RBB FUND INC, 485BPOS, 1997-12-08

RBB FUND INC
485BPOS, 1997-12-08

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<PAGE>

As filed with the Securities and Exchange Commission on December 8, 1997
Securities Act File No. 33-20827
Investment Company Act File No. 811-5518

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

SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549

FORM N-1A

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 /x/

Pre-Effective Amendment No. __ / /

Post-Effective Amendment No. 50 /x/

and

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 /x/

Amendment No. 52 /x/

THE RBB FUND, INC.

(Government Securities Portfolio: RBB 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 Strategic 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; NI Larger Cap
Value Fund: NI Class; Boston Partners Large Cap Value Fund: Boston Partners
Advisor Class, Boston Partners Institutional Class and Boston Partners Investor
Class; Boston Partners Mid Cap Value Fund: Boston Partners Institutional Class
and Boston Partners Investor Class; Boston Partners Bond Fund: Boston Partners
Institutional Class and Boston Partners Investor Class; Money Market Portfolio:
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: 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; Government Obligations
Money Market Portfolio: Sansom Street Class, Bedford 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 MICHAEL P. MALLOY, ESQUIRE
PNC Bank, National Association Drinker Biddle & Reath LLP
1600 Market Street, 28th Floor 1100 PNB Building
Philadelphia, PA 19103 1345 Chestnut Street
(Name and Address of Agent for Philadelphia, PA 19107-3496
Service)

It is proposed that this filing will become effective (check appropriate box)
/x/ immediately upon filing pursuant to paragraph (b)
/ / on (date) pursuant to paragraph (b)
/ / 60 days after filing pursuant to paragraph (a)(1)
/ / on (date) pursuant to paragraph (a)(1)
/ / 75 days after filing pursuant to paragraph (a)(2)
/ / on (date) pursuant to paragraph (a)(2) of Rule 485
If appropriate, check the following box:
/ / This post-effective amendment designates a new effective date for
a previously filed post-effective amendment.

<PAGE>

THE RBB FUND, INC.
(BEA INSTITUTIONAL CLASSES OF THE BEA INTERNATIONAL EQUITY,
BEA STRATEGIC GLOBAL FIXED INCOME, BEA EMERGING MARKETS EQUITY,
BEA U.S. CORE EQUITY, BEA U.S. CORE FIXED INCOME, BEA MUNICIPAL BOND,
BEA HIGH YIELD, BEA SHORT DURATION, AND BEA BALANCED FUNDS)

CROSS REFERENCE SHEET
---------------------

Pursuant to Rule 495(a)
under the Securities Act of 1933

Form N-1A Item Location
- -------------- --------
Part A Prospectus

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

2. Synopsis . . . . . . . . . . . . . . . . Annual Fund
Operating Expenses

3. Condensed Financial Information. . . . . Financial Highlights

4. General Description of Registrant. . . . Cover Page; The Company;
Investment Objectives and
Policies; Investment
Limitations; Risk Factors

5. Management of the Fund . . . . . . . . . Management

5A. Management's Discussion
of Fund Performance. . . . . . . . . . Not Applicable

6. Capital Stock and Other Securities . . . Cover Page; Dividends and
Distributions; Taxes;
Shareholder Servicing;
Multi-Class Structure;
Description of Shares

7. Purchase of Securities Being Offered . . How to Purchase Shares; Net
Asset Value

8. Redemption or Repurchase . . . . . . . . How to Redeem Shares; Net Asset
Value

9. Pending Legal Proceedings. . . . . . . . Not Applicable

<PAGE>

CROSS REFERENCE SHEET
---------------------

Pursuant to Rule 495(a)
under the Securities Act of 1933

Form N-1A Item Location
- -------------- --------

PART B STATEMENT OF ADDITIONAL
INFORMATION

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

11. Table of Contents. . . . . . . . . . . . Contents

12. General Information and History. . . . . General; Directors and Officers;
Additional Information
Concerning Fund Shares;
Miscellaneous; see Prospectus -
"The Fund"

13. Investment Objectives and Policies . . . Common Investment Policies;
Supplemental Investment
Objectives and Policies;
Investment Limitations; Risk
Factors

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" "Multi-Class
Structure"

19. Purchase, Redemption and Pricing of
Securities Being Offered . . . . . . . Purchase and Redemption
Information; Valuation of
Shares; See Prospectus - "How to
Purchase Shares" and "How to
Redeem Shares"

20. Tax Status . . . . . . . . . . . . . . . Taxes; See Prospectus - "Taxes"

21. Underwriters . . . . . . . . . . . . . . Not Applicable

22. Calculation of Performance Data. . . . . Performance and Yield
Information

23. Financial Statements . . . . . . . . . . Miscellaneous

<PAGE>

THE RBB FUND, INC.
(BEA INVESTOR CLASSES OF THE BEA INTERNATIONAL EQUITY,
BEA HIGH YIELD, BEA EMERGING MARKETS EQUITY,
AND BEA GLOBAL TELECOMMUNICATIONS FUNDS)

CROSS REFERENCE SHEET
---------------------

Pursuant to Rule 495(a)
under the Securities Act of 1933

Form N-1A Item Location
- -------------- --------

Part A Prospectus

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

2. Synopsis. . . . . . . . . . . . . . . Annual Fund
Operating Expenses

3. Condensed Financial Information . . . Not Applicable

4. General Description of Registrant . . Cover Page; The Company;
Investment Objectives and
Policies; Investment
Limitations; Risk Factors

5. Management of the Fund. . . . . . . . Management

5A. Management's Discussion
of Fund Performance . . . . . . . . Not Applicable

6. Capital Stock and Other Securities. . Cover Page; Dividends and
Distributions; Taxes;
Shareholder Servicing;
Multi-Class Structure;
Description of Shares

7. Purchase of Securities Being Offered How to Purchase Shares; Net
Asset Value

8. Redemption or Repurchase. . . . . . . How to Redeem Shares; Net Asset
Value

9. Pending Legal Proceedings . . . . . . Not Applicable

<PAGE>

THE RBB FUND, INC.
(BEA INVESTOR CLASSES OF THE BEA INTERNATIONAL EQUITY,
BEA HIGH YIELD, BEA EMERGING MARKETS EQUITY,
AND BEA GLOBAL TELECOMMUNICATIONS FUNDS)

CROSS REFERENCE SHEET
---------------------

Pursuant to Rule 495(a)
under the Securities Act of 1933

Form N-1A Item Location
- -------------- --------

PART B STATEMENT OF ADDITIONAL
INFORMATION

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

11. Table of Contents . . . . . . . . . . Contents

12. General Information and History . . . General; Directors and Officers;
Additional Information
Concerning Fund Shares;
Miscellaneous; see Prospectus -
"The Fund"

13. Investment Objectives and Policies. . Common Investment Policies;
Supplemental Investment
Objectives and Policies;
Investment Limitations; Risk
Factors

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" "Multi-Class
Structure"

19. Purchase, Redemption and Pricing of
Securities Being Offered. . . . . . Purchase and Redemption
Information; Valuation of
Shares; See Prospectus - "How to
Purchase Shares" and "How to
Redeem Shares"

20. Tax Status. . . . . . . . . . . . . . Taxes; See Prospectus - "Taxes"

21. Underwriters. . . . . . . . . . . . . Not Applicable

22. Calculation of Performance Data . . . Performance and Yield
Information

23. Financial Statements. . . . . . . . . Miscellaneous
<PAGE>

THE RBB FUND, INC.
(BEA ADVISOR CLASSES OF THE BEA INTERNATIONAL EQUITY,
BEA EMERGING MARKETS EQUITY, BEA HIGH YIELD AND
BEA GLOBAL TELECOMMUNICATIONS FUNDS)

CROSS REFERENCE SHEET
---------------------

Pursuant to Rule 495(a)
under the Securities Act of 1933

Form N-1A Item Location
- -------------- --------

Part A Prospectus

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

2. Synopsis. . . . . . . . . . . . . . . Annual Fund
Operating Expenses

3. Condensed Financial Information . . . Financial Highlights

4. General Description of Registrant . . Cover Page; The Company;
Investment Objectives and
Policies; Investment
Limitations; Risk Factors

5. Management of the Fund. . . . . . . . Management

5A. Management's Discussion
of Fund Performance . . . . . . . . Not Applicable

6. Capital Stock and Other Securities. . Cover Page; Dividends and
Distributions; Taxes;
Shareholder Servicing;
Multi-Class Structure;
Description of Shares

7. Purchase of Securities Being Offered. How to Purchase Shares; Net
Asset Value

8. Redemption or Repurchase. . . . . . . How to Redeem Shares; Net Asset
Value

9. Pending Legal Proceedings . . . . . . Not Applicable

<PAGE>

THE RBB FUND, INC.
(BEA ADVISOR CLASSES OF THE BEA INTERNATIONAL EQUITY,
BEA EMERGING MARKETS EQUITY, BEA HIGH YIELD AND
BEA GLOBAL TELECOMMUNICATIONS FUNDS)

CROSS REFERENCE SHEET
---------------------

Pursuant to Rule 495(a)
under the Securities Act of 1933

Form N-1A Item Location
- -------------- --------

PART B STATEMENT OF ADDITIONAL
INFORMATION

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

11. Table of Contents . . . . . . . . . . . Contents

12. General Information and History . . . . General; Directors and Officers;
Additional Information
Concerning Fund Shares;
Miscellaneous; see Prospectus -
"The Fund"

13. Investment Objectives and Policies. . . Common Investment Policies;
Supplemental Investment
Objectives and Policies;
Investment Limitations; Risk
Factors

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" "Multi-Class
Structure"

19. Purchase, Redemption and Pricing of
Securities Being Offered. . . . . . . Purchase and Redemption
Information; Valuation of
Shares; See Prospectus - "How to
Purchase Shares" and "How to
Redeem Shares"

20. Tax Status. . . . . . . . . . . . . . . Taxes; See Prospectus - "Taxes"

21. Underwriters. . . . . . . . . . . . . . Not Applicable

22. Calculation of Performance Data . . . . Performance and Yield
Information

23. Financial Statements. . . . . . . . . . Miscellaneous

<PAGE>

B E A
INSTITUTIONAL FUNDS

INTERNATIONAL EQUITY FUND

EMERGING MARKETS EQUITY FUND

U.S. CORE EQUITY FUND

BALANCED FUND

U.S. CORE FIXED INCOME FUND

STRATEGIC GLOBAL FIXED INCOME FUND

HIGH YIELD FUND

MUNICIPAL BOND FUND

SHORT DURATION FUND

PROSPECTUS - DECEMBER 8, 1997

<PAGE>
TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
Annual Fund Operating Expenses......................................................................... 2
Financial Highlights................................................................................... 5
The Company............................................................................................ 12
Investment Objectives and Policies..................................................................... 12
Investment Limitations................................................................................. 28
Risk Factors........................................................................................... 28
Management............................................................................................. 31
Expenses............................................................................................... 36
How to Purchase Shares................................................................................. 36
How to Redeem and Exchange Shares...................................................................... 38
Net Asset Value........................................................................................ 40
Dividends and Distributions............................................................................ 40
Taxes.................................................................................................. 41
Multi-Class Structure.................................................................................. 44
Description of Shares.................................................................................. 44
Other Information...................................................................................... 45
</TABLE>

i
<PAGE>
BEA INSTITUTIONAL FUNDS

THE BEA INSTITUTIONAL FUNDS CONSIST OF NINE CLASSES OF COMMON STOCK OF THE RBB
FUND, INC. (THE "COMPANY"), AN OPEN-END MANAGEMENT INVESTMENT COMPANY. SHARES
(COLLECTIVELY, THE "INSTITUTIONAL SHARES" OR "SHARES") OF SUCH CLASSES (THE
"INSTITUTIONAL CLASSES" OR "CLASSES") ARE OFFERED BY THIS PROSPECTUS AND
REPRESENT INTERESTS IN ONE OF THE NINE INVESTMENT PORTFOLIOS OF THE COMPANY
DESCRIBED IN THIS PROSPECTUS (COLLECTIVELY, THE "FUNDS"). THE INVESTMENT
OBJECTIVE OF EACH FUND DESCRIBED IN THIS PROSPECTUS IS AS FOLLOWS:

BEA INTERNATIONAL EQUITY FUND -- seeks to provide long-term
appreciation of capital. The Fund will invest primarily in equity securities
of non-U.S. issuers.

BEA EMERGING MARKETS EQUITY FUND -- seeks to provide long-term
appreciation of capital. The Fund will invest primarily in equity securities
in emerging country markets.

BEA U.S. CORE EQUITY FUND -- seeks to provide long term appreciation
of capital. The Fund will invest primarily in U.S. equity securities.

BEA BALANCED FUND -- seeks to maximize total return consistent with
preservation of capital through both income and capital appreciation.

BEA U.S. CORE FIXED INCOME FUND -- seeks to provide high total return.
The Fund will invest primarily in domestic fixed-income securities
consistent with comparable broad market fixed income indices, such as the
Lehman Brothers Aggregate Bond Index.

BEA HIGH YIELD FUND -- seeks to provide a high total return. The Fund
will invest primarily in high yield fixed income securities issued by
corporations, governments and agencies, both domestic and foreign.

BEA STRATEGIC GLOBAL FIXED INCOME FUND -- seeks to provide high total
return. The Fund will invest primarily in both foreign and domestic fixed
income securities.

BEA MUNICIPAL BOND FUND -- seeks to provide high total return. The
Fund will invest primarily in municipal bonds issued by state and local
authorities.

BEA SHORT DURATION FUND -- seeks to provide investors with as high a
level of current income as is consistent with the preservation of capital.

There can be, of course, no assurance that a Fund's investment objective
will be achieved. Investments in the Funds involve certain risks. See "Risk
Factors."

THE BEA HIGH YIELD FUND MAY INVEST ITS ASSETS WITHOUT LIMITATION IN
SECURITIES WHICH ARE BELOW INVESTMENT-GRADE QUALITY. 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 FUND.
SEE "RISK FACTORS."

BEA Associates ("BEA" or the "Adviser"), a U.S. investment advisory firm,
will act as the investment adviser to each Fund. BEA maintains a global
investment strategy and, as of September 30, 1997, served as adviser for
approximately $34.6 billion of assets.

Generally, the minimum initial investment in the BEA Institutional Funds is
$3,000,000 and the minimum subsequent investment is $100,000.

This Prospectus contains information that a prospective investor needs to
know before investing. Please keep it for future reference. A Statement of
Additional Information, dated December 8, 1997, has been filed with the
Securities and Exchange Commission (the "SEC") and is incorporated by reference
in this Prospectus. It may be obtained free of charge by calling (800) 401-2230.
The Prospectus and Statement of Additional Information are also available for
reference, along with related material, on the SEC website (http://www.sec.gov).

Shares of the Funds are not deposits or obligations of or guaranteed or
endorsed by any bank, and shares are not federally insured by the U.S.
Government, the Federal Deposit Insurance Corporation, the Federal Reserve Board
or any other governmental agency. Investments in shares of the Funds involve
investment risks, including the possible loss of principal.

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

PROSPECTUS DECEMBER 8, 1997

<PAGE>

ANNUAL FUND OPERATING EXPENSES

(AS A PERCENTAGE OF AVERAGE DAILY NET ASSETS(1))

<TABLE>
<CAPTION>
BEA BEA
BEA EMERGING U.S. CORE
INTERNATIONAL MARKETS BEA U.S. BEA FIXED
EQUITY EQUITY CORE EQUITY BALANCED INCOME
FUND FUND FUND FUND FUND
------------- -------- ----------- ------------ ---------
<S> <C> <C> <C> <C> <C>
Management Fees
(after waivers)(2)............................... .80% .98% .71% .50% .25%
Other Expenses
(after waivers)(2)............................... .36% .51% .29% .40% .25%
--- --- --- --- ---
Total Fund
Operating Expenses (after waivers)(2)............ 1.16% 1.49% 1.00% .90% .50%
--- --- --- --- ---
--- --- --- --- ---
</TABLE>

<TABLE>
<CAPTION>
BEA
STRATEGIC BEA BEA
GLOBAL FIXED HIGH BEA SHORT
INCOME YIELD MUNICIPAL DURATION
FUND FUND BOND FUND FUND
------------- -------- ----------- ---------
<S> <C> <C> <C> <C>
Management Fees
(after waivers)(2)............................... .43% .44% .47% .15%
Other Expenses
(after waivers)(2)............................... .32% .26% .53% .40%
--- --- --- ---
Total Fund
Operating Expenses (after waivers)(2)............ .75% .70% 1.00% .55%
--- --- --- ---
--- --- --- ---
</TABLE>

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

(1) The annual operating expenses for the Funds are based on actual expenses
incurred for the fiscal year ended August 31, 1997 (except for the BEA Short
Duration and Balanced Funds). The expenses of the BEA Short Duration and
Balanced Funds are based on expenses expected to be incurred in the current
fiscal period.

(2) Before expense waivers and expense reimbursements, Management Fees would be
.80%, 1.00%, .75%, .60%, .375%, .50%, .70%, .70% and .15% for the BEA
International Equity, the BEA Emerging Markets Equity, the BEA U.S. Core
Equity, the BEA Balanced, the BEA U.S. Core Fixed Income, the BEA Strategic
Global Fixed Income, the BEA High Yield, the BEA Municipal Bond and the BEA
Short Duration Funds, respectively. Other Expenses would be .45%, .63%,
.43%, .54%, .405%, .48%, .43%, .67% and .45% for the BEA International
Equity, the Bea Emerging Markets Equity, the BEA U.S. Core Equity, the BEA
U.S. Core Fixed Income, the BEA Strategic Global Fixed Income, the BEA High
Yield, the BEA Municipal Bond and the BEA Short Duration Funds, respectively
and Total Fund Operating Expenses would be 1.25%, 1.63%, 1.18%, 1.14%, .78%,
.98%, 1.13%, 1.37% and .60% for the BEA International Equity, the BEA
Emerging Markets Equity, the BEA U.S. Core Equity, the BEA Balanced, the BEA
U.S. Core Fixed Income, the BEA Strategic Global Fixed Income, the BEA High
Yield, the BEA Municipal Bond and the BEA Short Duration Funds,
respectively.

2
<PAGE>
- --------------------------------------------------------------------------------
EXAMPLE
An investor would pay the following expenses on a $1,000 investment in each of
the Funds, assuming (1) a 5% annual return, and (2) redemption at the end of
each time period.

<TABLE>
<CAPTION>
ONE THREE FIVE TEN
YEAR YEARS YEARS YEARS
------ ------ ------- -------
<S> <C> <C> <C> <C>
BEA International Equity Fund......................................... $12 $37 $64 $141
BEA Emerging Markets Equity Fund...................................... $15 $47 $81 $178
BEA U.S. Core Equity Fund............................................. $10 $32 $55 $122
BEA Balanced Fund..................................................... $ 9 $29 N/A N/A
BEA U.S. Core Fixed Income Fund....................................... $ 5 $16 $28 $ 63
BEA Strategic Global Fixed Income Fund................................ $ 8 $24 $42 $ 93
BEA High Yield Fund................................................... $ 7 $22 $39 $ 87
BEA Municipal Bond Fund............................................... $10 $32 $55 $122
BEA Short Duration Fund............................................... $ 6 $18 N/A N/A
</TABLE>

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

This fee table is designed to assist an investor in understanding the various
costs and expenses that an investor in each of the Funds will bear directly or
indirectly. (For more complete descriptions of the various costs and expenses,
see "Management" below.) The expense figures in the fee table are based upon
fees and costs incurred by the Funds (except the BEA Short Duration and Balanced
Funds) during the fiscal year ended August 31, 1997. The expenses of the BEA
Short Duration and Balanced Funds are based on expenses expected to be incurred
by those Funds in the current fiscal period if the Funds offer shares to the
public. Actual expenses may be greater or less than such costs and fees of the
Institutional Shares set forth above. This fee table reflects voluntary waivers
of Management and Administration Fees for the BEA International Equity, the BEA
Emerging Markets Equity, the BEA U.S. Core Equity, the BEA Balanced, the BEA
U.S. Core Fixed Income, the BEA Strategic Global Fixed Income, the BEA High
Yield, the BEA Municipal Bond Fund and the BEA Short Duration Funds,
respectively. The Adviser and Administrator are under no obligation with respect
to such fee waivers, however, and there can be no assurance that any future
waivers of Management and Administration Fees (if any) will not vary from the
figures reflected in this fee table. To the extent any service providers assume
additional expenses of any Fund, such assumption of additional expenses will
have the effect of lowering a Fund's overall expense ratio and increasing its
return to investors.

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

3
<PAGE>
FINANCIAL HIGHLIGHTS

The tables below set forth certain information concerning the investment results
of the BEA Institutional Classes representing interests in the BEA International
Equity, the BEA Emerging Markets Equity, the BEA U.S. Core Equity, the BEA High
Yield, the BEA U.S. Core Fixed Income, the BEA Strategic Global Fixed Income,
and the BEA Municipal Bond Funds for each of the periods indicated. The
financial data included in this table for each of the periods ended August 31,
1997, 1996, 1995, 1994 and 1993 are a part of the Company's Financial Statements
for each of the above Funds which have been audited by Coopers & Lybrand L.L.P.,
the Company's independent accountants. The financial data included in this table
should be read in conjunction with the financial statements and related notes.
Financial Highlights are not available for the BEA Institutional Classes
representing interests in the BEA Balanced Fund and the BEA Short Duration Fund
because, as of the date of this Prospectus, these Funds had no operating
history. Further information about the performance of the Funds is available in
the Fund's Annual Report to Shareholders. Both the Statement of Additional
Information and the Annual Report to Shareholders may be obtained from the BEA
Institutional Funds free of charge by calling (800) 401-2230.

BEA INSTITUTIONAL FUNDS OF
THE RBB FUND, INC.
FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)

<TABLE>
<CAPTION>
BEA INTERNATIONAL EQUITY FUND
-----------------------------------------------------------------------------
FOR THE
PERIOD
FOR THE FOR THE FOR THE FOR THE OCTOBER 1,
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED 1992* TO
AUGUST 31, AUGUST 31, AUGUST 31, AUGUST 31, AUGUST 31,
1997 1996 1995 1994 1993
------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of
period............................ $ 19.41 $ 18.24 $ 20.73 $ 18.73 $ 15.00
------------- ------------- ------------- ------------- -------------
Income from investment operations
Net investment income.......... 0.18 0.19 0.06 0.05 0.04
Net realized and unrealized
gains (losses) on securities
and foreign currency
transactions.................. 2.89 1.05 (1.75) 2.60 3.69
------------- ------------- ------------- ------------- -------------
Total from investment
operations.................... 3.07 1.24 (1.69) 2.65 3.73
------------- ------------- ------------- ------------- -------------
Less Dividends and Distributions
Dividends from net investment
income........................ (0.26) (0.07) -- (0.05) --
Distributions from capital
gains......................... -- -- (0.80) (0.60) --
------------- ------------- ------------- ------------- -------------
Total Dividends and
Distributions................. (0.26) (0.07) (0.80) (0.65) --
------------- ------------- ------------- ------------- -------------
Net asset value, end of
period........................ $ 22.22 $ 19.41 $ 18.24 $ 20.73 $ 18.73
------------- ------------- ------------- ------------- -------------
------------- ------------- ------------- ------------- -------------
Total return....................... 15.93% 6.81%(d) (8.06)%(d) 14.23%(d) 24.87%(c)(d)
Ratio/Supplementa1 Data
Net assets, end of period
(000's omitted)............... $ 568,510 $ 682,271 $ 773,255 $ 767,190 $ 268,404
Ratio of expenses to average
net assets.................... 1.16%(a) 1.19%(a) 1.25%(a) 1.25%(a) 1.25%(a)(b)
Ratio of net investment income
to average net assets......... 0.71% 0.84% 0.35% 0.33% 0.41% (b)
Portfolio turnover rate........ 126% 86% 78% 104% 106% (c)
Average commission rate(e)..... $ 0.0039 $ 0.0007 N/A N/A N/A
</TABLE>

(a) Without the voluntary waiver of advisory fees and administration fees, the
ratios of expenses to average net assets for the BEA International Equity
Fund would have been 1.25%, 1.22%, 1.26% and 1.30% for the years ended
August 31, 1997, 1996, 1995 and 1994, respectively and 1.46% annualized for
the period ended August 31, 1993.

(b) Annualized.

(d) Redemption fees not reflected in total return.
(e) Computed by dividing the total amount of brokerage commissions paid by the
total shares of investment securities purchased and sold during the period
for which commissions were charged, as required by the SEC for fiscal years
beginning after September 1, 1995.
* Commencement of operations.

4
<PAGE>
BEA INSTITUTIONAL FUNDS OF
THE RBB FUND, INC.
FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)

<TABLE>
<CAPTION>
BEA EMERGING MARKETS EQUITY FUND
-----------------------------------------------------------------------------------------
FOR THE PERIOD
FOR THE FOR THE FOR THE FOR THE FEBRUARY 1, 1993*
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED TO
AUGUST 31, 1997 AUGUST 31, 1996 AUGUST 31, 1995 AUGUST 31, 1994 AUGUST 31, 1993
--------------- --------------- --------------- --------------- -----------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of
period............................ $ 18.20 $ 17.67 $ 24.58 $ 18.38 $ 15.00
--------------- --------------- --------------- --------------- -----------------
Income from investment
operations
Net investment income (loss)... 0.21 0.10 0.02 (0.03) 0.02
Net realized and unrealized
gains (losses) on securities
and foreign currency
transactions.................. 1.30 0.48 (5.94) 6.64 3.36
--------------- --------------- --------------- --------------- -----------------
Total from investment
operations.................... 1.51 0.58 (5.92) 6.61 3.38
--------------- --------------- --------------- --------------- -----------------
Less Dividends and
Distributions
Dividends from net
investment income............. (0.07) (0.05) (0.07) (0.09) --
Distributions from capital
gains......................... -- 0.00 (0.92) (0.32) --
--------------- --------------- --------------- --------------- -----------------
Total Dividends and
Distributions................. (0.07) (0.05) (0.99) (0.41) --
--------------- --------------- --------------- --------------- -----------------
Net asset value, end of
period........................ $ 19.64 $ 18.20 $ 17.67 $ 24.58 $ 18.38
--------------- --------------- --------------- --------------- -----------------
--------------- --------------- --------------- --------------- -----------------
Total return....................... 8.31% 3.33%(d) (24.42)%(d) 35.99%(d) 22.53%(c)(d)
Ratio/Supplemental Data
Net assets, end of period
(000's omitted)............... $ 83,012 $ 114,691 $ 128,323 $ 140,675 $ 21,988
Ratio of expenses to
average net assets............ 1.49%(a) 1.49%(a) 1.50%(a) 1.50%(a) 1.50%(a)(b)
Ratio of net investment
income (loss) to average net
assets........................ 0.99% 0.63% 0.02% (0.02)% 0.28%(b)
Portfolio turnover rate........ 147% 79% 79% 54% 38%(c)
Average commission rate(e)..... $ 0.0004 $ 0.0005 N/A N/A N/A
</TABLE>

(a) Without the voluntary waiver of advisory fees and administration fees and
without the reimbursement of operating expenses , the ratios of expenses to
average net assets for the BEA Emerging Markets Equity Fund would have been
1.63%, 1.62%, 1.61%, and 2.01% for the years ended August 31, 1997, 1996,
1995, and 1994, respectively and 3.23% annualized for the period ended
August 31, 1993.

(b) Annualized.

5
<PAGE>
BEA INSTITUTIONAL FUNDS OF
THE RBB FUND, INC.
FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)

<TABLE>
<CAPTION>
BEA U.S. CORE EQUITY FUND BEA U.S. CORE FIXED INCOME FUND
--------------------------------- ---------------------------------------------
FOR THE FOR THE
FOR THE FOR THE PERIOD FOR THE FOR THE FOR THE PERIOD
YEAR YEAR SEPTEMBER YEAR YEAR YEAR APRIL 1,
ENDED ENDED 1, 1994* ENDED ENDED ENDED 1994*
AUGUST AUGUST TO AUGUST AUGUST AUGUST AUGUST TO AUGUST
31, 31, 31, 31, 31, 31, 31,
1997 1996 1995 1997 1996 1995 1994
--------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of
period....................... $ 19.05 $ 17.86 $ 15.00 $ 15.06 $ 15.42 $ 14.77 $ 15.00
--------- --------- --------- --------- --------- --------- ---------
Income from investment
operations
Net investment income..... 0.14 0.20 0.22 0.92 0.95 0.88 0.42
Net realized and
unrealized gains (losses)
on securities and foreign
currency transactions.... 6.82 2.81 2.72 0.76 (0.16) 0.61 (0.40)
--------- --------- --------- --------- --------- --------- ---------
Total from investment
operations............... 6.96 3.01 2.94 1.68 0.79 1.49 0.02
--------- --------- --------- --------- --------- --------- ---------
Less Dividends and
Distributions
Dividends from net
investment income........ (0.20) (0.21) (0.08) (0.97) (0.93) (0.84) (0.25)
Distributions from capital
gains.................... (1.41) (1.61) -- (0.12) (0.22) -- --
--------- --------- --------- --------- --------- --------- ---------
Total Dividends and
Distributions............ (1.61) (1.82) (0.08) (1.09) (1.15) (0.84) (0.25)
--------- --------- --------- --------- --------- --------- ---------
Net asset value, end of
period................... $ 24.40 $ 19.05 $ 17.86 $ 15.65 $ 15.06 $ 15.42 $ 14.77
--------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- ---------
Total return.................. 38.32% 17.59% 19.75% 11.53% 5.23%(c) 10.60% 0.17%(c)
Ratio/Supplemental Data
Net assets, end of period
(000's omitted).......... $ 86,182 $ 59,015 $ 31,644 $177,219 $118,596 $ 99,250 $ 30,016
Ratio of expenses to
average net assets....... 1.00%(a) 1.00%(a) 1.00%(a) 0.50%(a) 0.50%(a) 0.50%(a) 0.50%(a)(b)
Ratio of net investment
income to average net
assets................... 0.67% 1.25% 1.59% 6.31% 6.43% 6.47% 6.04%(b)
Portfolio turnover rate... 93% 127% 123% 372%(c) 201% 304% 186%(c)
Average commission
rate(d).................. $ 0.0592 $ 0.0614 N/A N/A N/A N/A N/A
</TABLE>

(a) Without the voluntary waiver of advisory fees and administration fees, the
ratios of expenses to average net assets for the BEA U.S. Core Equity Fund
Institutional Class would have been 1.18% and 1.34% for the years ended
August 31, 1997 and 1996, respectively, and 1.51% annualized for the period
ended August 31, 1995. Without the voluntary waiver of advisory fees and
administration fees, the ratios of expenses to average net assets for the
BEA U.S. Core Fixed Income Fund Institutional Class would have been .78%,
.78% and .84% for the years ended August 31, 1997, 1996 and 1995,
respectively, and .99% annualized
for the period ended August 31, 1994.

(b) Annualized.

(d) Computed by dividing the total amount of brokerage commissions paid by the
total shares of investment securities purchased and sold during the period
for which commissions were charged, as required by the SEC for fiscal years
beginning after September 1, 1995.

* Commencement of operations.

6
<PAGE>
BEA INSTITUTIONAL FUNDS OF
THE RBB FUND, INC.
FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)

<TABLE>
<CAPTION>
BEA STRATEGIC GLOBAL FIXED INCOME FUND
-----------------------------------------------------------------------------
FOR THE FOR THE FOR THE FOR THE PERIOD
YEAR ENDED YEAR ENDED YEAR ENDED JUNE 28, 1994* TO
AUGUST 31, 1997 AUGUST 31, 1996 AUGUST 31, 1995 AUGUST 31, 1994
----------------- ----------------- ----------------- -----------------
<S> <C> <C> <C> <C>
Net asset value, beginning of
period............................ $ 15.75 $ 15.67 $ 15.00 $ 15.00
----------------- ----------------- ----------------- -----------------
Income from investment operations
Net investment income.......... 0.85 0.87 1.06 0.15
Net realized and unrealized
gains (losses) on securities
and foreign currency
transactions.................. (0.16) 0.58 0.49 (0.15)
----------------- ----------------- ----------------- -----------------
Total from investment
operations.................... 0.69 1.45 1.55 --
----------------- ----------------- ----------------- -----------------
Less Dividends and Distributions
Dividends from net investment
income........................ (0.71) (1.22) (0.88) --
Distributions from capital
gains......................... (0.32) (0.15) -- --
----------------- ----------------- ----------------- -----------------
Total Dividends and
Distributions................. (1.03) (1.37) (0.88) --
----------------- ----------------- ----------------- -----------------
Net asset value, end of
period........................ $ 15.41 $ 15.75 $ 15.67 $ 15.00
----------------- ----------------- ----------------- -----------------
----------------- ----------------- ----------------- -----------------
Total return....................... 4.48% 9.65% 10.72% 0.00%(c)
Ratio/Supplemental Data
Net assets, end of period
(000's omitted)............... $ 44,285 $ 38,348 $ 19,565 $ 6,300
Ratio of expenses to average
net assets.................... 0.75%(a) 0.75%(a) 0.75%(a) 0.75%(a)(b)
Ratio of net investment income
(loss) to average net
assets........................ 5.31% 7.37% 7.26% 5.64%(b)
Portfolio turnover rate........ 98% 87% 91% 0%(c)
</TABLE>

(a) Without the voluntary waiver of advisory fees and administration fees and
without the reimbursement of operating expenses, the ratios of expenses to
average net assets for the BEA Strategic Global Fixed Income Fund would have
been 0.98%, 1.07% and 1.29% for the years ended August 31, 1997, 1996 and
1995, respectively and 1.92% annualized for the period ended August 31,
1994.

(b) Annualized.

* Commencement of operations.

7
<PAGE>
BEA INSTITUTIONAL FUNDS OF
THE RBB FUND, INC.
Financial Highlights
(For a Share Outstanding Throughout each Period)

<TABLE>
<CAPTION>
BEA HIGH YIELD FUND
---------------------------------------------------------------------------------
FOR THE FOR THE FOR THE FOR THE FOR THE PERIOD
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED MARCH 31, 1993*
AUGUST 31, AUGUST 31, AUGUST 31, AUGUST 31, TO
1997 1996 1995 1994 AUGUST 31, 1993
------------- ------------- ------------- ------------- -----------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of
period............................ $ 16.09 $ 15.72 $ 15.94 $ 16.94 $ 15.00
------------- ------------- ------------- ------------- -----------------
Income from investment operations
Net investment income.......... 1.37 1.47 1.42 1.20 0.52
Net realized and unrealized
gains (losses) on securities
and foreign currency
transactions.................. 0.96 0.40 (0.30) (0.77) 1.42
------------- ------------- ------------- ------------- -----------------
Total from investment
operations.................... 2.33 1.87 1.12 0.43 1.94
------------- ------------- ------------- ------------- -----------------
Less Dividends and Distributions
Dividends from net investment
income........................ (1.34) (1.50) (1.34) (1.43) --
Distributions from capital
gains......................... -- -- -- -- --
------------- ------------- ------------- ------------- -----------------
Total Dividends and
Distributions................. (1.34) (1.50) (1.34) (1.43) --
------------- ------------- ------------- ------------- -----------------
Net asset value, end of
period........................ $ 17.08 $ 16.09 $ 15.72 $ 15.94 $ 16.94
------------- ------------- ------------- ------------- -----------------
------------- ------------- ------------- ------------- -----------------
Total return....................... 15.17% 12.42% 7.79%(d) 2.24%(d) 12.93%(c)(d)
Ratio/Supplemental Data
Net assets, end of period
(000's omitted)............... $ 92,630 $ 75,849 $ 153,621 $ 143,517 $ 98,357
Ratio of expenses to average
net assets.................... 0.70%(a) 0.88%(a) 1.00%(a) 1.00%(a) 1.00%(a)(b)
Ratio of net investment income
(loss) to average net
assets........................ 8.44% 8.92% 9.37% 7.73% 7.56%(b)
Portfolio turnover rate........ 84% 143% 70% 121% 72%(c)
</TABLE>

(a) Without the voluntary waiver of advisory fees and administration fees, the
ratios of expenses to average net assets for the BEA High Yield Fund would
have been 1.13%, 1.11%, 1.08%, and 1.13% annualized for the years ended
August 31, 1997, 1996, 1995 and 1994, respectively, and 1.17% annualized for
the period ended August 31, 1993.

(b) Annualized.

(d) Redemption fees not reflected in total return.

* Commencement of operations.

8
<PAGE>
BEA INSTITUTIONAL FUNDS OF
THE RBB FUND, INC.
FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)

<TABLE>
<CAPTION>
BEA MUNICIPAL BOND FUND
-----------------------------------------------------
FOR THE
PERIOD
FOR THE FOR THE FOR THE JUNE 20,
YEAR ENDED YEAR ENDED YEAR ENDED 1994* TO
AUGUST 31, AUGUST 31, AUGUST 31, AUGUST 31,
1997 1996 1995 1994
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Net asset value, beginning of
period............................ $ 14.65 $ 15.46 $ 15.06 $ 15.00
----------- ----------- ----------- -----------
Income from investment operations
Net investment income.......... 0.72 0.73 0.71 0.09
Net realized and unrealized
gains (losses) on securities
and foreign currency
transactions.................. 0.65 (0.37) 0.50 (0.03)
----------- ----------- ----------- -----------
Total from investment
operations.................... 1.37 0.36 1.21 0.06
----------- ----------- ----------- -----------
Less Dividends and Distributions
Dividends from net investment
income........................ (0.72) (0.74) (0.76) --
Distributions from capital
gains......................... (0.46) (0.43) (0.05) --
----------- ----------- ----------- -----------
Total Dividends and
Distributions................. (1.18) (1.17) (0.81) --
----------- ----------- ----------- -----------
Net asset value, end of
period........................ $ 14.84 $ 14.65 $ 15.46 $ 15.06
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
Total return....................... 9.74% 2.27% 8.42% 0.40%(c)
Ratio/Supplemental Data
Net assets, end of period
(000's omitted)............... $ 19,810 $ 19,581 $ 48,978 $ 42,310
Ratio of expenses to average
net assets.................... 1.00%(a) 1.00%(a) 1.00%(a) 1.00%(a)(b)
Ratio of net investment income
(loss) to average net
assets........................ 4.88% 4.62% 4.76% 3.27%(b)
Portfolio turnover rate........ 43% 34% 25% 9%(c)
</TABLE>

(a) Without the voluntary waiver of advisory fees and administration fees, the
ratios of expenses to average net assets for the BEA Municipal Bond Fund
would have been 1.37%, 1.42% and 1.19% for the years ended August 31, 1997,
1996 and 1995, respectively, and 1.34% annualized for the period ended
August 31, 1994.

(b) Annualized.

* Commencement of operations.

9
<PAGE>
- ----------------------------------------------

THE COMPANY

The Company is an open-end management investment company that currently operates
or proposes to operate twenty-two separate investment portfolios. Each of the
BEA Institutional Funds represents an interest in a separate portfolio. Each
Fund is non-diversified. The Company was incorporated in Maryland on February
29, 1988.

The Funds are designed primarily for investors seeking investment of funds held
in an institutional, fiduciary, advisory, agency, custodial or other similar
capacity, which may include the investment of funds held or managed by broker-
dealers, investment counselors, insurance companies, employee benefit plans,
colleges, churches, charities, corporations and other institutions. Shares are
currently available for purchase by investors who have entered into an
investment management agreement with BEA or its affiliates. In addition, Shares
may be purchased directly by certain individuals described in "How to Purchase
Shares." Institutional investors such as those listed above may purchase Shares
for discretionary or nondiscretionary accounts maintained by individuals.
- ----------------------------------------------

INVESTMENT OBJECTIVES AND POLICIES

The investment objective of each Fund may not be changed without the affirmative
vote of a majority of the Fund'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 Fund will achieve its
investment objective. Because of their different investment emphases, each Fund
should be considered as a vehicle for diversification within a larger investment
portfolio and not as a balanced investment program by itself. The Statement of
Additional Information contains a more detailed description of the various
investments and investment techniques used by the Funds.

BEA INTERNATIONAL EQUITY FUND

The BEA International Equity Fund's investment objective is to seek long-term
appreciation of capital by investing primarily in equity securities of non-U.S.
issuers. The Fund defines equity securities of non-U.S. issuers as securities of
issuers whose principal activities are outside the United States. The Fund
expects that its investments will be concentrated in Argentina, Australia,
Austria, Brazil, Canada, Chile, Colombia, Denmark, Finland, France, Germany,
Greece, Hungary, Israel, Italy, Japan, Malaysia, Mexico, The Netherlands, New
Zealand, Norway, Portugal, Singapore, South Africa, South Korea, Spain, Sweden,
Switzerland, Thailand, the United Kingdom and Venezuela. The Fund may invest in
securities of issuers in Emerging Markets, as defined below under "Investment
Objectives and Policies -- BEA Emerging Markets Equity Fund," but does not
expect to invest more than 40% of its total assets in securities of issuers in
Emerging Markets. The Fund will invest in securities of issuers from at least
three countries outside the United States.

Under normal market conditions, the Fund will invest a minimum of 80% of its
total assets in equity securities of non-U.S. issuers. Such equity securities
may include common stock and preferred stock (including convertible preferred
stock); bonds, notes and debentures convertible into common or preferred stock;
stock purchase

10
<PAGE>
warrants and rights; equity interests in trusts and partnerships; and depositary
receipts of companies.

The Fund 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 Fund has
no limitation on the maturity or the credit quality of the debt securities in
which it invests, which may include lower-rated debt securities. See "Risk
Factors -- Lower-Rated Securities."

BEA EMERGING MARKETS EQUITY FUND

The BEA Emerging Markets Equity Fund's investment objective is to seek long-term
appreciation of capital by investing 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 Fund'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, Portugal, Spain, Switzerland, the United Kingdom and the United States.
Under normal market conditions, the Fund will invest a minimum of 80% of its
total assets in equity securities of issuers in Emerging Markets. The Fund 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 Fund
will at all times, except during defensive periods, maintain investments in at
least three Emerging Markets.

The Fund normally will not select portfolio securities on the basis of their
dividend or income potential unless BEA believes the income will contribute to
the securities' capital 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 Fund'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 Fund does not
presently intend to invest more than 5% of its net assets in debt securities.
Debt securities may include lower-rated debt securities. See "Risk Factors --
Lower-Rated Securities."

BEA U.S. CORE EQUITY FUND

The BEA U.S. Core Equity Fund will seek to provide long-term appreciation of
capital by investing primarily in U.S. equity securities. Under normal market
conditions, the BEA U.S. Core Equity Fund will invest 65% of the value of its
total assets in U.S. equity securities.

11
<PAGE>

Equity securities include common stocks, preferred stocks, and securities which
are convertible into common stock and readily marketable securities, such as
rights and warrants, which derive their value from common stock. The BEA U.S.
Core Equity Fund may also purchase without limitation dollar-denominated
American Depository Receipts ("ADRs") of foreign issuers and similar securities.
For defensive purposes, the BEA U.S. Core Equity Fund may invest in fixed income
securities and in money market instruments.

The BEA U.S. Core Equity Fund normally will not emphasize dividend or interest
income in choosing securities, unless BEA believes the income will contribute to
the securities' appreciation potential.

BEA BALANCED FUND

The BEA Balanced Fund's investment objective is to maximize total return
consistent with preservation of capital through both income and capital
appreciation.

The Fund will invest in domestic equity and debt securities and cash equivalent
instruments. The proportion of the Fund's assets to be invested in each type of
security will vary from time to time in accordance with BEA's assessment of
economic conditions and investment opportunities. The asset allocation strategy
is based on the premise that, from time to time, certain asset classes are more
attractive long-term investments than others. Timely shifts among equity
securities, debt securities and cash equivalent instruments, as determined by
their relative valuation, should produce superior investment returns over the
long term. In general, the Fund will not attempt to predict short-term market
movements or interest rate changes, focusing instead upon a longer-term outlook.
BEA anticipates that under normal market conditions between 35% and 65% of the
Fund's total assets will be invested in equity securities and between 35% and
65% will be invested in debt securities.

The Fund will be managed by teams of BEA managers, each dedicated to managing a
portion of the Fund's assets. The BEA Domestic Equity Management Team will
manage the Equity portion of the Fund, which will invest primarily in common
stocks, preferred stocks, securities which are convertible into common stocks,
and rights and warrants which derive their value from common stocks. The BEA
Fixed Income Management Team will manage the Fixed Income portion of the Fund,
which will invest primarily in domestic fixed-income securities including,
without limitation, bonds, debentures, notes, equipment leases and trust
certificates, mortgage-related securities, and obligations issued or guaranteed
by the U.S. Government or its agencies or instrumentalities, or by states or
municipalities. Under normal market conditions, the Fund will seek to maintain
an average weighted quality of its debt and convertible securities comparable to
the AA rating of Standard & Poor's Ratings Service ("S&P"). Subject to this
condition, the Fund may invest in lower-rated debt securities. See "Risk Factors
- -- Lower-Rated Securities." For more information on the Management Teams, see
"Management -- Investment Adviser."

Under normal market conditions, at least 35% of the Fund's total assets will be
invested in fixed-income securities and at least 35% will be invested in equity
securities. The actual percentage of assets invested in equity and fixed-income
securities will vary from time to time in accordance with BEA's analysis of
economic conditions and the underlying values of securities.

12
<PAGE>
BEA U.S. CORE FIXED INCOME FUND

The BEA U.S. Core Fixed Income Fund will seek to provide high total return by
investing at least 65% of the value of its total assets in domestic fixed income
securities consistent with comparable broad market fixed-income indices. Debt
securities may include, without limitation, bonds, debentures, notes, equipment
lease and trust certificates, mortgage-related securities, and obligations
issued or guaranteed by the U.S. Government or its agencies or
instrumentalities. The BEA U.S. Core Fixed Income Fund may invest up to 35% of
the value of its total assets in debt securities of foreign issuers including
emerging market debt. With respect to 35% of the Fund's total assets, the Fund
may also invest in other securities including but not limited to equity and
equity-related securities. Under normal market conditions, the Fund will seek to
maintain an average dollar-weighted credit rating comparable to the "AA" rating
of S&P. Subject to this condition, however, the Fund may invest in lower-rated
debt securities. See "Risk Factors -- Lower-Rated Securities." The Adviser
estimates that the average weighted maturity of the Fund will range between 5
and 15 years.

Depending upon prevailing market conditions, the BEA U.S. Core Fixed Income Fund
may purchase debt securities at a discount from face value, which produces a
yield greater than the coupon rate. Conversely, if debt securities are purchased
at a premium over face value, the yield will be lower than the coupon rate. An
increase in interest rates will generally reduce the value of the fixed income
investments in the Fund and a decline in interest rates will generally increase
the value of those investments.

BEA STRATEGIC GLOBAL FIXED INCOME FUND

The BEA Strategic Global Fixed Income Fund will seek to provide high total
return by investing 65% of the value of its total assets in fixed income
securities issued by foreign and domestic corporations, governments and agen-
cies. Under normal market conditions, the Fund will seek to maintain an average
weighted quality comparable to the four highest bond ratings of S&P (i.e., BBB
or better, commonly referred to as "investment grade"). The Fund may invest in
fixed-income securities which may have equity characteristics, such as
convertible bonds. The BEA Strategic Global Fixed Income Fund will not limit its
investments in securities rated below investment grade by recognized rating
agencies or in comparable unrated securities. The portion of the Fund's assets
invested in various countries will vary from time to time depending on BEAs
assessment of market opportunities. There is no limit on investments in any
region, country or currency, although the BEA Strategic Global Fixed Income Fund
will normally invest in at least three different countries.

In addition to fixed income securities issued by foreign and domestic
corporations, the BEA Strategic Global Fixed Income Fund may also invest in
foreign government securities ("sovereign bonds"), U.S. Government securities
including government agencies' securities, debt obligations of supranational
entities, Brady Bonds, loan participations and assignments, convertible
securities, mortgage-backed securities, asset-backed securities, zero-coupon
securities, when-issued securities, repurchase and reverse repurchase agreements
and dollar rolls, and the BEA Strategic Global Fixed Income Fund may lend
portfolio securities to broker-dealers or institutional investors. For defensive
purposes the Fund may invest up to 100% of its assets in U.S. Government
securities, including government agencies' securities and Temporary Investments.
See "Common Investment Policies -- All Funds" and "Common Investment Objectives

13
<PAGE>
and Policies" in the Statement of Additional Information for a discussion of
these and other investment policies and strategies.

BEA HIGH YIELD FUND

The BEA High Yield Fund seeks to provide high total return by investing
primarily in high yield fixed-income securities issued by corporations,
govern-ments and agencies, both U.S. and foreign. Under normal market
conditions, the Fund 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
Fund is not limited in the extent to which it can invest in securities rated
below investment grade by recognized rating agencies or in comparable unrated
securities. See "Risk Factors -- Lower Rated Securities." The portion of the
Fund'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 Fund, and thus the net asset value of
the Shares of the Fund, 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 Fund may
purchase debt securities of any maturity, and the average maturity of the Fund's
assets will vary based upon BEA's assessment of economic and market conditions.

BEA MUNICIPAL BOND FUND

The BEA Municipal Bond Fund seeks to provide high total return by investing at
least 65% of the value of its total assets in fixed-income securities issued by
state and local governments ("Municipal Obligations"), although the BEA
Municipal Bond Fund may invest its assets without limitation in securities of
below investment-grade quality. The BEA Municipal Bond Fund may invest up to 40%
of its assets in municipal obligations the interest on which constitutes an item
of tax preference for purposes of the federal alternative minimum tax
("Alterative Minimum Tax Securities").

The two principal classifications of Municipal Obligations are "general
obligation" securities and "revenue" securities. General obligation securities
are secured by the issuer's pledge of its full faith, credit and taxing power
for the payment of principal and interest. Revenue securities are payable only
from the revenues derived from a particular facility or class of facilities or,
in some cases, from the proceeds of a special excise tax or other specific
revenue source such as the user of the facility being financed. Revenue
securities include private activity bonds which are not payable from the
unrestricted revenues of the issuer. Consequently, the credit quality of private
activity bonds is usually directly related to the credit standing of the
corporate user of the facility involved. Municipal Obligations may also include
"moral obligation" bonds, which are normally issued by special purpose public
authorities. If the issuer of moral obligation bonds is unable to meet its debt
service obligations from current revenues, it may draw on a reserve fund, the
restoration of which is a moral commitment but not a legal obligation of the
state or municipality which created the issuer.

Eligible Municipal Obligations include debt obligations issued by governmental
entities to obtain funds for various public purposes, including the construction
of a wide range of public facilities, the refunding of outstanding obligations,
the payment of general operating expenses and the extension of loans to public
institutions and facilities. Private activity bonds

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issued by or on behalf of public authorities to finance various privately
operated facilities are considered Municipal Obligations.

Also included within the general category of Municipal Obligations are
participation certificates in a lease, an installment purchase contract, or a
conditional sales contract ("lease obligations") entered into by a state or
political subdivision to finance the acquisition or construction of equipment,
land, or facilities. Although lease obligations do not constitute general
obligations of the issuer for which the lessee's unlimited taxing power is
pledged, certain lease obligations are backed by the lessee's covenant to
appropriate money to make the lease obligation payments. However, under certain
lease obligations, the lessee has no obligation to make these payments in future
years unless money is appropriated on a yearly basis. Although
"non-appropriation" lease obligations are secured by the leased property,
disposition of the property in the event of foreclosure might prove difficult.
These securities represent a relatively new type of financing that is not yet as
marketable as more conventional securities. Moreover, certain investments in
lease obligations may be illiquid and subject to the investment limitations
described in the Statement of Additional Information under "Common Investment
Policies -- All Funds -- Illiquid Securities."

BEA SHORT DURATION FUND

The BEA Short Duration Fund seeks to provide investors with as high a level of
current income as is consistent with the preservation of capital. The Adviser
will seek to maintain a duration of approximately one year, but may vary the
Fund's duration depending upon market conditions. Under normal circumstances,
the dollar-weighted average life of the Fund's investment securities will be
longer than six months and less than three years. Under normal circumstances,
the average duration of the Fund's investments will not exceed 1.5 years. Since
the Fund ordinarily will invest in securities with longer maturities than those
found in money market funds, its total return is expected to be higher and
fluctuations in its net asset value are expected to be greater. Unlike money
market funds, however, the Fund does not seek to maintain a stable net asset
value and may not be able to return dollar-for-dollar the money invested.
Moreover, there can be no assurance that the Fund's investment objective will be
achieved.

The BEA Short Duration Fund will invest primarily in U.S. dollar and foreign
currency denominated debt securities and securities with debt-like
characteristics (bearing interest or having a stated principal), such as bonds,
debentures, notes, mortgage-related securities (including stripped
mortgage-backed securities), asset-backed securities, municipal obligations and
convertible debt obligations of domestic and foreign issuers throughout the
world, including supranational entities. These securities also include money
market instruments consisting of U.S. Government securities, certificates of
de-posit, time deposits, bankers' acceptances, short-term investment grade
corporate bonds, participation interests and other short-term debt instruments,
and repurchase agreements. The Fund also may purchase shares of other invest-
ment companies that invest in these securities to the extent permitted under the
1940 Act. The Adviser will endeavor to hedge foreign currency denominated debt
using various investment techniques in an effort to minimize fluctuations in the
Fund's net asset value resulting from fluctuations in currency exchange rates
relative to the U.S. dollar.

The maturity of any single instrument held by the Fund is not limited. The
Adviser will seek to maintain a duration of approximately one

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<PAGE>

year, but may vary the Fund's duration depending upon market conditions. The
duration of the Fund's investments, however, under normal circumstances, will
not exceed 1.5 years. As a measure of a fixed-income security's cash flow,
duration is an alternative to the concept of "term to maturity" in assessing the
price volatility associated with changes in interest rates. Generally, the
longer the duration, the more volatility an investor should expect. For example,
the market price of a bond with a duration of two years would be expected to
decline 2% if interest rates rose 1%. Conversely, the market price of the same
bond would be expected to increase 2% if interest rates fell 1%. Duration is a
way of measuring a security's maturity in terms of the average time required to
receive the present value of all interest and principal payments as opposed to
its term to maturity. The maturity of a security measures only the time until
final payment is due; it does not take account of the pattern of a security's
cash flows over time, which would include how cash flow is affected by
prepayments and by changes in interest rates. Incorporating a security's yield,
coupon interest payments, final maturity and option features into one measure,
duration is computed by determining the weighted average maturity of a bond's
cash flows, where the present values of the cash flows serve as weights. In
computing the duration of the Fund, the Adviser will estimate the duration of
obligations that are subject to prepayment or redemption by the issuer, taking
into account the influence of interest rates on prepayments and coupon flows.
This method of computing duration is known as option-adjusted duration.

The average dollar-weighted credit rating of the securities held by the Fund
will be at least the equivalent of A- by Moody's Investors Service, Inc.
("Moody's"), S&P, Fitch Investors Service, Inc. ("Fitch") or Duff & Phelps, Inc.
("Duff"). To attempt to further limit risk, each security in which the Fund
invests must be rated at least Baa by Moody's or BBB by S&P, Fitch or Duff or,
if unrated, deemed to be of comparable quality by the Adviser. Debt securities
in the lowest investment-grade debt category (e.g., bonds rated BBB by S&P or
Baa by Moody's) may have speculative characteristics, and changes in economic
conditions or other circumstances are more likely to lead to a weakened capacity
to make principal and interest payments than is the case with higher grade debt
securities. The average dollar-weighted portfolio credit rating will be measured
on the basis of the dollar value of the securities purchased and their credit
rating without reference to rating subcategories. Subject to the average
dollar-weighted portfolio credit rating condition, the Fund may retain a debt
security which was rated as investment grade at the time of purchase but whose
rating is subsequently downgraded below investment grade. In addition, the Fund
may invest up to 5% of net assets in lower-rated debt securities. See "Risk
Factors -- Lower-Rated Securities."

The Short Duration Fund may engage in currency exchange transactions to attempt
to protect against uncertainty in the level of future exchange rates. In
addition, the Fund may utilize various other investment techniques and
practices, such as options and futures transactions, buying and selling interest
rate and currency swaps, caps, floors and collars, and short sales to further
hedge against the overall risk to the Fund. The Fund also may engage in
leveraging, lending portfolio securities, purchasing securities on a when-issued
or forward commitment basis and purchasing illiquid securities.

COMMON INVESTMENT POLICIES -- ALL FUNDS

This section describes certain investment policies that are common to each Fund.
These policies are described in more detail in the Statement of Additional
Information.

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<PAGE>

TEMPORARY INVESTMENTS. For defensive purposes or during temporary periods
in which BEA believes changes in economic, financial or political conditions
make it advisable, each Fund 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 Funds may hold cash or cash equivalents pending
investment.

BORROWING. A Fund 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 -- All Funds -- Reverse Repurchase Agreements" and
"-- Borrowing."

LENDING OF PORTFOLIO SECURITIES. A Fund may also lend its portfolio
securities to financial institutions against collateral consisting of cash, U.S.
Government securities or irrevocable bank letters of credit, which are equal at
all times to at least 100% of the value of the securities loaned. 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 loss of rights in the
collateral should the borrower of the securities fail financially. However,
loans will be made only to borrowers deemed by the Fund's investment adviser to
be of good standing and only when, in the adviser's judgment, the income to be
earned from the loans justifies the attendant risks. Any loans of the
Portfolio's securities will be fully collateralized and marked to market daily.
A Portfolio may not make loans in excess of 30% of the value of its total
assets.

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 Fund may invest in Rule 144A securities
that BEA has determined are liquid pursuant to guidelines established by the
Company's Board of Directors.

INVESTMENT COMPANIES. Each Fund may invest in securities issued by other
investment companies to the extent permitted by the 1940 Act. As a shareholder
of another investment company, each Fund 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 Fund bears directly in connection with its own operations.

PORTFOLIO TURNOVER. BEA will effect portfolio transactions in each Fund
without regard to holding periods if, in its judgment, such transactions are
advisable in light of general market, economic or financial conditions. The past
portfolio ratios for the operational Funds are set forth above under "Financial
Highlights." Portfolio turnover may vary greatly from year to year as well as
within a particular year. High portfolio turnover rates (100% or more) will
generally result in higher transaction costs to a Fund and may result in the
realization of short-term capital gains that are taxable to shareholders as
ordinary income. The Short Duration Fund and the Balanced Fund anticipate that,
under normal conditions, their annual portfolio

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<PAGE>

turnover rate for the Fund should not exceed 100%. However, it is impossible to
predict portfolio turnover rates. The amount of portfolio activity will not be a
limiting factor when making portfolio decisions. The Portfolio turnover rates
for the Funds are set forth above under "Financial Highlights." See the
Statement of Additional Information, "Portfolio Transactions" and "Taxes."

The Statement of Additional Information contains additional investment policies
and strategies of the Funds.

COMMON INVESTMENT POLICIES -- BEA INTERNATIONAL EQUITY, BEA EMERGING MARKETS
EQUITY, BEA U.S. CORE EQUITY, BEA BALANCED, BEA U.S. CORE FIXED INCOME, BEA
STRATEGIC GLOBAL FIXED INCOME, BEA HIGH YIELD AND BEA SHORT DURATION FUNDS

FOREIGN CURRENCY TRANSACTIONS. BEA may seek to hedge against a decline in
value of a Fund's non-dollar denominated portfolio securities resulting from
currency devaluations or fluctuations. Unless the BEA International Equity, the
BEA Emerging Markets Equity, the BEA U.S. Core Equity, the BEA Balanced, the BEA
U.S. Core Fixed Income, the BEA Strategic Global Fixed Income, the BEA High
Yield and the BEA Short Duration Funds 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
Funds 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 Funds may also enter into contracts to purchase and sell forward foreign
currency exchange contracts to seek to enhance total return. To the extent that
such contracts are entered into for this purpose, they are considered
speculative. If a Fund enters into such a contract for any purpose, the Fund
will be required to place cash or liquid assets in a segregated account with the
Company's custodian in an amount equal to the value of the Fund's total assets
committed to the consummation of the contract. The Funds will not invest more
than 10% of their respective total assets in such contracts for the purpose of
enhancing total return. There is no limit on the amount of assets that the Funds
may invest in such transactions for hedging purposes.

A Fund will incur costs in connection with conversions between various
currencies. A Fund may hold foreign currency received in connection with
investments in foreign securities when, in the judgment of BEA, it would be
beneficial to convert such currency into U.S. dollars at a later date, based on
anticipated changes in the relevant exchange rate. See "Risk Factors" for a
discussion of the risks of foreign forward currency exchange contracts.

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<PAGE>
by private issuers such as commercial investment banks, savings and loan
institutions, mortgage bankers and private mortgage insurance companies. As with
other interest-bearing securities, the prices of such securities are inversely
affected by changes in interest rates. However, though the value of a
mortgage-related security may decline when interest rates rise, the converse is
not necessarily true because in periods of declining interest rates mortgages
underlying securities are prone to prepayment. For this and other reasons, a
mortgage-related security's stated maturity may be shortened by an unscheduled
prepayment on underlying mortgages and, therefore, it is not possible to predict
accurately the security's return to these Funds.

Mortgage-related securities acquired by these Funds may include collateralized
mortgage obligations ("CMOs") issued by FNMA, FHLMC or other U.S. Government
agencies or instrumentalities, as well as by private issuers. These securities
may be considered mortgage derivatives. CMOs provide an investor with a
specified interest in the cash flow of a pool of underlying mortgages or other
mortgage-related securities.

The BEA Short Duration Fund may purchase stripped mortgage-backed securities
("SMBS"), which evidence ownership in future interest payments or the future
principal payments on obligations of the U.S. Government and other obligations.
SMBS may exhibit greater price volatility than ordinary debt securities because
of the manner in which their principal and interest are returned to investors.
In addition, the market value of SMBS can be extremely volatile in response to
higher interest rates. The yields on a class of SMBS that receives all or most
of the interest are generally higher than prevailing market yields and there is
a greater risk that the initial investment will not be fully recouped.

ASSET-BACKED SECURITIES. The Funds may purchase asset-backed securities,
which represent a participation in, or are secured by and payable from, a stream
of payments generated by particular assets, most often a pool of assets similar
to one another. Assets generating such payments will consist of such instruments
as motor vehicle installment purchase obligations, credit card receivables and
home equity loans.

Asset-backed securities may involve certain risks arising primarily from the
nature of the underlying assets (i.e., credit card and automobile loan
receivables as opposed to real estate mortgages). For example, credit card
receivables are generally unsecured and may require the repossession of personal
property upon the default of the debtor which may be difficult or impracticable
in some cases. Asset-backed securities are considered an industry for industry
concentration purposes, and the Funds will therefore not purchase any
asset-backed securities which would cause 25% or more of a Fund's total assets
at the time of purchase to be invested in asset-backed securities.

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<PAGE>
SUPPLEMENTAL INVESTMENT POLICIES -- BEA MUNICIPAL BOND FUND

TAX-EXEMPT DERIVATIVES AND OTHER MUNICIPAL OBLIGATIONS. The BEA Municipal
Bond Fund may invest in tax-exempt derivative securities relating to Municipal
Obligations, including tender option bonds, participations, beneficial interests
in trusts and partnership interests. A typical tax-exempt derivative security
involves the purchase of an interest in a pool of Municipal Obligations which
interest includes a tender option, demand or other feature allowing the Fund to
tender the underlying Municipal Obligation to a third party at periodic
intervals and to receive the principal amount thereof. A participation interest
gives the Fund an undivided interest in a Municipal Obligation in the proportion
the Fund's participation bears to the total principal amount of the Municipal
Obligation, and typically provides for a repurchase feature for all or any part
of the full principal amount of the participation interest, plus accrued
interest. Trusts and partnerships are typically used to convert long-term fixed
rate high quality bonds of a single state or municipal issuer into variable or
floating rate demand instruments.

During normal market conditions, up to 20% of the BEA Municipal Bond Fund's net
assets may be invested in securities which are not Municipal Obligations; at
least 80% of the BEA Municipal Bond Fund's net assets will be invested in
Municipal Obligations the interest on which is exempt from regular federal
income tax. During temporary defensive periods, the BEA Municipal Bond Fund may
invest without limitation in obligations which are not Municipal Obligations and
may hold without limitation uninvested cash reserves. Such securities may
include, without limitation, bonds, notes, variable rate demand notes and
commercial paper, provided such securities are rated within the relevant
categories, applicable to Municipal Obligations set forth above, or if unrated,
are of comparable quality as determined by the Adviser, and may also include,
without limitation, other debt obligations, such as bank obligations. The BEA
Municipal Bond Fund may acquire "stand-by commitments" with respect to Municipal
Obligations held by it. Under a stand-by commitment, a dealer agrees to purchase
at the BEA Municipal Bond Fund's option specified Municipal Obligations at a
specified price. The acquisition of a stand-by commitment may increase the cost,
and thereby reduce the yield, of the Municipal Obligation to which such
commitment relates. The BEA Municipal Bond Fund will acquire stand-by
commitments solely to facilitate portfolio liquidity and does not intend to
exercise its rights thereunder for trading purposes.

The amount of information regarding the financial condition of issuers of
Municipal Obligations may not be as extensive as that which is made available by
public corporations and the secondary market for Municipal Obligations may be
less liquid than that for taxable fixed-income securities. Accordingly, the
ability of the BEA Municipal Bond Fund to buy and sell tax-exempt securities
may, at any particular time and with respect to any particular securities, be
limited.

SUPPLEMENTAL INVESTMENT POLICIES -- BEA SHORT DURATION FUND

INTEREST RATE SWAPS, CAPS, FLOORS AND COLLARS. The Short Duration Fund may
enter into interest rate swaps and may purchase or sell interest rate caps,
floors and collars. The Fund will enter into these transactions primarily to
preserve a return or spread on a particular investment or portion of its
portfolio. The Fund also may enter into these transactions to protect against
any increase in the price of securities the Fund anticipates purchasing at a
later date. Interest rate swaps involve the exchange by the Fund with another
party of their respective commitments to pay or receive interest (for

20
<PAGE>
example, an exchange of floating rate payments for fixed-rate payments). The
exchange commitments can involve payments to be made in the same currency or in
different currencies. The purchase of an interest rate cap entitles the
purchaser, to the extent that a specified index exceeds a predetermined interest
rate, to receive payments of interest on a contractually based principal amount
from the seller of such interest rate cap. The purchase of an interest rate
floor entitles the purchaser, to the extent that a specified index falls below a
predetermined interest rate, to receive payments on a notional principal amount
from the seller of such interest rate floor. A collar has aspects of both a cap
and a floor.

The BEA Short Duration Fund may enter into these transactions on either an
asset-based or liability-based basis depending on whether it is hedging its
assets or its liabilities, and will usually enter into interest rate swaps on a
net basis. In so doing, the two payment streams are netted out, with the Fund
receiving or paying, as the case may be, only the net amount of the two
payments. The net amount of the excess, if any, of the Short Duration Fund's
obligations over its entitlements with respect to each interest rate swap will
be accrued on a daily basis and an amount of cash or liquid securities having an
aggregate net asset value at least equal to the accrued excess will be
maintained in a segregated account by the Fund's Custodian. If the Fund enters
into an interest rate swap other than on a net basis, the Fund would maintain a
segregated account in the full amount accrued on a daily basis of the Fund's
obligations with respect to the swap. The Fund will enter into swap, cap or
floor transactions with its Custodian, and with other counterparties, but only
if: (i) for transactions with maturities under one year, such other counterparty
has outstanding short-term paper rated at least A-1 by S&P, Prime-I by Moody's,
F-1 by Fitch or Duff-I by Duff, or (ii) for transactions with maturities greater
than one year, the counterparty has outstanding debt securities rated at least
Aa by Moody's or AA by S&P, Fitch or Duff. If there is a default by the other
party to such a transaction, the Fund will have contractual remedies pursuant to
the agreements related to the transaction. To the extent the Fund sells (i.e.,
writes) caps and floors, it will maintain in a segregated account cash or liquid
securities having an aggregate net asset value at least equal to the full amount
accrued on a daily basis, of the Fund's obligations with respect to any caps or
floors.

The use of interest rate swaps is a highly specialized activity which involves
investment techniques and risks different from those associated with ordinary
portfolio security transactions. If the Adviser is incorrect in its forecasts of
market values, interest rates and other applicable factors, the investment
performance of the Fund would diminish compared with what it would have been if
these investment techniques were not used. Moreover, even if the Adviser is
correct in its forecasts, there is a risk that the swap position may correlate
imperfectly with the price of the asset or liability being hedged. There is no
limit on the amount of interest rate swap transactions that may be entered into
by the Fund. These transactions do not involve the delivery of securities or
other underlying assets or principal. Accordingly, the risk of loss with respect
to interest rate swaps is limited to the net amount of interest payments that
the Fund is contractually obligated to make. If the other party to an interest
rate swap defaults, the Fund's risk of loss consists of the net amount of
interest payments that the Fund contractually is entitled to receive. The Fund
may purchase and sell (i.e., write) caps and floors without limitation, subject
to the segregated account requirement described above.

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INVESTMENT LIMITATIONS

Each Fund is subject to the following fundamental investment limitations, which
may not be changed with respect to a Fund without shareholder approval. A
complete list of the Funds' fundamental investment limitations is set forth in
the Statement of Additional Information under "Investment Limitations."

Each Fund may not:

Borrow money or issue senior securities, except that each Fund may
borrow from institutions and enter into reverse repurchase agreements and
dollar rolls for temporary purposes in amounts up to one-third of the value
of its total assets at the time of such borrowing; or mortgage, pledge or
hypothecate any assets, except in connection with any such borrowing and
then in amounts not in excess of one-third of the value of the Fund's total
assets at the time of such borrowing. Each Fund will not purchase securities
while its aggregate borrowings (including reverse repurchase agreements,
dollar rolls and borrowings from banks) are in excess of 5% of its total
assets. Securities held in escrow or separate accounts in connection with
the Fund's investment practices are not considered to be borrowings or
deemed to be pledged for purposes of this limitation.

Any investment policy or limitation which involves a maximum or minimum
percentage of securities shall not be considered to be violated unless an excess
over or a deficiency under the percentage occurs immediately after, and is
caused by, an acquisition or disposition of securities or utilization of assets
by a Fund.

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

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 Funds 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 Funds' 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 Funds' 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 Funds' 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 Funds must be made in
compliance with U.S. and foreign currency restrictions and tax laws restricting
the amounts and types of foreign investments.

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<PAGE>
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 Funds' 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 secu-
rities exchanges, brokers and issuers in foreign countries than in the United
States.

FOREIGN CURRENCY TRANSACTIONS. The market in forward foreign currency
exchange contracts offers less protection against defaults by the other party to
such instruments than is available for currency instruments traded on an
exchange. Such contracts are subject to the risk that the counterparty to the
contract will default on its obligations. Since these contracts are not
guaranteed by an exchange or clearinghouse, a default on the contract would
deprive a Fund of unrealized profits, transaction costs or the benefits of a
currency hedge or force a Fund to cover its purchase or sale commitments, if
any, at the current market price. A Fund will not enter into forward foreign
currency exchange contracts unless the credit quality of the unsecured senior
debt or the claims-paying ability of the counterparty is considered to be
investment grade by BEA.

LOWER-RATED SECURITIES. The widespread expansion of government, consumer
and corporate debt within the economy has made the corporate sector, especially
cyclically sensitive industries, more vulnerable to economic downturns or
increased interest rates. Because lower-rated debt securities involve issuers
with weaker credit fundamentals (such as debt-to-equity ratios, interest charge
coverage, earnings history and the like), an economic downturn, or increases in
interest rates, could severely disrupt the market for lower-rated debt
securities and adversely affect the value of outstanding debt securities and the
ability of the issuers to repay principal and interest.

Lower-rated debt securities (commonly known as "junk bonds") possess speculative
characteristics and are subject to greater market fluctuations and risk of lost
income and principal than higher-rated debt securities for a variety of reasons.
The markets for and prices of lower-rated debt securities have been found to be
less sensitive to interest rate changes than higher-rated investments, but more
sensitive to adverse economic changes or individual corporate developments.
Also, during an economic downturn or substantial period of rising interest
rates, highly leveraged issuers may experience financial stress which would
adversely affect their ability to service their principal and interest payment
obligations, to meet projected business goals and to obtain additional
financing. If the issuer of a debt security owned by a Fund defaulted, the Fund
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 Fund'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 Fund 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 Fund's assets.
If a Fund experiences unexpected net redemptions, this may force it to

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sell its lower-rated debt securities, without regard to their investment merits,
thereby decreasing the asset base upon which a Fund's expenses can be spread and
possibly reducing a Fund'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 BEA's ability to both value accurately lower-rated debt securities and
the Fund'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.

FIXED INCOME SECURITIES. The value of the securities held by a Fund, and
thus the net asset value of the shares of a Fund, generally will vary inversely
in relation to changes in prevailing interest rates. Thus, if interest rates
have increased from the time a debt or other fixed income security was
purchased, such security, if sold, might be sold at a price less than its cost.
Conversely, if interest rates have declined from the time such a security was
purchased, such security, if sold, might be sold at a price greater than its
cost. Also, the value of such securities may be affected by changes in real or
perceived creditworthiness of the issuers. Thus, if creditworthiness is
enhanced, the price may rise. Conversely, if creditworthiness declines, the
price may decline. A Fund is not restricted to any maximum or minimum time to
maturity in purchasing portfolio securities, and the average maturity of the
Fund's assets will vary based upon BEA's assessment of economic and market
conditions.

GENERAL. Investment methods described in this prospectus are among those
which the Funds have the power to utilize. Accordingly, reference to any
particular method or technique carries no implication that it will be utilized
or, if it is, that it will be successful.

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

MANAGEMENT

BOARD OF DIRECTORS

The business and affairs of the Company and of each Fund are managed under the
direction of the Company's Board of Directors.

INVESTMENT ADVISER

BEA serves as the Investment Adviser for each of the Funds pursuant to
investment advisory agreements (the "Advisory Agreements"). BEA is a general
partnership organized under the laws of the State of New York in December 1990
and, together with its predecessor firms, has been engaged in the investment
advisory business for over 60 years. BEA is a wholly-owned subsidiary of Credit
Suisse, the second largest Swiss bank, which in turn is a subsidiary of CS
Holding, a Swiss corporation. Active employees of BEA have a long-term equity
incentive plan. BEA is a registered investment adviser under the Investment
Advisers Act of 1940, as amended. BEA's principal offices are located at One
Citicorp Center, 153 East 53rd Street, New York, New York 10022.

BEA is a diversified investment adviser managing global equity, fixed-income and
derivative securities accounts for corporate pension and profit-sharing plans,
state pension funds, union funds, endowments and other charitable institutions.
As of September 30, 1997, BEA managed approximately $34.6 billion in assets. BEA
currently acts as investment adviser for eleven other investment companies
registered under the 1940 Act, and acts as sub-adviser to certain portfolios of
twelve other registered investment companies.

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<PAGE>

BEA will select investments for each of the Funds and will place purchase and
sale orders on behalf of each of the Funds. The Funds may use affiliates of
Credit Suisse in connection with the purchase or sale of securities in
accordance with the rules or exemptive orders adopted by the Securities and
Exchange Commission (the "SEC") when BEA believes that the charge for the
transaction does not exceed usual and customary levels.

The day-to-day portfolio management of the BEA International Equity and the BEA
Emerging Markets Equity Funds is the responsibility of the BEA International
Equity Management Team. The Team consists of the following investment
professionals: William P. Sterling (Executive Director), Richard Watt (Managing
Director), Stephen M. Swift (Managing Director), and Steven D. Bleiberg (Senior
Vice President). Mr. Sterling joined BEA in 1995, prior to which time he was the
head of International Economics at Merrill Lynch & Company. Mr. Watt joined BEA
in 1995, prior to which time he was the 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. Swift joined BEA in 1995, prior to which time he spent three
years at Credit Suisse Asset Management in London, where he was the 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. Bleiberg has been engaged as an investment
professional with BEA for more than five years.

The day-to-day portfolio management of the BEA U.S. Core Equity Fund and the
equity portion of the BEA Balanced Fund is the responsibility of the BEA
Domestic Equity Management Team. The Team consists of the following investment
professionals: William W. Priest, Jr. (Chief Executive Officer and Executive
Director of BEA), John B. Hurford (Executive Director), Todd M. Rice (Senior
Vice President), and James A. Abate (Senior Vice President). Messrs. Priest,
Hurford and Rice have, on an individual basis, been engaged as investment
professionals with BEA for more than five years. Mr. Abate joined BEA in 1995;
previously, he was a Managing Director for Vert Independent Capital Research.
Prior to joining Vert, Mr. Abate was a Manager in Price Waterhouse's
Valuation/Corporate Finance Group.

The day-to-day portfolio management of the BEA U.S. Core Fixed Income, the BEA
Municipal Bond, the BEA Strategic Global Fixed Income and the BEA Short Duration
Funds, as well as the fixed-income portion of the BEA Balanced Fund is the
responsibility of the BEA Fixed Income Management Team. The Team consists of the
following investment professionals: Robert J. Moore (Executive Director), Gregg
Diliberto (Managing Director), Mark Silverstein (Senior Vice President), Robert
Justich (Senior Vice President), William P. Sterling (Executive Director).
Messrs. Moore, Diliberto and Silverstein have, on an individual basis, been
engaged as investment professionals with BEA for more than five years. 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.

The day to day portfolio management of the BEA High Yield Fund is the
responsibility of the BEA High Yield Management Team. The Team consists of the
following investment professionals: Richard Lindquist (Managing Director), Misia
Dudley (Senior Vice President), Marianne Rossi; (Senior Vice President) and John
Tobin (Senior Vice President). Mr. Lindquist, Ms. Dudley,

25
<PAGE>

Ms. Rossi and Mr. Tobin 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. Prior to joining CS First Boston,
Mr. Tobin managed portfolios for Integrated Resources and prior to that was Vice
President and industry analyst with Bankers Trust Company.

For the advisory services provided and expenses assumed by it, BEA is entitled
to receive a fee from the BEA International Equity, the BEA Emerging Markets
Equity Fund, the BEA U.S. Core Equity Fund, the BEA Balanced Fund, the BEA U.S.
Core Fixed Income Fund, the BEA Strategic Global Fixed Income Fund, the BEA High
Yield Fund, the BEA Municipal Bond Fund, and the BEA Short Duration Fund,
computed at an annual rate of .80%, 1.00%, .75%, .60%, .375%, .50%, .70%, .70%
and .15%, respectively of the average net assets, computed daily and payable
quarterly.

BEA may, at its discretion, from time to time agree to waive voluntarily all or
any portion of its advisory fee for any Fund.

For the fiscal year ended August 31, 1997, the Company paid BEA investment
advisory fees, on an annualized basis, with respect to the BEA International
Equity, the BEA Emerging Markets Equity, the BEA U.S. Core Equity, the BEA High
Yield, the BEA U.S. Core Fixed Income, the BEA Strategic Global Fixed Income,
and the BEA Municipal Bond Funds .80%, .98%, .71%, .44%, .25%, .43% and .47%,
respectively, of the average net assets of the respective Funds, and BEA waived,
approximately 0%, .02%, .04%, .16%, .125%, .07%, and .23%, respectively, of the
average net assets of each such Fund.

BEA may assume additional expenses of a Fund from time to time. In certain
circumstances, BEA may assume such expenses on the condition that it is
reimbursed by the Fund 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 Fund's expense ratio and of decreasing return to investors.

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 Company in connection
with the matters to which the Advisory Agreements relate 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 Agreements.

ADMINISTRATOR

PFPC Inc. ("PFPC"), an indirect, wholly-owned subsidiary of PNC Bank Corp.,
serves as administrator for the Institutional Class of the Funds. As
administrator, PFPC will provide various services to the Institutional Class of
the Funds, including determining the net asset value of the Institutional Class
of each Fund, providing shareholder servicing and all accounting services for
the Class and generally assisting in all aspects of the operations of the
Institutional Class of each Fund. As compensation for its administrative
services, the Funds will pay PFPC a fee calculated at the annual rate of .125%
of the average daily net assets of the Institutional Class of each Fund. PFPC
has its principal offices at 400 Bellevue Parkway, Wilmington, Delaware 19809.

26
<PAGE>
ADMINISTRATIVE SERVICES AGENT

Counsellors Funds Service, Inc. ("Counsellors Service"), a wholly-owned
subsidiary of Warburg Pincus Asset Management, Inc., provides certain
administrative services to the Institutional Class of each of the Funds that are
not provided by PFPC, subject to the supervision and direction of the Board of
Directors of each of the Funds. As compensation for such administrative
services, each of the Funds pays Counsellors Service each month a fee for the
previous month calculated at the annual rate of .15% of average daily net assets
of the Institutional Class of each Fund. Counsellors Service's principal
business address is 466 Lexington Avenue, New York, New York 10017-3147.

DISTRIBUTOR

Counsellors Securities Inc. ("Counsellors Securities"), a wholly-owned
subsidiary of Warburg Pincus Asset Management, Inc., serves as the Company's
distributor. Counsellors Securities is located at 466 Lexington Avenue, New
York, New York 10017-3147. No compensation is payable by the Company to
Counsellors Securities for distribution services with respect to the
Institutional Shares of the Funds.

BEA, Counsellors Securities or an affiliate of either may, at its own expense,
provide promotional incentives for qualified recipients who support the sale of
Shares of a Fund, consisting of securities dealers who have sold Fund Shares or
others, including banks and other financial institutions, under special
arrangements. Incentives may include opportunities to attend business meetings,
conferences, sales or training programs for recipients' employees or clients and
other programs or events and may also include opportunities to participate in
advertising or sales campaigns and/or shareholder services and programs
regarding one or more Funds. BEA, Counsellors Securities or an affiliate of
either may pay for travel, meals and lodging in connection with these
promotional activities. In some instances, these incentives may be offered only
to certain institutions whose representatives provide services in connection
with the sale or expected sale of significant amounts of the Fund's Shares.

TRANSFER AGENT

State Street Bank and Trust Company ("State Street") acts as transfer agent for
the Funds. It has delegated to Boston Financial Data Services, Inc. ("BFDS"), a
50% owned subsidiary, responsibility for most transfer agent servicing
functions. State Street's principal address is 225 Franklin Street, Boston, MA
02110 and BFDS's principal address is 2 Heritage Drive, North Quincy, MA 02171,
telephone number (800) 401-2230.

CUSTODIAN

Brown Brothers Harriman & Co. serves as Custodian for all of the Funds. The 1940
Act and the rules and regulations adopted thereunder permit a Fund to maintain
its securities and cash in the custody of certain eligible banks and securities
depositories. In compliance with such rules and regulations, a Fund'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

27
<PAGE>

Classes of the Funds pay their own administration fees, and may pay a different
share than the other classes of other expenses (excluding advisory and custodial
fees) if those expenses are actually incurred in a different amount by the
Institutional Classes or if they receive different services.

The expenses for each Fund are set forth in the tables entitled "Annual Fund
Operating Expenses," above.
- ----------------------------------------------

HOW TO PURCHASE SHARES

GENERAL

Shares representing interests in the Funds are offered continuously for sale by
the Distributor. Except as described below, BEA Institutional Class Shares are
currently available for purchase only by investors who have entered into an
investment management agreement with BEA or its affiliates. Shares may be
purchased initially by completing the application and forwarding the application
to the BEA Institutional Funds. Purchases of Shares may be effected by wire to
an account to be specified by BFDS or by mailing a check or Federal Reserve
Draft, payable to the order of "The BEA Institutional Funds," The BEA
Institutional Funds, P.O. Box 8500, Boston, MA 02266-8500. The name of the Fund
for which Shares are being purchased must also appear on the check or Federal
Reserve Draft. Federal Reserve Drafts are available at national banks or any
state bank which is a member of the Federal Reserve System. Initial investments
in the BEA Institutional Funds must be at least $3,000,000, except Shares may be
purchased by existing clients of BEA or its affiliates or by officers of such
existing clients (or those holding similar positions) with an initial investment
of at least $100,000; all subsequent investments for such persons must be at
least $1,000. Subsequent initial investments in any other Fund must be at least
$100,000. Each Fund reserves the right to suspend the offering of Shares for a
period of time or to reject any purchase order.

Shares of the Funds may be purchased by officers and employees of BEA or its
affiliates and any BEA pension or profit-sharing plan, without being subject to
the minimum investment limitation or the requirement that investors enter into
an investment management agreement.

Shares may be purchased on any Business Day. A "Business Day" is any day that
the New York Stock Exchange (the "NYSE") is open for business. Currently, the
NYSE is closed on weekends and New Year's Day, Dr. Martin Luther King, Jr. Day,
Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving Day and Christmas Day and the preceding Friday or subsequent Monday
when these holidays occur on a Saturday or Sunday.

The price paid for Shares purchased will be the net asset value next computed
after an order is received by the Fund's transfer agent prior to its close of
business on such day. Orders received by the Fund's transfer agent after its
close of business are priced at the net asset value next determined on the
following Business Day. For a description of the manner of calculating a Fund's
net asset value, see "Net Asset Value" below.

PURCHASES IN-KIND

Subject to the approval of the Adviser, investors may acquire shares of any of
the Funds in exchange for portfolio securities that are eligible for investment
by the relevant Fund or Funds. Such portfolio securities must (a) meet the
investment objectives and policies of the Funds, (b) be acquired for investment
and not for resale, (c) be liquid securities which are not restricted as to
transfer either by law or

28
<PAGE>

liquidity of market, and (d) have a value which is readily ascertainable.
Generally an investor will recognize for federal income tax purposes any gain or
loss realized on an exchange of property for shares. Under certain
circumstances, initial investors may not recognize gain or loss on such an
exchange. Investors, particularly initial investors, are urged to consult their
tax advisers in determining the particular federal income tax consequences of
their purchase in-kind. Such exchanges will be subject to each Fund's minimum
investment requirement. Shareholders may be required to bear certain
administrative or custodial costs in effecting purchases in-kind.

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

HOW TO REDEEM AND EXCHANGE SHARES

An investor of a Fund may redeem (sell) his shares on any day that the Fund's
net asset value is calculated (see "Net Asset Value" below).

Shareholders may redeem for cash some or all of their Fund Shares at any time.
To do so, a written request in proper form must be sent directly to the BEA
Institutional Funds, P.O. Box 8500, Boston, MA 02266-8500. The redemption price
is the net asset value per Share next determined after the initial receipt of
proper notice of redemption. The value of Shares at the time of redemption may
be more or less than the shareholder's cost, depending on the market value of
the securities held by the Fund at such time.

A request for redemption must be signed by all persons in whose names the Shares
are registered or by an authorized party, such as the agent or investment
adviser for the Shareholder. Signatures must conform exactly to the account
registration. Generally, a properly signed written request is all that is
required for a redemption. In some cases, however, other documents may be
necessary. Additional documentary evidence of authority is also required by the
BEA Institutional Funds in the event redemption is required by a corporation,
partnership, trust, fiduciary, executor or administrator.

PAYMENT OF REDEMPTION PROCEEDS

Payment of the Redemption Price for Shares redeemed will be made by wire or by
check mailed within seven days after acceptance by the BEA Institutional Funds
c/o BFDS, of the request and any other necessary documents in proper order. Such
payment may be postponed or the right of redemption suspended as provided by the
SEC. If the Shares to be redeemed have been recently purchased by check, the
Fund's transfer agent may delay mailing a redemption check, which may be a
period of up to 15 days from the date of purchase, pending a determination that
the check has cleared.

INVOLUNTARY REDEMPTION

The Company reserves the right to redeem an account in any Fund of a shareholder
at any time the net asset value of the account in such a Fund falls below $500
as the result of a redemption request. Shareholders will be notified in writing
that the value of their account in a Fund is less than $500 and will be allowed
30 days to make additional investments before the redemption is processed.

REDEMPTION IN-KIND

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<PAGE>

elected, however, to be governed by Rule 18f-1 under the 1940 Act so that a Fund
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
Fund. Redeeming shareholders will be required to bear certain administrative or
custodial costs in effecting redemptions in-kind.

EXCHANGE PRIVILEGE

An individual or institution may exchange Institutional Shares of a Fund for
Institutional Shares of any other BEA Institutional Fund at such Fund's
respective net asset values. Exchanges will be effected in the manner described
under "Redemption of Shares" above. If an exchange request is received by BEA
Institutional Funds prior to the close of regular trading on the NYSE, the
exchange will be made at each Fund'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 Institutional 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 the BEA
Institutional Funds at (800) 401-2230.

If the exchanging shareholder does not currently own shares of the Fund 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 Fund.

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

NET ASSET VALUE

The net asset values for each class of a Fund are determined as of the close of
regular trading on the NYSE on each Business Day. The net asset values of each
class of a Fund are calculated by adding the value of the proportionate interest
of each class in a Fund's securities, cash and other assets, deducting the
actual and accrued liabilities of the class and dividing the result by the total
number of outstanding shares of the class.

Most securities held by a Fund are priced based on their market value as
determined by reported sales prices, or the mean between bid and asked prices
that are provided by securities dealers or pricing services. Fund securities
which are primarily traded on foreign securities exchanges are normally valued
at the preceding closing values of such securities on their respective
exchanges. Securities for which market quotations are not readily available are
valued at fair market value as determined in good faith under the procedures
established by the Board of Directors. The amortized cost method of valuation
will also be used with respect to debt obligations with sixty days or less
remaining to maturity unless the Adviser under the supervision of the Board of
Directors determines such method does not represent fair value.

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

DIVIDENDS AND DISTRIBUTIONS

The Company will distribute substantially all of the net realized capital gains,
if any, of each of the Funds to each Fund's shareholders annually. The Company
will distribute all net investment

30
<PAGE>

income, if any, for the BEA International Equity, the BEA Emerging Markets
Equity, and the BEA U.S. Core Equity Funds annually. The Company will distribute
net investment income, if any, for the BEA Balanced and the BEA Short Duration
Funds at least annually. The Company will distribute net investment income for
the BEA U.S. Core Fixed Income, the BEA Strategic Global Fixed Income, the BEA
High Yield and the BEA Municipal Bond Funds at least quarterly. All
distributions will be reinvested in the form of additional full and fractional
shares of the relevant Fund unless a contrary election is made on the
application to have distributions paid in cash. If in the future a shareholder
desires to have distributions paid out rather than reinvested, the shareholder
should notify the BEA Institutional Funds in writing.

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

TAXES

GENERAL

The following discussion is only a brief summary of some of the important tax
considerations generally affecting the Funds and their shareholders and is not
intended as a substitute for careful tax planning. Accordingly, investors in the
Funds should consult their tax advisers with specific reference to their own tax
situation.

Each Fund will elect to be taxed as a regulated investment company under
Subchapter M of the Internal Revenue Code of 1986 (the "Code"), as amended. So
long as a Fund qualifies for this tax treatment, it 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) and out of the portion of such net
capital gain that constitutes mid-term capital gain, if any, of a Fund will be
taxed to shareholders as long-term capital gain or mid-term capital gain, if
any, of a Fund, as the case may be, 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 mid-term and other
long-term capital gain of such taxpayers is 28% and 20%, respectively. Corporate
taxpayers are taxed at the same rates on both ordinary income and capital gains.

The BEA Municipal Bond Fund intends to pay substantially all of its dividends as
"exempt interest dividends." Investors in this Fund should note, however, that
taxpayers are required to report the receipt of tax-exempt interest and "exempt
interest dividends" in their federal income tax returns and that in two
circumstances such amounts, while exempt from regular federal income tax, are
subject to federal alternative minimum tax at a rate of 24% in the case of
individuals, trusts and estates, and 20% in the case of corporate taxpayers.
First, tax-exempt interest and "exempt interest dividends" derived from certain
private activity bonds issued after August 7, 1986, will generally constitute an
item of tax preference for corporate and noncorporate taxpayers in determining
alternative minimum tax liability. Depending upon market conditions, the BEA
Municipal Bond Fund may invest up to

31
<PAGE>

40% of its net assets in such private activity bonds. Secondly, tax-exempt
interest and "exempt interest dividends" derived from all Municipal Obligations
must be taken into account by corporate taxpayers in determining their adjusted
current earnings adjustment for federal alternative minimum tax purposes.
Shareholders who are recipients of Social Security Act or Railroad Retirement
Act benefits should further note that tax-exempt interest and "exempt interest
dividends" will be taken into account in determining the taxability of their
benefit payments.

The BEA Municipal Bond Fund will determine annually the percentages of its net
investment income which are fully tax-exempt, which constitute an item of tax
preference for alternative minimum tax purposes, and which are fully taxable and
will apply such percentages uniformly to all distributions declared from net
investment income during that year. These percentages may differ significantly
from the actual percentages for any particular day.

Transactions in foreign currencies, forward contracts, options and futures
contracts (including options and futures contracts on foreign currencies) will
be subject to special provisions of the Code that, among other things, may
affect the character (i.e., ordinary or capital) of gains or losses realized by
a Fund, accelerate the recognition of income by a Fund and defer a Fund'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 Funds. In addition, certain investments (such as zero coupon securities
and shares of so-called "passive foreign investment companies" or "PFICS") may
cause a Fund to recognize income without the receipt of cash. Each of these
circumstances, whether separately or in combination, may limit a Fund's ability
to pay sufficient dividends and to make sufficient distributions to satisfy the
Subchapter M and excise tax distributions requirements.

The Company will send written notices to shareholders annually regarding the tax
status of distributions made by each Fund. 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 Fund 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 Fund for shares
representing interests in another Fund 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 Fund is not intended to constitute a balanced investment
program. Shares of the BEA Municipal Bond Fund would not be suitable for
tax-exempt institutions and

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<PAGE>

may not be suitable for retirement plans qualified under Section 401 of the
Code, H.R. 10 plans and individual retirement accounts since such plans and
accounts are generally tax-exempt and, therefore, not only would not gain any
additional benefit from the Fund's dividends being tax-exempt but also such
dividends would be taxable when distributed to the beneficiary.

FOREIGN INCOME TAXES

Investment income received by the Funds 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
Funds 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 Fund's assets to be invested in various countries is not known.

If more than 50% of the value of a Fund's total assets at the close of each
taxable year consists of the stock or securities of foreign corporations, such
Fund will be eligible to elect to "pass through" to the Company's shareholders
the amount of foreign income taxes paid by each Fund (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 respec-
tive pro-rata shares of the foreign income taxes paid by a Fund 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 Fund for the purpose of the foreign tax credit
limitation rules of the Code, shareholders will be required to treat allocable
portions of a Fund'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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MULTI-CLASS STRUCTURE

The Company offers other classes of shares, Investor and Advisor Shares of the
Funds, which are offered directly to institutional investors and financial
intermediaries pursuant to separate prospectuses. Shares of a Fund represent
equal pro rata interests in the Funds and accrue dividends and calculate net
asset value and performance quotations in the same manner. The Company quotes
performance of the Investor and Advisor Shares separately from Institutional
Shares. Because of different fees paid by the Institutional Shares, the total
return on such shares can be expected, at any time, to be different than the
total return on Investor and Advisor Shares. Information concerning these other
classes may be obtained by calling the BEA Institutional Funds at (800)
401-2230.

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

DESCRIPTION OF SHARES

THIS PROSPECTUS AND THE STATEMENT OF ADDITIONAL INFORMATION INCORPORATED HEREIN
RELATE PRIMARILY TO THE BEA INSTITUTIONAL CLASSES REPRESENTING INTERESTS IN THE
BEA INTERNATIONAL EQUITY, THE BEA EMERGING MARKETS EQUITY, THE BEA HIGH YIELD,
THE BEA U.S. CORE EQUITY, THE BEA BALANCED, THE BEA U.S. CORE FIXED INCOME, THE
BEA

33
<PAGE>

STRATEGIC GLOBAL FIXED INCOME, THE BEA MUNICIPAL BOND AND THE BEA SHORT DURATION
FUNDS AND DESCRIBE ONLY THE INVESTMENT OBJECTIVE AND POLICIES, OPERATIONS,
CONTRACTS AND OTHER MATTERS RELATING TO THESE FUNDS.

Each share that represents an interest in a Fund has an equal proportionate
interest in the assets belonging to such Fund with each other share that
represents an interest in such Fund. Shares of the Company do not have
preemptive or conversion rights. When issued for payment as described in this
Prospectus, Shares will be fully paid and non-assessable.

The Company 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 Company will assist in shareholder communication in such
matters.

Holders of shares of each of the Funds 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 Company 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 the
Company's Shares" for examples of when the 1940 Act requires voting by
investment portfolio or by class.) Shareholders of the Company 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 Company may elect all of the directors.

As of November 15, 1997, to the Company's knowledge, no person held of record or
beneficially 25% or more of the outstanding shares of all classes of the
Company.

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

OTHER INFORMATION

REPORTS AND INQUIRIES

Shareholders of a Fund will receive unaudited semi-annual reports describing the
Fund's investment operations and annual financial statements audited by
independent accountants. Shareholder inquiries can be made by contacting the BEA
Institutional Funds at (800) 401-2230 or by writing to BEA Institutional Funds,
P.O. Box 8500, Boston, MA 02266-8500.

PERFORMANCE INFORMATION

34
<PAGE>

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
Fund's performance with other measures of investment return. For example, a
Fund's total return or expense ratio 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, Morgan Stanley Composite Index EAFE, Morgan Stanley
Composite Index-Free Emerging Markets, JP Morgan Global Government Bond Index
(Unhedged), First Boston High Yield Index, Consumer Price Index, Bond Buyer's
20-Bond Index, Dow Jones Industrial Average, national publications such as
MONEY, FORBES, BARRON'S, THE WALL STREET JOURNAL or the NEW YORK TIMES or
publications of a local or regional nature, and other industry publications. For
these purposes, the performance of a Fund, as well as the performance published
by such services or experienced by such indices, will usually not reflect
redemption fees, the inclusion of which would reduce performance results. If a
Fund advertises non-standard computations, however, the Fund will disclose such
fees, and will also disclose that the performance data do not reflect such fees
and that inclusion of such fees would reduce the performance quoted.

From time to time, each of the Funds other than the BEA International Equity,
BEA Emerging Markets Equity and BEA U.S. Core Equity Funds may also advertise
its "30-day yield." The yield refers to the income generated by an investment in
a Fund over the 30-day period identified in the advertisement, and is computed
by dividing the net investment income per share during the period by the maximum
public offering price per share of the last day of the period. This income is
"annualized" by assuming that the amount of income is generated each month over
a one-year period and is compounded semi-annually. The annualized income is then
shown as a percentage of the net asset value.

The yield on shares of a Fund will fluctuate and is not necessarily
representative of future results. Shareholders should remember that yield is
generally a function of portfolio quality and maturity, type of instrument,
operating expenses and market conditions. Any fees charged by broker/dealers
directly to their customers in connection with investments in a Fund are not
reflected in the yields on a Fund's shares, and such fees, if charged, will
reduce the actual return received by shareholders on their investments.

35
<PAGE>
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY
REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS OR IN THE FUNDS' 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 COMPANY OR ITS
DISTRIBUTOR. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING BY THE COMPANY OR
BY THE DISTRIBUTOR IN ANY JURISDICTION IN WHICH SUCH OFFERING MAY NOT LAWFULLY
BE MADE.
<PAGE>

BEA INSTITUTIONAL FUNDS

QUICK REFERENCE GUIDE

BEA INSTITUTIONAL FUNDS
- -----------------------------------
International Equity Fund
Emerging Markets Equity Fund
U.S. Core Equity Fund
Balanced Fund
U.S. Core Fixed Income Fund
Strategic Global Fixed Income Fund
High Yield Fund
Municipal Bond Fund
Short Duration Fund

WORLD WIDE WEB
- -----------------------------------
Please visit our website at: www.beafunds.com.

FUND AND ACCOUNT INFORMATION
- -----------------------------------
Shareholders and all interested investors may direct
their inquiries and requests for information to the
Funds' information line at 1-800-401-2230.

AUTOMATIC REINVESTMENT PROGRAM
- -----------------------------------
Dividend and capital gain distributions are
automatically reinvested in shares of the same
Fund at the current net asset value.

EXCHANGE PRIVILEGES
- -----------------------------------
Shareholders may sell fund shares and buy shares of other
BEA Institutional Funds in writing. Please refer to the
Prospectus section entitled "Exchange Privilege."

STATEMENTS AND REPORTS
- -----------------------------------
As a shareholder you will receive the following:
* Confirmation Statements - after every transaction
that affects your account balance or account
registration
* Account Statements - quarterly
* Financial Reports - semi-annually

INVESTMENT ADVISER
- -----------------------------------
BEA Associates
One Citicorp Center
153 East 53rd Street
New York, NY 10022

DISTRIBUTOR
- -----------------------------------
Counsellors Securities Inc.
466 Lexington Avenue
New York, NY 10017-3147

ADMINISTRATOR
- -----------------------------------
PFPC Inc.
400 Bellevue Parkway
Wilmington, DE 19809

ADMINISTRATIVE SERVICES AGENT
- -----------------------------------
Counsellors Funds Service, Inc.
466 Lexington Avenue
New York, NY 10017-3147

CUSTODIAN
- -----------------------------------
Brown Brothers Harriman & Co.
40 Water Street
Boston, MA 02109

TRANSFER AGENT
- -----------------------------------
State Street Bank and Trust Co.
225 Franklin Street
Boston, MA 02110

INDEPENDENT ACCOUNTANTS
- -----------------------------------
Coopers & Lybrand L.L.P.
2400 Eleven Penn Center
Philadelphia, PA 19103

LEGAL COUNSEL
- -----------------------------------
Drinker Biddle & Reath LLP
1345 Chestnut Street
Philadelphia, PA 19107

<PAGE>

BEA

INSTITUTIONAL FUNDS

INTERNATIONAL EQUITY FUND
EMERGING MARKETS EQUITY FUND
U.S. CORE EQUITY FUND
BALANCED FUND
U.S. CORE FIXED INCOME FUND
STRATEGIC GLOBAL FIXED INCOME FUND
HIGH YIELD FUND
MUNICIPAL BOND FUND
SHORT DURATION FUND
(INVESTMENT PORTFOLIOS OF THE RBB FUND, INC.)

STATEMENT OF ADDITIONAL INFORMATION

This Statement of Additional Information provides supplementary
information pertaining to shares of nine classes (the "BEA Institutional
Shares" or the "Shares") representing interests in nine investment portfolios
(the "Funds") of The RBB Fund, Inc. (the "Company"): the BEA International
Equity, the BEA Emerging Markets Equity, the BEA U.S. Core Equity, the BEA
Balanced, the BEA U.S. Core Fixed Income, the BEA Strategic Global Fixed
Income, the BEA High Yield, the BEA Municipal Bond, and the BEA Short
Duration Funds (collectively, the "Funds"). This Statement of Additional
Information is not a prospectus, and should be read only in conjunction with
the Prospectus of the Company relating to the Funds, dated December 8, 1997
(the "Prospectus"). A copy of the Prospectus may be obtained from the Fund's
transfer agent by calling toll-free (800) 401-2230. This Statement of
Additional Information is dated December 8, 1997.

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 COMPANY OR ITS DISTRIBUTOR. THE STATEMENT OF ADDITIONAL INFORMATION DOES
NOT CONSTITUTE AN OFFERING BY THE COMPANY OR BY THE DISTRIBUTOR IN ANY
JURISDICTION IN WHICH SUCH OFFERING MAY NOT LAWFULLY BE MADE.

<PAGE>

CONTENTS

Prospectus
Page Page

General. . . . . . . . . . . . . . . . . . . . . . . . . . 1 14
Common Investment Policies -- All Funds. . . . . . . . . . 1 14
Common Investment Objectives and Policies --
BEA International Equity, BEA Emerging
Markets Equity, BEA U.S. Core Equity,
BEA Balanced, BEA U.S. Core Fixed Income,
BEA High Yield, BEA Strategic Global
Fixed Income and BEA Short Duration Funds. . . . . . . . 7 __
Supplemental Investment Objectives and
Policies -- BEA Municipal Bond Fund. . . . . . . . . . . 22 __
Supplemental Investment Objectives and
Policies -- BEA International Equity,
BEA Emerging Markets Equity, BEA U.S.
Core Equity and BEA Balanced Funds . . . . . . . . . . . 23 __
Investment Limitations . . . . . . . . . . . . . . . . . . 23 29
Risk Factors . . . . . . . . . . . . . . . . . . . . . . . 25 30
Directors and Officers . . . . . . . . . . . . . . . . . . 30 N/A
Investment Advisory and Servicing
Arrangements . . . . . . . . . . . . . . . . . . . . . . 34 33
Portfolio Transactions . . . . . . . . . . . . . . . . . . 41 N/A
Purchase and Redemption Information. . . . . . . . . . . . 46 37,39
Valuation of Shares. . . . . . . . . . . . . . . . . . . . 47 41
Performance and Yield Information. . . . . . . . . . . . . 49 46
Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . 53 42
Additional Information Concerning the
Company Shares . . . . . . . . . . . . . . . . . . . . . 62 45
Miscellaneous. . . . . . . . . . . . . . . . . . . . . . . 66 N/A
Financial Statements . . . . . . . . . . . . . . . . . . . 76 N/A
Appendix A . . . . . . . . . . . . . . . . . . . . . . . . A-1 N/A
Appendix B . . . . . . . . . . . . . . . . . . . . . . . . B-1 N/A

<PAGE>

GENERAL

The RBB Fund, Inc. (the "Company") is an open-end management
investment company currently operating or proposing to operate twenty-two
separate investment portfolios. The Company 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 FUNDS

The following supplements the information contained in the Prospectus
concerning the investment objectives and policies of, and techniques used by the
Funds.

NON-DIVERSIFIED STATUS. Each Fund is classified as non-diversified
within the meaning of the Investment Company Act of 1940 (the "1940 Act"), which
means that each Fund is not limited by such Act in the proportion of its assets
that it may invest in securities of a single issuer. Each Fund'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 (the
"Code"). See "Taxes." To qualify, each Fund 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
Fund'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 Fund's total assets will be invested in the
securities of a single issuer and each Fund will not own more than 10% of the
outstanding voting securities of a single issuer. To the extent that each Fund
assumes large positions in the securities of a small number of issuers, each
Fund'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 Fund may invest for temporary 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

<PAGE>

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.

REPURCHASE AGREEMENTS. Each Fund 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 Fund 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 Fund to possible loss because of adverse market action,
expenses and/or delays in connection with the disposition of the underlying
obligations. The financial institutions with which a Fund may enter into
repurchase agreements will be banks and non-bank dealers of U.S. Government
securities that are listed on the Federal Reserve Bank of New York's list of
reporting dealers, if such banks and non-bank dealers are deemed creditworthy
by the Fund's adviser. A Fund's adviser will continue to monitor
creditworthiness of the seller under a repurchase agreement, and will require
the seller to maintain during the term of the agreement the value of the
securities subject to the agreement to equal at least the repurchase price
(including accrued interest). In addition, the Fund's adviser will require
that the value of this collateral, after transaction costs (including loss of
interest) reasonably expected to be incurred on a default, be equal to or
greater than the repurchase price (including accrued premium) provided in the
repurchase agreement or the daily amortization of the difference between the
purchase price and the repurchase price specified in the repurchase
agreement. The Fund's adviser will mark-to-market daily the value of the
securities. There are no percentage limits on a Fund's ability to enter into
repurchase agreements. Repurchase agreements are considered to be loans by
the Fund under the 1940 Act.

REVERSE REPURCHASE AGREEMENTS AND DOLLAR ROLLS. Each Fund 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 Fund pursuant to such Fund's agreement to repurchase
them at a mutually agreed upon date, price and rate of interest. At the time
a Fund enters into a reverse repurchase agreement, it will

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<PAGE>

establish and maintain a segregated account with an approved custodian
containing cash or liquid 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 Fund's liquidity and ability to
manage its assets might be affected when it sets aside cash or portfolio
securities to cover such commitments. Reverse repurchase agreements involve
the risk that the market value of the securities retained in lieu of sale may
decline below the price of the securities a Fund has sold but is obligated to
repurchase. In the event the buyer of securities under a reverse repurchase
agreement files for bankruptcy or becomes insolvent, such buyer or its
trustee or receiver may receive an extension of time to determine whether to
enforce a Fund's obligation to repurchase the securities, and a Fund's use of
the proceeds of the reverse repurchase agreement may effectively be
restricted pending such decision. Reverse repurchase agreements are
considered to be borrowings under the 1940 Act. Each Fund also may enter
into "dollar rolls," in which it sells fixed income securities for delivery
in the current month and simultaneously contracts to repurchase substantially
similar (same type, coupon and maturity) securities on a specified future
date. During the roll period, a Fund would forgo principal and interest paid
on such securities. A Fund would be compensated by the difference between
the current sales price and the forward price for the future purchase, as
well as by the interest earned on the cash proceeds of the initial sale. The
Funds do not presently intend to invest more than 5% of net assets in reverse
repurchase agreements or dollar rolls.

WHEN-ISSUED SECURITIES, DELAYED DELIVERY TRANSACTIONS AND FORWARD
COMMITMENTS. Each Fund may purchase securities on a when-issued basis or on
a forward commitment basis, and it may purchase or sell securities for
delayed delivery. These transactions occur when securities are purchased or
sold by a Fund with payment and delivery taking place in the future to secure
what is considered an advantageous yield and price to a Fund at the time of
entering into the transaction. Although the Funds have not established a
limit on the percentage of their assets that may be committed in connection
with such transactions, they will maintain a segregated account with their
custodian of cash or liquid securities denominated in U.S. dollars or
non-U.S. currencies in an aggregate amount equal to the amount of their
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 Fund's liquidity and ability
to manage its assets might be affected when it sets aside cash or portfolio
fund securities to

-3-
<PAGE>

cover such commitments. When a Fund 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 Fund 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. Each Fund currently
anticipates that when-issued securities will not exceed 25% of its net
assets. Each Fund does not intend to engage in when-issued purchases and
forward commitments for speculative purposes but only in furtherance of its
investment objectives.

STAND-BY COMMITMENT AGREEMENTS. Each Fund may from time to time
enter into stand-by commitment agreements. Such agreements commit a Fund,
for a stated period of time, to purchase a stated amount of a fixed income
securities which may be issued and sold to the Fund 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 Fund is paid a
commitment fee, regardless of whether or not the security is ultimately
issued. A Fund 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 Fund. Each Fund will not enter into a
stand-by commitment with a remaining term in excess of 45 days and it will
limit its investment in such commitments so that the aggregate purchase price
of the securities subject to such commitments, together with the value of
portfolio securities subject to legal restrictions on resale, will not exceed
10% of its assets taken at the time of acquisition of such commitment or
security. Each Fund will at all times maintain a segregated account with its
custodian of cash or liquid 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 Fund'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 stand-by
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 Fund
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.

-4-
<PAGE>

The purchase of a security subject to a stand-by 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 stand-by commitment. The Funds do not presently intend to invest
more than 5% of net assets in stand-by commitment agreements.

ILLIQUID SECURITIES. Each Fund does not presently intend to invest
more than 15% 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 Fund 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 Company's Board of Directors. Because of the
absence of any liquid trading market currently for these investments, a Fund
may take longer to liquidate these positions than would be the case for
publicly traded securities. Although these securities may be resold in
privately negotiated transactions, the prices realized on such sales could be
less than those originally paid by a Fund. Securities that have legal or
contractual restrictions on resale but have a readily available market are
not considered illiquid for purposes of this limitation. With respect to
each Fund, repurchase agreements subject to demand are deemed to have a
maturity equal to the notice period.

Mutual funds do not typically hold a significant amount of 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.

-5-
<PAGE>

If otherwise consistent with their investment objectives and policies,
the Funds may purchase securities that are not registered under the Securities
Act but which may be sold to "qualified institutional buyers" in accordance with
Rule 144A under the Securities Act. These securities will not be considered
illiquid so long as it is determined by the Adviser, under guidelines approved
by the Board of Directors, that an adequate trading market exists for the
securities. This investment practice could have the effect of increasing the
level of illiquidity in a Fund during any period that qualified institutional
buyers become uninterested in purchasing restricted securities.

The Adviser will monitor the liquidity of restricted securities in a
Fund under the supervision of the Board of Directors. In reaching liquidity
decisions, the Adviser may consider, among others, the following factors: (1)
the unregistered nature of the security; (2) the frequency of trades and quotes
for the security; (3) the number of dealers wishing to purchase or sell the
security and the number of other potential purchasers; (4) dealer undertakings
to make a market in the security and (5) the nature of the security and the
nature of the marketplace trades (e.g., the time needed to dispose of the
security, the method of soliciting offers and the mechanics of the transfer).
Where there are no readily available market quotations, the security shall be
valued at fair value as determined in good faith by the Board of Directors of
the Company.

SECURITIES OF UNSEASONED ISSUERS. Each Fund 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 Fund'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 Fund may lend its portfolio securities with an aggregate value of
up to 30% of its total assets to broker/dealers and other institutional
investors. Each Fund 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 Fund'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

-6-
<PAGE>

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 Funds to possible loss because of
adverse market action, expenses and/or delays in connection with the disposition
of the underlying securities.

BORROWING. Each Fund 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 Fund's total assets. Although the principal of such borrowings
will be fixed, a Fund's assets may change in value during the time the borrowing
is outstanding. Each Fund expects that some of its borrowings may be made on a
secured basis. In such situations, either the custodian will segregate the
pledged assets for the benefit of the lender or arrangements will be made with a
suitable subcustodian, which may include the lender.

COMMON INVESTMENT OBJECTIVES AND POLICIES -- BEA INTERNATIONAL
EQUITY, BEA EMERGING MARKETS EQUITY, BEA U.S. CORE EQUITY, BEA
BALANCED, BEA U.S. CORE FIXED INCOME, BEA HIGH YIELD, BEA
STRATEGIC GLOBAL FIXED INCOME AND BEA SHORT DURATION FUNDS

U.S. GOVERNMENT SECURITIES. The U.S. Government securities in which a
Fund 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).

7
<PAGE>

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 Funds 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 Fund may invest in so-called "Brady Bonds," which
are securities created through the exchange of existing commercial bank loans to
Latin American public and private entities for new bonds in connection with debt
restructurings under a debt restructuring plan announced by former U.S.
Secretary of the Treasury Nicholas F. Brady (the "Brady Plan"). Brady Bonds may
be collateralized or uncollateralized, are issued in various currencies
(primarily the U.S. dollar) and are currently actively traded in the
over-the-counter secondary market for Latin American debt instruments.

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cash or securities in an amount that, in the case of fixed rate bonds, is equal
to at least one year of rolling interest payments or, in the case of floating
rate bonds, initially is equal to at least one year's rolling interest payments
based on the applicable interest rate at that time and is adjusted at regular
intervals thereafter.

All Mexican Brady Bonds issued to date, except New Money Bonds, have
principal repayments at final maturity fully collateralized by U.S. Treasury
zero coupon bonds (or comparable collateral in other currencies) and interest
coupon payments collateralized on an 18-month rolling-forward basis by funds
held in escrow by an agent for the bondholders. Approximately half of the
Venezuelan Brady Bonds issued to date have principal repayments at final
maturity collateralized by U.S. Treasury zero coupon bonds (or comparable
collateral in other currencies), while slightly more than half have interest
coupon payments collateralized on a 14-month rolling-forward basis by securities
held by the Federal Reserve Bank of New York as collateral agent.

Brady Bonds are often viewed as having three or four valuation
components: the collateralized repayment of principal at final maturity; the
collateralized interest payments; the uncollateralized interest payments; and
any uncollateralized repayment of principal at maturity (these uncollateralized
amounts constituting the "residual risk").

LOAN PARTICIPATIONS AND ASSIGNMENTS. Each Fund 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 Fund'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 Fund having a contractual relationship only with the Lender,
not with the borrower. Each Fund 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 Funds
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 Fund may not directly benefit
from any collateral supporting the Loan in which it has purchased the
Participation. As a result, the Funds 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 Funds may be treated as a
general creditor of the Lender and may not benefit from any set-off between the

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Lender and the borrower. The Funds will acquire Participations only if the
Lender interpositioned between the Funds and the borrower is determined by BEA
to be creditworthy. Each Fund currently anticipates that it will not invest
more than 5% of its net assets in Loan Participations and Assignments.

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, 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.

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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 Funds have no current intention of converting any convertible
securities they may own into equity securities or holding them as equity
securities upon conversion, although they 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 a Fund is called for redemption, the Fund 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. The Funds will invest in
convertible securities without regard to their credit rating. See "Risk Factors
- -- Lower Rated Securities" in the prospectus.

MORTGAGE-BACKED SECURITIES. The Funds may invest in
mortgage-backed securities, such as those issued by the Government National
Mortgage Association ("GNMA"), the Federal National Mortgage Association
("FNMA"), the Federal Home Loan Mortgage Corporation ("FHLMC") or certain
foreign issuers, 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 Fund'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.

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<PAGE>

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 Funds 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 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 Fund'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 Funds. Mortgage-related securities provide regular
payments consisting of interest and principal. No assurance can be given as to
the return the Funds will receive when these amounts are reinvested.

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<PAGE>

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 Funds may also purchase
collateralized mortgage obligations ("CMOs") issued by a U.S. Government
instrumentality which are backed by a portfolio of mortgages or
mortgage-backed securities. The issuer's obligations to make interest and
principal payments is secured by the underlying portfolio of mortgages or
mortgage-backed securities. Generally, CMOs are partitioned into several
classes with a ranked priority by which the classes of obligations are
redeemed. These securities may be considered mortgage derivatives. The Funds
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 will only receive
principal cash flows from the pool. All interest cash flows go to the interest
only class. The relative payment rights of the various CMO classes may be
structured in many ways, either sequentially or by other rules of priority.
Generally, payments of principal are applied to the CMO classes in the order of
their respective stated maturities, so that no principal payments will be made
on a CMO class until all other classes having an earlier stated maturity date
are paid in full. Sometimes, however, CMO classes are "parallel pay," i.e.
payments of principal are made to two or more classes concurrently. CMOs may
exhibit more or less price volatility and interest rate risk than other types of
mortgaged-related obligations.

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

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(called tranches) receive interest at a stated rate, but only one class at a
time receives 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 Fund would have the same effect as the prepayment of mortgages
underlying a mortgage-backed pass-through security as described above.

ASSET-BACKED SECURITIES. Each Fund 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 Funds 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 Funds will therefore not purchase
any asset-backed securities which would cause 25% or more of a Fund's net
assets at the time of purchase to be invested in asset-backed securities.

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<PAGE>

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.

ZERO COUPON SECURITIES. Each Fund 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. Each Fund currently anticipates that
zero coupon securities will not exceed 5% of its net 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 Fund 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 Funds 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 Fund to gain exposure
to the benchmark market while fixing the maximum loss that the Fund 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 Fund may forego all or
part of the interest and principal that would be payable on a comparable
conventional note; the Fund'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.

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<PAGE>

ADDITIONAL INVESTMENT CONSIDERATIONS AND RISKS--NON-INVESTMENT GRADE
FIXED-INCOME SECURITIES. When and if available, fixed-income securities may be
purchased by a Fund at a discount from face value. From time to time a Fund may
purchase securities in default with respect to the paying of principal and/or
interest at the time acquired if, in the opinion of BEA, such securities have
the potential for future capital appreciation.

Debt securities purchased by the Funds 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 Fund 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 Funds
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 Fund but will
be reflected in the net asset value of a Fund's shares. The Funds 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.

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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 Fund must include the interest ("original issue discount") on
these securities in determining the amount of its required distributions to
shareholders for federal income tax and federal excise tax purposes, even though
it receives no cash interest until the security's maturity or payment date.
Therefore, in order to satisfy these distribution requirements, a Fund 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 Fund'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 Fund may also purchase securities not paying interest at
the time acquired if, in the opinion of the Fund's Adviser, such securities have
the potential for future income or capital appreciation.

HEDGING. Each of the Funds may engage in various hedging strategies.
See "Currency Hedging" in the Prospectus.

FORWARD CURRENCY CONTRACTS. Each Fund may use forward currency
contracts to protect against uncertainty in the level of future exchange rates
and to enhance total return. The Funds may also 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 Fund 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

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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 Fund 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 Fund 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
Fund security if its market value exceeds the amount of foreign currency a Fund
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 Fund to sustain losses on these
contracts and transaction costs. A Fund 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 Fund to deliver an amount of foreign currency in
excess of the value of a Fund's portfolio securities or other assets denominated
in that currency or (2) a Fund maintains cash or liquid 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 Fund will be served.

At or before the maturity date of a forward contract requiring a
portfolio to sell a currency, the Funds 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 Fund will obtain, on the same maturity
date, the same amount of the currency that it is obligated to deliver.
Similarly, the Funds may close out a forward contract requiring them to purchase
a specified currency by entering into a second contract entitling them to sell
the same amount of the same currency on the maturity date of the first contract.
A Fund 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.

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The cost to a Fund 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 Fund 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 Fund.

Although a Fund 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 Funds may convert foreign currency from time to
time, and investors should be aware of the costs of currency conversion.
Although foreign exchange dealers do not charge a fee for conversion, they do
realize a profit based on the difference between the prices at which they are
buying and selling various currencies. Thus, a dealer may offer to sell a
foreign currency to a Fund at one rate, while offering a lesser rate of exchange
should a Fund desire to resell that currency to the dealer.

OPTIONS AND FUTURES CONTRACTS. The Funds, except the BEA Municipal
Bond Fund, 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. These Funds 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. See Appendix "B" for a description of futures contracts and options on
futures contracts and the risks thereof.

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Options trading is a highly specialized activity which entails greater
than ordinary investment risks. Options on particular securities may be more
volatile than the underlying securities, and therefore, on a percentage basis,
an investment in the underlying securities themselves. A Fund will write call
options only if they are "covered." In the case of a call option on a security,
the option is "covered" if a Fund owns the security underlying the call or has
an absolute and immediate right to acquire that security without additional cash
consideration (or, if additional cash consideration is required, liquid assets
in such amount as are held in a segregated account by its custodian) upon
conversion or exchange of other securities held by it. For a call option on an
index, the option is covered if a Fund maintains with its custodian liquid
assets equal to the contract value. A call option is also covered if a Fund
holds a call on the same security or index as the call written where the
exercise price of the call held is (i) equal to or less than the exercise price
of the call written, or (ii) greater than the exercise price of the call written
provided the difference is maintained by the Fund in liquid assets in a
segregated account with its custodian.

When a Fund purchases a put option, the premium paid by it is recorded
as an asset of the Fund. When a Fund writes an option, an amount equal to the
net premium (the premium less the commission) received by the Fund is included
in the liability section of the Fund's statement of assets and liabilities as a
deferred credit. The amount of this asset or deferred credit will be
subsequently marked-to-market to reflect the current value of the option
purchased or written. The current value of the traded option is the last sale
price or, in the absence of a sale, the mean between the last bid and asked
prices. If an option purchased by a Fund expires unexercised the Fund realizes
a loss equal to the premium paid. If the Fund enters into a closing sale
transaction on an option purchased by it, the Fund will realize a gain if the
premium received by the Fund on the closing transaction is more than the premium
paid to purchase the option, or a loss if it is less. If an option written by a
Fund expires on the stipulated expiration date or if the Fund enters into a
closing purchase transaction, it will realize a gain (or loss if the cost of a
closing purchase transaction exceeds the net premium received when the option is
sold) and the deferred credit related to such option will be eliminated. If an
option written by a Fund is exercised, the proceeds of the sale will be
increased by the net premium originally received and the Fund will realize a
gain or loss.

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these markets, causing a given transaction not to achieve its objectives. In
addition, a liquid secondary market for particular options, whether traded
over-the-counter or on a national securities exchange ("Exchange"), may be
absent for reasons which include the following: there may be insufficient
trading interest in certain options; restrictions may be imposed by an Exchange
on opening transactions or closing transactions or both; trading halts,
suspensions or other restrictions may be imposed with respect to particular
classes or series of options or underlying securities; unusual or unforeseen
circumstances may interrupt normal operations on an Exchange; the facilities of
an Exchange or the Options Clearing Corporation may not at all times be adequate
to handle current trading volume; or one or more Exchanges could, for economic
or other reasons, decide or be compelled at some future date to discontinue the
trading of options (or a particular class or series of options), in which event
the secondary market on that Exchange (or in that class or series of options)
would cease to exist, although outstanding options that had been issued by the
Options Clearing Corporation as a result of trades on that Exchange would
continue to be exercisable in accordance with their terms.

SHORT SALES "AGAINST THE BOX." In a short sale, a Fund sells a
borrowed security and has a corresponding obligation to the lender to return the
identical security. Each Fund 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 Fund engages in a short sale, the
collateral for the short position will be maintained by the Fund's custodian or
a qualified sub-custodian. While the short sale is open, the Fund 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 Fund's long position. A
Fund 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 Fund (or a security convertible or exchangeable for such security), or when
the Fund wants to sell the security at an attractive current price, but also
wishes possibly to defer recognition of gain or loss for federal income tax
purposes. (A short sale against the box will defer recognition of gain for
federal income tax purposes only if the Fund subsequently closes the short
position by making a purchase of the relevant securities no later than 30 days
after the end of the taxable year.) In such case, any future losses in the
Fund's long position should be reduced by a gain in the short position.
Conversely, any gain in the

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<PAGE>

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 Fund owns. There will be certain
additional transaction costs associated with short sales against the box, but
the Fund will endeavor to offset these costs with the income from the investment
of the cash proceeds of short sales. The Funds do not presently intend to
invest more than 5% of net assets in short sales against the box.

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 Company 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. See
Appendix "A" for a list of commercial paper ratings.

SUPPLEMENTAL INVESTMENT POLICIES - BEA MUNICIPAL BOND FUND

Opinions relating to the validity of Municipal Obligations and to the
exemption of interest thereon from federal income tax are rendered by bond
counsel to the respective issuers at the time of issuance, and opinions relating
to the validity of and the tax-exempt status of payments received by the Fund
from tax-exempt derivative securities are rendered by counsel to the respective
sponsors of such securities. The Fund and the Adviser will rely on such
opinions and will not review independently the underlying proceedings relating
to the issuance of Municipal Obligations, the creation of any tax-exempt
derivative securities, or the basis for such opinions.

The Tax Reform Act of 1986 substantially revised provisions of prior
law affecting the issuance and use of proceeds of certain Municipal Obligations.
A new definition of private activity bonds applies to many types of bonds,
including those which were industrial development bonds under prior law.
Interest on private activity bonds issued after August 15, 1986 is tax-exempt
only if the bonds fall within certain defined categories of qualified private
activity bonds and meet the requirements specified in those respective
categories. In addition, interest on certain private activity bonds issued
after August 7, 1986 that is received by taxpayers subject to federal
alternative minimum tax is taxable. The Act has generally not

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<PAGE>

changed the tax treatment of bonds issued to finance governmental operations.
As used in this Statement of Additional Information, the term "private activity
bonds" also includes industrial development revenue bonds issued prior to the
effective date of the provisions of the Tax Reform Act of 1986. Investors
should also be aware of the possibility of state and local alternative minimum
or minimum income tax liability on interest from Alternative Minimum Tax
Securities.

Although the BEA Municipal Bond Fund may invest 25% or more of its net
assets in Municipal Obligations the interest on which is paid solely from
revenues of similar projects, and may invest up to 40% of its total assets in
private activity bonds when added together with any taxable investments held by
the BEA Municipal Bond Fund, it does not presently intend to do so unless in the
opinion of the Adviser the investment is warranted. To the extent the BEA
Municipal Bond Fund's assets are invested in Municipal Obligations payable from
the revenues of similar projects or are invested in private activity bonds, the
BEA Municipal Bond Fund will be subject to the peculiar risks presented by the
laws and economic conditions relating to such projects and bonds to a greater
extent than it would be if its assets were not so invested.

SUPPLEMENTAL INVESTMENT OBJECTIVES AND POLICIES --
BEA INTERNATIONAL EQUITY, BEA EMERGING MARKETS EQUITY,
BEA U.S. CORE EQUITY AND BEA BALANCED FUNDS

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 Fund 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

The Company has adopted the following fundamental investment
limitations which may not be changed without the affirmative vote of the holders
of a majority of the Fund's

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<PAGE>

outstanding Shares (as defined in Section 2(a)(42) of the 1940 Act). Each Fund
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 Fund; 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 Fund's total assets at the time of such
borrowing;

2. Issue any senior securities, except as permitted under the 1940
Act;

3. Act as an underwriter of securities within the meaning of the
Securities Act 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 Fund 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 Fund may deal in forward foreign exchange transactions 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. Purchase any securities which would cause 25% or more of the
value of the Fund's total assets at the time of purchase to be invested in
the securities of 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

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<PAGE>

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.

For purposes of Investment Limitation No. 1, collateral arrangements
with respect to, if applicable, the writing of options, futures contracts,
options on futures contracts, forward currency contracts and collateral
arrangements with respect to initial and variation margin are not deemed to be a
pledge of assets and neither such arrangements nor the purchase or sale of
futures or related options are deemed to be the issuance of a senior security
for purposes of Investment Limitation No. 2.

In addition to the fundamental investment limitations specified above,
a Fund may not:

1. Make investments for the purpose of exercising control or
management, but investments by a Fund in wholly-owned investment entities
created under the laws of certain countries will not be deemed the making
of investments for the purpose of exercising control or management;

2. Purchase securities on margin, except for short-term credits
necessary for clearance of portfolio transactions, and except that a Fund
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 Fund 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 Company, 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.

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<PAGE>

The policies set forth above are not fundamental and thus may be
changed by the Company's Board of Directors without a vote of the shareholders.

Except as required by the 1940 Act with respect to the borrowing of
money, if a percentage restriction is adhered to at the time of investment, a
later increase or decrease in percentage resulting from a change in market
values of portfolio securities or amount of total or net assets will not be
considered a violation of any of the foregoing restrictions.

Securities held by a Fund 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 1940 Act.

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 Fund'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

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<PAGE>

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 Funds' ability to repatriate investment income, capital or
the proceeds of sales of securities by foreign investors. The Funds 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 Funds of any restrictions on investments.

REPORTING STANDARDS. Most of the foreign securities held by the Funds
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 Fund 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 Fund'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 Fund. If the value of a foreign currency rises against the
U.S. dollar, the value of a Fund's assets denominated in that currency will
increase; conversely, if the value of a foreign currency declines against the
U.S. dollar, the value of a Fund'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 Funds may invest in these investment funds
and registered investment companies subject to the provisions of the 1940 Act.
If these Funds invest in such investment companies, they will each bear their
proportionate share of the costs incurred by such companies, including
investment advisory fees.

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<PAGE>

CLEARANCE AND SETTLEMENT PROCEDURES. Delays in clearance and
settlement could result in temporary periods when assets of a Fund are
uninvested and no return is earned thereon. The inability of a Fund to make
intended security purchases due to settlement problems could cause a Fund to
miss attractive investment opportunities. Inability to dispose of a portfolio
security due to settlement problems could result either in losses to a Fund due
to subsequent declines in the value of such portfolio security or, if a Fund 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 Fund 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 Fund 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 Fund would be subject.

LOWER-RATED OR NON-RATED CRITERIA FOR DEBT SECURITIES. The BEA
High Yield, BEA U.S. Core Fixed Income, BEA Strategic Global Fixed Income,
and the BEA Municipal Bond Funds have established no rating criteria for the
debt securities in which they 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 are greater than is the case with higher rated
securities. For example, during an economic downturn or a sustained period
of rising interest rates, issuers of high yield securities may be more likely
to experience financial stress, especially if such issuers are highly
leveraged. During such periods, such issuers may not have sufficient
revenues to meet their interest payment obligations. The issuer's ability to
service its debt obligations also may be adversely affected by specific
issuer developments, or the issuer's inability 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.

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<PAGE>

have to replace such called security with a lower yielding security, thus
decreasing the net investment income to a Fund and dividends to shareholders.

A Fund may have difficulty disposing of certain lower-rated securities
because there may be a thin trading market for such securities. The secondary
trading market for high yield securities is generally not as liquid as the
secondary market for higher rated securities. Reduced secondary market
liquidity may have an adverse impact on market price and a Fund's ability to
dispose of particular issues when necessary to meet a Fund'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 a
Fund's net asset value. In addition, a Fund 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.

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 Fund 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 Fund can meet redemption
requests. BEA will not necessarily dispose of a portfolio security when its
ratings have been changed.

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 Fund 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

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<PAGE>

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 Fund'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 Funds in a manner
that will minimize the exposure to such risks, there can be no assurance that
adverse political changes will not cause a Fund 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 Fund 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 Fund 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 Fund
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 Fund's
ability to dispose of particular issues when necessary to meet a Fund's
liquidity needs or in response to a specific economic event, such as a
deterioration in the creditworthiness of the issuer. The lack of a liquid
secondary market for certain securities also may make it more difficult for a
Fund to obtain accurate market quotations for purposes of valuing a Fund's
portfolio and calculating its net asset value. When and if available, fixed
income securities may be purchased by a Fund at a discount from face value.
However, a Fund 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 Fund may purchase securities
not paying interest at the time acquired if, in the opinion of the Adviser, such
securities have the potential for future income or capital appreciation.

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<PAGE>

DIRECTORS AND OFFICERS

The directors and executive officers of the Company, their ages,
business addresses and principal occupations during the past five years are:

Position Principal Occupation
Name, Address and Age with the Company During Past Five Years
- --------------------- ---------------- ----------------------

Arnold M. Reichman - 49* Director Senior Managing Director,
466 Lexington Avenue Chief Operating
New York, NY 10017 Officer and Assistant Secretary,
Warburg Pincus Asset Management,
Inc.; Director and Executive
Officer, Counsellors Securities
Inc; Director/Trustee of various
investment companies advised by
Warburg Pincus Asset Management,
Inc.

Robert Sablowsky - 58** Director Senior Vice President,
10 Wall Street Fahnestock Co., Inc. (a
New York, NY 10005 registered broker-dealer); prior
to October 1996, Executive Vice
President of Gruntal & Co., Inc.,
(a registered broker-dealer).

Francis J. McKay - 60 Director Since 1963, Executive
7701 Burholme Avenue Vice President, Fox Chase
Philadelphia, PA 19111 Cancer Center (biomedical
research and medical care.)

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

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<PAGE>

Position Principal Occupation
Name, Address and Age with the Company During Past Five Years
- --------------------- ---------------- ----------------------

President, Cellucap Mfg. Co.,
Inc. (manufacturer of disposable
headwear).

Julian A. Brodsky - 63 Director Director and Vice Chairman
Comcast Corporation since 1969, Comcast
1234 Market Street Corporation (cable television
16th Floor and communications); Director,
Philadelphia, PA 19107-3723 Comcast Cablevision of
Philadelphia (cable television
and communications) and Nextel
(wireless communications).

Donald van Roden - 72 Director and Self-employed businessman.
1200 Old Mill Lane Chairman of From February 1980 to March
Wyomissing, PA 19610 the Board 1987, Vice Chairman, Smith Kline
Beecham Corporation
(pharmaceuticals); Director, AAA
Mid-Atlantic (auto service);
Director, Keystone Insurance Co.

Edward J. Roach - 73 President and Certified Public Accountant;
Suite 100 Treasurer Vice Chairman of the Board,
Bellevue Park Fox Chase Cancer Center;
Corporate Center Trustee Emeritus,
400 Bellevue Parkway Pennsylvania School for the
Wilmington, DE 19809 Deaf; Trustee Emeritus,
Immaculata College; President
or Vice President and Treasurer
of various investment companies
advised by PNC Institutional
Management Corporation; Director,
the Bradford Funds, Inc.

Morgan R. Jones - 58 Secretary Chairman of the law firm of
Drinker Biddle & Reath LLP Drinker Biddle & Reath LLP;
1345 Chestnut Street Director, Rocking Horse Child
Philadelphia, PA 19107-3496 Care Centers of America, Inc.

_________________________

* Mr. Reichman is an "interested person" of the Company, as that term is
defined in the 1940 Act, by virtue of his positions with Counsellors
Securities Inc., the Company's distributor.

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<PAGE>

** Mr. Sablowsky is an "interested person" of the Company, as that term is
defined in the 1940 Act, by virtue of his position with Fahnestock Co.,
Inc., a registered 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 Company 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 Company 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 all persons to be nominated as directors of the Company.

The Company pays directors who are not "affiliated persons" (as that
term is defined in the 1940 Act) of any investment adviser or sub-adviser of
the Company or the Distributor and Mr. Sablowsky who is considered to be an
affiliated person, $12,000 annually and $1,000 per meeting of the Board or
any committee thereof that is not held in conjunction with a Board meeting.
In addition, the Chairman of the Board receives an additional $5,000 per year
for his services in this capacity. Such Directors are reimbursed for any
expenses incurred in attending meetings of the Board of Directors or any
committee thereof. For the year ended August 31, 1997, each of the following
members of the Board of Directors received compensation from the Company in
the following amounts:

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<PAGE>

DIRECTORS' COMPENSATION
Total
Pension or Compensation
Retirement from
Benefits Estimated Registrant
Aggregate Accrued as Annual and Fund
Compensation Part of Benefits Complex(1)
Name of Person/ from Fund Upon Paid to
Position Registrant Expenses Retirement Directors
- --------------- ------------ ------------ ---------- ------------

Julian A. Brodsky, $16,000 N/A N/A $16,000
Director

Francis J. McKay, $19,000 N/A N/A $19,000
Director

Arnold M. Reichman, -0- N/A N/A -0-
Director

Robert Sablowsky, $ 8,000 N/A N/A $ 8,000
Director

Marvin E. Sternberg, $19,000 N/A N/A $19,000
Director

Donald van Roden, $24,000 N/A N/A $24,000
Director and
Chairman

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

1 A Fund Complex means two or more investment companies that hold themselves
out to investors as related companies for purposes of investment and
investor services, or have a common investment adviser or have an
investment adviser that is an affiliated person of the investment adviser
of any other investment companies.

On October 24, 1990 the Company adopted, as a participating employer,
the Fund Office Retirement Profit-Sharing Plan and Trust Agreement, a retirement
plan for employees (currently Edward J. Roach and one other employee) pursuant
to which the Company will contribute on a quarterly basis amounts equal to 10%
of the quarterly compensation of each eligible employee. By virtue of the
services performed by the Company's advisers, custodians, administrators and
distributor, the Company itself requires only two part-time employees. Drinker
Biddle & Reath LLP, of which Mr. Jones is a partner, receives legal fees as
counsel to the Company. No officer, director or employee of BEA

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<PAGE>

or the Distributor currently receives any compensation from the Company.

INVESTMENT ADVISORY AND SERVICING ARRANGEMENTS

ADVISORY AGREEMENTS. BEA Associates (sometimes referred to as the
"Adviser") renders advisory and administrative services to each of the Funds
pursuant to Investment Advisory Agreements. The Advisory Agreements relating to
the Funds are dated September 16, 1992 for the BEA International Equity, the BEA
Emerging Markets Equity and the BEA High Yield Funds, dated August 31, 1993 for
the BEA U.S. Core Equity, the BEA U.S. Core Fixed Income, the BEA Strategic
Global Fixed Income and BEA Municipal Bond Funds, and dated November 17, 1994
for the BEA Balanced and the BEA Short Duration Funds. Such advisory agreements
are hereinafter collectively referred to as the "Advisory Agreements."

BEA Associates is a diversified investment adviser, managing global
equity, 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, 1997, BEA Associates managed approximately $34.6 billion in
assets. BEA is a wholly-owned subsidiary of Credit Suisse, the second
largest Swiss bank, which in turn is a subsidiary of CS Holding, a Swiss
corporation. Active employees of BEA have a long-term equity incentive plan.
BEA Associates is a registered investment advisor under the Investment
Advisors Act of 1940, as amended.

As an investment adviser, BEA emphasizes a global investment
strategy. BEA currently acts as investment adviser for eleven other
investment companies registered under the 1940 Act. They are: BEA Strategic
Global Income Fund, Inc., BEA Income Fund, Inc., 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 twelve other
registered investment companies: Frank Russell Investment Company (Fixed
Income III Fund and Multi-strategy Bond Fund), Oppenheimer (LifeSpan Balanced
Fund, LifeSpan Income Fund and LifeSpan Growth Fund), Panorama (LifeSpan
Balanced Account, LifeSpan Capital Appreciation Account and LifeSpan
Diversified Income Account), SEI Institutional Managed Trust (High Yield Bond
Fund), WNL Series Trust (BEA Growth and Income Fund), Touchstone
International Equity Fund and Touchstone Variable Annuity International
Equity Fund.

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<PAGE>

BEA Associates has sole investment discretion for the Funds and will
make all decisions affecting assets in the Funds under the supervision of the
Company's Board of Directors and in accordance with each Fund's stated policies.
BEA Associates will select investments for the Funds and will place purchase and
sale orders on behalf of the Funds. For its services to the BEA International
Equity, the BEA Emerging Markets Equity, the BEA U.S. Core Equity, the BEA U.S.
Core Fixed Income, the BEA Strategic Global Fixed Income, the BEA High Yield,
the BEA Municipal Bond Fund, the BEA Balanced and the BEA Short Duration Funds,
BEA Associates will be paid (before any voluntary waivers or reimbursements) a
monthly fee computed at an annual rate of .80%, 1.00%, .75%, .375%, .50%, .70%,
.70%, .60% and .15% of average daily net assets, respectively.

For the fiscal year ended August 31, 1997 the Funds paid BEA advisory
fees and BEA waived fees and/or reimbursed expenses of the Funds as follows:

Fees Paid
Portfolio (after waivers) Waivers Reimbursements
- --------- --------------- ------- --------------

International Equity $5,300,316 $0 $0
Emerging Markets $ 988,002 $18,498 $0
Equity
U.S. Core Equity $ 537,237 $27,626 $0
Balanced N/A N/A N/A
U.S. Core Fixed $ 357,196 $ 177,539 $0
Income
Strategic Global $ 180,945 $ 27,305 $0
Fixed Income
High Yield $ 393,841 $ 233,336 $0
Municipal Bond $ 91,093 $ 44,791 $0
Short Duration N/A N/A N/A

For the fiscal year ended August 31, 1996, the Funds paid BEA advisory
fees and BEA waived fees and/or reimbursed expenses of the Funds as follows:

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<PAGE>

Fees Paid
Portfolio (after waivers) Waivers Reimbursements
- --------- --------------- ------- --------------

International $5,993,072 $ 0 $ 0
Equity
Emerging Markets $1,289,739 $ 0 $ 0
Equity
U.S. Core Equity $234,890 $93,430 $ 0
Balanced N/A N/A N/A
U.S. Core Fixed $316,147 $134,639 $ 0
Income
Strategic Global $103,144 $53,915 $ 0
Fixed Income
High Yield $542,590 $100,763 $ 0
Municipal Bond $92,994 $68,790 $ 0
Short Duration N/A N/A N/A

For the fiscal year ended August 31, 1995, the Funds paid BEA advisory
fees and BEA waived fees and/or reimbursed expenses of the Funds as follows:

Fees Paid
Portfolio (after waivers) Waivers Reimbursements
- --------- --------------- ------- --------------

International Equity $6,012,837 $ 0 $ 0
Emerging Markets $1,250,012 $33,702 $ 0
Equity
U.S. Core Equity $77,156 $88,725 $ 0
Balanced N/A N/A N/A
U.S. Core Fixed $133,139 $121,336 $ 0
Income
Strategic Global $18,914 $68,558 $ 0
Fixed Income
High Yield $1,002,002 $ 0 $ 0
Municipal Bond $295,376 $38,740 $ 0
Short Duration N/A N/A N/A

Each class of the Fund bears all of its own expenses not
specifically assumed by the Adviser. General expenses of the Company not
readily identifiable as belonging to a Fund of the Company are allocated
among all investment funds by or under the direction of the Company's Board
of Directors in such manner as the Board determines fair and equitable. The
BEA Institutional Class of the Funds pays its own administration fees, and
may pay a different share than the other classes of the Funds of other
expenses (excluding advisory and custodial fees) if those expenses are
actually incurred in a different amount by the Institutional Class or if it
receives different services.

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<PAGE>

Under the Advisory Agreements, BEA Associates will not be liable for
any error of judgment or mistake of law or for any loss suffered by the Company
or a Fund in connection with the performance of the Advisory Agreements, 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
Agreements.

The Advisory Agreements were reapproved on July 10, 1996, by vote of
the Company's Board of Directors, including a majority of those directors who
are not parties to the Advisory Agreements or interested persons (as defined in
the 1940 Act) of such parties. The Advisory Agreements were approved by each
Fund's initial shareholder. Each Advisory Agreement is terminable by vote of
the Company's Board of Directors or by the holders of a majority of the
outstanding voting securities of the relevant Fund, at any time without penalty,
on 60 days' written notice to BEA Associates. Each of the Advisory Agreements
may also be terminated by BEA Associates on 60 days' written notice to the
Company. Each of the Advisory Agreements terminates automatically in the event
of assignment thereof.

CUSTODIAN AND TRANSFER AGENCY AGREEMENTS. Brown Brothers Harriman &
Co. ("BBH") acts as the custodian for the Funds and also acts as the
custodian for the Funds' 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 Fund, (b) holds
and transfers Portfolio securities on account of each Fund, (c) accepts
receipts and makes disbursements of money on behalf of each Fund, (d)
collects and receives all income and other payments and distributions on
account of each Fund's portfolio securities, and (e) makes periodic reports
to the Company's Board of Directors concerning each Fund's operations. BBH
is authorized to select one or more banks or trust companies to serve as
sub-custodian on behalf of the Company, provided that BBH remains responsible
for the performance of all its duties under the Custodian Agreement and
holds the Company harmless from the negligent acts and omissions of any
sub-custodian. For its services to the Company under the Custodian
Agreement, BBH receives a fee which is calculated based upon each Fund's
average daily gross assets, exclusive of transaction charges and
out-of-pocket expenses, which are also charged to the Company.

State Street Bank and Trust Company ("State Street") serves as the
transfer agent for the Funds. It has delegated to Boston Financial Data
Services, Inc. ("BFDS"), a 50%- owned

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<PAGE>

subsidiary, responsibility for most transfer agent servicing functions. State
Street serves as the transfer and dividend disbursing agent for the Funds
pursuant to a Transfer Agency Agreement, as supplemented (collectively, the
"Transfer Agency Agreement"), under which it (a) issues and redeems shares of
each of the Funds, (b) addresses and mails all communications by each Fund to
record owners of shares of each such Fund, 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 Company's Board of Directors concerning
the operations of each Fund. For its services to the Company under the Transfer
Agency Agreement, State Street receives a fee on a per transaction basis.

ADMINISTRATION AND ACCOUNTING SERVICES AND ADMINISTRATIVE SERVICES
AGREEMENTS. PFPC Inc. ("PFPC"), an indirect, wholly-owned subsidiary of PNC
Bank Corp., serves as the administrator to the BEA Institutional Funds
pursuant to Administration and Accounting Services Agreements (the
"Administration and Accounting Services Agreements") which were reapproved by
the Board of Directors of the Company on July 9, 1997. PFPC has agreed to
furnish to the BEA Institutional Funds portfolio statistical and research
data, clerical, accounting, and bookkeeping services and certain other
services required by the Funds. PFPC has also agreed to prepare and file
various reports with the appropriate regulatory agencies, and prepare
materials required by the SEC or any state securities commission having
jurisdiction over the Funds.

The Administration and Accounting Services Agreements provide that
PFPC shall not be liable for any loss suffered by the Company in connection
with the performance of services under the Administration and Accounting
Services Agreements, except a loss resulting from willful misfeasance, gross
negligence or reckless disregard of its duties and obligations under the
Administrative and Accounting Services Agreements. In consideration for the
services provided under the Administration and Accounting Services
Agreements, PFPC receives a fee calculated at an annual rate of .125% of the
average daily net assets of the Institutional Class of each Fund.

For the fiscal year ended August, 31, 1997, the Funds paid PFPC
administration fees and PFPC waived fees and/or reimbursed expenses as follows:

Fees Paid
(after
Portfolio waivers) Waivers Reimbursements
- --------- --------- ------- --------------

International Equity $785,014 $43,161 $ 0
Emerging Markets Equity $125,801 $ 12 $ 0
U.S. Core Equity $ 94,144 $ 0 $ 0

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<PAGE>

Balanced N/A N/A N/A
U.S. Core Fixed Income $159,177 $19,068 $ 0
Strategic Global Fixed $ 41,650 $10,412 $ 0
Income
High Yield $ 89,597 $22,399 $ 0
Municipal Bond $ 24,265 $ 0 $ 0
Short Duration N/A N/A N/A

For the fiscal year ended August, 31, 1996, the Funds paid PFPC
administration fees and PFPC waived fees and/or reimbursed expenses as follows:

Fees Paid
(after
Portfolio waivers) Waivers Reimbursements
- --------- --------- ------- --------------

International Equity $931,214 $ 5,204 $ 0
Emerging Markets Equity $152,709 $ 8,509 $ 0
U.S. Core Equity $ 54,720 $ 0 $ 0
Balanced N/A N/A N/A
U.S. Core Fixed Income $102,178 $48,084 $ 0
Strategic Global Fixed
Income $ 31,412 $ 7,853 $ 0
High Yield $102,402 $12,483 $ 0
Municipal Bond $ 28,890 $ 0 $ 0
Short Duration N/A N/A N/A

For the fiscal year ended August, 31, 1995, the Funds paid PFPC
administration fees and PFPC waived fees and/or reimbursed expenses as follows:

Fees Paid
(after
Portfolio waivers) Waivers Reimbursements
- --------- --------- ------- --------------

International Equity $908,172 $31,334 $ 0
Emerging Markets Equity $147,367 $13,100 $ 0
U.S. Core Equity $ 27,647 $ 0 $ 0
Balanced N/A N/A N/A
U.S. Core Fixed Income $ 57,681 $27,144 $ 0
Strategic Global Fixed
Income $ 17,494 $ 4,374 $ 0
High Yield $173,244 $ 6,060 $ 0
Municipal Bond $ 59,664 $ 0 $ 0
Short Duration N/A N/A N/A

Counsellors Fund Services, Inc. ("Counsellors") provides certain
administrative services to the Institutional Class of each of the Funds that are
not provided by PFPC, pursuant to an Agreement dated October 26, 1994 (the
"Administrative Services Agreement"). Such services are provided

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<PAGE>

subject to the supervision and direction of the Board of Directors of the
Company.

The Administrative Services Agreement provides that Counsellors shall
not be liable for any error of judgment or mistake of law or any loss suffered
by the Funds in connection with the performance of services under the Agreement,
except a loss resulting from willful misfeasance, gross negligence or reckless
disregard of its duties and obligations thereunder.

As compensation for its services to the Institutional Class of the
Funds under the Administrative Services Agreement, Counsellors receives a
monthly fee for the previous month calculated at the rate of .15% of the average
daily net assets of the Institutional Class of each of the Funds.

For the fiscal year ended August, 31, 1997, the Funds paid Counsellors
administration fees and Counsellors waived fees and/or reimbursed expenses as
follows:

Fees Paid
(after
Portfolio waivers) Waivers Reimbursements
- --------- --------- ------- --------------

International Equity $463,778 $530,031 $0
Emerging Markets Equity $ 30,195 $120,780 $0
U.S. Core Equity $ 7,532 $105,441 $0
Balanced N/A N/A N/A
U.S. Core Fixed Income $ 14,258 $199,636 $0
Strategic Global Fixed $ 4,165 $ 58,310 $0
Income $ 8,959 $125,436 $0
High Yield $ 1,941 $ 27,177 $0
Municipal Bond
Short Duration N/A N/A N/A

For the fiscal year ended August, 31, 1996, the Funds paid Counsellors
administration fees and Counsellors waived fees and/or reimbursed expenses as
follows:

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<PAGE>

Fees Paid
(after
Portfolio waivers) Waivers Reimbursements
- --------- --------- ------- --------------

International Equity $928,754 $194,947 $0
Emerging Markets Equity $ 32,335 $161,461 $0
U.S. Core Equity $ 12,019 $ 53,645 $0
Balanced N/A N/A N/A
U.S. Core Fixed Income $ 23,392 $180,314 $0
Strategic Global Fixed
Income $ 6,880 $ 40,238 $0
High Yield $ 44,362 $ 93,499 $0
Municipal Bond $ 7,328 $ 27,340 $0
Short Duration N/A N/A N/A

For the fiscal year ended August, 31, 1995, the Funds paid Counsellors
administration fees and Counsellors waived fees and/or reimbursed expenses as
follows:

Fees Paid
(after
Portfolio waivers) Waivers Reimbursements
- --------- --------- ------- --------------

International Equity $1,045,701 $ 81,620 $0
Emerging Markets Equity $ 98,236 $ 94,321 $0
U.S. Core Equity $ 8,847 $ 24,329 $0
Balanced N/A N/A N/A
U.S. Core Fixed Income $ 16,965 $ 84,825 $0
Strategic Global Fixed
Income $ 2,752 $ 23,490 $0
High Yield $ 112,603 $102,112 $0
Municipal Bond $ 19,092 $ 52,504 $0
Short Duration N/A N/A N/A

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 Funds. In executing portfolio
transactions, BEA Associates seeks to obtain the best net results for a Fund,
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.

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<PAGE>

Portfolio transactions for the Funds may be effected on domestic or
foreign securities exchanges. In transactions for securities not actively
traded on a domestic or foreign securities exchange, a Fund will deal directly
with the dealers who make a market in the securities involved, except in those
circumstances where better prices and execution are available elsewhere. Such
dealers usually are acting as principal for their own account. On occasion,
securities may be purchased directly from the issuer. Such portfolio securities
are generally traded on a net basis and do not normally involve brokerage
commissions. Securities firms may receive brokerage commissions on certain
portfolio transactions, including options, futures and options on futures
transactions and the purchase and sale of underlying securities upon exercise of
options. The Funds have no obligation to deal with any broker in the execution
of transactions in portfolio securities. The Funds may use affiliates of Credit
Suisse, BEA's parent company, 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 commission paid by
the Funds 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 Fund will normally deal with the principal market makers unless it can
obtain better terms elsewhere.

For the fiscal year ended August 31, 1997, the Funds paid brokerage
commissions as follows:

Fund Brokerage Commission
- ---- --------------------

International Equity $5,041,204
Emerging Markets Equity $1,074,701
U.S. Core Equity $ 181,354
U.S. Core Fixed Income $ 0
Strategic Global Fixed Income $ 0
High Yield $ 0
Municipal Bond $ 0

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<PAGE>

For the fiscal year ended August 31, 1996, the Funds paid brokerage
commissions as follows:

Fund Brokerage Commission
- ---- --------------------

International Equity $3,385,421
Emerging Markets Equity $ 713,193
U.S. Core Equity $ 182,796
U.S. Core Fixed Income $ 0
Strategic Global Fixed Income $ 0
High Yield $ 0
Municipal Bond $ 0

For the fiscal year ended August 31, 1995, the Funds paid brokerage
commissions as follows:

Fund Brokerage Commission
- ---- --------------------

International Equity $3,943,441
Emerging Markets Equity $ 778,886
U.S. Core Equity $ 110,474
U.S. Core Fixed Income $ 0
Strategic Global Fixed Income $ 0
High Yield $ 0
Municipal Bond $ 0

No Fund 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 Fund 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 Fund 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 its 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 Fund and its other clients and that the
total commissions paid by a Fund will be reasonable in relation to the benefits
to a Fund over the long-term.

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<PAGE>

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 Fund 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 Fund's anticipated need for liquidity makes
such action desirable. Any such repurchase prior to maturity reduces the
possibility that a Fund 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 Fund and for other investment accounts
managed by BEA Associates are made independently of each other in 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 Fund is concerned, in other cases it is
believed to be beneficial to a Fund. A Fund 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 Company's Board
of Directors pursuant to Rule 10f-3 under the 1940 Act.

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.

The BEA Short Duration Fund expects that its annual portfolio turnover
rate will not exceed 100% under normal market conditions. The BEA Balanced Fund
expects that its annual portfolio turnover rate will not exceed 100% under
normal market conditions for the equity portion and 100% for the fixed income
portion. A high rate of portfolio turnover (100% or more) involves
correspondingly greater brokerage commission expenses and other transaction
costs, which must be borne directly by a

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<PAGE>

Fund. Each of the Funds 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 Fund'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 Fund during the year.

The Funds have the benefit of an exemptive order issued by the SEC
under the 1940 Act authorizing the Funds and other investment companies advised
by BEA to acquire jointly securities issued in private placements, subject to
the terms and conditions of the order.

PURCHASES AND REDEMPTION INFORMATION

The Company reserves the right, if conditions exist which make cash
payments undesirable, to honor any request for redemption of a Fund's shares by
making payment in whole or in part in securities chosen by the Company and
valued in the same way as they would be valued for purposes of computing a
Fund's net asset value. If payment is made in securities, a shareholder may
incur transaction costs in converting these securities into cash. Investors may
also be required to bear certain transaction costs associated with redemptions
in kind. The Company has elected, however, to be governed by Rule 18f-1 under
the 1940 Act so that a Fund 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 Fund.

Under the 1940 Act, a Fund 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 Fund securities is not
reasonably practicable, or for such other periods as the SEC may permit. (A Fund
may also suspend or postpone the recordation of the transfer of its shares upon
the occurrence of any of the foregoing conditions.)

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<PAGE>

An illustration of the computation of the public offering price per
Institutional Share of the Funds, based on the value of the Funds' net assets as
of August 31, 1997 is as follows:

International Emerging Markets U.S. Core
Equity Equity Equity
------------- ---------------- ------
<S> <C> <C> <C>

Net Assets . . . . . . . . . . . . $568,510,409 $83,012,386 $86,181,741

Outstanding Shares . . . . . . . . 25,586,459 4,227,236 3,532,014

Net Asset Value Per Share . . . . $22.22 $19.64 $24.40

Maximum Sales Charge . . . . . . . N/A N/A N/A

Offering to Public . . . . . . . . $22.22 $19.64 $24.40

U.S. Core Strategic Global
Fixed Income Fixed Income
------------ ----------------

Net Assets . . . . . . . . . . . . $177,218,582 $44,285,401

Outstanding Shares . . . . . . . . 11,321,399 2,873,591

Net Asset Value Per Share. . . . . $15.65 $15.41

Maximum Sales Charge . . . . . . . N/A N/A

Offering to Public . . . . . . . . $15.65 $15.41

High Yield Municipal Bond
------------ ----------------

Net Assets . . . . . . . . . . . . $92,630,437 $19,810,118

Outstanding Shares . . . . . . . . 5,422,963 1,334,939

Net Asset Value Per Share. . . . . $17.08 $14.84

Maximum Sales Charge . . . . . . . N/A N/A

Offering to Public . . . . . . . . $17.08 $14.84

</TABLE>

VALUATION OF SHARES

The net asset values per share of each class of the Funds are
calculated separately from each other class as of the close of regular trading
of the NYSE on each Business Day. The net

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<PAGE>

asset value per share, the value of an individual share in a Fund, is computed
by adding the value of the proportionate interest of each class of a Fund in the
Fund's securities, cash and other assets, subtracting the actual and accrued
liabilities of the class and dividing the result by the number of outstanding
shares of such class. "Business Day" means each weekday when the NYSE is open.
Currently, the NYSE is closed on New Year's Day, Dr. Martin Luther King Jr.,
Day, Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving Day and Christmas Day and the preceding Friday or subsequent Monday
when one of these holidays falls on a Saturday or Sunday. 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. Fund
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
Fund is determined only on Business Days, the net asset value of shares of a
Fund may be significantly affected on days when an investor does not have access
to the Fund. 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 the close of regular trading (generally 4:00
p.m. Eastern Time); 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 Company'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.

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<PAGE>

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 Fund 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 Company 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 Company's books at their face value. Other assets, if any, are
valued at fair value as determined in good faith by the Company's Board of
Directors.

PERFORMANCE AND YIELD INFORMATION

TOTAL RETURN. Each Fund that advertises its "average annual total
return" computes such return separately for each class of shares by determining
the average annual compounded rate of return during specified periods that
equates the initial amount invested to the ending redeemable value of such
investment according to the following formula:

ERV l/n
T = [(-----) - 1]
P

Where: T = average annual total return;

ERV = ending redeemable value of a hypothetical $1,000
payment made at the beginning of the l, 5 or 10 year
(or other) periods at the end of the applicable period
(or a fractional portion thereof);

P = hypothetical initial payment of $1,000; and

n = period covered by the computation, expressed in years.

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<PAGE>

Each Fund that advertises its "aggregate total return" computes
such returns separately for each class of shares by determining the aggregate
compounded rates of return during specified periods that likewise equate the
initial amount invested to the ending redeemable value of such investment. The
formula for calculating aggregate total return is as follows:

ERV
Aggregate Total Return = [(-----) - l]
P

The calculations are made assuming that (1) all dividends and
capital gain distributions are reinvested on the reinvestment dates at the price
per share existing on the reinvestment date, (2) all recurring fees charged to
all shareholder accounts are included, and (3) for any account fees that vary
with the size of the account, a mean (or median) account size in the Fund during
the periods is reflected. The ending redeemable value (variable "ERV" in the
formula) is determined by assuming complete redemption of the hypothetical
investment after deduction of all nonrecurring charges at the end of the
measuring period.

Calculated according to the foregoing the average annual total
return of the Institutional Class of the Funds for the period ended August 31,
1997 is as follows:

Since
3 year 5 year Inception
Portfolio 1 year (ann.) (ann.) ann.*
- --------- ------ ------ ------ ---------

International 15.93% 4.42% N/A 10.36%
Equity
Emerging Markets 8.31% (5.43)% N/A 7.77%
Equity
U.S. Core Equity 38.32% 24.88% N/A 24.86%
Balanced N/A N/A N/A N/A
U.S. Core Fixed 11.53% 9.08% N/A 7.97%
Income
Strategic Global 4.48% 8.25% N/A 7.76%
Fixed Income
High Yield 15.17% 11.75% N/A 11.17%
Municipal Bond 9.74% 6.76% N/A 6.44%
Short Duration N/A N/A N/A N/A

* Inception dates of the Institutional Class of the Funds are as follows:
International Equity (October 1, 1992); Emerging Markets Equity (February
1, 1993); U.S. Core Equity (September 1, 1994); U.S. Core Fixed Income
(April 1, 1994); Strategic Global

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Fixed Income (June 28, 1994); High Yield (March 31, 1993); and Municipal
Bond Fund (June 20, 1994).

The aggregate total return for the Institutional Class of the Funds
for the period ended August 31, 1997 since inception is as follows:

Portfolio Inception Date Aggregate Return
- --------- -------------- ----------------

International Equity 10/1/92 62.40%
Emerging Market Equity 2/1/93 40.94%
U.S. Core Equity 9/1/94 94.76%
Balanced N/A N/A
U.S. Core Fixed Income 4/1/94 30.01%
Strategic Global Fixed 6/28/94 26.84%
Income
High Yield 3/31/93 61.14%
Municipal Bond 6/20/94 22.18%
Short Duration N/A N/A

The Funds 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
Fund's performance with other measures of investment return. For example, in
comparing a Fund'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 Fund may calculate
its aggregate and/or average annual total return for the specified periods of
time by assuming the investment of $10,000 in Fund shares and assuming the
reinvestment of each dividend or other distribution at net asset value on the
reinvestment date. The Funds do not, for these purposes, deduct from the
initial value invested any amount representing sales charges. The Funds 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.

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YIELD. Certain Funds may advertise a 30-day (or one month) standard
yield as described in the Prospectus. Such yields are calculated separately for
each class of shares in each Fund in accordance with the method prescribed by
the SEC for mutual funds:

a - b 6
YIELD = 2[( - - - - +1 ) - 1]
cd

Where: a = dividends and interest earned by a Fund during the period;

b = expenses accrued for the period (net of reimbursements);

c = average daily number of shares outstanding during the
period, entitled to receive dividends; and

d = maximum offering price per share on the last day of the
period.

For the purpose of determining net investment income earned during the period
(variable "a" in the formula), dividend income on equity securities held by a
Fund is recognized by accruing 1/360 of the stated dividend rate of the security
each day that the security is in the Fund. Except as noted below, interest
earned on debt obligations held by a Fund is calculated by computing the yield
to maturity of each obligation based on the market value of the obligation
(including actual accrued interest) at the close of business on the last
business day of each month, or, with respect to obligations purchased during the
month, the purchase price (plus actual accrued interest) and dividing the result
by 360 and multiplying the quotient by the market value of the obligation
(including actual accrued interest) in order to determine the interest income on
the obligation for each day of the subsequent month that the obligation is held
by the Fund. For purposes of this calculation, it is assumed that each month
contains 30 days. The maturity of an obligation with a call provision is the
next call date on which the obligation reasonably may be expected to be called
or, if none, the maturity date. With respect to debt obligations purchased 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 value of such debt obligations. Expenses accrued
for the period (variable "b" in the formula) include all recurring fees charged
by a Fund to all shareholder accounts in proportion to the length of the base
period and the Fund's mean (or median) account size. Undeclared earned income
will be

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subtracted from the offering price per share (variable "d" in the formula).

With respect to receivables-backed obligations that are expected to be
subject to monthly payments of principal and interest ("pay-downs"), (i) gain or
loss attributable to actual monthly pay downs are accounted for as an increase
or decrease to interest income during the period, and (ii) each Fund may elect
either (a) to amortize the discount and premium on the remaining security, based
on the cost of the security, to the weighted average maturity date, if such
information is available, or to the remaining term of the security, if any, if
the weighted average date is not available or (b) not to amortize discount or
premium on the remaining security.

Based on the foregoing calculation the Standard Yield for the
Institutional Class of the Funds that advertise yield for the 30-day period
ended August 31, 1997 was as follows:

Fund 30-Day Yield
- ---- ------------

U.S. Core Fixed Income 6.37%
Strategic Global Fixed Income 6.04%
High Yield 9.55%
Municipal Bond 4.65%

TAXES

GENERAL TAX CONSEQUENCES TO THE COMPANY AND ITS SHAREHOLDERS. The
following is only a summary of certain additional tax considerations generally
affecting the Funds and their shareholders that are not described in the
Company's Prospectus. No attempt is made to present a detailed explanation of
the tax treatment of the Funds 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 Fund 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 Fund is exempt from
federal income tax on its net investment income and realized capital gains which
it distributes to shareholders, provided that it (a) distributes an amount equal
to the sum of (i) at least 90% of its investment company taxable income (net
taxable investment income and the excess of net short-term capital gain over net
long-term capital loss), if any, for the year and (ii) at least 90% of its net
tax-exempt interest income, if any, for the year (the "Distribution
Requirement"), and (b) satisfies certain other requirements of

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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 Fund
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").

Future Treasury regulations may provide that currency gains that are
not "directly related" to a Fund'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 Fund's assets
must consist of cash and cash items, U.S. Government securities, securities of
other regulated investment companies, and securities of other issuers (as to
which the Fund has not invested more than 5% of the value of its total assets in
securities of such issuer and as to which the Fund does not hold more than 10%
of the outstanding voting securities of such issuer), and no more than 25% of
the value of each Fund'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 Fund
controls and which are engaged in the same or similar trades or businesses (the
"Asset Diversification Requirement").

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<PAGE>

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 Company 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 Fund 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 mid-term or other long-term capital gain,
regardless of the length of time the shareholder has held his shares, whether
such gain was recognized by the Fund prior to the date on which a shareholder
acquired shares of the Fund and whether the distribution was paid in cash or
reinvested in shares. The aggregate amount of distributions designated by any
Fund as capital gain dividends may not exceed the net capital gain of such Fund
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 Company to shareholders not later than 60 days
after the close of each Fund's respective taxable year.

In the case of corporate shareholders, distributions (other than
capital gain dividends) of a Fund 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 Fund for the year. Generally, a
dividend will be treated as a "qualifying dividend" only if it has been received
from a domestic corporation. However, if a Fund 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

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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 Company
will designate the portion, if any, of the distribution made by a Fund that
qualifies for the dividends received deduction in a written notice mailed by the
Company to shareholders not later than 60 days after the close of the Fund's
taxable year.

Investors should be aware that any loss realized upon the sale,
exchange or redemption of shares held for six months or less will be treated as
a long-term capital loss to the extent any capital gain dividends have been paid
with respect to such shares.

The BEA Municipal Bond Fund is designed to provide investors with
current tax-exempt interest income. Exempt interest dividends distributed to
shareholders by this Fund are not included in the shareholder's gross income for
regular federal income tax purpose. In order for the Municipal Bond Fund to pay
exempt interest dividends during any taxable year, at the close of each fiscal
quarter at least 50% of the value of the Fund must consist of exempt interest
obligations.

In addition, the BEA Municipal Bond Fund may not be an appropriate
investment for entities which are "substantial users" of facilities financed by
private activity bonds or "related persons" thereof. "Substantial user" is
defined under U.S. Treasury Regulations to include a nonexempt person who
regularly uses a part of such facilities in his trade or business and (a) whose
gross revenues are more than 5% of the total revenue derived by all users of
such facilities, (b) who occupies more than 5% of the entire usable area of such
facilities, or (c) for whom such facilities or a part thereof were specifically
constructed, reconstructed or acquired. "Related persons" include certain
related natural persons, affiliated corporations, a partnership and its partners
and an S corporation and its shareholder.

A Fund may acquire standby commitments with respect to Municipal
Obligations held in its portfolio and will treat any interest received on
Municipal Obligations subject to such stand-by commitments as tax-exempt income.
In Rev. Rul. 82-144, 1982-2 C.B. 34, the Internal Revenue Service held that a
mutual fund acquired ownership of municipal obligations for federal income tax
purposes, even though the fund simultaneously purchased "put" agreements with
respect to the same municipal obligations from the seller of the obligations.
The Company will not engage in transactions involving the use of stand-by
commitments that differ materially from the transaction described in
Rev. Rul. 82-144 without first obtaining a private letter

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<PAGE>

ruling from the Internal Revenue Service or the opinion of counsel.

Interest on indebtedness incurred by a shareholder to purchase or
carry shares if the BEA Municipal Bond Fund is not deductible for income tax
purposes of (as expected) the BEA Municipal Bond Fund distributes exempt
interest dividends during the shareholder's taxable year. Receipt of exempt
interest dividends may result in collateral federal income tax consequences to
certain other taxpayers, including persons subject to alternative minimum tax
(see Prospectus and discussion below), financial institutions, property and
casualty insurance companies, individual recipients of Social Security or
Railroad Retirement benefits, and foreign corporations engaged in a trade or
business in the United States. Prospective investors should consult their own
tax advisers as to such consequences.

Corporate taxpayers may be liable for alternative minimum tax, which
is imposed at the rate of 20% of "alternative minimum taxable income" (less, in
the case of corporate shareholders with "alternative minimum taxable income" of
less than $310,000, the applicable "exemption amount"), in lieu of the regular
corporate income tax. "Alternative minimum taxable income," is equal to
"taxable income", (as determined for corporate income regular tax purposes) with
certain adjustments. Although corporate taxpayers in determining "alternative
minimum taxable income" are allowed to exclude exempt interest dividends (other
than exempt interest dividends derived from certain private activity bonds ("AMT
Preference Dividends"), as explained in the Prospectus) and to utilize the 70%
dividends received deduction at the first level of computation, the Code
requires (as a second computational step) that "alternative minimum taxable
income" be increased by 75% of the excess of "adjusted current earnings" over
other "alternative minimum taxable income."

Corporate shareholders will have to take into account (1) all exempt
interest dividends and (2) the full amount of all dividends from a Fund 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%.

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<PAGE>

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 Fund does not qualify as a regulated
investment company, all of its taxable income will be subject to tax at regular
corporate rates without any deduction for distributions to shareholders, and all
distributions will be taxable as ordinary dividends (including amounts derived
from interest on Municipal Obligations in the case of the BEA Municipal Bond
Fund) to the extent of such Fund's current and accumulated earnings 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 Fund will be disallowed to the extent an
investor repurchases shares of the same Fund 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 Fund 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 one-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 Fund intends to distribute all of
its taxable income currently, no Fund anticipates incurring any liability for
this excise tax. However, investors should note that a Fund may in certain
circumstances be required to liquidate investments in order to make sufficient
distributions to avoid excise tax liability.

The Company will be required in certain cases to withhold and remit to
the United States Treasury 31% of dividends paid to any shareholder (1) who has
provided either an incorrect tax identification number or no number at all, (2)
who is subject to backup withholding by the Internal Revenue Service for failure
to report the receipt of interest or dividend income properly, or (3) who has
failed to certify to the Company that he is not subject to backup withholding or
that he is an "exempt recipient."

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<PAGE>

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 Fund 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 Fund
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 Fund 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
Funds. The ability of the Funds 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 and the Asset Diversification Requirement.

STRADDLES. The options transactions that the Funds 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 Funds. In
addition, losses realized by the Funds 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
Funds 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 Funds must make in
order to avoid federal excise tax. Furthermore, in determining their investment
company taxable income and ordinary income, the Funds may be required to
capitalize, rather than deduct currently, any interest expense on indebtedness
incurred or continued to purchase or carry any positions that are part of a
straddle. The tax consequences to the Funds of holding straddle positions may
be further affected by various elections provided under the Code and Treasury

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regulations, but at the present time the Funds 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 Funds 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.

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 Funds 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 Funds, 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 Fund 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 Fund
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 Fund must make to avoid federal excise tax liability.

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Each of the Funds may elect not to have the year-end mark-to-market
rule apply to Section 1256 contracts that are part of a "mixed straddle" with
other investments of such Fund that are not Section 1256 contracts (the "Mixed
Straddle Election").

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 Fund 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 Fund 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 Fund may elect capital gain or loss treatment for such transactions.
Alternatively, a Fund 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 Fund's investment company taxable income available to
be distributed to shareholders as ordinary income, rather than increasing or
decreasing the amount of the Fund'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 Fund 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.

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shares, notwithstanding the distribution of such income to the shareholders of
such Fund. Additional charges in the nature of interest may also be imposed on
a Fund in respect of such deferred taxes. However, in lieu of sustaining the
foregoing tax consequences, a Fund may elect to have its investment in any PFIC
taxed as an investment in a "qualified electing fund" ("QEF"). A Fund 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 Fund for purposes of satisfying the Distribution Requirement and the excise
tax distribution requirement.

Recently enacted changes to the Code will permit a Fund to elect (in
lieu of paying deferred tax or making a QEF election) to mark-to-market annually
any PFIC shares that it owns and to include any gains (but not losses) that it
is deemed to realize as ordinary income. A Fund generally will not be subject
to deferred federal income tax on any gains that it is deemed to realize as a
consequence of making a mark-to-market election, but such gains will be taken
into account by the Fund for purposes of satisfying the Distribution Requirement
and the excise tax distribution requirement. The mark-to-market provisions will
generally apply to the Fund's taxable years beginning after December 31, 1997.

ASSET DIVERSIFICATION REQUIREMENT. For purposes of the Asset
Diversification Requirement, the issuer of a call option on a security
(including an option written on an exchange) will be deemed to be the issuer of
the underlying security. The Internal Revenue Service has informally ruled,
however, that a call option that is written by a fund need not be counted for
purposes of the Asset Diversification Requirement where the fund holds the
underlying security. However, the Internal Revenue Service has also informally
ruled that a put option written by a fund must be treated as a separate asset
and its value measured by "the value of the underlying security" for purposes of
the Asset Diversification Requirement, regardless (apparently) of whether it is
"covered" under the rules of the exchange. The Internal Revenue Service has not
explained whether in valuing a written put option in this manner a fund should
use the current value of the underlying security (its prospective future
investment); the cash consideration that must be paid by the fund if the put
option is exercised (its liability); or some other measure that would take into
account the fund's unrealized profit or loss in writing the option. Under the
Code, a fund may not rely on informal rulings of the Internal Revenue Service
issued to other taxpayers. Consequently, a Fund 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.

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ADDITIONAL INFORMATION CONCERNING THE COMPANY SHARES

The Company has authorized capital of thirty billion shares of
Common Stock, $.001 par value per share, of which 13.93 billion shares are
currently classified as follows: 100 million shares are classified as Class A
Common Stock, 100 million shares are classified as Class B Common Stock, 100
million shares are classified as Class C Common Stock, 100 million shares are
classified as Class D Common Stock, 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
(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
(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 (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, 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 (Strategic Global Fixed
Income), 50 million shares are classified as Class AA Common Stock (Municipal
Bond), 50 million shares are classified as Class BB Common Stock (BEA
Balanced), 50 million shares are classified as Class CC Common Stock (Short
Duration), 100 million shares are classified as Class DD Common Stock, 100
million shares are classified as Class EE Common Stock, 50 million shares are
classified as Class FF Common Stock (n/i Numeric Investors Micro Cap), 50
million shares are classified as Class GG Common Stock (n/i Numeric Investors
Growth), 50 million shares are classified as Class HH Common Stock (n/i
Numeric Investors Growth & Value), 100 million shares are classified as Class
II Common Stock (BEA Investor International), 100 million shares are
classified as Class JJ Common Stock (BEA Investor Emerging), 100 million
shares are classified as Class KK Common Stock (BEA Investor High Yield), 100
million shares are classified as Class LL Common Stock (BEA

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Investor Global Telecom), 100 million shares are classified as Class MM
Common Stock (BEA Advisor International), 100 million shares are classified
as Class NN Common Stock (BEA Advisor Emerging), 100 million shares are
classified as Class OO Common Stock (BEA Advisor High Yield), 100 million
shares are classified as Class PP Common Stock (BEA Advisor Global Telecom),
100 million shares are classified as Class QQ Common Stock (Boston Partners
Institutional Large Cap), 100 million shares are classified as Class RR
Common Stock (Boston Partners Investor Large Cap), 100 million shares are
classified as Class SS Common Stock (Boston Partners Advisor Large Cap), 100
million shares are classified as Class TT Common Stock (Boston Partners
Investor Mid Cap), 100 million shares are classified as Class UU Common Stock
(Boston Partners Institutional Mid Cap), 100 million shares are classified as
Class VV Common Stock (Boston Partners Institutional Bond), 100 million
shares are classified as Class WW Common Stock (Boston Partners Investor
Bond), 50 million are classified as Class XX Common Stock (n/i Numeric
Investors Larger Cap Value), 700 million shares are classified as Class
Janney Money Common Stock (Money), 200 million shares are classified as Class
Janney Municipal Money Common Stock (Municipal Money), 500 million shares are
classified as Class Janney Government Obligations Money Common Stock
(Government Money), 100 million shares are classified as Class Janney N.Y.
Municipal Money Common Stock (N.Y. Money), 1 million shares are classified as
Class Beta 1 Common Stock (Money), 1 million shares are classified as Class
Beta 2 Common Stock (Municipal Money), 1 million shares are classified as
Class Beta 3 Common Stock (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 (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
(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 (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 (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

-64-
<PAGE>

Common Stock (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
(Government Money), and 1 million shares are classified as Theta 4 Common
Stock (N.Y. Money). Shares of the Class T, U, V, X, Y, Z, AA, BB and CC
Common Stock constituted the BEA Institutional classes. Under the Company'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 fourteen separate
"families:" the Cash Preservation Family, the Sansom Street Family, the
Bedford Family, the BEA Family, the Janney Montgomery Scott Money Family, the
n/i Numeric Investors Family, the Boston Partners Family, the Beta Family,
the Gamma Family, the Delta Family, the Epsilon Family, the Zeta Family, the
Eta Family and the Theta Family. 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; the Bedford
Family represents interests in the Money Market, Municipal Money Market,
Government Obligations Money Market and New York Municipal Money Market
Portfolios; the BEA Family represents interests in ten non-money market
funds; 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 Funds. The n/i Numeric Investors Family
represents interests in four non-money market funds and the Boston Partners
Family represents interest in three non-money market funds.

The Company does not currently intend to hold annual meetings of
shareholders except as required by the 1940 Act or other applicable law. The
Company'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
Company 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 Company
will assist in shareholder communication in such matters.

-65-
<PAGE>

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 voting securities of an investment company
such as the Company 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 Fund. 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 and the election of directors are not subject to
the separate voting requirements and may be effectively acted upon by
shareholders of an investment company voting without regard to portfolio.

Notwithstanding any provision of Maryland law requiring a greater vote
of shares of the Company'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 Company's Articles of
Incorporation, the Company 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 Drinker Biddle & Reath LLP, 1345 Chestnut
Street, Philadelphia, Pennsylvania 19107-3496, serves as counsel to the Company
and the non-interested directors.

INDEPENDENT ACCOUNTANTS. Coopers & Lybrand L.L.P., 2400 Eleven Penn
Center, Philadelphia, Pennsylvania 19103, serves as the Company's independent
accountants.

CONTROL PERSONS. As of November 15, 1997, to the Company'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
Company indicated below. See "Additional Information Concerning the Company
Shares" above. The Company does not know whether such persons also beneficially
own such shares.

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<PAGE>

PORTFOLIO NAME AND ADDRESS PERCENT OWNED
--------- ---------------- -------------

Cash Preservation Money Jewish Family and Children's 44.2%
Market Portfolio Agency of Philadelphia
(Class G) Capital Campaign
Attn: S. Ramm
1610 Spruce Street
Philadelphia, PA 19103

Dominic and Barbara Pisciotta and 15.9%
Successors in Trust under the
Dominic and Barbara Pisciotta
Caring Trust
207 Woodmere Way
St. Charles, MO 63303

Cash Preservation Kenneth Farwell and Valerie 11.3%
Municipal Money Market Farwell JTTEN
Portfolio 3854 Sullivan
(Class H) St. Louis, MO 63107

Gary L. Lange and 32.6%
Susan D. Lange JTTEN
1354 Shady Knoll Ct.
Longwood, FL 32750

Andrew Diederich and 6.2%
Doris Diederich JTTEN
1003 Lindeman
Des Peres, MO 63131

Gwendolyn Haynes 5.2%
2757 Geyer
St. Louis, MO 63104

Savannah Thomas Trust 6.3%
200 Madison Ave.
Rock Hill, MD 63119

Sansom Street Money Wasner & Co. 32.6%
Market Portfolio FAO Paine Webber and Managed
(Class I) Assets Sundry Holdings
Attn: Joe Domizio
200 Stevens Drive
Lester, PA 19113

Saxon and Co. 65.5%
FBO Paine Webber
P.O. Box 7780 1888
Philadelphia, PA 19182

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<PAGE>

PORTFOLIO NAME AND ADDRESS PERCENT OWNED
--------- ---------------- -------------

BEA International Equity Blue Cross & Blue Shield of 6.10%
- Institutional Class Massachusetts Inc.
(Class T) Retirement Income Trust
100 Summer Street
Boston, MA 02110-2106

Credit Suisse Private Banking 6.89%
Dividend Reinvest Plan
c/o Credit Suisse PVT BKG
12 E. 49th Street, 40th Fl.
New York, NY 10017-1028

Indiana University Foundation 5.49%
Attn: Walter L. Koon, Jr.
P.O. Box 500
Bloomington, IN 47402-0500

Employees Ret. Plan Marshfield 5.31%
Clinic
1000 N. Oak Avenue
Marshfield, WI 54449

State Street Bank & Trust 5.06%
FBC Consumers Energy
DTD 3-1-1997
P.O. Box 1992
Boston, MA 02105-1992

BEA International Equity Bob & Co. 87.30%
Portfolio - Advisor P.O. Box 1809
Class (Class MM) Boston, MA 02105-1809

TRANSCORP 10.78%
FBO William E. Burns
P.O. Box 6535
Englewood, CO 80155-6535

BEA High Yield Portfolio Fidelity Investments Institutional 15.61%
- Institutional Class Operations Co. Inc. as Agent for
(Class U) Certain Employee Benefit Plan
100 Magellan Way #KWIC
Covington, KY 41015-1987

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<PAGE>

PORTFOLIO NAME AND ADDRESS PERCENT OWNED
--------- ---------------- -------------

Guenter Full Trust Michelin North 17.31%
America Inc.
Master Trust
P.O. Box 19001
Greenville, SC 29602-9001

C S First Boston Pension Fund 6.15%
Park Avenue Plaza, 34th Floor
Attn: Steve Medici
55 E. 52nd Street
New York, NY 10055-0002

Southdown Inc. Pension Plan 9.65%
MAC & Co.
Mutual Fund Operations
P.O. Box 3198
Pittsburgh, PA 31980

Edward J. Demske TTEE 5.42%
Miami University Foundation
202 Roudebush Hall
Oxford, OH 45056

BEA High Yield Portfolio Richard A. Wilson TTEE 10.81%
- Advisor Class E. Francis Wilson TTEE
(Class OO) The Wilson Family Trust
7612 March Avenue
West Hills, CA 91304-5232

Charles Schwab & Co. 88.82%
Special Custody Account for the
Exclusive Benefit of Customers
101 Montgomery St.
San Francisco, CA 94104-4122

BEA Emerging Markets Wachovia Bank North Carolina Trust 26.22%
Equity Portfolio - for Carolina Power & Light Co.
Institutional Class Supplemental Retirement Trust
(Class V) 301 N. Main Street
Winston-Salem, NC 27101-3819

Hall Family Foundation 38.21%
P.O. Box 419580
Kansas City, MO 64141-8400

Arkansas Public Employees 18.33%
Retirement System
124 W. Capitol Avenue
Little Rock, AR 72201-3704

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<PAGE>

PORTFOLIO NAME AND ADDRESS PERCENT OWNED
--------- ---------------- -------------

BEA Emerging Markets Charles Schwab & Co. 22.65%
Equity Portfolio - Special Custody Account for the
Advisor Class (Class NN) Exclusive Benefit of Customers
101 Montgomery Street
San Francisco, CA 94104-4175

Donald W. Allgood 72.66%
3106 Johannsen Dr.
Burlington, IA 52601-1541

BEA US Core Equity Patterson & Co. 43.71%
Portfolio - P.O. Box 7829
Institutional Class Philadelphia, PA 19101-7829

(Class X)
Credit Suisse Private Banking 13.51%
Dividend Reinvest Plan
c/o Credit Suisse PVT BKG
12 E. 49th Street, 40th Fl.
New York, NY 10017-1028

Fleet National Bank Trust 5.86%
Hospital St. Raphael Malpractice
Attn: 1958875020
P.O. Box 92800
Rochester, NY 14692-8900

Werner & Pfleiderer Pension 6.98%
Plan Employees
663 E. Crescent Avenue
Ramsey, NJ 07446-1220

Washington Hebrew Congregation 11.22%
3935 Macomb St. NW
Washington, DC 20016-3799

BEA US Core Fixed Income New England UFCW & Employers' 24.30%
Portfolio - Pension Fund Board of Trustees
Institutional Class 161 Forbes Road, Suite 201
(Class Y) Braintree, MA 02184-2606

Patterson & Co. 6.50%
P.O. Box 7829
Philadelphia, PA 19101-7829

-70-
<PAGE>

PORTFOLIO NAME AND ADDRESS PERCENT OWNED
--------- ---------------- -------------

MAC & Co 5.07%
Mutual Funds Operations
P.O. Box 3198
Pittsburgh, PA 15230-3198

Fidelity Investments Institutional 9.70%
Operations Co. Inc. (FIIOC) as
Agent for Credit Suisse First
Boston Employee's Savings PSP
100 Magellan Way #KWIC
Covington, KY 41015-1987

DCA Food Industries Inc. 8.95%
100 East Grand Avenue
Beloit, WI 53511-6255

State St. Bank & Trust TTE 6.57%
Fenway Holdings LLC Master Trust
P.O. Box 470
Boston, MA 02102-0470

The Valley Foundation 6.47%
c/o Enterprise Trust
16450 Los Gatos Boulevard
Suite 210
Los Gatos, CA 95032-5594

BEA Strategic Global Sunkist Master Trust 32.35%
Fixed Income Portfolio 14130 Riverside Drive
(Class Z) Sherman Oaks, CA 91423-2313

Patterson & Co. 23.13%
P.O. Box 7829
Philadelphia, PA 19101-7829

Key Trust Co. of Ohio 18.70%
FBO Eastern Enterp. Collective
Inv. Trust
P.O. Box 94870
Cleveland, OH 44101-4870

Hard & Co. 17.34%
Trust for Abtco Inc.
Retirement Plan
c/o Associated Bank, N.A.
100 W. Wisconsin Ave.
Neenah, WI 54956-3012

-71-
<PAGE>

PORTFOLIO NAME AND ADDRESS PERCENT OWNED
--------- ---------------- -------------

BEA Municipal Bond Fund William A. Marquard 39.48%
Portfolio (Class AA) 2199 Maysville Rd.
Carlisle, KY 40311-9716

Arnold Leon 13.16%
c/o Fiduciary Trust Company
P.O. Box 3199
Church Street Station
New York, NY 10008-3199

Irwin Bard 6.51%
1750 North East 183rd St. North
Miami Beach, FL 33179-4908

S. Finkelstein Family Fund 5.01%
1755 York Ave., Apt. 35 BC
New York, NY 10128-6827

BEA Global Tele- E. M. Warburg Pincus & Co. Inc. 17.48%
communications Portfolio 466 Lexington Ave.
- Advisor Class New York, NY 10017-3140
(Class PP)

Bea Associates 401K 11.82%
153 East 53rd Street
New York, NY 10022-4611

John B. Hurford 47.62%
153 E. 53rd St., Flr. 57
New York, NY 10022-4611

n/i Numeric Investors Charles Schwab & Co. Inc. 15.3%
Micro Cap Fund Special Custody Account for the
(Class FF) Exclusive Benefit of Customers
Attn: Mutual Funds
101 Montgomery Street
San Francisco, CA 94104

Public Inst. for Social Security 6.1%
1001 19th Street N, 16th Floor
Arlington, VA 22209

Portland General Corp. 13.7%
Invest Trust
DTD 01/29/90
Attn: William J. Valach
121 SW Salmon Street
Portland, OR 97202

-72-
<PAGE>

PORTFOLIO NAME AND ADDRESS PERCENT OWNED
--------- ---------------- -------------

State Street Bank and 7.0%
Trust Company
FBO Yale Univ Ret Pln for Staff
Emp
State Street Bank & Trust Co.
Master TR Div
Attn: Kevin Sutton
Solomon Williard Bldg. One
Enterprise Dr.
North Quincy, MA 02171

n/i Numeric Investors Charles Schwab & Co. Inc. 18.6%
Growth Fund Special Custody Account for the
(Class GG) Exclusive Benefit of Customers
Attn: Mutual Funds
101 Montgomery Street
San Francisco, CA 94104

U.S. Equity Investment Portfolio 6.5%
LP
c/o Asset Management Advisors Inc.
1001 N. US Hwy 1 STE 800
Jupiter, FL 33477

Portland General Corp. VEBA 5.7%
Plan
DTD 12/19/90
Attn: William Valach
121 SW Salmon Street
Portland, OR 97202

CitiBank FSB 18.9%
Sargent & Lundy Retirement Trust
C/O CitiCorp
Attn: D. Erwin Jr.
1410 N. West Shore Blvd.
Tampa, FL 33607

n/i Numeric Investors Charles Schwab & Co. Inc. 22.9%
Growth and Value Special Custody Account for the
Fund (Class HH) Exclusive Benefit of Customers
Attn: Mutual Funds
101 Montgomery Street
San Francisco, CA 94104

-73-
<PAGE>

PORTFOLIO NAME AND ADDRESS PERCENT OWNED
--------- ---------------- -------------

Chase Manhattan Bank 6.2%
Collins Group Trust I
840 Newport Center Dr.
Newport Beach, CA 92660

Boston Partners Large Dr. Janice B. Yost 26.2%
Cap Value Fund - Trust Mary Black Foundation Inc.
Institutional Class Bell Hill-945 E. Main St.
(Class QQ) Spartanburg, SC 29302

Saxon and Co. 12.4%
FBO UJF Equity Funds
P.O. Box 7780-1888
Philadelphia, PA 19182

Irving Fireman's Relief & Ret 8.1%
Fund
Lou Mayfield-Chairman
601 N. Beltline Ste. 20
Irving, TX 75061

John N. Brodson and 10.0%
Paul A. Ebert
Trst Amer Coll of Surg Staf
Mem Ret Plan
55 E. Erie Street
Chicago, IL 60611

Wells Fargo Bank 15.7%
Trst Stoel Rives
Tr 008125
P. O. Box 9800
Calabasas, CA 91308

Hawaiian Trust Company LTD 6.3%
Trst The Estate of James
Campbell
Pension Fund
P.O. Box 3170
Honolulu, HI 96802-3170

Shady Side Academy Endowment 11.0%
423 Fox Chapel Rd.
Pittsburgh, PA 15238

-74-
<PAGE>

PORTFOLIO NAME AND ADDRESS PERCENT OWNED
--------- ---------------- -------------

Boston Partners Large Fleet National Bank TTEE 7.7%
Cap Value Fund - Testa Hurwitz THIB
Investor Class FBO Scott Birnbaum
(Class RR) P.O. Box 92800
Rochester, NY 14692

National Financial Services 25.5%
Corp
For the Exclusive Benefit of
our Customers
Attn: Mutual Funds, 5th Floor
200 Liberty Street I World
Financial Center
New York, NY 10281

Joseph P. Scherer 10.3%
Rollover IRA
26 Embassy Ct
Cherry Hill, NJ 08002

Linda C. Brodson 7.3%
Trst Linda C. Brodson Trust
465 Lakeside Pl
Highland Park, IL 60035

John N. Brodson 7.3%
Trust John N. Brodson Trust
U/A DTD 08/06/87
465 Lakeside Pl
Highland Park, IL 60035

Charles Schwab & Co. Inc. 12.0%
Special Custody Account
for Bene of Cust
Attn: Mutual Funds
101 Montgomery Street
San Francisco, CA 94104

Mark R. Scott 6.1%
and Maryann Scott
JTTEN WROS
2543 Longmount Dr.
Wexford, PA 15090

Boston Partners Mid Cap National Financial SVCS Corp. 27.2%
Value Fund For Exclusive Bene of our
Investor Class Customers
(Class TT) Sal Vella
200 Liberty Street
New York, NY 10281

-75-
<PAGE>

PORTFOLIO NAME AND ADDRESS PERCENT OWNED
--------- ---------------- -------------

Charles Schwab & Co. Inc. 32.0%
Special Custody Account for
Bene of Cust
Attn: Mutual Funds
101 Montgomery St.
San Francisco, CA 94104

George B. Smithy, Jr. 13.0%
38 Greenwood Road
Wellesley, MA 02181

John N. Brodson 6.4%
Trst John N. Brodson Trust
U/A DTD 08/06/87
465 Lakeside Pl
Highland Park, IL 60035

Linda C. Brodson 6.4%
Trst Linda C. Brodson Trust
465 Lakeside Pl
Highland Park, IL 60035

Boston Partners Mid Cap Wells Fargo Bank Cust 5.4%
Value Fund FBO William W. Carter
Institutional Class IRA FIP 007430
(Class UU) P.O. Box 1389
San Carlos, CA 94070-1389

USNB of Oregon 77.2%
Cust Jean Vollum
Attn: Mutual Funds
P.O. Box 3168
Portland, OR 97208

As of the above date, directors and officers as a group owned less
than one percent of the shares of the Company.

FINANCIAL STATEMENTS

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<PAGE>

reference herein. The financial statements included in the 1997 Annual Report
have been audited by the Fund's independent accountants, Coopers & Lybrand
L.L.P. The reports of Coopers & Lybrand L.L.P. are incorporated herein by
reference. Such financial statements have been incorporated herein in reliance
upon such reports given upon their authority as experts in accounting and
auditing. Copies of the 1997 Annual Report may be obtained at no charge by
telephoning the Distributor at the telephone number appearing on the front page
of this Statement of Additional Information.

-77-

<PAGE>

APPENDIX A

COMMERCIAL PAPER RATINGS

A Standard & Poor's ("S&P") commercial paper rating is a current
assessment of the likelihood of timely payment of debt having an original
maturity of no more than 365 days. The following summarizes the rating
categories used by Standard and Poor's for commercial paper:

"A-1" - The highest category indicates that the degree of safety
regarding timely payment is strong. Those issues determined to possess
extremely strong safety characteristics are denoted with a plus sign (+)
designation.

"A-2" - Capacity for timely payment on issues with this designation is
satisfactory. However, the relative degree of safety is not as high as for
issues designated "A-1."

"A-3" - Issues carrying this designation have adequate capacity for
timely payment. They are, however, more vulnerable to the adverse effects of
changes in circumstances than obligations carrying the higher designations.

"B" - Issues are regarded as having only a speculative capacity for
timely payment.

"C" - This rating is assigned to short-term debt obligations with a
doubtful capacity for payment.

"D" - Issues are in payment default. The "D" rating category is used
when interest payments of principal payments are not made on the date due, even
if the applicable grace period has not expired, unless S&P believes such
payments will be made during such grace period.

Moody's commercial paper ratings are opinions of the ability of
issuers to repay punctually senior debt obligations not having an original
maturity in excess of one year, unless explicitly noted. The following
summarizes the rating categories used by Moody's for commercial paper:

A-1
<PAGE>

positions in well-established industries; high rates of return on funds
employed; conservative capitalization structure with moderate reliance on debt
and ample asset protection; broad margins in earnings coverage of fixed
financial charges and high internal cash generation; and well-established access
to a range of financial markets and assured sources of alternate liquidity.

"Prime-2" - Issuers (or supporting institutions) have a strong ability
for repayment of senior short-term debt obligations. This will normally be
evidenced by many of the characteristics cited above but to a lesser degree.
Earnings trends and coverage ratios, while sound, may be more subject to
variation. Capitalization characteristics, while still appropriate, may be more
affected by external conditions. Ample alternate liquidity is maintained.

"Prime-3" - Issuers (or supporting institutions) have an acceptable
ability for repayment of senior short-term debt obligations. The effects of
industry characteristics and market compositions may be more pronounced.
Variability in earnings and profitability may result in changes in the level of
debt protection measurements and may require relatively high financial leverage.
Adequate alternate liquidity is maintained.

"Not Prime" - Issuers do not fall within any of the Prime rating
categories.

The three rating categories of Duff & Phelps for investment grade
commercial paper and short-term debt are "D-1," "D-2" and "D-3." Duff & Phelps
employs three designations, "D-1+," "D-1" and "D-1-," within the highest rating
category. The following summarizes the rating categories used by Duff & Phelps
for commercial paper:

"D-1+" - Debt possesses highest certainty of timely payment.
Short-term liquidity, including internal operating factors and/or access to
alternative sources of funds, is outstanding, and safety is just below risk-free
U.S. Treasury short-term obligations.

"D-1" - Debt possesses very high certainty of timely payment.
Liquidity factors are excellent and supported by good fundamental protection
factors. Risk factors are minor.

"D-1-" - Debt possesses high certainty of timely payment. Liquidity
factors are strong and supported by good fundamental protection factors. Risk
factors are very small.

"D-2" - Debt possesses good certainty of timely payment. Liquidity
factors and company fundamentals are sound.

A-2
<PAGE>

Although ongoing funding needs may enlarge total financing requirements, access
to capital markets is good. Risk factors are small.

"D-3" - Debt possesses satisfactory liquidity and other protection
factors qualify issues as investment grade. Risk factors are larger and subject
to more variation. Nevertheless, timely payment is expected.

"D-4" - Debt possesses speculative investment characteristics.
Liquidity is not sufficient to ensure against disruption in debt service.
Operating factors and market access may be subject to a high degree of
variation.

"D-5" - Issuer has failed to meet scheduled principal and/or interest
payments.

Fitch short-term ratings apply to debt obligations that are payable on
demand or have original maturities of generally up to three years. The
following summarizes the rating categories used by Fitch for short-term
obligations:

"F-1+" - Securities possess exceptionally strong credit quality.
Issues assigned this rating are regarded as having the strongest degree of
assurance for timely payment.

"F-1" - Securities possess very strong credit quality. Issues
assigned this rating reflect an assurance of timely payment only slightly less
in degree than issues rated "F-1+."

"F-2" - Securities possess good credit quality. Issues assigned this
rating have a satisfactory degree of assurance for timely payment, but the
margin of safety is not as great as the "F-1+" and "F-1" ratings.

"F-3" - Securities possess fair credit quality. Issues assigned this
rating have characteristics suggesting that the degree of assurance for timely
payment is adequate; however, near-term adverse changes could cause these
securities to be rated below investment grade.

"F-S" - Securities possess weak credit quality. Issues assigned this
rating have characteristics suggesting a minimal degree of assurance for timely
payment and are vulnerable to near-term adverse changes in financial and
economic conditions.

"D" - Securities are in actual or imminent payment default.

A-3
<PAGE>

"LOC" - The symbol "LOC" indicates that the rating is based on a
letter of credit issued by a commercial bank.

Thomson BankWatch short-term ratings assess the likelihood of an
untimely payment of principal and interest of debt instruments with original
maturities of one year or less. The following summarizes the ratings used by
Thomson BankWatch:

"TBW-1" - This designation represents Thomson BankWatch's highest
category and indicates a very high likelihood that principal and interest will
be paid on a timely basis.

"TBW-2" - This designation represents Thomson BankWatch's
second-highest category and indicates that while the degree of safety regarding
timely repayment of principal and interest is strong, the relative degree of
safety is not as high as for issues rated "TBW-1."

"TBW-3" - This designation represents Thomson BankWatch's lowest
investment-grade category and indicates that while the obligation is more
susceptible to adverse developments (both internal and external) than those
with higher ratings, the capacity to service principal and interest in a
timely fashion is considered adequate.

"TBW-4" - This designation represents Thomson BankWatch's lowest
rating category and indicates that the obligation is regarded as non-investment
grade and therefore speculative.

IBCA assesses the investment quality of unsecured debt with an
original maturity of less than one year which is issued by bank holding
companies and their principal bank subsidiaries. The following summarizes the
rating categories used by IBCA for short-term debt ratings:

"A1" - Obligations are supported by the highest capacity for timely
repayment. Where issues possess a particularly strong credit feature, a rating
of "A1+" is assigned.

"A2" - Obligations are supported by a satisfactory capacity for timely
repayment although such capacity may be susceptible to adverse changes in
business, economic or financial conditions.

"A3" - Obligations are supported by an adequate capacity for timely
repayment such capacity is more susceptible

A-4
<PAGE>

to adverse changes in business, economic, or financial conditions than for
obligations in higher categories.

"B" - Obligations for which the capacity for timely repayment is
susceptible to adverse changes in business, economic, or financial conditions.

"C" - Obligations for which there is a high risk of default or which
are currently in default.

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. The obligor's capacity to meet its financial commitment on
the obligation is extremely strong.

"AA" - An obligation rated "AA" differs from the highest rated
obligations only in small degree. The obligor's capacity to meet its financial
commitment on the obligation is very strong.

"A" - An obligation rated "A" is somewhat more susceptible to the
adverse effects of changes in circumstances and economic conditions than
obligations in higher rated categories. However, the obligor's capacity to meet
its financial commitment on the obligation is still strong.

"BBB" - An obligation rated "BBB" exhibits adequate protection
parameters. However, adverse economic conditions or changing circumstances are
more likely to lead to a weakened capacity of the obligor to meet its financial
commitment on the obligation.

"BB," "B," "CCC," "CC" and "C" - Debt is regarded as having
significant speculative characteristics. "BB" indicates the least degree of
speculation and "C" the highest. While such obligations will likely have some
quality and protective characteristics, these may be outweighed by large
uncertainties or major exposures to adverse conditions.

"BB" - Debt is less vulnerable to non-payment than other speculative
issues. However, it faces major ongoing uncertainties or exposure to adverse
business, financial or economic conditions which could lead to the obligor's
inadequate capacity to meet its financial commitment on the obligation.

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<PAGE>

"B" - Debt is more vulnerable to non-payment than obligations rated
"BB", but the obligor currently has the capacity to meet its financial
commitment on the obligation. Adverse business, financial or economic
conditions will likely impair the obligor's capacity or willingness to meet its
financial commitment on the obligation.

"CCC" - Debt is currently vulnerable to non-payment, and is dependent
upon favorable business, financial and economic conditions for the obligor to
meet its financial commitment on the obligation. In the event of adverse
business, financial or economic conditions, the obligor is not likely to have
the capacity to meet its financial commitment on the obligation.

"CC" - An obligation rated "CC" is currently highly vulnerable to
non-payment.

"C" - The "C" rating may be used to cover a situation where a
bankruptcy petition has been filed or similar action has been taken, but
payments on this obligation are being continued.

"D" - An obligation rated "D" is in payment default. This rating is
used when payments on an obligation are not made on the date due, even if the
applicable grace period has not expired, unless S & P believes that such
payments will be made during such grace period. "D" rating is also used upon
the filing of a bankruptcy petition or the taking of similar action if payments
on an obligation are jeopardized.

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.

"r" - This rating is attached to highlight derivative, hybrid, and
certain other obligations that S & P believes may experience high volatility or
high variability in expected returns due to non-credit risks. Examples of such
obligations are: securities whose principal or interest return is indexed to
equities, commodities, or currencies; certain swaps and options; and
interest-only and principal-only mortgage securities. The absence of an "r"
symbol should not be taken as an indication that an obligation will exhibit no
volatility or variability in total return.

The following summarizes the ratings used by Moody's for corporate and
municipal long-term debt:

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<PAGE>

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 are considered as medium-grade obligations, (i.e., they
are neither highly protected nor poorly secured). Interest payments and
principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.

"Ba," "B," "Caa," "Ca," and "C" - Bonds that possess one of these
ratings provide questionable protection of interest and principal ("Ba"
indicates speculative elements; "B" indicates a general lack of characteristics
of desirable investment; "Caa" are of 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.

(P)... - When applied to forward delivery bonds, indicates that the
rating is provisional pending delivery of the bonds. The rating may be revised
prior to delivery if changes

A-7
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occur in the legal documents or the underlying credit quality of the bonds.

Note: Those bonds in the Aa, A, Baa, Ba and B groups which Moody's
believes possess the strongest investment attributes are designated by the
symbols, Aa1, A1, Baa1, Ba1 and B1.

The following summarizes the long-term debt ratings used by Duff &
Phelps for corporate and municipal long-term debt:

"AAA" - Debt is considered to be of the highest credit quality. The
risk factors are negligible, being only slightly more than for risk-free U.S.
Treasury debt.

"AA" - Debt is considered to be of high credit quality. Protection
factors are strong. Risk is modest but may vary slightly from time to time
because of economic conditions.

"A" - Debt possesses protection factors which are average but
adequate. However, risk factors are more variable and greater in periods of
economic stress.

"BBB" - Debt possesses below-average protection factors but such
protection factors are still considered sufficient for prudent investment.
Considerable variability in risk is present during economic cycles.

"BB," "B," "CCC," "DD," and "DP" - Debt that possesses one of these
ratings is considered to be below investment grade. Although below investment
grade, debt rated "BB" is deemed likely to meet obligations when due. Debt
rated "B" possesses the risk that obligations will not be met when due. Debt
rated "CCC" is well below investment grade and has considerable uncertainty as
to timely payment of principal, interest or preferred dividends. Debt rated
"DD" is a defaulted debt obligation, and the rating "DP" represents preferred
stock with dividend arrearages.

To provide more detailed indications of credit quality, the "AA," "A,"
"BBB," "BB" and "B" ratings may be modified by the addition of a plus (+) or
minus (-) sign to show relative standing within these major categories.

The following summarizes the ratings used by Fitch for corporate and
municipal bonds:

"AAA" - Bonds considered to be investment grade and of the highest
credit quality. The obligor has an exceptionally strong ability to pay interest
and repay principal, which is unlikely to be affected by reasonably foreseeable
events.

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<PAGE>

"AA" - Bonds considered to be investment grade and of very high credit
quality. The obligor's ability to pay interest and repay principal is very
strong, although not quite as strong as bonds rated "AAA." Because bonds rated
in the "AAA" and "AA" categories are not significantly vulnerable to foreseeable
future developments, short-term debt of these issuers is generally rated "F-1+."

"A" - Bonds considered to be investment grade and of high credit
quality. The obligor's ability to pay interest and repay principal is
considered to be strong, but may be more vulnerable to adverse changes in
economic conditions and circumstances than bonds with higher ratings.

"BBB" - Bonds considered to be investment grade and of satisfactory
credit quality. The obligor's ability to pay interest and repay principal is
considered to be adequate. Adverse changes in economic conditions and
circumstances, however, are more likely to have an adverse impact on these
bonds, and therefore, impair timely payment. The likelihood that the ratings of
these bonds will fall below investment grade is higher than for bonds with
higher ratings.

"BB" - Bonds considered to be speculative. The obligor's ability to
pay interest and repay principal may be affected over time by adverse economic
changes. However, business and financial alternatives can be identified, which
could assist the obligor in satisfying its debt service requirements.

"B" - Bonds are considered highly speculative. While securities in
this class are currently meeting debt service requirements, the probability of
continued timely payment of principal and interest reflects the obligor's
limited margin of safety and the need for reasonable business and economic
activity throughout the life of the issue.

"CCC" - Bonds have certain identifiable characteristics that, if not
remedied, may lead to default. The ability to meet obligations requires an
advantageous business and economic environment.

"CC" - Bonds are minimally protected. Default in payments of interest
and/or principal seems probable over time.

"C" - Bonds are in imminent default in payment of interest or
principal.

"DDD," "DD" and "D" - Bonds are in default on interest and/or
principal payments. Such securities are extremely speculative and should be
valued on the basis of their ultimate

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recovery value in liquidation or reorganization of the obligor. "DDD"
represents the highest potential for recovery on these securities, and "D"
represents the lowest potential for recovery.

To provide more detailed indications of credit quality, the Fitch
ratings from and including "AA" to "C" may be modified by the addition of a plus
(+) or minus (-) sign to show relative standing within these major rating
categories.

IBCA assesses the investment quality of unsecured debt with an
original maturity of more than one year which is issued by bank holding
companies and their principal bank subsidiaries. The following summarizes the
rating categories used by IBCA for long-term debt ratings:

"AAA" - Obligations for which there is the lowest expectation of
investment risk. Capacity for timely repayment of principal and interest is
substantial, such that adverse changes in business, economic or financial
conditions are unlikely to increase investment risk substantially.

"AA" - Obligations for which there is a very low expectation of
investment risk. Capacity for timely repayment of principal and interest is
substantial, such that adverse changes in business, economic or financial
conditions may increase investment risk, albeit not very significantly.

"A" - Obligations for which there is a low expectation of investment
risk. Capacity for timely repayment of principal and interest is strong,
although adverse changes in business, economic or financial conditions may lead
to increased investment risk.

"BBB" - Obligations for which there is currently a low expectation of
investment risk. Capacity for timely repayment of principal and interest is
adequate, although adverse changes in business, economic or financial conditions
are more likely to lead to increased investment risk than for obligations in
other categories.

"BB," "B," "CCC," "CC," and "C" - Obligations are assigned one of
these ratings where it is considered that speculative characteristics are
present. "BB" represents the lowest degree of speculation and indicates a
possibility of investment risk developing. "C" represents the highest degree of
speculation and indicates that the obligations are currently in default.

IBCA may append a rating of plus (+) or minus (-) to a rating below
"AAA" to denote relative status within major rating categories.

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<PAGE>

Thomson BankWatch assesses the likelihood of an untimely repayment of
principal or interest over the term to maturity of long term debt and preferred
stock which are issued by United States commercial banks, thrifts and non-bank
banks; non-United States banks; and broker-dealers. The following summarizes
the rating categories used by Thomson BankWatch for long-term debt ratings:

"AAA" - This designation represents the highest category assigned by
Thomson BankWatch to long-term debt and indicates that the ability to repay
principal and interest on a timely basis is extremely high.

"AA" - This designation indicates a very strong ability to repay
principal and interest on a timely basis with limited incremental risk compared
to issues rated in the highest category.

"A" - This designation indicates that the ability to repay principal
and interest is strong. Issues rated "A" could be more vulnerable to adverse
developments (both internal and external) than obligations with higher ratings.

"BBB" - This designation represents Thomson BankWatch's lowest
investment-grade category and indicates an acceptable capacity to repay
principal and interest. Issues rated "BBB" are, however, more vulnerable to
adverse developments (both internal and external) than obligations with higher
ratings.

"BB," "B," "CCC," and "CC," - These designations are assigned by
Thomson BankWatch to non-investment grade long-term debt. Such issues are
regarded as having speculative characteristics regarding the likelihood of
timely payment of principal and interest. "BB" indicates the lowest degree of
speculation and "CC" the highest degree of speculation.

"D" - This designation indicates that the long-term debt is in
default.

PLUS (+) OR MINUS (-) - The ratings from "AAA" through "CC" may
include a plus or minus sign designation which indicates where within the
respective category the issue is placed.

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 Ratings Group for municipal
notes:

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<PAGE>

"SP-1" - The issuers of these municipal notes exhibit a strong
capacity to pay principal and interest. Those issues determined to possess very
strong characteristics are given a plus (+) designation.

"SP-2" - The issuers of these municipal notes exhibit satisfactory
capacity to pay principal and interest, with some vulnerability to adverse
financial and economic changes over the term of the notes.

"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" - This designation denotes 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" - This designation denotes high quality, with margins
of protection ample although not so large as in the preceding group.

"MIG-3"/"VMIG-3" - This designation denotes 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" - This designation denotes adequate quality, carrying
specific risk but having protection commonly regarded as required of an
investment security and not distinctly or predominantly speculative.

"SG" - This designation denotes speculative quality and lack of
margins of protection.

Fitch and Duff & Phelps use the short-term ratings described under
Commercial Paper Ratings for municipal notes.

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<PAGE>

APPENDIX B

As stated in the Prospectus, the Funds may enter into certain futures
transactions. Such transactions are described in this Appendix.

I. Interest Rate Futures Contracts

Use of Interest Rate Futures Contracts. Bond prices are established
in both the cash market and the futures market. In the cash market, bonds are
purchased and sold with payment for the full purchase price of the bond being
made in cash, generally within five business days after the trade. In the
futures market, only a contract is made to purchase or sell a bond in the future
for a set price on a certain date. Historically, the prices for bonds
established in the futures markets have tended to move generally in the
aggregate in concert with the cash market prices and have maintained fairly
predictable relationships. Accordingly, a Fund may use interest rate futures
contracts as a defense, or hedge, against anticipated interest rate changes. As
described below, this would include the use of futures contract sales to protect
against expected increases in interest rates and futures contract purchases to
offset the impact of interest rate declines.

A Fund could accomplish a similar result to that which it hopes to
achieve through the use of futures contracts by selling bonds with long
maturities and investing in bonds with short maturities when interest rates are
expected to increase, or conversely, selling short-term bonds and investing in
long-term bonds when interest rates are expected to decline. However, because
of the liquidity that is often available in the futures market, the protection
is more likely to be achieved, perhaps at a lower cost and without changing the
rate of interest being earned by the Fund, by using futures contracts.

Description of Interest Rate Futures Contracts. An interest rate
futures contract sale would create an obligation by a Fund, as seller, to
deliver the specific type of financial instrument called for in the contract at
a specific future time for a specified price. A futures contract purchase would
create an obligation by a Fund, as purchaser, to take delivery of the specific
type of financial instrument at a specific future time at a specific price. The
specific securities delivered or taken, respectively, at settlement date, would
not be determined until at or near that date. The determination would be in
accordance with the rules of the exchange on which the futures contract sale or
purchase was made.

B-1
<PAGE>

Although interest rate futures contracts by their terms call for
actual delivery or acceptance of securities, in most cases the contracts are
closed out before the settlement date without the making or taking of delivery
of securities. Closing out a futures contract sale is effected by a Fund
entering into a futures contract purchase for the same aggregate amount of the
specific type of financial instrument and the same delivery date. If the price
of the sale exceeds the price of the offsetting purchase, the Fund is
immediately paid the difference and thus realizes a gain. If the offsetting
purchase price exceeds the sale price, the Fund pays the difference and realizes
a loss. Similarly, the closing out of a futures contract purchase is effected
by the Fund entering into a futures contract sale. If the offsetting sale price
exceeds the purchase price, the Fund realizes a gain, and if the purchase price
exceeds the offsetting sale price, the Fund realizes a loss.

Interest rate futures contracts are traded in an auction environment
on the floors of several exchanges -- principally, the Chicago Board of Trade,
the Chicago Mercantile Exchange and the New York Futures Exchange. Each
exchange guarantees performance under contract provisions through a clearing
corporation, a nonprofit organization managed by the exchange membership.

A public market now exists in futures contracts covering various
financial instruments including long-term U.S. Treasury Bonds and Notes;
Government National Mortgage Association (GNMA) modified pass-through mortgage
backed securities; three-month U.S. Treasury Bills; and ninety-day commercial
paper. The Funds may trade in any interest rate futures contracts for which
there exists a public market, including, without limitation, the foregoing
instruments.

With regard to each Fund, the Adviser also anticipates engaging in
transactions, from time to time, in foreign stock index futures such as the
ALL-ORDS (Australia), CAC-40 (France), TOPIX (Japan) and the FTSE-100 (United
Kingdom).

II. Index Futures Contracts

General. A stock or bond index assigns relative values to the stocks
or bonds included in the index, which fluctuates with changes in the market
values of the stocks or bonds included. Some stock index futures contracts are
based on broad market indexes, such as Standard & Poor's 500 or the New York
Stock Exchange Composite Index. In contrast, certain exchanges offer futures
contracts on narrower market indexes, such as the Standard & Poor's 100 or
indexes based on an industry or market indexes, such as Standard & Poor's 100 or
indexes based on an industry or market segment, such as oil and gas stocks.
Futures

B-2
<PAGE>

contracts are traded on organized exchanges regulated by the Commodity Futures
Trading Commission. Transactions on such exchanges are cleared through a
clearing corporation, which guarantees the performance of the parties to each
contract. With regard to each Fund, to the extent consistent with its
investment objective, the Adviser anticipates engaging in transactions, from
time to time, in foreign stock index futures such as the ALL-ORDS (Australia),
CAC-40 (France), TOPIX (Japan) and the FTSE-100 (United Kingdom).

A Fund might sell index futures contracts in order to offset a
decrease in market value of its portfolio securities that might otherwise result
from a market decline. A Fund might do so either to hedge the value of its
portfolio as a whole, or to protect against declines, occurring prior to sales
of securities, in the value of the securities to be sold. Conversely, a Fund
might purchase index futures contracts in anticipation of purchases of
securities. A long futures position may be terminated without a corresponding
purchase of securities.

In addition, a Fund might utilize index futures contracts in
anticipation of changes in the composition of its portfolio holdings. For
example, in the event that a Fund expects to narrow the range of industry groups
represented in its holdings it may, prior to making purchases of the actual
securities, establish a long futures position based on a more restricted index,
such as an index comprised of securities of a particular industry group. A Fund
may also sell futures contracts in connection with this strategy, in order to
protect against the possibility that the value of the securities to be sold as
part of the restructuring of the portfolio will decline prior to the time of
sale.

III. Futures Contracts on Foreign Currencies

A futures contract on foreign currency creates a binding obligation on
one party to deliver, and a corresponding obligation on another party to accept
delivery of, a stated quantity of foreign currency, for an amount fixed in U.S.
dollars (or another currency). Foreign currency futures may be used by a
Portfolio to hedge against exposure to fluctuations in exchange rates between
different currencies arising from multinational transactions.

IV. Margin Payments

Unlike purchase or sales of portfolio securities, no price is paid or
received by a Fund upon the purchase or sale of a futures contract. Initially,
a Fund will be required to deposit with the broker or in a segregated account
with a custodian an amount of liquid assets known as initial margin,

B-3
<PAGE>

based on the value of the contract. The nature of initial margin in futures
transactions is different from that of margin in security transactions in that
futures contract margin does not involve the borrowing of funds by the customer
to finance the transactions. Rather, the initial margin is in the nature of a
performance bond or good faith deposit on the contract which is returned to the
Fund upon termination of the futures contract assuming all contractual
obligations have been satisfied. Subsequent payments, called variation margin,
to and from the broker, will be made on a daily basis as the price of the
underlying instruments fluctuates making the long and short positions in the
futures contract more or less valuable, a process known as
marking-to-the-market. For example, when a particular Fund has purchased a
futures contract and the price of the contract has risen in response to a rise
in the underlying instruments, that position will have increased in value and
the Fund will be entitled to receive from the broker a variation margin payment
equal to that increase in value. Conversely, where the Fund has purchased a
futures contract and the price of the future contract has declined in response
to a decrease in the underlying instruments, the position would be less valuable
and the Fund would be required to make a variation margin payment to the broker.
Prior to expiration of the futures contract, the Adviser may elect to close the
position by taking an opposite position, subject to the availability of a
secondary market, which will operate to terminate the Fund's position in the
futures contract. A final determination of variation margin is then made,
additional cash is required to be paid by or released to the Fund, and the Fund
realizes a loss or gain.

V. Risks of Transactions in Futures Contracts

There are several risks in connection with the use of futures by a
Fund. One risk arises because of the imperfect correlation between movements in
the price of the futures and movements in the price of any instruments which are
the subject of a hedge. The price of the futures may move more than or less
than the price of the instruments being hedged. If the price of the futures
moves less than the price of the instruments which are the subject of the hedge,
the hedge will not be fully effective but, if the price of the instruments being
hedged has moved in an unfavorable direction, the Fund would be in a better
position than if it had not hedged at all. If the price of the instruments
being hedged has moved in a favorable direction, this advantage will be
partially offset by the loss on the futures. If the price of the futures moves
more than the price of the hedged instruments, the Fund involved will experience
either a loss or gain on the futures which will not be completely offset by
movements in the price of the instruments which are the subject of the hedge.
To compensate for the imperfect correlation of movements in the price of
instruments being hedged

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<PAGE>

and movements in the price of futures contracts, a Fund may buy or sell futures
contracts in a greater dollar amount than the dollar amount of instruments being
hedged if the volatility over a particular time period of the prices of such
instruments has been greater than the volatility over such time period of the
future, or if otherwise deemed to be appropriate by the Adviser. Conversely, a
Fund may buy or sell fewer futures contracts if the volatility over a particular
time period of the prices of the instruments being hedged is less than the
volatility over such time period of the futures contract being used, or if
otherwise deemed to be appropriate by the Adviser. It is also possible that,
where a Fund has sold futures to hedge its portfolio against a decline in the
market, the market may advance and the value of instruments held in the Fund may
decline. If this occurred, the Portfolio would lose money on the futures and
also experience a decline in value in its portfolio securities.

When futures are purchased to hedge against a possible increase in the
price of securities or a currency before a Portfolio is able to invest its cash
(or cash equivalents) in an orderly fashion, it is possible that the market may
decline instead; if the Fund then concludes not to invest its cash at that time
because of concern as to possible further market decline or for other reasons,
the Fund will realize a loss on the futures contract that is not offset by a
reduction in the price of the instruments that were to be purchased.

In addition to the possibility that there may be an imperfect
correlation, or no correlation at all, between movements in the futures and any
instruments being hedged, the price of futures may not correlate perfectly with
movement in the cash market due to certain market distortions. Rather than
meeting additional margin deposit requirements, investors may close futures
contracts through off-setting transactions which could distort the normal
relationship between the cash and futures markets. Second, with respect to
financial futures contracts, the liquidity of the futures market depends on
participants entering into off-setting transactions rather than making or taking
delivery. To the extent participants decide to make or take delivery, liquidity
in the futures market could be reduced thus producing distortions. Third, from
the point of view of speculators, the deposit requirements in the futures market
are less onerous than margin requirements in the securities market. Therefore,
increased participation by speculators in the futures market may also cause
temporary price distortions. Due to the possibility of price distortion in the
futures market, and because of the imperfect correlation between the movements
in the cash market and movements in the price of futures, a correct forecast of
general market trends or interest rate movements by the adviser may still not
result in a successful hedging transaction over a short time frame.

B-5

<PAGE>

Positions in futures may be closed out only on an exchange or board of
trade which provides a secondary market for such futures. Although the Funds
intend to purchase or sell futures only on exchanges or boards of trade where
there appear to be active secondary markets, there is no assurance that a liquid
secondary market on any exchange or board of trade will exist for any particular
contract or at any particular time. In such event, it may not be possible to
close a futures investment position, and in the event of adverse price
movements, a Fund would continue to be required to make daily cash payments of
variation margin. However, in the event futures contracts have been used to
hedge portfolio securities, such securities will not be sold until the futures
contract can be terminated. In such circumstances, an increase in the price of
the securities, if any, may partially or completely offset losses on the futures
contract. However, as described above, there is no guarantee that the price of
the securities will in fact correlate with the price movements in the futures
contract and thus provide an offset on a futures contract.

Further, it should be noted that the liquidity of a secondary market
in a futures contract may be adversely affected by "daily price fluctuation
limits" established by commodity exchanges which limit the amount of fluctuation
in a futures contract price during a single trading day. Once the daily limit
has been reached in the contract, no trades may be entered into at a price
beyond the limit, thus preventing the liquidation of open futures positions.
The trading of futures contracts is also subject to the risk of trading halts,
suspensions, exchange or clearing house equipment failures, government
intervention, insolvency of a brokerage firm or clearing house or other
disruptions of normal activity, which could at times make it difficult or
impossible to liquidate existing positions or to recover excess variation margin
payments.

Successful use of futures by a Fund is also subject to the Adviser's
ability to predict correctly movements in the direction of the market. For
example, if a particular Fund has hedged against the possibility of a decline in
the market adversely affecting securities held by it and securities prices
increase instead, the Fund will lose part or all of the benefit to the increased
value of its securities which it has hedged because it will have offsetting
losses in its futures positions. In addition, in such situations, if the Fund
has insufficient cash, it may have to sell securities to meet daily variation
margin requirements. Such sales of securities may be, but will not necessarily
be, at increased prices which reflect the rising market. A Fund may have to
sell securities at a time when it may be disadvantageous to do so.

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<PAGE>

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 (as well as gain) to the investor. For example, if at the time
of purchase, 10% of the value of the futures contract is deposited as margin, a
subsequent 10% decrease in the value of the futures contract would result in a
total loss of the margin deposit, before any deduction for the transaction
costs, if the account were then closed out. A 15% decrease would result in a
loss equal to 150% of the original margin deposit, before any deduction for the
transaction costs, if the contract were closed out. Thus, a purchase or sale of
a futures contract may result in losses in excess of the amount invested in the
contract.

VI. Options on Futures Contracts

A Fund may purchase and write options on the futures contracts
described above. A futures option gives the holder, in return for the premium
paid, the right to buy (call) from or sell (put) to the writer of the option a
futures contract at a specified price at any time during the period of the
option. Upon exercise, the writer of the option is obligated to pay the
difference between the cash value of the futures contract and the exercise
price. Like the buyer or seller of a futures contract, the holder, or writer,
of an option has the right to terminate its position prior to the scheduled
expiration of the option by selling, or purchasing an option of the same series,
at which time the person entering into the closing transaction will realize a
gain or loss. A Fund will be required to deposit initial margin and variation
margin with respect to put and call options on futures contracts written by it
pursuant to brokers' requirements similar to those described above. Net option
premiums received will be included as initial margin deposits. As an example,
in anticipation of a decline in interest rates, a Portfolio may purchase call
options on futures contracts as a substitute for the purchase of futures
contracts to hedge against a possible increase in the price of securities which
the Fund intends to purchase. Similarly, if the value of the securities held by
a Fund is expected to decline as a result of an increase in interest rates, the
Fund might purchase put options or sell call options on futures contracts rather
than sell futures contracts.

B-7

<PAGE>

underlying futures contract will not correspond to changes in the value of the
option purchased. Depending on the pricing of the option compared to either the
futures contract upon which it is based, or upon the price of the underlying
securities or currencies, an option may or may not be less risky than ownership
of the futures contract or such securities or currencies. In general, the
market prices of options can be expected to be more volatile than the market
prices on the underlying futures contract. Compared to the purchase or sale of
futures contracts, however, the purchase of call or put options on futures
contracts may frequently involve less potential risk to a Fund because the
maximum amount at risk is the premium paid for the options (plus transaction
costs). The writing of an option on a futures contract involves risks similar
to those risks relating to the sale of futures contracts.

VII. Other Matters

Accounting for futures contracts will be in accordance with generally
accepted accounting principles.

The Funds intend to comply with the regulations of the Commodity
Futures Trading Commission exempting the Funds from registration as a "commodity
pool operator."

B-8

<PAGE>

B E A
[graphic]
ADVISOR FUNDS

INTERNATIONAL EQUITY FUND

EMERGING MARKETS EQUITY FUND

GLOBAL TELECOMMUNICATIONS FUND

HIGH YIELD FUND

PROSPECTUS - DECEMBER 8, 1997

<PAGE>
TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
---------
<S> <C>
Annual Fund Operating Expenses..................................................................................... 2
Financial Highlights............................................................................................... 3
The Company........................................................................................................ 7
Investment Objectives and Policies................................................................................. 7
Investment Limitations............................................................................................. 12
Risk Factors....................................................................................................... 13
Management......................................................................................................... 15
Expenses........................................................................................................... 18
How to Purchase Shares............................................................................................. 18
How to Redeem and Exchange Shares.................................................................................. 20
Net Asset Value.................................................................................................... 22
Dividends and Distributions........................................................................................ 22
Taxes.............................................................................................................. 22
Multi-Class Structure.............................................................................................. 24
Description of Shares.............................................................................................. 24
Other Information.................................................................................................. 26
</TABLE>

<PAGE>
BEA ADVISOR FUNDS
THE BEA ADVISOR FUNDS CONSIST OF FOUR CLASSES OF COMMON STOCK OF THE RBB FUND,
INC. (THE "COMPANY"), 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 THE FOUR OF THE INVESTMENT PORTFOLIOS OF THE COMPANY DESCRIBED IN THIS
PROSPECTUS (COLLECTIVELY, THE "FUNDS"). THE INVESTMENT OBJECTIVE OF EACH FUND
DESCRIBED IN THIS PROSPECTUS IS AS FOLLOWS:

BEA INTERNATIONAL EQUITY FUND -- seeks to provide long-term
appreciation of capital. The Fund will invest primarily in equity securities
of non-U.S. issuers.

BEA EMERGING MARKETS EQUITY FUND -- seeks to provide long-term
appreciation of capital. The Fund will invest primarily in equity securities
in emerging country markets.

BEA GLOBAL TELECOMMUNICATIONS FUND -- seeks to provide long-term
appreciation of capital. The Fund will invest primarily in equity securities
of telecommunications companies, both foreign and domestic.

There can be, of course, no assurance that a Fund's investment objective
will be achieved. Investments in the Funds involve certain risks. See "Risk
Factors."

The minimum initial investment in a Fund is $2,500 and the minimum
subsequent investment is $250. The minimum initial investment for Individual
Retirement Accounts, Uniform Gifts to Minors and Automatic Investment Plans is
$1,000 and the minimum subsequent investment in each of these plans is $100.

PROSPECTUS DECEMBER 8, 1997

<PAGE>
ANNUAL FUND OPERATING EXPENSES

(AS A PERCENTAGE OF AVERAGE DAILY NET ASSETS)(1)

<TABLE>
<CAPTION>
BEA
BEA EMERGING BEA
INTERNATIONAL MARKETS GLOBAL BEA
EQUITY EQUITY TELECOMMUNICATIONS HIGH YIELD
FUND FUND FUND FUND
------------- -------- --------------------- -------------
<S> <C> <C> <C> <C>
Management Fees (after waivers)(2)................ .80% .98% .0% .44%
12b-1 Fees........................................ .25% .25% .25% .25%
Other Expenses (after waivers and
reimbursements)(2)............................... .38% .52% 1.40% .27%
--- --- --- ---
Total Fund Operating Expenses (after waivers and
reimbursements)(2)............................... 1.43% 1.75% 1.65% .96%
--- --- --- ---
--- --- --- ---
</TABLE>

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

(1) The annual operating expenses for the Funds are based on actual expenses
incurred for the period ended August 31, 1997.

(2) Before waivers, Management Fees would be 1.00%, 1.00% and .70%, for the BEA
Emerging Markets Equity Fund, the BEA Global Telecommunications Fund and the
BEA High Yield Fund, respectively. Other Expenses would be .48%, .67%, 7.13%
and .52% for the BEA International Equity Fund, the BEA Emerging Markets
Equity Fund, the BEA Global Telecommunications Fund, and the BEA High Yield
Fund, respectively, and Total Fund Operating Expenses would be 1.53%, 1.92%,
8.38% and 1.47%, respectively.

- --------------------------------------------------------------------------------
EXAMPLE
An investor would pay the following expenses on a $1,000 investment in each of
the Funds, assuming (1) a 5% annual return, and (2) redemption at the end of
each time period.

<TABLE>
<CAPTION>
ONE THREE FIVE TEN
YEAR YEARS YEARS YEARS
---- ----- ----- -----
<S> <C> <C> <C> <C>
BEA International Equity Fund......................................... $ 15 $45 $78 $ 171
BEA Emerging Markets Equity Fund...................................... $ 18 $55 $95 $ 206
BEA Global Telecommunications Fund.................................... $ 17 $52 $90 $ 195
BEA High Yield Fund................................................... $ 10 $31 $53 $ 118
</TABLE>

The Example in this fee table assumes that all dividends and distributions are
reinvested and that the amounts listed under "Annual Fund 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. Long-term shareholders of the Funds may pay more than the
maximum front-end sales charges permitted by the National Association of
Securities Dealers, Inc.

P-2
<PAGE>
FINANCIAL HIGHLIGHTS

The tables below set forth certain information concerning the investment results
of the BEA Advisor Classes representing interests in the BEA International
Equity Fund, the BEA Emerging Markets Equity Fund, the BEA Global
Telecommunications Fund and the BEA High Yield Fund for the periods indicated.
The financial information has been derived from the financial statements
incorporated by reference into the Statement of Additional Information and has
been audited by the Funds' independent accountants, Coopers & Lybrand L.L.P. The
financial information should be read together with these financial statements
and related notes. Further information about the performance of the Funds is
available in the Funds' Annual Report to Shareholders. Both the Statement of
Additional Information and the Annual Report to Shareholders may be obtained
from the BEA Advisor Funds free of charge by calling (800) 441-7764.

BEA ADVISOR FUNDS OF
THE RBB FUND, INC.

FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)

<TABLE>
<CAPTION>
BEA INTERNATIONAL
EQUITY FUND
-----------------------
FOR THE PERIOD
NOVEMBER 1, 1996* TO
AUGUST 31, 1997
-----------------------
<S> <C>
Net asset value, beginning of period.............. $ 19.67
------------
Income from investment operations
Net investment income (loss).................. 0.36
Net realized and unrealized gains (losses) on
securities and foreign currency
transactions................................. 2.40
------------
Total from investment operations.............. 2.76
------------
Less Dividends and Distributions
Dividends from net investment income.......... (0.26)
Distributions from capital gains.............. --
------------
Total Dividends and Distributions............. (0.26)
------------
Net asset value, end of period................ $ 22.17
------------
------------
Total return...................................... 14.14%(c)
Ratio/Supplemental Data
Net assets, end of period..................... $147,365
Ratio of expenses to average net assets....... 1.43%(a)(b)
Ratio of net investment income to average net
assets....................................... 1.15%(b)
Portfolio turnover rate....................... 126%
Average commission rate(e).................... $ 0.0039
</TABLE>

(a) Without the voluntary waiver of advisory fees and administration fees, the
ratios of expenses to average net assets for the BEA International Equity
Fund Advisor Class would have been 1.53% annualized for the period ended
August 31, 1997.

(b) Annualized.

(d) Redemption fees not reflected in total return.

(e) Computed by dividing the total amount of brokerage commissions paid by the
total shares of investment securities purchased and sold during the period
for which commissions were charged, as required by the SEC for fiscal years
beginning after September 1, 1995.

* Commencement of operations.

P-3
<PAGE>

BEA ADVISOR FUNDS OF
THE RBB FUND, INC.

FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)

<TABLE>
<CAPTION>
BEA EMERGING MARKETS
EQUITY FUND
-----------------------
FOR THE PERIOD
NOVEMBER 1, 1996* TO
AUGUST 31, 1997
-----------------------
<S> <C>
Net asset value, beginning of period.............. $18.08
------------
Income from investment operations
Net investment income......................... 0.18
Net realized and unrealized gains on
securities and foreign currency
transactions................................. 1.40
------------
Total from investment operations.............. 1.58
------------
Less Dividends and Distributions
Dividends from net investment income.......... (0.06)
Distributions from capital gains.............. --
------------
Total Dividends and Distributions............. (0.06)
------------
Net asset value, end of period................ $19.60
------------
------------
Total return...................................... 8.76%(c)
Ratio/Supplemental Data
Net assets, end of period..................... $3,586
Ratio of expenses to average net assets....... 1.75%(a)(b)
Ratio of net investment income to average net
assets....................................... 0.88%(b)
Portfolio turnover rate....................... 147%
Average commission rate(e).................... $0.0004
</TABLE>

(a) Without the voluntary waiver of advisory fees and administration fees, the
ratios of expenses to average net assets for the BEA Emerging Markets Equity
Fund Advisor Class would have been 1.92% annualized for the period ended
August 31, 1997.

(b) Annualized.

(d) Redemption fees not reflected in total return.

* Commencement of operations.

P-4
<PAGE>

BEA ADVISOR FUNDS OF
THE RBB FUND, INC.

FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)

<TABLE>
<CAPTION>
BEA GLOBAL
TELECOMMUNICATIONS FUND
-----------------------
FOR THE PERIOD
DECEMBER 4, 1996* TO
AUGUST 31, 1997
-----------------------
<S> <C>
Net asset value, beginning of period.............. $ 15.00
------------
Income from investment operations
Net investment income......................... 0.02
Net realized and unrealized gains on
securities and foreign currency
transactions................................. 2.28
------------
Total from investment operations.............. 2.30
------------
Less Dividends and Distributions
Dividends from net investment income.......... --
Distributions from capital gains.............. --
------------
Total Dividends and Distributions............. --
------------
Net asset value, end of period................ $ 17.30
------------
------------
Total return...................................... 15.33%(c)
Ratio/Supplemental Data
Net assets, end of period..................... $569,472
Ratio of expenses to average net assets....... 1.65%(a)(b)
Ratio of net investment income to average net
assets....................................... 0.16%(b)
Portfolio turnover rate....................... 43%(c)
Average commission rate(d).................... $ 0.0035
</TABLE>

(a) Without the voluntary waiver of advisory fees and administration fees, and
without the reimbursement of operating expenses the ratios of expenses to
average net assets for the BEA Global Telecommunications Fund Advisor Class
would have been 8.38% annualized for the period ended August 31, 1997.
(b) Annualized.

P-5
<PAGE>

BEA ADVISOR FUNDS OF
THE RBB FUND, INC.

FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)

<TABLE>
<CAPTION>
BEA HIGH YIELD FUND
-----------------------
FOR THE PERIOD
NOVEMBER 1, 1996* TO
AUGUST 31, 1997
-----------------------
<S> <C>
Net asset value, beginning of period.............. $ 16.21
------------
Income from investment operations
Net investment income......................... 0.93
Net realized and unrealized gains on
securities and foreign currency
transactions................................. 0.87
------------
Total from investment operations.............. 1.80
------------
Less Dividends and Distributions
Dividends from net investment income.......... (0.93)
Distributions from capital gains.............. --
------------
Total Dividends and Distributions............. (0.93)
------------
Net asset value, end of period................ $ 17.08
------------
------------
Total return...................................... 11.49%(c)
Ratio/Supplemental Data
Net assets, end of period..................... $86,375
Ratio of expenses to average net assets....... 0.96%(a)(b)
Ratio of net investment income (loss) to
average net assets........................... 8.13%(b)
Portfolio turnover rate....................... 84%(c)
</TABLE>

(a) Without the voluntary waiver of advisory fees and administration fees, the
ratios of expenses to average net assets for the BEA High Yield Fund Advisor
Class would have been 1.47% annualized for the period ended August 31, 1997.
(b) Annualized.

(d) Redemption fees not reflected in total return.
* Commencement of operations.

P-6
<PAGE>
- ----------------------------------------------

THE COMPANY

The Company is an open-end management investment company that currently operates
or proposes to operate twenty-two separate investment portfolios. Each of the
BEA Advisor Funds represents an interest in a separate portfolio. Each Fund is
non-diversified. The Company was incorporated in Maryland on February 29, 1988.

The Funds are designed primarily for individual investors and are available
through financial intermediaries, including broker-dealers, investment advisers,
financial planners, banks and insurance companies. Investment professionals such
as those listed above may purchase Shares for discretionary or non-discretionary
accounts maintained by individuals.
- ----------------------------------------------
INVESTMENT OBJECTIVES AND POLICIES

BEA INTERNATIONAL EQUITY FUND

BEA EMERGING MARKETS EQUITY FUND

P-7
<PAGE>

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 Fund'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, Portugal, Spain, Switzerland, the United Kingdom and the United
States. Under normal market conditions, the Fund will invest a minimum of 80% of
its total assets in equity securities of issuers in Emerging Markets. The Fund
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
Fund will at all times, except during defensive periods, maintain investments in
at least three Emerging Markets.

BEA GLOBAL TELECOMMUNICATIONS FUND

The BEA Global Telecommunications Fund's investment objective is long-term
capital appreciation by investing primarily in equity securities of
telecommunications companies, both foreign and domestic. It is the policy of the
Fund under normal market conditions to invest not less than 65% of its total
assets in equity securities (including common and preferred stocks, convertible
securities and warrants to acquire such equity securities) of telecommunications
companies. The Fund will invest in convertible securities based on their
underlying equity characteristics without regard to the credit rating of such
securities. Such convertible securities may include lower-quality high yielding
securities. See "Risk Factors -- Lower Rated Securities." As a Fund investing in
global markets, at least 65% of the Fund's investments will be made in at least
three different countries.

P-8
<PAGE>

munications activities"). A "telecommunications company" is an entity in which
(i) at least 50% of either its revenue or earnings was derived from
telecommunications activities, or (ii) at least 50% of its assets was devoted to
telecommunications activities based on the company's most recent fiscal year.
The remainder of the assets of the BEA Global Telecommunications Fund may be
invested in equity or non-equity securities issued by companies that are not
primarily engaged in telecommunications activities.

Because the Fund 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.
Telecommunications industries may be subject to greater governmental regulation
than many other industries and changes in governmental policies and the need for
regulatory approvals may have a material effect on the products and services of
this industry. Telephone operating companies in the United States, for example,
are subject to both federal and state regulation affecting permitted rates of
return and the kinds of services that may be offered. Certain types of companies
represented in the Fund are engaged in competition for market share. In recent
years, these have been companies providing goods and services such as private
and local area networks and telephone set equipment.
BEA HIGH YIELD FUND

The BEA High Yield Fund seeks to provide high total return by investing
primarily in high yield fixed income securities issued by corporations,
governments and agencies, both U.S. and foreign. Under normal market conditions,
the Fund 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 Fund is
not limited in the extent to which it can invest in securities rated below
investment-grade by recognized rating agencies or in comparable unrated
securities. See "Risk Factors -- Lower-Rated Securities." The portion of the
Fund'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 Fund, and thus the net asset value of
the shares of the Fund, 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 Fund may
purchase debt securities of any maturity and the average maturity of the Fund's
assets will vary based upon BEA's assessment of economic and market conditions.

COMMON INVESTMENT POLICIES -- ALL FUNDS

This section describes certain investment policies that are common to each Fund.
These policies are described in more detail in the Statement of Additional
Information.

P-9
<PAGE>
Temporary Investments." To the extent permitted by their investment objectives
and policies, the Funds may hold cash or cash equivalents pending investment.

BORROWING. A Fund 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 -- All Funds -- Reverse Repurchase Agreements" and
"-- Borrowing."

LENDING OF PORTFOLIO SECURITIES. A Fund may also lend its portfolio
securities to financial institutions against collateral consisting of cash, U.S.
Government securities or irrevocable bank letters of credit, which are equal at
all times to at least 102% of the value of the securities loaned. 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 loss of rights in the
collateral should the borrower of the securities fail financially. However,
loans will be made only to borrowers deemed by the Fund's investment adviser to
be of good standing and only when, in the adviser's judgment, the income to be
earned from the loans justifies the attendant risks. Any loans of the
Portfolio's securities will be fully collateralized and marked to market daily.
A Portfolio may not make loans in excess of 30% of the value of its total
assets.

PORTFOLIO TURNOVER. BEA will effect portfolio transactions in each Fund
without regard to holding periods if, in its judgment, such transactions are
advisable in light of general market, economic or financial conditions. The past
portfolio turnover rates for the Advisor Classes of the Funds are set forth
above under "Financial Highlights." Portfolio turnover may vary greatly from
year to year as well as within a particular year. High portfolio turnover rates
(100% or more) will generally result in higher transaction costs to a Fund and
may result in the realization of short-term capital gains that are taxable to
shareholders as ordinary income. The amount of portfolio activity will not be a
limiting factor when making portfolio decisions. The portfolio turnover rates
for the Funds are set forth above under "Financial Highlights." See the
Statement of Additional Information, "Portfolio Transactions" and "Taxes."

FOREIGN CURRENCY TRANSACTIONS. BEA may seek to hedge against a decline in
value of a Fund's non-dollar denominated portfolio securities resulting from
currency devaluations or fluctuations. Unless the Funds 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 Funds may also seek to protect, during the period prior to
its remittance, the value of the amount of interest, dividends and net realized

P-10
<PAGE>
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 Funds may also enter into contracts to purchase and sell forward foreign
currency exchange contracts to seek to enhance total return. To the extent that
such contracts are entered into for this purpose they are considered
speculative. If a Fund enters into such a contract for any purpose, the Fund
will be required to place cash or liquid assets in a segregated account with the
Company's custodian in an amount equal to the value of the Fund's total assets
committed to the consummation of the contract. The Funds will not invest more
than 10% of their respective total assets in such contracts for the purpose of
enhancing total return. There is no limit on the amount of assets that the Funds
may invest in such transactions for hedging purposes.

MORTGAGE-RELATED PASS-THROUGHS AND DERIVATIVES. The Funds may invest in
mortgage-related securities. Purchasable mortgage-related securities are
represented by pools of mortgage loans assembled for sale to investors by
various governmental agencies such as the Government National Mortgage
Association and government-related organizations such as the Federal National
Mortgage Association and the Federal Home Loan Mortgage Corporation, as well as
by private issuers such as commercial investment banks, savings and loan
institutions, mortgage bankers and private mortgage insurance companies. As with
other interest-bearing securities, the prices of such securities are inversely
affected by changes in interest rates. However, though the value of a
mortgage-related security may decline when interest rates rise, the converse is
not necessarily true because in periods of declining interest rates mortgages
underlying securities are prone to prepayment. For this and other reasons, a
mortgage-related security's stated maturity may be shortened by an unscheduled
prepayment on underlying mortgages and, therefore, it is not possible to predict
accurately the security's return to these Funds.

P-11
<PAGE>

The Statement of Additional Information contains additional investment policies
and strategies of the Funds.
- ----------------------------------------------
INVESTMENT LIMITATIONS

Each Fund may not:

Borrow money or issue senior securities, except that each Fund may
borrow from institutions and enter into reverse repurchase agreements
and dollar rolls for temporary purposes in amounts up to one-third of
the value of its total assets at the time of such borrowing; or
mortgage, pledge or hypothecate any assets, except in connection with
any such borrowing and then in amounts not in excess of one-third of the
value of the Fund's total assets at the time of such borrowing. Each
Fund will not purchase securities while its aggregate borrowings
(including reverse repurchase agreements, dollar rolls and borrowings
from banks) are in excess of 5% of its total assets. Securities held in
escrow or separate accounts in connection with the Fund's investment
practices are not considered to be borrowings or deemed to be pledged
for purposes of this limitation.

Any investment policy or limitation which involves a maximum or minimum
percentage of securities or assets shall not be considered to be violated unless
an excess over or a deficiency under the percentage occurs immediately after,
and is caused by, an acquisition or disposition of securities or utilization of
assets by a Fund.

P-12
<PAGE>
- ----------------------------------------------
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 Funds 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 Funds' 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 Funds' 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 Funds' 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 Funds 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 Funds' 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.

P-13
<PAGE>
and the like), an economic downturn, or increases in interest rates, could
severely disrupt the market for lower-rated debt securities and adversely affect
the value of outstanding debt securities and the ability of the issuers to repay
principal and interest.

Lower-rated debt securities (commonly known as "junk bonds") possess speculative
characteristics and are subject to greater market fluctuations and risk of lost
income and principal than higher-rated debt securities for a variety of reasons.
The markets for and prices of lower-rated debt securities have been found to be
less sensitive to interest rate changes than higher rated investments, but more
sensitive to adverse economic changes or individual corporate developments.
Also, during an economic downturn or substantial period of rising interest
rates, highly leveraged issuers may experience financial stress which would
adversely affect their ability to service their principal and interest payment
obligations, to meet projected business goals and to obtain additional
financing. If the issuer of a debt security owned by a Fund defaulted, the Fund
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 Fund'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 Fund 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 Fund's assets.
If a Fund 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 Fund's expenses can be spread and
possibly reducing a Fund'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 BEA's ability both to value accurately lower-rated debt securities and
the Fund'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.

GENERAL. Investment methods described in this Prospectus are among those
which the Funds have the power to utilize. Accordingly,

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<PAGE>

reference to any particular method or technique carries no implication that it
will be utilized or, if it is, that it will be successful.

- ----------------------------------------------
MANAGEMENT
BOARD OF DIRECTORS

The business and affairs of the Company and each Fund are managed under the
direction of the Company's Board of Directors.

INVESTMENT ADVISER

BEA serves as the Investment Adviser for each of the Funds pursuant to
investment advisory agreements (the "Advisory Agreements"). BEA is a general
partnership organized under the laws of the State of New York in December 1990
and, together with its predecessor firms, has been engaged in the investment
advisory business for over 60 years. BEA is a wholly-owned subsidiary of Credit
Suisse, the second largest Swiss bank which in turn is a subsidiary of CS
Holding, a Swiss corporation. Active employees of BEA have a long-term equity
incentive plan. BEA is a registered investment adviser under the Investment
Advisers Act of 1940, as amended. BEA's principal offices are located at One
Citicorp Center, 153 East 53rd Street, New York, New York 10022.

BEA is a diversified investment adviser, managing global equity, fixed income
and derivative securities accounts for corporate pension and profit-sharing
plans, state pension funds, union funds, endowments and other charitable
institutions. As of September 30, 1997, BEA managed approximately $34.6 billion
in assets. BEA currently acts as investment adviser for eleven other investment
companies registered under the 1940 Act, and as sub-adviser to certain
portfolios of twelve other registered investment companies.

The day-to-day portfolio management of the BEA International Equity and the BEA
Emerging Markets Equity Funds is the responsibility of the BEA International
Equity Management Team. The Team consists of the following investment
professionals: William P. Sterling (Executive Director), Richard Watt (Managing
Director), Stephen M. Swift (Managing Director), and Steven D. Bleiberg (Senior
Vice President). Mr. Sterling joined BEA in 1995, prior to which time he was the
head of International Economics at Merrill Lynch & Company. Mr. Watt joined BEA
in 1995, prior to which time he was the 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. Swift joined BEA in 1995, prior to which time he spent three
years at Credit Suisse Asset Management in London, where he was the 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. Bleiberg has been engaged as an investment
professional with BEA for more than five years.

The day-to-day portfolio management of the BEA Global Telecommunications Fund is
the

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<PAGE>

responsibility of the BEA Global Telecommunications Management Team. The Team
consists of the following investment professionals: Richard Watt (Managing
Director), William P. Sterling (Executive Director), Todd M. Rice (Senior Vice
President) and Stephen Waite (Vice President). Mr. Rice has been engaged as an
investment professional with BEA for more than five years. Mr. Waite joined BEA
in 1995, prior to which he was Vice President and Senior European Economist for
Merrill Lynch & Company in London.

The day-to-day portfolio management of the BEA High Yield Fund is the
responsibility of the BEA High Yield Management Team. The Team consists of the
following investment professionals: Richard Lindquist (Managing Director), Misia
Dudley (Senior Vice President), Marianne Rossi (Senior Vice President), and John
Tobin (Senior Vice President). Mr. Lindquist, Ms. Dudley, Ms. Rossi and Mr.
Tobin 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. Prior to joining CS First Boston, Mr. Tobin
managed portfolios for Integrated Resources and prior to that was Vice President
and industry analyst with Bankers Trust Company.

For the advisory services provided and expenses assumed by it, BEA is entitled
to receive a fee from the BEA International Equity Fund, the BEA Emerging
Markets Equity Fund, the BEA Global Telecommunications Fund and the BEA High
Yield Fund computed at an annual rate of .80%, 1.00%, 1.00% and .70%,
respectively, of average daily net assets, computed daily and payable quarterly.

BEA may, at its discretion from time to time agree to waive voluntarily all or
any portion of its advisory fee for any Fund. For the fiscal year ended August
31, 1997, the Company paid BEA investment advisory fees, on an annualized basis,
with respect to the BEA International Equity, the BEA Emerging Markets Equity,
the BEA High Yield and the BEA Global Telecommunications Funds .80%, .98%, 0%
and .44%, respectively, of the average net assets of the respective Funds, and
BEA waived, approximately .20%, .02%, 1.00% and .26%, respectively, of the
average net assets of each such Fund.

CO-ADMINISTRATORS

PFPC Inc. ("PFPC"), an indirect, wholly-owned subsidiary of PNC Bank Corp.,
serves as co-administrator for the Advisor Class of the Funds. As
co-administrator, PFPC will provide various services to the Advisor Class of the
Funds, including determining the net asset value of the Advisor Class of each
Fund, providing all

P-16
<PAGE>

accounting services for the Class and generally assisting in all aspects of the
operations of the Advisor Class of each Fund. As compensation for administrative
services, the Funds will pay PFPC a fee calculated at the annual rate of .125%
of the average daily net assets of the Advisor Class of each Fund. PFPC has its
principal offices at 400 Bellevue Parkway, Wilmington, Delaware 19809.

The Company employs BEA as co-administrator. As co-administrator, BEA generally
assists the Advisor Class of each of the Funds in all aspects of their
administration and shareholder servicing. As compensation, the Company pays to
BEA a fee calculated at an annual rate of .05% of the average daily net assets
of the Advisor Class of each Fund for assets up to $125 million, and .10%
thereafter.

DISTRIBUTOR

Counsellors Securities Inc. ("Counsellors Securities"), a wholly-owned
subsidiary of Warburg Pincus Asset Management, Inc., serves as the Company's
distributor. Counsellors Securities' principal business address is 466 Lexington
Avenue, New York, New York 10017-3147. Counsellors Securities receives a fee at
an annual rate equal to .25% of the Fund's average daily net assets for
distribution services, pursuant to a distribution agreement between Counsellors
Securities and the Company in accordance with a distribution plan (the "12b-1
Plan") adopted by the Company pursuant to Rule 12b-1 under the 1940 Act. Amounts
paid to Counsellors Securities under the Company's 12b-1 Plan may be used by
Counsellors Securities to cover expenses that are related to (i) the
distribution of Advisor Shares of the Funds, (ii) ongoing servicing and/or
maintenance of the accounts of shareholders of the Fund, and (iii) sub-transfer
agency services, subaccounting services or administrative services related to
the sale of the Advisor Shares of the Funds, all as set forth in the Company's
12b-1 Plan. Payments under the 12b-1 Plan are not tied exclusively to the
expenses actually incurred. Counsellors Securities may delegate some or all of
these functions to a Service Organization. See "How to Purchase Shares --
Purchases Through Intermediaries."

TRANSFER AGENT

CUSTODIAN

Brown Brothers Harriman & Co. serves as custodian for all of the Funds. The 1940
Act and the rules and regulations adopted thereunder permit a Fund to maintain
its securities and cash in the custody of certain eligible banks and securities
depositories. In compliance with such

P-17
<PAGE>
rules and regulations, a Fund'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 Fund are deducted from its total income before dividends
are paid. Any general expenses of the Company that are not readily identifiable
as belonging to a particular investment portfolio of the Company will be
allocated among all investment portfolios of the Company based upon the relative
net assets of the investment portfolios. The Advisor Class of the Funds pays its
own administration fees, and may pay a different share than the other classes of
other expenses (excluding advisory and custodial fees) if those expenses are
actually incurred in a different amount by the Advisor Class or if it receives
different services.

The expenses for each Fund are set forth in the tables entitled "Annual Fund
Operating Expenses," above.

- ----------------------------------------------
HOW TO PURCHASE SHARES

Shares representing interests in the Funds are offered continuously for sale by
the Distributor and may be purchased without imposition of a sales charge
through the BEA Advisor Funds. Shares of a Fund may be purchased either by mail
or, with special advance instructions, by wire.

BY MAIL

If an investor desires to purchase Shares by mail, a check or money order made
payable to the "BEA Advisor Funds" (in U.S. currency) should be sent along with
the completed account application to the "BEA Advisor Funds" at the address set
forth below. Checks payable to the investor and endorsed to the order of the
"BEA Advisor Funds" will not be accepted as payment and will be returned to
sender. If payment is received by check in proper form on or before the close of
regular trading on the New York Stock Exchange, Inc. ("NYSE") (generally 4:00
p.m. Eastern Time) on a day that a Fund calculates its net asset value (a
"Business Day") the purchase will be made at the Fund's net asset value
calculated at the end of that day. If payment is received after the close of
regular trading on the NYSE, the purchase will be effected at the Fund's net
asset value determined for the next Business Day after payment has been
received. Checks or money orders that are not in proper form or that are not
accompanied or preceded by a completed application will be returned to sender.
Shares purchased by check are entitled to receive dividends and distributions
beginning on the day after payment has been received. Checks should be made
payable to the "BEA Advisor Funds" accompanied by a breakdown of amounts to be
invested in each Fund. If a check used for purchase does not clear, the Funds
will cancel the purchase and the investor may be liable for losses or fees
incurred. For a description of the manner of calculating a Fund's net asset
value, see "Net Asset Value" below.

SEND TO:
BEA ADVISOR FUNDS
P.O. Box 8500
Boston, MA 02266-8500

OVERNIGHT TO:
BFDS
ATTN: BEA ADVISOR FUNDS
2 Heritage Drive
North Quincy, MA 02171

BY WIRE

P-18
<PAGE>

for instructions, an investor should then wire Federal Funds to the BEA Advisor
Funds , c/o BFDS using the following wire address:

State Street Bank & Trust Company
ABA# 0110 000 28
ATTN: Mutual Fund/Custody Dept.
[BEA Advisor Fund Name]
DDA# 9905-227-6
For Further Credit: [ACCOUNT NUMBER AND REGISTRATION]

If a telephone order is received by the close of regular trading on the NYSE AND
payment by wire is received on the same day in proper form (in accordance with
instructions stated 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 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. 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 Business Day. Payment
for orders that are not accepted will be returned to the prospective investor
after prompt inquiry. If a telephone order is placed and payment by wire is not
received on the same day, the Fund will cancel the purchase and the investor may
be liable for losses or fees incurred.

Shares of a Fund are sold without a sales charge. The minimum initial investment
in a Fund is $2,500 and minimum subsequent investments must be $250, except that
subsequent minimum investments can be as low as $100 under the Automatic
Investment Plan, Uniform Gifts to Minors Act and through Individual Retirement
Accounts described below. The Funds reserve the right to change the initial and
subsequent minimum investment requirements at any time.

After an investor has made his initial investment, additional Shares may be
purchased at any time by mail or by wire in the manner outlined above. Wire
payments for initial and subsequent investments should clearly indicate the
investor's account number and the name in which Shares are being purchased. Each
Fund reserves the right to suspend the offering of Shares for a period of time
or to reject any specific purchase order. In the interest of economy and
convenience, physical certificates representing Shares in a Fund are not
normally issued.

PURCHASE THROUGH INTERMEDIARIES

The Funds understand that some broker-dealers (other than Counsellors
Securities), financial institutions, securities dealers and other industry
professionals ("Service Agents") impose certain conditions on their clients that
invest in the Funds, which are in addition to or different from those described
in this Prospectus, and, to the extent permitted by applicable regulatory
authority, may charge their clients direct fees. Certain features of the Funds,
such as the minimum initial or subsequent investments, redemption fees and
certain trading restrictions may be modified or waived by Service Agents, and
administrative charges or other direct fees may be imposed for the services
rendered, which charges or fees would not be imposed if Fund Shares were
purchased directly from the Funds. Therefore, a client or customer should
contact the Service Agent acting on his behalf concerning the fees (if any)
charged in connection with a purchase or redemption of a Fund's shares and
should read this Prospectus in light of the terms governing his accounts with
Service Agents. Service Agents or, if applicable, their designees, will be
responsible for promptly transmitting client or customer purchase and redemption
orders to the Funds in accordance with their agreements with clients or
customers. Service Agents, or, if applicable, their designees that have entered
into agreements with a Fund or its agent, may enter confirmed purchase orders on
behalf of clients and customers with payment to follow no later than the Fund's

P-19
<PAGE>

pricing on the following Business Day. If payment is not received by such time
the Service Agents could be held liable for resulting fees or losses.

A Fund will be deemed to have received a purchase or redemption order when a
Service Agent, or, if applicable, its authorized designee, receives a purchase
or redemption order in good order. Orders received by a Fund in proper form will
be priced at the Fund's net asset value next computed after they are accepted by
the Service Agent or its authorized designee.

For administration, subaccounting, transfer agency and/or other services, BEA,
Counsellors Securities or an affiliate of either may pay Service Agent and
certain recordkeeping organizations with whom they have entered into agreements
a fee of up to .35% (the "Service Fee") of the average annual value of accounts
with the Funds maintained by such Service Agent or recordkeepers. A portion of
the Service Fee may be borne by the Funds as a transfer agency fee. The Service
Fee payable to any one Service Agent or recordkeeper is determined based upon a
number of factors, including the nature and quality of the services provided,
the operations processing requirements of the relationship and the standardized
fee schedule of the Service Agent or recordkeeper.

AUTOMATIC INVESTMENT PLAN

Additional investments in Shares may be made automatically on a periodic basis
by authorizing the BEA Advisor Funds to withdraw funds from your bank account
through an Automatic Investment Plan. Investors desiring to participate in an
Automatic Investment Plan should call the BEA Advisor Funds, at (800) 401-2230
to obtain the appropriate forms, or complete the appropriate section of the
Application included with this Prospectus. The minimum initial investment for an
Automatic Investment Plan is $1,000, with minimum monthly payments of $100.

RETIREMENT PLANS AND UGMA/UTMA ACCOUNTS

Shares may be purchased in conjunction with Individual Retirement Accounts
("IRAs"), rollover IRAs, pension, profit-sharing or other employer benefit
plans, and under the Uniform Gifts to Minors Act ("UGMA") or Uniform Transfers
to Minors Act ("UTMA"). The minimum initial investment in conjunction with such
accounts is $1,000, and the minimum subsequent investment is $100. For further
information as to applications and annual fees, please contact the BEA Advisor
Funds. To determine whether the benefits of an IRA and other plans and UGMA and
UTMA accounts are available and/or appropriate, a shareholder should consult
with a tax adviser.

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

HOW TO REDEEM AND EXCHANGE SHARES

An investor of a Fund may redeem (sell) his Shares on any day that the Fund's
net asset value is calculated (see "Net Asset Value" below).

REDEMPTION IN WRITING

Shareholders may redeem for cash some or all of their Fund Shares at any time.
To do so, a written request in proper form must be sent directly to the BEA
Advisor Funds c/o BFDS, P.O. Box 8500, Boston, MA 02266-8500. The redemption
price is the net asset value per share next determined after the initial receipt
of proper notice of a redemption. The value of Shares at the time of redemption
may be more or less than the shareholders' cost depending on the market value of
the securities held by the Fund at the time.

A request for redemption must be signed by all persons in whose names the Shares
are registered or by an authorized party, such as an agent or investment adviser
to the Shareholder. Signatures must conform exactly to the account registration.
Generally, a properly signed written request is all that is required for a
redemption. In some cases, however, other documents may be necessary. Additional
documentary evidence

P-20
<PAGE>

of authority is also required by the BEA Advisor Funds in the event redemption
is requested by a corporation, partnership, trust, fiduciary, executor or
administrator.

PAYMENT OF REDEMPTION PROCEEDS

Payment of the Redemption Price for Shares redeemed will be made by wire or
check mailed within seven days after acceptance by the BEA Investor Funds c/o
BFDS, of the request and any other necessary documents in proper order. Such
payment may be postponed or the right of redemption suspended as provided by the
SEC. If the Shares to be redeemed have been recently purchased by check, the
Fund's transfer agent may delay mailing a redemption check, which may be a
period of up to 15 days from the date of purchase, pending a determination that
the check has cleared.

INVOLUNTARY REDEMPTION
The Company reserves the right to redeem an account in any Fund of a shareholder
at any time the net asset value of the account in such Fund falls below $500 as
the result of a redemption request. Shareholders will be notified in writing
that the value of their account in a Fund is less than $500 and will be allowed
30 days to make additional investments before the redemption is processed.
REDEMPTION IN-KIND

The Company reserves the right, at its discretion, to honor any request for
redemption of a Fund's shares by making payment in whole or in part in
securities chosen by the Company and valued in the same way as they would be
valued for purposes of computing a Fund's net asset value. If payment is made in
securities, a shareholder may incur transaction costs in converting these
securities into cash after they have redeemed their Shares. The Company has
elected, however, to be governed by Rule 18f-1 under the 1940 Act so that a Fund
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
Fund. Redeeming shareholders will be required to bear certain administrative or
custodial costs in effecting redemptions in-kind.

EXCHANGE PRIVILEGE

An individual or Service Agent may exchange Advisor Shares of a Fund for Advisor
Shares of any other BEA Advisor Fund at such Fund's respective net asset values.
Exchanges will be effected in the manner described under "Redemption of Shares"
above. If an exchange request is received by BEA Advisor Funds prior to the
close of regular trading on the NYSE, the exchange will be made at each Fund'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 the BEA Advisor Funds at
(800) 401-2230.

TELEPHONE TRANSACTIONS

In order to request redemptions or exchanges by telephone, investors must have
completed

P-21
<PAGE>

and returned to the BEA Advisor Funds an account application containing a
telephone election. Unless contrary instructions are elected, an investor will
be entitled to make redemptions or exchanges by telephone by calling the BEA
Advisor Funds at (800) 401-2230. To add a telephone redemption or exchange
feature to an existing account that previously did not provide for this option,
a Telephone Redemption or Exchange Authorization Form may be obtained from the
BEA Advisor Funds. Neither the Company, the Funds, the Distributor, the Co-
Administrators, the Transfer Agent nor any other Fund agent will be liable for
following instructions communicated by telephone that they reasonably believe to
be genuine. Such procedures may include, among others, providing written
confirmation of telephone transactions, tape recording telephone instructions,
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, and requiring specific personal information prior to
acting upon telephone instructions.

- ----------------------------------------------
NET ASSET VALUE

The net asset values for each class of the Funds are determined as of the close
of regular trading on the NYSE on each Business Day. The net asset values of
each class of a Fund are calculated by adding the value of the proportionate
interest of each class in a Fund's securities, cash and other assets, deducting
the actual and accrued liabilities of the class and dividing the result by the
total number of outstanding shares of the class.

Most securities held by a Fund are priced based on their market value as
determined by reported sales prices, or the mean between bid and asked prices
that are provided by securities dealers or pricing services. Fund securities
which are primarily traded on foreign securities exchanges are normally valued
at the preceding closing values of such securities on their respective
exchanges. Securities for which market quotations are not readily available are
valued at fair market value as determined in good faith under procedures
established by the Board of Directors. The amortized cost method of valuation
will also be used with respect to debt obligations with sixty days or less
remaining to maturity unless the Adviser under the supervision of the Board of
Directors determines such method does not represent fair value.

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

DIVIDENDS AND DISTRIBUTIONS

The Company will distribute substantially all of the net realized capital gains,
if any, of each of the Funds to each Fund's shareholders annually. The Company
will distribute all net investment income, if any, for the BEA International
Equity, the BEA Emerging Markets Equity and the BEA Global Telecommunications
Funds annually. The Company will distribute net investment income for the BEA
High Yield Fund, if any, at least quarterly. All distributions will be
reinvested in the form of additional full and fractional shares of the relevant
Fund unless a contrary election is made on the application to have distributions
paid in cash. If in the future a shareholder desires to have distributions paid
out rather than reinvested, the shareholder should notify the BEA Advisor Funds
in writing.

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

TAXES

GENERAL

P-22
<PAGE>

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) and out of the portion of such net
capital gain that constitutes mid-term capital gain, if any, of a Fund will be
taxed to shareholders as long-term capital gain or mid-term capital gain, as the
case may be, 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 mid-term and other long-term capital gain of such taxpayers is
28% and 20%, respectively. Corporate taxpayers are taxed at the same rates on
both ordinary income and capital gains.

Shareholders who exchange shares representing interests in one Fund for shares
representing interests in another Fund 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.

FOREIGN INCOME TAXES

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<PAGE>
determine the effective rate of foreign tax in advance since the amount of each
Fund's assets to be invested in various countries is not known.

If more than 50% of the value of a Fund's total assets at the close of each
taxable year consists of the stock or securities of foreign corporations, such
Fund will be eligible to elect to "pass through" to the Company's shareholders
the amount of foreign income taxes paid by each Fund (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 respec-
tive pro-rata share of the foreign income taxes paid by a Fund 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 Fund for the purpose of the foreign tax credit
limitation rules of the Code, shareholders will be required to treat allocable
portions of a Fund's distributions as foreign source income. No deduction for
foreign taxes may be claimed by a shareholder who does not itemize deductions.

- ----------------------------------------------
MULTI-CLASS STRUCTURE

The Company offers other classes of shares, the Institutional and Investor
Shares of the Funds, which are offered directly to institutional investors and
financial intermediaries pursuant to separate prospectuses. Shares of a Fund
represent equal pro rata interests in the Fund and accrue dividends and
calculate net asset value and performance quotations in the same manner. The
Company quotes performance of the Institutional and Investor Shares separately
from the 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 the BEA Advisor Funds
at (800) 401-2230.

- ----------------------------------------------
DESCRIPTION OF SHARES

THIS PROSPECTUS AND THE STATEMENT OF ADDITIONAL INFORMATION INCORPORATED HEREIN
RELATE PRIMARILY TO THE BEA ADVISOR CLASSES REPRESENTING INTERESTS IN THE BEA
INTERNATIONAL EQUITY, THE BEA EMERGING MARKETS EQUITY, THE BEA GLOBAL
TELECOMMUNICATIONS AND THE BEA HIGH YIELD FUNDS AND DESCRIBE ONLY THE INVESTMENT
OBJECTIVE AND POLICIES, OPERATIONS, CONTRACTS AND OTHER MATTERS RELATING TO
THESE FUNDS.

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<PAGE>
Holders of shares of each of the Funds 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 Company 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 the
Company Shares" for examples of when the 1940 Act requires voting by investment
portfolio or by class.) Shareholders of the Company 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
Company may elect all of the directors.

As of November 15, 1997, to the Company's knowledge, no person held of record or
beneficially 25% or more of the outstanding shares of all classes of the
Company.

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<PAGE>
BEA ADVISOR FUNDS

- ----------------------------------------------
OTHER INFORMATION
REPORTS AND INQUIRIES

Shareholders of a Fund will receive unaudited semi-annual reports describing the
Fund's investment operations and annual financial statements audited by
independent accountants. Shareholder inquiries can be made by contacting the BEA
Advisor Funds at (800) 401-2230 or by writing to the BEA Advisor Funds P.O. Box
8500, Boston, MA 02266-8500.

PERFORMANCE INFORMATION

From time to time, each of the Funds 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 Fund. 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 Funds 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 Fund's performance with other measures of investment return. For
example, a Fund's total return or expense ratio 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, Morgan Stanley Composite Index EAFE,
Morgan Stanley Composite Index-Free Emerging Markets, JP Morgan Global
Government Bond Index (Unhedged), First Boston High Yield Index, Consumer Price
Index, Bond Buyer's 20-Bond Index, Dow Jones Industrial Average, national
publications such as MONEY, FORBES, BARRON'S, THE WALL STREET JOURNAL or the NEW
YORK TIMES or publications of a local or regional nature, and other industry
publications. For these purposes, the performance of a Fund, as well as the
performance published by such services or experienced by such indices, will
usually not reflect redemption fees, the inclusion of which would reduce
performance results. If a Fund advertises non-standard computations, however,
the Fund will disclose such fees, and will also disclose that the performance
data do not reflect such fees and that inclusion of such fees would reduce the
performance quoted.

From time to time, the BEA High Yield Fund may also advertise its "30-day
yield." The yield refers to the income generated by an investment in the Fund
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

P-26
<PAGE>
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 Fund 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 Fund are not
reflected in the yields on the Fund's shares, and such fees, if charged, will
reduce the actual return received by shareholders on their investments.

HISTORICAL PERFORMANCE INFORMATION

For the period from commencement of operations (November 1, 1996) through August
31, 1997, the total return since inception (not annualized) for the Advisor
Class of the BEA International Equity, Emerging Markets Equity and High Yield
Funds was as follows:

FOR THE PERIOD ENDED AUGUST 31, 1997

<TABLE>
<CAPTION>
SINCE
INCEPTION
---------
<S> <C>
International Equity Fund....................................................................................... 14.14%
Emerging Markets Equity Fund.................................................................................... 8.76%
High Yield Fund................................................................................................. 11.49%
</TABLE>

The total return assumes reinvestment of all dividends and capital gains and
reflects fee waivers in effect. Without these waivers, the Funds' performance
would have been lower. Of course, past performance is no guarantee of future
results. Investment return and principal value will fluctuate, so that Advisor
Shares when redeemed may be worth more or less than the original cost. For more
information on performance, see "Performance Information" in the Statement of
Additional Information.

INSTITUTIONAL CLASS. The table below presents the prior total return
history on an annualized basis for the Institutional Class of the BEA
International Equity, the BEA Emerging Markets Equity and the BEA High Yield
Funds for the periods indicated. The investment objectives, policies and
strategies of the Funds underlying the Institutional and Advisor Classes are
identical. The Institutional Class, which has a minimum investment of $3
million, has lower fees and expenses than the Advisor Class, so that the
performance of the Institutional Class will differ from that of the Advisor
Class. IN ADDITION, THE PAST PERFORMANCE OF THE INSTITUTIONAL CLASS OF EACH FUND
IS NOT INDICATIVE OF THE FUTURE PERFORMANCE OF EACH FUND. Listed below the
performance history for each Fund is a comparative index comprised of securities
similar to those in which the Funds invest.

P-27
<PAGE>

FOR THE YEAR ENDED AUGUST 31, 1997

<TABLE>
<CAPTION>
SINCE
FUND/INDEX (ANNUALIZED) ONE YEAR THREE YEARS INCEPTION*
- ----------------------------------------------------------------------------------------- ----------- ------------ -------------
<S> <C> <C> <C>
BEA International Equity................................................................. 15.9% 4.4% 10.4%
Morgan Stanley Capital International-Europe, Australia & Far East Index**................ 9.4% 6.0% 11.6%
BEA Emerging Markets Equity.............................................................. 8.3% (5.4)% 7.8%
Morgan Stanley Capital International-Emerging Markets Free Index**....................... 4.6% (3.2)% 12.1%
BEA High Yield........................................................................... 15.2% 11.8% 11.2%
CS First Boston High Yield Index***...................................................... 15.4% 12.9% 11.2%
</TABLE>

- ------------------------
* The BEA International Equity Fund commenced operations on October 1, 1992;
the BEA Emerging Markets Equity Fund commenced operations on February 1,
1993; the BEA High Yield Fund commenced operations on March 31, 1993.
** These indices are composites of equity securities considered to be
representative of equity performance in the specified countries. These
indices are not actively managed, and cannot be invested in directly.
Historical performance of these market indices does not guarantee future
performance of the Fund.
*** The index is a composite of fixed income securities considered to be
representative of fixed income performance in the high yield fixed income
market. The index is not actively managed, and cannot be invested in
directly. Historical performance of the market index does not guarantee
future performance of the Fund.

P-28
<PAGE>

NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY
REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS OR IN THE FUNDS' 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 COMPANY OR ITS
DISTRIBUTOR. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING BY THE COMPANY OR
BY THE DISTRIBUTOR IN ANY JURISDICTION IN WHICH SUCH OFFERING MAY NOT LAWFULLY
BE MADE.

<PAGE>

BEA ADVISOR FUNDS

QUICK REFERENCE GUIDE

BEA ADVISOR FUNDS
- -------------------------------------
International Equity Fund
Emerging Markets Equity Fund
Global Telecommunications Fund
High Yield Fund

WORLD WIDE WEB
- -------------------------------------
Please visit our website at: www.beafunds.com.

FUND AND ACCOUNT INFORMATION
- -------------------------------------
Shareholders and all interested investors may direct
their inquiries and requests for information to the
Funds' information line at 1-800-401-2230.

AUTOMATIC REINVESTMENT PROGRAM
- -------------------------------------
Dividend and capital gain distributions are
automatically reinvested in shares of the same
Fund at the current net asset value.

EXCHANGE PRIVILEGES
- -------------------------------------
Shareholders may sell fund shares and buy shares
of other BEA Advisor Funds by telephone or in
writing. Please refer to the Prospectus section
entitled "Exchange Privilege."

STATEMENTS AND REPORTS
- -------------------------------------
As a shareholder you will receive the following:
* Confirmation Statements - after every transaction
that affects your account balance or account
registration
* Account Statements - quarterly
* Financial Reports - semi-annually

INVESTMENT ADVISER
- -------------------------------------
BEA Associates
One Citicorp Center
153 East 53rd Street
New York, NY 10022

DISTRIBUTOR
- -------------------------------------
Counsellors Securities Inc.
466 Lexington Avenue
New York, NY 10017-3147

CO-ADMINISTRATOR
- -------------------------------------
PFPC Inc.
400 Bellevue Parkway
Wilmington, DE 19809

CO-ADMINISTRATOR
- -------------------------------------
BEA Associates
One Citicorp Center
153 East 53rd Street
New York, NY 10022

CUSTODIAN
- -------------------------------------
Brown Brothers Harriman & Co.
40 Water Street
Boston, MA 02109

TRANSFER AGENT
- -------------------------------------
State Street Bank and Trust Co.
225 Franklin Street
Boston, MA 02110

INDEPENDENT ACCOUNTANTS
- -------------------------------------
Coopers & Lybrand L.L.P.
2400 Eleven Penn Center
Philadelphia, PA 19103

LEGAL COUNSEL
- -------------------------------------
Drinker Biddle & Reath LLP
1345 Chestnut Street
Philadelphia, PA 19107-3496

<PAGE>

BEA
ADVISOR FUNDS

INTERNATIONAL EQUITY FUND
EMERGING MARKETS EQUITY FUND
GLOBAL TELECOMMUNICATIONS FUND
HIGH YIELD FUND
(INVESTMENT PORTFOLIOS OF THE RBB FUND, INC.)

STATEMENT OF ADDITIONAL INFORMATION

This Statement of Additional Information provides supplementary
information pertaining to shares (the "Advisor Shares" or the "Shares")
representing interests in four investment portfolios (the "Funds") of The RBB
Fund, Inc. (the "Company"): the BEA International Equity, the BEA Emerging
Markets Equity, the BEA Global Telecommunications and the BEA High Yield
Funds (collectively, the "Funds"). This Statement of Additional Information
is not a prospectus, and should be read only in conjunction with the BEA
Advisor Prospectus for the Funds, dated December 8, 1997, (the "Prospectus").
A copy of the Prospectus may be obtained from the Fund's transfer agent by
calling toll-free (800) 401-2230. This Statement of Additional Information
is dated December 8, 1997.

<PAGE>

CONTENTS

Prospectus
Page Page
---- ----------

General. . . . . . . . . . . . . . . . . . . . . . . . . . 3 3
Common Investment Policies -- All Funds. . . . . . . . . . 3 6
Supplemental Investment Objectives and
Policies --
BEA International Equity, BEA
Emerging Markets Equity and BEA Global
Telecommunications Funds . . . . . . . . . . . . . . . 24 6
Supplemental Investment Objectives and
Policies --
BEA Global Telecommunications
Fund . . . . . . . . . . . . . . . . . . . . . . . . . 24 6
Investment Limitations . . . . . . . . . . . . . . . . . . 25 7
Risk Factors . . . . . . . . . . . . . . . . . . . . . . . 27 7
Directors and Officers . . . . . . . . . . . . . . . . . . 32 N/A
Investment Advisory and Servicing
Arrangements . . . . . . . . . . . . . . . . . . . . . . 37 9
Portfolio Transactions . . . . . . . . . . . . . . . . . . 43 N/A
Purchase and Redemption Information. . . . . . . . . . . . 47 12
Valuation of Shares. . . . . . . . . . . . . . . . . . . . 48 16
Performance and Yield Information. . . . . . . . . . . . . 49 19
Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . 53 16
Additional Information Concerning Fund
Shares . . . . . . . . . . . . . . . . . . . . . . . . . 61 19
Miscellaneous. . . . . . . . . . . . . . . . . . . . . . . 64
Financial Statements . . . . . . . . . . . . . . . . . . . 75 N/A
Appendix A . . . . . . . . . . . . . . . . . . . . . . . . A-1
Appendix B . . . . . . . . . . . . . . . . . . . . . . . . B-1

-2-

<PAGE>

GENERAL

The RBB Fund, Inc. (the "Company) is an open-end management investment
company currently operating or proposing to operate twenty-two separate
investment portfolios. The Company was organized as a Maryland corporation on
February 29, 1988.

COMMON INVESTMENT POLICIES -- ALL FUNDS

The following supplements the information contained in the Prospectus
concerning the investment objectives and policies of, and techniques used by,
the Funds.

NON-DIVERSIFIED STATUS. Each Fund is classified as non-diversified
within the meaning of the Investment Company Act of 1940 (the "1940 Act") which
means that each Fund is not limited by such Act in the proportion of its assets
that it may invest in securities of a single issuer. Each Fund'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 (the
"Code"). See "Taxes." To qualify, each Fund 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
Fund'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 Fund's total assets will be invested in the
securities of a single issuer and each Fund will not own more than 10% of the
outstanding voting securities of a single issuer. To the extent that each Fund
assumes large positions in the securities of a small number of issuers, each
Fund'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.

-3-

<PAGE>

REPURCHASE AGREEMENTS. Each Fund 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 Fund 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 Fund to possible
loss because of adverse market action, expenses and/or delays in connection with
the disposition of the underlying obligations. The financial institutions with
which a Fund may enter into repurchase agreements will be banks and non-bank
dealers of U.S. Government securities that are listed on the Federal Reserve
Bank of New York's list of reporting dealers, if such banks and non-bank dealers
are deemed creditworthy by the Fund's adviser. A Fund's adviser will continue
to monitor creditworthiness of the seller under a repurchase agreement, and will
require the seller to maintain during the term of the agreement the value of the
securities subject to the agreement to equal at least the repurchase price
(including accrued interest). In addition, the Fund's adviser will require that
the value of this collateral, after transaction costs (including loss of
interest) reasonably expected to be incurred on a default, be equal to or
greater than the repurchase price (including accrued premium) provided in the
repurchase agreement or the daily amortization of the difference between the
purchase price and the repurchase price specified in the repurchase agreement.
The Fund's adviser will mark-to-market daily the value of the securities. There
are no percentage limits on a Fund's ability to enter into repurchase
agreements. Repurchase agreements are considered to be loans by the Fund under
the 1940 Act.

-4-

<PAGE>

repurchase them at a mutually agreed upon date, price and rate of interest. At
the time a Fund enters into a reverse repurchase agreement, it will establish
and maintain a segregated account with an approved custodian containing cash or
liquid 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 Fund's liquidity and ability to manage its assets might be
affected when it sets aside cash or portfolio securities to cover such
commitments. Reverse repurchase agreements involve the risk that the market
value of the securities retained in lieu of sale may decline below the price of
the securities a Fund has sold but is obligated to repurchase. In the event the
buyer of securities under a reverse repurchase agreement files for bankruptcy or
becomes insolvent, such buyer or its trustee or receiver may receive an
extension of time to determine whether to enforce a Fund's obligation to
repurchase the securities, and a Fund's use of the proceeds of the reverse
repurchase agreement may effectively be restricted pending such decision.
Reverse repurchase agreements are considered to be borrowings under the 1940
Act. Each Fund also may enter into "dollar rolls," in which it sells fixed
income securities for delivery in the current month and simultaneously contracts
to repurchase substantially similar (same type, coupon and maturity) securities
on a specified future date. During the roll period, a Fund would forgo
principal and interest paid on such securities. A Fund would be compensated by
the difference between the current sales price and the forward price for the
future purchase, as well as by the interest earned on the cash proceeds of the
initial sale. The Funds do not presently intend to invest more than 5% of net
assets in reverse repurchase agreements or dollar rolls.

WHEN-ISSUED SECURITIES, DELAYED DELIVERY TRANSACTIONS AND FORWARD
COMMITMENTS. Each Fund 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 Fund
with payment and delivery taking place in the future to secure what is
considered an advantageous yield and price to a Fund at the time of entering
into the transaction. Although the Funds have not established a limit on the
percentage of their assets that may be committed in connection with such
transactions, they will maintain segregated accounts with their custodian
consisting of cash or liquid securities denominated in U.S. dollars or non-U.S.
currencies in an aggregate amount equal to the amount of their 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 Fund's liquidity and ability

-5-

<PAGE>

to manage its assets might be affected when it sets aside cash or portfolio
securities to cover such commitments. When a Fund 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 Fund 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. Each Fund
currently anticipates that when-issued securities will not exceed 25% of its net
assets. Each Fund does not intend to engage in when-issued purchases and
forward commitments for speculative purposes but only in furtherance of its
investment objectives.

STAND-BY COMMITMENT AGREEMENTS. Each Fund may from time to time enter
into stand-by commitment agreements. Such agreements commit a Fund, for a
stated period of time, to purchase a stated amount of fixed-income securities
which may be issued and sold to the Fund 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 Fund is paid a commitment fee, regardless of
whether or not the security is ultimately issued. A Fund 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 Fund. Each
Fund will not enter into a stand-by commitment with a remaining term in excess
of 45 days and it will limit its investment in such commitments so that the
aggregate purchase price of the securities subject to such commitments, together
with the value of portfolio securities subject to legal restrictions on resale,
will not exceed 10% of its assets taken at the time of acquisition of such
commitment or security. Each Fund will at all times maintain a segregated
account with its custodian consisting of cash or liquid 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 Fund's liquidity and ability to
manage its assets might be affected when it sets aside cash or portfolio
securities to cover such commitments.

-6-

<PAGE>

ILLIQUID SECURITIES. Each Fund does not presently intend to invest
more than 15% 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 Fund 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
Company's Board of Directors. Because of the absence of any liquid trading
market currently for these investments, a Fund may take longer to liquidate
these positions than would be the case for publicly traded securities. Although
these securities may be resold in privately negotiated transactions, the prices
realized on such sales could be less than those originally paid by a Fund.
Securities that have legal or contractual restrictions on resale but have a
readily available market are not considered illiquid for purposes of this
limitation. With respect to each Fund, repurchase agreements subject to demand
are deemed to have a maturity equal to the notice period.

Mutual funds do not typically hold a significant amount of 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.

If otherwise consistent with their investment objectives and policies,
the Funds may purchase securities that are not

-7-

<PAGE>

registered under the Securities Act but can be sold to "qualified
institutional buyers" in accordance with Rule 144A under the Securities Act.
These securities will not be considered illiquid so long as it is determined
by the Adviser, under guidelines approved by the Board of Directors, that an
adequate trading market exists for the securities. A Fund's investment in
Rule 144A securities could increase the level of illiquidity during any
period that qualified institutional buyers become uninterested in purchasing
these securities.

-8-

<PAGE>

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 Funds to possible loss because of adverse market
action, expenses and/or delays in connection with the disposition of the
underlying securities.

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 Funds may invest
generally consist of obligations issued or backed by national, state or
provincial governments or similar political

-9-

<PAGE>

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.

Dollar-denominated, collateralized Brady Bonds, which may be fixed
rate par bonds or floating rate discount bonds, are collateralized in full as to
principal by U.S. Treasury zero coupon bonds having the same maturity as the
bonds. Interest payments on these Brady Bonds generally are collateralized by
cash or securities in an amount that, in the case of fixed rate bonds, is equal
to at least one year of rolling interest payments or, in the case of floating
rate bonds, initially is equal to at least one year's rolling interest payments
based on the applicable interest rate at that time and is adjusted at regular
intervals thereafter.

-10-

<PAGE>

collateralized on an 18-month rolling-forward basis by funds held in escrow by
an agent for the bondholders. Approximately half of the Venezuelan Brady Bonds
issued to date have principal repayments at final maturity collateralized by
U.S. Treasury zero coupon bonds (or comparable collateral in other currencies),
while slightly more than half have interest coupon payments collateralized on a
14-month rolling-forward basis by securities held by the Federal Reserve Bank of
New York as collateral agent.

LOAN PARTICIPATIONS AND ASSIGNMENTS. Each Fund 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 Funds' 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 Fund having a contractual relationship only with the Lender,
not with the borrower. Each Fund 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 Funds
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 Fund may not directly benefit
from any collateral supporting the Loan in which it has purchased the
Participation. As a result, the Funds 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 Funds 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 Funds will acquire Participations only if the
Lender interpositioned between the Funds and the borrower is determined by BEA
to be creditworthy. Each Fund currently anticipates that it will not invest
more than 5% of its net assets in Loan Participations and Assignments.

-11-

<PAGE>

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, 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.

-12-

<PAGE>

MORTGAGE-BACKED SECURITIES. The Funds may invest in mortgage-backed
securities, such as those issued by the Government National Mortgage Association
("GNMA"), the Federal National Mortgage Association ("FNMA"), the Federal Home
Loan Mortgage Corporation ("FHLMC") or certain foreign issuers, 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 Fund'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,

-13-

<PAGE>

pools, particularly those with loans with other maturities or different
characteristics, are priced on an assumption of average life determined for each
pool.

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.

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<PAGE>

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 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 sequentiallyor by other rules of priority.
Generally, payments of principal are applied to the CMO classes in the order of
their respective stated maturities, so that no principal payments will be made
on a CMO class until all other classes having an earlier stated maturity date
are paid in full. Sometimes, however, CMO classes are "parallel pay," I.E.
payments of principal are made to two or more classes concurrently. CMOs may
exhibit more or less price volatility and interest rate risk than other types of
mortgaged-related obligations.

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 receives 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 Fund would have the same effect as the prepayment of
mortgages underlying a

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<PAGE>

mortgage-backed pass-through security as described above.

ASSET-BACKED SECURITIES. Each Fund 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 Funds 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 Funds
will therefore not purchase any asset-backed securities which would cause 25% or
more of a Fund's net 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 Fund may invest. Automobile receivables
generally are secured by automobiles. Most issuers of automobile receivables
permit the loan servicers to retain possession of the underlying obligations.
If the servicer were to sell these obligations to another party, there is a risk
that the purchaser would acquire an interest superior to that of the holders of
the asset-backed securities. In addition, because of the large number of
vehicles involved in a typical issuance and technical requirements under state
laws, the trustee for the holders of the automobile receivables may not have a
proper security interest in the underlying automobiles. Therefore, there is the
possibility that recoveries on repossessed collateral may not, in some cases, be
available to support payments on these securities. Credit card receivables are
generally unsecured, and the debtors are entitled to the protection of a number
of state and federal consumer credit laws, many of which give such debtors the
right to set off certain amounts owed on the credit cards, thereby reducing the
balance due.

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<PAGE>

ADDITIONAL INVESTMENT CONSIDERATIONS AND RISKS -- NON-INVESTMENT
GRADE FIXED-INCOME SECURITIES. When and if available, fixed-income
securities may be purchased by a Fund at a discount from face value. From
time to time, a Fund may purchase securities in default with respect to the
paying of principal and/or interest at the time acquired if, in the opinion
of BEA, such securities have the potential for future capital appreciation.

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<PAGE>

The value of the lower rated fixed-income securities that the
Funds 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 Fund
but will be reflected in the net asset value of a Fund's shares. The Funds
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.

-18-

<PAGE>

distributions to shareholders for federal income tax and federal excise tax
purposes, even though it receives no cash interest until the security's maturity
or payment date. Therefore, in order to satisfy these distribution
requirements, a Fund 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 Fund'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 Fund may also purchase securities not
paying interest at the time acquired if, in the opinion of the Fund's Adviser,
such securities have the potential for future income or capital appreciation.

HEDGING. Each of the Funds may engage in various hedging strategies.
See "Currency Hedging" in the Prospectus.

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
Fund 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 Fund 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 Fund security if its market
value exceeds the amount of foreign currency a Fund is obligated to deliver.
The projection of short-term currency market movements is extremely difficult,

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<PAGE>

and the successful execution of a short-term hedging strategy is highly
uncertain.

-20-

<PAGE>

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 Fund.

OPTIONS AND FUTURES CONTRACTS. The Funds 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 Funds 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. See Appendix "B" for a
description of futures contracts and options on futures contracts and the risks
thereof.

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<PAGE>

exercise price of the call written provided the difference is maintained by the
Fund in liquid assets in a segregated account with its custodian.

There are several risks associated with transactions in options on
securities and indexes. For example, there are significant differences between
the securities and options markets that could result in an imperfect correlation
between these markets, causing a given transaction not to achieve its
objectives. In addition, a liquid secondary market for particular options,
whether traded over-the-counter or on a national securities exchange
("Exchange"), may be absent for reasons which include the following: there may
be insufficient trading interest in certain options; restrictions may be imposed
by an Exchange on opening transactions or closing transactions or both; trading
halts, suspensions or other restrictions may be imposed with respect to
particular classes or series of options or underlying securities; unusual or
unforeseen circumstances may interrupt normal operations on an Exchange; the
facilities of an Exchange or the Options Clearing Corporation may not at all
times be adequate to handle current trading volume; or one or more Exchanges
could, for economic or other reasons, decide or be compelled at some future date
to discontinue the trading of options (or a particular class or series of
options), in which event the secondary market on that Exchange (or in that class
or series of options) would cease to exist, although outstanding options that
had been issued by the Options Clearing Corporation

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<PAGE>

as a result of trades on that Exchange would continue to be exercisable in
accordance with their terms.

SHORT SALES "AGAINST THE BOX." In a short sale, a Fund sells a
borrowed security and has a corresponding obligation to the lender to return
the identical security. Each Fund 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 Fund engages in a
short sale, the collateral for the short position will be maintained by the
Fund's custodian or a qualified sub-custodian. While the short sale is open,
the Fund 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 Fund's long position. A Fund 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 Fund (or a security
convertible or exchangeable for such security), or when the Fund wants to
sell the security at an attractive current price, but also wishes possibly to
defer recognition of gain or loss for federal income tax purposes. (A short
sale against the box will defer recognition of gain for federal income tax
purposes only if the Fund subsequently closes the short position by making a
purchase of the relevant securities no later than 30 days after the end of
the taxable year.) In such case, any future losses in the Fund'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 Fund owns.
There will be certain additional transaction costs associated with short
sales against the box, but the Fund will endeavor to offset these costs with
the income from the investment of the cash proceeds of short sales. The
Funds do not presently intend to invest more than 5% of net assets in short
sales against the box.

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 Company 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

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<PAGE>

investment dealers who make a market in the Section 4(2) paper, thereby
providing liquidity. See "Illiquid Securities" above. See Appendix "A" for a
list of commercial paper ratings.

SUPPLEMENTAL INVESTMENT OBJECTIVES AND POLICIES --
BEA INTERNATIONAL EQUITY, BEA EMERGING MARKETS EQUITY AND
BEA GLOBAL TELECOMMUNICATIONS FUNDS

SUPPLEMENTAL INVESTMENT OBJECTIVES AND POLICIES --
BEA GLOBAL TELECOMMUNICATIONS FUND

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
depreciation 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,

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<PAGE>

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 Fund's investment decisions are based upon capital appreciation
potential rather than income considerations.

INVESTMENT LIMITATIONS

The Company has adopted the following fundamental investment
limitations, which may not be changed without the affirmative vote of the
holders of a majority of the Fund's outstanding Shares (as defined in Section
2(a)(42) of the 1940 Act). Each Fund may not:

2. Issue any senior securities, except as permitted under the 1940
Act;

3. Act as an underwriter of securities within the meaning of the
Securities Act, 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;

6. Make loans, except through loans of portfolio instruments and
repurchase agreements, provided that for purposes

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<PAGE>

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 the BEA Global Telecommunications Fund, purchase any
securities, which would cause 25% or more of the value of the Fund's total
assets at the time of purchase to be invested in the securities of 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. The BEA Global Telecommunications Fund will concentrate in
the telecommunications industry.

For purposes of Investment Limitation No. 1, collateral arrangements
with respect to, if applicable, the writing of options and futures contracts,
options on futures contracts, forward currency contracts and collateral
arrangements with respect to initial and variation margin are not deemed to be a
pledge of assets and neither such arrangements nor the purchase or sale of
futures or related options are deemed to be the issuance of a senior security
for purposes of Investment Limitation No. 2.

In addition to the fundamental investment limitations specified above,
a Fund may not:

1. Make investments for the purpose of exercising control or
management, but investments by a Fund in wholly-owned investment entities
created under the laws of certain countries will not be deemed the making of
investments for the purpose of exercising control or management;

2. Purchase securities on margin, except for short-term credits
necessary for clearance of portfolio transactions, and except that a Fund 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

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<PAGE>

that a Fund 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 Company, the Adviser or any subsidiary
thereof each owning beneficially more than one-half 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 Company's Board of Directors without a vote of the shareholders.

RISK FACTORS

FOREIGN SECURITIES. Investments in foreign securities are subject to
certain risks, as discussed below.

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<PAGE>

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 Funds' ability to repatriate investment income, capital or
the proceeds of sales of securities by foreign investors. The Funds 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 Funds
of any restrictions on investments.

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<PAGE>

investment companies, they will each bear their proportionate share of the costs
incurred by such companies, including investment advisory fees.

OPERATING EXPENSES. The costs attributable to foreign investing that
a Fund 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 Fund 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 Fund would be subject.

LOWER-RATED OR NON-RATED CRITERIA FOR DEBT SECURITIES. The BEA High
Yield Fund 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 are
greater than is the case with higher rated securities. For example, during an
economic downturn or a sustained period of rising interest rates, issuers of
high yield securities may be more likely to experience financial stress,
especially if such issuers are highly leveraged. During such periods, such
issuers may not have sufficient revenues to meet their interest payment
obligations. The issuer's ability to service its debt obligations also may be
adversely affected by specific issuer developments, or the issuer's inability to
meet specific projected business forecasts, or the unavailability of additional
financing. The risk of loss due to default by the issuer is significantly
greater for the holders of lower-rated securities because such securities may be
unsecured and may be subordinated to other creditors of the issuer.

Lower-rated securities frequently have call or redemption features
which would permit an issuer to repurchase the security from a Fund. If a call
were exercised by the issuer

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<PAGE>

during a period of declining interest rates, a Fund likely would have to
replace such called security with a lower yielding security, thus decreasing the
net investment income to a Fund and dividends to shareholders.

A Fund may have difficulty disposing of certain lower-rated
securities because there may be a thin trading market for such securities.
The secondary trading market for high yield securities is generally not as
liquid as the secondary market for higher rated securities. Reduced
secondary market liquidity may have an adverse impact on market price and a
Fund's ability to dispose of particular issues when necessary to meet a
Fund's liquidity needs or in response to a specific economic event such as a
deterioration in the creditworthiness of the issuer.

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 Fund 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 Fund can meet redemption requests. BEA will not necessarily
dispose of a portfolio security when its ratings have been changed.

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<PAGE>

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.

Investors should also be aware that certain sovereign debt instruments
in which a Fund 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 Fund 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 Fund
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 Fund's
ability to dispose of particular issues when necessary to meet a Fund's
liquidity needs or in response to a specific economic event, such as a
deterioration in the creditworthiness of the issuer. The lack of a liquid

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<PAGE>

secondary market for certain securities also may make it more difficult for a
Fund to obtain accurate market quotations for purposes of valuing a Fund's
portfolio and calculating its net asset value. When and if available,
fixed-income securities may be purchased by a Fund at a discount from face
value. However, a Fund 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 Fund 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 Company, their ages,
business addresses and principal occupations during the past five years are:

Position Principal Occupation
Name, Address and Age with the Company During Past Five Years
- --------------------- ---------------- ----------------------

Arnold M. Reichman - 49* Director Senior Managing Director,
466 Lexington Avenue Chief Operating Officer
New York, NY 10017 and Assistant Secretary,
Warburg Pincus Asset
Management, Inc.;
Director and Executive
Officer, Counsellors
Securities Inc;
Director/Trustee of
various investment
companies advised by
Warburg Pincus Asset
Management, Inc.

Robert Sablowsky - 58** Director Senior Vice President,
110 Wall Street Fahnestock & Co., Inc.
New York, NY 10005 (a registered
broker/dealer); prior to
October 1996, Executive
Vice President of Gruntal
& Co., Inc. (a registered
broker/dealer).

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<PAGE>

Position Principal Occupation
Name, Address and Age with the Company During Past Five Years
- --------------------- ---------------- ----------------------

Francis J. McKay - 60 Director Since 1963, Executive
7701 Burholme Avenue Vice President, Fox
Philadelphia, PA 19111 Chase Cancer Center
(biomedical research and
medical care.)

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 and Vice
Comcast Corporation Chairman since 1969,
1234 Market Street Comcast Corporation
16th Floor (cable television and
Philadelphia, PA communications);
19107-3723 Director, Comcast
Cablevision of
Philadelphia (cable
television
communications) and
Nextel (wireless
communications).

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<PAGE>

Position Principal Occupation
Name, Address and Age with the Company During Past Five Years
- --------------------- ---------------- ----------------------

Donald van Roden - 72 Director and Self-employed
1200 Old Mill Lane Chairman of the businessman. From
Wyomissing, PA 19610 Board February 1980 to March
1987, Vice Chairman,
Smith Kline Beecham
Corporation
(pharmaceuticals);
Director, AAA
Mid-Atlantic (auto
service); Director,
Keystone Insurance Co.

Edward J. Roach - 73 President and Certified Public
Suite 100 Treasurer Accountant; Vice Chairman
Bellevue Park of the of the Board, Fox
Corporate Center Chase Cancer Center;
400 Bellevue Parkway Trustee Emeritus,
Wilmington, DE 19809 Pennsylvania School for
the Deaf; Trustee
Emeritus, Immaculata
College; President or
Vice President and
Treasurer of various
investment companies
advised by PNC
Institutional Management
Corporation; Director,
The Bradford Funds, Inc.

Morgan R. Jones - 58 Secretary Chairman of the law firm
Drinker Biddle & Reath LLP of Drinker Biddle &
1345 Chestnut Street Reath LLP; Director,
Philadelphia, PA Rocking Horse Child Care
19107-3496 Centers of America, Inc.

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

* Mr. Reichman is an "interested person" of the Company, as that term is
defined in the 1940 Act, by virtue of his positions with Counsellors
Securities Inc., the Company's distributor.

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<PAGE>

** Mr. Sablowsky is an "interested person" of the Company, as that term is
defined in the 1940 Act, by virtue of his position with Fahnestock & Co.,
Inc., a registered broker-dealer.

The Company pays directors who are not "affiliated persons" (as that
term is defined in the 1940 Act) of any investment adviser or sub-adviser of
the Company or the Distributor and Mr. Sablowsky, who is considered to be an
affiliated person, $12,000 annually and $1,000 per meeting of the Board or any
committee thereof that is not held in conjunction with a Board meeting. In
addition, the Chairman of the Board receives an additional $5,000 per year for
his services in this capacity. Such Directors are reimbursed for any expenses
incurred in attending meetings of the Board of Directors or any committee
thereof. For the year ended August 31, 1997, each of the following members of
the Board of Directors received compensation from the Company in the following
amounts:

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DIRECTORS' COMPENSATION

Pension or Total
Retirement Compensation
Benefits Estimated from
Aggregate Accrued as Annual Registrant
Compensation Part of Benefits and Fund
Name of from Fund Upon Complex Paid(1)
Person/Position Registrant Expenses Retirement to Directors
- --------------- ---------- -------- ---------- ------------

Julian A. Brodsky, $16,000 N/A N/A $16,000
Director

Francis J. McKay, $19,000 N/A N/A $19,000
Director

Arnold M. Reichman, 0 N/A N/A 0
Director

Robert Sablowsky, $ 8,000 N/A N/A $ 8,000
Director

Marvin E. Sternberg, $19,000 N/A N/A $19,000
Director
Donald van Roden, $24,000 N/A N/A $24,000
Director and
Chairman

1. A Fund Complex means two or more investment companies that hold themselves
out to investors as related companies for purposes of investment and
investor services, or have a common investment adviser or have an
investment adviser that is an affiliated person of the investment adviser
of any other investment companies.

On October 24, 1990 the Company adopted, as a participating
employer, the Fund Office Retirement Profit-Sharing Plan and Trust
Agreement, a retirement plan for employees (currently Edward J. Roach
and one other employee) pursuant to which the Company will contribute on
a quarterly basis amounts equal to 10% of the quarterly compensation of
each eligible employee. By virtue of the services performed by the
Company's advisers, custodians, administrators and distributor, the
Company itself requires only two part-time employees. Drinker Biddle &
Reath, LLP, of which Mr. Jones is a partner, receives legal fees as
counsel to the Company. No officer, director or employee of BEA or the
Distributor currently receives any compensation from the Company.

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<PAGE>

INVESTMENT ADVISORY AND SERVICING ARRANGEMENTS

ADVISORY AGREEMENTS. BEA Associates (sometimes referred to as the
"Adviser") renders advisory and administrative services to each of the Funds
pursuant to Investment Advisory Agreements. The Advisory Agreements relating to
the Funds are dated September 16, 1992 for the BEA International Equity, the BEA
Emerging Markets Equity and the BEA High Yield Funds and dated July 10, 1996 for
the BEA Global Telecommunications Fund. Such advisory agreements are
hereinafter collectively referred to as the "Advisory Agreements."

BEA Associates is a diversified investment adviser, managing global
equity, fixed-income and derivative securities accounts for corporate pension
and profit-sharing plans, state pension funds, union funds, endowments and other
charitable institutions. As of September 30, 1997, BEA Associates managed
approximately $34.6 billion in assets. BEA is a wholly-owned subsidiary of
Credit Suisse, the second largest Swiss bank, which in turn is a subsidiary of
CS Holding, a Swiss corporation. Active employees of BEA have a long term
equity incentive plan. BEA Associates is a registered investment advisor under
the Investment Advisors Act of 1940, as amended.

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<PAGE>

Global Telecommunications and the BEA High Yield Funds, BEA Associates will be
paid (before any voluntary waivers or reimbursements) a monthly fee computed at
an annual rate of .80%, 1.00%, 1.00% and .70% of average daily net assets,
respectively.

For the fiscal year ended August 31, 1997 the Funds paid BEA advisory
fees and BEA waived fees and/or reimbursed expenses of the Funds as follows:

Fees Paid
(after waivers and
Fund reimbursements) Waivers Reimbursements
- ---- ------------------ ------- --------------

International $5,300,316 $ 0 $ 0
Equity
Emerging Markets $ 988,002 $ 18,498 $ 0
Equity
High Yield $ 393,841 $233,336 $ 0
Global $ 0 $ 3,745 $20,903
Telecommunications

For the fiscal year ended August 31, 1996, the Funds paid BEA advisory
fees and BEA waived fees and/or reimbursed expenses of the Funds as follows:

Fees Paid
(after waivers and
Fund reimbursements) Waivers Reimbursements
- ---- ------------------ ------- --------------

International $5,993,072 $ 0 $0
Equity
Emerging Markets $1,289,739 $ 0 $0
Equity
High Yield $ 542,590 $100,763 $0
Global N/A N/A N/A
Telecommunications

For the fiscal year ended August 31, 1995, the Funds paid BEA advisory
fees and BEA waived fees and/or reimbursed expenses of the Funds as follows:

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<PAGE>

Fees Paid
(after waivers and
Fund reimbursements) Waivers Reimbursements
- ---- ------------------ ------- --------------

International Equity $6,012,837 $ 0 $0
Emerging Markets $1,250,012 $33,702 $0
Equity
High Yield $1,002,002 $0 $0
Global N/A N/A N/A
Telecommunications

Each Fund bears all of its own expenses not specifically assumed by
the Adviser. General expenses of the Company not readily identifiable as
belonging to a Fund of the Company are allocated among all investment funds
by or under the direction of the Company's Board of Directors in such manner
as the Board determines fair and accurate. The BEA Advisor Class of the
Funds pays its own administration fees, and may pay a different share than
the other classes of the Funds of other expenses (excluding advisory and
custodial fees) if those expenses are actually incurred in a different amount
by the Advisor Class or if it receives different services.

The Advisory Agreements were reapproved on July 9, 1997, by vote of
the Company's Board of Directors, including a majority of those directors who
are not parties to the Advisory Agreements or interested persons (as defined
in the 1940 Act) of such parties. The Advisory Agreements were approved by
each Fund's initial shareholder. Each Advisory Agreement is terminable by
vote of the Company's Board of Directors or by the holders of a majority of
the outstanding voting securities of the relevant Fund, at any time without
penalty, on 60 days' written notice to BEA Associates. Each of the Advisory
Agreements may also be terminated by BEA Associates on 60 days' written
notice to the Company. Each of the Advisory Agreements terminates
automatically in the event of assignment thereof.

-39-

<PAGE>

and transfers portfolio securities on account of each Fund, (c) accepts receipts
and makes disbursements of money on behalf of each Fund, (d) collects and
receives all income and other payments and distributions on account of each
Fund's portfolio securities, and (e) makes periodic reports to the Company's
Board of Directors concerning each Fund's operations. BBH is authorized to
select one or more banks or trust companies to serve as sub-custodian on behalf
of the Company, provided that BBH remains responsible for the performance of all
its duties under the Custodian Agreement and holds the Company harmless from the
negligent acts and omissions of any sub-custodian. For its services to the
Company under the Custodian Agreement, BBH receives a fee which is calculated
based upon each Fund's average daily gross assets, exclusive of transaction
charges and out-of-pocket expenses, which are also charged to the Company.

State Street Bank and Trust Company ("State Street") serves as
transfer agent for the Funds. It has delegated to Boston Financial Data
Services, Inc. ("BFDS"), a 50%-owned subsidiary, responsibility for most
transfer agent servicing functions. State Street serves as the transfer and
dividend disbursing agent for the Funds pursuant to a Transfer Agency Agreement
(the "Transfer Agency Agreement"), under which it (a) issues and redeems shares
of each of the Funds, (b) addresses and mails all communications by each Fund to
record owners of shares of each such Fund, 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 Company's Board of Directors concerning
the operations of each Fund. For its services to the Company under the
Transfer Agency Agreement, State Street receives a fee on a per transaction
basis.

ADMINISTRATION AND ACCOUNTING SERVICES AGREEMENTS. PFPC Inc.,
("PFPC") an indirect, wholly-owned subsidiary of PNC Bank Corp., serves as
the administrator to the Advisor Class of the Funds pursuant to
Administration and Accounting Services Agreements, which were reapproved by
the Board of Directors on July 9, 1997 (the "PFPC Administration and
Accounting Services Agreements"). PFPC has agreed to furnish to the BEA
Advisor Funds portfolio statistical and research data, clerical, accounting
and bookkeeping services and certain other services required by the Funds.

The PFPC Administration and Accounting Services Agreements provide
that PFPC shall not be liable for any loss suffered by the Company or the
Funds in connection with the performance of services under the PFPC
Administration and Accounting Services Agreements, except a loss resulting
from willful misfeasance, gross negligence, or reckless disregard of its
duties and obligations under the PFPC Administration and Accounting Services
Agreements. In consideration for providing services pursuant to the PFPC
Administration and Accounting Services Agreements, PFPC

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<PAGE>

receives a fee calculated at an annual rate of .125% of average daily net assets
of the Advisor Class of each Fund, with a minimum annual fee of $75,000.

For the period from commencement of operations (the Global
Telecommunications Fund commenced operations December 4, 1996; all other Funds
commenced operations November 1, 1996) and ending August 31, 1997, the Funds
paid PFPC administration fees and PFPC waived fees and/or reimbursed expenses as
follows:

Fees Paid
Portfolio (after waivers) Waivers Reimbursements
- --------- --------------- ------- --------------

International Equity $ 785,014 $43,161 $ 0
Emerging Markets
Equity $ 125,801 $ 12 $ 0
High Yield $ 89,597 $22,399 $ 0
Global
Telecommunications $ 0 $ 468 $ 0

BEA serves as co-administrator to the Advisor Class of the Funds
pursuant to Co-Administration Agreements which were reapproved by the Board of
Directors on July 9, 1997 (the "BEA Co-Administration Agreements"). BEA has
agreed to provide shareholder liaison services to the Advisor Class of the Funds
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 Company or the Funds 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 BEA Co-Administration
Agreements, BEA receives a fee calculated at an annual rate of .05% of average
daily net assets of the Advisor Class of the Funds for assets up to $125 million
and .10% thereafter.

For the period from commencement of operations (the Global
Telecommunications Fund commenced operations December 4, 1996; all other Funds
commenced operations November 1, 1996) and ending August 31, 1997, the Funds
paid BEA administration fees and BEA waived fees and/or reimbursed expenses as
follows:

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<PAGE>

Fees Paid
Portfolio (after waivers) Waivers Reimbursements
- --------- --------------- ------- --------------

International Equity $ 0 $ 31 $ 0
Emerging Markets
Equity $ 0 $ 2 $ 0
High Yield $ 0 $ 29 $ 0
Global
Telecommunications $ 0 $187 $ 0

DISTRIBUTION AND SHAREHOLDER SERVICING

The Funds have each entered into Distribution Agreements with
Counsellors Securities Inc. ("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 Agreements
provide that the Funds will 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 Funds. 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 Advisor Class of the Funds, 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 collectively with Selling
Services and Administrative Services, "Services") 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 Funds, 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 Funds to prospective shareholders of the Funds; 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.

For the period ended August 31, 1997, the Funds paid Counsellors
Securities distribution fees and Counsellors

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<PAGE>

Securities waived distribution fees and/or reimbursed expenses as follows:

Fees Paid
Portfolio (after waivers) Waivers Reimbursements
- --------- --------------- ------- --------------

International Equity $151 $ 0 $ 0
Emerging Market
Equity $ 9 $ 0 $ 0
High Yield $143 $ 0 $ 0
Global
Telecommunications $936 $ 0 $ 0

Mr. Reichman, a Director of the Fund, has an indirect financial
interest in the operation of the Plan by virtue of his positions with the
Distributor. Mr. Sablowsky, a Director of the Fund, has an indirect interest in
the operation of the Plans by virtue of his position with Fahnestock Co., Inc.

PORTFOLIO TRANSACTIONS

-43-

<PAGE>

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.

For the fiscal year ended August 31, 1997, the Funds paid brokerage
commissions as follows:

Fund Brokerage Commission
---- --------------------

International Equity $ 5,041,204
Emerging Markets Equity $ 1,074,701
High Yield $ 0
Global Telecommunications $ 1,261

For the fiscal year ended August 31, 1996, the Funds paid brokerage
commissions as follows:

Fund Brokerage Commission
---- --------------------

International Equity $3,385,421
Emerging Markets Equity $ 713,193
High Yield 0
Global Telecommunications N/A

For the fiscal year ended August 31, 1995, the Funds paid brokerage
commissions as follows:

Fund Brokerage Commission
---- --------------------

International Equity $ 3,943,441
Emerging Markets Equity $ 778,886
High Yield $ 0
Global Telecommunications N/A

-44-

<PAGE>

Corporate debt and U.S. Government securities are generally traded on
the over-the-counter market on a "net" basis without a stated commission,
through dealers acting for their own account and not as brokers. The Funds 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.

Investment decisions for each Fund and for other investment accounts
managed by BEA Associates are made independently of each other in the light of
differing conditions. However, the same investment decision may be made for two
or more of such accounts. In such cases, simultaneous transactions are
inevitable. Purchases or sales are then averaged as to price and allocated as
to amount according to a formula deemed equitable to each such account. While
in some cases this practice could have a detrimental effect upon the price or
value of the security as far as a Fund is concerned, in other cases it is
believed to be

-45-

<PAGE>

beneficial to a Fund. A Fund 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 Company's Board of Directors
pursuant to Rule 10f-3 under the 1940 Act.

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.

The BEA International Equity, the BEA Emerging Markets Equity, the BEA
Global Telecommunications and the BEA High Yield Funds expect that their annual
Fund turnover rate should not exceed 100% under normal market conditions. A
high rate of portfolio turnover (100% or more) involves correspondingly greater
brokerage commission expenses and other transaction costs, which must be borne
directly by a Fund. Each of the Funds 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 Fund'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 Fund during the year.

PURCHASE AND REDEMPTION INFORMATION

The Company reserves the right, if conditions exist which make cash
payments undesirable, to honor any request for redemption of a Fund's shares by
making payment in whole or in part in securities chosen by the Company and
valued in the same way as they would be valued for purposes of computing a
Fund's net asset value. If payment is made in securities, a shareholder may
incur transaction costs in converting these securities into cash. Investors
may also be required to bear certain transaction costs associated with
redemptions in kind. The Company has elected, however, to be governed by Rule
18f-1 under the 1940 Act so that a Fund 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 Fund.

Under the 1940 Act, a Fund 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 Fund securities is not
reasonably practicable, or for such other periods as the SEC may permit. (A
Fund may also suspend or postpone the recordation of the transfer of its shares
upon the occurrence of any of the foregoing conditions.)

Advisor Shares of the Funds are offered and sold on a continuous
basis by the Distributor, acting as agent for the Company. An illustration
of the computation of the public offering price per share of an Advisor Share
of the Funds, based on the value of the Funds net assets as of August 31,
1997 would be as follows:

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<PAGE>

NET ASSET VALUE
---------------

Global
International Emerging Markets High Yield Telecommunications
Equity Fund Equity Fund Fund Fund
----------- ----------- ---- ----

Net Assets . . . $147,365 $ 3,586 $ 86,375 $ 569,472

Number of Shares
Outstanding. . . 6,647 183 5,057 32,926

Net Asset Value
Per Share. . . . $ 22.17 $ 19.60 $ 17.08 $ 17.30

Sales Charge . . N/A N/A N/A N/A

Offering Price
to Public. . . . $ 22.17 $ 19.60 $ 17.08 $ 17.30

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<PAGE>

VALUATION OF SHARES

The net asset values per share of each class of the Funds is
calculated separately from each other class as of the close of regular
trading of the NYSE on each Business Day. The net asset value per share is
computed by adding the value of the proportionate interest of each class of a
Fund in the Fund's securities, cash and other assets, subtracting the actual
and accrued liabilities of the class and dividing the result by the number of
outstanding shares of such class. "Business Day" means each weekday when the
NYSE is open. Currently, the NYSE is closed on New Year's Day, Dr. Martin
Luther King, Jr. Day, Presidents' Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Thanksgiving Day and Christmas Day and on the
preceding Friday or subsequent Monday when one of these holidays falls on a
Saturday or Sunday. 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. Fund 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 Fund is determined
only on Business Days, the net asset value of shares of a Fund may be
significantly affected on days when an investor does not have access to the
Fund. 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 market 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 the close of regular
trading (generally 4:00 p.m. Eastern Time); 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 Company'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

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<PAGE>

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 Fund'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 Fund 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.

PERFORMANCE AND YIELD INFORMATION

ERV l/n
T = [(-----) - 1]
P

Where: T = average annual total return;

ERV = ending redeemable value of a hypothetical $1,000 payment
made at the beginning of the 1, 5 or 10 year (or other)
periods at the end of the applicable period (or a fractional
portion thereof);

P = hypothetical initial payment of $1,000; and

n = period covered by the computation, expressed in years.

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<PAGE>

Each Fund that advertises its "aggregate total return" computes such
returns separately for each class of shares by determining the aggregate
compounded rates of return during specified periods that likewise equate the
initial amount invested to the ending redeemable value of such investment. The
formula for calculating aggregate total return is as follows:

ERV
Aggregate Total Return = [(-----) - 1]
P

The calculations are made assuming that (1) all dividends and capital
gain distributions are reinvested on the reinvestment dates at the price per
share existing on the reinvestment date, (2) all recurring fees charged to all
shareholder accounts are included, and (3) for any account fees that vary with
the size of the account, a mean (or median) account size in the Fund during the
periods is reflected. The ending redeemable value (variable "ERV" in the
formula) is determined by assuming complete redemption of the hypothetical
investment after deduction of all nonrecurring charges at the end of the
measuring period.

The aggregate total returns for the Advisor Class of the Funds for the
period ended August 31, 1997 since inception are as follows:

Portfolio Inception Date Aggregate Return
- --------- -------------- ----------------

International Equity 10/1/92 14.14%
Emerging Markets Equity 2/1/93 8.76%
High Yield 11/1/96 11.49%
Global Telecommunications 6/20/94 15.33%

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<PAGE>

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.

a - b 6
YIELD = 2[( - - - - +1 ) - 1]
cd

Where: a = dividends and interest earned by a Fund during the period;

b = expenses accrued for the period (net of reimbursements);

c = average daily number of shares outstanding during the
period, entitled to receive dividends; and

d = maximum offering price per share on the last day of the
period.

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<PAGE>

maturity of an obligation with a call provision is the next call date on which
the obligation reasonably may be expected to be called or, if none, the maturity
date. With respect to debt obligations purchased 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
value of such debt obligations. Expenses accrued for the period (variable "b"
in the formula) include all recurring fees charged by a Fund to all shareholder
accounts in proportion to the length of the base period and the Fund's mean (or
median) account size. Undeclared earned income will be subtracted from the
offering price per share (variable "d" in the formula).

Based on the foregoing calculation, the Standard Yield for the Advisor
Class of the High Yield Fund for the 30-day period ended August 31, 1997 was as
follows:

Fund 30-Day Yield
- ---- ------------

High Yield Fund 9.31%

TAXES

Each Fund 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

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<PAGE>

investment company, each Fund is exempt from federal income tax on its net
investment income and realized capital gains which it distributes to
shareholders, provided that it (a) distributes an amount equal to the sum of (i)
at least 90% of its investment company taxable income (net taxable investment
income and the excess of net short-term capital gain over net long-term capital
loss, if any, for the year) and (ii) at least 90% of its net tax-exempt interest
income, if any, for the year (the "Distribution Requirement"), and (b) satisfies
certain other requirements of the Code that are described below. Distributions
of investment company taxable income and net tax-exempt interest income made
during the taxable year or, under specified circumstances, within twelve months
after the close of the taxable year will satisfy the Distribution Requirement.
The Distribution Requirement for any year may be waived if a regulated
investment company establishes to the satisfaction of the Internal Revenue
Service that it is unable to satisfy the Distribution Requirement by reason of
distributions previously made for the purpose of avoiding liability for federal
excise tax (discussed below).

In addition to satisfaction of the Distribution Requirement, each Fund
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").

Future Treasury regulations may provide that currency gains that are
not "directly related" to a Fund'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 Requirement. 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.

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<PAGE>

investment companies), or in two or more issuers which such Fund 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 Fund 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.

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<PAGE>

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 Company will
designate the portion, if any, of the distribution made by a Fund that qualifies
for the dividends received deduction in a written notice mailed by the Company
to shareholders not later than 60 days after the close of the Fund's taxable
year.

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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<PAGE>

Corporate shareholders will have to take into account (1) all
exempt interest dividends and (2) the full amount of all dividends from a
Fund 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 Fund 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 Fund's
current and accumulated earnings 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 Fund will be disallowed to the extent an investor repurchases shares
of the same Fund 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 Fund
in the form of shares within the 61-day period would be treated as a purchase
for this purpose.

-56-

<PAGE>

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.

-57-

<PAGE>

positions that are part of a straddle. The tax consequences to the Funds of
holding straddle positions may be further affected by various elections provided
under the Code and Treasury regulations, but at the present time the Funds are
uncertain which (if any) of these elections they will make.

-58-

<PAGE>

distribution" that a Fund must make to avoid federal excise tax liability.

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 Fund may elect capital gain or loss treatment for such transactions.
Alternatively, a Fund 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 Fund's investment company taxable income available to
be distributed to shareholders as ordinary income, rather than increasing or
decreasing the amount of the Fund'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 Fund 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.

-59-

<PAGE>

"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 Fund. Additional
charges in the nature of interest may also be imposed on a Fund in respect of
such deferred taxes. However, in lieu of sustaining the foregoing tax
consequences, a Fund may elect to have its investment in any PFIC taxed as an
investment in a "qualified electing fund" ("QEF"). A Fund 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 Fund for
purposes of satisfying the Distribution Requirement and the excise tax
distribution requirement.

Recently enacted changes to the Code will permit a Fund to elect (in
lieu of paying deferred tax or making a QEF election) to mark-to-market annually
any PFIC shares that it owns and to include any gains (but not losses) that it
was deemed to realize as ordinary income. A Fund generally will not be subject
to deferred federal income tax on any gains that it is deemed to realize as a
consequence of making a mark-to-market election, but such gains will be taken
into account by the Fund for purposes of satisfying the Distribution Requirement
and the excise tax distribution requirement. The mark-to-market provisions will
generally apply to the Fund's taxable years beginning after December 31, 1997.

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<PAGE>

curtail its writing of options in order to stay within the limits of the Asset
Diversification Requirement.

ADDITIONAL INFORMATION CONCERNING FUND SHARES

The Company has authorized capital of thirty billion shares of Common
Stock, $.001 par value per share, of which 13.93 billion shares are currently
classified as follows: 100 million shares are classified as Class A Common
Stock, 100 million shares are classified as Class B Common Stock, 100 million
shares are classified as Class C Common Stock, 100 million shares are classified
as Class D Common Stock, 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 (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 0 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 (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, 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
(Strategic Global Fixed Income), 50 million shares are classified as Class AA
Common Stock (Municipal Bond), 50 million shares are classified as Class BB
Common Stock (BEA Balanced), 50 million shares are classified as Class CC Common
Stock (Short Duration), 100 million shares are classified as Class DD Common
Stock, 100 million shares are classified as Class EE Common Stock, 50 million
shares are classified as Class FF Common Stock (n/i Numeric Investors Micro
Cap), 50 million shares are classified as Class GG Common Stock (n/i Numeric
Investors Growth), 50 million shares are classified as Class HH Common Stock
(n/i Numeric Investors Growth & Value), 100 million shares are classified as
Class II Common Stock (BEA Investor International), 100 million shares are
classified as Class JJ Common Stock (BEA Investor Emerging), 100 million shares
are

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<PAGE>

classified as Class KK Common Stock (BEA Investor High Yield), 100 million
shares are classified as Class LL Common Stock (BEA Investor Global Telecom),
100 million shares are classified as Class MM Common Stock (BEA Advisor
International), 100 million shares are classified as Class NN Common Stock
(BEA Advisor Emerging), 100 million shares are classified as Class 00 Common
Stock (BEA Advisor High Yield), 100 million shares are classified as Class PP
Common Stock (BEA Advisor Global Telecom), 100 million shares are classified
as Class QQ Common Stock (Boston Partners Institutional Large Cap), 100
million shares are classified as Class RR Common Stock (Boston Partners
Investor Large Cap), 100 million shares are classified as Class SS Common
Stock (Boston Partners Advisor Large Cap), 100 million shares are classified
as Class TT Common Stock (Boston Partners Investor Mid Cap), 100 million
shares are classified as Class UU Common Stock (Boston Partners Institutional
Mid Cap), 100 million shares are classified as Class VV Common Stock (Boston
Partners Institutional Bond), 100 million shares are classified as Class WW
Common Stock (Boston Partners Investor Bond), 50 million are classified as
Class XX Common Stock (n/i Numeric Investors Larger Cap Value), 700 million
shares are classified as Class Janney Money Common Stock (Money), 200 million
shares are classified as Class Janney Municipal Money Common Stock (Municipal
Money), 500 million shares are classified as Class Janney Government
Obligations Money Common Stock (Government Money), 100 million shares are
classified as Class Janney N.Y. Municipal Money Common Stock (N.Y. Money), 1
million shares are classified as Class Beta 1 Common Stock (Money), 1 million
shares are classified as Class Beta 2 Common Stock (Municipal Money), 1
million shares are classified as Class Beta 3 Common Stock (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 (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 (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 (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 (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 (Government

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<PAGE>

Money), 1 million shares are classified as Eta 4 Common Stock (N.Y. Money), 1
million shares are classified as Theta I 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 (Government Money), and 1 million shares
are classified as Theta 4 Common Stock (N.Y. Money). Shares of the Class MM,
NN, 00 and PP Common Stock constitute the BEA Advisor Classes. Under the
Company'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 fourteen
separate "families:" the Cash Preservation Family, the Sansom Street Family,
the Bedford Family, the BEA Family, the Janney Montgomery Scott Money Family,
the n/i Numeric Investors Family, Boston Partners Family, the Beta Family,
the Gamma Family, the Delta Family, the Epsilon Family, the Zeta Family, the
Eta Family and the Theta Family. 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; the Bedford
Family represents interests in the Money Market, Municipal Money Market,
Government Obligations Money Market and New York Municipal Money Market
Portfolios; the BEA Family represents interests in ten non-money market
Funds; 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 Funds. The n/i Numeric Investors Family
represents interests in four non-money market Funds; the Boston Partners
Family represents interests in three non-money market Funds.

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<PAGE>

matter required to be submitted by the provisions of such Act or applicable
state law, or otherwise, to the holders of the outstanding voting securities of
an investment company such as the Company 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 Fund. 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 and the election
of directors are not subject to the separate voting requirements and may be
effectively acted upon by shareholders of an investment company voting without
regard to portfolio.

Notwithstanding any provision of Maryland law requiring a greater vote
of shares of the Company'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 discusses above) or by the Company's Articles of
Incorporation, the Company 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 Drinker Biddle & Reath LLP, 1345 Chestnut
Street, Philadelphia, Pennsylvania 19107-3496, serves as counsel to the
Company and the non-interested directors.

INDEPENDENT ACCOUNTANTS. Coopers & Lybrand L.L.P., 2400 Eleven Penn
Center, Philadelphia, Pennsylvania 19103, serves as the Company's independent
accountants.

CONTROL PERSONS. As of November 15, 1997, to the Company'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 Company indicated below. See "Additional Information Concerning
Company Shares" above. The Company does not know whether such persons also
beneficially own such shares.

-64-

<PAGE>

PORTFOLIO NAME AND ADDRESS PERCENT OWNED
- --------- ---------------- -------------

Cash Preservation Jewish Family and Children's 44.2%
Money Market Portfolio Agency of Philadelphia
(Class G) Capital Campaign
Attn: S. Ramm
1610 Spruce Street
Philadelphia, PA 19103

Dominic and Barbara Pisciotta 15.9%
and Successors in Trust under
the Dominic and Barbara
Pisciotta Caring Trust
207 Woodmere Way
St. Charles, MO 63303

Cash Preservation Kenneth Farwell and Valerie 11.3%
Municipal Money Market Farwell JTTEN
Portfolio 3854 Sullivan
(Class H) St. Louis, MO 63107

Gary L. Lange and 32.6%
Susan D. Lange JTTEN
1354 Shady Knoll Ct.
Longwood, FL 32750

Andrew Diederich and 6.2%
Doris Diederich JTTEN
1003 Lindeman
Des Peres, MO 63131

Gwendolyn Haynes 5.2%
2757 Geyer
St. Louis, MO 63104

Savannah Thomas Trust 6.3%
200 Madison Ave.
Rock Hill, MD 63119

Sansom Street Money Wasner & Co. 32.6%
Market Portfolio FAO Paine Webber and Managed
(Class I) Assets Sundry Holdings
Attn: Joe Domizio
200 Stevens Drive
Lester, PA 19113

Saxon and Co. 65.5%
FBO Paine Webber
P.O. Box 7780 1888
Philadelphia, PA 19182

-65-
<PAGE>

PORTFOLIO NAME AND ADDRESS PERCENT OWNED
- --------- ---------------- -------------

BEA International Blue Cross & Blue Shield of 6.10%
Equity - Institutional Massachusetts Inc.
Class Retirement Income Trust
(Class T) 100 Summer Street
Boston, MA 02110-2106

Credit Suisse Private Banking 6.89%
Dividend Reinvest Plan
c/o Credit Suisse PVT BKG
12 E. 49th Street, 40th Fl.
New York, NY 10017-1028

Indiana University Foundation 5.49%
Attn: Walter L. Koon, Jr.
P.O. Box 500
Bloomington, IN 47402-0500

Employees Ret. Plan Marshfield 5.31%
Clinic
1000 N. Oak Avenue
Marshfield, WI 54449

State Street Bank & Trust 5.06%
FBC Consumers Energy
DTD 3-1-1997
P.O. Box 1992
Boston, MA 02105-1992

BEA International Bob & Co. 87.30%
Equity Portfolio - P.O. Box 1809
Advisor Class (Class Boston, MA 02105-1809
MM)
TRANSCORP 10.78%
FBO William E. Burns
P.O. Box 6535
Englewood, CO 80155-6535

BEA High Yield Fidelity Investments 15.61%
Portfolio - Institutional
Institutional Class Operations Co. Inc. as Agent
(Class U) for Certain Employee Benefit
Plan
100 Magellan Way #KWIC
Covington, KY 41015-1987

Guenter Full Trust Michelin 17.31%
North America Inc.
Master Trust
P.O. Box 19001
Greenville, SC 29602-9001

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<PAGE>

PORTFOLIO NAME AND ADDRESS PERCENT OWNED
- --------- ---------------- -------------

C S First Boston Pension Fund 6.15%
Park Avenue Plaza, 34th Floor
Attn: Steve Medici
55 E. 52nd Street
New York, NY 10055-0002

Southdown Inc. Pension Plan 9.65%
MAC & Co.
Mutual Fund Operations
P.O. Box 3198
Pittsburgh, PA 31980

Edward J. Demske TTEE 5.42%
Miami University Foundation
202 Roudebush Hall
Oxford, OH 45056

BEA High Yield Richard A. Wilson TTEE 10.81%
Portfolio - Advisor E. Francis Wilson TTEE
Class (Class OO) The Wilson Family Trust
7612 March Avenue
West Hills, CA 91304-5232

Charles Schwab & Co. 88.82%
Special Custody Account for the
Exclusive Benefit of Customers
101 Montgomery St.
San Francisco, CA 94104-4122

BEA Emerging Markets Wachovia Bank North Carolina 26.22%
Equity Portfolio - Trust for Carolina Power &
Institutional Class Light Co.
(Class V) Supplemental Retirement Trust
301 N. Main Street
Winston-Salem, NC 27101-3819

Hall Family Foundation 38.21%
P.O. Box 419580
Kansas City, MO 64141-8400

Arkansas Public Employees 18.33%
Retirement System
124 W. Capitol Avenue
Little Rock, AR 72201-3704

BEA Emerging Markets Charles Schwab & Co. 22.65%
Equity Portfolio - Special Custody Account for the
Advisor Class Exclusive Benefit of Customers
(Class NN) 101 Montgomery Street
San Francisco, CA 94104-4175

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<PAGE>

PORTFOLIO NAME AND ADDRESS PERCENT OWNED
- --------- ---------------- -------------

Donald W. Allgood 72.66%
3106 Johannsen Dr.
Burlington, IA 52601-1541

BEA US Core Equity Patterson & Co. 43.71%
Portfolio - P.O. Box 7829
Institutional Class Philadelphia, PA 19101-7829
(Class X)
Credit Suisse Private Banking 13.51%
Dividend Reinvest Plan
c/o Credit Suisse PVT BKG
12 E. 49th Street, 40th Fl.
New York, NY 10017-1028

Fleet National Bank Trust 5.86%
Hospital St. Raphael Malpractice
Attn: 1958875020
P.O. Box 92800
Rochester, NY 14692-8900

Werner & Pfleiderer Pension 6.98%
Plan Employees
663 E. Crescent Avenue
Ramsey, NJ 07446-1220

Washington Hebrew Congregation 11.22%
3935 Macomb St. NW
Washington, DC 20016-3799

BEA US Core Fixed New England UFCW & Employers' 24.30%
Income Portfolio - Pension Fund Board of Trustees
Institutional Class 161 Forbes Road, Suite 201
(Class Y) Braintree, MA 02184-2606

Patterson & Co. 6.50%
P.O. Box 7829
Philadelphia, PA 19101-7829

MAC & Co 5.07%
Mutual Funds Operations
P.O. Box 3198
Pittsburgh, PA 15230-3198

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<PAGE>

PORTFOLIO NAME AND ADDRESS PERCENT OWNED
- --------- ---------------- -------------

Fidelity Investments 9.70%
Institutional
Operations Co. Inc. (FIIOC)
as Agent for Credit Suisse
First Boston Employee's
Savings PSP
100 Magellan Way #KWIC
Covington, KY 41015-1987

DCA Food Industries Inc. 8.95%
100 East Grand Avenue
Beloit, WI 53511-6255

State St. Bank & Trust TTE 6.57%
Fenway Holdings LLC Master Trust
P.O. Box 470
Boston, MA 02102-0470

The Valley Foundation 6.47%
c/o Enterprise Trust
16450 Los Gatos Boulevard
Suite 210
Los Gatos, CA 95032-5594

BEA Strategic Global Sunkist Master Trust 32.35%
Fixed Income Portfolio 14130 Riverside Drive
(Class Z) Sherman Oaks, CA 91423-2313

Patterson & Co. 23.13%
P.O. Box 7829
Philadelphia, PA 19101-7829

Key Trust Co. of Ohio 18.70%
FBO Eastern Enterp. Collective
Inv. Trust
P.O. Box 94870
Cleveland, OH 44101-4870

Hard & Co. 17.34%
Trust for Abtco Inc.
Retirement Plan
c/o Associated Bank, N.A.
100 W. Wisconsin Ave.
Neenah, WI 54956-3012

BEA Municipal Bond William A. Marquard 39.48%
Fund Portfolio (Class 2199 Maysville Rd.
AA) Carlisle, KY 40311-9716

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<PAGE>

PORTFOLIO NAME AND ADDRESS PERCENT OWNED
- --------- ---------------- -------------

Arnold Leon 13.16%
c/o Fiduciary Trust Company
P.O. Box 3199
Church Street Station
New York, NY 10008-3199

Irwin Bard 6.51%
1750 North East 183rd St.
North Miami Beach, FL
33179-4908

S. Finkelstein Family Fund 5.01%
1755 York Ave., Apt. 35 BC
New York, NY 10128-6827

BEA Global Tele- E. M. Warburg Pincus & Co. 17.48%
communications Inc.
Portfolio - Advisor 466 Lexington Ave.
Class (Class PP) New York, NY 10017-3140

Bea Associates 401K 11.82%
153 East 53rd Street
New York, NY 10022-4611

John B. Hurford 47.62%
153 E. 53rd St., Flr. 57
New York, NY 10022-4611

Public Inst. for Social 6.1%
Security
1001 19th Street N,
16th Floor
Arlington, VA 22209

Portland General Corp. 13.7%
Invest Trust
DTD 01/29/90
Attn: William J. Valach
121 SW Salmon Street
Portland, OR 97202

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<PAGE>

PORTFOLIO NAME AND ADDRESS PERCENT OWNED
- --------- ---------------- -------------

State Street Bank and 7.0%
Trust Company
FBO Yale Univ Ret Pln for
Staff Emp
State Street Bank & Trust Co.
Master TR Div
Attn: Kevin Sutton
Solomon Williard Bldg. One
Enterprise Dr.
North Quincy, MA 02171

U.S. Equity Investment 6.5%
Portfolio LP
c/o Asset Management Advisors
Inc.
1001 N. US Hwy 1 STE 800
Jupiter, FL 33477

Portland General Corp. 5.7%
VEBA Plan
DTD 12/19/90
Attn: William Valach
121 SW Salmon Street
Portland, OR 97202

CitiBank FSB 18.9%
Sargent & Lundy Retirement Trust
C/O CitiCorp
Attn: D. Erwin Jr.
1410 N. West Shore Blvd.
Tampa, FL 33607

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<PAGE>

PORTFOLIO NAME AND ADDRESS PERCENT OWNED
- --------- ---------------- -------------

Chase Manhattan Bank 6.2%
Collins Group Trust I
840 Newport Center Dr.
Newport Beach, CA 92660

Boston Partners Large Dr. Janice B. Yost 26.2%
Cap Value Fund - Trust Mary Black Foundation
Institutional Class Inc.
(Class QQ) Bell Hill-945 E. Main St.
Spartanburg, SC 29302

Saxon and Co. 12.4%
FBO UJF Equity Funds
P.O. Box 7780-1888
Philadelphia, PA 19182

Irving Fireman's Relief & Ret 8.1%
Fund
Lou Mayfield-Chairman
601 N. Beltline Ste. 20
Irving, TX 75061

John N. Brodson and 10.0%
Paul A. Ebert
Trst Amer Coll of Surg Staf
Mem Ret Plan
55 E. Erie Street
Chicago, IL 60611

Wells Fargo Bank 15.7%
Trst Stoel Rives
Tr 008125
P. O. Box 9800
Calabasas, CA 91308

Hawaiian Trust Company LTD 6.3%
Trst The Estate of James
Campbell
Pension Fund
P.O. Box 3170
Honolulu, HI 96802-3170

Shady Side Academy Endowment 11.0%
423 Fox Chapel Rd.
Pittsburgh, PA 15238

Boston Partners Large Fleet National Bank TTEE 7.7%
Cap Value Fund - Testa Hurwitz THIB
Investor Class FBO Scott Birnbaum
(Class RR) P.O. Box 92800
Rochester, NY 14692

-72-

<PAGE>

PORTFOLIO NAME AND ADDRESS PERCENT OWNED
- --------- ---------------- -------------

National Financial Services 25.5%
Corp
For the Exclusive Benefit of
our Customers
Attn: Mutual Funds, 5th Floor
200 Liberty Street I World
Financial Center
New York, NY 10281

Joseph P. Scherer 10.3%
Rollover IRA
26 Embassy Ct
Cherry Hill, NJ 08002

Linda C. Brodson 7.3%
Trst Linda C. Brodson Trust
465 Lakeside Pl
Highland Park, IL 60035

John N. Brodson 7.3%
Trust John N. Brodson Trust
U/A DTD 08/06/87
465 Lakeside Pl
Highland Park, IL 60035

Charles Schwab & Co. Inc. 12.0%
Special Custody Account
for Bene of Cust
Attn: Mutual Funds
101 Montgomery Street
San Francisco, CA 94104

Mark R. Scott 6.1%
and Maryann Scott
JTTEN WROS
2543 Longmount Dr.
Wexford, PA 15090

Boston Partners Mid National Financial SVCS Corp. 27.2%
Cap Value Fund For Exclusive Bene of our
Investor Class Customers
(Class TT) Sal Vella
200 Liberty Street
New York, NY 10281

-73-

<PAGE>

PORTFOLIO NAME AND ADDRESS PERCENT OWNED
- --------- ---------------- -------------

Charles Schwab & Co. Inc. 32.0%
Special Custody Account for
Bene of Cust
Attn: Mutual Funds
101 Montgomery St.
San Francisco, CA 94104

George B. Smithy, Jr. 13.0%
38 Greenwood Road
Wellesley, MA 02181

John N. Brodson 6.4%
Trst John N. Brodson Trust
U/A DTD 08/06/87
465 Lakeside Pl
Highland Park, IL 60035

Linda C. Brodson 6.4%
Trst Linda C. Brodson Trust
465 Lakeside Pl
Highland Park, IL 60035

Boston Partners Mid Wells Fargo Bank Cust 5.4%
Cap Value Fund FBO William W. Carter
Institutional Class IRA FIP 007430
(Class UU) P.O. Box 1389
San Carlos, CA 94070-1389

USNB of Oregon 77.2%
Cust Jean Vollum
Attn: Mutual Funds
P.O. Box 3168
Portland, OR 97208

As of the above date, directors and officers as a group owned less
than one percent of the shares of the Company.

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<PAGE>

FINANCIAL STATEMENTS

The audited financial statements and notes thereto in the Funds'
Annual Report to Shareholders for the fiscal year ended August 31, 1997 (the
"1997 Annual Report") are incorporated by reference into this Statement of
Additional Information. No other parts of the 1997 Annual Report are
incorporated by reference herein. The financial statements included in the 1997
Annual Report have been audited by the Fund's independent accountants, Coopers &
Lybrand L.L.P. The reports of Coopers & Lybrand L.L.P. are incorporated herein
by reference. Such financial statements have been incorporated herein in
reliance upon such reports given upon their authority as experts in accounting
and auditing. Copies of the 1997 Annual Report may be obtained at no charge by
telephoning the Distributor at the telephone number appearing on the front page
of this Statement of Additional Information.

-75-

<PAGE>

APPENDIX A

COMMERCIAL PAPER RATINGS

"A-2" - Capacity for timely payment on issues with this designation is
satisfactory. However, the relative degree of safety is not as high as for
issues designated "A-1."

"B" - Issues are regarded as having only a speculative capacity for
timely payment.

"C" - This rating is assigned to short-term debt obligations with a
doubtful capacity for payment.

"Prime-1" - Issuers (or supporting institutions) have a superior
ability for repayment of senior short-term debt obligations. Prime-1 repayment
ability will often be evidenced by many of the following characteristics:
leading market positions in well-established industries; high rates of return on
funds employed; conservative capitalization structure with moderate reliance on
debt and ample asset protection; broad margins in earnings coverage of fixed
financial charges and high

A-1

<PAGE>

internal cash generation; and well-established access to a range of financial
markets and assured sources of alternate liquidity.

"Not Prime" - Issuers do not fall within any of the Prime rating
categories.

"D-1" - Debt possesses very high certainty of timely payment.
Liquidity factors are excellent and supported by good fundamental protection
factors. Risk factors are minor.

"D-1-" - Debt possesses high certainty of timely payment. Liquidity
factors are strong and supported by good fundamental protection factors. Risk
factors are very small.

"D-2" - Debt possesses good certainty of timely payment. Liquidity
factors and company fundamentals are sound. Although ongoing funding needs may
enlarge total financing requirements, access to capital markets is good. Risk
factors are small.

"D-3" - Debt possesses satisfactory liquidity and other protection
factors qualify issues as investment grade. Risk

A-2

<PAGE>

factors are larger and subject to more variation. Nevertheless, timely payment
is expected.

"D-5" - Issuer has failed to meet scheduled principal and/or interest
payments.

"F-1+" - Securities possess exceptionally strong credit quality.
Issues assigned this rating are regarded as having the strongest degree of
assurance for timely payment.

"F-1" - Securities possess very strong credit quality. Issues
assigned this rating reflect an assurance of timely payment only slightly less
in degree than issues rated "F-1+."

"D" - Securities are in actual or imminent payment default.

"LOC" - The symbol "LOC" indicates that the rating is based on a
letter of credit issued by a commercial bank.

A-3

<PAGE>

"TBW-1" - This designation represents Thomson BankWatch's highest
category and indicates a very high likelihood that principal and interest will
be paid on a timely basis.

"TBW-3" - This designation represents Thomson BankWatch's lowest
investment-grade category and indicates that while the obligation is more
susceptible to adverse developments (both internal and external) than those with
higher ratings, the capacity to service principal and interest in a timely
fashion is considered adequate.

"TBW-4" - This designation represents Thomson BankWatch's lowest
rating category and indicates that the obligation is regarded as non-investment
grade and therefore speculative.

"A1" - Obligations are supported by the highest capacity for timely
repayment. Where issues possess a particularly strong credit feature, a rating
of "A1+" is assigned.

"A2" - Obligations are supported by a satisfactory capacity for timely
repayment although such capacity may be susceptible to adverse changes in
business, economic or financial conditions.

"A3" - Obligations are supported by an adequate capacity for timely
repayment such capacity is more susceptible to adverse changes in business,
economic, or financial conditions than for obligations in higher categories.

"B" - Obligations for which the capacity for timely repayment is
susceptible to adverse changes in business, economic, or financial conditions.

"C" - Obligations for which there is a high risk of default or which
are currently in default.

A-4

<PAGE>

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 . The obligor's capacity to meet its financial commitment on
the obligation is extremely strong.

"AA" - An obligation rated "AA" differs from the highest rated
obligations only in small degree. The obligor's capacity to meet its financial
commitment on the obligation is very strong.

"BB," "B," "CCC," "CC" and "C" - Debt is regarded as having
significant speculative characteristics. "BB" indicates the least degree of
speculation and "C" the highest . While such obligations will likely have some
quality and protective characteristics, these may be outweighed by large
uncertainties or major exposures to adverse conditions.

A-5

<PAGE>

"CC" - An obligation rated "CC" is currently highly vulnerable to
non-payment.

"C" - The "C" rating may be used to cover a situation where a
bankruptcy petition has been filed or similar action has been taken, but
payments on this obligation are being continued.

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.

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
edged." 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.

A-6

<PAGE>

(P)... - When applied to forward delivery bonds, indicates that the
rating is provisional pending delivery of the bonds. The rating may be revised
prior to delivery if changes occur in the legal documents or the underlying
credit quality of the bonds.

Note: Those bonds in the Aa, A, Baa, Ba and B groups which Moody's
believes possess the strongest investment attributes are designated by the
symbols, Aa1, A1, Baa1, Ba1 and B1.

The following summarizes the long-term debt ratings used by Duff &
Phelps for corporate and municipal long-term debt:

"AAA" - Debt is considered to be of the highest credit quality. The
risk factors are negligible, being only slightly more than for risk-free U.S.
Treasury debt.

A-7

<PAGE>

"AA" - Debt is considered of high credit quality. Protection factors
are strong. Risk is modest but may vary slightly from time to time because of
economic conditions.

"A" - Debt possesses protection factors which are average but
adequate. However, risk factors are more variable and greater in periods of
economic stress.

The following summarizes the ratings used by Fitch for corporate and
municipal bonds:

"BBB" - Bonds considered to be investment grade and of satisfactory
credit quality. The obligor's ability to pay

A-8

<PAGE>

interest and repay principal is considered to be adequate. Adverse changes in
economic conditions and circumstances, however, are more likely to have an
adverse impact on these bonds, and therefore, impair timely payment. The
likelihood that the ratings of these bonds will fall below investment grade is
higher than for bonds with higher ratings.

"CCC" - Bonds have certain identifiable characteristics that, if not
remedied, may lead to default. The ability to meet obligations requires an
advantageous business and economic environment.

"CC" - Bonds are minimally protected. Default in payments of interest
and/or principal seems probable over time.

"C" - Bonds are in imminent default in payment of interest or
principal.

"DDD," "DD" and "D" - Bonds are in default on interest and/or
principal payments. Such securities are extremely speculative and should be
valued on the basis of their ultimate recovery value in liquidation or
reorganization of the obligor. "DDD" represents the highest potential for
recovery on these securities, and "D" represents the lowest potential for
recovery.

"AAA" - Obligations for which there is the lowest expectation of
investment risk. Capacity for timely repayment of

A-9

<PAGE>

principal and interest is substantial, such that adverse changes in business,
economic or financial conditions are unlikely to increase investment risk
substantially.

IBCA may append a rating of plus (+) or minus (-) to a rating below
"AAA" to denote relative status within major rating categories.

"AA" - This designation indicates a very strong ability to repay
principal and interest on a timely basis with limited

A-10

<PAGE>

incremental risk compared to issues rated in the highest category.

"D" - This designation indicates that the long-term debt is in
default.

PLUS (+) OR MINUS (-) - The ratings from "AAA" through "CC" may
include a plus or minus sign designation which indicates where within the
respective category the issue is placed.

MUNICIPAL NOTE RATINGS

"SP-1" - The issuers of these municipal notes exhibit a strong
capacity to pay principal and interest. Those issues determined to possess very
strong characteristics are given a plus (+) designation.

"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")

A-11

<PAGE>

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-2"/"VMIG-2" - This designation denotes high quality, with margins
of protection ample although not so large as in the preceding group.

"SG" - This designation denotes speculative quality and lack of
margins of protection.

Fitch and Duff & Phelps use the short-term ratings described under
Commercial Paper Ratings for municipal notes.

A-12

<PAGE>

APPENDIX B

As stated in the Prospectus, the Funds may enter into certain futures
transactions. Such transactions are described in this Appendix.

I. INTEREST RATE FUTURES CONTRACTS

B-1

<PAGE>

Interest rate futures contracts are traded in an auction environment
on the floors of several exchanges --principally, the Chicago Board of Trade,
the Chicago Mercantile Exchange and the New York Futures Exchange. Each
exchange guarantees performance under contract provisions through a clearing
corporation, a nonprofit organization managed by the exchange membership.

II. INDEX FUTURES CONTRACTS

B-2

<PAGE>

Commodity Futures Trading Commission. Transactions on such exchanges are
cleared through a clearing corporation, which guarantees the performance of the
parties to each contract. With regard to each Fund, to the extent consistent
with its investment objective, the Adviser anticipates engaging in transactions,
from time to time, in foreign stock index futures such as the ALL-ORDS
(Australia), CAC-40 (France), TOPIX (Japan) and the FTSE-100 (United Kingdom).

III. FUTURES CONTRACTS ON FOREIGN CURRENCIES

A futures contract on foreign currency creates a binding obligation on
one party to deliver, and a corresponding obligation on another party to accept
delivery of, a stated quantity of foreign currency, for an amount fixed in U.S.
dollars (or another currency). Foreign currency futures may be used by a Fund
to hedge against exposure to fluctuations in exchange rates between different
currencies arising from multinational transactions.

IV. Margin Payments

B-3

<PAGE>

security transactions in that futures contract margin does not involve the
borrowing of funds by the customer to finance the transactions. Rather, the
initial margin is in the nature of a performance bond or good faith deposit on
the contract which is returned to the Fund upon termination of the futures
contract assuming all contractual obligations have been satisfied. Subsequent
payments, called variation margin, to and from the broker, will be made on a
daily basis as the price of the underlying instruments fluctuates making the
long and short positions in the futures contract more or less valuable, a
process known as marking-to-the-market. For example, when a particular Fund has
purchased a futures contract and the price of the contract has risen in response
to a rise in the underlying instruments, that position will have increased in
value and the Fund will be entitled to receive from the broker a variation
margin payment equal to that increase in value. Conversely, where the Fund has
purchased a futures contract and the price of the future contract has declined
in response to a decrease in the underlying instruments, the position would be
less valuable and the Fund would be required to make a variation margin payment
to the broker. Prior to expiration of the futures contract, the Adviser may
elect to close the position by taking an opposite position, subject to the
availability of a secondary market, which will operate to terminate the Fund's
position in the futures contract. A final determination of variation margin is
then made, additional cash is required to be paid by or released to the Fund,
and the Fund realizes a loss or gain.

V. RISKS OF TRANSACTIONS IN FUTURES CONTRACTS

B-4

<PAGE>

a particular time period of the prices of such instruments has been greater than
the volatility over such time period of the future, or if otherwise deemed to be
appropriate by the Adviser. Conversely, a Fund may buy or sell fewer futures
contracts if the volatility over a particular time period of the prices of the
instruments being hedged is less than the volatility over such time period of
the futures contract being used, or if otherwise deemed to be appropriate by the
Adviser. It is also possible that, where a Fund has sold futures to hedge its
portfolio against a decline in the market, the market may advance and the value
of instruments held in the Fund may decline. If this occurred, the Fund would
lose money on the futures and also experience a decline in value in its
portfolio securities.

When futures are purchased to hedge against a possible increase in the
price of securities or a currency before a Fund is able to invest its cash (or
cash equivalents) in an orderly fashion, it is possible that the market may
decline instead; if the Fund then concludes not to invest its cash at that time
because of concern as to possible further market decline or for other reasons,
the Fund will realize a loss on the futures contract that is not offset by a
reduction in the price of the instruments that were to be purchased.

Positions in futures may be closed out only on an exchange or board of
trade which provides a secondary market for such futures. Although the Funds
intend to purchase or sell

B-5

<PAGE>

futures only on exchanges or boards of trade where there appear to be active
secondary markets, there is no assurance that a liquid secondary market on any
exchange or board of trade will exist for any particular contract or at any
particular time. In such event, it may not be possible to close a futures
investment position, and in the event of adverse price movements, a Fund would
continue to be required to make daily cash payments of variation margin.
However, in the event futures contracts have been used to hedge portfolio
securities, such securities will not be sold until the futures contract can be
terminated. In such circumstances, an increase in the price of the securities,
if any, may partially or completely offset losses on the futures contract.
However, as described above, there is no guarantee that the price of the
securities will in fact correlate with the price movements in the futures
contract and thus provide an offset on a futures contract.

B-6

<PAGE>

substantial loss (as well as gain) to the investor. For example, if at the time
of purchase, 10% of the value of the futures contract is deposited as margin, a
subsequent 10% decrease in the value of the futures contract would result in a
total loss of the margin deposit, before any deduction for the transaction
costs, if the account were then closed out. A 15% decrease would result in a
loss equal to 150% of the original margin deposit, before any deduction for the
transaction costs, if the contract were closed out. Thus, a purchase or sale of
a futures contract may result in losses in excess of the amount invested in the
contract.

VI. OPTIONS ON FUTURES CONTRACTS

A Fund may purchase and write options on the futures contracts
described above. A futures option gives the holder, in return for the premium
paid, the right to buy (call) from or sell (put) to the writer of the option a
futures contract at a specified price at any time during the period of the
option. Upon exercise, the writer of the option is obligated to pay the
difference between the cash value of the futures contract and the exercise
price. Like the buyer or seller of a futures contract, the holder, or writer,
of an option has the right to terminate its position prior to the scheduled
expiration of the option by selling, or purchasing an option of the same series,
at which time the person entering into the closing transaction will realize a
gain or loss. A Fund will be required to deposit initial margin and variation
margin with respect to put and call options on futures contracts written by it
pursuant to brokers' requirements similar to those described above. Net option
premiums received will be included as initial margin deposits. As an example,
in anticipation of a decline in interest rates, a Fund may purchase call options
on futures contracts as a substitute for the purchase of futures contracts to
hedge against a possible increase in the price of securities which the Fund
intends to purchase. Similarly, if the value of the securities held by a Fund
is expected to decline as a result of an increase in interest rates, the Fund
might purchase put options or sell call options on futures contracts rather than
sell futures contracts.

Investments in futures options involve some of the same considerations
that are involved in connection with investments in futures contracts (for
example, the existence of a liquid secondary market). In addition, the purchase
or sale of an option also entails the risk that changes in the value of the
underlying futures contract will not correspond to changes in the value of the
option purchased. Depending on the pricing of the option compared to either the
futures contract upon which it is based, or upon the price of the underlying
securities or currencies, an option may or may not be less risky than ownership
of the futures contract or such securities or currencies. In

B-7

<PAGE>

general, the market prices of options can be expected to be more volatile than
the market prices on the underlying futures contract. Compared to the purchase
or sale of futures contracts, however, the purchase of call or put options on
futures contracts may frequently involve less potential risk to a Fund because
the maximum amount at risk is the premium paid for the options (plus transaction
costs). The writing of an option on a futures contract involves risks similar
to those risks relating to the sale of futures contracts.

VII. OTHER MATTERS

Accounting for futures contracts will be in accordance with generally
accepted accounting principles.

The Funds intend to comply with the regulations of the Commodity
Futures Trading Commission exempting the Funds from registration as a "commodity
pool operator."

B-8

<PAGE>

B E A
[graphic]
INVESTOR FUNDS

INTERNATIONAL EQUITY FUND

EMERGING MARKETS EQUITY FUND

GLOBAL TELECOMMUNICATIONS FUND

HIGH YIELD FUND

PROSPECTUS - DECEMBER 8, 1997

<PAGE>
TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
---------
<S> <C>
Annual Fund Operating Expenses........................................................................ 2
Financial Highlights.................................................................................. 3
The Company........................................................................................... 3
Investment Objectives and Policies.................................................................... 3
Investment Limitations................................................................................ 8
Risk Factors.......................................................................................... 9
Management............................................................................................ 11
Expenses.............................................................................................. 14
How to Purchase Shares................................................................................ 14
How to Redeem and Exchange Shares..................................................................... 17
Net Asset Value....................................................................................... 18
Dividends and Distributions........................................................................... 19
Taxes................................................................................................. 19
Multi-Class Structure................................................................................. 21
Description of Shares................................................................................. 21
Other Information..................................................................................... 22
Performance Information............................................................................... 22
</TABLE>
<PAGE>
BEA INVESTOR FUNDS
THE BEA INVESTOR FUNDS CONSIST OF FOUR CLASSES OF COMMON STOCK OF THE RBB FUND,
INC. (THE "COMPANY"), 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 THE FOUR INVESTMENT PORTFOLIOS OF THE COMPANY DESCRIBED IN THIS
PROSPECTUS (COLLECTIVELY, THE "FUNDS"). THE INVESTMENT OBJECTIVE OF EACH FUND
DESCRIBED IN THIS PROSPECTUS IS AS FOLLOWS:

BEA INTERNATIONAL EQUITY FUND -- seeks to provide long-term
appreciation of capital. The Fund will invest primarily in equity securities
of non-U.S. issuers.

BEA EMERGING MARKETS EQUITY FUND -- seeks to provide long-term
appreciation of capital. The Fund will invest primarily in equity securities
in emerging country markets.

There can be, of course, no assurance that a Fund's investment objective
will be achieved. Investments in the Funds involve certain risks. See "Risk
Factors."

THE BEA HIGH YIELD FUND MAY INVEST ITS ASSETS WITHOUT LIMITATION IN
SECURITIES WHICH ARE BELOW INVESTMENT-GRADE QUALITY SECURITIES. 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 FUND.
SEE "RISK FACTORS."

THE INVESTOR SHARES OF THE PORTFOLIOS ARE SOLD UNDER THE NAME "BEA INVESTOR
FUNDS." THE INVESTOR SHARES MAY NOT BE PURCHASED BY INDIVIDUALS DIRECTLY FROM
THE COMPANY'S DISTRIBUTOR, BUT 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.

The minimum initial investment in a Fund is $2,500 and the minimum
subsequent investment is $250. The minimum initial investment for Individual
Retirement Accounts, Automatic Investment Plans and Uniform Gifts to Minors is
$1,000 and the minimum subsequent investments in each of these plans is $100.

SHARES OF THE FUNDS ARE NOT DEPOSITS OR OBLIGATIONS OF OR GUARANTEED OR
ENDORSED BY ANY BANK, AND SHARES ARE NOT FEDERALLY INSURED BY THE U.S.
GOVERNMENT, THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD
OR ANY OTHER GOVERNMENTAL AGENCY. INVESTMENTS IN SHARES OF THE FUNDS INVOLVE
INVESTMENT RISKS, INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.

PROSPECTUS DECEMBER 8, 1997
<PAGE>
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average daily net assets)(1)

<TABLE>
<CAPTION>
BEA
EMERGING BEA GLOBAL
BEA MARKETS TELECOMMUNI-
INTERNATIONAL EQUITY CATIONS BEA HIGH
EQUITY FUND FUND FUND YIELD FUND
------------- -------- ----------- ----------
<S> <C> <C> <C> <C>
Management Fees (after
waivers)(1)...................... .80% 1.00% 1.00% .45%(1)
12b-1 Fees........................ .50% .50% .50% .50%
Other Expenses (after
waivers)(2)...................... .39% .49% .40% .25%
--- --- --- ---
Total Fund Operating Expenses
(after waivers)(2)............... 1.69% 1.99% 1.90% 1.20%
--- --- --- ---
--- --- --- ---
</TABLE>

- ------------------------------
(1) Before expense waivers, Management Fees would be .70%.

(2) Based upon estimated amounts for the current fiscal year after expense
waivers. Before expense waivers, Other Expenses would be .42%, .62% and .41%
for the BEA International Equity, the BEA Emerging Markets Equity, and the
BEA High Yield Funds, respectively, and total Fund Operating Expenses would
be 1.72%, 2.12% and 1.61%, respectively.

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

EXAMPLE

An investor would pay the following expenses on a $1,000 investment in each of
the Funds, assuming (1) a 5% annual return, and (2) redemption at the end of
each time period.

<TABLE>
<CAPTION>
THREE
ONE YEAR YEARS
----------- -----------
<S> <C> <C>
BEA International Equity Fund.................................................................... $ 17 $ 53
--- ---
BEA Emerging Markets Equity Fund................................................................. $ 20 $ 62
--- ---
BEA Global Telecommunications Fund............................................................... $ 19 $ 60
--- ---
BEA High Yield Fund.............................................................................. $ 12 $ 38
--- ---
</TABLE>

2
<PAGE>
- ----------------------------------------------

FINANCIAL HIGHLIGHTS

No financial highlights are presented for the Investor Class since, as of the
date of this Prospectus, the Class had no operating history.
- ----------------------------------------------
THE COMPANY

The Company is an open-end management investment company that currently operates
or proposes to operate twenty-two separate investment portfolios. Each of the
BEA Investor Funds represents an interest in a separate portfolio. Each Fund is
non-diversified. The Company was incorporated in Maryland on February 29, 1988.

The Funds are designed primarily for individual investors and are available
through financial intermediaries including broker-dealers, investment advisers,
financial planners, banks, and insurance companies. Investment professionals
such as those listed above may purchase Shares for discretionary or
non-discretionary accounts maintained by individuals.
- ----------------------------------------------

INVESTMENT OBJECTIVES AND POLICIES

BEA INTERNATIONAL EQUITY FUND

3
<PAGE>
warrants and rights; equity interests in trusts and partnerships; and depositary
receipts of companies.

BEA EMERGING MARKETS EQUITY FUND

The Fund normally will not select portfolio securities on the basis of their
dividend or interest income potential unless BEA believes the income will
contribute to the securities' capital appreciation potential.

To the extent that the Fund'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 Fund does not
presently intend to invest more than 5% of its net assets in debt securities.
Debt securities may include lower quality, high yielding debt securities. See
"Risk Factors -- Lower-Rated Securities."

BEA GLOBAL TELECOMMUNICATIONS FUND

The BEA Global Telecommunications Fund's investment objective is long-term
capital appreciation by investing primarily in equity securities of
telecommunications companies, both foreign

4
<PAGE>
and domestic. It is the policy of the Fund under normal market conditions to
invest not less than 65% of its total assets in equity securities (including
common and preferred stocks, convertible securities and warrants to acquire such
equity securities) of telecommunications companies. The Fund will invest in
convertible securities based on their underlying equity characteristics without
regard to the credit rating of such securities. Such convertible securities may
include lower-quality high yielding securities commonly known as "junk bonds."
See "Risk Factors -- Lower-Rated Securities." As a Fund investing in global
markets, at least 65% of the Fund's investments will be made in at least three
different countries.

The Fund 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); 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 (collectively,
"telecommunications activities"). A "telecommunications company" is an entity in
which (i) at least 50% of either its revenue or earnings was derived from
telecommunications activities, or (ii) at least 50% of its assets was devoted to
telecommunications activities based on the company's most recent fiscal year.
The remainder of the assets of the BEA Global Telecommunications Fund may be
invested in non-equity securities issued by companies that are not primarily
engaged in telecommunications activities.

Telecommunications industries may be subject to greater governmental regulation
than many other industries and changes in governmental policies and the need for
regulatory approvals may have a material effect on the products and services of
this industry. Telephone operating companies in the United States, for example,
are subject to both federal and state regulation affecting permitted rates of
return and the kinds of services that may be offered. Certain types of companies
represented in the Fund are engaged in fierce competition for market share. In
recent years, these have been companies providing goods and services such as
private and local area networks and telephone set equipment.

BEA HIGH YIELD FUND

The BEA High Yield Fund seeks to provide high total return by investing
primarily in high yield fixed-income securities issued by corporations,
governments and agencies, both U.S. and foreign. Under normal market conditions,
the Fund 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 Fund is
not limited in the extent to which it can invest in securities rated below
investment-grade by recognized rating agencies or in comparable unrated
securities. See "Risk Factors -- Lower-Rated Securities." The portion of the
Fund's assets invested in various countries will vary from time to time
depending on BEA's assessment of market opportunities.

5
<PAGE>
The value of the securities held by the Fund, and thus the net asset value of
the shares of the Fund, 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 Fund may
purchase debt securities of any maturity, and the average maturity of the Fund'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 Fund.
These policies are described in more detail in the Statement of Additional
Information.

LENDING OF PORTFOLIO SECURITIES. A Fund may also lend its portfolio
securities to financial institutions against collateral consisting of cash, U.S.
Government securities or irrevocable bank letters of credit, which are equal at
all times to at least 100% of the value of the securities loaned. There is no
investment restriction on the amount of securities that may be loaned. 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 loss of rights in
the collateral should the borrower of the securities fail financially. However,
loans will be made only to borrowers deemed by the Fund's investment adviser to
be of good standing and only when, in the adviser's judgment, the income to be
earned from the loans justifies the attendant risks. Any loans of the
Portfolio's securities will be fully collateralized and marked to market daily.
A Portfolio may not make loans in excess of 30% of the value of its total
assets.

6
<PAGE>
other investment company's expenses, including advisory fees. These expenses
would be in addition to the advisory and other expenses that a Fund bears
directly in connection with its own operations.

PORTFOLIO TURNOVER. BEA will effect portfolio transactions in each Fund
without regard to holding periods if, in its judgment, such transactions are
advisable in light of general market, economic or financial conditions. The BEA
International Equity, the BEA Emerging Markets Equity, the BEA Global
Telecommunications and the BEA High Yield Funds anticipate that their annual
portfolio turnover rate should not exceed 100% under normal conditions. However,
it is impossible to predict portfolio turnover rates. Portfolio turnover may
vary greatly from year to year as well as within a particular year. High
portfolio turnover rates (100% or more) will generally result in higher
transaction costs to a Fund and may result in the realization of short-term
capital gains that are taxable to shareholders as ordinary income. The amount of
portfolio activity will not be a limiting factor when making portfolio
decisions. See the Statement of Additional Information, "Portfolio Transactions"
and "Taxes."

FOREIGN CURRENCY TRANSACTIONS. BEA may seek to hedge against a decline in
value of a Fund's non-dollar denominated portfolio securities resulting from
currency devaluations or fluctuations. Unless the BEA Funds 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 Funds 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.

7
<PAGE>
Home Loan Mortgage Corporation, as well as by private issuers such as commercial
investment banks, savings and loan institutions, mortgage bankers and private
mortgage insurance companies. As with other interest-bearing securities, the
prices of such securities are inversely affected by changes in interest rates.
However, though the value of a mortgage-related security may decline when
interest rates rise, the converse is not necessarily true because in periods of
declining interest rates mortgages underlying securities are prone to
prepayment. For this and other reasons, a mortgage-related security's stated
maturity may be shortened by an unscheduled prepayment on underlying mortgages
and, therefore, it is not possible to predict accurately the security's return
to these Funds.

The Statement of Additional Information contains additional investment policies
and strategies of the Funds.
- ----------------------------------------------

INVESTMENT LIMITATIONS

8
<PAGE>
Each Fund may not:

Borrow money or issue senior securities, except that each Fund may
borrow from institutions and enter into reverse repurchase agreements and
dollar rolls for temporary purposes in amounts up to one-third of the value
of its total assets at the time of such borrowing; or mortgage, pledge or
hypothecate any assets, except in connection with any such borrowing and
then in amounts not in excess of one-third of the value of the Fund's total
assets at the time of such borrowing. Each Fund will not purchase securities
while its aggregate borrowings (including reverse repurchase agreements,
dollar rolls and borrowings from banks) are in excess of 5% of its total
assets outstanding. Securities held in escrow or separate accounts in
connection with the Fund's investment practices are not considered to be
borrowings or deemed to be pledged for purposes of this limitation.

Any investment policy or limitation which involves a maximum or minimum
percentage of securities or assets shall not be considered to be violated unless
an excess over a deficiency under the percentage occurs immediately after, and
is caused by, an acquisition or disposition of securities or utilization of
assets by a Fund.
- ----------------------------------------------

RISK FACTORS

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 Funds' 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.

9
<PAGE>
FOREIGN CURRENCY TRANSACTIONS. The market in forward foreign currency
exchange contracts offers less protection against defaults by the other party to
such instruments than is available for currency instruments traded on an
exchange. Such contracts are subject to the risk that the counterparty to the
contract will default on its obligations. Since these contracts are not
guaranteed by an exchange or clearinghouse, a default on the contract would
deprive a Fund of unrealized profits, transaction costs or the benefits of a
currency hedge or force a Fund to cover its purchase or sale commitments, if
any, at the current market price. A Fund will not enter into forward foreign
currency exchange contracts unless the credit quality of the unsecured senior
debt or the claims-paying ability of the counterparty is considered to be
investment grade by BEA.

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 BEA's ability both to value accurately lower-rated debt securities and
the Fund'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,

10
<PAGE>
may decrease the value and liquidity of lower-rated debt securities, especially
in a thinly traded market.

GENERAL. Investment methods described in this Prospectus are among those
which the Funds have the power to utilize. Accordingly, reference to any
particular method or technique carries no implication that it will be utilized
or, if it is, that it will be successful.
- ----------------------------------------------

MANAGEMENT

BOARD OF DIRECTORS

The business and affairs of the Company and each Fund are managed under the
direction of the Company's Board of Directors.

INVESTMENT ADVISER

The day-to-day portfolio management of the BEA International Equity, and the BEA
Emerging Markets Equity Funds is the responsibility of the BEA International
Equity Management Team. The Team consists of the following

11
<PAGE>
investment professionals: William P. Sterling (Executive Director), Richard Watt
(Managing Director), Stephen M. Swift (Managing Director), and Steven D.
Bleiberg (Senior Vice President). Mr. Sterling joined BEA in 1995, prior to
which time he was the head of International Economics at Merrill Lynch &
Company. Mr. Watt joined BEA in 1995, prior to which time he was the 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. Swift joined BEA in 1995, prior
to which time he spent three years at Credit Suisse Asset Management in London,
where he was the 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. Bleiberg has been
engaged as an investment professional with BEA for more than five years.

The day-to-day portfolio management of the BEA Global Telecommunications Fund is
the responsibility of the BEA Global Telecommunications Management Team. The
Team consists of the following investment professionals: Richard Watt (Managing
Director), William P. Sterling (Executive Director), Todd M. Rice (Senior Vice
President) and Stephen Waite (Vice President). Mr. Rice has been engaged as an
investment professional with BEA for more than five years. Mr. Waite joined BEA
in 1995, prior to which he was Vice President and Senior European Economist for
Merrill Lynch & Company in London.

For the advisory services provided and expenses assumed by it, BEA is entitled
to receive a fee from the BEA International Equity Fund, the BEA Emerging
Markets Equity Fund, the BEA Global Telecommunications Equity Fund and the BEA
High Yield Fund computed at an annual rate of .80%, 1.00%, 1.00% and .70%,
respectively of the average daily net assets, computed daily and payable
quarterly. BEA may, at its discretion, from time to time agree to waive
voluntarily all or any portion of its advisory fee for any Fund.

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

12
<PAGE>
Company in connection with the matters to which the Advisory Agreements relate
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 Agreements.

CO-ADMINISTRATORS

PFPC Inc. ("PFPC"), an indirect, wholly-owned subsidiary of PNC Bank Corp.,
serves as co-administrator for the Investor Class of the Funds. As
co-administrator, PFPC will provide various services to the Investor Class of
the Funds, including determining the net asset value of the Investor Class of
each Fund, providing all accounting services for the Class and generally
assisting in all aspects of the operations of the Investor Class of each Fund.
As compensation for administrative services, the Funds pay PFPC a fee calculated
at the annual rate of .125% of average daily net assets of the Investor Class of
each Fund. PFPC has its principal offices at 400 Bellevue Parkway, Wilmington,
Delaware 19809.

The Company employs BEA as co-administrator. As co-administrator, BEA generally
assists the Investor Class of each of the Funds in all aspects of their
administration and shareholder servicing. As compensation, the Company pays to
BEA a fee calculated at an annual rate of .05% of average daily net assets of
the Investor Class of each Fund, for assets up to $125 million, and .10%
thereafter.

DISTRIBUTOR

Counsellors Securities Inc. ("Counsellors Securities"), a wholly-owned
subsidiary of Warburg Pincus Asset Management, Inc., serves as the Company's
distributor. Counsellors Securities' principal business address is 466 Lexington
Avenue, New York, New York 10017-3147. Counsellors Securities receives a fee at
an annual rate equal to .50% of the Fund's average daily net assets for
distribution services, pursuant to a distribution agreement between Counsellors
Securities and the Company in accordance with a distribution plan (the "12b-1
Plan") adopted by the Company pursuant to Rule 12b-1 under the 1940 Act. Amounts
paid to Counsellors Securities under the Company's 12b-1 Plan may be used by
Counsellors Securities to cover expenses that are related to (i) the
distribution of Investor Shares of the Funds, (ii) ongoing servicing and/or
maintenance of the accounts of shareholders of the Fund, and (iii) sub-transfer
agency services, subaccounting services or administrative services related to
the sale of the Investor Shares of the Funds, all as set forth in the Company's
12b-1 Plan. Payments under the 12b-1 Plan are not tied exclusively to the
expenses actually incurred. Counsellors Securities may delegate some or all of
these functions to a Service Organization. See "How to Purchase Shares --
Purchases Through Intermediaries."

13
<PAGE>
whose representatives provide services in connection with the sale or expected
sale of significant amounts of the Fund's Shares.

TRANSFER AGENT

CUSTODIAN

EXPENSES

The expenses of each Fund are deducted from its total income before dividends
are paid. Any general expenses of the Company that are not readily identifiable
as belonging to a particular investment portfolio of the Company will be
allocated among all investment portfolios of the Company based upon the relative
net assets of the investment portfolios. The Investor Class of the Funds pays
its own administration fees, and may pay a different share than the other
classes of other expenses (excluding advisory and custodial fees) if those
expenses are actually incurred in a different amount by the Investor Class or if
it receives different services.
- ----------------------------------------------

HOW TO PURCHASE SHARES

Shares representing interests in the Funds are offered continuously for sale by
the Distributor and may be purchased without imposition of a sales charge
through the BEA Investor Funds. Shares of a Fund may be purchased either by
mail, or with special advance instructions, by wire.

BY MAIL

If an investor desires to purchase Shares by mail, a check or money order made
payable to the "BEA Investor Funds" (in U.S. currency) should be sent along with
the completed account application to the "BEA Investor Funds" at the address set
forth below. Checks payable to the investor and endorsed to the order of the
"BEA Investor Funds" will not be accepted as payment and will be returned to
sender. If payment is received by check in proper form on or before the close of
regular trading on the New York Stock Exchange, Inc. ("NYSE") (generally, 4:00
p.m. Eastern Time) on a day that a Fund calculates its net asset value (a
"Business Day") the purchase will be made at the Fund's net asset value
calculated at the end of that day. If payment is received after the close of
regular trading on the NYSE the purchase will be effected at the Fund's net
asset value determined for the next Business Day after payment has been
received. Checks or money orders that are not in proper form or that are not
accompanied or preceded by a completed application will be returned to sender.
Shares purchased by check are entitled to receive dividends and distributions
beginning on the day after payment has been received. Checks should be made
payable to the "BEA

14
<PAGE>
Investor Funds" accompanied by a breakdown of amounts to be invested in each
Fund. If a check used for purchase does not clear, the Funds will cancel the
purchase and the investor may be liable for losses or fees incurred. For a
description of the manner of calculating a Fund's net asset value, see "Net
Asset Value" below.

SEND TO: BEA INVESTOR FUNDS
P.O. Box 8500
Boston, MA 02266-8500

OVERNIGHT TO:
BFDS
ATTN: BEA INVESTOR FUNDS
2 Heritage Drive
North Quincy, MA 02171

BY WIRE

Investors may also purchase Shares by wiring funds from their banks. Telephone
orders will not be accepted until a completed account application in proper form
has been received and an account number has been established. After telephoning
(800) 401-2230 for instructions, an investor should then wire Federal Funds to
the BEA Investor Funds c/o BFDS using the following wire address:

State Street Bank & Trust Company
ABA# 0110 000 28
ATTN: Mutual Fund/Custody Dept.
[BEA Investor Fund Name]
DDA# 9905-227-6
For Further Credit: [ACCOUNT NUMBER AND REGISTRATION]

If a telephone order is received by the close of regular trading on the NYSE,
AND payment by wire is received on the same day in proper form (in accordance
with instructions stated 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 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. 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
Business Day. Payment for orders that are not accepted will be returned to the
prospective investor after prompt inquiry. If a telephone order is placed and
payment by wire is not received on the same day, the Fund will cancel the
purchase and the investor may be liable for losses or fees incurred.

Shares of a Fund are sold without a sales charge. The minimum initial investment
in a Fund is $2,500 and the minimum subsequent investments must be $250, except
that subsequent minimum investments can be as low as $100 under the Automatic
Investment Plan, Uniform Gifts to Minors Act and through Individual Retirement
Accounts described below. The Funds reserve the right to change the initial and
subsequent minimum investment requirements at any time.

After an investor has made his initial investment, additional Shares may be
purchased at any time by mail or by wire in the manner outlined above. Wire
payments for initial and subsequent investments should clearly indicate the
investor's account number and the name in which Shares are being purchased. Each
Fund reserves the right to suspend the offering of Shares for a period of time
or reject any specific purchase order. In the interest of economy and
convenience, physical certificates representing Shares in a Fund are not
normally issued.

15
<PAGE>
PURCHASE THROUGH INTERMEDIARIES

The Funds understand that some broker-dealers (other than Counsellors
Securities), financial institutions, securities dealers and other industry
professionals ("Service Agents") impose certain conditions on their clients that
invest in the Funds, which are in addition to or different from those described
in this Prospectus, and, to the extent permitted by applicable regulatory
authority, may charge their clients direct fees. Certain features of the Funds,
such as the minimum initial or subsequent investments, redemption fees and
certain trading restrictions may be modified, or waived by Service Agents and
administrative charges or other direct fees may be imposed, which charges or
fees would not be imposed if Fund Shares were purchased directly from the Funds.
Therefore, a client or customer should contact the Service Agent acting on his
behalf concerning the fees (if any) charged in connection with a purchase or
redemption of a Fund's shares and should read this Prospectus in light of the
terms governing his accounts with Service Agents. Service Agents will be
responsible for promptly transmitting client or customer purchase and redemption
orders to the Funds in accordance with their agreements with clients or
customers. Service Agents, or, if applicable, their designees that have entered
into agreements with a Fund or its agent, may enter confirmed purchase orders on
behalf of clients and 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 Service Agents could be held liable for resulting fees or losses.

Investors who purchase Shares through a program of services offered or
administered by a securities dealer or financial institution should read the
program materials in conjunction with this Prospectus. The Funds reserve the
right to vary further the initial and subsequent minimum investment requirements
at any time.

AUTOMATIC INVESTMENT PLAN

Additional investments in Shares may be made automatically on a periodic basis
by authorizing the BEA Investor Funds to withdraw funds from your bank account
through an Automatic Investment Plan. Investors desiring to participate in an
Automatic Investment Plan should call the BEA Investor Funds, at (800) 401-2230
to obtain the appropriate forms, or complete the appropriate section of the
Application included with this Prospectus. The minimum initial investment for an
Automatic Investment Plan is $1,000, with minimum monthly payments of $100.

16
<PAGE>
RETIREMENT PLANS AND UGMA/UTMA ACCOUNTS

Shares may be purchased in conjunction with Individual Retirement Accounts
("IRAs"), rollover IRAs, pension, profit-sharing or other employer benefit
plans, and under the Uniform Gifts to Minors Act ("UGMA") or Uniform Transfers
to Minors Act ("UTMA"). The minimum initial investment in conjunction with such
accounts is $1,000, and the minimum subsequent investment is $100. For further
information as to applications and annual fees, please contact the BEA Investor
Funds. To determine whether the benefits of an IRA and other plans and UGMA and
UTMA accounts are available and/or appropriate, a shareholder should consult
with a tax adviser.
- ----------------------------------------------

HOW TO REDEEM AND EXCHANGE SHARES

An investor of a Fund may redeem (sell) his Shares on any day that the Fund's
net asset value is calculated (see "Net Asset Value" below).

REDEMPTION IN WRITING

Shareholders may redeem for cash some or all of their Fund Shares at any time.
To do so, a written request in proper form must be sent directly to the BEA
Investor Funds c/o BFDS, P.O. Box 8500, Boston, MA 02266-8500. The redemption
price is the net asset value per share next determined after the initial receipt
of proper notice of redemption. The value of Shares at the time of redemption
may be more or less than the shareholder's cost, depending on the market value
of the securities held by the Fund at such time.

A request for redemption must be signed by all persons in whose names the Shares
are registered or by an authorized party, such as the agent or investment
adviser for the Shareholder. Signatures must conform exactly to the account
registration. Generally, a properly signed written request is all that is
required for a redemption. In some cases, however, other documents may be
necessary. Additional documentary evidence of authority is also required by the
BEA Investor Funds in the event redemption is requested by a corporation,
partnership, trust, fiduciary, executor or administrator.

PAYMENT OF REDEMPTION PROCEEDS

INVOLUNTARY REDEMPTION

The Company reserves the right to redeem an account in any Fund of a shareholder
at any time the net asset value of the account in such Fund falls below $500 as
the result of a redemption request. Shareholders will be notified in writing
that the value of their account in a Fund is less than $500 and will be allowed
30 days to make additional investments before the redemption is processed.

REDEMPTION IN-KIND

17
<PAGE>
shareholder may incur transaction costs in converting these securities into cash
after they have redeemed their Shares. The Company has elected, however, to be
governed by Rule 18f-1 under the 1940 Act so that a Fund 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 Fund. Redeeming
shareholders will be required to bear certain administrative or custodial costs
in effecting redemptions in-kind.

EXCHANGE PRIVILEGE

An institution may exchange Investor Shares of a Fund for Investor Shares of any
other BEA Investor Fund at such Fund's respective net asset values. Exchanges
will be effected in the manner described under "Redemption of Shares" above. If
an exchange request is received by BEA Investor Funds prior to the close of
regular trading on the NYSE, the exchange will be made at each Fund'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 Investor 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 the BEA Investor Funds at
(800) 401-2230.

If the exchanging shareholder does not currently own Shares of the Fund 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 Fund.

TELEPHONE TRANSACTIONS

In order to request redemptions or exchanges by telephone, investors must have
completed and returned to the BEA Investor Funds an account application
containing a telephone election. Unless contrary instructions are elected, an
investor will be entitled to make redemptions or exchanges by telephone by
calling the BEA Investor Funds at (800) 401-2230. To add a telephone redemption
or exchange feature to an existing account that previously did not provide for
this option, a Telephone Redemption or Exchange Authorization Form may be
obtained from the BEA Investor Funds. Neither the Company, the Funds, the
Distributor, the Co-Administrators, the Transfer Agent nor any other Fund agent
will be liable for following instructions communicated by telephone that they
reasonably believe to be genuine. Such procedures may include, among others,
providing written confirmation of telephone transactions, tape recording
telephone instructions, 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, and requiring specific personal
information prior to acting upon telephone instructions.
- ----------------------------------------------

NET ASSET VALUE

The net asset values for each class of the Funds are determined as of the close
of regular trading on the NYSE on each Business Day. The net asset values of
each class of a Fund are

18
<PAGE>
calculated by adding the value of the proportionate interest of each class in a
Fund's securities, cash and other assets, deducting the actual and accrued
liabilities of the class and dividing the result by the total number of
outstanding shares of the class.

DIVIDENDS AND DISTRIBUTIONS

The Company will distribute substantially all of the net realized capital gains,
if any, of each of the Funds to each Fund's shareholders annually. The Company
will distribute all net investment income, if any, for the BEA International
Equity, the BEA Emerging Markets Equity and the BEA Global Telecommunications
Funds annually. The Company will distribute net investment income for the BEA
High Yield Fund, if any, at least quarterly. All distributions will be
reinvested in the form of additional full and fractional shares of the relevant
Fund unless contrary election is made on the application to have distributions
paid in cash. If in the future a shareholder desires to have distributions paid
out rather than reinvested, the shareholder should notify the BEA Investor Funds
in writing.
- ----------------------------------------------

TAXES

GENERAL

Each Fund 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 Fund qualifies for this tax treatment, it 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 Fund, and out of the
portion of such net capital gain that constitutes mid-term capital gain, if any,
of a Fund will be taxed to shareholders as long-term capital gain or mid-term
capital gain, as the case may be, 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

19
<PAGE>
marginal rate on ordinary income for individuals, trusts and estates is
generally 39.6%. However, the maximum rate imposed on mid-term and other
long-term capital gain of such taxpayers is 28% and 20%, respectively. Corporate
taxpayers are taxed at the same rates on both ordinary income and capital gains.

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 Fund for Shares
representing interests in another Fund 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.

FOREIGN INCOME TAXES

20
<PAGE>
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 Fund for the purpose of the foreign tax credit limitation rules
of the Code, shareholders will be required to treat allocable portions of a
Fund's distributions as foreign source income. No deduction for foreign taxes
may be claimed by a shareholder who does not itemize deductions.
- ----------------------------------------------

MULTI-CLASS STRUCTURE

The Company offers other classes of shares, Institutional and Advisor Shares of
the Funds, which are offered directly to institutional investors and financial
intermediaries pursuant to separate prospectuses. Shares of a Fund represent
equal pro rata interests in the Fund and accrue dividends and calculate net
asset value and performance quotations in the same manner. The Company 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 the BEA Investor Funds at (800) 401-2230.
- ----------------------------------------------

DESCRIPTION OF SHARES

The Company has authorized capital of thirty billion shares of Common Stock,
$.001 par value per share, of which 13.93 billion shares are currently
classified into 82 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 INTERESTS IN THE BEA
INTERNATIONAL EQUITY, THE BEA EMERGING MARKETS EQUITY, THE BEA GLOBAL
TELECOMMUNICATIONS AND THE BEA HIGH YIELD FUNDS AND DESCRIBE ONLY THE INVESTMENT
OBJECTIVE AND POLICIES, OPERATIONS, CONTRACTS AND OTHER MATTERS RELATING TO
THESE FUNDS.

21
<PAGE>
class.) Shareholders of the Company 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 Company may elect
all of the directors.

As of November 15, 1997, to the Company's knowledge, no person held of record or
beneficially 25% or more of the outstanding shares of all classes of the
Company.
- ----------------------------------------------

OTHER INFORMATION

REPORTS AND INQUIRIES

Shareholders of a Fund will receive unaudited semi-annual reports describing the
Fund's investment operations and annual financial statements audited by
independent accountants. Shareholder inquiries can be made by contacting the BEA
Investor Funds at (800) 401-2230 or by writing to the BEA Investor Funds, P.O.
Box 8500, Boston, MA 02266-2500.

PERFORMANCE INFORMATION

From time to time, each of the Funds 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 Fund. 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 Funds 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 Fund's performance with other measures of investment return. For
example, a Fund's total return or expense ratio 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,
Wil-shire 5000 Index, Lehman Brothers Bond Indexes, Morgan Stanley Composite
Index EAFE, Morgan Stanley Composite Index-Free Emerging Markets, JP Morgan
Global Government Bond Index (Unhedged), First Boston High Yield Index, Consumer
Price Index, Bond Buyer's 20-Bond Index, Dow Jones Industrial Average, national
publications such as MONEY, FORBES, BARRON'S, THE WALL STREET JOURNAL or the NEW
YORK TIMES or publications of a local or regional nature, and other industry
publications. For these purposes, the performance of a Fund, as well as the
performance published by such services or experienced by such indices, will
usually not reflect redemption fees, the inclusion of which would reduce
performance results. If a Fund advertises non-standard computations, however,
the Fund will disclose such fees, and will also disclose that the performance
data do not reflect such fees and the inclusion of such fees would reduce the
performance quoted.

22
<PAGE>
over a one-year period and is compounded semi-annually. The annualized income is
then shown as a percentage of the net asset value.

HISTORICAL PERFORMANCE INFORMATION

INSTITUTIONAL CLASS. The table below presents the prior total return
history on an annualized basis for the Institutional Class of the BEA
International Equity, the BEA Emerging Markets Equity and the BEA High Yield
Funds for the periods indicated. The investment objectives, policies and
strategies of the Funds underlying the Institutional and the Investor Classes
are identical. The Institutional Class, which has a minimum investment of $3
million, has lower fees and expenses than the Investor Class, so that the
performance of the Institutional Class will differ from that of the Investor
Class. IN ADDITION, THE PAST PERFORMANCE OF THE INSTITUTIONAL CLASS OF THESE
FUNDS IS NOT NECESSARILY INDICATIVE OF THE FUTURE PERFORMANCE OF EACH FUND.
Listed below the performance history for each Fund is a comparative index
comprised of securities similar to those in which the Funds invest.

23
<PAGE>
FOR THE PERIOD ENDED AUGUST 31, 1997

<TABLE>
<CAPTION>
ONE THREE SINCE
FUND/INDEX (ANNUALIZED) YEAR YEARS INCEPTION*
- -------------------------------------------------- ------ ------ ------
<S> <C> <C> <C>
BEA International Equity.......................... 15.9% 4.4% 10.4%
Morgan Stanley Capital International-Europe,
Australia & Far East Index**..................... 9.4% 6.0% 11.6%
BEA Emerging Markets Equity....................... 8.3% (5.4)% 7.8%
Morgan Stanley Capital International-Emerging
Markets Free Index**............................. 4.6% (3.2)% 12.1%
BEA High Yield.................................... 15.2% 11.8% 11.2%
CS First Boston High Yield Index***............... 15.4% 12.9% 11.2%
</TABLE>

** These indices are composites of equity securities considered to be
representative of equity performance in the specified countries. These
indices are not actively managed, and cannot be invested in directly.
Historical performance of these market indices does not guarantee future
performance of the Fund.

*** The index is a composite of fixed income securities considered to be
representative of fixed income performance in the specified market. The
index is not actively managed, and cannot be invested in directly.
Historical performance of the market index does not guarantee future
performance of the Fund.

24
<PAGE>
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY
REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS OR IN THE FUNDS' 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 COMPANY OR ITS
DISTRIBUTOR. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING BY THE COMPANY OR
BY THE DISTRIBUTOR IN ANY JURISDICTION IN WHICH SUCH OFFERING MAY NOT LAWFULLY
BE MADE.

<PAGE>

BEA INVESTOR FUNDS
QUICK REFERENCE GUIDE

BEA INVESTOR FUNDS
- ----------------------------------------
International Equity Fund
Emerging Markets Equity Fund
Global Telecommunications Fund
High Yield Fund

WORLD WIDE WEB
- ----------------------------------------
Please visit our website at: www.beafunds.com.

FUND AND ACCOUNT INFORMATION
- ----------------------------------------
Shareholders and all interested investors may direct
their inquiries and requests for information to the
Funds' information line at 1-800-401-2230.

AUTOMATIC REINVESTMENT PROGRAM
- ----------------------------------------
Dividend and capital gain distributions are
automatically reinvested in shares of the same
Fund at the current net asset value.

EXCHANGE PRIVILEGES
- ----------------------------------------
Shareholders may sell fund shares and buy shares
of other BEA Investor Funds by telephone or in
writing. Please refer to the Prospectus section entitled
"Exchange Privilege."

STATEMENTS AND REPORTS
- ----------------------------------------
As a shareholder you will receive the following:
* Confirmation Statements - after every transaction
That affects your account balance or account
registration
* Account Statements - quarterly
* Financial Reports - semi-annually

INVESTMENT ADVISER
- ----------------------------------------
BEA Associates
One Citicorp Center
153 East 53rd Street
New York, NY 10022

DISTRIBUTOR
- ----------------------------------------
Counsellors Securities Inc.
466 Lexington Avenue
New York, NY 10017-3147

CO-ADMINISTRATOR
- ----------------------------------------
PFPC Inc.
400 Bellevue Parkway
Wilmington, DE 19809

CO-ADMINISTRATOR
- ----------------------------------------
BEA Associates
One Citicorp Center
153 East 53rd Street
New York, NY 10022

CUSTODIAN
- ----------------------------------------
Brown Brothers Harriman & Co.
40 Water Street
Boston, MA 02109

TRANSFER AGENT
- ----------------------------------------
State Street Bank and Trust Co.
225 Franklin Street
Boston, MA 02110

INDEPENDENT ACCOUNTANTS
- ----------------------------------------
Coopers & Lybrand L.L.P.
2400 Eleven Penn Center
Philadelphia, PA 19103

LEGAL COUNSEL
- ----------------------------------------
Drinker Biddle & Reath LLP
1345 Chestnut Street
Philadelphia, PA 19107-3496

<PAGE>

BEA INVESTOR FUNDS

INTERNATIONAL EQUITY
EMERGING MARKETS EQUITY
GLOBAL TELECOMMUNICATIONS
HIGH YIELD
(INVESTMENT PORTFOLIOS OF THE RBB FUND, INC.)

STATEMENT OF ADDITIONAL INFORMATION

This Statement of Additional Information provides supplementary
information pertaining to shares (the "Investor Shares" or the "Shares")
representing interests in four investment portfolios (the "Funds") of The RBB
Fund, Inc. (the "Company"): the BEA International Equity, the BEA Emerging
Markets Equity, the BEA Global Telecommunications and the BEA High Yield
(collectively, the "Funds"). This Statement of Additional Information is not
a prospectus, and should be read only in conjunction with the BEA Investor
Prospectus for the Funds, dated December 8, 1997 (the "Prospectus"). A copy
of the Prospectus may be obtained from the Fund's transfer agent by calling
toll-free (800) 401-2230. This Statement of Additional Information is dated
December 8, 1997.

<PAGE>

CONTENTS

Prospectus
Page Page
---- ----

General 3 4
Common Investment Policies -- All Funds 3 4
Supplemental Investment Objectives and Policies --
BEA International Equity, BEA Emerging
Markets Equity and BEA Global Telecommunications
Funds 24 6
Supplemental Investment Objectives and Policies --
BEA Global Telecommunications Fund 24
Investment Limitations 25 7
Risk Factors 27 8
Directors and Officers 32 N/A
Investment Advisory and Servicing Arrangements 36 9
Portfolio Transactions 42 N/A
Purchase and Redemption Information 46 12
Valuation of Shares 46 15
Performance and Yield Information 48 18
Taxes 51 15
Additional Information Concerning Fund Shares 59 18
Miscellaneous 62 18
Financial Statements 73 N/A
Appendix A A-1 N/A
Appendix B B-1 N/A

<PAGE>

GENERAL

COMMON INVESTMENT POLICIES -- ALL FUNDS

The following supplements the information contained in the Prospectus
concerning the investment objectives and policies of, and techniques used by,
the Funds.

-3-
<PAGE>

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.

REVERSE REPURCHASE AGREEMENTS AND DOLLAR ROLLS. Each Fund 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 Fund pursuant to such Fund's agreement to repurchase them at a mutually
agreed upon date, price and rate of interest. At the time a Fund enters into a
reverse repurchase agreement, it will establish and maintain a segregated
account with an approved custodian containing cash or liquid securities

-4-
<PAGE>

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 Fund's liquidity and ability to manage its assets might be
affected when it sets aside cash or portfolio securities to cover such
commitments. Reverse repurchase agreements involve the risk that the market
value of the securities retained in lieu of sale may decline below the price
of the securities a Fund has sold but is obligated to repurchase. In the
event the buyer of securities under a reverse repurchase agreement files for
bankruptcy or becomes insolvent, such buyer or its trustee or receiver may
receive an extension of time to determine whether to enforce a Fund's
obligation to repurchase the securities, and a Fund's use of the proceeds of
the reverse repurchase agreement may effectively be restricted pending such
decision. Reverse repurchase agreements are considered to be borrowings
under the 1940 Act. Each Fund also may enter into "dollar rolls," in which
it sells fixed income securities for delivery in the current month and
simultaneously contracts, to repurchase substantially similar (same type,
coupon and maturity) securities on a specified future date. During the roll
period, a Fund would forgo principal and interest paid on such securities. A
Fund would be compensated by the difference between the current sales price
and the forward price for the future purchase, as well as by the interest
earned on the cash proceeds of the initial sale. The Funds do not presently
intend to invest more than 5% of net assets in reverse repurchase agreements
or dollar rolls.

WHEN-ISSUED SECURITIES, DELAYED DELIVERY TRANSACTIONS AND FORWARD
COMMITMENTS. Each Fund may purchase securities on a when-issued basis or on
a forward commitment 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 Fund with payment and delivery taking
place in the future to secure what is considered an advantageous yield and
price to a Fund at the time of entering into the transaction. Although the
Funds have not established a limit on the percentage of their assets that may
be committed in connection with such transactions, they will maintain a
segregated account with their custodian of cash or liquid securities
denominated in U.S. dollars or non-U.S. currencies in an aggregate amount
equal to the amount of their 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
Fund'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
Fund engages in when-issued transactions, it relies on the seller to
consummate the trade. Failure of the seller to do so may result

-5-
<PAGE>

in the Fund 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. Each Fund currently anticipates that when-issued
securities will not exceed 25% of its net assets. Each Fund does not intend to
engage in when-issued purchases and forward commitments for speculative purposes
but only in furtherance of its investment objectives.

STAND-BY COMMITMENT AGREEMENTS. Each Fund may from time to time enter
into stand-by commitment agreements. Such agreements commit a Fund, for a
stated period of time, to purchase a stated amount of a fixed income securities
which may be issued and sold to the Fund 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 Fund is paid a commitment fee, regardless of
whether or not the security is ultimately issued. A Fund 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 Fund. Each
Fund will not enter into a stand-by commitment with a remaining term in excess
of 45 days and it will limit its investment in such commitments so that the
aggregate purchase price of the securities subject to such commitments, together
with the value of portfolio securities subject to legal restrictions on resale,
will not exceed 10% of its assets taken at the time of acquisition of such
commitment or security. Each Fund will at all times maintain a segregated
account with its custodian of cash or liquid 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 Fund's liquidity and ability to manage its assets might be
affected when it sets aside cash or portfolio securities to cover such
commitments.

The purchase of a security subject to a stand-by commitment agreement
and the related commitment fee will be recorded on the date on which the
security can reasonably be

-6-
<PAGE>

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 stand-by
commitment. The Funds do not presently intend to invest more than 5% of net
assets in stand-by commitment agreements.

ILLIQUID SECURITIES. Each Fund does not presently intend to invest
more than 15% 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 Fund 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
Company's Board of Directors. Because of the absence of any liquid trading
market currently for these investments, a Fund may take longer to liquidate
these positions than would be the case for publicly traded securities. Although
these securities may be resold in privately negotiated transactions, the prices
realized on such sales could be less than those originally paid by a Fund.
Securities that have legal or contractual restrictions on resale but have a
readily available market are not considered illiquid for purposes of this
limitation. With respect to each Fund, repurchase agreements subject to demand
are deemed to have a maturity equal to the notice period.

If otherwise consistent with their investment objectives and policies,
the Funds may purchase securities which are not registered under the Securities
Act but which may be sold to "qualified institutional buyers" in accordance with
Rule 144A under the Securities Act. These securities will not be

-7-
<PAGE>

considered illiquid so long as it is determined by the Adviser, under guidelines
approved by the Board of Directors, that an adequate trading market exists for
the securities. This investment practice could have the effect of increasing
the level of illiquidity in a Fund during any period that qualified
institutional buyers become uninterested in purchasing restricted securities.

-8-
<PAGE>

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 Funds to possible loss because of
adverse market action, expenses and/or delays in connection with the disposition
of the underlying securities.

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.

-9-
<PAGE>

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.

-10
<PAGE>

in escrow by an agent for the bondholders. Approximately half of the Venezuelan
Brady Bonds issued to date have principal repayments at final maturity
collateralized by U.S. Treasury zero coupon bonds (or comparable collateral in
other currencies), while slightly more than half have interest coupon payments
collateralized on a 14-month rolling-forward basis by securities held by the
Federal Reserve Bank of New York as collateral agent.

-11-
<PAGE>

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,
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.

-12-
<PAGE>

MORTGAGE-BACKED SECURITIES. The Funds may invest in mortgage-backed
securities, such as those issued by the Government National Mortgage
Association ("GNMA"), the Federal National Mortgage Association ("FNMA"), the
Federal Home Loan Mortgage Corporation ("FHLMC") or certain foreign issuers,
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 Fund'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.

-13-
<PAGE>

pools, particularly those with loans with other maturities or different
characteristics, are priced on an assumption of average life determined for each
pool.

-14-
<PAGE>

COLLATERALIZED MORTGAGE OBLIGATIONS. The Funds 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
mortgagebacked securities. These securities may be considered mortgage
derivatives. Generally, CMOs are partitioned into several classes with a
marked priority by which the classes of obligations are redeemed. The Funds
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.

-15-
<PAGE>

mortgage-backed security as described above.

-16-
<PAGE>

ADDITIONAL CONSIDERATIONS AND RISKS--NON-INVESTMENT GRADE
FIXED-INCOME SECURITIES. When and if available, fixed-income securities may
be purchased by a Fund at a discount from face value. From time to time a
Fund may purchase securities in default with respect to the paying of
principal and/or interest at the time acquired if, in the opinion of BEA,
such securities have the potential for future capital appreciation.

-17-
<PAGE>

-18-
<PAGE>

HEDGING. Each of the Funds may engage in various hedging strategies.
See "Currency Hedging" in the Prospectus.

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
Fund 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 Fund 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 Fund security if its market
value exceeds the amount of foreign currency a Fund is obligated to deliver.
The projection of short-term currency market movements is extremely difficult,

-19-
<PAGE>

and the successful execution of a short-term hedging strategy is highly
uncertain.

-20-
<PAGE>

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 Fund.

-21-
<PAGE>

exercise price of the call written, or (ii) greater than the exercise price of
the call written provided the difference is maintained by the Fund in liquid
assets in a segregated account with its custodian.

When a Fund purchases a put option, the premium paid by it is recorded as
an asset of the Fund. When a Fund writes an option, an amount equal to the net
premium (the premium less the commission) received by the Fund is included in
the liability section of the Fund's statement of assets and liabilities as a
deferred credit. The amount of this asset or deferred credit will be
subsequently marked-to-market to reflect the current value of the option
purchased or written. The current value of the traded option is the last sale
price or, in the absence of a sale, the mean between the last bid and asked
prices. If an option purchased by a Fund expires unexercised the Fund realizes
a loss equal to the premium paid. If the Fund enters into a closing sale
transaction on an option purchased by it, the Fund will realize a gain if the
premium received by the Fund on the closing transaction is more than the premium
paid to purchase the option, or a loss if it is less. If an option written by a
Fund expires on the stipulated expiration date or if the Fund enters into a
closing purchase transaction, it will realize a gain (or loss if the cost of a
closing purchase transaction exceeds the net premium received when the option is
sold) and the deferred credit related to such option will be eliminated. If an
option written by a Fund is exercised, the proceeds of the sale will be
increased by the net premium originally received and the Fund will realize a
gain or loss.

-22-
<PAGE>

options that had been issued by the Options Clearing Corporation as a result of
trades on that Exchange would continue to be exercisable in accordance with
their terms.

SHORT SALES "AGAINST THE BOX." In a short sale, a Fund sells a
borrowed security and has a corresponding obligation to the lender to return the
identical security. Each Fund 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 Fund engages in a short sale, the
collateral for the short position will be maintained by the Fund's custodian or
a qualified sub-custodian. While the short sale is open, the Fund 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 Fund's long position. A
Fund 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 Fund (or a security convertible or exchangeable for such security), or when
the Fund wants to sell the security at an attractive current price, but also
wishes possibly to defer recognition of gain or loss for federal income tax
purposes. (A short sale against the box will defer recognition of gain for
federal income tax purposes only if the Portfolio subsequently closes the short
position by making a purchase of the relevant securities no later than 3 days
after the end of the taxable year.) In such case, any future losses in the
Fund'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
Fund owns. There will be certain additional transaction costs associated with
short sales against the box, but the Fund will endeavor to offset these costs
with the income from the investment of the cash proceeds of short sales. The
Funds do not presently intend to invest more than 5% of net assets in short
sales against the box.

-23-
<PAGE>

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. See Appendix "A"
for a list of commercial paper ratings.

SUPPLEMENTAL INVESTMENT OBJECTIVES AND
POLICIES -- BEA INTERNATIONAL EQUITY, BEA EMERGING
MARKETS EQUITY AND BEA GLOBAL TELECOMMUNICATIONS FUNDS

SUPPLEMENTAL INVESTMENT OBJECTIVES AND POLICIES --
BEA GLOBAL TELECOMMUNICATIONS FUND

-24-
<PAGE>

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
Fund's investment decisions are based upon capital appreciation potential rather
than income considerations.

INVESTMENT LIMITATIONS

The Company has adopted the following fundamental investment
limitations which may not be changed without the affirmative vote of the holders
of a majority of the Fund's outstanding Shares (as defined in Section 2(a)(42)
of the 1940 Act). Each Fund may not:

2. Issue any senior securities, except as permitted under the 1940
Act;

-25-
<PAGE>

7. Except for the BEA Global Telecommunications Fund, purchase any
securities which would cause 25% or more of the value of the Fund's total assets
at the time of purchase to be invested in the securities of 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. The BEA Global Telecommunications Fund will concentrate in
the telecommunications industry.

In addition to the fundamental investment limitations specified above,
a Fund may not:

1. Make investments for the purpose of exercising control or
management, but investments by a Fund in wholly-owned investment entities
created under the laws of certain countries will not be deemed the making of
investments for the purpose of exercising control or management;

2. Purchase securities on margin, except for short-term credits
necessary for clearance of portfolio transactions, and except that a Fund may
make margin deposits in connection with its use of options, futures contracts,
options on futures contracts and forward contracts;

-26-
<PAGE>

3. Purchase or sell interests in mineral leases, oil, gas or other
mineral exploration or development programs, except that a Fund 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 Company, 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 Company's Board of Directors without a vote of the shareholders.

RISK FACTORS

FOREIGN SECURITIES. Investments in foreign securities are subject to
certain risks, discussed below.

-27-
<PAGE>

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 Funds' ability to repatriate investment income, capital or
the proceeds of sales of securities by foreign investors. The Funds 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 Funds
of any restrictions on investments.

INVESTMENT CONTROLS. In certain countries that currently prohibit
direct foreign investment in the securities of their companies, indirect foreign
investment in the securities of

-28-
<PAGE>

companies listed and traded on the stock exchanges in these countries is
permitted through investment funds which have been specifically authorized.
The Funds may invest in these investment funds and registered investment
companies subject to the provisions of the 1940 Act. If these Funds invest
in such investment companies, they will each bear their proportionate share
of the costs incurred by such companies, including investment advisory fees.

OPERATING EXPENSES. The costs attributable to foreign investing that
a Fund 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 Fund 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 Fund would be subject.

LOWER-RATED OR NON-RATED CRITERIA FOR DEBT SECURITIES. The High Yield
Fund 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
are greater than is the case with higher rated securities. For example,
during an economic downturn or a sustained period of rising interest rates,
issuers of high yield securities may be more likely to experience financial
stress, especially if such issuers are highly leveraged. During such
periods, such issuers may not have sufficient revenues to meet their interest
payment obligations. The issuer's ability to service its debt obligations
also may be adversely affected by specific issuer developments, or the
issuer's inability 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

-29-
<PAGE>

securities because such securities may be unsecured and may be subordinated to
other creditors of the issuer.

Lower-rated securities frequently have call or redemption features
which would permit an issuer to repurchase the security from a Fund. If a
call were exercised by the issuer during a period of declining interest
rates, a Fund likely would have to replace such called security with a lower
yielding security, thus decreasing the net investment income to a Fund and
dividends to shareholders.

A Fund may have difficulty disposing of certain lower-rated
securities because there may be a thin trading market for such securities.
The secondary trading market for high yield securities is generally not as
liquid as the secondary market for higher rated securities. Reduced
secondary market liquidity may have an adverse impact on market price and a
Fund's ability to dispose of particular issues when necessary to meet a
Fund'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 a
Fund's net asset value. In addition, the Fund 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.

-30-
<PAGE>

-31-
<PAGE>

However, a Fund 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 Fund 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 Company, their ages,
business addresses and principal occupations during the past five years are:

Principal Occupation
Position with During Part Five
Name, Address and Age Fund Years
- --------------------- ------------- --------------------

Arnold M. Reichman - 49* Director Senior Managing
466 Lexington Avenue Director, Chief
New York, NY 10017 Operating Officer
and Assistant
Secretary, Warburg
Pincus Asset
Management, Inc.;
Director and
Executive Officer,
Counsellors
Securities Inc;
Director/Trustee of
various investment
companies advised by
Warburg Pincus Asset
Management, Inc.

Robert Sablowsky - 58** Director Senior Vice
10 Wall Street President,
New York, NY 10005 Fahnestock Co., Inc.
(a registered
broker-dealer);
prior to October
1996, Executive Vice
President of Gruntal
& Co., Inc. (a
registered broker-
dealer).

-32-
<PAGE>

Principal Occupation
Position with During Part Five
Name, Address and Age Fund Years
- --------------------- ------------- --------------------

Francis J. McKay - 60 Director Since 1963,
7701 Burholme Avenue Executive Vice
Philadelphia, PA 19111 President, Fox Chase
Cancer Center
(biomedical research
and medical care.)
Principal Occupation

Marvin E. Sternberg - 62 Director Since 1974,
937 Mt. Pleasant Road Chairman, Director
Bryn Mawr, PA 19010 and President, 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 and Vice
Comcast Corporation Chairman Comcast
1234 Market Street Corporation since
16th Floor 1969, (cable television
Philadelphia, PA 19107- and communications);
3723 Director, Comcast
Cablevision of
Philadelphia (cable
television and
communications) and
Nextel (wireless
communications).

-33-
<PAGE>

Principal Occupation
Position with During Part Five
Name, Address and Age Fund Years
- --------------------- ------------- --------------------

Donald van Roden - 72 Director and Self-employed
1200 Old Mill Lane Chairman of the businessman. From
Wyomissing, PA 19610 Board February 1980 to
March 1987, Vice
Chairman, Smith
Kline Beecham
Corporation
(pharmaceuticals);
Director, AAA Mid-
Atlantic (auto
service); Director,
Keystone Insurance
Co.

Edward J. Roach - 73 President and Certified Public
Suite 100 Treasurer Accountant; Vice
Bellevue Park Chairman of the
Corporate Center Board, Fox Chase
400 Bellevue Parkway Cancer Center;
Wilmington, DE 19809 Trustee Emeritus,
Pennsylvania School
for the Deaf;
Trustee Emeritus,
Immaculata College;
President or Vice
President and
Treasurer of various
investment companies
advised by PNC
Institutional
Management
Corporation;
Director, The
Bradford Funds, Inc.

Morgan R. Jones - 58 Secretary Chairman of the law
Drinker Biddle & Reath firm of Drinker
LLP Biddle & Reath LLP;
1345 Chestnut Street Director, Rocking
Philadelphia, PA 19107- Horse Child Care
3496 Centers of America,
Inc.

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

* Mr. Reichman is an "interested person" of the Company, as that term is
defined in the 1940 Act, by virtue of his

-34-
<PAGE>

positions with Counsellors Securities Inc., the Company's distributor.

** Mr. Sablowsky is an "interested person" of the Company, as that term is
defined in the 1940 Act by virtue of his position with Fahnestock Co.,
Inc., a registered broker-dealer.

The Company pays directors who are not "affiliated persons" (as that
term is defined in the 1940 Act) of any investment adviser or sub-adviser of the
Company or the Distributor and Mr. Sablowsky who is considered to be an
affiliated person, $12,000 annually and $1,000 per meeting of the Board or any
committee thereof that is not held in conjunction with a Board meeting. In
addition, the Chairman of the Board receives an additional $5,000 per year for
his services in this capacity. Such Directors are reimbursed for any expenses
incurred in attending meetings of the Board of Directors or any committee
thereof. For the year ended August 31, 1997, each of the following members of
the Board of Directors received compensation from the Company in the following
amounts:

-35-
<PAGE>

DIRECTORS' COMPENSATION

PENSION OR TOTAL
RETIREMENT COMPENSATION
BENEFITS ESTIMATED FROM
AGGREGATE ACCRUED AS ANNUAL REGISTRANT
COMPENSATION PART OF BENEFITS AND FUND
NAME OF PERSON/ FROM FUND UPON COMPLEX(1)
POSITION REGISTRANT EXPENSES RETIREMENT PAID TO DIRECTORS
- --------------- ------------ ---------- ---------- -----------------

Julian A. Brodsky, $16,000 N/A N/A $16,000
Director
Francis J. McKay, $19,000 N/A N/A $19,000
Director
Arnold M. Reichman, $ 0 N/A N/A $ 0
Director
Robert Sablowsky, $ 8,000 N/A N/A $ 8,000
Director
Marvin E. Sternberg, $19,000 N/A N/A $19,000
Director
Donald van Roden, $24,000 N/A N/A $24,000
Director and Chairman

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

(1) A Fund Complex means two or more investment companies that hold themselves
out to investors as related companies for purposes of investment and
investor services, or have a common investment adviser or have an
investment adviser that is an affiliated person of the investment adviser
of any other investment companies.

On October 24, 1990 the Company adopted, as a participating
employer, the Fund Office Retirement Profit-Sharing Plan and Trust
Agreement, a retirement plan for employees (currently Edward J. Roach and
one other employee) pursuant to which the Company will contribute on a
quarterly basis amounts equal to 10% of the quarterly compensation of each
eligible employee. By virtue of the services performed by the Company's
advisers, custodians, administrators and distributor, the Company itself
requires only two part-time employees. Drinker Biddle & Reath LLP, of
which Mr. Jones is a partner, receives legal fees as counsel to the
Company. No officer, director or employee of BEA or the Distributor
currently receives any compensation from the Company.

-36-
<PAGE>

INVESTMENT ADVISORY AND SERVICING ARRANGEMENTS

ADVISORY AGREEMENTS. BEA Associates (sometimes referred to as the
"Adviser") renders advisory and administrative services to each of the Funds
pursuant to Investment Advisory Agreements. The Advisory Agreements relating to
the Funds are dated September 16, 1992 for the BEA International Equity, BEA
Emerging Markets Equity and BEA High Yield Funds, dated July 10, 1996 for the
BEA Global Telecommunications Fund. Such advisory agreements are hereinafter
collectively referred to as the "Advisory Agreements."

BEA Associates is a diversified investment adviser, managing 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, 1997, BEA Associates managed approximately $34.6 billion in
assets. BEA is a wholly-owned subsidiary of Credit Suisse, the second
largest Swiss bank, which in turn is a subsidiary of CS Holding, a Swiss
corporation. Active employees of BEA have a long-term equity incentive plan.
BEA Associates is a registered investment advisor under the Investment
Advisors Act of 1940, as amended.

-37-
<PAGE>

Telecommunications and BEA High Yield Funds, BEA Associates will be paid (before
any voluntary waivers or reimbursements) a monthly fee computed at an annual
rate of .80%, 1.00%, 1.00% and .70% of average daily net assets, respectively.

For the fiscal year ended August 31, 1997, the Funds paid BEA advisory
fees and BEA waived fees and/or reimbursed expenses of the Funds as follows:

Fees Paid
(After
Waivers and
Fund Reimbursements Waivers Reimbursements
- ---- ----------- --------- --------------
International Equity $5,300,316 $ 0 $ 0
Emerging Markets $ 988,002 $ 18,498 $ 0
Equity
High Yield $ 393,841 $233,336 $ 0
Global $ 0 $ 3,745 $ 20,903
Telecommunications

For the fiscal year ended August 31, 1996, the Funds paid BEA advisory
fees and BEA waived fees and/or reimbursed expenses of the Funds as follows:

Fees Paid
(After
Fund Waivers) Waivers Reimbursements
- ---- ----------- -------- --------------
International $5,993,072 $ 0 $ 0
Equity
Emerging Markets $1,289,739 $ 0 $ 0
Equity
High Yield $ 542,590 $100,763 $ 0
Global N/A N/A N/A
Telecommunications

-38-
<PAGE>

For the fiscal year ended August 31, 1995, the Funds paid BEA advisory
fees and BEA waived fees and/or reimbursed expenses of the Funds as follows:

Fund Fees Paid Waivers Reimbursements
- ---- --------- ------- --------------

International Equity $6,012,837 $ 0 $ 0
Emerging Markets $1,250,012 $ 0 $ 0
Equity
High Yield $1,002,002 $ 0 $ 0
Global N/A N/A N/A
Telecommunications

Each Fund bears all of its own expenses not specifically assumed by
the Adviser. General expenses of the Company not readily identifiable as
belonging to a Fund of the Company are allocated among all investment funds by
or under the direction of the Company's Board of Directors in such manner as the
Board determines to be fair and equitable. The BEA Investor Class of the Funds
pays its own administration fees, and may pay a different share than the other
classes of the Funds of other expenses (excluding advisory and custodial fees)
if those expenses are actually incurred in a different amount by the Investor
Class or if it receives different services.

The Advisory Agreements were reapproved on July 9, 1997, by vote of the
Company's Board of Directors, including a majority of those directors who are
not parties to the Advisory Agreements or interested persons (as defined in the
1940 Act) of such parties. The Advisory Agreements were approved by each Fund's
initial shareholder. Each Advisory Agreement is terminable by vote of the
Company's Board of Directors or by the holders of a majority of the outstanding
voting securities of the relevant Fund, at any time without penalty, on 60 days'
written notice to BEA Associates. Each of the Advisory Agreements may also be
terminated by BEA Associates on 60 days' written notice to the Company. Each of
the Advisory Agreements terminates automatically in the event of assignment
thereof.

-39-
<PAGE>

CUSTODIAN AND TRANSFER AGENCY AGREEMENTS. Brown Brothers Harriman &
Co. ("BBH") acts as the custodian for the Funds and also acts as the custodian
for the Funds' 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 Fund, (b) holds and transfers
portfolio securities on account of each Fund, (c) accepts receipts and makes
disbursements of money on behalf of each Fund, (d) collects and receives all
income and other payments and distributions on account of each Fund's portfolio
securities, and (e) makes periodic reports to the Company's Board of Directors
concerning each Fund's operations. BBH is authorized to select one or more
banks or trust companies to serve as sub-custodian on behalf of the Company,
provided that BBH remains responsible for the performance of all its duties
under the Custodian Agreement and holds the Company harmless from the negligent
acts and omissions of any sub-custodian. For its services to the Company under
the Custodian Agreement, BBH receives a fee which is calculated based upon each
Fund's average daily gross assets, exclusive of transaction charges and
out-of-pocket expenses, which are also charged to the Company.

State Street Bank and Trust Company ("State Street") serves as the
transfer agent for the Funds. It has delegated to Boston Financial Data
Services, Inc. ("BFDS"), a 50%-owned subsidiary, responsibility for most
transfer agent servicing functions. State Street serves as the transfer and
dividend disbursing agent for the Funds pursuant to a Transfer Agency
Agreement as supplemented (collectively, the "Transfer Agency Agreement"),
under which it (a) issues and redeems shares of each of the Funds, (b)
addresses and mails all communications by each Fund to record owners of
shares of each such Fund, 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 Company's Board of Directors concerning the
operations of each Fund. For its services to the Company under the Transfer
Agency Agreement, State Street receives a fee on a per transaction basis.

ADMINISTRATION AND ACCOUNTING SERVICES AGREEMENTS. PFPC Inc., an
indirect, wholly owned subsidiary of PNC Bank Corp., serves as the
administrator to the Investor Class of the Funds pursuant to Administration
and Accounting Services Agreements, which were reapproved by the Board of
Directors on July 9, 1997 (the "PFPC Administration and Accounting Services
Agreements"). PFPC has agreed to furnish to the BEA Investor Funds portfolio
statistical and research data, clerical, accounting and bookkeeping services
and certain other services required by the Funds. PFPC has also agreed to
prepare and file various reports with the appropriate regulatory agencies,
and prepare materials required by the SEC or any state securities commission
having jurisdiction over the Funds.

The PFPC Administration and Accounting Services Agreements provide
that PFPC shall not be liable for any loss suffered by the Company or the
Funds in

-40-
<PAGE>

connection with the performance of the PFPC Administration and Accounting
Services Agreements, except a loss resulting from willful misfeasance, gross
negligence, or reckless disregard of its duties and obligations under the
PFPC Administration and Accounting Services Agreements. In consideration for
the services provided under the PFPC Administration and Accounting Services
Agreements, PFPC receives a fee calculated at an annual rate of .125% of
average daily net assets of the Investor Class of each Fund, with a minimum
annual fee of $75,000.

BEA serves as co-administrator to the Investor Class of the Funds
pursuant to Co-Administration Agreements which were reapproved by the Board of
Directors on July 9, 1997 (the "BEA Co-Administration Agreements"). BEA has
agreed to provide shareholder liaison services to the Investor Class of the
Funds 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 Company or the Funds in connection with the performance of the
agreements, 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 average
daily net assets of the Investor Class of each Fund up to $125 million and 10%
thereafter.

DISTRIBUTION AND SHAREHOLDER SERVICING

-41-
<PAGE>

limited to, office space and equipment, telephone facilities, answering routine
inquiries regarding the Funds, 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 Funds to prospective shareholders of the Funds;
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.

For the period ended August 31, 1997, the Funds paid Counsellors
Securities distribution fees and Counsellors Securities waived distribution fees
and/or reimbursed expenses as follows:

Fund Fees Paid Waivers Reimbursements
- ---- --------- ------- --------------

International Equity $151 $ 0 $ 0
Emerging Markets $ 9 $ 0 $ 0
Equity
High Yield $143 $ 0 $ 0
Global $936 $ 0 $ 0
Telecommunications

PORTFOLIO TRANSACTIONS

-42-
<PAGE>

spread is not necessarily consistent with obtaining the best results in
particular transactions.

During the fiscal year ended August 31, 1997, the Funds paid
brokerage commissions as follows:

-43-
<PAGE>

Fund Brokerage Commissions
---- ---------------------

International Equity $ 5,041,204
Emerging Markets Equity $ 1,074,701
Global Telecommunications(1) $ 0
High Yield $ 1,261

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

(1) Initial public offering date was December 4, 1996.

During the fiscal year ended August 31, 1996, the Funds paid brokerage
commissions as follows:

Fund Brokerage Commissions
---- ---------------------

International Equity $ 3,385,421
Emerging Markets Equity $ 713,193
Global Telecommunications(1) N/A
High Yield $0

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

(1) Initial public offering date was December 4, 1996.

During the fiscal year ended August 31, 1995, the Funds paid brokerage
commissions as follows:

Fund Brokerage Commissions
---- ---------------------

International Equity $ 3,943,441
Emerging Markets Equity $ 778,886
Global Telecommunications(1) N/A
High Yield $0

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

(1) Initial public offering date was December 4, 1996.

-44-
<PAGE>

performed by BEA Associates under its 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 Fund and its other clients and that the total commissions paid by a Fund
will be reasonable in relation to the benefits to a Fund over the long-term.

-45-
<PAGE>

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.

BEA International Equity, BEA Emerging Markets Equity and BEA Global
Telecommunications Funds expect that their annual Fund turnover rate should not
exceed 100% under normal market conditions. BEA High Yield Fund anticipates
that its portfolio turnover may exceed 100%. A high rate of portfolio turnover
(100% or more) involves correspondingly greater brokerage commission expenses
and other transaction costs, which must be borne directly by a Fund. Each of
the Funds 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 Fund'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
Fund during the year.

PURCHASE AND REDEMPTION INFORMATION

The Company reserves the right, if conditions exist which make cash
payments undesirable, to honor any request for redemption of a Fund's shares by
making payment in whole or in part in securities chosen by the Company and
valued in the same way as they would be valued for purposes of computing a
Fund's net asset value. If payment is made in securities, a shareholder may
incur transaction costs in converting these securities into cash. Investors
may also be required to bear certain transaction costs associated with
redemptions in kind. The Company has elected, however, to be governed by Rule
18f-1 under the 1940 Act so that a Fund 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 Fund.

-46-
<PAGE>

regulation) an emergency exists as a result of which disposal or valuation of
Fund securities is not reasonably practicable, or for such other periods as the
SEC may permit. (A Fund may also suspend or postpone the recordation of the
transfer of its shares upon the occurrence of any of the foregoing conditions.)

VALUATION OF SHARES

The net asset values per share of each class of the Funds are
calculated separately from each other class as of the close of regular
trading of the NYSE on each Business Day. The net asset value per share, the
value of an individual share in a Fund, is computed by adding the value of
the proportionate interest of each class of a Fund in the Fund's securities,
cash and other assets, subtracting the actual and accrued liabilities of the
class and dividing the result by the number of outstanding shares of such
class. "Business Day" means each weekday when the NYSE is open. Currently,
the NYSE is closed on New Year's Day, Dr. Martin Luther King, Jr. Day,
Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving Day and Christmas Day and the preceding Friday or subsequent
Monday when one of these holidays falls on a Saturday or Sunday. 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. Fund 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 Fund is determined only on Business Days, the
net asset value of shares of a Fund may be significantly affected on days
when an investor does not have access to the Fund. 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 the close of regular trading (generally 4:00
p.m. Eastern Time); 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 Company's Board of

-47-
<PAGE>

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 Fund'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 Fund 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.

PERFORMANCE AND YIELD INFORMATION

-48-
<PAGE>

ERV l/n
T = [(-----) - 1]
P

Where: T = average annual total return;

ERV = ending redeemable value of a hypothetical $1,000 payment
made at the beginning of the l, 5 or 10 year (or other)
periods at the end of the applicable period (or a fractional
portion thereof);

P = hypothetical initial payment of $1,000; and

n = period covered by the computation, expressed in years.

Each Fund that advertises its "aggregate total return" computes such
returns separately for each class of shares by determining the aggregate
compounded rates of return during specified periods that likewise equate the
initial amount invested to the ending redeemable value of such investment. The
formula for calculating aggregate total return is as follows:

ERV
Aggregate Total Return = [(-----) - l]
P

The calculations are made assuming that (1) all dividends and capital gain
distributions are reinvested on the reinvestment dates at the price per share
existing on the reinvestment date, (2) all recurring fees charged to all
shareholder accounts are included, and (3) for any account fees that vary with
the size of the account, a mean (or median) account size in the Fund during the
periods is reflected. The ending redeemable value (variable "ERV" in the
formula) is determined by assuming complete redemption of the hypothetical
investment after deduction of all nonrecurring charges at the end of the
measuring period.

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<PAGE>

distribution at net asset value on the reinvestment date. The Funds do not, for
these purposes, deduct from the initial value invested any amount representing
sales charges. The Funds 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.

a - b
6
YIELD = 2[( - - - - +1 ) - 1]
cd

Where: a = dividends and interest earned by a Fund during the period;

b = expenses accrued for the period (net of reimbursements);

c = average daily number of shares outstanding during the
period, entitled to receive dividends; and

d = maximum offering price per share on the last day of the
period.

-50-
<PAGE>

dividing the result by 360 and multiplying the quotient by the market value of
the obligation (including actual accrued interest) in order to determine the
interest income on the obligation for each day of the subsequent month that the
obligation is held by the Fund. For purposes of this calculation, it is assumed
that each month contains 30 days. The maturity of an obligation with a call
provision is the next call date on which the obligation reasonably may be
expected to be called or, if none, the maturity date. With respect to debt
obligations purchased 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 value of such debt
obligations. Expenses accrued for the period (variable "b" in the formula)
include all recurring fees charged by a Fund to all shareholder accounts in
proportion to the length of the base period and the Fund's mean (or median)
account size. Undeclared earned income will be subtracted from the offering
price per share (variable "d" in the formula).

TAXES

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<PAGE>

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).

-52-

<PAGE>

-53-
<PAGE>

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 Company will designate the
portion, if any, of the distribution made by a Fund that qualifies for the
dividends received deduction in a written notice mailed by the Company to
shareholders not later than 60 days after the close of the Fund's taxable year.

Corporate taxpayers may be liable for alternative minimum tax, which
is imposed at the rate of 20% of "alternative minimum taxable income" (less, in
the case of corporate shareholders with "alternative minimum taxable income," of
less than $310,000, the applicable "exemption amount"), in lieu of the regular
corporate income tax. "Alternative minimum taxable income" is equal to "taxable
income" (as determined for corporate income regular tax purposes) with certain
adjustments. Although corporate taxpayers in determining "alternative minimum
taxable income" are allowed to exclude exempt interest dividends (other than
exempt interest dividends derived from certain private activity bonds ("AMT
Preference Dividends"), as explained in the Prospectus) and to utilize the 70%
dividends received deduction at the first level of computation, the Code
requires (as a second computational step) that "alternative minimum taxable
income" be increased by 75% of the excess of adjusted current earnings" over
other "alternative minimum taxable income."

Corporate 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

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<PAGE>

1986 and before 1996, regardless of whether such taxpayers are liable for
alternative minimum tax.

If for any taxable year any Fund 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 Fund's
current and accumulated earnings 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 Fund will be disallowed to the extent an investor repurchases shares
of the same Fund 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 Fund
in the form of shares within the 61-day period would be treated as a purchase
for this purpose.

-55-
<PAGE>

Because only a few regulations implementing the straddle rules have
been promulgated by the U.S. Treasury, the tax consequences to the Funds of
engaging in options transactions

-56-
<PAGE>

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.

Each of the Funds 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 Fund that are not Section 1256 contracts (the "Mixed
Straddle Election").

-57-
<PAGE>

PASSIVE FOREIGN INVESTMENT COMPANIES. If a Fund acquires shares in
certain foreign investment entities, called "passive foreign investment
companies" ("PFIC"), such Fund 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
Fund. Additional charges in the nature of interest may also be imposed on a
Fund in respect of such deferred taxes. However, in lieu of sustaining the
foregoing tax consequences, a Fund may elect to have its investment in any PFIC
taxed as an investment in a "qualified electing fund" ("QEF"). A Fund making a
QEF election would be required to include in its

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<PAGE>

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 Fund for purposes of satisfying the Distribution
Requirement and the excise tax distribution requirement.

ADDITIONAL INFORMATION CONCERNING FUND SHARES

-59-
<PAGE>

100 million shares are classified as Class B Common Stock, 100 million shares
are classified as Class C Common Stock, 100 million shares are classified as
Class D Common Stock, 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 (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 (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, 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 (Strategic Global Fixed Income), 50
million shares are classified as Class AA Common Stock (Municipal Bond), 50
million shares are classified as Class BB Common Stock (BEA Balanced), 50
million shares are classified as Class CC Common Stock (Short Duration), 100
million shares are classified as Class DD Common Stock, 100 million shares
are classified as Class EE Common Stock, 50 million shares are classified as
Class FF Common Stock (n/i Numeric Investors Micro Cap), 50 million shares
are classified as Class GG Common Stock (n/i Numeric Investors Growth), 50
million shares are classified as Class HH Common Stock (n/i Numeric Investors
Growth & Value), 100 million shares are classified as Class II Common Stock
(BEA Investor International), 100 million shares are classified as Class JJ
Common Stock (BEA Investor Emerging), 100 million shares are classified as
Class KK Common Stock (BEA Investor High Yield), 100 million shares are
classified as Class LL Common Stock (BEA Investor Global Telecom), 100
million shares are classified as Class MM Common Stock (BEA Advisor
International), 100 million shares are classified as Class NN Common Stock
(BEA Advisor Emerging), 100 million shares are classified as Class 00 Common
Stock (BEA Advisor High Yield), 100 million shares are classified as Class PP
Common Stock (BEA Advisor Global Telecom), 100 million shares are classified
as Class QQ Common Stock (Boston Partners Institutional Large Cap), 100
million shares are classified as Class RR Common Stock (Boston Partners

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<PAGE>

Investor Large Cap), 100 million shares are classified as Class SS Common
Stock (Boston Partners Advisor Large Cap), 100 million shares are classified
as Class TT Common Stock (Boston Partners Investor Mid Cap); 100 million
shares are classified as Class UU Common Stock (Boston Partners Institutional
Mid Cap); 100 million shares are classified as Class VV Common Stock (Boston
Partners Institutional Bond); 100 million shares are classified as Class WW
Common Stock (Boston Partners Investor Bond); 50 million are classified as
Class XX Common Stock (n/i Numeric Investors Larger Cap Value) 700 million
shares are classified as Class Janney Money Common Stock (Money), 200 million
shares are classified as Class Janney Municipal Money Common Stock (Municipal
Money), 500 million shares are classified as Class Janney, Government
Obligations Common Stock (Government Money), 100 million shares are
classified as Class Janney N.Y. Municipal Money Common Stock (N.Y. Money), 1
million shares are classified as Class Beta 1 Common Stock (Money), 1 million
shares are classified as Class Beta 2 Common Stock (Municipal Money), 1
million shares are classified as Class Beta 3 Common Stock (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 (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 (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 (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 (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 (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 (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 Company's charter, the Board of Directors has the power
to classify or reclassify any unissued shares of Common Stock from time to
time.

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<PAGE>

The classes of Common Stock have been grouped into fourteen
separate "families:" the Cash Preservation Family, the Sansom Street Family,
the Bedford Family, the BEA Family, the Janney Montgomery Scott Money Family,
the n/i Numeric Investors Family, Boston Partners Family, the Beta Family,
the Gamma Family, the Delta Family, the Epsilon Family, the Zeta Family, the
Eta Family and the Theta Family. 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; the Bedford
Family represents interests in the Money Market, Municipal Money Market,
Government Obligations Money Market and New York Municipal Money Market
Portfolios; the BEA Family represents interests in ten 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 n/i Numeric Investors Family
represents interests in four non-money market portfolios; the Boston Partners
Family represents interest in three non-money market funds.

As stated in the Prospectus, holders of shares of each class of the
Company will vote in the aggregate and not by class on all matters, except where
otherwise required by law. Further, shareholders of the Company 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 voting securities of an investment company such as the
Company 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 Fund. Under the Rule, the approval of an investment advisory
agreement or any change in a fundamental investment policy would be effectively
acted upon

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<PAGE>

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 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.

MISCELLANEOUS

COUNSEL. The law firm of Drinker Biddle & Reath LLP, 1345 Chestnut
Street, Philadelphia, Pennsylvania 19107-3496, serves as counsel to the Company
and the non-interested directors.

INDEPENDENT ACCOUNTANTS. Coopers & Lybrand L.L.P., 2400 Eleven Penn
Center, Philadelphia, Pennsylvania 19103, serves as the Company's independent
accountants.

CONTROL PERSONS. As of November 15, 1997, to the Company'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
Company indicated below. See "Additional Information Concerning Fund Shares"
above. The Company does not know whether such persons also beneficially own
such shares.

PORTFOLIO NAME AND ADDRESS PERCENT OWNED
- --------- ---------------- -------------

Cash Preservation Jewish Family and Children's 44.2%
Money Market Portfolio Agency of Philadelphia
(Class G) Capital Campaign
Attn: S. Ramm
1610 Spruce Street
Philadelphia, PA 19103

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<PAGE>

PORTFOLIO NAME AND ADDRESS PERCENT OWNED
- --------- ---------------- -------------

Dominic and Barbara Pisciotta 15.9%
and Successors in Trust under
the Dominic and Barbara
Pisciotta Caring Trust
207 Woodmere Way
St. Charles, MO 63303

Cash Preservation Kenneth Farwell and Valerie 11.3%
Municipal Money Market Farwell JTTEN
Portfolio 3854 Sullivan
(Class H) St. Louis, MO 63107

Gary L. Lange and 32.6%
Susan D. Lange JTTEN
1354 Shady Knoll Ct.
Longwood, FL 32750

Andrew Diederich and 6.2%
Doris Diederich JTTEN
1003 Lindeman
Des Peres, MO 63131

Gwendolyn Haynes 5.2%
2757 Geyer
St. Louis, MO 63104
Savannah Thomas Trust 6.3%
200 Madison Ave.
Rock Hill, MD 63119

Sansom Street Money Wasner & Co. 32.6%
Market Portfolio FAO Paine Webber and Managed
(Class I) Assets Sundry Holdings
Attn: Joe Domizio
200 Stevens Drive
Lester, PA 19113

Saxon and Co. 65.5%
FBO Paine Webber
P.O. Box 7780 1888
Philadelphia, PA 19182

BEA International Blue Cross & Blue Shield of 6.10%
Equity - Institutional Massachusetts Inc.
Class Retirement Income Trust
(Class T) 100 Summer Street
Boston, MA 02110-2106

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<PAGE>

PORTFOLIO NAME AND ADDRESS PERCENT OWNED
- --------- ---------------- -------------

Credit Suisse Private Banking 6.89%
Dividend Reinvest Plan
c/o Credit Suisse PVT BKG
12 E. 49th Street, 40th Fl.
New York, NY 10017-1028

Indiana University Foundation 5.49%
Attn: Walter L. Koon, Jr.
P.O. Box 500
Bloomington, IN 47402-0500

Employees Ret. Plan Marshfield 5.31%
Clinic
1000 N. Oak Avenue
Marshfield, WI 54449

State Street Bank & Trust 5.06%
FBC Consumers Energy
DTD 3-1-1997
P.O. Box 1992

Boston, MA 02105-1992
BEA International Bob & Co. 87.30%
Equity Portfolio - P.O. Box 1809
Advisor Class (Class Boston, MA 02105-1809
MM)