a loss to the extent of the default plus any expenses involved
in an attempt to recover the investment.

STAND-BY COMMITMENTS. The Fixed Income Fund and the New York Municipal Fund may
acquire stand-by commitments with respect to Municipal Obligations held in their
respective portfolios. Under a stand-by commitment, which is commonly known as a
'put', a dealer agrees to purchase, at a Fund's option, specified Municipal
Obligations at a specified price. A Fund may pay for stand-by commitments either
separately in cash or by paying a higher price for the securities acquired with
the commitment, thus increasing the cost of the securities and reducing the
yield otherwise available from them, and will be valued at zero in determining
the Fund's net asset value. A stand-by commitment is not transferable by a Fund,
although the Fund can sell the underlying Municipal Obligations to a third party
at any time. The principal risk of stand-by commitments is that the writer of a
commitment may default on its obligation to repurchase the securities acquired
with it. The Funds intend to enter into stand-by commitments only with brokers,
dealers and banks that, in the opinion of 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 Funds will acquire
stand-by commitments only in order to facilitate portfolio liquidity and do not
intend to exercise their rights under stand-by commitments for trading purposes.

STRATEGY AVAILABLE TO THE INTERMEDIATE GOVERNMENT FUND

GOVERNMENT ZERO COUPON SECURITIES. The Intermediate Government Fund may invest
in (i) Government Securities that have been stripped of their unmatured interest
coupons, (ii) the

coupons themselves and (iii) receipts or certificates representing interests in
stripped Government Securities and coupons (collectively referred to as
'Government zero coupon securities'). The market value of Government zero coupon
securities that are considered Government Securities is used for purposes of
determining whether at least 65% of the Intermediate Government Fund's total
assets is invested in Government Securities. However, receipts or certificates
which are underwritten by securities dealers or banks that evidence ownership of
future interest payments, principal payments or both on certain notes or bonds
issued by the U.S. government, its agencies, authorities or instrumentalities
will not be considered Government Securities for purposes of the 65% test. For a
description of zero coupon securities and the tax and other considerations
associated with investing in them, see 'Zero Coupon Securities' above and
'Dividends, Distributions and Taxes -- Taxes' below.

INVESTMENT GUIDELINES

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

MANAGEMENT OF THE FUNDS

INVESTMENT ADVISER. Each Fund employs Warburg as its investment adviser.
Warburg, subject to the control of each Fund's officers and the Board, manages
the investment and reinvestment of the assets of the Funds in accordance with
each Fund's investment objective and stated investment policies. Warburg makes
investment decisions for each Fund and places orders to purchase or sell
securities on behalf of each such Fund. Warburg also employs a support staff of
management personnel to provide services to the Funds and furnishes the Funds
with office space, furnishings and equipment.

For the services provided by Warburg, the Fixed Income Fund, the Global
Fixed Income Fund, the Intermediate Government Fund and the New York Municipal
Fund pay Warburg a fee calculated at an annual rate of .50%, 1.00%, .50% and
.40%, respectively, of the Fund's average daily net assets. Although the Global
Fixed Income Fund's advisory fee is higher than that paid by most other
investment companies, including money market and fixed income funds,

Warburg believes that it is comparable to fees charged by other mutual funds
with similar policies and strategies. The advisory agreement between each Fund
and Warburg provides that Warburg will reimburse the Fund to the extent certain
expenses that are described in the Statement of Additional Information exceed
applicable state expense limitations. Warburg and each Fund's co-administrators
may voluntarily waive a portion of their fees from time to time and temporarily
limit the expenses to be paid by the Fund.

Warburg is a professional investment counselling firm which provides
investment services to investment companies, employee benefit plans, endowment
funds, foundations and other institutions and individuals. As of November 30,
1995, Warburg managed approximately $11.9 billion of assets, including
approximately $6.2 billion of assets of twenty-three investment companies or
portfolios. Incorporated in 1970, Warburg is a wholly owned subsidiary of
Warburg, Pincus Counsellors G.P. ('Warburg G.P.'), a New York general
partnership. E.M. Warburg, Pincus & Co., Inc. ('EMW') controls Warburg through
its ownership of a class of voting preferred stock of Warburg. Warburg G.P. has
no business other than being a holding company of Warburg and its subsidiaries.
Warburg's address is 466 Lexington Avenue, New York, New York 10017-3147.

PORTFOLIO MANAGERS. Dale C. Christensen is a co-portfolio manager and president
of each of the Funds. Mr. Christensen is a managing director of EMW and has been
associated with EMW since 1989, before which time he was a senior vice president
at Citibank, N.A. He has been with each Fund since January 1992. M. Anthony E.
van Daalen is a co-portfolio manager of the Fixed Income and Intermediate
Government Funds. Mr. van Daalen has been a vice president and co-portfolio
manager at Warburg since 1992, prior to which time he was an assistant vice
president at Citibank, N.A. Laxmi C. Bhandari, also a vice president of Warburg,
is a co-portfolio manager of the Global Fixed Income Fund. Mr. Bhandari has been
a co-portfolio manager of the Global Fixed Income Fund since joining Warburg in
1993, before which time he was a vice president at the Paribas Corporation.
Sharon B. Parente is a co-portfolio manager of the New York Municipal Fund. Ms.
Parente is a senior vice president of Warburg and has been a co-portfolio
manager of the New York Municipal Fund since joining Warburg in 1992, before
which time she was a vice president at Citibank, N.A.

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

Each Fund employs PFPC, an indirect, wholly owned subsidiary of PNC Bank
Corp., as a co-administrator. As a co-administrator, PFPC calculates the Fund's
net asset value, provides all accounting services for each Fund and assists in
related aspects of the Fund's operations. As compensation each Fund pays PFPC a
fee calculated at an annual rate of .10% of its average daily net assets,
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.

CUSTODIANS. PNC Bank, National Association ('PNC') serves as custodian of the
assets of each of the Funds. Fiduciary Trust Company International ('Fiduciary')
also serves as custodian of the Global Fixed Income Fund's assets. Like PFPC,
PNC is a subsidiary of PNC Bank Corp. and its principal business address is
Broad and Chestnut Streets, Philadelphia, Pennsylvania 19101. Fiduciary's
principal business address is Two World Trade Center, New York, New York 10048.

TRANSFER AGENT. State Street Bank and Trust Company ('State Street') acts as
shareholder servicing agent, transfer agent and dividend disbursing agent for
the Funds. It has delegated to Boston Financial Data Services, Inc. ('BFDS'), a
50%-owned subsidiary, responsibility for most shareholder servicing functions.
State Street's principal business address is 225 Franklin Street, Boston,
Massachusetts 02110. BFDS's principal business address is 2 Heritage Drive,
North Quincy, Massachusetts 02171.

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

Warburg or its affiliates may, at their own expense, provide promotional
incentives to parties who support the sale of shares of the Funds, consisting of
securities dealers who have sold Fund shares or others, including banks and
other financial institutions, under special arrangements. In some instances,
these incentives may be offered only to certain institutions whose
representatives provide services in connection with the sale or expected sale of
significant amounts of Fund shares.

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

HOW TO OPEN AN ACCOUNT

In order to invest in a Fund, an investor must first complete and sign an
account application. To obtain an application, an investor may telephone Warburg
Pincus Funds at (800) 257-5614. An investor may also obtain an account
application by writing to:

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

Completed and signed account applications should be mailed to Warburg
Pincus Funds at the above address.

RETIREMENT PLANS AND UGMA ACCOUNTS. For information about (i) investing in the
Funds through a tax-deferred retirement plan, such as an Individual Retirement
Account ('IRA') or a Simplified Employee Pension IRA ('SEP-IRA'), or (ii) about
opening a Uniform Gifts to Minors Act or Uniform Transfers to Minors Act
('UGMA') account, an investor should telephone Warburg Pincus Funds at (800)
888-6878 or write to Warburg Pincus Funds at the address set forth above.
Investors should consult their own tax advisers about the establishment of
retirement plans and UGMA accounts.

CHANGES TO ACCOUNT. For information on how to make changes to an account, an
investor should telephone Warburg Pincus Funds at (800) 888-6878.

HOW TO PURCHASE SHARES

Common Shares of each Fund may be purchased either by mail or, with special
advance instructions, by wire.

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

BY WIRE. Investors may also purchase Common Shares in a Fund by wiring funds
from their banks. Telephone orders will not be accepted until a completed
account application in proper form has been received and an account number has
been established. Investors should place an order with the Fund prior to wiring
funds by telephoning (800) 888-6878. Federal funds may be wired to Counsellors
Securities Inc. using the following wire address:

State Street Bank and Trust Co.
225 Franklin St.
Boston, MA 02101
ABA# 0110 000 28
Attn: Mutual Funds/Custody Dept.
[Insert Warburg Pincus Fund name(s) here]
DDA# 9904-649-2
[Shareowner name]
[Shareowner account number]

If a telephone order is received by the close of regular trading on the New
York Stock Exchange and payment by wire is received on the same day in proper
form in accordance with instructions set forth above, the shares will be priced
according to the net asset value of the Fund on that day and are entitled to
dividends and distributions beginning on that day. If payment by wire is
received in proper form by the close of the NYSE without a prior telephone
order, the purchase will be priced according to the net asset value of the Fund
on that day and is entitled to dividends and distributions beginning on that
day. However, if a wire in proper form that is not preceded by a telephone order
is received after the close of regular trading on the NYSE, the payment will be
held uninvested until the order is effected at the close of business on the next
business day. Payment for orders that are not accepted will be returned to the
prospective investor after prompt inquiry. If a telephone order is placed and
payment by wire is not received on the same day, the Fund will cancel the
purchase and the investor may be liable for losses or fees incurred.

The minimum initial investment in each Fund is $2,500 and the minimum
subsequent investment is $100, except that subsequent minimum investments can be
as low as $50 under the Automatic Monthly Investment Plan described in the next
section. For retirement plans and

UGMA accounts, the minimum initial and subsequent investment is $500. The Fund
reserves the right to vary further the initial and subsequent investment minimum
requirements at any time. In addition, the Fund may, in its sole discretion,
waive the initial and subsequent investment minimum requirements with respect to
investors who are employees of EMW or its affiliates or persons with whom
Warburg has entered into an investment advisory agreement. Existing investors
will be given 15 days' notice by mail of any increase in investment minimum
requirements.

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

PURCHASES THROUGH INTERMEDIARIES. The Funds understand that some broker-dealers
(other than Counsellors Securities), financial institutions, securities dealers
and other industry professionals, including certain of the programs discussed
below, may impose certain conditions on their clients or customers that invest
in the Funds, which are in addition to or different than those described in this
Prospectus, and may charge their clients or customers direct fees. Certain
features of the Funds, such as the minimum initial and subsequent investments,
redemption fees and certain trading restrictions, may be modified or waived in
these programs, and administrative charges may be imposed for the services
rendered. Therefore, a client or customer should contact the organization acting
on his behalf concerning the fees (if any) charged in connection with a purchase
or redemption of Fund shares and should read this Prospectus in light of the
terms governing his accounts with the organization. These organizations will be
responsible for promptly transmitting client or customer purchase and redemption
orders to the Fund in accordance with their agreements with clients or
customers.

Common Shares of each Fund are available through the Charles Schwab &
Company, Inc. Mutual Fund OneSource'tm' Program; Fidelity Brokerage Services,
Inc. FundsNetwork'tm' Program; Jack White & Company, Inc.; and Waterhouse
Securities Inc. Generally, these programs do not require customers to pay a
transaction fee in connection with purchases. These and other organizations that
have entered into agreements with a Fund or its agent may enter confirmed
purchase orders on behalf of clients and customers by phone, with payment to
follow no later than the Fund's pricing on the following business day. If
payment is not received by such time, the organization could be held liable for
resulting fees or losses.

AUTOMATIC MONTHLY INVESTING. Automatic monthly investing allows shareholders to
authorize a Fund to debit their bank account monthly ($50 minimum) for the
purchase of Fund shares on or about either the tenth or twentieth business day
of each month. To establish the automatic monthly investing option, obtain a
separate application or complete the 'Automatic Investment Program' section of
the account applications and include a voided, unsigned check from the bank
account to be debited. Only an account maintained at a domestic financial
institution which is an automatic clearing house member may be used.
Shareholders using this service must satisfy the initial investment minimum for
the Fund prior to or concurrent with the start of any Automatic Investment
Program. Please refer to an account application for further information, or
contact Warburg Pincus Funds at (800) 888-6878 for information or to modify or
terminate the program. Investors should allow a period of up to 30 days in order
to implement an automatic investment program. The failure to provide complete
information could result in further delays.

HOW TO REDEEM AND EXCHANGE
SHARES

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

Common Shares of the Funds may either be redeemed by mail or by telephone.
Investors should realize that in using the telephone redemption and exchange
option, you may be giving up a measure of security that you may have if you were
to redeem or exchange your shares in writing. If an investor desires to redeem
his shares by mail, a written request for redemption should be sent to Warburg
Pincus Funds at the address indicated above under 'How to Open an Account.' An
investor should be sure that the redemption request identifies the Fund, the
number of shares to be redeemed and the investor's account number. In order to
change the bank account designated to receive the redemption proceeds, the
investor must send a written request (with signature guarantee of all investors
listed on the account when such a change is made in conjunction with a
redemption request) to Warburg Pincus Funds. Each mail redemption request must
be signed by the registered owner(s) (or his legal representative(s)) exactly as
the shares are registered. If an investor has applied for the telephone
redemption feature on his account application, he may redeem his shares by
calling Warburg Pincus Funds at (800) 888-6878 between 9:00 a.m. and 4:00 p.m.
(Eastern time) on any business day. An investor making a telephone withdrawal
should state (i) the name of the Fund, (ii) the account number of the Fund,
(iii) the name of the investor(s) appearing on the Fund's records, (iv) the
amount to be withdrawn and (v) the name of the person requesting the redemption.

After receipt of the redemption request by mail or by telephone, the
redemption proceeds will, at the option of the investor, be paid by check and
mailed to the investor of record or be wired to the investor's bank as indicated
in the account application previously filled out by the investor. No Fund
currently imposes a service charge for effecting wire transfers but each Fund
reserves the right to do so in the future. During periods of significant
economic or market change, telephone redemptions may be difficult to implement.
If an investor is unable to contact Warburg Pincus Funds by telephone, an
investor may deliver the redemption request to Warburg Pincus Funds by mail at
the address shown above under 'How to Open an Account.' Although each Fund will
redeem shares purchased by check before the check clears, payments of the
redemption proceeds will be delayed until such check has cleared, which may take
up to 15 days from the purchase date. Investors should consider purchasing
shares using a certified or bank check or money order if they anticipate an
immediate need for redemption proceeds.

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

The proceeds paid upon redemption may be more or less than the amount
invested depending

upon a share's net asset value at the time of redemption. If an investor redeems
all the shares in his account, all dividends and distributions declared up to
and including the date of redemption are paid along with the proceeds of the
redemption.

If, due to redemptions, the value of an investor's account drops to less
than $2,000 ($250 in the case of a retirement plan or UGMA account), each Fund
reserves the right to redeem the shares in that account at net asset value.
Prior to any redemption, the Fund will notify an investor in writing that this
account has a value of less than the minimum. The investor will then have 60
days to make an additional investment before a redemption will be processed by
the Fund.

TELEPHONE TRANSACTIONS. In order to request redemptions by telephone, investors
must have completed and returned to Warburg Pincus Funds an account application
containing a telephone election. Unless contrary instructions are elected an
investor will be entitled to make exchanges by telephone. Neither a Fund nor its
agents will be liable for following instructions communicated by telephone that
it reasonably believes to be genuine. Reasonable procedures will be employed on
behalf of each Fund to confirm that instructions communicated by telephone are
genuine. Such procedures include providing written confirmation of telephone
transactions, tape recording telephone instructions and requiring specific
personal information prior to acting upon telephone instructions.

AUTOMATIC CASH WITHDRAWAL PLAN. Each Fund offers investors an automatic cash
withdrawal plan under which investors may elect to receive periodic cash
payments of at least $250 monthly or quarterly. To establish this service,
complete the 'Automatic Withdrawal Plan' section of the account application and
attach a voided check from the bank account to be credited. For further
information regarding the automatic cash withdrawal plan or to modify or
terminate the plan, investors should contact Warburg Pincus Funds at (800)
888-6878.

EXCHANGE OF SHARES. An investor may exchange Common Shares of a Fund for Common
Shares of another Fund or for Common Shares of another Warburg Pincus Fund at
their respective net asset values. Exchanges may be effected by mail or by
telephone in the manner described under 'Redemption of Shares' above. If an
exchange request is received by Warburg Pincus Funds prior to the close of
regular trading on the NYSE, the exchange will be made at each Fund's net asset
value determined at the end of that business day. Exchanges may be effected
without a sales charge but must satisfy the minimum dollar amount necessary for
new purchases. Due to the costs involved in effecting exchanges, each Fund
reserves the right to refuse to honor more than three exchange requests by a
shareholder in any 30-day period. The exchange privilege may be modified or
terminated at any time upon 60 days' notice to shareholders. Currently,
exchanges may be made among the Funds and with the following other funds:

WARBURG PINCUS CASH RESERVE FUND -- a money market fund investing in
short-term, high quality money market instruments;

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

WARBURG PINCUS TAX FREE FUND -- a bond fund seeking maximum current income
exempt from federal income taxes, consistent with preservation of captial;

WARBURG PINCUS BALANCED FUND -- a fund seeking maximum total return
through a combination of long-term growth of capital and current income
consistent with

preservation of capital through diversified investments in equity and debt
securities;

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

WARBURG PINCUS CAPITAL APPRECIATION FUND -- an equity fund seeking
long-term capital appreciation by investing principally in equity
securities of medium-sized domestic companies;

WARBURG PINCUS SMALL COMPANY VALUE FUND -- an equity fund seeking
long-term capital appreciation by investing primarily in equity securities
of small companies;

WARBURG PINCUS EMERGING GROWTH FUND -- an equity fund seeking maximum
capital appreciation by investing in emerging growth companies;

WARBURG PINCUS POST-VENTURE CAPITAL FUND -- a fund seeking long-term
growth of capital by investing primarily in equity securities of issuers
in their post-venture capital stage of development and pursuing an
aggressive investment strategy;

WARBURG PINCUS INTERNATIONAL EQUITY FUND -- an equity fund seeking
long-term capital appreciation by investing primarily in equity securities
of non-United States issuers;

WARBURG PINCUS EMERGING MARKETS FUND -- an equity fund seeking growth of
capital by investing primarily in securities of non-United States issuers
consisting of companies in emerging securities markets;

WARBURG PINCUS JAPAN GROWTH FUND -- an equity fund seeking long-term
growth of capital by investing primarily in equity securities of Japanese
issuers; and

WARBURG PINCUS JAPAN OTC FUND -- an equity fund seeking long-term capital
appreciation by investing in a portfolio of securities traded in the
Japanese over-the-counter market.

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

DIVIDENDS, DISTRIBUTIONS AND TAXES

DIVIDENDS AND DISTRIBUTIONS. Each Fund calculates its dividends from net
investment income. Net investment income includes interest accrued and dividends
earned on the Fund's portfolio securities for the applicable period (which
includes amortization of market discount) less amortization of market premium
and applicable expenses. The Fixed Income Fund, the Intermediate Government Fund
and the New York Municipal Fund each declares its dividends from its net
investment income daily and pays those dividends monthly in the calendar year in
which they are declared. The Global Fixed Income Fund declares dividends from
its net investment income quarterly. Net investment income earned on weekends
and when the NYSE is not opened will be computed as of the next business day.
Distributions of net realized long-term and short-term capital gains are
declared annually and will be paid in the calendar year in which they are
declared, generally in November or December. Unless an investor instructs a Fund
to pay dividends or distributions in cash, dividends and

distributions will automatically be reinvested in additional Common Shares of
the relevant Fund at net asset value. The election to receive dividends in cash
may be made on the account application or, subsequently, by writing to Warburg
Pincus Funds at the address set forth under 'How to Open an Account' or by
calling Warburg Pincus Funds at (800) 888-6878.

A Fund may be required to withhold for U.S. federal income taxes 31% of all
distributions payable to shareholders who fail to provide the Fund with their
correct taxpayer identification number or to make required certifications, or
who have been notified by the U.S. Internal Revenue Service that they are
subject to backup withholding.

Special Distribution Matters Relating to the New York Municipal Fund. If,
for any full fiscal year, the New York Municipal Fund's total distributions
exceed net investment income and net realized capital gains, the excess
distributions may be treated as a taxable dividend or a tax-free return of
capital (up to the amount of the shareholder's tax basis in his shares). The
amount treated as a tax-free return of capital will reduce a shareholder's
adjusted basis in his shares. Pursuant to the requirements of the 1940 Act and
other applicable laws, a notice will accompany any distribution paid from
sources other than net investment income. In the event the Fund distributes
amounts in excess of its net investment income and net realized capital gains,
such distributions may have the effect of decreasing the Fund's total assets,
which may increase the Fund's expense ratio.

TAXES. Each Fund intends to continue to qualify each year as a 'regulated
investment company' within the meaning of the Code. Each Fund, if it qualifies
as a regulated investment company, will be subject to a 4% non-deductible excise
tax measured with respect to certain undistributed amounts of ordinary income
and capital gain. Each Fund expects to pay such additional dividends and to make
such additional distributions as are necessary to avoid the application of this
tax.

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

received by the shareholder with respect to such share. The portion of such loss
not disallowed as described in the preceding sentence shall be treated for
federal income tax purposes as a long-term capital loss to the extent of any
distributions or deemed distributions of long-term capital gains received by the
shareholder with respect to such share. An investor in the New York Municipal
Fund who redeems his shares prior to the declaration of a dividend may lose
tax-exempt status on accrued income attributable to tax-exempt Municipal
Obligations. Investors may be proportionately liable for taxes on income and
gains of the Funds, but investors not subject to tax on their income will not be
required to pay tax on amounts distributed to them. The Fund's investment
activities, including short sales of securities, will not result in unrelated
business taxable income to a tax-exempt investor. A Fund's dividends, to the
extent not derived from dividends attributable to certain types of stock issued
by U.S. domestic corporations, generally will not qualify for the dividends
received deduction for corporations.

Dividends and interest received by a Fund with respect to its foreign
investments may be subject to withholding and other taxes imposed by foreign
countries. However, tax conventions between certain countries and the United
States may reduce or eliminate such taxes. If a Fund qualifies as a regulated
investment company, if certain asset and distribution requirements are satisfied
and if more than 50% of the Fund's total assets at the close of its fiscal year
consists of stock or securities of foreign corporations, the Fund may elect for
U.S. income tax purposes to treat foreign income taxes paid by it as paid by its
shareholders. A Fund may qualify for and make this election in some, but not
necessarily all, of its taxable years. As a result, shareholders of the Fund
would be required to include their pro rata portions of such foreign taxes in
computing their taxable incomes and then treat an amount equal to those foreign
taxes as a U.S. federal income tax deduction or as foreign tax credits against
their U.S. federal income taxes. Shortly after any year for which it makes such
an election, each Fund will report to its shareholders the amount per share of
such foreign tax that must be included in each shareholder's gross income and
the amount which will be available for the deduction or credit. No deduction for
foreign taxes may be claimed by a shareholder who does not itemize deductions.
Certain limitations will be imposed on the extent to which the credit (but not
the deduction) for foreign taxes may be claimed.

Special Tax Matters Relating to the Intermediate Government Fund. Investors
in the Intermediate Government Fund do not have to pay state and local income
taxes with respect to interest income on most types of Government Securities if
the investors are the tax owners of these Government Securities. Furthermore,
some states, if certain requirements are satisfied, permit investors to treat
the portion of their regulated investment company dividends that is attributable
to interest income on these Government Securities as tax-exempt income for state
or local income tax purposes. Other states treat all of these dividends as
subject to state and local income taxation. Investors in the Fund should consult
their own tax advisers to assess the consequences of investing in the Fund under
state and local laws generally and to determine whether dividends paid by the
Fund that represent interest derived from Government Securities are exempt from
any applicable state or local taxes.

federal individual and corporate alternative minimum taxes to the extent they
are derived from certain types of private activity bonds issued after August 7,
1986 and (ii) all exempt-interest dividends will be a component of the 'current
earnings' adjustment item for purposes of the federal corporate alternative
minimum tax. Furthermore, exempt-interest dividends paid by the Fund will
constitute a component of the 'current earnings' adjustment item for purposes of
the .12% corporate environmental tax. Moreover, dividends paid by the Fund will
be subject to a branch profits tax of up to 30% when received by certain foreign
corporate investors. Dividends derived from interest on qualifying New York
Municipal Obligations will be exempt from New York State and New York City
personal income (but not corporate franchise) taxes.

The Fixed Income Fund does not expect to meet the tax requirements that
would enable it to pay exempt-interest dividends with respect to income derived
from its holdings of Municipal Obligations.

GENERAL. Statements as to the tax status of each investor's dividends and
distributions are mailed annually. In the case of the New York Municipal Fund,
these statements set forth the dollar amount of income excluded or exempt from
federal income or New York State and New York City personal income taxes and the
dollar amount, if any, subject to federal taxation. These statements also
designate the amount of exempt-interest dividends that is a specific preference
item for purposes of the federal individual and corporate alternative minimum
taxes. Each investor will also receive, if applicable, various written notices
after the close of a Fund's prior taxable year with respect to certain dividends
and distributions which were received from the Fund during the Fund's prior
taxable year. Investors should consult their own tax advisers with specific
reference to their own tax situations, including their state and local tax
liabilities.

NET ASSET VALUE

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

The net asset value per Common Share of each Fund is computed by adding the
Common Shares' pro rata share of the value of the Fund's assets, deducting the
Common Shares' pro rata share of the Fund's liabilities and the liabilities
specifically allocated to the Common Shares and then dividing the result by the
total number of outstanding Common Shares.

PERFORMANCE

The Funds quote the performance of Common Shares separately from Advisor
Shares. The net asset value of Common Shares is listed in The Wall Street
Journal each business day under the heading 'Warburg Pincus Funds.' From time to
time, each Fund may advertise yield and average annual total return of its
Common Shares over various periods of time. The yield refers to net investment
income generated by the Common Shares over a specified thirty-day period, which
is then annualized. That is, the amount of net investment income generated by
the Common Shares during that thirty-day period is assumed to be generated over
a 12-month period and is shown as a percentage of the investment. In addition,
advertisements concerning the Intermediate Government Fund and the New York
Municipal Fund may describe a tax equivalent yield. The tax equivalent yield
demonstrates the yield on a taxable investment necessary to produce an after-tax
yield equal to the Common Shares' tax-free yield. It is calculated by increasing
the yield shown for the Common Shares to the extent necessary to reflect the
payment of specified tax rates. Thus, the tax equivalent yield will always
exceed a Fund's Common Shares' yield. Total return figures show the average
percentage change in value of an investment in the Common Shares from the
beginning of the measuring period to the end of the measuring period. The
figures reflect changes in the price of the Common Shares assuming that any
income dividends and/or capital gain distributions made by the Fund during the
period were reinvested in Common Shares of the Fund. Total return will be shown
for recent one-, five- and ten-year periods, and may be shown for other periods
as well (such as from commencement of the Fund's operations or on a
year-by-year, quarterly or current year-to-date basis).

When considering average total return figures for periods longer than one
year, it is important to note that a Fund's annual total return for one year in
the period might have been greater or less than the average for the entire
period. When considering total return figures for periods shorter than one year,
investors should bear in mind that each Fund seeks long-term appreciation and
that such return may not be representative of any Fund's return over a longer
market cycle. Each Fund may also advertise aggregate total return figures of its
Common Shares for various periods, representing the cumulative change in value
of an investment in the Common Shares for the specific period (again reflecting
changes in the Fund's share prices and assuming reinvestment of dividends and
distributions). Aggregate and average total returns may be shown by means of
schedules, charts or graphs and may indicate various components of total return
(i.e., change in value of initial investment, income dividends and capital gain
distributions).

Investors should note that yield, tax-equivalent yield and total return
figures are based on historical earnings and are not intended to indicate future
performance. Each Fund's Statement of Additional Information describes the
method used to determine the yield and total return. Current performance figures
may be obtained by calling Warburg Pincus Funds at (800) 257-5614.

dollar bonds of ten countries with active bond markets), the Salomon Brothers
World Government Bond Index (a hedged, market-capitalization weighted index
designed to track major government debt markets) and the Lipper General World
Income Average (an average of funds that invest primarily in non-U.S. dollar and
U.S. dollar debt instruments); in the case of the Intermediate Government Fund,
with the Lehman Intermediate Government Bond Index (an unmanaged index of
government bonds calculated by Lehman Brothers); and in the case of the New York
Municipal Fund, with the Bond Buyer Index (the 'BBI') (an unmanaged index of 20
General Obligation issues of 20-year maturity from various municipalities across
the nation published by the American Banker) and the Lipper New York
Intermediate Municipal Debt Funds Average (an unmanaged index of 61 Intermediate
Municipal Debt Funds calculated by Lipper Analytical Services); or (iii) other
appropriate indexes of investment securities or with data developed by Warburg
derived from such indexes. The Fund may also include evaluations of each Fund
published by nationally recognized ranking services and by financial
publications that are nationally recognized, such as The Wall Street Journal,
Investor's Daily, Money, Inc., Institutional Investor, Barron's, Fortune,
Forbes, Business Week, Mutual Fund Magazine, Morningstar, Inc. and Financial
Times.

In reports or other communications to investors or in advertising, each
Fund may also describe the general biography or work experience of the portfolio
managers of the Fund and may include quotations attributable to the portfolio
managers describing approaches taken in managing the Fund's investments,
research methodology underlying stock selection or the Fund's investment
objective. In addition, a Fund and its portfolio managers may render periodic
updates of Fund activity, which may include a discussion of significant
portfolio holdings and analysis of holdings by industry, country, credit quality
and other characteristics. Each Fund may also discuss measures of risk, the
continuum of risk and return relating to different investments, and the
potential impact of foreign securities of a portfolio otherwise composed of
domestic securities. Morningstar, Inc. rates funds in broad categories based on
risk/reward analyses over various periods of time. In addition, each Fund may
from time to time compare its expense ratio to that of investment companies with
similar objectives and policies, based on data generated by Lipper Analytical
Services, Inc. or similar investment services that monitor mutual funds.

GENERAL INFORMATION

ORGANIZATION. The Fixed Income Fund and the New York Municipal Fund were
organized under the laws of The Commonwealth of Massachusetts as Massachusetts
business trusts in 1987 and 1986, respectively. In 1992, these Funds changed
their names from 'Counsellors Fixed Income Fund' and 'Counsellors New York
Municipal Bond Fund' to 'Warburg, Pincus Fixed Income Fund' and 'Warburg, Pincus
New York Municipal Bond Fund,' respectively. On February 28, 1995, the New York
Municipal Fund changed its name to 'Warburg, Pincus New York Intermediate
Municipal Fund.' The Global Fixed Income Fund and the Intermediate Government
Fund were incorporated under the laws of the State of Maryland in 1990 and 1988,
respectively, under the names 'Counsellors Global Fixed Income Fund, Inc.' and
'Counsellors Intermediate Maturity Government Fund, Inc.,' respectively. On
October 27, 1995 and February , 1996, the Funds amended their respective
charters to change their names to 'Warburg, Pincus Global Fixed Income Fund,
Inc.' and 'Warburg, Pincus Intermediate Maturity Government Fund, Inc.'

value per share, of which one billion shares are classified as Advisor Shares.
The charters of the Global Fixed Income Fund and the Intermediate Government
Fund authorize each Fund's Board to issue three billion full and fractional
shares of capital stock, $.001 par value per share, of which one billion shares
are designated Advisor Shares. Under each Fund's charter documents, the Board
has the power to classify or reclassify any unissued shares of the Fund into one
or more additional classes by setting or changing in any one or more respects
their relative rights, voting powers, restrictions, limitations as to dividends,
qualifications and terms and conditions of redemption. The Board of a Fund may
similarly classify or reclassify any class of its shares into one or more series
and, without shareholder approval, may increase the number of authorized shares
of the Fund.

MULTI-CLASS STRUCTURE. Each Fund offers a separate class of shares, the Advisor
Shares, pursuant to a separate prospectus. Individual investors may only
purchase Advisor Shares through institutional shareholders of record,
broker-dealers, financial institutions, depository institutions, retirement
plans and financial intermediaries. Shares of each class represent equal pro
rata interests in the respective Fund and accrue dividends and calculate net
asset value and performance quotations in the same manner. Because of the higher
fees paid by the Advisor Shares, the total return on such shares can be expected
to be lower than the total return on Common Shares. Investors may obtain
information concerning the Advisor Shares from their investment professional or
by calling Counsellors Securities at (800) 888-6878.

VOTING RIGHTS. Investors in a Fund are entitled to one vote for each full share
held and fractional votes for fractional shares held. Shareholders of a Fund
will vote in the aggregate except where otherwise required by law and except
that each class will vote separately on certain matters pertaining to its
distribution and shareholder servicing arrangements. There will normally be no
meetings of investors for the purpose of electing members of the Board unless
and until such time as less than a majority of the members holding office have
been elected by investors. Any Director of the Global Fixed Income Fund or the
Intermediate Government Fund may be removed by the shareholders at any time by a
vote of a majority of the votes entitled to be cast for the election of
Directors. Investors of record of no less than two-thirds of the outstanding
shares of the Fixed Income Fund or the New York Municipal Fund may remove a
Trustee through a declaration in writing or by vote cast in person or by proxy
at a meeting called for that purpose. A meeting will be called for the purpose
of voting on the removal of a governing Board member at the written request of
holders of 10% of the outstanding shares of a Fund. John L. Furth, a Director
and Trustee of the Funds, and Lionel I. Pincus, Chairman of the Board and Chief
Executive Officer of EMW, may be deemed to be controlling persons of each Fund
as of December 28, 1995 because they may be deemed to possess or share
investment power over shares owned by clients of Warburg and certain other
entities.

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

omission in this Prospectus with regard to another Fund.

SHAREHOLDER SERVICING

Common Shares may be sold to or through institutions, including insurance
companies, financial institutions and broker-dealers, that will not be paid by a
Fund a distribution fee pursuant to Rule 12b-1 under the 1940 Act for services
to their clients or customers who are beneficial owners of Common Shares. These
institutions may be paid fees by a Fund, Warburg, Counsellors Securities or any
of their affiliates for transfer agency, administrative, accounting, shareholder
liaison and/or other services provided to their customers that invest in the
Fund's Common Shares. Organizations that provide recordkeeping or other services
to certain employee benefit plans and qualified and other retirement plans that
include a Fund as an investment alternative and registered representatives
(including retirement plan consultants) that facilitate the administration and
servicing of shareholder accounts may also be paid a fee. Fees paid vary
depending on the arrangements and the amount of Fund assets held by an
institution's clients or customers and/or the number of plan participants
investing in the Fund. Warburg, Counsellors Securities or any of their
affiliates may, from time to time, at their own expense, pay certain Fund
transfer agent fees and expenses related to clients and customers of these
institutions and organizations. In addition, these institutions and
organizations may use a portion of their compensation to compensate the Fund's
custodian or transfer agent for costs related to accounts of their clients or
customers.

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

<PAGE>
<PAGE>
TABLE OF CONTENTS

THE FUNDS' EXPENSES ...................................................... 2
FINANCIAL HIGHLIGHTS ..................................................... 3
INVESTMENT OBJECTIVES AND
POLICIES .............................................................. 5
PORTFOLIO INVESTMENTS .................................................... 7
RISK FACTORS AND SPECIAL CONSIDERATIONS .............................. 10
PORTFOLIO TRANSACTIONS AND
TURNOVER RATE ........................................................ 13
CERTAIN INVESTMENT STRATEGIES ........................................... 13
INVESTMENT GUIDELINES ................................................... 21
MANAGEMENT OF THE FUNDS ................................................. 21
HOW TO OPEN AN ACCOUNT .................................................. 23
HOW TO PURCHASE SHARES .................................................. 23
HOW TO REDEEM AND EXCHANGE
SHARES ............................................................... 26
DIVIDENDS, DISTRIBUTIONS AND
TAXES ................................................................ 28
NET ASSET VALUE ......................................................... 31
PERFORMANCE ............................................................. 32
GENERAL INFORMATION ..................................................... 33
SHAREHOLDER SERVICING ................................................... 35

WPBDF-1-0396

<PAGE>
<PAGE>
[LOGO]

[ ] WARBURG PINCUS
FIXED INCOME FUND

[ ] WARBURG PINCUS
GLOBAL FIXED INCOME FUND

[ ] WARBURG PINCUS INTERMEDIATE
MATURITY GOVERNMENT FUND

[ ] WARBURG PINCUS NEW YORK
INTERMEDIATE MUNICIPAL FUND

PROSPECTUS

, 1996

STATEMENT OF DIFFERENCES

The trademark symbol shall be represented as ........'tm'
The dagger shall be represented as....................'D'

<PAGE>
<PAGE>
[Logo]

PROSPECTUS

, 1996

[ ] WARBURG PINCUS FIXED INCOME FUND
[ ] WARBURG PINCUS GLOBAL FIXED INCOME FUND
[ ] WARBURG PINCUS INTERMEDIATE MATURITY GOVERNMENT FUND
[ ] WARBURG PINCUS NEW YORK INTERMEDIATE MUNICIPAL FUND

<PAGE>
<PAGE>
Subject to Completion, dated January 16, 1996

WARBURG PINCUS ADVISOR FUNDS
P.O. BOX 9030
BOSTON, MASSACHUSETTS 02205-9030
TELEPHONE NUMBER: (800) 888-6878

, 1996
PROSPECTUS

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

WARBURG PINCUS FIXED INCOME FUND is a bond fund seeking current income and,
secondarily, capital appreciation by investing in a diversified portfolio of
fixed income securities.

WARBURG PINCUS INTERMEDIATE MATURITY GOVERNMENT FUND is an intermediate-term
bond fund investing in obligations issued or guaranteed by the U.S. government,
its agencies or instrumentalities.

The Funds currently offer two classes of shares, one of which, the Advisor
Shares, is offered pursuant to this Prospectus. The Advisor Shares of the Funds,
as well as Advisor Shares of certain other Warburg Pincus-advised funds, are
sold under the name 'Warburg Pincus Advisor Funds.' Individual investors may
purchase Advisor Shares only through institutional shareholders of record,
broker-dealers, financial institutions, depository institutions, retirement
plans and other financial intermediaries ('Institutions'). The Advisor Shares
impose a 12b-1 fee of up to .75% per annum, which is the economic equivalent of
a sales charge. The Funds' Common Shares are available for purchase by
individuals directly and are offered by a separate prospectus.

NO MINIMUM INVESTMENT

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

This Prospectus briefly sets forth certain information about the Funds that
investors should know before investing. Investors are advised to read this
Prospectus and retain it for future reference. Additional information about each
Fund, contained in a Statement of Additional Information, has been filed with
the Securities and Exchange Commission (the 'SEC') and is available to investors
without charge by calling Warburg Pincus Advisor Funds at (800) 257-5614.
Information regarding the status of shareholder accounts may be obtained by
calling Warburg Pincus Advisor Funds at (800) 888-6878. The Statements of
Additional Information, as amended or supplemented from time to time, bear the
same date as this Prospectus and are incorporated by reference in their entirety
into this Prospectus.

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

- --------------------------------------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
- --------------------------------------------------------------------------------
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any State in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such State.

THE FUNDS' EXPENSES

Each of Warburg Pincus Fixed Income Fund, Global Fixed Income Fund,
Intermediate Government Fund and New York Municipal Fund (the 'Funds') currently
offers two separate classes of shares: Common Shares and Advisor Shares. See
'General Information.' Because of the higher fees paid by Advisor Shares, the
total return on such shares can be expected to be lower than the total return on
Common Shares.

<TABLE>
<CAPTION>
GLOBAL INTERMEDIATE NEW YORK
FIXED INCOME FIXED INCOME GOVERNMENT MUNICIPAL
FUND FUND FUND FUND
------------ ------------ ------------ ---------
<S> <C> <C> <C> <C>
Shareholder Transaction Expenses
Maximum Sales Load Imposed on Purchases (as a
percentage of offering price)...................... 0 0 0 0
Annual Fund Operating Expenses (as a percentage of average
net assets)
Management Fees...................................... .35% .44% .05% .19%
12b-1 Fees........................................... .75%* .75%* .75%* .75%*
Other Expenses....................................... .40% .51% .55% .41%
----- ------ ----- ---------
Total Fund Operating Expenses (after fee
waivers)`D'........................................ 1.50% 1.70% 1.35% 1.35%
EXAMPLE
You would pay the following expenses
on a $1,000 investment, assuming (1) 5% annual return and
(2) redemption at the end of each time period:
1 year............................................... $15 $17 $14 $14
3 years.............................................. $47 $54 $43 $43
</TABLE>

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

* Current 12b-1 fees are % out of a maximum .75% authorized under the Advisor
Shares' Distribution Plan. At least a portion of these fees should be
considered by the investor to be the economic equivalent of a sales charge.

`D' Absent the anticipated waiver of fees by the Funds' investment adviser and
co-administrator, Management Fees for the Fixed Income, Global Fixed Income,
Intermediate Government and New York Municipal Funds would equal .50%,
1.00%, .50%, and .40%, respectively; Other Expenses would equal .43%, .58%,
.59% and .46%, respectively; and Total Fund Operating Expenses would equal
1.68%, 2.33%, 1.84% and 1.61%, respectively. Other Expenses are based on
actual expenses of the Common Shares of the Funds for the fiscal year ended
October 31, 1995, net of any fee waivers or expense reimbursements. The
investment adviser and co-administrator are under no obligation to continue
these waivers.

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

<PAGE>
<PAGE>
FINANCIAL HIGHLIGHTS

Advisor Shares of the Fund had not been offered to the public as of October
31, 1995 and, accordingly, no financial information is provided with respect to
such shares. Financial information with respect to Common Shares of the Funds
are contained in the Funds' annual report, dated October 31, 1995, copies of
which appear in the Funds' Statements of Additional Information or may be
obtained without charge by calling Warburg Pincus Advisor Funds at (800)
257-5614.

INVESTMENT OBJECTIVES AND POLICIES

FIXED INCOME FUND

GLOBAL FIXED INCOME FUND

<PAGE>
<PAGE>
rights. For temporary defensive purposes or during times of international
political or economic uncertainty, all of the Fund's investments may be made
temporarily in the United States or denominated in U.S. dollars.

The Fund may invest in a wide variety of fixed income obligations issued
anywhere in the world, including the United States. The Fund may purchase debt
obligations issued or guaranteed by the United States or foreign governments,
their agencies, instrumentalities or political subdivisions, as well as
supranational entities organized or supported by several national governments,
such as the International Bank for Reconstruction and Development (the 'World
Bank') or the European Investment Bank. The Fund may also purchase fixed income
obligations of foreign corporations that are issued in a currency other than
U.S. dollars. Because of fluctuating currency values, the Fund may engage in
certain currency transactions, as described under 'Certain Investment
Strategies -- Options, Futures and Currency Transactions' below.

The Fund may hold up to 35% of its net assets in fixed income securities
rated below investment grade, or in unrated securities considered to be of
equivalent quality.

INTERMEDIATE GOVERNMENT FUND

<PAGE>
<PAGE>
Assistance Agency of the Department of Defense (the 'Guaranty'), of the due
and punctual payment of 90% of payments of principal and interest due on the
Loan Note and a security interest in collateral, consisting of non-callable
securities issued or guaranteed by the United States government, or derivatives
thereof, such as trust receipts or other securities evidencing an interest in
such United States government securities, sufficient to pay the remaining 10% of
all payments of principal and interest due on the Loan Notes. Each Certificate
issued by a Trust represents the right to receive a portion of the payments due
on the Loan Note held by that Trust. The Certificates are not subject to
prepayment or acceleration. Each Guaranty is entitled to the full faith and
credit of the United States of America. A Certificateholder's right to receive
any payments with respect to the Guaranty will be subject to termination if such
holder breaches the terms of its Certificate.

NEW YORK MUNICIPAL FUND

PORTFOLIO INVESTMENTS

MONEY MARKET OBLIGATIONS. Each Fund is authorized to invest, under normal
conditions, up to 35% of its total assets in short-term money market obligations
having remaining maturities

<PAGE>
<PAGE>
of less than one year at the time of purchase. These short-term instruments
consist of Government Securities; bank obligations (including certificates of
deposit, time deposits and bankers' acceptances of domestic or foreign banks,
domestic savings and loans and similar institutions) that are high quality
investments or, if unrated, deemed by Warburg to be high quality investments;
commercial paper rated no lower than A-2 by S&P or Prime-2 by Moody's or the
equivalent from another major rating service or, if unrated, of an issuer having
an outstanding, unsecured debt issue then rated within the three highest rating
categories; in the case of the Fixed Income Fund and the Global Fixed Income
Fund, obligations of foreign governments, their agencies or instrumentalities;
and repurchase agreements with respect to portfolio securities. The short-term
money market obligations in which the New York Municipal Fund is authorized to
invest generally will be tax-exempt obligations; however, the Fund may invest in
taxable obligations when suitable tax-exempt obligations are unavailable or to
maintain liquidity for meeting anticipated redemptions and paying operating
expenses. Tax-exempt money market obligations in which the New York Municipal
Fund may invest consist of investment grade tax-exempt notes and tax-exempt
commercial paper rated no lower than A-2 by S&P or Prime-2 by Moody's or the
equivalent from another major rating service or, if not rated, of municipal
issuers having an issue of outstanding Municipal Obligations rated within the
three highest grades by Moody's or S&P.

Repurchase Agreements. Under normal market conditions, each Fund may invest
up to 20% of its total assets in repurchase agreement transactions with member
banks of the Federal Reserve System and certain non-bank dealers. Repurchase
agreements are contracts under which the buyer of a security simultaneously
commits to resell the security to the seller at an agreed-upon price and date.
Under the terms of a typical repurchase agreement, a Fund would acquire any
underlying security for a relatively short period (usually not more than one
week) subject to an obligation of the seller to repurchase, and the Fund to
resell, the obligation at an agreed-upon price and time, thereby determining the
yield during the Fund's holding period. This arrangement results in a fixed rate
of return that is not subject to market fluctuations during the Fund's holding
period. The value of the underlying securities will at all times be at least
equal to the total amount of the purchase obligation, including interest. The
Fund bears a risk of loss in the event that the other party to a repurchase
agreement defaults on its obligations or becomes bankrupt and the Fund is
delayed or prevented from exercising its right to dispose of the collateral
securities, including the risk of a possible decline in the value of the
underlying securities during the period while the Fund seeks to assert this
right. Warburg, acting under the supervision of the governing Board of each Fund
(the 'governing Board' or 'Board'), monitors the creditworthiness of those bank
and non-bank dealers with which each Fund enters into repurchase agreements to
evaluate this risk. A repurchase agreement is considered to be a loan under the
Investment Company Act of 1940, as amended (the '1940 Act').

<PAGE>
<PAGE>
Inc. ('PFPC'). A money market mutual fund is an investment company that invests
in short-term high quality money market instruments. A money market mutual fund
generally does not purchase securities with a remaining maturity of more than
one year. The Intermediate Government Fund and the New York Municipal Fund would
invest in money market mutual funds that invest in Government Securities and
tax-exempt securities, respectively. As a shareholder in any mutual fund, a Fund
will bear its ratable share of the mutual fund's expenses, including management
fees, and will remain subject to payment of the Fund's administration fees and
other expenses with respect to assets so invested.

Mortgage-Backed Securities. Mortgage-backed securities are collateralized
by mortgages or interests in mortgages and may be issued by government or
non-government entities. Mortgage-backed securities issued by GNMA, FNMA or
FHLMC provide a monthly payment consisting of interest and principal payments,
and additional payments will be made out of unscheduled prepayments of
principal. Neither the value of nor the yield on these mortgage-backed
securities or shares of the Funds is guaranteed by the U.S. Government.
Non-government issued mortgage-backed securities may offer higher yields than
those issued by government entities, but may be subject to greater price
fluctuations. The value of mortgaged-backed securities may change due to shifts
in the market's perceptions of issuers, and regulatory or tax changes may
adversely affect the mortgage securities market as a whole. Foreclosures and
prepayments, which occur when unscheduled or early payments are made on the
underlying mortgages, may shorten the effective maturities on these securities.
The Funds' yield may be affected by reinvestment of prepayments at
higher or lower rates than the original investment. Prepayments may tend to
increase due to
7

<PAGE>
<PAGE>
refinancing of mortgages as interest rates decline. In addition, like other debt
securities, the values of mortgage-backed securities will generally fluctuate in
response to interest rates.

Structured Notes, Bonds or Debentures. Typically, the value of the
principal and/or interest on these instruments is determined by reference to
changes in the value of specific currencies, interest rates, commodities,
indexes or other financial indicators (the 'Reference') or the relevant change
in two or more References. The interest rate or the principal amount payable
upon maturity or redemption may be increased or decreased depending upon changes
in the applicable Reference. The terms of the structured securities may provide
that in certain circumstances no principal is due at maturity and, therefore,
may result in the loss of a Fund's entire investment. The value of structured
securities may move in the same or the opposite direction as the value of the
Reference, so that appreciation of the Reference may produce an increase or
decrease in the interest rate or value of the security at maturity. In addition,
the change in interest rate or the value of the security at maturity may be a
multiple of the change in the value of the Reference so that the security may be
more or less volatile than the Reference, depending on the multiple.
Consequently, structured securities may entail a greater degree of market risk
and volatility than other types of debt obligations.

Assignments and Participations. Each Fund may invest in assignments of and
participations in loans issued by banks and other financial institutions.

<PAGE>
<PAGE>
20% limit on investing in non-municipal securities.

RISK FACTORS AND SPECIAL
CONSIDERATIONS

For certain additional risks related to each Fund's investments, see
'Portfolio Investments' beginning at page 5 and 'Certain Investment Strategies'
beginning at page 12.

Among the factors that may be considered in deciding whether to invest in a
security are the issuer's financial resources, its sensitivity to economic
conditions and trends, its operating history and the ability of the issuer's
management. Bond prices generally vary inversely in relation to changes in the
level of interest rates, as well as in response to other market factors and
changes in the creditworthiness of the issuers of the securities. Government
Securities are considered to be of the highest credit quality available.
Government Securities, however, will be affected by general changes in interest
rates. The price volatility of a Fund's shares where the Fund invests in
intermediate maturity bonds will be substantially less than that of long-term
bonds. An intermediate maturity bond will generally have a lower yield than that
of a long-term bond. Longer-term securities in which the Funds may invest
generally offer a higher current yield than is offered by shorter-term
securities, but also generally involve greater volatility of price and risk of
capital than shorter-term securities.

<PAGE>
<PAGE>
requirements imposed by the Internal Revenue Code of 1986, as amended (the
'Code'), for qualification as a regulated investment company. As non-diversified
investment companies, the Funds may invest a greater proportion of their assets
in the obligations of a small number of issuers and, as a result, may be subject
to greater risk with respect to portfolio securities. To the extent that the
Funds assume large positions in the securities of a small number of issuers,
their return may fluctuate to a greater extent than that of a diversified
company as a result of changes in the financial condition or in the market's
assessment of the issuers.

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

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

PORTFOLIO TRANSACTIONS AND
TURNOVER RATE

<PAGE>
<PAGE>
with a purchase or sale of securities when Warburg believes that the charge for
the transaction does not exceed usual and customary levels and when doing so is
consistent with guidelines adopted by the Board. CERTAIN INVESTMENT STRATEGIES

STRATEGIES AVAILABLE TO ALL FUNDS

<PAGE>
<PAGE>
specified multiplier times the change in the specified interest rate, index or
exchange rate. An option on a futures contract gives the purchaser the right, in
return for the premium paid, to assume a position in a futures contract.

Aggregate initial margin and premiums required to establish positions other
than those considered by the CFTC to be 'bona fide hedging' will not exceed 5%
of a Fund's net asset value, after taking into account unrealized profits and
unrealized losses on any such contracts. Although the Funds are limited in the
amount of assets that may be invested in futures transactions, there is no
overall limit on the percentage of Fund assets that may be at risk with respect
to futures activities.

<PAGE>
<PAGE>
these strategies are not otherwise 'covered' through ownership of the underlying
security, financial instrument or currency or by other portfolio positions or by
other means consistent with applicable regulatory policies. Segregated assets
cannot be sold or transferred unless equivalent assets are substituted in their
place or it is no longer necessary to segregate them. As a result, there is a
possibility that segregation of a large percentage of the Fund's assets could
impede portfolio management or the Fund's ability to meet redemption requests or
other current obligations.

INTEREST RATE, INDEX, MORTGAGE AND CURRENCY SWAPS; INTEREST RATE CAPS, FLOORS
AND COLLARS. Each Fund may enter into interest rate index and mortgage swaps and
interest rate caps, floors and collars for hedging purposes or to seek to
increase total return; the Fixed Income and Global Fixed Income Funds may enter
into currency swaps for hedging purposes. Interest rate swaps involve the
exchange by the Fund with another party of their respective commitments to pay
or receive interest, such as an

<PAGE>
<PAGE>
exchange of fixed rate payments for floating rate payments. Index swaps involve
the exchange by the Fund with another party of the respective amounts payable
with respect to a notional principal amount at interest rates equal to two
specified indexes. Mortgage swaps are similar to interest rate swaps in that
they represent commitments to pay and receive interest. The notional principal
amount, however, is tied to a reference pool or pools of mortgages. Currency
swaps involve the exchange of their respective rights to make or receive
payments in specified currencies. The purchase of an interest rate cap entitles
the purchaser, to the extent that a specified index exceeds a predetermined
interest rate, to receive payment of interest on a notional principal amount
from the party selling such interest rate cap. The purchase of an interest rate
floor entitles the purchaser, to the extent that a specified index falls below a
predetermined interest rate, to receive payments of interest on a notional
principal amount from the party selling the interest rate floor. An interest
rate collar is the combination of a cap and a floor that preserves a certain
return within a predetermined range of interest rates.

A Fund will enter into interest rate, index and mortgage swaps only on a
net basis, which means that the two payment streams are netted out, with the
Fund receiving or paying, as the case may be, only the net amount of the two
payments. Interest rate, index and mortgage swaps do not involve the delivery of
securities, other underlying assets or principal. Accordingly, the risk of loss
with respect to interest rate, index and mortgage swaps is limited to the net
amount of interest payments that the Fund is contractually obligated to make. If
the other party to an interest rate, index or mortgage swap defaults, the Fund's
risk of loss consists of the net amount of interest payments that the Fund is
contractually entitled to receive. In contrast, currency swaps usually involve
the delivery of a gross payment stream in one designated currency in exchange
for the gross payment stream in another designated currency. Therefore, the
entire payment stream under a currency swap is subject to the risk that the
other party to the swap will default on its contractual delivery obligations. To
the extent that the net amount payable by the Fund under an interest rate, index
or mortgage swap and the entire amount of the payment stream payable by the Fund
under a currency swap or an interest rate cap, floor cap or collar are held in a
segregated account consisting of cash, Government Securities or high-grade
liquid debt securities, the Funds and Warburg believe that swaps do not
constitute senior securities under the 1940 Act and, accordingly, will not treat
them as being subject to each Fund's borrowing restriction.

STRATEGIES AVAILABLE TO THE FIXED INCOME FUND, THE GLOBAL FIXED INCOME FUND AND
THE INTERMEDIATE GOVERNMENT FUND

<PAGE>
<PAGE>
to close out its short position. Although prior to delivery the Fund will have
to pay an amount equal to any dividends paid on the securities sold short, the
Fund will receive the dividends from the securities sold short or the dividends
from the preferred stock or interest from the debt securities convertible or
exchangeable into the securities sold short, plus a portion of the interest
earned from the proceeds of the short sale. The Fund will deposit, in a
segregated account with its custodian or a qualified subcustodian, the
securities sold short or convertible or exchangeable preferred stocks or debt
securities in connection with short sales against the box. Each Fund will
endeavor to offset transaction costs associated with short sales against the box
with the income from the investment of the cash proceeds. Not more than 10% of a
Fund's net assets (taken at current value) may be held as collateral for short
sales against the box at any one time. The extent to which the Fund may make
short sales may be limited by the requirement contained in the Code.

STRATEGIES AVAILABLE TO THE FIXED INCOME FUND AND THE GLOBAL FIXED INCOME FUND

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expenses paid by the REIT in addition to the expenses of the Fund.

Investing in REITs involves certain risks. A REIT may be affected by
changes in the value of the underlying property owned by such REIT or by the
quality of any credit extended by the REIT. REITs are dependent on management
skills, are not diversified (except to the extent the Code requires), and are
subject to the risks of financing projects. REITs are subject to heavy cash flow
dependency, default by borrowers, self-liquidation, the possibilities of failing
to qualify for the exemption from tax for distributed income under the Code and
failing to maintain their exemptions from the 1940 Act. REITs are also subject
to interest rate risks.

STRATEGY AVAILABLE TO THE FIXED INCOME FUND AND THE INTERMEDIATE GOVERNMENT FUND

STRATEGIES AVAILABLE TO THE FIXED INCOME FUND AND THE NEW YORK MUNICIPAL FUND

MUNICIPAL OBLIGATIONS. The two principal types of Municipal Obligations, in
terms of the source of payment of debt service on the bonds, are general
obligation bonds and revenue bonds and a Fund may hold both in any proportion.
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 or other
specific revenue source but not from the general taxing power. There are, of
course, variations in the security of Municipal Obligations, both within
a particular classification and between classifications.

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Sizeable investments in such obligations could involve an increased risk to the
Fund should any of such related projects or facilities experience financial
difficulties. Each Fund intends during the coming year to limit investments in
such obligations to less than 25% of its assets.

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STRATEGY AVAILABLE TO THE INTERMEDIATE GOVERNMENT FUND

GOVERNMENT ZERO COUPON SECURITIES. The Intermediate Government Fund may invest
in (i) Government Securities that have been stripped of their unmatured interest
coupons, (ii) the coupons themselves and (iii) receipts or certificates
representing interests in stripped Government Securities and coupons
(collectively referred to as 'Government zero coupon securities'). The market
value of Government zero coupon securities that are considered Government
Securities is used for purposes of determining whether at least 65% of the
Intermediate Government Fund's total assets is invested in Government
Securities. However, receipts or certificates which are underwritten by
securities dealers or banks that evidence ownership of future interest payments,
principal payments or both on certain notes or bonds issued by the U.S.
government, its agencies, authorities or instrumentalities will not be
considered Government Securities for purposes of the 65% test. For a description
of zero coupon securities and the tax and other considerations associated with
investing in them, see 'Zero Coupon Securities' above and 'Dividends,
Distributions and Taxes -- Taxes' below.

INVESTMENT GUIDELINES

MANAGEMENT OF THE FUNDS

INVESTMENT ADVISER. Each Fund employs Warburg as its investment adviser.
Warburg, subject to the control of each Fund's officers and the Board, manages
the investment and reinvestment of the assets of the Funds in accordance with
each Fund's investment objective and stated investment policies. Warburg makes
investment decisions for each Fund and places orders to purchase or sell
securities on behalf of each such Fund. Warburg also employs a support staff of
management personnel to provide services to the Funds and also furnishes the
Funds with office space, furnishings and equipment.

For the services provided by Warburg, the Fixed Income Fund, the Global
Fixed Income Fund, the Intermediate Government Fund and
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the New York Municipal Fund pay Warburg a fee calculated at an annual rate of
.50%, 1.00%, .50% and .40%, respectively, of the Fund's average daily net
assets. Although the Global Fixed Income Fund's advisory fee is higher than that
paid by most other investment companies, including money market and fixed income
funds, Warburg believes that it is comparable to fees charged by other mutual
funds with similar policies and strategies. The advisory agreement between each
Fund and Warburg provides that Warburg will reimburse the Fund to the extent
certain expenses that are described in the Statement of Additional Information
exceed applicable state expense limitations. Warburg and each Fund's
co-administrators may voluntarily waive a portion of their fees from time to
time and temporarily limit the expenses to be paid by the Fund.

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<PAGE>
compensation each Fund pays PFPC a fee calculated at an annual rate of .10% of
its average daily net assets, 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.

HOW TO PURCHASE SHARES

Individual investors may only purchase Warburg Pincus Advisor Fund shares
through Institutions. The Funds reserve the right to make Advisor Shares
available to other investors in the future. References in this Prospectus to
shareholders or investors also include Institutions which may act as the record
holders of the Advisor Shares.

Each Institution separately determines the rules applicable to its
customers investing in a Fund, including minimum initial and subsequent
investment requirements and the procedures to be followed to effect purchases,
redemptions and exchanges of Advisor Shares. There is no minimum amount of
initial or subsequent purchases of Advisor Shares imposed on Institutions,
although the Funds reserve the right to impose minimums in the future.

Orders for the purchase of Advisor Shares are placed with an Institution by
its customers. The Institution is responsible for the prompt transmission of the
order to the Fund or its agent.

Institutions may purchase Advisor Shares by telephoning the Fund and
sending payment by wire. After telephoning (800) 888-6878 for
instructions, an Institution should then wire
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federal funds to Counsellors Securities Inc. using the following wire address:

State Street Bank and Trust Co.
225 Franklin St.
Boston, MA 02101
ABA# 0110 000 28
Attn: Mutual Funds/Custody Dept.
[Insert Warburg Pincus Advisor
Fund name(s) here]
DDA# 9904-649-2
[Shareowner name]
[Shareowner account number]

Orders by wire will not be accepted until a completed account application
has been received in proper form, and an account number has been established. If
a telephone order is received by the close of regular trading on the New York
Stock Exchange ('NYSE') (currently 4:00 p.m., Eastern time) and payment by wire
is received on the same day in proper form in accordance with instructions set
forth above, the shares will be priced according to the net asset value of the
Fund on that day and are entitled to dividends and distributions beginning on
that day. If payment by wire is received in proper form by the close of the NYSE
without a prior telephone order, the purchase will be priced according to the
net asset value of the relevant Fund on that day and is entitled to dividends
and distributions beginning on that day. However, if a wire in proper form that
is not preceded by a telephone order is received after the close of regular
trading on the NYSE, the payment will be held uninvested until the order is
effected at the close of business on the next business day. Payment for orders
that are not accepted will be returned after prompt inquiry. Certain
organizations or Institutions that have entered into agreements with a Fund or
its agent may enter confirmed purchase orders on behalf of customers, with
payment to follow no later than three business days following the day the order
is effected. If payment is not received by such time, the organization could be
held liable for resulting fees or losses.

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

The Funds understand that some broker-dealers (other than Counsellors
Securities), financial institutions, securities dealers and other industry
professionals may impose certain conditions on their clients or customers that
invest in a Fund, which are in addition to or different than those described in
this Prospectus, and may charge their clients or customers direct fees. Certain
features of a Fund, such as the initial and subsequent investment minimums,
redemption fees and certain trading restrictions, may be modified or waived in
these programs, and administrative charges may be imposed for the services
rendered. Therefore, a client or customer should contact the organization acting
on his behalf concerning the fees (if any) charged in connection with a purchase
or redemption of Fund shares and should read this Prospectus in light of the
terms governing his account with the organization.

HOW TO REDEEM AND EXCHANGE
SHARES

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

Institutions may redeem Advisor Shares by calling Warburg Pincus Advisor
Funds at (800) 888-6878 between 9:00 a.m. and 4:00 p.m. (East-

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<PAGE>
ern time) on any business day. An investor making a telephone withdrawal should
state (i) the name of the Fund, (ii) the account number of the Fund, (iii) the
name of the investor(s) appearing on the Fund's records, (iv) the amount to be
withdrawn and (v) the name of the person requesting the redemption.

After receipt of the redemption request the redemption proceeds will be
wired to the investor's bank as indicated in the account application previously
filled out by the investor. The Funds do not currently impose a service charge
for effecting wire transfers but reserve the right to do so in the future.
During periods of significant economic or market change, telephone redemptions
may be difficult to implement. If an investor is unable to contact Warburg
Pincus Advisor Funds by telephone, an investor may deliver the redemption
request to Warburg Pincus Advisor Funds by mail at Warburg Pincus Advisor Funds,
P.O. Box 9030, Boston, Massachusetts 02205-9030.

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

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

EXCHANGE OF SHARES. An Institution may exchange Advisor Shares of a Fund for
Advisor Shares of the other Warburg Pincus Advisor Funds at their respective net
asset values. Exchanges may be effected in the manner described under
'Redemption of Shares' above. If an exchange request is received by Warburg
Pincus Advisor Funds prior to the close of regular trading on the NYSE, the
exchange will be made at each fund's net asset value determined at the end of
that business day. Exchanges may be effected without a sales charge. The
exchange privilege may be modified or terminated at any time upon 60 days'
notice to shareholders.

The exchange privilege is available to shareholders residing in any state
in which Advisor Shares being acquired may legally be sold. When an investor
effects an exchange of shares, the exchange is treated for federal income tax
purposes as a redemption. Therefore, the investor may realize a taxable gain or
loss in connection with the exchange. Investors wishing to exchange Advisor
Shares of a Fund for Advisor Shares in another Warburg Pincus Advisor Fund
should review the prospectus of the other fund prior to making an exchange. For
further information regarding the exchange privilege or to obtain a current
prospectus for another Warburg Pincus Advisor Fund, an investor should contact
Warburg Pincus Advisor Funds at (800) 888-6878.

DIVIDENDS, DISTRIBUTIONS AND TAXES

DIVIDENDS AND DISTRIBUTIONS. Each Fund calculates its dividends from net
investment income. Net investment income includes interest accrued and dividends
earned on the Fund's portfolio

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securities for the applicable period (which includes amortization of market
discount) less amortization of market premium and applicable expenses. The Fixed
Income Fund, the Intermediate Government Fund and the New York Municipal Fund
each declares its dividends from its net investment income daily and pays those
dividends monthly in the calendar year in which they are declared. The Global
Fixed Income Fund declares dividends from its net investment income quarterly.
Net investment income earned on weekends and when the NYSE is not opened will be
computed as of the next business day. Distributions of net realized long-term
and short-term capital gains are declared annually and will be paid in the
calendar year in which they are declared, generally in November or December.
Unless an investor instructs a Fund to pay dividends or distributions in cash,
dividends and distributions will automatically be reinvested in additional
Advisor Shares of the relevant Fund at net asset value. The election to receive
dividends in cash may be made on the account application or, subsequently, by
writing to Warburg Pincus Advisor Funds at the address set forth under 'How to
Open an Account' or by calling Warburg Pincus Advisor Funds at (800) 888-6878.
Dividends are determined in the same manner and are paid in the same amount for
each Fund share, except that Advisor Shares bear all the expense of fees paid to
certain service organizations. See 'Shareholder Servicing.' As a result, at any
given time, the average annual total return on Advisor Shares will be lower than
the average annual total return on Common Shares.

The investments by the Funds in zero coupon securities may create special
tax consequences. Zero coupon securities do not make interest payments, although
a portion of the difference between a zero coupon security's maturity value and
its purchase price is imputed as income to the Funds each year even though the
Funds receive no cash distribution until maturity. Under the U.S. federal tax
laws applicable to mutual funds, the Funds will not be
subject to tax on this income if they pay dividends to their shareholders
substantially equal to all the income received from, or imputed with respect to,
their investments during the year, including their zero coupon securities.
24

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<PAGE>
These dividends ordinarily will constitute taxable income to the shareholders of
the Funds.

Dividends paid from net investment income and distributions of net realized
short-term capital gains are taxable to investors as ordinary income, and
distributions derived from net realized long-term capital gains will be taxable
to investors as long-term capital gains, in each case regardless of how long
investors have held Fund shares and whether received in cash or reinvested in
additional Fund shares. As a general rule, an investor's gain or loss on a sale
or redemption of his Fund shares will be a long-term capital gain or loss if he
has held his shares for more than one year and will be a short-term capital gain
or loss if he has held his shares for one year or less. However, any loss
realized upon the sale or redemption of shares within six months from the date
of their purchase will be treated as a long-term capital loss to the extent of
any amounts treated as distributions of long-term capital gain during such
six-month period with respect to such shares. In the case of the New York
Municipal Fund, any loss realized by a shareholder on the sale or redemption of
a Fund share held by the shareholder for six months or less will be disallowed
to the extent of the amount of any exempt-interest dividend received by the
shareholder with respect to such share. The portion of such loss not disallowed
as described in the preceding sentence shall be treated for federal income tax
purposes as a long-term capital loss to the extent of any distributions or
deemed distributions of long-term capital gains received by the shareholder with
respect to such share. An investor in the New York Municipal Fund who redeems
his shares prior to the declaration of a dividend may lose tax-exempt status on
accrued income attributable to tax-exempt Municipal Obligations. Investors may
be proportionately liable for taxes on income and gains of the Funds, but
investors not subject to tax on their income will not be required to pay tax on
amounts distributed to them. The Fund's investment activities, including short
sales of securities, will not result in unrelated business taxable income to a
tax-exempt investor. A Fund's dividends, to the extent not derived from
dividends attributable to certain types of stock issued by U.S. domestic
corporations, generally will not qualify for the dividends received deduction
for corporations.

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<PAGE>
Securities if the investors are the tax owners of these Government Securities.
Furthermore, some states, if certain requirements are satisfied, permit
investors to treat the portion of their regulated investment company dividends
that is attributable to interest income on these Government Securities as
tax-exempt income for state or local income tax purposes. Other states treat all
of these dividends as subject to state and local income taxation. Investors in
the Fund should consult their own tax advisers to assess the consequences of
investing in the Fund under state and local laws generally and to determine
whether dividends paid by the Fund that represent interest derived from
Government Securities are exempt from any applicable state or local taxes.

Special Tax Matters Relating to the New York Municipal Fund and the Fixed
Income Fund. As a regulated investment company, the New York Municipal Fund will
designate and pay exempt-interest dividends derived from interest earned on
qualifying Municipal Obligations. Such exempt-interest dividends may be excluded
by investors of the Fund from their gross income for federal income tax purposes
although (i) all or a portion of such exempt-interest dividends will be a
specific tax-preference item for purposes of the federal individual and
corporate alternative minimum taxes to the extent they are derived from certain
types of private activity bonds issued after August 7, 1986 and (ii) all
exempt-interest dividends will be a component of the 'current earnings'
adjustment item for purposes of the federal corporate alternative minimum tax.
Furthermore, exempt-interest dividends paid by the Fund will constitute a
component of the 'current earnings' adjustment item for purposes of the .12%
corporate environmental tax. Moreover, dividends paid by the Fund will be
subject to a branch profits tax of up to 30% when received by certain foreign
corporate investors. Dividends derived from interest on qualifying New York
Municipal Obligations will be exempt from New York State and New York City
personal income (but not corporate franchise) taxes.

The Fixed Income Fund does not expect to meet the tax requirements that
would enable it to pay exempt-interest dividends with respect to income derived
from its holdings of Municipal Obligations.

NET ASSET VALUE

The net asset value per Advisor Share of each Fund is computed by adding
the Advisor Shares' pro rata share of the value of the Fund's assets, deducting
the Advisor Shares' pro rata share of the Fund's liabilities and the liabilities
specifically allocated to Advisor Shares and then dividing the result by the
number of outstanding Advisor Shares.

PERFORMANCE

Each Fund quotes the performance of Advisor Shares separately from Common
Shares. The net asset value of the Advisor Shares is listed in The Wall Street
Journal each business day under the heading Warburg Pincus Advisor Funds. From
time to time, each Fund may advertise yield and average annual total return of
its Advisor Shares over various periods of time. The yield of a Fund refers to
net investment income generated by the Advisor Shares over a specified
thirty-day period, which is then annualized. That is, the amount of net
investment income generated by the Advisor Shares during that thirty-day period
is assumed to be generated over a 12-month period and is shown as a percentage
of the investment. In addition, advertisements concerning the Intermediate
Government Fund and the New York Municipal Fund may describe a tax equivalent
yield. The tax equivalent yield demonstrates the yield on a taxable investment
necessary to produce an after-tax yield equal to the Advisor Shares' tax-free
yield. It is calculated by increasing the yield shown for the Advisor Shares to
the extent necessary to reflect the payment of specified tax rates. Thus, the
tax equivalent yield will always exceed a Fund's yield. Total return figures
show the average percentage change in value of an investment in the Advisor
Shares from the beginning of the measuring period to the end of the measuring
period. The figures reflect changes in the price of the Advisor Shares assuming
that any income dividends and/or capital gain distributions made by the Fund
during the period were reinvested in Advisor Shares of the Fund. Total return
will be shown for recent one-, five- and ten-year periods, and may be shown for
other periods as well (such as from commencement of the Fund's operations or on
a year-by-year, quarterly or current year-to-date basis).

When considering average total return figures for periods longer than one
year, it is important to note that a Fund's annual total return for one year in
the period might have been greater or less than the average for the entire
period. When considering total return figures for periods shorter than one year,
investors should bear in mind that each Fund seeks long-term appreciation and
that such return may not be representative of any Fund's return over a longer
market cycle. Each Fund may also advertise aggregate total return figures of its
Advisor Shares for various periods, representing the cumulative change in value
of an investment in the Advisor Shares for the specific period (again reflecting
changes in the Fund's share prices and assuming reinvestment of dividends and
distributions). Aggregate and average total returns may be shown by means of
schedules, charts or graphs and may indicate various components of total return
(i.e., change in value of initial

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investment, income dividends and capital gain distributions).

In reports or other communications to investors or in advertising material,
a Fund may describe general economic and market conditions affecting the Fund. A
Fund may compare its performance with (i) that of other mutual funds as listed
in the rankings prepared by Lipper Analytical Services, Inc. or similar
investment services that monitor the performance of mutual funds or as set forth
in the publications listed below; (ii) in the case of the Fixed Income Fund,
with the Lehman Bond Index (an unmanaged index of government and corporate bonds
calculated by Lehman Brothers); in the case of the Global Fixed Income Fund,
with the J.P. Morgan Traded Index (an index of non-U.S. dollar bonds of ten
countries with active bond markets), the Salomon Brothers World Government Bond
Index (a hedged, market-capitalization weighted index designed to track major
government debt markets) and the Lipper General World Income Average (an average
of funds that invest primarily in non-U.S. dollar and U.S. dollar debt
instruments); in the case of the Intermediate Government Fund, with the Lehman
Intermediate Government Bond Index (an unmanaged index of government bonds
calculated by Lehman Brothers); and in the case of the New York Municipal Fund,
with the Bond Buyer Index (the 'BBI') (an unmanaged index of 20 General
Obligation issues of 20-year maturity from various municipalities across the
nation published by the American Banker) and the Lipper New York Intermediate
Municipal Debt Funds Average (an unmanaged index of 61 Intermediate Municipal
Debt Funds calculated by Lipper Analytical Services); or (iii) other appropriate
indexes of investment securities or with data developed by Warburg derived from
such indexes. The Fund may also include evaluations of each Fund published by
nationally recognized ranking services and by financial publications that are
nationally recognized, such as The Wall Street Journal, Investor's Daily, Money,
Inc., Institutional Investor, Barron's, Fortune, Forbes, Business Week, Mutual
Fund Magazine, Morningstar, Inc. and Financial Times.

GENERAL INFORMATION

ORGANIZATION. The Fixed Income Fund and the New York Municipal Fund were
organized under the laws of The Commonwealth of Massachusetts as Massachusetts
business trusts in 1987 and

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1986, respectively. In 1992, these Funds changed their names from 'Counsellors
Fixed Income Fund' and 'Counsellors New York Municipal Bond Fund' to 'Warburg,
Pincus Fixed Income Fund' and 'Warburg, Pincus New York Municipal Bond Fund,'
respectively. On February 28, 1995, the New York Municipal Fund changed its name
to 'Warburg, Pincus New York Intermediate Municipal Fund.' The Global Fixed
Income Fund and the Intermediate Government Fund were incorporated under the
laws of the State of Maryland in 1990 and 1988, respectively, under the names
'Counsellors Global Fixed Income Fund, Inc.' and 'Counsellors Intermediate
Maturity Government Fund, Inc.,' respectively. On October 27, 1995 and February
, 1996, the Funds amended their respective charters to change their names to
'Warburg, Pincus Global Fixed Income Fund, Inc.' and 'Warburg, Pincus
Intermediate Maturity Government Fund, Inc.'

The Agreement and Declaration of Trust of each of the Fixed Income Fund and
the New York Municipal Fund authorizes each Fund's Board to issue an unlimited
number of full and fractional shares of beneficial interest, $.001 par value per
share, of which one billion shares are classified as Advisor Shares. The
charters of the Global Fixed Income Fund and the Intermediate Government Fund
authorize each Fund's Board to issue three billion full and fractional shares of
capital stock, $.001 par value per share, of which one billion shares are
designated Advisor Shares. Under each Fund's charter documents, the Board has
the power to classify or reclassify any unissued shares of the Fund into one or
more additional classes by setting or changing in any one or more respects their
relative rights, voting powers, restrictions, limitations as to dividends,
qualifications and terms and conditions of redemption. The Board of a Fund may
similarly classify or reclassify any class of its shares into one or more series
and, without shareholder approval, may increase the number of authorized shares
of the Fund.

MULTI-CLASS STRUCTURE. Each Fund offers a separate class of shares, the Common
Shares, directly to individuals pursuant to a separate prospectus. Shares of
each class represent equal pro rata interests in the respective Fund and accrue
dividends and calculate net asset value and performance quotations in the same
manner, except that Advisor Shares bear fees payable by the Fund to Institutions
for services they provide to the beneficial owners of such shares and enjoy
certain exclusive voting rights on matters relating to these fees. Because of
the higher fees paid by the Advisor Shares, the total return on such shares can
be expected to be lower than the total return on Common Shares. Investors may
obtain information concerning the Common Shares from their investment
professional or by calling Counsellors Securities at (800) 888-6878.

VOTING RIGHTS. Investors in a Fund are entitled to one vote for each full share
held and fractional votes for fractional shares held. Shareholders of a Fund
will vote in the aggregate except where otherwise required by law and except
that each class will vote separately on certain matters pertaining to its
distribution and shareholder servicing arrangements. There will normally be no
meetings of investors for the purpose of electing members of the Board unless
and until such time as less than a majority of the members holding office have
been elected by investors. Any Director of the Global Fixed Income Fund or the
Intermediate Government Fund may be removed by the shareholders at any time by a
vote of a majority of the votes entitled to be cast for the election of
Directors. Investors of record of no less than two-thirds of the outstanding
shares of the Fixed Income Fund or the New York Municipal Fund may remove a
Trustee through a declaration in writing or by vote cast
in person or by proxy at a meeting called for that purpose. A meeting will be
called for the purpose of voting on the removal of a governing Board member at
the written request of holders of 10% of the outstanding shares of a Fund. John
L. Furth, a Director and Trustee of the Funds,
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and Lionel I. Pincus, Chairman of the Board and Chief Executive Officer of EMW,
may be deemed to be controlling persons of each Fund as of December 28, 1995
because they may be deemed to possess or share investment power over shares
owned by clients of Warburg and certain other entities.

SHAREHOLDER COMMUNICATIONS. Each investor will receive a quarterly statement of
his account, as well as a statement of his account after any transaction that
affects his share balance or share registration (other than the reinvestment of
dividends or distributions or investment made through the Automatic Investment
Program). Each Fund will also send to its investors a semiannual report and an
audited annual report, each of which includes a list of the investment
securities held by the Fund and a statement of the performance of the Fund. Each
Institution that is the record owner of Advisor Shares on behalf of its
customers will send a statement to those customers periodically showing their
indirect interest in Advisor Shares, as well as providing other information
about the Fund. See 'Shareholder Servicing.'

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

SHAREHOLDER SERVICING

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

Warburg, Counsellors Securities or any of their affiliates may, from time
to time, at their own expense, provide compensation to Service Organizations. To
the extent they do so, such compensation does not represent an additional
expense to the Fund or its shareholders. In addition, Warburg, Counsellors
Securities or any of their affiliates may, from time to time, at their own
expense, pay certain Fund transfer agent fees and expenses related to accounts
of Customers. A Service Organization may use a portion of the fees paid pursuant
to a Plan to compensate

the Fund's custodian or transfer agent for costs related to accounts of
Customers.

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

<PAGE>
<PAGE>
TABLE OF CONTENTS

THE FUNDS' EXPENSES ...................................................... 2
FINANCIAL HIGHLIGHTS ..................................................... 3
INVESTMENT OBJECTIVES AND
POLICIES .............................................................. 3
PORTFOLIO INVESTMENTS .................................................... 5
RISK FACTORS AND SPECIAL CONSIDERATIONS ............................... 9
PORTFOLIO TRANSACTIONS AND
TURNOVER RATE ........................................................ 11
CERTAIN INVESTMENT STRATEGIES ........................................... 12
INVESTMENT GUIDELINES ................................................... 19
MANAGEMENT OF THE FUNDS ................................................. 19
HOW TO PURCHASE SHARES .................................................. 21
HOW TO REDEEM AND EXCHANGE
SHARES ............................................................... 22
DIVIDENDS, DISTRIBUTIONS AND
TAXES ................................................................ 23
NET ASSET VALUE ......................................................... 26
PERFORMANCE ............................................................. 27
GENERAL INFORMATION ..................................................... 28
SHAREHOLDER SERVICING ................................................... 30

WPBDF-1-0396

<PAGE>
<PAGE>
[LOGO]

[ ] WARBURG PINCUS
FIXED INCOME FUND

[ ] WARBURG PINCUS
GLOBAL FIXED INCOME FUND

[ ] WARBURG PINCUS INTERMEDIATE
MATURITY GOVERNMENT FUND

[ ] WARBURG PINCUS NEW YORK
INTERMEDIATE MUNICIPAL FUND

PROSPECTUS

, 1996

Statement of Differences

The dagger shall be represented as....................'D'

<PAGE>1

INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS STATEMENT OF ADDITIONAL INFORMATION DOES NOT CONSTITUTE A
PROSPECTUS.

<PAGE>1

Subject to Completion, dated January 16, 1996

STATEMENT OF ADDITIONAL INFORMATION

____________, 1996

WARBURG PINCUS FIXED INCOME FUND

P.O. Box 9030, Boston, Massachusetts 02205-9030
For information, call (800) 888-6878

Contents
Page

Investment Objectives . . . . . . . . . . . . . . . . 2
Investment Policies . . . . . . . . . . . . . . . . . 2
Management of the Fund . . . . . . . . . . . . . . . 31
Additional Purchase and Redemption Information . . . 38
Exchange Privilege . . . . . . . . . . . . . . . . . 39
Additional Information Concerning Taxes . . . . . . . 39
Determination of Performance . . . . . . . . . . . . 42
Auditors and Counsel . . . . . . . . . . . . . . . . 44
Miscellaneous . . . . . . . . . . . . . . . . . . . . 45
Financial Statements . . . . . . . . . . . . . . . . 45
Appendix - Description of Ratings . . . . . . . . . . A-1
Report of Coopers & Lybrand L.L.P., Independent
Accountants . . . . . . . . . . . . . . . . . . . . A-8

This Statement of Additional Information is meant to be read in
conjunction with the combined Prospectus for the Common Shares of Warburg
Pincus Fixed Income Fund (the "Fund"), Warburg Pincus Intermediate Maturity
Government Fund, Warburg Pincus New York Intermediate Municipal Fund and
Warburg Pincus Global Fixed Income Fund, and with the Prospectus for the
Advisor Shares of the Fund, each dated __________, 1996, as amended or
supplemented from time to time, and is incorporated by reference in its
entirety into those Prospectuses. Because this Statement of Additional
Information is not itself a prospectus, no investment in shares of the Fund
should be made solely upon the information contained herein. Copies of the
Fund's Prospectuses and information regarding the Fund's current performance
may be obtained by calling the Fund at (800) 927-2874. Information regarding
the status of shareholder accounts may be obtained by calling the Fund at
(800) 888-6878 or by writing to the Fund, P.O. Box 9030, Boston, Massachusetts
02205-9030.

<PAGE>2

INVESTMENT OBJECTIVES

The investment objectives of the Fund are to generate high current
income consistent with reasonable risk and, secondarily, capital appreciation.

INVESTMENT POLICIES

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

Options, Futures and Currency Exchange Transactions

Securities Options. The Fund may write covered put and call options
on stock and debt securities and may purchase such options that are traded on
foreign and U.S. exchanges, as well as over-the-counter ("OTC").

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

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

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

<PAGE>3

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

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

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

Prior to their expirations, put and call options may be sold in
closing sale or purchase transactions (sales or purchases by the Fund prior to
the exercise of options that it has purchased or written, respectively, of
options of the same series) in which the Fund may

<PAGE>4

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

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

<PAGE>5

Securities exchanges generally have established limitations
governing the maximum number of calls and puts of each class which may be held
or written, or exercised within certain time periods by an investor or group
of investors acting in concert (regardless of whether the options are written
on the same or different securities exchanges or are held, written or
exercised in one or more accounts or through one or more brokers). It is
possible that the Fund and other clients of Warburg and certain of its
affiliates may be considered to be such a group. A securities exchange may
order the liquidation of positions found to be in violation of these limits
and it may impose certain other sanctions. These limits may restrict the
number of options the Fund will be able to purchase on a particular security.

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

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

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

<PAGE>6

Listed options generally have a continuous liquid market while
dealer options have none. Consequently, the Fund will generally be able to
realize the value of a dealer option it has purchased only by exercising it or
reselling it to the dealer who issued it. Similarly, when the Fund writes a
dealer option, it generally will be able to close out the option prior to its
expiration only by entering into a closing purchase transaction with the
dealer to which the Fund originally wrote the option. Although the Fund will
seek to enter into dealer options only with dealers who will agree to and that
are expected to be capable of entering into closing transactions with the
Fund, there can be no assurance that the Fund will be able to liquidate a
dealer option at a favorable price at any time prior to expiration. The
inability to enter into a closing transaction may result in material losses to
the Fund. Until the Fund, as a covered OTC call option writer, is able to
effect a closing purchase transaction, it will not be able to liquidate
securities (or other assets) used to cover the written option until the option
expires or is exercised. This requirement may impair the Fund's ability to
sell portfolio securities or, with respect to currency options, currencies at
a time when such sale might be advantageous. In the event of insolvency of
the other party, the Fund may be unable to liquidate a dealer option.

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

The Fund will not enter into futures contracts and related options
for which the aggregate initial margin and premiums (discussed below) required
to establish positions other than those considered to be "bona fide hedging"
by the CFTC exceed 5% of the Fund's net asset value after taking into account
unrealized profits and unrealized losses on any such contracts it has entered
into. The Fund reserves the right to engage in transactions involving futures
contracts and options on futures contracts to the extent allowed by CFTC
regulations in effect from time to time and in accordance with the Fund's
policies. Although the Fund is limited in the amount of assets it may invest
in futures transactions (as described above and in the Prospectus), there is
no overall limit on the percentage of Fund assets that may be at risk with
respect to futures activities. The ability of the Fund to trade in futures
contracts and options on futures contracts may be limited by the requirements
of the Internal Revenue Code of 1986, as amended (the "Code"), applicable to a
regulated investment company.

Futures Contracts. A foreign currency futures contract provides for
the future sale by one party and the purchase by the other party of a certain
amount of a specified non-U.S. currency at a specified price, date, time and
place. An interest rate futures contract provides for the future sale by one
party and the purchase by the other party of a certain amount of a specific
interest rate sensitive financial instrument (debt security) at a specified

<PAGE>7

price, date, time and place. Securities indexes are capitalization weighted
indexes which reflect the market value of the securities listed on the
indexes. A securities index futures contract is an agreement to be settled by
delivery of an amount of cash equal to a specified multiplier times the
difference between the value of the index at the close of the last trading day
on the contract and the price at which the agreement is made.

No consideration is paid or received by the Fund upon entering into
a futures contract. Instead, the Fund is required to deposit in a segregated
account with its custodian an amount of cash or cash equivalents, such as U.S.
government securities or other liquid high-grade debt obligations, equal to
approximately 1% to 10% of the contract amount (this amount is subject to
change by the exchange on which the contract is traded, and brokers may charge
a higher amount). This amount is known as "initial margin" and is in the
nature of a performance bond or good faith deposit on the contract which is
returned to the Fund upon termination of the futures contract, assuming all
contractual obligations have been satisfied. The broker will have access to
amounts in the margin account if the Fund fails to meet its contractual
obligations. Subsequent payments, known as "variation margin," to and from
the broker, will be made daily as the currency, financial instrument or index
underlying the futures contract fluctuates, making the long and short
positions in the futures contract more or less valuable, a process known as
"marking-to-market." The Fund will also incur brokerage costs in connection
with entering into futures transactions.

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

<PAGE>8

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

An option on a currency, interest rate or securities index futures
contract, as contrasted with the direct investment in such a contract, gives
the purchaser the right, in return for the premium paid, to assume a position
in a futures contract at a specified exercise price at any time prior to the
expiration date of the option. The writer of the option is required upon
exercise to assume an offsetting futures position (a short position if the
option is a call and a long position if the option is a put). Upon exercise
of an option, the delivery of the futures position by the writer of the option
to the holder of the option will be accompanied by delivery of the accumulated
balance in the writer's futures margin account, which represents the amount by
which the market price of the futures contract exceeds, in the case of a call,
or is less than, in the case of a put, the exercise price of the option on the
futures contract. The potential loss related to the purchase of an option on
futures contracts is limited to the premium paid for the option (plus
transaction costs). Because the value of the option is fixed at the point of
sale, there are no daily cash payments by the purchaser to reflect changes in
the value of the underlying contract; however, the value of the option does
change daily and that change would be reflected in the net asset value of the
Fund.

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

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

At or before the maturity of a forward contract, the Fund may either
sell a portfolio security and make delivery of the currency, or retain the
security and fully or

<PAGE>9

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

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

Currency Hedging. The Fund's currency hedging will be limited to
hedging involving either specific transactions or portfolio positions.
Transaction hedging is the purchase or sale of forward currency with respect
to specific receivables or payables of the Fund generally accruing in
connection with the purchase or sale of its portfolio securities. Position
hedging is the sale of forward currency with respect to portfolio security
positions. The Fund may not position hedge to an extent greater than the
aggregate market value (at the time of entering into the hedge) of the hedged
securities.

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

<PAGE>10

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

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

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

<PAGE>11

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

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

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

Additional Information on Investment Practices

Foreign Investments. The Fund may not invest more than 35% of its
assets in securities denominated in a currency other than U.S. dollars.
Investors should recognize that investing in foreign companies involves
certain risks, including those discussed below, which are not typically
associated with investing in United States issuers. Since the Fund may invest
in securities denominated in currencies other than the U.S. dollar, and since
the Fund

<PAGE>12

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

Many of the foreign securities held by the Fund will not be
registered with, nor the issuers thereof be subject to reporting requirements
of, the SEC. Accordingly, there may be less publicly available information
about such securities and about the foreign company or government issuing them
than is available about a domestic company or government entity. Foreign
companies are generally not subject to uniform financial reporting standards,
practices and requirements comparable to those applicable to U.S. companies.
In addition, with respect to some foreign countries, there is the possibility
of expropriation or confiscatory taxation, limitations on the removal of funds
or other assets of the Fund, political or social instability, or domestic
developments which could affect U.S. investments in those countries.

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

<PAGE>13

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

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

Foreign Debt Securities. The returns on foreign debt securities
reflect interest rates and other market conditions prevailing in those
countries and the effect of gains and losses in the denominated currencies
against the U.S. dollar, which have had a substantial impact on investment in
foreign fixed income securities. The relative performance of various
countries' fixed income markets historically has reflected wide variations
relating to the unique characteristics of each country's economy. Year-to-
year fluctuations in certain markets have been significant, and negative
returns have been experienced in various markets from time to time.

The foreign government securities in which the Fund may invest
generally consist of obligations issued or backed by national, state or
provincial governments or similar political subdivisions or central banks in
foreign countries. Foreign government securities also include debt
obligations of supranational entities, which include international
organizations designated, or backed by governmental entities to promote
economic reconstruction or development, international banking institutions and
related government agencies. Examples include the International Bank for
Reconstruction and Development (the "World Bank"), the European Coal and Steel
Community, the Asian Development Bank and the InterAmerican Development Bank.

Foreign government securities also include debt securities "quasi-
governmental agencies" and debt securities denominated in multinational
currency units of an issuer (including supranational issuers). Debt
securities of quasi-governmental agencies are issued by entities owned by
either a national, state or equivalent government or are obligations of a
political unit that is not backed by the national government's full faith and
credit and general taxing powers. An example of a multinational currency unit
is the European Currency Unit ("ECU"). An ECU represents specified amounts of
the currencies of certain member states of the European Economic Community.
The specific amounts of currencies comprising the ECU may be adjusted by the
Council of Ministers of the European Community to reflect changes in relative
values of the underlying currencies.

<PAGE>14

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

Loan Participations and Assignments. The Fund may invest in fixed
and floating rate loans ("Loans") arranged through private negotiations
between a foreign government (a "Borrower") and one or more financial
institutions ("Lenders"). The majority of the Fund's investments in Loans are
expected to be in the form of participations in Loans ("Participations") and
assignments of portions of Loans from third parties ("Assignments").
Participations typically will result in the Fund having a contractual
relationship only with the Lender, not with the Borrower. The Fund will have
the right to receive payments of principal, interest and any fees to which it
is entitled only from the Lender selling the Participation and only upon
receipt by the Lender of the payments from the Borrower. In connection with
purchasing Participations, the Fund generally will have no right to enforce
compliance by the Borrower with the terms of the loan agreement relating to
the Loan, nor any rights of set-off against the Borrower, and the Fund may not
directly benefit from any collateral supporting the Loan in which it has
purchased the Participation. As a result, the Fund will assume the credit
risk of both the Borrower and the Lender that is selling the Participation.
In the event of the insolvency of the Lender selling a Participation, the Fund
may be treated as a general creditor of the Lender and may not benefit from
any set-off between the Lender and the Borrower. The Fund will acquire
Participations only if the Lender interpositioned between the Fund and the
Borrower is determined by Counsellors to be creditworthy.

When the Fund purchases Assignments from Lenders, the Fund will
acquire direct rights against the Borrower on the Loan. However, since
Assignments are generally arranged through private negotiations between
potential assignees and potential assignors, the

<PAGE>15

rights and obligations acquired by the Fund as the purchaser of an Assignment
may differ from, and be more limited than, those held by the assigning Lender.

There are risks involved in investing in Participations and
Assignments. The Fund may have difficulty disposing of them because there is
no liquid market for such securities. The lack of a liquid secondary market
will have an adverse impact on the value of such securities and on the Fund's
ability to dispose of particular Participations or Assignments when necessary
to meet the Fund's liquidity needs or in response to a specific economic
event, such as a deterioration in the creditworthiness of the Borrower. The
lack of a liquid market for Participations and Assignments also may make it
more difficult for the Fund to assign a value to these securities for purposes
of valuing the Fund's portfolio and calculating its net asset value.

Municipal Obligations. Municipal Obligations are debt obligations
issued by or on behalf of states (including the state of New York),
territories and possessions of the United States and the District of Columbia
and their political subdivisions, agencies and instrumentalities. Municipal
Obligations are 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 bonds that are issued by or on behalf of public
authorities to finance various privately-operated facilities are included
within the term Municipal Obligations if the interest paid thereon is exempt
from federal income tax.

The two principal types of Municipal Obligations, in terms of the
source of payment of debt service on the bonds, consist of "general
obligation" and "revenue" issues. 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 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. Consequently, the credit quality of
revenue bonds is usually directly related to the credit standing of the user
of the facility involved.

There are, of course, variations in the quality of Municipal
Obligations, both within a particular classification and between
classifications, and the yields on Municipal Obligations 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 Moody's Investors Service, Inc. ("Moody's") and
Standard & Poor's Ratings Group ("S&P") represent their opinions as to the
quality of Municipal Obligations. It should be emphasized, however, that
ratings are general and are not absolute standards of quality, and Municipal
Obligations with the same maturity, interest rate and rating may have
different yields while Municipal Obligations of the same maturity and interest
rate with different ratings may have the same yield. Subsequent to its
purchase by the Fund, an issue of

<PAGE>16

Municipal Obligations 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 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 the ratings of Moody's and S&P and their significance.

Among other instruments, the 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.

The yields on Municipal Obligations are dependent upon a variety of
factors, including general economic and monetary conditions, money market
factors, conditions of the municipal bond market, size of a particular
offering, maturity of the obligation offered and rating of the issue.

Municipal Obligations are also 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 Congress 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 Obligations may be
materially affected.

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

Below Investment Grade Securities. The Fund may hold up to 35% of
its net assets in fixed income securities rated below investment grade and as
low as C by Moody's or D by S&P, and in comparable unrated securities. While
the market values of medium and lower-rated securities and unrated securities
of comparable quality tend to react less to fluctuations in interest rate
levels than do those of higher-rated securities, the market values of certain
of these securities also tend to be more sensitive to individual corporate
developments and changes in economic conditions than higher-quality
securities. In addition, medium and lower-rated securities and comparable
unrated securities generally present a higher degree of credit risk. Issuers
of medium and lower-rated securities and unrated securities are often highly
leveraged and may not have more traditional methods of financing available to
them so that their ability to service their debt obligations during an
economic

<PAGE>17

downturn or during sustained periods of rising interest rates may be impaired.
The risk of loss due to default by such issuers is significantly greater
because medium and lower-rated securities and unrated securities generally are
unsecured and frequently are subordinated to the prior payment of senior
indebtedness.

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

The Fund may have difficulty disposing of certain of these
securities because there may be a thin trading market. Because there is no
established retail secondary market for many of these securities, the Fund
anticipates that these securities could be sold only to a limited number of
dealers or institutional investors. To the extent a secondary trading market
for these securities does exist, it generally is not as liquid as the
secondary market for higher-rated securities. The lack of a liquid secondary
market, as well as adverse publicity and investor perception with respect to
these securities, may have an adverse impact on market price and the Fund's
ability to dispose of particular issues when necessary to meet the Fund's
liquidity needs or in response to a specific economic event such as a
deterioration in the creditworthiness of the issuer. The lack of a liquid
secondary market for certain securities also may make it more difficult for
the Fund to obtain accurate market quotations for purposes of valuing the Fund
and calculating its net asset value.

The market value of securities in lower-rated categories is more
volatile than that of higher quality securities. Factors adversely impacting
the market value of these securities will adversely impact the Fund's net
asset value. The Fund will rely on the judgment, analysis and experience of
Warburg in evaluating the creditworthiness of an issuer. In this evaluation,
Warburg will take into consideration, among other things, the issuer's
financial resources, its sensitivity to economic conditions and trends, its
operating history, the quality of the issuer's management and regulatory
matters. Normally, medium- and lower-rated and comparable unrated securities
are not intended for short-term investment. The Fund may incur additional
expenses to the extent it is required to seek recovery upon a default in the
payment of principal or interest on its portfolio holdings of such securities.
Recent adverse publicity regarding lower-rated bonds may have depressed the
prices for such securities to some extent. Whether investor perceptions will
continue to have a negative effect on the price of such securities is uncertain.

Lending of Portfolio Securities. The Fund may lend portfolio
securities to brokers, dealers and other financial organizations that meet
capital and other credit requirements or other criteria established by the
Fund's Board of Trustees (the "Board"). These loans, if and when made, may
not exceed 20% of the Fund's total assets taken at value. The Fund will not
lend portfolio securities to E.M. Warburg, Pincus & Co., Inc. ("EMW") or its
affiliates unless it has applied for and received specific authority to do so
from the SEC. Loans of portfolio securities will be collateralized by cash,
letters of credit or

<PAGE>18

U.S. government securities, which are maintained at all times in an amount
equal to at least 100% of the current market value of the loaned securities.
Any gain or loss in the market price of the securities loaned that might occur
during the term of the loan would be for the account of the Fund. From time
to time, the Fund may return a part of the interest earned from the investment
of collateral received for securities loaned to the borrower and/or a third
party that is unaffiliated with the Fund and that is acting as a "finder."

By lending its securities, the Fund can increase its income by
continuing to receive interest and any dividends on the loaned securities as
well as by either investing the collateral received for securities loaned
in short-term instruments or obtaining yield in the form of interest paid by
the borrower when U.S. government securities are used as collateral. The Fund
will adhere to the following conditions whenever its portfolio securities are
loaned: (i) the Fund must receive at least 100% cash collateral or equivalent
securities of the type discussed in the preceding paragraph from the borrower;
(ii) the borrower must increase such collateral whenever the market value of
the securities rises above the level of such collateral; (iii) the Fund must
be able to terminate the loan at any time; (iv) the Fund must receive
reasonable interest on the loan, as well as any dividends, interest or other
distributions on the loaned securities and any increase in market value; (v)
the Fund may pay only reasonable custodian fees in connection with the loan;
and (vi) voting rights on the loaned securities may pass to the borrower,
provided, however, that if a material event adversely affecting the investment
occurs, the Board of Trustees must terminate the loan and regain the right to
vote the securities. Loan agreements involve certain risks in the event of
default or insolvency of the other party including possible delays or
restrictions upon the Fund's ability to recover the loaned securities or
dispose of the collateral for the loan.

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

<PAGE>19

The Fund also may enter into "dollar rolls," in which the Fund sells
fixed-income securities for delivery in the current month and simultaneously
contracts to repurchase similar but not identical (same type, coupon and
maturity) securities on a specified future date. During the roll period, the
Fund would forego principal and interest paid on such securities. The Fund
would be compensated by the difference between the current sales price and the
forward price for the future purchase, as well as by the interest earned on
the cash proceeds of the initial sale. At the time the Fund enters into a
dollar roll transaction, it will place in a segregated account maintained with
an approved custodian cash or other liquid high-grade debt obligations having
a value not less than the repurchase price (including accrued interest) and
will subsequently monitor the account to ensure that its value is maintained.
Reverse repurchase agreements are considered to be borrowings under the 1940
Act.

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

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

The Fund does not intend to engage in short sales against the box
for investment purposes. The Fund may, however, make a short sale as a hedge,
when it believes that the price of a security may decline, causing a decline
in the value of a security owned by the Fund (or a security convertible or
exchangeable for such security), or when the Fund wants to sell the security
at an attractive current price, but also wishes to defer

<PAGE>20

recognition of gain or loss for U.S. federal income tax purposes and for
purposes of satisfying certain tests applicable to regulated investment
companies under the Code. In such case, any future losses in the Fund's long
position should be offset by a gain in the short position and, conversely, any
gain in the long position should be reduced by a loss in the short position.
The extent to which such gains or losses are reduced will depend upon the
amount of the security sold short relative to the amount the Fund owns. There
will be certain additional transaction costs associated with short sales
against the box, but the Fund will endeavor to offset these costs with the
income from the investment of the cash proceeds of short sales.

Variable Rate and Master Demand Notes. Variable rate demand notes
("VRDNs") are obligations issued by corporate or governmental entities which
contain a floating or variable interest rate adjustment formula and an
unconditional right of demand to receive payment of the unpaid principal
balance plus accrued interest upon a short notice period not to exceed seven
days. The interest rates are adjustable at intervals ranging from daily to up
to every six months to some prevailing market rate for similar investments,
such adjustment formula being calculated to maintain the market value of the
VRDN at approximately the par value of the VRDN upon the adjustment date. The
adjustments are typically based upon the prime rate of a bank or some other
appropriate interest rate adjustment index.

Master demand notes are notes which provide for a periodic
adjustment in the interest rate paid (usually tied to the Treasury Bill
auction rate) and permit daily changes in the principal amount borrowed.
While there may be no active secondary market with respect to a particular
VRDN purchased by the Fund, the Fund may, upon the notice specified in the
note, demand payment of the principal of and accrued interest on the note at
any time and may resell the note at any time to a third party. The absence of
such an active secondary market, however, could make it difficult for the Fund
to dispose of the VRDN involved in the event the issuer of the note defaulted
on its payment obligations, and the Fund could, for this or other reasons,
suffer a loss to the extent of the default.

When-Issued Securities and Delayed-Delivery Transactions. The Fund
may utilize its assets to purchase securities on a "when-issued" basis or
purchase or sell securities for delayed delivery (i.e., payment or delivery
occur beyond the normal settlement date at a stated price and yield).
When-issued transactions normally settle within 30-45 days. The Fund will
enter into a when-issued transaction for the purpose of acquiring portfolio
securities and not for the purpose of leverage, but may sell the securities
before the settlement date if Warburg deems it advantageous to do so. The
payment obligation and the interest rate that will be received on when-issued
securities are fixed at the time the buyer enters into the commitment. Due to
fluctuations in the value of securities purchased or sold on a when-issued or
delayed-delivery basis, the yields obtained on such securities may be higher
or lower than the yields available in the market on the dates when the
investments are actually delivered to the buyers.

<PAGE>21

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

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

The principal risk of stand-by commitments 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 Counsellors, present
minimal credit risks. In evaluating the creditworthiness of the issuer of a
stand-by commitment, Counsellors will periodically review relevant financial
information concerning the issuer's assets, liabilities and contingent claims.
The Fund will acquire stand-by commitments only in order to facilitate
portfolio liquidity and does not intend to exercise its rights under stand-by
commitments for trading purposes.

The amount payable to the Fund upon its exercise of a stand-by
commitment is normally (i) the Fund's acquisition cost of the 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 in the Fund's

<PAGE>22

portfolio will not exceed 1/2 of 1% of the value of the Fund's 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 securities. 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.

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

Warrants. The Fund may invest up to 5% of its net assets in
warrants (valued at the lower of cost or market) (other than warrants acquired
by the Fund as part of a unit or attached to securities at the time of
purchase), provided that not more than 2% of net assets may be invested in
warrants not listed on a recognized U.S. or foreign stock exchange. Because a
warrant does not carry with it the right to dividends or voting rights with
respect to the securities which it entitles a holder to purchase, and because
it does not represent any rights in the assets of the issuer, warrants may be
considered more speculative than certain other types of investments. Also,
the value of a warrant does not necessarily change with the value of the
underlying securities and a warrant ceases to have value if it is not
exercised prior to its expiration date.

Non-Publicly Traded and Illiquid Securities. The Fund may not
invest more than 15% of its net assets in non-publicly traded and illiquid
securities, including securities that are illiquid by virtue of the absence of
a readily available market, repurchase agreements which have a maturity of
longer than seven days, VRDNs and master demand notes providing for settlement
upon more than seven days notice by the Fund, and time deposits maturing in
more than seven calendar days. Securities that have legal or contractual
restrictions on resale but have a readily available market are not considered
illiquid for purposes of this limitation. Repurchase agreements subject to
demand are deemed to have a maturity equal to the notice period.

<PAGE>23

Historically, illiquid securities have included securities subject
to contractual or legal restrictions on resale because they have not been
registered under the Securities Act of 1933, as amended (the "Securities
Act"), securities which are otherwise not readily marketable and repurchase
agreements having a maturity of longer than seven days. Securities which have
not been registered under the Securities Act are referred to as private
placements or restricted securities and are purchased directly from the issuer
or in the secondary market. Mutual funds do not typically hold a significant
amount of these restricted or other illiquid securities because of the
potential for delays on resale and uncertainty in valuation. Limitations on
resale may have an adverse effect on the marketability of portfolio securities
and a mutual fund might be unable to dispose of restricted or other illiquid
securities promptly or at reasonable prices and might thereby experience
difficulty satisfying redemptions within seven days. A mutual fund might also
have to register such restricted securities in order to dispose of them
resulting in additional expense and delay. Adverse market conditions could
impede such a public offering of securities.

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

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

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

<PAGE>24

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

Other Investment Limitations

The investment limitations numbered 1 through 12 may not be changed
without the affirmative vote of the holders of a majority of the Fund's
outstanding shares. Such majority is defined as the lesser of (i) 67% or more
of the shares present at the meeting, if the holders of more than 50% of the
outstanding shares of the Fund are present or represented by proxy, or (ii)
more than 50% of the outstanding shares. Investment limitations 13 through 18
may be changed by a vote of the Board at any time.

The Fund may not:

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

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

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

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

<PAGE>25

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

6. Make short sales of securities or maintain a short position,
except the Fund may maintain short positions in forward currency contracts,
options, futures contracts and options on futures contracts and make short
sales "against the box."

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

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

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

10. Issue any senior security except as permitted in these
Investment Restrictions.

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

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

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

14. Invest more than 15% 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

<PAGE>26

which there are no readily available market quotations. For purposes of this
limitation, (a) repurchase agreements with maturities greater than seven days,
(b) VRDNs and master demand notes providing for settlement upon more than
seven days notice by the Fund and (c) time deposits maturing in more than
seven calendar days shall be considered illiquid securities.

15. Purchase any security if as a result the Fund would then have
more than 5% of its total assets invested in securities of companies
(including predecessors) that have been in continuous operation for fewer than
three years.

16. Purchase or retain securities of any company if, to the
knowledge of the Fund, any of the Fund's officers or Trustees or any officer
or director of Counsellors individually owns more than 1/2 of 1% of the
outstanding securities of such company and together they own beneficially more
than 5% of the securities.

17. Invest in warrants (other than warrants acquired by the Fund as
part of a unit or attached to securities at the time of purchase) if, as a
result, the investments (valued at the lower of cost or market) would exceed
5% of the value of the Fund's net assets of which not more than 2% of the
Fund's net assets may be invested in warrants not listed on a recognized U.S.
or foreign stock exchange.

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

The aggregate of all Rule 144A Securities, non-publicly traded and
illiquid securities and securities of companies (including predecessors) that
have been in continuous operation for less than three years is limited to 15%
of total assets. These and other non-fundamental investment limitations are
currently required by one or more states in which shares of the Fund are sold.
These may be more restrictive than the limitations set forth above. Should
the Fund determine that any such commitment is no longer in the best interest
of the Fund and its shareholders, the Fund will revoke the commitment by
terminating the sale of Fund shares in the state involved. In addition, the
relevant state may change or eliminate its policy regarding such investments.

If a percentage restriction (other than the percentage limitation
set forth in No. 1 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

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

<PAGE>27

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

Trading in securities in certain foreign countries is completed at
various times prior to the close of business on each business day in New York
(i.e., a day on which the New York Stock Exchange (the "NYSE") is open for
trading). In addition, securities trading in a particular country or
countries may not take place on all business days in New York. Furthermore,
trading takes place in various foreign markets on days which are not business
days in New York and days on which the Fund's net asset value is not
calculated. As a result, calculation of the Fund's net asset value may not
take place contemporaneously with the determination of the prices of certain
portfolio securities used in such calculation. Events affecting the values of
portfolio securities that occur between the time their prices are determined
and the close of regular trading on the NYSE will not be reflected in the
Fund's calculation of net asset value unless the Board of its delegates deems
that the event would materially affect net asset value, in which case an
adjustment may be made. All assets and liabilities initially expressed in
foreign currency values will be converted into U.S. dollar values at the
prevailing rate as quoted by a Pricing Service. If such quotations are not
available, the rate of exchange will be determined in good faith pursuant to
consistently applied procedures established by the Board.

<PAGE>28

Portfolio Transactions

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

Warburg will select specific portfolio investments and effect
transactions for the Fund and in doing so seeks to obtain the overall best
execution of portfolio transactions. In evaluating prices and executions,
Warburg will consider the factors it deems relevant, which may include the
breadth of the market in the security, the price of the security, the
financial condition and execution capability of a broker or dealer and the
reasonableness of the commission, if any, for the specific transaction and on
a continuing basis. Warburg may, in its discretion, effect transactions in
portfolio securities with dealers who provide brokerage and research services
(as those terms are defined in Section 28(e) of the Securities Exchange Act of
1934) to the Fund and/or other accounts over which Warburg exercises
investment discretion. Warburg may place portfolio transactions with a broker
or dealer with whom it has negotiated a commission that is in excess of the
commission another broker or dealer would have charged for effecting the
transaction if Warburg determines in good faith that such amount of commission
was reasonable in relation to the value of such brokerage and research
services provided by such broker or dealer viewed in terms of either that
particular transaction or of the overall responsibilities of Warburg.
Research and other services received may be useful to Warburg in serving both
the Fund and its other clients and, conversely, research or other services
obtained by the placement of business of other clients may be useful to
Warburg in carrying out its obligations to the Fund. Research may include
furnishing advice, either directly or through publications or writings, as to
the value of securities, the advisability of purchasing or selling specific
securities and the availability of securities or purchasers or sellers of
securities; furnishing seminars, information, analyses and reports concerning
issuers, industries, securities, trading markets and methods,

<PAGE>29

legislative developments, changes in accounting practices, economic factors
and trends and portfolio strategy; access to research analysts, corporate
management personnel, industry experts, economists and government officials;
comparative performance evaluation and technical measurement services and
quotation services; and products and other services (such as third party
publications, reports and analyses, and computer and electronic access,
equipment, software, information and accessories that deliver, process or
otherwise utilize information, including the research described above) that
assist Warburg in carrying out its responsibilities. For the fiscal year
ended October 31, 1995, $ of total brokerage commissions was paid to
brokers and dealers who provided such research and other services on portfolio
transactions of $ . Research received from brokers or dealers is
supplemental to Warburg's own research program. The fees to Warburg under its
advisory agreement with the Fund are not reduced by reason of its receiving
any brokerage and research services.

During the fiscal years ended October 31, 1993, October 31, 1994 and
October 31, 1995, the Fund paid an aggregate of approximately $2,000, $17,350
and $14,573, respectively, in such commissions. The increase in brokerage
commissions paid in the most recent fiscal year was due to an increase in
overall assets of the Fund and increased equity investments.

Investment decisions for the Fund concerning specific portfolio
securities are made independently from those for other clients advised by
Warburg. 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 Warburg 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, Warburg may aggregate the
securities to be sold or purchased for the Fund with those to be sold or
purchased for such other investment clients in order to obtain best execution.

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

In no instance will portfolio securities be purchased from or sold
to Warburg or Counsellors Securities or any affiliated person of such
companies. In addition, the Fund will not give preference to any institutions
with whom the Fund enters into distribution or

<PAGE>30

shareholder servicing agreements concerning the provision of distribution
services or support services. See the Prospectuses, "Shareholder Servicing."

Transactions for the Fund may be effected on foreign securities
exchanges. In transactions for securities not actively traded on a foreign
securities exchange, the Fund will deal directly with the dealers who make a
market in the securities involved, except in those circumstances where better
prices and execution are available elsewhere. Such dealers usually are acting
as principal for their own account. On occasion, securities may be purchased
directly from the issuer. Such portfolio securities are generally traded on a
net basis and do not normally involve brokerage commissions. Securities firms
may receive brokerage commissions on certain portfolio transactions, including
options, futures and options on futures transactions and the purchase and sale
of underlying securities upon exercise of options.

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

Portfolio Turnover

The Fund's portfolio turnover rate is calculated by dividing the
lesser of purchases or sales of its portfolio securities for the year by the
monthly average value of the portfolio securities. Securities with remaining
maturities of one year or less at the date of acquisition are excluded from
the calculation.

The Fund does not intend to seek profits through short-term trading,
but the rate of turnover will not be a limiting factor when the Fund deems it
desirable to sell or purchase securities. Certain practices that may be
employed by the Fund could result in high portfolio turnover. For example,
portfolio securities may be sold in anticipation of a rise in interest rates
(market decline) or purchased in anticipation of a decline in interest rates
(market rise) and later sold. In addition, a security may be sold and another
of comparable quality purchased at approximately the same time to take
advantage of what Warburg believes to be a temporary disparity in the normal
yield relationship between the two securities. These yield disparities may
occur for reasons not directly related to the investment quality of particular
issues or the general movement of interest rates, such as changes in the
overall demand for, or supply of, various types of securities. In addition,
options on securities may be sold in anticipation of a decline in the price of
the underlying security (market decline) or purchased in anticipation of a
rise in the price of the underlying security (market rise) and later sold.

<PAGE>31

MANAGEMENT OF THE FUND

Officers and Board of Trustees

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

Richard N. Cooper* (61) . . . Trustee
Room 7E47OHB National Intelligence Counsel;
Central Intelligence Agency Professor at Harvard
930 Dolly Madison Blvd. University; Director or Trustee of
McLean, Virginia 22107 Circuit City Stores, Inc. (retail
electronics and appliances)
and Phoenix Home Life Insurance Co.

Donald J. Donahue (71) . . . . Trustee
99 Indian Field Road Chairman of Magma Copper Company
Greenwich, Connecticut 06830 since January 1987; Director or Trustee of
GEV Corporation and Signet Star Reinsurance
Company; Chairman and Director of NAC
Holdings from September 1990-June 1993.

Jack W. Fritz (68) . . . . . . Trustee
2425 North Fish Creek Road Private investor; Consultant and
P.O. Box 483 Director of Fritz Broadcasting, Inc. and
Wilson, Wyoming 83014 Fritz Communications (developers and
operators of radio stations); Director of
Advo, Inc. (direct mail advertising).

John L. Furth* (65) . . . . . . Chief Executive Officer and Trustee
466 Lexington Avenue Vice Chairman and Director of EMW;
New York, New York 10017-3147 Associated with EMW since 1970; Director and
officer of other investment companies
advised by Warburg.

Thomas A. Melfe (63) . . . . . Trustee
30 Rockefeller Plaza Partner in the law firm of Donovan

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

<PAGE>32

New York, New York 10112 Leisure Newton & Irvine; Director of
Municipal Fund for New York Investors, Inc.

Alexander B. Trowbridge (66) . Trustee
1155 Connecticut Avenue, N.W. President of Trowbridge Partners, Inc.
Suite 700 (business consulting) from January 1990-
Washington, DC 20036 January 1994; President of the National
Association of Manufacturers from 1980-1990;
Director or Trustee of New England Mutual
Life Insurance Co., ICOS Corporation
(biopharmaceuticals), P.H.H. Corporation
(fleet auto management; housing and plant
relocation service), WMX Technologies Inc.
(solid and hazardous waste collection and
disposal), The Rouse Company (real estate
development), SunResorts International Ltd.
(hotel and real estate management), Harris
Corp. (electronics and communications
equipment), The Gillette Co. (personal care
products) and Sun Company Inc. (petroleum
refining and marketing).

Dale C. Christensen (48) . . . President and Co-Portfolio Manager
466 Lexington Avenue of the Fund
New York, New York 10017 Portfolio Manager or Co-Portfolio Manager of
other Warburg Pincus Funds; Managing
Director of EMW; Associated with EMW since
1989; Vice President at Citibank, N.A. from
1985-1989; President of other investment
companies advised by Warburg.

Arnold M. Reichman (47) . . . . Executive Vice President
466 Lexington Avenue Managing Director and Assistant
New York, New York 10017-3147 Secretary of EMW; Associated with EMW since
1984; Senior Vice President, Secretary and
Chief Operating Officer of Counsellors
Securities; Officer of other investment
companies advised by Warburg.

<PAGE>33

Eugene L. Podsiadlo (38) . . . Senior Vice President
466 Lexington Avenue Managing Director of EMW;
New York, New York 10017-3147 Associated with EMW since 1991; Vice
President of Citibank, N.A. from 1987-1991;
Senior Vice President of Counsellors
Securities and officer of other investment
companies advised by Warburg.

Stephen Distler (42) . . . . . Vice President and Chief Financial
466 Lexington Avenue Officer
New York, New York 10017-3147 Managing Director, Controller and Assistant
Secretary of EMW; Associated with EMW since
1984; Treasurer of Counsellors Securities;
Vice President, Treasurer and Chief
Accounting Officer or Vice President and
Chief Financial Officer of other investment
companies advised by Warburg.

Eugene P. Grace (44) . . . . . Vice President and Secretary
466 Lexington Avenue Associated with EMW since April 1994;
New York, New York 10017-3147 Attorney-at-law from September 1989-
April 1994; Life insurance agent, New York
Life Insurance Company from 1993-1994;
General Counsel and Secretary, Home Unity
Savings Bank from 1991-1992; Vice President
and Chief Compliance Officer of Counsellors
Securities; Vice President and Secretary of
other investment companies advised by
Warburg.

Howard Conroy (41) . . . . . . Vice President, Treasurer
466 Lexington Avenue and Chief Accounting Officer
New York, New York 10017-3147 Associated with EMW since 1992; Associated
with Martin Geller, C.P.A. from 1990-1992;
Vice President, Finance with
Gabelli/Rosenthal & Partners, L.P. until
1990; Vice President, Treasurer and Chief
Accounting Officer of other investment
companies advised by Warburg.

Karen Amato (32) . . . . . . . Assistant Secretary
466 Lexington Avenue Associated with EMW since 1987;
New York, New York 10017-3147 Assistant Secretary of other investment
companies advised by Warburg.

<PAGE>34

No employee of Warburg 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 Trustee of the Fund. Each Trustee who is not a
director, officer or employee of Warburg, PFPC or any of their affiliates
receives an annual fee of $1,000 and $250 for each meeting of the Board
attended by him for his services as Trustee and is reimbursed for expenses
incurred in connection with his attendance at Board meetings.

Trustees' Compensation
(for the fiscal year ended October 31, 1995)
<TABLE>
<CAPTION>

Total Total Compensation from
Compensation from all Investment Companies
Name of Trustee Fund Managed by Warburg*
--------------- ----------------- ------------------------
<S> <C> <C>

John L. Furth None** None**
Richard N. Cooper $2,000 $41,083
Donald J. Donahue $2,250 $43,833
Jack W. Fritz $1,750 $35,333
Thomas A. Melfe $2,250 $43,583
Alexander B. Trowbridge $2,250 $43,833

</TABLE>

_______________

* Each Trustee also serves as a Director or Trustee of 15 other investment
companies advised by Warburg.

** Mr. Furth is considered to be an interested person of the Fund and
Warburg, as defined under Section 2(a)(19) of the 1940 Act, and,
accordingly, receives no compensation from the Fund or any other
investment company managed by Warburg.

Mr. Dale C. Christensen, president and co-portfolio manager of the
Fund, earned a B.S. in Agriculture from the University of Alberta and a B.Ed.
in Mathematics from the University of Calgary, both located in Canada. Mr.
Christensen is also co-portfolio manager of Warburg Pincus Global Fixed Income
Fund, Warburg Pincus Intermediate Maturity Government Fund and Warburg Pincus
New York Intermediate Municipal Fund. Mr. Christensen directs the fixed
income group at Warburg, which he joined in 1989, providing portfolio
management for Warburg Pincus Funds and institutional clients around the
world. Mr. Christensen was a Vice President in the International Private
Banking division and the domestic pension fund management division at Citicorp
from 1984 to 1989. Prior to that, Mr. Christensen was a fixed income
portfolio manager at CIC Asset Management from 1982 to 1984.

<PAGE>35

Mr. M. Anthony E. van Daalen, co-portfolio manager of the Fund,
earned a B.A. degree from Wesleyan University and a M.B.A. degree from New
York University. Mr. van Daalen is also co-portfolio manager of Warburg
Pincus Intermediate Maturity Government Fund. He has been with the Fund since
joining Warburg in 1992, specializing in government and high yield bonds. Mr.
van Daalen was an Assistant Vice President, Portfolio Manager at Citibank in
the Private Banking Group from 1985 to 1991. Prior to that Mr. van Daalen was
a Retail Banking Manager at The Connecticut Bank and Trust Co. from 1983 to
1985 and an Analyst at Goldstein/Krall Market Research from 1982 to 1983.

As of December 28, 1995, Trustees and officers of the Fund as a
group owned of record less than 1% of the Fund's outstanding Common Shares.
As of the same date, Mr. Furth may be deemed to have beneficially owned 55.06%
of the Fund's outstanding Common Shares, including shares owned by clients for
which Warburg has investment discretion. Mr. Furth disclaims ownership of
these shares and does not intend to exercise voting rights with respect to
these shares. No Trustees or officers owned of record any Advisor Shares.

Investment Adviser and Co-Administrators

Warburg serves as investment adviser to the Fund, PFPC as co-
administrator to the Fund and Counsellors Funds Service, Inc. ("Counsellors
Service") serves as co-administrator to the Fund pursuant to separate written
agreements (the "Advisory Agreement," the "PFPC Co-Administration Agreement"
and the "Counsellors Service Co-Administration Agreement," respectively). The
services provided by, and the fees payable by the Fund to, Warburg under the
Advisory Agreement, PFPC under the PFPC Co-Administration Agreement and
Counsellors Service under the Counsellors Service Co-Administration Agreement
are described in the Prospectuses. See the Prospectuses, "Management of the
Fund." Each class of shares of the Fund bears its proportionate share of fees
payable to Warburg, PFPC and Counsellors Service in the proportion that its
assets bear to the aggregate assets of the Fund at the time of calculation.
Prior to March 1, 1994, PFPC served as administrator to the Fund and
Counsellors Service served as administrative services agent to the Fund
pursuant to separate written agreements.

Warburg agrees that if, in any fiscal year, the expenses borne by
the Fund exceed the applicable expense limitations imposed by the securities
regulations of any state in which shares of the Fund are registered or
qualified for sale to the public, it will reimburse the Fund to the extent
required by such regulations. Unless otherwise required by law, such
reimbursement would be accrued and paid on a monthly basis. At the date of
this Statement of Additional Information, the most restrictive annual expense
limitation applicable to the Fund is 2.5% of the first $30 million of the
average net assets of the Fund, 2% of the next $70 million of the average net
assets of the Fund and 1.5% of the remaining average net assets of the Fund.

During the fiscal years ended October 31, 1993, October 31, 1994 and
October 31, 1995, Warburg earned $381,803, $449,070 and $555,483,
respectively, under

<PAGE>36

the Advisory Agreement. For the same periods, Warburg voluntarily waived
$67,719, $125,203 and $162,585, respectively, of such fees. During the fiscal
years ended October 31, 1993, October 31, 1994 and October 31, 1995, PFPC
voluntarily waived $0, $36,132 and $41,568, respectively, of the $62,305,
$90,330 and $111,097 in administration fees or, in the case of the two most
recent fiscal years, co-administration fees, earned in such fiscal year.
Counsellors Service earned $42,338, $72,277 and $111,097 in administration
fees or, in the case of the two most recent fiscal years, co-administration
fees during the fiscal years ended October 31, 1993, October 31, 1994 and
October 31, 1995, respectively.

Custodian and Transfer Agent

PNC Bank, National Association ("PNC") is custodian of the Fund's
assets pursuant to a custodian agreement (the "Custodian Agreement"). Under
the Custodian Agreement, PNC (i) maintains a separate account or accounts in
the name of the Fund, (ii) holds and transfers portfolio securities on account
of the Fund, (iii) makes receipts and disbursements of money on behalf of the
Fund, (iv) collects and receives all income and other payments and
distributions on account of the Fund's portfolio securities and (v) makes
periodic reports to the Board concerning the Fund's custodial arrangements.
PNC is authorized to select one or more banks or trust companies to serve as
sub-custodian on behalf of the Fund, provided that PNC remains responsible for
the performance of all its duties under the Custodian Agreement and holds the
Fund harmless from the acts and omissions of any sub-custodian. PNC is an
indirect wholly owned subsidiary of PNC Bank Corp., and its principal business
address is Broad and Chestnut Streets, Philadelphia, Pennsylvania 19101.

State Street Bank and Trust Company ("State Street") serves as the
shareholder servicing, transfer and dividend disbursing agent of the Fund
pursuant to a Transfer Agency and Service Agreement, under which State Street
(i) issues and redeems shares of the Fund, (ii) addresses and mails all
communications by the Fund to record owners of Fund shares, including reports
to shareholders, dividend and distribution notices and proxy material for its
meetings of shareholders, (iii) maintains shareholder accounts and, if
requested, sub-accounts and (iv) makes periodic reports to the Fund's Board of
Trustees concerning the transfer agent's operations with respect to the Fund.
State Street has delegated to Boston Financial Data Services, Inc., a 50%
owned subsidiary ("BFDS"), responsibility for most shareholder servicing
functions. BFDS's principal business address is 2 Heritage Drive, Boston,
Massachusetts 02171. The principal business address of State Street is 225
Franklin Street, Boston, Massachusetts 02110.

Organization of the Fund

The Fund's Agreement and Declaration of Trust (the "Trust
Agreement") authorizes the Board to issue three billion full and fractional
shares of common stock, $.001 par value per share ("Common Shares"), of which
one billion shares are designated Common Stock-Series 1 and one billion shares
are designated Common Stock-Series 2 (the "Advisor Shares"). Only Common
Shares and Advisor Shares have been issued by the Fund.

<PAGE>37

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

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

Distribution and Shareholder Servicing

The Fund may, in the future, enter into agreements ("Agreements")
with institutional shareholders of record, broker-dealers, financial
institutions, depository institutions, retirement plans and financial
intermediaries ("Institutions") to provide certain distribution, shareholder
servicing, administrative and/or accounting services for their clients or
customers (or participants in the case of retirement plans) ("Customers") who
are beneficial owners of Advisor Shares. See the Advisor Prospectus,
"Shareholder Servicing." Agreements will be governed by a distribution plan
(the "Distribution Plan") pursuant to Rule 12b-1 under the 1940 Act. The
Distribution Plan requires the Board, at least quarterly, to receive and
review written reports of amounts expended under the Distribution Plan and the
purposes for which such expenditures were made.

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

<PAGE>38

provided by the Institution to its Customers prior to any purchase of Fund
shares. Prospectuses are available from the Fund's distributor upon request.
No preference will be shown in the selection of Fund portfolio investments for
the instruments of Institutions.

The Distribution Plan will continue in effect for so long as its
continuance is specifically approved at least annually by the Board, including
a majority of the Trustees who are not interested persons of the Fund and who
have no direct or indirect financial interest in the operation of the
Distribution Plan ("Independent Trustees"). Any material amendment of the
Distribution Plan would require the approval of the Board in the same manner.
The Distribution Plan may not be amended to increase materially the amount to
be spent under it without shareholder approval of the Advisor Shares. The
Distribution Plan may be terminated at any time, without penalty, by vote of a
majority of the Independent Trustees or by a vote of a majority of the
outstanding voting securities of the Advisor Shares of the Fund.

ADDITIONAL PURCHASE AND REDEMPTION INFORMATION

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

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

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

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

<PAGE>39

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

EXCHANGE PRIVILEGE

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

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

Upon receipt of proper instructions and all necessary supporting
documents, shares submitted for exchange are redeemed at the then-current net
asset value of the relevant class and the proceeds are invested on the same
day, at a price as described above, in shares of the relevant class of the
fund being acquired. Warburg reserves the right to reject more than three
exchange requests by a shareholder in any 30-day period. The exchange
privilege may be modified or terminated at any time upon 60 days' notice to
shareholders.

ADDITIONAL INFORMATION CONCERNING TAXES

The discussion set out below of tax considerations generally
affecting the Fund and its shareholders is intended to be only a summary and
is not intended as a substitute for careful tax planning by prospective
shareholders. Shareholders are advised to consult their own tax advisers with
respect to the particular tax consequences to them of an investment in the
Fund.

The Fund has qualified and intends to continue to qualify each year
as a "regulated investment company" under Subchapter M of the Code. If it
qualifies as a regulated investment company, the Fund will pay no federal
income taxes on its taxable net investment income (that is, taxable income
other than net realized capital gains) and its net

<PAGE>40

realized capital gains that are distributed to shareholders. To qualify under
Subchapter M, the Fund must, among other things: (i) distribute to its
shareholders at least 90% of its taxable net investment income (for this
purpose consisting of taxable net investment income and net realized
short-term capital gains); (ii) derive at least 90% of its gross income from
dividends, interest, payments with respect to loans of securities, gains from
the sale or other disposition of securities, or other income (including, but
not limited to, gains from options, futures, and forward contracts) derived
with respect to the Fund's business of investing in securities; (iii) derive
less than 30% of its annual gross income from the sale or other disposition of
securities, options, futures or forward contracts held for less than three
months; and (iv) diversify its holdings so that, at the end of each fiscal
quarter of the Fund (a) at least 50% of the market value of the Fund's assets
is represented by cash, U.S. government securities and other securities, with
those other securities limited, with respect to any one issuer, to an amount
no greater in value than 5% of the Fund's total assets and to not more than
10% of the outstanding voting securities of the issuer, and (b) not more than
25% of the market value of the Fund's assets is invested in the securities of
any one issuer (other than U.S. government securities or securities of other
regulated investment companies) or of two or more issuers that the Fund
controls and that are determined to be in the same or similar trades or
businesses or related trades or businesses. In meeting these requirements,
the Fund may be restricted in the selling of securities held by the Fund for
less than three months and in the utilization of certain of the investment
techniques described above and in the Fund's Prospectuses. As a regulated
investment company, the Fund will be subject to a 4% non-deductible excise tax
measured with respect to certain undistributed amounts of ordinary income and
capital gain required to be but not distributed under a prescribed formula.
The formula requires payment to shareholders during a calendar year of
distributions representing at least 98% of the Fund's taxable ordinary income
for the calendar year and at least 98% of the excess of its capital gains over
capital losses realized during the one-year period ending October 31 during
such year, together with any undistributed, untaxed amounts of ordinary income
and capital gains from the previous calendar year. The Fund expects to pay
the dividends and make the distributions necessary to avoid the application of
this excise tax.

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

<PAGE>41

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

A shareholder of the Fund receiving dividends or distributions in
additional shares should be treated for federal income tax purposes as
receiving a distribution in an amount equal to the amount of money that a
shareholder receiving cash dividends or distributions receives, and should
have a cost basis in the shares received equal to that amount.

Investors considering buying shares just prior to a dividend or
capital gain distribution should be aware that, although the price of shares
purchased at that time may reflect the amount of the forthcoming distribution,
those who purchase just prior to a distribution will receive a distribution
that will nevertheless be taxable to them. Upon the sale or exchange of
shares, a shareholder will realize a taxable gain or loss depending upon the
amount realized and the basis in the shares. Such gain or loss will be
treated as capital gain or loss if the shares are capital assets in the
shareholder's hands, and, as described in the Prospectuses, will be long-term
or short-term depending upon the shareholder's holding period for the shares.
Any loss realized on a sale or exchange will be disallowed to the extent the
shares disposed of are replaced, including replacement through the
reinvestment of dividends and capital gains distributions in the Fund, within
a period of 61 days beginning 30 days before and ending 30 days after the
disposition of the shares. In such a case, the basis of the shares acquired
will be increased to reflect the disallowed loss.

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

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

<PAGE>42

Investment in Passive Foreign Investment Companies

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

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

On April 1, 1992 proposed regulations of the Internal Revenue
Service (the "IRS") were published providing a mark-to-market election for
regulated investment companies. The IRS subsequently issued a notice
indicating that final regulations will provide that regulated investment
companies may elect the mark-to-market election for tax years ending after
March 31, 1992 and before April 1, 1993. Whether and to what extent the
notice will apply to taxable years of the Fund is unclear. If the Fund is not
able to make the foregoing election, it may be able to avoid the interest
charge (but not the ordinary income treatment) on disposition of the stock by
electing, under proposed regulations, each year to mark-to-market the stock
(that is, treat it as if it were sold for fair market value). Such an
election could result in acceleration of income to the Fund.

DETERMINATION OF PERFORMANCE

From time to time, the Fund may quote the total return of its Common
Shares and/or Advisor Shares in advertisements or in reports and other
communications to shareholders. With respect to the Fund's Common Shares, the
Fund's average annual total return for the one-year period ended October 31,
1995 was 12.59% (12.39% without waivers), the average annual total return for
the five-year period ended October 31, 1995 was 9.84% (9.64% without waivers)
and the average annual total return for the period commenced August 17, 1987
(commencement of operations) and ended October 31, 1995 was 8.27% (8.09%
without waivers). These figures are calculated by finding the average annual
compounded rates of return for the one-, five- and ten- (or such shorter
period as the relevant class of shares has been offered) year periods that
would equate the initial amount invested to the ending redeemable value
according to the following formula: P (1 + T)[*GRAPHIC OMITTED-SEE FOOTNOTE
BELOW] = ERV. For purposes of this formula, "P" is a hypothetical investment
of $1,000; "T" is

- ------------------------
* The expression (1 + T) is being raised to the nth power.

<PAGE>43

average annual total return; "n" is number of years; and "ERV" is the ending
redeemable value of a hypothetical $1,000 payment made at the beginning of the
one-, five- or ten-year periods (or fractional portion thereof). Total return
or "T" is computed by finding the average annual change in the value of an
initial $1,000 investment over the period and assumes that all dividends and
distributions are reinvested during the period.

The Fund may advertise, from time to time, comparisons of the
performance of its Common Shares and/or Advisor Shares with that of one or
more other mutual funds with similar investment objectives. The Fund may
advertise average annual calendar year-to-date and calendar quarter returns,
which are calculated according to the formula set forth in the preceding
paragraph except that the relevant measuring period would be the number of
months that have elapsed in the current calendar year or most recent three
months, as the case may be.

Yield is calculated by annualizing the net investment income
generated by the Fund over a specified thirty-day period according to the
following formula:

YIELD = 2[( a-b+1 )[*GRAPHIC OMITTED-SEE FOOTNOTE BELOW] -1]
--------------------------------------------------
cd

For purposes of this formula: "a" is dividends and interest earned during the
period; "b" is expenses accrued for the period (net of reimbursements); "c" is
the average daily number of shares outstanding during the period that were
entitled to receive dividends; and "d" is the maximum offering price per share
on the last day of the period. The Fund's yield for the 30-day period ended
October 31, 1995 was 6.50%.

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

- ------------------------
* The expression ( a-b+1 ) is being raised to the 6th power.

<PAGE>44

AUDITORS AND COUNSEL

Coopers & Lybrand L.L.P. ("Coopers & Lybrand"), with principal
offices at 2400 Eleven Penn Center, Philadelphia, Pennsylvania 19103, serves
as independent accountants for the Fund. The financial statements for the
fiscal years ended October 31, 1993, October 31, 1994 and October 31, 1995
that appear in this Statement of Additional Information have been audited by
Coopers & Lybrand, whose report thereon appears elsewhere herein and have been
included herein in reliance upon the report of such firm of independent
accountants given upon their authority as experts in accounting and auditing.

The financial statements for the periods beginning with commencement
of the Fund through October 31, 1992 have been audited by Ernst & Young LLP
("Ernst & Young"), independent accountants, as set forth in their report, and
have been included in reliance on such report and upon the authority of such
firm as experts in accounting and auditing. Ernst & Young's address is
787 7th Avenue, New York, New York 10019.

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

MISCELLANEOUS

As of December 28, 1995, there were no persons (other than Mr.
Furth, see "Management of the Fund") that owned of record 5% or more of the
Fund's outstanding shares.

Common Shares

Nat'l Financial Svsc Corp. ("Fidelity"), FBO Customers, P.O. Box
3908, Church Street Station, New York, New York 10008-3908 -- 6.04%. The Fund
believes that Fidelity is not the beneficial owner of shares held of record by
it. Mr. Lionel I. Pincus, Chairman of the Board and Chief Executive Officer
of EMW, may be deemed to have beneficially owned 55.15% of the Common Shares
outstanding, including shares owned by clients for which Warburg has
investment discretion and by companies that EMW may be deemed to control. Mr.
Pincus disclaims ownership of these shares and does not intend to exercise
voting rights with respect to these shares.

FINANCIAL STATEMENTS

The Fund's audited financial statements for the fiscal year ended
October 31, 1995 follow the Report of Independent Accountants.

<PAGE>A-1

APPENDIX

DESCRIPTION OF RATINGS

Corporate Bond Ratings

The following summarizes the ratings used by Standard & Poor's
Ratings Group ("S&P") for corporate bonds:

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

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

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

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

BB, B, CCC, CC, C - Debt rated BB, B, CCC, CC and C is regarded, on
balance, as predominately speculative with respect to capacity to pay interest
and repay principal in accordance with the terms of the obligation. BB
represents a lower degree of speculation than B and C the highest degree of
speculation. While such bonds will likely have some quality and protective
characteristics, these are outweighed by large uncertainties or major risk
exposures to adverse conditions.

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

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

<PAGE>A-2

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

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

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

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

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

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

The following summarizes the ratings used by Moody's Investors
Service, Inc. ("Moody's") for corporate bonds:

Aaa - Bonds that are rated Aaa are judged to be of the best quality.
They carry the smallest degree of investment risk and are generally referred
to as "gilt edged." Interest payments are protected by a large or
exceptionally stable margin and principal is secure. While the various
protective elements are likely to change, such changes as can be visualized
are most unlikely to impair the fundamentally strong position of such issues.

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

<PAGE>A-3

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

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

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

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

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

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

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

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

Short-Term Note Ratings

The following summarizes the two highest ratings used by S&P for
short-term notes:

SP-1 - Loans bearing this designation evidence a very strong or
strong capacity to pay principal and interest. Those issues determined to
possess overwhelming safety characteristics will be given a plus sign
designation.

<PAGE>A-4

SP-2 - Loans bearing this designation evidence a satisfactory
capacity to pay principal and interest.

The following summarizes the two highest ratings used by Moody's for
short-term notes and variable rate demand obligations:

MIG-1/VMIG-1 - Obligations bearing these designations are of the
best quality, enjoying strong protection from established cash flows of funds
for their servicing or from established and broad-based access to the market
for refinancing, or both.

MIG-2/VMIG-2 - Obligations bearing these designations are of high
quality with margins of protection ample although not so large as in the
preceding group.

Commercial Paper Ratings

The following summarizes the two highest ratings for commercial
paper used by S&P and Moody's, respectively:

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

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

Municipal Obligations Ratings

The following summarizes the ratings used by S&P for Municipal
Obligations:

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

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

<PAGE>A-5

BBB - This is the lowest investment grade. Debt rated BBB has an
adequate capacity to pay interest and repay principal. Although adverse
economic conditions or changing circumstances are more likely to lead to a
weakened capacity to pay interest and repay principal for debt in this
category than in higher rated categories.

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

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

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

<PAGE>A-6

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

The following summarizes the highest four municipal ratings used by
Moody's:

Aaa - Bonds which are rated Aaa are judged to be of the best
quality. They carry the smallest degree of investment risk and are generally
referred to as "gilt edge." Interest payments are protected by a large or
exceptionally stable margin and principal is secure. While the various
protective elements are likely to change, such changes as can be visualized
are most unlikely to impair the fundamentally strong position of such issues.

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

Ba - Bonds which are rated Ba are judged to have speculative
elements; their future cannot be considered as well assured. Often the
protection of interest and principal

<PAGE>A-7

payments may be very moderate and thereby not well safeguarded during both
good and bad times over the future. Uncertainty of position characterizes
bonds in this class.

Note: Those bonds in the Aa, A, Baa, Ba and B groups which Moody's
believes possess the strongest investment attributes are designated by the
symbols Aa1, A1, Baa1, Ba1, and B1.

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

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

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

<PAGE>
- --------------------------------------------------------------------------------
WARBURG PINCUS FIXED INCOME FUNDS
REPORT OF INDEPENDENT ACCOUNTANTS
- --------------------------------------------------------------------------------

To the Boards of Directors, Trustees and Shareholders of
Warburg Pincus Fixed Income Funds:

We have audited the accompanying statement of assets and liabilities including
the schedule of investments of the Warburg Pincus Intermediate Maturity
Government Fund and the statements of net assets of the Warburg Pincus Fixed
Income Fund, Warburg Pincus Global Fixed Income Fund and Warburg Pincus New York
Intermediate Municipal Fund (all Funds collectively referred to as the 'Warburg
Pincus Fixed Income Funds') as of October 31, 1995, and the related statements
of operations for the year then ended and the statements of changes in net
assets for each of the two years and the financial highlights for each of the
three years in the period then ended. These financial statements and financial
highlights are the responsibility of the Funds' management. Our responsibility
is to express an opinion on these financial statements and financial highlights
based on our audits. The financial highlights of each of the Warburg Pincus
Fixed Income Funds for each of the two years in the period ended October 31,
1992, were audited by other auditors, whose report dated December 15, 1992,
expressed an unqualified opinion.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
October 31, 1995, by correspondence with the custodians and brokers. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.

In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of each
of the Warburg Pincus Fixed Income Funds as of October 31, 1995, and the results
of their operations for the year then ended, and the changes in their net assets
for each of the two years and the financial highlights for each of the three
years in the period then ended, in conformity with generally accepted accounting
principles.

COOPERS & LYBRAND L.L.P.

2400 Eleven Penn Center
Philadelphia, PA
December 14, 1995

<PAGE>
- --------------------------------------------------------------------------------
WARBURG PINCUS FIXED INCOME FUND
- --------------------------------------------------------------------------------

December 8, 1995

Dear Shareholder:

The objective of Warburg Pincus Fixed Income Fund (the 'Fund') is high
current income consistent with reasonable risk. Capital appreciation is a
secondary objective. The Fund invests in a broadly diversified portfolio of
securities, including both corporate and U.S. government issues.

For the 12 months ended October 31, 1995, the Fund gained 12.59%, vs. a
12.54% gain in the Lehman Brothers Intermediate Government/Corporate Bond Index.
The Fund's 30-day annualized SEC yield was 6.50% as of October 31, 1995. Its
total net assets were $116,982,908.

Falling interest rates and controlled inflation provided an ideal backdrop
for bond prices during the period, and the Fund participated fully in the
market's advance. Throughout, we maintained our emphasis on high-quality bonds
(approximately 83% of the portfolio was held in issues rated A or above by
Moody's or S&P as of October 31, 1995 with the majority in AAA-rated issues). We
also maintained our focus on intermediate-term issues in an effort to mitigate
risk while pursuing a high level of current income and, secondarily, capital
appreciation. At the end of the reporting period, the Fund's average maturity
and duration were 6.31 and 4.88 years, respectively.

Currently, the Fund's heaviest sector weighting is in U.S. Treasury
obligations, which we believe represent the most attractive values. We also hold
a position in mortgage-backed issues. Our preference in this sector is
commercial mortgage-backed bonds, which hold little of the prepayment risk
associated with standard GNMA or FNMA issues. We remain underweighted in
corporate bonds, which we think are generally fully valued relative to
Treasuries.

Looking ahead, we believe the environment remains a positive one for
fixed-income securities. Inflation remains subdued, which arguably gives the
Federal Reserve room to lower interest rates in the months ahead. Also arguing
for lower rates is the possibility of congressional passage of a credible
deficit-reduction plan. We believe the Fund is well-positioned to capitalize on
these positive developments in the market.

<TABLE>
<S> <C>
Dale C. Christensen M. Anthony E. van Daalen
Co-Portfolio Manager Co-Portfolio Manager
</TABLE>

2
- --------------------------------------------------------------------------------
<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
WARBURG PINCUS FIXED INCOME FUND
- --------------------------------------------------------------------------------

GROWTH OF $10,000 INVESTED IN WARBURG PINCUS FIXED INCOME FUND
SINCE INCEPTION AS OF OCTOBER 31, 1995

The graph below illustrates the hypothetical investment of $10,000 in
Warburg Pincus Fixed Income Fund (the 'Fund') from August 17, 1987 (inception)
to October 31, 1995, assuming the reinvestment of dividends and capital gains at
net asset value, compared to the Lehman Brothers Intermediate
Government/Corporate Index ('LIGC')* for the same time period.

<TABLE>
<CAPTION>
[PERFORMANCE GRAPH]
Average Annual
Total Returns
for periods ending
FUND LIGC 10/31/95
<S> <C> <C> <C>
8/17/87 10,000.0 10,000.0 1 year
10/31/87 9,804.0 10,152.0 12.59%
10/31/88 11,046.0 11,098.0 5 year
10/31/89 11,906.0 12,269.0 9.84%
10/31/90 12,011.0 13,174.0 Since Inception
10/31/91 13,942.0 14,995.0 (08/17/87)
10/31/92 15,375.0 16,493.0 8.27%
10/31/93 17,164.0 18,129.0
10/31/94 17,060.0 17,778.0
10/31/95 19,208.0 20,005.0
</TABLE>

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

<S> <C>
1 Year Total Return (9/30/94-9/30/95).................................................................. 11.70%
5 Year Average Annual Total Return (9/30/90-9/30/95)................................................... 9.21%
Average Annual Total Return Since Inception (8/17/87-9/30/95).......................................... 8.21%
</TABLE>

All figures cited here represent past performance and do not guarantee
future results. Investment return and principal value of an investment will
fluctuate so that an investor's shares upon redemption may be worth more or less
than original cost. For periods ending 9/30/95 and 10/31/95, respectively,
without waivers or reimbursement of Fund expenses, average annual total returns
would have been 11.51% and 12.39% for 1-year, 9.01% and 9.64% for 5-year, and
8.03% and 8.09% since inception.

- ------------
* The LIGC Index is an unmanaged index of intermediate government and corporate
bonds calculated by Lehman Brothers Inc. and has no defined investment
objective.

3
- --------------------------------------------------------------------------------
<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
WARBURG PINCUS FIXED INCOME FUND
STATEMENT OF NET ASSETS
October 31, 1995
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
RATINGS'D'
PAR SECURITY DESCRIPTION (MOODY'S/S&P) MATURITY RATE VALUE
- ----------- ------------------------------------------------------ ------------- --------- ------ ------------
<C> <S> <C> <C> <C> <C>
CORPORATE BONDS (16.0%)
$ 5,000,000 Banque Paribas Subordinate Notes (A2/A-) 06/15/07 8.350% $ 5,468,750
1,500,000 Benedek Broadcast Corporation Senior Secured Note
[Callable 03/01/00 @ $105.938] (B2/NR) 03/01/05 11.875 1,582,500
1,500,000 Continental Homes Holdings Corporation Senior Note
[Callable 08/01/97 @ $104] (Ba3/B) 08/01/99 12.000 1,588,125
500,000 Grancare, Inc. [Callable 9/15/00 @ $104.69] (B2/B) 09/15/05 9.375 498,750
3,500,000 J.C. Penney & Co. [Callable 06/15/01 @ $104.57] (A1/A+) 06/15/21 9.750 4,195,625
2,000,000 Mediq, Inc. Subordinated Debenture [Callable 07/15/96
@ $105] (B3/CCC+) 07/15/03 7.500 1,630,000
1,500,000 Peregrine Investment Holdings Convertible Bond (Euro)
[Callable 12/18/95 @ $100] (NR/NR) 12/01/00 4.500 1,224,375
1,000,000 Pueblo Xtra International, Inc. Senior Note [Callable
08/01/98 @ $104.75] (B2/B-) 08/01/03 9.500 952,500
2,000,000 Seventh Mexican Acceptance Bond (Grupo Sidek) (Euro) (NR/NR) 08/15/99 10.000 1,110,000
500,000 Telewest PLC [Callable 10/01/00 @ $104.81] (B1/BB) 10/01/06 9.625 502,500
------------
TOTAL CORPORATE BONDS (Cost $19,250,406) 18,753,125
------------

MORTGAGE-BACKED SECURITIES (25.7%)
667,012 Bankers Trust Company Multi-Class Pass Through CTSF
Series 1988-1 Class D (NR/AAA) 04/01/18 8.625 692,296
770,138 Donaldson, Lufkin, & Jenrette Acceptance Trust Series
1989-1 Class F (Aaa/AAA) 08/01/19 11.000 829,135
4,000,000 Federal Home Loan Bank Structured Note [Callable
01/27/96 @ $100] (Aaa/AAA) 07/27/00 5.000 3,951,200
414,520 Federal Home Loan Mortgage Corp. Pool #220014 (Aaa/AAA) 10/01/01 8.750 425,501
5,828,014 Federal National Mortgage Association Conventional
Loan Pool #250322 (Aaa/AAA) 08/01/25 7.500 5,891,702
281,147 Goldman Sachs Trust 2 Series F Class 3 (Aaa/AAA) 10/20/18 9.250 297,302
590,152 Guaranteed Mortgage Corp. Series M Class M1 (Aaa/NR) 04/01/03 8.500 607,102
3,771,954 Mortgage Capital Funding, Inc. Class 1995-MC1 (NR/AAA) 05/25/27 7.700 3,892,185
2,000,000 Nomura Asset Capital Corp. Series 1993-M1 Class A1 (NR/NR) 11/25/03 7.640 2,052,500
2,098,481 Nomura Asset Securities Corp. Series 1994-4B Class 4A (Aaa/AAA) 09/25/24 8.300 2,130,614
4,000,000 Resolution Trust Corp. Series 94-C1 Class B (Aa/AA+) 06/25/26 8.000 4,160,000
2,000,000 Resolution Trust Corporation Mortgage Pass Through
Series-95 C1 Class A-2C (Aaa/NR) 02/25/27 6.900 1,963,750
1,000,000 Security Pacific Home Equity ABS Series 1991 Class B (Aaa/AAA) 05/15/98 8.850 1,051,600
2,000,000 Shurgard CMO Asset Backed Pass Through Certificates
Series 1 Class 1 (NR/NR) 06/15/04 8.240 2,120,625
------------
TOTAL MORTGAGE-BACKED SECURITIES (Cost $29,313,859) 30,065,512
------------
</TABLE>

See Accompanying Notes to Financial Statements.
10
- --------------------------------------------------------------------------------
<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
WARBURG PINCUS FIXED INCOME FUND
STATEMENT OF NET ASSETS (CONT'D)
October 31, 1995
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
RATINGS'D'
PAR SECURITY DESCRIPTION (MOODY'S/S&P) MATURITY RATE VALUE
- ----------- ------------------------------------------------------ ------------- --------- ------ ------------
<C> <S> <C> <C> <C> <C>
MUNICIPAL BONDS (0.9%)
$ 1,000,000 Los Angeles County, California Pension Obligation,
Series D RB (Cost $1,000,000) (Aaa/AAA) 06/30/05 6.770% $ 1,002,500
------------
UNITED STATES TREASURY OBLIGATIONS (45.2%)
4,000,000 U.S. Treasury Note 07/15/98 8.250 4,251,840
13,500,000 U.S. Treasury Note 04/15/99 7.000 14,012,999
14,700,000 U.S. Treasury Note 05/15/01 8.000 16,174,408
16,750,000 U.S. Treasury Note 02/15/05 7.500 18,469,052
------------
TOTAL UNITED STATES TREASURY OBLIGATIONS (Cost $52,194,817) 52,908,299
------------
AGENCY OBLIGATIONS (1.5%)
1,677,798 Small Business Administration Guaranteed Development
Participation Certificate Debenture Series 1992-20D (Cost $1,677,798) 04/01/12 8.200 1,759,591
------------

</TABLE>

COMMON STOCK (2.2%)
SHARES
- -----------
<C> <S> <C> <C>
50,000 American Health Properties, Inc. 1,031,250
50,000 Healthcare Realty Trust, Inc. 1,006,250
30,000 Universal Health Realty Income Trust 498,750
------------
TOTAL COMMON STOCK (Cost $2,579,398) 2,536,250
------------
PREFERRED STOCK (6.8%)
40,000 American Re Capital Corp. 8.500 1,005,000
40,000 Banesto Holdings Limited Series A 10.500 1,186,000
161,000 Indosuez Holdings SCA ADR 10.375 4,326,875
50,000 Credit Lyonnaise Capital SCA ADR # 9.500 1,212,500
2,320 Ohio Edison Corp. 7.360 234,320
------------
TOTAL PREFERRED STOCK (Cost $7,697,355) 7,964,695
------------

</TABLE>

SHORT-TERM INVESTMENTS (1.1%)
PAR
- -----------
<C> <S> <C>
$ 1,254,000 Repurchase agreement with State Street Bank and Trust
Co. dated 10/31/95 at 5.83% to be repurchased at
$1,254,203 on 11/01/95. (Collateralized by $1,265,000
U.S. Treasury Note at 6.875% due 10/31/96, with a
market value of $1,280,813.) (Cost $1,254,000) 1,254,000
------------
TOTAL INVESTMENTS AT VALUE (99.4%) (Cost $114,967,633*) 116,243,972

OTHER ASSETS IN EXCESS OF LIABILITIES (0.6%) 738,936
------------
NET ASSETS (100.0%) (applicable to 11,618,046 shares) $116,982,908
------------
------------
NET ASSETS VALUE, offering and redemption price per share ($116,982,908[div]11,618,046) $10.07
------
------

</TABLE>

INVESTMENT ABBREVIATIONS

<TABLE>
<S> <C>
ADR = American Depository Receipt
CMO = Collateralized Mortgage Obligation
RB = Revenue Bond
</TABLE>

'D' Credit ratings given by Moody's Investors Service, Inc. and Standard &
Poor's Ratings Group are unaudited.
# Restricted security.
* Also cost for Federal income tax purposes.

See Accompanying Notes to Financial Statements.
11
- --------------------------------------------------------------------------------
<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
WARBURG PINCUS FIXED INCOME FUNDS
STATEMENTS OF OPERATIONS
For the Year Ended October 31, 1995
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
Warburg
Warburg Pincus Warburg Pincus
Warburg Pincus Intermediate New York
Pincus Global Maturity Intermediate
Fixed Income Fixed Income Government Municipal
Fund Fund Fund Fund
------------ ------------ ---------- --------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Interest $ 8,376,182 $6,507,144 $3,252,179 $3,982,642
Dividends 470,438 552,228 98,083 45,198
------------ ------------ ---------- --------------
Total investment income 8,846,620 7,059,372 3,350,262 4,027,840
------------ ------------ ---------- --------------
EXPENSES:
Investment advisory 555,483 773,318 253,734 316,050
Administrative services 222,194 170,130 102,661 158,024
Audit 15,674 16,985 16,975 15,975
Custodian/Sub-custodian 48,401 44,270 17,340 23,471
Directors/Trustees 10,500 10,500 10,500 10,500
Insurance 6,127 5,754 3,692 4,479
Legal 73,175 72,631 58,060 70,563
Printing 11,861 4,525 5,236 12,489
Registration 31,178 31,790 26,398 16,631
Transfer agent 48,503 51,309 43,347 33,447
Miscellaneous 14,281 38,611 14,726 14,365
------------ ------------ ---------- --------------
1,037,377 1,219,823 552,669 675,994
Less: fees waived (204,153) (485,160) (248,192) (201,919)
------------ ------------ ---------- --------------
Total expenses 833,224 734,663 304,477 474,075
------------ ------------ ---------- --------------
Net investment income 8,013,396 6,324,709 3,045,785 3,553,765
------------ ------------ ---------- --------------
NET REALIZED AND UNREALIZED GAIN FROM INVESTMENTS
AND FOREIGN CURRENCY RELATED ITEMS:
Net realized gain from security transactions 1,132,052 508,655 514,443 818,720
Net realized loss from futures contracts (606,653) (849,500) 0 0
Net realized gain (loss) from foreign currency
related items 49,446 (961,036) 0 0
Net decrease in unrealized depreciation from
investments and foreign currency related
items 4,869,743 2,015,972 2,406,718 1,979,229
------------ ------------ ---------- --------------
Net realized and unrealized gain from
investments and foreign currency
related items 5,444,588 714,091 2,921,161 2,797,949
------------ ------------ ---------- --------------

Net increase in net assets resulting
from operations $ 13,457,984 $7,038,800 $5,966,946 $6,351,714
------------ ------------ ---------- --------------
------------ ------------ ---------- --------------
</TABLE>

See Accompanying Notes to Financial Statements.
19
- --------------------------------------------------------------------------------
<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
WARBURG PINCUS FIXED INCOME FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
Warburg Pincus Warburg Pincus
Fixed Income Global Fixed
Fund Income Fund
----------------------------- -----------------------------
For the Year Ended October For the Year Ended October
31, 31,
1995 1994 1995 1994
------------ ------------ ------------ ------------

<S> <C> <C> <C> <C>
FROM OPERATIONS:
Net investment income $ 8,013,396 $ 5,867,260 $ 6,324,709 $ 5,807,634
Net realized gain (loss) from security
transactions 1,132,052 (1,660,108) 508,655 (1,869,553)
Net realized gain (loss) from futures
contracts (606,653) 117,484 (849,500) 269,845
Net realized gain (loss) from foreign
currency related items 49,446 18,246 (961,036) (2,237,413)
Net change in unrealized appreciation
(depreciation) from investments and
foreign currency related items 4,869,743 (4,804,661) 2,015,972 (4,227,712)
------------ ------------ ------------ ------------
Net increase (decrease) in net assets
resulting from operations 13,457,984 (461,779) 7,038,800 (2,257,199)
------------ ------------ ------------ ------------
FROM DISTRIBUTIONS:
Dividends from net investment income (8,013,396) (5,926,356) (3,445,878) (3,215,939)
Distributions from capital gains 0 (732,704) 0 (827,403)
Return of capital 0 0 0 (366,074)
------------ ------------ ------------ ------------
Net decrease from distributions (8,013,396) (6,659,060) (3,445,878) (4,409,416)
------------ ------------ ------------ ------------
FROM CAPITAL SHARE TRANSACTIONS:
Proceeds from sale of shares 47,678,747 58,018,967 42,488,917 61,614,112
Reinvested dividends 6,555,741 5,623,287 2,941,954 3,798,759
Net asset value of shares redeemed (44,942,286) (35,456,760) (75,776,818) (30,346,474)
------------ ------------ ------------ ------------
Net increase (decrease) in net assets
from capital share transactions 9,292,202 28,185,494 (30,345,947) 35,066,397
------------ ------------ ------------ ------------
Net increase (decrease) in net assets 14,736,790 21,064,655 (26,753,025) 28,399,782
NET ASSETS:
Beginning of year 102,246,118 81,181,463 90,394,069 61,994,287
------------ ------------ ------------ ------------
End of year $116,982,908 $102,246,118 $ 63,641,044 $ 90,394,069
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------

20
- --------------------------------------------------------------------------------
<PAGE>
<PAGE>
- --------------------------------------------------------------------------------

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

<CAPTION>
Warburg Pincus Warburg Pincus
Intermediate Maturity New York Intermediate
Government Fund Municipal Fund
--------------------------------- ---------------------------------
For the Year Ended October 31, For the Year Ended October 31,
1995 1994 1995 1994
------------ ------------ ------------ ------------

<C> <C> <C> <C>
$ 3,045,785 $ 2,827,703 $ 3,553,765 $ 3,215,210

514,443 (58,020) 818,720 47,719
0 0 0 0

0 0 0 0
2,406,718 (3,492,181) 1,979,229 (3,387,003)
------------ ------------ ------------ ------------
5,966,946 (722,498) 6,351,714 (124,074)
------------ ------------ ------------ ------------
(3,045,785) (2,827,703) (3,553,765) (3,222,899)
0 (3,937,754) (47,531) (912,745)
0 0 0 0
------------ ------------ ------------ ------------
(3,045,785) (6,765,457) (3,601,296) (4,135,644)
------------ ------------ ------------ ------------
26,773,501 24,310,135 32,441,402 50,293,197
2,288,064 5,552,546 3,073,742 3,404,096
(22,818,476) (53,205,957) (40,620,180) (43,299,063)
------------ ------------ ------------ ------------
6,243,089 (23,343,276) (5,105,036) 10,398,230
------------ ------------ ------------ ------------
9,164,250 (30,831,231) (2,354,618) 6,138,512
46,733,653 77,564,884 75,716,095 69,577,583
------------ ------------ ------------ ------------
$ 55,897,903 $ 46,733,653 $ 73,361,477 $ 75,716,095
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
</TABLE>

See Accompanying Notes to Financial Statements.

21
- --------------------------------------------------------------------------------
<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
WARBURG PINCUS FIXED INCOME FUND
FINANCIAL HIGHLIGHTS
(For a Share of the Fund Outstanding Throughout Each Year)
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
For the Year Ended October 31,
------------------------------------------------------
1995 1994 1993 1992 1991
-------- -------- -------- ------- -------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF YEAR $ 9.61 $ 10.42 $ 9.90 $ 9.61 $ 8.95
-------- -------- -------- ------- -------
Income from Investment Operations:

Net Investment Income .70 .63 .56 .67 .73
Net Gain (Loss) on Securities and Foreign Currency
Related Items (both realized and unrealized) .46 (.70) .52 .29 .66
-------- -------- -------- ------- -------

Total from Investment Operations 1.16 (.07) 1.08 .96 1.39
-------- -------- -------- ------- -------
Less Distributions:

Dividends from Net Investment Income (.70) (.65) (.56) (.67) (.73)
Distributions from Capital Gains .00 (.09) .00 .00 .00
-------- -------- -------- ------- -------

Total Distributions (.70) (.74) (.56) (.67) (.73)
-------- -------- -------- ------- -------

NET ASSET VALUE, END OF YEAR $ 10.07 $ 9.61 $ 10.42 $ 9.90 $ 9.61
-------- -------- -------- ------- -------
-------- -------- -------- ------- -------

Total Return 12.59% (.60%) 11.63% 10.28% 16.08%

RATIOS/SUPPLEMENTAL DATA:

Net Assets, End of Year (000s) $116,983 $102,246 $81,181 $65,095 $61,908

Ratios to average daily net assets:
Operating expenses .75% .75% .75% .75% .75%
Net investment income 7.25% 6.53% 5.99% 6.82% 7.85%
Decrease reflected in above operating expense ratios
due to waivers/reimbursements .18% .18% .09% .27% .24%

Portfolio Turnover Rate 182.93% 179.44% 227.37% 122.04% 150.61%
</TABLE>

See Accompanying Notes to Financial Statements.

TAX STATUS OF 1995 DIVIDENDS (Unaudited)

Dividends paid by the Fund taxable as ordinary income amounted to $.70 per
share.

Because the Fund's fiscal year is not the calendar year, amounts to be used by
calendar year taxpayers on their Federal return will be reflected on Form
1099-DIV and will be mailed in January 1996.

22
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
WARBURG PINCUS FIXED INCOME FUNDS
NOTES TO FINANCIAL STATEMENTS
October 31, 1995
- --------------------------------------------------------------------------------

1. SIGNIFICANT ACCOUNTING POLICIES

The Warburg Pincus Fixed Income Funds are comprised of the Warburg Pincus
Fixed Income Fund (the 'Fixed Income Fund') and the Warburg Pincus Intermediate
Maturity Government Fund (the 'Intermediate Government Fund') which are
registered under the Investment Company Act of 1940, as amended (the '1940
Act'), as diversified, open-end management investment companies and the Warburg
Pincus Global Fixed Income Fund (the 'Global Fixed Income Fund') and the Warburg
Pincus New York Intermediate Municipal Fund (the 'New York Municipal Fund')
which are registered under the 1940 Act as non-diversified, open-end management
investment companies.

Investment objectives for each Fund are as follows: the Fixed Income Fund
seeks to generate high current income consistent with reasonable risk with
capital appreciation a secondary objective; the Global Fixed Income Fund seeks
to maximize total investment return consistent with prudent investment
management, consisting of a combination of interest income, currency gains and
capital appreciation; the Intermediate Government Fund seeks to achieve as high
a level of current income as is consistent with preservation of capital; and the
New York Municipal Fund seeks to maximize current interest income exempt from
Federal income tax and New York State and New York City personal income tax to
the extent consistent with prudent investment and preservation of capital.

The net asset value of each Fund is determined daily as of the close of
regular trading on the New York Stock Exchange. Each Fund's investments are
valued at market value, which is currently determined using the last reported
sales price. If no sales are reported, investments are generally valued at the
last reported bid price. In the absence of market quotations, investments are
generally valued at fair value as determined by or under the direction of the
Fund's governing Board. Short-term investments that mature in 60 days or less
are valued on the basis of amortized cost, which approximates market value.

The books and records of the Funds are maintained in U.S. dollars.
Transactions denominated in foreign currencies are recorded at the current
prevailing exchange rates. All assets and liabilities denominated in foreign
currencies are translated into U.S. dollar amounts at the current exchange rate
at the end of the period. Translation gains or losses resulting from changes in
the exchange rate during the reporting period and realized gains and losses on
the settlement of foreign currency transactions are reported in the results of
operations for the current period. The Global Fixed Income Fund isolates that
portion of gains and losses on investments in debt securities which are due to
changes in the foreign exchange rate from that which are due to changes in
market prices of debt securities.

Security transactions are accounted for on trade date. Interest income is
recorded on the accrual basis. Dividends are recorded on the ex-dividend date.
The cost of investments sold is determined by use of the specific identification
method for both financial reporting and income tax purposes.

Dividends from net investment income are declared daily and paid monthly
for the Fixed Income Fund, the Intermediate Government Fund and the New York
Municipal Fund. Dividends from net investment income are declared and paid
quarterly for the Global Fixed Income Fund. Distributions for all Funds of net
realized capital gains, if any, are declared and paid annually. However, to the
extent that a net realized capital gain can be reduced by a capital loss
carryover, such gain will not be distributed.

26
- --------------------------------------------------------------------------------
<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
WARBURG PINCUS FIXED INCOME FUNDS
NOTES TO FINANCIAL STATEMENTS (CONT'D)
October 31, 1995
- --------------------------------------------------------------------------------
Income and capital gain distributions are determined in accordance with Federal
income tax regulations which may differ from generally accepted accounting
principles.

Certain amounts in the Statements of Changes in Net Assets have been
reclassified to conform to current year presentation.

No provision is made for Federal taxes as it is each Fund's intention to
continue to qualify for and elect the tax treatment applicable to regulated
investment companies under the Internal Revenue Code and make the requisite
distributions to its shareholders which will be sufficient to relieve it from
Federal income and excise taxes.

Costs incurred by the Global Fixed Income Fund in connection with its
organization have been deferred and are being amortized over a period of five
years from the date the Global Fixed Income Fund commenced its operations.

Each Fund may enter into repurchase agreement transactions. Under the terms
of a typical repurchase agreement, a Fund acquires an underlying security
subject to an obligation of the seller to repurchase. The value of the
underlying security collateral will be maintained at an amount at least equal to
the total amount of the purchase obligation, including interest. The collateral
is in the Fund's possession.

2. INVESTMENT ADVISER, CO-ADMINISTRATORS AND DISTRIBUTOR

Warburg, Pincus Counsellors, Inc. ('Warburg'), a wholly owned subsidiary of
Warburg, Pincus Counsellors G.P. ('Counsellors G.P.'), serves as each Fund's
investment adviser. For its investment advisory services, Warburg receives the
following fees based on each Fund's average daily net assets:

<TABLE>
<CAPTION>
FUND ANNUAL RATE
- --------------------------------- ----------------------------------

<S> <C>
Fixed Income .50% of average daily net assets
Global Fixed Income 1.00% of average daily net assets
Intermediate Government .50% of average daily net assets
New York Municipal .40% of average daily net assets
</TABLE>

For the year ended October 31, 1995, investment advisory fees and waivers
were as follows:

<TABLE>
<CAPTION>
GROSS NET
FUND ADVISORY FEE WAIVER ADVISORY FEE
- --------------------------------------------------- ------------ --------- ------------

<S> <C> <C> <C>
Fixed Income $555,483 $(162,585) $392,898
Global Fixed Income 773,318 (435,848) 337,470
Intermediate Government 253,734 (226,320) 27,414
New York Municipal 316,050 (168,856) 147,194
</TABLE>

Counsellors Funds Service, Inc. ('CFSI'), a wholly owned subsidiary of
Warburg, and PFPC Inc. ('PFPC'), an indirect, wholly owned subsidiary of PNC
Bank Corp. ('PNC'), serve as each Fund's co-administrators. For administrative
services, CFSI currently receives a fee calculated at an annual rate of

27
- --------------------------------------------------------------------------------
<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
WARBURG PINCUS FIXED INCOME FUNDS
NOTES TO FINANCIAL STATEMENTS (CONT'D)
October 31, 1995
- --------------------------------------------------------------------------------
.10% of each Fund's average daily net assets. For the year ended October 31,
1995, administrative services fees earned by CFSI were as follows:

<TABLE>
<CAPTION>
FUND CO-ADMINISTRATION FEE
- ----------------------------------------------------------------------- ---------------------

<S> <C>
Fixed Income $ 111,097
Global Fixed Income 77,332
Intermediate Government 50,747
New York Municipal 79,012
</TABLE>

For its administrative services, PFPC currently receives a fee calculated
at an annual rate of .10% of the average daily net assets of the Fixed Income
Fund, the Intermediate Government Fund and the New York Municipal Fund. For the
Global Fixed Income Fund, PFPC currently receives a fee calculated at an annual
rate of .12% of the first $250 million in average daily net assets, .10% of the
next $250 million in average daily net assets, .08% of the next $250 million in
average daily net assets and .05% of average daily net assets over $750 million.

For the year ended October 31, 1995, administrative services fees earned
and voluntarily waived by PFPC were as follows:

<TABLE>
<CAPTION>
FUND GROSS FEE WAIVER NET
- ----------------------------------------------------------- --------- -------- -------

<S> <C> <C> <C>
Fixed Income $ 111,097 $(41,568) $69,529
Global Fixed 92,798 (49,312) 43,486
Intermediate Government 51,914 (21,872) 30,042
New York Municipal 79,012 (33,063) 45,949
</TABLE>

Counsellors Securities Inc. ('CSI'), also a wholly owned subsidiary of
Warburg, serves as each Fund's distributor. No compensation is paid by the Funds
to CSI for distribution services.

3. INVESTMENTS IN SECURITIES

For the year ended October 31, 1995, purchases and sales of investment
securities (excluding short-term investments) and United States government and
agency obligations were as follows:

<TABLE>
<CAPTION>
U.S. GOVERNMENT AND
INVESTMENT SECURITIES AGENCY OBLIGATIONS
--------------------------- ----------------------------
FUND PURCHASES SALES PURCHASES SALES
- --------------------------------------- ----------- ------------ ------------ ------------

<S> <C> <C> <C> <C>
Fixed Income $69,506,438 $ 59,600,888 $144,593,744 $131,853,246
Global Fixed Income 79,097,036 108,742,015 9,808,921 11,805,050
Intermediate Government 0 0 61,570,880 50,413,561
New York Municipal 79,189,466 87,267,702 0 0
</TABLE>

28
- --------------------------------------------------------------------------------
<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
WARBURG PINCUS FIXED INCOME FUNDS
NOTES TO FINANCIAL STATEMENTS (CONT'D)
October 31, 1995
- --------------------------------------------------------------------------------

At October 31, 1995, the net unrealized appreciation from investments for
those securities having an excess of value over cost and net unrealized
depreciation from investments for those securities having an excess of cost over
value (based on cost for Federal income tax purposes) was as follows:

<TABLE>
<CAPTION>
NET UNREALIZED
UNREALIZED UNREALIZED APPRECIATION
FUND APPRECIATION DEPRECIATION (DEPRECIATION)
- ------------------------------------------------ ------------ ------------ --------------

<S> <C> <C> <C>
Fixed Income $2,550,123 $ (1,273,784) $1,276,339
Global Fixed Income 1,658,696 (1,472,059) 186,637
Intermediate Government 1,299,887 (263,103) 1,036,784
New York Municipal 1,976,753 (16,768) 1,959,985
</TABLE>

4. FORWARD FOREIGN CURRENCY CONTRACTS

The Fixed Income Fund and the Global Fixed Income Fund may enter into
forward currency contracts for the purchase or sale of a specific foreign
currency at a fixed price on a future date. Risks may arise upon entering into
these contracts from the potential inability of counterparties to meet the terms
of their contracts and from unanticipated movements in the value of a foreign
currency relative to the U.S. dollar. The Funds will enter into forward
contracts primarily for hedging purposes. The forward currency contracts are
adjusted by the daily exchange rate of the underlying currency and any gains or
losses are recorded for financial statement purposes as unrealized until the
contract settlement date.

At October 31, 1995, the Global Fixed Income Fund had the following open
forward foreign currency contracts:

<TABLE>
<CAPTION>
FOREIGN UNREALIZED
FORWARD CURRENCY EXPIRATION CURRENCY CONTRACT CONTRACT FOREIGN EXCHANGE
CONTRACT DATE TO BE SOLD AMOUNT VALUE GAIN (LOSS)
- ------------------------ ---------- ---------- ----------- ----------- ----------------

<S> <C> <C> <C> <C> <C>
Australian Dollars 12/18/95 914,990 $ 690,818 $ 695,209 $ (4,391)
British Pounds 12/27/95 3,510,984 5,435,003 5,541,737 (106,734)
Danish Krone 12/18/95 29,059,448 5,281,904 5,319,710 (37,806)
German Marks 11/29/95 14,200,000 9,588,116 10,109,640 (521,524)
German Marks 11/29/95 375,092 255,164 267,045 (11,881)
German Marks 12/18/95 10,514,444 1,918,694 1,924,806 (6,112)
German Marks 12/18/95 10,513,889 1,934,834 1,924,704 10,130
German Marks 12/18/95 6,013,700 4,243,966 4,285,704 (41,738)
Irish Punt 12/18/95 2,881,250 4,639,677 4,671,371 (31,694)
Netherlands Guilder 11/29/95 4,577,075 2,760,600 2,896,883 (136,283)
Netherlands Guilder 11/29/95 79,014 49,138 50,009 (871)
----------- ----------- ----------------
$36,797,914 $37,686,818 $ (888,904)
----------- ----------- ----------------
----------- ----------- ----------------
</TABLE>

5. FUTURES CONTRACTS

Each Fund may enter into futures contracts for hedging purposes to the
extent permitted by its investment policies and objectives. To enter into a
futures contract, a Fund must make a deposit of an initial margin with its
custodian in a segregated account. Subsequent payments, which are dependent on

29
- --------------------------------------------------------------------------------
<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
WARBURG PINCUS FIXED INCOME FUNDS
NOTES TO FINANCIAL STATEMENTS (CONT'D)
October 31, 1995
- --------------------------------------------------------------------------------
the daily fluctuations in the value of the underlying instrument, are made or
received by a Fund each day (daily variation margin) and are recorded as
unrealized gains or losses until the contracts are closed. When the contract is
closed, a Fund records a realized gain or loss equal to the difference between
the proceeds from (or cost of) the closing transactions and a Fund's basis in
the contract. Risks of entering into futures contracts include the possibility
that a change in the value of the contract may not correlate with the changes in
the value of the underlying instruments. The Fixed Income Fund and the Global
Fixed Income Fund entered into futures contracts during the year ended October
31, 1995. However, the Fixed Income Fund and Global Fixed Income Fund had no
futures contracts open at October 31, 1995.

6. CAPITAL SHARE TRANSACTIONS

The Global Fixed Income Fund and the Intermediate Government Fund are each
authorized to issue three billion full and fractional shares of capital stock,
$.001 par value per share, of which one billion shares are designated Series 2
Shares (the Advisor Shares). The Fixed Income Fund and the New York Municipal
Fund are each authorized to issue an unlimited number of full and fractional
shares of beneficial interest, $.001 par value per share, of which one billion
shares are designated Series 2 Shares (the Advisor Shares). At October 31, 1995,
no Advisor Shares were outstanding.

30
- --------------------------------------------------------------------------------
<PAGE>
<PAGE>
- --------------------------------------------------------------------------------

[THIS PAGE INTENTIONALLY LEFT BLANK]

31
- --------------------------------------------------------------------------------
<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
WARBURG PINCUS FIXED INCOME FUNDS
NOTES TO FINANCIAL STATEMENTS (CONT'D)
October 31, 1995
- --------------------------------------------------------------------------------

6. CAPITAL SHARE TRANSACTIONS (cont'd)

Transactions in shares of each Fund were as follows:

<TABLE>
<CAPTION>
FIXED INCOME FUND GLOBAL FIXED INCOME FUND
For the Year Ended October 31, For the Year Ended October 31,
---------------------------------------- ----------------------------------
1995 1994 1995 1994
------------------- ------------------- ---------------- ----------------
<S> <C> <C> <C> <C>
Shares sold 4,918,036 5,837,372 4,066,768 5,678,256
Shares issued to
shareholders on
reinvestment of
dividends 672,751 566,407 281,288 350,063
Shares redeemed (4,609,035) (3,561,347) (7,231,335) (2,829,142)
------------------- ------------------- ---------------- ----------------
Net increase (decrease)
in shares outstanding 981,752 2,842,432 (2,883,279) 3,199,177
------------------- ------------------- ---------------- ----------------
------------------- ------------------- ---------------- ----------------
</TABLE>

7. NET ASSETS

Net assets at October 31, 1995, consisted of the following:

<TABLE>
<CAPTION>
FIXED INCOME FUND GLOBAL FIXED INCOME FUND
---------------------------- ------------------------
<S> <C> <C>
Capital contributed, net $116,808,286 $ 63,963,915
Accumulated net investment income
(loss) (66,850) 1,917,795
Accumulated net realized gain
(loss) from security transactions (1,034,867) (1,533,335)
Net unrealized appreciation
(depreciation) from investments
and foreign currency related
items 1,276,339 (707,331)
---------------- ------------------------
Net assets $116,982,908 $ 63,641,044
---------------- ------------------------
---------------- ------------------------
</TABLE>

8. CAPITAL LOSS CARRYOVER

At October 31, 1995, capital loss carryovers available to offset possible
future capital gains of each Fund were as follows:

<TABLE>
<CAPTION>
Capital Loss Carryover Total Capital
Expiring In Loss Carryover
-------------------------- --------------
2002 2003
---------- ----------
<S> <C> <C> <C>
Fixed Income $1,034,867 $1,034,867
Global Fixed Income 653,329 1,284,612 1,937,941

32
- --------------------------------------------------------------------------------
<PAGE>
<PAGE>
- --------------------------------------------------------------------------------

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

<CAPTION>
INTERMEDIATE GOVERNMENT FUND NEW YORK MUNICIPAL FUND
For the Year Ended October 31, For the Year Ended October 31,
---------------------------------------- ----------------------------------
1995 1994 1995 1994
------------------- ------------------- ---------------- ----------------
<C> <C> <C> <C>
2,723,498 2,426,890 3,181,012 4,835,896
230,993 538,360 299,821 328,635
(2,323,291) (5,159,908) (3,957,382) (4,178,180)
------------------- ------------------- ---------------- ----------------
631,200 (2,194,658) (476,549) 986,351
------------------- ------------------- ---------------- ----------------
------------------- ------------------- ---------------- ----------------

<CAPTION>
INTERMEDIATE GOVERNMENT FUND NEW YORK MUNICIPAL FUND
------------------------------------------ ---------------------------------
<C> <C>
$ 54,407,628 $ 70,580,636
(5,346) 0
458,837 818,908
1,036,784 1,961,933
--------------- ---------------
$ 55,897,903 $ 73,361,477
--------------- ---------------
--------------- ---------------
</TABLE>

33
- --------------------------------------------------------------------------------

<PAGE>C-1

PART C
OTHER INFORMATION

Item 24. Financial Statements and Exhibits

(a) Financial Statements relating to Common Shares

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

(2) Financial Statements included in Part B:
(a) Report of Coopers & Lybrand L.L.P.,
Independent Accountants
(b) Statement of Net Assets
(c) Statement of Operations
(d) Statement of Changes in Net Assets
(e) Financial Highlights
(f) Notes to Financial Statements

(b) Exhibits:

Exhibit No. Description of Exhibit
- ----------- ----------------------

1 Agreement and Declaration of Trust.

2 Second Amended and Restated By-Laws.

3 Not applicable.

4 Form of Stock Certificates.(1)

5 Investment Advisory Agreement.

6 Form of Distribution Agreement. (2)

7 Not applicable.

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

(2)Incorporated by reference; material provisions of this exhibit
substantially similar to those of the corresponding exhibit in Post-
Effective Amendment No. 10 to the Registration Statement on Form N-1A of
Warburg, Pincus International Equity Fund, Inc. filed on September 22,
1995 (Securities Act File No. 33-27031).

<PAGE>C-2

8(a) Form of Custodian Agreement with PNC Bank,
as amended. (2)

(b) Form of Custodian Agreement with Chase Manhattan Bank, N.A.(3)

(b-1) Form of Amendment to Custodian Agreement with Chase Manhattan
Bank, N.A.

9(a) Form of Transfer Agency Agreement. (1)

(b) Form of Co-Administration Agreement with Counsellors Funds
Service, Inc. (1)

(b-1) Form of Co-Administration Agreement with PFPC Inc. (1)

10(a) Opinion of Willkie Farr & Gallagher, counsel to the Fund.(5)

(b) Consent of Willkie Farr & Gallagher, counsel to the Fund.

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

(b) Consent of Ernst & Young LLP, Independent Accountants.

12 Not applicable.

13 Form of Purchase Agreement. (2)

- ------------------------
(3)Incorporated by reference; material provisions of this exhibit
substantially similar to those of the corresponding exhibit in Post-
Effective Amendment No. 17 to the Registration Statement on Form N-1A of
Warburg, Pincus Capital Appreciation Fund filed on December 29, 1995
(Securities Act File No. 33-12344).

(4)Incorporated by reference; material provisions of this exhibit
substantially similar to those of the corresponding exhibit in Pre-
Effective Amendment No. 1 to the Registration Statement on Form N-1A of
Warburg, Pincus Japan Growth Fund, Inc. filed on December 18, 1995
(Securities Act File No. 33-63653).

(5)Incorporated by reference to Opinion of Willkie Farr &
Gallagher filed with Registrant's Rule 24f-2 Notice, filed on
December 19, 1995.

<PAGE>C-3

14 Form of Retirement Plans. (6)

15(a) Shareholder Services Plan. (7)

(b) Amended and Restated Distribution Plan. (4)

16(a) Schedule for Computation of Total Return and Yield Quotations
relating to Common Shares.

17 Financial Data Schedule relating to Common Shares.

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

Warburg, Pincus Counsellors, Inc. ("Warburg"), Registrant's
investment adviser, may be deemed a controlling person of Registrant because
it possesses or shares investment or voting power with respect to more than
25% of the outstanding securities of Registrant. E.M. Warburg, Pincus & Co.,
Inc. ("EMW") controls Warburg through its ownership of a class of voting
preferred stock of Warburg. John L. Furth, director of the Fund, and Lionel
I. Pincus, Chairman of the Board and Chief Executive Officer of EMW, may be
deemed to be controlling persons of the Fund because they may be deemed to
possess or share investment power over shares owned by clients of Warburg and
certain other entities.

- ------------------------
(6)Incorporated by reference to Post-Effective Amendment No. 1 to the
Registration Statement of Warburg, Pincus Managed Bond Trust, filed on
February 28, 1995 (Securities Act File No. 33-73672).

(7)Incorporated by reference; material provisions of this exhibit
substantially similar to those of the corresponding exhibit in Post-
Effective Amendment No. 12 to the Registration Statement on Form N-1A of
Counsellors Cash Reserve Fund, Inc. filed on June 28, 1995 (Securities
Act File No. 2-94840).

(8)Incorporated by reference; material provisions of this exhibit
substantially similar to those of the corresponding exhibit in
Post-Effective Amendment No. 13 to the Registration Statement
on Form N-1A of Warburg, Pincus International Equity Fund,
Inc. filed on December 28, 1995 (Securities Act File No. 33-
27031).

<PAGE>C-4

Item 26. Number of Holders of Securities

Number of Record Holders
Title of Class as of December 28, 1995
-------------- ------------------------

Shares of beneficial interest, 879
par value $.001 per share

Shares of beneficial interest - 0
Series 1, par value $.001
per share

Shares of beneficial interest - 0
Series 2 ("Advisor Shares"),
par value $.001 per share

Item 27. Indemnification

Registrant, officers and directors or trustees of Warburg, of
Counsellors Securities, Inc. ("Counsellors Securities") and of Registrant are
covered by insurance policies indemnifying them for liability incurred in
connection with the operation of Registrant. These policies provide insurance
for any "Wrongful Act" of an officer, director or trustee. Wrongful Act is
defined as breach of duty, neglect, error, misstatement, misleading statement,
omission or other act done or wrongfully attempted by an officer, director or
trustee in connection with the operation of Registrant. Insurance coverage
does not extend to (a) conflicts of interest or gaining in fact any profit or
advantage to which one is not legally entitled, (b) intentional noncompliance
with any statute or regulation or (c) commission of dishonest, fraudulent acts
or omissions. The coverage is limited in amount and, in certain
circumstances, is subject to a deductible.

Under Section 8.1 of the Agreement and Declaration of Trust (the
"Agreement"), the Trustees and officers of Registrant, in incurring any debts,
liabilities or obligations, or in limiting or omitting any other actions for
or in connection with the Trust, are or shall be deemed to be acting as
Trustees or officers of Registrant and not in their own capacities. No
Trustee, officer, employee or agent of the Trust shall be subject to any
personal liability whatsoever in tort, contract, or otherwise, to any other
person or persons in connection with the assets or affairs of Registrant save
only that arising from his own willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct of his
office or the discharge of his functions. Registrant shall be solely

<PAGE>C-5

liable for any and all debts, claims, demands, judgments, decrees, liabilities
or obligations of any and every kind, against or with respect to Registrant in
tort, contract or otherwise in connection with the assets or the affairs of
Registrant and all persons dealing with Registrant shall be deemed to have
agreed that resort shall be had solely to the Trust Property (as defined in
the Agreement) of Registrant for the payment or performance thereof.

Section 8.2 of the Agreement further limits the liability of the
Trustees by providing that a Trustee shall not be liable for errors of
judgment or mistakes of fact or law. Furthermore, (i) the Trustees shall not
be responsible or liable in any event for any neglect or wrongdoing of any
officer, agent, employee, consultant, Investment Advisor, Administrator,
Distributor or Principal Underwriter, Custodian or Transfer Agent, Dividend
Disbursing Agent, Shareholder Servicing Agent or Accounting Agent (as such
terms are defined in the Agreement) of Registrant, nor shall any Trustee be
responsible for the act or omission of any other Trustee; (ii) the Trustees
may take advice of counsel or other experts with respect to the meaning and
operation of the Agreement and their duties as Trustees, and shall be under no
liability for any act or omission in accordance with such advice or for
failing to follow such advice; and (iii) in discharging their duties, the
Trustees, when acting in good faith, shall be entitled to rely upon the books
of account of Registrant and upon written reports made to the Trustees by any
officer appointed by them, any independent public accountant, and (with
respect to the subject matter of the contract involved) any officer, partner
or responsible employee of a Contracting Party (as defined in the Agreement)
appointed by the Trustees pursuant to Section 5.2 of the Agreement. The
Trustees are not required to give any bond or surety or any other security for
the performance of their duties.

Under Section 8.4 of the Agreement any past or present
Trustee or officer of Registrant (including persons who serve at Registrant's
request as directors, officers or trustees of another organization in which
Registrant has any interest as a shareholder, creditor or otherwise
(hereinafter referred to as a "Covered Person")) is indemnified to the fullest
extent permitted by law against liability and all expenses reasonably incurred
by him in connection with any action, suit or proceeding to which he may be a
party or otherwise involved by reason of his being or having been a Covered
Person. This provision does not authorize indemnification when it is
determined, in the manner specified in the Agreement that such Covered Person
has not acted in good faith in the reasonable belief that his actions were in
or not opposed to the best interests of Registrant. Moreover, this

<PAGE>C-6

provision does not authorize indemnification when it is determined, in the
manner specified in the Agreement that such Covered Person would otherwise be
liable to Registrant or its shareholders by reason of willful misfeasance, bad
faith, gross negligence or reckless disregard of his duties. Expenses may be
paid by Registrant in advance of the final disposition of any action, suit or
proceeding upon receipt of an undertaking by such Covered Person to repay such
expenses to Registrant in the event that it is ultimately determined that
indemnification of such expenses is not authorized under the Agreement and
either (i) the Covered Person provides security for such undertaking, (ii)
Registrant is insured against losses from such advances or (iii) the
disinterested Trustees or independent legal counsel determines, in the manner
specified in the Agreement that there is reason to believe the Covered Person
will be found to be entitled to indemnification.

Insofar as indemnification for liability arising under the 1933 Act
may be permitted to Trustees, officers and controlling persons of Registrant
pursuant to the foregoing provisions, or otherwise, Registrant has been
advised that in the opinion of the Securities and Exchange Commission ("SEC")
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by Registrant of expenses
incurred or paid by a Trustee, officer or controlling person of Registrant in
the successful defense of any action, suit or proceeding) is asserted by such
Trustee, officer or controlling person in connection with the securities being
registered, Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication
of such issue.

Item 28. Business and Other Connections of
Investment Adviser

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

<PAGE>C-7

Item 29. Principal Underwriter

(a) Counsellors Securities acts as distributor for Registrant, as
well as for The RBB Fund, Inc., Warburg Pincus Capital Appreciation Fund,
Warburg Pincus Cash Reserve Fund, Warburg Pincus Emerging Growth Fund, Warburg
Pincus Emerging Markets Fund, Warburg Pincus Global Fixed Income Fund, Warburg
Pincus Institutional Fund, Inc., Warburg Pincus Intermediate Maturity
Government Fund, Warburg Pincus International Equity Fund, Warburg Pincus
Japan Growth Fund, Warburg Pincus Japan OTC Fund, Warburg Pincus New York
Intermediate Municipal Fund, Warburg Pincus Post-Venture Capital Fund, Warburg
Pincus New York Tax Exempt Fund, Warburg Pincus Short-Term Tax-Advantaged Bond
Fund, Warburg Pincus Small Company Value Fund and Warburg Pincus Trust.

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

Item 30. Location of Accounts and Records

(1) Warburg, Pincus Fixed Income Fund
466 Lexington Avenue
New York, New York 10017-3147
(Fund's Agreement and Declaration of Trust,
by-laws and minute books)

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

(3) PFPC Inc.
103 Bellevue Parkway
Wilmington, Delaware 19809
(records relating to its functions as co-
administrator)

<PAGE>C-8

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

(5) PNC Bank, National Association
Broad and Chestnut Streets
Philadelphia, Pennsylvania 19101
(records relating to its functions as custodian)

(6) The Chase Manhattan Bank, N.A.
One MetroTech Center
Brooklyn, New York 11245
(records relating to its functions as custodian)

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

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

Item 31. Management Services

Not applicable.

Item 32. Undertakings

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

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

<PAGE>C-9

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, and the
Investment Company Act of 1940, the Registrant has duly caused this Amendment
to be signed on its behalf by the undersigned, thereunto duly authorized, in
the City of New York and the State of New York, on the 11th day of January,
1996.

WARBURG, PINCUS
FIXED INCOME FUND

By:/s/ Dale C. Christensen
Dale C. Christensen

President

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

Signature Title Date
- --------- ----- ----

/s/ Lionel I. Pincus Chairman of the January 11, 1996
Lionel I. Pincus Board and Trustee

/s/ John L. Furth Chief Executive January 11, 1996
John L. Furth Officer and Trustee

/s/ Dale C. Christensen President January 11, 1996
Dale C. Christensen

/s/ Reuben S. Leibowitz Chief Financial January 11, 1996
Reuben S. Leibowitz Officer and Vice
President

/s/ Stephen Distler Treasurer and January 11, 1996
Stephen Distler Principal Accounting
Officer

/s/ Richard N. Cooper Trustee January 11, 1996
Richard N. Cooper

/s/ Donald J. Donahue Trustee January 11, 1996
Donald J. Donahue

/s/ Jack W. Fritz Trustee January 11, 1996
Jack W. Fritz

<PAGE>C-10

/s/ Thomas A. Melfe Trustee January 11, 1996
Thomas A. Melfe

/s/ Alexander B. Trowbridge Trustee January 11, 1996
Alexander B. Trowbridge

<PAGE>

INDEX TO EXHIBITS

Exhibit No. Description of Exhibit
- ----------- ----------------------
1 Agreement and Declaration of Trust.

2 Second Amended and Restated By-Laws.

3 Not applicable.

4 Form of Stock Certificates. (1)

5 Investment Advisory Agreement.

6 Form of Distribution Agreement. (2)

7 Not applicable.

8(a) Form of Custodian Agreement with PNC Bank,
as amended. (2)

(b) Form of Custodian Agreement with Chase Manhattan Bank, N.A.(3)

(b-1) Form of Amendment to Custodian Agreement with Chase Manhattan
Bank, N.A.

(3)Incorporated by reference; material provisions of this exhibit
substantially similar to those of the corresponding exhibit in
Post-Effective Amendment No. 17 to the Registration Statement
on Form N-1A of Warburg, Pincus Capital Appreciation Fund
filed on December 27, 1995 (Securities Act File No. 33-12344).

<PAGE>

9(a) Form of Transfer Agency Agreement. (1)

(b) Form of Co-Administration Agreement with Counsellors Funds
Service, Inc. (1)

(b-1) Form of Co-Administration Agreement with PFPC Inc. (1)

10(a) Opinion of Willkie Farr & Gallagher, counsel to the Fund.(5)

(b) Consent of Willkie Farr & Gallagher, counsel to the Fund.

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

(b) Consent of Ernst & Young LLP, Independent Accountants.

12 Not applicable.

13 Form of Purchase Agreement. (2)

14 Form of Retirement Plans. (6)

- ------------------------
(4)Incorporated by reference; material provisions of this exhibit
substantially similar to those of the corresponding exhibit in Pre-
Effective Amendment No. 1 to the Registration Statement on Form N-1A of
Warburg, Pincus Japan Growth Fund, Inc. filed on December 18, 1995
(Securities Act File No. 33-63653).

(5)Incorporated by reference to Opinion of Willkie Farr & Gallagher filed with
Registrant's Rule 24f-2 Notice, filed on December 19, 1995.

(6)Incorporated by reference to Post-Effective Amendment No. 1 to
the Registration Statement of Warburg, Pincus Managed Bond
Trust, filed on February 28, 1995 (Securities Act File No. 33-
73672).

<PAGE>

15(a) Shareholder Services Plan. (7)

(b) Amended and Restated Distribution Plan. (4)

16(a) Schedule for Computation of Total Return and Yield Quotations
relating to Common Shares.

17 Financial Data Schedule relating to Common Shares.

- ------------------------
(7)Incorporated by reference; material provisions of this exhibit
substantially similar to those of the corresponding exhibit in Post-
Effective Amendment No. 12 to the Registration Statement on Form N-1A of
Counsellors Cash Reserve Fund, Inc. filed on June 28, 1995 (Securities
Act File No. 2-94840).

(8)Incorporated by reference; material provisions of this exhibit
substantially similar to those of the corresponding exhibit in Post-
Effective Amendment No. 13 to the Registration Statement on Form N-1A of
Warburg, Pincus International Equity Fund, Inc. filed on December 28, 1995
(Securities Act File No. 33-27031).

<PAGE>1

AGREEMENT AND DECLARATION OF TRUST

COUNSELLORS FIXED INCOME FUND

This AGREEMENT AND DECLARATION OF TRUST, made at Boston, Massachusetts
this 20th day of January, 1987, by and between the Settlor and the Trustee
whose signature is set forth below (the "Initial Trustee"),

W I T N E S S E T H T H A T:

WHEREAS, Virginia Spencer, an individual residing in Boston,
Massachusetts (the "Settlor"), proposes to deliver to the Initial Trustee the
sum of one hundred dollars ($100.00) lawful money of the United States of
America in trust hereunder and to authorize the Initial Trustee and all other
Persons acting as Trustees hereunder to employ such funds, and any other funds
coming into their hands or the hands of their successor or successors as such
Trustees, to carry on the business of an investment company, and as such of
buying, selling, investing in or otherwise dealing in and with stocks, bonds,
debentures, warrants, options, futures contracts and other securities and
interests therein, or calls or puts with respect to any of the same, or such
other and further investment media and other property as the Trustees may deem
advisable, which are not prohibited by law or the terms of this Declaration;
and

WHEREAS, the Initial Trustee is willing to accept such sum, together with
any and all additions thereto and the income or increments thereof, upon the
terms, conditions and trusts hereinafter set forth; and

WHEREAS, it is proposed that the assets held by the Trustees be divided
into separate portfolios, each with its own separate assets, investment
objectives, policies and purposes, and that the beneficial interest in each
such portfolio shall be divided into transferable Shares of Beneficial
Interest, a separate Series of Shares for each portfolio, all in accordance
with the provisions hereinafter set forth; and

WHEREAS, it is desired that the trust established hereby (the "Trust") be
managed and operated as a trust with transferable shares under the laws of
Massachusetts, of the type commonly known as and referred to as a
Massachusetts business trust, in accordance with the provisions hereinafter
set forth,

NOW, THEREFORE, the Initial Trustee, for himself and his successors as
Trustees, hereby declares, and agrees with the

<PAGE>2

Settlor, for himself and for all Persons who shall hereafter become holders of
Shares of Beneficial Interest of the Trust, of any Series, that the Trustees
will hold the sum delivered to them upon the execution hereof, and all other
and further cash, securities and other property of every type and description
which they may in any way acquire in their capacity as such Trustees, together
with the income therefrom and the proceeds thereof, IN TRUST NEVERTHELESS, to
manage and dispose of the same for the benefit of the holders from time to
time of the Shares of Beneficial Interest of the several Series being issued
and to be issued hereunder and in the manner and subject to the provisions
hereof, to wit:

ARTICLE 1

THE TRUST

SECTION 1.1. Name. The name of the Trust shall be

"COUNSELLORS FIXED INCOME FUND",

and so far as may be practicable the Trustees shall conduct the Trust's
activities, execute all documents and sue or be sued under that name, which
name (and the word "Trust" wherever used in this Agreement and Declaration of
Trust, except where the context otherwise requires) shall refer to the
Trustees in their capacity as Trustees, and not individually or personally,
and shall not refer to the officers, agents or employees of the Trust or of
such Trustees, or to the holders of the Shares of Beneficial Interest of the
Trust, of any Series. If the Trustees determine that the use of such name is
not practicable, legal or convenient at any time or in any jurisdiction, or if
the Trust is required to discontinue the use of such name pursuant to Section
10.5 hereof, then subject to that Section, the Trustees may use such other
designation, or they may adopt such other name for the Trust as they deem
proper, and the Trust may hold property and conduct its activities under such
designation or name.

SECTION 1.2. Location. The Trust shall have an office in Boston,
Massachusetts, unless changed by the Trustees to another location in
Massachusetts or elsewhere, but such office need not be the sole or principal
office of the Trust. The Trust may have such other offices or places of
business as the Trustees may from time to time determine to be necessary or
expedient.

SECTION 1.3. Nature of Trust. The Trust shall be a trust with
transferable shares under the laws of The Commonwealth of Massachusetts, of
the type referred to in Section 1 of Chapter 182 of the Massachusetts General
Laws and commonly termed a Mas

<PAGE>3

sachusetts business trust. The Trust is not intended to be, shall not be
deemed to be, and shall not be treated as, a general partnership, limited
partnership, joint venture, corporation or joint stock company. The
Shareholders shall be beneficiaries and their relationship to the Trustees
shall be solely in that capacity in accordance with the rights conferred upon
them hereunder.

SECTION 1.4. Definitions. As used in this Agreement and Declaration of
Trust, the following terms shall have the meanings set forth below unless the
context thereof otherwise requires:

"Accounting Agent" shall have the meaning designated in Section 5.2(g)
hereof.

"Administrator" shall have the meaning designated in Section 5.2(b)
hereof.

"Affiliated Person" shall have the meaning assigned to it in the 1940
Act.

"By-Laws" shall mean the By-Laws of the Trust, as amended from time to
time.

"Certificate of Designation" shall have the meaning designated in Section
6.1 hereof.

"Certificate of Termination" shall have the meaning designated in Section
6.1 hereof.

"Commission" shall have the same meaning as in the 1940 Act.

"Contracting Party" shall have the meaning designated in the preamble to
Section 5.2 hereof.

"Covered Person" shall have the meaning designated in Section 8.4 hereof.

"Custodian" shall have the meaning designated in Section 5.2(d) hereof.

"Declaration" and "Declaration of Trust" shall mean this Agreement and
Declaration of Trust and all amendments or modifications thereof as from time
to time in effect. References in this Agreement and Declaration of Trust to
"hereof", "herein" and "hereunder" shall be deemed to refer to the Declaration
of Trust generally, and shall not be limited to the particular text, Article
or Section in which such words appear.

"Disabling Conduct" shall have the meaning designated in Section 8.4
hereof.

<PAGE>4

"Distributor" shall have the meaning designated in Section 5.2(c) hereof.

"Dividend Disbursing Agent" shall have the meaning designated in Section
5.2(e) hereof.

"General Items" shall have the meaning defined in Section 6.2(a) hereof.

"Initial Trustee" shall have the meaning defined in the preamble hereto.

"Investment Advisor" shall have the meaning stated in Section 5.2(a)
hereof.

"Majority of the Trustees" shall mean a majority of the Trustees in
office at the time in question. At any time at which there shall be only one
(1) Trustee in office, such term shall mean such Trustee.

"Majority Shareholder Vote," as used with respect to the election of any
Trustee at a meeting of Shareholders, shall mean the vote for the election of
such Trustee of a plurality of all outstanding Shares of the Trust, without
regard to Series, represented in person or by proxy and entitled to vote
thereon, provided that a quorum (as determined in accordance with the ByLaws)
is present, and as used with respect to any other action required or permitted
to be taken by Shareholders, shall mean the vote for such action of the
holders of that majority of all outstanding Shares (or, where a separate vote
of Shares of any particular Series is to be taken, the affirmative vote of
that majority of the outstanding Shares of that Series) of the Trust which
consists of: (i) a majority of all Shares (or of Shares of the particular
Series) represented in person or by proxy and entitled to vote on such action
at the meeting of Shareholders at which such action is to be taken, provided
that a quorum (as determined in accordance with the By-Laws) is present; or
(ii) if such action is to be taken by written consent of Shareholders, a
majority of all Shares (or of Shares of the particular Series) issued and
outstanding and entitled to vote on such action; provided, that (iii) as used
with respect to any action requiring the affirmative vote of "a majority of
the outstanding voting securities", as the quoted phrase is defined in the
1940 Act, of the Trust or of any Portfolio, "Majority Shareholder Vote" means
the vote for such action at a meeting of Shareholders of the smallest majority
of all outstanding Shares of the Trust (or of Shares of the particular
Portfolio) entitled to vote on such action which satisfies such 1940 Act
voting requirement.

<PAGE>5

"1940 Act" shall mean the provisions of the Investment Company Act of
1940 and the rules and regulations thereunder, both as amended from time to
time, and any order or orders thereunder which may from time to time be
applicable to the Trust.

"Person" shall mean and include individuals, as well as corporations,
limited partnerships, general partnerships, joint stock companies, joint
ventures, associations, banks, trust companies, land trusts, business trusts
or other organizations established under the laws of any jurisdiction, whether
or not considered to be legal entities, and governments and agencies and
political subdivisions thereof.

"Portfolio" or "Portfolios" shall mean one or more of the separate
components of the assets of the Trust which are now or hereafter established
and designated under or in accordance with the provisions of Article 6 hereof.

"Portfolio Assets" shall have the meaning defined in Section 6.2(a)
hereof.

"Principal Underwriter" shall have the meaning designated in Section
5.2(c) hereof.

"Prospectus," as used with respect to any Portfolio or Series of Shares,
shall mean the prospectus relating to such Portfolio or Series which
constitutes part of the currently effective Registration Statement of the
Trust under the Securities Act of 1933, as such prospectus may be amended or
supplemented from time to time.

"Securities" shall mean any and all bills, notes, bonds, debentures or
other obligations or evidences of indebtedness, certificates of deposit,
bankers' acceptances, commercial paper, repurchase agreements or other money
market instruments; stocks, shares or other equity ownership interests; and
warrants, options or other instruments representing rights to subscribe for,
purchase, receive or otherwise acquire or to sell, transfer, assign or
otherwise dispose of, and scrip, certificates, receipts or other instruments
evidencing any ownership rights or interests in, any of the foregoing and
"when issued" and "delayed delivery" contracts for securities, issued,
guaranteed or sponsored by any governments, political subdivisions or
governmental authorities, agencies or instrumentalities, by any individuals,
firms, companies, corporations, syndicates, associations or trusts, or by any
other organizations or entities whatsoever, irrespective of their forms or the
names by which they may be described, whether or not they be organized and
operated for profit, and

<PAGE>6

whether they be domestic or foreign with respect to The Commonwealth of Mas-
sachusetts or the United States of America.

"Securities of the Trust" shall mean any Securities issued by the Trust.

"Series" shall mean one or more of the series of Shares authorized by the
Trustees to represent the beneficial interest in one or more of the
Portfolios.

"Settlor" shall have the meaning stated in the first
"Whereas" clause set forth above.

"Shareholder" shall mean as of any particular time any Person shown of
record at such time on the books of the Trust as a holder of outstanding
Shares of any Series, and shall include a pledgee into whose name any such
Shares are transferred in pledge.

"Shareholder Servicing Agent" shall have the meaning
designated in Section 5.2(f) hereof.

"Shares" shall mean the transferable units into which the beneficial
interest in the Trust and each Portfolio of the Trust (as the context may
require) shall be divided from time to time, and includes fractions of Shares
as well as whole Shares. All references herein to "Shares" which are not
accompanied by a reference to any particular Series or Portfolio shall be
deemed to apply to outstanding Shares without regard to Series.

"Single Class Voting," as used with respect to any matter to be acted
upon at a meeting or by written consent of Shareholders, shall mean a style of
voting in which each holder of one or more Shares shall be entitled to one
vote on the matter in question for each Share standing in his name on the
records of the Trust, irrespective of Series, and all outstanding Shares of
all Series vote as a single class.

"Statement of Additional Information," as used with respect to any
Portfolio or Series of Shares, shall mean the statement of additional
information relating to such Portfolio or Series, which constitutes part of
the currently effective Registration Statement of the Trust under the
Securities Act of 1933, as such statement of additional information may be
amended or supplemented from time to time.

"Transfer Agent" shall have the meaning defined in Section 5.2(e) hereof.

<PAGE>7

"Trust" shall have the meaning stated in the fourth "Whereas" clause set
forth above.

"Trust Property" shall mean, as of any particular time, any and all
property which shall have been transferred, conveyed or paid to the Trust or
the Trustees, and all interest, dividends, income, earnings, profits and gains
therefrom, and proceeds thereof, including any proceeds derived from the sale,
exchange or liquidation thereof, and any funds or payments derived from any
reinvestment of such proceeds in whatever form the same may be, and which at
such time is owned or held by, or for the account of, the Trust or the
Trustees, without regard to the Portfolio to which such property is allocated.

"Trustees" shall mean, collectively, the Initial Trustee, so long as he
shall continue in office, and all other individuals who at the time in
question have been duly elected or appointed as Trustees of the Trust in
accordance with the provisions hereof and who have qualified and are then in
office. At any time at which there shall be only one (1) Trustee in office,
such term shall mean such single Trustee.

SECTION 1.5. Real Property to be Converted into Personal Property.
Notwithstanding any other provision hereof, any real property at any time
forming part of the Trust Property shall be held in trust for sale and
conversion into personal property at such time or times and in such manner and
upon such terms as the Trustees shall approve, but the Trustees shall have
power until the termination of this Trust to postpone such conversion as long
as they in their uncontrolled discretion shall think fit, and for the purpose
of determining the nature of the interest of the Shareholders therein, all
such real property shall at all times be considered as personal property.

ARTICLE 2

PURPOSE OF THE TRUST

The purpose of the Trust shall be to engage in the business of being an
investment company, and as such of subscribing for, purchasing or otherwise
acquiring, holding for investment or trading in, borrowing, lending and
selling short, selling, assigning, negotiating or exchanging and otherwise
disposing of, and turning to account, realizing upon and generally dealing in
and with, in any manner, (a) Securities of all kinds, (b) precious metals and
other minerals, contracts to purchase and sell, and other interests of every
nature and kind in, such metals or minerals, and (c) rare coins and other
numismatic items, and all as the Trustees in their discretion shall

<PAGE>8

determine to be necessary, desirable or appropriate, and to exercise and
perform any and every act, thing or power necessary, suitable or desirable for
the accomplishment of such purpose, the attainment of any of the objects or
the furtherance of any of the powers given hereby which are lawful purposes,
objects or powers of a trust with transferable shares of the type commonly
termed a Massachusetts business trust; and to do every other act or acts or
thing or things incidental or appurtenant to or growing out of or in
connection with the aforesaid objects, purposes or powers, or any of them,
which a trust of the type commonly termed a Massachusetts business trust is
not now or hereafter prohibited from doing, exercising or performing.

ARTICLE 3

POWERS OF THE TRUSTEES

SECTION 3.1. Powers in General. The Trustees shall have, without other
or further authorization, full, entire, exclusive and absolute power, control
and authority over, and management of, the business of the Trust and over the
Trust Property, to the same extent as if the Trustees were the sole owners of
the business and property of the Trust in their own right, and with such
powers of delegation as may be permitted by this Declaration, subject only to
such limitations as may be expressly imposed by this Declaration of Trust or
by applicable law. The enumeration of any specific power or authority herein
shall not be construed as limiting the aforesaid power or authority or any
specific power or authority. Without limiting the foregoing, the Trustees may
adopt By-Laws not inconsistent with this Declaration of Trust providing for
the conduct of the business and affairs of the Trust and may amend and repeal
them to the extent that such By-Laws do not reserve that right to the
Shareholders; they may select, and from time to time change, the fiscal year
of the Trust; they may adopt and use a seal for the Trust, provided, that
unless otherwise required by the Trustees, it shall not be necessary to place
the seal upon, and its absence shall not impair the validity of, any document,
instrument or other paper executed and delivered by or on behalf of the Trust;
they may from time to time in accordance with the provisions of Section 6.1
hereof establish one or more Portfolios to which they may allocate such of the
Trust Property, subject to such liabilities, as they shall deem appropriate,
each such Portfolio to be operated by the Trustees as a separate and distinct
investment medium and with separately defined investment objectives and
policies and distinct investment purposes, all as established by the Trustees,
or from time to time changed by them; they may as they consider appropriate
elect and remove officers and appoint and terminate agents and consultants and
hire and terminate

<PAGE>9

employees, any one or more of the foregoing of whom may be a Trustee; they may
appoint from their own number, and terminate, any one or more committees
consisting of one or more Trustees, including without implied limitation an
Executive Committee, which may, when the Trustees are not in session and
subject to the 1940 Act, exercise some or all of the power and authority of
the Trustees as the Trustees may determine; in accordance with Section 5.2
they may employ one or more Investment Advisors, Administrators and Custodians
and may authorize any Custodian to employ subcustodians or agents and to
deposit all or any part of such assets in a system or systems for the central
handling of Securities, retain Transfer, Dividend Disbursing, Accounting or
Shareholder Servicing Agents or any of the foregoing, provide for the
distribution of Shares by the Trust through one or more Distributors,
Principal Underwriters or otherwise, set record dates or times for the
determination of Shareholders entitled to participate in, benefit from or act
with respect to various matters; and in general they may delegate to any
officer of the Trust, to any Committee of the Trustees and to any employee,
Investment Advisor, Administrator, Distributor, Custodian, Transfer Agent,
Dividend Disbursing Agent, or any other agent or consultant of the Trust, such
authority, powers, functions and duties as they consider desirable or
appropriate for the conduct of the business and affairs of the Trust,
including without implied limitation the power and authority to act in the
name of the Trust and of the Trustees, to sign documents and to act as
attorney-in-fact for the Trustees. Without limiting the foregoing and to the
extent not inconsistent with the 1940 Act or other applicable law, the
Trustees shall have power and authority:

(a) Investments. To invest and reinvest cash and other property;
to buy, for cash or on margin, and otherwise acquire and hold, Securities
created or issued by any Persons, including Securities maturing after the
possible termination of the Trust; to make payment therefor in any lawful
manner in exchange for any of the Trust Property; and to hold cash or
other property uninvested without in any event being bound or limited by
any present or future law or custom in regard to investments by trustees;

(b) Disposition of Assets. Upon such terms and conditions as they
deem best, to lend, sell, exchange, mortgage, pledge, hypothecate, grant
security interests in, encumber, negotiate, convey, transfer or otherwise
dispose of, and to trade in, any and all of the Trust Property, free and
clear of all trusts, for cash or on terms, with or without advertisement,
and on such terms as to payment, security or otherwise, all as they shall
deem necessary or expedient;

<PAGE>10

(c) Ownership Powers. To vote or give assent, or exercise any and
all other rights, powers and privileges of ownership with respect to, and
to perform any and all duties and obligations as owners of, any
Securities or other property forming part of the Trust Property, the same
as any individual might do; to exercise powers and rights of subscription
or otherwise which in any manner arise out of ownership of Securities,
and to receive powers of attorney from, and to execute and deliver
proxies or powers of attorney to, such Person or Persons as the Trustees
shall deem proper, receiving from or granting to such Person or Persons
such power and discretion with relation to Securities or other property
of the Trust, all as the Trustees shall deem proper;

(d) Form of Holding. To hold any Security or other property in a
form not indicating any trust, whether in bearer, unregistered or other
negotiable form, or in the name of the Trustees or of the Trust, or of
the Portfolio to which such Securities or property belong, or in the name
of a Custodian, subcustodian or other nominee or nominees, or otherwise,
upon such terms, in such manner or with such powers, as the Trustees may
determine, and with or without indicating any trust or the interest of
the Trustees therein;

(e) Reorganization, etc. To consent to or participate in any plan
for the reorganization, consolidation or merger of any corporation or
issuer, any Security of which is or was held in the Trust or any
Portfolio; to consent to any contract, lease, mortgage, purchase or sale
of property by such corporation or issuer, and to pay calls or subscrip-
tions with respect to any Security forming part of the Trust Property;

(f) Voting Trusts, etc. To join with other holders of any
Securities in acting through a committee, depository, voting trustee or
otherwise, and in that connection to deposit any Security with, or
transfer any Security to, any such committee, depository or trustee, and
to delegate to them such power and authority with relation to any
Security (whether or not so deposited or transferred) as the Trustees
shall deem proper, and to agree to pay, and to pay, such portion of the
expenses and compensation of such committee, depository or trustee as the
Trustees shall deem proper;

(g) Contracts, etc. To enter into, make and perform all such
obligations, contracts, agreements and undertakings of every kind and
description, with any Person or Persons, as the Trustees shall in their
discretion deem expedient in

<PAGE>11

the conduct of the business of the Trust, for such terms as they shall see
fit, whether or not extending beyond the term of office of the Trustees, or
beyond the possible expiration of the Trust; to amend, extend, release or
cancel any such obligations, contracts, agreements or understandings; and to
execute, acknowledge, deliver and record all written instruments which they
may deem necessary or expedient in the exercise of their powers;

(h) Guarantees, etc. To endorse or guarantee the payment of any
notes or other obligations of any Person; to make contracts of guaranty
or suretyship, or otherwise assume liability for payment thereof; and to
mortgage and pledge the Trust Property or any part thereof to secure any
of or all such obligations;

(i) Partnerships, etc. To enter into joint ventures, general or
limited partnerships and any other combinations or associations;

(j) Insurance. To purchase and pay for entirely out of Trust
Property such insurance as they may deem necessary or appropriate for the
conduct of the business, including, without limitation, insurance
policies insuring the assets of the Trust and payment of distributions
and principal on its portfolio investments, and insurance policies
insuring the Shareholders, Trustees, officers, employees, agents,
consultants, Investment Advisors, managers, Administrators, Distributors,
Principal Underwriters, or other independent contractors, or any thereof
(or any Person connected therewith), of the Trust, individually, against
all claims and liabilities of every nature arising by reason of holding,
being or having held any such office or position, or by reason of any
action alleged to have been taken or omitted by any such Person in any
such capacity, including any action taken or omitted that may be
determined to constitute negligence, whether or not the Trust would have
the power to indemnify such Person against such liability;

(k) Pensions, etc. To pay pensions for faithful service, as deemed
appropriate by the Trustees, and to adopt, establish and carry out
pension, profit-sharing, share bonus, share purchase, savings, thrift and
other retirement, incentive and benefit plans, trusts and provisions,
including the purchasing of life insurance and annuity contracts as a
means of providing such retirement and other benefits, for any or all of
the Trustees, officers, employees and agents of the Trust;

<PAGE>12

(l) Power of Collection and Litigation. To collect, sue for and
receive all sums of money coming due to the Trust, to employ counsel, and
to commence, engage in, prosecute, intervene in, join, defend, compound,
compromise, adjust or abandon, in the name of the Trust, any and all ac-
tions, suits, proceedings, disputes, claims, controversies, demands or
other litigation or legal proceedings relating to the Trust, the business
of the Trust, the Trust Property, or the Trustees, officers, employees,
agents and other independent contractors of the Trust, in their capacity
as such, at law or in equity, or before any other bodies or tribunals,
and to compromise, arbitrate or otherwise adjust any dispute to which the
Trust may be a party, whether or not any suit is commenced or any claim
shall have been made or asserted;

(m) Issuance and Repurchase of Shares. To issue, sell, repurchase,
redeem, retire, cancel, acquire, hold, resell, reissue, dispose of,
transfer, and otherwise deal in Shares of any Series, and, subject to
Article 6 hereof, to apply to any such repurchase, redemption,
retirement, cancellation or acquisition of Shares of any Series, any of
the Portfolio Assets belonging to the Portfolio to which such Series
relates, whether constituting capital or surplus or otherwise, to the
full extent now or hereafter permitted by applicable law; provided, that
any Shares belonging to the Trust shall not be voted, directly or
indirectly;

(n) Offices. To have one or more offices, and to carry on all or
any of the operations and business of the Trust, in any of the States,
Districts or Territories of the United States, and in any and all foreign
countries, subject to the laws of such State, District, Territory or
country;

(o) Expenses. To incur and pay any and all such expenses and
charges as they may deem advisable (including without limitation
appropriate fees to themselves as Trustees), and to pay all such sums of
money for which they may be held liable by way of damages, penalty, fine
or otherwise;

(p) Agents, etc. To retain and employ any and all such servants,
agents, employees, attorneys, brokers, investment advisers, accountants,
architects, engineers, builders, escrow agents, depositories,
consultants, ancillary trustees, custodians, agents for collection,
insurers, banks and officers, as they think best for the business of the
Trust or any Portfolio, to supervise and direct the acts of any of the
same, and to fix and pay their compensation and define their duties;

<PAGE>13

(q) Accounts. To determine, and from time to time change, the
method or form in which the accounts of the Trust shall be kept;

(r) Valuation. Subject to the requirements of the 1940 Act, to
determine from time to time the value of all or any part of the Trust
Property and of any services, Securities, property or other consideration
to be furnished to or acquired by the Trust, and from time to time to
revalue all or any part of the Trust Property in accordance with such
appraisals or other information as is, in the Trustees' sole judgment,
necessary and satisfactory;

(s) Indemnification. In addition to the mandatory indemnification
provided for in Article 8 hereof and to the extent permitted by law, to
indemnify or enter into agreements with respect to indemnification with
any Person with whom this Trust has dealings, including, without
limitation, any independent contractor, to such extent as the Trustees
shall determine; and

(t) General. To do all such other acts and things and to conduct,
operate, carry on and engage in such other lawful businesses or business
activities as they shall in their sole and absolute discretion consider
to be incidental to the business of the Trust or any Portfolio as an
investment company, and to exercise all powers which they shall in their
discretion consider necessary, useful or appropriate to carry on the
business of the Trust or any Portfolio, to promote any of the purposes
for which the Trust is formed, whether or not such things are
specifically mentioned herein, in order,to protect or promote the
interests of the Trust or any Portfolio, or otherwise to carry out the
provisions of this Declaration.

SECTION 3.2. Borrowings; Financings; Issuance of Securities. The
Trustees have power to borrow or in any other manner raise such sum or sums of
money, and to incur such other indebtedness for goods or services, or for or
in connection with the purchase or other acquisition of property, as they
shall deem advisable for the purposes of the Trust, in any manner and on any
terms, and to evidence the same by negotiable or non-negotiable Securities
which may mature at any time or times, even beyond the possible date of
termination of the Trust; to issue Securities of any type for such cash,
property, services or other considerations, and at such time or times and upon
such terms, as they may deem advisable; and to reacquire any such Securities.
Any such Securities of the Trust may, at the discretion of the Trustees, be
made convertible into Shares of any Series, or may evidence the right to
purchase, subscribe for or otherwise

<PAGE>14

acquire Shares of any Series, at such times and on such terms as the Trustees
may prescribe.

SECTION 3.3. Deposits. Subject to the requirements of the 1940 Act, the
Trustees shall have power to deposit any moneys or Securities included in the
Trust Property with any one or more banks, trust companies or other banking
institutions, whether or not such deposits will draw interest. Such deposits
are to be subject to withdrawal in such manner as the Trustees may determine,
and the Trustees shall have no responsibility for any loss which may occur by
reason of the failure of the bank, trust company or other banking institution
with which any such moneys or Securities have been deposited, other than
liability based on their gross negligence or willful fault.

SECTION 3.4. Allocations. The Trustees shall have power to determine
whether moneys or other assets received by the Trust shall be charged or
credited to income or capital, or allocated between income and capital,
including the power to amortize or fail to amortize any part or all of any
premium or discount, to treat any part or all of the profit resulting from the
maturity or sale of any asset, whether purchased at a premium or at a
discount, as income or capital, or to apportion the same between income and
capital, to apportion the sale price of any asset between income and capital,
and to determine in what manner any expenses or disbursements are to be borne
as between income and capital, whether or not in the absence of the power and
authority conferred by this Section 3.4 such assets would be regarded as
income or as capital or such expense or disbursement would be charged to
income or to capital; to treat any dividend or other distribution on any
investment as income or capital, or to apportion the same between income and
capital; to provide or fail to provide reserves, including reserves for
depreciation, amortization or obsolescence in respect of any Trust Property in
such amounts and by such methods as they shall determine; to allocate less
than all of the consideration paid for Shares of any Series to the shares of
beneficial interest account of the Portfolio to which such Shares relate and
to allocate the balance thereof to paid-in capital of that Portfolio, and to
reallocate such amounts from time to time; all as the Trustees may reasonably
deem proper.

SECTION 3.5. Further Powers; Limitations. The Trustees shall have power
to do all such other matters and things, and to execute all such instruments,
as they deem necessary, proper or desirable in order to carry out, promote or
advance the interests of the Trust, although such matters or things are not
herein specifically mentioned. Any determination as to what is in the
interests of the Trust made by the Trustees in good faith shall be conclusive.
In construing the provisions of this Declaration

<PAGE>15

of Trust, the presumption shall be in favor of a grant of power to the
Trustees. The Trustees shall not be required to obtain any court order to
deal with the Trust Property. The Trustees may limit their right to exercise
any of their powers through express restrictive provisions in the instruments
evidencing or providing the terms for any Securities of the Trust or in other
contractual instruments adopted on behalf of the Trust.

ARTICLE 4

TRUSTEES AND OFFICERS

SECTION 4.1. Number, Designation, Election, Term, etc.

(a) Initial Trustee. Upon his execution of this Declaration of
Trust or a counterpart hereof or some other writing in which he accepts
such Trusteeship and agrees to the provisions hereof, the individual
whose signature is affixed hereto as Initial Trustee shall become the
Initial Trustee hereof.

(b) Number. The Trustees serving as such, whether named above or
hereafter becoming Trustees, may increase (to not more than twenty (20))
or decrease the number of Trustees to a number other than the number
theretofore determined by a written instrument signed by a Majority of
the Trustees (or by an officer of the Trust pursuant to the vote of a
Majority of the Trustees). No decrease in the number of Trustees shall
have the effect of removing any Trustee from office prior to the
expiration of his term, but the number of Trustees may be decreased in
conjunction with the removal of a Trustee pursuant to subsection (e) of
this Section 4.1.

(c) Election and Term. The Trustees shall be elected by the
Shareholders of the Trust at the first meeting of Shareholders
immediately prior to the initial public offering of Shares of the Trust,
and the term of office of any Trustees in office before such election
shall terminate at the time of such election. Subject to Section 16(a)
of the 1940 Act and to the preceding sentence of this subsection (c), the
Trustees shall have the power to set and alter the terms of office of the
Trustees, and at any time to lengthen or shorten their own terms or make
their terms of unlimited duration, to elect their own successors and,
pursuant to subsection (f) of this Section 4.1, to appoint Trustees to
fill vacancies; provided, that Trustees shall be elected by a Majority
Shareholder Vote at any such time or times as the Trustees shall
determine that such action is

<PAGE>16

required under Section 16(a) of the 1940 Act or, if not so required, that such
action is advisable; and further provided, that, after the initial election of
Trustees by the Shareholders, the term of office of any incumbent Trustee
shall continue until the termination of this Trust or his earlier death,
resignation, retirement, bankruptcy, adjudicated incompetency or other
incapacity or removal, or if not so terminated, until the election of such
Trustee's successor in office has become effective in accordance with this
subsection (c).

(d) Resignation and Retirement. Any Trustee may resign his trust
or retire as a Trustee, by a written instrument signed by him and
delivered to the other Trustees or to any officer of the Trust, and such
resignation or retirement shall take effect upon such delivery or upon
such later date as is specified in such instrument.

(e) Removal. Any Trustee may be removed with or without cause at
any time: (i) by written instrument, signed by at least two-thirds (2/3)
of the number of Trustees prior to such removal, specifying the date upon
which such removal shall become effective; or (ii) by vote of
Shareholders holding not less than two-thirds (2/3) of the Shares of each
Series then outstanding, cast in person or by proxy at any meeting called
for the purpose; or (iii) by a written declaration signed by Shareholders
holding not less than two-thirds (2/3) of the Shares of each Series then
outstanding and filed with the Trust's Custodian.

(f) Vacancies. Any vacancy or anticipated vacancy resulting from
any reason, including an increase in the number of Trustees, may (but
need not unless required by the 1940 Act) be filled by a Majority of the
Trustees, subject to the provisions of Section 16(a) of the 1940 Act,
through the appointment in writing of such other individual as such
remaining Trustees in their discretion shall determine; provided, that if
there shall be no Trustees in office, such vacancy or vacancies shall be
filled by vote of the Shareholders. Any such appointment or election
shall be effective upon such individual's written acceptance of his
appointment as a Trustee and his agreement to be bound by the provisions
of this Declaration of Trust, except that any such appointment in
anticipation of a vacancy to occur by reason of retirement, resignation
or increase in the number of Trustees to be effective at a later date
shall become effective only at or after the effective date of said
retirement, resignation or increase in the number of Trustees.

<PAGE>17

(g) Acceptance of Trusts. Any individual appointed as a Trustee
under subsection (f), and any individual elected as a Trustee under
subsection (c), of this Section 4.1 who was not, immediately prior to
such election, acting as a Trustee, shall accept such appointment or
election in writing and agree in such writing to be bound by the
provisions hereof, and whenever such individual shall have executed such
writing and any conditions to such appointment or election shall have
been satisfied, such individual shall become a Trustee and the Trust
Property shall vest in the new Trustee, together with the continuing
Trustees, without any further act or conveyance.

(h) Effect of Death, Resignation, etc. No vacancy, whether
resulting from the death, resignation, retirement, removal or incapacity
of any Trustee, an increase in the number of Trustees or otherwise, shall
operate to annul or terminate the Trust hereunder or to revoke or
terminate any existing agency or contract created or entered into
pursuant to the terms of this Declaration of Trust. Until such vacancy
is filled as provided in this Section 4.1, the Trustees in office (if
any), regardless of their number, shall have all the powers granted to
the Trustees and shall discharge all the duties imposed upon the Trustees
by this Declaration. A written instrument certifying the existence of
such vacancy signed by a Majority of the Trustees shall be conclusive
evidence of the existence of such vacancy.

(i) Conveyance. In the event of the resignation or removal of a
Trustee or his otherwise ceasing to be a Trustee, such former Trustee or
his legal representative shall, upon request of the continuing Trustees,
execute and deliver such documents as may be required for the purpose of
consummating or evidencing the conveyance to the Trust or the remaining
Trustees of any Trust Property held in such former Trustee's name, but
the execution and delivery of such documents shall not be requisite to
the vesting of title to the Trust Property in the remaining Trustees, as
provided in subsection (g) of this Section 4.1 and in Section 4.13
hereof.

(j) No Accounting. Except to the extent required by the 1940 Act
or under circumstances which would justify his removal for cause, no
Person ceasing to be a Trustee (nor the estate of any such Person) shall
be required to make an accounting to the Shareholders or remaining
Trustees upon such cessation.

(k) Filings. Whenever there shall be a change in the composition
of the Trustees, the Trust shall cause to be

<PAGE>18

filed in the office of the Secretary of State of The Commonwealth of
Massachusetts and in each other place where the Trust is required to file
amendments to this Declaration a copy of (i) the instrument by which (in the
case of the appointment of a new Trustee, or the election of an individual who
was not theretofore a Trustee) the new Trustee accepted his appointment or
election and agreed to be bound by the terms of this Declaration, or (in the
case of a resignation) by which the former Trustee resigned as such, together
in either case with a certificate of one of the other Trustees as to the
circumstances of such election, appointment or resignation, or (ii) in the
case of the removal or death of a Trustee, a certificate of one of the
Trustees as to the circumstances of such removal or resignation.

SECTION 4.2. Trustees' Meetings; Participation by Telephone, etc. An
annual meeting of Trustees shall be held not later than the last day of the
fourth month after the end of each fiscal year of the Trust and special
meetings may be held from time to time, in each case, upon the call of such
officers as may be thereunto authorized by the By-Laws or vote of the
Trustees, or by any two (2) Trustees, or pursuant to a vote of the Trustees
adopted at a duly constituted meeting of the Trustees, and upon such notice as
shall be provided in the By-Laws. The Trustees may act with or without a
meeting, and a written consent to any matter, signed by a Majority of the
Trustees, shall be equivalent to action duly taken at a meeting of the
Trustees, duly called and held. Except as otherwise provided by the 1940 Act
or other applicable law, or by this Declaration of Trust or the By-Laws, any
action to be taken by the Trustees may be taken by a majority of the Trustees
present at a meeting of Trustees (a quorum, consisting of at least a Majority
of the Trustees, being present), within or without Massachusetts. If
authorized by the By-Laws, all or any one or more Trustees may participate in
a meeting of the Trustees or any Committee thereof by means of conference
telephone or similar means of communication by means of which all Persons
participating in the meeting can hear each other, and participation in a
meeting pursuant to such means of communication shall constitute presence in
person at such meeting. The minutes of any meeting thus held shall be
prepared in the same manner as a meeting at which all participants were
present in person.

SECTION 4.3. Committees; Delegation. The Trustees shall have power,
consistent with their ultimate responsibility to supervise the affairs of the
Trust, to delegate from time to time to an Executive Committee, and to one or
more other Committees, or to any single Trustee, the doing of such things and
the execution of such deeds or other instruments, either in the name of the
Trust or the names of the Trustees or as their attorney or

<PAGE>19

attorneys in fact, or otherwise as the Trustees may from time to time deem
expedient, and any agreement, deed, mortgage, lease or other instrument or
writing executed by the Trustee or Trustees or other Person to whom such
delegation was made shall be valid and binding upon the Trustees and upon the
Trust.

SECTION 4.4. Officers. The Trustees shall annually elect such officers
or agents, who shall have such powers, duties and responsibilities as the
Trustees may deem to be advisable, and as they shall specify by resolution or
in the By-Laws. Except as may be provided in the By-Laws, any officer elected
by the Trustees may be removed at any time with or without cause. Any two (2)
or more offices may be held by the same individual.

SECTION 4.5. Compensation of Trustees and Officers. The Trustees shall
fix the compensation of all officers and Trustees. Without limiting the
generality of any of the provisions hereof, the Trustees shall be entitled to
receive reasonable compensation for their general services as such, and to fix
the amount of such compensation, and to pay themselves or any one or more of
themselves such compensation for special services, including legal,
accounting, or other professional services, as they in good faith may deem
reasonable. No Trustee or officer resigning and (except where a right to
receive compensation for a definite future period shall be expressly provided
in a written agreement with the Trust, duly approved by the Trustees) no
Trustee or officer removed shall have any right to any compensation as such
Trustee or officer for any period following his resignation or removal, or any
right to damages on account of his removal, whether his compensation be by the
month, by the year or otherwise.

SECTION 4.6. Ownership of Shares and Securities of the Trust. Any
Trustee, and any officer, employee or agent of the Trust, and any organization
in which any such Person is interested, may acquire, own, hold and dispose of
Shares of any Series and other Securities of the Trust for his or its
individual account, and may exercise all rights of a holder of such Shares or
Securities to the same extent and in the same manner as if such Person were
not such a Trustee, officer, employee or agent of the Trust; subject, in the
case of Trustees and officers, to the same limitations as directors or
officers (as the case may be) of a Massachusetts business corporation; and the
Trust may issue and sell or cause to be issued and sold and may purchase any
such Shares or other Securities from any such Person or any such organization,
subject only to the general limitations, restrictions or other provisions
applicable to the sale or purchase of Shares of such Series or other
Securities of the Trust generally.

<PAGE>20

SECTION 4.7. Right of Trustees and Officers to Own Property or to Engage
in Business; Authority of Trustees to Permit Others
to Do Likewise. The Trustees, in their capacity as Trustees, and (unless
otherwise specifically directed by vote of the Trustees) the officers of the
Trust in their capacity as such, shall not be required to devote their entire
time to the business and affairs of the Trust. Except as otherwise
specifically provided by vote of the Trustees, or by agreement in any
particular case, any Trustee or officer of the Trust may acquire, own, hold
and dispose of, for his own individual account, any property, and acquire,
own, hold, carry on and dispose of, for his own individual account, any
business entity or business activity, whether similar or dissimilar to any
property or business entity or business activity invested in or carried on by
the Trust, and without first offering the same as an investment opportunity to
the Trust, and may exercise all rights in respect thereof as if he were not a
Trustee or officer of the Trust. The Trustees shall also have power,
generally or in specific cases, to permit employees or agents of the Trust to
have the same rights (or lesser rights) to acquire, hold, own and dispose of
property and businesses, to carry on businesses, and to accept investment
opportunities without offering them to the Trust, as the Trustees have by
virtue of this Section 4.7.

SECTION 4.8. Reliance on Experts. The Trustees and officers may consult
with counsel, engineers, brokers, appraisers, auctioneers, accountants,
investment bankers, securities analysts or other Persons (any of which may be
a firm in which one or more of the Trustees or officers is or are members or
otherwise interested) whose profession gives authority to a statement made by
them on the subject in question, and who are reasonably deemed by the Trustees
or officers in question to be competent, and the advice or opinion of such
Persons shall be full and complete personal protection to all of the Trustees
and officers in respect of any action taken or suffered by them in good faith
and in reliance on or in accordance with such advice or opinion. In discharg-
ing their duties, Trustees and officers, when acting in good faith, may rely
upon financial statements of the Trust represented to them to be correct by
any officer of the Trust having charge of its books of account, or stated in a
written report by an independent certified public accountant fairly to present
the financial position of the Trust. The Trustees and officers may rely, and
shall be personally protected in acting, upon any instrument or other document
believed by them to be genuine.

SECTION 4.9. Surety Bonds. No Trustee, officer, employee or agent of
the Trust shall, as such, be obligated to give any bond or surety or other
security for the performance of any of his duties, unless required by
applicable law or regulation, or

<PAGE>21

unless the Trustees shall otherwise determine in any particular case.

SECTION 4.10. Apparent Authority of Trustees and Officers.
No purchaser, lender, transfer agent or other Person dealing with the Trustees
or any officer of the Trust shall be bound to make any inquiry concerning the
validity of any transaction purporting to be made by the Trustees or by such
officer, or to make inquiry concerning or be liable for the application of
money or property paid, loaned or delivered to or on the order of the Trustees
or of such officer.

SECTION 4.11. Other Relationships Not Prohibited. The fact that:

(a) any of the Shareholders, Trustees or officers of the Trust is a
shareholder, director, officer, partner, trustee, employee, manager,
adviser, principal underwriter or distributor or agent of or for any
Contracting Party (as defined in Section 5.2 hereof), or of or for any
parent or Affiliated Person of any Contracting Party, or that the
Contracting Party or any parent or Affiliated Person thereof is a
Shareholder or has an interest in the Trust or any Portfolio, or that

(b) any Contracting Party may have a contract providing for the
rendering of any similar services to one or more other corporations,
trusts, associations, partnerships, limited partnerships or other
organizations, or have other business or interests,

shall not affect the validity of any contract for the performance and
assumption of services, duties and responsibilities to, for or of the Trust
and/or the Trustees or disqualify any Shareholder, Trustee or officer of the
Trust from voting upon or executing the same or create any liability or
accountability to the Trust or to the holders of Shares of any Series;
provided that, in the case of any relationship or interest referred to in the
preceding clause (a) on the part of any Trustee or officer of the Trust,
either (x) the material facts as to such relationship or interest have been
disclosed to or are known by the Trustees not having any such relationship or
interest and the contract involved is approved in good faith by a majority of
such Trustees not having any such relationship or interest (even though such
unrelated or disinterested Trustees are less than a quorum of all of the
Trustees), (y) the material facts as to such relationship or interest and as
to the contract have been disclosed to or are known by the Shareholders
entitled to vote thereon and the contract involved is specifically approved in
good faith by vote of the Shareholders, or (z) the specific contract involved
is

<PAGE>22

fair to the Trust as of the time it is authorized, approved or ratified by the
Trustees or by the Shareholders.

SECTION 4.12. Payment of Trust Expenses. The Trustees are authorized to
pay or to cause to be paid out of the principal or income of the Trust, or
partly out of principal and partly out of income, and according to any
allocation to particular Portfolios made by them pursuant to Section 6.2(b)
hereof, all expenses, fees, charges, taxes and liabilities incurred or arising
in connection with the business and affairs of the Trust or in connection with
the management thereof, including, but not limited to, the Trustees'
compensation and such expenses and charges for the services of the Trust's
officers, employees, Investment Advisor, Administrator, Distributor, Principal
Underwriter, auditor, counsel, Custodian, Transfer Agent, Dividend Disbursing
Agent, Accounting Agent, Shareholder Servicing Agent, and such other agents,
consultants, and independent contractors and such other expenses and charges
as the Trustees may deem necessary or proper to incur.

SECTION 4.13. Ownership of the Trust Property. Legal title to all the
Trust Property shall be vested in the Trustees as joint tenants, except that
the Trustees shall have power to cause legal title to any Trust Property to be
held by or in the name of one or more of the Trustees, or in the name of the
Trust, or of any particular Portfolio, or in the name of any other Person as
nominee, on such terms as the Trustees may determine; provided that the
interest of the Trust and of the respective Portfolio therein is appropriately
protected. The right, title and interest of the Trustees in the Trust
Property shall vest automatically in each Person who may hereafter become a
Trustee. Upon the termination of the term of office of a Trustee as provided
in Section 4.1(c), (d) or (e) hereof, such Trustee shall automatically cease
to have any right, title or interest in any of the Trust Property, and the
right, title and interest of such Trustee in the Trust Property shall vest
automatically in the remaining Trustees. Such vesting and cessation of title
shall be effective whether or not conveyancing documents have been executed
and delivered pursuant to Section 4.1(i) hereof.

ARTICLE 5

DELEGATION OF MANAGERIAL RESPONSIBILITIES

SECTION 5.1. Appointment; Action by Less than All Trustees. The
Trustees shall be responsible for the general operating policy of the Trust
and for the general supervision of the business of the Trust conducted by
officers, agents, employees or advisers of the Trust or by independent
contractors, but the

<PAGE>23

Trustees shall not be required personally to conduct all the business of the
Trust and, consistent with their ultimate responsibility as stated herein, the
Trustees may appoint, employ or contract with one or more officers, employees
and agents to conduct, manage and/or supervise the operations of the Trust,
and may grant or delegate such authority to such officers, employees and/or
agents as the Trustees may, in their sole discretion, deem to be necessary or
desirable, without regard to whether such authority is normally granted or
delegated by trustees. With respect to those matters of the operation and
business of the Trust which they shall elect to conduct themselves, except as
otherwise provided by this Declaration or the By-Laws, if any, the Trustees
may authorize any single Trustee or defined group of Trustees, or any
committee consisting of a number of Trustees less than the whole number of
Trustees then in office without specification of the particular Trustees
required to be included therein, to act for and to bind the Trust, to the same
extent as the whole number of Trustees could do, either with respect to one or
more particular matters or classes of matters, or generally.

SECTION 5.2. Certain Contracts. Subject to compliance with the
provisions of the 1940 Act, but notwithstanding any limitations of present and
future law or custom in regard to delegation of powers by trustees generally,
the Trustees may, at any time and from time to time in their discretion and
without limiting the generality of their powers and authority otherwise set
forth herein, enter into one or more contracts with any one or more
corporations, trusts, associations, partnerships, limited partnerships or
other types of organizations, or individuals ("Contracting Party"), to provide
for the performance and assumption of some or all of the following services,
duties and responsibilities to, for or on behalf of the Trust and/or any
Portfolio, and/or the Trustees, and to provide for the performance and
assumption of such other services, duties and responsibilities in addition to
those set forth below, as the Trustees may deem appropriate:

(a) Advisory. An investment advisory or management agreement
whereby the Investment Advisor shall undertake to furnish the Trust such
management, investment advisory or supervisory, administrative,
accounting, legal, statistical and research facilities and services, and
such other facilities and services, if any, as the Trustees shall from
time to time consider desirable, all upon such terms and conditions as
the Trustees may in their discretion determine to be not inconsistent
with this Declaration, the applicable provisions of the 1940 Act or any
applicable provisions of the By-Laws. Any such advisory or management
agreement and any amendment thereto shall be subject to approval by a
Majority Shareholder Vote at a meeting of the Shareholders

<PAGE>24

of the Trust. Notwithstanding any provisions of this Declaration, the
Trustees may authorize the Investment Advisor (subject to such general or
specific instructions as the Trustees may from time to time adopt) to effect
purchases, sales, loans or exchanges of portfolio securities of the Trust on
behalf of the Trustees or may authorize any officer or employee of the Trust
or any Trustee to effect such purchases, sales, loans or exchanges pursuant to
recommendations of the Investment Advisor (and all without further action by
the Trustees). Any such purchases, sales, loans and exchanges shall be deemed
to have been authorized by all of the Trustees. The Trustees may, in their
sole discretion, call a meeting of Shareholders in order to submit to a vote
of Shareholders at such meeting the approval of continuance of any such
investment advisory or management agreement. If the Shareholders of any
Portfolio should fail to approve any such investment advisory or management
agreement, the Investment Advisor may nonetheless serve as Investment Advisor
with respect to any other Portfolio whose Shareholders shall have approved
such contract.

(b) Administration. An agreement whereby the agent, subject to the
general supervision of the Trustees and in conformity with any policies
of the Trustees with respect to the operations of the Trust and each
Portfolio, will supervise all or any part of the operations of the Trust
and each Portfolio, and will provide all or any part of the
administrative and clerical personnel, office space and office equipment
and services appropriate for the efficient administration and operations
of the Trust and each Portfolio (any such agent being herein referred to
as an "Administrator").

(c) Distribution. An agreement providing for the sale of Shares of
any one or more Series to net the Trust not less than the net asset value
per Share (as described in Section 6.2(h) hereof) and pursuant to which
the Trust may appoint the other party to such agreement as its principal
underwriter or sales agent for the distribution of such Shares. The
agreement shall contain such terms and conditions as the Trustees may in
their discretion determine to be not inconsistent with this Declaration,
the applicable provisions of the 1940 Act and any applicable provisions
of the By-Laws (any such agent being herein referred to as a
"Distributor" or a "Principal Underwriter", as the case may be).

(d) Custodian. The appointment of a bank or trust company having
an aggregate capital, surplus and undivided

<PAGE>25

profits (as shown in its last published report) of at least two million
dollars ($2,000,000) as custodian of the Securities and cash of the Trust and
of each Portfolio and of the accounting records in connection therewith (any
such agent being herein referred to as a "Custodian").

(e) Transfer and Dividend Disbursing Agency. An agreement with an
agent to maintain records of the ownership of outstanding Shares, the
issuance and redemption and the transfer thereof (any such agent being
herein referred to as a "Transfer Agent"), and to disburse any dividends
declared by the Trustees and in accordance with the policies of the
Trustees and/or the instructions of any particular Shareholder to
reinvest any such dividends (any such agent being herein referred to as a
"Dividend Disbursing Agent").

(f) Shareholder Servicing. An agreement with an agent to provide
service with respect to the relationship of the Trust and its
Shareholders, records with respect to Shareholders and their Shares, and
similar matters (any such agent being herein referred to as a
"Shareholder Servicing Agent").

(g) Accounting. An agreement with an agent to handle all or any
part of the accounting responsibilities, whether with respect to the
Trust's properties, Shareholders or otherwise (any such agent being
herein referred to as an "Accounting Agent").

The same Person may be the Contracting Party for some or all of the
services, duties and responsibilities to, for and of the Trust and/or the
Trustees, and the contracts with respect thereto may contain such terms
interpretive of or in addition to the delineation of the services, duties and
responsibilities provided for, including provisions that are not inconsistent
with the 1940 Act relating to the standard of duty of and the rights to
indemnification of the Contracting Party and others, as the Trustees may
determine. Nothing herein shall preclude, prevent or limit the Trust or a
Contracting Party from entering into sub- contractual arrangements relative to
any of the matters referred to in subsections (a) through (g) of this Section
5.2.

<PAGE>26

ARTICLE 6

PORTFOLIOS AND SHARES

SECTION 6.1. Description of Portfolios and Shares.

(a) Shares; Portfolios; Series of Shares. The beneficial interest
in the Trust shall be divided into Shares having a nominal or par value
of one mill ($.001) per Share, and all of one class, of which an
unlimited number may be issued. The Trustees shall have the authority
from time to time to establish and designate one or more separate,
distinct and independent Portfolios into which the assets of the Trust
shall be divided, and to authorize a separate Series of Shares for each
such Portfolio (each of which Series, including without limitation each
Series authorized in Section 6.2 hereof, shall represent interests only
in the Portfolio with respect to which such Series was authorized), as
they deem necessary or desirable. Except as otherwise provided as to a
particular Portfolio herein, or in the Certificate of Designation
therefor, the Trustees shall have all the rights and powers, and be
subject to all the duties and obligations, with respect to each such
Portfolio and the assets and affairs thereof as they have under this
Declaration with respect to the Trust and the Trust Property in general.

(b) Establishment, etc. of Portfolios; Authorization of Shares.
The establishment and designation of any Portfolio in addition to the
Portfolios established and designated in Section 6.2 hereof and the
authorization of the Shares thereof shall be effective upon the execution
by a Majority of the Trustees (or by an officer of the Trust pursuant to
the vote of a Majority of the Trustees) of an instrument setting forth
such establishment and designation and the relative rights and
preferences of the Shares of such Portfolio and the manner in which the
same may be amended (a "Certificate of Designation"), and may provide
that the number of Shares of such Series which may be issued is un-
limited, or may limit the number issuable. At any time that there are no
Shares outstanding of any particular Portfolio previously established and
designated, including any Portfolio established and designated in Section
6.2 hereof, the Trustees may by an instrument executed by a Majority of
the Trustees (or by an officer of the Trust pursuant to the vote of a
Majority of the Trustees) terminate such Portfolio and the establishment
and designation thereof and the authorization of its Shares (a
"Certificate of Termination"). Each Certificate of Designation,
Certificate of Termination and any instrument

<PAGE>27

amending a Certificate of Designation shall have the status of an amendment to
this Declaration of Trust, and shall be filed and become effective as provided
in Section 9.4 hereof.

(c) Character of Separate Portfolios and Shares Thereof. Each
Portfolio established hereunder shall be a separate component of the
assets of the Trust, and the holders of Shares of the Series representing
the beneficial interest in the assets of that Portfolio shall be
considered Shareholders of such Portfolio, but such Shareholders shall
also be considered Shareholders of the Trust for purposes of receiving
reports and notices and, except as otherwise provided herein or in the
Certificate of Designation of a particular Portfolio as to such
Portfolio, or as required by the 1940 Act or other applicable law, the
right to vote, all without distinction by Series. The Trustees shall
have exclusive power without the requirement of Shareholder approval to
establish and designate such separate and distinct Portfolios, and to fix
and determine the relative rights and preferences as between the shares
of the respective Portfolios as to rights of redemption and the price,
terms and manner of redemption, special and relative rights as to
dividends and other distributions and on liquidation, sinking or purchase
fund provisions, conversion rights, and conditions under which the
Shareholders of the several Portfolios shall have separate voting rights
or no voting rights.

(d) Consideration for Shares. The Trustees may issue Shares of any
Series for such consideration (which may include property subject to, or
acquired in connection with the assumption of, liabilities) and on such
terms as they may determine (or for no consideration if pursuant to a
Share dividend or split up), all without action or approval of the
Shareholders. All Shares when so issued on the terms determined by the
Trustees shall be fully paid and nonassessable (but may be subject to
mandatory contribution back to the Trust as provided in Section 6.2(h)
hereof). The Trustees may classify or reclassify any unissued Shares, or
any Shares of any Series previously issued and reacquired by the Trust,
into Shares of one or more other Portfolios that may be established and
designated from time to time.

SECTION 6.2. Establishment and Designation of Counsellors Fixed Income
Portfolio; General Provisions for All Portfolios. Without limiting the
authority of the Trustees set forth in Section 6.1(a) hereof to establish and
designate further Portfolios, there is hereby established and designated
Counsellors Fixed Income Portfolio. The Shares of such

<PAGE>28

Portfolio, and the Shares of any further Portfolios that may from time to time
be established and designated by the Trustees shall (unless the Trustees
otherwise determine with respect to some further Portfolio at the time of
establishing and designating the same) have the following relative rights and
preferences:

(a) Assets Belonging to Portfolios. Any portion of the Trust
Property allocated to a particular Portfolio, and all consideration
received by the Trust for the issue or sale of Shares of such Portfolio,
together with all assets in which such consideration is invested or
reinvested, all interest, dividends, income, earnings, profits and gains
therefrom, and proceeds thereof, including any proceeds derived from the
sale, exchange or liquidation of such assets, and any funds or payments
derived from any reinvestment of such proceeds in whatever form the same
may be, shall be held by the Trustees in trust for the benefit of the
holders of Shares of that Portfolio and shall irrevocably belong to that
Portfolio for all purposes, and shall be so recorded upon the books of
account of the Trust, and the Shareholders of such Portfolio shall not
have, and shall be conclusively deemed to have waived, any claims to the
assets of any Portfolio of which they are not Shareholders. Such
consideration, assets, interest, dividends, income, earnings, profits,
gains and proceeds, together with any General Items allocated to that
Portfolio as provided in the following sentence, are herein referred to
collectively as "Portfolio Assets" of such Portfolio, and as assets
"belonging to" that Portfolio. In the event that there are any assets,
income, earnings, profits, and proceeds thereof, funds, or payments which
are not readily identifiable as belonging to any particular Portfolio
(collectively "General Items"), the Trustees shall allocate such General
Items to and among any one or more of the Portfolios established and
designated from time to time in such manner and on such basis as they, in
their sole discretion, deem fair and equitable; and any General Items so
allocated to a particular Portfolio shall belong to and be part of the
Portfolio Assets of that Portfolio. Each such allocation by the Trustees
shall be conclusive and binding upon the Shareholders of all Portfolios
for all purposes.

(b) Liabilities of Portfolios. The assets belonging to each
particular Portfolio shall be charged with the liabilities in respect of
that Portfolio and all expenses, costs, charges and reserves attributable
to that Portfolio, and any general liabilities, expenses, costs, charges
or reserves of the Trust which are not readily identifiable as pertaining
to any particular Portfolio shall be allocated

<PAGE>29

and charged by the Trustees to and among any one or more of the Portfolios
established and designated from time to time in such manner and on such basis
as the Trustees in their sole discretion deem fair and equitable. The
indebtedness, expenses, costs, charges and reserves allocated and so charged
to a particular Portfolio are herein referred to as "liabilities of" that
Portfolio. Each allocation of liabilities, expenses, costs, charges and
reserves by the Trustees shall be conclusive and binding upon the Shareholders
of all Portfolios for all purposes. Any creditor of any Portfolio may look
only to the assets of that Portfolio to satisfy such creditor's debt.

(c) Dividends. Dividends and distributions on Shares of a
particular Portfolio may be paid with such frequency as the Trustees may
determine, which may be daily or otherwise pursuant to a standing
resolution or resolutions adopted only once or with such frequency as the
Trustees may determine, to the Shareholders of that Portfolio, from such
of the income, accrued or realized, and capital gains, realized or
unrealized, and out of the assets belonging to that Portfolio, as the
Trustees may determine, after providing for actual and accrued
liabilities of that Portfolio. All dividends and distributions on Shares
of a particular Portfolio shall be distributed pro rata to the
Shareholders of that Portfolio in proportion to the number of such Shares
held by such holders at the date and time of record established for the
payment of such dividends or distributions, except that in connection
with any dividend or distribution program or procedure the Trustees may
determine that no dividend or distribution shall be payable on Shares as
to which the Shareholder's purchase order and/or payment have not been
received by the time or times established by the Trustees under such
program or procedure, or that dividends or distributions shall be payable
on Shares which have been tendered by the holder thereof for redemption
or repurchase, but the redemption or repurchase proceeds of which have
not yet been paid to such Shareholder. Such dividends and distributions
may be made in cash or Shares of that Portfolio or a combination thereof
as determined by the Trustees, or pursuant to any program that the
Trustees may have in effect at the time for the election by each
Shareholder of the mode of the making of such dividend or distribution to
that Shareholder. Any such dividend or distribution paid in Shares will
be paid at the net asset value thereof as determined in accordance with
subsection (h) of this Section 6.2.

(d) Liquidation. In the event of the liquidation or dissolution of
the Trust, the Shareholders of each Portfolio

<PAGE>30

of which Shares are outstanding shall be entitled to receive, when and as
declared by the Trustees, the excess of the Portfolio Assets over the
liabilities of such Portfolio. The assets so distributable to the
Shareholders of any particular Portfolio shall be distributed among such
Shareholders in proportion to the number of Shares of that Portfolio held by
them and recorded on the books of the Trust. The liquidation of any
particular Portfolio may be authorized by vote of a Majority of the Trustees,
subject to the affirmative vote of "a majority of the outstanding voting
securities" of that Portfolio, as the quoted phrase is defined in the 1940
Act, determined in accordance with clause (iii) of the definition of "Majority
Shareholder Vote" in Section 1.4 hereof.

(e) Voting. The Shareholders shall have the voting rights set
forth in or determined under Article VII hereof.

(f) Redemption by Shareholder. Each holder of Shares of a
particular Portfolio shall have the right at such times as may be
permitted by the Trust, but no less frequently than once each week, to
require the Trust to redeem all or any part of his Shares of that
Portfolio at a redemption price equal to the net asset value per Share of
that Portfolio next determined in accordance with subsection (h) of this
Section 6.2 after the Shares are properly tendered for redemption;
provided that the Trustees may from time to time, in their discretion,
determine and impose a fee for such redemption. Payment of the
redemption price shall be in cash; provided, however, that if the
Trustees determine, which determination shall be conclusive, that
conditions exist which make payment wholly in cash unwise or undesirable,
the Trust may make payment wholly or partly in Securities or other assets
belonging to such Portfolio at the value of such Securities or assets
used in such determination of net asset value. Notwithstanding the
foregoing, the Trust may postpone payment of the redemption price and may
suspend the right of the holders of Shares of any Portfolio to require
the Trust to redeem Shares of that Portfolio during any period or at any
time when and to the extent permissible under the 1940 Act.

(g) Redemption at the Option of the Trust. Each Share of any
Portfolio shall be subject to redemption at the option of the Trust at
the redemption price which would be applicable if such Share were then
being redeemed by the Shareholder pursuant to subsection (f) of this
Section 6.2: (i) at any time, if the Trustees determine in their sole
discretion that failure to so redeem may have materially adverse
consequences to the holders of the Shares of the

<PAGE>31

Trust or of any Portfolio, or (ii) upon such other conditions with respect to
maintenance of Shareholder accounts of a minimum amount as may from time to
time be determined by the Trustees and set forth in the then current
Prospectus or Statement of Additional Information of such Portfolio. Upon
such redemption the holders of the Shares so redeemed shall have no further
right with respect thereto other than to receive payment of such redemption
price.

(h) Net Asset Value. The net asset value per Share of any
Portfolio at any time shall be the quotient obtained by dividing the
value of the net assets of such Portfolio at such time (being the current
value of the assets belonging to such Portfolio, less its then existing
liabilities) by the total number of Shares of that Portfolio then
outstanding, all determined in accordance with the methods and
procedures, including without limitation those with respect to rounding,
established by the Trustees from time to time. The Trustees may
determine to maintain the net asset value per Share of any Portfolio at a
designated constant dollar amount and in connection therewith may adopt
procedures not inconsistent with the 1940 Act for the continuing
declaration of income attributable to that Portfolio as dividends payable
in additional Shares of that Portfolio at the designated constant dollar
amount and for the handling of any losses attributable to that Portfolio.
Such procedures may provide that in the event of any loss each
Shareholder shall be deemed to have contributed to the shares of
beneficial interest account of that Portfolio his pro rata portion of the
total number of Shares required to be canceled in order to permit the net
asset value per Share of that Portfolio to be maintained, after
reflecting such loss, at the designated constant dollar amount. Each
Shareholder of the Trust shall be deemed to have expressly agreed, by his
investment in any Portfolio with respect to which the Trustees shall have
adopted any such procedure, to make the contribution referred to in the
preceding sentence in the event of any such loss.

(i) Transfer. All Shares of each particular Portfolio shall be
transferable, but transfers of Shares of a particular Portfolio will be
recorded on the Share transfer records of the Trust applicable to that
Portfolio only at such times as Shareholders shall have the right to
require the Trust to redeem Shares of that Portfolio and at such other
times as may be permitted by the Trustees.

(j) Equality. All Shares of each particular Portfolio shall
represent an equal proportionate interest in the assets belonging to that
Portfolio (subject to the

<PAGE>32

liabilities of that Portfolio), and each Share of any particular Portfolio
shall be equal to each other Share thereof; but the provisions of this
sentence shall not restrict any distinctions permissible under subsection (c)
of this Section 6.2 that may exist with respect to dividends and distributions
on Shares of the same Portfolio. The Trustees may from time to time divide or
combine the Shares of any particular Portfolio into a greater or lesser number
of Shares of that Portfolio without thereby changing the proportionate
beneficial interest in the assets belonging to that Portfolio or in any way
affecting the rights of the holders of Shares of any other Portfolio.

(k) Rights of Fractional Shares. Any fractional Share of any
Series shall carry proportionately all the rights and obligations of a
whole Share of that Series, including rights and obligations with respect
to voting, receipt of dividends and distributions, redemption of Shares,
and liquidation of the Trust or of the Portfolio to which they pertain.

(l) Conversion Rights. Subject to compliance with the requirements
of the 1940 Act, the Trustees shall have the authority to provide that
holders of Shares of any Portfolio shall have the right to convert said
Shares into Shares of one or more other Portfolios in accordance with
such requirements and procedures as the Trustees may establish.

SECTION 6.3. Ownership of Shares. The ownership of Shares shall be
recorded on the books of the Trust or of a Transfer Agent or similar agent for
the Trust, which books shall be maintained separately for the Shares of each
Series that has been authorized. Certificates evidencing the ownership of
Shares need not be issued except as the Trustees may otherwise determine from
time to time, and the Trustees shall have power to call outstanding Share
certificates and to replace them with book entries. The Trustees may make
such rules as they consider appropriate for the issuance of Share
certificates, the use of facsimile signatures, the transfer of Shares and
similar matters. The record books of the Trust as kept by the Trust or any
Transfer Agent or similar agent, as the case may be, shall be conclusive as to
who are the Shareholders and as to the number of Shares of each Portfolio held
from time to time by each such Shareholder.

The holders of Shares of each Portfolio shall upon demand disclose to the
Trustees in writing such information with respect to their direct and indirect
ownership of Shares of such Portfolio as the Trustees deem necessary to comply
with the

<PAGE>33

provisions of the Internal Revenue Code, or to comply with the requirements of
any other authority.

SECTION 6.4. Investments in the Trust. The Trustees may accept
investments in any Portfolio of the Trust from such Persons and on such terms
and for such consideration, not inconsistent with the provisions of the 1940
Act, as they from time to time authorize. The Trustees may authorize any
Distributor, Principal Underwriter, Custodian, Transfer Agent or other Person
to accept orders for the purchase of Shares that conform to such authorized
terms and to reject any purchase orders for Shares, whether or not conforming
to such authorized terms.

SECTION 6.5. No Pre-emptive Rights. No Shareholder, by virtue of
holding Shares of any Portfolio, shall have any preemptive or other right to
subscribe to any additional Shares of that Portfolio, or to any shares of any
other Portfolio, or any other Securities issued by the Trust.

SECTION 6.6. Status of Shares. Every Shareholder, by virtue of having
become a Shareholder, shall be held to have expressly assented and agreed to
the terms hereof and to have become a party hereto. Shares shall be deemed to
be personal property, giving only the rights provided herein. Ownership of
Shares shall not entitle the Shareholder to any title in or to the whole or
any part of the Trust Property or right to call for a partition or division of
the same or for an accounting, nor shall the ownership of Shares constitute
the Shareholders partners. The death of a Shareholder during the continuance
of the Trust shall not operate to terminate the Trust or any Portfolio, nor
entitle the representative of any deceased Shareholder to an accounting or to
take any action in court or elsewhere against the Trust or the Trustees, but
only to the rights of said decedent under this Declaration of Trust.

ARTICLE 7

SHAREHOLDERS' VOTING POWERS AND MEETINGS

SECTION 7.1. Voting Powers. The Shareholders shall have power to vote
only (i) for the election or removal of Trustees as provided in Sections
4.1(c) and (e) hereof, (ii) with respect to the approval or termination in
accordance with the 1940 Act of any contract with a Contracting Party as
provided in Section 5.2 hereof as to which Shareholder approval is required by
the 1940 Act, (iii) with respect to any termination or reorganization of the
Trust or any Portfolio to the extent and as provided in Sections 9.1 and 9.2
hereof, (iv) with respect to any amendment

<PAGE>34

of this Declaration of Trust to the extent and as provided in Section 9.3
hereof, (v) to the same extent as the stockholders of a Massachusetts business
corporation as to whether or not a court action, proceeding or claim should or
should not be brought or maintained derivatively or as a class action on
behalf of the Trust or any Portfolio, or the Shareholders of any of them
(provided, however, that a Shareholder of a particular Portfolio shall not in
any event be entitled to maintain a derivative or class action on behalf of
any other Portfolio or the Shareholders thereof), and (vi) with respect to
such additional matters relating to the Trust as may be required by the 1940
Act, this Declaration of Trust, the By-Laws or any registration of the Trust
with the Commission (or any successor agency) or any State, or as the Trustees
may consider necessary or desirable. If and to the extent that the Trustees
shall determine that such action is required by law, they shall cause each
matter required or permitted to be voted upon at a meeting or by written
consent of Shareholders to be submitted to a separate vote of the outstanding
Shares of each Portfolio entitled to vote thereon; provided that (i) when
expressly required by this Declaration or by the 1940 Act, actions of
Shareholders shall be taken by Single Class Voting of all outstanding Shares
of each Series whose holders are entitled to vote thereon; and (ii) when the
Trustees determine that any matter to be submitted to a vote of Shareholders
affects only the rights or interests of Shareholders of one or more but not
all Portfolios, then only the Shareholders of the Portfolios so affected shall
be entitled to vote thereon.

SECTION 7.2. Number of Votes and Manner of Voting; Proxies. On each
matter submitted to a vote of the Shareholders, each holder of Shares of any
Series shall be entitled to a number of votes equal to the number of Shares of
such Series standing in his name on the books of the Trust. There shall be no
cumulative voting in the election of Trustees. Shares may be voted in person
or by proxy. A proxy with respect to Shares held in the name of two (2) or
more Persons shall be valid if executed by any one of them unless at or prior
to exercise of the proxy the Trust receives a specific written notice to the
contrary from any one of them. A proxy purporting to be executed by or on
behalf of a Shareholder shall be deemed valid unless challenged at or prior to
its exercise and the burden of proving invalidity shall rest on the
challenger. Until Shares are issued, the Trustees may exercise all rights of
Shareholders and may take any action required by law, this Declaration of
Trust or the By-Laws to be taken by Shareholders.

SECTION 7.3. Meetings. Meetings of Shareholders may be called by the
Trustees from time to time for the purpose of taking action upon any matter
requiring the vote or authority of the Shareholders as herein provided, or
upon any other matter

<PAGE>35

deemed by the Trustees to be necessary or desirable. Written notice of any
meeting of Shareholders shall be given or caused to be given by the Trustees
by mailing such notice at least seven (7) days before such meeting, postage
prepaid, stating the time, place and purpose of the meeting, to each
Shareholder at the Shareholder's address as it appears on the records of the
Trust. The Trustees shall promptly call and give notice of a meeting of
Shareholders for the purpose of voting upon removal of any Trustee of the
Trust when requested to do so in writing by Shareholders holding not less than
ten percent (10%) of the Shares then outstanding. If the Trustees shall fail
to call or give notice of any meeting of Shareholders for a period of thirty
(30) days after written application by Shareholders holding at least ten
percent (10%) of the Shares then outstanding requesting that a meeting be
called for any other purpose requiring action by the Shareholders as provided
herein or in the By-Laws, then Shareholders holding at least ten percent (10%)
of the Shares then outstanding may call and give notice of such meeting, and
thereupon the meeting shall be held in the manner provided for herein in case
of call thereof by the Trustees.

SECTION 7.4. Record Dates. For the purpose of determining the
Shareholders who are entitled to vote or act at any meeting or any adjournment
thereof, or who are entitled to participate in any dividend or distribution,
or for the purpose of any other action, the Trustees may from time to time
close the transfer books for such period, not exceeding thirty (30) days
(except at or in connection with the termination of the Trust), as the
Trustees may determine; or without closing the transfer books the Trustees may
fix a date and time not more than sixty (60) days prior to the date of any
meeting of Shareholders or other action as the date and time of record for the
determination of Shareholders entitled to vote at such meeting or any
adjournment thereof or to be treated as Shareholders of record for purposes of
such other action, and any Shareholder who was a Shareholder at the date and
time so fixed shall be entitled to vote at such meeting or any adjournment
thereof or to be treated as a Shareholder of record for purposes of such other
action, even though he has since that date and time disposed of his Shares,
and no Shareholder becoming such after that date and time shall be so entitled
to vote at such meeting or any adjournment thereof or to be treated as a
Shareholder of record for purposes of such other action.

SECTION 7.5. Quorum and Required Vote. A majority of the Shares
entitled to vote shall be a quorum for the transaction of business at a
Shareholders' meeting, but any lesser number shall be sufficient for
adjournments. Any adjourned session or sessions may be held within a
reasonable time after the date set for the original meeting without the
necessity of further notice.

<PAGE>36

A Majority Shareholder Vote at a meeting of which a quorum is present shall
decide any question, except when a different vote is required or permitted by
any provision of the 1940 Act or other applicable law or by this Declaration
of Trust or the By-Laws, or when the Trustees shall in their discretion
require a larger vote or the vote of a majority or larger fraction of the
Shares of one or more particular Series.

SECTION 7.6. Action by Written Consent. Subject to the provisions of
the 1940 Act and other applicable law, any action taken by Shareholders may be
taken without a meeting if a majority of Shareholders entitled to vote on the
matter (or such larger proportion thereof or of the Shares of any particular
Series as shall be required by the 1940 Act or by any express provision of
this Declaration of Trust or the By-Laws or as shall be permitted by the
Trustees) consent to the action in writing and if the writings in which such
consent is given are filed with the records of the meetings of Shareholders,
to the same extent and for the same period as proxies given in connection with
a Shareholders' meeting. Such consent shall be treated for all purposes as a
vote taken at a meeting of Shareholders.

SECTION 7.7. Inspection of Records. The records of the Trust shall be
open to inspection by Shareholders to the same extent as is permitted
stockholders of a Massachusetts business corporation under the Massachusetts
Business Corporation Law.

SECTION 7.8. Additional Provisions. The By-Laws may include further
provisions for Shareholders' votes and meetings and related matters not
inconsistent with the provisions hereof.

ARTICLE 8

LIMITATION OF LIABILITY; INDEMNIFICATION

SECTION 8.1. Trustees, Shareholders, etc. Not Personally Liable;
Notice. The Trustees and officers of the Trust, in incurring any debts,
liabilities or obligations, or in limiting or omitting any other actions for
or in connection with the Trust, are or shall be deemed to be acting as
Trustees or officers of the Trust and not in their own capacities. No
Shareholder shall be subject to any personal liability whatsoever in tort,
contract or otherwise to any other Person or Persons in connection with the
assets or the affairs of the Trust or of any Portfolio, and subject to Section
8.4 hereof, no Trustee, officer, employee or agent of the Trust shall be
subject to any personal liability whatsoever in tort, contract, or otherwise,
to any other Person or Persons in connection with the assets or affairs of the
Trust or of any Portfolio, save only that arising

<PAGE>37

from his own willful misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of his office or the discharge
of his functions. The Trust (or if the matter relates only to a particular
Portfolio, that Portfolio) shall be solely liable for any and all debts,
claims, demands, judgments, decrees, liabilities or obligations of any and
every kind, against or with respect to the Trust or such Portfolio in tort,
contract or otherwise in connection with the assets or the affairs of the
Trust or such Portfolio, and all Persons dealing with the Trust or any
Portfolio shall be deemed to have agreed that resort shall be had solely to
the Trust Property of the Trust or the Portfolio Assets of such Portfolio, as
the case may be, for the payment or performance thereof.

The Trustees shall use their best efforts to ensure that every note,
bond, contract, instrument, certificate or undertaking made or issued by the
Trustees or by any officers or officer shall give notice that this Declaration
of Trust is on file with the Secretary of State of The Commonwealth of
Massachusetts and shall recite to the effect that the same was executed or
made by or on behalf of the Trust or by them as Trustees or Trustee or as
officers or officer, and not individually, and that the obligations of such
instrument are not binding upon any of them or the Shareholders individually
but are binding only upon the assets and property of the Trust, or the
particular Portfolio in question, as the case may be, but the omission thereof
shall not operate to bind any Trustees or Trustee or officers or officer or
Shareholders or Shareholder individually, or to subject the Portfolio Assets
of any Portfolio to the obligations of any other Portfolio.

SECTION 8.2. Trustees' Good Faith Action; Expert Advice; No Bond or
Surety. The exercise by the Trustees of their powers and discretions
hereunder shall be binding upon everyone interested. Subject to Section 8.4
hereof, a Trustee shall be liable for his own willful misfeasance, bad faith,
gross negligence or reckless disregard of the duties involved in the conduct
of the office of Trustee, and for nothing else, and shall not be liable for
errors of judgment or mistakes of fact or law. Subject to the foregoing, (i)
the Trustees shall not be responsible or liable in any event for any neglect
or wrongdoing of any officer, agent, employee, consultant, Investment Advisor,
Administrator, Distributor or Principal Underwriter, Custodian or Transfer
Agent, Dividend Disbursing Agent, Shareholder Servicing Agent or Accounting
Agent of the Trust, nor shall any Trustee be responsible for the act or
omission of any other Trustee; (ii) the Trustees may take advice of counsel or
other experts with respect to the meaning and operation of this Declaration of
Trust and their duties as Trustees, and shall be under no liability for any
act or omission in accordance with such advice or for failing

<PAGE>38

to follow such advice; and (iii) in discharging their duties, the Trustees,
when acting in good faith, shall be entitled to rely upon the books of account
of the Trust and upon written reports made to the Trustees by any officer
appointed by them, any independent public accountant, and (with respect to the
subject matter of the contract involved) any officer, partner or responsible
employee of a Contracting Party appointed by the Trustees pursuant to Section
5.2 hereof. The Trustees as such shall not be required to give any bond or
surety or any other security for the performance of their duties.

SECTION 8.3. Indemnification of Shareholders. If any
Shareholder (or former Shareholder) of the Trust shall be charged or held to
be personally liable for any obligation or liability of the Trust solely by
reason of being or having been a Shareholder and not because of such
Shareholder's acts or omissions or for some other reason, the Trust (upon
proper and timely request by the Shareholder) shall assume the defense against
such charge and satisfy any judgment thereon, and the Shareholder or former
Shareholder (or the heirs, executors, administrators or other legal
representatives thereof, or in the case of a corporation or other entity, its
corporate or other general successor) shall be entitled (but solely out of the
assets of the Portfolio of which such Shareholder or former Shareholder is or
was the holder of Shares) to be held harmless from and indemnified against all
loss and expense arising from such liability.

SECTION 8.4. Indemnification of Trustees, Officers, etc. Subject to the
limitations set forth hereinafter in this Section 8.4, the Trust shall
indemnify (from the assets of the Portfolio or Portfolios to which the conduct
in question relates) each of its Trustees and officers (including Persons who
serve at the Trust's request as directors, officers or trustees of another
organization in which the Trust has any interest as a shareholder, creditor or
otherwise [hereinafter, together with such Person's heirs, executors,
administrators or personal representative, referred to as a "Covered Person"])
against all liabilities, including but not limited to amounts paid in
satisfaction of judgments, in compromise or as fines and penalties, and
expenses, including reasonable accountants' and counsel fees, incurred by any
Covered Person in connection with the defense or disposition of any action,
suit or other proceeding, whether civil or criminal, before any court or
administrative or legislative body, in which such Covered Person may be or may
have been involved as a party or otherwise or with which such Covered Person
may be or may have been threatened, while in office or thereafter, by reason
of being or having been such a Trustee or officer, director or trustee, except
with respect to any matter as to which it has been determined that

<PAGE>39

such Covered Person (i) did not act in good faith in the reasonable belief
that such Covered Person's action was in or not opposed to the best interests
of the Trust or (ii) had acted with willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct of such
Covered Person's office (either and both of the conduct described in (i) and
(ii) being referred to hereafter as "Disabling Conduct"). A determination
that the Covered Person is entitled to indemnification may be made by (i) a
final decision on the merits by a court or other body before whom the
proceeding was brought that the Covered Person to be indemnified was not
liable by reason of Disabling Conduct, (ii) dismissal of a court action or an
administrative proceeding against a Covered Person for insufficiency of
evidence of Disabling Conduct, or (iii) a reasonable determination, based upon
a review of the facts, that the indemnitee was not liable by reason of
Disabling Conduct by (a) a vote of a majority of a quorum of Trustees who are
neither "interested persons" of the Trust as defined in Section 2(a)(19) of
the 1940 Act nor parties to the proceeding, or (b) an independent legal
counsel in a written opinion. Expenses, including accountants' and counsel
fees so incurred by any such Covered Person (but excluding amounts paid in
satisfaction of judgments, in compromise or as fines or penalties), may be
paid from time to time by the Portfolio or Portfolios to which the conduct in
question related in advance of the final disposition of any such action, suit
or proceeding; provided that the Covered Person shall have undertaken to repay
the amounts so paid to such Portfolio or Portfolios if it is ultimately
determined that indemnification of such expenses is not authorized under this
Article 8 and (i) the Covered Person shall have provided security for such
undertaking, (ii) the Trust shall be insured against losses arising by reason
of any lawful advances, or (iii) a majority of a quorum of the disinterested
Trustees, or an independent legal counsel in a written opinion, shall have
determined, based on a review of readily available facts (as opposed to a full
trial-type inquiry), that there is reason to believe that the Covered Person
ultimately will be found entitled to indemnification.

SECTION 8.5. Compromise Payment. As to any matter disposed of by a
compromise payment by any such Covered Person referred to in Section 8.4
hereof, pursuant to a consent decree or otherwise, no such indemnification
either for said payment or for any other expenses shall be provided unless
such indemnification shall be approved (i) by a majority of a quorum of the
disinterested Trustees or (ii) by an independent legal counsel in a written
opinion. Approval by the Trustees pursuant to clause (i) or by independent
legal counsel pursuant to clause (ii) shall not prevent the recovery from any
Covered Person of any amount paid to such Covered Person in accordance with
either of such clauses

<PAGE>40

as indemnification if such Covered Person is subsequently adjudicated by a
court of competent jurisdiction not to have acted in good faith in the
reasonable belief that such Covered Person's action was in or not opposed to
the best interests of the Trust or to have been liable to the Trust or its
Shareholders by reason of willful misfeasance, bad faith, gross negligence or
reckless disregard of the duties involved in the conduct of such Covered
Person's office.

SECTION 8.6. Indemnification Not Exclusive, etc. The right
of indemnification provided by this Article 1 shall not be exclusive of or
affect any other rights to which any such Covered Person may be entitled. As
used in this Article 8, a "disinterested" Person is one against whom none of
the actions, suits or other proceedings in question, and no other action, suit
or other proceeding on the same or similar grounds is then or has been pending
or threatened. Nothing contained in this Article 8 shall affect any rights to
indemnification to which personnel of the Trust, other than Trustees and
officers, and other Persons may be entitled by contract or otherwise under
law, nor the power of the Trust to purchase and maintain liability insurance
on behalf of any such Person.

SECTION 8.7. Liability of Third Persons Dealing with Trustees. No
person dealing with the Trustees shall be bound to make any inquiry concerning
the validity of any transaction made or to be made by the Trustees or to see
to the application of any payments made or property transferred to the Trust
or upon its order.

ARTICLE 9

DURATION; REORGANIZATION; AMENDMENTS

SECTION 9.1. Duration and Termination of Trust. Unless terminated as
provided herein, the Trust shall continue without limitation of time and,
without limiting the generality of the foregoing, no change, alteration or
modification with respect to any Portfolio or Series of Shares shall operate
to terminate the Trust. The Trust may be terminated at any time by a Majority
of the Trustees, subject to the favorable vote of the holders of not less than
a majority of the Shares outstanding and entitled to vote of each Portfolio of
the Trust, or by an instrument or instruments in writing without a meeting,
consented to by the holders of not less than a majority of such Shares, or by
such greater or different vote of Shareholders of any Series as may be
established by the Certificate of Designation by which such Series was
authorized. Upon termination, after paying or otherwise providing for all
charges, taxes, expenses and

<PAGE>41

liabilities, whether due or accrued or anticipated as may be determined by the
Trustees, the Trust shall in accordance with such procedures as the Trustees
consider appropriate reduce the remaining assets to distributable form in
cash, Securities or other property, or any combination thereof, and distribute
the proceeds to the Shareholders, in conformity with the provisions of Section
6.2(d) hereof.

SECTION 9.2. Reorganization. The Trustees may sell, convey and transfer
all or substantially all of the assets of the Trust, or the assets belonging
to any one or more Portfolios, to another trust, partnership, association or
corporation organized under the laws of any state of the United States, or may
transfer such assets to another Portfolio of the Trust, in exchange for cash,
Shares or other Securities (including, in the case of a transfer to another
Portfolio of the Trust, Shares of such other Portfolio), or to the extent
permitted by law then in effect may merge or consolidate the Trust or any
Portfolio with any other Trust or any corporation, partnership, or association
organized under the laws of any state of the United States, all upon such
terms and conditions and for such consideration when and as authorized by vote
or written consent of a Majority of the Trustees and approved by the
affirmative vote of the holders of not less than a majority of the Shares
outstanding and entitled to vote of each Portfolio whose assets are affected
by such transaction, or by an instrument or instruments in writing without a
meeting, consented to by the holders of not less than a majority of such
Shares, and/or by such other vote of any Series as may be established by the
Certificate of Designation with respect to such Series. Following such
transfer, the Trustees shall distribute the cash, Shares or other Securities
or other consideration received in such transaction (giving due effect to the
assets belonging to and indebtedness of, and any other differences among, the
various Portfolios of which the assets have so been transferred) among the
Shareholders of the Portfolio of which the assets have been so transferred;
and if all of the assets of the Trust have been so transferred, the Trust
shall be terminated. Nothing in this Section 9.2 shall be construed as
requiring approval of Shareholders for the Trustees to organize or assist in
organizing one or more corporations, trusts, partnerships, associations or
other organizations, and to sell, convey or transfer less than substantially
all of the Trust Property or the assets belonging to any Portfolio to such
organizations or entities.

SECTION 9.3. Amendments; etc. All rights granted to the Shareholders
under this Declaration of Trust are granted subject to the reservation of the
right to amend this Declaration of Trust as herein provided, except that no
amendment shall repeal the limitations on personal liability of any
Shareholder or

<PAGE>42

Trustee or the prohibition of assessment upon the Shareholders (otherwise than
as permitted under Section 6.2(h)) without the express consent of each
Shareholder or Trustee involved. Subject to the foregoing, the provisions of
this Declaration of Trust (whether or not related to the rights of
Shareholders) may be amended at any time, so long as such amendment does not
adversely affect the rights of any Shareholder with respect to which such
amendment is or purports to be applicable and so long as such amendment is not
in contravention of applicable law, including the 1940 Act, by an instrument
in writing signed by a Majority of the Trustees (or by an officer of the Trust
pursuant to the vote of a Majority of the Trustees). Any amendment to this
Declaration of Trust that adversely affects the rights of all Shareholders may
be adopted at any time by an instrument in writing signed by a Majority of the
Trustees (or by an officer of the Trust pursuant to a vote of a Majority of
the Trustees) when authorized to do so by the vote in accordance with Section
7.1 hereof of Shareholders holding a majority of all the Shares outstanding
and entitled to vote, without regard to Series, or if said amendment adversely
affects the rights of the Shareholders of less than all of the Portfolios, by
the vote of the holders of a majority of all the Shares entitled to vote of
each Portfolio so affected. Subject to the foregoing, any such amendment
shall be effective when the instrument containing the terms thereof and a
certificate (which may be a part of such instrument) to the effect that such
amendment has been duly adopted, and setting forth the circumstances thereof,
shall have been executed and acknowledged by a Trustee or officer of the Trust
and filed as provided in Section 9.4 hereof.

SECTION 9.4. Filing of Copies of Declaration and Amendments. The
original or a copy of this Declaration and of each amendment hereto (including
each Certificate of Designation and Certificate of Termination), as well as
the certificates called for by Section 4.1(k) hereof as to changes in the
Trustees, shall be kept at the office of the Trust where it may be inspected
by any Shareholder, and one copy of each such instrument shall be filed with
the Secretary of State of The Commonwealth of Massachusetts, as well as with
any other governmental office where such filing may from time to time be
required by the laws of Massachusetts. A restated Declaration, integrating
into a single instrument all of the provisions of this Declaration which are
then in effect and operative, may be executed from time to time by a Majority
of the Trustees and shall, upon filing with the Secretary of State of The
Commonwealth of Massachusetts, be conclusive evidence of all amendments
contained therein and may thereafter be referred to in lieu of the original
Declaration and the various amendments thereto.

<PAGE>43

ARTICLE 10

MISCELLANEOUS

SECTION 10.1. Governing Law. This Declaration of Trust is executed and
delivered in The Commonwealth of Massachusetts and with reference to the laws
thereof, and the rights of all parties and the construction and effect of
every provision hereof shall be subject to and construed according to the laws
of said Commonwealth.

SECTION 10.2. Counterparts. This Declaration of Trust and any amendment
thereto may be simultaneously executed in several counterparts, each of which
so executed shall be deemed to be an original, and such counterparts,
together, shall constitute but one and the same instrument, which shall be
sufficiently evidenced by any such original counterpart.

SECTION 10.3. Reliance by Third Parties. Any certificate executed by an
individual who, according to the records in the office of the Secretary of
State of The Commonwealth of Massachusetts appears to be a Trustee hereunder,
certifying to: (a) the number or identity of Trustees or Shareholders, (b)
the due authorization of the execution of any instrument or writing, (c) the
form of any vote passed as a meeting of Trustees or Shareholders, (d) the fact
that the number of Trustees or Shareholders present at any meeting or
executing any written instrument satisfies the requirements of this
Declaration of Trust, (e) the form of any By-Law adopted, or the identity of
any officers elected, by the Trustees, or (f) the existence or non-existence
of any fact or facts which in any manner relate to the affairs of the Trust,
shall be conclusive evidence as to the matters so certified in favor of any
Person dealing with the Trustees, or any of them, and the successors of such
Person.

SECTION 10.4. References; Headings. The masculine gender shall include
the feminine and neuter genders. Headings are placed herein for convenience
of reference only and shall not be taken as a part of this Declaration or
control or affect the meaning, construction or effect hereof.

SECTION 10.5. Use of the Name "Counsellors". Warburg, Pincus
Counsellors, Inc. ("Warburg") has consented to the use by the Trust of the
name "Counsellors", which is a property right of Warburg. The Trust will only
use the name "Counsellors" and will not purport to grant to any third party
the right to use such name for any purpose. Warburg or any corporate
affiliate of Warburg may use or grant to others the right to use the name
"Counsellors", as all or a portion of a corporate or business

<PAGE>44

name or for any commercial purpose, including a grant of such right to any
other investment company. At the request of Warburg, the Trust will take such
action as may be required to provide its consent to the use of such name by
Warburg, or any corporate affiliate of Warburg, or by any Person to whom
Warburg or an affiliate of Warburg shall have granted the right to the use of
the name "Counsellors". Upon the termination of any investment advisory or
management agreement into which Warburg and the Trust may enter, the Trust
shall, upon request by Warburg, cease to use the name "Counsellors" as its
name, and shall not use such name or initials as a part of its name or for any
other commercial purpose, and shall cause its officers and Trustees to take
any and all actions which Warburg may request to effect the foregoing and to
reconvey to Warburg or such corporate affiliate any and all rights to such
name.

IN WITNESS WHEREOF, the undersigned has hereunto set his hand and seal,
for himself and his assigns, and has thereby accepted the Trusteeship as the
Initial Trustee of Counsellors Fixed Income Fund hereby granted and agreed to
the provisions hereof, all as of the day and year first above written.

/s/ Bryan G. Tyson
_________________________
Bryan G. Tyson

The undersigned Settlor of Counsellors Fixed Income Fund, hereby accepts,
approves and authorizes the foregoing Agreement and Declaration of Trust of
Counsellors Fixed Income Fund.

Dated: January 20, 1987

/s/ Virginia Spencer
_________________________
Virginia Spencer

<PAGE>45

ACKNOWLEDGMENTS

M A S S A C H U S E T T S

Suffolk, ss.: January 20, 1987

Then personally appeared the above named Bryan G. Tyson and acknowledged the
foregoing instrument to be his free act and deed.

Before me,
/s/ Linda M. Rose
________________________
Notary Public

M A S S A C H U S E T T S

Suffolk, ss.: January 20, 1987

Then personally appeared the above named Virginia Spencer and acknowledged the
foregoing instrument to be her free act and deed.

Before me,

/s/ Linda M. Rose
________________________
Notary Public

<PAGE>1

Second Amended and Restated By-Laws

<PAGE>2

WARBURG, PINCUS FIXED INCOME FUND

Second Amended and Restated By-Laws

Index

Page No.

RECITALS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

ARTICLE 1 - SHAREHOLDERS AND SHAREHOLDERS' MEETINGS . . . . . . . . . . . 1

SECTION 1.1. Meetings . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 1.2. Presiding Officer; Secretary . . . . . . . . . . . . . 1
SECTION 1.3. Authority of Chairman of Meeting to
Interpret Declaration and By-Laws . . . . . . . . . . . . . . . 2
SECTION 1.4. Voting; Quorum . . . . . . . . . . . . . . . . . . . . 2
SECTION 1.5. Inspectors . . . . . . . . . . . . . . . . . . . . . . 2
SECTION 1.6. Notice of Shareholder Business . . . . . . . . . . . . 2
SECTION 1.7. Shareholders' Action in Writing . . . . . . . . . . . 3
SECTION 1.8. Shareholder Business not Eligible for
Consideration . . . . . . . . . . . . . . . . . . . . . . . . . 3

ARTICLE 2 - TRUSTEES AND TRUSTEES' MEETINGS . . . . . . . . . . . . . . . 4

SECTION 2.1. Number of Trustees . . . . . . . . . . . . . . . . . . 4
SECTION 2.2. Regular Meetings of Trustees . . . . . . . . . . . . . 4
SECTION 2.3. Special Meetings of Trustees . . . . . . . . . . . . . 4
SECTION 2.4. Notice of Meetings . . . . . . . . . . . . . . . . . . 4
SECTION 2.5. Quorum; Presiding Officer . . . . . . . . . . . . . . 5
SECTION 2.6. Participation by Telephone . . . . . . . . . . . . . . 5
SECTION 2.7. Location of Meetings . . . . . . . . . . . . . . . . . 5
SECTION 2.8. Votes . . . . . . . . . . . . . . . . . . . . . . . . 5
SECTION 2.9. Rulings of Chairman . . . . . . . . . . . . . . . . . 5
SECTION 2.10. Trustees' Action in Writing . . . . . . . . . . . . . 6
SECTION 2.11. Resignations . . . . . . . . . . . . . . . . . . . . . 6
SECTION 2.12. Trustee Nominations . . . . . . . . . . . . . . . . . 6

ARTICLE 3 - OFFICERS . . . . . . . . . . . . . . . . . . . . . . . . . . 7

SECTION 3.1. Officers of the Trust . . . . . . . . . . . . . . . . 7
SECTION 3.2. Time and Terms of Election . . . . . . . . . . . . . . 7
SECTION 3.3. Resignation and Removal . . . . . . . . . . . . . . . 8
SECTION 3.4. Fidelity Bond . . . . . . . . . . . . . . . . . . . . 8
SECTION 3.5. Chairman of the Trustees . . . . . . . . . . . . . . . 8
SECTION 3.6. Vice Chairmen . . . . . . . . . . . . . . . . . . . . 8
SECTION 3.7. President . . . . . . . . . . . . . . . . . . . . . . 8
SECTION 3.8. Vice Presidents . . . . . . . . . . . . . . . . . . . 9
SECTION 3.9. Treasurer and Assistant Treasurers . . . . . . . . . . 9
SECTION 3.10. Controller and Assistant Controllers . . . . . . . . . 9
SECTION 3.11. Secretary and Assistant Secretaries . . . . . . . . . 10

<PAGE>3

SECTION 3.12. Substitutions . . . . . . . . . . . . . . . . . . . . 10
SECTION 3.13. Execution of Deeds, etc. . . . . . . . . . . . . . . . 10
SECTION 3.14. Power to Vote Securities . . . . . . . . . . . . . . . 10

ARTICLE 4 - COMMITTEES . . . . . . . . . . . . . . . . . . . . . . . . . 11

SECTION 4.1. Power of Trustees to Designate
Committees . . . . . . . . . . . . . . . . . . . . . 11
SECTION 4.2. Rules for Conduct of Committee Affairs. . . . . . . . 11
SECTION 4.3. Trustees May Alter, Abolish, etc. . . . . . . . . . . 11
SECTION 4.4. Minutes; Review by Trustees . . . . . . . . . . . . . 11

ARTICLE 5 - SEAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

ARTICLE 6 - SHARES . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

SECTION 6.1. Issuance of Shares . . . . . . . . . . . . . . . . . . 12
SECTION 6.2. Uncertificated Shares . . . . . . . . . . . . . . . . 12
SECTION 6.3. Share Certificates . . . . . . . . . . . . . . . . . . 12
SECTION 6.4. Lost, Stolen, etc., Certificates . . . . . . . . . . . 13
SECTION 6.5. Record Transfer of Pledged Shares . . . . . . . . . . 13

ARTICLE 7 - CUSTODIAN . . . . . . . . . . . . . . . . . . . . . . . . . . 13

ARTICLE 8 - AMENDMENTS . . . . . . . . . . . . . . . . . . . . . . . . . 14

SECTION 8.1. By-Laws Subject to Amendment . . . . . . . . . . . . . 14
SECTION 8.2. Notice of Proposal to Amend By-Laws
Required . . . . . . . . . . . . . . . . . . . . . . 14

<PAGE>4

SECOND AMENDED AND RESTATED
BY-LAWS
OF
WARBURG, PINCUS FIXED INCOME FUND

These Articles are the Second Amended and Restated By-Laws of
Warburg, Pincus Fixed Income Fund, a trust with transferable shares
established under the laws of The Commonwealth of Massachusetts (the "Trust"),
pursuant to an Agreement and Declaration of Trust of the Trust made the 20th
day of January, 1987, and filed in the office of the Secretary of The
Commonwealth (as amended from time to time, the "Declaration"). These By-Laws
have been adopted by the Trustees pursuant to the authority granted by Section
3.1 of the Declaration.

All words and terms capitalized in these By-Laws, unless otherwise
defined herein, shall have the same meanings as they have in the Declaration.

ARTICLE 1

SHAREHOLDERS AND SHAREHOLDERS' MEETINGS

SECTION 1.1. Meetings. A meeting of the Shareholders of the Trust
shall be held whenever called by the Trustees and whenever election of a
Trustee or Trustees by Shareholders is required by the provisions of the 1940
Act. Meetings of Shareholders shall also be called by the Trustees when
requested in writing by Shareholders holding at least ten percent (10%) of the
Shares then outstanding for the purpose of voting upon removal of any Trustee,
or if the Trustees shall fail to call or give notice of any such meeting of
Shareholders for a period of thirty (30) days after such application, then
Shareholders holding at least ten percent (10%) of the Shares then outstanding
may call and give notice of such meeting. Notice of Shareholders' meetings
shall be given as provided in the Declaration.

SECTION 1.2. Presiding Officer; Secretary. The Chairman of the
Trustees, if any, or in his absence the Vice Chairman or Chairmen, if any, in
the order of their seniority or as the Trustees shall otherwise determine, and
in the absence of the Chairman and all Vice Chairmen, if any (or if there are
none), the President, shall preside at each Shareholders' meeting as chairman
of the meeting, or in the absence of the Chairman, all Vice-Chairmen and the
President, the Trustees present at the meeting shall elect one of their number
as chairman of the meeting. Unless otherwise provided for by the Trustees,
the

<PAGE>5

Secretary of the Trust shall be the secretary of all meetings of Shareholders
and shall record the minutes thereof.

SECTION 1.3. Authority of Chairman of Meeting to Interpret
Declaration and By-Laws. At any Shareholders' meeting the chairman of the
meeting shall be empowered to determine the construction or interpretation of
the Declaration or these By-Laws, or any part thereof or hereof, and his
ruling shall be final.

SECTION 1.4. Voting; Quorum. At each meeting of Shareholders,
except as otherwise provided by the Declaration, every, holder of record of
Shares entitled to vote shall be entitled to a number of votes equal to the
number of Shares standing in his name on the Share register of the Trust.
Shareholders may vote by proxy and the form of any such proxy may be
prescribed from time to time by the Trustees. A quorum shall exist if the
holders of a majority of the outstanding Shares of the Trust entitled to vote
without regard to Series are present in person or by proxy, but any lesser
number shall be sufficient for adjournments. At all meetings of the
Shareholders, votes shall be taken by ballot for all matters which may be
binding upon the Trustees pursuant to Section 7.1 of the Declaration. On
other matters, votes of Shareholders need not be taken by ballot unless
otherwise provided for by the Declaration or by vote of the Trustees, or as
required by the Act or the Regulations, but the chairman of the meeting may in
his discretion authorize any matter to be voted upon by ballot.

SECTION 1.5. Inspectors. At any meeting of Shareholders, the
chairman of the meeting may appoint one or more Inspectors of Election or
Balloting to supervise the voting at such meeting or any adjournment thereof.
If Inspectors are not so appointed, the chairman of the meeting may, and on
the request of any Shareholder present or represented and entitled to vote
shall, appoint one or more Inspectors for such purpose. Each Inspector,
before entering upon the discharge of his duties, shall take and sign an oath
faithfully to execute the duties of Inspector of Election or Balloting, as the
case may be, at such meeting with strict impartiality and according to the
best of his ability. If appointed, Inspectors shall take charge of the polls
and, when the vote is completed, shall make a certificate of the result of the
vote taken and of such other facts as may be required by law.

SECTION 1.6. Notice of Shareholder Business. (a) At any Annual or
Special Meeting of the Shareholders, only such business shall be conducted as
shall have been properly brought before the meeting. To be properly brought
before an Annual or Special Meeting business must be (A) (i) specified in the
notice of meeting (or any supplement thereto) given by or at the

<PAGE>6

direction of the Board of Trustees, (ii) otherwise properly brought before the
meeting by or at the direction of the Board of Trustees, or (iii) subject to
the provisions of Section 1.6 of this Article 1, otherwise properly brought
before the meeting by a Shareholder and (B) a proper subject under applicable
law for Shareholder action.

(b) For business to be properly brought before an Annual or Special
Meeting by a Shareholder, the Shareholder must have given timely notice
thereof in writing to the Secretary of the Trust. To be timely, any such
notice must be delivered to or mailed and received at the principal executive
offices of the Trust not later than 60 days prior to the date of the meeting;
provided, however, that if less than 70 days' notice or prior public
disclosure of the date of the meeting is given or made to Shareholders, any
such notice by a Shareholder to be timely must be so received not later than
the close of business on the 10th day following the day on which notice of the
date of the Annual or Special Meeting was given or such public disclosure was
made.

(c) Any such notice by a Shareholder shall set forth as to each
matter the Shareholder proposes to bring before the Annual or Special Meeting
(i) a brief description of the business desired to be brought before the
Annual or Special Meeting and the reasons for conducting such business at the
Annual or Special Meeting, (ii) the name and address, as they appear on the
Trust's books, of the Shareholder proposing such business, (iii) the class and
number of shares of the capital stock of the Trust which are beneficially
owned by the Shareholder, and (iv) any material interest of the Shareholder in
such business.

(d) Notwithstanding anything in the By-Laws to the contrary, no
business shall be conducted at any Annual or Special Meeting except in
accordance with the procedures set forth in this Section 1.6. The chairman of
the Annual or Special Meeting shall, if the facts warrant, determine and
declare to the meeting that business was not properly brought before the
meeting in accordance with the provisions of this Section 1.6, and if he
should so determine, he shall so declare to the meeting, and any such business
not properly brought before the meeting shall not be considered or transacted.

SECTION 1.7. Shareholders' Action in Writing. Nothing in this
Article 1 shall limit the power of the Shareholders to take any action by
means of written instruments without a meeting, as permitted by Section 7.6 of
the Declaration.

SECTION 1.8. Shareholder Business not Eligible for Consideration.
(a) Notwithstanding anything in these By-Laws to the contrary, any proposal
that is otherwise properly brought before an Annual or Special Meeting by a
Shareholder will not be

<PAGE>7

eligible for consideration by the Shareholders at such Annual or Special
Meeting if such proposal is substantially the same as a matter properly
brought before such Annual or Special Meeting by or at the direction of the
Board of Trustees of the Trust. The chairman of such Annual or Special
Meeting shall, if the facts warrant, determine and declare that a Shareholder
proposal is substantially the same as a matter properly brought before the
meeting by or at the direction of the Board of Trustees, and, if he should so
determine, he shall so declare to the meeting, and any such Shareholder
proposal shall not be considered at the meeting.

(b) This Section 1.8 shall not be construed or applied to make
ineligible for consideration by the Shareholders at any Annual or Special
Meeting any Shareholder proposal required to be included in the Trust's proxy
statement relating to such meeting pursuant to Rule 14a-8 under the Securities
Exchange Act of 1934, or any successor rule thereto.

ARTICLE 2

TRUSTEES AND TRUSTEES' MEETINGS

SECTION 2.1. Number of Trustees. There shall initially be one (1)
Trustee, and the number of Trustees shall thereafter be such number,
authorized by the Declaration, as from time to time shall be fixed by a vote
adopted by a Majority of the Trustees.

SECTION 2.2. Regular Meetings of Trustees. Regular meetings of the
Trustees may be held without call or notice at such places and at such times
as the Trustees may from time to time determine; provided, that notice of such
determination, and of the time, place and purposes of the first regular
meeting thereafter, shall be given to each absent Trustee in accordance with
Section 2.4 hereof.

SECTION 2.3. Special Meetings of Trustees. Special meetings of the
Trustees may be held at any time and at any place when called by the Chairman
of the Trustees, if any, any Vice Chairman, if any, the President or the
Treasurer or by two (2) or more Trustees, or if there shall be fewer than
three (3) Trustees, by any Trustee; provided, that notice of the time, place
and purposes thereof is given to each Trustee in accordance with Section 2.4
hereof by the Secretary or an Assistant Secretary or by the officer or the
Trustees calling the meeting.

SECTION 2.4. Notice of Meetings. Notice of any regular or special
meeting of the Trustees shall be sufficient if given in writing to each
Trustee, and if sent by mail at least five (5) days, or by telegram, Federal
Express or other similar delivery

<PAGE>8

service at least twenty-four (24) hours, before the meeting, addressed to his
usual or last known business or residence address, or if delivered to him in
person at least twenty-four (24) hours before the meeting. Notice of a
special meeting need not be given to any Trustee who was present at an earlier
meeting, not more than thirty-one (31) days prior to the subsequent meeting,
at which the subsequent meeting was called. Notice of a meeting may be waived
by any Trustee by written waiver of notice, executed by him before or after
the meeting, and such waiver shall be filed with the records of the meeting
Attendance by a Trustee at a meeting shall constitute a waiver of notice,
except where a Trustee attends a meeting for the purpose of protesting prior
thereto or at its commencement the lack of notice.

SECTION 2.5. Quorum; Presiding Officer. At any meeting of the
Trustees, a Majority of the Trustees shall constitute a quorum. Any meeting
may be adjourned from time to time by a majority of the votes cast upon the
question, whether or not a quorum is present, and the meeting may be held as
adjourned without further notice. Unless the Trustees shall otherwise elect,
generally or in a particular case, the Chairman of the Trustees, or in his
absence (or if there is none), the Vice Chairman or Vice Chairmen, if any, in
the order of their seniority or as the Trustees shall otherwise determine, or
in the absence of the Chairman and all Vice Chairmen, if any, the President,
shall preside at each meeting of the Trustees as chairman of the meeting.

SECTION 2.6. Participation by Telephone. One or more of the
Trustees may participate in a meeting thereof or of any Committee of the
Trustees by means of a conference telephone or similar communications
equipment allowing all persons participating in the meeting to hear each other
at the same time. Participation by such means shall constitute presence in
person at a meeting.

SECTION 2.7. Location of Meetings. Trustees' meetings may be held
at any place, within or without Massachusetts.

SECTION 2.8. Votes. Voting at Trustees' meetings may be conducted
orally, by show of hands or, if requested by any Trustee, by written ballot.
The results of all voting shall be recorded by the Secretary in the minute
book.

SECTION 2.9. Rulings of Chairman. All other rules of conduct
adopted and used at any Trustees' meeting shall be determined by the chairman
of such meeting, whose ruling on all procedural matters shall be final.

<PAGE>9

SECTION 2.10. Trustees' Action in Writing. Nothing in this Article
2 shall limit the power of the Trustees to take action by means of a written
instrument without a meeting, as provided in Section 4.2 of the Declaration.

SECTION 2.11. Resignations. Any Trustee may resign at any time by
written instrument signed by him and delivered to the Chairman, if any, the
President or the Secretary or to a meeting of the Trustees. Such resignation
shall be effective upon receipt unless specified to be effective at some other
time.

SECTION 2.12. Trustee Nominations. (a) Only persons who are
nominated in accordance with the procedures set forth in this Section 2.12
shall be eligible for election or re-election as Trustees. Nominations of
persons for election or re-election to the Board of Trustees as Trustees of
the Trust may be made at a meeting of Shareholders by or at the direction of
the Board of Trustees or by any Shareholder of the Trust who is entitled to
vote for the election of such nominee at the meeting and who complies with the
notice procedures set forth in this Section 2.12.

(b) Such nominations, other than those made by or at the direction
of the Board of Trustees, shall be made pursuant to timely notice delivered in
writing to the Secretary of the Trust. To be timely, any such notice by a
Shareholder must be delivered to or mailed and received at the principal
executive offices of the Trust not later than 60 days prior to the meeting;
provided, however, that if less than 70 days' notice or prior public
disclosure of the date of the meeting is given or made to Shareholders, any
such notice by a Shareholder to be timely must be so received not later than
the close of business on the 10th day following the day on which notice of the
date of the meeting was given or such public disclosure was made.

(c) Any such notice by a Shareholder shall set forth (i) as to each
person whom the Shareholder proposes to nominate for election or re-election
as a Trustee, (A) the name, age, business address and residence address of
such person, (B) the principal occupation or employment of such person, (C)
the class and number of shares of beneficial interest in the Trust which are
beneficially owned by such person and (D) any other information relating to
such person that is required to be disclosed in solicitations of proxies for
the election of Trustees pursuant to Regulation 14A under the Securities
Exchange Act of 1934 or any successor regulation thereto (including without
limitation such persons' written consent to being named in the proxy statement
as a nominee and to serving as a Trustee if elected and whether any person
intends to seek reimbursement from the Trust of the expenses of any
solicitation of proxies should such person be elected a Trustee of the Trust);
and (ii)

<PAGE>10

as to the Shareholder giving the notice (A) the name and address, as they
appear on the Trust's books, of such Shareholder and (B) the class and number
of shares of beneficial interest in the Trust which are beneficially owned by
such Shareholder. At the request of the Board of Trustees any person
nominated by the Board of Trustees for election as a Trustee shall furnish to
the Secretary of the Trust that information required to be set forth in a
Shareholder's notice of nomination which pertains to the nominee.

(d) If a notice by a Shareholder is required to be given pursuant to
this Section 2.12, no person shall be entitled to receive reimbursement from
the Trust of the expenses of a solicitation of proxies for the election as a
Trustee of a person named in such notice unless such notice states that such
reimbursement will be sought from the Trust. No person shall be eligible for
election as a Trustee of the Trust unless nominated in accordance with the
procedures set forth in this Section 2.12. The chairman of the meeting shall,
if the facts warrant, determine and declare to the meeting that a nomination
was not made in accordance with the procedures prescribed by the By-Laws, and
if he should so determine, he shall so declare to the meeting and the
defective nomination shall be disregarded for all purposes.

ARTICLE 3

OFFICERS

SECTION 3.1. Officers of the Trust. The officers of the Trust shall
consist of a President, a Treasurer and a Secretary, and may include a
Chairman of the Trustees, one or more Vice Chairmen, Vice Presidents,
Assistant Treasurers and Assistant Secretaries, and such other officers as the
Trustees may designate. Any person may hold more than one office. Except for
the Chairman of the Trustees, if any, and any Vice Chairmen, if any, no
officer need be a Trustee.

SECTION 3.2. Time and Terms of Election. The Chairman, if any, the
President, the Treasurer and the Secretary shall be elected by the Trustees at
their first meeting and thereafter at the annual meeting of the Trustees, as
provided in Section 4.2 of the Declaration. Such officers shall hold office
until the next annual meeting of the Trustees and until their successors shall
have been duly elected and qualified, and may be removed at any meeting by the
affirmative vote of a Majority of the Trustees. All other officers of the
Trust may be elected or appointed at any meeting of the Trustees. Such
officers shall hold office for any term, or indefinitely, as determined by the
Trustees, and shall be subject to removal, with or without cause, at any time
by the Trustees.

<PAGE>11

SECTION 3.3. Resignation and Removal. Any officer may resign at any
time by giving written notice to the Trustees. Such resignation shall take
effect at the time specified therein, and, unless otherwise specified therein,
the acceptance of such resignation shall not be necessary to make it
effective. If the office of any officer or agent becomes vacant by reason of
death, resignation, retirement, disqualification, removal from office or
otherwise, the Trustees may choose a successor, who shall hold office for the
unexpired term in respect of which such vacancy occurred. Except to the
extent expressly provided in a written agreement with the Trust, no officer
resigning or removed shall have any right to any compensation for any period
following such resignation or removal, or any right to damage on account of
such removal.

SECTION 3.4. Fidelity Bond. The Trustees may, in their discretion,
direct any officer appointed by them to furnish at the expense of the Trust a
fidelity bond approved by the Trustees, in such amount as the Trustees may
prescribe.

SECTION 3.5. Chairman of the Trustees. The Board of Trustees may,
by resolution adopted by a majority of the entire Board, designate a Chairman
of the Trustees, who shall preside at each meeting of the Trustees. If so
designated, such Chairman of the Trustees shall also preside at all meetings
of the Shareholders and, subject to the supervision of the Trustees, shall
have general charge and supervision of the business, property and affairs of
the Trust and such other powers and duties as the Trustees may prescribe, and
unless otherwise provided by law, the Declaration, these By-Laws or specific
vote of the Trustees, shall have and may exercise all of the powers given to
the Trustees by the Declaration and by these By-Laws.

SECTION 3.6. Vice Chairmen. If the Trustees shall elect one or more
Vice Chairmen, the Vice Chairman or if there shall be more than one, such Vice
Chairmen in the order of their seniority or as otherwise designated by the
Trustees, shall preside at meetings of the Shareholders and of the Trustees,
and shall exercise such other powers and duties of the Chairman as the
Trustees shall determine.

SECTION 3.7. President. The President shall be the chief
administrative officer of the Trust and, subject to the supervision of the
Chairman, if any, shall have general charge of the operations of the Trust and
general supervision of the personnel of the Trust, and such other powers and
duties as the Trustees or the Chairman, if any, shall prescribe. In the
absence or disability of the Chairman (or if there is none), the President
shall exercise the powers and duties of the Chairman, except to the extent
that the Trustees shall have delegated such

<PAGE>12

powers and duties to the Vice Chairman or Chairmen, if any, and except that he
shall not preside at meetings of the Trustees if he is not himself a Trustee.

SECTION 3.8. Vice Presidents. In the absence or disability of the
President, the Vice President or, if there shall be more than one, the Vice
Presidents in the order of their seniority or as otherwise designated by the
Trustees, shall exercise all of the powers and duties of the President. The
Vice Presidents shall have the power to execute bonds, notes, mortgages and
other contracts, agreements and instruments in the name of the Trust, and
shall do and perform such other duties as the Trustees, the Chairman, if any,
or the President shall direct.

SECTION 3.9. Treasurer and Assistant Treasurers. The Treasurer
shall be the chief financial officer of the Trust, and shall have the custody
of the Trust's funds and Securities, and shall keep full and accurate accounts
of receipts and disbursements in books belonging to the Trust and shall
deposit all moneys, and other valuable effects in the name and to the credit
of the Trust, in such depositories as may be designated by the Trustees,
taking proper vouchers for such disbursements, shall have such other duties
and powers as may be prescribed from time to time by the Trustees or the
Chairman, if any, and shall render to the Trustees, whenever they may require
it, an account of all his transactions as Treasurer and of the financial
condition of the Trust. If no Controller is elected, the Treasurer shall also
have the duties and powers of the Controller, as provided in these By-Laws.
Any Assistant Treasurer shall have such duties and powers as shall be
prescribed from time to time by the Trustees or the Treasurer, and shall be
responsible to and shall report to the Treasurer. In the absence or
disability of the Treasurer, the Assistant Treasurer or, if there shall be
more than one, the Assistant Treasurers in the order of their seniority or as
otherwise designated by the Trustees or the Chairman, if any, shall have the
powers and duties of the Treasurer.

SECTION 3.10. Controller and Assistant Controllers. If a Controller
is elected, he shall be the chief accounting officer of the Trust and shall be
in charge of its books of account and accounting records and of its accounting
procedures, and shall have such duties and powers as are commonly incident to
the office of a controller, and such other duties and powers as may be
prescribed from time to time by the Trustees. The Controller shall be
responsible to and shall report to the Trustees, but in the ordinary conduct
of the Trust's business, shall be under the supervision of the Treasurer. Any
Assistant Controller shall have such duties and powers as shall be prescribed
from time to time by the Trustees or the Controller, and shall be responsible

<PAGE>13

to and shall report to the Controller. In the absence or disability of the
Controller, the Assistant Controller or, there shall be more than one, the
Assistant Controllers in the order of their seniority or as otherwise
designated by the Trustees or the Chairman, if any, shall have the powers and
duties of the Controller.

SECTION 3.11. Secretary and Assistant Secretaries. The Secretary
shall, if and to the extent requested by the Trustees, attend all meetings of
the Trustees, any Committee of the Trustees and/or the Shareholders and record
all votes and the minutes of proceedings in a book to be kept for that
purpose, shall give or cause to be given notice of all meetings of the
Trustees, any Committee of the Trustees, and of the Shareholders and shall
perform such other duties as may be prescribed by the Trustees. The
Secretary, or in his absence any Assistant Secretary, shall affix the Trust's
seal to any instrument requiring it, and when so affixed, it shall be attested
by the signature of the Secretary or an Assistant Secretary. The Secretary
shall be the custodian of the Share records and all other books, records and
papers of the Trust (other than financial) and shall see that all books,
reports, statements, certificates and other documents and records required by
law are properly kept and filed. In the absence or disability of the
Secretary, the Assistant Secretary or, if there shall be more than one, the
Assistant Secretaries in the order of their seniority or as otherwise
designated by the Trustees or the Chairman, if any, shall have the powers and
duties of the Secretary.

SECTION 3.12. Substitutions. In case of the absence or disability
of any officer of the Trust, or for any other reason that the Trustees may
deem sufficient, the Trustees may delegate for the time being the powers or
duties, or any of them, of such officer to any other officer, or to any
Trustee.

SECTION 3.13. Execution of Deeds, etc. Except as the Trustees may
generally or in particular cases otherwise authorize or direct, all deeds,
leases, transfers, contracts, proposals, bonds, notes, checks, drafts and
other obligations made, accepted or endorsed by the Trust shall be signed or
endorsed on behalf of the Trust by the Chairman, if any, the President, one of
the Vice Presidents or the Treasurer.

SECTION 3.14. Power to Vote Securities. Unless otherwise ordered by
the Trustees, the Treasurer and the Secretary each shall have full power and
authority on behalf of the Trust to give proxies for and/or to attend and to
act and to vote at any meeting of stockholders of any corporation in which the
Trust may hold stock, and at any such meeting the Treasurer or the Secretary,
as the case may be, his proxy shall possess and

<PAGE>14

may exercise any and all rights and powers incident to the ownership of such
stock which, as the owner thereof, the Trust might have possessed and
exercised if present. The Trustees, by resolution from time to time, or, in
the absence thereof, either the Treasurer or the Secretary, may confer like
powers upon any other person or persons as attorneys and proxies of the Trust.

ARTICLE 4

COMMITTEES

SECTION 4.1. Power of Trustees to Designate Committees. The
Trustees, by vote of a Majority of the Trustees, may elect from their number
an Executive Committee and any other Committees and may delegate thereto some
or all of their powers except those which by law, by the Declaration or by
these By-Laws may not be delegated; provided, that the Executive Committee
shall not be empowered to elect the Chairman of the Trustees, if any, the
President, the Treasurer or the Secretary, to amend the By-Laws, to exercise
the powers of the Trustees under this Section 4.1 or under Section 4.3 hereof,
or to perform any act for which the action of a Majority of the Trustees is
required by law, by the Declaration or by these By-Laws. The members of any
such Committee shall serve at the pleasure of the Trustees.

SECTION 4.2. Rules for Conduct of Committee Affairs. Except as
otherwise provided by the Trustees, each Committee elected or appointed
pursuant to this Article 4 may adopt such standing rules and regulations for
the conduct of its affairs as it may deem desirable, subject to review and
approval of such rules and regulations by the Trustees at the next succeeding
meeting of the Trustees, but in the absence of any such action or any contrary
provisions by the Trustees, the business of each Committee shall be conducted,
so far as practicable, in the same manner as provided herein and in the
Declaration for the Trustees.

SECTION 4.3. Trustees May Alter, Abolish, etc., Committees. The
Trustees may at any time alter or abolish any Committee, change the membership
of any Committee, or revoke, rescind or modify any action of any Committee or
the authority of any Committee with respect to any matter or class of
matters; provided, that no such action shall impair the rights of any third
parties.

SECTION 4.4. Minutes; Review by Trustees. Any Committee to which
the Trustees delegate any of their powers or duties shall keep records of its
meetings and shall report its actions to the Trustees.

<PAGE>15

ARTICLE 5

SEAL

The seal of the Trust shall consist of a flat-faced circular die with
the word "Massachusetts", together with the name of the Trust, the words
"Trust Seal", and the year of its organization cut or engraved thereon, but,
unless otherwise required by the Trustees, the seal shall not be necessary to
be placed on, and its absence shall not impair the validity of, any document,
instrument or other paper executed and delivered by or on behalf of the Trust.

ARTICLE 6

SECTION 6.1. Issuance of Shares. The Trustees may issue Shares of
any or all Series either in certificated or uncertificated form, they may
issue certificates to the holders of shares of a Series which was originally
issued in uncertificated form, and if they have issued Shares of any Series in
certificated form, they may at any time discontinue the issuance of Share
certificates for such Series and may, by written notice to such Shareholders
of such Series require the surrender of their Share certificates to the Trust
for cancellation, which surrender and cancellation shall not affect the
ownership of Shares for such Series.

SECTION 6.2. Uncertificated Shares. For any Series of Shares for
which the Trustees issue Shares without certificates, the Trust or the
Transfer Agent may either issue receipts therefor or may keep accounts upon
the books of the Trust for the record holders of such Shares, who shall in
either case be deemed, for all purposes hereunder, to be the holders of such
Shares as if they had received certificates therefor and shall be held to have
expressly assented and agreed to the terms hereof and of the Declaration.

SECTION 6.3. Share Certificates. For any Series of Shares for which
the Trustees shall issue Share certificates, each Shareholder of such Series
shall be entitled to a certificate stating the number of Shares owned by him
in such form as shall be prescribed from time to time by the Trustees. Such
certificate shall be signed by the Chairman, if any, or a Vice Chairman, if
any, or the President or a Vice-President, and by the Treasurer or an
Assistant Treasurer or the Secretary or an Assistant Secretary of the Trust.
Such signatures may be facsimiles if the certificate is countersigned by a
Transfer Agent, or by a Registrar, other than a Trustee, officer or employee
of the Trust. In case any officer who has signed or

<PAGE>16

whose facsimile signature has been placed on such certificate shall cease to
be such officer before such certificate is issued, it may be issued by the
Trust with the same effect as if he were such officer at the time of its
issue.

SECTION 6.4. Lost, Stolen, etc., Certificates. If any certificate
for certificated Shares shall be lost, stolen, destroyed or mutilated, the
Trustees may authorize the issuance of a new certificate of the same tenor and
for the same number of Shares in lieu thereof. The Trustees shall require the
surrender of any mutilated certificate in respect of which a new certificate
is issued, and may, in their discretion, before the issuance of a new
certificate, require the owner of a lost, stolen or destroyed certificate, or
the owner's legal representative, to make an affidavit or affirmation setting
forth such facts as to the loss, theft or destruction as they deem necessary,
and to give the Trust a bond in such reasonable sum as the Trustees direct, in
order to indemnify the Trust.

SECTION 6.5. Record Transfer of Pledged Shares. A pledgee of Shares
pledged as collateral security shall be entitled to a new certificate in his
name as pledgee, in the case of certificated Shares, or to be registered as
the holder in pledge of such Shares in the case of uncertificated Shares;
provided, that the instrument of pledge substantially describes the debt or
duty that is intended to be secured thereby. Any such new certificate shall
express on its face that it is held as collateral security, and the name of
the pledgor shall be stated thereon, and any such registration of
uncertificated Shares shall be in a form which indicates that the registered
holder holds such Shares in pledge. After such issue or registration, and
unless and until such pledge is released, such pledgee and his successors and
assigns shall alone be entitled to the rights of a Shareholder, and entitled
to vote such Shares.

ARTICLE 7

CUSTODIAN

The Trust shall at all times employ a bank or trust company having a
capital, surplus and undivided profits of at least Two Million Dollars
($2,000,000) as Custodian of the capital assets of the Trust. The Custodian
shall be compensated for its services by the Trust upon such basis as shall be
agreed upon from time to time between the Trust and the Custodian.

<PAGE>17

ARTICLE 8

AMENDMENTS

SECTION 8.1. By-Laws Subject to Amendment. These By-Laws may be
altered, amended or repealed, in whole or in part, at any time by vote of the
holders of a majority of the Shares (or whenever there shall be more than one
Series of Shares, of the holders of a majority of the Shares of each Series)
issued, outstanding and entitled to vote. The Trustees, by vote of a majority
of the Trustees, may alter, amend or repeal these By-Laws, in whole or in
part, including By-Laws adopted by the Shareholders, except with respect to
any provision hereof which by law, the Declaration or these By-Laws requires
action by the Shareholders. By-Laws adopted by the Trustees may be altered,
amended or repealed by the Shareholders.

SECTION 8.2. Notice of Proposal to Amend By-Laws Required. No
proposal to amend or repeal these By-Laws or to adopt new By-Laws shall be
acted upon at a meeting unless either (i) such proposal is stated in the
notice or in the waiver of notice, as the case may be, of the meeting of the
Trustees or Shareholders at which such action is taken, or (ii) all of the
Trustees or Shareholders, as the case may be, are present at such meeting and
all agree to consider such proposal without protesting the lack of notice.

As adopted, April 5, 1995

<PAGE>1

INVESTMENT ADVISORY AGREEMENT

July 10, 1987

Warburg, Pincus Counsellors, Inc.
466 Lexington Avenue
New York, New York 10017-3147

Dear Sirs:

Counsellors Fixed Income Fund (the "Fund"), a business trust
organized under the laws of the Commonwealth of Massachusetts, herewith
confirms its agreement with Warburg, Pincus Counsellors, Inc. (the "Adviser")
as follows:

1. Investment Description; Appointment

The Fund desires to employ its capital by investing and reinvesting
in investments of the kind and in accordance with the limitations specified in
its Agreement and Declaration or Trust, as may be amended from time to time,
and in its Prospectus and Statement of Additional Information as from time to
time in effect, and in such manner and to such extent as may from time to time
be approved by the Board of Trustees of the Fund. Copies of the Fund's
Prospectus, Statement of Additional Information and Agreement and Declaration
of Trust, as may be amended from time to time, have been or will be submitted
to the Adviser. The Fund desires to employ and hereby appoints the Adviser to
act as investment adviser to its sole portfolio, the Counsellors Fixed Income
Portfolio (hereinafter also referred to as the "Fund"). The Adviser accepts
the appointment and agrees to furnish the services for the compensation set
forth below.

2. Services as Investment Adviser

Subject to the supervision and direction of the Board of Trustees of
the Fund, the Adviser will (a) act in strict conformity with the Fund's
Agreement and Declaration of Trust, the Investment Company Act of 1940 and the
Investment Advisers Act of 1940, as the same may from time to time be amended,
(b) manage the Fund in accordance with the Fund's investment objective and
policies as stated in the Fund's Prospectus and Statement of Additional
Information as from time to time in effect, (c) make investment decisions for
the Fund and (d) place purchase and sale orders for securities on behalf of
the Fund. In providing those services, the Adviser will provide investment
research and supervision of the Fund's investments and conduct a continual
program of investment, evaluation and, if appropriate, sale and

<PAGE>2

reinvestment of the Fund's assets. In addition, the Adviser will furnish the
Fund with whatever statistical information the Fund may reasonably request
with respect to the securities that the Fund may hold or contemplate
purchasing.

3. Brokerage

In executing transactions for the Fund and selecting brokers or
dealers, the Adviser will use its best efforts to seek the best overall terms
available. In assessing the best overall terms available for any portfolio
transaction, the Adviser will consider all factors it deems relevant
including, but not limited to, breadth of the market in the security, the
price of the security, the financial condition and execution capability of the
broker or dealer and the reasonableness of any commission for the specific
transaction and for transactions executed through the broker or dealer in
aggregate. In selecting brokers or dealers to execute a particular
transaction and in evaluating the best overall terms available, the Adviser
may consider the brokerage and research services (as those terms are defined
in Section 28(e) of the Securities Exchange Act of 1934) provided to the Fund
and/or other accounts over which the Adviser or an affiliate exercises
investment discretion.

4. Information Provided to the Fund

The Adviser will keep the Fund informed of developments materially
affecting the Fund, and will, on its own initiative, furnish the Fund from
time to time with whatever information the Adviser believes is appropriate for
this purpose.

5. Standard of Care

The Adviser shall exercise its best judgment in rendering the
services listed in paragraphs 2, 3 and 4 above. The Adviser shall not be
liable for any error of judgment or mistake of law or for any loss suffered by
the Fund in connection with the matters to which this Agreement relates,
provided that nothing herein shall be deemed to protect or purport to protect
the Adviser against any liability to the Fund or to shareholders of the Fund
to which the Adviser would otherwise be subject by reason of willful
misfeasance, bad faith or gross negligence on its part in the performance of
its duties or by reason of the Adviser's reckless disregard of its obligations
and duties under this Agreement.

<PAGE>3

6. Compensation

In consideration of the services rendered pursuant to this
Agreement, the Fund will pay the Adviser an annual fee calculated at an annual
rate of .70 of 1.00% of the Fund's average daily net assets. The fee for the
period from the date the Fund's initial registration statement is declared
effective by the Securities and Exchange Commission to the end of the year
during which the initial registration statement is declared effective shall be
prorated according to the proportion that such period bears to the full yearly
period. Upon any termination of this Agreement before the end of a year, the
fee for such part of that year shall be prorated according to the proportion
that such period bears to the full yearly period and shall be payable upon the
date of termination of this Agreement. For the purpose of determining fees
payable to the Adviser, the value of the Fund's net assets shall be computed
at the times and in the manner specified in the Fund's Prospectus or Statement
of Additional Information as from time to time in effect.

7. Expenses

The Adviser will bear all expenses in connection with the
performance of its services under this Agreement. The Fund will bear certain
other expenses to be incurred in its operation, including: investment advisory
and administration fees; taxes, interest, brokerage fees and commissions, if
any; fees of trustees of the Fund who are not officers, directors, or
employees of the Adviser, Provident National Bank or any of their affiliates;
fees of any pricing service employed to value shares of the Fund; Securities
and Exchange Commission fees and state Blue Sky qualification fees; charges of
custodians and transfer and dividend disbursing agents; the Fund's
proportionate share of insurance premiums; outside auditing and legal
expenses; costs of maintenance of the Fund's existence; costs attributable to
investor services, including, without limitation, telephone and personnel
expenses; costs of preparing and printing prospectuses and statements of
additional information for regulatory purposes and for distribution to
existing shareholders; costs of shareholders' reports and meetings of the
shareholders of the Fund and of the officers or Board of Trustees of the Fund;
and any extraordinary expenses.

The Fund, will be responsible for nonrecurring expenses which may
arise, including costs of litigation to which the Fund is a party and of
indemnifying officers and Trustees of the Fund with respect to such litigation
and other expenses as determined by the Trustees.

<PAGE>4

8. Reimbursement to the Fund

If in any fiscal year the aggregate expenses of the Fund (including
fees pursuant to this Agreement and the Fund's administration agreement, but
excluding interest, taxes, brokerage and, if permitted by state securities
commissions, extraordinary expenses) exceed the expense limitation of any
state having jurisdiction over the Fund, the Adviser will reimburse the Fund
for such excess expense. The Adviser's expenses reimbursement obligation will
be limited to the amount of its fees received pursuant to this Agreement.
Such expense reimbursement, if any, will be estimated, reconciled and paid on
an annual basis.

9. Services to Other Companies or Accounts

The Fund understands that the Adviser now acts, will continue to act
and may act in the future as investment adviser to fiduciary and other managed
accounts and to one or more other investment companies or series of investment
companies, and the Fund has no objection to the Adviser so acting, provided
that whenever the Fund and one or more other accounts or investment companies
or portfolios advised by the Adviser have available funds for investment,
investments suitable and appropriate for each will be allocated in accordance
with a formula believed to be equitable to each entity. The Fund recognizes
that in some cases this procedure may adversely affect the size of the
position obtainable for the Fund. In addition, the Fund understands that the
persons employed by the Adviser to assist in the performance of the Adviser's
duties hereunder will not devote their full time to such service and nothing
contained herein shall be deemed to limit or restrict the right of the Adviser
or any affiliate of the Adviser to engage in and devote time and attention to
other businesses or to render services of whatever kind or nature.

10. Term of Agreement

This Agreement shall continue until April 17, 1989 and thereafter
shall continue automatically for successive annual periods ending on April 17
of each year, provided such continuance is specifically approved at least
annually by (a) the Board of Trustees of the Fund or (b) a vote of a
"majority" (as defined in the Investment Company Act of 1940) of the Fund's
outstanding voting securities, provided that in either event the continuance
is also approved by a majority of the Board of Trustees who are not
"interested persons" (as defined in said Act) of any party to this Agreement,
by vote cast in person at a meeting called for the purpose of voting on such
approval. This Agreement is terminable, without penalty, on 60 days' written
notice, by the Board of Trustees of the Fund or by vote of holders of a
majority of the

<PAGE>5

Fund's shares, or upon 90 days' written notice, by the Adviser. This
Agreement will also terminate automatically in the event of its assignment (as
defined in said Act).

11. Representation by the Fund

The Fund represents that a copy of its Agreement and Declaration of
Trust, dated January 20, 1987, together with all amendments thereto, is on
file in the office of the Secretary of State of the Commonwealth of
Massachusetts.

12. Limitation of Liability

It is expressly agreed that this Agreement was executed by or on
behalf of the Fund and not by the Trustees of the Fund or its officers
individually, and the obligations of the Fund hereunder shall not be binding
upon any of the Trustees, shareholders, nominees, officers, agents or
employees of the Fund individually, but bind only the assets and property of
the Fund, as provided in the Agreement and Declaration of Trust of the Fund.
The execution and delivery of this Agreement have been authorized by the
Trustees and the sale shareholder of the Fund and signed by an authorized
officer of the Fund, acting as such, and neither such authorization by such
Trustees and shareholder nor such execution and delivery by such officer shall
be deemed to have been made by any of them individually or to impose any
liability on any of them personally, but shall bind only the trust property of
the Fund as provided in its Agreement and Declaration of Trust.

13. Miscellaneous

The Fund recognizes that directors, officers and employees of the
Adviser may from time to time serve as directors, trustees, officers and
employees of corporations and business trusts (including other investment
companies) and that such other corporations and trusts may include the name
"Counsellors" or "Counsellors Securities" as part of their names, and that the
Adviser or its affiliates may enter into advisory or other agreements with
such other corporations and trusts. If the Adviser ceases to act as the
investment adviser of the Fund's shares, the Fund agrees that, at the
Adviser's request, the Fund's license to use the word "Counsellors" will
terminate and that the Fund will take all necessary action to change the name
of the Fund to a name not including the word "Counsellors."

<PAGE>6

Please confirm that the foregoing is in accordance with your
understanding by indicating your acceptance hereof at the place below
indicated, whereupon it shall become a binding agreement between us.

Very truly yours,

COUNSELLOR FIXED INCOME FUND

By: /s/ Dale C. Christensen
President
Accepted:

WARBURG, PINCUS COUNSELLORS, INC.

By: /s/ Arnold M. Reichman
Authorized Officer

<PAGE>1

AMENDMENT TO AGREEMENTS

This Amendment is made as of _________________, 1995 among CHASE
MANHATTAN BANK, N.A. (the "Bank"), PNC BANK, NATIONAL ASSOCIATION (the
"Company") and each of the investment companies listed on Schedule A attached
hereto (together the "Funds" and each a "Fund") to amend the Agreement between
the Bank and each of the Funds listed on such Schedule A (each a "Custodian
Agreement").

WITNESSETH:

WHEREAS, the Funds are registered as an open-end management investment
companies under the Investment Company Act of 1940, as amended; and

WHEREAS, the Bank serves as custodian of the Funds' assets pursuant to a
Custodian Agreement;

NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, it is agreed between the parties hereto as follows:

1. Section 9 of each Custodian Agreement is hereby replaced in its
entirety with the following:

9. Instructions. As used in this Agreement, the term "Instructions"
means instructions of the Company received by the Bank, via telephone,
telex, TWX, facsimile transmission, bank wire or other teleprocess or
electronic instruction system acceptable to the Bank which the Bank
believes in good faith to have been given by two Authorized Persons or
which are transmitted with proper testing or authentication pusuant to
terms and conditions which the Bank may specify.

Any instructions delivered to the Bank by telephone shall promptly
thereafter be confirmed in a writing signed by two Authorized Persons
(which confirmation may bear the facsimile signature of such Persons),
but the Fund and the Company will hold the Bank harmless for any failure
on the part of the Fund, the Company or their agents to send such
confirmation in writing, the failure of such confirmation to conform to
the telephone instructions received or the Bank's failure to produce such
confirmation at any subsequent time. Unless otherwise expressly
provided, all Instructions shall continue in full force and effect until
cancelled or superseded. If the Bank requires test arrangements,
authentication methods or other security devices to be used with respect
to Instructions, any Instructions given by the Company thereafter shall
be given and processed in accordance with such terms and conditions for
the use of such arrangements, methods or devices as the Bank may put

<PAGE>14

into effect and modify from time to time. The Company shall safeguard and
shall cause its agents, if applicable, to safeguard any testkeys,
identification codes or other security devices which the Bank shall make
available to it. The Bank may electronically record any instructions given by
telephone, and any other telephone discussions, with respect to the Custody
Account.

2. Except as specifically modified herein, the terms of each Agreement
remain in full force and effect.

IN WITNESS WHEREOF, each of the parties hereto has caused this Amendment
to be executed in its name and on its behalf by its duly authorized
representative as of the date first above written.

COUNSELLORS EMERGING GROWTH
FUND, INC.

WARBURG, PINCUS CAPITAL
APPRECIATION FUND

WARBURG, PINCUS FIXED INCOME
FUND

By:
Name:
Title:

CHASE MANHATTAN BANK, N.A.

By:
Name:
Title:

PNC BANK, NATIONAL ASSOCIATION

By:
Name:
Title:

<PAGE>

SCHEDULE A

FUND CUSTODIAN AGREEMENT
---- DATED
-------------------

Counsellors Emerging
Growth Fund, Inc. July 24, 1988

Warburg, Pincus Capital
Appreciation Fund July 25, 1988

Warburg, Pincus Fixed Income
Fund July 25, 1988

<PAGE>

CONSENT OF COUNSEL

Warburg, Pincus Fixed Income Fund

We hereby consent to being named in the Statement of Additional
Information included in Post-Effective Amendment No. 13 (the "Amendment") to
the Registration Statement on Form N-1A (Securities Act File No. 33-12343,
Investment Company Act File No. 811-5039) of Warburg, Pincus Fixed Income Fund
(the "Fund") under the caption "Auditors and Counsel" and to the Fund's filing
a copy of this Consent as an exhibit to the Amendment.

/s/ Willkie Farr & Gallagher
_______________________________
Willkie Farr & Gallagher

New York, New York
January 12, 1996

<PAGE>1

CONSENT OF INDEPENDENT ACCOUNTANTS

We consent to the inclusion in this Post-Effective Amendment No. 13 to
the Registration Statement under the Securities Act of 1933 on Form N-1A
(File No. 33-12343) of our report dated December 14, 1995 on our audit of
the financial statements and financial highlights of Warburg, Pincus
Fixed Income Fund. We also consent to the reference to our
Firm under the captions "Financial Highlights" and "Auditors and Counsel."

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

2400 Eleven Penn Center
Philadelphia, Pennsylvania
January 16, 1996

<PAGE>1

CONSENT OF INDEPENDENT AUDITORS

We consent to the reference to our firm under the captions "Financial
Highlights" and "Auditors and Counsel" and to the use of our report
dated December 15, 1992 in this Registration Statement (Form N-1A No.
33-12343) of Warburg, Pincus Fixed Income Fund.

/s/ Ernst & Young LLP
ERNST & YOUNG LLP

New York, New York
January 16, 1996

<PAGE>

Warburg Pincus Fixed Income
For the One Year Ended October 31, 1995

Total Return With Waivers:

((11,259-10,000)/10,000) = 12.59%

Total Return Without Waivers:

((11,239-10,000)/10,000) = 12.39%

For the Five Years Ended October 31, 1995

Total Return With Waivers:

((15,992/10,000)[*GRAPHIC OMITTED-SEE FOOTNOTE BELOW] -1) = 9.84%

Total Return Without Waivers:

((15,846/10,000)[*GRAPHIC OMITTED-SEE FOOTNOTE BELOW] -1) = 9.64%

- ----------------------
* - The preceding expression is being raised to the power 1/5.00274

Inception Thru October 31, 1995

Total Return With Waivers:

((19,208/10,000)[*GRAPHIC OMITTED-SEE FOOTNOTE BELOW] -1) = 8.27%

Total Return Without Waivers:

((18,940/10,000)[*GRAPHIC OMITTED-SEE FOOTNOTE BELOW] -1) = 8.09%

- ----------------------
* - The preceding expression is being raised to the power 1/8.21370

30 day SEC Yield at 10/31/95

697,406.53 - 72,128.82
2[( ---------------------- + 1)[*GRAPHIC OMITTED-SEE FOOTNOTE BELOW]- 1]=6.50%
11,626,139.004 x 10.07

- -------------------------
* - The preceding expression is being raised to the 6th power.

<ARTICLE> 6
<CIK> 0000811142
<NAME> WARBURG PINCUS FIXED INCOME FUND

<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> OCT-31-1995
<PERIOD-END> OCT-31-1995
<INVESTMENTS-AT-COST> 114967633
<INVESTMENTS-AT-VALUE> 116243972
<RECEIVABLES> 1971772
<ASSETS-OTHER> 18232
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 118233976
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<OVERDISTRIBUTION-NII> 0
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<APPREC-INCREASE-CURRENT> 4869743
<NET-CHANGE-FROM-OPS> 13457984
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 8013396
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 4918036
<NUMBER-OF-SHARES-REDEEMED> 4609035
<SHARES-REINVESTED> 672751
<NET-CHANGE-IN-ASSETS> 14736790
<ACCUMULATED-NII-PRIOR> (142080)
<ACCUMULATED-GAINS-PRIOR> (1534483)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 555483
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1037377
<AVERAGE-NET-ASSETS> 111096493
<PER-SHARE-NAV-BEGIN> 9.61
<PER-SHARE-NII> .70
<PER-SHARE-GAIN-APPREC> .46
<PER-SHARE-DIVIDEND> .70
<PER-SHARE-DISTRIBUTIONS> 0
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<PER-SHARE-NAV-END> 10.07
<EXPENSE-RATIO> .75
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>