BMC FUND, INC.
NOTICE OF SPECIAL MEETING OF
SHAREHOLDERS TO BE HELD
MARCH 19, 1999
NOTICE IS HEREBY GIVEN THAT a
special meeting of shareholders of BMC
Fund, Inc. (the "Corporation") will be held
on Friday, March 19, 1999, at 9:30 a.m.
at the offices of the Corporation, 800
Golfview Park, Lenoir, North Carolina
28645, for the following purposes:
1. To approve an amendment to the
Corporation's investment objectives.
2. To approve an Investment Advisory
Agreement between the Corporation
and Northern Trust Bank of Florida
dated as of April 1, 1999.
3. To approve an Investment Advisory
Agreement between the Corporation
and Wellington Management Company,
LLP dated as of April 1, 1999.
4. To transact such other business as may
properly come before the meeting.
Only shareholders of record as of the close
of business on February 5, 1999 are entitled
to notice of, and to vote at, the meeting.
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING,
PLEASE SIGN, DATE AND RETURN THE ENCLOSED FORM
OF PROXY AS PROMPTLY AS POSSIBLE IN THE ENCLOSED
ENVELOPE. IF YOU ATTEND THE MEETING, YOU MAY
WITHDRAW YOUR PROXY AT THAT TIME AND VOTE IN
PERSON.
February 17, 1999
By Order of the Board of Directors
Paul H. Broyhill
Chairman of the Board
<PAGE>
BMC FUND, INC.
Golfview Park
Lenoir, North Carolina 28645
(Tel.: (828) 758-6102)
PROXY STATEMENT
SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD MARCH 19, 1999
This proxy statement is furnished in
connection with the solicitation by BMC
Fund, Inc. (the "Corporation") of
proxies for use at the special meeting
of shareholders to be held at the
offices of the Corporation, 800
Golfview Park, Lenoir, North Carolina
28645 on Friday, March 19, 1999 at 9:30
a.m., and at any and all adjournments
thereof, for the purpose of considering
and acting upon the matters specified
in the accompanying notice of the
meeting and detailed below. The
Corporation is soliciting such proxies
by mail on behalf of its Board of
Directors and is bearing the expenses
of the solicitation. This proxy statement and
the enclosed proxy form are first being sent
to shareholders on or about March 1, 1999.
The Board of Directors has fixed the
close of business on February 5, 1999
as the record date for the determination of
shareholders entitled to notice of and to vote
at the meeting. On the record date,
4,933,281 shares of Common Stock of the
Corporation were issued and outstanding,
each share being entitled to one vote.
Information concerning beneficial
ownership of Common Stock by
principal shareholders and by the
management of the Corporation is set
forth below. See "Principal Shareholders."
Shares represented by proxies will be voted
by the proxy agents named therein unless
such proxies are revoked. The proxy agents
will vote the proxies that they hold in
accordance with the choices specified by the
person giving the proxy. If the enclosed
proxy reflects no specification but is
properly signed, the proxy agents will
vote the shares represented thereby for
the approval of the proposed amendment
to the Corporation's investment objectives
and for each of the Investment Advisory
Agreements which are the subject of the
proposals described below.
Any shareholder who submits the
accompanying proxy has the right to
revoke it by notifying the Secretary of
the Corporation in writing at any time
prior to the voting of the proxy. A proxy is
suspended if the person giving the proxy
attends the meeting and elects to vote in
person.
A majority of votes entitled to be cast on a
particular matter, represented in person or by
proxy, constitutes a quorum for purposes of
matters to be considered at the annual
meeting. Once a share is represented for any
purpose at a meeting, it is considered present
for quorum purposes for the remainder of
the meeting and any adjournment thereof
(unless a new record date is set for the
adjourned meeting). Shares which are
withheld as to voting with respect to one or
more Investment Advisory Agreements are
counted in determining the existence of a
quorum.
The Board of Directors is not aware of
any business to come before the meeting
other than the matters described in the
accompanying notice of the meeting. If
any other matters of business are properly
presented at the meeting, however, the proxy
agents will vote upon such matters in
accordance with their best judgment.
ADMINISTRATION OF THE CORPORATION
Administration of the Corporation is
primarily the responsibility of the
Corporation's Chairman and Chief
Executive Officer, Paul H. Broyhill,
and its President, E. D. Beach. The
Corporation's securities portfolio, which was
valued at approximately $122.1 million at
September 30, 1998, is managed primarily
by such officers, under the supervision of
the Board of Directors. The Corporation
currently has investment advisory
agreements with two investment advisers,
IBJ Whitehall Bank & Trust Company
("Whitehall"), formerly IBJ Schroder Bank
& Trust Company, and W. H. Reaves & Co.,
Inc. ("Reaves"). At September 30, 1998,
Whitehall and Reaves were responsible for
managing approximately $16.2 million and
$7.5 million of the Corporation's assets,
respectively. Whitehall is principally
responsible for investing the Corporation's
assets in equity securities of domestic
issuers. Reaves is principally responsible
for investing the Corporation's assets in
equity securities of public utilities and
energy companies. The shareholders of
the Corporation approved the agreements
with Whitehall and Reaves in 1986 and
1990, respectively, and the Board of
Directors, including a majority of the
directors who are not interested persons of
the Corporation, has approved such
agreements annually since such shareholder
approval was obtained. Whitehall is located
at One State Street, New York, New York
10004. Reaves is located at 10 Exchange
Place, Jersey City, New Jersey 07032.
The Custodian of the Corporation's portfolio
securities is First Union National Bank,
Charlotte, North Carolina, pursuant to an
Amended and Restated Custodian
Agreement dated as of December 31, 1986.
PROPOSAL RELATING TO AMENDMENT TO INVESTMENT
OBJECTIVES
Subject to approval by the holders of the
majority the outstanding voting securities of
the Corporation, the Board of Directors has
adopted an amendment to the Corporation's
investment objectives. The Corporation's
investment objectives and policies were last
amended by the shareholders of the
Corporation at the annual meeting of
shareholders on July 30, 1994.
Background
The Corporation's primary investment
objective is to seek as high a level of
current income which is consistent with
the preservation of capital. In accordance
with its current income objective, the
Corporation may invest its assets in, among
other securities, debt obligations that are
exempt from federal income tax under
Section 103(a) of the Internal Revenue Code
("Municipal Bonds") and in obligations
that generate taxable interest, such as
corporate bonds and debentures, Treasury
Bills and other securities issued by the
federal government or its agencies,
securities of deposit issued by domestic
banks and other obligations that produce
taxable interest ("Taxable Debt
Obligations"). Prior to 1991, the
Corporation's investment objectives required
that at least 50% of the value of the
Corporation's assets be invested in
Municipal Bonds. In 1991, the shareholders
approved an amendment to the Corporation's
investment objectives which deleted this
requirement. This amendment empowered
the Board of Directors to liquidate the
Corporation's portfolio of Municipal Bonds
should the Board determine, in its discretion,
that such divestiture would be necessary or
appropriate.
At a regularly scheduled meeting of the
Board of Directors of the Corporation
held in July 1998, the Board approved a
change in the Corporation's investment
strategy to divest the Corporation of its
investments in Municipal Bonds after
April 1, 1999. The Board authorized
management of the Corporation to reinvest
the proceeds of the Municipal Bonds in
Taxable Debt Obligations in accordance
with the Corporation's current income
investment objective, and in other securities,
including equity securities, in accordance
with the Corporation's secondary investment
objective of providing long term capital
appreciation. Under the Corporation's
investment objectives, the Board would
be authorized to resume its strategy of
investing in Municipal Bonds at a later
date.
Proposed Amendment
Following the Board's July 1998 action,
the Board determined that it would be
in the best interests of the Corporation and
its shareholders to give management and the
Corporation's investment advisers greater
flexibility in the types of Taxable Debt
Obligations the Corporation may purchase.
Currently, the Corporation's investment
objectives permit the Corporation to invest
assets, without restriction, in obligations
rated no lower than A by Moody's and
Standard and Poor's. The Board of Directors
has approved an amendment to the
Corporation's investment objectives, subject
to approval by the Corporation shareholders,
that would permit the Corporation to invest
assets of the Corporation, without
restriction, in obligations rated no lower
than BBB by Moody's or Standard & Poor's.
A copy of the Corporation's investment
objectives and policies as currently in effect
and as proposed to be amended is attached
to this proxy statement as Exhibit A. The
following paragraph sets forth the proposed
amendment:
The Corporation's assets invested pursuant to
its current income objective will be invested in
obligations rated no lower than BBB by Moody's
or Standard & Poor's, except that (i) the
Corporation may purchase Temporary Investments
having a Moody's rating of no lower than MIG-3
and (ii)the Corporation may invest up to 17.5%
of its assets in more speculative and
higher yielding Municipal Bonds that are rated
lower than BBB (but no lower than B) or are
unrated. If unrated, Municipal Bonds or
Temporary Investments purchased by the
Corporation must be issued by a state or
municipality with a rating of BBB or better and
must have characteristics that, in the judgment
of the Board of Directors, are consistent with
obligations having ratings that meet the minimum
acceptable ratings set forth herein.
The Board of Directors believes the flexibility
provided by the foregoing amendment is
appropriate in view of the change in investment
strategy described above, which will result in
the Corporation's replacing its Municipal Bond
portfolio with Taxable Debt Obligations. The
Board believes the proposed amendment will
increase the universe of securities the
Corporation may acquire without a material
adverse effect on the quality of the
Corporation's portfolio.
In order for the proposed amendment to
become effective, it must be approved
by the holders of a majority of the
shares of the Corporation's common
stock entitled to vote. The Board of
Directors recommends a vote FOR the
approval of the proposed amendment to
the Corporation's investment objective.
PROPOSAL RELATING TO
INVESTMENT
ADVISORY AGREEMENTS
Subject to approval of the holders of
the majority of the outstanding voting
securities of the Corporation, the
Corporation proposes to enter into an
Investment Advisory Agreement, dated as
of April 1, 1999, with each of Northern
Trust Bank of Florida, N.A. ("Northern
Trust") and Wellington Management
Company, LLP ("Wellington
Management"). The description of the
Investment Advisory Agreements set forth below
is qualified in its entirety by the terms
of each agreement, a copy of which is
attached hereto as Exhibit B and
Exhibit C, respectively. (Northern
Trust and Wellington Management are
hereafter referred to individually as a
"New Adviser" and collectively as the
"New Advisers" and, together with
Whitehall and Reaves, as the "Advisers.")
Interested Person Status of Certain of
the Corporation's Directors
Dolph W. von Arx, who is a member of
the Board of Directors of the Corporation
and of Northern Trust of Florida
Corporation, which is the parent corporation
of Northern Trust, owns 2002 shares of
common stock of Northern Trust
Corporation, which is the parent corporation
of Northern Trust of Florida Corporation.
By virtue of owning such shares, Mr. von
Arx will become an "interested person"
of the Corporation as defined in the
Investment Company Act of 1940 upon the
effectiveness of the Investment Advisory
Agreement between the Corporation and
Northern Trust. Currently, five members of
the eleven- member Board of Directors of
the Corporation are interested persons.
Following the effectiveness of the
Investment Advisory Agreement with
Northern Trust, six (a majority) of the
members of the Board will be interested
persons.
Terms of the Agreements
The Agreements authorize the New
Advisers to manage separate portions of
the Corporation's investment portfolio,
with each New Adviser having investment
discretion with respect to the portion
under its management. The Board of
Directors has authorized Paul H.
Broyhill, the Chairman of the
Corporation, or E.D. Beach, the
President of the Corporation, to
allocate portions of the portfolio over
which each New Adviser shall be given
investment discretion. The Corporation
from time to time may increase or
decrease the amount of assets under a
New Adviser's management, depending on
such factors as the investment
performance of the New Adviser in
relation to the fees charged by it,
management's perception of the benefits
of diversification of external
management of the Corporation's
investments and administrative
considerations. The Corporation's
investment portfolio as of September
30, 1998 was valued at approximately
$122.1 million, of which the
Corporation's two existing external
investment advisers, Whitehall and
Reaves, managed $16.2 million and $7.5
million, respectively, with the balance
of approximately $98.4 million being
managed internally and available to be
managed by Northern Trust and
Wellington Management. The Corporation
currently expects that management will
maintain investment discretion with
respect to approximately $63.4 million
of the Corporation's investment
portfolio (based on the Corporation's
September 30, 1998 valuation).
The Agreements authorize and direct the
New Advisers to provide a continuous
investment program consistent with the
Corporation's investment objectives and
policies and instructions of the Board
of Directors. The Corporation's
investments in the aggregate must
comply at all times with the
Corporation's objectives and policies,
regardless of whether such investments
are under the direct management of the
Board of Directors or of external
investment advisers. The Corporation
may provide each New Adviser with
written instructions to enable the New
Adviser to comply with the
Corporation's investment objectives and
policies. Such instructions would
reflect limitations on the New
Advisers' investment activities
designed to prevent inadvertent
violations of the Corporation's
policies that might otherwise result
from more than one adviser managing
separate portions of the Corporation's
assets. Except for compliance with
these instructions, the New Advisers
will not be responsible for compliance
with any requirement that the overall
mix of the Corporation's assets meets
specified percentages.
The Agreements are for terms of two
years and may be renewed from year to
year by mutual consent, provided that
such renewal shall be specifically
approved at least annually by the Board
of Directors of the Corporation or by a
vote of the holders of the majority of
the outstanding shares of the
Corporation. In either event, each of
the Agreements must be approved by a
majority of those Directors who are not
interested persons of the Corporation.
Each of the Agreements may be
terminated at any time, without payment
of any penalty, by the Board of
Directors of the Corporation or by a
vote of the holders of a majority of
the Corporation's shares on 60 days'
written notice to the New Adviser, or
by the New Adviser on 90 days' written
notice to the Corporation. The
Agreements are not assignable by either
party. In the event of assignment by
the New Adviser, the respective
Agreement automatically terminates.
Fees
The Investment Advisory Agreements
provide for the payment of quarterly
fees to the New Advisers. The
quarterly fee payable to the New
Advisers will be payable in advance and
will be the product of the closing
value of the assets under management on
the last day of the preceding fiscal
quarter multiplied by the applicable
percentage set forth below, subject to
adjustment in the event the Corporation
contributes assets to or withdraws
assets from managed assets during the
quarter and in the event the Investment
Advisory Agreement is terminated prior
to the end of a quarter.
Quarterly Fee
(Percent of
Adviser Closing Value)
Northern Trust 0.0875% (1)
Wellington
Management 0.075%
____________________
(1) With respect to Northern Trust,
the applicable percentage for
assets in excess of $15 million
will be 0.075% and for assets in
excess of $20 million will be
0.0625%. Northern Trust's
investment activities on behalf of
the Corporation will include both
fixed income investments and
equity investments.
The foregoing fees were negotiated by
the Corporation with the New Advisers,
each independently of the other, and
reflect the customary fee structures of
such New Adviser for the type of
investment program requested by the
Corporation.
The Corporation currently proposes to
retain investment authority over
approximately $63.4 million of its
investment portfolio (based on the
Corporation's September 30, 1998
valuation) and grant investment
authority to the New Advisers in the
following amounts:
Northern Trust $20 million
Wellington Management $15 million
The Corporation may elect, at the
outset of the Investment Advisory
Agreements or thereafter, to grant
investment authority to the New
Advisers in amounts different from
those set forth above, depending on
such factors as management's perception
of the benefits of diversification of
external management of the
Corporation's investments and the
investment performance of the New
Advisers in relation to their advisory
fees.
Based on the above allocations, the
Investment Advisory Agreements would
have the following pro forma effect on
the Corporation's estimated annual
expenses for the fiscal year ending
March 31, 1999:
Percentage of
Net Assets
Actual(1) Pro Forma(2)
Annual Expenses:
Management Fees 0.07%
Northern Trust
Agreement 0.03%
Wellington Management
Agreement 0.03%
Total Management Fees 0.13%
Other Expenses(3) 0.20%
Northern Trust
Agreement -%
Wellington Management
Agreement -%
Total Other Expenses 0.20%
Total Annual Expenses 0.27%
Northern Trust
Agreement 0.03%
Wellington Management
Agreement 0.03%
Total Annual Expenses 0.33%
______________
(1) Based on estimated amounts for the current
fiscal year ending March 31, 1999.
(2) After giving effect to the payment of
advisory fees to the New Advisers assuming
the Investment Advisory Agreements had been in
effect beginning April 1, 1998 and the
allocation of assets between the New Advisers
set forth above.
(3) Includes salaries,professional fees and
other expenses.
The table set forth above and the following
example are intended to assist the Corporation's
shareholders in understanding the indirect
effect of the fees payable under each of the
Investment Advisory Agreements on the
shareholders' investment in the Corporation. To
facilitate the shareholders' comparison of this
fee structure with fee structures of other
funds, the Securities and Exchange Commission
requires the Corporation to assume a 5% annual
return. The Corporation has interpreted "5%
annual return" to mean growth in assets under
management at a compounded annual rate of 5%.
The information set forth above and below should
not be considered to be a representation of past
or future expenses, and actual expenses may be
greater or less than those shown.
Example
You would pay the following expenses on a $1,000
investment, assuming a 5% annual return:
1 Year 3 Years 5 Years 10 Years
Northern
Trust
Agreement $3.38 $10.62 $18.55 $41.85
Wellington
Management
Agreement $3.00 $9.43 $16.48 $38.21
Information Concerning Northern Trust
Northern Trust is a national
banking association with its principal
offices located at 700 Brickell Avenue,
Miami, Florida 33131. It is a wholly
owned subsidiary of Northern Trust of
Florida Corporation, 700 Brickell
Avenue, Miami, Florida, which in turn
is a wholly owned subsidiary of
Northern Trust Corporation, 50 South
LaSalle Street, Chicago, Illinois
60675.
Exhibit E is a list of Northern Trust's
principal executive officers and directors, all
of whom may be reached at the principal offices
of Northern Trust.
Northern Trust does not serve as adviser to any
other registered investment company with
similar investment objectives.
None of the officers or directors of the
Corporation and none of the directors or
executive officers of Northern Trust has
purchased or sold any securities of Northern
Trust in excess of one percent of the
outstanding shares since the beginning
of the Corporation's last fiscal year.
None of the officers or directors of
the Corporation owns any securities of
or has any other direct or indirect
interest in Northern Trust, except for
Mr. von Arx as described above under
"Interested Person Status of Certain of
the Corporation's Directors. "
Information Concerning Wellington
Management
Wellington Management is a Massachusetts
limited liability partnership with principal
offices at 75 State Street, Boston,
Massachusetts 02109. Wellington Management is a
professional investment counseling firm which
provides investment services to investment
companies, employee benefit plans, endowments,
foundations and other institutions and
individuals. Wellington Management's
predecessor organizations have provided
investment advisory services for over 60 years.
As of January 31, 1999, Wellington Management
had investment management authority with
respect to approximately $24 billion
in assets.
Wellington Management is managed by its active
partners. The managing partners of Wellington
Management as of January 31, 1999 were Robert W.
Doran, Duncan M. McFarland and John R. Ryan.
Exhibit F is a listing of the general
partners and Senior Vice Presidents of
Wellington Management as of January 31, 1999,
all of whom may be reached at the principal
offices of the firm.
Wellington Management does not serve as adviser
to any other registered investment company with
similar investment objectives.
Brokerage Commissions
The Corporation paid
brokerage commissions in the aggregate
of $85,847 during the fiscal year ended
March 31, 1998. Except with respect to
brokerage commissions paid to Reaves,
which is an affiliated person of the
Corporation by virtue of its serving as
an investment adviser to the
Corporation, no brokerage commissions
were paid to affiliated persons of the
Corporation or to affiliated persons of
such affiliated persons, or to any
broker an affiliated person of which is
an affiliated person of the Corporation
or of Whitehall or Reaves. For the
fiscal year ended March 31, 1998, the
Corporation paid Reaves brokerage
commissions in the aggregate amount of
$34,802. For the fiscal year ended
March 31, 1998, such amount represented
40.5% of the aggregate brokerage
commissions paid by the Corporation to
all brokers. With the exception of
those Advisers whose investment
activities are or will be limited to
principal transactions involving fixed
income securities, the Advisers'
commissions are limited to the lesser
of (i) 50% of the regular New York
Stock Exchange rates, (ii) the maximum
amount permissible pursuant to Section
17(e) of the Investment Company Act of
1940 or (iii) $.07 per share. In
addition, the amounts paid to an
Adviser in commissions and fees (as
described above) shall not exceed 2% of
the average daily market value of the
Corporation's assets under such
Adviser's management for the preceding
fiscal year.
Recommendation of the Board of
Directors
The Board of Directors
approved each of the proposed
Investment Advisory Agreements at a
meeting of the Board of Directors held
on Wednesday, February 17, 1999 in
Charlotte, North Carolina. The
principal factor in the Board's
approval of the Investment Advisory
Agreements is the Board's judgment that
the engagement of additional advisers
with strong reputations in fixed income
investments would better enable the
Corporation to replace its Municipal
Bond portfolio with Taxable Debt
Obligations, pursuant to the change in
investment strategy described above
(see "Proposal Relating to Amendment to
Investment Objectives"). The Board
also considered the reputation of each
of Northern Trust and Wellington
Management, the amount of assets under
their respective management, the
financial strength of each institution
and similar factors.
In order for each of the
proposed Investment Advisory Agreements
to become effective, it must be
approved by the holders of a majority
of the shares of the Corporation's
common stock entitled to vote. The
Board of Directors recommends a vote
FOR the approval of the Corporation's
proposed Investment Advisory Agreement
with each of Northern Trust and
Wellington Management.
<PAGE>
PRINCIPAL SHAREHOLDERS
The following table reflects
information concerning all directors
and executive officers individually and
as a group, and those persons known to
the Corporation to own beneficially 5%
or more of the Corporation's Common
Stock as of February 5, 1999:
Amount and Nature of Beneficial
Ownership of Common Stock
Voting and Percent of
Investment Power Outstanding
Name Sole Shared Common Stock
Directors and Executive Officers
E. D. Beach 300 87,043 (1) 1.8%
James T.
Broyhill 785,788 96,212 17.9%
Paul H.
Broyhill 1,301,420(2) 206,208 (1) 30.6%
William E.
Cooper 3,240 0 (3)
Lawrence Z.
Crockett 200 0 (3)
Willard A.
Gortner 166,469 691,653 17.4%
Allene B.
Heilman 470,298 29,777 10.1%
Harry
Heltzer 200 6,060 (3)
Gene A.
Hoots 25 0 (3)
Dolph W.
von Arx 25 -- (3)
Michael
Landry 25 -- (3)
All directors 2,727,990 1,030,980 76.2%
and executive
officers as
a group
(11 persons)
Five Percent
Shareholders
Satie E. 661,877 122,493 15.9%
Gortner
PH-1 4601 Gulf ShoreBlvd. North
Naples, FL 33940-2215
Broyhill 316,871 0 6.4%
Investments,Inc.
Golfview Park
Lenoir, NC 28645
__________________________
(1) Includes 85,973 shares owned of
record by Broyhill Family
Foundation, Inc., a non-profit
corporation. By resolution of the
Foundation trustees, E. D. Beach
and Paul H. Broyhill control the
voting and disposition of shares
of the Corporation owned by the
Foundation.
(2) Includes 316,871 shares owned of
record by Broyhill Investments,
Inc., the voting stock of which is
principally owned by Paul H.
Broyhill and his immediate family.
(3) Total shares represent less than
1.0% of the Corporation's
outstanding Common Stock.
SHAREHOLDER PROPOSALS
In order to be included in proxy material for
the 1999 annual meeting of shareholders,
shareholder proposals must be received at the
offices of the Corporation by March 19,1999.
ANNUAL AND SEMI-ANNUAL REPORTS
The Corporation will furnish, without charge, to
any shareholder a copy of its annual report for
the fiscal year ended March 31, 1998 and its
semi-annual report for the six months ended
September 30, 1998 to any shareholder upon
request. Any such request should be sent to
Carol Frye, Assistant Secretary, Golfview
Park, Lenoir, North Carolina 28645. A stamped,
addressed postal card is enclosed for use in
requesting such report. The annual report was
previously furnished to shareholders on May 22,
1998 and the semi-annual report for the six
months ended September 30, 1998 was previously
furnished to shareholders on or about November
13, 1998.<PAGE>
EXHIBIT A
(Revised March 1999)
INVESTMENT OBJECTIVES AND POLICIES OF
BMC FUND, INC.
Investment Objectives
The Corporation's investment objectives are
two-fold. The majority of the Corporation's
assets will be invested in accordance with its
first objective, which is to seek as high a
level of current income as is consistent with
the preservation of capital. The balance of the
Corporation's assets will be invested in
accordance with its second objective, which is
to provide long term capital appreciation. The
Corporation's investment objectives may not be
amended without the approval of a majority of
the holders of the Corporation's outstanding
voting securities.
Current Income. In accordance with its current
income objective, the Corporation may invest
its assets in (i) debt obligations that are
exempt from federal income tax under Section
103(a) of the Internal Revenue Code (the
"Code"), including debt obligations issued by or
on behalf of states, territories and possessions
of the United States and the District of
Columbia and their political subdivisions,
agencies and instrumentalities, or multi-state
agencies or authorities, the interest on which
is exempt from federal income tax ("Municipal
Bonds"); (ii) project notes the interest on
which is exempt from federal income tax under
Section 11(b) of the United States Housing Act
of 1937, as amended, and bond, tax or revenue
anticipation notes issued by states or
municipalities with a term, when issued, of less
than three years ("Temporary Investments"); and
(iii) securities of investment companies
having a similar investment objective, subject
to limitations of the Investment Company Act of
1940 on ownership of investment company
securities. (The investments described in
clauses (i) through (iii) hereinafter are
referred to collectively as "Tax-Exempt
Securities.")
In accordance with its
current income objective, the
Corporation may also invest its assets
in obligations that generate taxable
interest, such as corporate bonds and
debentures, Treasury bills and other
securities issued by the federal
government or its agencies,
certificates of deposit issued by
domestic banks and other obligations
that produce taxable interest.
The Corporation's assets
invested pursuant to its current income
objective will be invested in
obligations rated no lower than BBB by
Moody's or Standard & Poor's, except
that (i) the Corporation may purchase
Temporary Investments having a Moody's
rating of no lower than MIG-3 and (ii)
the Corporation may invest up to 17.5%
of its assets in more speculative and
higher yielding Municipal Bonds that
are rated lower than BBB (but no lower
than B) or are unrated. If unrated,
Municipal Bonds or Temporary
Investments purchased by the
Corporation must be issued by a state
or municipality with a rating of BBB or
better and must have characteristics
that, in the judgment of the Board of
Directors, are consistent with
obligations having ratings that meet
the minimum acceptable ratings set
forth herein.
Subsequent to the purchase
by the Corporation of an issue of Tax-
Exempt Securities, the issue may cease
to be rated or its rating may be
reduced below the minimum required for
purchase by the Corporation. Neither
event will require the elimination of
such obligation from the Corporation's
portfolio, but the Corporation will
consider such an event in determining
whether to continue to hold such
obligation in its portfolio. To the
extent that the ratings given by
Moody's or Standard & Poor's for
Municipal Bonds or by Moody's for
Temporary Investments may change as a
result of changes by such rating
organizations, or changes in their
rating systems, the Corporation will
attempt to use comparable ratings as
standards for its investments in
Municipal Bonds or Temporary
Investments in accordance with this
investment objective.
Capital Appreciation. The
Corporation's second investment
objective is to provide long term
capital appreciation. Whatever current
income would be generated by the
Corporation pursuant to this objective
would likely be incidental to the
objective of capital growth.
The Corporation will attempt
to accomplish this objective by
investing primarily in common stocks,
preferred stocks and beneficial
interests and warrants, options or
other rights to acquire common stocks,
preferred stocks and beneficial
interests. In addition, the
Corporation also may invest in precious
metals, precious stones and real
estate. From time to time management
may attempt to assume temporarily a
defensive position with respect to
those assets dedicated to capital
growth. Management's judgment in this
regard may result in the acquisition of
short term investments, securities
issued by the federal government or its
agencies, commercial paper and
certificates of deposit issued by
domestic banks.
If an investment complies
with a non-statutory percentage
restriction set forth in the
Corporation's investment objectives and
policies at the time the investment is
made, a later change in market value of
the investment or of other assets of
the Corporation, or in any ratings,
will not be deemed to result in a
violation of the percentage
restriction.
Fundamental Policies
Subject to the restrictions
and limitations of the Corporation's
investment objectives set forth above,
the following fundamental policies will
govern the Corporation's investment
activities and may not be changed
without approval by the holders of a
majority of the Corporation's
outstanding voting securities:
1. The Corporation will
not issue any senior securities.
2. The Corporation will
not engage in the making of short
sales, purchases on margin or the
writing of put options; however,
to the extent of 10% of its
assets, the Corporation may write
call options with respect to
securities owned by the
Corporation.
3. The Corporation may
obtain such short-term credit as
is necessary for the clearance of
securities transactions or for
similar short-term or temporary
purposes. In any event, the total
amount outstanding shall not
exceed 20% of the value of the
Corporation's assets immediately
following any such borrowing.
4. The Corporation will
not underwrite the securities of
other issuers, except insofar as
the Corporation may purchase secu-
rities of other issuers under
circumstances in which the
Corporation, were it later to
publicly offer or sell such secu-
rities, might be deemed to be an
underwriter for the purposes of
the Securities Act of 1933.
5. The Corporation may
invest up to 25% of the value of
its assets in securities (other
than U.S. Government securities
and securities of other regulated
investment companies) of any one
issuer or two or more issuers
controlled by the Corporation and
engaged in related businesses.
The Corporation may acquire
securities of other investment
companies, provided that after
such acquisition the Corporation,
and any company or companies
controlled by the Corporation, own
in the aggregate (i) not more than
3% of the total outstanding voting
stock of such other investment
company; (ii) securities issued by
such other investment company
having an aggregate value of not
more than 5% of the value of the
Corporation's assets; and (iii)
securities issued by such other
investment company and all other
investment companies (other than
treasury stock of the Corporation)
having an aggregate value of not
more than 10% of the value of the
Corporation's assets. The
registrant may acquire securities
of other investment companies
without regard to the above
limitations, however, if
immediately after such acquisition
not more than 3% of the total
outstanding stock of such other
investment company or companies is
owned by the Corporation and all
affiliated persons of the
Corporation. The intent of this
policy is to permit the
Corporation to invest in
securities of other investment
companies to the extent permitted
by section 12 of the Investment
Company Act of 1940.
6. Except to the extent of
30% of its assets, the Corporation
will not engage in the purchase,
sale or holding of interests in
real estate. This restriction is
in part a result of the
potentially illiquid nature of
such an investment. The
Corporation, however, may
purchase, hold or sell tax-exempt
revenue bonds representing
interests in real estate and
beneficial interests in real
estate investment trusts. The
Corporation may also engage in the
purchase or sale of mortgage loans
to the extent of 10% of the value
of its assets.
7. The Corporation may
engage in the purchase or sale of
precious metals and precious
stones only to the extent of 5% of
its assets. This restriction is
in part a result of the
potentially illiquid nature of
such an investment. The
Corporation will not engage,
however, in the purchase or sale
of commodity contracts.
8. The Corporation may
engage in the making of loans to
other persons only to the extent
of 20% of its assets and only in
compliance with the Investment
Company Act of 1940 and the North
Carolina Business Corporation Act.
This restriction is in part a
result of the potentially illiquid
nature of such an investment. The
Corporation may purchase debt
securities, however, in accordance
with its investment objectives in
excess of 5% of its assets.
9. The Corporation
anticipates that its portfolio
turnover rate (the lesser of
purchases or sales of portfolio
securities for the year divided by
the monthly average value of the
portfolio securities) will usually
not exceed 100%. The Corporation
may sell a portion of its
portfolio, however, in
anticipation of a rise in interest
rates (market decline), or it may
purchase securities in
anticipation of a decline in
interest rates (market rise) and
thereafter sell them. Addition-
ally, the Corporation may sell a
security and then purchase another
one of comparable quality at
approximately the same time to
take advantage of what the Board
of Directors believes to be a
temporary disparity in the normal
yield relationship between the two
securities. These yield
disparities may occur for reasons
not directly related to the
investment quality of particular
issues or the general movement of
interest rates, such as changes in
the overall demand for, or supply
of, various types of tax-exempt
securities. Accordingly, the
Corporation's portfolio turnover
rate could exceed 100% in
particular years. Such portfolio
turnover rate, however, will not
be a limiting factor when the
Corporation deems the purchase or
sale of a security to be
consistent with its fundamental
objective and policies.
10. The Corporation
will observe all restrictions and
requirements of the Code necessary
to maintain its status as a
regulated investment company under
the Code and to avoid incurring
the personal holding company
income tax imposed by the Code on
undistributed personal holding
company income.
11. The Corporation
shall operate as a closed-end,
non-diversified management
company.
Other Investment Policies
Subject to the restrictions
and limitations of the Corporation's
investment objectives set forth above,
the following policies will govern the
Corporation's investment activities and
may be changed by the Board of
Directors without approval by the
holders of a majority of the
Corporation's outstanding voting
securities:
1. The Corporation will
not invest in any security that
would cause more than 25% of the
value of its assets to be invested
in securities of issuers in any
one industry. The Corporation may
invest its assets in Municipal
Bonds, which generally cannot be
classified by industry, and may
invest as much as 40% of the value
of its assets in Municipal Bonds
the issuers of which are located
in North Carolina.
2. The Corporation may
engage in the purchase and sale of
securities of foreign issuers only
to the extent of 20% of its
assets.<PAGE>
EXHIBIT B
INVESTMENT ADVISORY AGREEMENT
THIS AGREEMENT, is made as of the
lst day of April, 1999, between BMC
Fund, Inc., a North Carolina
corporation (the "Fund"), and Northern
Trust Bank of Florida, N.A., a national
banking association (the "Adviser").
WHEREAS, the Fund is a closed-end
management investment company
registered under the Investment Company
Act of 1940 (the "1940 Act");
WHEREAS, the Adviser is a national
banking association that provides
investment advisory services as a part
of its general banking activities; and
WHEREAS, the Fund desires to
retain the Adviser to render investment
services with respect to a portion of
the Fund's investment assets, and the
Adviser is willing to render such
services;
NOW, THEREFORE, in consideration
of the mutual covenants herein
contained, the Fund and the Adviser
agree as follows:
1. Appointment of Adviser. The
Fund hereby appoints the Adviser to act
as investment adviser with respect to
the investment assets identified in
Annex A attached hereto (the "Assets")
in accordance with the terms and
conditions set forth below, and the
Adviser hereby accepts such
appointment.
2. Assets. The Fund may add or
remove assets from the Adviser's
management upon 10 days' notice to the
Adviser or such shorter period agreed
to by the Fund and the Adviser. The
Fund represents that the Assets are
lawfully owned by the Fund, that there
are no restrictions (whether arising
out of contract, operation of law or
otherwise) on the transfer, sale or
public distribution thereof and that
neither the Fund nor any affiliated
person of the Fund is an affiliated
person of any issuer whose securities
are included in the Assets.
3. Advisory Duties. The
Adviser shall manage, subject to the
supervision and control of the Board of
Directors of the Fund, the Assets in
accordance with the Fund's investment
objectives and policies, a copy of
which has been provided to the Adviser
(the "Objectives and Policies"), as
amended from time to time, and in
accordance with the following
understandings:
(a) The Adviser shall
provide a continuous investment
program with respect to the Assets
in accordance with the Objectives
and Policies and the instructions
of the Board of Directors of the
Fund. The Adviser will have no
responsibility for determining
that the total assets of the Fund
are invested in compliance with
any requirement of the Objectives
and Policies that specific
percentages of such total assets
be invested pursuant to particular
objectives.
(b) The Adviser shall
provide investment advisory,
research, statistical and clerical
services relating to its
management of the Assets.
(c) The Adviser, in the
performance of its duties and
obligations under this Agreement,
shall act in conformity with the
Articles of Incorporation and
Bylaws of the Fund, the
instructions of the Board of
Directors of the Fund, the
requirements of the 1940 Act, the
rules of the Securities and
Exchange Commission (the
"Commission") and all other
applicable federal and state laws
and regulations.
(d) (i) The Adviser will
execute all trades on behalf of
the Registrant involving exchange
listed securities through floor
brokers selected by the Adviser.
Commissions paid to the Adviser by
the Fund with respect to such
transactions shall not exceed the
lesser of (i) 50% of the regular
New York Stock Exchange, Inc.
rates in effect immediately prior
to the institution of fully
negotiated rates, (ii) $0.07 per
share or (iii) the maximum amount
permissible pursuant to Section
17(e) of the 1940 Act and the
rules of the Securities and
Exchange Commission thereunder;
provided, the amounts paid to the
Adviser in commissions, when added
to the fees paid to the Adviser
pursuant to Section 8 of the
Agreement, shall not exceed 2% of
the average daily total market
value of the Registrant's assets
under the Adviser's management for
the preceding fiscal year.
(ii) Without the
written consent of the Fund and
compliance with the 1940 Act and
the rules of the Commission
thereunder, the Adviser shall not
cause the Fund to purchase
securities from the Adviser, or
any affiliated person of the
Adviser, acting as principal and
shall not cause the Adviser to
purchase securities from any
syndicate or selling group of
which the Adviser or any
affiliated person of the Adviser
is a member. The Adviser may
refrain from advising the Fund
concerning securities of companies
of which any of the directors,
officers or employees of the
Adviser or of affiliated persons
of the Adviser are directors,
officers or employees, or
concerning securities of companies
for which the Adviser or its
affiliated persons act as
financial adviser.
(iii) When the
Adviser deems the purchase or sale
of a security to be in the best
interests of the Fund as well as
other customers, the Adviser, to
the extent permitted by applicable
laws and regulations, may
aggregate the securities to be
sold or purchased in order to
obtain the best execution and most
favorable price. In such event,
allocation of the securities so
purchased or sold, as well as the
expenses incurred in the
transaction, will be made by the
Adviser in the manner it considers
to be the most equitable and
consistent with its fiduciary
obligations to the Fund and to
such other customers.
(e) The Adviser shall
provide the Custodian, as defined
below, and the Fund on each
business day with a list of all
securities transactions directed
by the Adviser for the prior
business day and shall render to
the Fund's Board of Directors such
other periodic and special reports
as the Board may reasonably
request.
(f) The investment
management services of the Adviser
to the Fund under this Agreement
are not to be deemed exclusive,
and the Adviser shall be free to
render similar services to others.
4. Custody of Assets. First
Union National Bank, Charlotte, North
Carolina (the "Custodian") will retain
custody of the Assets. The Fund will
cause the Custodian to settle purchases
and sales of securities made by the
Adviser in connection with the
Adviser's management of the Assets,
through delivery of securities, payment
of funds or such other acts as may be
necessary to fulfill such custodial
responsibilities. Instructions
concerning purchases and sale of
securities by the Adviser on behalf of
the Fund shall be communicated to the
Custodian and the Fund in a manner
agreed to by the Fund, the Custodian
and the Adviser. Fees charged by the
Custodian shall continue to be the
responsibility of the Fund.
5. Books and Records. The
Adviser shall maintain and preserve the
books and records relating to
securities transactions on behalf of
the Fund in accordance with Section 31
of the 1940 Act and the rules of the
Commission thereunder, including,
without limitation, Rule 31a-1(f). The
Adviser agrees that all such books and
records are the property of the Fund
and that it will surrender promptly to
the Fund any of such books and records
upon the Fund's request. The Adviser
further agrees to preserve for the
periods prescribed by Rule 31a-2 under
the 1940 Act any such books and records
as are required to be maintained by
Rule 31a-1(f) under the 1940 Act.
6. Reports to Adviser. The
Fund agrees to furnish the Adviser at
its principal office all prospectuses,
proxy statements, reports to
shareholders, sales literature or other
material prepared for distribution to
shareholders of the Fund or the public,
which refer in any way to the Adviser,
10 days prior to use thereof and not to
use such material if the Adviser should
object thereto in writing within seven
days after receipt of such material.
The Fund shall furnish or otherwise
make available to the Adviser such
other information relating to the
business affairs of the Fund as the
Adviser at any time, or from time to
time, reasonably requests in order to
discharge its obligations hereunder.
7. Expenses. During the term
of this Agreement, the Adviser will pay
all expenses incurred by it in
connection with its activities under
this Agreement other than the cost of
securities purchased for the Fund and
the taxes and brokerage commissions, if
any, payable in connection with the
purchase and of such securities.
8. Compensation of the Adviser.
(a) For the services to be
rendered by the Adviser as
provided in this Agreement, the
Fund shall pay to the Adviser a
quarterly fee in advance. The fee
for a succeeding quarter will be
the product of the closing market
value of the Assets on the last
day of the preceding fiscal
quarter (the "Closing Value")
multiplied by the applicable
percentage set forth below (the
"Applicable Percentage");
provided, however, that the
quarterly fee payable to the
Adviser with respect to the
quarter commencing April 1, 1999
will be the product of the value
of the Assets first placed under
the management of the Adviser as
of April 1, 1999 multiplied by the
Applicable Percentage.
Applicable
Percentage Closing Value
.0875% of the first $15 million
.075% of the next $ 5 million
.0625% of amounts over $20 million
The quarterly fee calculated as
set forth above will be subject to
the following adjustments:
(i) In the event the Fund,during any fiscal
quarter,contributes additionalassets to be
managed by theAdviser(the "Additional
Assets"),the quarterly fee shall be the
product of the Closing Value times the
Applicable Percentage, reduced by an amount
equal to the closing market value of the
Additional Assets on the date of contribution
multiplied by a fraction the numerator of
which is the number of days during such
fiscal quarter that the Additional Assets
were under management and the denominator of
which is the total number of days in such fiscal
quarter.
(ii) In the event the Fund, during any fiscal
quarter, withdraws assets from the Adviser's
management (the "Withdrawn Assets"), the
quarterly fee shall be the product of the
Closing Value times the Applicable Percentage,
increased by an amount equal to the closing
value of the Withdrawn Assets on the date
of withdrawal multiplied by a fraction the
numerator of which is the number of date
during such fiscal quarter that the Withdrawn
Assets were under management and the
denominator of which is the total number of
days in the fiscal quarter.
(iii) In the event of termination of this
Agreement prior to the end of a quarter, the
Adviser shall repay the Fund a pro rata
portion of the quarterly fee for such quarter
based on the number of days elapsed in the
then-current fiscal quarter as a percentage
of the total number of days in such quarter.
There shall be no adjustment of the fee payable
under this Agreement for fluctuations during
a fiscal quarter in the value of Assets under
management prior to the date the Closing Value
is determined in accordance with this
Section 8.
(b) After the end of each fiscal quarter, the
Adviser shall submit to the Fund a report
showing the amount of the fee properly payable
to the Adviser hereunder and the detailed
calculation thereof. The Fund shall pay the
Adviser such fee not later than 30 days after
its receipt of such report. Failure of the Fund
to pay the fee when due shall entitle the
Adviser to pay the fee from cash assets of
the Fund under its management.
9. Limitation of Liability. In
the absence of (i) willful misfeasance,
bad faith or gross negligence on the
part of the Adviser in performance of
its obligations and duties hereunder,
(ii) reckless disregard by the Adviser
of its obligations and duties hereunder
or (iii) a loss resulting from a breach
of fiduciary duty with respect to the
receipt of compensation of services (in
which case any award of damages shall
be limited to the period and the amount
set forth in Section 36(b)(3) of the
1940 Act), the Adviser shall not be
subject to any liability whatsoever to
the Fund, or to any shareholder of the
Fund, for any error of judgment,
mistake or law or any other act or
omission in the course of, or connected
with, rendering services hereunder
including, without limitation, for any
losses that may be sustained in
connection with the purchase, holding,
redemption or sale of any security on
behalf of the Fund. The federal
securities laws impose liabilities
under certain circumstances on persons
who act in good faith, and therefore
nothing herein shall in any way
constitute a waiver or limitation of
any rights which the undersigned may
have under any federal securities laws.
10. Duration and Termination.
This Agreement shall, if approved by
the vote of a majority of the
outstanding voting securities of the
Fund at the special meeting of
shareholders on March 19,1999,
become effective on April 1, 1999 and
shall continue in effect until March
31, 2001, and thereafter only so long
as such continuance is approved at
least annually by a vote of the Fund's
Board of Directors (including at least
a majority of the directors who are not
interested persons of the Fund), cast
in person at a meeting called for the
purpose of voting on such approval. In
addition, the Fund may present to its
shareholders the question of
continuance of the Agreement; in such
event, such continuance shall be
effective only if approved by the
affirmative vote of a majority of the
outstanding voting securities of the
Fund.
This Agreement may be terminated
at any time, without payment of any
penalty, either by vote of the Board of
Directors of the Fund or by vote of a
majority of the outstanding voting
securities of the Fund, on 60 days'
written notice to the Adviser. This
Agreement shall not be assigned by
either party and shall automatically
terminate in the event of its
assignment. This Agreement may be
terminated by the Adviser on 60 days'
written notice to the Fund. Any notice
under this Agreement shall be given in
writing, addressed and delivered, or
mailed postpaid, to the other party as
follows:
If to the Fund: E. D.Beach
President
BMC Fund, Inc.
P. O. Box 500
Golfview Park
Lenoir, NC 28645
If to the Adviser: Northern Trust Bank
of Florida, N.A.
700 Brickell Avenue
Miami, Florida 33131
Attention:____________
11. Independent Contractor. The
Adviser shall for all purposes herein
be deemed to be an independent
contractor and shall, unless otherwise
expressly provided herein or authorized
by the Board of Directors of the Fund
from time to time, have no authority to
act for or represent the Fund in any
way or otherwise be deemed an agent for
the Fund.
12. Amendment of Agreement.
This Agreement may be amended by mutual
consent, but the consent of the Fund
must be approved (a) by vote of a
majority of the members of the Board of
Directors who are not interested
persons of the Fund, cast in person at
a meeting called for the purpose of
voting on such amendment, and (b) by
vote of a majority of the outstanding
voting securities of the Fund.
13. Definitions. As used in
this Agreement, the terms "affiliated
person," "assignment," "interested
persons" and "vote of a majority of the
outstanding voting securities" shall
have the respective meanings set forth
in Section 2(a)(3), Section 2(a)(4),
Section 2(a)(19) and Section 2(a)(42)
of the 1940 Act.
14. Governing Law. This
Agreement shall be governed by and
construed in accordance with the laws
of the State of North Carolina.
15. Miscellaneous. The Fund
acknowledges that it has reviewed the
Adviser's Form ADV, Part II, as
amended, at least forty-eight hours
prior to entering into this Agreement.
IN WITNESS WHEREOF, the parties
hereto have caused this instrument to
be executed by their officers
designated below as of the day and year
first above written.
ATTEST: BMC FUND, INC.
________________ ______________________
E. D. Beach
President
ATTEST: NORTHERN TRUST BANK
OF FLORIDA, N.A.
_______________ ___________________
Name:
Title:
<PAGE>
ANNEX A
DESCRIPTION OF ASSETS<PAGE>
EXHIBIT C
INVESTMENT ADVISORY AGREEMENT
THIS AGREEMENT, is made as of the
lst day of April, 1999, between BMC
Fund, Inc., a North Carolina
corporation (the "Fund"), and
Wellington Management Company, LLP, a
Massachusetts limited liability
partnership (the "Adviser").
WHEREAS, the Fund is a closed-end
management investment company
registered under the Investment Company
Act of 1940 (the "1940 Act");
WHEREAS, the Adviser is an
investment adviser registered under the
Investment Advisers Act of 1940; and
WHEREAS, the Fund desires to
retain the Adviser to render investment
services with respect to a portion of
the Fund's investment assets, and the
Adviser is willing to render such
services;
NOW, THEREFORE, in consideration
of the mutual covenants herein
contained, the Fund and the Adviser
agree as follows:
1. Appointment of Adviser. The
Fund hereby appoints the Adviser to act
as investment adviser with respect to
the investment assets identified in
Annex A attached hereto (the "Assets")
in accordance with the terms and
conditions set forth below, and the
Adviser hereby accepts such
appointment.
2. Assets. The Fund may add or
remove assets from the Adviser's
management upon 10 days' notice to the
Adviser or such shorter period agreed
to by the Fund and the Adviser. The
Fund represents that the Assets are
lawfully owned by the Fund, that there
are no restrictions (whether arising
out of contract, operation of law or
otherwise) on the transfer, sale or
public distribution thereof and that
neither the Fund nor any affiliated
person of the Fund is an affiliated
person of any issuer whose securities
are included in the Assets.
3. Advisory Duties. The
Adviser shall manage, subject to the
supervision and control of the Board of
Directors of the Fund, the Assets in
accordance with the Fund's investment
objectives and policies, a copy of
which has been provided to the Adviser
(the "Objectives and Policies"), as
amended from time to time, and in
accordance with the following
understandings:
(a) The Adviser shall
provide a continuous investment
program with respect to the Assets
in accordance with the Objectives
and Policies and the instructions
of the Board of Directors of the
Fund. The Adviser will have no
responsibility for determining
that the total assets of the Fund
are invested in compliance with
any requirement of the Objectives
and Policies that specific
percentages of such total assets
be invested pursuant to particular
objectives.
(b) The Adviser shall
provide investment advisory,
research, statistical and clerical
services relating to its
management of the Assets.
(c) The Adviser, in the
performance of its duties and
obligations under this Agreement,
shall act in conformity with the
Articles of Incorporation and
Bylaws of the Fund, the
instructions of the Board of
Directors of the Fund, the
requirements of the 1940 Act, the
rules of the Securities and
Exchange Commission (the
"Commission") and all other
applicable federal and state laws
and regulations.
(d) (i) [Intentionally
omitted.]
(ii) Without the
written consent of the Fund and
compliance with the 1940 Act and
the rules of the Commission
thereunder, the Adviser shall not
cause the Fund to purchase
securities from the Adviser, or
any affiliated person of the
Adviser, acting as principal and
shall not cause the Adviser to
purchase securities from any
syndicate or selling group of
which the Adviser or any
affiliated person of the Adviser
is a member. The Adviser may
refrain from advising the Fund
concerning securities of companies
of which any of the directors,
officers or employees of the
Adviser or of affiliated persons
of the Adviser are directors,
officers or employees, or
concerning securities of companies
for which the Adviser or its
affiliated persons act as
financial adviser.
(iii) When the
Adviser deems the purchase or sale
of a security to be in the best
interests of the Fund as well as
other customers, the Adviser, to
the extent permitted by applicable
laws and regulations, may
aggregate the securities to be
sold or purchased in order to
obtain the best execution and most
favorable price. In such event,
allocation of the securities so
purchased or sold, as well as the
expenses incurred in the
transaction, will be made by the
Adviser in the manner it considers
to be the most equitable and
consistent with its fiduciary
obligations to the Fund and to
such other customers.
(e) The Adviser shall
provide the Custodian, as defined
below, and the Fund on each
business day with a list of all
securities transactions directed
by the Adviser for the prior
business day and shall render to
the Fund's Board of Directors such
other periodic and special reports
as the Board may reasonably
request.
(f) The investment
management services of the Adviser
to the Fund under this Agreement
are not to be deemed exclusive,
and the Adviser shall be free to
render similar services to others.
4. Custody of Assets. First
Union National Bank, Charlotte, North
Carolina (the "Custodian") will retain
custody of the Assets. The Fund will
cause the Custodian to settle purchases
and sales of securities made by the
Adviser in connection with the
Adviser's management of the Assets,
through delivery of securities, payment
of funds or such other acts as may be
necessary to fulfill such custodial
responsibilities. Instructions
concerning purchases and sale of
securities by the Adviser on behalf of
the Fund shall be communicated to the
Custodian and the Fund in a manner
agreed to by the Fund, the Custodian
and the Adviser. Fees charged by the
Custodian shall continue to be the
responsibility of the Fund.
5. Books and Records. The
Adviser shall maintain and preserve the
books and records relating to
securities transactions on behalf of
the Fund in accordance with Section 31
of the 1940 Act and the rules of the
Commission thereunder, including,
without limitation, Rule 31a-1(f). The
Adviser agrees that all such books and
records are the property of the Fund
and that it will surrender promptly to
the Fund any of such books and records
upon the Fund's request. The Adviser
further agrees to preserve for the
periods prescribed by Rule 31a-2 under
the 1940 Act any such books and records
as are required to be maintained by
Rule 31a-1(f) under the 1940 Act.
6. Reports to Adviser. The
Fund agrees to furnish the Adviser at
its principal office all prospectuses,
proxy statements, reports to
shareholders, sales literature or other
material prepared for distribution to
shareholders of the Fund or the public,
which refer in any way to the Adviser,
10 days prior to use thereof and not to
use such material if the Adviser should
object thereto in writing within seven
days after receipt of such material.
The Fund shall furnish or otherwise
make available to the Adviser such
other information relating to the
business affairs of the Fund as the
Adviser at any time, or from time to
time, reasonably requests in order to
discharge its obligations hereunder.
7. Expenses. During the term
of this Agreement, the Adviser will pay
all expenses incurred by it in
connection with its activities under
this Agreement other than the cost of
securities purchased for the Fund and
the taxes and brokerage commissions, if
any, payable in connection with the
purchase and of such securities.
8. Compensation of the Adviser.
(a) For the services to be
rendered by the Adviser as
provided in this Agreement, the
Fund shall pay to the Adviser a
quarterly fee in advance. The fee
for a succeeding quarter will be
the product of the closing market
value of the Assets on the last
day of the preceding fiscal
quarter (the "Closing Value")
multiplied by 0.075%; provided,
however, that the quarterly fee
payable to the Adviser with
respect to the quarter commencing
April 1, 1999 will be the product
of the value of the Assets first
placed under the management of the
Adviser as of April 1, 1999
multiplied by 0.075%. The
quarterly fee calculated as set
forth above will be subject to the
following adjustments:
(i) In the event the Fund, during any fiscal
quarter, contributes additional assets to be
managed by the Adviser (the "Additional
Assets"), the quarterly fee shall be the
product of the Closing Value times 0.075%,
reduced by an amount equal to the closing
market value of the Additional Assets on the
date of contribution multiplied by a fraction
the numerator of which is the number of days
during such fiscal quarter that the Additional
Assets were under management and the
denominator of which is the total number of
days in such fiscal quarter.
(ii) In the event the Fund, during any
fiscal quarter, withdraws assets from the
Adviser's management (the "Withdrawn Assets"),
the quarterly fee shall be the product of
the Closing Value times 0.075%, increased
by an amount equal to the closing value of
the Withdrawn Assets on the date of withdrawal
multiplied by a fraction the numerator of
which is the number of date during such
fiscal quarter that the Withdrawn Assets
were under management and the denominator
of which is the total number of days in
the fiscal quarter.
(iii) In the event of termination of this
Agreement prior to the end of a quarter, the
Adviser shall repay the Fund a pro rata portion
of the quarterly fee for such quarter
based on the number of days elapsed in the
then-current fiscal quarter as a percentage of
the total number of daysin such quarter.
There shall be no adjustment of the fee payable
under this Agreement for fluctuations during
a fiscal quarter in the value of Assets under
management prior to the date the Closing Value
is determined in accordance with this Section 8.
(b) After the end of each
fiscal quarter, the Adviser shall
submit to the Fund a report
showing the amount of the fee
properly payable to the Adviser
hereunder and the detailed
calculation thereof. The Fund
shall pay the Adviser such fee not
later than 30 days after its
receipt of such report. Failure
of the Fund to pay the fee when
due shall entitle the Adviser to
pay the fee from cash assets of
the Fund under its management.
9. Limitation of Liability. In
the absence of (i) willful misfeasance,
bad faith or gross negligence on the
part of the Adviser in performance of
its obligations and duties hereunder,
(ii) reckless disregard by the Adviser
of its obligations and duties hereunder
or (iii) a loss resulting from a breach
of fiduciary duty with respect to the
receipt of compensation of services (in
which case any award of damages shall
be limited to the period and the amount
set forth in Section 36(b)(3) of the
1940 Act), the Adviser shall not be
subject to any liability whatsoever to
the Fund, or to any shareholder of the
Fund, for any error of judgment,
mistake or law or any other act or
omission in the course of, or connected
with, rendering services hereunder
including, without limitation, for any
losses that may be sustained in
connection with the purchase, holding,
redemption or sale of any security on
behalf of the Fund. The federal
securities laws impose liabilities
under certain circumstances on persons
who act in good faith, and therefore
nothing herein shall in any way
constitute a waiver or limitation of
any rights which the undersigned may
have under any federal securities laws.
10. Duration and Termination.
This Agreement shall, if approved by
the vote of a majority of the
outstanding voting securities of the
Fund at the special meeting of
shareholders on March 19, 1999,
become effective on April 1, 1999 and
shall continue in effect until March
31, 2001, and thereafter only so long
as such continuance is approved at
least annually by a vote of the Fund's
Board of Directors (including at least
a majority of the directors who are not
interested persons of the Fund), cast
in person at a meeting called for the
purpose of voting on such approval. In
addition, the Fund may present to its
shareholders the question of
continuance of the Agreement; in such
event, such continuance shall be
effective only if approved by the
affirmative vote of a majority of the
outstanding voting securities of the
Fund.
This Agreement may be terminated
at any time, without payment of any
penalty, either by vote of the Board of
Directors of the Fund or by vote of a
majority of the outstanding voting
securities of the Fund, on 60 days'
written notice to the Adviser. This
Agreement shall not be assigned by
either party and shall automatically
terminate in the event of its
assignment. This Agreement may be
terminated by the Adviser on 60 days'
written notice to the Fund. Any notice
under this Agreement shall be given in
writing, addressed and delivered, or
mailed postpaid, to the other party as
follows:
If to the Fund: E. D. Beach
President
BMC Fund, Inc.
P. O. Box 500
Golfview Park
Lenoir, NC 28645
If to the Adviser: Wellington Management
Company, LLP
75 State Street
Boston, Massachusetts
02109
Attention:____________
11. Independent Contractor. The
Adviser shall for all purposes herein
be deemed to be an independent
contractor and shall, unless otherwise
expressly provided herein or authorized
by the Board of Directors of the Fund
from time to time, have no authority to
act for or represent the Fund in any
way or otherwise be deemed an agent for
the Fund.
12. Amendment of Agreement.
This Agreement may be amended by mutual
consent, but the consent of the Fund
must be approved (a) by vote of a
majority of the members of the Board of
Directors who are not interested
persons of the Fund, cast in person at
a meeting called for the purpose of
voting on such amendment, and (b) by
vote of a majority of the outstanding
voting securities of the Fund.
13. Definitions. As used in
this Agreement, the terms "affiliated
person," "assignment," "interested
persons" and "vote of a majority of the
outstanding voting securities" shall
have the respective meanings set forth
in Section 2(a)(3), Section 2(a)(4),
Section 2(a)(19) and Section 2(a)(42)
of the 1940 Act.
14. Governing Law. This
Agreement shall be governed by and
construed in accordance with the laws
of the State of North Carolina.
15. Miscellaneous. The Fund
acknowledges that it has reviewed the
Adviser's Form ADV, Part II, as
amended, at least forty-eight hours
prior to entering into this Agreement.
IN WITNESS WHEREOF, the parties
hereto have caused this instrument to
be executed by their officers
designated below as of the day and year
first above written.
ATTEST: BMC FUND, INC.
____________ ______________________
E. D. Beach
President
ATTEST: WELLINGTON MANAGEMENT
COMPANY, LLP
___________ _________________
Name:
Title:<PAGE>
ANNEX A
DESCRIPTION OF ASSETS
<PAGE>
EXHIBIT E
EXECUTIVE OFFICERS AND DIRECTORS OF
NORTHERN TRUST BANK OF FLORIDA, N.A.
Juan C. Alonso(1) Carlos Noble (1)
Sheldon T.Anderson Anna K.Rentz (1)
Robert W. Bauchman(1) Douglas P. Regan(1)
Louise F. Dill H. James Sigsbee (1)
PaulW.Dresselhaus Donna R.Spivey
James R. Grinney(1) Harold H.Tyler,Jr.(1)
Stephen A.Lynch,III(1) Jorge L.Viera
Ray E. Marchman, Jr.(1) Arthur M.Wood, Jr.(1)
William L.Morrison (1)(2)
____________________________
(1) Executive Officer
(2) Principal Executive Officer
<PAGE>
EXHIBIT F
GENERAL PARTNERS AND SENIOR VICE PRESIDENTS
OF WELLINGTON MANAGEMENT COMPANY
Kenneth L. Abrams Matthew E. Megargel
Nicholas C. Adams James N. Mordy
Rand L. Alexander Diane C. Nordin
Deborah L. Allinson Stephen T. O Brien
James H. Averill Edward P. Owens
Karl E. Bandtel Saul J. Pannell
Marie-Claude Bernal Thomas L. Pappas
William N. Booth Jonathan M. Payson
Paul Braverman Stephen M. Pazuk
Robert A. Bruno Robert D. Rands
Maryann E. Carroll Eugene E. Record,Jr.
Pamela Dippel James A. Rullo
Robert W. Doran John R. Ryan
Charles T. Freeman Joseph H. Schwartz
Laurie A. Gabriel Theodore Shasta
Frank J. Gilday Binkley C. Shorts
John H. Gooch Trond Skramstad
Nicholas P. Greville Catherine A. Smith
Paul Hamel Stephen A. Soderberg
William C. S. Hicks Brendan J. Swords
Lucius T. Hill, III Harriett Tee Taggart
Paul D. Kaplan Perry M. Traquina
John C. Keogh Gene R. Tremblay
George C. Lodge, Jr. Michael A. Tyler
Nancy T. Lukitsh Mary Ann Tynan
Mark T. Lynch Clare Villari
Christine S. Manfredi Ernst H. von Metzsch
Patrick J. McCloskey James L. Walters
Earl E. McEvoy Kim Williams
Duncan M. McFarland Francis V. Wisneski
Paul M. Mecray III
<PAGE>
THIS PROXY IS SOLICITED ON BEHALF OF
THE BOARD OF DIRECTORS BMC FUND, INC.
The undersigned hereby appoints Paul H.
Broyhill and E. D. Beach, or either of
them, as agents, each with the power to
appoint his substitute, and hereby
authorizes them to vote, as designated
below, all of the shares of Common
Stock of BMC Fund, Inc. (the
"Corporation"), held of record by the
undersigned on February 5, 1999, at the
special meeting of shareholders to be
held on March 19, 1999, or at any
adjournment thereof.
1. To approve an amendment to the
Corporation's Investment
Objectives and Policies.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
2. To approve an Investment Advisory
Agreement with Northern Trust Bank
of Florida.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
3. To approve an Investment Advisory
Agreement with Wellington
Management Company, LLP.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
In their discretion, the proxy
agents are authorized to vote upon
such other business as may come
before the meeting.
THIS PROXY WHEN PROPERLY EXECUTED
WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED SHAREHOLDER.
IF NO DIRECTION IS GIVEN, THIS PROXY
WILL BE VOTED TO APPROVE PROPOSALS 1 THROUGH 3.
Dated __________________,1999
_______________________________
Signature*
_______________________________
Signature*
*Please sign exactly as the name
appears hereon.
When shares are held in joint
accounts, each joint
owner should sign. Executors,
administrators,
trustees, guardians, attorneys and
corporate officers
should indicate their titles.
