<PAGE>
As filed with the Securities and Exchange Commission on April 10, 1998
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. 53 /X/
and
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 /X/
Amendment No. 55 /X/
-------------------------------------
THE RBB FUND, INC.
(Government Securities Portfolio: RBB Family Class; BEA International
Equity Portfolio: BEA Class, BEA Investor Class and BEA Advisor Class; BEA High
Yield Portfolio: BEA Class, BEA Investor Class and BEA Advisor Class; BEA
Emerging Markets Equity Portfolio: BEA Class, BEA Investor Class and BEA
Advisor Class; BEA U.S. Core Equity Portfolio: BEA Class; BEA U.S. Core Fixed
Income Portfolio: BEA Class; BEA 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;
Schneider Capital Management Value Fund; BEA Long-Short Market Neutral Fund: BEA
Class and BEA Advisor Class; BEA Long-Short Equity Fund: BEA Class and BEA
Advisor Class; Money Market Portfolio: RBB Family Class, Cash Preservation
Class, Sansom Street Class, Bedford Class, Janney Class, Beta Class, Gamma
Class, Delta Class, Epsilon Class, Zeta Class, Eta Class and Theta Class;
Municipal Money Market Portfolio: RBB Family Class, Cash Preservation Class,
Sansom Street Class, Bedford Class, Bradford Class, Janney Class, Beta Class,
Gamma Class, Delta Class, Epsilon Class, Zeta Class, Eta Class and Theta Class;
Government Obligations Money Market Portfolio: Sansom Street Class, Bedford
Class, Bradford Class, Janney Class, Beta Class, Gamma Class, Delta Class,
Epsilon Class, Zeta Class, Eta Class and Theta Class; New York Municipal Money
Market Portfolio: Bedford Class, Janney Class, Beta Class, Gamma Class, Delta
Class, Epsilon Class, Zeta Class, Eta Class and Theta Class)
------------------------------------------------
(Exact Name of Registrant as Specified in Charter)
Bellevue Park Corporate Center
400 Bellevue Parkway, Suite 100
Wilmington, DE 19809
(Address of Principal Executive Offices)
-------------------------------------------------
Registrant's Telephone Number: (302) 792-2555
Copies to:
GARY M. GARDNER, ESQUIRE 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 Service) Philadelphia, PA 19107-3496
It is proposed that this filing will become effective (check appropriate
box)
/ / immediately upon filing pursuant to paragraph (b)
<PAGE>
/ / on (date) pursuant to paragraph (b)
/ / 60 days after filing pursuant to paragraph (a)(1)
/ / on (date) pursuant to paragraph (a)(1)
/X/ 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.
Title of Securities Being Registered:
Class ZZ Common Stock
Class AAA Common Stock
Class BBB Common Stock
Class CCC Common Stock
The purpose of this Post-Effective Amendment is to register shares of two new
portfolios of Registrant.
<PAGE>
THE RBB FUND, INC.
(BEA LONG-SHORT MARKET NEUTRAL FUND AND
BEA LONG-SHORT EQUITY FUND)
CROSS REFERENCE SHEET
---------------------
FORM N-1A ITEM LOCATION
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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; BEA Advisor and
Institutional Funds Quick Reference
Guide; Investment Objectives and
Policies; Investment Limitations;
Risk Factors; Additional Investment
Policies
5. Management of the Fund Management
6. Capital Stock and Other Securities Cover Page; Dividends and
Distributions; 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 and Exchange Shares;
Net Asset Value
9. Legal Proceedings Not applicable
<PAGE>
THE RBB FUND, INC.
(BEA LONG-SHORT MARKET NEUTRAL FUND AND
BEA LONG-SHORT EQUITY FUND)
CROSS REFERENCE SHEET
---------------------
FORM N-1A ITEM LOCATION
- -------------- --------
PART B STATEMENT OF ADDITIONAL INFORMATION
10. Cover Page Cover Page
11. Table of Contents Cover Page
12. General Information and History General; Directors and Officers;
Additional Information Concerning
the Company Shares; Miscellaneous
13. Investment Objectives and Policies Investment Limitations; Common
Investment Policies; Supplemental
Investment Policies
14. Management of the Fund Directors and Officers; Investment
Advisory and Servicing Arrangements
15. Control Persons and Principal Holders Additional Information Concerning
of Securities the Company Shares
16. Investment Advisory and Other Investment Advisory and Servicing
Services Arrangements; See Prospectus -
"Management"
17. Brokerage Allocation and Other Portfolio Transactions
Practices
18. Capital Stock and Other Securities Additional Information Concerning
the Company Shares; See Prospectus
- "Dividends and Distributions"
and "Description of Shares"
19. Purchase, Redemption and Pricing of Purchase and Redemption
Securities Being Offered Information; Valuation of Shares;
See Prospectus - "How to Purchase
Shares" and "How to Redeem and
Exchange Shares"
20. Tax Status Taxes; See Prospectus - "Taxes"
21. Underwriters Not Applicable
<PAGE>
22. Calculation of Performance Data Performance and Yield Information
23. Financial Statements None
<PAGE>
B E A
ADVISOR & INSTITUTIONAL
FUNDS
BEA LONG-SHORT MARKET NEUTRAL FUND
BEA LONG-SHORT EQUITY FUND
PROSPECTUS __________, 1998
<PAGE>
TABLE OF CONTENTS
PAGE
----
ANNUAL FUND OPERATING EXPENSES . . . . . . . . . . . . . . . . . . . . . . 4
INVESTMENT OBJECTIVES AND POLICIES . . . . . . . . . . . . . . . . . . . . 6
INVESTMENT LIMITATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . 8
RISK FACTORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
ADDITIONAL INVESTMENT POLICIES . . . . . . . . . . . . . . . . . . . . . . 14
MANAGEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
EXPENSES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
HOW TO PURCHASE SHARES . . . . . . . . . . . . . . . . . . . . . . . . . . 21
HOW TO REDEEM AND EXCHANGE SHARES. . . . . . . . . . . . . . . . . . . . . 27
NET ASSET VALUE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
DIVIDENDS AND DISTRIBUTIONS. . . . . . . . . . . . . . . . . . . . . . . . 30
TAXES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
MULTI-CLASS STRUCTURE. . . . . . . . . . . . . . . . . . . . . . . . . . . 32
DESCRIPTION OF SHARES. . . . . . . . . . . . . . . . . . . . . . . . . . . 32
OTHER INFORMATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
-1-
<PAGE>
BEA ADVISOR AND INSTITUTIONAL FUNDS
THE BEA ADVISOR AND INSTITUTIONAL FUNDS CONSIST OF SEVENTEEN CLASSES OF
COMMON STOCK OF THE RBB FUND, INC. (THE "COMPANY"), AN OPEN-END MANAGEMENT
INVESTMENT COMPANY. EACH OF THE BEA LONG-SHORT MARKET NEUTRAL AND BEA
LONG-SHORT EQUITY FUNDS (THE "FUNDS") OFFERS TWO CLASSES OF SHARES, THE ADVISOR
SHARES AND THE INSTITUTIONAL SHARES (COLLECTIVELY WITH THE ADVISOR SHARES, THE
"SHARES"). SHARES OF BOTH CLASSES ARE OFFERED BY THIS PROSPECTUS AND REPRESENT
INTERESTS IN THE TWO FUNDS DESCRIBED IN THIS PROSPECTUS. THE INVESTMENT
OBJECTIVE OF EACH FUND IS AS FOLLOWS:
THE BEA LONG-SHORT MARKET NEUTRAL FUND seeks long-term capital
appreciation while minimizing exposure to general equity market risk. The
Fund seeks a total return greater than the total return of the Salomon Smith
Barney U.S. 1-Month Treasury Bill Index-TM-. The Fund pursues its objective
by taking long positions in stocks that the investment adviser has identified
as undervalued and short positions in stocks that the Adviser has identified
as overvalued. Generally, the Fund's investments will be concentrated in
securities principally traded in the United States markets.
THE BEA LONG-SHORT EQUITY FUND seeks a total return greater than that of
the Standard & Poor's 500 Composite Stock Price Index (the "S&P 500 Index").
The Fund pursues its objective by investing in shares of the BEA Long-Short
Market Neutral Fund while simultaneously utilizing S&P 500 Index futures,
options on S&P 500 Index futures and equity swap contracts to gain exposure to
the equity market as measured by the S&P 500 Index. See "Investment Objectives
and Policies--BEA Long-Short Equity Fund" and "General Description of Risks and
Fund Investments."
There can be no assurance that a Fund's investment objective will be
achieved. Investments in the Funds involve certain risks. See "Risk Factors."
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 December 31, 1997, BEA Associates managed approximately $34.2 billion in
assets.
This Prospectus contains information that a prospective investor needs to
know before investing. Please keep it for
-2-
<PAGE>
future reference. A Statement of Additional Information, dated __________,
1998, 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 __________, 1998
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<PAGE>
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average daily net assets)(1)
<TABLE>
<CAPTION>
BEA BEA
LONG-SHORT BEA LONG-SHORT BEA
MARKET LONG-SHORT MARKET LONG-SHORT
NEUTRAL EQUITY NEUTRAL EQUITY
FUND FUND FUND FUND
(INSTITUTIONAL (INSTITUTIONAL (ADVISOR (ADVISOR
CLASS) CLASS) CLASS) CLASS)
--------------- --------------- ---------- ----------
<S> <C> <C> <C> <C>
Management Fees (after waivers)(2)(4) 1.40% 0 1.40% 0
12b-1 Fees N/A N/A 0.25% 0.25%
Other Expenses(3) 0.60% 2.50% 0.60% 2.50%
Total Fund Operating Expenses (after
waivers(2) 2.00% 2.50% 2.25% 2.75%
____ ____ ____ ____
____ ____ ____ ____
</TABLE>
_____________________
(1) The annual operating expenses for the Funds are based on expenses expected
to be incurred by the Fund (after expected fee waivers and expense
reimbursements).
(2) The Adviser has undertaken to reduce its management fee and bear certain
expenses until further notice in order to limit the total annual operating
expenses (which do not include nonrecurring account fees and extraordinary
expenses) of each class to the percentage of a Fund's total annual
operating expenses attributable to that class listed under Total Fund
Operating Expenses above plus the performance adjustment referred to in
Note (4) below. Absent such undertaking by the Adviser to waive its fee
and bear such expenses, Management Fees would be 1.50% and 0.10% for the
BEA Long-Short Market Neutral Fund and the BEA Long-Short Equity Fund,
respectively; and Total Fund Operating Expenses would be 2.10% and 2.35%,
respectively, for the Institutional Shares and Advisor Shares of the
BEA Long-Short Market Neutral Fund, and 2.60% and 2.85%, respectively,
for the Institutional Shares and Advisor Shares of the BEA Long-Short
Equity Fund.
(3) With respect to the BEA Long-Short Equity Fund, "Other Expenses" includes
the indirect expenses associated with the Fund's investment in
Institutional Shares of the BEA Long-Short Market Neutral Fund.
(4) The Management Fee for the BEA Long-Short Market Neutral Fund may be
increased or decreased by applying a performance adjustment after the
Fund's first year of operations. See "Management--Investment Adviser."
EXAMPLE
An investor would pay the following expenses on a $1,000 investment in Shares of
each of the Funds, assuming (1) a 5% annual return, and (2) redemption at the
end of each time period.
<TABLE>
<CAPTION>
One Three
Year Years
----- -----
<S> <C> <C>
BEA Long-Short Market Neutral Fund (Institutional Shares)...... $21 $63
BEA Long-Short Market Neutral Fund (Advisor Shares)............ $23 $70
BEA Long-Short Equity Fund (Institutional Shares).............. $25 $78
BEA Long-Short Equity Fund (Advisor Shares).................... $28 $85
</TABLE>
-4-
<PAGE>
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 Advisor
Shares may pay more than the maximum front-end sales charges permitted by the
National Association of Securities Dealers, Inc. ("NASD").
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 various costs and
expenses, see "Management" below.) "Other Expenses" are estimated for the
current fiscal year. The fee table reflects expense reimbursements and
voluntary waivers of management fees and administration fees. The Adviser and
Administrators are under no obligation with respect to such fee waivers and
reimbursements, 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.
-5-
<PAGE>
INVESTMENT OBJECTIVES AND POLICIES
THE BEA LONG-SHORT MARKET NEUTRAL FUND. The investment objective of
the BEA Long-Short Market Neutral Fund is to seek long-term capital
appreciation while minimizing exposure to general equity market risk. The
Fund seeks a total return greater than the return of the Salomon Smith Barney
1-Month Treasury Bill Index-TM-. The Fund attempts to achieve its objective
by taking long positions in stocks that the Adviser has identified as
undervalued and short positions in stocks that the Adviser has identified as
overvalued. See "Risk Factors -- Short Sales" below. Generally, the Fund's
investments will be concentrated in securities principally traded in the
United States markets. By taking long and short positions in different stocks
with similar characteristics, the Fund attempts to minimize the effect of
general stock market movements on the Fund's performance. The Adviser will
determine the size of each long or short position by analyzing the tradeoff
between the attractiveness of each position and its impact on the risk of the
overall portfolio. The Fund seeks to construct a diversified portfolio that
has minimal net exposure to the U.S. equity market generally and low to
neutral exposure to specific industries, specific capitalization ranges
(e.g., large cap, mid cap and small cap) and certain other factors.
Although the Fund's investment strategy seeks to minimize the risk
associated with investing in the equity market, an investment in the Fund will
be subject to the risk of poor stock selection by the Adviser. In other words,
the Adviser may not be successful in executing its strategy of taking long
positions in stocks that outperform the market and short positions in stocks
that underperform the market. Further, since the Adviser will manage both a
long and a short portfolio, an investment in the Fund will involve the risk that
the Adviser may make more poor investment decisions than an adviser of a typical
stock mutual fund with only a long portfolio may make. An investment in
one-month U.S. Treasury Bills is different from an investment in the Fund
because Treasury Bills are backed by the full faith and credit of the U.S.
Government, Treasury Bills have a fixed rate of return and investors in Treasury
Bills do not bear the risk of losing their investment.
To meet margin requirements, redemptions or pending investments, the Fund
may also temporarily hold a portion of its assets in full faith and credit
obligations of the United States government (e.g., U.S. Treasury Bills) and in
short-term notes, commercial paper or other money market instruments of high
quality (i.e., rated at least "A-2" or "AA" by Standard & Poor's ("S&P") or
Prime 2 or "Aa" by Moody's Investors Service, Inc. ("Moody's")) issued by
companies having an outstanding debt issue rated at least "AA" by S&P or at
least "Aa" by Moody's, or
-6-
<PAGE>
determined by the Adviser to be of comparable quality to any of the foregoing.
The Fund's long and short positions may involve (without limit) equity
securities of foreign issuers that are traded in the markets of the United
States as sponsored American Depository Receipts ("ADRs"). ADRs are receipts
typically issued by a U.S. bank or trust company evidencing ownership of the
underlying foreign securities. Generally, ADRs, in registered form, are
designed for use in U.S. securities markets. The ADRs may not necessarily be
denominated in the same currency as the foreign securities underlying the ADRs.
See "Risk Factors -- Foreign Investments." The Fund will not invest in equity
securities that are principally traded outside of the United States.
THE BEA LONG-SHORT EQUITY FUND. The investment objective of the BEA
Long-Short Equity Fund is to seek a total return greater than that of the
Standard & Poor's 500 Composite Stock Price Index (the "S&P 500 Index"). The
Fund seeks to achieve its objective by investing in Institutional Shares of the
BEA Long-Short Market Neutral Fund while simultaneously utilizing S&P 500 Index
futures, options on S&P 500 Index futures and equity swap contracts to gain
exposure to the equity market as measured by the S&P 500 Index. See "Investment
Objectives and Policies -- BEA Long-Short Market Neutral Fund" and "Risk Factors
- -- S&P 500 Index Futures and Related Options" and "-- Equity Swap Contracts"
below. The Fund has applied to the SEC for an exemptive order allowing it to
invest without limit in the BEA Long-Short Market Neutral Fund. Once the Fund
has indirectly acquired a diversified long and short portfolio through the
purchase of Institutional Shares of the BEA Long-Short Market Neutral Fund, the
Adviser will purchase S&P 500 Index futures, options on S&P 500 Index futures
and equity swap contracts in an amount approximately equal to the net asset
value of the Fund in order to gain full net exposure to the U.S. equity market
as measured by the S&P 500 Index. In addition to purchasing Institutional
Shares of the BEA Long-Short Market Neutral Fund, the Fund may also take long
positions in stocks principally traded in the markets of the United States that
the Adviser has identified as undervalued and short positions in such stocks
that the Adviser has identified as overvalued. See "Risk Factors -- Short
Sales."
The S&P 500 Index is an unmanaged index composed of 500 common stocks, most
of which are listed on the New York Stock Exchange. The S&P 500 Index assigns
relative values to the stocks included in the index, weighted according to each
stock's total market value relative to the total market value of the other
stocks included in such index.
To meet margin requirements, redemptions or pending investments, the Fund
may also temporarily hold a portion of its
-7-
<PAGE>
assets in full faith and credit obligations of the United States government
(e.g., U.S. Treasury Bills) and in short-term notes, commercial paper or other
money market instruments of high quality (i.e., rated at least "A-2" or "AA" by
S&P or Prime 2 or "Aa" by Moody's) issued by companies having an outstanding
debt issue rated at least "AA" by S&P or at least "Aa" by Moody's, or determined
by the Adviser to be of comparable quality to any of the foregoing.
The Fund's long and short positions may involve (without limit) equity
securities of foreign issuers that are traded in the markets of the United
States as ADRs, which are described above under "BEA Long-Short Market Neutral
Fund." See "Risk Factors -- Foreign Investments." The Fund will not invest in
equity securities that are traded outside of the United States.
In a typical stock mutual fund the investment adviser attempts to earn an
excess return (return above market return) or "alpha" by identifying and
purchasing undervalued stocks. However, there is another "alpha" possibility --
identifying and selling short overvalued stocks. The term "double alpha" refers
to these two potential sources of alpha: one from correctly identifying
undervalued stocks and one from correctly identifying overvalued stocks. The
market neutral strategy employed directly by the BEA Long-Short Market Neutral
Fund and indirectly by the BEA Long-Short Equity Fund (through investment in
shares of the BEA Long-Short Market Neutral Fund) seeks to capture both alphas.
The BEA Long-Short Equity Fund also seeks gain (and incurs additional cost and
expense risk) by investing in S&P 500 Index instruments.
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
-8-
<PAGE>
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.
RISK FACTORS
SPECIAL RISKS AND OTHER CONSIDERATIONS RELATING TO THE BEA LONG-SHORT
EQUITY FUND. Because the BEA Long-Short Equity Fund may invest up to 100% of
its assets in shares of the BEA Long-Short Market Neutral Fund and other
investment companies, the expenses associated with investing in the Fund may be
higher than those associated with a portfolio that directly invests in
securities that are not themselves investment companies. An investor in the BEA
Long-Short Equity Fund will incur a proportionate share of the expenses of the
Fund, as well as a proportionate share of expenses of the BEA Long-Short Market
Neutral Fund and unaffiliated investment companies in which the BEA Long-Short
Equity Fund invests (collectively, the "underlying funds"). Investors in the
BEA Long-Short Equity Fund should realize that they can invest directly in the
underlying funds.
The BEA Long-Short Equity Fund will seek to avoid duplicative fees and
the layering of expenses to a meaningful extent. The Fund will generally
only invest in the Institutional Shares of the BEA Long-Short Market Neutral
Fund, which are offered with no sales or redemption charges, distribution
fees or shareholder servicing fees. The management fees payable to BEA under
the Fund's management contract are for services that are in addition to,
rather than duplicative of, services provided under the management contract
for any underlying funds in which the Portfolio invests. The administration,
custody and transfer agency fees borne by the Fund are also for services that
are in addition to, and not duplicative of, services provided to the
underlying funds. In addition, the distribution fees relating to Advisor
Shares of the Fund, when aggregated with any distribution or shareholder
servicing fees paid by the Fund in connection with its investments in
underlying funds will not exceed applicable NASD limits.
-9-
<PAGE>
As a fund that may invest a substantial portion of its assets in other
investment companies, the BEA Long-Short Equity Fund will be subject to certain
investment risks. The Fund's performance is directly related to the performance
of the BEA Long-Short Market Neutral Fund and the other investment companies in
which it invests. Accordingly, the ability of the Portfolio to meet its
investment objective is directly related to the ability of the underlying funds
to meet their objectives. There can be no assurance that the investment
objective of any underlying fund will be achieved.
From time to time, the BEA Long-Short Market Neutral Fund may experience
relatively large purchases or redemptions due to asset allocation decisions made
by BEA in managing the BEA Long-Short Equity Fund and other client accounts.
These transactions may have a material effect on the BEA Long-Short Market
Neutral Fund. While it is impossible to predict the overall impact of these
transactions over time, there could be adverse effects on the BEA Long-Short
Market Neutral Fund to the extent that it may be required to sell securities at
times when it would not otherwise do so or receive cash that cannot be invested
in an expeditious manner. There may be tax consequences associated with
purchases and sales of securities, and such sales may also increase transaction
costs. BEA is committed to minimizing the impact of these transactions on the
BEA Long-Short Market Neutral Fund to the extent it is consistent with pursuing
the BEA Long-Short Equity Fund's investment objective and will monitor the
impact of the BEA Long-Short Equity Fund's asset allocation decisions on the BEA
Long-Short Market Neutral Fund.
INVESTMENT RISKS. The value of Fund shares may increase or decrease
depending on market, economic, political, regulatory and other conditions
affecting each Fund's portfolio. Investment in Shares of the Funds is more
volatile and risky than some other forms of investment. In addition, if the
Adviser takes long positions in stocks that decline or short positions in stocks
that increase in value, then the losses of the BEA Long-Short Market Neutral
Fund and BEA Long-Short Equity Fund may exceed those of other stock mutual funds
that hold long positions only.
SHORT SALES. When the Adviser anticipates that a security is overvalued,
it may sell the security short by borrowing the same security from a broker or
other institution and selling the security. A Fund will incur a loss as a
result of a short sale if the price of the borrowed security increases between
the date of the short sale and the date on which the Fund replaces such
security. A Fund will realize a gain if there is a decline in price of the
security between those dates, which decline exceeds the costs of the borrowing
the security and other transaction costs. There can be no assurance that a Fund
will be able to close out a short position at any particular time or at an
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<PAGE>
acceptable price. Although a Fund's gain is limited to the amount at which it
sold a security short, its potential loss is limited only by the maximum
attainable price of the security less the price at which the security was sold.
Until a Fund replaces a borrowed security, it will maintain at all times cash,
U.S. Government securities, or other liquid securities in an amount which, when
added to any amount deposited with a broker as collateral will at least equal
the current market value of the security sold short. Depending on arrangements
made with brokers, a Fund may not receive any payments (including interest) on
collateral deposited with them. The Funds will not make a short sale if, after
giving effect to such sale, the market value of all securities sold short
exceeds 100% of the value of a Fund's net assets.
S&P 500 INDEX FUTURES AND RELATED OPTIONS (BEA LONG-SHORT EQUITY FUND
ONLY). An S&P 500 Index Future contract (an "Index Future") is a contract to
buy or sell an integral number of units of the S&P 500 Index at a specified
future date at a price agreed upon when the contract is made. A unit is the
value at a given time of the S&P 500 Index. Entering into a contract to buy
units is commonly referred to as buying or purchasing a contract or holding a
long position in the S&P 500 Index. An option on an Index Future gives the
purchaser the right, in return for the premium paid, to assume a long or a short
position in an Index Future. The BEA Long-Short Equity Fund will realize a loss
if the value of the S&P 500 Index declines between the time the Fund purchases
an Index Future or an option transaction in which the Fund has assumed a long
position and may realize a gain if the value of the S&P 500 Index rises between
such dates.
The BEA Long-Short Equity Fund may close out a futures contract purchase by
entering into a futures contract sale. This will operate to terminate the
Fund's position in the futures contract. Positions in Index Futures may be
closed out by the Fund only on the futures exchanges on which the Index Futures
are then traded. There can be no assurance that a liquid market will exist for
any particular contract at any particular time. The liquidity of the market in
futures contracts could be adversely affected by "daily price fluctuation
limits" established by the relevant futures exchange which limit the amount of
fluctuation in the price of an Index Future 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. In such event, it may not be possible for the Fund
to close its futures contract purchase, and, in the event of adverse price
movements, the Fund would continue to be required to make daily cash payments of
variation margin (payments to and from a broker made on a daily basis as the
price of the Index Future fluctuates). The futures market may also attract more
speculators than does the securities market, because deposit requirements in the
futures market are
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<PAGE>
less onerous than margin requirements in the securities market. Increased
participation by speculators in the futures market may also cause price
distortions.
Further, when the BEA Long-Short Equity Fund purchases an Index Future, it
is required to maintain, at all times while an Index Future is held by the Fund,
cash, U.S. Government securities or other liquid securities in an amount which,
together with the initial margin deposit on the futures contract, is equal to
the current value of the futures contract.
EQUITY SWAP CONTRACTS (BEA LONG-SHORT EQUITY FUND ONLY). In an equity
swap contract, the counterparty generally agrees to pay the BEA Long-Short
Equity Fund the amount, if any, by which the notional amount of the equity swap
contract would have increased in value had it been invested in the basket of
stocks comprising the S&P 500 Index, plus the dividends that would have been
received on those stocks. The Fund agrees to pay to the counterparty a floating
rate of interest (typically the London Inter Bank Offered Rate) on the notional
amount of the equity swap contract plus the amount, if any, by which that
notional amount would have decreased in value had it been invested in such
stocks. Therefore, the return to the Fund on any equity swap contract should be
the gain or loss on the notional amount plus dividends on the stocks comprising
the S&P 500 Index (as if the Fund had invested the notional amount in stocks
comprising the S&P 500 Index) less the interest paid by the Fund on the notional
amount. Therefore, the Fund will generally realize a loss if the value of the
S&P 500 Index declines and will generally realize a gain if the value of the S&P
500 Index rises. The Fund will enter into equity swap contracts only on a net
basis, I.E., where the two parties' obligations are netted out, with the Fund
paying or receiving, as the case may be, only the net amount of any payments.
If there is a default by the counterparty to an equity swap contract, the Fund
will be limited to contractual remedies pursuant to the agreements related to
the transaction.
There is no assurance that the equity swap contract counterparties will be
able to meet their obligations or that, in the event of default, the BEA
Long-Short Equity Fund will succeed in pursuing contractual remedies. The Fund
thus assumes the risk that it may be delayed in or prevented from obtaining
payments owed to it pursuant to these contracts. The Adviser will closely
monitor the credit of equity swap contract counterparties to seek to minimize
this risk. The Fund will not use equity swap contracts for leverage.
The BEA Long-Short Equity Fund will not enter into any equity swap contract
unless, at the time of entering into such transaction, the unsecured senior debt
of the counterparty is rated at least A by Moody's or S&P. In addition, the
staff of
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<PAGE>
the Securities and Exchange Commission (the "SEC") considers equity swap
contracts to be illiquid securities. Consequently, as long as the staff
maintains this position, the Fund will not invest in equity swap contracts if,
as a result of the investment, the total value of such investments together with
that of all other illiquid securities which the Fund owns would exceed 15% of
the Fund's net assets.
The net amount of the excess, if any, of the Fund's obligations over its
entitlement with respect to each equity swap contract will be accrued on a daily
basis, and an amount of cash, U.S. Government Securities or other liquid
securities having an aggregate market value at least equal to the accrued excess
will be maintained in a segregated account. The Fund does not believe that the
Fund's obligations under equity swap contracts are senior securities within the
meaning of the 1940 Act, so long as such a segregated account is maintained, and
accordingly, the Fund will not treat them as being subject to its borrowing
restrictions.
FOREIGN INVESTMENTS. Investing in foreign companies may involve additional
risks and considerations which are not typically associated with investing in
U.S. companies. Since stocks of foreign companies are normally denominated in
foreign currencies, the Funds may be affected favorably or unfavorably by
changes in currency rates and in exchange control regulations, and may incur
costs in connection with conversions between various currencies.
As non-U.S. companies are not generally subject to uniform accounting,
auditing and financial reporting standards and practices comparable to those
applicable to U.S. companies, comparable information may not be readily
available about certain foreign companies. Some non-U.S. securities of foreign
companies may be less liquid and more volatile than securities of comparable
U.S. companies. In addition, in certain foreign countries, there is the
possibility of expropriation or confiscatory taxation, political or social
instability, or diplomatic developments which could affect U.S. investments in
those countries.
FIXED INCOME SECURITIES. The value of the fixed income 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
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<PAGE>
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.
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.
ADDITIONAL INVESTMENT POLICIES
This section describes certain investment policies that are common to each
Fund. Investment policies are described in more detail in the Statement of
Additional Information.
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, 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. Each 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 Adviser to be of good
standing and only when, in
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<PAGE>
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 33 1/3% of the value of its total assets (including the loan
collateral).
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.
REPURCHASE AGREEMENTS. Each Fund may enter into repurchase agreements, by
which a Fund purchases a security and obtains a simultaneous commitment from the
seller (a bank or, to the extent permitted by the 1940 Act, a recognized
securities dealer) to repurchase the security at an agreed-upon price and date
(usually seven days or less from the date of original purchase). The resale
price is in excess of the purchase price and reflects an agreed-upon market rate
unrelated to the coupon rate on the purchased security. Such transactions
afford the Funds the opportunity to earn a return on temporarily available cash.
Although the underlying security may be a bill, certificate of indebtedness,
note or bond issued by an agency, authority or instrumentality of the U.S.
Government, the obligation of the seller is not guaranteed by the U.S.
Government and there is a risk that the seller may fail to repurchase the
underlying security. In such event, a Fund would attempt to exercise rights
with respect to the underlying security, including possible disposition in the
market. However, a Fund may be subject to various delays and risks of loss,
including (a) possible declines in the value of the underlying security during
the period while a Fund seeks to enforce its rights thereto and (b) inability to
enforce rights and the expenses involved in attempted enforcement.
ILLIQUID SECURITIES. Each Fund may purchase "illiquid securities", defined
as securities which cannot be sold or disposed of in the ordinary course of
business within seven days at approximately the price at which a Fund has valued
such securities, so long as no more than 15% of a Fund's net assets would be
invested in such illiquid securities after giving effect to a purchase.
Investment in illiquid securities involves the risk that, because of the lack of
consistent market demand for such securities, a Fund may be forced to sell them
at a discount from the last offer price.
INVESTMENT COMPANIES. Each Fund may invest in securities issued by
unaffiliated investment companies to the extent permitted by the 1940 Act. As a
shareholder of another invest-
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ment company, each Fund would bear, along with other shareholders, its pro
rata portion of the other investment company's expenses, including management
fees. These expenses would be in addition to the management and other
expenses that a Fund bears directly in connection with its own operations.
The 1940 Act generally permits the BEA Long-Short Equity Fund to invest
without limitation in other investment companies that are part of the same
"group of investment companies" (as defined in the 1940 Act), provided certain
limitations are observed. Generally, these limitations require that the Fund
(a) limit its investments to shares of other investment companies that are part
of the same "group of investment companies," Government securities and
short-term paper; (b) observe certain limitations on the amount of sales loads
and distribution-related fees that are borne directly and indirectly by its
shareholders; and (c) not invest in other investment companies structured as
"funds of funds." An exemptive order issued by the SEC permits the BEA
Long-Short Equity Fund to hold investments other than those identified above,
including domestic and foreign equity and fixed income securities, S&P 500 Index
futures and related options, equity swap contracts and shares of unaffiliated
investment companies.
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
annual portfolio turnover rate for the BEA Long-Short Market Neutral Fund and
the BEA Long-Short Equity Fund is not expected to exceed 150% and 50%,
respectively. 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."
AMERICAN DEPOSITORY RECEIPTS. Each Fund may invest in ADRs. ADRs are
typically issued by a U.S. bank or trust evidencing ownership of the underlying
foreign securities. Generally, ADRs, in registered form, are designed for use
in U.S. securities markets. ADRs may be listed on a national securities
exchange or may be traded in the over-the-counter market. ADRs traded in the
over-the-counter market which do not have an active or substantial secondary
market will be considered illiquid and therefore will be subject to the Funds'
respective limitations with respect to such securities. ADRs may be denominated
in U.S. dollars although the underlying securities may be denominated in
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a foreign currency. Investments in ADRs involve risks similar to those
accompanying direct investments in foreign securities. Certain of these risks
are described above under "Foreign Investments."
The Statement of Additional Information contains additional investment
policies and strategies of the Funds.
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 Group, a Swiss corporation. 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 December 31, 1997, BEA managed approximately
$34.2 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.
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 Group in connection with the purchase or sale of securities in
accordance with the rules or exemptive orders adopted by 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 Long-Short Market Neutral
and BEA Long-Short Equity Funds is the responsibility of the BEA Structured
Equity Team. The Team consists of the following investment professionals:
William
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<PAGE>
Priest (Chief Executive Officer), Eric Remole (Managing Director), Marc
Bothwell (Vice President) and Michael Welhoelter (Vice President). Mr.
Priest has been engaged as an investment professional with BEA for more than
twenty-five years. Mr. Remole joined BEA in 1997, prior to which time he was
Managing Director for fourteen years at Citicorp Investment Management, Inc.
(now Chancellor/LGT Asset Management, Inc.). Mr. Bothwell joined BEA in
1997, prior to which time he was a vice president and portfolio manager at
Chancellor/LGT Asset Management, Inc., where he was involved in risk
management and research on earnings and earnings surprise modeling. Prior to
1994, he was a programmer and trader at Keane Dealer Services, Inc. Mr.
Welhoelter joined BEA in 1997, prior to which time he was a portfolio manager
and vice president at Chancellor/LGT Asset Management, Inc., where he
developed risk management and portfolio construction strategies.
The BEA Long-Short Market Neutral Fund pays BEA a basic management fee,
computed daily and payable quarterly, at the annual rate of 1.50% of the
average net assets of the Fund. After the first year of operations, this
basic management fee may be increased or decreased by applying an adjustment
formula (the "Performance Adjustment"). The Performance Adjustment is
calculated monthly by comparing the Fund's investment performance to a target
during the most recent twelve-month period. The target is the investment
record of the Salomon Smith Barney U.S. 1-Month Treasury Bill Index-TM- plus
5 percentage points. The Performance Adjustment is added to or subtracted
from the basic fee. The maximum annualized Performance Adjustment is .50%.
The BEA Long-Short Equity Fund pays BEA a management fee, computed daily
and payable quarterly, at the annual rate of 0.10% of the average net assets
of the Fund.
The Adviser has voluntarily undertaken to waive some or all of its
management fee and, if necessary, to bear certain expenses of each Fund until
further notice to the extent required to limit the total annual operating
expenses (which do not include non recurring account fees and extraordinary
expenses) of each class of shares to the percentage of each Fund's average
daily net assets attributable to that class listed in the Expense Limitation
column below, plus the Performance Adjustment applicable to the BEA
Long-Short Market Neutral Fund. The Performance Adjustment would be
determined without regard to any waivers of the basic management fee.
<TABLE>
<CAPTION>
CONTRACTUAL BASIC
MANAGEMENT FEE (AS EXPENSE LIMITATION
A % OF AVERAGE (AS A % OF AVERAGE
DAILY NET ASSETS) DAILY NET ASSETS)*
------------------ ------------------
<S> <C> <C>
INSTITUTIONAL SHARES
BEA Long-Short Market Neutral Fund . . . . . . 1.50% 2.00%
BEA Long-Short Equity Fund . . . . . . . . . . 0.10% 2.50%
ADVISOR SHARES
BEA Long-Short Market Neutral Fund . . . . . . 1.50% 2.25%
BEA Long-Short Equity Fund . . . . . . . . . . 0.10% 2.75%
</TABLE>
- ---------------------
* With respect to the BEA Long-Short Equity Fund, "Other
Expenses" includes the indirect expenses associated
with the Fund's investment in Institutional Shares of
the BEA Long-Short Market Neutral 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 by a Fund will have the effect of
increasing its expense ratio and of decreasing return to its 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
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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 -- ADVISOR CLASS
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 Shares of each
Fund, providing all accounting services for the Advisor 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% of
such assets in excess of $125 million.
ADMINISTRATOR -- INSTITUTIONAL CLASS
PFPC 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 Shares
of the Funds, providing shareholder servicing and all accounting services for
the Institutional Class and generally assisting in all aspects of the operations
of the Institutional Class of the Funds. 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.
ADMINISTRATIVE SERVICES AGENT -- INSTITUTIONAL CLASS
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
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fee for the previous month calculated at the annual rate of .15% of the 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' 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 Advisor Class'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." 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.
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<PAGE>
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
Custodial Trust Company serves as Custodian for 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
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 and
Institutional Classes of the Funds pay their own administration fees, and
Advisor Shares bear the expense associated with the 12b-1 Plan. Each class
may pay a different share than the other classes of other expenses (excluding
management and custodial fees) if those expenses are actually incurred in a
different amount by that class 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
Shares representing interests in the Funds are offered continuously for
sale by the Distributor.
The Funds offer two classes of shares: Advisor Shares and Institutional
Shares. Whether an investor is eligible to purchase Advisor or Institutional
Shares generally depends on the amount invested in a particular Fund. Advisor
Shares bear a
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Shareholder Service Fee and Distribution Fee whereas Institutional Shares do
not.
GENERAL
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.
ADVISOR CLASS
Advisor Shares of the Funds 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 Advisor 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
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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
Investors may also purchase Advisor 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 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
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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
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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.
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 Advisor 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
Advisor 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
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plans and UGMA and UTMA accounts are available and/or appropriate, a shareholder
should consult with a tax adviser.
INSTITUTIONAL CLASS
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
Institutional Shares must be at least $3,000,000, except Institutional 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.
PURCHASES IN-KIND
Subject to the approval of the Adviser, investors may acquire
Institutional Shares 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 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
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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).
REDEMPTION IN WRITING
Shareholders may redeem for cash some or all of their Shares at any time.
To do so, a written request in proper form must be sent directly to the BEA
Advisor Funds or 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
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 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.
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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
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 investor may exchange Shares of a Fund for Shares of the same class of
any other Fund of the Company 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 the 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 Shares of the Funds 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 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
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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 -- ADVISOR CLASS
In order to request redemptions or exchanges by telephone, investors must
have completed 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. 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
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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 both the Advisor
and Institutional Classes of the BEA Long-Short Market Neutral and BEA
Long-Short Equity Funds at least annually. 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 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)
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, if any, of a Fund 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%. The maximum rate imposed on long-term capital
gain of such taxpayers is 28% (for the sale of capital assets held more than 12
months but not more than 18 months) or 20% (for the sale of capital assets held
more than 18 months). Corporate taxpayers are taxed on both ordinary income and
capital gains at a maximum nominal rate of 35%.
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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
31% "backup" withholding on reportable dividends, capital gains distributions
and redemption payments.
To the extent such investments are permissible for a Fund, the Fund's
transactions in options, futures contracts, hedging transactions, forward
contracts and straddles will be subject to special tax rules (including
mark-to-market, constructive sale, straddle, wash sale and short sale rules),
the effect of which may be to accelerate income to the Fund, defer losses to the
Fund, cause adjustments in the holding periods of the Fund's securities and
convert short-term capital losses into long-term capital losses. These rules
could therefore affect the amount, timing and character of distributions to
shareholders.
The foregoing is a general summary of the federal income tax consequences
of investing in a Fund to shareholders who are U.S. citizens or U.S.
corporations. Shareholders should consult their own tax advisers about the tax
consequences of an investment in the Funds in light of each shareholder's
particular tax situation. Shareholders should also consult their own tax
advisers about consequences under foreign, state, local or other applicable tax
laws.
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
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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
respective 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.
MULTI-CLASS STRUCTURE
The Company offers three classes of shares, Advisor, 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 Funds and accrue
dividends and calculate net asset value and performance quotations in the same
manner. The Company quotes performance of each class of Shares separately.
Because different fees are paid by each class of shares, the total return on
such shares can be expected, at any time, to be different than the total return
on another class of Shares. Information concerning these other classes may be
obtained by calling the BEA 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).
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THIS PROSPECTUS AND THE STATEMENT OF ADDITIONAL INFORMATION INCORPORATED
HEREIN RELATE PRIMARILY TO THE BEA ADVISOR AND INSTITUTIONAL CLASSES
REPRESENTING INTERESTS IN THE BEA LONG-SHORT MARKET NEUTRAL AND BEA LONG-SHORT
EQUITY 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 March 31, 1998, 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
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financial statements audited by independent accountants. Shareholder inquiries
can be made by contacting the BEA Funds at (800) 401-2230 or by writing to BEA
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/Weisenberger Investment Technologies, Inc.,
Mutual Fund Forecaster or Morningstar, Inc., or with the performance of the
Standard & Poor's 500 Stock Index, Standard & Poor's MidCap 400 Index,
Consumer Price Index, Salomon Smith Barney 1-Month Treasury Bill Index-TM-,
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.
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NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY
REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS OR IN THE 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.
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BEA ADVISOR & INSTITUTIONAL FUNDS
QUICK REFERENCE GUIDE
BEA ADVISOR & INSTITUTIONAL FUNDS
BEA Long-Short Market Neutral Fund
BEA Long-Short Equity 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 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
<PAGE>
DISTRIBUTOR
Counsellors Securities Inc.
466 Lexington Avenue
New York, NY 10017-3147
ADMINISTRATOR (INSTITUTIONAL CLASS)
PFPC Inc.
400 Bellevue Parkway
Wilmington, DE 19809
CO-ADMINISTRATOR (ADVISOR CLASS)
PFPC Inc.
400 Bellevue Parkway
Wilmington, DE 19809
CO-ADMINISTRATOR (ADVISOR CLASS)
BEA Associates
One Citicorp Center
153 East 53rd Street
New York, NY 10022
ADMINISTRATIVE SERVICES AGENT (INSTITUTIONAL CLASS)
Counsellors Funds Service, Inc.
466 Lexington Avenue
New York, NY 10017-3147
CUSTODIAN
Custodial Trust Company
101 Carnegie Center
Princeton, NJ 08540
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
<PAGE>
1345 Chestnut Street
Philadelphia, PA 19107-3496
<PAGE>
BEA
ADVISOR AND INSTITUTIONAL FUNDS
BEA LONG-SHORT MARKET NEUTRAL FUND
BEA LONG-SHORT EQUITY FUND
(INVESTMENT PORTFOLIOS OF THE RBB FUND, INC.)
STATEMENT OF ADDITIONAL INFORMATION
This Statement of Additional Information provides supplementary
information pertaining to shares of the BEA Advisor and Institutional Classes
representing interests in two investment portfolios (the "Funds") of The RBB
Fund, Inc. (the "Company"): the BEA Long-Short Market Neutral Fund and the BEA
Long-Short Equity Fund (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
__________, 1998 (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 __________, 1998.
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 __
Common Investment Policies --
BEA Long-Short Market Neutral Fund and BEA
Long-Short Equity Fund . . . . . . . . . . 1 __
Supplemental Investment Policies --
BEA Long-Short Equity Fund . . . . . . . . 9 __
Investment Limitations . . . . . . . . . . . 10 __
Risk Factors . . . . . . . . . . . . . . . . 13 __
Directors and Officers . . . . . . . . . . . 15 N/A
Investment Advisory and Servicing
Arrangements . . . . . . . . . . . . . . . 19 __
Portfolio Transactions . . . . . . . . . . . 27 N/A
Purchase and Redemption Information. . . . . 29 __
Valuation of Shares. . . . . . . . . . . . . 30 __
Performance and Yield Information. . . . . . 31 __
Taxes. . . . . . . . . . . . . . . . . . . . 33 __
Additional Information Concerning the
Company Shares . . . . . . . . . . . . . . 41 __
Miscellaneous. . . . . . . . . . . . . . . . 45 N/A
Appendix A . . . . . . . . . . . . . . . . . A-1 N/A
Appendix B . . . . . . . . . . . . . . . . . B-1 N/A
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GENERAL
The RBB Fund, Inc. (the "Company") is an open-end management
investment company currently operating or proposing to operate twenty-six
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 -- BEA LONG-SHORT MARKET NEUTRAL FUND AND BEA
LONG-SHORT EQUITY FUND
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
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currency; (c) floating rate securities and other instruments denominated in any
currency issued by international development agencies; (d) finance company and
corporate commercial paper and other short-term corporate debt obligations of
U.S. and foreign corporations; and (e) repurchase agreements with banks and
broker-dealers with respect to such securities.
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 averse market action, expenses and/or delays in the 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. 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).
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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 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. The Funds do not presently intend to invest more
than 5% of net assets in reverse repurchase 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, equity swaps, 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,
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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 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"
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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 33 1/3% of its total assets (including the loan collateral) 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
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 could 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.
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
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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).
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.
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.
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
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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.
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 as a result of trades on
that Exchange would continue to be exercisable in accordance with their terms.
SHORT SALES. The BEA Long-Short Market Neutral Fund will seek, and the BEA
Long-Short Equity Fund may seek, to realize additional gains through short
sales. Short sales are transactions in which a Fund sells a security it does
not own, in anticipation of a decline in the value of that security relative to
the long positions held by the Fund. To complete such a
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transaction, a Fund must borrow the security to make delivery to the buyer. A
Fund then is obligated to replace the security borrowed by purchasing it at the
market price at or prior to the time of replacement. The price at such time may
be more or less than the price at which the security was sold by a Fund. Until
the security is replaced, a Fund is required to repay the lender any dividends
or interest that accrue during the period of the loan. To borrow the security,
a Fund also may be required to pay a premium, which would increase the cost of
the security sold. The net proceeds of the short sale will be retained by the
broker (or by the Fund's custodian in a special custody account), to the extent
necessary to meet margin requirements, until the short position is closed out.
A Fund also will incur transaction costs in effecting short sales.
A Fund will incur a loss as a result of the short sale if the price of
the security increases between the date of the short sale and the date on which
the Fund replaces the borrowed security. A Fund will realize a gain if the
security declines in price between those dates. The amount of any gain will be
decreased, and the amount of any loss increased, by the amount of the premium,
dividends, interest or expenses a Fund may be required to pay in connection with
a short sale. An increase in the value of a security sold short by a Fund over
the price at which it was sold short will result in a loss to the Fund, and
there can be no assurance that the Fund will be able to close out the position
at any particular time or at an acceptable price.
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."
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.
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SUPPLEMENTAL INVESTMENT POLICIES -
BEA LONG-SHORT EQUITY FUND
S&P 500 INDEX FUTURES AND RELATED OPTIONS. An S&P 500 Index Future
contract (an "Index Future") is a contract to buy or sell an integral number of
units of the Standard & Poor's 500 Composite Stock Price Index (the "S&P 500
Index") at a specified future date at a price agreed upon when the contract is
made. A unit is the value of the S&P 500 Index from time to time. Entering
into a contract to buy units is commonly referred to as buying or purchasing a
contract or holding a long position in the S&P 500 Index.
Index Futures can be traded through all major commodity brokers.
Currently, contracts are expected to expire on the tenth day of March, June,
September and December. The BEA Long-Short Equity Fund will ordinarily be able
to close open positions on the United States futures exchange on which Index
Futures are then traded at any time up to and including the expiration day.
In contrast to purchases of a common stock, no price is paid or
received by the BEA Long-Short Equity Fund upon the purchase of a futures
contract. Upon entering into a futures contract, the Fund will be required to
deposit with its custodian in a segregated account in the name of the futures
broker a specified amount of cash or securities. This is known by participants
in the market as "initial margin". The type of instruments that may be
deposited as initial margin, and the required amount of initial margin, are
determined by the futures exchange(s) on which the Index Futures are traded.
The nature of initial margin in futures transactions is different from that of
margin in securities 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 S&P 500 Index fluctuates, making the
position in the futures contract more or less valuable, a process known as
"marking to the market". For example, when the Fund has purchased an Index
Future and the price of the S&P 500 Index has risen, that position will have
increased in value and the Fund will receive from the broker a variation margin
payment equal to that increase in value. Conversely, when the Fund has
purchased an Index Future and the price of the S&P 500 Index has declined, the
position would be less valuable and the Fund would be required to make a
variation margin payment to the broker. When the Fund terminates a position in
a futures contract, a final
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determination of variation margin is made, additional cash is paid by or to the
Fund, and the Fund realizes a gain or a loss.
The price of Index Futures may not correlate perfectly with movement
in the underlying index due to certain market distortions. First, all
participants in the futures market are subject to margin deposit and maintenance
requirements. Rather than meeting additional margin deposit requirements,
investors may close futures contracts through offsetting transactions which
could distort the normal relationship between the S&P 500 Index and futures
markets. Secondly, the deposit requirements in the futures market are less
onerous than margin requirements in the securities market, and as a result the
futures market may attract more speculators than does the securities market.
Increased participation by speculators in the futures market may also cause
temporary price distortions.
Options on index futures contracts give the purchaser the right, in
return for the premium paid, to assume a position in an index futures contract
(a long position if the option is a call and a short position if the option is a
put) at a specified exercise price at any time during the period of the option.
Upon exercise of the option, the holder would assume the underlying futures
position and would receive a variation margin payment of cash or securities
approximating the increase in the value of the holder's option position. If an
option is exercised on the last trading day prior to the expiration date of the
option, the settlement will be made entirely in cash based on the difference
between the exercise price of the option and the closing level of the index on
which the futures contract is based on the expiration date. Purchasers of
options who fail to exercise their options prior to the exercise date suffer a
loss of the premium paid.
The ability to establish and close out positions in options on futures
contracts will be subject to the development and maintenance of a liquid
secondary market. It is not certain that such a market will develop. Although
the BEA Long-Short Equity Fund generally will purchase only those options for
which there appears to be an active secondary market, there is no assurance that
a liquid secondary market on an exchange will exist for any particular option or
at any particular time. In the event no such market exists for particular
options, it might not be possible to effect closing transactions in such
options, with the result that the Fund would have to exercise the options in
order to realize any profit.
INVESTMENT LIMITATIONS
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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 each Fund's 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, provided that: (a) short sales and related borrowings of securities
are not subject to this restriction; and, (b) for the purposes of this
restriction, collateral arrangements with respect to options, short sales, stock
index, interest rate, currency or other futures, options on futures contracts,
collateral arrangements with respect to initial and variation margin and
collateral arrangements with respect to swaps and other derivatives are not
deemed to be a pledge or other encumbrance of assets.
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
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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 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
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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.
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.
Since the securities of foreign companies are frequently denominated
in foreign currencies, the Funds may be affected favorably or unfavorably by
changes in currency rates and in exchange control regulations, and may incur
costs in connection with conversions between various currencies.
As foreign companies are not generally subject to uniform accounting,
auditing and financial reporting standards and they may have policies that are
not comparable to those of domestic companies, there may be less information
available about certain foreign companies than about domestic companies.
Securities of some foreign companies are generally less liquid and more volatile
than securities of comparable domestic companies. There is generally less
government supervision and regulation of stock exchanges, brokers and listed
companies than in the U.S. In addition, with respect to certain foreign
countries, there is the possibility of expropriation or confiscatory taxation,
political or social instability, or diplomatic developments which could affect
U.S. investments in those countries.
Although the Funds will endeavor to achieve the most favorable
execution costs in their portfolio transactions, fixed
-13-
<PAGE>
commissions on many foreign stock exchanges are generally higher than negotiated
commissions on U.S. exchanges.
Certain foreign governments levy withholding taxes on dividend and
interest income. Although in some countries a portion of these taxes is
recoverable, the non-recoverable portion of foreign withholding taxes will
reduce the income received from the companies in which the Funds invest.
However, these foreign withholding taxes are not expected to have a significant
impact.
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.
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.
-14-
<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 - 59** 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 - 62 Director Since 1963, Executive
7701 Burholme Avenue Vice President, Fox Chase
Philadelphia, PA 19111 Cancer Center (biomedical research
and medical care.)
Marvin E. Sternberg - 63 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
-15-
<PAGE>
Position Principal Occupation
Name, Address and Age With the Company During Past Five Years
- --------------------- ---------------- ----------------------
1975, Director and Executive Vice
President, Cellucap Mfg. Co., Inc.
(manufacturer of disposable
headwear).
Julian A. Brodsky - 64 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 - 73 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, Nobel Education
Philadelphia, PA 19107-3496 Dynamics, Inc.
-16-
<PAGE>
- -------------------------
* 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.
** 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:
-17-
<PAGE>
DIRECTORS' COMPENSATION
<TABLE>
<CAPTION>
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
- ---------------- ---------- -------- ---------- ---------
<S> <C> <C> <C> <C>
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
</TABLE>
- ----------------------
(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 is the Fund's sole 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 one part-time employee. 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.
-18-
<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. 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
December 31, 1997, BEA Associates managed approximately $34.2 billion in assets.
BEA is a wholly-owned subsidiary of Credit Suisse Group, a Swiss corporation.
BEA Associates is a registered investment advisor under the Investment Advisors
Act of 1940, as amended.
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.
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.
The BEA Long-Short Market Neutral Fund pays BEA a basic management
fee, computed daily and payable monthly, at the annual rate of 1.50% of the
average net assets of the Fund. After the first year of operations, this
basic management fee may be increased or decreased by applying an adjustment
formula (the
-19-
<PAGE>
"Performance Adjustment"). The Performance Adjustment is calculated monthly by
comparing the Fund's investment performance to a Target (as defined below)
during the most recent twelve-month period. The "Target" is the investment
record of the Salomon Smith Barney 1-Month U.S. Treasury Bill Index-TM- plus 5
percentage points. The Performance Adjustment is added to or subtracted from
the basic fee.
The Performance Adjustment may increase or decrease the basic fee
in five steps. The first step would occur if the Fund's performance during
the most recent 12-month period differed from that of the Target by more than
one but not more than two percentage points. In this event, the Performance
Adjustment would be 0.10%, and the annual rate of the total management fee
would be either 1.40% or 1.60%. The second step would occur if the Fund's
performance during the most recent 12-month period differed from that of the
Target by more than two but not more than three percentage points. In this
event, the Performance Adjustment would be 0.20%, and the annual rate of the
total management fee would be either 1.30% or 1.70%. The third step would
occur if the Fund's performance during the most recent 12-month period
differed from that of the Target by more than three but not more than four
percentage points. In this event, the Performance Adjustment would be 0.30%,
and the annual rate of the total management fee would be either 1.20% or
1.80%. The fourth step would occur if the Fund's performance during the most
recent 12-month period differed from that of the Target by more than four but
not more than five percentage points. In this event, the Performance
Adjustment would be 0.40%, and the annual rate of the total management fee
would be either 1.10% or 1.90%. The fifth step would occur if the Fund's
performance during the most recent 12-month period differed from that of the
Target by five percentage points or more. In this event, the Performance
Adjustment would be 0.50%, and the annual rate of the total management fee
would be either 1.00% or 2.00%. Thus:
-20-
<PAGE>
<TABLE>
<CAPTION>
BASIC RATE PERFORMANCE TOTAL MANAGEMENT
ADJUSTMENT FEE RATE
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
No adjustment 1.50% N/A 1.50%
- --------------------------------------------------------------------------------
First Step:
Performance
exceeds Tar-
get by more
than 1 but
not more than 2
percen-
tage points 1.50 .10% 1.60
Performance
lags Target
by more than 1
but not
more than 2
percentage
points 1.50 (.10) 1.40
- --------------------------------------------------------------------------------
Second Step:
Performance
exceeds Tar-
get by more
than 2 but
not more than 3
percentage
points 1.50 .20 1.70
Performance
lags Target
by more than
2 but not
more than 3
percentage
points 1.50 (.20) 1.30
- --------------------------------------------------------------------------------
</TABLE>
-21-
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
- --------------------------------------------------------------------------------
Third Step:
Performance
exceeds Target
by more than
3 but not
more than 4
percentage
points 1.50 .30 1.80
Performance
lags Target
by more than
3 but not
more than 4
percentage
points 1.50 (.30) 1.20
- --------------------------------------------------------------------------------
Fourth Step:
Performance
exceeds Tar-
get by more
than 4 but
not more than 5
percentage
points 1.50 .40 1.90
Performance
lags Target
by more than 4
but not
more than 5
percentage
points 1.50 (.40) 1.10
- --------------------------------------------------------------------------------
Fifth Step:
Performance
exceeds Tar-
get by more
than 5
percentage
points 1.50 .50 2.00
Performance
lags Target
by more than
5 percentage
points 1.50 (.50) 1.00
- --------------------------------------------------------------------------------
</TABLE>
-22-
<PAGE>
The BEA Long-Short Equity Fund pays BEA a management fee, computed
daily and payable quarterly, at the annual rate of 0.10% of the average net
assets of the Fund.
As disclosed in the Prospectus, each of the Funds has agreed to pay
the Adviser a management fee at the annual percentage rate of the relevant
Fund's average daily net assets set forth in the Prospectus. The Adviser has
informed the Company that it will voluntarily waive some or all of its
management fees under the Advisory Agreements and, if necessary, will bear
certain expenses of each Fund until further notice so that each Fund's total
annual operating expenses (including the management fee but not including
nonrecurring account fees and extraordinary expenses) applicable to each
class will not exceed the percentage of each Fund's average daily net assets
attributable to that class as set forth in the Prospectus plus the
Performance Adjustment applicable to the BEA Long-Short Market Neutral Fund.
The Performance Adjustment would be determined without regard to any waivers
of the basic management fee.
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 Advisor and
Institutional Classes of the Funds pay their own administration fees, and may
pay a different share than the other classes of the Funds of other expenses
(excluding management and custodial fees) if those expenses are actually
incurred in a different amount by each Class or if it receives different
services.
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 are dated ______________, 1998. 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. Custodial Trust Company
("CTC") 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, CTC (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. CTC is authorized to select one or more banks or trust
companies to serve as sub-custodian on behalf of the Company, provided CTC
-23-
<PAGE>
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, CTC 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 -- ADVISOR CLASS.
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, dated _______________, 1998
(the "PFPC Administration and Accounting Services Agreements"). PFPC has agreed
to furnish statistical and research data, clerical, accounting and bookkeeping
services and certain other services with respect to the Advisor Shares of 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 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.
BEA serves as co-administrator to the Advisor Class of the Funds
pursuant to Co-Administration Agreements dated
-24-
<PAGE>
_________________, 1998 (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.
ADMINISTRATION AND ACCOUNTING SERVICES AND ADMINISTRATIVE SERVICES
AGREEMENTS -- INSTITUTIONAL CLASS. PFPC serves as the administrator to the
BEA Institutional Funds pursuant to Administration and Accounting Services
Agreements (the "Administration and Accounting Services Agreements") dated
_____________, 1998. PFPC has agreed to furnish statistical and research
data, clerical, accounting, and bookkeeping services and certain other
services with respect to the Institutional Shares of 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 Agreement. 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.
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 __________, 1998 (the
"Administrative Services Agreement"). Such services are provided 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
-25-
<PAGE>
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.
DISTRIBUTION AND SHAREHOLDER SERVICING -- ADVISOR CLASS
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.
-26-
<PAGE>
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
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.
Portfolio transactions for the Funds shall be effected on domestic
securities exchanges. In transactions for securities not actively traded on a
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 Group, 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.
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.
-27-
<PAGE>
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.
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.
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
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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 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.
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.)
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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. Although the Fund does not invest
directly in foreign securities, it invests in American Depository Receipts, the
value of which depends on the underlying foreign security. 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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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.
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 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);
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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.
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 Salomon Smith
Barney 1-Month Treasury Bill Index,-TM- 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
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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.
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 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
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<PAGE>
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.
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").
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.
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 long-term capital gain (20% or 28%, as
applicable), regardless of the length of time the shareholder has held his
shares, whether such gain was recognized by the Fund
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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
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.
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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, if any, 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%.
"Constructive sale" provisions apply to activities by a Fund which
lock in gain on an "appreciated financial position." Generally, a "position" is
defined to include stock, a debt instrument, or partnership interest, or an
interest in any of the foregoing, including through a short sale, a swap
contract, or a future or forward contract. The entry into a short sale, a swap
contract or a future or forward contract relating to an appreciated direct
position in any stock or debt instrument, or the acquisition of stock or debt
instrument at a time when the Fund occupies an offsetting (short) appreciated
position in the stock or debt instrument, is treated as a "constructive sale"
that gives rise to the immediate recognition of gain (but not loss). The
application of these rules may cause a Fund to recognize taxable income from
these offsetting transactions in excess of the cash generated by such
activities.
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
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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 prior
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."
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 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
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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
regulations, but at the present time the Funds are uncertain which (if any) of
these elections they will make.
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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.
Each of the Funds may elect not to have the year-end mark-to-market
rule apply to Section 1256 contracts that are part
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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.
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
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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.
The Code permits 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 is not 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 are taken into account by the Fund for
purposes of satisfying the Distribution Requirement and the excise tax
distribution requirement.
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.
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
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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 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
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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),
___ million shares are classified as Class YY Common Stock (Schneider Capital
Management Value Fund), 100 million shares are classified as Class ZZ Common
Stock (BEA Institutional Long-Short Market Neutral Fund), 100 million shares
are classified as Class AAA Common Stock (BEA Advisor Long-Short Market
Neutral Fund), 100 million shares are classified as Class BBB Common Stock
(BEA Institutional Long-Short Equity Fund), 100 million shares are classified
as Class CCC Common Stock (BEA Advisor Long-Short Equity Fund), 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
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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 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 fifteen 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 Schneider
Capital Management 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 twelve 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, and the Schneider Capital Management Family
represents interests in one non-money market fund.
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.
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
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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 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.
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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" - Obligations are rated in the highest category indicating that
the obligor's capacity to meet its financial commitment is strong. Within this
category, certain obligations are designated with a plus sign (+). This
indicates that the obligor's capacity to meet its financial commitment on these
obligations is extremely strong.
"A-2" - Obligations are somewhat more susceptible to the adverse
effects of changes in circumstances and economic conditions than obligations
rated "A-1". However, the obligor's capacity to meet its financial commitment on
the obligation is satisfactory.
"A-3" - Obligations exhibit 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.
"B" - Obligations are regarded as having significant speculative
characteristics. The obligor currently has the capacity to meet its financial
commitment on the obligation; however, it faces major ongoing uncertainties
which could lead to the obligor's inadequate capacity to meet its financial
commitment on the obligation.
"C" - Obligations are currently vulnerable to nonpayment and are
dependent on favorable business, financial, and economic conditions for the
obligor to meet its financial obligation.
"D" - Obligations are in payment default. The "D" rating category 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 such payments will
be made during such grace period. The "D" rating will also be used upon the
filing of a bankruptcy petition or the taking of a similar action if payments on
an obligation are jeopardized.
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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:
"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 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 effect 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 the 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.
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"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 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 insure 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 IBCA short-term ratings apply to debt obligations that have time
horizons of less than 12 months for most obligations, or up to three years for
U.S. public finance securities. The following summarizes the rating categories
used by Fitch IBCA for short-term obligations:
"F1" - Securities possess the highest credit quality. This
designation indicates the strongest capacity for timely payment of financial
commitments and may have an added "+" to denote any exceptionally strong credit
feature.
"F2" - Securities possess good credit quality. This designation
indicates a satisfactory capacity for timely payment of financial commitments,
but the margin of safety is not as great as in the case of securities rated
"F1".
"F3" - Securities possess fair credit quality. This designation
indicates that the capacity for timely payment of financial commitments is
adequate; however, near-term adverse changes could result in a reduction to
non-investment grade.
"B" - Securities possess speculative credit quality. this designation
indicates minimal capacity for timely payment of
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financial commitments, plus vulnerability to near-term adverse changes in
financial and economic conditions.
"C" - Securities possess high default risk. This designation
indicates that the capacity for meeting financial commitments is solely reliant
upon a sustained, favorable business and economic environment.
"D" - Securities are in actual or imminent payment default.
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.
CORPORATE AND MUNICIPAL LONG-TERM DEBT RATINGS
The following summarizes the ratings used by Standard & Poor's for
corporate and municipal debt:
"AAA" - An obligation rated "AAA" has the highest rating assigned by
Standard & Poor's. The obligor's capacity to meet its financial commitment on
the obligation is extremely strong.
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"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.
"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.
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"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:
"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.
"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
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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.
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 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.
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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 IBCA for corporate
and municipal bonds:
"AAA" - Bonds considered to be investment grade and of the highest
credit quality. These ratings denote the lowest expectation of investment risk
and are assigned only in case of exceptionally strong capacity for timely
payment of financial commitments. This capacity is very unlikely to be
adversely affected by foreseeable events.
"AA" - Bonds considered to be investment grade and of very high credit
quality. These ratings denote a very low expectation of investment risk and
indicate very strong capacity for timely payment of financial commitments. This
capacity is not significantly vulnerable to foreseeable events.
"A" - Bonds considered to be investment grade and of high credit
quality. These ratings denote a low expectation of investment risk and indicate
strong capacity for timely payment of financial commitments. This capacity may,
nevertheless, be more vulnerable to adverse changes in circumstances or in
economic conditions than bonds with higher ratings.
"BBB" - Bonds considered to be investment grade and of good credit
quality. These ratings denote that there is currently a low expectation of
investment risk. The capacity for timely payment of financial commitments is
adequate, but adverse circumstances and in economic conditions are more likely
to impair this category.
"BB" - Bonds considered to be speculative. These ratings indicate
that there is a possibility of credit risk developing, particularly as the
result of adverse economic changes over time; however, business or financial
alternatives may be available to allow financial commitments to be met.
Securities rated in this category are not investment grade.
"B" - Bonds are considered highly speculative. these ratings indicate
that significant credit risk is present, but a
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<PAGE>
limited margin of safety remains. Financial commitments are currently being
met; however, capacity for continued payment is contingent upon a sustained,
favorable business and economic environment.
"CCC", "CC", "C" - Bonds have high default risk. Capacity for meeting
financial commitments is reliant upon sustained, favorable business or economic
developments. "CC" ratings indicate that default of some kind appears probable,
and "C" ratings signal imminent default.
"DDD," "DD" and "D" - Bonds are in default. Securities are not
meeting obligations and are extremely speculative. "DDD" designates 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 IBCA
ratings from and including "AA" to "B" may be modified by the addition of a plus
(+) or minus (-) sign to show relative standing within these major rating
categories.
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
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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:
"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.
A-10
<PAGE>
"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 IBCA and Duff & Phelps use the short-term ratings described
under Commercial Paper Ratings for municipal notes.
A-11
<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.
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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 Fund
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
B-4
<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 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.
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.
The risk of loss in trading futures contracts in some strategies can
be substantial, due both to the low margin
B-6
<PAGE>
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.
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
B-7
<PAGE>
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
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Page 1
PART C
OTHER INFORMATION
Item 24. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements:
(1) Included in Part A of the Registration Statement:
Not Applicable.
(2) Incorporated by reference into Part B:
Not Applicable.
<TABLE>
<CAPTION>
(b) Exhibits: SEE NOTE #
----------
<S> <C>
(1) (a) Articles of Incorporation of Registrant 1
(b) Articles Supplementary of Registrant. 1
(c) Articles of Amendment to Articles of Incorporation of Registrant. 2
(d) Articles Supplementary of Registrant. 2
(e) Articles Supplementary of Registrant. 5
(f) Articles Supplementary of Registrant. 6
(g) Articles Supplementary of Registrant. 9
(h) Articles Supplementary of Registrant. 10
(i) Articles Supplementary of Registrant. 14
(j) Articles Supplementary of Registrant. 14
(k) Articles Supplementary of Registrant. 19
(l) Articles Supplementary of Registrant. 19
(m) Articles Supplementary of Registrant. 19
(n) Articles Supplementary of Registrant. 19
(o) Articles Supplementary of Registrant. 20
(p) Articles Supplementary of Registrant. 23
(q) Articles Supplementary of Registrant. 25
(r) Articles Supplementary of Registrant. 27
(s) Articles of Amendment to Charter of the Registrant. 28
(t) Articles Supplementary of Registrant. 28
(u) Form of Articles Supplementary relating to the BEA Long-Short
Market Neutral and BEA Long-Short Equity Funds.
(2) By-Laws, as amended 28
(3) None.
<PAGE>
Page 2
(4) (a) See Articles VI, VII, VIII, IX and XI of Registrant's Articles 1
of Incorporation dated February 17, 1988.
(b) See Articles II, III, VI, XIII, and XIV of Registrant's By-Laws 23
as amended through April 26, 1996.
(5) (a) Investment Advisory Agreement (Money Market) between Registrant 3
and Provident Institutional Management Corporation, dated as of
August 16, 1988.
(b) Sub-Advisory Agreement (Money Market) between Provident 3
Institutional Management Corporation and Provident National Bank,
dated as of August 16, 1988.
(c) Investment Advisory Agreement (Tax-Free Money Market) between 3
Registrant and Provident Institutional Management Corporation,
dated as of August 16, 1988.
(d) Sub-Advisory Agreement (Tax-Free Money Market) between Provident 3
Institutional Management Corporation and Provident National Bank,
dated as of August 16, 1988.
(e) Investment Advisory Agreement (Government Obligations Money Market) 3
between Registrant and Provident Institutional Management Corporation,
dated as of August 16, 1988.
(f) Sub-Advisory Agreement (Government Obligations Money Market) between 3
Provident Institutional Management Corporation and Provident National
Bank, dated as of August 16, 1988.
(g) Investment Advisory Agreement (Government Securities) between 8
Registrant and Provident Institutional Management Corporation
dated as of April 8, 1991.
(h) Investment Advisory Agreement (New York Municipal Money Market) 9
between Registrant and Provident Institutional Management Corporation
dated November 5, 1991.
(i) Investment Advisory Agreement (Tax-Free Money Market) between 10
Registrant and Provident Institutional Management Corporation
dated April 21, 1992.
(j) Investment Advisory Agreement (BEA International Equity Portfolio) 11
between Registrant and BEA Associates.
(k) Investment Advisory Agreement (BEA Strategic Fixed Income Portfolio) 11
between Registrant and BEA Associates.
(l) Investment Advisory Agreement (BEA Emerging Markets Equity Portfolio) 11
between Registrant and BEA Associates.
<PAGE>
Page 3
(m) Investment Advisory Agreement (BEA U.S. Core Equity Portfolio) 15
between Registrant and BEA Associates, dated as of October 27, 1993.
(n) Investment Advisory Agreement (BEA U.S. Core Fixed Income Portfolio) 15
between Registrant and BEA Associates, dated as of October 27, 1993.
(o) Investment Advisory Agreement (BEA Global Fixed Income Portfolio) 15
between Registrant and BEA Associates, dated as of October 27, 1993.
(p) Investment Advisory Agreement (BEA Municipal Bond Fund Portfolio) 15
between Registrant and BEA Associates, dated as of October 27, 1993.
(q) Investment Advisory Agreement (BEA Balanced) between Registrant 16
and BEA Associates.
(r) Investment Advisory Agreement (BEA Short Duration Portfolio) 16
between Registrant and BEA Associates.
(s) Investment Advisory Agreement (n/i Micro Cap Fund) between 23
Registrant and Numeric Investors, L.P.
(t) Investment Advisory Agreement (n/i Growth Fund) between Registrant 23
and Numeric Investors, L.P.
(u) Investment Advisory Agreement (n/i Growth & Value Fund) between 23
Registrant and Numeric Investors, L.P.
(v) Investment Advisory Agreement (BEA Global Telecommunications Portfolio) 24
between Registrant and BEA Associates.
(w) Investment Advisory Agreement (Boston Partners Large Cap Value Fund) 26
between Registrant and Boston Partners Asset Management, L.P.
(x) Investment Advisory Agreement (Boston Partners Mid Cap Value Fund) 28
between Registrant and Boston Partners Asset Management, L.P.
(y) Investment Advisory Agreement (n/i Larger Cap Value Fund) between 31
Registrant and Numeric Investors, L.P. dated December 1, 1997.
(z) Investment Advisory Agreement (Boston Partners Bond Fund) between 31
Registrant and Boston Partners Asset Management, L.P. dated
December 1, 1997.
<PAGE>
Page 4
(aa) Form of Investment Advisory Agreement (Schneider Capital Management 32
Value Fund) between Registrant and Schneider Capital Management Company.
(bb) Form of Investment Advisory Agreement (BEA Long-Short Market Neutral
Fund) between Registrant and BEA Associates.
(cc) Form of Investment Advisory Agreement (BEA Long-Short Equity Fund)
between Registrant and BEA Associates.
(6) (r) Distribution Agreement and Supplements (Classes A through Q) 8
between the Registrant and Counsellors Securities Inc.
dated as of April 10, 1991.
(s) Distribution Agreement Supplement (Classes L, M, N and 0) 9
between the Registrant and Counsellors Securities Inc.
dated as of November 5, 1991.
(t) Distribution Agreement Supplements (Classes R, S, and Alpha 1 through 9
Theta 4) between the Registrant and Counsellors Securities Inc.
dated as of November 5, 1991.
(u) Distribution Agreement Supplement (Classes T, U and V) between the 10
Registrant and Counsellors Securities Inc. dated as of September 18, 1992.
(w) Distribution Agreement Supplement (Classes X, Y, Z and AA) between 14
the Registrant and Counselors Securities Inc.
(x) Distribution Agreement Supplement (Classes BB and CC) between 18
Registrant and Counsellors Securities Inc. dated as of October 26, 1994.
(z) Distribution Agreement Supplement (Classes L, M, N and O) between 19
the Registrant and Counsellors Securities Inc.
(aa) Distribution Agreement Supplement (Classes R, S) between the 19
Registrant and Counsellors Securities Inc.
(bb) Distribution Agreement Supplements (Classes Alpha 1 through Theta 4) 19
between the Registrant and Counsellors Securities Inc.
(cc) Distribution Agreement Supplement (Janney Classes) between the 20
Registrant and Counsellors Securities Inc.
(dd) Distribution Agreement Supplement ni Classes (Classes FF, GG and HH) 23
between Registrant and Counsellors Securities Inc.
(ee) Distribution Agreement Supplement (Classes II, JJ, KK, and LL) 24
between Registrant and Counsellors Securities Inc.
<PAGE>
Page 5
(ff) Distribution Agreement Supplement (Classes MM, NN, OO, and PP) 24
between Registrant and Counsellors Securities Inc.
(gg) Distribution Agreement Supplement (Class QQ) between Registrant 26
and Counsellors Securities Inc.
(hh) Distribution Agreement Supplement (Class RR) between Registrant 27
and Counsellors Securities Inc.
(ii) Distribution Agreement Supplement (Class SS) between Registrant 27
and Counsellors Securities Inc.
(jj) Distribution Agreement Supplement (Class TT) between Registrant 28
and Counsellors Securities Inc.
(kk) Distribution Agreement Supplement (Class UU) between Registrant 28
and Counsellors Securities Inc.
(ll) Distribution Agreement Supplement (Class VV) between Registrant 31
and Counsellors Securities, Inc.
(mm) Distribution Agreement Supplement (Class WW) between Registrant 31
and Counsellors Securities, Inc.
(nn) Distribution Agreement Supplement (Class XX) between Registrant 31
and Counsellors Securities, Inc.
(oo) Form of Distribution Agreement Supplement (Class YY) between Registrant 32
and Counsellors Securities, Inc.
(pp) Form of Distribution Agreement Supplement (Classes ZZ and AAA)
between Registrant and Counsellors Securities, Inc.
(qq) Form of Distribution Agreement Supplement (Classes BBB and CCC)
between Registrant and Counsellors Securities, Inc.
(7) Fund Office Retirement Profit-Sharing and Trust Agreement, dated as of 29
October 24, 1990, as amended.
(8) (a) Custodian Agreement between Registrant and Provident National Bank 3
dated as of August 16, 1988.
(b) Sub-Custodian Agreement among The Chase Manhattan Bank, N.A., the 10
Registrant and Provident National Bank, dated as of July 13, 1992,
relating to custody of Registrant's foreign securities.
(e) Amendment No. 1 to Custodian Agreement dated August 16, 1988. 9
<PAGE>
Page 6
(f) Agreement between Brown Brothers Harriman & Co. and Registrant on 10
behalf of BEA International Equity Portfolio, dated September 18, 1992.
(g) Agreement between Brown Brothers Harriman & Co. and Registrant on 10
behalf of BEA Strategic Fixed Income Portfolio, dated September 18, 1992.
(h) Agreement between Brown Brothers Harriman & Co. and Registrant on 10
behalf of BEA Emerging Markets Equity Portfolio, dated September 18, 1992.
(i) Agreement between Brown Brothers Harriman & Co. and Registrant on 15
behalf of BEA Emerging Markets Equity, BEA International Equity,
BEA Strategic Fixed Income and BEA Global Fixed Income Portfolios,
dated as of November 29, 1993.
(j) Agreement between Brown Brothers Harriman & Co. and Registrant on 15
behalf of BEA U.S. Core Equity and BEA U.S. Core Fixed Income Portfolios
dated as of November 29, 1993.
(k) Custodian Contract between Registrant and State Street Bank and 18
Trust Company.
(l) Custody Agreement between Registrant and Custodial Trust Company on 23
behalf of n/i Micro Cap Fund, n/i Growth Fund and n/i Growth & Value Fund
Portfolios of the Registrant.
(m) Custodian Agreement Supplement Between Registrant and PNC Bank, 26
National Association dated October 16, 1996.
(n) Custodian Agreement Supplement between Registrant and Brown Brothers 27
Harriman & Co. on behalf of the BEA Municipal Bond Fund.
(o) Custodian Agreement Supplement between Registrant and PNC Bank, 28
National Association, on behalf of the Boston Partners Mid Cap Value Fund.
(p) Custody Agreement between Registrant and Custodial Trust Company on 31
behalf of the n/i Larger Cap Value Fund.
(q) Custodian Agreement Supplement between Registrant and PNC Bank, N.A. 31
on behalf of the Boston Partners Bond Fund.
(r) Form of Custodian Agreement Supplement between Registrant and PNC Bank, 32
N.A. on behalf of the Schneider Capital Management Value Fund.
<PAGE>
Page 7
(s) Form of Custodian Agreement between Registrant and Custodial Trust
Company on behalf of the BEA Long-Short Market Neutral and
the BEA Long-Short Equity Funds.
(9) (a) Transfer Agency Agreement (Sansom Street) between Registrant and 3
Provident Financial Processing Corporation, dated as of August 16, 1988.
(b) Transfer Agency Agreement (Cash Preservation) between Registrant and 3
Provident Financial Processing Corporation, dated as of August 16, 1988.
(c) Shareholder Servicing Agreement (Sansom Street Money Market). 3
(d) Shareholder Servicing Agreement (Sansom Street Tax-Free Money Market). 3
(e) Shareholder Servicing Agreement (Sansom Street Government 3
Obligations Money Market).
(f) Shareholder Services Plan (Sansom Street Money Market). 3
(g) Shareholder Services Plan (Sansom Street Tax-Free Money Market). 3
(h) Shareholder Services Plan (Sansom Street Government Obligations 3
Money Market).
(i) Transfer Agency Agreement (Bedford) between Registrant and 3
Provident Financial Processing Corporation, dated as of August 16, 1988.
(j) Administration and Accounting Services Agreement between Registrant 8
and Provident Financial Processing Corporation, relating to Government
Securities Portfolio, dated as of April 10, 1991.
(k) Administration and Accounting Services Agreement between Registrant 9
and Provident Financial Processing Corporation, relating to New York
Municipal Money Market Portfolio dated as of November 5, 1991.
(l) Administration and Accounting Services Agreement between Registrant 10
and Provident Financial Processing Corporation (BEA International
Equity) dated September 18, 1992.
(m) Administration and Accounting Services Agreement between Registrant 10
and Provident Financial Processing Corporation (BEA Strategic Fixed
Income) dated September 18, 1992.
(n) Administration and Accounting Services Agreement between Registrant 10
and Provident Financial Processing Corporation (BEA Emerging Markets
Equity) dated September 18, 1992.
<PAGE>
Page 8
(o) Transfer Agency Agreement and Supplements (Bradford, Alpha (now 9
known as Janney), Beta, Gamma, Delta, Epsilon, Zeta, Eta and Theta)
between Registrant and Provident Financial Processing Corporation
dated as of November 5, 1991.
(p) Transfer Agency Agreement Supplement (BEA) between Registrant and 10
Provident Financial Processing Corporation dated as of September 19, 1992.
(q) Administrative Services Agreement between Registrant and Counsellor's 10
Fund Services, Inc. (BEA Portfolios) dated September 18, 1992.
(r) Administration and Accounting Services Agreement between Registrant 10
and Provident Financial Processing Corporation, relating to Tax-Free
Money Market Portfolio, dated as of April 21, 1992.
(s) Transfer Agency Agreement Supplement (BEA U.S. Core Equity, BEA U.S. 15
Core Fixed Income, BEA Global Fixed Income and BEA Municipal Bond Fund
Portfolios) between Registrant and PFPC Inc. dated as October 27, 1993.
(t) Administration and Accounting Services Agreement between Registrant 15
and PFPC Inc. relating to BEA U.S. Core Equity Portfolio dated as of
October 27, 1993.
(u) Administration and Accounting Services Agreement between Registrant and 15
PFPC Inc. (BEA U.S. Core Fixed Income Portfolio) dated October 27, 1993.
(v) Administration and Accounting Services Agreement between Registrant and 15
PFPC Inc. (International Fixed Income Portfolio) dated October 27, 1993.
(w) Administration and Accounting Services Agreement between Registrant and 15
PFPC Inc. (Municipal Bond Fund Portfolio) dated October 27, 1993.
(x) Transfer Agency Agreement Supplement (BEA Balanced and Short Duration 18
Portfolios) between Registrant and PFPC Inc. dated October 26, 1994.
(y) Administration and Accounting Services Agreement between Registrant 18
and PFPC Inc. (BEA Balanced Portfolio) dated October 26, 1994.
(z) Administration and Accounting Services Agreement between Registrant 18
and PFPC Inc. (BEA Short Duration Portfolio) dated October 26, 1994.
<PAGE>
Page 9
(aa) Administrative Services Agreement Supplement between Registrant and 18
Counsellors Fund Services, Inc. (BEA Classes) dated October 26, 1994.
(bb) Transfer Agency and Service Agreement between Registrant and State 21
Street Bank and Trust Company and PFPC, Inc. dated February 1, 1995.
(cc) Supplement to Transfer Agency and Service Agreement between Registrant, 21
State Street Bank and Trust Company, Inc. and PFPC dated April 10, 1995.
(dd) Amended and Restated Credit Agreement dated December 15, 1994. 22
(ee) Transfer Agency Agreement Supplement (n/i Micro Cap Fund, n/i Growth 23
Fund and n/i Growth & Value Fund) between Registrant and PFPC, Inc.
dated April 14, 1996.
(ff) Administration and Accounting Services Agreement between Registrant 23
and PFPC, Inc. (n/i Micro Cap Fund) dated April 24, 1996.
(gg) Administration and Accounting Services Agreement between Registrant 23
and PFPC, Inc. (n/i Growth Fund) dated April 24, 1996.
(hh) Administration and Accounting Services Agreement between Registrant 23
and PFPC, Inc. (n/i Growth & Value Fund) dated April 24, 1996.
(ii) Administrative Services Agreement between Registrant and Counsellors 23
Fund Services, Inc. (n/i Micro Cap Fund, n/i Growth Fund and n/i
Growth & Value Fund) dated April 24, 1996.
(jj) Administration and Accounting Services Agreement between Registrant 24
and PFPC, Inc. (BEA Global Telecommunications Portfolio).
(kk) Co-Administration Agreement between Registrant Investor and BEA 24
Associates (BEA International Equity Investor Portfolio).
(ll) Co-Administration Agreement between Registrant and BEA Associates 24
(BEA International Equity Advisor Portfolio).
(mm) Co-Administration Agreement between Registrant and BEA Associates 24
(BEA Emerging Markets Equity Investor Portfolio).
(nn) Co-Administration Agreement between Registrant and BEA Associates 24
(BEA Emerging Markets Equity Advisor Portfolio).
(oo) Co-Administration Agreement between Registrant and BEA Associates 24
(BEA High Yield Investor Portfolio).
<PAGE>
Page 10
(pp) Co-Administration Agreement between Registrant and BEA Associates 24
(BEA High Yield Advisor Portfolio).
(qq) Co-Administration Agreement between Registrant and BEA Associates 24
(BEA Global Telecommunications Investor Portfolio).
(rr) Co-Administration Agreement between Registrant and BEA Associates 24
(BEA Global Telecommunications Advisor Portfolio).
(ss) Transfer Agreement and Service Agreement between Registrant and 24
State Street Bank and Trust Company.
(tt) Administration and Accounting Services Agreement between the 27
Registrant and PFPC Inc. dated October 16, 1996 (Boston Partners
Large Cap Value Fund).
(uu) Transfer Agency Agreement Supplement between Registrant and PFPC Inc. 26
(Boston Partners Large Cap Value Fund, Institutional Class).
(vv) Transfer Agency Agreement Supplement between Registrant and PFPC Inc. 26
(Boston Partners Large Cap Value Fund, Investor Class).
(ww) Transfer Agency Agreement Supplement between Registrant and PFPC Inc. 26
(Boston Partners Large Cap Value Fund, Advisor Class).
(xx) Transfer Agency Agreement Supplement between Registrant and PFPC Inc., 28
(Boston Partners Mid Cap Value Fund, Institutional Class).
(yy) Transfer Agency Agreement Supplement between Registrant and PFPC Inc., 28
(Boston Partners Mid Cap Value Fund, Investor Class).
(zz) Administration and Accounting Services Agreement between Registrant 28
and PFPC Inc. dated, May 30, 1997 (Boston Partners Mid Cap Value Fund).
(aaa) Transfer Agency Agreement Supplement (n/i Larger Cap Value Fund) 31
between Registrant and PFPC, Inc. dated December 1, 1997.
(bbb) Administration and Accounting Services Agreement between Registrant 31
and PFPC, Inc. dated December 1, 1997 (n/i Larger Cap Value Fund).
(ccc) Co-Administration Agreement between Registrant and Bear Stearns Funds 31
Management, Inc. dated December 1, 1997 (n/i Larger Cap Value Fund).
(ddd) Administrative Services Agreement between Registrant and Counsellors 31
Fund Services, Inc. dated December 1, 1997 (n/i Larger Cap Value Fund)
<PAGE>
Page 11
(eee) Transfer Agency Agreement Supplement between Registrant and PFPC, Inc. 31
dated December 1, 1997 (Boston Partners Bond Fund, Institutional Class).
(fff) Transfer Agency Agreement Supplement between Registrant and PFPC, Inc. 31
dated December 1, 1997 (Boston Partners Bond Fund, Investor Class).
(ggg) Administration and Accounting Services Agreement between Registrant 31
and PFPC, Inc. dated December 1, 1997 (Boston Partners Bond Fund).
(hhh) Form of Administration and Accounting Services Agreement between 32
Registrant and PFPC Inc. (Schneider Capital Management Value Fund).
(iii) Form of Transfer Agency Agreement Supplement between Registrant and 32
PFPC Inc. (Schneider Capital Management Value Fund).
(jjj) Form of Administrative Services Agreement between Registrant and 32
Counsellors Fund Services, Inc. (Schneider Capital Management Value Fund).
<PAGE>
Page 12
(kkk) Form of Administration and Accounting Services Agreement between Registrant
and PFPC Inc. (BEA Long-Short Market Neutral Fund).
(lll) Form of Administration and Accounting Services Agreement between Registrant
and PFPC Inc. (BEA Long-Short Equity Fund).
(mmm) Form of Co-Administration Agreement between Registrant and BEA Associates
(BEA Long-Short Market Neutral Fund).
(nnn) Form of Co-Administration Agreement between Registrant and BEA Associates
(BEA Long-Short Equity Fund).
(ooo) Form of Transfer Agency Agreement Supplement between Registrant and State
Street Bank & Trust Company (BEA Long-Short Market Neutral Fund Institutional Class).
(ppp) Form of Transfer Agency Agreement Supplement between Registrant and State
Street Bank & Trust Company (BEA Long-Short Market Neutral Fund Advisor Class).
(qqq) Form of Transfer Agency Agreement Supplement between Registrant and State
Street Bank & Trust Company (BEA Long-Short Equity Fund Institutional Class).
(rrr) Form of Transfer Agency Agreement Supplement between Registrant and State
Street Bank & Trust Company (BEA Long-Short Equity Fund Advisor Class).
(sss) Form of Administrative Services Agreement between Registrant and
Counsellors Fund Services, Inc. (BEA Long-Short Market Neutral Fund).
(ttt) Form of Administrative Services Agreement between Registrant and
Counsellors Fund Services, Inc. (BEA Long-Short Equity Fund).
(10) Opinion and Consent of Counsel.
(11) (a) Consent of Drinker Biddle & Reath LLP.
(12) None.
(13) (a) Subscription Agreement (relating to Classes A through N). 2
(b) Subscription Agreement between Registrant and Planco Financial
Services, Inc., relating to Classes O and P. 7
(c) Subscription Agreement between Registrant and Planco Financial
Services, Inc., relating to Class Q. 7
<PAGE>
Page 13
(d) Subscription Agreement between Registrant and Counsellors Securities 9
Inc. relating to Classes R, S, and Alpha 1 through Theta 4.
(e) Subscription Agreement between Registrant and Counsellors Securities 10
Inc. relating to Classes T, U and V.
(f) Subscription Agreement between Registrant and Counsellor's Securities 18
Inc. relating to Classes BB and CC.
(g) Purchase Agreement between Registrant and Numeric Investors, L.P. 23
relating to Class FF (n/i Micro Cap Fund).
(h) Purchase Agreement between Registrant and Numeric Investors, L.P. 23
relating to Class GG (n/i Growth Fund).
(i) Purchase Agreement between Registrant and Numeric Investors, L.P. 23
relating to Class HH (n/i Growth & Value Fund).
(j) Subscription Agreement between Registrant and Counsellors Securities, 24
Inc. relating to Classes II through PP.
(k) Purchase Agreement between Registrant and Boston Partners Asset 27
Management, L.P. relating to Classes QQ, RR and SS (Boston Partners
Large Cap Value Fund).
(l) Purchase Agreement between Registrant and Boston Partners Asset 28
Management, L.P. relating to Classes TT and UU (Boston Partners
Mid Cap Value Fund).
(m) Purchase Agreement between Registrant and Boston Partners Asset 31
Management L.P.relating to Classes VV and WW (Boston Partners Bond Fund).
(n) Purchase Agreement between Registrant and Numeric Investors, L.P. 31
relating to Class XX (n/i Larger Cap Value Fund).
(o) Form of Purchase Agreement between Registrant and BEA Associates relating
to Classes ZZ and AAA (BEA Long-Short Market Neutral Fund).
(p) Form of Purchase Agreement between Registrant and BEA Associates relating
to Classes BBB and CCC (BEA Long-Short Equity Fund).
(14) None.
(15) (a) Plan of Distribution (Sansom Street Money Market). 3
(b) Plan of Distribution (Sansom Street Tax-Free Money Market). 3
(c) Plan of Distribution (Sansom Street Government Obligations Money Market). 3
(d) Plan of Distribution (Cash Preservation Money). 3
(e) Plan of Distribution (Cash Preservation Tax-Free Money Market). 3
(f) Plan of Distribution (Bedford Money Market). 3
(g) Plan of Distribution (Bedford Tax-Free Money Market). 3
<PAGE>
Page 14
(h) Plan of Distribution (Bedford Government Obligations Money Market). 3
(i) Plan of Distribution (Income Opportunities High Yield). 7
(j) Amendment No. 1 to Plans of Distribution (Classes A through Q). 8
(k) Plan of Distribution (Alpha (now known as Janney) Money Market). 9
(l) Plan of Distribution (Alpha (now known as Janney) Tax-Free Money 9
Market (now known as the Municipal Money Market)).
(m) Plan of Distribution (Alpha (now known as Janney) Government 9
Obligations Money Market).
(n) Plan of Distribution (Alpha (now known as Janney) New York 9
Municipal Money Market).
(o) Plan of Distribution (Beta Money Market). 9
(p) Plan of Distribution (Beta Tax-Free Money Market). 9
(q) Plan of Distribution (Beta Government Obligations Money Market). 9
(r) Plan of Distribution (Beta New York Money Market). 9
(s) Plan of Distribution (Gamma Money Market). 9
(t) Plan of Distribution (Gamma Tax-Free Money Market). 9
(u) Plan of Distribution (Gamma Government Obligations Money Market). 9
(v) Plan of Distribution (Gamma New York Municipal Money Market). 9
(w) Plan of Distribution (Delta Money Market). 9
(x) Plan of Distribution (Delta Tax-Free Money Market). 9
(y) Plan of Distribution (Delta Government Obligations Money Market). 9
(z) Plan of Distribution (Delta New York Municipal Money Market). 9
(aa) Plan of Distribution (Epsilon Money Market). 9
(bb) Plan of Distribution (Epsilon Tax-Free Money Market). 9
(cc) Plan of Distribution (Epsilon Government Municipal Money Market). 9
(dd) Plan of Distribution (Epsilon New York Municipal Money Market). 9
(ee) Plan of Distribution (Zeta Money Market). 9
(ff) Plan of Distribution (Zeta Tax-Free Money Market). 9
<PAGE>
Page 15
(gg) Plan of Distribution (Zeta Government Obligations Money Market). 9
(hh) Plan of Distribution (Zeta New York Municipal Money Market). 9
(ii) Plan of Distribution (Eta Money Market). 9
(jj) Plan of Distribution (Eta Tax-Free Money Market). 9
(kk) Plan of Distribution (Eta Government Obligations Money Market). 9
(ll) Plan at Distribution (Eta New York Municipal Money Market). 9
(mm) Plan of Distribution (Theta Money Market). 9
(nn) Plan of Distribution (Theta Tax-Free Money Market). 9
(oo) Plan of Distribution (Theta Government Obligations Money Market). 9
(pp) Plan of Distribution (Theta New York Municipal Money Market). 9
(qq) Plan of Distribution (BEA International Equity Investor). 24
(rr) Plan of Distribution (BEA International Equity Advisor). 24
(ss) Plan of Distribution (BEA Emerging Markets Equity Investor). 24
(tt) Plan of Distribution (BEA Emerging Markets Equity Advisor). 24
(uu) Plan of Distribution (BEA High Yield Investor). 24
(vv) Plan of Distribution (BEA High Yield Advisor). 24
(ww) Plan of Distribution (BEA Global Telecommunications Investor). 24
(xx) Plan of Distribution (BEA Global Telecommunications Advisor). 24
(yy) Plan of Distribution (Boston Partners Large Cap Value Fund 26
Institutional Class)
(zz) Plan of Distribution (Boston Partners Large Cap Value Fund Investor Class) 27
(aaa) Plan of Distribution (Boston Partners Large Cap Value Fund Advisor Class) 27
(bbb) Plan of Distribution (Boston Partners Mid Cap Value Fund Investor Class) 27
(ccc) Plan of Distribution (Boston Partners Mid Cap Value Fund Institutional Class) 27
(ddd) Plan of Distribution (Boston Partners Bond Fund Institutional Class). 31
<PAGE>
Page 16
(eee) Plan of Distribution (Boston Partners Bond Fund Investor Class). 31
(fff) Form of Plan of Distribution Pursuant to Rule 12b-1 (BEA Long-Short
Equity Fund Advisor Class).
(ggg) Form of Plan of Distribution Pursuant to Rule 12b-1 (BEA Long-Short
Market Neutral Fund Advisor Class).
(16) (a) Schedule for Computation of Performance Quotations for the Money
Market and Boston Partners Portfolios. 29
(b) Schedule for Computation of Performance Quotations for the BEA Portfolios. 30
(c) Schedule for Computation of Performance Quotations for the n/i Portfolios. 31
(17) Not Applicable.
(18) Form of Amended Rule 18f-3 Plan
</TABLE>
NOTE #
- ------
1 Incorporated herein by reference to the same exhibit number of Registrant's
Registration Statement (No. 33-20827) filed on March 24, 1988.
2 Incorporated herein by reference to the same exhibit number of
Pre-Effective Amendment No. 2 to Registrant's Registration Statement (No.
33-20827) filed on July 12, 1988.
3 Incorporated herein by reference to the same exhibit number of
Post-Effective Amendment No. 1 to Registrant's Registration Statement (No.
33-20827) filed on March 23, 1989.
4 Incorporated herein by reference to the same exhibit number of
Post-Effective Amendment No. 2 to Registrant's Registration Statement (No.
33-20827) filed on October 25, 1989.
5 Incorporated herein by reference to the same exhibit number of
Post-Effective Amendment No. 3 to the Registrant's Registration Statement
(No. 33-20827) filed on April 27, 1990.
6 Incorporated herein by reference to the same exhibit number of
Post-Effective Amendment No. 4 to the Registrant's Registration Statement
(No. 33-20827) filed on May 1, 1990.
7 Incorporated herein by reference to the same exhibit number of
Post-Effective Amendment No. 5 to the Registrant's Registration Statement
(No. 33-20827) filed on December 14, 1990.
8 Incorporated herein by reference to the same exhibit number of
Post-Effective Amendment No. 6 to the Registrant's Registration Statement
(No. 33-20827) filed on October 24, 1991.
9 Incorporated herein by reference to the same exhibit number of
Post-Effective Amendment No. 7 to the Registrant's Registration Statement
(No. 33-20827) filed on July 15, 1992.
10 Incorporated herein by reference to the same exhibit number of
Post-Effective Amendment No. 8 to the Registrant's Registration Statement
(No. 33-20827) filed on October 22, 1992.
11 Incorporated herein by reference to the same exhibit number of
Post-Effective Amendment No. 9 to the Registrant's Registration Statement
(No. 33-20827) filed on December 16, 1992.
<PAGE>
Page 17
12 Incorporated herein by reference to the same exhibit number of
Post-Effective Amendment No. 11 to the Registrant's Registration Statement
(No. 33-20827) filed on June 21, 1993.
13 Incorporated herein by reference to the same exhibit number Post-Effective
Amendment No. 12 to the Registrant's Registration Statement (No. 33-20827)
filed on July 27, 1993.
14 Incorporated herein by reference to the same exhibit number of
Post-Effective Amendment No. 13 to the Registrant's Registration Statement
(No. 33-20827) filed on October 29, 1993.
15 Incorporated herein by reference to the same exhibit number of
Post-Effective Amendment No. 14 to the Registrant's Registration Statement
(No. 33-20827) filed on December 21, 1993.
16 Incorporated herein by reference to the same exhibit number of
Post-Effective Amendment No. 19 to the Registrant's Registration Statement
(No. 33-20827) filed on October 14, 1994.
17 Incorporated herein by reference to the same exhibit number of
Post-Effective Amendment No. 20 to the Registrant's Registration Statement
(No. 33-20827) filed on October 21, 1994.
18 Incorporated herein by reference to the same exhibit number of
Post-Effective Amendment No. 21 to the Registrant's Registration Statement
(No. 33-20827) filed on October 28, 1994.
19 Incorporated herein by reference to the same exhibit number of
Post-Effective Amendment No. 22 to the Registrant's Registration Statement
(No. 33-20827) filed an December 19, 1994.
20 Incorporated herein by reference to the same exhibit number of
Post-Effective Amendment No. 27 to the Registrant's Registration Statement
(No. 33-20827) filed on March 31, 1995.
21 Incorporated herein by reference to the same exhibit number of
Post-Effective Amendment No. 28 to the Registrant's Registration Statement
(No. 33-20827) filed on October 6, 1995.
22 Incorporated herein by reference to the same exhibit number of
Post-Effective Amendment No. 29 to the Registrant's Registration Statement
(No. 33-20827) filed on October 25, 1995.
23 Incorporated herein by reference to the same exhibit number of
Post-Effective Amendment No. 34 to the Registrant's Registration Statement
(No. 33-20827) filed on May 16, 1996.
24 Incorporated herein by reference to the same exhibit number of
Post-Effective Amendment No. 37 to the Registrant's Registration Statement
(No. 33-20827) filed July 30, 1996.
25 Incorporated herein by reference to the same exhibit number of
Post-Effective Amendment No. 39 to the Registrant's Registration Statement
(No. 33-20827) filed on October 11, 1996.
26 Incorporated herein by reference to the same exhibit number of
Post-Effective Amendment No. 41 to the Registrant's Registration Statement
(No. 33-20827) filed on November 27, 1996.
27 Incorporated herein by reference to the same exhibit number of
Post-Effective Amendment No. 45 to the Registrant's Registration Statement
(No. 33-20827) filed on May 9, 1997.
28 Incorporated herein by reference to the same exhibit number of
Post-Effective Amendment No. 46 to the Registrant's Registration Statement
(33-20827) filed on September 25, 1997.
29 Incorporated herein by reference to the same exhibit number of
Post-Effective Amendment No. 49 to the Registrant's Registration Statement
(33-20827) filed on December 1, 1997.
30 Incorporated herein by reference to the same exhibit number of
Post-Effective Amendment No. 50 to the Registrant's Registration Statement
(33-20827) filed on December 8, 1997.
31 Incorporated herein by reference to the same exhibit number of
Post-Effective Amendment No. 51 to the Registrant's Registration Statement
(33-20827) filed on December 8, 1997.
<PAGE>
Page 18
32 Incorporated herein by reference to the same exhibit number of Post-
Effective Amendment No. 52 to the Registrant's Registration Statement (33-20827)
filed on January 23, 1998.
Item 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT
None.
Item 26. NUMBER OF HOLDERS OF SECURITIES
The following information is given as of March 31, 1998.
<TABLE>
<CAPTION>
TITLE OF CLASS OF COMMON STOCK NUMBER OF RECORD HOLDERS
- ------------------------------ ------------------------
<S> <C>
a) Cash Preservation Money Market 40
b) Cash Preservation Municipal Money Market 56
c) Sansom Street Money Market 3
d) Sansom Street Municipal Money Market 0
e) Sansom Street Government Obligations Money Market 0
f) Bedford Money Market 93063
g) Bedford New York Municipal Money Market 3234
h) RBB Government Securities 500
i) Bedford Municipal Money Market 4441
j) Bedford Government Obligations Money Market 3266
k) BEA International Equity - Institutional Class 273
l) BEA International Equity - Investor Class 0
m) BEA International Equity - Advisor Class 11
n) BEA High Yield - Institutional Class 72
o) BEA High Yield - Investor Class 0
p) BEA High Yield - Advisor Class 11
q) BEA Emerging Markets Equity - Institutional Class 23
r) BEA Emerging Markets Equity - Investor Class 0
s) BEA Emerging Markets Equity - Advisor Class 8
t) BEA U.S. Core Equity 63
u) BEA U.S. Core Fixed Income 59
v) BEA Strategic Global Fixed Income 15
w) BEA Municipal Bond Fund 35
x) BEA Short Duration 0
y) BEA Balanced 0
z) BEA Global Telecommunications - Investor Class 0
aa) BEA Global Telecommunications - Advisor Class 23
bb) Janney Montgomery Scott
Money Market 103789
cc) Janney Montgomery Scott
Municipal Money Market 4357
dd) Janney Montgomery Scott
Government Obligations Money Market 33852
ee) Janney Montgomery Scott
New York Municipal Money Market 1383
ff) ni Micro Cap 3535
gg) ni Growth 3437
hh) ni Growth & Value 5005
ii) ni Larger Cap Value 438
jj) Boston Partners Large Cap Value Fund - Institutional
Class 39
kk) Boston Partners Large Cap Value Fund - Investor Class 38
ll) Boston Partners Large Cap Value Fund - Advisor Class 0
mm) Boston Partners Mid Cap Value Fund - Investor Class 40
nn) Boston Partners Mid Cap Value Fund - Institutional Class 54
oo) Boston Partners Premium Bond - Institutional Class 4
<PAGE>
Page 19
pp) Boston Partners Premium Bond - Investor Class 2
</TABLE>
Item 27. INDEMNIFICATION
Sections 1, 2, 3 and 4 of Article VIII of Registrant's Articles of
Incorporation, as amended, incorporated herein by reference as Exhibits 1(a) and
1(c), provide as follows:
Section 1. To the fullest extent that limitations on the
liability of directors and officers are permitted by the Maryland General
Corporation Law, no director or officer of the Corporation shall have any
liability to the Corporation or its shareholders for damages. This limitation on
liability applies to events occurring at the time a person serves as a director
or officer of the Corporation whether or not such person is a director or
officer at the time of any proceeding in which liability is asserted.
Section 2. The Corporation shall indemnify and advance expenses
to its currently acting and its former directors to the fullest extent
that indemnification of directors is permitted by the Maryland General
Corporation Law. The Corporation shall indemnify and advance expenses
to its officers to the same extent as its directors and to such
further extent as is consistent with law. The Board of Directors may
by law, resolution or agreement make further provision for
indemnification of directors, officers, employees and agents to the
fullest extent permitted by the Maryland General Corporation law.
Section 3. No provision of this Article shall be effective to
protect or purport to protect any director or officer of the
Corporation against any liability to the Corporation or its security
holders to which he would otherwise be subject by reason of willful
misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of his office.
Section 4. References to the Maryland General Corporation Law in
this Article are to the law as from time to time amended. No further
amendment to the Articles of Incorporation of the Corporation shall
decrease, but may expand, any right of any person under this Article
based on any event, omission or proceeding prior to such amendment.
Insofar as indemnification for liability arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
Registrant pursuant to the foregoing provisions, or otherwise, Registrant has
been advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by Registrant of expenses incurred or
paid by a director, officer or controlling person of Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, Registrant will, unless in the opinion of its counsel the matter has
been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
Item 28. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER
Information as to any other business, profession, vocation or
employment of substantial nature in which any directors and officers of PIMC,
BEA, Numeric, Boston Partners and Schneider Capital Management are, or at any
time during the past two (2) years have been, engaged for their own accounts or
in the capacity of director, officer, employee, partner or trustee is
incorporated herein by reference to Schedules A and D of PIMC's FORM ADV (File
No. 801-13304) filed on March 28, 1997, Schedules B and D of BEA's FORM ADV
(File No. 801-37170) filed on March 31, 1997, Schedules B and D of Numeric's
FORM ADV (File No. 801-35649) filed on March 27, 1997, Schedules of Boston
Partners' FORM ADV (File No. 801-49059) filed on July 17, 1997, and Schedules B
and D of Schneider Capital Management's FORM ADV (File No. 801-52502) filed on
July 16, 1996, respectively.
There is set forth below information as to any other business,
profession, vocation or employment of a substantial nature in which each
director or officer of PNC Bank, National Association (successor by merger to
Provident National Bank) ("PNC Bank"), is, or at any time during the past two
years has been, engaged for his own account or in the capacity of director,
officer, employee, partner or trustee.
<PAGE>
Page 20
PNC BANK, NATIONAL ASSOCIATION
DIRECTORS
<TABLE>
<CAPTION>
POSITION WITH TYPE
PNC BANK NAME OTHER BUSINESS CONNECTIONS OF BUSINESS
- ------------- ---- -------------------------- -----------
<S> <C> <C> <C>
Director B.R. Brown President and C.E.O. of Coal
Consol, Inc.
Consol Plaza
1800 Washington Road
Pittsburgh, PA 15241
Director Constance E. Clayton Associate Dean Medical
Allegheny University of
the Health Sciences
Bellet Bldg.
1505 Race Street-Mail Stop 660
Philadelphia, PA 19102
Director Eberhard Faber IV Chairman and C.E.O. Manufacturing
E.F.L., Inc.
1220 Mellon Bank Bldg.
8 W. Market Street
Wilkes-Barre, PA 18701
Director Dr. Stuart Heydt President and C.E.O. Medical
Geisinger Health System
Commerce Court, Suite 300
2601 Market Place
Harrisburg, PA 17110-9603
Director Edward P. Junker, III Retired Vice Chairman Banking
PNC Bank, N.A.
901 State Street, P.O. Box 8480
Erie, PA 16553
Director Thomas A. McConomy President, C.E.O. and Manufacturing
Chairman, Calgon Carbon Corp.
413 Woodland Road
Sewickley, PA 15143
Director Thomas H. O'Brien Chairman and CEO Banking
PNC Bank Corp.
One PNC Plaza, 249 Fifth Avenue
Pittsburgh, PA 15227-2707
Director Rocco A. Ortenzio Chairman and C.E.O. Medical
Select Medical Corporation
4718 Old Gettysburg Road
P.O. Box 2034
Mechanicsburg, PA 17055
Director Robert C. Robb, Jr. President, Lewis, Eckert, Robb Financial and Management
& Company Consultants
425 One Plymouth Meeting
Plymouth Meeting, PA 19462
<PAGE>
Page 21
</TABLE>
<TABLE>
<CAPTION>
POSITION WITH TYPE
PNC BANK NAME OTHER BUSINESS CONNECTIONS OF BUSINESS
- ------------- ---- -------------------------- -----------
<S> <C> <C> <C>
Director James E. Rohr President and C.E.O. Bank Holding
PNC Bank, N.A. Company
One PNC Plaza, 30th Floor
Pittsburgh, PA 15265
Director Daniel M. Rooney President, Pittsburgh Steelers Football
Football Club of the National
Football League
300 Stadium Circle
Pittsburgh, PA 15212
Director Seth E. Schofield Chairman Airline
Base International
1479 Painters Run Road
Pittsburgh, PA 15241
</TABLE>
PNC BANK, NATIONAL ASSOCIATION
OFFICERS
James C. Altman Senior Vice President
Terry D. Amore Senior Vice President
Edward V. Arbaugh, III Senior Vice President
Robert Jones Arnold Senior Vice President
James N. Atteberry Senior Vice President
Lila M. Bachelier Senior Vice President
James C. Baker Senior Vice President
R. Perrin Baker Chief Market Counsel, Northwest PA
James R. Bartholomew Senior Vice President
Peter R. Begg Senior Vice President
Constance A. Bentzen Senior Vice President
Donald G. Berdine Senior Vice President
Ben Berzin, Jr. Senior Vice President
<PAGE>
Page 22
James H. Best Senior Vice President
Paul A. Best Senior Vice President
Michael J. Beyer Senior Vice President
R. Bruce Bickel Senior Vice President
Karen E. Blair Senior Vice President
Ronald R. Blankenbuehler Senior Vice President
Eva T. Blum Senior Vice President
Ronald L. Bovill Senior Vice President
George Brikis Executive Vice President
Dennis P. Brenckle Regional President, Central PA Market
Michael Brundage Senior Vice President
Donna L. Burge Senior Vice President
Jane Wilson Burks Senior Vice President
Douglas H. Burr Senior Vice President
David D. Burrow Senior Vice President
Anthony J. Cacciatore Senior Vice President
Richard C. Caldwell Executive Vice President
Craig T. Campbell Senior Vice President
William L. Campbell Senior Vice President
J. Richard Carnall Executive Vice President
Donald R. Carroll Senior Vice President
Edward V. Caruso Executive Vice President
Kevin J. Cecil Senior Vice President
Rhonda S. Chatzkel Senior Vice President
Chaomei Chen Senior Vice President
Sandra Chickeletti Assistant Secretary
Thomas P. Ciak Assistant Secretary
Peter K. Classen Regional President, PNC Bank,
Northeast, Pa
James P. Conley Senior Vice President/Credit Policy
<PAGE>
Page 23
Andra D. Cochran Senior Vice President
William Harvey Coggin Senior Vice President
Sharon Coghlan Coordinating Market Chief Counsel,
Philadelphia
John F. Colligan Senior Vice President
James P. Conley Senior Vice President
C. David Cook Senior Vice President
Robert F. Crouse Senior Vice President
Peter M. Crowley Senior Vice President
Keith P. Crytzer Senior Vice President
John J. Daggett Senior Vice President
Peter J. Danchak Senior Vice President
Richard Devore Senior Vice President
James N. Devries Senior Vice President
Anuj Dhanda Senior Vice President
Victor M. DiBattista Chief Regional Counsel
Frank H. Dilenschneider Senior Vice President
Thomas C. Dilworth Senior Vice President
Alfred J. DiMatties Senior Vice President
Robert D. Edwards Senior Vice President
Tawana L. Edwards Senior Vice President
David J. Egan Senior Vice President
Richard M. Ellis Senior Vice President
Lynn Fox Evans Senior Vice President & Controller
William E. Fallon Senior Vice President
James M. Ferguson, III Senior Vice President
Charles J. Ferrero Senior Vice President
Frederick C. Frank, III Executive Vice President
William J. Friel Executive Vice President
Brian K. Garlock Senior Vice President
Leigh Gerstenberger Senior Vice President
<PAGE>
Page 24
Donald W. Giffin, Jr. Senior Vice President
Richard C. Grace Senior Vice President
James G. Graham Executive Vice President
Craig Davidson Grant Senior Vice President
Barbara J. Griec Senior Vice President
Thomas M. Groneman Senior Vice President
Thomas Grundman Senior Vice President
John C. Haller Regional President, Ohio Market
Michael J. Hannon Senior Vice President
Michael N. Harreld Regional President, Kentucky Market
Michael J. Harrington Senior Vice President
Maurice H. Hartigan, II Executive Vice President
G. Thomas Hewes Senior Vice President
Gregory A. Hoeck Executive Vice President
Susan G. Holt Senior Vice President
Sylvan M. Holzer Regional President, Pittsburgh Market
William D. Hummel Senior Vice President
Wayne P. Hunley Senior Vice President
John M. Infield Senior Vice President
S. Terry Irvin Executive Vice President
Philip C. Jackson Senior Vice President
Lawrence W. Jacobs Senior Vice President
Robert Greg Jenkins Senior Vice President
William J. Johns Controller
Craig M. Johnson Senior Vice President, Comptroller
Eric C. Johnson Senior Vice President
William R. Johnson Audit Director
Edward C. Johnson Senior Vice President
Robert D. Kane, Jr. Senior Vice President
<PAGE>
Page 25
Jack Kelly Senior Vice President
Michael D.Kelsey Chief Compliance Counsel
Geoffrey R. Kimmel Senior Vice President
Randall C. King Senior Vice President
James M. Kinsman, Jr. Senior Vice President
Christopher M. Knoll Senior Vice President
William Kosis Executive Vice President
Richard C. Krauss Senior Vice President
Frank R. Krepp Senior Vice President & Chief Credit
Policy Officer
Thomas F. Lamb Senior Vice President
Kenneth P. Leckey Senior Vice President & Cashier
Marilyn R. Levins Senior Vice President
Carl J. Lisman Executive Vice President
Richard J. Lovett Senior Vice President
Stephen F. Lugarich Senior Vice President
Brian S. MacConnell Senior Vice President
Jane E. Madio Senior Vice President
Linda R. Manfredonia Senior Vice President
Nicholas M. Marsini, Jr. Senior Vice President
John A. Martin Senior Vice President
David O. Matthews Senior Vice President
Dennis McChesney Executive Vice President
Walter B. McClellan Senior Vice President
James F. McGowan Senior Vice President
Timothy McInerney Senior Vice President
Charlotte B. McLaughlin Senior Vice President
Kim D. McNeil Senior Vice President
Charles R. McNutt Senior Vice President
<PAGE>
Page 26
James W. Meighen Senior Vice President
James C. Mendelson Senior Vice President
Theodore Lang Merhoff Senior Vice President
Darryl Metzger Senior Vice President
Scott C. Meves Senior Vice President
Ralph S. Michael, III Executive Vice President
James P. Mikula Senior Vice President
Robert J. Miller, Jr. Senior Vice President
Melanie Millican Senior Vice President
Robert G. Mills Assistant Secretary
J. William Mills, III Senior Vice President
Francine Miltenberger Senior Vice President
Chester A. Misbach Senior Vice President
Barbara A. Misner Senior Vice President
D. Bryant Mitchell, II Executive Vice President
Michael D. Moll Senior Vice President
Christopher N. Moravec Senior Vice President
Thomas R. Moore Vice President and Secretary
Marlene D. Mosco Regional President Northwest PA Market
Peter F. Moylan Senior Vice President
Ronald J. Murphy Executive Vice President
Saiyid T. Naqvi Executive Vice President
Michael B. Nelson Executive Vice President
Jill V. Niedweske Senior Vice President
Thomas J. Nist Senior Vice President
John L. Noelcke Senior Vice President
Thomas H. O'Brien Chairman
Cynthia G. Osofsky Senior Vice President
Thomas E. Paisley, III Senior Vice President
Daniel J. Pavlick Senior Vice President
<PAGE>
Page 27
David M. Payne Senior Vice President
John Pendergrass Senior Vice President
W. David Pendl Senior Vice President
Stephen D. Penn Senior Vice President
Frank Pomor Senior Vice President
Helen P. Pudlin Senior Vice President
Wayne Pulliam Senior Vice President
Arthur F. Radman, III Senior Vice President
Gordon L. Ragan Senior Vice President
Edward E. Randall Senior Vice President
Robert Q. Reilly Senior Vice President
Jesse S. Reinhardt Senior Vice President
Ronald J. Retzler Senior Vice President
Richard C. Rhoades Senior Vice President
Charles M. Rhodes, Jr. Senior Vice President
Rodger L. Rickenbrode Senior Vice President
Bryan W. Ridley Senior Vice President
W. Alton Roberts Senior Vice President
James E. Rohr President and Chief Executive Officer
James C. Rooks Senior Vice President
Peter M. Ross Senior Vice President
Suzanne C. Ross Senior Vice President
Gerhard Royer Senior Vice President
Robert T. Saltarelli Senior Vice President
Robert V. Sammartino Senior Vice President
William Sayre, Jr. Senior Vice President
Stephen C. Schatterman Senior Vice President
Peter H. Schryver Senior Vice President
Richard A. Seymour Senior Vice President
<PAGE>
Page 28
Timothy G. Shack Senior Vice President
Douglas E. Shaffer Senior Vice President
Bruce Shipley Senior Vice President
Alfred A. Silva Executive Vice President
George R. Simon Senior Vice President
J. Max Smith Senior Vice President
Richard L. Smoot President and CEO of PNC Bank,
Philadelphia
Timothy N. Smyth Senior Vice President
Richard R. Soeder Senior Vice President
Darcel H. Steber Senior Vice President
Melvin A. Steele Senior Vice President
Richard Stegemeier Senior Vice President
Ted K. Stirgwolt Senior Vice President
Donald N. Stolper Executive Vice President
Connie Bond Stuart Senior Vice President
Lon E. Susak Senior Vice President
Stephen L. Swanson Executive Vice President
Ronald L. Tassone Senior Vice President
Frank A. Taucher Senior Vice President
John T. Taylor Senior Vice President
Peter W. Thompson Senior Vice President
Jane B. Tompkins Senior Vice President
Alex T. Topping Senior Vice President
Kevin M. Tucker Senior Vice President
William H. Turner Regional President, Northern
New Jersey Market
William Thomps Tyrrell Senior Vice President
Alan P. Vail Senior Vice President
Michael B. Vairin Senior Vice President
Ellen G. Vander Horst Executive Vice President
<PAGE>
Page 29
Ronald H. Vicari Senior Vice President
Patrick M. Wallace Senior Vice President
Bruce E. Walton Executive Vice President
Annette M. Ward-Kredel Senior Vice President
Leonard A. Watkins Senior Vice President
Frances A. Wilkinson Assistant Secretary
Robert S. Wrath Senior Vice President
Mark F. Wheeler Senior Vice President
George Whitmer Senior Vice President
Gary G. Wilson Senior Vice President
Nancy B. Wolcott Executive Vice President
Arlene M. Yocum Senior Vice President
Carole Yon Senior Vice President
George L. Ziminski, Jr. Senior Vice President
(1) PNC Bank, National Association, 120 S. 17th Street, Philadelphia, PA
19103 1600 Market Street, Philadelphia, PA 19103 17th and Chestnut
Streets, Philadelphia, PA 19103
(2) PNC National Bank, 103 Bellevue Parkway, Wilmington, DE 19809.
(3) PFPC Inc., 103 Bellevue Parkway, Wilmington, DE 19809.
(4) PNC Service Corp, 103 Bellevue Parkway, Wilmington, DE 19809.
(5) Provident Capital Management, Inc., 30 S. 17th Street, Suite 1500,
Philadelphia, PA 19103.
(6) PNC Investment Corp., Broad and Chestnut Street, Philadelphia, PA
19101.
(7) Provident Realty Management, Inc., Broad and Chestnut Streets,
Philadelphia, PA 19101.
(8) Provident Realty, Inc., Broad and Chestnut Streets, Philadelphia, PA
19101.
(9) PNC Bancorp, Inc., 222 Delaware Avenue, Wilmington, DE 19810
(10) PNC New Jersey Credit Corp, 1415 Route 70 East, Suite 604, Cherry Hill,
NJ 08034.
(11) PNC Trust Company of New York, 40 Broad Street, New York, NY 10084.
(12) Provcor Properties, Inc., Broad and Chestnut Streets, Philadelphia, PA
19101.
(13) PNC Credit Corp, 103 Bellevue Parkway, Wilmington, DE 19809.
<PAGE>
Page 30
(14) PNC Bank Corp., 5th Avenue and Wood Streets, Pittsburgh, PA 15265.
(15) PNC Bank, New Jersey, National Association, Woodland Falls Corporate
Park, 210 Lake Drive East, Cherry Hill, NJ 08002.
(16) PNC Capital Corp, 5th Avenue and Woods Streets, Pittsburgh, PA 15265.
(17) PNC Holding Corp, 222 Delaware Avenue, P.O. Box 791, Wilmington, DE
19899.
(18) PNC Venture Corp, 5th Avenue and Woods Streets, Pittsburgh, PA 15265.
(19) PNC Bank, Delaware, 300 Delaware Avenue, Wilmington, DE 19801.
(20) Bank of Delaware Corp., 300 Delaware Avenue, Wilmington, DE 19801.
(21) Del-Vest, Inc., 300 Delaware Avenue, Wilmington, DE 19801.
(22) Marand Corp., 222 Delaware Avenue, Wilmington, DE 19801.
(23) Millsboro Insurance Agency, 300 Delaware Avenue, Wilmington, DE 19801.
(24) Roney-Richards, Inc., 300 Delaware Avenue, Wilmington, DE 19801.
Item 29. PRINCIPAL UNDERWRITER
(a) Counsellors Securities Inc. (the "Distributor") acts as principal
underwriter for the following investment companies:
Warburg Pincus Cash Reserve Fund
Warburg Pincus New York Tax Exempt Fund
Warburg Pincus New York Intermediate Municipal Fund
Warburg Pincus Intermediate Maturity Government Fund
Warburg Pincus Fixed Income Fund
Warburg Pincus Global Fixed Income Fund
Warburg Pincus Capital Appreciation Fund
Warburg Pincus Emerging Growth Fund
Warburg Pincus International Equity Fund
Warburg Pincus Japan OTC Fund
Warburg Pincus Growth & Income Fund
Warburg Pincus Balanced Fund
Warburg Pincus Emerging Markets Fund
Warburg Pincus Global Post-Venture Capital Fund
Warburg Pincus Health Sciences Fund
Warburg Pincus Institutional Fund
Warburg Pincus Japan Growth Fund
Warburg Pincus Post-Venture Capital Fund
Warburg Pincus Small Company Growth Fund
Warburg Pincus Small Company Value Fund
Warburg Pincus Strategic Value Fund
Warburg Pincus Trust
Warburg Pincus Trust II
(b) The information required by this item 29(b) is incorporated by
reference to Form BD (SEC File No. 15-654) filed by the Distributor with
the Securities and Exchange Commission pursuant to the Securities
Exchange Act of 1934.
<PAGE>
Page 31
Item 30. LOCATION OF ACCOUNTS AND RECORDS
(1) PNC Bank, National Association (successor by merger to Provident
National Bank), 1600 Market Street, Philadelphia, PA 19103
(records relating to its functions as sub-adviser and custodian).
(2) Counsellors Securities Inc., 466 Lexington Avenue, New York, New
York 10017 (records relating to its functions as distributor).
(3) PNC Institutional Management Corporation, Bellevue Corporate
Center, 103 Bellevue Parkway, Wilmington, Delaware 19809 (records
relating to its functions as investment adviser, sub-adviser and
administrator).
(4) PFPC Inc., Bellevue Corporate Center, 400 Bellevue Parkway,
Wilmington, Delaware 19809 (records relating to its functions as
transfer agent and dividend disbursing agent).
(5) Drinker Biddle & Reath LLP, Philadelphia National Bank Building,
1345 Chestnut Street, Philadelphia, Pennsylvania 19107-3496
(Registrant's Articles of Incorporation, By-Laws and Minute
Books).
(6) BEA Associates, One Citicorp Center, 153 East 53rd Street, New
York, New York 10022 (records relating to its function as
investment adviser).
(7) Numeric Investors, L.P., 1 Memorial Drive, Cambridge,
Massachusetts 02142 (records relating to its function as
investment adviser).
(8) Boston Partners Asset Management, L.P., One Financial Center,
43rd Floor, Boston, Massachusetts 02111 (records relating to its
function as investment adviser).
(9) Schneider Capital Management Co., 460 East Swedesford Road, Suite
1080, Wayne, Pennsylvania 19087 (records relating to its function
as investment adviser).
Item 31. MANAGEMENT SERVICES
None.
Item 32. UNDERTAKINGS
(a) Registrant hereby undertakes to hold a meeting of shareholders
for the purpose of considering the removal of directors in the
event the requisite number of shareholders so request.
(b) Registrant hereby undertakes to furnish each person to whom a
prospectus is delivered a copy of Registrant's latest annual
reports to shareholders upon request and without charge.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, the Registrant certifies that it has duly caused this
Post-Effective Amendment No. 53 to its Registration Statement to be signed on
its behalf by the undersigned, thereunto duly authorized, in the City of
Wilmington, and State of Delaware, on the 10th day of April, 1998.
THE RBB FUND, INC.
By: /s/ Edward J. Roach
-------------------------
Edward J. Roach
President and Treasurer
Pursuant to the requirements of the Securities Act of 1933, this Post-
Effective Amendment No. 53 to Registrant's Registration Statement has been
signed below by the following persons in the capacities and on the date
indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/Edward J. Roach President (Principal Executive Officer) April 10, 1998
- ------------------------------ and Treasurer (Principal Financial
Edward J. Roach and Accounting Officer)
*/s/ Donald van Roden Director April 10, 1998
- ------------------------------
Donald van Roden
*/s/ Francis J. McKay Director April 10, 1998
- ------------------------------
Francis J. McKay
*/s/ Marvin E. Sternberg Director April 10, 1998
- ------------------------------
Marvin E. Sternberg
*/s/ Julian A. Brodsky Director April 10, 1998
- ------------------------------
Julian A. Brodsky
*/s/ Arnold M. Reichman Director April 10, 1998
- ------------------------------
Arnold M. Reichman
*/s/ Robert Sablowsky Director April 10, 1998
- ------------------------------
Robert Sablowsky
*By:/s/Edward J. Roach April 10, 1998
- ------------------------------
Edward J. Roach
Attorney-in-Fact
</TABLE>
<PAGE>
THE RBB FUND, INC.
(the "Company")
POWER OF ATTORNEY
Know All Men by These Presents, that the undersigned, Edward J. Roach,
hereby constitutes and appoints Michael P. Malloy, his true and lawful attorney,
to execute in his name, place, and stead, in his capacity as an officer of the
Company, the Registration Statement and any amendments thereto and all
instruments necessary or incidental in connection therewith, and to file the
same with the Securities and Exchange Commission; and said attorney shall have
full power and authority to do and perform in his name and on his behalf, in any
and all capacities, every act whatsoever requisite or necessary to be done in
the premises, as fully and to all intents and purposes as he might or could do
in person, said acts of said attorney being hereby ratified and approved.
DATED: April 23, 1997
/s/ Edward J. Roach
- ------------------------------
Edward J. Roach
<PAGE>
THE RBB FUND, INC.
(the "Company")
POWER OF ATTORNEY
Know All Men by These Presents, that the undersigned, Donald van
Roden, hereby constitutes and appoints Edward J. Roach and Michael P. Malloy,
his true and lawful attorneys, to execute in his name, place, and stead, in his
capacity as Director or officer, or both, of the Company, the Registration
Statement and any amendments thereto and all instruments necessary or incidental
in connection therewith, and to file the same with the Securities and Exchange
Commission; and said attorneys shall have full power and authority to do and
perform in his name and on his behalf, in any and all capacities, every act
whatsoever requisite or necessary to be done in the premises, as fully and to
all intents and purposes as he might or could do in person, said acts of said
attorneys being hereby ratified and approved.
DATED: April 23, 1997
/s/ Donald van Roden
- ------------------------------
Donald van Roden
<PAGE>
THE RBB FUND, INC.
(the "Company")
POWER OF ATTORNEY
Know All Men by These Presents, that the undersigned, Marvin E.
Sternberg, hereby constitutes and appoints Edward J. Roach and Michael P.
Malloy, his true and lawful attorneys, to execute in his name, place, and stead,
in his capacity as Director or officer, or both, of the Company, the
Registration Statement and any amendments thereto and all instruments necessary
or incidental in connection therewith, and to file the same with the Securities
and Exchange Commission; and said attorneys shall have full power and authority
to do and perform in his name and on his behalf, in any and all capacities,
every act whatsoever requisite or necessary to be done in the premises, as fully
and to all intents and purposes as he might or could do in person, said acts of
said attorneys being hereby ratified and approved.
DATED: April 23, 1997
/s/ Marvin E. Sternberg
- ------------------------------
Marvin E. Sternberg
<PAGE>
THE RBB FUND, INC.
(the "Company")
POWER OF ATTORNEY
Know All Men by These Presents, that the undersigned, Arnold Reichman,
hereby constitutes and appoints Edward J. Roach and Michael P. Malloy, his true
and lawful attorneys, to execute in his name, place, and stead, in his capacity
as Director or officer, or both, of the Company, the Registration Statement and
any amendments thereto and all instruments necessary or incidental in connection
therewith, and to file the same with the Securities and Exchange Commission; and
said attorneys shall have full power and authority to do and perform in his name
and on his behalf, in any and all capacities, every act whatsoever requisite or
necessary to be done in the premises, as fully and to all intents and purposes
as he might or could do in person, said acts of said attorneys being hereby
ratified and approved.
DATED: April 23, 1997
/s/ Arnold Reichman
- ------------------------------
Arnold Reichman
<PAGE>
THE RBB FUND, INC.
(the "Company")
POWER OF ATTORNEY
Know All Men by These Presents, that the undersigned, Francis J.
McKay, hereby constitutes and appoints Edward J. Roach and Michael P. Malloy,
his true and lawful attorneys, to execute in his name, place, and stead, in his
capacity as Director or officer, or both, of the Company, the Registration
Statement and any amendments thereto and all instruments necessary or incidental
in connection therewith, and to file the same with the Securities and Exchange
Commission; and said attorneys shall have full power and authority to do and
perform in his name and on his behalf, in any and all capacities, every act
whatsoever requisite or necessary to be done in the premises, as fully and to
all intents and purposes as he might or could do in person, said acts of said
attorneys being hereby ratified and approved.
DATED: April 23, 1997
/s/ Francis J. McKay
- ------------------------------
Francis J. McKay
<PAGE>
THE RBB FUND, INC.
(the "Company")
POWER OF ATTORNEY
Know All Men by These Presents, that the undersigned, Julian Brodsky,
hereby constitutes and appoints Edward J. Roach and Michael P. Malloy, his true
and lawful attorneys, to execute in his name, place, and stead, in his capacity
as Director or officer, or both, of the Company, the Registration Statement and
any amendments thereto and all instruments necessary or incidental in connection
therewith, and to file the same with the Securities and Exchange Commission; and
said attorneys shall have full power and authority to do and perform in his name
and on his behalf, in any and all capacities, every act whatsoever requisite or
necessary to be done in the premises, as fully and to all intents and purposes
as he might or could do in person, said acts of said attorneys being hereby
ratified and approved.
DATED: April 23, 1997
/s/ Julian Brodsky
- ------------------------------
Julian Brodsky
<PAGE>
THE RBB FUND, INC.
(the "Company")
POWER OF ATTORNEY
Know All Men by These Presents, that the undersigned, Robert
Sablowsky, hereby constitutes and appoints Edward J. Roach and Michael P.
Malloy, his true and lawful attorneys, to execute in his name, place, and stead,
in his capacity as Director or officer, or both, of the Company, the
Registration Statement and any amendments thereto and all instruments necessary
or incidental in connection therewith, and to file the same with the Securities
and Exchange Commission; and said attorneys shall have full power and authority
to do and perform in his name and on his behalf, in any and all capacities,
every act whatsoever requisite or necessary to be done in the premises, as fully
and to all intents and purposes as he might or could do in person, said acts of
said attorneys being hereby ratified and approved.
DATED: April 23, 1997
/s/ Robert Sablowsky
- ------------------------------
Robert Sablowsky
<PAGE>
THE RBB FUND, INC.
EXHIBIT INDEX
EXHIBITS
1(u) Form of Articles Supplementary relating to the BEA Long-Short
Market Neutral and BEA Long-Short Equity Funds.
5(bb) Form of Investment Advisory Agreement (BEA Long-Short Market
Neutral Fund) between Registrant and BEA Associates.
5(cc) Form of Investment Advisory Agreement (BEA Long-
Short Equity Fund) between Registrant and BEA
Associates.
6(pp) Form of Distribution Agreement Supplement (Classes ZZ and
AAA) between Registrant and Counsellors Securities, Inc.
6(qq) Form of Distribution Agreement Supplement (Classes BBB and CCC)
between Registrant and Counsellors Securities, Inc.
8(s) Form of Custodian Agreement between Registrant and Custodial
Trust Company on behalf of the BEA Long-Short Market Neutral Fund
and the BEA Long-Short Equity Fund.
9(kkk) Form of Administration and Accounting Services Agreement between
Registrant and PFPC Inc. (BEA Long-Short Market Neutral Fund).
9(lll) Form of Administration and Accounting Services Agreement between
Registrant and PFPC Inc. (BEA Long-Short Equity Fund).
9(mmm) Form of Co-Administration Agreement between Registrant and BEA
Associates (BEA Long-Short Market Neutral Fund).
9(nnn) Form of Co-Administration Agreement between Registrant and BEA
Associates (BEA Long-Short Equity Fund).
9(ooo) Form of Transfer Agency Agreement Supplement between Registrant
and State Street Bank & Trust Company (BEA Long-Short Market
Neutral Fund Institutional Class).
<PAGE>
9(ppp) Form of Transfer Agency Agreement Supplement between Registrant
and State Street Bank & Trust Company (BEA Long-Short Market
Neutral Fund Advisor Class).
9(qqq) Form of Transfer Agency Agreement Supplement between Registrant
and State Street Bank & Trust Company (BEA Long-Short Equity Fund
Institutional Class).
9(rrr) Form of Transfer Agency Agreement Supplement between Registrant
and State Street Bank & Trust Company (BEA Long-Short Equity Fund
Advisor Class).
9(sss) Form of Administrative Services Agreement between Registrant and
Counsellors Fund Services, Inc. (BEA Long-Short Market Neutral
Fund).
9(ttt) Form of Administrative Services Agreement between Registrant and
Counsellors Fund Services, Inc. (BEA Long-Short Equity Fund).
10 Opinion and Consent of Counsel.
11(a) Consent of Drinker Biddle & Reath LLP.
13(o) Form of Purchase Agreement between Registrant and BEA
Associates relating to Classes ZZ and AAA (BEA Long-Short
Market Neutral Fund).
13(p) Form of Purchase Agreement between Registrant and BEA
Associates relating to Classes BBB and CCC (BEA Long-Short
Equity Fund).
15(fff) Form of Plan of Distribution Pursuant to Rule 12b-1 (BEA
Long-Short Equity Fund Advisor Class).
15(ggg) Form of Plan of Distribution Pursuant to Rule 12b-1 (BEA
Long-Short Market Neutral Fund Advisor Class).
18(f) Form of Amended Rule 18f-3 Plan
<PAGE>
Page 1
THE RBB FUND, INC.
ARTICLES SUPPLEMENTARY TO THE
CHARTER
THE RBB FUND, INC., a Maryland corporation having its principal office
in Baltimore, Maryland (hereinafter called the "Corporation"), hereby certifies
to the State Department of Assessments and Taxation of Maryland that:
FIRST: The Board of Directors of the Corporation, an open-end
investment company registered under the Investment Company Act of 1940, as
amended, and having authorized capital of thirty billion (30,000,000,000) shares
of common stock, par value $.001 per share, has adopted a unanimous resolution
increasing the number of shares of common stock that are classified (but not
increasing the aggregate number of authorized shares) into separate classes by:
(1) classifying an additional one hundred million (100,000,000) of the
previously authorized, unissued and unclassified shares of the common
stock, par value $.001 per share, with an aggregate par value of one
hundred thousand dollars ($100,000), as Class ZZ Common Stock (BEA Long-
(1) Short Market Neutral Fund Institutional Class);
(2) classifying an additional one hundred million
<PAGE>
Page 2
(100,000,000) of the previously authorized, unissued and unclassified
shares of the common stock, par value $.001 per share, with an aggregate
par value of one hundred thousand dollars ($100,000), as Class AAA Common
Stock (BEA Long-Short Market Neutral Fund Advisor Class);
(3) classifying an additional one hundred million (100,000,000) of the
previously authorized, unissued and unclassified shares of the common
stock, par value $.001 per share, with an aggregate par value of one
hundred thousand dollars ($100,000), as Class BBB Common Stock (BEA
Long-Short Equity Fund Institutional Class); and
(4) classifying an additional one hundred million (100,000,000) of the
previously authorized, unissued and unclassified shares of the common
stock, par value $.001 per share, with an aggregate par value of one
hundred thousand dollars ($100,000), as Class CCC Common Stock (BEA
Long-Short Equity Fund Advisor Class).
SECOND: A description of the shares so classified with the
preferences, conversion and other rights, voting powers, restrictions,
limitations as to dividends, qualifications and terms and conditions of
redemption as set or changed by the Board of Directors of the Corporation is as
follows:
A description of the preferences, conversion and other
<PAGE>
Page 3
rights, voting powers, restrictions, limitations as to dividends, qualifications
and terms and conditions or redemption of each class of common stock of the
Corporation is set forth in Article VI, Section (6) of the Corporation's
Charter, and has not been changed by the Board of Directors of the Corporation.
The shares of Classes ZZ, AAA, BBB and CCC Common Stock will be issued
without stock certificates.
THIRD: The shares aforesaid have been duly classified by the Board
of Directors of the Corporation pursuant to authority and power contained in the
charter of the Corporation.
FOURTH: Immediately before the increase in the number of shares of
common stock that have been classified into separate classes:
(a) the Corporation had authority to issue thirty billion
(30,000,000,000) shares of its common stock and the aggregate par value of all
the shares of all classes was thirty million dollars ($30,000,000);
(b) the number of shares of each authorized class of common
stock was as follows:
Class A - one hundred million (100,000,000), par value $.001 per share;
Class B - one hundred million (100,000,000), par value $.001 per share;
Class C - one hundred million (100,000,000), par value $.001 per share;
<PAGE>
Page 4
Class D - one hundred million (100,000,000), par value $.001 per share;
Class E - five hundred million (500,000,000), par value $.001 per share;
Class F - five hundred million (500,000,000), par value $.001 per share;
Class G - five hundred million (500,000,000), par value $.001 per share;
Class H - five hundred million (500,000,000), par value $.001 per share;
Class I - one billion (1,000,000,000), par value $.001 per share;
Class J - five hundred million (500,000,000), par value $.001 per share;
Class K - five hundred million (500,000,000), par value $.001 per share;
Class L - one billion five hundred million (1,500,000,000), par value $.001
per share;
Class M - five hundred million (500,000,000), par value $.001 per share;
Class N - five hundred million (500,000,000), par value $.001 per share;
Class O - five hundred million (500,000,000), par value $.001 per share;
Class P - one hundred million (100,000,000), par value $.001 per share;
Class Q - one hundred million (100,000,000), par value $.001 per
<PAGE>
Page 5
share;
Class R - five hundred million (500,000,000), par value $.001 per share;
Class S - five hundred million (500,000,000), par value $.001 per share;
Class T - five hundred million (500,000,000), par value $.001 per share;
Class U - five hundred million (500,000,000), par value $.001 per share;
Class V - five hundred million (500,000,000), par value $.001 per share;
Class W - one hundred million (100,000,000), par value $.001 per share;
Class X - fifty million (50,000,000), par value $.001 per share;
Class Y - fifty million (50,000,000), par value $.001 per share;
Class Z - fifty million (50,000,000), par value $.001 per share;
Class AA - fifty million (50,000,000), par value $.001 per share;
Class BB - fifty million (50,000,000), par value $.001 per share;
Class CC - fifty million (50,000,000), par value $.001 per share;
Class DD - one hundred million (100,000,000), par value $.001 per share;
Class EE - one hundred million (100,000,000), par value $.001 per share;
<PAGE>
Page 6
Class FF - fifty million (50,000,000), par value $.001 per share;
Class GG - fifty million (50,000,000), par value $.001 per share;
Class HH - fifty million (50,000,000), par value $.001 per share;
Class II - one hundred million (100,000,000), par value $.001 per share;
Class JJ - one hundred million (100,000,000), par value $.001 per share;
Class KK - one hundred million (100,000,000), par value $.001 per share;
Class LL - one hundred million (100,000,000), par value $.001 per share;
Class MM - one hundred million (100,000,000), par value $.001 per share;
Class NN - one hundred million (100,000,000), par value $.001 per share;
Class OO - one hundred million (100,000,000), par value $.001 per share;
Class PP - one hundred million (100,000,000), par value $.001 per share;
Class QQ - one hundred million (100,000,000), par value $.001 per share;
Class RR - one hundred million (100,000,000), par value $.001 per share;
<PAGE>
Page 7
Class SS - one hundred million (100,000,000), par value $.001 per share;
Class TT - one hundred million (100,000,000), par value $.001 per share;
Class UU - one hundred million (100,000,000), par value $.001 per share;
Class VV - one hundred million (100,000,000), par value $.001 per share;
Class WW - one hundred million (100,000,000), par value $.001 per share;
Class XX - fifty million (50,000,000), par value $.001 per share;
Class YY - one hundred million (100,000,000), par value $.001 per share;
Class Alpha 1 - seven hundred million (700,000,000), par value $.001 per
share;
Class Alpha 2 - two hundred million (200,000,000), par value $.001 per
share;
Class Alpha 3 - five hundred million (500,000,000), par value $.001 per
share;
Class Alpha 4 - one hundred million (100,000,000), par value $.001 per
share;
Class Beta 1 - one million (1,000,000), par value $.001 per share;
Class Beta 2 - one million (1,000,000), par value $.001 per share;
<PAGE>
Page 8
Class Beta 3 - one million (1,000,000), par value $.001 per share;
Class Beta 4 - one million (1,000,000), par value $.001 per share;
Class Gamma 1 - one million (1,000,000), par value $.001 per share;
Class Gamma 2 - one million (1,000,000), par value $.001 per share;
Class Gamma 3 - one million (1,000,000), par value $.001 per share;
Class Gamma 4 - one million (1,000,000), par value $.001 per share;
Class Delta 1 - one million (1,000,000), par value $.001 per share;
Class Delta 2 - one million (1,000,000), par value $.001 per share;
Class Delta 3 - one million (1,000,000), par value $.001 per share;
Class Delta 4 - one million (1,000,000), par value $.001 per share;
Class Epsilon 1 - one million (1,000,000), par value $.001 per share;
Class Epsilon 2 - one million (1,000,000), par value $.001 per share;
Class Epsilon 3 - one million (1,000,000), par value $.001 per share;
<PAGE>
Page 9
Class Epsilon 4 - one million (1,000,000), par value $.001 per share;
Class Zeta 1 - one million (1,000,000), par value $.001 per share;
Class Zeta 2 - one million (1,000,000), par value $.001 per share;
Class Zeta 3 - one million (1,000,000), par value $.001 per share;
Class Zeta 4 - one million (1,000,000), par value $.001 per share;
Class Eta 1 - one million (1,000,000), par value $.001 per share;
Class Eta 2 - one million (1,000,000) par value $.001 per share;
Class Eta 3 - one million (1,000,000), par value $.001 per share;
Class Eta 4 - one million (1,000,000), par value $.001 per share;
Class Theta 1 - one million (1,000,000), par value $.001 per share;
Class Theta 2 - one million (1,000,000), par value $.001 per share;
Class Theta 3 - one million (1,000,000), par value $.001 per share; and
Class Theta 4 - one million (1,000,000), par value $.001 per share;
<PAGE>
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for a total of thirteen billion nine hundred twenty-nine million
(13,929,000,000) shares classified into separate classes of common stock.
After the increase in the number of shares of common stock that have
been classified into separate classes:
(c) the Corporation has the authority to issue thirty billion
(30,000,000,000) shares of its common stock and the aggregate par value of all
the shares of all classes is now thirty million one hundred thousand dollars
($30,100,000); and
(d) the number of authorized shares of each class is now as
follows:
Class A - one hundred million (100,000,000), par value $.001 per share;
Class B - one hundred million (100,000,000), par value $.001 per share;
Class C - one hundred million (100,000,000), par value $.001 per share;
Class D - one hundred million (100,000,000), par value $.001 per share;
Class E - five hundred million (500,000,000), par value $.001 per share;
Class F - five hundred million (500,000,000), par value $.001 per share;
Class G - five hundred million (500,000,000), par value $.001 per share;
Class H - five hundred million (500,000,000), par value $.001 per
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Page 11
share;
Class I - one billion (1,000,000,000), par value $.001 per share;
Class J - five hundred million (500,000,000), par value $.001 per share;
Class K - five hundred million (500,000,000), par value $.001 per share;
Class L - one billion five hundred million (1,500,000,000), par value $.001
per share;
Class M - five hundred million (500,000,000), par value $.001 per share;
Class N - five hundred million (500,000,000), par value $.001 per share;
Class O - five hundred million (500,000,000), par value $.001 per share;
Class P - one hundred million (100,000,000), par value $.001 per share;
Class Q - one hundred million (100,000,000), par value $.001 per share;
Class R - five hundred million (500,000,000), par value $.001 per share;
Class S - five hundred million (500,000,000), par value $.001 per share;
Class T - five hundred million (500,000,000), par value $.001 per share;
Class U - five hundred million (500,000,000), par value $.001 per share;
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Page 12
Class V - five hundred million (500,000,000), par value $.001 per share;
Class W - one hundred million (100,000,000), par value $.001 per share;
Class X - fifty million (50,000,000), par value $.001 per share;
Class Y - fifty million (50,000,000), par value $.001 per share;
Class Z - fifty million (50,000,000), par value $.001 per share;
Class AA - fifty million (50,000,000), par value $.001 per share;
Class BB - fifty million (50,000,000), par value $.001 per share;
Class CC - fifty million (50,000,000), par value $.001 per share;
Class DD - one hundred million (100,000,000), par value $.001 per share;
Class EE - one hundred million (100,000,000), par value $.001 per share;
Class FF - fifty million (50,000,000), par value $.001 per share;
Class GG - fifty million (50,000,000), par value $.001 per share;
Class HH - fifty million (50,000,000), par value $.001 per share;
Class II - one hundred million (100,000,000), par value $.001 per share;
Class JJ - one hundred million (100,000,000), par value $.001
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Page 13
per share;
Class KK - one hundred million (100,000,000), par value $.001 per share;
Class LL - one hundred million (100,000,000), par value $.001 per share;
Class MM - one hundred million (100,000,000), par value $.001 per share;
Class NN - one hundred million (100,000,000), par value $.001 per share;
Class OO - one hundred million (100,000,000), par value $.001 per share;
Class PP - one hundred million (100,000,000), par value $.001 per share;
Class QQ - one hundred million (100,000,000), par value $.001 per share;
Class RR - one hundred million (100,000,000), par value $.001 per share;
Class SS - one hundred million (100,000,000), par value $.001 per share;
Class TT - one hundred million (100,000,000), par value $.001 per share;
Class UU - one hundred million (100,000,000), par value $.001 per share;
Class VV - one hundred million (100,000,000), par value $.001 per share;
Class WW - one hundred million (100,000,000), par value $.001
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Page 14
per share;
Class XX - fifty million (50,000,000), par value $.001 per share;
Class YY - 100 million (100,000,000), par value $.001 per share;
Class ZZ - 100 million (100,000,000), par value $.001 per share;
Class AAA - 100 million (100,000,000), par value $.001 per share;
Class BBB - 100 million (100,000,000), par value $.001 per share;
Class CCC - 100 million (100,000,000), par value $.001 per share;
Class Alpha 1 - seven hundred million (700,000,000), par value $.001 per
share;
Class Alpha 2 - two hundred million (200,000,000), par value $.001 per
share;
Class Alpha 3 - five hundred million (500,000,000), par value $.001 per
share;
Class Alpha 4 - one hundred million (100,000,000), par value $.001 per
share;
Class Beta 1 - one million (1,000,000), par value $.001 per share;
Class Beta 2 - one million (1,000,000), par value $.001 per share;
Class Beta 3 - one million (1,000,000), par value $.001 per
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Page 15
share;
Class Beta 4 - one million (1,000,000), par value $.001 per share;
Class Gamma 1 - one million (1,000,000), par value $.001 per share;
Class Gamma 2 - one million (1,000,000), par value $.001 per share;
Class Gamma 3 - one million (1,000,000), par value $.001 per share;
Class Gamma 4 - one million (1,000,000), par value $.001 per share;
Class Delta 1 - one million (1,000,000), par value $.001 per share;
Class Delta 2 - one million (1,000,000), par value $.001 per share;
Class Delta 3 - one million (1,000,000), par value $.001 per share;
Class Delta 4 - one million (1,000,000), par value $.001 per share;
Class Epsilon 1 - one million (1,000,000), par value $.001 per share;
Class Epsilon 2 - one million (1,000,000), par value $.001 per share;
Class Epsilon 3 - one million (1,000,000), par value $.001 per share;
Class Epsilon 4 - one million (1,000,000), par value $.001 per
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Page 16
share;
Class Zeta 1 - one million (1,000,000), par value $.001 per share;
Class Zeta 2 - one million (1,000,000), par value $.001 per share;
Class Zeta 3 - one million (1,000,000), par value $.001 per share;
Class Zeta 4 - one million (1,000,000), par value $.001 per share;
Class Eta 1 - one million (1,000,000), par value $.001 per share;
Class Eta 2 - one million (1,000,000) par value $.001 per share;
Class Eta 3 - one million (1,000,000), par value $.001 per share;
Class Eta 4 - one million (1,000,000), par value $.001 per share;
Class Theta 1 - one million (1,000,000), par value $.001 per share;
Class Theta 2 - one million (1,000,000), par value $.001 per share;
Class Theta 3 - one million (1,000,000), par value $.001 per share;
Class Theta 4 - one million (1,000,000), par value $.001 per share;
for a total of thirteen billion nine hundred thirty-two million
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(13,932,000,000) shares classified into separate classes of common stock.
<PAGE>
Page 18
IN WITNESS WHEREOF, The RBB Fund, Inc. has caused these presents to be
signed in its name and on its behalf by its President and witnessed Secretary on
__________________, 1998.
THE RBB FUND, INC.
WITNESS:
------------------------------ ------------------------------
Morgan R. Jones Edward J. Roach
Secretary President
<PAGE>
Page 19
THE UNDERSIGNED, President of The RBB Fund, Inc., who executed on
behalf of said corporation the foregoing Articles Supplementary to the Charter,
of which this certificate is made a part, hereby acknowledges that the foregoing
Articles Supplementary are the act of the said Corporation and further certifies
that, to the best of his knowledge, information and belief, the matters and
facts set forth therein with respect to the approval thereof are true in all
material respects, under the penalties of perjury.
------------------------------
Edward J. Roach
President
<PAGE>
INVESTMENT ADVISORY AGREEMENT
(BEA Long-Short Market Neutral Fund)
AGREEMENT made as of ______, 1998 between THE RBB FUND, INC., a
Maryland corporation (herein called the "Company"), and BEA ASSOCIATES, a New
York general partnership (herein called the "Investment Adviser").
WHEREAS, the Company is registered as an open-end, management
investment company under the Investment Company Act of 1940 (the "1940 Act") and
currently offers or proposes to offer shares representing interests in twenty
five separate investment portfolios; and
WHEREAS, the Company desires to retain the Investment Adviser to
render certain investment advisory services to the Company with respect to the
Company's BEA Long-Short Market Neutral Fund (the "Fund"), and the Investment
Adviser is willing to so render such services,
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, and intending to be legally bound hereby, it is agreed between
the parties hereto as follows:
1. APPOINTMENT. The Company hereby appoints the Investment Adviser
to act as investment adviser for the Fund for the period and on the terms set
forth in this Agreement. The Investment Adviser accepts such appointment and
agrees to render the services herein set forth, for the compensation herein
provided.
2. DELIVERY OF DOCUMENTS. The Company has furnished the Investment
Adviser with copies properly certified or authenticated or each of the
following:
(a) Resolutions of the Board of Directors of the Company
authorizing the appointment of the Investment Adviser and the execution and
delivery of this Agreement;
(b) Each Prospectus relating to any class of Shares representing
interests in the Fund of the Company in effect under the 1933 Act (such
prospectuses, as presently in effect and as they shall from time to time be
amended and supplemented, are herein collectively called the "Prospectuses").
The Company will furnish the Investment Adviser from time to time with
copies, properly certified or authenticated, of all amendments of or supplements
to the foregoing, if any.
<PAGE>
3. MANAGEMENT OF THE FUND. Subject to the supervision of the Board
of Directors of the Company, the Investment Adviser will provide for the overall
management of the Fund including (i) the provision of continuous investment
programs for the Fund, including investment research and management with respect
to all securities, investments, cash and cash equivalents in the Fund, (ii) the
determination from time to time of what securities and other investments will be
purchased, retained, or sold by the Company for the Fund, and (iii) the
placement from time to time of orders for all purchases and sales made for the
Fund. The Investment Adviser will provide the services rendered by it hereunder
in accordance with the Fund's investment objectives, restrictions and policies
as stated in the applicable Prospectuses and the applicable statement of
additional information contained in the Registration Statement. The Investment
Adviser further agrees that it will render to the Company's Board of Directors
such periodic and special reports regarding the performance of its duties under
this Agreement as the Board may request. The Investment Adviser agrees to
provide to the Company (or its agents and service providers) prompt and accurate
data with respect to the Fund's transactions and, where not otherwise available,
the daily valuation of securities in the Fund.
4. BROKERAGE. The investment Adviser may place orders either
directly with the issuer or with any broker or dealer. In placing orders with
brokers and dealers, the Investment Adviser will attempt to obtain the best
price and the most favorable execution of its orders. In placing orders, the
Investment Adviser will consider the experience and skill of the firm's
securities traders as well as the firm's financial responsibility and
administrative efficiency. Consistent with this obligation, the Investment
Adviser may, subject to the review of the Board of Directors, select brokers on
the basis of the research, statistical and pricing services they provide to the
Fund and other clients of the Investment Adviser. Information and research
received from such brokers will be in addition to, and not in lieu of, the
services required to be performed by the Investment Adviser hereunder. A
commission paid to such brokers may be higher than that which another qualified
broker would have charged for effecting the same transaction, provided that
the Investment Adviser determines in good faith that such commission is
reasonable in terms either of the transaction or the overall responsibility of
the Investment Adviser to the Fund and its other clients and that the total
commissions paid by the Fund will be reasonable in relation to the benefits to
the Fund over the long-term. In no instance will the Fund's securities be
purchased from or sold to the Company's principal underwriter, the Investment
Adviser, or any affiliated person thereof, except to the extent permitted by SEC
exemptive order or by applicable law.
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<PAGE>
5. CONFORMITY WITH LAW; CONFIDENTIALITY. The Investment Adviser
further agrees that it will comply with all applicable rules and regulations of
all federal regulatory agencies having jurisdiction over the Investment Adviser
in the performance of its duties hereunder. The Investment Adviser will treat
confidentially and as proprietary information of the Company all records and
other information relating to the Company and prior, present or potential
shareholders (except clients of the Investment Adviser and its affiliates), and
will not use such records and information for any purpose other than performance
of its responsibilities and duties hereunder, except after prior notification to
and approval in writing by the Company, which approval shall not be unreasonably
withheld and may not be withheld where the Investment Adviser may be exposed to
civil or criminal contempt proceedings for failure to comply, when requested to
divulge such Information by duly constituted authorities, or when so requested
by the Company.
6. SERVICES NOT EXCLUSIVE. The investment management and services
rendered by the Investment Adviser hereunder are not to be deemed exclusive, and
the Investment Adviser shall be free to render similar services to others so
long as its services under this Agreement are not impaired thereby.
7. BOOKS AND RECORDS. In compliance with the requirements of Rule
31a-3 under the 1940 Act, the Investment Adviser hereby agrees that all records
which it maintains for the Fund are the property of the Company and further
agrees to surrender promptly to the Company any of such records upon the
Company's request. The Investment Adviser further agrees to preserve for the
periods prescribed by Rule 31a-2 under the 1940 Act the records required to be
maintained by Rule 31a-1 under the 1940 Act.
8. EXPENSES. During the term of this Agreement, the Investment
Adviser will pay all expenses incurred by it in connection with its activities
under this Agreement other than the cost of securities purchased for the Fund
(including brokerage commissions, if any), the cost of independent pricing
services used in valuing the Fund's securities and fees and expenses of
registering and qualifying shares for distribution under state securities laws.
If the expenses borne by the Fund in any fiscal year exceed the most
restrictive applicable expense limitations imposed by the securities regulations
of any state in which the Shares of the Fund are registered or qualified for
sale to the public, the Investment Adviser shall reimburse the Fund for any
excess up to the amount of the fees payable by the Fund to it during such fiscal
year pursuant to Paragraph 9 hereof in the same proportion that its fees bear to
the total fees paid by the Company for investment advisory services in respect
of the Fund;
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<PAGE>
PROVIDED, HOWEVER, that notwithstanding the foregoing, the Investment Adviser
shall reimburse the Fund for such excess expenses regardless of the amount of
such fees payable to it during such fiscal year to the extent that the
securities regulations of any state in which the Shares are registered or
qualified for sale so require.
9. COMPENSATION.
(a) For the services provided and the expenses assumed pursuant to
this Agreement with respect to the Fund, until the Fund has completed twelve
full calendar months of investment operations (the "Initial Period"), the
Company will pay the Investment Adviser from the assets of the Fund and the
Investment Adviser will accept as full compensation therefor a fee, computed
daily and payable monthly, at the annual rate of 1.50% of the Fund's average
daily net assets.
(b) Following the Initial Period, the Company will pay the Investment
Adviser from the assets of the Fund and the Investment Adviser will accept as
full compensation therefor fees calculated as follows:
(i) There shall be a fee, computed daily and payable monthly, at
the annual rate of 1.50% of the Fund's average daily net assets (the "Base
Fee"), PROVIDED, however, that if subparagraph (ii) below is applicable, the fee
shall be calculated pursuant to subparagraph (iii) below.
(ii) After each calendar month, it shall be determined whether
the investment performance of the Fund (calculated in accordance with
subparagraph (v) below) has exceeded or lagged the Target (as hereinafter
defined) within the parameters of one of subparagraphs (A) through (E) during
the immediately preceding twelve months:
(A) the investment performance of the Fund exceeded or
lagged the Target by more than 100 but not more than 200 basis points;
(B) the investment performance of the Fund exceeded or
lagged the Target by more than 200 but not more than 300 basis points;
(C) the investment performance of the Fund exceeded or
lagged the Target by more than 300 but not more than 400 basis points;
(D) the investment performance of the Fund exceeded or
lagged the Target by more than 400 but not more than 500 basis points; or
-4-
<PAGE>
(E) the investment performance of the Fund exceeded or
lagged the Target by more than 500 basis points.
(iii) If subparagraph (ii) applies, the rate of the Base Fee
for such calendar month should be adjusted as follows:
(A) If subparagraph (ii)(A) applies, the annual rate of the
Base Fee shall be 1.60% if the investment performance of the Fund exceeded the
Target or 1.40% if the investment performance lagged the Target;
(B) If subparagraph (ii)(B) applies, the annual rate of the
Base Fee shall be 1.70% if the investment performance of the Fund exceeded the
Target or 1.30% if the investment performance lagged the Target;
(C) If subparagraph (ii)(C) applies, the annual rate of the
Base Fee shall be 1.80% if the investment performance of the Fund exceeded the
Target or 1.20% if the investment performance lagged the Target;
(D) If subparagraph (ii)(D) applies, the annual rate of the
Base Fee shall be 1.90% if the investment performance of the Fund exceeded the
Target or 1.10% if the investment performance lagged the Target; or
(E) If subparagraph (ii)(E) applies, the annual rate of the
Base Fee shall be 2.00% if the investment performance of the Fund exceeded the
Target or 1.00% if the investment performance lagged the Target.
(iv) The "Target" means the investment record of the Salomon
Smith Barney 1-Month Treasury Bill Index-TM- plus 500 basis points.
(v) The investment record of the Salomon Smith Barney 1-Month
Treasury Bill Index-TM- shall be calculated in accordance with Rule 205-1(b)
under the Investment Advisers Act of 1940, as amended (the "Advisers Act") as
such Rule shall be amended from time to time or any successor regulation. The
investment performance of the Fund shall be calculated in accordance with Rule
205-1(a) under the Advisers Act as such Rule shall be amended from time to time
or any successor regulation.
(c) The fee attributable to the Fund shall be satisfied only against
assets of the Fund and not against the assets of any other investment portfolio
of the Company.
10. LIMITATION OF LIABILITY OF THE INVESTMENT ADVISER. The
Investment Adviser shall not be liable for any error of
-5-
<PAGE>
judgment or mistake of law or for any loss suffered by the Company in
connection with the matters to which this Agreement relates, except a loss
resulting from a breach of fiduciary duty with respect to the receipt of
compensation for services or a loss resulting from willful misfeasance, bad
faith or gross negligence on the part of the Investment Adviser in the
performance of its duties or from reckless disregard by it of its obligations
and duties under this Agreement ("disabling conduct"). The Fund will
indemnify the Investment Adviser against and hold it harmless from any and
all losses, claims, damages, liabilities or expenses (including reasonable
counsel fees and expenses) resulting from any claim, demand, action or suit
not resulting from disabling conduct by the Investment Adviser.
Indemnification shall be made only following: (i) a final decision on the
merits by a court or other body before whom the proceeding was brought that
the Investment Adviser was not liable by reason of disabling conduct or (ii)
in the absence of such a decision, a reasonable determination, based upon a
review of the facts, that the Investment Adviser was not liable by reason of
disabling conduct by (a) the vote of a majority of a quorum of directors of
the Fund who are neither "interested persons" of the Fund nor parties to the
proceeding ("disinterested non-party directors") or (b) an independent legal
counsel in a written opinion. The Investment Adviser shall be entitled to
advances from the Fund for payment of the reasonable expenses incurred by it
in connection with the matter as to which it is seeking indemnification in
the manner and to the fullest extent permissible under the Maryland General
Corporation Law. The Investment Adviser shall provide to the Fund a written
affirmation of its good faith belief that the standard of conduct necessary
for indemnification by the Fund has been met and a written undertaking to
repay any such advance if it should ultimately be determined that the
standard of conduct has not been met. In addition, at least one of the
following additional conditions shall be met: (a) the Investment Adviser
shall provide a security in form and amount acceptable to the Fund for its
undertaking; (b) the Fund is insured against losses arising by reason of the
advance; or (c) a majority of a quorum of disinterested non-party directors,
or independent legal counsel, in a written opinion, shall have determined,
based upon a review of facts readily available to the Fund at the time the
advance is proposed to be made, that there is reason to believe that the
Investment Adviser will ultimately be found to be entitled to
indemnification. Any amounts payable by the Fund under this Section shall be
satisfied only against the assets of the Fund and not against the assets of
any other investment portfolio of the Company.
11. DURATION AND TERMINATION. This Agreement shall become effective
with respect to the Fund upon approval of this Agreement by vote of a majority
of the outstanding voting securities of the Fund and, unless sooner terminated
as provided
-6-
<PAGE>
herein, shall continue with respect to the Fund until ______, 199_.
Thereafter, if not terminated, this Agreement shall continue with respect to the
Fund for successive annual periods ending on _______, PROVIDED such continuance
is specifically approved at least annually (a) by the vote of a majority of
those members of the Board of Directors of the Company who are not parties to
this Agreement or interested persons of any such party, cast in person at a
meeting called for the purpose of voting on such approval, and (b) by the Board
of Directors of the Company or by vote of a majority of the outstanding voting
securities of the Fund; PROVIDED, HOWEVER, that this Agreement may be terminated
with respect to the Fund by the Company at any time, without the payment of any
penalty, by the Board of Directors of the Company or by vote of a majority of
the outstanding voting securities of the Portfolio, on the 60 days' prior
written notice to the Investment Adviser, or by the Investment Adviser at any
time, without payment of any penalty, on 90 days' prior written notice to the
Company. This Agreement will immediately terminate in the event of its
assignment. (As used in this Agreement, the terms "majority of the outstanding
voting securities," "interested person" and "assignment" shall have the same
meaning as such terms have in the 1940 Act).
12. AMENDMENT OF THIS AGREEMENT. No provision of this Agreement may
be changed, discharged or terminated orally, except by an instrument in writing
signed by the party against which enforcement of the change, discharge or
termination is sought, and no amendment of this Agreement affecting the Fund
shall be effective until approved by vote of the holders of a majority of the
outstanding voting securities of the Fund.
13. MISCELLANEOUS. The captions in this Agreement are included for
convenience of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect. If any
provision of this Agreement shall be held or made invalid by a court decision,
statute, rule or otherwise, the remainder of this Agreement shall not be
affected thereby. This Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and their respective successors and shall be
governed by Delaware law.
14. CHANGE IN MEMBERSHIP. The Investment Adviser shall notify the
Company of any change in its membership within a reasonable time after such
change.
15. GOVERNING LAW. This Agreement shall be governed by and construed
and enforced in accordance with the laws of the
-7-
<PAGE>
state of New York without giving effect to the conflicts of laws principles
thereof.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be executed by their officers designated below as of the day and year first
above written.
THE RBB FUND, INC.
By:
-----------------------------
President
BEA ASSOCIATES
By:
-----------------------------
-8-
<PAGE>
INVESTMENT ADVISORY AGREEMENT
(BEA Long-Short Equity Fund)
AGREEMENT made as of ______, 1998 between THE RBB FUND, INC., a
Maryland corporation (herein called the "Company"), and BEA ASSOCIATES, a New
York general partnership (herein called the "Investment Adviser").
WHEREAS, the Company is registered as an open-end, management
investment company under the Investment Company Act of 1940 (the "1940 Act") and
currently offers or proposes to offer shares representing interests in twenty
five separate investment portfolios; and
WHEREAS, the Company desires to retain the Investment Adviser to
render certain investment advisory services to the Company with respect to the
Company's BEA Long-Short Equity Fund (the "Fund"), and the Investment Adviser is
willing to so render such services,
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, and intending to be legally bound hereby, it is agreed between
the parties hereto as follows:
1. APPOINTMENT. The Company hereby appoints the Investment Adviser
to act as investment adviser for the Fund for the period and on the terms set
forth in this Agreement. The Investment Adviser accepts such appointment and
agrees to render the services herein set forth, for the compensation herein
provided.
2. DELIVERY OF DOCUMENTS. The Company has furnished the Investment
Adviser with copies properly certified or authenticated or each of the
following:
(a) Resolutions of the Board of Directors of the Company
authorizing the appointment of the Investment Adviser and the execution and
delivery of this Agreement;
(b) Each Prospectus relating to any class of Shares representing
interests in the Fund of the Company in effect under the 1933 Act (such
prospectuses, as presently in effect and as they shall from time to time be
amended and supplemented, are herein collectively called the "Prospectuses").
The Company will furnish the Investment Adviser from time to time with
copies, properly certified or authenticated, of all amendments of or supplements
to the foregoing, if any.
<PAGE>
3. MANAGEMENT OF THE FUND. Subject to the supervision of the Board
of Directors of the Company, the Investment Adviser will provide for the overall
management of the Fund including (i) the provision of continuous investment
programs for the Fund, including investment research and management with respect
to all securities, investments, cash and cash equivalents in the Fund, (ii) the
determination from time to time of what securities and other investments will be
purchased, retained, or sold by the Company for the Fund, and (iii) the
placement from time to time of orders for all purchases and sales made for the
Fund. The Investment Adviser will provide the services rendered by it hereunder
in accordance with the Fund's investment objectives, restrictions and policies
as stated in the applicable Prospectuses and the applicable statement of
additional information contained in the Registration Statement. The Investment
Adviser further agrees that it will render to the Company's Board of Directors
such periodic and special reports regarding the performance of its duties under
this Agreement as the Board may request. The Investment Adviser agrees to
provide to the Company (or its agents and service providers) prompt and accurate
data with respect to the Fund's transactions and, where not otherwise available,
the daily valuation of securities in the Fund.
4. BROKERAGE. The investment Adviser may place orders either
directly with the issuer or with any broker or dealer. In placing orders with
brokers and dealers, the Investment Adviser will attempt to obtain the best
price and the most favorable execution of its orders. In placing orders, the
Investment Adviser will consider the experience and skill of the firm's
securities traders as well as the firm's financial responsibility and
administrative efficiency. Consistent with this obligation, the Investment
Adviser may, subject to the review of the Board of Directors, select brokers on
the basis of the research, statistical and pricing services they provide to the
Fund and other clients of the Investment Adviser. Information and research
received from such brokers will be in addition to, and not in lieu of, the
services required to be performed by the Investment Adviser hereunder. A
commission paid to such brokers may be higher than that which another qualified
broker would have charged for effecting the same transaction, provided that
the Investment Adviser determines in good faith that such commission is
reasonable in terms either of the transaction or the overall responsibility of
the Investment Adviser to the Fund and its other clients and that the total
commissions paid by the Fund will be reasonable in relation to the benefits to
the Fund over the long-term. In no instance will the Fund's securities be
purchased from or sold to the Company's principal underwriter, the Investment
Adviser, or any affiliated person thereof, except to the extent permitted by SEC
exemptive order or by applicable law.
-2-
<PAGE>
5. CONFORMITY WITH LAW; CONFIDENTIALITY. The Investment Adviser
further agrees that it will comply with all applicable rules and regulations of
all federal regulatory agencies having jurisdiction over the Investment Adviser
in the performance of its duties hereunder. The Investment Adviser will treat
confidentially and as proprietary information of the Company all records and
other information relating to the Company and prior, present or potential
shareholders (except clients of the Investment Adviser and its affiliates), and
will not use such records and information for any purpose other than performance
of its responsibilities and duties hereunder, except after prior notification to
and approval in writing by the Company, which approval shall not be unreasonably
withheld and may not be withheld where the Investment Adviser may be exposed to
civil or criminal contempt proceedings for failure to comply, when requested to
divulge such Information by duly constituted authorities, or when so requested
by the Company.
6. SERVICES NOT EXCLUSIVE. The investment management and services
rendered by the Investment Adviser hereunder are not to be deemed exclusive, and
the Investment Adviser shall be free to render similar services to others so
long as its services under this Agreement are not impaired thereby.
7. BOOKS AND RECORDS. In compliance with the requirements of Rule
31a-3 under the 1940 Act, the Investment Adviser hereby agrees that all records
which it maintains for the Fund are the property of the Company and further
agrees to surrender promptly to the Company any of such records upon the
Company's request. The Investment Adviser further agrees to preserve for the
periods prescribed by Rule 31a-2 under the 1940 Act the records required to be
maintained by Rule 31a-1 under the 1940 Act.
8. EXPENSES. During the term of this Agreement, the Investment
Adviser will pay all expenses incurred by it in connection with its activities
under this Agreement other than the cost of securities purchased for the Fund
(including brokerage commissions, if any), the cost of independent pricing
services used in valuing the Fund's securities and fees and expenses of
registering and qualifying shares for distribution under state securities laws.
If the expenses borne by the Fund in any fiscal year exceed the most
restrictive applicable expense limitations imposed by the securities regulations
of any state in which the Shares of the Fund are registered or qualified for
sale to the public, the Investment Adviser shall reimburse the Fund for any
excess up to the amount of the fees payable by the Fund to it during such fiscal
year pursuant to Paragraph 9 hereof in the same proportion that its fees bear to
the total fees paid by the Company for investment advisory services in respect
of the Fund;
-3-
<PAGE>
PROVIDED, HOWEVER, that notwithstanding the foregoing, the Investment Adviser
shall reimburse the Fund for such excess expenses regardless of the amount of
such fees payable to it during such fiscal year to the extent that the
securities regulations of any state in which the Shares are registered or
qualified for sale so require.
9. COMPENSATION.
(a) For the services provided and the expenses assumed pursuant
to this Agreement with respect to the Fund, the Company will pay the Investment
Adviser from the assets of the Fund and the Investment Adviser will accept as
full compensation therefor a fee, computed daily and payable monthly, at the
annual rate of 0.10% of the Fund's average daily net assets.
(b) The fee attributable to the Fund shall be satisfied only
against assets of the Fund and not against the assets of any other investment
portfolio of the Company.
10. LIMITATION OF LIABILITY OF THE INVESTMENT ADVISER. The
Investment Adviser shall not be liable for any error of judgment or mistake of
law or for any loss suffered by the Company in connection with the matters to
which this Agreement relates, except a loss resulting from a breach of fiduciary
duty with respect to the receipt of compensation for services or a loss
resulting from willful misfeasance, bad faith or gross negligence on the part of
the Investment Adviser in the performance of its duties or from reckless
disregard by it of its obligations and duties under this Agreement ("disabling
conduct"). The Fund will indemnify the Investment Adviser against and hold it
harmless from any and all losses, claims, damages, liabilities or expenses
(including reasonable counsel fees and expenses) resulting from any claim,
demand, action or suit not resulting from disabling conduct by the Investment
Adviser. Indemnification shall be made only following: (i) a final decision on
the merits by a court or other body before whom the proceeding was brought that
the Investment Adviser was not liable by reason of disabling conduct or (ii) in
the absence of such a decision, a reasonable determination, based upon a review
of the facts, that the Investment Adviser was not liable by reason of disabling
conduct by (a) the vote of a majority of a quorum of directors of the Fund who
are neither "interested persons" of the Fund nor parties to the proceeding
("disinterested non-party directors") or (b) an independent legal counsel in a
written opinion. The Investment Adviser shall be entitled to advances from the
Fund for payment of the reasonable expenses incurred by it in connection with
the matter as to which it is seeking indemnification in the manner and to the
fullest extent permissible under the Maryland General Corporation Law. The
Investment Adviser shall provide to the Fund a written affirmation of its good
faith belief that the standard of conduct
-4-
<PAGE>
necessary for indemnification by the Fund has been met and a written
undertaking to repay any such advance if it should ultimately be determined
that the standard of conduct has not been met. In addition, at least one of
the following additional conditions shall be met: (a) the Investment Adviser
shall provide a security in form and amount acceptable to the Fund for its
undertaking; (b) the Fund is insured against losses arising by reason of the
advance; or (c) a majority of a quorum of disinterested non-party directors,
or independent legal counsel, in a written opinion, shall have determined,
based upon a review of facts readily available to the Fund at the time the
advance is proposed to be made, that there is reason to believe that the
Investment Adviser will ultimately be found to be entitled to
indemnification. Any amounts payable by the Fund under this Section shall be
satisfied only against the assets of the Fund and not against the assets of
any other investment portfolio of the Company.
11. DURATION AND TERMINATION. This Agreement shall become effective
with respect to the Fund upon approval of this Agreement by vote of a majority
of the outstanding voting securities of the Fund and, unless sooner terminated
as provided herein, shall continue with respect to the Fund until ______, 199_.
Thereafter, if not terminated, this Agreement shall continue with respect to the
Fund for successive annual periods ending on _______, PROVIDED such continuance
is specifically approved at least annually (a) by the vote of a majority of
those members of the Board of Directors of the Company who are not parties to
this Agreement or interested persons of any such party, cast in person at a
meeting called for the purpose of voting on such approval, and (b) by the Board
of Directors of the Company or by vote of a majority of the outstanding voting
securities of the Fund; PROVIDED, HOWEVER, that this Agreement may be terminated
with respect to the Fund by the Company at any time, without the payment of any
penalty, by the Board of Directors of the Company or by vote of a majority of
the outstanding voting securities of the Portfolio, on the 60 days' prior
written notice to the Investment Adviser, or by the Investment Adviser at any
time, without payment of any penalty, on 90 days' prior written notice to the
Company. This Agreement will immediately terminate in the event of its
assignment. (As used in this Agreement, the terms "majority of the outstanding
voting securities," "interested person" and "assignment" shall have the same
meaning as such terms have in the 1940 Act).
12. AMENDMENT OF THIS AGREEMENT. No provision of this Agreement may
be changed, discharged or terminated orally, except by an instrument in writing
signed by the party against which enforcement of the change, discharge or
termination is sought, and no amendment of this Agreement affecting the Fund
shall be effective until approved by vote of the holders of a majority of the
outstanding voting securities of the Fund.
-5-
<PAGE>
13. MISCELLANEOUS. The captions in this Agreement are included for
convenience of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect. If any
provision of this Agreement shall be held or made invalid by a court decision,
statute, rule or otherwise, the remainder of this Agreement shall not be
affected thereby. This Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and their respective successors and shall be
governed by Delaware law.
14. CHANGE IN MEMBERSHIP. The Investment Adviser shall notify the
Company of any change in its membership within a reasonable time after such
change.
15. GOVERNING LAW. This Agreement shall be governed by and construed
and enforced in accordance with the laws of the state of New York without giving
effect to the conflicts of laws principles thereof.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be executed by their officers designated below as of the day and year first
above written.
THE RBB FUND, INC.
By:
-----------------------------
President
BEA ASSOCIATES
By:
-----------------------------
-6-
<PAGE>
DISTRIBUTION AGREEMENT SUPPLEMENT
(BEA Long-Short Market Neutral Fund)
This supplemental agreement is entered into this day of ,
1998, by and between THE RBB FUND, INC. (the "Fund") and COUNSELLORS SECURITIES
INC. (the "Distributor").
The Fund is a corporation organized under the laws of the State of
Maryland and is an open-end management investment company. The Fund and the
Distributor have entered into a Distribution Agreement, dated as of April 10,
1991 (as from time to time amended and supplemented, the "Distribution
Agreement"), pursuant to which the Distributor has undertaken to act as
distributor for the Fund, as more fully set forth therein. Certain capitalized
terms used without definition in this Distribution Agreement Supplement have the
meaning specified in the Distribution Agreement.
The Fund agrees with the Distributor as follows:
1. ADOPTION OF DISTRIBUTION AGREEMENT. The Distribution Agreement
is hereby adopted for The BEA Long-Short Market Neutral Fund portfolio of the
Fund. This class shall constitute a "Class" as referred to in the Distribution
Agreement and its shares shall be "Class Shares" as referred to therein.
2. PAYMENT OF FEES. For all services to be rendered, facilities
furnished and expenses paid or assumed by the Distributor as provided in the
Distribution Agreement and herein, the Fund shall pay the Distributor no
compensation.
3. COUNTERPARTS. This agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the undersigned have entered into this Agreement,
intending to be legally bound hereby, as of the date and year first above
written.
THE RBB FUND, INC. COUNSELLORS SECURITIES INC.
By: By:
------------------------- -----------------------------
President Title:
<PAGE>
DISTRIBUTION AGREEMENT SUPPLEMENT
(BEA Long-Short Equity Fund)
This supplemental agreement is entered into this day of ,
1998, by and between THE RBB FUND, INC. (the "Fund") and COUNSELLORS SECURITIES
INC. (the "Distributor").
The Fund is a corporation organized under the laws of the State of
Maryland and is an open-end management investment company. The Fund and the
Distributor have entered into a Distribution Agreement, dated as of April 10,
1991 (as from time to time amended and supplemented, the "Distribution
Agreement"), pursuant to which the Distributor has undertaken to act as
distributor for the Fund, as more fully set forth therein. Certain capitalized
terms used without definition in this Distribution Agreement Supplement have the
meaning specified in the Distribution Agreement.
The Fund agrees with the Distributor as follows:
1. ADOPTION OF DISTRIBUTION AGREEMENT. The Distribution
Agreement is hereby adopted for The BEA Long-Short Equity Fund portfolio of
the Fund. This class shall constitute a "Class" as referred to in the
Distribution Agreement and its shares shall be "Class Shares" as referred to
therein.
2. PAYMENT OF FEES. For all services to be rendered, facilities
furnished and expenses paid or assumed by the Distributor as provided in the
Distribution Agreement and herein, the Fund shall pay the Distributor no
compensation.
3. COUNTERPARTS. This agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the undersigned have entered into this Agreement,
intending to be legally bound hereby, as of the date and year first above
written.
THE RBB FUND, INC. COUNSELLORS SECURITIES INC.
By: By:
------------------------ -----------------------------
President Title:
<PAGE>
DRAFT OF APRIL 2, 1998
CUSTODY AGREEMENT
AGREEMENT, dated as of May __, 1998 by and between THE RBB FUND, INC. (the
"Company"), a corporation organized and existing under the laws of the State of
Maryland, acting with respect to and on behalf of each of the series of the
Company that are identified on Exhibit A hereto (each, a "Portfolio"), and
CUSTODIAL TRUST COMPANY, a bank organized and existing under the laws of the
State of New Jersey (the "Custodian").
WHEREAS, the Company desires that the securities, funds and other assets of
the Portfolios be held and administered by Custodian pursuant to this Agreement;
WHEREAS, each Portfolio is an investment portfolio represented by a series
of Shares constituting part of the capital stock of the Company, an open-end
management investment company registered under the 1940 Act;
WHEREAS, Custodian represents that it is a bank having the qualifications
prescribed in the 1940 Act to act as custodian for management investment
companies registered under the 1940 Act;
NOW, THEREFORE, in consideration of the mutual agreements herein made, the
Company and Custodian hereby agree as follows:
ARTICLE I
DEFINITIONS
Whenever used in this Agreement, the following terms, unless the context
otherwise requires, shall mean:
1.1 "AUTHORIZED PERSON" means any person authorized by
<PAGE>
resolution of the Board of Directors to give Oral Instructions and Written
Instructions on behalf of the Company and identified, by name or by office, in
Exhibit B hereto or any person designated to do so by an investment adviser of
any Portfolio who is named by the Company in Exhibit C hereto.
1.2 "BOARD OF DIRECTORS TRUSTEES" means the Board of Directors of the
Company or, when permitted under the 1940 Act, the Executive Committee thereof,
if any.
1.3 "BOOK-ENTRY SYSTEM" means a book-entry system maintained by a Federal
Reserve Bank for securities of the United States government or of agencies or
instrumentalities thereof (including government-sponsored enterprises).
1.4 "BUSINESS DAY" means any day on which banks in the State of New Jersey
and New York are open for business.
1.5 "CUSTODY ACCOUNT" means, with respect to a Portfolio, the account in
the name of such Portfolio, which is provided for in Section 3.2 below.
1.6 "DOMESTIC SECURITIES DEPOSITORY" means The Depository Trust Company and
any other clearing agency registered with the Securities and Exchange Commission
under the Securities Exchange Act of 1934, which acts as a securities
depository.
1.7 "ELIGIBLE DOMESTIC BANK" means a bank as defined in the 1940 Act.
1.8 "ELIGIBLE FOREIGN CUSTODIAN" means any banking institution, trust
company or other entity (including any Foreign Securities Depository) organized
under the laws of a country other than the United States which is eligible under
the 1940 Act to act as a custodian for securities and other assets of a
Portfolio held
<PAGE>
outside the United States.
1.9 "FOREIGN CUSTODY MANAGER" has the same meaning as in the 1940 Act.
1.10 "FOREIGN SECURITIES DEPOSITORY" means a foreign securities depository
or clearing agency as defined in the 1940 Act.
1.11 "MASTER REPURCHASE AGREEMENT" means the Master Repurchase Agreement
of even date herewith between the Company and Bear, Stearns & Co. Inc. as it may
from time to time be amended.
1.12 "MASTER SECURITIES LOAN AGREEMENT" means the Master Securities Loan
Agreement of even date herewith between the Company and Bear, Stearns Securities
Corp. as it may from time to time be amended.
1.13 "1940 ACT" means the Investment Company Act of 1940, as amended, and
the rules and regulations thereunder.
1.14 "ORAL INSTRUCTIONS" means instructions orally transmitted to and
accepted by Custodian which are (A) reasonably believed by Custodian to have
been given by an Authorized Person, (B) recorded and kept among the records of
Custodian made in the ordinary course of business, and (C) completed in
accordance with Custodian's requirements from time to time as to content of
instructions and their manner and timeliness of delivery by the Company.
1.15 "PROPER INSTRUCTIONS" means Oral Instructions or Written Instructions.
Proper Instructions may be continuing Written Instructions when deemed
appropriate by the Company and Custodian.
1.16 "SECURITIES DEPOSITORY" means any Domestic Securities
<PAGE>
Depository or Foreign Securities Depository.
1.17 "SHARES" means, with respect to a Portfolio, those shares in a series
or class of the capital stock of the Company that represent interests in such
Portfolio.
1.18 "WRITTEN INSTRUCTIONS" means written communications received by
Custodian that are (A) reasonably believed by Custodian to have been signed or
sent by an Authorized Person, (B) sent or transmitted by letter, facsimile,
central processing unit connection, on-line terminal or magnetic tape, and (C)
completed in accordance with Custodian's requirements from time to time as to
content of instructions and their manner and timeliness of delivery by the
Company.
ARTICLE II
APPOINTMENT OF CUSTODIAN
2.1 APPOINTMENT. The Company hereby appoints Custodian as custodian of all
such securities, funds and other assets of each Portfolio as may be acceptable
to Custodian and from time to time delivered to it by the Company or others for
the account of such Portfolio.
2.2 ACCEPTANCE. Custodian hereby accepts appointment as such custodian and
agrees to perform the duties thereof as hereinafter set forth.
ARTICLE III
CUSTODY OF SECURITIES, FUNDS AND OTHER ASSETS
3.1 SEGREGATION. All securities and non-cash property of a Portfolio in the
possession of Custodian (other than securities maintained by Custodian with a
sub-custodian appointed pursuant to this Agreement or in a Securities Depository
or Book-Entry System) shall be physically segregated from other such securities
<PAGE>
and non-cash property in the possession of Custodian. All cash, securities and
other non-cash property of a Portfolio shall be identified as belonging to such
Portfolio.
3.2 CUSTODY ACCOUNT. (a) Custodian shall open and maintain in its trust
department a custody account in the name of each Portfolio, subject only to
draft or order of Custodian, in which Custodian shall enter and carry all
securities, funds and other assets of such Portfolio which are delivered to
Custodian and accepted by it.
(b) If, with respect to any Portfolio, Custodian at any time fails to
receive any of the documents referred to in Section 3.10(a) below, then, until
such time as it receives such document, it shall not be obligated to receive any
securities into the Custody Account of such Portfolio and shall be entitled to
return to such Portfolio any securities that it is holding in such Custody
Account.
3.3 SECURITIES IN PHYSICAL FORM. Custodian may, but shall not be obligated
to, hold securities that may be held only in physical form.
3.4 DISCLOSURE TO ISSUERS OF SECURITIES. Custodian is authorized to
disclose the Company's and any Portfolio's names and addresses, and the
securities positions in such Portfolio's Custody Account, to the issuers of such
securities when requested by them to do so.
3.5 EMPLOYMENT OF DOMESTIC SUB-CUSTODIANS. At any time and from time to
time, Custodian in its discretion may appoint and employ, and may also cease to
employ, any Eligible Domestic Bank as sub-custodian to hold securities and other
assets of a Portfolio that are maintained in the United States and to carry out
such other provisions of this Agreement as it may determine, provided,
<PAGE>
however, that the employment of any such sub-custodian has been approved by the
Company. The employment of any such sub-custodian shall be at Custodian's
expense and shall not relieve Custodian of any of its obligations or liabilities
under this Agreement.
3.6 EMPLOYMENT OF FOREIGN SUB-CUSTODIANS. (a) At any time and from time to
time, Custodian in its discretion may appoint and employ in accordance with the
1940 Act, and may also cease to employ, (I) any overseas branch of any Eligible
Domestic Bank, or (II) any Eligible Foreign Custodian selected by the Foreign
Custody Manager, in each case as a foreign sub-custodian for securities and
other assets of a Portfolio that are maintained outside the United States,
provided, however, that the employment of any such overseas branch has been
approved by the Company and, provided further that, in the case of any such
Eligible Foreign Custodian, the Foreign Custody Manager has approved, in
writing, the agreement (and/or, in the case of a Foreign Securities Depository,
the rules and/or established practices and procedures thereof) pursuant to which
Custodian employs such Eligible Foreign Custodian.
(b) Set forth on Exhibit D hereto, with respect to each Portfolio, are the
foreign sub-custodians (including Foreign Securities Depositories) that
Custodian may employ pursuant to Section 3.6(a) above. Exhibit D shall be
revised from time to time as foreign sub-custodians are added or deleted.
(c) If the Company proposes to have a Portfolio make an investment which is
to be held in a country in which Custodian does not have appropriate
arrangements in place with a foreign sub-custodian selected by the Foreign
Custody Manager, then the Company shall inform Custodian sufficiently in advance
of such investment to allow Custodian to make such arrangements.
(d) Notwithstanding anything to the contrary in Section 8.1
<PAGE>
below, Custodian shall have no greater liability to any Portfolio or the Company
for the actions or omissions of any foreign sub-custodian appointed pursuant to
this Agreement than any such foreign sub-custodian has to Custodian, and
Custodian shall not be required to discharge any such liability which may be
imposed on it unless and until such foreign sub-custodian has effectively
indemnified Custodian against it or has otherwise discharged its liability to
Custodian in full.
(e) Upon the request of the Foreign Custody Manager, Custodian shall
furnish to the Foreign Custody Manager information concerning all foreign
sub-custodians employed pursuant to this Agreement which shall be similar in
kind and scope to any such information that may have been furnished to the
Foreign Custody Manager in connection with the initial approval by the Foreign
Custody Manager of the agreements pursuant to which Custodian employs such
foreign sub-custodians or as otherwise required by the 1940 Act.
3.7 EMPLOYMENT OF OTHER AGENTS. Custodian may employ other suitable agents,
which may include affiliates of Custodian such as Bear, Stearns & Co. Inc.
("Bear Stearns") or Bear, Stearns Securities Corp.("BS Securities"), both of
which are securities broker-dealers, provided, however, that Custodian shall not
employ (a) BS Securities to hold any collateral pledged by BS Securities under
the Master Securities Loan Agreement or any other securities loan agreement
between the Company and BS Securities, whether now or hereafter in effect, or
(b) Bear Stearns to hold any securities purchased from Bear Stearns under the
Master Repurchase Agreement or any other repurchase agreement between the
Company and Bear Stearns, whether now or hereafter in effect. The appointment of
any agent pursuant to this Section 3.7 shall not relieve Custodian of any of its
obligations or liabilities under this Agreement.
<PAGE>
3.8 BANK ACCOUNTS. In its discretion and from time to time Custodian may
open and maintain one or more demand deposit accounts with any Eligible Domestic
Bank (any such accounts to be in the name of Custodian and subject only to its
draft or order), provided, however, that the opening and maintenance of any such
account shall be at Custodian's expense and shall not relieve Custodian of any
of its obligations or liabilities under this Agreement.
3.9 DELIVERY OF ASSETS TO CUSTODIAN. Provided they are acceptable to
Custodian, the Company shall deliver to Custodian the securities, funds and
other assets of each Portfolio, including (A) payments of income, payments of
principal and capital distributions received by such Portfolio with respect to
securities, funds or other assets owned by such Portfolio at any time during the
term of this Agreement, and (B) funds received by such Portfolio for the
issuance, at any time during such term, of Shares of such Portfolio. Custodian
shall not be under any duty or obligation to require the Company to deliver to
it any securities or other assets owned by a Portfolio and shall have no
responsibility or liability for or on account of securities or other assets not
so delivered.
3.10 DOMESTIC SECURITIES DEPOSITORIES AND BOOK-ENTRY SYSTEMS. Custodian and
any sub-custodian appointed pursuant to Section 3.5 above may deposit and/or
maintain securities of any Portfolio in a Domestic Securities Depository or in a
Book-Entry System, subject to the following provisions:
(a) Prior to a deposit of securities of a Portfolio in any Domestic
Securities Depository or Book-Entry System, the Company shall deliver to
Custodian a resolution of the Board of Directors, certified by an officer of the
Company, authorizing and instructing Custodian (and any sub-custodian appointed
pursuant to Section 3.5 above) on an on-going basis to deposit in
<PAGE>
such Domestic Securities Depository or Book-Entry System all securities eligible
for deposit therein and to make use of such Domestic Securities Depository or
Book-Entry System to the extent possible and practical in connection with the
performance of its obligations hereunder (or under the applicable sub-custody
agreement in the case of such sub-custodian), including, without limitation, in
connection with settlements of purchases and sales of securities, loans of
securities, and deliveries and returns of collateral consisting of securities.
(b) Securities of a Portfolio kept in a Book-Entry System or Domestic
Securities Depository shall be kept in an account ("Depository Account") of
Custodian (or of any sub-custodian appointed pursuant to Section 3.5 above) in
such Book-Entry System or Domestic Securities Depository which includes only
assets held by Custodian (or such sub-custodian) as a fiduciary, custodian or
otherwise for customers.
(c) The records of Custodian with respect to securities of a Portfolio that
are maintained in a Book-Entry System or Domestic Securities Depository shall at
all times identify such securities as belonging to such Portfolio.
(d) If securities purchased by a Portfolio are to be held in a Book-Entry
System or Domestic Securities Depository, Custodian (or any sub-custodian
appointed pursuant to Section 3.5 above) shall pay for such securities upon (I)
receipt of advice from the Book-Entry System or Domestic Securities Depository
that such securities have been transferred to the Depository Account, and (II)
the making of an entry on the records of Custodian (or of such sub-custodian) to
reflect such payment and transfer for the account of such Portfolio. If
securities sold by a Portfolio are held in a Book-Entry System or Domestic
<PAGE>
Securities Depository, Custodian (or such sub-custodian) shall transfer such
securities upon (A) receipt of advice from the Book-Entry System or Domestic
Securities Depository that payment for such securities has been transferred to
the Depository Account, and (B) the making of an entry on the records of
Custodian (or of such sub-custodian) to reflect such transfer and payment for
the account of such Portfolio.
(e) Custodian shall provide the Company with copies of any report obtained
by Custodian (or by any sub-custodian appointed pursuant to Section 3.5 above)
from a Book-Entry System or Domestic Securities Depository in which securities
of a Portfolio are kept on the internal accounting controls and procedures for
safeguarding securities deposited in such Book-Entry System or Domestic
Securities Depository.
(f) At its election, the Company shall be subrogated to the rights of
Custodian (or of any sub-custodian appointed pursuant to Section 3.5 above) with
respect to any claim against a Book-Entry System or Domestic Securities
Depository or any other person for any loss or damage to a Portfolio arising
from the use of such Book-Entry System or Domestic Securities Depository, if and
to the extent that such Portfolio has not been made whole for any such loss or
damage.
3.11 RELATIONSHIP WITH SECURITIES DEPOSITORIES. No Book-Entry System,
Securities Depository, or other securities depository or clearing agency
(whether foreign or domestic) which it is or may become standard market practice
to use for the comparison and settlement of trades in securities shall be an
agent or sub-contractor of Custodian for purposes of Section 3.7 above or
otherwise.
3.12 PAYMENTS FROM CUSTODY ACCOUNT. Upon receipt of Proper Instructions
with respect to a Portfolio but subject to its right to foreclose upon and
liquidate collateral pledged to it pursuant to Section 9.3 below, Custodian
shall make payments from the Custody Account of such Portfolio, but only in the
following
<PAGE>
cases, provided, FIRST, that such payments are in connection with the clearance
and/or custody of securities or other assets, SECOND, that there are sufficient
funds in such Custody Account, whether belonging to such Portfolio or advanced
to it by Custodian in its sole and absolute discretion as set forth in Section
3.18 below, for Custodian to make such payments, and, THIRD, that after the
making of such payments, such Portfolio would not be in violation of any margin
or other requirements agreed upon pursuant to Section 3.18 below:
(a) For the purchase of securities for such Portfolio but only (I) in the
case of securities (other than options on securities, futures contracts and
options on futures contracts), against the delivery to Custodian (or any
sub-custodian appointed pursuant to this Agreement) of such securities
registered as provided in Section 3.20 below or in proper form for transfer or,
if the purchase of such securities is effected through a Book-Entry System or
Domestic Securities Depository, in accordance with the conditions set forth in
Section 3.10 above, and (II) in the case of options, futures contracts and
options on futures contracts, against delivery to Custodian (or such
sub-custodian) of evidence of title thereto in favor of such Portfolio, the
Custodian, any such sub-custodian, or any nominee referred to in Section 3.20
below;
(b) In connection with the conversion, exchange or surrender, as set forth
in Section 3.13(f) below, of securities owned by such Portfolio;
(c) For transfer in accordance with the provisions of any agreement among
the Company, Custodian and a securities broker-dealer, relating to compliance
with rules of The Options Clearing Corporation and of any registered national
securities exchange (or of any similar organization or organizations) regarding
escrow or other arrangements in connection with
<PAGE>
transactions of such Portfolio;
(d) For transfer in accordance with the provisions of any agreement among
the Company, Custodian and a futures commission merchant, relating to compliance
with the rules of the Commodity Futures Trading Commission and/or any contract
market (or any similar organization or organizations) regarding margin or other
deposits in connection with transactions of such Portfolio;
(e) For the funding of any time deposit (whether certificated or not) or
other interest-bearing account with any banking institution (including
Custodian), provided that Custodian shall receive and retain such certificate,
advice, receipt or other evidence of deposit (if any) as such banking
institution may deliver with respect to any such deposit or account;
(f) For the purchase from a banking or other financial institution of loan
participations, but only if Custodian has in its possession a copy of the
agreement between the Company and such banking or other financial institution
with respect to the purchase of such loan participations and provided that
Custodian shall receive and retain such participation certificate or other
evidence of participation (if any) as such banking or other financial
institution may deliver with respect to any such loan participation;
(g) For the purchase and/or sale of foreign currencies or of options to
purchase and/or sell foreign currencies, for spot or future delivery, for the
account of such Portfolio pursuant to contracts between the Company and any
banking or other financial institution (including Custodian, any sub-custodian
appointed pursuant to this Agreement and any affiliate of Custodian);
(h) For transfer to a securities broker-dealer as margin for
<PAGE>
a short sale of securities for such Portfolio, or as payment in lieu of
dividends paid on securities sold short for such Portfolio;
(i) For the payment as provided in Article IV below of any dividends,
capital gain distributions or other distributions declared on the Shares of such
Portfolio;
(j) For the payment as provided in Article IV below of the redemption price
of the Shares of such Portfolio;
(k) For the payment of any expense or liability incurred by such Portfolio,
including but not limited to the following payments for the account of such
Portfolio: interest, taxes, and administration, investment advisory, accounting,
auditing, transfer agent, custodian, trustee and legal fees, and other operating
expenses of such Portfolio; in all cases, whether or not such expenses are to be
in whole or in part capitalized or treated as deferred expenses; and
(l) For any other proper purpose, but only upon receipt of Proper
Instructions, specifying the amount and purpose of such payment, certifying such
purpose to be a proper purpose of such Portfolio, and naming the person or
persons to whom such payment is to be made.
3.13 DELIVERIES FROM CUSTODY ACCOUNT. Upon receipt of Proper Instructions
with respect to a Portfolio but subject to its right to foreclose upon and
liquidate collateral pledged to it pursuant to Section 9.3 below, Custodian
shall release and deliver securities and other assets from the Custody Account
of such Portfolio, but only in the following cases, provided, FIRST, that such
deliveries are in connection with the clearance and/or custody of securities or
other assets, SECOND, there are sufficient amounts and types of securities or
other assets in such Custody Account for Custodian to make such deliveries, and,
<PAGE>
THIRD, that after the making of such deliveries, such Portfolio would not be in
violation of any margin or other requirements agreed upon pursuant to Section
3.18 below:
(a) Upon the sale of securities for the account of such Portfolio but,
subject to Section 3.14 below, only against receipt of payment therefor or, if
such sale is effected through a Book-Entry System or Domestic Securities
Depository, in accordance with the provisions of Section 3.10 above;
(b) To an offeror's depository agent in connection with tender or other
similar offers for securities of such Portfolio; provided that, in any such
case, the funds or other consideration for such securities is to be delivered to
Custodian;
(c) To the issuer thereof or its agent when such securities are called,
redeemed or otherwise become payable, provided that in any such case the funds
or other consideration for such securities is to be delivered to Custodian;
(d) To the issuer thereof or its agent for exchange for a different number
of certificates or other evidence representing the same aggregate face amount or
number of units; provided that, in any such case, the new securities are to be
delivered to Custodian;
(e) To the securities broker through whom securities are being sold for
such Portfolio, for examination in accordance with the "street delivery" custom;
(f) For exchange or conversion pursuant to any plan of merger,
consolidation, recapitalization, reorganization or readjustment of the issuer of
such securities, or pursuant to provisions for conversion contained in such
securities, or pursuant to any deposit agreement, including surrender or receipt
<PAGE>
of underlying securities in connection with the issuance or cancellation of
depository receipts; provided that, in any such case, the new securities and
funds, if any, are to be delivered to Custodian;
(g) In the case of warrants, rights or similar securities, to the issuer of
such warrants, rights or similar securities, or its agent, upon the exercise
thereof, provided that, in any such case, the new securities and funds, if any,
are to be delivered to Custodian;
(h) To the borrower thereof, or its agent, in connection with any loans of
securities for such Portfolio pursuant to any securities loan agreement entered
into by the Company, but only against receipt by Custodian of such collateral as
is required under such securities loan agreement;
(i) To any lender, or its agent, as collateral for any borrowings from such
lender by such Portfolio that require a pledge of assets of such Portfolio, but
only against receipt by Custodian of the amounts borrowed;
(j) Pursuant to any authorized plan of liquidation, reorganization, merger,
consolidation or recapitalization of such Portfolio or the Company;
(k) For delivery in accordance with the provisions of any agreement among
the Company, Custodian and a securities broker- dealer, relating to compliance
with the rules of The Options Clearing Corporation and of any registered
national securities exchange (or of any similar organization or organizations)
regarding escrow or other arrangements in connection with transactions of such
Portfolio;
(l) For delivery in accordance with the provisions of any
<PAGE>
agreement among the Company, Custodian, and a futures commission merchant,
relating to compliance with the rules of the Commodity Futures Trading
Commission and/or any contract market (or any similar organization or
organizations) regarding margin or other deposits in connection with
transactions of such Portfolio;
(m) For delivery to a securities broker-dealer as margin for a short sale
of securities for such Portfolio;
(n) To the issuer of American Depositary Receipts or International
Depositary Receipts (hereinafter, collectively, "ADRs") for such securities, or
its agent, against a written receipt therefor adequately describing such
securities, provided that such securities are delivered together with
instructions to issue ADRs in the name of Custodian or its nominee and to
deliver such ADRs to Custodian;
(o) In the case of ADRs, to the issuer thereof, or its agent, against a
written receipt therefor adequately describing such ADRs, provided that such
ADRs are delivered together with instructions to deliver the securities
underlying such ADRs to Custodian or an agent of Custodian; or
(p) For any other proper purpose, but only upon receipt of Proper
Instructions, specifying the securities or other assets to be delivered, setting
forth the purpose for which such delivery is to be made, certifying such purpose
to be a proper purpose of such Portfolio, and naming the person or persons to
whom delivery of such securities or other assets is to be made.
3.14 DELIVERY PRIOR TO FINAL PAYMENT. When instructed by the Company to
deliver securities of a Portfolio against payment, Custodian shall be entitled,
but only if in accordance with generally accepted market practice, to deliver
such securities prior to actual receipt of final payment therefor and,
exclusively in the
<PAGE>
case of securities in physical form, prior to receipt of payment therefor. In
any such case, such Portfolio shall bear the risk that final payment for such
securities may not be made or that such securities may be returned or otherwise
held or disposed of by or through the person to whom they were delivered, and
Custodian shall have no liability for any of the foregoing.
3.15 CREDIT PRIOR TO FINAL PAYMENT. In its sole discretion and from time to
time, Custodian may credit the Custody Account of a Portfolio, prior to actual
receipt of final payment thereof, with (A) proceeds from the sale of securities
of such Portfolio which it has been instructed to deliver against payment, (B)
proceeds from the redemption of securities or other assets in such Custody
Account, and (C) income from securities, funds or other assets in such Custody
Account. Any such credit shall be conditional upon actual receipt by Custodian
of final payment and may be reversed if final payment is not actually received
in full. Custodian may, in its sole discretion and from time to time, permit a
Portfolio to use funds so credited to its Custody Account in anticipation of
actual receipt of final payment. Any funds so used shall constitute an advance
subject to Section 3.18 below.
3.16 DEFINITION OF FINAL PAYMENT. For purposes of this Agreement, "final
payment" means payment in funds which are (or have become) immediately
available, under applicable law are irreversible, and are not subject to any
security interest, levy, lien or other encumbrance.
3.17 PAYMENTS AND DELIVERIES OUTSIDE THE UNITED STATES. Notwithstanding
anything to the contrary that may be required by Section 3.12 or Section 3.13
above, or elsewhere in this Agreement, in the case of securities and other
assets maintained outside the United States and in the case of payments made
outside the United States, Custodian and any sub-custodian appointed pursuant to
this Agreement may receive and deliver such
<PAGE>
securities or other assets, and may make such payments, in accordance with the
laws, regulations, customs, procedures and practices applicable in the relevant
local market outside the United States.
3.18 CLEARING CREDIT. Custodian may, in its sole discretion and from time
to time, advance funds to the Company to facilitate the settlement of a
Portfolio's transactions in the Custody Account of such Portfolio. Any such
advance (A) shall be repayable immediately upon demand made by Custodian, (B)
shall be fully secured as provided in Section 9.3 below, and (C) shall bear
interest at such rate, and be subject to such other terms and conditions, as
Custodian and the Company may agree.
3.19 ACTIONS NOT REQUIRING PROPER INSTRUCTIONS. Unless otherwise instructed
by the Company, Custodian shall with respect to all securities and other assets
held for a Portfolio:
(a) Subject to Section 8.4 below, receive into the Custody Account of such
Portfolio any funds or other property, including payments of principal, interest
and dividends, due and payable on or on account of such securities and other
assets;
(b) Deliver securities of such Portfolio to the issuers of such securities
or their agents for the transfer thereof into the name of such Portfolio,
Custodian or any of the nominees referred to in Section 3.20 below;
(c) Endorse for collection, in the name of such Portfolio, checks, drafts
and other negotiable instruments;
(d) Surrender interim receipts or securities in temporary form for
securities in definitive form;
(e) Execute, as custodian, any necessary declarations or
<PAGE>
certificates of ownership under the federal income tax laws of the United
States, or the laws or regulations of any other taxing authority, in connection
with the transfer of such securities or other assets or the receipt of income or
other payments with respect thereto;
(f) Receive and hold for such Portfolio all rights and similar securities
issued with respect to securities or other assets of such Portfolio;
(g) As may be required in the execution of Proper Instructions, transfer
funds from the Custody Account of such Portfolio to any demand deposit account
maintained by Custodian pursuant to Section 3.8 above; and
(h) In general, attend to all non-discretionary details in connection with
the sale, exchange, substitution, purchase and transfer of, and other dealings
in, such securities and other assets.
3.20 REGISTRATION AND TRANSFER OF SECURITIES. All securities held for a
Portfolio that are issuable only in bearer form shall be held by Custodian in
that form, provided that any such securities shall be held in a Securities
Depository or Book-Entry System if eligible therefor. All other securities and
all other assets held for a Portfolio may be registered in the name of (A)
Custodian as agent, (B) any sub-custodian appointed pursuant to this Agreement,
(C) any Securities Depository, or (D) any nominee or agent of any of them. The
Company shall furnish to Custodian appropriate instruments to enable Custodian
to hold or deliver in proper form for transfer, or to register as in this
Section 3.20 provided, any securities or other assets delivered to Custodian
which are registered in the name of a Portfolio.
3.21 RECORDS. (A) Custodian shall maintain complete and
<PAGE>
accurate records with respect to securities, funds and other assets held for a
Portfolio, including (I) journals or other records of original entry containing
an itemized daily record in detail of all receipts and deliveries of securities
and all receipts and disbursements of funds; (II) ledgers (or other records)
reflecting (A) securities in transfer, if any, (B) securities in physical
possession, (C) monies and securities borrowed and monies and securities loaned
(together with a record of the collateral therefor and substitutions of such
collateral), (D) dividends and interest received, and (E) dividends receivable
and interest accrued; and (III) cancelled checks and bank records related
thereto. Custodian shall keep such other books and records with respect to
securities, funds and other assets of a Portfolio which are held hereunder as
the Company may reasonably request.
(b) All such books and records maintained by Custodian for a Portfolio
shall (I) be maintained in a form acceptable to the Company and in compliance
with rules and regulations of the Securities and Exchange Commission, (II) be
the property of such Portfolio and at all times during the regular business
hours of Custodian be made available upon request for inspection by duly
authorized officers, employees or agents of the Company and employees or agents
of the Securities and Exchange Commission, and (III) if required to be
maintained under the 1940 Act, be preserved for the periods prescribed therein.
3.22 ACCOUNT REPORTS BY CUSTODIAN. Custodian shall furnish the Company with
a daily activity statement, including a summary of all transfers to or from the
Custody Account of each Portfolio (in the case of securities and other assets
maintained in the United States, on the day following such transfers). At least
monthly and from time to time, Custodian shall furnish the Company with a
detailed statement of the securities, funds and other assets held for each
Portfolio under this Agreement.
<PAGE>
3.23 OTHER REPORTS BY CUSTODIAN. Custodian shall provide the Company with
such reports as the Company may reasonably request from time to time on the
internal accounting controls and procedures for safeguarding securities which
are employed by Custodian or any sub-custodian appointed pursuant to this
Agreement.
3.24 PROXIES AND OTHER MATERIALS. (a) Unless otherwise instructed by the
Company, Custodian shall promptly deliver to the Company all notices of
meetings, proxy materials (other than proxies) and other announcements, which
it receives regarding securities held by it in the Custody Account of a
Portfolio. Whenever Custodian or any of its agents receives a proxy with
respect to securities in the Custody Account of a Portfolio, Custodian shall
promptly request instructions from the Company on how such securities are to
be voted, and shall give such proxy, or cause it to be given, in accordance
with such instructions. If the Company timely informs Custodian that the
Company wishes to vote any such securities in person, Custodian shall
promptly seek to have a legal proxy covering such securities issued to the
Company. Unless otherwise instructed by the Company, neither Custodian nor
any of its agents shall exercise any voting rights with respect to securities
held hereunder.
(b) Unless otherwise instructed by the Company, Custodian shall promptly
transmit to the Company all other written information received by Custodian from
issuers of securities held in the Custody Account of any Portfolio. With respect
to tender or exchange offers for such securities or with respect to other
corporate transactions involving such securities, Custodian shall promptly
transmit to the Company all written information received by Custodian from the
issuers of such securities or from any party (or its agents) making any such
tender or exchange offer or
<PAGE>
participating in such other corporate transaction. If the Company, with respect
to such tender or exchange offer or other corporate transaction, desires to take
any action that may be taken by it pursuant to the terms of such offer or other
transaction, the Company shall notify Custodian (i) in the case of securities
maintained outside the United States, such number of Business Days prior to the
date on which Custodian is to take such action as will allow Custodian to take
such action in the relevant local market for such securities in a timely
fashion, and (ii) in the case of all other securities, at least five Business
Days prior to the date on which Custodian is to take such action.
3.25 CO-OPERATION. Custodian shall cooperate with and supply necessary
information to the entity or entities appointed by the Company to keep the books
of account of a Portfolio and/or to compute the value of the assets of a
Portfolio.
ARTICLE IV
REDEMPTION OF PORTFOLIO SHARES;
DIVIDENDS AND OTHER DISTRIBUTIONS
4.1 TRANSFER OF FUNDS. From such funds as may be available for the purpose
in the Custody Account of a Portfolio, and upon receipt of Proper Instructions
specifying that the funds are required to redeem Shares of such Portfolio or to
pay dividends or other distributions to holders of Shares of such Portfolio,
Custodian shall transfer each amount specified in such Proper Instructions to
such account of such Portfolio or of an agent thereof (other than Custodian), at
such bank, as the Company may designate therein with respect to such amount.
4.2 SOLE DUTY OF CUSTODIAN. Custodian's sole obligation with respect to the
redemption of Shares of a Portfolio and the payment of dividends and other
distributions thereon shall be its obligation set forth in Section 4.1 above,
and Custodian shall
<PAGE>
not be required to make any payments to the various holders from time to time of
Shares of a Portfolio nor shall Custodian be responsible for the payment or
distribution by the Company, or any agent designated in Proper Instructions
given pursuant to Section 4.1 above, of any amount paid by Custodian to the
account of the Company or such agent in accordance with such Proper
Instructions.
ARTICLE V
SEGREGATED ACCOUNTS
Upon receipt of Proper Instructions to do so, Custodian shall establish and
maintain a segregated account or accounts for and on behalf of any Portfolio,
into which account or accounts may be transferred funds and/or securities,
including securities maintained in a Securities Depository:
(a) in accordance with the provisions of any agreement among the Company,
Custodian and a securities broker-dealer (or any futures commission merchant),
relating to compliance with the rules of The Options Clearing Corporation or of
any registered national securities exchange (or the Commodity Futures Trading
Commission or any registered contract market), or of any similar organization or
organizations, regarding escrow or other arrangements in connection with
transactions of such Portfolio,
(b) for purposes of segregating funds or securities in connection with
securities options purchased or written by such Portfolio or in connection with
financial futures contracts (or options thereon) purchased or sold by such
Portfolio,
(c) which constitute collateral for loans of securities made by such
Portfolio,
(d) for purposes of compliance by such Portfolio with requirements under
the 1940 Act for the maintenance of segregated
<PAGE>
accounts by registered management investment companies in connection with
reverse repurchase agreements, when-issued, delayed delivery and firm commitment
transactions, and short sales of securities, and
(e) for other proper purposes, but only upon receipt of Proper
Instructions, specifying the purpose or purposes of such segregated account and
certifying such purposes to be proper purposes of such Portfolio.
ARTICLE VI
CERTAIN REPURCHASE TRANSACTIONS
6.1 TRANSACTIONS. If and to the extent that the necessary funds and
securities of a Portfolio have been entrusted to it under this Agreement, and
subject to Custodian's right to foreclose upon and liquidate collateral pledged
to it pursuant to Section 9.3 below, Custodian, as agent of such Portfolio,
shall from time to time (and unless the Company gives it Proper Instructions to
do otherwise) make from the Custody Account of such Portfolio the transfers of
funds and deliveries of securities which such Portfolio is required to make
pursuant to the Master Repurchase Agreement and shall receive for the Custody
Account of such Portfolio the transfers of funds and deliveries of securities
which the seller under the Master Repurchase Agreement is required to make
pursuant thereto. Custodian shall make and receive all such transfers and
deliveries pursuant to, and subject to the terms and conditions of, the Master
Repurchase Agreement.
6.2 COLLATERAL. Custodian shall daily mark to market the securities
purchased under the Master Repurchase Agreement and held in the Custody Account
of a Portfolio, and shall give to the seller thereunder any such notice as may
be required thereby in connection with such mark-to-market.
<PAGE>
6.3 EVENTS OF DEFAULT. Custodian shall promptly notify the Company of any
event of default under the Master Repurchase Agreement (as such term "event of
default" is defined therein) of which it has actual knowledge.
6.4 MASTER REPURCHASE AGREEMENT. Custodian hereby acknowledges its receipt
from the Company of a copy of the Master Repurchase Agreement. The Company shall
provide Custodian, prior to the effectiveness thereof, with a copy of any
amendment to the Master Repurchase Agreement.
ARTICLE VII
CERTAIN SECURITIES LENDING TRANSACTIONS
7.1 TRANSACTIONS. If and to the extent that the necessary funds and
securities of a Portfolio have been entrusted to it under this Agreement, and
subject to Custodian's right to foreclose upon and liquidate collateral pledged
to it pursuant to Section 9.3 below, Custodian, as agent of such Portfolio,
shall from time to time (and unless the Company gives it Proper Instructions to
do otherwise) make from the Custody Account of such Portfolio the transfers of
funds and deliveries of securities which such Portfolio is required to make
pursuant to the Master Securities Loan Agreement and shall receive for the
Custody Account of such Portfolio the transfers of funds and deliveries of
securities which the borrower under the Master Securities Loan Agreement is
required to make pursuant thereto. Custodian shall make and receive all such
transfers and deliveries pursuant to, and subject to the terms and conditions
of, the Master Securities Loan Agreement.
7.2 COLLATERAL. Custodian shall daily mark to market, in the manner
provided for in the Master Securities Loan Agreement, all loans of securities
which may from time to time be outstanding
<PAGE>
thereunder.
7.3 DEFAULTS. Custodian shall promptly notify the Company of any default
under the Master Securities Loan Agreement (as such term "default" is defined
therein) of which it has actual knowledge.
7.4 MASTER SECURITIES LOAN AGREEMENT. Custodian hereby acknowledges its
receipt from the Company of a copy of the Master Securities Loan Agreement. The
Company shall provide Custodian, prior to the effectiveness thereof, with a copy
of any amendment to the Master Securities Loan Agreement.
ARTICLE VIII
CONCERNING THE CUSTODIAN
8.1 STANDARD OF CARE. Custodian shall be held to the exercise of reasonable
care in carrying out its obligations under this Agreement, and shall be without
liability to any Portfolio or the Company for any loss, damage, cost, expense
(including attorneys' fees and disbursements), liability or claim which does not
arise from willful misfeasance, bad faith or negligence on the part of
Custodian. Custodian shall be entitled to rely on and may act upon advice of
counsel in all matters, and shall be without liability for any action reasonably
taken or omitted pursuant to such advice. In no event shall Custodian be liable
for special, incidental or consequential damages, even if Custodian has been
advised of the possibility of such damages, or be liable in any manner
whatsoever for any action taken or omitted upon instructions from the Company or
any agent of the Company.
8.2 ACTUAL COLLECTION REQUIRED. Custodian shall not be liable for, or
considered to be the custodian of, any funds belonging to a Portfolio or any
money represented by a check, draft or other instrument for the payment of
money, until Custodian or its agents actually receive such funds or collect on
such instrument.
<PAGE>
8.3 NO RESPONSIBILITY FOR TITLE, ETC. So long as and to the extent that it
is in the exercise of reasonable care, Custodian shall not be responsible for
the title, validity or genuineness of any assets or evidence of title thereto
received or delivered by it or its agents.
8.4 LIMITATION ON DUTY TO COLLECT. Custodian shall promptly notify the
Company whenever any money or property due and payable from or on account of any
securities or other assets held hereunder for a Portfolio is not timely received
by it. Custodian shall not, however, be required to enforce collection, by legal
means or otherwise, of any such money or other property not paid when due, but
shall receive the proceeds of such collections as may be effected by it or its
agents in the ordinary course of Custodian's custody and safekeeping business or
of the custody and safekeeping business of such agents.
8.5 EXPRESS DUTIES ONLY. Custodian shall have no duties or obligations
whatsoever except such duties and obligations as are specifically set forth in
this Agreement, and no covenant or obligation shall be implied in this Agreement
against Custodian. Custodian shall have no discretion whatsoever with respect to
the management, disposition or investment of the Custody Account of any
Portfolio and is not a fiduciary to any Portfolio or the Company. In particular,
Custodian shall not be under any obligation at any time to monitor or to take
any other action with respect to compliance by any Portfolio or the Company with
the 1940 Act, the provisions of the Corporation's charter documents or by-laws,
or any Portfolio's investment objectives, policies and limitations as in effect
from time to time.
ARTICLE IX
INDEMNIFICATION
<PAGE>
9.1 INDEMNIFICATION. Each Portfolio shall indemnify and hold harmless
Custodian, any sub-custodian appointed pursuant to this Agreement and any
nominee of any of them, from and against any loss, damages, cost, expense
(including attorneys' fees and disbursements), liability (including, without
limitation, liability arising under the Securities Act of 1933, the Securities
Exchange Act of 1934, the 1940 Act, and any federal, state or foreign securities
and/or banking laws) or claim arising directly or indirectly (a) from the fact
that securities or other assets in the Custody Account of such Portfolio are
registered in the name of any such nominee, or (b) from any action or inaction,
with respect to such Portfolio, by Custodian or such sub-custodian or nominee
(i) at the request or direction of or in reliance on the advice of the Company
or any of its agents, or (ii) upon Proper Instructions, or (c) generally, from
the performance of its obligations under this Agreement with respect to such
Portfolio, provided that Custodian, any such sub-custodian or any nominee of any
of them shall not be indemnified and held harmless from and against any such
loss, damage, cost, expense, liability or claim arising from willful
misfeasance, bad faith or negligence on the part of Custodian or any such
sub-custodian or nominee.
9.2 INDEMNITY TO BE PROVIDED. If the Company requests Custodian to take
any action with respect to securities or other assets of a Portfolio, which
may, in the opinion of Custodian, result in Custodian or its nominee becoming
liable for the payment of money or incurring liability of some other form,
Custodian shall not be required to take such action until such Portfolio
shall have provided indemnity therefor to Custodian in an amount and form
satisfactory to Custodian.
9.3 SECURITY. As security for the payment of any present or future
obligation or liability of any kind which a Portfolio may have to Custodian with
respect to or in connection with the
<PAGE>
Custody Account of such Portfolio or this Agreement, or which such Portfolio may
otherwise have to Custodian, the Company hereby pledges to Custodian all
securities, funds and other assets of every kind which are in such Custody
Account or otherwise held for such Portfolio pursuant to this Agreement, and
hereby grants to Custodian a lien, right of set-off and continuing security
interest in such securities, funds and other assets.
ARTICLE X
FORCE MAJEURE
Custodian shall not be liable for any failure or delay in performance of
its obligations under this Agreement arising out of or caused, directly or
indirectly, by circumstances beyond its reasonable control, including, without
limitation, acts of God; earthquakes; fires; floods; wars; civil or military
disturbances; sabotage; strikes; epidemics; riots; power failures; computer
failure and any such circumstances beyond its reasonable control as may cause
interruption, loss or malfunction of utility, transportation, computer (hardware
or software) or telephone communication service; accidents; labor disputes; acts
of civil or military authority; actions by any governmental authority, DE JURE
or DE FACTO; or inability to obtain labor, material, equipment or
transportation.
ARTICLE XI
REPRESENTATIONS AND WARRANTIES
11.1 REPRESENTATIONS WITH RESPECT TO PORTFOLIOS. The Company represents and
warrants that (a) it has all necessary power and authority to perform the
obligations hereunder of each Portfolio, (b) the execution and delivery by it of
this Agreement, and the performance by it of the obligations hereunder of each
Portfolio, have been duly authorized by all necessary action and will not
violate any law, regulation, charter, by-law, or other
<PAGE>
instrument, restriction or provision applicable to it or such Portfolio or by
which it or such Portfolio, or their respective assets, may be bound, and (c)
this Agreement constitutes a legal, valid and binding obligation of each
Portfolio, enforceable against it in accordance with its terms.
11.2 REPRESENTATIONS OF CUSTODIAN. Custodian represents and warrants that
(a) it has all necessary power and authority to perform its obligations
hereunder, (b) the execution and delivery by it of this Agreement, and the
performance by it of its obligations hereunder, have been duly authorized by all
necessary action and will not violate any law, regulation, charter, by-law, or
other instrument, restriction or provision applicable to it or by which it or
its assets may be bound, and (c) this Agreement constitutes a legal, valid and
binding obligation of it, enforceable against it in accordance with its terms.
ARTICLE XII
COMPENSATION OF CUSTODIAN
Each Portfolio shall pay Custodian such fees and charges as are set forth
in Exhibit E hereto, as such Exhibit E may from time to time be revised by
Custodian upon 14 days' prior written notice to the Company. Any annual fee or
other charges payable by a Portfolio shall be paid monthly by automatic
deduction from funds available therefor in the Custody Account of such
Portfolio, or, if there are no such funds, upon presentation of an invoice
therefor. Out-of-pocket expenses incurred by Custodian in the performance of its
services hereunder for any Portfolio and all other proper charges and
disbursements of the Custody Account of such Portfolio shall be charged to such
Custody Account by Custodian and paid in the same manner as the annual fee and
other charges referred to in this Article XII.
ARTICLE XIII
<PAGE>
TAXES
13.1 TAXES PAYABLE BY PORTFOLIOS. Any and all taxes, including any interest
and penalties with respect thereto, which may be levied or assessed under
present or future laws or in respect of the Custody Account of any Portfolio or
any income thereof shall be charged to such Custody Account by Custodian and
paid in the same manner as the annual fee and other charges referred to in
Article XII above.
13.2 TAX RECLAIMS. Upon the written request of the Company, Custodian shall
exercise, on behalf of any Portfolio, any tax reclaim rights of such Portfolio
which arise in connection with foreign securities in the Custody Account of such
Portfolio.
ARTICLE XIV
AUTHORIZED PERSONS; NOTICES
14.1 AUTHORIZED PERSONS. Custodian may rely upon and act in accordance with
any notice, confirmation, instruction or other communication which is reasonably
believed by Custodian to have been given or signed on behalf of the Company by
one of the Authorized Persons designated by the Company in Exhibit B hereto, as
it may from time to time be revised. The Company may revise Exhibit B hereto at
any time by notice in writing to Custodian given in accordance with Section 14.4
below, but no revision of Exhibit B hereto shall be effective until Custodian
actually receives such notice.
14.2 INVESTMENT ADVISERS. Custodian may also rely upon and act in
accordance with any Written or Oral Instructions given with respect to a
Portfolio which are reasonably believed by Custodian to have been given or
signed by one of the persons designated from time to time by any of the
investment advisers of such Portfolio
<PAGE>
who are specified in Exhibit C hereto (if any) as it may from time to time be
revised. The Company may revise Exhibit C hereto at any time by notice in
writing to Custodian given in accordance with Section 14.4 below, and each
investment adviser specified in Exhibit C hereto (if any) may at any time by
like notice designate an Authorized Person or remove an Authorized Person
previously designated by it, but no revision of Exhibit C hereto (if any) and no
designation or removal by such investment adviser shall be effective until
Custodian actually receives such notice.
14.3 ORAL INSTRUCTIONS. Custodian may rely upon and act in accordance with
Oral Instructions. All Oral Instructions shall be confirmed to Custodian in
Written Instructions. However, if Written Instructions confirming Oral
Instructions are not received by Custodian prior to a transaction, it shall in
no way affect the validity of the transaction authorized by such Oral
Instructions or the authorization given by an Authorized Person to effect such
transaction. Custodian shall incur no liability to any Portfolio or the Company
in acting upon Oral Instructions. To the extent such Oral Instructions vary from
any confirming Written Instructions, Custodian shall advise the Company of such
variance but unless confirming Written Instructions are timely received, such
Oral Instructions shall govern.
14.4 ADDRESSES FOR NOTICES. Unless otherwise specified herein, all demands,
notices, instructions, and other communications to be given hereunder shall be
sent, delivered or given to the recipient at the address, or the relevant
telephone number, set forth after its name hereinbelow:
<PAGE>
If to the Company:
THE RBB FUND
for [INSERT NAME OF PORTFOLIO]
Bellevue Park Corporate Center
400 Bellevue Parkway (Ste 100)
Wilmington, DE 19809
Attention:
------------------------------
Telephone: (302) -
---- ----
Facsimile: (302) -
---- ----
If to Custodian:
CUSTODIAL TRUST COMPANY
101 Carnegie Center
Princeton, New Jersey 08540-6231
Attention: VICE PRESIDENT - TRUST OPERATIONS
Telephone: (609) 951-2320
Facsimile: (609) 951-2327
or at such other address as either party hereto shall have provided to the other
by notice given in accordance with this Section 14.4. Writing shall include
transmissions by or through teletype, facsimile, central processing unit
connection, on-line terminal and magnetic tape.
14.5 REMOTE CLEARANCE. Written Instructions for the receipt, delivery or
transfer of securities may include, and Custodian shall accept, Remote Clearance
Instructions (as defined hereinbelow) and Bulk Input Instructions (as defined
hereinbelow), provided that such Instructions are given in accordance with the
procedures prescribed by Custodian from time to time as to content of
instructions and their manner and timeliness of delivery by Customer. Custodian
shall be entitled to conclusively assume that all Remote Clearance Instructions
and Bulk Input Instructions have been given by an Authorized Person, and
Custodian is hereby irrevocably authorized to act in accordance therewith. For
purposes of this Agreement, "Remote Clearance Instructions" means instructions
that are input directly via a remote terminal which is located on the premises
<PAGE>
of the Company, or of an investment adviser named in Exhibit C hereto, and
linked to Custodian; and "Bulk Input Instructions" means instructions that are
input by bulk input computer tape delivered to Custodian by messenger or
transmitted to it via such transmission mechanism as the Company and Custodian
shall from time to time agree upon.
ARTICLE XV
TERMINATION
Either party hereto may terminate this Agreement with respect to one or
more of the Portfolios by giving to the other party a notice in writing
specifying the date of such termination, which shall be not less than sixty (60)
days after the date of the giving of such notice. Upon the date set forth in
such notice this Agreement shall terminate with respect to each Portfolio
specified in such notice, and Custodian shall, upon receipt of a notice of
acceptance by the successor custodian, on that date (a) deliver directly to the
successor custodian or its agents all securities (other than securities held in
a Book-Entry System or Securities Depository) and other assets then owned by
such Portfolio and held by Custodian as custodian, and (b) transfer any
securities held in a Book-Entry System or Securities Depository to an account of
or for the benefit of such Portfolio, provided that such Portfolio shall have
paid to Custodian all fees, expenses and other amounts to the payment or
reimbursement of which it shall then be entitled.
ARTICLE XVI
MISCELLANEOUS
16.1 BUSINESS DAYS. Nothing contained in this Agreement shall require
Custodian to perform any function or duty on a day other than a Business Day.
<PAGE>
16.2 GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York, without regard to the
conflict of law principles thereof.
16.3 REFERENCES TO CUSTODIAN. The Company shall not circulate any printed
matter which contains any reference to Custodian without the prior written
approval of Custodian, excepting printed matter contained in the prospectus or
statement of additional information for a Portfolio and such other printed
matter as merely identifies Custodian as custodian for a Portfolio. The Company
shall submit printed matter requiring approval to Custodian in draft form,
allowing sufficient time for review by Custodian and its counsel prior to any
deadline for printing.
16.4 NO WAIVER. No failure by either party hereto to exercise, and no delay
by such party in exercising, any right hereunder shall operate as a waiver
thereof. The exercise by either party hereto of any right hereunder shall not
preclude the exercise of any other right, and the remedies provided herein are
cumulative and not exclusive of any remedies provided at law or in equity.
16.5 AMENDMENTS. This Agreement cannot be changed orally and, except as
otherwise provided herein with respect to the Exhibits attached hereto, no
amendment to this Agreement shall be effective unless evidenced by an instrument
in writing executed by the parties hereto.
16.6 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, and by the parties hereto on separate
counterparts, each of which shall be deemed an original but all of which
together shall constitute but one and the same instrument.
16.7 SEVERABILITY. If any provision of this Agreement shall be
<PAGE>
invalid, illegal or unenforceable in any respect under any applicable law, the
validity, legality and enforceability of the remaining provisions shall not be
affected or impaired thereby.
16.8 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and shall
inure to the benefit of the parties hereto and their respective successors and
assigns; PROVIDED, HOWEVER, that this Agreement shall not be assignable by
either party hereto without the written consent of the other party. Any
purported assignment in violation of this Section 16.8 shall be void.
16.9 JURISDICTION. Any suit, action or proceeding with respect to this
Agreement may be brought in the Supreme Court of the State of New York, County
of New York, or in the United States District Court for the Southern District of
New York, and the parties hereto hereby submit to the non-exclusive jurisdiction
of such courts for the purpose of any such suit, action or proceeding, and
hereby waive for such purpose any other preferential jurisdiction by reason of
their present or future domicile or otherwise.
16.10 HEADINGS. The headings of sections in this Agreement are for
convenience of reference only and shall not affect the meaning or construction
of any provision of this Agreement.
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to
be executed in its name and on its behalf by its representative thereunto duly
authorized, all as of the day and year first above written.
THE RBB FUND, INC.
with respect to and on behalf
of the Portfolios identified on
Exhibit A hereto
<PAGE>
By:
----------------------
Name: Edward J. Roach
Title: President & Treasurer
CUSTODIAL TRUST COMPANY
By:
----------------------
Name: Ronald D. Watson
Title: President
EXHIBIT A
PORTFOLIOS
- BEA Long-Short Market Neutral Fund
- BEA Long-Short Equity Fund
<PAGE>
EXHIBIT B
AUTHORIZED PERSONS
Set forth below are the names and specimen signatures of the persons
authorized by the Company to administer the Custody Accounts of the Portfolios.
NAME
- --------------------------------------------------------------------------------
<PAGE>
SIGNATURE
- --------------------------------------------------------------------------------
<PAGE>
EXHIBIT C
INVESTMENT ADVISERS
ALL PORTFOLIOS
BEA Associates
<PAGE>
EXHIBIT D
APPROVED FOREIGN SUB-CUSTODIANS AND SECURITIES DEPOSITORIES
ALL PORTFOLIOS
FOREIGN SUB-CUSTODIAN COUNTRY(IES) SECURITIES DEPOSITORIES
<PAGE>
EXHIBIT E
CUSTODY FEES AND TRANSACTION CHARGES
(BEA LONG-SHORT MARKET NEUTRAL FUND)
DOMESTIC FEES. Assets maintained by the BEA Long-Short Market Neutral Fund
("Portfolio One") in the United States are hereinafter referred to as "Domestic
Assets". FOR PURPOSES OF CALCULATING THE ANNUAL FEE HEREINAFTER PROVIDED FOR AND
CHARGING THE TRANSACTION FEES HEREINAFTER PROVIDED FOR, ALL DOMESTIC ASSETS HELD
IN THE ACCOUNT ESTABLISHED PURSUANT TO THE SPECIAL CUSTODY ACCOUNT AMONG THE
COMPANY, CUSTODIAN AND BEAR STEARNS, DATED AS OF MAY __, 1998, SHALL BE DEEMED
TO BE HELD IN THE CUSTODY ACCOUNT OF PORTFOLIO ONE UNDER THIS AGREEMENT AND ALL
TRANSACTIONS IN SUCH DOMESTIC ASSETS SHALL BE DEEMED TO HAVE OCCURRED IN SUCH
CUSTODY ACCOUNT.
Portfolio One shall pay Custodian the following fees for Domestic Assets
and the following charges for transactions in the United States, all such fees
and charges to be payable monthly:
(1) an annual fee equal to the sum of (a) 0.04% (four basis points) per
annum of the value of the Domestic Assets held in Portfolio One's Custody
Account up to $50 million, plus (b) 0.02% (two basis points) per annum of the
amount by which the value of such Domestic Assets is more than $50 million but
less than $200 million, plus (c) 0.01% (one basis point) per annum of the amount
by which the value of such Domestic Assets exceeds $200 million, with each such
percentage fee to be based upon the total market value of such Domestic Assets
as determined on the last Business Day of the month for which such fee is
charged;
(2) a transaction charge of $25 for each receive or deliver into or from
such Custody Account of securities in physical form;
<PAGE>
(3) a transaction charge for each repurchase transaction in such Custody
Account which represents a cash sweep investment for Portfolio One's account,
computed on the basis of a 360-day year and for the actual number of days such
repurchase transaction is outstanding at a rate of 0.10% (ten basis points) per
annum on the amount of the purchase price paid by Portfolio One in such
repurchase transaction;
(4) a charge of $10 for each "free" transfer of funds from such Custody
Account;
(5) an administrative fee for each purchase in such Custody Account of
shares or other interests in a money market or other fund, which purchase
represents a cash sweep investment for Portfolio One's account, computed for
each day that there is a positive balance in such fund to equal 1/365th of 0.10%
(ten basis points) on the amount of such positive balance for such day; and
(6) a service charge for each holding of securities or other assets of
Portfolio One that are sold by way of private placement or in such other manner
as to require services by Custodian which in its reasonable judgment are
materially in excess of those ordinarily required for the holding of publicly
traded securities in the United States.
INTERNATIONAL FEES. Portfolio One shall pay Custodian fees for assets
maintained by Portfolio One outside the United States ("Foreign Assets") and
charges for transactions by Portfolio One outside the United States (including,
without limitation, charges for funds transfers and tax reclaims) in accordance
with such schedule of fees and charges for each country in which Foreign Assets
of Portfolio One are held as Custodian shall from time to time provide to the
Company. Any asset-based fee shall be based
<PAGE>
upon the total market value of the applicable Foreign Assets as determined on
the last Business Day of the month for which such fee is charged.
<PAGE>
(BEA LONG-SHORT EQUITY FUND)
DOMESTIC FEES. BEA Long-Short Equity Fund ("Portfolio Two") shall pay
Custodian the following fees for assets maintained by Portfolio Two in the
United States ("Domestic Assets") and the following charges for transactions by
Portfolio Two in the United States, all such fees and charges to be payable
monthly:
(1) an annual fee equal to the sum of (a) 0.02% (two basis points) per
annum of the value of the Domestic Assets held in Portfolio Two's Custody
Account up to $50 million, plus (b) 0.01% (one basis point) per annum of the
amount by which the value of such Domestic Assets is more than $50 million but
less than $200 million, plus (c) 0.005% (one-half basis point) per annum of the
amount by which the value of such Domestic Assets exceeds $200 million, with
each such percentage fee to be based upon the total market value of such
Domestic Assets as determined on the last Business Day of the month for which
such fee is charged;
(2) a transaction charge of $25 for each receive or deliver into or from
such Custody Account of securities in physical form;
(3) a transaction charge for each repurchase transaction in such Custody
Account which represents a cash sweep investment for Portfolio Two's account,
computed on the basis of a 360-day year and for the actual number of days such
repurchase transaction is outstanding at a rate of 0.10% (ten basis points) per
annum on the amount of the purchase price paid by Portfolio Two in such
repurchase transaction;
(4) a charge of $10 for each "free" transfer of funds from such Custody
Account;
(5) an administrative fee for each purchase in such Custody
<PAGE>
Account of shares or other interests in a money market or other fund, which
purchase represents a cash sweep investment for Portfolio Two's account,
computed for each day that there is a positive balance in such fund to equal
1/365th of 0.10% (ten basis points) on the amount of such positive balance for
such day; and
(6) a service charge for each holding of securities or other assets of
Portfolio Two that are sold by way of private placement or in such other manner
as to require services by Custodian which in its reasonable judgment are
materially in excess of those ordinarily required for the holding of publicly
traded securities in the United States.
INTERNATIONAL FEES. Portfolio Two shall pay Custodian fees for assets
maintained by Portfolio Two outside the United States ("Foreign Assets") and
charges for transactions by Portfolio Two outside the United States (including,
without limitation, charges for funds transfers and tax reclaims) in accordance
with such schedule of fees and charges for each country in which Foreign Assets
of Portfolio Two are held as Custodian shall from time to time provide to the
Company. Any asset-based fee shall be based upon the total market value of the
applicable Foreign Assets as determined on the last Business Day of the month
for which such fee is charged.
<PAGE>
ADMINISTRATION AND ACCOUNTING SERVICES AGREEMENT
TERMS AND CONDITIONS
This Agreement is made as of , 1998 by and between THE RBB
FUND, INC., a Maryland corporation (the "Fund"), and PFPC INC., a Delaware
corporation ("PFPC"), which is an indirect wholly owned subsidiary of PNC Bank
Corp.
The Fund is registered as an open-end, non-diversified investment
company under the Investment Company Act of 1940, as amended (the "1940 Act").
The Fund wishes to retain PFPC, to provide administration and accounting
services to the BEA Long-Short Market Neutral Fund (the "Portfolio"), and PFPC
wishes to furnish such services.
In consideration of the promises and mutual covenants herein
contained, the parties agree as follows:
1. DEFINITIONS.
(a) "1933 ACT" means the Securities Act of 1933, as amended.
(b) "1934 ACT" means the Securities Exchange Act of 1934, as amended.
(c) "AUTHORIZED PERSON" means any officer of the Fund and any other
person, duly authorized by the Fund's Board of Directors, to give Oral and
Written Instructions on behalf of the Fund and listed on the Certificate
attached hereto as Appendix B or any amendment thereto as may be received by
PFPC from time to
<PAGE>
time. An Authorized Person's scope of authority may be limited by the Fund
by setting forth such limitation on the Certificate.
(d) "BOOK-ENTRY SYSTEM" means Federal Reserve Treasury book-entry
system for United States and federal agency securities, its successor or
successors, and its nominee or nominees and any book-entry system maintained by
an exchange registered with the SEC under the 1934 Act.
(e) "ORAL INSTRUCTIONS" mean oral instructions received by PFPC from
an Authorized Person or from a person reasonably believed by PFPC to be an
Authorized Person.
(f) "SEC" means the Securities and Exchange Commission.
(g) "SHARES" mean the shares of common stock of the Fund
representing an interest in the Portfolio.
(h) "PROPERTY" means:
(i) any and all securities and other investment items of
the Portfolio which the Fund may from time to time
deposit, or cause to be deposited, with PFPC or which
PFPC may from time to time hold for the Fund on behalf
of the Portfolio;
(ii) all income in respect of any of such securities or
other investment items;
(iii) all proceeds of the sale of any of such securities or
investment items; and
(iv) all proceeds of the sale of Shares which are received
by PFPC from time to time, from or on behalf of the
Fund.
(i) "WRITTEN INSTRUCTIONS" mean written instructions signed by two
Authorized Persons and received by PFPC. The
-2-
<PAGE>
instructions may be delivered by hand, mail, tested telegram, cable, telex or
facsimile sending device.
2. APPOINTMENT.
The Fund hereby appoints PFPC to provide administration and accounting
services to the Portfolio, in accordance with the terms set forth in this
Agreement. PFPC accepts such appointment and agrees to furnish such services.
3. DELIVERY OF DOCUMENTS.
The Fund has provided or, where applicable, will provide PFPC with the
following:
(a) certified or authenticated copies of the resolutions of the
Fund's Board of Directors, approving the appointment of PFPC to
provide services pursuant to this Agreement;
(b) a copy of the Fund's most recent effective registration
statement;
(c) a copy of the Fund's advisory agreement or agreements with
respect to the Portfolio;
(d) a copy of the Fund's distribution agreement or agreements with
respect to the Portfolio;
(e) a copy of any additional administration agreement with respect to
the Portfolio;
(f) copies of any shareholder servicing agreements made in respect of
the Portfolio; and
(g) certified or authenticated copies of any and all amendments or
supplements to the foregoing.
4. COMPLIANCE WITH GOVERNMENT RULES AND REGULATIONS. PFPC undertakes to
comply with all applicable requirements of the 1933 Act, the 1934 Act and the
1940 Act, and any laws, rules and regulations of governmental authorities having
jurisdiction with respect to all duties to be performed by PFPC hereunder.
Except
-3-
<PAGE>
as specifically set forth herein, PFPC assumes no responsibility for such
compliance by the Fund.
5. INSTRUCTIONS.
Unless otherwise provided in this Agreement, PFPC shall act only upon
Oral and Written Instructions.
PFPC shall be entitled to rely upon any Oral and Written Instructions
it receives from an Authorized Person (or from a person reasonably believed by
PFPC to be an Authorized Person) pursuant to this Agreement. PFPC may assume
that any Oral or Written Instruction received hereunder is not in any way
inconsistent with the provisions of organizational documents or this Agreement
or of any vote, resolution or proceeding of the Fund's Board of Directors or of
the Fund's shareholders.
The Fund agrees to forward to PFPC Written Instructions confirming
Oral Instructions so that PFPC receives the Written Instructions by the close of
business on the same day that such Oral Instructions are received. The fact
that such confirming Written Instructions are not received by PFPC shall in no
way invalidate the transactions or enforceability of the transactions authorized
by the Oral Instructions. The Fund further agrees that PFPC shall incur no
liability to the Fund in acting upon Oral or Written Instructions provided such
instructions reasonably appear to have been received from an Authorized Person.
-4-
<PAGE>
6. RIGHT TO RECEIVE ADVICE.
(a) ADVICE OF THE FUND. If PFPC is in doubt as to any action it
should or should not take, PFPC may request directions or advice, including Oral
or Written Instructions, from the Fund.
(b) ADVICE OF COUNSEL. If PFPC shall be in doubt as to any questions
of law pertaining to any action it should or should not take, PFPC may request
advice at its own cost from such counsel of its own choosing (who may be counsel
for the Fund, the Fund's advisor or PFPC, at the option of PFPC).
(c) CONFLICTING ADVICE. In the event of a conflict between
directions, advice or Oral or Written Instructions PFPC receives from the Fund,
and the advice it receives from counsel, PFPC shall be entitled to rely upon and
follow the advice of counsel.
(d) PROTECTION OF PFPC. PFPC shall be protected in any action it
takes or does not take in reliance upon directions, advice or Oral or Written
Instructions it receives from the Fund or from counsel and which PFPC believes,
in good faith, to be consistent with those directions, advice and Oral or
Written Instructions.
Nothing in this paragraph shall be construed so as to impose an
obligation upon PFPC (i) to seek such directions, advice or Oral or Written
Instructions, or (ii) to act in accordance with such directions, advice or Oral
or Written Instructions unless, under the terms of other provisions of this
-5-
<PAGE>
Agreement, the same is a condition of PFPC's properly taking or not taking such
action.
7. RECORDS.
The books and records pertaining to the Fund, which are in the
possession of PFPC, shall be the property of the Fund. Such books and records
shall be prepared and maintained as required by the 1940 Act and other
applicable securities laws, rules and regulations. The Fund and Authorized
Persons shall have access to such books and records at all times during PFPC's
normal business hours. Upon the reasonable request of the Fund, copies of any
such books and records shall be provided by PFPC to the Fund or to an Authorized
Person at the Fund's expense to be paid from the assets of the Portfolio.
PFPC shall keep the following records:
(a) all books and records with respect to the Portfolio's books of
account;
(b) records of the Portfolio's securities transactions;
(c) all other books and records as PFPC is required to maintain
pursuant to Rule 31a-1 of the 1940 Act and as specifically set
forth in Appendix B hereto.
8. CONFIDENTIALITY.
PFPC agrees to keep confidential all records of the Fund and
information relative to the Fund and its shareholders (past, present
and potential), unless the release of such records or information is
otherwise consented to, in writing, by the Fund. The Fund agrees that
such consent shall not be unreasonably withheld.
-6-
<PAGE>
The Fund further agrees that, should PFPC be required to provide such
information or records to duly constituted authorities (who may
institute civil or criminal contempt proceedings for failure to
comply), PFPC shall not be required to seek the Fund's consent prior
to disclosing such information.
9. LIAISON WITH ACCOUNTANTS.
PFPC shall act as liaison with the Fund's independent public
accountants and shall provide account analyses, fiscal year summaries, and other
audit-related schedules, all with respect to the Portfolio. PFPC shall take all
reasonable action in the performance of its obligations under this Agreement to
assure that the necessary information is made available to such accountants for
the expression of their opinion, as such may be required by the Fund from time
to time.
10. DISASTER RECOVERY.
PFPC shall enter into and shall maintain in effect with appropriate
parties one or more agreements making reasonable provision of emergency use of
electronic data processing equipment to the extent appropriate equipment is
available. In the event of equipment failures, PFPC shall, at no additional
expense to the Fund, take reasonable steps to minimize service interruptions but
shall have no liability with respect thereto.
-7-
<PAGE>
11. COMPENSATION.
As compensation for services rendered by PFPC during the term of this
Agreement, the Fund will pay to PFPC from the assets of the Portfolio a fee or
fees as may be agreed to in writing by the Fund and PFPC.
12. INDEMNIFICATION.
The Fund agrees to indemnify and hold harmless PFPC and its nominees
from all taxes, charges, expenses, assessments, claims and liabilities
(including, without limitation, liabilities arising under the 1933 Act, the 1934
Act and the 1940 Act, and any state and foreign securities and blue sky laws,
and amendments thereto, and expenses, including (without limitation) attorneys'
fees and disbursements, arising directly or indirectly from any action which
PFPC takes or does not take (i) at the request or on the direction of or in
reliance on the advice of the Fund or (ii) upon Oral or Written Instructions.
Neither PFPC, nor any of its nominees, shall be indemnified against any
liability to the Fund or to its shareholders (or any expenses incident to such
liability) arising out of PFPC's own willful misfeasance, gross negligence or
reckless disregard of its duties and obligations under this Agreement.
13. RESPONSIBILITY OF PFPC.
PFPC shall be under no duty to take any action on behalf of the Fund
except as specifically set forth herein or as may be specifically agreed to by
PFPC in writing. PFPC shall be obligated to exercise care and diligence in the
performance of
-8-
<PAGE>
its duties hereunder, to act in good faith and to use its best efforts,
within reasonable limits, in performing services provided for under this
Agreement. PFPC shall be responsible for failure to perform its duties under
this Agreement arising out of PFPC's gross negligence. Notwithstanding the
foregoing, PFPC shall not be responsible for losses beyond its control,
provided that PFPC has acted in accordance with the standard of care set
forth above; and provided further that PFPC shall only be responsible for
that portion of losses or damages suffered by the fund that are attributable
to the gross negligence of PFPC.
Without limiting the generality of the foregoing or of any other
provision of this Agreement, PFPC, in connection with its duties under this
Agreement, shall not be liable for (a) the validity or invalidity or authority
or lack thereof of any Oral or Written Instruction, notice or other instrument
which conforms to the applicable requirements of this Agreement, and which PFPC
reasonably believes to be genuine; or (b) delays or errors or loss of data
occurring by reason of circumstances beyond PFPC's control, including acts of
civil or military authority, national emergencies, labor difficulties, fire,
flood or catastrophe, acts of God, insurrection, war, riots or failure of the
mails, transportation, communication or power supply.
Notwithstanding anything in this Agreement to the contrary, PFPC shall
have no liability to the Fund for any consequential, special or indirect losses
or damages which the Fund may incur or suffer by or as a consequence of PFPC's
-9-
<PAGE>
performance of the services provided hereunder, whether or not the likelihood of
such losses or damages was known by PFPC.
14. DESCRIPTION OF ACCOUNTING SERVICES ON A CONTINUING BASIS.
PFPC will perform the following accounting functions with respect to
the Portfolio if required:
(i) Journalize investment, capital share and income and
expense activities;
(ii) Verify investment buy/sell trade tickets when received
from the investment advisor (the "Advisor") and
transmit trades to the Fund's foreign custodian (the
"Custodian") for proper settlement;
(iii) Maintain individual ledgers for investment securities;
(iv) Maintain historical tax lots for each security;
(v) Reconcile cash and investment balances with the
Custodian, and provide the Advisor with the beginning
cash balance available for investment purposes;
(vi) Update the cash availability throughout the day as
required by the Advisor;
(vii) Post to and prepare the Statement of Assets and
Liabilities and the Statement of Operations;
(viii) Calculate various contractual expenses (E.G., advisory
and custody fees);
(ix) Monitor the expense accruals and notify an officer
of the Fund of any proposed adjustments;
(x) Control all disbursements and authorize such
disbursements upon Written Instructions;
(xi) Calculate capital gains and losses;
-10-
<PAGE>
(xii) Determine net income;
(xiii) Obtain security market quotes from independent pricing
services approved by the Advisor, or if such quotes are
unavailable, then obtain such prices from Advisor, and
in either case calculate the market value of the
investments;
(xiv) Transmit or mail a copy of the daily portfolio
valuation to the Advisor;
(xv) Compute net asset value;
(xvi) As appropriate, compute yields, total return, expense
ratios, portfolio turnover rate, and, if required,
portfolio average dollar-weighted maturity; and
(xvii) Prepare a monthly financial statement, which will
include the following items:
Schedule of Investments
Statement of Assets and Liabilities Statement of
Operations
Cash Statement
Schedule of Capital Gains and Losses.
15. DESCRIPTION OF ADMINISTRATION SERVICES ON A CONTINUING BASIS.
PFPC will perform the following administration services with respect
to the Portfolio:
(i) Prepare quarterly broker security transactions
summaries;
(ii) Prepare monthly security transaction listings;
(iii) (a) Assist in the preparation of support schedules
necessary for completion of federal and state tax
returns; or (b) prepare for execution and file the
Fund's Federal and state tax returns;
(iv) (a) Assist in the preparation of Semi-Annual Reports
with the SEC on Form
-11-
<PAGE>
N-SAR; or (b) prepare and file the Fund's Semi-Annual
Reports with the SEC on Form N-SAR.
(v) (a) Assist in the preparation of annual, semi-annual,
and quarterly shareholder reports; or (b) prepare and
file with the SEC the Fund's annual, semi-annual, and
quarterly shareholder reports;
(vi) Assist with the preparation of registration statements
and other filings relating to the registration of
Shares;
(vii) Monitor the Portfolio's status as a regulated
investment company under SubChapter M of the Internal
Revenue Code of 1986, as amended; and
(viii) Coordinate contractual relationships and communications
between the Fund and its service providers.
16. DURATION AND TERMINATION.
This Agreement shall continue until terminated by the Fund or by PFPC
on sixty (60) days' prior written notice to the other party.
17. NOTICES.
All notices and other communications, including written Instructions,
shall be in writing or by confiding telegram, cable, telex or facsimile sending
device. If notice is sent by confirming telegram, cable, telex or facsimile
sending device, it shall be deemed to have been given immediately. If notice is
sent by first-class mail, it shall be deemed to have been given three days after
it has been mailed. If notice is sent by messenger, it shall be deemed to have
been given on the day it is delivered. Notices shall be addressed (a) if to
PFPC at PFPC's
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<PAGE>
address, 400 Bellevue Parkway, Wilmington, Delaware 19809; (b) if to the
Fund, at the address of the Fund; or (c) if to neither of the foregoing, at
such other address as shall have been notified to the sender of any such
Notice or other communication.
18. AMENDMENTS.
This Agreement, or any term thereof, may be changed or waived only by
written amendment, signed by the party against whom enforcement of such change
or waiver is sought.
19. DELEGATION.
PFPC may assign its rights and delegate its duties hereunder to any
wholly owned direct or indirect subsidiary of PNC Bank, National Association or
PNC Bank Corp, provided that (i) PFPC gives the Fund thirty (30) days' prior
written notice; (ii) the delegate agrees with PFPC to comply with all relevant
provisions of the 1940 Act; and (iii) PFPC and such delegate promptly provide
such information as the Fund may request, and respond to such questions as the
Fund may ask, relative to the delegation, including (without limitation) the
capabilities of the delegate.
20. COUNTERPARTS.
This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
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<PAGE>
21. FURTHER ACTIONS.
Each party agrees to perform such further acts and execute such
further documents as are necessary to effectuate the purposes hereof.
22. MISCELLANEOUS.
This Agreement embodies the entire agreement and understanding between
the parties and supersedes all prior agreements and understandings relating to
the subject matter hereof, provided that the parties may embody in one or more
separate documents their agreement, if any, with respect to delegated and/or
Oral Instructions.
The captions in this Agreement are included for convenience of
reference only and in no way define or delimit any of the provisions hereof or
otherwise affect their construction or effect.
This Agreement shall be deemed to be a contract made in Delaware and
governed by Delaware law. If any provision of this Agreement shall be held or
made invalid by a court decision, statute, rule or otherwise, the remainder of
this Agreement shall
-14-
<PAGE>
not be affected thereby. This Agreement shall be binding and shall inure to
the benefit of the parties hereto and their respective successors.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their officers designated below on the day and year first above
written.
PFPC INC.
By:
-------------------------------------
Title:
THE RBB FUND, INC.
By:
--------------------------------------
President
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<PAGE>
ADMINISTRATION AND ACCOUNTING SERVICES AGREEMENT
TERMS AND CONDITIONS
This Agreement is made as of , 1998 by and between THE RBB
FUND, INC., a Maryland corporation (the "Fund"), and PFPC INC., a Delaware
corporation ("PFPC"), which is an indirect wholly owned subsidiary of PNC Bank
Corp.
The Fund is registered as an open-end, non-diversified investment
company under the Investment Company Act of 1940, as amended (the "1940 Act").
The Fund wishes to retain PFPC, to provide administration and accounting
services to the BEA Long-Short Equity Fund (the "Portfolio"), and PFPC wishes to
furnish such services.
In consideration of the promises and mutual covenants herein
contained, the parties agree as follows:
1. DEFINITIONS.
(a) "1933 ACT" means the Securities Act of 1933, as amended.
(b) "1934 ACT" means the Securities Exchange Act of 1934, as amended.
(c) "AUTHORIZED PERSON" means any officer of the Fund and any other
person, duly authorized by the Fund's Board of Directors, to give Oral and
Written Instructions on behalf of the Fund and listed on the Certificate
attached hereto as Appendix B or any amendment thereto as may be received by
PFPC from time to
<PAGE>
time. An Authorized Person's scope of authority may be limited by the Fund
by setting forth such limitation on the Certificate.
(d) "BOOK-ENTRY SYSTEM" means Federal Reserve Treasury book-entry
system for United States and federal agency securities, its successor or
successors, and its nominee or nominees and any book-entry system maintained by
an exchange registered with the SEC under the 1934 Act.
(e) "ORAL INSTRUCTIONS" mean oral instructions received by PFPC from
an Authorized Person or from a person reasonably believed by PFPC to be an
Authorized Person.
(f) "SEC" means the Securities and Exchange Commission.
(g) "SHARES" mean the shares of common stock of the Fund
representing an interest in the Portfolio.
(h) "PROPERTY" means:
(i) any and all securities and other investment items of
the Portfolio which the Fund may from time to time
deposit, or cause to be deposited, with PFPC or which
PFPC may from time to time hold for the Fund on behalf
of the Portfolio;
(ii) all income in respect of any of such securities or
other investment items;
(iii) all proceeds of the sale of any of such securities or
investment items; and
(iv) all proceeds of the sale of Shares which are received
by PFPC from time to time, from or on behalf of the
Fund.
(i) "WRITTEN INSTRUCTIONS" mean written instructions signed by two
Authorized Persons and received by PFPC. The
-2-
<PAGE>
instructions may be delivered by hand, mail, tested telegram, cable, telex or
facsimile sending device.
2. APPOINTMENT.
The Fund hereby appoints PFPC to provide administration and accounting
services to the Portfolio, in accordance with the terms set forth in this
Agreement. PFPC accepts such appointment and agrees to furnish such services.
3. DELIVERY OF DOCUMENTS.
The Fund has provided or, where applicable, will provide PFPC with the
following:
(a) certified or authenticated copies of the resolutions of the
Fund's Board of Directors, approving the appointment of PFPC to
provide services pursuant to this Agreement;
(b) a copy of the Fund's most recent effective registration
statement;
(c) a copy of the Fund's advisory agreement or agreements with
respect to the Portfolio;
(d) a copy of the Fund's distribution agreement or agreements with
respect to the Portfolio;
(e) a copy of any additional administration agreement with respect to
the Portfolio;
(f) copies of any shareholder servicing agreements made in respect of
the Portfolio; and
(g) certified or authenticated copies of any and all amendments or
supplements to the foregoing.
4. COMPLIANCE WITH GOVERNMENT RULES AND REGULATIONS. PFPC undertakes to
comply with all applicable requirements of the 1933 Act, the 1934 Act and the
1940 Act, and any laws, rules and regulations of governmental authorities having
jurisdiction with respect to all duties to be performed by PFPC hereunder.
Except
-3-
<PAGE>
as specifically set forth herein, PFPC assumes no responsibility for such
compliance by the Fund.
5. INSTRUCTIONS.
Unless otherwise provided in this Agreement, PFPC shall act only upon
Oral and Written Instructions.
PFPC shall be entitled to rely upon any Oral and Written Instructions
it receives from an Authorized Person (or from a person reasonably believed by
PFPC to be an Authorized Person) pursuant to this Agreement. PFPC may assume
that any Oral or Written Instruction received hereunder is not in any way
inconsistent with the provisions of organizational documents or this Agreement
or of any vote, resolution or proceeding of the Fund's Board of Directors or of
the Fund's shareholders.
The Fund agrees to forward to PFPC Written Instructions confirming
Oral Instructions so that PFPC receives the Written Instructions by the close of
business on the same day that such Oral Instructions are received. The fact
that such confirming Written Instructions are not received by PFPC shall in no
way invalidate the transactions or enforceability of the transactions authorized
by the Oral Instructions. The Fund further agrees that PFPC shall incur no
liability to the Fund in acting upon Oral or Written Instructions provided such
instructions reasonably appear to have been received from an Authorized Person.
-4-
<PAGE>
6. RIGHT TO RECEIVE ADVICE.
(a) ADVICE OF THE FUND. If PFPC is in doubt as to any action it
should or should not take, PFPC may request directions or advice, including Oral
or Written Instructions, from the Fund.
(b) ADVICE OF COUNSEL. If PFPC shall be in doubt as to any questions
of law pertaining to any action it should or should not take, PFPC may request
advice at its own cost from such counsel of its own choosing (who may be counsel
for the Fund, the Fund's advisor or PFPC, at the option of PFPC).
(c) CONFLICTING ADVICE. In the event of a conflict between
directions, advice or Oral or Written Instructions PFPC receives from the Fund,
and the advice it receives from counsel, PFPC shall be entitled to rely upon and
follow the advice of counsel.
(d) PROTECTION OF PFPC. PFPC shall be protected in any action it
takes or does not take in reliance upon directions, advice or Oral or Written
Instructions it receives from the Fund or from counsel and which PFPC believes,
in good faith, to be consistent with those directions, advice and Oral or
Written Instructions.
Nothing in this paragraph shall be construed so as to impose an
obligation upon PFPC (i) to seek such directions, advice or Oral or Written
Instructions, or (ii) to act in accordance with such directions, advice or Oral
or Written Instructions unless, under the terms of other provisions of this
-5-
<PAGE>
Agreement, the same is a condition of PFPC's properly taking or not taking such
action.
7. RECORDS.
The books and records pertaining to the Fund, which are in the
possession of PFPC, shall be the property of the Fund. Such books and records
shall be prepared and maintained as required by the 1940 Act and other
applicable securities laws, rules and regulations. The Fund and Authorized
Persons shall have access to such books and records at all times during PFPC's
normal business hours. Upon the reasonable request of the Fund, copies of any
such books and records shall be provided by PFPC to the Fund or to an Authorized
Person at the Fund's expense to be paid from the assets of the Portfolio.
PFPC shall keep the following records:
(a) all books and records with respect to the Portfolio's books of
account;
(b) records of the Portfolio's securities transactions;
(c) all other books and records as PFPC is required to maintain
pursuant to Rule 31a-1 of the 1940 Act and as specifically set
forth in Appendix B hereto.
8. CONFIDENTIALITY.
PFPC agrees to keep confidential all records of the Fund and
information relative to the Fund and its shareholders (past, present
and potential), unless the release of such records or information is
otherwise consented to, in writing, by the Fund. The Fund agrees that
such consent shall not be unreasonably withheld.
-6-
<PAGE>
The Fund further agrees that, should PFPC be required to provide such
information or records to duly constituted authorities (who may
institute civil or criminal contempt proceedings for failure to
comply), PFPC shall not be required to seek the Fund's consent prior
to disclosing such information.
9. LIAISON WITH ACCOUNTANTS.
PFPC shall act as liaison with the Fund's independent public
accountants and shall provide account analyses, fiscal year summaries, and other
audit-related schedules, all with respect to the Portfolio. PFPC shall take all
reasonable action in the performance of its obligations under this Agreement to
assure that the necessary information is made available to such accountants for
the expression of their opinion, as such may be required by the Fund from time
to time.
10. DISASTER RECOVERY.
PFPC shall enter into and shall maintain in effect with appropriate
parties one or more agreements making reasonable provision of emergency use of
electronic data processing equipment to the extent appropriate equipment is
available. In the event of equipment failures, PFPC shall, at no additional
expense to the Fund, take reasonable steps to minimize service interruptions but
shall have no liability with respect thereto.
-7-
<PAGE>
11. COMPENSATION.
As compensation for services rendered by PFPC during the term of this
Agreement, the Fund will pay to PFPC from the assets of the Portfolio a fee or
fees as may be agreed to in writing by the Fund and PFPC.
12. INDEMNIFICATION.
The Fund agrees to indemnify and hold harmless PFPC and its nominees
from all taxes, charges, expenses, assessments, claims and liabilities
(including, without limitation, liabilities arising under the 1933 Act, the 1934
Act and the 1940 Act, and any state and foreign securities and blue sky laws,
and amendments thereto, and expenses, including (without limitation) attorneys'
fees and disbursements, arising directly or indirectly from any action which
PFPC takes or does not take (i) at the request or on the direction of or in
reliance on the advice of the Fund or (ii) upon Oral or Written Instructions.
Neither PFPC, nor any of its nominees, shall be indemnified against any
liability to the Fund or to its shareholders (or any expenses incident to such
liability) arising out of PFPC's own willful misfeasance, gross negligence or
reckless disregard of its duties and obligations under this Agreement.
13. RESPONSIBILITY OF PFPC.
PFPC shall be under no duty to take any action on behalf of the Fund
except as specifically set forth herein or as may be specifically agreed to by
PFPC in writing. PFPC shall be obligated to exercise care and diligence in the
performance of
-8-
<PAGE>
its duties hereunder, to act in good faith and to use its best efforts,
within reasonable limits, in performing services provided for under this
Agreement. PFPC shall be responsible for failure to perform its duties under
this Agreement arising out of PFPC's gross negligence. Notwithstanding the
foregoing, PFPC shall not be responsible for losses beyond its control,
provided that PFPC has acted in accordance with the standard of care set
forth above; and provided further that PFPC shall only be responsible for
that portion of losses or damages suffered by the fund that are attributable
to the gross negligence of PFPC.
Without limiting the generality of the foregoing or of any other
provision of this Agreement, PFPC, in connection with its duties under this
Agreement, shall not be liable for (a) the validity or invalidity or authority
or lack thereof of any Oral or Written Instruction, notice or other instrument
which conforms to the applicable requirements of this Agreement, and which PFPC
reasonably believes to be genuine; or (b) delays or errors or loss of data
occurring by reason of circumstances beyond PFPC's control, including acts of
civil or military authority, national emergencies, labor difficulties, fire,
flood or catastrophe, acts of God, insurrection, war, riots or failure of the
mails, transportation, communication or power supply.
Notwithstanding anything in this Agreement to the contrary, PFPC shall
have no liability to the Fund for any consequential, special or indirect losses
or damages which the Fund may incur or suffer by or as a consequence of PFPC's
-9-
<PAGE>
performance of the services provided hereunder, whether or not the likelihood of
such losses or damages was known by PFPC.
14. DESCRIPTION OF ACCOUNTING SERVICES ON A CONTINUING BASIS.
PFPC will perform the following accounting functions with respect to
the Portfolio if required:
(i) Journalize investment, capital share and income and
expense activities;
(ii) Verify investment buy/sell trade tickets when received
from the investment advisor (the "Advisor") and
transmit trades to the Fund's foreign custodian (the
"Custodian") for proper settlement;
(iii) Maintain individual ledgers for investment securities;
(iv) Maintain historical tax lots for each security;
(v) Reconcile cash and investment balances with the
Custodian, and provide the Advisor with the beginning
cash balance available for investment purposes;
(vi) Update the cash availability throughout the day as
required by the Advisor;
(vii) Post to and prepare the Statement of Assets and
Liabilities and the Statement of Operations;
(viii) Calculate various contractual expenses (E.G., advisory
and custody fees);
(ix) Monitor the expense accruals and notify an officer
of the Fund of any proposed adjustments;
(x) Control all disbursements and authorize such
disbursements upon Written Instructions;
(xi) Calculate capital gains and losses;
-10-
<PAGE>
(xii) Determine net income;
(xiii) Obtain security market quotes from independent pricing
services approved by the Advisor, or if such quotes are
unavailable, then obtain such prices from Advisor, and
in either case calculate the market value of the
investments;
(xiv) Transmit or mail a copy of the daily portfolio
valuation to the Advisor;
(xv) Compute net asset value;
(xvi) As appropriate, compute yields, total return, expense
ratios, portfolio turnover rate, and, if required,
portfolio average dollar-weighted maturity; and
(xvii) Prepare a monthly financial statement, which will
include the following items:
Schedule of Investments
Statement of Assets and Liabilities Statement of
Operations
Cash Statement
Schedule of Capital Gains and Losses.
15. DESCRIPTION OF ADMINISTRATION SERVICES ON A CONTINUING BASIS.
PFPC will perform the following administration services with respect
to the Portfolio:
(i) Prepare quarterly broker security transactions
summaries;
(ii) Prepare monthly security transaction listings;
(iii) (a) Assist in the preparation of support schedules
necessary for completion of federal and state tax
returns; or (b) prepare for execution and file the
Fund's Federal and state tax returns;
(iv) (a) Assist in the preparation of Semi-Annual Reports
with the SEC on Form
-11-
<PAGE>
N-SAR; or (b) prepare and file the
Fund's Semi-Annual Reports with the SEC on Form N-SAR.
(v) (a) Assist in the preparation of annual, semi-annual,
and quarterly shareholder reports; or (b) prepare and
file with the SEC the Fund's annual, semi-annual, and
quarterly shareholder reports;
(vi) Assist with the preparation of registration statements
and other filings relating to the registration of
Shares;
(vii) Monitor the Portfolio's status as a regulated
investment company under SubChapter M of the Internal
Revenue Code of 1986, as amended; and
(viii) Coordinate contractual relationships and communications
between the Fund and its service providers.
16. DURATION AND TERMINATION.
This Agreement shall continue until terminated by the Fund or by PFPC
on sixty (60) days' prior written notice to the other party.
17. NOTICES.
All notices and other communications, including written Instructions,
shall be in writing or by confiding telegram, cable, telex or facsimile sending
device. If notice is sent by confirming telegram, cable, telex or facsimile
sending device, it shall be deemed to have been given immediately. If notice is
sent by first-class mail, it shall be deemed to have been given three days after
it has been mailed. If notice is sent by messenger, it shall be deemed to have
been given on the day it is delivered. Notices shall be addressed (a) if to
PFPC at PFPC's
-12-
<PAGE>
address, 400 Bellevue Parkway, Wilmington, Delaware 19809; (b) if to the Fund,
at the address of the Fund; or (c) if to neither of the foregoing, at such
other address as shall have been notified to the sender of any such Notice or
other communication.
18. AMENDMENTS.
This Agreement, or any term thereof, may be changed or waived only by
written amendment, signed by the party against whom enforcement of such change
or waiver is sought.
19. DELEGATION.
PFPC may assign its rights and delegate its duties hereunder to any
wholly owned direct or indirect subsidiary of PNC Bank, National Association or
PNC Bank Corp, provided that (i) PFPC gives the Fund thirty (30) days' prior
written notice; (ii) the delegate agrees with PFPC to comply with all relevant
provisions of the 1940 Act; and (iii) PFPC and such delegate promptly provide
such information as the Fund may request, and respond to such questions as the
Fund may ask, relative to the delegation, including (without limitation) the
capabilities of the delegate.
20. COUNTERPARTS.
This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
-13-
<PAGE>
21. FURTHER ACTIONS.
Each party agrees to perform such further acts and execute such
further documents as are necessary to effectuate the purposes hereof.
22. MISCELLANEOUS.
This Agreement embodies the entire agreement and understanding between
the parties and supersedes all prior agreements and understandings relating to
the subject matter hereof, provided that the parties may embody in one or more
separate documents their agreement, if any, with respect to delegated and/or
Oral Instructions.
The captions in this Agreement are included for convenience of
reference only and in no way define or delimit any of the provisions hereof or
otherwise affect their construction
or effect.
This Agreement shall be deemed to be a contract made in Delaware and
governed by Delaware law. If any provision of this Agreement shall be held or
made invalid by a court decision, statute, rule or otherwise, the remainder of
this Agreement shall
-14-
<PAGE>
not be affected thereby. This Agreement shall be binding and shall inure to
the benefit of the parties hereto and their respective successors.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their officers designated below on the day and year first above
written.
PFPC INC.
By:
----------------------------
Title:
THE RBB FUND, INC.
By:
---------------------------
President
-15-
<PAGE>
CO-ADMINISTRATION AGREEMENT
, 1998
BEA Associates
153 East 53rd Street
58th Floor
New York, New York 10022
Dear Sirs:
The RBB Fund, Inc. (the "Company"), a corporation organized under the
laws of the State of Maryland, confirms its agreement with BEA Associates
("BEA") with respect to the BEA Long-Short Market Neutral Portfolio (the
"Fund"), a portfolio of the Company, as follows:
1. INVESTMENT DESCRIPTION; APPOINTMENT
The Company desires to employ its capital by investing and
reinvesting in investments of the kind and in accordance with the limitations
specified in the Company's Articles of Incorporation, as amended from time to
time (the "Charter"), in the Company's By-laws, as amended from time to time
(the "By-laws"), in the Fund's prospectus (the "Prospectus") and statement of
additional information (the "Statement of Additional Information") as in
effect from time to time, and in such manner and to the extent as may from
time to time be approved by the Board of Directors of the Company. Copies of
the Fund's Prospectus and Statement of Additional Information and the
Company's Charter and By-laws have been submitted to BEA. The Fund employs
BEA Associates (the "Adviser") as its investment adviser. The Company
desires to employ and hereby appoints BEA as its co-administrator for the
Fund with respect to the Advisor class of shares. BEA accepts this
appointment and agrees to furnish the services for the compensation set forth
below.
<PAGE>
2. SERVICES AS CO-ADMINISTRATOR
Subject to the supervision and direction of the Board of Directors of
the Company, BEA will:
(a) assist in supervising all aspects of the Fund's operations,
except those performed by other parties pursuant to written agreements with the
Company;
(b) provide various shareholder liaison services including, but not
limited to, responding to inquiries of shareholders regarding the Fund,
providing information on shareholder investments, assisting shareholders of the
Fund in changing dividend options, account designations and addresses, and other
similar services;
(c) provide certain administrative services including, but not
limited to, providing periodic statements showing the account balance of a Fund
shareholder and integrating the statements with those of other transactions and
balances in the shareholder's other accounts serviced by the Fund's custodian or
transfer agent;
(d) supply the Fund with office facilities (which may be BEA
Service's own offices), data processing services, clerical, internal executive
and administrative services, and stationery and office supplies;
(e) furnish corporate secretarial services, including assisting in
the preparation of materials for Board of Directors meetings and distributing
those materials and assisting in the preparation of minutes of meetings of the
Company's Board of Directors and any Committees thereof and of the Fund's
shareholders;
(f) coordinate the preparation of reports to the Fund's shareholders
of record and the Securities and Exchange Commission (the "SEC") including, but
not limited to, proxy statements; annual, semi-annual and quarterly reports to
shareholders; annual and semi-annual reports on Form N-SAR; and post-effective
amendments to the Fund's Registration Statement on Form N-1A (the "Registration
Statements");
(g) develop computer systems for the generation of consolidated
periodic reports to investors;
(h) assist in other regulatory filings as necessary;
(i) assist the Fund's investment adviser, at the investment adviser's
request, in monitoring and developing compliance procedures for the Fund which
will include, among other matters, procedures to assist the investment adviser
in
-2-
<PAGE>
monitoring compliance with the Fund's investment objective, policies,
restrictions, tax matters and applicable laws and regulations; and
(j) acting as liaison between the Fund and the Fund's independent
public accountants, counsel, custodian or custodians, transfer agent and
co-administrator and taking all reasonable action in the performance of its
obligations under this Agreement to assure that all necessary information is
made available to each of them.
In performing all services under this Agreement, BEA shall act in
conformity with applicable law, the Company's Charter and By-Laws, and all
amendments thereto, and the investment objective, investment policies and other
practices and policies set forth in the Fund's Registration Statement, as such
Registration Statement and practices and policies may be amended from time to
time.
3. COMPENSATION
In consideration of services rendered pursuant to this Agreement, the
Fund will pay BEA on the first business day of each month a fee for the previous
month at an annual rate of .05% of the Fund's average daily net assets for the
first $125 million of average daily net assets, and .10% of average daily net
assets for Fund assets above $125 million. The fee for the period from the date
BEA commences its operations on behalf of the Fund to the end of the month
during which BEA commences such operations shall be prorated according to the
proportion that such period bears to the full monthly period. Upon any
termination of this Agreement before the end of any month, the fee for such part
of a month shall be prorated according to the proportion which such period bears
to the full monthly period and shall be payable upon the date of termination of
this Agreement. For the purpose of determining fees payable to BEA, fees shall
be calculated monthly and the value of the Fund's net assets shall be computed
at the times and in the manner specified in the Prospectus and Statement of
Additional Information as from time to time in effect.
4. EXPENSES
BEA will bear all expenses in connection with the performance of
its services under this Agreement; PROVIDED, HOWEVER, that the Fund will
reimburse BEA for the out-of-pocket expenses incurred by it on behalf of
the Fund. Such reimbursable expenses shall include, but not be limited to,
postage, telephone, telex and Federal Express charges. BEA will bill the
Fund as soon as practicable after the end of each calendar month for the
expenses it is entitled to have reimbursed.
-3-
<PAGE>
The Fund will bear certain other expenses to be incurred in its
operation, including: taxes, interest, brokerage fees and commissions, if any;
fees of Directors of the Company who are not officers, directors, or employees
of the Adviser or BEA; Securities and Exchange Commission fees and state Blue
Sky qualification fees; charges of custodians and transfer and dividend
disbursing agents; certain insurance premiums; outside auditing and legal
expenses; costs of maintenance of corporate existence; except as otherwise
provided herein, costs attributable to investor services, including, without
limitation, telephone and personnel expenses; costs of preparing and printing
prospectuses and statements of additional information for regulatory purposes
and for distribution to existing shareholders; costs of shareholders' reports
and meetings, and meetings of the officers of the Board of Directors of the
Company; costs of any pricing services; and any extraordinary expenses.
5. STANDARD OF CARE
BEA shall exercise its best judgment in rendering the services listed
in paragraph 2 above. BEA shall not be liable for any error of judgment or
mistake of law or for any loss suffered by the Fund in connection with the
matters to which this Agreement relates provided that nothing in this Agreement
shall be deemed to protect or purport to protect BEA against liability to the
Fund or to its shareholders to which BEA would otherwise be subject by reason of
willful misfeasance, bad faith or negligence on its part in the performance of
its duties or by reason of BEA's reckless disregard of its obligations and
duties under this Agreement.
6. TERM OF AGREEMENT
This Agreement shall become effective on the day following approval by
the Board of Directors of the Company including a majority of the Board of
Directors who are not "interested persons" (as defined in the Investment Company
Act of 1940, as amended) of any party to this Agreement, and shall continue
until , 1998 and shall continue automatically (unless terminated
as provided herein) for successive annual periods ending on of
each year, provided that such continuance is specifically approved at least
annually by the Board of Directors of the Company, including a majority of the
Board of Directors who are not "interested persons" of any party to this
Agreement, by vote cast in person at a meeting called for the purpose of voting
on such approval. This Agreement is terminable, without penalty, on 60 days'
written notice, by the Board of Directors of the Company or by vote of holders
of a majority of the Fund's shares, or upon 60 days' written notice, by BEA.
-4-
<PAGE>
7. SERVICE TO OTHER COMPANIES OR ACCOUNTS
The Company understands that BEA now acts, will continue to act and
may act in the future as administrator, co-administrator or administrative
services agent to one or more other investment companies, and the Company has no
objection to BEA's so acting. The Company understands that the persons employed
by BEA to assist in the performance of BEA's duties hereunder will not devote
their full time to such service and nothing contained in this Agreement shall be
deemed to limit or restrict the right of BEA or any affiliate of BEA to engage
in and devote time and attention to other businesses or to render services of
whatever kind or nature.
8. LIMITATION OF LIABILITY
The Company and BEA agree that the obligations of the Company under
this Agreement will not be binding upon any of the directors, shareholders,
nominees, officers, employees or agents, whether past, present or future, of the
Company, individually, but are binding only upon the assets and property of the
Fund, as provided in the Company's Charter. The execution and delivery of this
Agreement has been authorized by the Board of Directors of the Company, and
signed by an authorized officer of the Company, acting as such, and neither the
authorization by the Board of Directors nor the execution and delivery by the
officer will be deemed to have been made by any of them individually or to
impose any liability on any of them personally, but will bind only the property
of the Fund as provided in the Charter.
If the foregoing is in accordance with your understanding, kindly
indicate your acceptance hereof by signing and returning to us the enclosed copy
hereof.
Very truly yours,
RBB FUND, INC.
By:
--------------------------------
Name:
Title:
Accepted:
BEA ASSOCIATES
By:
------------------------
Name:
Title:
-5-
<PAGE>
CO-ADMINISTRATION AGREEMENT
, 1998
BEA Associates
153 East 53rd Street
58th Floor
New York, New York 10022
Dear Sirs:
The RBB Fund, Inc. (the "Company"), a corporation organized under the
laws of the State of Maryland, confirms its agreement with BEA Associates
("BEA") with respect to the BEA Long-Short Equity Portfolio (the "Fund"), a
portfolio of the Company, as follows:
1. INVESTMENT DESCRIPTION; APPOINTMENT
The Company desires to employ its capital by investing and
reinvesting in investments of the kind and in accordance with the limitations
specified in the Company's Articles of Incorporation, as amended from time to
time (the "Charter"), in the Company's By-laws, as amended from time to time
(the "By-laws"), in the Fund's prospectus (the "Prospectus") and statement of
additional information (the "Statement of Additional Information") as in
effect from time to time, and in such manner and to the extent as may from
time to time be approved by the Board of Directors of the Company. Copies of
the Fund's Prospectus and Statement of Additional Information and the
Company's Charter and By-laws have been submitted to BEA. The Fund employs
BEA Associates (the "Adviser") as its investment adviser. The Company
desires to employ and hereby appoints BEA as its co-administrator for the
Fund with respect to the Advisor class of shares. BEA accepts this
appointment and agrees to furnish the services for the compensation set forth
below.
<PAGE>
2. SERVICES AS CO-ADMINISTRATOR
Subject to the supervision and direction of the Board of Directors of
the Company, BEA will:
(a) assist in supervising all aspects of the Fund's operations,
except those performed by other parties pursuant to written agreements with the
Company;
(b) provide various shareholder liaison services including, but not
limited to, responding to inquiries of shareholders regarding the Fund,
providing information on shareholder investments, assisting shareholders of the
Fund in changing dividend options, account designations and addresses, and other
similar services;
(c) provide certain administrative services including, but not
limited to, providing periodic statements showing the account balance of a Fund
shareholder and integrating the statements with those of other transactions and
balances in the shareholder's other accounts serviced by the Fund's custodian or
transfer agent;
(d) supply the Fund with office facilities (which may be BEA
Service's own offices), data processing services, clerical, internal executive
and administrative services, and stationery and office supplies;
(e) furnish corporate secretarial services, including assisting in
the preparation of materials for Board of Directors meetings and distributing
those materials and assisting in the preparation of minutes of meetings of the
Company's Board of Directors and any Committees thereof and of the Fund's
shareholders;
(f) coordinate the preparation of reports to the Fund's shareholders
of record and the Securities and Exchange Commission (the "SEC") including, but
not limited to, proxy statements; annual, semi-annual and quarterly reports to
shareholders; annual and semi-annual reports on Form N-SAR; and post-effective
amendments to the Fund's Registration Statement on Form N-1A (the "Registration
Statements");
(g) develop computer systems for the generation of consolidated
periodic reports to investors;
(h) assist in other regulatory filings as necessary;
(i) assist the Fund's investment adviser, at the investment adviser's
request, in monitoring and developing compliance procedures for the Fund which
will include, among other matters, procedures to assist the investment adviser
in
-2-
<PAGE>
monitoring compliance with the Fund's investment objective, policies,
restrictions, tax matters and applicable laws and regulations; and
(j) acting as liaison between the Fund and the Fund's independent
public accountants, counsel, custodian or custodians, transfer agent and
co-administrator and taking all reasonable action in the performance of its
obligations under this Agreement to assure that all necessary information is
made available to each of them.
In performing all services under this Agreement, BEA shall act in
conformity with applicable law, the Company's Charter and By-Laws, and all
amendments thereto, and the investment objective, investment policies and other
practices and policies set forth in the Fund's Registration Statement, as such
Registration Statement and practices and policies may be amended from time to
time.
3. COMPENSATION
In consideration of services rendered pursuant to this Agreement, the
Fund will pay BEA on the first business day of each month a fee for the previous
month at an annual rate of .05% of the Fund's average daily net assets for the
first $125 million of average daily net assets, and .10% of average daily net
assets for Fund assets above $125 million. The fee for the period from the date
BEA commences its operations on behalf of the Fund to the end of the month
during which BEA commences such operations shall be prorated according to the
proportion that such period bears to the full monthly period. Upon any
termination of this Agreement before the end of any month, the fee for such part
of a month shall be prorated according to the proportion which such period bears
to the full monthly period and shall be payable upon the date of termination of
this Agreement. For the purpose of determining fees payable to BEA, fees shall
be calculated monthly and the value of the Fund's net assets shall be computed
at the times and in the manner specified in the Prospectus and Statement of
Additional Information as from time to time in effect.
4. EXPENSES
BEA will bear all expenses in connection with the performance of
its services under this Agreement; PROVIDED, HOWEVER, that the Fund will
reimburse BEA for the out-of-pocket expenses incurred by it on behalf of
the Fund. Such reimbursable expenses shall include, but not be limited to,
postage, telephone, telex and Federal Express charges. BEA will bill the
Fund as soon as practicable after the end of each calendar month for the
expenses it is entitled to have reimbursed.
-3-
<PAGE>
The Fund will bear certain other expenses to be incurred in its
operation, including: taxes, interest, brokerage fees and commissions, if any;
fees of Directors of the Company who are not officers, directors, or employees
of the Adviser or BEA; Securities and Exchange Commission fees and state Blue
Sky qualification fees; charges of custodians and transfer and dividend
disbursing agents; certain insurance premiums; outside auditing and legal
expenses; costs of maintenance of corporate existence; except as otherwise
provided herein, costs attributable to investor services, including, without
limitation, telephone and personnel expenses; costs of preparing and printing
prospectuses and statements of additional information for regulatory purposes
and for distribution to existing shareholders; costs of shareholders' reports
and meetings, and meetings of the officers of the Board of Directors of the
Company; costs of any pricing services; and any extraordinary expenses.
5. STANDARD OF CARE
BEA shall exercise its best judgment in rendering the services listed
in paragraph 2 above. BEA shall not be liable for any error of judgment or
mistake of law or for any loss suffered by the Fund in connection with the
matters to which this Agreement relates provided that nothing in this Agreement
shall be deemed to protect or purport to protect BEA against liability to the
Fund or to its shareholders to which BEA would otherwise be subject by reason of
willful misfeasance, bad faith or negligence on its part in the performance of
its duties or by reason of BEA's reckless disregard of its obligations and
duties under this Agreement.
6. TERM OF AGREEMENT
This Agreement shall become effective on the day following approval by
the Board of Directors of the Company including a majority of the Board of
Directors who are not "interested persons" (as defined in the Investment Company
Act of 1940, as amended) of any party to this Agreement, and shall continue
until , 1998 and shall continue automatically (unless terminated
as provided herein) for successive annual periods ending on of
each year, provided that such continuance is specifically approved at least
annually by the Board of Directors of the Company, including a majority of the
Board of Directors who are not "interested persons" of any party to this
Agreement, by vote cast in person at a meeting called for the purpose of voting
on such approval. This Agreement is terminable, without penalty, on 60 days'
written notice, by the Board of Directors of the Company or by vote of holders
of a majority of the Fund's shares, or upon 60 days' written notice, by BEA.
-4-
<PAGE>
7. SERVICE TO OTHER COMPANIES OR ACCOUNTS
The Company understands that BEA now acts, will continue to act and
may act in the future as administrator, co-administrator or administrative
services agent to one or more other investment companies, and the Company has no
objection to BEA's so acting. The Company understands that the persons employed
by BEA to assist in the performance of BEA's duties hereunder will not devote
their full time to such service and nothing contained in this Agreement shall be
deemed to limit or restrict the right of BEA or any affiliate of BEA to engage
in and devote time and attention to other businesses or to render services of
whatever kind or nature.
8. LIMITATION OF LIABILITY
The Company and BEA agree that the obligations of the Company under
this Agreement will not be binding upon any of the directors, shareholders,
nominees, officers, employees or agents, whether past, present or future, of the
Company, individually, but are binding only upon the assets and property of the
Fund, as provided in the Company's Charter. The execution and delivery of this
Agreement has been authorized by the Board of Directors of the Company, and
signed by an authorized officer of the Company, acting as such, and neither the
authorization by the Board of Directors nor the execution and delivery by the
officer will be deemed to have been made by any of them individually or to
impose any liability on any of them personally, but will bind only the property
of the Fund as provided in the Charter.
If the foregoing is in accordance with your understanding, kindly
indicate your acceptance hereof by signing and returning to us the enclosed copy
hereof.
Very truly yours,
RBB FUND, INC.
By:
----------------------------------------
Name:
Title:
Accepted:
BEA ASSOCIATES
By:
-----------------------
Name:
Title:
-5-
<PAGE>
TRANSFER AGENCY AGREEMENT SUPPLEMENT
(BEA Long-Short Market Neutral Fund Advisor Class)
This supplemental agreement is entered into this day of ,
1998, by and between THE RBB FUND, INC. (the "Fund") and State Street Bank &
Trust Company, a Massachusetts trust company (the "Transfer Agent").
The Fund is a corporation organized under the laws of the State of
Maryland and is an open-end management investment company. The Fund and the
Transfer Agent have entered into a Transfer Agency Agreement, dated as of
October 15, 1996 (as from time to time amended and supplemented, the "Transfer
Agency Agreement"), pursuant to which the Transfer Agent has undertaken to act
as transfer agent, registrar and dividend disbursing agent for the Fund with
respect to the Shares of the Fund, as more fully set forth therein. Certain
capitalized terms used without definition in this Transfer Agency Agreement
Supplement have the meaning specified in the Transfer Agency Agreement.
The Fund agrees with the Transfer Agent as follows:
1. ADOPTION OF TRANSFER AGENCY AGREEMENT. The Transfer Agency
Agreement is hereby adopted for the BEA Long-Short Market Neutral Fund's (the
"Fund") Advisor Class of Common Stock (Class AAA). This shall constitute a
"Class" as referred to in the Transfer Agency Agreement and its shares shall be
"Shares" as referred to therein.
2. COMPENSATION. As compensation for the services rendered by the
Transfer Agent during the term of the Transfer Agency Agreement, the Fund will
pay to the Transfer Agent, with respect to each Class of the Fund, annual fees
that shall be agreed to from time to time by the Fund and the Transfer Agent,
plus certain of the Transfer Agent's expenses relating to such services, as
shall be agreed to from time to time by the Fund and the Transfer Agent.
3. COUNTERPARTS. This agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the undersigned have entered into this
Agreement, intending to be legally bound hereby, as of the date and year
first above written.
THE RBB FUND, INC. STATE STREET BANK & TRUST
COMPANY
By: By:
--------------------------- --------------------------------
President
<PAGE>
TRANSFER AGENCY AGREEMENT SUPPLEMENT
(BEA Long-Short Market Neutral Fund Institutional Class)
This supplemental agreement is entered into this day of ,
1998, by and between THE RBB FUND, INC. (the "Fund") and State Street Bank &
Trust Company, a Massachusetts Trust company (the "Transfer Agent").
The Fund is a corporation organized under the laws of the State of
Maryland and is an open-end management investment company. The Fund and the
Transfer Agent have entered into a Transfer Agency Agreement, dated as of
October 15, 1996 (as from time to time amended and supplemented, the "Transfer
Agency Agreement"), pursuant to which the Transfer Agent has undertaken to act
as transfer agent, registrar and dividend disbursing agent for the Fund with
respect to the Shares of the Fund, as more fully set forth therein. Certain
capitalized terms used without definition in this Transfer Agency Agreement
Supplement have the meaning specified in the Transfer Agency Agreement.
The Fund agrees with the Transfer Agent as follows:
1. ADOPTION OF TRANSFER AGENCY AGREEMENT. The Transfer Agency
Agreement is hereby adopted for the BEA Long-Short Market Neutral Fund's (the
"Fund") Institutional Class of Common Stock (Class ZZ). This shall constitute a
"Class" as referred to in the Transfer Agency Agreement and its shares shall be
"Shares" as referred to therein.
2. COMPENSATION. As compensation for the services rendered by the
Transfer Agent during the term of the Transfer Agency Agreement, the Fund will
pay to the Transfer Agent, with respect to each Class of the Fund, annual fees
that shall be agreed to from time to time by the Fund and the Transfer Agent,
plus certain of the Transfer Agent's expenses relating to such services, as
shall be agreed to from time to time by the Fund and the Transfer Agent.
3. COUNTERPARTS. This agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the undersigned have entered into this
Agreement, intending to be legally bound hereby, as of the date and year
first above written.
THE RBB FUND, INC. STATE STREET BANK & TRUST
COMPANY
By: By:
--------------------------- ----------------------------
President
<PAGE>
TRANSFER AGENCY AGREEMENT SUPPLEMENT
(BEA Long-Short Equity Fund Advisor Class)
This supplemental agreement is entered into this day of ,
1998, by and between THE RBB FUND, INC. (the "Fund") and State Street Bank &
Trust Company, a Massachusetts trust company (the "Transfer Agent").
The Fund is a corporation organized under the laws of the State of
Maryland and is an open-end management investment company. The Fund and the
Transfer Agent have entered into a Transfer Agency Agreement, dated as of
October 15, 1996 (as from time to time amended and supplemented, the "Transfer
Agency Agreement"), pursuant to which the Transfer Agent has undertaken to act
as transfer agent, registrar and dividend disbursing agent for the Fund with
respect to the Shares of the Fund, as more fully set forth therein. Certain
capitalized terms used without definition in this Transfer Agency Agreement
Supplement have the meaning specified in the Transfer Agency Agreement.
The Fund agrees with the Transfer Agent as follows:
1. ADOPTION OF TRANSFER AGENCY AGREEMENT. The Transfer Agency
Agreement is hereby adopted for the BEA Long- Short Equity Fund's (the "Fund")
Advisor Class of Common Stock (Class CCC). This shall constitute a "Class" as
referred to in the Transfer Agency Agreement and its shares shall be "Shares" as
referred to therein.
2. COMPENSATION. As compensation for the services rendered by the
Transfer Agent during the term of the Transfer Agency Agreement, the Fund will
pay to the Transfer Agent, with respect to each Class of the Fund, annual fees
that shall be agreed to from time to time by the Fund and the Transfer Agent,
plus certain of the Transfer Agent's expenses relating to such services, as
shall be agreed to from time to time by the Fund and the Transfer Agent.
3. COUNTERPARTS. This agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the undersigned have entered into this
Agreement, intending to be legally bound hereby, as of the date and year
first above written.
THE RBB FUND, INC. STATE STREET BANK & TRUST
COMPANY
By: By:
------------------------------- ---------------------------
President
<PAGE>
TRANSFER AGENCY AGREEMENT SUPPLEMENT
(BEA Long-Short Equity Fund Institutional Class)
This supplemental agreement is entered into this day of ,
1998, by and between THE RBB FUND, INC. (the "Fund") and State Street Bank &
Trust Company, a Massachusetts trust company (the "Transfer Agent").
The Fund is a corporation organized under the laws of the State of
Maryland and is an open-end management investment company. The Fund and the
Transfer Agent have entered into a Transfer Agency Agreement, dated as of
October 15, 1996 (as from time to time amended and supplemented, the "Transfer
Agency Agreement"), pursuant to which the Transfer Agent has undertaken to act
as transfer agent, registrar and dividend disbursing agent for the Fund with
respect to the Shares of the Fund, as more fully set forth therein. Certain
capitalized terms used without definition in this Transfer Agency Agreement
Supplement have the meaning specified in the Transfer Agency Agreement.
The Fund agrees with the Transfer Agent as follows:
1. ADOPTION OF TRANSFER AGENCY AGREEMENT. The Transfer Agency
Agreement is hereby adopted for the BEA Long-Short Equity Fund's (the "Fund")
Institutional Class of Common Stock (Class BBB). This shall constitute a "Class"
as referred to in the Transfer Agency Agreement and its shares shall be "Shares"
as referred to therein.
2. COMPENSATION. As compensation for the services rendered by the
Transfer Agent during the term of the Transfer Agency Agreement, the Fund will
pay to the Transfer Agent, with respect to each Class of the Fund, annual fees
that shall be agreed to from time to time by the Fund and the Transfer Agent,
plus certain of the Transfer Agent's expenses relating to such services, as
shall be agreed to from time to time by the Fund and the Transfer Agent.
3. COUNTERPARTS. This agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the undersigned have entered into this
Agreement, intending to be legally bound hereby, as of the date and year
first above written.
THE RBB FUND, INC. STATE STREET BANK & TRUST
COMPANY
By: By:
-------------------------------- -----------------------------
President
<PAGE>
ADMINISTRATIVE SERVICES AGREEMENT
This Agreement is made as of the day of , 1998, by and between
THE RBB FUND, INC., a Maryland corporation (the "Fund"), on behalf of the BEA
Long-Short Market Neutral Fund (the "Portfolio") and COUNSELLORS FUNDS SERVICE,
INC. ("Counsellors"), a Delaware corporation.
W I T N E S S E T H
WHEREAS, the Fund is registered as an open-end, diversified management
investment company under the Investment Company Act of 1940, as amended (the
"1940 Act"); and
WHEREAS, the Fund wishes to retain Counsellors to provide certain
administrative services to the Portfolio, and Counsellors is willing to furnish
such services;
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, it is agreed between the parties hereto as follows:
1. APPOINTMENT. The Fund hereby appoints Counsellors to provide
certain administrative services to the Portfolio with respect to the
Institutional class of shares for the period and on the terms set forth in
this Agreement. Counsellors accepts such appointment and agrees to furnish
the services herein set forth in return for the compensation as provided in
Paragraph 6 of this Agreement. Counsellors agrees to comply with all
relevant provisions of the Securities Act of 1933, as amended, the Securities
Exchange Act of 1934, as amended, and 1940 Act and applicable rules and
regulations thereunder.
<PAGE>
2. SERVICES ON A CONTINUING BASIS. Subject to the supervision and
direction of the Board of Directors of the Fund, Counsellors undertakes to
perform the following administrative services for the Portfolio:
(a) Making available office facilities, as requested by the Fund,
(which may be in the offices of Counsellors or a corporate affiliate);
(b) Furnishing data processing services, clerical services and
certain internal quasi-legal, executive and administrative services;
(c) Furnish an 800 telephone line for shareholder inquires and
otherwise assist in the preparation of shareholder communications and notices as
requested by the Fund or the investment adviser to the Portfolio (the
"Investment Adviser").
(d) Assisting in coordinating the preparation of reports to the
Portfolio's shareholders of record and the Securities and Exchange Commission
(the "SEC") including, but not limited to, proxy statements; annual,
semi-annual and quarterly reports to Shareholders; annual and semi-annual
reports on Form N-SAR; and post-effective amendments to the Fund's
Registration Statement on Form N-1A (the "Registration Statement");
(e) Assisting the Investment Adviser, at the Investment Adviser's
request, in monitoring and developing compliance procedures which will include,
among other matters, procedures to assist the Investment Adviser in monitoring
compliance with the Portfolio's investment objective, policies,
-2-
<PAGE>
restrictions, tax matters and applicable laws and regulations; and
(f) Acting as liaison between the Fund and the Fund's independent
public accountants, counsel, custodian or custodians, transfer agent and
administrator and taking all reasonable action in the performance of its
obligations under this Agreement to assure that all necessary information is
made available to each of them.
In performing all services under this Agreement, Counsellors shall act in
conformity with applicable law, the Fund's Articles of Incorporation and
By-Laws, and all amendments thereto, and the Portfolio's investment
objective, investment policies and other practices and policies set forth in
the Fund's Registration Statement, as such Registration Statement and
practices and policies may be amended from time to time.
3. BOOKS AND RECORDS. In connection with the services provided under
this Agreement, Counsellors shall maintain such books and records, as required
by the Fund, of the Fund's reports or filings with the Portfolio's shareholders,
the SEC authorities and other required reports and documents prepared, filed or
distributed on behalf of the Fund.
The books and records pertaining to the Fund or any Portfolio that are in
the possession of Counsellors shall be the property of the Fund. Such books and
records shall be prepared and maintained as required by the 1940 Act and other
applicable securities laws and rules and regulations. The Fund, or the
-3-
<PAGE>
Fund's authorized representatives, shall have access to such books and
records at all times during Counsellors' normal business hours. Upon the
reasonable request of the Fund, copies of any such books and records shall be
provided by Counsellors to the Fund or the Fund's authorized representative
at the Fund's expense.
4. CONFIDENTIALITY. Counsellors agrees on behalf of itself and its
employees to treat confidentially all records and other information relative to
the Fund or any Portfolio and its prior, present or potential shareholders and
relative to the Investment Adviser and its prior, present or potential
customers, except, after prior notification to and approval in writing by the
Fund, which approval shall not be unreasonably withheld and may not be withheld
where Counsellors may be exposed to civil or criminal contempt proceedings for
failure to comply, when requested to divulge such information by duly
constituted authorities, or when so requested by the Fund.
5. RIGHT TO RECEIVE ADVICE.
(a) ADVICE OF FUND. If Counsellors is in doubt as to any action to
be taken or omitted by it, it may request, and shall receive, directions or
advice from the Fund.
(b) ADVICE OF COUNSEL. If Counsellors is in doubt as to any
question of law involved in any action to be taken or omitted by Counsellors, it
may request advice at its own cost from counsel of its own choosing (who may be
counsel for the
-4-
<PAGE>
Investment Adviser, the Fund or Counsellors, at the option of Counsellors).
(c) CONFLICTING ADVICE. In case of conflict between directions or
advice received by Counsellors pursuant to subsection (a) of this paragraph and
advice received by Counsellors pursuant to subsection (b) of this paragraph,
Counsellors shall be entitled to rely on and follow the advice received pursuant
to the latter provision alone.
(d) PROTECTION OF COUNSELLORS. Counsellors shall be protected in any
action or inaction which it takes in reliance on any directions or advice
received pursuant to subsections (a) or (b) of this paragraph which Counsellors,
after receipt of any such directions or advice in good faith believes to be
consistent with such directions or advice. However, nothing in this paragraph
shall be construed as imposing upon Counsellors any obligation (i) to seek such
directions or advice or (ii) to act in accordance with such directions or advice
when received. Nothing in this subsection shall excuse Counsellors when an
action or omission on the part of Counsellors constitutes willful misfeasance,
bad faith, negligence or reckless disregard by Counsellors of its duties under
this Agreement.
6. COMPENSATION. In consideration of services rendered pursuant to this
Agreement, the Fund will pay Counsellors on the first business day of each month
a fee for the previous month, calculated daily. The Fund will also reimburse
Counsellors for its out-of-pocket expenses incurred on behalf of the Fund,
-5-
<PAGE>
including but not limited to, postage, telephone, telex and Federal Express
charges. The annual fee shall be .15% of the Portfolio's average daily net
assets exclusive of out-of-pocket expenses. Upon any termination of this
Agreement before the end of any month, the fee for such part of a month shall be
prorated according to the proportion which such period bears to the full monthly
period and shall be payable upon the date of termination of this Agreement. For
the purpose of determining fees payable to Counsellors, the value of the
Portfolio's net assets shall be computed at the times and in the manner
specified in the Fund's Prospectus and Statement of Additional Information as
from time to time in effect. The annual fee paid to Counsellors hereunder may
be amended upon terms as may be specifically agreed to in writing from time to
time by the Fund and Counsellors.
7. INDEMNIFICATION. The Fund agrees to indemnify and hold harmless
Counsellors and its nominees from all taxes, charges, expenses, assessments,
claims and liabilities (including, without limitation, liabilities arising under
federal securities and commodities laws and any state and foreign securities and
Blue Sky laws, all as or to be amended from time to time) and expenses,
including (without limitation) attorneys' fees and disbursements, arising
directly or indirectly from any action or thing which Counsellors takes or does
or omits to take or do pursuant to the terms of this Agreement or otherwise at
the request or on the direction of or in reliance on the advice of the Fund,
provided, that neither Counsellors nor any of its
-6-
<PAGE>
nominees shall be indemnified against any liability to the Fund or to its
Shareholders (or any expenses incident to such liability) arising out of
Counsellors' own willful misfeasance, bad faith, negligence or reckless
disregard of its duties and obligations under this Agreement.
8. RESPONSIBILITY OF COUNSELLORS. Counsellors shall be under no duty to
take any action on behalf of the Fund, except as specifically set forth herein
or as may be specifically agreed to by Counsellors in writing. In the
performance of its duties hereunder, Counsellors shall be obligated to exercise
care and diligence and to act in good faith and to use its best efforts within
reasonable limits in performing services provided for under this Agreement.
Counsellors shall be responsible for its own negligent failure to perform
its duties under this Agreement. Without limiting the generality of the
foregoing or of any other provision of this Agreement, Counsellors in connection
with its duties under this Agreement shall not be under any duty or obligation
to inquire into and shall not be liable for or in respect of (a) the validity or
invalidity or authority or lack thereof of any notice or other instrument which
conforms to the applicable requirements of this Agreement, and which Counsellors
reasonably believes to be genuine; or (b) delays or errors or loss of data
occurring by reason of circumstances beyond Counsellors' control, including acts
of civil or military authority, national emergencies, labor difficulties, fire,
-7-
<PAGE>
mechanical breakdown, flood or catastrophe, acts of God, insurrection, war,
riots or failure of the mails, transportation, communication or power supply.
9. DURATION AND TERMINATION. This Agreement shall continue until
terminated by the Fund or Counsellors on 60 days' written notice.
10. NOTICES. All notices and other communications hereunder (collectively
referred to as "Notice" or "Notices" in this Paragraph), shall be in writing or
by confirming telegram, Cable, telex or facsimile sending device. Notices shall
be addressed (a) if to Counsellors at Counsellors' address, 466 Lexington
Avenue, New York, New York 10017; (b) if to the Fund, at the address of the
Fund; or (c) if to neither of the foregoing, at such other address as shall have
been notified to the sender of any such Notice or other communication. If the
location of the sender of a Notice or other communication and the address of the
addressee thereof are, at the time of sending more than 100 miles apart, the
Notice may be mailed, in which case it shall be deemed to have been given three
days after it is sent, or if sent by confirming telegram, cable, telex, or
facsimile sending device charges arising from the sending of a Notice hereunder
shall be paid by the sender.
11. FURTHER ACTIONS. Each party agrees to perform such further acts and
execute such further documents as are necessary to effectuate the purposes
hereof.
-8-
<PAGE>
12. AMENDMENTS. This Agreement or any part hereof may be changed or
waived only by an instrument in writing signed by the party against which
enforcement of such change or waiver is sought.
13. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
14. MISCELLANEOUS. This Agreement embodies the entire agreement and
understanding between the parties thereto, and supersedes all prior agreements
and understandings, relating to the subject matter hereof. The captions in this
Agreement are included for convenience of reference only and in no way define or
delimit any of the provisions hereof or otherwise affect their construction or
effect. This Agreement shall be deemed to be a contract made in New York and
governed by New York law. If any provision of this Agreement shall be held or
made invalid by a court decision, statute, rule or otherwise, the remainder of
this Agreement shall not be affected thereby. This Agreement shall be binding
and shall inure to the benefit of the parties hereto and their respective
successors.
-9-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their officers designated below as of the day and year first above
written.
THE RBB FUND, INC.
By:
----------------------------------
Title:
COUNSELLORS FUNDS SERVICE, INC.
By:
---------------------------------
Title:
-10-
<PAGE>
ADMINISTRATIVE SERVICES AGREEMENT
This Agreement is made as of the day of , 1998, by and between
THE RBB FUND, INC., a Maryland corporation (the "Fund"), on behalf of the BEA
Long-Short Equity Fund (the "Portfolio") and COUNSELLORS FUNDS SERVICE, INC.
("Counsellors"), a Delaware corporation.
W I T N E S S E T H
WHEREAS, the Fund is registered as an open-end, diversified management
investment company under the Investment Company Act of 1940, as amended (the
"1940 Act"); and
WHEREAS, the Fund wishes to retain Counsellors to provide certain
administrative services to the Portfolio, and Counsellors is willing to furnish
such services;
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, it is agreed between the parties hereto as follows:
1. APPOINTMENT. The Fund hereby appoints Counsellors to provide
certain administrative services to the Portfolio with respect to the
Institutional class of shares for the period and on the terms set forth in
this Agreement. Counsellors accepts such appointment and agrees to furnish
the services herein set forth in return for the compensation as provided in
Paragraph 6 of this Agreement. Counsellors agrees to comply with all
relevant provisions of the Securities Act of 1933, as amended, the Securities
Exchange Act of 1934, as amended, and 1940 Act and applicable rules and
regulations thereunder.
<PAGE>
2. SERVICES ON A CONTINUING BASIS. Subject to the supervision and
direction of the Board of Directors of the Fund, Counsellors undertakes to
perform the following administrative services for the Portfolio:
(a) Making available office facilities, as requested by the Fund,
(which may be in the offices of Counsellors or a corporate affiliate);
(b) Furnishing data processing services, clerical services and
certain internal quasi-legal, executive and administrative services;
(c) Furnish an 800 telephone line for shareholder inquires and
otherwise assist in the preparation of shareholder communications and notices as
requested by the Fund or the investment adviser to the Portfolio (the
"Investment Adviser").
(d) Assisting in coordinating the preparation of reports to the
Portfolio's shareholders of record and the Securities and Exchange Commission
(the "SEC") including, but not limited to, proxy statements; annual,
semi-annual and quarterly reports to Shareholders; annual and semi-annual
reports on Form N-SAR; and post-effective amendments to the Fund's
Registration Statement on Form N-1A (the "Registration Statement");
(e) Assisting the Investment Adviser, at the Investment Adviser's
request, in monitoring and developing compliance procedures which will include,
among other matters, procedures to assist the Investment Adviser in monitoring
compliance with the Portfolio's investment objective, policies,
-2-
<PAGE>
restrictions, tax matters and applicable laws and regulations; and
(f) Acting as liaison between the Fund and the Fund's independent
public accountants, counsel, custodian or custodians, transfer agent and
administrator and taking all reasonable action in the performance of its
obligations under this Agreement to assure that all necessary information is
made available to each of them.
In performing all services under this Agreement, Counsellors shall act
in conformity with applicable law, the Fund's Articles of Incorporation and
By-Laws, and all amendments thereto, and the Portfolio's investment
objective, investment policies and other practices and policies set forth in
the Fund's Registration Statement, as such Registration Statement and
practices and policies may be amended from time to time.
3. BOOKS AND RECORDS. In connection with the services provided under
this Agreement, Counsellors shall maintain such books and records, as required
by the Fund, of the Fund's reports or filings with the Portfolio's shareholders,
the SEC authorities and other required reports and documents prepared, filed or
distributed on behalf of the Fund.
The books and records pertaining to the Fund or any Portfolio that are in
the possession of Counsellors shall be the property of the Fund. Such books and
records shall be prepared and maintained as required by the 1940 Act and other
applicable securities laws and rules and regulations. The Fund, or the
-3-
<PAGE>
Fund's authorized representatives, shall have access to such books and
records at all times during Counsellors' normal business hours. Upon the
reasonable request of the Fund, copies of any such books and records shall be
provided by Counsellors to the Fund or the Fund's authorized representative
at the Fund's expense.
4. CONFIDENTIALITY. Counsellors agrees on behalf of itself and its
employees to treat confidentially all records and other information relative to
the Fund or any Portfolio and its prior, present or potential shareholders and
relative to the Investment Adviser and its prior, present or potential
customers, except, after prior notification to and approval in writing by the
Fund, which approval shall not be unreasonably withheld and may not be withheld
where Counsellors may be exposed to civil or criminal contempt proceedings for
failure to comply, when requested to divulge such information by duly
constituted authorities, or when so requested by the Fund.
5. RIGHT TO RECEIVE ADVICE.
(a) ADVICE OF FUND. If Counsellors is in doubt as to any action to
be taken or omitted by it, it may request, and shall receive, directions or
advice from the Fund.
(b) ADVICE OF COUNSEL. If Counsellors is in doubt as to any
question of law involved in any action to be taken or omitted by Counsellors, it
may request advice at its own cost from counsel of its own choosing (who may be
counsel for the
-4-
<PAGE>
Investment Adviser, the Fund or Counsellors, at the option of Counsellors).
(c) CONFLICTING ADVICE. In case of conflict between directions or
advice received by Counsellors pursuant to subsection (a) of this paragraph and
advice received by Counsellors pursuant to subsection (b) of this paragraph,
Counsellors shall be entitled to rely on and follow the advice received pursuant
to the latter provision alone.
(d) PROTECTION OF COUNSELLORS. Counsellors shall be protected in any
action or inaction which it takes in reliance on any directions or advice
received pursuant to subsections (a) or (b) of this paragraph which Counsellors,
after receipt of any such directions or advice in good faith believes to be
consistent with such directions or advice. However, nothing in this paragraph
shall be construed as imposing upon Counsellors any obligation (i) to seek such
directions or advice or (ii) to act in accordance with such directions or advice
when received. Nothing in this subsection shall excuse Counsellors when an
action or omission on the part of Counsellors constitutes willful misfeasance,
bad faith, negligence or reckless disregard by Counsellors of its duties under
this Agreement.
6. COMPENSATION. In consideration of services rendered pursuant to this
Agreement, the Fund will pay Counsellors on the first business day of each month
a fee for the previous month, calculated daily. The Fund will also reimburse
Counsellors for its out-of-pocket expenses incurred on behalf of the Fund,
-5-
<PAGE>
including but not limited to, postage, telephone, telex and Federal Express
charges. The annual fee shall be .15% of the Portfolio's average daily net
assets exclusive of out-of-pocket expenses. Upon any termination of this
Agreement before the end of any month, the fee for such part of a month shall be
prorated according to the proportion which such period bears to the full monthly
period and shall be payable upon the date of termination of this Agreement. For
the purpose of determining fees payable to Counsellors, the value of the
Portfolio's net assets shall be computed at the times and in the manner
specified in the Fund's Prospectus and Statement of Additional Information as
from time to time in effect. The annual fee paid to Counsellors hereunder may
be amended upon terms as may be specifically agreed to in writing from time to
time by the Fund and Counsellors.
7. INDEMNIFICATION. The Fund agrees to indemnify and hold harmless
Counsellors and its nominees from all taxes, charges, expenses, assessments,
claims and liabilities (including, without limitation, liabilities arising under
federal securities and commodities laws and any state and foreign securities and
Blue Sky laws, all as or to be amended from time to time) and expenses,
including (without limitation) attorneys' fees and disbursements, arising
directly or indirectly from any action or thing which Counsellors takes or does
or omits to take or do pursuant to the terms of this Agreement or otherwise at
the request or on the direction of or in reliance on the advice of the Fund,
provided, that neither Counsellors nor any of its
-6-
<PAGE>
nominees shall be indemnified against any liability to the Fund or to its
Shareholders (or any expenses incident to such liability) arising out of
Counsellors' own willful misfeasance, bad faith, negligence or reckless
disregard of its duties and obligations under this Agreement.
8. RESPONSIBILITY OF COUNSELLORS. Counsellors shall be under no duty to
take any action on behalf of the Fund, except as specifically set forth herein
or as may be specifically agreed to by Counsellors in writing. In the
performance of its duties hereunder, Counsellors shall be obligated to exercise
care and diligence and to act in good faith and to use its best efforts within
reasonable limits in performing services provided for under this Agreement.
Counsellors shall be responsible for its own negligent failure to perform
its duties under this Agreement. Without limiting the generality of the
foregoing or of any other provision of this Agreement, Counsellors in connection
with its duties under this Agreement shall not be under any duty or obligation
to inquire into and shall not be liable for or in respect of (a) the validity or
invalidity or authority or lack thereof of any notice or other instrument which
conforms to the applicable requirements of this Agreement, and which Counsellors
reasonably believes to be genuine; or (b) delays or errors or loss of data
occurring by reason of circumstances beyond Counsellors' control, including acts
of civil or military authority, national emergencies, labor difficulties, fire,
-7-
<PAGE>
mechanical breakdown, flood or catastrophe, acts of God, insurrection, war,
riots or failure of the mails, transportation, communication or power supply.
9. DURATION AND TERMINATION. This Agreement shall continue until
terminated by the Fund or Counsellors on 60 days' written notice.
10. NOTICES. All notices and other communications hereunder (collectively
referred to as "Notice" or "Notices" in this Paragraph), shall be in writing or
by confirming telegram, Cable, telex or facsimile sending device. Notices shall
be addressed (a) if to Counsellors at Counsellors' address, 466 Lexington
Avenue, New York, New York 10017; (b) if to the Fund, at the address of the
Fund; or (c) if to neither of the foregoing, at such other address as shall have
been notified to the sender of any such Notice or other communication. If the
location of the sender of a Notice or other communication and the address of the
addressee thereof are, at the time of sending more than 100 miles apart, the
Notice may be mailed, in which case it shall be deemed to have been given three
days after it is sent, or if sent by confirming telegram, cable, telex, or
facsimile sending device charges arising from the sending of a Notice hereunder
shall be paid by the sender.
11. FURTHER ACTIONS. Each party agrees to perform such further acts and
execute such further documents as are necessary to effectuate the purposes
hereof.
-8-
<PAGE>
12. AMENDMENTS. This Agreement or any part hereof may be changed or
waived only by an instrument in writing signed by the party against which
enforcement of such change or waiver is sought.
13. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
14. MISCELLANEOUS. This Agreement embodies the entire agreement and
understanding between the parties thereto, and supersedes all prior agreements
and understandings, relating to the subject matter hereof. The captions in this
Agreement are included for convenience of reference only and in no way define or
delimit any of the provisions hereof or otherwise affect their construction or
effect. This Agreement shall be deemed to be a contract made in New York and
governed by New York law. If any provision of this Agreement shall be held or
made invalid by a court decision, statute, rule or otherwise, the remainder of
this Agreement shall not be affected thereby. This Agreement shall be binding
and shall inure to the benefit of the parties hereto and their respective
successors.
-9-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their officers designated below as of the day and year first above
written.
THE RBB FUND, INC.
By:
----------------------------------
Title:
COUNSELLORS FUNDS SERVICE, INC.
By:
----------------------------------
Title:
-10-
<PAGE>
LAW OFFICES
Drinker Biddle & Reath LLP
1345 Chestnut Street
Philadelphia, PA 19107-3496
Telephone: (215) 988-2700
Fax: (215) 988-2757
April 10, 1998
The RBB Fund, Inc.
Bellevue Park Corporate Center
400 Bellevue Parkway, Suite 100
Wilmington, DE 19809
RE: SHARES REGISTERED BY POST-EFFECTIVE AMENDMENT NO. 53 TO REGISTRATION
STATEMENT ON FORM N-1A (FILE NO. 33-20827)
Ladies and Gentlemen:
We have acted as counsel to The RBB Fund, Inc. (the "Company") in
connection with the preparation and filing with the Securities and Exchange
Commission of Post-Effective Amendment No. 53 (the "Amendment") to the Company's
Registration Statement on Form N-1A under the Securities Act of 1933, as
amended. The Board of Directors of the Company has authorized 100,000,000
shares of Class ZZ Common Stock, $.001 par value per share, 100,000,000 shares
of Class AAA Common Stock, $.001 par value per share, 100,000,000 shares of
Class BBB Common Stock, $.001 par value per share and 100,000,000 shares of
Class CCC Common Stock, $001. par value per share, to be issued and sold by the
Company (collectively, the "Shares"). Classes ZZ, AAA, BBB and CCC are the
Advisor and Institutional Classes, respectively, of the new BEA Long-Short
Market Neutral and BEA Long-Short Equity Funds (the "Funds"). The Amendment
seeks to register an indefinite number of Shares.
We have reviewed the Company's Certificate of Incorporation, ByLaws,
resolutions of its Board of Directors, and such other legal and factual matters
as we have deemed appropriate. This opinion is based exclusively on the
Maryland General Corporation Law and the federal law of the United States of
America.
We assume that, prior to the effectiveness of the Amendment under the 1933
Act, the Company will have filed with the Maryland Department of Assessments and
Taxation all necessary documents (the "Documents") to authorize, classify and
establish the
<PAGE>
Shares.
Based upon and subject to the foregoing, it is our opinion that the Shares,
when issued for payment as described in the Company's Prospectus relating to the
Funds and in accordance with the Company's Articles of Incorporation and the
Documents for not less than $.001 per share, will be legally issued, fully paid
and non-assessable by the Company.
We hereby consent to the filing of this opinion as an exhibit to
Post-Effective Amendment No. 53 to the Company's Registration Statement.
Very truly yours,
/s/ Drinker Biddle & Reath LLP
------------------------------
DRINKER BIDDLE & REATH LLP
<PAGE>
CONSENT OF COUNSEL
We hereby consent to the use of our name and to the reference to our
firm under the captions "Management of the Company" and "Counsel" in the
Statement of Additional Information included in Post-Effective Amendment No. 53
to the Registration Statement (File Nos. 33-20827 and 811-5518) on Form N-1A of
The RBB Fund, Inc. under the Securities Act of 1933, as amended, and the
Investment Company Act of 1940, as amended. This consent does not constitute a
consent under Section 7 of the Securities Act of 1933, as amended, and in
consenting to the use of our name and the references to our firm under such
captions we have not certified any part of the Registration Statement and do not
otherwise come within the categories of persons whose consent is required under
Section 7 or the rules and regulations of the Securities and Exchange Commission
thereunder.
/s/ DRINKER BIDDLE & REATH LLP
------------------------------
DRINKER BIDDLE & REATH LLP
Philadelphia, Pennsylvania
April 10, 1998
<PAGE>
PURCHASE AGREEMENT
(BEA Long-Short Market Neutral Fund)
The RBB Fund, Inc. (the "Fund"), a Maryland corporation, and BEA
Associates ("BEA"), intending to be legally bound, hereby agree with each other
as follows:
1. The Fund hereby offers BEA and BEA hereby purchases $_____ worth
of shares of each of Classes ZZ and AAA Common Stock of the Fund (par value
$.001 per share) (such shares hereinafter sometimes collectively known as
"Shares") at a price per Share equivalent to the net asset value per share of
the Shares of the Fund as determined on _________, 1998.
The Fund hereby acknowledges receipt from BEA of funds in the amount of $_____
in full payment for the Shares.
2. BEA represents and warrants to the Fund that the Shares are being
acquired for investment purposes and not with a view to the distribution
thereof.
3. This agreement may be executed in counterparts, and all such
counterparts taken together shall be deemed to constitute one and the same
instrument.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the ____ day of __________, 199_.
THE RBB FUND, INC.
By:
----------------------------
President
BEA ASSOCIATES
By:
----------------------------
General Counsel
<PAGE>
PURCHASE AGREEMENT
(BEA Long-Short Equity Fund)
The RBB Fund, Inc. (the "Fund"), a Maryland corporation, and BEA
Associates ("BEA"), intending to be legally bound, hereby agree with each other
as follows:
1. The Fund hereby offers BEA and BEA hereby purchases $_____ worth
of shares of each of Classes BBB and CCC Common Stock of the Fund (par value
$.001 per share) (such shares hereinafter sometimes collectively known as
"Shares") at a price per Share equivalent to the net asset value per share of
the Shares of the Fund as determined on _________, 1998.
The Fund hereby acknowledges receipt from BEA of funds in the amount of $_____
in full payment for the Shares.
2. BEA represents and warrants to the Fund that the Shares are being
acquired for investment purposes and not with a view to the distribution
thereof.
3. This agreement may be executed in counterparts, and all such
counterparts taken together shall be deemed to constitute one and the same
instrument.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the ____ day of __________, 199_.
THE RBB FUND, INC.
By:
----------------------------
President
BEA ASSOCIATES
By:
----------------------------
General Counsel
<PAGE>
PLAN OF DISTRIBUTION PURSUANT TO RULE 12b-1
OF
THE RBB FUND, INC.
(BEA Long-Short Equity Portfolio Advisor Class)
WHEREAS, The RBB Fund, Inc. (the "Fund") intends to engage in business
as an open-end management investment company and is registered as such under the
Investment Company Act of 1940, as amended (the "Act"); and
WHEREAS, the Fund desires to adopt a Plan of Distribution pursuant to
Rule 12b-1 under the Act with respect to shares of its Class CCC Common Stock,
par value $.001 per share (the "Class CCC Shares") and the Board of Directors
has determined that there is a reasonable likelihood that adoption of this Plan
of Distribution will benefit the Fund and its stockholders; and
WHEREAS, the Fund intends to employ Counsellors Securities inc. (the
"Distributor") as distributor of the Class CCC Shares; and
WHEREAS, the Fund and the Distributor intend to enter into a separate
Distribution Agreement with the Fund for Class CCC Shares, pursuant to which the
Fund will employ the Distributor as distributor for the continuous offering of
Class CCC Shares;
NOW, THEREFORE, the Fund hereby adopts, and the Distributor hereby
agrees to the terms of, this Plan of Distribution (the "Plan") in accordance
with Rule 12b-1 under the Act on the following terms and conditions:
1. The Fund shall pay to the Distributor, as the distributor of the
Class CCC Shares, compensation for distribution of its shares at an annual rate
not to exceed .25% of the average daily net assets of the Class CCC Shares. The
amount of such compensation shall be agreed upon by the Board of Directors of
the Fund and by the Distributor and shall be calculated and accrued daily and
paid monthly or at such other intervals as the Board of Directors and the
Distributor shall mutually agree.
2. The amount set forth in paragraph 1 of this Plan shall be paid
for the Distributor's services as distributor of the Class CCC Shares. Such
amount may be spent by the Distributor on any activities or expenses primarily
intended to result in the sale of Class CCC Shares, including, but not limited
to: compensation to and expenses of employees of the
<PAGE>
Distributor who engage in or support distribution of the Class CCC Shares,
including overhead and telephone expenses; printing of prospectuses and
reports for other than existing shareholders; preparation, printing and
distribution of sales literature and advertising materials; and compensation
to certain financial institutions ("Service Organizations") who sell Class
CCC Shares. The Distributor may negotiate with any such Service
Organizations the services to be provided by the Service Organization to
shareholders in connection with the sale of Class CCC shares ("Distribution
Services"), and all or any portion of the compensation paid to the
Distributor under paragraph 1 of this Plan may be reallocated by the
Distributor to Service Organizations who sell Class CCC Shares. The
compensation paid to Service Organizations with respect to Distribution
Services will compensate Service Organizations to cover certain expenses
primarily intended to result in the sale of Class CCC Shares, including, but
not limited to: (a) costs of payments made to employees that engage in the
sale of Class CCC Shares; (b) payments made to, and expenses of, persons who
provide support services in connection with the sale of Class CCC shares,
including, but not limited to, office space and equipment, telephone
facilities, processing shareholder transactions and providing any other
shareholder services not otherwise provided by the Fund's transfer agent; (c)
costs relating to the formulation and implementation of marketing and
promotional activities, including, but not limited to, direct mail promotions
and television, radio, newspaper, magazine and other mass media advertising;
(d) costs of printing and distributing prospectuses, statements of additional
information and reports relating to the Class CCC Shares to prospective
shareholders of the Class CCC Shares; (e) costs involved in preparing,
printing and distributing sales literature pertaining to the Class CCC
shares; and (f) costs involved in obtaining whatever information, analyses
and reports with respect to marketing and promotional activities that the
Service Organization may, from time to time, deem advisable. The
compensation paid to Service Organizations with respect to Shareholder
Services will compensate Service Organizations for personal service and/or
the maintenance of shareholder accounts, including but not limited to (a)
responding to inquiries of customers or clients of the Service Organization
who beneficially own Class CCC Shares ("Customers"), (b) providing
information on Customer investments and (c) providing other shareholder
liaison services. The compensation paid to Service Organizations with
respect to Administrative Services will compensate Service Organizations for
administrative and accounting services to their Customers, including, but not
limited to: (a) aggregating and processing purchase and redemption requests
from Customers and placing net purchase and redemption orders with the Fund's
distributor or transfer agent; (b) providing Customers with a service that
invests the assets of their accounts in the Class CCC Shares; (c) processing
dividend payments from the Class CCC Shares on behalf of Customers; (d)
-2-
<PAGE>
providing information periodically to Customers showing their positions in
the Class CCC Shares; (e) arranging for bank wires; (f) providing
sub-accounting with respect to Class CCC Shares beneficially owned by
Customers or the information to the Fund necessary for sub-accounting; (g)
forwarding shareholder communications from the Fund (for example, proxies,
shareholder reports, annual and semi-annual financial statements and
dividend, distribution and tax notices related to the Class CCC Shares) to
Customers, if required by law; and (h) providing other similar services to
the extent permitted under applicable statutes, rules and regulations.
3. This plan shall not take effect until it has been approved by a
vote of at least a majority (as defined in the Act) of the outstanding Class CCC
Shares.
4. In addition to the approval required by paragraph 3 above, this
Plan shall not take effect until it has been approved, together with any related
agreements, by votes of a majority of both (a) the Board of Directors of the
Fund and (b) those directors of the Fund who are not "interested persons" of the
Fund (as defined in the Act) and have no direct or indirect financial interest
in the operation of this Plan or any agreements related to it (the "Rule 12b-1
Directors"), cast in person at a meeting (or meetings) called for the purpose of
voting on this Plan and such related agreements.
5. This Plan shall continue in effect until __________, 1998.
Thereafter, this Plan shall continue in effect for so long as such continuance
is specifically approved at least annually in the manner provided for approval
of this Plan in paragraph 4.
6. The Distributor shall provide to the Board of Directors of the
Fund and the Board of Directors shall review, at least quarterly, a written
report of the amounts expended pursuant to this Plan and the purposes for which
such expenditures were made, including commissions, advertising, printing,
interest, carrying charges and allocated overhead expenses.
7. This Plan may be terminated at any time by vote of a majority of
the Rule 12b-1 Directors, or by a vote of a majority of the outstanding Class
CCC Shares.
8. This Plan may not be amended to increase materially the amount of
compensation provided for in paragraph 1 hereof unless such amendment is
approved in the manner provided for initial approval in paragraph 3 hereof, and
no material amendment to the Plan of any kind, including an amendment which
would increase materially the amount of compensation, shall be
-3-
<PAGE>
made unless approved in the manner provided for approval and annual renewal
in paragraph 4 hereof.
9. While this Plan is in effect, the selection and nomination of
Directors who are not interested persons (as defined in the Act) of the Fund
shall be committed to the discretion of the then current Directors who are not
interested persons (as defined in the Act) of the Fund.
10. The Fund shall preserve copies of this Plan and any related
agreements and all reports made pursuant to paragraph 6 hereof for a period of
not less than six years from the date of this Plan, the agreements or such
reports, as the case may be, the first two years in an easily accessible place.
Date: , 1998
-4-
<PAGE>
PLAN OF DISTRIBUTION PURSUANT TO RULE 12b-1
OF
THE RBB FUND, INC.
(BEA Long-Short Market Neutral Portfolio Advisor Class)
WHEREAS, The RBB Fund, Inc. (the "Fund") intends to engage in business
as an open-end management investment company and is registered as such under the
Investment Company Act of 1940, as amended (the "Act"); and
WHEREAS, the Fund desires to adopt a Plan of Distribution pursuant to
Rule 12b-1 under the Act with respect to shares of its Class AAA Common Stock,
par value $.001 per share (the "Class AAA Shares") and the Board of Directors
has determined that there is a reasonable likelihood that adoption of this Plan
of Distribution will benefit the Fund and its stockholders; and
WHEREAS, the Fund intends to employ Counsellors Securities inc. (the
"Distributor") as distributor of the Class AAA Shares; and
WHEREAS, the Fund and the Distributor intend to enter into a separate
Distribution Agreement with the Fund for Class AAA Shares, pursuant to which the
Fund will employ the Distributor as distributor for the continuous offering of
Class AAA Shares;
NOW, THEREFORE, the Fund hereby adopts, and the Distributor hereby
agrees to the terms of, this Plan of Distribution (the "Plan") in accordance
with Rule 12b-1 under the Act on the following terms and conditions:
1. The Fund shall pay to the Distributor, as the distributor of the
Class AAA Shares, compensation for distribution of its shares at an annual rate
not to exceed .25% of the average daily net assets of the Class AAA Shares. The
amount of such compensation shall be agreed upon by the Board of Directors of
the Fund and by the Distributor and shall be calculated and accrued daily and
paid monthly or at such other intervals as the Board of Directors and the
Distributor shall mutually agree.
2. The amount set forth in paragraph 1 of this Plan shall be paid
for the Distributor's services as distributor of the Class AAA Shares. Such
amount may be spent by the Distributor on any activities or expenses primarily
intended to result in the sale of Class AAA Shares, including, but not limited
to: compensation to and expenses of employees of the
<PAGE>
Distributor who engage in or support distribution of the Class AAA Shares,
including overhead and telephone expenses; printing of prospectuses and
reports for other than existing shareholders; preparation, printing and
distribution of sales literature and advertising materials; and compensation
to certain financial institutions ("Service Organizations") who sell Class
AAA Shares. The Distributor may negotiate with any such Service
Organizations the services to be provided by the Service Organization to
shareholders in connection with the sale of Class AAA shares ("Distribution
Services"), and all or any portion of the compensation paid to the
Distributor under paragraph 1 of this Plan may be reallocated by the
Distributor to Service Organizations who sell Class AAA Shares. The
compensation paid to Service Organizations with respect to Distribution
Services will compensate Service Organizations to cover certain expenses
primarily intended to result in the sale of Class AAA Shares, including, but
not limited to: (a) costs of payments made to employees that engage in the
sale of Class AAA Shares; (b) payments made to, and expenses of, persons who
provide support services in connection with the sale of Class AAA shares,
including, but not limited to, office space and equipment, telephone
facilities, processing shareholder transactions and providing any other
shareholder services not otherwise provided by the Fund's transfer agent; (c)
costs relating to the formulation and implementation of marketing and
promotional activities, including, but not limited to, direct mail promotions
and television, radio, newspaper, magazine and other mass media advertising;
(d) costs of printing and distributing prospectuses, statements of additional
information and reports relating to the Class AAA Shares to prospective
shareholders of the Class AAA Shares; (e) costs involved in preparing,
printing and distributing sales literature pertaining to the Class AAA
shares; and (f) costs involved in obtaining whatever information, analyses
and reports with respect to marketing and promotional activities that the
Service Organization may, from time to time, deem advisable. The
compensation paid to Service Organizations with respect to Shareholder
Services will compensate Service Organizations for personal service and/or
the maintenance of shareholder accounts, including but not limited to (a)
responding to inquiries of customers or clients of the Service Organization
who beneficially own Class AAA Shares ("Customers"), (b) providing
information on Customer investments and (c) providing other shareholder
liaison services. The compensation paid to Service Organizations with
respect to Administrative Services will compensate Service Organizations for
administrative and accounting services to their Customers, including, but not
limited to: (a) aggregating and processing purchase and redemption requests
from Customers and placing net purchase and redemption orders with the Fund's
distributor or transfer agent; (b) providing Customers with a service that
invests the assets of their accounts in the Class AAA Shares; (c) processing
dividend payments from the Class AAA Shares on behalf of Customers; (d)
-2-
<PAGE>
providing information periodically to Customers showing their positions in
the Class AAA Shares; (e) arranging for bank wires; (f) providing
sub-accounting with respect to Class AAA Shares beneficially owned by
Customers or the information to the Fund necessary for sub-accounting; (g)
forwarding shareholder communications from the Fund (for example, proxies,
shareholder reports, annual and semi-annual financial statements and
dividend, distribution and tax notices related to the Class AAA Shares) to
Customers, if required by law; and (h) providing other similar services to
the extent permitted under applicable statutes, rules and regulations.
3. This plan shall not take effect until it has been approved by a
vote of at least a majority (as defined in the Act) of the outstanding Class AAA
Shares.
4. In addition to the approval required by paragraph 3 above, this
Plan shall not take effect until it has been approved, together with any related
agreements, by votes of a majority of both (a) the Board of Directors of the
Fund and (b) those directors of the Fund who are not "interested persons" of the
Fund (as defined in the Act) and have no direct or indirect financial interest
in the operation of this Plan or any agreements related to it (the "Rule 12b-1
Directors"), cast in person at a meeting (or meetings) called for the purpose of
voting on this Plan and such related agreements.
5. This Plan shall continue in effect until __________, 1998.
Thereafter, this Plan shall continue in effect for so long as such continuance
is specifically approved at least annually in the manner provided for approval
of this Plan in paragraph 4.
6. The Distributor shall provide to the Board of Directors of the
Fund and the Board of Directors shall review, at least quarterly, a written
report of the amounts expended pursuant to this Plan and the purposes for which
such expenditures were made, including commissions, advertising, printing,
interest, carrying charges and allocated overhead expenses.
7. This Plan may be terminated at any time by vote of a majority of
the Rule 12b-1 Directors, or by a vote of a majority of the outstanding Class
AAA Shares.
8. This Plan may not be amended to increase materially the amount of
compensation provided for in paragraph 1 hereof unless such amendment is
approved in the manner provided for initial approval in paragraph 3 hereof, and
no material amendment to the Plan of any kind, including an amendment which
would increase materially the amount of compensation, shall be
-3-
<PAGE>
made unless approved in the manner provided for approval and annual renewal
in paragraph 4 hereof.
9. While this Plan is in effect, the selection and nomination of
Directors who are not interested persons (as defined in the Act) of the Fund
shall be committed to the discretion of the then current Directors who are not
interested persons (as defined in the Act) of the Fund.
10. The Fund shall preserve copies of this Plan and any related
agreements and all reports made pursuant to paragraph 6 hereof for a period of
not less than six years from the date of this Plan, the agreements or such
reports, as the case may be, the first two years in an easily accessible place.
Date: , 1998
------------------
-4-
<PAGE>
Exhibit 18
FORM OF AMENDED RULE 18f-3 PLAN
RULE 18f-3 PLAN
1. A Portfolio of the Fund ("Portfolio") may issue more than one class of
voting stock ("Class"), provided that:
(a) Each such Class:
(1) (i) Shall have a different arrangement for shareholder
services or the distribution of securities or both, and shall pay all of
the expenses of that arrangement; and
(ii) May pay a different share of other expenses, not
including advisory or custodial fees or other expenses related to the
management of the Portfolio's assets, if those expenses are actually
incurred in a different amount by that Class, or if the Class receives
services of a different kind or to a different degree than other Classes;
(2) Shall have exclusive voting rights on any matter
submitted to shareholders that relates solely to its arrangement;
(3) Shall have separate voting rights on any matter
submitted to shareholders in which the interests of one Class differ from
the interests of any other Class; and
(4) Shall have in all other respects the same rights and
obligations as each other class.
(b) Expenses may be waived or reimbursed by the Portfolio's
adviser, underwriter, or any other provider of services to the Portfolio.
(c) (1) Any payments made under paragraph (a)(1)(i) of this
Plan shall conform to Appendix A to this Plan, as such Appendix A shall be
amended from time to time by the Board.
(2) Before any vote on the Plan or the Appendix, the
Directors shall be provided, and any agreement relating to a Class
arrangement shall require the parties thereto to furnish, such information
as may be reasonably necessary to evaluate the Plan.
(3) The provisions of the Plan in Appendix A are
<PAGE>
severable for each Class, and whenever any action is to be taken with
respect to the Plan in Appendix A, that action will be taken separately for
each Class.
(d) A Portfolio may offer a Class with an exchange privilege
providing that securities of the Class may be exchanged for certain
securities of another Portfolio. Such exchange privileges are summarized
in Appendix B, as may be modified by the Board from time to time, and are
set forth in greater detail in the prospectuses of each of the Classes.
<PAGE>
APPENDIX A
RBB FUND
CURRENT DISTRIBUTION FEE LEVELS
APRIL __, 1998
- ----------------------------------------
<TABLE>
<CAPTION>
A. MONEY MARKET PORTFOLIO
Current Distribution
Class Fee Level Effective Date
----- -------------------- --------------
<S> <C> <C>
1. Sansom Street (Class I) fee 0.05% 4/10/91
Shareholder Service Fee 0.10% 8/16/88
2. Bedford (Class L) fee 0.60% 11/17/94
3. Cash Preservation (Class G) fee 0.40% 4/10/91
4. RBB Family (Class E) fee 0.40% 4/10/91
5. Janney (Class Alpha 1) fee 0.60% 2/l/95
B. MUNICIPAL MONEY MARKET PORTFOLIO
Current Distribution
Class Fee Level Effective Date
----- -------------------- --------------
1. Sansom Street (Class J) fee 0.05% 4/10/91
Shareholder Service Fee 0.10% 8/16/88
2. Bedford (Class M) fee 0.60% 11/17/94
3. Bradford (Class R) fee 0.60% 11/17/94
4. Cash Preservation (Class H) fee 0.40% 4/10/91
5. RBB Family (Class F) fee 0.40% 4/10/91
6. Janney (Class Alpha 2) fee 0.60% 2/l/95
</TABLE>
<PAGE>
C. GOVERNMENT OBLIGATION MONEY MARKET PORTFOLIO
<TABLE>
<CAPTION>
Current Distribution
Class Fee Level Effective Date
----- -------------------- --------------
<S> <C> <C>
1. Sansom Street (Class K) fee 0.05% 4/10/91
Shareholder Service Fee 0.10% 8/16/88
2. Bedford (Class N) fee 0.60% 11/17/94
3. Bradford (Class S) fee 0.60% 11/17/94
4. Janney (Class Alpha 3) fee 0.60% 2/l/95
D. GOVERNMENT SECURITIES PORTFOLIO
Current Distribution
Class Fee Level Effective Date
----- -------------------- --------------
1. RBB Family (Class P) fee 0.40% 4/10/91
E. NEW YORK MUNICIPAL MONEY MARKET PORTFOLIO
Current Distribution
Class Fee Level Effective Date
----- -------------------- --------------
1. Bedford (Class O) fee 0.60% 11/17/94
2. Janney (Class Alpha 4) fee 0.60% 2/l/95
F. BEA INTERNATIONAL EQUITY PORTFOLIO
Current Distribution
Class Fee Level Effective Date
----- -------------------- --------------
1. BEA Institutional(Class T) None None
2. BEA Investor (Class II) fee 0.50% 7/10/96
3. BEA Advisor (Class MM) fee 0.25% 7/10/96
G. BEA EMERGING MARKETS PORTFOLIO
Current Distribution
Class Fee Level Effective Date
----- -------------------- --------------
1. BEA Institutional(Class V) None None
2. BEA Investor (Class JJ) fee 0.50% 7/10/96
3. BEA Advisor (Class NN) fee 0.25% 7/10/96
</TABLE>
<PAGE>
H. BEA HIGH YIELD PORTFOLIO
<TABLE>
<CAPTION>
Current Distribution
Class Fee Level Effective Date
----- -------------------- --------------
<S> <C> <C>
1. BEA Institutional(Class U) None None
2. BEA Investor (Class KK) fee 0.50% 7/10/96
3. BEA Advisor (Class OO) fee 0.25% 7/10/96
I. BEA U.S. CORE EQUITY PORTFOLIO
Current Distribution
Class Fee Level Effective Date
----- -------------------- --------------
1. BEA Institutional (Class X) None None
J. BEA U.S. CORE FIXED INCOME PORTFOLIO
Current Distribution
Class Fee Level Effective Date
----- -------------------- --------------
1. BEA Institutional (Class Y) None None
K. BEA STRATEGIC GLOBAL FIXED INCOME PORTFOLIO
Current Distribution
Class Fee Level Effective Date
----- -------------------- --------------
1. BEA Institutional (Class Z) None None
L. BEA MUNICIPAL BOND FUND
Current Distribution
Class Fee Level Effective Date
----- -------------------- --------------
1. BEA Institutional (Class AA) None None
M. BEA SHORT DURATION PORTFOLIO
Current Distribution
Class Fee Level Effective Date
----- -------------------- --------------
1. BEA Institutional (Class BB) None None
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
N. BEA BALANCED PORTFOLIO
Current Distribution
Class Fee Level Effective Date
----- -------------------- --------------
<S> <C> <C>
1. BEA Institutional (Class CC) None None
O. BEA GLOBAL TELECOMMUNICATIONS PORTFOLIO
Current Distribution
Class Fee Level Effective Date
----- ------------------- --------------
1. BEA Investor (Class LL) fee 0.50% 7/10/96
2. BEA Advisor (Class PP) fee 0.25% 7/10/96
P. BEA LONG-SHORT MARKET NEUTRAL PORTFOLIO
Current Distribution
Class Fee Level Effective Date
----- -------------------- --------------
1. BEA Institutional (Class ZZ) None
2. BEA Advisor (Class AAA) fee 0.25%
Q. BEA LONG-SHORT EQUITY PORTFOLIO
Current Distribution
Class Fee Level Effective Date
----- -------------------- --------------
1. BEA Institutional (Class BBB) None
2. BEA Advisor (Class CCC) fee 0.25%
R. BOSTON PARTNERS LARGE CAP VALUE FUND
Current Distribution
Class Fee Level Effective Date
----- -------------------- --------------
1. Institutional Class (Class QQ) fee 0.04% 10/16/96
2. Advisor Class (Class SS) fee 0.50% 10/16/96
3. Investor Class (Class RR) fee 0.25% 10/16/96
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
S. BOSTON PARTNERS MID CAP VALUE FUND
Current Distribution
Class Fee Level Effective Date
----- -------------------- --------------
<S> <C> <C>
1. Institutional Class (Class TT) fee 0.04% 6/1/97
2. Investor Class (Class UU) fee 0.25% 6/1/97
T. BOSTON PARTNERS BOND FUND
Current Distribution
Class Fee Level Effective Date
----- -------------------- --------------
1. Institutional Class (Class VV) fee 0.04% 12/29/97
2. Investor Class (Class WW) fee 0.25% 12/29/97
U. SCHNEIDER CAPITAL MANAGEMENT VALUE FUND
Current Distribution
Class Fee Level Effective Date
----- -------------------- --------------
1. Investor (Class YY) None 4/6/98
</TABLE>
<PAGE>
APPENDIX B
EXCHANGE PRIVILEGES OF THE PORTFOLIOS
OF THE RBB FUND, INC.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------
FAMILY EACH PORTFOLIO (CLASS) . . . MAY BE EXCHANGED FOR ANY OF
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
BEA (Institutional Classes) International Equity (T) International Equity (T)
High Yield (U) Strategic Fixed Income (U)
Emerging Markets Equity (V) Emerging Markets Equity (V)
U.S. Core Equity (X) U.S. Core Equity (X)
U.S. Core Fixed Income (Y) U.S. Core Fixed Income (Y)
Strategic Global Fixed Income (Z) Global Fixed Income (Z)
Municipal Bond Fund (AA) Municipal Bond Fund (AA)
Balanced Fund (BB) Balanced Fund (BB)
Short Duration Fund (CC) Short Duration Fund (CC)
Long-Short Market Neutral (ZZ) Long-Short Market Neutral (ZZ)
Long-Short Equity (BBB) Long-Short Equity (BBB)
- -------------------------------------------------------------------------------------------------------------------
BEA (Investor Classes) International Equity (II) International Equity (II)
Emerging Markets Equity (JJ) Emerging Markets Equity (JJ)
High Yield (KK) High Yield (KK)
Global Telecommunications (LL) Global Telecommunications (LL)
Investor Shares of other non-RBB Investor Shares of other non-RBB
funds advised by BEA Associates funds Advised by BEA Associates
- -------------------------------------------------------------------------------------------------------------------
BEA (Advisor Classes) International Equity (MM) International Equity (MM)
Emerging Markets Equity (NN) Emerging Markets Equity (NN)
High Yield (OO) High Yield (OO)
Global Telecommunications (PP) Global Telecommunications (PP)
Long-Short Market Neutral (AAA) Long-Short Market Neutral (AAA)
Long-Short Equity (CCC) Long-Short Equity (CCC)
Advisor Shares of other non-RBB Advisor Shares of other non-RBB
funds advised by BEA Associates funds advised by BEA Associates
- -------------------------------------------------------------------------------------------------------------------
Cash Preservation Money Market (G) Money Market (G)
Municipal Money Market (H) Municipal Money Market (H)
- -------------------------------------------------------------------------------------------------------------------
RBB Money Market (E) Money Market (E)
Municipal Money Market (F) Municipal Money Market (F)
Government Securities (P) Government Securities (P)
- -------------------------------------------------------------------------------------------------------------------
Bedford (Bear Stearns) Money Market (L) Common Shares of other non-RBB
funds advised or sponsored by Bear,
Stearns & Co. Inc.
- -------------------------------------------------------------------------------------------------------------------
Bedford (Valley Forge) Money Market (L) Common Shares of other non-RBB
funds advised or sponsored by
Valley Forge Capital Holdings, Inc.
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
- -------------------------------------------------------------------------------------------------------------------
n/i Micro Cap (FF) Growth & Value (HH)
Growth (GG) Larger Cap Value (XX)
Growth & Value (HH)
Larger Cap Value (XX)
- -------------------------------------------------------------------------------------------------------------------
Schneider Capital Management Schneider Capital Management Schneider Capital Management
Value Fund (YY) Value Fund (YY)
- -------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------
Boston Partners (Institutional Mid Cap Value (TT) Mid Cap Value (TT)
Classes) Large Cap Value (QQ) Large Cap Value (QQ)
Bond (VV) Bond (VV)
- -------------------------------------------------------------------------------------------------------------------
Boston Partners (Investor Classes) Mid Cap Value (UU) Mid Cap Value (UU)
Large Cap Value (RR) Large Cap Value (RR)
Bond (WW) Bond (WW)
- -------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
