WARBURG PINCUS TRUST, 485APOS, 1999-02-18

WARBURG PINCUS TRUST
485APOS, 1999-02-18

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<PAGE> 1

As filed with the U.S. Securities and Exchange Commission
on February 18, 1999

Securities Act File No. 33-58125

Investment Company Act File No. 811-07261

U.S. SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM N-1A

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [x]

Pre-Effective Amendment No. [ ]

Post-Effective Amendment No. 8 [x]

and/or

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

Amendment No. 9 [x]

(Check appropriate box or boxes)

Warburg, Pincus Trust
(Exact Name of Registrant as Specified in Charter)

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

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

Janna Manes, Esq.

Warburg, Pincus Trust
466 Lexington Avenue
New York, New York 10017-3147

(Name and Address of Agent for Service)

Copy to:

Rose F. DiMartino, Esq.
Willkie Farr & Gallagher

787 Seventh Avenue

New York, New York 10019-6099

<PAGE> 2

Approximate Date of Proposed Public Offering: April 30, 1999

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

[ ] immediately upon filing pursuant to paragraph (b)

[ ] on [date] pursuant to paragraph (b)

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

[x] on April 30, 1999 pursuant to paragraph (a)(1)

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

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

If appropriate, check the following box:

[ ] This post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
<PAGE> 3

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

Subject to Completion, dated February 18, 1999
PROSPECTUS

April 30, 1999

WARBURG PINCUS TRUST

----------------------- EMERGING MARKETS PORTFOLIO

----------------------- INTERNATIONAL EQUITY PORTFOLIO

----------------------- POST-VENTURE CAPITAL PORTFOLIO

----------------------- SMALL COMPANY GROWTH 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.

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

LOGO

<PAGE> 4

CONTENTS

<TABLE>
<S> <C>
KEY POINTS........................ ......................... 3
Goals and Principal Strategies........................... 3
Investor Profile......................................... 3
A Word About Risk........................................ 4
PERFORMANCE SUMMARY.................... .................... 5
Year-by-Year Total Returns............................... 5
Average Annual Total Returns............................. 6
INVESTOR EXPENSES..................... ..................... 7
Fees and Portfolio Expenses.............................. 7
Example.................................................. 8
THE PORTFOLIOS IN DETAIL................. .................. 9
The Management Firm...................................... 9
Portfolio Information Key................................ 10
EMERGING MARKETS PORTFOLIO................ ................. 11
INTERNATIONAL EQUITY PORTFOLIO.............. ............... 13
POST-VENTURE CAPITAL PORTFOLIO.............. ............... 15
SMALL COMPANY GROWTH PORTFOLIO.............. ............... 17
MORE ABOUT RISK...................... ...................... 19
Introduction............................................. 19
Types of Investment Risk................................. 19
Certain Investment Practices............................. 22
MEET THE MANAGERS..................... ..................... 25
ABOUT YOUR ACCOUNT.................... ..................... 28
Share Valuation.......................................... 28
Distributions............................................ 28
Taxes.................................................... 28
BUYING AND SELLING SHARES................. ................. 29
FOR MORE INFORMATION................... .................... back cover
</TABLE>

<PAGE> 5

KEY POINTS

GOALS AND PRINCIPAL STRATEGIES

<TABLE>
<CAPTION>
PORTFOLIO/RISK FACTORS GOAL STRATEGIES
<S> <C> <C>

EMERGING MARKETS PORTFOLIO Long-term growth of capital - Invests in foreign equity securities
Risk factors: - Focuses on the world's less developed
Market risk countries
Foreign securities - Analyzes a company's growth potential,
Emerging-markets focus using a bottom-up investment approach
Non-diversified status

INTERNATIONAL EQUITY PORTFOLIO Long-term capital appreciation - Invests in foreign equity securities
Risk factors: - Diversifies its investments across
Market risk countries, including emerging markets
Foreign securities - Favors stocks with discounted
valuations, using a value-based, bottom-up
investment approach

POST-VENTURE CAPITAL PORTFOLIO Long-term growth of capital - Invests primarily in equity securities
Risk factors: of U.S. companies considered to be in
Market risk their post-venture-capital stage of
Start-up and other small companies development
Special-situation companies - May invest in companies of any size
- Takes a growth investment approach to
identifying attractive
post-venture-capital investments

SMALL COMPANY GROWTH PORTFOLIO Capital growth - Invests in equity securities of small
Risk factors: U.S. companies
Market risk - Using a growth investment style, may
Start-up and other small companies look for either developing or older
Special-situation companies companies in a growth stage or companies
Non-diversified status providing products or services with a high
unit-volume growth rate
</TABLE>

INVESTOR PROFILE

THESE PORTFOLIOS ARE DESIGNED FOR INVESTORS WHO:

- have longer time horizons

- are willing to assume the risk of losing money in exchange for attractive
potential long-term returns

- are investing for growth or capital appreciation

- in the case of the Emerging Markets and International Equity portfolios, want
to diversify their investments internationally

- in the case of the Post-Venture Capital and Small Company Growth portfolios,
want to diversify their investments with more aggressive stock funds

THEY MAY NOT BE APPROPRIATE IF YOU:

- are investing for a shorter time horizon

- are uncomfortable with an investment that has a higher degree of volatility

- want to limit your exposure to foreign securities

- are looking for income

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

<PAGE> 6

A WORD ABOUT RISK

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

Principal risk factors for the portfolios are discussed below. Before you
invest, please make sure you understand the risks that apply to your portfolio.
As with any mutual fund, you could lose money over any period of time.

Investments in the portfolios are not bank deposits and are not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency.

MARKET RISK

All portfolios

The market value of a security may move up and down, sometimes rapidly and
unpredictably. These fluctuations, which are often referred to as "volatility,"
may cause a security to be worth less than it was worth at an earlier time.
Market risk may affect a single issuer, industry, sector of the economy, or the
market as a whole. Market risk is common to most investments--including stocks
and bonds, and the mutual funds that invest in them.

FOREIGN SECURITIES

All portfolios

A portfolio that invests outside the U.S. carries additional risks that
include:

- CURRENCY RISK Fluctuations in exchange rates between the U.S. dollar and
foreign currencies may negatively
affect an investment. Adverse changes in exchange rates may erode or reverse
any gains produced by foreign-currency denominated investments and may widen
any losses. Each of the portfolios may, but is not required to, seek to reduce
currency risk by hedging part or all of its exposure to various foreign
currencies.

EURO CONVERSION The introduction of a new single European currency, the euro,
may result in uncertainties for securities of European companies, European
markets and the operation of the portfolios. The euro was introduced on January
1, 1999, by 11 European Union member countries who are participating in European
Monetary Union (EMU).

The introduction of the euro results in the redenomination of certain
European debt and equity securities over a period of time, which may bring in
differences in various accounting, tax and/or legal treatments that would not
otherwise occur. Any market disruptions relating to the introduction of the euro
could adversely affect the value of European securities and currencies held by
the portfolios. Other risks relate to the ability of financial institutions'
systems to process euro transactions. Additional economic and operational issues
are raised by the fact that certain European Union member countries, including
the United Kingdom, did not participate in EMU on January 1, 1999, and therefore
did not implement the euro on that date.

At this early stage no one knows what the degree of impact of the
introduction of the euro will be. To the extent that the market impact or effect
on a portfolio holding is negative or portfolio service-provider systems cannot
process the euro conversion, the portfolio's performance could be hurt.

- INFORMATION RISK Key information about an issuer, security or market may be
inaccurate or unavailable.

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

EMERGING-MARKETS FOCUS

Emerging Markets Portfolio

Focusing on emerging (less developed) markets involves higher levels of risk,
including increased currency, information, liquidity, market, political and
valuation risks. Deficiencies in regulatory oversight, market infrastructure,
shareholder protections and company laws could expose the portfolio to
operational and other risks as well. Some countries may have restrictions that
could limit the portfolio's access to attractive opportunities. Additionally,
emerging markets often face serious economic problems (such as high external
debt, inflation and unemployment) that could subject the portfolio to increased
volatility or substantial declines in value.

START-UP AND OTHER SMALL COMPANIES

Post-Venture Capital Portfolio
Small Company Growth Portfolio

Start-up and other small companies may have less-experienced management,
limited product lines, unproven track records or inadequate capital reserves.
Their securities may carry increased market, liquidity and other risks. Key
information about the company may be inaccurate or unavailable.

SPECIAL-SITUATION COMPANIES

Post-Venture Capital Portfolio
Small Company Growth Portfolio

"Special situations" are unusual developments that affect a company's market
value. Examples include mergers, acquisitions and reorganizations. Securities of
special-situation companies may decline in value if the anticipated benefits of
the special situation do not materialize.

NON-DIVERSIFIED STATUS

Emerging Markets Portfolio

Small Company Growth Portfolio

The portfolios are considered non-diversified portfolios under the Investment
Company Act of 1940 and are permitted to invest a greater proportion of their
assets in the securities of a smaller number of issuers. As a result, the
portfolios may be subject to greater volatility with respect to their
investments than a portfolio that is more broadly diversified.

4
<PAGE> 7

PERFORMANCE SUMMARY

The bar chart below and the table on the next page provide an indication of the
risks of investing in these portfolios. The bar chart shows you how each
portfolio's performance has varied from year to year for up to 10 years. The
table compares each portfolio's performance over time to that of a broadly based
securities market index and other indexes, if applicable. As with all mutual
funds, past performance is not a prediction of the future.

YEAR-BY-YEAR TOTAL RETURNS

<TABLE>
<CAPTION>
YEAR ENDED 12/31: 1996 1997 1998

<S> <C> <C> <C>
EMERGING MARKETS PORTFOLIO
Best Quarter: XX.xx%(Q___)
Worst Quarter: (XX.xx)%(Q___)
Inception date: 12/31/97 NA
----------------------

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

INTERNATIONAL EQUITY PORTFOLIO
Best Quarter: XX.xx%(Q___)
Worst Quarter: (XX.xx)%(Q___)
Inception date: 6/30/95
----------------------

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

POST-VENTURE
CAPITAL PORTFOLIO
Best Quarter: XX.xx%(Q___)
Worst Quarter: (XX.xx)%(Q___)
Inception date: 9/30/96 NA
----------------------

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

SMALL COMPANY
GROWTH PORTFOLIO
Best Quarter: XX.xx%(Q___)
Worst Quarter: (XX.xx)%(Q___)
Inception date: 6/30/95
----------------------

--------------------------------------------------------------
</TABLE>

<PAGE> 8

AVERAGE ANNUAL TOTAL RETURNS

<TABLE>
<CAPTION>
ONE YEAR FIVE YEARS 10 YEARS LIFE OF INCEPTION
PERIOD ENDED 12/31/98: 1998 1994-1998 1989-1998 FUND DATE
<S> <C> <C> <C> <C> <C>
EMERGING MARKETS PORTFOLIO XX.xx% NA NA XX.xx% 12/31/97
MORGAN STANLEY CAPITAL INTERNATIONAL EMERGING MARKETS FREE
INDEX XX.xx% NA NA XX.xx%
INTERNATIONAL EQUITY PORTFOLIO XX.xx% NA NA XX.xx% 6/30/95
MSCI ALL COUNTRY WORLD EXCLUDING THE U.S. INDEX XX.xx% NA NA XX.xx%
POST-VENTURE CAPITAL PORTFOLIO XX.xx% NA NA XX.xx% 9/30/96
RUSSELL 2000 GROWTH INDEX XX.xx% NA NA XX.xx%
RUSSELL 2500 GROWTH INDEX XX.xx% NA NA XX.xx%
NASDAQ INDUSTRIALS INDEX XX.xx% NA NA XX.xx%
SMALL COMPANY GROWTH PORTFOLIO XX.xx% NA NA XX.xx% 6/30/95
RUSSELL 2000 GROWTH INDEX XX.xx% NA NA XX.xx%
</TABLE>

UNDERSTANDING PERFORMANCE

- TOTAL RETURN tells you how much an investment in a portfolio has changed
in value over a given time period. It assumes that all dividends and
capital gains (if any) were reinvested in additional shares. The change
in value can be stated either as a cumulative return or as an average
annual rate of return.

- A CUMULATIVE TOTAL RETURN is the actual return of an investment for a
specified period. The year-by-year total returns in the bar chart are
examples of one-year cumulative total returns.

- An AVERAGE ANNUAL TOTAL RETURN applies to periods longer than one year.
It smoothes out the variations in year-by-year performance to tell you
what constant annual return would have produced the investment's actual
cumulative return. This gives you an idea of an investment's annual
contribution to your portfolio, assuming you held it for the entire
period.

- Because of compounding, the average annual total returns in the table
cannot be computed by averaging the returns in the bar chart.

6
<PAGE> 9

INVESTOR EXPENSES

FEES AND PORTFOLIO EXPENSES

This table describes the fees and expenses you may bear as a shareholder. Annual
portfolio operating expense figures are for the fiscal year ended December 31,
1998. 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 insurance company separate account or in
the plan documents or other informational materials supplied by plan sponsors.

<S> <C> <C> <C> <C>
POST- SMALL
EMERGING INTERNATIONAL VENTURE COMPANY
MARKETS EQUITY CAPITAL GROWTH
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
SHAREHOLDER FEES
(paid directly from your investment)
Sales charge "load" on purchases NONE NONE NONE NONE
Deferred sales charge "load" NONE NONE NONE NONE
Sales charge "load" on reinvested distributions NONE NONE NONE NONE
Redemption fees NONE NONE NONE NONE
Exchange fees NONE NONE NONE NONE
ANNUAL PORTFOLIO OPERATING EXPENSES
(deducted from fund assets)
Management fee 1.25% 1.00% 1.25% .90%
Distribution and service (12b-1) fee NONE NONE NONE NONE
Other expenses .xx% .xx% .xx% .xx%
TOTAL ANNUAL PORTFOLIO OPERATING EXPENSES* .xx% .xx% .xx% .xx%
</TABLE>

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

<TABLE>
<CAPTION>
SMALL
EXPENSES AFTER EMERGING INTERNATIONAL POST-VENTURE COMPANY
WAIVERS AND MARKETS EQUITY CAPITAL GROWTH
REIMBURSEMENTS PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
<S> <C> <C> <C> <C>
Management fee .xx% .xx% .xx% .xx%
Distribution and service (12b-1) fee NONE NONE NONE NONE
Other expenses .xx% .xx% .xx% .xx%
---- ---- ---- ----
TOTAL ANNUAL PORTFOLIO OPERATING EXPENSES X.XX% .XX% X.XX% .XX%
</TABLE>

<PAGE> 10

EXAMPLE

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

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

<TABLE>
<CAPTION>
ONE YEAR THREE YEARS FIVE YEARS 10 YEARS
<S> <C> <C> <C> <C>
EMERGING MARKETS PORTFOLIO $ $ $ $
INTERNATIONAL EQUITY PORTFOLIO $ $ $ $
POST-VENTURE CAPITAL PORTFOLIO $ $ $ $
SMALL COMPANY GROWTH PORTFOLIO $ $ $ $
</TABLE>

8
<PAGE> 11

THE PORTFOLIOS IN DETAIL

THE MANAGEMENT FIRM

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

- Investment adviser for the portfolios

- Responsible for managing each portfolio's assets according to its goal and
strategies

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

- Currently manages approximately $22 billion in assets

For easier reading, Warburg Pincus Asset Management, Inc. will be referred to
as "Warburg Pincus" or "we" throughout this Prospectus.

ABBOTT CAPITAL MANAGEMENT, LLC
50 Rowes Wharf, Suite 240
Boston, MA 02110-3328
- Sub-investment adviser for the Post-Venture Capital Portfolio

- Responsible for managing the portfolio's investments in private-equity
portfolios

- A registered investment adviser concentrating on venture-capital, buyout, and
special-situations investments

- Currently manages approximately $2.4 billion in assets

<PAGE> 12

PORTFOLIO INFORMATION KEY

Concise descriptions of each portfolio begin on the next page. Each
description provides the following information:

GOAL AND STRATEGIES

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

PORTFOLIO INVESTMENTS

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

RISK FACTORS

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

PORTFOLIO MANAGEMENT

The individuals designated by the investment adviser to handle the
portfolio's day-to-day management.

INVESTOR EXPENSES

Actual portfolio expenses for the 1998 fiscal year. Future expenses may be
higher or lower.

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

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

FINANCIAL HIGHLIGHTS

A table showing the portfolio's audited financial performance for up to five
years.

- TOTAL RETURN How much you would have earned on an investment in the
portfolio, assuming you had reinvested all dividend and capital-gain
distributions.

- PORTFOLIO TURNOVER An indication of trading frequency. The portfolios may
sell securities without regard to the length of time they have been held. A
high turnover rate may increase the portfolio's transaction costs and
negatively affect its performance.

The Annual Report includes the auditor's report, along with the portfolio's
financial statements. It is available free upon request.

10
<PAGE> 13

EMERGING MARKETS PORTFOLIO

GOAL AND STRATEGIES

The Emerging Markets Portfolio seeks long-term growth of capital. To pursue
this goal, it invests in equity securities of companies located in or conducting
a majority of their business in emerging-markets.

An emerging market is any country:

- generally considered to be an emerging or developing country by the United
Nations, or by the World Bank and the International Finance Corporation (IFC),
or

- included in the IFC Investable Index or the Morgan Stanley Capital
International Emerging Markets Index, or

- having a per-capita gross national product of $2,000 or less

Under this definition, most countries of the world (other than the U.S.,
Canada, Western Europe, Japan, Australia and New Zealand) are considered
emerging markets.

Under normal market conditions, the portfolio will invest at least 65% of
assets in equity securities of issuers from at least three emerging markets. The
portfolio may invest in companies of any size, including emerging-growth
companies--small or medium-size companies that have passed their start-up phase,
show positive earnings, and offer the potential for accelerated earnings growth.

Its non-diversified status allows the portfolio to invest a greater share of
its assets in the securities of fewer companies. However, the portfolio managers
typically have diversified the portfolio's investments.

PORTFOLIO INVESTMENTS

This portfolio invests primarily in equity securities of emerging-markets
issuers. Equity holdings may consist of:

- common and preferred stocks

- debt securities convertible into common or preferred stock

- rights and warrants

- equity interests in trusts and partnerships

- depositary receipts

To a limited extent, the portfolio may also engage in other investment
practices.

RISK FACTORS

This portfolio's principal risk factors are:

- market risk

- foreign securities

- emerging-markets focus

- non-diversified status

The value of your investment will fluctuate in response to stock-market
movements. Because the portfolio invests internationally, it carries additional
risks, including currency, information and political risks. These risks are
defined in "More About Risk."

Because the portfolio focuses on emerging markets, you should expect it to be
riskier than a more broadly diversified international equity fund. Investing in
emerging markets involves access, operational and other risks not generally
encountered in developed countries. In addition, emerging markets often face
serious economic problems that could subject the portfolio to increased
volatility or substantial declines in value.

Non-diversification might cause the portfolio to be more volatile than a
diversified portfolio. "More About Risk" details certain other investment
practices the portfolio may use. Please read that section carefully before you
invest.

PORTFOLIO MANAGEMENT

Richard H. King and Vincent J. McBride are Co-Portfolio Managers of the
portfolio. Associate Portfolio Manager Morid Kamshad assists them. You can find
out more about the portfolio's managers in "Meet the Managers."

INVESTOR EXPENSES

Management fee .xx%

All other expenses .xx%

-------------
Total expenses X.xx%

<PAGE> 14

FINANCIAL HIGHLIGHTS

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

PERIOD ENDED: 12/98(1)
<S> <C>
PER-SHARE DATA

- -------------------------------------------------------------------------
Net asset value, beginning of period

- -------------------------------------------------------------------------
Investment activities:
Net investment income
Net gains or losses on investments and foreign currency
related items (both realized and unrealized)

- -------------------------------------------------------------------------
Total from investment activities

- -------------------------------------------------------------------------
Distributions:
From net investment income
From realized capital gains

- -------------------------------------------------------------------------
Total distributions

- -------------------------------------------------------------------------
Net asset value, end of period

- -------------------------------------------------------------------------
Total return

- -------------------------------------------------------------------------
RATIOS AND SUPPLEMENTAL DATA

- -------------------------------------------------------------------------
Net assets, end of period (000s omitted)
Ratio of expenses to average net assets
Ratio of net income to average net assets
Decrease reflected in above operating expense ratios due to
waivers/reimbursements
Portfolio turnover rate

- -------------------------------------------------------------------------
</TABLE>

(1) For the period December 31, 1997 (Commencement of Operations) through
December 31, 1998.

(2) Per share information is calculated using the average share outstanding
method.

(3) Interest earned on uninvested cash balances is used to offset portions of
the transfer agent expense. These arrangements had no effect on the
portfolio's expense ratio.

(4) Not annualized.

(5) Annualized.

12
<PAGE> 15

INTERNATIONAL EQUITY PORTFOLIO

GOAL AND STRATEGIES

The International Equity Portfolio seeks long-term capital appreciation. To
pursue this goal, it invests in equity securities of companies located or
conducting a majority of their business outside the U.S.

Under normal market conditions, the portfolio will invest at least 65% of
assets in equity securities of issuers from at least three foreign countries.
The portfolio intends to diversify its investments across different countries,
although at times it may invest a significant part of its assets in a single
country. Although the portfolio emphasizes developed countries, it may also
invest in emerging markets.

In choosing equity securities, the portfolio's managers use a bottom-up
investment approach that begins with an analysis of individual companies. The
managers look for companies of any size whose stocks appear to be discounted
relative to earnings, assets or projected growth. The portfolio managers
determine value based upon research and analysis, taking all relevant factors
into account.

PORTFOLIO INVESTMENTS

This portfolio intends to invest substantially all of its assets in the
following types of equity securities:

- common stocks

- securities convertible into or exchangeable for common stocks

To a limited extent, the portfolio may also engage in other investment
practices.

RISK FACTORS

This portfolio's principal risk factors are:

- market risk

- foreign securities

To the extent that the portfolio invests in emerging markets or focuses on a
single country or region, it takes on additional risks that could hurt its
performance. Investing in emerging markets involves access, operational and
other risks not generally encountered in developed countries. Focusing on a
single country or region may cause the portfolio to be more volatile than a more
geographically diversified equity fund. "More About Risk" details these and
certain other investment practices the portfolio may use. Please read that
section carefully before you invest.

PORTFOLIO MANAGEMENT

Harold W. Ehrlich, Richard H. King, Vincent J. McBride and Harold E. Sharon
manage the portfolio. Associate Portfolio Manager Nancy Nierman assists them.
You can find out more about the portfolio's managers in "Meet the Managers."

INVESTOR EXPENSES

Management fee .xx%
All other expenses .xx%

-------------
Total expenses X.xx%

<PAGE> 16

FINANCIAL HIGHLIGHTS

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

PERIOD ENDED: 12/98 12/97 12/96 12/95(1)
<S> <C> <C> <C> <C>
PER-SHARE DATA
Net asset value, beginning of period $11.48 $10.65 $10.00
-------------------------------------
Investment activities:
Net investment income 0.10 0.00 0.03
Net gains or losses on investments and foreign currency
related items (both realized and unrealized) (0.37) 1.06 0.70
-------------------------------------
Total from investment activities (0.27) 1.06 0.73
-------------------------------------
Distributions:
From net investment income (0.01) (0.06) (0.01)
Distributions in excess of net investment income 0.00 (0.10) (0.07)
Distributions from realized gains 0.00 0.06 0.00
Distributions in excess of realized gains 0.71 (0.01) 0.00
-------------------------------------
Total distributions (0.72) (0.23) (0.08)
-------------------------------------
Net asset value, end of period $10.49 $11.48 $10.65
-------------------------------------
Total return (2.26)% 9.98% 7.30%(2)
-------------------------------------
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000s omitted) $347,229 $298,218 $64,537
Ratio of expenses to average net assets 1.36%(3) 1.36%(3) 1.44%(4)
Ratio of net income to average net assets 0.66% .64% 0.48%(4)
Decrease reflected in above operating expense ratios due to
waivers/reimbursement 0.00% .04% .77%(4)
Portfolio turnover rate 78.65% 30.82% 8.31%(2)
-------------------------------------
</TABLE>

(1) For the period June 30, 1995 (Commencement of Operations) through December
31, 1995.

(2) Not annualized.

(3) Interest earned on uninvested cash balances is used to offset portions of
the transfer agent expense. These arrangements resulted in a reduction to
the portfolio's expenses by %, .01% and .00%, for the years ending
December 31, 1998, 1997 and 1996, respectively. The portfolio's operating
expense ratio after reflecting these arrangements was %, 1.35% and 1.36%
for the years ended December 31, 1998, 1997 and 1996, respectively.

(4) Annualized.

14
<PAGE> 17

POST-VENTURE CAPITAL PORTFOLIO

GOAL AND STRATEGIES

The Post-Venture Capital Portfolio seeks long-term growth of capital. To
pursue this goal, it invests in equity securities of U.S. companies considered
to be in their post-venture-capital stage of development.

A post-venture-capital company is one that has received venture-capital
financing either:

- during the early stages of the company's existence or the early stages of the
development of a new product or service, or

- as part of a restructuring or recapitalization of the company

In either case, one or more of the following will have occurred within 10
years prior to the portfolio's purchase of the company's securities:

- the investment of venture-capital financing

- distribution of the company's securities to venture-capital investors

- the initial public offering

Under normal market conditions, the portfolio will invest at least 65% of
assets in equity securities of post-venture-capital companies. The portfolio may
invest in companies of any size.

PORTFOLIO INVESTMENTS

This portfolio invests primarily in equity securities of post-venture-capital
companies. Equity holdings may consist of:

- common and preferred stocks

- warrants

- securities convertible into common stocks

- partnership interests

The portfolio may invest up to:

- 10% of assets in private-equity portfolios that invest in venture-capital
companies

- 20% of assets in foreign securities

To a limited extent, the portfolio may also engage in other investment
practices.

RISK FACTORS

This portfolio's principal risk factors are:

- market risk

- start-up and other small companies

- special-situation companies

The value of your investment will fluctuate in response to stock-market
movements. Investing in start-up and other small companies may expose the
portfolio to increased market liquidity and information risks. These risks are
defined in "More About Risk."

Post-venture-capital companies are often involved in "special situations."
Securities of special-situation companies may decline in value and hurt the
portfolio's performance if the anticipated benefits of the special situation do
not materialize.

To the extent that it invests in private-equity portfolios, the portfolio
takes on additional liquidity, valuation and other risks. "More About Risk"
details certain other investment practices the portfolio may use. Please read
that section carefully before you invest.

PORTFOLIO MANAGEMENT

Elizabeth B. Dater and Stephen J. Lurito are Co-Portfolio Managers of the
portfolio. Associate Portfolio Managers Robert S. Janis and Christopher M. Nawn
assist them. Raymond L. Held and Thaddeus I. Grey manage the portfolio's
investments in private-equity portfolios. You can find out more about the
portfolio's managers in "Meet the Managers."

INVESTOR EXPENSES

Management fee .xx%

All other expenses .xx%

---------

Total expenses X.xx%

<PAGE> 18

FINANCIAL HIGHLIGHTS

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

PERIOD ENDED: 12/98 12/97 12/96(1)
<S> <C> <C> <C>
PER-SHARE DATA
Net asset value, beginning of period $9.76 $10.00
====== =====
Investment activities:
Net investment income (0.08) (0.00)
Net gains or losses on investments (both realized and
unrealized) 1.38 0.24
------ ----
Total from investment activities 1.30 0.24
------ ----
Net asset value, end of period $11.06 $9.76
====== ====
Total return 13.34% (2.40)%(2)
------ ----
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000s omitted) $30,520 $12,400
Ratio of expenses to average net assets 1.40%(4) 1.41%(3,4)
Ratio of net income to average net assets (0.75)% 0.80%(3)
Decrease reflected in above operating expense ratio due to
waivers/reimbursements 0.18% 4.16%(3)
Portfolio turnover rate 238.12% 6.80%(2)
------ ----

</TABLE>

(1) For the period September 30, 1996 (Commencement of Operations) through
December 31, 1996.

(2) Not annualized.

(3) Annualized.

(4) Interest earned on uninvested cash balances is used to offset portions of
the transfer agent expense. These arrangements resulted in a reduction to
the portfolio's expenses by %, .00% and .01% for the years or period
ended December 31, 1998, 1997 and 1996, respectively. The portfolio's
operating expense ratio after reflecting these arrangements was %, 1.40%
and 1.40% for the years or period ended December 31, 1998, 1997 and 1996,
respectively.

<PAGE> 19

SMALL COMPANY GROWTH PORTFOLIO

GOAL AND STRATEGIES

The Small Company Growth Portfolio seeks capital growth. To pursue this goal,
it invests in equity securities of small U.S. growth companies.

In seeking to identify growth companies--companies with attractive
capital-growth potential--the portfolio's managers often look for:

- companies still in the developmental stage

- older companies that appear to be entering a new stage of growth

- companies providing products or services with a high unit-volume growth rate

The portfolio may also invest in emerging-growth companies--small or
medium-size companies that have passed their start-up phase, show positive
earnings, and offer the potential for accelerated earnings growth.
Emerging-growth companies generally stand to benefit from new products or
services, technological developments, changes in management or other factors.

Under normal market conditions, the portfolio will invest at least 65% of
assets in equity securities of small U.S. companies. The portfolio considers a
"small" company to be one whose market capitalization is within the range of
capitalizations of companies in the Russell 2000 Index. As of December 31, 1998,
the Russell 2000 Index included companies with market capitalizations between
$4.4 million and $3.2 billion.

Some companies may outgrow the definition of a small company after the
portfolio has purchased their securities. These companies continue to be
considered small for purposes of the portfolio's minimum 65% allocation to
small-company equities. In addition, the portfolio may invest in companies of
any size once the 65% policy is met. As a result, the portfolio's average market
capitalization may sometimes exceed that of the largest company in the Russell
2000 Index.

PORTFOLIO INVESTMENTS

This portfolio intends to invest at least 80% of assets in equity securities
of small-capitalization growth companies. Equity holdings may consist of:

- common and preferred stocks

- securities convertible into common stocks

- rights and warrants

The portfolio may invest up to 10% of assets in foreign securities. To a
limited extent, it may also engage in other investment practices.

RISK FACTORS

This portfolio's principal risk factors are:

- market risk

- start-up and other small companies

- special-situation companies

- non-diversified status

The value of your investment will fluctuate in response to stock-market
movements. Investing in start-up and other small companies may expose the
portfolio to increased market, liquidity and information risks. These risks are
defined in "More About Risk."

Small companies and emerging-growth companies are often involved in "special
situations." Securities of special-situation companies may decline in value and
hurt the portfolio's performance if the anticipated benefits of the special
situation do not materialize.

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

PORTFOLIO MANAGEMENT

Elizabeth B. Dater and Stephen J. Lurito are Co-Portfolio Managers of the
portfolio. You can find out more about them in "Meet the Managers."

INVESTOR EXPENSES

Management fee .xx%

All other expenses .xx%

-----------

Total expenses .xx%

<PAGE> 20

FINANCIAL HIGHLIGHTS

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

PERIOD ENDED: 12/98 12/97 12/96 12/95(1)
<S> <C> <C> <C> <C>
PER-SHARE DATA
Net asset value, beginning of period $14.25 $12.51 $10.00
======== ======== =========
Investment activities:
Net investment income (0.07) (0.06) (0.01)
Net gains or losses on investments (both realized and
unrealized) 2.30 1.80 2.52
------- ------- --------
Total from investment activities 2.23 1.74 2.51
------- ------- --------
Net asset value, end of period $16.48 $14.25 $12.51
------- ------- --------
Total return 15.65% 13.91% 25.10%(2)
------- ------- --------
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000s omitted) $666,394 $339,398 $97,445
Ratio of expenses to average net assets 1.15%(4) 1.16%(4) 1.25%(3)
Ratio of net income to average net assets (.56)% (.66)% (.36)%(3)
Decrease reflected in above operating expense ratio due to
waivers/reimbursements .00% .01% .25%(3)
Portfolio turnover rate 92.45% 101.50% 34.25%(2)
------- ------- --------
</TABLE>

(1) For the period June 30, 1995 (Commencement of Operations) through December
31, 1995.

(2) Not annualized.

(3) Annualized.

(4) Interest earned on uninvested cash balances is used to offset portions of
the transfer agent expense. These arrangements resulted in a reduction to
the portfolio's expenses by %, .01% and .00% for the years ended
December 31, 1998, 1997 and 1996, respectively. The portfolio's operating
expense ratio after reflecting these arrangements was %, 1.14% and 1.16%
for the years ended December 31, 1998, 1997 and 1996, respectively.

18
<PAGE> 21

MORE ABOUT RISK

INTRODUCTION

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

The portfolios may use certain investment practices that have higher risks
associated with them. However, each portfolio has limitations and policies
designed to reduce many of the risks. The "Certain Investment Practices" table
describes these practices and the limitations on their use.

TYPES OF INVESTMENT RISK

The following risks are referred to throughout this Prospectus.

ACCESS RISK Some countries may restrict a portfolio's access to investments
or offer terms that are less advantageous than those for local investors. This
could limit the attractive investment opportunities available to a portfolio.

CORRELATION RISK The risk that changes in the value of a hedging instrument
will not match those of the investment being hedged.

CREDIT RISK The issuer of a security or the counterparty to a contract may
default or otherwise become unable to honor a financial obligation.

CURRENCY RISK Fluctuations in exchange rates between the U.S. dollar and
foreign currencies may negatively affect an investment. Adverse changes in
exchange rates may erode or reverse any gains produced by foreign-
currency-denominated investments and may widen any losses.

The introduction of the euro results in the redenomination of certain
European debt and equity securities over a period of time, which may bring
differences in various accounting, tax and/or legal treatments that would not
otherwise occur. Any market disruptions relating to the introduction of the euro
could adversely affect the value of European securities and currencies held by
the portfolios. Other risks relate to the ability of financial institutions'
systems to process euro transactions. Additional economic and operational issues
are raised by the fact that certain European Union member countries, including
the United Kingdom, did not participate in EMU on January 1, 1999, and therefore
did not implement the euro on that date.

EXPOSURE RISK The risk associated with investments (such as derivatives) or
practices (such as short selling) that increase the amount of money a portfolio
could gain or lose on an investment.

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

- SPECULATIVE To the extent that a derivative or practice is not used as a
hedge, the portfolio is directly exposed to its risks. Gains or losses from
speculative positions in a derivative may be much greater than the
derivative's original cost. For example, potential losses from writing
uncovered call options and from speculative short sales are unlimited.

INFORMATION RISK Key information about an issuer, security or market may be
inaccurate or unavailable.

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

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

MARKET RISK The market value of a security may move up and down, sometimes
rapidly and unpredictably. These fluctuations, which are often referred to as
"volatility," may cause a security to be worth less than it was worth at an
earlier time. Market risk may affect a single issuer, industry, sector of the
economy, or the market as a whole. Market risk is common to most
investments--including stocks and bonds, and the mutual funds that invest in
them.

OPERATIONAL RISK Some countries have less-developed securities markets (and
related transaction, registration and custody practices) that could subject a
portfolio to losses from fraud, negligence, delay or other actions.

<PAGE> 22

impair a portfolio's ability to bring its capital or income back to the U.S.
Other political risks include economic policy changes, social and political
instability, military action and war.

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

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

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

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

20
<PAGE> 23

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21
<PAGE> 24

CERTAIN INVESTMENT PRACTICES

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

KEY TO TABLE:

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

<TABLE>
<CAPTION>
POST- SMALL
EMERGING INTERNATIONAL VENTURE COMPANY
MARKETS EQUITY CAPITAL GROWTH
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
INVESTMENT PRACTICE LIMIT
<S> <C> <C> <C> <C>
BORROWING The borrowing of money from banks to meet
redemptions or for other temporary or emergency purposes.
Speculative exposure risk. 30% 30% 30% 30%
- --------------------------------------------------------------------------------------------------------

COUNTRY/REGION FOCUS Investing a significant portion of
portfolio assets in a single country or region. Market
swings in the targeted country or region will be likely to
have a greater effect on portfolio performance than they
would in a more geographically diversified equity portfolio.
Currency, market, political risks. [-] [-] -- --
- --------------------------------------------------------------------------------------------------------

CURRENCY HEDGING Instruments, such as options, futures,
forwards or swaps, intended to manage portfolio exposure to
currency risk. Options, futures or forwards involve the
right or obligation to buy or sell a given amount of foreign
currency at a specified price and future date. Swaps involve
the right or obligation to receive or make payments based on
two different currency rates. Correlation, credit, currency,
hedged exposure, liquidity, political, valuation risks.(1) [ ] [ ] [ ] [ ]
- --------------------------------------------------------------------------------------------------------

EMERGING MARKETS Countries generally considered to be
relatively less developed or industrialized. Emerging
markets often face economic problems that could subject a
portfolio to increased volatility or substantial declines in
value. Deficiencies in regulatory oversight, market
infrastructure, shareholder protections and company laws
could expose a portfolio to risks beyond those generally
encountered in developed countries. Access, currency,
information, liquidity, market, operational, political,
valuation risks. [-] [-] -- --
- --------------------------------------------------------------------------------------------

EQUITY SWAPS A contract between a portfolio and another
party in which the parties agree to exchange streams of
payments based on certain benchmarks. For example, a
portfolio may use equity swaps to gain access to the
performance of a benchmark asset (such as an index or one or
more stocks) where the portfolio's direct investment is
restricted. Credit, currency, interest-rate, liquidity,
market, political, speculative exposure, valuation risks. [ ] [ ] -- --
- --------------------------------------------------------------------------------------------------------

FOREIGN SECURITIES Securities of foreign issuers. May
include depositary receipts. Currency, euro conversion,
information, liquidity, market, political, valuation risks. [-] [-] 20% 10%
- --------------------------------------------------------------------------------------------------------

FUTURES AND OPTIONS ON FUTURES Exchange-traded contracts
that enable a portfolio to hedge against or speculate on
future changes in currency values, interest rates or stock
indexes. Futures obligate the portfolio (or give it the
right, in the case of options) to receive or make payment at
a specific future time based on those future changes.(1)
Correlation, currency, hedged exposure, interest-rate,
market, speculative exposure risks.(2) [ ] [ ] [ ] [ ]
- --------------------------------------------------------------------------------------------------------
INVESTMENT-GRADE DEBT SECURITIES Debt securities rated
within the four highest grades (AAA/Aaa through BBB/Baa) by
Standard & Poor's or Moody's rating service, and unrated
securities of comparable quality. Credit, interest-rate,
market risks. 35% 35% 20% 20%
- --------------------------------------------------------------------------------------------------------
</TABLE>

<PAGE> 25

<TABLE>
<CAPTION>
POST- SMALL
EMERGING INTERNATIONAL VENTURE COMPANY
MARKETS EQUITY CAPITAL GROWTH
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
INVESTMENT PRACTICE LIMIT
<S> <C> <C> <C> <C>
NON-INVESTMENT-GRADE DEBT SECURITIES Debt securities rated
below the fourth-highest grade (BBB/Baa) by Standard &
Poor's or Moody's rating service, and unrated securities of
comparable quality. Commonly referred to as junk bonds.
Credit, information, interest-rate, liquidity, market,
valuation risks. 35% 5% 5% 10%
- ----------------------------------------------------------------------------------------------------
OPTIONS Instruments that provide a right to buy (call) a
particular security or an index of securities at a fixed
price within a certain time period. A portfolio may purchase
both put and call options for hedging or speculative
purposes.(1) Correlation, credit, hedged exposure,
liquidity, market, speculative exposure, valuation risks. 25% 25% 25% 25%
- ----------------------------------------------------------------------------------------------------
PRIVATE-EQUITY PORTFOLIOS Private limited partnerships or
other investment funds that themselves invest in equity or
debt securities of:

- -companies in the venture-capital or post-venture-capital
stages of development

- -companies engaged in special situations or changes in
corporate control, including buyouts
Information, liquidity, market, valuation risks. -- -- 10% --
- ----------------------------------------------------------------------------------------------------
RESTRICTED AND OTHER ILLIQUID SECURITIES Securities with
restrictions on trading, or those not actively traded. May
include private placements. Liquidity, market, valuation
risks. 15% 15% 15% 15%
- ----------------------------------------------------------------------------------------------------
SECURITIES LENDING Lending portfolio securities to financial
institutions; a portfolio receives cash, U.S. government
securities or bank letters of credit as collateral. Credit,
liquidity, market, operational risks. 33 1/3% 33 1/3 33 1/3 33 1/3
- ----------------------------------------------------------------------------------------------------
SHORT SALES Selling borrowed securities with the intention
of repurchasing them for a profit on the expectation that
the market price will drop. Liquidity, market, speculative
exposure risks. -- -- 10% --
- ----------------------------------------------------------------------------------------------------

SHORT SALES "AGAINST THE BOX" A short sale when the
portfolio owns enough shares of the security involved to
cover the borrowed securities, if necessary. Liquidity,
market, speculative exposure risks. [ ] [ ] [ ] [ ]
- ----------------------------------------------------------------------------------------------------
</TABLE>

<PAGE> 26

<TABLE>
<CAPTION>
POST- SMALL
EMERGING INTERNATIONAL VENTURE COMPANY
MARKETS EQUITY CAPITAL GROWTH
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
INVESTMENT PRACTICE LIMIT
<S> <C> <C> <C> <C>

SPECIAL-SITUATION COMPANIES Companies experiencing unusual
developments affecting their market values. Special
situations may include acquisition, consolidation,
reorganization, recapitalization, merger, liquidation,
special distribution, tender or exchange offer, or
potentially favorable litigation. Securities of a
special-situation company could decline in value and hurt a
portfolio's performance if the anticipated benefits of the
special situation do not materialize. Information, market
risks. [ ] [ ] [-] [-]
- ----------------------------------------------------------------------------------------------------

START-UP AND OTHER SMALL COMPANIES Companies with small
relative market capitalizations, including those with
continuous operations of less than three years. Information,
liquidity, market, valuation risks. [-] [-] [-] [-]
- ----------------------------------------------------------------------------------------------------

TEMPORARY DEFENSIVE TACTICS Placing some or all of a
portfolio's assets in investments such as money-market
obligations and investment-grade debt securities for
defensive purposes. Although intended to avoid losses in
adverse market, economic, political or other conditions,
defensive tactics might be inconsistent with a portfolio's
principal investment strategies and might prevent a
portfolio from achieving its goal. [ ] [ ] [ ] [ ]
- ----------------------------------------------------------------------------------------------------
WARRANTS Options issued by a company granting the holder the
right to buy certain securities, generally common stock, at
a specified price and usually for a limited time. Liquidity,
market, speculative exposure risks. 10% 10% 10% 10%
- ----------------------------------------------------------------------------------------------------
WHEN-ISSUED SECURITIES AND FORWARD COMMITMENTS The purchase
or sale of securities for delivery at a future date; market
value may change before delivery. Liquidity, market,
speculative exposure risks. 20% 20% 20% 20%
- ----------------------------------------------------------------------------------------------------
</TABLE>

(1) The portfolios are not obligated to pursue any hedging strategy. In
addition, hedging practices may not be available, may be too costly to be
used effectively or may be unable to be used for other reasons.

(2) Each portfolio is limited to 5% of net assets for initial margin and premium
amounts on futures positions considered to be speculative by the Commodity
Futures Trading Commission.

24
<PAGE> 27

MEET THE MANAGERS

[LIZ DATER PHOTO]

ELIZABETH B. DATER
Managing Director

- Co-Portfolio Manager, Post-Venture Capital Portfolio since inception

- Co-Portfolio Manager, Small Company Growth Portfolio since 19XX

- With Warburg Pincus since 1978

[ROBERT S. JANIS PHOTO]

ROBERT S. JANIS
Managing Director

- Associate Portfolio Manager, Post-Venture Capital Portfolio since inception

- With Warburg Pincus since 1994

- Previously vice president and senior research analyst with U.S. Trust Company
of New York, 1985 to 1994

[HAROLD W. ERLICH PHOTO]

HAROLD W. EHRLICH, CFA, CIC
Managing Director

- Co-Portfolio Manager, International Equity Portfolio since April 1998

- With Warburg Pincus since 1995

- Previously senior vice president, portfolio manager and analyst at Templeton
Investment Counsel Inc.

[RICHARD H. KING PHOTO]

RICHARD H. KING
Managing Director

- Co-Portfolio Manager, Emerging Markets Portfolio since inception

- Co-Portfolio Manager, International Equity Portfolio since inception

- With Warburg Pincus since 1989

Job titles indicate position with the investment adviser.

<PAGE> 28

[STEPHEN J. LURITO PHOTO]

STEPHEN J. LURITO
Managing Director

- Co-Portfolio Manager, Post-Venture Capital Portfolio since inception

- Co-Portfolio Manager, Small Company Growth Portfolio since inception

- With Warburg Pincus since 1987

[HAROLD E. SHARON PHOTO]

HAROLD E. SHARON
Managing Director

- Portfolio Manager, International Equity Portfolio
since 19XX

- With Warburg Pincus since March 1998

- Executive director and portfolio manager with CIBC Oppenheimer, 1994 to 1998

- Warburg Pincus Senior Vice President and portfolio manager, 1990 to 1994

[CHRISTOPHER M. NAWN PHOTO]

CHRISTOPHER M. NAWN
Managing Director

- Associate Portfolio Manager, Post-Venture Capital Portfolio since inception

- With Warburg Pincus since 1994

- Previously vice president and senior research analyst with Dreyfus
Corporation, 1990 to 1994

[VINCENT J. MCBRIDE PHOTO]

VINCENT J. MCBRIDE
Senior Vice President

- Co-Portfolio Manager, International Equity Portfolio since April 1998

- Co-Portfolio Manager, Emerging Markets Portfolio since 1997

- With Warburg Pincus since 1994

- Previously international equity analyst with Smith Barney Inc.

<PAGE> 29

[MORID KAMSHAD PHOTO]

MORID KAMSHAD
Vice President

- Associate Portfolio Manager, Emerging Markets Portfolio since April 1998

- With Warburg Pincus since 1997

- Senior investment manager with Pictet Asset Management, 1995 to 1997

- Investment analyst with HSBC Asset Management,
1994 to 1995

- Business development manager with Air Products and Chemicals-France, 19XX to
1994

[NANCY NIERMAN PHOTO]

NANCY NIERMAN
Vice President

- Associate Portfolio Manager, International Equity Portfolio since 19XX

- With Warburg Pincus since 1996

- Previously analyst with Fiduciary Trust Company International, 19XX to 1996

SUB-INVESTMENT ADVISER PORTFOLIO MANAGERS

Post-Venture Capital Portfolio

RAYMOND L. HELD and THADDEUS I. GRAY manage the Post-Venture Capital
Portfolio's investments in private-equity portfolios. Both are Investment
Managers and Managing Directors of Abbott Capital Management LLC, the
portfolio's sub-investment adviser. Mr. Held has been with Abbott since
1986, while Mr. Gray joined the firm in 1989.

<PAGE> 30

ABOUT YOUR ACCOUNT

SHARE VALUATION

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

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

Each portfolio values its securities based on market quotations when it
calculates its NAV. If market quotations are not readily available, securities
and other assets are valued by another method that the Board of Trustees
believes accurately reflects fair value. Debt obligations that will mature in 60
days or less are valued on the basis of amortized cost, unless the Board
determines that using this method would not reflect an investment's value.

Some portfolio securities may be listed on foreign exchanges that are open on
days (such as U.S. holidays) when the portfolios do not compute their prices.
This could cause the value of a portfolio's investments to be affected by
trading on days when you cannot buy or sell shares.

The Post-Venture Capital Portfolio initially values its investments in
private-equity portfolios at cost. After that, the Post-Venture Capital
Portfolio values these investments according to reports from the private-equity
portfolios that the sub-investment adviser generally receives on a quarterly
basis. The portfolio's net asset value typically will not reflect interim
changes in the values of its private-equity-portfolio investments.

DISTRIBUTIONS

Investors in a portfolio are entitled to a share of the portfolio's net
income and gains on investments. The portfolio passes these earnings along to
its shareholders as distributions.

Each portfolio earns dividends from stocks and interest from bond,
money-market and other investments. These are passed along as dividend
distributions. A portfolio realizes capital gains whenever it sells securities
for a higher price than it paid for them. These are passed along as capital gain
distributions.

The portfolios typically distribute dividends and capital gains annually,
usually in December. The dividends and distributions will be reinvested
automatically in additional shares of the same portfolio that paid them.

TAXES

For a discussion of the tax status of a variable contract or pension plan,
refer to the sponsoring participating insurance company separate account
prospectus or plan documents or other informational materials supplied by plan
sponsors.

Because shares of the portfolios may be purchased only through variable
contracts and plans, 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.

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.

<PAGE> 31

BUYING AND SELLING SHARES

You may not buy or sell shares of a portfolio directly; you may only buy or
sell shares through variable-annuity contracts and variable life insurance
contracts offered by separate accounts of certain insurance companies or through
tax-qualified pension and retirement plans. Certain portfolios may not be
available in connection with a particular contract or plan.

An insurance company's separate accounts buy and sell shares of a portfolio
at NAV, without any sales or other charges. Each insurance company receives
orders from its contract holders to buy or sell shares of a portfolio on any
business day that the portfolio calculates its NAV. If the order is received by
the insurance company prior to the close of regular trading on the NYSE, the
order will be executed at that day's NAV.

Plan participants may buy shares of a portfolio through their plan by
directing the plan trustee to buy shares for their account in a manner similar
to that described above for variable annuity and variable life insurance
contracts. You should contact your plan sponsor concerning the appropriate
procedure for investing in a portfolio.

Each portfolio reserves the right to:

- refuse any specific purchase or exchange request, including those from any
person or group who, in the portfolio's view, is likely to engage in excessive
trading.

- change or discontinue its exchange privilege after 30 days' notice to current
investors, or temporarily suspend this privilege during unusual market
conditions.

- make a "redemption in kind"--payment in portfolio securities rather than
cash--for certain large redemption amounts that could hurt portfolio
operations

- suspend redemptions or postpone payment dates as permitted by the Investment
Company Act of 1940 (such as during periods other than weekends or holidays
when the NYSE is closed or trading on the NYSE is restricted, or any other
time that the SEC permits)

- stop offering the portfolio's shares for a period of time (such as when
management believes that a substantial increase in assets could adversely
affect it)

<PAGE> 32

FOR MORE INFORMATION

This Prospectus is intended for use in connection with a defined-contribution
plan, tax-deferred arrangement or variable contract. 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 information regarding distributions and 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. More information about these portfolios
is available free upon request, including the following:

ANNUAL/SEMIANNUAL REPORTS TO SHAREHOLDERS

Includes financial statements, portfolio investments and detailed performance
information.

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

OTHER INFORMATION

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

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

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

BY TELEPHONE:

800-222-8977

BY MAIL:

Warburg Pincus Funds

P.O. Box 9030

Boston, MA 02205-9030

BY OVERNIGHT OR COURIER SERVICE:

Boston Financial

Attn: Warburg Pincus Funds

2 Heritage Drive

North Quincy, MA 02171

ON THE INTERNET:

www.warburg.com

SEC FILE NUMBER:

Warburg Pincus Trust 811-07261

[WARBURG PINCUS LOGO]
ASSET MANAGEMENT

P.O. BOX 9030, BOSTON, MA 02205-9030

800-222-8977 [-] www.warburg.com

COUNSELLORS SECURITIES INC., DISTRIBUTOR. TRIUS-1-0499

<PAGE> 33

Subject to Completion, dated February 18, 1999
PROSPECTUS

April 30, 1999

WARBURG PINCUS TRUST

- GROWTH & INCOME 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.

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

[Warburg Pincus Asset Management Logo]

<PAGE> 34

This page intentionally left blank

<PAGE> 35

CONTENTS

<TABLE>
<S> <C>
KEY POINTS........................ ......................... 4
Goal and Principal Strategies............................ 4
Investor Profile......................................... 4
A Word About Risk........................................ 5
PERFORMANCE SUMMARY.................... .................... 6
Year-by-Year Total Returns............................... 6
Average Annual Total Returns............................. 7
INVESTOR EXPENSES..................... ..................... 8
Fees and Portfolio Expenses.............................. 8
Example.................................................. 9
THE PORTFOLIO IN DETAIL.................. .................. 10
The Management Firm...................................... 10
Portfolio Information Key................................ 11
Goal and Strategies...................................... 11
Portfolio Investments.................................... 11
Risk Factors............................................. 11
Portfolio Management..................................... 11
Investor Expenses........................................ 11
MORE ABOUT RISK...................... ...................... 14
Introduction............................................. 14
Types of Investment Risk................................. 14
Certain Investment Practices............................. 17
MEET THE MANAGER..................... ...................... 18
ABOUT YOUR ACCOUNT.................... ..................... 19
Share Valuation.......................................... 19
Account Statements.......................................
Taxes.................................................... 19
BUYING AND SELLING SHARES................. ................. 20
FOR MORE INFORMATION................... .................... back cover
</TABLE>

<PAGE> 36

KEY POINTS

GOAL AND PRINCIPAL STRATEGIES

<TABLE>
<CAPTION>
PORTFOLIO/RISK FACTORS GOAL STRATEGIES
<S> <C> <C>
GROWTH & INCOME PORTFOLIO Long-term growth of capital and income - Invests primarily in equity securities
Risk factors: - Focuses on large U.S. companies
Market risk - Analyzes such factors as
price-to-earnings and price-to-book
ratios, using a value investment style
</TABLE>

INVESTOR PROFILE

THIS PORTFOLIO IS DESIGNED FOR INVESTORS WHO:

- have longer time horizons

- are willing to assume the risk of losing money in exchange for attractive
potential long-term returns

- are investing for growth and income

- want to diversify their portfolios into common stocks

- are investing for long-term goals that may include college or retirement
IT MAY NOT BE APPROPRIATE IF YOU:

- are investing for a shorter time horizon

- are uncomfortable with an investment that will fluctuate in value

- are looking primarily for income

You should base your investment decision on your own goals, risk preferences
and time horizon.

<PAGE> 37

A WORD ABOUT RISK

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

Principal risk factors for the portfolio are discussed below. Before you
invest, please make sure you understand the risks that apply to your portfolio.
As with any mutual fund, you could lose money over any period of time.

Investments in the portfolio are not bank deposits and are not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency.

MARKET RISK

FOREIGN SECURITIES

A portfolio that invests outside the U.S. carries additional risks that
include:

- CURRENCY RISK Fluctuations in exchange rates between the U.S. dollar and
foreign currencies may negatively affect an investment. Adverse changes in
exchange rates may erode or reverse any gains produced by foreign-currency
denominated investments and may widen any losses. The portfolio may, but is
not required to, seek to reduce currency risk by hedging part or all of its
exposure to various foreign currencies.

The introduction of the euro results in the redenomination of certain
European debt and equity securities over a period of time, which may bring in
differences in various accounting, tax and/or legal treatments that would not
otherwise occur. Any market disruptions relating to the introduction of the euro
could adversely affect the value of European securities and currencies held by
the portfolio. Other risks relate to the ability of financial institutions'
systems to process euro transactions. Additional economic and operational issues
are raised by the fact that certain European Union member countries, including
the United Kingdom, did not participate in EMU on January 1, 1999, and therefore
did not implement the euro on that date.

- INFORMATION RISK Key information about an issuer, security or market may be
inaccurate or unavailable.

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

5
<PAGE> 38

PERFORMANCE SUMMARY

The bar chart below and the table on the next page provide an indication of the
risks of investing in the portfolio. The bar chart shows you how the portfolio's
performance has varied from year to year for up to 10 years. The table compares
the portfolio's performance over time to that of a broadly based securities
market index. As with all mutual funds, past performance is not a prediction of
the future.

YEAR-BY-YEAR TOTAL RETURNS
Year Ended 12/31: 1998
------------------------------

Growth & Income Portfolio
Best quarter: XX.xx% (Q___)
Worst quarter: (XX.xx)% (Q___)
Inception date: 10/31/97 __________

______________________________________

<PAGE> 39

AVERAGE ANNUAL TOTAL RETURNS

<TABLE>
<CAPTION>
ONE YEAR FIVE YEARS 10 YEARS LIFE OF INCEPTION
PERIOD ENDED 12/31/98: 1998 1994-1998 1989-1998 FUND DATE
<S> <C> <C> <C> <C> <C>
GROWTH & INCOME PORTFOLIO XX.xx% NA NA XX.xx% 10/31/97
S&P 500 INDEX XX.xx% NA NA XX.xx%
</TABLE>

UNDERSTANDING PERFORMANCE

- TOTAL RETURN tells you how much an investment in the portfolio has
changed in value over a given time period. It assumes that all dividends
and capital gains (if any) were reinvested in additional shares. The
change in value can be stated either as a cumulative return or as an
average annual rate of return.

- A CUMULATIVE TOTAL RETURN is the actual return of an investment for a
specified period. The year-by-year total returns in the bar chart are
examples of one-year cumulative total returns.

- Because of compounding, the average annual total returns in the table
cannot be computed by averaging the returns in the bar chart.

7
<PAGE> 40

INVESTOR EXPENSES

FEES AND PORTFOLIO EXPENSES

<S> <C>
SHAREHOLDER FEES
(paid directly from your investment)
Sales charge "load" on purchases NONE
Deferred sales charge "load" NONE
Sales charge "load" on reinvested distributions NONE
Redemption fees NONE
Exchange fees NONE
ANNUAL PORTFOLIO OPERATING EXPENSES
(deducted from portfolio assets)
Management fee .75%
Distribution and service (12b-1) fee NONE
Other expenses .xx%
TOTAL ANNUAL PORTFOLIO OPERATING EXPENSES* .xx%
</TABLE>

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

<TABLE>
<CAPTION>
EXPENSES AFTER
WAIVERS AND
REIMBURSEMENTS
<S> <C>
Management fee .xx%
Distribution and service (12b-1) fee NONE
Other expenses .xx%
----
TOTAL ANNUAL PORTFOLIO OPERATING EXPENSES X.XX%
</TABLE>

<PAGE> 41

EXAMPLE

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

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

<TABLE>
<CAPTION>
ONE YEAR THREE YEARS FIVE YEARS 10 YEARS
<S> <C> <C> <C>
$ $ $ $
</TABLE>

9
<PAGE> 42

THE PORTFOLIO IN DETAIL

THE MANAGEMENT FIRM

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

- Investment adviser for the portfolio

- Responsible for managing the portfolio's assets according to its goal and
strategies

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

- Currently manages approximately $22 billion in assets

For easier reading, Warburg Pincus Asset Management, Inc. will be referred to
as "Warburg Pincus" or "we" throughout this Prospectus.

<PAGE> 43

PORTFOLIO INFORMATION KEY

Concise descriptions of the portfolio begins on the next page. The
description provides the following information:

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

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

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

PORTFOLIO MANAGEMENT
The individuals designated by the investment adviser to handle the
portfolio's day-to-day management.

INVESTOR EXPENSES
Actual portfolio expenses for the 1998 fiscal year. Future expenses may be
higher or lower.

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

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

- TOTAL RETURN How much you would have earned on an investment in the
portfolio, assuming you had reinvested all dividend and capital gain
distributions.

- PORTFOLIO TURNOVER An indication of trading frequency.
The portfolio may sell securities without regard to the length of time they
have been held. A high turnover rate may increase the portfolio's transaction
costs and negatively affect its performance. Portfolio turnover may also
result in capital-gain distributions that could raise your income tax
liability.

The Annual Report includes the auditor's report, along with the portfolio's
financial statements. It is available free upon request.

11
<PAGE> 44

GROWTH AND INCOME PORTFOLIO

GOAL AND STRATEGIES

The Growth & Income Portfolio seeks long-term growth of capital and income.
To pursue this goal, it invests primarily in equity securities of value
companies.

Value companies are companies whose earnings power or asset value does not
appear to be reflected in the current stock price. As a result, value companies
look underpriced according to financial measurements of their intrinsic worth or
business prospects. These measurements include price-to-earnings, price-to-book
and debt-to-equity ratios. The portfolio manager determines value based upon
research and analysis, taking all relevant factors into account.

The portfolio expects to focus on large U.S. companies with market
capitalizations of $1 billion or more, although it may invest in companies of
any size.

The portfolio pursues its income objective by investing in dividend-paying
equity securities. However, the portfolio's dividend distribution will vary and
may be low.

PORTFOLIO INVESTMENTS

Normally the portfolio invests substantially all of its assets in equity
securities, including:

- common stocks

- securities convertible into common stocks

- securities such as rights and warrants, whose values are based on common
stocks

It may also invest in preferred stocks and non-convertible debt securities
such as bonds, debentures and notes.

The portfolio may invest up to:

- 10% of assets in debt securities rated from BB/Ba to C (junk bonds)

- 15% of assets in real-estate investment trusts (REITs)

- 20% of assets in foreign securities

To a limited extent, the portfolio may also engage in other investment
practices.

RISK FACTORS

This portfolio's principal risk factor is:

- market risk

The value of your investment will fluctuate in response to stock market
movements. The amount of income you receive from the portfolio also will
fluctuate.

The portfolio's emphasis on large-company value stocks may reduce its
volatility and downside risk. Of course, this is not guaranteed. Value stocks in
theory are already underpriced, and large-company stocks tend to be less
volatile than small-company stocks. However, a value stock may never reach what
the manager believes is its full value, or may even go down in price. In the
long run, the portfolio may produce more modest returns than riskier stock funds
as a trade-off for this potentially lower risk.

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

PORTFOLIO MANAGEMENT

Brian S. Posner manages the portfolio. You can find out more about him in
"Meet the Manager."

INVESTOR EXPENSES

Management fee xx%
Distribution and service
(12b-1) fee xx%
All other expenses xx%
Total expenses xx%

12
<PAGE> 45

FINANCIAL HIGHLIGHTS

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

PERIOD ENDED: 12/98 12/97(1)
<S> <C> <C>
PER-SHARE DATA
Net asset value, beginning of period $10.00
=======
Investment activities:
Net investment income 0.04
Net gains or losses on investments (both realized and
unrealized) 0.35
-------
Total from investment activities 0.39
-------
Distributions:
From net investment income (0.03)
From realized capital gains (0.03)
-------
Total distributions (0.06)
-------
Net asset value, end of period $10.33
=======
Total return 3.89%(2)
-------
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000s omitted) $1,993
Ratio of expenses to average net assets(3) 1.00%(4)
Ratio of net income to average net assets 2.08%(4)
Decrease reflected in above operating expense ratios due to
waivers/reimbursements 9.42%(4)
Portfolio turnover rate 64.38%(4)
-------
</TABLE>

(1) For the period October 31, 1997 (Commencement of Operations) through
December 31, 1997.

(2) Not annualized.

(3) Interest earned on uninvested cash balances is used to offset portions of
the transfer agent expense. These arrangements had no effect on the
portfolio's net expense ratio.

(4) Annualized.

13
<PAGE> 46

MORE ABOUT RISK

INTRODUCTION

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

The portfolio may use certain investment practices that have higher risks
associated with them. However, the portfolio has limitations and policies
designed to reduce many of the risks. The "Certain Investment Practices" table
describes these practices and the limitations on their use.

TYPES OF INVESTMENT RISK

The following risks are referred to throughout this Prospectus.

CORRELATION RISK The risk that changes in the value of a hedging instrument
will not match those of the investment being hedged.

CREDIT RISK The issuer of a security or the counterparty to a contract may
default or otherwise become unable to honor a financial obligation.

EURO CONVERSION The introduction of a new single European currency, the euro,
may result in uncertainties for securities of European companies, European
markets and the operation of the portfolio. The euro was introduced on January
1, 1999, by 11 European Union member countries who are participating in European
Monetary Union (EMU).

The introduction of the euro results in the redenomination of certain
European debt and equity securities over a period of time, which may bring
differences in various accounting, tax and/or legal treatments that would not
otherwise occur. Any market disruptions relating to the introduction of the euro
could adversely affect the value of European securities and currencies held by
the portfolio. Other risks relate to the ability of financial institutions'
systems to process euro transactions. Additional economic and operational issues
are raised by the fact that certain European Union member countries, including
the United Kingdom, did not participate in EMU on January 1, 1999, and therefore
did not implement the euro on that date.

EXPOSURE RISK The risk associated with investments (such as derivatives) or
practices (such as short selling) that increase the amount of money the
portfolio could gain or lose on an investment.

INFORMATION RISK Key information about an issuer, security or market may be
inaccurate or unavailable.

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

OPERATIONAL RISK Some countries have less developed securities markets (and
related transaction, registration and custody practices) that could subject the
portfolio to losses from fraud, negligence, delay or other actions.

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

<PAGE> 47

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

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

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

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

15
<PAGE> 48

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16
<PAGE> 49

CERTAIN INVESTMENT PRACTICES

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

KEY TO TABLE:

<TABLE>
<CAPTION>
INVESTMENT PRACTICE LIMIT
<S> <C> <C>
BORROWING The borrowing of money from banks to meet
redemptions or for other temporary or emergency purposes.
Speculative exposure risk. 30%
- ----------------------------------------------------------------------------
CURRENCY HEDGING Instruments, such as options, futures,
forwards or swaps, intended to manage portfolio exposure to
currency risk. Options, futures or forwards involve the
right or obligation to buy or sell a given amount of foreign
currency at a specified price and future date. Swaps involve
the right or obligation to receive or make payments based on
two different currency rates. Correlation, credit, currency,
hedged exposure, liquidity, political, valuation risks.(1) [ ]
- ----------------------------------------------------------------------------
FOREIGN SECURITIES Securities of foreign issuers. May
include depositary receipts. Currency, euro conversion,
information, liquidity, market, operational, political,
valuation risks. 20%
- ----------------------------------------------------------------------------
FUTURES AND OPTIONS ON FUTURES Exchange-traded contracts
that enable a portfolio to hedge against or speculate on
future changes in currency values, interest rates or stock
indexes. Futures obligate the portfolio (or give it the
right, in the case of options) to receive or make payment at
a specific future time based on those future changes.(1)
Correlation, currency, hedged exposure, interest-rate,
market, speculative exposure risks.(2) [ ]
- ----------------------------------------------------------------------------
INVESTMENT-GRADE DEBT SECURITIES Debt securities rated
within the four highest grades (AAA/Aaa through BBB/Baa) by
Standard & Poor's or Moody's Rating Service, and unrated
securities of comparable quality. Credit, interest-rate,
market risks. 20%
- ----------------------------------------------------------------------------
NON-INVESTMENT-GRADE DEBT SECURITIES Debt securities and
convertible securities rated below the fourth-highest grade
(BBB/Baa) by Standard & Poor's or Moody's rating service,
and unrated securities of comparable quality. Commonly
referred to as junk bonds. Credit, information, interest-
rate, liquidity, market, valuation risks. 10%
- ----------------------------------------------------------------------------
OPTIONS Instruments that provide a right to buy (call) or
sell (put) a particular security, currency or an index of
securities at a fixed price within a certain time period. A
portfolio may purchase or sell (write) both put and call
options for hedging or speculative purposes.(1) Correlation,
credit, hedged exposure, liquidity, market, speculative
exposure, valuation risks. 25%
- ----------------------------------------------------------------------------
REAL-ESTATE INVESTMENT TRUSTS (REITS) Pooled investment
vehicles that invest primarily in income-producing real
estate or real-estate related loans or interests. Credit,
interest-rate, market risks. 15%
- ----------------------------------------------------------------------------
RESTRICTED AND OTHER ILLIQUID SECURITIES Securities with
restrictions on trading, or those not actively traded. May
include private placements. Liquidity, market, valuation
risks. 15%
- ----------------------------------------------------------------------------
SECURITIES LENDING Lending portfolio securities to financial
institutions; a portfolio receives cash, U.S. government
securities or bank letters of credit as collateral. Credit,
liquidity, market, operational risks. 20%
- ----------------------------------------------------------------------------
SHORT SALES "AGAINST THE BOX" A short sale when the
portfolio owns enough shares of the security involved to
cover the borrowed securities, if necessary. Liquidity,
market, speculative exposure risks. [ ]
- ----------------------------------------------------------------------------
TEMPORARY DEFENSIVE TACTICS Placing some or all of a
portfolio's assets in investments such as money-market
obligations and investment-grade debt securities for
defensive purposes. Although intended to avoid losses in
adverse market, economic, political or other conditions,
defensive tactics might be inconsistent with a portfolio's
principal investment strategies and might prevent a
portfolio from achieving its goal. [ ]
- ----------------------------------------------------------------------------
WARRANTS Options issued by a company granting the holder the
right to buy certain securities, generally common stock, at
a specified price and usually for a limited time. Liquidity,
market, speculative exposure risks. 15%
- ----------------------------------------------------------------------------
WHEN-ISSUED SECURITIES AND FORWARD COMMITMENTS The purchase
or sale of securities for delivery at a future date; market
value may change before delivery. Liquidity, market,
speculative exposure risks. 20%
- ----------------------------------------------------------------------------
</TABLE>

(1) The portfolio is not obligated to pursue any hedging strategy. In addition,
hedging practices may not be available, may be too costly to be used
effectively or may be unable to be used for other reasons.
(2) The portfolio is limited to 5% of net assets for initial margin and premium
amounts on futures positions considered to be speculative by the Commodity
Futures Trading Commission.

17
<PAGE> 50

MEET THE MANAGER

[Brian S. Posner Photo]

BRIAN S. POSNER
Managing Director

- Portfolio Manager,
Growth & Income Portfolio
since January 199x

- Joined Warburg Pincus in 1997

- Portfolio Manager with
Fidelity Investments,

1987 to 1996

Job title indicates position with the adviser.

<PAGE> 51

ABOUT YOUR ACCOUNT

SHARE VALUATION

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

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

The portfolio values its securities based on market quotations when it
calculates its NAV. If market quotations are not readily available, securities
and other assets are valued by another method that the Board of Trustees
believes accurately reflects fair value. Debt obligations that will mature in 60
days or less are valued on the basis of amortized cost, unless the Board
determines that using this method would not reflect an investment's value.

Some portfolio securities may be listed on foreign exchanges that are open on
days (such as U.S. holidays) when the portfolio does not compute its prices.
This could cause the value of the portfolio's investments to be affected by
trading on days when you cannot buy or sell shares.

TAXES

Investors in the portfolio are entitled to a share of the portfolio's net
income and gains on investments. The portfolio passes these earnings along to
its shareholders as distributions.

Because shares of the portfolio may be purchased only through variable
contracts and plans, 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.

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.

<PAGE> 52

BUYING AND SELLING SHARES

You may not buy or sell shares of the portfolio directly; you may only buy or
sell shares through variable-annuity contracts and variable life insurance
contracts offered by separate accounts of certain insurance companies or through
tax-qualified pension and retirement plans. Certain portfolios may not be
available in connection with a particular contract or plan.

An insurance company's separate accounts buy and sell shares of the portfolio
at NAV, without any sales or other charges. Each insurance company receives
orders from its contract holders to buy or sell shares of the portfolio on any
business day that the portfolio calculates its NAV. If the order is received by
the insurance company prior to the close of regular trading on the NYSE, the
order will be executed at that day's NAV.

Plan participants may buy shares of the portfolio through their plan by
directing the plan trustee to buy shares for their account in a manner similar
to that described above for variable annuity and variable life insurance
contracts. You should contact your plan sponsor concerning the appropriate
procedure for investing in the portfolio.

The portfolio reserves the right to:

- refuse any specific purchase or exchange request, including those from any
person or group who, in the portfolio's view, is likely to engage in excessive
trading

- change or discontinue its exchange privilege after 30 days' notice to current
investors, or temporarily suspend this privilege during unusual market
conditions

- make a "redemption in kind"--payment in portfolio securities rather than
cash--for certain large redemption amounts that could hurt portfolio
operations

- stop offering the portfolio's shares for a period of time (such as when
management believes that a substantial increase in assets could adversely
affect it)

<PAGE> 53

FOR MORE INFORMATION

This Prospectus is intended for use in connection with a defined-contribution
plan, tax-deferred arrangement or variable contract. 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 information regarding distributions and 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. More information about the portfolio is
available free upon request, including the following:

ANNUAL/SEMIANNUAL REPORTS TO SHAREHOLDERS

Includes financial statements, portfolio investments and detailed performance
information.

OTHER INFORMATION

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

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

BY TELEPHONE:
800-222-8977

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

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

ON THE INTERNET:
www.warburg.com

SEC FILE NUMBER:

Warburg Pincus Trust 811-07261

[Warburg Pincus Asset Management Logo]

P.O. BOX 9030, BOSTON, MA 02205-9030

800-222-8977 - www.warburg.com
COUNSELLORS SECURITIES INC., DISTRIBUTOR. TRIUS-1-0499

<PAGE> 54
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
any offers to buy be accepted prior to the time the registration statement
becomes effective. This Statement of Additional Information does not constitute
a prospectus.

SUBJECT TO COMPLETION, DATED February 18, 1999

STATEMENT OF ADDITIONAL INFORMATION

April 30, 1999

WARBURG PINCUS TRUST
EMERGING MARKETS PORTFOLIO
GROWTH & INCOME PORTFOLIO
INTERNATIONAL EQUITY PORTFOLIO
POST-VENTURE CAPITAL PORTFOLIO
SMALL COMPANY GROWTH PORTFOLIO

This Statement of Additional Information provides information about Warburg
Pincus Trust (the "Trust"), relating to the Emerging Markets, Growth & Income,
International Equity, Post-Venture Capital and Small Company Growth Portfolios
(each a "Portfolio," and together, the "Portfolios") that supplements
information contained in the Prospectus or Prospectuses for the relevant
Portfolio (collectively, the "Prospectuses"), each dated April 30, 1999.

The Trust's audited Annual Reports dated December 31, 1998, which either
accompany this Statement of Additional Information or have previously been
provided to the investor to whom this Statement of Additional Information is
being sent, is incorporated herein by reference.

This Statement of Additional Information is not itself a Prospectus, no
investment in shares of the Portfolios should be made solely upon the
information contained herein. Copies of the Trust's Prospectuses, Annual Report
and information regarding each Portfolio's current performance may be obtained
by writing or telephoning:

Warburg Pincus
P.O. Box 9030
Boston, MA 02205-9030
1-800-222-8977

<PAGE> 55
TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
INVESTMENT OBJECTIVES AND POLICIES............................................................................... 1
OPTIONS ON SECURITIES AND SECURITIES INDICES AND CURRENCY EXCHANGE TRANSACTIONS.................................. 1
Securities Options............................................................................................ 1
Securities Index Options...................................................................................... 4
OTC Options................................................................................................... 5
Currency Exchange Transactions................................................................................ 5
Forward Currency Contracts.................................................................................... 5
Currency Options.............................................................................................. 6
Currency Hedging.............................................................................................. 6
Futures Activities............................................................................................ 7
Futures Contracts............................................................................................. 7
Options on Futures Contracts.................................................................................. 8
Hedging Generally............................................................................................. 9
Swaps......................................................................................................... 10
Asset Coverage for Forward Contracts, Options, Futures and Options on Futures and Swaps....................... 11
FOREIGN INVESTMENTS.............................................................................................. 11
Foreign Currency Exchange..................................................................................... 12
Information................................................................................................... 12
Political Instability......................................................................................... 12
Foreign Markets............................................................................................... 12
Increased Expenses............................................................................................ 12
Privatizations................................................................................................ 13
Foreign Debt Securities....................................................................................... 13
Brady Bonds................................................................................................... 13
Depositary Receipts........................................................................................... 14
Emerging Markets.............................................................................................. 14
Euro Conversion............................................................................................... 14
U.S. GOVERNMENT SECURITIES....................................................................................... 15
MONEY MARKET OBLIGATIONS......................................................................................... 15
Repurchase Agreements......................................................................................... 15
Money Market Mutual Funds..................................................................................... 16
DEBT SECURITIES.................................................................................................. 16
Below Investment Grade Securities............................................................................. 17
CONVERTIBLE SECURITIES........................................................................................... 18
MORTGAGE-BACKED SECURITIES....................................................................................... 18
ASSET-BACKED SECURITIES.......................................................................................... 19
LOAN PARTICIPATIONS AND ASSIGNMENTS.............................................................................. 20
Stand-By Commitments.......................................................................................... 21
TEMPORARY DEFENSIVE STRATEGIES................................................................................... 22
SECURITIES OF OTHER INVESTMENT COMPANIES......................................................................... 22
LENDING OF PORTFOLIO SECURITIES.................................................................................. 22
WHEN-ISSUED SECURITIES AND DELAYED-DELIVERY TRANSACTIONS......................................................... 23
SHORT SALES...................................................................................................... 23
Short Sales "Against the Box"................................................................................. 24
REVERSE REPURCHASE AGREEMENTS AND DOLLAR ROLLS................................................................... 24
WARRANTS......................................................................................................... 25
NON-PUBLICLY TRADED AND ILLIQUID SECURITIES...................................................................... 26
Rule 144A Securities.......................................................................................... 26
BORROWING........................................................................................................ 27
General....................................................................................................... 28
</TABLE>

i
<PAGE> 56

<TABLE>
<S> <C>
PRIVATE FUNDS.................................................................................................... 28
REITS............................................................................................................ 29
NON-DIVERSIFIED STATUS........................................................................................... 30
INVESTMENT RESTRICTIONS.......................................................................................... 30
PORTFOLIO VALUATION.............................................................................................. 32
PRIVATE FUNDS.................................................................................................... 33
PORTFOLIO TRANSACTIONS........................................................................................... 33
PORTFOLIO TURNOVER............................................................................................... 36
MANAGEMENT OF THE TRUST.......................................................................................... 37
OFFICERS AND BOARD OF TRUSTEES................................................................................... 37
PORTFOLIO MANAGERS............................................................................................... 41
INVESTMENT ADVISERS AND CO-ADMINISTRATORS........................................................................ 43
DISTRIBUTOR...................................................................................................... 46
ORGANIZATION OF THE TRUST........................................................................................ 46
ADDITIONAL PURCHASE AND REDEMPTION INFORMATION................................................................... 48
ADDITIONAL INFORMATION CONCERNING TAXES.......................................................................... 48
DETERMINATION OF PERFORMANCE..................................................................................... 51
INDEPENDENT ACCOUNTANTS AND COUNSEL.............................................................................. 55
FINANCIAL STATEMENTS............................................................................................. 55
MISCELLANEOUS.................................................................................................... 56
</TABLE>

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<PAGE> 57

INVESTMENT OBJECTIVES AND POLICIES

The following information supplement the descriptions of each
Portfolio's investment objective and policies in the Prospectuses. There are no
assurances that the Portfolios will achieve their investment objectives.

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

The investment objectives of the Growth & Income Portfolio are
long-term growth of capital and income.

The investment objective of the International Equity Portfolio
is long-term capital appreciation.

The investment objective of the Small Company Growth Portfolio
is capital growth.

Unless otherwise indicated, all of the Portfolios are
permitted, but not obligated, to engage in the following investment strategies,
subject to any percentage limitations set forth below.

The Portfolios are not obligated to pursue any of the
following strategies and do not represent that these techniques are available
now or will be available at any time in the future.

Options on Securities and Securities Indices and
Currency Exchange Transactions.

Each Portfolio may purchase and write (sell) options on
securities, securities indices and currencies for hedging purposes or to
increase total return. Up to 25% of the Fund's total assets may be at risk in
connection with investing in options on securities, securities indices and, if
applicable, currencies. The amount of assets considered to be "at risk" in these
transactions is, in the case of purchasing options, the amount of the premium
paid, and, in the case of writing options, the value of the underlying
obligation.

Securities Options. Each 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 OTC Options.

Each Portfolio that may write options 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
<PAGE> 58
sell to the option holder an underlying security at a specified price for a
specified time period or at a specified time.

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.

The principal reason for writing covered options on a security
is to attempt to realize, through the receipt of premiums, a greater return than
would be realized on the securities alone. In return for a premium, a 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). A Portfolio
that writes call options retains the risk of an increase 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 decline, the put writer would expect to suffer a
loss. This loss may be less than the loss from purchasing the underlying
instrument directly to the extent that the premium received offsets the effects
of the decline.

In the case of options written by a 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 a Portfolio may write covered call options. For example, if
a 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.

2
<PAGE> 59
Options written by a 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 Portfolios, other than the Emerging
Markets Portfolio, may write (i) in-the-money call options when Warburg Pincus
Asset Management, 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, a 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, if permissible,
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 OTC 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. A Portfolio cannot

3
<PAGE> 60
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 OTC
market may be more limited than for exchange-traded options and may also involve
the risk that securities dealers participating in OTC transactions would fail to
meet their obligations to the Portfolio. The Portfolio, however, intends to
purchase OTC 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 and would
continue to be at market risk on the security.

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.

Securities Index Options. Each Portfolio may purchase and
write exchange-listed and OTC put and call options on securities indexes. A
securities index measures the movement of a certain group of securities by
assigning relative values to the securities included in the index, fluctuating
with changes in the market values of the securities included in the index. Some
securities 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 securities indexes are similar to options on
securities except that (i) the expiration cycles of securities index options are
monthly, while those of securities options are currently quarterly, and (ii) the
delivery requirements are different. Instead of giving the right to take or make
delivery of securities at a specified price, an option on a securities index
gives the holder the right to receive a cash "exercise settlement amount" equal
to (a) the amount, if any, by which the fixed exercise price of the option
exceeds (in the case of a put) or is less than (in the case of a call) the
closing value of the underlying index on the date of exercise, multiplied by (b)
a fixed "index multiplier." Receipt of this cash amount will depend

4
<PAGE> 61
upon the closing level of the securities index upon which the option is based
being greater than, in the case of a call, or less than, in the case of a put,
the exercise price of the index and the exercise price of the option times a
specified multiple. The writer of the option is obligated, in return for the
premium received, to make delivery of this amount. Securities 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 securities to the clearing
organization if the option is exercised, and the clearing organization is then
obligated to pay the writer the exercise price of the option. If a 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.

Exchange traded options generally have a continuous liquid
market while OTC or dealer options do not. 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.

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 a variety of factors not
applicable to investment in U.S. securities, 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. Risks associated with currency forward
contracts and purchasing currency options are similar to those described herein
for futures contracts and securities and stock index options. In addition, the
use of currency transactions could result in losses from the imposition of

5
<PAGE> 62

foreign exchange controls, suspension of settlement or other governmental
actions or unexpected events.

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

At or before the maturity of a forward contract, the 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 enter into an
offsetting transaction. 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

6
<PAGE> 63

U.S. dollar value of non-dollar denominated securities it holds, a Portfolio may
purchase foreign currency put options. If the value of the foreign currency does
decline, the Portfolio will have the right to sell the foreign 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.

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.

Futures Activities. Each Portfolio may enter into foreign
currency, interest rate and securities index futures contracts and purchase and
write (sell) related options traded on exchanges designated by the Commodity
Futures Trading Commission (the "CFTC") or consistent with CFTC regulations on
foreign exchanges. These 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, a cash
settlement 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. 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. Aggregate initial margin and premiums
(discussed below) required to establish positions other than those considered to
be "bona fide hedging" by the CFTC will not 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. There is no overall limit on the
percentage of Portfolio assets that may be at risk with respect to futures
activities.

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<PAGE> 64

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

No consideration is paid or received by a Portfolio upon
entering into a futures contract. Instead, the Portfolio is required to
segregate with its custodian an amount of cash or securities acceptable to the
broker, 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
securities 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 may 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 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.

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

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

Hedging Generally. 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 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 prices in the securities market generally
or, in the case of certain indexes, in an industry or market segment, rather
than movements in the price of a particular security. The risk of imperfect
correlation increases as the composition of the 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. Securities index futures
transactions may be subject to additional correlation risks. First, all
participants in the

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futures market are subject to margin deposit and maintenance requirements.
Rather than meeting additional margin deposit requirements, investors may close
futures contracts through offsetting transactions which would distort the normal
relationship between the securities index and futures markets. Secondly, from
the point of view of speculators, the deposit requirements in the futures market
are less onerous than margin requirements in the securities market. Therefore,
increased participation by speculators in the futures market also may cause
temporary price distortions. Because of the possibility of price distortions in
the futures market and the imperfect correlation between movements in a
securities index and movements in the price of securities index futures, a
correct forecast of general market trends by Warburg still may not result in a
successful hedging transaction.

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
currencies, interest rates or securities markets, as the case may be, and to
predict correctly 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.

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 a 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.

Swaps. (Emerging Markets and International Equity Portfolios)
The Emerging Markets and International Equity Portfolios may each enter into
swaps relating to interest rates, indexes, currencies and equity interests of
foreign issuers. A swap transaction is an agreement between a Portfolio and a
counterparty to act in accordance with the terms of the swap contract. Interest
rate swaps involve the exchange by the Portfolio with another party of their
respective commitments to pay or receive interest, such as an exchange of fixed
rate payments for floating rate payments. Index swaps involve the exchange by
the Portfolio with another party of the respective amounts payable with respect
to a notional principal amount related to one or more indexes. Currency swaps
involve the exchange of cash flows on a notional amount of two or more
currencies based on their relative future values. An equity swap is an agreement
to exchange streams of payments computed by reference to a notional amount based
on the performance of a stock index, a basket of stocks or a single stock. A
Portfolio may enter into these transactions for hedging purchases, such as to
preserve a return or spread on a particular investment or portion of its assets,
to protect against currency fluctuations, as a duration management technique or
to protect against any increase in the price of securities the Portfolio
anticipates purchasing at a later date. The Portfolios may also use these
transactions for speculative purposes to increase total return, such as to
obtain the price performance of a security without actually purchasing the
security in circumstances

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where, for example, the subject security is illiquid, is unavailable for direct
investment or available only on less attractive terms. Swaps have risks
associated with them, including possible default by the counterparty to the
transaction, illiquidity and, where swaps are used as hedges, the risk that the
use of a swap could result in losses greater than if the swap had not been
employed.

A Portfolio will usually enter into swaps on a net basis,
i.e., the two payment streams are netted out in a cash settlement on the payment
date or dates specified in the agreement, with the Portfolio receiving or
paying, as the case may be, only the net amount of the two payments. Swaps do
not involve the delivery of securities, other underlying assets or principal.
Accordingly, the risk of loss with respect to swaps is limited to the net amount
of payments that the Portfolio is contractually obligated to make. If the
counterparty to a swap defaults, the Portfolio's risk of loss consists of the
net amount of payments that the Portfolio is contractually entitled to receive.
Where swaps are entered into for good faith hedging purposes, Warburg believes
such obligations do not constitute senior securities under the Investment
Company Act of 1940, as amended (the "1940 Act"), and, accordingly, will not
treat them as being subject to a Portfolio's borrowing restrictions. Where swaps
are entered into for other than hedging purposes, a Portfolio will segregate an
amount of cash or liquid securities having a value equal to the accrued excess
of its obligations over its entitlements with respect to each swap on a daily
basis.

Asset Coverage for Forward Contracts, Options, Futures and
Options on Futures and Swaps. Each Portfolio will comply with guidelines
established by the U.S. Securities and Exchange Commission (the "SEC") and other
applicable regulatory bodies with respect to coverage of forward currency
contracts; options written by the Portfolios on currencies, securities and
securities indexes and swaps; 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
securities 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 impede portfolio
management or the Portfolio's ability to meet redemption requests or other
current obligations.

For example, a call option written by a 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 a 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 a Portfolio holds a futures or
forward contract,

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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.

Foreign Investments. Since the Emerging Markets and
International Equity Portfolios will, and the Growth & Income and Post-Venture
Capital Portfolios (each up to 20% of its total assets), and the Small Company
Growth Portfolio (up to 10% of its total assets) may, be investing in foreign
securities, investors should recognize that investing in foreign companies
involves certain risks, including those discussed below, which are in addition
to those associated with investing in U.S. issuers. 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. 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 Currency Exchange. Since each Portfolio 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. Unless otherwise contracted, 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.
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. 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.

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 subject to financial reporting

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standards, practices and requirements that are either not uniform or less
rigorous than those applicable to U.S. companies.

Political Instability. 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.

Foreign Markets. 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, which may result
in increased exposure to market and foreign exchange fluctuation and increased
liquidity.

Increased Expenses. The operating expenses of the
International Equity and Emerging Markets Portfolios (and, to the extent they
invest in foreign securities, the Growth & Income, Post-Venture Capital and
Small Company Growth Portfolios) can be expected to be higher than that of an
investment company investing exclusively in U.S. securities, since the expenses
of the Portfolio associated with foreign investing, 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.

Privatizations. Each Portfolio may invest in privatizations
(i.e. foreign government programs of selling interests in government-owned or
controlled enterprises). The ability of U.S. entities, such as the Portfolios,
to participate in privatizations may be limited by local law, or the terms for
participation may be less advantageous than for local investors. There can be no
assurance that privatization programs will be available or successful. The
International Equity and Emerging Markets Portfolios could invest to a
significant extent in privatizations.

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

The foreign government securities in which a 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

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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. Each 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. The International
Equity and Emerging Markets Portfolios could invest to a significant extent in
Brady bonds.

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

Emerging Markets. One or more Portfolios with authority to
invest outside of the United States may invest in securities of issuers located
in less developed countries considered to be "emerging markets." The Emerging
Market Portfolio and the International Equity Portfolio may invest in securities
of issuers located in emerging markets to a significant extent. Investing in
securities of issuers located in emerging markets involves not only the risks
described above 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. For example, many investments in
emerging markets experienced significant declines in value due to political and
currency volatility in emerging markets countries during the latter part of
1997. Other characteristics of emerging markets that may affect investment there
include certain

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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.

Euro Conversion. The planned introduction of a single European
currency, the euro, on January 1, 1999 for participating European nations in the
Economic and Monetary Union presents unique risks and uncertainties for
investors in those countries, including (i) the functioning of the payment and
operational systems of banks and other financial institutions; (ii) the creation
of suitable clearing and settlement payment schemes for the euro; (iii) the
fluctuation of the euro relative to non-euro currencies during the transition
period from January 1, 1999 to December 31, 2000 and beyond; and (iv) whether
the interest rate, tax and labor regimes of the European countries participating
in the euro will converge over time. Further, the conversion of the currencies
of other Economic Monetary Union countries, such as the United Kingdom, and the
admission of other countries, including Central and Eastern European countries,
to the Economic and Monetary Union could adversely affect the euro. These or
other factors may cause market disruptions and could adversely affect the value
of foreign securities and currencies held by the Portfolios.

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

Other U.S. government securities the Portfolios may invest in
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, Federal 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

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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.

Money Market Obligations. Each Portfolio is authorized to
invest under normal market conditions up to 20% of its assets in domestic and
foreign short-term (one year or less remaining to maturity) and, in the case of
the Emerging Markets, International Equity, Post- Venture Capital and Small
Company Growth Portfolios, medium-term (five years or less remaining maturity)
money market obligations. Money market 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, domestic savings and
loans and similar institutions) that are high quality investments; commercial
paper rated no lower than A-2 by Standard & Poor's Ratings Services ("S&P") or
Prime-2 by Moody's Investors Service, Inc. ("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. Each Portfolio 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 while the Portfolio seeks to assert this right.
Warburg, acting under the supervision of each Portfolio's 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 a Portfolio and appropriate considering the factors of
return and liquidity, a Portfolio may invest up to 5% of its assets in
securities of money market mutual funds that are unaffiliated with the Portfolio
or Warburg. A money market mutual fund is an investment company that invests in
short-term high quality money market instruments. A money market mutual fund
generally does not purchase securities with a remaining maturity of more than
one year. As a shareholder in any mutual fund, a Portfolio will

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bear its ratable share of the mutual fund's expenses, including management fees,
and will remain subject to payment of the Portfolio's management fees and other
expenses with respect to assets so invested.

Debt Securities. Each of the Emerging Markets Portfolio and
the International Equity Portfolio may invest up to 35%, and each of the Growth
& Income Portfolio, the Post-Venture Capital Portfolio and the Small Company
Growth Portfolio may invest up to 20%, of its total assets in debt securities
(other than money market obligations). Any percentage limitation on a
Portfolio's ability to invest in debt securities will not be applicable during
periods when the Portfolio pursues a temporary defensive strategy as discussed
below. 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 forecast accurately 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.

Each Fund may invest to a limited extent in zero coupon
securities. See "Additional Information Concerning Taxes" for a discussion of
the tax consequences to shareholders in a Portfolio that invests in zero coupon
securities.

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. Securities 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.

Below Investment Grade Securities. The Emerging Markets
Portfolio may invest or hold up to 35% of its net assets in below investment
grade debt and equity securities including convertible securities. Within the
20% limitation on investments in debt securities, up to 10% of the Growth &
Income Portfolio's assets may be invested in debt securities rated below
investment grade, including convertible debt securities. The International
Equity, Post-Venture Capital and Small Company Growth Portfolios may each invest
up to 5% of its total assets in below investment grade debt securities, which
will be included in any overall investment limitation or investment minimum on
debt securities.

Below investment grade debt securities may be rated as low as
C by Moody's or D by S&P, or be deemed by Warburg to be of equivalent quality.
Securities that are rated C by Moody's are the lowest rated class and can be
regarded as having

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extremely poor prospects of ever attaining any real investment standing. A
security rated D by S&P is in default or is expected to default upon maturity or
payment date. Below investment grade securities (commonly referred to as "junk
bonds"), (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. The market
values of certain of these securities also tend to be more sensitive to
individual corporate developments and changes in economic conditions than
investment grade securities. In addition, these securities generally present a
higher degree of credit risk. The risk of loss due to default is significantly
greater because these securities generally are unsecured and frequently are
subordinated to the prior payment of senior indebtedness.

While the market values of below investment grade securities
tend to react less to fluctuations in interest rate levels than do those of
investment grade 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 investment grade securities. In addition, below
investment grade securities generally present a higher degree of credit risk.
Issuers of below investment grade 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 below investment
grade securities generally are unsecured and frequently are subordinated to the
prior payment of senior indebtedness.

An economic 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.

A Portfolio may have difficulty disposing of certain of these
securities because there may be a thin trading market. Because there is no
established retail secondary market for many of these securities, the Trust
anticipates that these securities could be sold only to a limited number of
dealers or institutional investors. To the extent a secondary trading market for
these securities does exist, it generally is not as liquid as the secondary
market for investment grade securities. The lack of a liquid secondary market,
as well as adverse publicity and investor perception with respect to these
securities, may have an adverse impact on market price and a Portfolio's ability
to dispose of particular issues 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 issuer. The lack of a liquid secondary market for
certain securities also may make it more difficult for a Portfolio to obtain
accurate market quotations for purposes of valuing the Portfolio and calculating
its net asset value.

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The market value of below investment grade securities is more
volatile than that of investment grade securities. Factors adversely impacting
the market value of these securities will adversely impact the 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, below investment grade securities are not intended for short-term
investment. A Portfolio may incur additional expenses to the extent it is
required to seek recovery upon a default in the payment of principal or interest
on its portfolio holdings of such securities.

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 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. Like bonds, the value of convertible securities
fluctuates in relation to changes in interest rates and, in addition, also
fluctuates in relation to the underlying common stock.

Mortgage-Backed Securities. Each 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. 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

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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. In addition, mortgage-backed securities issued by certain
non-government entities and collateralized mortgage obligations may be less
marketable than other securities.

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 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. Each 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. In addition, there is no assurance that the
security interest in the collateral can be realized.

Loan Participations and Assignments. Each 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 a Portfolio's investments in Loans are
expected to be in the form of participations in

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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 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.

Structured Notes, Bonds or Debentures.

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

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Consequently, structured securities may entail a greater degree of market risk
and volatility than other types of debt obligations.

Stand-By Commitments. (Emerging Markets Portfolio) 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. When investing in stand-by commitments, the Portfolio will
seek 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 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 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.

Temporary Defensive Strategies. When Warburg believes that a
defensive posture is warranted, each Portfolio may invest temporarily without
limit in investment

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grade debt obligations and in domestic and foreign money market obligations,
including repurchase agreements.

Securities of Other Investment Companies. Each Portfolio may
invest in securities of other investment companies 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 331/3% of the Portfolio's total assets (including the Loan collateral)
taken at value. A Portfolio will not lend portfolio securities to its investment
adviser, any sub-investment adviser or their affiliates unless it has applied
for and received specific authority to do so from the SEC. Loans of portfolio
securities will be collateralized by cash or liquid securities, which are
segregated 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."

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
an investor's 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 use up to 20% of its total assets to purchase securities on a
"when-issued" basis or

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purchase or sell securities for delayed delivery (i.e., payment or delivery
occur beyond the normal settlement date at a stated price and yield). 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 prices obtained on such securities
may be higher or lower than the prices available in the market on the dates when
the investments are actually delivered to the buyers. When a Portfolio agrees to
purchase when-issued or delayed-delivery securities, its custodian will set
aside cash or liquid securities equal to the amount of the commitment. 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
segregate additional assets in order to ensure that the value of the segregated
assets 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.

Short Sales (Post-Venture Capital Portfolio). The Post-Venture
Capital Portfolio may engage in "short sales" that do not meet the definition of
short sales "against the box" with respect to up to 10% of its total assets. In
a short sale, the investor sells a borrowed security and has a corresponding
obligation to the lender to return the identical security. The seller does not
immediately deliver the securities sold and is said to have a short position in
those securities until delivery occurs. 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 will make a profit or incur a loss as a result of a short sale
depending on whether the price of the security decreases or increases between
the date of the short sale and the date on which the Portfolio purchases the
security to replace the borrowed securities that have been sold. The amount of
any loss would be increased (and any gain decreased) by any premium or interest
the Portfolio is required to pay in connection with a short sale.

The Portfolio's obligation to replace the securities borrowed
in connection with a short sale will be secured by cash or liquid securities
deposited as collateral with the broker. In addition, the Portfolio will place
in a segregated account with its custodian or a qualified subcustodian an amount
of cash or liquid securities equal to the difference, if any, between (i) the
market value of the securities sold at the time they were sold short and (ii)
any cash or liquid securities deposited as collateral with the broker in
connection with the short sale (not including the proceeds of the 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

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deposited with the broker (not including the proceeds of 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. Each Portfolio may enter into
short sales "against the box." Not more than 10% of a Portfolio's net assets
(taken at current value) may be held as collateral for such sales at any one
time. In a short sale, a Portfolio sells a borrowed security and has a
corresponding obligation to the lender to return the identical security. The
seller does not immediately deliver the securities sold and is said to have a
short position in those securities until delivery occurs. While a short sale is
made by selling a security a Portfolio does not own, a short sale is "against
the box" to the extent that a Portfolio contemporaneously owns or has the right
to obtain, at no added cost, securities identical to those sold short. If the
Portfolio engages in a short sale, the collateral for the short position will be
segregated by the Portfolio's custodian or qualified sub-custodian. While the
short sale is open, the Portfolio will continue to segregate an amount of
securities equal in kind and amount to the securities sold short or securities
convertible into or exchangeable for such equivalent securities. These
securities constitute the Portfolio's long position.

The Portfolios do not intend to engage in short sales against
the box for investment purposes. A Portfolio may make a short sale as a hedge,
when it believes that the price of a security may decline, causing a decline in
the value of a security owned by the Portfolio (or a security convertible or
exchangeable for such security). In such case, any future losses in the
Portfolio's long position should be offset by a gain in the short position and,
conversely, any gain in the long position should be reduced by a loss in the
short position. The extent to which such gains or losses are reduced will depend
upon the amount of the security sold short relative to the amount the Portfolio
owns. There will be certain additional transaction costs associated with short
sales against the box, but the Portfolio will endeavor to offset these costs
with the income from the investment of the cash proceeds of short sales.

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

Reverse Repurchase Agreements and Dollar Rolls. Each Portfolio
may enter into reverse repurchase agreements with member banks of the Federal
Reserve System and certain non-bank dealers. Reverse repurchase agreements
involve the sale of securities held by a Portfolio pursuant to its agreement to
repurchase them at a mutually agreed upon date, price and rate of interest. At
the time the Portfolio enters into a reverse repurchase agreement, it will
segregate cash or liquid securities having a value not less than the repurchase
price (including accrued interest). The segregated assets will be marked-to-
market daily and additional assets will be segregated on any day in which the
assets fall

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below the repurchase price (plus accrued interest). The Portfolio's liquidity
and ability to manage its assets might be affected when it sets aside cash or
portfolio securities to cover such commitments. Reverse repurchase agreements
involve the risk that the market value of the securities retained in lieu of
sale may decline below the price of the securities the Portfolio has sold but is
obligated to repurchase. In the event the buyer of securities under a reverse
repurchase agreement files for bankruptcy or becomes insolvent, such buyer or
its trustee or receiver may receive an extension of time to determine whether to
enforce the Portfolio's obligation to repurchase the securities, and the
Portfolio's use of the proceeds of the reverse repurchase agreement may
effectively be restricted pending such decision.

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

Warrants. Each Portfolio may invest up to 10% of net assets
(15% of its total assets in the case of the Growth & Income Portfolio) in
warrants. Warrants are securities that give the holder the right, but not the
obligation to purchase equity issues of the company issuing the warrants, or a
related company, at a fixed price either on a date certain or during a set
period. A Portfolio may invest in warrants to purchase newly created equity
securities consisting of common and preferred stock. The equity security
underlying a warrant is authorized at the time the warrant is issued or is
issued together with the warrant.

Investing in warrants can provide a greater potential for
profit or loss than an equivalent investment in the underlying security, and,
thus, can be a speculative investment. At the time of issue, the cost of a
warrant is substantially less than the cost of the underlying security itself,
and price movements in the underlying security are generally magnified in the
price movements of the warrant. This leveraging effect enables the investor to
gain exposure to the underlying security with a relatively low capital
investment. This leveraging increases an investor's risk, however, in the event
of a decline in the value of the underlying security and can result in a
complete loss of the amount invested in the warrant. In addition, the price of a
warrant tends to be more volatile than, and may not correlate exactly to, the
price of the underlying security. If the market price of the underlying security
is below the exercise price of the warrant on its expiration date, the warrant
will generally expire without value. The value of a warrant may decline because
of a decline in the value of the underlying security, the passage of time,
changes in interest rates or in the dividend or other policies of the company
whose equity underlies the warrant or a change in the perception as to the
future price of the

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underlying security, or any combination thereof. Warrants generally pay no
dividends and confer no voting or other rights other than to purchase the
underlying security.

Non-Publicly Traded and Illiquid Securities. 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 day, certain Rule 144A Securities (as
defined below) and, with respect to the Post- Venture Capital Portfolio, Private
Funds (as defined below). 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. Companies whose securities are not publicly traded
may not be subject to the disclosure and other investor protection requirements
applicable to companies whose securities are publicly traded. Limitations on
resale may have an adverse effect on the marketability of portfolio securities
and a mutual fund might be unable to dispose of restricted or other illiquid
securities promptly or at reasonable prices and might thereby experience
difficulty satisfying redemptions within seven days without borrowing. A mutual
fund might also have to register such restricted securities in order to dispose
of them resulting in additional expense and delay. Adverse market conditions
could impede such a public offering of securities.

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

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

An investment in Rule 144A Securities will be considered
illiquid and therefore subject to a Portfolio's limit on the purchase of
illiquid securities unless the Board or its

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<PAGE> 84
delegates determines that the Rule 144A Securities are liquid. In reaching
liquidity decisions, the Board or 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).

Investing in Rule 144A Securities could have the effect of
increasing the level of illiquidity in the Portfolios to the extent that
qualified institutional buyers are unavailable or uninterested in purchasing
such securities from the Portfolios. The Board may adopt guidelines and delegate
to Warburg the daily function of determining and monitoring the illiquidity of
Rule 144A Securities, although the Board will retain ultimate responsibility for
liquidity determinations.

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 portfolio securities.
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 sub-custodian, which may include the lender.

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

"Special Situation" Companies. "Special situation companies"
are 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, may provide an
attractive investment opportunity. 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. Although investing in securities
of small- and medium-sized and emerging growth companies, unseasoned issuers or
issuers in "special situations" offers potential for above-average returns if
the companies are successful, the risk exists that the companies will not
succeed and the prices of the companies' shares could significantly decline in
value. Therefore, an investment in a Portfolio may involve a greater degree of
risk than an investment in other mutual funds that seek growth of capital or
capital appreciation by investing in better-known, larger companies.

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<PAGE> 85

General. 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
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.

Private Funds. (Post-Venture Capital Portfolio) 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, LLC, 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 offer individual investors a unique opportunity to
participate in venture capital and other private investment funds, providing
access to investment opportunities typically available only to large
institutions and accredited investors. Although 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,

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<PAGE> 86

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 Portfolio'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. 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 or D by S&P. Securities in these rating categories are in payment
default or have extremely poor prospects of attaining any investment standing.
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 the Portfolio's
net assets.

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

Warburg has experience in researching small 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 400 of
the larger domestic venture capital funds. Ms. Dater and Mr. Lurito have managed
post- venture equity securities in

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<PAGE> 87

separate accounts for institutions since 1989 and currently manage over $1
billion of such assets for investment companies and other institutions.

REITs. Each Portfolio may invest in real estate investment
trusts ("REITs"), which are pooled investment vehicles that invest primarily in
income-producing real estate or real estate related loans or interests. Like
regulated investment companies such as the Trust, REITs are not taxed on income
distributed to shareholders provided they comply with several requirements of
the Internal Revenue Code of 1986, amended (the "Code"). By investing in a REIT,
the Portfolio will indirectly bear its proportionate share of any expenses paid
by the REIT in addition to the expenses of the Portfolio.

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

Non-Diversified Status (Emerging Markets and Small Company
Growth Portfolios). These Portfolios are classified as non-diversified within
the meaning of the 1940 Act, which means that each Portfolio is not limited by
such Act in the proportion of its assets that it may invest in securities of a
single issuer. As a non-diversified portfolio, each Portfolio may invest a
greater proportion of its assets in the obligations of a smaller number of
issuers and, as a result, may be subject to greater risk with respect to
portfolio securities. Each Portfolio's investments will be limited, however, in
order to qualify as a "regulated investment company" for purposes of the Code.
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 or of two or more issuers of which
the Portfolio has 20% or more voting control and which are in similar or related
trades or businesses, 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 RESTRICTIONS

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 15 may be changed by a vote of the Board at any time. If a percentage
limitation (other than the percentage limitation set forth in investment
restriction No. 1 below) is adhered to at the time of an investment, a later
increase or

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<PAGE> 88

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.

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.

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<PAGE> 89

3. For the Growth & Income, International Equity and Post-Venture
Capital Portfolios 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. 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, in the
case of the Growth & Income Portfolio, securities issued by companies which
invest in real estate 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, Growth & Income, International Equity and
Small Company Growth Portfolios 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, with respect to the Emerging Markets Portfolio, enter into stand-by
commitments.

10. Issue any senior security except as permitted in these 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 and in connection with the writing of covered put
and call options and purchase of securities on a

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<PAGE> 90
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.

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. 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 10%
of the value of the Portfolio's net assets (in the case of the Growth & Income
Portfolio, 15% of the value of that Portfolio's total assets).

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

PORTFOLIO VALUATION

The following is a description of the procedures used by each 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 OTC 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
highest bid and lowest asked quotations. If there are no such quotations, the
value of the securities will be taken to be the most recent bid quotation on the
exchange or market. Options contracts will be valued similarly. Futures
contracts will be valued at the most recent settlement price at the time of
valuation. 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. The valuation of short sales of securities, which are not traded
on a national exchange, will be at the mean of bid and asked prices. Amortized
cost involves valuing a portfolio instrument at its initial cost and thereafter
assuming a constant amortization to maturity of an discount or premium,
regardless of the impact of fluctuating interest rates on the market value of
the instrument. Short-term obligations with maturities of 60 days or less are
valued at amortized cost, which constitutes fair value as determined by the
Board. Amortized cost involves valuing a portfolio instrument at its initial
cost and thereafter assuming a constant amortization to maturity of any discount
or premium, regardless of the impact of fluctuating interest rates on the market
value of the instrument. The amortized cost method of valuation may also be used
with respect to other debt obligations with 60 days or less remaining to
maturity. Notwithstanding the foregoing, in determining the market value of
portfolio investments, the Portfolio may employ outside organizations (each, 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, futures contracts and other assets for which market
quotations are not available

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<PAGE> 91
will be valued at their fair value as determined in good faith pursuant to
consistently applied procedures established by the Board. In addition, the Board
or its delegates may value a security at fair value if it determines that such
security's value determined by the methodology set forth above does not reflect
its fair value.

Trading in securities in certain foreign countries is completed at
various times prior to the close of business on each business day in New York
(i.e., a day on which The New York Stock Exchange, Inc. (the "NYSE") is open for
trading). In addition, securities trading in a particular country or countries
may not take place on all business days in New York. Furthermore, trading takes
place in various foreign markets on days which are not business days in New York
and days on which 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 foreign
portfolio securities used in such calculation. All assets and liabilities
initially expressed in foreign currency values will be converted into U.S.
dollar values at the prevailing rate as quoted by a Pricing Service as of 12:00
noon (Eastern time). 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.

Private Funds (Post-Venture Capital Portfolio). Private Funds are
initially valued at cost (i.e., the actual dollar amount invested). Thereafter,
Private Funds are valued at the prices set forth in periodic reports received by
Abbott from the Private Funds. These reports are generally made quarterly.
Neither Abbott nor the Portfolio will monitor interim changes in the value of
portfolio holdings of the Private Funds. As a result, these changes will not be
taken into account by the Portfolio in calculating its net asset value.

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
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 involve a commission
or other fee. There is generally no stated commission in the case of securities
traded in domestic or foreign OTC markets, but the price of securities traded in
OTC 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.

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Except for the Post-Venture Capital Portfolio's investments in Private
Funds, which will be 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 due to brokerage business on behalf of the Portfolios may be
useful to Warburg in serving 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 as third party publications,
reports and analyses, and computer and electronic access, equipment, software,
information and accessories that deliver, process or otherwise utilize
information, including the research described above) that assist Warburg in
carrying out its responsibilities. For the fiscal year ended December 31, 1998,
$_____, $_____, $_____ and $_____ of total brokerage commissions was paid by the
Growth & Income, International Equity, Post-Venture Capital and Small Company
Growth Portfolios, respectively, to brokers and dealers who provided such
research and other services. Research received from brokers or dealers is
supplemental to Warburg's own research program. The fees to Warburg under its
advisory agreements with each Portfolio are not reduced by reason of its
receiving any brokerage and research services.

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

<TABLE>
<CAPTION>
Portfolio Year Commissions
- --------- ---- -----------
<S> <C> <C>
Emerging Markets 1998 $_____

Growth & Income 1997 $2,412
</TABLE>

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<PAGE> 93

<TABLE>
<S> <C> <C>
1998 $_____
International Equity 1996 $1,056,276
1997 $1,594,509
1998 $_____

Post-Venture Capital 1996 $5,237
1997 $88,821
1998 $_____

Small Company Growth 1996 $386,387
1997 $883,377
1998 $_____
</TABLE>

The table below shows the amount each Portfolio held, as of December
31, 1998, with [Goldman, Sachs & Co.], one of the regular broker-dealers of
these Portfolios:

<TABLE>
<S> <C>
Growth & Income $304,000
International Equity $31,579,000
Small Company Growth $63,256,000
</TABLE>

Investment decisions for each Portfolio concerning specific portfolio
securities are made independently from those for other clients advised by
Warburg or Abbott, as relevant. 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. ("Counsellors Securities"), located at 466 Lexington
Avenue, New York, New York 10017, the Trust's distributor and a wholly-owned
subsidiary of Warburg, 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. No portfolio transactions have been executed through
Counsellors Securities since the commencement of each Portfolio's operations. In
no instance will portfolio securities be purchased from or sold to Warburg,
Abbott or Counsellors Securities or any affiliated person of such companies.

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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 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. The portfolio turnover rate of
238.12% for the Post-Venture Capital Portfolio for the year ended December 31,
1997 was attributable to sales of securities that were necessary to accommodate
unanticipated redemption orders.

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. 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 a Portfolio may be higher than mutual funds
having similar objectives that do not utilize these strategies.

It is not possible to predict the Portfolios' portfolio turnover rates.
High portfolio turnover rates (100% or more) may result in dealer markups 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.

38
<PAGE> 95
MANAGEMENT OF THE TRUST

Officers and Board of Trustees

The business and affairs of the Trust are managed by the Board of
Trustees in accordance with the laws of the Commonwealth of Massachusetts. The
Board elects officers who are responsible for the day-to-day operations of the
Trust and who execute policies authorized by the Board. Under the Trust's
Declaration of Trust, the Board may classify or reclassify any unissued shares
of the Trust into one or more additional classes by setting or changing in any
one or more respects their relative rights, voting powers, restrictions,
limitations as to dividends, qualifications and terms and conditions of
redemption. The Board may similarly classify or reclassify any class of its
shares into one or more series and, without shareholder approval, may increase
the number of authorized shares of the Trust.

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

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

John L. Furth* (68) Chairman of the Board
466 Lexington Avenue Chief Executive Officer and Director of Warburg;
New York, New York 10017-3147 Associated with Warburg since 1970; Chairman of the Board
and officer of other investment companies in the Warburg
Pincus family of funds.
</TABLE>

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

39
<PAGE> 96

<TABLE>
<S> <C>
Jeffrey E. Garten (52) Trustee
Box 208200 Dean of Yale School of Management and William S. Beinecke
New Haven, Connecticut 06520-8200 Professor in the Practice of International Trade and
Finance; Undersecretary of Commerce for International Trade
from November 1993 to October 1995; Director/Trustee of
other investment companies in the Warburg Pincus family
of funds.

Thomas A. Melfe (67) Trustee
1251 Avenue of the Americas Partner in the law firm of Piper & Marbury, L.L.P.;
29th Floor Partner in the law firm of Donovan Leisure Newton & Irvine New York,
New York 10020-1104 from April 1984 to April 1998; Chairman of the Board,
Municipal Fund for New York Investors, Inc.; Director/Trustee of
other investment companies in the Warburg Pincus family of funds.

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

Alexander B. Trowbridge (69) Trustee
1317 F Street, N.W., 5th Floor President of Trowbridge Partners, Inc. (business
Washington, DC 20004 consulting) from January 1990 to January 1994; Director or
Trustee of New England Mutual Life Insurance Co., ICOS
Corporation (biopharmaceuticals), WMX Technologies, Inc.
(solid and hazardous waste collection and disposal), The
Rouse Company (real estate development), Harris Corp.
(electronics and communications equipment), The Gillette
Co. (personal care products) and Sun Company Inc.
(petroleum refining and marketing); Director/Trustee of
other investment companies in the Warburg Pincus family of
funds.
</TABLE>

- ----------

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

40
<PAGE> 97

<TABLE>
<S> <C>
Eugene L. Podsiadlo (42) President
466 Lexington Avenue Managing Director of Warburg; Associated with Warburg
New York, New York 10017-3147 since 1991; Officer of Counsellors Securities and other
investment companies in the Warburg Pincus family of funds.

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

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

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

Howard Conroy, CPA (45) Vice President and Chief Financial Officer
466 Lexington Avenue Vice President of Warburg; Associated with Warburg since
New York, New York 10017-3147 1992; Officer of other investment companies in the Warburg
Pincus family of funds.

Daniel S. Madden, CPA (33) Treasurer and Chief Accounting Officer Vice President of Warburg;
466 Lexington Avenue Associated with Warburg since 1995; Associated with BlackRock
New York, New York 10017-3147 Financial Management, Inc. from September 1994 to October 1996;
Associated with BEA Associates from April 1993 to September
1994; Officer of other investment companies in the Warburg Pincus
family of funds.
</TABLE>

41
<PAGE> 98

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

No employee of Warburg, 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. For each fund in the Warburg
Pincus family of funds, each Director/Trustee who is not a director, trustee,
officer or employee of Warburg, PFPC or any of their affiliates receives an
annual fee of $500, $1,000 or $2,000 per fund for Director/Trustee services
provided, $250 for each Board meeting attended and $400 for each Audit Committee
meeting attended, in addition to reimbursement for expenses incurred in
connection with attendance at Board meetings.

42
<PAGE> 99

Trustees' Compensation
(for the fiscal year ended December 31, 1998)

<TABLE>
<CAPTION>
Total Total Compensation from
Compensation from all Investment Companies in
Name of Trustee Trust Warburg Pincus Fund Complex*
--------------- ----- ----------------------------
<S> <C> <C>
John L. Furth** None None
Arnold M. Reichman** None None
Richard N. Cooper $1,500 $44,500
Donald J. Donahue*** $1,500 $44,500
Jack W. Fritz $1,500 $44,500
Jeffrey E. Garten**** None None
Thomas A. Melfe $1,500 $44,500
Alexander B. Trowbridge $1,500 $44,500
</TABLE>

- ----------

* Each Trustee also serves as a Director or Trustee of 26 investment
companies in the Warburg Pincus family of funds, except for Mr. Melfe,
who also serves as a Director or Trustee of 24 investment companies in
the Warburg Pincus family of funds.

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

*** Mr. Donahue resigned as Trustee of the Trust effective February 6,
1998.

**** Mr. Garten became a Trustee of the Trust effective February 6, 1998.

As of [March 31, 1999], no Trustees or officers of the Trust owned any
of the outstanding shares of the Portfolios.

Portfolio Managers

Emerging Markets Portfolio. Richard H. King, Co-Portfolio Manager of
the Emerging Markets Portfolio, also manages other Warburg Pincus Funds. 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) from 1985 to 1986 which
grew from $3 million to over $100 million during this two-year period. Mr. King
earned a B.A. degree from Durham University in England.

Vincent J. McBride, Co-Portfolio Manager of the Emerging Markets
Portfolio, also manages other Warburg Pincus Funds. Prior to joining Warburg in
1994, Mr. McBride

43
<PAGE> 100
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.

Morid Kamshad, Associate Portfolio Manager of the Emerging Markets
Portfolio, is a Vice President of Warburg and serves there as an international
equity associate portfolio manager. Prior to joining Warburg Pincus, Mr. Kamshad
was a senior investment manager at Pictet Asset Management from 1995 to 1997.
From 1994 to 1995 he was an investment analyst at HSBC Asset Management, and
from 1989 to 1993, he was a business development manager at Air Products and
Chemicals-France. Mr. Kamshad received his M.B.A. from I.E.S.E. in Barcelona and
his B.S. from the University of Colorado.

International Equity Portfolio. Mr. King and Mr. McBride, described
above, are also Co-Portfolio Managers of the International Equity Portfolio (see
biographies above).

Harold W. Ehrlich, Co-Portfolio Manager of the International Equity
Portfolio, also manages other Warburg Pincus Funds. Prior to joining Warburg in
February 1995, Mr. Ehrlich was a senior vice president, portfolio manager and
analyst at Templeton Investment Counsel Inc. from 1987 to 1995. He 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.

Harold E. Sharon is Co-Portfolio Manager of the International Equity
Portfolio and serves in similar positions with other Warburg Pincus Funds. Prior
to joining Warburg in 1998, Mr. Sharon was an executive director and portfolio
manager at CIBC Oppenheimer from 1994 to 1998. Mr. Sharon was previously a Vice
President and Portfolio Manager at Warburg from 1990 to 1994. Mr. Sharon earned
a B.S. Degree with honors from the University of Rochester and an M.S. degree in
Management from the Sloan School of Management, M.I.T.

Nancy Nierman, Associate Portfolio Manager of the International Equity
Portfolio, also manages other Warburg Pincus Funds. Ms. Nierman, a Vice
President of Warburg, serves as a European equity analyst and has been with
Warburg since April 1996, before which time she was a vice president at
Fiduciary Trust Company International from 1990 to 1996 and an international
equity trader at TIAA-CREF from 1985 to 1990. She received her B.B.A. degree
from Barite College in 1985.

Growth & Income Portfolio. Brian S. Poser, Portfolio Manager of the
Growth & Income Portfolio also manages other Warburg Pincus Funds. Prior to
joining Warburg, Mr. Poser was employed from 1987 to 1996 by Fidelity
Investments, where, most recently, he was the vice president and portfolio
manager of the Fidelity Equity-Income II Fund. Mr. Poser received an
undergraduate degree from Northwestern University and his M.B.A. in finance from
the University of Chicago.

44
<PAGE> 101
Post-Venture Capital Portfolio. Elizabeth B. Dater is Co-Portfolio
Manager of the Post-Venture Capital Portfolio and manages other Warburg Pincus
Funds. Prior to joining Warburg in 1978, she was a vice president of Research at
Fiduciary Trust Company of New York and an institutional sales assistant at
Lehman Brothers. Ms. Dater has been a regular panelist on Maryland Public
Television's Wall Street Week with Louis Rukeyser since 1976. Ms. Dater earned a
B.A. degree from Boston University in Massachusetts.

Stephen J. Lurito is Co-Portfolio Manager of the Post-Venture Capital
Portfolio and manages other Warburg Pincus Funds. Mr. Lurito 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 of the Post-Venture Portfolio and of other Warburg Pincus Funds. Prior
to joining Warburg in October 1994, Mr. Janis was a vice president and senior
research analyst at U.S. Trust Company of New York. He earned B.A. and M.B.A.
degrees from the University of Pennsylvania. Prior to joining Warburg in
September 1994, Mr. Nawn was a senior sector analyst and portfolio manager at
the Dreyfus Corporation. He earned a B.A. degree from the Colorado College and
an M.B.A. degree from the University of Texas.

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

Prior to joining a predecessor of Abbott in 1989, Mr. Gray was an
assistant vice president at Commerzbank Capital Markets Corporation, where he
managed the area responsible for underwriting and distributing all new issues of
securities. Prior to this, he was an associate with Credit Commercial de France
in Paris in the Corporate Finance Department. Mr. Gray received his B.A. in
History from the University of Pennsylvania and his M.B.A. in Finance from New
York University. He is also a Chartered Financial Analyst.

Small Company Growth Portfolio. Ms. Dater and Mr. Lurito are also
Co-Portfolio Managers of the Small Company Growth Portfolio (see biographies
above).

Investment Advisers and Co-Administrators

Warburg serves as investment adviser to the Portfolios, Abbott serves
as sub-investment adviser to the Post-Venture Capital Portfolio, and Counsellors
Funds Service, Inc. ("Counsellors Service") and PFPC serve as co-administrators
to the Trust pursuant to separate written agreements (the "Advisory Agreements,"
the "Counsellors Service Co-Administration Agreements" and the "PFPC
Co-Administration Agreements," respectively). These fees are

45
<PAGE> 102

calculated at an annual rate based on a percentage of a Portfolio's average
daily net assets. Warburg, subject to the control of the Trust's officers and
the Board, manages the investment and reinvestment of the assets of the
Portfolios in accordance with each Portfolio's investment objective and stated
investment policies. Warburg makes investment decisions for each Portfolio and
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 employees a support staff of management personnel to
provide services to the Trust and furnishes the Trust with office space,
furnishings and equipment. Abbott, in accordance with the investment objective
and polices of the Post-Venture Capital Portfolio, makes investment decisions
for the Portfolio regarding investments in Private Funds, effects transactions
in Private Funds on behalf of the Portfolio and assists in other administrative
functions relating to investments in Private Funds.

For the services provided by Warburg, the Trust pays Warburg a fee
calculated at an annual rate equal to percentages of the relevant Portfolio's
average daily net assets, as follows: Emerging Markets Portfolio -- 1.25%,
Growth & Income Portfolio -- .75%, International Equity Portfolio -- 1.00%, and
Small Company Growth Portfolio -- .90%. For the services provided by Warburg,
the Post-Venture Capital Portfolio pays Warburg a fee calculated at an annual
rate of 1.25% of the Portfolio's average daily net assets, out of which Warburg
pays Abbott for sub-investment advisory services. Warburg and the Portfolios'
co-administrators may voluntarily waive a portion of their fees from time to
time and temporarily limit the expenses to be borne by the Portfolios.

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 each Portfolio and its
various service providers, furnishing corporate secretarial services, which
include preparing materials for meetings of the Board, preparing proxy
statements and annual and semiannual reports, assisting in the preparation of
tax returns and developing and monitoring 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.

As a co-administrator, PFPC calculates each Portfolio's net asset
value, provides all accounting services for the Portfolios and assists in
related aspects of the Portfolios' operations. As compensation, each of the
Post-Venture Capital and Small Company Growth Portfolios pays PFPC a fee
calculated at an annual rate of .10% of the Portfolio's first $500 million in
average daily net assets, .075% of the next $1 billion in average daily net
assets, and .05% of average daily net assets over $1.5 billion. Each of the
Emerging Markets and International Equity Portfolios 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. The Growth & Income Portfolio pays PFPC a fee
calculated at an annual rate of .15% of the Portfolio's first $500 million in
average daily net assets, .10% of the next $1 billion in

46
<PAGE> 103

average daily net assets and .05% of average daily net assets over $1.5 billion.
PFPC has its principal offices at 400 Bellevue Parkway, Wilmington, Delaware
19809.

The advisory fees earned by Warburg and the co-administration fees
earned by PFPC and Counsellors Service, respectively, for the last three fiscal
years are described below.

Advisory Fees earned by Warburg for the fiscal years ended December 31 (portions
of fees waived, if any, are noted in parentheses next to the amount earned)*

<TABLE>
<CAPTION>
1996 1997 1998
---- ---- ----
<S> <C> <C> <C> <C> <C>
Emerging Markets N/A N/A N/A N/A
Growth & Income N/A N/A $2,055 ($2,055)
International Equity $2,217,681 ($79,157) $3,592,157 0
Post-Venture Capital ** $6,696 ($6,696) $386,073 ($55,829)
Small Company Growth $2,100,487 ($10,689) $4,349,002 0
</TABLE>

- ----------

* During the fiscal period ended December 31, 1996, Warburg also reimbursed
expenses of $15,007 to the Post-Venture Capital Portfolio. During the
fiscal year ended December 31, 1997, Warburg also reimbursed expenses of
$23,347 to the Growth & Income Portfolio.

** From its investment advisory fee, Warburg pays Abbott a sub-investment
advisory fee for its services to the Post-Venture Capital Portfolio. No
compensation is paid by the Post-Venture Capital Portfolio to Abbott for
its sub-investment advisory services.

Co-Administration Fees earned by PFPC for the fiscal years ended December 31
(portions of fees waived, if any, are noted in parentheses next to the amount
earned)

<TABLE>
<CAPTION>
1996 1997 1998
---- ---- ----
<S> <C> <C> <C> <C> <C>
Emerging Markets N/A N/A N/A N/A
Growth & Income N/A N/A $411 ($411)
International Equity $263,565 ($2,836) $409,216 0
Post-Venture Capital $536 ($536) $30,886 ($30,886)
Small Company Growth $233,388 ($1,188) $471,801 0
</TABLE>

Co-Administration Fees earned by Counsellors Service for the fiscal years ended
December 31

<TABLE>
<CAPTION>
1996 1997 1998
---- ---- ----
<S> <C> <C> <C>
Emerging Markets N/A N/A
Growth & Income N/A $274
</TABLE>

47
<PAGE> 104

<TABLE>
<S> <C> <C>
International Equity $221,792 $359,216
Post-Venture Capital $536 $30,886
Small Company Growth $233,388 $483,223
</TABLE>

Custodian and Transfer Agent

PNC Bank, National Association ("PNC") serves as custodian of each
Portfolio's U.S. assets and State Street Bank and Trust Company ("State Street")
serves as custodian of the each Portfolio's non-U.S. assets. Each custodian
serves pursuant to separate custodian agreements (the "Custodian Agreements").
Under the Custodian Agreements, PNC and State Street each (i) maintains a
separate account or accounts in the name of each Portfolio, (ii) holds and
transfers portfolio securities on account of each Portfolio, (iii) makes
receipts and disbursements of money on behalf of each Portfolio, (iv) collects
and receives all income and other payments and distributions on account of each
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. State Street is authorized to
select one or more foreign banking institutions and foreign securities
depositaries as sub-custodian on behalf of the relevant Portfolio and PNC is
authorized to select one or more domestic banks or trust companies to serve as
sub-custodian on behalf of the Portfolios. PNC is an indirect, wholly owned
subsidiary of PNC Bank Corp., and its principal business address is 1600 Market
Street, Philadelphia, Pennsylvania 19103. The principal business address of
State Street is 225 Franklin Street, Boston, Massachusetts 02110.

State Street also serves 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 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., an affiliate of State Street ("BFDS"), responsibility for most
shareholder servicing functions. BFDS's principal business address is 2 Heritage
Drive, Boston, Massachusetts 02171.

Distributor

Counsellors Securities, a wholly owned subsidiary of Warburg, acts as
the distributor of the Portfolios. Counsellors Securities' principal business
address is 466 Lexington Avenue, New York, New York 10017.

Organization of the Trust

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 six series

48
<PAGE> 105

have been authorized, five 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.

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.

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 all 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.

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

49
<PAGE> 106
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

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.

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 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 intends to
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 continue to qualify to be treated as a
regulated investment company each taxable year under the Code. If it qualifies
as a regulated investment company, a Portfolio will effectively pay no federal
income taxes on its

50
<PAGE> 107

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 so qualify, a Portfolio must, among other things: (a) derive at
least 90% of its gross income in each taxable year from dividends, interest,
payments with respect to securities, loans and gains from the sale or other
disposition of stock, securities or foreign currencies, or other income
(including, but not limited to, gains from options, futures or forward
contracts) derived with respect to its business of investing in such stock,
securities or currencies; and (b) diversify its holdings so that, at the end of
each quarter of the Portfolio's taxable year, (i) at least 50% of the market
value of the Portfolio's assets is represented by cash, securities of other
regulated investment companies, U.S. Government securities and other securities,
with such other securities limited, in respect of any one issuer, to an amount
not greater than 5% of the Portfolio's assets and not greater than 10% of the
outstanding voting securities of such issuer and (ii) not more than 25% of the
value of its assets is invested in the securities (other than U.S. Government
Securities or securities of other regulated investment companies) of any one
issuer or any two or more issuers that the Portfolio controls and are determined
to be engaged in the same or similar trades or businesses or related trades or
businesses. Each Portfolio expects that all of its foreign currency gains will
be directly related to its principal business of investing in stocks and
securities.

If, in any taxable year, a Portfolio fails to qualify as a regulated
investment company under the Code or fails to meet the distribution requirement,
it would be taxed in the same manner as an ordinary corporation and
distributions to its shareholders would not be deductible by the Portfolio in
computing its taxable income. In addition, in the event of a failure to qualify,
the Portfolio's distributions, to the extent derived from the Portfolio's
current or accumulated earnings and profits would constitute dividends (eligible
for the corporate dividends-received deduction) which are taxable to
shareholders as ordinary income, even though those distributions might otherwise
(at least in part) have been treated in the shareholders' hands as long-term
capital gains. If a Portfolio fails to qualify as a regulated investment company
in any year, it must pay out its earnings and profits accumulated in that year
in order to qualify again as a regulated investment company. In addition, if a
Portfolio failed to qualify as a regulated investment company for a period
greater than one taxable year, the Portfolio may be required to recognize any
net built-in gains (the excess of the aggregate gains, including items of
income, over aggregate losses that would have been realized if it had been
liquidated) in order to qualify as a regulated investment company in a
subsequent year.

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 agency or instrumentality are treated as securities of
separate issuers. The Treasury Department has indicated that it may issue future
pronouncements addressing the

51
<PAGE> 108
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 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 short sales against the box, if any, and transactions in
foreign currencies, forward contracts, options and futures contracts (including
options and futures 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 realized by the Portfolio (i.e., may affect whether gains or
losses are ordinary or capital), accelerate recognition of income to the
Portfolio and defer Portfolio losses. These rules could therefore affect the
character, amount and timing of distributions to shareholders. These provisions
also (a) will require a Portfolio to mark-to-market certain types of the
positions in its portfolio (i.e., treat them as if they were closed out) and (b)
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 engages in a short
sale against-the-box or acquires any foreign currency, forward contract, option,
futures contract or hedged investment in order to mitigate the effect of these
rules and prevent disqualification of the Portfolio as a regulated investment
company.

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

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.

52
<PAGE> 109
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 Qualified Electing Fund treatment,
which would require the Portfolio 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 October 9, 1997, the Ways and Means Committee of
the U.S. Congress approved technical corrections legislation that would treat
PFICs as pass-through entities for purposes of applying the 20% rate to the
portion of a PFIC's long-term gain attributable to assets held more than 18
months.

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

Income received by a Portfolio from investments in foreign securities
may be subject to withholding and other taxes imposed by foreign countries. The
foreign taxes paid by a Portfolio will reduce its return from investments in the
Portfolio.

DETERMINATION OF PERFORMANCE

From time to time, a Portfolio may quote its total return in
advertisements or in reports and other communications to shareholders. The
aggregate total return for the fiscal periods ended December 31, 1998, were as
follows (performance figures calculated without the waiver of fees by a
Portfolio's service provider(s), if any, are noted in italics):

[TO BE UPDATED]

53
<PAGE> 110

<TABLE>
<CAPTION>
One-Year Since Inception (Date)
-------- ----------------------
<S> <C> <C> <C> <C>
Emerging Markets (12/31/97)
Growth & Income N/A N/A 3.89% 2.50%*
(10/31/97)

International Equity (2.26%) (2.26%) 5.85% 5.77%
(6/30/95)

Post-Venture Capital 13.34% 13.01% 8.37% 8.13%
(9/30/96)

Small Company Growth 15.73% 15.73% 22.03% 22.03%
(6/30/95)
</TABLE>

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

* Non-annualized.

These total return figures show the average percentage change in value
of an investment in a Portfolio from the beginning of the measurement period to
the end of the measurement 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 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.

When considering average total return figures for periods longer than
one year, it is important to note that the annual total return for one year in
the period might have been greater or less than the average for the entire
period. When considering total return figures for periods shorter than one year,
investors should bear in mind that such return may not be representative of any
Portfolio's return over a longer market cycle. A Portfolio may also advertise
aggregate total return figures for various periods, representing the cumulative
change in value of an investment in the relevant Portfolio for the specific
period. Aggregate and average total returns may be shown by means of

54
<PAGE> 111

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).

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 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.

A Portfolio may compare its performance with (i) that of other mutual
funds with similar investment objectives and policies, which may be based on the
rankings prepared by Lipper Analytical Services, Inc. or similar investment
services that monitor the performance of mutual funds; (ii) in the case of the
Post-Venture Capital Portfolio, with the Nasdaq Industrials Index and
appropriate indexes prepared by Frank Russell Company relating to securities
represented in the Portfolio, which are unmanaged indexes of common stocks; in
the case of the Small Company Growth Portfolio, with appropriate indexes
prepared by Frank Russell company relating to securities represented in the
Portfolio; in the case of the Growth & Income Portfolio, with the S&P 500 Index,
which is an unmanaged index; in the case of the Emerging Markets Portfolio, with
the Morgan Stanley Capital International Emerging Markets Free Index; and in the
case of the International Equity Portfolio, the Morgan Stanley Capital
International All Country World Except U.S. Index and the Morgan Stanley Capital
International Europe, Australia, Far East ("EAFE") Index, which are unmanaged
indexes of common stocks; or (iii) other appropriate indexes of investment
securities or with data developed by Warburg derived from such indexes. A
Portfolio may also include evaluations of the Portfolio published by nationally
recognized ranking services and by financial publications such as Barron's,
Business Week, Financial Times, Forbes, Fortune, Inc., Institutional Investor,
Investor's Business Daily, Money, Morningstar, Mutual Fund Magazine, SmartMoney,
The Wall Street Journal and Worth. Morningstar, Inc. rates funds in broad
categories based on risk/reward analyses over various time periods. In addition,
each Portfolio may from time to time compare its expense ratio to that of
investment companies with similar objectives and policies, based on data
generated by Lipper Analytical Services, Inc. or similar investment services
that monitor mutual funds.

55
<PAGE> 112

In reports or other communications to investors or in advertising, each
Portfolio 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 updates of Portfolio activity, which may include a discussion of
significant portfolio holdings; analysis of holdings by industry, country,
credit quality and other characteristics; and comparison and analysis of the
Portfolio with respect to relevant market and industry benchmarks. 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 measures of risk, the continuum
of risk and return relating to different investments and the potential impact of
foreign stocks on a portfolio otherwise composed of domestic securities.

Warburg 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.

To illustrate this point, the performance of international equity
securities, as measured by the Morgan Stanley Capital International (EAFE)
Europe, Australasia, Far East Index (the "EAFE Index"), has equaled or exceeded
that of domestic equity securities, as measured by the Standard & Poor's 500
Composite Stock Index (the "S&P 500 Index") in 14 of the last 26 years. The
following table compares annual total returns of the EAFE Index and the S&P 500
Index for the calendar years shown.

EAFE INDEX VS. S&P 500 INDEX

1972-1998

ANNUAL TOTAL RETURN+

<TABLE>
<CAPTION>
YEAR EAFE(R)INDEx S&P 500 INDEx
---- ----------- -------------
<S> <C> <C>
1972* 33.28 15.63
1973* -16.82 -17.37
1974* -25.60 -29.72
1975 31.21 31.55
1976 -.36 19.15
1977* 14.61 -11.50
1978* 28.91 1.06
1979 1.82 12.31
1980 19.01 25.77
1981* -4.85 -9.73
1982 -4.63 14.76
1983* 20.91 17.27
1984* 5.02 1.40
1985* 52.97 26.33
1986* 66.80 14.62
1987* 23.18 2.03
</TABLE>

56
<PAGE> 113
EAFE INDEX VS. S&P 500 INDEX

1972-1998

ANNUAL TOTAL RETURN+

<TABLE>
<CAPTION>
YEAR EAFE(R)INDEx S&P 500 INDEx
---- ----------- -------------
<S> <C> <C>
1988* 26.66 12.40
1989 9.22 27.25
1990 -24.71 -6.56
1991 10.19 26.31
1992 -13.89 4.46
1993* 30.49 7.06
1994* 6.24 -1.54
1995 9.42 34.11
1996 4.40 20.26
1997 0.24 31.01
1998
</TABLE>

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

+ Without reinvestment of dividends.

* The EAFE Index has outperformed the S&P 500 Index 14 out of the last 26
years.

Source: Morgan Stanley Capital International; Bloomberg Financial Markets

The quoted performance information shown above is not intended
to indicate the future performance of the International Equity Portfolio.
Advertising or supplemental sales literature relating to the Portfolio may
describe the percentage decline from all-time high levels for certain foreign
stock markets. It may also describe how the Portfolio differs from the EAFE(R)
Index in composition.

INDEPENDENT ACCOUNTANTS AND COUNSEL

PricewaterhouseCoopers LLP ("PwC"), with principal offices at
2400 Eleven Penn Center, Philadelphia, Pennsylvania 19103, serves as independent
accountants for the Trust. The financial statements for the Trust that are
incorporated by reference in this Statement of Additional Information have been
audited by PwC, and have been included herein in reliance upon the report of
such firm of independent accountants given upon their authority as experts in
accounting and auditing.

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

FINANCIAL STATEMENTS

The Trust's audited Annual Report dated December 31, 1998,
which either accompanies this Statement of Additional Information or has
previously been provided to the investor to whom this Statement of Additional
Information is being sent, is incorporated herein by reference with respect to
all information regarding the Portfolios included therein. The Trust will
furnish without charge a copy of its Annual Report upon request by calling the
Trust at 1-800-222-8977.

57
<PAGE> 114
MISCELLANEOUS

As of [March 31, 1999], the following persons owned of record
5% or more of each Portfolio's outstanding shares:

[TO BE PROVIDED]

58
<PAGE> 115

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.

A-1
<PAGE> 116
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.

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

A-2

<PAGE> 117

PART C

OTHER INFORMATION

Item 23. Exhibits

<TABLE>
<CAPTION>
Exhibit No. Description of Exhibit
----------- ----------------------
<S> <C>
a(1) Declaration of Trust.(1)

(2) Amendment to Declaration of Trust.(2)

(3) Designation of Series relating to addition of Post-Venture Capital and
Emerging Markets Portfolios.(3)

(4) Designation of Series relating to addition of Growth & Income Portfolio.(4)

(5) Designation of Series relating to addition of Emerging Growth Portfolio.(5)

b(1) By-Laws.(1)

(2) Amendment to By-Laws.(6)
</TABLE>

(1) Incorporated by reference to Registrant's Registration Statement on
Form N-1A filed with the Commission on March 17, 1995.

(2) Incorporated by reference to Pre-Effective Amendment No. 1 to
Registrant's Registration Statement on Form N-1A filed with the
Commission on June 14, 1995.

(3) Incorporated by reference to Post-Effective Amendment No. 2 to
Registrant's Registration Statement on Form N-1A, filed with the
Commission on April 18, 1996.

(4) Incorporated by reference to Post-Effective Amendment No. 4 to
Registrant's Registration Statement on Form N-1A, filed with the
Commission on August 11, 1997.

(5) Incorporated by reference to Post-Effective Amendment No. 6 to
Registrant's Registration Statement on Form N-1A, filed with the
Commission on November 25, 1998.

(6) Incorporated by reference; material provisions of this exhibit are
substantially similar to those of the corresponding exhibit to
Post-Effective Amendment No. 19 to the Registration Statement on Form
N-1A of Warburg, Pincus Capital Appreciation Fund filed on February
23, 1998

C-1
<PAGE> 118

<TABLE>
<CAPTION>
Exhibit No. Description of Exhibit
----------- ----------------------
<S> <C>
c Form of Share Certificate.(2)

d(1) Forms of Investment Advisory Agreements pertaining to the International
Equity and Small Company Growth Portfolios.(2)

(2) Forms of Investment Advisory Agreements pertaining to the Post-Venture
Capital and Emerging Markets Portfolios.(3)

(3) Form of Sub-Investment Advisory Agreement pertaining to the Post-Venture
Capital Portfolio.(3)

(4) Form of Investment Advisory Agreement pertaining to the Growth & Income
Portfolio.(4)

(5) Form of Investment Advisory Agreement pertaining to the Emerging Growth
Portfolio.(5)

e(1) Form of Distribution Agreement.(2).

(2) Form of Letter Agreement pertaining to inclusion of the Growth & Income
Portfolio to the existing Distribution Agreement.(4)

(3) Form of Letter Agreement pertaining to inclusion of the Emerging Growth
Portfolio to the existing Distribution Agreement.(5)

f Not applicable

g(1) Form of Custodian Agreement with PNC Bank, National Association.(2)

(2) Form of Custodian Agreement with State Street Bank and Trust Company.(7)
</TABLE>

(Securities Act File No. 33-12344; Investment Company Act File No.
811-5041).

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

C-2
<PAGE> 119

<TABLE>
<CAPTION>
Exhibit No. Description of Exhibit
----------- ----------------------
<S> <C>
(3) Form of Custodian Services Agreement with PNC Bank, National Association and
the Growth & Income Portfolio.(4)

(4) Form of Custodian Services Agreement with PNC Bank, National Association and
the Emerging Growth Portfolio.(5)

h(1) Form of Transfer Agency Agreement.(2)

(2) Form of Co-Administration Agreement with Counsellors Funds Service, Inc.(2)

(3) Form of Co-Administration Agreement with PFPC Inc.(2)

(4) Form of Letter Agreement between Registrant and PFPC Inc. pertaining to
inclusion of the Post-Venture Capital and Emerging Markets Portfolios to the
existing Co-Administration Agreement.(3)

(5) Form of Participation Agreement.(2)

(6) Form of Co-Administration Agreement between Registrant and PFPC Inc.
pertaining to inclusion of the Growth & Income Portfolio.(4)

(7) Form of Co-Administration Agreement between Registrant and Counsellors Funds
Service, Inc. pertaining to inclusion of the Growth & Income Portfolio.(4)

(8) Form of Letter Agreement between Registrant and State Street pertaining
to the inclusion of the Growth & Income Portfolio under the Transfer Agency and
Service Agreement.(4)

(9) Form of Letter Agreement between Registrant and PFPC Inc. pertaining to
inclusion of the Emerging Growth Portfolio under the existing
Co-Administration Agreement.(5)
</TABLE>

C-3
<PAGE> 120

<TABLE>
<CAPTION>
Exhibit No. Description of Exhibit
----------- ----------------------
<S> <C>
(10) Form of Letter Agreement between Registrant and State Street pertaining
to the inclusion of the Emerging Growth Portfolio under the Transfer Agency and
Service Agreement.(5)

i(1) Opinion and Consent of Willkie Farr & Gallagher, counsel to the Trust.(8)

(2) Opinion of Sullivan & Worcester LLP.(5)

j Consent of PricewaterhouseCoopers LLP, independent accountants.(8)

l(1) Purchase Agreement pertaining to the International Equity and Small Company
Growth Portfolios.(2)

(2) Form of Purchase Agreement pertaining to the Post-Venture Capital and
Emerging Markets Portfolios.(3)

(3) Form of Purchase Agreement pertaining to the Growth & Income Portfolio.(4)

(4) Form of Purchase Agreement pertaining to the Emerging Growth Portfolio.(5)

m Not applicable

n Financial Data Schedules.(8)

o Not applicable.
</TABLE>

Item 24. Persons Controlled by or Under Common Control
with Registrant

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

(8) To be filed by amendment.

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International (Bermuda), Ltd., a Bermuda corporation; Warburg, Pincus Asset
Management International, Inc., a Delaware corporation; Warburg Pincus Asset
Management (Japan), Inc., a Japanese corporation; and Warburg Pincus Asset
Management (Dublin) Limited, an Irish corporation.

Item 25. Indemnification

Registrant, and officers and directors of Warburg, Counsellors
Securities, Inc., Registrant's distributor ("Counsellors Securities"), and
Registrant are covered by insurance policies indemnifying them for liability
incurred in connection with the operation of Registrant. Discussion of this
coverage is incorporated by reference to Item 27 of Part C of the Trust's
Registration Statement filed on March 17, 1995 (Securities Act File No.
33-58125).

Item 26. Business and Other Connections of Investment Adviser

Warburg, a wholly owned subsidiary of Warburg, Pincus Asset
Management Holdings, Inc., acts as investment adviser to Registrant. Warburg
renders investment advice to a wide variety of individual and institutional
clients. The list required by this Item 26 of officers and directors of Warburg,
together with information as to their other business, profession, vocation or
employment of a substantial nature during the past two years, is incorporated by
reference to Schedules A and D of Form ADV filed by Warburg (SEC File No.
801-07321).

Abbott Capital Management, LLC ("Abbott") acts as
sub-investment adviser for the Post-Venture Capital Portfolio. Abbott renders
investment advice and provides full-service private equity programs to clients.
The list required by this Item 26 of Officers and Directors of Abbott, together
with information as to their other business, profession, vocation, or employment
of a substantial nature during the past two years, is incorporated by reference
to Schedules A and D of Form ADV filed by Abbott (SEC File No. 801-27914).

Item 27. Principal Underwriter

(a) Counsellors Securities will act as distributor for
Registrant. Counsellors Securities currently acts as distributor for Warburg
Pincus Balanced Fund; Warburg Pincus Capital Appreciation Fund; Warburg Pincus
Cash Reserve Fund; Warburg Pincus Central & Eastern Europe Fund; Warburg Pincus
Emerging Growth Fund; Warburg Pincus Emerging Markets Fund; Warburg Pincus
Emerging Markets II Fund; Warburg Pincus European Equity Fund; Warburg Pincus
Fixed Income Fund; Warburg Pincus Global Fixed Income Fund; Warburg Pincus
Global Post-Venture Capital Fund; Warburg Pincus Global Telecommunications Fund;
Warburg Pincus Growth & Income Fund; Warburg Pincus Health Sciences Fund;

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<PAGE> 122

Warburg Pincus High Yield Fund; Warburg Pincus Institutional Fund; Warburg
Pincus Intermediate Maturity Government Fund; Warburg Pincus International
Equity Fund; Warburg Pincus International Growth Fund; Warburg Pincus
International Small Company Fund; Warburg Pincus Japan Growth Fund; Warburg
Pincus Japan Small Company Fund; Warburg Pincus Long-Short Equity Fund; Warburg
Pincus Long-Short Market Neutral Fund; Warburg Pincus Major Foreign Markets
Fund; Warburg Pincus Municipal Bond Fund; Warburg Pincus New York Intermediate
Municipal Fund; Warburg Pincus New York Tax Exempt Fund; Warburg Pincus
Post-Venture Capital Fund; Warburg Pincus Select Economic Value Equity Fund;
Warburg Pincus Small Company Growth Fund; Warburg Pincus Small Company Value
Fund; Warburg Pincus Strategic Global Fixed Income Fund; Warburg Pincus
Strategic Value Fund; Warburg Pincus Trust II; Warburg Pincus U.S. Core Equity
Fund; Warburg Pincus U.S. Core Fixed Income Fund; Warburg Pincus WorldPerks
Money Market Fund; and Warburg Pincus WorldPerks Tax Free Money Market Fund.

(b) For information relating to each director and officer of
Counsellors Securities, reference is made to Form BD (SEC File No. 15-654) filed
by Counsellors Securities under the Securities Exchange Act of 1934.

Item 28. Location of Accounts and Records

(1) Warburg, Pincus Trust
335 Madison Avenue
New York, New York 10017
(Trust's Declaration of Trust, by-laws and minute
books)

(2) Counsellors Funds Service, Inc.
335 Madison Avenue
New York, New York 10017
(records relating to its functions as
co-administrator)

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

(4) Counsellors Securities Inc.
335 Madison Avenue
New York, New York 10017
(records relating to its functions as distributor)

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<PAGE> 123
(5) Warburg Pincus Asset Management, Inc.
466 Lexington Avenue
New York, New York 10017-3147
(records relating to its functions as investment
adviser)

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

(7) PNC Bank, National Association
Mutual Fund Custody Services
200 Stevens Drive
Suite 440
Lester, Pennsylvania 19113
(records relating to its functions as custodian)

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

Item 29. Management Services

Not applicable.

Item 30. Undertakings

Not applicable.

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<PAGE> 124
SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, as amended
(the "Securities Act"), and the Investment Company Act of 1940, as amended, the
Registrant has duly caused this Amendment to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of New York and the State of
New York, on the 18th day of February, 1999.

WARBURG, PINCUS TRUST

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

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

<TABLE>
<CAPTION>
Signature Title Date
- --------- ----- ----
<S> <C> <C>

/s/ John L. Furth Chairman of the Board of February 18, 1999
- --------------------------- Trustees
John L. Furth

/s/ Eugene L. Podsiadlo President February 18, 1999
- ---------------------------
Eugene L. Podsiadlo

/s/ Howard Conroy Vice President and Chief February 18, 1999
- --------------------------- Financial Officer
Howard Conroy

/s/ Daniel S. Madden Treasurer and Chief Accounting February 18, 1999
- --------------------------- Officer
Daniel S. Madden

/s/ Richard N. Cooper Trustee February 18, 1999
- ---------------------------
Richard N. Cooper

/s/ Jack W. Fritz Trustee February 18, 1999
- ---------------------------
Jack W. Fritz

/s/ Jeffrey E. Garten Trustee February 18, 1999
- ---------------------------
Jeffrey E. Garten

/s/ Thomas A. Melfe Trustee February 18, 1999
- ---------------------------
Thomas A. Melfe

/s/ Arnold M. Reichman Trustee February 18, 1999
- ---------------------------
Arnold M. Reichman

/s/ Alexander B. Trowbridge Trustee February 18, 1999
- ---------------------------
Alexander B. Trowbridge
</TABLE>

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<PAGE> 125
INDEX TO EXHIBITS

Exhibit No. Description of Exhibit

NONE