<PAGE>
Registration No. 33-20827
Inv. Co. Act No. 811-5518
As filed with the Securities and Exchange Commission on October 25, 1995
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [ ]
POST-EFFECTIVE AMENDMENT NO. 29 [X]
and
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [ ]
AMENDMENT NO. 31 [X]
__________________________________
THE RBB FUND, INC.
(Warburg Pincus Growth & Income Fund: Warburg Pincus Class and Warburg
Pincus Series 2 Class; Warburg Pincus Balanced Portfolio: Warburg
Pincus Class and Warburg Pincus Series 2 Class; Tax-Free Portfolio:
Warburg Pincus Class; Government Securities Portfolio: RBB Family Class;
BEA International Equity Portfolio: BEA Class; BEA Strategic Fixed
Income Portfolio: BEA Class; BEA Emerging Markets Equity Portfolio:
BEA Class; BEA U.S. Core Equity Portfolio: BEA Class; BEA U.S. Core
Fixed Income Portfolio; BEA Class; BEA Global Fixed Income Portfolio:
BEA Class; BEA Municipal Bond Fund Portfolio; BEA Class; BEA Balanced
Fund Portfolio; BEA Class; BEA Short Duration Portfolio: BEA Class;
Money Market Portfolio: RBB Family Class, Cash Preservation Class,
Sansom Street Class, Bedford Class, Janney Class, Beta Class,
Gamma Class, Delta Class, Epsilon Class, Zeta Class, Eta Class and Theta
Class; Municipal Money Market Portfolio: RBB Family Class, Cash
Preservation Class, Sansom Street Class, Bedford Class, Bradford Class,
Janney Class, Beta Class, Gamma Class, Delta Class, Epsilon Class, Zeta
Class, Eta Class and Theta Class; Government Obligations Money Market
Portfolio: Sansom Street Class, Bedford Class, Bradford Class, Janney
Class, Beta Class, Gamma Class, Delta Class, Epsilon Class, Zeta Class,
Eta Class and Theta Class; New York Municipal Money Market Portfolio:
Bedford Class, Janney Class, Beta Class, Gamma Class, Delta Class, Epsilon
Class, Zeta Class, Eta Class and Theta Class)
______________________________________________________________________
(Exact Name of Registrant as Specified in Charter)
Bellevue Park Corporate Center
400 Bellevue Parkway
Suite 100
Wilmington, DE 19809
(Address of Principal Executive Offices)
________________________________________
Registrant's Telephone Number: (302) 792-2555
Copies to:
GARY M. GARDNER, ESQUIRE JOHN N. AKE, ESQUIRE
PNC Bank, National Association Ballard Spahr Andrews & Ingersoll
Broad and Chestnut Streets 1735 Market Street, 51st Floor
Philadelphia, PA 19101 Philadelphia, PA 19101
(Name and Address of
Agent for Service)
Approximate Date of Proposed Public Offering: as soon as possible after
effective date of registration statement.
It is proposed that this filing will become effective (check appropriate
box)
immediately upon filing pursuant to paragraph (b)
-------
on _________________ pursuant to paragraph (b)
-------
60 days after filing pursuant to paragraph (a)(1)
-------
X on December 28, 1995 pursuant to paragraph (a)(1)
-------
75 days after filing pursuant to paragraph (a)(2)
-------
on _______________ pursuant to paragraph (a)(2) of rule 485
-------
If appropriate, check following box:
------- this post-effective amendment designates a new effective
date for a previously filed post-effective amendment.
______________________________
Pursuant to Rule 24f-2 under the Investment Company Act of 1940, Registrant
has elected to register an indefinite number of shares of common stock of each
of the sixty classes registered hereby under the Securities Act of 1933.
Registrant anticipates filing its notice pursuant to Rule 24f-2 for the fiscal
year ended August 31, 1995 on or before October 30, 1995.
______________________________
This document contains a total of ___________ pages.
Exhibit Index appears on page __________.
<PAGE>
THE RBB FUND, INC.
(BEA Shares of the BEA International Equity, BEA Emerging Markets Equity,
BEA U.S. Core Equity, BEA Balanced Fund, BEA U.S. Core Fixed Income,
BEA Global Fixed Income, BEA Strategic Fixed Income,
BEA Municipal Bond Fund and BEA Short Duration Portfolios)
Cross Reference Sheet
<TABLE>
<CAPTION>
Form N-1A Item Location
-------------- --------
<S> <C>
PART A PROSPECTUS
1. Cover Page............................ Cover Page
2. Synopsis.............................. Fee Table
3. Condensed Financial Information....... Financial Highlights
4. General Description of Registrant..... Cover Page; The Fund;
Investment Objectives and
Policies
5. Management of the Fund................ Management
6. Capital Stock and Other Securities.... Cover Page; Dividends and
Distributions
7. Purchase of Securities Being Offered.. How to Purchase Shares; Net
Asset Value
8. Redemption or Repurchase.............. How to Redeem Shares; Net
Asset Value
9. Legal Proceedings..................... Inapplicable
<PAGE>
PART B STATEMENT OF
ADDITIONAL
INFORMATION
10. Cover Page............................ Cover Page
11. Table of Contents..................... Contents
12. General Information and History....... General; See Prospectus - "The
Fund"
13. Investment Objectives and Policies.... Common Investment Policies;
Common Investment Objectives
and Policies; Supplemental
Investment Objectives and
Policies
14. Management of the Fund................ Directors and Officers;
Investment Advisory and
Servicing Arrangements
15. Control Persons and Principal Holders
of Securities......................... Miscellaneous
16. Investment Advisory and Other
Services.............................. Investment Advisory and
Servicing Arrangements; See
Prospectus - "Management"
17. Brokerage Allocation and Other
Practices............................. Portfolio Transactions
18. Capital Stock and Other Securities.... Additional Information
Concerning Fund Shares; See
Prospectus - "Dividends and
Distributions" and
"Description of Shares"
19. Purchase, Redemption and Pricing of
Securities Being Offered.............. Purchase and Redemption
Information; Valuation of
Shares; See Prospectus - "How
to Purchase Shares," "How to
Redeem Shares" and
"Distribution of Shares"
20. Tax Status............................ Taxes; See Prospectus -
"Taxes"
21. Underwriters.......................... Not Applicable
22. Calculation of Performance Data....... Performance and Yield
Information
23. Financial Statements Inapplicable
</TABLE>
PART C Other Information
Information required to be included in Part C is set forth under the
appropriate item, so numbered in Part C of this Registration Statement.
<PAGE>
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THE BEA FAMILY OF MUTUAL FUNDS
BEA INTERNATIONAL EQUITY PORTFOLIO
BEA EMERGING MARKETS EQUITY PORTFOLIO
BEA U.S. CORE EQUITY PORTFOLIO
BEA BALANCED PORTFOLIO
BEA U.S. CORE FIXED INCOME PORTFOLIO
BEA GLOBAL FIXED INCOME PORTFOLIO
BEA STRATEGIC FIXED INCOME PORTFOLIO
BEA MUNICIPAL BOND FUND PORTFOLIO
BEA SHORT DURATION PORTFOLIO
---------------------
PROSPECTUS
---------------------
DECEMBER 28, 1995
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<PAGE>
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
Fee Table.................................................................................................. 2
Financial Highlights....................................................................................... 4
The Fund................................................................................................... 5
Investment Objectives and Policies......................................................................... 5
Investment Limitations..................................................................................... 20
Risk Factors............................................................................................... 20
Management................................................................................................. 23
Expenses................................................................................................... 26
How to Purchase Shares..................................................................................... 27
How to Redeem Shares....................................................................................... 28
Net Asset Value............................................................................................ 30
Dividends and Distributions................................................................................ 30
Taxes...................................................................................................... 30
Description of Shares...................................................................................... 32
Other Information.......................................................................................... 33
</TABLE>
<PAGE>
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The BEA Family consists of nine classes of common stock of The RBB Fund,
Inc. (the "Fund"), an open-end management investment company. Shares
(collectively, the "BEA Shares" or "Shares") of such classes (the "BEA Classes"
or "Classes") are offered by this Prospectus and represent interests in one of
nine of the investment portfolios of the Fund described in this Prospectus
(collectively, the "Portfolios"). The investment objective of each Portfolio
described in this Prospectus is as follows:
BEA INTERNATIONAL EQUITY PORTFOLIO -- to provide long-term appreciation
of capital. The Portfolio will invest primarily in equity securities of
non-U.S. issuers.
BEA EMERGING MARKETS EQUITY PORTFOLIO -- to provide long-term
appreciation of capital. The Portfolio will invest primarily in equity
securities in emerging country markets.
BEA U.S. CORE EQUITY PORTFOLIO -- to provide long term appreciation of
capital. The Portfolio will invest primarily in U.S. equity securities.
BEA BALANCED PORTFOLIO -- to maximize total return consistent with
preservation of capital through both income and capital appreciation.
BEA U.S. CORE FIXED INCOME PORTFOLIO -- to provide high total return.
The Portfolio will invest primarily in domestic fixed-income securities
consistent with comparable broad market fixed income indices, such as the
Lehman Brothers Aggregate Bond Index.
BEA STRATEGIC FIXED INCOME PORTFOLIO -- to provide a high total return.
The Portfolio will invest primarily in fixed income securities issued by
corporations, governments and agencies, both domestic and foreign. The
Portfolio will invest without regard to maturity or credit quality
limitations.
BEA GLOBAL FIXED INCOME PORTFOLIO -- to provide high total return. The
Portfolio will invest primarily in both foreign and domestic fixed income
securities.
BEA MUNICIPAL BOND FUND PORTFOLIO -- to provide high total return. The
Portfolio will invest primarily in municipal bonds issued by state and local
authorities.
BEA SHORT DURATION PORTFOLIO -- to provide investors with as high a
level of current income as is consistent with the preservation of capital.
There can be, of course, no assurance that a Portfolio's investment
objective will be achieved. Investments in the Portfolios involve certain risks.
See "Risk Factors."
THE BEA INTERNATIONAL EQUITY, BEA EMERGING MARKETS EQUITY, BEA STRATEGIC
FIXED INCOME, BEA U.S. CORE FIXED INCOME, BEA GLOBAL FIXED INCOME AND BEA
MUNICIPAL BOND FUND PORTFOLIOS MAY INVEST ITS ASSETS WITHOUT LIMITATION IN
SECURITIES WHICH MAY INCLUDE BELOW INVESTMENT-GRADE QUALITY SECURITIES COMMONLY
KNOWN AS "JUNK BONDS." INVESTMENTS OF THIS TYPE ARE SUBJECT TO GREATER RISKS,
INCLUDING THE RISK OF LOSS OF PRINCIPAL AND INTEREST, THAN THOSE INVOLVED WITH
INVESTMENT GRADE SECURITIES. PURCHASERS SHOULD CAREFULLY ASSESS THE RISKS
ASSOCIATED WITH AN INVESTMENT IN THESE PORTFOLIOS. SEE "RISK FACTORS."
THE PORTFOLIOS MAY ENGAGE IN SHORT-TERM TRADING AND MAY INVEST IN PUT AND
CALL OPTIONS. SUCH ACTIVITY CONSTITUTES SPECULATIVE ACTIVITY AND INVOLVES
GREATER RISKS OR COST TO THE PORTFOLIOS.
THE PORTFOLIOS MAY INVEST UP TO 10% OF NET ASSETS IN ILLIQUID SECURITIES.
SUCH INVESTMENTS CONSTITUTE SPECULATIVE ACTIVITY AND INVOLVE GREATER RISKS OR
COSTS TO THE PORTFOLIOS. SEE "RISK FACTORS."
THE PORTFOLIOS MAY TREAT SECURITIES ACQUIRED PURSUANT TO RULE 144A OF THE
SECURITIES ACT OF 1933 ("RULE 144A SECURITIES") AS LIQUID, AND THEREFORE NOT
SUBJECT TO THE PORTFOLIOS' TEN PER CENT LIMITATION ON INVESTMENTS IN ILLIQUID
SECURITIES. HOWEVER, A PORTFOLIO WILL NOT INVEST MORE THAN FIFTY PER CENT OF ITS
TOTAL ASSETS IN (A) SECURITIES OF ISSUERS WHICH ARE RESTRICTED AS TO
DISPOSITION, INCLUDING RULE 144A SECURITIES, COMBINED WITH (B) THE SECURITIES OF
ISSUERS WHICH TOGETHER WITH ANY PREDECESSORS HAVE A RECORD OF LESS THAN THREE
YEARS CONTINUOUS OPERATION. THE PORTFOLIOS MAY INVEST IN THESE SECURITIES TO A
GREATER EXTENT THAN INVESTMENT COMPANIES WHICH MEET ALL OF THE REQUIREMENTS OF
SECTION 1301:6-3-09(E)(12) OF THE OHIO ADMINISTRATIVE CODE.
BEA Associates ("BEA" or the "Adviser"), a U.S. investment advisory firm,
will act as the investment adviser to each Portfolio. BEA emphasizes a global
investment strategy and, as of , 1995, acted as adviser for
approximately $ billion of assets.
Generally, the minimum initial investment in a Portfolio is $1,000,000 and
the minimum subsequent investment is $100,000.
This Prospectus contains information that a prospective investor needs to
know before investing. Please keep it for future reference. A Statement of
Additional Information, dated December 28, 1995, has been filed with the
Securities and Exchange Commission and is incorporated by reference in this
Prospectus. It may be obtained free of charge from the Fund's distributor by
calling (800) 888-9723.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE COMMISSION OR
ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
PROSPECTUS DECEMBER 28, 1995
<PAGE>
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FEE TABLE
SHAREHOLDER TRANSACTION EXPENSES
<TABLE>
<CAPTION>
BEA BEA
BEA EMERGING STRATEGIC
INTERNATIONAL MARKETS FIXED
EQUITY EQUITY INCOME
PORTFOLIO PORTFOLIO PORTFOLIO
------------- -------- ---------
<S> <C> <C> <C>
Redemption Fees (Payable to the Fund) (as a
percentage of amount redeemed)................... 1.00% 1.50% .25%
</TABLE>
ANNUAL PORTFOLIO OPERATING EXPENSES AFTER EXPENSE REIMBURSEMENTS AND WAIVERS*
<TABLE>
<CAPTION>
BEA BEA
BEA EMERGING U.S. CORE
INTERNATIONAL MARKETS BEA U.S. BEA FIXED
EQUITY EQUITY CORE EQUITY BALANCED INCOME
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
------------- -------- ----------- ------------ ---------
<S> <C> <C> <C> <C> <C>
Management fees
(after waivers)**................................ % % % % %
Other Expenses
(after reimbursements)........................... % % % % %
--- --- --- --- ---
Total Portfolio
Operating Expenses (after waivers and
reimbursements).................................. % % % % %
--- --- --- --- ---
--- --- --- --- ---
</TABLE>
<TABLE>
<CAPTION>
BEA
BEA STRATEGIC BEA BEA
GLOBAL FIXED FIXED MUNICIPAL SHORT
INCOME INCOME BOND FUND DURATION
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
------------- -------- ----------- ---------
<S> <C> <C> <C> <C>
Management fees
(after waivers)**................................ -- % % %
Other Expenses
(after reimbursements)........................... % % % %
--- --- --- ---
Total Portfolio
Operating Expenses (after waivers and
reimbursements).................................. % % % %
--- --- --- ---
--- --- --- ---
<FN>
- ------------------------
* The operating expenses for the Portfolios are based on actual expenses for
the year ended August 31, 1995.
** Management fees are each based on average daily net assets and are
calculated daily and paid monthly.
</TABLE>
2
<PAGE>
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EXAMPLE
An investor would pay the following expenses on a $1,000 investment in each
of the Portfolios, assuming (1) a 5% annual return, and (2) redemption at the
end of each time period.
<TABLE>
<CAPTION>
ONE THREE FIVE TEN
YEAR YEARS YEARS YEARS
------ ------ ------- -------
<S> <C> <C> <C> <C>
BEA International Equity Portfolio*...................................
BEA Emerging Markets Equity Portfolio**...............................
BEA U.S. Core Equity Portfolio........................................
BEA Balanced Portfolio .
BEA U.S. Core Fixed Income Portfolio..................................
BEA Global Fixed Income Portfolio.....................................
BEA Strategic Fixed Income Portfolio***...............................
BEA Municipal Bond Fund Portfolio.....................................
BEA Short Duration Portfolio..........................................
<FN>
- ------------------------------
* Reflects a 1.00% redemption fee
** Reflects a 1.50% redemption fee
*** Reflects a .25% redemption fee
**** N/A
</TABLE>
An investor would pay the following expenses on the same investment,
assuming no redemption:
<TABLE>
<CAPTION>
ONE THREE FIVE TEN
YEAR YEARS YEARS YEARS
---- ----- ----- -----
<S> <C> <C> <C> <C>
BEA International Equity Portfolio..........................
BEA Emerging Markets Equity Portfolio.......................
BEA Strategic Fixed Income Portfolio........................
</TABLE>
The Example in the Fee Table assumes that all dividends and distributions
are reinvested and that the amounts listed under "Annual Portfolio Operating
Expenses After Expense Reimbursements and Waivers" remain the same in the years
shown. THE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES AND ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
The Fee Table is designed to assist an investor in understanding the various
costs and expenses that an investor in each of the Portfolios will bear directly
or indirectly. (For more complete descriptions of the various costs and
expenses, see "Management" below.) The expense
figures are based upon fees and costs of the Portfolios as of August 31, 1995.
Actual expenses may be greater or less than such costs and fees. The Fee Table
reflects waiver of Management and Administration Fees equal to %, %, %,
%, %, %, %, % and % for the BEA International Equity, BEA Emerging
Markets Equity, BEA U.S. Core Equity, BEA Balanced, BEA U.S. Core Fixed Income,
BEA Global Fixed Income, BEA Strategic Fixed Income, BEA Municipal Bond Fund and
BEA Short Duration Portfolios respectively. However, there can be no assurance
that any future waivers of Management and Administration Fees (if any) will not
vary from the figures reflected in the Fee Table. To the extent any service
providers assume additional expenses of any Portfolio, such assumption of
additional expenses will have the effect of lowering a Portfolio's overall
expense ratio and increasing its return to investors. Absent fee waivers or
reimbursements, estimated expenses for the fiscal year ended August 31, 1995
were as follows:
ANNUAL PORTFOLIO OPERATING EXPENSES BEFORE EXPENSE REIMBURSEMENTS AND WAIVERS
<TABLE>
<CAPTION>
BEA
BEA BEA U.S.
Inter- Emerging BEA U.S. Core
national Markets Core BEA Fixed
Equity Equity Equity Balanced Income
Portfolio Portfolio Portfolio Portfolio Portfolio
--------- -------- --------- -------- ---------
<S> <C> <C> <C> <C> <C>
Management fees............................................. .80% 1.00% .75% .60% .375%
Other Expenses..............................................
--------- -------- --------- -------- ---------
Total Portfolio Operating Expenses..........................
--------- -------- --------- -------- ---------
--------- -------- --------- -------- ---------
</TABLE>
<TABLE>
<CAPTION>
BEA BEA BEA
Global Strategic Municipal BEA
Fixed Fixed Bond Short
Income Income Fund Duration
Portfolio Portfolio Portfolio Portfolio
--------- --------- --------- --------
<S> <C> <C> <C> <C>
Management fees............................................. .50% .70% .70% .15%
Other Expenses..............................................
--------- --------- --------- --------
Total Portfolio Operating Expenses..........................
--------- --------- --------- --------
--------- --------- --------- --------
</TABLE>
3
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FINANCIAL HIGHLIGHTS
The tables below set forth certain information concerning the investment
results of the BEA Classes representing interests in the BEA International
Equity, BEA Emerging Markets Equity, BEA Strategic Fixed Income, BEA U.S. Core
Fixed Income, BEA Global Fixed Income and BEA Municipal Bond Fund Portfolios for
each of the periods indicated. The financial data included in this table for
each of the periods
ended August 31, 1995, August 31, 1994 and August 31, 1993 are a part of the
Fund's Financial Statements for each of the above Portfolios which have been
audited by Coopers & Lybrand L.L.P., the Fund's independent accountants, whose
report thereon appears in the Statement of Additional Information along with the
financial statements. The financial data included in this table should be read
in conjunction with the financial statements and related notes included in the
Statement of Additional Information.
[Financials to be filed by post-effective amendment]
4
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THE FUND
The Fund is an open-end management investment company that currently
operates or proposes to operate seventeen separate investment portfolios. Each
of the nine classes of shares offered by this Prospectus represents interests in
one of the nine Portfolios. Each Portfolio is non-diversified. The Fund was
incorporated in Maryland on February 29, 1988.
The Portfolios are designed primarily for investors seeking investment of
funds held in an institutional, fiduciary, advisory, agency, custodial or other
similar capacity, which may include the investment of funds held or managed by
broker-dealers, investment counselors, insurance companies, employee benefit
plans, colleges, churches, charities, corporations and other institutions.
Shares are currently available for purchase by investors who have entered into
an investment management agreement with BEA or its affiliates. In addition,
Shares may be purchased directly by certain individuals described in "How to
Purchase Shares." Institutional investors such as those listed above may
purchase Shares for discretionary or non-discretionary accounts maintained by
individuals.
INVESTMENT OBJECTIVES AND POLICIES
The investment objective of each Portfolio may not be changed without the
affirmative vote of a majority of the Portfolio's outstanding shares (as defined
in the Investment Company Act of 1940, as amended (the "1940 Act")). As with
other mutual funds, there can be no assurance that any Portfolio will achieve
its investment objective. Because of their different investment emphases, each
Portfolio should be considered as a vehicle for diversification and not as a
balanced investment program. The Statement of Additional Information contains a
more detailed description of the various investments and investment techniques
used by the Portfolios.
BEA INTERNATIONAL EQUITY PORTFOLIO
The BEA International Equity Portfolio's investment objective is to seek
long-term appreciation of capital. The Portfolio will invest primarily in equity
securities of non-U.S. issuers. The Portfolio defines equity securities of non-
U.S. issuers as securities of issuers whose principal activities are outside the
United States. The Portfolio expects that its investments will be concentrated
in Argentina, Australia, Austria, Brazil, Canada, Chile, Colombia, Denmark,
England, Finland, France, Germany, Greece, Hong Kong, Hungary, Italy, Japan,
Malaysia, Mexico, The Netherlands, New Zealand, Norway, Portugal, Singapore,
South Africa, Spain, Sweden, Switzerland, Thailand and Venezuela. The Portfolio
may invest in securities of issuers in Emerging Markets, as defined below under
"Investment Objectives and Policies -- BEA Emerging Markets Equity Portfolio,"
but does not expect to invest more than 40% of its total assets in securities of
issuers in Emerging Markets. The Portfolio will invest in securities of issuers
from at least three countries outside the United States.
Under normal market conditions, the Portfolio will invest a minimum of 80%
of its total assets in equity securities of non-U.S. issuers. Such equity
securities include common stock and preferred stock (including convertible
preferred stock); bonds, notes and debentures convertible into common or
preferred stock; stock purchase warrants and rights; equity interests in trusts
and partnerships; and depositary receipts of companies.
The Portfolio may invest up to 20% of its total assets in debt securities
issued by U.S. or foreign banks, corporations or the following: other business
organizations, or by U.S. or foreign governments or governmental entities
(including supranational organizations such as the International Bank for
Reconstruction and Development (more commonly referred to as the "World Bank"),
the Asian Development Bank, the InterAmerican Development Bank and the European
Coal and Steel Community), mortgage-backed securities, asset-backed securities,
zero-coupon securities, when-issued securities, repurchase and reverse
repurchase agreements and dollar rolls and may lend portfolio securities to
broker-dealers or institutional investors. The Portfolio may choose to take
advantage of opportunities for capital appreciation from debt securities, by
reason of anticipated changes in such factors as interest rates, currency
relationships, or credit standing of individual issuers. The Portfolio has no
limitation on the maturity or the credit quality of the debt securities in
5
<PAGE>
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which it invests, which may include lower-quality, high yielding securities,
commonly known as "junk bonds."
The Portfolio normally will not emphasize dividend or interest income in
choosing securities, unless BEA believes the income will contribute to the
securities' appreciation potential.
In accordance with the above-mentioned investment policies, the Portfolio
may also invest in U.S. and foreign government securities, convertible
securities, mortgage-backed securities, asset-backed securities, zero-coupon
securities, when-issued securities, repurchase and reverse repurchase agreements
and dollar rolls and may lend portfolio securities to broker-dealers or
institutional investors. See "Investment Objectives and Policies -- Common
Investment Policies" and the Statement of Additional Information.
BEA EMERGING MARKETS EQUITY PORTFOLIO
The BEA Emerging Markets Equity Portfolio's investment objective is to seek
long-term appreciation of capital. The Portfolio will invest primarily in equity
securities of issuers in Emerging Markets. As used in this Prospectus, an
Emerging Market is any country which is generally considered to be an emerging
or developing country by the World Bank and the International Finance
Corporation, as well as countries that are classified by the United Nations as
emerging or developing, at the time of the Portfolio's investment. The countries
that will not be considered Emerging Markets include: Australia, Austria,
Belgium, Canada, Denmark, Finland, France, Germany, Ireland, Italy, Japan,
Luxembourg, the Netherlands, New Zealand, Norway, Spain, Switzerland, the United
Kingdom and the United States. Under normal market conditions, the Portfolio
will invest a minimum of 80% of its total assets in equity securities of issuers
in Emerging Markets. The Portfolio will not necessarily seek to diversify
investments on a geographical basis or on the basis of the level of economic
development of any particular country. The Portfolio will at all times, except
during defensive periods, maintain investments in at least three Emerging
Markets.
The Portfolio normally will not emphasize dividend or interest income in
choosing securities, unless BEA believes the income will contribute to the
securities' appreciation potential.
An equity security of an issuer in an Emerging Market is defined as common
stock and preferred stock (including convertible preferred stock); bonds, notes
and debentures convertible into common or preferred stock; stock purchase
warrants and rights; equity interests in trusts and partnerships; and depositary
receipts of companies: (i) the principal securities trading market for which is
in an Emerging Market; (ii) whose principal trading market is in any country,
provided that, alone or on a consolidated basis, they derive 50% or more of
their annual revenue from either goods produced, sales made or services
performed in Emerging Markets; or (iii) that are organized under the laws of,
and with a principal office in, an Emerging Market. Determinations as to
eligibility will be made by BEA based on publicly available information and
inquiries made to the companies.
To the extent that the Portfolio's assets are not invested as described
above, the remainder of the assets may be invested in (i) debt securities
denominated in the currency of an Emerging Market or issued or guaranteed by an
Emerging Market company or the government of an Emerging Market, (ii) equity or
debt securities of corporate or governmental issuers located in developed
countries, and (iii) short-term and medium-term debt securities of the type
described below under "Common Investment Policies -- Temporary Investments."
Debt securities in (i) or (ii) above may include, without limitation,
lower-rated debt securities (commonly known as "junk bonds"). See "Risk Factors
- -- Lower-Rated Securities."
In accordance with the above-mentioned investment policies, the Portfolio
may also invest in convertible securities, mortgage-backed securities,
asset-backed securities, zero-coupon securities, when-issued securities,
repurchase and reverse repurchase agreements and dollar rolls and may lend
portfolio securities to broker-dealers or institutional investors, as more fully
described in "Investment Objectives and Policies -- Common Investment Policies"
and the Statement of Additional Information.
6
<PAGE>
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BEA U.S. CORE EQUITY PORTFOLIO
The BEA U.S. Core Equity Portfolio will seek to provide long-term
appreciation of capital. The Portfolio will invest primarily in U.S. equity
securities. Under normal market conditions, the BEA U.S. Core Equity Portfolio
will invest 65% of the value of its total assets in equity securities. Equity
securities include common stocks, preferred stocks, and securities which are
convertible into common stock and readily marketable securities, such as rights
and warrants, which derive their value from common stock. The BEA U.S. Core
Equity Portfolio may also purchase without limitation dollar-denominated
American Depository Receipts ("ADRs") and similar securities. For defensive
purposes, the BEA U.S. Core Equity Portfolio may invest in fixed income
securities and in money market instruments.
The BEA U.S. Core Equity Portfolio normally will not emphasize dividend or
interest income in choosing securities, unless BEA believes the income will
contribute to the securities' appreciation potential.
BEA BALANCED PORTFOLIO
The BEA Balanced Portfolio's investment objective is to maximize total
return consistent with preservation of capital through both income and capital
appreciation.
The Portfolio will invest in domestic equity and debt securities and cash
equivalent instruments. The proportion of the Portfolio's assets to be invested
in each type of security will vary from time to time in accordance with BEA's
assessment of economic conditions and investment opportunities. The asset
allocation strategy is based on the premise that, from time to time, certain
asset classes are more attractive long-term investments than others. Timely
shifts among equity securities, debt securities and cash equivalent instruments,
as determined by their relative over-valuation or under-valuation, should
produce superior investment returns over the long term. In general, the
Portfolio will not attempt to predict short-term market movements or interest
rate changes, focusing instead upon a longer-term outlook. BEA anticipates that
under normal market conditions between 35% and 65% of the Portfolio's total
assets will be invested in equity securities, and between 35% and 65% will be
invested in debt securities.
The Portfolio will be managed by teams of BEA managers, each dedicated to
managing a portion of the Portfolio's assets. The BEA Domestic Equity Management
Team will manage the Equity portion of the Portfolio, which will primarily
invest in common stocks, preferred stocks, securities which are convertible into
common stocks, and rights and warrants which derive their value from common
stocks. The BEA Fixed Income Management Team will manage the Fixed-Income
portion of the Portfolio, which will invest primarily in domestic fixed-income
securities consistent with comparable broad market fixed-income indices, such as
the Lehman Brothers Aggregate Bond Index. Debt securities include, without
limitation, bonds, debentures, notes, equipment leases and trust certificates,
mortgage-related securities, and obligations issued or guaranteed by the U.S.
Government or its agencies or instrumentalities, or by states or municipalities.
Under normal market conditions, the Portfolio will seek to maintain an average
weighted quality of its debt and convertible securities comparable to the AA
rating of S&P. Subject to this condition, the Portfolio may invest in
lower-rated debt securities (commonly known as "junk bonds"). See "Risk Factors
- -- Lower-Rated Securities." For more information on the Management Teams, see
"Management -- Investment Adviser."
Under normal market conditions, at least 35% of the Portfolio's total assets
will be invested in fixed-income securities and at least 35% will be invested in
equity securities. The actual percentage of assets invested in equity and
fixed-income securities will vary from time to time in accordance with BEA's
analysis of economic conditions and the underlying values of securities.
BEA U.S. CORE FIXED INCOME PORTFOLIO
The BEA U.S. Core Fixed Income Portfolio will seek to provide high total
return. The Portfolio will invest at least 65% of the value of its total assets
in domestic fixed income securities consistent with comparable broad market
fixed-income indices, such as the Lehman Brothers Aggregate Bond Index. Debt
securities may include, without limitation, bonds, debentures, notes, equipment
lease and trust certificates, mortgage-related securities, and obligations
issued or guaranteed by the U.S. Government or its agencies or
instrumentalities. The BEA U.S.
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Core Fixed Income Portfolio may invest up to 35% of the value of its total
assets in debt securities of foreign issuers. With respect to 35% of the
Portfolio's total assets, the Portfolio may also invest in other securities
including but not limited to equity and equity-related securities. Under normal
market conditions, the Portfolio will seek to maintain an average weighted
quality comparable to the AA rating of Standard & Poor's Corporation ("S&P").
Subject to this condition, however, the Portfolio may invest in lower-rated debt
securities (commonly known as "junk bonds"). See "Risk Factors -- Lower-Rated
Securities." The Adviser estimates that the average weighted maturity of the
Portfolio will range between 5 and 15 years.
Depending upon prevailing market conditions, the BEA U.S. Core Fixed Income
Portfolio may purchase debt securities at a discount from face value, which
produces a yield greater than the coupon rate. Conversely, if debt securities
are purchased at a premium over face value, the yield will be lower than the
coupon rate. An increase in interest rates will generally reduce the value of
the fixed income investments in the Portfolio and a decline in interest rates
will generally increase the value of those investments.
BEA GLOBAL FIXED INCOME PORTFOLIO
The BEA Global Fixed Income Portfolio will seek to provide high total
return. The Portfolio will invest 65% of the value of its total assets in fixed
income securities issued by foreign and domestic corporations, governments and
agencies. Under normal market conditions, the Portfolio will seek to maintain an
average weighted quality comparable to the four highest bond ratings of S&P
(i.e., BBB or better, commonly referred to as "investment grade"). The Portfolio
may invest in fixed income securities which may have equity characteristics,
such as convertible bonds. The BEA Global Fixed Income Portfolio will not limit
its investments in securities rated below investment grade by recognized rating
agencies or in comparable unrated securities (such lower-rated securities are
commonly referred to as "junk bonds"). The portion of the Portfolio's assets
invested in various countries will vary from time to time depending on BEA's
assessment of market opportunities. There is no limit on investments in any
region, country or currency, although the BEA Global Fixed Income Portfolio will
normally invest in at least three different countries.
In addition to fixed income securities issued by foreign and domestic
corporations, the BEA Global Fixed Income Portfolio may also invest in foreign
government securities ("sovereign bonds"), U.S. government securities including
government agencies' securities, debt obligations of supranational entities,
Brady Bonds, loan participations and assignments, convertible securities,
mortgage-backed securities, asset-backed securities, zero-coupon securities,
when-issued securities, repurchase and reverse repurchase agreements and dollar
rolls, and the BEA Global Fixed Income Portfolio may lend portfolio securities
to broker-dealers or institutional investors. For defensive purposes the
Portfolio may invest up to 100% of its assets in U.S. government securities,
including government agencies' securities and Temporary Investments (as
described below). See "Common Investment Policies -- All Portfolios" and "Common
Investment Objectives and Policies" in the Statement of Additional Information
for a discussion of these and other investment policies and strategies.
BEA STRATEGIC FIXED INCOME PORTFOLIO
BEA Strategic Fixed Income Portfolio seeks to provide high total return. The
Portfolio will invest primarily in fixed income securities issued by
corporations, governments and agencies, both U.S. and foreign. Under normal
market conditions, the Portfolio will invest a minimum of 65% of its total
assets in fixed income securities, with the remainder invested in fixed income
securities which may have equity characteristics, such as convertible bonds. The
Portfolio is not limited in the extent to which it can invest in securities
rated below investment grade by recognized rating agencies or in comparable
unrated securities. Such securities are commonly referred to as "junk bonds."
The portion of the Portfolio's assets invested in various countries will vary
from time to time depending on BEA's assessment of market opportunities.
The value of the securities held by the Portfolio, and thus the net asset
value of the shares of the Portfolio, generally will vary inversely in relation
to changes in prevailing interest rates. Thus, if interest rates have increased
from the
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time a debt or other fixed income security was purchased, such security, if
sold, might be sold at a price less than its cost. Conversely, if interest rates
have declined from the time such a security was purchased, such security, if
sold, might be sold at a price greater than its cost. Also, the value of such
securities may be affected by changes in real or perceived creditworthiness of
the issuers. Thus, if creditworthiness is enhanced, the price may rise.
Conversely, if creditworthiness declines, the price may decline. The Portfolio
is not restricted to any maximum or minimum time to maturity in purchasing
portfolio securities, and the average maturity of the Portfolio's assets will
vary based upon BEA's assessment of economic and market conditions.
In addition to fixed income securities issued by U.S. and foreign
corporations, the Portfolio may also invest in U.S. government securities,
foreign government securities ("sovereign bonds"), debt obligations of
supranational entities, Brady Bonds, loan participations and assignments,
convertible securities, mortgage-backed securities, asset-backed securities,
zero-coupon securities, when-issued securities, repurchase and reverse
repurchase agreements and dollar rolls, and the Portfolio may lend portfolio
securities to broker-dealers or institutional investors. See "Common Investment
Policies -- All Portfolios" and "Common Investment Objectives and Policies" in
the Statement of Additional Information for a discussion of these and other
investment policies and strategies.
BEA MUNICIPAL BOND FUND PORTFOLIO
The BEA Municipal Bond Fund Portfolio seeks to provide high total return.
The Portfolio will invest at least 65% of the value of its total assets in fixed
income securities issued by state and local governments ("Municipal
Obligations"), although the BEA Municipal Bond Fund Portfolio may invest its
assets without limitation in securities of below investment-grade quality. The
BEA Municipal Bond Fund Portfolio may invest up to 40% of its assets in
municipal obligations the interest on which constitutes an item of tax
preference for purposes of the Federal alternative minimum tax ("Alterative
Minimum Tax Securities").
The two principal classifications of Municipal Obligations are "general
obligation" securities and "revenue" securities. General obligation securities
are secured by the issuer's pledge of its full faith, credit and taxing power
for the payment of principal and interest. Revenue securities are payable only
from the revenues derived from a particular facility or class of facilities or,
in some cases, from the proceeds of a special excise tax or other specific
revenue source such as the user of the facility being financed. Revenue
securities include private activity bonds which are not payable from the
unrestricted revenues of the issuer. Consequently, the credit quality of private
activity bonds is usually directly related to the credit standing of the
corporate user of the facility involved. Municipal Obligations may also include
"moral obligation" bonds, which are normally issued by special purpose public
authorities. If the issuer of moral obligation bonds is unable to meet its debt
service obligations from current revenues, it may draw on a reserve fund, the
restoration of which is a moral commitment but not a legal obligation of the
state or municipality which created the issuer.
Purchasable Municipal Obligations include debt obligations issued by
governmental entities to obtain funds for various public purposes, including the
construction of a wide range of public facilities, the refunding of outstanding
obligations, the payment of general operating expenses and the extension of
loans to public institutions and facilities. Private activity bonds issued by or
on behalf of public authorities to finance various privately operated facilities
are considered municipal obligations.
Also included within the general category of Municipal Obligations are
participation certificates in a lease, an installment purchase contract, or a
conditional sales contract ("lease obligations") entered into by a state or
political subdivision to finance the acquisition or construction of equipment,
land, or facilities. Although lease obligations do not constitute general
obligations of the issuer for which the lessee's unlimited taxing power is
pledged, certain lease obligations are backed by the lessee's covenant to
appropriate money to make the lease obligation payments. However, under certain
lease obligations, the lessee has no obligation to make these payments in future
years unless money is appropriated on a yearly basis. Although
"non-appropriation" lease obligations are secured by the leased property,
disposition of
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the property in the event of foreclosure might prove difficult. These securities
represent a relatively new type of financing that is not yet as marketable as
more conventional securities. Moreover, certain investments in lease obligations
may be illiquid and subject to the investment limitations described below.
BEA SHORT DURATION PORTFOLIO
The Short Duration Portfolio seeks to provide investors with as high a level
of current income as is consistent with the preservation of capital. The Adviser
will seek to maintain a duration of approximately one year, but may vary the
Portfolio's duration depending upon market conditions. Under normal
circumstances, the dollar-weighted average life of the Portfolio's investment
securities will be longer than six months and less than three years. The
Portfolio's duration, under normal circumstances, will not exceed 1.5 years.
Since the Portfolio ordinarily will invest in securities with longer maturities
than those found in money market funds, its total return is expected to be
higher and fluctuations in its net asset value are expected to be greater.
Unlike money market funds, however, the Portfolio does not seek to maintain a
stable net asset value and may not be able to return dollar-for-dollar the money
invested. Moreover, there can be no assurance that the Portfolio's investment
objective will be achieved.
The Short Duration Portfolio will invest primarily in U.S. Dollar and
foreign currency denominated debt securities and securities with debt-like
characteristics (e.g., bearing interest or having a stated principal), such as
bonds, debentures, notes, mortgage-related securities (including stripped
mortgage-backed securities), asset-backed securities, municipal obligations and
convertible debt obligations of domestic and foreign issuers throughout the
world, including supranational entities. These securities also include money
market instruments consisting of U.S. Government securities, certificates of
deposit, time deposits, bankers' acceptances, short-term investment grade
corporate bonds, participation interests and other short-term debt instruments,
and repurchase agreements. The Portfolio also may purchase shares of other
investment companies that invest in these securities to the extent permitted
under the 1940 Act. The Adviser will endeavor to hedge foreign currency
denominated debt using various investment techniques in an effort to minimize
fluctuations in the Portfolio's net asset value resulting from fluctuations in
currency exchange rates relative to the U.S. dollar.
The maturity of any single instrument held by the Portfolio is not limited.
The duration of the Portfolio, however, under normal circumstances, will not
exceed 1.5 years. The Adviser will seek to maintain a duration of approximately
one year, but may vary the Portfolio's duration depending upon market
conditions. As a measure of a fixed-income security's cash flow, duration is an
alternative to the concept of "term to maturity" in assessing the price
volatility associated with changes in interest rates. Generally, the longer the
duration, the more volatility an investor should expect. For example, the market
price of a bond with a duration of two years would be expected to decline 2% if
interest rates rose 1%. Conversely, the market price of the same bond would be
expected to increase 2% if interest rates fell 1%. Duration is a way of
measuring a security's maturity in terms of the average time required to receive
the present value of all interest and principal payments as opposed to its term
to maturity. The maturity of a security measures only the time until final
payment is due; it does not take account of the pattern of a security's cash
flows over time, which would include how cash flow is affected by prepayments
and by changes in interest rates. Incorporating a security's yield, coupon
interest payments, final maturity and option features into one measure, duration
is computed by determining the weighted average maturity of a bond's cash flows,
where the present values of the cash flows serve as weights. In computing the
duration of the Portfolio, the Adviser will estimate the duration of obligations
that are subject to prepayment or redemption by the issuer, taking into account
the influence of interest rates on prepayments and coupon flows. This method of
computing duration is known as option-adjusted duration. Since the Portfolio
ordinarily will invest in securities with longer maturities than those found in
money market funds, its total return is expected to be higher and fluctuations
in its net asset value are expected to be greater.
The average dollar-weighted credit rating of the securities held by the
Portfolio will be at
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least the equivalent of A- by Moody's Investors Service, Inc. ("Moody's"),
Standard & Poor's Corporation ("S&P"), Fitch Investors Service, Inc. ("Fitch")
or Duff & Phelps, Inc. ("Duff"). To attempt to further limit risk, each security
in which the Portfolio invests must be rated at least Baa by Moody's or BBB by
S&P, Fitch or Duff or, if unrated, deemed to be of comparable quality by the
Adviser. Debt securities in the lowest investment grade debt category (e.g.,
bonds rated BBB by S&P or Baa by Moody's) 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 debt securities. The average dollar-weighted portfolio
credit rating will be measured on the basis of the dollar value of the
securities purchased and their credit rating without reference to rating
subcategories. Subject to the average dollar-weighted portfolio credit rating
condition, the Fund may retain a debt security which was rated as investment
grade at the time of purchase but whose rating is subsequently downgraded below
investment grade. Such lower-rated debt securities are commonly referred to as
"junk bonds." See "Risk Factors -- Lower-Rated Securities."
The Short Duration Portfolio may engage in currency exchange transactions to
attempt to protect against uncertainty in the level of future exchange rates. In
addition, the Portfolio may utilize various other investment techniques and
practices, such as options and futures transactions, buying and selling interest
rate and currency swaps, caps, floors and collars, and short sales to further
hedge against the overall risk to the Portfolio. The Portfolio also may engage
in leveraging, lending portfolio securities, purchasing securities on a
when-issued or forward commitment basis and purchasing illiquid securities.
For a more detailed description of the investment policies of each
Portfolio, see "Common Investment Policies -- All Portfolios" below and "Common
Investment Policies" in the Statement of Additional Information.
COMMON INVESTMENT POLICIES -- ALL PORTFOLIOS
This section describes certain investment policies that are common to each
Portfolio. These policies are described in more detail in the Statement of
Additional Information.
TEMPORARY INVESTMENTS. For temporary purposes or during periods in which
BEA believes changes in economic, financial or political conditions make it
advisable, each Portfolio may reduce its holdings in equity and other securities
and invest up to 100% of its assets in certain short-term (less than twelve
months to maturity) and medium-term (not greater than five years to maturity)
debt securities or hold cash. The short-term and medium-term debt securities in
which a Portfolio may invest consist of: (a) obligations of the United States or
foreign governments, their respective agencies or instrumentalities; (b) bank
deposits and bank obligations (including certificates of deposit, time deposits
and bankers' acceptances) of U.S. or foreign banks denominated in any currency;
(c) floating rate securities and other instruments denominated in any currency
issued by international development agencies; (d) finance company and corporate
commercial paper and other short-term corporate debt obligations of U.S. and
foreign corporations; and (e) repurchase agreements with banks and
broker-dealers with respect to such securities.
BORROWING. A Portfolio may borrow up to 33 1/3 percent of its total assets
without obtaining shareholder approval. The Adviser intends to borrow only for
temporary or emergency purposes, or to engage in reverse repurchase agreements
or dollar roll transactions. See Statement of Additional Information, "Common
Investment Policies -- All Portfolios -- Reverse Repurchase Agreements" and "--
Borrowing."
ILLIQUID SECURITIES. Each Portfolio may invest in illiquid securities up to
10% of its net assets. The term "illiquid securities" for this purpose means
securities that cannot be disposed of within seven days in the ordinary course
of business at approximately the amount at which the Portfolio has valued the
securities. Such securities may include, among other things, loan participations
and assignments, options purchased in the over-the-counter markets, repurchase
agreements maturing in more than seven days, structured notes and restricted
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securities other than Rule 144A securities that BEA has determined are liquid
pursuant to guidelines established by the Fund's Board of Directors. Because of
the absence of any liquid trading market currently for these investments, a
Portfolio may take longer to liquidate these positions than would be the case
for publicly traded securities. Although these securities may be resold in
privately negotiated transactions, the prices realized on such sales could be
less than those originally paid by a Portfolio. Securities that have legal or
contractual restrictions on resale but have a readily available market are not
deemed illiquid for purposes of this limitation. BEA will monitor the liquidity
of restricted securities in each Portfolio's portfolio and report periodically
on such decisions to the Board of Directors of the Fund. Where there are no
readily available market quotations, the security shall be valued a fair value
as determined in good faith by the Board of Directors of the Fund. The Board has
adopted a policy that the Portfolios will not purchase private placements (i.e.
restricted securities other than Rule 144A securities). A Portfolio will not
invest more than 50% of its total assets in (a) securities of issuers which are
restricted as to disposition, including Rule 144A securities, combined with (b)
securities of unseasoned issuers (see below). See Statement of Additional
Information, "Common Investment Policies -- All Portfolios -- Illiquid
Securities" and "Common Investment Objectives and Policies -- Structured Notes."
SECURITIES OF UNSEASONED ISSUERS. Each Portfolio will not invest in
securities of unseasoned issuers, including equity securities of unseasoned
issuers which are not readily marketable, if the aggregate investment in such
securities would exceed 5% of such Portfolio's net assets. The term "unseasoned"
refers to issuers which, together with their predecessors, have been in
operation for less than three years.
REPURCHASE AGREEMENTS. Each Portfolio may agree to purchase debt securities
from financial institutions subject to the seller's agreement to repurchase them
at an agreed upon time and price ("Repurchase Agreements"). Repurchase
Agreements are in substance loans. Default by or bankruptcy of a seller would
expose a Portfolio to possible loss because of adverse market action, expenses
and/or delays in connection with the disposition of the underlying obligations.
CASH EQUIVALENTS. Each Portfolio may invest without limitation in
short-term, interest-bearing instruments or deposits of United States and
foreign issuers for temporary or defensive purposes to maintain liquidity or
pending investment. Such investments may include, but are not limited to,
commercial paper, certificates of deposit, variable or floating rate notes,
bankers' acceptances, time deposits, government securities and money market
deposit accounts.
WHEN-ISSUED PURCHASERS AND FORWARD COMMITMENTS. Each Portfolio may purchase
securities on a "when-issued" basis and may purchase or sell securities on a
"forward commitment" basis. These transactions involve a commitment by a
Portfolio to purchase or sell particular securities with payment and delivery
taking place at a future date (perhaps one or two months later), and permit a
Portfolio to lock-in a price or yield on a security it owns or intends to
purchase, regardless of future changes in interest rates. When-issued and
forward commitment transactions involve the risk, however, that the price or
yield obtained in a transaction may be less favorable than the price or yield
available in the market when the securities delivery takes place. A Portfolio's
when-issued purchases and forward commitments are not expected to exceed 25% of
the value of its total assets absent unusual market conditions. Each Portfolio
does not intend to engage in when-issued purchases and forward commitments for
speculative purposes but only in furtherance of their investment objectives.
REVERSE REPURCHASE AGREEMENTS. Each Portfolio may enter into reverse
repurchase agreements with respect to portfolio securities for temporary
purposes (such as to obtain cash to meet redemption requests when the
liquidation of portfolio securities is deemed disadvantageous or inconvenient by
the Adviser). Reverse repurchase agreements involve the risk that the market
value of the securities sold by a Portfolio may decline below the price of the
securities a Portfolio is obligated to repurchase. Each Portfolio may also enter
into "dollar rolls," in which it sells fixed income securities for delivery in
the current month and simultaneously contracts to repurchase substantially
similar (same type, coupon and maturity) securities on a specified future date.
During the roll period, a portfolio would forego principal and interest paid on
such
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securities. Reverse repurchase agreements and dollar rolls are considered to be
borrowings by a Portfolio under the 1940 Act.
SECURITIES LENDING. To increase income on its investments, a Portfolio may
lend its portfolio securities with an aggregate value of up to 30% of its total
assets to broker/dealers and other institutional investors pursuant to
agreements requiring that the loans be continuously secured by collateral equal
at all times in value to at least the market value of the securities loaned.
Collateral for such loans may include cash securities of the U.S. Government or
its agencies or instrumentalities or an irrevocable letter of credit issued by a
bank which is deemed creditworthy by the Adviser. Default by or bankruptcy of a
borrower would expose the Portfolios to possible loss because of adverse market
action, expenses and/or delays in connection with the disposition of the
underlying securities.
INVESTMENT COMPANIES. Each Portfolio may invest in securities issued by
other investment companies within the limit prescribed by the 1940 Act. Each
Portfolio currently intends to limit its investments so that, as determined
immediately after a securities purchase is made, (i) not more than 5% of the
value of its total assets will be invested in the securities of any one
investment company; (ii) not more than 10% of the value of its total assets will
be invested in the aggregate in securities of investment companies as a group;
and (iii) not more than 3% of the outstanding voting stock of any one investment
company will be owned by a Portfolio or by the Fund as a whole. As a shareholder
of another investment company, each Portfolio would bear, along with other
shareholders, its pro rata portion of the other investment company's expenses,
including advisory fees. These expenses would be in addition to the advisory and
other expenses that a Portfolio bears directly in connection with its own
operations.
PORTFOLIO TURNOVER. BEA will effect portfolio transactions in each
Portfolio without regard to holding period, if, in its judgment, such
transactions are advisable in light of general market, economic or financial
conditions. As a result of each Portfolio's investment policies, each Portfolio
may engage in a substantial number of portfolio transactions. The BEA Short
Duration Portfolio anticipates that its annual portfolio turnover rate should
not exceed 500% under normal conditions, the BEA International Equity, BEA
Emerging Markets Equity, and BEA Strategic Fixed Income Portfolios anticipate
that their annual portfolio turnover rate should not exceed 150% under normal
conditions, and the BEA U.S. Core Equity, BEA U.S. Core Fixed Income, BEA Global
Fixed Income and BEA Municipal Bond Fund anticipate that their annual portfolio
turnover rate should not exceed 100% under normal conditions. The BEA Balanced
Portfolio anticipates that, under normal conditions, the annual portfolio
turnover rate for the equity portion should not exceed 100%, and the annual
portfolio turnover rate for the fixed income portion should not exceed 100%.
However, it is impossible to predict portfolio turnover rates. The portfolio
turnover rate is calculated by dividing the lesser of a Portfolio's annual sales
or purchases of portfolio securities (exclusive of purchases or sales of
securities whose maturities at the time of acquisition were one year or less) by
the monthly average value of the securities in the Portfolio during the year.
The anticipated portfolio turnover rate for each Portfolio is greater than that
of many other investment companies. A higher than normal portfolio turnover rate
may affect the degree to which a Portfolio's net asset value fluctuates. Higher
portfolio turnover rates are likely to result in comparatively greater brokerage
commissions. In addition, short-term gains realized from portfolio transactions
are taxable to shareholders as ordinary income. The amount of portfolio activity
will not be a limiting factor when making portfolio decisions. See Statement of
Additional Information, "Portfolio Transactions" and "Taxes."
PORTFOLIO TRANSACTIONS. Portfolio transactions for the Portfolios may be
effected on domestic or foreign securities exchanges. In transactions for
securities not actively traded on a domestic or foreign securities exchange, a
Portfolio will deal directly with the dealers who make a market in the
securities involved, except in those circumstances where better prices and
execution are available elsewhere. Such dealers usually are acting as principal
for their own account. On occasion, securities may be purchased directly from
the issuer. Such portfolio securities are generally traded on a net basis and do
not normally involve brokerage commissions.
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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
Portfolios have no obligation to deal with any broker in the execution of
transactions in portfolio securities. The Portfolios may use affiliates of
Credit Suisse in connection with the purchase or sale of securities in
accordance with rules or exemptive orders adopted by the Securities and Exchange
Commission (the "SEC") when BEA believes that the charge for the transaction
does not exceed usual and customary levels.
The Portfolios have the benefit of an exemptive order issued by the SEC
under the 1940 Act authorizing the Portfolios and other investment companies
advised by BEA to acquire jointly securities issued in private placements,
subject to the terms and conditions of the order. The Board of the Fund has
adopted a policy that the Portfolios will not purchase private placements (i.e.
restricted securities other than Rule 144A securities).
The Statement of Additional Information contains additional investment
policies and strategies that are common to Portfolios.
COMMON INVESTMENT POLICIES -- BEA INTERNATIONAL EQUITY, BEA EMERGING MARKETS
EQUITY, BEA U.S. CORE EQUITY, BEA BALANCED, BEA U.S. CORE FIXED INCOME, BEA
GLOBAL FIXED INCOME, BEA STRATEGIC FIXED INCOME, AND BEA SHORT DURATION
PORTFOLIOS
INVESTMENT CONTROLS. In certain countries that currently prohibit direct
foreign investment in the securities of their companies, indirect foreign
investment in the securities of companies listed and traded on the stock
exchanges in these countries is permitted through investment funds which have
been specifically authorized. The BEA International Equity, BEA Emerging Markets
Equity, BEA U.S. Core Equity, BEA Balanced, BEA U.S. Core Fixed Income, BEA
Global Fixed Income, BEA Strategic Fixed Income and BEA Short Duration
Portfolios may invest in these investment funds and registered investment
companies subject to the provisions of the 1940 Act. If the BEA International
Equity, BEA Emerging Markets Equity, BEA U.S. Core Equity, BEA Balanced, BEA
U.S. Core Fixed Income, BEA Global Fixed Income, BEA Strategic Fixed Income and
BEA Short Duration Portfolios invest in such investment companies, such
Portfolios will each bear their proportionate share of the costs incurred by
such companies, including investment advisory fees.
CURRENCY HEDGING. BEA may seek to hedge against a decline in value of a
Portfolio's non-dollar denominated portfolio securities resulting from currency
devaluations or fluctuations. Unless the BEA International Equity, BEA Emerging
Markets Equity, BEA U.S. Core Equity, BEA Balanced, BEA U.S. Core Fixed Income,
BEA Global Fixed Income, BEA Strategic Fixed Income and BEA Short Duration
Portfolios engage in currency hedging transactions, they will be subject to the
risk of changes in relation to the U.S. dollar of the value of the foreign
currencies in which their assets are denominated. The BEA International Equity,
BEA Emerging Markets Equity, BEA U.S. Core Equity, BEA Balanced, BEA U.S. Core
Fixed Income, BEA Global Fixed Income, BEA Strategic Fixed Income and BEA Short
Duration Portfolios may also seek to protect, during the period prior to its
remittance, the value of the amount of interest, dividends and net realized
capital gains received or to be received in a local currency that it intends to
remit out of a foreign country by investing in high-quality short-term U.S.
dollar-denominated debt securities of such country and/or participating in the
forward currency market for the purchase of U.S. dollars in the country. There
can be no guarantee that suitable U.S. dollar-denominated investments will be
available at the time BEA wishes to use them to hedge amounts to be remitted.
Moreover, investors should be aware that dollar-denominated securities may not
be available in some or all foreign countries, that the forward currency market
for the purchase of U.S. dollars in many foreign countries is not highly
developed and that in certain countries no forward market for foreign currencies
currently exists or that such market may be closed to investment by a Portfolio.
The Portfolios may also use currency options or futures for purposes of currency
hedging (see below).
OPTIONS AND FUTURES CONTRACTS. The BEA International Equity, BEA Emerging
Markets Equity, BEA U.S. Core Equity, BEA Balanced, BEA U.S. Core Fixed Income,
BEA Global Fixed
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Income, BEA Strategic Fixed Income, and BEA Short Duration Portfolios may write
covered call options, buy put options, buy call options and write put options,
without limitation except as noted in this paragraph. Such options may relate to
particular securities or to various indexes and may or may not be listed on a
national securities exchange and issued by the Options Clearing Corporation. The
BEA International Equity, BEA Emerging Markets Equity, BEA U.S. Core Equity, BEA
Balanced, BEA U.S. Core Fixed Income, BEA Global Fixed Income, BEA Strategic
Fixed Income, and BEA Short Duration Portfolios may also invest in futures
contracts and options on futures contracts (index futures contracts or interest
rate futures contracts, as applicable) for hedging purposes (including currency
hedging) or for other purposes so long as aggregate initial margins and premiums
required for non-hedging positions do not exceed 5% of its net assets, after
taking into account any unrealized profits and losses on any such contracts it
has entered into. However, the BEA International Equity, BEA Emerging Markets
Equity, BEA U.S. Core Equity, BEA Balanced, BEA U.S. Core Fixed Income, BEA
Global Fixed Income, BEA Strategic Fixed Income and BEA Short Duration
Portfolios may not write put options or purchase or sell futures contracts or
options on futures contracts to hedge more than its total assets unless
immediately after any such transaction the aggregate amount of premiums paid for
put options and the amount of margin deposits on its existing futures positions
do not exceed 5% of its total assets.
Options trading is a highly specialized activity which entails greater than
ordinary investment risks. A call option for a particular security gives the
purchaser of the option the right to buy, and a writer the obligation to sell,
the underlying security at the stated exercise price at any time prior to the
expiration of the option, regardless of the market price of the security. The
premium paid to the writer is in consideration for undertaking the obligations
under the option contract. A put option for a particular security gives the
purchaser the right to sell the underlying security at the stated exercise price
at any time prior to the expiration date of the option, regardless of the market
price of the security. In contrast to an option on a particular security, an
option on an index provides the holder with the right to make or receive a cash
settlement upon exercise of the option. The amount of this settlement will be
equal to the difference between the closing price of the index at the time of
exercise and the exercise price of the option expressed in dollars, times a
specified multiple.
The BEA International Equity, BEA Emerging Markets Equity, BEA U.S. Core
Equity, BEA Balanced, BEA U.S. Core Fixed Income, BEA Global Fixed Income, BEA
Strategic Fixed Income, and BEA Short Duration Portfolios will engage in
unlisted over-the-counter options only with broker/dealers deemed creditworthy
by the Adviser. Closing transactions in certain options are usually effected
directly with the same broker/dealer that effected the original option
transaction. The BEA International Equity, BEA Emerging Markets Equity, BEA U.S.
Core Equity, BEA Balanced, BEA U.S. Core Fixed Income, BEA Global Fixed Income,
BEA Strategic Fixed Income, and BEA Short Duration Portfolios bear the risk that
the broker/dealer will fail to meet its obligations. There is no assurance that
each of these Portfolios will be able to close an unlisted option position.
Furthermore, unlisted options are not subject to the protections afforded
purchasers of listed options by the Options Clearing Corporation, which performs
the obligations of its members who fail to do so in connection with the purchase
or sale of options.
To enter into a futures contract, the BEA International Equity, BEA Emerging
Markets Equity, BEA U.S. Core Equity, BEA Balanced, BEA U.S. Core Fixed Income,
BEA Global Fixed Income, BEA Strategic Fixed Income, and BEA Short Duration
Portfolios must make a deposit of initial margin with its custodian in a
segregated account in the name of its futures broker. Subsequent payments to or
from the broker, called variation margin, will be made on a daily basis as the
price of the underlying security or index fluctuates, making the long and short
positions in the futures contracts more or less valuable.
The risks related to the use of options and futures contracts include: (i)
the correlation between movements in the market price of a portfolio's
investments (held or intended for
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purchase) being hedged and in the price of the futures contract or option may be
imperfect; (ii) possible lack of a liquid secondary market for closing out
options or futures positions; (iii) the need for additional portfolio management
skills and techniques; and (iv) losses due to unanticipated market movements.
Successful use of options and futures by the BEA International Equity, BEA
Emerging Markets Equity, BEA U.S. Core Equity, BEA Balanced, BEA U.S. Core Fixed
Income, BEA Global Fixed Income, BEA Strategic Fixed Income, and BEA Short
Duration Portfolios is subject to the Adviser's ability to correctly predict
movements in the direction of the market. For example, if such Portfolio uses
future contracts as a hedge against the possibility of a decline in the market
adversely affecting securities held by it and securities prices increase
instead, such Portfolio will lose part or all of the benefit of the increased
value of its securities which it has hedged because it will have approximately
equal offsetting losses in its futures positions. The risk of loss in trading
futures contracts in some strategies can be substantial, due both to the low
margin deposits required, and the extremely high degree of leverage involved in
futures pricing. As a result, a relatively small price movement in a futures
contract may result in immediate and substantial loss or gain to the investor.
Thus, a purchase or sale of a futures contract may result in losses or gains in
excess of the amount invested in the contract. For a further discussion see
"Investment Policies" in the Statement of Additional Information.
SUPPLEMENTAL INVESTMENT POLICIES -- BEA INTERNATIONAL EQUITY, BEA EMERGING
MARKETS EQUITY, BEA BALANCED, BEA U.S. CORE FIXED INCOME, BEA GLOBAL FIXED
INCOME PORTFOLIO, BEA STRATEGIC FIXED INCOME AND BEA SHORT DURATION PORTFOLIOS
MORTGAGE-RELATED PASS-THROUGHS AND DERIVATIVES. The BEA International
Equity, BEA Emerging Markets Equity, BEA Balanced, BEA U.S. Core Fixed Income,
BEA Global Fixed Income, BEA Strategic Fixed Income and BEA Short Duration
Portfolios may invest in mortgage-related securities. Purchasable mortgage-
related securities are represented by pools of mortgage loans assembled for sale
to investors by various governmental agencies such as the Government National
Mortgage Association and government-related organizations such as the Federal
National Mortgage Association and the Federal Home Loan Mortgage Corporation, as
well as by private issuers such as commercial investment banks, savings and loan
institutions, mortgage bankers and private mortgage insurance companies.
Although certain mortgage-related securities are guaranteed by a third party or
are otherwise similarly secured, the market value of the security, which may
fluctuate, is not so secured. If these Portfolios purchase a mortgage-related
security at a premium, that portion may be lost if there is a decline in the
market value of the security whether resulting from increases in interest rates
or prepayment of the underlying mortgage collateral. As with other
interest-bearing securities, the prices of such securities are inversely
affected by changes in interest rates. However, though the value of a
mortgage-related security may decline when interest rates rise, the converse is
not necessarily true because in periods of declining interest rates mortgages
underlying securities are prone to prepayment. For this and other reasons, a
mortgage-related security's stated maturity may be shortened by an unscheduled
prepayment on underlying mortgages and, therefore, it is not possible to predict
accurately the security's return to these Portfolios. Mortgage-related
securities provide regular payments consisting of interest and principal. No
assurance can be given as to the return these Portfolios will receive when these
amounts are reinvested.
Mortgaged-related securities acquired by these Portfolios may include
collateralized mortgage obligations ("CMOs") issued by FNMA, FHLMC or other U.S.
Government agencies or instrumentalities, as well as by private issuers. These
securities may be considered mortgage derivatives. CMOs provide an investor with
a specified interest in the cash flow of a pool of underlying mortgages or other
mortgage-related securities. Issuers of CMOs frequently elect to be taxed as
pass-through entities known as real estate mortgage investment conduits
("REMICs"). CMOs are issued in multiple classes, each with a specified fixed or
floating interest rate and a final distribution date. Coupons can be fixed or
variable. If variable, they can move with or in the reverse direction of
interest rates. The coupon changes could
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be a multiple of the actual rate change and there may be limitations on what the
coupon can be. Cash flows of pools can also be divided into a principal only
class and an interest only class. In this case the principal only class ("PO")
will only receive principal cash flows from the pool. All interest cash flows go
to the interest only class. The relative payment rights of the various CMO
classes may be structured in many ways either sequentially, or by other rules of
priority. Generally, payments of principal are applied to the CMO classes in the
order of their respective stated maturities, so that no principal payments will
be made on a CMO class until all other classes having an earlier stated maturity
date are paid in full. Sometimes, however, CMO classes are "parallel pay," i.e.
payments of principal are made to two or more classes concurrently. CMOs may
exhibit more or less price volatility and interest rate risk than other types of
mortgaged-related obligations.
ASSET-BACKED SECURITIES. The BEA International Equity, BEA Emerging Markets
Equity, BEA Balanced, BEA U.S. Core Fixed Income, BEA Strategic Fixed Income,
BEA Global Fixed Income and BEA Short Duration Portfolios may purchase
asset-backed securities, which represent a participation in, or are secured by
and payable from, a stream of payments generated by particular assets, most
often a pool of assets similar to one another. Assets generating such payments
will consist of such instruments as motor vehicle installment purchase
obligations, credit card receivables and home equity loans. These Portfolios may
also invest in other types of asset-backed securities that may be available in
the future. Payment of principal and interest may be guaranteed up to certain
amounts and for a certain time period by a letter of credit issued by a
financial institution unaffiliated with entities issuing the securities. The
estimated life of an asset-backed security varies with the prepayment experience
with respect to the underlying debt instruments. The rate of such prepayments,
and hence the life of the asset-backed security, will be primarily a function of
current market rates, although other economic and demographic factors will be
involved. In certain circumstances, asset-backed securities may be considered
illiquid securities subject to the percentage limitations described above.
Asset-backed securities may involve certain risks that are not presented by
mortgage-backed securities arising primarily from the nature of the underlying
assets (i.e., credit card and automobile loan receivables as opposed to real
estate mortgages). For example, credit card receivables are generally unsecured
and may require the repossession of personal property upon the default of the
debtor which may be difficult or impracticable in some cases. Asset-backed
securities are considered an industry for industry concentration purposes, and
the Portfolios will therefore not purchase any asset-backed securities which
would cause 25% or more of a Portfolio's total assets at the time of purchase to
be invested in asset-backed securities. See "Investment Limitations."
SUPPLEMENTAL INVESTMENT POLICIES -- BEA MUNICIPAL BOND FUND PORTFOLIO
TAX-EXEMPT DERIVATIVES AND OTHER MUNICIPAL OBLIGATIONS. The BEA Municipal
Bond Fund Portfolio may invest in tax-exempt derivative securities relating to
Municipal Obligations, including tender option bonds, participations, beneficial
interests in trusts and partnership interests. A typical tax-exempt derivative
security involves the purchase of an interest in a pool of Municipal Obligations
which interest includes a tender option, demand or other feature, allowing the
Portfolio to tender the underlying Municipal Obligation to a third party at
periodic intervals and to receive the principal amount thereof. A participation
interest gives the Portfolio an undivided interest in a Municipal Obligation in
the proportion the Portfolio's participation bears to the total principal amount
of the Municipal Obligation, and typically provides for a repurchase feature for
all or any part of the full principal amount of the participation interest, plus
accrued interest. Trusts and partnerships are typically used to convert
long-term fixed rate high quality bonds of a single state or municipal issuer
into variable or floating rate demand instruments.
Opinions relating to the validity of Municipal Obligations and to the
exemption of interest thereon from Federal income tax are rendered by bond
counsel to the respective issuers at the time of issuance, and opinions relating
to the validity of and the tax-exempt status of payments received by the Funds
from tax-exempt
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derivative securities are rendered by counsel to the respective sponsors of such
securities. The Fund and its investment adviser will rely on such opinions and
will not review independently the underlying proceedings relating to the
issuance of Municipal Obligations, the creation of any tax-exempt derivative
securities, or the basis for such opinions.
During normal market conditions, up to 20% of the BEA Municipal Bond Fund
Portfolio's net assets may be invested in securities which are not Municipal
Obligations; at least 80% of the BEA Municipal Bond Fund Portfolio's net assets
will be invested in Municipal Obligations the interest on which is exempt from
regular Federal income tax. During temporary defensive periods, the BEA
Municipal Bond Fund Portfolio may invest without limitation in obligations which
are not Municipal Obligations and may hold without limitation uninvested cash
reserves. Such securities may include, without limitation, bonds, notes,
variable rate demand notes and commercial paper, provided such securities are
rated within the relevant categories, applicable to Municipal Obligations set
forth above, or if unrated, are of comparable quality as determined by the
Adviser, and may also include, without limitation, other debt obligations, such
as bank obligations. The BEA Municipal Bond Fund Portfolio may acquire "stand-by
commitments" with respect to Municipal Obligations held by it. Under a stand-by
commitment, a dealer agrees to purchase at the BEA Municipal Bond Fund
Portfolio's option specified Municipal Obligations at a specified price. The
acquisition of a stand-by commitment may increase the cost, and thereby reduce
the yield, of the Municipal Obligation to which such commitment relates. The BEA
Municipal Bond Fund Portfolio will acquire stand-by commitments solely to
facilitate portfolio liquidity and does not intend to exercise its rights
thereunder for trading purposes.
The Tax Reform Act of 1986 substantially revised provisions of prior law
affecting the issuance and use of proceeds of certain Municipal Obligations. A
new definition of private activity bonds applies to many types of bonds,
including those which were industrial development bonds under prior law.
Interest on private activity bonds issued after August 15, 1986 is tax-exempt
only if the bonds fall within certain defined categories of qualified private
activity bonds and meet the requirements specified in those respective
categories. In addition, interest on certain private activity bonds issued after
August 7, 1986 that is received by taxpayers subject to alternative minimum tax
is taxable. The Act has generally not changed the tax treatment of bonds issued
to finance governmental operations. As used in this Prospectus, the term
"private activity bonds" also includes industrial development revenue bonds
issued prior to the effective date of the provisions of the Tax Reform Act of
1986. Investors should also be aware of the possibility of state and local
alternative minimum or minimum income tax liability on interest from Alternative
Minimum Tax Securities.
Although the BEA Municipal Bond Fund Portfolio may invest 25% or more of its
net assets in Municipal Obligations the interest on which is paid solely from
revenues of similar projects, and may invest up to 40% of its total assets in
private activity bonds when added together with any taxable investments held by
the BEA Municipal Bond Fund Portfolio, they do not presently intend to do so
unless in the opinion of the Adviser the investment is warranted. To the extent
the BEA Municipal Bond Fund Portfolio's assets are invested in Municipal
Obligations payable from the revenues of similar projects or are invested in
private activity bonds, the BEA Municipal Bond Fund Portfolio will be subject to
the peculiar risks presented by the laws and economic conditions relating to
such projects and bonds to a greater extent than it would be if its assets were
not so invested. The amount of information regarding the financial condition of
issuers of Municipal Obligations may not be as extensive as that which is made
available by public corporations and the secondary market for Municipal
Obligations may be less liquid than that for taxable fixed-income securities.
Accordingly, the ability of the BEA Municipal Bond Fund Portfolio to buy and
sell tax-exempt securities may, at any particular time and with respect to any
particular securities, be limited.
SUPPLEMENTAL INVESTMENT POLICIES -- BEA SHORT DURATION PORTFOLIO
INTEREST RATE SWAPS, CAPS, FLOORS AND COLLARS. The Short Duration Portfolio
may enter
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into interest rate swaps and may purchase or sell interest rate caps, floors and
collars. The Portfolio will enter into these transactions primarily to preserve
a return or spread on a particular investment or portion of its portfolio. The
Portfolio also may enter into these transactions to protect against any increase
in the price of securities the Portfolio anticipates purchasing at a later date.
Interest rate swaps involve the exchange by the Portfolio with another party of
their respective commitments to pay or receive interest (for example, an
exchange of floating rate payments for fixed-rate payments). The exchange
commitments can involve payments to be made in the same currency or in different
currencies. The purchase of an interest rate cap entitles the purchaser, to the
extent that a specified index exceeds a predetermined interest rate, to receive
payments of interest on a contractually-based principal amount from the seller
of such interest rate cap. The purchase of an interest rate floor entitles the
purchaser, to the extent that a specified index falls below a predetermined
interest rate, to receive payments on a notional principal amount from the
seller of such interest rate floor. A collar has aspects of both a cap and a
floor.
The Short Duration Portfolio may enter into these transactions on either an
asset-based or liability-based basis depending on whether it is hedging its
assets or its liabilities, and will usually enter into interest rate swaps on a
net basis. In so doing, the two payment streams are netted out, with the
Portfolio receiving or paying, as the case may be, only the net amount of the
two payments. The net amount of the excess, if any, of the Short Duration
Portfolio's obligations over its entitlements with respect to each interest rate
swap will be accrued on a daily basis and an amount of cash or high-quality
liquid debt securities having an aggregate net asset value at least equal to the
accrued excess will be maintained in a segregated account by the Portfolio's
Custodian. If the Portfolio enters into an interest rate swap other than on a
net basis, the Portfolio would maintain a segregated account in the full amount
accrued on a daily basis of the Portfolio's obligations with respect to the
swap. The Portfolio will enter into swap, cap or floor transactions with its
Custodian, and with other counterparties, but only if: (i) for transactions with
maturities under one year, such other counterparty has outstanding short-term
paper rated at least A-1 by S&P, Prime-1 by Moody's, F-1 by Fitch or Duff-1 by
Duff, or (ii) for transactions with maturities greater than one year, the
counterparty has outstanding debt securities rated at least Aa by Moody's or AA
by S&P, Fitch or Duff. If there is a default by the other party to such a
transaction, the Portfolio will have contractual remedies pursuant to the
agreements related to the transaction. To the extent the Portfolio sells (i.e.,
writes) caps and floors, it will maintain in a segregated account cash or
high-quality liquid debt securities having an aggregate net asset value at least
equal to the full amount accrued on a daily basis, of the Portfolio's
obligations with respect to any caps or floors.
The use of interest rate swaps is a highly specialized activity which
involves investment techniques and risks different from those associated with
ordinary portfolio security transactions. If the Adviser is incorrect in its
forecasts of market values, interest rates and other applicable factors, the
investment performance of the Portfolio would diminish compared with what it
would have been if these investment techniques were not used. Moreover, even if
the Adviser is correct in its forecasts, there is a risk that the swap position
may correlate imperfectly with the price of the asset or liability being hedged.
There is no limit on the amount of interest rate swap transactions that may be
entered into by the Portfolio. These transactions do not involve the delivery of
securities or other underlying assets or principal. Accordingly, the risk of
loss with respect to interest rate swaps is limited to the net amount of
interest payments that the Portfolio is contractually obligated to make. If the
other party to an interest rate swap defaults, the Portfolio's risk of loss
consists of the net amount of interest payments that the Portfolio contractually
is entitled to receive. The Portfolio may purchase and sell (i.e., write) caps
and floors without limitation, subject to the segregated account requirement
described above. The swap market has grown substantially in recent years with a
large number of banks and investment banking firms acting both as principals and
as agents utilizing standardized swap documentation. Caps and floors are more
recent
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innovations for which standardized documentation has not yet been developed and,
accordingly, they are less liquid than swaps.
PORTFOLIO TURNOVER. Using certain investment techniques may produce higher
than normal portfolio turnover and may affect the degree to which the Short
Duration Portfolio's net asset value fluctuates. Higher portfolio turnover rates
(100% annually or more) are likely to result in comparatively greater brokerage
commissions. In addition, short-term gains realized from portfolio transactions
are taxable to shareholders as ordinary income. The amount of portfolio activity
will not be a limiting factor when making portfolio decisions. Under normal
market conditions, the Portfolio's turnover rate generally will not exceed 500%.
INVESTMENT LIMITATIONS
Each Portfolio is subject to the following fundamental investment
limitations, which may not be changed with respect to a Portfolio except upon
the affirmative vote of the holders of a majority of that Portfolio's
outstanding Shares. Each Portfolio may not:
1. Purchase any securities which would cause 25% or more of the value
of the Portfolio's total assets at the time of purchase to be invested in
the securities of one or more issuers conducting their principal business
activities in the same industry, provided that (a) there is no limitation
with respect to (i) instruments issued or guaranteed by the United States,
any state, territory or possession of the United States, the District of
Columbia or any of their authorities, agencies, instrumentalities or
political subdivisions, and (ii) repurchase agreements secured by the
instruments described in clause (i); (b) wholly-owned finance companies will
be considered to be in the industries of their parents if their activities
are primarily related to financing the activities of the parents; and (c)
utilities will be divided according to their services, for example, gas, gas
transmission, electric and gas, electric and telephone will each be
considered a separate industry.
2. Borrow money or issue senior securities, except that each Portfolio
may borrow from institutions and enter into reverse repurchase agreements
and dollar rolls for temporary purposes in amounts up to one-third of the
value of its total assets at the time of such borrowing; or mortgage, pledge
or hypothecate any assets, except in connection with any such borrowing and
then in amounts not in excess of one-third of the value of the Portfolio's
total assets at the time of such borrowing. Each Portfolio will not purchase
securities while its aggregate borrowings (including reverse repurchase
agreements, dollar rolls and borrowings from banks) in excess of 5% of its
total assets are outstanding. Securities held in escrow or separate accounts
in connection with the Portfolio's investment practices are not considered
to be borrowings or deemed to be pledged for purposes of this limitation.
If a percentage limitation is satisfied at the time of investment, a later
increase or decrease in such percentage resulting from a change in the value of
the Portfolio's portfolio securities will not constitute a violation of such
limitation, except that any borrowing by the Portfolio that exceeds the
fundamental investment restrictions stated above must be reduced to meet such
restrictions within the period required by the 1940 Act (currently three days).
In order to permit the sale of a Portfolio's shares in certain states, the
Fund may make commitments more restrictive than the investment policies and
limitations described in this Prospectus. Should the Fund determine that any
such commitment is no longer in the best interests of the Fund, it will revoke
the commitment by terminating sales of its shares in the state involved.
RISK FACTORS
FOREIGN SECURITIES. Investing in the securities of non-U.S. issuers
involves opportunities and risks that are different from investing in the
securities of U.S. issuers. The risks associated with investing in securities of
non-U.S. issuers are generally heightened for investments in securities of
issuers in Emerging Markets.
Because foreign securities generally are denominated and pay dividends or
interest in foreign currencies, and the Portfolios may hold
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from time to time various foreign currencies pending their investment in foreign
securities or their conversion into U.S. dollars, the value of the Portfolios'
assets as measured in U.S. dollars may be affected favorably or unfavorably by
changes in exchange rates. In addition, investors should realize that the value
of the Portfolios' investments may be adversely affected by changes in political
or social conditions, diplomatic relations, confiscatory taxation,
expropriation, limitation on the removal of funds or assets, or imposition of
(or change in) exchange control regulations in those foreign nations. In
addition, changes in government administrations or economic or monetary policies
in the U.S. or abroad could result in appreciation or depreciation of portfolio
securities and could favorably or adversely affect the Portfolios' operations.
Furthermore, the economies of individual foreign nations may differ from that of
the United States, whether favorably or unfavorably, in areas such as growth of
gross national product, rate of inflation, capital reinvestment, resource
self-sufficiency and balance of payments position. Any foreign investments made
by the Portfolios must be made in compliance with U.S. and foreign currency
restrictions and tax laws restricting the amounts and types of foreign
investments.
In general, less information is publicly available with respect to foreign
issuers than is available with respect to U.S. companies. Most foreign companies
are also not subject to the uniform accounting and financial reporting
requirements applicable to issuers in the United States. The Portfolios' foreign
investments may be less liquid and their prices may be more volatile than
comparable investments in securities in U.S. companies. Expenses relating to
foreign investments are higher than those relating to domestic securities. In
addition, there is generally less government supervision and regulation of
securities exchanges, brokers and issuers in foreign countries than in the
United States.
POLITICAL, ECONOMIC AND MARKET FACTORS. Investments in foreign securities
involve risks relating to political and economic developments abroad, as well as
those that result from the differences between the regulations to which U.S. and
foreign issuers are subject. These risks may include expropriation, confiscatory
taxation, withholding taxes on dividends and interest, limitations on the use or
transfer of a Portfolio's assets and political or social instability or
diplomatic developments. 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. Securities of many foreign
issuers may be less liquid, and their prices may be more volatile, than those of
securities of comparable U.S. issuers. Brokerage commissions, custodial services
and other costs relating to investment in foreign securities markets are
generally more expensive than in the United States. Such markets have different
clearance and settlement procedures and in certain markets there have been times
when settlements have been unable to keep pace with the volume of securities
transactions, making it difficult to conduct such transactions. There is
generally less government supervision and regulation of exchanges, brokers and
issuers in foreign securities markets than there is in the United States.
In addition, substantial limitations may exist in certain countries with
respect to BEA Global Fixed Income Portfolio's ability to repatriate investment
income, capital or the proceeds of sales of securities by foreign investors. BEA
Global Fixed Income Portfolio could be adversely affected by delays in, or a
refusal to grant, any required government approval for repatriation of capital,
as well as by the application to the Portfolio of any restrictions on
investments.
REPORTING STANDARDS. Most of the foreign securities held by the BEA Global
Fixed Income Portfolio will not be registered with the SEC, nor will the issuers
thereof be subject to SEC or other U.S. reporting requirements. Accordingly,
there will be less publicly available information concerning foreign issuers of
securities held by the Portfolio than will be available concerning U.S.
companies. Foreign companies, and in particular, companies in emerging markets,
are not generally subject to uniform accounting, auditing and financial
reporting standards or to other regulatory requirements comparable to those
applicable to U.S. companies.
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EXCHANGE RATE FLUCTUATIONS. Because foreign securities ordinarily will be
denominated in currencies other than the U.S. dollar, changes in foreign
currency exchange rates will affect all of the Portfolios' net asset value, the
value of interest and dividends earned, gains and losses realized on the sale of
securities and net investment income and capital gain, if any, to be distributed
to shareholders by the Portfolios. If the value of a foreign currency rises
against the U.S. dollar, the value of a Portfolio's assets denominated in that
currency will increase; conversely, if the value of a foreign currency declines
against the U.S. dollar, the value of a Portfolio's assets denominated in that
currency will decrease. The exchange rates between the U.S. dollar and other
currencies are determined by supply and demand in the currency exchange markets,
international balances of payments, government intervention, speculation and
other economic and political conditions.
LOWER-RATED SECURITIES. The widespread expansion of government, consumer
and corporate debt within the economy has made the corporate sector, especially
cyclically sensitive industries, more vulnerable to economic downturns or
increased interest rates. Because lower-rated debt securities involve issuers
with weaker credit fundamentals (such as debt-to-equity ratios, interest charge
coverage, earnings history and the like), an economic downturn, or increases in
interest rates, could severely disrupt the market for lower-rated debt
securities and adversely affect the value of outstanding debt securities and the
ability of the issuers to repay principal and interest.
Lower-rated debt securities (commonly known as "junk bonds") possess
speculative characteristics and are subject to greater market fluctuations and
risk of lost income and principal than higher-rated debt securities for a
variety of reasons. The markets for and prices of lower-rated debt securities
have been found to be less sensitive to interest rate changes than higher-rated
investments, but more sensitive to adverse economic changes or individual
corporate developments. Also, during an economic downturn or substantial period
of rising interest rates, highly leveraged issuers may experience financial
stress which would adversely affect their ability to service their principal and
interest payment obligations, to meet projected business goals and to obtain
additional financing. If the issuer of a debt security owned by a Portfolio
defaulted, the Portfolio could incur additional expenses in seeking recovery
with no guaranty of recovery. In addition, periods of economic uncertainty and
changes can be expected to result in increased volatility of market prices of
lower-rated debt securities and a Portfolio's net asset value. Lower-rated debt
securities also present risks based on payment expectations. For example,
lower-rated debt securities may contain redemption or call provisions. If an
issuer exercises these provisions in a declining interest rate market, a
Portfolio would have to replace the security with a lower yielding security,
resulting in a decreased return for investors. Conversely, a lower-rated debt
security's value will decrease in a rising interest rate market, as will the
value of a Portfolio's assets. If a Portfolio experiences unexpected net
redemptions, this may force it to sell its lower-rated debt securities, without
regard to their investment merits, thereby decreasing the asset base upon which
a Portfolio's expenses can be spread and possibly reducing a Portfolio's rate of
return.
In addition, to the extent that there is no established retail secondary
market, there may be thin trading of lower-rated debt securities, and this may
have an impact on both BEA's ability to value accurately lower-rated debt
securities and the Portfolio's assets, as judgment plays a greater role when
reliable objective data are unavailable, and to dispose of the debt securities.
Adverse publicity and investor perceptions, whether or not based on fundamental
analysis, may decrease the value and liquidity of lower-rated debt securities,
especially in a thinly traded market.
Current laws may have an impact on the market for lower-rated debt
securities. The Financial Institutions Reform, Recovery and Enforcement Act of
1989 required federally insured savings associations to divest substantially all
their holdings of lower-rated debt securities by July 1, 1994 and prohibits such
savings associations from acquiring lower-rated debt securities, except through
certain qualified affiliates.
Lower-rated debt securities may include zero coupon securities or
pay-in-kind securities. A zero coupon security bears no interest but is
22
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issued at a discount from its value at maturity. When held to maturity, its
entire return equals the difference between its issue price and its maturity
value. Pay-in-kind securities typically do not provide for cash interest
payments but instead provide for the issuance of additional debt securities of
the issuer in the face amount of the interest payment amount due in lieu of a
cash payment. The market prices of both of these securities are affected to a
greater extent by interest rate changes and thereby tend to be more volatile
than securities which pay interest periodically and in cash.
There are also special considerations associated with investing in
lower-rated debt securities structured as zero coupon or pay-in-kind securities.
For example, a Portfolio must include the interest ("original issue discount")
on these securities in determining the amount of its required distributions to
shareholders for federal income tax and federal excise tax purposes, even though
it receives no cash interest until the security's maturity or payment date.
Therefore, in order to satisfy these distribution requirements, a Portfolio may
have to sell some of its assets, without regard to their investment merit, to
obtain cash to distribute to shareholders. These actions may occur under
disadvantageous circumstances and are likely to reduce a Portfolio's assets and
may thereby increase its expense ratio and decrease its rate of return. For
additional information concerning these tax considerations, see "Taxes" in the
Statement of Additional Information. From time to time, a Portfolio may also
purchase securities not paying interest at the time acquired if, in the opinion
of the Portfolio's Adviser, such securities have the potential for future income
or capital appreciation.
Finally, there are risks involved in applying credit ratings as a method for
evaluating lower-rated debt securities. For example, credit ratings evaluate the
safety of principal and interest payments, not the market risks involved in
lower-rated debt securities. Since credit rating agencies may fail to change the
credit ratings in a timely manner to reflect subsequent events, BEA will monitor
the issuers of lower-rated debt securities in a Portfolio to determine if the
issuers will have sufficient cash flow and profits to meet required principal
and interest payments, and to assure the debt securities' liquidity so the
Portfolio can meet redemption requests. BEA will not necessarily dispose of a
portfolio security when its ratings have been changed.
FIXED INCOME SECURITIES. The value of the securities held by a Portfolio,
and thus the net asset value of the shares of a Portfolio, generally will vary
inversely in relation to changes in prevailing interest rates. Thus, if interest
rates have increased from the time a debt or other fixed income security was
purchased, such security, if sold, might be sold at a price less than its cost.
Conversely, if interest rates have declined from the time such a security was
purchased, such security, if sold, might be sold at a price greater than its
cost. Also, the value of such securities may be affected by changes in real or
perceived creditworthiness of the issuers. Thus, if creditworthiness is
enhanced, the price may rise. Conversely, if creditworthiness declines, the
price may decline. A Portfolio is not restricted to any maximum or minimum time
to maturity in purchasing portfolio securities, and the average maturity of the
Portfolio's assets will vary based upon BEA's assessment of economic and market
conditions.
MANAGEMENT
BOARD OF DIRECTORS
The business and affairs of the Fund and each investment portfolio are
managed under the direction of the Fund's Board of Directors.
INVESTMENT ADVISER
BEA serves as the investment adviser for each of the Portfolios pursuant to
investment advisory agreements (the "Advisory Agreements"). BEA is a general
partnership organized under the laws of the State of New York and, together with
its predecessor firms, has been engaged in the investment advisory business for
over 50 years. BEA's principal offices are located at One Citicorp Center, 153
East 53rd Street, New York, New York 10022. Credit Suisse Capital Corporation
("CS Capital") is an 80% partner and Basic Appraisals, Inc. is a 20% partner in
BEA. CS Capital is a wholly-owned subsidiary of Credit Suisse Investment
Corporation, which is a wholly-owned subsidiary of Credit Suisse, the second
largest Swiss bank, which in turn is a subsidiary of CS Holding, a
23
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Swiss corporation. No one person or entity possesses a controlling interest in
Basic Appraisals, Inc. BEA is registered as an investment adviser under the
Investment Advisers Act of 1940, as amended.
BEA is a diversified asset manager, handling global equity, balanced, fixed
income and derivative securities accounts for private individuals, as well as
corporate pension and profit-sharing plans, state pension funds, union funds,
endowments and other charitable institutions. As of , 1995, BEA
managed approximately $ billion in assets.
As an investment adviser, BEA emphasizes a global investment strategy. BEA
currently acts as investment adviser for fourteen registered investment
companies under the Investment Company Act. They are: The Chile Fund, Inc., The
Indonesia Fund, Inc., The Portugal Fund, Inc., The Latin America Investment
Fund, Inc., The Latin America Equity Fund, Inc., The Brazilian Equity Fund,
Inc., The First Israel Fund, Inc., The Emerging Markets Telecommunications Fund,
Inc., The Emerging Markets Infrastructure Fund, Inc., The Bear Stearns Emerging
Markets Debt Fund, Inc., The BEA International Equity Fund, The BEA Emerging
Markets Equity Fund, The BEA Strategic Fixed Income Fund and The BEA U.S. Core
Fixed Income Fund. BEA also acts as investment adviser for nineteen offshore
funds, thirteen of which are equity funds -- The South America Fund N.V., The
Mexican Investment Company, Latin America Capital Partners, Ltd., Brazilian
Equity Investments I Ltd., Argentine Equity Investments I Ltd., C.I. Global
Fund, C.I. Emerging Markets Fund, C.I. North America Fund, C.I. Global Equity
RSP Fund, C.I. Latin America Fund, Credit Suisse North America Fund, Credit
Suisse Equity Fund-Latin America and Credit Suisse Transatlantic Fund -- and six
of which focus on investments in fixed income securities -- The Mexico Debt
Fund, The Bear Stearns Emerging Markets Fixed Income Fund, C.I. World Bond Fund,
C.I. Global Bond RSP Fund and Credits Emerging Markets Debt Fund.
BEA has sole investment discretion for the Portfolios and will make all
decisions affecting assets of each Portfolio under the supervision of the Fund's
Board of Directors and in accordance with the Portfolio's stated policies. BEA
will select investments for each of the Portfolios and will place purchase and
sale orders on behalf of each of the Portfolios. BEA is also responsible for
providing to the Portfolios' and the Fund's service providers prompt and
accurate data with respect to the Portfolios' transactions and the valuation of
portfolio securities.
The day-to-day portfolio management of BEA International Equity and BEA
Emerging Markets Equity Portfolios is the responsibility of the BEA
International Equities Management Team. The Team consists of the following
investment professionals: Emilio Bassini (Managing Director), Piers Playfair
(Managing Director), Steven D. Bleiberg (Senior Vice President), Stephen M.
Swift (Managing Director), Richard Watt (Senior Vice President), William P.
Sterling (Managing Director), Ian Borsook (Vice President), and Stephen R. Waite
(Vice President). Mr. Bassini has been engaged as an investment professional
with BEA for more than five years. Mr. Bleiberg rejoined BEA in 1991 after
spending two years as a portfolio manager at Matrix Capital Management, prior to
which he spent five years at BEA in the equity research department. Mr. Playfair
joined BEA in 1990, prior to which he was a manager in the corporate finance
division of Samuel Montagu, London and a Director of Equity Capital Markets
Group at Salomon Brothers. Mr. Swift joined BEA in 1995, prior to which he spent
three years at Credit Suisse Asset Management in London, where he was Head of
Global Equities and portfolio manager for the CS Tiger Fund. For the previous 15
years he was with Wardley Investment Services, a Hong Kong-based subsidiary of
the Hong Kong and Shanghai Bank. Mr. Watt joined BEA in 1995, prior to which he
was head of emerging markets investments and research at Gatmore Investment
Limited in London. Prior to 1992, he was a director of Kleinwort Benson
International Investment in London and was a portfolio manager with Lorithan
Regional Council, a public pension plan sponsor in Scotland. Mr. Sterling joined
BEA in 1995, prior to which he was head of International Economics at Merrill
Lynch & Company. Mr. Borsook joined BEA in 1995, prior to which he was a manager
of global economic indicators and Vice President at
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Merrill Lynch & Company. Mr. Waite joined BEA in 1995, prior to which he was
Vice President and Senior European Economist for Merrill Lynch & Company in
London. Prior to May 1992 he was an economic consultant to Capital Group in Los
Angeles.
The day-to-day portfolio management of the BEA U.S. Core Equity Portfolio
and the equity portion of the BEA Balanced Portfolio is the responsibility of
the BEA Domestic Equity Management Team. The Team consists of the following
investment professionals: William W. Priest, Jr. (Chief Executive Officer and
Managing Director of BEA), John B. Hurford (Vice Chairman of the Executive
Committee and Managing Director), Albert L. Zesiger (Managing Director), Todd M.
Rice (Vice President), Christopher C. Thompson (Vice President), William P.
Sterling (Managing Director), Ian Borsook (Vice President), and Stephen R. Waite
(Vice President). Messrs. Priest, Hurford, and Zesiger have, on an individual
basis, been engaged as investment professionals with BEA for more than five
years. Mr. Rice joined BEA in 1990; previously, he was employed as an investment
professional at Salomon Brothers. Mr. Thompson joined BEA in 1995 as a result of
the acquisition by BEA Associates of CS First Boston Investment Management
Corporation. Prior to the year and one half he spent at CS First Boston
Investment Management, Mr. Thompson spent six and one half years with Brown
Brothers Harriman & Company.
The day-to-day portfolio management of the BEA Strategic Fixed Income, BEA
U.S. Core Fixed Income, BEA Municipal Bond Fund, BEA Global Fixed Income and BEA
Short Duration Portfolios, as well as the fixed income portion of the BEA
Balanced Portfolio, is the responsibility of the BEA Fixed Income Management
Team. The Team consists of the following investment professionals: Robert Moore
(Executive Director), Gregg Diliberto (Managing Director), Richard Lundquist
(Managing Director), Mark Silverstein (Senior Vice President), Marianne Rossi
(Vice President), Mark Arnold (Special Consultant), William P. Sterling
(Managing Director), Ian Borsook (Vice President), and Stephen R. Waite (Vice
President). Messrs. Moore, Diliberto and Arnold have, on an individual basis,
been engaged as investment professionals with BEA for more than five years. Mr.
Silverstein joined BEA in 1991; prior to joining BEA he was a vice president of
First Boston. Mr. Lindquist and Ms. Rossi joined BEA in 1995 as a result of
BEA's acquisition of CS First Boston Investment Management. Prior to joining CS
First Boston, Mr. Lindquist and Ms. Rossi were with Prudential Insurance Company
of America.
For the services provided and expenses assumed by it, BEA is entitled to
receive the following fees, computed daily and payable monthly based on a
Portfolio's average daily net assets:
<TABLE>
<CAPTION>
PORTFOLIO ANNUAL RATE
- -------------------------------- --------------------
<S> <C>
BEA International Equity........ .80% of the average
daily net assets*
BEA Emerging Markets Equity..... 1.00% of the average
daily net assets*
BEA U.S. Core Equity............ .75% of the average
daily net assets*
BEA Balanced.................... .60% of the average
daily net assets
BEA U.S. Core Fixed Income...... .375% of the average
daily net assets
BEA Global Fixed Income......... .50% of the average
daily net assets
BEA Strategic Fixed Income...... .70% of the average
daily net assets
BEA Municipal Bond Fund......... .70% of the average
daily net assets
BEA Short Duration.............. .15% of the average
daily net assets
<FN>
- ------------------------------
* This fee is higher than that paid by most investment companies.
</TABLE>
BEA may, at its discretion, from time to time agree to waive voluntarily all
or any portion of its advisory fee for any Portfolio.
For the period ended August 31, 1995, the Fund paid BEA investment advisory
fees, on annualized basis, with respect to the BEA International Equity, BEA
Emerging Markets Equity, BEA U.S. Core Equity, BEA Balanced, BEA Strategic Fixed
Income, BEA U.S. Core Fixed Income, BEA Global Fixed Income, BEA Municipal Bond
Fund and BEA Short Duration Portfolios , , , , , , , and
, respectively, of the average net assets of the respective Portfolios, and
BEA waived, approximately , , , , , , , , and ,
respectively, of the average net assets of each such Portfolio.
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The Advisory Agreements provide that BEA shall not be liable for any error
of judgment or mistake of law or for any loss suffered by the Fund in connection
with the matters to which the Advisory Agreement relates and shall be
indemnified for any losses and claims in connection with any claim relating
thereto, except liability resulting from willful misfeasance, bad faith or gross
negligence on BEA's part in the performance of its duties or from reckless
disregard of its obligations and duties under the Advisory Agreement.
ADMINISTRATOR AGENT
PFPC Inc. ("PFPC"), an indirect, wholly-owned subsidiary of PNC Bank Corp.,
serves as administrator and transfer agent for the Portfolios. As administrator,
PFPC will provide various services to each Portfolio, including determining each
of the Portfolio's net asset value, providing all accounting services for the
Portfolios and generally assisting in all aspects of each Portfolio's
operations. As compensation for administrative services, the Fund will pay to
PFPC a fee calculated at the annual rate of .125% of each Portfolio's average
daily net assets.
PFPC has its principal offices at 400 Bellevue Parkway, Wilmington, Delaware
19809. As of , 1995, PFPC was performing accounting and/or
administrative services for investment companies and investment partnerships,
with combined total assets of approximately $ billion. PNC Bank Corp. is a
multi-bank holding company with its principal offices in Pittsburgh,
Pennsylvania.
ADMINISTRATIVE SERVICES AGENT
Counsellors Funds Service, Inc. ("Counsellors Service"), a wholly-owned
subsidiary of Counsellors Securities Inc. ("Counsellors" or the "Distributor"),
provides certain administrative services to each of the Portfolios that are not
provided by PFPC, subject to the supervision and direction of the Board of
Directors of the Fund. These services include furnishing certain internal
quasi-legal, executive and administrative services, acting as liaison between
the Portfolios and the Portfolios' various service providers, furnishing
corporate secretarial services, which include assisting in the preparation of
materials for meetings of the Board of Directors of the Fund, coordinating the
preparation of proxy statements and annual, semi-annual and quarterly reports
and generally assisting in monitoring and developing compliance procedures for
the Portfolios. As compensation for such administrative services, the Fund will
pay to Counsellors Service each month a fee for the previous month calculated at
the annual rate of .15% of each Portfolio's average daily net assets.
DISTRIBUTOR
Counsellors serves as distributor of the Shares. Counsellors is a
wholly-owned subsidiary of Warburg, Pincus Counsellors, Inc. ("WPC") and is
located at 466 Lexington Avenue, New York, New York 10017-3147. WPC is a
wholly-owned subsidiary of Warburg, Pincus Counsellors, G.P. No compensation is
payable by the Fund to Counsellors for distribution services with respect to the
Portfolios.
CUSTODIAN
PNC Bank, National Association serves as the custodian of the assets of the
BEA Municipal Bond Fund Portfolio. Brown Brothers Harriman & Co. serves as
custodian for the remaining Portfolios. The 1940 Act and the rules and
regulations adopted thereunder permit a Portfolio to maintain its securities and
cash in the custody of certain eligible banks and securities depositories. In
compliance with such rules and regulations, a Portfolio's portfolio of
securities and cash, when invested in securities of foreign issuers, may be held
by eligible foreign subcustodians appointed by the custodian.
EXPENSES
The expenses of each Portfolio are deducted from its total income before
dividends are paid. These expenses include, but are not limited to, fees paid to
the investment adviser, administrative services agent fees and administrator's
fees and fees and expenses of officers and directors who are not affiliated with
the Portfolio's investment adviser or distributor, taxes, interest, legal fees,
custodian fees, auditing fees, brokerage fees and commissions, certain of the
fees and expenses of registering and qualifying the Portfolios and the Shares
for distribution under Federal and state securities laws, expenses of preparing
prospectuses and statements of additional information and of printing and
distributing prospectuses and statements of additional information annually to
existing shareholders,
26
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the expense of reports to shareholders, shareholders' meetings and proxy
solicitations, fidelity bond and directors and officers liability insurance
premiums, the expense of using independent pricing services and other expenses
which are not expressly assumed by the Adviser under its investment advisory
agreement with respect to a Portfolio. Any general expenses of the Fund that are
not readily identifiable as belonging to a particular investment portfolio of
the Fund will be allocated among all investment portfolios of the Fund based
upon the relative net assets of the investment portfolios at the time such
expenses are incurred. Transfer agency expenses, expenses of preparation,
printing and distributing prospectuses, statements of additional information,
proxy statements and reports to shareholders, registration fees and other costs
identified as belonging to a particular class, are allocated to such class.
BEA has agreed to reimburse each Portfolio for the amount, if any, by which
the total operating and management expenses of such Portfolio for any fiscal
year exceed the most restrictive state blue sky expense limitation in effect
from time to time, to the extent required by such limitation.
BEA may assume additional expenses of a Portfolio from time to time. In
certain circumstances, BEA may assume such expenses on the condition that it is
reimbursed by the Portfolio for such amounts prior to the end of a fiscal year.
In such event, the reimbursement of such amounts will have the effect of
increasing a Portfolio's expense ratio and of decreasing return to investors.
For the Fund's fiscal year ended August 31, 1995, the Fund's total expenses
were % (annualized) of average net assets with respect to the BEA
International Equity Portfolio (not taking into account waivers and
reimbursements of % ), % (annualized) of average net assets with respect to
the BEA Emerging Markets Equity Portfolio (not taking into account waivers and
reimbursements of %), % (annualized) of average net assets with respect to
the BEA U.S. Core Equity Portfolio (not taking into account waivers and
reimbursements of %), % (annualized) of average net assets with respect to
the BEA Balanced Portfolio (not taking into account waivers and reimbursements
of %), % of average net assets with respect to the BEA Strategic Fixed
Income Portfolio (not taking into account waivers and reimbursements of %),
% (annualized) of average net assets with respect to the BEA U.S. Core Fixed
Income Portfolio (not taking into account waivers and reimbursements of %),
% (annualized) of average net assets with respect to the BEA Global Fixed
Income Portfolio (not taking into account waivers and reimbursements of %),
% (annualized) of average net assets with respect to the BEA Municipal Bond
Fund Portfolio (not taking into account waivers and reimbursements of %) and
% (annualized) of average net assets with respect to the BEA Short Duration
Portfolio (not taking into account waivers and reimbursements of %).
HOW TO PURCHASE SHARES
GENERAL
Shares representing interests in the Portfolios are offered continuously for
sale by the Distributor. Except as described below, BEA Class Shares are
currently available for purchase only by investors who have entered into an
investment management agreement with BEA or its affiliates. Shares may be
purchased initially by completing the application and forwarding the application
to the Fund's transfer agent, PFPC. Purchases of Shares may be effected by wire
to an account to be specified by PFPC or by mailing a check or Federal Reserve
Draft, payable to the order of "The BEA Family" c/o PFPC, P.O. Box 6950,
Wilmington, Delaware 19809. The name of the Portfolio for which Shares are being
purchased must also appear on the check or Federal Reserve Draft. Federal
Reserve Drafts are available at national banks or any state bank which is a
member of the Federal Reserve System. Initial investments in any Portfolio must
be at least $1,000,000, except shares may be purchased by existing clients of
BEA or its affiliates or by officers of such existing clients (or those holding
similar positions) with an initial investment of at least $100,000; all
subsequent investments for such persons must be at least $1,000. Subsequent
initial investments in any other Portfolio must be at least $100,000. The Fund
reserves the right to reject any purchase order.
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Shares of the Portfolios may be purchased by officers and employees of BEA
or its affiliates and any BEA pension or profit-sharing plan, without being
subject to the minimum investment limitation or the requirement that investors
enter into an investment management agreement.
Shares may be purchased on any Business Day. A "Business Day" is any day
that the New York Stock Exchange (the "NYSE") is open for business. Currently,
the NYSE is closed on weekends and New Year's Day, President's Day, Good Friday,
Memorial Day, Independence Day (observed), Labor Day, Thanksgiving Day and
Christmas Day (observed).
The price paid for Shares purchased will be the net asset value next
computed after an order is received by the Fund's transfer agent prior to its
close of business on such day. Orders received by the Fund's transfer agent
after its close of business are priced at the net asset value next determined on
the following Business Day.
PURCHASES IN-KIND
Subject to the approval of the Adviser, investors may acquire Shares of any
of the Portfolios in exchange for portfolio securities that are eligible for
investment by the relevant Portfolio or Portfolios. Such portfolio securities
must (a) meet the investment objectives and policies of the Portfolios, (b) be
acquired for investment and not for resale, (c) be liquid securities which are
not restricted as to transfer either by law or liquidity of market, and (d) have
a value which is readily ascertainable. Generally an investor will recognize for
federal income tax purposes any gain or loss realized on an exchange of property
for Shares. Under certain circumstances, initial investors may not recognize
gain or loss on such an exchange. Investors, particularly initial investors, are
urged to consult their tax advisers in determining the particular federal income
tax consequences of their purchase in-kind. Such exchanges will be subject to
each Portfolio's minimum investment requirement.
HOW TO REDEEM SHARES
GENERAL
Shareholders may redeem for cash some or all of their Shares at any time. To
do so, a written request in proper form must be sent directly to The BEA Family
c/o PFPC, P.O. Box 8950, Wilmington, Delaware 19899. The redemption price is the
net asset value per share next determined after the initial receipt of proper
notice of redemption. Redemptions in the BEA International Equity Portfolio
incurs a redemption fee of 1.00%; the BEA Emerging Markets Equity Portfolio,
1.50%; and the BEA Strategic Fixed Income Portfolio, .25%. No redemption fee is
charged for redemptions involving a redemption in-kind (see below). The value of
Shares at the time of redemption may be more or less than the shareholder's
cost, depending on the market value of the securities held by the Fund at such
time.
A request for redemption must be signed by all persons in whose names the
Shares are registered or by an authorized party. Signatures must conform exactly
to the account registration. If the proceeds of the redemption would
exceed $10,000, or if the proceeds are not to be paid to the record owner at the
record address, or if the shareholder is a corporation, partnership, trust or
fiduciary, signature(s) must be guaranteed by a bank, broker-dealer, credit
union, national securities exchange, savings association or any other
organization which qualifies as an "eligible guarantor institution" as that term
is defined in rules adopted by the Securities and Exchange Commission. In some
cases, however, other documents may be necessary.
INVOLUNTARY REDEMPTION
The Fund reserves the right to redeem an account in any Portfolio of a
shareholder (other than an officer or employee of BEA or any BEA pension or
profit sharing plan) at any time the net asset value of the account in such
Portfolio falls below $50,000 as the result of a redemption request.
Shareholders will be notified in writing that the value of their account in a
Portfolio is less than $50,000 and will be allowed 30 days to make additional
investments before the redemption is processed.
PAYMENT OF REDEMPTION PROCEEDS
Payment of the Redemption Price for Shares redeemed will be made by wire or
by check mailed within seven days after acceptance by the Fund's transfer agent,
PFPC, of the request and any other necessary documents in proper order. Such
payment may be postponed
28
<PAGE>
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or the right of redemption suspended as provided by the rules of the SEC. If the
Shares to be redeemed have been recently purchased by check, the Fund's transfer
agent may delay mailing a redemption check, which may be a period of up to 15
days from the date of purchase, pending a determination that the check has
cleared.
REDEMPTION IN-KIND
The Fund reserves the right, if conditions exist which make cash payments
undesirable, to honor any request for redemption of a Portfolio's Shares by
making payment in whole or in part in securities chosen by the Fund and valued
in the same way as they would be valued for purposes of computing a Portfolio's
net asset value. If payment is made in securities, a shareholder may incur
transaction costs in converting these securities into cash after they have
redeemed their Shares. The Fund has elected, however, to be governed by Rule
18f-1 under the Investment Company Act so that a Portfolio is obligated to
redeem its shares solely in cash up to the lesser of $250,000 or 1% of its net
asset value during any 90-day period for any one shareholder of a Portfolio.
EXCHANGE PRIVILEGE
A Shareholder may exchange Shares of any one of the BEA Family Classes for
Shares of any other of the BEA Family Classes. Such exchange will be effected at
the net asset value of the exchanged Class (less any applicable redemption fee)
and the net asset value of the Class to be acquired next determined after the
transfer agent's receipt of a request for an exchange. No exchange fee is
currently imposed on exchanges, although the Fund reserves the right to impose a
$5.00 administrative fee for each exchange. An exchange of Shares will be
treated as a sale for Federal income tax purposes.
An investor considering an exchange to any of the other BEA Portfolios
should refer to the prospectus and statement of additional information regarding
such Portfolio.
A shareholder wishing to make an exchange may do so by sending a written
request to the Fund's transfer agent. In the case of shareholders holding share
certificates, the certificates must accompany the request for an exchange.
Shareholders are automatically provided with telephone exchange privileges when
opening an account, unless they indicate on the Application that they do not
wish to use this privilege. SHAREHOLDERS HOLDING SHARE CERTIFICATES ARE NOT
ELIGIBLE TO EXCHANGE SHARES BY TELEPHONE BECAUSE SHARE CERTIFICATES MUST
ACCOMPANY ALL EXCHANGE REQUESTS. To add a telephone exchange feature to an
existing account that previously did not provide for this option, a Telephone
Exchange Authorization Form must be filed with PFPC. This form is available from
PFPC. Once this election has been made, the shareholder may simply contact PFPC
by telephone to request the exchange (800)447-1139 (in Delaware call collect
(302)791-1031). The Fund will employ reasonable procedures to confirm that
instructions communicated by telephone are genuine, and if the Fund does not
employ such procedures, it may be liable for any losses due to unauthorized or
fraudulent telephone instructions. Neither the Fund nor PFPC will be liable for
any loss, liability, cost or expense for following the Fund's telephone
transaction procedures described below or for following instructions
communicated by telephone that it reasonably believes to be genuine.
The Fund's telephone transaction procedures include the following measures:
(1) requiring the appropriate telephone transaction privilege forms; (2)
requiring the caller to provide the names of the account owners, the account
social security number and name of the Portfolio, all of which must match the
Fund's records; (3) requiring the Fund's service representative to complete a
telephone transaction form, listing all of the above caller identification
information; (4) permitting exchanges only if the two account registrations are
identical; (5) requiring that redemption proceeds be sent only by check to the
account owners of record at the address of record, or by wire only to the owners
of record at the bank account of record; (6) sending a written confirmation for
each telephone transaction to the owners of record at the address of record
within five (5) business days of the call; and (7) maintaining tapes of
telephone transactions for six months, if the Fund elects to record shareholder
telephone transactions.
For accounts held of record by a broker-dealer, trustee, custodian or other
agent, additional documentation or information regarding
29
<PAGE>
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the scope of a caller's authority is required. Finally, for telephone
transactions in accounts held jointly, additional information regarding other
account holders is required. Telephone transactions will not be permitted in
connection with IRA, other retirement plan accounts, or accounts with
attorney-in-fact under power of attorney.
If the exchanging shareholder does not currently own Shares of the Portfolio
whose Shares are being acquired, a new account will be established with the same
registration, dividend and capital gain options and authorized dealer of record
as the account from which shares are exchanged, unless otherwise specified in
writing by the shareholder with all signatures guaranteed by an eligible
guarantor institution. The exchange privilege may be modified or terminated at
any time, or from time to time, by the Fund, upon 60 days written notice to
shareholders.
If an exchange is to another BEA Portfolio, the dollar value of Shares
acquired must equal or exceed the Portfolio's minimum for a new account; if to
an existing account, the dollar value must equal or exceed the Portfolio's
minimum for subsequent investments. If any amount remains in the account from
which the exchange is being made, such amount must not drop below the minimum
account value required by the Portfolio.
NET ASSET VALUE
The net asset value for each Portfolio is determined daily as of the close
of regular trading on the NYSE on each Business Day. The net asset value of a
Portfolio is calculated by adding the value of all its securities to cash and
other assets, deducting its actual and accrued liabilities and dividing by the
total number of its Shares outstanding.
DIVIDENDS AND DISTRIBUTIONS
The Fund will distribute substantially all of the net realized capital
gains, if any, of each of the Portfolios to each Portfolio's shareholders
annually. The Fund will distribute all net investment income, if any, for the
BEA International Equity, BEA Emerging Markets Equity, and BEA U.S. Core Equity
Portfolios annually. The Fund will distribute net investment income, if any, for
the BEA Balanced and BEA Short Duration Portfolios at least annually. The Fund
will distribute net investment income for the BEA U.S. Core Fixed Income, BEA
Global Fixed Income, BEA Strategic Fixed Income and BEA Municipal Bond Fund
Portfolios at least quarterly. All distributions will be reinvested in the form
of additional full and fractional Shares of the relevant Portfolio unless a
shareholder elects otherwise. If a shareholder desires to have distributions
paid out rather than reinvested, the shareholder should notify PFPC in writing.
TAXES
GENERAL
The following discussion is only a brief summary of some of the important
tax considerations generally affecting the Portfolios and their shareholders and
is not intended as a substitute for careful tax planning. Accordingly, investors
in the Portfolios should consult their tax advisers with specific reference to
their own tax situation.
Each Portfolio will elect to be taxed as a regulated investment company
under Subchapter M of the Internal Revenue Code of 1986, as amended (the
"Code"). So long as a Portfolio qualifies for this tax treatment, such Portfolio
will be relieved of Federal income tax on amounts distributed to shareholders,
but shareholders, unless otherwise exempt, will pay income or capital gains
taxes on amounts so distributed (except distributions that are treated as a
return of capital or that are designated as exempt interest dividends)
regardless of whether such distributions are paid in cash or reinvested in
additional Shares.
Distributions out of the "net capital gain" (the excess of net long-term
capital gain over net short-term capital loss), if any, of a Portfolio will be
taxed to shareholders as long-term capital gain regardless of the length of time
a shareholder has held his Shares or whether such gain was reflected in the
price paid for the Shares. All other distributions, to the extent they are
taxable, are taxed to shareholders as ordinary income. The current nominal
maximum marginal rate on ordinary income for individuals, trusts and estates is
31%. However, the maximum rate
30
<PAGE>
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imposed on net capital gain of such taxpayers is 28%. Corporate taxpayers are
taxed at the same rates on both ordinary income and capital gains.
The BEA Municipal Bond Fund Portfolio intends to pay substantially all of
its dividends as "exempt interest dividends." Investors in this Portfolio should
note, however, that taxpayers are required to report the receipt of tax-exempt
interest and "exempt interest dividends" in their Federal income tax returns and
that in two circumstances such amounts, while exempt from regular Federal income
tax, are subject to alternative minimum tax at a rate of 24% in the case of
individuals, trusts and estates, and 20% in the case of corporate taxpayers.
First, tax-exempt interest and "exempt interest dividends" derived from certain
private activity bonds issued after August 7, 1986, will generally constitute an
item of tax preference for corporate and noncorporate taxpayers in determining
alternative minimum tax liability. Depending upon market conditions, the BEA
Municipal Bond Fund Portfolio may invest up to 40% of its net assets in such
private activity bonds. Secondly, tax-exempt interest and "exempt interest
dividends" derived from all Municipal Obligations must be taken into account by
corporate taxpayers in determining their adjusted current earnings adjustment
for alternative minimum tax purposes. Shareholders who are recipients of Social
Security Act or Railroad Retirement Act benefits should further note that
tax-exempt interest and "exempt interest dividends" will be taken into account
in determining the taxability of their benefit payments.
The BEA Municipal Bond Fund Portfolio will determine annually the
percentages of its net investment income which are fully tax-exempt, which
constitute an item of tax preference for alternative minimum tax purposes, and
which are fully taxable and will apply such percentages uniformly to all
distributions declared from net investment income during that year. These
percentages may differ significantly from the actual percentages for any
particular day.
Transactions in foreign currencies, forward contracts, options and futures
contracts (including options and futures contracts on foreign currencies) will
be subject to special provisions of the Code that, among other things, may
affect the character (i.e., ordinary or capital) of gains or losses realized by
a Portfolio, accelerate the recognition of income by a Portfolio and defer a
Portfolio's losses. Exchange control regulations may restrict repatriations of
investment income and capital or of the proceeds of sales of securities by
investors such as the Portfolios. In addition, certain investments (such as zero
coupon securities and shares of so-called "passive foreign investment companies"
or "PFICS") may cause a Portfolio to recognize income without the receipt of
cash. Each of these circumstances, whether separately or in combination, may
limit a Portfolio's ability to pay sufficient dividends and to make sufficient
distributions to satisfy the Subchapter M and excise tax distributions
requirements.
The Fund will send written notices to shareholders annually regarding the
tax status of distributions made by each Portfolio. Dividends declared in
October, November or December of any year payable to shareholders of record on a
specified date in such a month will be deemed to have been received by the
shareholders on December 31, provided such dividends are paid during January of
the following year. Each Portfolio intends to make sufficient actual or deemed
distributions prior to the end of each calendar year to avoid liability for
Federal excise tax.
Investors should be careful to consider the tax implications of buying
Shares just prior to a distribution. The price of shares purchased at that time
will reflect the amount of the forthcoming distribution. Those investors
purchasing just prior to a distribution will nevertheless be taxed on the entire
amount of the distribution received.
Shareholders who exchange Shares representing interests in one Portfolio for
Shares representing interests in another Portfolio will generally recognize
capital gain or loss for Federal income tax purposes.
Under certain provisions of the Code, some shareholders may be subject to a
31% "backup" withholding tax on reportable dividends, capital gains
distributions and redemption payments.
31
<PAGE>
- --------------------------------------------------------------------------------
Shareholders who are nonresident alien individuals, foreign trusts or
estates, foreign corporations or foreign partnerships may be subject to
different U.S. Federal income tax treatment.
An investment in one Portfolio is not intended to constitute a balanced
investment program. Shares of the BEA Municipal Bond Fund Portfolio would not be
suitable for tax-exempt institutions and may not be suitable for retirement
plans qualified under Section 401 of the Internal Revenue Code, H.R. 10 plans
and individual retirement accounts since such plans and accounts are generally
tax-exempt and, therefore, not only would not gain any additional benefit from
the Portfolios' dividends being tax-exempt but also such dividends would be
taxable when distributed to the beneficiary.
FOREIGN INCOME TAXES
Investment income received by the Portfolios from sources within foreign
countries may be subject to foreign income taxes withheld at the source. The
United States has entered into tax treaties with many foreign countries which
entitle the Portfolios to a reduced rate of, or exemption from, taxes on such
income. It is impossible to determine the effective rate of foreign tax in
advance since the amount of each Portfolio's assets to be invested in various
countries is not known.
If more than 50% of the value of a Portfolio's total assets at the close of
each taxable year consists of the stock or securities of foreign corporations,
such Portfolio will be eligible to elect to "pass through" to the Fund's
shareholders the amount of foreign income taxes paid by each Portfolio (the
"Foreign Tax Election"). Pursuant to the Foreign Tax Election, shareholders will
be required (i) to include in gross income, even though not actually received,
their respective pro-rata shares of the foreign income taxes paid by the
Portfolio that are attributable to any distributions they receive; and (ii)
either to deduct their pro-rata share of foreign taxes in computing their
taxable income, or to use it (subject to various Code limitations) as a foreign
tax credit against U.S. Federal income tax (but not both). In determining the
source and character of distributions received from a Portfolio for the purpose
of the foreign tax credit limitation rules of the Code, shareholders will be
required to treat allocable portions of a Portfolio's distributions as foreign
source income. No deduction for foreign taxes may be claimed by a shareholder
who does not itemize deductions.
MISCELLANEOUS CONSIDERATIONS; EFFECT OF FUTURE LEGISLATION
Future legislative or administrative changes or court decisions may
materially affect the tax consequences of investing in one or more Portfolios of
the Fund. Shareholders are also urged to consult their tax advisers concerning
the application of state and local income taxes to investments in the Fund which
may differ from the Federal income tax consequences described above.
DESCRIPTION OF SHARES
The Fund has authorized capital of thirty billion shares of Common Stock,
$.001 par value per share, of which 12.2 billion shares are currently classified
into 60 different classes of Common Stock (as described in the Statement of
Additional Information).
THIS PROSPECTUS AND THE STATEMENT OF ADDITIONAL INFORMATION INCORPORATED
HEREIN RELATE PRIMARILY TO THE BEA CLASSES REPRESENTING AN INTEREST IN THE BEA
INTERNATIONAL EQUITY, BEA EMERGING MARKETS EQUITY, BEA STRATEGIC FIXED INCOME,
BEA U.S. CORE EQUITY, BEA BALANCED, BEA U.S. CORE FIXED INCOME, BEA GLOBAL FIXED
INCOME, BEA MUNICIPAL BOND FUND AND BEA SHORT DURATION PORTFOLIOS AND DESCRIBE
ONLY THE INVESTMENT OBJECTIVE AND POLICIES, OPERATIONS, CONTRACTS AND OTHER
MATTERS RELATING TO SUCH CLASSES.
Each share that represents an interest in a Portfolio has an equal
proportionate interest in the assets belonging to such Portfolio with each other
share that represents an interest in such Portfolio. Shares of the Fund do not
have preemptive or conversion rights. When issued for payment as described in
this Prospectus, Shares will be fully paid and non-assessable. This Prospectus
combines offering information with respect to nine Portfolios; there is a
possibility that one Portfolio might become liable for any
32
<PAGE>
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misstatement, inaccuracy, or incomplete disclosure in the Prospectus concerning
another Portfolio.
The Fund currently does not intend to hold annual meetings of shareholders
except as required by the 1940 Act or other applicable law. The law under
certain circumstances provides shareholders with the right to call for a meeting
of shareholders to consider the removal of one or more directors. To the extent
required by law, the Fund will assist in shareholder communication in such
matters.
Holders of shares of each of the Portfolios will vote in the aggregate and
not by class on all matters, except where otherwise required by law.
Furthermore, shareholders of all investment portfolios of the Fund will vote in
the aggregate and not by portfolio except as otherwise required by law or when
the Board of Directors determines that the matter to be voted upon affects only
the interests of the shareholders of a particular investment portfolio. (See the
Statement of Additional Information under "Additional Information Concerning
Fund Shares" for examples of when the 1940 Act requires voting by investment
portfolio or by class.) Shareholders of the Fund are entitled to one vote for
each full share held (irrespective of class or portfolio) and fractional votes
for fractional shares held. Voting rights are not cumulative and, accordingly,
the holders of more than 50% of the aggregate shares of Common Stock of the Fund
may elect all of the directors.
As of September 29, 1995, to the Fund's knowledge, no person held of record
or beneficially 25% or more of the outstanding shares of all classes of the
Fund.
OTHER INFORMATION
REPORTS AND INQUIRIES
Shareholders of a Portfolio will receive unaudited semi-annual reports
describing the Portfolio's investment operations and annual financial statements
audited by independent accountants. Shareholder inquiries should be addressed to
PFPC, the Fund's transfer agent, Bellevue Park Corporate Center, 400 Bellevue
Parkway, Wilmington, Delaware 19809, toll-free (800) 447-1139 (in Delaware call
collect (302) 791-1031).
SHARE CERTIFICATES
The Fund will issue share certificates for any of the Shares only upon the
written request of a shareholder sent to PFPC.
PERFORMANCE INFORMATION
From time to time, each of the Portfolios may advertise its performance,
including comparisons to other mutual funds with similar investment objectives
and to stock or other relevant indices. All such advertisements will show the
average annual total return over one, five and ten year periods or, if such
periods have not yet elapsed, shorter periods corresponding to the life of a
Portfolio. Such total return quotations will be computed by finding the
compounded average annual total return for each time period that would equate
the assumed initial investment of $1,000 to the ending redeemable value, net of
any redemption and other fees, according to a required standardized calculation.
The standard calculation is required by the SEC to provide consistency and
comparability in investment company advertising. The Portfolios may also from
time to time include in such advertising an aggregate total return figure or a
total return figure that is not calculated according to the standardized formula
in order to compare more accurately a Portfolio's performance with other
measures of investment return. For example, a Portfolio's total return may be
compared with data published by Lipper Analytical Services, Inc., CDA Investment
Technologies, Inc., Mutual Fund Forecaster, Morningstar, Inc. or Weisenberger
Investment Company Service, or with the performance of the Standard & Poor's 500
Stock Index, Standard & Poor's MidCap 400 Index, Moody's Bond Survey Bond Index,
Wilshire 5000 Index, Lehman Brothers Bond Indexes, Consumer Price Index, Bond
Buyer's 20-Bond Index, Dow Jones Industrial Average, national publications such
as Money, Forbes, Barron's, the Wall Street Journal or the New York Times or
publications of a local or regional nature, and other industry publications. For
these purposes, the performance of a Portfolio, as well as the performance
published by such services or experienced by such indices, will usually not
reflect redemption fees, the inclusion of which would reduce performance
results. If a Portfolio advertises non-standard computations, however, the
Portfolio will disclose such fees, and
33
<PAGE>
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will also disclose that the performance data do not reflect such fees and that
inclusion of such fees would reduce the performance quoted.
From time to time, each of the Portfolios other than the BEA International
Equity, BEA Emerging Markets Equity and BEA U.S. Core Equity Portfolios may also
advertise its "30-day yield." The yield refers to the income generated by an
investment in a Portfolio over the 30-day period identified in the
advertisement, and is computed by dividing the net investment income per share
during the period by the maximum public offering price per share of the last day
of the period. This income is "annualized" by assuming that the amount of income
is generated each month over a one-year period and is compounded semi-annually.
The annualized income is then shown as a percentage of the net asset value.
The yield on Shares of a Portfolio will fluctuate and is not necessarily
representative of future results. Shareholders should remember that yield is
generally a function of portfolio quality and maturity, type of instrument,
operating expenses and market conditions. Any fees charged by broker/dealers
directly to their customers in connection with investments in a Portfolio are
not reflected in the yields on a Portfolio's Shares, and such fees, if charged,
will reduce the actual return received by shareholders on their investments.
34
<PAGE>
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NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY
REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS OR IN THE PORTFOLIOS' STATEMENT
OF ADDITIONAL INFORMATION INCORPORATED HEREIN BY REFERENCE, IN CONNECTION WITH
THE OFFERING MADE BY THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH REPRESENTATIONS
MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE FUND OR ITS
DISTRIBUTOR. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING BY THE FUND OR BY
THE DISTRIBUTOR IN ANY JURISDICTION IN WHICH SUCH OFFERING MAY NOT LAWFULLY BE
MADE.
Investment Adviser
BEA Associates
New York, New York
<PAGE>
THE BEA FAMILY NEW ACCOUNT APPLICATION
Mail completed application to:
PFPC - Attention: The BEA Family, P.O. Box 8950, Wilmington, DE 19899
1. REGISTRATION. PLEASE PRINT
<TABLE>
<S> <C> <C>
/ / Individual / / Trust
Owner
/ / Joint
Tenant / / Corporation
Co-Owner*, minor, trust
/ / Custodian / / Other ------
Street Address
/ / UGMA / / (State)
City State Zip Code
</TABLE>
* For joint registration, both must sign. The registration will be as joint
tenants with the right of survivorship and not as tenants in common, unless
otherwise stated.
- -
2. INVESTMENTS. TOTAL AMOUNT INVESTED [(MINIMUM OF $1,000,000; $100,000 FOR
SUBSEQUENT INVESTMENTS)] $
- -------------------.
<TABLE>
<S> <C>
BEA International Equity Portfolio $ -------------------
BEA Emerging Markets Equity Portfolio $ -------------------
BEA U.S. Core Equity Portfolio $ -------------------
BEA Balanced Fund $ -------------------
BEA U.S. Core Fixed Income Portfolio $ -------------------
BEA Global Fixed Income Portfolio $ -------------------
BEA Strategic Fixed Income Portfolio $ -------------------
BEA Municipal Bond Fund Portfolio $ -------------------
BEA Short Duration Portfolio $ -------------------
</TABLE>
/ / BY CHECK. Make payable to "The BEA Family."
/ / BY WIRE. Call PFPC Inc. ("PFPC") directly at (800) 447-1139 (in Delaware
call collect (302) 791-1149) to obtain a Fund account number and for further
instructions. Then, fill in your new fund account number ___________________
- --------------------------------------------------------------------------------
3. TAX IDENTIFICATION
Under penalties of perjury, I certify with my signature below that the number
shown in this section of the application is my correct taxpayer identification
number and that I am not subject to backup withholding because the Internal
Revenue Service has not notified me that I am subject to backup withholding as a
result of a failure to report all interest or dividends, or the Internal Revenue
Service has notified me that I am no longer subject to backup withholding. If
you are subject to backup withholding, check the box in front of the following
statement.
/ / The Internal Revenue Service has notified me that I am subject to backup
withholding.
<TABLE>
<C> <S> <C> <C> <C>
- --------------------------------------- --------------------------------------- ---------------------------------------
(Owner's Social Security #) (Tax Identification #) (Minor's Social Security #)
</TABLE>
- --------------------------------------------------------------------------------
4. SIGNATURES
Citizenship: / / U.S. / / Other _______________________________________________
Please provide Phone Number ( ) ______________________________________________
Sign below exactly as printed in Registration.
I (we) am (are) of legal age and have read the prospectus. I (we) hereby certify
that each of the persons listed below has been duly elected, and is now legally
holding the office set below his name and has the authority to make this
authorization.
Please print titles below if signing on behalf of a business or trust.
<TABLE>
<S> <C>
- --------------------------------------------- ---------------------------------------------
(Signature) (Signature)
- --------------------------------------------- ---------------------------------------------
(President, Trustee, General Partner or (Co-owner, Secretary of Corporation,
Agent) Co-trustee, etc).
</TABLE>
<PAGE>
THE BEA FAMILY OF MUTUAL FUNDS
SUPPLEMENT DATED FEBRUARY 16, 1995 TO
PROSPECTUS DATED DECEMBER 28, 1994
The following paragraphs replace the fourth and fifth full paragraphs on
page 27.
The day-to-day portfolio management of BEA International Equity and BEA
Emerging Markets Equity Portfolios is the responsibility of the BEA
International Equities Management Team. The Team consists of the following
investment professionals: Emilio Bassini (Managing Director), Piers Playfair
(Senior Vice President), and Steven D. Bleiberg (Vice President. Mr. Bassini has
been engaged as an investment professional with BEA for more than five years.
Mr. Bleiberg rejoined BEA in 1991, he spent two years as a portfolio manager at
Matrix Capital Management, prior to Matrix, Mr. Bleiberg spent five years at BEA
in the equity research department. Mr. Playfair joined BEA in 1990, prior to
joining BEA he was a manager in the corporate finance division of Samuel
Montagu, London and a Director of Equity Capital Markets Group at Salomon
Brothers.
The day-to-day portfolio management of the BEA U.S. Core Equity Portfolio
and the equity portion of the BEA Balanced Portfolio is the responsibility of
the BEA Domestic Equity Management Team. The Team consists of the following
investment professionals: William W. Priest, Jr. (Chief Executive Officer and
Managing Director of BEA), John B. Hurford (Vice Chairman of the Executive
Committee and Managing Director), Albert L. Zesiger (Managing Director), and
Todd M. Rice (Vice President). Messrs. Priest, Hurford, and Zesiger have, on an
individual basis, been engaged as investment professionals with BEA for more
than five years. Mr. Rice joined BEA in 1990; previously, he was employed as an
investment professional at Salomon Brothers.
<PAGE>
THE BEA FAMILY OF MUTUAL FUNDS
BEA INTERNATIONAL EQUITY PORTFOLIO
BEA EMERGING MARKETS EQUITY PORTFOLIO
BEA U.S. CORE EQUITY PORTFOLIO
BEA BALANCED PORTFOLIO
BEA U.S. CORE FIXED INCOME PORTFOLIO
BEA GLOBAL FIXED INCOME PORTFOLIO
BEA STRATEGIC FIXED INCOME PORTFOLIO
BEA MUNICIPAL BOND FUND PORTFOLIO
BEA SHORT DURATION PORTFOLIO
(INVESTMENT PORTFOLIOS OF THE RBB FUND, INC.)
STATEMENT OF ADDITIONAL INFORMATION
This Statement of Additional Information provides supplementary
information pertaining to shares of nine classes (the "BEA Shares" or the
"Shares") representing interests in nine investment portfolios (the
"Portfolios") of The RBB Fund, Inc. (the "Fund"): BEA International Equity
Portfolio, BEA Emerging Markets Equity Portfolio, BEA U.S. Core Equity
Portfolio, BEA Balanced Portfolio, BEA U.S. Core Fixed Income Portfolio, BEA
Global Fixed Income Portfolio, BEA Strategic Fixed Income Portfolio, BEA
Municipal Bond Fund Portfolio, and BEA Short Duration Portfolio (collectively,
the "Portfolios"). This Statement of Additional Information is not a
prospectus, and should be read only in conjunction with the Prospectus or
Prospectuses of the Fund relating to the Portfolios, dated December 28, 1995
(the "Prospectus"). A copy of the Prospectus may be obtained from the Fund's
distributor by calling toll-free (800) 888-9723. This Statement of Additional
Information is dated December 28, 1995.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS NOT CONTAINED IN THIS STATEMENT OF ADDITIONAL INFORMATION IN
CONNECTION WITH THE OFFERING MADE BY THE PROSPECTUS AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE FUND OR ITS DISTRIBUTOR. THE STATEMENT OF ADDITIONAL INFORMATION DOES
NOT CONSTITUTE AN OFFERING BY THE FUND OR BY THE DISTRIBUTOR IN ANY JURISDICTION
IN WHICH SUCH OFFERING MAY NOT LAWFULLY BE MADE.
<PAGE>
CONTENTS
Prospectus
Page Page
---- ----------
General ............................................. 2 5
Common Investment Policies -- All Portfolios ........ 2 5
Common Investment Objectives and Policies -- BEA
International Equity, BEA Emerging Markets Equity,
BEA U.S. Core Equity, BEA Balanced, BEA U.S. Core
Fixed Income, BEA Strategic Fixed Income, BEA Global
Fixed Income and BEA Short Duration Portfolios..... 7 14
Supplemental Investment Objectives and Policies --
BEA International Equity, BEA Emerging Markets
Equity, BEA U.S. Core Equity, BEA Balanced, BEA
U.S. Core Fixed Income, BEA Strategic Fixed
Income, BEA Global Fixed Income and BEA Short
Duration Portfolios................................ 16 16
Supplemental Investment Objectives and Policies --
BEA International Equity, BEA Emerging
Markets Equity, BEA U.S. Core Equity and BEA
Balanced Portfolios................................ 22 16
Investment Limitations .............................. 22 20
Risk Factors ........................................ 25 20
Directors and Officers .............................. 28 N/A
Investment Advisory and Servicing Arrangements....... 30 23
Portfolio Transactions .............................. 34 13
Purchase and Redemption Information ................. 36 27
Valuation of Shares ................................. 37 30
Performance and Yield Information.................... 38 33
Taxes ............................................... 41 30
Additional Information Concerning Fund Shares........ 50 32
Miscellaneous ....................................... 53 33
Financial Statements ................................ F-1 N/A
Appendix ............................................ A-1 N/A
<PAGE>
GENERAL
The RBB Fund, Inc. (the "Fund") is an open-end management investment
company currently operating or proposing to operate seventeen separate
investment portfolios. The Fund was organized as a Maryland corporation on
February 29, 1988.
Unless otherwise indicated, the following investment policies may be
changed by the Board of Directors without an affirmative vote of shareholders.
Capitalized terms used herein and not otherwise defined have the same meanings
as are given to such terms in the Prospectus.
COMMON INVESTMENT POLICIES -- ALL PORTFOLIOS
The following supplements the information contained in the Prospectus
concerning the investment objectives and policies of, and techniques used by the
Portfolios.
NON-DIVERSIFIED STATUS. Each Portfolio is classified as
non-diversified within the meaning of the Investment Company Act, which means
that each Portfolio is not limited by such Act in the proportion of its assets
that it may invest in securities of a single issuer. Each Portfolio's
investments will be limited, however, in order to qualify as a "regulated
investment company" for purposes of the Internal Revenue Code of 1986, as
amended. See "Taxes." To qualify, each Portfolio will comply with certain
requirements, including limiting its investments so that at the close of each
quarter of the taxable year (i) not more than 25% of the market value of each
Portfolio's total assets will be invested in the securities of a single issuer,
and (ii) with respect to 50% of the market value of its total assets, not more
than 5% of the market value of each Portfolio's total assets will be invested in
the securities of a single issuer and each Portfolio will not own more than 10%
of the outstanding voting securities of a single issuer. To the extent that
each Portfolio assumes large positions in the securities of a small number of
issuers, each Portfolio's 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.
REPURCHASE AGREEMENTS. Each Portfolio may agree to purchase
securities from a bank or recognized securities dealer and simultaneously commit
to resell the securities to the bank or dealer at an agreed-upon date and price
reflecting a market rate of interest unrelated to the coupon rate or maturity of
the purchased securities ("repurchase agreements"). Such Portfolio would
maintain custody of the underlying securities prior to their repurchase; thus,
the obligation of the bank or dealer to pay the repurchase price on the date
agreed to would be, in effect, secured by such securities. If the value of such
securities were less than the repurchase price, plus interest, the other party
to the agreement would be required to provide additional collateral so that at
all times the collateral is at least equal to the repurchase price plus accrued
interest. The Adviser will consider the
2
<PAGE>
creditworthiness of a seller in determining whether to have a Portfolio enter
into a repurchase agreement. There are no percentage limits on a Portfolio's
ability to enter into repurchase agreements. Each Portfolio will not invest
more than 15% of its assets in repurchase agreements maturing in more than seven
(7) days. Repurchase agreements are considered to be loans by the Portfolio
under the Investment Company Act of 1940 (the "Investment Company Act" or the
"1940 Act").
REVERSE REPURCHASE AGREEMENTS. Each Portfolio 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 a Portfolio pursuant to such Portfolio's agreement to
repurchase them at a mutually agreed upon date, price and rate of interest. At
the time a Portfolio 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). A Portfolio's liquidity and ability
to manage its assets might be affected when it sets aside cash or portfolio
securities to cover such commitments. Reverse repurchase agreements involve the
risk that the market value of the securities retained in lieu of sale may
decline below the price of the securities a Portfolio has sold but is obligated
to repurchase. In the event the buyer of securities under a reverse repurchase
agreement files for bankruptcy or becomes insolvent, such buyer or its trustee
or receiver may receive an extension of time to determine whether to enforce a
Portfolio's obligation to repurchase the securities, and a Portfolio's use of
the proceeds of the reverse repurchase agreement may effectively be restricted
pending such decision. Each Portfolio also may enter into "dollar rolls," in
which it sells fixed income securities for delivery in the current month and
simultaneously contract to repurchase substantially similar (same type, coupon
and maturity) securities on a specified future date. During the roll period, a
Portfolio would forgo principal and interest paid on such securities. A
Portfolio would be compensated by the difference between the current sales price
and the forward price for the future purchase, as well as by the interest earned
on the cash proceeds of the initial sale. Reverse repurchase agreements are
considered to be borrowings under the Investment Company Act.
WHEN-ISSUED SECURITIES AND DELAYED DELIVERY TRANSACTIONS. Each
Portfolio may purchase securities on a when-issued basis, and it may purchase or
sell securities for delayed delivery. These transactions occur when securities
are purchased or sold by a Portfolio with payment and delivery taking place in
the future to secure what is considered an advantageous yield and price to a
Portfolio at the time of entering into the transaction. Although the Portfolios
have not established a limit on the percentage of its assets that may be
committed in connection with such transactions, it will maintain a segregated
account with its custodian of cash, cash equivalents, U.S. Government securities
or other high grade liquid debt securities
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denominated in U.S. dollars or non-U.S. currencies in an aggregate amount equal
to the amount of its commitment in connection with such purchase transactions.
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 assets
fall below the amount of its commitment. Each Portfolio's liquidity and ability
to manage its assets might be affected when it sets aside cash or portfolio
securities to cover such commitments. When a Portfolio engages in when-issued
transactions, it relies on the seller to consummate the trade. Failure of the
seller to do so may result in the Portfolio incurring a loss or missing an
opportunity to obtain a price considered to be advantageous. The Portfolio
currently anticipates that when-issued securities will not exceed 25% of its
total assets.
STANDBY COMMITMENT AGREEMENTS. Each Portfolio may from time to time
enter into standby commitment agreements. Such agreements commit such
Portfolio, for a stated period of time, to purchase a stated amount of a fixed
income security which may be issued and sold to the Portfolio at the option of
the issuer. The price and coupon of the security is fixed at the time of the
commitment. At the time of entering into the agreement a Portfolio is paid a
commitment fee, regardless of whether or not the security is ultimately issued.
A Portfolio will enter into such agreements only for the purpose of investing in
the security underlying the commitment at a yield and price that is considered
advantageous to a Portfolio. Each Portfolio will not enter into a standby
commitment with a remaining term in excess of 45 days and it will limit its
investment in such commitments so that the aggregate purchase price of the
securities subject to such commitments, together with the value of portfolio
securities subject to legal restrictions on resale, will not exceed 10% of its
assets taken at the time of acquisition of such commitment or security. Such
Portfolio will at all times maintain a segregated account with its custodian of
cash, cash equivalents, U.S. Government securities or other high grade liquid
debt securities denominated in U.S. dollars or non-U.S. currencies in an
aggregate amount equal to the purchase price of the securities underlying the
commitment. 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 assets fall below the amount of the purchase price. A
Portfolio's liquidity and ability to manage its assets might be affected when it
sets aside cash or portfolio securities to cover such commitments.
There can be no assurance that the securities subject to a standby
commitment will be issued and the value of the security, if issued, on the
delivery date may be more or less than its purchase price. Because the issuance
of the security underlying the commitment is at the option of the issuer, a
Portfolio may bear the risk of a decline in the value of such security and may
not benefit from an appreciation in the value of the security during the
commitment period.
The purchase of a security subject to a standby commitment agreement
and the related commitment fee will be recorded on the date on which the
security can reasonably be expected to be issued, and the value of the
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security will be adjusted by the amount of the commitment fee. In the event the
security is not issued, the commitment fee will be recorded as income on the
expiration date of the standby commitment.
ILLIQUID SECURITIES. Each Portfolio may not invest more than 10% of
its net assets in illiquid securities (including repurchase agreements which
have a maturity of longer than seven days), including securities that are
illiquid by virtue of the absence of a readily available market or legal or
contractual restrictions on resale. Securities that have legal or contractual
restrictions on resale but have a readily available market are not considered
illiquid for purposes of this limitation. With respect to each Portfolio,
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. The Board has adopted a policy that the Portfolios will not
purchase private placements (i.e., restricted securities other than Rule 144A
securities). 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.
The SEC has recently adopted Rule 144A which 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. The Adviser anticipates that the
market for certain restricted securities such as institutional commercial
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paper will expand further as a result of this new regulation and the development
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.
The Adviser will monitor the liquidity of restricted securities in a
Portfolio under the supervision of the Board of Directors. In reaching
liquidity decisions, the Adviser may consider, INTER ALIA, the following
factors: (1) the unregistered nature of the security; (2) the frequency of
trades and quotes for the security; (3) the number of dealers wishing to
purchase or sell the security and the number of other potential purchasers; (4)
dealer undertakings to make a market in the security and (5) 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).
LENDING OF PORTFOLIO SECURITIES. Although each Portfolio does not
currently intend to do so, it may lend its portfolio securities on a short or
long term basis to broker-dealers or institutional investors that the Adviser
deems qualified, but only when the borrower maintains with a Portfolio's
custodian, collateral either in cash or money market instruments, in an amount
at least equal to the market value of the securities loaned, plus accrued
interest and dividends, determined on a daily basis and adjusted accordingly.
In determining whether to lend securities to a particular broker-dealer or
institutional investor, the Adviser will consider, and during the period of the
loan will monitor, all relevant facts and circumstances, including the
creditworthiness of the borrower. Such loans would involve risks of delay in
receiving additional collateral in the event the value of the collateral
decreased below the value of the securities loaned or of delay in recovering the
securities loaned or even the loss of rights in the collateral should the
borrower of the securities fail financially.
BORROWING. Each Portfolio may borrow up to 33 1/3 percent of its
total assets. The Adviser intends to borrow only for temporary or emergency
purposes, including to meet portfolio redemption requests so as to permit the
orderly disposition of portfolio securities, or to facilitate settlement
transactions on portfolio securities. Additional investments will not be made
when borrowings exceed 5% of a Portfolio's total assets. Although the principal
of such borrowings will be fixed, a Portfolio's assets may change in value
during the time the borrowing is outstanding. Each Portfolio expects that some
of its borrowings may be made on a secured basis. In such situations, either
the custodian will segregate the pledged assets for the benefit of the lender or
arrangements will be made with a suitable subcustodian, which may include the
lender.
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COMMON INVESTMENT OBJECTIVES AND POLICIES --BEA INTERNATIONAL EQUITY, BEA
EMERGING MARKETS EQUITY,BEA U.S. CORE EQUITY, BEA BALANCED, BEA U.S. CORE
FIXED INCOME, BEA STRATEGIC FIXED INCOME, BEA GLOBAL FIXED INCOME AND BEA
SHORT DURATION PORTFOLIOS
U.S. GOVERNMENT SECURITIES. The U.S. government securities in which a
Portfolio may invest include direct obligations of the U.S. Treasury (such as
Treasury bills, notes and bonds) and obligations issued by U.S. government
agencies and instrumentalities, including securities that are supported by the
full faith and credit of the United States and securities that are supported
primarily or solely by the creditworthiness of the issuer (such as securities of
the Federal Home Loan Banks, the Student Loan Marketing Association and the
Tennessee Valley Authority).
FOREIGN DEBT SECURITIES. The returns on foreign debt securities
reflect interest rates and other market conditions prevailing in those countries
and the effect of gains and losses in the denominated currencies against the
U.S. dollar, which have had a substantial impact on investment in foreign fixed
income securities. The relative performance of various countries' fixed income
markets historically has reflected wide variations relating to the unique
characteristics of each country's economy. Year-to-year fluctuations in certain
markets have been significant, and negative returns have been experienced in
various markets from time to time.
The foreign government securities in which the Portfolios may invest
generally consist of obligations issued or backed by national, state or
provincial governments or similar political subdivisions or central banks in
foreign countries. Foreign government securities also include debt obligations
of supranational entities, which include international organizations designated,
or backed by governmental entities to promote economic reconstruction or
development, international banking institutions and related government agencies.
Examples include the International Bank for Reconstruction and Development (the
"World Bank"), the European Coal and Steel Community, the Asian Development Bank
and the InterAmerican Development Bank.
Foreign government securities also include debt securities of
"quasi-governmental agencies" and debt securities denominated in multinational
currency units of an issuer (including supranational issuers). Debt securities
of quasi-governmental agencies are issued by entities owned by either a
national, state or equivalent government or are obligations of a political unit
that is not backed by the national government's full faith and credit and
general taxing powers. An example of a multinational currency unit is the
European Currency Unit ("ECU"). An ECU represents specified amounts of the
currencies of certain member states of the European Economic Community. The
specific amounts of currencies comprising the ECU may be adjusted by the Council
of Ministers of the European Community to reflect changes in relative values of
the underlying currencies.
BRADY BONDS. Each Portfolio may invest in so-called "Brady Bonds,"
which have recently been issued by Costa Rica, Mexico, Uruguay and
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Venezuela and which may be issued by other Latin American countries. Brady
Bonds are issued as part of a debt restructuring in which the bonds are issued
in exchange for cash and certain of the country's outstanding commercial bank
loans. Investors should recognize that Brady Bonds have been issued only
recently, and accordingly, they do not have a long payment history. Brady Bonds
may be collateralized or uncollateralized, are issued in various currencies
(primarily the U.S. dollar) and are actively traded in the over-the-counter
("OTC") secondary market for debt of Latin American issuers.
LOAN PARTICIPATIONS AND ASSIGNMENTS. Each Portfolio may invest in
fixed and floating rate loans ("Loans") arranged through private negotiations
between a foreign government and one or more financial institutions ("Lenders").
The majority of the Portfolio's investments in Loans in Latin America are
expected to be in the form of participations in Loans ("Participations") and
assignments of portions of Loans from third parties ("Assignments").
Participations typically will result in each Portfolio having a contractual
relationship only with the Lender, not with the borrower. Each Portfolio will
have the right to receive payments of principal, interest and any fees to which
it is entitled only from the Lender selling the Participation and only upon
receipt by the Lender of the payments from the borrower. In connection with
purchasing Participations, the Portfolios generally will have no right to
enforce compliance by the borrower with the terms of the loan agreement relating
to the Loan ("Loan Agreement"), nor any rights of set-off against the borrower,
and the Portfolio may not directly benefit from any collateral supporting the
Loan in which it has purchased the Participation. As a result, the Portfolios
will assume the credit risk of both the borrower and the Lender that is selling
the Participation. In the event of the insolvency of the Lender selling a
Participation, the Portfolios may be treated as a general creditor of the Lender
and may not benefit from any set-off between the Lender and the borrower. The
Portfolios will acquire Participations only if the Lender interpositioned
between the Portfolios and the borrower is determined by BEA to be creditworthy.
Each Portfolio currently anticipates that it will not invest more than 5% of its
total assets in Loan Participations and Assignments.
CONVERTIBLE SECURITIES. The BEA U.S. Core Equity Portfolio may invest
up to 100% of its total assets in convertible securities, the BEA Balanced
Portfolio may invest up to 65% of its total assets in convertible securities,
the BEA International Equity and BEA Emerging Markets Equity Portfolios may
invest up to 20% of its total assets in convertible securities and each other
Portfolio may invest up to 35% of their total assets in convertible securities.
A convertible security is a bond, debenture, note, preferred stock or other
security that may be converted into or exchanged for a prescribed amount of
common stock of the same or a different issuer within a particular period of
time at a specified price or formula. A convertible security entitles the
holder to receive interest paid or accrued on debt or the dividend paid on
preferred stock until the convertible security matures or is redeemed, converted
or exchanged. Before conversion, convertible securities have characteristics
similar to nonconvertible debt securities in that they ordinarily provide a
stable stream of income with generally higher
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yields than those of common stocks of the same or similar issuers. Convertible
securities rank senior to common stock in a corporation's capital structure but
are usually subordinated to comparable nonconvertible securities. While no
securities investment is completely without risk, investments in convertible
securities generally entail less risk than the corporation's common stock,
although the extent to which such risk is reduced depends in large measure upon
the degree to which the convertible security sells above its value as a fixed
income security. Convertible securities have unique investment characteristics
in that they generally (1) have higher yields than common stocks, but lower
yields than comparable non-convertible securities, (2) are less subject to
fluctuation in value than the underlying stock since they have fixed income
characteristics and (3) provide the potential for capital appreciation if the
market price of the underlying common stock increases. Most convertible
securities currently are issued by U.S. companies, although a substantial
Eurodollar convertible securities market has developed, and the markets for
convertible securities denominated in local currencies are increasing.
The value of a convertible security is a function of its "investment
value" (determined by its yield in comparison with the yields of other
securities of comparable maturity and quality that do not have a conversion
privilege) and its "conversion value" (the security's worth, at market value, if
converted into the underlying common stock). The investment value of a
convertible security is influenced by changes in interest rates, with investment
value declining as interest rates increase and increasing as interest rates
decline. The credit standing of the issuer and other factors also may have an
effect on the convertible security's investment value. The conversion value of
a convertible security is determined by the market price of the underlying
common stock. If the conversion value is low relative to the investment value,
the price of the convertible security is governed principally by its investment
value. Generally the conversion value decreases as the convertible security
approaches maturity. To the extent the market price of the underlying common
stock approaches or exceeds the conversion price, the price of the convertible
security will be increasingly influenced by its conversion value. A convertible
security generally will sell at a premium over its conversion value by the
extent to which investors place value on the right to acquire the underlying
common stock while holding a fixed income security.
The Portfolios have no current intention of converting any convertible
securities it may own into equity or holding them as equity upon conversion,
although it may do so for temporary purposes. A convertible security might be
subject to redemption at the option of the issuer at a price established in the
convertible security's governing instrument. If a convertible security held by
the Portfolio is called for redemption, the Portfolio will be required to permit
the issuer to redeem the security, convert it into the underlying common stock
or sell it to a third party.
MORTGAGE-BACKED SECURITIES. BEA International Equity Portfolio and
BEA Emerging Markets Equity Portfolio may invest up to 20% of their total
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assets in mortgage-backed securities and each other Portfolio may invest up to
100% of its total assets in mortgage-backed securities, such as those issued by
the Government National Mortgage Association ("GNMA"), the Federal National
Mortgage Association, the Federal Home Loan Mortgage Corporation or certain
foreign issuers. Mortgage-backed securities represent direct or indirect
participations in, or are secured by and payable from, mortgage loans secured by
real property. The mortgages backing these securities include, among other
mortgage instruments, conventional 30-year fixed rate mortgages, 15-year fixed
rate mortgages, graduated payment mortgages and adjustable rate mortgages. The
government or the issuing agency typically guarantees the payment of interest
and principal of these securities. However, the guarantees do not extend to the
securities' yield or value, which are likely to vary inversely with fluctuations
in interest rates, nor do the guarantees extend to the yield or value of the
Portfolio's shares. These securities generally are "pass-through" instruments,
through which the holders receive a share of all interest and principal payments
from the mortgages underlying the securities, net of certain fees.
Yields on pass-through securities are typically quoted by investment
dealers and vendors based on the maturity of the underlying instruments and the
associated average life assumption. The average life of pass-through pools
varies with the maturities of the underlying mortgage loans. A pool's term may
be shortened by unscheduled or early payments of principal on the underlying
mortgages. The occurrence of mortgage prepayments is affected by various
factors, including the level of interest rates, general economic conditions, the
location, scheduled maturity and age of the mortgage and other social and
demographic conditions. Because prepayment rates of individual pools vary
widely, it is not possible to predict accurately the average life of a
particular pool. For pools of fixed rate 30-year mortgages, a common industry
practice in the U.S. has been to assume that prepayments will result in a
12-year average life. At present, pools, particularly those with loans with
other maturities or different characteristics, are priced on an assumption of
average life determined for each pool. In periods of falling interest rates,
the rate of prepayment tends to increase, thereby shortening the actual average
life of a pool of mortgage-related securities. Conversely, in periods of rising
rates the rate of prepayment tends to decrease, thereby lengthening the actual
average life of the pool. However, these effects may not be present, or may
differ in degree, if the mortgage loans in the pools have adjustable interest
rates or other special payment terms, such as a prepayment charge. Actual
prepayment experience may cause the yield of mortgage-backed securities to
differ from the assumed average life yield. Reinvestment of prepayments may
occur at higher or lower interest rates than the original investment, thus
affecting a Portfolio's yield.
The rate of interest on mortgage-backed securities is lower than the
interest rates paid on the mortgages included in the underlying pool due to the
annual fees paid to the servicer of the mortgage pool for passing through
monthly payments to certificate holders and to any guarantor, such as GNMA, and
due to any yield retained by the issuer. Actual yield to the holder may vary
from the coupon rate, even if adjustable, if the mortgage-backed
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securities are purchased or traded in the secondary market at a premium or
discount. In addition, there is normally some delay between the time the issuer
receives mortgage payments from the servicer and the time the issuer makes the
payments on the mortgage-backed securities, and this delay reduces the effective
yield to the holder of such securities.
COLLATERALIZED MORTGAGE OBLIGATIONS. The Portfolios may also purchase
collateralized mortgage obligations ("CMOS") issued by a U.S. Government
instrumentality which are backed by a portfolio of mortgages or mortgage-backed
securities. The issuer's obligations to make interest and principal payments is
secured by the underlying portfolio of mortgages or mortgage-backed securities.
Generally, CMOS are partitioned into several classes with a ranked priority by
which the classes of obligations are redeemed. The Portfolios may only invest
in CMOS issued by FHLMC, FNMA or other agencies of the U.S. Government or
instrumentalities established or sponsored by the U.S. Government.
The CMO structure returns principal to investors sequentially, rather
than according to the pro rata method of a pass-through. In the traditional CMO
structure, all classes (called tranches) receive interest at a stated rate, but
only one class at a time received principal. All principal payments received on
the underlying mortgages or securities are first paid to the "fastest pay"
tranche. After this tranche is retired, the next tranche in the sequence
becomes the exclusive recipient of principal payments. This sequential process
continues until the last tranche is retired. In the event of sufficient early
repayments on the underlying mortgages, the "fastest-pay" tranche generally will
be retired prior to its maturity. Thus the early retirement of a particular
tranche of a cmo held by a Portfolio would have the same effect as the
prepayment of mortgages underlying a mortgage-backed pass-through security as
described above.
ASSET-BACKED SECURITIES. Each Portfolio may invest in asset-backed
securities, which represent participations in, or are secured by and payable
from, assets such as motor vehicle installment sales, installment loan
contracts, leases of various types of real and personal property and receivables
from revolving credit (credit card) agreements. Such assets are securitized
through the use of trusts and special purpose corporations. Payments or
distributions of principal and interest may be guaranteed up to certain amounts
and for a certain time period by a letter of credit or a pool insurance policy
issued by a financial institution unaffiliated with the trust or corporation. A
Portfolio will not purchase any asset-backed securities which would cause 25% or
more of its total assets at the time of purchase to be invested in asset-backed
securities.
Asset-backed securities present certain risks that are not presented
by other securities in which the Portfolio may invest. Automobile receivables
generally are secured by automobiles. Most issuers of automobile receivables
permit the loan servicers to retain possession of the underlying obligations.
If the servicer were to sell these obligations to another party, there is a risk
that the purchaser would acquire an interest superior to that
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of the holders of the asset-backed securities. In addition, because of the
large number of vehicles involved in a typical issuance and technical
requirements under state laws, the trustee for the holders of the automobile
receivables may not have a proper security interest in the underlying
automobiles. Therefore, there is the possibility that recoveries on repossessed
collateral may not, in some cases, be available to support payments on these
securities. Credit card receivables are generally unsecured, and the debtors
are entitled to the protection of a number of state and federal consumer credit
laws, many of which give such debtors the right to set off certain amounts owed
on the credit cards, thereby reducing the balance due. Because asset-backed
securities are relatively new, the market experience in these securities is
limited, and the market's ability to sustain liquidity through all phases of the
market cycle has not been tested.
ZERO COUPON SECURITIES. Each Portfolio may invest in "zero coupon"
U.S. Treasury, foreign government and U.S. and foreign corporate debt
securities, which are bills, notes and bonds that have been stripped of their
unmatured interest coupons and receipts or certificates representing interests
in such stripped debt obligations and coupons. A Portfolio currently
anticipates that zero coupon securities will not exceed 20% of its total assets.
A zero coupon security pays no interest to its holder prior to maturity.
Accordingly, such securities usually trade at a deep discount from their face or
par value and will be subject to greater fluctuations of market value in
response to changing interest rates than debt obligations of comparable
maturities that make current distributions of interest. A Portfolio anticipates
that it will not normally hold zero coupon securities to maturity. Federal tax
law requires that a holder of a zero coupon security accrue a portion of the
discount at which the security was purchased as income each year, even though
the holder receives no interest payment on the security during the year.
STRUCTURED NOTES. The Portfolios may invest in structured notes. The
distinguishing feature of a structured note is that the amount of interest
and/or principal payable on the notes is based on the performance of a benchmark
asset or market other than fixed-income securities or interest rates. Examples
of a benchmark include stock prices, currency exchange rates and physical
commodity prices. Investing in a structured note allows a Portfolio to gain
exposure to the benchmark market while fixing the maximum loss that the
Portfolio may experience in the event that the market does not perform as
expected. The performance tie can be a straight relationship or leveraged,
although BEA generally will not use leverage in its structured note strategies.
Normally, these bonds are issued by U.S. government agencies and investment
banks arrange the structuring. Depending on the terms of the note, the
Portfolio may forego all or part of the interest and principal that would be
payable on a comparable conventional note; the Portfolio's loss cannot exceed
this foregone interest and/or principal. An investment in a structured note
involves risks similar to those associated with a direct investment in the
benchmark asset. Structured notes will be treated as illiquid securities for
investment limitation purposes.
ADDITIONAL INVESTMENT CONSIDERATIONS AND RISKS--NON-INVESTMENT GRADE
FIXED INCOME SECURITIES. When and if available, fixed income securities may be
purchased by a Portfolio at a discount from face value. From time to time a
Portfolio may purchase securities in default with respect to the paying of
principal and/or interest at the time acquired if, in the opinion of BEA, such
securities have the potential for future capital appreciation.
Debt securities purchased by the Portfolios may bear fixed, fixed and
contingent or variable rates of interest and may involve equity features such as
conversion or exchange rights or warrants for the acquisition of stock of the
same or a different issuer; participations based on revenues, sales or profits,
or the purchase of common stock in a unit transaction (where corporate debt
securities and common stock are offered as a unit). Conversion of certain debt
securities may reduce net income per share and net asset value per share. The
occurrence of any income dilution of previously outstanding shares of common
stock when debt securities are converted will depend upon whether a Portfolio
can, from the investments made with the proceeds of the debt securities, earn an
amount per share issuable upon conversion at least equal to the amount earned
with respect to shares of common stock outstanding
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prior to conversion. If debt securities are converted at a time when the net
asset value per share of common stock is greater than the conversion price, the
conversion will result in a decrease or dilution in then current net asset value
per share of common stock.
The value of the lower rated fixed income securities that the
Portfolios purchase may fluctuate more than the value of higher rated debt
securities. These lower rated fixed income securities generally tend to reflect
short-term corporate and market developments to a greater extent than higher
rated securities which react primarily to fluctuations in the general level of
interest rates. Changes in the value of securities subsequent to their
acquisition will not affect cash income or yields to maturity to a Portfolio but
will be reflected in the net asset value of a Portfolio's shares. The
Portfolios attempt to reduce risk through credit analysis and attention to
current developments and trends in both the economy and financial markets.
There can be no assurance that such attempts will be successful.
HEDGING. Each of the Portfolios may engaged in various hedging
strategies. See "Currency Hedging" in the Prospectus.
FORWARD CURRENCY CONTRACTS. Each Portfolio may use forward currency
contracts to protect against uncertainty in the level of future exchange rates.
The Portfolio may enter into forward currency contracts with respect to specific
transactions. For example, when a portfolio anticipates the receipt in a
foreign currency of interest payments on a security that it holds, a portfolio
may desire to "lock-in" the U.S. dollar price of the security or the U.S. dollar
equivalent of such payment, as the case may be, by entering into a forward
contract for the purchase or sale, for a fixed amount of U.S. dollars, of the
amount of foreign currency involved in the underlying transaction. A Portfolio
will thereby be able to protect itself against a possible loss resulting from an
adverse change in the relationship between the currency exchange rates during
the period between the date on which the security is purchased or sold, or on
which the payment is declared, and the date on which such payments are made or
received.
The precise matching of the forward contract amounts and the value of
the securities involved will not generally be possible because the future value
of such securities in foreign currencies will change as a consequence of market
movements in the value of those securities between the date the forward contract
is entered into and the date it matures. Accordingly, it may be necessary for a
Portfolio to purchase additional foreign currency on the spot (i.e., cash)
market (and bear the expense of such purchase) if the market value of the
security is less than the amount of foreign currency the Portfolio is obligated
to deliver and if a decision is made to sell the security and make delivery of
the foreign currency. Conversely, it may be necessary to sell on the spot
market some of the foreign currency received upon the sale of a Portfolio
security if its market value exceeds the amount of foreign currency a Portfolio
is obligated to deliver. The projection of short-term currency market movements
is extremely difficult, and the successful execution of a short-term hedging
strategy is highly uncertain.
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Forward contracts involve the risk that anticipated currency movements will not
be accurately predicted, causing a Portfolio to sustain losses on these
contracts and transaction costs. A Portfolio may enter into a forward contract
and maintain a net exposure on such contract only if (1) the consummation of the
contract would not obligate a Portfolio to deliver an amount of foreign currency
in excess of the value of a Portfolio's portfolio securities or other assets
denominated in that currency or (2) a Portfolio maintains cash, government
securities or liquid, high-grade debt securities in a segregated account in an
amount not less than the value of a Portfolio's total assets committed to the
consummation of the contract which value must be marked to market daily. A
Portfolio will comply with guidelines established by the SEC with respect to
coverage of forward contracts entered into by mutual funds and, if such
guidelines so require, will set aside cash, U.S. government securities or
liquid, high-grade debt securities in a segregated account with its custodian in
the amount prescribed. Under normal circumstances, consideration of the
prospect for currency parities will be incorporated into the longer term
investment decisions made with regard to overall diversification strategies.
However, the Adviser believes that it is important to have the flexibility to
enter into such forward contracts when it determines that the best interests of
a Portfolio will be served.
At or before the maturity date of a forward contract requiring a
portfolio to sell a currency, the Portfolios may either sell a portfolio
security and use the sale proceeds to make delivery of the currency or retain
the security and offset its contractual obligation to deliver the currency by
purchasing a second contract pursuant to which the Portfolio will obtain, on the
same maturity date, the same amount of the currency that it is obligated to
deliver. Similarly, the Portfolios may close out a forward contract requiring
it to purchase a specified currency by entering into a second contract entitling
it to sell the same amount of the same currency on the maturity date of the
first contract. A Portfolio would realize a gain or loss as a result of
entering into such an offsetting forward currency contract under either
circumstance to the extent the exchange rate or rates between the currencies
involved moved between the execution dates of the first contract and the
offsetting contract.
The cost to a Portfolio of engaging in forward currency contracts will
vary with factors such as the currencies involved, the length of the contract
period and the market conditions then prevailing. Because forward currency
contracts are usually entered into on a principal basis, no fees or commissions
are involved. The use of forward currency contracts will not eliminate
fluctuations in the prices of the underlying securities a Portfolio owns or
intends to acquire, but it will fix a rate of exchange in advance. In addition,
although forward currency contracts limit the risk of loss due to a decline in
the value of the hedged currencies, at the same time they limit any potential
gain that might result should the value of the currencies increase.
Although a Portfolio will value its assets daily in terms of U.S.
dollars, it does not intend to convert its holdings of foreign currencies into
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U.S. dollars on a daily basis. The Portfolios may convert foreign currency from
time to time, and investors should be aware of the costs of currency conversion.
Although foreign exchange dealers do not charge a fee for conversion, they do
realize a profit based on the difference between the prices at which they are
buying and selling various currencies. Thus, a dealer may offer to sell a
foreign currency to a Portfolio at one rate, while offering a lesser rate of
exchange should a Portfolio desire to resell that currency to the dealer.
FUTURES CONTRACTS. When a Portfolio purchases a futures contract, it
agrees to purchase a specified underlying instrument at a specified future date.
When a Portfolio sells a futures contract, it agrees to sell the underlying
instrument at a specified future date. The price at which the purchase and sale
will take place is fixed when a Portfolio enters into the contract. The
underlying instrument may be a specified type of security, such as U.S. Treasury
bonds or notes.
The majority of futures contracts are closed out by entering into an
offsetting purchase or sale transaction in the same contract on the exchange
where they are traded, rather than being held for the life of the contract.
Futures contracts are closed out at their current prices, which may result in a
gain or loss.
If a Portfolio holds a futures contract until the delivery date, it
will be required to complete the purchase and sale contemplated by the contract.
In the case of futures contracts on securities, the purchaser generally must
deliver the agreed-upon purchase price in cash, and the seller must deliver
securities that meet the specified characteristics of the contract.
A Portfolio may purchase futures contracts as an alternative to
purchasing actual securities. For example, if a Portfolio intended to purchase
bonds but had not yet done so, it could purchase a futures contract in order to
lock in current bond prices while deciding on particular investments. This
strategy is sometimes known as an anticipatory hedge. Alternatively, a
Portfolio could purchase a futures contract if it had cash and short-term
securities on hand that it wished to invest in longer-term securities, but at
the same time that Portfolio wished to maintain a highly liquid position in
order to be prepared to meet redemption requests or other obligations. In these
strategies a Portfolio would use futures contracts to attempt to achieve an
overall return -- whether positive or negative --similar to the return from
longer-term securities, while taking advantage of potentially greater liquidity
that futures contracts may offer. Although a Portfolio would hold cash and
liquid debt securities in a segregated account with a value sufficient to cover
its open futures obligations, the segregated assets would be available to a
Portfolio immediately upon closing out the futures position, while settlement of
securities transactions can take several days. However, because the Portfolio's
cash that would otherwise have been invested in higher-yielding bonds would be
held uninvested or invested in short-term securities so long as the futures
position remains open, the
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Portfolio's return would involve a smaller amount of interest income and
potentially a greater amount of capital gain or loss.
A Portfolio may sell futures contracts to hedge its other investments
against changes in value, or as an alternative to sales of securities. For
example, if the investment adviser anticipated a decline in bond prices, but did
not wish to sell bonds owned by a Portfolio, it could sell a futures contract in
order to lock in a current sale price. If prices subsequently fell, the future
contract's value would be expected to rise and offset all or a portion of the
loss in the bonds that Portfolio had hedged. Of course, if prices subsequently
rose, the futures contract's value could be expected to fall and offset all or a
portion of the benefit of the Portfolio. In this type of strategy, the
Portfolio's return will tend to involve a larger component of interest income,
because the Portfolio will remain invested in longer-term securities rather than
selling them and investing the proceeds in short-term securities which generally
provide lower yields.
SUPPLEMENTAL INVESTMENT OBJECTIVES AND POLICIES -- BEA INTERNATIONAL
EQUITY, BEA EMERGING MARKETS EQUITY, BEA BALANCED, BEA U.S. CORE
EQUITY, BEA U.S. CORE FIXED INCOME, BEA GLOBAL FIXED INCOME, BEA
STRATEGIC FIXED INCOME AND BEA SHORT DURATION PORTFOLIOS.
FUTURES MARGIN PAYMENTS. The purchaser or seller of a futures
contract is not required to deliver or pay for the underlying instrument unless
the contract is held until the delivery date. However, both the purchaser and
seller are required to deposit "initial margin" with a futures broker (known as
a futures commission merchant, or FCM), when the contract is entered into.
Initial margin deposits are equal to a percentage of the contract's value, as
set by the exchange where the contract is traded, and may be maintained in cash
or high quality liquid securities. If the value of either party's position
declines, that party will be required to make additional "variation margin"
payments to settle the change in value on a daily basis. The party that has a
gain may be entitled to receive all or a portion of this amount. Initial and
variation margin payments are similar to good faith deposits or performance
bonds, unlike margin extended by a securities broker, and initial and variation
margin payments do not constitute purchasing securities on margin for purposes
of the Portfolio's investment limitations. In the event of the bankruptcy of an
FCM that holds margin on behalf of a Portfolio, that Portfolio may be entitled
to return of margin owed to it only in proportion to the amount received by the
FCM's other customers. The investment adviser will attempt to minimize this
risk by careful monitoring of the creditworthiness of the FCMs with which a
Portfolio does business.
CORRELATION OF PRICE CHANGES. The prices of futures contracts depend
primarily on the value of their underlying instruments. Because there are a
limited number of types of futures contracts, it is likely that the standardized
futures contracts available to a Portfolio will not match that Portfolio's
current or anticipated investments. Futures prices can also
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diverge from the prices of their underlying instruments, even if the underlying
instruments match the Portfolio's investments well. Futures prices are affected
by such factors as current and anticipated short-term interest rates, changes in
volatility of the underlying instrument, and the time remaining until expiration
of the contract, which may not affect security prices the same way. Imperfect
correlation between a Portfolio's investments and its futures positions may also
result from differing levels of demand in the futures markets and the securities
markets, from structural differences in how futures and securities are traded,
or from imposition of daily price fluctuation limits for futures contracts. A
Portfolio may purchase or sell futures contracts with a greater or lesser value
than the securities it wishes to hedge or intends to purchase in order to
attempt to compensate for differences in historical volatility between the
futures contract and the securities, although this may not be successful in all
cases. If price changes in a Portfolio's futures positions are poorly
correlated with its other investments, its futures positions may fail to produce
anticipated gains or result in losses that are not offset by the gains in that
Portfolio's other investments.
LIQUIDITY OF FUTURES CONTRACTS. Because futures contracts are
generally settled within a day from the date they are closed out, compared with
a settlement period of seven days for some types of securities, the futures
markets can provide liquidity superior to the securities markets in many cases.
Nevertheless, there is no assurance a liquid secondary market will exist for any
particular futures contract at any particular time. In addition, futures
exchanges may establish daily price fluctuation limits for futures contracts,
and may halt trading if a contract's price moves upward or downward more than
the limit in a given day. On volatile trading days when the price fluctuation
limit is reached, it may be impossible for a Portfolio to enter into new
positions or close out existing positions. If the secondary market for a
futures contract is not liquid because of price fluctuation limits or otherwise,
it would prevent prompt liquidation of unfavorable futures positions, and
potentially could require a Portfolio to continue to hold a futures position
until the delivery date regardless of changes in its value. As a result, a
Portfolio's access to other assets held to cover its futures positions could
also be impaired.
PURCHASING PUT OPTIONS. By purchasing a put option, a Portfolio
obtains the right (but not the obligation) to sell the option's underlying
instrument at a fixed strike price. The option may give a Portfolio the right
to sell only on the option's expiration date, or may be exercisable at any time
up to and including that date. In return for this right, a Portfolio pays the
current market price for the option (known as the option premium). The option's
underlying instrument may be a security, or a futures contract.
A Portfolio may terminate its position in a put option it has
purchased by allowing it to expire or by exercising the option. If the option
is allowed to expire, the Portfolio will lose the entire premium it paid. If
the Portfolio exercises the option, it completes the sale of the underlying
instrument at the strike price. If the Portfolio exercises a put option on a
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futures contract, it assumes a seller's position in the underlying futures
contract. Purchasing an option on a futures contract does not require the
Portfolio to make futures margin payments unless it exercises the option. A
Portfolio may also terminate a put option position by closing it out in the
secondary market at its current price, if a liquid secondary market exists.
Put options may be used by a Portfolio to hedge securities it owns, in
a manner similar to selling futures contracts, by locking in a minimum price at
which the Portfolio can sell. If security prices fall, the value of the put
option would be expected to rise and offset all or a portion of the Portfolio's
resulting losses. However, option premiums tend to decrease over time as the
expiration date nears. Therefore, because of the cost of the option in the form
of the premium (and transaction costs), a Portfolio would expect to suffer a
loss in the put option if prices do not decline sufficiently to offset the
deterioration in the value of the option premium. At the same time, because the
maximum a Portfolio has at risk is the cost of the option, purchasing put
options does not eliminate the potential for the Portfolio to profit from an
increase in the value of the securities hedged to the same extent as selling a
futures contract.
PURCHASING CALL OPTIONS. The features of call options are essentially
the same as those of put options, except that the purchaser of a call option
obtains the right to purchase, rather than sell, the underlying instrument at
the option's strike price (call options on futures contracts are settled by
purchasing the underlying futures contract). By purchasing a call option, a
Portfolio would attempt to participate in potential price increases of the
underlying instrument, with results similar to those obtainable from purchasing
a futures contract, but with risk limited to the cost of the option if security
prices fell. At the same time, a Portfolio can expect to suffer a loss if
security prices do not rise sufficiently to offset the cost of the option.
The Portfolios may purchase call options in connection with "closing
purchase transactions." A Portfolio may terminate its position in a call option
by entering into a closing purchase transaction. A closing purchase transaction
is the purchase of a call option on the same security with the same exercise
price and call period as the option previously written by the Portfolio. If a
Portfolio is unable to enter into a closing purchase transaction, a Portfolio
may be required to hold a security that it might otherwise have sold to protect
against depreciation.
WRITING PUT OPTIONS. When a Portfolio writes a put option, it takes
the opposite side of the transaction from the option's purchaser. In return for
receipt of the premium, a Portfolio assumes the obligation to pay the strike
price for the option's underlying instrument if the other party to the option
chooses to exercise it. When writing an option on a futures contract the
Portfolio will be required to make margin payments to an FCM as described above
for futures contracts. A Portfolio may seek to terminate its position in a put
option it writes before exercise by closing out the option in the secondary
market at its current price. If the secondary market is not
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liquid for an option the Portfolio has written, however, the Portfolio must
continue to be prepared to pay the strike price while the option is outstanding,
regardless of price changes, and must continue to set aside assets to cover its
position.
A Portfolio may write put options as an alternative to purchasing
actual securities. If security prices rise, the Portfolio would expect to
profit from a written put option, although its gain would be limited to the
amount of the premium it received. If security prices remain the same over
time, it is likely that the Portfolio will also profit, because it should be
able to close out the option at a lower price. If security prices fall, the
Portfolio would expect to suffer a loss. This loss should be less than the loss
the Portfolio would have experienced from purchasing the underlying instrument
directly, however, because the premium received for writing the option should
mitigate the effects of the decline. As with other futures and options
strategies used as alternatives for purchasing securities, the Portfolio's
return from writing put options generally will involve a smaller amount of
interest income than purchasing longer-term securities directly, because the
Portfolio's cash will be invested in shorter-term securities which usually offer
lower yields.
WRITING CALL OPTIONS. Writing a call option obligates a Portfolio to
sell or deliver the option's underlying instrument, in return for the strike
price, upon exercise of the option. The characteristics of writing call options
are similar to those of writing put options, as described above, except that
writing covered call options generally is a profitable strategy if prices remain
the same or fall. Through receipt of the option premium, the Portfolio would
seek to mitigate the effects of a price decline. At the same time, because a
Portfolio would have to be prepared to deliver the underlying instrument in
return for the strike price, even if its current value is greater, the Portfolio
would give up some ability to participate in security price increases when
writing call options.
COMBINED OPTION POSITIONS. A Portfolio may purchase and write options
in combination with each other to adjust the risk and return characteristics of
the overall position. For example, a Portfolio may purchase a put option and
write a call option on the same underlying instrument, in order to construct a
combined position whose risk and return characteristics are similar to selling a
futures contract. Another possible combined position would involve writing a
call option at one strike price and buying a call option at a lower price, in
order to reduce the risk of the written call option in the event of a
substantial price increase. Because combined options positions involve multiple
trades, they result in higher transaction costs and may be more difficult to
open and close out.
RISKS OF OPTIONS TRANSACTIONS. Options are subject to risks similar
to those described above with respect to futures contracts, including the risk
of imperfect correlation between the option and a Portfolio's other investments
and the risk that there might not be a liquid secondary market for the option.
In the case of options on futures contracts, there is also a risk
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of imperfect correlation between the option and the underlying futures contract.
Options are also subject to the risks of an illiquid secondary market,
particularly in strategies involving writing options, which a Portfolio cannot
terminate by exercise. In general, options whose strike prices are close to
their underlying instruments' current value will have the highest trading
volume, while options whose strike prices are further away may be less liquid.
The liquidity of options may also be affected if options exchanges impose
trading halts, particularly when markets are volatile.
ASSET COVERAGE FOR FUTURES AND OPTIONS POSITIONS. A Portfolio will
not use leverage in its options and futures strategies. Such investments will
be made for hedging purposes only. A Portfolio will hold securities or other
options or futures positions whose values are expected to offset its obligations
under the hedge strategies. A Portfolio will not enter into an option or
futures position that exposes the Portfolio to an obligation to another party
unless it owns either (i) an offsetting position in securities or other options
or futures contracts or (ii) cash, receivables and short-term debt securities
with a value sufficient to cover its potential obligations. A Portfolio will
comply with guidelines established by the SEC with respect to coverage of
options and futures strategies by mutual funds, and if the guidelines so require
will set aside cash and high grade liquid debt securities in a segregated
account with its custodian bank in the amount prescribed. Securities held in a
segregated account cannot be sold while the futures or option strategy is
outstanding, unless they are replaced with similar securities. As a result,
there is a possibility that segregation of a large percentage of the Portfolio's
assets could impede portfolio management or the Portfolio's ability to meet
redemption requests or other current obligations.
LIMITATIONS ON FUTURES AND OPTIONS TRANSACTIONS. The Fund on behalf
of the Portfolios will file, if required, a notice of eligibility for exclusion
from the definition of the term "commodity pool operator" with the Commodity
Futures Trading Commission ("CFTC") and the National Futures Association, which
regulate trading in the futures markets. Pursuant to Section 4.5 of the
regulations under the Commodity Exchange Act, the notice of eligibility includes
the following representations:
(a) The Portfolios will use commodity futures contracts and related
commodity options for bona fide hedging purposes within the meaning of CFTC
regulations; provided that a Portfolio may hold long positions in commodity
futures contracts and related commodity options that in addition do not fall
within the definition of bona fide hedging transactions if the positions are
used as part of a portfolio management strategy and are incidental to a
Portfolio's activities in the underlying cash market, and the aggregate initial
margin and premiums required to establish such positions will not exceed five
percent of the liquidation value of the Portfolio's total assets, after taking
into account unrealized profits and unrealized losses on any such contracts it
has entered into; and
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(b) The Portfolios will not enter into any commodity futures contract
or option on a commodity futures contract if, as a result, the sum of initial
margin deposits on commodity futures contracts and related commodity options and
premiums paid for options on commodity futures contracts the Portfolio has
purchased, after taking into account unrealized profits and losses on such
contracts, would exceed 5% of a Portfolio's total assets.
In addition, the Portfolios will not enter into any futures contract
and neither Portfolio will enter into any option if, as a result, the sum of (i)
the current value of assets hedged in the case of strategies involving the sale
of securities, and (ii) the current value of securities or other instruments
underlying the respective Portfolio's other futures or options positions, would
exceed 50% of such Portfolio's net assets.
The Portfolios' limitations on investments in futures contracts and
its policies regarding futures contracts and the Portfolios' limitations on
investments in options and their policies regarding options discussed above in
this Statement of Additional Information, are not fundamental policies and may
be changed as regulatory agencies permit.
Various exchanges and regulatory authorities have recently undertaken
reviews of options and futures trading in light of market volatility. Among the
possible actions that have been presented are proposals to adopt new or more
stringent daily price fluctuation limits for futures or options transactions,
and proposals to increase the margin requirements for various types of
strategies. It is impossible to predict what actions, if any, will result from
these reviews at this time.
SHORT SALES "AGAINST THE BOX." In a short sale, a Portfolio sells a
borrowed security and has a corresponding obligation to the lender to return the
identical security. Each Portfolio may engage in short sales if at the time of
the short sale it owns or has the right to obtain, at no additional cost, an
equal amount of the security being sold short. This investment technique is
known as a short sale "against the box." In a short sale, a seller does not
immediately deliver the securities sold and is said to have a short position in
those securities until delivery occurs. If a Portfolio engages in a short sale,
the collateral for the short position will be maintained by the Portfolio's
custodian or a qualified sub-custodian. While the short sale is open, the
Portfolio will maintain in a segregated account an amount of securities equal in
kind and amount to the securities sold short or securities convertible into or
exchangeable for such equivalent securities. These securities constitute the
Portfolio's long position. A Portfolio may, however, make a short sale as a
hedge, when it believes that the price of a security may decline, causing a
decline in the value of a security owned by the Portfolio (or a security
convertible or exchangeable for such security), or when the Portfolio wants to
sell the security at an attractive current price, but also wishes to defer
recognition of gain or loss for federal income tax purposes and for purposes of
satisfying certain tests applicable to regulated investment companies under the
Internal Revenue Code. In such case, any future losses in the Portfolio's long
position should be reduced by a gain
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in the short position. Conversely, any gain in the long position should be
reduced by a loss in the short position. The extent to which such gains or
losses are reduced will depend upon the amount of the security sold short
relative to the amount the Portfolio owns. There will be certain additional
transaction costs associated with short sales against the box, but the Portfolio
will endeavor to offset these costs with the income from the investment of the
cash proceeds of short sales.
SECTION 4(2) PAPER. "Section 4(2) paper" is commercial paper which is
issued in reliance on the "private placement" exemption from registration which
is afforded by Section 4(2) of the Securities Act of 1933. Section 4(2) paper
is restricted as to disposition under the Federal securities laws and is
generally sold to institutional investors such as the Fund which agree that they
are purchasing the paper for investment and not with a view to public
distribution. Any resale by the purchaser must be in an exempt transaction.
Section 4(2) paper normally is resold to other institutional investors through
or with the assistance of investment dealers who make a market in the Section
4(2) paper, thereby providing liquidity. See "Illiquid Securities" above.
SUPPLEMENTAL INVESTMENT OBJECTIVES AND POLICIES -- BEA INTERNATIONAL
EQUITY, BEA EMERGING MARKETS EQUITY, BEA U.S. CORE EQUITY AND BEA
BALANCED PORTFOLIOS
RIGHTS OFFERINGS AND PURCHASE WARRANTS. Rights offerings and purchase
warrants are privileges issued by a corporation which enable the owner to
subscribe to and purchase a specified number of shares of the corporation at a
specified price during a specified period of time. Subscription rights normally
have a short lifespan to expiration. The purchase of rights or warrants
involves the risk that a Portfolio could lose the purchase value of a right or
warrant if the right to subscribe to additional shares is not executed prior to
the rights and warrants expiration. Also, the purchase of rights and/or
warrants involves the risk that the effective price paid for the right and/or
warrant added to the subscription price of the related security may exceed the
value of the subscribed security's market price such as when there is no
movement in the level of the underlying security.
INVESTMENT LIMITATIONS
Each Portfolio has adopted the following fundamental investment
limitations which may not be changed without the affirmative vote of the holders
of a majority of the Portfolio's outstanding Shares (as defined in Section
2(a)(42) of the Investment Company Act). Each Portfolio may not:
1. Borrow money, except from banks, and only if after such borrowing
there is asset coverage of at least 300% for all borrowings of the Portfolio; or
mortgage, pledge or hypothecate any of its assets except in connection with any
such borrowing and in amounts not in excess of the lesser
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of the dollar amounts borrowed or 33 1/3% of the value of the Portfolio's total
assets at the time of such borrowing; (For the purpose of this restriction,
collateral arrangements with respect to, if applicable, the writing of options,
and futures contracts, options on futures contracts, forward currency contracts
and collateral arrangements with respect to initial and variation margin are not
deemed to be a pledge of assets and neither such arrangements nor the purchase
or sale of futures or related options are deemed to be the issuance of a senior
security for purposes of Investment Limitation No. 2);
2. Issue any senior securities, except as permitted under the
Investment Company Act;
3. Act as an underwriter of securities within the meaning of the
Securities Act of 1933 except insofar as it might be deemed to be an underwriter
upon disposition of certain portfolio securities acquired within the limitation
on purchases of restricted securities;
4. Purchase or sell real estate (including real estate limited
partnership interests), provided that a Portfolio may invest in securities
secured by real estate or interests therein or issued by companies that invest
in real estate or interests therein;
5. Purchase or sell commodities or commodity contracts, except that
a Portfolio may deal in forward foreign exchange between currencies of the
different countries in which it may invest and purchase and sell stock index and
currency options, stock index futures, financial futures and currency futures
contracts and related options on such futures;
6. Make loans, except through loans of portfolio instruments and
repurchase agreements, provided that for purposes of this restriction the
acquisition of bonds, debentures or other debt instruments or interests therein
and investment in government obligations, Loan Participations and Assignments,
short-term commercial paper, certificates of deposit and bankers' acceptances
shall not be deemed to be the making of a loan; and
7. Invest more than 25% of its assets, taken at market value at the
time of each investment, in the securities of issuers in any particular industry
(excluding the U.S. Government and its agencies and instrumentalities).
In addition to the fundamental investment limitations specified above,
a Portfolio may not:
1. Make investments for the purpose of exercising control or
management. Investments by a Portfolio in wholly-owned investment entities
created under the laws of certain countries will not be deemed the making
of investments for the purpose of exercising control or management;
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2. Purchase securities on margin, except for short-term credits
necessary for clearance of portfolio transactions, and except that a
Portfolio may make margin deposits in connection with its use of options,
futures contracts, options on futures contracts and forward contracts;
3. Purchase or sell interests in mineral leases, oil, gas or
other mineral exploration or development programs, except that a Portfolio
may invest in securities issued by companies that engage in oil, gas or
other mineral exploration or development activities; and
4. Purchase or retain the securities of any issuer, if those
individual officers and directors of the Fund, the Adviser or any
subsidiary thereof each owning beneficially more than 1/2 of 1% of the
securities of such issuer own in the aggregate more than 5% of the
securities of such issuer.
The policies set forth above are not fundamental and thus may be
changed by the Fund's Board of Directors without a vote of the shareholders.
In order to permit the sale of the Portfolios in certain states, the
Fund on behalf of a Portfolio has undertaken to adhere to the following
investment policies, each of which may be changed without shareholder approval:
(1) That the dollar amount of short sales at any one time shall
not exceed 25% of the net equity of a Portfolio, and the value of
securities of any one issuer in which a Portfolio is short may not exceed
the lesser of 2.0% of the value of a Portfolio's net assets or 2.0% of the
securities of any class of any issuer. Short sales may be made only in
those securities which are fully listed on a national securities exchange.
This provision does not include the sale of securities if the Portfolio
contemporaneously owns or has the right to obtain securities equivalent in
kind and amount to those sold, i.e., short sales against the box.
(2) That the investment in warrants, valued at the lower of cost
or market, may not exceed 5.0% of the value of a Portfolio's net assets.
Included within that amount, but not to exceed 2.0% of the value of a
Portfolio's net assets, may be warrants which are not listed on the New
York or American Stock Exchange. Warrants acquired by a Portfolio in units
or attached to securities may be deemed to be without value.
Except for the percentage restrictions applicable to the borrowing of
money, if a percentage restriction is adhered to at the time of investment, a
later increase or decrease in percentage resulting from a change in market
values of portfolio securities or amount of total or net assets will not be
considered a violation of any of the foregoing restrictions.
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In order to permit the sale of shares of a Portfolio in certain
states, a Portfolio may make commitments more restrictive than the investment
policies and limitations above. If a Portfolio determines that any such
commitment is no longer in its best interests, it will revoke the commitment by
terminating sales of its shares in the state involved. In addition, a Portfolio
may be subject to investment restrictions imposed by countries in which it
invests directly or indirectly.
Securities held by a Portfolio generally may not be purchased from,
sold or loaned to the Adviser or its affiliates or any of their directors,
officers or employees, acting as principal, unless pursuant to a rule or
exemptive order under the Investment Company Act.
RISK FACTORS
CLEARANCE AND SETTLEMENT PROCEDURES. Delays in clearance and
settlement could result in temporary periods when assets of a Portfolio are
uninvested and no return is earned thereon. The inability of a Portfolio to
make intended security purchases due to settlement problems could cause a
Portfolio to miss attractive investment opportunities. Inability to dispose of
a portfolio security due to settlement problems could result either in losses to
a Portfolio due to subsequent declines in the value of such portfolio security
or, if a Portfolio has entered into a contract to sell the security, could
result in possible liability to the purchaser.
OPERATING EXPENSES. The costs attributable to foreign investing that
a Portfolio must bear frequently are higher than those attributable to domestic
investing. For example, the cost of maintaining custody of foreign securities
exceeds custodian costs for domestic securities. Investment income on certain
foreign securities in which a Portfolio may invest may be subject to foreign
withholding or other taxes that could reduce the return on those securities.
Tax treaties between the United States and foreign countries, however, may
reduce or eliminate the amount of foreign tax to which a Portfolio would be
subject.
NO RATING CRITERIA FOR DEBT SECURITIES. The BEA U.S. Core Fixed
Income, the BEA Global Fixed Income, and BEA Municipal Bond Fund Portfolios have
established no rating criteria for the debt securities in which it may invest.
Issuers of low rated or non-rated securities ("high yield" securities, commonly
known as "junk bonds") may be highly leveraged and may not have available to
them more traditional methods of financing. Therefore, the risks associated
with acquiring the securities of such issuers generally is greater than is the
case with higher rated securities. For example, during an economic downturn or
a sustained period of rising interest rates, issuers of high yield securities
may be more likely to experience financial stress, especially if such issuers
are highly leveraged. During such periods, such issuers may not have sufficient
revenues to meet their interest payment obligations. The issuer's ability to
service its debt obligations also may be adversely affected by specific issuer
developments, or the issuer's inability
25
<PAGE>
to meet specific projected business forecasts, or the unavailability of
additional financing. The risk of loss due to default by the issuer is
significantly greater for the holders of lower-rated securities because such
securities may be unsecured and may be subordinated to other creditors of the
issuer.
Lower-rated securities frequently have call or redemption features
which would permit an issuer to repurchase the security from a Portfolio. If a
call were exercised by the issuer during a period of declining interest rates, a
Portfolio likely would have to replace such called security with a lower
yielding security, thus decreasing the net investment income to a Portfolio and
dividends to shareholders.
A Portfolio may have difficulty disposing of certain lower-rated
securities because there may be a thin trading market for such securities. The
secondary trading market for high yield securities is generally not as liquid as
the secondary market for higher rated securities. Reduced secondary market
liquidity may have an adverse impact on market price and a Portfolio's ability
to dispose of particular issues when necessary to meet a Portfolio's liquidity
needs or in response to a specific economic event such as a deterioration in the
creditworthiness of the issuer.
Adverse publicity and investor perceptions, which may not be based on
fundamental analysis, also may decrease the value and liquidity of lower-rated
securities, particularly in a thinly traded market. Factors adversely affecting
the market value of lower-rated securities are likely to adversely affect the
Portfolio's net asset value. In addition, a Portfolio may incur additional
expenses to the extent it is required to seek recovery upon a default on a
portfolio holding or participate in the restructuring of the obligation.
SOVEREIGN DEBT. Investments in Sovereign Debt involve special risks.
The issuer of the debt or the governmental authorities that control the
repayment of the debt may be unable or unwilling to repay principal or interest
when due in accordance with the terms of such debt, and the Portfolio may have
limited legal recourse in the event of a default.
Sovereign Debt differs from debt obligations issued by private
entities in that, generally, remedies for defaults must be pursued in the courts
of the defaulting party. Legal recourse is therefore somewhat limited.
Political conditions, especially a sovereign entity's willingness to meet the
terms of its debt obligations, are of considerable significance. Also, there
can be no assurance that the holders of commercial bank loans to the same
sovereign entity may not contest payments to the holders of Sovereign Debt in
the event of default under commercial bank loan agreements.
A sovereign debtor's willingness or ability to repay principal and pay
interest in a timely manner may be affected by, among other factors, its cash
flow situation, the extent of its foreign reserves, the availability of
sufficient foreign exchange on the date a payment is due, the relative size of
26
<PAGE>
the debt service burden to the economy as a whole, the sovereign debtor's policy
toward principal international lenders and the political constraints to which a
sovereign debtor may be subject. Increased protectionism on the part of a
country's trading partners, or political changes in those countries, could also
adversely affect its exports. Such events could diminish a country's trade
account surplus, if any, or the credit standing of a particular local government
or agency.
The occurrence of political, social or diplomatic changes in one or
more of the countries issuing Sovereign Debt could adversely affect a
Portfolio's investments. Political changes or a deterioration of a country's
domestic economy or balance of trade may affect the willingness of countries to
service their Sovereign Debt. While the Adviser intends to manage the
Portfolios in a manner that will minimize the exposure to such risks, there can
be no assurance that adverse political changes will not cause a Portfolio to
suffer a loss of interest or principal on any of its holdings.
Investors should also be aware that certain Sovereign Debt instruments
in which a Portfolio may invest involve great risk. Sovereign Debt issued by
issuers in many Emerging Markets generally is deemed to be the equivalent in
terms of quality to securities rated below investment grade by Moody's and S&P.
Such securities are regarded as predominantly speculative with respect to the
issuer's capacity to pay interest and repay principal in accordance with the
terms of the obligations and involve major risk exposure to adverse conditions.
Some of such Sovereign Debt, which may not be paying interest currently or may
be in payment default, may be comparable to securities rated D by S&P or C by
Moody's. A Portfolio may have difficulty disposing of certain Sovereign Debt
obligations because there may be a limited trading market for such securities.
Because there is no liquid secondary market for many of these securities, a
Portfolio anticipates that such securities could be sold only to a limited
number of dealers or institutional investors. The lack of a liquid secondary
market may have an adverse impact on the market price of such securities and a
Portfolio's ability to dispose of particular issues when necessary to meet a
Portfolio's liquidity needs or in response to a specific economic event, such as
a deterioration in the creditworthiness of the issuer. The lack of a liquid
secondary market for certain securities also may make it more difficult for a
Portfolio to obtain accurate market quotations for purposes of valuing a
Portfolio's portfolio and calculating its net asset value. When and if
available, fixed income securities may be purchased by a Portfolio at a discount
from face value. However, a Portfolio does not intend to hold such securities
to maturity for the purpose of achieving potential capital gains, unless current
yields on these securities remain attractive. From time to time a Portfolio may
purchase securities not paying interest at the time acquired if, in the opinion
of the Adviser, such securities have the potential for future income or capital
appreciation.
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<PAGE>
DIRECTORS AND OFFICERS
The directors and executive officers of the Fund, their business
addresses and principal occupations during the past five years are:
Principal Occupation
Name and Address Position with Fund During Past Five Years
- ---------------- ------------------ ----------------------
Arnold M. Reichman* Director Since 1986, Managing
466 Lexington Avenue Director and Assistant
New York, NY 10017 Secretary, E. M. Warburg,
Pincus & Co., Inc.; Since
1990, Chief Executive
Officer and since 1991,
Secretary, Counsellors
Securities, Inc; Officer
of various investment
companies advised by
Warburg, Pincus
Counsellors, Inc.
Robert Sablowsky** Director Since 1985, Executive
14 Wall Street Vice President of
New York, NY 10005 Gruntal & Co., Inc.,
Director, Gruntal & Co.,
Inc. and Gruntal Financial
Corp.
Francis J. McKay Director Since 1963, Executive
7701 Burholme Avenue Vice President, Fox Chase
Philadelphia, PA 1911 Cancer Center (Biomedical
research and medical
care.)
Marvin E. Sternberg Director Since 1974, Chairman,
937 Mt. Pleasant Road Director and President,
Bryn Mawr, PA 19010 Moyco Industries, Inc.
(manufacturer of dental
supplies and precision
coated abrasives); Since
1968, Director and
President, Mart MMM, Inc.
(formerly Montgomeryville
Merchandise Mart Inc.) and
Mart PMM, Inc. (formerly
Pennsauken Merchandise
Mart, Inc.) (Shopping
Centers); and Since 1975,
Director and Executive
Vice President, Cellucap
Mfg. Co., Inc.
(manufacturer of
disposable headwear).
28
<PAGE>
Principal Occupation
Name and Address Position with Fund During Past Five Years
- ---------------- ------------------ ----------------------
Julian A. Brodsky Director Director, Vice Chairman
Comcast Corporation 1969 to present, Comcast
1234 Market Street Corporation (cable
16th Floor television and
Philadelphia, PA 19107-3723 communications); Director,
Comcast Cablevision of
Philadelphia (cable
television communications)
and Nextel (wireless
communications).
Donald van Roden Director Self-employed
1200 Old Mill Lane businessman.
Wyomissing, PA 19610 From February 1980 to
March 1987, Vice Chairman,
Smith Kline Beckman
Corporation
(pharmaceuticals);
Director, AAA Mid-Atlantic
(auto service); Director,
Keystone Insurance Co.
Edward J. Roach President and Certified Public
Accountant; Treausurer Vice Chairman of the
Bellevue Park of the Board, Fox Chase
Corporate Center Cancer Center; Vice
400 Bellevue Parkway President and Trustee,
Wilmington, DE 19809 Pennsylvania School
for the Deaf; Trustee,
Immaculata College; Vice
President and Treasurer of
various investment
companies advised by PNC
Institutional Management
Corporation.
Morgan R. Jones Secretary Chairman of the law firm
1100 PNB Bank Building of Drinker Biddle & Reath,
Broad and Chestnut Streets Philadelphia,
Philadelphia, PA 19107 Pennsylvania;
Director, Rocking Horse
Child Care Centers of
America, Inc.
- --------------
* Mr. Reichman is an "interested person" of the Fund as that term is defined
in the 1940 Act by virtue of his position with Counsellors Securities Inc.,
the Fund's distributor.
** Mr. Sablowsky is an "interested person" of the Fund as that term is defined
in the 1940 Act by virtue of his position with Gruntal & Co., Inc., a
broker-dealer.
Messrs. McKay, Sternberg and Brodsky are members of the Audit
Committee of the Board of Directors. The Audit Committee, among other things,
reviews results of the annual audit and recommends to the Fund the firm to be
selected as independent auditors.
29
<PAGE>
Messrs. Reichman, McKay and van Roden are members of the Executive
Committee of the Board of Directors. The Executive Committee may generally
carry on and manage the business of the Fund when the Board of Directors is not
in session.
Messrs. McKay, Sternberg, Brodsky and van Roden are members of the
Nominating Committee of the Board of Directors. The Nominating Committee
recommends to the Board annually all persons to be nominated as directors of the
Fund.
The Fund pays directors who are not "affiliated persons" (as that term
is defined in the 1940 Act) of any Investment Adviser of sub-advisor of the Fund
or the Distributor $9,500 annually and $700 per meeting of the Board or any
committee thereof that is not held in conjunction with a Board meeting. Such
Directors are reimbursed for any expenses incurred in attending meetings of the
Board of Directors or any committee thereof. The Chairman (currently Donald von
Rodeu) receives an additional $5,000 for his services. For the year ended
August 31, 1995, Directors and officers of the Fund received compensation and
reimbursement of expenses in the aggregate amount of $________. On October 24,
1990 the Fund adopted, as a participating employer, the Fund Office Retirement
Profit-Sharing Plan and Trust Agreement, a retirement plan for employees
(currently Edward J. Roach) pursuant to which the Fund will contribute on a
monthly basis amounts equal to 10% of the monthly compensation of each eligible
employee. By virtue of the services performed by PNC Institutional Management
Corporation ("PIMC"), the Fund's adviser to certain investment portfolios of the
Fund, BEA Associates ("BEA Associates"), the Fund's adviser to the BEA
Portfolios, Warburg Pincus Counsellors, Inc. (Warburg"), the Fund's adviser to
the Warburg Pincus Portfolios, PNC Bank, National Association ("PNC Bank"), the
Fund's custodian, and Counsellors Securities Inc. (the "Distributor"), the
Fund's distributor, the Fund itself requires only one part-time employee. No
officer, director or employee of PIMC, BEA, PNC Bank or the Distributor
currently receives any compensation from the Fund.
INVESTMENT ADVISORY AND SERVICING ARRANGEMENTS
ADVISORY AGREEMENTS. BEA Associates renders advisory and
administrative services to each of the Portfolios pursuant to Investment
Advisory Agreements. The Advisory Agreements relating to the Portfolios are
dated September 16, 1992 for the BEA International Equity, BEA Emerging Markets
Equity and BEA Strategic Fixed Income Portfolios, dated August 31, 1993 for the
BEA U.S. Core Equity, BEA U.S. Core Fixed Income, BEA Global Fixed Income and
BEA Municipal Bond Fund Portfolios, and dated November 17, 1994 for the BEA
Balanced and BEA Short Duration Portfolios. Such advisory agreements are
hereinafter collectively referred to as the "Advisory Contracts."
30
<PAGE>
BEA Associates is a diversified asset manager, handling global equity,
balanced, fixed income and derivative securities accounts for private
individuals, as well as corporate pension and profit-sharing plans, state
pension funds, union funds, endowments and other charitable institutions. As of
______________, 1995, BEA Associates managed approximately $____ billion in
assets. BEA Associates is a general partnership organized under the laws of the
State of New York and, together with it predecessor firms, has been engaged in
the investment advisory business for over 50 years. Credit Suisse Capital
Corporation ("CS Capital") is an 80% partner and Basic Appraisals, Inc. is a 20%
partner in BEA Associates. CS Capital is a wholly-owned subsidiary of Credit
Suisse Investment Corporation, which is a wholly-owned subsidiary of Credit
Suisse, the second largest Swiss bank, which in turn is subsidiary of CS
Holding, a Swiss corporation. No one person or entity possesses a controlling
interest in Basic Appraisals, Inc. BEA Associates is registered as an
investment adviser under the Investment Advisers Act of 1940, as amended.
BEA Associates has sole investment discretion for the Portfolios and
will make all decisions affecting assets in the Portfolios under the supervision
of the Fund's Board of Directors and in accordance with each Portfolio's stated
policies. BEA Associates will select investments for the Portfolios and will
place purchase and sale orders on behalf of the Portfolios. For its services to
the BEA International Equity, BEA Emerging Markets Equity, BEA U.S. Core Equity,
BEA U.S. Core Fixed Income, BEA Global Fixed Income, BEA Strategic Fixed Income,
BEA Municipal Bond Fund, BEA Balanced and BEA Short Duration Portfolios, BEA
Associates will be paid a monthly fee computed at an annual rate of .80%, 1.00%,
.75%, .375%, .50%, .70%, .70%, .60% and .15% of average daily net assets,
respectively.
For the year ended August 31, 1995, BEA waived advisory fees with
respect to the BEA International Equity, BEA Emerging Markets Equity, BEA
Strategic Fixed Income, BEA U.S. Core Fixed Income, BEA Global Fixed Income and
BEA Municipal Bond Fund Portfolios in the amount of $______________,
$________________, $______________, $_______________, and $______________,
respectively. During the same period, BEA received advisory fees (after
waivers) in the amount of $________________, $______________, $____________,
$______________, AND $_______________, respectively.
As required by various state regulations, BEA Associates will
reimburse the Fund or the Portfolio affected (as applicable) if and to the
extent that the aggregate operating expenses of the Fund or the Portfolio
affected exceed applicable state limits for the fiscal year, to the extent
required by such state regulations. Currently, the most restrictive of such
applicable limits is believed to be 2-1/2% of the first $30 million of average
annual net assets, 2% of the next $70 million of average annual net assets and
1 1/2% of the remaining average annual net assets. Certain expenses, such as
brokerage commissions, taxes, interest and extraordinary items, are excluded
from this limitation. Whether such expense limitations apply to the Fund as a
whole or to each Portfolio on an individual basis depends upon the particular
regulations of such states.
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<PAGE>
Each Portfolio bears all of its own expenses not specifically assumed
by the Adviser. General expenses of the Fund not readily identifiable as
belonging to a Portfolio of the Fund are allocated among all investment
Portfolios by or under the direction of the Fund's Board of Directors in such
manner as the Board determines to be fair and equitable. Expenses borne by a
Portfolio include, but are not limited to, the following (or a Portfolio's share
of the following): (a) the cost (including brokerage commissions) of securities
purchased or sold by a Portfolio and any losses incurred in connection
therewith; (b) fees payable to and expenses incurred on behalf of a Portfolio by
BEA Associates; (c) expenses of organizing the Fund that are not attributable to
a class of the Fund; (d) certain of the filing fees and expenses relating to the
registration and qualification of the Fund and a Portfolio's shares under
Federal and/or state securities laws and maintaining such registrations and
qualifications; (e) fees and salaries payable to the Fund's directors and
officers; (f) taxes (including any income or franchise taxes) and governmental
fees; (g) costs of any liability and other insurance or fidelity bonds; (h) any
costs, expenses or losses arising out of a liability of or claim for damages or
other relief asserted against the Fund or a Portfolio for violation of any law;
(i) legal, accounting and auditing expenses, including legal fees of special
counsel for the independent directors; (j) charges of custodians and other
agents; (k) expenses of setting in type and printing prospectuses, statements of
additional information and supplements thereto for existing shareholders,
reports, statements, and confirmations to shareholders and proxy material that
are not attributable to a class; (l) costs of mailing prospectuses, statements
of additional information and supplements thereto to existing shareholders, as
well as reports to shareholders and proxy material that are not attributable to
a class; (m) any extraordinary expenses; (n) fees, voluntary assessments and
other expenses incurred in connection with membership in investment company
organizations; (o) costs of mailing and tabulating proxies and costs of
shareholders' and directors' meetings; (p) costs of PFPC's use of independent
pricing services to value a Portfolio's securities; and (q) the cost of
investment company literature and other publications provided by the Fund to its
directors and officers. Transfer agency expenses, expenses of preparation,
printing and mailing prospectuses, statements of additional information, proxy
statements and reports to shareholders, organizational expenses and registration
fees and other costs identified as belonging to a particular class of the Fund
are allocated to such class.
Under the Advisory Contracts, BEA Associates will not be liable for
any error of judgment or mistake of law or for any loss suffered by the Fund or
a Portfolio in connection with the performance of the Advisory Contracts, and
shall be indemnified for any losses and expenses in connection with any claim
relating thereto, except a loss resulting from willful misfeasance, bad faith or
gross negligence on the part of BEA Associates in the performance of its duties
or reckless disregard by it of its obligations and duties under the Advisory
Contracts.
The Advisory Contracts were approved on July 26, 1995, by vote of the
Fund's Board of Directors, including a majority of those directors who
32
<PAGE>
are not parties to the Advisory Contracts or interested persons (as defined in
the 1940 Act) of such parties. The Advisory Contracts were approved by each
Portfolio's initial shareholder. Each Advisory Contract is terminable by vote
of the Fund's Board of Directors or by the holders of a majority of the
outstanding voting securities of the relevant Portfolio, at any time without
penalty, on 60 days' written notice to BEA Associates. Each of the Advisory
Contracts may also be terminated by BEA Associates on 60 days' written notice to
the Fund. Each of the Advisory Contracts terminates automatically in the event
of assignment thereof.
CUSTODIAN AND TRANSFER AGENCY AGREEMENTS. PNC Bank, National
Association ("PNC"), serves as custodian for the BEA Municipal Bond Fund
pursuant to a custodian agreement (the "PNC Custodian Agreement"). PNC's
principal business address is 17th and Chestnut Streets, Philadelphia,
Pennsylvania 19103. Brown Brothers Harriman & Co. ("BBH") acts as the custodian
for the remaining Portfolios and also acts as the custodian for the Portfolios'
foreign securities pursuant to a Custodian Agreement (the "BBH Custodian
Agreement," and together with the PNC Custodian Agreement, the "Custodian
Agreements"). Under the Custodian Agreements, PNC and BBH (the "Custodians")
(a) maintain a separate account or accounts in the name of each Portfolio, (b)
hold and transfer portfolio securities on account of each Portfolio, (c) accept
receipts and make disbursements of money on behalf of each Portfolio, (d)
collect and receive all income and other payments and distributions on account
of each Portfolio's portfolio securities, and (e) make periodic reports to the
Fund's Board of Directors concerning each Portfolio's operations. The
Custodians are authorized to select one or more banks or trust companies to
serve as sub-custodian on behalf of the Fund, provided that the Custodians
remain responsible for the performance of all their duties under the Custodian
Agreements and hold the Fund harmless from the negligent acts and omissions of
any sub-custodian. For their services to the Fund under the Custodian
Agreements, each of the Custodians receive a fee which is calculated based upon
each Portfolio's average daily gross assets, exclusive of transaction charges
and out-of-pocket expenses, which are also charged to the Fund.
PFPC Inc. ("PFPC"), an affiliate of PNC Bank, serves as the transfer
and dividend disbursing agent for the BEA Classes pursuant to a Transfer Agency
Agreement, as supplemented (collectively, the "Transfer Agency Agreement"),
under which PFPC (a) issues and redeems shares of each of the BEA Classes, (b)
addresses and mails all communications by each Portfolio to record owners of
shares of each such Class, including reports to shareholders, dividend and
distribution notices and proxy materials for its meetings of shareholders, (c)
maintains shareholder accounts and, if requested, sub-accounts and (d) makes
periodic reports to the Fund's Board of Directors concerning the operations of
each BEA Class. PFPC may, on 30 days' notice to the Fund, assign its duties as
transfer and dividend disbursing agent to any other affiliate of PNC Bank Corp.
For its services to the Fund under the Transfer Agency Agreement, PFPC receives
a fee for orders which are placed via third parties and electronically relayed
to PFPC at the annual rate of $8 per account for the BEA International Equity,
BEA Emerging Markets
33
<PAGE>
Equity, BEA U.S. Core Equity and BEA Global Fixed Income Portfolios, and $11 per
account for the BEA U.S. Core Fixed Income and BEA Municipal Bond Fund
Portfolios. PFPC receives a fee for all other orders at an annual rate of $10
per account for the BEA International Equity, BEA Emerging Markets Equity, BEA
U.S. Core Equity and BEA Global Fixed Income Portfolios, and $13 per account for
the BEA U.S. Core Fixed Income and BEA Municipal Bond Fund Portfolios.
PORTFOLIO TRANSACTIONS
Subject to policies established by the Board of Directors, BEA
Associates is responsible for the execution of portfolio transactions and the
allocation of brokerage transactions for the Portfolios. In executing portfolio
transactions, BEA Associates seeks to obtain the best net results for a
Portfolio, taking into account such factors as the price (including the
applicable brokerage commission or dealer spread), size of the order, difficulty
of execution and operational facilities of the firm involved. While BEA
Associates generally seeks reasonably competitive commission rates, payment of
the lowest commission or spread is not necessarily consistent with obtaining the
best results in particular transactions.
Commission rates for brokerage transactions on foreign stock exchanges
are generally fixed. The reasonableness of any negotiated commission paid by
the Portfolios will be evaluated on the basis of the difficulty involved in
execution, the time taken to conclude the transaction, the extent of the
broker's commitment, if any, of its own capital and the amount involved in the
transaction. It should be noted that commission rates in U.S. Markets are
negotiated.
In the case of over-the-counter issues, there is generally no stated
commission, but the price usually includes an undisclosed commission or markup,
and the Portfolio will normally deal with the principal market makers unless it
can obtain better terms elsewhere.
No Portfolio has any obligation to deal with any broker or group of
brokers in the execution of portfolio transactions. BEA Associates may,
consistent with the interests of a Portfolio and subject to the approval of the
Board of Directors, select brokers on the basis of the research, statistical and
pricing services they provide to a Portfolio and other clients of BEA
Associates. Information and research received from such brokers will be in
addition to, and not in lieu of, the services required to be performed by BEA
Associates under his respective contracts. A commission paid to such brokers
may be higher than that which another qualified broker would have charged for
effecting the same transaction, provided that BEA Associates, as applicable,
determines in good faith that such commission is reasonable in terms either of
the transaction or the overall responsibility of BEA Associates to a Portfolio
and its other clients and that the total commissions paid by a Portfolio will be
reasonable in relation to the benefits to a Portfolio over the long-term.
34
<PAGE>
Corporate debt and U.S. Government securities are generally traded on
the over-the-counter market on a "net" basis without a stated commission,
through dealers acting for their own account and not as brokers. The Portfolios
will primarily engage in transactions with these dealers or deal directly with
the issuer unless a better price or execution could be obtained by using a
broker. Prices paid to a dealer in debt securities will generally include a
"spread," which is the difference between the prices at which the dealer is
willing to purchase and sell the specific security at the time, and includes the
dealer's normal profit.
BEA Associates may seek to obtain an undertaking from issuers of
commercial paper or dealers selling commercial paper to consider the repurchase
of such securities from a Portfolio prior to their maturity at their original
cost plus interest (sometimes adjusted to reflect the actual maturity of the
securities), if it believes that a Portfolio's anticipated need for liquidity
makes such action desirable. Any such repurchase prior to maturity reduces the
possibility that a Portfolio would incur a capital loss in liquidating
commercial paper (for which there is no established market), especially if
interest rates have risen since acquisition of the particular commercial paper.
Investment decisions for each Portfolio and for other investment
accounts managed by BEA Associates are made independently of each other in the
light of differing conditions. However, the same investment decision may be
made for two or more of such accounts. In such cases, simultaneous transactions
are inevitable. Purchases or sales are then averaged as to price and allocated
as to amount according to a formula deemed equitable to each such account.
While in some cases this practice could have a detrimental effect upon the price
or value of the security as far as a Portfolio is concerned, in other cases it
is believed to be beneficial to a Portfolio. A Portfolio will not purchase
securities during the existence of any underwriting or selling group relating to
such security of which BEA Associates or any affiliated person (as defined in
the 1940 Act) thereof is a member except pursuant to procedures adopted by the
Fund's Board of Directors pursuant to Rule 10f-3 under the 1940 Act. Among
other things, these procedures, which will be reviewed by the Fund's directors
as deemed necessary and appropriate require that the commission paid in
connection with such a purchase be reasonable and fair, that the purchase be at
not more than the public offering price prior to the end of the first business
day after the date of the public offer, and that BEA Associates not participate
in or benefit from the sale to a Portfolio.
In no instance will portfolio securities be purchased from or sold to
the Distributor or BEA Associates or any affiliated person of the foregoing
entities except as permitted by SEC exemptive order or by applicable law.
During the year ended August 31, 1995, the BEA International Equity
Portfolio paid $______________ of brokerage commissions and the BEA Emerging
Markets Equity Portfolio paid $_______________ of brokerage
35
<PAGE>
commissions, and for each other Portfolio no brokerage commissions were paid
during such period.
The BEA Short Duration Portfolio expects that its annual portfolio
turnover rate will not exceed 500% under normal market conditions. BEA
International Equity, BEA Emerging Markets Equity and BEA Strategic Fixed Income
Portfolios expect that their annual Portfolio turnover rate should not exceed
150% under normal market conditions. BEA U.S. Core Equity, BEA U.S. Core Fixed
Income, BEA Global Fixed Income and BEA Municipal Bond Fund expect that their
annual portfolio turnover rate should not exceed 100% under normal market
conditions. The BEA Balanced Portfolio expects that its annual portfolio
turnover rate will not exceed 100% under normal market conditions for the equity
portion and 100% for the fixed income portion. A high rate of portfolio
turnover involves correspondingly greater brokerage commission expenses and
other transaction costs, which must be borne directly by a Portfolio. Federal
income tax laws may restrict the extent to which a Portfolio may engage in short
term trading of securities. See "Taxes". Each of the Portfolios anticipates
that its annual portfolio turnover rate will vary from year to year. The
portfolio turnover rate is calculated by dividing the lesser of a Portfolio's
annual sales or purchases of portfolio securities (exclusive of purchases or
sales of securities whose maturities at the time of acquisition were one year or
less) by the monthly average value of the securities in the Portfolio during the
year.
PURCHASE AND REDEMPTION INFORMATION
The Fund reserves the right, if conditions exist which make cash
payments undesirable, to honor any request for redemption of a Portfolio's
shares by making payment in whole or in part in securities chosen by the Fund
and valued in the same way as they would be valued for purposes of computing a
Portfolio's net asset value. If payment is made in securities, a shareholder
may incur transaction costs in converting these securities into cash. The Fund
has elected, however, to be governed by Rule 18f-1 under the Investment Company
Act so that a Portfolio is obligated to redeem its shares solely in cash up to
the lesser of $250,000 or 1% of its net asset value during any 90-day period for
any one shareholder of a Portfolio.
Under the Investment Company Act, a Portfolio may suspend the right to
redemption or postpone the date of payment upon redemption for any period during
which the New York Stock Exchange, Inc. (the "NYSE") is closed (other than
customary weekend and holiday closings), or during which trading on said
Exchange is restricted, or during which (as determined by the SEC by rule or
regulation) an emergency exists as a result of which disposal or valuation of
Portfolio securities is not reasonably practicable, or for such other periods as
the SEC may permit. (A Portfolio may also suspend or postpone the recordation
of the transfer of its shares upon the occurrence of any of the foregoing
conditions.)
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Recently the staff of the SEC has recommended that the SEC consider
recommending to the United States Congress that the Investment Company Act be
amended to permit so-called "Interval Funds". Such Interval Funds may be
structured to permit redemptions less frequently than daily. In the event that
the SEC administratively or Congress legislatively permits the creation of such
Interval Funds, the Portfolios may consider appropriate changes in their
structures to conform with such provisions and to recognize the nature of the
markets in foreign securities.
VALUATION OF SHARES
The net asset value per share of each Portfolio is calculated
separately as of the close of regular trading of the NYSE on each Business Day.
"Business Day" means each weekday when the NYSE is open. Currently, the NYSE is
closed on New Year's Day, Presidents' Day, Good Friday, Memorial Day,
Independence Day (observed), Labor Day, Thanksgiving Day and Christmas Day
(observed). Securities which are listed on stock exchanges, whether U.S. or
foreign are valued at the last sale price on the day the securities are valued
or, lacking any sales on such day, at the mean of the bid and asked prices
available prior to the valuation. Portfolio securities primarily traded in
foreign markets may be traded in such markets on days which are not Business
Days. Because net asset value per share of each Portfolio is determined only on
Business Days, the net asset value of shares of a Portfolio may be significantly
affected on days when an investor does not have access to the Portfolio. If on
any Business Day a foreign securities exchange or foreign market is closed, the
securities traded on such exchange or in such market will be valued at the last
sale price reported on the previous business day of such foreign exchange or
market. In cases where securities are traded on more than one exchange, the
securities are generally valued on the exchange designated by the Board of
Directors or its delegates as the primary market. Securities traded in the
over-the-counter market and listed on the National Association of Securities
Dealers Automatic Quotation System ("NASDAQ") are valued at the last trade price
listed on the NASDAQ at 4:00 p.m.; securities listed on NASDAQ for which there
were no sales on that day and other over-the-counter securities are valued at
the mean of the bid and asked prices available prior to valuation. Securities
for which market quotations are not readily available are valued at fair value
as determined in good faith by or under the direction of the Fund's Board of
Directors. The amortized cost method of valuation may also be used with respect
to debt obligations with sixty days or less remaining to maturity. Any assets
which are denominated in a foreign currency are converted into U.S. dollars at
the prevailing market rates for purposes of calculating net asset value.
Foreign currency exchange rates are generally determined prior to the
close of the NYSE. Occasionally, events affecting the value of foreign
securities and such exchange rates occur between the time at which they are
determined and the close of the NYSE, which events will not be reflected in a
computation of the Portfolio's net asset value. If events materially affecting
the value of such securities or assets or currency exchange rates
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occurred during such time period, the securities or assets would be valued at
their fair value as determined in good faith by or under the direction of the
Board of Directors. The foreign currency exchange transactions of a Portfolio
conducted on a spot basis will be valued at the spot rate for purchasing or
selling currency prevailing on the foreign exchange market. Under normal market
conditions this rate differs from the prevailing exchange rate by an amount
generally less than one-tenth of one percent due to the costs of converting from
one currency to another.
In determining the approximate market value of portfolio investments,
the Fund may employ outside organizations, which may use a matrix or formula
method that takes into consideration market indices, matrices, yield curves and
other specific adjustments. This may result in the securities being valued at a
price different from the price that would have been determined had the matrix or
formula method not been used. All cash, receivables and current payables are
carried on the Fund's books at their face value. Other assets, if any, are
valued at fair value as determined in good faith by the Fund's Board of
Directors.
PERFORMANCE AND YIELD INFORMATION
TOTAL RETURN. For purposes of quoting and comparing the performance
of the Portfolios to that of other mutual funds and to stock or other relevant
indices in advertisements or in reports to shareholders, performance may be
stated in terms of total return. Under the rules of the Securities and Exchange
Commission, funds advertising performance must include total return quotes
calculated according to the following formula:
P(1 + T)TO THE POWER OF n = ERV
Where: P = a hypothetical initial payment of $1,000
T = average annual total return
n = number of years (1, 5 or 10)
ERV = ending redeemable value at the end of the 1, 5 or 10 year
periods (or fractional portion thereof) of a hypothetical $1,000 payment made at
the beginning of the 1, 5 or 10 year periods.
Under the foregoing formula, the time periods used in advertising will
be based on rolling calendar quarters, updated to the last day of the most
recent quarter prior to submission of the advertisement for publication, and
will cover one, five and ten year periods or a shorter period dating from the
effectiveness of the Fund's registration statement. In calculating the ending
redeemable value, the maximum sales load is deducted from the initial $1,000
payment and all dividends and distributions by the Fund are assumed to have been
reinvested at net asset value, as described in the Prospectus, on the
reinvestment dates during the period. Total return, or "T" in the formula
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above, is computed by finding the average annual compounded rates of return over
the 1, 5 and 10 year periods (or fractional portion thereof) that would equate
the initial amount invested to the ending redeemable value. Any sales loads
that might in the future be made applicable at the time to reinvestments would
be included as would any recurring account charges that might be imposed by the
Fund.
The Portfolios may also from time to time include in such advertising
an aggregate total return figure or a total return figure that is not calculated
according to the formula set forth above in order to compare more accurately a
Portfolio's performance with other measures of investment return. For example,
in comparing a Portfolio's total return with data published by Lipper Analytical
Services, Inc., CDA Investment Technologies, Inc. or Weisenberger Investment
Company Service, or with the performance of the Standard & Poor's 500 Stock
Index or the Dow Jones Industrial Average, as appropriate, a Portfolio may
calculate its aggregate and/or average annual total return for the specified
periods of time by assuming the investment of $10,000 in Portfolio shares and
assuming the reinvestment of each dividend or other distribution at net asset
value on the reinvestment date. The Portfolio does not, for these purposes,
deduct from the initial value invested any amount representing sales charges.
The Portfolio will, however, disclose the maximum sales charge and will also
disclose that the performance data do not reflect sales charges and that
inclusion of sales charges would reduce the performance quoted. Such
alternative total return information will be given no greater prominence in such
advertising than the information prescribed under SEC rules, and all
advertisements containing performance data will include a legend disclosing that
such performance data represent past performance and that the investment return
and principal value of an investment will fluctuate so that an investor's
shares, when redeemed, may be worth more or less than their original cost.
Calculated according to the SEC rules for the period beginning on the
commencement of operations and ending August 31, 1995, the average annual total
return for the BEA International Equity Portfolio (commencing October 1, 1992),
BEA Emerging Markets Equity Portfolio (commencing February 1, 1993), BEA
Strategic Fixed Income Portfolio (commencing March 1, 1993), BEA U.S. Core Fixed
Income Portfolio (commencing April 1, 1994), BEA Global Fixed Income Portfolio
(commencing June 28, 1994), and BEA Municipal Bond Fund Portfolio (commencing
June 20, 1994), respectively was ___% (annualized), ____% (annualized), ____%
(annualized), ___% (annualized), ___% (annualized) and ___% (annualized). For
the same period, the aggregate total return for the Portfolios was ___%, ___%,
___%, ___%, ___%, and ___%, respectively.
Calculated according to the non-standardized computation for the
period beginning on the commencement of operations of each of the BEA
International Equity, BEA Emerging Markets Equity and BEA Strategic Fixed Income
Portfolios and ending on August 31, 1995, the average annual total return for
the Portfolios was ____%, ____%, and ____% respectively. The aggregate total
return for the Portfolios calculated according to the
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non-standardized computation for the period beginning on the commencement of
operations of each of the Portfolios and ending August 31, 1995 was ____%,
____%, and ____%, respectively.
YIELD. Certain Portfolios may also advertise their yield. Under the
rules of the SEC, a Portfolio advertising yield must calculate yield using the
following formula:
YIELD = 2[(a-b +1)TO THE POWER OF 6 - 1]
---
cd
Where: a = dividends and interest earned during the period.
b = expenses accrued for the period (net of
reimbursement).
c = the average daily number of shares outstanding during
the period that were entitled to receive dividends.
d = the maximum offering price per share on the last day
of the period.
Under the foregoing formula, yield is computed by compounding
semi-annually, the net investment income per share earned during a 30 day period
divided by the maximum offering price per share on the last day of the period.
For the purpose of determining the interest earned (variable "a" in the formula)
on debt obligations that were purchased by a Portfolio at a discount or premium,
the formula generally calls for amortization of the discount or premium; the
amortization schedule will be adjusted monthly to reflect changes in the market
values of the debt obligations.
Yield may fluctuate daily and does not provide a basis for determining
future yields. Because the yields will fluctuate, they cannot be compared with
yields on savings account or other investment alternatives that provide an
agreed to or guaranteed fixed yield for a stated period of time. However, yield
information may be useful to an investor considering temporary investments in
money market instruments. In comparing the yield of one money market fund to
another, consideration should be given to each fund's investment policies,
including the types of investments made, lengths of maturities of the portfolio
securities, the method used by each fund to compute the yield (methods may
differ) and whether there are any special account charges which may reduce the
effective yield.
The yields on certain obligations are dependent on a variety of
factors, including general money market conditions, conditions in the particular
market for the obligation, the financial condition of the issuer, the size of
the offering, the maturity of the obligation and the ratings of the issue. The
ratings of Moody's Investors Service and Standard & Poor's Corporation represent
their respective opinions as to the quality of the obligations they undertake to
rate. Ratings, however, are general and are not
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absolute standards of quality. Consequently, obligations with the same rating,
maturity and interest rate may have different market prices. In addition,
subsequent to its purchase by a Portfolio, an issue may cease to be rated or may
have its rating reduced below the minimum required for purchase. In such an
event, the Portfolio's investment adviser will consider whether the Portfolio
should continue to hold the obligation.
TAXES
GENERAL TAX CONSEQUENCES TO THE FUND AND ITS SHAREHOLDERS. The
following is only a summary of certain additional tax considerations generally
affecting the Portfolios and their shareholders that are not described in the
Fund's Prospectus. No attempt is made to present a detailed explanation of the
tax treatment of the Portfolios or their shareholders, and the discussion in
this Statement of Additional Information and in the Prospectus is not intended
as a substitute for careful tax planning. Investors are urged to consult their
tax advisers with specific reference to their own tax situation.
Each Portfolio has elected to be taxed as a regulated investment
company under Part I of Subchapter M of the Internal Revenue Code of 1986, as
amended (the "Code"). As a regulated investment company, each Portfolio is
exempt from Federal income tax on its net investment income and realized capital
gains which it distributes to shareholders, provided that it (a) distributes an
amount equal to the sum of (i) at least 90% of its investment company taxable
income (net taxable investment income and the excess of net short-term capital
gain over net long-term capital loss), if any, for the year and (ii) at least
90% of its net tax-exempt interest income, if any, for the year (the
"Distribution Requirement"), and (b) satisfies certain other requirements of the
Code that are described below. Distributions of investment company taxable
income and net tax-exempt interest income made during the taxable year or, under
specified circumstances, within twelve months after the close of the taxable
year will satisfy the Distribution Requirement. The Distribution Requirement
for any year may be waived if a regulated investment company establishes to the
satisfaction of the Internal Revenue Service that it is unable to satisfy the
Distribution Requirement by reason of distributions previously made for the
purpose of avoiding liability for Federal excise tax (discussed below).
In addition to satisfaction of the Distribution Requirement each
Portfolio must derive at least 90% of its gross income from dividends, interest,
certain payments with respect to securities loans and gains from the sale or
other disposition of stock or securities or foreign currencies, or from other
income derived with respect to its business of investing in such stock,
securities, or currencies (the "Income Requirement") and derive less than 30% of
its gross income from the sale or other disposition of any of the following
investments, if such investments were held for less than three months: (a) stock
or securities (as defined in Section 2(a)(36) of the 1940 Act); (b) options,
futures, or forward contracts (other than options, futures or forward contracts
on foreign currencies); and (c) foreign currencies (or
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options, futures or forward contracts on foreign currencies) but only if such
currencies (or options, futures or forward contracts) are not directly related
to the regulated investment company's principal business of investing in stock
or securities (or in options and futures with respect to stocks or securities)
(the "Short-Short Gain Test"). Interest (including accrued original issue
discount, "accrued market discount") received by a Portfolio at maturity or on
disposition of a security held for less than three months will not be treated as
gross income derived from the sale or other disposition of such security for
purposes of the Short-Short Gain Test. However, any other income which is
attributable to realized market appreciation will be treated as gross income
from the sale or other disposition of securities for this purpose.
Future Treasury regulations may provide that currency gains that are
not "directly related" to a Portfolio's principal business of investing in stock
or securities (or in options or futures with respect to stock or securities)
will not satisfy the Income Requirements. Income derived by a regulated
investment company from a partnership or trust (including a foreign entity that
is classified as a partnership or trust for U.S. federal income tax purposes)
will satisfy the Income Requirement only to the extent such income is
attributable to items of income of the partnership or trust that would satisfy
the Income Requirement if they were realized by a regulated investment company
in the same manner as realized by the partnership or trust.
In addition to the foregoing requirements, at the close of each
quarter of its taxable year, at least 50% of the value of each Portfolio's
assets must consist of cash and cash items, U.S. Government securities,
securities of other regulated investment companies, and securities of other
issuers (as to which the Portfolio has not invested more than 5% of the value of
its total assets in securities of such issuer and as to which the Portfolio does
not hold more than 10% of the outstanding voting securities of such issuer), and
no more than 25% of the value of each Portfolio's total assets may be invested
in the securities of any one issuer (other than U.S. Government securities and
securities of other regulated investment companies), or in two or more issuers
which such Portfolio controls and which are engaged in the same or similar
trades or businesses (the "Asset Diversification Requirement").
The Internal Revenue Service has taken the position, in informal
rulings issued to other taxpayers, that the issuer of a repurchase agreement is
the bank or dealer from which securities are purchased. A Portfolio will not
enter into repurchase agreements with any one bank or dealer if entering into
such agreements would, under the informal position expressed by the Internal
Revenue Service, cause it to fail to satisfy the Asset Diversification
Requirement.
Distributions of investment company taxable income will be taxable
(subject to the possible allowance of the dividend received deduction described
below) to shareholders as ordinary income, regardless of whether such
distributions are paid in cash or are reinvested in shares. Shareholders
receiving any distribution from the Fund in the form of additional shares will
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be treated as receiving a taxable distribution in an amount equal to the fair
market value of the shares received, determined as of the reinvestment date.
Each Portfolio intends to distribute to shareholders its excess of net
long-term capital gain over net short-term capital loss ("net capital gain"), if
any, for each taxable year. Such gain is distributed as a capital gain dividend
and is taxable to shareholders as long-term capital gain, regardless of the
length of time the shareholder has held his shares, whether such gain was
recognized by the Portfolio prior to the date on which a shareholder acquired
shares of the Portfolio and whether the distribution was paid in cash or
reinvested in shares. The aggregate amount of distributions designated by any
Portfolio as capital gain dividends may not exceed the net capital gain of such
Portfolio for any taxable year, determined by excluding any net long-term
capital loss attributable to transactions occurring after October 31 of such
year and by treating any such loss as if it arose on the first day of the
following taxable year. Such distributions will be designated as capital gain
dividends in a written notice mailed by the Fund to shareholders not later than
60 days after the close of each Portfolio's respective taxable year.
In the case of corporate shareholders, distributions (other than
capital gain dividends) of a Portfolio for any taxable year will qualify for the
70% dividends received deduction, only to the extent of the gross amount of
"qualifying dividends" received by such Portfolio for the year. Generally, a
dividend will be treated as a "qualifying dividend" only if it has been received
from a domestic corporation. However, if a Portfolio owns at least 10 percent
of the stock (by vote and value) of certain foreign corporations with U.S.
source income, then a portion of the dividends paid by such foreign corporations
may constitute "qualifying dividends". A dividend received by a taxpayer will
not be treated as a "qualifying dividend" if (1) it has been received with
respect to any share of stock that the taxpayer has held for 45 days (90 days in
the case of certain preferred stock) or less (excluding any day more than 45
days (or 90 days in the case of certain preferred stock) after the date on which
the stock becomes ex-dividend), or (2) to the extent that the taxpayer is under
an obligation (pursuant to a short sale or otherwise) to make related payments
with respect to positions in substantially similar or related property. The
Fund will designate the portion, if any, of the distribution made by a Portfolio
that qualifies for the dividends received deduction in a written notice mailed
by the Fund to shareholders not later than 60 days after the close of the
Portfolio's taxable year.
Investors should note that recent legislative changes made to the Code
have increased the significance of the distinction between capital gain and
ordinary income distributions for some individual investors. Under this
legislation, the maximum marginal rate on ordinary income for individuals,
trusts and estates has nominally been increased only from 28% to 31%. However,
due to the phase-out of personal exemptions and the enactment of limitations on
itemized deductions for individual taxpayers whose adjusted gross income exceeds
certain threshold amounts that depend on the taxpayer's
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filing status, the actual maximum marginal rate may be significantly greater.
By contrast, the maximum rate on the net capital gain of individuals, trusts and
estates remains 28%. Capital gains and ordinary income of corporate taxpayers
will continue to be taxed at a nominal maximum rate of 34% (an effective
marginal rate of 39% applies in the case of corporations having taxable income
between $100,000 and $335,000). Investors should be aware that any loss
realized upon the sale, exchange or redemption of shares held for six months or
less will be treated as a long-term capital loss to the extent any capital gain
dividends have been paid with respect to such shares.
The BEA Municipal Bond Fund Portfolio is designed to provide investors
with current tax-exempt interest income. Exempt interest dividends distributed
to shareholders by this Portfolio are not included in the shareholder's gross
income for regular Federal income tax purpose. In order for the Municipal Bond
Portfolio to pay exempt interest dividends during any taxable year, at the close
of each fiscal quarter at least 50% of the value of the Portfolio must consist
of exempt interest obligations.
In addition, the BEA Municipal Bond Fund Portfolio may not be an
appropriate investment for entities which are "substantial users" of facilities
financed by private activity bonds or "related persons" thereof. "Substantial
user" is defined under U.S. Treasury Regulations to include a nonexempt person
who regularly uses a part of such facilities in his trade or business and (a)
whose gross revenues are more than 5% of the total revenue derived by all users
of such facilities, (b) who occupies more than 5% of the entire usable area of
such facilities, or (c) for whom such facilities or a part thereof were
specifically constructed, reconstructed or acquired. "Related persons" include
certain related natural persons, affiliated corporations, a partnership and its
partners and an S corporation and its shareholder.
A Portfolio may acquire standby commitments with respect to Municipal
Obligations held in its portfolio and will treat any interest received on
Municipal Obligations subject to such standby commitments a tax-exempt income.
In Rev. Rul. 82-144, 1982-2 C.B. 34, the Internal Revenue Service held that a
mutual fund acquired ownership of municipal obligations for federal income tax
purposes, even though the fund simultaneously purchased "put" agreements with
respect to the same municipal obligations from the seller of the obligations.
The Fund will not engage in transactions involving the use of standby
commitments that differ materially from the transaction described in Rev. Rul.
82-144 without first obtaining a private letter ruling from the Internal Revenue
Service or the opinion of counsel.
Interest on indebtedness incurred by a shareholder to purchase or
carry shares of the BEA Municipal Bond Fund Portfolio is not deductible for
income tax purposes of (as expected) the BEA Municipal Bond Fund Portfolio
distributes exempt interest dividends during the shareholder's taxable year.
Receipt of exempt interest dividends may result in collateral Federal income tax
consequences to certain other taxpayers, including persons subject to
alternative minimum tax (see Prospectus and discussion below), financial
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institutions, property and casualty insurance companies, individual recipients
of Social Security or Railroad Retirement benefits, and foreign corporations
engaged in a trade or business in the United States. Prospective investors
should consult their own tax advisers as to such consequences.
Corporate taxpayers may be liable for alternative minimum tax, which
is imposed at the rate of 20% of "alternative minimum taxable income" (less, in
the case of corporate shareholders with "alternative minimum taxable income" of
less than $310,000, the applicable "exemption amount"), in lieu of the regular
corporate income tax. "Alternative minimum taxable income" is equal to "taxable
income" (as determined for corporate income regular tax purposes) with certain
adjustments. Although corporate taxpayers in determining "alternative minimum
taxable income" are allowed to exclude exempt interest dividends (other than
exempt interest dividends derived from certain private activity bonds ("AMT
Preference Dividends"), as explained in the Prospectus) and to utilize the 70%
dividends received deduction at the first level of computation, the Code
requires (as a second computational step) that "alternative minimum taxable
income" be increased by 75% of the excess of "adjusted current earnings" over
other "alternative minimum taxable income."
Corporate shareholders will have to take into account (1) all exempt
interest dividends and (2) the full amount of all dividends from a Portfolio
that are treated as "qualifying dividends" for purposes of the dividends
received deduction in determining their "adjusted current earnings." As much as
75% of any exempt interest dividend and 82.5% of any "qualifying dividend"
received by a corporate shareholder could, as a consequence, be subject to
alternative minimum tax. Exempt interest dividends received by such a corporate
shareholder may accordingly be subject to alternative minimum tax at an
effective rate of 15%.
Corporate investors should also note that the Superfund Amendments and
Reauthorization Act of 1986 imposes an environmental tax on corporate taxpayers
of 0.14% of the excess of "alternative minimum taxable income" (with certain
modifications) over $2,000,000 for taxable years beginning after 1986 and before
1996, regardless of whether such taxpayers are liable for alternative minimum
tax.
If for any taxable year any Portfolio does not qualify as a regulated
investment company, all of its taxable income will be subject to tax at regular
corporate rates without any deduction for distributions to shareholders, and all
distributions will be taxable as ordinary dividends (including amounts derived
from interest on Municipal Obligations in the case of the BEA Municipal Bond
Fund Portfolio) to the extent of such Portfolio's current and accumulated
earning and profits. Such distributions will be eligible for the dividends
received deduction in the case of corporate shareholders. Investors should be
aware that any loss realized on a sale of shares of a Portfolio will be
disallowed to the extent an investor repurchases shares of the same Portfolio
within a period of 61 days (beginning 30 days before and ending 30 days after
the day of disposition of the shares).
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Dividends paid by a Portfolio in the form of shares within the 61-day period
would be treated as a purchase for this purpose.
The Code imposes a non-deductible 4% excise tax on regulated
investment companies that do not distribute with respect to each calendar year
an amount equal to 98% of their ordinary income for the calendar year plus 98%
of their capital gain net income for the 1-year period ending on October 31 of
such calendar year. The balance of such income must be distributed during the
next calendar year. For the foregoing purposes, a company is treated as having
distributed any amount on which it is subject to income tax for any taxable year
ending in such calendar year. Because each Portfolio intends to distribute all
of its taxable income currently, no Portfolio anticipates incurring any
liability for this excise tax. However, investors should note that a Portfolio
may in certain circumstances be required to liquidate investments in order to
make sufficient distributions to avoid excise tax liability.
The Fund will be required in certain cases to withhold and remit to
the United States Treasury 31% of dividends paid to any shareholder (1) who has
provided either an incorrect tax identification number or no number at all, (2)
who is subject to backup withholding by the Internal Revenue Service for failure
to report the receipt of interest or dividend income properly, or (3) who has
failed to certify to the Fund that he is not subject to backup withholding or
that he is an "exempt recipient."
The foregoing general discussion of Federal income tax consequences is
based on the Code and the regulations issued thereunder as in effect on the date
of this Statement of Additional Information. Future legislative or
administrative changes or court decisions may significantly change the
conclusions expressed herein, and any such changes or decisions may have a
retroactive effect with respect to the transactions contemplated herein.
Although each Portfolio expects to qualify as a "regulated investment
company" and to be relieved of all or substantially all Federal income taxes,
depending upon the extent of its activities in states and localities in which
its offices are maintained, in which its agents or independent contractors are
located or in which it is otherwise deemed to be conducting business, each
Portfolio may be subject to the tax laws of such states or localities.
Certain states exempt from state income taxation dividends paid by a
regulated investment company that are derived from interest on U.S. Government
obligations. Each Portfolio will accordingly inform its shareholders annually
of the percentage, if any, of its ordinary dividends that is derived from
interest on U.S. Government obligations. Shareholders should consult with their
tax advisers as to the availability and extent of any applicable state income
tax exemption.
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SPECIAL TAX CONSIDERATIONS. The following discussion relates to the
particular Federal income tax consequences of the investment policies of the
Portfolios. The ability of the Portfolios to engage in options, short sale and
futures activities will be somewhat limited by the requirements for their
continued qualification as regulated investment companies under the Code, in
particular the Distribution Requirement, the Short-Short Gain Test and the Asset
Diversification Requirement.
STRADDLES. The options transactions that the Portfolios enter into
may result in "straddles" for Federal income tax purposes. The straddle rules
of the Code may affect the character of gains and losses realized by the
Portfolios. In addition, losses realized by the Portfolios on positions that
are part of a straddle may be deferred under the straddle rules, rather than
being taken into account in calculating the investment company taxable income
and net capital gain of the Portfolios for the taxable year in which such losses
are realized. Losses realized prior to October 31 of any year may be similarly
deferred under the straddle rules in determining the "required distribution"
that the Portfolios must make in order to avoid Federal excise tax.
Furthermore, in determining their investment company taxable income and ordinary
income, the Portfolios may be required to capitalize, rather than deduct
currently, any interest expense on indebtedness incurred or continued to
purchase or carry any positions that are part of a straddle. The tax
consequences to the Portfolios of holding straddle positions may be further
affected by various elections provided under the Code and Treasury regulations,
but at the present time the Portfolios are uncertain which (if any) of these
elections they will make.
Because only a few regulations implementing the straddle rules have
been promulgated by the U.S. Treasury, the tax consequences to the Portfolios of
engaging in options transactions are not entirely clear. Nevertheless, it is
evident that application of the straddle rules may substantially increase or
decrease the amount which must be distributed to shareholders in satisfaction of
the Distribution Requirement (or to avoid Federal excise tax liability) for any
taxable year in comparison to a fund that did not engage in options
transactions. For purposes of the Short-Short Gain Test, current Treasury
regulations provide that (except to the extent that the short sale rules
discussed below would otherwise apply) the straddle rules will have no effect on
the holding period of any straddle position. However, the U.S. Treasury has
announced that it is continuing to study the application of the straddle rules
for this purpose.
OPTIONS AND SECTION 1256 CONTRACTS. The writer of a covered put or
call option generally does not recognize income upon receipt of the option
premium. If the option expires unexercised or is closed on an exchange, the
writer generally recognizes short-term capital gain. If the option is
exercised, the premium is included in the consideration received by the writer
in determining the capital gain or loss recognized in the resultant sale.
However, certain options transactions that the Portfolios enter into, as well as
futures transactions and transactions in forward foreign currency contracts that
are traded in the interbank market entered into by the Portfolios, will
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be subject to special tax treatment as "Section 1256 contracts." Section 1256
contracts are treated as if they are sold for their fair market value on the
last business day of the taxable year (i.e., marked-to-market), regardless of
whether a taxpayer's obligations (or rights) under such contracts have
terminated (by delivery, exercise, entering into a closing transaction or
otherwise) as of such date. Any gain or loss recognized as a consequence of the
year-end marking-to-market of Section 1256 contracts is combined (after
application of the straddle rules that are described above) with any other gain
or loss that was previously recognized upon the termination of Section 1256
contracts during that taxable year. The net amount of such gain or loss for the
entire taxable year is generally treated as 60% long-term capital gain or loss
and 40% short-term capital gain or loss, except in the case of marked-to-market
forward foreign currency contracts for which such gain or loss is treated as
ordinary income or loss. Such short-term capital gain (and, in the case of
marked-to-market forward foreign currency contracts, such ordinary income) would
be included in determining the investment company taxable income of the relevant
Portfolio for purposes of the Distribution Requirement, even if it were wholly
attributable to the year-end marking-to-market of Section 1256 contracts that
the relevant Portfolio continued to hold. Investors should also note that
Section 1256 contracts will be treated as having been sold on October 31 in
calculating the "required distribution" that a Portfolio must make to avoid
Federal excise tax liability.
Each of the Portfolios may elect not to have the year-end
marking-to-market rule apply to Section 1256 contracts that are part of a "mixed
straddle" with other investments of such Portfolio that are not Section 1256
contracts (the "Mixed Straddle Election"). It is unclear under present law how
certain gain that the Portfolios may derive from trading in Section 1256
contracts for which a Mixed Straddle Election is not made will be treated for
purposes of the "Short-Short Gain Test." The Portfolios may seek a ruling from
the Internal Revenue Service in order to resolve this issue.
FOREIGN CURRENCY TRANSACTIONS. In general, gains from "foreign
currencies" and from foreign currency options, foreign currency futures and
forward foreign exchange contracts relating to investments in stock, securities
or foreign currencies will be qualifying income for purposes of determining
whether the Portfolio qualifies as a RIC. It is currently unclear, however, who
will be treated as the issuer of a foreign currency instrument or how foreign
currency options, futures or forward foreign currency contracts will be valued
for purposes of the Asset Diversification Requirement. A Portfolio may request
a private letter ruling from the Internal Revenue Service for guidance on some
or all of these issues.
Under Code Section 988 special rules are provided for certain
transactions in a foreign currency other than the taxpayer's functional currency
(i.e., unless certain special rules apply, currencies other than the U.S.
dollar). In general, foreign currency gains or losses from certain forward
contracts, from futures contracts that are not "regulated futures contracts",
and from unlisted options will be treated as ordinary income or
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loss. In certain circumstances where the transaction is not undertaken as part
of a straddle, a Portfolio may elect capital gain or loss treatment for such
transactions. Alternatively, a Portfolio may elect ordinary income or loss
treatment for transactions in futures contracts and options on foreign currency
that would otherwise produce capital gain or loss. In general gains or losses
from a foreign currency transaction subject to Code Section 988 will increase or
decrease the amount of the Portfolio's investment company taxable income
available to be distributed to shareholders as ordinary income, rather than
increasing or decreasing the amount of the Portfolio's net capital gain.
Additionally, if losses from a foreign currency transaction subject to Code
Section 988 exceed other investment company taxable income during a taxable
year, a Portfolio will not be able to make any ordinary dividend distributions,
and any distributions made before the losses were realized but in the same
taxable year would be recharacterized as a return of capital to shareholders,
thereby reducing each shareholder's basis in his Shares.
PASSIVE FOREIGN INVESTMENT COMPANIES. If a Portfolio acquires shares
in certain foreign investment entities, called "passive foreign investment
companies" ("PFIC"), such Portfolio may be subject to "deferred" Federal income
tax on a portion of any "excess distribution" received with respect to such
shares or on a portion of any gain recognized upon a disposition of such shares,
notwithstanding the distribution of such income to the shareholders of such
Portfolio. Additional charges in the nature of interest may also be imposed on
a Portfolio in respect of such deferred taxes. However, in lieu of sustaining
the foregoing tax consequences, a Portfolio may elect to have its investment in
any PFIC taxed as an investment in a "qualified electing fund" ("QEF"). A
Portfolio making a QEF election would be required to include in its income each
year a ratable portion, whether or not distributed, of the ordinary earnings and
net capital gain of the QEF. Any such QEF inclusions would have to be taken
into account by a Portfolio for purposes of satisfying the Distribution
Requirement and the excise tax distribution requirement.
The Internal Revenue Service has proposed regulations that would
permit a Portfolio to elect (in lieu of paying deferred tax or making a QEF
election) to mark-to-market annually any PFIC shares that it owned and to
include any gains (but not losses) that it was deemed to realize as ordinary
income. A Portfolio generally would not be subject to deferred Federal income
tax on any gains that it was deemed to realize as a consequence of making a
mark-to-market election, but such gains would be taken into account by the
Portfolio for purposes of satisfying the Distribution Requirement and the excise
tax distribution requirement. The proposed regulations would generally apply
only prospectively, to taxable years ending after their promulgation as final
regulations.
SHORT-SHORT GAIN TEST. Because of the Short-Short Gain Test, the
Portfolios may have to limit the sale of appreciated (but not depreciated)
securities that they have held for less than three months. The short sale of
(including for this purpose the acquisition of a put option on) (1) securities
held on the date of the short sale or acquired after the short sale and on or
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before the date of closing thereof or (2) securities which are "substantially
identical" to securities held on the date of the short sale or acquired after
the short sale and on or before the date of the closing thereof may reduce the
holding period of such securities for purposes of the Short-Short Gain Test.
Any increase in value of a position that is part of a "designated
hedge" will be offset by any decrease in value (whether realized or not) of the
offsetting hedging position during the period of such hedge for purposes of the
Short-Short Gain Test. Thus, only the net gain (if any) from the designated
hedge will be included in gross income for purposes of the Short-Short Gain
Test. Each of the Portfolios anticipates engaging in hedging transactions that
qualify as designated hedges. However, because of the failure of the U.S.
Treasury to promulgate regulations as authorized by the Code, it is not clear at
the present time whether this treatment will be available to all of the
Portfolios' hedging transactions. To the extent the Portfolios' transactions do
not qualify as designated hedges, the Portfolios' investments in short sales,
options or other transactions may be limited.
ASSET DIVERSIFICATION REQUIREMENT. For purposes of the Asset
Diversification Requirement, the issuer of a call option on a security
(including an option written on an exchange) will be deemed to be the issuer of
the underlying security. The Internal Revenue Service has informally ruled,
however, that a call option that is written by a fund need not be counted for
purposes of the Asset Diversification Requirement where the fund holds the
underlying security. However, the Internal Revenue Service has also informally
ruled that a put option written by a fund must be treated as a separate asset
and its value measured by "the value of the underlying security" for purposes of
the Asset Diversification Requirement, regardless (apparently) of whether it is
"covered" under the rules of the exchange. The Internal Revenue Service has not
explained whether in valuing a written put option in this manner a fund should
use the current value of the underlying security (its prospective future
investment); the cash consideration that must be paid by the fund if the put
option is exercised (its liability); or some other measure that would take into
account the fund's unrealized profit or loss in writing the option. Under the
Code, a fund may not rely on informal rulings of the Internal Revenue Service
issued to other taxpayers. Consequently, a Portfolio may find it necessary to
seek a ruling from the Internal Revenue Service on this issue or to curtail its
writing of options in order to stay within the limits of the Asset
Diversification Requirement.
ADDITIONAL INFORMATION CONCERNING FUND SHARES
The Fund has authorized capital of thirty billion shares of Common
Stock, $.001 par value per share, of which 12.2 billion shares are currently
classified as follows: 100 million shares are classified as Class A Common Stock
(Growth & Income), 100 million shares are classified as Class B Common Stock,
100 million shares are classified as Class C Common Stock (Balanced), 100
million shares are classified as Class D Common Stock (Tax-Free), 500 million
shares are classified as Class E Common Stock (Money),
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500 million shares are classified as Class F Common Stock (Municipal Money), 500
million shares are classified as Class G Common Stock (Money), 500 million
shares are classified as Class H Common Stock (Municipal Money), 1 billion
shares are classified as Class I Common Stock (Money), 500 million shares are
classified as Class J Common Stock (Municipal Money), 500 million shares are
classified as Class K Common Stock (U.S. Government Money), 1,500 million shares
are classified as Class L Common Stock (Money), 500 million shares are
classified as Class M Common Stock (Municipal Money), 500 million shares are
classified as Class N Common Stock (U.S. Government Money), 500 million shares
are classified as Class O Common Stock (N.Y. Money), 100 million shares are
classified as Class P Common Stock (Government), 100 million shares are
classified as Class Q Common Stock, 500 million shares are classified as Class R
Common Stock (Municipal Money), 500 million shares are classified as Class S
Common Stock (U.S. Government Money), 500 million shares are classified as Class
T Common Stock (International), 500 million shares are classified as Class U
Common Stock (Strategic), 500 million shares are classified as Class V Common
Stock (Emerging), 100 million shares are classified as Class W Common Stock
(Laffer/Canto Equity), 50 million shares are classified as Class X Common Stock
(U.S. Core Equity), 50 million shares are classified as Class Y Common Stock
(U.S. Core Fixed Income), 50 million shares are classified as Class Z Common
Stock (Global Fixed Income), 50 million shares are classified as Class AA Common
Stock (Municipal Bond), 50 million shares are classified as Class BB Common
Stock (BEA Balanced), 50 million shares are classified as Class CC Common Stock
(Short Duration), 100 million shares are classified as Class DD Common Stock
(Growth & Income Series 2), 100 million shares are classified as Class EE Common
Stock (Balanced Series 2), 700 million shares are classified as Class Alpha 1
Common Stock (Money), 200 million shares are classified as Class Alpha 2 Common
Stock (Municipal Money), 500 million shares are classified as Class Alpha 3
Common Stock (U.S. Government Money), 100 million shares are classified as Class
Alpha 4 Common Stock (N.Y. Money), 1 million shares are classified as Class Beta
1 Common Stock (Money), 1 million shares are classified as Class Beta 2 Common
Stock (Municipal Money), 1 million shares are classified as Class Beta 3 Common
Stock (U.S. Government Money), 1 million shares are classified as Class Beta 4
Common Stock (N.Y. Money), 1 million shares are classified as Gamma 1 Common
Stock (Money), 1 million shares are classified as Gamma 2 Common Stock
(Municipal Money), 1 million shares are classified as Gamma 3 Common Stock (U.S.
Government Money), 1 million shares are classified as Gamma 4 Common Stock (N.Y.
Money), 1 million shares are classified as Delta 1 Common Stock (Money), 1
million shares are classified as Delta 2 Common Stock (Municipal Money), 1
million shares are classified as Delta 3 Common Stock (U.S. Government Money), 1
million shares are classified as Delta 4 Common Stock (N.Y. Money), 1 million
shares are classified as Epsilon 1 Common Stock (Money), 1 million shares are
classified as Epsilon 2 Common Stock (Municipal Money), 1 million shares are
classified as Epsilon 3 Common Stock (U.S. Government Money), 1 million shares
are classified as Epsilon 4 Common Stock (N.Y. Money), 1 million shares are
classified as Zeta 1 Common Stock (Money), 1 million shares are classified as
Zeta 2 Common Stock (Municipal Money), 1 million shares are classified as Zeta 3
Common Stock (U.S. Government Money), 1 million shares are classified as
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Zeta 4 Common Stock (N.Y. Money), 1 million shares are classified as Eta 1
Common Stock (Money), 1 million shares are classified as Eta 2 Common Stock
(Municipal Money), 1 million shares are classified as Eta 3 Common Stock (U.S.
Government Money), 1 million shares are classified as Eta 4 Common Stock (N.Y.
Money), 1 million shares are classified as Theta 1 Common Stock (Money), 1
million shares are classified as Theta 2 Common Stock (Municipal Money), 1
million shares are classified as Theta 3 Common Stock (U.S. Government Money),
and 1 million shares are classified as Theta 4 Common Stock (N.Y. Money).
Shares of the Class T, U, V, X, Y, Z, AA, BB and CC Common Stock constituted the
BEA classes. Under the Fund's charter, the Board of Directors has the power to
classify or reclassify any unissued shares of Common Stock from time to time.
The classes of Common Stock have been grouped into fifteen separate
"families": the RBB Family, the Warburg Pincus Family, the Cash Preservation
Family, the Sansom Street Family, the Bedford Family, the Bradford Family, the
BEA Family, the Janney Montgomery Scott Money Family, the Beta Family, the Gamma
Family, the Delta Family, the Epsilon Family, the Zeta Family, the Eta Family
and the Theta Family. The RBB Family represents interests in one non-money
market portfolio as well as the Money Market and Municipal Money Market
Portfolios; the Warburg Pincus Family represents interests in the Growth &
Income, Balanced, and Tax Free Funds; the Cash Preservation Family represents
interests in the Money Market and Municipal Money Market Portfolios; the Sansom
Street Family represents interests in the Money Market, Municipal Money Market
and Government Obligations Money Market Portfolios; Bedford Family represents
interests in the Money Market, Municipal Money Market, Government Obligations
Money Market and New York Municipal Money Market Portfolios; the Bradford Family
represents interests in the Municipal Money Market and Government Obligations
Money Market Portfolios; the BEA Family represents interests in nine non-money
market portfolios; the Janney Montgomery Scott Family and the Beta, Gamma,
Delta, Epsilon, Zeta, Eta and Theta Families represent interests in the Money
Market, Municipal Money Market, Government Obligations Money Market and New York
Municipal Money Market Portfolios.
The Fund does not currently intend to hold annual meetings of
shareholders except as required by the 1940 Act or other applicable law. The
Fund's amended By-Laws provide that shareholders collectively owning at least
ten percent of the outstanding shares of all classes of Common Stock of the Fund
have the right to call for a meeting of shareholders to consider the removal of
one or more directors. To the extent required by law, the Fund will assist in
shareholder communication in such matters.
As stated in the Prospectus, holders of shares of each class of the
Fund will vote in the aggregate and not by class on all matters, except where
otherwise required by law. Further, shareholders of the Fund will vote in the
aggregate and not by portfolio except as otherwise required by law or when the
Board of Directors determines that the matter to be voted upon affects only the
interests of the shareholders of a particular portfolio. Rule 18f-2 under the
Investment Company Act provides that any matter required
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to be submitted by the provisions of such Act or applicable state law, or
otherwise, to the holders of the outstanding securities of an investment company
such as the Fund shall not be deemed to have been effectively acted upon unless
approved by the holders of a majority of the outstanding shares of each
portfolio affected by the matter. Rule 18f-2 further provides that a portfolio
shall be deemed to be affected by a matter unless it is clear that the interests
of each portfolio in the matter are identical or that the matter does not affect
any interest of the Portfolio. Under the Rule, the approval of an investment
advisory agreement or any change in a fundamental investment policy would be
effectively acted upon with respect to a portfolio only if approved by the
holders of a majority of the outstanding voting securities of such portfolio.
However, the Rule also provides that the ratification of the selection of
independent public accountants, the approval of principal underwriting contracts
and the election of directors are not subject to the separate voting
requirements and may be effectively acted upon by shareholders of an investment
company voting without regard to portfolio.
Notwithstanding any provision of Maryland law requiring a greater vote
of shares of the Fund's common stock (or of any class voting as a class) in
connection with any corporate action, unless otherwise provided by law, (for
example by Rule 18f-2 discussed above) or by the Fund's Articles of
Incorporation, the Fund may take or authorize such action upon the favorable
vote of the holders of more than 50% of all of the outstanding shares of Common
Stock voting without regard to class (or portfolio).
MISCELLANEOUS
COUNSEL. The law firm of Ballard Spahr Andrews & Ingersoll, 1735
Market Street, 51st Floor, Philadelphia, Pennsylvania 19103 serves as counsel to
the Fund, PIMC, PNC, PFPC and the Distributor. The law firm of Drinker Biddle &
Reath, 1100 Philadelphia National Bank Building, Broad and Chestnut Streets,
Philadelphia, Pennsylvania 19107, serves as counsel to the Fund's independent
directors.
INDEPENDENT ACCOUNTANTS. Coopers & Lybrand L.L.P., 2400 Eleven Penn
Center, Philadelphia, Pennsylvania 19103, serves as the Fund's independent
accountants. The Portfolios' financial statements which appear in this
Statement of Additional Information have been audited by Coopers & Lybrand
L.L.P., as set forth in their report, which also appears in this Statement of
Additional Information, and have been included herein in reliance upon the
report of such firm given upon their authority as experts in accounting and
auditing. [Note: Financial Statements to be provided by Post-Effective
Amendment.]
CONTROL PERSONS. As of September 29, 1995, to the Fund's knowledge,
the following named persons at the addresses shown below owned of record
approximately 5% or more of the total outstanding shares of the class of the
Fund indicated below. See "Additional Information Concerning Fund
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Shares" above. The Fund does not know whether such persons also beneficially
own such shares.
PORTFOLIO NAME AND ADDRESS PERCENT OWNED
- --------- ---------------- -------------
Warburg Pincus Charles Schwab & Co., Inc. 31.56
Growth & Income Fund Reinvest Account
(Class A) Attn: Mutual Funds Dept.
101 Montgomery Street
San Francisco, CA 94104-4122
National Financial Services Corp. 16.81
FBO Customers
P.O. Box 3908
Church Street Station
New York, New York 10008-3908
Warburg Pincus Charles Schwab & Co., Inc. 40.90
Balanced Fund Reinvest Account
(Class C) Attn: Mutual Funds Dept.
101 Montgomery Street
San Francisco, CA 94104-4122
National Financial Services Corp. 18.66
FBO Customers
P.O. Box 3908
Church Street Station
New York, New York 10008-3908
E.M. Warburg Pincus & Co., Inc. 6.22
466 Lexington Avenue
New York, New York 10017
-3140
Warburg Pincus Gruntal Co. 11.05
Tax Free Fund FBO 995-10702-19
(Class D) 14 Wall Street
New York, New York 10005-2176
Gruntal Co. 10.01
FBO 995-16852-14
14 Wall Street
New York, New York 10005-2176
RBB Money Market Luanne M. Garvey and Robert J. 7.855
Portfolio Garvey
(Class E) 2729 Woodland Avenue
Trooper, PA 19403
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PORTFOLIO NAME AND ADDRESS PERCENT OWNED
- --------- ---------------- -------------
PNC Bank, NA Custodian FBO 13.532
Harold T. Erfer
414 Charles Lane
Wynnewood, PA 19096
PNC Bank, NA Custodian FBO Karen 17.583
M. McElhinny and Contribution
Account
4943 King Arthur Drive
Erie, PA 16506
E.L. Haines Jr. and Betty J. 8.154
Haines
2341 Pinebluff Drive
Dallas, TX 75228
John Robert Estrada and 14.104
Shirley Ann Estrada
1700 Raton Drive
Arlington, TX 76018
Eric Levine and Linda & Howard 30.740
Levine
67 Lanes Pond Road
Howell, NJ 07731
RBB Municipal Money William B. Pettus Trust 10.862
Market Portfolio Augustine W. Pettus Trust
(Class F) 827 Winding Path Lane
St. Louis, MO 63021-6635
Seymour Fein 89.137
P.O. Box 486
Tremont Post Office
Bronx, NY 10457-0486
Cash Preservation Money Saver's Marketing Inc. 21.340
Market Portfolio c/o Planco
(Class G) 15 Industrial Blvd.
Paoli, PA 19301
Jewish Family and 43.178
Children's Agency of Philadelphia
Capital Campaign
Attn: S. Ramm
1610 Spruce Street
Philadelphia, PA 19103
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PORTFOLIO NAME AND ADDRESS PERCENT OWNED
- --------- ---------------- -------------
Lynda R. Succ Trustee for 8.262
in Trust under The
Lynda R. Campbell Caring Trust
935 Rutger Street
St. Louis, MO 63104
Cash Preservation Kenneth Farwell and Valerie 7.020
Municipal Money Market (Class H) Farwell Jt. Ten
Portfolio 3854 Sullivan
St. Louis, MO 63107
Larnie Johnson and Mary Alice 11.364
Johnson
4927 Lee Avenue
St. Louis, MO 63115-1726
Marcella L. Haugh Caring Trust 8.421
40 Plaza Square - Apt. 202
St. Louis, MO 63103
Deborah C. Brown of Trustee 29.929
for Barbara J.C. Custis Trustee
The Crowe Trust
9921 West 128th Terrace
Overland Park, KS 66213
Sansom Street Money Wasner & Co. 19.201
Market Portfolio FAO Paine Webber and Managed
(Class I) Assets Sundry Holdings
Attn: Joe Domizio
200 Stevens Drive
Lester, PA 19113
Saxon and Co. 72.138
FBO Paine Webber
P.O. Box 7780 1888
Philadelphia, PA 19182
Robertson Stephens & Co. 8.659
FBO Exclusive Benefit Investors
555 California St./#2600
San Francisco, CA 94104
BEA Strategic Fixed Chase Manhattan Bankers Trustee 17.782
Income Portfolio for Kendale Company Master Pension
(Class U) Plan
Attn: Mark Tesoriero
3 Metrotech Center
6th Floor
Brooklyn, NY 11245
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PORTFOLIO NAME AND ADDRESS PERCENT OWNED
- --------- ---------------- -------------
Temple Inland Master Retirement 5.848
Trust
303 South Temple Drive
Diboll, TX 75941
State of Oregon 55.136
Treasury Department
159 State Capital Building
Salem, OR 97310
BEA Emerging Markets Wachovia Bank North Carolina Trust 8.265
Equity Portfolio for Carolina Power & Light Co.
(Class V) Supplemental Retirement Trust
301 N. Main Street
Winston-Salem, NC 27101
Northern Trust Company Trustee 18.992
for Texas Instruments Employee Plan
P.O. Box 92956
Chicago, IL 60675-2956
Hall Family Foundation 19.126
P.O. Box 419580
Kansas City, MO 64208
Northern Trust 11.377
Trustee for Pillsbury
P.O. Box 92956
Chicago, IL 60675
Amherst H. Wilder Foundation 5.661
919 Lafond Avenue
St. Paul, MN 55104
BEA US Core Equity Bank of New York 62.094
Portfolio Trust APU Buckeye Pipeline
(Class X) One Wall Street
New York, NY 10286
Werner & Pfleiderer Pension 11.438
Plan Employees
663 E. Crescent Avenue
Ramsey, NJ 07446
BEA Associates 10.601
FAO Profit Sharing Trust
153 E. 53rd Street
New York, NY 10022
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PORTFOLIO NAME AND ADDRESS PERCENT OWNED
- --------- ---------------- -------------
BEA Associates 6.290
FAO Pension Trust
153 E. 53rd Street
New York, NY 10022
BEA US Core Fixed Income New England UFCW & Employers' 31.738
Portfolio Pension Fund Board of Trustees
(Class Y) 161 Forbes Road, Suite 201
Braintree, MA 02184
Bankers Trust 24.687
Trust Pechniney Corp. Pension
Master Trust
34 Exchange Place
4th Floor
Jersey City, NJ 07302
Kollmorgen Corporation 5.804
Pension Trust
1601 Thapelo Road
Waltham, MA 02154
Patterson & Co. 21.333
P.O. Box 7829
Philadelphia, PA 19102
BEA Global Fixed Income Sunkist Master Trust 64.337
Portfolio 14130 Riverside Drive
(Class Z) Sherman Oaks, CA 91423
Key Trust Co. of Ohio 35.661
FBO Eastern Enterp. Collective
Inv. Trust
P.O. Box 901536
Cleveland, OH 44202-1559
BEA Municipal Bond Fund William A. Marquard 29.495
Portfolio 2199 Maysville Rd.
(Class AA) Carlisle, KY 40311
Arnold Leon 10.306
c/o Fiduciary Trust Company
P.O. Box 3199
Church Street STATION
New York, NY 10008
Edgar E. Sharp 7.339
P.O. Box 8338
Longboat Key, FL 34228
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PORTFOLIO NAME AND ADDRESS PERCENT OWNED
- --------- ---------------- -------------
John C. Cahill 13.528
c/o David Holmgren
30 White Birch Lane
Cots Cob, CT 06870
Irwin Bard 7.255
1750 North East 183rd St.
North Miami Beach, FL 33160
Warburg Pincus Growth & Connecticut General Life Ins. Co. 98.63
Income Series 2 on behalf of its separate accounts
(Class DD) 55E 55F 55G c/o Melissa Spencer
M110
CIGNA Corp. P.O. Box 2975
Hartford, CT 06104-2975
Warburg Pincus Balanced Warburg Pincus Counsellors Inc. 85.12
Fund Series 2 Attn: Stephen Distler
(Class EE) 466 Lexington Avenue
10th Floor
New York, New York 10017-3140
Janney Montgomery Scott Janney Montgomery Scott 100
Money Market Portfolio 1801 Market Street
(Class Alpha 1) Philadelphia, PA 19103-1675
Janney Montgomery Scott Janney Montgomery Scott 100
Municipal Money Market 1801 Market Street
Portfolio Philadelphia, PA 19103-1675
(Class Alpha 2)
Janney Montgomery Scott Janney Montgomery Scott 100
Government Obligations 1801 Market Street
Money Market Portfolio Philadelphia, PA 19103-1675
(Class Alpha 3)
Janney Montgomery Scott Janney Montgomery Scott 100
New York Municipal Money 1801 Market Street
Market Portfolio Philadelphia, PA 19103-1675
(Class Alpha 4)
As of such date, no person owned of record or, to the Fund's
knowledge, beneficially, more than 25% of the outstanding shares of all classes
of the Fund.
As of the above date, directors and officers as a group owned less
than one percent of the shares of the Fund.
LITIGATION. There is currently no material litigation affecting the
Fund.
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BANKING LAWS. Banking laws and regulations currently prohibit a bank
holding company registered under the Federal Bank Holding Company Act of 1956 or
any bank or non-bank affiliate thereof from sponsoring, organizing, controlling
or distributing the shares of a registered, open-end investment company
continuously engaged in the issuance of its shares, and prohibit banks generally
from issuing, underwriting, selling or distributing securities, but such banking
laws and regulations do not prohibit such a holding company or affiliate or
banks generally from acting as investment adviser, transfer agent or custodian
to such an investment company, or from purchasing shares of such a company as
agent for and upon the order of such a customer. PNC, PIMC and PFPC are subject
to such banking laws and regulations. If PFPC or PNC were prohibited from
continuing to perform such services, it is expected that the Fund's Board of
Directors would recommend that the Fund enter into new agreements with other
qualified firms. Any new advisory agreement would be subject to shareholder
approval.
[Financial Statements to be provided by Post-Effective Amendment]
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APPENDIX
CORPORATE AND MUNICIPAL LONG-TERM DEBT RATINGS
The following summarizes the ratings used by Standard & Poor's for
corporate and municipal debt:
"AAA" - This designation represents the highest rating assigned by
Standard & Poor's to a debt obligation and indicates an extremely strong
capacity to pay interest and repay principal.
"AA" - Debt is considered to have a very strong capacity to pay
interest and repay principal and differs from "AAA" issues only in small degree.
"A" - Debt is considered to have a strong capacity to pay interest and
repay principal although such issues are somewhat more susceptible to the
adverse effects of changes in circumstances and economic conditions than debt in
higher-rated categories.
"BBB" - Debt is regarded as having an adequate capacity to pay
interest and repay principal. Whereas such issues normally exhibit adequate
protection parameters, adverse economic conditions or changing circumstances are
more likely to lead to a weakened capacity to pay interest and repay principal
for debt in this category than in higher-rated categories.
"BB," "B," and "CCC" - Debt that possesses one of these ratings is
regarded, on balance, as predominantly speculative with respect to capacity to
pay interest and repay principal in accordance with the terms of the obligation.
"BB" indicates the lowest degree of speculation and "CCC" the highest degree of
speculation. While such debt will likely have some quality and protective
characteristics, these are outweighed by large uncertainties or major risk
exposures to adverse conditions.
"CC" - This rating is reserved for issues that are currently in
arrears on dividends or sinking fund payments but that are currently paying.
"C" - This rating is reserved for income bonds on which no interest is
being paid.
"D" - Debt is in default, and payment of interest and/or repayment of
principal is in arrears.
PLUS (+) OR MINUS (-) - The ratings from "AA" through "CCC" may be
modified by the addition of a plus or minus sign to show relative standing
within the major rating categories.
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The following summarizes the ratings used by Moody's for corporate and
municipal long-term debt:
"Aaa" - Bonds are judged to be of the best quality. They carry the
smallest degree of investment risk and are generally referred to as "gilt edge."
Interest payments are protected by a large or by an 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 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 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 considered medium-grade obligations, i.e., they are
neither highly protected nor poorly secured. Interest payments and principal
security appear adequate for the present but certain protective elements may be
lacking or may be characteristically unreliable over any great length of time.
Such bonds lack outstanding investment characteristics and in fact have
speculative characteristics as well.
"Ba," "B," "Caa," "Ca," and "C" - Bonds that possess one of these
ratings provide questionable protection of interest and principal ("Ba"
indicates some speculative elements; "B" indicates a general lack of
characteristics of desirable investment; "Caa" represents a poor standing; "Ca"
represents obligations which are speculative in a high degree; and "C"
represents the lowest rated class of bonds). "Caa," "Ca" and "C" bonds may be in
default.
Con. (- - -) - Bonds for which the security depends upon the
completion of some act or the fulfillment of some condition are rated
conditionally. These are bonds secured by (a) earnings of projects under
construction, (b) earnings of projects unseasoned in operation experience, (c)
rentals which begin when facilities are completed, or (d) payments to which some
other limiting condition attaches. Parenthetical rating denotes probable credit
stature upon completion of construction or elimination of basis of condition.
Moody's applies numerical modifiers 1, 2 and 3 in each generic
classification from "Aa" to "B" in its bond rating system. The modifier 1
indicates that the company ranks in the higher end of its generic rating
A-2
<PAGE>
category; the modifier 2 indicates a mid-range ranking; and the modifier 3
indicates that the issue ranks at the lower end of its generic rating category.
MUNICIPAL NOTE RATINGS
A Standard and Poor's rating reflects the liquidity concerns and
market access risks unique to notes due in three years or less. The following
summarizes the ratings used by Standard & Poor's Corporation for municipal
notes:
"SP-1" - The issuers of these municipal notes exhibit very strong or
strong capacity to pay principal and interest. Those issues determined to
possess overwhelming safety characteristics are given a plus (+) designation.
"SP-2" - The issuers of these municipal notes exhibit satisfactory
capacity to pay principal and interest.
"SP-3" - The issuers of these municipal notes exhibit speculative
capacity to pay principal and interest.
Moody's ratings for state and municipal notes and other short-term
loans are designated Moody's Investment Grade ("MIG") and variable rate demand
obligations are designated Variable Moody's Investment Grade ("VMIG"). Such
ratings recognize the differences between short-term credit risk and long-term
risk. The following summarizes the ratings by Moody's Investors Service, Inc.
for short-term notes:
"MIG-1"/"VMIG-1" - Loans bearing this designation are of the best
quality, enjoying strong protection by established cash flows, superior
liquidity support or demonstrated broad-based access to the market for
refinancing.
"MIG-2"/"VMIG-2" - Loans bearing this designation are of high quality,
with margins of protection ample although not so large as in the preceding
group.
"MIG-3"/"VMIG-3" - Loans bearing this designation are of favorable
quality, with all security elements accounted for but lacking the undeniable
strength of the preceding grades. Liquidity and cash flow protection may be
narrow and market access for refinancing is likely to be less well established.
"MIG-4"/"VMIG-4" - Loans bearing this designation are of adequate
quality, carrying specific risk but having protection commonly regarded as
required of an investment security and not distinctly or predominantly
speculative.
A-3
<PAGE>
"SG" - Loans bearing this designation are of speculative quality and
lack margins of protection.
A-4
<PAGE>
PART C
OTHER INFORMATION
Item 24. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements:
(1) Included in Part A of the Registration Statement:
None
Included in Part B of the Registration Statement:
None
(b) Exhibits: See Note #
----------
(1) (a) Articles of Incorporation of Registrant 1
(b) Articles Supplementary of Registrant. 1
(c) Articles of Amendment to Articles of
Incorporation of Registrant. 2
(d) Articles Supplementary of Registrant. 2
(e) Articles Supplementary of Registrant. 5
(f) Articles Supplementary of Registrant. 6
(g) Articles Supplementary of Registrant. 9
(h) Articles Supplementary of Registrant. 10
(i) Articles Supplementary of Registrant. 14
(j) Articles Supplementary of Registrant. 14
(k) Articles Supplementary of Registrant. 19
(l) Articles Supplementary of Registrant. 19
(m) Articles Supplementary of Registrant. 19
(n) Articles Supplementary of Registrant. 19
(o) Articles Supplementary of Registrant 20
<PAGE>
See Note #
----------
(2) Amended By-Laws adopted August 16, 1988. 3
(a) Amendment to By-Laws adopted July 25, 1989. 4
(b) By-Laws amended through October 24, 1989. 5
(3) None.
(4) Specimen Certificates
a) SafeGuard Equity Growth and Income Shares 3
b) SafeGuard Fixed Income Shares 3
c) SafeGuard Balanced Shares 3
d) SafeGuard Tax-Free Shares 3
e) SafeGuard Money Market Shares 3
f) SafeGuard Tax-Free Money Market Shares 3
g) Cash Preservation Money Market Shares 3
h) Cash Preservation Tax-Free Money
Market Shares 3
i) Sansom Street Money Market Shares 3
j) Sansom Street Tax-Free Money Market Shares 3
k) Sansom Street Government Obligations Money 3
Market Shares
l) Bedford Money Market Shares
m) Bedford Tax-Free Money Market Shares 3
n) Bedford Government Obligations Money Market 3
Shares
o) Bedford New York Municipal Money
Market Shares 5
p) SafeGuard Government Securities Shares 5
q) Income Opportunities High Yield Bond Shares 6
r) Bradford Tax-Free Money Market Shares 8
s) Bradford Government Obligations Money Market 8
Shares
t) Alpha 1 Money Market Shares 8
u) Alpha 2 Tax-Free Money Market Shares 8
v) Alpha 3 Government Obligations Money Market 8
Shares
w) Alpha 4 New York Municipal Money Market 8
Shares
x) Beta 1 Money Market Shares 8
y) Beta 2 Tax-Free Money Market Shares 8
z) Beta 3 Government Obligations Money Market 8
Shares
aa) Beta 4 New York Municipal Money Market Shares 8
bb) Gamma 1 Money Market Shares 8
cc) Gamma 2 Tax-Free Money Market Shares 8
dd) Gamma 3 Government Obligations Money Market 8
Shares
ee) Gamma 4 New York Municipal Money Market Shares 8
ff) Delta 1 Money Market Shares 8
gg) Delta 2 Tax-Free Money Market Shares 8
2
<PAGE>
See Note #
----------
hh) Delta 3 Government Obligations Money Market 8
Shares
ii) Delta 4 New York Municipal Money
Market Shares 8
jj) Epsilon 1 Money Market Shares 8
kk) Epsilon 2 Tax-Free Money Market Shares 8
ll) Epsilon 3 Government Obligations Money
Market Shares 8
mm) Epsilon 4 New York Municipal Money
Market Shares 8
nn) Zeta 1 Money Market Shares 8
oo) Zeta 2 Tax-Free Money Market Shares 8
pp) Zeta 3 Government Obligations Money
Market Shares 8
qq) Zeta 4 New York Municipal Money Market Shares
rr) Eta 1 Money Market Shares 8
ss) Eta 2 Tax-Free Money Market Shares 8
tt) Eta 3 Government Obligations Money Market 8
Shares
uu) Eta 4 New York Municipal Money Market Shares 8
vv) Theta 1 Money Market Shares 8
ww) Theta 2 Tax-Free Money Market Shares 8
xx) Theta 3 Government Obligations Money Market 8
Shares
yy) Theta 4 New York Municipal Money Market 8
Shares
zz) BEA International Equity Shares 9
a1) BEA Strategic Fixed Income Shares 9
a2) BEA Emerging Markets Equity Shares 9
a3) Laffer/Canto Equity Shares 12
a4) BEA U.S. Core Equity Shares 13
a5) BEA U.S. Core Fixed Income Shares 13
a6) BEA Global Fixed Income Shares 13
a7) BEA Municipal Bond Shares 13
a8) BEA Balanced Shares 16
a9) BEA Short Duration Shares 16
a10) Warburg Growth & Income Shares 18
a11) Warburg Balanced Shares 18
(5) (a) Investment Advisory Agreement (Money) 3
between Registrant and Provident
Institutional Management Corporation,
dated as of August 16, 1988.
(b) Sub-Advisory Agreement (Money) between 3
Provident Institutional Management
Corporation and Provident National Bank,
dated as of August 16, 1988.
(c) Investment Advisory Agreement 3
(Tax -Free Money) between Registrant and
3
<PAGE>
See Note #
----------
Provident Institutional Management
Corporation, dated as of August 16, 1988.
(d) Sub-Advisory Agreement (Tax-Free Money) 3
between Provident Institutional Management
Corporation and Provident National Bank,
dated as of August 16, 1988.
(e) Investment Advisory Agreement 3
(Government Money) between Registrant and
Provident Institutional Management
Corporation, dated as of August 16, 1988.
(f) Sub-Advisory Agreement (Government Money) 3
between Provident Institutional Management
Corporation and Provident National Bank,
dated as of August 16, 1988.
(k) Investment Advisory Agreement (Balanced) 3
between Registrant and Provident
Institutional Management Corporation,
dated as of August 16, 1988.
(l) Sub-Advisory Agreement (Balanced) between 4
Provident Institutional Management
Corporation and Provident National Bank,
dated as of August 16, 1988.
(m) Investment Advisory Agreement (Tax-Free) 3
between Registrant and Provident
Institutional Management Corporation,
dated as of August 16, 1988.
(n) Sub-Advisory Agreement (Tax-Free) between 3
Provident Institutional Management
Corporation and Provident National Bank,
dated as of August 16, 1988.
(s) Investment Advisory Agreement 8
(Government Securities) between Registrant
and Provident Institutional Management
Corporation dated as of April 8, 1991.
(t) Investment Advisory Agreement 8
(High Yield Bond) between Registrant
and Provident Institutional Management
Corporation dated as of April 8, 1991.
(u) Sub-Advisory Agreement (High Yield Bond) 8
between Registrant and Warburg,
Pincus Counsellors, Inc.
4
<PAGE>
See Note #
----------
dated as of April 8, 1991.
(v) Investment Advisory Agreement 9
(New York Municipal Money Market) between
Registrant and Provident Institutional
Management Corporation dated
November 5, 1991.
(w) Investment Advisory Agreement (Equity) 10
between Registrant and Provident
Institutional Management Corporation
dated November 5, 1991.
(x) Sub-Advisory Agreement (Equity) between 10
Registrant, Provident Institutional
Management Corporation and Warburg,
Pincus Counsellors, Inc. dated
November 5, 1991.
(y) Investment Advisory Agreement 10
(Tax-Free Money Market) between
Registrant and Provident Institutional
Management Corporation dated
April 21, 1992.
(z) Investment Advisory Agreement 11
(BEA International Equity Portfolio)
between Registrant and BEA Associates.
(aa) Investment Advisory Agreement 11
(BEA Strategic Fixed Income Portfolio)
between Registrant and BEA Associates.
(bb) Investment Advisory Agreement 11
(BEA Emerging Markets Equity Portfolio)
between Registrant and BEA Associates.
(cc) Investment Advisory Agreement 14
(Laffer/Canto Equity Portfolio)
between Registrant and Laffer Advisors
Incorporated, dated as of July 21, 1993.
(dd) Sub-Advisory Agreement 12
(Laffer/Canto Sector Equity Portfolio)
between PNC Institutional Management
Corporation and Laffer Advisors
Incorporated, dated as of July 21, 1993.
(ee) Investment Advisory Agreement 15
(BEA U.S. Core Equity Portfolio) between
Registrant and BEA Associates, dated as
5
<PAGE>
See Note #
----------
of October 27, 1993.
(ff) Investment Advisory Agreement 15
(BEA U.S. Core Fixed Income Portfolio)
between Registrant and BEA Associates,
dated as of October 27, 1993.
(gg) Investment Advisory Agreement 15
(BEA Global Fixed Income Portfolio)
between Registrant and BEA Associates,
dated as of October 27, 1993.
(hh) Investment Advisory Agreement 15
(BEA Municipal Bond Fund Portfolio)
between Registrant and BEA Associates,
dated as of October 27, 1993.
(ii) Investment Advisory Agreement 14
(Warburg Pincus Growth and Income Fund)
between Registrant and Warburg,
Pincus Counsellors, Inc.
(jj) Investment Advisory Agreement 16
(Warburg Pincus Balanced Fund) between
Registrant and Warburg, Pincus Counsellors,
Inc.
(kk) Form of Investment Advisory Agreement 16
(BEA Balanced) between Registrant and
BEA Associates.
(ll) Form of Investment Advisory Agreement 16
(BEA Short Duration Portfolio) between
Registrant and BEA Associates.
(mm) Investment Advisory Agreement (Warburg 21
Pincus Tax Free Fund) between Registrant
and Warburg, Pincus Counsellors, Inc.
(6) (r) Distribution Agreement and Supplements 8
(Classes A through Q) between the
Registrant and Counsellors Securities Inc.
dated as of April 10, 1991.
(s) Distribution Agreement Supplement 9
(Classes L, M, N and O) between the
Registrant and Counsellors Securities
Inc. dated as of November 5, 1991.
(t) Distribution Agreement Supplements 9
(Classes R, S, and Alpha 1 through Theta 4)
6
<PAGE>
See Note #
----------
between the Registrant and Counsellors
Securities Inc. dated as of November
5, 1991.
(u) Distribution Agreement Supplement 10
(Classes T, U and V) between the Registrant
and Counsellors Securities Inc.
dated as of September 18, 1992.
(v) Distribution Agreement Supplement 14
(Class W) between the Registrant and
Counsellors Securities Inc. dated as of
July 21, 1993.
(w) Distribution Agreement Supplement 14
(Classes X, Y, Z and AA) between the
Registrant and Counselors Securities Inc.
(x) Distribution Agreement Supplement 18
(Classes BB and CC) between Registrant
and Counsellor's Securities Inc. dated
as of October 26, 1994.
(y) Distribution Agreement Supplement 18
(Classes DD and EE) between Registrant and
Counsellor's Securities Inc. dated as of
October 26, 1994.
(z) Form of Distribution Agreement Supplement 19
(Classes L, M, N and O) between the
Registrant and Counsellor's Securities
Inc.
(aa) Form of Distribution Agreement Supplement 19
(Classes R, S) between the Registrant and
Counsellor's Securities Inc.
(bb) Distribution Agreement Supplements 19
(Classes Alpha 1 through Theta 4) between
the Registrant and Counsellor's Securities
Inc.
(cc) Distribution Agreement Supplement Janney 20
Classes (Alpha 1, Alpha 2, Alpha 3 and
Alpha 4 between the Registrant and
Counsellor's Securities, Inc.
(7) Fund Office Retirement Profit-Sharing and 7
Trust Agreement, dated as of October 24, 1990.
(8) (a) Custodian Agreement between Registrant and 3
7
<PAGE>
See Note #
----------
Provident National Bank dated as of
August 16, 1988.
(b) Sub-Custodian Agreement among 10
The Chase Manhattan Bank, N.A., the
Registrant and Provident National Bank,
dated as of July 13, 1992, relating to
custody of Registrant's foreign securities.
(e) Amendment No. 1 to Custodian Agreement 9
dated August 16, 1988.
(f) Agreement between Brown Brothers Harriman 10
& Co. and Registrant on behalf of
BEA International Equity Portfolio,
dated September 18, 1992.
(g) Agreement between Brown Brothers Harriman & 10
Co. and Registrant on behalf of BEA
Strategic Fixed Income Portfolio, dated
September 18, 1992.
(h) Agreement between Brown Brothers Harriman 10
& Co. and Registrant on behalf of
BEA Emerging Markets Equity Portfolio,
dated September 18, 1992.
(i) Agreement between Brown Brothers Harriman 15
& Co. and Registrant on behalf of BEA
Emerging Markets Equity, BEA International
Equity, BEA Strategic Fixed Income and BEA
Global Fixed Income Portfolios,
dated as of November 29, 1993.
(j) Agreement between Brown Brothers Harriman 15
& Co. and Registrant on behalf of
BEA U.S. Core Equity and BEA U.S. Core
Fixed Income Portfolio dated as of
November 29, 1993.
(k) Custodian Contract between 18
Registrant and State Street Bank and
Trust Company.
(9) (a) Transfer Agency Agreement (Sansom Street) 3
between Registrant and Provident
Financial Processing Corporation,
dated as of August 16, 1988.
(b) Transfer Agency Agreement (Cash Preservation) 3
between Registrant and Provident Financial
8
<PAGE>
See Note #
----------
Processing Corporation, dated as of
August 16, 1988.
(c) Shareholder Servicing Agreement 3
(Sansom Street Money).
(d) Shareholder Servicing Agreement 3
(Sansom Street Tax-Free Money).
(e) Shareholder Servicing Agreement 3
(Sansom Street Government Money).
(f) Shareholder Services Plan 3
(Sansom Street Money).
(g) Shareholder Services Plan 3
(Sansom Street Tax-Free Money).
(h) Shareholder Services Plan 3
(Sansom Street Government Money).
(i) Transfer Agency Agreement (SafeGuard) 3
between Registrant and Provident Financial
Processing Corporation, dated as of
August 16, 1988.
(j) Transfer Agency Agreement (Bedford) 3
between Registrant and Provident
Financial Processing Corporation,
dated as of August 16, 1988.
(k) Transfer Agency Agreement 7
(Income Opportunities) between Registrant
and Provident Financial Processing
Corporation dated June 25, 1990.
(l) Administration and Accounting Services 8
Agreement between Registrant and
Provident Financial Processing
Corporation, relating to Government
Securities Portfolio, dated as of
April 10, 1991.
(m) Administration and Accounting Services 9
Agreement between Registrant and
Provident Financial Processing
Corporation, relating to
New York Municipal Money Market
Portfolio dated as of November 5, 1991.
(n) Administration and Accounting Services 9
9
<PAGE>
See Note #
----------
Agreement between Registrant and Provident
Financial Processing Corporation, relating
to Equity Portfolio dated as of
November 5, 1991.
(o) Administration and Accounting Services 9
Agreement between Registrant and Provident
Financial Processing Corporation, relating
to High Yield Bond Portfolio,
dated as of April 10, 1991.
(p) Administration and Accounting Services 10
Agreement between Registrant and Provident
Financial Processing Corporation
(International) dated September 18, 1992.
(q) Administration and Accounting Services 10
Agreement between Registrant and Provident
Financial Processing Corporation (Strategic)
dated September 18, 1992;
(r) Administration and Accounting Services 10
Agreement between Registrant and Provident
Financial Processing Corporation (Emerging)
dated September 18, 1992.
(s) Transfer Agency Agreement and Supplements 9
(Bradford, Alpha, Beta, Gamma, Delta,
Epsilon, Zeta, Eta and Theta) between
Registrant and Provident Financial
Processing Corporation dated as of
November 5, 1991.
(t) Transfer Agency Agreement Supplement 10
(BEA) between Registrant and Provident
Financial Processing Corporation
dated as of September 18, 1992.
(u) Administrative Services Agreement between 10
Registrant and Counsellor's Fund
Services, Inc. (BEA Portfolios)
dated September 18, 1992.
(v) Administration and Accounting Services 10
Agreement between Registrant and Provident
Financial Processing Corporation, relating
to Tax-Free Money Market Portfolio, dated
as of April 21, 1992.
(w) Transfer Agency Agreement Supplement 12
(Laffer) between Registrant and PFPC Inc.
10
<PAGE>
See Note #
----------
dated as of July 21, 1993.
(x) Administration and Accounting Services 12
Agreement between Registrant and PFPC Inc.,
relating to Laffer/Canto Equity Fund,
dated July 21, 1993.
(y) Transfer Agency Agreement Supplement 15
(BEA U.S. Core Equity, BEA U.S.
Core Fixed Income, BEA Global Fixed Income
and BEA Municipal Bond Fund) between
Registrant and PFPC Inc. dated as of
October 27, 1993.
(z) Administration and Accounting Services 15
Agreement between Registrant and PFPC Inc.
relating to (Core Equity) dated as of
October 27, 1993.
(aa) Administration and Accounting Services 15
Agreement between Registrant and PFPC Inc.
(Core Fixed Income) dated
October 27, 1993.
(bb) Administration and Accounting Services 15
Agreement between Registrant and
PFPC Inc. (International Fixed Income)
dated October 27, 1993
(cc) Administration and Accounting Services 15
Agreement between Registrant and PFPC Inc.
(Municipal Bond) dated October 27, 1993.
(dd) Transfer Agency Agreement Supplement 18
(BEA Balanced and Short Duration) between
Registrant and PFPC Inc. dated
October 26, 1994.
(ee) Administration and Accounting Services 18
Agreement between Registrant and PFPC Inc.
(BEA Balanced) dated October 26, 1994.
(ff) Administration and Accounting Services 18
Agreement between Registrant and PFPC Inc.
(BEA Short Duration) dated
October 26, 1994.
(gg) Co-Administration Agreement between 18
Registrant and PFPC Inc. (Warburg Pincus
Growth & Income Fund) dated
August 4, 1994.
11
<PAGE>
See Note #
----------
(hh) Co-Administration Agreement between 18
Registrant and PFPC Inc. (Warburg Pincus
Balanced Fund) dated August 4, 1994.
(ii) Co-Administration Agreement between 18
Registrant and Counsellors Funds Services,
Inc. (Warburg Pincus Growth & Income Fund)
dated August 4, 1994.
(jj) Co-Administration Agreement between 18
Registrant and Counsellors Funds Services,
Inc. (Warburg Pincus Balanced Fund) dated
August 4, 1994.
(kk) Administrative Services Agreement Supplement 18
between Registrant and Counsellor's Fund
Services, Inc. (BEA Classes) dated
October 26, 1994.
(ll) Co-Administration Agreement between 21
Registrant and PFPC Inc. (Warburg Pincus
Tax Free Fund) dated March 31, 1995.
(mm) Co-Administration Agreement between 21
Registrant and Counsellors Funds
Services, Inc. (Warburg Pincus Tax Free
Fund) dated March 31, 1995.
(nn) Transfer Agency and Service Agreement 21
between Registrant and State Street
Bank and Trust Company and PFPC, Inc.
dated February 1, 1995.
(oo) Supplement to Transfer Agency and Service 21
Agreement between Registrant, State Street
Bank and Trust Company, Inc. and PFPC
dated April 10, 1995.
(pp) Amended and Restated Credit Agreement dated
December 15, 1994
(10)(a) Opinion of Counsel.
Incorporated by reference herein to
Registrant's 24f-2 Notice for the fiscal
year ending August 31, 1994 filed
on October 7, 1994.
(b) Consent of Counsel.
12
<PAGE>
See Note #
----------
(11) Consent of Independent Accountants.
None.
(12) None.
(13)(a) Subscription Agreement (relating to 2
Classes A through N).
(b) Subscription Agreement between Registrant 7
and Planco Financial Services, Inc.,
relating to Classes O and P.
(c) Subscription Agreement between Registrant and 7
Planco Financial Services, Inc., relating to
Class Q.
(d) Subscription Agreement between Registrant 9
and Counsellors Securities Inc. relating to
Classes R, S, and Alpha 1 through Theta 4.
(e) Subscription Agreement between Registrant 10
and Counsellors Securities Inc. relating to
Classes T, U and V.
(f) Subscription Agreement between Registrant 18
and Counsellor's Securities Inc. relating to
Classes BB and CC.
(g) Purchase Agreement between Registrant and 21
Counsellors Securities Inc. relating to
Class DD (Warburg Pincus Growth & Income
Fund Series 2).
(h) Purchase Agreement between Registrant and 21
Counsellors Securities Inc. relating to
Class EE (Warburg Pincus Balanced Fund
Series 2).
(14) None.
(15)(a) Plan of Distribution (Sansom Street Money). 3
(b) Plan of Distribution (Sansom Street Tax-Free 3
Money).
(c) Plan of Distribution (Sansom Street 3
Government Money).
(d) Plan of Distribution (Cash Preservation 3
Money).
13
<PAGE>
See Note #
----------
(e) Plan of Distribution (Cash Preservation 3
Tax-Free Money).
(f) Plan of Distribution (SafeGuard Equity). 3
(g) Plan of Distribution 3
(SafeGuard Fixed Income).
(h) Plan of Distribution (SafeGuard Balanced). 3
(i) Plan of Distribution (SafeGuard Tax-Free). 3
(j) Plan of Distribution (SafeGuard Money). 3
(k) Plan of Distribution (SafeGuard Tax-Free
Money). 3
(l) Plan of Distribution (Bedford Money). 3
(m) Plan of Distribution (Bedford Tax-Free 3
Money).
(n) Plan of Distribution (Bedford Government 3
Money).
(o) Plan of Distribution (Bedford New York 7
Municipal Money).
(p) Plan of Distribution (SafeGuard Government 7
Securities).
(q) Plan of Distribution (Income Opportunities 7
High Yield).
(r) Amendment No. 1 to Plans of Distribution 8
(Classes A through Q).
(s) Plan of Distribution (Bradford Tax-Free 9
Money).
(t) Plan of Distribution (Bradford Government 9
Money).
(u) Plan of Distribution (Alpha Money). 9
(v) Plan of Distribution (Alpha Tax-Free 9
Money).
(w) Plan of Distribution (Alpha Government 9
Money).
14
<PAGE>
See Note #
----------
(x) Plan of Distribution (Alpha New York 9
Money).
(y) Plan of Distribution (Beta Money). 9
(z) Plan of Distribution (Beta Tax-Free 9
Money).
(aa) Plan of Distribution (Beta Government 9
Money).
(bb) Plan of Distribution (Beta New York 9
Money).
(cc) Plan of Distribution (Gamma Money). 9
(dd) Plan of Distribution (Gamma Tax-Free 9
Money).
(ee) Plan of Distribution (Gamma Government 9
Money).
(ff) Plan of Distribution (Gamma New York 9
Money).
(gg) Plan of Distribution (Delta Money). 9
(hh) Plan of Distribution (Delta Tax-Free 9
Money).
(ii) Plan of Distribution (Delta Government 9
Money).
(jj) Plan of Distribution (Delta New York 9
Money).
(kk) Plan of Distribution (Epsilon Money). 9
(ll) Plan of Distribution (Epsilon Tax-Free 9
Money).
(mm) Plan of Distribution (Epsilon Government 9
Money).
(nn) Plan of Distribution (Epsilon New York 9
Money).
(oo) Plan of Distribution (Zeta Money). 9
(pp) Plan of Distribution (Zeta Tax-Free 9
Money).
15
<PAGE>
See Note #
----------
(qq) Plan of Distribution (Zeta Government 9
Money).
(rr) Plan of Distribution (Zeta New York 9
Money).
(ss) Plan of Distribution (Eta Money). 9
(tt) Plan of Distribution (Eta Tax-Free Money). 9
(uu) Plan of Distribution (Eta Government 9
Money).
(vv) Plan of Distribution (Eta New York 9
Money).
(ww) Plan of Distribution (Theta Money). 9
(xx) Plan of Distribution (Theta Tax-Free 9
Money).
(yy) Plan of Distribution (Theta Government 9
Money).
(zz) Plan of Distribution (Theta New York 9
Money).
(aaa) Plan of Distribution (Laffer Equity). 12
(bbb) Plan Distribution (Warburg Pincus Growth 18
& Income Series 2).
(ccc) Plan of Distribution (Warburg Pincus 18
Balanced Series 2).
(16) Schedule of Computation of Performance 3
Quotations.
(17) None.
(18) Rule 18f-3 Plan. 21
16
<PAGE>
_________________
Note #
- ------
1 Incorporated herein by reference to the same exhibit number of
Registrant's Registration Statement (No. 33-20827) filed on March 24,
1988.
2 Incorporated herein by reference to the same exhibit number of
Pre-Effective Amendment No. 2 to Registrant's Registration Statement (No.
33-20827) filed on July 12, 1988.
3 Incorporated herein by reference to the same exhibit number of
Post-Effective Amendment No. 1 to Registrant's Registration Statement (No.
33-20827) filed on March 23, 1989.
4 Incorporated herein by reference to the same exhibit number of
Post-Effective Amendment No. 2 to Registrant's Registration Statement (No.
33-20827) filed on October 25, 1989.
5 Incorporated herein by reference to the same exhibit number of
Post-Effective Amendment No. 3 to the Registrant's Registration Statement
(No. 33-20827) filed on April 27, 1990.
6 Incorporated herein by reference to the same exhibit number of
Post-Effective Amendment No. 4 to the Registrant's Registration Statement
(No. 33-20827) filed on May 1, 1990.
7 Incorporated herein by reference to the same exhibit number of
Post-Effective Amendment No. 5 to the Registrant's Registration Statement
(No. 33-20827) filed on December 14, 1990.
8 Incorporated herein by reference to the same exhibit number of
Post-Effective Amendment No. 6 to the Registrant's Registration Statement
(No. 33-20827) filed on October 24, 1991.
9 Incorporated herein by reference to the same exhibit number of
Post-Effective Amendment No. 7 to the Registrant's Registration Statement
(No. 33-20827) filed on July 15, 1992.
10 Incorporated herein by reference to the same exhibit number of
Post-Effective Amendment No. 8 to the Registrant's Registration Statement
(No. 33-20827) filed on October 22, 1992.
11 Incorporated herein by reference to the same exhibit number of
Post-Effective Amendment No. 9 to the Registrant's Registration Statement
(No. 33-20827) filed on December 16, 1992.
12 Incorporated herein by reference to the same exhibit number of
Post-Effective Amendment No. 11 to the Registrant's Registrant Statement
(No. 33-20827) filed on June 21, 1993.
17
<PAGE>
13 Incorporated herein by reference to the same exhibit number Post-Effective
Amendment No. 12 to the Registrant's Registration Statement (No. 33-20827)
filed on July 27, 1993.
14 Incorporated herein by reference to the same exhibit number of
Post-Effective Amendment No. 13 to the Registrant's Registration Statement
(No. 33-20827) filed on October 29, 1993.
15 Incorporated herein by reference to the same exhibit number of
Post-Effective Amendment No. 14 to the Registrant's Registration Statement
No. 33-20827 filed on December 21, 1993.
16 Incorporated herein by reference to the same exhibit number of
Post-Effective Amendment No. 19 to the Registrant's Registration Statement
(No. 33-20827) filed on October 14, 1994.
17 Incorporated herein by reference to the same exhibit number of
Post-Effective Amendment No. 20 to the Registrant's Registration Statement
No. 33-20827 filed on October 21, 1994.
18 Incorporated herein by reference to the same exhibit number of
Post-Effective Amendment No. 21 to the Registrant's Registration Statement
No. 33-20827 filed on October 28, 1994.
19 Incorporated herein by reference to the same exhibit number of
Post-Effective Amendment No. 22 to the Registrant's Registration Statement
No. 33-20827 filed on December 19, 1994.
20 Incorporated herein by reference to the same exhibit number of
Post-Effective Amendment No. 27 to the Registrant's Registration Statement
No. 33-20827 filed on March 31, 1995.
21 Incorporated herein by reference to the same exhibit number of
Post-Effective Amendment No. 28 to the Registrant's Registration Statement
No. 33-20827 filed on October 6, 1995.
Item 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT
None.
Item 26. NUMBER OF HOLDERS OF SECURITIES
The following information is given as of September 29, 1995.
<TABLE>
<CAPTION>
Title of Class of Common Stock Number of Record Holders
------------------------------ ------------------------
<S> <C>
a) Warburg Pincus Growth & Income 36,122
b) Warburg Pincus Balance 234
c) Warburg Pincus Tax-Free 155
d) RBB Money Market 12
18
<PAGE>
e) RBB Municipal Money Market 2
f) Cash Preservation Money Market 37
g) Cash Preservation Municipal Money Market 74
h) Sansom Street Money Market 3
i) Sansom Street Municipal Money Market 0
j) Sansom Street Government Obligations 0
Money Market
k) Bedford Money Market 87,305
l) Bedford Municipal Money Market 4,488
m) Bedford Government Obligations Money 3,675
Market
n) Bedford New York Municipal Money Market 2,819
o) RBB Government Securities 661
p) Bradford Municipal Money Market 3,318
q) Bradford Government Obligations Money 1,811
Market
r) BEA International Equity 177
s) BEA Strategic Fixed Income 42
t) BEA Emerging Markets Equity 45
u) BEA U.S. Core Equity 30
v) BEA U.S. Core Fixed Income 28
w) BEA U.S. Global Fixed Income 1
x) BEA Municipal Bond fund 33
y) BEA Short Duration 0
z) BEA Balanced 0
aa) Janney Montgomery Scott 1
Money Market
bb) Janney Montgomery Scott 1
Municipal Money Market
cc) Janney Montgomery Scott 1
Government Obligations Money Market
dd) Janney Montgomery Scott 1
New York Municipal Money Market
ee) Warburg Pincus Growth & Income Series 2 8
ff) Warburg Pincus Balanced Series 2 5
</TABLE>
Item 27. INDEMNIFICATION
Sections 1, 2, 3 and 4 of Article VIII of Registrant's Articles of
Incorporation, as amended, incorporated herein by reference as Exhibits 1(a) and
1(c), provide as follows:
Section 1. To the fullest extent that limitations on the
liability of directors and officers are permitted by the Maryland
General Corporation Law, no director or officer of the Corporation
shall have any liability to the Corporation or its shareholders for
damages. This limitation on liability applies to events occurring
at the time a person serves as a director or officer of the
Corporation whether or not such person is a director or officer at
the time of any proceeding in which liability is asserted.
19
<PAGE>
Section 2. The Corporation shall indemnify and advance
expenses to its currently acting and its former directors to the
fullest extent that indemnification of directors is permitted by the
Maryland General Corporation Law. The Corporation shall indemnify
and advance expenses to its officers to the same extent as its
directors and to such further extent as is consistent with law. The
Board of Directors may by By-law, resolution or agreement make
further provision for indemnification of directors, officers,
employees and agents to the fullest extent permitted by the Maryland
General Corporation Law.
Section 3. No provision of this Article shall be effective to
protect or purport to protect any director or officer of the
Corporation against any liability to the Corporation or its security
holders 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.
Section 4. References to the Maryland General Corporation Law
in this Article are to the law as from time to time amended. No
further amendment to the Articles of Incorporation of the
Corporation shall decrease, but may expand, any right of any person
under this Article based on any event, omission or proceeding prior
to such amendment.
Insofar as indemnification for liability arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of Registrant pursuant to the foregoing provisions, or otherwise,
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by Registrant of expenses
incurred or paid by a director, officer or controlling person of Registrant in
the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, Registrant will, unless in the opinion of its counsel the matter has
been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
Item 28. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER
Information as to any other business, profession, vocation or
employment of a substantial nature in which any directors and officers of PIMC,
BEA, and Warburg are, or at any time during the past two (2) years have been,
engaged for their own accounts or in the capacity of director, officer,
employee, partner or trustee is incorporated herein by reference to Schedules
20
<PAGE>
A and D of PIMC's Form ADV (File No. 801-13304) filed on March 28, 1993,
Schedules B and D of BEA's Form ADV (File No. 801-37170) filed on March 30,
1993, and Schedules A and D of Warburg's Form ADV (File No. 801-07321) filed on
August 28, 1992, respectively.
There is set forth below information as to any other business,
profession, vocation or employment of a substantial nature in which each
director or officer of PNC Bank, National Association (successor by merger to
Provident National Bank) ("PNC Bank"), is, or at any time during the past two
years has been, engaged for his own account or in the capacity of director,
officer, employee, partner or trustee.
PNC BANK, NATIONAL ASSOCIATION
Directors and Officers
To the knowledge of Registrant, none of the directors or officers of
PNC except those set forth below, is or has been, at any time during the past
two years, engaged in any other business, profession, vocation or employment of
a substantial nature, except that certain directors and officers of PNC Bank
also hold various positions with, and engage in business for, PNC Bank Corp.
(formerly PNC Financial Corp), which owns all the outstanding stock of PNC Bank,
or other subsidiaries of PNC Bank Corp. Set forth below are the names and
principal businesses of the directors and certain of the senior executive
officers of PNC Bank who are engaged in any other business, profession, vocation
or employment of substantial nature.
21
<PAGE>
PNC BANK, NATIONAL ASSOCIATION
<TABLE>
<CAPTION>
Position with
PNC Bank,
National Other Business Type of
Association Name Connections Business
- ------------- ---- -------------- --------
<S> <C> <C> <C>
Director B.R. Brown President and C.E.O. of Coal
Consol, Inc.
Pittsburgh, PA (22)
Director Constance E. Clayton Superintendent of Schools Educator
The School District of
Philadelphia
Philadelphia, PA (23)
Director F. Eugene Dixon, Jr. Private Trustee Trustee
Lafayette Hill, PA (24)
Director A. James Freeman Vice Chairman and C.E.O. Manufacturing
Lord Corporation
Erie, PA (25)
Director Banking
Marine Bank
Erie, PA (26)
Director Dr. Stuart Heydt President and C.E.O. Medical
Geisinger Foundation
Danville, PA (27)
Director Edward P. Junker, III Chairman and C.E.O. Banking
Marine Bank
Erie, PA (26)
Director Thomas A. McConomy President, C.E.O. and Manufacturing
Chairman, Calgon Carbon
Corporation
Pittsburgh, PA (28)
Director Robert C. Milsom Retired
Pittsburgh, PA*
Director Thomas H. O'Brien Chairman and C.E.O. Bank Holding
PNC Bank Corp. (14)
Director Dr. J. Dennis O'Connor Chancellor Education
University of Pittsburgh
Pittsburgh, PA (29)
22
<PAGE>
Position with
PNC Bank,
National Other Business Type of
Association Name Connections Business
- ------------- ---- -------------- --------
<S> <C> <C> <C>
Director Rocco A. Ortenzio Chairman and C.E.O. Medical
Continental Medical Systems,
Inc.
Mechanicsburg, PA (30)
Director Robert C. Robb, Jr. Partner Financial and
Lewis, Eckert, Robb & Management
Company Consultants
Plymouth Meeting, PA (31)
Director Daniel M. Rooney President, Pittsburgh Football
Steelers Football Club
of the National Football
League
Pittsburgh, PA (32)
Director Seth E. Schofield Chairman, President and Airline
C.E.O.
USAir Group, Inc. and
USAir, Inc.
Arlington, VA (33)
Director Robert M. Valentini President and C.E.O. Bell of Communica-
Pennsylvania and Chairman tions
Network Policy Council of Bell
Atlantic Corporation
Philadelphia, PA (34)
President and James E. Rohr President Bank
Chief Executive PNC Bank Corp. Holding
Officer (14) Company
President and Bruce E. Robbins None.
Chief Executive
Officer of PNC
Bank, National
Association,
Pittsburgh
Senior Executive Edward V. Randall, Jr. None.
Vice President
Executive J. Richard Carnall Director Banking
Vice President PNC National Bank (2)
Chairman and Director Financial-
PFPC Inc. (3) Related
Services
23
<PAGE>
Position with
PNC Bank,
National Other Business Type of
Association Name Connections Business
- ------------- ---- -------------- --------
<S> <C> <C> <C>
Director
PNC Trust Company Fiduciary
of New York (11) Activities
Director Equipment
Hayden Bolts, Inc.* Leasing
Director, Real Estate
Parkway Real Estate
Company*
Director Investment
Provident Capital Advisory
Management, Inc. (5)
Director Investment
Advanced Investment Advisory
Management, Inc. (15)
Executive Richard C. Caldwell Director Banking
Vice President PNC National Bank (2)
Director Investment
Provident Capital Advisory
Management, Inc. (5)
Director Fiduciary
PNC Trust Company Activities
of New York (11)
Executive Vice President Bank Holding
PNC Bank Corp. (14) Company
Director Investment
Advanced Investment Advisory
Management, Inc. (15)
Director Banking
PNC Bank, New Jersey,
New Jersey, National
Association (16)
Director Financial-
PFPC Inc. (3) Related
Services
Executive Vice Herbert G. None.
President Summerfield, Jr.
24
<PAGE>
Position with
PNC Bank,
National Other Business Type of
Association Name Connections Business
- ------------- ---- -------------- --------
<S> <C> <C> <C>
Executive Vice Joe R. Irwin None.
President
President and Richard L. Smoot Senior Vice President Banking
Chief Executive Operations
Officer of PNC PNC Bank Corp. (20)
Bank, National
Association, Director Fiduciary
Philadelphia PNC Trust Company of Activities
New York (11)
Director Investment
PNC Institutional Advisory
Management Corporation (28)
Director Financial
PFPC Inc. (3) Related
Services
Executive Vice W. Herbert Crowder, III None.
President
Executive Vice Walter L. West None.
President
Senior Vice George Lula None.
President
Secretary William F. Strome Director
International
PNC Bank International (35) Banking
Services
Managing General Counsel Bank Holding
and Senior Vice President Company
PNC Bank Corp.
Senior Vice James P. Conley None.
President/
Credit Policy
</TABLE>
____________________
* For more information, contact William F. Strome, PNC Bank, National
Association, Broad and Chestnut Streets, Philadelphia, PA 19101.
(1) PNC Bank, National Association, 120 S. 17th Street, Philadelphia, PA
19103.
(2) PNC National Bank, 103 Bellevue Parkway, Wilmington, DE 19809.
(3) PFPC Inc., 400 Bellevue Parkway, Wilmington, DE 19809.
25
<PAGE>
(4) PNC Service Corp, 103 Bellevue Parkway, Wilmington, DE 19809.
(5) Provident Capital Management, Inc., 30 S. 17th Street, Site 1500,
Philadelphia, PA 19103.
(6) PNC National Investment Corporation, Broad and Chestnut Streets,
Philadelphia, PA 19101.
(7) Provident Realty Management, Inc., Broad and Chestnut Streets,
Philadelphia, PA 19101.
(8) Provident Realty, Inc., Broad and Chestnut Streets, Philadelphia, PA
19101.
(9) PNC Bancorp, Inc. 3411 Silverside Park, Wilmington, DE 19810
(10) PNC New Jersey Credit Corp, 1415 Route 70 East, Suite 604, Cherry Hill, NJ
08034.
(11) PNC Trust Company of New York, 40 Broad Street, New York, NY 10084.
(12) Provcor Properties, Inc., Broad and Chestnut Streets, Philadelphia, PA
19101.
(13) PNC Credit Corp, 103 Bellevue Parkway, Wilmington, DE 19809.
(14) PNC Bank Corp., 5th Avenue and Wood Streets, Pittsburgh, PA 15265.
(15) Advanced Investment Management, Inc., 27th Floor, One Oliver Plaza,
Pittsburgh, PA 15265.
(16) PNC Bank of New Jersey, National Association, Woodland Falls Corporate
Park, 210 Lake Drive East, Cherry Hill, NJ 08002.
(17) PNC Institutional Management Corporation, 400 Bellevue Parkway,
Wilmington, DE 19809.
(18) Provident National Leasing Corporation, Broad and Chestnut Streets,
Philadelphia, PA 19101
(19) Provident National Bank Corp. New Jersey, 1 Centennial Square,
Haddonfield, NJ 08033
(20) The Clayton Bank and Trust Company, Clayton, DE 19938
(21) Keystone Life Insurance Company, 1207 Chestnut Street, Philadelphia, PA
19107-4101
(22) Consol, Inc., Consol Plaza, Pittsburgh, PA 15241
(23) School District of Philadelphia, 21 Street and The Parkway, Philadelphia,
PA 19103-1099
(24) F. Eugene Dixon, Jr., Private Trustee, 665 Thomas Road, Lafayette Hill, PA
19444-0178
(25) Lord Corporation, 2000 W. Grandview Boulevard, Erie, PA 16514
(26) Marine Bank, Ninth and State Streets, Erie, PA 16553
(27) Geisinger Foundation, 100 N. Academy Avenue, Danville, PA 17822
(28) Calgon Carbon Corporation, P.O. Box 717, Pittsburgh, PA 15230-0717
(29) University of Pittsburgh, 107 Cathedral of Learning, Pittsburgh, PA 15260
(30) Continental Medical Systems, Inc., P.O. Box 715, Mechanicsburg, PA 17055
(31) Lewis, Eckert, Robb & Company, 425 One Plymouth Meeting, Plymouth Meeting,
PA 19462
(32) Football Club of the National Football League, 300 Stadium Circle,
Pittsburgh, PA 15212
(33) USAir Group, Inc. and USAir, Inc., 2345 Crystal Drive, Arlington, VA
22227
(34) Bell of Pennsylvania, One Parkway, Philadelphia, PA 19102
(35) PNC Bank International, 5th and Wood Streets, Pittsburgh, PA 15222
26
<PAGE>
Item 29. PRINCIPAL UNDERWRITER
(a) Counsellors Securities Inc. (the "Distributor") acts as
distributor for the following investment companies:
Warburg, Pincus Cash Reserve Fund
Warburg, Pincus New York Tax Exempt Fund
Warburg, Pincus New York Municipal Bond Fund
Warburg, Pincus Intermediate Maturity Government Fund
Warburg, Pincus Fixed Income Fund
Warburg, Pincus Global Fixed Income Fund
Warburg, Pincus Capital Appreciation Fund
Warburg, Pincus Emerging Growth Fund
Warburg, Pincus International Equity Fund
Warburg, Pincus Japan OTC Fund
Counsellors Tandem Securities Fund
Warburg Pincus Growth & Income Fund
Warburg Pincus Balanced Fund
Warburg Pincus Tax Free Fund
The Distributor acts as a principal underwriter, depositor or investment adviser
for the following investment companies: None other than Registrant and
companies listed above.
(b) Information for each director or officer of the Distributor is
set forth below:
Name and Principal Positions and Offices Positions and Offices
Business Address with the Distributor with Registrant
- ----------------- --------------------- ---------------------
John L. Vogelstein Director
466 Lexington Avenue
New York, New York 10017
Lionel I. Pincus Director
466 Lexington Avenue
New York, New York 10017
Reuben S. Leibowitz Director,
466 Lexington Avenue President and Chief
New York, New York 10017 Financial Officer
John L. Furth Director
466 Lexington Avenue
New York, New York 10017
Arnold M. Reichman Vice President, Director
466 Lexington Avenue Secretary and
New York, New York 10017 Chief Operating Officer
Roger Reinlieb Vice President
27
<PAGE>
466 Lexington Avenue
New York, New York 10017
Karen Amato Assistant Secretary
466 Lexington Avenue
New York, New York 10017
Stephen Distler Treasurer
466 Lexington Avenue
New York, New York 10017
(c) Information as to commissions and other compensation received
by the principal underwriter is set forth below.
Net
Name of Underwriting Compensation
Principal Discounts and on Redemption Brokerage Other
Underwriter Commissions and Repurchase Commissions Compensation
- ----------- ------------- -------------- ----------- ------------
Counsellors $ 0 $ 0 $ 0 $ 0
Securities
Inc.
Item 30. LOCATION OF ACCOUNTS AND RECORDS
(1) PNC Bank, National Association (successor by merger to Provident
National Bank), Broad and Chestnut Street, Philadelphia, PA 19101
(records relating to its functions as sub-adviser and custodian).
(2) Counsellors Securities Inc., 466 Lexington Avenue, New York, New York
10017 (records relating to its functions as distributor).
(3) PNC Institutional Management Corporation (formerly Provident
Institutional Management Corporation), Bellevue Corporate Center, 103
Bellevue Parkway, Wilmington, Delaware 19809 (records relating to its
functions as investment adviser, sub-adviser and administrator).
(4) PFPC Inc. (formerly Provident Financial Processing Corporation),
Bellevue Corporate Center, 400 Bellevue Parkway, Wilmington, Delaware
19809 (records relating to its functions as transfer agent and
dividend disbursing agent).
(5) Ballard Spahr Andrews & Ingersoll, 1735 Market Street - 51st Floor,
Philadelphia, Pennsylvania 19103 (Registrant's Articles of
Incorporation, By-Laws and Minute Books).
28
<PAGE>
(6) BEA Associates, One Citicorp Center, 153 East 53rd Street, New York,
New York 10022 (records relating to its function as investment
adviser).
(7) Warburg, Pincus Counsellors, Inc., 466 Lexington Avenue, New York,
New York 10017-3147 (records relating to its functions as investment
adviser).
Item 31. MANAGEMENT SERVICES
None.
Item 32. UNDERTAKINGS
(a) Registrant hereby undertakes to hold a meeting of shareholders
for the purpose of considering the removal of directors in the
event the requisite number of shareholders so request.
29
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, the Registrant has duly caused this Post-Effective
Amendment to its Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Wilmington, and State of
Delaware, on October 25, 1995.
THE RBB FUND, INC.
By: /s/ Edward J. Roach
------------------------
Edward J. Roach
President and
Treasurer
Pursuant to the requirements of the Securities Act of 1933, this
Post-Effective Amendment to Registrant's Registration Statement has been signed
below by the following persons in the capacities and on the date indicated.
Signature Title Date
--------- ----- ----
/s/ Edward J. Roach President (Principal October 25, 1995
- ------------------- Executive Officer) and
Edward J. Roach Treasurer (Principal
Financial and Accounting
Officer)
/s/ Donald Van Roden Director October 25, 1995
- --------------------
Donald van Roden
/s/ Francis J. McKay Director October 25, 1995
- --------------------
Francis J. McKay
/s/ Marvin E. Sternberg Director October 25, 1995
- -----------------------
Marvin E. Sternberg
/s/ Julian A. Brodsky Director October 25, 1995
- ---------------------
Julian A. Brodsky
/s/ Arnold M. Reichman Director October 25, 1995
- ----------------------
Arnold M. Reichman
/s/ Robert Sablowsky Director October 25, 1995
- --------------------
Robert Sablowsky
<PAGE>
THE RBB FUND, INC.
RBB CLASSES
WARBURG PINCUS CLASSES
WARBURG PINCUS SERIES 2 CLASSES
CASH PRESERVATION CLASSES
SANSOM STREET CLASSES
BEDFORD CLASSES
BRADFORD CLASSES
BEA CLASSES
JANNEY (ALPHA) CLASSES
BETA CLASSES
GAMMA CLASSES
DELTA CLASSES
EPSILON CLASSES
ZETA CLASSES
ETA CLASSES
THETA CLASSES
EXHIBIT INDEX
-------------
Exhibit Page See Note #
- ------ ---- ----------
(1)(a) Articles of Incorporation of Registrant. 1
(b) Articles Supplementary of Registrant. 1
(c) Articles of Amendment to Articles of 2
Incorporation of Registrant.
(d) Articles Supplementary of Registrant. 2
(e) Articles Supplementary of Registrant. 5
(f) Articles Supplementary of Registrant. 6
(g) Articles Supplementary of Registrant. 9
(h) Articles Supplementary of Registrant. 10
(i) Articles Supplementary of Registrant. 14
(j) Articles Supplementary of Registrant. 14
(k) Articles Supplementary of Registrant. 19
(l) Articles Supplementary of Registrant 19
(m) Articles Supplementary of Registrant. 19
(n) Articles Supplementary of Registrant. 19
1
<PAGE>
(o) Articles Supplementary of Registrant 20
(2) Amended By-Laws adopted August 16, 1988. 3
(a) Amendment to By-Laws adopted July 25, 1989. 4
(b) By-Laws amended through October 24, 1989. 5
(3) None.
(4) Specimen Certificates
(a) SafeGuard Equity Growth and Income Shares 3
(b) SafeGuard Fixed Income Shares 3
(c) SafeGuard Balanced Shares 3
(d) SafeGuard Tax-Free Shares 3
(e) SafeGuard Money Market Shares 3
(f) SafeGuard Tax-Free Money Market Shares 3
(g) Cash Preservation Money Market Shares 3
(h) Cash Preservation Tax-Free Money Market Shares 3
(i) Sansom Street Money Market Shares 3
(j) Sansom Street Tax-Free Money Market Shares 3
(k) Sansom Street Government Obligations Money 3
(l) Bedford Money Market Shares 3
(m) Bedford Tax-Free Money Market Shares 3
(n) Bedford Government Obligations Money Market Shares 3
(o) Bedford New York Municipal Money Market Shares 5
2
<PAGE>
(p) SafeGuard Government Securities Shares 5
(q) Income Opportunities High Yield Bond Shares 6
(r) Bradford Tax-Free Money Market Shares 8
(s) Bradford Government Obligations Money Market Shares 8
(t) Alpha 1 Money Market Shares 8
(u) Alpha 2 Tax-Free Money Market Shares 8
(v) Alpha 3 Government Obligations Money Market Shares 8
(w) Alpha 4 New York Municipal Money Market Shares 8
(x) Beta 1 Money Market Shares 8
(y) Beta 2 Tax-Free Money Market Shares 8
(z) Beta 3 Government Obligations Money Market Shares 8
(aa) Beta 4 New York Municipal Money Market Shares 8
(bb) Gamma 1 Money Market Shares 8
(cc) Gamma 2 Tax-Free Money Market Shares 8
(dd) Gamma 3 Government Obligations Money Market Shares 8
(ee) Gamma 4 New York Municipal Money Market Shares 8
(ff) Delta 1 Money Market Shares 8
(gg) Delta 2 Tax-Free Money Market Shares 8
(hh) Delta 3 Government Obligations Money Market Shares 8
(ii) Delta 4 New York Municipal Money Market Shares 8
(jj) Epsilon 1 Money Market Shares 8
3
<PAGE>
(kk) Epsilon 2 Tax-Free Money Market Shares 8
(ll) Epsilon 3 Government Obligations Money Market Shares 8
(mm) Epsilon 4 New York Municipal Money Market Shares 8
(nn) Zeta 1 Money Market Shares 8
(oo) Zeta 2 Tax-Free Money Market Shares 8
(qq) Zeta 4 New York Municipal Money Market Shares 8
(rr) Eta 1 Money Market Shares 8
(ss) Eta 2 Tax-Free Money Market Shares 8
(tt) Eta 3 Government Obligations Money Market Shares 8
(uu) Eta 4 New York Municipal Money Market Shares 8
(vv) Theta 1 Money Market Shares 8
(ww) Theta 2 Tax-Free Money Market Shares 8
(xx) Theta 3 Government Obligations Money Market Shares 8
(yy) Theta 4 New York Municipal Money Market Shares 8
(zz) BEA International Equity Shares 9
(a1) BEA Strategic Fixed Income Shares 9
(a2) BEA Emerging Markets Equity Shares 9
(a3) Laffer/Canto Equity Shares 12
(a4) BEA U.S. Core Equity Shares 13
(a5) BEA U.S. Core Fixed Income Shares 13
(a6) BEA Global Fixed Income Shares 13
4
<PAGE>
(a7) BEA Municipal Bond Fund Shares 13
(a8) BEA Balanced Shares 16
(a9) BEA Short Duration Shares 16
(a10) Warburg Growth & Income Shares 18
(a11) Warburg Balanced Shares 18
(5)(a) Investment Advisory Agreement (Money) 3
between Registrant and Provident
Institutional Management Corporation,
dated as of August 16, 1988.
(b) Sub-Advisory Agreement (Money) between 3
Provident Institutional Management
Corporation and Provident National Bank,
dated as of August 16, 1988.
(c) Investment Advisory Agreement (Tax-Free 3
Money) between Registrant and Provident
Institutional Management Corporation,
dated as of August 16, 1988.
(d) Sub-Advisory Agreement (Tax-Free Money) 3
between Provident Institutional Management
Corporation and Provident National Bank,
dated as of August 16, 1988.
(e) Investment Advisory Agreement (Government 3
Money) between Registrant and Provident
Institutional Management Corporation, dated
as of August 16, 1988.
(f) Sub-Advisory Agreement (Government Money) 3
between Provident Institutional Management
Corporation and Provident National Bank,
dated as of August 16, 1988.
(k) Investment Advisory Agreement (Balanced) 3
between Registrant and Provident Institutional
Management Corporation, dated as ofAugust 16,
1988.
5
<PAGE>
(l) Sub-Advisory Agreement (Balanced) between 3
Provident Institutional Management Corporation
and Provident National Bank, dated as of
August 16, 1988.
(m) Investment Advisory Agreement (Tax-Free) 3
between Registrant and Provident Institutional
Management Corporation, dated as of August 16,
1988.
(n) Sub-Advisory Agreement (Tax-Free) between 3
Provident Institutional Management Corporation
and Provident National Bank, dated as of
August 16, 1988.
(s) Investment Advisory Agreement (Government 8
Securities) between Registrant and Provident
Institutional Management Corporation dated
as of April 8, 1991.
(t) Investment Advisory Agreement (High Yield Bond) 8
between Registrant and Provident Institutional
Management Corporation dated as of April 8, 1991.
(u) Sub-Advisory Agreement (High Yield Bond) between 8
Registrant and Warburg, Pincus Counsellors, Inc.
dated as of April 8, 1991.
(v) Investment Advisory Agreement (New York Municipal 9
Money Market) between Registrant and Provident
Institutional Management Corporation dated
November 5, 1991.
(w) Investment Advisory Agreement (Equity) between 10
Registrant and Provident Institutional Management
Corporation dated November 5, 1991.
(x) Sub-Advisory Agreement (Equity) between Registrant, 10
Provident Institutional Management Corporation and
Warburg, Pincus Counsellors, Inc. dated November 5,
1991.
6
<PAGE>
(y) Investment Advisory Agreement (Tax-Free Money Market) 10
between Registrant and Provident Institutional
Management Corporation dated April 21, 1992.
(z) Investment Advisory Agreement (BEA International 11
Equity Portfolio) between Registrant and BEA
Associates.
(aa) Investment Advisory Agreement (BEA Strategic 11
Fixed Income Portfolio) between Registrant and
BEA Associates.
(bb) Investment Advisory Agreement (BEA Emerging 11
Markets Equity Portfolio) between Registrant
and BEA Associates.
(cc) Investment Advisory Agreement (Laffer/Canto Equity 14
Portfolio) between Registrant and Laffer Advisors,
Incorporated, dated as of July 21, 1993.
(dd) Sub-Advisory Agreement (Laffer/Canto Portfolio) 12
between PNC Institutional Management Corporation
and Laffer Advisors, Incorporated, dated as of
July 21, 1993.
(ee) Investment Advisory Agreement (BEA U.S. Core 15
Equity Portfolio) between Registrant and BEA
Associates, dated as of October 27, 1993.
(ff) Investment Advisory Agreement (BEA U.S. Core 15
Fixed Income Portfolio) between Registrant and
BEA Associates, dated as of October 27, 1993.
(gg) Investment Advisory Agreement (BEA Global Fixed 15
Income Portfolio) between Registrant and BEA
Associates, dated as of October 27 1993.
(hh) Investment Advisory Agreement (BEA Municipal Bond 15
Fund Portfolio) between Registrant and BEA Associates,
dated as of October 27, 1993.
7
<PAGE>
(ii) Investment Advisory Agreement (Warburg Pincus 14
Growth & Income Fund) between Registrant and
Warburg, Pincus Counsellors, Inc.
(jj) Form of Investment Advisory Agreement (Warburg 16
Pincus Balanced Fund) between Registrant and
Warburg, Pincus Counsellors, Inc.
(kk) Form of Investment Advisory Agreement (BEA 16
Balanced) between Registrant and BEA Associates.
(ll) Form of Investment Advisory Agreement (BEA Short 16
Duration) between Registrant and BEA Associates.
(mm) Investment Advisory Agreement (Warburg Pincus Tax 21
Free Fund) between Registrant and Warburg, Pincus
Counsellors, Inc.
(6)(r) Distribution Agreement and Supplements (Classes A 8
through Q) between the Registrant and Counsellors
Securities Inc. dated as of April 10, 1991.
(s) Distribution Agreement Supplement (Classes L, M, N 9
and O) between the Registrant and Counsellors
Securities Inc. dated as of November 5, 1991.
(t) Distribution Agreement Supplements (Classes R, S, 9
and Alpha 1 through Theta 4) between the
Registrant and Counsellors Securities Inc. dated
as of November 5, 1991.
(u) Distribution Agreement Supplement (Classes T, U 10
and V) between the Registrant and Counsellors
Securities Inc. dated as of September 18, 1992.
(v) Distribution Agreement Supplement (Class W) between 14
the Registrant and Counsellors Securities Inc. dated
as of July 21, 1993.
8
<PAGE>
(w) Distribution Agreement Supplement (Classes X, Y, Z 14
and AA) between the Registrant and Counsellors
Securities Inc.
(x) Distribution Agreement Supplement (Classes BB 18
and CC) between Registrant and Counsellors Securities
Inc. dated as of October 26, 1994.
(y) Distribution Agreement Supplement (Classes DD 18
and EE) between Registrant and Counsellors Securities
Inc. dated as of October 26, 1994.
(z) Form of Distribution Agreement Supplement (Classes 19
L, M, N, and O) between the Registrant and
Counselor's Securities Inc.
(aa) Form of Distribution Agreement Supplement (Classes R 19
and S) between the Registrant and Counselor's
Securities Inc.
(bb) Distribution Agreement Supplements (Classes Alpha 1 19
through Theta 4) between Registrant and Counsellor's
Securities Inc.)
(cc) Distribution Agreement Supplement, Janney Classes 20
(Alpha 1, Alpha 2, Alpha 3 and Alpha 4) between
Registrant and Counsellor's Securities Inc.
(7) Fund Office Retirement Profit-Sharing and Trust 7
Agreement, dated as of October 24, 1990.
(8)(a) Custodian Agreement between Registrant and Provident 3
National Bank dated as of August 16, 1988.
(b) Sub-Custodian Agreement among The Chase Manhattan 10
Bank, N.A., the Registrant and Provident National
Bank, dated as of July 13, 1992, relating to custody
of Registrant's foreign securities.
(e) Amendment No. 1 to Custodian Agreement dated 9
August 16, 1988.
9
<PAGE>
(f) Agreement between Brown Brothers Harriman & Co. and 10
Registrant on behalf of BEA International Equity
Portfolio, dated September 18, 1992.
(g) Agreement between Brown Brothers Harriman & Co. 10
and Registrant on behalf of BEA Strategic Fixed Income
Portfolio, dated September 18, 1992.
(h) Agreement between Brown Brothers Harriman & Co. and 10
Registrant on behalf of BEA Emerging Markets Equity
Portfolio, dated September 18, 1992.
(i) Agreement between Brown Brothers Harriman & Co. and 15
Registrant on behalf of BEA International Equity, BEA
Emerging Markets, BEA Strategic Fixed Income and BEA
Global Fixed Income Portfolio, dated as of November
29, 1993.
(j) Agreement between Brown Brothers Harriman & Co. and 15
Registrant on behalf of BEA U.S. Core Equity and BEA
U.S. Core Fixed Income Portfolios, dated as of
November 29, 1993.
(k) Custodian Contract between Registrant and State Street 18
Bank and Trust Company.
(9)(a) Transfer Agency Agreement (Sansom Street) between 3
Registrant and Provident Financial Processing
Corporation, dated as of August 16, 1988.
(b) Transfer Agency Agreement (Cash Preservation) between 3
Registrant and Provident Financial Processing
Corporation, dated as of August 16, 1988.
(c) Shareholder Servicing Agreement (Sansom Street Money). 3
(d) Shareholder Servicing Agreement (Sansom Street Tax-Free
Money). 3
10
<PAGE>
(e) Shareholder Servicing Agreement (Sansom Street Government 3
Money).
(f) Shareholder Services Plan (Sansom Street Money). 3
(g) Shareholder Services Plan (Sansom Street Tax-Free Money). 3
(h) Shareholder Services Plan (Sansom Street Government Money). 3
(i) Transfer Agency Agreement (SafeGuard) between 3
Registrant and Provident Financial Processing
Corporation, dated as of August 16, 1988.
(j) Transfer Agency Agreement (Bedford) between Registrant 3
and Provident Financial Processing Corporation, dated as
of August 16, 1988.
(k) Transfer Agency Agreement (Income Opportunities) 7
between Registrant and Provident Financial Processing
Corporation dated June 25, 1990.
(l) Administration and Accounting Services Agreement 8
between Registrant and Provident Financial Processing
Corporation, relating to Government Securities
Portfolio, dated as of April 10, 1991.
(m) Administration and Accounting Services Agreement 9
between Registrant and Provident Financial Processing
Corporation, relating to New York Municipal Money
Market Portfolio dated as of November 5, 1991.
(n) Administration and Accounting Services Agreement 9
between Registrant and Provident Financial Processing
Corporation, relating to Equity Portfolio dated
as of November 5, 1991.
11
<PAGE>
(o) Administration and Accounting Services Agreement 9
between Registrant and Provident Financial Processing
Corporation, relating to High Yield Bond Portfolio ,
dated as of April 10, 1991.
(p) Administration and Accounting Services Agreement 10
between Registrant and Provident Financial Processing
Corporation (International) dated as of
September 18, 1992.
(q) Administration and Accounting Services Agreement 10
between Registrant and Provident Financial
Processing Corporation (Strategic) dated
September 18, 1992.
(r) Administration and Accounting Services Agreement 10
between Registrant and Provident Financial
Processing Corporation (Emerging) dated
September 18, 1992.
(s) Transfer Agency Agreement and Supplements 9
(Bradford, Alpha, Beta, Gamma, Delta, Epsilon,
Zeta, Eta and Theta) between Registrant and
Provident Financial Processing Corporation dated
as of November 5, 1991.
(t) Transfer Agency Agreement Supplement (BEA) between 10
Registrant and Provident Financial Processing
Corporation.
(u) Administration Services Agreement between Registrant 10
and Counsellor's Fund Services, Inc. (BEA Portfolios)
dated September 18, 1992.
(v) A dministration and Accounting Services Agreement between 10
Registrant and Provident Financial Processing Corporation,
relating to Tax-Free Money Market Portfolio, dated
as of April 21, 1992.
(w) Transfer Agency Agreement Supplement (Laffer) between 12
Registrant and PFPC Inc. dated as of July 21, 1993.
12
<PAGE>
(x) Administration and Accounting Services Agreement 12
between Registrant and PFPC Inc., relating to
Laffer/Canto Equity Fund, dated July 21, 1993.
(y) Transfer Agency Agreement Supplemental 15
(BEA U.S. Core Equity, BEA U.S. Core Fixed
Income, BEA Global Fixed Income and BEA
Municipal Bond Fund) between Registrant and PFPC
Inc. dated as of October 27, 1993.
(z) Administration and Accounting Services Agreement 15
between Registrant and PFPC Inc., (Core Equity)
dated October 27, 1993.
(aa) Administration and Accounting Services Agreement 15
between Registrant and PFPC Inc. (Core Fixed
Income) dated October 27, 1993.
(bb) Administration and Accounting Services Agreement 15
between Registrant and PFPC Inc. (International
Fixed Income) dated October 27, 1993.
(cc) Administration and Accounting Services Agreement 15
between Registrant and PFPC Inc. dated
October 27, 1993.
(dd) Transfer Agency Agreement Supplement (BEA 18
Balanced and Short Duration) between Registrant
and PFPC Inc. dated October 26, 1994.
(ee) Administration and Accounting Services 18
Agreement between Registrant and PFPC Inc.
(BEA Balanced) dated October 26, 1994.
(ff) Administration and Accounting Services Agreement 18
between Registrant and PFPC Inc. (BEA Short
Duration) dated October 26, 1994.
(gg) Co-Administration Agreement between Registrant 18
and PFPC Inc. (Warburg Pincus Growth & Income
Fund) dated August 4, 1994.
13
<PAGE>
(hh) Co-Administration Agreement between Registrant 18
and PFPC Inc. (Warburg Pincus Balanced Fund)
dated August 4, 1994.
(ii) Co-Administration Agreement between Registrant 18
and Counsellors Fund Service, Inc. (Warburg
Pincus Growth Income Fund) dated August 4, 1994.
(jj) Co-Administration Agreement between Registrant and 18
Counsellors Fund Service, Inc. (Warburg Pincus
Balanced Fund) dated August 4, 1994.
(kk) Administrative Services Agreement Supplement 18
between Registrant and Counsellor's Fund Services,
Inc. (BEA Classes) dated October 26, 1994.
(ll) Co-Administration Agreement between Registrant and 21
PFPC Inc. (Warburg Pincus Tax Free Fund) dated
March 31, 1995.
(mm) Co-Administration Agreement between Registrant 21
and Counsellors Funds Services, Inc. (Warburg
Pincus Tax Free Fund).
(nn) Transfer Agency and Service Agreement between 21
Registrant, State Street Bank and Trust Company
and PFPC Inc. dated February 1, 1995.
(oo) Supplement to Transfer Agency and Service Agreement 21
between Registrant, State Street Bank and Trust
Company, Inc. and PFPC dated April 10, 1995.
(pp) Amended and Restated Credit Agreement dated
December 15, 1994.
(10)(a) Opinion of Counsel.
Incorporated by reference herein to Registrant's
24f-2 Notice for the fiscal year ending August 31,
1994 filed on October 7, 1994.
(b) Consent of Counsel.
14
<PAGE>
(11) Consent of Independent Accountants.
None.
(12) None.
(13)(a) Subscription Agreement (relating to Classes A 2
through N).
(b) Subscription Agreement between Registrant and 7
Planco Financial Services, Inc., relating to
Classes O and P.
(c) Subscription Agreement between Registrant and 7
Planco Financial Services, Inc., relating to
Class Q.
(d) Subscription Agreement between Registrant and 9
Counsellors Securities Inc. relating to Classes R,
S, and Alpha 1 through Theta 4.
(e) Subscription Agreement between Registrant and 10
Counsellors Securities Inc. relating to Classes T,
U and V.
(f) Subscription Agreement between Registrant and 18
Counsellors Securities Inc. relating to Classes BB
and CC.
(g) Purchase Agreement between Registrant and Counsellors 21
Securities Inc. relating to Classes DD (Warburg Pincus
Growth & Income Fund Series 2).
(h) Purchase Agreement between Registrant and Counsellors 21
Securities Inc. relating to Class EE (Warburg Pincus
Balanced Fund Series 2).
(14) None.
(15)(a) Plan of Distribution (Sansom Street Money). 3
(b) Plan of Distribution (Sansom Street 3
Tax-Free Money).
(c) Plan of Distribution (Sansom Street 3
Government Money).
15
<PAGE>
(d) Plan of Distribution (Cash Preservation 3
Money).
(e) Plan of Distribution (Cash Preservation 3
Tax-Free Money).
(f) Plan of Distribution (SafeGuard Equity). 3
(g) Plan of Distribution (SafeGuard Fixed Income). 3
(h) Plan of Distribution (SafeGuard Balanced). 3
(i) Plan of Distribution (SafeGuard Tax-Free). 3
(j) Plan of Distribution (SafeGuard Money). 3
(k) Plan of Distribution (SafeGuard Tax-Free 3
Money).
(l) Plan of Distribution (Bedford Money). 3
(m) Plan of Distribution (Bedford Tax-Free Money). 3
(n) Plan of Distribution (Bedford Government 3
Money).
(o) Plan of Distribution (Bedford New York 7
Municipal Money).
(p) Plan of Distribution (SafeGuard Government 7
Securities).
(q) Plan of Distribution (Income Opportunities 7
High Yield).
(r) Amendment No. 1 to Plans of Distribution 8
(Classes A through Q).
(s) Plan of Distribution (Bradford Tax-Free Money). 9
(t) Plan of Distribution (Bradford Government Money). 9
(u) Plan of Distribution (Alpha Money).
16
<PAGE>
(v) Plan of Distribution (Alpha Tax-Free Money). 9
(w) Plan of Distribution (Alpha Government Money). 9
(x) Plan of Distribution (Alpha New York Money). 9
(y) Plan of Distribution (Beta Money). 9
(z) Plan of Distribution (Beta Tax-Free Money). 9
(aa) Plan of Distribution (Beta Government Money). 9
(bb) Plan of Distribution (Beta New York Money). 9
(cc) Plan of Distribution (Gamma Money). 9
(dd) Plan of Distribution (Gamma Tax-Free Money). 9
(ee) Plan of Distribution (Gamma Government Money). 9
(ff) Plan of Distribution (Gamma New York Money). 9
(gg) Plan of Distribution (Delta Money). 9
(hh) Plan of Distribution (Delta Tax-Free Money). 9
(ii) Plan of Distribution (Delta Government Money). 9
(jj) Plan of Distribution (Delta New York Money). 9
(kk) Plan of Distribution (Epsilon Money). 9
(ll) Plan of Distribution (Epsilon Tax-Free Money). 9
(mm) Plan of Distribution (Epsilon Government Money). 9
(nn) Plan of Distribution (Epsilon New York Money). 9
17
<PAGE>
(oo) Plan of Distribution (Zeta Money). 9
(pp) Plan of Distribution (Zeta Tax-Free Money). 9
(qq) Plan of Distribution (Zeta Government Money). 9
(rr) Plan of Distribution (Zeta New York Money). 9
(ss) Plan of Distribution (Eta Money). 9
(tt) Plan of Distribution (Eta Tax-Free Money). 9
(uu) Plan of Distribution (Eta Government Money). 9
(vv) Plan of Distribution (Eta New York Money). 9
(ww) Plan of Distribution (Theta Money). 9
(xx) Plan of Distribution (Theta Tax-Free Money). 9
(yy) Plan of Distribution (Theta Government Money). 9
(zz) Plan of Distribution (Theta New York Money). 9
(aaa) Plan of Distribution (Laffer Equity). 12
(bbb) Plan Distribution (Warburg Pincus 18
Growth & Income Series 2).
(ccc) Plan of Distribution (Warburg Pincus Balanced 18
Series 2).
(16) Schedule of Computation of Performance 3
Quotations.
(17) None.
(18) Rule 18f-3 Plan. 21
_________________
18
<PAGE>
Note #
1 Incorporated herein by reference to the same exhibit
number of Registrant's Registration Statement (No.
33-20827) filed on March 24, 1988.
2 Incorporated herein by reference to the same exhibit
number of Pre-Effective Amendment No. 2 to Registrant's
Registration Statement (No. 33-20827) filed on July 12,
1988.
3 Incorporated herein by reference to the same exhibit
number of Post-Effective Amendment No. 1 to Registrant's
Registration Statement (No. 33-20827) filed on March 23,
1989.
4 Incorporated herein by reference to the same exhibit
number of Post-Effective Amendment No. 2 to Registrant's
Registration Statement (No. 33-20827) filed on October
25, 1989.
5 Incorporated herein by reference to the same exhibit
number of Post-Effective Amendment No. 3 to the
Registrant's Registration Statement (No. 33-20827) filed
on April 27, 1990.
6 Incorporated herein by reference to the same exhibit
number of Post-Effective Amendment No. 4 to the
Registrant's Registration Statement (No. 33-20827) filed
on May 1, 1990.
7 Incorporated herein by reference to the same exhibit
number of Post-Effective Amendment No. 5 to the
Registrant's Registration Statement (No. 33-20827) filed
on December 14, 1990.
8 Incorporated herein by reference to the same exhibit
number of Post-Effective Amendment No. 6 to the
Registrant's Registration Statement (No. 33-20827) filed
on October 24, 1991.
9 Incorporated herein by reference to the same exhibit
number of Post-Effective Amendment No. 7 to the
Registrant's Registration Statement (No. 33-20827) filed
on July 15, 1992.
10 Incorporated herein by reference to the same exhibit
number of Post-Effective Amendment No. 8 to the
Registrant's Registration Statement (No. 33-20827) filed
on October 22, 1992.
11 Incorporated herein by reference to the same exhibit
number of Post-Effective Amendment No. 9 to the
Registrant's Registration Statement (No. 33-20827) filed
on December 16, 1992.
19
<PAGE>
12 Incorporated herein by reference to the same exhibit
number of Post Effective Amendment No. 11 to the
Registration Statement (No. 33-20827) filed on June 21,
1993.
13 Incorporated herein by reference to the same exhibit
number of Post-Effective Amendment No. 12 to
Registration Statement (No. 33-20827) filed on July 27,
1993.
14 Incorporated herein by reference to the same exhibit
number of Post-Effective Amendment No. 13 to
Registration Statement (No. 33-20827 filed on October
29, 1993.
15 Incorporated herein by reference to the same exhibit
number of Post-Effective Amendment No. 14 to
Registration Statement (No. 33-20827) filed on December
21, 1993.
16 Incorporated herein by reference to the same exhibit
number of Post-Effective Amendment No. 19 to
Registration Statement (No. 33-20827) filed on October
14, 1994.
17 Incorporated herein by reference to the same exhibit
number of Post-Effective Amendment No. 20 to
Registration Statement (No. 33-20827) filed on October
21, 1994.
18 Incorporated herein by reference to the same exhibit
number of Post-Effective Amendment No. 21 to
Registration Statement (No. 33-20827) filed on October
28, 1994.
19 Incorporated herein by reference to the same exhibit
number of Post-Effective Amendment No. 22 to
Registration Statement (No. 33-20827) filed on December
19, 1994.
20 Incorporated herein by reference to the same exhibit
number of Post-Effective Amendment No. 20 to
Registration Statement (No. 33-20827) filed on March 31,
1995.
21 Incorporated herein by reference to the same exhibit
number of Post-Effective Amendment No. 28 to
Registration Statement (No. 33-20827) filed on October
6, 1995.
20
<PAGE>
Exhibit (9)(pp)
______________________________________________________
______________________________________________________
AMENDED AND RESTATED CREDIT AGREEMENT
AMONG
THE LATIN AMERICA INVESTMENT FUND, INC.
THE LATIN AMERICA EQUITY FUND, INC.
THE CHILE FUND, INC.
THE BRAZILIAN EQUITY FUND, INC.
THE INDONESIA FUND, INC.
THE FIRST ISRAEL FUND, INC.
THE PORTUGAL FUND, INC.
THE EMERGING MARKETS TELECOMMUNICATIONS FUND, INC.
THE EMERGING MARKETS INFRASTRUCTURE FUND, INC.
THE RBB FUND, INC.
AND
THE FIRST NATIONAL BANK OF BOSTON
Dated as of December 15, 1994
______________________________________________________
______________________________________________________
<PAGE>
AMENDED AND RESTATED CREDIT AGREEMENT
AMENDED AND RESTATED CREDIT AGREEMENT, dated as of December 15, 1994, by
and among THE LATIN AMERICA INVESTMENT FUND, INC., a closed-end management
investment company incorporated under the laws of Maryland and registered under
the Investment Company Act of 1940, as amended (the "1940 ACT") (the "LA
INVESTMENT FUND"); THE LATIN AMERICA EQUITY FUND, INC., a closed-end management
investment company incorporated under the laws of Maryland and registered under
the 1940 Act (the "LA EQUITY FUND"); THE CHILE FUND, INC. , a closed-end
management investment company incorporated under the laws of Maryland and
registered under the 1940 Act (the "CHILE FUND"); THE BRAZILIAN EQUITY FUND,
INC., a closed-end management investment company incorporated under the laws of
Maryland and registered under the 1940 Act (the "BRAZILIAN EQUITY FUND"); THE
INDONESIA FUND, INC., a closed-end management investment company incorporated
under the laws of Maryland and registered under the 1940 Act (the "INDONESIA
FUND"); THE FIRST ISRAEL FUND, INC., a closed-end management investment company
incorporated under the laws of Maryland and registered under the 1940 Act (the
"FIRST ISRAEL FUND"); THE PORTUGAL FUND, INC., a closed-end management
investment company incorporated under the laws of Maryland and registered under
the 1940 Act (the "PORTUGAL FUND"); THE EMERGING MARKETS TELECOMMUNICATIONS
FUND, INC., a closed-end management investment company incorporated under the
laws of Maryland and registered under the 1940 Act (the "TELECOMMUNICATIONS
FUND"); THE EMERGING MARKETS INFRASTRUCTURE FUND, INC., a closed-end management
investment company incorporated under the laws of Maryland and registered under
the 1940 Act (the "INFRASTRUCTURE FUND"); and THE RBB FUND, INC., an open-end
management investment company incorporated under the laws of Maryland and
registered under the 1940 Act (the "RBB FUND"), acting on behalf of the
following portfolios (each a "PORTFOLIO" and collectively, the "PORTFOLIOS"):
BEA Emerging Markets Equity Portfolio, BEA Global Fixed Income Portfolio, BEA
International Equity Portfolio, BEA Municipal Bond Fund Portfolio, BEA Strategic
Fixed Income Portfolio, BEA U.S. Core Equity Portfolio, and BEA U.S. Core Fixed
Income Portfolio (each of the LA Investment Fund, the LA Equity Fund, the Chile
Fund, the Brazilian Equity Fund, the Portugal Fund, the First Israel Fund, the
Indonesia Fund, the Telecommunications Fund, the Infrastructure Fund and the RBB
Fund being herein sometimes referred to as a "BORROWER" and collectively, the
"BORROWERS") and THE FIRST NATIONAL BANK OF BOSTON, a national banking
association with its head office at 100 Federal Street, Boston, Massachusetts
02110 (the "BANK").
WHEREAS, the Latin America Investment Fund, the Latin America Equity Fund,
the Chile Fund and the Brazilian Equity Fund (collectively, the "EXISTING
BORROWERS") and the Bank entered into a Credit Agreement dated as of December
31, 1993 (the "PRIOR AGREEMENT") providing for advances to be made by the Bank
to the Existing Borrowers for temporary or emergency purposes; and
WHEREAS, the Existing Borrowers and the Bank desire to amend and restate
the Prior Agreement to add the Portugal Fund, the First Israel Fund, the
Indonesia Fund, the Telecommunications Fund, the Infrastructure Fund and the RBB
Fund, acting on behalf of the Portfolios (collectively, the "NEW BORROWERS") as
Borrowers; and
<PAGE>
WHEREAS, each of the Borrowers is authorized to borrow money for its own
temporary or emergency purposes, or the temporary or emergency purposes of the
Portfolios, and desires to enter into this Agreement so that it may borrow funds
from the Bank from time to time for such purposes; and
WHEREAS, the Bank is willing to advance funds to the Borrowers from time to
time on a demand, discretionary basis on the terms and subject to the conditions
set forth below;
NOW, THEREFORE, in consideration of the mutual promises and agreements of
the parties set forth herein, the parties hereto agree as follows:
Section 1. DEFINITIONS; INTERPRETATION.
Section 1.1. DEFINITIONS. As used herein, the following terms shall have
meanings assigned to them below:
ADJUSTED EURODOLLAR RATE. Applicable to any Interest Period, shall mean a
rate per annum determined pursuant to the following formula:
AER = [ LIBOR ]*
---------------
[ 1.00 - RP ]
AER = Adjusted Eurodollar Rate
LIBOR = London Interbank Offered Rate
RP = Reserve Percentage
*The amount in brackets shall be rounded upwards, if necessary, to the
next higher 1/100 of 1%.
Where:
"LONDON INTERBANK OFFERED RATE" applicable to any Eurodollar Loan for
any Interest Period means the rate of interest determined by the Bank to be
the prevailing rate per annum at which deposits in U.S. dollars are offered
to the Bank by first-class banks in the London interbank Eurodollar market
on or about 11:00 a.m. (London time) two Business Days before the first day
of such Interest Period in an amount approximately equal to the principal
amount of the Eurodollar Loan to which such Interest Period is to apply for
a period of time approximately equal to such Interest Period.
"RESERVE PERCENTAGE" applicable to any Interest Period means the rate
(expressed as a decimal) applicable to the Bank during such Interest Period
under regulations issued from time to time by the Board of Governors of the
Federal Reserve System for determining the maximum reserve requirement
(including, without limitation, any basic, supplemental, emergency or
marginal reserve requirement) of the Bank with respect to "Eurocurrency
liabilities" as that term is defined under such regulations.
2
<PAGE>
The Adjusted Eurodollar Rate shall be adjusted automatically as of the effective
date of any change in the Reserve Percentage.
AFFECTED LOANS. As defined in Section 2.8(a).
AFFILIATED PERSON. As defined in the 1940 Act and the rules and
regulations promulgated thereunder.
AGREEMENT. This Amended and Restated Credit Agreement as originally
executed, or if amended or supplemented from time to time, as so amended or
supplemented. References to the Agreement shall mean and include references to
each of the Exhibits and Schedules hereto.
BANK. As defined in the preamble hereof.
BASE RATE. The greater of (i) the annual rate of interest announced from
time to time by the Bank at its Head Office as its "Base Rate", and (ii) the
Federal Funds Effective Rate plus 1/2 of 1% per annum (rounded upwards, if
necessary, to the next 1/8 of 1%).
BASE RATE LOAN. A Loan that bears interest at the Base Rate.
BORROWER and BORROWERS. As defined in the preamble hereof.
BORROWING DATE. The date on which any Loan is made or is to be made
hereunder.
BRAZILIAN EQUITY FUND. As defined in the preamble hereof.
BUSINESS DAY. (i) For all purposes other than as covered by clause (ii)
below, any day other than a Saturday, Sunday or legal holiday on which banks in
Boston, Massachusetts or New York, New York are open for the conduct of a
substantial part of their commercial banking business; and (ii) with respect to
all notices and determinations in connection with, and payments of principal and
interest on, Eurodollar Loans, any day that is a Business Day described in
clause (i) and that is also a day for trading by and between banks in U.S.
Dollar deposits in the London interbank Eurodollar market.
CHILE FUND. As defined in the preamble hereof.
CUSTODIAN. The entity that acts as a Borrower's custodian for purposes of
Section 17(f) of the 1940 Act or, if the RBB Fund has more than one custodian
for the assets of the Portfolios, the entity that acts as custodian for the
assets of each Portfolio.
DEFAULT. As defined in Section 6.1 hereof.
EURODOLLAR LOAN. Any Loan bearing interest at a rate determined with
reference to the Adjusted Eurodollar Rate.
EVENT OF DEFAULT. As defined in Section 6.1 hereof.
3
<PAGE>
EXISTING BORROWERS. As defined in the preamble hereof.
FEDERAL FUNDS EFFECTIVE RATE. For any day, a fluctuating interest rate per
annum equal to the weighted average of the rates on overnight Federal Funds
transactions with members of the Federal Reserve System arranged by Federal
Funds brokers, as published for such day (or, if such day is not a Business Day,
for the next preceding Business Day) by the Federal Reserve Bank of New York,
or, if such rate is not so published for any day that is a Business Day, the
average of the quotations for such day on such transactions received by the Bank
from three Federal Funds brokers of recognized standing selected by the Bank.
FIRST ISRAEL FUND. As defined in the preamble hereof.
HEAD OFFICE. The head office of the Bank, which at present is located at
100 Federal Street, Boston, Massachusetts 02110.
INDEBTEDNESS. All obligations, contingent and otherwise, that in
accordance with generally accepted accounting principles should be classified
upon the obligor's balance sheet as indebtedness, or to which reference should
be made by footnotes thereto, including, without limitation, in any event and
whether or not so classified: (i) all debt for money borrowed and similar
extensions of credit, whether direct or indirect; (ii) all liabilities secured
by any mortgage, pledge, security interest, lien, charge, or other encumbrance
existing on property owned or acquired subject thereto, whether or not the
liability secured thereby shall have been assumed; and (iii) all guaranties,
endorsements and other contingent obligations, whether direct or indirect, in
respect of Indebtedness of others, including any obligation to supply funds to
or in any manner to invest in, directly, or indirectly, the debtor, to purchase
Indebtedness, or to assure the owner of Indebtedness against loss, through an
agreement to purchase goods, supplies, or services for the purpose of enabling
the debtor to make payment of the Indebtedness held by such owner or otherwise,
and the obligations to reimburse the issuer of any letters of credit.
INDONESIA FUND. As defined in the preamble hereof.
INFRASTRUCTURE FUND. As defined in the preamble hereof.
INTEREST PERIOD. With respect to each Eurodollar Loan made to a Borrower,
the period commencing on the date of the making or continuation of or conversion
to such Eurodollar Loan and ending seven, 14 or 30 days thereafter, as such
Borrower may elect in the applicable Loan Request delivered pursuant to Section
2.2(a), or continuation notice delivered pursuant to Section 2.5(b); PROVIDED
that:
(i) any Interest Period (other than an Interest Period determined
pursuant to clause (iii) below) that would otherwise end on a day that is
not a Business Day shall be extended to the next succeeding Business Day
unless such Business Day falls in the next calendar month, in which case
such Interest Period shall end on the immediately preceding Business Day;
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(ii) any Interest Period that begins on the last Business Day of a
calendar month (or on a day for which there is no numerically corresponding
day in the calendar month at the end of such Interest Period) shall,
subject to clause (iii) below, end on the last Business Day of a calendar
month;
(iii) any Interest Period that would otherwise end after the
Termination Date shall end on the Termination Date;
(iv) notwithstanding clause (iii) above, no Interest Period shall
have a duration of less than seven days; and if any Interest Period
applicable to such Loan would be for a shorter period, such Interest Period
shall not be available hereunder; and
(v) the Interest Period for any Eurodollar Loan made to any
Portfolio of the RBB Fund may not exceed seven days.
INVESTMENT ADVISER. BEA Associates, a New York general partnership.
LA EQUITY FUND. As defined in the preamble hereof.
LA INVESTMENT FUND. As defined in the preamble hereof.
LOAN or LOANS. As defined in Section 2.1 hereof.
LOAN ACCOUNT. As defined in Section 2.3 hereof.
LOAN REQUEST. As defined in Section 2.2(a) hereof.
MAXIMUM AMOUNT. With respect to each Borrower or, if applicable, each
Portfolio, and at the relevant time of reference thereto, an amount equal to the
lesser of the following:
(i) until the Termination Date, $50,000,000, or
(ii) at all times, and when added to all other indebtedness of such
Borrower incurred for itself or on behalf of such Portfolio, as applicable,
then outstanding, 25% of the value of the net assets of such Borrower or
such Portfolio at such time, or
(iii) the maximum amount such Borrower is permitted to borrow for
itself or on behalf of such Portfolio, as applicable, at such time under
(a) applicable federal or state laws, statutes and regulations, including
without limitation the asset coverage requirements of Section 18(a)(1) of
the 1940 Act, (b) agreements (whether or not having the force of law) by
such Borrower for itself or on behalf of such Portfolio, as applicable,
with federal, state, local or foreign governmental agencies, authorities or
regulators, as more particularly described in Part 1 of SCHEDULE I hereto,
as amended and in effect from time to time, and (c) limitations on
borrowing adopted by such Borrower for itself or on behalf of such
Portfolio, as applicable, and described in its Registration Statement,
Prospectus or Statement of Additional
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Information, if applicable, or elsewhere, as more particularly described in
Part 2 of SCHEDULE I hereto, as amended and in effect from time to time.
Although it will be within the discretion of the Bank whether it makes Loans
under this Agreement, each Borrower understands that the Bank may use the
Maximum Amount as a ceiling on Loans.
NEW BORROWERS. As defined in the preamble hereof.
1940 ACT. As defined in the preamble hereof.
PORTFOLIO. As defined in the preamble hereof.
PORTUGAL FUND. As defined in the preamble hereof.
PRIOR AGREEMENT. As defined in the preamble hereof.
PROSPECTUS. With respect to the LA Investment Fund, such Borrower's
Prospectus dated September 20, 1994; with respect to the LA Equity Fund, such
Borrower's Prospectus dated September 20, 1994; with respect to the Chile Fund,
such Borrower's Prospectus dated July 7, 1993; respect to the Brazilian Equity
Fund, such Borrower's Prospectus dated April 3, 1992; with respect to the
Indonesia Fund, such Borrower's Prospectus dated March 1, 1990; with respect to
the First Israel Fund, such Borrower's Prospectus dated October 22, 1992; with
respect to the Portugal Fund, such Borrower's Prospectus dated November 1, 1989;
with respect to the Telecommunications Fund, such Borrower's Prospectus dated
June 17, 1992; with respect to the Infrastructure Fund, such Borrower's
Prospectus dated December 21, 1993; and with respect to the Portfolios, such
Portfolios' Prospectus or Prospectuses, each dated June 29, 1994.
RBB FUND. As defined in the preamble hereof.
REGISTRATION STATEMENT. The most recent Registration Statement on Form N-2
or Form N-1A, as applicable, filed by each Borrower with, and declared effective
by, the Securities and Exchange Commission and amended from time to time,
pursuant to the 1940 Act.
REGULATION U. Regulation U promulgated by the Board of Governors of the
Federal Reserve System, as in effect from time to time.
STATEMENT OF ADDITIONAL INFORMATION. The Statement of Additional
Information that must be provided by the LA Investment Fund, the LA Equity Fund
and the RBB Fund on behalf of the Portfolios to recipients of its or their
Prospectuses upon request, pursuant to the rules and regulations of the
Securities and Exchange Commission.
TELECOMMUNICATIONS FUND. As defined in the preamble hereof.
TERMINATION DATE. December 31, 1995, or such earlier date on which the
Bank in its discretion shall have terminated the credit facility provided for in
this Agreement and made demand for the repayment of all amounts then outstanding
hereunder.
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Section 1.2. INTERPRETATION. All terms of an accounting character not
specifically defined herein shall have the meanings assigned thereto by
generally accepted accounting principles in the United States of America, unless
the context otherwise requires. Each reference herein to a particular person or
entity (including, without limitation, the Bank) shall include a reference to
the successors and permitted assigns of such person or entity. The words
"herein", "hereof", "hereunder", and words of like import shall refer to this
Agreement as a whole and not to any particular Section or subdivision of this
Agreement.
Section 2. CREDIT FACILITY.
Section 2.1. CREDIT FACILITY. Subject to the terms and conditions set
forth in this Agreement, the Bank agrees to make revolving loans ("LOANS") to
each Borrower from time to time in the Bank's discretion on any Business Day
during the period from the date hereof to (but not including) the Termination
Date, as may be requested by any Borrower for itself or on behalf of a
Portfolio. Each Loan made by the Bank shall be in the principal amount stated
in the applicable Loan Request, and shall be in a minimum amount of at least
$1,000,000 and an integral multiple of $500,000 (or the balance of the
applicable unborrowed Maximum Amount), PROVIDED that at no time shall the
aggregate outstanding principal amount of all Loans made to any Borrower for its
own account or for the account of a Portfolio exceed the Maximum Amount
applicable to such Borrower or Portfolio; and PROVIDED, FURTHER that at no time
shall the aggregate outstanding principal amount of all Loans to all Borrowers
exceed $50,000,000. Within the limits of the provisions of this Section 2.1,
each Borrower may borrow, pay or prepay pursuant to Section 2.7 and reborrow
under this Section 2.1.
Section 2.2. NOTICE AND MANNER OF BORROWING. All Loans shall be requested
and funded in accordance with the procedures set forth below:
(a) LOAN REQUESTS. Each request by a Borrower for a Loan hereunder shall
be made by telephonic notice to the Bank (a "LOAN REQUEST") prior to 11:30 a.m.,
Boston time, on the Borrowing Date in the case of Base Rate Loans, and three
days prior to the Borrowing Date in the case of Eurodollar Loans. Each Loan
Request shall be irrevocable and shall state (i) the principal amount of the
requested Loan; (ii) the interest rate to be applicable thereto; (iii) in the
case of Eurodollar Loans; the Interest Period requested for such Loan (subject
to the definition of Interest Period); and (iv) in the case of Loans to the RBB
Fund, the Portfolio for which the Loan is being requested. Each Loan Request
shall also state the maximum amount such Borrower is then permitted to borrow
hereunder, for itself or on behalf of the relevant Portfolio, as applicable,
determined in accordance with the definition of Maximum Amount. Each Loan
Request shall be made by a duly authorized representative of such Borrower, as
specified by such Borrower in writing from time to time, and the Bank may rely
upon any telephone request that it reasonably believes is made by such a
representative. Each Loan Request shall promptly be followed by a written
confirmation thereof, substantially in the form of EXHIBIT A hereto, PROVIDED
that if such written confirmation differs in any material respect from the
action of the Bank taken in good faith reliance upon such telephone request, the
records of the Bank shall control absent manifest error.
Each Loan Request made by a Borrower shall constitute a representation and
warranty by such Borrower to the Bank that (i) the Loan requested thereby is
permitted under such Borrower's Prospectus, Registration Statement and, if
applicable, Statement of Additional Information; (ii) such
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Loan will not, when made, cause the aggregate outstanding principal amount of
all Loans of all Borrowers hereunder to exceed $50,000,000; (iii) the proceeds
of such Loan will be used by such Borrower for itself or on behalf of the
applicable Portfolio only in accordance with the provisions of Section 2.11
hereof; and (iv) all of the representations and warranties of such Borrower
contained in Section 4 hereof are true and correct on and as of the date of such
Loan Request and the date of such Loan as though made on and as of such dates.
(b) FUNDING THE LOANS. If, upon receipt of a Loan Request in accordance
with Section 2.2(a) hereof, the Bank is willing, in its discretion, to make a
Loan to the requesting Borrower for itself or on behalf of a Portfolio, the Bank
shall make such Loan by depositing or wiring the proceeds thereof, on the same
day in immediately available funds and at the applicable Borrower's expense, to
an account maintained on behalf of such Borrower or Portfolio by the Custodian
of such Borrower or Portfolio in accordance with the wiring instructions set
forth in SCHEDULE II hereto, as amended by such Borrower and in effect from time
to time.
Section 2.3. LOAN ACCOUNT. The Bank will maintain a separate account on
its books for each Borrower and each Portfolio (each a "LOAN ACCOUNT") on which
will be recorded, in accordance with the Bank's customary accounting practice,
(a) all Loans made by the Bank to such Borrower for its own account or for the
account of such Portfolio, (b) all payments on such Loans made by such Borrower
for its own account or for the account of such Portfolio to the Bank, and (c)
all other charges and expenses properly chargeable to such Borrower for its own
account or for the account of such Portfolio hereunder. The debit balance of
each Loan Account shall reflect the amount of the applicable Borrower's
indebtedness incurred for its own account or the account of its Portfolios from
time to time to the Bank hereunder and, in the absence of manifest error, shall
constitute conclusive evidence of the indebtedness of such Borrower incurred for
its own account or for the account of its Portfolios to the Bank hereunder.
Section 2.4. REPAYMENT OF LOANS. Each Loan made hereunder shall be
payable on demand or upon the termination of the credit facility provided
hereunder, as contemplated by Section 2.12; PROVIDED that if demand is not
earlier made, each Base Rate Loan shall mature and the principal amount thereof
become due and payable in full on the seventh day following the date of the
making of such Base Rate Loan, in the case of Loans to the Portfolios, and on
the Termination Date, in the case of Loans to all other Borrowers; and each
Eurodollar Loan shall mature and the principal amount thereof become due and
payable on the last day of the applicable Interest Period. Only the relevant
Borrower or the assets of the relevant Portfolio, as applicable, shall be liable
for the due and punctual payment of each such Loan made to such Borrower for its
own account or the account of such Portfolio, together with interest accrued
thereon and any other amounts payable with respect thereto.
Section 2.5. INTEREST.
(a) INTEREST RATE ON LOANS. Except as otherwise provided in Section
2.5(d) below, the outstanding principal amount of each Loan shall bear interest
until maturity at (i) the Base Rate, or (ii) the Adjusted Eurodollar Rate plus
1-1/2%, as selected by the applicable Borrower from time to time in its Loan
Request. Interest accrued on each Base Rate Loan shall be paid by the
applicable Borrower on the last day of each calendar quarter and upon demand by
the Bank for repayment of
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such Loan. Interest accrued on each Eurodollar Loan shall be paid on the last
day of the Interest Period applicable thereto and upon demand by the Bank for
repayment of such Loan.
(b) DURATION OF INTEREST PERIODS. Subject to the provisions of the
definition of Interest Period, the duration of each Interest Period applicable
to a Eurodollar Loan shall be as specified in the applicable Loan Request
delivered pursuant to Section 2.2(a). The applicable Borrower shall have the
option to elect a subsequent Interest Period to be applicable to such Loan by
giving notice of such election to the Bank received no later than 10:00 a.m.
Boston time three Business Days before the end of the then applicable Interest
Period.
If the Bank does not receive a notice of election of duration of an
Interest Period for a Eurodollar Loan within the applicable time limits
specified therein, or if, when such notice must be given, the Bank shall not
then be willing, in its sole discretion, to continue such Loan or a Default or
Event of Default then exists, the applicable Borrower shall be deemed to have
elected to convert such Loan in whole into a Base Rate Loan on the last day of
the then current Interest Period with respect thereto.
Notwithstanding the foregoing, no Borrower may select an Interest Period
that would end, but for the provisions of the definition of Interest Period,
after the Termination Date.
(c) OVERDUE PRINCIPAL AND INTEREST. Overdue principal and (to the extent
permitted by applicable law) interest on each Loan and all other overdue amounts
payable hereunder shall bear interest compounded monthly and payable on demand
at a rate per annum equal to two percent above the greater of (i) the interest
rate then in effect for such Loan and (ii) the Base Rate, until such amount
shall be paid in full (whether before or after judgment).
(d) LIMITATION ON INTEREST. No provision of this Agreement shall require
the payment or permit the collection of interest in excess of the rate then
permitted by applicable law.
Section 2.6. PLACE AND MODE OF PAYMENTS; COMPUTATIONS.
(a) Each payment made or caused to be made by a Borrower to the Bank under
this Agreement shall be made directly to the Bank in United States Dollars at
the Bank's Head Office ABA #011-000-390 Attention: Loretta Barrasso, Commercial
Loan Services, not later than 2:00 p.m., Boston time, on the due date of each
such payment, and in immediately available and freely transferable funds.
(b) If any sum would, but for the provisions of this subsection (b),
become due and payable to the Bank by any Borrower on any day that is not a
Business Day, then such sum shall become due and payable on the next succeeding
Business Day, and interest payable to the Bank under this Agreement shall be
adjusted by the Bank accordingly.
(c) All computations of interest and fees hereunder shall be made by the
Bank on the basis of a 360-day year and paid for the actual number of days
elapsed.
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(d) The Bank will determine the Base Rate in effect from time to time.
Any change in the Base Rate shall, for all purposes of this Agreement, become
effective on, and from the beginning of, the day on which such change shall
first be announced or determined by the Bank in accordance with the Bank's
customary banking practices.
(e) Each payment by a Borrower under this Agreement shall be made without
set-off or counterclaim and free and clear of and without deduction or
withholding of any kind.
Section 2.7. OPTIONAL PREPAYMENTS; CERTAIN MANDATORY PREPAYMENTS.
(a) Each Borrower shall have the right at any time to repay any Base Rate
Loans, in whole or in part, upon telephonic notice to the Bank of its intention
to repay such Loan prior to 12:00 noon, Boston time, on the date such prepayment
is to be made; PROVIDED, HOWEVER, that each such prepayment (except a prepayment
in full) shall be made in an amount of $100,000 or an integral multiple thereof.
Except as otherwise provided herein, Eurodollar Loans may only be prepaid on the
last day of the applicable Interest Period.
(b) If at any time the aggregate unpaid principal amount of all Loans to
all Borrowers exceeds $50,000,000, the Borrower that caused such excess agrees
to immediately prepay the amount of such excess, together with any amounts
payable pursuant to Section 2.10 hereof.
(c) If at any time the aggregate unpaid principal amount of Loans made to
any Borrower for its own account or for the account of a Portfolio shall exceed
the Maximum Amount applicable to such Borrower or Portfolio, such Borrower
agrees to immediately prepay the amount of such excess, together with any
amounts payable pursuant to Section 2.10 hereof.
(d) Upon each repayment or prepayment of any principal of any Loan
pursuant to any of the provisions of this Agreement, the applicable Borrower
hereby absolutely and unconditionally promises, for itself or on behalf of the
relevant Portfolio, to pay to the Bank, and there shall become absolutely due
and payable on the date of each such repayment or prepayment, all of the unpaid
interest accrued to such date on the amount of the principal of the Loans being
repaid or prepaid by such Borrower on such date. Whenever any interest on and
any principal of the Loans are paid simultaneously hereunder, the whole amount
paid shall be applied first to interest then due and payable.
2.8. CHANGED CIRCUMSTANCES.
(a) In the event that:
(i) on any date on which the Adjusted Eurodollar Rate would
otherwise be set the Bank shall have determined in good faith (which
determination shall be final and conclusive) that adequate and fair means
do not exist for ascertaining the London Interbank Offered Rate, or
(ii) at any time the Bank shall have determined in good faith (which
determination shall be final and conclusive) that:
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(A) the making or continuation of or conversion of any Loan to a
Eurodollar Loan has been made impracticable or unlawful by (1) the
occurrence of a contingency that materially and adversely affects the
London interbank Eurodollar market or (2) compliance by the Bank in good
faith with any applicable law or governmental regulation, guideline or
order or interpretation or change thereof by any governmental authority
charged with the interpretation or administration thereof or with any
request or directive of any such governmental authority (whether or not
having the force of law); or
(B) the Adjusted Eurodollar Rate shall no longer represent the
effective cost to the Bank for U.S. dollar deposits in the London interbank
market;
then, and in any such event, the Bank shall forthwith so notify each Borrower
thereof. Until the Bank notifies a Borrower that the circumstances giving rise
to such notice no longer apply, the obligation of the Bank to allow selection by
such Borrower of the type of Loan affected by the contingencies described in
this Section 2.8(a) (herein called "AFFECTED LOANS") shall be suspended. If at
the time the Bank so notifies each Borrower, a Borrower has previously given the
Bank a Loan Request with respect to one or more Affected Loans but such Loans
have not yet gone into effect, such Loan Request shall be deemed to be void and,
if the Bank in its discretion continues to be willing to lend to such Borrower,
such Borrower may borrow Loans of a non-affected type by delivering a substitute
Loan Request pursuant to Section 2.2(a) hereof.
Upon such date as shall be specified in such notice (which shall not be
earlier than the date such notice is given) each Borrower shall, with respect to
the outstanding Affected Loans made to it, prepay the same, together with
interest thereon and any amounts required to be paid pursuant to Section 2.10,
and may borrow Loans of another type in accordance with Section 2.1 hereof by
delivering substitute Loan Requests pursuant to Section 2.2(a) hereof.
(b) In case any change in law, regulation, treaty or official directive or
the interpretation or application thereof by any court or by any governmental
authority charged with the administration thereof or the compliance with any
guideline or request of any central bank or other governmental authority
(whether or not having the force of law):
(i) subjects the Bank to any tax with respect to payments of
principal or interest or any other amounts payable hereunder by any
Borrower or otherwise with respect to the transactions contemplated hereby
(except for taxes on the overall net income of the Bank imposed by the
United States of America or any political subdivision thereof), or
(ii) imposes, modifies or deems applicable any deposit insurance,
reserve, special deposit or similar requirement against assets held by, or
deposits in or for the account of, or loans by, the Bank (other than such
requirements as are already included in the determination of the Adjusted
Eurodollar Rate), or
(iii) imposes upon the Bank any other condition with respect to its
performance under this Agreement,
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and the result of any of the foregoing is to increase the cost to the Bank,
reduce the income receivable by the Bank or impose any expense upon the Bank
with respect to any Loans, the Bank shall notify each Borrower thereof. To the
extent such cost, reduction or expense is attributable to any specific Loan or
Loans, the applicable Borrower(s) agree(s) to pay to the Bank the amount of such
increase in cost, reduction in income or additional expense attributable to such
Loan or Loans as and when such cost, reduction or expense is incurred or
determined, upon presentation by the Bank of a statement in the amount and
setting forth the Bank's calculation thereof, which statement shall be deemed
true and correct absent manifest error. To the extent such cost, reduction or
expense is not so attributable to any Loan or Loans, each Borrower, for itself
or on behalf of the Portfolios, as applicable, agrees to pay to the Bank, in the
proportion that the average amount of Loans outstanding made to such Borrower
for its own account or for the account of each Portfolio during the preceding
12-month period (or such shorter period that this Agreement shall have been
effective) bears to the average amount of all Loans outstanding to all Borrowers
during such period (or, if no Loans shall have been outstanding, 10% of such
amount), the amount of such increase in cost, reduction in income or additional
expense, determined and paid as aforesaid.
Section 2.9. INCREASED CAPITAL REQUIREMENTS. If any law or any
governmental rule, regulation, policy, guideline or directive (whether or not
having the force of law) or the interpretation thereof by a court or
governmental authority with appropriate jurisdiction affects the amount of
capital required to be maintained by the Bank or any corporation controlling the
Bank and the Bank determines that the amount of capital required is increased by
or based upon the existence of the credit facilities established hereunder or
any Loans made pursuant hereto, and such increase has or would have the effect
of reducing the return on the Bank's equity to a level below that which the Bank
could have achieved (taking into consideration the Bank's then existing policies
with respect to capital adequacy and assuming the full utilization of the Bank's
capital) but for such law, rule, regulation, policy, guideline or directive,
then the Bank shall notify each Borrower in writing of such fact. To the extent
such reduction is attributable to any specific Loan or Loans, the applicable
Borrower(s) agree(s) to pay to the Bank the amount of such reduction
attributable to such Loan or Loans as and when such reduction is determined,
upon presentation by the Bank of a statement in the amount and setting forth the
Bank's calculation thereof, which statement shall be deemed true and correct
absent manifest error. To the extent such reduction is not so attributable to
any Loan or Loans, each Borrower agrees to pay, in the proportion that the
average amount of Loans outstanding made to such Borrower for its own account or
for the account of each Portfolio, as applicable, during the preceding 12-month
period (or such shorter period that this Agreement shall have been effective)
bears to the average amount of all Loans outstanding to all Borrowers during
such period (or, if no Loans shall have been be outstanding, 10% of such
amount), the amount of such reduction, determined and paid as aforesaid. In
determining such amount, the Bank may use any reasonable averaging and
attribution methods. In this connection, the Bank shall allocate such costs
among its customers in good faith and on an equitable basis.
Section 2.10. FUNDING LOSSES. If a Borrower for any reason makes any
payment of principal with respect to a Eurodollar Loan on any date other than
the scheduled maturity thereof, or fails to borrow or continue a Eurodollar Loan
after giving a Loan Request or continuation notice therefor, such Borrower shall
reimburse the Bank for any resulting loss or expense incurred by it, including
without limitation any loss reasonably incurred in obtaining, liquidating or
employing of deposits from third parties. Such Borrower shall pay the amount of
such loss or expense upon presentation of
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a statement in the amount thereof and setting forth the Bank's calculation
thereof, which statement shall be deemed true and correct absent manifest error.
Section 2.11. USE OF PROCEEDS. The proceeds of each Loan hereunder shall
be used by the applicable Borrower to meet requests for funds from such Borrower
for itself or on behalf of a Portfolio of such Borrower for temporary or
emergency purposes, as specified in such Borrower's Prospectus. No portion of
any Loan made to the Brazilian Equity Fund, the Chile Fund, the First Israel
Fund, the Indonesia Fund, the Infrastructure Fund, the LA Equity Fund, the LA
Investment Fund, the Portugal Fund and the Telecommunications Fund is to be used
for the "purpose of purchasing or carrying" any "margin stock" as such terms are
used in Regulations U and X of the Board of Governors of the Federal Reserve
System, 12 C.F.R. 221 and 224, as amended. Proceeds for any Loan made to a
Portfolio of the RBB Fund shall be used by such Portfolio solely to effect
redemptions to shareholders during the period in which such Portfolio is
awaiting receipt of settlement money from the sale of assets made to cover
requests for redemptions.
Section 2.12. DISCRETIONARY DEMAND FACILITY. It is acknowledged and
agreed by each Borrower that the Bank has no obligation to make any Loan
hereunder, and that the decision whether or not to make any Loan requested by
any Borrower is within the sole and exclusive discretion of the Bank. The Bank
may terminate the credit facilities provided for herein either in whole or in
part with respect to one or more or more Borrowers at any time by written notice
to the affected Borrower(s).
Section 3. CONDITIONS PRECEDENT.
Section 3.1. CONDITIONS OF CLOSING. This Agreement shall become effective
upon the receipt by the Bank of the following:
(a) executed original counterparts of this Agreement, signed by the Bank
and each Borrower;
(b) certified copies of the charter documents and bylaws of each New
Borrower, and certified copies of any amendments executed since December 31,
1993 to the charter documents and bylaws of each Existing Borrower;
(c) certified copies of all documents relating to the due authorization
and execution by each Borrower of this Agreement as the Bank may reasonably
request, including, without limitation, all votes of the Board of Directors of
such Borrower authorizing (i) the execution and delivery by such Borrower of
this Agreement, (ii) its performance of all of its agreements and obligations
under this Agreement, and (iii) the borrowings and other transactions
contemplated by this Agreement;
(d) an incumbency certificate, dated the date hereof, signed by the
Secretary or Assistant Secretary of each Borrower setting forth the names and
specimen signatures of each individual authorized to give notices, sign or act
on behalf of such Borrower in connection with the transactions contemplated by
this Agreement;
(e) an opinion of Ballard Spahr Andrews & Ingersoll, counsel to the RBB
Fund, an opinion of Skadden, Arps, Slate, Meagher and Flom, counsel to the First
Israel Fund and an opinion
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from Willkie Farr & Gallagher, counsel to the remaining Borrowers, substantially
in the form of EXHIBITS B-1, B-2 and B-3, respectively; and
(f) such other documents as the Bank shall have requested in order to
comply with applicable rules and regulations promulgated by the Federal Reserve
Board and other governmental and regulatory authorities.
Section 3.2. CONDITIONS OF LOANS. The willingness of the Bank in its
discretion to make any Loan to a Borrower for its own account or for the account
of a Portfolio on a Borrowing Date shall be subject to the satisfaction, at or
before the time each such Loan is made, of each of the following conditions
precedent (unless and to the extent that satisfaction of such conditions
precedent or any of them is waived pursuant to Section 16 hereof):
(a) the Bank shall have received a Loan Request from the applicable
Borrower for itself or on behalf of a Portfolio, as required by Section 2.2(a);
(b) the representations and warranties contained in Section 4 of this
Agreement and otherwise made by or on behalf of or with respect to such Borrower
in connection with the transactions contemplated by this Agreement shall (except
to the extent that such representations and warranties relate expressly to a
specific date, and except to the extent of changes resulting from the
transactions contemplated or permitted by this Agreement and changes occurring
in the ordinary course of business that, singly or in the aggregate, do not
materially adversely affect such Borrower or such Portfolio or its business,
assets, operations, prospects or its condition (financial or otherwise)), be
true and correct at and as of such Borrowing Date;
(c) there shall exist no Default or Event of Default upon the making of
such Loan;
(d) the Bank shall be satisfied that there has been no material adverse
change (i) in the business, assets, operations, prospects or condition
(financial or otherwise) of such Borrower or Portfolio since the date of the
most recent financial statements of such Borrower or Portfolio referred to in
Section 4.9, or (ii) in the political or economic conditions prevailing in the
countries of origin of the issuers of the portfolio securities of such Borrower
or Portfolio; and
(e) the making of such Loan shall not contravene any law, regulation,
decree or order binding on such Borrower or the Bank, and the Bank shall have
received all such certificates and documents in relation thereto as the Bank or
the Bank's counsel shall have reasonably requested.
Section 4. REPRESENTATIONS AND WARRANTIES. Each of the Borrowers
represents and warrants to the Bank that:
Section 4.1. ORGANIZATION, QUALIFICATION, ETC. Such Borrower is duly
organized and validly existing as a corporation under the laws of its
jurisdiction of incorporation and each Borrower and each Portfolio is duly
qualified to do business in each other jurisdiction wherein the nature of its
properties or its business requires such qualification and in which the failure
to be so qualified could materially adversely affect the business, assets or
condition (financial or otherwise) of such Borrower or Portfolio.
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Section 4.2. REGISTRATION UNDER APPLICABLE LAW. Such Borrower is
registered as a closed-end management investment company under the 1940 Act or,
in the case of the RBB Fund, such Borrower is registered as a open-end
management investment company under the 1940 Act.
Section 4.3. AUTHORIZATION, ETC. The execution, delivery and performance
by such Borrower of this Agreement are within the powers of such Borrower, have
been duly authorized by all necessary and proper action on the part of such
Borrower, and do not and will not (i) violate or contravene any provision of
such Borrower's charter documents or bylaws, or any amendment thereof; (ii)
violate or contravene any provision of such Borrower's Prospectus, Registration
Statement or Statement of Additional Information, if applicable; (iii) conflict
with, or result in a breach of any material term, condition or provision of, or
constitute a default under or result in the creation of any mortgage, lien,
pledge, charge, security interest or other encumbrance upon any of the property
or assets of such Borrower under, any agreement, trust deed, indenture, mortgage
or other instrument to which such Borrower is a party or by which such Borrower
or any of its property or assets is bound or affected; or (iv) violate or
contravene any provision of any material law, regulation, order, ruling or
interpretation thereunder or any decree, order or judgment of any court or
governmental or regulatory authority, bureau, agency or official.
Section 4.4. BINDING EFFECT OF AGREEMENT, ETC. This Agreement and all the
provisions hereof constitute the legally valid and binding obligations of such
Borrower enforceable against such Borrower in accordance with their terms,
except as enforceability is limited by bankruptcy, insolvency, reorganization,
moratorium or other laws relating to or affecting generally the enforcement of
creditors' rights and except to the extent that the availability of equitable
remedies is subject to the discretion of the court before which any proceeding
therefor may be brought.
Section 4.5. APPROVALS, ETC. No authorization, approval, consent or other
action by, and no notice to or filing with, any shareholder or creditor of such
Borrower, or governmental or regulatory agency or authority having jurisdiction
over such Borrower, is required to make valid and legally binding the execution,
delivery and performance by such Borrower of this Agreement or the consummation
by such Borrower of the transactions contemplated hereby, or the exercise by the
Bank of its rights and remedies hereunder.
Section 4.6. COMPLIANCE WITH OTHER INSTRUMENTS. Such Borrower is in
compliance with all investment policies and restrictions applicable to it or to
its Portfolios identified in its Prospectus, Registration Statement and
Statement of Additional Information, if applicable, and is in compliance with
all investment policies and restrictions applicable to it or its Portfolios
under Section 8(b), Section 13 and all other provisions of the 1940 Act. Such
Borrower is not in violation of any material provision of its charter documents
or bylaws, or any amendment thereof, or in default under any material indenture
or agreement to which it is a party or by which it or any of its property or
assets is bound, or in violation of any material applicable laws or orders,
regulations, rulings, decrees or requirements of any court or governmental or
regulatory agency or authority by which it or any of its property or assets is
bound, which default or violation could have a material adverse effect on the
business, assets, operations, prospects or condition (financial or otherwise) of
such Borrower or the Portfolios of such Borrower.
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Section 4.7. LITIGATION. There are no pending or, to the best knowledge
of such Borrower, threatened actions, suits, investigations or proceedings at
law or in equity before any federal, state, local or foreign court, governmental
or regulatory authority, agency, commission, board, bureau or instrumentality,
or board of arbitration, against or affecting such Borrower or its right, title
and interest in or to any of its properties or assets.
Section 4.8. TAXES. Such Borrower has made or filed all federal, state,
local, foreign and other tax returns, reports and declarations required by any
jurisdiction to which such Borrower is subject, and has paid all taxes and other
assessments and charges shown or determined to be due on such returns, reports
and declarations or pursuant to any matters raised by audits or for other
reasons known to it, except those being contested in good faith by appropriate
proceedings and as to which there have been set aside reserves adequate with
respect to such tax, assessment or charge so contested. Such Borrower has set
aside on its books provisions reasonably adequate for the payment of all taxes
for periods subsequent to the periods to which such returns, reports or
declarations apply. There are no unpaid taxes claimed to be due by the taxing
authority of any jurisdiction, and such Borrower knows of no basis for any such
claim.
Section 4.9. FINANCIAL STATEMENTS; NO MATERIAL CHANGES.
(a) The Annual Report of the LA Investment Fund as of December 31, 1993,
setting forth the Schedule of Investments and the Statement of Assets and
Liabilities of the LA Investment Fund as of the date of such Report, and the
Statements of Operations and Changes in Net Assets of the LA Investment Fund for
the period then ended, certified by Coopers & Lybrand, and the Semi-Annual
Report of the LA Investment Fund as of June 30, 1994, setting forth the Schedule
of Investments and the Statement of Assets and Liabilities of the LA Investment
Fund as of the date of such Report and the Statements of Operations and Changes
in Net Assets of the LA Investment Fund as of the date of such report, certified
by management of the Investment Adviser, copies of each of which have been
furnished to the Bank, are complete and correct in all material respects; and
said Annual Report and Semi-Annual Report fairly present the financial condition
of the LA Investment Fund as of their respective dates and the results of the
operations of the LA Investment Fund for the periods ended on such dates, all in
accordance with generally accepted accounting principles applied on a consistent
basis. Since December 31, 1993 there have been no changes in the assets,
liabilities, business, condition (financial or otherwise) or results of
operations of the LA Investment Fund, that have been, in any case or in the
aggregate, materially adverse.
(b) The Annual Report of the LA Equity Fund as of December 31, 1993,
setting forth the Schedule of Investments and the Statement of Assets and
Liabilities of the LA Equity Fund as of the date of such Report, and the
Statements of Operations and Changes in Net Assets of the LA Equity Fund for the
period then ended, certified by Coopers & Lybrand, and the Semi-Annual Report of
the LA Equity Fund as of June 30, 1994, setting forth the Schedule of
Investments and the Statement of Assets and Liabilities of the LA Equity Fund as
of the date of such Report and the Statements of Operations and Changes in Net
Assets of the LA Equity Fund as of the date of such report, certified by
management of the Investment Adviser, copies of each of which have been
furnished to the Bank, are complete and correct in all material respects; and
said Annual Report and Semi-Annual Report fairly present the financial condition
of the LA Equity Fund as of their respective dates and the results
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of the operations of the LA Equity Fund for the periods ended on such dates, all
in accordance with generally accepted accounting principles applied on a
consistent basis. Since December 31, 1993 there have been no changes in the
assets, liabilities, business, condition (financial or otherwise) or results of
operations of the LA Equity Fund, that have been, in any case or in the
aggregate, materially adverse.
(c) The Annual Report of the Chile Fund as of December 31, 1993, setting
forth the Schedule of Investments and the Statement of Assets and Liabilities of
the Chile Fund as of the date of such Report, and the Statements of Operations
and Changes in Net Assets of the Chile Fund for the period then ended, certified
by Coopers & Lybrand, and the Semi-Annual Report of the Chile Fund as of June
30, 1994, setting forth the Schedule of Investments and the Statement of Assets
and Liabilities of the Chile Fund as of the date of such Report and the
Statements of Operations and Changes in Net Assets of the Chile Fund as of the
date of such report, certified by management of the Investment Adviser, copies
of each of which have been furnished to the Bank, are complete and correct in
all material respects; and said Annual Report and Semi-Annual Report fairly
present the financial condition of the Chile Fund as of their respective dates
and the results of the operations of the Chile Fund for the periods ended on
such dates, all in accordance with generally accepted accounting principles
applied on a consistent basis. Since December 31, 1993 there have been no
changes in the assets, liabilities, business, condition (financial or otherwise)
or results of operations of the Chile Fund, that have been, in any case or in
the aggregate, materially adverse.
(d) The Annual Report of the Brazilian Equity Fund as of March 31, 1994,
setting forth the Schedule of Investments and the Statement of Assets and
Liabilities of the Brazilian Equity Fund as of the date of such Report, and the
Statements of Operations and Changes in Net Assets of the Brazilian Equity Fund
for the period then ended, certified by Coopers & Lybrand, copies of each of
which have been furnished to the Bank, are complete and correct in all material
respects; and said Annual Report fairly presents the financial condition of the
Brazilian Equity Fund as of its date and the results of the operations of the
Brazilian Equity Fund for the period ended on such date, all in accordance with
generally accepted accounting principles applied on a consistent basis. Since
March 31, 1994 there have been no changes in the assets, liabilities, business,
condition (financial or otherwise) or results of operations of the Brazilian
Equity Fund, that have been, in any case or in the aggregate, materially
adverse.
(e) The Annual Report of the Indonesia Fund as of December 31, 1993,
setting forth the Schedule of Investments and the Statement of Assets and
Liabilities of the Indonesia Fund as of the date of such Report, and the
Statements of Operations and Changes in Net Assets of the Indonesia Fund for the
period then ended, certified by Coopers & Lybrand, and the Semi-Annual Report of
the Indonesia Fund as of June 30, 1994, setting forth the Schedule of
Investments and the Statement of Assets and Liabilities of the Indonesia Fund as
of the date of such Report and the Statements of Operations and Changes in Net
Assets of the Indonesia Fund as of the date of such report, certified by
management of the Investment Adviser, copies of each of which have been
furnished to the Bank, are complete and correct in all material respects; and
said Annual Report and Semi-Annual Report fairly present the financial condition
of the Indonesia Fund as of their respective dates and the results of the
operations of the Indonesia Fund for the periods ended on such dates, all in
accordance with generally accepted accounting principles applied on a consistent
basis. Since December 31, 1993 there have been no changes in the assets,
liabilities, business, condition (financial or otherwise) or
17
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results of operations of the Indonesia Fund, that have been, in any case or in
the aggregate, materially adverse.
(f) The Annual Report of the First Israel Fund as of September 30, 1993,
setting forth the Schedule of Investments and the Statement of Assets and
Liabilities of the Indonesia Fund as of the date of such Report, and the
Statements of Operations and Changes in Net Assets of the First Israel Fund for
the period then ended, certified by Coopers & Lybrand, and the Semi-Annual
Report of the First Israel Fund as of March 31, 1994, setting forth the Schedule
of Investments and the Statement of Assets and Liabilities of the First Israel
Fund as of the date of such Report and the Statements of Operations and Changes
in Net Assets of the First Israel Fund as of the date of such report, certified
by management of the Investment Adviser, copies of each of which have been
furnished to the Bank, are complete and correct in all material respects; and
said Annual Report and Semi-Annual Report fairly present the financial condition
of the First Israel Fund as of their respective dates and the results of the
operations of the First Israel Fund for the periods ended on such dates, all in
accordance with generally accepted accounting principles applied on a consistent
basis. Since September 30, 1993 there have been no changes in the assets,
liabilities, business, condition (financial or otherwise) or results of
operations of the First Israel Fund, that have been, in any case or in the
aggregate, materially adverse.
(g) The Annual Report of the Portugal Fund as of December 31, 1993,
setting forth the Schedule of Investments and the Statement of Assets and
Liabilities of the Portugal Fund as of the date of such Report, and the
Statements of Operations and Changes in Net Assets of the Portugal Fund for the
period then ended, certified by Coopers & Lybrand, and the Semi-Annual Report of
the Portugal Fund as of June 30, 1994, setting forth the Schedule of Investments
and the Statement of Assets and Liabilities of the Portugal Fund as of the date
of such Report and the Statements of Operations and Changes in Net Assets of the
Portugal Fund as of the date of such report, certified by management of the
Investment Adviser, copies of each of which have been furnished to the Bank, are
complete and correct in all material respects; and said Annual Report and Semi-
Annual Report fairly present the financial condition of the Portugal Fund as of
their respective dates and the results of the operations of the Portugal Fund
for the periods ended on such dates, all in accordance with generally accepted
accounting principles applied on a consistent basis. Since December 31, 1993
there have been no changes in the assets, liabilities, business, condition
(financial or otherwise) or results of operations of the Portugal Fund, that
have been, in any case or in the aggregate, materially adverse.
(h) The Annual Report of the Telecommunications Fund as of May 31, 1994,
setting forth the Schedule of Investments and the Statement of Assets and
Liabilities of the Telecommunications Fund as of the date of such Report, and
the Statements of Operations and Changes in Net Assets of the Telecommunications
Fund for the period then ended, certified by Coopers & Lybrand, copies of which
have been furnished to the Bank, is complete and correct in all material
respects; and said Annual Report fairly presents the financial condition of the
Telecommunications Fund as of its date and the results of the operations of the
Telecommunications Fund for the period ended on such date, all in accordance
with generally accepted accounting principles applied on a consistent basis.
Since May 31, 1994 there have been no changes in the assets, liabilities,
business, condition (financial or otherwise) or results of operations of the
Telecommunications Fund, that have been, in any case or in the aggregate,
materially adverse.
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(i) The Semi-Annual Report of the Infrastructure Fund as of May 31, 1994,
setting forth the Schedule of Investments and the Statement of Assets and
Liabilities of the Infrastructure Fund as of the date of such Report and the
Statements of Operations and Changes in Net Assets of the Infrastructure Fund as
of the date of such report, certified by management of the Investment Adviser,
copies of which have been furnished to the Bank, are complete and correct in all
material respects; and said Semi-Annual Report fairly presents the financial
condition of the Infrastructure Fund as of its date and the results of the
operations of the Infrastructure Fund for the period ended on such date, all in
accordance with generally accepted accounting principles applied on a consistent
basis. Since May 31, 1994 there have been no changes in the assets,
liabilities, business, condition (financial or otherwise) or results of
operations of the Infrastructure Fund, that have been, in any case or in the
aggregate, materially adverse.
(j) The Annual Report of the BEA International Equity Portfolio and BEA
Emerging Markets Equity Portfolio as of August 31, 1994, setting forth the
Schedule of Investments and the Statement of Assets and Liabilities of the BEA
International Equity Portfolio and BEA Emerging Markets Equity Portfolio as of
the date of such Report, and the Statements of Operations and Changes in Net
Assets of the BEA International Equity Portfolio and BEA Emerging Markets Equity
Portfolio for the period then ended, certified by Coopers & Lybrand, copies of
which have been furnished to the Bank, are complete and correct in all material
respects; and said Annual Report fairly presents the financial condition of the
BEA International Equity Portfolio and BEA Emerging Markets Equity Portfolio as
of their respective dates and the results of the operations of the BEA
International Equity Portfolio and BEA Emerging Markets Equity Portfolio for the
period ended on such date, all in accordance with generally accepted accounting
principles applied on a consistent basis. Since August 31, 1994 there have been
no changes in the assets, liabilities, business, condition (financial or
otherwise) or results of operations of the BEA International Equity Portfolio
and BEA Emerging Markets Equity Portfolio, that have been, in any case or in the
aggregate, materially adverse.
(k) The Schedule of Investments of the BEA Global Fixed Income Portfolio
as of August 31, 1994, setting forth the Schedule of Investments of the BEA
Global Fixed Income Portfolio as of the date of such Report, certified by
Coopers & Lybrand, copies of which have been furnished to the Bank, is complete
and correct in all material respects; and said Schedule of Investments fairly
presents the investment portfolio of the BEA Global Fixed Income Portfolio as of
its date in accordance with generally accepted accounting principles applied on
a consistent basis. Since August 31, 1994 there have been no changes in the
assets, liabilities, business, condition (financial or otherwise) or results of
operations of the BEA Global Fixed Income Portfolio, that have been, in any case
or in the aggregate, materially adverse.
(l) The Schedule of Investments of the BEA Municipal Bond Fund Portfolio
as of August 31, 1994, setting forth the Schedule of Investments of the BEA
Municipal Bond Fund Portfolio as of the date of such Report, certified by
Coopers & Lybrand, copies of which have been furnished to the Bank, is complete
and correct in all material respects; and said Schedule of Investments fairly
presents the investment portfolio of the BEA Municipal Bond Fund Portfolio as of
its date in accordance with generally accepted accounting principles applied on
a consistent basis. Since August 31, 1994 there have been no changes in the
assets, liabilities, business, condition (financial or otherwise) or results of
operations of the BEA Municipal Bond Fund Portfolio, that have been, in any case
or in the aggregate, materially adverse.
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(m) The Schedule of Investments of the BEA U.S. Core Equity Portfolio as
of August 31, 1994, setting forth the Schedule of Investments of the BEA U.S.
Core Equity Portfolio as of the date of such Report, certified by Coopers &
Lybrand, copies of which have been furnished to the Bank, is complete and
correct in all material respects; and said Schedule of Investments fairly
presents the investment portfolio of the BEA U.S. Core Equity Portfolio as of
its date in accordance with generally accepted accounting principles applied on
a consistent basis. Since August 31, 1994 there have been no changes in the
assets, liabilities, business, condition (financial or otherwise) or results of
operations of the BEA U.S. Core Equity Portfolio, that have been, in any case or
in the aggregate, materially adverse.
(n) The Schedule of Investments of the BEA U.S. Core Fixed Income
Portfolio as of August 31, 1994, setting forth the Schedule of Investments of
the BEA U.S. Core Fixed Income Portfolio as of the date of such Report,
certified by Coopers & Lybrand, copies of which have been furnished to the Bank,
is complete and correct in all material respects; and said Schedule of
Investments fairly presents the investment portfolio of the BEA U.S. Core Fixed
Income Portfolio as of its date in accordance with generally accepted accounting
principles applied on a consistent basis. Since August 31, 1994 there have been
no changes in the assets, liabilities, business, condition (financial or
otherwise) or results of operations of the BEA U.S. Core Fixed Income Portfolio,
that have been, in any case or in the aggregate, materially adverse.
(o) The Schedule of Investments of the BEA Strategic Fixed Income
Portfolio as of August 31, 1994, setting forth the Schedule of Investments of
the BEA Strategic Fixed Income Portfolio as of the date of such Report,
certified by Coopers & Lybrand, copies of which have been furnished to the Bank,
is complete and correct in all material respects; and said Schedule of
Investments fairly presents the investment portfolio of the BEA Strategic Fixed
Income Portfolio as of its date in accordance with generally accepted accounting
principles applied on a consistent basis. Since August 31, 1994 there have been
no changes in the assets, liabilities, business, condition (financial or
otherwise) or results of operations of the BEA Strategic Fixed Income Portfolio,
that have been, in any case or in the aggregate, materially adverse.
Section 4.10. NO DEFAULTS. No Default or Event of Default has occurred
and is continuing.
Section 4.11. AFFILIATED PERSONS.
(a) So far as appears from the records of such Borrower, neither the Bank
nor, to the knowledge of such Borrower, any Affiliated Person of the Bank,
individually or in the aggregate, owns, controls or holds with the power to
vote, five percent or more of the outstanding voting securities of such
Borrower;
(b) neither such Borrower nor, to the knowledge of such Borrower, any
Affiliated Person of such Borrower, directly or indirectly, individually or in
the aggregate, owns, controls or holds with power to vote, five percent or more
of the outstanding voting securities of the Bank or, to the knowledge of such
Borrower, any Affiliated Person of the Bank;
(c) neither such Borrower nor, to the knowledge of such Borrower, any
Affiliated Person of such Borrower, directly or indirectly, individually or in
the aggregate, controls or, to the
20
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knowledge of such Borrower, after due inquiry, is controlled by or under common
control with, the Bank or, to the knowledge of such Borrower, any Affiliated
Person of the Bank;
(d) no officer, director or employee of such Borrower or, to the knowledge
of such Borrower, any Affiliated Person of such Borrower is an Affiliated Person
of the Bank or, to the knowledge of such Borrower, any Affiliated Person of the
Bank;
(e) except as described in SCHEDULE III hereto, as amended and in effect
from time to time, such Borrower does not, directly or indirectly, own, control,
or hold with power to vote, ten percent or more of the outstanding voting
securities of any issuer; and
(f) except as described in SCHEDULE IV, as amended and in effect from time
to time, to the knowledge of such Borrower, no person, directly or indirectly,
owns, controls or holds with power to vote, five percent or more of the
outstanding voting securities of such Borrower.
Section 4.12. DISCLOSURE. Neither this Agreement nor any of the
information concerning such Borrower submitted to the Bank in connection
herewith contains any untrue statement of a material fact or omits to state a
material fact necessary in order to make the statements contained therein not
misleading in light of the circumstances in which they are made. Except as
disclosed herein or in the Prospectuses, Registration Statements or Statements
of Additional Information, there is no fact known to such Borrower that
materially adversely affects, or that, in the best judgment of the management of
such Borrower, could in the future materially adversely affect, the assets,
business, prospects, condition (financial or otherwise) or operations of such
Borrower.
Section 5. COVENANTS. Each Borrower covenants and agrees that, so long as
any amounts are owing with respect to the Loans or otherwise under this
Agreement, or if no such amount is owing, so long as the Bank shall, in its
discretion, be willing to make Loans hereunder as provided herein, it will
comply with the following covenants. EACH BORROWER ACKNOWLEDGES AND AGREES THAT
COMPLIANCE WITH THE FOLLOWING COVENANTS SHALL IN NO WAY COMPROMISE THE ABSOLUTE
DISCRETION OF THE BANK TO ADVANCE FUNDS UNDER THIS CREDIT FACILITY TO SUCH
BORROWER OR MAKE DEMAND AT ANY TIME FOR PAYMENT OF THE OBLIGATIONS OF SUCH
BORROWER TO THE BANK.
Section 5.1. USE OF PROCEEDS. Such Borrower shall use the proceeds of
Loans only for the purposes specified in Section 2.11.
Section 5.2. PUNCTUAL PAYMENT. Such Borrower will duly and punctually pay
or cause to be paid principal and interest and all other sums due from it under
this Agreement in accordance with the terms hereof.
Section 5.3. TAXES, ETC. Such Borrower (a) will file all federal, state,
local, foreign and other tax returns, reports and declarations required by any
jurisdiction to which such Borrower is subject on or before the due dates for
the returns, reports and declarations; and (b) will pay and discharge, before
the same shall become in arrears, all taxes, assessments and other governmental
charges shown or determined to be due on such returns, reports and declarations,
unless, and in any
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such case, the same is being contested in good faith by appropriate proceedings
and an adequate reserve therefor has been established.
Section 5.4. COMPLIANCE WITH LAW, ETC. Such Borrower will comply in all
material respects with (i) all applicable federal, state and local laws, rules,
regulations and governmental or regulatory directives (whether or not having the
force of law), and all orders, writs, judgments, injunctions, decrees or awards
to which it may be subject; (ii) all of its investment policies and restrictions
set forth in its Prospectus, Registration Statement or Statement of Additional
Information, if applicable, or otherwise; and (iii) the provisions of its
charter documents and bylaws and all agreements and instruments by which it or
any of its property or assets may be affected or bound.
Section 5.5. COMPLIANCE WITH REGULATION U. Such Borrower will, at any
time and from time to time upon receipt of notice from the Bank, and at such
Borrower's expense, promptly execute and deliver or file all additional
instruments and documents, and take all further action, that may be necessary or
desirable, or that the Bank may reasonably request, in order to fully comply
with the requirements of Regulation U.
Section 5.6. NOTICE OF CERTAIN EVENTS. Such Borrower will give the Bank
prompt written notice of:
(a) any change in any federal, state or local law, rule or regulation or
governmental or regulatory directive (whether or not having the force of law)
materially adversely affecting such Borrower, or any of its property or assets,
or affecting such Borrower's ability to repay the Loans and comply with the
terms of this Agreement;
(b) any change in its agreements with governmental authorities or
regulators or its investment policies or restrictions that would make any of the
information set forth in SCHEDULE I hereto incorrect, incomplete or misleading
in any material respect, and will prepare and submit to the Bank for attachment
to this Agreement an amendment to SCHEDULE I reflecting such change;
(c) any change in its portfolio or in the ownership of its outstanding
voting securities that would make any of the information set forth in SCHEDULES
III and IV hereto incorrect or incomplete in any material respect, and will
prepare and submit to the Bank for attachment to this Agreement an amendment to
SCHEDULE III or IV, as applicable, reflecting such change;
(d) any material change in its method of business or in the Registration
Statement or Statement of Additional Information, if applicable (it being
understood that any change in the investment restrictions and limitations on
indebtedness applicable to such Borrower shall constitute material changes);
(e) the commencement of any litigation or any administrative, regulatory
or arbitration proceeding or investigation to which such Borrower may hereafter
become a party that may involve any material risk of any material final judgment
or liability not adequately covered by insurance or that may otherwise result in
any material adverse change in the business, assets, operations, prospects or
condition (financial or otherwise) of such Borrower; and
22
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(f) the occurrence of any Default or Event of Default.
Section 5.7. TOTAL VALUE OF ASSETS, ETC. Such Borrower will, at any time
and from time to time during normal business hours, notify the Bank by telephone
or in writing, as requested by the Bank, of a listing of the portfolio
securities, the total asset value of such securities and the net asset value of
such securities of such Borrower, or the Portfolios of such Borrower, and any
changes in any of such values, in each case as most recently calculated.
Section 5.8. REPORTS, ADDITIONAL INFORMATION, ETC. Such Borrower will
cause to be furnished to the Bank:
(a) as soon as available, and not later than 90 days after the end of each
fiscal year of such Borrower, the Annual Report(s) of such Borrower for itself
or for its Portfolios, including audited financial statements certified by
Coopers & Lybrand or other independent public accountants of national standing,
setting forth the Schedule of Investments and the Statement of Assets and
Liabilities of such Borrower or Portfolios, each as of the end of such fiscal
year, and including Statements of Operations, Cash Flows and Changes in Net
Assets of such Borrower or Portfolios for the fiscal period then ended;
(b) as soon as available, and not later than 60 days after the end of the
second fiscal quarter of such Borrower, the Semi-Annual Report(s) prepared by
such Borrower for itself or for its Portfolios, its administrator or accounting
agent , setting forth the Schedule of Investments and the Statement of Assets
and Liabilities of such Borrower or Portfolios, each as of the end of such
fiscal quarter, and including Statements of Operations, Cash Flows and Changes
in Net Assets of such Borrower or Portfolios for the fiscal period then ended;
(c) at the same times as such reports are furnished to such Borrower's
shareholders, any additional reports required by Section 30(d) of the 1940 Act
or any applicable law;
(d) upon request by the Bank, within 10 Business Days after the issuance
thereof, copies of all other regular and periodic reports and any other reports
that such Borrower may be required to file with the Securities and Exchange
Commission or any similar or corresponding governmental commission, department
or agency; and
(e) such other information with respect to the financial standing and
history or the business, property, assets or prospects of such Borrower or the
Portfolios of such Borrower as the Bank may, at any time and from time to time,
reasonably request.
Section 5.9. FURTHER ASSURANCES. Such Borrower will, at any time and from
time to time, execute and deliver such additional instruments and take such
further action as the Bank may reasonably request to carry out to the Bank's
satisfaction the transactions contemplated by this Agreement.
Section 5.10. PROHIBITED AFFILIATIONS. (a) Such Borrower will not,
directly or indirectly, own, control, or hold with power to vote, five percent
or more of the outstanding voting securities of
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the Bank or any Affiliated Person of the Bank known to such Borrower to be such
an Affiliated Person;
(b) such Borrower will use its best efforts to ensure that it will not,
directly or indirectly, control the Bank or any Affiliated Person of the Bank
known to such Borrower to be such an Affiliated Person; and
(c) such Borrower will use its best efforts to ensure that none of its
officers, directors, or employees is or becomes an Affiliated Person of the Bank
or any Affiliated Person of the Bank known to such Borrower to be such an
Affiliated Person.
Section 5.11. NEGATIVE PLEDGE ON ASSETS. Such Borrower will not create or
permit to exist any lien or encumbrance upon any of its property or assets, or
the assets of the Portfolios, as applicable, other than (i) liens in favor of
the Bank; (ii) liens arising from attachments or similar proceedings, pending
litigation, judgments or taxes or assessments, in any such event whose validity
or amount is being contested in good faith by appropriate proceedings and for
which adequate reserves have been established and are maintained, or liens
arising from taxes and assessments which are not due and delinquent; and (iii)
banker's liens or rights of offset on deposits held in banks; PROVIDED that this
provision shall not prohibit the making of any collateral arrangement or the
segregation of assets as required by law in connection with certain portfolio
strategies, such as forward contracts, futures contracts and options.
Section 5.12. LIMITATION ON ADDITIONAL INDEBTEDNESS. Such Borrower will
not incur or permit to exist or remain outstanding, for its own account or for
the account of the Portfolios, as applicable, any Indebtedness to any person or
entity; PROVIDED, HOWEVER, that such Borrower may incur or permit to exist or
remain outstanding:
(a) Indebtedness of such Borrower incurred for its own account or for the
account of the Portfolios, as applicable, to the Bank arising under this
Agreement;
(b) Indebtedness in respect of taxes, assessments and other governmental
charges to the extent that payment thereof is not at the time required to be
made or is being contested in good faith by appropriate proceedings and for
which an adequate reserve has been established;
(c) Indebtedness of such Borrower incurred for its own account or for the
account of the Portfolios, as applicable, incurred in the ordinary course of
business and not incurred through the borrowing of money or the obtaining of
credit or the leasing of property, except that this provision shall not prohibit
(i) credit on an open account basis customarily extended to such Borrower in
connection with purchases of goods or services in the ordinary course of
business; (ii) the entry into reverse repurchase agreements; and (iii) short-
term credits for the clearance and settlement of securities transactions; and
(d) Indebtedness in respect of judgments or awards which have been in
force for less than the applicable appeal period, so long as execution is not
levied or in respect of which such Borrower shall at the time in good faith be
prosecuting an appeal or proceedings for review.
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<PAGE>
Section 5.13. LIMITATION ON DIVIDENDS. Such Borrower will not declare or
pay any dividend or make any other distribution on any class of its capital
stock or purchase any of such capital stock in violation of the requirements of
Section 18(a)(1)(B) of the 1940 Act or any other applicable law or regulation.
Section 6. EVENTS OF DEFAULT; ACCELERATION.
Section 6.1. EVENTS OF DEFAULT; ACCELERATION. If any of the following
events ("EVENTS OF DEFAULT" or, if the giving of notice or the lapse of time or
both is required, then, prior to such notice and/or lapse of time, "DEFAULTS")
shall occur:
(a) if any Borrower shall fail to pay any principal of any Loan
outstanding made to it hereunder for its own account or for the account of a
Portfolio when the same shall become due and payable, whether at the stated date
of maturity or any accelerated date of maturity or at any other date fixed for
payment;
(b) if any Borrower shall fail to pay any interest on any Loan outstanding
made to it for its own account or for the account of a Portfolio when the same
shall become due and payable, whether at the stated date of maturity or any
accelerated date of maturity or at any other date fixed for payment, and such
failure shall continue unremedied for three Business Days;
(c) if any Borrower, acting for itself or on behalf of a Portfolio, shall
fail to perform, discharge, observe or comply with any of the terms, covenants
and agreements contained in Section 5.1, 5.6(f), 5.7 or 5.10 through 5.13;
(d) if any Borrower, acting for itself or on behalf of a Portfolio, shall
fail to perform, discharge, observe or comply with any of the terms, covenants
and agreements contained herein (other than those specified in paragraphs (a),
(b) and (c) of this Section 6.1), and such failure shall continue unremedied for
30 days after written notice of such failure has been given to such Borrower by
the Bank;
(e) if any representation or warranty of any Borrower contained in this
Agreement or any other document or instrument delivered by such Borrower
pursuant to or in connection with this Agreement shall prove to have been false
or misleading in any material respect as of the time when made or deemed to have
been made;
(f) if any Borrower, acting for itself or on behalf of a Portfolio, shall
fail in the performance or the payment, at maturity or within an applicable
period of grace, of any obligation contained in any agreement or instrument
evidencing any other indebtedness with respect to borrowed money or credit
received, or any mortgage, pledge, agreement, indenture or other agreement
relating thereto, for such period of time as would, or would have permitted
(assuming the giving of appropriate notice if required) the holder or holders
thereof or of any obligations issued thereunder to accelerate the maturity
thereof;
(g) if any Borrower makes an assignment for the benefit of creditors, or
admits in writing its inability to pay or generally fails to pay its debts as
they mature or become due, or petitions or
25
<PAGE>
applies for the appointment of a trustee (in bankruptcy) or other custodian,
liquidator or receiver of such Borrower or of any substantial part of the
property or assets of such Borrower or commences any case or other proceeding
relating to such Borrower under any bankruptcy, reorganization, arrangement,
insolvency, readjustment of debt, dissolution or liquidation or similar law of
any jurisdiction, now or hereafter in effect, or takes any action to authorize
or in furtherance of any of the foregoing;
(h) if any such petition or application is filed or any such case or other
proceeding is commenced against such Borrower and such Borrower indicates its
approval thereof, consent thereto or acquiescence therein or an order for relief
or appointing any such trustee (in bankruptcy), custodian, liquidator or
receiver is entered adjudicating such Borrower bankrupt or insolvent, or
approving a petition in any such case or other proceeding, and such order
remains unstayed and in effect for more than 60 days, whether or not
consecutive;
(i) if there shall remain in force, undischarged, unsatisfied and
unstayed, for more than 30 days, whether or not consecutive, any final judgment
against such Borrower that, with other outstanding final judgments undischarged
against such Borrower, (i) exceeds, in the aggregate, $500,000 or (ii) shall
have a materially adverse effect upon the business, assets, operations,
prospects or condition (financial or otherwise) of such Borrower; or
(j) if there shall occur a material adverse change in the business,
assets, operations, prospects or condition, financial or otherwise, of such
Borrower; it being acknowledged that a reduction in a Borrower's total assets
resulting from declines in the market value of its assets or, in the case of the
Portfolios, shareholder redemptions, shall not constitute a material adverse
change so long as the aggregate amount of such Borrower's Loans does not exceed
the Maximum Amount applicable to such Borrower;
then and in any such event and without notice or demand by the Bank (i) the
obligation of the Bank to make Loans to the defaulting Borrower shall terminate,
(ii) the Loans of such Borrower, all interest thereon and all other amounts
payable by such Borrower under this Agreement shall become and be forthwith due
and payable without presentment, demand, protest or notice, all of which are
expressly waived by such Borrower. In case any one or more of the foregoing
Events of Default shall have occurred and be continuing, and whether or not the
Bank shall have accelerated the maturity of the Loans of any Borrower pursuant
to the foregoing, the Bank may proceed to protect and enforce its rights against
such Borrower by suit in equity, action at law and/or other appropriate
proceeding, whether for the specific performance of any covenant or agreement
contained in this Agreement or any instrument pursuant to which the obligations
of any Borrower to the Bank hereunder are evidenced, and, if such amount shall
have become due, by declaration or otherwise, proceed to enforce the payment
thereof or any other legal or equitable right of the Bank hereunder. No remedy
conferred upon the Bank herein is intended to be exclusive of any other remedy
and each and every remedy shall be cumulative and shall be in addition to every
other remedy given hereunder or now or hereafter existing at law or in equity or
by statute or any other provision of law.
Section 7. SET-OFF. Any deposits, balances or other sums credited by or
due from the Bank to any Borrower hereunder for its own account or for the
account of a Portfolio may be, at any time or from time to time, set-off and
applied by the Bank, in such order as the Bank in its sole
26
<PAGE>
discretion may determine, against the payment of all or any part of the
obligations of such Borrower hereunder for its own account or for the account of
such Portfolio then due and payable and any other liabilities, direct or
indirect, absolute or contingent, now existing or hereafter arising, of such
Borrower for its own account or for the account of such Portfolio then due and
payable to the Bank hereunder. The Bank agrees promptly to notify the
applicable Borrower of such set-off or application, PROVIDED that the failure to
give such notice shall not affect the validity of such set-off or application.
Section 8. EXPENSES. Whether or not the transactions contemplated hereby
are consummated, and to the extent any expense is attributable to any specific
Loan or Loans, the applicable Borrower(s) agrees to reimburse the Bank on demand
the amount of all reasonable expenses attributable to such Loan or Loans,
including but not limited to reasonable attorneys' fees and disbursements (and
the allocated costs of in-house counsel for the Bank), incurred or expended in
connection with the preparation or interpretation of this Agreement or any
amendment hereof, or with the enforcement of any obligations or the satisfaction
of any indebtedness of such Borrower hereunder incurred for its own account or
for the account of a Portfolio, or in connection with any litigation, proceeding
or dispute hereunder in any way related to the Bank's relationship hereunder.
To the extent any such expense is not so attributable to any Loan or Loans, each
Borrower agrees to pay to the Bank, in the proportion that the average amount of
Loans made to such Borrower for its own account or for the account of a
Portfolio outstanding during the preceding 12-month period (or such shorter
period that this Agreement shall have been effective) bears to the average
amount of all Loans outstanding to all Borrowers during such period (or, if no
Loans shall have been outstanding, 10% of such amount), the amount of such
expense, determined and paid as aforesaid.
Section 9. SURVIVAL OF COVENANTS, ETC. All covenants, agreements,
representations and warranties made herein or in any documents or other papers
delivered by, or on behalf of, each Borrower pursuant hereto shall be deemed to
have been relied upon by the Bank, notwithstanding any investigation heretofore
or hereafter made by it, and shall survive the making by the Bank of the Loans
to such Borrower, as herein contemplated, and shall continue in full force and
effect so long as any amount due under this Agreement remains outstanding and
unpaid or the Bank has any obligation to make any Loans to such Borrower
hereunder. All statements contained in any certificate, document or other paper
delivered by any authorized person to the Bank at any time by or on behalf of
any Borrower pursuant hereto or in connection with the transactions contemplated
hereby shall constitute representations and warranties by such Borrower
hereunder.
Section 10. INDEMNIFICATION. (a) Each Borrower agrees to indemnify and
hold harmless the Bank from and against any and all claims, actions and suits
whether groundless or otherwise, and from and against any and all liabilities,
losses, damages and expenses of every nature and character arising out of this
Agreement or the transactions evidenced hereby as they directly relate to such
Borrower or the Loans made by the Bank to such Borrower for its own account or
for the account of a Portfolio; PROVIDED that the Bank shall have no right to be
indemnified hereunder with respect to any such claims, actions, suits,
liabilities, losses, damages and expenses to the extent arising as a result of
its own gross negligence, willful misconduct or bad faith; and PROVIDED, FURTHER
that no Borrower shall be liable for any settlement, compromise or consent to
the entry of any order adjudicating or otherwise disposing of any claim, action,
suit, liability, loss, damage or expense effected without the consent of such
Borrower. Should any claim be made by a person not a party to
27
<PAGE>
this Agreement with respect to any matter to which the foregoing indemnity
relates, the Bank shall promptly notify the applicable Borrower of any such
claim, and such Borrower shall have the right to direct and control the defense
of such claim or any litigation based thereon at its own expense through counsel
of its own choosing.
(b) The Bank agrees to indemnify and hold harmless each Borrower from and
against any and all claims, actions and suits whether groundless or otherwise,
and from and against any and all liabilities, losses, damages and expenses of
every nature and character arising out of this Agreement or the transactions
evidenced hereby; PROVIDED that no Borrower shall have the right to be
indemnified hereunder with respect to any such claims, actions, suits,
liabilities, losses, damages and expenses to the extent arising as a result of
its own gross negligence, willful misconduct or bad faith; and PROVIDED, FURTHER
that the Bank shall not be liable for any settlement, compromise or consent to
the entry of any order adjudicating or otherwise disposing of any claim, action,
suit, liability, loss, damage or expense effected without the consent of the
Bank. Should any claim be made against a Borrower by a person not a party to
this Agreement with respect to any matter to which the foregoing indemnity
relates, such Borrower shall promptly notify the Bank of any such claim, and the
Bank shall have the right to direct and control the defense of such claim or any
litigation based thereon at its own expense through counsel of its own choosing.
Section 11. PARTIES IN INTEREST; PARTICIPATIONS. All the terms of this
Agreement shall be binding upon and inure to the benefit of and be enforceable
by the respective successors and assigns of the parties hereto; PROVIDED that no
Borrower may assign or transfer its rights hereunder or any interest herein
without the prior written consent of the Bank. The Bank may, with the prior
written consent of any Borrower (which shall not be unreasonably withheld or
delayed), assign or transfer to any other person or entity, all or any part of,
or any interest in, its rights and obligations hereunder with respect to such
Borrower, or without such consent, grant loan participations therein; PROVIDED
that in all cases other than the case of the sale of loan participations, the
Bank shall give the applicable Borrower prompt written notice thereof, and
PROVIDED, FURTHER that such Borrower shall make payment of all amounts due and
payable hereunder and deliver such documents as are required hereunder to the
Bank until such time as it is notified in writing to do otherwise.
Section 12. NOTICES, ETC. Except as otherwise expressly provided in this
Agreement, all notices, demands and other communications made or required to be
given pursuant to this Agreement shall be in writing and shall be delivered by
hand, by accepted express mail service, postage prepaid, or sent by telex or
facsimile transmission and confirmed by letter, addressed as follows:
(a) if to any Borrower, c/o BEA Associates, One Citicorp Center, 153
East 53rd Street, New York, New York 10022 Attention: Paul Stamler, Vice
President - Fund Administration or at such other address for notice or
demand as any Borrower shall last have furnished in writing to the Bank; or
(b) if to the Bank, to the address set forth in the preamble of this
Agreement, Attention: John T. Daley, Vice President, or at such other
address for notice as the Bank shall last have furnished in writing to each
Borrower.
28
<PAGE>
Any such notice or demand shall be deemed to have been duly given or made and to
have become effective (a) if delivered by hand to a responsible officer of the
party to which it is directed, at the time of receipt thereof by such officer,
(b) if sent by accepted express mail service, postage prepaid, one Business Day
after posting thereof, and (c) if sent by facsimile transmission or telex, at
the time of receipt of any automatic answer-back or other similar acknowledgment
of receipt thereof.
Section 13. MISCELLANEOUS. This Agreement shall be deemed to be a
contract under the laws of The Commonwealth of Massachusetts and shall for all
purposes be construed in accordance with and governed by the laws of said
Commonwealth. The rights and remedies herein expressed are cumulative and not
exclusive of any other rights that the Bank or any Borrower, as the case may be,
would otherwise have. The captions in this Agreement are for convenience of
reference only and shall not define or limit the provisions hereof. This
Agreement and any amendment hereof may be executed in several counterparts and
by each party on a separate counterpart, each of which when so executed and
delivered shall be an original, but all of which together shall constitute one
instrument. In proving this Agreement, it shall not be necessary to produce or
account for more than one such counterpart signed by the party against whom
enforcement is sought.
Section 14. SEVERABILITY. If any of the provisions of this Agreement or
the application thereof to any party hereto or to any person or entity or
circumstance is held to be invalid, illegal or unenforceable in any respect,
such invalidity, illegality or unenforceability shall not affect any other term
or provision hereof or thereof or the application thereof to any other party
hereto or to any other person or entity or circumstance.
Section 15. ENTIRE AGREEMENT, ETC. This Agreement amends and restates in
its entirety the Prior Agreement. This Agreement, together with any of the
documents executed in connection herewith, express the entire understanding of
the parties with respect to the transactions contemplated hereby. Neither this
Agreement nor any term hereof may be changed, waived, discharged or terminated
orally or in writing, except as provided in Section 16 hereof.
Section 16. CONSENTS, AMENDMENTS, WAIVERS, ETC. Except as otherwise
expressly provided in this Agreement, any consent or approval required or
permitted by this Agreement to be given by the Bank may be given, and any term
of this Agreement or of any other instrument related hereto or mentioned herein
may be amended, and the performance or observance by any Borrower of any terms
of this Agreement or such other instrument or the continuance of any Default or
Event of Default by such Borrower or any condition or term hereof applicable to
such Borrower may be waived (either generally or in a particular instance and
either retroactively or prospectively) with, but only with, the written consent
of such Borrower and the written consent of the Bank. No waiver shall extend to
or affect any obligation not expressly waived or impair any right consequent
thereon. No course of dealing or delay or omission on the part of the Bank in
exercising any right shall operate as a waiver thereof or otherwise be
prejudicial thereto. No notice to or demand on any Borrower shall entitle such
Borrower to other or further notice in similar or other circumstances.
Section 17. WAIVER OF JURY TRIAL. THE BANK AND EACH BORROWER AGREE THAT
NEITHER OF THEM NOR ANY ASSIGNEE OR SUCCESSOR SHALL (A) SEEK A JURY TRIAL IN ANY
LAWSUIT, PROCEEDING, COUNTERCLAIM OR ANY OTHER ACTION
29
<PAGE>
BASED UPON, OR ARISING OUT OF, THIS AGREEMENT OR THE DEALINGS OR THE
RELATIONSHIP BETWEEN OR AMONG ANY OF THEM, OR (B) SEEK TO CONSOLIDATE ANY SUCH
ACTION WITH ANY OTHER ACTION IN WHICH A JURY TRIAL CANNOT BE OR HAS NOT BEEN
WAIVED. THE PROVISIONS OF THIS PARAGRAPH HAVE BEEN FULLY DISCUSSED BY THE BANK
AND EACH BORROWER, AND THESE PROVISIONS SHALL BE SUBJECT TO NO EXCEPTIONS.
NEITHER THE BANK NOR ANY BORROWER HAS AGREED WITH OR REPRESENTED TO THE OTHER
THAT THE PROVISIONS OF THIS PARAGRAPH WILL NOT BE FULLY ENFORCED IN ALL
INSTANCES.
Section 18. SUBMISSION TO JURISDICTION. Each Borrower agrees that any
suit for the enforcement of this Agreement may be brought in the courts of The
Commonwealth of Massachusetts or any Federal Court sitting therein and consents
to the non-exclusive jurisdiction of such court and to service of process in any
such suit being made upon such Borrower by mail at the address specified in
Section 12 hereof. Each Borrower hereby waives any objection that it may now or
hereafter have to the venue of any such suit or any such court or that such suit
was brought in an inconvenient court.
Section 19. JUDGMENT CURRENCY. Each Borrower agrees to indemnify the Bank
against any loss incurred by it as a result of any judgment or order against
such Borrower being given or made for the payment of any amount due hereunder
which is expressed and paid in a currency (the "JUDGMENT CURRENCY") other than
the currency in which such amount was to be paid (the "OBLIGATION CURRENCY") and
as a result of any variation between (a) the rate of exchange at which the
Obligation Currency amount is converted into Judgment Currency for the purposes
of such judgment or order, and (b) the rate of exchange at which the Bank is
able to purchase the Obligation Currency with the amount of Judgment Currency
actually received by the Bank. The foregoing indemnity shall constitute a
separate and independent obligation of each Borrower and shall continue in full
force and effect notwithstanding any such judgment or order as aforesaid. The
term "rate of exchange" shall include any premiums and costs of exchange payable
in connection with the purchase of, or conversions into, the relevant currency.
Section 20. CONFIDENTIALITY. The Bank agrees that in handling any non-
public information received from any Borrower hereunder the Bank shall exercise
the same degree of care that it exercises with respect to its own proprietary
information of the same or similar types in order to maintain the
confidentiality of such information, it being understood by each Borrower,
however, that disclosure of such information may be made (i) to the subsidiaries
or affiliates of the Bank in connection with their present or prospective
business relations with any Borrower, (ii) to prospective transferees or
purchasers of an interest in the Loans made to any Borrower, (iii) as required
by law, regulation, rule or order, subpoena, judicial order or similar order and
(iv) as may be required in connection with the examination, audit or similar
investigation of the Bank.
Section 21. OBLIGATIONS SEVERAL. The Bank agrees that the obligations of
each Borrower and, in case of the RBB Fund, each Portfolio, hereunder are
several and that the Bank shall have no recourse against any Borrower or
Portfolio for the payment or performance of the obligations of any other
Borrower or Portfolio.
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IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to
be duly executed as an instrument under seal by its duly authorized officer as
of the date first written above.
THE LATIN AMERICA INVESTMENT FUND, INC.
By: /s/ Michael A. Pignataro
-----------------------------------
Title:
THE LATIN AMERICA EQUITY FUND, INC.
By: /s/ Michael A. Pignataro
-----------------------------------
Title:
THE CHILE FUND, INC.
By: /s/ Michael A. Pignataro
-----------------------------------
Title:
THE BRAZILIAN EQUITY FUND, INC.
By: /s/ Michael A. Pignataro
-----------------------------------
Title:
THE PORTUGAL FUND, INC.
By: /s/ Michael A. Pignataro
----------------------------------
Title:
THE FIRST ISRAEL FUND, INC.
By: /s/ Michael A. Pignataro
----------------------------------
Title:
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THE INDONESIA FUND, INC.
By: /s/ Michael A. Pignataro
----------------------------------
Title:
THE EMERGING MARKETS
TELECOMMUNICATIONS FUND, INC.
By: /s/ Michael A. Pignataro
----------------------------------
Title:
THE EMERGING MARKETS
INFRASTRUCTURE FUND, INC.
By: /s/ Michael A. Pignataro
----------------------------------
Title:
THE RBB FUND, INC.
acting on behalf of the following portfolios:
BEA Emerging Markets Equity Portfolio
BEA Global Fixed Income Portfolio
BEA International Equity Portfolio
BEA Municipal Bond Fund Portfolio
BEA Strategic Fixed Income Portfolio
BEA U.S. Core Equity Portfolio
BEA U.S. Core Fixed Income Portfolio
By: /s/ Edward J. Roach
----------------------------------
Title: President
THE FIRST NATIONAL BANK OF BOSTON
By: /s/ John J. Daly
--------------------------------------
Vice President
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SCHEDULE I
THE LATIN AMERICA INVESTMENT FUND, INC.
THE LATIN AMERICA EQUITY FUND, INC.
THE CHILE FUND, INC.
THE BRAZILIAN EQUITY FUND, INC.
THE PORTUGAL FUND, INC.
THE FIRST ISRAEL FUND, INC.
THE INDONESIA FUND, INC.
THE EMERGING MARKETS TELECOMMUNICATIONS FUND, INC.
THE EMERGING MARKETS INFRASTRUCTURE FUND, INC.
THE RBB FUND, INC.
LIMITATIONS ON BORROWING AND PLEDGING ASSETS
Part 1. AGREEMENTS WITH REGULATORS:
NONE.
Part 2. LIMITATIONS ON BORROWING CONTAINED IN PROSPECTUS OR STATEMENT OF
ADDITIONAL INFORMATION:
THE LATIN AMERICA INVESTMENT FUND, INC. Statement of Additional Information
provides as follows:
"Under its fundamental investment restrictions, the Fund may not: . . .
Issue senior securities, borrow money or pledge its assets, except that the
Fund may borrow from a lender (i) for temporary or emergency purposes, (ii)
for such short-term credits as may be necessary for the clearance or
settlement of transactions, (iii) to finance repurchases of its shares in
amounts not exceeding 10% (taken at the lower of cost or current value) of
its total assets (not including the amount borrowed), (iv) to pay any
dividends required to be distributed in order for the Fund to maintain its
qualification as a regulated investment company under the Internal Revenue
Code of 1986, as amended (the "Code") or (v) to pay Fund expenses outside
of Latin America, and not for the purpose of leveraging. In no event shall
borrowings by the Fund exceed 33 1/3% of the Fund's total assets (not
including the amount borrowed). Additional investments will not be made
when borrowings exceed 5% of the Fund's total assets. The Fund may pledge
its assets to secure such borrowings. For the purpose of this investment
restriction, collateral arrangements with respect to the writing of options
or the purchase or sale of future contracts or related options or forward
currency contracts are not deemed a pledge of assets or the issuance of a
senior security."
<PAGE>
THE LATIN AMERICA EQUITY FUND, INC. Statement of Additional Information
provides as follows:
"Under its fundamental investment restrictions, the Fund may not: . . .
Issue senior securities, borrow money or pledge its assets, except
that the Fund may borrow from a lender (i) for temporary or emergency
purposes, (ii) for such short-term credits as may be necessary for the
clearance or settlement of transactions, (iii) to finance repurchases of
its shares in amounts not exceeding 10% (taken at the lower of cost or
current value) of its total assets (not including the amount borrowed),
(iv) to pay any dividends required to be distributed in order for the Fund
to maintain its qualification as a regulated investment company under the
Internal Revenue Code of 1986, as amended (the "Code") or (v) to pay Fund
expenses outside of Latin America, and not for the purpose of leveraging.
In no event shall borrowings by the Fund exceed 33 1/3% of the Fund's total
assets (not including the amount borrowed). Additional investments will
not be made when borrowings exceed 5% of the Fund's total assets. The Fund
may pledge its assets to secure such borrowings. For the purpose of this
investment restriction, collateral arrangements with respect to the writing
of options or the purchase or sale of future contracts or related options
or forward currency contracts are not deemed a pledge of assets or the
issuance of a senior security."
THE CHILE FUND, INC. Prospectus, as modified by shareholder vote, provides
as follows:
"Under its fundamental restrictions, the Fund may not: . . .
Issue senior securities, borrow money or pledge its assets, except
that the Fund may borrow from a lender (i) for temporary or emergency
purposes, (ii) for such short-term credits as may be necessary for the
clearance or settlement of transactions, (iii) to refinance repurchases of
its shares in amounts not exceeding 10% (taken at the lower of cost or
current value) of its total assets (not including the amount borrowed),
(iv) to pay any dividends required to be distributed in order for the Fund
to maintain its qualification as a regulated investment company under the
Internal Revenue Code of 1986, as amended (the "Code") or (v) to pay Fund
expenses outside of Chile, and not for the purpose of leveraging. In no
event shall borrowings by the Fund exceed 33 1/3% of the Fund's total
assets (not including the amount borrowed). Additional investments will
not be made when borrowings exceed 5% of the Fund's total assets. The Fund
may pledge its assets to secure such borrowings. For the purpose of this
investment restriction, collateral arrangements with respect to the writing
of options or the purchase or sale of future contracts or related options
or forward currency contracts are not deemed a pledge of assets or the
issuance of a senior security."
THE BRAZILIAN EQUITY FUND, INC. Prospectus provides as follows:
"Under its fundamental investment restrictions, the Fund may not: . . .
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<PAGE>
Issue senior securities, borrow money or pledge its assets, except that the
Fund may borrow from a lender (a) for temporary or emergency purposes, (b)
for such short-term credits as may be necessary for the clearance or
settlement of the transactions, (c) to finance repurchases of its shares
. . ., in amounts not exceeding 10% (taken at the lower of cost or current
value) of its total assets (not including the amount borrowed), or (d) to
pay any dividends required to be distributed in order for the Fund to
maintain its qualification as a regulated investment company under the U.S.
Internal Revenue Code of 1986 or otherwise to avoid taxation under that
Code. Additional investments will not be made when borrowings exceed 5% of
the Fund's assets. The Fund may pledge its assets to secure borrowings."
THE PORTUGAL FUND, INC. Prospectus, as modified by shareholder vote,
provides as follows:
"Under its fundamental restrictions, the Fund may not: . . .
Issue senior securities, borrow money or pledge its assets, except
that the Fund may borrow from a lender (i) for temporary or emergency
purposes, (ii) for such short-term credits as may be necessary for the
clearance or settlement of transactions, (iii) to refinance repurchases of
its shares in amounts not exceeding 10% (taken at the lower of cost or
current value) of its total assets (not including the amount borrowed) or
(iv) to pay any dividends required to be distributed in order for the Fund
to maintain its qualification as a regulated investment company under the
Internal Revenue Code of 1986, as amended (the "Code"). In no event shall
borrowings by the Fund exceed 33 1/3% of the Fund's total assets (not
including the amount borrowed). Additional investments will not be made
when borrowings exceed 5% of the Fund's total assets. The Fund may pledge
its assets to secure such borrowings. For the purpose of this
investment restriction, collateral arrangements with respect to the writing
of options or the purchase or sale of future contracts or related options
or forward currency contracts are not deemed a pledge of assets or the
issuance of a senior security."
THE FIRST ISRAEL FUND, INC. Prospectus provides as follows:
"Under its fundamental restrictions, the Fund may not: . . .
Issue senior securities, borrow or pledge its assets including entering
into reverse repurchase agreements, except that the Fund may borrow to make
distributions required for the Fund to maintain its qualification as a
regulated investment company under the Code for U.S. tax purposes, for
temporary or emergency purposes, for the clearance of transactions in
amounts not exceeding 10% (taken at the lower of cost or current value) of
its total assets (not including the amount borrowed) or to pay certain
excise taxes. The Fund may borrow up to 33 1/3% of its total assets
(including the amount borrowed) to finance the repurchase and/or tender for
its shares if, after such borrowing there is asset coverage of at least
300% as defined in the 1940 Act, for temporary purposes in an additional
amount not exceeding 5% of the value of the total assets of the Fund (for
the purposes of this restriction, collateral
3
<PAGE>
arrangements with respect to options, futures contracts, options on futures
contracts and reverse repurchase agreements and collateral arrangements
meeting applicable Securities and Exchange Commission requirements with
respect to initial and variation margin are not deemed to be the issuance
of a senior security) and may also pledge its assets to secure such
borrowings."
THE INDONESIA FUND, INC. Prospectus, as modified by shareholder vote,
provides as follows:
"Under its fundamental investment restrictions, the Fund may not: . . .
Issue senior securities, borrow money or pledge its assets, except
that the Fund may borrow from a lender (i) for temporary or emergency
purposes, (ii) for such short-term credits as may be necessary for the
clearance or settlement of transactions, (iii) to refinance repurchases of
its shares in amounts not exceeding 10% (taken at the lower of cost or
current value) of its total assets (not including the amount borrowed) or
(iv) to pay any dividends required to be distributed in order for the Fund
to maintain its qualification as a regulated investment company under the
Internal Revenue Code of 1986, as amended (the "Code"). In no event shall
borrowings by the Fund exceed 33 1/3% of the Fund's total assets (not
including the amount borrowed). Additional investments will not be made
when borrowings exceed 5% of the Fund's total assets. The Fund may pledge
its assets to secure such borrowings. For the purpose of this investment
restriction, collateral arrangements with respect to the writing of options
or the purchase or sale of future contracts or related options or forward
currency contracts are not deemed a pledge of assets or the issuance of a
senior security. Subscription and collateral arrangements in connection
with the purchase of Indonesian securities in public offerings will not be
limited by this restriction."
THE EMERGING MARKETS TELECOMMUNICATIONS FUND, INC. Prospectus provides as
follows:
"Under its fundamental investment restrictions, the Fund may not: . . .
Issue senior securities, borrow money or pledge its assets, except that the
Fund may borrow from a lender (i) for temporary or emergency purposes, (ii)
for such short-term credits as may be necessary for the clearance or
settlement of the transactions, (iii) to finance repurchases of its shares
. . ., in amounts not exceeding 10% (taken at the lower of cost or current
value) of its total assets (not including the amount borrowed), or (iv) to
pay any dividends required to be distributed in order for the Fund to
maintain its qualification as a regulated investment company under the Code
or otherwise to avoid taxation under the Code. Additional investments will
not be made when borrowings exceed 5% of the Fund's total assets. The Fund
may pledge its assets to secure such borrowings. For the purpose of this
investment restriction, collateral arrangements with respect to the writing
of options or the purchase or sale of future contracts or related options
or forward currency contracts are not deemed a pledge of assets or the
issuance of a senior security."
4
<PAGE>
THE EMERGING MARKETS INFRASTRUCTURE FUND, INC. Prospectus provides as
follows:
"Under its fundamental investment restrictions, the Fund may not: . . .
Issue senior securities, borrow money or pledge its assets, except that the
Fund may borrow from a lender (i) for temporary or emergency purposes, (ii)
for such short-term credits as may be necessary for the clearance or
settlement of the transactions, (iii) to finance repurchases of its shares
. . . in amounts not exceeding 10% (taken at the lower of cost or current
value) of its total assets (not including the amount borrowed), or (iv) to
pay any dividends required to be distributed in order for the Fund to
maintain its qualification as a regulated investment company under the Code
or otherwise to avoid taxation under the Code. Additional investments will
not be made when borrowings exceed 5% of the Fund's total assets. The Fund
may pledge its assets to secure such borrowings. For the purpose of this
investment restriction, collateral arrangements with respect to the writing
of options or the purchase or sale of future contracts or related options
or forward currency contracts are not deemed a pledge of assets or the
issuance of a senior security."
THE RBB FUND, INC. Statement of Additional Information provides as follows:
"Each Fund may not: . . .
Borrow money, except from banks, and only if after such borrowing there is
asset coverage of at least 300% for all borrowings of the Portfolio; or
mortgage, pledge or hypothecate any of its assets except in connection with
any such borrowing and in amounts not in excess of the lesser of the dollar
amounts borrowed or 33 1/3% of the value of the Portfolio's total assets at
the time of such borrowing; (For the purpose of this restriction,
collateral arrangements with respect to, if applicable, the writing of
options, and futures contracts, options on futures contracts, forward
currency contracts and collateral arrangements with respect to initial and
variation margin are not deemed to be a pledge of assets and neither such
arrangements nor the purchase or sale of futures or related options are
deemed to be the issuance of a senior security for purposes of [the
investment limitation restricting the issuance of senior securities except
as permitted under the Investment Company Act]."
5
<PAGE>
SCHEDULE II
THE LATIN AMERICA INVESTMENT FUND, INC.
THE LATIN AMERICA EQUITY FUND, INC.
THE CHILE FUND, INC.
THE BRAZILIAN EQUITY FUND, INC.
THE PORTUGAL FUND, INC.
THE FIRST ISRAEL FUND, INC.
THE INDONESIA FUND, INC.
THE EMERGING MARKETS TELECOMMUNICATIONS FUND, INC.
THE EMERGING MARKETS INFRASTRUCTURE FUND, INC.
THE RBB FUND, INC.
WIRING INSTRUCTIONS
THE LATIN AMERICA INVESTMENT FUND, INC.
Provident National Bank
ABA#: 031-000-053
Attn: Mutual Fund Department
Acct#: 1108816
Attn: Bob Scuba
Credit Deposit to: THE LATIN AMERICA INVESTMENT FUND, INC.
Acct #: 34-34-012-036-2844
THE CHILE FUND, INC.
Provident National Bank
ABA#: 031-000-053
Attn: Mutual Fund Department
Acct#: 1108816
Attn: Bob Scuba
Credit Deposit to: THE CHILE FUND, INC.
Acct #: 34-34-012-036-2072
THE BRAZILIAN EQUITY FUND, INC.
Provident National Bank
ABA#: 031-000-053
6
<PAGE>
Attn: Mutual Fund Department
Acct#: 1108816
Attn: Bob Scuba
Credit Deposit to: THE BRAZILIAN EQUITY FUND, INC.
Acct #: 34-34-012-036-3044
THE LATIN AMERICA EQUITY FUND, INC.
Bank of Boston
ABA #: 011-000-390
F/A Brown Brothers Harriman & Co., Boston
A/C#: 005-5570-4
F/C THE LATIN AMERICA EQUITY FUND, INC.
A/C#: 8149320
THE PORTUGAL FUND, INC.
PNC Bank N.A.
ABA # 031-000-053
Attn: Mutual Fund Dept.
A/C# 1108816
Attn: Bob Scuba
Credit Deposit to: THE PORTUGAL FUND, INC.
A/C# 34340120362153
THE FIRST ISRAEL FUND, INC.
Bankers Trust Company, New York
ABA# 021-001-033
A/C Brown Brothers Harriman & Co., NY
Acct# 01-501-026
A/C ISRAEL FUND
A/C# 813603-8
THE INDONESIA FUND, INC.
PNC Bank N.A.
ABA# 031000053
A/C# 85-1108-8160
Attn: Custody Administration
REF: INDONESIA FUND
7
<PAGE>
THE EMERGING MARKETS TELECOMMUNICATIONS FUND, INC.
Bankers Trust Company, New York
ABA# 021-001-033
A/C Brown Brothers Harriman & Co., New York
ACCT# 01-501-026
A/C EMERGING MARKETS TELECOM FUND
A/C 8135204
THE EMERGING MARKETS INFRASTRUCTURE FUND, INC.
Bankers Trust Company, New York
ABA# 021-001-033
A/C Brown Brothers Harriman & Co., New York
A/C# 01-501-026
Favor: EMERGING MARKETS INFRASTRUCTURE FUND
BEA STRATEGIC FIXED INCOME PORTFOLIO
Bankers Trust Company, New York
ABA# 021-001-033
A/C Brown Brothers Harriman & Co., New York
A/C# 01-501-026
A/C RBB STRATEGIC FUND
A/C 8122822
BEA EMERGING MARKETS EQUITY PORTFOLIO
Bankers Trust Company, New York
ABA# 021-001-033
A/C Brown Brothers Harriman & Co., N.Y.
A/C# 01-501-026
A/C RBB EMERGING MARKETS FUND
A/C 8122806
BEA U.S. CORE EQUITY PORTFOLIO
Bankers Trust, NY
ABA# 021-001-033
A/C Brown Brothers Harriman & Co., Boston
A/C# 01-501-026
8
<PAGE>
Ref A/C BEA US CORE EQUITY FUND
Ref A/C# 8122905
BEA U. S. CORE FIXED INCOME PORTFOLIO
Bankers Trust Company, New York
ABA# 021-001-033
A/C Brown Brothers Harriman & Co., Boston
A/C# 01-501-026
REF: BEA/RBB CORE FIXED INCOME
REF A/C# 8122913
BEA INTERNATIONAL EQUITY PORTFOLIO
Bankers Trust Company, New York
ABA# 021-001-033
A/C Brown Brothers Harriman & Co., New York
ACC# 01-501-026
A/C RBB INTERNATIONAL EQUITY FUND
A/C# 8122814
BEA MUNICIPAL BOND FUND PORTFOLIO
PNC Bank N.A.
ABA# 031-0000-53
Attn: Mutual Fund Dept.
A/C 1100343
Credit to: BEA MUNICIPAL BOND FUND PORTFOLIO
A/C 340110181646
BEA GLOBAL FIXED INCOME PORTFOLIO
Bankers Trust, NY
ABA# 021-001-033
A/C Brown Brothers Harriman & Co., Boston
A/C# 01-501-026
A/C BEA GLOBAL FIXED INCOME FUND
A/C# 8122830
9
<PAGE>
SCHEDULE III
THE LATIN AMERICA INVESTMENT FUND, INC.
THE LATIN AMERICA EQUITY FUND, INC.
THE CHILE FUND, INC.
THE BRAZILIAN EQUITY FUND, INC.
THE PORTUGAL FUND, INC.
THE FIRST ISRAEL FUND, INC.
THE INDONESIA FUND, INC.
THE EMERGING MARKETS TELECOMMUNICATIONS FUND, INC.
THE EMERGING MARKETS INFRASTRUCTURE FUND, INC.
THE RBB FUND, INC.
ISSUERS 10% OR MORE OF WHOSE OUTSTANDING VOTING SECURITIES
ARE OWNED OR CONTROLLED BY EACH BORROWER
% of Voting Securities
Owned by such Name
Name of Borrower Name of Issuer of Borrower
- ---------------- -------------- ------------------------
NONE
1
<PAGE>
SCHEDULE IV
THE LATIN AMERICA INVESTMENT FUND, INC.
THE LATIN AMERICA EQUITY FUND, INC.
THE CHILE FUND, INC.
THE BRAZILIAN EQUITY FUND, INC.
THE PORTUGAL FUND, INC.
THE FIRST ISRAEL FUND, INC.
THE INDONESIA FUND, INC.
THE EMERGING MARKETS TELECOMMUNICATIONS FUND, INC.
THE EMERGING MARKETS INFRASTRUCTURE FUND, INC.
THE RBB FUND, INC.
PERSONS HOLDING 5% OR MORE OF
OUTSTANDING VOTING SECURITIES OF THE BORROWERS
(As of September 30, 1994)
% of Borrower's Voting
Name of Person Securities
- -------------- ----------------------
0THE LATIN AMERICA INVESTMENT FUND, INC. NONE
THE LATIN AMERICA EQUITY FUND, INC. NONE
THE CHILE FUND, INC. NONE
THE PORTUGAL FUND, INC.
1) Ardsley Partners 14.9%
450 Park Avenue
New York, NY 10022
THE FIRST ISRAEL FUND, INC. NONE
1
<PAGE>
THE INDONESIA FUND, INC.
1) Fiduciary Trust Company International* 9%
Two World Trade Center
New York, NY 10048
2) United Nations Joint Staff Pension Fund 8.7%
United Nations
New York, NY 10017
3) Wellington Management Company 7%
75 State Street
Boston, MA 02109
THE EMERGING MARKETS TELECOMMUNICATIONS FUND NONE
THE EMERGING MARKETS INFRASTRUCTURE FUND, INC.
1) Neuberger & Berman 7.7%
605 Third Avenue
New York, NY 10158
THE RBB FUND, INC.
BEA INTERNATIONAL EQUITY PORTFOLIO
1) EG&G Inc. 5%
EG&G Master Trust
45 William Street
Wellesley, MA 02181
* Includes shares held by its client, United Nations Joint Staff Pension Fund.
2
<PAGE>
BEA STRATEGIC FIXED INCOME PORTFOLIO
1) State of Oregon
Treasury Department 43%
159 State Capital Building
Salem, OR 97310
2) The Chase Manhattan Bankers Trust 14%
For Kendale Company Master Pension Plan
3 Metrotech Center, 6th Floor
Brooklyn, NY 11245
BEA EMERGING MARKETS EQUITY PORTFOLIO
1) Amherst H. Wilder Foundation 6%
919 Lafond Avenue
Saint Paul, MN 55104
2) Bryn Mawr College 12%
101 North Merion Avenue
Bryn Mawr, PA 19010
3) Northern Trust Company TTEE 23%
Texas Instruments Employee Plan
P.O. Box 92956
AC #22-69966/2-059328
Chicago, IL 60676-2956
4) Wachovia Bank North Carolina 10%
Carolina Power & Light Co.
Supplemental Retirement Trust
301 Main Street
Winston Salem, NC 27101
5) Wachovia Bank North Carolina 6%
Fleming Companies Inc.
Master Pension Trust
307 North Main Street P.O. Box 3099
Winston Salem, NC 27150
BEA U.S. CORE EQUITY PORTFOLIO
1) Bank of New York 100%
Trust APU Buckeye Pipeline
One Wall Street
New York, NY 10286
3
<PAGE>
BEA U.S. CORE FIXED INCOME PORTFOLIO
1) New England UFCW & Employers 47%
Pension Fund Board of Trustees
161 Forbes Rd. Suite 201
Braintree, MA 02184
2) Bankers Trust 40%
Pechiney Corporation Pension
Master Trust
34 Exchange Place, 4th Floor
Jersey City, NJ 07302
3) Chapin School Ltd. and Endowment Fund5%
Attn: Gordon Pattee
9 West 57th Street, Suite 44605
New York, NY 10019
BEA GLOBAL FIXED INCOME PORTFOLIO
1) Bank of New York 100%
Eastern Enterprises Retirement
Plan Trust
One Wall Street, 8th Floor
New York, NY 10286
BEA MUNICIPAL BOND FUND PORTFOLIO
1) Howard Isermann 10%
9 Tulane Dr.
Livingston, NJ 07039
2) John C. Cahill 6%
c/o David Holmgren
30 White Birch Lane
Cos Cob, CT 06870
4
<PAGE>
EXHIBIT A
LOAN REQUEST
I, ______________________, _____________________ of ___________________,
(the "Borrower"), acting pursuant to Section 2.2 of the Credit Agreement dated
as of December 15, 1994 by and between The First National Bank of Boston (the
"Bank") and the Borrower (the "AGREEMENT"), do hereby certify to the Bank as
follows:
1. The Borrower has requested that the Bank make a Loan (as defined in
the Agreement) in the principal amount of $____________ [for its
_____________ Portfolio] on the date hereof (the "REQUESTED LOAN") to
mature on ______________ and to bear interest at the [Adjusted
Eurodollar Rate plus __%][Base Rate].
2. On the date hereof, the total asset value of the [Borrower's]
[Portfolio's] portfolio securities is $_______________; the net asset
value of the [Borrower's] [Portfolio's] portfolio is
$__________________; and the total value of the unencumbered assets in
the [Borrower's] [Portfolio's] portfolio is $_________________.
3. The total principal amount outstanding of all Loans made to all
Borrowers pursuant to the Agreement is _________________________ on
the date hereof prior to the borrowing of the Requested Loans.
4. The Maximum Amount (as defined in the Agreement) for the [Borrower]
[Portfolio], being the maximum amount the [Borrower] [Portfolio] is
authorized to borrow under the Agreement on the date hereof, is
$____________________.
5. Except as described on attached SCHEDULE III to the Agreement, the
[Borrower] [Portfolio] does not directly or indirectly own, control or
hold with power to vote, 5% or more of the outstanding voting
securities of any issuer.
6. The representations and warranties set forth in Section 4 of the
Agreement are true and correct as of the date hereof as though made on
and as of the date hereof.
IN WITNESS WHEREOF, I have hereunto set my hand this ______ day of
____________, 19__.
______________________________
By: ___________________________
Title:
1
<PAGE>
EXHIBIT B-1
FORM OF OPINION OF COUNSEL TO THE RBB FUND
The First National Bank of Boston
100 Federal Street
Boston, MA 02110
RE: Amended and Restated Credit Agreement dated as of December 15, 1994 by
and among The First National Bank of Boston and each of The Latin America
Investment Fund, Inc., The Latin America Equity Fund, Inc., The Chile Fund,
Inc., The Brazilian Equity Fund, Inc., The Portugal Fund, Inc., The First Israel
Fund, Inc., The Indonesia Fund, Inc., The Emerging Markets Telecommunications
Fund, Inc., The Emerging Markets Infrastructure Fund, Inc. and The RBB Fund,
acting on behalf of BEA Emerging Markets Equity Portfolio, BEA Global Fixed
Income Portfolio, BEA International Equity Portfolio, BEA Municipal Bond Fund
Portfolio, BEA Strategic Fixed Income Portfolio, BEA U.S. Core Equity Portfolio,
and BEA U.S. Core Fixed Income Portfolio.
Ladies and Gentlemen:
We are counsel to The RBB Fund, Inc., a Maryland corporation (the "Fund"),
acting on behalf of BEA International Equity Portfolio, BEA Emerging Markets
Equity Portfolio, BEA Global Fixed Income Portfolio, BEA Strategic Fixed Income
Portfolio, BEA U.S. Core Equity Portfolio, BEA U.S. Core Fixed Income Portfolio,
and BEA Municipal Bond Fund Portfolio (each a "Portfolio", collectively the
"Portfolios"), and have represented the Fund and its Portfolios in connection
with the preparation, execution and delivery of the Amended and Restated Credit
Agreement dated as of December 15, 1994 (the "Agreement") among The First
National Bank of Boston (the "Bank"), the Fund on behalf of the Portfolios, and
other funds advised by BEA Associates ("BEA"). All terms not defined herein and
defined in the Agreement shall have the same meanings herein as in the
Agreement.
We have examined executed counterparts of the Agreement and originals, or
copies, the authenticity of which has been established to our satisfaction, of
such other documents, corporate records, agreements and instruments and
certificates of public officials and officers of the Fund as we have deemed
necessary as the basis for the opinions herein expressed. As to the questions
of fact material to such opinions we have, when relevant facts were not
independently established, relied upon certifications by officers of the Fund.
In expressing the opinions set forth below, we have assumed, and so far as
is known to us there are no facts inconsistent with, the following:
1. Each of the parties (other than the Fund) executing the Agreement has
duly and validly executed and delivered the Agreement, and such party's
obligations set forth therein are legal, valid and binding;
1
<PAGE>
The First National Bank of Boston
December 15, 1994
Page 2
2. Each individual executing the Agreement on behalf of a party (other
than the Fund) is duly authorized to do so;
3. Each individual executing the Agreement is legally competent to do so;
and
4. All counterparts of the Agreement submitted to us as originals are
authentic. All counterparts of the Agreement submitted to us as certified or
photostatic copies conform to the original documents. All signatures on all
such counterparts of the Agreement are genuine. All public records reviewed or
relied upon by us or on our behalf are true and complete. All statements and
information contained in the counterparts of the Agreement are true and
complete.
The phrase "known to us" means the actual knowledge, without independent
inquiry, of the lawyers at our firm who have performed legal services in
connection with the issuance of this opinion.
Based on the foregoing and having regard for such legal considerations as
we have deemed relevant, and subject to the limitations and qualifications
below, it is our opinion that:
1. The Fund is duly organized and validly existing under the laws of the
State of Maryland and is duly qualified to do business in each other
jurisdiction wherein the nature of its properties or its business requires such
qualification and in which the failure to be so qualified may reasonably be
expected to materially and adversely affect the business, assets or condition
(financial or otherwise) of the Fund.
2. The Fund is registered as an open-end management company under the
Investment Company Act of 1940.
3. The execution, delivery and performance by the Fund of the Agreement
are within the corporate powers of the Fund, have been duly authorized by all
necessary and proper action on the part of the Fund, and do not and will not:
(i) violate or contravene any provision of the Fund's charter documents or
bylaws, as amended and in effect on the date hereof; (ii) contravene any
provision of the Fund's Prospectus or Registration Statement, as applicable;
(iii) to our knowledge, conflict with, or result in a breach of any material
term, condition or provision of, or constitute a default under or result in the
creation of any mortgage, lien, pledge, charge, security interest or other
encumbrance upon any of the property or assets of the Fund under, any material
agreement, trust deed, indenture, mortgage or other instruments to which the
Fund is a party or by which the Fund or any of the property or assets of the
Fund is bound or affected; or (iv) to our knowledge, violate or contravene any
provision of any material law, regulation, order, ruling or interpretation
thereunder or any decree, order or judgment of any court or governmental or
regulatory authority, bureau, agency or official to the extent applicable to the
Fund.
2
<PAGE>
The First National Bank of Boston
December 15, 1994
Page 3
4. The Agreement has been duly executed and delivered by the Fund. We
know of no reason why the choice of law provisions of the Agreement, which set
forth Massachusetts law as the governing law, would not be enforced by the
courts of the State of Maryland, as agreed upon by the parties; provided,
however, that there is a substantial or vital relationship between the chosen
situs and the issue to be decided and that the particular application of such
laws does not violate public policy as applied by the courts of the State of
Maryland.
5. No authorization, approval, consent, or other action by, and no notice
to or filing with, any shareholder or creditor of the Fund, or governmental or
regulatory agency or authority, is required to make valid and legally binding
the execution, delivery and performance by the Fund of the Agreement or the
consummation by the Fund of the transactions contemplated by the Agreement, or
the exercise by the Bank of its rights and remedies thereunder.
6. To our knowledge, there are no pending or threatened actions, suits,
investigations or proceedings at law or in equity before any federal or state
court, governmental or regulatory authority, agency, commission, board, bureau
or instrumentality, or board of arbitration, against or affecting the Fund or
its right, title and interest in or to any of its properties or assets, an
adverse decision in which could materially and adversely affect the financial
condition or business of the Fund.
We are members of the Bars of the Commonwealth of Pennsylvania and the
State of Maryland only and do not opine as to the laws of any jurisdiction other
than the laws of the Commonwealth of Pennsylvania and the State of Maryland and
the laws of the United States, and the opinion set forth above is, accordingly,
limited to the laws of those jurisdictions.
This letter and the opinion expressed herein are being furnished solely for
your information and may not be relied upon by any other person without our
prior written consent.
Very truly yours,
3
<PAGE>
THE LATIN AMERICA INVESTMENT FUND, INC.
[THE LATIN AMERICA EQUITY FUND, INC.]
[THE CHILE FUND, INC.]
[THE BRAZILIAN EQUITY FUND, INC.]
CERTIFICATE OF SECRETARY
I, the undersigned, the duly elected Secretary of _________________, a
Maryland corporation (the "Borrower"), hereby certify that:
1. Attached hereto as EXHIBIT A is a true and correct copy of the
Articles of Incorporation of the Borrower and all amendments thereto,
which Articles of Incorporation are in full force and effect.
2. Attached hereto as EXHIBIT B is a true and correct copy of the bylaws
of the Borrower and all amendments thereto, which bylaws are in full
force and effect.
3. Attached hereto as EXHIBIT C is a true, correct and complete copy of
resolutions of the Board of Directors of the Borrower adopted as of
______________, relating to a certain Credit Agreement with The First
National Bank of Boston dated as of December 31, 1993, which
resolutions are certified by me, are duly authorized, have not been
modified and are in full force and effect on the date hereof.
4. Each of the persons named below is a duly elected, qualified and
acting officer of the Borrower serving in the capacity set forth
below, and set forth opposite his name below is his genuine
autographic signature in the usual form thereof with which I am
familiar:
NAME TITLE SIGNATURE
---- ----- ---------
IN WITNESS WHEREOF, I have executed this Certificate this ________ day of
______________, 1993.
_______________________________
_______________________________
Secretary
[SEAL]
The undersigned hereby certifies that the person executing the above
Certificate as Secretary of the Borrower is, on and as of the date hereof, the
duly elected, qualified and acting Secretary of the Borrower, and the signature
of such person appearing above is such person's true signature.
___________________________________
<PAGE>
EXHIBIT B-2
FORM OF OPINION OF COUNSEL TO THE FIRST ISRAEL FUND
December 15, 1994
The First National Bank of Boston
100 Federal Street
Boston, MA 02110
RE: Amended and Restated Credit Agreement dated as of December 15, 1994 by
and among The First National Bank of Boston and each of The Latin
America Investment Fund, Inc., The Latin America Equity Fund, Inc.,
The Chile Fund, Inc., The Brazilian Equity Fund, Inc., The Portugal
Fund, Inc., The First Israel Fund, Inc., The Indonesia Fund, Inc., The
Emerging Markets Telecommunications Fund, Inc., The Emerging Markets
Infrastructure Fund, Inc. and The RBB Fund, acting on behalf of BEA
Emerging Markets Equity Portfolio, BEA Global Fixed Income Portfolio,
BEA International Equity Portfolio, BEA Municipal Bond Fund Portfolio,
BEA Strategic Fixed Income Portfolio, BEA U.S. Core Equity Portfolio,
and BEA U.S. Core Fixed Income Portfolio.
Ladies and Gentlemen:
We have acted as special counsel to The First Israel Fund, Inc., a Maryland
corporation (the "Borrower"), in connection with the preparation, execution and
delivery of the Amended and Restated Credit Agreement, dated as of December 15,
1994 (the "Agreement"), among The First National Bank of Boston (the "Bank") and
each of the Borrowers (as defined in the Agreement). Capitalized terms used
herein and not otherwise defined herein shall have the same meanings herein as
ascribed thereto in the Agreement.
In our examination we have assumed the genuineness of all signatures (other
than those of the Borrower) including endorsements, the legal capacity of
natural persons, the authenticity of all documents submitted to us as originals,
the conformity to original documents of all documents submitted to us as
certified or photostatic copies, and the authenticity of the originals of such
copies. As to any facts material to this opinion which we did not independently
establish or verify, we have relied upon statements and representations of the
Borrower and its officers and other representatives and of public officials,
including the facts set forth in the Borrower's Certificate described below.
In rendering the opinions set forth herein, we have examined and relied on
originals or copies of the following:
(a) the Agreement,
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(b) the certificate of the Borrower executed by ________________________
dated the date hereof, a copy of which is attached as Exhibit A hereto (the
"Borrower's Certificate");
(c) certified copies of the Articles of Incorporation and By-laws of the
Borrower;
(d) a certified copy of certain resolutions of the Board of Directors of
the Borrower adopted on October __, 1994;
(e) certificates from public officials in the States of Maryland and New
York as to the good standing of the Borrower in each jurisdiction; and
(f) such other documents as we have deemed necessary or appropriate as a
basis for the opinions set forth below.
Members of our firm are admitted to the bar of the State of New York. We
express no opinion as to the laws of any jurisdiction other than (i) the laws of
the State of New York and (ii) the federal laws of the United States of America.
Based upon the foregoing and subject to the limitations, qualifications,
exceptions and assumptions set forth herein, we are of the opinion that:
1. The Borrower is qualified to do business and is in good standing as a
foreign corporation under the laws of the State of New York.
2. The Borrower has the corporate power and corporate authority to
execute, deliver and perform all of its obligations under the Agreement. The
execution and delivery of the Agreement and the consummation by the Borrower of
the transactions contemplated thereby have been duly authorized by all requisite
corporate action on the part of the Borrower. The Agreement has been duly
executed and delivered by the Borrower.
3. The Agreement, if it were governed by New York law, would constitute
the valid and binding obligation of the Borrower enforceable against the
Borrower in accordance with its terms.
4. The execution and delivery by the Borrower of the Agreement and the
performance by the Borrower of its obligations under the Agreement, in
accordance with its terms, do not (i) conflict with the Certificate of
Incorporation or By-laws of the Borrower, (ii) constitute a violation of or a
default under any Applicable Contracts (as hereinafter defined) or (iii) cause
the creation of any security interest or lien upon any of the property of the
Borrower pursuant to any Applicable Contracts. "Applicable Contracts" mean
those agreements or instruments set forth on Schedule I and which have been
identified to us as all the agreements and instruments which are material to the
business or financial condition of the Borrower.
5. Neither the execution, delivery or performance by the Borrower of the
Agreement nor the compliance by the Borrower with the terms and provisions
thereof will contravene any provision of any Applicable Law (as hereinafter
defined). "Applicable Laws" shall mean those laws, rules and regulations of the
State of New York and of the United States of America (including, without
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limitation, Regulations G, U and X of the Federal Reserve Board) which, in our
experience, are normally applicable to transactions with registered investment
companies similar to the Borrower and of the type contemplated by the Agreement.
6. No Governmental Approval (as hereinafter defined), which has not been
obtained or taken and is not in full force and effect, is required to authorize
or is required in connection with the execution, delivery or performance of the
Agreement by the Borrower. "Governmental Approval" means any consent, approval,
license, authorization or validation of, or filing, recording or registration
with, any Governmental Authority (as hereinafter defined) pursuant to Applicable
Laws. "Governmental Authority" means any federal or New York executive,
legislative, judicial, administrative or regulatory body.
7. Neither the execution, delivery or performance by the Borrower of its
obligations under the Agreement nor compliance by the Borrower with the terms
thereof will contravene any Applicable Order against the Borrower. For purposes
of this paragraph 7, the term "Applicable Orders" means those orders or decrees
of Governmental Authorities identified on Schedule II and which have been
identified to us as all the material orders or decrees binding on the Borrower
or affecting any of the Borrower's properties, assets or business.
8. The Borrower is registered as a closed-end management investment
company under the 1940 Act.
9. To our knowledge, there are no pending or threatened actions, suits,
investigations or proceedings at law or in equity before any federal or state
court, governmental or regulatory authority, agency, commission, board, bureau
or instrumentality, or board of arbitration, against or affecting the Borrower
or its right, title and interest in or to any of its properties or assets an
adverse decision in which could materially and adversely affect the financial
condition or business of the Borrower.
10. We know of no reason why the choice of law provisions of the
Agreement, which set forth Massachusetts law as the governing law, would not be
enforced by the courts of the State of New York, as agreed upon by the parties;
provided, however, that the particular application of such laws does not violate
public policy as applied in New York.
In rendering the foregoing opinions, we have assumed, with your consent,
that:
(a) The Borrower has been duly organized and is validly existing and in
good standing under the laws of the State of Maryland.
(b) The execution, delivery and performance of any of its obligations
under the Agreement does not and will not conflict with, contravene, violate or
constitute a default under (i) any lease, indenture, instrument or other
agreement to which the Borrower or its property is subject (other than the
Applicable Contracts as to which we express our opinion in paragraph 4 herein),
(ii) any rule, law or regulation to which the Borrower is subject (other than
Applicable Laws as to which we express our opinion in paragraph 5 herein), (iii)
any judicial or administrative order or decree of any
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governmental authority (other than Applicable Orders as to which we express our
opinion in paragraph 7 herein); and
(c) no authorization, consent or other approval of, notice to or filing
with any court, governmental authority or regulatory body (other than
Governmental Approvals as to which we express our opinion in paragraph 6 herein)
is required to authorize or is required in connection with the execution,
delivery or performance by the Borrower of the Agreement or the transactions
contemplated thereby.
Our opinions are also subject to the following assumptions and
qualifications:
(a) enforcement may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting creditors' rights
generally and by general principles of equity (regardless of whether enforcement
is sought in equity or at law);
(b) we have assumed the Agreement constitutes the legal, valid and binding
obligation of each party to such Agreement (other than the Borrower) enforceable
against such party (other than the Borrower) in accordance with its terms;
(c) we express no opinion as to the effect on the opinion expressed herein
of (i) the compliance or non-compliance of the Bank to the Agreement with any
state, federal or other laws or regulations applicable to it or (ii) the legal
or regulatory status or the nature of the business of the Bank;
(d) we express no opinion as to the enforceability of any rights to
contribution or indemnification provided for in the Agreement that are violative
of public policy underlying any law, rule or regulation (including, any federal
or state securities laws, rule or regulation); and
(e) we express no opinion as to the enforceability of any provision of the
Agreement to the extent it authorizes or permits the Bank or any purchaser of a
participation interest from the Bank to set-off or apply any deposit, property
or indebtedness with respect to any participation interest.
This opinion is being furnished only to you and is solely for your benefit
and is not to be used, circulated, quoted, relied upon or otherwise referred to
by any other Person or for any other purpose without our prior written consent.
Very truly yours,
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EXHIBIT B-3
FORM OF OPINION OF COUNSEL TO THE BORROWERS
December 15, 1994
The First National Bank of Boston
100 Federal Street
Boston, MA 02110
RE: Amended and Restated Credit Agreement dated as of December 15, 1994 by
and among The First National Bank of Boston and each of The Latin
America Investment Fund, Inc., The Latin America Equity Fund, Inc.,
The Chile Fund, Inc., The Brazilian Equity Fund, Inc., The Portugal
Fund, Inc., The First Israel Fund, Inc., The Indonesia Fund, Inc., The
Emerging Markets Telecommunications Fund, Inc., The Emerging Markets
Infrastructure Fund, Inc. and The RBB Fund, acting on behalf of BEA
Emerging Markets Equity Portfolio, BEA Global Fixed Income Portfolio,
BEA International Equity Portfolio, BEA Municipal Bond Fund Portfolio,
BEA Strategic Fixed Income Portfolio, BEA U.S. Core Equity Portfolio,
and BEA U.S. Core Fixed Income Portfolio.
Gentlemen:
We are counsel to each of The Latin America Investment Fund, Inc., The
Latin America Equity Fund, Inc., The Chile Fund, Inc., The Brazilian Equity
Fund, Inc., The Portugal Fund, Inc., The Indonesia Fund, Inc., The Emerging
Markets Telecommunications Fund, Inc. and The Emerging Markets Infrastructure
Fund, Inc. (each a "BORROWER" and collectively, the "BORROWERS") and have
represented the Borrowers in connection with the preparation, execution and
delivery of the Amended and Restated Credit Agreement dated as of December 15,
1994 (the "AGREEMENT") among The First National Bank of Boston (the "BANK") and
each of the Borrowers and The RBB Fund, Inc. All terms not defined herein and
defined in the Agreement shall have the same meanings herein as in the
Agreement.
We have examined executed counterparts of the Agreement and originals, or
copies, the authenticity of which has been established to our satisfaction, of
such other documents, corporate records, agreements and instruments and
certificates of public officials and officers of the Borrowers as we have deemed
necessary as the basis for the opinions herein expressed. As to the questions
of fact material to such opinions we have, when relevant facts were not
independently established, relied upon certifications by officers of the
Borrowers.
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Based on the foregoing and having regard for such legal considerations as
we have deemed relevant, and subject to the limitations and qualifications
below, it is our opinion that:
1. Each of the Borrowers is duly organized and validly existing under the
laws of the State of Maryland and is duly qualified to do business in each other
jurisdiction wherein the nature of its properties or its business requires such
qualification and in which the failure to be so qualified may reasonably be
expected to materially adversely affect the business, assets or condition
(financial or otherwise) of such Borrower.
2. Each of the Borrowers is registered as a closed-end management
investment company under the 1940 Act.
3. The execution, delivery and performance by each Borrower of the
Agreement are within the corporate powers of such Borrower, have been duly
authorized by all necessary and proper action on the part of such Borrower, and
do not and will not (i) violate or contravene any provision of such Borrower's
charter documents or bylaws, as amended and in effect on the date hereof;
provided, however, that further approval by the Board of Directors of The
Indonesia Fund, Inc. is required with respect to any drawdown by that Fund
aggregating in excess of $500,000, (ii) violate or contravene any provision of
such Borrower's Prospectus or Registration Statement, as applicable, (iii) to
our knowledge, conflict with, or result in a breach of any material term,
condition or provision of, or constitute a default under or result in the
creation of any mortgage, lien, pledge, charge, security interest or other
encumbrance upon any of the property or assets of such Borrower under, any
material agreement, trust deed, indenture, mortgage or other instrument to which
such Borrower is a party or by which such Borrower or any of the property or
assets of such Borrower is bound or affected, or (iv) to our knowledge, violate
or contravene any provision of any material law, regulation, order, ruling or
interpretation thereunder or any decree, order or judgment of any court or
governmental or regulatory authority, bureau, agency or official.
4. The Agreement has been duly executed and delivered by each Borrower.
We know of no reason why the choice of law provisions of the Agreement, which
set forth Massachusetts law as the governing law, would not be enforced by the
courts of the State of Maryland, as agreed upon by the parties; provided,
however, that the particular application of such laws does not violate public
policy as applied in Maryland.
5. No authorization, approval, consent, or other action by, and no notice
to or filing with, any shareholder or creditor of any Borrower, or governmental
or regulatory agency or authority, is required to make valid and legally binding
the execution, delivery and performance by such Borrower of the Agreement or the
consummation by such Borrower of the transactions contemplated by the Agreement,
or the exercise by the Bank of its rights and remedies thereunder.
6. To our knowledge, there are no pending or threatened actions, suits,
investigations or proceedings at law or in equity before any federal or state
court, governmental or regulatory authority, agency, commission, board, bureau
or instrumentality, or board of arbitration, against or affecting any Borrower
or its right, title and interest in or to any or its properties or assets an
adverse decision in which could materially and adversely affect the financial
condition or business of such Borrower.
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We are members of the Bar of the State of New York only and do not opine as to
the laws of any jurisdiction other than the laws of the State of New York and
the laws of the United States and the opinion set forth above is, accordingly,
limited to the laws of those jurisdictions. As to matters involving the
application of the laws of the State of Maryland, we have relied on the opinion
of even date herewith of Messrs. Venable, Baetjer and Howard that is attached to
this opinion.
This letter and the opinion expressed herein are being furnished solely for
your information and may not be relied upon by any other person without our
prior written consent.
Very truly yours,
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EXHIBIT B-3
FORM OF OPINION OF SPECIAL MARYLAND COUNSEL TO THE BORROWERS
December 15, 1994
Skadden, Arps, Slate, Meagher & Flom
919 Third Avenue
New York, NY 10022
Willkie Farr & Gallagher
One Citicorp Center
153 East 53rd Street
New York, New York 10022
RE: Amended and Restated Credit Agreement dated as of December 15, 1994 by
and among The First National Bank of Boston and each of The Latin
America Investment Fund, Inc., The Latin America Equity Fund, Inc.,
The Chile Fund, Inc., The Brazilian Equity Fund, Inc., The Portugal
Fund, Inc., The First Israel Fund, Inc., The Indonesia Fund, Inc., The
Emerging Markets Telecommunications Fund, Inc., The Emerging Markets
Infrastructure Fund, Inc. and The RBB Fund, acting on behalf of BEA
Emerging Markets Equity Portfolio, BEA Global Fixed Income Portfolio,
BEA International Equity Portfolio, BEA Municipal Bond Fund Portfolio,
BEA Strategic Fixed Income Portfolio, BEA U.S. Core Equity Portfolio,
and BEA U.S. Core Fixed Income Portfolio.
Ladies and Gentlemen:
We have served as special Maryland counsel to each of The Latin America
Investment Fund, Inc., The Latin America Equity Fund, Inc., The Chile Fund,
Inc., The Brazilian Equity Fund, Inc., The Portugal Fund, Inc., The First Israel
Fund, Inc., The Indonesia Fund, Inc., The Emerging Markets Telecommunications
Fund, Inc. and The Emerging Markets Infrastructure Fund, Inc. (each a "BORROWER"
and collectively, the "BORROWERS") in connection with the Amended and Restated
Credit Agreement dated as of December 15, 1994 (the "AGREEMENT") among The First
National Bank of Boston (the "BANK"), each of the Borrowers and The RBB Fund,
Inc., acting on behalf of its various portfolios described above. We have not
served as counsel to, and this opinion is not rendered on behalf of, The RBB
Fund, Inc. or its various portfolios. All terms not defined herein and defined
in the Agreement shall have the same meanings herein as in the Agreement.
We have examined the Borrowers' respective Charters and Bylaws and such
other documents, corporate records, and instruments as we have deemed necessary
as the basis for the opinions herein expressed. We have relied upon a
certificate of the Secretary of each of the Borrowers with respect to their
respective Bylaws, their form of the Agreement, and actions taken by their
Boards of Directors with respect to the Agreement. We have also relied upon
certificates of the Maryland State
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Department of Assessments and Taxation to the effect that the Borrowers are duly
incorporated and existing under the laws of the State of Maryland and in good
standing and duly authorized to transact business in the State of Maryland. We
have assumed, without independent verification and the genuineness of
signatures, the authenticity of all documents furnished to us, and the
conformity of copies to the originals.
Based on the foregoing and subject to the limitations and qualifications
below, it is our opinion that:
1. Each of the Borrowers is duly organized and validly existing under the
laws of the State of Maryland.
2. The execution, delivery and performance by each Borrower of the
Agreement are within the corporate powers of such Borrower, have been duly
authorized by all necessary and proper action on the part of such Borrower, and
do not and will not violate or contravene any provision of such Borrower's
Charter or Bylaws, as amended and in effect on the date hereof; provided,
however, that further approval by the Board of Directors of The Indonesia Fund,
Inc. is required with respect to any drawdown by that Fund aggregating in excess
of $500,000.
3. We know of no reason why the choice of law provisions of the Agreement,
which set forth Massachusetts law as the governing law, would not be enforced by
the courts of the State of Maryland, as agreed upon by the parties; provided,
however, that the particular application of such laws does not violate public
policy as applied in Maryland.
The Charters and Bylaws of the Borrowers require compliance with various
provisions of the Investment Company Act of 1940. We express no opinion with
respect to such compliance.
This letter expresses our opinion with respect to the Maryland General
Corporation Law governing the matters set forth above. It does not extend to
the securities or "Blue-Sky" laws of Maryland, to federal securities laws, or to
other laws.
You may each rely upon our foregoing opinion in rendering your respective
opinions to the Bank pursuant to the Agreement.
Very truly yours,
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Exhibit (10)(b)
CONSENT
We hereby consent to the use of our name under the caption
"Miscellaneous-Counsel" in the Statement of Additional Information of Post-
Effective Amendment No. 29 to the Registration Statement on Form N-1A of The RBB
Fund, Inc. (Registration No. 33-20827) filed under the Securities Act of 1933
and Amendment No. 31 under the Investment Company Act of 1940.
/s/ Ballard Spahr Andrews & Ingersoll
-------------------------------------
Ballard Spahr Andrews & Ingersoll
October 25, 1995
