WARBURG PINCUS POST VENTURE CAPITAL FUND INC, N-1A EL/A, 1995-09-06

WARBURG PINCUS POST VENTURE CAPITAL FUND INC
N-1A EL/A, 1995-09-06

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<PAGE>1

As filed with the U.S. Securities and Exchange Commission
on September 6, 1995

Securities Act File No. 33-61225
Investment Company Act File No. 811-07327

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. 1 [X]

Post-Effective Amendment No. [ ]

and/or

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

Amendment No. 1 [X]

(Check appropriate box or boxes)

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

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

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

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

Copy to:

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

<PAGE>2

Approximate Date of Proposed Public Offering: As soon as practicable after
the effective date of this Registration Statement.

CALCULATION OF REGISTRATION FEE UNDER THE SECURITIES ACT OF 1933

Proposed
Title of Securities Amount Being Proposed Maximum Offering Maximum Aggregate Offering Amount of Registration
Being Registered Registered Price per Unit Price Fee
------------------- ------------ ------------------------- -------------------------- ----------------------
<S> <C> <C> <C> <C>

Shares of
beneficial
interest, $.001 par
value per share
Indefinite* Indefinite* Indefinite* $500

</TABLE>

____________________

* An indefinite number of shares of beneficial interest of the Registrant
is being registered by this Registration Statement pursuant to Rule 24f-2
under the Investment Company Act of 1940, as amended (the "1940 Act").

The Registrant hereby amends this Registration Statement on such
date or dates as may be necessary to delay its effective date until the
Registrant shall file a further amendment which specifically states that this
Registration Statement shall thereafter become effective in accordance with
Section 8(a) of the Securities Act of 1933, as amended (the "1933 Act"), or
until the Registration Statement shall become effective on such date as the
Commission, acting pursuant to said Section 8(a), may determine.

<PAGE>3

WARBURG, PINCUS POST-VENTURE CAPITAL FUND, INC.

FORM N-1A

CROSS REFERENCE SHEET

Part A Common and Series 2 Shares
Item No. Prospectus Heading
-------- --------------------------

1. Cover Page . . . . . . . Cover Page

2. Synopsis . . . . . . . . The Fund's Expenses

3. Condensed Financial
Information . . . . . . Financial Highlights;
Performance

4. General Description of
Registrant . . . . . . . Cover Page; Investment
Objective and Policies;
Investment Guidelines;
General Information

5. Management of the Fund . Management of the Fund

6. Capital Stock and Other
Securities . . . . . . . General Information;
Shareholder Servicing

7. Purchase of Securities
Being Offered . . . . . How to Purchase Shares;
Management of the Fund;
Shareholder Servicing

8. Redemption or Repurchase How to Redeem and Exchange
Shares

9. Legal Proceedings . . . Not applicable

<PAGE>4

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

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

11. Table of Contents . . . Contents

12. General Information and
History . . . . . . . . Management of the Fund--
Organization of the Fund;
Notes to Financial Statements;
See Prospectuses--"General
Information"

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

14. Management of the
Registrant . . . . . . . Management of the Fund; See
Prospectuses--"Management of
the Fund"

15. Control Persons and
Principal Holders of
Securities . . . . . . . Management of the Fund;
Miscellaneous; See
Prospectuses--"Management of
the Fund"

16. Investment Advisory and
Other Services . . . . . Management of the Fund; See
Prospectuses--"Management of
the Fund" and "Shareholder
Servicing"

17. Brokerage Allocation . . Investment Policies--Portfolio
Transactions

18. Capital Stock and Other
Securities . . . . . . . Management of the Fund--
Organization of the Fund and
Shareholder Servicing; See
Prospectuses--"General
Information"

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

<PAGE>5
Part B Statement of Additional
Item No. Information Heading
-------- -----------------------

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

21. Underwriters . . . . . . Management of the Fund; See
Prospectuses--"Management of
the Fund" and "Shareholder
Servicing"

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

23. Financial Statements . . Report of Coopers & Lybrand
L.L.P., Independent Auditors;
Financial Statement

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

<PAGE>

SUBJECT TO COMPLETION, DATED SEPTEMBER 6, 1995

[LOGO]

PROSPECTUS

SEPTEMBER , 1995

[ ] WARBURG PINCUS CAPITAL APPRECIATION FUND
[ ] WARBURG PINCUS EMERGING GROWTH FUND
[ ] WARBURG PINCUS POST-VENTURE CAPITAL FUND
[ ] WARBURG PINCUS INTERNATIONAL EQUITY FUND
[ ] WARBURG PINCUS JAPAN OTC FUND

<PAGE>

SUBJECT TO COMPLETION, DATED SEPTEMBER 6, 1995

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

September , 1995

PROSPECTUS

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

WARBURG, PINCUS CAPITAL APPRECIATION FUND seeks long-term capital appreciation
by investing principally in equity securities of medium-sized domestic
companies.

WARBURG, PINCUS EMERGING GROWTH FUND seeks maximum capital appreciation by
investing in equity securities of small- to medium-sized companies in the United
States with emerging or renewed growth potential.

WARBURG, PINCUS POST-VENTURE CAPITAL FUND seeks long-term growth of capital by
investing principally in equity securities of issuers in their post-venture
capital stage of development.

WARBURG, PINCUS INTERNATIONAL EQUITY FUND seeks long-term capital appreciation
by investing in international equity securities that are considered by the
Fund's investment adviser to have above-average potential for appreciation.

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

International investing entails special risk considerations, including currency
fluctuations, lower liquidity, economic instability, political uncertainty and
differences in accounting methods. See 'Risk Factors and Special
Considerations.'
NO LOAD CLASS OF COMMON SHARES

Each Fund offers two classes of shares. A class of Common Shares that is 'no
load' is offered by this Prospectus (i) directly from the Funds' distributor,
Counsellors Securities Inc., and (ii) through various brokerage firms including
Charles Schwab & Company, Inc. Mutual Fund OneSourceTM Program; Fidelity
Brokerage Services, Inc. FundsNetworkTM Program; Jack White & Company, Inc. and
Waterhouse Securities, Inc. The availability of the Japan OTC Fund through these
brokerage firms may vary. Common Shares of the Japan OTC Fund and the
Post-Venture Fund are subject to a 12b-1 fee of .25% per annum.

LOW MINIMUM INVESTMENT

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

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

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

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

INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.

<PAGE>
THE FUNDS' EXPENSES

Each of Warburg, Pincus Capital Appreciation Fund (the 'Capital
Appreciation Fund'), Warburg, Pincus Emerging Growth Fund (the 'Emerging Growth
Fund'), Warburg, Pincus International Equity Fund (the 'International Equity
Fund'), Warburg, Pincus Japan OTC Fund (the 'Japan OTC Fund') and Warburg,
Pincus Post-Venture Capital Fund (the 'Post-Venture Fund' and, with the Capital
Appreciation Fund, the Emerging Growth Fund, the International Equity Fund and
the Japan OTC Fund, the 'Funds'; individually a 'Fund') currently offers two
separate classes of shares: Common Shares and Advisor Shares. For a description
of Advisor Shares see 'General Information' and 'Shareholder Servicing.' In
addition, Common Shares of the Japan OTC Fund and the Post-Venture Fund pay the
Fund's distributor a 12b-1 fee. See 'Management of the Funds -- Distributor.'

<TABLE>
<CAPTION>
CAPITAL EMERGING INTERNATIONAL JAPAN POST-
APPRECIATION GROWTH EQUITY OTC VENTURE
FUND FUND FUND FUND FUND
------------ -------- ------------- ----- ---------
<S> <C> <C> <C> <C> <C>
Shareholder Transaction Expenses
Maximum Sales Load Imposed on Purchases (as a percentage
of offering price).................................... 0 0 0 0 0
Redemption Fee (as a percentage of the value of shares
redeemed)............................................. 0 0 0 1.00 %* 0
Annual Fund Operating Expenses (after fee waivers) (as a
percentage of average net assets)
Management Fees......................................... .69% .86% 1.00% .97 % .69 %
12b-1 Fees.............................................. 0 0 0 .25 % .25 %
Other Expenses.......................................... .36% .36% .44% .53 % .71 %
------ -------- ------ ----- ---------
Total Fund Operating Expenses........................... 1.05% 1.22% 1.44% 1.75 % 1.65 %
EXAMPLE
You would pay the following expenses
on a $1,000 investment, assuming (1) 5% annual return
and (2) redemption at the end of each time period:
1 year.................................................. $ 11 $ 12 $ 15 $ 18 $ 17
3 years................................................. $ 33 $ 39 $ 46 $ 55 $ 52
5 years................................................. $ 58 $ 67 $ 79 n.a. n.a.
10 years................................................ $128 $148 $ 172 n.a. n.a.
</TABLE>

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

* Redemption fees are charged to shareholders redeeming their shares of the
Japan OTC Fund within six months after the date of purchase and are paid to
the Fund. The redemption fee will not apply to shares purchased prior to
September 30, 1995 or such later date as the Japan OTC Fund may determine.
See 'How to Redeem and Exchange Shares.'

<PAGE>

The expense table shows the costs and expenses that an investor will bear
directly or indirectly as a Common Shareholder of each Fund. With respect to the
Japan OTC Fund and the Post-Venture Fund, 'Other Expenses' are based on
estimated amounts to be charged in the current fiscal year. Absent the
anticipated waiver of fees by the Funds' investment adviser and co-
administrator, Management Fees for the Japan OTC and Post-Venture Funds would
each equal 1.25%, Other Expenses would equal .56% and .75%, respectively, and
Total Fund Operating Expenses would equal 2.06% and 2.25%, respectively. Certain
broker-dealers and financial institutions also may charge their clients fees in
connection with investments in a Fund's Common Shares, which fees are not
reflected in the table. Absent the voluntary waiver of a portion of the fees
payable to the Funds' investment adviser, the Management Fees for the Capital
Appreciation Fund and the Emerging Growth Fund would have equalled .70% and
.90%, respectively, and Total Fund Operating Expenses for the Capital
Appreciation Fund and the Emerging Growth Fund would have equalled 1.06% and
1.26%, respectively. No fees were waived in the case of the International Equity
Fund. The Example should not be considered a representation of past or future
expenses; actual Fund expenses may be greater or less than those shown.
Moreover, while the Example assumes a 5% annual return, each Fund's actual
performance will vary and may result in a return greater or less than 5%.
Long-term shareholders of the Japan OTC Fund or the Post-Venture Fund may pay
more than the economic equivalent of the maximum front-end sales charges
permitted by the National Association of Securities Dealers, Inc. (the 'NASD').

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

The information regarding each Fund for the two fiscal years/period ending
October 31, 1994 has been derived from information audited by Coopers & Lybrand
L.L.P., independent auditors, whose report dated December 12, 1994 appears in
the relevant Fund's Statement of
Additional Information. For the Capital Appreciation, Emerging Growth and
International Equity Funds, the information for the prior fiscal years/period
ending October 31, 1992 (up to three such years/period) has been audited by
Ernst & Young LLP, whose report was unqualified. The information for the six
months ended April 30, 1995 is unaudited. Financial information is not presented
for the Post-Venture Fund, which had not commenced operations as of April 30,
1995. Further information about the performance of the Funds (other than the
Post-Venture Fund) is contained in the Funds' annual report, dated October 31,
1994, copies of which may be obtained without charge by calling Warburg Pincus
Funds at (800) 257-5614.

<PAGE>
CAPITAL APPRECIATION FUND

<TABLE>
<CAPTION>
FOR THE
PERIOD
AUGUST 17,
1987
FOR THE SIX (COMMENCEMENT
MONTHS OF
ENDED OPERATIONS)
APRIL 30, FOR THE YEAR ENDED OCTOBER 31, THROUGH
1995 ------------------------------------------------------------------- OCTOBER 31,
(UNAUDITED) 1994 1993 1992 1991 1990 1989 1988 1987
----------- ------ ------ ------ ------ ------ ------ ------ -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period.... $ 14.29 $15.32 $13.30 $12.16 $ 9.78 $11.48 $ 9.47 $7.74 $ 10.00
----------- ------ ------ ------ ------ ------ ------ ------ ------
Income from Investment
Operations
Net Investment Income
(Loss)............... .03 .04 .05 .04 .15 .20 .19 .17 .04
Net Gains (Loss) from
Securities (both
realized and
unrealized).......... .75 .17 2.78 1.21 2.41 (1.28) 2.15 1.70 (2.30)
----------- ------ ------ ------ ------ ------ ------ ------ ------
Total from Investment
Operations........... .78 .21 2.83 1.25 2.56 (1.08) 2.34 1.87 (2.26)
----------- ------ ------ ------ ------ ------ ------ ------ ------
Less Distributions
Dividends (from net
investment income)... .00 (.05) (.05) (.06) (.18) (.21) (.19) (.14) .00
Distributions (from
capital gains)....... (.98) (1.19) (.76) (.05) .00 (.41) (.14) .00 .00
----------- ------ ------ ------ ------ ------ ------ ------ ------
Total Distributions.... (.98) (1.24) (.81) (.11) (.18) (.62) (.33) (.14) .00
----------- ------ ------ ------ ------ ------ ------ ------ ------
Net Asset Value, End of
Period................. $ 14.09 $14.29 $15.32 $13.30 $12.16 $ 9.78 $11.48 $9.47 $ 7.74
----------- ------ ------ ------ ------ ------ ------ ------ ------
----------- ------ ------ ------ ------ ------ ------ ------ ------
Total Return............. 13.25%* 1.65% 22.19% 10.40% 26.39% (10.11%) 25.42% 24.31% (71.26%)*
Ratios/Supplemental Data
Net Assets, End of Period
(000s)................. $181,109 $159,346 $159,251 $117,900 $115,191 $76,537 $56,952 $29,351 $17,917
Ratios to Average Daily
Net Assets:
Operating expenses..... 1.08%* 1.05% 1.01% 1.06% 1.08% 1.04% 1.10% 1.07% 1.00%*
Net investment
income............... .49%* .26% .30% .41% 1.27% 2.07% 1.90% 2.00% 1.88%*
Decrease reflected in
above expense ratios
due to
waivers/reimbursements... .00% .01% .00% .01% .00% .01% .08% .91% .84%*
Portfolio Turnover
Rate................... 153.53%* 51.87% 48.26% 55.83% 39.50% 37.10% 36.56% 33.16% 20.00%
</TABLE>

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

EMERGING GROWTH FUND

<TABLE>
<CAPTION>
FOR THE PERIOD
FOR THE SIX JANUARY 21, 1988
MONTHS (COMMENCEMENT
ENDED OF OPERATIONS)
APRIL 30, FOR THE YEAR ENDED OCTOBER 31, THROUGH
1995 ----------------------------------------------------------------- OCTOBER 31,
(UNAUDITED) 1994 1993 1992 1991 1990 1989 1988
----------- -------- -------- ------- ------- ------- ------- ----------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period.... $22.38 $23.74 $18.28 $16.97 $10.83 $13.58 $11.21 $10.00
----------- -------- -------- ------- ------- ------- ------- -------
Income from Investment
Operations
Net Investment Income
(Loss)............... (.05) .00 (.10) (.03) .05 .13 .16 .07
Net Gains (Loss) from
Securities (both
realized and
unrealized).......... 1.72 .00 5.93 1.71 6.16 (2.32) 2.51 1.18
----------- -------- -------- ------- ------- ------- ------- -------
Total from Investment
Operations........... 1.67 .00 5.83 1.68 6.21 (2.19) 2.67 1.25
----------- -------- -------- ------- ------- ------- ------- -------
Less Distributions
Dividends (from net
investment income)... .00 .00 .00 (.01) (.07) (.18) (.12) (.04)
Distributions (from
capital gains)....... .00 (1.36) (.37) (.36) .00 (.38) (.18) .00
----------- -------- -------- ------- ------- ------- ------- -------
Total Distributions.... .00 (1.36) (.37) (.37) (.07) (.56) (.30) (.04)
----------- -------- -------- ------- ------- ------- ------- -------
Net Asset Value, End of
Period................. $24.05 $22.38 $23.74 $18.28 $16.97 $10.83 $13.58 $11.21
----------- -------- -------- ------- ------- ------- ------- -------
----------- -------- -------- ------- ------- ------- ------- -------
Total Return............. 15.62%* .16% 32.28% 9.87% 57.57% (16.90%) 24.20% 16.34%*
Ratios/Supplemental Data
Net Assets, End of Period
(000s)................. $ 289,226 $240,664 $165,525 $99,562 $42,061 $23,075 $26,685 $ 10,439
Ratios to Average Daily
Net Assets:
Operating expenses..... 1.25%* 1.22% 1.23% 1.24% 1.25% 1.25% 1.25% 1.25%*
Net investment income
(loss)............... (.52%)* (.58%) (.60%) (.25%) .32% 1.05% 1.38% 1.10%*
Decrease reflected in
above expense ratios
due to
waivers/reimbursements.. .00% .04% .00% .08% .47% .42% .78% 3.36%*
Portfolio Turnover
Rate................... 97.48%* 60.38% 68.35% 63.35% 97.69% 107.30% 100.18% 82.21%
</TABLE>

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

<PAGE>
INTERNATIONAL EQUITY FUND

<TABLE>
<CAPTION>
FOR THE
PERIOD
MAY 2, 1989
FOR THE SIX (COMMENCEMENT
MONTHS OF
ENDED OPERATIONS)
APRIL 30, FOR THE YEAR ENDED OCTOBER 31, THROUGH
1995 --------------------------------------------------------- OCTOBER 31,
(UNAUDITED) 1994 1993 1992 1991 1990 1989
----------- ---------- -------- -------- ------- ------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period.... $20.51 $17.00 $12.22 $13.66 $11.81 $11.35 $10.00
----------- ---------- -------- -------- ------- ------- ------------
Income from Investment
Operations
Net Investment Income
(Loss)............... .09 .09 .09 .15 .19 .13 .05
Net Gains (Losses) from
Securities and
Foreign Currency
Related Items (both
realized and
unrealized).......... (1.89 ) 3.51 4.84 (1.28) 2.03 .55 1.30
----------- ---------- -------- -------- ------- ------- ------------
Total from Investment
Operations........... (1.80 ) 3.60 4.93 (1.13) 2.22 .68 1.35
----------- ---------- -------- -------- ------- ------- ------------
Less Distributions
Dividends (from net
investment income)... (.07 ) (.04) (.02) (.16) (.33) (.10) .00
Distributions in excess
of net investment
income............... .00 (.01) .00 .00 .00 .00 .00
Distributions (from
capital gains)....... (.53 ) (.04) (.13) (.15) (.04) (.12) .00
----------- ---------- -------- -------- ------- ------- ------------
Total Distributions.... (.60 ) (.09) (.15) (.31) (.37) (.22) .00
----------- ---------- -------- -------- ------- ------- ------------
Net Asset Value, End of
Period................. $18.11 $20.51 $17.00 $12.22 $13.66 $11.81 $11.35
----------- ---------- -------- -------- ------- ------- ------------
----------- ---------- -------- -------- ------- ------- ------------
Total Return............. (17.05 %)* 21.22% 40.68% (8.44%) 19.42% 5.92% 28.73%*
Ratios/Supplemental Data
Net Assets, End of Period
(000s)................. $1,796,703 $1,533,872 $378,661 $101,763 $72,553 $38,946 $ 13,260
Ratios to Average Daily
Net Assets:
Operating expenses..... 1.38 %* 1.44% 1.48% 1.49% 1.50% 1.46% 1.50%*
Net investment income
(loss)............... .90 %* .19% .38% .88% 1.19% 1.58% 1.33%*
Decrease reflected in
above expense ratios
due to
waivers/reimbursements... .00 % .00% .00% .07% .17% .38% .89%*
Portfolio Turnover
Rate................... 22.67 %* 17.02% 22.60% 53.29% 54.95% 66.12% 27.32%
</TABLE>

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

JAPAN OTC FUND

<TABLE>
<CAPTION>
FOR THE SIX FOR THE PERIOD
MONTHS SEPTEMBER 30, 1994
ENDED (COMMENCEMENT
APRIL 30, OF OPERATIONS)
1995 THROUGH
(UNAUDITED) OCTOBER 31, 1994
----------- ------------------
<S> <C> <C>
Net Asset Value,
Beginning of Period.... $9.85 $10.00
----------- -------
Income from Investment
Operations
Net Investment
Income............... .01 .00
Net Gains (Losses) from
Securities and
Foreign Currency
Related Items (both
realized and
unrealized).......... (2.01) (.15)
----------- -------
Total from Investment
Operations........... (2.00) (.15)
----------- -------
Less Distributions
Dividends (from net
investment income)... .00 .00
Distributions (from
capital gains)....... .00 .00
----------- -------
Total Distributions.... .00 .00
----------- -------
Net Asset Value, End of
Period................. $7.85 $9.85
----------- -------
----------- -------
Total Return............. (36.72%)* (15.84%)*
Ratios/Supplemental Data
Net Assets, End of Period
(000s)................. $26,573 $ 19,878
Ratios to Average Daily
Net Assets:
Operating expenses..... 1.00%* 1.00%*
Net investment
income............... .16%* .49%*
Decrease reflected in
above expense ratios
due to
waivers/reimbursements... 2.28%* 4.96%*
Portfolio Turnover
Rate................... 138.17%* .00%
</TABLE>

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

* Annualized.
The Total Return shown above has been annualized; the actual Total Return
(after the effect of expense waivers) for the one-month period September 30,
1994 (commencement of operations) through October 31, 1994 was
-1.50%, and the actual Total Return (after the effect of expense waivers) for
the six months ended April 30, 1995 was -20.30%.

<PAGE>
INVESTMENT OBJECTIVES AND POLICIES

The CAPITAL APPRECIATION FUND seeks long-term capital appreciation; the
production of current income is incidental to this objective. The EMERGING
GROWTH FUND seeks maximum capital appreciation; the production of current income
is incidental to this objective. The INTERNATIONAL EQUITY FUND and the JAPAN OTC
FUND each seek long-term capital appreciation. The POST-VENTURE FUND seeks
long-term growth of capital.

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

CAPITAL APPRECIATION FUND

The Capital Appreciation Fund is a diversified management investment
company that pursues its investment objective by investing in a broadly
diversified portfolio of equity securities of domestic companies. The Fund will
ordinarily invest substantially all of its total assets -- but no less than 80%
of its total assets -- in common stocks, warrants and securities convertible
into or exchangeable for common stocks. The Fund intends to focus on securities
of medium-sized companies, consisting of companies having stock market
capitalizations of between $500 million and $4.5 billion. (Market capitalization
means the total market value of a company's outstanding common stock.) Under
normal market conditions, except for temporary defensive purposes, the Fund will
invest no less than 80% of its assets in medium-sized companies, with the
remainder invested in companies with smaller or larger market capitalizations.
The prices of securities of medium-sized companies, which are traded on
exchanges or in the over-the-counter market, tend to fluctuate in value more
than the prices of securities of large-sized companies.

Warburg, Pincus Counsellors, Inc., the Funds' investment adviser
('Counsellors'), will attempt to identify sectors of the market and companies
within market sectors that it believes will outperform the overall market.
Counsellors also seeks to identify themes or patterns it believes to be
associated with high growth potential firms, such as significant fundamental
changes (including senior management changes) or generation of a large free cash
flow.

EMERGING GROWTH FUND

The Emerging Growth Fund is a non-diversified management investment company
that pursues its investment objective by investing in a portfolio of equity
securities of domestic companies. The Fund ordinarily will invest at least 65%
of its total assets in common stocks or warrants of emerging growth companies
that represent attractive opportunities for maximum capital appreciation.
Emerging growth companies are small- or medium-sized companies that have passed
their start-up phase and that show positive earnings and prospects of achieving
significant profit and gain in a relatively short period of time.

Although under current market conditions the Fund expects to invest in
companies having stock market capitalizations of up to approximately $500
million, the Fund may invest in emerging growth companies without regard to
their market capitalization. Emerging growth companies generally stand to
benefit from new products or services, technological developments or changes in
management and other factors and include smaller companies experiencing unusual
developments affecting their market value. These 'special situation companies'
include companies that are involved in the following: an acquisition or
consolidation; a reorganization; a

<PAGE>
recapitalization; a merger, liquidation, or distribution of cash, securities
or other assets; a tender or exchange offer; a breakup or workout of a holding
company; litigation which, if resolved favorably, would improve the value of the
company's stock; or a change in corporate control.

INTERNATIONAL EQUITY FUND

The International Equity Fund is a diversified management investment
company that pursues its investment objective by investing primarily in a
broadly diversified portfolio of equity securities of companies, wherever
organized, that in Counsellors' judgment have their principal business
activities and interests outside the United States. The Fund will ordinarily
invest substantially all of its assets -- but no less than 65% of its total
assets -- in common stocks, warrants and securities convertible into or
exchangeable for common stocks. Ordinarily the Fund will hold no less than 65%
of its total assets in at least three countries other than the United States.
The Fund intends to be widely diversified across securities of many corporations
located in a number of foreign countries. Counsellors anticipates, however, that
the Fund may from time to time invest a significant portion of its assets in a
single country such as Japan, which may involve special risks. See 'Risk Factors
and Special Considerations -- Japanese Investments' below. In appropriate
circumstances, such as when a direct investment by the International Equity Fund
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 Fund may, consistent with the provisions of the Investment
Company Act of 1940, as amended (the '1940 Act'), invest in the securities of
closed-end investment companies that invest in foreign securities.

The Fund intends to invest principally in the securities of financially
strong companies with opportunities for growth within growing international
economies and markets through increased earning power and improved utilization
or recognition of assets. Investment may be made in equity securities of
companies of any size, whether traded on or off a national securities exchange.

JAPAN OTC FUND

The Japan OTC Fund is a non-diversified management investment company that
pursues its investment objective by investing in a portfolio of securities
traded in the Japanese over-the-counter market. The Fund is designed to provide
an opportunity to participate in the dynamic structural changes in the Japanese
industrial system through investment in less-established, higher growth
companies that can be expected to benefit from these changes. At all times,
except during temporary defensive periods, the Fund will maintain at least 65%
of its total assets in securities of companies traded through JASDAQ, the
primary Japanese over-the-counter market, or the Japanese Second Section OTC
Market (the 'Frontier Market'). The portion of the Fund's assets that is not
invested through JASDAQ or the Frontier Market may be invested in securities of
Japanese issuers that are not traded through JASDAQ or the Frontier Market or
exchange-traded and over-the-counter securities of issuers in other Asian
markets, in addition to the other instruments described below. The Fund may
invest up to 35% of its total assets in securities of other Asian issuers, with
no more than 10% invested in any one country. The Fund will not invest in
securities of non-Asian issuers, except that the Fund may, for defensive
purposes, invest in U.S. debt securities and money market instruments. The Fund
intends its portfolio to consist principally of equity securities (common stock,
warrants and securities convertible into common stock), which may include shares
of closed-end investment companies investing in Asia. The Japan OTC Fund may
also invest up to 5% of the Fund's net assets in each of the following: foreign
debt securities, including foreign government securites

<PAGE>
and debt obligations of supranational entities, mortgage-backed securities,
asset-backed securities and zero coupon securities. The Japan OTC Fund may
involve a greater degree of risk than an investment in other mutual funds that
seek capital appreciation by investing in better-known, larger companies. From
time to time, the Japan OTC Fund may hedge part or all of its exposure to the
Japanese yen, thereby reducing or substantially eliminating any favorable or
unfavorable impact of changes in the value of the yen in relation to the U.S.
dollar.

At December 31, 1994, 581 issues were traded through JASDAQ, having an
aggregate market capitalization in excess of 14 trillion yen (approximately
$[150] billion as of September , 1995). The entry requirements for JASDAQ
generally require a minimum of 2 million shares outstanding at the time of
registration, a minimum of 200 shareholders, minimum pre-tax profits of 10 yen
(approximately $[.10] as of September , 1995) per share over the prior fiscal
year and net worth of 200 million yen (approximately $[2.05] million as of
September , 1995). JASDAQ has generally attracted small growth companies or
companies whose major shareholders wish to sell only a small portion of the
company's equity.

The Frontier Market is under the jurisdiction of JASDAQ, which is overseen
by the Japanese Securities and Exchange Commission. The Frontier Market has less
stringent entry requirements than those described above for JASDAQ and is
designed to enable early stage, riskier companies (especially research and
development-oriented firms) access to capital markets. As of the date of this
Prospectus, there were not yet any registrations on the Frontier Market, but the
first registrations are expected to be effective in November 1995.

POST-VENTURE FUND

The Fund is a diversified management investment company that pursues its
investment objective by investing primarily in equity securities of companies
considered by Counsellors to be in their post-venture capital stage of
development. Under normal market conditions, the Fund will invest at least 65%
of its total assets in equity securities of 'post-venture capital companies.' A
post-venture capital company is a company that meets these criteria: (i) its
early stage financing was provided by venture capitalists and (ii) it is engaged
in an initial public offering of its securities or it completed an initial
public offering of its securities within ten years prior to purchase by the
Fund.

Counsellors believes that venture capital participation in a company's
capital structure at an early stage in a company's development can lead to above
average revenue/earnings growth. Venture capitalists finance start-up companies
and companies in the early stages of developing new products or services since
these companies usually do not have access to conventional forms of financing
(such as bank loans or public issuances of stock). Venture capital funds are
funds organized by venture capitalists for the purpose of providing venture
capital to these types of companies; interests in venture capital funds
typically are offered to large institutions, such as pension funds and
endowments, as well as high net worth individuals. Venture capital participation
in a company is often reduced when the company does an initial public offering
of its securities or when it is involved in a merger, tender offer or
acquisition. Venture capital funds regularly distribute to their investors
interests in companies they have financed.

<PAGE>

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 Fund's assets invested in these securities,
which together with the Fund's other illiquid assets may not exceed 15% of the
Fund's assets, will vary over time depending on investment opportunities and
other factors. The Fund may also invest in securities of companies that do
not meet the definition of post-venture capital companies that are
experiencing unusual developments affecting their capital structure, such as
a reorganization or recapitalization; an acquisition, consolidation, merger or
tender offer; or a change in corporate control.

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

INVESTMENT GRADE DEBT. The International Equity Fund and the Japan OTC Fund each
may invest up to 35% of its total assets, and the Capital Appreciation Fund, the
Emerging Growth Fund and the Post-Venture Fund each may invest up to 20% of its
total assets, in investment grade debt securities (other than money market
instruments) and preferred stocks that are not convertible into common stock for
the purpose of seeking capital appreciation. The interest income to be derived
may be considered as one factor in selecting debt securities for investment by
Counsellors. Because the market value of debt obligations can be expected to
vary inversely to changes in prevailing interest rates, investing in debt
obligations may provide an opportunity for capital appreciation when interest
rates are expected to decline. The success of such a strategy is dependent upon
Counsellors' ability to accurately forecast changes in interest rates. The
market value of debt obligations may also be expected to vary depending upon,
among other factors, the ability of the issuer to repay principal and interest,
any change in investment rating and general economic conditions. A security will
be deemed to be investment grade if it is rated within the four highest grades
by Moody's Investors Service, Inc. ('Moody's') or Standard & Poor's Ratings
Group ('S&P') or, if unrated, is determined to be of comparable quality by
Counsellors. Bonds rated in the fourth highest grade may have speculative
characteristics and changes in economic conditions or other circumstances are
more likely to lead to a weakened capacity to make principal and interest
payments than is the case with higher grade bonds. Subsequent to its purchase by
a Fund, an issue of securities may cease to be rated or its rating may be
reduced below the minimum required for purchase by the Fund. Neither event will
require sale of such securities. Counsellors will consider such event in its
determination of whether the Fund should continue to hold the securities. The
Japan OTC Fund does not currently intend during the coming year to hold more
than 5% of its net assets in securities that have been downgraded below
investment grade.

When Counsellors believes that a defensive posture is warranted, each Fund
may invest temporarily without limit in investment grade

<PAGE>
debt obligations and in domestic and foreign money market obligations, including
repurchase agreements as discussed below. When such a defensive posture is
warranted, the International Equity Fund and the Japan OTC Fund may also invest
temporarily without limit in securities of U.S. companies.

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

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

Money Market Mutual Funds. Where Counsellors believes that it would be
beneficial to the Fund and appropriate considering the factors of return and
liquidity, each Fund may invest up to 5% of its assets in securities of money
market mutual funds that are unaffiliated with the Fund, Counsellors or, in the
case of the Japan OTC Fund, the sub-investment adviser (each investment adviser
and sub-investment adviser referred to individually as an 'Adviser'). As a
shareholder in any mutual fund, a Fund will bear its ratable share of the mutual
fund's expenses, including management fees, and will remain subject to payment
of the Fund's advisory and administration fees with respect to assets so
invested.

U.S. GOVERNMENT SECURITIES. U.S. government securities in which a Fund may
invest include:

<PAGE>
direct obligations of the U.S. Treasury, and obligations issued by U.S.
government agencies and instrumentalities, including instruments that are
supported by the full faith and credit of the United States, instruments that
are supported by the right of the issuer to borrow from the U.S. Treasury and
instruments that are supported by the credit of the instrumentality.

CONVERTIBLE SECURITIES. Convertible securities in which a Fund may invest,
including both convertible debt and convertible preferred stock, may be
converted at either a stated price or stated rate into underlying shares of
common stock. Because of this feature, convertible securities enable an investor
to benefit from increases in the market price of the underlying common stock.
Convertible securities provide higher yields than the underlying equity
securities, but generally offer lower yields than non-convertible securities of
similar quality. The value of convertible securities fluctuates in relation to
changes in interest rates like bonds and, in addition, fluctuates in relation to
the underlying common stock. The Japan OTC Fund will invest only in convertible
securities rated investment grade at the time of purchase or deemed to be of
equivalent quality. The Japan OTC Fund does not currently intend during the
coming year to hold more than 5% of its net assets in the aggregate of
investment grade convertible securities and investment grade debt downgraded
below investment grade subsequent to acquisition by the Fund.
RISK FACTORS AND SPECIAL
CONSIDERATIONS

EMERGING GROWTH AND SMALL COMPANIES. Investing in common stocks and securities
convertible into common stocks is subject to the inherent risk of fluctuations
in the prices of such securities. Investing in securities of emerging growth
companies, which may include JASDAQ and Frontier Market securities, may involve
greater risks since these securities may have limited marketability and, thus,
may be more volatile. In addition, small- and medium-sized companies are
typically subject to a greater degree of changes in earnings and business
prospects than are larger, more established companies. Because small- and
medium-sized companies normally have fewer shares outstanding than larger
companies, it may be more difficult for a Fund to buy or sell significant
amounts of such shares without an unfavorable impact on prevailing prices. There
is typically less publicly available information concerning small- and
medium-sized companies than for larger, more established ones. Securities of
issuers in 'special situations' also may be more volatile, since the market
value of these securities may decline in value if the anticipated benefits do
not materialize. Companies in 'special situations' include, but are not limited
to, companies involved in an acquisition or consolidation; reorganization;
recapitalization; merger, liquidation or distribution of cash, securities or
other assets; a tender or exchange offer, a breakup or workout of a holding
company; or litigation which, if resolved favorably, would improve the value of
the companies' securities. Although investing in securities of emerging growth
companies or 'special situations' offers potential for above-average returns if
the companies are successful, the risk exists that the companies will not
succeed and the prices of the companies' shares could significantly decline in
value. Therefore, an investment in the Capital Appreciation Fund, the Emerging
Growth Fund, the Japan OTC Fund or the Post-Venture Fund may involve a greater
degree of risk than an investment in other mutual funds that seek capital
appreciation by investing in better-known, larger companies. For certain
additional risks relating to each Fund's investments, see 'Portfolio
Investments' beginning at page 9 and 'Certain Investment Strategies' beginning
at page 14.

JAPANESE INVESTMENTS. A significant portion of the Japan OTC Fund's assets will
be invested in securities traded through JASDAQ. Trading of equity securities
through the JASDAQ market is conducted by securities firms in Japan, primarily
through an organization which acts as a

<PAGE>

'matching agent,' as opposed to a recognized stock exchange. Consequently,
securities traded through JASDAQ may, from time to time, and especially in
falling markets, become illiquid and experience short-term price volatility and
wide spreads between bid and offer prices. This combination of limited liquidity
and price volatility may have an adverse effect on the investment performance of
the Fund. In periods of rapid price increases, the limited liquidity of JASDAQ
restricts the Fund's ability to adjust its portfolio quickly in order to take
full advantage of a significant market increase, and conversely, during periods
of rapid price declines, it restricts the ability of the Fund to dispose of
securities quickly in order to realize gains previously made or to limit losses
on securities held in its portfolio. In addition, although JASDAQ has generally
experienced sustained growth in aggregate market capitalization and trading
volume, there have been periods in which aggregate market capitalization and
trading volume have declined. The Frontier Market is expected to present greater
liquidity, volatility and trading considerations than JASDAQ.

Investing in Japanese securities may involve the risks described below
associated with investing in foreign securities generally. In addition, because
the Japan OTC Fund invests primarily in Japan and the International Equity Fund
may from time to time have a large position in Japanese securities, these Funds
will be subject to general economic and political conditions in Japan. The Japan
OTC Fund should be considered a vehicle for diversification, but the Fund itself
is not diversified.

Securities in Japan are denominated and quoted in 'yen.' Yen are fully
convertible and transferable based on floating exchange rates into all
currencies, without administrative or legal restrictions for both non-residents
and residents of Japan. In determining the net asset value of shares of each
Fund, assets or liabilities initially expressed in terms of Japanese yen will be
translated into U.S. dollars at the current selling rate of Japanese yen against
U.S. dollars. As a result, in the absence of a successful currency hedge, the
value of each Fund's assets as measured in U.S. dollars may be affected
favorably or unfavorably by fluctuations in the value of Japanese yen relative
to the U.S. dollar.

Japan is largely dependent upon foreign economies for raw materials.
International trade is important to Japan's economy, as exports provide the
means to pay for many of the raw materials it must import. Because of the
concentration of Japanese exports in highly visible products such as
automobiles, machine tools and semiconductors, and the large trade surpluses
ensuing therefrom, Japan has entered a difficult phase in its relations with its
trading partners, particularly with respect to the United States, with whom the
trade imbalance is the greatest.

JASDAQ-traded securities can be volatile, which would result in the Japan
OTC Fund's net asset value fluctuating in response. The decline in the Japanese
securities markets since 1989 has contributed to a weakness in the Japanese
economy, and the impact of a further decline cannot be ascertained. The common
stocks of many Japanese companies continue to trade at high price-earnings
ratios in comparison with those in the United States, even after the recent
market decline. Differences in accounting methods make it difficult to compare
the earnings of Japanese companies with those of companies in other countries,
especially the United States.

Japan has a parliamentary form of government. In 1993 a coalition
government was formed which, for the first time since 1955, did not include the
Liberal Democratic Party. Since mid-1993, there have been several changes in
leadership in Japan. What, if any, effect the current political situation will
have on prospective regulatory reforms on the economy in Japan cannot be
predicted. Recent and future developments in Japan and neighboring Asian
countries may lead to changes in policy that might adversely affect the Funds
investing there. For additional information, see 'Japan and its

<PAGE>

Securities Markets,' beginning at page 29 of the Statement of Additional
Information for the Japan OTC Fund, and 'Investment Policies -- Japanese
Investments,' beginning at page 3 of the Statement of Additional Information for
the International Equity Fund.

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

INVESTMENTS IN NON-PUBLICLY TRADED SECURITIES. Although the Funds expect to
invest primarily in publicly traded equity securities, each Fund may invest up
to 10% of its assets (15% in the case of the Post-Venture Fund) in non-publicly
traded equity securities, which may involve a high degree of business and
financial risk and may result in substantial losses. Because of the absence of
any liquid trading market currently for these investments, a Fund may take
longer to liquidate these positions than would be the case for publicly traded
securities. Although these securities may be resold in privately negotiated
transactions, the prices realized on such sales could be less than those
originally paid by the Fund. Further, companies whose securities are not
publicly traded may not be subject to the disclosure and other investor
protection requirements applicable to companies whose securities are publicly
traded. A Fund's investment in illiquid securities is subject to the risk that
should the Fund desire to sell any of these securities when a ready buyer is not
available at a price that is deemed to be representative of their value, the
value of the Fund's net assets could be adversely affected.

NON-DIVERSIFIED STATUS. Each of the Emerging Growth Fund and the Japan OTC Fund
is classified as a non-diversified investment company under the 1940 Act, which
means that each Fund is not limited by the 1940 Act in the proportion of its
assets that it may invest in the obligations of a single issuer. Each Fund will,
however, comply with diversification requirements imposed by the Internal
Revenue Code of 1986, as amended (the 'Code'), for qualification as a regulated
investment company. As a non-diversified investment company, each Fund may
invest a greater proportion of its assets in the obligations of a small number
of issuers and, as a result, may be subject to greater risk with respect to
portfolio securities. To the extent that a Fund assumes large positions in the
securities of a small number of issuers, its return may fluctuate to a greater
extent than that of a diversified company as a result of changes in the
financial condition or in the market's assessment of the issuers.

PORTFOLIO TRANSACTIONS AND
TURNOVER RATE

A Fund will attempt to purchase securities with the intent of holding them
for investment but may purchase and sell portfolio securities whenever an
Adviser believes it to be in the best interests of the relevant Fund. A Fund
will not consider portfolio turnover rate a limiting factor in making investment
decisions consistent with its investment objective and policies. It is not
possible to predict the Japan OTC or the Post-

<PAGE>

Venture Fund's portfolio turnover rate. However, it is anticipated that each
Fund's annual turnover rate should not exceed 100%. High portfolio turnover
rates (100% or more) may result in dealer mark ups or underwriting commissions
as well as other transaction costs, including correspondingly higher brokerage
commissions. In addition, short-term gains realized from portfolio turnover may
be taxable to shareholders as ordinary income. See 'Dividends, Distributions and
Taxes -- Taxes' below and 'Investment Policies -- Portfolio Transactions' in
each Fund's Statement of Additional Information.

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

CERTAIN INVESTMENT STRATEGIES

Although there is no intention of doing so during the coming year, each
Fund is authorized to engage in the following investment strategies: (i)
purchasing securities on a when-issued basis and purchasing or selling
securities for delayed delivery and (ii) lending portfolio securities. Each Fund
may engage in options or futures transactions for the purpose of hedging against
a decline in value of its portfolio holdings or to generate income to offset
expenses or increase return. Such transactions that are not considered hedging
should be considered speculative and may serve to increase the Fund's investment
risk. Detailed information concerning these strategies and their related risks
is contained below and in each Fund's Statement of Additional Information.

STRATEGIES AVAILABLE TO ALL FUNDS

FOREIGN SECURITIES. The International Equity Fund and the Japan OTC Fund each
will ordinarily hold no less than 65% of its total assets in foreign securities.
The Emerging Growth Fund may invest up to 10% and the Capital Appreciation Fund
and the Post-Venture Fund may each invest up to 20% of its total assets in the
securities of foreign issuers. There are certain risks involved in investing in
securities of companies and governments of foreign nations which are in addition
to the usual risks inherent in domestic investments. These risks include those
resulting from fluctuations in currency exchange rates, revaluation of
currencies, future adverse political and economic developments and the possible
imposition of currency exchange blockages or other foreign governmental laws or
restrictions, reduced availability of public information concerning issuers, the
lack of uniform accounting, auditing and financial reporting standards and other
regulatory practices and requirements that are often generally less rigorous
than those applied in the United States. Moreover, securities of many foreign
companies may be less liquid and their prices more volatile than those of
securities of comparable U.S. companies. Certain foreign countries are known to
experience long delays between the trade and settlement dates of securities
purchased or sold. In addition, with respect to certain foreign countries, there
is the possibility of expropriation, nationalization, confiscatory taxation and
limitations on the use or removal of funds or other assets of the Funds,
including the withholding of dividends. Foreign securities may be subject to
foreign government taxes that would reduce the net yield on such securities.
Moreover, individual foreign economies may differ favorably or unfavorably from
the U.S. economy in such respects as growth of gross national product, rate of
inflation, capital

<PAGE>
reinvestment, resource self-sufficiency and balance of payments positions.
Investment in foreign securities will also result in higher operating expenses
due to the cost of converting foreign currency into U.S. dollars, the payment of
fixed brokerage commissions on foreign exchanges, which generally are higher
than commissions on U.S. exchanges, higher valuation and communications costs
and the expense of maintaining securities with foreign custodians.

RULE 144A SECURITIES. The Funds may purchase securities that are not registered
under the Securities Act of 1933, as amended (the '1933 Act'), but that can be
sold to 'qualified institutional buyers' in accordance with Rule 144A under the
1933 Act ('Rule 144A Securities'). An investment in Rule 144A Securities will be
considered illiquid and therefore subject to each Fund's limitation on the
purchase of illiquid securities, unless the Fund's governing Board determines on
an ongoing basis that an adequate trading market exists for the security. In the
case of the Japan OTC Fund, Rule 144A Securities will be limited to 10% of the
Fund's net assets, included within the Fund's 15% limit on illiquid securities.
In addition to an adequate trading market, the Board will also consider factors
such as trading activity, availability of reliable price information and other
relevant information in determining whether a Rule 144A Security is liquid. This
investment practice could have the effect of increasing the level of illiquidity
in the Funds to the extent that qualified institutional buyers become
uninterested for a time in purchasing Rule 144A Securities. The governing Board
of each Fund will carefully monitor any investments by the Fund in Rule 144A
Securities. The governing Board may adopt guidelines and delegate to an Adviser
the daily function of determining and monitoring the liquidity of Rule 144A
Securities, although each Board will retain ultimate responsibility for any
determination regarding liquidity.

WRITING OPTIONS ON SECURITIES. Each Fund may write covered call options and, in
the case of the Japan OTC Fund and the Post-Venture Fund, covered put options on
up to 25% of the net asset value of the stock and debt securities in its
portfolio and will realize fees (referred to as 'premiums') for granting the
rights evidenced by the options. A put option embodies the right of its
purchaser to compel the writer of the option to purchase from the option holder
an underlying security at a specified price for a specified time period or at a
specified time. In contrast, a call option embodies the right of its purchaser
to compel the writer of the option to sell to the option holder an underlying
security at a specified price for a specified time period or at a specified
time. Thus, the purchaser of a put option written by a Fund has the right to
compel the purchase by the Fund of the underlying security at an agreed-upon
price for a specified time period or at a specified time, while the purchaser of
a call option written by a Fund has the right to purchase from the Fund the
underlying security owned by the Fund at the agreed-upon price for a specified
time period or at a specified time.

Upon the exercise of a put option written by the Japan OTC Fund or the
Post-Venture Fund, the Fund may suffer an economic loss equal to the excess of
the exercise price of the option over the security's market value at the time of
the option exercise, less the premium received for writing the option. Upon the
exercise of a call option written by a Fund, the Fund may suffer an economic
loss equal to the excess of the security's market value at the time of the
option exercise over the Fund's acquisition cost of the security, less the
premium received for writing the option.

A Fund may engage in a closing purchase transaction to realize a profit, to
prevent an underlying security 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

<PAGE>

prior to the outstanding option's expiration). To effect a closing purchase
transaction, a Fund would purchase, prior to the holder's exercise of an option
that the Fund has written, an option of the same series as that on which the
Fund desires to terminate its obligation. The obligation of a Fund under an
option that it has written would be terminated by a closing purchase
transaction, but the Fund would not be deemed to own an option as the result of
the transaction. The ability of a Fund to engage in closing transactions with
respect to options depends on the existence of a liquid secondary market. While
a Fund generally will purchase or write options only if there appears to be a
liquid secondary market for the options purchased or sold, for some options, no
such secondary market may exist or the market may cease to exist, particularly
with respect to options that trade over-the-counter ('OTC options').

Option writing for each Fund may be limited by position and exercise limits
established by securities exchanges and the NASD. Furthermore, a Fund may, at
times, have to limit its option writing in order to qualify as a regulated
investment company under the Code.

In addition to writing covered options to generate income, each Fund may
enter into options 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 on a portfolio position
with a gain on the hedge position; at the same time, however, a properly
correlated hedge will result in a gain on the portfolio position being offset by
a loss on the hedge position. Each Fund bears the risk that the prices of the
securities being hedged will not move in the same amount as the hedge. A Fund
will engage in hedging transactions only when deemed advisable by an Adviser.
Successful use by a Fund of options for hedging purposes will depend on an
Adviser's ability to correctly predict movements in the direction of the
security underlying the option or, in the case of stock index options (described
below), the underlying securities market, which could prove to be inaccurate.
Losses incurred in options transactions and the costs of these transactions will
affect each Fund's performance. Even if an Adviser's expectations are correct,
where options are used as a hedge there may be an imperfect correlation between
the change in the value of the options and of the portfolio securities hedged.
Therefore, an investment in the Funds may involve a greater risk than an
investment in other mutual funds that seek capital appreciation or growth of
capital.

PURCHASING PUT AND CALL OPTIONS ON SECURITIES. The International Equity Fund,
the Japan OTC Fund and the Post-Venture Fund each may utilize up to 10% of its
assets to purchase put and call options on stocks and debt securities that are
traded on foreign as well as U.S. exchanges, as well as OTC options. The Capital
Appreciation Fund and the Emerging Growth Fund each may utilize up to 2% of its
assets to purchase U.S. exchange-traded and OTC put and call options on stocks
and debt securities and, with respect to put options, may do so at or about the
same time that it purchases the underlying security or at a later time.

By buying a put, a Fund limits its risk of loss from a decline in the
market value of the underlying security until the put expires. Any appreciation
in the value of and yield otherwise available from the underlying security,
however, will be partially offset by the amount of the premium paid for the put
option and any related transaction costs. Call options may be purchased by each
Fund in order to acquire the underlying securities for the Fund at a price that
avoids any additional cost that would result from a substantial increase in the
market value of a security. Each Fund also may purchase call options to increase
its return to investors at a time when the option is expected to increase in
value due to anticipated appreciation of the underlying security.

<PAGE>
Prior to their expirations, put and call options may be sold in closing
sale transactions (sales by a Fund, prior to the exercise of options that it has
purchased, of options of the same series), and profit or loss from the sale will
depend on whether the amount received is more or less than the premium paid for
the option plus the related transaction costs.

STOCK INDEX OPTIONS. In addition to purchasing and writing options on
securities, each Fund may utilize up to 10% of its total assets to purchase
exchange-listed and, in the case of the International Equity Fund, the Japan OTC
Fund and the Post-Venture Fund, OTC put and call options on stock indexes, and
may write put and call options on such indexes. A stock index measures the
movement of a certain group of stocks by assigning relative values to the common
stocks included in the index. Options on stock indexes are similar to options on
stock except that (i) the expiration cycles of stock index options are monthly,
while those of stock options are currently quarterly, and (ii) the delivery
requirements are different. Instead of giving the right to take or make delivery
of stock at a specified price, an option on a stock index gives the holder the
right to receive a cash 'exercise settlement amount' equal to (a) the amount, if
any, by which the fixed exercise price of the option exceeds (in the case of a
put) or is less than (in the case of a call) the closing value of the underlying
index on the date of exercise multiplied by (b) a fixed 'index multiplier.' The
discussion of options on securities above, and the related risks, is applicable
to options on securities indexes.

FUTURES CONTRACTS AND OPTIONS. Each Fund may enter into interest rate, stock
index and, in the case of the International Equity, Japan OTC and Post-Venture
Funds, currency futures contracts and purchase and write (sell) related options
that are traded on an exchange designated by the Commodity Futures Trading
Commission (the 'CFTC') or consistent with CFTC regulations on foreign
exchanges. These transactions may be entered into for 'bona fide hedging' as
defined in CFTC regulations and other permissible purposes including (i)
protecting against anticipated changes in the value of portfolio securities the
Fund intends to purchase and (ii) increasing return.

An interest rate futures contract is a standardized contract for the future
delivery of a specified interest rate sensitive security (such as a U.S.
Treasury Bond or U.S. Treasury Note or its equivalent) at a future date at a
price set at the time of the contract. Stock indexes are capitalization weighted
indexes which reflect the market value of the stock listed on the indexes. A
stock index futures contract is an agreement to be settled by delivery of an
amount of cash equal to a specified multiplier times the difference between the
value of the index at the beginning and at the end of the contract period. 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 at a specified exercise
price at any time prior to the expiration date of the option. 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 foreign currency at a
specified price, date, time and place.

Parties to a futures contract must make 'initial margin' deposits to secure
performance of the contract. There are also requirements to make 'variation
margin' deposits from time to time as the value of the futures contract
fluctuates. The Funds are not commodity pools and, in compliance with CFTC
regulations currently in effect, may enter into any futures contracts and
related options for 'bona fide hedging' purposes and, in addition, for other
purposes, provided that aggregate initial margin and premiums required to
establish positions other than those considered by the CFTC to be 'bona fide
hedging' will not exceed 5% of each Fund's net asset value, after taking into
account unrealized

<PAGE>
profits and unrealized losses on any such contracts. Each Fund reserves the
right to engage in transactions involving futures and options thereon to the
extent allowed by CFTC regulations in effect from time to time and in accordance
with the Fund's policies. Certain provisions of the Code may limit the extent to
which the Fund may enter into futures contracts or engage in options
transactions.

There are several risks in connection with the use of futures contracts.
Successful use of futures contracts is subject to the ability of the Advisers to
predict correctly movements in the direction of the currency, interest rate or
stock index underlying the particular futures contract or related option. These
predictions and, thus, the use of futures contracts involve skills and
techniques that are different from those involved in the management of portfolio
securities. In addition, there can be no assurance that there will be a
correlation between movements in the currencies, interest rate or index
underlying the futures contract and movements in the price of the portfolio
securities which are the subject of a hedge. A decision concerning whether, when
and how to utilize futures involves the exercise of skill and judgment, and even
a well-conceived hedge may be unsuccessful to some degree because of unexpected
market behavior or trends in foreign currencies, interest rates or stock
indexes. Losses incurred in futures transactions and the costs of these
transactions will affect the Fund's performance.

A further risk involves the lack of a liquid secondary market for a futures
contract and the resulting inability to close out a futures contract. Futures
and options contracts may only be closed out by entering into offsetting
transactions on the exchange where the position was entered into (or a linked
exchange), and as a result of daily price fluctuation limits there can no
assurance that an offsetting transaction could be entered into at an
advantageous price at any particular time. Consequently, a Fund may realize a
loss on a futures contract or option that is not offset by an increase in the
value of the Fund's securities that are being hedged or the Fund may not be able
to close a futures or options position without incurring a loss in the event of
adverse price movements.

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

STRATEGY AVAILABLE TO THE INTERNATIONAL EQUITY FUND, THE JAPAN OTC FUND AND THE
POST-VENTURE FUND

CURRENCY EXCHANGE TRANSACTIONS. Each Fund may engage in currency exchange
transactions to protect against uncertainty in the level of future exchange
rates and to increase the Fund's income and total return (except that the
International Equity Fund may only enter into forward currency contracts for
hedging purposes). Each Fund will conduct its currency exchange

<PAGE>
transactions (i) on a spot (i.e., cash) basis at the rate prevailing in the
currency exchange market, (ii) through entering into forward contracts to
purchase or sell currency, (iii) as described above, through entering into
foreign currency futures contracts or options on such contracts or (iv) in
the case of the Japan OTC Fund and the Post-Venture Fund, by purchasing currency
options.

Forward Currency Contracts. A forward currency contract involves an
obligation to purchase or sell a specific currency at a future date, which may
be any fixed number of days from the date of the contract 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 their customers. The use of forward
currency contracts as a hedge 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. In addition, although forward currency contracts 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.

STRATEGIES AVAILABLE TO THE JAPAN OTC FUND
AND THE POST-VENTURE FUND

CURRENCY OPTIONS. Each Fund may purchase exchange-traded put and call options on
currencies. An option on a foreign currency gives the purchaser, in return for a
premium, the right to sell, in the case of a put, and buy, in the case of a
call, the underlying currency at a specified price during the term of the
option. The benefit to the Fund derived from purchases of foreign currency
options, like the benefit derived from other types of options, will be reduced
by the amount of the premium and related transaction costs. In addition, if
currency exchange rates do not move in the direction or to the extent
anticipated, the Fund could sustain losses on transactions in foreign currency
options that would require it to forgo a portion or all of the benefits of
advantageous changes in the rates.

REVERSE REPURCHASE AGREEMENTS. Each of the Japan OTC Fund and the Post-Venture
Fund may also enter into reverse repurchase agreements with the same parties
with whom it may enter into repurchase agreements. Reverse repurchase agreements
involve the sale of securities held by the Fund pursuant to its agreement to
repurchase them at a mutually agreed upon date, price and rate of interest. At
the time the Fund enters into a reverse repurchase agreement, it will establish
and maintain a segregated account with an approved custodian containing cash or
liquid high-grade debt securities having a value not less than the repurchase
price (including accrued interest). The assets contained in the segregated
account will be marked-to-market daily and additional assets will be placed in
such account on any day in which the assets fall below the repurchase price
(plus accrued interest). The Fund's liquidity and ability to manage its assets
might be affected when it sets aside cash or portfolio securities to cover such
commitments. Reverse repurchase agreements involve the risk that the market
value of the securities retained in lieu of sale may decline below the price of
the securities the Fund has sold but is obligated to repurchase. In the event
the buyer of securities under a reverse repurchase agreement files for
bankruptcy or becomes insolvent, such buyer or its trustee or receiver may
receive an extension of time to determine whether to enforce the Fund's
obligation to repurchase the securities, and the Fund's use of the proceeds of
the reverse repurchase agreement may effectively be restricted pending such
decision. Reverse repurchase agreements are considered to be borrowings under
the 1940 Act.

DOLLAR ROLL TRANSACTIONS. Each Fund also may enter into 'dollar rolls,' in which
the Fund sells fixed income securities for delivery in the current month and
simultaneously contracts to

<PAGE>
repurchase similar but not identical (same type, coupon and maturity) securities
on a specified future date. During the roll period, the Fund would forgo
principal and interest paid on such securities. The Fund would be compensated
by the difference between the current sales price and the forward price for the
future purchase, as well as by the interest earned on the cash proceeds of the
initial sale. At the time that the Fund enters into a dollar roll transaction,
it will place in a segregated account maintained with an approved custodian cash
or other liquid high-grade debt obligations having a value not less than the
repurchase price (including accrued interest) and will subsequently monitor the
account to ensure that its value is maintained. For financial reporting and tax
purposes, each Fund proposes to treat dollar rolls as two separate transactions,
one involving the sale of a security and a separate transaction involving the
purchase of a security. The Funds do not currently intend to enter into dollar
rolls that are accounted for as a financing.

STRATEGY AVAILABLE TO THE POST-VENTURE FUND

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

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

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

Short Sales Against the Box. The Fund may, in addition to engaging in short
sales as described above, enter into a short sale of securities such that when
the short position is open the Fund owns an equal amount of the securities sold
short or owns preferred stocks or debt securities, convertible or exchangeable
without payment of further consideration, into an equal number of securities
sold short. This kind of short sale, which is referred to as one 'against the
box,' will be entered into by the Fund for the purpose of receiving a portion of
the interest earned by the executing broker from the proceeds of the sale. The
proceeds of the sale will generally be held by the broker until the

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

The extent to which the Fund may make short sales may be limited by Code
requirements for qualification as a regulated investment company. See
'Dividends, Distributions and Taxes' for other tax considerations applicable to
short sales.

INVESTMENT GUIDELINES

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

MANAGEMENT OF THE FUNDS

INVESTMENT ADVISERS. Each Fund employs Counsellors as investment adviser to the
Fund. The Japan OTC Fund employs SPARX Investment & Research, USA, Inc. ('SPARX
USA') as its sub-investment adviser. With respect to each Fund other than the
Japan OTC Fund, Counsellors, subject to the control of each Fund's officers and
the governing Board, manages the investment and reinvestment of the assets of
the Funds in accordance with each Fund's investment objective and stated
investment policies. Counsellors

<PAGE>
makes investment decisions for each such Fund and places orders to purchase or
sell securities on behalf of each such Fund. With respect to the Japan OTC Fund,
Counsellors has general oversight for the day-to-day management of the Fund,
manages the Fund's U.S. investments and investments in debt securities,
determines the country allocation and industry allocation of Fund assets,
monitors Fund expenses and evaluates the services provided by the sub-investment
adviser to the Fund. Counsellors also employs a support staff of management
personnel to provide services to the Funds and furnishes each Fund with office
space, furnishings and equipment. SPARX USA, in accordance with the investment
objective and policies of the Japan OTC Fund and under the supervision of
Counsellors and the Fund's governing Board, makes investment decisions for the
Fund involving Japanese and other Asian equity securities, places orders to buy
and sell such securities on behalf of the Fund and provides research to the Fund
relating to Japanese and other Asian companies and securities markets.

For the services provided by Counsellors, the Capital Appreciation Fund,
the Emerging Growth Fund, the International Equity Fund and the Post-Venture
Fund will each pay Counsellors a fee calculated at an annual rate of .70%, .90%,
1.00% and 1.25%, respectively, of the Fund's average daily net assets. The Japan
OTC Fund pays Counsellors an advisory fee calculated at an annual rate of 1.25%
of the Fund's average daily net assets, out of which Counsellors pays SPARX USA
a fee of .625%. Although in the case of the Emerging Growth Fund, the
International Equity Fund, the Japan OTC Fund and the Post-Venture Fund, this
advisory fee is higher than that paid by most other investment companies,
including money market and fixed income funds, Counsellors believes that it is
comparable to fees charged by other mutual funds with similar policies and
strategies. The advisory agreement between each Fund and Counsellors provides
that Counsellors will reimburse the Fund to the extent certain expenses that are
described in the Statement of Additional Information exceed applicable state
expense limitations. Counsellors, SPARX USA and each Fund's co-administrators
may voluntarily waive a portion of their fees from time to time and temporarily
limit the expenses to be borne by the Fund.

Counsellors is a professional investment counselling firm which provides
investment services to investment companies, employee benefit plans, endowment
funds, foundations and other institutions and individuals. As of August 31,
1995, Counsellors managed approximately $ billion of assets, including
approximately $ billion of assets of twenty investment companies or
portfolios. Incorporated in 1970, Counsellors is a wholly owned subsidiary of
Warburg, Pincus Counsellors G.P. ('Counsellors G.P.'), a New York general
partnership. E.M. Warburg, Pincus & Co., Inc. ('EMW') controls Counsellors
through its ownership of a class of voting preferred stock of Counsellors.
Counsellors G.P. has no business other than being a holding company of
Counsellors and its subsidiaries. Counsellors' address is 466 Lexington Avenue,
New York, New York 10017-3147.

PORTFOLIO MANAGERS. The portfolio manager of the International Equity Fund is
Richard H. King. Together with Shuhei Abe of SPARX USA, Mr. King and Nicholas
Edwards are co-portfolio managers of the Japan OTC Fund. The
president of the International Equity Fund, the Japan OTC Fund and Warburg
Pincus Emerging Markets Fund is Mr. King. Mr. King has been a portfolio manager
of the International Equity Fund since its inception on May 2, 1989, and Mr.
King and Mr. Abe have been co-portfolio managers of the Japan OTC Fund since its
inception on September 30, 1994. Mr. Edwards has been a co-portfolio manager of
the Japan OTC Fund since October 1995. Mr. King has been a managing director of
EMW since 1989. From 1984 until 1988 he was chief investment officer and a
director at Fiduciary Trust Company

<PAGE>

International S.A. in London, with responsibility for all
international equity management and investment strategy. From 1982 to 1984 he
was a director in charge of Far East equity investments at N.M. Rothschild
International Asset Management, a London merchant bank. Mr. Edwards has been
with Counsellors since August 1995, before which time he was a director at
Jardine Fleming Investment Advisers, Tokyo. Prior to that he was a vice
president of Robert Fleming Inc. in New York City. Mr. Edwards is also an
associate portfolio manager and research analyst for the International Equity
Fund.

Nicholas P.W. Horsley, Harold W. Ehrlich and Vincent J. McBride are also
associate portfolio managers and research analysts for the International Equity
Fund. Mr. Horsley is a senior vice president of Counsellors and has been with
Counsellors and the Fund since 1993, before which time he was a director,
portfolio manager and analyst at Barclays deZoete Wedd in New York City. Mr.
Ehrlich is a senior vice president of Counsellors and has been with Counsellors
and the Fund since February 1995, before which time he was a senior vice
president, portfolio manager and analyst at Templeton Investment Counsel Inc.
Mr. McBride has been with Counsellors and the Fund since 1994. Prior to joining
Counsellors, Mr. McBride was an international equity analyst at Smith Barney
Inc. from 1993 to 1994 and at General Electric Investment Corporation from 1992
to 1993. From 1989 to 1992 he was a portfolio manager/analyst at United Jersey
Bank.

Shuhei Abe of SPARX USA, a co-portfolio manager of the Japan OTC Fund, is
the founder and president of SPARX Asset Management Company Ltd. ('SPARX'), the
parent company of SPARX USA. Prior to founding SPARX in 1989 (by assuming
control of a predecessor company), Mr. Abe worked for Soros Fund Management and
Credit Suisse Trust Bank as an independent adviser. Toshikatsu Kimura is an
associate portfolio manager of the Japan OTC Fund. Mr. Kimura has been a
portfolio manager and analyst at SPARX since 1992, before which time he was a
warrant trader and portfolio manager, respectively, at Sanyo Securities and
Sanyo Investment Management from 1986 to 1990, and at Funai Capital from 1990 to
1992.

The co-portfolio managers of the Emerging Growth Fund and the Post-Venture
Fund are Elizabeth B. Dater and Stephen J. Lurito, co-presidents of the Emerging
Growth Fund. Ms. Dater has been portfolio manager of the Emerging Growth Fund
since its inception on January 21, 1988. She is a managing director of EMW and
has been a portfolio manager of Counsellors since 1978. Mr. Lurito has been a
portfolio manager of the Emerging Growth Fund since 1990. He is a managing
director of EMW and has been with Counsellors since 1987, before which time he
was a research analyst at Sanford C. Bernstein & Company, Inc. Robert S. Janis
and Christopher M. Nawn are associate portfolio managers and research analysts
for the Post-Venture Fund. Mr. Janis has been with Counsellors since October
1994, before which time he was a vice president and senior research analyst at
U.S. Trust Company of New York. Mr. Nawn has been with Counsellors since
September 1994, before which time he was a senior sector analyst and portfolio
manager at the Dreyfus Corporation.

George U. Wyper and Susan L. Black have been co-portfolio managers of the
Capital Appreciation Fund since December 1994. Mr. Wyper is a managing director
of EMW, which he joined in August 1994, before which time he was chief
investment officer of White River Corporation and president of Hanover Advisers,
Inc. (1993-August 1994), chief investment officer of Fund American Enterprises,
Inc. (1990-1993) and the director of fixed income investments at Fireman's Fund
Insurance Company (1987-1990). Ms. Black is a managing director of EMW and has
been with Counsellors since 1985.

<PAGE>
SPARX USA, a Delaware corporation, is a wholly owned subsidiary of SPARX.
SPARX USA, which has not previously acted as adviser to a U.S. investment
company, is registered as an investment adviser under the U.S. Investment
Advisers Act of 1940. SPARX is an independent investment advisory company, which
is owned by Shuhei Abe. The predecessor of SPARX was incorporated in Tokyo in
July 1988 and was registered as an investment adviser under the Investment
Advisory Act of 1986 of Japan. SPARX has no business other than providing
investment advisory services, and as of January 31, 1995 had approximately $242
million in assets under management. SPARX USA's address is 413 Seaside Avenue,
Honolulu, Hawaii 96815.

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

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

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

CUSTODIAN. Fiduciary Trust Company International ('Fiduciary') serves as
custodian of the International Equity Fund's assets and State Street Bank and
Trust Company ('State Street') serves as custodian of the Japan OTC Fund's
assets. Fiduciary's principal business address is Two World Trade Center, New
York, New York 10048. State Street's principal business address is 225 Franklin
Street, Boston, Massachusetts 02110.

PNC Bank, National Association ('PNC'), serves as custodian of the
Post-Venture Fund's U.S. assets, and State Street serves as custodian of the
Fund's non-U.S. assets. PNC also provides certain custodial services generally
in connection with purchases and sales of International Equity Fund shares and
serves as custodian of the assets

<PAGE>

of the Capital Appreciation Fund and the Emerging Growth Fund. Like PFPC, PNC is
a subsidiary of PNC Bank Corp. and its principal business address is Broad and
Chestnut Streets, Philadelphia, Pennsylvania 19101.

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

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

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

HOW TO OPEN AN ACCOUNT

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

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

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

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

<PAGE>
advisers about the establishment of retirement plans and UGMA accounts.

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

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

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

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

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

If a telephone order is received by the close of regular trading on the New
York Stock Exchange (the 'NYSE') (currently 4:00 p.m., Eastern time) and payment
by wire is received on the same day in proper form in accordance with
instructions set forth above, the shares will be priced according to the net
asset value of the Fund on that day and are entitled to dividends and
distributions beginning on that day. If payment by wire is received in proper
form by the close of the NYSE without a prior telephone order, the purchase will
be priced according to the net asset value of the Fund on that day and is
entitled to dividends and distributions beginning on that day. However, if a
wire in proper form that is not preceded by a telephone order is received after
the close of regular trading on the NYSE, the payment will be held uninvested
until the order is effected at the close of business on

<PAGE>
the next business day. Payment for orders that are not accepted will be returned
to the prospective investor after prompt inquiry. If a telephone order is placed
and payment by wire is not received on the same day, the Fund will cancel the
purchase and the investor may be liable for losses or fees incurred.

The minimum initial investment in each Fund is $2,500 and the minimum
subsequent investment is $100, except that subsequent minimum investments can be
as low as $50 under the Automatic Monthly Investment Plan described in the next
section. For a tax-deferred retirement plan, such as an IRA or an UGMA account,
the minimum initial and subsequent investment is $500. The Fund reserves the
right to change the initial and subsequent investment minimum requirements at
any time. In addition, the Fund may, in its sole discretion, waive the initial
and subsequent investment minimum requirements with respect to investors who are
employees of EMW or its affiliates or persons with whom Counsellors has entered
into an investment advisory agreement. Existing investors will be given 15 days'
notice by mail of any increase in investment minimum requirements.

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

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

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

AUTOMATIC MONTHLY INVESTING. Automatic monthly investing allows shareholders to
authorize a Fund to debit their bank account monthly ($50 minimum) for the
purchase of Fund shares on or about either the tenth or twentieth calendar day
of each month. To establish the automatic monthly investing option, obtain a
separate application or complete the 'Automatic Investment Program' section of
the account applications and include a voided, unsigned check from the bank
account to be debited. Only

<PAGE>
an account maintained at a domestic financial institution which is an automated
clearing house member may be used. Shareholders using this service must satisfy
the initial investment minimum for the Fund prior to or concurrent with the
start of any Automatic Investment Program. Please refer to an account
application for further information, or contact Warburg Pincus Funds at (800)
888-6878 for information or to modify or terminate the program. Investors should
allow a period of up to 30 days in order to implement an automatic investment
program. The failure to provide complete information could result in further
delays.
HOW TO REDEEM AND EXCHANGE
SHARES

REDEMPTION OF SHARES. An investor in a Fund may redeem (sell) his shares on any
day that the Fund's net asset value is calculated (see 'Net Asset Value' below).
Proceeds from the redemption of shares of the Japan OTC Fund will be reduced by
the amount of any applicable redemption fee (see below).

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

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

If a redemption order is received prior to the close of regular trading on
the NYSE, the redemption order will be effected at the net asset value per share
as determined on that day. If a redemption order is received after the close of
regular trading on the NYSE, the redemption order will be effected at the net
asset value as

<PAGE>
next determined. Redemption proceeds will normally be mailed or wired to an
investor on the next business day following the date a redemption order is
effected. If, however, in the judgment of Counsellors, immediate payment would
adversely affect a Fund, each Fund reserves the right to pay the redemption
proceeds within seven days after the redemption order is effected. Furthermore,
each Fund may suspend the right of redemption or postpone the date of payment
upon redemption (as well as suspend or postpone the recordation of an exchange
of shares) for such periods as are permitted under the 1940 Act.

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

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

The Japan OTC Fund imposes a redemption charge on any redemption of shares
(which includes an exchange of shares of the Japan OTC Fund into another Warburg
Pincus Fund) made within six months from the date of purchase. The charge, which
is deducted from the redemption proceeds and retained by the Fund, is equal to
1.00% of the current value of shares redeemed that were held for less than six
months, including any appreciation in value of the redeemed shares. If shares
being redeemed were not all held for the same length of time, those shares held
longest will be redeemed first for purposes of determining whether the charge
applies. The redemption charge will not be imposed on redemptions (or exchanges)
of shares acquired through the reinvestment of dividends, and these shares will
be redeemed before any shares to which the redemption charge applies. The
redemption fee will not apply to shares purchased prior to September 30, 1995 or
such later date as the Fund may determine.

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

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

EXCHANGE OF SHARES. An investor may exchange Common Shares of a Fund for Common
Shares of another Fund or for Common Shares of the other mutual funds advised by
Counsellors at their respective net asset values. Exchanges may be effected by
mail or by telephone in the manner described under 'Redemption of

<PAGE>
Shares' above. If an exchange request is received by Warburg Pincus Funds prior
to 4:00 p.m. (Eastern time), the exchange will be made at each Fund's net asset
value determined at the end of that business day. Exchanges may be effected
without a sales charge but must satisfy the minimum dollar amount necessary for
new purchases and may, in the case of exchanges from the Japan OTC Fund, be
subject to a redemption fee. Due to the costs involved in effecting exchanges,
each Fund reserves the right to refuse to honor more than three exchange
requests by a shareholder in any 30-day period. The exchange privilege may be
modified or terminated at any time upon 60 days' notice to shareholders.
Currently, exchanges may be made among the Funds and with the following other
funds:

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

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

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

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

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

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

WARBURG PINCUS SHORT-TERM TAX-ADVANTAGED BOND FUND -- a bond fund seeking
maximum income after the effect of federal income taxes as a primary
objective and capital appreciation as a secondary objective through
investments in taxable and tax-exempt debt instruments;

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

WARBURG PINCUS BALANCED FUND -- a fund seeking maximum total return
through a combination of long-term growth of capital and current income
consistent with preservation of capital through diversified investments in
equity and debt securities;

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

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

The exchange privilege is available to shareholders residing in any state
in which the Common Shares being acquired may legally be sold. When an investor
effects an exchange of shares, the exchange is treated for federal income tax
purposes as a redemption. Therefore, the investor may realize a taxable gain or
loss in connection with the exchange. Investors wishing to exchange Common
Shares of a Fund for Common Shares in another Warburg Pincus

<PAGE>
Fund should review the prospectus of the other fund prior to making an exchange.
For further information regarding the exchange privilege or to obtain a current
prospectus for another Warburg Pincus Fund, an investor should contact Warburg
Pincus Funds at (800) 257-5614.
DIVIDENDS, DISTRIBUTIONS AND TAXES

DIVIDENDS AND DISTRIBUTIONS. Each Fund calculates its dividends from net
investment income. Net investment income includes interest accrued and dividends
earned on the Fund's portfolio securities for the applicable period less
applicable expenses. Each Fund declares dividends from its net investment income
semiannually and pays them in the calendar year in which they are declared. Net
investment income earned on weekends and when the NYSE is not open will be
computed as of the next business day. Distributions of net realized long-term
and short-term capital gains are declared annually and, as a general rule, will
be distributed or paid in November or December of each calendar year. Unless an
investor instructs a Fund to pay dividends or distributions in cash, dividends
and distributions will automatically be reinvested in additional Common Shares
of the relevant Fund at net asset value. The election to receive dividends in
cash may be made on the account application or, subsequently, by writing to
Warburg Pincus Funds at the address set forth under 'How to Open an Account' or
by calling Warburg Pincus Funds at (800) 888-6878. Dividends are determined in
the same manner and are paid in the same amount for each Fund share, except that
Advisor Shares bear all the expense of fees paid to certain service
organizations. See 'Shareholder Servicing.'

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

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

Dividends paid from net investment income and distributions of net realized
short-term capital gains are taxable to investors as ordinary income, regardless
of the length of time shareholders have held shares of the Fund or whether
received in cash or reinvested in additional Fund shares. Distributions derived
from net realized long-term capital gains will be taxable to investors as
long-term capital gains, whether received in cash or reinvested in Fund shares
and regardless of how long the shareholder has held Fund shares. As a general
rule, an investor's gain or loss on a sale or redemption of his Fund shares will
be a long-term capital gain or loss if he has held his shares for more than one
year and will be a short-term capital gain or loss if he has held his shares for
one year or less. However, any loss realized upon the sale or redemption of
shares within six months from the date of their purchase will be treated as a
long-term capital loss to the extent of any amounts treated as distributions of
long-term capital gain during such six-month period with respect to such shares.
Investors may be proportionately liable for taxes on income and gains of the
Funds, but investors not subject to tax on their income will not be required to
pay tax on amounts distributed to them. A Fund's dividends, to the extent not
derived from dividends attributable to certain types of stock issued by U.S.
domestic corporations, will not

<PAGE>
qualify for the dividends received deduction for corporations.

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

Special Tax Matters Relating to the Japan OTC Fund. In the opinion of
Japanese counsel for the Fund, the operations of the Fund will not subject the
Fund to any Japanese income, capital gains or other taxes except for withholding
taxes on interest and dividends paid to the Fund by Japanese corporations and
securities transaction taxes payable in the event of sales of portfolio
securities in Japan. In the opinion of such counsel, under the tax convention
between the United States and Japan (the 'Convention') as currently in force, a
Japanese withholding tax at a rate of 15% is, with certain exceptions, imposed
upon dividends paid by Japanese corporations to the Fund. Pursuant to the
present terms of the Convention, interest received by the Fund from sources
within Japan is subject to a Japanese withholding tax at a rate of 10%.

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

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

NET ASSET VALUE

Each Fund's net asset value per share is calculated as of the close of
regular trading on the NYSE (currently 4:00 p.m., Eastern time) on each business
day, Monday through Friday,

<PAGE>
except on days when the NYSE is closed. The NYSE is currently scheduled to be
closed on New Year's Day, Washington's Birthday, Good Friday, Memorial Day
(observed), Independence Day, Labor Day, Thanksgiving Day and Christmas Day, and
on the preceding Friday or subsequent Monday when one of these holidays falls on
a Saturday or Sunday, respectively. The net asset value per share of each Fund
generally changes each day.

The net asset value per Common Share of each Fund is computed by adding the
Common Shares' pro rata share of the value of the Fund's assets, deducting the
Common Shares' pro rata share of the Fund's liabilities and the liabilities
specifically allocated to Common Shares and then dividing the result by the
total number of outstanding Common Shares. Generally, the Funds' investments are
valued at market value or, in the absence of a quoted market value with respect
to any portfolio securities, at fair value as determined by or under the
direction of the governing Board.

Portfolio securities that are primarily traded on foreign exchanges are
generally valued at the closing values of such securities on their respective
exchanges preceding the calculation of a Fund's net asset value, except that
when an occurrence subsequent to the time a value was so established is likely
to have changed such value, then the fair market value of those securities will
be determined by consideration of other factors by or under the direction of the
governing Board or its delegates.

Securities listed on a U.S. securities exchange (including securities
traded through the NASDAQ National Market System) or foreign securities exchange
will be valued on the basis of the closing value on the date on which the
valuation is made. Other U.S. over-the-counter securities, foreign
over-the-counter securities and securities listed or traded on certain foreign
stock exchanges whose operations are similar to the U.S. over-the-counter market
are valued on the basis of the bid price at the close of business on each day.
Option or futures contracts will be valued at the last sale price at 4:00 p.m.
(Eastern time) on the date on which the valuation is made, as quoted on the
primary exchange or board of trade on which the option or futures contract is
traded or, in the absence of sales, at the mean between the last bid and asked
prices. Unless the governing Board determines that using this valuation method
would not reflect the investments' value, short-term investments that mature in
60 days or less are valued on the basis of amortized cost, which involves
valuing a portfolio instrument at its cost initially 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
valuation of short sales of securities, which are not traded on a national
exchange, will be at the mean of bid and asked prices. Any assets and
liabilities initially expressed in non-U.S. dollar currencies are translated
into U.S. dollars at the prevailing rate as quoted by an independent pricing
service on the date of valuation. Further information regarding valuation
policies is contained in each Fund's Statement of Additional Information.

PERFORMANCE

The Funds quote the performance of Common Shares separately from
Advisor Shares. The net asset value of Common Shares is listed in The
Wall Street Journal each business day under the heading 'Warburg Pincus
Funds.' From time to time, each Fund may advertise the average annual
total return of its Common Shares over various periods of time. These total
return figures show the average percentage change in value of an
investment in the Common Shares from the beginning of the measuring
period to the end of the measuring period. The figures reflect changes
in the price of the Common Shares assuming that any income dividends
and/or capital gain distributions made by the Fund during the period were
reinvested in Common Shares of the Fund. Total return will be shown for
recent one-, five- and ten-year periods,

<PAGE>
and may be shown for other periods as well (such as from commencement of the
Fund's operations or on a year-by-year, quarterly or current year-to-date
basis).

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

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

In reports or other communications to investors or in advertising material,
a Fund may describe general economic and market conditions affecting the Fund.
The Fund may compare its performance with (i) that of other mutual funds as
listed in the rankings prepared by Lipper Analytical Services, Inc. or similar
investment services that monitor the performance of mutual funds or as set forth
in the publications listed below; (ii) in the case of the Capital Appreciation
Fund, with the Russell Midcap Index, the S&P Midcap 400 Index and the S&P 500
Index; in the case of the Emerging Growth Fund, with the Russell 2000 Small
Stock Index, the T. Rowe Price New Horizons Fund Index and the S&P 500 Index; in
the case of the International Equity Fund, the Morgan Stanley Capital
International Europe, Australia and Far East ('EAFE') Index, the Salomon Russell
Global Equity Index, the FT-Actuaries World Indices (jointly compiled by The
Financial Times, Ltd., Goldman, Sachs & Co. and NatWest Securities Ltd.) and the
S&P 500 Index; in the case of the Japan OTC Fund, the indexes noted above for
the International Equity Fund, as well as the Nikkei over-the-counter average,
the JASDAQ Index, the Nikkei 225 and 300 Stock Indexes and the Topix Index; in
the case of the Post-Venture Fund, with the Venture Capital 100 Index (compiled
by Venture Capital Journal) and the Russell 2000 Small Stock Index; all of which
are unmanaged indexes of common stocks; or (iii) other appropriate indexes of
investment securities or with data developed by Counsellors derived from such
indexes. The Post-Venture Fund may also make comparisons using data compiled by
the National Venture Capital Association. A Fund may include evaluations of the
Fund published by nationally recognized ranking services and by financial
publications that are nationally recognized, such as The Wall Street Journal,
Investor's Daily, Money, Inc., Institutional Investor, Barron's, Fortune,
Forbes, Business Week, Morningstar, Inc. and Financial Times.

In reports or other communications to investors or in advertising, each
Fund may also describe the general biography or work experience of the portfolio
managers of the Fund and may include quotations attributable to the portfolio
managers describing approaches taken in managing the Fund's investments,
research methodology underlying stock selection or the Fund's investment
objective. The Post-Venture Fund may discuss characteristics of venture capital
financed companies and the benefits expected to be achieved from investing in
these companies. Each Fund may also discuss the continuum of

<PAGE>
risk and return relating to different investments and the potential impact of
foreign stocks on a portfolio otherwise composed of domestic securities. In
addition, each Fund may from time to time compare the expense ratio of its
Common Shares to that of investment companies with similar objectives and
policies, based on data generated by Lipper Analytical Services, Inc. or similar
investment services that monitor mutual funds.
GENERAL INFORMATION

ORGANIZATION. The International Equity Fund was incorporated on February 9, 1989
under the laws of the State of Maryland. Although the Fund's name as set forth
in its charter is 'Counsellors International Equity Fund, Inc.,' it does
business under the name 'Warburg, Pincus International Equity Fund.' The
Emerging Growth Fund was incorporated on November 12, 1987 under the laws of the
State of Maryland. Although the Fund's name as set forth in its charter is
'Counsellors Emerging Growth Fund, Inc.,' it does business under the name
'Warburg, Pincus Emerging Growth Fund.' The Capital Appreciation Fund was
organized on January 20, 1987 under the laws of The Commonwealth of
Massachusetts and is a business entity commonly known as 'Massachusetts business
trust.' On February 26, 1992, the Fund amended the Agreement and Declaration of
Trust to change the name of the Fund from 'Counsellors Capital Appreciation
Fund' to 'Warburg, Pincus Capital Appreciation Fund.' The Japan OTC Fund and the
Post-Venture Fund were incorporated on July 26, 1994 and July 12, 1995,
respectively, under the laws of the State of Maryland.

The charter of each of the Emerging Growth Fund, the International Equity
Fund, the Japan OTC Fund and the Post-Venture Fund authorizes the Board to issue
three billion full and fractional shares of capital stock, $.001 par value per
share, of which one billion shares are designated Series 2 Shares (the Advisor
Shares). The Capital Appreciation Fund's Agreement and Declaration of Trust
authorizes the Board to issue an unlimited number of full and fractional shares
of beneficial interest, $.001 par value per share, of which one billion shares
are classified as Series 2 Shares (the Advisor Shares). Under each Fund's
charter documents, the governing Board has the power to classify or reclassify
any unissued shares of the Fund into one or more additional classes by setting
or changing in any one or more respects their relative rights, voting powers,
restrictions, limitations as to dividends, qualifications and terms and
conditions of redemption. The governing Board of a Fund may similarly classify
or reclassify any class of its shares into one or more series and, without
shareholder approval, may increase the number of authorized shares of the Fund.

MULTI-CLASS STRUCTURE. Each Fund offers a separate class of shares, the Advisor
Shares, pursuant to a separate prospectus. Advisor Shares may not be purchased
by individuals directly but institutions and retirement plans may purchase
Advisor Shares for individuals. Advisor Shares of each class represent equal pro
rata interests in the respective Fund and accrue dividends and calculate net
asset value and performance quotations in the same manner, as described
elsewhere in this Prospectus. Because of the higher fees borne by the Advisor
Shares, the total return on such shares can be expected, at any time, to be
lower than the total return on Common Shares. Investors may obtain information
concerning the Advisor Shares by calling Counsellors Securities at (800)
888-6878.

VOTING RIGHTS. Investors in a Fund are entitled to one vote for each full share
held and fractional votes for fractional shares held. Shareholders of a Fund
will vote in the aggregate except where otherwise required by law and except
that each class will vote separately on certain matters pertaining to its
distribution and shareholder servicing arrangements. There will normally be no
meetings of investors for the purpose of electing members of the governing Board
unless and until such time as less than a majority of the members holding office
have been elected by

<PAGE>

investors. Any Director of the International Equity Fund, the Emerging Growth
Fund, the Japan OTC Fund or the Post-Venture Fund may be removed from office
upon the vote of shareholders holding at least a majority of the relevant Fund's
outstanding shares, at a meeting called for that purpose. Investors of record of
no less than two-thirds of the outstanding shares of the Capital Appreciation
Fund may remove a Trustee through a declaration in writing or by vote cast in
person or by proxy at a meeting called for that purpose. A meeting will be
called for the purpose of voting on the removal of a Board member at the written
request of holders of 10% of the outstanding shares of a Fund. John L. Furth, a
Director and Trustee of the Funds, and Lionel I. Pincus, Chairman of the Board
and Chief Executive Officer of EMW, may be deemed to be controlling persons of
each Fund other than the Post-Venture Fund as of August 31, 1995 because they
may be deemed to possess or share investment power over shares owned by clients
of Counsellors and certain other entities.

SHAREHOLDER COMMUNICATIONS. Each investor will receive a quarterly statement of
his account, as well as a statement of his account after any transaction that
affects his share balance or share registration (other than the reinvestment of
dividends or distributions). Each Fund will also send to its investors a
semiannual report and an audited annual report, each of which includes a list of
the investment securities held by the Fund and a statement of the performance of
the Fund.

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

Each Fund is authorized to offer Advisor Shares exclusively to institutions
that enter into account servicing agreements ('Agreements') with the Fund
pursuant to a distribution plan described below. Pursuant to the terms of an
Agreement, the institution will provide certain distribution, shareholder
servicing, administrative and/or accounting services for its clients and
customers ('Customers') who are beneficial owners of Advisor Shares. Each Fund's
governing Board has approved a distribution plan pursuant to Rule 12b-1 under
the 1940 Act under which the Fund will pay each participating institution a
negotiated fee on an annual basis not to exceed .75% of the value of the average
daily net assets of its Customers invested in Advisor Shares.

Common Shares may be sold to or through institutions, including insurance
companies, that will not be paid by the Fund a distribution fee pursuant to Rule
12b-1 under the 1940 Act for services to their clients or customers who may be
deemed to be beneficial owners of Common Shares. These institutions may be paid
a fee by the Fund for transfer agency, administrative or other services provided
to their customers that invest in the Funds' Common Shares. These services
include maintaining account records, processing orders to purchase, redeem and
exchange Common Shares and responding to certain customer inquiries.
Organizations that provide recordkeeping or other services to certain employee
benefit plans and qualified and other retirement plans that include a Fund as an
investment alternative may also be paid a fee by the Fund for these services.

Counsellors and Counsellors Securities may, from time to time, at their own
expense, also provide compensation to these institutions and organizations. To
the extent they do so, such compensation does not represent an additional
expense to a Fund or its shareholders, since it will be paid from the assets of
Counsellors, Counsellors Service or their affiliates. Counsellors Securities
currently receives a fee equal to an annual rate of .25% of the average daily
net assets of each of the Japan OTC and Post-Venture Fund's Common Shares. See
'Management of the Funds -- Distributor.'

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

<PAGE>
TABLE OF CONTENTS

THE FUNDS' EXPENSES ...................................................... 2
FINANCIAL HIGHLIGHTS ..................................................... 3
INVESTMENT OBJECTIVES AND POLICIES ....................................... 6
PORTFOLIO INVESTMENTS .................................................... 9
RISK FACTORS AND SPECIAL
CONSIDERATIONS ....................................................... 11
PORTFOLIO TRANSACTIONS AND TURNOVER
RATE ................................................................. 13
CERTAIN INVESTMENT STRATEGIES ........................................... 14
INVESTMENT GUIDELINES ................................................... 21
MANAGEMENT OF THE FUNDS ................................................. 21
HOW TO OPEN AN ACCOUNT .................................................. 25
HOW TO PURCHASE SHARES .................................................. 26
HOW TO REDEEM AND EXCHANGE
SHARES ............................................................... 28
DIVIDENDS, DISTRIBUTIONS AND TAXES ...................................... 31
NET ASSET VALUE ......................................................... 32
PERFORMANCE ............................................................. 33
GENERAL INFORMATION ..................................................... 35
SHAREHOLDER SERVICING ................................................... 36

[LOGO]

[ ] WARBURG PINCUS
CAPITAL APPRECIATION FUND

[ ] WARBURG PINCUS
EMERGING GROWTH FUND

[ ] WARBURG PINCUS
POST-VENTURE CAPITAL FUND

[ ] WARBURG PINCUS
INTERNATIONAL EQUITY FUND

[ ] WARBURG PINCUS
JAPAN OTC FUND

PROSPECTUS

SEPTEMBER , 1995

WPEQF-1-0995

<PAGE>
[Logo]

PROSPECTUS

SEPTEMBER 30, 1995

[ ] WARBURG PINCUS POST-VENTURE CAPITAL FUND

<PAGE>

SUBJECT TO COMPLETION, DATED SEPTEMBER 6, 1995

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

September 30, 1995

PROSPECTUS

Warburg Pincus Advisor Funds are a family of open-end mutual funds that are
offered to financial institutions investing on behalf of their customers and to
retirement plans that elect to make one or more Advisor Funds an investment
option for participants in the plans. One Advisor Fund is described in this
Prospectus:
WARBURG, PINCUS POST-VENTURE CAPITAL FUND (the 'Fund') seeks long-term growth of
capital by investing principally in equity securities of issuers
in their post-venture capital stage of development.

The Fund currently offers two classes of shares, one of which, the Advisor
Shares, is offered pursuant to this Prospectus. The Advisor Shares of the Fund,
as well as Advisor Shares of certain other Warburg Pincus-advised funds, are
sold under the name 'Warburg Pincus Advisor Funds.' The Advisor Shares may not
be purchased by individuals directly but institutions and retirement plans
('Institutions') may purchase Advisor Shares for individuals. The Advisor Shares
impose a 12b-1 fee of up to .75% per annum, which is the economic equivalent of
a sales charge. Common Shares are available for purchase by individuals directly
and are offered by a separate prospectus.

NO MINIMUM INVESTMENT

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

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

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

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

<PAGE>
THE FUND'S EXPENSES

The Fund currently offers two separate classes of shares: Common Shares and
Advisor Shares. See 'General Information' and 'Shareholder Servicing.' Because
of the higher fees borne by Advisor Shares, the total return on such shares can
be expected, at any time, to be lower than the total return on Common Shares.

Shareholder Transaction Expenses
Maximum Sales Load Imposed on Purchases (as a percentage of offering price).................... 0
Annual Fund Operating Expenses (as a percentage of average net assets) (after fee waivers)
Management Fees................................................................................ .69%
12b-1 Fees..................................................................................... .75%*
Other Expenses................................................................................. .71%
---------
Total Fund Operating Expenses.................................................................. 2.15%

</TABLE>

EXAMPLE
You would pay the following expenses
on a $1,000 investment, assuming (1) 5% annual return and (2) redemption at the end
of each time period:
1 year...................................................................................................... $22
3 years..................................................................................................... $67

</TABLE>

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

* At least a portion of these fees should be considered by the investor to be
the economic equivalent of a sales charge.

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

The expense table shows the costs and expenses that an investor will bear
directly or indirectly as an Advisor Shareholder of the Fund. 'Other Expenses'
are based upon estimated amounts to be charged in the current fiscal year.
Absent the anticipated waiver of fees by the Fund's investment adviser and
co-administrator, Management Fees would equal 1.25%, Other Expenses would equal
.75% and Total Fund Operating Expenses would equal 2.75%.Certain broker-dealers
and financial institutions also may charge their clients fees in connection with
investments in Advisor Shares, which fees are not reflected in the table. The
Example should not be considered a representation of past or future expenses;
actual Fund expenses may be greater or less than those shown. Moreover, while
the Example assumes a 5% annual return, the Fund's actual performance will vary
and may result in a return greater or less than 5%. Long-term holders of Advisor
Shares may pay more than the economic equivalent of the maximum front-end sales
charges permitted by the National Association of Securities Dealers, Inc. (the
'NASD').

<PAGE>
INVESTMENT OBJECTIVE AND POLICIES

The Fund's investment objective is long-term growth of capital. The Fund is
a diversified management investment company that pursues its investment
objective by investing primarily in equity securities of companies considered by
Counsellors to be in their post-venture capital stage of development. Under
normal market conditions, the Fund will invest at least 65% of its total assets
in equity securities of 'post-venture capital companies.' A post-venture capital
company is a company that meets these criteria: (i) its early stage financing
was provided by venture capitalists and (ii) it is engaged in an initial public
offering of its securities or it completed an initial public offering of its
securities within ten years prior to purchase by the Fund.

Counsellors has acknowledged expertise in researching smaller companies and
companies in the early stages of development. Its team of analysts, led by
Elizabeth Dater and Stephen Lurito, regularly monitors over 250 of the larger
domestic venture capital funds. The Fund will focus on post-venture capital
companies that are traded on a national securities exchange or in an organized
over-the-counter market. The Fund 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 Fund's assets invested in these securities, which
together with the Fund's other illiquid assets may not exceed 15% of the Fund's
assets, will vary over time depending on investment opportunities and other
factors. The Fund may also invest in securities of companies that do not meet
the definition of post-venture capital companies that are experiencing unusual
developments affecting their capital structure, such as a reorganization or
recapitalization; an acquisition, consolidation, merger or tender offer; or a
change in corporate control.

PORTFOLIO INVESTMENTS

<PAGE>
INVESTMENT GRADE DEBT. The Fund may invest up to 20% of its total assets in
investment grade debt securities (other than money market instruments) and
preferred stocks that are not convertible into common stock for the purpose of
seeking capital appreciation. The interest income to be derived may be
considered as one factor in selecting debt securities for investment by
Counsellors. Because the market value of debt obligations can be expected to
vary inversely to changes in prevailing interest rates, investing in debt
obligations may provide an opportunity for growth of capital when interest rates
are expected to decline. The success of such a strategy is dependent upon
Counsellors' ability to accurately forecast changes in interest rates. The
market value of debt obligations may also be expected to vary depending upon,
among other factors, the ability of the issuer to repay principal and interest,
any change in investment rating and general economic conditions. A security will
be deemed to be investment grade if it is rated within the four highest grades
by Moody's Investors Service, Inc. ('Moody's') or Standard & Poor's Ratings
Group ('S&P') or, if unrated, is determined to be of comparable quality by
Counsellors. Bonds rated in the fourth highest grade may have speculative
characteristics and changes in economic conditions or other circumstances are
more likely to lead to a weakened capacity to make principal and interest
payments than is the case with higher grade bonds. Subsequent to its purchase by
the Fund, an issue of securities may cease to be rated or its rating may be
reduced below the minimum required for purchase by the Fund. Neither event will
require sale of such securities. Counsellors will consider such event in its
determination of whether the Fund should continue to hold the securities.

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

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

Repurchase Agreements. The Fund may invest in repurchase agreement
transactions on portfolio securities with member banks of the Federal Reserve
System and certain non-bank dealers. Repurchase agreements are contracts under
which the buyer of a security simultaneously commits to resell the security to
the seller at an agreed-upon price and date. Under the terms of a typical
repurchase agreement, the Fund would acquire any underlying security for a
relatively short period (usually not more than one week) subject to an
obligation of the seller to repurchase, and the Fund to resell, the obligation
at an agreed-upon price and time, thereby determining the yield during the
Fund's holding period. This arrangement results in a fixed rate of return that
is not subject to market fluctuations during the Fund's holding period. The
value of the underlying securities will at all times be at least equal to the
total amount of the purchase obligation, including interest. The Fund

<PAGE>
bears a risk of loss in the event that the other party to a repurchase agreement
defaults on its obligations or becomes bankrupt and the Fund is delayed or
prevented from exercising its right to dispose of the collateral securities,
including the risk of a possible decline in the value of the underlying
securities during the period while the Fund seeks to assert this right.
Counsellors, acting under the supervision of the Fund's Board of Directors (the
'Board'), monitors the creditworthiness of those bank and non-bank dealers with
which the Fund enters into repurchase agreements to evaluate this risk. A
repurchase agreement is considered to be a loan under the 1940 Act.

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

U.S. GOVERNMENT SECURITIES. U.S. government securities in which the Fund may
invest include: direct obligations of the U.S. Treasury and obligations issued
by U.S. government agencies and instrumentalities, including instruments that
are supported by the full faith and credit of the United States, instruments
that are supported by the right of the issuer to borrow from the U.S. Treasury
and instruments that are supported by the credit of the instrumentality.

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

RISK FACTORS AND SPECIAL
CONSIDERATIONS

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

<PAGE>
companies' shares could significantly decline in value. Therefore, an investment
in the Fund may involve a greater degree of risk than an investment in other
mutual funds that seek capital appreciation by investing exclusively in better-
known, larger companies. For certain additional risks relating to the Fund's
investments, see 'Portfolio Investments' beginning at page 3 and 'Certain
Investment Strategies' below.

INVESTMENTS IN NON-PUBLICLY TRADED SECURITIES. Although the Fund expects to
invest primarily in publicly traded equity securities, it may invest up to 15%
of its assets in non-publicly traded equity securities, which may involve a high
degree of business and financial risk and may result in substantial losses.
Because of the absence of any liquid trading market currently for these
investments, the Fund may take longer to liquidate these positions than would be
the case for publicly traded securities. Although these securities may be resold
in privately negotiated transactions, the prices realized on such sales could be
less than those originally paid by the Fund. Further, companies whose securities
are not publicly traded may not be subject to the disclosure and other investor
protection requirements applicable to companies whose securities are publicly
traded. The Fund's investment in illiquid securities is subject to the risk that
should the Fund desire to sell any of these securities when a ready buyer is not
available at a price that is deemed to be representative of their value, the
value of the Fund's net assets could be adversely affected.

PORTFOLIO TRANSACTIONS AND
TURNOVER RATE

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

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

CERTAIN INVESTMENT STRATEGIES

Although there is no intention of doing so during the coming year, the Fund
is authorized to engage in the following investment strategies: (i) purchasing
securities on a when-issued basis and purchasing or selling securities for
delayed-delivery and (ii) lending portfolio securities. The Fund may engage in
options or futures transactions for the purpose of hedging against a decline in
value of its portfolio holdings or to generate income to offset expenses or
increase return. Such transactions that are not considered hedging should be
considered speculative and may serve to increase the Fund's investment risk.
Detailed information concerning these strategies and their related risks is
contained below and in the Statement of Additional Information.

FOREIGN SECURITIES. The Fund may invest up to 20% of its total assets in the
securities of foreign

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

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

WRITING OPTIONS ON SECURITIES. The Fund may write covered call options and
covered put options on up to 25% of the net asset value of the stock and debt
securities in its portfolio and will realize fees (referred to as 'premiums')
for granting the rights evidenced by the options. A put option embodies the
right of its purchaser to compel the writer of the option to purchase from the
option holder an underlying security at a specified price for a specified time
period or at a specified time. In contrast, a call option embodies the right of
its purchaser to compel the writer of the option to sell to the option holder an
underlying security at a specified price for a specified time period or at a
specified price. Thus, the purchaser of a put option written by the Fund has the
right to compel the purchase by the Fund of the underlying security at an
agreed-upon price for a specified time period or at a

<PAGE>
specified time, while the purchaser of a call option written by the Fund has the
right to purchase from the Fund the underlying security owned by the Fund at the
agreed-upon price for a specified time period or at a specified time.

Upon the exercise of a put option written by the Fund, the Fund may suffer
an economic loss equal to the excess of the exercise price of the option over
the security's market value at the time of the option exercise, less the premium
received for writing the option. Upon the exercise of a call option written by
the Fund, the Fund may suffer an economic loss equal to the excess of the
security's market value at the time of the option exercise over the Fund's
acquisition cost of the security, less the premium received for writing the
option.

The Fund may engage in a closing purchase transaction to realize a profit,
to prevent an underlying security 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). To effect a closing purchase transaction, the Fund would purchase,
prior to the holder's exercise of an option that the Fund has written, an option
of the same series as that on which the Fund desires to terminate its
obligation. The obligation of the Fund under an option that it has written would
be terminated by a closing purchase transaction, but the Fund would not be
deemed to own an option as the result of the transaction. The ability of the
Fund to engage in closing transactions with respect to options depends on the
existence of a liquid secondary market. While the Fund generally will purchase
or write options only if there appears to be a liquid secondary market for the
options purchased or sold, for some options, no such secondary market may exist
or the market may cease to exist, particularly with respect to options that
trade over-the-counter ('OTC options').

Option writing for the Fund may be limited by position and exercise limits
established by securities exchanges and the NASD. Furthermore, the Fund may, at
times, have to limit its option writing in order to qualify as a regulated
investment company under the Internal Revenue Code of 1986, as amended (the
'Code').

In addition to writing covered options to generate income, the Fund may
enter into options 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 on a portfolio position
with a gain on the hedge position; at the same time, however, a properly
correlated hedge will result in a gain on the portfolio position being offset by
a loss on the hedge position. The Fund bears the risk that the prices of the
securities being hedged will not move in the same amount as the hedge. The Fund
will engage in hedging transactions only when deemed advisable by Counsellors.
Successful use by the Fund of options for hedging purposes will depend on
Counsellor's ability to correctly predict movements in the direction of the
security underlying the option or, in the case of stock index options (described
below), the underlying securities market, which could prove to be inaccurate.
Losses incurred in options transactions and the costs of these transactions will
affect the Fund's performance. Even if Counsellor's expectations are correct,
where options are used as a hedge there may be an imperfect correlation between
the change in the value of the options and of the portfolio securities hedged.
Therefore, an investment in the Fund may involve a greater risk than an
investment in other mutual funds that seek growth of capital.

PURCHASING PUT AND CALL OPTIONS ON SECURITIES. The Fund may utilize up to 10% of
its total assets to purchase put and call options on stocks and debt securities
that are traded on foreign as well as U.S. exchanges, as well as OTC options.

By buying a put, the Fund limits its risk of loss from a decline in the
market value of the security until the put expires. Any appreciation

<PAGE>

in the value of and yield otherwise available from the underlying security,
however, will be partially offset by the amount of the premium paid for the put
option and any related transaction costs. Call options may be purchased by the
Fund in order to acquire the underlying securities for the Fund at a price that
avoids any additional cost that would result from a substantial increase in the
market value of a security. The Fund also may purchase call options to increase
its return to investors at a time when the call is expected to increase in value
due to anticipated appreciation of the underlying security.

Prior to their expirations, put and call options may be sold in closing
sale transactions (sales by the Fund, prior to the exercise of options that it
has purchased, of options of the same series), and profit or loss from the sale
will depend on whether the amount received is more or less than the premium paid
for the option plus the related transaction costs.

STOCK INDEX OPTIONS. In addition to purchasing options on securities, the Fund
may utilize up to 10% of its total assets to purchase exchange-listed and OTC
put and call options on stock indexes, and may write put and call options on
such indexes. A stock index measures the movement of a certain group of stocks
by assigning relative values to the common stocks included in the index. Options
on stock indexes are similar to options on stock except that (i) the expiration
cycles of stock index options are monthly, while those of stock options are
currently quarterly, and (ii) the delivery requirements are different. Instead
of giving the right to take or make delivery of stock at a specified price, an
option on a stock index gives the holder the right to receive a cash 'exercise
settlement amount' equal to (a) the amount, if any, by which the fixed exercise
price of the option exceeds (in the case of a put) or is less than (in the case
of a call) the closing value of the underlying index on the date of exercise
multiplied by (b) a fixed 'index multiplier.' The discussion of options on
securities above, and the related risks, is applicable to options on stock
indexes.

FUTURES CONTRACTS AND OPTIONS. The Fund may enter into foreign currency,
interest rate and stock index futures contracts and purchase and write (sell)
related options that are traded on an exchange designated by the Commodity
Futures Trading Commission (the 'CFTC') or consistent with CFTC regulations on
foreign exchanges. These transactions may be entered into for 'bona fide
hedging' as defined in CFTC regulations and other permissible purposes including
(i) protecting against anticipated changes in the value of portfolio securities
the Fund intends to purchase and (ii) increasing return.

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
foreign currency at a specified price, date, time and place. An interest rate
futures contract is a standardized contract for the future delivery of a
specified interest rate sensitive security (such as a U.S. Treasury Bond or U.S.
Treasury Note or its equivalent) at a future date at a price set at the time of
the contract. Stock indexes are capitalization weighted indexes which reflect
the market value of the stock listed on the indexes. A stock index futures
contract is an agreement to be settled by delivery of an amount of cash equal to
a specified multiplier times the difference between the value of the index at
the beginning and at the end of the contract period. 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 at a specified exercise price at any
time prior to the expiration date of the option.

<PAGE>
and, in addition, for other purposes, provided that aggregate initial margin and
premiums required to establish positions other than those considered by the CFTC
to be 'bona fide hedging' will not exceed 5% of the Fund's net asset value,
after taking into account unrealized profits and unrealized losses on any such
contracts. The Fund reserves the right to engage in transactions involving
futures and options thereon to the extent allowed by CFTC regulations in effect
from time to time and in accordance with the Fund's policies. Certain provisions
of the Code may limit the extent to which the Fund may enter into futures
contracts or engage in options transactions.

There are several risks in connection with the use of futures contracts.
Successful use of futures contracts is subject to the ability of Counsellors to
predict correctly movements in the direction of the currency, interest rate or
stock index underlying the particular futures contract or related option. These
predictions and, thus, the use of futures contracts involve skills and
techniques that are different from those involved in the management of portfolio
securities. In addition, there can be no assurance that there will be a
correlation between movements in the currencies, interest rate or index
underlying the futures contract and movements in the price of the portfolio
securities which are the subject of a hedge. A decision concerning whether, when
and how to utilize futures involves the exercise of skill and judgment, and even
a well-conceived hedge may be unsuccessful to some degree because of unexpected
market behavior or trends in foreign currencies, interest rates or stock
indexes. Losses incurred in futures transactions and the costs of these
transactions will affect the Fund's performance.

A further risk involves the lack of a liquid secondary market for a futures
contract and the resulting inability to close out a futures contract. Futures
and options contracts may only be closed out by entering into offsetting
transactions on the exchange where the position was entered into (or a linked
exchange), and as a result of daily price fluctuation limits there can be no
assurance that an offsetting transaction could be entered into at an
advantageous price at any particular time. Consequently, the Fund may realize a
loss on a futures contract or option that is not offset by an increase in the
value of the Fund's securities that are being hedged or the Fund may not be able
to close a futures or options position without incurring a loss in the event of
adverse price movements.

CURRENCY EXCHANGE TRANSACTIONS. The Fund may engage in currency exchange
transactions to protect against uncertainty in the level of future exchange
rates and to increase the Fund's income and total return. The Fund will conduct
its currency exchange transactions (i) on a spot (i.e., cash) basis at the rate
prevailing in the currency exchange market, (ii) through entering into forward
contracts to purchase or sell currency, (iii) as described above, through
entering into foreign currency futures contracts or options on such contracts or
(iv) by purchasing currency options.

Forward Currency Contracts. A forward currency contract involves an
obligation to purchase or sell a specific currency at a future date, which may
be any fixed number of days from the date of the contract 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 their customers. The use of forward
currency contracts as a hedge 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. In addition, although forward currency contracts 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.

Currency Options. The Fund may purchase exchange-traded put and call
options on currencies. An option on a foreign currency gives the purchaser, in
return for a premium, the right to

<PAGE>
sell, in the case of a put, and buy, in the case of a call, the underlying
currency at a specified price during the term of the option. The benefit to the
Fund derived from purchases of foreign currency options, like the benefit
derived from other types of options, will be reduced by the amount of the
premium and related transaction costs. In addition, if currency exchange rates
do not move in the direction or to the extent anticipated, the Fund could
sustain losses on transactions in foreign currency options that would require it
to forgo a portion or all of the benefits of advantageous changes in the rates.

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

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

<PAGE>
Short Sales Against the Box. The Fund may, in addition to engaging in short
sales as described above, enter into a short sale of securities such that when
the short position is open the Fund owns an equal amount of the securities sold
short or owns preferred stocks or debt securities, convertible or exchangeable
without payment of further consideration, into an equal number of securities
sold short. This kind of short sale, which is referred to as one 'against the
box,' will be entered into by the Fund for the purpose of receiving a portion of
the interest earned by the executing broker from the proceeds of the sale. The
proceeds of the sale will generally be held by the broker until the settlement
date when the Fund delivers securities to close out its short position. Although
prior to delivery the Fund will have to pay an amount equal to any dividends
paid on the securities sold short, the Fund will receive the dividends from the
securities sold short or the dividends from the preferred stock or interest from
the debt securities convertible or exchangeable into the securities sold short,
plus a portion of the interest earned from the proceeds of the short sale. The
Fund will deposit, in a segregated account with its custodian or a qualified
subcustodian, the securities sold short or convertible or exchangeable preferred
stocks or debt securities in connection with short sales against the box. The
Fund will endeavor to offset transaction costs associated with short sales
against the box with the income from the investment of the cash proceeds. Not
more than 10% of the Fund's net assets (taken at current value) may be held as
collateral for short sales against the box at any
one time.

REVERSE REPURCHASE AGREEMENTS. The Fund may also enter into reverse repurchase
agreements with the same parties with whom it may enter into repurchase
agreements. Reverse repurchase agreements involve the sale of securities held by
the Fund pursuant to its agreement to repurchase them at a mutually agreed upon
date, price and rate of interest. At the time the Fund enters into a reverse
repurchase agreement, it will establish and maintain a segregated account with
an approved custodian containing cash or liquid high-grade debt securities
having a value not less than the repurchase price (including accrued interest).
The assets contained in the segregated account will be marked-to-market daily
and additional assets will be placed in such account on any day in which the
assets fall below the repurchase price (plus accrued interest). The Fund's
liquidity and ability to manage its assets might be affected when it sets aside
cash or portfolio securities to cover such commitments. Reverse repurchase
agreements involve the risk that the market value of the securities retained in
lieu of sale may decline below the price of the securities the Fund has sold but
is obligated to repurchase. In the event the buyer of securities under a reverse
repurchase agreement files for bankruptcy or becomes insolvent, such buyer or
its trustee or receiver may receive an extension of time to determine whether to
enforce the Fund's obligation to repurchase the securities, and the Fund's use
of the proceeds of the reverse repurchase agreement may effectively be
restricted pending such decision. Reverse repurchase agreements are considered
to be borrowings under the 1940 Act.

DOLLAR ROLL TRANSACTIONS. The Fund also may enter into 'dollar rolls,' in which
the Fund sells fixed income securities for delivery in the current month and
simultaneously contracts to repurchase similar but not identical (same type,
coupon and maturity) securities on a specified future date. During the roll
period, the Fund would forgo principal and interest paid on such securities. The
Fund would be compensated by the difference between the current sales price and
the forward price for the future purchase, as

<PAGE>
well as by the interest earned on the cash proceeds of the initial sale. At the
time that the Fund enters into a dollar roll transaction, it will place in a
segregated account maintained with an approved custodian cash or other liquid
high-grade debt obligations having a value not less than the repurchase price
(including accrued interest) and will subsequently monitor the account to ensure
that its value is maintained. For financial reporting and tax purposes, the Fund
proposes to treat dollar rolls as two separate transactions: one involving the
sale of a security and a separate transaction involving the purchase of a
security. The Fund does not currently intend to enter into dollar rolls that are
accounted for as a financing.
INVESTMENT GUIDELINES

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

MANAGEMENT OF THE FUND

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

For the services provided by Counsellors, the Fund pays Counsellors a fee
calculated at an annual rate of 1.25% of the Fund's average daily net assets.
Although this advisory fee is higher than that paid by most other investment
companies, including money market and fixed income funds, Counsellors believes
that it is comparable to fees charged by other mutual funds with similar
policies and strategies. The advisory agreement between the Fund and Counsellors
provides that Counsellors will reimburse the Fund to the extent certain expenses
that are described in the Statement of Additional Information exceed applicable
state expense limitations. Counsellors and the Fund's co-administrators may
voluntarily waive a portion of their fees from time to time and temporarily
limit the expenses to be borne by the Fund.

Counsellors is a professional investment counselling firm which provides
investment services to investment companies, employee benefit

<PAGE>

plans, endowment funds, foundations and other institutions and individuals. As
of August 31, 1995, Counsellors managed approximately $
billion of assets, including approximately $ billion of assets of twenty
investment companies or portfolios. Incorporated in 1970, Counsellors is a
wholly owned subsidiary of Warburg, Pincus Counsellors G.P. ('Counsellors
G.P.'), a New York general partnership. E.M. Warburg, Pincus & Co., Inc. ('EMW')
controls Counsellors through its ownership of a class of voting preferred stock
of Counsellors. Counsellors G.P. has no business other than being a holding
company of Counsellors and its subsidiaries. Counsellors' address is 466
Lexington Avenue, New York, New York 10017-3147.

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

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

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

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

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

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

CUSTODIAN. PNC Bank, National Association ('PNC') serves as custodian of the
Fund's U.S. assets and State Street Bank and Trust Company ('State Street')
serves as custodian of the Fund's

<PAGE>
non-U.S. assets. State Street's principal business address is 225 Franklin
Street, Boston, Massachusetts 02110. Like PFPC, PNC is a subsidiary of PNC Bank
Corp. and its principal business address is Broad and Chestnut Streets,
Philadelphia, Pennsylvania 19101.

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

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

Warburg Pincus Advisor Fund shares are only available for investment by
institutions on behalf of their customers and through retirement plans that
elect to make one or more Advisor Funds an option for participants in the plans.
Individuals, including participants in retirement plans, cannot invest directly
in Advisor Shares of the Fund, but may do so only through a participating
Institution. The Fund reserves the right to make Advisor Shares available to
other investors in the future. References in this Prospectus to shareholders or
investors are generally to Institutions as the record holders of the Advisor
Shares.

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

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

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

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

Orders by wire will not be accepted until a completed account application
has been received in proper form, and an account number has been established. If
a telephone order is received by the close of regular trading on the New York
Stock Exchange ('NYSE') (currently 4:00 p.m., Eastern time) and payment by wire
is received on the same day in proper form in accordance with instructions set
forth above, the shares will be priced according to the net asset value of the
Fund on that day and are entitled to dividends and distributions beginning on
that day. If payment by wire is received in proper form by the close of the NYSE
without a prior telephone order, the purchase will be priced according to the
net asset value of the Fund on that day and is entitled to dividends and
distributions beginning

<PAGE>
on that day. However, if a wire in proper form that is not preceded by a
telephone order is received after the close of regular trading on the NYSE, the
payment will be held uninvested until the order is effected at the close of
business on the next business day. Payment for orders that are not accepted will
be returned after prompt inquiry. Certain organizations that have entered into
agreements with the Fund or its agent may enter confirmed purchase orders on
behalf of customers, with payment to follow no later than the Fund's pricing on
the following business day. If payment is not received by such time, the
organization could be held liable for resulting fees or losses.

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

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

HOW TO REDEEM AND EXCHANGE
SHARES

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

Institutions may redeem Advisor Shares by calling Warburg Pincus Advisor
Funds at (800) 888-6878 between 9:00 a.m. and 4:00 p.m. (Eastern time) on any
business day. An investor making a telephone withdrawal should state (i) the
name of the Fund, (ii) the account number of the Fund, (iii) the name of the
investor(s) appearing on the Fund's records, (iv) the amount to be withdrawn and
(v) the name of the person requesting the redemption.

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

<PAGE>
business day following the date a redemption order is effected. If, however, in
the judgment of Counsellors, immediate payment would adversely affect the Fund,
it reserves the right to pay the redemption proceeds within seven days after the
redemption order is effected. Furthermore, the Fund may suspend the right of
redemption or postpone the date of payment upon redemption (as well as suspend
or postpone the recordation of an exchange of shares) for such periods as are
permitted under the 1940 Act.

EXCHANGE OF SHARES. An Institution may exchange Advisor Shares of the Fund for
Advisor Shares of the other Warburg Pincus Advisor Funds at their respective net
asset values. Exchanges may be effected in the manner described under
'Redemption of Shares' above. If an exchange request is received by Warburg
Pincus Advisor Funds prior to 4:00 p.m. (Eastern time) the exchange will be made
at each fund's net asset value determined at the end of that business day.
Exchanges may be effected without a sales charge. The exchange privilege may be
modified or terminated at any time upon 60 days' notice to shareholders.

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

DIVIDENDS, DISTRIBUTIONS AND TAXES

DIVIDENDS AND DISTRIBUTIONS. The Fund calculates its dividends from net
investment income. Net investment income includes interest accrued and dividends
earned on the Fund's portfolio securities for the applicable period less
applicable expenses. The Fund declares dividends from its net investment income
semiannually and pays them in the calendar year in which they are declared. Net
investment income earned on weekends and when the NYSE is not open will be
computed as of the next business day. Distributions of net realized long-term
and short-term capital gains are declared annually and, as a general rule, will
be distributed or paid in November or December of each calendar year. Unless an
investor instructs the Fund to pay dividends or distributions in cash, dividends
and distributions will automatically be reinvested in additional Advisor Shares
of the Fund at net asset value. The election to receive dividends in cash may be
made on the account application or, subsequently, by writing to Warburg Pincus
Advisor Funds at the address set forth under 'How to Purchase Shares' or by
calling Warburg Pincus Advisor Funds at (800) 888-6878.

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

TAXES. The Fund intends to qualify each year as a 'regulated investment company'
within the meaning of the Code. The Fund, if it qualifies as

<PAGE>
a regulated investment company, will be subject to a 4% non-deductible excise
tax measured with respect to certain undistributed amounts of ordinary income
and capital gain. The Fund expects to pay such additional dividends and to make
such additional distributions as are necessary to avoid the application of this
tax.

Dividends paid from net investment income and distributions of net realized
short-term capital gains are taxable to investors as ordinary income, regardless
of the length of time shareholders have held the Advisor Shares or whether
received in cash or reinvested in additional Advisor Shares. Distributions
derived from net realized long-term capital gains will be taxable to investors
as long-term capital gains, whether received in cash or reinvested in Advisor
Shares and regardless of how long the shareholder has held the Advisor Shares.
As a general rule, an investor's gain or loss on a sale or redemption of its
Fund shares will be a long-term capital gain or loss if it has held its shares
for more than one year and will be a short-term capital gain or loss if it has
held its shares for one year or less. However, any loss realized upon the sale
or redemption of shares within six months from the date of their purchase will
be treated as a long-term capital loss to the extent of any amounts treated as
distributions of long-term capital gain during such six-month period with
respect to such shares. Investors may be proportionately liable for taxes on
income and gains of the Fund, but investors not subject to tax on their income
will not be required to pay tax on amounts distributed to them. The Fund's
dividends, to the extent not derived from dividends attributable to certain
types of stock issued by U.S. domestic corporations, will not qualify for the
dividends received deduction for corporations.

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

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

<PAGE>
certain dividends and distributions which were received from the Fund during the
Fund's prior taxable year. Investors should consult their own tax advisers with
specific reference to their own tax situations, including their state and local
tax liabilities. Individuals investing in the Fund through Institutions should
consult those Institutions or their own tax advisers regarding the tax
consequences of investing in the Fund.
NET ASSET VALUE

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

The net asset value per Advisor Share of the Fund is computed by adding the
Advisor Share's pro rata share of the value of the Fund's assets, deducting the
Advisor Share's pro rata share of the Fund's liabilities and the liabilities
specifically allocated to Advisor Shares and then dividing the result by the
total number of outstanding Advisor Shares. Generally, the Fund's investments
are valued at market value or, in the absence of a quoted market value with
respect to any portfolio securities, at fair value as determined by or under the
direction of the Board.

Portfolio securities that are primarily traded on foreign exchanges are
generally valued at the closing values of such securities on their respective
exchanges preceding the calculation of the Fund's net asset value, except that
when an occurrence subsequent to the time a value was so established is likely
to have changed such value, then the fair market value of those securities will
be determined by consideration of other factors by or under the direction of the
Board.

Securities listed on a U.S. securities exchange (including securities
traded through the NASDAQ National Market System) or foreign securities exchange
will be valued on the basis of the closing value on the date on which the
valuation is made. Other U.S. over-the-counter securities, foreign
over-the-counter securities and securities listed or traded on certain foreign
stock exchanges whose operations are similar to the U.S. over-the-counter market
are valued on the basis of the bid price at the close of business on each day.
Option or futures contracts will be valued at the last sale price at 4:00 p.m.
(Eastern time) on the date on which the valuation is made, as quoted on the
primary exchange or board of trade on which the option or futures contract is
traded or, in the absence of sales, at the mean between the last bid and asked
prices. Unless the Board determines that using this valuation method would not
reflect the investments' value, short-term investments that mature in 60 days or
less are valued on the basis of amortized cost, which involves valuing a
portfolio instrument at its cost initially 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 valuation
of short sales of securities, which are not traded on a national exchange, will
be at the mean of bid and asked prices. Any assets and liabilities initially
expressed in non-U.S. dollar currencies are translated into U.S. dollars at the
prevailing rate as quoted by an independent pricing service on the date of
valuation. Further information regarding valuation policies is contained in the
Statement of Additional Information.

PERFORMANCE

The Fund quotes the performance of Advisor Shares separately from Common
Shares. The net asset value of the Advisor Shares is listed in The Wall Street
Journal each business day under

<PAGE>

the heading Warburg Pincus Advisor Funds. From time to time, the Fund may
advertise the average annual total return of Advisor Shares over various periods
of time. These total return figures show the average percentage change in value
of an investment in the Advisor Shares from the beginning of the measuring
period to the end of the measuring period. The figures reflect changes in the
price of the Advisor Shares assuming that any income dividends and/or capital
gain distributions made by the Fund during the period were reinvested in Advisor
Shares. Total return will be shown for recent one-, five- and ten-year periods,
and may be shown for other periods as well (such as on a year-by-year, quarterly
or current year-to-date basis).

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

Investors should note that total return figures are based on historical
earnings and are not intended to indicate future performance. The Statement of
Additional Information describes the method used to determine total return.
Current total return figures may be obtained by calling Warburg Pincus Advisor
Funds at (800) 888-6878.

In reports or other communications to investors or in advertising material,
the Fund may describe general economic and market conditions affecting the Fund
and may compare its performance with (i) that of other mutual funds as listed in
the rankings prepared by Lipper Analytical Services, Inc. or similar investment
services that monitor the performance of mutual funds or as set forth in the
publications listed below; (ii) with the Venture Capital 100 Index (compiled by
Venture Capital Journal) and the Russell 2000 Small Stock Index, which are
unmanaged indexes of common stocks; or (iii) other appropriate indexes of
investment securities or with data developed by Counsellors derived from such
indexes. The Fund may also make comparisons using data compiled by the National
Venture Capital Association. The Fund may also include evaluations published by
nationally recognized ranking services and by financial publications that are
nationally recognized, such as The Wall Street Journal, Investor's Daily, Money,
Inc., Institutional Investor, Barron's, Fortune, Forbes, Business Week,
Morningstar, Inc. and Financial Times.

In reports or other communications to investors or in advertising, the Fund
may discuss characteristics of venture capital financed companies and the
benefits expected to be achieved from investing in these companies. The Fund may
also describe the general biography or work experience of the portfolio managers
of the Fund and may include quotations attributable to the portfolio managers
describing approaches taken in managing the Fund's investments, research
methodology underlying stock selection or the Fund's investment objective. The
Fund may also discuss 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. In addition, the Fund may from time to time
compare the expense ratio of Advisor Shares to that of

<PAGE>
investment companies with similar objectives and policies, based on data
generated by Lipper Analytical Services, Inc. or similar investment services
that monitor mutual funds.
GENERAL INFORMATION

ORGANIZATION. The Fund was incorporated on July 12, 1995 under the laws of the
State of Maryland. The Fund's charter authorizes the Board to issue three
billion full and fractional shares of capital stock, $.001 par value per share,
of which one billion shares are designated Series 2 Shares (the Advisor Shares).
Under the Fund's charter documents, the Board has the power to classify or
reclassify any unissued shares of the Fund into one or more additional classes
by setting or changing in any one or more respects their relative rights, voting
powers, restrictions, limitations as to dividends, qualifications and terms and
conditions of redemption. The Board may similarly classify or reclassify any
class of its shares into one or more series and, without shareholder approval,
may increase the number of authorized shares of the Fund.

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

VOTING RIGHTS. Investors in the Fund are entitled to one vote for each full
share held and fractional votes for fractional shares held. Shareholders of the
Fund will vote in the aggregate except where otherwise required by law and
except that each class will vote separately on certain matters pertaining to its
distribution and shareholder servicing arrangements. There will normally be no
meetings of investors for the purpose of electing members of the Board unless
and until such time as less than a majority of the members holding office have
been elected by investors. Any member of the Board may be removed from office
upon the vote of shareholders holding at least a majority of the Fund's
outstanding shares, at a meeting called for that purpose. A meeting will be
called for the purpose of voting on the removal of a Board member at the written
request of holders of 10% of the outstanding shares of the Fund.

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

SHAREHOLDER SERVICING

The Fund is authorized to offer Advisor Shares exclusively to Institutions
whose clients or customers (or participants in the case of retirement plans)
('Customers') are beneficial owners of Advisor Shares. Either those Institutions
or companies providing certain services to them (together, 'Service
Organizations') will enter into account servicing agreements ('Agreements') with
the Fund pursuant to a Distribution Plan as described below. Pursuant to the
terms of an Agreement, the Service Organization

<PAGE>

agrees to provide certain distribution, shareholder servicing, administrative
and/or accounting services for its Customers. Distribution services would be
marketing or other services in connection with the promotion and sale of Advisor
Shares. Shareholder services that may be provided include responding to Customer
inquiries, providing information on Customer investments and providing other
shareholder liaison services. Administrative and accounting services related to
the sale of Advisor Shares may include (i) aggregating and processing purchase
and redemption requests from Customers and placing net purchase and redemption
orders with the Fund's transfer agent, (ii) processing dividend payments from
the Fund on behalf of Customers and (iii) providing sub-accounting related to
the sale of Advisor Shares beneficially owned by Customers or the information to
the Fund necessary for sub-accounting. The Board has approved a Distribution
Plan (the 'Plan') pursuant to Rule 12b-1 under the 1940 Act under which the Fund
will pay each participating Service Organization a negotiated fee on an annual
basis not to exceed .75% (up to a .25% annual service fee and a .50% annual
distribution fee) of the value of the average daily net assets of its Customers
invested in Advisor Shares. The Board evaluates the appropriateness of the Plan
on a continuing basis and in doing so considers all relevant factors.

Counsellors and Counsellors Securities may, from time to time, at their own
expense, provide compensation to these institutions. To the extent they do so,
such compensation does not represent an additional expense to the Fund or its
shareholders since it will be paid from the assets of Counsellors, Counsellors
Service or their affiliates.

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

<PAGE>
TABLE OF CONTENTS

THE FUND'S EXPENSES ...................................................... 2
INVESTMENT OBJECTIVE AND POLICIES ........................................ 3
PORTFOLIO INVESTMENTS .................................................... 3
RISK FACTORS AND SPECIAL
CONSIDERATIONS ........................................................ 5
PORTFOLIO TRANSACTIONS AND TURNOVER
RATE .................................................................. 6
CERTAIN INVESTMENT STRATEGIES ............................................ 6
INVESTMENT GUIDELINES ................................................... 13
MANAGEMENT OF THE FUND .................................................. 13
HOW TO PURCHASE SHARES .................................................. 15
HOW TO REDEEM AND EXCHANGE
SHARES ............................................................... 16
DIVIDENDS, DISTRIBUTIONS AND TAXES ...................................... 17
NET ASSET VALUE ......................................................... 19
PERFORMANCE ............................................................. 19
GENERAL INFORMATION ..................................................... 21
SHAREHOLDER SERVICING ................................................... 21

[LOGO]

[ ] WARBURG PINCUS
POST-VENTURE CAPITAL FUND

PROSPECTUS

SEPTEMBER 30, 1995

ADPVC-1-0995

<PAGE>

<PAGE>1

Subject to Completion, dated September 6, 1995

STATEMENT OF ADDITIONAL INFORMATION
September 30, 1995

WARBURG PINCUS POST-VENTURE CAPITAL FUND

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

Contents

Page
----
Investment Objective . . . . . . . . . . . . . . . . 2
Investment Policies . . . . . . . . . . . . . . . . . 2
Management of the Fund . . . . . . . . . . . . . . . 23
Additional Purchase and Redemption Information . . . 30
Exchange Privilege . . . . . . . . . . . . . . . . . 31
Additional Information Concerning Taxes . . . . . . . 32
Determination of Performance . . . . . . . . . . . . 35
Auditors and Counsel . . . . . . . . . . . . . . . . 36
Financial Statement . . . . . . . . . . . . . . . . . 36
Appendix -- Description of Ratings . . . . . . . . . A-1
Report of Coopers & Lybrand L.L.P.,
Independent Auditors . . . . . . . . . . . . . . . A-3

This Statement of Additional Information is meant to be read in
conjunction with the combined Prospectus for the Common Shares of Warburg
Pincus Post-Venture Capital Fund (the "Fund"), Warburg Pincus Capital
Appreciation Fund, Warburg Pincus Emerging Growth Fund, Warburg Pincus
International Equity Fund and Warburg Pincus Japan OTC Fund, and with the
Prospectus for the Advisor Shares of the Fund, each dated September 30, 1995,
and is incorporated by reference in its entirety into those Prospectuses.
Because this Statement of Additional Information is not itself a prospectus,
no investment in shares of the Fund should be made solely upon the information
contained herein. Copies of the Fund's Prospectuses and information regarding
the Fund's current performance may be obtained by calling the Fund at
(800) 257-5614. Information regarding the status of shareholder accounts may
be obtained by calling the Fund at (800) 888-6878 or by writing to the Fund,
P.O. Box 9030, Boston, Massachusetts 02205-9030.

<PAGE>2

INVESTMENT OBJECTIVE

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

INVESTMENT POLICIES

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

Additional Information on Investment Practices

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

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

<PAGE>3

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

Lending of Portfolio Securities. The Fund may lend portfolio
securities to brokers, dealers and other financial organizations that meet
capital and other credit requirements or other criteria established by the
Fund's Board of Directors (the "Board"). These loans, if and when made, may
not exceed 20% of the Fund's total assets taken at value. The Fund will not
lend portfolio securities to E.M. Warburg, Pincus & Co., Inc. ("EMW") or its
affiliates unless it has applied for and received specific authority to do so
from the Securities and Exchange Commission (the "SEC"). Loans of portfolio
securities will be collateralized by cash, letters of credit or U.S.
government securities, which are maintained at all times in an amount equal to
at least 100% of the current market value of the loaned securities. Any gain
or loss in the market price of the securities loaned that might occur during
the term of the loan would be for the account of the Fund. From time to time,
the Fund may return a part of the interest earned from the investment of
collateral received for securities loaned to the borrower and/or a third party
that is unaffiliated with the Fund and that is acting as a "finder."

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

<PAGE>4

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

A change in the value of a foreign currency relative to the U.S.
dollar will result in a corresponding change in the dollar value of the Fund'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 to shareholders by the Fund.
The rate of exchange between the U.S. dollar and other currencies is
determined by the forces of supply and demand in the foreign exchange markets.
Changes in the exchange rate may result over time from the interaction of many
factors directly or indirectly affecting economic and political conditions in
the United States and a particular foreign country, including economic and
political developments in other countries. Of particular importance are rates
of inflation, interest rate levels, the balance of payments and the extent of
government surpluses or deficits in the United States and the particular
foreign country, all of which are in turn sensitive to the monetary, fiscal
and trade policies pursued by the governments of the United States and foreign
countries important to international trade and finance. Governmental
intervention may also play a significant role. National governments rarely
voluntarily allow their currencies to float freely in response to economic
forces. Sovereign governments use a variety of techniques, such as
intervention by a country's central bank or imposition of regulatory controls
or taxes, to affect the exchange rates of their currencies.

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

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

<PAGE>5

sold. Due to the increased exposure of the Fund to market and foreign
exchange fluctuations brought about by such delays, and due to the
corresponding negative impact on Fund liquidity, the Fund will avoid investing
in countries which are known to experience settlement delays which may expose
the Fund to unreasonable risk of loss.

The interest payable on the Fund's foreign securities may be subject
to foreign withholding taxes, and while investors may be able to claim some
credit or deductions for such taxes with respect to their allocated shares of
such foreign tax payments, the general effect of these taxes will be to reduce
the Fund's income.

Currency Transactions. The value in U.S. dollars of the assets of
the Fund that are invested in foreign securities may be affected favorably or
unfavorably by changes in exchange control regulations, and the Fund may incur
costs in connection with conversion between various currencies. The Fund,
therefore, may engage in currency exchange transactions to protect against
uncertainty in the level of future exchange rates and may also engage in
currency transactions to increase income and total return. Currency exchange
transactions may be from any non-U.S. currency into U.S. dollars or into other
appropriate currencies. The Fund will conduct its currency exchange
transactions (i) on a spot (i.e., cash) basis at the rate prevailing in the
currency exchange market, (ii) through entering into forward contracts to
purchase or sell currency, (iii) by purchasing currency options or (iv)
through entering into foreign currency futures contracts or options on such
contracts. If a devaluation is generally anticipated, the Fund may not be
able to contract to sell the currency at a price above the devaluation level
it anticipates. The cost to the Fund of engaging in currency transactions
varies with factors such as the currency involved, the length of the contract
period and the market conditions then prevailing. Because transactions in
currency exchange are usually conducted on a principal basis, no fees or
commissions are generally involved. In light of the requirements that the
Fund must meet to qualify as a regulated investment company under the Internal
Revenue Code of 1986, as amended (the "Code"), for a given year, the Fund
currently intends to limit its gross income from currency transactions to less
than 10% of its gross income for that taxable year.

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

<PAGE>6

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

Foreign Currency Futures. As described below under "Futures
Activities," the Fund may enter into foreign currency futures contracts and
related options.

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

A decline in the dollar value of a foreign currency in which the
Fund's securities are denominated will reduce the 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 such
diminutions in the value of securities it holds, the Fund may purchase put
options on the foreign currency. If the value of the currency does decline,
the Fund will have the right to sell the currency for a fixed amount in
dollars and will thereby offset, in whole or in part, the adverse effect on
its securities that otherwise would have resulted. Conversely, if a rise in
the dollar value of a currency in which securities to be acquired are
denominated is projected, thereby potentially increasing the cost of the
securities, the Fund may purchase call options on the particular currency.
The purchase of these options could offset, at least partially, the effects of
the adverse movements in exchange rates. 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.

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

<PAGE>7

successful in mitigating changes in the value of the Fund's investments
denominated in that currency over time.

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

The Fund will not enter into futures contracts and related options
for which the aggregate initial margin and premiums required to establish
positions other than those considered to be "bona fide hedging" by the CFTC
exceed 5% of the Fund's net asset value after taking into account unrealized
profits and unrealized losses on any such contracts it has entered into.
There is no overall limit on the percentage of the Fund's assets that may be
at risk with respect to futures activities.

Futures Contracts. A foreign currency futures contract provides for
the future sale by one party and the purchase by the other party of a certain
amount of a specified non-U.S. currency at a specified price, date, time and
place. Foreign currency futures are similar to forward currency contracts,
except that they are traded on commodities exchanges and are standardized as
to contract size and delivery date. 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 financial instrument (debt security) at a
specified price, date, time and place. Stock indexes are capitalization
weighted indexes which reflect the market value of the companies listed on the
indexes. A stock index futures contract is an agreement to be settled by
delivery of an amount of cash equal to a specified multiplier times the
difference between the value of the index at the beginning and at the end of
the contract period. In entering into these contracts, the Fund will incur
brokerage costs and be required to make and maintain certain "margin" deposits
on a mark-to-market basis, as described below.

One of the purposes of entering into a futures contract may be to
protect the Fund from fluctuations in value of its portfolio securities
without its necessarily buying or selling the securities. Since the value of
portfolio securities will far exceed the value of the futures contracts sold
by the Fund, an increase in the value of the futures contracts could only
mitigate, but not totally offset, the decline in the value of the Fund's
assets. No consideration is paid or received by the Fund upon entering into a
futures contract. Instead, the Fund will be required to deposit in a
segregated account with its custodian an amount of cash or cash equivalents,
such as U.S. government securities or other liquid high-grade debt obliga-
tions, 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

<PAGE>8

amount). This amount is known as "initial margin" and is in the nature of a
performance bond or good faith deposit on the contract which is returned to
the Fund upon termination of the futures contract, assuming all contractual
obligations have been satisfied. The broker will have access to amounts in
the margin account if the Fund fails to meet its contractual obligations.
Subsequent payments, known as "variation margin," to and from the broker, will
be made daily as the currency, financial instrument or stock index underlying
the futures contract fluctuates, making the long and short positions in the
futures contract more or less valuable, a process known as
"marking-to-market." At any time prior to the expiration of a futures
contract, the Fund may elect to close the position by taking an opposite
position, which will operate to terminate the Fund's existing position in the
contract.

Positions in futures contracts and options on futures contracts may
be closed out only on the exchange on which they were entered into (or through
a linked exchange). No secondary market for such contracts exists. Although
the Fund intends to enter into futures contracts only if there is an active
market for such contracts, there is no assurance that an active market will
exist for the contracts 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. 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 and subjecting the Fund to substantial
losses. In such event, and in the event of adverse price movements, the Fund
would be required to make daily cash payments of variation margin. In such
circumstances, an increase in the value of the portion of the Fund's
securities being hedged, if any, may partially or completely offset losses on
the futures contract. However, as described above, there is no guarantee that
the price of the securities being hedged will, in fact, correlate with the
price movements in a futures contract and thus provide an offset to losses on
the futures contract.

If the Fund has hedged against the possibility of an event adversely
affecting the value of securities held in its portfolio and that event does
not occur, the Fund will lose part or all of the benefit of the increased
value of securities which it has hedged because it will have offsetting losses
in its futures positions. Losses incurred in futures transactions and the
costs of these transactions will affect the Fund's performance. In addition,
in such situations, if the Fund had insufficient cash, it might have to sell
securities to meet daily variation margin requirements at a time when it would
be disadvantageous to do so. These sales of securities could, but will not
necessarily, be at increased prices which reflect the change in currency
values, interest rates or stock indexes, as the case may be.

Options on Futures Contracts. The Fund may purchase and write put
and call options on foreign currency, interest rate and stock index futures
contracts and may enter into closing transactions with respect to such options
to terminate existing positions. There is no guarantee that such closing
transactions can be effected.

<PAGE>9

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

There are several risks relating to options on futures contracts.
The ability to establish and close out positions on such options will be
subject to the existence of a liquid market. In addition, the purchase of put
or call options will be based upon predictions as to anticipated trends in
interest rates and securities markets by Counsellors. 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 portfolio
strategies will be successful. Even if Counsellors' expectations are correct,
where options on futures are used for hedging purposes, there may be an
imperfect correlation between the change in the value of the options and of
the portfolio securities hedged.

Options on Securities. The Fund may purchase and write put and call
options on stocks and debt securities that are traded on foreign and U.S.
exchanges, as well as over-the-counter ("OTC") options, to the extent
permitted by the policies of state securities authorities in states where
shares of the Fund are qualified for offer and sale. The Fund may utilize up
to 10% of its assets to purchase such options and, with respect to put
options, may do so at or about the same time that it purchases the underlying
security or at a later time. In addition, the Fund may write covered call
options on up to 25% of the stock and debt securities in its portfolio.
Options on securities and stock indexes (described below) may be purchased for
hedging purposes and to increase income and total return.

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

<PAGE>10

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

Options written by the Fund will normally have expiration dates
between one and nine months from the date written. The exercise price of the
options may be below, equal to or above the market values of the underlying
securities at the times the options are written. In the case of call options,
these exercise prices are referred to as "in-the-money," "at-the-money" and
"out-of-the-money," respectively. The Fund may write (i) in-the-money call
options when Counsellors 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 Counsellors 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 Counsellors 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.
To secure its obligation to deliver the underlying security when it writes a
call option, the Fund will be required to deposit in escrow the underlying
security or other assets in accordance with the rules of the Options Clearing
Corporation (the "Clearing Corporation") and of the securities exchange on
which the option is written.

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

Additional risks exist with respect to certain of the securities for
which the Fund may write covered call options. If the Fund writes covered
call options on mortgage-backed securities, the mortgage-backed securities
that it holds as cover may, because of scheduled amortization or unscheduled
prepayments, cease to be sufficient cover.

<PAGE>11

If this occurs, the Fund will compensate for the decline in the value of the
cover by purchasing an appropriate additional amount of mortgage-backed
securities.

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

Prior to their expirations, put and call options purchased by the
Fund may be sold in closing sale transactions (sales by the Fund, prior to the
exercise of options that it has purchased, of options of the same series) in
which the Fund may realize a profit or loss from the sale. An option position
may be closed out only where there exists a secondary market for an option of
the same series on a recognized securities exchange or in the over-the-counter
market. In cases where the Fund has written an option, it will realize a
profit if the cost of the closing purchase transaction is less than the
premium received upon writing the original option and will incur a loss if the
cost of the closing purchase transaction exceeds the premium received upon
writing the original option. Similarly, when the Fund has purchased an option
and engages in a closing sale transaction, whether the Fund realizes a profit
or loss will depend upon whether the amount received in the closing sale
transaction is more or less than the premium the Fund initially paid for the
original option plus the related transaction costs. So long as the obligation
of the Fund as the writer of an option continues, the Fund may be assigned an
exercise notice by the broker-dealer through which the option was sold,
requiring the Fund to deliver the underlying security against payment of the
exercise price. This obligation terminates when the option expires or the
Fund effects a closing purchase transaction. The Fund can no longer effect a
closing purchase transaction with respect to an option once it has been
assigned an exercise notice.

Although the Fund will generally purchase or write only those
options for which Counsellors believes there is an active secondary market so
as to facilitate closing transactions, 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

<PAGE>12

to effect closing transactions in particular options. Moreover, as discussed
below, the Fund's ability to terminate options positions established in the
over-the-counter market may be more limited than for exchange-traded options
and may also involve the risk that securities dealers participating in
over-the-counter transactions would fail to meet their obligations to the
Fund. The Fund, however, intends to purchase over-the-counter options only
from dealers whose debt securities, as determined by Counsellors, are
considered to be investment grade. If, as a covered call option writer, the
Fund is unable to effect a closing purchase transaction in a secondary market,
it will not be able to sell the underlying security until the option expires
or it delivers the underlying security upon exercise. In either case, the
Fund would continue to be at market risk on the security and could face higher
transaction costs, including brokerage commissions.

Options as a Hedge. In addition to entering into options
transactions for other purposes, including generating current income, the Fund
may enter into options 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 on a portfolio
position with a gain on the hedged position; at the same time, however, a
properly correlated hedge will result in a gain on the portfolio position
being offset by a loss on the hedged position. The Fund bears the risk that
the prices of the securities being hedged will not move in the same amount as
the hedge. The Fund will engage in hedging transactions only when deemed
advisable by Counsellors. Successful use by the Fund of options will be
subject to Counsellors' ability to predict correctly movements in the
direction of the stock underlying the option used as a hedge. Losses incurred
in hedging transactions and the costs of these transactions will affect the
Fund's performance.

Stock Index Options. The Fund may utilize up to 10% of its total
assets to purchase exchange-listed and OTC put and call options on stock
indexes, and may write options on such indexes to hedge against the effects of
market-wide price movements or to increase income and total return. The
aggregate value of the securities underlying the calls or puts on stock
indexes written by the Fund, determined as of the date the options are sold,
when added to the value of the securities underlying the calls on stock and
debt securities written by the Fund, may not exceed 25% of the Fund's net
assets. A stock index measures the movement of a certain group of stocks by
assigning relative values to the common stocks included in the index,
fluctuating with changes in the market values of the stocks included in the
index. Some stock index options are based on a broad market index such as the
New York Stock Exchange ("NYSE") Composite index, or a narrower market index
such as the Standard & Poor's 100. Indexes may also be based on a particular
industry or market segment.

Options on stock indexes are similar to options on stock except that
(i) the expiration cycles of stock index options are monthly, while those of
stock options are currently quarterly, and (ii) the delivery requirements are
different. Instead of giving the right to take or make delivery of stock at a
specified price, an option on a stock index gives the holder the right to
receive a cash "exercise settlement amount" equal to (a) the amount, if

<PAGE>13

any, by which the fixed exercise price of the option exceeds (in the case of a
put) or is less than (in the case of a call) the closing value of the
underlying index on the date of exercise, multiplied by (b) a fixed "index
multiplier." Receipt of this cash amount will depend upon the closing level
of the stock index upon which the option is based being greater than, in the
case of a call, or less than, in the case of a put, the exercise price of the
index and the exercise price of the option expressed in dollars times a
specified multiple. The writer of the option is obligated, in return for the
premium received, to make delivery of this amount. The writer may offset its
position in stock index options prior to expiration by entering into a closing
transaction on an exchange or it may let the option expire unexercised.

Stock Index Options as a Hedge. The effectiveness of purchasing or
writing stock index options as a hedging technique will depend upon the extent
to which price movements in the portion of a securities portfolio being hedged
correlate with price movements of the stock index selected. Because the value
of an index option depends upon movements in the level of the index rather
than the price of a particular stock, whether the Fund will realize a gain or
loss from the purchase or writing of options on an index depends upon
movements in the level of stock prices in the stock market generally or, in
the case of certain indexes, in an industry or market segment, rather than
movements in the price of a particular stock. Accordingly, successful use by
the Fund of options on stock indexes will be subject to Counsellors' ability
to predict correctly movements in the direction of the stock market generally
or of a particular industry. This requires different skills and techniques
than predicting changes in the price of individual stocks, and there can be no
assurance that the use of these portfolio strategies will be successful.

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

Listed options generally have a continuous liquid market while
dealer options have none. Consequently, the Fund will generally be able to
realize the value of a dealer option it has purchased only by exercising it or
reselling it to the dealer who issued it. Similarly, when the Fund writes a
dealer option, it generally will be able to close out the option prior to its
expiration only by entering into a closing purchase transaction with the
dealer to which the Fund originally wrote the option. Although the Fund will
seek to enter into dealer options only with dealers who will agree to and that
are expected to be capable of entering into closing transactions with the
Fund, there can be no assurance that the Fund will

<PAGE>14

be able to liquidate a dealer option at a favorable price at any time prior to
expiration. The inability to enter into a closing transaction may result in
material losses to the Fund. Until the Fund, as a covered dealer call option
writer, is able to effect a closing purchase transaction, it will not be able
to liquidate securities (or other assets) used to cover the written option
until the option expires or is exercised. This requirement may impair the
Fund's ability to sell portfolio securities or, with respect to currency
options, currencies at a time when such sale might be advantageous. In the
event of insolvency of the other party, the Fund may be unable to liquidate a
dealer option.

Asset Coverage for Forward Contracts, Options, Futures and Options
on Futures. As described in the Prospectus, the Fund will comply with
guidelines established by the SEC designed to eliminate any potential for
leverage with respect to currency forward contracts; options written by the
Fund on currencies, securities and indexes; currency, interest rate and index
futures contracts and options on these futures contracts. These guidelines
may, in certain instances, require segregation by the Fund of cash or liquid
high-grade debt securities or other securities that are acceptable as
collateral to the appropriate regulatory authority.

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

When-Issued Securities and Delayed-Delivery Transactions. The Fund
may utilize up to 20% of its total assets to purchase securities on a
"when-issued" basis or purchase or sell securities for delayed delivery (i.e.,
payment or delivery occur beyond the normal settlement date at a stated price
and yield). When-issued transactions normally settle within 30-45 days. The
Fund will enter into a when-issued transaction for the purpose of acquiring
portfolio securities and not for the purpose of leverage, but may sell the
securities before the settlement date if Counsellors deems it advantageous to
do so. The payment obligation and the interest rate that will be received on
when-issued securities are fixed at the time the buyer enters into the
commitment. Due to fluctuations in the value of securities purchased or sold
on a when-issued or delayed-delivery basis, the yields obtained on such

<PAGE>15

securities may be higher or lower than the yields available in the market on
the dates when the investments are actually delivered to the buyers.

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

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

Convertible Securities. Convertible securities in which the Fund
may invest, including both convertible debt and convertible preferred stock,
may be converted at either a stated price or stated rate into underlying
shares of common stock. Because of this feature, convertible securities
enable an investor to benefit from increases in the market price of the
underlying common stock. Convertible securities provide higher yields than
the underlying equity securities, but generally offer lower yields than
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.

Warrants. The Fund may invest up to 5% of net assets in warrants.
Because a warrant does not carry with it the right to dividends or voting
rights with respect to the securities which it entitles a holder to purchase,
and because it does not represent any rights in the assets of the issuer,
warrants may be considered more speculative than certain other types of
investments. Also, the value of a warrant does not necessarily change with
the

<PAGE>16

value of the underlying securities and a warrant ceases to have value if it is
not exercised prior to its expiration date.

Non-Publicly Traded and Illiquid Securities. The Fund may not
invest more than 15% of its net assets in 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
and time deposits maturing in more than seven days. Securities that have
legal or contractual restrictions on resale but have a readily available
market are not considered illiquid for purposes of this limitation.
Repurchase agreements subject to demand are deemed to have a maturity equal to
the notice period.

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

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

Rule 144A 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. Counsellors 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.

<PAGE>17

Counsellors will monitor the liquidity of restricted securities in
the Fund under the supervision of the Board. In reaching liquidity decisions,
Counsellors 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).

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

Other Investment Limitations

The investment limitations numbered 1 through 9 may not be changed
without the affirmative vote of the holders of a majority of the Fund's
outstanding shares. Such majority is defined as the lesser of (i) 67% or more
of the shares present at the meeting, if the holders of more than 50% of the
outstanding shares of the Fund are present or represented by proxy, or (ii)
more than 50% of the outstanding shares. Investment limitations 10 through 16
may be changed by a vote of the Board at any time.

The Fund may not:

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

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

<PAGE>18

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

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

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

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

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

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

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

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

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

12. Invest more than 15% of the Fund's net assets in securities
which may be illiquid because of legal or contractual restrictions on resale
or securities for which there are

<PAGE>19

no readily available market quotations. For purposes of this limitation,
repurchase agreements with maturities greater than seven days shall be
considered illiquid securities.

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

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

15. Invest in warrants (other than warrants acquired by the Fund as
part of a unit or attached to securities at the time of purchase) if, as a
result, the investments (valued at the lower of cost or market) would exceed
5% of the value of the Fund's net assets.

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

The Fund may make commitments more restrictive than the restrictions
listed above so as to permit the sale of Fund shares in certain states.
Should the Fund determine that any such commitment is no longer in the best
interest of the Fund and its shareholders, the Fund will revoke the commitment
by terminating the sale of Fund shares in the state involved. If a percentage
restriction is adhered to at the time of an investment, a later increase or
decrease in the percentage of assets resulting from a change in the values of
portfolio securities or in the amount of the Fund's assets will not constitute
a violation of such restriction.

Portfolio Valuation

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

Securities listed on a U.S. securities exchange (including
securities traded through the NASDAQ National Market System) or on a foreign
securities exchange will be valued on the basis of the closing value on the
date on which the valuation is made or, in the absence of sales, at the mean
between the closing bid and asked prices. Other U.S. over-the-counter
securities, foreign over-the-counter securities and securities listed or
traded on certain foreign stock exchanges whose operations are similar to the
U.S. over-the-counter market will be valued on the basis of the bid price at
the close of business on each day, or, if market quotations for those
securities are not readily available, at fair value, as determined in good
faith pursuant to consistently applied procedures established by the Board. A
security which is listed or traded on more than one exchange is valued at the
quotation on the

<PAGE>20

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. In determining the market value
of portfolio investments, the Fund may employ outside organizations (a
"Pricing Service") which may use a matrix or formula method that takes into
consideration market indexes, matrices, yield curves and other specific
adjustments. The procedures of Pricing Services are reviewed periodically by
the officers of the Fund under the general supervision and responsibility of
the Board, which may replace any such Pricing Service at any time. Short-term
obligations with maturities of 60 days or less are valued at amortized cost,
which constitutes fair value as determined by the Board. The amortized cost
method of valuation may also be used with respect to debt obligations with 60
days or less remaining to maturity. All other securities and other assets of
the Fund will be valued at their fair value as determined in good faith
pursuant to consistently applied procedures established by the Board. In
addition, the Board or its delegates may value a security at fair value if it
determines that such security's value determined by the methodology set forth
above does not reflect its fair value.

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

Portfolio Transactions

Counsellors is responsible for establishing, reviewing and, where
necessary, modifying the Fund's investment program to achieve its investment
objective. Purchases and sales of newly issued portfolio securities are
usually principal transactions without brokerage commissions effected directly
with the issuer or with an underwriter acting as principal. Other purchases
and sales may be effected on a securities exchange or over-the-counter,
depending on where it appears that the best price or execution will be
obtained. The purchase price paid by the Fund to underwriters of newly issued
securities usually includes a concession paid by the issuer to the
underwriter, and purchases of securities from dealers, acting as either
principals or agents in the after market, are normally executed at a price

<PAGE>21

between the bid and asked price, which includes a dealer's mark-up or
mark-down. Transactions on U.S. stock exchanges and some foreign stock
exchanges involve the payment of negotiated brokerage commissions. On
exchanges on which commissions are negotiated, the cost of transactions may
vary among different brokers. On most foreign exchanges, commissions are
generally fixed. There is generally no stated commission in the case of
securities traded in domestic or foreign over-the-counter markets, but the
price of securities traded in over-the-counter markets includes an undisclosed
commission or mark-up. U.S. government securities are generally purchased
from underwriters or dealers, although certain newly issued U.S. government
securities may be purchased directly from the U.S. Treasury or from the
issuing agency or instrumentality.

Counsellors will select specific portfolio investments and effect
transactions for the Fund. Counsellors seeks to obtain the best net price and
the most favorable execution of orders. In evaluating prices and executions,
Counsellors 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. In addition, to the extent that the execution and price
offered by more than one broker or dealer are comparable, Counsellors 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, as amended) to the Fund and/or
other accounts over which Counsellors exercises investment discretion.
Research and other services received may be useful to Counsellors in serving
both the Fund and its other clients and, conversely, research or other
services obtained by the placement of business of other clients may be useful
to Counsellors in carrying out its obligations to the Fund. The fee to
Counsellors under its advisory agreement with the Fund is not reduced by
reason of its receiving any brokerage and research services.

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

Any portfolio transaction for the Fund may be executed through
Counsellors Securities Inc., the Fund's distributor ("Counsellors
Securities"), if, in Counsellors' 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

<PAGE>22

Securities charges the Fund a commission rate consistent with those charged by
Counsellors Securities to comparable unaffiliated customers in similar
transactions. All transactions with affiliated brokers will comply with Rule
17e-1 under the 1940 Act.

In no instance will portfolio securities be purchased from or sold
to Counsellors or Counsellors Securities or any affiliated person of such
companies. In addition, the Fund will not give preference to any institutions
with whom the Fund enters into distribution or shareholder servicing
agreements ("Agreements") concerning the provision of distribution services or
support services to customers ("Customers") who beneficially own the Fund's
Common Stock, par value $.001 per share, designated Common Stock - Series 1
(the "Series 1 Shares") or Common Stock - Series 2 (the "Advisor Shares").
See the Prospectuses, "Shareholder Servicing."

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

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

Portfolio Turnover

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

Certain practices that may be employed by the Fund could result in
high portfolio turnover. For example, options on securities may be sold in
anticipation of a decline in the price of the underlying security (market
decline) or purchased in anticipation of a rise in the price of the underlying
security (market rise) and later sold. The Fund's investment in special
situation companies could result in high portfolio turnover. To the

<PAGE>23

extent that its portfolio is traded for the short-term, the Fund will be
engaged essentially in trading activities based on short-term considerations
affecting the value of an issuer's stock instead of long-term investments
based on fundamental valuation of securities. Because of this policy,
portfolio securities may be sold without regard to the length of time for
which they have been held. Consequently, the annual portfolio turnover rate
of the Fund may be higher than mutual funds having a similar objective that do
not invest in special situation companies.

MANAGEMENT OF THE FUND

Officers and Board of Directors

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

Richard N. Cooper (60) . . . . Director
Harvard University Professor at Harvard University;
1737 Cambridge Street Director or Trustee of CNA
Cambridge, Massachusetts 02138 Financial Corporation, Circuit City Stores,
Inc. (retail electronics and appliances) and
Phoenix Home Life Insurance Co.

Donald J. Donahue (70) . . . Director
99 Indian Field Road Chairman of Magma Copper Company
Greenwich, Connecticut 06830 since January 1987; Director or Trustee of GEV
Corporation and Signet Star Reinsurance
Company; Chairman and Director of NAC Holdings
from September 1990-June 1993.

Jack W. Fritz (67) . . . Director
2425 North Fish Creek Road Private investor; Consultant and
P.O. Box 483 Director of Fritz Broadcasting, Inc. and
Wilson, Wyoming 83014 Fritz Communications (developers and operators
of radio stations); Director of Advo, Inc.
(direct mail advertising).

John L. Furth* (64) . . . Chairman of the Board
466 Lexington Avenue Vice Chairman and Director of EMW;

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

<PAGE>24

New York, New York 10017-3147 Associated with EMW since 1970; Chairman of
the Board of 13 other investment companies
advised by Counsellors; President of one other
investment company advised by Counsellors.

Thomas A. Melfe (63) . . Director
30 Rockefeller Plaza Partner in the law firm of Donovan Leisure
New York, New York 10112 Newton & Irvine; Director of Municipal Fund
for New York Investors, Inc.

Alexander B. Trowbridge (65) Director
1155 Connecticut Avenue, N.W. President of Trowbridge Partners, Inc.
Suite 700 (business consulting) from January 1990-
Washington, DC 20036 January 1994; President of the National
Association of Manufacturers from 1980-1990;
Director or Trustee of New England Mutual Life
Insurance Co., ICOS Corporation
(biopharmaceuticals), P.H.H. Corporation
(fleet auto management; housing and plant
relocation service), WMX Technologies Inc.
(solid and hazardous waste collection and
disposal), The Rouse Company (real estate
development), SunResorts International Ltd.
(hotel and real estate management), Harris
Corp. (electronics and communications
equipment), The Gillette Co. (personal care
products) and Sun Company Inc. (petroleum
refining and marketing).

Arnold M. Reichman (46) . President
466 Lexington Avenue Managing Director and Assistant Secretary
New York, New York 10017-3147 of EMW; Associated with EMW since 1984; Senior
Vice President, Secretary and Chief Operating
Officer of Counsellors Securities; President
or Executive Vice President of 14 other
investment companies advised by Counsellors.

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

<PAGE>25

and 14 other investment companies advised by
Counsellors.

Eugene P. Grace (43) . . Vice President and Secretary
466 Lexington Avenue Associated with EMW since April 1994;
New York, New York 10017-3147 Attorney-at-law from September 1989-April
1994; life insurance agent, New York Life
Insurance Company from 1993-1994; General
Counsel and Secretary, Home Unity Savings Bank
from 1991-1992; Vice President and Chief
Compliance Officer of Counsellors Securities;
Vice President and Secretary of 14 other
investment companies advised by Counsellors.

Stephen Distler (40) . . Vice President and Chief Financial Officer
466 Lexington Avenue Managing Director, Controller and Assistant
New York, New York 10017-3147 Secretary of EMW; Associated with EMW since
1984; Treasurer of Counsellors Securities;
Vice President, Treasurer and Chief Accounting
Officer or Vice President and Chief Financial
Officer of 14 other investment companies
advised by Counsellors.

Howard Conroy (41) . . . Vice President, Treasurer and Chief
466 Lexington Avenue Accounting Officer
New York, New York 10017-3147 Associated with EMW since 1992;
Associated with Martin Geller, C.P.A. from
1990-1992; Vice President, Finance with
Gabelli/Rosenthal & Partners, L.P. until 1990;
Vice President, Treasurer and Chief Accounting
Officer of 13 other investment companies
advised by Counsellors.

Karen Amato (31) . . . . Assistant Secretary
466 Lexington Avenue Associated with EMW since 1987;
New York, New York 10017-3147 Assistant Secretary of 14 other investment
companies advised by Counsellors.

<PAGE>26

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

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

Total Total Compensation from
Compensation from all Investment Companies
Name of Director Fund Managed by Counsellors*
---------------- ----------------- ------------------------
<S> <C> <C>
John L. Furth None** None**
Richard N. Cooper $1,500 $
Donald J. Donahue $1,500 $
Jack W. Fritz $1,500 $
Thomas A. Melfe $1,500 $
Alexander B. Trowbridge $1,500 $

</TABLE>

- -------------------------
+ Estimates of future payments to be made pursuant to existing
arrangements.

* Each Director also serves as a Director or Trustee of 14 other investment
companies advised by Counsellors.

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

Elizabeth Dater, co-portfolio manager of the Fund, is also co-
portfolio manager of Warburg Pincus Emerging Growth Fund and the Small Company
Growth Portfolio of Warburg, Pincus Trust. Ms. Dater also manages a
post-venture capital fund and is the former Director of Research for
Counsellors' investment management activities. Prior to joining Counsellors
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

<PAGE>27

has been a regular panelist on Maryland Public Television's "Wall Street Week"
since 1976. Ms. Dater earned a B.A. degree from Boston University in
Massachusetts.

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

Robert S. Janis and Christopher M. Nawn are associate portfolio
managers and research analysts of the Fund. Prior to joining Counsellors 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 Counsellors 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 a M.B.A.
degree from the University of Texas.

Investment Adviser and Co-Administrators

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

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

<PAGE>28

Organization of the Fund

The Fund was incorporated on July 12, 1995 under the laws of the
State of Maryland. The Fund's charter authorizes the Board to issue three
billion full and fractional shares of common stock, $.001 par value per share.
Common Stock ("Common Shares"), Common Stock -- Series 1 and Advisor Shares
have been authorized by the Fund's charter, although only Common Shares and
Advisor Shares have been issued by the Fund. When matters are submitted for
shareholder vote, each shareholder will have one vote for each share owned and
proportionate, fractional votes for fractional shares held. Shareholders
generally vote in the aggregate, except with respect to (i) matters affecting
only the shares of a particular class, in which case only the shares of the
affected class would be entitled to vote, or (ii) when the 1940 Act requires
that shares of the classes be voted separately. There will normally be no
meetings of shareholders for the purpose of electing Directors unless and
until such time as less than a majority of the Directors holding office have
been elected by shareholders. The Directors will call a meeting for any
purpose when requested to do so in writing by shareholders of record of not
less than 10% of the Fund's outstanding shares.

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

Custodians and Transfer Agent

PNC Bank, National Association ("PNC") and State Street Bank and
Trust Company ("State Street") serve as custodians of the Fund's U.S. and
foreign assets, respectively, 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 the Fund,
(ii) holds and transfers portfolio securities on account of the Fund,
(iii) makes receipts and disbursements of money on behalf of the Fund,
(iv) collects and receives all income and other payments and distributions for
the account of the Fund's portfolio securities held by it and (v) makes
periodic reports to the Board concerning the Fund's custodial arrangements.
PNC may delegate its duties under its Custodian Agreement with the Fund to a
wholly owned direct or indirect subsidiary of PNC or PNC Bank Corp. upon
notice to the Fund and upon the satisfaction of certain other conditions.
With the approval of the Board, State Street is authorized to select one or
more foreign banking institutions and foreign securities depositories to serve
as sub-custodian on behalf of the Fund; State Street is not relieved of any
responsibility or liability to the Fund on account of any actions or omissions
of any such sub-custodian. PNC is an indirect, wholly owned subsidiary of PNC
Bank Corp., and its principal business address is Broad and Chestnut Streets,
Philadelphia, Pennsylvania 19101. The principal business address of State
Street is 225 Franklin Street, Boston, Massachusetts 02110.

<PAGE>29

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

Distribution and Shareholder Servicing

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

Pursuant to the 12b-1 Plan, Counsellors Securities provides the
Board with periodic reports of amounts expended under the 12b-1 Plan and the
purpose for which the expenditures were made.

<PAGE>30

Advisor Shares. The Fund may, in the future, enter into Agreements
with institutions ("Institutions") to perform certain distribution,
shareholder servicing, administrative and accounting services for their
Customers who are beneficial owners of Advisor Shares. See the Prospectuses,
"Shareholder Servicing." The Fund's Agreements with Institutions with respect
to Advisor Shares will be governed by a distribution plan (the "Distribution
Plan"). The Distribution Plan requires the Board, at least quarterly, to
receive and review written reports of amounts expended under the Distribution
Plan and the purposes for which such expenditures were made.

General. An Institution with which the Fund has entered into an
Agreement with respect to its Advisor Shares may charge a Customer one or more
of the following types of fees, as agreed upon by the Institution and the
Customer, with respect to the cash management or other services provided by
the Institution: (i) account fees (a fixed amount per month or per year); (ii)
transaction fees (a fixed amount per transaction processed); (iii)
compensation balance requirements (a minimum dollar amount a Customer must
maintain in order to obtain the services offered); or (iv) account maintenance
fees (a periodic charge based upon the percentage of assets in the account or
of the dividend paid on those assets). Services provided by an Institution to
Customers are in addition to, and not duplicative of, the services to be
provided under the Fund's co-administration and distribution and shareholder
servicing arrangements. A Customer of an Institution should read the relevant
Prospectus and Statement of Additional Information in conjunction with the
Agreement and other literature describing the services and related fees that
would be provided by the Institution to its Customers prior to any purchase of
Fund shares. Prospectuses are available from the Fund's distributor upon
request. No preference will be shown in the selection of Fund portfolio
investments for the instruments of Institutions.

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

ADDITIONAL PURCHASE AND REDEMPTION INFORMATION

The offering price of the Fund's shares is equal to the per share
net asset value of the relevant class of shares of the Fund. Information on
how to purchase and redeem

<PAGE>31

Fund shares and how such shares are priced is included in the Prospectuses
under "Net Asset Value."

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

If the Board determines that conditions exist which make payment of
redemption proceeds wholly in cash unwise or undesirable, the Fund may make
payment wholly or partly in securities or other property. If a redemption is
paid wholly or partly in securities or other property, a shareholder would
incur transaction costs in disposing of the redemption proceeds. The Fund
intends to comply with Rule 18f-1 promulgated under the 1940 Act with respect
to redemptions in kind.

Automatic Cash Withdrawal Plan. An automatic cash withdrawal plan
(the "Plan") is available to shareholders who wish to receive specific amounts
of cash periodically. Withdrawals may be made under the Plan by redeeming as
many shares of the Fund as may be necessary to cover the stipulated withdrawal
payment. To the extent that withdrawals exceed dividends, distributions and
appreciation of a shareholder's investment in the Fund, there will be a
reduction in the value of the shareholder's investment and continued
withdrawal payments may reduce the shareholder's investment and ultimately
exhaust it. Withdrawal payments should not be considered as income from
investment in the Fund. All dividends and distributions on shares in the Plan
are automatically reinvested at net asset value in additional shares of the
Fund.

EXCHANGE PRIVILEGE

An exchange privilege with certain other funds advised by
Counsellors is available to investors in the Fund. The funds into which
exchanges can be made by holders of Common Shares currently are the Common
Shares of Warburg Pincus Cash Reserve Fund, Warburg Pincus New York Tax Exempt
Fund, Warburg Pincus New York Intermediate Municipal Fund, Warburg Pincus Tax-
Free Fund, Warburg Pincus Intermediate Maturity Government Fund, Warburg
Pincus Fixed Income Fund, Warburg Pincus Short-Term Tax-Advantaged Bond Fund,
Warburg Pincus Global Fixed Income Fund, Warburg Pincus Balanced Fund, Warburg
Pincus Growth & Income Fund, Warburg Pincus Capital Appreciation Fund, Warburg
Pincus Emerging Growth Fund, Warburg Pincus International Equity Fund, Warburg
Pincus Emerging Markets Fund and Warburg Pincus Japan OTC Fund. Common
Shareholders of the Fund may exchange all or part of their shares for

<PAGE>32

Common Shares of these or other mutual funds organized by Counsellors in the
future on the basis of their relative net asset values per share at the time
of exchange. Exchanges of Advisor Shares may currently be made with Advisor
Shares of Warburg Pincus Balanced Fund, Warburg Pincus Capital Appreciation
Fund, Warburg Pincus Emerging Growth Fund, Warburg Pincus Growth & Income Fund
and Warburg Pincus International Equity Fund at their relative net asset
values at the time of the exchange.

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

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

ADDITIONAL INFORMATION CONCERNING TAXES

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

The Fund intends to qualify each year as a "regulated investment
company" under Subchapter M of the Code. If it qualifies as a regulated
investment company, the Fund will pay no federal income taxes on its taxable
net investment income (that is, taxable income other than net realized capital
gains) and its net realized capital gains that are distributed to
shareholders. To qualify under Subchapter M, the Fund must, among other
things: (i) distribute to its shareholders at least 90% of its taxable net
investment income (for this purpose consisting of taxable net investment
income and net realized short-term capital gains); (ii) derive at least 90% of
its gross income from dividends, interest, payments with respect to loans of
securities, gains from the sale or other disposition of securities, or other
income (including, but not limited to, gains from options, futures, and
forward contracts) derived with respect to the Fund's business of investing in
securities; (iii) derive less than 30% of its annual gross income from the
sale or other disposition of securities,

<PAGE>33

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

The Fund's transactions, if any, in foreign currencies, forward
contracts, options and futures contracts (including options and forward
contracts on foreign currencies) will be subject to special provisions of the
Code that, among other things, may affect the character of gains and losses
recognized by the Fund (i.e., may affect whether gains or losses are ordinary
or capital), accelerate recognition of income to the Fund, defer Fund losses
and cause the Fund to be subject to hyperinflationary currency rules. These
rules could therefore affect the character, amount and timing of distributions
to shareholders. These provisions also (i) will require the Fund to
mark-to-market certain types of its positions (i.e., treat them as if they
were closed out) and (ii) may cause the Fund to recognize income without
receiving cash with which to pay dividends or make distributions in amounts
necessary to satisfy the distribution requirements for avoiding income and
excise taxes. The Fund will monitor its transactions, will make the
appropriate tax elections and will make the appropriate entries in its books
and records when it acquires any foreign currency, forward contract, option,
futures contract or hedged investment so that (a) neither the Fund nor its
shareholders will be treated as receiving a materially greater amount of
capital gains or distributions than actually realized or received, (b) the
Fund will be able to use substantially all of its losses for the fiscal years
in which the losses actually occur and (c) the Fund will continue to qualify
as a regulated investment company.

A shareholder of the Fund receiving dividends or distributions in
additional shares should be treated for federal income tax purposes as
receiving a distribution in an amount equal to the amount of money that a
shareholder receiving cash dividends or

<PAGE>34

distributions receives, and should have a cost basis in the shares received
equal to that amount.

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

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

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

Investment in Passive Foreign Investment Companies

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

<PAGE>35

Certain interest charges may be imposed on either the Fund or its shareholders
with respect to any taxes arising from excess distributions or gains on the
disposition of shares in a PFIC.

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

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

DETERMINATION OF PERFORMANCE

From time to time, the Fund may quote the total return of its Common
Shares and/or Advisor Shares in advertisements or in reports and other
communications to shareholders. Average annual 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 relevant class of shares has been
offered) year periods that would equate the initial amount invested to the
ending redeemable value according to the following formula:
P (1 + T)[exponent "n"] = ERV. For purposes of this formula, "P" is a
hypothetical investment of $1,000; "T" is average annual total return; "n" is
number of years; and "ERV" is the ending redeemable value of a hypothetical
$1,000 payment made at the beginning of the one-, five- or ten-year periods
(or fractional portion thereof). Total return or "T" is computed by finding
the average annual change in the value of an initial $1,000 investment over
the period and assumes that all dividends and distributions are reinvested
during the period.

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

<PAGE>36

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

From time to time, the Fund may advertise evaluations of a class of
Fund shares published by nationally recognized financial publications, such as
Morningstar Inc. or Lipper Analytical Services, Inc. Morningstar, Inc. rates
funds in broad categories based on risk/reward analyses over various time
periods. In addition, reference may be made in advertising a class of Fund
shares to opinions of Wall Street economists and analysts regarding economic
cycles and their effects historically on the performance of small companies,
both as a class and relative to other investments. The Fund may also discuss
its beta, or volatility relative to the market, and make reference to its
relative performance in various market cycles in the United States.

AUDITORS AND COUNSEL

Coopers & Lybrand L.L.P. ("Coopers & Lybrand"), with principal
offices at 2400 Eleven Penn Center, Philadelphia, Pennsylvania 19103, serves
as independent auditors for the Fund. The financial statement that appears in
this Statement of Additional Information has been audited by Coopers &
Lybrand, whose report thereon appears elsewhere herein and has been included
herein in reliance upon the report of such firm of independent auditors given
upon their authority as experts in accounting and auditing.

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

FINANCIAL STATEMENT

The Fund's financial statement follows the Report of Independent
Auditors.

<PAGE>A-1

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 it is somewhat more susceptible to the adverse effects of
changes in circumstances and economic conditions than debt in higher-rated
categories.

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

<PAGE>A-2

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.

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

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

<PAGE>C-1

PART C

OTHER INFORMATION

Item 24. Financial Statements and Exhibits

(a) Financial Statements included in Part B:*

(1) Report of Coopers & Lybrand L.L.P.,
Independent Auditors.

(2) Statement of Assets and Liabilities.

(b) Exhibits:

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

1 Articles of Incorporation.**

2 By-Laws.**

3 Not applicable.

4 Form of Share Certificate.*

5 Investment Advisory Agreement.*

6 Distribution Agreement.*

7 Not applicable.

8(a) Form of Custodian Agreement with PNC Bank, National
Association.*

8(b) Form of Custodian Agreement with State Street Bank and Trust
Company.*

9(a) Form of Transfer Agency Agreement.*

9(b) Form of Counsellors Service Co-Administration Agreement.*

9(c) Form of PFPC Co-Administration Agreement.*

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

10(b) Opinion and Consent of Venable, Baetjer and Howard, LLP,
Maryland Counsel to the Fund.*

11 Not applicable.

- ----------------------
* To be filed by amendment.

** Incorporated by reference to Registrant's Registration Statement on Form
N-1A, filed on July 21, 1995 (EDGAR Accession No. 899140-95-149)

<PAGE>C-2

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

12 Not applicable.

13 Form of Purchase Agreement.*

14 Not applicable.

15(a) Form of Shareholder Services and Distribution Plan.*

15(b) Form of Shareholder Services Plan.*

15(c) Form of Distribution Plan.*

15(d) Form of Distribution Agreements.*

16 Not applicable.

17 Not applicable.

- ---------------------
* To be filed by amendment.

<PAGE>C-3

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

All of the outstanding shares of common stock of Registrant
on the date Registrant's Registration Statement becomes effective will be
owned by Warburg, Pincus Counsellors, Inc. ("Counsellors"), a corporation
formed under New York law.

Item 26. Number of Holders of Securities

It is anticipated that Counsellors will hold all Registrant's shares
of common stock, par value $.001 per share, on the date Registrant's
Registration Statement becomes effective.

Item 27. Indemnification

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

Under Article VIII of the Articles of Incorporation (the
"Articles"), the Directors and officers of Registrant shall not have any
liability to Registrant or its stockholders for money damages, to the fullest
extent permitted by Maryland law. This limitation on liability applies to
events occurring at the time a person serves as a Director or officer of
Registrant whether or not such person is a Director or officer at the time of
any proceeding in which liability is asserted. No provision of Article VIII
shall protect or purport to protect any Director or officer of Registrant
against any liability to Registrant or its stockholders to which he would
otherwise be subject by reason of willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct of his
office.

Registrant shall indemnify and advance expenses to its currently
acting and its former Directors to the fullest extent that indemnification of
Directors and advancement of expenses to Directors is permitted by the
Maryland General Corporation Law. Registrant shall indemnify and advance
expenses to its officers to the same extent as its Directors and to such
further extent as is consistent with such law. The Board of Directors may,
through

<PAGE>C-4

a by-law, resolution or agreement, make further provisions for indemnification
of directors, officers, employees and agents to the fullest extent permitted
by the Maryland General Corporation Law.

Article V of the By-Laws further limits the liability of the
Directors by providing that any person who was or is a party or is threatened
to be made a party in any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative, by
reason of the fact that such person is a current or former director or officer
of Registrant, or is or was serving while a director or officer of Registrant
at the request of Registrant as a director, officer, partner, trustee,
employee, agent or fiduciary of another corporation, partnership, joint
venture, trust, enterprise or employee benefit plan, shall be indemnified by
Registrant against judgments, penalties, fines, excise taxes, settlements and
reasonable expenses (including attorneys' fees) actually incurred by such
person in connection with such action, suit or proceeding to the full extent
permissible under the Maryland General Corporation Law, the 1993 Act and the
1940 Act, as such statutes are now or hereafter in force, except that such
indemnity shall not protect any such person against any liability to
Registrant or any stockholder thereof to which such person would otherwise be
subject by reason of willful misfeasance, bad faith, gross negligence or
reckless disregard of the duties involved in the conduct of his office.

Item 28. Business and Other Connections of
Investment Adviser

Counsellors is a wholly owned subsidiary of Warburg, Pincus
Counsellors G.P., acts as investment adviser to Registrant. Counsellors
renders investment advice to a wide variety of individual and institutional
clients. The list required by this Item 28 of officers and directors of
Counsellors, 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 Counsellors (SEC File No. 801-07321).

Item 29. 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 Emerging Growth Fund; Warburg, Pincus Emerging
Markets Fund; Warburg, Pincus Fixed Income Fund; Warburg, Pincus Global Fixed
Income Fund; Warburg, Pincus Growth & Income Fund; Warburg, Pincus
Institutional Fund, Inc.; Warburg, Pincus Intermediate Maturity Government
Fund; Warburg, Pincus International Equity Fund; Warburg, Pincus Japan OTC
Fund; Warburg, Pincus New York Intermediate Municipal Fund; Warburg, Pincus
New York Tax Exempt

<PAGE>C-5

Fund; Warburg, Pincus Short-Term Tax-Advantaged Bond Fund, Warburg, Pincus
Tax-Free Fund and Warburg, Pincus Trust.

(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, as
amended.

Item 30. Location of Accounts and Records

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

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

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

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

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

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

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

<PAGE>C-6

Item 31. Management Services

Not applicable.

Item 32. Undertakings

(a) Registrant hereby undertakes to file a post-effective
amendment, using financial statements which need not be certified, within four
to six months from the effective date of Registrant's Registration Statement
under the 1940 Act.

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

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

<PAGE>C-7

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, as
amended, and the Investment Company Act of 1940, as amended, the Registrant
has duly caused this Amendment to the Registration Statement 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 5th day of September, 1995.

WARBURG, PINCUS POST-VENTURE CAPITAL FUND, INC.

By:/s/ Arnold M. Reichman
Arnold M. Reichman
President

ATTEST:

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

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

/s/ John L. Furth Chairman of the Board September 5, 1995
John L. Furth and Director

/s/ Arnold M. Reichman President September 5, 1995
Arnold M. Reichman

/s/ Stephen Distler Vice President and September 5, 1995
Stephen Distler Chief Financial Officer

/s/ Howard Conroy Vice President, Treasurer September 5, 1995
Howard Conroy and Chief Accounting
Officer

/s/ Richard N. Cooper Director September 5, 1995
Richard N. Cooper

/s/ Donald J. Donahue Director September 5, 1995
Donald J. Donahue

<PAGE>C-8

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

/s/ Jack W. Fritz Director September 5, 1995
Jack W. Fritz

/s/ Thomas A. Melfe Director September 5, 1995
Thomas A. Melfe

/s/ Alexander B. Trowbridge Director September 5, 1995
Alexander B. Trowbridge

<PAGE>

INDEX TO EXHIBITS

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

1 Articles of Incorporation.*

2 By-Laws.*

3 Not applicable.

4 Form of Share Certificate.**

5 Investment Advisory Agreement.**

6 Distribution Agreement.**

7 Not applicable.

8(a) Form of Custodian Agreement with PNC Bank, National
Association.**

8(b) Form of Custodian Agreement with State Street Bank and Trust
Company.**

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

9(b) Form of Counsellors Service Co-Administration Agreement.**

9(c) Form of PFPC Co-Administration Agreement.**

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

10(b) Opinion and Consent of Venable, Baetjer and Howard, LLP,
Maryland Counsel to the Fund.**

11 Not applicable.

12 Not applicable.

13 Form of Purchase Agreement.**

14 Not applicable.

15(a) Form of Shareholder Services and
Distribution Plan.**

- ---------------------
* Incorporated by reference to Registrant's Registration Statement on
Form N-1A, filed on July 21, 1995 (EDGAR Accession No. 899140-95-149).

** To be filed by amendment.

<PAGE>

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

15(b) Form of Shareholder Services Plan.**

15(c) Form of Distribution Plan.**

15(d) Form of Distribution Agreements.**

16 Not applicable.

17 Not applicable.

- ---------------------
** To be filed by amendment.