WARBURG PINCUS TRUST, 497, 1996-07-03

WARBURG PINCUS TRUST
497, 1996-07-03

Previous: FIRST OF AMERICA BANK-MICHIGAN NA, 10-K, 1996-07-03

Next: DADE INTERNATIONAL INC, 15-12G, 1996-07-03

<PAGE>
<PAGE>
PROSPECTUS
July 2, 1996
WARBURG PINCUS TRUST
EMERGING MARKETS PORTFOLIO
POST-VENTURE CAPITAL PORTFOLIO

Warburg Pincus Trust shares are not available directly to
individual investors but may be offered only through certain
insurance products and pension and retirement plans.

[Logo]

<PAGE>
<PAGE>
PROSPECTUS July 2, 1996

Warburg Pincus Trust (the 'Trust') is an open-end management investment company
that currently offers four investment funds, two of which, the Emerging Markets
Portfolio and the Post-Venture Capital Portfolio, are offered pursuant to this
Prospectus (the 'Portfolios'):

EMERGING MARKETS PORTFOLIO seeks long-term growth of capital by investing
primarily in equity securities of non-United States issuers consisting of
companies in emerging securities markets. International investment entails
special risk considerations, including currency fluctuations, lower liquidity,
economic instability, political uncertainty and differences in accounting
methods.

POST-VENTURE CAPITAL PORTFOLIO seeks long-term growth of capital by investing
primarily in equity securities of issuers in their post-venture capital stage of
development and pursues an aggressive investment strategy. Because of the nature
of the Post-Venture Capital Portfolio's investments and certain strategies it
may use, an investment in the Portfolio involves certain risks and may not be
appropriate for all investors.

Only shares of the Post-Venture Capital Portfolio are currently being offered.
Shares of a Portfolio are not available directly to individual investors but may
be offered only to certain (i) life insurance companies ('Participating
Insurance Companies') for allocation to certain of their separate accounts
established for the purpose of funding variable annuity contracts and variable
life insurance contracts (together, 'Variable Contracts') and (ii) tax-qualified
pension and retirement plans ('Plans'), including participant-directed Plans
which elect to make a Portfolio an investment option for Plan participants. A
Portfolio may not be available in every state due to various insurance
regulations.

This Prospectus briefly sets forth certain information about the Portfolios that
investors should know before investing. Investors are advised to read this
Prospectus and retain it for future reference. This Prospectus should be read in
conjunction with the prospectus of the separate account of the specific
insurance product that accompanies this Prospectus or with the Plan documents or
other informational materials supplied by Plan sponsors. Additional information
about each Portfolio, 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 the Trust at (800) 369-2728.
The Statement of Additional Information, as amended from time to time, bears the
same date as this Prospectus and is incorporated by reference in its entirety
into this Prospectus.
- --------------------------------------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION
OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY
OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
- --------------------------------------------------------------------------------

<PAGE>
<PAGE>
THE TRUST'S EXPENSES
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
Emerging Markets Post-Venture
Portfolio Capital Portfolio
---------------- -----------------
<S> <C> <C>
Shareholder Transaction Expenses
Maximum Sales Load Imposed on Purchases (as a
percentage of offering price)....................... 0 0
Annual Fund Operating Expenses (as a percentage of average
net assets)
Management Fees....................................... .60% .64%
12b-1 Fees............................................ 0 0
Other Expenses*....................................... .80% .76%
--- ---
Total Portfolio Operating Expenses (after fee waivers
and expense reimbursements)*........................ 1.40% 1.40%
</TABLE>

<TABLE>
<CAPTION>
EXAMPLE
<S> <C> <C>
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................................................. $ 14 $ 14
3 years................................................ $ 44 $ 44
</TABLE>

- --------------------------------------------------------------------------------
* Absent the anticipated waiver of fees by the Portfolios' investment adviser
and co-administrator, Management Fees for the Emerging Markets Portfolio and
the Post-Venture Captial Portfolio would each equal 1.25%; Other Expenses
would equal .75% and .81%, respectively; and Total Portfolio Operating
Expenses would equal 2.00% and 2.06%, respectively. Other Expenses for each
Portfolio are based on annualized estimates of expenses for the fiscal year
ending December 31, 1996, net of any fee waivers or expense reimbursements.
The investment adviser has undertaken to limit each Portfolio's Total
Portfolio Operating Expenses through December 31, 1996.

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

The expense table shows the costs and expenses that an investor will bear
directly or indirectly as a shareholder of a Portfolio. THE TABLE DOES NOT
REFLECT ADDITIONAL CHARGES AND EXPENSES WHICH ARE, OR MAY BE, IMPOSED UNDER THE
VARIABLE CONTRACTS OR PLANS; SUCH CHARGES AND EXPENSES ARE DESCRIBED IN THE
PROSPECTUS OF THE SPONSORING PARTICIPATING INSURANCE COMPANY SEPARATE ACCOUNT OR
IN THE PLAN DOCUMENTS OR OTHER INFORMATIONAL MATERIALS SUPPLIED BY PLAN
SPONSORS. The Example should not be considered a representation of past or
future expenses; actual Portfolio expenses may be greater or less than those
shown. Moreover, while the Example assumes a 5% annual return, each Portfolio's
actual performance will vary and may result in a return greater or less than 5%.

<PAGE>
<PAGE>
INVESTMENT OBJECTIVES AND POLICIES
- --------------------------------------------------------------------------------

The investment objective of the Emerging Markets Portfolio and the
Post-Venture Capital Portfolio is to seek long-term growth of capital.

Each Portfolio'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 Portfolio. Any investment involves risk and, therefore, there can be no
assurance that any Portfolio will achieve its investment objective. See
'Portfolio Investments' and 'Certain Investment Strategies' for descriptions of
certain types of investments the Portfolios may make.

EMERGING MARKETS PORTFOLIO

The Emerging Markets Portfolio is a non-diversified portfolio that pursues
its investment objective by investing primarily in equity securities of
non-United States issuers consisting of companies in emerging securities
markets. An investment in the Portfolio may involve a greater degree of risk
than investment in other mutual funds that seek capital growth by investing in
larger, more developed markets.

Under normal market conditions, the Portfolio will invest at least 65% of its
total assets in equity securities of issuers in Emerging Markets (as defined
below), and the Portfolio intends to acquire securities of many issuers located
in a number of foreign countries. The Portfolio will not necessarily seek to
diversify investments on a geographical basis or on the basis of the level of
economic development of any particular country. However, the Portfolio will at
all times, except during defensive periods, maintain investments in at least
three countries outside the United States. An equity security of an issuer in an
Emerging Market is defined as common stock and preferred stock (including
convertible preferred stock); bonds, notes and debentures convertible into
common or preferred stock; stock purchase warrants and rights; equity interests
in trusts and partnerships; and depositary receipts of an issuer: (i) the
principal securities trading market for which is in an Emerging Market; (ii)
which derives at least 50% of its revenues or earnings, either alone or on a
consolidated basis, from goods produced or sold, investments made or services
performed in an Emerging Market, or which has at least 50% of its total or net
assets situated in one or more Emerging Markets; or (iii) that is organized
under the laws of, and with a principal office in, an Emerging Market.
Determinations as to whether an issuer is an Emerging Markets issuer will be
made by Warburg, Pincus Counsellors, Inc., the Portfolio's investment adviser
('Warburg'), based on publicly available information and inquiries made to the
issuers.

As used in this Prospectus, an Emerging Market is any country (i) which is
generally considered to be an emerging or developing country by the World Bank
and the International Finance Corporation (the 'IFC') or by the United

<PAGE>
<PAGE>
Nations Development Programme or (ii) which is included in the IFC Investable
Index or the Morgan Stanley Capital International Emerging Markets Index or
(iii) which has a gross national product ('GNP') per capita of $2,000 or less,
in each case at the time of the Portfolio's investment. Among the countries
which Warburg currently considers to be Emerging Markets are the following:
Algeria, Angola, Antigua, Argentina, Armenia, Azerbaijan, Bangladesh, Barbados,
Barbuda, Belarus, Belize, Bhutan, Bolivia, Botswana, Brazil, Bulgaria, Cambodia,
Chile, People's Republic of China, Republic of China (Taiwan), Colombia, Cyprus,
Czech Republic, Dominica, Ecuador, Egypt, Estonia, Georgia, Ghana, Greece,
Grenada, Guyana, Hong Kong, Hungary, India, Indonesia, Israel, Ivory Coast,
Jamaica, Jordan, Kazakhstan, Kenya, Republic of Korea (South Korea), Latvia,
Lebanon, Lithuania, Malawi, Malaysia, Mauritius, Mexico, Moldova, Mongolia,
Montserrat, Morocco, Mozambique, Myanmar (Burma), Namibia, Nepal, Nigeria,
Pakistan, Panama, Papua New Guinea, Paraguay, Peru, Philippines, Poland,
Portugal, Romania, Russia, Saudi Arabia, Singapore, Slovakia, Slovenia, South
Africa, Sri Lanka, St. Kitts and Nevis, St. Lucia, St. Vincent and the
Grenadines, Swaziland, Tanzania, Thailand, Trinidad and Tobago, Tunisia, Turkey,
Turkmenistan, Uganda, Ukraine, Uruguay, Uzbekistan, Venezuela, Vietnam,
Yugoslavia, Zambia and Zimbabwe. Among the countries that will not be considered
Emerging Markets are: Australia, Austria, Belgium, Canada, Denmark, Finland,
France, Germany, Ireland, Italy, Japan, Luxembourg, Netherlands, New Zealand,
Norway, Spain, Sweden, Switzerland, United Kingdom and the United States.

The Portfolio may invest in securities of companies of any size, whether
traded on or off a national securities exchange. Portfolio holdings may include
emerging growth companies, which are small- or medium-sized companies that have
passed their start-up phase and that show positive earnings and prospects for
achieving profit and gain in a relatively short period of time.

In appropriate circumstances, such as when a direct investment by the
Portfolio in the securities of a particular country cannot be made or when the
securities of an investment company are more liquid than the underlying
portfolio securities, the Portfolio may, consistent with the provisions of the
Investment Company Act of 1940, as amended (the '1940 Act'), invest in the
securities of closed-end investment companies that invest in foreign securities.
As a shareholder in a closed-end investment company, the Portfolio will bear its
ratable share of the investment company's expenses, including management fees,
and will remain subject to payment of the Portfolio's administration fees and
other expenses with respect to assets so invested.

POST-VENTURE CAPITAL PORTFOLIO

Because of the nature of the Post-Venture Capital Portfolio's investments and
certain strategies it may use, such as investing in Private Funds (as defined
below),

<PAGE>
<PAGE>
an investment in the Portfolio should be considered only for the aggressive
portion of an investor's portfolio and may not be appropriate for all investors.

The Post-Venture Capital Portfolio is a diversified portfolio that pursues
its investment objective by investing primarily in equity securities of
companies considered by Warburg, the Portfolio's investment adviser, to be in
their post-venture capital stage. Although the Portfolio may invest up to 10% of
its assets in venture capital and other investment funds, the Portfolio is not
designed primarily to provide venture capital financing. Rather, under normal
market conditions, the Portfolio will invest at least 65% of its total assets in
equity securities of 'post-venture capital companies.' A post-venture capital
company is a company that has received venture capital financing either (a)
during the early stages of the company's existence or the early stages of the
development of a new product or service or (b) as part of a restructuring or
recapitalization of the company. The investment of venture capital financing,
distribution of such company's securities to venture capital investors, or
initial public offering ('IPO'), whichever is later, will have been made within
ten years prior to the Portfolio's purchase of the company's securities.

Warburg believes that venture capital participation in a company's capital
structure can lead to revenue/earnings growth rates above those of older, public
companies such as those in the Dow Jones Industrial Average or the Fortune 500.
Venture capitalists finance start-up companies, companies in the early stages of
developing new products or services and companies undergoing a restructuring or
recapitalization, since these companies may not have access to conventional
forms of financing (such as bank loans or public issuances of stock). Venture
capitalists may hold substantial positions in companies that may have been
acquired at prices significantly below the initial public offering price. This
may create a potential adverse impact in the short-term on the market price of a
company's stock due to sales in the open market by a venture capitalist or
others who acquired the stock at lower prices prior to the company's IPO.
Warburg will consider the impact of such sales in selecting post-venture capital
investments. Venture capitalists may be individuals or funds organized by
venture capitalists which are typically offered only to large institutions, such
as pension funds and endowments, and certain accredited investors. Venture
capital participation in a company is often reduced when the company engages in
an IPO of its securities or when it is involved in a merger, tender offer or
acquisition.

Warburg has experience in researching smaller companies, companies in the
early stages of development and venture capital-financed companies. Its team of
analysts, led by Elizabeth Dater and Stephen Lurito, regularly monitors
portfolio companies whose securities are held by over 250 of the larger domestic
venture capital funds. Ms. Dater and Mr. Lurito have managed post-venture equity
securities in separate accounts for institutions since 1989 and currently manage
over $1 billion of such assets for institutions.

<PAGE>
<PAGE>
The Portfolio will invest in securities of post-venture capital companies that
are traded on a national securities exchange or in an organized over-the-counter
market.

Private Fund Investments. Up to 10% of the Post-Venture Capital Portfolio's
assets may be invested in United States or foreign private limited partnerships
or other investment funds ('Private Funds') that themselves invest in equity or
debt securities of (a) companies in the venture capital or post-venture capital
stages of development or (b) companies engaged in special situations or changes
in corporate control, including buyouts. In selecting Private Funds for
investment, Abbott Capital Management, L.P., the Portfolio's sub-investment
adviser with respect to Private Funds ('Abbott'), attempts to invest in a mix of
Private Funds that will provide an above average internal rate of return (i.e.,
the discount rate at which the present value of an investment's future cash
inflows (dividend income and capital gains) are equal to the cost of the
investment). Warburg believes that the Portfolio's investments in Private Funds
offers individual investors a unique opportunity to participate in venture
capital and other private investment funds, providing access to investment
opportunities typically available only to large institutions and accredited
investors. Although the Portfolio's investments in Private Funds are limited to
a maximum of 10% of the Portfolio's assets, these investments are highly
speculative and volatile and may produce gains or losses in this portion of the
Portfolio that exceed those of the Portfolio's other holdings and of more mature
companies generally.

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

<PAGE>
<PAGE>
Information Concerning Taxes -- Investment in Passive Foreign Investment
Companies' in the Statement of Additional Information.

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

Other Strategies. The Post-Venture Capital Portfolio may invest up to 35% of
its assets in exchange-traded and over-the-counter securities that do not meet
the definition of post-venture capital companies without regard to market
capitalization. Up to 10% of the Portfolio's assets may be invested, directly or
through Private Funds, in securities of issuers engaged at the time of purchase
in 'special situations,' such as a restructuring or recapitalization; an
acquisition, consolidation, merger or tender offer; a change in corporate
control or investment by a venture capitalist.

To attempt to reduce risk, the Portfolio will diversify its investments over
a broad range of issuers operating in a variety of industries. The Portfolio may
hold securities of companies of any size, and will not limit capitalization of
companies it selects to invest in. However, due to the nature of the venture
capital to post-venture cycle, the Portfolio anticipates that the average market
capitalization of companies in which it invests will be less than $1 billion at
the time of investment. Although the Portfolio will invest primarily in U.S.
companies, up to 20% of the Portfolio's assets may be invested in securities of
issuers located in any foreign country. Equity securities in which the Portfolio
will invest are common stock, preferred stock, warrants, securities convertible
into or exchangeable for common stock and partnership interests. The Portfolio
may engage in a variety of strategies to reduce risk or seek to enhance return,
including engaging in short selling (see 'Certain Investment Strategies').

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

DEBT. The Post-Venture Capital Portfolio may invest up to 20% of its total
assets in investment grade debt securities (other than money market obligations)
for the purpose of seeking growth of capital. The Emerging Markets Portfolio may
invest up to 35% of its total assets in debt securities (other than money market
obligations) for the purpose of seeking growth of capital. The interest income
to be derived may be considered as one factor in selecting debt securities for
investment by Warburg. Because the market value of debt obligations can be
expected to vary inversely to changes in prevailing interest rates, investing in
debt obligations may provide an opportunity for capital growth when interest
rates are expected to decline. The success of

<PAGE>
<PAGE>
such a strategy is dependent upon Warburg's ability to accurately forecast
changes in interest rates. The market value of debt obligations may also be
expected to vary depending upon, among other factors, the ability of the issuer
to repay principal and interest, any change in investment rating and general
economic conditions.

A security will be deemed to be investment grade if it is rated within the
four highest grades by Moody's or S&P or, if unrated, is determined to be of
comparable quality by Warburg. Bonds rated in the fourth highest grade may have
speculative characteristics and changes in economic conditions or other
circumstances are more likely to lead to a weakened capacity to make principal
and interest payments than is the case with higher grade bonds. Subsequent to
its purchase by a Portfolio, an issue of securities may cease to be rated or its
rating may be reduced below the minimum required for purchase by the Portfolio.
Neither event will require sale of such securities, although Warburg will
consider such event in its determination of whether the Portfolio should
continue to hold the securities.

When Warburg believes that a defensive posture is warranted, each Portfolio
may invest temporarily without limit in investment grade debt obligations and in
domestic and foreign money market obligations, including repurchase agreements.
When such a defensive posture is warranted, the Emerging Markets Portfolio may
also invest temporarily without limit in other securities of U.S. companies.

Emerging Markets Portfolio. The Emerging Markets Portfolio may invest or hold
up to 35% of its net assets in fixed-income securities (including convertible
bonds) rated below investment grade (commonly referred to as 'junk bonds') and
as low as C by Moody's or D by S&P, or 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.

Among the types of debt securities in which the Emerging Markets Portfolio
may invest are Brady Bonds, loan participations and assignments, asset-backed
securities and mortgage-backed securities:

Brady Bonds are collateralized or uncollateralized securities created through
the exchange of existing commercial bank loans to public and private Latin
American entities for new bonds in connection with certain debt restructurings.
Brady Bonds have been issued only recently and therefore do not have a long
payment history. However, in light of the history of commercial bank loan
defaults by Latin American public and private entities, investments in Brady
Bonds may be viewed as speculative.

Loan Participations and Assignments of fixed and floating rate loans arranged
through private negotiations between a foreign government as borrower and one or
more financial institutions as lenders will typically result in the Emerging
Markets Portfolio having a contractual relationship only with the

<PAGE>
<PAGE>
lender, in the case of a participation, or the borrower, in the case of an
assignment. The Portfolio may not directly benefit from any collateral
supporting a participation, and in the event of the insolvency of a lender will
be treated as a general creditor of the lender. As a result, the Portfolio
assumes the risk of both the borrower and the lender of a participation. The
Portfolio's rights and obligations as the purchaser of an assignment may differ
from, and be more limited than, those held by the assigning lender. The lack of
a liquid secondary market for both participations and assignments will have an
adverse impact on the value of such securities and on the Portfolio's ability to
dispose of participations or assignments.

Asset-backed securities are collateralized by interests in pools of consumer
loans, with interest and principal payments ultimately depending on payments in
respect of the underlying loans by individuals (or a financial institution
providing credit enhancement). Because market experience in these securities is
limited, the market's ability to sustain liquidity through all phases of the
market cycle had not been tested. In addition, there is no assurance that the
security interest in the collateral can be realized. The Portfolio may purchase
asset-backed securities that are unrated.

Mortgage-backed securities are collateralized by mortgages or interests in
mortgages and may be issued by government or non-government entities.
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 mortgage-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. Prepayment, which
occurs when unscheduled or early payments are made on the underlying mortgages,
may shorten the effective maturities of these securities and may lower their
returns.

MONEY MARKET OBLIGATIONS. Each Portfolio is authorized to invest, under
normal market conditions, up to 20% of its total assets in domestic and foreign
short-term (one year or less remaining to maturity) and medium-term (five years
or less remaining to maturity) money market obligations and, for temporary
defensive purposes, may invest in these securities without limit. These
instruments consist of obligations issued or guaranteed by the U.S. government
or a foreign government, their agencies or instrumentalities; bank obligations
(including certificates of deposit, time deposits and bankers' acceptances of
domestic or foreign banks, domestic savings and loans and similar institutions)
that are high quality investments or, if unrated, deemed by Warburg to be high
quality investments; commercial paper rated no lower than A-2 by S&P or Prime-2
by Moody's or the equivalent from another major rating service or, if unrated,
of an issuer having an outstanding, unsecured debt issue then rated within the
three highest rating categories; and repurchase agreements with respect to the
foregoing.

<PAGE>
<PAGE>
Repurchase Agreements. The Portfolios may invest in repurchase agreement
transactions with member banks of the Federal Reserve System and certain
non-bank dealers. Repurchase agreements are contracts under which the buyer of a
security simultaneously commits to resell the security to the seller at an
agreed-upon price and date. Under the terms of a typical repurchase agreement, a
Portfolio 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 Portfolio to resell, the obligation at an agreed-upon price
and time, thereby determining the yield during the Portfolio's holding period.
This arrangement results in a fixed rate of return that is not subject to market
fluctuations during the Portfolio'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 Portfolio 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 Portfolio is delayed or prevented from
exercising its right to dispose of the collateral securities, including the risk
of a possible decline in the value of the underlying securities during the
period in which the Portfolio seeks to assert this right. Warburg, acting under
the supervision of the Trust's Board of Trustees (the 'Board'), monitors the
creditworthiness of those bank and non-bank dealers with which each Portfolio
enters into repurchase agreements to evaluate this risk. A repurchase agreement
is considered to be a loan under the 1940 Act.

Money Market Mutual Funds. Where Warburg believes that it would be beneficial
to the Portfolio and appropriate considering the factors of return and
liquidity, each Portfolio may invest up to 5% of its assets in securities of
money market mutual funds that are unaffiliated with the Portfolio, Warburg, the
Portfolios' co-administrator, PFPC Inc. ('PFPC') or, in the case of the
Post-Venture Capital Portfolio, with Abbott. As a shareholder in any mutual
fund, a Portfolio will bear its ratable share of the mutual fund's expenses,
including management fees, and will remain subject to payment of the Portfolio's
administrative 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 Portfolio may invest include: direct obligations of the
U.S. Treasury, obligations issued by U.S. government agencies and
instrumentalities, including instruments that are supported by the full faith
and credit of the United States, instruments that are supported by the right of
the issuer to borrow from the U.S. Treasury and instruments that are supported
by the credit of the instrumentality.

CONVERTIBLE SECURITIES. Convertible securities in which a Portfolio 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

<PAGE>
<PAGE>
investor to benefit from increases in the market price of the underlying common
stock. Convertible securities provide higher yields than the underlying equity
securities, but generally offer lower yields than non-convertible securities of
similar quality. The value of convertible securities fluctuates in relation to
changes in interest rates like bonds and, in addition, fluctuates in relation to
the underlying common stock. Subsequent to purchase by a Portfolio, convertible
securities may cease to be rated or a rating may be reduced below the minimum
required for purchase by the Portfolio. Neither event will require sale of such
securities, although Warburg will consider such event in its determination of
whether the Portfolio should continue to hold the securities.

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

Investing in common stocks and securities convertible into common stocks is
subject to the inherent risk of fluctuations in the prices of such securities.
For certain additional risks relating to each Portfolio's investments, see
'Portfolio Investments' beginning at page 7 and 'Certain Investment Strategies'
beginning at page 14.

EMERGING MARKETS. The Emerging Markets Portfolio may invest in securities of
issuers located in less developed countries considered to be 'emerging markets.'
Investing in securities of issuers located in emerging markets involves not only
the risks described below, with respect to investing in foreign securities, but
also other risks, including exposure to economic structures that are generally
less diverse and mature than, and to political systems that can be expected to
have less stability than, those of developed countries. Other characteristics of
emerging markets that may affect investment there include certain national
policies that may restrict investment by foreigners in issuers or industries
deemed sensitive to relevant national interests and the absence of developed
legal structures governing private and foreign investments and private property.
The typically small size of the markets for securities of issuers located in
emerging markets and the possibility of a low or nonexistent volume of trading
in those securities may also result in a lack of liquidity and in price
volatility of those securities.

<PAGE>
<PAGE>
small- and medium-sized companies than for larger, more established ones.
Securities of issuers in 'special situations' also may be more volatile, since
the market value of these securities may decline in value if the anticipated
benefits do not materialize. Companies in 'special situations' include, but are
not limited to, companies involved in an acquisition or consolidation;
reorganization; recapitalization; merger, liquidation or distribution of cash,
securities or other assets; a tender or exchange offer; a breakup or workout of
a holding company; litigation which, if resolved favorably, would improve the
value of the companies' securities; or a change in corporate control. Although
investing in securities of emerging growth companies or 'special situations'
offers potential for above-average returns if the companies are successful, the
risk exists that the companies will not succeed and the prices of the companies'
shares could significantly decline in value. Therefore, an investment in a
Portfolio may involve a greater degree of risk than an investment in other
mutual funds that seek capital growth by investing in better-known, larger
companies.

NON-PUBLICLY TRADED SECURITIES; RULE 144A SECURITIES. The Portfolios 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'). An investment in Rule 144A Securities will be considered illiquid
and therefore subject to each Portfolio's limitation on the purchase of illiquid
securities, unless the Board determines on an ongoing basis that an adequate
trading market exists for the security. In addition to an adequate trading
market, the Board will 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 Portfolios
to the extent that qualified institutional buyers become uninterested for a time
in purchasing Rule 144A Securities. The Board will carefully monitor any
investments by the Portfolios in Rule 144A Securities. The Board may adopt
guidelines and delegate to Warburg the daily function of determining and
monitoring the liquidity of Rule 144A Securities, although the Board will retain
ultimate responsibility for any determination regarding liquidity.

Non-publicly traded securities (including Rule 144A Securities and interests
in Private Funds) may involve a high degree of business and financial risk and
may result in substantial losses. The securities may be less liquid than
publicly traded securities and a Portfolio 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
Portfolio. Further, companies whose securities are not publicly traded are not
subject to the disclosure and other investor protection requirements that would
be applicable if their securities were publicly traded. A Portfolio's investment
in illiquid securities is subject to the risk that should the Portfolio

<PAGE>
<PAGE>
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
Portfolio's net assets could be adversely affected.

NON-DIVERSIFIED STATUS. The Emerging Markets Portfolio is classified as
non-diversified under the 1940 Act, which means that the Portfolio is not
limited by the 1940 Act in the proportion of its assets that it may invest in
the obligations of a single issuer. The Portfolio 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. Being
non-diversified means that the Portfolio may invest a greater proportion of its
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 Portfolio assumes large positions in the securities of a small number of
issuers, its 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. The Emerging Markets Portfolio may invest or hold
lower-rated and comparable unrated securities (commonly referred to as 'junk
bonds') which (i) will likely have some quality and protective characteristics
that, in the judgment of the rating organizations, 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. Private Fund
investments of the Post-Venture Capital Portfolio may also hold lower-rated and
comparable unrated 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. 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 rating categories is more volatile
than that of higher quality securities. In addition, the Portfolio 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 Portfolio's ability to dispose of particular
issues and may make it more difficult for the Portfolio to obtain accurate
market quotations for purposes of valuing the Portfolio and calculating its net
asset value.

<PAGE>
<PAGE>
PORTFOLIO TRANSACTIONS AND TURNOVER RATE
- --------------------------------------------------------------------------------

A Portfolio 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 Portfolio. The
Portfolios will not consider portfolio turnover rate a limiting factor in making
investment decisions consistent with their investment objectives and policies.
It is not possible to predict the Portfolios' turnover rate. However, it is
anticipated that each Portfolio's annual turnover rate should not exceed 100%.
High portfolio turnover rates (100% or more) may result in dealer mark ups or
underwriting commissions as well as other transaction costs, including
correspondingly higher brokerage commissions. In addition, short-term gains
realized from portfolio turnover may be taxable to shareholders as ordinary
income. See 'Dividends, Distributions and Taxes -- Taxes' below and 'Investment
Policies -- Portfolio Transactions' in the Statement of Additional Information.

All orders for transactions in securities or options on behalf of a Portfolio
are placed by Warburg with broker-dealers that it selects, including Counsellors
Securities Inc., the Portfolios' distributor ('Counsellors Securities'). A
Portfolio 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
Portfolio is authorized to engage in the following investment strategies: (i)
purchasing securities on a when-issued basis and purchasing or selling
securities for delayed-delivery, (ii) lending portfolio securities and (iii)
entering into reverse repurchase agreements and dollar rolls. The Emerging
Markets Portfolio may also invest in zero coupon securities and stand-by
commitments, although the Portfolio currently anticipates that during the coming
year zero coupon securities or stand-by commitments will not exceed 5% of net
assets. Detailed information concerning these strategies and their related risks
is contained below and in the Statement of Additional Information.

FOREIGN SECURITIES. The Emerging Markets Portfolio will ordinarily hold no
less than 65% of its total assets in foreign securities, and the Post-Venture
Capital Portfolio may invest up to 20% of its total assets 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 U.S. 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

<PAGE>
<PAGE>
restrictions, reduced availability of public information concerning issuers, the
lack of uniform accounting, auditing and financial reporting standards and other
regulatory practices and requirements that are often generally less rigorous
than those applied in the United States. Moreover, securities of many foreign
companies may be less liquid and their prices more volatile than those of
securities of comparable U.S. companies. Certain foreign countries are known to
experience long delays between the trade and settlement dates of securities
purchased or sold. In addition, with respect to certain foreign countries, there
is the possibility of expropriation, nationalization, confiscatory taxation and
limitations on the use or removal of funds or other assets of the Portfolios,
including the withholding of dividends. Foreign securities may be subject to
foreign government taxes that would reduce the net yield on such securities.
Moreover, individual foreign economies may differ favorably or unfavorably from
the U.S. economy in such respects as growth of gross national product, rate of
inflation, capital reinvestment, resource self-sufficiency and balance of
payments positions. Investment in foreign securities will also result in higher
operating expenses due to the cost of converting foreign currency into U.S.
dollars, the payment of fixed brokerage commissions on foreign exchanges, which
generally are higher than commissions on U.S. exchanges, higher valuation and
communications costs and the expense of maintaining securities with foreign
custodians. The risks associated with investing in securities of non-U.S.
issuers are generally heightened for investments in securities of issuers in
emerging markets.

OPTIONS, FUTURES AND CURRENCY TRANSACTIONS. At the discretion of Warburg,
each Portfolio 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 a Portfolio'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 PORTFOLIO'S INVESTMENT RISK. Transaction
costs and any premiums associated with these strategies, and any losses
incurred, will affect a Portfolio's net asset value and performance. Therefore,
an investment in a Portfolio may involve a greater risk than an investment in
other mutual funds that do not utilize these strategies. A Portfolio's 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 Stock Index Options. The Post-Venture Capital Portfolio may
write put and call options on up to 25% of the net asset value of the stock and
debt securities in its portfolio and will realize fees (referred to as
'premiums') for granting the rights evidenced by the options. Each Portfolio may
utilize up to 10% of its assets to purchase options on stocks and debt
securities that are traded on U.S. and foreign exchanges, as well as

<PAGE>
<PAGE>
over-the-counter ('OTC') options. The purchaser of a put option on a security
has the right to compel the purchase by the writer of the underlying security,
while the purchaser of a call option has the right to purchase the underlying
security from the writer. In addition to purchasing and writing options on
securities, the Emerging Markets Portfolio and the Post-Venture Capital
Portfolio may also utilize up to 15% and 10%, respectively, of its total assets
to purchase exchange-listed and OTC put and call options on stock indexes, and
may also write such options. A stock index measures the movement of a certain
group of stocks by assigning relative values to the common stocks included in
the index.

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

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

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

Currency Exchange Transactions. Each Portfolio will conduct its currency
exchange transactions either (i) on a spot (i.e., cash) basis at the rate
prevailing in the currency exchange market, (ii) through entering into futures
contracts or options on futures contracts (as described above), (iii) through
entering into forward contracts to purchase or sell currency or (iv) by
purchasing exchange-traded currency options. A forward currency contract
involves an obligation to purchase or sell a specific currency at a future date

<PAGE>
<PAGE>
at a price set at the time of the contract. An option on a foreign currency
operates similarly to an option on a security. Risks associated with currency
forward contracts and purchasing currency options are similar to those described
in this Prospectus for futures contracts and securities and stock index options.
In addition, the use of currency transactions could result in losses from the
imposition of foreign exchange controls, suspension of settlement or other
governmental actions or unexpected events.

Hedging Considerations. 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. Each Portfolio 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 Portfolio engages in the
strategies described above, the Portfolio 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 Portfolio may be unable to close out an option or futures position without
incurring substantial losses, if at all. A Portfolio is also subject to the risk
of a default by a counterparty to an off-exchange transaction.

Asset Coverage. Each Portfolio will comply with applicable regulatory
requirements designed to eliminate any potential for leverage with respect to
options written by the Portfolio on securities and indexes; currency, interest
rate and stock index futures contracts and options on these futures contracts;
and forward currency contracts. The use of these strategies may require that the
Portfolio 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 Portfolio'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 a Portfolio's assets could

<PAGE>
<PAGE>
impede portfolio management or the Portfolio's ability to meet redemption
requests or other current obligations.

SHORT SELLING. The Post-Venture Capital Portfolio may from time to time sell
securities short. A short sale is a transaction in which the Portfolio sells
borrowed securities in anticipation of a decline in the market price of the
securities. Possible losses from short sales differ from losses that could be
incurred from a purchase of a security, because losses from short sales may be
unlimited, whereas losses from purchases can equal only the total amount
invested. The current market value of the securities sold short will not exceed
10% of the Portfolio's assets.

When the Post-Venture Capital Portfolio makes a short sale, the proceeds it
receives from the sale are retained by a broker until the Portfolio replaces the
borrowed securities. To deliver the securities to the buyer, the Portfolio must
arrange through a broker to borrow the securities and, in so doing, the
Portfolio becomes obligated to replace the securities borrowed at their market
price at the time of replacement, whatever that price may be. The Portfolio may
have to pay a premium to borrow the securities and must pay any dividends or
interest payable on the securities until they are replaced.

The Post-Venture Capital Portfolio's obligation to replace the securities
borrowed in connection with a short sale will be secured by cash or U.S.
government securities deposited as collateral with the broker. In addition, the
Portfolio will place in a segregated account with its custodian or a qualified
subcustodian an amount of cash or U.S. government securities equal to the
difference, if any, between (i) the market value of the securities sold at the
time they were sold short and (ii) any cash or U.S. government securities
deposited as collateral with the broker in connection with the short sale (not
including the proceeds of the short sale). Until it replaces the borrowed
securities, the Portfolio will maintain the segregated account daily at a level
so that (a) the amount deposited in the account plus the amount deposited with
the broker (not including the proceeds from the short sale) will equal the
current market value of the securities sold short and (b) the amount deposited
in the account plus the amount deposited with the broker (not including the
proceeds from the short sale) will not be less than the market value of the
securities at the time they were sold short.

Short Sales Against the Box. The Emerging Markets Portfolio and the Post-
Venture Capital Portfolio may enter into a short sale of securities such that
when the short position is open the Portfolio 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 the Portfolio 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 Portfolio delivers securities to close

<PAGE>
<PAGE>
out its short position. Although prior to delivery the Portfolio will have to
pay an amount equal to any dividends paid on the securities sold short, the
Portfolio 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 Portfolio 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. The Portfolio
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 the Portfolio'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 Portfolio may make short sales may be limited by Code
requirements for qualification as a regulated investment company. See
'Dividends, Distributions and Taxes' for other tax considerations applicable to
short sales.

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

Each Portfolio may 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) time deposits maturing in more than seven calendar days; and (iv) certain
Rule 144A Securities. In addition, up to 5% of each Portfolio's total assets may
be invested in the securities of issuers which have been in continuous operation
for less than three years, and up to an additional 5% of its net assets may be
invested in warrants. Each Portfolio may borrow from banks for temporary or
emergency purposes, such as meeting anticipated redemption requests, provided
that reverse repurchase agreements and any other borrowing by the Portfolio may
not exceed 30% of its total assets, and may pledge its assets to the extent
necessary to secure permitted borrowings. Whenever borrowings (including reverse
repurchase agreements) exceed 5% of the value of a Portfolio's total assets, the
Portfolio will not make any investments (including roll-overs). Except for the
limitations on borrowing, the investment guidelines set forth in this paragraph
may be changed at any time without shareholder consent by vote of the Board,
subject to the limitations contained in the 1940 Act. A complete list of
investment restrictions that each Portfolio has adopted identifying additional
restrictions that cannot be changed without the approval of the majority of the
Portfolio's outstanding shares is contained in the Statement of Additional
Information.

<PAGE>
<PAGE>
MANAGEMENT OF THE PORTFOLIOS
- --------------------------------------------------------------------------------

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

For the services provided by Warburg, each Portfolio pays Warburg a fee
calculated at an annual rate of 1.25% of the relevant Portfolio's average daily
net assets. Warburg pays Abbott a fee of .55% per annum of the value of Private
Fund investments as of the last day of each calendar quarter. Although these
advisory fees are higher than that paid by most other investment companies,
including money market and fixed income funds, Warburg believes that they are
comparable to fees charged by other mutual funds with similar policies and
strategies. Warburg and the Trust's co-administrators may voluntarily waive a
portion of their fees from time to time and temporarily limit the expenses to be
paid by a Portfolio.

Warburg is a professional investment counselling firm which provides
investment services to investment endowment funds, foundations and other
institutions and individuals. As of May 31, 1996, Warburg managed approximately
$16.3 billion of assets, including approximately $9.7 billion of investment
company assets. 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.

<PAGE>
<PAGE>
Messrs. Held, Pratt, Solomon and Gray are also the investment managers of
Abbott. The principal business address of Abbott and Mr. Pratt is 50 Rowes
Wharf, Suite 240, Boston, Massachusetts 02110-3328 and that of Messrs. Held,
Solomon and Gray is 1330 Avenue of the Americas, Suite 2800, New York, New York
10019.

For tax and other business purposes, the partners of Abbott plan to merge
Abbott with and into, or transfer all of the assets of Abbott to, a newly-formed
Delaware limited liability company ('Abbott LLC'), with Abbott LLC to survive
and assume all of the liabilities of Abbott as part of the transaction. This
transaction, which is expected to occur before September 30, 1996 and is subject
to certain contingencies, will not involve any material change in the
management, ownership, personnel, operations or activities of Abbott. The
present partners of Abbott will be members of Abbott LLC and will hold
officerships and other positions in Abbott LLC carrying responsibilities
generally commensurate with their present responsibilities. Pursuant to a new
sub-advisory agreement, Abbott LLC, as successor to Abbott, will perform the
services then being performed by Abbott. The new sub-advisory agreement will be
substantially identical to the current sub-advisory agreement among Warburg, the
Trust and Abbott, except for the change of the service provider from Abbott to
Abbott LLC.

PORTFOLIO MANAGERS. Richard H. King and Nicholas P.W. Horsley are
co-portfolio managers of the Emerging Markets Portfolio, and Harold W. Ehrlich
and Vincent J. McBride are associate portfolio managers and research analysts.

Mr. King, a senior managing director of EMW since 1989. From 1984 until 1988
he was chief investment officer and a director at Fiduciary Trust Company
International S.A. in London, with responsibility for all international equity
management and investment strategy. From 1982 to 1984 he was a director in
charge of Far East equity investments at N.M. Rothschild International Asset
Management, a London merchant bank. Mr. Horsley is a senior vice president of
Warburg and has been with Warburg since 1993, before which time he was a
director, portfolio manager and analyst at Barclays deZoete Wedd in New York
City.

Mr. Ehrlich is a senior vice president of Warburg and has been with Warburg
since February 1995, before which time he was a senior vice president, portfolio
manager and analyst at Templeton Investment Counsel Inc. Mr. McBride, a vice
president of Warburg, has been with Warburg since 1994. Prior to joining
Warburg, Mr. McBride was an international equity analyst at Smith Barney Inc.
from 1993 to 1994 and at General Electric Investment Corporation from 1992 to
1993. From 1989 to 1992 he was a portfolio manager/analyst at United Jersey
Bank.

The co-portfolio managers of the Post-Venture Capital Portfolio are Elizabeth
B. Dater and Stephen J. Lurito. Ms. Dater is a senior managing director of EMW
and has been a portfolio manager of Warburg since 1978.

<PAGE>
<PAGE>
Mr. Lurito is a managing director of EMW and has been with Warburg since 1987,
before which time he was a research analyst at Sanford C. Bernstein & Company,
Inc.

Robert S. Janis and Christopher M. Nawn, vice presidents of Warburg, are
associate portfolio managers and research analysts for the Post-Venture Capital
Portfolio. Mr. Janis has been with Warburg since October 1994, before which time
he was a vice president and senior research analyst at U.S. Trust Company of New
York. Mr. Nawn has been with Warburg since September 1994, before which time he
was a senior sector analyst and portfolio manager at the Dreyfus Corporation.

Raymond L. Held and Gary H. Solomon, investment managers and general partners
of Abbott, manage the Post-Venture Capital Portfolio's investments in Private
Funds. Abbott also acts as sub-investment adviser for the Warburg Pincus
Post-Venture Capital Fund.

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

The Trust employs PFPC, an indirect, wholly owned subsidiary of PNC Bank
Corp., as a co-administrator. As a co-administrator, PFPC calculates each
Portfolio's net asset value, provides all accounting services for the Portfolio
and assists in related aspects of the Portfolio's operations. As compensation
the Emerging Markets Portfolio pays PFPC a fee calculated at an annual rate of
.12% of the Portfolio's first $250 million in average daily net assets, .10% of
the next $250 million in average daily net assets, .08% of the next $250 million
in average daily net assets, and .05% of average daily net assets over $750
million, and the Post-Venture Capital Portfolio pays PFPC a fee calculated at an
annual rate of .10% of the Portfolio's average daily net assets, in each case
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. State Street Bank and Trust Company ('State Street') serves as
custodian of the Emerging Markets Portfolio's assets. PNC Bank, National
Association ('PNC'), serves as custodian of the Post-Venture Capital

<PAGE>
<PAGE>
Portfolio's U.S. assets and Fiduciary Trust Company International ('Fiduciary')
serves as custodian of the Portfolio's non-U.S. assets. State Street's principal
business address is 225 Franklin Street, Boston, Massachusetts 02110. 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 also serves as shareholder servicing agent,
transfer agent and dividend disbursing agent for the Portfolios. It has
delegated to Boston Financial Data Services, Inc., a 50% owned subsidiary
('BFDS'), responsibility for most shareholder servicing functions. BFDS's
principal business address is 2 Heritage Drive, North Quincy, Massachusetts
02171.

DISTRIBUTOR. Counsellors Securities serves without compensation as
distributor of the shares of the Portfolios. Counsellors Securities is a wholly
owned subsidiary of Warburg and is located at 466 Lexington Avenue, New York,
New York 10017-3147.

For administration, subaccounting, transfer agency and/or other services,
Counsellors Securities or its affiliates may pay Participating Insurance
Companies and Plans or their affiliates or entities that provide services to
them ('Service Organizations') with whom it enters into agreements up to .35%
(the 'Service Fee') of the annual average value of accounts maintained by such
Service Organizations with a Portfolio. A portion of the Service Fee may be
borne by a Portfolio as a transfer agency fee. In addition, a Service
Organization may directly or indirectly pay a portion of this Service Fee to
a Portfolio's custodian or transfer agent for costs related to accounts of
the Service Organizations' clients or customers. The Service Fee payable to any
one Service Organization is determined based upon a number of factors, including
the nature and quality of the services provided, the operations processing
requirements of the relationship and the standardized fee schedule of the
Service Organization.

Warburg or its affiliates may, at their own expense, provide promotional
incentives to qualified recipients who support the sale of shares of a
Portfolio, consisting of securities dealers who have sold Portfolio 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 a Portfolio's shares.

TRUSTEES AND OFFICERS. The officers of the Trust manage each Portfolio's
day-to-day operations and are directly responsible to the Board. The Board sets
broad policies for each Portfolio and chooses the Trust's officers. A list of
the Trustees and officers 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.

<PAGE>
<PAGE>
HOW TO PURCHASE AND REDEEM SHARES IN THE PORTFOLIOS
- --------------------------------------------------------------------------------

Individual investors may not purchase or redeem shares of a Portfolio
directly; shares may be purchased or redeemed only through Variable Contracts
offered by separate accounts of Participating Insurance Companies or through
Plans, including participant-directed Plans which elect to make a Portfolio an
investment option for Plan participants. Please refer to the prospectus of the
sponsoring Participating Insurance Company separate account or to the Plan
documents or other informational materials supplied by Plan sponsors for
instructions on purchasing or selling a Variable Contract and on how to select a
Portfolio as an investment option for a Variable Contract or Plan.

PURCHASES. All investments in the Portfolios are credited to a Participating
Insurance Company's separate account immediately upon acceptance of an
investment by a Portfolio. Each Participating Insurance Company receives orders
from its contract owners to purchase or redeem shares of a Portfolio on any day
that the Portfolio calculates its net asset value (a 'business day'). That
night, all orders received by the Participating Insurance Company prior to the
close of regular trading on the New York Stock Exchange Inc. (the 'NYSE')
(currently 4:00 p.m., Eastern time) on that business day are aggregated, and the
Participating Insurance Company places a net purchase or redemption order for
shares of one or both Portfolios during the morning of the next business day.
These orders are executed at the net asset value (described below under 'Net
Asset Value') computed at the close of regular trading on the NYSE on the
previous business day in order to provide a match between the contract owners'
orders to the Participating Insurance Company and that Participating Insurance
Company's orders to a Portfolio.

Plan participants may invest in shares of a Portfolio through their Plan by
directing the Plan trustee to purchase shares for their account. Participants
should contact their Plan sponsor for information concerning the appropriate
procedure for investing in the Portfolio.

Each Portfolio reserves the right to reject any specific purchase order.
Purchase orders may be refused if, in Warburg's opinion, they are of a size that
would disrupt the management of a Portfolio. A Portfolio may discontinue sales
of its shares if management believes that a substantial further increase in
assets may adversely effect that Portfolio's ability to achieve its investment
objective. In such event, however, it is anticipated that existing Variable
Contract owners and Plan participants would be permitted to continue to
authorize investment in such Portfolio and to reinvest any dividends or capital
gains distributions.

REDEMPTIONS. Shares of a Portfolio may be redeemed on any business day.
Redemption orders which are received by a Participating Insurance Company or
Plan or its agent prior to the close of regular trading on the NYSE on any
business day and transmitted to the Trust or its specified agent during the
morning of the next business day will be processed at the net asset value
computed at the close of regular trading on the NYSE on the previous

<PAGE>
<PAGE>
business day. Redemption proceeds will normally be wired to the Participating
Insurance Company or Plan the business day following receipt of the redemption
order, but in no event later than seven days after receipt of such order.

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

DIVIDENDS AND DISTRIBUTIONS. Each Portfolio calculates its dividends from net
investment income. Net investment income includes interest accrued and dividends
earned on the Portfolio's portfolio securities for the applicable period less
applicable expenses. Each Portfolio declares dividends from its net investment
income annually. Net investment income earned on weekends and when the NYSE is
not open will be computed as of the next business day. Distributions of net
realized long-term and short-term capital gains are declared annually and, as a
general rule, will be distributed or paid after the end of the fiscal year in
which they are earned. Dividends and distributions will automatically be
reinvested in additional shares of the relevant Portfolio at net asset value
unless, in the case of a Variable Contract, a Participating Insurance Company
elects to have dividends or distributions paid in cash.

TAXES. For a discussion of the tax status of a Variable Contract or Plan,
refer to the sponsoring Participating Insurance Company separate account
prospectus or Plan documents or other informational materials supplied by Plan
sponsors.

Each Portfolio intends to qualify each year as a 'regulated investment
company' within the meaning of the Code. Each Portfolio intends to distribute
all of its net income and capital gains to its shareholders (the Variable
Contracts and Plans).

Because shares of the Portfolios may be purchased only through Variable
Contracts and Plans, it is anticipated that any income dividends or capital gain
distributions from a Portfolio are taxable, if at all, to the Participating
Insurance Companies and Plans and will be exempt from current taxation of the
Variable Contract owner or Plan participant if left to accumulate within the
Variable Contract or Plan. Generally, withdrawals from Variable Contracts or
Plans may be subject to ordinary income tax and, if made before age 59 1/2, a
10% penalty tax.

Special Tax Matters. Certain provisions of the Code may require that a gain
recognized by a Portfolio upon the closing of a short sale be treated as a
short-term capital gain, and that a loss recognized by the Portfolio upon the
closing of a short sale be treated as a long-term capital loss, regardless of
the amount of time that the Portfolio held the securities used to close the
short sale. A Portfolio's use of short sales may also affect the holding periods
of certain securities held by the Portfolio if such securities are
'substantially identical' to securities used by the Portfolio to close the short
sale. The Portfolio's short selling activities will not result in unrelated
business taxable income to a tax-exempt investor.

<PAGE>
<PAGE>
INTERNAL REVENUE SERVICE REQUIREMENTS. Each Portfolio intends to comply with
the diversification requirements currently imposed by the Internal Revenue
Service on separate accounts of insurance companies as a condition of
maintaining the tax-deferred status of Variable Contracts. See the Statement of
Additional Information for more specific information.

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

Each Portfolio's net asset value per share is calculated as of the close of
regular trading on the NYSE 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 the holidays falls on a
Saturday or Sunday, respectively. The net asset value per share of each
Portfolio generally changes every day.

The net asset value per share of each Portfolio is computed by dividing the
value of the Portfolio's net assets by the total number of its shares
outstanding.

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

PERFORMANCE
- --------------------------------------------------------------------------------

From time to time, each Portfolio may advertise its average annual total
return over various periods of time. These total return figures show the average
percentage change in value of an investment in the Portfolio from the

<PAGE>
<PAGE>
beginning of the measuring period to the end of the measuring period. The
figures reflect changes in the price of the Portfolio's shares assuming that any
income dividends and/or capital gain distributions made by the Portfolio during
the period were reinvested in shares of the Portfolio. 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 Portfolio's operations or on a
year-by-year, quarterly or current year-to-date basis).

Total returns quoted for the Portfolios include the effect of deducting each
Portfolio's expenses, but may not include charges and expenses attributable to
any particular Variable Contract or Plan. Accordingly, the prospectus of the
sponsoring Participating Insurance Company separate account or Plan documents or
other informational materials supplied by Plan sponsors should be carefully
reviewed for information on relevant charges and expenses. Excluding these
charges and expenses from quotations of each Portfolio's performance has the
effect of increasing the performance quoted, and the effect of these charges
should be considered when comparing a Portfolio's performance to that of other
mutual funds.

When considering average annual total return figures for periods longer than
one year, it is important to note that the annual total return for one year in
the period might have been greater or less than the average for the entire
period. When considering total return figures for periods shorter than one year,
investors should bear in mind that such return may not be representative of a
Portfolio's return over a longer market cycle. Each Portfolio may also advertise
its aggregate total return figures for various periods, representing the
cumulative change in value of an investment in the Portfolio for the specific
period (again reflecting changes in share prices and assuming reinvestment of
dividends and distributions). Aggregate and average total returns may be shown
by 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 return figures are based on historical earnings
and are not intended to indicate future performance. The Statement of Additional
Information describes the method used to determine the total return. Current
total return figures may be obtained by calling (800) 369-2728.

In reports or other communications to investors or in advertising material, a
Portfolio or a Participating Insurance Company or Plan sponsor may describe
general economic and market conditions affecting the Portfolio. Performance may
be compared 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 Emerging Markets Portfolio, with the IFC
Emerging Market Free Index, the IFC Investible Index and the Morgan Stanley
Capital International Emerging Markets Index and, in the case of the
Post-Capital Venture Portfolio, with the Venture Capital

<PAGE>
<PAGE>
100 Index (compiled by Venture Capital Journal), the Russell 2000 Small Stock
Index and the S&P 500 Index, all of which are unmanaged indexes of common
stocks; or (iii) other appropriate indexes of investment securities or with data
developed by Warburg derived from such indexes. The Post-Venture Capital
Portfolio may also make comparisons using data and indexes compiled by the
National Venture Capital Association, Venture-One and Private Equity Analysts
Newsletter and similar organizations and publications. A Portfolio or a
Participating Insurance Company may also include evaluations 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
Portfolio or a Participating Insurance Company or Plan sponsor may also describe
the general biography or work experience of the portfolio managers of the
Portfolio and may include quotations attributable to the portfolio managers
describing approaches taken in managing the Portfolio's investments, research
methodology underlying stock selection or the Portfolio's investment objective.
In addition, a Portfolio and its portfolio managers may render periodic updates
of Portfolio activity, which may include a discussion of significant portfolio
holdings and analysis of holdings by industry, country, credit quality and other
characteristics. The Post-Venture Capital Portfolio may discuss characteristics
of venture capital financed companies and the benefits expected to be achieved
from investing in these companies. Each Portfolio may also discuss the continuum
of risk and return relating to different investments and the potential impact of
foreign securities on 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 Portfolio or a Participating
Insurance Company or Plan sponsor may from time to time compare the Portfolio's
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
- --------------------------------------------------------------------------------

TRUST ORGANIZATION. The Trust was organized on March 15, 1995 under the laws
of The Commonwealth of Massachusetts as a 'Massachusetts business trust.' The
Trust's Declaration of Trust authorizes the Board to issue an unlimited number
of full and fractional shares of beneficial interest, $.001 par value per share.
Shares of four series have been authorized, two of which constitute the
interests in the Portfolios. The Board may classify or reclassify any of its
shares into one or more additional series without shareholder approval.

<PAGE>
<PAGE>
VOTING RIGHTS. When matters are submitted for shareholder vote, shareholders
of each Portfolio will have one vote for each full share held and fractional
votes for fractional shares held. Generally, shares of the Trust will vote by
individual Portfolio on all matters except where otherwise required by law.
There will normally be no meetings of shareholders for the purpose of electing
Trustees unless and until such time as less than a majority of the members
holding office have been elected by shareholders. Shareholders of record of no
less than two-thirds of the outstanding shares of the Trust 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 Trustee at the written request of holders of 10% of
the Trust's outstanding shares. Under current law, a Participating Insurance
Company is required to request voting instructions from Variable Contract owners
and must vote all Trust shares held in the separate account in proportion to the
voting instructions received. Plans may or may not pass through voting rights to
Plan participants, depending on the terms of the Plan's governing documents. For
a more complete discussion of voting rights, refer to the sponsoring
Participating Insurance Company separate account prospectus or the Plan
documents or other informational materials supplied by Plan sponsors.

CONFLICTS OF INTEREST. Each Portfolio offers its shares to (i) Variable
Contracts offered through separate accounts of Participating Insurance Companies
which may or may not be affiliated with each other and (ii) Plans including
Participant-directed Plans which elect to make a Portfolio an investment option
for Plan participants. Due to differences of tax treatment and other
considerations, the interests of various Variable Contract owners and Plan
participants participating in a Portfolio may conflict. The Board will monitor
the Portfolios for any material conflicts that may arise and will determine what
action, if any, should be taken. If a conflict occurs, the Board may require one
or more Participating Insurance Company separate accounts and/or Plans to
withdraw its investments in one or both Portfolios. As a result, a Portfolio may
be forced to sell securities at disadvantageous prices and orderly portfolio
management could be disrupted. In addition, the Board may refuse to sell shares
of a Portfolio to any Variable Contract or Plan or may suspend or terminate the
offering of shares of a Portfolio if such action is required by law or
regulatory authority or is in the best interests of the shareholders of the
Portfolio.

SHAREHOLDER COMMUNICATIONS. Participating Insurance Companies and Plan
trustees will receive semiannual and audited annual reports, each of which
includes a list of the investment securities held by the Portfolio and a
statement of the performance of the Portfolio. Periodic listings of the
investment securities held by the Portfolios may be obtained by calling the
Trust at (800) 369-2728.

<PAGE>
<PAGE>
Since the prospectuses of the Portfolios are combined in this single
Prospectus, it is possible that a Portfolio may become liable for a
misstatement, inaccuracy or omission in this Prospectus with regard to the other
Portfolio.

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

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

<PAGE>
<PAGE>
TABLE OF CONTENTS

<TABLE>
<S> <C>
The Trust's Expenses.................................................... 2
Investment Objectives and Policies...................................... 3
Portfolio Investments................................................... 7
Risk Factors and Special Considerations................................. 11
Portfolio Transactions and Turnover Rate................................ 14
Certain Investment Strategies........................................... 14
Investment Guidelines................................................... 19
Management of the Portfolios............................................ 20
How to Purchase and Redeem Shares in the Portfolios..................... 24
Dividends, Distributions and Taxes...................................... 25
Net Asset Value......................................................... 26
Performance............................................................. 26
General Information..................................................... 28
</TABLE>

[Logo]

P.O. BOX 9030, BOSTON, MA 02205-9030
800-369-2728
WPTRU-1-0696

STATEMENT OF ADDITIONAL INFORMATION

July 2, 1996

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

WARBURG PINCUS TRUST

EMERGING MARKETS PORTFOLIO
POST-VENTURE CAPITAL PORTFOLIO

P.O. Box 9030, Boston, Massachusetts 02205-9030
For information, call (800) 369-2728

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

CONTENTS

<TABLE>
<CAPTION>
Page
----
<S> <C>
Investment Objectives................................................................................ 2
Investment Policies.................................................................................. 2
Management of the Trust.............................................................................. 31
Additional Purchase and Redemption Information....................................................... 38
Additional Information Concerning Taxes.............................................................. 39
Determination of Performance......................................................................... 42
Independent Accountants and Counsel.................................................................. 43
Financial Statements................................................................................. 43
Appendix -- Description of Ratings................................................................... A-1
Statement of Assets and Liabilities (Unaudited)...................................................... A-5
</TABLE>

Warburg Pincus Trust (the "Trust") currently offers four
managed investment funds, two of which, the Emerging Markets Portfolio and the
Post-Venture Capital Portfolio (together the "Portfolios" and each a
"Portfolio"), are described in this Statement of Additional Information. This
Statement of Additional Information is meant to be read in conjunction with the
combined Prospectus for the Portfolios, dated July 2, 1996, as amended or
supplemented from time to time, and is incorporated by reference in its entirety
into that Prospectus. Shares of a Portfolio are not available directly to
individual investors but may be offered only to certain (i) life insurance
companies ("Participating Insurance Companies") for allocation to certain of
their separate accounts established for the purpose of funding variable annuity
contracts and variable life insurance policies (together "Variable Contracts")
and (ii) tax-qualified pension and retirement plans ("Plans"), including
participant-directed Plans which elect to make a Portfolio an investment option
for Plan participants. Because this Statement of Additional Information is not
itself a prospectus, no investment in shares of a Portfolio should be made
solely upon the information contained herein. Copies of the Trust's Prospectus
for the Portfolios and information regarding each of the Portfolios' current
performance may be obtained by calling the Trust at (800) 369-2728 or by writing
to the Trust, P.O. Box 9030, Boston, Massachusetts 02205-9030.

INVESTMENT OBJECTIVES

The investment objective of each Portfolio is long-term growth
of capital.

INVESTMENT POLICIES

The following policies supplement the descriptions of each
Portfolio's investment objective and policies in the Prospectus.

Options, Futures and Currency Exchange Transactions

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

The Post-Venture Capital Portfolio 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
Post-Venture Capital Portfolio 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 Portfolio 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 Portfolio 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.

In the case of options written by the Post-Venture Capital
Portfolio that are deemed covered by virtue of the Portfolio's holding
convertible or exchangeable preferred stock or debt securities, the time
required to convert or exchange and obtain physical delivery of the underlying
common stock with respect to which the Portfolio has written options may exceed
the time within which the Portfolio must make delivery in accordance with an
exercise notice. In these instances, the Portfolio may purchase or temporarily

2
<PAGE>
<PAGE>

borrow the underlying securities for purposes of physical delivery. By so doing,
the Portfolio will not bear any market risk, since the Portfolio 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 Portfolio 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 Post-Venture Capital Portfolio may write covered call
options. For example, if the Portfolio 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 Portfolio 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 Post-Venture Capital Portfolio 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
Post-Venture Capital Portfolio may write (i) in-the-money call options when
Warburg, Pincus Counsellors, Inc., the Portfolios' 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 Post- Venture Capital
Portfolio 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 Emerging
Markets Portfolio or the Post- Venture Capital Portfolio prior to the exercise
of options that it has purchased or, with respect to the Post-Venture Capital
Portfolio, written, respectively, of options of the same series) in which the
Portfolio may realize a profit or loss from the sale. An option position may be
closed out only where there exists a secondary market for an option of the same
series on a recognized securities exchange or in the over-the-counter market.
When a

3
<PAGE>
<PAGE>

Portfolio has purchased an option and engages in a closing sale transaction,
whether the Portfolio 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 Portfolio initially paid for the original option plus the related
transaction costs. Similarly, in cases where the Post-Venture Capital Portfolio
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 Portfolio 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
Post-Venture Capital Portfolio under an option it has written would be
terminated by a closing purchase transaction, but the Portfolio would not be
deemed to own an option as a result of the transaction. So long as the
obligation of the Post-Venture Capital Portfolio as the writer of an option
continues, the Portfolio may be assigned an exercise notice by the broker-dealer
through which the option was sold, requiring the Portfolio to deliver the
underlying security against payment of the exercise price. This obligation
terminates when the option expires or the Post-Venture Capital Portfolio effects
a closing purchase transaction. The Post-Venture Capital Portfolio can no longer
effect a closing purchase transaction with respect to an option once it has been
assigned an exercise notice.

There is no assurance that sufficient trading interest will
exist to create a liquid secondary market on a securities exchange for any
particular option or at any particular time, and for some options no such
secondary market may exist. A liquid secondary market in an option may cease to
exist for a variety of reasons. In the past, for example, higher than
anticipated trading activity or order flow or other unforeseen events have at
times rendered certain of the facilities of the Clearing Corporation and various
securities exchanges inadequate and resulted in the institution of special
procedures, such as trading rotations, restrictions on certain types of orders
or trading halts or suspensions in one or more options. There can be no
assurance that similar events, or events that may otherwise interfere with the
timely execution of customers' orders, will not recur. In such event, it might
not be possible to effect closing transactions in particular options. Moreover,
a Portfolio'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
Portfolio. The Portfolio, 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
Post-Venture Capital Portfolio 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 Portfolio would continue to be at market risk on
the security and could face higher transaction costs, including brokerage
commissions.

4
<PAGE>
<PAGE>

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

Stock Index Options. Each Portfolio may purchase and write
exchange-listed and OTC put and call options on stock indexes. A stock index
measures the movement of a certain group of stocks by assigning relative values
to the common stocks included in the index, fluctuating with changes in the
market values of the stocks included in the index. Some stock index options are
based on a broad market index, such as the NYSE Composite Index, or a narrower
market index such as the Standard & Poor's 100. Indexes may also be based on a
particular industry or market segment.

Options on stock indexes are similar to options on stock
except that (i) the expiration cycles of stock index options are monthly, while
those of stock options are currently quarterly, and (ii) the delivery
requirements are different. Instead of giving the right to take or make delivery
of stock at a specified price, an option on a stock 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 stock
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. Stock index options may be offset by entering into closing
transactions as described above for securities options.

OTC Options. The Portfolios 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 stock to the clearing
organization if the option is exercised, and the clearing organization is then
obligated to pay the writer the exercise price of the option. If a Portfolio
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 Portfolio, the

5
<PAGE>
<PAGE>

Portfolio would lose the premium it paid for the option and the expected benefit
of the transaction.

Listed options generally have a continuous liquid market while
dealer options have none. Consequently, the Portfolio 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 Portfolio 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 Portfolio originally wrote the option. Although the Portfolios 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
Portfolios, there can be no assurance that the Portfolio will be able to
liquidate a dealer option at a favorable price at any time prior to expiration.
The inability to enter into a closing transaction may result in material losses
to a Portfolio. Until the Portfolio, 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 Portfolio'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 Portfolio may be unable to liquidate a dealer option.

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

A Portfolio 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 Portfolio's net asset value after taking
into account unrealized profits and unrealized losses on any such contracts it
has entered into. The Portfolios reserve 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 a
Portfolio's policies. Although each Portfolio 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 Portfolio assets
that may be at risk with respect to futures activities. The ability of the
Portfolio 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.

6
<PAGE>
<PAGE>

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

No consideration is paid or received by a Portfolio upon
entering into a futures contract. Instead, the Portfolio 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 Portfolio 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 Portfolio fails to meet its
contractual obligations. Subsequent payments, known as "variation margin," to
and from the broker, will be made daily as the currency, financial instrument or
stock index underlying the futures contract fluctuates, making the long and
short positions in the futures contract more or less valuable, a process known
as "marking-to-market." The Portfolios will also incur brokerage costs in
connection with entering into futures transactions.

At any time prior to the expiration of a futures contract, a
Portfolio may elect to close the position by taking an opposite position, which
will operate to terminate the Portfolio'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 Portfolios intend 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 a Portfolio to substantial losses. In such
event, and in the event of adverse price movements, the Portfolio would be
required to make daily cash payments of variation margin. In such situations, if
the Portfolio had insufficient cash, it might have to sell securities to meet
daily variation margin requirements at a time when it would be

7
<PAGE>
<PAGE>

disadvantageous to do so. In addition, if the transaction is entered into for
hedging purposes, in such circumstances the Portfolio 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 Portfolio's performance.

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

An option on a currency, interest rate or stock 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
Portfolio.

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

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

8
<PAGE>
<PAGE>

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 Portfolio
may either sell a portfolio security and make delivery of the currency, or
retain the security and fully or partially offset its contractual obligation to
deliver the currency by negotiating with its trading partner to purchase a
second, offsetting contract. If the Portfolio retains the portfolio security and
engages in an offsetting transaction, the Portfolio, 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 Portfolios may purchase exchange-traded
put and call options on foreign currencies. Put options convey the right to sell
the underlying currency at a price which is anticipated to be higher than the
spot price of the currency at the time the option is exercised. Call options
convey the right to buy the underlying currency at a price which is expected to
be lower than the spot price of the currency at the time the option is
exercised.

Currency Hedging. The Portfolios' currency hedging will be
limited to hedging involving either specific transactions or portfolio
positions. Transaction hedging is the purchase or sale of forward currency with
respect to specific receivables or payables of a Portfolio 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. A Portfolio 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 Portfolio's securities are denominated will reduce the U.S. dollar
value of the securities, even if their value in the foreign currency remains
constant. The use of currency hedges does not eliminate fluctuations in the
underlying prices of the securities, but it does establish a rate of exchange
that can be achieved in the future. For example, in order to protect against
diminutions in the U.S. dollar value of securities it holds, a Portfolio may
purchase currency put options. If the value of the currency does decline, the
Portfolio 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 Portfolio 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 Portfolio
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.

9
<PAGE>
<PAGE>

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 Portfolio may not be able to contract to sell a
currency at a price above the devaluation level it anticipates.

While the values of currency futures and options on futures,
forward currency contracts and currency options may be expected to correlate
with exchange rates, they will not reflect other factors that may affect the
value of the Portfolio's investments and a currency hedge may not be entirely
successful in mitigating changes in the value of the Portfolio'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
Portfolio against a price decline if the issuer's creditworthiness deteriorates.

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

In hedging transactions based on an index, whether a Portfolio
will realize a gain or loss from the purchase or writing of options on an index
depends upon movements in the level of stock prices in the stock market
generally or, in the case of certain indexes, in an industry or market segment,
rather than movements in the price of a particular stock. The risk of imperfect
correlation increases as the composition of the Portfolio'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
Portfolio'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 Portfolio's net investment results if market movements are
not as anticipated when the hedge is established. Stock 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 stock index and futures
markets. Secondly, from the point of view of speculators, the deposit
requirements in the futures market are less onerous than margin

10
<PAGE>
<PAGE>

requirements in the securities market. Therefore, increased participation by
speculators in the futures market also may cause temporary price distortions.
Because of the possibility of price distortions in the futures market and the
imperfect correlation between movements in the stock index and movements in the
price of stock index futures, a correct forecast of general market trends by
Warburg still may not result in a successful hedging transaction.

A Portfolio will engage in hedging transactions only when
deemed advisable by Warburg, and successful use by the Portfolio 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
Portfolio's performance.

Asset Coverage for Forward Contracts, Options, Futures and
Options on Futures. As described in the Prospectus, each Portfolio 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 Portfolio on securities and indexes; and currency, interest rate and
index futures contracts and options on these futures contracts. These guidelines
may, in certain instances, require segregation by a Portfolio of cash or liquid
high-grade debt securities or other securities that are acceptable as collateral
to the appropriate regulatory authority.

For example, in the case of the Post-Venture Capital
Portfolio, a call option written by the Portfolio on securities may require the
Portfolio to hold the securities subject to the call (or securities convertible
into the securities without additional consideration) or to segregate assets (as
described above) sufficient to purchase and deliver the securities if the call
is exercised. A call option written by a Portfolio on an index may require the
Portfolio 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
Post-Venture Capital Portfolio may require the Portfolio to segregate assets (as
described above) equal to the exercise price. The Post-Venture Capital Portfolio
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 Portfolio. If a
Portfolio holds a futures or forward contract, the Portfolio 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 Portfolio 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.

11
<PAGE>
<PAGE>

Additional Information on Other Investment Practices

Special Situation Companies. Each Portfolio may invest (with
respect to the Post-Venture Capital Portfolio, up to 10% of its assets, directly
or indirectly) in the securities of "special situation companies" involved in an
actual or prospective acquisition or consolidation; reorganization;
recapitalization; merger, liquidation or distribution of cash, securities or
other assets; a tender or exchange offer; a breakup or workout of a holding
company; or litigation which, if resolved favorably, would improve the value of
the company's stock. If the actual or prospective situation does not materialize
as anticipated, the market price of the securities of a "special situation
company" may decline significantly. The Portfolios believe, however, that if
"special situation companies" are analyzed carefully and invested in at the
appropriate time, the Portfolios may achieve growth of capital. There can be no
assurance, however, that a special situation that exists at the time a Portfolio
makes its investment will be consummated under the terms and within the time
period contemplated.

Foreign Investments. The Post-Venture Capital Portfolio may
invest up to 20% of its total assets in the securities of foreign issuers.
Investors should recognize that investing in foreign companies involves certain
risks, including those discussed below, which are not typically associated with
investing in U.S. issuers.

Foreign Currency Exchange. Since the Emerging Markets
Portfolio will, and the Post-Venture Capital Portfolio (up to 20% of its total
assets) may, be investing in securities denominated in currencies other than the
U.S. dollar, and since a Portfolio may temporarily hold funds in bank deposits
or other money market investments denominated in foreign currencies, each
Portfolio's investments in foreign companies 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 a Portfolio's 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 by a
Portfolio with respect to its foreign investments. The rate of exchange between
the U.S. dollar and other currencies is determined by the forces of supply and
demand in the foreign exchange markets. Changes in the exchange rate may result
over time from the interaction of many factors directly or indirectly affecting
economic and political conditions in the United States and a particular foreign
country, including economic and political developments in other countries. Of
particular importance are rates of inflation, interest rate levels, the balance
of payments and the extent of government surpluses or deficits in the United
States and the particular foreign country, all of which are in turn sensitive to
the monetary, fiscal and trade policies pursued by the governments of the United
States and foreign countries important to international trade and finance.
Governmental intervention may also play a significant role. National governments
rarely voluntarily allow their currencies to float freely in response to
economic forces. Sovereign governments use a variety of techniques, such as

12
<PAGE>
<PAGE>

intervention by a country's central bank or imposition of regulatory controls or
taxes, to affect the exchange rates of their currencies. A Portfolio may use
hedging techniques with the objective of protecting against loss through the
fluctuation of the valuation 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.

Information. The majority of the foreign securities held by a
Portfolio will not be registered with, nor the issuers thereof be subject to
reporting requirements of, the SEC. Accordingly, there may be less publicly
available information about the securities and about the foreign company or
government issuing them than is available about a domestic company or government
entity. Foreign companies are generally not subject to uniform financial
reporting standards, practices and requirements comparable to those applicable
to U.S. companies.

Political Instability. 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 Portfolio,
political or social instability, or domestic developments which could affect
U.S. investments in those and neighboring countries. For example, tensions in
Asia have increased following the announcement in March 1993 by The Democratic
People's Republic of Korea ("North Korea") of its intention to withdraw from
participation in the Nuclear Non-Proliferation Treaty and its refusal to allow
the International Atomic Energy Agency to conduct full inspections of its
nuclear facilities. Military action involving North Korea or the economic
deterioration of North Korea could adversely affect the entire region and the
performance of the Emerging Markets Portfolio.

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

Increased Expenses. The operating expenses of the Emerging
Markets Portfolio can be expected to be higher than that of an investment
company investing exclusively in U.S. securities, since the expenses of the
Portfolio, such as custodial costs, valuation costs and communication costs, as
well as the rate of the investment advisory fees, though similar to such
expenses of some other international funds, are higher than those costs incurred
by other investment companies.

General. In general, individual foreign economies may differ
favorably or unfavorably from the U.S. economy in such respects as growth of
gross national product,

13
<PAGE>
<PAGE>

rate of inflation, capital reinvestment, resource self-sufficiency, and balance
of payments positions. A Portfolio 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.

Foreign Debt Securities. (Emerging Markets Portfolio) 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 Emerging
Markets Portfolio 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 of
"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.

Brady Bonds. (Emerging Markets Portfolio) The Emerging Markets
Portfolio may invest in so-called "Brady Bonds," which have been issued by Costa
Rica, Mexico, Uruguay and Venezuela and which may be issued by other Latin
American countries. Brady Bonds are issued as part of a debt restructuring in
which the bonds are issued in exchange for cash and certain of the country's
outstanding commercial bank loans. Investors should recognize that Brady Bonds
do not have a long payment history. Brady Bonds may be collateralized or
uncollateralized, are issued in various currencies (primarily the U.S. dollar)
and are actively traded in the over-the-counter ("OTC") secondary market for
debt of Latin American issuers.

14
<PAGE>
<PAGE>

U.S. Government Securities. Each Portfolio 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. Each Portfolio may also invest in instruments that are supported by
the right of the issuer to borrow from the U.S. Treasury and instruments that
are supported by the credit of the instrumentality. Because the U.S. government
is not obligated by law to provide support to an instrumentality it sponsors, a
Portfolio will invest in obligations issued by such an instrumentality only if
Warburg determines that the credit risk with respect to the instrumentality does
not make its securities unsuitable for investment by the Portfolio.

Securities of Other Investment Companies. Each Portfolio may
invest in securities of other investment companies, and with respect to the
Post-Venture Capital Portfolio, partnerships and other investment vehicles
deemed to be investment companies under the Investment Company Act of 1940, as
amended (the "1940 Act"), to the extent permitted under the 1940 Act. Presently,
under the 1940 Act, a Portfolio 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 Portfolio's
total assets and (iii) when added to all other investment company securities
held by the Portfolio, do not exceed 10% of the value of the Portfolio's total
assets.

Lending of Portfolio Securities. A Portfolio may lend
portfolio securities to brokers, dealers and other financial organizations that
meet capital and other credit requirements or other criteria established by the
Trust's Board of Trustees (the "Board"). These loans, if and when made, may not
exceed 20% of the Portfolio's total assets taken at value. A Portfolio will not
lend portfolio securities to affiliates of Warburg unless it has applied for and
received specific authority to do so from the SEC. Loans of portfolio securities
will be collateralized by cash, letters of credit or U.S. government securities,
which are maintained at all times in an amount equal to at least 100% of the
current market value of the loaned securities. Any gain or loss in the market
price of the securities loaned that might occur during the term of the loan
would be for the account of the Portfolio involved. From time to time, a
Portfolio 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 Portfolio and that is acting as a "finder."

15
<PAGE>
<PAGE>

By lending its securities, the Portfolio 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. Although
the generation of income is not an investment objective of the Portfolios,
income received could be used to pay a Portfolio's expenses and would increase
its total return. Each Portfolio will adhere to the following conditions
whenever its portfolio securities are loaned: (i) the Portfolio 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 Portfolio must be able to terminate the loan at any
time; (iv) the Portfolio 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 Portfolio may pay only reasonable
custodian fees in connection with the loan; and (vi) voting rights on the loaned
securities may pass to the borrower, provided, however, that if a material event
adversely affecting the investment occurs, the Board must terminate the loan and
regain the right to vote the securities. Loan agreements involve certain risks
in the event of default or insolvency of the other party including possible
delays or restrictions upon the Portfolio's ability to recover the loaned
securities or dispose of the collateral for the loan.

When-Issued Securities and Delayed-Delivery Transactions. Each
Portfolio may utilize up to 20% of its total 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. A
Portfolio 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.

When a Portfolio 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 other 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 Portfolio 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 Portfolio's commitment. It may be
expected that the Portfolio'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 Portfolio engages in when-issued or
delayed-delivery transactions, it relies on the other party to

16
<PAGE>
<PAGE>

consummate the trade. Failure of the seller to do so may result in the
Portfolio's incurring a loss or missing an opportunity to obtain a price
considered to be advantageous.

American, European and Continental Depositary Receipts. The
assets of a Portfolio 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. Each Portfolio may invest up to 5% of net assets in
warrants (valued at the lower of cost or market) (other than warrants acquired
by the Portfolio as part of a unit or attached to securities at the time of
purchase). 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. A Portfolio may
not invest more than 15% of its net assets in 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,
time deposits maturing in more than seven days, certain Rule 144A Securities (as
defined below) and, in the case of the Post-Venture Capital Portfolio, Private
Funds (as defined in the Prospectus). Securities that have legal or contractual
restrictions on resale but have a readily available market are not considered
illiquid for purposes of this limitation. Repurchase agreements subject to
demand are deemed to have a maturity equal to the notice period.

Historically, illiquid securities have included securities
subject to contractual or legal restrictions on resale because they have not
been registered under the Securities Act of 1933, as amended (the "Securities
Act"), securities which are otherwise not readily marketable and repurchase
agreements having a maturity of longer than seven days. Securities which have
not been registered under the Securities Act are referred to as private
placements or restricted securities and are purchased directly from the issuer
or in the secondary market. 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

17
<PAGE>
<PAGE>

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

Below Investment Grade Securities. The Portfolios may invest
in below investment grade convertible debt and preferred securities and it is
not required to dispose of securities downgraded below investment grade
subsequent to acquisition by the Portfolios. Although the Post-Venture Capital
Portfolio may invest only in investment grade non-convertible debt securities
(as described in the Prospectus), securities held by Private Funds (as described
in the Prospectus) may be rated below investment grade. 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.

18
<PAGE>
<PAGE>

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 obligations during an economic 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.

Certain of these securities may be difficult to dispose of
because there may be a thin trading market. Because there is no establishing
retail secondary market for many of these securities, it is anticipated 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 ability to dispose of particular
issues when necessary to meet the 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 to obtain accurate market quotations for purposes of valuation
and calculation of net asset value.

The market value of securities in medium- and 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 Portfolio's net asset value. The Portfolio 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. Additional expenses may
be incurred 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 securities 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.

Borrowing. Each Portfolio 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

19
<PAGE>
<PAGE>

portfolio securities. Additional investments (including roll-overs) will not be
made when borrowings exceed 5% of the Portfolio's net assets. Although the
principal of such borrowings will be fixed, the Portfolio's assets may change in
value during the time the borrowing is outstanding. Each Portfolio 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.

Investment Policies of the Emerging Markets Portfolio Only

Loan Participations and Assignments. The Emerging Markets
Portfolio 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 Emerging Markets
Portfolio'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
Portfolio having a contractual relationship only with the Lender, not with the
Borrower. The Portfolio 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 Emerging Markets
Portfolio 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 Portfolio may not directly benefit from
any collateral supporting the Loan in which it has purchased the Participation.
As a result, the Portfolio 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 Portfolio 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 Emerging Markets Portfolio will acquire Participations
only if the Lender interpositioned between the Portfolio and the Borrower is
determined by Warburg to be creditworthy.

When the Portfolio purchases Assignments from Lenders, the
Portfolio 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 the Portfolio 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 Portfolio 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
Portfolio's ability to dispose of particular Participations or Assignments when
necessary to meet the Portfolio'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

20
<PAGE>
<PAGE>

difficult for the Portfolio to assign a value to these securities for purposes
of valuing the Portfolio's portfolio and calculating its net asset value.

Mortgage-Backed Securities. The Emerging Markets Portfolio may
invest in mortgage-backed securities, such as those issued by the Government
National Mortgage Association ("GNMA"), the Federal National Mortgage
Association ("FNMA"), the Federal Home Loan Mortgage Corporation ("FHLMC") or
certain foreign issuers. Mortgage-backed securities represent direct or indirect
participations in, or are secured by and payable from, mortgage loans secured by
real property. The mortgages backing these securities include, among other
mortgage instruments, conventional 30-year fixed-rate mortgages, 15-year fixed
rate mortgages, graduated payment mortgages and adjustable rate mortgages. The
government or the issuing agency typically guarantees the payment of interest
and principal of these securities. However, the guarantees do not extend to the
securities' yield or value, which are likely to vary inversely with fluctuations
in interest rates, nor do the guarantees extend to the yield or value of the
Portfolio's shares. These securities generally are "pass-through" instruments,
through which the holders receive a share of all interest and principal payments
from the mortgages underlying the securities, net of certain fees.

Yields on pass-through securities are typically quoted by
investment dealers and vendors based on the maturity of the underlying
instruments and the associated average life assumption. The average life of
pass-through pools varies with the maturities of the underlying mortgage loans.
A pool's term may be shortened by unscheduled or early payments of principal on
the underlying mortgages. The occurrence of mortgage prepayments is affected by
various factors, including the level of interest rates, general economic
conditions, the location, scheduled maturity and age of the mortgage and other
social and demographic conditions. Because prepayment rates of individual pools
vary widely, it is not possible to predict accurately the average life of a
particular pool. For pools of fixed-rate 30-year mortgages, a common industry
practice in the U.S. has been to assume that prepayments will result in a
12-year average life. At present, pools, particularly those with loans with
other maturities or different characteristics, are priced on an assumption of
average life determined for each pool. In periods of falling interest rates, the
rate of prepayment tends to increase, thereby shortening the actual average life
of a pool of mortgage-related securities. Conversely, in periods of rising rates
the rate of prepayment tends to decrease, thereby lengthening the actual average
life of the pool. However, these effects may not be present, or may differ in
degree, if the mortgage loans in the pools have adjustable interest rates or
other special payment terms, such as a prepayment charge. Actual prepayment
experience may cause the yield of mortgage-backed securities to differ from the
assumed average life yield. Reinvestment of prepayments may occur at higher or
lower interest rates than the original investment, thus affecting the
Portfolio's yield.

The rate of interest on mortgage-backed securities is lower
than the interest rates paid on the mortgages included in the underlying pool
due to the annual fees paid to the servicer of the mortgage pool for passing
through monthly payments to certificate holders and to any guarantor, such as
GNMA, and due to any yield retained by the issuer. Actual

21
<PAGE>
<PAGE>

yield to the holder may vary from the coupon rate, even if adjustable, if the
mortgage-backed securities are purchased or traded in the secondary market at a
premium or discount. In addition, there is normally some delay between the time
the issuer receives mortgage payments from the servicer and the time the issuer
makes the payments on the mortgage-backed securities, and this delay reduces the
effective yield to the holder of such securities.

Asset-Backed Securities. The Emerging Markets Portfolio may
invest in asset- backed securities, which represent participations in, or are
secured by and payable from, assets such as motor vehicle installment sales,
installment loan contracts, leases of various types of real and personal
property and receivables from revolving credit (credit card) agreements. Such
assets are securitized through the use of trusts and special purpose
corporations. Payments or distributions of principal and interest may be
guaranteed up to certain amounts and for a certain time period by a letter of
credit or a pool insurance policy issued by a financial institution unaffiliated
with the trust or corporation.

Asset-backed securities present certain risks that are not
presented by other securities in which the Portfolio may invest. Automobile
receivables generally are secured by automobiles. Most issuers of automobile
receivables permit the loan servicers to retain possession of the underlying
obligations. If the servicer were to sell these obligations to another party,
there is a risk that the purchaser would acquire an interest superior to that of
the holders of the asset-backed securities. In addition, because of the large
number of vehicles involved in a typical issuance and technical requirements
under state laws, the trustee for the holders of the automobile receivables may
not have a proper security interest in the underlying automobiles. Therefore,
there is the possibility that recoveries on repossessed collateral may not, in
some cases, be available to support payments on these securities. Credit card
receivables are generally unsecured, and the debtors are entitled to the
protection of a number of state and federal consumer credit laws, many of which
give such debtors the right to set off certain amounts owed on the credit cards,
thereby reducing the balance due. Because asset-backed securities are relatively
new, the market experience in these securities is limited, and the market's
ability to sustain liquidity through all phases of the market cycle has not been
tested.

Zero Coupon Securities. The Emerging Markets Portfolio may
invest in "zero coupon" U.S. Treasury, foreign government and U.S. and foreign
corporate convertible and nonconvertible debt securities, which are bills, notes
and bonds that have been stripped of their unmatured interest coupons and
custodial receipts or certificates of participation representing interests in
such stripped debt obligations and coupons. A zero coupon security pays no
interest to its holder prior to maturity. Accordingly, such securities usually
trade at a deep discount from their face or par value and will be subject to
greater fluctuations of market value in response to changing interest rates than
debt obligations of comparable maturities that make current distributions of
interest. The Portfolio 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

22
<PAGE>
<PAGE>

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 Portfolio must pay each year and, in
order to generate cash necessary to pay such dividends, the Portfolio may
liquidate portfolio securities at a time when it would not otherwise have done
so.

Stand-By Commitments. The Emerging Markets Portfolio 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 Portfolio's
option specified securities at a specified price. The Portfolio's right to
exercise stand-by commitments is unconditional and unqualified. Stand-by
commitments acquired by the Portfolio may also be referred to as "put" options.
A stand-by commitment is not transferable by the Portfolio, although the
Portfolio 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 Portfolio intends 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 Portfolio
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 Portfolio upon its exercise of a
stand-by commitment is normally (i) the Portfolio's acquisition cost of the
securities (excluding any accrued interest which the Portfolio paid on their
acquisition), less any amortized market premium or plus any amortized market or
original issue discount during the period the Portfolio owned the securities,
plus (ii) all interest accrued on the securities since the last interest payment
date during that period.

The Portfolio expects that stand-by commitments will generally
be available without the payment of any direct or indirect consideration.
However, if necessary or advisable, the Portfolio 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 Portfolio's
portfolio will not exceed 1/2 of 1% of the value of the Portfolio's total assets
calculated immediately after each stand-by commitment is acquired.

The Portfolio 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 Portfolio would be valued at zero in
determining net asset value. Where the Portfolio paid any consideration directly
or

23
<PAGE>
<PAGE>

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
Portfolio. Stand-by commitments would not affect the average weighted maturity
of the Portfolio's portfolio. The Portfolio currently anticipates that it will
not invest more than 5% of its net assets in stand-by commitments.

Non-Diversified Status. The Emerging Markets Portfolio is
classified as non-diversified within the meaning of the 1940 Act, which means
that it is not limited by such Act in the proportion of its assets that it may
invest in securities of a single issuer. The Portfolio's investments will be
limited, however, in order to qualify as a "regulated investment company" for
purposes of the Code. See "Additional Information Concerning Taxes." To qualify,
the Portfolio will comply with certain requirements, including limiting its
investments so that at the close of each quarter of the taxable year (i) not
more than 25% of the market value of its total assets will be invested in the
securities of a single issuer, and (ii) with respect to 50% of the market value
of its total assets, not more than 5% of the market value of its total assets
will be invested in the securities of a single issuer and the Portfolio will not
own more than 10% of the outstanding voting securities of a single issuer.

Investment Policies of the Post-Venture Capital Portfolio Only

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

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

24
<PAGE>
<PAGE>

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

Securities of Small Companies. The Post-Venture Capital
Portfolio's investments involve considerations that are not applicable to
investing in securities of established, larger-capitalization issuers, including
reduced and less reliable information about issuers and markets, less stringent
accounting standards, illiquidity of securities and markets, higher brokerage
commissions and fees and greater market risk in general. In addition, securities
of smaller companies may involve greater risks since these securities may have
limited marketability and, thus, may be more volatile.

Other Investment Limitations

The investment limitations numbered 1 through 10 may not be
changed without the affirmative vote of the holders of a majority of a
Portfolio'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 Portfolio are present or represented by
proxy, or (ii) more than 50% of the outstanding shares. Investment limitations
11 through 17 may be changed by a vote of the Board at any time.

A Portfolio may not:

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

2. Purchase any securities which would cause 25% or more of
the value of the Portfolio'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. For the Post-Venture Capital Portfolio only, purchase the
securities of any issuer, if as a result more than 5% of the value of the
Portfolio's total assets would be invested in the securities of such issuer,
except that this 5% limitation does not apply to U.S.

25
<PAGE>
<PAGE>

government securities and except that up to 25% of the value of the Portfolio's
total assets may be invested without regard to this 5% limitation.

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

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

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

7. For the Emerging Markets Portfolio only, make short sales
of securities or maintain a short position, except that the Portfolio may
maintain short positions in forward currency contracts, options, futures
contracts and options on futures contracts and make short sales "against the
box".

8. Purchase securities on margin, except that the Portfolio
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 Portfolio 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 on a forward commitment or
delayed-delivery basis and enter into stand-by commitments.

10. Issue any senior security except as permitted in the
Portfolio's investment limitations.

11. 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.

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

26
<PAGE>
<PAGE>

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

14. Purchase any security if as a result the Portfolio 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.

15. Purchase or retain securities of any company if, to the
knowledge of the Trust, any of the Portfolio's officers or Trustees or any
officer or director of Warburg 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.

16. Invest in warrants (other than warrants acquired by the
Portfolio 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 Portfolio's net assets.

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

General. Certain other non-fundamental investment limitations
are currently required by one or more states in which shares of the Portfolios
are sold. These may be more restrictive than the limitations set forth above.
Should a Portfolio determine that any such commitment is no longer in the best
interest of the Portfolio and its shareholders, the Portfolio will revoke the
commitment by terminating the sale of Portfolio shares in the state involved. In
addition, the relevant state may change or eliminate its policy regarding such
investment limitations. 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 Portfolio's assets
will not constitute a violation of such restriction.

Portfolio Valuation

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

27
<PAGE>
<PAGE>

quotation on the exchange or market. Options and futures contracts will be
valued similarly. A security which is listed or traded on more than one exchange
is valued at the quotation on the exchange determined to be the primary market
for such security. Short-term obligations with maturities of 60 days or less are
valued at amortized cost, which constitutes fair value as determined by the
Board. Amortized cost involves valuing a portfolio instrument at its initial
cost and thereafter assuming a constant amortization to maturity of any discount
or premium, regardless of the impact of fluctuating interest rates on the market
value of the instrument. The amortized cost method of valuation may also be used
with respect to debt obligations with 60 days or less remaining to maturity. In
determining the market value of portfolio investments, the Portfolio may employ
outside organizations (a "Pricing Service") which may use a matrix formula or
other objective method that takes into consideration market indexes, matrices,
yield curves and other specific adjustments. The procedures of Pricing Services
are reviewed periodically by the officers of the Trust under the general
supervision and responsibility of the Board, which may replace a Pricing Service
at any time. Securities, options and futures contracts for which market
quotations are not available and certain other assets of the Portfolio 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 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 Portfolio's net asset value is not calculated. As a result,
calculation of the Portfolio'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 Portfolios'
calculation of net asset value, in which case an adjustment may be made by the
Board or its delegates. 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.

Portfolio Transactions

Warburg is responsible for establishing, reviewing and, where
necessary, modifying each Portfolio's investment program to achieve its
investment objective. Purchases and sales of newly issued portfolio securities
are usually principal transactions without brokerage commissions effected
directly with the issuer or with an underwriter acting as principal. Private
Funds may be purchased directly from the issuer or may involve a broker or
placement agent. Other purchases and sales may be effected on a securities

28
<PAGE>
<PAGE>

exchange or over-the-counter, depending on where it appears that the best price
or execution will be obtained. The purchase price paid by a Portfolio to
underwriters of newly issued securities usually includes a concession paid by
the issuer to the underwriter, and purchases of securities from dealers, acting
as either principals or agents in the after market, are normally executed at a
price between the bid and asked price, which includes a dealer's mark-up or
mark-down. Transactions on U.S. stock exchanges and some foreign stock exchanges
involve the payment of negotiated brokerage commissions. On exchanges on which
commissions are negotiated, the cost of transactions may vary among different
brokers. On most foreign exchanges, commissions are generally fixed. Purchases
of Private Funds through a broker or placement agent will also involve a
commission or other fee. There is generally no stated commission in the case of
securities traded in domestic or foreign over-the-counter markets, but the price
of securities traded in over-the-counter markets includes an undisclosed
commission or mark-up. U.S. government securities are generally purchased from
underwriters or dealers, although certain newly issued U.S. government
securities may be purchased directly from the U.S. Treasury or from the issuing
agency or instrumentality.

Except for Private Funds managed by Abbott, Warburg will
select specific portfolio investments and effect transactions for each Portfolio
and in doing so seeks to obtain the overall best execution of portfolio
transactions. In evaluating prices and executions, Warburg will consider the
factors it deems relevant, which may include the breadth of the market in the
security, the price of the security, the financial condition and execution
capability of a broker or dealer and the reasonableness of the commission, if
any, for the specific transaction and on a continuing basis. Warburg may, in its
discretion, effect transactions in portfolio securities with dealers who provide
brokerage and research services (as those terms are defined in Section 28(e) of
the Securities Exchange Act of 1934) to a Portfolio 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 Portfolios 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 Portfolios. Research
may include furnishing advice, either directly or through publications or
writings, as to the value of securities, the advisability of purchasing or
selling specific securities and the availability of securities or purchasers or
sellers of securities; furnishing seminars, information, analyses and reports
concerning issuers, industries, securities, trading markets and methods,
legislative developments, changes in accounting practices, economic factors and
trends and portfolio strategy; access to research analysts, corporate management
personnel, industry experts, economists and government officials; comparative
performance evaluation and technical measurement services and quotation
services; and products and other services (such

29
<PAGE>
<PAGE>

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. Research received from
brokers or dealers is supplemental to Warburg's own research program. The fees
to Warburg under its advisory agreements with the Trust are not reduced by
reason of its receiving any brokerage and research services.

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

Any portfolio transaction for a Portfolio may be executed
through Counsellors Securities Inc., the Trust'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 Portfolio a commission rate consistent with those charged by Counsellors
Securities to comparable unaffiliated customers in similar transactions. All
transactions with affiliated brokers will comply with Rule 17e-1 under the 1940
Act. In no instance will portfolio securities be purchased from or sold to
Warburg or Counsellors Securities or any affiliated person of such companies.

Transactions for the Portfolios may be effected on foreign
securities exchanges. In transactions for securities not actively traded on a
foreign securities exchange, the Portfolios 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.

Each Portfolio may participate, if and when practicable, in
bidding for the purchase of securities for the Portfolio's portfolio directly
from an issuer in order to take advantage of the lower purchase price available
to members of such a group. A Portfolio

30
<PAGE>
<PAGE>

will engage in this practice, however, only when Warburg, in its sole
discretion, believes such practice to be otherwise in the Portfolio's interest.

Portfolio Turnover

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

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

MANAGEMENT OF THE TRUST

Officers and Board of Trustees

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

<TABLE>
<S> <C>
Richard N. Cooper (62)...................................Trustee
Harvard University National Intelligence Counsel; Professor at
1737 Cambridge Street Harvard University; Director or Trustee of
Cambridge, Massachusetts 02138 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 since
</TABLE>

31
<PAGE>
<PAGE>
<TABLE>
<S> <C>
Greenwich, Connecticut 06830 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 (69).......................................Trustee
2425 North Fish Creek Road Private investor; Consultant
P.O. Box 483 and 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)......................................Chairman of the Board and Trustee
466 Lexington Avenue Vice Chairman and Director of EMW;
New York, New York 10017-3147 Associated with E.M. Warburg, Pincus & Co.,
Inc. ("EMW") since 1970; President of The
Grand Street Settlement; Trustee of Blythedale
Childrens Hospital and Barnard College and
Treasurer of the Foundation for Child
Development; Officer of other investment
companies advised by Warburg.

Thomas A. Melfe (64).....................................Trustee
30 Rockefeller Plaza Partner in the law firm of
New York, New York 10112 Donovan Leisure Newton & Irvine; Director of
Municipal Fund for New York Investors, Inc.

Arnold M. Reichman* (48).................................Trustee and 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.

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

32
<PAGE>
<PAGE>
<TABLE>
<S> <C>
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).

Eugene L. Podsiadlo (39).................................Senior Vice President
466 Lexington Avenue Managing Director of EMW; Associated with
New York, New York 10017-3147 EMW since 1991; Vice President of Citibank,
N.A. from 1987-1991; Senior Vice President
of Counsellors Securities and other investment
companies advised by Warburg.

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

Howard Conroy (42).......................................Vice President, Treasurer and Chief
466 Lexington Avenue 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,
</TABLE>

33
<PAGE>
<PAGE>
<TABLE>
<S> <C>
Treasurer and Chief
Accounting Officer of
other investment
companies advised by
Warburg.

Janna Manes (28).........................................Assistant Secretary
466 Lexington Avenue Associated with EMW since 1996; Associated
New York, New York 10017-3147 with the law firm of Willkie Farr & Gallagher
from 1993-1996; Assistant Secretary of other
investment companies advised by Warburg.
</TABLE>

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

Trustees' Compensation
(estimated for the fiscal year ended December 31, 1996)`D'

<TABLE>
<CAPTION>
Total Total Compensation from
Compensation from all Investment Companies
Name of Director Trust Managed by Warburg*
- ----------------------------------------- ------------------------------ --------------------------------
<S> <C> <C>
John L. Furth None** None**

Arnold M. Reichman None** None**

Richard N. Cooper $1,500 $47,000

Donald J. Donahue $1,500 $47,000

Jack W. Fritz $1,500 $47,000

Thomas A. Melfe $1,500 $47,000

Alexander B. Trowbridge $1,500 $47,000
</TABLE>

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

`D' Amounts shown are estimates of future payments to be made pursuant to
existing arrangements.

* Each Trustee also serves as a Director or Trustee of 19 other
investment companies advised by Warburg.

34
<PAGE>
<PAGE>

** Mr. Furth and Mr. Reichman are considered to be interested persons of
the Trust and Warburg, as defined under Section 2(a)(19) of the 1940
Act, and, accordingly, receive no compensation from the Trust or any
other investment company managed by Warburg.

As of June 18, 1996, no Trustees or officers of the Trust owned any of the
outstanding shares of the Portfolios.

Portfolio Managers

Emerging Markets Portfolio. Mr. Richard H. King, co-portfolio
manager of the Emerging Markets Portfolio, earned a B.A. degree from Durham
University in England. Mr. King is also portfolio manager of Warburg Pincus
International Equity Fund, the International Equity Portfolio of Warburg Pincus
Institutional Fund, Inc. and the International Equity Portfolio of the Trust and
a co-portfolio manager of Warburg Pincus Emerging Markets Fund and Warburg
Pincus Japan OTC Fund. From 1968 to 1982, he worked at W.I. Carr Sons & Company
(Overseas), a leading international brokerage firm. He resided in the Far East
as an investment analyst from 1970 to 1977, became director, and later relocated
to the U.S. where he became founder and president of W.I. Carr (America), based
in New York. From 1982 to 1984 Mr. King was a director in charge of the Far East
equity investments at N.M. Rothschild International Asset Management, a London
merchant bank. In 1984 Mr. King became chief investment officer and director for
all international investment strategy with Fiduciary Trust Company International
S.A., in London. He managed an EAFE mutual fund (FTIT) 1985-1986 which grew from
$3 million to over $100 million during this two-year period.

Mr. Nicholas P.W. Horsley, co-portfolio manager of the
Emerging Markets Portfolio and associate portfolio manager and research analyst
of the International Equity Portfolio of the Trust, is also a co-portfolio
manager of Warburg Pincus Emerging Markets Fund and Warburg Pincus Japan OTC
Fund and an associate portfolio manager and research analyst of Warburg Pincus
International Equity Fund and the International Equity Portfolio of Warburg
Pincus Institutional Fund, Inc. From 1981 to 1984 Mr. Horsley was a securities
analyst at Barclays Merchant Bank in London, UK and Johannesburg, RSA. From 1984
to 1986 he was a senior analyst with BZW Investment Management in London. From
1986 to 1993 he was a director, portfolio manager and analyst at Barclays
dezoete Wedd in New York City. Mr. Horsley earned B.A. and M.A. degrees with
honors from University College, Oxford.

Mr. Harold W. Ehrlich, associate portfolio manager and
research analyst of the Emerging Markets Portfolio and the International Equity
Portfolio of the Trust, is also an associate portfolio manager and research
analyst of Warburg Pincus Emerging Markets Fund, Warburg Pincus International
Equity Fund and the International Equity Portfolio of Warburg Pincus
Institutional Fund, Inc. Prior to joining Warburg, Mr. Ehrlich was a senior vice
president, portfolio manager and analyst at Templeton Investment Counsel Inc.
from 1987 to

35
<PAGE>
<PAGE>

1995. He was a research analyst and assistant portfolio manager at Fundamental
Management Corporation from 1985 to 1986 and a research analyst at First Equity
Corporation of Florida from 1983 to 1985. Mr. Ehrlich earned a B.S.B.A. degree
from University of Florida and earned his Chartered Financial Analyst
designation in 1990.

Mr. Vincent J. McBride, associate portfolio manager and
research analyst of the Emerging Markets Portfolio and the International Equity
Portfolio of the Trust, is also an associate portfolio manager and research
analyst of Warburg Pincus Emerging Markets Fund, Warburg Pincus International
Equity Fund and the International Equity Portfolio of Warburg Pincus
Institutional Fund, Inc. Prior to joining Warburg in 1994, Mr. McBride was an
international equity analyst at Smith Barney Inc. from 1993 to 1994 and at
General Electric Investment Corporation from 1992 to 1993. He was also a
portfolio manager/analyst at United Jersey Bank from 1989 to 1992 and a
portfolio manager at First Fidelity Bank from 1987 to 1989. Mr. McBride earned a
B.S. degree from the University of Delaware and an M.B.A. degree from Rutgers
University.

Post-Venture Capital Portfolio. Ms. Elizabeth B. Dater,
co-portfolio manager of the Post-Venture Capital Portfolio is also co-portfolio
manager of Warburg Pincus Post- Venture Capital Fund, Warburg Pincus Emerging
Growth Fund and the Small Company Growth Portfolio of the Trust. Ms. Dater is
the former director of research for Warburg's investment management activities.
Prior to joining Warburg in 1978, she was a vice president of Research at
Fiduciary Trust Company of New York and an institutional sales assistant at
Lehman Brothers. Ms. Dater has been a regular panelist on Maryland Public
Television's "Wall Street Week" since 1976. Ms. Dater earned a B.A. degree from
Boston University in Massachusetts.

Mr. Stephen J. Lurito, co-portfolio manager of the
Post-Venture Capital Portfolio is also co-portfolio manager of Warburg Pincus
Post-Venture Capital Fund, Warburg Pincus Emerging Growth Fund and the Small
Company Growth Portfolio of the Trust. Mr. Lurito, also the research coordinator
and a portfolio manager for micro-cap equity and post-venture products, has been
with Warburg since 1987. Prior to that he was a research analyst at Sanford C.
Bernstein & Company, Inc. Mr. Lurito earned a B.A. degree from the University of
Virginia and a M.B.A. from the University of Pennsylvania.

Robert S. Janis and Christopher M. Nawn are associate
portfolio managers and research analysts for the Post-Venture Capital Portfolio.
Mr. Janis has been with Warburg since October 1994, before which time he was a
vice president and senior research analyst at U.S. Trust Company of New York.
Mr. Nawn has been with Warburg since September 1994, before which time he was a
senior sector analyst and portfolio manager at the Dreyfus Corporation.

Raymond L. Held and Gary H. Solomon, investment managers and
general partners of Abbott, manage the Post-Venture Capital Portfolio's
investments in Private

36
<PAGE>
<PAGE>

Funds. Abbott also acts as sub-investment adviser for the Warburg Pincus
Post-Venture Capital Fund.

Investment Adviser, Sub-Investment Adviser and Co-Administrators

Warburg serves as investment adviser to each Portfolio, Abbott
serves as sub-investment adviser to the Post-Venture Capital Portfolio,
Counsellors Funds Service, Inc. ("Counsellors Service") serves as a
co-administrator to the Trust and PFPC serves as a co-administrator to the
Trust pursuant to separate written agreements (the "Advisory Agreements," the
"Sub-Advisory Agreement," the "Counsellors Service Co-Administration Agreements"
and the "PFPC Co-Administration Agreements," respectively). The services
provided by, and the fees payable by the Trust to, Warburg under the Advisory
Agreements, Abbott under the Sub-Advisory Agreement, Counsellors Service under
the Counsellors Service Co-Administration Agreements and PFPC under the PFPC
Co-Administration Agreements are described in the Prospectus.

Custodian and Transfer Agent

State Street Bank and Trust Company ("State Street") serves as
custodian of the Emerging Markets Portfolio's U.S. and foreign assets. PNC Bank,
National Association ("PNC") serves as custodian of the Post-Venture Capital
Portfolio's U.S. assets and Fiduciary Trust Company International ("Fiduciary")
serves as custodian of the Portfolio's non-U.S. assets, pursuant to separate
custodian agreements (the "Custodian Agreements"). Under the Custodian
Agreements, State Street, PNC and Fiduciary each (i) maintains a separate
account or accounts in the name of the relevant Portfolio, (ii) holds and
transfers portfolio securities on account of the relevant Portfolio, (iii) makes
receipts and disbursements of money on behalf of the relevant Portfolio, (iv)
collects and receives all income and other payments and distributions on account
of the relevant Portfolio's portfolio securities held by it and (v) makes
periodic reports to the Board concerning the Trust's custodial arrangements. PNC
may delegate its duties under its Custodian Agreement with the Trust to a wholly
owned direct or indirect subsidiary of PNC or PNC Bank Corp. upon notice to the
Trust and upon the satisfaction of certain other conditions. With the approval
of the Board, State Street and Fiduciary are authorized to select one or more
foreign banking institutions and foreign securities depositaries as
sub-custodian on behalf of the Emerging Markets Portfolio and the Post-Venture
Capital Portfolio, respectively; neither State Street nor Fiduciary is relieved
of any responsibility or liability to the Trust on account of any actions or
omissions of any such sub-custodian. The principal business address of State
Street is 225 Franklin Street, Boston, Massachusetts 02110. PNC is an indirect,
wholly owned subsidiary of PNC Bank Corp., and its principal business address is
Broad and Chestnut Streets, Philadelphia, Pennsylvania 19101. The principal
business address of Fiduciary is Two World Trade Center, New York, New York
10048.

State Street also acts as the shareholder servicing, transfer
and dividend disbursing agent of the Trust pursuant to a Transfer Agency and
Service Agreement, under

37
<PAGE>
<PAGE>

which State Street (i) issues and redeems shares of each Portfolio, (ii)
addresses and mails all communications by the Trust to record owners of
Portfolio shares, including reports to shareholders, dividend and distribution
notices and proxy material for its meetings of shareholders, (iii) maintains
shareholder accounts and, if requested, sub-accounts and (iv) makes periodic
reports to the Board concerning the transfer agent's operations with respect to
the Trust. 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.

Organization of the Trust

The Trust was organized as an unincorporated Massachusetts
business trust under the name "Warburg, Pincus Trust."

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

All shareholders of a Portfolio, upon liquidation, will
participate ratably in the Portfolio'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.

ADDITIONAL PURCHASE AND REDEMPTION INFORMATION

As described in the Prospectus, shares of the Portfolios may
not be purchased or redeemed by individual investors directly, but may be
purchased or redeemed only through Variable Contracts offered by separate
accounts of Participating Insurance Companies and through Plans, including
participant-directed Plans which elect to make a Portfolio an investment option
for Plan participants. The offering price of each Portfolio's shares is equal to
its per share net asset value. Additional information on how to purchase

38
<PAGE>
<PAGE>

and redeem a Portfolio's shares and how such shares are priced is included in
the Prospectus under "Net Asset Value."

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

If the Board determines that conditions exist which make
payment of redemption proceeds wholly in cash unwise or undesirable, a Portfolio
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 Trust will comply with Rule 18f-1 promulgated under the
1940 Act with respect to redemptions in kind.

ADDITIONAL INFORMATION CONCERNING TAXES

The discussion set out below of tax considerations generally
affecting the Trust 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 the sponsoring Participating
Insurance Company separate account prospectus or the Plan documents or other
informational materials supplied by Plan sponsors and their own tax advisers
with respect to the particular tax consequences to them of an investment in a
Portfolio.

Each Portfolio intends to qualify as a "regulated investment
company" under Subchapter M of the Code. If it qualifies as a regulated
investment company, a Portfolio will pay no federal income taxes on its taxable
net investment income (that is, taxable income other than net realized capital
gains) and its net realized capital gains that are distributed to shareholders.
To qualify under Subchapter M, a Portfolio 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 its 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

39
<PAGE>
<PAGE>

the end of each fiscal quarter of the Portfolio (a) at least 50% of the market
value of the Portfolio'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
Portfolio'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
Portfolio'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 Portfolio controls and that are
determined to be in the same or similar trades or businesses or related trades
or businesses. In meeting these requirements, a Portfolio may be restricted in
the selling of securities held by the Portfolio for less than three months and
in the utilization of certain of the investment techniques described above and
in the Trust's Prospectus. As a regulated investment company, a Portfolio 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 Portfolio'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 December 31 during such year, together with any
undistributed, untaxed amounts of ordinary income and capital gains from the
previous calendar year. The Portfolios expect to pay the dividends and make the
distributions necessary to avoid the application of this excise tax.

In addition, each Portfolio intends to comply with the
diversification requirements of Section 817(h) of the Code related to the
tax-deferred status of insurance company separate accounts. To comply with
regulations under Section 817(h) of the Code, each Portfolio will be required to
diversify its investments so that on the last day of each calendar quarter no
more than 55% of the value of its assets is represented by any one investment,
no more than 70% is represented by any two investments, no more than 80% is
represented by any three investments and no more than 90% is represented by any
four investments. Generally, all securities of the same issuer are treated as a
single investment. For the purposes of Section 817(h), obligations of the United
States Treasury and each U.S. government instrumentality are treated as
securities of separate issuers. The Treasury Department has indicated that it
may issue future pronouncements addressing the circumstances in which a Variable
Contract owner's control of the investments of a separate account may cause the
Variable Contract owner, rather than the Participating Insurance Company, to be
treated as the owner of the assets held by the separate account. If the Variable
Contract owner is considered the owner of the securities underlying the separate
account, income and gains produced by those securities would be included
currently in the Variable Contract owner's gross income. It is not known what
standards will be set forth in such pronouncements or when, if at all, these
pronouncements may be issued. In the event that rules or regulations are
adopted, there can be no assurance that the Portfolios will be able to operate
as currently described, or that the Trust will not have to change the investment
goal or investment policies of a Portfolio. While a Portfolio's investment goal
is fundamental and may be changed only by a vote of a majority of the
Portfolio's outstanding

40
<PAGE>
<PAGE>

shares, the Board reserves the right to modify the investment policies of a
Portfolio as necessary to prevent any such prospective rules and regulations
from causing a Variable Contract owner to be considered the owner of the shares
of the Portfolio underlying the separate account.

A Portfolio'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 Portfolio (i.e., may affect whether gains or losses are
ordinary or capital), accelerate recognition of income to the Portfolio, defer
Portfolio losses and cause the Portfolio 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
a Portfolio to mark-to-market certain types of its positions (i.e., treat them
as if they were closed out) and (ii) may cause the Portfolio to recognize income
without receiving cash with which to pay dividends or make distributions in
amounts necessary to satisfy the distribution requirements for avoiding income
and excise taxes. Each Portfolio 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 currency, forward contract, option, futures
contract or hedged investment so that (a) neither the Portfolio nor its
shareholders will be treated as receiving a materially greater amount of capital
gains or distributions than actually realized or received, (b) the Portfolio
will be able to use substantially all of its losses for the fiscal years in
which the losses actually occur and (c) the Portfolio will continue to qualify
as a regulated investment company.

As described in the Prospectus, because shares of a Portfolio
may only be purchased through Variable Contracts and Plans, it is anticipated
that dividends and distributions will be exempt from current taxation if left to
accumulate within the Variable Contracts or Plans.

Investment in Passive Foreign Investment Companies

If a Portfolio purchases shares in certain foreign entities
classified under the Code as "passive foreign investment companies" ("PFICs"),
the Portfolio 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 by the Portfolio to its shareholders, the Variable
Contracts and Plans. 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 Portfolio. Certain interest charges may be imposed on
the Portfolio with respect to any taxes arising from excess distributions or
gains on the disposition of shares in a PFIC.

A Portfolio 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

41
<PAGE>
<PAGE>

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 Portfolio 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 Portfolio.

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 a Portfolio is unclear. If the Portfolio 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 Portfolio. Recently proposed legislation would
codify the mark-to-market election for regulated investment companies.

DETERMINATION OF PERFORMANCE

From time to time, a Portfolio may quote its total return in
advertisements or in reports and other communications to shareholders. Total
return is calculated by finding the average annual compounded rates of
return for the one-, five-, and ten- (or such shorter period as the Portfolio
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)`pp'n = ERV. For purposes of this formula, "P" is a hypothetical
investment of $1,000; "T" is average annual total return; "n" is number of
years; and "ERV" is the ending redeemable value of a hypothetical $1,000 payment
made at the beginning of the one-, five- or ten-year periods (or fractional
portion thereof). Total return or "T" is computed by finding the average annual
change in the value of an initial $1,000 investment over the period and assumes
that all dividends and
distributions are reinvested during the period.

A Portfolio may advertise, from time to time, comparisons of
its performance with that of one or more other mutual funds with similar
investment objectives. A Portfolio 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. Investors
should note that this performance may not be representative of the Portfolio's
total return in longer market cycles.

A Portfolio's performance will vary from time to time
depending upon market conditions, the composition of its portfolio and operating
expenses allocable to it. As described above, total return is based on
historical earnings and is not intended to indicate

42
<PAGE>
<PAGE>

future performance. Consequently, any given performance quotation should not be
considered as representative of performance for any specified period in the
future. Performance information may be useful as a basis for comparison with
other investment alternatives. However, a Portfolio's performance will
fluctuate, unlike certain bank deposits or other investments which pay a fixed
yield for a stated period of time. Performance quotations for the Portfolios
include the effect of deducting each Portfolio's expenses, but may not include
charges and expenses attributable to any particular Variable Contract or Plan,
which would reduce the returns described in this section. See the Prospectus,
"Performance."

The Emerging Markets Portfolio intends to diversify its assets
among countries, and in doing so, would expect to be able to reduce the risk
arising from economic problems affecting a single country. Warburg thus believes
that, by spreading risk throughout many diverse markets outside the United
States, the Portfolio will reduce its exposure to country-specific economic
problems. Warburg also believes that a diversified portfolio of international
equity securities, when combined with a similarly diversified portfolio of
domestic equity securities, tends to have a lower volatility than a portfolio
composed entirely of domestic securities. Furthermore, international equities
have been shown to reduce volatility in single asset portfolios regardless of
whether the investments are in all domestic equities or all domestic
fixed-income instruments, and research has indicated that volatility can be
significantly decreased when international equities are added. Advertising or
supplemental sales literature relating to the Portfolio may describe the
percentage decline from all-time high levels for certain foreign stock markets.

INDEPENDENT ACCOUNTANTS AND COUNSEL

Coopers & Lybrand L.L.P. with principal offices at 2400 Eleven
Penn Center, Philadelphia, Pennsylvania 19103, serves as independent accountants
for the Trust.

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

FINANCIAL STATEMENTS

The Portfolios have not yet commenced operations. The
Portfolios' initial Statements of Assets and Liabilities (Unaudited) as of April
17, 1996 follow the Appendix to this Statement of Additional Information.

43
<PAGE>
<PAGE>

APPENDIX

DESCRIPTION OF RATINGS

Commercial Paper Ratings

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

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

Corporate Bond Ratings

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

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

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

A - Debt rated A has a strong capacity to pay interest and
repay principal although 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 they normally
exhibit 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.

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

BB, B, CCC, CC, C - Debt rated BB, B, CCC, CC and C is regarded, on
balance, as predominantly 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.

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

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

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

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

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

A-2
<PAGE>
<PAGE>

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

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

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

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

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

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

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

Moody's applies numerical modifiers (1, 2 and 3) with respect to the
bonds rated "Aa" through "B". The modifier 1 indicates that the bond being rated
ranks in the higher

A-3

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.

A-4

WARBURG PINCUS TRUST

STATEMENT OF ASSETS AND LIABILITIES
AS OF APRIL 17, 1996

<TABLE>
<CAPTION>
Emerging
Markets
Portfolio
---------
<S> <C>
Assets:
Cash 0
Deferred Organizational Costs 0
-
Total Assets 0

Liabilities: 0
-
Net Assets 0
=
Net Asset Value, Redemption and Offering:
Price Per Share (1 billion
shares classified for the
Emerging Markets Portfolio -
$.001 par value) applicable to 1
share outstanding.
$10.00
======
</TABLE>

WARBURG PINCUS TRUST

STATEMENT OF ASSETS AND LIABILITIES
AS OF APRIL 17, 1996

<TABLE>
<CAPTION>
Post-Venture
Capital
Portfolio
---------
<S> <C>
Assets:
Cash 0
Deferred Organizational Costs 0
-
Total Assets 0

Liabilities: 0
-
Net Assets 0
=
Net Asset Value, Redemption and Offering:
Price Per Share (1 billion
shares classified for the
Post-Venture Capital Portfolio -
$.001 par value) applicable to 1
share outstanding $10.00
======
</TABLE>

<PAGE>
<PAGE>
PROSPECTUS

July 2, 1996

WARBURG PINCUS TRUST
POST-VENTURE CAPITAL PORTFOLIO

Warburg Pincus Trust shares are not available directly to
individual investors but may be offered only through certain
insurance products and pension and retirement plans.

[Logo]

<PAGE>
<PAGE>
PROSPECTUS July 2, 1996

Warburg Pincus Trust (the 'Trust') is an open-end management investment company
that currently offers four investment funds, one of which, the Post-Venture
Capital Portfolio, is offered pursuant to this Prospectus (the 'Portfolio'):

Shares of the Portfolio are not available directly to individual investors but
may be offered only to certain (i) life insurance companies ('Participating
Insurance Companies') for allocation to certain of their separate accounts
established for the purpose of funding variable annuity contracts and variable
life insurance contracts (together, 'Variable Contracts') and (ii) tax-qualified
pension and retirement plans ('Plans'), including participant-directed Plans
which elect to make the Portfolio an investment option for Plan participants.
The Portfolio may not be available in every state due to various insurance
regulations.

This Prospectus briefly sets forth certain information about the Portfolio that
investors should know before investing. Investors are advised to read this
Prospectus and retain it for future reference. This Prospectus should be read in
conjunction with the prospectus of the separate account of the specific
insurance product that accompanies this Prospectus or with the Plan documents or
other informational materials supplied by Plan sponsors. Additional information
about the Portfolio, 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 the Trust at (800) 369-2728.
The Statement of Additional Information, as amended from time to time, bears the
same date as this Prospectus and is incorporated by reference in its entirety
into this Prospectus.
- --------------------------------------------------------------------------------

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

<PAGE>
<PAGE>
THE TRUST'S EXPENSES
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
Post-Venture
Capital Portfolio
-----------------
<S> <C>
Shareholder Transaction Expenses
Maximum Sales Load Imposed on Purchases (as a percentage of offering
price)............................................................. 0
Annual Fund Operating Expenses (as a percentage of average net assets)
Management Fees...................................................... .64%
12b-1 Fees........................................................... 0
Other Expenses*...................................................... .76%
---
Total Portfolio Operating Expenses (after fee waivers and expense
reimbursements)*................................................... 1.40%

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............................................................... $ 14
3 years.............................................................. $ 44
</TABLE>

- --------------------------------------------------------------------------------
* Absent the waiver of fees by the Portfolio's investment adviser and
co-administrator, Management Fees for the Portfolio would equal 1.25%; Other
Expenses would equal .81%; and Total Portfolio Operating Expenses would equal
2.06%. Other Expenses for the Portfolio are based on annualized estimates of
expenses for the fiscal year ending December 31, 1996, net of any fee waivers
or expense reimbursements. The investment adviser has undertaken to limit the
Portfolio's Total Portfolio Operating Expenses through December 31, 1996.

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

The expense table shows the costs and expenses that an investor will bear
directly or indirectly as a shareholder of the Portfolio. THE TABLE DOES NOT
REFLECT ADDITIONAL CHARGES AND EXPENSES WHICH ARE, OR MAY BE, IMPOSED UNDER THE
VARIABLE CONTRACTS OR PLANS; SUCH CHARGES AND EXPENSES ARE DESCRIBED IN THE
PROSPECTUS OF THE SPONSORING PARTICIPATING INSURANCE COMPANY SEPARATE ACCOUNT OR
IN THE PLAN DOCUMENTS OR OTHER INFORMATIONAL MATERIALS SUPPLIED BY PLAN
SPONSORS. The Example should not be considered a representation of past or
future expenses; actual Portfolio expenses may be greater or less than those
shown. Moreover, while the Example assumes a 5% annual return, the Portfolio's
actual performance will vary and may result in a return greater or less than 5%.

<PAGE>
<PAGE>
INVESTMENT OBJECTIVES AND POLICIES
- --------------------------------------------------------------------------------
Because of the nature of the Post-Venture Capital Portfolio's investments and
certain strategies it may use, such as investing in Private Funds (as defined
below), an investment in the Portfolio should be considered only for the
aggressive portion of an investor's portfolio and may not be appropriate for all
investors.
The investment objective of the Post-Venture Capital Portfolio is to seek
long-term growth of capital. The Portfolio's objective is a fundamental policy
and may not be amended without first obtaining the approval of a majority of the
outstanding shares of the Portfolio. Any investment involves risk and,
therefore, there can be no assurance that the Portfolio will achieve its
investment objective. See 'Portfolio Investments' and 'Certain Investment
Strategies' for descriptions of certain types of investments the Portfolio may
make.
The Portfolio is a diversified portfolio that pursues its investment
objective by investing primarily in equity securities of companies considered by
Warburg, Pincus Counsellors, Inc., the Portfolio's investment adviser
('Warburg'), to be in their post-venture capital stage. Although the Portfolio
may invest up to 10% of its assets in venture capital and other investment
funds, the Portfolio is not designed primarily to provide venture capital
financing. Rather, under normal market conditions, the Portfolio will invest at
least 65% of its total assets in equity securities of 'post-venture capital
companies.' A post-venture capital company is a company that has received
venture capital financing either (a) during the early stages of the company's
existence or the early stages of the development of a new product or service or
(b) as part of a restructuring or recapitalization of the company. The
investment of venture capital financing, distribution of such company's
securities to venture capital investors, or initial public offering ('IPO'),
whichever is later, will have been made within ten years prior to the
Portfolio's purchase of the company's securities.
Warburg believes that venture capital participation in a company's capital
structure can lead to revenue/earnings growth rates above those of older, public
companies such as those in the Dow Jones Industrial Average or the Fortune 500.
Venture capitalists finance start-up companies, companies in the early stages of
developing new products or services and companies undergoing a restructuring or
recapitalization, since these companies may not have access to conventional
forms of financing (such as bank loans or public issuances of stock). Venture
capitalists may hold substantial positions in companies that may have been
acquired at prices significantly below the initial public offering price. This
may create a potential adverse impact in the short-term on the market price of a
company's stock due to sales in the open market by a venture capitalist or
others who acquired the stock at lower prices prior to the company's IPO.
Warburg will consider the impact of such sales in selecting post-venture capital
investments. Venture capitalists may be individuals or funds organized by
venture capitalists which are typically offered only to large institutions, such
as pension funds and endowments,

<PAGE>
<PAGE>
and certain accredited investors. Venture capital participation in a company is
often reduced when the company engages in an IPO of its securities or when it is
involved in a merger, tender offer or acquisition.
Warburg has experience in researching smaller companies, companies in the
early stages of development and venture capital-financed companies. Its team of
analysts, led by Elizabeth Dater and Stephen Lurito, regularly monitors
portfolio companies whose securities are held by over 250 of the larger domestic
venture capital funds. Ms. Dater and Mr. Lurito have managed post-venture equity
securities in separate accounts for institutions since 1989 and currently manage
over $1 billion of such assets for institutions. The Portfolio will invest in
securities of post-venture capital companies that are traded on a national
securities exchange or in an organized over-the-counter market.
Private Fund Investments. Up to 10% of the Portfolio's assets may be invested
in United States or foreign private limited partnerships or other investment
funds ('Private Funds') that themselves invest in equity or debt securities of
(a) companies in the venture capital or post-venture capital stages of
development or (b) companies engaged in special situations or changes in
corporate control, including buyouts. In selecting Private Funds for investment,
Abbott Capital Management, L.P., the Portfolio's sub-investment adviser with
respect to Private Funds ('Abbott'), attempts to invest in a mix of Private
Funds that will provide an above average internal rate of return (i.e., the
discount rate at which the present value of an investment's future cash inflows
(dividend income and capital gains) are equal to the cost of the investment).
Warburg believes that the Portfolio's investments in Private Funds offers
individual investors a unique opportunity to participate in venture capital and
other private investment funds, providing access to investment opportunities
typically available only to large institutions and accredited investors.
Although the Portfolio's investments in Private Funds are limited to a maximum
of 10% of the Portfolio's assets, these investments are highly speculative and
volatile and may produce gains or losses in this portion of the Portfolio that
exceed those of the Portfolio's other holdings and of more mature companies
generally.
Because Private Funds generally are investment companies for purposes of the
Investment Company Act of 1940, as amended (the '1940 Act'), the Portfolio's
ability to invest in them will be limited. In addition, Portfolio shareholders
will remain subject to the Portfolio's expenses while also bearing their pro
rata share of the operating expenses of the Private Funds. The ability of the
Portfolio to dispose of interests in Private Funds is very limited and will
involve the risks described under 'Risk Factors and Special
Considerations -- Non-Publicly Traded Securities; Rule 144A Securities.' In
valuing the Portfolio's holdings of interests in Private Funds, the Portfolio
will be relying on the most recent reports provided by Abbott and by the Private
Funds themselves prior to calculation of the Portfolio's net asset value. These
reports, which are provided on an infrequent basis, often depend

<PAGE>
<PAGE>
on the subjective valuations of the managers of the Private Funds and, in
addition, would not generally reflect positive or negative subsequent
developments affecting companies held by the Private Fund. See 'Net Asset
Value.' Debt securities held by a Private Fund will tend to be rated below
investment grade and may be rated as low as C by Moody's Investors Service, Inc.
('Moody's') or D by Standard & Poor's Ratings Group ('S&P'). For a discussion of
the risks of investing in below investment grade debt, see 'Risk Factors and
Special Considerations -- Lower Rated Securities' below and 'Investment
Policies -- Below Investment Grade Debt Securities' in the Statement of
Additional Information. For a discussion of the possible tax consequences of
investing in foreign Private Funds, see 'Additional Information Concerning
Taxes -- Investment in Passive Foreign Investment Companies' in the Statement of
Additional Information.

Other Strategies. The Portfolio may invest up to 35% of its assets in
exchange-traded and over-the-counter securities that do not meet the definition
of post-venture capital companies without regard to market capitalization. Up to
10% of the Portfolio's assets may be invested, directly or through Private
Funds, in securities of issuers engaged at the time of purchase in 'special
situations,' such as a restructuring or recapitalization; an acquisition,
consolidation, merger or tender offer; a change in corporate control or
investment by a venture capitalist.

<PAGE>
<PAGE>
PORTFOLIO INVESTMENTS
- --------------------------------------------------------------------------------
DEBT. The Portfolio may invest up to 20% of its total assets in investment
grade debt securities (other than money market obligations) for the purpose of
seeking growth of capital. The interest income to be derived may be considered
as one factor in selecting debt securities for investment by Warburg. Because
the market value of debt obligations can be expected to vary inversely to
changes in prevailing interest rates, investing in debt obligations may provide
an opportunity for capital growth when interest rates are expected to decline.
The success of such a strategy is dependent upon Warburg's ability to accurately
forecast changes in interest rates. The market value of debt obligations may
also be expected to vary depending upon, among other factors, the ability of the
issuer to repay principal and interest, any change in investment rating and
general economic conditions.

A security will be deemed to be investment grade if it is rated within the
four highest grades by Moody's or S&P or, if unrated, is determined to be of
comparable quality by Warburg. Bonds rated in the fourth highest grade may have
speculative characteristics and changes in economic conditions or other
circumstances are more likely to lead to a weakened capacity to make principal
and interest payments than is the case with higher grade bonds. Subsequent to
its purchase by the Portfolio, an issue of securities may cease to be rated or
its rating may be reduced below the minimum required for purchase by the
Portfolio. Neither event will require sale of such securities, although Warburg
will consider such event in its determination of whether the Portfolio should
continue to hold the securities.

When Warburg believes that a defensive posture is warranted, the Portfolio
may invest temporarily without limit in investment grade debt obligations and in
domestic and foreign money market obligations, including repurchase agreements.

MONEY MARKET OBLIGATIONS. The Portfolio is authorized to invest, under normal
market conditions, up to 20% of its total assets in domestic and foreign
short-term (one year or less remaining to maturity) and medium-term (five years
or less remaining to maturity) money market obligations and, for temporary
defensive purposes, may invest in these securities without limit. These
instruments consist of obligations issued or guaranteed by the U.S. government
or a foreign government, their agencies or instrumentalities; bank obligations
(including certificates of deposit, time deposits and bankers' acceptances of
domestic or foreign banks, domestic savings and loans and similar institutions)
that are high quality investments or, if unrated, deemed by Warburg to be high
quality investments; commercial paper rated no lower than A-2 by S&P or Prime-2
by Moody's or the equivalent from another major rating service or, if unrated,
of an issuer having an outstanding, unsecured debt issue then rated within the
three highest rating categories; and repurchase agreements with respect to the
foregoing.

Repurchase Agreements. The Portfolio may invest in repurchase agreement
transactions with member banks of the Federal Reserve System and certain

<PAGE>
<PAGE>
non-bank dealers. Repurchase agreements are contracts under which the buyer of a
security simultaneously commits to resell the security to the seller at an
agreed-upon price and date. Under the terms of a typical repurchase agreement,
the Portfolio 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 Portfolio to resell, the obligation at an agreed-upon
price and time, thereby determining the yield during the Portfolio's holding
period. This arrangement results in a fixed rate of return that is not subject
to market fluctuations during the Portfolio'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 Portfolio 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 Portfolio is delayed or prevented from
exercising its right to dispose of the collateral securities, including the risk
of a possible decline in the value of the underlying securities during the
period in which the Portfolio seeks to assert this right. Warburg, acting under
the supervision of the Trust's Board of Trustees (the 'Board'), monitors the
creditworthiness of those bank and non-bank dealers with which the Portfolio
enters into repurchase agreements to evaluate this risk. A repurchase agreement
is considered to be a loan under the 1940 Act.

Money Market Mutual Funds. Where Warburg believes that it would be beneficial
to the Portfolio and appropriate considering the factors of return and
liquidity, the Portfolio may invest up to 5% of its assets in securities of
money market mutual funds that are unaffiliated with the Portfolio, Warburg, the
Portfolio's co-administrator, PFPC Inc. ('PFPC') or Abbott. As a shareholder in
any mutual fund, the Portfolio will bear its ratable share of the mutual fund's
expenses, including management fees, and will remain subject to payment of the
Portfolio's administrative 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 the Portfolio may invest include: direct obligations of the
U.S. Treasury, obligations issued by U.S. government agencies and
instrumentalities, including instruments that are supported by the full faith
and credit of the United States, instruments that are supported by the right of
the issuer to borrow from the U.S. Treasury and instruments that are supported
by the credit of the instrumentality.

CONVERTIBLE SECURITIES. Convertible securities in which the Portfolio 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

<PAGE>
<PAGE>
fluctuates in relation to changes in interest rates like bonds and, in addition,
fluctuates in relation to the underlying common stock. Subsequent to purchase by
the Portfolio, convertible securities may cease to be rated or a rating may be
reduced below the minimum required for purchase by the Portfolio. Neither event
will require sale of such securities, although Warburg will consider such event
in its determination of whether the Portfolio should continue to hold the
securities.

RISK FACTORS AND SPECIAL CONSIDERATIONS
- --------------------------------------------------------------------------------
Investing in common stocks and securities convertible into common stocks is
subject to the inherent risk of fluctuations in the prices of such securities.
For certain additional risks relating to the Portfolio's investments, see
'Portfolio Investments' beginning at page 6 and 'Certain Investment Strategies'
beginning at page 10.

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

NON-PUBLICLY TRADED SECURITIES; RULE 144A SECURITIES. The Portfolio 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

<PAGE>
<PAGE>
buyers' in accordance with Rule 144A under the 1933 Act ('Rule 144A
Securities'). An investment in Rule 144A Securities will be considered illiquid
and therefore subject to the Portfolio's limitation on the purchase of illiquid
securities, unless the Board determines on an ongoing basis that an adequate
trading market exists for the security. In addition to an adequate trading
market, the Board will 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 Portfolio to
the extent that qualified institutional buyers become uninterested for a time in
purchasing Rule 144A Securities. The Board will carefully monitor any
investments by the Portfolio in Rule 144A Securities. The Board may adopt
guidelines and delegate to Warburg the daily function of determining and
monitoring the liquidity of Rule 144A Securities, although the Board will retain
ultimate responsibility for any determination regarding liquidity.

Non-publicly traded securities (including Rule 144A Securities and interests
in Private Funds) may involve a high degree of business and financial risk and
may result in substantial losses. The securities may be less liquid than
publicly traded securities and the Portfolio 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
Portfolio. Further, companies whose securities are not publicly traded are not
subject to the disclosure and other investor protection requirements that would
be applicable if their securities were publicly traded. The Portfolio's
investment in illiquid securities is subject to the risk that should the
Portfolio 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 Portfolio's net assets could be adversely affected.

LOWER-RATED SECURITIES. Private Fund investments of the Portfolio may hold
lower-rated and comparable unrated 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. 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.

<PAGE>
<PAGE>
market quotations for purposes of valuing the Portfolio and calculating its net
asset value.

PORTFOLIO TRANSACTIONS AND TURNOVER RATE
- --------------------------------------------------------------------------------
The Portfolio 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 Portfolio. The Portfolio
will not consider portfolio turnover rate a limiting factor in making investment
decisions consistent with their investment objectives and policies. It is not
possible to predict the Portfolio's turnover rate. However, it is anticipated
that the Portfolio's annual turnover rate should not exceed 100%. High portfolio
turnover rates (100% or more) may result in dealer mark ups or underwriting
commissions as well as other transaction costs, including correspondingly higher
brokerage commissions. In addition, short-term gains realized from portfolio
turnover may be taxable to shareholders as ordinary income. See 'Dividends,
Distributions and Taxes -- Taxes' below and 'Investment Policies -- Portfolio
Transactions' in the Statement of Additional Information.

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

CERTAIN INVESTMENT STRATEGIES
- --------------------------------------------------------------------------------
Although there is no intention of doing so during the coming year, the
Portfolio is authorized to engage in the following investment strategies: (i)
purchasing securities on a when-issued basis and purchasing or selling
securities for delayed-delivery, (ii) lending portfolio securities and (iii)
entering into reverse repurchase agreements and dollar rolls. Detailed
information concerning these strategies and their related risks is contained
below and in the Statement of Additional Information.

FOREIGN SECURITIES. The Portfolio may invest up to 20% of its total assets 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 U.S. investments. These risks include
those resulting from fluctuations in currency exchange rates, revaluation of
currencies, future adverse political and economic developments and the possible
imposition of currency exchange blockages or other foreign governmental laws or
restrictions, reduced availability of public information concerning issuers, the
lack of uniform accounting, auditing and financial reporting standards and other
regulatory practices and requirements that are often generally less rigorous
than those applied in the United States. Moreover, securities of many foreign
companies may be less liquid and their

<PAGE>
<PAGE>
prices more volatile than those of securities of comparable U.S. companies.
Certain foreign countries are known to experience long delays between the trade
and settlement dates of securities purchased or sold. In addition, with respect
to certain foreign countries, there is the possibility of expropriation,
nationalization, confiscatory taxation and limitations on the use or removal of
funds or other assets of the Portfolio, including the withholding of dividends.
Foreign securities may be subject to foreign government taxes that would reduce
the net yield on such securities. Moreover, individual foreign economies may
differ favorably or unfavorably from the U.S. economy in such respects as growth
of gross national product, rate of inflation, capital reinvestment, resource
self-sufficiency and balance of payments positions. Investment in foreign
securities will also result in higher operating expenses due to the cost of
converting foreign currency into U.S. dollars, the payment of fixed brokerage
commissions on foreign exchanges, which generally are higher than commissions on
U.S. exchanges, higher valuation and communications costs and the expense of
maintaining securities with foreign custodians.

OPTIONS, FUTURES AND CURRENCY TRANSACTIONS. At the discretion of Warburg, the
Portfolio 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 Portfolio's current or anticipated
portfolio holdings, (ii) as a substitute for purchasing or selling portfolio
securities or (iii) to seek to generate income to offset expenses or increase
return. TRANSACTIONS THAT ARE NOT CONSIDERED HEDGING SHOULD BE CONSIDERED
SPECULATIVE AND MAY SERVE TO INCREASE THE PORTFOLIO'S INVESTMENT RISK.
Transaction costs and any premiums associated with these strategies, and any
losses incurred, will affect the Portfolio's net asset value and performance.
Therefore, an investment in the Portfolio may involve a greater risk than an
investment in other mutual funds that do not utilize these strategies. The
Portfolio's 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 Internal Revenue Code of
1986, as amended (the ('Code').

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

<PAGE>
<PAGE>
options on stock indexes, and may also write such options. A stock index
measures the movement of a certain group of stocks by assigning relative values
to the common stocks included in the index.

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

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

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

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

<PAGE>
<PAGE>
Hedging Considerations. A hedge is designed to offset a loss on the portfolio
position with a gain in the hedge position; at the same time, however, a
properly correlated hedge will result in a gain in the portfolio position being
offset by a loss in the hedge position. As a result, the use of options, futures
contracts and currency exchange transactions for hedging purposes could limit
any potential gain from an increase in value of the position hedged. In
addition, the movement in the portfolio position hedged may not be of the same
magnitude as movement in the hedge. The Portfolio 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 the Portfolio engages in the
strategies described above, the Portfolio 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 Portfolio may be unable to close out an option or futures position without
incurring substantial losses, if at all. The Portfolio is also subject to the
risk of a default by a counterparty to an off-exchange transaction.

Asset Coverage. The Portfolio will comply with applicable regulatory
requirements designed to eliminate any potential for leverage with respect to
options written by the Portfolio on securities and indexes; currency, interest
rate and stock index futures contracts and options on these futures contracts;
and forward currency contracts. The use of these strategies may require that the
Portfolio 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 Portfolio'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 Portfolio's assets could impede
portfolio management or the Portfolio's ability to meet redemption requests or
other current obligations.

SHORT SELLING. The Portfolio may from time to time sell securities short. A
short sale is a transaction in which the Portfolio sells borrowed securities in
anticipation of a decline in the market price of the securities. Possible losses
from short sales differ from losses that could be incurred from a purchase of a
security, because losses from short sales may be unlimited, whereas losses from
purchases can equal only the total amount invested. The current market value of
the securities sold short will not exceed 10% of the Portfolio's assets.

<PAGE>
<PAGE>
When the Portfolio makes a short sale, the proceeds it receives from the sale
are retained by a broker until the Portfolio replaces the borrowed securities.
To deliver the securities to the buyer, the Portfolio must arrange through a
broker to borrow the securities and, in so doing, the Portfolio becomes
obligated to replace the securities borrowed at their market price at the time
of replacement, whatever that price may be. The Portfolio may have to pay a
premium to borrow the securities and must pay any dividends or interest payable
on the securities until they are replaced.

The Portfolio's obligation to replace the securities borrowed in connection
with a short sale will be secured by cash or U.S. government securities
deposited as collateral with the broker. In addition, the Portfolio will place
in a segregated account with its custodian or a qualified subcustodian an amount
of cash or U.S. government securities equal to the difference, if any, between
(i) the market value of the securities sold at the time they were sold short and
(ii) any cash or U.S. government securities deposited as collateral with the
broker in connection with the short sale (not including the proceeds of the
short sale). Until it replaces the borrowed securities, the Portfolio will
maintain the segregated account daily at a level so that (a) the amount
deposited in the account plus the amount deposited with the broker (not
including the proceeds from the short sale) will equal the current market value
of the securities sold short and (b) the amount deposited in the account plus
the amount deposited with the broker (not including the proceeds from the short
sale) will not be less than the market value of the securities at the time they
were sold short.

Short Sales Against the Box. The Portfolio may enter into a short sale of
securities such that when the short position is open the Portfolio 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 the Portfolio 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 Portfolio delivers
securities to close out its short position. Although prior to delivery the
Portfolio will have to pay an amount equal to any dividends paid on the
securities sold short, the Portfolio 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
Portfolio 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. The Portfolio 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 the Portfolio's net

<PAGE>
<PAGE>
assets (taken at current value) may be held as collateral for short sales
against the box at any one time.

INVESTMENT GUIDELINES
- --------------------------------------------------------------------------------
The Portfolio may 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) time deposits maturing in more than seven calendar days; and (iv) certain
Rule 144A Securities. In addition, up to 5% of the Portfolio's total assets may
be invested in the securities of issuers which have been in continuous operation
for less than three years, and up to an additional 5% of its net assets may be
invested in warrants. The Portfolio may borrow from banks for temporary or
emergency purposes, such as meeting anticipated redemption requests, provided
that reverse repurchase agreements and any other borrowing by the Portfolio may
not exceed 30% of its total assets, and may pledge its assets to the extent
necessary to secure permitted borrowings. Whenever borrowings (including reverse
repurchase agreements) exceed 5% of the value of the Portfolio's total assets,
the Portfolio will not make any investments (including roll-overs). Except for
the limitations on borrowing, the investment guidelines set forth in this
paragraph may be changed at any time without shareholder consent by vote of the
Board, subject to the limitations contained in the 1940 Act. A complete list of
investment restrictions that the Portfolio has adopted identifying additional
restrictions that cannot be changed without the approval of the majority of the
Portfolio's outstanding shares is contained in the Statement of Additional
Information.

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

<PAGE>
<PAGE>
interests in Private Funds on behalf of the Portfolio and assists in
administrative functions relating to investments in Private Funds.

For the services provided by Warburg, the Portfolio pays Warburg a fee
calculated at an annual rate of 1.25% of the Portfolio's average daily net
assets. Warburg pays Abbott a fee of .55% per annum of the value of Private Fund
investments as of the last day of each calendar quarter. Although these advisory
fees are higher than that paid by most other investment companies, including
money market and fixed income funds, Warburg believes that they are comparable
to fees charged by other mutual funds with similar policies and strategies.
Warburg and the Trust'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 Portfolio.

Abbott. Abbott, which was founded in 1986, is an independent specialized
investment firm with assets under management of approximately $3 billion. Abbott
is a registered investment adviser which concentrates on venture capital, buyout
and special situations partnership investments. Abbott's management team
provides full-service private equity programs to clients. Raymond L. Held,
Stanley E. Pratt and Gary H. Solomon are the general partners of Abbott and
Thaddeus I. Gray, CFA is a limited partner of Abbott. Messrs. Held, Pratt,
Solomon and Gray are also the investment managers of Abbott. The principal
business address of Abbott and Mr. Pratt is 50 Rowes Wharf, Suite 240, Boston,
Massachusetts 02110-3328 and that of Messrs. Held, Solomon and Gray is 1330
Avenue of the Americas, Suite 2800, New York, New York 10019.

<PAGE>
<PAGE>
generally commensurate with their present responsibilities. Pursuant to a new
sub-advisory agreement, Abbott LLC, as successor to Abbott, will perform the
services then being performed by Abbott. The new sub-advisory agreement will be
substantially identical to the current sub-advisory agreement among Warburg, the
Trust and Abbott, except for the change of the service provider from Abbott to
Abbott LLC.

PORTFOLIO MANAGERS. The co-portfolio managers of the Portfolio are Elizabeth
B. Dater and Stephen J. Lurito. Ms. Dater is a senior managing director of EMW
and has been a portfolio manager of Warburg since 1978. Mr. Lurito is a managing
director of EMW and has been with Warburg since 1987, before which time he was a
research analyst at Sanford C. Bernstein & Company, Inc.

Robert S. Janis and Christopher M. Nawn, vice presidents of Warburg, are
associate portfolio managers and research analysts for the Portfolio. Mr. Janis
has been with Warburg since October 1994, before which time he was a vice
president and senior research analyst at U.S. Trust Company of New York. Mr.
Nawn has been with Warburg since September 1994, before which time he was a
senior sector analyst and portfolio manager at the Dreyfus Corporation.

Raymond L. Held and Gary H. Solomon, investment managers and general partners
of Abbott, manage the Portfolio's investments in Private Funds. Abbott also acts
as sub-investment adviser for the Warburg Pincus Post-Venture Capital Fund.

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

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

<PAGE>
<PAGE>
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 Portfolio's U.S. assets and Fiduciary Trust Company International
('Fiduciary') serves as custodian of the Portfolio's non-U.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') serves
as shareholder servicing agent, transfer agent and dividend disbursing agent for
the Portfolio. It has delegated to Boston Financial Data Services, Inc., a 50%
owned subsidiary ('BFDS'), 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 without compensation as
distributor of the shares of the Portfolio. Counsellors Securities is a wholly
owned subsidiary of Warburg and is located at 466 Lexington Avenue, New York,
New York 10017-3147.

For administration, subaccounting, transfer agency and/or other services,
Counsellors Securities or its affiliates may pay Participating Insurance
Companies and Plans or their affiliates or entities that provide services to
them ('Service Organizations') with whom it enters into agreements up to .35%
(the 'Service Fee') of the annual average value of accounts maintained by such
Service Organizations with the Portfolio. A portion of the Service Fee may be
borne by the Portfolio as a transfer agency fee. In addition, a Service
Organization may directly or indirectly pay a portion of this Service Fee to the
Portfolio's custodian or transfer agent for costs related to accounts of the
Service Organizations' clients or customers. The Service Fee payable to any one
Service Organization is determined based upon a number of factors, including the
nature and quality of the services provided, the operations processing
requirements of the relationship and the standardized fee schedule of the
Service Organization.

Warburg or its affiliates may, at their own expense, provide promotional
incentives to qualified recipients who support the sale of shares of the
Portfolio, consisting of securities dealers who have sold Portfolio 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 the Portfolio's shares.

TRUSTEES AND OFFICERS. The officers of the Trust manage the Portfolio's day-
to-day operations and are directly responsible to the Board. The Board sets
broad policies for the Portfolio and chooses the Trust's officers. A list of the

<PAGE>
<PAGE>
Trustees and officers and a brief statement of their present positions and
principal occupations during the past five years is set forth in the Statement
of Additional Information.

HOW TO PURCHASE AND REDEEM SHARES IN THE PORTFOLIO
- --------------------------------------------------------------------------------
Individual investors may not purchase or redeem shares of the Portfolio
directly; shares may be purchased or redeemed only through Variable Contracts
offered by separate accounts of Participating Insurance Companies or through
Plans, including participant-directed Plans which elect to make the Portfolio an
investment option for Plan participants. Please refer to the prospectus of the
sponsoring Participating Insurance Company separate account or to the Plan
documents or other informational materials supplied by Plan sponsors for
instructions on purchasing or selling a Variable Contract and on how to select
the Portfolio as an investment option for a Variable Contract or Plan.

PURCHASES. All investments in the Portfolio are credited to a Participating
Insurance Company's separate account immediately upon acceptance of an
investment by the Portfolio. Each Participating Insurance Company receives
orders from its contract owners to purchase or redeem shares of the Portfolio on
any day that the Portfolio calculates its net asset value (a 'business day').
That night, all orders received by the Participating Insurance Company prior to
the close of regular trading on the New York Stock Exchange Inc. (the 'NYSE')
(currently 4:00 p.m., Eastern time) on that business day are aggregated, and the
Participating Insurance Company places a net purchase or redemption order for
shares of the Portfolio during the morning of the next business day. These
orders are executed at the net asset value (described below under 'Net Asset
Value') computed at the close of regular trading on the NYSE on the previous
business day in order to provide a match between the contract owners' orders to
the Participating Insurance Company and that Participating Insurance Company's
orders to the Portfolio.

Plan participants may invest in shares of the Portfolio through their Plan by
directing the Plan trustee to purchase shares for their account. Participants
should contact their Plan sponsor for information concerning the appropriate
procedure for investing in the Portfolio.

The Portfolio reserves the right to reject any specific purchase order.
Purchase orders may be refused if, in Warburg's opinion, they are of a size that
would disrupt the management of the Portfolio. The Portfolio may discontinue
sales of its shares if management believes that a substantial further increase
in assets may adversely effect the Portfolio's ability to achieve its investment
objective. In such event, however, it is anticipated that existing Variable
Contract owners and Plan participants would be permitted to continue to
authorize investment in the Portfolio and to reinvest any dividends or capital
gains distributions.

REDEMPTIONS. Shares of the Portfolio may be redeemed on any business day.
Redemption orders which are received by a Participating Insurance Company or
Plan or its agent prior to the close of regular trading on the

<PAGE>
<PAGE>
NYSE on any business day and transmitted to the Trust or its specified agent
during the morning of the next business day will be processed at the net asset
value computed at the close of regular trading on the NYSE on the previous
business day. Redemption proceeds will normally be wired to the Participating
Insurance Company or Plan the business day following receipt of the redemption
order, but in no event later than seven days after receipt of such order.

DIVIDENDS, DISTRIBUTIONS AND TAXES
- --------------------------------------------------------------------------------
DIVIDENDS AND DISTRIBUTIONS. The Portfolio calculates its dividends from net
investment income. Net investment income includes interest accrued and dividends
earned on the Portfolio's portfolio securities for the applicable period less
applicable expenses. The Portfolio declares dividends from its net investment
income annually. Net investment income earned on weekends and when the NYSE is
not open will be computed as of the next business day. Distributions of net
realized long-term and short-term capital gains are declared annually and, as a
general rule, will be distributed or paid after the end of the fiscal year in
which they are earned. Dividends and distributions will automatically be
reinvested in additional shares of the Portfolio at net asset value unless, in
the case of a Variable Contract, a Participating Insurance Company elects to
have dividends or distributions paid in cash.

The Portfolio intends to qualify each year as a 'regulated investment
company' within the meaning of the Code. The Portfolio intends to distribute all
of its net income and capital gains to its shareholders (the Variable Contracts
and Plans).

Because shares of the Portfolio may be purchased only through Variable
Contracts and Plans, it is anticipated that any income dividends or capital gain
distributions from the Portfolio are taxable, if at all, to the Participating
Insurance Companies and Plans and will be exempt from current taxation of the
Variable Contract owner or Plan participant if left to accumulate within the
Variable Contract or Plan. Generally, withdrawals from Variable Contracts or
Plans may be subject to ordinary income tax and, if made before age 59 1/2, a
10% penalty tax.

Special Tax Matters. Certain provisions of the Code may require that a gain
recognized by the Portfolio upon the closing of a short sale be treated as a
short-term capital gain, and that a loss recognized by the Portfolio upon the
closing of a short sale be treated as a long-term capital loss, regardless of
the amount of time that the Portfolio held the securities used to close the
short sale. The Portfolio's use of short sales may also affect the holding
periods of certain securities held by the Portfolio if such securities are
'substantially identical' to securities used by the Portfolio to close the short
sale. The

<PAGE>
<PAGE>
Portfolio's short selling activities will not result in unrelated business
taxable income to a tax-exempt investor.

INTERNAL REVENUE SERVICE REQUIREMENTS. The Portfolio intends to comply with
the diversification requirements currently imposed by the Internal Revenue
Service on separate accounts of insurance companies as a condition of
maintaining the tax-deferred status of Variable Contracts. See the Statement of
Additional Information for more specific information.

NET ASSET VALUE
- --------------------------------------------------------------------------------
The Portfolio's net asset value per share is calculated as of the close of
regular trading on the NYSE 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 the holidays falls on a
Saturday or Sunday, respectively. The net asset value per share of the Portfolio
generally changes every day.

The net asset value per share of the Portfolio is computed by dividing the
value of the Portfolio's net assets by the total number of its shares
outstanding.

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

<PAGE>
<PAGE>
PERFORMANCE
- --------------------------------------------------------------------------------
From time to time, the Portfolio may advertise its average annual total
return over various periods of time. These total return figures show the average
percentage change in value of an investment in the Portfolio from the beginning
of the measuring period to the end of the measuring period. The figures reflect
changes in the price of the Portfolio's shares assuming that any income
dividends and/or capital gain distributions made by the Portfolio during the
period were reinvested in shares of the Portfolio. 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 Portfolio's operations or on a
year-by-year, quarterly or current year-to-date basis).

Total returns quoted for the Portfolio include the effect of deducting the
Portfolio's expenses, but may not include charges and expenses attributable to
any particular Variable Contract or Plan. Accordingly, the prospectus of the
sponsoring Participating Insurance Company separate account or Plan documents or
other informational materials supplied by Plan sponsors should be carefully
reviewed for information on relevant charges and expenses. Excluding these
charges and expenses from quotations of the Portfolio's performance has the
effect of increasing the performance quoted, and the effect of these charges
should be considered when comparing the Portfolio's performance to that of other
mutual funds.

When considering average annual total return figures for periods longer than
one year, it is important to note that the annual total return for one year in
the period might have been greater or less than the average for the entire
period. When considering total return figures for periods shorter than one year,
investors should bear in mind that such return may not be representative of the
Portfolio's return over a longer market cycle. The Portfolio may also advertise
its aggregate total return figures for various periods, representing the
cumulative change in value of an investment in the Portfolio for the specific
period (again reflecting changes in share prices and assuming reinvestment of
dividends and distributions). Aggregate and average total returns may be shown
by 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).

In reports or other communications to investors or in advertising material,
the Portfolio or a Participating Insurance Company or Plan sponsor may describe
general economic and market conditions affecting the Portfolio. Performance may
be compared 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

<PAGE>
<PAGE>
forth in the publications listed below; (ii) the Venture Capital 100 Index
(compiled by Venture Capital Journal), the Russell 2000 Small Stock Index and
the S&P 500 Index, all of which are unmanaged indexes of common stocks; or (iii)
other appropriate indexes of investment securities or with data developed by
Warburg derived from such indexes. The Portfolio may also make comparisons using
data and indexes compiled by the National Venture Capital Association,
Venture-One and Private Equity Analysts Newsletter and similar organizations and
publications. The Portfolio or a Participating Insurance Company may also
include evaluations 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, the
Portfolio or a Participating Insurance Company or Plan sponsor may also describe
the general biography or work experience of the portfolio managers of the
Portfolio and may include quotations attributable to the portfolio managers
describing approaches taken in managing the Portfolio's investments, research
methodology underlying stock selection or the Portfolio's investment objective.
In addition, the Portfolio and its portfolio managers may render periodic
updates of Portfolio activity, which may include a discussion of significant
portfolio holdings and analysis of holdings by industry, country, credit quality
and other characteristics. The Portfolio may discuss characteristics of venture
capital financed companies and the benefits expected to be achieved from
investing in these companies. The Portfolio may also discuss the continuum of
risk and return relating to different investments and the potential impact of
foreign securities on 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, the Portfolio or a Participating
Insurance Company or Plan sponsor may from time to time compare the Portfolio's
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
- --------------------------------------------------------------------------------
TRUST ORGANIZATION. The Trust was organized on March 15, 1995 under the laws
of The Commonwealth of Massachusetts as a 'Massachusetts business trust.' The
Trust's Declaration of Trust authorizes the Board to issue an unlimited number
of full and fractional shares of beneficial interest, $.001 par value per share.
Shares of four series have been authorized, one of which constitutes the
interests in the Post-Venture Capital Portfolio. The Board may classify or
reclassify any of its shares into one or more additional series without
shareholder approval.

<PAGE>
<PAGE>
VOTING RIGHTS. When matters are submitted for shareholder vote, shareholders
of the Portfolio will have one vote for each full share held and fractional
votes for fractional shares held. Generally, shares of the Trust will vote by
individual Portfolio on all matters except where otherwise required by law.
There will normally be no meetings of shareholders for the purpose of electing
Trustees unless and until such time as less than a majority of the members
holding office have been elected by shareholders. Shareholders of record of no
less than two-thirds of the outstanding shares of the Trust 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 Trustee at the written request of holders of 10% of
the Trust's outstanding shares. Under current law, a Participating Insurance
Company is required to request voting instructions from Variable Contract owners
and must vote all Trust shares held in the separate account in proportion to the
voting instructions received. Plans may or may not pass through voting rights to
Plan participants, depending on the terms of the Plan's governing documents. For
a more complete discussion of voting rights, refer to the sponsoring
Participating Insurance Company separate account prospectus or the Plan
documents or other informational materials supplied by Plan sponsors.

CONFLICTS OF INTEREST. The Portfolio offers its shares to (i) Variable
Contracts offered through separate accounts of Participating Insurance Companies
which may or may not be affiliated with each other and (ii) Plans including
Participant-directed Plans which elect to make the Portfolio an investment
option for Plan participants. Due to differences of tax treatment and other
considerations, the interests of various Variable Contract owners and Plan
participants participating in the Portfolio may conflict. The Board will monitor
the Portfolio for any material conflicts that may arise and will determine what
action, if any, should be taken. If a conflict occurs, the Board may require one
or more Participating Insurance Company separate accounts and/or Plans to
withdraw its investments in the Portfolio. As a result, the Portfolio may be
forced to sell securities at disadvantageous prices and orderly portfolio
management could be disrupted. In addition, the Board may refuse to sell shares
of the Portfolio to any Variable Contract or Plan or may suspend or terminate
the offering of shares of the Portfolio if such action is required by law or
regulatory authority or is in the best interests of the shareholders of the
Portfolio.

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

<PAGE>
<PAGE>
TABLE OF CONTENTS

<TABLE>
<S> <C>
The Trust's Expenses.................................................... 2
Investment Objectives and Policies...................................... 3
Portfolio Investments................................................... 6
Risk Factors and Special Considerations................................. 8
Portfolio Transactions and Turnover Rate................................ 10
Certain Investment Strategies........................................... 10
Investment Guidelines................................................... 15
Management of the Portfolio............................................. 15
How to Purchase and Redeem Shares in the Portfolio...................... 19
Dividends, Distributions and Taxes...................................... 20
Net Asset Value......................................................... 21
Performance............................................................. 22
General Information..................................................... 23
</TABLE>

[Logo]

P.O. BOX 9030, BOSTON, MA 02205-9030
800-369-2728
WPTRU-1-0696

STATEMENT OF ADDITIONAL INFORMATION

July 2, 1996

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

WARBURG PINCUS TRUST

POST-VENTURE CAPITAL PORTFOLIO

P.O. Box 9030, Boston, Massachusetts 02205-9030
For information, call (800) 369-2728

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

CONTENTS

<TABLE>
<CAPTION>
Page
----
<S> <C>
Investment Objective................................................................................... 2
Investment Policies.................................................................................... 2
Management of the Trust................................................................................ 26
Additional Purchase and Redemption Information......................................................... 32
Additional Information Concerning Taxes................................................................ 32
Determination of Performance........................................................................... 35
Independent Accountants and Counsel.................................................................... 36
Financial Statements................................................................................... 36
Appendix -- Description of Ratings..................................................................... A-1
Statement of Assets and Liabilities (Unaudited)........................................................ A-5
</TABLE>

Warburg Pincus Trust (the "Trust") currently offers four
managed investment funds, one of which, the Post-Venture Capital Portfolio (the
"Portfolio"), is described in this Statement of Additional Information. This
Statement of Additional Information is meant to be read in conjunction with the
Prospectus for the Portfolio, dated July 2, 1996, as amended or supplemented
from time to time, and is incorporated by reference in its entirety into that
Prospectus. Shares of the Portfolio are not available directly to individual
investors but may be offered only to certain (i) life insurance companies
("Participating Insurance Companies") for allocation to certain of their
separate accounts established for the purpose of funding variable annuity
contracts and variable life insurance policies (together "Variable Contracts")
and (ii) tax-qualified pension and retirement plans ("Plans"), including
participant-directed Plans which elect to make the Portfolio an investment
option for Plan participants. Because this Statement of Additional Information
is not itself a prospectus, no investment in shares of the Portfolio should be
made solely upon the information contained herein. Copies of the Trust's
Prospectus for the Portfolio and information regarding the Portfolio's current
performance may be obtained by calling the Trust at (800) 369-2728 or by writing
to the Trust, P.O. Box 9030, Boston, Massachusetts 02205-9030.

INVESTMENT OBJECTIVE

The investment objective of the Portfolio is long-term growth
of capital.

INVESTMENT POLICIES

The following policies supplement the descriptions of the
Portfolio's investment objective and policies in the Prospectus.

Options, Futures and Currency Exchange Transactions

Securities Options. The Portfolio 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 Portfolio 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
Portfolio 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 Portfolio 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 Portfolio may receive may be adversely affected as new or existing
institutions, including other investment companies, engage in or increase their
option-writing activities.

In the case of options written by the Portfolio that are
deemed covered by virtue of the Portfolio's holding convertible or exchangeable
preferred stock or debt securities, the time required to convert or exchange and
obtain physical delivery of the underlying common stock with respect to which
the Portfolio has written options may exceed the time within which the Portfolio
must make delivery in accordance with an exercise notice. In these instances,
the Portfolio may purchase or temporarily borrow the underlying

securities for purposes of physical delivery. By so doing, the Portfolio will
not bear any market risk, since the Portfolio 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 Portfolio 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 Portfolio may write covered call options. For example,
if the Portfolio 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 Portfolio 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 Portfolio 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 Portfolio may write (i) in-the-money call
options when Warburg, Pincus Counsellors, Inc., the Portfolio'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 Portfolio 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 Portfolio
prior to the exercise of options that it has purchased or written, respectively,
of options of the same series) in which the Portfolio may realize a profit or
loss from the sale. An option position may be closed out only where there exists
a secondary market for an option of the same series on a recognized securities
exchange or in the over-the-counter market. When the Portfolio has purchased an
option and engages in a closing sale transaction, whether the Portfolio 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 Portfolio initially paid for the original option plus the
related transaction costs. Similarly, in cases where the Portfolio 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 Portfolio 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 Portfolio under an
option it has written would be terminated by a closing purchase transaction, but
the Portfolio would not be deemed to own an option as a result of the
transaction. So long as the obligation of the Portfolio as the writer of an
option continues, the Portfolio may be assigned an exercise notice by the
broker-dealer through which the option was sold, requiring the Portfolio to
deliver the underlying security against payment of the exercise price. This
obligation terminates when the option expires or the Portfolio effects a closing
purchase transaction. The Portfolio 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 Portfolio'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
Portfolio. The Portfolio, 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
Portfolio 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 Portfolio would continue to be at market risk on the security and could face
higher transaction costs, including brokerage commissions.

written or exercised in one or more accounts or through one or more brokers). It
is possible that the Trust or the Portfolio 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 Portfolio will be able to purchase on a
particular security.

Stock Index Options. The Portfolio may purchase and write
exchange-listed and OTC put and call options on stock indexes. A stock index
measures the movement of a certain group of stocks by assigning relative values
to the common stocks included in the index, fluctuating with changes in the
market values of the stocks included in the index. Some stock index options are
based on a broad market index, such as the NYSE Composite Index, or a narrower
market index such as the Standard & Poor's 100. Indexes may also be based on a
particular industry or market segment.

OTC Options. The Portfolio 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 stock 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 Portfolio
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 Portfolio, the Portfolio would
lose the premium it paid for the option and the expected benefit of the
transaction.

Listed options generally have a continuous liquid market while
dealer options have none. Consequently, the Portfolio 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 Portfolio 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 Portfolio
originally wrote the option. Although the Portfolio 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 Portfolio, there can be
no assurance that the Portfolio 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 Portfolio. Until the
Portfolio, 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 Portfolio'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
Portfolio may be unable to liquidate a dealer option.

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

The Portfolio 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 Portfolio's net asset value after
taking into account unrealized profits and unrealized losses on any such
contracts it has entered into. The Portfolio 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 Portfolio's policies. Although the Portfolio 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 Portfolio assets
that may be at risk with respect to futures activities. The ability of the
Portfolio 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.

the market value of the stock listed on the indexes. A stock 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 Portfolio upon
entering into a futures contract. Instead, the Portfolio 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 Portfolio 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 Portfolio fails to meet its
contractual obligations. Subsequent payments, known as "variation margin," to
and from the broker, will be made daily as the currency, financial instrument or
stock index underlying the futures contract fluctuates, making the long and
short positions in the futures contract more or less valuable, a process known
as "marking-to-market." The Portfolio will also incur brokerage costs in
connection with entering into futures transactions.

At any time prior to the expiration of a futures contract, the
Portfolio may elect to close the position by taking an opposite position, which
will operate to terminate the Portfolio'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 Portfolio 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 Portfolio to substantial losses. In such
event, and in the event of adverse price movements, the Portfolio would be
required to make daily cash payments of variation margin. In such situations, if
the Portfolio 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 Portfolio 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 Portfolio's performance.

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

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

trading partner to purchase a second, offsetting contract. If the Portfolio
retains the portfolio security and engages in an offsetting transaction, the
Portfolio, 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 Portfolio may purchase exchange-traded
put and call options on foreign currencies. Put options convey the right to sell
the underlying currency at a price which is anticipated to be higher than the
spot price of the currency at the time the option is exercised. Call options
convey the right to buy the underlying currency at a price which is expected to
be lower than the spot price of the currency at the time the option is
exercised.

Currency Hedging. The Portfolio'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 Portfolio 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 Portfolio 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 Portfolio'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 Portfolio may
purchase currency put options. If the value of the currency does decline, the
Portfolio 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 Portfolio 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 Portfolio
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 Portfolio may not be able to contract
to sell a currency at a price above the devaluation level it anticipates.

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

In hedging transactions based on an index, whether the
Portfolio will realize a gain or loss from the purchase or writing of options on
an index depends upon movements in the level of stock prices in the stock market
generally or, in the case of certain indexes, in an industry or market segment,
rather than movements in the price of a particular stock. The risk of imperfect
correlation increases as the composition of the Portfolio'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
Portfolio'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 Portfolio's net investment results if market movements are
not as anticipated when the hedge is established. Stock 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 stock index and futures
markets. Secondly, from the point of view of speculators, the deposit
requirements in the futures market are less onerous than margin requirements in
the securities market. Therefore, increased participation by speculators in the
futures market also may cause temporary price distortions. Because of the
possibility of price distortions in the futures market and the imperfect
correlation between movements in the stock index and movements in the price of
stock index futures, a correct forecast of general market trends by Warburg
still may not result in a successful hedging transaction.

The Portfolio will engage in hedging transactions only when
deemed advisable by Warburg, and successful use by the Portfolio 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
Portfolio's performance.

Asset Coverage for Forward Contracts, Options, Futures and
Options on Futures. As described in the Prospectus, the Portfolio 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 Portfolio on securities and indexes; and currency, interest rate and
index futures contracts and options on these futures contracts. These guidelines
may, in certain instances, require segregation by the Portfolio 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 Portfolio on
securities may require the Portfolio 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 Portfolio
on an index may require the Portfolio 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 Portfolio may require the Portfolio to segregate assets (as
described above) equal to the exercise price. The Portfolio 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 Portfolio. If the Portfolio holds a futures or
forward contract, the Portfolio 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 Portfolio may enter into fully or partially offsetting
transactions so that its net position, coupled with any segregated assets (equal
to any remaining obligation), equals its net obligation. Asset coverage may be
achieved by other means when consistent with applicable regulatory policies.

Additional Information on Other Investment Practices

Special Situation Companies. The Portfolio may invest up to
10% of its assets, directly or indirectly, in the securities of "special
situation companies" involved in an actual or prospective acquisition or
consolidation; reorganization; recapitalization; merger, liquidation or
distribution of cash, securities or other assets; a tender or exchange offer; a
breakup or workout of a holding company; or litigation which, if resolved
favorably, would improve the value of the company's stock. If the actual or
prospective situation does not materialize as anticipated, the market price of
the securities of a "special situation company" may decline significantly. The
Portfolio believes, however, that if "special situation companies" are analyzed
carefully and invested in at the appropriate time, the Portfolio may achieve
growth of capital. There can be no assurance, however, that a special situation
that exists at the time the Portfolio makes its investment will be consummated
under the terms and within the time period contemplated.

Foreign Investments. The Portfolio may invest up to 20% of its
total assets in the securities of foreign issuers. Investors should recognize
that investing in foreign companies involves certain risks, including those
discussed below, which are not typically associated with investing in U.S.
issuers.

Foreign Currency Exchange. Since the Portfolio may be
investing up to 20% of its total assets in securities denominated in currencies
other than the U.S. dollar, and since the Portfolio may temporarily hold funds
in bank deposits or other money market investments denominated in foreign
currencies, the Portfolio's investments in foreign companies 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 Portfolio's 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 by the
Portfolio with respect to its foreign investments. The rate of exchange between
the U.S. dollar and other currencies is determined by the forces of supply and
demand in the foreign exchange markets. Changes in the exchange rate may result
over time from the interaction of many factors directly or indirectly affecting
economic and political conditions in the United States and a particular foreign
country, including economic and political developments in other countries. Of
particular importance are rates of inflation, interest rate levels, the balance
of payments and the extent of government surpluses or deficits in the United
States and the particular foreign country, all of which are in turn sensitive to
the monetary, fiscal and trade policies pursued by the governments of the United
States and foreign countries important to international trade and finance.
Governmental intervention may also play a significant role. National governments
rarely voluntarily allow their currencies to float freely in response to
economic forces. Sovereign governments use a variety of techniques, such as
intervention by a country's central bank or imposition of regulatory controls or
taxes, to affect the exchange rates of their currencies. The Portfolio

may use hedging techniques with the objective of protecting against loss through
the fluctuation of the valuation 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.

Information. The majority of the foreign securities held by
the Portfolio will not be registered with, nor the issuers thereof be subject to
reporting requirements of, the SEC. Accordingly, there may be less publicly
available information about the securities and about the foreign company or
government issuing them than is available about a domestic company or government
entity. Foreign companies are generally not subject to uniform financial
reporting standards, practices and requirements comparable to those applicable
to U.S. companies.

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

General. In general, individual foreign economies may differ
favorably or unfavorably from the U.S. economy in such respects as growth of
gross national product, rate of inflation, capital reinvestment, resource
self-sufficiency, and balance of payments positions. The Portfolio 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.

U.S. Government Securities. The Portfolio 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 Portfolio 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 Portfolio will invest in
obligations issued by such an instrumentality only if Warburg determines that
the credit risk with respect to the instrumentality does not make its securities
unsuitable for investment by the Portfolio.

Securities of Other Investment Companies. The Portfolio may
invest in securities of other investment companies, partnerships and other
investment vehicles deemed to be investment companies under the Investment
Company Act of 1940, as amended (the "1940 Act"), to the extent permitted under
the 1940 Act. Presently, under the 1940 Act, the Portfolio 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 Portfolio's total assets and (iii) when added to all other investment
company securities held by the Portfolio, do not exceed 10% of the value of the
Portfolio's total assets.

Lending of Portfolio Securities. The Portfolio may lend
portfolio securities to brokers, dealers and other financial organizations that
meet capital and other credit requirements or other criteria established by the
Trust's Board of Trustees (the "Board"). These loans, if and when made, may not
exceed 20% of the Portfolio's total assets taken at value. The Portfolio will
not lend portfolio securities to affiliates of Warburg unless it has applied for
and received specific authority to do so from the SEC. Loans of portfolio
securities will be collateralized by cash, letters of credit or U.S. government
securities, which are maintained at all times in an amount equal to at least
100% of the current market value of the loaned securities. Any gain or loss in
the market price of the securities loaned that might occur during the term of
the loan would be for the account of the Portfolio. From time to time, the
Portfolio 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 Portfolio and that is acting as a "finder."

time; (iv) the Portfolio 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 Portfolio may pay only reasonable
custodian fees in connection with the loan; and (vi) voting rights on the loaned
securities may pass to the borrower, provided, however, that if a material event
adversely affecting the investment occurs, the Board must terminate the loan and
regain the right to vote the securities. Loan agreements involve certain risks
in the event of default or insolvency of the other party including possible
delays or restrictions upon the Portfolio's ability to recover the loaned
securities or dispose of the collateral for the loan.

When-Issued Securities and Delayed-Delivery Transactions. The
Portfolio may utilize up to 20% of its total 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
Portfolio 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.

When the Portfolio 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 other 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 Portfolio 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 Portfolio's commitment. It may be
expected that the Portfolio'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 Portfolio 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 Portfolio's incurring a
loss or missing an opportunity to obtain a price considered to be advantageous.

American, European and Continental Depositary Receipts. The
assets of the Portfolio 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 Portfolio may invest up to 5% of net assets in
warrants (valued at the lower of cost or market) (other than warrants acquired
by the Portfolio as part of a unit or attached to securities at the time of
purchase). 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 Portfolio may
not invest more than 15% of its net assets in 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,
time deposits maturing in more than seven days, certain Rule 144A Securities (as
defined below) and Private Funds (as defined in the Prospectus). 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.

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.

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

Below Investment Grade Securities. The Portfolio may invest in
below investment grade convertible debt and preferred securities and it is not
required to dispose of securities downgraded below investment grade subsequent
to acquisition by the Portfolio. Although the Portfolio may invest only in
investment grade non-convertible debt securities (as described in the
Prospectus), securities held by Private Funds (as described in the Prospectus)
may be rated below investment grade. 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
obligations during an economic 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.

Borrowing. The Portfolio 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.
Additional investments (including roll-overs) will not be made when borrowings
exceed 5% of the Portfolio's net assets. Although the principal of such
borrowings will be fixed, the Portfolio's assets may change in value during the
time the borrowing is outstanding. The Portfolio 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.

these investments. Among these are the risks associated with investment in
companies in an early stage of development or with little or no operating
history, companies operating at a loss or with substantial variation in
operation results from period to period, companies with the need for substantial
additional capital to support expansion or to maintain a competitive position,
or companies with significant financial leverage. Such companies may also face
intense competition from others including those with greater financial resources
or more extensive development, manufacturing, distribution or other attributes,
over which the Portfolio will have no control.

Interests in the Private Funds in which the Portfolio may
invest will be subject to substantial restrictions on transfer and, in some
instances, may be non-transferable for a period of years. Private Funds may
participate in only a limited number of investments and, as a consequence, the
return of a particular Private Fund may be substantially adversely affected by
the unfavorable performance of even a single investment. Certain of the Private
Funds in which the Portfolio may invest may pay their investment managers a fee
based on the performance of the Private Fund, which may create an incentive for
the manager to make investments that are riskier or more speculative than would
be the case if the manager was paid a fixed fee. Private Funds are not
registered under the 1940 Act and, consequently, are not subject to the
restrictions on affiliated transactions and other protections applicable to
regulated investment companies. The valuation of companies held by Private
Funds, the securities of which are generally unlisted and illiquid, may be very
difficult and will often depend on the subjective valuation of the managers of
the Private Funds, which may prove to be inaccurate. Inaccurate valuations of a
Private Fund's portfolio holdings may affect the Fund's net asset value
calculations. Private Funds in which the Portfolio invests will not borrow to
increase the amount of assets available for investment or otherwise engage in
leverage.

Securities of Small Companies. The Portfolio's investments
involve considerations that are not applicable to investing in securities of
established, larger- capitalization issuers, including reduced and less reliable
information about issuers and markets, less stringent accounting standards,
illiquidity of securities and markets, higher brokerage commissions and fees and
greater market risk in general. In addition, securities of smaller companies may
involve greater risks since these securities may have limited marketability and,
thus, may be more volatile.

Other Investment Limitations

The investment limitations numbered 1 through 9 may not be
changed without the affirmative vote of the holders of a majority of the
Portfolio'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 Portfolio are present or represented by
proxy, or (ii) more than 50% of the outstanding shares. Investment limitations
10 through 16 may be changed by a vote of the Board at any time.

The Portfolio may not:

3. Purchase the securities of any issuer, if as a result more
than 5% of the value of the Portfolio'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 Portfolio's
total assets may be invested without regard to this 5% limitation.

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

8. Invest in commodities, except that the Portfolio 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 on a forward commitment or delayed-delivery basis and enter into
stand-by commitments.

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

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

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

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

13. Purchase any security if as a result the Portfolio 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.

14. Purchase or retain securities of any company if, to the
knowledge of the Trust, any of the Portfolio's officers or Trustees or any
officer or director of Warburg 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.

15. Invest in warrants (other than warrants acquired by the
Portfolio 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 Portfolio's net assets.

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

General. Certain other non-fundamental investment limitations
are currently required by one or more states in which shares of the Portfolio
are sold. These may be more restrictive than the limitations set forth above.
Should the Portfolio determine that any such commitment is no longer in the best
interest of the Portfolio and its shareholders, the Portfolio will revoke the
commitment by terminating the sale of Portfolio shares in the state involved. In
addition, the relevant state may change or eliminate its policy regarding such

investment limitations. 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 Portfolio's assets
will not constitute a violation of such restriction.

Portfolio Valuation

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

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

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
Portfolio's calculation of net asset value, in which case an adjustment may be
made by the Board or its delegates. 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.

Portfolio Transactions

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

Except for Private Funds managed by Abbott, Warburg will
select specific portfolio investments and effect transactions for the Portfolio
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 Portfolio 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 Portfolio 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
Portfolio. Research may include furnishing advice, either directly or through
publications or writings, as to the value of securities, the advisability of
purchasing or selling specific securities and the availability of securities or
purchasers or sellers of securities; furnishing seminars, information, analyses
and reports concerning issuers, industries, securities, trading markets and
methods, legislative developments, changes in accounting practices, economic
factors and trends and portfolio strategy; access to research analysts,
corporate management personnel, industry experts, economists and government
officials; comparative performance evaluation and technical measurement services
and quotation services; and products and other services (such as third party
publications, reports and analyses, and computer and electronic access,
equipment, software, information and accessories that deliver, process or
otherwise utilize information, including the research described above) that
assist Warburg in carrying out its responsibilities. Research received from
brokers or dealers is supplemental to Warburg's own research program. The fees
to Warburg under its advisory agreements with the Trust are not reduced by
reason of its receiving any brokerage and research services.

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

Any portfolio transaction for the Portfolio may be executed
through Counsellors Securities Inc., the Trust'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 Portfolio a commission rate consistent with those charged by Counsellors
Securities to comparable unaffiliated customers in similar transactions. All
transactions with affiliated brokers will comply with Rule 17e-1 under the 1940
Act. In no instance will portfolio securities be purchased from or sold to
Warburg or Counsellors Securities or any affiliated person of such companies.

Transactions for the Portfolio may be effected on foreign
securities exchanges. In transactions for securities not actively traded on a
foreign securities exchange, the Portfolio 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 Portfolio may participate, if and when practicable, in
bidding for the purchase of securities for the Portfolio's portfolio directly
from an issuer in order to take advantage of the lower purchase price available
to members of such a group. The Portfolio will engage in this practice, however,
only when Warburg, in its sole discretion, believes such practice to be
otherwise in the Portfolio's interest.

Portfolio Turnover

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

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

MANAGEMENT OF THE TRUST

Officers and Board of Trustees

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

<TABLE>
<S> <C>
Richard N. Cooper (62)...................................Trustee
Harvard University National Intelligence Counsel;
1737 Cambridge Street Professor at Harvard University;
Cambridge, Massachusetts 02138 Director or Trustee of 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 since
Greenwich, Connecticut 06830 January 1987; Director or Trustee of GEV
Corporation and Signet Star Reinsurance
Company; Chairman and Director of
NAC Holdings from September 1990-June 1993.

</TABLE>
26

<TABLE>
<S> <C>
Arnold M. Reichman* (48).................................Trustee and 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.

Alexander B. Trowbridge (66).............................Trustee
1317 F Street, N.W. President of Trowbridge Partners, Inc.
Suite 500 (business consulting) from January 1990-
Washington, DC 20004 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).

Stephen Distler (42).....................................Vice President and Chief Financial Officer
466 Lexington Avenue Managing Director, Controller and Assistant
New York, New York 10017-3147 Secretary of EMW; Associated with EMW
since 1984; Treasurer of Counsellors
Securities; Vice President, Treasurer and Chief
Accounting Officer or Vice President and
- --------
* Indicates a Trustee who is an "interested person" of the Trust as defined in the 1940
Act.

</TABLE>
27

<TABLE>

<S> <C>
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 and Assistant Secretary of
Counsellors Securities; Vice President and
Secretary of otherinvestment companies
advised by Warburg.

Trustees' Compensation
(estimated for the fiscal year ended December 31, 1996)`D'

Arnold M. Reichman None** None**

Richard N. Cooper $1,500 $47,000

Donald J. Donahue $1,500 $47,000

Jack W. Fritz $1,500 $47,000

Thomas A. Melfe $1,500 $47,000

Alexander B. Trowbridge $1,500 $47,000
</TABLE>

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

`D' Amounts shown are estimates of future payments to be made pursuant to
existing arrangements.

* Each Trustee also serves as a Director or Trustee of 19 other
investment companies advised by Warburg.

As of June 18, 1996, no Trustees or officers of the Trust owned any of the
outstanding shares of the Portfolio.

Portfolio Managers

Ms. Elizabeth B. Dater, co-portfolio manager of the Portfolio
is also co- portfolio manager of Warburg Pincus Post-Venture Capital Fund,
Warburg Pincus Emerging Growth Fund and the Small Company Growth Portfolio of
the Trust. Ms. Dater is the former director of research for Warburg's investment
management activities. Prior to joining Warburg in 1978, she was a vice
president of Research at Fiduciary Trust Company of New York and an
institutional sales assistant at Lehman Brothers. Ms. Dater has been a regular
panelist on Maryland Public Television's "Wall Street Week" since 1976. Ms.
Dater earned a B.A. degree from Boston University in Massachusetts.

Mr. Stephen J. Lurito, co-portfolio manager of the Portfolio
is also co- portfolio manager of Warburg Pincus Post-Venture Capital Fund,
Warburg Pincus Emerging Growth Fund and the Small Company Growth Portfolio of
the Trust. Mr. Lurito, also the research coordinator and a portfolio manager for
micro-cap equity and post-venture products, has been with Warburg since 1987.
Prior to that he was a research analyst at Sanford C. Bernstein & Company, Inc.
Mr. Lurito earned a B.A. degree from the University of Virginia and a M.B.A.
from the University of Pennsylvania.

Robert S. Janis and Christopher M. Nawn are associate
portfolio managers and research analysts for the Portfolio. Mr. Janis has been
with Warburg since October 1994, before which time he was a vice president and
senior research analyst at U.S. Trust Company of New York. Mr. Nawn has been
with Warburg since September 1994, before which time he was a senior sector
analyst and portfolio manager at the Dreyfus Corporation.

Raymond L. Held and Gary H. Solomon, investment managers and
general partners of Abbott, manage the Portfolio's investments in Private Funds.
Abbott also acts as sub-investment adviser for the Warburg Pincus Post-Venture
Capital Fund.

Investment Adviser, Sub-Investment Adviser and Co-Administrators

Warburg serves as investment adviser to the Portfolio, Abbott
serves as sub- investment adviser to the Portfolio, Counsellors Funds Service,
Inc. ("Counsellors Service") serves as a co-administrator to the Trust and PFPC
serves as a co-administrator to the Trust pursuant to separate written
agreements (the "Advisory Agreements," the "Sub-Advisory Agreement," the
"Counsellors Service Co-Administration Agreements" and the "PFPC Co-
Administration Agreements," respectively). The services provided by, and the
fees payable by the Trust to, Warburg under the Advisory Agreements, Abbott
under the Sub-Advisory Agreement, Counsellors Service under the Counsellors
Service Co-Administration Agreements and PFPC under the PFPC Co-Administration
Agreements are described in the Prospectus.

Custodian and Transfer Agent

PNC Bank, National Association ("PNC") serves as custodian of
the Portfolio's U.S. assets and Fiduciary Trust Company International
("Fiduciary") serves as custodian of the Portfolio's non-U.S. assets, pursuant
to separate custodian agreements (the "Custodian Agreements"). Under the
Custodian Agreements, PNC and Fiduciary each (i) maintains a separate account or
accounts in the name of the Portfolio, (ii) holds and transfers portfolio
securities on account of the Portfolio, (iii) makes receipts and disbursements
of money on behalf of the Portfolio, (iv) collects and receives all income and
other payments and distributions on account of the Portfolio's portfolio
securities held by it and (v) makes periodic reports to the Board concerning the
Trust's custodial arrangements. PNC may delegate its duties under its Custodian
Agreement with the Trust to a wholly owned direct or indirect subsidiary of PNC
or PNC Bank Corp. upon notice to the Trust and

upon the satisfaction of certain other conditions. With the approval of the
Board, Fiduciary is authorized to select one or more foreign banking
institutions and foreign securities depositaries as sub-custodian on behalf of
the Portfolio. Fiduciary is not relieved of any responsibility or liability to
the Trust on account of any actions or omissions of any such 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. The principal business address of Fiduciary is Two World Trade Center,
New York, New York 10048.

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

Organization of the Trust

The Trust was organized as an unincorporated Massachusetts
business trust under the name "Warburg, Pincus Trust."

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

All shareholders of the Portfolio, upon liquidation, will
participate ratably in the Portfolio'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.

ADDITIONAL PURCHASE AND REDEMPTION INFORMATION

As described in the Prospectus, shares of the Portfolio may
not be purchased or redeemed by individual investors directly, but may be
purchased or redeemed only through Variable Contracts offered by separate
accounts of Participating Insurance Companies and through Plans, including
participant-directed Plans which elect to make the Portfolio an investment
option for Plan participants. The offering price of the Portfolio's shares is
equal to its per share net asset value. Additional information on how to
purchase and redeem the Portfolio's shares and how such shares are priced is
included in the Prospectus under "Net Asset Value."

Under the 1940 Act, the Portfolio 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 Portfolio 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
Portfolio 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 Trust will comply with Rule 18f-1
promulgated under the 1940 Act with respect to redemptions in kind.

ADDITIONAL INFORMATION CONCERNING TAXES

The Portfolio intends to qualify as a "regulated investment
company" under Subchapter M of the Code. If it qualifies as a regulated
investment company, the Portfolio will pay no federal income taxes on its
taxable net investment income (that is, taxable income other than net realized
capital gains) and its net realized capital gains that are distributed to
shareholders. To qualify under Subchapter M, the Portfolio 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 its 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 Portfolio (a) at least 50% of the market value of the
Portfolio'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 Portfolio'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 Portfolio'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 Portfolio 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 Portfolio may be restricted in the selling of securities held
by the Portfolio for less than three months and in the utilization of certain of
the investment techniques described above and in the Trust's Prospectus. As a
regulated investment company, the Portfolio 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 Portfolio'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
December 31 during such year, together with any undistributed, untaxed amounts
of ordinary income and capital gains from the previous calendar year. The
Portfolio expects to pay the dividends and make the distributions necessary to
avoid the application of this excise tax.

In addition, the Portfolio intends to comply with the
diversification requirements of Section 817(h) of the Code related to the
tax-deferred status of insurance company separate accounts. To comply with
regulations under Section 817(h) of the Code, the Portfolio will be required to
diversify its investments so that on the last day of each calendar quarter no
more than 55% of the value of its assets is represented by any one investment,
no more than 70% is represented by any two investments, no more than 80% is
represented by any three investments and no more than 90% is represented by any
four investments. Generally, all securities of the same issuer are treated as a
single investment. For the purposes of Section 817(h), obligations of the United
States Treasury and each U.S.

government instrumentality are treated as securities of separate issuers. The
Treasury Department has indicated that it may issue future pronouncements
addressing the circumstances in which a Variable Contract owner's control of the
investments of a separate account may cause the Variable Contract owner, rather
than the Participating Insurance Company, to be treated as the owner of the
assets held by the separate account. If the Variable Contract owner is
considered the owner of the securities underlying the separate account, income
and gains produced by those securities would be included currently in the
Variable Contract owner's gross income. It is not known what standards will be
set forth in such pronouncements or when, if at all, these pronouncements may be
issued. In the event that rules or regulations are adopted, there can be no
assurance that the Portfolio will be able to operate as currently described, or
that the Trust will not have to change the investment goal or investment
policies of the Portfolio. While the Portfolio's investment goal is fundamental
and may be changed only by a vote of a majority of the Portfolio's outstanding
shares, the Board reserves the right to modify the investment policies of the
Portfolio as necessary to prevent any such prospective rules and regulations
from causing a Variable Contract owner to be considered the owner of the shares
of the Portfolio underlying the separate account.

The Portfolio'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 Portfolio (i.e., may affect whether gains or losses are
ordinary or capital), accelerate recognition of income to the Portfolio, defer
Portfolio losses and cause the Portfolio 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 Portfolio to mark-to-market certain types of its positions (i.e., treat them
as if they were closed out) and (ii) may cause the Portfolio 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 Portfolio 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 currency, forward contract, option, futures
contract or hedged investment so that (a) neither the Portfolio nor its
shareholders will be treated as receiving a materially greater amount of capital
gains or distributions than actually realized or received, (b) the Portfolio
will be able to use substantially all of its losses for the fiscal years in
which the losses actually occur and (c) the Portfolio will continue to qualify
as a regulated investment company.

As described in the Prospectus, because shares of the
Portfolio may only be purchased through Variable Contracts and Plans, it is
anticipated that dividends and distributions will be exempt from current
taxation if left to accumulate within the Variable Contracts or Plans.

Investment in Passive Foreign Investment Companies

If the Portfolio purchases shares in certain foreign entities
classified under the Code as "passive foreign investment companies" ("PFICs"),
the Portfolio 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 by the Portfolio to its shareholders, the Variable
Contracts and Plans. 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 Portfolio. Certain interest charges may be imposed on
the Portfolio with respect to any taxes arising from excess distributions or
gains on the disposition of shares in a PFIC.

The Portfolio 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 Portfolio 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 Portfolio.

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 Portfolio is unclear. If the Portfolio 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 Portfolio. Recently proposed legislation would
codify the mark-to-market election for regulated investment companies.

DETERMINATION OF PERFORMANCE

From time to time, the Portfolio may quote its total return in
advertisements or in reports and other communications to shareholders. Total
return is calculated by finding the average annual compounded rates of return
for the one-, five-, and ten- (or such shorter period as the Portfolio has been
offered) year periods that would equate the initial amount invested to the
ending redeemable value according to the following formula: P (1 + T)n = ERV.
For purposes of this formula, "P" is a hypothetical investment of $1,000; "T" is
average annual total return; "n" is number of years; and "ERV" is the ending
redeemable value of a hypothetical $1,000 payment made at the beginning of the
one-, five- or ten-year periods (or fractional portion thereof). Total return or
"T" is computed by finding the

average annual change in the value of an initial $1,000 investment over the
period and assumes that all dividends and distributions are reinvested during
the period.

The Portfolio may advertise, from time to time, comparisons of
its performance with that of one or more other mutual funds with similar
investment objectives. The Portfolio 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. Investors
should note that this performance may not be representative of the Portfolio's
total return in longer market cycles.

The Portfolio's performance will vary from time to time
depending upon market conditions, the composition of its portfolio and operating
expenses allocable to it. As described above, total return is based on
historical earnings and is not intended to indicate future performance.
Consequently, any given performance quotation should not be considered as
representative of performance for any specified period in the future.
Performance information may be useful as a basis for comparison with other
investment alternatives. However, the Portfolio's performance will fluctuate,
unlike certain bank deposits or other investments which pay a fixed yield for a
stated period of time. Performance quotations for the Portfolio include the
effect of deducting the Portfolio's expenses, but may not include charges and
expenses attributable to any particular Variable Contract or Plan, which would
reduce the returns described in this section. See the Prospectus, "Performance."

INDEPENDENT ACCOUNTANTS AND COUNSEL

Coopers & Lybrand L.L.P. with principal offices at 2400 Eleven
Penn Center, Philadelphia, Pennsylvania 19103, serves as independent accountants
for the Trust.

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

FINANCIAL STATEMENTS

The Portfolio has not yet commenced operations. The
Portfolio's initial Statement of Assets and Liabilities (Unaudited) as of April
17, 1996 follows the Appendix to this Statement of Additional Information.

APPENDIX

DESCRIPTION OF RATINGS

Commercial Paper Ratings

Corporate Bond Ratings

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

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

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

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

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

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

A-2

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

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

A-3

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.

A-4

WARBURG PINCUS TRUST

STATEMENT OF ASSETS AND LIABILITIES
AS OF APRIL 17, 1996

<TABLE>
<CAPTION>
Post-Venture
Capital
Portfolio
---------
<S> <C>
Assets:
Cash 0
Deferred Organizational Costs 0
-
Total Assets 0

STATEMENT OF DIFFERENCES
------------------------

The dagger symbol shall be expressed as........ `D'
Mathematical powers usually represented as a
superscript shall be preceded by............... `pp'

<PAGE>