<PAGE>
As filed with the Securities and Exchange Commission on JULY 29, 1996
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [ ]
POST-EFFECTIVE AMENDMENT NO. 37 [X]
and
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [ ]
AMENDMENT NO. 39 [X]
__________________________________
THE RBB FUND, INC.
(Government Securities Portfolio: RBB Family Class; BEA International Equity
Portfolio: BEA Class, BEA Investor Class and BEA Advisor Class; BEA HIGH
YIELD Portfolio: BEA Class, BEA Investor Class and BEA Advisor Class; BEA
Emerging Markets Equity Portfolio: BEA Class, BEA Investor Class and BEA
Advisor 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; BEA Global
Telecommunications Portfolio: BEA Investor Class and BEA Advisor Class; ni
Micro Cap Fund; ni Class; ni Growth Fund; ni Class; ni Growth & Value Fund;
ni 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 19103
(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 ____ __, 1996 pursuant to paragraph (b)
-----
60 days after filing pursuant to paragraph (a)(1)
-----
on ______________ pursuant to paragraph (a)(1)
-----
X 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-six classes registered hereby under the Securities Act of 1933.
Registrant filed its notice pursuant to Rule 24f-2 for the fiscal year ended
August 31, 1995 on October 26, 1995.
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THE RBB FUND, INC.
(BEA Advisor Classes of the BEA International Equity Portfolio,
BEA Emerging Markets Equity Portfolio, BEA High Yield Portfolio
and BEA Global Telecommunications Portfolio)
Cross Reference Sheet
FORM N-1A ITEM LOCATION
-------------- --------
PART A PROSPECTUS
1. Cover Page............................ Cover Page
2. Synopsis.............................. Annual Portfolio Operating
Expenses
3. Financial Highlights Information...... Not Applicable
4. General Description of Registrant..... Cover Page; The Fund;
Objectives and Policies
5. Management of the Fund................ Management
6. Capital Stock and Other Securities.... Cover Page; Dividends and
Distributions; Shareholder
Servicing; Description of
Shares; Multi-Class Structure
7. Purchase of Securities Being Offered.. How to Purchase Shares; Net
Asset Value
8. Redemption or Repurchase.............. How to Redeem and Exchange
Privilege; Net Asset Value
9. Legal Proceedings..................... Inapplicable
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.... Description of Shares;
Additional Information
Concerning Fund Shares; See
Prospectus - "Dividends and
Distributions" "Description of
Shares"
3
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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 and Exchange Privilege"
and "Shareholder Servicing"
20. Tax Status............................ Taxes; See Prospectus -
"Taxes"
21. Underwriters.......................... Not Applicable
22. Calculation of Performance Data....... Performance Yield Information
23. Financial Statements.................. Not Applicable
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>
THE RBB FUND, INC.
(BEA Investor Classes of the BEA International Equity Portfolio,
BEA Emerging Markets Equity Portfolio, BEA High Yield Portfolio
and BEA Global Telecommunications Portfolio)
Cross Reference Sheet
FORM N-1A ITEM LOCATION
-------------- --------
PART A PROSPECTUS
1. Cover Page............................ Cover Page
2. Synopsis.............................. Annual Portfolio
Operating Expenses
3. Financial Highlights Information...... Not Applicable
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; Shareholder
Servicing; Description of
Shares; Multi-Class Structure
7. Purchase of Securities Being Offered.. How to Purchase Shares; Net
Asset Value
8. Redemption or Repurchase.............. How to Redeem and Exchange
Privilege; Net Asset Value
9. Legal Proceedings..................... Inapplicable
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
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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"; "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 and Exchange Privilege"
and "Shareholder Servicing"
20. Tax Status............................ Taxes; See Prospectus -
"Taxes"
21. Underwriters.......................... Not Applicable
22. Calculation of Performance Data....... Performance and Yield
Information
23. Financial Statements.................. Not Applicable
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.
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- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
THE BEA FAMILY OF MUTUAL FUNDS
ADVISOR CLASS
BEA INTERNATIONAL EQUITY PORTFOLIO
BEA EMERGING MARKETS EQUITY PORTFOLIO
BEA GLOBAL TELECOMMUNICATIONS PORTFOLIO
BEA HIGH YIELD PORTFOLIO
----------
PROSPECTUS
----------
___________, 1996
A REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION BUT HAS NOT YET BECOME EFFECTIVE. THESE
SECURITIES MAY NOT BE SOLD NOR MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME
THE REGISTRATION STATEMENT BECOMES EFFECTIVE. THIS (COMMUNICATION) SHALL NOT
CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY NOR SHALL
THERE BE ANY SALE OF THESE SECURITIES IN ANY STATE IN WHICH SUCH OFFER,
SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION
UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
<PAGE>
TABLE OF CONTENTS
ANNUAL PORTFOLIO OPERATING EXPENSES............................................3
INVESTMENT OBJECTIVES AND POLICIES.............................................4
INVESTMENT LIMITATIONS.........................................................8
RISK FACTORS...................................................................9
MANAGEMENT....................................................................10
EXPENSES......................................................................13
HOW TO PURCHASE SHARES........................................................14
HOW TO REDEEM SHARES..........................................................15
NET ASSET VALUE...............................................................17
DIVIDENDS AND DISTRIBUTIONS...................................................18
TAXES.........................................................................18
SHAREHOLDER SERVICING.........................................................20
MULTI-CLASS STRUCTURE.........................................................20
DESCRIPTION OF SHARES.........................................................21
OTHER INFORMATION.............................................................22
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BEA FAMILY OF MUTUAL FUNDS
ADVISOR CLASS
The Advisor Classes of the BEA Family consist of four classes of common
stock of The RBB Fund, Inc. (the "Fund"), an open-end management investment
company. Shares (collectively, the "Advisor Shares" or "Shares") of such classes
(the "Advisor Classes" or "Classes") are offered by this Prospectus and
represent interests in one of four 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 GLOBAL TELECOMMUNICATIONS PORTFOLIO - to provide long-term appreciation of
capital. The Portfolio will invest primarily in equity securities of
telecommunications companies, both foreign and domestic.
BEA HIGH YIELD PORTFOLIO - to provide a high total return. The Portfolio will
invest primarily in high yield fixed income securities (also known as "junk
bonds") issued by corporations, governments and agencies, both domestic and
foreign. The Portfolio will invest without regard to maturity or credit quality
limitations.
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 HIGH YIELD PORTFOLIO 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 THIS PORTFOLIO. SEE "RISK FACTORS."
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 September 30, 1996, acted as adviser for
approximately $____ billion of assets.
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 ________ ___, 1996, has been filed with the
Securities and Exchange Commission and is incorporated by
<PAGE>
reference in this Prospectus. It may be obtained free of charge from the Fund's
distributor by calling (800) ___-____.
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 ________ ___, 1996
2
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ANNUAL PORTFOLIO OPERATING EXPENSES
BEA BEA U.S.
BEA Emerging Global
International Markets Telecommuni- BEA
Equity Equity cations High Yield
Portfolio Portfolio Portfolio Portfolio
--------- --------- --------- ---------
Management Fees*.... .80% 1.00% 1.00% .70%
12b-1 Fees.......... .25% .25% .25% .25%
Other Expenses...... . % . % . % . %
--------- --------- --------- ---------
Total Portfolio
Operating Expenses.. ___% ____% ____% ___%
* Management fees are each based on average daily net assets and are
calculated daily and paid monthly.
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.
One Three Five Ten
Year Years Years Years
---- ----- ----- -----
BEA International Equity Portfolio........ $__ $__ $__ $__
BEA Emerging Markets Equity Portfolio..... $__ $__ $__ $__
BEA Global Telecommunications Portfolio... $__ $__ N/A N/A
BEA High Yield Portfolio.................. $__ $__ $__ $__
The Example in the Fee Table assumes that all dividends and distributions
are reinvested and that the amounts listed under "Annual Portfolio Operating
Expenses" 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. The expense figures are restated from fees and costs of
the Institutional Classes of the Portfolios as of August 31, 1996, except for
BEA Global Telecommunications Portfolio, which is based on estimated expenses
for the current fiscal year. Actual expenses may be greater or less than such
costs and fees.
3
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FINANCIAL HIGHLIGHTS
Financial highlights are not available for the Advisor Classes of the
Portfolios because, as of the date of this prospectus, such classes had no
operating history.
THE FUND
The Fund is an open-end management investment company that currently
operates or proposes to operate eighteen separate investment portfolios. Each of
the four Classes of Shares offered by this Prospectus represents interests in
one of the four 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 advisory or other similar capacity, which may include the
investment of funds held or managed by broker-dealers, investment counselors and
financial planners. Investment professionals 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.
4
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The Portfolio may invest up to 20% of its total assets in debt securities
issued by U.S. or foreign governments or corporations, although it does not
currently intend to invest more than 5% of its net assets in debt securities.
The Portfolio has no limitation on the maturity or the credit quality of the
debt securities in which it invests, which may include lower-quality, high
yielding securities, commonly known as "junk bonds." See "Risk Factors --
Lower-Rated Securities."
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 government or
corporate debt securities of Emerging Market or developed countries, although
the Portfolio does not presently intend to invest more than 5% of its net assets
in debt securities. Debt securities may include lower-rated debt securities
(commonly known as "junk bonds"). See "Risk Factors - Lower-Rated Securities."
BEA GLOBAL TELECOMMUNICATIONS PORTFOLIO
The BEA Global Telecommunications Portfolio's investment objective is long
term capital appreciation. The Portfolio seeks to achieve its objective by
investing primarily in equity securities of telecommunications companies, both
foreign and domestic. It is the policy of the Portfolio under normal market
conditions to invest not less than 65% of its total assets in equity securities
(including common and preferred stocks, and convertible securities and warrants
to acquire such equity
5
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securities) of telecommunications companies. As a Portfolio investing in global
markets, at least 65% of the Portfolio's investments will be made in at least
three different countries. The Portfolio considers telecommunications companies
to be those which are engaged primarily in designing, developing, operating,
financing, manufacturing or providing the following activities, products and
services: communications equipment and services (including equipment and
services for both data and voice transmission); electronic components and
equipment; broadcast (including television and radio, satellite, microwave and
cable television and narrow casting); computer equipment, mobile communications
and cellular radio and paging; electronic mail; local and wide area networking
and linkage of word and data processing systems; publishing and information
systems; video and telex; and emerging technologies combining telephone,
television and/or computer systems (collective "telecommunication activity"). A
"telecommunications" company is an entity in which (i) at least 50% of either
its revenue or earnings was derived from telecommunications activity, or (ii) at
least 50% of its assets was devoted to telecommunications activity based on the
company's most recent fiscal year. The remainder of the assets of the BEA
Global Telecommunications Portfolio may be invested in non-equity securities or
securities issued by companies that are not primarily engaged in
telecommunications activities.
Because the Portfolio will concentrate its investments in the
telecommunications industry, its investments may be subject to greater risk and
market fluctuation than a fund that has securities representing a broader range
of investment alternatives. The telecommunications industry is subject to
extensive governmental regulation, which could adversely affect the Portfolio's
performance. The nature and scope of such regulation generally is subject to
political forces and market considerations, the effect of which cannot be
predicted. Telecommunications companies in both developed and emerging
countries are undergoing significant change due to varying and evolving levels
of governmental regulation or deregulation and other factors. As a result,
competitive pressures are intense and the securities of such companies may be
subject to rapid price volatility. Telecommunications regulation typically
limits rates charged, returns earned, providers of services, types of services,
ownership, areas served and terms for dealing with competitors and customers.
Telecommunications regulation generally has tended to be less stringent for
newer services than for traditional telephone service, although there can be no
assurances that such newer services will not be heavily regulated in the future.
Regulation may also limit the use of new technologies and hamper efficient
deprecation of existing assets. If regulation limits the use of new
technologies by established carriers or forces cross-subsidies, large private
networks may emerge. Service providers may also be subject to regulations
regarding ownership and control, providers of services, subscription rates and
technical standards.
Companies offering telephone services are experiencing increasing
competition from cellular telephones, and the cellular telephone industry,
because it has a limited operating history, faces uncertainty concerning the
future of the industry and demand for cellular telephones. All
telecommunications companies in both developed and emerging countries are
subject to the additional risk that technological innovations will make their
products and services obsolete. While telephone companies in developed
countries and certain emerging countries may pay an above average dividend, the
Portfolio's investment decisions are based upon capital appreciation potential
rather than income considerations.
6
<PAGE>
BEA HIGH YIELD PORTFOLIO
BEA High Yield Portfolio seeks to provide high total return. The Portfolio
will invest primarily in high yield fixed income securities (commonly known as
"junk bonds") 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 such high yield 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 junk bonds (i.e., securities rated below
investment grade by recognized rating agencies or in comparable unrated
securities). See "Risk Factors - Lower-Rated Securities." 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. Also, the value of such securities may
be affected by changes in real or perceived creditworthiness of the issuers.
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.
COMMON INVESTMENT POLICIES
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 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 cash or certain short-term (less than
twelve months to maturity) and medium-term (not greater than five years to
maturity) interest-bearing instruments or deposits of United States and foreign
issuers. 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. See Statement of Additional Information, "Common Investment Policies
- - Temporary Investments." To the extent permitted by their investment
objectives and policies, the Portfolios may hold cash or cash equivalents
pending investment.
BORROWING. A Portfolio may borrow up to 33 1/3 percent of its total assets
without obtaining shareholder approval. The Adviser intends to borrow, or to
engage in reverse repurchase agreements or dollar roll transactions, only for
temporary or emergency purposes. See Statement of Additional Information,
"Common Investment Policies - Reverse Repurchase Agreements" and "- Borrowing."
RULE 144A SECURITIES. Rule 144A securities are securities which are restricted
as to resale to the general public, but which may be resold to qualified
institutional buyers. Each Portfolio may invest in Rule 144A securities that
BEA has determined are liquid pursuant to guidelines established by the Fund's
Board of Directors.
7
<PAGE>
INVESTMENT COMPANIES. Each Portfolio may invest in securities issued by other
investment companies within the limit prescribed by the 1940 Act. 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. The BEA
International, Emerging Markets Equity and Global Telecommunications Portfolios
anticipate that their annual portfolio turnover rate should not exceed 100%
under normal conditions. However, it is impossible to predict portfolio
turnover rates. The portfolio turnover rate for BEA High Yield Portfolio is
anticipated to exceed 100%. The anticipated portfolio turnover rate for BEA
High Yield 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."
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 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. These 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.
The Statement of Additional Information contains additional investment
policies and strategies that are common to the Portfolios.
INVESTMENT LIMITATIONS
Each Portfolio is subject to the following fundamental investment
limitation, 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. A complete list of the Portfolios' fundamental investment limitations
is set forth in the Statement of Additional Information under "Investment
Limitations." Each Portfolio may not:
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
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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.
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 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.
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.
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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.
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 CS Advisors Corp., a New York Corporation
which is a wholly-owned subsidiary of CS Capital, 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 largest Swiss bank,
which in turn is a subsidiary of CS Holding, a Swiss corporation. BEA is
registered as an investment adviser under the Investment Advisers Act of 1940,
as amended.
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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 September 30, 1996, BEA
managed approximately $____ billion in assets. As an investment adviser, BEA
emphasizes a global investment strategy. BEA currently acts as investment
adviser for thirteen investment companies registered under the Investment
Company Act, and as sub-adviser to certain portfolios of six other registered
investment companies. BEA also acts as investment adviser for forty-two
offshore funds, twenty-two of which are equity funds and twenty of which are
debt funds.
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 Portfolios' 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, BEA
Emerging Markets Equity and BEA Global Telecommunications Portfolios is the
responsibility of the BEA International Equities Management Team. The Team
consists of the following investment professionals: Emilio Bassini (Executive
Director), Stephen M. Swift (Managing Director), Steven D. Bleiberg (Senior Vice
President), Richard Watt (Senior Vice President), William P. Sterling (Managing
Director), Ian Borsook (Vice President), and Stephen R. Waite (Vice President).
Mr. Bassini and Mr. Bleiberg have, on an individual basis, been engaged as
investment professionals with BEA for more than five years. 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 Gartmore 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 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 High Yield 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 Lindquist (Managing Director), Misia
Dudley (Senior Vice President), Mark Silverstein (Senior Vice President), Robert
Justich (Senior Vice President), Marianne Rossi (Vice President), William P.
Sterling (Managing Director), Ian Borsook (Vice President), and Stephen R. Waite
(Vice President). Messrs. Moore, Diliberto and Silverstein have, on an
individual basis, been engaged as investment professionals with BEA for more
than five years. Mr. Lindquist, Ms. Dudley 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
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America. Prior to joining CS First Boston, Ms. Dudley was with Stockbridge
Partners, and prior to that had spent five years with E.F. Hutton. Mr. Justich
joined BEA in 1995, prior to which he worked at Merrill Lynch and as a Manager
of Financial Services with Arthur Young & Company.
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:
PORTFOLIO ANNUAL RATE
- --------- -----------
BEA International Equity. . . . . . . .80% of the average daily net assets*
BEA Emerging Markets Equity . . . . . 1.00% of the average daily net assets*
BEA Global Telecommunications . . . . 1.00% of the average daily net assets*
BEA High Yield. . . . . . . . . . . . .70% of the average daily net assets
* This fee is higher than that paid by most investment companies, although
the fees are within the range of fees of investment companies with similar
investment objectives.
For the period ended August 31, 1996, the Fund paid BEA investment advisory
fees, on annualized basis, with respect to the BEA International Equity, BEA
Emerging Markets Equity and BEA High Yield 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. BEA may, at its discretion, from time to time
agree to waive voluntarily all or any portion of its advisory fee for any
Portfolio.
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.
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.
ADMINISTRATORS
PFPC Inc. ("PFPC"), an indirect, wholly-owned subsidiary of PNC Bank
Corp., serves as administrator 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
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. The Fund employs
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BEA as co-administrator. As co-administrator, BEA provides shareholder liaison
services to the Fund, including responding to shareholder inquiries and
providing information on shareholder account. As compensation, the Fund pays
to BEA a fee calculated at an annual rate of .05% of each Portfolio's average
daily net assets.
DISTRIBUTOR
Counsellors Securities Inc. ("Counsellors Securities"), serves as the
Fund's distributor. Counsellors Securities is located at 466 Lexington Avenue,
New York, New York 10017-3147. Counsellors Securities receives a fee at an
annual rate equal to .25% of the Portfolio's average daily net assets for
distribution services, pursuant to a distribution agreement between Counsellor's
Securities and the Fund in accordance with a distribution plan (the "12b-1
Plan") adopted by the Fund pursuant to Rule 12b-1 under the 1940 Act. Amounts
paid to Counsellors Securities under the Fund's 12b-1 Plan may be used by
Counsellors Securities to cover expenses that are related to (i) the sale of
Advisor Shares of the Portfolios, (ii) ongoing servicing and/or maintenance of
the accounts of shareholders of the Portfolio, and (iii) sub-transfer agency
services, subaccounting services or administrative services related to the sale
of the Advisor Shares of the Portfolios, all as set forth in the Fund's 12b-1
Plan. Payments under the 12b-1 Plan are not tied exclusively to the
distribution expenses actually incurred. Counsellors Securities may delegate
some or all of these functions to a Service Organization. See "Shareholder
Servicing." The Fund's Board of Directors will evaluate the appropriateness of
the 12b-1 Plan on a continuing basis and in doing so will consider all relevant
factors, including expenses borne by Counsellors Securities and amounts received
under the 12b-1 Plan.
TRANSFER AGENT
Boston Financial Data Services, Inc. ("BFDS") serves as Transfer Agent
for the Portfolios. BFDS's address is Two Heritage Drive, Quincy, MA, 02171.
CUSTODIAN
Brown Brothers Harriman & Co. serves as custodian for the 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, distributor, administrator and co-administrator 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, the expense of reports to shareholders, shareholders'
meetings and proxy solicitations, fidelity bond
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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.
HOW TO PURCHASE SHARES
BEA Advisor Shares are available for investment by individual investors
("Individuals") and through investment professionals such as broker-dealers,
financial planners and other financial intermediaries ("Intermediaries").
The Fund reserves the right to make Advisor Shares available to other
investors in the future. The minimum initial investment is $_____. The
minimum subsequent investment is $_____.
Shares of the Portfolios may be purchased either by mail, or with special
advance instructions, by wire. If an Individual or Intermediary desires to
purchase Shares by mail, a check or money order made payable to "The RBB
Fund, Inc." in U.S. currency should be sent along with a completed account
application to Counsellors Securities, the Fund's distributor, at the address
set forth above. Checks payable to the Individual or Intermediary and
endorsed to the Fund will not be accepted as payment and will be returned.
If payment is received by check in proper form on or before 4:00 p.m. (Eastern
time) on a day that a Portfolio calculates its net asset value (a "business
day") the purchase will be made at the Potfolio's net asset value calculated
at the end of that day. If payment is received after 4:00 p.m., the purchase
will be effected at the Portfolio's net asset value determined for the next
business day after payment has been received. Checks or money orders that
are not in proper form or that are not accompanied or preceeded by a complete
application will be returned to sender. Shares purchased by check are
entitled to receive dividends and distributions beginning the day after
payment has been received. Checks for investments in more than one Portfolio
should be accompanied by a breakdown of amount to be invested in the
Portfolios. If a check used for purchase does not clear, the Portfolios will
cancel the purchase and the Individual or Intermediary may be liable for
losses and fees incurred. For a description of the manner of calculating a
Portfolio's net asset value, see "Net Asset Value."
Individuals and Itermediaries may also purchase Advisor Shares by
telephoning BEA Advisor Portfolios and sending payment by wire. After
telphoning (800)___-____ for instructions, an Individual or Intermediary
should then wire federal funds to Counsellors Securities using the following
wire address:
Orders by wire will not be accepted until a completed account application
has been received in proper form, and an account number has been established.
If a telephone order is received by the close of regular trading on the New York
Stock Exchange (the "NYSE") (currently 4:00 p.m., Eastern time) AND payment by
wire is received on the same day in proper form in accordance with instructions
set forth above, the shares will be priced according to the net asset value of
the Fund on that day and are entitled to dividends and distributions beginning
on that day. If payment by wire is received in proper form by the close of the
NYSE without a prior telephone order, the purchase will be priced according to
the net asset value of the Fund on that day and is entitled to dividends and
distributions beginning on that day. However, if a wire received in proper form
is not preceded by a telephone order AND is received after the close of regular
trading on the NYSE, the payment will be held uninvested until the order is
effected at the close of business on the next day that the Fund calculates its
net asset value (a "business day"). Payment for orders that are not accepted
will be returned to the institution after prompt inquiry. Certain organizations
that have entered into
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agreements with the Fund or its agent may enter confirmed purchase orders on
behalf of customers, with payment to follow no later than the Fund's pricing on
the following business day. If payment is not received by such time, the
organization could be held liable for resulting losses or fees incurred.
After a shareholder has made an initial investment, additional shares may be
purchased at any time in the manner outlined above. Payments for initial and
subsequent investments should be preceded by an order placed with the Fund or
its agent and should clearly indicate the shareholder's account number. In the
interest of economy and convenience, physical certificates representing shares
in the Fund are not normally issued.
The Fund understands that some broker-dealers (other than Counsellors
Securities), financial planners and other Intermediaries may impose certain
conditions on their clients that invest in the Fund, which are in addition to or
different than those described in this Prospectus, and, to the extent permitted
by applicable regulatory authority, may charge their clients direct fees.
Certain features of the Fund may be modified in these programs and
administrative charges may be imposed for the services rendered. Therefore, a
client or customer should contact the organization acting on his behalf
concerning the fees (if any) charged in connection with a purchase or redemption
of Fund shares and should read this Prospectus in light of the terms governing
his accounts with the organization. Each Intermediary separately determines
the rules applicable to its customers investing in the Fund, including
minimum initial and subsequent investment requirements and the procedures to
be followed to effect purchases, redemptions and exchanges of Advisor Shares.
Orders for the purchase of Advisor Shares through an Intermediary are placed
with the Intermediary by its customers. The Intermediary is responsible for
the prompt transmission of the order to the Fund.
HOW TO REDEEM SHARES
GENERAL
A shareholder may redeem (sell) shares on any day that the Fund's net asset
value is calculated (see "Net Asset Value" below).
Shareholders may redeem Advisor Shares by calling BEA Advisor Funds at
(800) __________ between 9:00 a.m. and 4:00 p.m. (Eastern time) on any
Business Day. A shareholder making a telephone withdrawal should state (i)
the name of the Portfolio, (ii) the account number of the Portfolio, (iii)
the name of the shareholder appearing on the Portfolio's records, (iv) the
amount to be withdrawn and (v) the name of the person requesting the
redemption. Requests for the redemption (or exchange) of Advisor Shares are
placed with an Intermediary by its customers. The Intermediary is
responsible for the prompt transmission of its customers' requests to the
Fund or its agent.
After receipt of the redemption request, the redemption proceeds will, at
the option of the shareholder, be paid by check and mailed to the shareholder
of record or be wired to the shareholder's bank as indicated in the account
application previously filled out by the shareholder. The Fund does not
currently impose a service charge for effecting wire transfers but the Fund
reserves the right to do so in the future. During periods of significant
economic or market change, telephone redemptions may be difficult to
implement. If a shareholder is unable to contact BEA Advisor Portfolios by
telephone, the shareholder may deliver the redemption request to BEA Advisor
Portfolios by mail at ____________________.
If a redemption order is received prior to the close of regular trading on
the NYSE, the redemption order will be effected at the net asset value per share
as determined on that day. If a redemption order is received after the close of
regular trading on the NYSE, the redemption order will be effected at the net
asset value as next determined. Redemption proceeds will normally be
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mailed or wired to a shareholder on the next business day following the date a
redemption order is effected. If, however, in the judgment of BEA, immediate
payment would adversely affect the Fund, the Fund reserves the right to pay
the redemption proceeds within seven days after the redemption order is
effected. Furthermore, the Fund may suspend the right of redemption or
postpone the date of payment upon redemption (as well as suspend or postpone
the recordation of an exchange of shares) for such periods as are permitted
under the 1940 Act.
The proceeds paid upon redemption may be more or less than the amount
invested depending upon a share's net asset value at the time of redemption. If
a shareholder redeems all the shares in his account, all dividends and
distributions declared up to and including the date of redemption are paid along
with the proceeds of the redemption. If 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.
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 at any time the net asset value of the account in such Portfolio
falls below $500 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
$500 and will be allowed 30 days to make additional investments before the
redemption is processed.
EXCHANGE PRIVILEGE
An Individual or Intermediary may exchange Advisor Shares of a Portfolio
for Advisor Shares of any other BEA Advisor Portfolio at their respective net
asset values. Exchanges may be effected in the manner described under
"Redemption of Shares" above. If an exchange request is received by BEA
Advisor Portfolios prior to 4:00 p.m. (Eastern time), the exchange will be
made at each Portfolio's net asset value determined on the same business day.
The exchange privilege may be modified or terminated at any time upon 60 days'
notice to shareholders.
The exchange privilege is available to shareholders residing in any state
in which the Advisor Shares being acquired may legally be sold. When a
shareholder effects an exchange of shares, the exchange is treated for federal
income tax purposes as a redemption. Therefore, the shareholder may realize a
taxable gain or loss in connection with the exchange. For further information
regarding the exchange privilege, the shareholder should contact BEA Advisor
Portfolios at (800) __________. No
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exchange fee is currently imposed on exchanges, although the Fund reserves the
right to impose a $5.00 administrative fee for each 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. 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 BFDS. This form is available from
BFDS. Once this election has been made, the shareholder may simply contact BFDS
by telephone to request the exchange (800)___-____. 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 BFDS 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.
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. 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 Global
Telecommunications Portfolios annually. The Fund will distribute net investment
income for the BEA
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High Yield Portfolio 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
BFDS 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
generally 39.6%. However, the maximum rate 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.
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
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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.
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.
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.
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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.
SHAREHOLDER SERVICING
The Fund is authorized to offer Advisor Shares to Intermediaries whose
clients or customers ("Customers") are beneficial owners of Advisor Shares.
Those Intermediaries may enter into service agreements ("Agreements") related
to the sale of the Advisor Shares with Counsellors Securities pursuant to a
Distribution Plan, as described below. Pursuant to the terms of an
Agreement, the Intermediary agrees to perform certain distribution,
shareholder servicing, administrative and accounting services for its
Customers. Distribution services would be marketing or other services in
connection with the promotion and sale of Advisor Shares. Shareholder
services that may be provided include responding to Customer inquiries,
providing information on Customer investments and providing other shareholder
liaison services. Administrative and accounting services related to the sale
of the Advisor Shares may include (i) aggregating and processing purchase and
redemption requests from Customers and placing net purchase and redemption
orders with the Fund's transfer agent, (ii) processing dividend payments from
the Fund on behalf of Customers and (iii) providing sub-accounting relating
to the sale of Advisor Shares beneficially owned by Customers or the
information to the Fund necessary for subaccounting. The Board of Directors
of the Fund has approved a Distribution Plan (the "Plan") pursuant to Rule
12b-1 under the 1940 Act under which Counsellors Securities may pay each
participating Intermediary a negotiated fee on an annual basis not to exceed
.25% of the value of the average daily net assets of its Customers invested in
the Advisor Shares. The Fund may, in the future, enter into additional
Agreements with Intermediaries. The Board of Directors of RBB will evaluate the
appropriateness of the Plan on a continuing basis.
MULTI-CLASS STRUCTURE
The Fund offers other classes of shares of the Portfolios which are offered
directly to institutional investors and financial institutions pursuant to
separate prospectuses. Shares of each class represent equal pro rata interests
in the Portfolios and accrue dividends and calculate net asset value and
performance quotations in the same manner. The Fund quotes performance of the
Institutional and Investor Shares separately from Advisor Shares. Because of
different fees paid by the Advisor Shares, the total return on such shares can
be expected, at any time, to be different than the total return on Institutional
and Investor Shares. Information concerning these other classes may be obtained
by calling [BEA/Counsellors Securities/BFDS] at 1-800-___-____.
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DESCRIPTION OF SHARES
The Fund has authorized capital of thirty billion shares of Common Stock,
$.001 par value per share, of which 12.35 billion shares are currently
classified into 67 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 ADVISOR CLASSES REPRESENTING AN INTEREST IN
THE BEA INTERNATIONAL EQUITY, BEA EMERGING MARKETS EQUITY, BEA GLOBAL
TELECOMMUNICATIONS AND BEA HIGH YIELD 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 four Portfolios; there is a
possibility that one Portfolio might become liable for any 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 July 23, 1996, 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.
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<PAGE>
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
BFDS, the Fund's transfer agent.
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.
From time to time, the BEA High Yield Portfolio may also advertise its
"30-day yield." The yield refers to the income generated by an investment in the
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 the 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 Intermediaries
directly to their customers in connection with investments in the Portfolio are
not reflected in the yields on the Portfolio's Shares, and such fees, if
charged, will reduce the actual return received by shareholders on their
investments.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY
REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS OR IN THE
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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.
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THE BEA FAMILY OF MUTUAL FUNDS
ADVISOR CLASS
BEA International Equity Portfolio
BEA Emerging Markets Equity Portfolio
BEA Global Telecommunications Portfolio
BEA High Yield Portfolio
(Investment Portfolios of The RBB Fund, Inc.)
STATEMENT OF ADDITIONAL INFORMATION
This Statement of Additional Information provides supplementary
information pertaining to shares of four classes (the "Advisor Shares" or the
"Shares") representing interests in four investment portfolios (the
"Portfolios") of The RBB Fund, Inc. (the "Fund"): BEA International Equity
Portfolio, BEA Emerging Markets Equity Portfolio, BEA Global Telecommunications
Portfolio and BEA High Yield Portfolio (collectively, the "Portfolios"). This
Statement of Additional Information is not a prospectus, and should be read only
in conjunction with the Prospectus of the Fund relating to the Portfolios, dated
________ __, 1996 (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 ________ __, 1996.
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.
A REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION BUT HAS NOT YET BECOME EFFECTIVE. THESE
SECURITIES MAY NOT BE SOLD NOR MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME
THE REGISTRATION STATEMENT BECOMES EFFECTIVE. THIS STATEMENT OF ADDITIONAL
INFORMATION SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN
OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES IN ANY STATE IN
WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO THE
REGISTRATION OR QUALIFICATION OF THE SECURITIES LAWS OF ANY SUCH STATE.
<PAGE>
CONTENTS
Prospectus
Page Page
---- ----------
General ............................................. 2 8
Common Investment Policies -- All Portfolios ........ 2 8
Supplemental Investment Objectives and Policies --
BEA International Equity, BEA Emerging
Markets Equity and BEA Global Telecommunications
Portfolios......................................... 22 19
Investment Limitations .............................. 22 22
Risk Factors ........................................ 25 23
Directors and Officers .............................. 28 N/A
Investment Advisory and Servicing Arrangements....... 30 26
Portfolio Transactions .............................. 34 29
Purchase and Redemption Information ................. 36 30
Valuation of Shares ................................. 37 32
Performance and Yield Information.................... 38 36
Taxes ............................................... 41 33
Additional Information Concerning Fund Shares........ 50 35
Miscellaneous ....................................... 53 35
Appendix ............................................ A-1 N/A
Financial Statements ................................ N/A N/A
<PAGE>
GENERAL
The RBB Fund, Inc. (the "Fund") is an open-end management investment
company currently operating or proposing to operate eighteen 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.
TEMPORARY INVESTMENTS. The short-term and medium-term debt
securities in which a Portfolio may invest for temporary and defensive purposes
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.
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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. 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. The Adviser will
consider the 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 AND DOLLAR ROLLS. 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 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
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<PAGE>
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, DELAYED DELIVERY TRANSACTIONS AND FORWARD
COMMITMENTS. Each Portfolio may purchase securities on a when-issued basis,
and it may purchase or sell securities for delayed delivery or on a forward
commitment basis. 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 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. When-issued and forward commitment transactions
involve the risk 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. The Portfolio currently anticipates that when-issued
securities will not exceed 25% of its total assets. 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.
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
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<PAGE>
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 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. 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 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 considered 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 at fair
5
<PAGE>
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). 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 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
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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).
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.
LENDING OF PORTFOLIO SECURITIES. 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. 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. 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. 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. 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.
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
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benefit of the lender or arrangements will be made with a suitable subcustodian,
which may include the lender.
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
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
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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. BEA International Equity and BEA Emerging
Markets Equity Portfolios may invest up to 20% of their total assets in
convertible securities, and BEA High Yield and BEA Global Telecommunications
Portfolios 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 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,
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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
assets in mortgage-backed securities and BEA High Yield 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
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certain foreign issuers, as well as by private issuers such as commercial
investment banks, savings and loan institutions, mortgage bankers and private
mortgage insurance companies. 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.
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 the 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. 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
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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. 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 the Portfolios.
Mortgage-related securities provide regular payments consisting of interest and
principal. No assurance can be given as to the return the Portfolios will
receive when these amounts are reinvested.
The rate of interest on mortgage-backed securities is lower than the
interest rates paid on the mortgages included in the underlying pool due to the
annual fees paid to the servicer of the mortgage pool for passing through
monthly payments to certificate holders and to any guarantor, such as GNMA, and
due to any yield retained by the issuer. Actual yield to the holder may vary
from the coupon rate, even if adjustable, if the mortgage-backed securities are
purchased or traded in the secondary market at a premium or discount. In
addition, there is normally some delay between the time the issuer receives
mortgage payments from the servicer and the time the issuer makes the payments
on the mortgage-backed securities, and this delay reduces the effective yield to
the holder of such securities.
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.
These securities may be considered mortgage derivatives. 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.
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 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
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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.
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. The Portfolios may
also invest in other types of asset-backed securities that may be available in
the future. 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. 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
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.
Asset-backed securities present certain risks that are not
presented by other securities in which the Portfolio may invest. Automobile
receivables generally are secured by automobiles. Most issuers of automobile
receivables permit the loan servicers to retain possession of the underlying
obligations. If the servicer were to sell these obligations to another party,
there is a risk that the purchaser would acquire an interest superior to that of
the holders of the asset-backed securities. In addition, because of the large
number of vehicles involved in a typical issuance and technical requirements
under state laws, the trustee for the holders of the automobile
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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.
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
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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 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.
Lower-rated debt securities may include zero coupon securities or
pay-in-kind securities. A zero coupon security bears no interest but is 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
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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" below. 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.
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. 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
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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.
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.
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
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
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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.
OPTIONS AND FUTURES CONTRACTS. The 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
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.
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 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 Portfolios bear the risk that the
broker/dealer will fail to meet its obligations. There is no assurance that the
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 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
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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 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
Portfolios is subject to the Adviser's ability to correctly predict movements in
the direction of the market. For example, if a 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. These instruments and techniques are
discussed in greater detail below.
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
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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 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.
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
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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 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
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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
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. The put thus acts as hedge against a fall in the price of
such securities. However, all other things being equal (including securities
prices) 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. This potential loss represents the cost of the hedge
against a fall in prices. 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
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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 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
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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
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 has filed 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
representation that the Portfolios will not enter into any commodity futures
contract or option on a commodity futures contract if, as a
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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.
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 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.
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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 AND BEA GLOBAL
TELECOMMUNICATIONS 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 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
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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. Except for BEA Global Telecommunications Portfolio, 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.
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
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the making of investments for the purpose of exercising control or
management;
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
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values of portfolio securities or amount of total or net assets will not be
considered a violation of any of the foregoing restrictions.
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.
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RISK FACTORS
FOREIGN SECURITIES. Investments in foreign securities are subject
to certain risks, discussed below.
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 the Portfolios' ability to repatriate investment income, capital or
the proceeds of sales of securities by foreign investors. The Portfolios 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 Portfolios of any restrictions on investments.
REPORTING STANDARDS. Most of the foreign securities held by the Portfolios
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.
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 a Portfolio's 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 a Portfolio. If the value of a foreign currency rises against
the U.S. dollar, the value of a Portfolio's assets denominated
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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.
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 Portfolios may invest in these investment
funds and registered investment companies subject to the provisions of the 1940
Act. If these Portfolios invest in such investment companies, they will each
bear their proportionate share of the costs incurred by such companies,
including investment advisory fees.
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.
LOWER- OR NON-RATED CRITERIA FOR DEBT SECURITIES. The BEA High
Yield Portfolio has 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
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the issuer's inability 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 the Portfolio. If
a call were exercised by the issuer during a period of declining interest rates,
the Portfolio likely would have to replace such called security with a lower
yielding security, thus decreasing the net investment income to the Portfolio
and dividends to shareholders.
The 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 the Portfolio's ability
to dispose of particular issues when necessary to meet the Portfolio's liquidity
needs or in response to a specific economic event such as a deterioration in the
creditworthiness of the issuer.
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, the 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.
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.
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 the 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.
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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
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
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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.
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, Address and Age Position with Fund During Past Five Years
- --------------------- ------------------ ----------------------
Arnold M. Reichman - 48* 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 - 58** 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 - 60 Director Since 1963, Executive
7701 Burholme Avenue Vice President, Fox Chase
Philadelphia, PA 1911 Cancer Center (Biomedical
research and medical care.)
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Marvin E. Sternberg -62 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).
Julian A. Brodsky -63 Director Director, Vice Chairman 1969
Comcast Corporation to present, Comcast
1234 Market Street Corporation (cable television
16th Floor and communications); Director,
Philadelphia, PA 19107-3723 Comcast Cablevision of
Philadelphia (cable television
communications) and Nextel
(wireless communications).
Donald van Roden - 72 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 - 72 President and Certified Public Accountant;
Bellevue Park Treasurer Vice Chairman of the
Corporate Center of the Board, Fox Chase
400 Bellevue Parkway Cancer Center; Vice President
Wilmington, DE 19809 and Trustee, Pennsylvania
School for the Deaf; Trustee,
Immaculata College; Vice
President and Treasurer of
various investment companies
advised by PNC Institutional
Management Corporation.
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Principal Occupation
Name and Address Position with Fund During Past Five Years
- --------------------- ------------------ ----------------------
Morgan R. Jones - 56 Secretary Chairman of the law firm of
1100 PNB Bank Building Drinker Biddle & Reath,
Broad and Chestnut Streets Philadelphia, Pennsylvania;
Philadelphia, PA 19107 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.
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
Roden) receives an additional $5,000 for his services. For the year ended
August 31, 1996, each of the following members of the Board of Directors
received compensation from the Fund in the following amounts: Julian A. Brodsky
in the aggregate amount of $_____; Francis J. McKay in the aggregate amount of
$______; Marvin E. Sternberg in the aggregate amount of $______; Donald van
Roden 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 the Fund's advisers, custodians, administrators and
distributor, the Fund itself requires only one part-time employee. No officer,
director or employee of BEA or the Distributor currently receives any
compensation from the Fund.
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<PAGE>
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 High Yield Portfolios, dated July 10, 1996 for the BEA Global
Telecommunications Portfolio. Such advisory agreements are hereinafter
collectively referred to as the "Advisory Contracts."
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
September 30, 1996, BEA Associates managed approximately $_____ billion in
assets. CS Capital, BEA's ultimate parent, 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. BEA Associates is registered as an investment
adviser under the Investment Advisers Act of 1940, as amended.
As an investment adviser, BEA emphasizes a global investment strategy. BEA
currently acts as investment adviser for thirteen investment companies
registered under the Investment Company Act. They are: Alpha Government
Securities Portfolio, BEA Strategic Income Fund, Inc., BEA Income Fund, Inc.,
BEA Short Duration Portfolio, The Brazilian Equity Fund, Inc., The Chile Fund,
Inc., The Emerging Markets Infrastructure Fund, Inc., The Emerging Markets
Telecommunications Fund, Inc., The First Israel Fund, Inc., The Indonesia Fund,
Inc., The Latin America Equity Fund, Inc., The Latin America Investment Fund,
Inc., and The Portugal Fund, Inc. In addition, BEA acts as sub-adviser to
certain portfolios of six other registered investment companies: Frank Russell
Investment Company (Fixed Income III Fund and Multistrategy Bond Fund),
Oppenheimer (LifeSpan Balanced Portfolio, LifeSpan Income Portfolio and LifeSpan
Growth Portfolio), Panorama (LifeSpan Balanced Account, LifeSpan Capital
Appreciation Account and LifeSpan Diversified Income Account), SEI Institutional
Managed Trust (High Yield Bond Portfolio), WNL Series Trust (BEA Growth and
Income Fund), Touchstone International Equity Fund and Touchstone Variable
Annuity International Equity Portfolio. BEA also acts as investment adviser for
forty-two offshore funds, twenty-two of which are equity funds and twenty of
which are debt funds.
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 Global
Telecommunications and BEA High Yield Portfolios, BEA Associates will be paid
(before any voluntary waivers or reimbursements) a
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<PAGE>
monthly fee computed at an annual rate of .80%, 1.00%, 1.00% and .70% of average
daily net assets, respectively.
For the year ended August 31, 1996, BEA waived advisory fees with
respect to the BEA International Equity, BEA Emerging Markets Equity, BEA Global
Telecommunications and BEA High Yield 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.
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
38
<PAGE>
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 10, 1996, by vote of
the Fund's Board of Directors, including a majority of those directors who 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. Brown Brothers Harriman
& Co. ("BBH") acts as the custodian for the Portfolios and also acts as the
custodian for the Portfolios' foreign securities pursuant to a Custodian
Agreement (the "Custodian Agreement"). Under the Custodian Agreement, BBH (a)
maintains a separate account or accounts in the name of each Portfolio, (b)
holds and transfers portfolio securities on account of each Portfolio, (c)
accepts receipts and makes disbursements of money on behalf of each Portfolio,
(d) collects and receives all income and other payments and distributions on
account of each Portfolio's portfolio securities, and (e) makes periodic reports
to the Fund's Board of Directors concerning each Portfolio's operations. BBH is
authorized to select one or more banks or trust companies to serve as
sub-custodian on behalf of the Fund, provided that BBH remains responsible for
the performance of all its duties under the Custodian Agreement and holds the
Fund harmless from the negligent acts and omissions of any sub-custodian. For
its services to the Fund under the Custodian Agreement, BBH receives a fee which
is calculated based upon each Portfolio's
39
<PAGE>
average daily gross assets, exclusive of transaction charges and out-of-pocket
expenses, which are also charged to the Fund.
Boston Financial Data Services, Inc. ("BFDS"), an affiliate of State
Street Bank and Trust Company, serves as the transfer and dividend disbursing
agent for the Advisor Classes pursuant to a Transfer Agency Agreement (the
"Transfer Agency Agreement"), under which BFDS (a) issues and redeems shares of
each of the Advisor 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 Advisor Class. For its services to the Fund
under the Transfer Agency Agreement, BFDS receives a fee on a per transaction
basis.
ADMINISTRATION AGREEMENTS. PFPC Inc., an indirect, wholly owned
subsidiary of PNC Bank Corp., serves as administrator to the Portfolios
pursuant to an Administration and Accounting Services Agreement dated July
10, 1996 (the "PFPC Administration Agreement"). PFPC has agreed to calculate
the Portfolios' net asset values, provide all accounting services for the
Portfolios, and assist in related aspects of the Portfolios' operations. The
PFPC Administration Agreement provides that PFPC shall not be liable for any
error of judgment or mistake of law or any loss suffered by the Fund or the
Portfolios in connection with the performance of the agreement, except a loss
resulting from willful misfeasance, bad faith or negligence, or reckless
disregard of its duties and obligations thereunder. In consideration for
providing services pursuant to the PFPC Administration Agreement, PFPC
receives a fee calculated at an annual rate of .125% of each Portfolio's
average daily net assets, with a minimum annual fee of $_______.
BEA serves as co-administrator to the Portfolios pursuant to
Co-Administration Agreements dated July 10, 1996 (the "BEA Co-Administration
Agreements"). BEA has agreed to provide shareholder liaison services to the
Portfolios including responding to shareholder inquiries and providing
information on shareholder accounts. The BEA Co-Administration Agreements
provide that BEA shall not be liable for any error of judgment or mistake of
law or any loss suffered by the Fund or the Portfolios in connection with the
performace of the agreement, except a loss resulting from willful
misfeasance, bad faith or negligence, or reckless disregard of its duties and
obligations thereunder. In consideration for providing services pursuant to
the BEA Co-Administration Agreements, BEA receives a fee calculated at an
annual rate of .05% of each of the Portfolios' average daily net assets.
DISTRIBUTION AND SHAREHOLDER SERVICING
The Portfolios have each entered into Distribution Agreements with
Counsellors Securities pursuant to their Distribution Plans (the "12b-1
Plans") under Rule 12b-1 of the 1940 Act. In consideration for Services (as
defined below), the Distribution Agreement provides that the Portfolios will
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each pay Counsellors Securities a fee calculated at an annual rate of .25% of
the respective average daily net assets of the Advisor Shares of the
Portfolios. Services performed by Counsellors Securities include (a) the sale
of the Advisor Shares, as set forth in the 12b-1 Plans ("Selling Services"),
(b) ongoing servicing and/or maintenance of the accounts of shareholders of
the Portfolios, as set forth in the 12b-1 Plans ("Shareholder Services"), and
(c) sub-transfer agency services, subaccounting services or administrative
services, as set forth in the 12b-1 Plans ("Administrative Services") and
including, without limitation, (i) payments reflecting an allocation of
overhead and other office expenses of Counsellors Securities related to
providing Services; (ii) payments made to, and reimbursement of expenses of,
persons who provide support services in connection with the distribution of
the Advisor Shares including, but not limited to, office space and equipment,
telephone facilities, answering routine inquiries regarding the Portfolios,
and providing any other Shareholder Services; (iii) payments made to
compensate selected dealers or other authorized persons for providing any
Services; (iv) costs relating to the formulation and implementation of
marketing and promotional activities, including, but not limited to, direct
mail promotions and television, radio, newspaper, magazine and other mass
media advertising, and related travel and entertainment expenses; (v) costs
of printing and distributing prospectuses, statements of additional
information and reports of the Portfolios to prospective shareholders of the
Portfolios; and (vi) costs involved in obtaining whatever information,
analyses and reports with respect to marketing and promotional activities
that Counsellors Securities may, from time to time, deem advisable.
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.
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. 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.
Commission rates for brokerage transactions on foreign stock
exchanges are generally fixed. The reasonableness of any negotiated
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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.
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
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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, 1996, BEA International Equity
Portfolio paid $_________ of brokerage commissions, BEA Emerging Markets Equity
Portfolio paid $_______ of brokerage commissions and for each other Portfolio no
brokerage commissions were paid during such period.
BEA International Equity, BEA Emerging Markets Equity and BEA Global
Telecommunications Portfolios expect that their annual Portfolio turnover rate
should not exceed 100% under normal market conditions. BEA High Yield Portfolio
anticipates that its portfolio turnover may exceed 100%. 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.
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).
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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. Investors
will also be required to bear certain transaction costs associated with
Redemptions-In-Kind. 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.)
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
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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 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.
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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)(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
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 $10,000 in Portfolio
shares and assuming the reinvestment of each dividend or other distribution at
net asset value on the reinvestment date. The Portfolio does not, for these
purposes, deduct from the initial value invested any
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amount representing sales charges. The Portfolio will, however, disclose the
maximum sales charge and will also disclose that the performance data do not
reflect sales charges and that inclusion of sales charges would reduce the
performance quoted. Such alternative total return information will be given no
greater prominence in such advertising than the information prescribed under SEC
rules, and all advertisements containing performance data will include a legend
disclosing that such performance data represent past performance and that the
investment return and principal value of an investment will fluctuate so that an
investor's shares, when redeemed, may be worth more or less than their original
cost.
Calculated according to the SEC rules for the period beginning on
the commencement of operations and ended August 31, 1996, the average annual
total return for the BEA International Equity Portfolio (commencing October 1,
1992) was ____% (annualized), BEA Emerging Markets Equity Portfolio (commencing
February 1, 1993) was ____% (annualized) and BEA High Yield Portfolio
(commencing March 1, 1993) was ____$ (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 and BEA Emerging Markets Equity Portfolios and ending on
August 31, 1996, the average annual total return for the Portfolios was ____%
and ____%, respectively. The aggregate total return for the Portfolios
calculated according to the non-standardized computation for the period
beginning on the commencement of operations of each of the Portfolios and ending
August 31, 1996 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)(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
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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 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
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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 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
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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
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
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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 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.
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."
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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 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).
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
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(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.
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
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<PAGE>
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 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.
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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 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.
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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
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
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<PAGE>
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 12.35 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), 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 (High Yield), 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
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Class DD Common Stock (Growth & Income Series 2), 100 million shares are
classified as Class EE Common Stock (Balanced Series 2), 50 million shares are
classified as Class FF (n/i Micro Cap), 50 million shares are classified as
Class GG (n/i Growth), 50 million shares are classified as Class HH (n/i Growth
& Value), 100 million shares are classified as Class II (BEA Investor
International), 100 million shares are classified as Class JJ (BEA Investor
Emerging), 100 million shares are classified as Class KK (BEA Investor High
Yield), 100 million shares are classified as Class LL (BEA Investor Global
Telecom), 100 million shares are classified as Class MM (BEA Advisor
International), 100 million shares are classified as Class NN (BEA Advisor
Emerging), 100 million shares are classified as Class OO (BEA Advisor High
Yield), 100 million shares are classified as Class PP (BEA Advisor Global
Telecom), 700 million shares are classified as Class Janney Money Common Stock,
200 million shares are classified as Class Janney Municipal Money Common Stock,
500 million shares are classified as Class Janney U.S. Government Money Common
Stock, 100 million shares are classified as Class Janney N.Y. Municipal Money
Common Stock, 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 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 MM, NN, OO and PP
Common Stock constitute the BEA Advisor 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 Cash Preservation Family, the Sansom
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Street Family, the Bedford Family, the Bradford Family, the BEA Family, the
Janney Montgomery Scott Money Family, the n/i 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 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 n/i Family represents interests in three 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 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.
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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 and PFPC. 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. No financial statements appear in this Statement of Additional
Information because, as of the date hereof, the Advisor Class had no performance
history.
CONTROL PERSONS. As of July 23, 1996, 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 Shares"
above. The Fund does not know whether such persons also beneficially own such
shares.
PORTFOLIO NAME AND ADDRESS PERCENT OWNED
- --------- ---------------- -------------
RBB Money Market Luanne M. Garvey and Robert J. 14.6
Portfolio Garvey
(Class E) 2729 Woodland Avenue
Trooper, PA 19403
Harold T. Erfer 12.8
414 Charles Lane
Wynnewood, PA 19096
Karen M. McElhinny and 16.6
Contribution Account
4943 King Arthur Drive
Erie, PA 16506
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PORTFOLIO NAME AND ADDRESS PERCENT OWNED
- --------- ---------------- -------------
John Robert Estrada and 15.9
Shirley Ann Estrada
1700 Raton Drive
Arlington, TX 76018
Eric Levine and Linda & Howard 29.1
Levine
67 Lanes Pond Road
Howell, NJ 07731
RBB Municipal Money William B. Pettus Trust 23.7
Market Portfolio Augustine W. Pettus Trust
(Class F) 827 Winding Path Lane
St. Louis, MO 63021-6635
Seymour Fein 76.3
P.O. Box 486
Tremont Post Office
Bronx, NY 10457-0486
Cash Preservation Money Jewish Family and Children's 55.4
Market Portfolio Agency of Philadelphia
(Class G) Capital Campaign
Attn: S. Ramm
1610 Spruce Street
Philadelphia, PA 19103
Lynda R. Succ Trustee for in 12.1
Trust under The Lynda R. Campbell
Caring Trust
935 Rutger Street
St. Louis, MO 63104
Theresa M. Palmer 7.6
5731 N. 4th Street
Philadelphia, PA 19120
Cash Preservation Kenneth Farwell and Valerie 10.5
Municipal Money Market Farwell Jt. Ten
Portfolio 3854 Sullivan
(Class H) St. Louis, MO 63107
Larnie Johnson and Mary Alice 17.1
Johnson
4927 Lee Avenue
St. Louis, MO 63115-1726
Andrew Diederich and Doris 5.8
Diederich
1003 Lindenman
Des Peres, MO 63131
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PORTFOLIO NAME AND ADDRESS PERCENT OWNED
- --------- ---------------- -------------
Marcella L. Haugh Caring Tr Dtd 7.3
8/12/91
40 Plaza Square
Apt. 202
St. Louis, MO 63101
Emil Hunter and Mary J. Hunter 7.1
428 W. Jefferson
Kirkwood, MO 63122
Ralph R. Moreno Caring Trust 5.2
418 N. Concord Street
Los Angeles, CA 90063
Sansom Street Money Wasner & Co. 19.1
Market Portfolio FAO Paine Webber and Managed
(Class I) Assets Sundry Holdings
Attn: Joe Domizio
200 Stevens Drive
Lester, PA 19113
Saxon and Co. 75.1
FBO Paine Webber
P.O. Box 7780 1888
Philadelphia, PA 19182
Robertson Stephens & Co. 5.8
FBO Exclusive Benefit Investors
c/o Eric Moore
555 California Street/No. 2600
San Francisco, CA 94101
Bradford Municipal J.C. Bradford & Co. 100
Money (Class R) 330 Commerce Street
Nashville, TN 37201
Bradford Government J.C. Bradford & Co. 100
Obligations Money 330 Commerce Street
(Class S) Nashville, TN 37201
BEA International Blue Cross & Blue Shield of 5.1
Equity Massachusetts Inc.
(Class T) Retirement Income Trust
100 Summmer Street
Boston, MA 02310
BEA High Yield Temple Inland Master Retirement 10.9
Portfolio Trust
(Class U) 303 South Temple Drive
Diboll, TX 75941
Guenter Full Trst Michelin North 17.8
America Inc.
Master Trust
P. O. Box 19001
Greenville, SC 29602-9001
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PORTFOLIO NAME AND ADDRESS PERCENT OWNED
- --------- ---------------- -------------
Flour Corporation Master 10.0
Retirement Trust
2383 Michelson Drive
Irvine, CA 92730
C S First Boston Pension Fund 10.6
Park Avenue Plaza, 34th Floor
55 E. 52nd Street
New York, NY 10055
Attn: Steve Medici
SC Johnson & Son, Inc. Retirement 14.4
Plan
1525 Howe Street
Racine, WI 53403
BEA Emerging Markets Wachovia Bank North Carolina 13.9
Equity Portfolio Trust for Carolina Power & Light
(Class V) Co. Supplemental Retirement Trust
301 N. Main Street
Winston-Salem, NC 27101
Northern Trust Company Trustee 19.1
for Texas Instruments Employee
Plan
P.O. Box 92956
Chicago, IL 60675-2956
Hall Family Foundation 19.2
P.O. Box 419580
Kansas City, MO 64208
Arkansas Public Emploees 9.7
Retirement System
124 W. Capitol Avenue
Little Rock, AR 72201
Northern Trust 11.5
Trustee for Pillsbury
P.O. Box 92956
Chicago, IL 60675
Amherst H. Wilder Foundation 5.3
919 Lafond Avenue
St. Paul, MN 55104
BEA US Core Equity Bank of New York 44.5
Portfolio Trust APU Buckeye Pipeline
(Class X) One Wall Street
New York, NY 10286
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PORTFOLIO NAME AND ADDRESS PERCENT OWNED
- --------- ---------------- -------------
Werner & Pfleiderer Pension 7.6
Plan Employees
663 E. Crescent Avenue
Ramsey, NJ 07446
Washington Hebrew Congregation 7.6
3935 Macomb St. NW
Washington, DC 20016
BEA US Core Fixed New England UFCW & Employers' 20.5
Income Portfolio Pension Fund Board of Trustees
(Class Y) 161 Forbes Road, Suite 201
Braintree, MA 02184
Bankers Trust 16.3
Trust Pechniney Corp. Pension
Master Trust
34 Exchange Place, 4th Floor
Jersey City, NJ 07302
Patterson & Co. 7.4
P.O. Box 7829
Philadelphia, PA 19102
MAC & Co 5.7
FAO 176-655
ROBF1766552
Mutual Funds Operations
P. O. Box 3198
Pittsburgh, PA 15230-3198
Bank of New York 7.4
Trst Fenway Partners Master Trust
One Wall Street, 12th floor
New York, NY 10286
Citibank NA 11.2
Trst CS First Boston Corp Emp S/P
Attn: Sheila Adams
111 Wall Street, 20th floor Z 1
New York, NY 10043
BEA Global Fixed Income Sunkist Master Trust 35.9
Portfolio (Class Z) 14130 Riverside Drive
Sherman Oaks, CA 91423
Patterson & Co. 25.7
P. O. Box 7829
Philadelphia, PA 19101
63
<PAGE>
PORTFOLIO NAME AND ADDRESS PERCENT OWNED
- --------- ---------------- -------------
Key Trust Co. of Ohio 20.8
FBO Eastern Enterp. Collective
Inv. Trust
P.O. Box 901536
Cleveland, OH 44202-1559
Mary E. Morten 6.2
C/O Credit Suisse New York
12 E. 49th Street, 40th Floor
New York, NY 10017
Attn: Portfolio Management
BEA Municipal Bond Fund William A. Marquard 36.2
Portfolio 2199 Maysville Rd.
(Class AA) Carlisle, KY 40311
Arnold Leon 12.1
c/o Fiduciary Trust Company
P.O. Box 3199
Church Street Station
New York, NY 10008
Irwin Bard 8.5
1750 North East 183rd St. North
Miami Beach, FL 33160
Matthew M. Sloves and Diane 5.5
Decker Sloves
Tenants in Common
1304 Stagecoach Road, S.E.
Albuquerque, NM 87123
n/i Micro Cap Fund Charles Schwab & Co. Inc. 13.4
(Class FF) Special Custody Account for the
Exclusive Benefit of Customers
Attn: Mutual Funds
101 Montgomery Street
San Francisco, CA 94101
Chase Manhattan Bank 45.3
Trst Collins Group Trust
940 Newport Center Drive
Newport Beach, CA 92660
Currie & Co. 9.3
c/o Fiduciary Trust Co. Intl
P. O. Box 3199
Church Street Station
New York, NY 10008
64
<PAGE>
PORTFOLIO NAME AND ADDRESS PERCENT OWNED
- --------- ---------------- -------------
n/i Growth Fund
(Class GG) Charles Schwab & Co. Inc. 17.7
Special Custody Account for the
Exclusive Benefit of Customers
Attn: Mutual Funds
101 Montgomery Street
San Francisco, CA 94101
U S Equity Investment Portfolio 30.9
LP
c/o Asset Management Advisors
Inc.
1001 N. US Hwy
Suite 800
Jupiter, FL 33447
Currie & Co. 5.4
c/o Fiduciary Trust Co. Intl
P. O. Box 3199
Church Street Station
New York, NY 10008
Bank of New York 17.8
Trst Sunkist Growers Inc.
14130 Riverside Drive
Sherman Oaks, CA 91423-2392
n/i Growth and Value Charles Schwab & Co. Inc. 43.6
Fund (Class HH) Special Custody Account for the
Exclusive Benefit of Customers
Attn: Mutual Funds
101 Montgomery Street
San Francisco, CA 94104
Janney Montgomery Scott Janney Montgomery Scott 100
Money Market Portfolio 1801 Market Street
(Class Janney Money Philadelphia, PA 19103-1675
Market)
Janney Montgomery Scott Janney Montgomery Scott 100
Municipal Money Market 1801 Market Street
Portfolio Philadelphia, PA 19103-1675
(Class Janney Municipal
Money Market)
Janney Montgomery Scott Janney Montgomery Scott 100
Government Obligations 1801 Market Street
Money Market Portfolio Philadelphia, PA 19103-1675
(Class Janney
Government Obligations
Money)
65
<PAGE>
PORTFOLIO NAME AND ADDRESS PERCENT OWNED
- --------- ---------------- -------------
Janney Montgomery Scott Janney Montgomery Scott 100
New York Municipal 1801 Market Street
Money Market Portfolio Philadelphia, PA 19103-1675
(Class Janney N.Y.
Municipal Money)
As of the above date, directors and officers as a group owned less than
one percent of the shares of RBB.
LITIGATION. There is currently no material litigation affecting RBB.
FINANCIAL STATEMENTS. No financial statements are supplied because, as
of the date of the Prospectus and this Statement of Additional Information, the
Funds had no operating history.
66
<PAGE>
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.
A-1
<PAGE>
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>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
THE BEA FAMILY OF MUTUAL FUNDS
Investor Class
BEA International Equity Portfolio
BEA Emerging Markets Equity Portfolio
BEA Global Telecommunications Portfolio
BEA High Yield Portfolio
___________
PROSPECTUS
___________
________ ___, 1996
A REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION BUT HAS NOT YET BECOME EFFECTIVE. THESE
SECURITIES MAY NOT BE SOLD NOR MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME
THE REGISTRATION STATEMENT BECOMES EFFECTIVE. THIS (COMMUNICATION) SHALL NOT
CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY NOR SHALL
THERE BE ANY SALE OF THESE SECURITIES IN ANY STATE IN WHICH SUCH OFFER,
SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION
UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
<PAGE>
TABLE OF CONTENTS
ANNUAL PORTFOLIO OPERATING EXPENSES...................................... 3
INVESTMENT OBJECTIVES AND POLICIES....................................... 4
INVESTMENT LIMITATIONS................................................... 8
RISK FACTORS............................................................. 9
MANAGEMENT............................................................... 10
EXPENSES................................................................. 13
HOW TO PURCHASE SHARES................................................... 14
HOW TO REDEEM SHARES..................................................... 15
NET ASSET VALUE.......................................................... 17
DIVIDENDS AND DISTRIBUTIONS.............................................. 18
TAXES.................................................................... 18
SHAREHOLDER SERVICING.................................................... 20
MULTI-CLASS STRUCTURE.................................................... 20
DESCRIPTION OF SHARES.................................................... 21
OTHER INFORMATION........................................................ 22
<PAGE>
BEA FAMILY OF MUTUAL FUNDS
INVESTOR CLASS
The Investor Classes of the BEA Family consist of four classes of common
stock of The RBB Fund, Inc. (the "Fund"), an open-end management investment
company. Shares (collectively, the "Investor Shares" or "Shares") of such
classes (the "Investor Classes" or "Classes") are offered by this Prospectus and
represent interests in one of four 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 GLOBAL TELECOMMUNICATIONS PORTFOLIO - to provide long-term appreciation
of capital. The Portfolio will invest primarily in equity securities of
telecommunications companies, both foreign and domestic.
BEA HIGH YIELD PORTFOLIO - to provide a high total return. The Portfolio
will invest primarily in high yield fixed income securities (also known as "junk
bonds") issued by corporations, governments and agencies, both domestic and
foreign. The Portfolio will invest without regard to maturity or credit quality
limitations.
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 HIGH YIELD PORTFOLIO 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 THIS PORTFOLIO. SEE "RISK FACTORS."
THE INVESTOR SHARES OF THE PORTFOLIOS ARE SOLD UNDER THE NAME "BEA
INVESTOR PORTFOLIOS." THE INVESTOR SHARES MAY NOT BE PURCHASED BY INDIVIDUALS
DIRECTLY FROM THE FUND'S DISTRIBUTOR, BUT OTHER BROKER-DEALERS, FINANCIAL
INSTITUTIONS, DEPOSITORY INSTITUTIONS, RETIREMENT PLANS AND OTHER FINANCIAL
INTERMEDIARIES ("INSTITUTIONS") MAY PURCHASE INVESTOR SHARES FOR INDIVIDUALS.
THE INVESTOR SHARES IMPOSE A 12b-1 FEE OF UP TO .50% PER ANNUM, WHICH IS THE
ECONOMIC EQUIVALENT OF A SALES CHARGE.
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 September 30, 1996, acted as adviser for
approximately $____ billion of assets.
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 ________
<PAGE>
___, 1996, 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) ___-____.
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 ________ ___, 1996
2
<PAGE>
ANNUAL PORTFOLIO OPERATING EXPENSES
BEA BEA U.S.
BEA Emerging Global
International Markets Telecommuni- BEA
Equity Equity cations High Yield
Portfolio Portfolio Portfolio Portfolio
--------- --------- --------- ---------
Management Fees*.. .80% 1.00% 1.00% .70%
12b-1 Fees........ .50% .50% .50% .50%
Other Expenses.... . % . % . % . %
---- ---- ---- ----
Total Portfolio
Operating Expenses ____% ____% ____% ____%
___________
* Management fees are each based on average daily net assets and are
calculated daily and paid monthly.
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.
One Three Five Ten
Year Years Years Years
---- ----- ----- -----
BEA International Equity Portfolio........ $__ $__ $___ $___
BEA Emerging Markets Equity Portfolio..... $__ $__ $___ $___
BEA Global Telecommunications Portfolio... $__ $__ N/A N/A
BEA High Yield Portfolio.................. $__ $__ $___ $___
__________
The Example in the Fee Table assumes that all dividends and distributions
are reinvested and that the amounts listed under "Annual Portfolio Operating
Expenses" 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. The expense figures are restated from fees and costs of
the Institutional Classes of the Portfolios as of August 31, 1996, except for
BEA Global Telecommunications Portfolio, which is based on estimated expenses
for the current fiscal year. Actual expenses may be greater or less than such
costs and fees.
3
<PAGE>
FINANCIAL HIGHLIGHTS
Financial highlights are not available for the Investor Classes of the
Portfolios because, as of the date of this prospectus, such classes had no
operating history.
THE FUND
The Fund is an open-end management investment company that currently
operates or proposes to operate eighteen separate investment portfolios. Each of
the four Classes of Shares offered by this Prospectus represents interests in
one of the four 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 advisory or other similar capacity, which may include the
investment of funds held or managed by broker-dealers, investment counselors and
financial planners. Investment professionals 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.
4
<PAGE>
The Portfolio may invest up to 20% of its total assets in debt securities
issued by U.S. or foreign governments or corporations, although it does not
currently intend to invest more than 5% of its net assets in debt securities.
The Portfolio has no limitation on the maturity or the credit quality of the
debt securities in which it invests, which may include lower-quality, high
yielding securities, commonly known as "junk bonds." See "Risk Factors --
Lower-Rated Securities."
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 government or corporate
debt securities of Emerging Market or developed countries, although the
Portfolio does not presently intend to invest more than 5% of its net assets in
debt securities. Debt securities may include lower-rated debt securities
(commonly known as "junk bonds"). See "Risk Factors -- Lower-Rated Securities."
BEA GLOBAL TELECOMMUNICATIONS PORTFOLIO
The BEA Global Telecommunications Portfolio's investment objective is long
term capital appreciation. The Portfolio seeks to achieve its objective by
investing primarily in equity securities of telecommunications companies, both
foreign and domestic. It is the policy of the Portfolio under normal market
conditions to invest not less than 65% of its total assets in equity securities
(including common and preferred stocks, and convertible securities and warrants
to acquire such equity
5
<PAGE>
securities) of telecommunications companies. As a Portfolio investing in global
markets, at least 65% of the Portfolio's investments will be made in at least
three different countries. The Portfolio considers telecommunications companies
to be those which are engaged primarily in designing, developing, operating,
financing, manufacturing or providing the following activities, products and
services: communications equipment and services (including equipment and
services for both data and voice transmission); electronic components and
equipment; broadcast (including television and radio, satellite, microwave and
cable television and narrow casting); computer equipment, mobile communications
and cellular radio and paging; electronic mail; local and wide area networking
and linkage of word and data processing systems; publishing and information
systems; video and telex; and emerging technologies combining telephone,
television and/or computer systems (collective "telecommunication activity"). A
"telecommunications" company is an entity in which (i) at least 50% of either
its revenue or earnings was derived from telecommunications activity, or (ii) at
least 50% of its assets was devoted to telecommunications activity based on the
company's most recent fiscal year. The remainder of the assets of the BEA
Global Telecommunications Portfolio may be invested in non-equity securities or
securities issued by companies that are not primarily engaged in
telecommunications activities.
Because the Portfolio will concentrate its investments in the
telecommunications industry, its investments may be subject to greater risk and
market fluctuation than a fund that has securities representing a broader range
of investment alternatives. The telecommunications industry is subject to
extensive governmental regulation, which could adversely affect the Portfolio's
performance. The nature and scope of such regulation generally is subject to
political forces and market considerations, the effect of which cannot be
predicted. Telecommunications companies in both developed and emerging
countries are undergoing significant change due to varying and evolving levels
of governmental regulation or deregulation and other factors. As a result,
competitive pressures are intense and the securities of such companies may be
subject to rapid price volatility. Telecommunications regulation typically
limits rates charged, returns earned, providers of services, types of services,
ownership, areas served and terms for dealing with competitors and customers.
Telecommunications regulation generally has tended to be less stringent for
newer services than for traditional telephone service, although there can be no
assurances that such newer services will not be heavily regulated in the future.
Regulation may also limit the use of new technologies and hamper efficient
deprecation of existing assets. If regulation limits the use of new
technologies by established carriers or forces cross-subsidies, large private
networks may emerge. Service providers may also be subject to regulations
regarding ownership and control, providers of services, subscription rates and
technical standards.
Companies offering telephone services are experiencing increasing
competition from cellular telephones, and the cellular telephone industry,
because it has a limited operating history, faces uncertainty concerning the
future of the industry and demand for cellular telephones. All
telecommunications companies in both developed and emerging countries are
subject to the additional risk that technological innovations will make their
products and services obsolete. While telephone companies in developed
countries and certain emerging countries may pay an above average dividend, the
Portfolio's investment decisions are based upon capital appreciation potential
rather than income considerations.
6
<PAGE>
BEA HIGH YIELD PORTFOLIO
BEA High Yield Portfolio seeks to provide high total return. The Portfolio
will invest primarily in high yield fixed income securities (commonly known as
"junk bonds") 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 such high yield 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 junk bonds (i.e., securities rated below
investment grade by recognized rating agencies or in comparable unrated
securities). See "Risk Factors - Lower-Rated Securities." 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. Also, the value of such securities may
be affected by changes in real or perceived creditworthiness of the issuers.
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.
COMMON INVESTMENT POLICIES
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 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 cash or certain short-term (less than
twelve months to maturity) and medium-term (not greater than five years to
maturity) interest-bearing instruments or deposits of United States and foreign
issuers. 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. See Statement of Additional Information, "Common Investment Policies
- -- Temporary Investments." To the extent permitted by their investment
objectives and policies, the Portfolios may hold cash or cash equivalents
pending investment.
BORROWING. A Portfolio may borrow up to 33 1/3 percent of its total
assets without obtaining shareholder approval. The Adviser intends to borrow, or
to engage in reverse repurchase agreements or dollar roll transactions, only for
temporary or emergency purposes. See Statement of Additional Information,
"Common Investment Policies -- Reverse Repurchase Agreements" and
"-- Borrowing."
RULE 144A SECURITIES. Rule 144A securities are securities which are
restricted as to resale to the general public, but which may be resold to
qualified institutional buyers. Each Portfolio may invest in Rule 144A
securities that BEA has determined are liquid pursuant to guidelines established
by the Fund's Board of Directors.
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INVESTMENT COMPANIES. Each Portfolio may invest in securities issued by
other investment companies within the limit prescribed by the 1940 Act. 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. The BEA
International, Emerging Markets Equity and Global Telecommunications Portfolios
anticipate that their annual portfolio turnover rate should not exceed 100%
under normal conditions. However, it is impossible to predict portfolio
turnover rates. The portfolio turnover rate for BEA High Yield Portfolio is
anticipated to exceed 100%. The anticipated portfolio turnover rate for BEA
High Yield 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."
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 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. These 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.
The Statement of Additional Information contains additional investment
policies and strategies that are common to the Portfolios.
INVESTMENT LIMITATIONS
Each Portfolio is subject to the following fundamental investment
limitation, 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. A complete list of the Portfolios' fundamental investment limitations
is set forth in the Statement of Additional Information under "Investment
Limitations." Each Portfolio may not:
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
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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.
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 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.
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.
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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.
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 CS Advisors Corp., a New York Corporation
which is a wholly-owned subsidiary of CS Capital, 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
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Suisse, the largest Swiss bank, which in turn is a subsidiary of CS Holding, a
Swiss corporation. 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 September 30, 1996, BEA
managed approximately $____ billion in assets. As an investment adviser, BEA
emphasizes a global investment strategy. BEA currently acts as investment
adviser for thirteen investment companies registered under the Investment
Company Act, and as sub-adviser to certain portfolios of six other registered
investment companies. BEA also acts as investment adviser for forty-two
offshore funds, twenty-two of which are equity funds and twenty of which are
debt funds.
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 Portfolios' 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, BEA
Emerging Markets Equity and BEA Global Telecommunications Portfolios is the
responsibility of the BEA International Equities Management Team. The Team
consists of the following investment professionals: Emilio Bassini (Executive
Director), Stephen M. Swift (Managing Director), Steven D. Bleiberg (Senior Vice
President), Richard Watt (Senior Vice President), William P. Sterling (Managing
Director), Ian Borsook (Vice President), and Stephen R. Waite (Vice President).
Mr. Bassini and Mr. Bleiberg have, on an individual basis, been engaged as
investment professionals with BEA for more than five years. 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 Gartmore 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 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 High Yield 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 Lindquist (Managing Director), Misia
Dudley (Senior Vice President), Mark Silverstein (Senior Vice President), Robert
Justich (Senior Vice President), Marianne Rossi (Vice President), William P.
Sterling (Managing Director), Ian Borsook (Vice President), and Stephen R. Waite
(Vice President). Messrs. Moore, Diliberto and Silverstein have, on an
individual basis, been engaged as investment
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professionals with BEA for more than five years. Mr. Lindquist, Ms. Dudley 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. Prior to joining CS
First Boston, Ms. Dudley was with Stockbridge Partners, and prior to that had
spent five years with E.F. Hutton. Mr. Justich joined BEA in 1995, prior to
which he worked at Merrill Lynch and as a Manager of Financial Services with
Arthur Young & Company.
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:
Portfolio Annual Rate
--------- -----------
BEA International Equity............ .80% of the average daily net assets*
BEA Emerging Markets Equity......... 1.00% of the average daily net assets*
BEA Global Telecommunications....... 1.00% of the average daily net assets*
BEA High Yield...................... .70% of the average daily net assets
___________
* This fee is higher than that paid by most investment companies, although
the fees are within the range of fees of investment companies with similar
investment objectives.
For the period ended August 31, 1996, the Fund paid BEA investment
advisory fees, on annualized basis, with respect to the BEA International
Equity, BEA Emerging Markets Equity and BEA High Yield 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. BEA may, at its discretion, from time to time
agree to waive voluntarily all or any portion of its advisory fee for any
Portfolio.
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.
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.
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ADMINISTRATORS
PFPC Inc. ("PFPC"), an indirect, wholly-owned subsidiary of PNC Bank
Corp., serves as administrator 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
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. The Fund employs BEA as co-administrator. As
co-administrator, BEA provides shareholder liaison services to the Fund,
including responding to shareholder inquiries and providing information on
shareholder account. As compensation, the Fund pays to BEA a fee calculated
at an annual rate of .05% of each Portfolios average daily net assets.
DISTRIBUTOR
Counsellors Securities Inc. ("Counsellors Securities"), serves as the
Fund's distributor. Counsellors Securities is located at 466 Lexington Avenue,
New York, New York 10017-3147. Counsellors Securities receives a fee at an
annual rate equal to .50% of the Portfolio's average daily net assets for
distribution services, pursuant to a distribution agreement between Counsellor's
Securities and the Fund in accordance with a distribution plan (the "12b-1
Plan") adopted by the Fund pursuant to Rule 12b-1 under the 1940 Act. Amounts
paid to Counsellors Securities under the Fund's 12b-1 Plan may be used by
Counsellors Securities to cover expenses that are related to (i) the sale of
Investor Shares of the Portfolios, (ii) ongoing servicing and/or maintenance of
the accounts of shareholders of the Portfolio, and (iii) sub-transfer agency
services, subaccounting services or administrative services related to the sale
of the Investor Shares of the Portfolios, all as set forth in the Fund's 12b-1
Plan. Payments under the 12b-1 Plan are not tied exclusively to the
distribution expenses actually incurred. Counsellors Securities may delegate
some or all of these functions to a Service Organization. See "Shareholder
Servicing." The Fund's Board of Directors will evaluate the appropriateness of
the 12b-1 Plan on a continuing basis and in doing so will consider all relevant
factors, including expenses borne by Counsellors Securities and amounts received
under the 12b-1 Plan.
TRANSFER AGENT
Boston Financial Data Services, Inc. ("BFDS") serves as Transfer
Agent for the Portfolios. BFDS's address is Two Heritage Drive, Quincy, MA,
02171.
CUSTODIAN
Brown Brothers Harriman & Co. serves as custodian for the 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, distributor,
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administrator and co-administrator 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, 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.
HOW TO PURCHASE SHARES
GENERAL
BEA Investor Shares are only available for investment through investment
professionals, financial institutions on behalf of their customers, retirement
plans that elect to make one or more Portfolios an option for participants in
the plans and other financial intermediaries. Individuals, including
participants in retirement plans, cannot invest directly in Investor Shares of
the Portfolios, but may do so only through a participating Institution. The
Fund reserves the right to make Investor Shares available to other investors in
the future. References in this Prospectus to shareholders or investors are
generally to Institutions as the record holders of the Investor Shares.
Each Institution separately determines the rules applicable to its
customers investing in the Fund, including minimum initial and subsequent
investment requirements and the procedures to be followed to effect purchases,
redemptions and exchanges of Investor Shares. There is no minimum amount of
initial or subsequent purchases of Investor Shares imposed on Institutions,
although the Fund reserves the right to impose minimums in the future.
Orders for the purchase of Investor Shares are placed with an Institution
by its customers. The Institution is responsible for the prompt transmission of
the order to the Fund.
Institutions may purchase Investor Shares by telephoning BEA Investor
Portfolios and sending payment by wire. After telephoning (800)___-____ for
instructions, an Institution should then wire federal funds to Counsellors
Securities Inc. using the following wire address:
Orders by wire will not be accepted until a completed account application
has been received in proper form, and an account number has been established.
If a telephone order is received by the close of regular trading on the New York
Stock Exchange (the "NYSE") (currently 4:00 p.m., Eastern time) AND payment by
wire is received on the same day in proper form in accordance with instructions
set forth above, the shares will be priced according to the net asset value of
the Fund on
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that day and are entitled to dividends and distributions beginning on that day.
If payment by wire is received in proper form by the close of the NYSE without a
prior telephone order, the purchase will be priced according to the net asset
value of the Fund on that day and is entitled to dividends and distributions
beginning on that day. However, if a wire received in proper form is not
preceded by a telephone order AND is received after the close of regular
trading on the NYSE, the payment will be held uninvested until the order is
effected at the close of business on the next day that the Fund calculates its
net asset value (a "business day"). Payment for orders that are not accepted
will be returned to the institution after prompt inquiry. Certain organizations
that have entered into agreements with the Fund or its agent may enter confirmed
purchase orders on behalf of customers, with payment to follow no later than the
Fund's pricing on the following business day. If payment is not received by
such time, the organization could be held liable for resulting losses or fees
incurred.
After an investor has made his initial investment, additional shares may
be purchased at any time in the manner outlined above. Payments for initial and
subsequent investments should be preceded by an order placed with the Fund or
its agent and should clearly indicate the investor's account number. In the
interest of economy and convenience, physical certificates representing shares
in the Fund are not normally issued.
The Fund understands that some broker-dealers (other than Counsellors
Securities), financial institutions, securities dealers and other industry
professionals may impose certain conditions on their clients that invest in the
Fund, which are in addition to or different than those described in this
Prospectus, and, to the extent permitted by applicable regulatory authority, may
charge their clients direct fees. Certain features of the Fund may be modified
in these programs and administrative charges may be imposed for the services
rendered. Therefore, a client or customer should contact the organization
acting on his behalf concerning the fees (if any) charged in connection with a
purchase or redemption of Fund shares and should read this Prospectus in light
of the terms governing his accounts with the organization.
HOW TO REDEEM SHARES
GENERAL
An investor may redeem (sell) shares on any day that the Fund's net asset
value is calculated (see "Net Asset Value" below). Requests for the redemption
(or exchange) of Investor Shares are placed with an Institution by its
customers. The Institution is responsible for the prompt transmission of its
customers' requests to the Fund or its agent.
Institutions may redeem Investor Shares by calling BEA Investor Funds at
(800) __________ between 9:00 a.m. and 4:00 p.m. (Eastern time) on any Business
Day. An investor making a telephone withdrawal should state (i) the name of the
Portfolio, (ii) the account number of the Portfolio, (iii) the name of the
investor appearing on the Portfolio's records, (iv) the amount to be withdrawn
and (v) the name of the person requesting the redemption.
After receipt of the redemption request, the redemption proceeds will be
wired to the investor's bank as indicated in the account application previously
filled out by the investor. The Fund does not currently impose a service charge
for effecting wire transfers but the Fund reserves the right to do so in the
future. During periods of significant economic or market change, telephone
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<PAGE>
redemptions may be difficult to implement. If an investor is unable to contact
BEA Investor Portfolios by telephone, an investor may deliver the redemption
request to BEA Investor Portfolios by mail at ____________________.
If a redemption order is received prior to the close of regular trading on
the NYSE, the redemption order will be effected at the net asset value per share
as determined on that day. If a redemption order is received after the close of
regular trading on the NYSE, the redemption order will be effected at the net
asset value as next determined. Redemption proceeds will normally be wired to
an investor on the next business day following the date a redemption order is
effected. If, however, in the judgment of BEA, immediate payment would
adversely affect the Fund, the Fund reserves the right to pay the redemption
proceeds within seven days after the redemption order is effected. Furthermore,
the Fund may suspend the right of redemption or postpone the date of payment
upon redemption (as well as suspend or postpone the recordation of an exchange
of shares) for such periods as are permitted under the 1940 Act.
The proceeds paid upon redemption may be more or less than the amount
invested depending upon a share's net asset value at the time of redemption. If
an investor redeems all the shares in his account, all dividends and
distributions declared up to and including the date of redemption are paid along
with the proceeds of the redemption. If 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.
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 at any time the net asset value of the account in such Portfolio
falls below $500 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
$500 and will be allowed 30 days to make additional investments before the
redemption is processed.
EXCHANGE PRIVILEGE
An Institution may exchange Investor Shares of a Portfolio for Investor
Shares of any other BEA Investor Portfolio at their respective net asset values.
Exchanges may be effected in the manner described under "Redemption of Shares"
above. If an exchange request is received by BEA Investor Portfolios prior to
4:00 p.m. (Eastern time), the exchange will be made at each Portfolio's net
asset
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value determined on the same business day. The exchange privilege may be
modified or terminated at any time upon 60 days' notice to shareholders.
The exchange privilege is available to shareholders residing in any state
in which the Investor Shares being acquired may legally be sold. When an
investor effects an exchange of shares, the exchange is treated for federal
income tax purposes as a redemption. Therefore, the investor may realize a
taxable gain or loss in connection with the exchange. For further information
regarding the exchange privilege, an investor should contact BEA Investor
Portfolios at (800) __________. No exchange fee is currently imposed on
exchanges, although the Fund reserves the right to impose a $5.00 administrative
fee for each 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. 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 BFDS. This form is available from
BFDS. Once this election has been made, the shareholder may simply contact BFDS
by telephone to request the exchange (800)___-____. 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 BFDS 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.
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. 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.
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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 Global
Telecommunications Portfolios annually. The Fund will distribute net investment
income for the BEA High Yield Portfolio 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 BFDS 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
generally 39.6%. However, the maximum rate 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.
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
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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.
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.
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
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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.
SHAREHOLDER SERVICING
The Fund is authorized to offer Investor Shares exclusively to
Institutions whose clients, customers or participants in retirement plans
("Customers") are beneficial owners of Investor Shares. Either those
Institutions or companies providing certain services to them (together, "Service
Organizations") may enter into service agreements ("Agreements") related to the
sale of the Investor Shares with Counsellors Securities pursuant to a
Distribution Plan, as described below. Pursuant to the terms of an Agreement,
the Service Organization agrees to perform certain distribution, shareholder
servicing, administrative and accounting services for its Customers.
Distribution services would be marketing or other services in connection with
the promotion and sale of Investor Shares. Shareholder services that may be
provided include responding to Customer inquiries, providing information on
Customer investments and providing other shareholder liaison services.
Administrative and accounting services related to the sale of the Investor
Shares may include (i) aggregating and processing purchase and redemption
requests from Customers and placing net purchase and redemption orders with the
Fund's transfer agent, (ii) processing dividend payments from the Fund on behalf
of Customers and (iii) providing sub-accounting relating to the sale of Investor
Shares beneficially owned by Customers or the information to the Fund necessary
for subaccounting. The Board of Directors of the Fund has approved a
Distribution Plan (the "Plan") pursuant to Rule 12b-1 under the 1940 Act under
which Counsellors Securities may pay each participating Service Organization a
negotiated fee on an annual basis not to exceed .75% of the value of the average
daily net assets of its Customers invested in the Investor Shares. However,
under the current Distribution Agreement between Counsellors Securities and the
Fund on behalf of the Portfolios, this fee shall not exceed .50% of average
daily net assets of Customers. The Fund may, in the future, enter into
additional Agreements with Service Organizations. The Board of Directors of RBB
will evaluate the appropriateness of the Plan on a continuing basis.
MULTI-CLASS STRUCTURE
The Fund offers other classes of shares of the Portfolios which are
offered directly to institutional investors and financial planners pursuant to
separate prospectuses. Shares of each class represent equal pro rata interests
in the Portfolios and accrue dividends and calculate net asset value and
performance quotations in the same manner. The Fund quotes performance of the
Institutional and Advisor Shares separately from Investor Shares. Because of
different fees paid by the Investor Shares, the total return on such shares can
be expected, at any time, to be different than the total return on Institutional
and Advisor Shares. Information concerning these other classes may be obtained
by calling [BEA/Counsellors Securities/BFDS] at 1-800-___-____.
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DESCRIPTION OF SHARES
The Fund has authorized capital of thirty billion shares of Common Stock,
$.001 par value per share, of which 12.35 billion shares are currently
classified into 67 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 INVESTOR CLASSES REPRESENTING AN INTEREST IN
THE BEA INTERNATIONAL EQUITY, BEA EMERGING MARKETS EQUITY, BEA GLOBAL
TELECOMMUNICATIONS AND BEA HIGH YIELD 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 four Portfolios; there is a
possibility that one Portfolio might become liable for any 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 July 23, 1996, 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.
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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
BFDS, the Fund's transfer agent.
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.
From time to time, the BEA High Yield Portfolio may also advertise its
"30-day yield." The yield refers to the income generated by an investment in the
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 the 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 Institutions
directly to their customers in connection with investments in the Portfolio are
not reflected in the yields on the Portfolio's Shares, and such fees, if
charged, will reduce the actual return received by shareholders on their
investments.
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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.
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THE BEA FAMILY OF MUTUAL FUNDS
INVESTOR CLASS
BEA INTERNATIONAL EQUITY PORTFOLIO
BEA EMERGING MARKETS EQUITY PORTFOLIO
BEA GLOBAL TELECOMMUNICATIONS PORTFOLIO
BEA HIGH YIELD PORTFOLIO
(INVESTMENT PORTFOLIOS OF THE RBB FUND, INC.)
STATEMENT OF ADDITIONAL INFORMATION
This Statement of Additional Information provides supplementary
information pertaining to shares of four classes (the "Investor Shares" or the
"Shares") representing interests in four investment portfolios (the
"Portfolios") of The RBB Fund, Inc. (the "Fund"): BEA International Equity
Portfolio, BEA Emerging Markets Equity Portfolio, BEA Global Telecommunications
Portfolio and BEA High Yield Portfolio (collectively, the "Portfolios"). This
Statement of Additional Information is not a prospectus, and should be read only
in conjunction with the Prospectus of the Fund relating to the Portfolios, dated
________ __, 1996 (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 ________ __, 1996.
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.
A REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION BUT HAS NOT YET BECOME EFFECTIVE. THESE
SECURITIES MAY NOT BE SOLD NOR MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME
THE REGISTRATION STATEMENT BECOMES EFFECTIVE. THIS STATEMENT OF ADDITIONAL
INFORMATION SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN
OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES IN ANY STATE IN
WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO THE
REGISTRATION OR QUALIFICATION OF THE SECURITIES LAWS OF ANY SUCH STATE.
<PAGE>
CONTENTS
Prospectus
Page Page
---- ----------
General ............................................. 2 8
Common Investment Policies -- All Portfolios ........ 2 8
Supplemental Investment Objectives and Policies --
BEA International Equity, BEA Emerging
Markets Equity and BEA Global Telecommunications
Portfolios......................................... 22 19
Investment Limitations .............................. 22 22
Risk Factors ........................................ 25 23
Directors and Officers .............................. 28 N/A
Investment Advisory and Servicing Arrangements....... 30 26
Portfolio Transactions .............................. 34 29
Purchase and Redemption Information ................. 36 30
Valuation of Shares ................................. 37 32
Performance and Yield Information.................... 38 36
Taxes ............................................... 41 33
Additional Information Concerning Fund Shares........ 50 35
Miscellaneous ....................................... 53 35
Appendix ............................................ A-1 N/A
Financial Statements ................................ N/A N/A
<PAGE>
GENERAL
The RBB Fund, Inc. (the "Fund") is an open-end management investment
company currently operating or proposing to operate eighteen 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.
TEMPORARY INVESTMENTS. The short-term and medium-term debt
securities in which a Portfolio may invest for temporary and defensive purposes
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.
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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. 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. The Adviser will
consider the 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 AND DOLLAR ROLLS. 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 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
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<PAGE>
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, DELAYED DELIVERY TRANSACTIONS AND FORWARD
COMMITMENTS. Each Portfolio may purchase securities on a when-issued basis,
and it may purchase or sell securities for delayed delivery or on a forward
commitment basis. 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 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. When-issued and forward commitment transactions
involve the risk 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. The Portfolio currently anticipates that when-issued
securities will not exceed 25% of its total assets. 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.
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
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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 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. 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 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 considered 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 at fair
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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). 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 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
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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).
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.
LENDING OF PORTFOLIO SECURITIES. 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. 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. 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. 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. 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.
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
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benefit of the lender or arrangements will be made with a suitable subcustodian,
which may include the lender.
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
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
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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. BEA International Equity and BEA Emerging
Markets Equity Portfolios may invest up to 20% of their total assets in
convertible securities, and BEA High Yield and BEA Global Telecommunications
Portfolios 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 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,
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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
assets in mortgage-backed securities and BEA High Yield 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
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certain foreign issuers, as well as by private issuers such as commercial
investment banks, savings and loan institutions, mortgage bankers and private
mortgage insurance companies. 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.
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 the 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. 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
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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. 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 the Portfolios.
Mortgage-related securities provide regular payments consisting of interest and
principal. No assurance can be given as to the return the Portfolios will
receive when these amounts are reinvested.
The rate of interest on mortgage-backed securities is lower than the
interest rates paid on the mortgages included in the underlying pool due to the
annual fees paid to the servicer of the mortgage pool for passing through
monthly payments to certificate holders and to any guarantor, such as GNMA, and
due to any yield retained by the issuer. Actual yield to the holder may vary
from the coupon rate, even if adjustable, if the mortgage-backed securities are
purchased or traded in the secondary market at a premium or discount. In
addition, there is normally some delay between the time the issuer receives
mortgage payments from the servicer and the time the issuer makes the payments
on the mortgage-backed securities, and this delay reduces the effective yield to
the holder of such securities.
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.
These securities may be considered mortgage derivatives. 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.
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 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
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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.
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. The Portfolios may
also invest in other types of asset-backed securities that may be available in
the future. 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. 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
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.
Asset-backed securities present certain risks that are not
presented by other securities in which the Portfolio may invest. Automobile
receivables generally are secured by automobiles. Most issuers of automobile
receivables permit the loan servicers to retain possession of the underlying
obligations. If the servicer were to sell these obligations to another party,
there is a risk that the purchaser would acquire an interest superior to that of
the holders of the asset-backed securities. In addition, because of the large
number of vehicles involved in a typical issuance and technical requirements
under state laws, the trustee for the holders of the automobile
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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.
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
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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 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.
Lower-rated debt securities may include zero coupon securities or
pay-in-kind securities. A zero coupon security bears no interest but is 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
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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" below. 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.
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. 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
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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.
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.
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
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
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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.
OPTIONS AND FUTURES CONTRACTS. The 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
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.
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 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 Portfolios bear the risk that the
broker/dealer will fail to meet its obligations. There is no assurance that the
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 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
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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 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
Portfolios is subject to the Adviser's ability to correctly predict movements in
the direction of the market. For example, if a 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. These instruments and techniques are
discussed in greater detail below.
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
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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 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.
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
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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 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
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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
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. The put thus acts as hedge against a fall in the price of
such securities. However, all other things being equal (including securities
prices) 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. This potential loss represents the cost of the hedge
against a fall in prices. 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
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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 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
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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
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 has filed 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
representation that the Portfolios will not enter into any commodity futures
contract or option on a commodity futures contract if, as a
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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.
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 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.
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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 AND BEA GLOBAL
TELECOMMUNICATIONS 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 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
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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. Except for BEA Global Telecommunications Portfolio, 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.
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
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the making of investments for the purpose of exercising control or
management;
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
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values of portfolio securities or amount of total or net assets will not be
considered a violation of any of the foregoing restrictions.
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.
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RISK FACTORS
FOREIGN SECURITIES. Investments in foreign securities are subject
to certain risks, discussed below.
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 the Portfolios' ability to repatriate investment income, capital or
the proceeds of sales of securities by foreign investors. The Portfolios 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 Portfolios of any restrictions on investments.
REPORTING STANDARDS. Most of the foreign securities held by the Portfolios
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.
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 a Portfolio's 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 a Portfolio. If the value of a foreign currency rises against
the U.S. dollar, the value of a Portfolio's assets denominated
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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.
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 Portfolios may invest in these investment
funds and registered investment companies subject to the provisions of the 1940
Act. If these Portfolios invest in such investment companies, they will each
bear their proportionate share of the costs incurred by such companies,
including investment advisory fees.
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.
LOWER- OR NON-RATED CRITERIA FOR DEBT SECURITIES. The BEA High
Yield Portfolio has 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
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the issuer's inability 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 the Portfolio. If
a call were exercised by the issuer during a period of declining interest rates,
the Portfolio likely would have to replace such called security with a lower
yielding security, thus decreasing the net investment income to the Portfolio
and dividends to shareholders.
The 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 the Portfolio's ability
to dispose of particular issues when necessary to meet the Portfolio's liquidity
needs or in response to a specific economic event such as a deterioration in the
creditworthiness of the issuer.
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, the 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.
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.
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 the 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.
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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
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
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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.
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, ADDRESS AND AGE POSITION WITH FUND DURING PAST FIVE YEARS
Arnold M. Reichman - 48* 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 - 58** 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 - 60 Director Since 1963, Executive
7701 Burholme Avenue Vice President, Fox Chase
Philadelphia, PA 1911 Cancer Center (Biomedical
research and medical care.)
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Marvin E. Sternberg -62 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).
Julian A. Brodsky -63 Director Director, Vice Chairman 1969
Comcast Corporation to present, Comcast
1234 Market Street Corporation (cable television
16th Floor and communications); Director,
Philadelphia, PA 19107-3723 Comcast Cablevision of
Philadelphia (cable television
communications) and Nextel
(wireless communications).
Donald van Roden - 72 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 - 72 President and Certified Public Accountant;
Bellevue Park Treasurer Vice Chairman of the
Corporate Center of the Board, Fox Chase
400 Bellevue Parkway Cancer Center; Vice President
Wilmington, DE 19809 and Trustee, Pennsylvania
School for the Deaf; Trustee,
Immaculata College; Vice
President and Treasurer of
various investment companies
advised by PNC Institutional
Management Corporation.
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Morgan R. Jones - 56 Secretary Chairman of the law firm of
1100 PNB Bank Building Drinker Biddle & Reath,
Broad and Chestnut Streets Philadelphia, Pennsylvania;
Philadelphia, PA 19107 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.
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
Roden) receives an additional $5,000 for his services. For the year ended
August 31, 1996, each of the following members of the Board of Directors
received compensation from the Fund in the following amounts: Julian A. Brodsky
in the aggregate amount of $_____; Francis J. McKay in the aggregate amount of
$______; Marvin E. Sternberg in the aggregate amount of $______; Donald van
Roden 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 the Fund's advisers, custodians, administrators and
distributor, the Fund itself requires only one part-time employee. No officer,
director or employee of BEA or the Distributor currently receives any
compensation from the Fund.
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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 High Yield Portfolios, dated July 10, 1996 for the BEA Global
Telecommunications Portfolio. Such advisory agreements are hereinafter
collectively referred to as the "Advisory Contracts."
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
September 30, 1996, BEA Associates managed approximately $_____ billion in
assets. CS Capital, BEA's ultimate parent, 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. BEA Associates is registered as an investment
adviser under the Investment Advisers Act of 1940, as amended.
As an investment adviser, BEA emphasizes a global investment strategy. BEA
currently acts as investment adviser for thirteen investment companies
registered under the Investment Company Act. They are: Alpha Government
Securities Portfolio, BEA Strategic Income Fund, Inc., BEA Income Fund, Inc.,
BEA Short Duration Portfolio, The Brazilian Equity Fund, Inc., The Chile Fund,
Inc., The Emerging Markets Infrastructure Fund, Inc., The Emerging Markets
Telecommunications Fund, Inc., The First Israel Fund, Inc., The Indonesia Fund,
Inc., The Latin America Equity Fund, Inc., The Latin America Investment Fund,
Inc., and The Portugal Fund, Inc. In addition, BEA acts as sub-adviser to
certain portfolios of six other registered investment companies: Frank Russell
Investment Company (Fixed Income III Fund and Multistrategy Bond Fund),
Oppenheimer (LifeSpan Balanced Portfolio, LifeSpan Income Portfolio and LifeSpan
Growth Portfolio), Panorama (LifeSpan Balanced Account, LifeSpan Capital
Appreciation Account and LifeSpan Diversified Income Account), SEI Institutional
Managed Trust (High Yield Bond Portfolio), WNL Series Trust (BEA Growth and
Income Fund), Touchstone International Equity Fund and Touchstone Variable
Annuity International Equity Portfolio. BEA also acts as investment adviser for
forty-two offshore funds, twenty-two of which are equity funds and twenty of
which are debt funds.
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 Global
Telecommunications and BEA High Yield Portfolios, BEA Associates will be paid
(before any voluntary waivers or reimbursements) a
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<PAGE>
monthly fee computed at an annual rate of .80%, 1.00%, 1.00% and .70% of average
daily net assets, respectively.
For the year ended August 31, 1996, BEA waived advisory fees with
respect to the BEA International Equity, BEA Emerging Markets Equity, BEA Global
Telecommunications and BEA High Yield 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.
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
38
<PAGE>
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 10, 1996, by vote of
the Fund's Board of Directors, including a majority of those directors who 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. Brown Brothers Harriman
& Co. ("BBH") acts as the custodian for the Portfolios and also acts as the
custodian for the Portfolios' foreign securities pursuant to a Custodian
Agreement (the "Custodian Agreement"). Under the Custodian Agreement, BBH (a)
maintains a separate account or accounts in the name of each Portfolio, (b)
holds and transfers portfolio securities on account of each Portfolio, (c)
accepts receipts and makes disbursements of money on behalf of each Portfolio,
(d) collects and receives all income and other payments and distributions on
account of each Portfolio's portfolio securities, and (e) makes periodic reports
to the Fund's Board of Directors concerning each Portfolio's operations. BBH is
authorized to select one or more banks or trust companies to serve as
sub-custodian on behalf of the Fund, provided that BBH remains responsible for
the performance of all its duties under the Custodian Agreement and holds the
Fund harmless from the negligent acts and omissions of any sub-custodian. For
its services to the Fund under the Custodian Agreement, BBH receives a fee which
is calculated based upon each Portfolio's
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<PAGE>
average daily gross assets, exclusive of transaction charges and out-of-pocket
expenses, which are also charged to the Fund.
Boston Financial Data Services, Inc. ("BFDS"), an affiliate of State
Street Bank and Trust Company, serves as the transfer and dividend disbursing
agent for the Investor Classes pursuant to a Transfer Agency Agreement (the
"Transfer Agency Agreement"), under which BFDS (a) issues and redeems shares of
each of the Investor 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 Investor Class. For its services to the Fund
under the Transfer Agency Agreement, BFDS receives a fee on a per transaction
basis.
ADMINISTRATION AGREEMENTS. PFPC Inc., an indirect, wholly owned
subsidiary of PNC Bank Corp., serves as administrator to the Portfolios
pursuant to an Administration and Accounting Services Agreement dated July
10, 1996 (the "PFPC Administration Agreement"). PFPC has agreed to calculate
the Portfolios' net asset values, provide all accounting services for the
Portfolios, and assist in related aspects of the Portfolios' operations. The
PFPC Administration Agreement provides that PFPC shall not be liable for any
error of judgment or mistake of law or any loss suffered by the Fund or the
Portfolios in connection with the performance of the agreement, except a loss
resulting from willful misfeasance, bad faith or negligence, or reckless
disregard of its duties and obligations thereunder. In consideration for
providing services pursuant to the PFPC Administration Agreement, PFPC
receives a fee calculated at an annual rate of .125% of each Portfolio's
average daily net assets, with a minimum annual fee of $_______.
BEA serves as co-administrator to the Portfolios pursuant to
Co-Administration Agreements dated July 10, 1996 (the "BEA Co-Administration
Agreements"). BEA has agreed to provide shareholder liaison services to the
Portfolios including responding to shareholder inquiries and providing
information on shareholder accounts. The BEA Co-Administration Agreements
provide that BEA shall not be liable for any error of judgment or mistake of
law or any loss suffered by the Fund or the Portfolios in connection with the
performace of the agreement, except a loss resulting from willful
misfeasance, bad faith or negligence, or reckless disregard of its duties and
obligations thereunder. In consideration for providing services pursuant to
the BEA Co-Administration Agreements, BEA receives a fee calculated at an
annual rate of .05% of each of the Portfolios' average daily net assets.
DISTRIBUTION AND SHAREHOLDER SERVICING
The Portfolios have each entered into Distribution Agreements with
Counsellors Securities pursuant to their Distribution Plans (the "12-b1
Plans") under Rule 12-b1 of the 1940 Act. In consideration for Services (as
defined below), the Distribution Agreement provides that the Portfolios will
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each pay Counsellors Securities a fee calculated at an annual rate of .50% of
the respective average daily net assets of the Investor Shares of the
Portfolios. Services performed by Counsellors Securities include (a) the sale
of the Investor Shares, as set forth in the 12b-1 Plans ("Selling Services"),
(b) ongoing servicing and/or maintenance of the accounts of shareholders of
the Portfolios, as set forth in the 12b-1 Plans ("Shareholder Services"), and
(c) sub-transfer agency services, subaccounting services or administrative
services, as set forth in the 12b-1 Plans ("Administrative Services") and
including, without limitation, (i) payments reflecting an allocation of
overhead and other office expenses of Counsellors Securities related to
providing Services; (ii) payments made to, and reimbursement of expenses of,
persons who provide support serviced in connection with the distribution of
the Investor Shares including, but not limited to, office space and equipment,
telephone facilities, answering routine inquiries regarding the Portfolios,
and providing any other Shareholder Services; (iii) payments made to
compensate selected dealers or other authorized persons for providing any
Services; (iv) costs relating to the formulation and implementation of
marketing and promotional activities, including, but not limited to, direct
mail promotions and television, radio, newspaper, magazine and other mass
media advertising, and related travel and entertainment expenses; (v) costs
of printing and distributing prospectuses, statements of additional
information and reports of the Portfolios to prospective shareholders of the
Portfolios; and (vi) costs involved in obtaining whatever information,
analyses and reports with respect to marketing and promotional activities
that Counsellors Securities may, from time to time, deem advisable.
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.
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. 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.
Commission rates for brokerage transactions on foreign stock
exchanges are generally fixed. The reasonableness of any negotiated
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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.
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
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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, 1996, BEA International Equity
Portfolio paid $_________ of brokerage commissions, BEA Emerging Markets Equity
Portfolio paid $_______ of brokerage commissions and for each other Portfolio no
brokerage commissions were paid during such period.
BEA International Equity, BEA Emerging Markets Equity and BEA Global
Telecommunications Portfolios expect that their annual Portfolio turnover rate
should not exceed 100% under normal market conditions. BEA High Yield Portfolio
anticipates that its portfolio turnover may exceed 100%. 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.
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).
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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. Investors
will also be required to bear certain transaction costs associated with
Redemptions-In-Kind. 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.)
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
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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 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.
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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)(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
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 $10,000 in Portfolio
shares and assuming the reinvestment of each dividend or other distribution at
net asset value on the reinvestment date. The Portfolio does not, for these
purposes, deduct from the initial value invested any
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amount representing sales charges. The Portfolio will, however, disclose the
maximum sales charge and will also disclose that the performance data do not
reflect sales charges and that inclusion of sales charges would reduce the
performance quoted. Such alternative total return information will be given no
greater prominence in such advertising than the information prescribed under SEC
rules, and all advertisements containing performance data will include a legend
disclosing that such performance data represent past performance and that the
investment return and principal value of an investment will fluctuate so that an
investor's shares, when redeemed, may be worth more or less than their original
cost.
Calculated according to the SEC rules for the period beginning on
the commencement of operations and ended August 31, 1996, the average annual
total return for the BEA International Equity Portfolio (commencing October 1,
1992) was ____% (annualized), BEA Emerging Markets Equity Portfolio (commencing
February 1, 1993) was ____% (annualized) and BEA High Yield Portfolio
(commencing March 1, 1993) was ____$ (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 and BEA Emerging Markets Equity Portfolios and ending on
August 31, 1996, the average annual total return for the Portfolios was ____%
and ____%, respectively. The aggregate total return for the Portfolios
calculated according to the non-standardized computation for the period
beginning on the commencement of operations of each of the Portfolios and ending
August 31, 1996 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)(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
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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 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
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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 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
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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
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
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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 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.
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."
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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 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).
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
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<PAGE>
(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.
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
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<PAGE>
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 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.
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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 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.
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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
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
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<PAGE>
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 12.35 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), 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 (High Yield), 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
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Class DD Common Stock (Growth & Income Series 2), 100 million shares are
classified as Class EE Common Stock (Balanced Series 2), 50 million shares are
classified as Class FF (n/i Micro Cap), 50 million shares are classified as
Class GG (n/i Growth), 50 million shares are classified as Class HH (n/i Growth
& Value), 100 million shares are classified as Class II (BEA Investor
International), 100 million shares are classified as Class JJ (BEA Investor
Emerging), 100 million shares are classified as Class KK (BEA Investor High
Yield), 100 million shares are classified as Class LL (BEA Investor Global
Telecom), 100 million shares are classified as Class MM (BEA Advisor
International), 100 million shares are classified as Class NN (BEA Advisor
Emerging), 100 million shares are classified as Class OO (BEA Advisor High
Yield), 100 million shares are classified as Class PP (BEA Advisor Global
Telecom), 700 million shares are classified as Class Janney Money Common Stock,
200 million shares are classified as Class Janney Municipal Money Common Stock,
500 million shares are classified as Class Janney U.S. Government Money Common
Stock, 100 million shares are classified as Class Janney N.Y. Municipal Money
Common Stock, 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 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 II, JJ, KK and LL
Common Stock constitute the BEA Investor 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 Cash Preservation Family, the Sansom
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Street Family, the Bedford Family, the Bradford Family, the BEA Family, the
Janney Montgomery Scott Money Family, the n/i 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 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 n/i Family represents interests in three 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 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.
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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 and PFPC. 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. No financial statements appear in this Statement of Additional
Information because, as of the date hereof, the Investor Class had no
performance history.
CONTROL PERSONS. As of July __, 1996, 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 Shares"
above. The Fund does not know whether such persons also beneficially own such
shares.
PORTFOLIO NAME AND ADDRESS PERCENT OWNED
- --------- ---------------- -------------
RBB Money Market Luanne M. Garvey and Robert J. 14.6
Portfolio Garvey
(Class E) 2729 Woodland Avenue
Trooper, PA 19403
Harold T. Erfer 12.8
414 Charles Lane
Wynnewood, PA 19096
Karen M. McElhinny and 16.6
Contribution Account
4943 King Arthur Drive
Erie, PA 16506
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PORTFOLIO NAME AND ADDRESS PERCENT OWNED
- --------- ---------------- -------------
John Robert Estrada and 15.9
Shirley Ann Estrada
1700 Raton Drive
Arlington, TX 76018
Eric Levine and Linda & Howard
Levine
67 Lanes Pond Road
Howell, NJ 07731 29.1
RBB Municipal Money William B. Pettus Trust 23.7
Market Portfolio Augustine W. Pettus Trust
(Class F) 827 Winding Path Lane
St. Louis, MO 63021-6635
Seymour Fein 76.3
P.O. Box 486
Tremont Post Office
Bronx, NY 10457-0486
Cash Preservation Money Jewish Family and Children's 55.4
Market Portfolio Agency of Philadelphia
(Class G) Capital Campaign
Attn: S. Ramm
1610 Spruce Street
Philadelphia, PA 19103
Lynda R. Succ Trustee for in 12.1
Trust under The Lynda R. Campbell
Caring Trust
935 Rutger Street
St. Louis, MO 63104
Theresa M. Palmer 7.6
5731 N. 4th Street
Philadelphia, PA 19120
Cash Preservation Kenneth Farwell and Valerie 10.5
Municipal Money Market Farwell Jt. Ten
Portfolio 3854 Sullivan
(Class H) St. Louis, MO 63107
Larnie Johnson and Mary Alice 17.1
Johnson
4927 Lee Avenue
St. Louis, MO 63115-1726
Andrew Diederich and Doris 5.8
Diederich
1003 Lindenman
Des Peres, MO 63131
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PORTFOLIO NAME AND ADDRESS PERCENT OWNED
- --------- ---------------- -------------
Marcella L. Haugh Caring Tr Dtd 7.3
8/12/91
40 Plaza Square
Apt. 202
St. Louis, MO 63101
Emil Hunter and Mary J. Hunter 7.1
428 W. Jefferson
Kirkwood, MO 63122
Ralph R. Moreno Caring Trust 5.2
418 N. Concord Street
Los Angeles, CA 90063
Sansom Street Money Wasner & Co. 19.1
Market Portfolio FAO Paine Webber and Managed
(Class I) Assets Sundry Holdings
Attn: Joe Domizio
200 Stevens Drive
Lester, PA 19113
Saxon and Co. 75.1
FBO Paine Webber
P.O. Box 7780 1888
Philadelphia, PA 19182
Robertson Stephens & Co. 5.8
FBO Exclusive Benefit Investors
c/o Eric Moore
555 California Street/No. 2600
San Francisco, CA 94101
Bradford Municipal J.C. Bradford & Co. 100
Money (Class R) 330 Commerce Street
Nashville, TN 37201
Bradford Government J.C. Bradford & Co. 100
Obligations Money 330 Commerce Street
(Class S) Nashville, TN 37201
BEA International Blue Cross & Blue Shield of 5.1
Equity Massachusetts Inc.
(Class T) Retirement Income Trust
100 Summmer Street
Boston, MA 02310
BEA High Yield Temple Inland Master Retirement 10.9
Portfolio Trust
(Class U) 303 South Temple Drive
Diboll, TX 75941
Guenter Full Trst Michelin North 17.8
America Inc.
Master Trust
P. O. Box 19001
Greenville, SC 29602-9001
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PORTFOLIO NAME AND ADDRESS PERCENT OWNED
- --------- ---------------- -------------
Flour Corporation Master 10.0
Retirement Trust
2383 Michelson Drive
Irvine, CA 92730
C S First Boston Pension Fund 10.6
Park Avenue Plaza, 34th Floor
55 E. 52nd Street
New York, NY 10055
Attn: Steve Medici
SC Johnson & Son, Inc. Retirement 14.4
Plan
1525 Howe Street
Racine, WI 53403
BEA Emerging Markets Wachovia Bank North Carolina 13.9
Equity Portfolio Trust for Carolina Power & Light
(Class V) Co. Supplemental Retirement Trust
301 N. Main Street
Winston-Salem, NC 27101
Northern Trust Company Trustee 19.1
for Texas Instruments Employee
Plan
P.O. Box 92956
Chicago, IL 60675-2956
Hall Family Foundation 19.2
P.O. Box 419580
Kansas City, MO 64208
Arkansas Public Emploees 9.7
Retirement System
124 W. Capitol Avenue
Little Rock, AR 72201
Northern Trust 11.5
Trustee for Pillsbury
P.O. Box 92956
Chicago, IL 60675
Amherst H. Wilder Foundation 5.3
919 Lafond Avenue
St. Paul, MN 55104
BEA US Core Equity Bank of New York 44.5
Portfolio Trust APU Buckeye Pipeline
(Class X) One Wall Street
New York, NY 10286
62
<PAGE>
PORTFOLIO NAME AND ADDRESS PERCENT OWNED
- --------- ---------------- -------------
Werner & Pfleiderer Pension 7.6
Plan Employees
663 E. Crescent Avenue
Ramsey, NJ 07446
Washington Hebrew Congregation 7.6
3935 Macomb St. NW
Washington, DC 20016
BEA US Core Fixed New England UFCW & Employers' 20.5
Income Portfolio Pension Fund Board of Trustees
(Class Y) 161 Forbes Road, Suite 201
Braintree, MA 02184
Bankers Trust 16.3
Trust Pechniney Corp. Pension
Master Trust
34 Exchange Place, 4th Floor
Jersey City, NJ 07302
Patterson & Co. 7.4
P.O. Box 7829
Philadelphia, PA 19102
MAC & Co 5.7
FAO 176-655
ROBF1766552
Mutual Funds Operations
P. O. Box 3198
Pittsburgh, PA 15230-3198
Bank of New York 7.4
Trst Fenway Partners Master Trust
One Wall Street, 12th floor
New York, NY 10286
Citibank NA 11.2
Trst CS First Boston Corp Emp S/P
Attn: Sheila Adams
111 Wall Street, 20th floor Z 1
New York, NY 10043
BEA Global Fixed Income Sunkist Master Trust 35.9
Portfolio (Class Z) 14130 Riverside Drive
Sherman Oaks, CA 91423
Patterson & Co. 25.7
P. O. Box 7829
Philadelphia, PA 19101
63
<PAGE>
PORTFOLIO NAME AND ADDRESS PERCENT OWNED
- --------- ---------------- -------------
Key Trust Co. of Ohio 20.8
FBO Eastern Enterp. Collective
Inv. Trust
P.O. Box 901536
Cleveland, OH 44202-1559
Mary E. Morten 6.2
C/O Credit Suisse New York
12 E. 49th Street, 40th Floor
New York, NY 10017
Attn: Portfolio Management
BEA Municipal Bond Fund William A. Marquard 36.2
Portfolio 2199 Maysville Rd.
(Class AA) Carlisle, KY 40311
Arnold Leon 12.1
c/o Fiduciary Trust Company
P.O. Box 3199
Church Street Station
New York, NY 10008
Irwin Bard 8.5
1750 North East 183rd St. North
Miami Beach, FL 33160
Matthew M. Sloves and Diane 5.5
Decker Sloves
Tenants in Common
1304 Stagecoach Road, S.E.
Albuquerque, NM 87123
n/i Micro Cap Fund
(Class FF) Charles Schwab & Co. Inc. 13.4
Special Custody Account for the
Exclusive Benefit of Customers
Attn: Mutual Funds
101 Montgomery Street
San Francisco, CA 94101
Chase Manhattan Bank 45.3
Trst Collins Group Trust
940 Newport Center Drive
Newport Beach, CA 92660
Currie & Co. 9.3
c/o Fiduciary Trust Co. Intl
P. O. Box 3199
Church Street Station
New York, NY 10008
64
<PAGE>
PORTFOLIO NAME AND ADDRESS PERCENT OWNED
- --------- ---------------- -------------
n/i Growth Fund Charles Schwab & Co. Inc. 17.7
(Class GG) Special Custody Account for the
Exclusive Benefit of Customers
Attn: Mutual Funds
101 Montgomery Street
San Francisco, CA 94101
U S Equity Investment Portfolio 30.9
LP
c/o Asset Management Advisors
Inc.
1001 N. US Hwy
Suite 800
Jupiter, FL 33447
Currie & Co. 5.4
c/o Fiduciary Trust Co. Intl
P. O. Box 3199
Church Street Station
New York, NY 10008
Bank of New York 17.8
Trst Sunkist Growers Inc.
14130 Riverside Drive
Sherman Oaks, CA 91423-2392
n/i Growth and Value Charles Schwab & Co. Inc. 43.6
Fund (Class HH) Special Custody Account for the
Exclusive Benefit of Customers
Attn: Mutual Funds
101 Montgomery Street
San Francisco, CA 94104
Janney Montgomery Scott Janney Montgomery Scott 100
Money Market Portfolio 1801 Market Street
(Class Janney Money Philadelphia, PA 19103-1675
Market)
Janney Montgomery Scott Janney Montgomery Scott 100
Municipal Money Market 1801 Market Street
Portfolio Philadelphia, PA 19103-1675
(Class Janney Municipal
Money Market)
Janney Montgomery Scott Janney Montgomery Scott 100
Government Obligations 1801 Market Street
Money Market Portfolio Philadelphia, PA 19103-1675
(Class Janney
Government Obligations
Money)
65
<PAGE>
PORTFOLIO NAME AND ADDRESS PERCENT OWNED
- --------- ---------------- -------------
Janney Montgomery Scott Janney Montgomery Scott 100
New York Municipal 1801 Market Street
Money Market Portfolio Philadelphia, PA 19103-1675
(Class Janney N.Y.
Municipal Money)
As of the above date, directors and officers as a group owned less than
one percent of the shares of RBB.
LITIGATION. There is currently no material litigation affecting RBB.
FINANCIAL STATEMENTS. No financial statements are supplied because, as
of the date of the Prospectus and this Statement of Additional Information, the
Funds had no operating history.
66
<PAGE>
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.
A-1
<PAGE>
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.
Notes to Financial Statements
(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 #
----------
(p) Articles Supplementary of registrant. 23
(q) Form Of Articles Supplementary of Registrant.
(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
(c) By-Laws amended through April 24, 1996. 23
(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 3
m) Bedford Tax-Free Money Market Shares 3
n) Bedford Government Obligations Money 3
Market 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
2
<PAGE>
See Note #
----------
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
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
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
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.
3
<PAGE>
See Note #
----------
(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
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.
4
<PAGE>
See Note #
----------
(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.
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.
5
<PAGE>
See Note #
----------
(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
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) Investment Advisory Agreement
(BEA Balanced) between Registrant and
BEA Associates.
(ll) Investment Advisory Agreement
(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.
(nn) Investment Advisory Agreement (NI 23
6
<PAGE>
See Note #
----------
Micro Cap Fund) between Registrant and
Numeric Investors, L.P.
(oo) Investment Advisory Agreement (NI 23
Growth Fund) between Registrant and
Numeric Investors, L.P.
(pp) Investment Advisory Agreement (NI 23
Growth & Value Fund) between Registrant
and Numeric Investors, L.P.
(qq) Form of Investment Advisory Agreement (BEA
Global Telecommunications Portfolio)
between Registrant and BEA Associates.
(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)
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
7
<PAGE>
See Note #
----------
(Classes DD and EE) between Registrant and
Counsellor's Securities Inc. dated as of
October 26, 1994.
(z) Distribution Agreement Supplement 19
(Classes L, M, N and O) between the
Registrant and Counsellor's Securities
Inc.
(aa) 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.
(dd) Distribution Agreement Supplement NI 23
Classes (Classes FF, GG and HH)
(ee) Form of Distribution Agreement Supplement
(classes II, JJ, KK, and LL)
(ff) Form of Distribution Agreement Supplement
(Classes MM, NN, OO, and PP)
(7) Fund Office Retirement Profit-Sharing and 7
Trust Agreement, dated as of October 24, 1990.
(8) (a) Custodian Agreement between Registrant and 3
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
8
<PAGE>
See Note #
----------
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.
(l) Form of Custody Agreement between the 23
Registrant and Custodial Trust Company on
behalf of NI Micro Cap Fund, NI Growth Fund
and NI Growth & Value Fund, Portfolios of the
Registrant.
(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
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).
9
<PAGE>
See Note #
----------
(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
Agreement between Registrant and Provident
Financial Processing Corporation, relating
to Equity Portfolio dated as of
November 5, 1991.
10
<PAGE>
See Note #
----------
(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.
dated as of July 21, 1993.
(x) Administration and Accounting Services 12
Agreement between Registrant and PFPC Inc.,
relating to Laffer/Canto Equity Fund,
11
<PAGE>
See Note #
----------
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.
(hh) Co-Administration Agreement between 18
Registrant and PFPC Inc. (Warburg Pincus
Balanced Fund) dated August 4, 1994.
12
<PAGE>
See Note #
----------
(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 22
December 15, 1994.
(qq) Transfer Agency Agreement Supplement (NI 23
Micro Cap Fund, NI Growth Fund and
NI Growth & Value Fund) between
Registrant and PFPC, Inc. dated April 24, 1996.
(rr) Administration and Accounting Services 23
Agreement between Registrant and PFPC, Inc.
(NI Micro Cap Fund) dated April 24, 1996.
(ss) Administration and Accounting Services 23
Agreement between Registrant and PFPC, Inc.
(NI Growth Fund) dated April 24, 1996.
13
<PAGE>
See Note #
----------
(tt) Administration and Accounting Services 23
Agreement between Registrant and PFPC, Inc.
(NI Growth & Value Fund) dated April 24,
1996.
14
<PAGE>
See Note #
----------
(uu) Administrative Services Agreement between 23
Registrant and Counsellors Fund Services,
Inc. (NI Micro Cap Fund, NI
Growth Fund and NI Growth &
Value Fund) dated April 24, 1996.
(vv) Form of Administration and Accounting Services
Agreement between Registrant and PFPC, Inc.
(BEA Global Telecommunications).
(ww) Form of Co-Administration Agreement between
Registrant Investor and BEA Associates
(BEA International Equity Investor
Portfolio).
(xx) Form of Co-Administration Agreement between
Registrant and BEA Associates (BEA
International Equity Advisor Portfolio).
(yy) Form of Co-Administration Agreement Between
Registrant and BEA Associates (BEA
Emerging Markets Equity Investor
Portfolio).
(zz) Form of Co-Administration Agreement between
Registrant and BEA Associates (BEA
Emerging Markets Equity Advisor
Portfolio).
(aaa) Form of Co-Administration Agreement between
Registrant and BEA Associates (BEA
High Yield Investor Portfolio).
(bbb) Form of Co-Administration Agreement between
Registrant and BEA Associates (BEA
High Yield Advisor Portfolio).
(ccc) Form of Co-Administration Agreement between
Registrant and BEA Associates (BEA
Global Telecommunications Investor
Portfolio).
(ddd) Form of Co-Administration Agreement between
Registrant and BEA Associates (BEA
Global Telecommunications Advisor
Portfolio).
(eee) Form of Transfer Agreement and Service
Agreement between Registrant and State
Street Bank and Trust Company.
15
<PAGE>
See Note #
----------
(10)(a) Opinion of Counsel. 23
(10)(b) Consent of Counsel.
(11) Consent of Independent Accountants.
(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).
(i) Purchase Agreement between Registrant and 23
Numeric Investors, L.P. relating to
Class FF (NI Micro Cap Fund).
(j) Purchase Agreement between Registrant and 23
Numeric Investors, L.P. relating to
Class GG (NI Growth Fund).
(k) Purchase Agreement between Registrant and 23
Numeric Investors, L.P. relating to
16
<PAGE>
See Note #
----------
Class HH (NI Growth & Value Fund)
(l) Form of Subscription Agreement between
Registrant and Counsellors Securities, Inc. relating
to Classes II through PP.
(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).
(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).
17
<PAGE>
See Note #
----------
(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).
(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).
18
<PAGE>
See Note #
----------
(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).
(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
19
<PAGE>
See Note #
----------
(bbb) Plan Distribution (Warburg Pincus Growth 18
& Income Series 2).
(ccc) Plan of Distribution (Warburg Pincus 18
Balanced Series 2).
(ddd) Form of Plan of Distribution (BEA International
Equity Investor).
(eee) Form of Plan of Distribution (BEA International
Equity Advisor).
(fff) Form of Plan of Distribution (BEA Emerging Markets
Equity Investor).
(ggg) Form of Plan of Distribution (BEA Emerging Markets
Equity Advisor).
(hhh) Form of Plan of Distribution (BEA High Yield
Investor).
(iii) Form of Plan of Distribution (BEA High Yield
Advisor).
(jjj) Form of Plan of Distribution (BEA Global
Telecommunications Investor).
(kkk) Form of Plan of Distribution (BEA Global
Telecommunications Advisor).
(16) Schedule of Computation of Performance 3
Quotations.
(17) None.
(18) Rule 18f-3 Plan. 21
(19) Representation of Ballard Spahr Andrews
& Ingersoll pursuant to Rule 485(b) under
the Securities Act of 1933.
- -----------------
NOTE #
1 Incorporated herein by reference to the same exhibit number of Registrant's
Registration Statement (No. 33-20827) filed on March 24, 1988.
20
<PAGE>
See Note #
----------
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.
21
<PAGE>
NOTE #
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.
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.
22
<PAGE>
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.
22 Incorporated herein by reference to the same exhibit number of
Post-Effective Amendment No. 29 to the Registrant's Registration Statement
(No. 33-20827) filed on October 25, 1995.
23 Incorporated herein by reference to the same exhibit number of
Post-Effective Amendment No. 34 to the Registrant's Registration Statement
(No. 33-20827) Filed on May 16, 1996.
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 July 24, 1996.
TITLE OF CLASS OF COMMON STOCK NUMBER OF RECORD HOLDERS
a) RBB Money Market 11
b) RBB Municipal Money Market 2
c) Cash Preservation Money Market 35
d) Cash Preservation Municipal Money Market 68
e) Sansom Street Money Market 3
f) Sansom Street Municipal Money Market 0
g) Sansom Street Government Obligations 0
Money Market
h) Bedford Money Market 97,325
i) Bedford Municipal Money Market 4,495
j) Bedford Government Obligations Money 3,532
Market
k) Bedford New York Municipal Money Market 2,809
l) RBB Government Securities 536
m) Bradford Municipal Money Market 1
n) Bradford Government Obligations Money 1
Market
o) BEA International Equity 206
p) BEA High Yield 48
q) BEA Emerging Markets Equity 37
r) BEA U.S. Core Equity 70
s) BEA U.S. Core Fixed Income 49
t) BEA U.S. Global Fixed Income 10
u) BEA Municipal Bond fund 35
v) BEA Short Duration 0
23
<PAGE>
w) BEA Balanced 0
x) Janney Montgomery Scott 1
Money Market
y) Janney Montgomery Scott 1
Municipal Money Market
z) Janney Montgomery Scott 1
Government Obligations Money Market
aa) Janney Montgomery Scott 1
New York Municipal Money Market
bb) ni Micro Corp 346
cc) ni Growth 381
dd) ni Growth & Value 181
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.
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
24
<PAGE>
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 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
25
<PAGE>
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.
26
<PAGE>
PNC BANK, NATIONAL ASSOCIATION
Position with
PNC Bank,
National Other Business Type of
Association Name Connections Business
- ------------ ---- -------------- --------
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
PNC Bank Corp. (14) Holding
Director Dr. J. Dennis O'Connor Chancellor Education
University of Pittsburgh
Pittsburgh, PA (29)
27
<PAGE>
Position with
PNC Bank,
National Other Business Type of
Association Name Connections Business
- ------------ ---- -------------- --------
Director Rocco A. Ortenzio Chairman and C.E.O. Medical
Continental Medical
Systems, Inc.
Mechanicsburg, PA (30)
Director Robert C. Robb, Jr. Partner Financial
Lewis, Eckert, Robb & and
Company Management
Plymouth Meeting, PA (31) Consultants
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. Communica-
Bell of Pennsylvania and tions
Chairman 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
28
<PAGE>
Position with
PNC Bank,
National Other Business Type of
Association Name Connections Business
- ------------ ---- -------------- --------
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.
29
<PAGE>
Position with
PNC Bank,
National Other Business Type of
Association Name Connections Business
- ------------ ---- -------------- --------
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 Banking
International (35) Services
Managing General Counsel Bank Holding
and Senior Vice President Company
PNC Bank Corp.
Senior Vice James P. Conley None.
President/
Credit Policy
- --------------------
* 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.
30
<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
31
<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
32
<PAGE>
Roger Reinlieb Vice President
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).
33
<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.
(b) Registrant hereby undertakes to file a post-effective amendment,
using unaudited financial statements for each of the NI Micro
Cap Fund, NI Growth Fund and NI Growth & Value Fund which
need not be certified, within four to six months from effective
date of this Registration Statement.
34
<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 July 29, 1996.
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 July 29, 1996
- ---------------------- Executive Officer) and
Treasurer (Principal
Financial and Accounting
Officer)
Edward J. Roach
/s/ Donald van Roden Director July 29, 1996
- -----------------------
Donald van Roden
/s/ Francis J. McKay Director July 29, 1996
- -----------------------
Francis J. McKay
/s/ Marvin E. Sternberg Director July 29, 1996
- -----------------------
Marvin E. Sternberg
/s/ Julian A. Brodsky Director July 29, 1996
- -----------------------
Julian A. Brodsky
/s/ Arnold M. Reichman Director July 29, 1996
- -----------------------
Arnold M. Reichman
/s/ Robert Sablowsky Director July 29, 1996
- -----------------------
Robert Sablowsky
35
<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 INSTITUTIONAL CLASSES
BEA INVESTOR CLASSES
BEA ADVISOR CLASSES
JANNEY (ALPHA) CLASSES
NI CLASSES
BETA CLASSES
GAMMA CLASSES
DELTA CLASSES
EPSILON CLASSES
ZETA CLASSES
ETA CLASSES
THETA CLASSES
EXHIBIT INDEX
-------------
Exhibit Page
- ------- ----
(1)(q) Form of Articles of Supplementary of Registrant
(5)(qq) Form of Investment Advisory Agreement (BEA Global
Telecommunications Portfolio) between
Registrant and BEA Associates.
(6)(ee) Form of Distribution Agreement Supplement (Classes
II, JJ, KK and LL)
(ff) Form of Distribution Agreement Supplement (Classes
MM, NN, OO, AND PP)
(9)(vv) Form of Administraiton and Accounting Services Agreement
between Registrant and PFPC, Inc. (BEA Global
Telecommunications)
(ww) Form of Co-Administration Agreements between Registrant
and BEA Associates (BEA International Equity
Investor Portfolio)
(xx) Form of Co-Administration Agreements between Registrant
and BEA Associates (BEA International Equity
Advisor Portfolio)
(yy) Form of Co-Administration Agreements between Registrant
and BEA Associates (BEA Emerging Markets Equity
Investor Portfolio)
(zz) Form of Co-Administration Agreements between Registrant
and BEA Associates (BEA Emerging Markets Equity
Advisor Portfolio)
(aaa) Form of Co-Administration Agreements between Registrant
and BEA Associates (BEA High Yield Investor Portfolio)
(bbb) Form of Co-Administration Agreements between Registrant
and BEA Associates (BEA High Yield Advisor Portfolio)
(ccc) Form of Co-Administration Agreements between Registrant
36
<PAGE>
and BEA Associates (BEA Global Telecommunications
Investor Portfolio)
(ddd) Form of Co-Administration Agreements between Registrant
and BEA Associates (BEA Global Telecommunications
Advisor Portfolio)
(eee) Form of Transfer Agency and Service Agreement between
Registrant and State Street Bank and Trust Company
(10)(B) Consent of Counsel
(11) Consent of Independent Accountants
(13)(L) Form of Subscription Agreement between Registrant and
Counsellors Securities Inc. relating to
Classes II though PP.
(15)(ddd) Form of Plan of Distribution (BEA International Equity
Investor)
(eee) Form of Plan of Distribution (BEA International Equity
Advisor)
(fff) Form of Plan of Distribution (BEA Emerging Markets Equity
Investor)
(ggg) Form of Plan of Distribution (BEA Emerging Markets Equity
Advisor)
(hhh) Form of Plan of Distribution (BEA High Yield Investor)
(iii) Form of Plan of Distribution (BEA High Yield Advisor)
(jjj) Form of Plan of Distribution (BEA Global Telecommunications
Investor)
(kkk) Form of Plan of Distribution (BEA Global Telecommunications
Advisor)
37
<PAGE>
195852.001(BF) EXHIBIT (1)(q)
THE RBB FUND, INC.
ARTICLES SUPPLEMENTARY TO THE
CHARTER
THE RBB FUND, INC., a Maryland corporation having its principal
office in Baltimore, Maryland (hereinafter called the "Corporation"), hereby
certifies to the State Department of Assessments and Taxation of Maryland that:
FIRST: The Board of Directors of the Corporation, an open-end
investment company registered under the Investment Company Act of 1940, as
amended, and having authorized capital of thirty billion (30,000,000,000) shares
of common stock, par value $.001 per share, has adopted a unanimous resolution
increasing the number of shares of common stock that are classified (but not
increasing the aggregate number of authorized shares) into separate classes by:
classifying an additional one hundred million (100,000,000) of the
previously authorized, unissued and unclassified shares of the common
stock, par value $.001 per share, with an aggregate par value of one
hundred thousand dollars ($100,000), as Class II Common Stock (BEA
International Equity Investor Portfolio);
classifying an additional one hundred million (100,000,000) of the
previously authorized, unissued and unclassified shares of the common
stock, par value
<PAGE>
$.001 per share, with an aggregate par value of one hundred thousand
dollars ($100,000), as Class JJ Common Stock (BEA Emerging Markets Equity
Investor Portfolio);
classifying an additional one hundred million (100,000,000) of the
previously authorized, unissued and unclassified shares of the common
stock, par value $.001 per share, with an aggregate par value of one
hundred thousand dollars ($100,000), as Class KK Common Stock (BEA High
Yield Investor Portfolio);
classifying an additional one hundred million (100,000,000) of the
previously authorized, unissued and unclassified shares of the common
stock, par value $.001 per share, with an aggregate par value of one
hundred thousand dollars ($100,000), as Class LL Common Stock (BEA Global
Telecommunications Investor Portfolio);
classifying an additional one hundred million (100,000,000) of the
previously authorized, unissued and unclassified shares of the common
stock, par value $.001 per share, with an aggregate par value of one
2
<PAGE>
hundred thousand dollars ($100,000), as Class MM Common Stock (BEA
International Equity Advisor Portfolio);
classifying an additional one hundred million (100,000,000) of the
previously authorized, unissued and unclassified shares of the common
stock, par value $.001 per share, with an aggregate par value of one
hundred thousand dollars ($100,000), as Class NN Common Stock (BEA
Emerging Markets Equity Advisor Portfolio);
classifying an additional one hundred million (100,000,000) of the
previously authorized, unissued and unclassified shares of the common
stock, par value $.001 per share, with an aggregate par value of one
hundred thousand dollars ($100,000), as Class OO Common Stock (BEA High
Yield Advisor Portfolio);
classifying an additional one hundred million (100,000,000) of the
previously authorized, unissued and unclassified shares of the common
stock, par value $.001 per share, with an aggregate par value of one
hundred thousand dollars ($100,000), as Class PP Common Stock (BEA Global
Telecommunications Advisor Portfolio);
3
<PAGE>
SECOND: A description of the shares so classified with the
preferences, conversion and other rights, voting powers, restrictions,
limitations as to dividends, qualifications and terms and conditions of
redemption as set or changed by the Board of Directors of the Corporation is as
follows:
A description of the preferences, conversion and other rights,
voting powers, restrictions, limitations as to dividends, qualifications and
terms and conditions or redemption of each class of common stock of the
Corporation is set forth in Article VI, Section (6) of the Corporation's
Charter, and has not been changed by the Board of Directors of the Corporation.
THIRD: The shares aforesaid have been duly classified by the Board
of Directors of the Corporation pursuant to authority and power contained in the
charter of the Corporation.
FOURTH: Immediately before the increase in the number of shares of
common stock that have been classified into separate classes:
(a) the Corporation had authority to issue thirty billion
(30,000,000,000) shares of its common stock and the aggregate par value of all
the shares of all classes was thirty million dollars ($30,000,000);
(b) the number of shares of each authorized class of common
stock was as follows:
Class A - one hundred million (100,000,000), par value $.001 per share;
4
<PAGE>
Class B - one hundred million (100,000,000), par value $.001 per share;
Class C - one hundred million (100,000,000), par value $.001 per share;
Class D - one hundred million (100,000,000), par value $.001 per share;
Class E - five hundred million (500,000,000), par value $.001 per share;
Class F - five hundred million (500,000,000), par value $.001 per share;
Class G - five hundred million (500,000,000), par value $.001 per share;
Class H - five hundred million (500,000,000), par value $.001 per share;
Class I - one billion (1,000,000,000), par value $.001 per share;
Class J - five hundred million (500,000,000), par value $.001 per share;
Class K - five hundred million (500,000,000), par value $.001 per share;
Class L - one billion five hundred million (1,500,000,000), par value $.001
per share;
Class M - five hundred million (500,000,000), par value $.001 per share;
5
<PAGE>
Class N - five hundred million (500,000,000), par value $.001 per share;
Class O - five hundred million (500,000,000), par value $.001 per share;
Class P - one hundred million (100,000,000), par value $.001 per share;
Class Q - one hundred million (100,000,000), par value $.001 per share;
Class R - five hundred million (500,000,000), par value $.001 per share;
Class S - five hundred million (500,000,000), par value $.001 per share;
Class T - five hundred million (500,000,000), par value $.001 per share;
Class U - five hundred million (500,000,000), par value $.001 per share;
Class V - five hundred million (500,000,000), par value $.01 per share;
Class W - one hundred million (100,000,000), par value $.001 per share;
Class X - fifty million (50,000,000), par value $.001 per share;
Class Y - fifty million (50,000,000), par value $.001 per share;
Class Z - fifty million (50,000,000), par value $.001 per share;
Class AA - fifty million (50,000,000), par value $.001 per share;
6
<PAGE>
Class BB - fifty million (50,000,000), par value $.001 per share;
Class CC - fifty million (50,000,000), par value $.001 per share;
Class DD - one hundred million (100,000,000), par value $.001 per share;
Class EE - one hundred million (100,000,000), par value $.001 per share;
Class FF - fifty million (50,000,000), par value $.001 per share;
Class GG - fifty million (50,000,000), par value $.001 per share;
Class HH - fifty million (50,000,000), par value $.001 per share;
Class Alpha 1 - seven hundred million (700,000,000), par value $.001 per
share;
Class Alpha 2 - two hundred million (200,000,000), par value $.001 per
share;
Class Alpha 3 - five hundred million (500,000,000), par value $.001 per
share;
Class Alpha 4 - one hundred million (100,000,000), par value $.001 per
share;
Class Beta 1 - one million (1,000,000), par value $.001 per share;
7
<PAGE>
Class Beta 2 - one million (1,000,000), par value $.001 per share;
Class Beta 3 - one million (1,000,000), par value $.001 per share;
Class Beta 4 - one million (1,000,000), par value $.001 per share;
Class Gamma 1 - one million (1,000,000), par value $.001 per share;
Class Gamma 2 - one million (1,000,000), par value $.001 per share;
Class Gamma 3 - one million (1,000,000), par value $.001 per share;
Class Gamma 4 - one million (1,000,000), par value $.001 per share;
Class Delta 1 - one million (1,000,000), par value $.001 per share;
Class Delta 2 - one million (1,000,000), par value $.001 per share;
Class Delta 3 - one million (1,000,000), par value $.001 per share;
Class Delta 4 - one million (1,000,000), par value $.001 per share;
Class Epsilon 1 - five hundred million (1,000,000), par value $.001 per
share;
8
<PAGE>
Class Epsilon 2 - one million (1,000,000), par value $.001 per share;
Class Epsilon 3 - one million (1,000,000), par value $.001 per share;
Class Epsilon 4 - one million (1,000,000), par value $.001 per share;
Class Zeta 1 - one million (1,000,000), par value $.001 per share;
Class Zeta 2 - one million (1,000,000), par value $.001 per share;
Class Zeta 3 - one million (1,000,000), par value $.001 per share;
Class Zeta 4 - one hundred million (1,000,000), par value $.001 per
share;
Class Eta 1 - one million (1,000,000), par value $.001 per share;
Class Eta 2 - one million (1,000,000) par value $.001 per share;
Class Eta 3 - one million (1,000,000), par value $.001 per share;
Class Eta 4 - one million (1,000,000), par value $.001 per share;
Class Theta 1 - one million (1,000,000), par value $.001 per share;
9
<PAGE>
Class Theta 2 - one million (1,000,000), par value $.001 per share;
Class Theta 3 - one million (1,000,000), par value $.001 per share; and
Class Theta 4 - one million (1,000,000), par value $.001 per share,
for a total of twelve billion three hundred seventy-eight million
(12,378,000,000) shares classified into separate classes of common stock.
After the increase in the number of shares of common stock that have
been classified into separate classes:
(c) the Corporation has the authority to issue thirty
billion (30,000,000,000) shares of its common stock and the aggregate par value
of all the shares of all classes is now thirty million dollars ($30,000,000);
and
(d) the number of authorized shares of each class is now as
follows: Class A - one hundred million (100,000,000), par value $.001 per share;
Class B - one hundred million (100,000,000), par value $.001 per share;
Class C - one hundred million (100,000,000), par value $.001 per share;
Class D - one hundred million (100,000,000), par value $.001 per share;
10
<PAGE>
Class E - five hundred million (500,000,000), par value $.001 per share;
Class F - five hundred million (500,000,000), par value $.001 per share;
Class G - five hundred million (500,000,000), par value $.001 per share;
Class H - five hundred million (500,000,000), par value $.001 per share;
Class I - one billion (1,000,000,000), par value $.001 per share;
Class J - five hundred million (500,000,000), par value $.001 per share;
Class K - five hundred million (500,000,000), par value $.001 per share;
Class L - one billion five hundred million (1,500,000,000), par value $.001
per share;
Class M - five hundred million (500,000,000), par value $.001 per share;
Class N - five hundred million (500,000,000), par value $.001 per share;
Class O - five hundred million (500,000,000), par value $.001 per share;
Class P - one hundred million (100,000,000), par value $.001 per share;
11
<PAGE>
Class Q - one hundred million (100,000,000), par value $.001 per share;
Class R - five hundred million (500,000,000), par value $.001 per share;
Class S - five hundred million (500,000,000), par value $.001 per share;
Class T - five hundred million (500,000,000), par value $.001 per share;
Class U - five hundred million (500,000,000), par value $.001 per share;
Class V - five hundred million (500,000,000), par value $.001 per share;
Class W - one hundred million (100,000,000), par value $.001 per share;
Class X - fifty million (50,000,000), par value $.001 per share;
Class Y - fifty million (50,000,000), par value $.001 per share;
Class Z - fifty million (50,000,000), par value $.001 per share;
Class AA - fifty million (50,000,000), par value $.001 per share;
Class BB - fifty million (50,000,000), par value $.001 per share;
Class CC - fifty million (50,000,000), par value $.001 per share;
Class DD - one hundred million (100,000,000), par value $.001 per share;
12
<PAGE>
Class EE - one hundred million (100,000,000), par value $.001 per share;
Class FF - fifty million (50,000,000), par value $.001 per share;
Class GG - fifty million (50,000,000), par value $.001 per share;
Class HH - fifty million (50,000,000), par value $.001 per share;
Class II - one hundred million (100,000,000), par value $.001 per share;
Class JJ - one hundred million (100,000,000), par value $.001 per share;
Class KK - one hundred million (100,000,000), par value $.001 per share;
Class LL - one hundred million (100,000,000), par value $.001 per share;
Class MM - one hundred million (100,000,000), par value $.001 per share;
Class NN - one hundred million (100,000,000), par value $.001 per share;
Class OO - one hundred million (100,000,000), par value $.001 per share;
Class PP - one hundred million (100,000,000), par value $.001 per share;
13
<PAGE>
Class Alpha 1 - seven hundred million (700,000,000), par value $.001 per
share;
Class Alpha 2 - two hundred million (200,000,000), par value $.001 per
share;
Class Alpha 3 - five hundred million (500,000,000), par value $.001 per
share;
Class Alpha 4 - one hundred million (100,000,000), par value $.001 per
share;
Class Beta 1 - one million (1,000,000), par value $.001 per share;
Class Beta 2 - one million (1,000,000), par value $.001 per share;
Class Beta 3 - one million (1,000,000), par value $.001 per share;
Class Beta 4 - one million (1,000,000), par value $.001 per share;
Class Gamma 1 - one million (1,000,000), par value $.001 per share;
Class Gamma 2 - one million (1,000,000), par value $.001 per share;
Class Gamma 3 - one million (1,000,000), par value $.001 per share;
Class Gamma 4 - one million (1,000,000), par value $.001 per share;
14
<PAGE>
Class Delta 1 - one million (1,000,000), par value $.001 per share;
Class Delta 2 - one million (1,000,000), par value $.001 per share;
Class Delta 3 - one million (1,000,000), par value $.001 per share;
Class Delta 4 - one million (1,000,000), par value $.001 per share;
Class Epsilon 1 - one million (1,000,000), par value $.001 per share;
Class Epsilon 2 - one million (1,000,000), par value $.001 per share;
Class Epsilon 3 - one million (1,000,000), par value $.001 per share;
Class Epsilon 4 - one million (1,000,000), par value $.001 per share;
Class Zeta 1 - one million (1,000,000), par value $.001 per share;
Class Zeta 2 - one million (1,000,000), par value $.001 per share;
Class Zeta 3 - one million (1,000,000), par value $.001 per share;
Class Zeta 4 - one million (1,000,000), par value $.001 per share;
15
<PAGE>
Class Eta 1 - one million (1,000,000), par value $.001 per share;
Class Eta 2 - one million (1,000,000) par value $.001
per share;
Class Eta 3 - one million (1,000,000), par value $.001 per share;
Class Eta 4 - one million (1,000,000), par value $.001 per share;
Class Theta 1 - one million (1,000,000), par value $.001 per share;
Class Theta 2 - one million (1,000,000), par value $.001 per share;
Class Theta 3 - one million (1,000,000), par value $.001 per share;
Class Theta 4 - one million (1,000,000), par value $.001 per share;
for a total of thirteen billion one hundred seventy-eight million
(13,178,000,000) shares classified into separate classes of common stock.
16
<PAGE>
IN WITNESS WHEREOF, The RBB Fund, Inc. has caused these presents to
be signed and attested in its name and on its behalf by its President and
Secretary on __________, 1996.
THE RBB FUND, INC.
ATTEST:
By:
- ---------------------------------- ------------------------------------
Morgan R. Jones Edward J. Roach
Secretary President
17
<PAGE>
THE UNDERSIGNED, President of The RBB Fund, Inc., who executed on
behalf of said corporation the foregoing Articles Supplementary to the Charter,
of which this certificate is made a part, hereby acknowledges, in the name and
on behalf of said Corporation, and further certifies that, to the best of his
knowledge, information and belief, the matters and facts set forth therein with
respect to the approval thereof are true in all material respects, under the
penalties of perjury.
------------------------------------------
Edward J. Roach
President
18
<PAGE>
INVESTMENT ADVISORY AGREEMENT
(BEA Global Telecommunications Portfolio)
AGREEMENT made as of July __, 1996 between THE RBB FUND, INC., a
Maryland corporation (herein called the "Company"), and BEA ASSOCIATES, a New
York general partnership (herein called the "Investment Advisor").
WHEREAS, the Company is registered as an open-end, management
investment company under the Investment Company Act of 1940 (the "1940 Act") and
currently offers or proposes to offer shares representing interests in seventeen
separate investment portfolios; and
WHEREAS, the Company desires to retain the Investment Advisor to
render certain investment advisory services to the Company with respect to the
Company's BEA Global Telecommunications Portfolio (the "Portfolio"), and the
Investment Advisor is willing to so render such services,
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, and intending to be legally bound hereby, it is agreed between
the parties hereto as follows:
1. APPOINTMENT. The Company hereby appoints the Investment Advisor
to act as investment advisor for the Portfolio for the period and on the terms
set forth in this Agreement. The Investment Advisor accepts such appointment
and agrees to render the services herein set forth, for the compensation herein
provided.
2. DELIVERY OF DOCUMENTS. The Company has furnished the Investment
Advisor with copies properly certified or authenticated of each of the
following:
(a) Resolutions of the Board of Directors of the Company
authorizing the appointment of the Investment Advisor and the execution and
delivery of this Agreement;
(b) Each Prospectus relating to any class of Shares representing
interests in the Portfolio of the Company in effect under the 1933 Act (such
prospectuses, as presently in effect and as they shall from time to time be
amended and supplemented, are herein collectively called the "Prospectuses").
<PAGE>
The Company will furnish the Investment Advisor from time to time with
copies, properly certified or authenticated, of all amendments of or supplements
to the foregoing, if any.
3. MANAGEMENT OF THE PORTFOLIO. Subject to the supervision of the
Board of Directors of the Company, the Investment Advisor will provide for the
overall management of the Portfolio including (i) the provision of a continuous
investment program for the Portfolio, including investment research and
management with respect to all securities, investments, cash and cash
equivalents in the Portfolio, (ii) the determination from time to time of what
securities and other investments will be purchased, retained, or sold by the
Company for the Portfolio, and (iii) the placement from time to time of orders
for all purchases and sales made for the Portfolio. The Investment Advisor will
provide the services rendered by it hereunder in accordance with the Portfolio's
investment objectives, restrictions and policies as stated in the applicable
Prospectus and the applicable statement of additional information contained in
the Registration Statement. The Investment Advisor further agrees that it will
render to the Company's Board of Directors such periodic and special reports
regarding the performance of its duties under this Agreement as the Board may
request. The Investment Advisor agrees to provide to the Company (or its agents
and service providers) prompt and accurate data with respect to the Portfolio's
transactions and, where not otherwise available, the daily valuation of
securities in the Portfolio.
4. BROKERAGE. The Investment Advisor may place orders either
directly with the issuer or with any broker or dealer. In placing orders with
brokers and dealers, the Investment Advisor will attempt to obtain the best
price and the most favorable execution of its orders. In placing orders, the
Investment Advisor will consider the experience and skill of the firm's
securities traders as well as the firm's financial responsibility and
administrative efficiency. Consistent with this obligation, the Investment
Advisor may, subject to the review of the Board of Directors, select brokers on
the basis of the research, statistical and pricing services they provide to the
Portfolio and other clients of the Investment Advisor. Information and research
received from such brokers will be in addition to, and not in lieu of, the
services required to be performed by the Investment Advisor hereunder. 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 the
Investment Advisor determines in good faith that such commission is reasonable
in terms either of the transaction or the overall responsibility of the
Investment Advisor to the Portfolio and its other clients and that the total
commissions paid by the Portfolio will be reasonable in relation to the benefits
to the Portfolio over the long-term.
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In no instance will the Portfolio's securities be purchased from or sold to the
Company's principal underwriter, the Investment Advisor, or any affiliated
person thereof, except to the extent permitted by SEC exemptive order or by
applicable law.
5. CONFORMITY WITH LAW; CONFIDENTIALITY. The Investment Advisor
further agrees that it will comply with all applicable rules and regulations of
all federal regulatory agencies having jurisdiction over the Investment Advisor
in the performance of its duties hereunder. The Investment Advisor will treat
confidentially and as proprietary information of the Company all records and
other information relating to the Company and prior, present or potential
shareholders (except clients of the Investment Advisor and its affiliates), and
will not use such records and information for any purpose other than performance
of its responsibilities and duties hereunder, except after prior notification to
and approval in writing by the Company, which approval shall not be unreasonably
withheld and may not be withheld where the Investment Advisor may be exposed to
civil or criminal contempt proceedings for failure to comply, when requested to
divulge such information by duly constituted authorities, or when so requested
by the Company.
6. SERVICES NOT EXCLUSIVE. The investment management and services
rendered by the Investment Advisor hereunder are not to be deemed exclusive, and
the Investment Advisor shall be free to render similar services to others so
long as its services under this Agreement are not impaired thereby.
7. BOOKS AND RECORDS. In compliance with the requirements of Rule
31a-3 under the 1940 Act, the Investment Advisor hereby agrees that all records
which it maintains for the Portfolio are the property of the Company and further
agrees to surrender promptly to the Company any of such records upon the
Company's request. The Investment Advisor further agrees to preserve for the
periods prescribed by Rule 31a-2 under the 1940 Act the records required to be
maintained by Rule 31a-1 under the 1940 Act.
8. EXPENSES. During the term of this Agreement, the Investment
Advisor will pay all expenses incurred by it in connection with its activities
under this Agreement other than the cost of securities purchased for the
Portfolio (including brokerage commissions, if any), the cost of independent
pricing services used in valuing the Portfolio's securities and fees and
expenses of registering and qualifying shares for distribution under state
securities laws.
If the expenses borne by the Portfolio in any fiscal year exceed the
most restrictive applicable expense limitations imposed
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by the securities regulations of any state in which the Shares of the Portfolio
are registered or qualified for sale to the public, the Investment Advisor shall
reimburse the Portfolio for any excess up to the amount of the fees payable by
the Portfolio to it during such fiscal year pursuant to Paragraph 9 hereof in
the same proportion that its fees bear to the total fees paid by the Company for
investment advisory services in respect of the Portfolio; PROVIDED, HOWEVER,
that notwithstanding the foregoing, the Investment Advisor shall reimburse the
Portfolio for such excess expenses regardless of the amount of such fees payable
to it during such fiscal year to the extent that the securities regulations of
any state in which the Shares are registered or qualified for sale so require.
9. COMPENSATION.
(a) For the services provided and the expenses assumed pursuant
to this Agreement with respect to the Portfolio, the Company will pay the
Investment Advisor from the assets of the Portfolio and the Investment Advisor
will accept as full compensation therefor a fee, computed daily and payable
monthly, at the annual rate of 1.00 % of the Portfolio's average daily net
assets.
(b) The fee attributable to the Portfolio shall be satisfied
only against assets of the Portfolio and not against the assets of any other
investment portfolio of the Company.
10. LIMITATION OF LIABILITY OF THE INVESTMENT ADVISOR. The
Investment Advisor shall not be liable for any error of judgment or mistake of
law or for any loss suffered by the Company in connection with the matters to
which this Agreement relates, except a loss resulting from a breach of fiduciary
duty with respect to the receipt of compensation for services or a loss
resulting from willful misfeasance, bad faith or gross negligence on the part of
the Investment Advisor in the performance of its duties or from reckless
disregard by it of its obligations and duties under this Agreement ("disabling
conduct"). The Portfolio will indemnify the Investment Advisor against and hold
it harmless from any and all losses, claims, damages, liabilities or expenses
(including reasonable counsel fees and expenses) resulting from any claim,
demand, action or suit not resulting from disabling conduct by the Investment
Advisor. Indemnification shall be made only following: (i) a final decision on
the merits by a court or other body before whom the proceeding was brought that
the Investment Advisor was not liable by reason of disabling conduct or (ii) in
the absence of such a decision, a reasonable determination, based upon a review
of the facts, that the Investment Advisor was not liable by reason of disabling
conduct by (a) the vote of a majority of a quorum of directors of the Portfolio
who are neither
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"interested persons" of the Portfolio nor parties to the proceeding
("disinterested non-party directors") or (b) an independent legal counsel in a
written opinion. The Investment Advisor shall be entitled to advances from the
Portfolio for payment of the reasonable expenses incurred by it in connection
with the matter as to which it is seeking indemnification in the manner and to
the fullest extent permissible under the Maryland General Corporation Law. The
Investment Advisor shall provide to the Portfolio a written affirmation of its
good faith belief that the standard of conduct necessary for indemnification by
the Portfolio has been met and a written undertaking to repay any such advance
if it should ultimately be determined that the standard of conduct has not been
met. In addition, at least one of the following additional conditions shall be
met: (a) the Investment Advisor shall provide a security in form and amount
acceptable to the Portfolio for its undertaking; (b) the Portfolio is insured
against losses arising by reason of the advance; or (c) a majority of a quorum
of disinterested non-party directors, or independent legal counsel, in a written
opinion, shall have determined, based upon a review of facts readily available
to the Portfolio at the time the advance is proposed to be made, that there is
reason to believe that the Investment Advisor will ultimately be found to be
entitled to indemnification. Any amounts payable by the Portfolio under this
Section shall be satisfied only against the assets of the Portfolio and not
against the assets of any other investment portfolio of the Company.
11. DURATION AND TERMINATION. This Agreement shall become effective
with respect to the Portfolio upon approval of this Agreement by vote of a
majority of the outstanding voting securities of the Portfolio and, unless
sooner terminated as provided herein, shall continue with respect to the
Portfolio until August 16, 1997. Thereafter, if not terminated, this Agreement
shall continue with respect to the Portfolio for successive annual periods
ending on August 16, PROVIDED such continuance is specifically approved at least
annually (a) by the vote of a majority of those members of the Board of
Directors of the Company who are not parties to this Agreement or interested
persons of any such party, cast in person at a meeting called for the purpose of
voting on such approval, and (b) by the Board of Directors of the Company or by
vote of a majority of the outstanding voting securities of the Portfolio;
PROVIDED, HOWEVER, that this Agreement may be terminated with respect to the
Portfolio by the Company at any time, without the payment of any penalty, by the
Board of Directors of the Company or by vote of a majority of the outstanding
voting securities of the Portfolio, on 60 days' prior written notice to the
Investment Advisor, or by the Investment Advisor at any time, without payment of
any penalty, on 90 days' prior written notice to the Company. This Agreement
will immediately terminate in the event of its assignment. (As used in
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this Agreement, the terms "majority of the outstanding voting securities,"
"interested person" and "assignment" shall have the same meaning as such terms
have in the 1940 Act).
12. AMENDMENT OF THIS AGREEMENT. No provision of this Agreement may
be changed, discharged or terminated orally, except by an instrument in writing
signed by the party against which enforcement of the change, discharge or
termination is sought, and no amendment of this Agreement affecting the
Portfolio shall be effective until approved by vote of the holders of a majority
of the outstanding voting securities of the Portfolio.
13. MISCELLANEOUS. The captions in this Agreement are included for
convenience of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect. If any
provision of this Agreement shall be held or made invalid by a court decision,
statute, rule or otherwise, the remainder of this Agreement shall not be
affected thereby. This Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and their respective successors and shall be
governed by Delaware law.
14. CHANGE IN MEMBERSHIP. The Investment Advisor shall notify the
Company of any change in its membership within a reasonable time after such
change.
15. GOVERNING LAW. This Agreement shall be governed by and construed
and enforced in accordance with the laws of the state of New York without giving
effect to the conflicts of laws principles thereof.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be executed by their officers designated below as of the day and year first
above written.
THE RBB FUND, INC.
By: __________________________
President
BEA ASSOCIATES
By: __________________________
<PAGE>
Exhibit (6)(ee)
DISTRIBUTION AGREEMENT SUPPLEMENT
(BEA Investor Classes)
This supplemental agreement is entered into this ___ day of
__________, 1996, by and between THE RBB FUND, INC. (the "Fund") and COUNSELLORS
SECURITIES INC. (the "Distributor").
The Fund is a corporation organized under the laws of the State of
Maryland and is an open-end management investment company. The Fund and the
Distributor have entered into a Distribution Agreement, dated as of April 10,
1991 (as from time to time amended and supplemented, the "Distribution
Agreement"), pursuant to which the Distributor has undertaken to act as
distributor for the Fund, as more fully set forth therein. Certain capitalized
terms used without definition in this Distribution Agreement Supplement have the
meaning specified in the Distribution Agreement.
The Fund agrees with the Distributor as follows:
1. ADOPTION OF DISTRIBUTION AGREEMENT. The Distribution Agreement
is hereby adopted for the BEA Investor Classes of Common Stock (Classes II, JJ,
KK and LL) of the Fund. Each such BEA Advisor Class shall constitute a "Class"
as referred to in the Distribution Agreement and its shares shall be "Class
Shares" as referred to therein.
2. PAYMENT OF FEES. For all services to be rendered, facilities
furnished and expenses paid or assumed by the Distributor as provided in the
Distribution Agreement and herein, the Fund shall pay the Distributor a monthly
12b-1 fee on the first business day of each month, based upon the average daily
value (as determined on each business day at the time set forth in the
Prospectus for determining net asset value per share) of the net assets of the
Classes during the preceeding month, at an annual rate of 0.50%.
IN WITNESS WHEREOF, the undersigned have entered into this Agreement,
intending to be legally bound hereby, as of the date and year first above
written.
THE RBB FUND, INC. COUNSELLORS SECURITIES INC.
By______________________ By_________________________
<PAGE>
Exhibit (6)(ff)
DISTRIBUTION AGREEMENT SUPPLEMENT
(BEA Advisor Classes)
This supplemental agreement is entered into this ___ day of
__________, 1996, by and between THE RBB FUND, INC. (the "Fund") and COUNSELLORS
SECURITIES INC. (the "Distributor").
The Fund is a corporation organized under the laws of the State of
Maryland and is an open-end management investment company. The Fund and the
Distributor have entered into a Distribution Agreement, dated as of April 10,
1991 (as from time to time amended and supplemented, the "Distribution
Agreement"), pursuant to which the Distributor has undertaken to act as
distributor for the Fund, as more fully set forth therein. Certain capitalized
terms used without definition in this Distribution Agreement Supplement have the
meaning specified in the Distribution Agreement.
The Fund agrees with the Distributor as follows:
1. ADOPTION OF DISTRIBUTION AGREEMENT. The Distribution Agreement
is hereby adopted for the BEA Advisor Classes of Common Stock (Classes MM, NN,
OO and PP) of the Fund. Each such BEA Class shall constitute a "Class" as
referred to in the Distribution Agreement and its shares shall be "Class Shares"
as referred to therein.
2. PAYMENT OF FEES. For all services to be rendered, facilities
furnished and expenses paid or assumed by the Distributor as provided in the
Distribution Agreement and herein, the Fund shall pay the Distributor A monthly
12b-1 fee on the first business day of each month, based upon the average daily
value ( as determined on each businessday at the time set forth in the
Prospectus for determining net asset value per share) of the net assets of the
Classes during the preceeding month, at an annual rate of 0.25%
IN WITNESS WHEREOF, the undersigned have entered into this Agreement,
intending to be legally bound hereby, as of the date and year first above
written.
THE RBB FUND, INC. COUNSELLORS SECURITIES INC.
By______________________ By_______________________
<PAGE>
EXHIBIT (9)(VV)
ADMINISTRATION AND ACCOUNTING SERVICES AGREEMENT
TERMS AND CONDITIONS
This Agreement is made as of ____________, 1996 by and between THE
RBB FUND, INC., a Maryland corporation (the "Fund"), and PFPC INC., a Delaware
corporation ("PFPC"), which is an indirect wholly owned subsidiary of PNC Bank
Corp.
The Fund is registered as an open-end, non-diversified investment
company under the Investment Company Act of 1940, as amended (the "1940 Act").
The Fund wishes to retain PFPC to provide administration and accounting services
to its BEA Global Telecommunications Portfolio (the "Portfolio"), and PFPC
wishes to furnish such services.
In consideration of the promises and mutual covenants herein
contained, the parties agree as follows:
1. DEFINITIONS.
(a) "1933 ACT" means the Securities Act of 1933, as amended.
(b) "1934 ACT" means the Securities Exchange Act of 1934, as
amended.
(c) "AUTHORIZED PERSON" means any officer of the Fund
and any other person, duly authorized by the Fund's Board of Directors, to
give Oral and Written Instructions on behalf of the Fund and listed on the
Certificate attached hereto as Appendix B or any amendment thereto as may be
received by PFPC from time to
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time. An Authorized Person's scope of authority may be limited by the Fund by
setting forth such limitation on the Certificate.
(d) "BOOK-ENTRY SYSTEM" means Federal Reserve Treasury
book-entry system for United States and federal agency securities, its
successor or successors, and its nominee or nominees and any book-entry
system maintained by an exchange registered with the SEC under the 1934 Act.
(e) "ORAL INSTRUCTIONS" mean oral instructions received by PFPC
from an Authorized Person or from a person reasonably believed by PFPC to be
an Authorized Person.
(f) "SEC" means the Securities and Exchange Commission.
(g) "SHARES" mean the shares of common stock of the Fund
representing an interest in the Portfolio.
(h) "PROPERTY" means:
(i) any and all securities and other investment items
of the Portfolio which the Fund may from time to
time deposit, or cause to be deposited, with PFPC
or which PFPC may from time to time hold for the
Fund on behalf of the Portfolio;
(ii) all income in respect of any of such securities or
other investment items;
(iii) all proceeds of the sale of any of such securities
or investment items; and
(iv) all proceeds of the sale of Shares which are
received by PFPC from time to time, from or on
behalf of the Fund.
(i) "WRITTEN INSTRUCTIONS" mean written instructions signed by
two Authorized Persons and received by PFPC. The
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instructions may be delivered by hand, mail, tested telegram, cable, telex or
facsimile sending device.
2. APPOINTMENT.
The Fund hereby appoints PFPC to provide administration and
accounting services to the Portfolio, in accordance with the terms set forth in
this Agreement. PFPC accepts such appointment and agrees to furnish such
services.
3. DELIVERY OF DOCUMENTS.
The Fund has provided or, where applicable, will provide PFPC with
the following:
(a) certified or authenticated copies of the resolutions of the
Fund's Board of Directors, approving the appointment of PFPC
to provide services pursuant to this Agreement;
(b) a copy of the Fund's most recent effective registration
statement;
(c) a copy of the Fund's advisory agreement or agreements with
respect to the Portfolio;
(d) a copy of the Fund's distribution agreement or agreements with
respect to the Portfolio;
(e) a copy of any additional administration agreement with respect
to the Portfolio;
(f) copies of any shareholder servicing agreements made in respect
of the Portfolio; and
(g) certified or authenticated copies of any and all amendments or
supplements to the foregoing.
4. COMPLIANCE WITH GOVERNMENT RULES AND REGULATIONS.
PFPC undertakes to comply with all applicable requirements of the
1933 Act, the 1934 Act and the 1940 Act, and any laws, rules and regulations of
governmental authorities
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having jurisdiction with respect to all duties to be performed by PFPC
hereunder. Except as specifically set forth herein, PFPC assumes no
responsibility for such compliance by the Fund.
5. INSTRUCTIONS.
Unless otherwise provided in this Agreement, PFPC shall act only
upon Oral and Written Instructions.
PFPC shall be entitled to rely upon any Oral and Written
Instructions it receives from an Authorized Person (or from a person reasonably
believed by PFPC to be an Authorized Person) pursuant to this Agreement. PFPC
may assume that any Oral or Written Instruction received hereunder is not in any
way inconsistent with the provisions of organizational documents or this
Agreement or of any vote, resolution or proceeding of the Fund's Board of
Directors or of the Fund's shareholders.
The Fund agrees to forward to PFPC Written Instructions confirming
Oral Instructions so that PFPC receives the Written Instructions by the close of
business on the same day that such Oral Instructions are received. The fact
that such confirming Written Instructions are not received by PFPC shall in no
way invalidate the transactions or enforceability of the transactions authorized
by the Oral Instructions. The Fund further agrees that PFPC shall incur no
liability to the Fund in acting upon Oral or Written Instructions provided such
instructions reasonably appear to have been received from an Authorized Person.
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6. RIGHT TO RECEIVE ADVICE.
(a) ADVICE OF THE FUND. If PFPC is in doubt as to any action it
should or should not take, PFPC may request directions or advice, including Oral
or Written Instructions, from the Fund.
(b) ADVICE OF COUNSEL. If PFPC shall be in doubt as to any
questions of law pertaining to any action it should or should not take, PFPC may
request advice at its own cost from such counsel of its own choosing (who may be
counsel for the Fund, the Fund's advisor or PFPC, at the option of PFPC).
(c) CONFLICTING ADVICE. In the event of a conflict between
directions, advice or Oral or Written Instructions PFPC receives from the Fund,
and the advice it receives from counsel, PFPC shall be entitled to rely upon and
follow the advice of counsel.
(d) PROTECTION OF PFPC. PFPC shall be protected in any action
it takes or does not take in reliance upon directions, advice or Oral or Written
Instructions it receives from the Fund or from counsel and which PFPC believes,
in good faith, to be consistent with those directions, advice and Oral or
Written Instructions.
Nothing in this paragraph shall be construed so as to impose an
obligation upon PFPC (i) to seek such directions, advice or Oral or Written
Instructions, or (ii) to act in accordance with such directions, advice or Oral
or Written Instructions unless, under the terms of other provisions of this
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Agreement, the same is a condition of PFPC's properly taking or not taking such
action.
7. RECORDS.
The books and records pertaining to the Fund, which are in the
possession of PFPC, shall be the property of the Fund. Such books and records
shall be prepared and maintained as required by the 1940 Act and other
applicable securities laws, rules and regulations. The Fund and Authorized
Persons shall have access to such books and records at all times during PFPC's
normal business hours. Upon the reasonable request of the Fund, copies of any
such books and records shall be provided by PFPC to the Fund or to an Authorized
Person at the Fund's expense to be paid from the assets of the Portfolio.
PFPC shall keep the following records:
(a) all books and records with respect to the Portfolio's books of
account;
(b) records of the Portfolio's securities transactions;
(c) all other books and records as PFPC is required to maintain
pursuant to Rule 31a-1 of the 1940 Act and as specifically set
forth in Appendix B hereto.
8. CONFIDENTIALITY.
PFPC agrees to keep confidential all records of the Fund and
information relative to the Fund and its shareholders (past, present and
potential), unless the release of such records or information is otherwise
consented to, in writing, by the Fund. The Fund agrees that such consent shall
not be
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unreasonably withheld. The Fund further agrees that, should PFPC be required to
provide such information or records to duly constituted authorities (who may
institute civil or criminal contempt proceedings for failure to comply), PFPC
shall not be required to seek the Fund's consent prior to disclosing such
information.
9. LIAISON WITH ACCOUNTANTS.
PFPC shall act as liaison with the Fund's independent public
accountants and shall provide account analyses, fiscal year summaries, and other
audit-related schedules, all with respect to the Portfolio. PFPC shall take all
reasonable action in the performance of its obligations under this Agreement to
assure that the necessary information is made available to such accountants for
the expression of their opinion, as such may be required by the Fund from time
to time.
10. DISASTER RECOVERY.
PFPC shall enter into and shall maintain in effect with appropriate
parties one or more agreements making reasonable provision of emergency use of
electronic data processing equipment to the extent appropriate equipment is
available. In the event of equipment failures, PFPC shall, at no additional
expense to the Fund, take reasonable steps to minimize service interruptions but
shall have no liability with respect thereto.
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11. COMPENSATION.
As compensation for services rendered by PFPC during the term of
this Agreement, the Fund will pay to PFPC from the assets of the Portfolio a fee
or fees as may be agreed to in writing by the Fund and PFPC.
12. INDEMNIFICATION.
The Fund agrees to indemnify and hold harmless PFPC and its nominees
from all taxes, charges, expenses, assessments, claims and liabilities
(including, without limitation, liabilities arising under the 1933 Act, the 1934
Act and the 1940 Act, and any state and foreign securities and blue sky laws,
and amendments thereto, and expenses, including (without limitation) attorneys'
fees and disbursements, arising directly or indirectly from any action which
PFPC takes or does not take (i) at the request or on the direction of or in
reliance on the advice of the Fund or (ii) upon Oral or Written Instructions.
Neither PFPC, nor any of its nominees, shall be indemnified against any
liability to the Fund or to its shareholders (or any expenses incident to such
liability) arising out of PFPC's own willful misfeasance, gross negligence or
reckless disregard of its duties and obligations under this Agreement.
13. RESPONSIBILITY OF PFPC.
PFPC shall be under no duty to take any action on behalf of the Fund
except as specifically set forth herein or as may be specifically agreed to by
PFPC in writing. PFPC shall be obligated to exercise care and diligence in the
performance of
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its duties hereunder, to act in good faith and to use its best efforts, within
reasonable limits, in performing services provided for under this Agreement.
PFPC shall be responsible for failure to perform its duties under this Agreement
arising out of PFPC's gross negligence. Notwithstanding the foregoing, PFPC
shall not be responsible for losses beyond its control, provided that PFPC has
acted in accordance with the standard of care set forth above; and provided
further that PFPC shall only be responsible for that portion of losses or
damages suffered by the fund that are attributable to the gross negligence of
PFPC.
Without limiting the generality of the foregoing or of any other
provision of this Agreement, PFPC, in connection with its duties under this
Agreement, shall not be liable for (a) the validity or invalidity or authority
or lack thereof of any Oral or Written Instruction, notice or other instrument
which conforms to the applicable requirements of this Agreement, and which PFPC
reasonably believes to be genuine; or (b) delays or errors or loss of data
occurring by reason of circumstances beyond PFPC's control, including acts of
civil or military authority, national emergencies, labor difficulties, fire,
flood or catastrophe, acts of God, insurrection, war, riots or failure of the
mails, transportation, communication or power supply.
Notwithstanding anything in this Agreement to the contrary, PFPC
shall have no liability to the Fund for any consequential, special or indirect
losses or damages which the Fund may incur or suffer by or as a consequence of
PFPC's
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<PAGE>
performance of the services provided hereunder, whether or not the likelihood of
such losses or damages was known by PFPC.
14. DESCRIPTION OF ACCOUNTING SERVICES ON A CONTINUING BASIS.
PFPC will perform the following accounting functions with respect to
the Portfolio if required:
(i) Journalize investment, capital share and income
and expense activities;
(ii) Verify investment buy/sell trade tickets when
received from the investment advisor (the
"Advisor") and transmit trades to the Fund's
foreign custodian (the "Custodian") for proper
settlement;
(iii) Maintain individual ledgers for investment
securities;
(iv) Maintain historical tax lots for each security;
(v) Reconcile cash and investment balances with the
Custodian, and provide the Advisor with the
beginning cash balance available for investment
purposes;
(vi) Update the cash availability throughout the day as
required by the Advisor;
(vii) Post to and prepare the Statement of Assets and
Liabilities and the Statement of Operations;
(viii) Calculate various contractual expenses (E.G.,
advisory and custody fees);
(ix) Monitor the expense accruals and notify an officer
of the Fund of any proposed adjustments;
(x) Control all disbursements and authorize such
disbursements upon Written Instructions;
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(xi) Calculate capital gains and losses;
(xii) Determine net income;
(xiii) Obtain security market quotes from independent
pricing services approved by the Advisor, or if
such quotes are unavailable, then obtain such
prices from Advisor, and in either case calculate
the market value of the investments;
(xiv) Transmit or mail a copy of the daily portfolio
valuation to the Advisor;
(xv) Compute net asset value;
(xvi) As appropriate, compute yields, total return,
expense ratios, portfolio turnover rate, and, if
required, portfolio average dollar-weighted
maturity; and
(xvii) Prepare a monthly financial statement, which will
include the following items:
Schedule of Investments
Statement of Assets and Liabilities
Statement of Operations
Cash Statement
Schedule of Capital Gains and Losses.
15. DESCRIPTION OF ADMINISTRATION SERVICES ON A CONTINUING BASIS.
PFPC will perform the following administration services with respect
to the Portfolio:
(i) Prepare quarterly broker security transactions
summaries;
(ii) Prepare monthly security transaction listings;
(iii) (a) Assist in the preparation of support schedules
necessary for completion of federal and state tax
returns; or (b) prepare for execution and file the
Fund's Federal and state tax returns;
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<PAGE>
(iv) (a) Assist in the preparation of Semi-Annual
Reports with the SEC on Form N-SAR; or (b) prepare
and file the Fund's Semi-Annual Reports with the
SEC on Form N-SAR.
(v) (a) Assist in the preparation of annual,
semi-annual, and quarterly shareholder reports; or
(b) prepare and file with the SEC the Fund's
annual, semi-annual, and quarterly shareholder
reports;
(vi) Assist with the preparation of registration
statements and other filings relating to the
registration of Shares;
(vii) Monitor the Portfolio's status as a regulated
investment company under SubChapter M of the
Internal Revenue Code of 1986, as amended; and
(viii) Coordinate contractual relationships and
communications between the Fund and its service
providers.
16. DURATION AND TERMINATION.
This Agreement shall continue until terminated by the Fund or by
PFPC on sixty (60) days' prior written notice to the other party.
17. NOTICES.
All notices and other communications, including written
Instructions, shall be in writing or by confiding telegram, cable, telex or
facsimile sending device. If notice is sent by confirming telegram, cable,
telex or facsimile sending device, it shall be deemed to have been given
immediately. If notice is sent by first-class mail, it shall be deemed to have
been given three days after it has been mailed. If notice is sent by messenger,
it shall be deemed to have been given on the day it is
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<PAGE>
delivered. Notices shall be addressed (a) if to PFPC at PFPC's address, 400
Bellevue Parkway, Wilmington, Delaware 19809; (b) if to the Fund, at the address
of the Fund; or (c) if to neither of the foregoing, at such other address as
shall have been notified to the sender of any such Notice or other
communication.
18. AMENDMENTS.
This Agreement, or any term thereof, may be changed or waived only
by written amendment, signed by the party against whom enforcement of such
change or waiver is sought.
19. DELEGATION.
PFPC may assign its rights and delegate its duties hereunder to any
wholly owned direct or indirect subsidiary of PNC Bank, National Association or
PNC Bank Corp, provided that (i) PFPC gives the Fund thirty (30) days' prior
written notice; (ii) the delegate agrees with PFPC to comply with all relevant
provisions of the 1940 Act; and (iii) PFPC and such delegate promptly provide
such information as the Fund may request, and respond to such questions as the
Fund may ask, relative to the delegation, including (without limitation) the
capabilities of the delegate.
20. COUNTERPARTS.
This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
13
<PAGE>
21. FURTHER ACTIONS.
Each party agrees to perform such further acts and execute such
further documents as are necessary to effectuate the purposes hereof.
22. MISCELLANEOUS.
This Agreement embodies the entire agreement and understanding
between the parties and supersedes all prior agreements and understandings
relating to the subject matter hereof, provided that the parties may embody in
one or more separate documents their agreement, if any, with respect to
delegated and/or Oral Instructions.
The captions in this Agreement are included for convenience of
reference only and in no way define or delimit any of the provisions hereof or
otherwise affect their construction or effect.
This Agreement shall be deemed to be a contract made in Delaware and
governed by Delaware law. If any provision of this Agreement shall be held or
made invalid by a court decision, statute, rule or otherwise, the remainder of
this Agreement shall not be affected thereby. This Agreement shall be binding
and shall inure to the benefit off the parties hereto and their respective
successors.
14
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their officers designated below on the day and year first above
written.
PFPC INC.
By:___________________________
THE RBB FUND, INC.
By:___________________________
15
<PAGE>
APPENDIX A
[LIST BOOKS AND RECORDS TO BE
Maintained by PFPC]
16
<PAGE>
APPENDIX B
----------
Authorized Persons
__________________________ ______________________________
(name) (signature)
__________________________ ______________________________
(name) (signature)
__________________________ ______________________________
(name) (signature)
__________________________ ______________________________
(name) (signature)
__________________________ ______________________________
(name) (signature)
__________________________ ______________________________
(name) (signature)
B-1
<PAGE>
CO-ADMINISTRATION AGREEMENT
July __, 1996
BEA Associates
153 East 53rd Street
58th Floor
New York, New York 10022
Dear Sirs:
The RBB Fund, Inc. (the "Company"), a corporation organized under the
laws of the State of Maryland, confirms its agreement with BEA Associates
("BEA") with respect to the BEA International Equity Investor Portfolio (the
"Fund"), a portfolio of the Company, as follows:
1. INVESTMENT DESCRIPTION; APPOINTMENT
The Company desires to employ its capital by investing and reinvesting
in investments of the kind and in accordance with the limitations specified in
the Company's Articles of Incorporation, as amended from time to time (the
"Charter"), in the Company's By-laws, as amended from time to time (the
"By-laws"), in the Fund's prospectus (the "Prospectus") and statement of
additional information (the "Statement of Additional Information") as in effect
from time to time, and in such manner and to the extent as may from time to time
be approved by the Board of Directors of the Company. Copies of the Fund's
Prospectus and Statement of Additional Information and the Company's Charter and
By-laws have been submitted to BEA. The Fund employs BEA Associates (the
"Adviser") as its investment adviser. The Company desires to employ and hereby
appoints BEA as its co-administrator for the Fund. BEA accepts this
appointment and agrees to furnish the services for the compensation set forth
below.
2. SERVICES AS CO-ADMINISTRATOR
Subject to the supervision and direction of the Board of Directors of
the Company, BEA will:
(a) assist in supervising all aspects of the Fund's operations,
except those performed by other parties pursuant to written agreements with the
Company;
<PAGE>
(b) provide various shareholder liaison services including, but not
limited to, responding to inquiries of shareholders regarding the Fund,
providing information on shareholder investments, assisting shareholders of the
Fund in changing dividend options, account designations and addresses, and other
similar services;
(c) provide certain administrative services including, but not
limited to, providing periodic statements showing the account balance of a Fund
shareholder and integrating the statements with those of other transactions and
balances in the shareholder's other accounts serviced by the Fund's custodian or
transfer agent;
(d) supply the Fund with office facilities (which may be BEA
Service's own offices), data processing services, clerical, internal executive
and administrative services, and stationery and office supplies;
(e) furnish corporate secretarial services, including assisting in
the preparation of materials for Board of Directors meetings and distributing
those materials and assisting in the preparation of minutes of meetings of the
Company's Board of Directors and any Committees thereof and of the Fund's
shareholders;
(f) coordinate the preparation of reports to the Fund's shareholders
of record and the Securities and Exchange Commission (the "SEC") including, but
not limited to, proxy statements; annual, semi-annual and quarterly reports to
shareholders; annual and semi-annual reports on Form N-SAR; and post-effective
amendments to the Fund's Registration Statement on Form N-1A (the "Registration
Statements");
(g) develop computer systems for the generation of consolidated
periodic reports to investors;
(h) assist in other regulatory filings as necessary;
(i) assist the Fund's investment adviser, at the investment adviser's
request, in monitoring and developing compliance procedures for the Fund which
will include, among other matters, procedures to assist the investment adviser
in monitoring compliance with the Fund's investment objective, policies,
restrictions, tax matters and applicable laws and regulations; and
(j) acting as liaison between the Fund and the Fund's independent
public accountants, counsel, custodian or custodians, transfer agent and
co-administrator and taking all reasonable action in the performance of its
obligations under this Agreement
2
<PAGE>
to assure that all necessary information is made available to each of them.
In performing all services under this Agreement, BEA shall act in
conformity with applicable law, the Company's Charter and By-Laws, and all
amendments thereto, and the investment objective, investment policies and other
practices and policies set forth in the Fund's Registration Statement, as such
Registration Statement and practices and policies may be amended from time to
time.
3. COMPENSATION
In consideration of services rendered pursuant to this Agreement, the
Fund will pay BEA on the first business day of each month a fee for the previous
month at an annual rate of .05% of the Fund's average daily net assets for the
first $125 million of average daily net assets, and .10% of average daily net
assets for Fund assets above $125 million. The fee for the period from the date
BEA commences its operations on behalf of the Fund to the end of the month
during which BEA commences such operations shall be prorated according to the
proportion that such period bears to the full monthly period. Upon any
termination of this Agreement before the end of any month, the fee for such part
of a month shall be prorated according to the proportion which such period bears
to the full monthly period and shall be payable upon the date of termination of
this Agreement. For the purpose of determining fees payable to BEA, fees shall
be calculated monthly and the value of the Fund's net assets shall be computed
at the times and in the manner specified in the Prospectus and Statement of
Additional Information as from time to time in effect.
4. EXPENSES
BEA will bear all expenses in connection with the performance of its
services under this Agreement; PROVIDED, HOWEVER, that the Fund will reimburse
BEA for the out-of-pocket expenses incurred by it on behalf of the Fund. Such
reimbursable expenses shall include, but not be limited to, postage, telephone,
telex and Federal Express charges. BEA will bill the Fund as soon as
practicable after the end of each calendar month for the expenses it is entitled
to have reimbursed.
The Fund will bear certain other expenses to be incurred in its
operation, including: taxes, interest, brokerage fees and commissions, if any;
fees of Directors of the Company who are not officers, directors, or employees
of the Adviser or BEA; Securities and Exchange Commission fees and state Blue
Sky qualification fees; charges of custodians and transfer and dividend
disbursing agents; certain insurance premiums; outside auditing and legal
expenses; costs of maintenance of corporate existence; except as otherwise
provided herein, costs
3
<PAGE>
attributable to investor services, including without limitation, telephone and
personnel expenses; costs of preparing and printing prospectuses and statements
of additional information for regulatory purposes and for distribution to
existing shareholders; costs of shareholders' reports and meetings, and meetings
of the officers of Board of Directors of the Company; costs of any pricing
services; and any extraordinary expenses.
5. STANDARD OF CARE
BEA shall exercise its best judgment in rendering the services listed
in paragraph 2 above. 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 this Agreement relates provided that nothing in this Agreement
shall be deemed to protect or purport to protect BEA against liability to the
Fund or to its shareholders to which BEA would otherwise be subject by reason of
willful misfeasance, bad faith or negligence on its part in the performance of
its duties or by reason of BEA's reckless disregard of its obligations and
duties under this Agreement.
6. TERM OF AGREEMENT
This Agreement shall become effective on the day following approval by
the Board of Directors of the Company including a majority of the Board of
Directors who are not "interested persons" (as defined in the Investment Company
Act of 1940, as amended) of any party to this Agreement, and shall continue
until September 16, 1995 and shall continue automatically (unless terminated as
provided herein) for successive annual periods ending on September 16 of each
year, provided that such continuance is specifically approved at least annually
by the Board of Directors of the Company, including a majority of the Board of
Directors who are not "interested persons" of any party to this Agreement, by
vote cast in person at a meeting called for the purpose of voting on such
approval. This Agreement is terminable, without penalty, on 60 days' written
notice, by the Board of Directors of the Company or by vote of holders of a
majority of the Fund's shares, or upon 60 days' written notice, by BEA.
7. SERVICE TO OTHER COMPANIES OR ACCOUNTS
The Company understands that BEA now acts, will continue to act and
may act in the future as administrator, co-administrator or administrative
services agent to one or more other investment companies, and the Company has no
objection to BEA's so acting. The Company understands that the persons employed
by BEA to assist in the performance of BEA's duties hereunder will not devote
their full time to such service and nothing contained in this Agreement shall be
deemed to limit or
4
<PAGE>
restrict the right of BEA or any affiliate of BEA to engage in and devote time
and attention to other businesses or to render services of whatever kind or
nature.
8. LIMITATION OF LIABILITY
The Company and BEA agree that the obligations of the Company under
this Agreement will not be binding upon any of the directors, shareholders,
nominees, officers, employees or agents, whether past, present or future, of the
Company, individually, but are binding only upon the assets and property of the
Fund, as provided in the Company's Charter. The execution and delivery of this
Agreement has been authorized by the Board of Directors of the Company, and
signed by an authorized officer of the Company, acting as such, and neither the
authorization by the Board of Directors nor the execution and delivery by the
officer will be deemed to have been made by any of them individually or to
impose any liability on any of them personally, but will bind only the property
of the Fund as provided in the Charter.
If the foregoing is in accordance with your understanding, kindly
indicate your acceptance hereof by signing and returning to us the enclosed copy
hereof.
Very truly yours,
RBB FUND, INC.
By:___________________________
Name:
Title:
Accepted:
BEA ASSOCTIATES
By:___________________________
Name:
Title:
5
<PAGE>
---------------
EXHIBIT (9)(XX)
CO-ADMINISTRATION AGREEMENT
July __, 1996
BEA Associates
153 East 53rd Street
58th Floor
New York, New York 10022
Dear Sirs:
The RBB Fund, Inc. (the "Company"), a corporation organized under the
laws of the State of Maryland, confirms its agreement with BEA Associates
("BEA") with respect to the BEA International Equity Advisor Portfolio (the
"Fund"), a portfolio of the Company, as follows:
1. INVESTMENT DESCRIPTION; APPOINTMENT
The Company desires to employ its capital by investing and reinvesting
in investments of the kind and in accordance with the limitations specified in
the Company's Articles of Incorporation, as amended from time to time (the
"Charter"), in the Company's By-laws, as amended from time to time (the
"By-laws"), in the Fund's prospectus (the "Prospectus") and statement of
additional information (the "Statement of Additional Information") as in effect
from time to time, and in such manner and to the extent as may from time to time
be approved by the Board of Directors of the Company. Copies of the Fund's
Prospectus and Statement of Additional Information and the Company's Charter and
By-laws have been submitted to BEA. The Fund employs BEA Associates (the
"Adviser") as its investment adviser. The Company desires to employ and hereby
appoints BEA as its co-administrator for the Fund. BEA accepts this
appointment and agrees to furnish the services for the compensation set forth
below.
2. SERVICES AS CO-ADMINISTRATOR
Subject to the supervision and direction of the Board of Directors of
the Company, BEA will:
(a) assist in supervising all aspects of the Fund's operations,
except those performed by other parties pursuant to written agreements with the
Company;
<PAGE>
(b) provide various shareholder liaison services including, but not
limited to, responding to inquiries of shareholders regarding the Fund,
providing information on shareholder investments, assisting shareholders of the
Fund in changing dividend options, account designations and addresses, and other
similar services;
(c) provide certain administrative services including, but not
limited to, providing periodic statements showing the account balance of a Fund
shareholder and integrating the statements with those of other transactions and
balances in the shareholder's other accounts serviced by the Fund's custodian or
transfer agent;
(d) supply the Fund with office facilities (which may be BEA
Service's own offices), data processing services, clerical, internal executive
and administrative services, and stationery and office supplies;
(e) furnish corporate secretarial services, including assisting in
the preparation of materials for Board of Directors meetings and distributing
those materials and assisting in the preparation of minutes of meetings of the
Company's Board of Directors and any Committees thereof and of the Fund's
shareholders;
(f) coordinate the preparation of reports to the Fund's shareholders
of record and the Securities and Exchange Commission (the "SEC") including, but
not limited to, proxy statements; annual, semi-annual and quarterly reports to
shareholders; annual and semi-annual reports on Form N-SAR; and post-effective
amendments to the Fund's Registration Statement on Form N-1A (the "Registration
Statements");
(g) develop computer systems for the generation of consolidated
periodic reports to investors;
(h) assist in other regulatory filings as necessary;
(i) assist the Fund's investment adviser, at the investment adviser's
request, in monitoring and developing compliance procedures for the Fund which
will include, among other matters, procedures to assist the investment adviser
in monitoring compliance with the Fund's investment objective, policies,
restrictions, tax matters and applicable laws and regulations; and
(j) acting as liaison between the Fund and the Fund's independent
public accountants, counsel, custodian or custodians, transfer agent and
co-administrator and taking all reasonable action in the performance of its
obligations under this Agreement
2
<PAGE>
to assure that all necessary information is made available to each of them.
In performing all services under this Agreement, BEA shall act in
conformity with applicable law, the Company's Charter and By-Laws, and all
amendments thereto, and the investment objective, investment policies and other
practices and policies set forth in the Fund's Registration Statement, as such
Registration Statement and practices and policies may be amended from time to
time.
3. COMPENSATION
In consideration of services rendered pursuant to this Agreement, the
Fund will pay BEA on the first business day of each month a fee for the previous
month at an annual rate of .05% of the Fund's average daily net assets for the
first $125 million of average daily net assets, and .10% of average daily net
assets for Fund assets above $125 million. The fee for the period from the date
BEA commences its operations on behalf of the Fund to the end of the month
during which BEA commences such operations shall be prorated according to the
proportion that such period bears to the full monthly period. Upon any
termination of this Agreement before the end of any month, the fee for such part
of a month shall be prorated according to the proportion which such period bears
to the full monthly period and shall be payable upon the date of termination of
this Agreement. For the purpose of determining fees payable to BEA, fees shall
be calculated monthly and the value of the Fund's net assets shall be computed
at the times and in the manner specified in the Prospectus and Statement of
Additional Information as from time to time in effect.
4. EXPENSES
BEA will bear all expenses in connection with the performance of its
services under this Agreement; PROVIDED, HOWEVER, that the Fund will reimburse
BEA for the out-of-pocket expenses incurred by it on behalf of the Fund. Such
reimbursable expenses shall include, but not be limited to, postage, telephone,
telex and Federal Express charges. BEA will bill the Fund as soon as
practicable after the end of each calendar month for the expenses it is entitled
to have reimbursed.
The Fund will bear certain other expenses to be incurred in its
operation, including: taxes, interest, brokerage fees and commissions, if any;
fees of Directors of the Company who are not officers, directors, or employees
of the Adviser or BEA; Securities and Exchange Commission fees and state Blue
Sky qualification fees; charges of custodians and transfer and dividend
disbursing agents; certain insurance premiums; outside auditing and legal
expenses; costs of maintenance of corporate existence; except as otherwise
provided herein, costs
3
<PAGE>
attributable to investor services, including without limitation, telephone and
personnel expenses; costs of preparing and printing prospectuses and statements
of additional information for regulatory purposes and for distribution to
existing shareholders; costs of shareholders' reports and meetings, and meetings
of the officers of Board of Directors of the Company; costs of any pricing
services; and any extraordinary expenses.
5. STANDARD OF CARE
BEA shall exercise its best judgment in rendering the services listed
in paragraph 2 above. 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 this Agreement relates provided that nothing in this Agreement
shall be deemed to protect or purport to protect BEA against liability to the
Fund or to its shareholders to which BEA would otherwise be subject by reason of
willful misfeasance, bad faith or negligence on its part in the performance of
its duties or by reason of BEA's reckless disregard of its obligations and
duties under this Agreement.
6. TERM OF AGREEMENT
This Agreement shall become effective on the day following approval by
the Board of Directors of the Company including a majority of the Board of
Directors who are not "interested persons" (as defined in the Investment Company
Act of 1940, as amended) of any party to this Agreement, and shall continue
until September 16, 1995 and shall continue automatically (unless terminated as
provided herein) for successive annual periods ending on September 16 of each
year, provided that such continuance is specifically approved at least annually
by the Board of Directors of the Company, including a majority of the Board of
Directors who are not "interested persons" of any party to this Agreement, by
vote cast in person at a meeting called for the purpose of voting on such
approval. This Agreement is terminable, without penalty, on 60 days' written
notice, by the Board of Directors of the Company or by vote of holders of a
majority of the Fund's shares, or upon 60 days' written notice, by BEA.
7. SERVICE TO OTHER COMPANIES OR ACCOUNTS
The Company understands that BEA now acts, will continue to act and
may act in the future as administrator, co-administrator or administrative
services agent to one or more other investment companies, and the Company has no
objection to BEA's so acting. The Company understands that the persons employed
by BEA to assist in the performance of BEA's duties hereunder will not devote
their full time to such service and nothing contained in this Agreement shall be
deemed to limit or
4
<PAGE>
restrict the right of BEA or any affiliate of BEA to engage in and devote time
and attention to other businesses or to render services of whatever kind or
nature.
8. LIMITATION OF LIABILITY
The Company and BEA agree that the obligations of the Company under
this Agreement will not be binding upon any of the directors, shareholders,
nominees, officers, employees or agents, whether past, present or future, of the
Company, individually, but are binding only upon the assets and property of the
Fund, as provided in the Company's Charter. The execution and delivery of this
Agreement has been authorized by the Board of Directors of the Company, and
signed by an authorized officer of the Company, acting as such, and neither the
authorization by the Board of Directors nor the execution and delivery by the
officer will be deemed to have been made by any of them individually or to
impose any liability on any of them personally, but will bind only the property
of the Fund as provided in the Charter.
If the foregoing is in accordance with your understanding, kindly
indicate your acceptance hereof by signing and returning to us the enclosed copy
hereof.
Very truly yours,
RBB FUND, INC.
By:________________________
Name:
Title:
Accepted:
BEA ASSOCTIATES
By:___________________________
Name:
Title:
5
<PAGE>
CO-ADMINISTRATION AGREEMENT
July __, 1996
BEA Associates
153 East 53rd Street
58th Floor
New York, New York 10022
Dear Sirs:
The RBB Fund, Inc. (the "Company"), a corporation organized under the
laws of the State of Maryland, confirms its agreement with BEA Associates
("BEA") with respect to the BEA Emerging Markets Equity Investor Portfolio (the
"Fund"), a portfolio of the Company, as follows:
1. INVESTMENT DESCRIPTION; APPOINTMENT
The Company desires to employ its capital by investing and reinvesting
in investments of the kind and in accordance with the limitations specified in
the Company's Articles of Incorporation, as amended from time to time (the
"Charter"), in the Company's By-laws, as amended from time to time (the
"By-laws"), in the Fund's prospectus (the "Prospectus") and statement of
additional information (the "Statement of Additional Information") as in effect
from time to time, and in such manner and to the extent as may from time to time
be approved by the Board of Directors of the Company. Copies of the Fund's
Prospectus and Statement of Additional Information and the Company's Charter and
By-laws have been submitted to BEA. The Fund employs BEA Associates (the
"Adviser") as its investment adviser. The Company desires to employ and hereby
appoints BEA as its co-administrator for the Fund. BEA accepts this
appointment and agrees to furnish the services for the compensation set forth
below.
2. SERVICES AS CO-ADMINISTRATOR
Subject to the supervision and direction of the Board of Directors of
the Company, BEA will:
1
<PAGE>
(a) assist in supervising all aspects of the Fund's operations,
except those performed by other parties pursuant to written agreements with the
Company;
(b) provide various shareholder liaison services including, but not
limited to, responding to inquiries of shareholders regarding the Fund,
providing information on shareholder investments, assisting shareholders of the
Fund in changing dividend options, account designations and addresses, and other
similar services;
(c) provide certain administrative services including, but not
limited to, providing periodic statements showing the account balance of a Fund
shareholder and integrating the statements with those of other transactions and
balances in the shareholder's other accounts serviced by the Fund's custodian or
transfer agent;
(d) supply the Fund with office facilities (which may be BEA
Service's own offices), data processing services, clerical, internal executive
and administrative services, and stationery and office supplies;
(e) furnish corporate secretarial services, including assisting in
the preparation of materials for Board of Directors meetings and distributing
those materials and assisting in the preparation of minutes of meetings of the
Company's Board of Directors and any Committees thereof and of the Fund's
shareholders;
(f) coordinate the preparation of reports to the Fund's shareholders
of record and the Securities and Exchange Commission (the "SEC") including, but
not limited to, proxy statements; annual, semi-annual and quarterly reports to
shareholders; annual and semi-annual reports on Form N-SAR; and post-effective
amendments to the Fund's Registration Statement on Form N-1A (the "Registration
Statements");
(g) develop computer systems for the generation of consolidated
periodic reports to investors;
(h) assist in other regulatory filings as necessary;
(i) assist the Fund's investment adviser, at the investment adviser's
request, in monitoring and developing compliance procedures for the Fund which
will include, among other matters, procedures to assist the investment adviser
in monitoring compliance with the Fund's investment objective, policies,
restrictions, tax matters and applicable laws and regulations; and
(j) acting as liaison between the Fund and the Fund's independent
public accountants, counsel, custodian or custodians, transfer agent and
co-administrator and taking all reasonable action in the performance of its
obligations under this Agreement
2
<PAGE>
to assure that all necessary information is made available to each of them.
In performing all services under this Agreement, BEA shall act in
conformity with applicable law, the Company's Charter and By-Laws, and all
amendments thereto, and the investment objective, investment policies and other
practices and policies set forth in the Fund's Registration Statement, as such
Registration Statement and practices and policies may be amended from time to
time.
3. COMPENSATION
In consideration of services rendered pursuant to this Agreement, the
Fund will pay BEA on the first business day of each month a fee for the previous
month at an annual rate of .05% of the Fund's average daily net assets for the
first $125 million of average daily net assets, and .10% of average daily net
assets for Fund assets above $125 million. The fee for the period from the date
BEA commences its operations on behalf of the Fund to the end of the month
during which BEA commences such operations shall be prorated according to the
proportion that such period bears to the full monthly period. Upon any
termination of this Agreement before the end of any month, the fee for such part
of a month shall be prorated according to the proportion which such period bears
to the full monthly period and shall be payable upon the date of termination of
this Agreement. For the purpose of determining fees payable to BEA, fees shall
be calculated monthly and the value of the Fund's net assets shall be computed
at the times and in the manner specified in the Prospectus and Statement of
Additional Information as from time to time in effect.
4. EXPENSES
BEA will bear all expenses in connection with the performance of its
services under this Agreement; PROVIDED, HOWEVER, that the Fund will reimburse
BEA for the out-of-pocket expenses incurred by it on behalf of the Fund. Such
reimbursable expenses shall include, but not be limited to, postage, telephone,
telex and Federal Express charges. BEA will bill the Fund as soon as
practicable after the end of each calendar month for the expenses it is entitled
to have reimbursed.
The Fund will bear certain other expenses to be incurred in its
operation, including: taxes, interest, brokerage fees and commissions, if any;
fees of Directors of the Company who are not officers, directors, or employees
of the Adviser or BEA; Securities and Exchange Commission fees and state Blue
Sky qualification fees; charges of custodians and transfer and dividend
disbursing agents; certain insurance premiums; outside auditing and legal
expenses; costs of maintenance of corporate existence; except as otherwise
provided herein, costs
3
<PAGE>
attributable to investor services, including without limitation, telephone and
personnel expenses; costs of preparing and printing prospectuses and statements
of additional information for regulatory purposes and for distribution to
existing shareholders; costs of shareholders' reports and meetings, and meetings
of the officers of Board of Directors of the Company; costs of any pricing
services; and any extraordinary expenses.
5. STANDARD OF CARE
BEA shall exercise its best judgment in rendering the services listed
in paragraph 2 above. 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 this Agreement relates provided that nothing in this Agreement
shall be deemed to protect or purport to protect BEA against liability to the
Fund or to its shareholders to which BEA would otherwise be subject by reason of
willful misfeasance, bad faith or negligence on its part in the performance of
its duties or by reason of BEA's reckless disregard of its obligations and
duties under this Agreement.
6. TERM OF AGREEMENT
This Agreement shall become effective on the day following approval by
the Board of Directors of the Company including a majority of the Board of
Directors who are not "interested persons" (as defined in the Investment Company
Act of 1940, as amended) of any party to this Agreement, and shall continue
until September 16, 1995 and shall continue automatically (unless terminated as
provided herein) for successive annual periods ending on September 16 of each
year, provided that such continuance is specifically approved at least annually
by the Board of Directors of the Company, including a majority of the Board of
Directors who are not "interested persons" of any party to this Agreement, by
vote cast in person at a meeting called for the purpose of voting on such
approval. This Agreement is terminable, without penalty, on 60 days' written
notice, by the Board of Directors of the Company or by vote of holders of a
majority of the Fund's shares, or upon 60 days' written notice, by BEA.
7. SERVICE TO OTHER COMPANIES OR ACCOUNTS
The Company understands that BEA now acts, will continue to act and
may act in the future as administrator, co-administrator or administrative
services agent to one or more other investment companies, and the Company has no
objection to BEA's so acting. The Company understands that the persons employed
by BEA to assist in the performance of BEA's duties hereunder will not devote
their full time to such service and nothing contained in this Agreement shall be
deemed to limit or
4
<PAGE>
restrict the right of BEA or any affiliate of BEA to engage in and devote time
and attention to other businesses or to render services of whatever kind or
nature.
8. LIMITATION OF LIABILITY
The Company and BEA agree that the obligations of the Company under
this Agreement will not be binding upon any of the directors, shareholders,
nominees, officers, employees or agents, whether past, present or future, of the
Company, individually, but are binding only upon the assets and property of the
Fund, as provided in the Company's Charter. The execution and delivery of this
Agreement has been authorized by the Board of Directors of the Company, and
signed by an authorized officer of the Company, acting as such, and neither the
authorization by the Board of Directors nor the execution and delivery by the
officer will be deemed to have been made by any of them individually or to
impose any liability on any of them personally, but will bind only the property
of the Fund as provided in the Charter.
If the foregoing is in accordance with your understanding, kindly
indicate your acceptance hereof by signing and returning to us the enclosed copy
hereof.
Very truly yours,
RBB FUND, INC.
By:___________________________
Name:
Title:
Accepted:
BEA ASSOCTIATES
By:___________________________
Name:
Title:
5
<PAGE>
---------------
EXHIBIT (9)(22)
CO-ADMINISTRATION AGREEMENT
July __, 1996
BEA Associates
153 East 53rd Street
58th Floor
New York, New York 10022
Dear Sirs:
The RBB Fund, Inc. (the "Company"), a corporation organized under the
laws of the State of Maryland, confirms its agreement with BEA Associates
("BEA") with respect to the BEA Emerging Markets Equity Advisor Portfolio (the
"Fund"), a portfolio of the Company, as follows:
1. INVESTMENT DESCRIPTION; APPOINTMENT
The Company desires to employ its capital by investing and reinvesting
in investments of the kind and in accordance with the limitations specified in
the Company's Articles of Incorporation, as amended from time to time (the
"Charter"), in the Company's By-laws, as amended from time to time (the
"By-laws"), in the Fund's prospectus (the "Prospectus") and statement of
additional information (the "Statement of Additional Information") as in effect
from time to time, and in such manner and to the extent as may from time to time
be approved by the Board of Directors of the Company. Copies of the Fund's
Prospectus and Statement of Additional Information and the Company's Charter and
By-laws have been submitted to BEA. The Fund employs BEA Associates (the
"Adviser") as its investment adviser. The Company desires to employ and hereby
appoints BEA as its co-administrator for the Fund. BEA accepts this
appointment and agrees to furnish the services for the compensation set forth
below.
2. SERVICES AS CO-ADMINISTRATOR
Subject to the supervision and direction of the Board of Directors of
the Company, BEA will:
1
<PAGE>
(a) assist in supervising all aspects of the Fund's operations,
except those performed by other parties pursuant to written agreements with the
Company;
(b) provide various shareholder liaison services including, but not
limited to, responding to inquiries of shareholders regarding the Fund,
providing information on shareholder investments, assisting shareholders of the
Fund in changing dividend options, account designations and addresses, and other
similar services;
(c) provide certain administrative services including, but not
limited to, providing periodic statements showing the account balance of a Fund
shareholder and integrating the statements with those of other transactions and
balances in the shareholder's other accounts serviced by the Fund's custodian or
transfer agent;
(d) supply the Fund with office facilities (which may be BEA
Service's own offices), data processing services, clerical, internal executive
and administrative services, and stationery and office supplies;
(e) furnish corporate secretarial services, including assisting in
the preparation of materials for Board of Directors meetings and distributing
those materials and assisting in the preparation of minutes of meetings of the
Company's Board of Directors and any Committees thereof and of the Fund's
shareholders;
(f) coordinate the preparation of reports to the Fund's shareholders
of record and the Securities and Exchange Commission (the "SEC") including, but
not limited to, proxy statements; annual, semi-annual and quarterly reports to
shareholders; annual and semi-annual reports on Form N-SAR; and post-effective
amendments to the Fund's Registration Statement on Form N-1A (the "Registration
Statements");
(g) develop computer systems for the generation of consolidated
periodic reports to investors;
(h) assist in other regulatory filings as necessary;
(i) assist the Fund's investment adviser, at the investment adviser's
request, in monitoring and developing compliance procedures for the Fund which
will include, among other matters, procedures to assist the investment adviser
in monitoring compliance with the Fund's investment objective, policies,
restrictions, tax matters and applicable laws and regulations; and
(j) acting as liaison between the Fund and the Fund's independent
public accountants, counsel, custodian or custodians, transfer agent and
co-administrator and taking all reasonable action in the performance of its
obligations under this Agreement
<PAGE>
to assure that all necessary information is made available to each of them.
In performing all services under this Agreement, BEA shall act in
conformity with applicable law, the Company's Charter and By-Laws, and all
amendments thereto, and the investment objective, investment policies and other
practices and policies set forth in the Fund's Registration Statement, as such
Registration Statement and practices and policies may be amended from time to
time.
3. COMPENSATION
In consideration of services rendered pursuant to this Agreement, the
Fund will pay BEA on the first business day of each month a fee for the previous
month at an annual rate of .05% of the Fund's average daily net assets for the
first $125 million of average daily net assets, and .10% of average daily net
assets for Fund assets above $125 million. The fee for the period from the date
BEA commences its operations on behalf of the Fund to the end of the month
during which BEA commences such operations shall be prorated according to the
proportion that such period bears to the full monthly period. Upon any
termination of this Agreement before the end of any month, the fee for such part
of a month shall be prorated according to the proportion which such period bears
to the full monthly period and shall be payable upon the date of termination of
this Agreement. For the purpose of determining fees payable to BEA, fees shall
be calculated monthly and the value of the Fund's net assets shall be computed
at the times and in the manner specified in the Prospectus and Statement of
Additional Information as from time to time in effect.
4. EXPENSES
BEA will bear all expenses in connection with the performance of its
services under this Agreement; PROVIDED, HOWEVER, that the Fund will reimburse
BEA for the out-of-pocket expenses incurred by it on behalf of the Fund. Such
reimbursable expenses shall include, but not be limited to, postage, telephone,
telex and Federal Express charges. BEA will bill the Fund as soon as
practicable after the end of each calendar month for the expenses it is entitled
to have reimbursed.
The Fund will bear certain other expenses to be incurred in its
operation, including: taxes, interest, brokerage fees and commissions, if any;
fees of Directors of the Company who are not officers, directors, or employees
of the Adviser or BEA; Securities and Exchange Commission fees and state Blue
Sky qualification fees; charges of custodians and transfer and dividend
disbursing agents; certain insurance premiums; outside auditing and legal
expenses; costs of maintenance of corporate existence; except as otherwise
provided herein, costs
3
<PAGE>
attributable to investor services, including without limitation, telephone and
personnel expenses; costs of preparing and printing prospectuses and statements
of additional information for regulatory purposes and for distribution to
existing shareholders; costs of shareholders' reports and meetings, and meetings
of the officers of Board of Directors of the Company; costs of any pricing
services; and any extraordinary expenses.
5. STANDARD OF CARE
BEA shall exercise its best judgment in rendering the services listed
in paragraph 2 above. 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 this Agreement relates provided that nothing in this Agreement
shall be deemed to protect or purport to protect BEA against liability to the
Fund or to its shareholders to which BEA would otherwise be subject by reason of
willful misfeasance, bad faith or negligence on its part in the performance of
its duties or by reason of BEA's reckless disregard of its obligations and
duties under this Agreement.
6. TERM OF AGREEMENT
This Agreement shall become effective on the day following approval by
the Board of Directors of the Company including a majority of the Board of
Directors who are not "interested persons" (as defined in the Investment Company
Act of 1940, as amended) of any party to this Agreement, and shall continue
until September 16, 1995 and shall continue automatically (unless terminated as
provided herein) for successive annual periods ending on September 16 of each
year, provided that such continuance is specifically approved at least annually
by the Board of Directors of the Company, including a majority of the Board of
Directors who are not "interested persons" of any party to this Agreement, by
vote cast in person at a meeting called for the purpose of voting on such
approval. This Agreement is terminable, without penalty, on 60 days' written
notice, by the Board of Directors of the Company or by vote of holders of a
majority of the Fund's shares, or upon 60 days' written notice, by BEA.
7. SERVICE TO OTHER COMPANIES OR ACCOUNTS
The Company understands that BEA now acts, will continue to act and
may act in the future as administrator, co-administrator or administrative
services agent to one or more other investment companies, and the Company has no
objection to BEA's so acting. The Company understands that the persons employed
by BEA to assist in the performance of BEA's duties hereunder will not devote
their full time to such service and nothing contained in this Agreement shall be
deemed to limit or
4
<PAGE>
restrict the right of BEA or any affiliate of BEA to engage in and devote time
and attention to other businesses or to render services of whatever kind or
nature.
8. LIMITATION OF LIABILITY
The Company and BEA agree that the obligations of the Company under
this Agreement will not be binding upon any of the directors, shareholders,
nominees, officers, employees or agents, whether past, present or future, of the
Company, individually, but are binding only upon the assets and property of the
Fund, as provided in the Company's Charter. The execution and delivery of this
Agreement has been authorized by the Board of Directors of the Company, and
signed by an authorized officer of the Company, acting as such, and neither the
authorization by the Board of Directors nor the execution and delivery by the
officer will be deemed to have been made by any of them individually or to
impose any liability on any of them personally, but will bind only the property
of the Fund as provided in the Charter.
If the foregoing is in accordance with your understanding, kindly
indicate your acceptance hereof by signing and returning to us the enclosed copy
hereof.
Very truly yours,
RBB FUND, INC.
By:___________________________
Name:
Title:
Accepted:
BEA ASSOCTIATES
By:___________________________
Name:
Title:
5
<PAGE>
EXHIBIT (9)(aaa)
CO-ADMINISTRATION AGREEMENT
July __, 1996
BEA Associates
153 East 53rd Street
58th Floor
New York, New York 10022
Dear Sirs:
The RBB Fund, Inc. (the "Company"), a corporation organized under the
laws of the State of Maryland, confirms its agreement with BEA Associates
("BEA") with respect to the BEA High Yield Investor Portfolio (the "Fund"), a
portfolio of the Company, as follows:
1. INVESTMENT DESCRIPTION; APPOINTMENT
The Company desires to employ its capital by investing and reinvesting
in investments of the kind and in accordance with the limitations specified in
the Company's Articles of Incorporation, as amended from time to time (the
"Charter"), in the Company's By-laws, as amended from time to time (the
"By-laws"), in the Fund's prospectus (the "Prospectus") and statement of
additional information (the "Statement of Additional Information") as in effect
from time to time, and in such manner and to the extent as may from time to time
be approved by the Board of Directors of the Company. Copies of the Fund's
Prospectus and Statement of Additional Information and the Company's Charter and
By-laws have been submitted to BEA. The Fund employs BEA Associates (the
"Adviser") as its investment adviser. The Company desires to employ and hereby
appoints BEA as its co-administrator for the Fund. BEA accepts this
appointment and agrees to furnish the services for the compensation set forth
below.
2. SERVICES AS CO-ADMINISTRATOR
Subject to the supervision and direction of the Board of Directors of
the Company, BEA will:
1
<PAGE>
(a) assist in supervising all aspects of the Fund's operations,
except those performed by other parties pursuant to written agreements with the
Company;
(b) provide various shareholder liaison services including, but not
limited to, responding to inquiries of shareholders regarding the Fund,
providing information on shareholder investments, assisting shareholders of the
Fund in changing dividend options, account designations and addresses, and other
similar services;
(c) provide certain administrative services including, but not
limited to, providing periodic statements showing the account balance of a Fund
shareholder and integrating the statements with those of other transactions and
balances in the shareholder's other accounts serviced by the Fund's custodian or
transfer agent;
(d) supply the Fund with office facilities (which may be BEA
Service's own offices), data processing services, clerical, internal executive
and administrative services, and stationery and office supplies;
(e) furnish corporate secretarial services, including assisting in
the preparation of materials for Board of Directors meetings and distributing
those materials and assisting in the preparation of minutes of meetings of the
Company's Board of Directors and any Committees thereof and of the Fund's
shareholders;
(f) coordinate the preparation of reports to the Fund's shareholders
of record and the Securities and Exchange Commission (the "SEC") including, but
not limited to, proxy statements; annual, semi-annual and quarterly reports to
shareholders; annual and semi-annual reports on Form N-SAR; and post-effective
amendments to the Fund's Registration Statement on Form N-1A (the "Registration
Statements");
(g) develop computer systems for the generation of consolidated
periodic reports to investors;
(h) assist in other regulatory filings as necessary;
(i) assist the Fund's investment adviser, at the investment adviser's
request, in monitoring and developing compliance procedures for the Fund which
will include, among other matters, procedures to assist the investment adviser
in monitoring compliance with the Fund's investment objective, policies,
restrictions, tax matters and applicable laws and regulations; and
(j) acting as liaison between the Fund and the Fund's independent
public accountants, counsel, custodian or custodians, transfer agent and
co-administrator and taking all reasonable action in the performance of its
obligations under this Agreement
<PAGE>
to assure that all necessary information is made available to each of them.
In performing all services under this Agreement, BEA shall act in
conformity with applicable law, the Company's Charter and By-Laws, and all
amendments thereto, and the investment objective, investment policies and other
practices and policies set forth in the Fund's Registration Statement, as such
Registration Statement and practices and policies may be amended from time to
time.
3. COMPENSATION
In consideration of services rendered pursuant to this Agreement, the
Fund will pay BEA on the first business day of each month a fee for the previous
month at an annual rate of .05% of the Fund's average daily net assets for the
first $125 million of average daily net assets, and .10% of average daily net
assets for Fund assets above $125 million. The fee for the period from the date
BEA commences its operations on behalf of the Fund to the end of the month
during which BEA commences such operations shall be prorated according to the
proportion that such period bears to the full monthly period. Upon any
termination of this Agreement before the end of any month, the fee for such part
of a month shall be prorated according to the proportion which such period bears
to the full monthly period and shall be payable upon the date of termination of
this Agreement. For the purpose of determining fees payable to BEA, fees shall
be calculated monthly and the value of the Fund's net assets shall be computed
at the times and in the manner specified in the Prospectus and Statement of
Additional Information as from time to time in effect.
4. EXPENSES
BEA will bear all expenses in connection with the performance of its
services under this Agreement; PROVIDED, HOWEVER, that the Fund will reimburse
BEA for the out-of-pocket expenses incurred by it on behalf of the Fund. Such
reimbursable expenses shall include, but not be limited to, postage, telephone,
telex and Federal Express charges. BEA will bill the Fund as soon as
practicable after the end of each calendar month for the expenses it is entitled
to have reimbursed.
The Fund will bear certain other expenses to be incurred in its
operation, including: taxes, interest, brokerage fees and commissions, if any;
fees of Directors of the Company who are not officers, directors, or employees
of the Adviser or BEA; Securities and Exchange Commission fees and state Blue
Sky qualification fees; charges of custodians and transfer and dividend
disbursing agents; certain insurance premiums; outside auditing and legal
expenses; costs of maintenance of corporate existence; except as otherwise
provided herein, costs
3
<PAGE>
attributable to investor services, including without limitation, telephone and
personnel expenses; costs of preparing and printing prospectuses and statements
of additional information for regulatory purposes and for distribution to
existing shareholders; costs of shareholders' reports and meetings, and meetings
of the officers of Board of Directors of the Company; costs of any pricing
services; and any extraordinary expenses.
5. STANDARD OF CARE
BEA shall exercise its best judgment in rendering the services listed
in paragraph 2 above. 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 this Agreement relates provided that nothing in this Agreement
shall be deemed to protect or purport to protect BEA against liability to the
Fund or to its shareholders to which BEA would otherwise be subject by reason of
willful misfeasance, bad faith or negligence on its part in the performance of
its duties or by reason of BEA's reckless disregard of its obligations and
duties under this Agreement.
6. TERM OF AGREEMENT
This Agreement shall become effective on the day following approval by
the Board of Directors of the Company including a majority of the Board of
Directors who are not "interested persons" (as defined in the Investment Company
Act of 1940, as amended) of any party to this Agreement, and shall continue
until September 16, 1995 and shall continue automatically (unless terminated as
provided herein) for successive annual periods ending on September 16 of each
year, provided that such continuance is specifically approved at least annually
by the Board of Directors of the Company, including a majority of the Board of
Directors who are not "interested persons" of any party to this Agreement, by
vote cast in person at a meeting called for the purpose of voting on such
approval. This Agreement is terminable, without penalty, on 60 days' written
notice, by the Board of Directors of the Company or by vote of holders of a
majority of the Fund's shares, or upon 60 days' written notice, by BEA.
7. SERVICE TO OTHER COMPANIES OR ACCOUNTS
The Company understands that BEA now acts, will continue to act and
may act in the future as administrator, co-administrator or administrative
services agent to one or more other investment companies, and the Company has no
objection to BEA's so acting. The Company understands that the persons employed
by BEA to assist in the performance of BEA's duties hereunder will not devote
their full time to such service and nothing contained in this Agreement shall be
deemed to limit or
4
<PAGE>
restrict the right of BEA or any affiliate of BEA to engage in and devote time
and attention to other businesses or to render services of whatever kind or
nature.
8. LIMITATION OF LIABILITY
The Company and BEA agree that the obligations of the Company under
this Agreement will not be binding upon any of the directors, shareholders,
nominees, officers, employees or agents, whether past, present or future, of the
Company, individually, but are binding only upon the assets and property of the
Fund, as provided in the Company's Charter. The execution and delivery of this
Agreement has been authorized by the Board of Directors of the Company, and
signed by an authorized officer of the Company, acting as such, and neither the
authorization by the Board of Directors nor the execution and delivery by the
officer will be deemed to have been made by any of them individually or to
impose any liability on any of them personally, but will bind only the property
of the Fund as provided in the Charter.
If the foregoing is in accordance with your understanding, kindly
indicate your acceptance hereof by signing and returning to us the enclosed copy
hereof.
Very truly yours,
RBB FUND, INC.
By:___________________________
Name:
Title:
Accepted:
BEA ASSOCTIATES
By:___________________________
Name:
Title:
5
<PAGE>
CO-ADMINISTRATION AGREEMENT
July __, 1996
BEA Associates
153 East 53rd Street
58th Floor
New York, New York 10022
Dear Sirs:
The RBB Fund, Inc. (the "Company"), a corporation organized under the
laws of the State of Maryland, confirms its agreement with BEA Associates
("BEA") with respect to the BEA High Yield Advisor Portfolio (the "Fund"), a
portfolio of the Company, as follows:
1. INVESTMENT DESCRIPTION; APPOINTMENT
The Company desires to employ its capital by investing and reinvesting
in investments of the kind and in accordance with the limitations specified in
the Company's Articles of Incorporation, as amended from time to time (the
"Charter"), in the Company's By-laws, as amended from time to time (the
"By-laws"), in the Fund's prospectus (the "Prospectus") and statement of
additional information (the "Statement of Additional Information") as in effect
from time to time, and in such manner and to the extent as may from time to time
be approved by the Board of Directors of the Company. Copies of the Fund's
Prospectus and Statement of Additional Information and the Company's Charter and
By-laws have been submitted to BEA. The Fund employs BEA Associates (the
"Adviser") as its investment adviser. The Company desires to employ and hereby
appoints BEA as its co-administrator for the Fund. BEA accepts this
appointment and agrees to furnish the services for the compensation set forth
below.
2. SERVICES AS CO-ADMINISTRATOR
Subject to the supervision and direction of the Board of Directors of
the Company, BEA will:
1
<PAGE>
(a) assist in supervising all aspects of the Fund's operations, except
those performed by other parties pursuant to written agreements with the
Company;
(b) provide various shareholder liaison services including, but not
limited to, responding to inquiries of shareholders regarding the Fund,
providing information on shareholder investments, assisting shareholders of the
Fund in changing dividend options, account designations and addresses, and other
similar services;
(c) provide certain administrative services including, but not limited to,
providing periodic statements showing the account balance of a Fund shareholder
and integrating the statements with those of other transactions and balances in
the shareholder's other accounts serviced by the Fund's custodian or transfer
agent;
(d) supply the Fund with office facilities (which may be BEA Service's own
offices), data processing services, clerical, internal executive and
administrative services, and stationery and office supplies;
(e) furnish corporate secretarial services, including assisting in the
preparation of materials for Board of Directors meetings and distributing those
materials and assisting in the preparation of minutes of meetings of the
Company's Board of Directors and any Committees thereof and of the Fund's
shareholders;
(f) coordinate the preparation of reports to the Fund's shareholders of
record and the Securities and Exchange Commission (the "SEC") including, but not
limited to, proxy statements; annual, semi-annual and quarterly reports to
shareholders; annual and semi-annual reports on Form N-SAR; and post-effective
amendments to the Fund's Registration Statement on Form N-1A (the "Registration
Statements");
(g) develop computer systems for the generation of consolidated periodic
reports to investors;
(h) assist in other regulatory filings as necessary;
(i) assist the Fund's investment adviser, at the investment adviser's
request, in monitoring and developing compliance procedures for the Fund which
will include, among other matters, procedures to assist the investment adviser
in monitoring compliance with the Fund's investment objective, policies,
restrictions, tax matters and applicable laws and regulations; and
(j) acting as liaison between the Fund and the Fund's independent public
accountants, counsel, custodian or custodians, transfer agent and
co-administrator and taking all reasonable action in the performance of its
obligations under this Agreement
<PAGE>
to assure that all necessary information is made available to each of them.
In performing all services under this Agreement, BEA shall act in
conformity with applicable law, the Company's Charter and By-Laws, and all
amendments thereto, and the investment objective, investment policies and other
practices and policies set forth in the Fund's Registration Statement, as such
Registration Statement and practices and policies may be amended from time to
time.
3. COMPENSATION
In consideration of services rendered pursuant to this Agreement, the
Fund will pay BEA on the first business day of each month a fee for the previous
month at an annual rate of .05% of the Fund's average daily net assets for the
first $125 million of average daily net assets, and .10% of average daily net
assets for Fund assets above $125 million. The fee for the period from the date
BEA commences its operations on behalf of the Fund to the end of the month
during which BEA commences such operations shall be prorated according to the
proportion that such period bears to the full monthly period. Upon any
termination of this Agreement before the end of any month, the fee for such part
of a month shall be prorated according to the proportion which such period bears
to the full monthly period and shall be payable upon the date of termination of
this Agreement. For the purpose of determining fees payable to BEA, fees shall
be calculated monthly and the value of the Fund's net assets shall be computed
at the times and in the manner specified in the Prospectus and Statement of
Additional Information as from time to time in effect.
4. EXPENSES
BEA will bear all expenses in connection with the performance of its
services under this Agreement; PROVIDED, HOWEVER, that the Fund will reimburse
BEA for the out-of-pocket expenses incurred by it on behalf of the Fund. Such
reimbursable expenses shall include, but not be limited to, postage, telephone,
telex and Federal Express charges. BEA will bill the Fund as soon as
practicable after the end of each calendar month for the expenses it is entitled
to have reimbursed.
The Fund will bear certain other expenses to be incurred in its
operation, including: taxes, interest, brokerage fees and commissions, if any;
fees of Directors of the Company who are not officers, directors, or employees
of the Adviser or BEA; Securities and Exchange Commission fees and state Blue
Sky qualification fees; charges of custodians and transfer and dividend
disbursing agents; certain insurance premiums; outside auditing and legal
expenses; costs of maintenance of corporate existence; except as otherwise
provided herein, costs
3
<PAGE>
attributable to investor services, including without limitation, telephone and
personnel expenses; costs of preparing and printing prospectuses and statements
of additional information for regulatory purposes and for distribution to
existing shareholders; costs of shareholders' reports and meetings, and meetings
of the officers of Board of Directors of the Company; costs of any pricing
services; and any extraordinary expenses.
5. STANDARD OF CARE
BEA shall exercise its best judgment in rendering the services listed
in paragraph 2 above. 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 this Agreement relates provided that nothing in this Agreement
shall be deemed to protect or purport to protect BEA against liability to the
Fund or to its shareholders to which BEA would otherwise be subject by reason of
willful misfeasance, bad faith or negligence on its part in the performance of
its duties or by reason of BEA's reckless disregard of its obligations and
duties under this Agreement.
6. TERM OF AGREEMENT
This Agreement shall become effective on the day following approval by
the Board of Directors of the Company including a majority of the Board of
Directors who are not "interested persons" (as defined in the Investment Company
Act of 1940, as amended) of any party to this Agreement, and shall continue
until September 16, 1995 and shall continue automatically (unless terminated as
provided herein) for successive annual periods ending on September 16 of each
year, provided that such continuance is specifically approved at least annually
by the Board of Directors of the Company, including a majority of the Board of
Directors who are not "interested persons" of any party to this Agreement, by
vote cast in person at a meeting called for the purpose of voting on such
approval. This Agreement is terminable, without penalty, on 60 days' written
notice, by the Board of Directors of the Company or by vote of holders of a
majority of the Fund's shares, or upon 60 days' written notice, by BEA.
7. SERVICE TO OTHER COMPANIES OR ACCOUNTS
The Company understands that BEA now acts, will continue to act and
may act in the future as administrator, co-administrator or administrative
services agent to one or more other investment companies, and the Company has no
objection to BEA's so acting. The Company understands that the persons employed
by BEA to assist in the performance of BEA's duties hereunder will not devote
their full time to such service and nothing contained in this Agreement shall be
deemed to limit or
4
<PAGE>
restrict the right of BEA or any affiliate of BEA to engage in and devote time
and attention to other businesses or to render services of whatever kind or
nature.
8. LIMITATION OF LIABILITY
The Company and BEA agree that the obligations of the Company under
this Agreement will not be binding upon any of the directors, shareholders,
nominees, officers, employees or agents, whether past, present or future, of the
Company, individually, but are binding only upon the assets and property of the
Fund, as provided in the Company's Charter. The execution and delivery of this
Agreement has been authorized by the Board of Directors of the Company, and
signed by an authorized officer of the Company, acting as such, and neither the
authorization by the Board of Directors nor the execution and delivery by the
officer will be deemed to have been made by any of them individually or to
impose any liability on any of them personally, but will bind only the property
of the Fund as provided in the Charter.
If the foregoing is in accordance with your understanding, kindly
indicate your acceptance hereof by signing and returning to us the enclosed copy
hereof.
Very truly yours,
RBB FUND, INC.
By:___________________________
Name:
Title:
Accepted:
BEA ASSOCTIATES
By:___________________________
Name:
Title:
5
<PAGE>
EXHIBIT 9(ccc)
CO-ADMINISTRATION AGREEMENT
July __, 1996
BEA Associates
153 East 53rd Street
58th Floor
New York, New York 10022
Dear Sirs:
The RBB Fund, Inc. (the "Company"), a corporation organized under the
laws of the State of Maryland, confirms its agreement with BEA Associates
("BEA") with respect to the BEA Global Telecommunications Investor Portfolio
(the "Fund"), a portfolio of the Company, as follows:
1. INVESTMENT DESCRIPTION; APPOINTMENT
The Company desires to employ its capital by investing and reinvesting
in investments of the kind and in accordance with the limitations specified in
the Company's Articles of Incorporation, as amended from time to time (the
"Charter"), in the Company's By-laws, as amended from time to time (the
"By-laws"), in the Fund's prospectus (the "Prospectus") and statement of
additional information (the "Statement of Additional Information") as in effect
from time to time, and in such manner and to the extent as may from time to time
be approved by the Board of Directors of the Company. Copies of the Fund's
Prospectus and Statement of Additional Information and the Company's Charter and
By-laws have been submitted to BEA. The Fund employs BEA Associates (the
"Adviser") as its investment adviser. The Company desires to employ and hereby
appoints BEA as its co-administrator for the Fund. BEA accepts this
appointment and agrees to furnish the services for the compensation set forth
below.
2. SERVICES AS CO-ADMINISTRATOR
Subject to the supervision and direction of the Board of Directors of
the Company, BEA will:
1
<PAGE>
(a) assist in supervising all aspects of the Fund's operations,
except those performed by other parties pursuant to written agreements with the
Company;
(b) provide various shareholder liaison services including, but not
limited to, responding to inquiries of shareholders regarding the Fund,
providing information on shareholder investments, assisting shareholders of the
Fund in changing dividend options, account designations and addresses, and other
similar services;
(c) provide certain administrative services including, but not
limited to, providing periodic statements showing the account balance of a Fund
shareholder and integrating the statements with those of other transactions and
balances in the shareholder's other accounts serviced by the Fund's custodian or
transfer agent;
(d) supply the Fund with office facilities (which may be BEA
Service's own offices), data processing services, clerical, internal executive
and administrative services, and stationery and office supplies;
(e) furnish corporate secretarial services, including assisting in
the preparation of materials for Board of Directors meetings and distributing
those materials and assisting in the preparation of minutes of meetings of the
Company's Board of Directors and any Committees thereof and of the Fund's
shareholders;
(f) coordinate the preparation of reports to the Fund's shareholders
of record and the Securities and Exchange Commission (the "SEC") including, but
not limited to, proxy statements; annual, semi-annual and quarterly reports to
shareholders; annual and semi-annual reports on Form N-SAR; and post-effective
amendments to the Fund's Registration Statement on Form N-1A (the "Registration
Statements");
(g) develop computer systems for the generation of consolidated
periodic reports to investors;
(h) assist in other regulatory filings as necessary;
(i) assist the Fund's investment adviser, at the investment adviser's
request, in monitoring and developing compliance procedures for the Fund which
will include, among other matters, procedures to assist the investment adviser
in monitoring compliance with the Fund's investment objective, policies,
restrictions, tax matters and applicable laws and regulations; and
(j) acting as liaison between the Fund and the Fund's independent
public accountants, counsel, custodian or custodians, transfer agent and
co-administrator and taking all reasonable action in the performance of its
obligations under this Agreement
<PAGE>
to assure that all necessary information is made available to each of them.
In performing all services under this Agreement, BEA shall act in
conformity with applicable law, the Company's Charter and By-Laws, and all
amendments thereto, and the investment objective, investment policies and other
practices and policies set forth in the Fund's Registration Statement, as such
Registration Statement and practices and policies may be amended from time to
time.
3. COMPENSATION
In consideration of services rendered pursuant to this Agreement, the
Fund will pay BEA on the first business day of each month a fee for the previous
month at an annual rate of .05% of the Fund's average daily net assets for the
first $125 million of average daily net assets, and .10% of average daily net
assets for Fund assets above $125 million. The fee for the period from the date
BEA commences its operations on behalf of the Fund to the end of the month
during which BEA commences such operations shall be prorated according to the
proportion that such period bears to the full monthly period. Upon any
termination of this Agreement before the end of any month, the fee for such part
of a month shall be prorated according to the proportion which such period bears
to the full monthly period and shall be payable upon the date of termination of
this Agreement. For the purpose of determining fees payable to BEA, fees shall
be calculated monthly and the value of the Fund's net assets shall be computed
at the times and in the manner specified in the Prospectus and Statement of
Additional Information as from time to time in effect.
4. EXPENSES
BEA will bear all expenses in connection with the performance of its
services under this Agreement; PROVIDED, HOWEVER, that the Fund will reimburse
BEA for the out-of-pocket expenses incurred by it on behalf of the Fund. Such
reimbursable expenses shall include, but not be limited to, postage, telephone,
telex and Federal Express charges. BEA will bill the Fund as soon as
practicable after the end of each calendar month for the expenses it is entitled
to have reimbursed.
The Fund will bear certain other expenses to be incurred in its
operation, including: taxes, interest, brokerage fees and commissions, if any;
fees of Directors of the Company who are not officers, directors, or employees
of the Adviser or BEA; Securities and Exchange Commission fees and state Blue
Sky qualification fees; charges of custodians and transfer and dividend
disbursing agents; certain insurance premiums; outside auditing and legal
expenses; costs of maintenance of corporate existence; except as otherwise
provided herein, costs
3
<PAGE>
attributable to investor services, including without limitation, telephone and
personnel expenses; costs of preparing and printing prospectuses and statements
of additional information for regulatory purposes and for distribution to
existing shareholders; costs of shareholders' reports and meetings, and meetings
of the officers of Board of Directors of the Company; costs of any pricing
services; and any extraordinary expenses.
5. STANDARD OF CARE
BEA shall exercise its best judgment in rendering the services listed
in paragraph 2 above. 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 this Agreement relates provided that nothing in this Agreement
shall be deemed to protect or purport to protect BEA against liability to the
Fund or to its shareholders to which BEA would otherwise be subject by reason of
willful misfeasance, bad faith or negligence on its part in the performance of
its duties or by reason of BEA's reckless disregard of its obligations and
duties under this Agreement.
6. TERM OF AGREEMENT
This Agreement shall become effective on the day following approval by
the Board of Directors of the Company including a majority of the Board of
Directors who are not "interested persons" (as defined in the Investment Company
Act of 1940, as amended) of any party to this Agreement, and shall continue
until September 16, 1995 and shall continue automatically (unless terminated as
provided herein) for successive annual periods ending on September 16 of each
year, provided that such continuance is specifically approved at least annually
by the Board of Directors of the Company, including a majority of the Board of
Directors who are not "interested persons" of any party to this Agreement, by
vote cast in person at a meeting called for the purpose of voting on such
approval. This Agreement is terminable, without penalty, on 60 days' written
notice, by the Board of Directors of the Company or by vote of holders of a
majority of the Fund's shares, or upon 60 days' written notice, by BEA.
7. SERVICE TO OTHER COMPANIES OR ACCOUNTS
The Company understands that BEA now acts, will continue to act and
may act in the future as administrator, co-administrator or administrative
services agent to one or more other investment companies, and the Company has no
objection to BEA's so acting. The Company understands that the persons employed
by BEA to assist in the performance of BEA's duties hereunder will not devote
their full time to such service and nothing contained in this Agreement shall be
deemed to limit or
4
<PAGE>
restrict the right of BEA or any affiliate of BEA to engage in and devote time
and attention to other businesses or to render services of whatever kind or
nature.
8. LIMITATION OF LIABILITY
The Company and BEA agree that the obligations of the Company under
this Agreement will not be binding upon any of the directors, shareholders,
nominees, officers, employees or agents, whether past, present or future, of the
Company, individually, but are binding only upon the assets and property of the
Fund, as provided in the Company's Charter. The execution and delivery of this
Agreement has been authorized by the Board of Directors of the Company, and
signed by an authorized officer of the Company, acting as such, and neither the
authorization by the Board of Directors nor the execution and delivery by the
officer will be deemed to have been made by any of them individually or to
impose any liability on any of them personally, but will bind only the property
of the Fund as provided in the Charter.
If the foregoing is in accordance with your understanding, kindly
indicate your acceptance hereof by signing and returning to us the enclosed copy
hereof.
Very truly yours,
RBB FUND, INC.
By:___________________________
Name:
Title:
Accepted:
BEA ASSOCTIATES
By:___________________________
Name:
Title:
5
<PAGE>
EXHIBIT (9) (ddd)
CO-ADMINISTRATION AGREEMENT
July __, 1996
BEA Associates
153 East 53rd Street
58th Floor
New York, New York 10022
Dear Sirs:
The RBB Fund, Inc. (the "Company"), a corporation organized under the
laws of the State of Maryland, confirms its agreement with BEA Associates
("BEA") with respect to the BEA Global Telecommunications Advisor Portfolio (the
"Fund"), a portfolio of the Company, as follows:
1. INVESTMENT DESCRIPTION; APPOINTMENT
The Company desires to employ its capital by investing and reinvesting
in investments of the kind and in accordance with the limitations specified in
the Company's Articles of Incorporation, as amended from time to time (the
"Charter"), in the Company's By-laws, as amended from time to time (the
"By-laws"), in the Fund's prospectus (the "Prospectus") and statement of
additional information (the "Statement of Additional Information") as in effect
from time to time, and in such manner and to the extent as may from time to time
be approved by the Board of Directors of the Company. Copies of the Fund's
Prospectus and Statement of Additional Information and the Company's Charter and
By-laws have been submitted to BEA. The Fund employs BEA Associates (the
"Adviser") as its investment adviser. The Company desires to employ and hereby
appoints BEA as its co-administrator for the Fund. BEA accepts this
appointment and agrees to furnish the services for the compensation set forth
below.
2. SERVICES AS CO-ADMINISTRATOR
Subject to the supervision and direction of the Board of Directors of
the Company, BEA will:
1
<PAGE>
(a) assist in supervising all aspects of the Fund's operations,
except those performed by other parties pursuant to written agreements with the
Company;
(b) provide various shareholder liaison services including, but not
limited to, responding to inquiries of shareholders regarding the Fund,
providing information on shareholder investments, assisting shareholders of the
Fund in changing dividend options, account designations and addresses, and other
similar services;
(c) provide certain administrative services including, but not
limited to, providing periodic statements showing the account balance of a Fund
shareholder and integrating the statements with those of other transactions and
balances in the shareholder's other accounts serviced by the Fund's custodian or
transfer agent;
(d) supply the Fund with office facilities (which may be BEA
Service's own offices), data processing services, clerical, internal executive
and administrative services, and stationery and office supplies;
(e) furnish corporate secretarial services, including assisting in
the preparation of materials for Board of Directors meetings and distributing
those materials and assisting in the preparation of minutes of meetings of the
Company's Board of Directors and any Committees thereof and of the Fund's
shareholders;
(f) coordinate the preparation of reports to the Fund's shareholders
of record and the Securities and Exchange Commission (the "SEC") including, but
not limited to, proxy statements; annual, semi-annual and quarterly reports to
shareholders; annual and semi-annual reports on Form N-SAR; and post-effective
amendments to the Fund's Registration Statement on Form N-1A (the "Registration
Statements");
(g) develop computer systems for the generation of consolidated
periodic reports to investors;
(h) assist in other regulatory filings as necessary;
(i) assist the Fund's investment adviser, at the investment adviser's
request, in monitoring and developing compliance procedures for the Fund which
will include, among other matters, procedures to assist the investment adviser
in monitoring compliance with the Fund's investment objective, policies,
restrictions, tax matters and applicable laws and regulations; and
(j) acting as liaison between the Fund and the Fund's independent
public accountants, counsel, custodian or custodians, transfer agent and
co-administrator and taking all reasonable action in the performance of its
obligations under this Agreement
2
<PAGE>
to assure that all necessary information is made available to each of them.
In performing all services under this Agreement, BEA shall act in
conformity with applicable law, the Company's Charter and By-Laws, and all
amendments thereto, and the investment objective, investment policies and other
practices and policies set forth in the Fund's Registration Statement, as such
Registration Statement and practices and policies may be amended from time to
time.
3. COMPENSATION
In consideration of services rendered pursuant to this Agreement, the
Fund will pay BEA on the first business day of each month a fee for the previous
month at an annual rate of .05% of the Fund's average daily net assets for the
first $125 million of average daily net assets, and .10% of average daily net
assets for Fund assets above $125 million. The fee for the period from the date
BEA commences its operations on behalf of the Fund to the end of the month
during which BEA commences such operations shall be prorated according to the
proportion that such period bears to the full monthly period. Upon any
termination of this Agreement before the end of any month, the fee for such part
of a month shall be prorated according to the proportion which such period bears
to the full monthly period and shall be payable upon the date of termination of
this Agreement. For the purpose of determining fees payable to BEA, fees shall
be calculated monthly and the value of the Fund's net assets shall be computed
at the times and in the manner specified in the Prospectus and Statement of
Additional Information as from time to time in effect.
4. EXPENSES
BEA will bear all expenses in connection with the performance of its
services under this Agreement; PROVIDED, HOWEVER, that the Fund will reimburse
BEA for the out-of-pocket expenses incurred by it on behalf of the Fund. Such
reimbursable expenses shall include, but not be limited to, postage, telephone,
telex and Federal Express charges. BEA will bill the Fund as soon as
practicable after the end of each calendar month for the expenses it is entitled
to have reimbursed.
The Fund will bear certain other expenses to be incurred in its
operation, including: taxes, interest, brokerage fees and commissions, if any;
fees of Directors of the Company who are not officers, directors, or employees
of the Adviser or BEA; Securities and Exchange Commission fees and state Blue
Sky qualification fees; charges of custodians and transfer and dividend
disbursing agents; certain insurance premiums; outside auditing and legal
expenses; costs of maintenance of corporate existence; except as otherwise
provided herein, costs
3
<PAGE>
attributable to investor services, including without limitation, telephone and
personnel expenses; costs of preparing and printing prospectuses and statements
of additional information for regulatory purposes and for distribution to
existing shareholders; costs of shareholders' reports and meetings, and meetings
of the officers of Board of Directors of the Company; costs of any pricing
services; and any extraordinary expenses.
5. STANDARD OF CARE
BEA shall exercise its best judgment in rendering the services listed
in paragraph 2 above. 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 this Agreement relates provided that nothing in this Agreement
shall be deemed to protect or purport to protect BEA against liability to the
Fund or to its shareholders to which BEA would otherwise be subject by reason of
willful misfeasance, bad faith or negligence on its part in the performance of
its duties or by reason of BEA's reckless disregard of its obligations and
duties under this Agreement.
6. TERM OF AGREEMENT
This Agreement shall become effective on the day following approval by
the Board of Directors of the Company including a majority of the Board of
Directors who are not "interested persons" (as defined in the Investment Company
Act of 1940, as amended) of any party to this Agreement, and shall continue
until September 16, 1995 and shall continue automatically (unless terminated as
provided herein) for successive annual periods ending on September 16 of each
year, provided that such continuance is specifically approved at least annually
by the Board of Directors of the Company, including a majority of the Board of
Directors who are not "interested persons" of any party to this Agreement, by
vote cast in person at a meeting called for the purpose of voting on such
approval. This Agreement is terminable, without penalty, on 60 days' written
notice, by the Board of Directors of the Company or by vote of holders of a
majority of the Fund's shares, or upon 60 days' written notice, by BEA.
7. SERVICE TO OTHER COMPANIES OR ACCOUNTS
The Company understands that BEA now acts, will continue to act and
may act in the future as administrator, co-administrator or administrative
services agent to one or more other investment companies, and the Company has no
objection to BEA's so acting. The Company understands that the persons employed
by BEA to assist in the performance of BEA's duties hereunder will not devote
their full time to such service and nothing contained in this Agreement shall be
deemed to limit or
4
<PAGE>
restrict the right of BEA or any affiliate of BEA to engage in and devote time
and attention to other businesses or to render services of whatever kind or
nature.
8. LIMITATION OF LIABILITY
The Company and BEA agree that the obligations of the Company under
this Agreement will not be binding upon any of the directors, shareholders,
nominees, officers, employees or agents, whether past, present or future, of the
Company, individually, but are binding only upon the assets and property of the
Fund, as provided in the Company's Charter. The execution and delivery of this
Agreement has been authorized by the Board of Directors of the Company, and
signed by an authorized officer of the Company, acting as such, and neither the
authorization by the Board of Directors nor the execution and delivery by the
officer will be deemed to have been made by any of them individually or to
impose any liability on any of them personally, but will bind only the property
of the Fund as provided in the Charter.
If the foregoing is in accordance with your understanding, kindly
indicate your acceptance hereof by signing and returning to us the enclosed copy
hereof.
Very truly yours,
RBB FUND, INC.
By:
-------------------------------------
Name:
Title:
Accepted:
BEA ASSOCTIATES
By:
---------------------------
Name:
Title:
5
<PAGE>
TRANSFER AGENCY AND SERVICE AGREEMENT
between
THE RBB FUND, INC.
and
STATE STREET BANK AND TRUST COMPANY
1
<PAGE>
TABLE OF CONTENTS
-----------------
Page
----
1. Terms of Appointment: Duties of the Bank . . . . . . . . . . . . . . . . 3
2. Fees and Expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3. Representations and Warranties of the Bank . . . . . . . . . . . . . . . 6
4. Representations and Warranties of the Fund . . . . . . . . . . . . . . . 7
5. Data Access and Proprietary Information. . . . . . . . . . . . . . . . . 7
6. Indemnification. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
7. Standard of Care . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
8. Covenants of the Fund and the Bank . . . . . . . . . . . . . . . . . . . 11
9. Termination of Agreement . . . . . . . . . . . . . . . . . . . . . . . . 12
10. Additional Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
11. Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
12. Amendment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
13. Massachusetts Law to Apply . . . . . . . . . . . . . . . . . . . . . . . 13
14. Force Majeure. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
15. Consequential Damages. . . . . . . . . . . . . . . . . . . . . . . . . . 13
16. Merger of Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . 13
17. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
2
<PAGE>
TRANSFER AGENCY AND SERVICE AGREEMENT
AGREEMENT made as of the day of , __________, 1996, by and between THE RBB
FUND, INC., Maryland corporation, having its principal office and place of
business at 400 Bellevue Parkway, Suite 100, Wilmington, Delaware 19809 (the
"Fund"), and STATE STREET BANK AND TRUST COMPANY, a Massachusetts trust company
having its principal office and place of business at 225 Franklin Street,
Boston, Massachusetts 02110 (the "Bank").
WHEREAS, the Fund is authorized to issue shares in separate series, with each
such series representing interests in a separate portfolio of securities and
other assets; and
WHEREAS, the Fund intends to initially offer shares in eight series, the BEA
International Equity Portfolio, BEA Emerging Markets Portfolio, BEA U.S. Core
Equity Portfolio, BEA U.S. Core Fixed Income Portfolio, BEA Global Fixed Income
Portfolio, BEA High Yield Portfolio, BEA Municipal Bond Portfolio and BEA Global
Telecommunications Portfolio (each such series, together with all other series
subsequently established by the Fund and made subject to this Agreement in
accordance with Article 10, being herein referred to as a "Portfolio", and
collectively as the "Portfolios");
WHEREAS, the Fund on behalf of the Portfolios desires to appoint the Bank as its
transfer agent, dividend disbursing agent, custodian of certain retirement plans
and agent in connection with certain other activities, and the Bank desires to
accept such appointment;
NOW, THEREFORE, in consideration of the mutual covenants herein contained, the
parties hereto agree as follows:
1. TERMS OF APPOINTMENT: DUTIES OF THE BANK
1.1 Subject to the terms and conditions set forth in this Agreement, the Fund,
on behalf of the Portfolios, hereby employs and appoints the Bank to act
as, and the Bank agrees to act as its transfer agent for the Fund's
authorized and issued shares of its common stock, $__________ par value,
("Shares"), dividend disbursing agent, custodian of certain retirement
plans and agent in connection with any accumulation, open-account or
similar plans provided to the shareholders of each of the respective
Portfolios of the Fund ("Shareholders") and set out in the currently
effective prospectus and statement of additional information ("prospectus")
of the Fund on behalf of the applicable Portfolio, including without
limitation any periodic investment plan or periodic withdrawal program.
3
<PAGE>
1.2 The Bank agrees that it will perform the following services:
(a) In accordance with procedures established from time to time by
agreement between the Fund on behalf of each of the Portfolios, as
applicable and the Bank, the Bank shall:
(i) Receive for acceptance, orders for the purchase of Shares, and
promptly deliver payment and appropriate documentation thereof
to the Custodian of the Fund authorized pursuant to the
Articles of Incorporation of the Fund (the "Custodian");
(ii) Pursuant to purchase orders, issue the appropriate number of
Shares and hold such Shares in the appropriate Shareholder
account;
(iii) Receive for acceptance redemption requests and redemption
directions and deliver the appropriate documentation thereof
to the Custodian;
(iv) In respect to the transactions in items (i), (ii) and (iii)
above, the Bank shall execute transactions directly with
broker-dealers authorized by the Fund who shall thereby be
deemed to be acting on behalf of the Fund;
(v) At the appropriate time as and when it receives monies paid to
it by the Custodian with respect to any redemption, pay over or
cause to be paid over in the appropriate manner such monies as
instructed by the redeeming Shareholders;
(vi) Effect transfers of Shares by the registered owners thereof upon
receipt of appropriate instructions;
(vii) Prepare and transmit payments for dividends and
distributions declared by the Fund on behalf of the
applicable Portfolio;
(viii) Issue replacement certificates for those certificates
alleged to have been lost, stolen or destroyed upon receipt
by the Bank of indemnification satisfactory to the Bank and
protecting the Bank and the Fund, and the Bank at its
option, may issue replacement certificates in place of
mutilated stock certificates upon presentation thereof and
without such indemnity;
4
<PAGE>
(ix) Maintain records of account for and advise the Fund and its
Shareholders as to the foregoing; and
(x) Record the issuance of shares of the Fund and maintain pursuant
to SEC Rule 17Ad-10(e) a record of the total number of shares of
the Fund which are authorized, based upon data provided to it by
the Fund, and issued and outstanding. The Bank shall also
provide the Fund on a regular basis with the total number of
shares which are authorized and issued and outstanding and shall
have no obligation, when recording the issuance of shares, to
monitor the issuance of such shares or to take cognizance of any
laws relating to the issue or sale of such shares, which
functions shall be the sole responsibility of the Fund.
(b) In addition to and neither in lieu nor in contravention of the
services set forth in the above paragraph (a), the Bank shall: (i)
perform the customary services of a transfer agent, dividend
disbursing agent, custodian of certain retirement plans and, as
relevant, agent in connection with accumulation, open-account or
similar plans (including without limitation any periodic investment
plan or periodic withdrawal program), including but not limited to:
maintaining all Shareholder accounts, preparing Shareholder meeting
lists, mailing proxies, mailing Shareholder reports and prospectuses
to current Shareholders, withholding taxes on U.S. resident and
non-resident alien accounts, preparing and filing U.S. Treasury
Department Forms 1099 and other appropriate forms required with
respect to dividends and distributions by federal authorities for all
Shareholders, preparing and mailing confirmation forms and statements
of account to Shareholders for all purchases and redemptions of Shares
and other confirmable transactions in Shareholder accounts, preparing
and mailing activity statements for Shareholders, and providing
Shareholder account information and (ii) provide a system which will
enable the Fund to monitor the total number of Shares sold in each
State.
(c) In addition, the Fund shall (i) identify to the Bank in writing those
transactions and assets to be treated as exempt from blue sky
reporting for each State and (ii) verify the establishment of
transactions for each State on the system prior to activation and
thereafter monitor the daily activity for each State. The
responsibility of the Bank for the Fund's blue sky State registration
status is solely limited to the initial
5
<PAGE>
establishment of transactions subject to blue sky compliance by the
Fund and the reporting of such transactions to the Fund as provided
above.
(d) Procedures as to who shall provide certain of these services in
Section 1 may be established from time to time by agreement between
the Fund on behalf of each Portfolio and the Bank per the attached
service responsibility schedule. The Bank may at times perform only a
portion of these services and the Fund or its agent may perform these
services on the Fund's behalf.
(e) The Bank shall provide additional services on behalf of the Fund
(i.e., escheatment services) which may be agreed upon in writing
between the Fund and the Bank.
2. FEES AND EXPENSES
2.1 For the performance by the Bank pursuant to this Agreement, the Fund agrees
on behalf of each of the Portfolios to pay the Bank an annual maintenance
fee for each Shareholder account as set out in the initial fee schedule
attached hereto. Such fees and out-of-pocket expenses and advances
identified under Section 2.2 below may be changed from time to time subject
to mutual written agreement between the Fund and the Bank.
2.2 In addition to the fee paid under Section 2.1 above, the Fund agrees on
behalf of each of the Portfolios to reimburse the Bank for out-of-pocket
expenses, including but not limited to confirmation production, postage,
forms, telephone, microfilm, microfiche, tabulating proxies, records
storage, or advances incurred by the Bank for the items set out in the fee
schedule attached hereto. In addition, any other expenses incurred by the
Bank at the request or with the consent of the Fund, will be reimbursed by
the Fund on behalf of the applicable Portfolio.
2.3 The Fund agrees on behalf of each of the Portfolios to pay all fees and
reimbursable expenses within five days following the receipt of the
respective billing notice. Postage for mailing of dividends, proxies, Fund
reports and other mailings to all shareholder accounts shall be advanced to
the Bank by the Fund at least seven (7) days prior to the mailing date of
such materials.
3. REPRESENTATIONS AND WARRANTIES OF THE BANK
The Bank represents and warrants to the Fund that:
3.1 It is a trust company duly organized and existing and in good standing
under the laws of the Commonwealth of Massachusetts.
6
<PAGE>
3.2 It is duly qualified to carry on its business in the Commonwealth of
Massachusetts.
3.3 It is empowered under applicable laws and by its Charter and By-Laws to
enter into and perform this Agreement.
3.4 All requisite corporate proceedings have been taken to authorize it to
enter into and perform this Agreement.
3.5 It has and will continue to have access to the necessary facilities,
equipment and personnel to perform its duties and obligations under this
Agreement.
4. REPRESENTATIONS AND WARRANTIES OF THE FUND
The Fund represents and warrants to the Bank that:
4.1 It is a corporation duly organized and existing and in good standing under
the laws of the State of Maryland.
4.2 It is empowered under applicable laws and by its Articles of Incorporation
and By-Laws to enter into and perform this Agreement.
4.3 All corporate proceedings required by said Articles of Incorporation and
By-Laws have been taken to authorize it to enter into and perform this
Agreement.
4.4 It is an open-end and diversified management investment company registered
under the Investment Company Act of 1940, as amended.
4.5 A registration statement under the Securities Act of 1933, as amended on
behalf of each of the Portfolios is currently effective and will remain
effective, and appropriate state securities law filings have been made and
will continue to be made, with respect to all Shares of the Fund being
offered for sale.
5. DATA ACCESS AND PROPRIETARY INFORMATION
5.1 The Fund acknowledges that the data bases, computer programs, screen
formats, report formats, interactive design techniques, and documentation
manuals furnished to the Fund by the Bank as part of the Fund's ability to
access certain Fund-related data ("Customer Data") maintained by the Bank
on data bases under the control and ownership of the Bank ("Data Access
Services") constitute copyrighted, trade secret, or other proprietary
information (collectively, "Proprietary Information") of substantial value
to the Bank or other third party. In no event shall Proprietary Information
be deemed Customer Data.
7
<PAGE>
The Fund agrees to treat all Proprietary Information as proprietary to the
Bank and further agrees that it shall not divulge any Proprietary
Information to any person or organization except as may be provided
hereunder. Without limiting the foregoing, the Fund agrees for itself and
its employees and agents:
(a) to access Customer Data solely from locations as may be designated in
writing by the Bank and solely in accordance with the Bank's
applicable user documentation;
(b) to refrain from copying or duplicating in any way the Proprietary
Information;
(c) to refrain from obtaining unauthorized access to any portion of the
Proprietary Information, and if such access is inadvertently obtained,
to inform in a timely manner of such fact and dispose of such
information in accordance with the Bank's instructions;
(d) to refrain from causing or allowing the data acquired hereunder from
being retransmitted to any other computer facility or other location,
except with the prior written consent of the Bank;
(e) that the Fund shall have access only to those authorized transactions
agreed upon by the parties;
(f) to honor all reasonable written requests made by the Bank to protect
at the Bank's expense the rights of the Bank in Proprietary
Information at common law, under federal copyright law and under other
federal or state law.
Each party shall take reasonable efforts to advise its employees of their
obligations pursuant to this Section 5. The obligations of this Section shall
survive any earlier termination of this Agreement.
5.2 If the Fund notifies the Bank that any of the Data Access Services do not
operate in material compliance with the most recently issued user
documentation for such services, the Bank shall endeavor in a timely manner
to correct such failure. Organizations from which the Bank may obtain
certain data included in the Data Access Services are solely responsible
for the contents of such data and the Fund agrees to make no claim against
the Bank arising out of the contents of such third-party data, including,
but not limited to, the accuracy thereof. DATA ACCESS SERVICES AND ALL
COMPUTER PROGRAMS AND SOFTWARE SPECIFICATIONS USED IN CONNECTION THEREWITH
ARE PROVIDED ON AN AS IS, AS AVAILABLE BASIS. THE BANK EXPRESSLY DISCLAIMS
ALL WARRANTIES EXCEPT THOSE EXPRESSLY STATED HEREIN
8
<PAGE>
INCLUDING, BUT NOT LIMITED TO, THE IMPLIED WARRANTIES OF MERCHANTABILITY AND
FITNESS FOR A PARTICULAR PURPOSE.
5.3 If the transactions available to the Fund include the ability to originate
electronic instructions to the Bank in order to (i) effect the transfer or
movement of cash or Shares or (ii) transmit Shareholder information or
other information, then in such event the Bank shall be entitled to rely on
the validity and authenticity of such instruction without undertaking any
further inquiry as long as such instruction is undertaken in conformity
with security procedures established by the Bank from time to time.
6. INDEMNIFICATION
6.1 The Bank shall not be responsible for, and the Fund shall on behalf of the
applicable Portfolio indemnify and hold the Bank harmless from and against,
any and all losses, damages, costs, charges, counsel fees, payments,
expenses and liability arising out of or attributable to:
(a) All actions of the Bank or its agents or subcontractors required to be
taken pursuant to this Agreement, provided that such actions are taken
in good faith and without negligence or willful misconduct.
(b) The Fund's lack of good faith, negligence or willful misconduct which
arise out of the breach of any representation or warranty of the Fund
hereunder.
(c) The reliance on or use by the Bank or its agents or subcontractors of
information, records, documents or services which (i) are received by
the Bank or its agents or subcontractors, and (ii) have been prepared.
maintained or performed by the Fund or any other person or firm on
behalf of the Fund including but not limited to any previous transfer
agent or registrar.
(d) The reliance on, or the carrying out by the Bank or its agents or
subcontractors of any instructions or requests of the Fund on behalf
of the applicable Portfolio.
(e) The offer or sale of Shares in violation of any requirement under the
federal securities laws or regulations or the securities laws or
regulations of any state that such Shares be registered in such state
or in violation of any stop order or other determination or ruling by
any federal agency or any state with respect to the offer or sale of
such Shares in such state.
9
<PAGE>
(f) The negotiation and processing by the Bank of checks not made payable
to the order of the Bank, the Fund, the Fund's management company,
transfer agent or distributor or the retirement account custodian or
trustee for a plan account investing in Shares, which checks are
tendered to the Bank for the purchase of Shares (i.e., checks made
payable to prospective or existing Shareholders, such checks are
commonly known as "third party checks").
6.2 At any time the Bank may apply to any officer of the Fund for instructions,
and may consult with legal counsel with respect to any matter arising in
connection with the services to be performed by the Bank under this
Agreement, and the Bank and its agents or subcontractors shall not be
liable and shall be indemnified by the Fund on behalf of the applicable
Portfolio for any action taken or omitted by it in reliance upon such
instructions or upon the opinion of such counsel. The Bank, its agents and
subcontractors shall be protected and indemnified in acting upon any paper
or document furnished by or on behalf of the Fund, reasonably believed to
be genuine and to have been signed by the proper person or persons, or upon
any instruction, information, data, records or documents provided the Bank
or its agents or subcontractors by machine readable input, telex, CRT data
entry or other similar means authorized by the Fund, and shall not be held
to have notice of any change of authority of any person, until receipt of
written notice thereof from the Fund. The Bank, its agents and
subcontractors shall also be protected and indemnified in recognizing stock
certificates which are reasonably believed to bear the proper manual or
facsimile signatures of the officers of the Fund, and the proper
countersignature of any former transfer agent or former registrar, or of a
co-transfer agent or co-registrar.
6.3 In order that the indemnification provisions contained in this Section 6
shall apply, upon the assertion of a claim for which the Fund may be
required to indemnify the Bank, the Bank shall promptly notify the Fund of
such assertion, and shall keep the Fund advised with respect to all
developments concerning such claim. The Fund shall have the option to
participate with the Bank in the defense of such claim or to defend against
said claim in its own name or in the name of the Bank. The Bank shall in
no case confess any claim or make any compromise in any case in which the
Fund may be required to indemnify the Bank except with the Fund's prior
written consent.
7. STANDARD OF CARE
The Bank shall at all times act in good faith and agrees to use its best
efforts within reasonable limits to insure the accuracy of all services
performed under this Agreement, but
10
<PAGE>
assumes no responsibility and shall not be liable for loss or damage due to
errors unless said errors are caused by its negligence, bad faith, or
willful misconduct or that of its employees.
8. COVENANTS OF THE FUND AND THE BANK
8.1 The Fund shall on behalf of each of the Portfolios promptly furnish to the
Bank the following:
(a) A certified copy of the resolution of the Board of Directors of the
Fund authorizing the appointment of the Bank and the execution and
delivery of this Agreement.
(b) A copy of the Articles of Incorporation and By-Laws of the Fund and
all amendments thereto.
8.2 The Bank hereby agrees to establish and maintain facilities and procedures
reasonably acceptable to the Fund for safekeeping of stock certificates,
check forms and facsimile signature imprinting devices, if any; and for the
preparation or use, and for keeping account of, such certificates, forms
and devices.
8.3 The Bank shall keep records relating to the services to be performed
hereunder, in the form and manner as it may deem advisable. To the extent
required by Section 31 of the Investment Company Act of 1940, as amended,
and the Rules thereunder, the Bank agrees that all such records prepared or
maintained by the Bank relating to the services to be performed by the Bank
hereunder are the property of the Fund and will be preserved, maintained
and made available in accordance with such Section and Rules, and will be
surrendered promptly to the Fund on and in accordance with its request.
8.4 The Bank and the Fund agree that all books, records. information and data
pertaining to the business of the other party which are exchanged or
received pursuant to the negotiation or the carrying out of this
Agreement shall remain confidential, and shall not be voluntarily disclosed
to any other person, except as may be required by law.
8.5 In case of any requests or demands for the inspection of the Shareholder
records of the Fund, the Bank will endeavor to notify the Fund and to
secure instructions from an authorized officer of the Fund as to such
inspection. The Bank reserves the right, however, to exhibit the
Shareholder records to any person whenever it is advised by its counsel
that it may be held liable for the failure to exhibit the Shareholder
records to such person.
11
<PAGE>
9. TERMINATION OF AGREEMENT
9.1 This Agreement may be terminated by either party upon one hundred twenty
(120) days written notice to the other.
9.2 Should the Fund exercise its right to terminate, all out-of-pocket expenses
associated with the movement of records and material will be borne by the
Fund on behalf of the applicable Portfolio(s). Additionally, the Bank
reserves the right to charge for any other reasonable expenses associated
with such termination and/or a charge equivalent to the average of three
(3) months' fees.
10. ADDITIONAL FUND
In the event that the Fund establishes one or more series of Shares in
addition to the BEA International Equity Portfolio, BEA Emerging Markets
Portfolio, BEA U.S. Core Equity Portfolio, BEA U.S. Core Fixed Income
Portfolio, BEA Global Fixed Income Portfolio, BEA High Yield Portfolio, BEA
Municipal Bond Portfolio and BEA Global Telecommunications Portfolio with
respect to which it desires to have the Bank render services as transfer
agent under the terms hereof, it shall so notify the Bank in writing, and
if the Bank agrees in writing to provide such services, such series of
Shares shall become a Portfolio hereunder.
11. ASSIGNMENT
11.1 Except as provided in Section 11.3 below, neither this Agreement nor
any rights or obligations hereunder may be assigned by either party
without the written consent of the other party.
11.2 This Agreement shall inure to the benefit of and be binding upon the
parties and their respective permitted successors and assigns.
11.3 The Bank may, without further consent on the part of the Fund,
subcontract for the performance hereof with (i) Boston Financial Data
Services, Inc., a Massachusetts corporation ("BFDS") which is duly
registered as a transfer agent pursuant to Section 17A(c)(2) of the
Securities Exchange Act of 1934, as amended ("Section 17A(c)(2)"), (ii)
a BFDS subsidiary duly registered as a transfer agent pursuant to
Section 17A(c)(2) or (iii) a BFDS affiliate duly registered as a
transfer agent pursuant to Section 17A(c)(2); provided, however, that
the Bank shall be as fully responsible to the Fund for the acts and
omissions of any subcontractor as it is for its own acts and omissions.
12
<PAGE>
12. AMENDMENT
This Agreement may be amended or modified by a written agreement executed
by both parties and authorized or approved by a resolution of the Board of
Directors of the Fund.
13. MASSACHUSETTS LAW TO APPLY
This Agreement shall be construed and the provisions thereof interpreted
under and in accordance with the laws of the Commonwealth of Massachusetts.
14. FORCE MAJEURE
In the event either party is unable to perform its obligations under the
terms of this Agreement because of acts of God, strikes, equipment or
transmission failure or damage reasonably beyond its control, or other
causes reasonably beyond its control, such party shall not be liable for
damages to the other for any damages resulting from such failure to perform
or otherwise from such causes.
15. CONSEQUENTIAL DAMAGES
Neither party to this Agreement shall be liable to the other party for
consequential damages under any provision of this Agreement or for any
consequential damages arising out of any act or failure to act hereunder.
16. MERGER OF AGREEMENT
This Agreement constitutes the entire agreement between the parties hereto
and supersedes any prior agreement with respect to the subject matter
hereof whether oral or written.
17. COUNTERPARTS
This Agreement may be executed by the parties hereto on any number of
counterparts, and all of said counterparts taken together shall be deemed
to constitute one and the same instrument.
13
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
in their names and on their behalf by and through their duly authorized
officers, as of the day and year first above written.
THE RBB FUND, INC.
BY:_________________________________
ATTEST:
_______________________
STATE STREET BANK AND TRUST
COMPANY
BY:__________________________________
Executive Vice President
ATTEST:
_______________________
14
<PAGE>
STATE STREET BANK & TRUST COMPANY
FUND SERVICE RESPONSIBILITIES
Service Performed Responsibility
- ----------------- --------------
Bank Fund
---- ----
1. Receives orders for the purchase
of Shares.
2. Issue Shares and hold Shares in
Shareholders accounts.
3. Receive redemption requests.
4. Effect transactions 1-3 above
directly with broker-dealers.
5. Pay over monies to redeeming
Shareholders.
6. Effect transfers of Shares.
7. Prepare and transmit dividends
and distributions.
8. Issue Replacement Certificates.
9. Reporting of abandoned property.
10. Maintain records of account.
11. Maintain and keep a current and
accurate control book for each
issue of securities.
12. Mail proxies.
13. Mail Shareholder reports.
14. Mail prospectuses to current
Shareholders.
15. Withhold taxes on U.S. resident
and non-resident alien accounts.
<PAGE>
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. 37 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. 39 under the Investment Company Act of 1940.
/S/ BALLARD SPAHR ANDREWS & INGERSOLL
Ballard Spahr Andrews & Ingersoll
July 25, 1996
<PAGE>
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent in this Post-Effective Amendment No. 37 under the
Securities Act of 1933, as amended to this Registration Statement on Form N-1A
(File No. 33-20827) of The RBB Fund, Inc. to the reference to our Firm under the
heading "Miscellaneous-- Independent Accountants" in the Statement of Additional
Information.
COOPERS & LYBRAND L.L.P.
2400 Eleven Penn Center
Philadelphia, Pennsylvania
July 29, 1996
<PAGE>
SUBSCRIPTION AGREEMENT
----------------------
The RBB Fund, Inc. (the "Fund"), a Maryland corporation, and
Counsellors Securities Inc. ("Counsellors"), a New York corporation, intending
to be legally bound, hereby agree with each other as follows:
1. The Fund hereby offers Counsellors and Counsellors hereby
purchases the following shares of Common Stock of the Fund (par value $.001 per
share) (such shares hereinafter sometimes collectively known as "Shares") at a
price per Share listed below.
Number of Purchase Price
Class of common stock Shares Purchased Per Share
- --------------------- ---------------- --------------
II 10 $ 15
JJ 10 15
KK 10 15
LL 10 15
MM 10 15
NN 10 15
OO 10 15
PP 10 15
The Fund hereby acknowledges receipt from Counsellors of funds in the amount of
$1,200.00 in full payment for the Shares.
2. Counsellors represents and warrants to the Fund that the Shares
are being acquired for investment purposes and not with a view to the
distribution thereof.
3. This agreement may be executed in counterparts, and all such
counterparts taken together shall be deemed to constitute one and the same
instrument.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the ____ day of ________, 1996.
THE RBB FUND, INC.
By:___________________________
President
COUNSELLORS SECURITIES INC.
By:___________________________
President
2
<PAGE>
PLAN OF DISTRIBUTION PURSUANT TO RULE 12b-1
OF
THE RBB FUND, INC.
(BEA International Equity Investor Class)
WHEREAS, The RBB Fund, Inc. (the "Fund") intends to engage in business
as an open-end management investment company and is registered as such under the
Investment Company Act of 1940, as amended (the "Act"); and
WHEREAS, the Fund desires to adopt a Plan of Distribution pursuant to
Rule 12b-1 under the Act with respect to shares of its Class II Common Stock,
par value $.001 per share (the "Class II Shares") and the Board of Directors has
determined that there is a reasonable likelihood that adoption of this Plan of
Distribution will benefit the Fund and its stockholders; and
WHEREAS, the Fund intends to employ Counsellors Securities Inc. (the
"Distributor") as distributor of the Class II Shares; and
WHEREAS, the Fund and the Distributor intend to enter into a separate
Distribution Agreement with the Fund for Class II Shares, pursuant to which the
Fund will employ the Distributor as distributor for the continuous offering of
Class II Shares;
NOW, THEREFORE, the Fund hereby adopts, and the Distributor hereby
agrees to the terms of, this Plan of Distribution (the "Plan") in accordance
with Rule 12b-1 under the Act on the following terms and conditions:
1. The Fund shall pay to the Distributor, as the distributor of the
Class II Shares, compensation for distribution of its shares at an annual rate
not to exceed .75% of the average daily net assets of the Class II Shares. The
amount of such compensation shall be agreed upon by the Board of Directors of
the Fund and by the Distributor and shall be calculated and accrued daily and
paid monthly or at such other intervals as the Board of Directors and the
Distributor shall mutually agree.
2. The amount set forth in paragraph 1 of this Plan shall be paid
for the Distributor's services as distributor of the Class II Shares. Such
amount may be spent by the Distributor on any activities or expenses primarily
intended to result in the sale of Class II Shares, including, but not limited
to:
<PAGE>
compensation to and expenses of employees of the Distributor who engage in or
support distribution of the Class II Shares, including overhead and telephone
expenses,; printing of prospectuses and reports for other than existing
shareholders; preparation, printing and distribution of sales literature and
advertising materials; and compensation to certain financial institutions
("Service Organizations") who sell Class II Shares. The Distributor may
negotiate with any such Service Organizations the services to be provided by the
Service Organization to shareholders in connection with the sale of Class II
Shares ("Distribution Services"), and all or any portion of the compensation
paid to the Distributor under paragraph 1 of this Plan may be reallocated by the
Distributor to Service Organizations who sell Class II Shares. The compensation
paid to Service Organizations with respect to Distribution Services will
compensate Service Organizations to cover certain expenses primarily intended to
result in the sale of Class II Shares, including, but not limited to: (a) costs
of payments made to employees that engage in the sale of Class II Shares; (b)
payments made to, and expenses of, persons who provide support services in
connection with the sale of Class II Shares, including, but not limited to,
office space and equipment, telephone facilities, processing shareholder
transactions and providing any other shareholder services not otherwise provided
by the Fund's transfer agent; (c) costs relating to the formulation and
implementation of marketing and promotional activities, including, but not
limited to, direct mail promotions and television, radio, newspaper, magazine
and other mass media advertising; (d) costs of printing and distributing
prospectuses, statements of additional information and reports relating to the
Class II Shares to prospective shareholders of the Class II Shares; (e) costs
involved in preparing, printing and distributing sales literature pertaining to
the Class II Shares; and (f) costs involved in obtaining whatever information,
analyses and reports with respect to marketing and promotional activities that
the Service Organization may, from time to time, deem advisable. The
compensation paid to Service Organizations with respect to Shareholder Services
will compensate Service Organizations for personal service and/or the
maintenance of shareholder accounts, including but not limited to (a) responding
to inquiries of customers or clients of the Service Organization who
beneficially own Class II Shares ("Customers"), (b) providing information on
Customer investments and (c) providing other shareholder liaison services. The
compensation paid to Service Organizations with respect to Administrative
Services will compensate Service Organizations for administrative and accounting
services to their Customers, including, but not limited to: (a) aggregating and
processing purchase and redemption requests from Customers and placing net
purchase and redemption orders with the Fund's distributor or transfer agent;
2
<PAGE>
(b) providing Customers with a service that invests the assets of their accounts
in the Class II Shares; (c) processing dividend payments from the Class II
Shares on behalf of Customers; (d) providing information periodically to
Customers showing their positions in the Class II Shares; (e) arranging for bank
wires; (f) providing sub-accounting with respect to Class II Shares beneficially
owned by Customers or the information to the Fund necessary for sub-accounting;
(g) forwarding shareholder communications from the Fund (for example, proxies,
shareholder reports, annual and semi-annual financial statements and dividend,
distribution and tax notices related to the Class II Shares) to Customers, if
required by law; and (h) providing other similar services to the extent
permitted under applicable statutes, rules and regulations.
3. This Plan shall not take effect until it has been approved by a
vote of at least a majority (as defined in the Act) of the outstanding Class II
Shares.
4. In addition to the approval required by paragraph 3 above, this
Plan shall not take effect until it has been approved, together with any related
agreements, by votes of a majority of both (a) the Board of Directors of the
Fund and (b) those directors of the Fund who are not "interested persons" of the
Fund (as defined in the Act) and have no direct or indirect financial interest
in the operation of this Plan or any agreements related to it (the "Rule 12b-1
Directors"), cast in person at a meeting (or meetings) called for the purpose of
voting on this Plan and such related agreements.
5. This Plan shall continue in effect until August 16, 1995.
Thereafter, this Plan shall continue in effect for so long as such continuance
is specifically approved at least annually in the manner provided for approval
of this Plan in paragraph 4.
6. The Distributor shall provide to the Board of Directors of the
Fund and the Board of Directors shall review, at least quarterly, a written
report of the amounts expended pursuant to this Plan and the purposes for which
such expenditures were made, including commissions, advertising, printing,
interest, carrying charges and allocated overhead expenses.
7. This Plan may be terminated at any time by vote of a majority of
the Rule 12b-1 Directors, or by a vote of a majority of the outstanding Class II
Shares.
3
<PAGE>
8. This Plan may not be amended to increase materially the amount of
compensation provided for in paragraph 1 hereof unless such amendment is
approved in the manner provided for initial approval in paragraph 3 hereof, and
no material amendment to the Plan of any kind, including an amendment which
would increase materially the amount of compensation, shall be made unless
approved in the manner provided for approval and annual renewal in paragraph 4
hereof.
9. While this Plan is in effect, the selection and nomination of
Directors who are not interested persons (as defined in the Act) of the Fund
shall be committed to the discretion of the then current Directors who are not
interested persons (as defined in the Act) of the Fund.
10. The Fund shall preserve copies of this Plan and any related
agreements and all reports made pursuant to paragraph 6 hereof for a period of
not less than six years from the date of this Plan, the agreements or such
reports, as the case may be, the first two years in an easily accessible place.
Dated: _____________________, 1996
<PAGE>
PLAN OF DISTRIBUTION PURSUANT TO RULE 12b-1
OF
THE RBB FUND, INC.
(BEA International Equity Advisor Class)
WHEREAS, The RBB Fund, Inc. (the "Fund") intends to engage in business
as an open-end management investment company and is registered as such under the
Investment Company Act of 1940, as amended (the "Act"); and
WHEREAS, the Fund desires to adopt a Plan of Distribution pursuant to
Rule 12b-1 under the Act with respect to shares of its Class MM Common Stock,
par value $.001 per share (the "Class MM Shares") and the Board of Directors has
determined that there is a reasonable likelihood that adoption of this Plan of
Distribution will benefit the Fund and its stockholders; and
WHEREAS, the Fund intends to employ Counsellors Securities Inc. (the
"Distributor") as distributor of the Class MM Shares; and
WHEREAS, the Fund and the Distributor intend to enter into a separate
Distribution Agreement with the Fund for Class MM Shares, pursuant to which the
Fund will employ the Distributor as distributor for the continuous offering of
Class MM Shares;
NOW, THEREFORE, the Fund hereby adopts, and the Distributor hereby
agrees to the terms of, this Plan of Distribution (the "Plan") in accordance
with Rule 12b-1 under the Act on the following terms and conditions:
1. The Fund shall pay to the Distributor, as the distributor of the
Class MM Shares, compensation for distribution of its shares at an annual rate
not to exceed .25% of the average daily net assets of the Class MM Shares. The
amount of such compensation shall be agreed upon by the Board of Directors of
the Fund and by the Distributor and shall be calculated and accrued daily and
paid monthly or at such other intervals as the Board of Directors and the
Distributor shall mutually agree.
2. The amount set forth in paragraph 1 of this Plan shall be paid
for the Distributor's services as distributor of the Class MM Shares. Such
amount may be spent by the Distributor on any activities or expenses primarily
intended to result in the sale of Class MM Shares, including, but not limited
to:
1
<PAGE>
compensation to and expenses of employees of the Distributor who engage in or
support distribution of the Class MM Shares, including overhead and telephone
expenses,; printing of prospectuses and reports for other than existing
shareholders; preparation, printing and distribution of sales literature and
advertising materials; and compensation to certain financial institutions
("Service Organizations") who sell Class MM Shares. The Distributor may
negotiate with any such Service Organizations the services to be provided by the
Service Organization to shareholders in connection with the sale of Class MM
Shares ("Distribution Services"), and all or any portion of the compensation
paid to the Distributor under paragraph 1 of this Plan may be reallocated by the
Distributor to Service Organizations who sell Class MM Shares. The compensation
paid to Service Organizations with respect to Distribution Services will
compensate Service Organizations to cover certain expenses primarily intended to
result in the sale of Class MM Shares, including, but not limited to: (a) costs
of payments made to employees that engage in the sale of Class MM Shares; (b)
payments made to, and expenses of, persons who provide support services in
connection with the sale of Class MM Shares, including, but not limited to,
office space and equipment, telephone facilities, processing shareholder
transactions and providing any other shareholder services not otherwise provided
by the Fund's transfer agent; (c) costs relating to the formulation and
implementation of marketing and promotional activities, including, but not
limited to, direct mail promotions and television, radio, newspaper, magazine
and other mass media advertising; (d) costs of printing and distributing
prospectuses, statements of additional information and reports relating to the
Class MM Shares to prospective shareholders of the Class MM Shares; (e) costs
involved in preparing, printing and distributing sales literature pertaining to
the Class MM Shares; and (f) costs involved in obtaining whatever information,
analyses and reports with respect to marketing and promotional activities that
the Service Organization may, from time to time, deem advisable. The
compensation paid to Service Organizations with respect to Shareholder Services
will compensate Service Organizations for personal service and/or the
maintenance of shareholder accounts, including but not limited to (a) responding
to inquiries of customers or clients of the Service Organization who
beneficially own Class MM Shares ("Customers"), (b) providing information on
Customer investments and (c) providing other shareholder liaison services. The
compensation paid to Service Organizations with respect to Administrative
Services will compensate Service Organizations for administrative and accounting
services to their Customers, including, but not limited to: (a) aggregating and
processing purchase and redemption requests from Customers and placing net
purchase and redemption orders with the Fund's distributor or transfer agent;
2
<PAGE>
(b) providing Customers with a service that invests the assets of their accounts
in the Class MM Shares; (c) processing dividend payments from the Class MM
Shares on behalf of Customers; (d) providing information periodically to
Customers showing their positions in the Class MM Shares; (e) arranging for bank
wires; (f) providing sub-accounting with respect to Class MM Shares beneficially
owned by Customers or the information to the Fund necessary for sub-accounting;
(g) forwarding shareholder communications from the Fund (for example, proxies,
shareholder reports, annual and semi-annual financial statements and dividend,
distribution and tax notices related to the Class MM Shares) to Customers, if
required by law; and (h) providing other similar services to the extent
permitted under applicable statutes, rules and regulations.
3. This Plan shall not take effect until it has been approved by a
vote of at least a majority (as defined in the Act) of the outstanding Class MM
Shares.
4. In addition to the approval required by paragraph 3 above, this
Plan shall not take effect until it has been approved, together with any related
agreements, by votes of a majority of both (a) the Board of Directors of the
Fund and (b) those directors of the Fund who are not "interested persons" of the
Fund (as defined in the Act) and have no direct or indirect financial interest
in the operation of this Plan or any agreements related to it (the "Rule 12b-1
Directors"), cast in person at a meeting (or meetings) called for the purpose of
voting on this Plan and such related agreements.
5. This Plan shall continue in effect until August 16, 1995.
Thereafter, this Plan shall continue in effect for so long as such continuance
is specifically approved at least annually in the manner provided for approval
of this Plan in paragraph 4.
6. The Distributor shall provide to the Board of Directors of the
Fund and the Board of Directors shall review, at least quarterly, a written
report of the amounts expended pursuant to this Plan and the purposes for which
such expenditures were made, including commissions, advertising, printing,
interest, carrying charges and allocated overhead expenses.
7. This Plan may be terminated at any time by vote of a majority of
the Rule 12b-1 Directors, or by a vote of a majority of the outstanding Class MM
Shares.
3
<PAGE>
8. This Plan may not be amended to increase materially the amount of
compensation provided for in paragraph 1 hereof unless such amendment is
approved in the manner provided for initial approval in paragraph 3 hereof, and
no material amendment to the Plan of any kind, including an amendment which
would increase materially the amount of compensation, shall be made unless
approved in the manner provided for approval and annual renewal in paragraph 4
hereof.
9. While this Plan is in effect, the selection and nomination of
Directors who are not interested persons (as defined in the Act) of the Fund
shall be committed to the discretion of the then current Directors who are not
interested persons (as defined in the Act) of the Fund.
10. The Fund shall preserve copies of this Plan and any related
agreements and all reports made pursuant to paragraph 6 hereof for a period of
not less than six years from the date of this Plan, the agreements or such
reports, as the case may be, the first two years in an easily accessible place.
Dated: _____________________, 1996
4
<PAGE>
PLAN OF DISTRIBUTION PURSUANT TO RULE 12b-1
OF
THE RBB FUND, INC.
(BEA Emerging Markets Equity Portfolio Investor Class)
WHEREAS, The RBB Fund, Inc. (the "Fund") intends to engage in business
as an open-end management investment company and is registered as such under the
Investment Company Act of 1940, as amended (the "Act"); and
WHEREAS, the Fund desires to adopt a Plan of Distribution pursuant to
Rule 12b-1 under the Act with respect to shares of its Class JJ Common Stock,
par value $.001 per share (the "Class JJ Shares") and the Board of Directors has
determined that there is a reasonable likelihood that adoption of this Plan of
Distribution will benefit the Fund and its stockholders; and
WHEREAS, the Fund intends to employ Counsellors Securities Inc. (the
"Distributor") as distributor of the Class JJ Shares; and
WHEREAS, the Fund and the Distributor intend to enter into a separate
Distribution Agreement with the Fund for Class JJ Shares, pursuant to which the
Fund will employ the Distributor as distributor for the continuous offering of
Class JJ Shares;
NOW, THEREFORE, the Fund hereby adopts, and the Distributor hereby
agrees to the terms of, this Plan of Distribution (the "Plan") in accordance
with Rule 12b-1 under the Act on the following terms and conditions:
1. The Fund shall pay to the Distributor, as the distributor of the
Class JJ Shares, compensation for distribution of its shares at an annual rate
not to exceed .75% of the average daily net assets of the Class JJ Shares. The
amount of such compensation shall be agreed upon by the Board of Directors of
the Fund and by the Distributor and shall be calculated and accrued daily and
paid monthly or at such other intervals as the Board of Directors and the
Distributor shall mutually agree.
2. The amount set forth in paragraph 1 of this Plan shall be paid
for the Distributor's services as distributor of the Class JJ Shares. Such
amount may be spent by the Distributor on any activities or expenses primarily
intended to result in the
1
<PAGE>
sale of Class JJ Shares, including, but not limited to: compensation to and
expenses of employees of the Distributor who engage in or support distribution
of the Class JJ Shares, including overhead and telephone expenses,; printing of
prospectuses and reports for other than existing shareholders; preparation,
printing and distribution of sales literature and advertising materials; and
compensation to certain financial institutions ("Service Organizations") who
sell Class JJ Shares. The Distributor may negotiate with any such Service
Organizations the services to be provided by the Service Organization to
shareholders in connection with the sale of Class JJ Shares ("Distribution
Services"), and all or any portion of the compensation paid to the Distributor
under paragraph 1 of this Plan may be reallocated by the Distributor to Service
Organizations who sell Class JJ Shares. The compensation paid to Service
Organizations with respect to Distribution Services will compensate Service
Organizations to cover certain expenses primarily intended to result in the sale
of Class JJ Shares, including, but not limited to: (a) costs of payments made to
employees that engage in the sale of Class JJ Shares; (b) payments made to, and
expenses of, persons who provide support services in connection with the sale of
Class JJ Shares, including, but not limited to, office space and equipment,
telephone facilities, processing shareholder transactions and providing any
other shareholder services not otherwise provided by the Fund's transfer agent;
(c) costs relating to the formulation and implementation of marketing and
promotional activities, including, but not limited to, direct mail promotions
and television, radio, newspaper, magazine and other mass media advertising; (d)
costs of printing and distributing prospectuses, statements of additional
information and reports relating to the Class JJ Shares to prospective
shareholders of the Class JJ Shares; (e) costs involved in preparing, printing
and distributing sales literature pertaining to the Class JJ Shares; and (f)
costs involved in obtaining whatever information, analyses and reports with
respect to marketing and promotional activities that the Service Organization
may, from time to time, deem advisable. The compensation paid to Service
Organizations with respect to Shareholder Services will compensate Service
Organizations for personal service and/or the maintenance of shareholder
accounts, including but not limited to (a) responding to inquiries of customers
or clients of the Service Organization who beneficially own Class JJ Shares
("Customers"), (b) providing information on Customer investments and (c)
providing other shareholder liaison services. The compensation paid to Service
Organizations with respect to Administrative Services will compensate Service
Organizations for administrative and accounting services to their Customers,
including, but not limited to: (a) aggregating and processing purchase and
redemption requests from Customers and placing net purchase and redemption
orders with the Fund's distributor or transfer agent; (b) providing Customers
with a service that invests the assets of their accounts in the Class JJ Shares;
(c) processing dividend payments from the Class JJ Shares on behalf of
Customers; (d)
2
<PAGE>
providing information periodically to Customers showing their positions in the
Class JJ Shares; (e) arranging for bank wires; (f) providing sub-accounting with
respect to Class JJ Shares beneficially owned by Customers or the information to
the Fund necessary for sub-accounting; (g) forwarding shareholder communications
from the Fund (for example, proxies, shareholder reports, annual and semi-annual
financial statements and dividend, distribution and tax notices related to the
Class JJ Shares) to Customers, if required by law; and (h) providing other
similar services to the extent permitted under applicable statutes, rules and
regulations.
3. This Plan shall not take effect until it has been approved by a
vote of at least a majority (as defined in the Act) of the outstanding Class JJ
Shares.
4. In addition to the approval required by paragraph 3 above, this
Plan shall not take effect until it has been approved, together with any related
agreements, by votes of a majority of both (a) the Board of Directors of the
Fund and (b) those directors of the Fund who are not "interested persons" of the
Fund (as defined in the Act) and have no direct or indirect financial interest
in the operation of this Plan or any agreements related to it (the "Rule 12b-1
Directors"), cast in person at a meeting (or meetings) called for the purpose of
voting on this Plan and such related agreements.
5. This Plan shall continue in effect until August 16, 1995.
Thereafter, this Plan shall continue in effect for so long as such continuance
is specifically approved at least annually in the manner provided for approval
of this Plan in paragraph 4.
6. The Distributor shall provide to the Board of Directors of the
Fund and the Board of Directors shall review, at least quarterly, a written
report of the amounts expended pursuant to this Plan and the purposes for which
such expenditures were made, including commissions, advertising, printing,
interest, carrying charges and allocated overhead expenses.
7. This Plan may be terminated at any time by vote of a majority of
the Rule 12b-1 Directors, or by a vote of a majority of the outstanding Class JJ
Shares.
8. This Plan may not be amended to increase materially the amount of
compensation provided for in paragraph 1 hereof unless such amendment is
approved in the manner provided for initial approval in paragraph 3 hereof, and
no material amendment to the Plan of any kind, including an amendment which
would increase materially the amount of compensation, shall be made unless
approved in the manner provided for approval and annual renewal in paragraph 4
hereof.
3
<PAGE>
9. While this Plan is in effect, the selection and nomination of
Directors who are not interested persons (as defined in the Act) of the Fund
shall be committed to the discretion of the then current Directors who are not
interested persons (as defined in the Act) of the Fund.
10. The Fund shall preserve copies of this Plan and any related
agreements and all reports made pursuant to paragraph 6 hereof for a period of
not less than six years from the date of this Plan, the agreements or such
reports, as the case may be, the first two years in an easily accessible place.
Dated: _____________________, 1996
4
<PAGE>
PLAN OF DISTRIBUTION PURSUANT TO RULE 12b-1
OF
THE RBB FUND, INC.
(BEA Emerging Markets Equity Portfolio Advisor Class)
WHEREAS, The RBB Fund, Inc. (the "Fund") intends to engage in business
as an open-end management investment company and is registered as such under the
Investment Company Act of 1940, as amended (the "Act"); and
WHEREAS, the Fund desires to adopt a Plan of Distribution pursuant to
Rule 12b-1 under the Act with respect to shares of its Class NN Common Stock,
par value $.001 per share (the "Class NN Shares") and the Board of Directors has
determined that there is a reasonable likelihood that adoption of this Plan of
Distribution will benefit the Fund and its stockholders; and
WHEREAS, the Fund intends to employ Counsellors Securities Inc. (the
"Distributor") as distributor of the Class NN Shares; and
WHEREAS, the Fund and the Distributor intend to enter into a separate
Distribution Agreement with the Fund for Class NN Shares, pursuant to which the
Fund will employ the Distributor as distributor for the continuous offering of
Class NN Shares;
NOW, THEREFORE, the Fund hereby adopts, and the Distributor hereby
agrees to the terms of, this Plan of Distribution (the "Plan") in accordance
with Rule 12b-1 under the Act on the following terms and conditions:
1. The Fund shall pay to the Distributor, as the distributor of the
Class NN Shares, compensation for distribution of its shares at an annual rate
not to exceed .25% of the average daily net assets of the Class NN Shares. The
amount of such compensation shall be agreed upon by the Board of Directors of
the Fund and by the Distributor and shall be calculated and accrued daily and
paid monthly or at such other intervals as the Board of Directors and the
Distributor shall mutually agree.
2. The amount set forth in paragraph 1 of this Plan shall be paid
for the Distributor's services as distributor of the Class NN Shares. Such
amount may be spent by the Distributor on any activities or expenses primarily
intended to result in the
<PAGE>
sale of Class NN Shares, including, but not limited to: compensation to and
expenses of employees of the Distributor who engage in or support distribution
of the Class NN Shares, including overhead and telephone expenses,; printing of
prospectuses and reports for other than existing shareholders; preparation,
printing and distribution of sales literature and advertising materials; and
compensation to certain financial institutions ("Service Organizations") who
sell Class NN Shares. The Distributor may negotiate with any such Service
Organizations the services to be provided by the Service Organization to
shareholders in connection with the sale of Class NN Shares ("Distribution
Services"), and all or any portion of the compensation paid to the Distributor
under paragraph 1 of this Plan may be reallocated by the Distributor to Service
Organizations who sell Class NN Shares. The compensation paid to Service
Organizations with respect to Distribution Services will compensate Service
Organizations to cover certain expenses primarily intended to result in the sale
of Class NN Shares, including, but not limited to: (a) costs of payments made to
employees that engage in the sale of Class NN Shares; (b) payments made to, and
expenses of, persons who provide support services in connection with the sale of
Class NN Shares, including, but not limited to, office space and equipment,
telephone facilities, processing shareholder transactions and providing any
other shareholder services not otherwise provided by the Fund's transfer agent;
(c) costs relating to the formulation and implementation of marketing and
promotional activities, including, but not limited to, direct mail promotions
and television, radio, newspaper, magazine and other mass media advertising; (d)
costs of printing and distributing prospectuses, statements of additional
information and reports relating to the Class NN Shares to prospective
shareholders of the Class NN Shares; (e) costs involved in preparing, printing
and distributing sales literature pertaining to the Class NN Shares; and (f)
costs involved in obtaining whatever information, analyses and reports with
respect to marketing and promotional activities that the Service Organization
may, from time to time, deem advisable. The compensation paid to Service
Organizations with respect to Shareholder Services will compensate Service
Organizations for personal service and/or the maintenance of shareholder
accounts, including but not limited to (a) responding to inquiries of customers
or clients of the Service Organization who beneficially own Class NN Shares
("Customers"), (b) providing information on Customer investments and (c)
providing other shareholder liaison services. The compensation paid to Service
Organizations with respect to Administrative Services will compensate Service
Organizations for administrative and accounting services to their Customers,
including, but not limited to: (a) aggregating and processing purchase and
redemption requests from Customers and placing net purchase and redemption
orders with the Fund's distributor or transfer agent; (b) providing Customers
with a service that invests the assets of their accounts in the Class NN Shares;
(c) processing dividend payments from the Class NN Shares on behalf of
Customers; (d)
2
<PAGE>
providing information periodically to Customers showing their positions in the
Class NN Shares; (e) arranging for bank wires; (f) providing sub-accounting with
respect to Class NN Shares beneficially owned by Customers or the information to
the Fund necessary for sub-accounting; (g) forwarding shareholder communications
from the Fund (for example, proxies, shareholder reports, annual and semi-annual
financial statements and dividend, distribution and tax notices related to the
Class NN Shares) to Customers, if required by law; and (h) providing other
similar services to the extent permitted under applicable statutes, rules and
regulations.
3. This Plan shall not take effect until it has been approved by a
vote of at least a majority (as defined in the Act) of the outstanding Class NN
Shares.
4. In addition to the approval required by paragraph 3 above, this
Plan shall not take effect until it has been approved, together with any related
agreements, by votes of a majority of both (a) the Board of Directors of the
Fund and (b) those directors of the Fund who are not "interested persons" of the
Fund (as defined in the Act) and have no direct or indirect financial interest
in the operation of this Plan or any agreements related to it (the "Rule 12b-1
Directors"), cast in person at a meeting (or meetings) called for the purpose of
voting on this Plan and such related agreements.
5. This Plan shall continue in effect until August 16, 1995.
Thereafter, this Plan shall continue in effect for so long as such continuance
is specifically approved at least annually in the manner provided for approval
of this Plan in paragraph 4.
6. The Distributor shall provide to the Board of Directors of the
Fund and the Board of Directors shall review, at least quarterly, a written
report of the amounts expended pursuant to this Plan and the purposes for which
such expenditures were made, including commissions, advertising, printing,
interest, carrying charges and allocated overhead expenses.
7. This Plan may be terminated at any time by vote of a majority of
the Rule 12b-1 Directors, or by a vote of a majority of the outstanding Class NN
Shares.
8. This Plan may not be amended to increase materially the amount of
compensation provided for in paragraph 1 hereof unless such amendment is
approved in the manner provided for initial approval in paragraph 3 hereof, and
no material amendment to the Plan of any kind, including an amendment which
would increase materially the amount of compensation, shall be made unless
approved in the manner provided for approval and annual renewal in paragraph 4
hereof.
3
<PAGE>
9. While this Plan is in effect, the selection and nomination of
Directors who are not interested persons (as defined in the Act) of the Fund
shall be committed to the discretion of the then current Directors who are not
interested persons (as defined in the Act) of the Fund.
10. The Fund shall preserve copies of this Plan and any related
agreements and all reports made pursuant to paragraph 6 hereof for a period of
not less than six years from the date of this Plan, the agreements or such
reports, as the case may be, the first two years in an easily accessible place.
Dated: _____________________, 1996
4
<PAGE>
PLAN OF DISTRIBUTION PURSUANT TO RULE 12b-1
OF
THE RBB FUND, INC.
(BEA High Yield Investor Class)
WHEREAS, The RBB Fund, Inc. (the "Fund") intends to engage in business
as an open-end management investment company and is registered as such under the
Investment Company Act of 1940, as amended (the "Act"); and
WHEREAS, the Fund desires to adopt a Plan of Distribution pursuant to
Rule 12b-1 under the Act with respect to shares of its Class OO Common Stock,
par value $.001 per share (the "Class OO Shares") and the Board of Directors has
determined that there is a reasonable likelihood that adoption of this Plan of
Distribution will benefit the Fund and its stockholders; and
WHEREAS, the Fund intends to employ Counsellors Securities Inc. (the
"Distributor") as distributor of the Class OO Shares; and
WHEREAS, the Fund and the Distributor intend to enter into a separate
Distribution Agreement with the Fund for Class OO Shares, pursuant to which the
Fund will employ the Distributor as distributor for the continuous offering of
Class OO Shares;
NOW, THEREFORE, the Fund hereby adopts, and the Distributor hereby
agrees to the terms of, this Plan of Distribution (the "Plan") in accordance
with Rule 12b-1 under the Act on the following terms and conditions:
1. The Fund shall pay to the Distributor, as the distributor of the
Class OO Shares, compensation for distribution of its shares at an annual rate
not to exceed .75% of the average daily net assets of the Class OO Shares. The
amount of such compensation shall be agreed upon by the Board of Directors of
the Fund and by the Distributor and shall be calculated and accrued daily and
paid monthly or at such other intervals as the Board of Directors and the
Distributor shall mutually agree.
2. The amount set forth in paragraph 1 of this Plan shall be paid
for the Distributor's services as distributor of the Class OO Shares. Such
amount may be spent by the Distributor on any activities or expenses primarily
intended to result in the
1
<PAGE>
sale of Class OO Shares, including, but not limited to: compensation to and
expenses of employees of the Distributor who engage in or support distribution
of the Class OO Shares, including overhead and telephone expenses,; printing of
prospectuses and reports for other than existing shareholders; preparation,
printing and distribution of sales literature and advertising materials; and
compensation to certain financial institutions ("Service Organizations") who
sell Class OO Shares. The Distributor may negotiate with any such Service
Organizations the services to be provided by the Service Organization to
shareholders in connection with the sale of Class OO Shares ("Distribution
Services"), and all or any portion of the compensation paid to the Distributor
under paragraph 1 of this Plan may be reallocated by the Distributor to Service
Organizations who sell Class OO Shares. The compensation paid to Service
Organizations with respect to Distribution Services will compensate Service
Organizations to cover certain expenses primarily intended to result in the sale
of Class OO Shares, including, but not limited to: (a) costs of payments made to
employees that engage in the sale of Class OO Shares; (b) payments made to, and
expenses of, persons who provide support services in connection with the sale of
Class OO Shares, including, but not limited to, office space and equipment,
telephone facilities, processing shareholder transactions and providing any
other shareholder services not otherwise provided by the Fund's transfer agent;
(c) costs relating to the formulation and implementation of marketing and
promotional activities, including, but not limited to, direct mail promotions
and television, radio, newspaper, magazine and other mass media advertising; (d)
costs of printing and distributing prospectuses, statements of additional
information and reports relating to the Class OO Shares to prospective
shareholders of the Class OO Shares; (e) costs involved in preparing, printing
and distributing sales literature pertaining to the Class OO Shares; and (f)
costs involved in obtaining whatever information, analyses and reports with
respect to marketing and promotional activities that the Service Organization
may, from time to time, deem advisable. The compensation paid to Service
Organizations with respect to Shareholder Services will compensate Service
Organizations for personal service and/or the maintenance of shareholder
accounts, including but not limited to (a) responding to inquiries of customers
or clients of the Service Organization who beneficially own Class OO Shares
("Customers"), (b) providing information on Customer investments and (c)
providing other shareholder liaison services. The compensation paid to Service
Organizations with respect to Administrative Services will compensate Service
Organizations for administrative and accounting services to their Customers,
including, but not limited to: (a) aggregating and processing purchase and
redemption requests from Customers and placing net purchase and redemption
orders with the Fund's distributor or transfer agent; (b) providing Customers
with a service that invests the assets of their accounts in the Class OO Shares;
(c) processing dividend payments from the Class OO Shares on behalf of
Customers; (d)
2
<PAGE>
providing information periodically to Customers showing their positions in the
Class OO Shares; (e) arranging for bank wires; (f) providing sub-accounting with
respect to Class OO Shares beneficially owned by Customers or the information to
the Fund necessary for sub-accounting; (g) forwarding shareholder communications
from the Fund (for example, proxies, shareholder reports, annual and semi-annual
financial statements and dividend, distribution and tax notices related to the
Class OO Shares) to Customers, if required by law; and (h) providing other
similar services to the extent permitted under applicable statutes, rules and
regulations.
3. This Plan shall not take effect until it has been approved by a
vote of at least a majority (as defined in the Act) of the outstanding Class OO
Shares.
4. In addition to the approval required by paragraph 3 above, this
Plan shall not take effect until it has been approved, together with any related
agreements, by votes of a majority of both (a) the Board of Directors of the
Fund and (b) those directors of the Fund who are not "interested persons" of the
Fund (as defined in the Act) and have no direct or indirect financial interest
in the operation of this Plan or any agreements related to it (the "Rule 12b-1
Directors"), cast in person at a meeting (or meetings) called for the purpose of
voting on this Plan and such related agreements.
5. This Plan shall continue in effect until August 16, 1995.
Thereafter, this Plan shall continue in effect for so long as such continuance
is specifically approved at least annually in the manner provided for approval
of this Plan in paragraph 4.
6. The Distributor shall provide to the Board of Directors of the
Fund and the Board of Directors shall review, at least quarterly, a written
report of the amounts expended pursuant to this Plan and the purposes for which
such expenditures were made, including commissions, advertising, printing,
interest, carrying charges and allocated overhead expenses.
7. This Plan may be terminated at any time by vote of a majority of
the Rule 12b-1 Directors, or by a vote of a majority of the outstanding Class OO
Shares.
8. This Plan may not be amended to increase materially the amount of
compensation provided for in paragraph 1 hereof unless such amendment is
approved in the manner provided for initial approval in paragraph 3 hereof, and
no material amendment to the Plan of any kind, including an amendment which
would increase materially the amount of compensation, shall be made unless
approved in the manner provided for approval and annual renewal in paragraph 4
hereof.
3
<PAGE>
9. While this Plan is in effect, the selection and nomination of
Directors who are not interested persons (as defined in the Act) of the Fund
shall be committed to the discretion of the then current Directors who are not
interested persons (as defined in the Act) of the Fund.
10. The Fund shall preserve copies of this Plan and any related
agreements and all reports made pursuant to paragraph 6 hereof for a period of
not less than six years from the date of this Plan, the agreements or such
reports, as the case may be, the first two years in an easily accessible place.
Dated: _____________________, 1996
<PAGE>
EXHIBIT G
PLAN OF DISTRIBUTION PURSUANT TO RULE 12b-1
OF
THE RBB FUND, INC.
(BEA High Yield Advisor Class)
WHEREAS, The RBB Fund, Inc. (the "Fund") intends to engage in business
as an open-end management investment company and is registered as such under the
Investment Company Act of 1940, as amended (the "Act"); and
WHEREAS, the Fund desires to adopt a Plan of Distribution pursuant to
Rule 12b-1 under the Act with respect to shares of its Class KK Common Stock,
par value $.001 per share (the "Class KK Shares") and the Board of Directors has
determined that there is a reasonable likelihood that adoption of this Plan of
Distribution will benefit the Fund and its stockholders; and
WHEREAS, the Fund intends to employ Counsellors Securities Inc. (the
"Distributor") as distributor of the Class KK Shares; and
WHEREAS, the Fund and the Distributor intend to enter into a separate
Distribution Agreement with the Fund for Class KK Shares, pursuant to which the
Fund will employ the Distributor as distributor for the continuous offering of
Class KK Shares;
NOW, THEREFORE, the Fund hereby adopts, and the Distributor hereby
agrees to the terms of, this Plan of Distribution (the "Plan") in accordance
with Rule 12b-1 under the Act on the following terms and conditions:
1. The Fund shall pay to the Distributor, as the distributor of the
Class KK Shares, compensation for distribution of its shares at an annual rate
not to exceed .25% of the average daily net assets of the Class KK Shares. The
amount of such compensation shall be agreed upon by the Board of Directors of
the Fund and by the Distributor and shall be calculated and accrued daily and
paid monthly or at such other intervals as the Board of Directors and the
Distributor shall mutually agree.
2. The amount set forth in paragraph 1 of this Plan shall be paid
for the Distributor's services as distributor of the Class KK Shares. Such
amount may be spent by the Distributor on any activities or expenses primarily
intended to result in the
-1-
<PAGE>
sale of Class KK Shares, including, but not limited to: compensation to and
expenses of employees of the Distributor who engage in or support distribution
of the Class KK Shares, including overhead and telephone expenses,; printing of
prospectuses and reports for other than existing shareholders; preparation,
printing and distribution of sales literature and advertising materials; and
compensation to certain financial institutions ("Service Organizations") who
sell Class KK Shares. The Distributor may negotiate with any such Service
Organizations the services to be provided by the Service Organization to
shareholders in connection with the sale of Class KK Shares ("Distribution
Services"), and all or any portion of the compensation paid to the Distributor
under paragraph 1 of this Plan may be reallocated by the Distributor to Service
Organizations who sell Class KK Shares. The compensation paid to Service
Organizations with respect to Distribution Services will compensate Service
Organizations to cover certain expenses primarily intended to result in the sale
of Class KK Shares, including, but not limited to: (a) costs of payments made to
employees that engage in the sale of Class KK Shares; (b) payments made to, and
expenses of, persons who provide support services in connection with the sale of
Class KK Shares, including, but not limited to, office space and equipment,
telephone facilities, processing shareholder transactions and providing any
other shareholder services not otherwise provided by the Fund's transfer agent;
(c) costs relating to the formulation and implementation of marketing and
promotional activities, including, but not limited to, direct mail promotions
and television, radio, newspaper, magazine and other mass media advertising; (d)
costs of printing and distributing prospectuses, statements of additional
information and reports relating to the Class KK Shares to prospective
shareholders of the Class KK Shares; (e) costs involved in preparing, printing
and distributing sales literature pertaining to the Class KK Shares; and (f)
costs involved in obtaining whatever information, analyses and reports with
respect to marketing and promotional activities that the Service Organization
may, from time to time, deem advisable. The compensation paid to Service
Organizations with respect to Shareholder Services will compensate Service
Organizations for personal service and/or the maintenance of shareholder
accounts, including but not limited to (a) responding to inquiries of customers
or clients of the Service Organization who beneficially own Class KK Shares
("Customers"), (b) providing information on Customer investments and (c)
providing other shareholder liaison services. The compensation paid to Service
Organizations with respect to Administrative Services will compensate Service
Organizations for administrative and accounting services to their Customers,
including, but not limited to: (a) aggregating and processing purchase and
redemption requests from Customers and placing net purchase and redemption
orders with the Fund's distributor or transfer agent; (b) providing Customers
with a service that invests the assets of their accounts in the Class KK Shares;
(c) processing dividend payments from the Class KK Shares on behalf of
Customers; (d)
-2-
<PAGE>
providing information periodically to Customers showing their positions in the
Class KK Shares; (e) arranging for bank wires; (f) providing sub-accounting with
respect to Class KK Shares beneficially owned by Customers or the information to
the Fund necessary for sub-accounting; (g) forwarding shareholder communications
from the Fund (for example, proxies, shareholder reports, annual and semi-annual
financial statements and dividend, distribution and tax notices related to the
Class KK Shares) to Customers, if required by law; and (h) providing other
similar services to the extent permitted under applicable statutes, rules and
regulations.
3. This Plan shall not take effect until it has been approved by a
vote of at least a majority (as defined in the Act) of the outstanding Class KK
Shares.
4. In addition to the approval required by paragraph 3 above, this
Plan shall not take effect until it has been approved, together with any related
agreements, by votes of a majority of both (a) the Board of Directors of the
Fund and (b) those directors of the Fund who are not "interested persons" of the
Fund (as defined in the Act) and have no direct or indirect financial interest
in the operation of this Plan or any agreements related to it (the "Rule 12b-1
Directors"), cast in person at a meeting (or meetings) called for the purpose of
voting on this Plan and such related agreements.
5. This Plan shall continue in effect until August 16, 1995.
Thereafter, this Plan shall continue in effect for so long as such continuance
is specifically approved at least annually in the manner provided for approval
of this Plan in paragraph 4.
6. The Distributor shall provide to the Board of Directors of the
Fund and the Board of Directors shall review, at least quarterly, a written
report of the amounts expended pursuant to this Plan and the purposes for which
such expenditures were made, including commissions, advertising, printing,
interest, carrying charges and allocated overhead expenses.
7. This Plan may be terminated at any time by vote of a majority of
the Rule 12b-1 Directors, or by a vote of a majority of the outstanding Class KK
Shares.
8. This Plan may not be amended to increase materially the amount of
compensation provided for in paragraph 1 hereof unless such amendment is
approved in the manner provided for initial approval in paragraph 3 hereof, and
no material amendment to the Plan of any kind, including an amendment which
would increase materially the amount of compensation, shall be made unless
approved in the manner provided for approval and annual renewal in paragraph 4
hereof.
-3-
<PAGE>
9. While this Plan is in effect, the selection and nomination of
Directors who are not interested persons (as defined in the Act) of the Fund
shall be committed to the discretion of the then current Directors who are not
interested persons (as defined in the Act) of the Fund.
10. The Fund shall preserve copies of this Plan and any related
agreements and all reports made pursuant to paragraph 6 hereof for a period of
not less than six years from the date of this Plan, the agreements or such
reports, as the case may be, the first two years in an easily accessible place.
Dated: _____________________, 1996
-4-
<PAGE>
PLAN OF DISTRIBUTION PURSUANT TO RULE 12b-1
OF
THE RBB FUND, INC.
(BEA Global Telecommunications Portfolio Investor Class)
WHEREAS, The RBB Fund, Inc. (the "Fund") intends to engage in business
as an open-end management investment company and is registered as such under the
Investment Company Act of 1940, as amended (the "Act"); and
WHEREAS, the Fund desires to adopt a Plan of Distribution pursuant to
Rule 12b-1 under the Act with respect to shares of its Class LL Common Stock,
par value $.001 per share (the "Class LL Shares") and the Board of Directors has
determined that there is a reasonable likelihood that adoption of this Plan of
Distribution will benefit the Fund and its stockholders; and
WHEREAS, the Fund intends to employ Counsellors Securities Inc. (the
"Distributor") as distributor of the Class LL Shares; and
WHEREAS, the Fund and the Distributor intend to enter into a separate
Distribution Agreement with the Fund for Class LL Shares, pursuant to which the
Fund will employ the Distributor as distributor for the continuous offering of
Class LL Shares;
NOW, THEREFORE, the Fund hereby adopts, and the Distributor hereby
agrees to the terms of, this Plan of Distribution (the "Plan") in accordance
with Rule 12b-1 under the Act on the following terms and conditions:
1. The Fund shall pay to the Distributor, as the distributor of the
Class LL Shares, compensation for distribution of its shares at an annual rate
not to exceed .75% of the average daily net assets of the Class LL Shares. The
amount of such compensation shall be agreed upon by the Board of Directors of
the Fund and by the Distributor and shall be calculated and accrued daily and
paid monthly or at such other intervals as the Board of Directors and the
Distributor shall mutually agree.
2. The amount set forth in paragraph 1 of this Plan shall be paid
for the Distributor's services as distributor of the Class LL Shares. Such
amount may be spent by the Distributor on any activities or expenses primarily
intended to result in the
1
<PAGE>
sale of Class LL Shares, including, but not limited to: compensation to and
expenses of employees of the Distributor who engage in or support distribution
of the Class LL Shares, including overhead and telephone expenses,; printing of
prospectuses and reports for other than existing shareholders; preparation,
printing and distribution of sales literature and advertising materials; and
compensation to certain financial institutions ("Service Organizations") who
sell Class LL Shares. The Distributor may negotiate with any such Service
Organizations the services to be provided by the Service Organization to
shareholders in connection with the sale of Class LL Shares ("Distribution
Services"), and all or any portion of the compensation paid to the Distributor
under paragraph 1 of this Plan may be reallocated by the Distributor to Service
Organizations who sell Class LL Shares. The compensation paid to Service
Organizations with respect to Distribution Services will compensate Service
Organizations to cover certain expenses primarily intended to result in the sale
of Class LL Shares, including, but not limited to: (a) costs of payments made to
employees that engage in the sale of Class LL Shares; (b) payments made to, and
expenses of, persons who provide support services in connection with the sale of
Class LL Shares, including, but not limited to, office space and equipment,
telephone facilities, processing shareholder transactions and providing any
other shareholder services not otherwise provided by the Fund's transfer agent;
(c) costs relating to the formulation and implementation of marketing and
promotional activities, including, but not limited to, direct mail promotions
and television, radio, newspaper, magazine and other mass media advertising; (d)
costs of printing and distributing prospectuses, statements of additional
information and reports relating to the Class LL Shares to prospective
shareholders of the Class LL Shares; (e) costs involved in preparing, printing
and distributing sales literature pertaining to the Class LL Shares; and (f)
costs involved in obtaining whatever information, analyses and reports with
respect to marketing and promotional activities that the Service Organization
may, from time to time, deem advisable. The compensation paid to Service
Organizations with respect to Shareholder Services will compensate Service
Organizations for personal service and/or the maintenance of shareholder
accounts, including but not limited to (a) responding to inquiries of customers
or clients of the Service Organization who beneficially own Class LL Shares
("Customers"), (b) providing information on Customer investments and (c)
providing other shareholder liaison services. The compensation paid to Service
Organizations with respect to Administrative Services will compensate Service
Organizations for administrative and accounting services to their Customers,
including, but not limited to: (a) aggregating and processing purchase and
redemption requests from Customers and placing net purchase and redemption
orders with the Fund's distributor or transfer agent; (b) providing Customers
with a service that invests the assets of their accounts in the Class LL Shares;
(c) processing dividend payments from the Class LL Shares on behalf of
Customers; (d)
2
<PAGE>
providing information periodically to Customers showing their positions in the
Class LL Shares; (e) arranging for bank wires; (f) providing sub-accounting with
respect to Class LL Shares beneficially owned by Customers or the information to
the Fund necessary for sub-accounting; (g) forwarding shareholder communications
from the Fund (for example, proxies, shareholder reports, annual and semi-annual
financial statements and dividend, distribution and tax notices related to the
Class LL Shares) to Customers, if required by law; and (h) providing other
similar services to the extent permitted under applicable statutes, rules and
regulations.
3. This Plan shall not take effect until it has been approved by a
vote of at least a majority (as defined in the Act) of the outstanding Class LL
Shares.
4. In addition to the approval required by paragraph 3 above, this
Plan shall not take effect until it has been approved, together with any related
agreements, by votes of a majority of both (a) the Board of Directors of the
Fund and (b) those directors of the Fund who are not "interested persons" of the
Fund (as defined in the Act) and have no direct or indirect financial interest
in the operation of this Plan or any agreements related to it (the "Rule 12b-1
Directors"), cast in person at a meeting (or meetings) called for the purpose of
voting on this Plan and such related agreements.
5. This Plan shall continue in effect until August 16, 1995.
Thereafter, this Plan shall continue in effect for so long as such continuance
is specifically approved at least annually in the manner provided for approval
of this Plan in paragraph 4.
6. The Distributor shall provide to the Board of Directors of the
Fund and the Board of Directors shall review, at least quarterly, a written
report of the amounts expended pursuant to this Plan and the purposes for which
such expenditures were made, including commissions, advertising, printing,
interest, carrying charges and allocated overhead expenses.
7. This Plan may be terminated at any time by vote of a majority of
the Rule 12b-1 Directors, or by a vote of a majority of the outstanding Class LL
Shares.
8. This Plan may not be amended to increase materially the amount of
compensation provided for in paragraph 1 hereof unless such amendment is
approved in the manner provided for initial approval in paragraph 3 hereof, and
no material amendment to the Plan of any kind, including an amendment which
would increase materially the amount of compensation, shall be made unless
approved in the manner provided for approval and annual renewal in paragraph 4
hereof.
3
<PAGE>
9. While this Plan is in effect, the selection and nomination of
Directors who are not interested persons (as defined in the Act) of the Fund
shall be committed to the discretion of the then current Directors who are not
interested persons (as defined in the Act) of the Fund.
10. The Fund shall preserve copies of this Plan and any related
agreements and all reports made pursuant to paragraph 6 hereof for a period of
not less than six years from the date of this Plan, the agreements or such
reports, as the case may be, the first two years in an easily accessible place.
Dated: _____________________, 1996
4
<PAGE>
PLAN OF DISTRIBUTION PURSUANT TO RULE 12b-1
OF
THE RBB FUND, INC.
(BEA Global Telecommunications Portfolio Advisor Class)
WHEREAS, The RBB Fund, Inc. (the "Fund") intends to engage in business
as an open-end management investment company and is registered as such under the
Investment Company Act of 1940, as amended (the "Act"); and
WHEREAS, the Fund desires to adopt a Plan of Distribution pursuant to
Rule 12b-1 under the Act with respect to shares of its Class PP Common Stock,
par value $.001 per share (the "Class PP Shares") and the Board of Directors has
determined that there is a reasonable likelihood that adoption of this Plan of
Distribution will benefit the Fund and its stockholders; and
WHEREAS, the Fund intends to employ Counsellors Securities Inc. (the
"Distributor") as distributor of the Class PP Shares; and
WHEREAS, the Fund and the Distributor intend to enter into a separate
Distribution Agreement with the Fund for Class PP Shares, pursuant to which the
Fund will employ the Distributor as distributor for the continuous offering of
Class PP Shares;
NOW, THEREFORE, the Fund hereby adopts, and the Distributor hereby
agrees to the terms of, this Plan of Distribution (the "Plan") in accordance
with Rule 12b-1 under the Act on the following terms and conditions:
1. The Fund shall pay to the Distributor, as the distributor of the
Class PP Shares, compensation for distribution of its shares at an annual rate
not to exceed .25% of the average daily net assets of the Class PP Shares. The
amount of such compensation shall be agreed upon by the Board of Directors of
the Fund and by the Distributor and shall be calculated and accrued daily and
paid monthly or at such other intervals as the Board of Directors and the
Distributor shall mutually agree.
2. The amount set forth in paragraph 1 of this Plan shall be paid
for the Distributor's services as distributor of the Class PP Shares. Such
amount may be spent by the Distributor on any activities or expenses primarily
intended to result in the
1
<PAGE>
sale of Class PP Shares, including, but not limited to: compensation to and
expenses of employees of the Distributor who engage in or support distribution
of the Class PP Shares, including overhead and telephone expenses,; printing of
prospectuses and reports for other than existing shareholders; preparation,
printing and distribution of sales literature and advertising materials; and
compensation to certain financial institutions ("Service Organizations") who
sell Class PP Shares. The Distributor may negotiate with any such Service
Organizations the services to be provided by the Service Organization to
shareholders in connection with the sale of Class PP Shares ("Distribution
Services"), and all or any portion of the compensation paid to the Distributor
under paragraph 1 of this Plan may be reallocated by the Distributor to Service
Organizations who sell Class PP Shares. The compensation paid to Service
Organizations with respect to Distribution Services will compensate Service
Organizations to cover certain expenses primarily intended to result in the sale
of Class PP Shares, including, but not limited to: (a) costs of payments made to
employees that engage in the sale of Class PP Shares; (b) payments made to, and
expenses of, persons who provide support services in connection with the sale of
Class PP Shares, including, but not limited to, office space and equipment,
telephone facilities, processing shareholder transactions and providing any
other shareholder services not otherwise provided by the Fund's transfer agent;
(c) costs relating to the formulation and implementation of marketing and
promotional activities, including, but not limited to, direct mail promotions
and television, radio, newspaper, magazine and other mass media advertising; (d)
costs of printing and distributing prospectuses, statements of additional
information and reports relating to the Class PP Shares to prospective
shareholders of the Class PP Shares; (e) costs involved in preparing, printing
and distributing sales literature pertaining to the Class PP Shares; and (f)
costs involved in obtaining whatever information, analyses and reports with
respect to marketing and promotional activities that the Service Organization
may, from time to time, deem advisable. The compensation paid to Service
Organizations with respect to Shareholder Services will compensate Service
Organizations for personal service and/or the maintenance of shareholder
accounts, including but not limited to (a) responding to inquiries of customers
or clients of the Service Organization who beneficially own Class PP Shares
("Customers"), (b) providing information on Customer investments and (c)
providing other shareholder liaison services. The compensation paid to Service
Organizations with respect to Administrative Services will compensate Service
Organizations for administrative and accounting services to their Customers,
including, but not limited to: (a) aggregating and processing purchase and
redemption requests from Customers and placing net purchase and redemption
orders with the Fund's distributor or transfer agent; (b) providing Customers
with a service that invests the assets of their accounts in the Class PP Shares;
(c) processing dividend payments from the Class PP Shares on behalf of
Customers; (d)
2
<PAGE>
providing information periodically to Customers showing their positions in the
Class PP Shares; (e) arranging for bank wires; (f) providing sub-accounting with
respect to Class PP Shares beneficially owned by Customers or the information to
the Fund necessary for sub-accounting; (g) forwarding shareholder communications
from the Fund (for example, proxies, shareholder reports, annual and semi-annual
financial statements and dividend, distribution and tax notices related to the
Class PP Shares) to Customers, if required by law; and (h) providing other
similar services to the extent permitted under applicable statutes, rules and
regulations.
3. This Plan shall not take effect until it has been approved by a
vote of at least a majority (as defined in the Act) of the outstanding Class PP
Shares.
4. In addition to the approval required by paragraph 3 above, this
Plan shall not take effect until it has been approved, together with any related
agreements, by votes of a majority of both (a) the Board of Directors of the
Fund and (b) those directors of the Fund who are not "interested persons" of the
Fund (as defined in the Act) and have no direct or indirect financial interest
in the operation of this Plan or any agreements related to it (the "Rule 12b-1
Directors"), cast in person at a meeting (or meetings) called for the purpose of
voting on this Plan and such related agreements.
5. This Plan shall continue in effect until August 16, 1995.
Thereafter, this Plan shall continue in effect for so long as such continuance
is specifically approved at least annually in the manner provided for approval
of this Plan in paragraph 4.
6. The Distributor shall provide to the Board of Directors of the
Fund and the Board of Directors shall review, at least quarterly, a written
report of the amounts expended pursuant to this Plan and the purposes for which
such expenditures were made, including commissions, advertising, printing,
interest, carrying charges and allocated overhead expenses.
7. This Plan may be terminated at any time by vote of a majority of
the Rule 12b-1 Directors, or by a vote of a majority of the outstanding Class PP
Shares.
8. This Plan may not be amended to increase materially the amount of
compensation provided for in paragraph 1 hereof unless such amendment is
approved in the manner provided for initial approval in paragraph 3 hereof, and
no material amendment to the Plan of any kind, including an amendment which
would increase materially the amount of compensation, shall be made unless
approved in the manner provided for approval and annual renewal in paragraph 4
hereof.
3
<PAGE>
9. While this Plan is in effect, the selection and nomination of
Directors who are not interested persons (as defined in the Act) of the Fund
shall be committed to the discretion of the then current Directors who are not
interested persons (as defined in the Act) of the Fund.
10. The Fund shall preserve copies of this Plan and any related
agreements and all reports made pursuant to paragraph 6 hereof for a period of
not less than six years from the date of this Plan, the agreements or such
reports, as the case may be, the first two years in an easily accessible place.
Dated: _____________________, 1996
